Q2 2024 IDEX Corp Earnings Call

Hello and welcome to the IDEX Corporation Q2 2024 Earnings Conference Call-In Webcast. If anyone should require operator assistance, please press star zero.

Operator: Conference Call and Webcast If anyone should require operator assistance, please press star zero. A question and answer session will follow the formal presentation. You may be placed into the question queue at any time by pressing star 1 on your telephone keypad.

A question and answer session will follow the formal presentation. You may be placed into question queue at any time by pressing star 1 on your telephone keypad. As a reminder, this conference is being recorded.

Operator: As a reminder, this conference is being recorded. It's now my pleasure to turn the call over to Wendy Palacios, Vice President, Investor Relations, and PA. Wendy, please go ahead. Good morning, everyone.

Wendy Palacios: It's now my pleasure to turn the call over to Wendy Palacios, Vice President Invest Relations and PA. Wendy, please go ahead.

Wendy Palacios: 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 Second Quarter 2024 Financial Highlights. Last night, we issued a press release outlining our company's financial and operating performance for the three months ending June 30 of 2024. The press release, along with the presentation to be used during today's webcast, can be accessed on our investor website at

Wendy Palacios: Good morning, everyone. This is Webby Palacios, Vice President of FP&A and Investor Relations for IDEX Corporation.

Speaker Change: Thank you for joining us for our discussion of the IDEX Second Quarter 2024 Financial Highlights.

Last night we issued a press release outlining our company's financial and operating performance for the three months ending June 30th of 2024.

The press release along with the presentation to be used during today's webcast can be accessed at our investor website at investors.idexcorp.com.

Wendy Palacios: Joining me today are Eric Ashleman, our Chief Executive Officer and President, and Abhishek Khandelwal, our Senior Vice President and Chief Financial Officer. Following our prepared remarks, we will open the call up for your questions. Turning to slide 2.

Speaker Change: Joining me today are Eric Ashleman, our Chief Executive Officer and President, and Abhishek Khandelwal, our Senior Vice President and Chief Financial Officer.

Speaker Change: Following our prepared remarks, we will open the call up for your questions.

Wendy Palacios: 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 law, including statements regarding events or developments that we expect or anticipate will or may occur in the future. These forward-looking statements are subject to risk and uncertainty. The actual results might differ materially from any forward-looking statements that we make today, and we do not assume any obligation to update them.

Speaker Change: Turning to slide 2, please note that during today's call we will present certain non-GAAP financial measures.

Speaker Change: We will also make forward-looking statements within the meaning of the federal securities law.

Speaker Change: including statements regarding events or developments that we expect or anticipate will or may occur in the future.

Speaker Change: These forward-looking statements are subject to risk and uncertainty. Actual results might differ materially from any forward-looking statements that we make today.

Wendy Palacios: Information regarding these factors, which may cause actual results to differ materially from these foregoing statements, is available on our website in our SEC file. With that, I'll now turn this call over to CEO and President Eric. Thanks, Wendy. And good morning, everyone.

Speaker Change: And we do not assume any obligation to update that.

Speaker Change: Information regarding these factors may cause actual results to differ entirely from these forward-looking statements.

Speaker Change: is available on our website and in our FCC filings.

Speaker Change: With that, I'll now turn this call over to CEO and President Eric Ashleman.

Eric Ashleman: I'm on slide 8. IDEX delivered against expectations in Q2 despite increasing macro uncertainty, with both adjusted EBITDA margin and adjusted EPS coming in slightly above our previous guidance. I'd like to thank the IDEX teams around the world for their strong execution on behalf of our customers and shareholders. As mentioned on our first quarter call, we saw a noticeable uptick in industrial day rates in our closest-to-consumption FMT businesses in December. This continued through the end of February but pulled back a bit in March as a surprisingly firm inflation report reduced the likelihood of a near-term interest rate rise. These daily order rates are largely stable now and in line with our original 2024 assumption.

Eric Ashleman: However, as the U.S. election cycle has come into full daily view, creating even more uncertainty given the perceived disparity of outcome. Tina Polbeck and the Project Committee. There's no talk of project cancellation. Just a quarter or two push to the right.

Eric Ashleman: Thanks, Wendy, and good morning, everyone. I'm on slide three.

Eric Ashleman: IDEX delivered against expectations in Q2 despite increasing macro uncertainty, with both adjusted EBITDA margin and adjusted EPS coming in slightly above our previous guidance. I'd like to thank the IDEX teams around the world for their strong execution on behalf of our customers and shareholders.

Eric Ashleman: As mentioned on our first quarter call, we saw a noticeable uptick in industrial day rates in our closest-to-consumption FMT businesses in December .

Eric Ashleman: This continued through the end of February , but pulled back a bit in March as a surprisingly firm inflation report reduced the likelihood of near-term interest rate relief.

Eric Ashleman: These daily order rates are largely stable now and in line with our original 2024 assumptions.

Eric Ashleman: However, as the U.S. election cycle has come into full daily view, creating even more uncertainty given the perceived disparity of outcomes, we've seen a pullback in project commitments.

Eric Ashleman: We'll continue to watch these businesses as open economic and political questions are resolved for any early signs of inflection. However, within the HST segment, we don't yet have enough growth catalysts to overcome the pressures facing our life science and analytical instrumentation. Our HST industrial markets are performing as described earlier for FMT, with stable day rates and deferred project activity. Despite some encouraging discussions from our semiconductor customers asking us to get ready to launch to support the next cycle of growth, we just haven't seen it yet turn into accelerating releases or increased orders. We think we're close here as most major players are pointing to likely strong growth in 2025.

Eric Ashleman: There's no talk of project cancellation, just a quarter or two push to the right. We'll continue to watch these businesses as open economic and political questions are resolved for any early signs of inflection.

Eric Ashleman: Within the HST segment, we don't yet have enough growth catalysts to overcome the pressures facing our life science and analytical instrumentation markets.

Eric Ashleman: Our HST industrial markets are performing as described earlier for FMT with stable day rates and deferred project activity.

Eric Ashleman: We think we're close here, as most major players are pointing to likely strong growth in 2025.

Eric Ashleman: Life sciences and analytical instrumentation performed in line with expectations, with a strong focus on innovations to support the next cycle of growth and excellent productivity to support margins as we await market recovery. As we said at the beginning of the year, we believe we are unlikely to see positive inflection for these markets until 2025. FSDP had a strong quarter. Our dispensing teams are performing exceptionally well within emerging markets.

Eric Ashleman: and excellent productivity to support margins as we await market recovery. As we said at the beginning of the year, we believe we are unlikely to see positive inflection for these markets until 2025.

Eric Ashleman: Their share gains within India are nicely offsetting much of the pressure from their North American markets as large retailers step back following a strong two-year replenishment cycle. Meanwhile, our fire business continues to grow as industry throughput improves. They are also growing their share through higher adoption of mobile platform automation. Finally, Bandit was affected by softness in auto and industrial demand but continues to deliver very strong, above-average profitability. Finally, we were thrilled last week to announce the acquisition of Mott.

Eric Ashleman: Our fire business continues to grow as industry throughput improves.

Eric Ashleman: They are also growing share through higher adoption of mobile platform automation.

Eric Ashleman: Finally, Bandit was affected by softness in auto and industrial demand, but continues to deliver very strong above-average profitability. Finally, we were thrilled last week to announce the acquisition of Mott. We'll talk a bit more about the company in a moment as we update our work within capital deployment.

Eric Ashleman: We'll talk a bit more about the company in a moment as we update our work within Capital Deployment. Turning to slide four, although market headwinds persist, we are leveraging our strong technical and innovation capabilities, as well as our close customer partnerships, to position our business for growth across technology-enabled markets and applications. Our Materials Processing Technology MP350 Microlyzer Processor won the Biotech Innovation Award at Interfit.

Eric Ashleman: Turning to slide four.

Eric Ashleman: Although market headwinds persist, we are leveraging our strong technical and innovation capabilities, as well as our close customer partnerships, to position our business for growth across technology-enabled markets and applications.

Eric Ashleman: Our Materials Processing Technology MP350 Microlyzer Processor won the Biotech Innovation Award at Interfex, the leading global pharmaceutical and biotechnology conference.

Eric Ashleman: The Leading Global Pharmaceutical and Biotechnology Congress. The MP350 is designed for production-scale cell disruption, used in the manufacturing of many biotech products such as antigens for vaccines and Viral Vectors Supporting Gene Therapy. In the life sciences area, our new MELS-GRIO X-PLAN CCG line of series imaging.

Eric Ashleman: The MP350 is designed for production-scale cell disruption, which is used in the manufacturing of many biotech products, such as antigens for vaccines and viral vectors supporting gene therapy.

Eric Ashleman: In the life sciences area, our new MELS-GRIO X-PLAN CCG Lens Series Imaging System, released in February , is providing customer access to superior quality optics with off-the-shelf leave time.

Eric Ashleman: Released in February, it's providing customer access to superior quality optics with off-the-shelf lead... This aligns with our strategy to deliver leading innovation and operational scale to support our customers from prototype to production. During the second quarter, our Intelligent Water Inspection Team at EPEC launched Verisite Ultra. This inspection technology tackles challenging infrastructures with remote access and an intuitive digital interface.

Eric Ashleman: This aligns with our strategy to deliver leading innovation and operational scale to support our customers from prototype to production, positioning us well for growth.

Eric Ashleman: During the second quarter, our Intelligent Water Inspection team at EPEC launched Verisight Ultra. This inspection technology tackles challenging infrastructures with remote access and an intuitive digital interface, capturing and converting data into powerful insights in the inspection of wastewater management systems.

Eric Ashleman: Capturing and Converting Data into Powerful Insights in the Inspection of Wastewater Manifestos. This is one of the many examples of how we're helping municipalities deliver clean water to their communities. We also received customer approval at our Trevor Business for the next generation of sustainable ultra-pure water heater and pump applications used to support semiconductor wafer fabrication. Quantum XNT heaters have saved semiconductor manufacturers over half a billion liters of ultra-pure water this year alone.

