Why IDEX Corporation (NYSE: IEX) stock is declining

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IDEX Corporation (NYSE: IEX) stock lost over 1.2% on 24th April, 2020 (As of  11:35 am GMT-4 ; Source: Google finance) after the company posted the first quarter of FY 20. Orders had fallen by 2 percent to $644.9 million compared to the prior year period and organic sales declined by five percent. IEX has increased backlog by $50 million. The company has reported the net income was $102.0 million which resulted in EPS of $1.33, which represents the decline of 11 cents, or 8 percent, from the prior year period EPS. EBITDA of $158.4 million was 26.6 percent of sales and covered interest expense by almost 15 times. The company generated the cash from operations of $84.8 million that led to free cash flow of $72.0 million, which was down 5 percent from the prior year period and was 71 percent of net income compared to 69 percent of net income in the prior year period. The decline in free cash flow was mainly due to lower earnings, which is partially offset by a favorable change in accrued expenses in the first quarter of 2020. The company has strong balance sheet, with more than $1.2 billion of liquidity and gross leverage of 1.5 times, which will enable the company to capitalize on opportunities as the world emerges from this crisis of pandemic. The company has withdrawn all prior financial guidance, which was provided on January 30, 2020, and suspended all future financial guidance for the balance of the year.

IEX in the first quarter of FY 20 has reported the adjusted earnings per share of $1.33, while reported 4 percent fall in the adjusted revenue to $594.46 million in the first quarter of FY 20. Additionally, the company had repurchased 867 thousand shares of common stock for $108.9 million in the first quarter of 2020 at an average price of $125.64. For the second quarter of 2020, the company expects sales to be down 15 to 25 percent.

Meanwhile, the company recently completed the acquisition of Flow Management Devices, LLC (“Flow MD”), which is a privately held provider of flow measurement systems that ensure custody transfer accuracy in the oil and gas industry. Flow MD was acquired for cash consideration of $120.8 million. The company has funded the entire purchase price with cash on hand.

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