Q4 2024 IDEX Corp Earnings Call

Greetings and welcome to the IDEXX Corporation fourth quarter 2024 earnings Conference call. At this time all participants are in a listen only mode. A question and answer session will follow the formal presentation.

Operator: Greetings and welcome to the IDEX Corporation 4th Quarter 2024 Earnings Conference Call. At this time, all participants are in a listen-only mode. A question-and-answer session will follow the formal presentation. If anyone should require operator assistance during the conference, please press star zero on your telephone. As a reminder, this conference is being recorded.

If anyone should require operator assistance during the conference. Please press star zero on your telephone keypad.

As a reminder, this conference is being recorded.

Wendy Palacios: I would now like to turn the conference over to your host, Ms. Wendy Palacios, Vice President, FP&A, and Investor Relations for IDEX Corporation. Thank you. Good morning, everyone. This is Wendy Palacios, Vice President of FP&A and Investor Relations for IDEX Corporation. Thank you for joining us for our discussion of the IDEX fourth quarter and full year 2024 financial highlights. Last night we issued a press release outlining our company's financial and operating performance for the three months and full year ending December 31st, 2024. The press release along with the presentation to be used during today's webcast can be accessed on our investor website at investors.idexcorp.com.

Speaker Change: I would now like to turn the conference over to your host MS. Wendy plus yes, Vice President of Finance and Investor Relations for IDEXX Corporation. Thank you you may begin.

Speaker Change: Good morning, everyone. This is 'twenty Palacios, Vice president of <unk> and Investor Relations for IDEXX Corporation.

Speaker Change: Thank you for joining us for our discussion of the IDEXX fourth quarter and full year 2024 financial highlights.

Speaker Change: Last night, we issued a press release outlining our company's financial and operating performance for the three months and full year ending December 31st 2024.

Speaker Change: The press release, along with the presentation to be used during today's webcast can be accessed on our investor website at investors thought IDEXX Corp dotcom.

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 for your questions. Turning to slide two. Please note that during today's call, we will present certain non-GAAP financial measures. We will also make forward-looking statements within the meaning of the federal securities laws, including statements regarding events or developments that we expect or anticipate will or may occur in the future period. These four looking statements are subject to risks and uncertainties. Actual results may differ materially from any forward-looking statements that we make today, and we do not assume any obligation to update them, other than as required by law.

Speaker Change: Joining me today are Eric Ashman, our Chief Executive Officer and President.

Speaker Change: And if he can do all our senior Vice President and Chief Financial Officer.

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

Speaker Change: Turning to slide two.

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

Speaker Change: These forward looking statements are subject to risks and uncertainties.

Speaker Change: Actual results may differ materially from any forward looking statements that we make today.

Speaker Change: And we do not assume any obligation to update them other than as required by law.

Wendy Palacios: Information regarding these factors that may cause actual results to differ materially from these forward-looking statements is available on our website and in our SEC filings.

Speaker Change: Information regarding these factors that may cause actual results to differ materially from these forward looking statements is available on our website and in our SEC filings with that I'll now turn this call over to our CEO and President Eric Eshleman.

Eric Ashleman: With that, I'll now turn this call over to our CEO and President, Eric Ashleman. Thank you, Wendy. And good morning, everyone. I'm on slide three. IDEX teams maneuvered a year of choppy and uncertain macro conditions with operational focus and solid execution in 2024. We delivered innovative solutions to our customers, achieved strong productivity through net price capture and operational excellence and deployed both financial and human capital toward our largest acquisition to date, Mott. I want to thank our IDEX employees around the globe for all their contributions. Our IDEX team executed a strong finish to the year.

Eric Eshleman: Thank you Wendy and good morning, everyone I'm on slide three.

Eric Eshleman: <unk> team has maneuvered a year, a choppy and uncertain macro conditions with operational focus and solid execution in 2024, we delivered innovative solutions to our customers achieve strong productivity through net price capture and operational excellence and deploy both financial and human capital toward our largest acquisition to date, but I want to thank our IDEXX employees.

Eric Eshleman: Around the globe for all their contributions are IDEXX team executed a strong finish to the year here are some Q4 highlights we delivered a series of impactful projects within the health and Science technology segment destined for pharma Global broadband satellite communications and energy transition verticals.

Eric Ashleman: Here are some Q4 highlights. We delivered a series of impactful projects within the health and science technology segment destined for pharma, global broadband satellite communications, and energy transition vertical. We drove Organic Order's growth across all segments led by HST. Mott achieved strong results in their first quarter with IDEX, delivering a significant filtration systems project within their energy transition vertical. The integration is proceeding smoothly, and Mott's accretion timing is tracking ahead of our original expectations. Our Fire Safety and Diversified Products segment set another new quarterly sales record driven by strong growth of their automation programs within integrated fire assistance.

Eric Eshleman: We drove organic orders growth across all segments led by H S T.

Eric Eshleman: <unk> achieved strong results in their first quarter with IDEXX delivering a significant filtration systems project within their energy transition vertical integration is proceeding smoothly and what's accretion timing is tracking ahead of our original expectations.

Eric Eshleman: Our fire safety and diversified products segment had another new quarterly sales record driven by strong growth of their automation programs within integrated fire systems.

Eric Ashleman: Reflecting on 2024, we saw three themes play out. When we started the year, there were some encouraging signs of growth with a noticeable uptick in industrial day rates coupled with expectations at the time for accelerated interest rate easing. We saw this reflected in our 2024 Q1 orders and sales performance in pockets of our portfolio. This environment changed in late Q1 as an unexpectedly high inflation rate reduced the likelihood of rate reductions. The U.S. election cycle with polarized potential outcomes entered the mix in the summer and most markets settled into an uncertain but stable pattern. Finally, late in the year, we had clarity with respect to both issues as inflation moderated and a presidential candidate won the race.

Eric Eshleman: Reflecting on 2024, we saw three themes play out when we started the year there were some encouraging signs of growth with a noticeable uptick in industrial day rates, coupled with expert expectations at the time for accelerated interest rate easing. We saw this reflected in our 2020 for Q1 orders and sales performance in pockets of our portfolio.

This environment changed in late Q1, as an unexpectedly high inflation rate reduced the likelihood of rate reductions the U S election cycle with polarized potential outcomes entered the mix in the summer in most markets settled into an uncertain, but stable pattern.

Eric Eshleman: Finally late in the year, we had clarity with respect to both issues as inflation moderated in a presidential candidate won the race, but the dynamic policy implications of the new administration likely moderated any near term growth catalysts within Q4.

Eric Ashleman: But the dynamic policy implications of the new administration likely moderated any near term growth catalyst within Q4. As we begin 2025, there appears to be a climate of uncertain optimism. We're sitting on a stable business space, our inventories and lead times are recalibrated back to normal levels, and a series of transformational megatrends are ready to help carry strong growth through the second half of the decade and beyond. The open questions, continuing to drive near-term uncertainty, all relate to the direction of U.S. trade and economic policy within an overall environment of high geopolitical tension. We'll likely have more clarity as we move through the first couple quarters this year.

Eric Eshleman: As we begin 2025, there appears to be a climate of uncertain optimism, we're sitting on a stable business base, our inventories and lead times have recalibrated back to normal levels and a series of transformational Megatrends are ready to help carry strong growth through the second half of the decade and beyond.

Eric Eshleman: The open questions continuing to drive near term uncertainty all relate to the direction of U S trade and economic policy within an overall environment of high geopolitical tension.

Eric Eshleman: Well likely have more clarity as we move through the first couple of quarters. This year despite.

Eric Ashleman: Despite challenging macro conditions, we are building IDEX to outperform throughout the entirety of a cycle. Our differentiated technologies provide solutions to complex problems and growth-advantaged verticals. We continue to apply 80-20 to each business to fuel growth and productivity. That's been the heartbeat of our operating model for well over a decade. But now, more than ever, we're using 80-20 at the enterprise level to drive power, scale, and focus through our portfolio of high-quality business.

Challenging macro conditions, we are building IDEXX to outperform throughout the entirety of a cycle our differentiated technologies provide solutions to complex problems and growth advantaged vertical we continue to apply 80 20 to each business to fuel growth and productivity. That's been the heartbeat of our operating model for well over a decade, but now more than ever we're using 80.

Eric Eshleman: 'twenty at the enterprise level to drive power scale and focus through our portfolio of high quality businesses.

Eric Ashleman: As we turn towards 2025 and beyond, I'd like to show you how far we've already come on this journey. I'm on slide four. We have more aggressively deployed capital over the last few years to build scale through thematic integration. We have also selectively pruned smaller, less growth-advantaged businesses to complement the work. Today, we have over half of IDEX revenue working together collaboratively within five groups, some formal, some building informally, to attack a handful of faster-growing markets that will benefit long-term from the secular tailwinds you see listed here. We're doing it with more scale and breadth, which allow us to better leverage our overhead spend while maximizing productivity potential.

Eric Eshleman: As we turn towards 2025 and beyond I'd like to show you how far we've already come on this journey.

Eric Eshleman: I'm on slide four.

Eric Eshleman: We have more aggressively deployed capital over the last few years to build scale through somatic integration. We are also selectively prune smaller less growth advantaged businesses to complement the work.

Eric Eshleman: Today, we have over half of IDEXX revenue working together collaboratively within five groups. Some formal some building informally to attack a handful of faster growth growing markets that will benefit long term from the secular tailwind that you see listed here.

Eric Eshleman: We're doing it with more scale and breath, which allow us to better leverage our overhead spend while maximizing productivity potential. This is an important strategic roadmap for our future evolution fueled by more power more focus more growth to drive consisting consistent earnings expansion.

Eric Ashleman: This is an important strategic roadmap for our future evolution fueled by more power, more focus, more growth to drive consistent earnings expansion. We have recently deployed the majority of our M&A capital towards businesses that deliver high-quality applications and solutions that leverage differentiated materials science technology. Mod is an important piece of this story, providing more access points to support fast-growing markets within energy transition, space and defense, and high-performance semiconductors. Despite the dramatic market ups and downs over the last few years, we remain very committed to expanding our work within life sciences. We have long, mutually beneficial partnerships with the world's best customers, and our teams continue to innovate in ways that push the frontiers of what is thought to be possible.

Eric Eshleman: We have recently deployed the majority of our M&A capital towards businesses that deliver high quality applications and solutions that leverage differentiated materials science technologies.

Eric Eshleman: Modest and important piece of the story, providing more access points to support fast fast growing markets with an energy transition.

Eric Eshleman: Space and defense and high performance semiconductor.

Eric Eshleman: Despite the dramatic market ups and downs over the last few years, we remain very committed to expanding our work within life Sciences, we have long mutually beneficial partnerships with the world's best customers and our teams continue to innovate in ways to push the frontier is in what is thought to be possible. We remain confident with the long term growth outlet outlook at this space.

Eric Ashleman: We remain confident with the long-term growth outlook of this space. Within Intelligent Water, we built a portfolio that offers an integrated suite of digital analytics complemented by hardware and mobile solutions that work in some of the world's most demanding environments. This helps our municipal and industrial customers meet the challenges of aging wastewater infrastructure, increasing severe weather events, and stricter regulatory requirements. In other areas of IDEX, where the markets are more mature, more industrial, and more fragmented, we are collaborating at scale across units to also drive growth and income outperformance. At IDX Fire and Safety, our automation capabilities are decreasing the response time and increasing the productivity and agility of emergency workers.

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Eric Eshleman: With an intelligent water, we built the portfolio that offers an integrated suite of digital analytics complemented by hardware and mobile solutions that work in some of the world's most demanding environments. This helps our municipal and industrial customers meet the challenges of aging wastewater infrastructure, increasing severe weather events and stricter regulatory requirements.

Eric Eshleman: Yeah.

Eric Eshleman: In other areas of IDEXX, where the markets are more mature more industrial and more fragmented we are collaborating at scale across units to also drive growth and income outperformance.

Eric Eshleman: And I'd ask fire and safety, our automation capabilities are decreasing the response time and increasing the productivity and agility of emergency workers.

Eric Ashleman: We believe we are uniquely positioned with our breadth of product and innovation capabilities to drive solutions of this type. We are enjoying double-digit growth in this area, and automated solutions now make up more than 10% of platform revenue. Finally, within our largest FMT businesses, specializing in severe duty flow control, we are rapidly digitizing the front end of our businesses, impacting the way we service and interact with our distributors, OEMs, and end users. This urgent work is powered by the scale and positioning of our best 80s businesses. Ultimately, the next step will deploy a common set of digital tools across all IDEX businesses to drive even higher levels of customer engagement.

Eric Eshleman: We believe we are uniquely positioned within with our breadth of product and innovation capabilities to drive solutions of this type we are enjoying double digit growth in this area and automated solutions now make up more than 10% of platform revenue.

Eric Eshleman: Finally, within our largest FMT businesses specializing in severe duty flow control. We are rapidly digitizing the front end of our businesses impacting the way, we service and interact with our distributors Oems and end users. This urgent work is powered by the scale and positioning of our best eighties businesses. Ultimately the next step will do.

Eric Eshleman: A common set of digital tools across all IDEXX businesses to drive even higher levels of customer engagement.

Eric Ashleman: One last important point. Beyond support for faster growth, the collaboration and integration I'm describing here has additional potential to drive earnings expansion at IDEC. As we build larger scalable platforms in business groups, we can begin to shift vertical organizations, which stack up additively one company at a time, to more efficient horizontal frameworks that better lever our employee dollars, allowing us to self-fund more growth resources positioned very close to the customer for maximum impact. Alongside this work, we continue to push for flat organizations overall to speed decision-making, pushing to eliminate any layers that might get in the way of our agility.

Eric Eshleman: One last important point beyond support for faster growth the collaboration and integration I'm, describing here has a dense additional potential to drive earnings expansion at IDEXX.

Eric Eshleman: As we build larger scalable platforms and business groups, we can begin to shift vertical organizations, which stack up additive Lee one company at a time.

Eric Eshleman: More efficient horizontal frameworks that better lever our employee dollars.

Eric Eshleman: Allowing us to self fund more growth resources positioned very close to the customer for maximum impact alongside this work we continue to push for flatter organizations overall to speed decision, making pushing to eliminate any layers that might get in the way of our agility higher thematic scale and integration also support higher levels of sourcing productivity.

Eric Ashleman: Higher thematic scale and integration also supports higher levels of sourcing productivity as the quantities of similar purchase commodity classes naturally increase. You'll see some early tangible benefits of this work within our guidance schedules. We have 43 cents of adjusted EPS support lined up for 2025 in these areas. On top of another 20 cents at the midpoint from traditional productivity. We're well positioned for solid margin expansion as we move the needle on organic growth.

Eric Eshleman: <unk> is the quantities of similar purchase commodity classes naturally increase you'll.

Eric Eshleman: Youll see some early tangible benefits of this work within our guidance schedules. We have 43 of adjusted EPS support lined up for 2025 and these areas on top of another 20 cents at the midpoint from traditional productivity, we're well positioned for solid margin expansion as we move the needle on organic growth.

Eric Ashleman: Turning to slide five, the last essential piece of our growth strategy is capital deployment. We are focused on the integration of MOT and deepening collaborative connections across our broader portfolio to leverage MOT's highly engineered filtration technologies into new innovative solutions. At the same time, our dedicated corporate development team continues to work alongside our business leaders to build a robust and active M&A funnel, cultivating businesses that fit the IDEX mold and have the potential to advance our strategic goals in the areas where we want to grow. We have the pipeline, balance sheet, and free cash flow generation to keep M&A as a consistent contributor to our growth over time.

Eric Eshleman: Turning to slide five the last a central piece of our growth strategy is capital deployment we.

Eric Eshleman: We are focused on the integration of Mod and deepening collaborative connections across our broader portfolio to leverage months' highly engineered filtration technologies into new innovative solutions.

Eric Eshleman: At the same time, our dedicated corporate development team continues to work alongside our business leaders to build a robust and active M&A funnel.

Eric Eshleman: Cultivating businesses that fit the IDEXX mode and have the potential to advance our strategic goals in the areas, where we want to grow.

Eric Eshleman: We have the pipeline balance sheet and free cash flow generation to keep M&A is a consistent contributor to our growth over time.

Abhishek Khandelwal: With that, I'll turn it over to Abhi to discuss our financial results and guidance. Thanks Eric. Turning to the consolidated financial results on slide 6. Please note, all comparisons are against the prior year period, unless stated otherwise. Fourth quarter orders of $817 million were up approximately 8% on a reported basis and up 5% organic. We saw orders growth across the portfolio, with HST experiencing 8% organic growth in the quarter, driven by blanket order activity that will ship in 2025. FSDP had mid-single-digit organic growth and FMT had low single-digit growth. For the year, orders were up 4% overall and up 3% organic.

Speaker Change: With that I'll turn it over to a b to discuss our financial results and guidance.

Speaker Change: Thanks, Eric.

Speaker Change: Turning to the consolidated financial results on slide six.

Speaker Change: Please note all comparisons are against the prior year period unless stated otherwise.

Speaker Change: Fourth quarter orders of $817 million were up approximately 8% on a reported basis and up 5% organically.

Speaker Change: We saw orders growth across the portfolio, but SSD experiencing 8% organic growth in the quarter driven by blanket order activity that will ship in 2025.

Speaker Change: <unk> had mid single digit organic growth in FMT had low single digit growth.

Speaker Change: For the year orders were up 4% overall and up.

Speaker Change: 3% organically.

Abhishek Khandelwal: Our HST and FSDP segments experienced high single-digit organic growth. HST growth was driven by year-end blanket order activity in nomadics and life sciences, combined with strong demand in both semiconductor MRO within our ceiling solutions business and within global broadband satellite communication. FSDP growth was driven by the combination of strong demand from North America fire OEMs and fire integrated system solutions. FMT experienced a low single-digit organic decline driven by market softness in our agricultural business as well as softness in our semiconductor capital equipment vertical within our intelligent water portfolio. Fourth quarter sales of $863 million were up 9% reported and up 3% organically compared to prior years.

Speaker Change: <unk> and <unk> segments experienced high single digit organic growth.

Speaker Change: <unk> growth was driven by year end blanket order activity and pneumatics and life Sciences.

And bind with strong demand in both semiconductor MRO within our sealing solutions business and within global broadband satellite communications.

Speaker Change: <unk> growth was driven by the combination of strong demand from North America fire Oems and fire integrated system solutions.

Speaker Change: <unk> experienced a low single digit organic decline driven by market softness in our agricultural business has been a softness in our semiconductor capital equipment vertical within our intelligent water portfolio.

Speaker Change: Fourth quarter sales of $863 million were up 9% reported and up 3% organically compared to prior year.

Abhishek Khandelwal: We experienced organic growth of 8% in FSDP and 3% in FMT. FSDP growth was driven by continued strength with North America Fire OEM's production ramp and shared gain of automation programs within integrated fire systems. HST was planned organically versus prior year. Strong execution of targeted growth initiatives tied to fuel cells, projects in pharma and global broadband satellite communications, and strong demand for semiconductor MRO were offset by broad-based softness in life sciences, analytical instrumentation, automotive, and semiconductor capital equipment verticals. Overall, we delivered approximately 40 million of projects, primarily centered in that. Whole year sales of $3.3 billion or flat overall and down 2% organic.

Speaker Change: We experienced organic growth of 8% and FSD.

Speaker Change: DP and 3% in FMT.

Speaker Change: <unk> growth was driven by continued strength with North America, OEM production ramp and share gain of automation programs within integrated fire systems.

Speaker Change: <unk> was flat organically versus prior year.

Speaker Change: Strong execution of targeted growth initiatives tied to fuel cell projects in pharma and Bilbo broadband satellite communications and strong demand for semiconductor MRO were offset by broad based softness in life Sciences analytical instrumentation, automotive and semiconductor capital equipment verticals.

Speaker Change: Overall, we delivered approximately $40 million of projects primarily centered in SSD.

Speaker Change: Full year sales of $3 3 billion were flat overall and down 2% organically.

Abhishek Khandelwal: HST, contracted by 7% on an organic basis, driven by life sciences, and semiconductor cyclical market head. FMT growth was flat with strength in chemicals and municipal water markets, offsetting softness in agriculture and semiconductor capital equipment within the intelligent water platform. FSDP drove low single-digit growth bolstered by North America Fire OEM and Fire Integrate System Solution demand. Fourth quarter gross margin decline, 20 basis points to 42.5% on a reported basis. However, on an adjusted basis, Gross margin expanded by 40 basis points as the benefit from strong price cost and operational productivity was partially offset by higher employee-related and discretionary cost, unfavorable mix, and the net dilutive impact of acquisitions and divestiture.

Speaker Change: It's a steep contracted by 7% on an organic basis.

Speaker Change: Even by life Sciences, and semiconductor cyclical market headwinds.

