IDEX Corporation

Greetings and welcome to the IDEX Corporation Earnings Conference Call Second Quarter 2023. 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 a conference, please press star zero on your telephone keypad. As a reminder, this conference is being recorded. It is now my pleasure to introduce your host, Allison Lawson, Vice President and Chief Accounting Officer. Thank you. You may begin.

Good morning, everyone. This is Alison Lawsus, Vice President and Chief Accounting Officer for IDEX Corporation. Thank you for joining us for our discussion of the IDEX second quarter 2023 financial highlights. Last night, we issued a press release outlining our company's financial and operating performance for the three months ending June 30th, 2023. The press release, along with the presentation slides to be used during today's webcast, can be accessed on our company website at IDEXXCorp.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 IDEXX's business. Then Bill will discuss second quarter financial results, an update on segment performance and the markets they serve, and our outlook for the third quarter and full year 2023. Lastly, Eric will close the call with his final remarks. 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 number 137-34463. 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. Idex delivered record sales and adjusted earnings per share in the second quarter, along with strong free cash flow. Our fluid metering and fire and safety diversified products businesses delivered exceptional performance on strong market fundamentals, both posting strong organic growth and profitability, with FMT delivering an all-time high EBITDA margin. Our health and science technology segment continue to face challenges impacted by inventory destocking in our analytical instrumentation, life sciences, biopharma, and semiconductor markets. Our teams within the segment drove double-digit organic growth over the last two years, admirably executing for customers and the business in very difficult conditions. Now, on the backside of the post-pandemic recovery, our OEM partners are aggressively reducing higher inventory levels beginning with those suppliers that have demonstrated the quickest returns to pre-pandemic lead times. Our teams are appropriately balanced as they execute targeted cost reductions to mitigate a portion of these volume declines, drive strong cash flow overall, and continue to innovate for our customers. During our last earnings call, our revised outlook for the year assumed our industrial businesses would slow moderately in the second half, while our HST segment would experience a modest rebound. While our view on the industrial markets has not changed, we are no longer projecting recovery in HST volumes in the second half of the year. Our outlook is based on revised forecasts from our key customers who are reevaluating their end market demand alongside their current inventory levels. They're considering many factors overall, including supply chain improvements, lower than expected growth in China, and overall macro pressures within their market verticals. This is a complex and rapidly evolving context which played out for us in Q2 with a 27 percent year-over-year organic drop in HST orders. This moderating demand profile net of our incremental cost containment actions drives an additional 45 cents of EPS pressure at the midpoint versus our previous guide. With that, as we noted in our press release, we are revising our full year 2023 adjusted EPS guidance to $7.90 to $8 per share. Bill will discuss the specifics. in greater detail during our segment and guidance updates. In the second quarter, we also closed on the Iridium Spectral Technologies deal we announced earlier this year, adding another market leader in custom optical filter solutions serving the space, life science, and telecommunications markets. We continue to focus on driving strong operational performance, regardless of business environment, delivering and innovating for our customers. We're driving speed and agility within our businesses, taking out inventory, and driving world-class lead times, positioning us best for growth cycles to come. We remain committed to managing through the short term while not losing focus on critical investments in the development of our people, in capital deployment, and in our differentiated technologies to enable our long-term growth path and deliver above-market performance over a cycle. With that, I'll turn it over to Bill to discuss our financial results.