Eric Ashleman: This is one of the many examples of how we're helping municipalities deliver clean water to their communities.

Eric Ashleman: We also received customer approval at our Trebor business for the next generation of sustainable, ultra-pure water heater and pump applications used to support the semiconductor wafer fabrication process.

Eric Ashleman: The Quantum XNT heaters have saved semiconductor manufacturers over half a billion liters of ultra-pure water this year alone. We anticipate this will provide long-term growth as the semiconductor market re-accelerates.

Eric Ashleman: We anticipate this will provide long-term growth as the semiconductor market re-accelerates. And in our fire and safety group, our teams unveiled the Wildcat solution for brush trucks used to fight wildland fires. Through a touchscreen application in the cab, firefighters can take control of essential water path functions while stationary or on the move in a much safer environment.

Eric Ashleman: And in our fire and safety group, our teams unveiled the wildcat solution for brush trucks used to fight wildland fires.

Eric Ashleman: Through a touchscreen application in the cab, firefighters can take control of essential water path functions while stationary or on the move in a much safer environment. With wildfire season clearly upon us in North America, this is a critical solution that can really make a difference.

Eric Ashleman: If wildfire season is clearly upon us in North America, this is a critical solution that can really make a difference. Now, turning to our Discipline Capital Deployment Initiatives on slide 5. We continue to leverage our strong balance sheet to tune our portfolio for profitable growth through strategic equity. Last week, we announced the acquisition of Mott Corporation, a leader in the design and manufacturing of sintered porous material structures and flow control solutions with deep material science knowledge and process control capability. Mott develops highly-engineered, configurable, mission-critical solutions for scalable, high-quality applications.

Speaker Change: Now, turning to our Discipline Capital Deployment Initiatives on slide 5.

Speaker Change: We continue to lever our strong balance sheet to tune our portfolio for profitable growth through strategic acquisitions. Last week, we announced the acquisition of Mott Corporation.

Eric Ashleman: Their business is complementary to our broader applied material science technology businesses within HST, including Muon, STC, and optical technology. And perhaps most impressively, they deliver for customers with an outstanding culture that fits really well with them. We believe the addition of Mott will deliver value for Idex via strong organic growth. Keep It a Margin Expansion Above HST Average and Near-Term EPS Accretion In addition to Mott, we acquired a small company, Subterra, on July 25, whose terrorist technologies help digitize underground information. It will become part of the Intelligent Water Platform within our FMT segment. Adding an important piece to our analytic solution across wastewater collection.

Eric Ashleman: a leader in the design and manufacturing of sintered porous material structures and flow control solutions with deep material science knowledge and process control capabilities.

Eric Ashleman: Mott develops highly-engineered, configurable, mission-critical solutions for scalable, high-quality applications.

Eric Ashleman: Their business is complementary to our broader applied materials science technology businesses within HST, including Muon, STC, and optical technologies

Speaker Change: And perhaps most impressively, they deliver for customers with an outstanding culture that fits really well with ours. We believe the addition of Mott will deliver value for IDEX via strong organic growth, EBITDA margin expansion to above HST average, and near-term EPS accretion.

Eric Ashleman: In addition to Mott, we acquired a small company, Subterra, on July 25th.

Eric Ashleman: Subterra's technologies help digitize underground infrastructure. It will become part of the Intelligent Water Platform within our FMT segment.

Eric Ashleman: Finally, as we optimize our portfolio, we continually reconsider the long-term growth prospects for all of our businesses. Occasionally, and typically with smaller companies that lack a path to scale, we decide to sell to an owner that can better maximize... During the second quarter, we divested Alpha Valvoli for $45.5 million in cash. They operated within our FMT segment. And with that, I'll turn it over to Abhi to discuss our finance. Thanks,

Eric Ashleman: adding an important piece to our analytic solution across wastewater collection systems.

Eric Ashleman: Finally, as we optimize our portfolio, we continually reconsider the long-term growth prospects for all of our businesses. Occasionally, and typically with smaller companies that lack a path to scale, we decide to sell to an owner that can better maximize potential.

Abhi: During the second quarter, we divested Alfa Valvoli for $45.5 million in cash. They operated within our FMT segment. With that, I'll turn it over to Abhi to discuss our financial results.

Abhishek Khandelwal: Turning to the consolidated financial results on slide... Please note that all comparisons are against the prior year period, unless otherwise stated. Orders of $773 million were up 1% on a reported basis and up 2% organically. We saw mid-single-digit organic growth in FSDP, and I just, which was partially offset by Mid-Single-Digit Decline, an FMT, driven by projects being pushed to the right. Second quarter sales of $807 million were down 5% reported and 4% organic.

Abhi: Thanks, Eric. Turning to the consolidated financial results on slide six.

Abhi: Please note that all comparisons are against the prior year period, unless otherwise stated.

Abhi: Orders of $773 million were up 1% on a reported basis and up 2% organically.

Abhi: We saw mid-single-digit organic growth in FSDP and HST, which were partially offset by mid-single-digit decline in FMT driven by projects being pushed to the right.

Eric Ashleman: Second quarter sales of $807 million was down 5% reported and 4% organically.

Abhishek Khandelwal: We experienced an 11% decline in HST, while FMT and FSDP were essentially flat as compared to the prior year period. Second quarter gross margin, an adjusted gross margin of 45.4%, an expansion of 70 basis points, driven by strong price costs and favorable operational productivity, partially offset by unfavorable mix, higher Employee-Related Costs, and lower volume left.

Abhi: We experienced an 11% decline in HST while FMT and FSDP were essentially flat as compared to the prior year period.

Abhi: Second quarter gross margin and adjusted gross margin were 45.4%, an expansion of 70 basis points, driven by strong price cost and favorable operational productivity, partially offset by unfavorable mix.

Abhi: Higher Employee Related Costs and Lower Volume Leverage.

Abhishek Khandelwal: The second quarter adjusted EBITDA margin was 27.8%, down 60 basis points. However, as compared to Q1, adjusted EBITDA was up 180 basis points. This strong sequential expansion highlights our team's continued focus on deploying 8020 to drive profitability as we manage through challenging market dynamics. I will discuss the drivers of second quarter adjusted EBITDA on the next slide in a moment. On a gap basis, our Q2 effective tax rate was 21.2% versus 22.4% in the prior period.

Eric Ashleman: Second quarter adjusted EBITDA margin was 27.8% down 60 basis points.

Eric Ashleman: However, as compared to Q1, adjusted EBITDA was up 180 basis points.

Eric Ashleman: This strong sequential expansion highlights our team's continued focus on deploying 80-20 to drive profitability as we manage through challenging market dynamics.

Eric Ashleman: I will discuss the drivers of second quarter adjusted EBITDA on the next slide in a moment.

Eric Ashleman: On a gap basis, our Q2 effective tax rate was 21.2% versus 22.4% in the prior period.

Abhishek Khandelwal: The decrease was primarily due to a discrete benefit from a research and development incentive resolution related to prior years from an international taxing authority. Second quarter net income was $141 million, generating an EPS of $1.86 billion. Adjusted net income was $156 million, with adjusted EPS of $2.06, down $0.12. Free cash flow for the quarter was $118 million, a decrease of 2%.

Eric Ashleman: The decrease was primarily due to a discrete benefit from Research and Development Incentive Resolution related to prior years.

Eric Ashleman: from an international taxing authority.

Eric Ashleman: Second quarter net income was $141 million, generating an EPS of $1.86.

Eric Ashleman: Adjusted net income was $156 million with adjusted EPS of $2.06 down $0.12.

Abhishek Khandelwal: We achieved a conversion rate of 75% of adjusted net income, a 310 basis point improvement on a year-over-year basis. We have a strong balance sheet, and this quarter we repaid $25 million of the $50 million previously outstanding debt under our term facility, and we paid $52.2 million in cash dividends. This was the 119th consecutive quarterly dividend payout. Moving on to slide seven, which details the adjusted EBITDA drive for the second quarter. Adjusted EBITDA decreased by 17 months.

Eric Ashleman: Free cash flow for the quarter was $118 million, a decrease of 2%. We achieved a conversion rate of 75% of adjusted net income, a 310 basis point improvement on a year-over-year basis.

Eric Ashleman: We have a strong balance sheet, and this quarter we repaid $25 million of the $50 million previously outstanding debt under our term facility, and we paid $52.2 million in cash dividends.

Eric Ashleman: The dividend was the 119th consecutive quarterly dividend payout.

Eric Ashleman: Moving on to slide 7, which details the adjusted EBITDA drivers.

Abhishek Khandelwal: The 4% Organic Sales Reduction unfavorably impacted adjusted EBITDA by $23 million flowing through at a prior Adjusted Gross Margin break. The negative volume flow-through was partially offset by a strong price-cost spread of 100 basis points in the quarter and operational productivity resulting in a $13 million benefit over the prior year. In the quarter, we saw an unfavorable mix driven by dispensing and lower overall industrial activity. These factors resulted in a negative 48.7% organic flow.

Eric Ashleman: For the second quarter, adjusted EBITDA decreased by $17 million.

Eric Ashleman: The 4% organic sales reduction unfavorably impacted adjusted EBITDA by $23 million.

Eric Ashleman: flowing through at a prior Adjusted Gross Margin rate.

Eric Ashleman: The negative volume flow-through was partially offset by a strong price-cost spread of 100 basis points in the quarter and operational productivity, resulting in a $13 million benefit over the prior year.

Eric Ashleman: In the quarter, we saw unfavorable mix driven by dispensing and lower overall industrial activity.

Eric Ashleman: These factors resulted in a negative 48.7% organic flow-through.