Speaker Change: FMT growth was flat with strength in chemicals, and municipal water markets offsetting softness in agriculture, and semiconductor capital equipment within the intelligent water platform.

Speaker Change: <unk> DP drove low single digit growth bolstered by North America, OEM and far integrated system solution demand.

Speaker Change: Fourth quarter gross margin declined 20 basis points.

Speaker Change: Before your two 5% on a reported basis.

Speaker Change: On an adjusted basis.

Speaker Change: Gross margin expanded by 40 basis points as the benefit from strong price cost and operational productivity was partially offset by higher employee related and discretionary cost.

Speaker Change: Favorable mix and the net dilutive impact of acquisitions and divestitures.

Abhishek Khandelwal: For the year, gross margin was 44.2%, ending relatively flat. adjusted gross margin was 44.5% expanding 30 basis Strong price cost and improved operational productivity, net of lower volume leverage, were partially offset by higher employee related costs and unfavorable net. fourth quarter adjusted EBITDA margin was 26.4% up 60 basis. I will discuss the drivers of fourth quarter adjusted EBITDA on the next slide in a moment. On a full-year basis, adjusted EBITDA margin contracted 80 basis points to 26.7%. A bridge of the full-year adjusted EBITDA can be found in the appendix of this presentation. On a gap basis, our Q4 effective tax rate was 18.5% versus 22.7% in the prior year period.

Speaker Change: For the year gross margin was 44, 2% and being relatively flat.

Speaker Change: Adjusted gross margin was 44, 5% expanding 30 basis points.

Speaker Change: Strong price cost and improved operational productivity net of lower volume leverage were partially offset by higher employee related costs and unfavorable mix.

Speaker Change: Fourth quarter adjusted EBITDA margin was 26, 4% up 60 basis points.

I will discuss the drivers of fourth quarter adjusted EBITDA on the next slide in a moment.

Speaker Change: On a full year basis.

Adjusted EBITDA margin.

Speaker Change: <unk> 80 basis points to 26, 7%.

Speaker Change: A bridge of the full year adjusted EBITDA can be found in the appendix of this presentation.

Speaker Change: On a GAAP basis.

Speaker Change: Q4 effective tax rate was 18, 5% versus 22, 7% in the prior year period.

Abhishek Khandelwal: The full year 2024 gap effective tax rate was 21.1% versus 21.7% in 2020. Both the Q4 and full-year tax rate decreases are primarily due to discrete benefits at year-end, including the reduction of taxes accrued on dividends of foreign earnings and the decrease in state tax expense mainly due to the jurisdictional mix of taxable income. Fourth quarter net income was $123 million, resulting in GAAP diluted EPS of $1.62. The adjusted net income was $155 million with an adjusted EPS of $2.04 up 21 cents or 11%. For the full year, net income was $505 million, resulting in EPS of $6.64.

Speaker Change: The full year 2024, GAAP effective tax rate was 21, 1% versus 21, 7% in 2023.

Speaker Change: Both the Q4 and full year tax rate decreases.

Primarily due to discrete benefits at year end, including the reduction of taxes accrued on dividends of foreign earnings and a decrease in state tax expense, mainly due to the jurisdictional mix of taxable income.

Speaker Change: Fourth quarter net income was $123 million, resulting in GAAP diluted EPS of $1 62.

Speaker Change: Adjusted net income was $155 million with an adjusted EPS of $2.04 up 21 cents or 11%.

Speaker Change: For the full year net income was $505 million, resulting in EPS of $6.64.

Abhishek Khandelwal: Adjusted net income was $599 million, generating an EPS of $7.89, down 33 cents, or 4% from last year. Free cash flow for the quarter was $157 million, a decrease of 12%. We achieved a conversion rate of 101% of adjusted net income. For the year, we delivered free cash flow of 603 million down 4% versus last year, and also coming in at 101% of adjusted net income. We achieved 3.8 in inventory returns and invested $65 million in capital expenditures. A strong balance sheet and cash flow enabled us to pay $205 million in cash dividends to shareholders this year.

Speaker Change: Adjusted net income was 599 million generating an EPS of $7.89 down 33, or 4% from last year.

Speaker Change: Free cash flow for the quarter was $157 million a decrease of 12%.

Speaker Change: We achieved a conversion rate of 101% of adjusted net income.

Speaker Change: For the year, we delivered free cash flow of $603 million down 4% versus last year and also coming in at 101% of adjusted net income.

Speaker Change: We achieved three eight in inventory turns and invested $65 million in capital expenditures.

Speaker Change: Our strong balance sheet and cash flow enabled us to pay $205 million in cash dividends to shareholders. This year.

Abhishek Khandelwal: We also funded the acquisition of Mott through the combination of approximately $212 million of cash and $774 million of debt. We continue to maintain our strong investment-grade rating and close the year with a gross leverage ratio of 2.2 times.

Speaker Change: We also funded the acquisition of Mark through the combination of approximately $212 million of cash and $774 million of debt.

Speaker Change: We continue to maintain our strong investment grade rating and closed the year with a gross leverage ratio of two two times.

Abhishek Khandelwal: Moving on to slide 7, I will walk through the details of the adjusted EBITDA drive. For the fourth quarter, adjusted EBITDA increased by approximately $23 million. Our organic sales volume increased by approximately 1%, favorably impacted adjusted EBITDA by $2 million, flowing through at prior year adjusted gross margin rate of 42.7%. Strong price-cost spread of 130 basis points and operational productivity drove $18 million of benefits year-over-year. In the quarter, we saw unfavorable mix, primarily in our energy and banded business. We strategically invested in resources, supporting target growth initiatives in groups such as Fire and Safety and Intelligent Water.

Speaker Change: Moving on to slide seven I will walk through the details of the adjusted EBITDA drivers.

Speaker Change: For the fourth quarter, adjusted EBITDA increased by approximately $23 million.

Speaker Change: Organic sales volume increase of approximately 1%.

Speaker Change: [noise] favorably impacted adjusted EBITDA by $2 million.

Speaker Change: Flowing through our prior year adjusted gross margin rate of 42, 7%.

Speaker Change: Strong price cost spread of 130 basis points and operational productivity drove $80 million of benefits year over year.

Speaker Change: In the quarter, we saw unfavorable mix, primarily in our energy and banded business.

Speaker Change: We strategically invested in resources supporting targeted growth initiatives and groups, such as fire and safety and intelligent water.

Abhishek Khandelwal: All these factors combine into a favorable organic flow-through of 53%. The impact of acquisitions, net of divestitures, and FX increased adjusted EBITDA by $12 million on a quarter-over-quarter basis.

Speaker Change: All of these factors combined into a favorable.

Speaker Change: Organic flow through of 53%.

Speaker Change: The impact of acquisitions net of divestitures and FX increased adjusted EBITDA by $12 million on a quarter over quarter basis.

Abhishek Khandelwal: Now, I would like to move on to our overall outlook for 2025, starting on page 8. before diving into a full year guide. I want to reiterate Eric's opening comments. IDEX continues to have leading positions in attractive end markets attached to strong secular growth trends. Beyond positive economic fundamentals, we will continue to drive above-market growth through pricing power, targeted growth initiatives, competitive lead times, and customer intimacy-driven shared gain. These dynamics are demonstrated within each of our segments and will result in better market performance over the long term. For the full year 2025, we expect organic growth of 1 to 3%, with the majority of our end markets stable to grow in.

Speaker Change: Now I would like to move on to our overall outlook for 2025, starting on page eight.

Speaker Change: Before diving into our full year guidance.

Speaker Change: I want to reiterate Eric's opening comments.

Speaker Change: <unk> continues to have leading positions in attractive end markets attached to strong secular growth trends.

Speaker Change: Beyond positive economic fundamentals, we will continue to drive above market growth through pricing power.

Speaker Change: Targeted growth initiatives competitive lead times and customer intimacy driven share gains.

Speaker Change: These dynamics are demonstrated in each of our segments and will result in better than market performance over the long term.

Speaker Change: For the full year 2025, we expect organic growth of 1% to 3%, but the majority of our end markets stable to growing.

Abhishek Khandelwal: Within this range, we expect HST to be our highest growth segment near the high end of the range. We are expecting a modest lift within our key end markets in life sciences, fluidics, and optical filters. And a second half recovery in the semiconductor capital equipment. We will continue to see tailwinds with pharma, semiconductor MRO, space and energy transition markets as we experienced in Q4. So, tailwinds are supported by demand for new disease therapies and nutrition, global communication satellite network expansion, and energy consumption tied to data centers. Additionally, mass applications and capabilities will enable growth acceleration with energy transition as demand for clean energy expands internationally, and traditional energy solutions grow domestically.

Speaker Change: Within this range.

Speaker Change: <unk> to be our highest growth segment near the high end of the range.

Speaker Change: We're expecting a modest lift.

Speaker Change: Key end markets and life Sciences, Fluidics optical sensors, and a second half recovery in the semiconductor capital equipment.

Speaker Change: He will continue to see tailwind with pharma semiconductor MRO space in energy transition markets as we experienced in Q4.

Speaker Change: So its tailwind are supported by demand for new disease therapies, and nutrition Global Communications satellite network expansion and energy consumption by two data centers. Additionally march applications and capabilities.

Speaker Change: Enable growth acceleration, but the energy transition the demand for clean energy expand internationally.

Speaker Change: In traditional energy solutions grows domestically.

Abhishek Khandelwal: For FMT, we expect overall segment growth closer to the lower end of the guideline. We see the most exposure to marker cyclicality in this sector. In our core industrial markets, we expect continued stability as we saw in the fourth quarter. but flat to low single-digit market growth and strong price. This stability will be tempered by energy and agriculture, where we see more challenges driven by the timing of capital investments and lower levels of farm income respectively. We remain bullish with the growth in our intelligent water platform, driven by continued municipal water markets investment in waste water management and aging infrastructure improvements in conjunction with key project wins in our semiconductor ultra-pure water heater business.

Speaker Change: For FMT, we expect overall segment growth closer to the lower end of the guidance range, we see the most exposure to market cyclicality in this segment.

Speaker Change: In our core industrial markets. We expect continued stability as you saw in the fourth quarter.

Speaker Change: But flat to low single digit market growth and strong price support.

This stability will be tempered by energy and agriculture, where do we see more challenges driven by the timing of capital investments.

Speaker Change: And lower levels of farm income respectively.

Speaker Change: We remain bullish with the growth in our intelligent bought a platform.

Speaker Change: Given by continued municipal water markets investment and wastewater management and aging infrastructure improvements.

Speaker Change: Junction the key project wins in our semiconductor ultra pure water heater business.

Abhishek Khandelwal: Finally, turning to our FSDP segment, we expect organic growth to be towards the midpoint of our guided range with continuous strength in our fire and safety business. Our FHIR business has successfully deployed its Integrate Systems platform over the past few years, and it is now more than 10% of that business. This program has increased our content per truck, which when combined with the Recovering North America OEM channel, has accelerated our growth. We expect the growth trajectory to continue in 2025. We expect dispensing and bandit to be up low single-digit. This segment performance outlook embedded within our organic growth range of 1 to 3 percent.

Speaker Change: Finally.

Speaker Change: Turning to our <unk> segment, we expect organic growth to be towards the midpoint of our guided range with continued strength in our fire and safety business.

Speaker Change: Our fire business has successfully deployed its integrated systems platform over the past few years.

Speaker Change: And it is now more than 10% of that business.

Speaker Change: This program has increased our content per truck, which when combined with the recovering North America OEM channel.

Speaker Change: Accelerating our growth.

Speaker Change: We expect the growth trajectory to continue in 2025.

Speaker Change: We expect dispensing and band it to be up low single digits.

Speaker Change: This segment performance outlook embedded within our organic growth range of 1% to 3%.

Abhishek Khandelwal: Equals adjusted earnings per share growth of $0.15 to $0.40 depending on top line results including price, cost in line with IDEX historical performance and slide portfolio. Additionally, we will drive operational excellence from operational productivity more than offsetting wage-related inflation pressure, contributing $0.15 to $0.25 of adjusted EPS growth. We will also drive 43 cents of growth from the platform optimization and de-layering savings that Eric already mentioned. In order to achieve these savings, we expect to take $21 to $25 million in restructuring charges during 2025, of which approximately $8 to $10 million is expected in the first These charges are primarily related to separate.

Speaker Change: Equals adjusted earnings per share growth of 15 240 <unk>.

Speaker Change: Depending on top line results, including price cost in line with IDEXX historical performance and slight portfolio mix.

Speaker Change: Additionally, we will drive operational excellence from operational productivity more than offsetting vigilant inflation pressure.

Speaker Change: Adding 15 to 25 of adjusted EPS growth.

Speaker Change: We will also drive 42 cents of growth from the platform optimization and delivering savings that Eric already mentioned.

Speaker Change: In order to achieve these savings, we expect to take 21% to $25 million in restructuring charges during 2025 of which approximately $8 million to $10 million is expected in the first quarter.

Speaker Change: These charges are primarily related to severance.

Abhishek Khandelwal: The reset of variable compensation to normal levels after a challenging 2024, combined with higher share base compensation, results in a 29 cent headwind, while the impact of recent acquisition and divestitures contributes 24 cents of adjusted operating EPS growth before financing. Finally, considering a few non-operational items, the higher debt level due to the acquisition of MAAT will unfavorably impact adjusted EPS growth by 22 cents. In totality, the overall impact of March 2025 adjusted EPS is accretive, net of higher interest expense ahead of schedule. We expect FX to be a headwind of $0.11 in 2025. An increase in the effective tax rate on a year-over-year basis is creating $0.14 headwind for adjusted EPS.

Speaker Change: The reset of variable compensation to normal levels. After a challenging 2024 combined with higher share based compensation, resulting in a 29 cent headwind, while the impact of recent acquisitions and divestitures contributes 24.

Speaker Change: <unk> operating EPS growth before financing.

Finally, considering a few non operational items.

Higher debt level due to the acquisition of Marc will unfavorably impact adjusted EPS growth by 'twenty two.

Speaker Change: In totality the overall impact of Mark to 2025, adjusted EPS is accretive net of higher interest expense ahead of schedule.

Speaker Change: We expect FX to be a headwind of 11 cents in 2025.

Speaker Change: An increase in the effective tax rate on a year over year basis is creating 14th cent headwind our adjusted EPS.

Abhishek Khandelwal: The 2024 effective tax rate includes certain discrete events, which produced an 11 cent benefit to adjusted EPS in 2024 that will not repeat in 2025. And in addition, the projected 2025 rate of approximately 22 to 23% includes a heavier mix of improved performance in regions with higher tax rates. Turning to slide nine, I'll provide additional details for the full year guidance, as well as the first quarter of 2020.

Speaker Change: 2024 effective tax rate includes certain discrete events.

Speaker Change: Which produced an 11% benefit to adjusted EPS in 2024 that will not repeat in 2025 and in addition, the.

Speaker Change: The projected 2025 rate of approximately 22% to 23% includes the heavier mix of improved performance in regions with higher tax rates.

Speaker Change: Turning to slide nine I'll provide additional details for the full year guidance as well as the first quarter of 2025.

Abhishek Khandelwal: In summary, for the full year, we expect organic revenue growth of 1 to 3% to yield gap EPS of $6.56 to $6.96 and an adjusted EPS of $8.10 to $8.45 or up 3% to 7% over 2024. Adjusted EBITDA margins are expected to be in the range of 27.5% to 28%. Capital expenditures are anticipated to be about $90 million. Corporate costs are expected to be approximately $110 million up from 2024, by approximately $16 million, driven by variable compensation reset and essential compliance investment. Moving on to the first quarter, we are projecting GAAP EPS to range from $1.18 to $1.24, and adjusted EPS to range from $1.60 to $1.65.

Speaker Change: In summary for the full year, we expect organic revenue growth of 1% to 3%.

Speaker Change: The yield gap EPS of $6 56 to $6 96.

Speaker Change: And an adjusted EPS of $8 10 to.

Speaker Change: $8 45.

Speaker Change: Up 3% to 7% over 'twenty 'twenty four.

Speaker Change: Adjusted EBITDA margins are expected to be in the range of 27.5% to 28%.

Speaker Change: Capital expenditures are anticipated to be about $90 million.

Speaker Change: Corporate costs are expected to be approximately $110 million up from 2024 by approximately $16 million driven by variable compensation reset and essential compliance investments.

Speaker Change: Moving onto the first quarter, we are projecting GAAP EPS to range from $1 18, $2 24, and adjusted EPS to range from $1 60 to $1 65.

Abhishek Khandelwal: Organic revenue is expected to decline 3% to 4% compared to the prior year. and adjusted EBITDA margins are expected to be in the range of 24.1% to 24.5%. Organic gravity range reflects a challenging Q1 2024 comparable with our semiconductor Agriculture, Chemical and Energy, and Markets, which decelerated as we exited 2024. We are offsetting a portion of this pressure through positive price-cost spread, productivity, and our platform optimization savings to drive an organic flow-through on lower volume in the low-to-mid 40 percent. Additionally, our adjusted EPS guidance includes six cents of pressure versus the prior year from share-based compensation.

Speaker Change: Organic revenue is expected to decline, 2% to 4% compared to the prior year.

Speaker Change: And adjusted EBITDA margins are expected to be in the range of 24, 1% to 24, 5%.

Speaker Change: Organic revenue range reflects the challenging Q1 2024 comparable with our semiconductor.

Speaker Change: Agricultural chemical and energy end markets, which decelerated as we exited 2024.

Offsetting a portion of this pressure through positive price cost spread productivity and our platform optimization savings to driving organic flow through on lower volume in the low to mid 40%.

Speaker Change: Additionally, adjust.

Speaker Change: Our adjusted EPS guidance.

Speaker Change: Includes six sensor pressure versus the prior year from share based compensation.

Abhishek Khandelwal: To add additional color to our first quarter guide from a sequential perspective versus 4Q2024. We expect to see reduced revenues resulting from $40 million of projects executed in the fourth quarter, flowing through at a gross margin rate, as well as some additional volume decline in HST due to semiconductor recovery timing and within FMT due to seasonality within ag and water. We expect pressure of $0.20 to adjusted EPS from accelerated recognition of stock compensation and variable compensation reset as we enter 2025.

Speaker Change: You add additional color to our first quarter guide from a sequential perspective versus <unk> 2024.

Speaker Change: We expect to see reduced revenues, resulting from $40 million of projects executed in the fourth quarter drilling.

Speaker Change: Flowing through at a gross margin rate.

Speaker Change: Well as some additional volume decline in <unk> due to semiconductor recovery timing and within FMT due to seasonality, but didn't act and water.

Speaker Change: We expect pressure of 'twenty two.

Speaker Change: The adjusted EPS.

Speaker Change: From accelerated recognition of stock compensation and variable compensation reset as we enter 2025.

Abhishek Khandelwal: To close out on our guidance, I would like to provide some pacing considerations to consider as you contemplate our four-year guidance on the next slide. I'm on slide 10. Our guidance implies that revenue and adjusted EPS will be weighted to the second half of the year. In terms of revenue pacing, we expect a higher portion of our four-year sales guide to be delivered in the second half. driven by sequential recovery of our capital equipment related semiconductor markets, timing of water project deliveries, and March shipment timing, which has historically been weighted to the latter part of the calendar.

Speaker Change: To close out on my guidance I would like to provide some basic considerations consider as you contemplate our full year guidance on the next slide.

Speaker Change: Im on slide 10.

Speaker Change: Our guidance implies that revenue and adjusted EPS will be weighted to the second half of the year.

Speaker Change: In terms of revenue pacing, we expect a higher portion of our full year sales guide to be delivered in the second half.

Speaker Change: Driven by sequential recovery of our capital equipment related and semiconductor markets.

Speaker Change: The water project deliveries and March shipment timing, which has historically been weighted to the latter part of the calendar year.

Abhishek Khandelwal: Additionally, we expect a modest recovery within our life sciences, fluidics, and optical filter business. implying low single-digit organic growth for the year, with revenue pacing approximately flat across the year. and industrials to show modest market growth with strong price support following historic seasonal patterns. Our target growth programs will have a more pronounced impact in the second half. From an adjusted EPS perspective, we expect increased adjusted EPS on higher second half volume at historical flow-through rate. Platform optimization and de-layering benefits, as well as price-cost realization, reach full run rate in the third quarter of 2020. and Stock Compensation Expense, you will have an in-year first quarter adjusted EPS impact of approximately 20 cents.

Speaker Change: Additionally, we expect a modest recovery within our life Sciences, fluidics and optical filter business.

Speaker Change: Implying low single digit organic growth for the year with revenue pacing approximately flat across the year.

Speaker Change: And industrials to show modest market growth with strong price support following historical seasonal patterns.

Speaker Change: Our targeted growth programs will have a more pronounced impact in the second half.

Speaker Change: From an adjusted EPS perspective, we expect.

