Idex Raises Guidance as Orders Surge Past $1 Billion
The industrial manufacturer posted record orders of more than $1 billion, up 29%, and used the momentum to lift its full-year profit and sales targets.
Idex (IEX) recorded sales of $921 million in the quarter, up 6% reported and 5% organically, but the number that reshaped the outlook was orders: more than $1 billion, up 29% reported and 28% organically. The diversified manufacturer of pumps, valves and measurement instruments raised its full-year 2026 organic sales guidance to 5%-6% growth from a prior 3%-4%, and lifted adjusted diluted earnings guidance to $8.70-$8.85 a share, roughly 10% growth, from $8.35-$8.55.
Reported diluted earnings were $1.93 a share, up 11% from a year earlier, while adjusted diluted earnings reached a record $2.32, up 12%. Gross margin expanded 100 basis points to 46.3%, and adjusted gross margin rose 110 basis points to 46.4%, helped by productivity gains, volume leverage and 150 basis points of price/cost benefit tied to IEEPA tariff refunds, partly offset by unfavorable mix. Adjusted EBITDA margin widened 70 basis points to 28.1%, with adjusted EBITDA of $258.3 million up $21.1 million, or 8.9%, from a year earlier. Net income margin rose 50 basis points to 15.6%.
The order growth and the margin gains did not spread evenly across Idex's three segments. Health & Science Technologies posted organic sales growth of 12%, driven by AI-linked data-center power and semiconductor demand alongside strength in space and defense, and its EBITDA margin climbed 270 basis points to 28.7%. Fire & Safety/Diversified Products grew organic sales just 1% with margin down 20 basis points to 34.8%, and Fluid & Metering Technologies organic sales fell 1% with margin down 50 basis points to 28.9% on weaker European rescue and dispensing demand. The gap left Health & Science Technologies as the primary engine behind both the top-line acceleration and the raised guidance.
A one-time item also flattered the quarter's margins. Idex had $14.7 million in net sales reductions and a $21.1 million cash refund tied to IEEPA tariffs and related customer rebates, adding 150 basis points to gross margin, 130 basis points to adjusted EBITDA margin and $0.08 to adjusted diluted earnings — a benefit with no equivalent in the prior-year comparison. Corporate costs rose 14% to $26.2 million from $22.9 million, reflecting higher employee-related and variable compensation expense.
Cash generation improved alongside earnings. Free cash flow conversion rose to 103% from 94%, and operating cash flow as a share of net income climbed to 140% from 123%, aided by the tariff refund receipts and higher earnings even as capital expenditure nearly doubled to $23.0 million from $14.8 million. Idex returned more of that cash to shareholders, lifting share repurchases to $77.1 million from $50.0 million and dividends to $53.9 million from $53.5 million.
The quarter also marked the first full period under new finance leadership: Sean Gillen became senior vice president and chief financial officer effective January 5, 2026, succeeding interim CFO Akhil Mahendra. With Health & Science Technologies carrying the growth and the tariff refund adding a temporary lift to margins, the raised guidance now rests on whether that segment's data-center and defense-linked demand holds up once the one-time tailwind rolls off.