Abhishek Khandelwal: The impact of FX lowered adjusted EBITDA by $1 million, while acquisitions and other divestitures were flat on a quarter over quarter basis as the benefits from our acquisitions were offset by adjusted EBITDA from divested companies. This resulted in a negative 42.4% flow-through for the second quarter. I will now review segment-level performance. Turning to slide 8, an FMT section. In Q2, orders decreased 4% organically, driven primarily by the cyclical decline in the ag market and the push out of industrial project activity, as Eric discussed in his opening remarks.

Eric Ashleman: The impact of FX lowered adjusted EBITDA by $1 million, while acquisitions net of divestitures was flat on a quarter-over-quarter basis, as the benefits from our acquisitions were offset by adjusted EBITDA from divested companies.

Eric Ashleman: This resulted in a negative 42.4% flow-through for the second quarter.

Eric Ashleman: I will now review segment-level performance.

Eric Ashleman: Turning to slide 8, an FMT segment.

Speaker Change: In Q2, orders decreased 4% organically, driven primarily by the cyclical decline in the ag market, and pushed out of industrial project activity, as Eric discussed in his opening remarks.

Abhishek Khandelwal: Organic sales were flat at lower volumes, particularly in our industrial straight-in-pump businesses, were offset by continued strong price caps. More specifically, we are seeing stable data rates across industrials; we're seeing project spending pushouts in the current macroeconomic climate. Our water businesses continue to benefit from strong municipal activity. While the ag markets are experiencing a cyclical downturn, our teams continue to make their own luck, and we are pleased with our team's performance against the current bad weather. Adjusted EBITDA margin decreased 140 basis points due to higher discretionary spending, lower volume leverage, and higher employee-related costs, partially offset by a strong price-cost spread and favorable operational productivity.

Eric Ashleman: Organic sales were flat at lower volumes, particularly in our industrial station pump businesses were offset by continued strong price capture.

Eric Ashleman: More specifically, we are seeing stable data rates across industrials, we're seeing project spending push-outs in the current macroeconomic climate.

Eric Ashleman: Our water businesses continue to benefit from strong municipal activity.

Eric Ashleman: While the ag markets are experiencing a cyclical downturn, our teams continue to make their own luck, and we are pleased with our team's performance against the current backdrop.

Eric Ashleman: Adjusted EBITDA margin decreased 140 basis points due to higher discretionary spending, lower volume leverage, and higher employee-related costs, partially offset by strong price-cost spread and favorable operational productivity.

Abhishek Khandelwal: Moving on to slide 9 in our HST section, despite a slower than expected recovery in the semiconductor industry and delayed industrial projects due to demand for software, organic orders are up 5% year-over-year. However, organic sales were down 11%, primarily driven by life sciences and analytical instrumentation markets.

Eric Ashleman: Moving on to slide 9 in our HST segment.

Eric Ashleman: Despite slower than expected recovery in the semiconductor industry and delayed industrial projects due to demand softness, organic orders were up 5% year over year.

Eric Ashleman: Organic sales were down 11% primarily driven by life sciences and analytical instrumentation markets.

Abhishek Khandelwal: While the market is experiencing a transitional period, we continue to work closely with our customers on innovation as we position ourselves for growth while we wait for the markets to recover. We are seeing early signs of encouragement in our semi-continental markets, but we have not yet seen an inflection in our orders.

Eric Ashleman: While the market is experiencing a transitional period, we continue to work closely with our customers on innovation as we position ourselves for growth while we wait for the markets to recover.

Eric Ashleman: While we are seeing early signs of encouragement in our semi-continent markets, we have not yet seen the inflection in our orders.

Abhishek Khandelwal: In line with our SMT industrial businesses, our HST industrial businesses are also experiencing project pushback. Q2 adjusted EBITDA margin for HST improved 10 basis points year over year, primarily due to the net accretive impact of acquisitions in the West, on an organic basis. Adjusted EBITDA margin decreased 20 basis points driven by lower volume leverage, unfavorable mix, and higher employee-related costs, partially offset by operational productivity, strong price costs, and lower discretionary spending.

Eric Ashleman: In line with our FMT industrial businesses, our HST industrial businesses are also experiencing project push-outs.

Eric Ashleman: Q2 adjusted EBITDA margin for HST improved 10 basis points year-over-year, primarily due to the net accretive impact of acquisitions and divestitures.

Eric Ashleman: On an organic basis, adjusted EBITDA margin decreased 20 basis points driven by lower volume leverage, unfavorable mix, and higher employee-related costs, partially offset by operational productivity, strong price cost, and lower discretionary spending.

Abhishek Khandelwal: sequentially, margins improved 150 basis points despite a sequential sales decline, which is a reflection of our strong focus on driving operational efficiency. Now turning to slide 10, organic orders in a fire and safety diversified product segment were up 6%.

Eric Ashleman: Sequentially, margins improved 150 basis points despite a sequential sales decline, which is a reflection of our strong focus on driving operational efficiency.

Eric Ashleman: Now turning to slide 10.

Eric Ashleman: Organic orders in a fire and safety diversified product segment were up 6%.

Abhishek Khandelwal: Organic net sales were up 1% compared to the prior year, driven by price capture across all markets and continued dispensing project wins in emerging markets. We are seeing positive trends within the fire and safety business as the OEMs continue to work their backlogs down. Bandits Saw Weakness Tied to Auto and Weaker Industrial Project Activities. Q2 adjusted EBITDA margin declined 40 basis points year over year, primarily due to higher employee-related costs and lower volume leverage, partially offset by strong price cost and operational block. With that, I would like to provide an update on our outlook for the third quarter and full year on slide 11. Note that our guidance does not contemplate the impact of future acquisitions.

Eric Ashleman: Organic net sales were up 1% compared to the prior year, driven by price capture across all markets and continued dispensing project wins in emerging markets.

Eric Ashleman: We are seeing positive trends within the fire and safety business as the OEMs continue to work their backlogs down. Bandits saw weakness tied to auto and weaker industrial project activity.

Eric Ashleman: Q2 adjusted EBITDA margin declined 40 basis points year-over-year, primarily due to higher employee-related costs and lower volume leverage.

Eric Ashleman: partially offset by strong price cost and operational productivity.

Eric Ashleman: With that, I would like to provide an update on our outlook for the third quarter and full year on slide 11.

Abhishek Khandelwal: For the third quarter, we project organic sales to increase 0 to 1% compared to the prior year. We anticipate an adjusted EBITDA margin of approximately 27%, gap EPS in the range of $1.61 to $1.66, and adjusted EPS in the range of $1.85 to $1.90, on a year-over-year basis. We expect a low single-digit organic sales decline in HST, given our current view on the timing of end market recovery. We are revising our full year out.

Eric Ashleman: Note that our guidance does not contemplate the impact from future acquisitions.

Eric Ashleman: For the third quarter, we project organic sales to increase 0 to 1 percent compared to prior year.

Eric Ashleman: We anticipate an adjusted EBITDA margin of approximately 27%.

Eric Ashleman: with gap EPS in the range of $1.61 to $1.66 and adjusted EPS in the range of $1.85 to $1.90.

Eric Ashleman: On a year-over-year basis, we expect low single-digit organic sales decline in HST and FSDP, and low single-digit growth in FMT.

Abhishek Khandelwal: We now expect revenue to decline by 1-2% compared to a prior outlook of growth of 0-2%. Given the devised organic assumption... we expect a four-year adjusted EBITDA margin of approximately 27% versus a prior outlook of approximately 28%. We project GAAP diluted EPS to range from $6.85 to $6.95, compared to a previous guide. $7.13 to $7.42, and Adjusted EPS to range from $7.80 to $7.96, versus a previous outflow of $8.15 to $8.45.

Eric Ashleman: Given our current view on the timing of end-market recoveries, we are revising our full-year outlook.

Eric Ashleman: We now expect revenue to decline.

Eric Ashleman: 1-2% compared to a prior outlook of growth of 0-2%.

Eric Ashleman: Given the revised organic assumptions, we expect a fully adjusted EBITDA margin of approximately 27% versus a prior outlook of approximately 28%.

Eric Ashleman: We project GAAP diluted EPS to range from $6.85 to $6.95 compared to our previous guidance of $7.13 to $7.43.

Eric Ashleman: An adjusted EPS to range from $7.80 to $7.90 versus a previous outlook of $8.15 to $8.45.

Abhishek Khandelwal: Update to full-year revenue guidance implies mixed single-digit organic sales decline in that with low single-digit growth in FMT and FSG. We will continue to closely monitor the end markets while maintaining our focused effort on driving profitable growth. With that, I will turn it over to Eric for closing remarks. Thanks, Abhi. I'm on slide 12.

Eric Ashleman: Update to a full year revenue guidance.

Eric Ashleman: implies mixed single-digit organic sales decline in HST.

Eric Ashleman: with low single-digit growth in FMT and FSDP.

Eric Ashleman: We will continue to closely monitor the end markets while maintaining our focused effort on driving profitable growth. With that, I will turn it over to Eric for closing remarks.

Eric Ashleman: Today, along the way, we touched on each of our key value drivers, organic growth, inorganic growth, and margin expansion. We continue to apply our IDEX operating model and 80-20 philosophy across all aspects of our business. It frames our culture and drives our growth and profitability. We are innovating and winning today with our best 80s customers and are very attractive. We believe broader economic support will really amplify these efforts. We have stepped up inorganic efforts with a series of thematic proprietary activities intended to drive above average growth and advantage. And we continue to strip complexity out of our businesses to support maximum financial leverage.

Eric Ashleman: Thanks, Abhi. I'm on slide 12. Today, along the way, we touched on each of our key value drivers, organic growth, inorganic growth, and margin expansion.

Eric Ashleman: We continue to apply our IDEX operating model and 80-20 philosophy across all aspects of our business. It frames our culture and drives our growth and profitability. We are innovating and winning today with our best 80s customers in very attractive markets.

Eric Ashleman: We believe broader economic support will really amplify these efforts over time.

Eric Ashleman: We have stepped up inorganic efforts with a series of thematic proprietary acquisitions intended to drive above-average growth in advantaged markets, and we continue to strip complexity out of our businesses to support maximum financial leverage and impact.