Speaker Change: Increased adjusted EPS on higher second half volume at historical flow through rates.

Speaker Change: Not from optimization and delivering benefits as well as price cost realization reached full run rate in the third quarter of 2025 and.

Speaker Change: Stock compensation expense, we would have an in year first quarter adjusted EPS impact of approximately 20 cents.

Abhishek Khandelwal: and a full-year impact of approximately $0.35.

Speaker Change: And a full year impact of approximately 35 cents with that I will turn it over to Eric for closing remarks.

Eric Ashleman: With that, I will turn it over to Eric for closing remarks. Thanks, Abhi. I'm on slide 11. As I close our introductory remarks with an overview of our value drivers, I thought I'd provide some three-dimensional color for my Q4 travels across IDEX to help you really appreciate the quality of our company, our people, and our culture. In late November, I joined more than 20 other IDEX leaders at our Airtek business, acquired in 2021, for a week of rapid continuous improvement events to drive productivity and throughput in support of one of their fastest growing customers. We included a cohort of large business leaders nearing graduation from the IDEX Academy's Leadership Excellence Program.

Eric: Thanks, a b I'm on slide 11.

Eric: I closed our introductory remarks with an overview of our value drivers I thought I'd provide some three dimensional color for my Q4 travels across IDEXX to help you really appreciate the quality of our company our people and our culture.

Eric: In late November I joined more than 20, other IDEXX leaders at our Air Tech business acquired in 2021 for a week of rapid continuous improvement events to drive productivity and throughput in support of one of their fastest growing customers.

Eric: We included a cohort of large business leaders nearing graduation from the IDEXX academies leadership Excellence program they.

Eric Ashleman: They took powerful lessons of process-driven servant leadership back to their global teams to raise the bar on what's possible when great teams work together with full engagement. I checked in on the Mott team in late fall to see firsthand the state of integration. I was inspired, as always, by their incredible passion for the business as they deliver solutions to the world's most demanding problems. In many ways, it feels like they've been part of IDEX for years, not months. Finally, I traveled to India to visit our facilities in commercial. The manufacturing facility we opened less than two years ago near Omnibot is already at high levels of utilization, producing a variety of products for dispensing and our HST material processing technology.

Eric: They took powerful lessons of process driven circuit leadership back to their global teams to raise the bar on what's possible when great teams worked together with full engagement.

Eric: Checked in on the <unk> team in late fall to see firsthand. The state of integration I was inspired as always by their incredible passion for the business as they deliver solutions to the world's most demanding problems in many ways. It feels like they've been part of IDEXX for years not months.

Eric: Finally, I traveled to India to visit our facilities in commercial teams. The manufacturing facility, we opened less than two years ago near Omnipod is already at high levels of utilization producing a variety of products for dispensing and our HST material processing technologies business.

Eric Ashleman: Near Vadodara, at our first production campus, I got a chance to visit the secondary school we've built and staffed to support over 250 children from local communities. All of these experiences helped me really appreciate the power of our purpose, trusted solutions, improving lives.

Eric: If a dora at our first production campus I got a chance to visit the secondary school, we felt and staff to support over 250 children from local communities.

Eric: All of these experiences helped me really appreciate the power of our purpose trusted solutions improving lives with that I'll turn it over to the operator for your questions.

Operator: With that, I'll turn it over to the operator for your questions. Thank you. If you'd like to ask a question, please press star 1 on your telephone keypad. A confirmation tone will indicate your line is in the question... You may press star two if you'd like to remove your question from the. For participants using speaker equipment, it may be necessary to pick up your handset before pressing the start button.

Eric: Okay.

Speaker Change: If you'd like to ask a question. Please press star one on your telephone keypad, a confirmation tone will indicate your line is in the question queue.

Speaker Change: You May press star two if he like to remove your question from the queue for participants using speaker equipment. It may be necessary to pick up your handset before pressing the star keys.

Michael Halloran: Our first question comes from the line of Mike Halloran with Baird. Please proceed with your question. Hey, good morning, everyone. Good morning. So let's start with a lot of what Abhi was going through there and just help me understand the cadencing and the moving pieces a little bit more succinctly. If I think about why 1Q is so soft and then the confidence in the remaining part of the year, obviously, let's, you know, take aside the share-based comp piece and, you know, certainly reference the timing. So the moving pieces here are more project timing, share-based comp, anything else you would talk to is a broad bucket.

Speaker Change: Our first question comes from the line of Mike Halloran with Baird. Please proceed with your question.

Mike Halloran: Hey, good morning, everyone.

Mike Halloran: So let's start with the latter would it be was going through there and just help me understand the cadence and the moving pieces a little bit more succinctly. If I if I think about why <unk> was so soft.

Mike Halloran: And then the confidence in the remaining part of the year obviously.

Mike Halloran: Take aside the share based comp piece.

Mike Halloran: And you certainly referenced the timing so.

The moving pieces here are more project timing share based comp or anything else you would talk to us a broad bucket, but I think the bigger part of the question is just why the confidence in some of these end markets improving as you work through the year, particularly the semi side or anything else.

Michael Halloran: But I think the bigger part of the question is just why the confidence in some of these end markets improving as you work through the year, particularly the semi-side or anything else. I know it's a broader question and my follow-up may be a little more succinct related to some of those, but just... Maybe help line that out because I know that's certainly where we're getting a lot of Yeah, so why don't I do this? Let me let me start and then I will jump in as you see, as you see, you know, fit. But so look, I know this Q1 topic, Q4 topic is a big topic.

Mike Halloran: Broader question and my follow up can you maybe be a little more succinct that related to some of those but just.

Speaker Change: Maybe help line that out because I know, that's certainly where we're getting a lot of questions. Yeah. So why don't I do this let me let me start and then Eric will jump in as he sees fit.

Mike Halloran: Fit but.

Eric Eshleman: Look I know Q1 topic Q4 topic is a big topic. So let's just start first sequentially Mike to your point. So if you think about Q4 to Q1 sequentially as you pointed out there's about $40 million of project in Q4. So when you think about the organic growth that you saw in Q4 $40 million of that is supporting a project in Q4, so that organic growth is very tight.

Eric Ashleman: So let's just start first sequentially, Mike, to your point. So if you kind of think about Q4 to Q1, sequentially, as you pointed out, there's about $40 million of project in Q4. So when you think about the organic growth that you saw in Q4, 40 million of that, you see 40 million of project in Q4. So that organic growth is very tied to that, you know, 40 million project shipment. So when you go from Q4 to Q1, that 40 million doesn't repeat and there's about a 22 cent impact. The second thing is when you when you talk about share based comps, it is actually a big topic sequentially.

Eric Eshleman: To that 40 million project shipments. So when you go from Q4 to Q1 that 40 million doesn't repeat them. There's about a 22 impact sequentially. The second thing is when you. When you talk about share based comps. It is actually a big topic sequentially. So from Q4 to Q1, it's a <unk> 20 headwind when you look at it on a sequential basis. So if you start with the 204.

Abhishek Khandelwal: So from Q4 to Q1, it's a 20 cent headwind when you look at it on a sequential basis. So if you start with a 204, back out the project, back out the share based comp, that's about 42 cents worth of sequential, sequential headwind. Now switching gears on you for a second, kind of talking about Q1 year over year. As you recall, when we talked about the last year at the same time, we exited Q4 into Q1, where our industrial businesses saw a positive momentum, positive inflection, and we built backlog in the exiting Q1 last year.

Eric Eshleman: <unk> back out the projects back out the share based comp that's about 42 cents worth.

Eric Eshleman: Sequential.

Eric Eshleman: Sequential headwind.

Eric Eshleman: Now switching gears on you for a second and kind of talking about Q1 year over year as you as.

Eric Eshleman: As you as you recall exhibit as you recall when we talked about the last year at the same time the eggs.

Eric Eshleman: Q4 into Q1, where our industrial businesses.

Eric Eshleman: Positive momentum positive inflection and we built backlog in the exiting Q1 last year.

Eric Ashleman: In May, we all saw there was a, you know, the inflation reading was pretty hard, likelihood of cutting the rate three to five times was pretty much off the table. And so what we saw in 2024, really, in the first half into the third quarter, is that industrial businesses that build backlog, burn that backlog, and quite frankly, carry the weight in 20 The second half of 2024, Mike, is really all about the strong momentum that we saw in HST tied to the orders or growth that we saw in Q3 and Q4. If you recall, Q3 was positive 20%.

Eric Eshleman: In May of you all saw there was the inflation reading was pretty hot the likelihood of it getting the right three to five times was pretty much off the table and so what we saw in 2024 really in the first half into the third quarter is our industrial businesses that build backlog burn that backlog and quite frankly carry the weight in 2024.

Eric Eshleman: The second half of 2024 months is really all about the strong momentum W. Saw it at just the type of the orders order growth that we saw in Q3 and Q4. If you recall Q3 was positive 20% Q4 was positive 8% in Q3, we saw blanket activity tied to our life Sciences business and some pneumatic business and then in Q4, we saw about 40 million.

Eric Ashleman: Q4 was positive 8%. In Q3, we saw blanket activity tied to our life sciences business and some nomadic business. And then in Q4, we saw about $40 million worth of blanket activity, 30 of which is tied to a nomadic business and then some more life sciences. Now these are not just blanket activity or just normal orders, right? These are brand new platforms with specific customers that have delivery schedules throughout 2025. Okay, so that's where the confidence into the HST orders and what that means from a revenue standpoint comes for, comes for in 2025. So what you're seeing here really is a year that's setting up with positive momentum.

Eric Eshleman: With the blanket activity 30 of which is tied to a nomadic business and then some more life sciences activity. Now. These are not just banking activity or just normal orders. These are brand new platforms with specific customers that have delivery schedules throughout 2025, okay. So that's where the confidence into the HST orders and what that means from a revenue standpoint comes form comes for.

Eric Eshleman: In 2025, so what youre seeing here really is a year that setting up with positive momentum. We closed January we built some backlog as part of a January close. So Q1 really is a reflection as you think about Q1 coming into Q1, we have lower backlog in the industrial side with strong momentum on the HST side as you saw in Q3 Q4, that's really setting us up.

Eric Ashleman: We closed January. We built some backlog as part of the January close. So Q1 really is a reflection, as you think about Q1, coming into Q1, we have lower backlog on the industrial side with strong momentum on the HST side, as you saw in Q3, Q4. That's really setting us up for 2021. A couple other things in the quarter, year over year, we have a 3 cent headwind from FX and then another 6 cent of headwind on the margin line tied to share based comp and wearable comp reset. So that's the color between Q4 to Q1 and then Q1 year over year.

Eric Eshleman: For 2025, a couple of other things in the quarter year over year, we have a <unk> <unk> headwind from FX.

Eric Eshleman: And then other <unk> <unk> of headwind on the margin line tied to share based comp and variable variable comp reset so.

Eric Eshleman: That's the color between Q4 to Q1 and in Q1 year over year.

Eric Ashleman: And just just just a couple things there. I think that that last point that Abhi made, I mean, this is us making the turn where kind of HST comes back and leads the way, as it will in 2025 from a growth standpoint. That's why we've been building it. The momentum that we saw in those blankets is, Abhishek said, that's not routine stuff. The Q4 items that we got in our pneumatics area are really, really good. I mean, that's tied to, honestly, providing power for data center applications. So really strong things that, again, they're unique individual customers with individual launch rates.

Eric Eshleman: Just a couple of things there.

Eric Eshleman: Think that last point that you made I mean this is us making the turn we are kind of HST comes back and leads the way as it will in 2025 from a growth standpoint, that's that's why we've been building it.

Eric Eshleman: The momentum that we saw in those blanks.

Eric Eshleman: Blankets as he said that that's not routine stuff.

Eric Eshleman: Q4 items that we got in our Pneumatics area are really really good I mean, that's tied to honestly to providing power for data center applications.

Eric Eshleman: So really strong things that again, they're unique individual customers individual longer launch rates. So we know where those are and how they phase out across the year.

Eric Ashleman: So we know where those are and how they phase out across the year. You know, the semi-con piece in there is the only piece we didn't really talk about. We do have a couple of customer-specific inventory adjustment pressure points in the early part of the year that are going to correct against themselves in the back half. And so while, as always, we're kind of waiting for an overall inflection point to get to better days ahead, there is a specific point in there that does show up in phasing beginning to You know, so that's out there, but at the same time, you know, around that, we've got actually a couple of positive data points.

Eric Eshleman: Semi con piece in there is the only piece, we didn't really talk about.

We do have.

Eric Eshleman: Couple of customer specific inventory adjustment pressure points in the early part of the.

Eric Eshleman: A year that are going to correct against themselves in the back half and so while as always we're kind of waiting for an overall inflection point to get to better days ahead. There is a specific point in there that that does show up in phasing beginning to end.

Eric Eshleman: So that's out there, but at the same time.

Round that we've got actually a couple of positive data points, our sealing solutions business within semi con, there's kind of different work and there's more sort of after market maintenance kind of items that you're using a system when youre running at.

Eric Ashleman: Our ceiling solutions business within Semicon does kind of different work and does more sort of aftermarket, you know, maintenance kind of items that you use in a system when you're running it. We saw nice growth in Q4, it's continuing to Q1, that's kind of a precursor, at least, you know, indicative that utilization matters and run rates matter and we think is a good data point for further growth in the entire system. And then we saw some, you know, some really, really nice bookings numbers at that kind of cutting edge of technology where we've got heavy content, heavy participation, which sets up really nice.

Eric Eshleman: That's a nice growth in Q4, it's continuing into Q1, that's kind of a precursor at least indicative that our utilization matters and run rates matter and we think is a good data point for further growth in the entire sector and then we saw some some really really nice bookings numbers at that kind of cutting edge of technology, where we've got heavy.

Eric Eshleman: Content heavy participation, which sets up really nicely for years ahead.

Eric Ashleman: So we have a little bit of a transition or a bump there, if you will, customer-specific, first half to second on the semi-side, which complements everything that... Yeah, got it. All right. So if I if I just sum that up super cleanly, then it's the sequential 4Q to 1Q are actually pretty normal seasonality if you exclude the share based comp and you exclude the project activity. And then the outlook for the year is also relatively normal seasonality other than how Mott is shaping up, how a couple of green shoots are shaping up in your semi commentary.

Eric Eshleman: So we have a little bit of a transition or a bump there. If you will customer specific first half the second on the semi side, which complements everything that'd be talks.

Eric Eshleman: Got it alright.

Eric Eshleman: I would just sum that up Super Cleanly, then it's the sequential <unk> were actually pretty normal seasonality. If you exclude the share based comp and you exclude the project activity.

Eric Eshleman: The outlooks and then the outlook for the year is also relatively normal seasonality other than how <unk> is shaping up a couple of green shoots there shaping up in your semi commentary, yes that is correct.

Eric Ashleman: Is that a fair interpretation? Yeah. All right.

Eric Eshleman: Fair interpretation, Okay, Alright, and then and then the second one just when you think about the platform optimization and Delayering comments you made today.

Eric Ashleman: And then the second one, just when you think about the platform optimization and delayering comments you made today, you know, maybe talk a little bit about what this means from the for the growth profile and for how you think about incremental margins or incremental leverage on that growth on a forward basis and just, you know, kind of frame up what the tailwind or the benefit could be. Yes, I mean, it's a it's a pretty simple ratio. We're moving the top line, the numerator and the denominator. And so, you know, this is stuff that we always had in mind as we were putting these pieces together.

Eric Eshleman: Maybe talk a little bit about what this means from the for the growth profile and for how you think about incremental margins or incremental leverage on that growth on a forward basis.

Eric Eshleman: Kind of frame up what the tailwind or the benefit could be from it yes.

Eric Eshleman: Pretty simple ratio, where we're moving the top line the numerator and the denominator and so this is stuff that we always had in mind as we're putting these pieces together and maybe ill kind of work it around the newer part that we're building around material science applications, but these businesses do linked together somatic we they're all leveraging technologies that are unique to each.

Eric Ashleman: And maybe I'll kind of work it around the newer part that we're building around material science applications. These businesses do link together thematically. They're all leveraging technologies, you know, that are unique to each business, but are kind of pinging against the same four to five mark. And so you're able to get some commercial efficiency there. You're able to kind of move from a system where kind of they call it the old IDEX way where each business sort of has to support itself in every single function. to now a couple of businesses that are able to intertwine, either commercially or via technology, sometimes shared services and back office.

Eric Eshleman: Business, but are kind of pinging against the same four to five markets.

Eric Eshleman: And so youre able to get some commercial efficiency, there youre able to kind of move from a system, where kind of they may call. It the old IDEXX way, where each business sort of has to support itself and every single function to now a couple of businesses that are able to intertwine either commercially or via technology, sometimes shared services and back office and so youre getting more mass.

Eric Ashleman: And so you're getting more mass close to the customer to support growth resources. and the growth mission of a company. And you're doing it in a way where actually, you know, you're moving up within the organizations that we're interfacing with in the markets that matter the most because we're bringing more power and more mass. You've got a chance to move the needle more on the top end, but you're actually able to do it a lot more efficiently from a resource perspective because you don't have to kind of string along a bunch of pearls. You've got some unique ways to combine things and get that.

Eric Eshleman: Close to the customer to support growth resources in the.

Eric Eshleman: Growth mission of the company.

Eric Eshleman: And you're doing it in a way, where we're actually moving up within the organizations that we're interfacing with in the markets that matter. The most because we're bringing more power and more mass to those they've got a chance to move the needle more on the top end, but you're actually able to do it a lot more efficiently from a resource perspective, because you don't have to kind of string along a bunch of pearls, you've got some unique ways to combine.

Eric Eshleman: Things and get that leverage so.

Eric Ashleman: So you saw that play out. You're seeing it play out in the 25 numbers on both the top line and the bottom because most of the growth highlights we have, they're kind of coming off that page and a lion's share of the productivity we're delivering is in the same. and that's a story that isn't done. We continue to run this out, we keep assembling the pieces, we put more scale and we get more depth and presence with certain customer sets and markets. There's things we can do. It has always been part of how we thought about this to not only drive growth but get the earnings expansion and the kick that you want there as well by working the top and the bottom of the ratio.

Eric Eshleman: You saw that play out you're seeing that play out in the 25 numbers on both the topline and the bottom because most of the growth highlights we have they're kind of coming off that page.

Eric Eshleman: <unk> a lion's share of the productivity, we're delivering is in the same areas and Thats a story that isn't done I mean as we can.

Eric Eshleman: Continue to run this out we keep assembling the pieces, we put more scale and we can get more depth and presence with certain customer sets and market.

Things, we can do from a facility's perspective other things along the way here. So it has always been part of how we thought about this to not only drive growth, but get the earnings expansion in the kits that you want there as well by work on the top and the bottom of the ratio.

Eric Eshleman: Thank you.

Eric Ashleman: Thank you.

Speaker Change: Thank you. Our next question comes from the line of flat vis tricky with Citi. Please proceed with your questions.

Vladimir Bystricky: Our next question comes from the line of Vlad Bystricky with Citi. Please proceed with your Morning, guys. Morning, team. Thanks for thanks for taking my call. Thanks for all the call around the outlook and the phasing. I guess just stepping back in terms of the... broader macroeconomic backdrop and what's assumed in your guidance. Have you made any specific assumptions relative to potential tariff impacts coming in? And what are you hearing from your customers as they're thinking about, you know, those potential impacts in this uncertain environment that you mentioned? Well, look, I mean, nothing really material here in the numbers of the quarterly phasing that anticipates direction there, because as you know, they're Some of it's along the lines I would have guessed.

Speaker Change: Good morning, guys. Good morning, Thanks for thanks for taking my call.

Speaker Change: Thanks for all the color on the outlook and the phasing I guess, just just stepping back in terms of the.

Speaker Change: Broader macroeconomic backdrop.

Speaker Change: What's assumed in your guidance have you made any specific assumptions relative to potential tariff impacts coming in and what are you hearing from your customers is there.

Speaker Change: Thinking about.

Speaker Change: Those potential impacts in this uncertain environment that you mentioned.

Speaker Change: Well look I mean, nothing really material here in the numbers of the quarterly phasing that anticipates direction, there because as you know there.

Speaker Change: Some of it's some of it's along the lines I would've guessed. Some other pieces of it are kind of surprising and then they're on and off again in nature. So what I will tell you is I just step back and say here's how we're generally set up for anywhere this goes.

Eric Ashleman: Some other pieces of it are kind of surprising, and they're on-off again in nature. So what I will tell you is I just step back and say, here's how we're generally set up for anywhere. We're really, really localized. In any region, we do business. So the majority of the content that we are procuring and sourcing and putting into production and then selling generally happens within the So that's always been the model kind of before tariff wave one and where we are now. Now, over the last five or six years, like a lot of companies, I mean, we've been more intentional about mitigating far away.

Speaker Change: We're really really localized.

