IDEX Corporation

Greetings. Welcome to the Q1 2022 IDEX Corporation earnings conference call. At this time, all participants are in a listen-only mode. A question and answer session will follow the formal presentation. If anyone should require operator assistance during the conference, please press star zero on your telephone keypad. Please note this conference is being recorded. I will now turn the conference over to your host, Allison Lawson, the Vice President and Chief Accounting Officer. You may begin.

Good morning, everyone. This is Allison Lawsus, Vice President and Chief Accounting Officer for IDEX Corporation. Thank you for joining us for the discussion of IDEX first quarter 2022 financial highlights. Last night, we issued a press release outlining our company's financial and operating performance for the three months ending March 31st, 2022. The press release, along with the presentation slides to be used during today's webcast, can be accessed on our company website at IDEXCorp.com. Joining me today are Eric Ashleman, our Chief Executive Officer and President, and Bill Grogan, our Chief Financial Officer. The format for our call today is as follows. We will begin with Eric providing an overview of the state of IDEXC's business. Then, Bill will discuss IDEXC's first quarter financial results. He'll also give an update on segment performance and the markets they serve, and provide our outlook for the second quarter and full year 2022. Following our prepared remarks, we will open the call for your questions. If you should need to exit the call for any reason, you may access a complete replay beginning approximately two hours after the call concludes by dialing the toll-free number, 877-660-6853, and entering conference ID 13722. or simply log on to our company homepage for the webcast replay. And before we begin, a brief reminder. This call may contain certain forward-looking statements that are subject to the Safe Harbor language in last night's press release and in IDEXX's filings with the Securities and Exchange Commission. With that, I'll now turn this call over to our CEO and President, Eric Ashleman.

Thank you, Alison, and good morning, everyone. I'm on slide six. The first quarter was an outstanding start to the year for IDEX. I'd like to thank our IDEX employees around the globe for their hard work and contributions to our success. We saw strong broad-based demand for our differentiated technologies with growth across all three of our segments, leading to record orders, sales, and backlog. This robust market plus outstanding operating performance resulted in 12% organic sales growth and excellent margins. We achieved adjusted EPS of $1.96, setting another IDEX record. Overall, the operating environment in the first quarter was much like the fourth quarter of 2021, but our teams improved their ability to navigate through this challenging environment. We effectively mapped our 80s and 20s from customers through work cells and back to the supply base in a way that increased overall throughput and velocity. We also worked together to attack our most problematic supply challenges through resourcing or redesign. Although we expect these challenges will remain for us in the near term, we are confident in our ability to adapt, execute, and deliver for our customers. This period of rapid economic recovery coupled with geopolitical disruptions and constrained supply continues to drive material and freight costs higher. We kept pace with our own robust price capture efforts as we leveraged the highly differentiated nature of IDEX's product portfolio and our leadership positions in critical niche markets around the world. We also saw strong benefits from our productivity initiatives Specifically, benefits from our site consolidations in FMT, capital investments that drove efficiencies, and product design changes that reduce material consumption. The results in Q1 are a testament to our team's long view across business cycles as they build productivity roadmaps to support growth and margin expansion. Turning to capital deployment, M&A continues to be a key priority for us. We recently announced our intent to acquire KZ Valve, a leading manufacturer of electric valves and controllers. This acquisition will extend our expertise in providing OEMs with critical solutions for precision agricultural and industrial applications and serve as a complement to our agriculture business within FMT. We're excited to welcome KZ Valve to IDEXX. We also closed on Nexcite, a complement to our FMT water platform. Our funnel is strong and we continue to build conviction and interest around faster growing areas that complement the IDEXX style of competition. Rupa Unakrishnan, who joined us in March, will be an outstanding addition to these efforts as she leads strategy and corporate development for the company. Also, in the first quarter, we deployed $28 million to repurchase approximately 148,000 shares of company stock. We employ a disciplined methodology to create long-term value for shareholders when we see a break between our intrinsic assessment of IDEC's enterprise value and our public valuation. Finally, we continue to make reasonable and modest resource investments to drive long-term sustainable growth. These investments typically involve incremental additions to our commercial and engineering resources to support our best organic bets or targeted resources to support our inorganic efforts through M&A. With that, let me turn it over to Bill to discuss our financial results.