IDEX Corporation

Greetings. Welcome to the fourth quarter of 2023 IDEX Corporation Earnings Conference Call. At this time, all participants will be in listen-only mode. The question and answer session will follow the formal presentation. If anyone should require operator assistance during today's conference, please press star zero from your telephone keypad. As a reminder, this conference is being recorded. I'll now turn the conference over to Allison Losses, Vice President and Chief Accounting Officer. Ms. Losses, you may now begin.

Good morning, everyone. This is Allison Lawson, Vice President and Chief Accounting Officer for IDEX Corporation. Thank you for joining us for our discussion of the IDEX fourth quarter and full year 2023 financial highlights. Last night, we issued a press release outlining our company's financial and operating performance for the three months and full year ending December 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 Abhi Candlewall, our new Senior Vice President and Chief Financial Officer. Today we'll begin with Eric providing an overview of the state of IDEX's business. Abhi will then discuss our fourth quarter and full year 2023 financial results and provide an update on the various markets we serve. He will also discuss our outlook for the first quarter and full year 2024. Lastly, Eric will close the call with his final remarks. We will then 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 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.

Thanks, Alison, and good morning, everyone. First, I'd like to introduce and welcome our new CFO, Abhi Candelwald, back to IDEX. Abhi previously worked at IDEX for 10 years and served as my finance partner for the majority of that tenure. I'm thrilled to welcome him back, and in many ways, it feels like he never left. Turning to slide six, we navigated the challenging backdrop in 2023 with really strong execution. As backlogs normalized, we took inventory out of the system, reduced lead times for customers, increased cash flow to record levels, and delivered productivity through strong price capture and operational excellence. As always, I want to reach out to our IDEXX employees around the globe with a sincere and appreciative thank you. I want to apply a bit of high-level perspective as I cover last year's dynamic demand patterns. Coming into 2023, we expected this would be a year of recalibration across our broad array of markets, and our thesis certainly held. Our fragmented industrial markets within FMT and parts of FSDP and HST played out as expected. Supply chains improved, dropping overall lead times, bringing artificially high backlog and inventory levels into focus. Customers attacked these positions moderately over time through order reductions to our businesses, ultimately reaching levels of stability for us in the fall. Our less fragmented markets within life sciences and analytical instrumentation and semi-con recalibrated in a dramatically different way. Through much of the post-pandemic recovery, these markets had run red hot with demand that was really only constrained by supply chain availability. Demand pressures from high interest rates, lower capital availability, and a lackluster post-COVID recovery in China, combined with outsized inventory balances and backlogs, drove sharp order reductions throughout these normally fast-growing sectors. This played out dramatically in the first half for IDEX. Given our short cycle character, we saw the decline quicker than many and reached equilibrium in the fall sooner than some. As we delivered against expectations within a stable Q4, we took a breath and developed a plan of attack for the year ahead. Lead times and backlogs are back to pre-pandemic levels. The majority of our industrial and municipal businesses are stable and seeing improvement with early and encouraging signs of modest growth ahead. The open questions are the specific catalyst and timing to support further acceleration. Our teams continue to aggressively engage with our top growth bets to drive market outperformance. These initiatives are spread across all segments in a variety of niche verticals. We're particularly excited about our growth work with customers in our water, semi-con, space communications, and energy transition markets. The markets not yet showing signs of near-term recovery remains life sciences and analytical instrumentation. We haven't forecasted a positive inflection yet for 2024. That said, our teams continue to work a robust pipeline of innovative projects in conjunction with our customers, positioning us to win on tomorrow's next-gen platforms. We believe in the long-term growth potential of these end markets and are well-positioned to support growth at the first signs of improved demand. We continue to focus on aggressive capital deployment towards M&A as we tune the portfolio towards faster-growing high-quality markets. We acquired Aridian and STC material solutions last year, adding important pieces of material science technology to our HST segment. Our funnel is expanding, filled with targets that enhance our growth potential. Our balance sheet is strong, fully supporting our ambitions. Finally, we divested two businesses, Micropump and Novatema, as we practice 80-20 at the enterprise level. With that, I'll turn it over to Abhi to discuss our financial results.