Speaker Change: And any region, we do business. So the majority of the content that we're procuring in sourcing and putting into production and then selling generally happens within the same border.

So that's always been the model kind of before tariff wave, one and where we are now now over the last five or six years like a lot of companies I mean, we've been more intentional about mitigating far away.

Speaker Change: Portions of our supply chain, we move things around we have taken certain ratios and fractions down and we've got more second sources.

Eric Ashleman: portions of our supply chain. We've moved things around, we've taken certain ratios and fractions down and we've got more second sources. Some of that was trade war related. Some of it is COVID and that whole experience. We've done those things too. And then, as always, you know, we just keep coming back to, you know, the differentiation and the votes around our franchise. Frankly, the long relationships that we have, which gives us some pricing protection. come out and it's simply unavoidable, and we're delivering critical technology. So we're tracking in any one of these scenarios sort of the price we might pay as an importer.

Speaker Change: Some of that was trade war related some of it is COVID-19 and that whole experience we've done those things too.

Speaker Change: And then as always.

Speaker Change: Keep coming back to the differentiation and the moats around our franchises in and frankly, the long relationships that we have which gives us some pricing protection as things come out and it is simply unavoidable and we're delivering critical technology. So.

Speaker Change: We're tracking in any one of these scenarios sort of the price we might pay as an important we know where that is we know where it is if a supplier is paying it and maybe most importantly, given our model. We know those places where if something were to come out and you know there was long duration is going to tend to lag in through value added steps. The example, I would give you here would be electron.

Eric Ashleman: We know where that is. We know where it is if a supplier is paying it. And maybe most importantly, given our model, we know those places where if something were to come out and there was long duration, it's going to tend to lag in through value-added steps. The example I would give you here would be electronics. We buy a lot of it from local board houses and things, but almost all of the components probably are coming from somewhere else. And so, you know, we learned some things in the first wave. We know where those points are.

Speaker Change: <unk>, we buy a lot of it from local board houses and things, but almost all of the components probably are coming from somewhere else.

Speaker Change: So we.

Speaker Change: We learned that we learned some things in the first wave, we know where those points or we can understand them potentially move things, if we need to but at the end of the day, we think we can protect it with price differentiation.

Eric Ashleman: We can understand them, potentially move things if we need to, but at the end of the day, we think we can protect it with price. So that's the general approach. We meet on it more actively as, again, I think most companies are. And then we're spending the time working different scenarios here. We don't have, at least from a North America perspective, we don't have a facility in Mexico. We have kind of a small to medium one in Canada. And again, a very localized model. Okay, that's that's really helpful. Eric, appreciate that. And then I just wanted to shift to capital deployment for a minute here.

Speaker Change: That's the general approach, we meet on it more actively as again I think most customers companies are and then we're spending the time work in different scenarios here, we don't have.

Speaker Change: At least from a North America perspective, we don't have a facility in Mexico.

Speaker Change: And have a small to medium one in Canada.

Speaker Change: And again, a very localized model overall.

Eric: Great. That's really helpful. Eric I appreciate that and then.

Eric: I just wanted to shift to capital deployment for for a minute here.

Eric Ashleman: M&A funnel update was interesting and helpful. Is there a way to think about sort of the mix of proprietary versus competitive targets in that $10 billion plus potential funnel? And are there particular businesses where you see a higher proportion of potentially larger deals that could come through? Yeah, well, I would still say, I mean, I we're we've got a lot of focus in the areas where we've been deploying capital. So continuing to flesh out that space, the spaces with an H A lot of companion technologies to the material science. that's an area of interest. Proprietary transactions are very much what we're trying to drive here.

Eric: M&A funnel update was was interesting and helpful.

Eric: Is there a way.

Eric: Just think about sort of the mix of proprietary versus competitive targets in that $10 billion plus.

Eric: Plus potential funnel.

Eric: And are there.

Eric: Particular businesses, where you see a higher proportion of potentially larger deals that could come through.

Eric: Yeah, well I would still say I mean.

We've got a lot of focus in the areas, where we've been deploying capital so continuing to flesh out that space the spaces within HST.

A lot of companion technologies to the materials science businesses that we put up there I mean, a lot of there's still a decent portion of the funnel that takes that even to another level. So that's an area of interest proprietary transactions are very much what we're trying to drive here.

Eric Ashleman: Over the last few years, as we've stepped up this work, we've been about an 80% proprietary level on the transactions that we've done. The work we're doing now, that's absolutely our focus, so we talk about... going to go over and have that first conversation. Introduce them to the concept of IDEC. You can probably imagine the more successful we are with bringing these transactions over the line, it gives us reference points and people that they can then talk to to understand what that experience was like. We start to build some natural credibility and momentum as that approach plays out.

Eric: Over the last few years as we've stepped up this work we've been about an 80% proprietary level on the transactions that we've done the work we're doing now that's absolutely our focus so when we talk about.

Eric: It's going to go over and have that first conversation with somebody just introduce them to the concept of IDEXX.

Eric: As you can probably imagine the more successful we are with bringing these transactions over the line. It gives us reference points and people that they can then talk to them to understand what that experience was like.

Eric: Can you start to build some natural credibility and momentum is that approach plays out so I'd love to hold that ratio. If we could as we go through it I think we've got a mix in the funnel right now that would suggest we could and we're all spending our time in a way that supports largely proprietary transactions.

Eric Ashleman: So I'd love to hold that ratio, if we could, as we go through it. I think we've got a mix in the funnel right now that would suggest we could. And we are all spending our time in a way that supports largely proprietary transactions, kind of regardless of the spaces we're looking at. I mean, these are, again, we're kind of, you know, we like that low-on-the-bill material, mission-criticality component. It's often not top of mind, you know, for some people. We see things a little differently. I think Matt was a good example there.

Regardless of the spaces, we're looking at I mean these are.

Eric: Again, we're kind of we like that low on the bill of material mission criticality component, it's often not top of mind for some people, we see things a little differently I think Bob was a good example, there.

Eric: We view that as a way that it could have some.

Eric Ashleman: Page 11 of 11 So we very much want to thank you all for joining us. And then Vlad, this will be, as you know, our leverage and the capacity. So we do have the balance sheet capacity to go support M&A the way we laid out on the page and still maintain our investment. Great, appreciate it. I'll get back in queue. Thank you.

Eric: Interdependent with other IDEXX businesses in a way that's kind of uniquely IDEXX and I think we were out there and we're able to tell that story for for longer than others might have been able to so we very much want to keep this approach and then blood this will it be.

Eric: Our leverage in and the capacity. So we do have the balance sheet capacity to go support M&A. The way, we laid out on the page and still maintain our investment grade rating.

Speaker Change: Great I appreciate it I'll get back in queue.

Eric: Thanks, a lot.

Speaker Change: Thank you. Our next question comes from the line of Nathan Jones with Stifel. Please proceed with your question.

Nathan Jones: Our next question comes from the line of Nathan Jones with Stiefel. Good morning, everyone. I'm going to start off with the back on the One-Two Guide and specifically the 40 million projects that shipped in the fourth quarter. Maybe I missed it. Maybe I already said it. Which of the, I mean, I assume it's HST, FMT, how did that split between those segments? I'm just trying to get a better idea of, you know, maybe what some core growth numbers in the fourth quarter would have been X some of these project shipments. Hey Nathan, this is Abhishek.

Nathan Jones: Good morning, everyone.

Speaker Change: Good morning.

Nathan Jones: I'm going to start off with.

Speaker Change: Back on the <unk> guide and specifically the 40 million projects that shipped in the fourth quarter, maybe I missed it maybe you already said it.

Nathan Jones: Which.

Nathan Jones: I assume it's HSA FMT.

Nathan Jones: How does that split between those segments I'm, just trying to get a better idea of maybe what some call growth numbers in the fourth quarter would have been ex some of these project shipments.

Nathan Jones: So it's about 80% of that just deal with a couple of projects in FMT in FSD P. But majority of this was SST driven in Q4.

Abhishek Khandelwal: So it's about 80% HST with a couple of projects in FMT and FSTP, but majority of this was HST driven. And so that means then that probably, because I mean, the same as Mike said, we get a lot of questions about the revenue guide in the first quarter. I think you've explained some of the earning stuff. Any color on how you're expecting that, you know, minus three to 4% to play out across the segments in the first quarter of 25? Absolutely, I can give you that Nathan. So think of FMT, kind of going back to my backlog conversation I just had, you know, starting the year, FMT is going to be down mid single digit, with HST low single digit to mid single digit decline and FSDP up, up low single digit.

Nathan Jones: And so that means then that probably.

Nathan Jones: Cause I mean same as Mark said, we're getting a lot of questions about that revenue guide in the first quarter I think you've explained some of the <unk> stuff.

Nathan Jones: Any color on how you're expecting that minus 3% to 4% to play out across the segments in the first quarter of 'twenty, absolutely I can give you that net and so think of FMT kind of going back to my backlog conversation I just had.

Nathan Jones: And to your FMT is going to be down mid single digits, but it just did low single digit to mid single digit decline in FSD up.

Nathan Jones: Up low single digits, that's how that's how we've laid out this guide to get to 2% to 4% decline.

Abhishek Khandelwal: That's how, that's how we've laid out this guide to get to three to four. That's helpful, thanks. And then I wanted to talk a little bit more about, I think it was slide four or slide five, with the leveraging scale to drive growth and earnings. Eric, you've given some color there around, you know, some of the initiatives. I was hoping to dig a little bit more into some of the financial impacts. I mean, when you're talking about supply chain leverage, that should show up in gross margins, and you're also talking about SG&A leverage here. Over time, how does that contribute to the financial performance of the business?

Speaker Change: That's helpful. Thanks, and then I wanted to talk a little bit more about.

Speaker Change: I, usually slide slide four slide five with the leveraging scale to drive growth in earnings.

Eric Eshleman: Eric you've given some color there around some of the initiatives that I was hoping to dig a little bit more into some of the financial impacts.

When youre talking about supply chain leverage actually show up in gross margin and Youre also talking about SG&A leverage here.

Eric Eshleman: Over time, how does that contribute to the financial performance of the business like I mean, you must have been your borrow somewhere SMA expectations as you know.

Abhishek Khandelwal: Like, I mean, you must have in your model somewhere some expectations of, you know, this has 20 basis points to gross margins a year or 20 basis points to SG&A leverage a year, just how we should think about how that moves the needle for IDEX from a financial perspective? Yeah, Nathan, so the best way to think about it is kind of going back to what we've been talking about over the last, you know, 12 months, which is really thinking about EBITDA margins here. So if you kind of think about HSD long term, what we've laid out is a low to mid 30% EBITDA business in HSD, right?

Nathan Jones: This adds 20 basis points to gross margins a year only 20 basis points to SG&A leverage just how we should think about how that moves the needle for IDEXX from a financial perspective, yeah Nathan.

Nathan Jones: The best way to think about it is kind of going back to what we've been talking about over the last 12 months, which is really thinking about EBITDA margins here. So if we kind of think about it just the long term will be laid out.

Nathan Jones: Low to mid 30% EBITDA business in HST right. So as you start to think about the work we're doing around delivering around from platform optimization and building scale, you should expect to see that SG&A benefit and expect to see that gross margin benefit because the cost is not just in SG&A. It's also above the gross margin line. So as you start to see the margin needle move.

Abhishek Khandelwal: So as you start to think about the work we're doing around de-layering around, you know, platform optimization and building scale, you should expect to see that SG&A benefit, expect to see that, you know, gross margin benefit, because the cost is not just in SG&A, it's also above, you know, in the gross margin line. So you should start to see the margin needle move, and you should expect HSD to get to low to mid 30%. And then FMT, you know, it's already north of 30 and then after I mean, we, you know, I know you got.

Nathan Jones: And you should expect SSD to get to low to mid 30% EBITDA business and then FMT, it's already north of 30, and then <unk> to be closer to 30% EBITDA.

Nathan Jones: So I mean I know you've got.

Eric Ashleman: I was just going to say, you know, I mean, one example here, we talked a little bit, and we brought Mott on board and talked about where it kind of came in from an EBITDA perspective and how we're going to, we're going to help them aggressively start to boost. Some of what we're talking about here is how that work is done. Sharper on the front end, 8020 says you're localizing around your highest margin products. Great drop-down contribution margin when you do that. Super careful about where you're sort of leveraging resources elsewhere, what you need to run a business.

I was just going to say.

Nathan Jones: One example, here, we talked a little bit.

Nathan Jones: <unk> onboard and talked about where it kind of came in from an EBITDA perspective, and how we can help them aggressively start to boost it.

Nathan Jones: So some of what we're talking about here is how that work is done here you're sharper on the front end of 2020 says your localizing around your highest margin products for the kind of afford in the franchises and you're moving those the most with the most consequence, great dropdown contribution margin when you do that and we're super careful about where you are sort of leveraging.

Nathan Jones: Resources elsewhere, what do you need to run a business with a company like IDEXX and get that bottom line pick up as well. It's early days in some of the things we're doing in sourcing.

Brett Linzey: and Mark Zuckerman. one of these areas, whether it's castings in one or optics in another or motors. You can start to, you can approach that in a very. Great. Thanks for taking my questions. I'll get back in the queue. Thank you.

Nathan Jones: Just to get your head around it if you start to think about it over time, you put lots and lots of lots of an optics franchises together, they're buying a lot of the same base level materials, and we're kind of seeing that in each one of these areas, whether it's castings in one or optics and another motors and a third yes, you can start that youre going to take an approach that in a very different way.

Speaker Change: Great. Thanks for taking my questions I'll get back in the queue.

Nathan Jones: Yeah.

Speaker Change: Thank you. Our next question comes from the line of Deane Dray with RBC capital markets. Please proceed with your question.

Deane Dray: Our next question comes from the line of Deane Dray with RBC Capital Markets. Thank you. Good morning, everyone. Hey, just for starters, I appreciate all the specifics on the first quarter guide. You know, we were all in a bit of a vacuum. release and it was very helpful to hear those. Thank you. I appreciate how you've bridged that for us. And so first question is, and if there's ever been a time to kind of plumb what you're seeing in terms of tone of business. Last quarter it was election uncertainty that seems to have been replaced with policy uncertainty.

Deane Dray: Thank you and good morning, everyone.

Nathan Jones: Evening.

Speaker Change: Hey, just for starters I appreciate all the specifics on the first quarter guide.

Speaker Change: We're all in a bit of a vacuum with the release and it was very helpful to hear the specifics this morning, but that that was probably the bulk of our questions that we were getting before the call.

Speaker Change: But I appreciate I use a bridge that for us and so first question.

Speaker Change: <unk> is this has ever been a time to kind of plug in what youre seeing in terms of tone of business. It seems now last quarter. It was election uncertainty that seems to have been replaced with policy uncertainty and but at the end you have got great indicators in terms of sentiment from your customers on a short.

Deane Dray: And but at the end you have got great indicators in terms of sentiment for your customers on the short cycle stuff, so what are the bellwether businesses telling you? And related to that, I don't normally ask about blanket orders, but the return of them is a positive that your key customers are giving you that kind of line of sight. So is that also part of a tone of business? And are you going to calibrate that? Yeah, thanks for the questions and the comments in the beginning there. I mean, so let's start over on the more industrial side of this, the thing where we're closer to consumption.

Speaker Change: Nickel stop so what are the bellwether businesses, telling you and related to that I don't normally ask about blanket orders, but the return of them is a positive that your key customers are giving you that kind of line of sight. So is that also part of a tone of business.

Speaker Change: And are you going to calibrate that for us.

Speaker Change: Right.

Speaker Change: Thanks for the questions and the comments in the beginning there.

Speaker Change: So let's start over on the more industrial side of this thing where we're closer to consumption I mean, I would say that that has been very stable with stable all last year I mean, even though as I said in my comments, we got some certainty around it.

Eric Ashleman: I mean, I would say, you know, that that has been very stable. It was stable last year. I mean, even though, as I said, my comments, we got some certainty around Candidate selection in Q4, I mean, you didn't really see a bounce necessarily because it very quickly went into the other area which you mentioned. which of the many policies that are being suggested are likely to play out? And can everybody get their head around whether that's good, bad, negative, indifferent, all of that? The reason I called it uncertain optimism is I do think in most of those conversations, you are seeing people sort of lean forward saying, It's got to be a good business environment.

Speaker Change: Candidate selection in Q4, I mean, you don't really see a bounce necessarily because it very quickly went into the other area, which you mentioned, which is which of the many policies that are being suggested are likely to play out and can everybody to get their head around whether that's good bad negative in different all of those things.

Speaker Change: Isn't I'd call that uncertain optimism is I do think in most of those conversations you are seeing people sort of lean forward, saying I think it's going to be a good business environment.

Eric Ashleman: Like, we're having more discussions about future projects, we're being asked... I think that's a positive. That being said, it's not like they're running the system higher, the factories are not working extra shifts, we're not really seeing that yet. It's a more positive environment, I think. really would like to get some clarity on where we need to go. Again, we're kind of set up to deal with either one of those swim. which one we're likely to get. So I think that's on the industrial side. I think you're pointing at the blankets is super important because that is kind of a different world.

Speaker Change: We're having more discussions about future projects were being asked to think and consider and quote on some things even in those industrial spaces that frankly, we weren't two or three quarters ago.

Speaker Change: I think that's a positive that being said, it's not like they're running the system higher the factories are not working extra shifts we're not really seeing that yet so it's.

Speaker Change: It's a more positive environment I think I think.

Speaker Change: I really would like to get some clarity on where we need to go again, we're kind of set up to deal with either one of those swim lanes. It would just be nice to know, which one we're likely to get so.

Speaker Change: I think that's on the industrial side I think you're pointing at the blankets is super important because that is kind of a different world.

Eric Ashleman: And it's reflective of why we've spent so much time trying to build our critical mass in some of these HST markets. So I'll pick a couple. and get your head around it. We're doing a lot of work around. It's not a huge part of IDEX today, but its growth potential is really high. And so the conversations, when you're talking about people that are in that... It's not about what's the policy. where are interest rates going? How many people are going to be shooting rockets up into the atmosphere? How many people want to play with rockets?

Speaker Change: And it's reflective of why we spent so much time trying to build ours.

Speaker Change: Our critical mass in some of these H S. T markets. So I'll pick a couple so you can get your head around it we're doing a lot of work around the space side of things, it's not a huge part of IDEXX today, but its growth potential is really high and so the conversations when you're talking about people that are in that space.

Speaker Change: It's not about what's the policy and where interest rates going.

Speaker Change: How many people are gonna be shooting rockets up into the atmosphere, how many people want to play with communication satellites.

Eric Ashleman: Satellite. Are they going to be able to get payloads in another... And so when we're getting orders and positions on solutions in those areas, those are annuities that I don't think are subject to some of the distortions, you know, month to month, quarter to quarter that we've seen in some of the other areas of the business. So there's one example. I mean, I think we have others in some of the things we're doing. We've got some good things going on in pharma. You know, the mock solution that we talked about in Q4 that they... This is the first time that work's ever been done.

Speaker Change: Going to be able to get payloads at another level.

Speaker Change: And so when we're getting orders in positions on solutions in those areas. Those are annuity streams that I don't think are subject to some of the distortions you know month to month quarter to quarter that we've seen in some of the other areas of the business.

Speaker Change: So there's one example, I mean I think we have others in.

Speaker Change: Yeah. So one of the things we're doing we've got some good things going on in pharma.

Speaker Change: The box solution that we talked about in Q4 that they delivered its the first time that works ever been done.

Eric Ashleman: And so a lot of this work and those orders and those order positions and the things we're putting out there are about setting specification points for evolving markets that I think are a little less dependent. Some of the ups and downs and sideways of, you know, kind of news of the day. And so, I mean, we're really encouraged, as you can tell, by those Q3 brankets, the Q4, because the numbers are good, but largely what they represent and how they position us. And Dean, just to add to that, when we when we talk about blankets, more and more for the near term above and beyond what Eric also said, those blankets that we're talking about have specific ship dates in 2025.

Speaker Change: Sure a lot of this work and those orders and those order positions and things that we're putting out there are about setting specification points for evolving markets that I think are a little less dependent on some of the ups and downs in sideways of kind of.

Speaker Change: News of the day.

Speaker Change: And so.

Speaker Change: I mean, we're really encouraged as you can tell by those Q3 brackets in Q4.

Speaker Change: Because the numbers are good but largely what they represent and how they position us for the years to come.

Speaker Change: <unk> just to add to that when we when we talk about blankets more and more for the near term above and beyond what I also said it does those benches that were talking about have specific ship dates in 2025. So they are they're going to get shipped in 2025 of course once you book, a blinker and doesn't get shipped on January 1st, but they have delivery schedules tied to it throughout the year that we're going to get.

