IDEX Corporation

Greetings and welcome to the first quarter 2023 IDEX Corporation earnings conference call. At this time, all participants are in a listen-only mode. A brief 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. As a reminder, this conference is being recorded. And it is now my pleasure to introduce to you Allison Lawson, Vice President and Chief Accounting Officer. Thank you, Allison. 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 our discussion of the IDEX first quarter 2023 financial highlights. Last night, we issued a press release outlining our company's financial and operating performance for the three months ending March 31st, 2023. 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. Today we will begin with Eric providing an overview of the state of IDEX's business. Then Bill will discuss IDEX's first quarter financial results, an update on segment performance in the markets they serve, and our outlook for the second quarter and full year 2023. 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 13734462. or simply log on to our company homepage for the webcast replay. 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, Allison, and good morning, everyone. I'm on slide six. I'd like to start with some key first quarter highlights. we delivered record sales with positive organic growth across all three of our segments, $2.09 adjusted earnings per share and strong free cash flow. Our FMT and FSD segments performed exceptionally well, both achieving record sales and strong profitability, offsetting some pressure in our HST segment. Price cost was positive and above IDEC's historical performance. As we look ahead to Q2 and the balance of the year, our outlook has changed. The last time we spoke, we anticipated short-term volume pressures within life sciences from inventory calibration concentrated in a few select OEM customers. However, as we progressed through the quarter, we saw signals of a broader, more prolonged recalibration within our HST segment, largely centered in our analytical instrumentation, life science, pharma, and semiconductor markets. End market demand is still positive, but we believe our customers have sufficient inventory of our critical components to support their needs in the near term. Over the past two years, we experienced robust growth in HST with sales up over 30% organically to support strong end-user demand and customer-specific inventory replenishment. But as supply chain conditions improve and the broader demand profile normalizes, our OEM partners are aggressively attacking higher inventory levels, beginning with those suppliers that have demonstrated the quickest returns to pre-pandemic lead times. The sharp and simultaneous nature of this inventory recalibration exceeds all prior historical cycles. In response, we proactively executed cost reductions to offset a portion of this volume impact. We tailored our approach to the specific challenges in individual businesses as well as broader discretionary costs across the entire company, managing through the short term but not losing focus on our longer-term growth path. These top-line challenges, net of our cost containment plan, drive 25 cents of adjusted EPS headwind for the year. Therefore, as we noted in our press release, we revised our full year adjusted 2023 EPS guidance from $8.25 to $8.55. Bill will discuss the specifics in greater detail during our segment and guidance updates. Regardless of these end market challenges, we remain confident in our ability to deliver total shareholder returns over the long term. Our capital deployment plan remains consistent. We continue to look to M&A as a significant source of value creation. To that end, we announced our intent to acquire Iridian Spectral Technologies for 150 million Canadian dollars or approximately 111 million US. Iridian is a world leader in custom optical filter solutions serving the space, life science, and telecommunications markets. Iridian expects fiscal 2023 revenues of 36 million Canadian dollars and EBITDA margin in the low 30s range. It is about a 13 times EBITDA trailing deal And within the IDEXX family of businesses, Iridian complements and expands upon the solutions provided by our scientific, fluidics, and optics businesses within HST. This transaction is expected to close in the second quarter. Iridian will be our sixth acquisition since the beginning of 2021, and we remain bullish on our ability to deploy capital on high-quality assets irrespective of the macro conditions. The integration of our Muon Group acquisition, which closed in fourth quarter 2022, is progressing well. We've deployed key elements of our operating model, and there continues to be a strong cultural fit between IDEX and Muon as our teams work together to unlock value between our businesses. Finally, I traveled last week to India to officially open our second plant in the state of Gujarat. It is a world-class facility that effectively doubles our production capacity in the country. Coupled with the opening of our plant expansion in China in late 2022 and our recent commissioning of sales and logistics centers in Singapore and Dubai, We now have a strengthened footprint to attack markets across Asia and the Middle East, a key element of our growth strategy. With that, I'll turn it over to Bill to discuss our financial results.