IDEX Corporation

I would now like to turn the conference over to your host, Ms. Wendy Palacios, Vice President, FP&A, and Investor Relations for IDEX Corporation. Thank you. You may begin.

Good morning, everyone. This is Wendy Palacios, Vice President of FP&A and Investor Relations for IDEX Corporation. Thank you for joining us for our discussion of the IDEX fourth quarter and full year 2024 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, 2024. The press release, along with the presentation to be used during today's webcast, can be accessed on our investor website at investors.idexcorp.com. Joining me today are Eric Asherman, our Chief Executive Officer and President, and Abhi Kendalwal, our Senior Vice President and Chief Financial Officer. Following our prepared remarks, we will open the call for your questions. Turning to slide two. Please note that during today's call we will present certain non-GAAP financial measures. We will also make forward-looking statements within the meaning of the federal securities laws, including statements regarding events or developments that we expect or anticipate will or may occur in the future period. These forward-looking statements are subject to risks and uncertainties. Actual results may differ materially from any forward-looking statements that we make today. and we do not assume any obligation to update them, other than as required by law. Information regarding these factors that may cause actual results to differ materially from these forward-looking statements is available on our website and in our SEC filings. With that, I'll now turn this call over to our CEO and President, Eric Eshelman.

Thank you, Wendy, and good morning, everyone. I'm on slide three. IDEXX teams maneuvered a year of choppy and uncertain macro conditions with operational focus and solid execution in 2024. We delivered innovative solutions to our customers, achieved strong productivity through net price capture and operational excellence, and deployed both financial and human capital toward our largest acquisition to date, Mott. I want to thank our IDEXX employees around the globe for all their contributions. Our IDEXX team executed a strong finish to the year. Here are some Q4 highlights. We delivered a series of impactful projects within the health and science technology segment destined for pharma, global broadband satellite communications, and energy transition verticals. We drove organic orders growth across all segments led by HST. Mott achieved strong results in their first quarter with IDEX delivering a significant filtration systems project within their energy transition vertical. The integration is proceeding smoothly, and Mott's accretion timing is tracking ahead of our original expectations. Our fire safety and diversified product segment set another new quarterly sales record driven by strong growth of their automation programs within integrated fire systems. Reflecting on 2024, we saw three themes play out. When we started the year, there were some encouraging signs of growth with a noticeable uptick in industrial day rates coupled with expectations at the time for accelerated interest rate easing. We saw this reflected in our 2024 Q1 orders and sales performance in pockets of our portfolio. This environment changed in late Q1 as an unexpectedly high inflation rate reduced the likelihood of rate reductions. The U.S. election cycle, with polarized potential outcomes, entered the mix in the summer, and most markets settled into an uncertain but stable pattern. Finally, late in the year, we had clarity with respect to both issues as inflation moderated and a presidential candidate won the race, but the dynamic policy implications of the new administration likely moderated any near-term growth catalysts within Q4. As we begin 2025, there appears to be a climate of uncertain optimism. We're sitting on a stable business space, our inventories and lead times are recalibrated back to normal levels, and a series of transformational megatrends are ready to help carry strong growth through the second half of the decade and beyond. The open questions continuing to drive near-term uncertainty all relate to the direction of U.S. trade and economic policy within an overall environment of high geopolitical tension. We'll likely have more clarity as we move through the first couple quarters this year. Despite challenging macro conditions, we are building IDEX to outperform throughout the entirety of a cycle. Our differentiated technologies provide solutions to complex problems and growth advantage verticals. We continue to apply 80-20 to each business to fuel growth and productivity. That's been the heartbeat of our operating model for well over a decade. But now, more than ever, we're using 80-20 at the enterprise level to drive power, scale, and focus through our portfolio of high quality businesses. As we turn towards 2025 and beyond, I'd like to show you how far we've already come on this journey. I'm on slide four. We have more aggressively deployed capital over the last few years to build scale through thematic integration. We have also selectively pruned smaller, less growth advantage businesses to complement the work. Today, we have over half of IDEXX revenue working together collaboratively within five groups. some formal, some building informally, to attack a handful of faster-growing markets that will benefit long-term from the secular tailwinds you see listed here. We're doing it with more scale and breadth, which allow us to better leverage our overhead spend while maximizing productivity potential. This is an important strategic roadmap for our future evolution fueled by more power, more focus, more growth to drive consistent earnings expansion. We have recently deployed the majority of our M&A capital towards businesses that deliver high-quality applications and solutions that leverage differentiated material science technologies. Mott is an important piece of this story, providing more access points to support fast-growing markets with an energy transition, space and defense, and high-performance semiconductor. Despite the dramatic market ups and downs over the last few years, we remain very committed to expanding our work within life sciences. We have long, mutually beneficial partnerships with the world's best customers, and our teams continue to innovate in ways that push the frontiers of what is thought to be possible. We remain confident with the long-term growth outlook of this space. Within Intelligent Water, we built a portfolio that offers an integrated suite of digital analytics, complemented by hardware and mobile solutions that work in some of the world's most demanding environments. This helps our municipal and industrial customers meet the challenges of aging wastewater infrastructure increasing severe weather events, and stricter regulatory requirements. In other areas of IDEX, where the markets are more mature, more industrial, and more fragmented, we are collaborating at scale across units to also drive growth and income outperformance. In IDEX Fire and Safety, our automation capabilities are decreasing the response time and increasing the productivity and agility of emergency workers. We believe we are uniquely positioned with our breadth of product and innovation capabilities to drive solutions of this type. We are enjoying double-digit growth in this area, and automated solutions now make up more than 10% of platform revenue. Finally, within our largest FMT businesses, specializing in severe duty flow control, we are rapidly digitizing the front end of our businesses, impacting the way we service and interact with our distributors, OEMs, and end users. This urgent work is powered by the scale and positioning of our best 80s businesses. Ultimately, the next step will deploy a common set of digital tools across all IDEX businesses to drive even higher levels of customer engagement. One last important point. Beyond support for faster growth, the collaboration and integration I'm describing here has additional potential to drive earnings expansion at IDEX. As we build larger scalable platforms and business groups, we can begin to shift vertical organizations, which stack up additively one company at a time, to more efficient horizontal frameworks that better lever our employee dollars, allowing us to self-fund more growth resources positioned very close to the customer for maximum impact. Alongside this work, we continue to push for flat organizations overall to speed decision making, pushing to eliminate any layers that might get in the way of our agility. A higher thematic scale and integration also supports higher levels of sourcing productivity as the quantities of similar purchase commodity classes naturally increase. You'll see some early tangible benefits of this work within our guidance schedules. We have 43 cents of adjusted EPS support lined up for 2025 in these areas on top of another 20 cents at the midpoint from traditional productivity. We're well positioned for solid margin expansion as we move the needle on organic growth. Turning to slide five, the last essential piece of our growth strategy is capital deployment. We are focused on the integration of Mott and deepening collaborative connections across our broader portfolio to leverage Mott's highly engineered filtration technologies into new innovative solutions. At the same time, our dedicated corporate development team continues to work alongside our business leaders to build a robust and active M&A funnel. Cultivating businesses that fit the IDEXX mold, and have the potential to advance our strategic goals in the areas where we want to grow. We have the pipeline, balance sheet, and free cash flow generation to keep M&A as a consistent contributor to our growth over time. With that, I'll turn it over to Abhi to discuss our financial results and guidance.