Eric Ashleman: Thanks again to our IDEX employees and partners around the world for all that you do to drive trusted solutions that improve. And with that, I'll turn it over to the operator. Thank you. We will now be conducting a question and answer session. If you would like to be placed in the question queue, please press star 1 on your telephone keypad. You may press star two if you'd like to remove your question from the queue.

Eric Ashleman: Thanks again to our IDEX employees and partners around the world for all that you do to drive trusted solutions that improve lives. With that, I'll turn it over to the operator for your questions.

Speaker Change: Thank you. We will now be conducting a question and answer session. If you would like to be placed into the question queue, please press star 1 on your telephone keypad.

Operator: One moment, please, while we poll for questions. And as a reminder, that's star number one to be placed in the question queue. Our first question is coming from Mike Halloran from Baird. Your line is now live. Hey, good morning, everyone.

Speaker Change: You may press star 2 if you'd like to remove your question from the queue.

Speaker Change: One moment please while we poll for questions and as a reminder that star 1 to be placed into question queue.

Mike Halloran: Hi Mike. So let's start by understanding the change in the guide. If I hear the comments right, Eric, the underlying daily rates were relatively stable in the quarter.

Eric Ashleman: Our first question is coming from Mike Halloran from Baird. Your line is now live.

Eric Ashleman: Hey, good morning everyone. Hi Mike. Hi Mike.

Speaker Change: So, let's start by understanding the change in the guide here. If I hear the comments right, Eric, the underlying daily rates were relatively stable in the quarter.

Eric Ashleman: It's in demand commentary has, I don't know, maybe a touch of optimism to it. But there have been more project pushouts and timing-related things. So the core of the question is, what's really changed from an end market dynamic? As we move through the second quarter into the back half, you know, the magnitude of the drop in organic trends in the back half versus where it was previously seems more severe than the comments you're making.

Speaker Change: It's in demand commentary has, I don't know, maybe a touch of optimism to it.

Mike Halloran: But there's been more project pushouts and timing related things. So the core of the question is what's really changed from an end market dynamic?

Speaker Change: As we move through the second quarter into the back half, you know, the magnitude of the drop of the organic trends in the back half versus where it was previously seems more severe than the comments you're making. So just kind of want to bridge the gap between the two, if you would.

Eric Ashleman: So just kind of want to bridge the gap between the two. Yeah, so look, I think you hit the first part of it dead on here. I kind of walked, and I went back a little further, kind of walked it from December all the way up to the present.

Speaker Change: Yeah, so so look I think you you hit the first part of it dead-on here I kind of walked and I went back a little further kind of walked it from December all the way up to the present and

Speaker Change: We've seen kind of this level of core rate stabilization since that initial pullback from the exuberance of Q1, right around that March time, and it held through the quarter. And that's across the board in FMT and the industrial-like portions of HST.

Eric Ashleman: And, you know, we've seen kind of this level of core rate stabilization since that, you know, initial pullback from the exuberance of Q1, right around that March time, and it held through the quarter. And that's across the board in FMT and the industrial like portions of HSA. I think the two components that are most different from us, relative to the last guidance.., is we had anticipated some semi-con launch in HST, and, you know, there's a lot of signals sent our way around ramps up in capacity, I mean, obviously that sector had trouble with it last time, it just didn't materialize into orders, and in fact we had some deferments in that area, you know, pretty late, in the late innings of the second quarter, pushed into the back half, you know, that we've now got to keep an eye on.

Speaker Change: I think the two components that are most different from us relative to the last guidance

Speaker Change: is we had anticipated some semi-con launch in HST and you know there's a lot of signals sent our way around ramps up in capacity I mean obviously that sector had trouble with it last time.

Speaker Change: It just didn't materialize into orders, and in fact we had some deferments in that area pretty late, in the late innings of the second quarter, pushed into the back half that we've now got to keep an eye on.

Eric Ashleman: The second piece, you know, we never talk about project business as a massive part of IDEX, but I've got to say that, you know, what changed here sort of from mid-May on, and we saw a lot of it in June, some of it continuing into July. I think it's pinging off the two uncertainty elements that I talked about here.

Speaker Change: The second piece, you know, we never talk about project business as a massive part of IDEX, but I've got to say that, you know, what changed here sort of mid-May on, and we saw a lot of it in June , some of it continuing into July , I think it's pinging off the two uncertainty elements that I talked about here.

Eric Ashleman: It's this notion of inflation and rate relief and when it's going to come, which has been sort of out there since that March time frame. Just a lot of political uncertainty is kind of the second thing. So we've had these conversations with distributors, OEMs, we've asked them about their own businesses, what they are thinking about it, and you kind of consistently hear those two things. And then for us, it's manifested, as I said in the opening comments, not as cancellation or pullback in resourcing, but just approval loops that take longer to come together. So for us, that worked out.

Speaker Change: The notion of inflation and rate relief and when it's going to come, which has been sort of out there since that March time frame.

Speaker Change: Just a lot of political uncertainty is kind of the second thing so

Speaker Change: And we've had these conversations with distributors, OEMs.

Speaker Change: We've asked them about their own businesses, how are you thinking about it, and you kind of consistently hear those two things. And then for us, it's manifested, as I said in the opening comments, not as cancellation or pullback in resourcing, but just approval loops that take longer to come together.

Eric Ashleman: We saw it in FMT in a few sectors, we saw it across some of the markets in HST, and we saw it in that, frankly, the growth initiative file that we also referenced here that we were counting on to lift a bit for us in the back half. And in fact, some of those projects, too, have that same narrative and overhang. So I think the optimism through all of that is that, ultimately, those questions are going to be resolved.

Speaker Change: So for us, that played out, we saw it in FMT in a few sectors, we saw it across some of the markets in HST, and we saw it in that, frankly, the growth initiative file that we also referenced here that we were counting on to lift a bit for us in the back half. And in fact, some of those projects, too, have that same narrative and overhang.

Speaker Change: So I think the optimism through all of that is that ultimately those questions are going to be resolved. As they're resolved, the fact that these are still resourced, we're still engaged, we're still talking about what comes next.

Eric Ashleman: As they're resolved, the fact that these are still resourced, we're still engaged, we're still talking about what comes next, I think that's where the confidence comes from, and the fact that it's sitting on a core foundation, you know, those day rates, what that tells you is that the system's still operating, it's still effective, people are maintaining things. You know, those two pieces together give you the long-term view that I think, eventually, this will sort itself out.

Speaker Change: I think that's where the confidence comes from and the fact that it's sitting on a core foundation. You know, those day rates, what that tells you is that the system's still operating, it's still effective, people are maintaining things. You know, those two pieces together give you the long-term view that I think eventually this, you know, sorts itself out.

Eric Ashleman: So the follow-on from that then is how do you think this recovery curves and plays out? If you listen to your comments on a lot of the projects, the activity is still there, more push out, more timing-oriented, and some stability on the daily rate. Is this a scenario where when these things start hitting, we could see a pretty rapid recovery pace? Not saying this year, not even asking for a timing component to it, or are you thinking something a little bit more iterative and modest as we think about moving into 25? Because at the end of the day, it seems like you're saying...

Speaker Change: So the follow then up on that then is how do you think this recovery curves and plays out if you listen to your comments on a lot of the projects the activity still there more push out more timing oriented and some stability on the daily rates?

Speaker Change: Is this a scenario when these things start hitting, we could see a pretty rapid recovery pace?

Speaker Change: Not saying this year, not even asking for a timing component to it, or are you thinking something a little bit more iterative and modest as we think about moving into 25? Because at the end of the day it seems like you're saying

Eric Ashleman: There are a lot of things underneath the surface to be really positive about, and it's just a question of when they hit. And so just trying to understand the recovery timing from your point of view. I'll kind of go through that in two dimensions, and I'm sure the second dimension we'll talk about as well in terms of those kind of core sectors in HST that have been pressured for a while. But if I start, you know, where I just left off in the last discussion.

Speaker Change: There's a lot of things underneath the surface to be really positive about, it's just a question of when they hit, so just trying to understand the recovery time.

Speaker Change: I'll kind of go through that in two dimensions, and I'm sure the second dimension we'll talk about as well in terms of those kind of core sectors in HST that have been pressured for a while. But if I start, you know, where I just left off on the last discussion.

Eric Ashleman: You know, the uncertainty attributable to those two dynamics, you know, the kind of interest rate and where that's going to go, interest rate travel, and geopolitical situations, good shot those are resolved to some degree here as we close out the year. Now, we've seen on other occasions when things like that have been resolved, you know, and there's a lot of captive energy, things have started pretty aggressively. We'll have to see.

Speaker Change: You know the uncertainty attributable to those two dynamics

Allison Lausas: Unknown Executive, Allison Lausas

Eric Ashleman: I mean, rates have been high for a while now. You know, does it take a while to fire that engine back up again in terms of investment? You know, Q4 and what we see in kind of the book to bill ratio there, I think, given just the nature of where the election is and where some of these other decisions are going to play out, will be a key input for us to understand the kind of rate of travel into 25.

Speaker Change: We'll have to see. We'll have to see. I mean, rates have been high for a while now. Does it take a while to fire that engine back up again in terms of investment?

Speaker Change: You know, Q4 and what we see in kind of the book-to-bill ratio there, I think given just the nature of where the election is and where some of these other decisions are going to play out, will be a key input for us to understand kind of rate of travel into 25.

Eric Ashleman: But I would say that the things that are embedded in those projects, the solutions that people are addressing with our technology, the things that are being extended now, I mean, frankly, they're overdue. They need to happen.

Speaker Change: But I would say that the things that are embedded in those projects, the solutions that people are addressing with our technology, the things that are being elongated now, I mean, frankly, they're overdue. They need to happen. We've kind of talked about this for a while, and I think...