Eric Ashleman: So they are, they're going to get shipped in 2025. Of course, that you know, once you book a blanket doesn't get shipped on January 1, but they have delivery schedules tied to it throughout the year that we're going to get, you know, get the product out. That's really helpful. And second question, and I might have missed it in the the 25 assumptions, are growth investments That's always a lever that you have. It's a way of investing for the future. Page 4 probably had a number of those growth investments, but do you have a specific number embedded in 25, and what was that number in 24?

Speaker Change: Get the product out the door.

Speaker Change: That's really helpful and <unk>.

Speaker Change: Second question and I might've missed it in the 25 assumptions are growth investments that's always a lever that you have it's a way of investing for the future.

Speaker Change: Page four probably had a number of those growth investments, but do you have a specific number embedded in 'twenty five and what was that number in <unk> and 'twenty four.

Eric Ashleman: Well, this is kind of an interesting one because in many ways they don't stick out in ways that they have before as a bridge item because, as I said in the comments here, we've largely self-funded. A lot of the growth investments within those five areas that we talked about. So we have a net productivity benefit because we've been able to resource lever, but that's sort of after the fact of us building some scalable mass as we go at some of these spaces. So I guess. because of the way that this architecture is being built that we've actually got more natural productivity, so you have to look less at it.

Speaker Change: It's kind of an interesting one because in many ways. They don't stick out in ways that they had before as a bridge item because in my comments here, we've largely self funded.

Speaker Change: A lot of the growth investments within those five areas that we talked about so we have a net productivity benefit because they've been able to resource lever, but that's sort of after the fact of US building scalable mass as we go at some of these spaces. So I.

Speaker Change: I guess, it's because of the way that this architecture is being built and we've actually got more natural productivity. So you have to look less at it there are some exceptions around the edges, but.

Eric Ashleman: There are some exceptions around the edges, but you're actually getting more power underneath the hood than is showing as an exceptional bridge item because of that work. Appreciate all that color. Thank you.

Speaker Change: You're actually getting more power underneath the hood and is showing as a exceptional bridge item because of that work correct.

Speaker Change: I appreciate all that color. Thank you Cynthia.

Conference Operator: Thank you. Our next question comes from the line of Joe Giordano with Cowen. Please proceed with your question.

Joe Giordano: Our next question comes from the line of Joe Giordano with TD Cowen. Please proceed. Hi guys, good morning. Hey Joe. Just to start on the projects that you got, the $40 million, was that contemplated when you gave, when you guys reported 3Q, was that contemplated originally in the fourth quarter or was that kind of a pull-in? Because I'm just curious, you got to the low end of the organic guide for the quarter, but the margin was below the low end, so just what, if any, of that was expected? Yeah, so Joe, when we guided Q4 as part of the Q3 call, we were very, very specific around the project delivery that we're expecting in Q4.

Speaker Change: Hey, guys good morning, Hey, Joe.

Joe Giordano: Just to start on the projects that you've got the $40 million was that contemplated when you gave.

Joe Giordano: When you guys reported <unk> was that contemplated originally in the fourth quarter or was that kind of a pull in because I'm. Just curious you got to the low end of the organic guide for the quarter, but.

Joe Giordano: Margin was below the low end so just.

Joe Giordano: What if any of that was expected yes, so Joe when we guided Q4 as part of the Q3 call. We were very very specific around the project.

Joe Giordano: The delivery that we're expecting in Q4 and in fact, the exact or the language that we use around it was hey, if you think about Q3 to Q4 ramp the businesses in general are stable and sequentially flat and on top of it where you have as project activity that we're going to see from Q3 to Q4, So we specifically called it out as part of our guidance.

Joe Giordano: In fact, the exact, or the language that we used around it was, hey, if you think about Q3 to Q4 ramp, the businesses in general are stable and sequentially flat, and on top of it, what you have is project activity that we're going to see from Q3 to Q4. So we specifically called it out as part of our guidance. Okay. And then if I look at the bridge, and I think that's obviously where all the confusion is with people today. I thought you said, I have kind of a couple of questions here. Like on SEMI, I thought you said that it decelerated out of Q4 and now it sounds like that's a major part of the acceleration in the second half of the year.

Joe Giordano: Okay.

Joe Giordano: And then if I look at the bridge and I think that's obviously, where all the confusion is with people today.

Joe Giordano: I thought you said.

Speaker Change: Kind of a couple of embedded questions here on semi I thought you said that it decelerated out of Q4 and now it sounds like that's a major part of the acceleration in the second half of the year. So maybe if you can dig in there unlike wherein semi or are you talking about whether it's memory or other things and then like the life science, how does that play with NIH potential defunding and Mike.

Abhishek Khandelwal: So maybe if you can dig in there on like where in SEMI are you talking about, whether it's memory or other things, and then like the life science, how does that play with NIH potential defunding and like export restrictions on tools and things like that? I'm getting to like how much of that ramp is, you know, secured with firm orders, or is it just an expectation of the market? Yeah, so so the two areas that you talked about on the on the semi side, we kind of have two pieces of it on the positive side in our ceiling solution.

Joe Giordano: Export restrictions on tools and things like that.

Joe Giordano: I'm getting is like how much of that ramp is secured with a firm orders or is it just an expectation of a market change.

Joe Giordano: So but.

Joe Giordano: The two areas that you've talked about on the semi side, we kind of two pieces of it.

Joe Giordano: On the positive side in our sealing solutions business and a smaller percentage, but you know that was positive in Q4. It remains positive in Q1, and it's kind of think of it as like MRO aftermarket business kind of a wearable item that you're using as you maintain.

Abhishek Khandelwal: smaller percentage, but that was positive in Q4, it remains positive in Q1, and it's kind of, think of it as like MRO aftermarket business, kind of a wearable item. So we're calling that out. It's not the major driver, but it's important because it is positive and in some ways... and Matt Summerville. Thank you. The more impactful disruption is in the first half of the year, here sitting in first quarter. This is on the kind of tool equipment side. the line share the rest of our work. I mean, we do we do have some inventory adjustments that are being taken, probably for some of those because of those impacts.

Joe Giordano: Maintain the system, so we're calling that out.

Joe Giordano: It's not the major driver, but it's important because it is positive and in some ways. We think it's a precursor of days ahead.

Joe Giordano: The the more impactful disruption is in the first half.

Joe Giordano: Of the year here sitting.

Joe Giordano: Sitting in first quarter.

Joe Giordano: On the kind of tool equipment side, what we do is from.

Joe Giordano: The lion's share of the rest of our work I mean, we do have we do have some inventory adjustments that are being taken probably for some of those because of those impacts centers economic variables or political variables that you talked about that we know is happening and so we've got kind of a phenomenon, where we pause a bit inside the business for that part of what we deliver in semi and then.

Abhishek Khandelwal: We've got kind of a phenomenon where we pause a bit inside the business for that part of what we deliver in semi, and then we pick it up again in the second half of the year. It's not necessarily a market effect. It's more of a discreet customer item that we know about. The third item that I was talking about for more long-range support is, hey, we're seeing very good commercial activity around the kind of ragged edge of the spectrum where we do a lot of the work that ultimately supports future run-outs towards 2030 and beyond.

Joe Giordano: We pick it up again in the second half of the year.

Joe Giordano: Necessarily a market effect, it's more of a discrete customer item that we know about.

Joe Giordano: The third item that I was talking about for more long range support is.

Joe Giordano: Very good commercial activity around the kind of ragged edge of the spectrum, where we do a lot of the work that ultimately supports future run out towards 2030 and beyond so it kind of got near term positive.

Abhishek Khandelwal: So we've kind of got near-term positive, we've got this bump in existing programs where we have to navigate that first half to second half, and then we've got some long-term indicators that I On the life science side, you know, you talk through some of those things, look, we see low single-digit to mid-single-digit lift in that kind of core fluidics handling franchise that we have around analytical instrumentation. Thank you all But a net positive, overall, as we run through the year and what we... We call H and S for life. Thanks, guys. Thank you.

Joe Giordano: This bump in existing programs, where we have to navigate that first half to second half and then we've got some long term indicators that actually we think are really positive.

Joe Giordano: On the life Science side, you talked to some of those things like we see low single digit to mid single digit lift in that kind of core.

Joe Giordano: So what X handling franchise that we have around animal its analytical instrumentation and within life science stuff.

Good stuff with an optical filters, which we are a life science component that's tucked in there.

Joe Giordano: Offset a little bit by some of the work that we do around genomics that is tied a little bit more to some of the uncertainty around government funding a lot of that.

Joe Giordano: For population surveillance and those things.

Joe Giordano: But a net positive overall as we run through the year and what we see and what we call <unk> life Sciences.

Thanks, guys.

Joe Giordano: Okay.

Conference Operator: Thank you. Our next question comes from the line of Brett Linzey with Mizuho. Please proceed with your question.

Abhishek Khandelwal: Our next question comes from the line of Brett Linzey with Mizzou Health. Hey, good morning, all. Thanks. First question just on price cost. Can you just clarify within that 15 to 40 cents that that's organic? How much are you embedding for price cost and then any context on the phasing through the years? Is it negative in in the first quarter? Do you catch up? Any context would be good. Absolutely. I can answer that for you. So when you think about price cost spread that we've laid out in this guide, I've laid out about 60 to 80 basis points of price cost spread.

Conference Operator: Hey, good morning, all Thanks first question just on price cost can you just clarify within that 15 to 40 cents. That's organic how much are you embedding for price cost and then any context on the phasing.

Conference Operator: Through the year or is it is it negative in the first quarter or do you catch up.

Conference Operator: Any context, because absolutely, but if I can answer that for you. So when you think about price cost spread that we've laid out in this guide a bit out of about 60 to 80 basis points of price cost spread in the guide if you think about phasing on the on the pricing piece first half to second half.

Abhishek Khandelwal: If you think about phasing on the pricing piece, first half to second half, I'd say it's about incremental $10 million of pricing in the back half of the year, because if you really think through the pricing mechanism and how we do it, we typically announce a pricing increase that goes into effect in Q1. So there's a quarter worth of lag. So think of it as first half to second half, but an incremental $10 million in pricing. But we don't have a negative position. No, it's positive 60 to 80 business points for the Okay, great. You know, appreciate the color there.

Conference Operator: I'd say its about incremental incremental $10 million of pricing in the back half of the year, because if you really think through the pricing mechanism and how we do it would typically announce a price increase that goes into effect in Q1. So there is a quarter worth of lag. So think of it as first half to second half about an incremental $10 million in price you should expect to see well, we don't have a negative position no.

Speaker Change: Positive 60 to 80 basis points for the year Yeah Yeah.

Speaker Change: Okay, Great I appreciate the color there and then just a question on HST and this in slide 13. So you indicated that the challenging comparable in life science and analytical.

Abhishek Khandelwal: And then just a question on HST, and this in slide 13. So you indicated that the challenging comparable in life science and analytical as an offset to strength elsewhere, just just a little bit of context there, I guess, on the moving pieces, I, I thought orders were down about 19. And sales pretty soft. I don't know if that suggests that life science and analytical was was up in the prior quarter, just just any color be great. I'm sorry, but try that question again. I'm not sure it completely follows. Oh, on slide 13, you said that you had noted a challenging comparable in life science and analytical instrumentation was an offset to strength elsewhere.

Speaker Change: As an offset to strength elsewhere, just just a little bit of context, there I guess on the moving pieces I thought Wow, we're down about 19 in sales pretty soft I don't know.

Speaker Change: That suggests that life science and analytical was up in the prior quarter, just any color would be great.

Speaker Change: I'm, sorry, but try that question again, but I'm not sure that completely <unk>.

Speaker Change: So on Slide 13, you you said that.

Speaker Change: You had noted a challenging comparable in life science and analytical instrumentation was an offset to strength elsewhere.

Abhishek Khandelwal: I guess, was that a Q4 comment? I know Q4'23 HST was down pretty significantly, so just wanted to square the moving pieces within the divisions. Yeah, so look, I think if you think about Q4'23, first of all, 2024 for life sciences has been pretty much flat. If I kind of take a look at our sales and where we've been in the last four quarters in 24, it's been pretty much similar throughout. While they have been flat on a year-over-year basis, there has still been pressure on the life sciences side from 24 to 23. So that's what we're talking about when we say we've always talked about life science in the context of 24 being, hey, sequentially, we have seen a flat, flat top line, but on a year-over-year basis, it's still there.

Speaker Change: I guess was that a Q4 comment.

Speaker Change: I know Q4 twenty-three HST was down pretty significantly. So just just wanted to square the moving pieces within the divisions. Yes. So look I think if you think about Q4 'twenty.

Speaker Change: First of all 2024 for life Sciences has been pretty much flat sequentially. If I kind of didn't kind of take a look at our sales and we're going to be in the last four quarters in 24, it's been pretty much similar throughout the year.

Speaker Change: While while they have been flat on a year over year basis. There has still been pressure on the life Sciences side from.

Speaker Change: From 24 to 23, so that's what we're talking about when we say we've always talked about lifestyles in the context of 24 being sequentially. We are seeing a flat flat top line, but on a year over year basis is still down.

Abhishek Khandelwal: That's what it is. Okay, great. Appreciate the detail. Thank you.

Speaker Change: What that refers to.

Speaker Change: Okay, great appreciate the detail.

Speaker Change: Thank you. Our next question comes from the line of Andrew Buscaglia with BNP Paribas. Please proceed with your question.

Andrew Buscaglia: Our next question comes from the line of Andrew Buscaglia with BNP Paribas. Please proceed with your question. Hey, good morning, guys. So. You know, I had a kind of high level strategic question I wanted to ask, and that, you know, HST has really come, it's really not come back the way we thought it would. And it had a good year out of COVID or a good two years. But it's been a long time since we really seen that growth pick up. And it seems to be, you know, quite a long cycle business. I'm wondering, you know, does this inform kind of where you want to go with this segment in terms of strategic acquisitions?

Andrew Buscaglia: Hey, good morning, guys good morning.

Speaker Change: So yeah.

Andrew Buscaglia: I had a kind of high level strategic question I wanted to ask.

Speaker Change: And that no HST.

Andrew Buscaglia: It's really come.

Andrew Buscaglia: It was really not come back the way we thought it would.

Andrew Buscaglia: You had a good year out of Covid are good two years, it's been it's been a long time, because we've really seen that growth pick up and it seems to be quite a long cycle business.

Speaker Change: I'm wondering does this inform kind of where you want to go with this segment in terms of the strategic acquisition.

Eric Ashleman: Are has it surprised you how long cycle and how tough it's been? And if you could just comment, like, is that is that a fair criticism in that it's, it's much more longer than when we thought. Well, I mean, longer cycle would kind of, I think, imply that there's a consistent wave and it's going to come around again and again and again, that I wouldn't agree with. I think, you know, what is surprising is probably the impact and the duration and overall numbers involved on the sort of COVID post COVID run up and run down on two sectors of that segment that formed half You know, originally, now that percentage is actually lower today, as we've acquired things in.

Speaker Change: Has it surprised you how long cycle and how tough it Ben.

Speaker Change: Yes, if you could just comment.

Speaker Change: Is that is that a fair criticism and that it is.

Speaker Change: Much more longer than we thought.

Speaker Change: Well I mean longer cycle, what kind of I think imply that theres, a consistent wave and it's going to come around again, and again and again that I wouldn't agree with I think.

Speaker Change: What is surprising is probably the impact and the duration and.

Speaker Change: Uh huh.

Speaker Change: Overall numbers involved on the sort of Covid post COVID-19 run up and run down on two sectors that segment that foreign to half of it.

Speaker Change: Originally now that percentage is actually lower today as we've acquired things in I mean, we're acquiring them in different spaces motto loan with its focus on energy transition starts to take those levels down theyre not as critical as they were just singularly with two dimensions.

Eric Ashleman: I mean, we're acquiring them in different spaces, Mott alone, with its focus on energy transition, starts to take those levels down. They're not as critical as they were, just singularly with two dimensions. But, you know, I'd go back and say, in hindsight, it all looks totally rational, but you had a global health event, so the very sector that was involved in trying to keep people safe and, I mean, got max funding, max velocity, and was really, really hot. And yeah, it was a little surprising in how long it took, you know, multi-years to recalibrate itself back and find its footing.

Speaker Change: But I.

Speaker Change: I could go back and say in hindsight it all looks totally rational, but you had a we had a global health event. So the various sector that was involved in trying to keep people safe and.

Speaker Change: Got Max funding Max velocity, and was really really hot and yes. It was a little surprising and how long. It took you know multi years tend to recalibrate itself back and find its footing again.

Eric Ashleman: You know, but the dynamics of that market, they don't, I don't think they're changed. We've still got tremendous challenges out there. health events, and things that we're trying to crack the code and figure out, you know, we're winning and the platforms that we're working on today, I mean. ultimately make life a lot better for people as we go forward. So I don't think that thesis changed. It's on the back end of a very, very singular event that in itself was held. health consequential and driven. Right next to it was the semi side of it. Everybody went from working here to working at their house.

Speaker Change: But the dynamics of that market. They don't I don't think they're changed I mean, we still got tremendous challenges out there in terms of health events and things that we're trying to crack the code and figure out.

Speaker Change: We're winning the platforms that we're working on today.

Speaker Change: Ultimately make life a lot better for people as we go forward. So I don't think that thesis has changed it's on the back end of a very very singular event that in itself was health.

Speaker Change: Health consequential and driven.

Speaker Change: Right next to it was the semi side of it everybody wants that working here to work on at their house. They all bought P. CS and it's been a long time since they need a new ones and so you got two things that were half of our segment.

Eric Ashleman: They all bought PCs and it's been a long time since they've needed new ones. So you've got two things that were half of our segment that I still think, while semilite always has a certain amount of cyclicality and we're always going to be careful to keep that ratio reasonable within IDEX, I think the two of them together, the duration of it and what caused it, pretty exceptional. And I think, you know, what's important to realize here is while it's been a while, we're actually seeing the swing. We're seeing the swing now where HST comes back.

Speaker Change: Still think of satellite always has a certain amount of cyclicality and we're always going to be careful to keep that ratio reasonable with an IDEXX.

Speaker Change: I think the two of them together the duration of it and what caused it.

Speaker Change: Pretty exceptional and I think what's important to realize here is while it's been a while we're actually seeing the swing we're seeing the swing now where HST comes back or twenty-five guidance has it leading the way in growth for IDEXX as a pause.

Eric Ashleman: Our 25 guidance has it leading the way in growth for IDEX. And I think we're going to see less and less and less of any of those echoes and ripples, and now, frankly, very, very exciting times. And a similar question with FMT, I would think that that would be recovering pretty strongly this year. And it seems as though kind of similarly, it seems like the short cycle either is something changed. In that business where you're finding you're on a lot more of these long-duration projects than you used to be in the past. I mean, largely the FMT, when taken entirely, doesn't have a lot of projects in it.

Speaker Change: We should expect it to remain in.

Speaker Change: And I think we're going to see less and less and less of any of those echos and ripples and now frankly very very exciting days ahead.

Speaker Change: Yes.

Speaker Change: It's been my question with FMT I would think that that would be recovering pretty strongly this year and it seemed as though.

Speaker Change: Similarly, it seems like the.

Speaker Change: It's not a short cycle, either if there's something change.

Speaker Change: And that business, where you're finding your own a lot more of these long duration projects then there needs to be in the past.

Speaker Change: No I mean.

Speaker Change: I mean, largely the FMT when taken entirely doesn't have a lot of projects in it we talk about it they're usually in kind of our chemical spaces energy, that's where you see a couple of them.

Eric Ashleman: We talk about it. They're usually in kind of our chemical spaces, energy, that's where you see a couple of them. Yeah. It's fragmented space that's reflective of general industry, that's why it tends to oscillate pretty fast. We referenced, frankly, pretty dramatic up-down in 2024 as the world dialed in differently. I think, you know, what you're seeing there, with kind of FMT being in sort of a third place positioning for for growth in the current. environment. is the uncertainty that we talked about with Deane playing out. I mean, we're looking for direction on policy. get some of those conversations that I referenced to turn into commitments, orders, and positions.

Speaker Change: It's been a fragmented space.

Speaker Change: Reflective of general industry, that's why it tends to oscillate pretty fast we referenced frankly pretty dramatic up down in 2024 is that the world dialed in differently.

Speaker Change: I think what you're seeing there with kind of FMT being in sort of a third place positioning for for growth in the current.

Speaker Change: <unk>.

Speaker Change: Is the uncertainty that we talked about with Dean playing out I mean, we're looking for direction on policy and things that.

Some of those conversations that I referenced to turn into commitments orders and positions when that happens at IDEXX, we typically chase it pretty quick and wrap it up.

Eric Ashleman: When that happens at IDEX, we typically chase it pretty quick and ramp it up. Yeah, okay. All right. Thank you.

Speaker Change: Yeah, Okay, alright, thank you.

Conference Operator: Thank you ladies and gentlemen, our final question. This morning comes from the line of.

