IDEX Q1 Earnings Call Highlights

IDEX NYSE: IEX reported first-quarter 2026 results that management said came in above expectations, supported by growth in its targeted “advantage markets” and continued application of the company’s 80/20 operating philosophy.

Quarterly performance and orders

President and CEO Eric Ashleman said IDEX delivered 5% organic sales growth in the quarter and an adjusted EBITDA margin of 26%, representing 50 basis points of year-over-year margin expansion. He also highlighted that orders were “better than expected,” with organic orders up 10% year-over-year.

Chief Financial Officer Sean Gillen said the quarter benefited from strength in Health & Science Technologies (HST), while the company also saw improved trends in parts of its shorter-cycle industrial exposure. “Adjusted EPS came in significantly higher than our guided range in the first quarter,” Gillen said, though he did not provide the specific Q1 adjusted EPS figure during the call.

On profitability, Gillen said adjusted EBITDA margin expansion was driven by “productivity improvements, positive volume leverage, and positive price cost,” partially offset by mix. Adjusted gross margin declined 40 basis points year-over-year to 44.9%, which he attributed to productivity gains and volume leverage being “more than offset by mix.”

Segment results: HST backlog builds while short-cycle markets remain mixed

Management repeatedly pointed to HST as the key driver of the quarter. Ashleman said strength was “most pronounced” in HST, citing secular drivers in data center, semiconductor, and space and defense markets, and noted that backlog building in HST improved visibility “for the balance of the year and into 2027.”

• HST: Gillen said organic orders increased 17% and organic revenue grew 11%. He cited volume gains in semiconductor original equipment and consumables, data center applications, and space and defense, and also called out strength in pharma. HST adjusted EBITDA margin expanded 100 basis points year-over-year.
• Fluid & Metering Technologies (FMT): Gillen said organic orders increased 9% and organic sales increased 2%. Orders were helped by IDEX’s “intelligent water platform” and mining exposure, partially offset by “global softness in chemical end markets.” FMT adjusted EBITDA margin declined 10 basis points year-over-year due to mix and volume deleverage outweighing productivity benefits.
• Fire & Safety/Diversified Products (FSDP): Gillen said organic orders declined 4% and organic sales decreased 1%. Fire & Safety grew “high single digit,” driven by strong demand for fire and rescue tools in North America and stable demand in Europe, offset by an expected decline in dispensing tied to difficult project comparisons. FSDP adjusted EBITDA margin increased 30 basis points year-over-year on productivity improvements.

On the cadence of short-cycle demand, Ashleman described January as soft, February improved, and March “much stronger,” with April holding around March levels. Still, he said the company’s internal “diagnostic” businesses were not moving “in a uniform way,” which he tied to continued geopolitical overhang and customer caution.

Advantage markets focus: space & defense, data center and semiconductors

Ashleman framed space and defense as an example of where IDEX is deploying resources to expand its opportunity set, describing the company’s role providing “critical components that move, manage, filter, focus, and protect data, energy, and fluids in space and defense systems.” He emphasized long program lives and rising system complexity as factors supporting a “multiyear growth runway.”

Management also discussed areas “influenced by AI,” which Gillen said were most meaningful for IDEX in power generation for data centers, semiconductor manufacturing, and optical switching. In response to analyst questions, Ashleman referenced IDEX’s thermal management role in behind-the-meter power generation used to support data centers.

Ashleman and Gillen also discussed HST profitability dynamics. Gillen said getting HST margins back toward historical highs would require improvement in acquired businesses whose margins are “not quite at the segment average yet,” plus a more favorable mix from life sciences. He said the company expects HST flow-through to improve into the mid-30% range in 2026 and sees a path “towards that 40%” as 80/20 actions take hold and as end markets improve.

On life sciences, Ashleman said the business performed “about exactly where we thought it would be,” with core franchises growing low single digits. He cited strength in pharma but pressure from China market dynamics for end customers and from NIH funding and academic pressures.

Capital deployment, cash flow, and balance sheet

IDEX generated $86 million of free cash flow in the first quarter, which Gillen described as the company’s seasonally lowest cash flow period. Free cash flow was down $5 million year-over-year, driven “mostly by higher working capital investment due to higher growth.” Gillen reiterated IDEX’s expectation of at least 100% free cash flow conversion on an annual basis.

The company ended the quarter with approximately $1.1 billion of liquidity and gross leverage of roughly two times. IDEX also continued returning capital to shareholders, paying $53 million in dividends and repurchasing $76 million of shares in the quarter. Ashleman said the company expects to maintain that repurchase pace throughout 2026, and Gillen added that IDEX still has capacity to pursue bolt-on M&A alongside its buyback plans.

Guidance raised; tariff update

Based on first-quarter performance and backlog building, IDEX raised its full-year outlook. Gillen said the company now expects 2026 organic growth of 3% to 4%, up from its prior 1% to 2% guidance. The company’s segment-level outlook assumes “high single-digit growth for HST” and “flattish” expectations for FMT and FSDP.

IDEX maintained its adjusted EBITDA margin outlook of 26.5% to 27% for the year. However, it increased its 2026 adjusted EPS guidance by $0.20 to $8.35 to $8.55. For the second quarter, Gillen guided to 3% to 4% organic growth, 26.5% to 27% adjusted EBITDA margin, and $2.07 to $2.12 adjusted EPS.

On tariffs, Gillen said the company continues to monitor developments and adapt. He noted that IEEPA tariffs have been repealed, but new tariffs have been implemented that are “largely consistent” with those repealed, leading IDEX to not anticipate “much of a net impact” to financial results at present. He added that the company has applied for expected IEEPA refunds and will update investors as the process plays out.

In closing remarks, Ashleman said HST continues to build momentum in targeted advantage markets, with wins that have “long multi-year tails,” while FMT and FSDP showed “encouraging positive signs of early inflection” but still face uncertainty tied to geopolitical factors.

About IDEX NYSE: IEX

IDEX Corporation is a diversified industrial manufacturer specializing in the design, production and distribution of highly engineered fluidics systems, measurement technologies and safety solutions. The company's core offerings include positive-displacement pumps, flow meters, valves, sampling systems and analytical instruments that serve a wide range of end markets such as water treatment, chemical processing, energy, food and beverage, and life sciences. Through its focus on precision engineering and proprietary material science, IDEX delivers products designed for reliability in demanding applications.

Operations at IDEX are organized into three principal segments.

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