IDEX's (IEX) Flow Management Buyout To Boost Energy Business

IDEX Corporation (NYSE:IEX) , on Feb 28, announced that it completed the acquisition of Phoenix, AZ-based Flow Management Devices, LLC. The transaction value was $125 million.

It is worth mentioning here that the buyout deal was announced by IDEX on Jan 29.

Privately-owned Flow Management Devices specializes in providing flow measurement systems, especially for customers in the oil & gas industry. The firm has manufacturing facilities in Arizona, and owns offices in Pittsburgh and Houston. It was founded in 2007 and generates $60 million in revenues globally.

Inside the Headlines

As noted, IDEX will benefit from the integration of Flow Management to its energy group, especially boosting the latter’s pump and metering systems business. Businesses from customers like pipeline operators, refineries and chemical manufacturers are expected to flourish.

It is worth noting here that IDEX’s energy group is part of the company’s Fluid & Metering Technologies segment. The energy group comprises the business of Liquid Controls, SAMPI, Corken and Toptech Systems.

In 2019, the Fluid & Metering Technologies segment accounted for 38% of IDEX’s revenues. Moreover, the energy market accounted for 17% of the Fluid & Metering Technologies segment’s sales in the year.

IDEX’s Inorganic Initiatives

The above-mentioned transaction is consistent with IDEX’s policy of acquiring meaningful businesses to gain access to improve its product lines and market exposure.

In 2018, the company’s acquisition of Phantom Controls’ intellectual property assets (in June) and Finger Lakes Instrumentation (in July) deserves a mention. Further, IDEX acquired Velcora Holding AB, with its Steridose and Roplan businesses, in July 2019. The buyout added strength to the company’s sealing solutions platform.

In fourth-quarter 2019, acquired assets positively impacted IDEX’s sales by 2%. In 2020, the buyouts are predicted to positively impact its revenues by $21 million and earnings by 3 cents per share.

Zacks Rank, Price Performance and Earnings Estimates

With a market capitalization of $11.3 billion, IDEX currently carries a Zacks Rank #4 (Sell). It faces headwinds from forex woes and challenging end markets. Also, impacts of variable compensation, tax rate and growth investments might be dragging.

You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

In the past three months, IDEX’s shares have dipped 6.2% versus the industry’s decline of 2.8%.

The Zacks Consensus Estimate for earnings per share is pegged at $5.74 for 2020 and $6.14 for 2021, marking declines of 4.5% from the respective 60-day-ago figures. Also, estimates represent a year-over-year decline of 1% for 2020 and a dip of 6.9% for 2021.

IDEX Corporation Price and Consensus