Rob Wertheimer: Ladies and gentlemen, our final question this morning comes from the line of Rob Wertheimer with Miele's Research. Hi. Thanks for the question. I wanted to kind of follow up on where you were going a minute ago, Eric. I mean, if you look at, obviously, HST, you cited the sources of the volatility, both up and down. And if you look across the trend line, and I know the business has changed, but do you think that we're back to normal there? And as you mentioned, that we're ready to resume growth. Is there any reversion to mean upwards versus maybe a higher trend line growth that you would expect from that segment?

Speaker Change: Rob Wertheimer with Melius Research. Please proceed with your question.

Speaker Change: Hi, Thanks for the question I wanted to kind of follow up on where you were going a minute ago. Eric I mean, if you look at obviously HST you cited the sources of the volatility both up and down and if you look across the trend line.

Speaker Change: I know the business has changed but.

Speaker Change: Do you think that there that we are back to normal there and as you mentioned that we're ready to resume growth is there any.

Speaker Change: Reversion to mean upwards versus maybe a higher trend line growth that you would expect from that segment. That's my first question. Thanks.

Eric Ashleman: That's my first question. Thanks. Yeah. Well, look, I think we're heading into positive territory. We're careful on the life science recovery and the lift that we're talking about here. I don't think it's a snapback kind of thing. Ultimately, that should be more growing at higher levels than even what we have projected in here. But we're kind of following the moderate trend lines to move away from where we've been to where we're going. think long term? I mean, that has tremendous growth prospects. Unknown Executive, Abhishek Khandelwal, Wendy Palacios, Unknown Executive, Abhishek Khandelwal, Obviously we've got the item I mentioned internally with customer positioning here, but generally we see that we're closer to where that next cycle is going to be.

Speaker Change: Well look I think I think we're heading into positive territory, where we're careful on the life science.

Speaker Change: Recovery in the lift that we're talking about here I don't think it's a snapback kind of thing.

Ultimately that should be more you know growing at higher levels than even what we have projected in here, but we're kind of following the moderate trend lines to move away from where we've been to where we're going.

Speaker Change: Long term I mean that has tremendous growth prospects that should be a mid single digit at a minimum kind of franchise for us, we're just being pretty careful and moderate about our projections as we start to approach that.

Speaker Change: Semi side I'd say, we're conservative there as well we're seeing some good things that we're seeing obviously, we got that.

Speaker Change: Item I mentioned internally with customer positioning here, but generally we see that we're closer to where that next cycle is going to be we're super well positioned.

Eric Ashleman: We're super well positioned in terms of how we're represented across critical technology. I think that's going to be an important component. Those two things where we typically have spent the bulk of our time talking about HST when we get here, as I said, they used to be half the segment. They're actually lower now. Things that Mott is doing in delivering within energy transition, they're doing some great work around the water franchise that they have inside that business. You're going to start to hear some things as those come out. We're going to be talking about those more.

Speaker Change: So how were represented across critical technology, I think that's going to be an important component.

Those two things, where we've typically ive spent the bulk of our time talking about HST. When we get here because I said they used to be half of segments are actually lower now.

Speaker Change: That modest doing and delivering with an energy transition framework around there the water franchise that they have with inside that business, you're going to start to hear some things as those come out we're going to be talking about those four it's going to be a more balanced suite.

Eric Ashleman: It's going to be a more balanced Product. And again, I think, you know, one of the reasons we like it is it's not as dependent. Temporal Shift These are fast-evolving applications that are moving pretty rapidly from Phase I to Phase II of their own evolution. This is really, really important. Okay, I'll stop there. Thank you.

Speaker Change: Product.

Speaker Change: And again I think.

Speaker Change: One of the reasons, we like it is it is not as dependent on sort of the temporal shifts in mood.

Speaker Change: Things because these are fast evolving applications that are moving pretty rapidly from phase one to phase two with their own evolution being there first.

Speaker Change: Really really important and exciting.

Speaker Change: Okay.

Speaker Change: I'll stop there thank you.

Eric Ashleman: Ladies and gentlemen, that concludes our question and answer session. I'll turn the floor back to Mr. Ashleman for any follow-up. So thanks. Thanks for joining today. I appreciate all the questions and the interest, as always. And I'll probably conclude with some comments that are going to echo some of the things we've talked about, but I want to make sure that we end with them here. You know, we're at an important inflection point for IDEX as we begin to bring together some of these recently acquired businesses with select legacy businesses that we've long had to build scale and power in the focus that I talked about on slide four.

Conference Operator: Thank you, ladies and gentlemen that concludes our question and answer session I will turn the floor back to Mr. Eshelman for any final comments.

Conference Operator: Thanks for joining us today appreciate all the questions and the interest is always probably conclude with some comments that are all going to echo some of the things we talked about but I want to make sure that we earn with him here. We're at an important inflection point for IDEXX as we began to bring together some of these recently acquired businesses with select legacy businesses that we've long.

Conference Operator: Have to build scale and power and the focus that I talked about on slide four.

Eric Ashleman: And you see that that's, you know, that's set up to deliver and is starting to deliver nice growth on the top line and then some really, really nice productivity and leverage on the bottom line. So working both sides of this ratio we think is really important. And we're now watching HST make that transition and that swing from a tough couple of years, we talked about why that happened, you know, to being back out in the lead as we, you know, leading the way for growth for IDEX. And again, and I like the conversation we had with Deane, I mean, you know, blanket orders, they're numbers, they're important, they help with the comps, but each one of them has a story, and the story that you see there is in many cases entry points into some of the best applications that we're going to be talking about for the next five minutes.

Conference Operator: You see that that's that's set up to deliver and is starting to deliver nice growth on the top line and then some really really nice productivity and leverage on the bottom line. So working both sides of this ratio we think is really important.

Conference Operator: You see that that's that's set up to deliver and is starting to deliver nice growth on the top line and then some really really nice productivity and leverage on the bottom line. So working both sides of this ratio we think is really important.

Conference Operator: Now watching H S T make that transition in that swing from a tough couple of years, we talked about why that happened.

Conference Operator: Being back out in the lead.

Conference Operator: Leading the way for growth for for IDEXX.

Conference Operator: And again.

Deane Dray: I like the conversation, we had with Dean I mean blanket orders their numbers. They are important they help with the comps, but each one of them has a story and the story that you see there is in many cases entry points into some of the best applications that we're going to be talking about for the next five to 10 years.

Eric Ashleman: really, really important that we get out there, super innovative, first to get there. And to see Mott contributing in that way this early as part of the company, really, really provides some nice energy. We're not leaving FMT and FSDP behind. We didn't touch on it much here today, but, you know, that point around digitization and automation and being able to apply that at scale. So I don't want to lose sight of that either. At the end of the day, we think we're building something special here. We are excited to keep talking about it with you along the way, and I look forward to the next time we get to do it.

Deane Dray: Really really important that we get out there super innovative first to get there.

Speaker Change: And to see Marc contributing in that way. This early as part of the company.

Speaker Change: Really provide some nice energy, we're not leaving the FMT and FSD Pea behind we didn't touch on it much here today, but that point around digitization and automation being able to apply that at scale.

Speaker Change: No stone and a threshold so don't want to lose sight of that either.

Speaker Change: End of the day, we think we're building something special here, we are excited to keep talking about it with you along the way I look forward to the next time, we get to do it have a great day.

Operator: Thank you.

Conference Operator: Thank you. This concludes today's conference call you may disconnect. Your lines at this time. Thank you for your participation.

Operator: This concludes today's conference call. You may disconnect your lines at this time. Thank you for your... Greetings and welcome to the IDEX Corporation 4th Quarter 2024 Earnings Conference Call. At this time, all participants are in a listen-only mode. A question-and-answer session will follow the formal presentation. If anyone should require operator assistance during the conference, please press star zero on your telephone key. As a reminder, this conference is being recorded. I would now like to turn the conference over to your host, Ms. Wendy Palacios, Vice President, FP&A, and Investor Relations for IDEX Corporation. Thank you. You may begin.

[music].

Conference Operator: [music].

Conference Operator: Greetings and welcome to the IDEXX Corporation fourth quarter 2024 earnings Conference call. At this time all participants are in a listen only mode. A question and answer session will follow the formal presentation. If anyone should require operator assistance. During the conference. Please press star zero on your telephone keypad.

Conference Operator: As a reminder, this conference is being recorded.

Conference Operator: I would now like to turn the conference over to your host Ms. Wendy Palacios, Vice President of planning and Investor Relations for IDEXX Corporation.

Speaker Change: Thank you you may begin.

Good morning, everyone. This is Wendy Palacios, Vice President of FP&A and Investor Relations for IDEX Corporation. Thank you for joining us for our discussion of the IDEX fourth quarter and full year 2024 financial highlights. Last night, we issued a press release outlining our company's financial and operating performance for the three months and full year ending December 31st, 2024. The press release along with the presentation to be used during today's webcast can be accessed on our investor website at investors.idexcorp.com. Joining me today are Eric Ashleman, our Chief Executive Officer and President. and Abhishek Khandelwal, our Senior Vice President and Chief Financial Officer.

Speaker Change: Good morning, everyone. This is Wendy Palacios, Vice President of <unk>, and Investor Relations for IDEXX Corporation.

Speaker Change: Thank you for joining us for our discussion of the IDEXX fourth quarter and full year 2024 financial highlights.

Speaker Change: Last night, we issued a press release outlining our company's financial and operating performance for the three months and full year ending December 31 2024.

Speaker Change: The press release, along with the presentation to be used during today's webcast can be accessed on our investor website at investors thought IDEXX Corp dotcom.

Speaker Change: Joining me today are Eric Ashwin, our Chief Executive Officer and President.

Brent Kendall: And I'll be Kendall, all our senior Vice President and Chief Financial Officer.

Following our prepared remarks, we will open the call for your questions. Turning to slide two. Please note that during today's call, we will present certain non-GAAP financial measures. We will also make forward-looking statements within the meaning of the federal securities laws, including statements regarding events or developments that we expect or anticipate will or may occur in the future period. These four looking statements are subject to risks and uncertainties. Actual results may differ materially from any forward-looking statements that we make today, and we do not assume any obligation to update them, other than as required by law.

Brent Kendall: Following our prepared remarks, we will open the call for your questions.

Brent Kendall: Turning to slide two.

Brent Kendall: Please note that during today's call, we will present certain non-GAAP financial measures.

Brent Kendall: We will also make forward looking statements within the meaning of the federal securities laws, including statements regarding events or developments that we expect or anticipate will or may occur in the future period.

Brent Kendall: These forward looking statements are subject to risks and uncertainties.

Brent Kendall: Actual results may differ materially from any forward looking statements that we make today.

Brent Kendall: And we do not assume any obligation to update them other than as required by law.

Information regarding these factors that may cause actual results to differ materially from these forward-looking statements is available on our website and in our SEC filings. With that, I'll now turn this call over to our CEO and President, Eric Ashleman. Thank you, Wendy. And good morning, everyone. I'm on slide three. IDEX teams maneuvered a year of choppy and uncertain macro conditions with operational focus and solid execution in 2024. We delivered innovative solutions to our customers, achieved strong productivity through net price capture and operational excellence and deployed both financial and human capital toward our largest acquisition to date, Mott.

Brent Kendall: Information regarding these factors that may cause actual results to differ materially from these forward looking statements is available on our website and in our SEC filings with that I'll now turn this call over to our CEO and President Eric Eshleman.

Speaker Change: Thank you Eddie and good morning, everyone I'm on slide three.

Speaker Change: <unk> team has maneuvered a year, a choppy and uncertain macro conditions with operational focus and solid execution in 2024, we delivered innovative solutions to our customers achieve strong productivity through net price capture and operational excellence and deploy both financial and human capital toward our largest acquisition to date, but I want to thank our IDEXX employees.

I want to thank our IDEX employees around the globe for all their contributions. Our IDEX team executed a strong finish to the year. Here are some Q4 highlights. We delivered a series of impactful projects within the health and science technology segment destined for pharma, global broadband satellite communications, and energy transition vertical. We drove Organic Order's growth across all segments led by HST. Mott achieved strong results in their first quarter with IDEX, delivering a significant filtration systems project within their energy transition vertical. The integration is proceeding smoothly, and Mott's accretion timing is tracking ahead of our original expectations.

Speaker Change: Around the globe for all their contributions are IDEXX team executed a strong finish to the year here are some Q4 highlights we delivered a series of impactful projects within the health and Science technology segment destined for pharma Global broadband satellite communications and energy transition verticals.

Speaker Change: We drove organic orders growth across all segments led by HST.

Speaker Change: <unk> achieved strong results in their first quarter with IDEXX delivering a significant filtration systems project within their energy transition vertical integration is proceeding smoothly and modest accretion timing is tracking ahead of our original expectations.

Our fire safety and diversified product segment set another new quarterly sales record, driven by strong growth of their automation programs within integrated fire assistance. Reflecting on 2024, we saw three themes play out. When we started the year, there were some encouraging signs of growth with a noticeable uptick in industrial day rates coupled with expectations at the time for accelerated interest rate easing. We saw this reflected in our 2024 Q1 orders and sales performance in pockets of our portfolio. This environment changed in late Q1 as an unexpectedly high inflation rate reduced the likelihood of rate reductions.

Speaker Change: Our fire safety and diversified products segment had another new quarterly sales record driven by strong growth of their automation programs within integrated fire systems.

Speaker Change: Reflecting on 2024, we saw three themes play out when we started the year there were some encouraging signs of growth with a noticeable uptick in industrial day rates, coupled with expert expectations at the time for accelerated interest rate easing. We saw this reflected in our 2020 for Q1 orders and sales performance in pockets of our portfolio.

Speaker Change: This environment changed in late Q1, as an unexpectedly high inflation rate reduced the likelihood of rate reductions the U S election cycle with polarized potential outcomes entered the mix in the summer in most market settled into an uncertain, but stable pattern.

The U.S. election cycle with polarized potential outcomes entered the mix in the summer, and most markets settled into an uncertain but stable pattern. Finally, late in the year, we had clarity with respect to both issues as inflation moderated and a presidential candidate won the race. But the dynamic policy implications of the new administration likely moderated any near-term growth catalyst within Q4. As we begin 2025, there appears to be a climate of uncertain optimism. We're sitting on a stable business base, our inventories and lead times are recalibrated back to normal levels, and a series of transformational megatrends are ready to help carry strong growth through the second half of the decade and beyond.

Speaker Change: Finally late in the year, we had clarity with respect to both issues as inflation moderated in a presidential candidate won the race, but the dynamic policy implications of the new administration likely moderated any near term growth catalysts within Q4.

Speaker Change: As we begin 2025, there appears to be a climate of uncertain optimism, we're sitting on a stable business base, our inventories and lead times have recalibrated back to normal levels and a series of transformational Megatrends are ready to help carry strong growth through the second half of the decade and beyond the.

The open questions, continuing to drive near-term uncertainty, all relate to the direction of U.S. trade and economic policy within an overall environment of high geopolitical tension. We'll likely have more clarity as we move through the first couple quarters this year. Despite challenging macro conditions, we are building IDEX to outperform throughout the entirety of a cycle. Our differentiated technologies provide solutions to complex problems and growth advantage verticals. We continue to apply 80-20 to each business to fuel growth and productivity. That's been the heartbeat of our operating model for well over a decade. But now, more than ever, we're using 80-20 at the enterprise level to drive power, scale, and focus through our portfolio of high-quality businesses.

Speaker Change: The open questions continuing to drive near term uncertainty all relate to the direction of U S trade and economic policy within an overall environment of high geopolitical tension.

Speaker Change: Like we have more clarity as we move through the first couple of quarters. This year.

Speaker Change: Despite challenging macro conditions, we are building IDEXX to outperform throughout the entirety of the cycle, our differentiated technologies provide solutions to complex problems and growth advantaged vertical we continue to apply 80 20 to each business to fuel growth and productivity and that's been the heartbeat of our operating model for well over a decade, but now more than ever.

Speaker Change: We're using 80 20 at the enterprise level to drive power scale and focus through our portfolio of high quality businesses as.

As we turn towards 2025 and beyond, I'd like to show you how far we've already come on this journey. I'm on slide four. We have more aggressively deployed capital over the last few years to build scale through thematic integration. We have also selectively pruned smaller, less growth-advantaged businesses to complement the work. Today, we have over half of IDEX revenue working together collaboratively within five groups, some formal, some building informally, to attack a handful of faster-growing markets that will benefit long-term from the secular tailwinds you see listed here. We're doing it with more scale and breadth, which allow us to better leverage our overhead spend while maximizing productivity potential.

Speaker Change: As we turn towards 2025 and beyond I'd like to show you how far we've already come on this journey.

Speaker Change: Im on slide four.

Speaker Change: We have more aggressively deployed capital over the last few years to build scale through somatic integration. We are also selectively prune smaller less growth advantaged businesses to complement the work.

Speaker Change: Today, we have over half of IDEXX revenue working together collaboratively within five groups. Some formal some building informally to attack a handful of faster growth growing markets that will benefit long term from the secular tailwind that you see listed here.

We're doing it with more scale and breath, which allow us to better leverage our overhead spend while maximizing productivity potential. This is an important strategic roadmap for our future evolution fueled by more power more focus more growth to drive consisting consistent earnings expansion.

This is an important strategic roadmap for our future evolution fueled by more power, more focus, more growth to drive consistent earnings expansion. We have recently deployed the majority of our M&A capital towards businesses that deliver high-quality applications and solutions that leverage differentiated material science technology. Mod is an important piece of this story, providing more access points to support fast-growing markets within energy transition, space and defense, and high-performance semiconductors. Despite the dramatic market ups and downs over the last few years, we remain very committed to expanding our work within life sciences. We have long, mutually beneficial partnerships with the world's best customers, and our teams continue to innovate in ways that push the frontiers of what is thought to be possible.

Speaker Change: We have recently deployed the majority of our M&A capital towards businesses that deliver high quality applications and solutions that leverage differentiated materials science technologies.

Speaker Change: <unk> is an important piece of the story, providing more access points to support fast fast growing markets with an energy transition.

Speaker Change: Space and defense and high performance semiconductor.

Speaker Change: Despite the dramatic market ups and downs over the last few years, we remain very committed to expanding our work within life Sciences, we have long mutually beneficial partnerships with the world's best customers and our teams continue to innovate in ways to push the frontier is about is thought to be possible. We remain confident with the long term growth outlet outlook at this space.

We remain confident with the long-term growth outlook of this space. Within Intelligent Water, we built a portfolio that offers an integrated suite of digital analytics, complemented by hardware and mobile solutions that work in some of the world's most demanding environments. This helps our municipal and industrial customers meet the challenges of aging wastewater infrastructure, increasing severe weather events, and stricter regulatory requirements. In other areas of IDEX, where the markets are more mature, more industrial, and more fragmented, we are collaborating at scale across units to also drive growth and income outperformance. At IDEX Fire and Safety, our automation capabilities are decreasing the response time and increasing the productivity and agility of emergency workers.

Speaker Change: <unk>.

Speaker Change: With an intelligent water, we built the portfolio that offers an integrated suite of digital analytics complemented by hardware and mobile solutions that work in some of the world's most demanding environments. This helps our municipal and industrial customers meet the challenges of aging wastewater infrastructure, increasing severe weather events and stricter regulatory requirements.

Speaker Change: And other areas.

Speaker Change: 'cause of IDEXX, where the markets are more mature more industrial and more fragmented we are collaborating at scale across units to also drive growth and income outperformance.

Speaker Change: And I would expire in safety, our automation capabilities are decreasing the response time and increasing the productivity and agility of emergency workers.

We believe we are uniquely positioned with our breadth of product and innovation capabilities to drive solutions of this type. We are enjoying double-digit growth in this area, and automated solutions now make up more than 10% of platform revenue. Finally, within our largest FMT businesses, specializing in severe duty flow control, we are rapidly digitizing the front end of our businesses, impacting the way we service and interact with our distributors, OEMs, and end users. This urgent work is powered by the scale and positioning of our best 80s businesses. Ultimately, the next step will deploy a common set of digital tools across all IDEX businesses to drive even higher levels of customer engagement.

Speaker Change: We believe we are uniquely positioned within with our breadth of product and innovation capabilities to drive solutions of this type we are enjoying double digit growth in this area and automated solutions now make up more than 10% of platform revenue.

Speaker Change: Finally, within our largest FMT businesses specializing in severe duty flow control. We are rapidly digitizing the front end of our businesses impacting the way, we service and interact with our distributors Oems and end users. This urgent work is powered by the scale and positioning of our best <unk> businesses. Ultimately the next step will be.

Speaker Change: A common set of digital tools across all IDEXX businesses to drive even higher levels of customer engagement.