Eric Ashleman: We've kind of talked about this for a while, and I think I'm pretty optimistic that these will ultimately get deployed and get deployed in a way that's favorable for us as we go forward. I think the other side of it is where we're going to come back and take an eye at the life science and analytical instrumentation sector, which, as you know, has been kind of flat for us for a while now after an initial slide of recalibration in the first half of last year.

Speaker Change: I'm pretty optimistic that those ultimately get deployed and get deployed in a way that's favorable for us as we go forward.

Speaker Change: I think the other side of it, you know, that's where we're going to come back and...

Speaker Change: Take an eye at the life science and analytical instrumentation sector, which as you know has been kind of flat for us for a while now, after an initial slide of recalibration in the first half of last year.

Eric Ashleman: I think there's a little optimism there as well in the conversations we're having that we're closer to the end of that cycle than the middle or the beginning. We're coming up on, by the end of the year, it'll be about two years.

Speaker Change: You know, and I think there's a little optimism there as well in the conversations we're having that we're closer to the end of that cycle than the middle or the beginning.

Eric Ashleman: We've been experiencing that as our customers. We are now starting to look at the life cycle of the technology that's out there and the opportunity for refresh. We're seeing indications of things like accelerating drug discovery in trials.

Speaker Change: You know, we're coming up on, by the end of the year, it'll be about two years.

Speaker Change: You know that we've been experiencing that as our customers.

Speaker Change: You start to now look at the life cycle of the technology that's out there and the opportunity for refresh.

Eric Ashleman: There are a lot of innovation announcements that our customers are talking about, and we've got great content on the gear that lines up well with us. I think on the China piece of that, I think expectations have been calibrated for a while. We'll see.

Speaker Change: We're seeing indications of things like accelerating drug discovery in trials.

Speaker Change: There's a lot of innovation announcements, you know, that our customers are talking about and we've got great content on the gear that lines up well with us.

Speaker Change: I think in the China piece of that, I think expectations have been calibrated for a while.

Speaker Change: We'll see. I think everyone's looking for signs that stimulus becomes effective there, but...

Eric Ashleman: I think everyone's looking for signs that stimulus becomes effective there, but I'd say that's a little bit more optimistic in tone and tenor as well. Then finally, on the Semicon part, as I said in the remarks at the beginning, a lot of people referencing, hey, 25 looks like it's going to be a pretty strong cycle, and so we'll be looking for when does the bridge link us from here to Thank you. Thanks, Mike. Thank you. Our next question today is from Vladimir Bystricky. City Group, your line is now live.

Speaker Change: I'd say that's a little bit more optimistic in tone and tenor as well. And then finally on the Semicon part, as I said in the remarks in the beginning, a lot of people referencing, hey, 25 looks like it's going to be a pretty strong cycle.

Speaker Change: And so we'll be looking for when does the bridge, when does the bridge, you know, link us from here to there.

Speaker Change: Thank you.

Mike Halloran: Thanks Mike.

Speaker Change: Thank you. Our next question today is coming from Vladimir Bystricky from Citigroup. Your line is now live.

Vladimir Bystricky: Hey, good morning, guys. Morning, guys. So maybe just a quick question on free cash flow. I know you did about 75% conversion in the quarter. You talked about 100% plus for the year. So can you just talk about what needs to happen to hit that higher conversion rate for the year and sort of your level of visibility or confidence in that? Yeah, I can take that.

Vlad Bizripke: Hey, good morning guys, thank you for taking my call.

Vlad Bizripke: So maybe just a quick question on free cash flow. I know you did about 75% conversion in the quarter. You talked about 100% plus for the year. So can you just talk about what needs to happen to...

Speaker Change: Hit that higher conversion rate for the year and sort of your level of visibility or confidence in that.

Abhishek Khandelwal: So, first of all, when you think about 75% for Q2 and compare it to prior years, it's in line with what we typically see in Q2, just the way the timing of the cash flows plays out. I'll answer the other question, which is the confidence level in a cash flow north of 100%. We feel highly confident.

Speaker Change: Yeah, I can take that. So first of all, when you think about the 75% for Q2, and compare it to prior years, it's in line with what we typically see in Q2, just the way the timing of the cash flows play out.

Speaker Change: I'll answer the other question, which is the confidence level in a cash flow north of 100%. We feel highly confident. That's our forecast for the year.

Abhishek Khandelwal: That's our forecast for the year. Things that we are focused on that we continue to drive are inventory reduction in line with where the top line is. As you think about the back half of the year and where our top line is, our teams are focused on driving inventory to the right levels that will drive working capital, and we feel pretty comfortable with us hitting our free cash per target. That's helpful. That's appreciated. And then...

Speaker Change: Things that we are focused on that we continue to drive is inventory reduction in line with where the top line is. As you think about the back half of the year and where our top line is, our teams are focused on driving inventory to the right levels that will drive work in capital. And we feel pretty comfortable with us hitting our free cash per target.

Vladimir Bystricky: Thank you. I wanted to dig in a little on FSDP, you know, the plus 6% organic orders. In the quarter, and it's pretty encouraging, I guess. Was there any bigger one-time orders in there to think about or, you know, sort of again your level of visibility to, um, Waters remaining positive in the back half if the macro holds, you know, as it did? If you think about the order profile for Q2 and where we landed, that growth pretty much came from FSDP. If I look at the segment or look at the business and where they were, it was primarily driven by North American OEM demand, so that's where we saw growth in Q2 from an order standpoint in FSDP.

Speaker Change: Okay, that's helpful. I appreciate it.

Speaker Change: I wanted to dig in a little on FSDP, you know, the

Speaker Change: Plus six percent organic orders in the in the quarter, and it's pretty encouraging. I guess was there any bigger one-time orders in there to think about or You know sort of again your level of visibility to

Speaker Change: orders remaining positive in the back half if the macro holds, you know, as it is.

Speaker Change: If you have left, I can give you a call on that. So if you think about the order profile for Q2 and where we landed.

Speaker Change: That growth pretty much came from FSDP, and if I look at the segment or look at the business and where they were, it was primarily driven by North America OEM demand, so that's where we saw the growth in Q2 from an order standpoint in FSDP.

Speaker Change: Now, keep in mind, in FSDP, we also have dispensing, and so orders sometimes can get choppy because you might, you know, we've been talking a lot about the disperse, dispensing emerging market growth.

Speaker Change: And those come in bigger chunks of order, so you could see something in Q1 that we shipped throughout the year. But if you think about Q2 and the growth in Q2, it's tied to North America OEM demand that we saw in the quarter.

Speaker Change: All right, thanks, Libby. I'll get back to you.

Vladimir Bystricky: Now keep in mind, in FSDP, we also have dispensing, and so orders sometimes can get choppy because you might, you know, we've been talking a lot about the dispensing emerging market growth, and those come in bigger chunks of orders, so you could see something in Q1 that we shipped throughout the year, but if you think about Q2 and the growth in Q2, it's tied to North America OEM demand that we All right. Thanks, everybody. We'll get back to you. The next question is coming from Nathan Jones from Steeple. Your line is now live. Good morning, everyone. Good morning.

Speaker Change: Your next question is coming from Nathan Jones from Steeple. Your line is now live.

Nathan Jones: I think it's been a while since we talked about FHIR OEM demand being positive, so that's good to hear. I wanted to follow up on the HST numbers. The guidance does imply that you're going to see a little bit of revenue improvement in the back half relative to the first half. Is that just, you know, the absence of inventory, and de-stocking that you saw through the second half of 23 and into 24, and just how do you think that's going to progress as we get into the back half?

Speaker Change: Good morning, everyone. Good morning, Nathan.

Nathan Jones: I think it's been a while since we've talked about fire OEM demand being positive, so that's good to hear. I wanted to follow up on the HST numbers.

Speaker Change: The guidance does imply that you're going to see, you know, a little bit of revenue improvement in the back half relative to the first half.

Speaker Change: Is that just, you know, the absence of inventory, de-stocking that you saw, you know, through the second half of 23 and into 24, and just how you think that's going to progress as we get into the back half?

Nathan Jones: Yeah, well, some of the cases where we talked about larger chunks that had been deferred and deferred here more recently, I mean, those are lining up closer to the back half of the year. And we, again, know what those programs are.

Speaker Change: Yeah, well, some of the cases where we talked about larger chunks that had been deferred and deferred here more recently, I mean, those are lining up closer to the back half of the year.

Eric Ashleman: We know what the platforms are, and ultimately, they do support the bridge to some of the growth that OEMs are talking about, specifically in the SEMICON area. We have a couple other HST programs that we've been monitoring for a while. I mean, they're very, very milestone-based, and I'm pretty confident that those are going to hit as well.

Speaker Change: We again know what those programs are, we know what the platforms are, and ultimately they do support the bridge to some of the growth that OEMs are talking about, specifically in the SEMICON area. We have a couple other HST programs that we've been monitoring for a while.

Eric Ashleman: So, I think it's largely attributable to those two things. I guess, continuing to follow up on the project push-out kind of question here. Historically, when industrial companies have started to talk about projects being pushed out but not cancelled, that can be a precursor to projects getting pushed out for an extended period of time. It doesn't sound like you're that concerned that we're in that kind of environment today where you can just say things that got pushed from the second quarter into the second half get pushed into 25, etc, etc.

Speaker Change: I mean, they're very, very milestone-based, and I'm pretty confident that those are going to hit as well. So I think it's largely attributable to those two things.

Speaker Change: I guess I'm continuing to follow up on the project push out kind of question here.

Speaker Change: Historically, when industrial companies have started to talk about projects being pushed out but not cancelled, that can be a precursor to projects getting pushed out for an extended period of time.

Speaker Change: It doesn't sound like you're that concerned that we're in that kind of environment today where, you know, you can just say things that got pushed from the second quarter into the second half get pushed into 25, etc, etc.

