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IDEX CORPORATION Provides Third Quarter Update

Published on 2008-10-09. Author : SpecialChem


As previously announced, IDEX has commenced the cessation of manufacturing operations in the Dispensing segment's Milan, Italy facility. In addition, IDEX has initiated Company-wide plans which include management and administrative workforce reductions as well as an additional facility consolidation. The projected savings in costs and operating expenses resulting from these restructuring activities is expected to be $13 - $14 million annually beginning in 2009.

The Company expects these actions to result in non-recurring severance and non-severance related charges totaling approximately $14 million over the second half of 2008. These costs are inclusive of the estimated $5 to $6 million of costs relating to the Milan, Italy facility.

Revised Q3 Revenue and Earnings Estimates

The Company projects third quarter of 2008 revenues to be approximately $365 million or an increase of 9 percent from the prior-year period versus the previous guidance of 14 to 16 percent. Excluding the previously mentioned restructuring expenses, third quarter of 2008 earnings per share is expected to be 52 to 53 cents versus previous guidance of 53 to 56 cents. Revenue growth within the Dispensing Equipment segment is down more than 20 percent versus the third quarter of 2007. Lower revenues are due primarily to deteriorating capital spending within the Dispensing Equipment segment end markets. Organic revenue growth for Fluid and Metering Technologies was approximately 5 percent for the third quarter versus prior estimates of high single digits. In addition, the strengthening of the US dollar resulted in lower reported revenues by approximately 1-2 percent versus previous estimates.

Acquisition Progress

On October 1, 2008, IDEX announced the acquisition of Richter Chemie-Technik, a leading provider of premium quality lined pumps, valves and control equipment for the chemical, fine chemical and pharmaceutical industries.

The Company is currently expecting to close additional acquisitions in the next 30-45 days. These acquisitions will further enhance the build-out within the Fluid and Metering Technologies segment and core technology capability within the Health and Science Technologies segment.

Inclusive of Richter Chemie-Technik and assuming successful closure of these additional acquisitions, the impact to 2009 revenue and EBITDA is estimated at $130-140 million and $32-35 million, respectively. The total cash consideration is estimated at $230-240 million. These acquisitions are also expected to be accretive to 2009 earnings.

Commenting on these announcements, IDEX Chairman and Chief Executive Officer Larry Kingsley stated, "Deteriorating economic conditions and lower capital spending in both Europe and North America, resulted in a significant reduction in orders for capital equipment within retail paints and coatings. In addition, we have been informed by a major retailer of their decision to use a competitor's dispensing equipment for their current replacement program. We have taken appropriate cost actions to mitigate these impacts not only within Dispensing but throughout the company. We will reduce our 2009 cost structure by $13-14 million as a result of our restructuring plans. It is clear that we are experiencing a slower economic environment which will result lower organic growth. However, IDEX is well positioned to weather the current economic challenges, with a focus on cost reduction while still investing for growth in end markets that should outperform the economy."


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