One last important point. Beyond support for faster growth, the collaboration and integration I'm describing here has additional potential to drive earnings expansion at IDEX. As we build larger scalable platforms and business groups, we can begin to shift vertical organizations, which stack up additively one company at a time, to more efficient horizontal frameworks that better lever our employee dollars, allowing us to self-fund more growth resources positioned very close to the customer for maximum impact. Alongside this work, we continue to push for flat organizations overall to speed decision-making, pushing to eliminate any layers that might get in the way of our agility.

Speaker Change: One last important point beyond support for faster growth the collaboration and integration I'm, describing here has a dense additional potential to drive earnings expansion at IDEXX.

Speaker Change: As we build larger scalable platforms and business groups, we can begin to shift vertical organizations, which stackup additives one company at a time to more efficient horizontal frameworks that better lever our employee dollars.

Speaker Change: Allowing us to self fund more growth resources positioned very close to the customer for maximum impact.

Speaker Change: Alongside this work we continue to push for flat organizations overall to speed decision, making pushing to eliminate any layers that might get in the way of our agility higher thematic scale and integration also support higher levels of sourcing productivity as the quantities of similar purchase commodity classes naturally increase youll see.

Higher thematic scale and integration also supports higher levels of sourcing productivity as the quantities of similar purchase commodity classes naturally increase. You'll see some early tangible benefits of this work within our guidance schedules. We have 43 cents of adjusted EPS support lined up for 2025 in these areas. On top of another 20 cents at the midpoint from traditional productivity. We're well positioned for solid margin expansion as we move the needle on organic growth. Turning to slide five, the last essential piece of our growth strategy is capital deployment. We are focused on the integration of MOT and deepening collaborative connections across our broader portfolio to leverage MOT's highly engineered filtration technologies into new innovative solutions.

Speaker Change: Some early tangible benefits of this work within our guidance schedules. We have 43 of adjusted EPS support lined up for 2025 and these areas on top of another 20 at the midpoint from traditional productivity, we're well positioned for solid margin expansion as we move the needle on organic growth.

Turning to slide five the last essential piece of our growth strategy is capital deployment.

Speaker Change: We are focused on the integration of Mod and deepening collaborative connections across our broader portfolio to leverage months' highly engineered filtration technologies into new innovative solutions at.

At the same time, our dedicated corporate development team continues to work alongside our business leaders to build a robust and active M&A funnel, cultivating businesses that fit the IDEX mold and have the potential to advance our strategic goals in the areas where we want to grow. We have the pipeline, balance sheet, and free cash flow generation to keep M&A as a consistent contributor to our growth over time. With that, I'll turn it over to Abhi to discuss our financial results and guidance. Thanks Eric. Turning to the consolidated financial results on slide six. Please note, all comparisons are against the prior year period, unless stated otherwise.

Speaker Change: At the same time, our dedicated corporate development team continues to work alongside our business leaders to build a robust and active M&A funnel cultivator.

Speaker Change: Cultivating businesses that fit the IDEXX mode and have the potential to advance our strategic goals in the areas, where we want to grow.

Speaker Change: We have the pipeline balance sheet and free cash flow generation to keep M&A is a consistent contributor to our growth over time.

Speaker Change: With that I'll turn it over to a b to discuss our financial results and guidance.

Speaker Change: Thanks, Eric.

Speaker Change: Turning to the consolidated financial results on slide six.

Speaker Change: Please note all comparisons are against the prior year period unless stated otherwise.

Fourth quarter orders of $817 million were up approximately 8% on a reported basis and up 5% organic. We saw orders growth across the portfolio, with HST experiencing 8% organic growth in the quarter, driven by blanket order activity that will ship in 2025. FSDP had mid-single-digit organic growth and FMT had low single-digit growth. For the year, orders were up 4% overall and up 3% organic. Our HSD and FSDP segments experienced high single-digit organic growth. HST growth was driven by year-end blanket order activity in nomadics and life sciences, combined with strong demand in both semiconductor MRO within our ceiling solutions business and within global broadband satellite communication.

Speaker Change: Fourth quarter orders of $817 million were up approximately 8% on a reported basis and up 5% organically.

Speaker Change: We saw modest growth across the portfolio with SSD experiencing 8% organic growth in the quarter driven by blanket order activity that will ship in 2025.

Speaker Change: <unk> had mid single digit organic growth in FMT had low single digit growth.

Speaker Change: For the year orders were up 4% overall and up 3% organically.

Speaker Change: <unk> and <unk> segments experienced high single digit organic growth.

Speaker Change: The growth was driven by year end blanket order activity in pneumatics and life Sciences.

Speaker Change: Bind with strong demand in both semiconductor MRO within our sealing solutions business and within global broadband satellite communications.

FSDP growth was driven by the combination of strong demand from North America fire OEMs and fire integrated system solutions. FMT experienced a low single-digit organic decline driven by market softness in our agricultural business as well as softness in our semiconductor capital equipment vertical within our intelligent water portfolio. Fourth quarter sales of $863 million were up 9% reported and up 3% organically compared to prior year. the experienced organic growth of 8% in FSDP and 3% in FMT. FSDP growth was driven by continued strength with North America Fire OEM's production ramp and shared gain of automation programs within integrated fire systems. HST was planned organically versus prior year.

Speaker Change: <unk> growth was driven by the combination of strong demand from North America fire Oems and fire integrated system solutions.

Speaker Change: <unk> experienced a low single digit organic decline driven by market softness in our agriculture business as well as softness in our semiconductor capital equipment vertical within our intelligent water portfolio.

Speaker Change: Fourth quarter sale of $863 million were up 9% reported and up 3% organically compared to prior year.

Speaker Change: We experienced organic growth of 8% and FSD and 3% in FMT.

Speaker Change: First GP growth was driven by continued strength with North America, OEM production ramp and share gain of automation programs within integrated fire systems.

Speaker Change: <unk> was flat organically versus prior year.

Strong execution of targeted growth initiatives tied to fuel cells, projects in pharma and global broadband satellite communications, and strong demand for semiconductor MRO were offset by broad-based softness in life sciences, analytical instrumentation, automotive, and semiconductor capital equipment. Overall, we delivered approximately 40 million of projects, primarily centered in that. Whole year sales of $3.3 billion or flat overall and down 2% organic. HST contracted by 7% on an organic basis, driven by life sciences, and semiconductor cyclical market head. FMT growth was flat with strength in chemicals and municipal water markets, offsetting softness in agriculture and semiconductor capital equipment within the intelligent water platform.

Speaker Change: <unk> execution of targeted growth initiatives tied to fuel cell projects in pharma and global broadband satellite communications and strong demand for semiconductor MRO were offset by broad based softness in life Sciences analytical instrumentation, automotive and semiconductor capital equipment verticals.

Speaker Change: Overall, we delivered approximately $40 million of projects primarily centered in SSD.

Speaker Change: Full year sales of $3 3 billion were flat overall and down 2% organically.

Speaker Change: <unk> contracted by 7% on an organic basis.

Speaker Change: By life Sciences, and semiconductor cyclical market headwinds.

Speaker Change: FMT growth was flat with strength in chemicals, and municipal water markets offsetting softness in agriculture, and semiconductor capital equipment within the intelligent water platform.

FSDP drove low single-digit growth bolstered by North America Fire OEM and Fire Integrated Systems Solution demand. The fourth quarter gross margin declined 20 basis points to 42.5% on a reported basis. However, on an adjusted basis, Gross margin expanded by 40 basis points as the benefit from strong price cost and operational productivity was partially offset by higher employee-related and discretionary costs, unfavorable mix, and the net dilutive impact of acquisitions and divestment. For the year, gross margin was 44.2%, ending relatively flat. adjusted gross margin was 44.5% expanding 30 basis Strong price cost and improved operational productivity, net of lower volume leverage, were partially offset by higher employee-related costs and unfavorable net.

As DB drove low single digit growth bolstered by North America fire, OEM and integrated system solution demand.

Speaker Change: Fourth quarter gross margin declined 20 basis points before at two 5% on a reported basis.

Speaker Change: However on an adjusted basis.

Speaker Change: Margin expanded by 40 basis points as the benefit from strong price cost and operational productivity was partially offset by higher employee related and discretionary cost and favorable mix.

Speaker Change: The net dilutive impact of acquisitions and divestitures.

Speaker Change: For the year gross margin was 44, 2% and being relatively flat.

Speaker Change: Adjusted gross margin was 44, 5% expanding 30 basis points.

Speaker Change: On price cost and improved operational productivity.

Net of lower volume leverage.

Speaker Change: Really offset by higher employee related costs and unfavorable mix.

fourth quarter adjusted EBITDA margin was 26.4% up 60 basis. I will discuss the drivers of fourth quarter adjusted EBITDA on the next slide in a moment. On a full-year basis, adjusted EBITDA margin contracted 80 basis points to 26.7%. A bridge of the full-year adjusted EBITDA can be found in the appendix of this presentation. On a gap basis, our Q4 effective tax rate was 18.5% versus 22.7% in the prior year period. The full year 2024 gap effective tax rate was 21.1% versus 21.7% in 2020. Both the Q4 and four-year tax rate decreases are primarily due to discrete benefits at year-end, including the reduction of taxes accrued on dividends of foreign earnings and the decrease in state tax expense mainly due to the jurisdictional mix of taxable income.

Speaker Change: Fourth quarter adjusted EBITDA margin was 26, 4% up 60 basis points.

Speaker Change: I will discuss the drivers of fourth quarter adjusted EBITDA on the next slide in a moment.

Speaker Change: On a full year basis.

Speaker Change: Adjusted EBITDA margin contracted 80 basis points to 26, 7%.

Speaker Change: A bridge of the full year adjusted EBITDA can be found in the appendix of this presentation.

Speaker Change: On a GAAP basis.

Speaker Change: Q4 effective tax rate was 18, 5% versus 22, 7% in the prior year period.

Speaker Change: The full year 2024, GAAP effective tax rate was 21, 1% versus 21, 7% in 2023.

Speaker Change: Both the Q4 and full year tax rate decreases.

Primarily due to discrete benefits at year end, including the reduction of taxes accrued on dividends of foreign earnings and the decrease in state tax expense, mainly due to the jurisdictional mix of taxable income.

Fourth quarter net income was $123 million, resulting in GAAP diluted EPS of $1.62. The adjusted net income was $155 million with an adjusted EPS of $2.04 up 21 cents or 11%. For the full year, net income was $505 million, resulting in EPS of $6.64. Adjusted net income was $599 million, generating an EPS of $7.89, down $0.33, or 4% from last Free cash flow for the quarter was $157 million, a decrease of 12%. We achieved a conversion rate of 101% of adjusted net income. For the year, we delivered free cash flow of $603 million down 4% versus last year, and also coming in at 101% of adjusted net income.

Speaker Change: Fourth quarter net income was $123 million, resulting in GAAP diluted EPS of $1 62.

Speaker Change: Adjusted net income was $155 million with an adjusted EPS of $2 <unk> up 21 cents or 11%.

Speaker Change: For the full year net income was $505 million, resulting in EPS of $6 64.

Speaker Change: Adjusted net income.

Speaker Change: <unk> hundred 99 million generating an EPS of $7 89.

Speaker Change: <unk> 33, or 4% from last year.

Speaker Change: Free cash flow for the quarter was $157 million a decrease of 12%.

Speaker Change: Our conversion rate of 101% of adjusted net income.

Speaker Change: For the year, we delivered free cash flow of $603 million down 4% versus last year and also coming in at 101% of adjusted net income.

We achieved 3.8 in inventory returns and invested $65 million in capital expenditures. A strong balance sheet and cash flow enabled us to pay $205 million in cash dividends to shareholders this year. We also funded the acquisition of Mott through the combination of approximately $212 million of cash and $774 million of debt. We continue to maintain our strong investment-grade rating and close the year with a gross leverage ratio of 2.2 times. Moving on to slide 7, I will walk through the details of the adjusted EBITDA drive. For the fourth quarter, adjusted EBITDA increased by approximately $23 million.

Speaker Change: We achieved three 8% inventory turns and invested $65 million in capital expenditures.

Speaker Change: Our strong balance sheet and cash flow enabled us to pay $205 million in cash dividends to shareholders. This year.

Speaker Change: We also funded the acquisition of <unk> through the combination of approximately $212 million of cash and $774 million of debt.

Speaker Change: We continue to maintain our strong investment grade rating and closed the year with a gross leverage ratio of two two times.

Speaker Change: Moving on to slide seven I will walk through the details of the adjusted EBITDA drivers.

Speaker Change: For the fourth quarter.

Speaker Change: <unk> EBITDA increased by approximately $23 million.

Our organic sales volume increased by approximately 1%, favorably impacted adjusted EBITDA by $2 million, flowing through at prior year adjusted gross margin rate of 42.7%. Strong price-cost bet of 130 basis points and operational productivity drove $18 million of benefits year over year. In the quarter, we saw unfavorable mix, primarily in our energy and banded business. We strategically invested in resources, supporting target growth initiatives in groups such as Fire and Safety and Intelligent Water. All these factors combine into a favorable organic flow-through of 53%. The impact of acquisitions, net of divestitures, and FX increased adjusted EBITDA by $12 million on a quarter-over-quarter basis.

Speaker Change: Our organic sales volume increase of approximately 1%.

Speaker Change: Favorably impacted adjusted EBITDA by $2 million.

Speaker Change: Flowing through our prior year adjusted gross margin rate of 42, 7%.

Speaker Change: Strong price cost spread of 130 basis points and operational productivity drove $80 million of benefits year over year.

Speaker Change: In the quarter, we saw unfavorable mix, primarily in our energy and <unk> business.

Speaker Change: We strategically invested in resources supporting targeted growth initiatives and groups, such as fire and safety and intelligent water.

Speaker Change: All of these factors combined into a favorable.

Speaker Change: Organic flow through of 53%.

Speaker Change: The impact of acquisitions net of divestitures and FX increased adjusted EBITDA by $12 million on a quarter over quarter basis.

Now, I would like to move on to our overall outlook for 2025, starting on page 8. before diving into our four-year guide. I want to reiterate Eric's opening comments. ADEX continues to have leading positions in attractive end markets attached to strong secular growth trends. Beyond positive economic fundamentals, we will continue to drive above market growth through pricing power, targeted growth initiatives, competitive lead times, and customer intimacy driven shared These dynamics are demonstrated in each of our segments and will result in better than market performance over the long term. For the full year 2025, we expect organic growth of 1% to 3%, with the majority of our end markets stable to grow in.

Speaker Change: Now I would like to move on to our overall outlook for 2025, starting on page eight.

Speaker Change: Before diving into our full year guidance.

Speaker Change: To reiterate Eric's opening comments.

Speaker Change: IDEXX continues to have leading positions in attractive end markets attached to strong secular growth trends.

Speaker Change: Beyond positive economic fundamentals, we will continue to drive above market growth through pricing power.

Speaker Change: Targeted growth initiatives competitive lead times and customer intimacy driven share gains.

Speaker Change: These dynamics are demonstrated with each of our segments and will result in better than market performance over the long term.

Speaker Change: For the full year 2025, we expect organic growth of 1% to 3%.

Speaker Change: But the majority of our end market is stable to growing.

Within this range, we expect HST to be our highest growth segment near the high end of the range. We are expecting a modest lift within our key end markets in life sciences, fluidics, and optical filters, and a second half recovery in the semiconductor capital equipment. We will continue to see tailwinds with pharma, semiconductor MRO, space and energy transition markets as we experienced in Q4. So, tailwinds are supported by demand for new disease therapies and nutrition, global communication satellite network expansion, and energy consumption tied to data centers. Additionally, mass applications and capabilities will enable growth acceleration with energy transition as demand for clean energy expands internationally, and traditional energy solutions grow domestically.

Speaker Change: Within this range, we expect <unk> to be our highest growth segment near the high end of the range.

Speaker Change: We are expecting a modest lift within our key end markets and life Sciences, Fluidics optical filters and a second half recovery in the semiconductor capital equipment.

Speaker Change: We will continue to see tailwind with pharma semiconductor MRO space in energy transition markets as we experienced in Q4.

Speaker Change: So a tailwind are supported by demand for new disease therapy, and nutrition Global Communications satellite network expansion and energy consumption tied to data centers.

Speaker Change: Additionally march applications and capabilities.

Speaker Change: <unk> growth acceleration with energy transition the demand for clean energy expand internationally.

In traditional energy solutions grows domestically.

For FMT, we expect overall segment growth closer to the lower end of the guideline. We see the most exposure to marker cyclicality in this sector. In our core industrial markets, we expect continued stability as we saw in the fourth quarter. but flat to low single-digit market growth and strong price. This stability will be tempered by energy and agriculture, where we see more challenges driven by the timing of capital investments and lower levels of farm income respectively. We remain bullish with the growth in our intelligent water platform, driven by continued municipal water markets investment in waste water management and aging infrastructure improvements in conjunction with key project wins in our semiconductor ultra-pure water heater business.

Speaker Change: For FMT, we expect overall segment growth closer to the lower end of the guidance range, we see the most exposure to market cyclicality in this segment.

Speaker Change: In our core industrial markets. We expect continued stability as you saw in the fourth quarter.

Speaker Change: But flat to low single digit market growth and strong price support.

Speaker Change: This stability will be tempered by energy and agriculture, where do we see more challenges driven by the timing of capital investments.

Speaker Change: And lower levels of farm income respectively.

Speaker Change: We remain bullish with the growth in our intelligent bought a platform.

Speaker Change: Given by continued municipal water markets investment and wastewater management and aging infrastructure improvements.

Speaker Change: Junction with key project wins in our semiconductor ultra pure water heater business.

Finally, turning to our FSDP segment, we expect organic growth to be towards the midpoint of our guided range with continuous strength in our fire and safety business. Our FHIR business has successfully deployed its Integrate Systems platform over the past few years, and it is now more than 10% of that business. This program has increased our content per truck, which when combined with the Recovering North America OEM channel, has accelerated our growth. We expect the growth trajectory to continue in 2025. We expect dispensing and bandit to be up low single-digit. This segment performance outlook embedded within our organic growth range of 1 to 3 percent.

Speaker Change: Finally.

Speaker Change: Turning to our <unk> segment, we expect organic growth to be towards the midpoint of our guided range with continued strength in our fire and safety business.

Speaker Change: Our fire business has successfully deployed its integrated systems platform over the past few years and it is now more than 10% of that business.

Speaker Change: This program has increased content per truck, which when combined with the recovering North America OEM channel.

Speaker Change: Accelerated growth.

Speaker Change: We expect the growth trajectory to continue in 2025.

Speaker Change: We expect dispensing and band it to be up low single digits.

Speaker Change: This segment performance outlook embedded within our organic growth range of 1% to 3%.

Equals adjusted earnings per share growth of $0.15 to $0.40 depending on top line results including price, cost in line with IDEX historical performance and slide portfolio. Additionally, we will drive operational excellence from operational productivity more than offsetting wage-related inflation pressure, contributing $0.15 to $0.25 of adjusted EPS growth. We will also drive 43 cents of growth from the platform optimization and de-layering savings that Eric already mentioned. In order to achieve these savings, we expect to take $21 to $25 million in restructuring charges during 2025, of which approximately $8 to $10 million is expected in the first These charges are primarily related to separate.

Speaker Change: The growth adjusted earnings per share growth of 15% to 40.

Speaker Change: Depending on top line results, including price cost in line with IDEXX historical performance and slight portfolio mix.

Speaker Change: Additionally, we will drive operational excellence from operational productivity more than offsetting vigilant inflation pressure.

Speaker Change: <unk> 15 to 25 of adjusted EPS growth.

Speaker Change: We will also drive 43 cents of growth from the platform optimization and delivering savings that Eric already mentioned.

Speaker Change: In order to achieve these savings, we expect to take 21% to $25 million and restructuring charges during 2025 of which approximately $8 million to $10 million is expected in the first quarter.

Speaker Change: These charges are primarily related to severance.

The reset of variable compensation to normal levels after a challenging 2024, combined with higher share base compensation, results in a 29 cent headwind, while the impact of recent acquisition and divestitures contributes 24 cents of adjusted operating EPS growth before financing. Finally, considering a few non-operational items, the higher debt level due to the acquisition of MAA will unfavorably impact adjusted EPS growth by $0.22. In totality, the overall impact of March 2025 adjusted EPS is accretive, net of higher interest expense ahead of schedule. We expect FX to be a headwind of 11 cents in 2025. An increase in the effective tax rate on a year-over-year basis is creating $0.14 headwind for adjusted EPS.

Speaker Change: The reset of variable compensation to normal levels. After a challenging 2024 combined with higher share based compensation resulted in a 29% headwind while the impact of recent acquisitions and divestitures contributes 24.

Speaker Change: <unk> operating EPS growth before financing.

Speaker Change: Finally, considering a few non operational items, the higher debt level due to the acquisition of Mod will unfavorably impact adjusted EPS growth by 'twenty two.