Eric Ashleman: Just comment on your confidence that we're not in that kind of environment where by the time we get to the fourth quarter, we're going to be talking about industrial orders that you thought were going to hit in the second half of 24 now being pushed to 25. So I certainly get the spirit of the question. I'd come back to the magnitude of the reference points here and what they are.

Speaker Change: Just comments on your confidence that we're not in that kind of environment where, you know, by the time we get to the fourth quarter, we're going to be talking about industrial orders that you thought were going to hit in the second half of 24 are now being pushed to 25.

Speaker Change: So I certainly get the spirit of the question. I'd come back to the magnitude of the reference points here and what they are.

Eric Ashleman: And so one of the benefits we have in those early indicator businesses that we always talk about an FMT is their great gauge of sensitivity to different narratives. And even in the last call, you know, one of the reasons I remarked about the dynamic that we've seen in the pullback in core rates in March and its alignment to, frankly, the hotter inflation read and the uncertainty of where rate relief was going to come in, it just, in my mind, showed us the sensitivity level around that particular dynamic in that part of the narrative.

Speaker Change: You know, so one of the benefits we have in those early indicator businesses that we always talk about in FMT is their great gauge of sensitivity to different narratives.

Speaker Change: And even in the last call, you know, one of the reasons I remarked about the dynamic that we'd seen in the pullback in core rates in March and its alignment to, frankly, you know, the hotter inflation read and the uncertainty of where rate relief was going to come in.

Speaker Change: It just, in my mind, showed us the sensitivity level around that particular dynamic in that part of the narrative.

Eric Ashleman: And that's maintained throughout, you know, the second one being, frankly, the election cycle here in the U.S.; almost everything we're talking about is North American-based and North American-centric, even in terms of the numbers and the way it's playing out. So if you look at those two issues, which are ubiquitously coming up in the conversation of why things are being delayed or elongated or pushed to the right, we actually know that those two are going to have resolution points. The certainty is pretty high, at least on the first, and on the second, of course, we know it comes in November.

Speaker Change: And that's maintained throughout, you know, the second one being, frankly, the election cycle here in the U.S., almost everything we're talking about is North American-based and North American-centric, even in terms of the numbers, the way it's playing out.

Speaker Change: So if you look at those two issues, which are ubiquitously showing up in the conversation of why things are being delayed or elongated or pushed to the right.

Speaker Change: We actually know that those two are going to have resolution points. The certainty is pretty high, at least on the first. And on the second, of course, we know it comes in November .

Eric Ashleman: And we've-you know, and I've seen these cycles a couple of times before where it's not unusual for things to be somewhat captive when those are-when these dynamics are playing out. I think the-you know, obviously, the post-inflationary wave, that's a new one. But I think we're closer to resolution on that than at the beginning. And just that sensitivity and the way that these are lining up, I think it gives me some confidence that as we watch those go, you're going to see some things be released. Great thanks for taking my questions. Thanks, Nathan.

Speaker Change: I've seen these cycles a couple times before where it's not unusual for things to be somewhat captive when these dynamics are playing out.

Speaker Change: You know, obviously the post-inflation wave, that's a new one, but I think we're closer to resolution on it than the beginning, and just that sensitivity and the way that these are lining up, I think it gives me some confidence that as we watch those go, you're going to see some things be relieved here.

Deane Dray: Your next question today is coming from Deane Dray from RBC Capital Markets. Your line is now live. Thank you. Good morning, everyone.

Speaker Change: Great, thanks for taking my questions. Thanks Nathan.

Speaker Change: Your next question today is coming from Deane Dray from RBC Capital Markets. Your line is now live.

Eric Ashleman: Hey, I don't know if you all were listening to one of your industrial peer conference calls. I'm just kidding, but they were saying the exact same things about extended approval loops and some nervousness about the election and some project pushouts. So the commentary is familiar, and so you guys are not an outlier. So just wanted to share that.

Dean Gray: Thank you. Good morning everyone.

Speaker Change: Hey, I don't know if you all were listening to one of your industrial peer conference calls. Just kidding. But they were saying the exact same things about extended approval loops.

Speaker Change: and some nervousness about election and some project push-outs. So the commentary is familiar, and so you guys are not an outlier. So just wanted to share that.

Deane Dray: The first question is, it's kind of like what we're not hearing, not hearing about analytical instruments, life science, or destocking. You said it was in line with expectations. Is the destocking over? I know you got to be really careful about declaring that, but just what's your sense today? Well, the way I look at a lot of these issues is that you're just kind of listening for cues in conversations.

Speaker Change: The question first is, it's kind of like what we're not hearing, not hearing about analytical instruments, life science, de-stocking, you said it's in line with expectations, is the de-stocking over? I know you've got to be really careful about declaring that, but just what's your sense today?

Eric Ashleman: And that's one of the reasons, as I talked about it earlier, I mentioned positive aspects like innovation, like drug trials accelerating, like duration of the cycle, and need for refreshes. Honestly, at the customer level, that's the kind of thing we're hearing about. It's not to suggest there aren't pockets of finished goods inventory out there on a global basis. Again, it's super hard for us to see that.

Speaker Change: Well, look, you know, once...

Speaker Change: Man, the way I look at a lot of these issues is you're just kind of listening for cues.

Speaker Change: It's not to suggest there aren't pockets of finished goods inventory out there on a global basis. Again, it's super hard for us to see that.

Eric Ashleman: But what you don't hear is kind of a dominion of the headlines, you know, with that aspect that we did earlier in the cycle. So, I still think it's uncertain, you know, with our own numbers and guidance here. I mean, we haven't called victory on it, and, you know, we've kind of held the line here for the rest of the year, but I am, you know, I am noticing that there is more positive commentary generally. And to be, you know, candid, I think we're just about ready to lap the duration of the run-up here as well.

Eric Ashleman: So, I think it's a lot of those things converging. I'm probably most excited about any element in it, just the level of innovation that I know we've been, you know, participating in and I've been talking about. I think you're starting to see that now start to hit the market in a bigger way for our end customers. That, in itself, is a vote of confidence, if not in the exact short term, certainly in the medium and the long term.

Speaker Change: To be candid, I think we're just about ready to lap the duration of the run-up here as well.

Speaker Change: I think it's a lot of those things converging. I'm probably most excited of any element in it, just the level of innovation that I know we've been, you know, we've been participating in and I've been talking about, I think you're starting to see that now start to hit the market in a bigger way for our end customers.

Eric Ashleman: And, Deane, this is just to build on what I just said. If I look at the performance this year and just look at the first half, quarter of a quarter, one to two, the performance has been relatively flat.

Abhishek Khandelwal: So, to Eric's point, you know, we weren't expecting a recovery in life sciences this year, but if I look at the performance, it's been flat. Yeah, that's exactly the way it appears to us. We just want to see if there was anything else, you know, below the radar screen.

Deane Dray: And then the second question is, Given the kind of uncertain backdrop, how about you all making any changes in your discretionary spending, any pullback in growth investments? You reaffirm your CapEx for the year, but any changes there that you would highlight? Or not changes that you would highlight? Yeah, I would say steady as she goes there.

Speaker Change: You reaffirm your CapEx for the year, but any changes there that you would highlight.

Eric Ashleman: I mean, as we said before, growth investments are typically for us people-based. They're domain experts. They're the people that are really, really good at, you know, engineering things and figuring things out with close proximity to customers.

Eric Ashleman: You know, the innovation cycle takes longer than a lot of people realize in mission-critical spaces like this. So, making sure that people are engaged in doing the right work is always part of what we do. And maybe even more important now than in a, you know, relatively choppy period, you're staying on that case because you could ultimately feel that gap later on in our own growth numbers. I will say, you know, I referenced, maybe more specifically, the work we're going to do with 8020 as we talk about Mott coming on the board.

Eric Ashleman: And one of the things that that's going to help them do, and it helps us across IDEX, is that it's actually a source of resource deployment and reallocation of resources that we have here from areas that are not as impactful to areas that are more impactful. So, as we play that out business to business and play it out in acquisitions. It's a way to kind of augment, you know, the power of resources in areas where we want to apply them without actually upping the spend profile overall.

Abhishek Khandelwal: And you know, we indicated that when we referenced it in the transaction as an area of margin lift for the company as it grows, but it's just representative of how we deploy it more generally and more broadly at IDEX. And Deane, this will be, I know you're going to see in the commentary in the press release and even in the 10Q, but you know, if you look at FSDP and HST, discretionary spend is down, and where you will see an increase is FMT, but quite frankly, that's tied to our digitization effort.

Abhishek Khandelwal: That's the front end, and that's, you know, one of the best that we are focused on. So overall, I'd say you'd see a discretionary reduction across the two businesses with the exception of, or two segments with the exception of, FMT. Really helpful. Thank you. Thank you. As a reminder, that's question number one to be placed in the question queue. Our next question today is coming from Matt Somerville

Matt Somerville: Your line is now live. Thanks. Just a couple of quick ones.

Matt Somerville: First, can you quantify the level of price capture you saw in Q2? And remind us, is that consistent with what you saw in Q1? And then, similarly, if you can also compare your organic book-to-bill in Q2 versus Q1, then I will follow. Yeah, Matt, absolutely.

Abhishek Khandelwal: So if I think about price capture, it's in line with the guidance that we laid out for the year. So price capture for the quarter was closer to 2%, but the bigger thing that we talked about that we were focused on is the price-cost spread. And our price-cost spread for the quarter was 100 pips.

Speaker Change: Yeah, Matt, absolutely. So if I think about the price capture, it's in line with the guidance that we lay out for the year. So price capture for the quarter was...

Abhishek Khandelwal: And if you recall what we said going into the year, we were targeting between 80 to 100 pips. So we're on the high end of the price-cost capture for the quarter. From a book-to-bill standpoint for the quarter, we landed at 0.96 versus a 1Q of 1.02. Now, that said, part of this is the timing of when the blankets book in the quarter. In Q1, we had a few blankets that got booked that we shipped throughout the year.

Speaker Change: From a book-to-bill standpoint for the quarter, we landed at 0.96.

Speaker Change: versus a 1Q of 1.02. Now that said.

Abhishek Khandelwal: Q2 had fewer of those. So the best way to think about our book-to-bill is, as we go towards the tail end of the year, like Eric alluded to, one of the things that we're focused on is our book-to-bill ratio, because that's where we see a lot of blankets come through that feed revenue for 2025. Got it.

Speaker Change: So the best way to think about our book-to-bill is, as we go towards the end of the year, like Eric alluded to, one of the things that we're focused on is our book-to-bill ratio, because that's where we see a lot of blankets come through that feed the revenue for 2025.

Matt Somerville: And then just a follow-up on the analytical instrumentation life sciences. I just want to be clear at this point. Are you thinking the inventory drawdown is indeed completely in the rear view mirror?

Eric Ashleman: And to that extent, are you seeing OEMs generally carry less inventory than they were pre-COVID, or is the absolute stocking level reverting back towards something more in line with the pre-COVID levels? Yeah, well, so again, there's kind of two pockets of inventory. One, we have a lot more visibility than another. So the inventory, let's say, between us and customers. So those would be components and things that we supply them. I mean, the planning levels that they have today are pretty typical for what they've been in the past, in terms of replenishment rates and how far away we are and how much lead time we're being asked to deliver. So that's been, honestly, back on track now for a while.

Speaker Change: Are you seeing OEMs generally carry less inventory than they were pre-COVID, or is the absolute stocking level reverting back towards something more in line with the pre-COVID level? Thank you.

Speaker Change: Yeah, well, so again, there's there's kind of two pockets of inventory. One, we have a lot more visibility to than another. So the inventory, let's say between us and customers,

Speaker Change: So those would be components and things that we supply them. I mean, the planning levels that they have today are pretty typical for what they've been in the past in terms of, you know.

Speaker Change: Repunishment rates and how far away we are and how much lead time we're being asked to deliver. So that's been honestly back in sync now for a while. The inventory of finished goods, which of course passed our customers and extend globally.

Eric Ashleman: The inventory of finished goods, which, of course, passed our customers and extended globally. You know, less clear for us, but to the extent we have not seen, you know, further erosion in demand here, and we've been holding relatively flat and continue to project it that way, I don't think it's, you know, we don't see it as a significant driver going forward and, in fact, are leaning on those points of optimism looking for the turn. We hope to be somewhere by 2025. Thanks.

Speaker Change: You know, less clear for us, but to the extent we have not seen, you know, further erosion in demand here, and we've been holding relatively flat and continue to project it that way, I don't think it's, you know, we don't see it as a significant driver going forward, and in fact are leaning on those points of optimism looking for the turn.

Speaker Change: which we hope to be somewhere into 2025.

Joe Giordano: Thank you. The next question is coming from Joe Giordano from Cowan. Your line is now live.

Speaker Change: Thank you, Eric. Thanks. Thanks, Matt.

Joe Giordano: Hey, good morning, guys. Hey, so just inherent in the revenue guide for the second half of the year, what are you thinking for orders for FMT and HST, like in dollars versus the 2Q level? Do they get better or worse from here?

Speaker Change: Hey, so just inherent in the revenue guide for the second half of the year, what are you thinking for orders for FMT and HST like in dollars versus the 2Q level? Do they get better or worse from here?

Abhishek Khandelwal: If I, if I look at our guide, and you kind of think about the back half that we have guided, yes, the orders do get better in terms of dollars, sequentially from first half to second half. And then, like, if I look, and I think this is, it's tough to analyze with companies now in the post-COVID era given how supply chains got crazy, but if I look at all of your, each of your segments independently over the past couple of years, like, if I look at, you know, since COVID, orders, the excess orders over revenue, it's pretty significant. So, I would think that there So like, are you seeing customers not taking delivery as you'd think for orders that are in the backlog? Are you seeing any cancellations there?

Speaker Change: Okay, and then, like, if I look, and I think this is, it's tough to analyze with companies now in the post-COVID given how supply chains got crazy, but if I look at all of your, each of your segments independently on, like, a trailing couple of years, like, if I look at, you know, since COVID.

Speaker Change: So, like, I would think that there's...

Speaker Change: More backlog coverage than like the guidance suggests given like, you know, I'm a trailing three year or whatever There's significantly more orders than revenue So like are you seeing customers not not taking delivery as you'd think for orders that are in backlog? Or are you seeing cancellations there?

Joe Giordano: I mean, I want to make sure we're seeing it the same way. You know, we typically backlog, we're a smaller backlog company; the normal course of business for us is kind of half a quarter is assured, and we go find the rest. That's that's a general statement for IDEX. That absolutely changed during the pandemic years, like it did for everybody else.

Speaker Change: I want to make sure we're seeing it the same way.

Eric Ashleman: I mean, we doubled it kind of at the height here and had a quarter's worth of insurance, maybe a little bit more, you know, as people overordered and did everything they could for supply chain assurance. Maybe sooner than many companies, we actually, you know, reverted back to a very typical backlog profile. And we've been there for a while now. So, kind of half a quarter in front of us. We have to go hunt for the rest.

Speaker Change: Like it did for everybody else. I mean, we I think we doubled it kind of at the height here and had a quarter's worth of insurance, maybe a little bit more, you know, as people overordered and did everything they could for supply chain assurance.

Speaker Change: Maybe sooner than many companies we actually, you know, reverted back to a very typical backlog profile And we've been there for a while now So kind of half a quarter in front of us got to go hunt for the rest. So

Eric Ashleman: So the dynamics of backlog for us are not that different. The lead times and replenishment that we're being asked to provide in all three segments are pretty typical. I think the only thing that's typical here for us has been the level of project commitments and those discussions around when the next thing might be coming. And I just point back to the indicators that we talked about as to what's driving it. Thank you. The next question is coming from Andrew Buscaglia from BNP Powered by Your Line is Now Live. Hey, good morning, guys. Hi. Hi,

Speaker Change: Pretty typical. I think the only thing that's atypical here for us has been the level of project commitments and those discussions around when the next thing might be coming. And I just point back to the indicators that we talked about as to what's driving it.

Speaker Change: Thank you. Next question is coming from Andrew Buscaglia from BNP Power Bio. Your line is now live.

Andrew Buscaglia: I wanted to focus on key margins. You know, in the past, you said that exiting the year, you could see a little bit of a lift. It seems like guidance might imply that too. In terms of getting back to that 30% or that level, how much of it is more dependent on volume coming back versus mix?

Andrew Buscalio: Hey, good morning, guys. Hi. Hi.

Speaker Change: I wanted to focus on key margins.

Andrew Buscalio: You know you I think you said in the past exiting the year you could see a little bit of a lift it seems like I might imply that too, but

Andrew Buscalio: In terms of getting back to that level, how much of it is more dependent on volume coming back versus mix? Because I'm trying to gauge some of these higher growth areas coming back, I guess, what are the dynamics?

Abhishek Khandelwal: Because I'm trying to gauge some of these higher growth areas coming back. Yeah, I guess what are the dynamics as that plays out in the market. Andrew, I think you cut off for a second or two there, so I might have missed a piece, but let me try to answer that question. If I don't completely get to your answer, then just ask me again. I'll go do it.

Speaker Change: as that plays out in the market.

Abhishek Khandelwal: But if you just take a step back and kind of think about where we are, your general comment about, you know, depending on volume, volume is a big part of it because, of course, when we see top-line growth, we level really nicely across our businesses. So that is a big component of how margin expansion happens. But that said, though, given where we are, you will notice, sequentially, our margin profile got better by 180 basis points, right, despite very minimal help from volume.

Speaker Change: Ask me again and I'll go do it.

Speaker Change: But if you just take a step back and kind of think about where we are, your general comment about, you know, depending on volume, volume is a big part of it, because of course, when we see top line growth, we level really nicely on our businesses. So that is a big component of how margin expansion happens. But that said, though, given where we are, you will notice sequentially our margin profile got better by 180 basis points, right?

Abhishek Khandelwal: And that's really tied to the work that we do around 80-20 complexity reduction and cost out in the light of where we've been. So as you think about the balance of the year and how we're thinking about the year exiting Q4, I want to be very careful; I'm talking about rates exiting Q4, not full-year rates. We're thinking about SST closer to that 28% kind of profile in EBITDA, FMT closer to 34%, and then FSDP in the 28% to 29% range from an EBITDA standpoint. Okay, yeah, that's very helpful. And yeah, I wanted to focus on including metering, you know, that municipal water strength has been a nice story for a while for you and others. Where are you guys?

Andrew Buscalio: Despite very minimal help from volume, and that's really tied to the work that we do around 80-20 complexity reduction and cost out in the light of where we've been. So as you think about the balance of the year and how we're thinking about the year exiting Q4, so I want to be very careful, I'm talking about rates exiting Q4, not full year rates.

Speaker Change: We're thinking about HST closer to that 28% kind of profile on EBITDA, FMT closer to 34, and then FSDP in the 28 to 29% range from an EBITDA standpoint.

Speaker Change: Okay, yeah it's very helpful.

Speaker Change: And yeah, I wanted to focus on included metering, you know, that municipal water strength has been a nice story for a while for you and others. Where are you guys, do you think, in that inning?

Eric Ashleman: Do you think that is true at all? Or what inning do you think you guys are in, and how much of your business is influenced by government spending or government funding? Well, so, okay, I think the cycle will play out for a while, mainly because the intentionality of that funding, you know, that's kind of spread over much of the industry, it just takes a long time to pay off. You know, these are complex engineering projects for multiple players, not just us. A good portion of things that have been announced is not actually spent yet or engineered. So I always thought of this as kind of a multi-year safety blanket or a warm, comfortable blanket, either one.

Speaker Change: What inning do you think you guys are in and how much of your business is influenced by government spending or government funding?

Speaker Change: Well, so, look, I think the cycle plays out for a while, mainly because the intentionality of that funding, you know, that's kind of spread over much of the industry, it just takes a long time to spend.

Speaker Change: These are complex engineering projects for multiple players, not just us. A good portion of things that have been announced is not actually spent yet or engineered.

Eric Ashleman: We're positioned actually in an, you know, we do important work to help spend that money, you know, so I think it's one of the reasons we're seeing the strength in our business. You know, we do analytical work that actually helps write the capital request. So, you know, essentially, many of our customers are actually engineers, civilian engineers that are then, you know, using that data to suggest projects that are going to tap into funding of the type that you're talking about here.

Andrew Buscalio: So, I always thought of this as kind of a multi-year safety blanket or a warm, comfortable blanket, either one. We're positioned actually in an... We do an important work to help spend that money, so I think it's one of the reasons we're seeing the strength in our business.

Andrew Buscalio: You know, we do analytical work that actually helps write the capital request.

Andrew Buscalio: So, you know, essentially, many of our customers are actually engineers, civilian engineers that are then, you know, using that data to suggest.

Eric Ashleman: You know, so there's a portion of it that, you know, is intentional and it's coming from announced government programs. A decent amount of it in municipalities, of course, is government funded, but that's ultimately through taxation.

Andrew Buscalio: Projects that are going to tap into funding of the type that you're talking about here.

Andrew Buscalio: You know, so there's a portion of it that, you know, is intentional and it's coming from announced government programs, you know, a decent amount of it in municipalities, of course, is government funded, but that's ultimately through taxation.

Eric Ashleman: I think there's a nice run here overall, if for no other reason than it just takes a while, you know, frankly, to bring all this to fruition. Yeah, okay. All right. Thank you. Thank you. The next question today is coming from Rob Wertheimer from Elias Research. Your line is now live. Thank you. Good morning.

Andrew Buscalio: And we have, you know, look, we participate in the industrial water side of this, too. And that, of course, is...

Andrew Buscalio: and tied to private markets. But I think I think there's a nice run here overall, if for no other reason that it just takes a while to, you know, frankly, bring all this to fruition.

Speaker Change: Yeah, okay. All right. Thank you.

Rob Wertheimer: I apologize if this happens; I got cut out for a while in the audio. So if I missed something or belabored a point that you've covered, you can just cut me off. But on the project delay side, is that tied to specific government policies that might, you know, might open up one way or the other? Or is it just more of a general unease or uncertainty that has affected how people are willing to spend?

Andrew Buscalio: Thank you. Next question today is coming from Rob Wertheimer from Elias Research Online. It's now live.

Rob Wertheimer: Thank you, good morning. I apologize if this, I got cut out for a while in the audio, so if I missed something or belabor a point.

Rob Wertheimer: Well, you've covered it. You can just cut me off. But on the project delay side, is that tied to specific government policies that might, you know, might open up one way or the other? Or is it just more of a general unease or uncertainty that has affected how people are willing to spend?

Rob Wertheimer: Yeah, so we did touch on that before, but I think it's worth, you know, a second go around. I mean, it's very specific around two very general themes. One around the cost of money and the fact that it's been higher for longer, and there's uncertainty as to the rate of travel to something better.

Speaker Change: Yeah, so we did touch on that before, but I think it's worth, you know, a second go around. I mean, it's very specific around two very general themes.

Speaker Change: One around sort of the cost of money and the fact that it's been higher for longer and there's uncertainty as to the rate of travel to something better.

Eric Ashleman: That's all about inflation and interest rates and that dynamic which everybody's watching. And I think the second one is around political uncertainty and uncertainty of outcomes given the polarization here in North America. In our conversations, it doesn't really travel below that to something more specific because, frankly, our business is, you know, it's more diverse, it's spread across different places, we're at the component level, so we're not as heavily indexed to a program or another program. It's kind of like the answer I gave on the water side of it.

Speaker Change: That's all about inflation and interest rate and that dynamic, which everybody's watching. And I think the second one is around political uncertainty and uncertainty of outcomes given the polarization here in North America of approaches.

Speaker Change: You know

Unknown Speaker: In our conversations, it doesn't really then travel below that to something more specific because, frankly, our business is, you know, it's more diverse, it's spread across different places, we're at the component level, so we're not as heavily indexed to a program or another program.

Rob Wertheimer: The fact that there's intentionality there and it's going to take multiple years to spend it is kind of good enough for us to then participate in the way we do in municipalities and industries across the globe to participate in that. So it's very generalized, as we're thinking of it here. Perfect.

Speaker Change: It's kind of like the answer I gave in the water side of it, you know, the fact that there's intentionality there and it's going to take multiple years to spend it is kind of good enough.

Speaker Change: for us to then participate in the way we do in municipalities and industries across the globe to participate in that. So it's very generalized as we're thinking of it here.

Eric Ashleman: Thank you. And then could you remind us of the rate sensitive businesses within FMT that you're kind of using as guidelines? What's the nature of the activity there? And the businesses could just give us a little bit more background on that. And I will stop there.

Speaker Change: Perfect, thank you. And then could you remind us on the...

Speaker Change: Eric Ashleman, Unknown Executive, Allison Lausas

Eric Ashleman: Thank you. Yeah, yep. It's a series of businesses in the FMT world. A lot of them are kinds of pumps and valves and fluids. So they're used for a broad array of purposes. They go to market typically through industrial distribution, and because of the kind of customized nature of the way that we do things and our rapid fulfillment, we can get an order on a Monday, ship it on a Wednesday, and it's in service on a Friday.

Eric Ashleman: I say all that because of the nature of that, they provide really good insight into kind of actual consumer activities across the board. And frankly, it's more than 50% of the order flow in those businesses. So we use them as diagnostics to tell us kind of what the state of health there is.

Eric Ashleman: And as we've talked about them here, what we've said is, you know, there are two dimensions that we see at work. The core day-to-day rates, which is this short-term fulfillment. Think of it as somebody maintaining their factory as they run it two shifts. That's steady. It has been steady. That's really back to the assumptions we had in the fall.

Speaker Change: And as we've talked about them here, what we've said is, you know, there's two dimensions that we see at work.

Eric Ashleman: It was only briefly interrupted, you know, briefly to the positive, and for a three-month period as I think there was more anticipation that we were going to have a more favorable rate release. And it sort of came back down, and it's been steady since. There's a tie-in there with project work, and project work in our world, don't think of them as stadiums or massive things like that. It could be a simple back-end expansion on a food plant or something like that. It kind of moves you from a pump or two to something like 40 or 50 for us.

Eric Ashleman: But that's tied to an approval process and a discrete decision that's important. And that's kind of the piece we've said has been hung up in the works here with those two more generalized themes that I talked about. So that's what the insight is telling us. We're very happy to see that the day rates are supportive of, you know, just strong and relatively stable industrial activity. And we look forward to the day uncertainty leaves the project-driven side of it, which is going to complement it overall. Perfect.

Rob Wertheimer: Thank you very much. Thank you. We have reached the end of our question and answer session. I'd like to turn the floor back over to management for any further questions.

Speaker Change: Perfect. Thank you much. You bet. Thank you. We have reached the end of our question and answer session. I'd like to turn the floor back over to management for any further closing comments.

Operator: Well, thank you. Hey, listen, I recognize we struggled a bit here to find our organic guidance footing over the last six quarters. I realize a lot of that chop is coming out of the HST segment.

Eric Ashleman: And I'm fully aware that, you know, investing in HST organically and inorganically is a key element of our strategy. What I want to make sure you understand is this is the right call for our business. Even in a period of uncertain transition for some of these foundational markets, we've talked about a lot here today. You know, a third of this segment lies across two verticals within life science and analytical instrumentation and advanced semi-con manufacturing. They're pressured today, but no doubt they're going to have wins at their backs for years to come.

Speaker Change: What I want to make sure you understand is this is the right call for our business.

Speaker Change: You know, a third of this segment lays across two verticals within life science and analytical instrumentation and advanced semi-con manufacturing. They're pressured today, but no doubt they're going to have wins at their backs for years to come.

Eric Ashleman: We just built another third of the segment that allows us to leverage the supplied material science technology to a really narrow band of high-quality application areas, and the mod acquisition completes this phase of the build. And then the remaining third, you know, is composed of high-quality businesses that are all number one in their respective niches and very, very IDEX-like in the way they function. So together, you know, we're innovating to set really critical specification points that are going to position us for leadership in the years to come, markets that are going to shape our futures.

Speaker Change: So together, we're innovating to set really critical specification points that are going to position us for leadership in the years to come. Markets that are going to shape our futures.

Eric Ashleman: And we'll see the financial benefit of that play out just as we've seen it play out in the legacy businesses of FMT and FSDP. It's really important that we kind of get IDEX into the mix as these markets form up and launch.

Speaker Change: And we'll see the financial benefit of that play out just as we've seen it play out in the legacy businesses of FMT and FSDP.

Eric Ashleman: So I look forward to walking you through our progress on that in the quarters and the years to come. And I wish you all a good day. Thanks so much. Thank you. That does conclude today's teleconference. You may disconnect your line at this time and have a wonderful day. We thank you for your participation today. Music Music Music Music Music Music Music Music Music Music Music Music Music Music Music Music Music Music, ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? Music Music Music Music Music Music Music Music Music Music, ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ??

Speaker Change: And it's really important that we kind of get IDEX into the mix as these markets form up and launch. So I look forward to walking you through our progress on that in the quarters and the years to come. And I wish you all a good day. Thanks so much.

Speaker Change: Thank you. That does conclude today's teleconference. You may disconnect your line at this time and have a wonderful day. We thank you for your participation today.

Speaker Change: www.thevenusproject.com www.thevenusproject.com

Speaker Change: Thanks for watching!

Speaker Change: Avishek Khandelwal, Eric Ashleman, Unknown Executive, Allison Lausas Avishek Khandelwal, Eric Ashleman, Unknown Executive, Allison Lausas

Speaker Change: www.thevenusproject.com

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