Speaker Change: In totality, the overall impact of Mark to 2025 of adjusted EPS is accretive net of higher interest expense ahead of schedule.

Speaker Change: We expect FX to be a headwind to <unk> in 2025.

Speaker Change: An increase in the effective tax rate on a year over year basis is creating 14th <unk> headwind to adjusted EPS.

The 2024 effective tax rate includes certain discrete events, which produced an 11 cent benefit to adjusted EPS in 2024 that will not repeat in 2025. And in addition, the projected 2025 rate of approximately 22 to 23% includes a heavier mix of improved performance in regions with higher tax rates. Turning to slide 9, I'll provide additional details for the full year guidance as well as the first quarter of 2025. In summary, for the full year, we expect organic revenue growth of 1 to 3% to yield gap EPS of $6.56 to $6.96 and an adjusted EPS of $8.10 to $8.45 or up 3% to 7% over 2024.

Speaker Change: 2024 effective tax rate includes certain discrete events.

Speaker Change: Which produced an <unk> <unk> benefit to adjusted EPS in 2024 that will not repeat in 2025 and in addition, the.

Speaker Change: The projected 2025 rate of approximately 22% to 23% includes the heavier mix of improved performance in regions with higher tax rates.

Speaker Change: Turning to slide nine I'll provide additional details for the full year guidance at both the first quarter of 2025.

Speaker Change: In summary for the full year, we expect organic revenue growth of 1% to 3%.

Speaker Change: The yield gap EPS of $6 56 to $6 96.

Speaker Change: And an adjusted EPS of $8 <unk>.

Speaker Change: $8 45.

Speaker Change: Or up 3% to 7% over 2024.

Adjusted EBITDA margins are expected to be in the range of 27.5% to 28%. Capital expenditures are anticipated to be about $90 million. Corporate costs are expected to be approximately $110 million, up from 2024, by approximately $16 million, driven by variable compensation reset and essential compliance investment. Moving on to the first quarter, we are projecting gap EPS to range from $1.18 to $1.24 and adjusted EPS to range from $1.60 to $1.65. Organic revenue is expected to decline 3% to 4% compared to the prior year. and adjusted EBITDA margins are expected to be in the range of 24.1% to 24.5%.

Adjusted EBITDA margins are expected to be in the range of 27, 5% to 28%.

Speaker Change: Capital expenditures are anticipated to be about $90 million.

Speaker Change: Corporate costs are expected to be approximately $110 million up from 2024 by approximately $16 million driven by variable compensation reset and essential compliance investments.

Speaker Change: Moving onto the first quarter, we are projecting GAAP EPS to range from $1 18 to $1 24.

Speaker Change: <unk> EPS to range from $1 60 to $1 65.

Speaker Change: Organic revenue is expected to decline, 2% to 4% compared to the prior year.

Speaker Change: And adjusted EBITDA margins expected to be in the range of 24, 1% to 24, 5%.

Organic gravity range reflects a challenging Q1 2024, comparable with our semiconductor Agriculture, Chemical and Energy, and Markets, which decelerated as we exited 2024. We are offsetting a portion of this pressure through positive price-cost spread, productivity, and our platform optimization savings to drive an organic flow-through on lower volume in the low-to-mid 40 percent. Additionally, our adjusted EPS guidance includes six cents of pressure versus the prior year from share-based compensation. To add additional color to our first quarter guide from a sequential perspective versus 4Q2024. We expect to see reduced revenues resulting from $40 million of projects executed in the fourth quarter, flowing through at a gross margin rate, as well as some additional volume decline in HST due to semiconductor recovery timing and within FMT due to seasonality within ag and water.

Speaker Change: Organic revenue range reflects the challenging Q1 2024 comparable with our semiconductor.

Speaker Change: AG cultural chemical and energy end markets, which decelerated as we exited 2024.

Speaker Change: We're offsetting a portion of this pressure through positive price cost spread productivity and our platform optimization savings to driving organic flow through on lower volume in the low to mid 40%.

Speaker Change: Additionally, our adjusted EPS guidance.

Speaker Change: <unk> <unk> of pressure versus the prior year from share based compensation.

Speaker Change: You add additional color to our first quarter guide from a sequential perspective versus <unk> 2024.

Speaker Change: We expect to see reduced revenues, resulting from $40 million of projects executed in the fourth quarter.

Speaker Change: Moving toward a gross margin rate as well as some additional volume decline in <unk> due to semiconductor recovery timing.

Speaker Change: FMT due to seasonality, but didn't act and water.

We expect pressure of $0.20 to adjusted EPS from accelerated recognition of stock compensation and variable compensation reset as we enter 2025. To close out on my guidance, I would like to provide some pacing considerations to consider as you contemplate our four-year guidance on the next slide. I'm on slide 10. Our guidance implies that revenue and adjusted EPS will be graded to the second half of the year. In terms of revenue pacing, we expect a higher portion of our four-year sales guide to be delivered in the second half. driven by sequential recovery of our capital equipment related semiconductor markets, timing of water project deliveries, and March shipment timing, which has historically been weighted to the latter part of the calendar.

Speaker Change: We expect pressure of 'twenty.

Speaker Change: The adjusted EPS.

Speaker Change: From accelerated recognition of stock compensation and variable compensation reset as we enter 2025.

Speaker Change: To close out on my guidance I would like to provide some basic considerations consider as you contemplate our full year guidance on the next slide.

Speaker Change: Im on slide 10.

Speaker Change: Our guidance implies that revenue and adjusted EPS will be weighted to the second half of the year.

Speaker Change: In terms of revenue pacing, we expect a higher portion of our full year sales guide to be delivered in the second half.

Speaker Change: Driven by sequential recovery of our capital equipment related and semiconductor markets.

Speaker Change: The water project deliveries and March shipment timing, which have historically been weighted to the latter part of the calendar year.

Additionally, we expect a modest recovery within our life sciences, fluidics, and optical filter business. implying low single-digit organic growth for the year, with revenue pacing approximately flat across the year. and industrials to show modest market growth with strong price support following historic seasonal patterns. Our target growth program will have a more pronounced impact in the second half. From an adjusted EPS perspective, we expect increased adjusted EPS and higher second half volume at historical flow-through rate. That's some optimization and de-layering benefits, as well as price-cost realization, reach full runway in the third quarter of 2020. and stock compensation expense to have an in-year first quarter adjusted EPS impact of approximately $0.20.

Speaker Change: Additionally, we expect a modest recovery within our life Sciences, fluidics and optical filter business.

Speaker Change: Implying low single digit organic growth for the year with revenue pacing approximately flat across the year.

Speaker Change: And industrials to show modest market growth with strong price support following historical seasonal patterns.

Speaker Change: Our targeted growth programs will have a more pronounced impact in the second half.

Speaker Change: From an adjusted EPS perspective, we expect.

Speaker Change: Increased adjusted EPS on higher second half volume at historical flow through rates.

Speaker Change: From optimization and delivering benefits as well as price cost realization reached full run rate in the third quarter of 2025 and.

Speaker Change: Stock compensation expense, we would have an in year first quarter adjusted EPS impact of approximately 2010.

and a full-year impact of approximately $0.35. With that, I will turn it over to Eric for closing remarks. Thanks, Abhi. I'm on slide 11. As I close our introductory remarks with an overview of our value drivers, I thought I'd provide some three-dimensional color for my Q4 travels across IDEX to help you really appreciate the quality of our company, our people, and our culture. In late November, I joined more than 20 other IDEX leaders at our Airtek business, acquired in 2021, for a week of rapid continuous improvement events to drive productivity and throughput in support of one of their fastest growing customers.

Speaker Change: And a full year impact of approximately 35 stores with that I will turn it over to Eric for closing remarks.

Eric: Thanks, a b I'm on slide 11.

Eric: As I close our introductory remarks with an overview of our value drivers I thought I'd provide some three dimensional color for my Q4 travels across IDEXX to help you really appreciate the quality of our company our people and our culture.

Eric: In late November I joined more than 20, other IDEXX leaders at our Aerotech business acquired in 2021 for a week of rapid continuous improvement events to drive productivity and throughput in support of one of their fastest growing customers.

We included a cohort of large business leaders nearing graduation from the IDEX Academy's Leadership Excellence Program. They took powerful lessons of process-driven servant leadership back to their global teams to raise the bar on what's possible when great teams work together with full engagement. I checked in on the Mott team in late fall to see first-hand the state of integration. I was inspired, as always, by their incredible passion for the business as they deliver solutions to the world's most demanding problems. In many ways, it feels like they've been part of IDEX for years, not months. Finally, I traveled to India to visit our facilities in commercial.

Eric: We included a cohort of large business leaders nearing graduation from the IDEXX academies leadership Excellence program they.

Eric: They took powerful lessons a process driven servant leadership back to their global teams to raise the bar on what's possible when great teams worked together with full engagement.

Eric: Checked in on the <unk> team in late fall to see firsthand. The state of integration I was inspired as always by their incredible passion for the business as they deliver solutions to the world's most demanding problems in many ways. It feels like they've been part of IDEXX for years not months.

Eric: Finally, I traveled to India to visit our facilities in commercial teams. The manufacturing facility, we opened less than two years ago near Omnipod is already at high levels of utilization producing a variety of products for dispensing and our HST material processing technologies business.

The manufacturing facility we opened less than two years ago near Omnibot is already at high levels of utilization, producing a variety of products for dispensing and our HST material processing technology. Near Vadodara, at our first production campus, I got a chance to visit the secondary school we've built and staffed to support over 250 children from local communities. All of these experiences helped me really appreciate the power of our purpose, trusted solutions, improving lives. With that, I'll turn it over to the operator for your question. Thank you. If you'd like to ask a question, please press star 1 on your telephone keypad.

Eric: If it does work at our first production campus I got a chance to visit the secondary school, we've built and staff to support over 250 children from local communities.

All of these experiences helped me really appreciate the power of our purpose trusted solutions improving lives.

Conference Operator: With that I'll turn it over to the operator for your questions.

Speaker Change: Thank you if you'd like to ask a question. Please press star one on your telephone keypad, a confirmation tone will indicate your line is in the question queue you.

A confirmation tone will indicate your line is in the question... You may press star 2 if you'd like to remove your question from the queue. For participants using speaker equipment, it may be necessary to pick up your handset before pressing the star Our first question comes from the line of Mike Halloran with Baird. Please proceed with your question. Hey, good morning, everyone. Good morning. So let's start with a lot of what Abhi was going through there and just help me understand the cadencing and the moving pieces a little bit more succinctly. If I think about why 1Q is so soft and then the confidence in the remaining part of the year, obviously, let's, you know, take aside the share-based comp piece and, you know, certainly reference the timing.

Conference Operator: You May press star two if you'd like to remove your question from the queue.

Conference Operator: For participants using speaker equipment, it may be necessary to pick up your handset before pressing the star keys.

Conference Operator: Our first question comes from the line of Mike Halloran with Baird. Please proceed with your question.

Mike Halloran: Hey, good morning, everyone.

Conference Operator: Good.

Conference Operator: So let's start with the lot of whether it be was going through there and just help me understand the cadence and the moving pieces a little bit more specifically if I. If I think about why <unk> is so soft.

Conference Operator: And then the confidence in the remaining part of the year obviously.

Conference Operator: Take aside the share based comp piece.

Conference Operator: And you certainly referenced the timing.

So the moving pieces here are more project timing, share-based comp, anything else you would talk to is a broad bucket. But I think the bigger part of the question is just why the confidence in some of these end markets improving as you work through the year, particularly the semi-side or anything else. I know it's a broader question and my follow-up may be a little more succinct related to some of those, but just... maybe help line that out because I know that's certainly where we're getting a lot of. Yeah, so why don't I do this? Let me let me start and then Eric will jump in as he sees, as you see, you know, fit.

Conference Operator: The moving pieces here are more project timing share based comp anything else you would talk to the broad bucket, but I think the bigger part of the question is just why the confidence in some of these end markets improving as you work through the year, particularly the semi side or anything else.

Conference Operator: Broader question and my follow up can you maybe be a little more succinct related to some of those but just.

Eric: Maybe help line that out because I know, that's certainly where we're getting a lot of questions. Yeah. So why don't I do this let me let me start and then Eric will jump in as he sees.

Conference Operator: Fit but.

But so look, I know this Q1 topic, Q4 topic is a big topic. So let's just start first sequentially, Mike, to your point. So if you kind of think about Q4 to Q1, sequentially, as you pointed out, there's about $40 million of project in Q4. So when you think about the organic growth that you saw in Q4, 40 million of that, you see 40 million of project in Q4. So that organic growth is very tied to that, you know, 40 million project shipment. So when you go from Q4 to Q1, that 40 million doesn't repeat and there's about a 22 cent impact.

Conference Operator: Look I know Q1 topic Q4 topic is a big topic. So let's just start first sequentially it might be to your point. So if you got to think about Q4 to Q1 sequentially. As you pointed out there's about $40 million of project in Q4. So when you think about the organic growth that you saw in Q4 $40 million that we reported on our project in Q4, so that organic growth is very tight.

Conference Operator: To that 40 million project shipments. So when you go from Q4 to Q1 that 40 million doesn't repeat them. There's about a 22 set impact sequentially. The second thing is when you. When you talk about share based comps. It is actually a big topic sequentially. So from Q4 to Q1, it's a <unk> 20 headwind when you look at it on a sequential basis. So if you start with the 204.

The second thing is when you when you talk about share based comps, it is actually a big topic sequentially. So from Q4 to Q1, it's a 20 cent headwind when you look at it on a sequential basis. So if you start with a 204, back out the project, back out the share based comp, that's about 42 cents worth of sequential sequential headwind. Now switching gears on you for a second, kind of talking about Q1 year over year. As you recall, when we talked about the last year at the same time, we exited Q4 into Q1, where our industrial businesses saw a positive momentum, positive inflection, and we built backlog in the exiting Q1 last year.

Conference Operator: <unk> back out the projects back up the share based comp that's about 42 cents worth the sequential.

Conference Operator: Sequential headwind.

Conference Operator: Now switching gears on you for a second and kind of talking about Q1 year over year as you.

Conference Operator: As you as you recall exhibit as you recall when we talked about at the last year at the same time.

Conference Operator: Q4 into Q1, where our industrial businesses.

Conference Operator: Our positive momentum positive inflection and we built backlog in the exit in Q1 last year.

In May, we all saw there was a, you know, the inflation reading was pretty hard, likelihood of cutting the rate three to five times was pretty much off the table. And so what we saw in 2024, really, in the first half into the third quarter, is that industrial businesses that build backlog, burn that backlog, and quite frankly, carry the weight in 2024. The second half of 2024, Mike, is really all about the strong momentum that we saw in HST tied to the orders or growth that we saw in Q3 and Q4. If you recall, Q3 was positive 20%.

Conference Operator: In May of you all saw there was the inflation reading was pretty hard the likelihood of fed cutting the rates, 2% to five times was pretty much off the table and so what we saw in 2024 really in the first half into the third quarter is our industrial businesses that build backlog burn that backlog and quite frankly carry the weight in 2024.

Conference Operator: The second half of 2024 months is really all about the strong momentum W. Saw it at just the types of the orders order growth that we saw in Q3 and Q4. If you recall Q3 was positive 20% Q4 was positive 8% in Q3, we saw blanket activity tied to our life Sciences business and some nomadic business and then in Q4, we saw about 40 million.

Q4 was positive 8%. In Q3, we saw blanket activity tied to our life sciences business and some nomadic business. And then in Q4, we saw about $40 million worth of blanket activity, 30 of which is tied to a nomadic business and then some more life sciences. Now, these are not just blanket activity or just normal orders, right? These are brand new platforms with specific customers that have delivery schedules throughout 2025. OK, so that's where the confidence into the HST orders and what that means from a revenue standpoint comes from, comes for in 2025. So what you're seeing here, really, is a year that's setting up with positive momentum.

Conference Operator: What the blend connectivity 30 of which is tied to a nomadic business and then some more life sciences activity. Now. These are not just bank of activity or just normal orders. These are brand new platforms with specific customers that have delivery schedules throughout 2025, okay. So that's where the confidence into the HST orders and what that means from a revenue standpoint comes form comes through.

Conference Operator: In 2025, so what youre seeing here really is a year that setting up with positive momentum. We closed January we built some backlog as part of a January close. So Q1 really is a reflection as you think about tier one coming into Q1, we have lower backlog on the industrial side with strong momentum on the HST side as you saw in Q3 Q4, that's really setting us up.

We closed January. We built some backlog as part of the January close. So Q1 really is a reflection, as you think about Q1, coming into Q1, we have lower backlog on the industrial side, with strong momentum on the HST side, as you saw in Q3, Q4. That's really setting us up for 2020. A couple other things in the quarter, year over year, we have a 3 cent headwind from FX and then another 6 cent of headwind on the margin line tied to share based comp and wearable comp reset. So that's the color between Q4 to Q1 and then Q1 year over year.

Conference Operator: For 2025, a couple of other things in the quarter year over year, we have a <unk> <unk> headwind from FX.

Conference Operator: And then other <unk> <unk> of headwind on the margin line tied to share based comp and variable variable comp reset so.

Conference Operator: That's the color between Q4 to Q1 and in Q1 year over year.

And just just just a couple things there. I think that that last point that Abhi made, I mean, this is us making the turn where kind of HST comes back and leads the way as it will in 2025 from a growth standpoint. It's why we've been building it. The momentum that we saw in those blankets is, Abhishek said, that's not routine stuff. The Q4 items that we got in our pneumatics area are really, really good. I mean, that's tied to, honestly, providing power for data center applications. So really strong things that, again, they're unique individual customers with individual launch rates.

Conference Operator: Just a couple of things there.

Conference Operator: I think that last point that you made I mean this is us making the turn we are kind of HST comes back and leads the way as it will in 2025 from a growth standpoint, that's that's why we've been building it.

Conference Operator: The momentum that we saw in those blanks.

Conference Operator: Blankets as he said that that's not routine stuff.

Conference Operator: Q4 items that we got in our Pneumatics area are really really good I mean, that's tied to honestly to providing power for data center applications.

Conference Operator: So really strong things that again, they're unique individual customers with individual longer launch rates. So we know where those are and how they phase out across the year.

So we know where those are and how they phase out across the year. You know, the semi-con piece in there is the only piece we didn't really talk about. We do have a couple of customer-specific inventory adjustment pressure points in the early part of the year that are going to correct against themselves in the back half. And so while, as always, we're kind of waiting for an overall inflection point to get to better days ahead, there is a specific point in there that does show up in phasing beginning You know, so that's out there, but at the same time, you know, around that, we've got actually a couple of positive data points.

Conference Operator: Semi con piece in there is the only piece, we didn't really talk about.

Conference Operator: We do have.

Conference Operator: A couple of customer specific inventory adjustment pressure points in the early part of the.

Conference Operator: A year that are going to correct against themselves in the back half and so while as always we're kind of waiting for an overall inflection point to get to to better days ahead. There is a specific point in there that that does show up in phasing beginning to end.

Conference Operator: So that's out there, but at the same time.

Conference Operator: Round that we've got actually a couple of positive data points, our sealing solutions business within semi content is kind of different work and theres more sort of after market maintenance kind of items that you're using a system when youre running at.

Our ceiling solutions business within Semicon does kind of different work and does more sort of aftermarket, you know, maintenance kind of items that you use in a system when you're running it. We saw nice growth in Q4, it's continuing to Q1, that's kind of a precursor, at least, you know, indicative that utilization matters and run rates matter and we think is a good data point for further growth in the entire system. And then we saw some, you know, some really, really nice bookings numbers at that kind of cutting edge of technology where we've got heavy content, heavy participation, which sets up really nice.

Conference Operator: That's a nice growth in Q4, it's continuing into Q1, that's kind of a precursor at least indicative that a utilization matters and run rates matter and we think is a good data point for further growth in the entire sector and then we saw some some really really nice bookings numbers at that kind of cutting edge of technology, where we've got heavy.

Conference Operator: <unk> heavy participation, which sets up really nicely for years ahead. So.

So we have a little bit of a transition or a bump there, if you will, customer-specific, first half to second on the semi-side, which complements everything that's there. Yeah, got it. All right. So if I if I just sum that up super cleanly, then it's the sequential 4Q to 1Q are actually pretty normal seasonality if you exclude the share based comp and you exclude the project activity. And then the outlook for the year is also relatively normal seasonality other than how Mott is shaping up, how a couple of green shoots are shaping up in your semi commentary.

Conference Operator: So we have a little bit of a transition or a bump there. If you will customer specific first half the second on the semi side, which compliments everything that it would be to Oxford.

Conference Operator: Got it alright.

Conference Operator: Just summed it up Super Cleanly, then it's the sequential <unk> were actually pretty normal seasonality. If you exclude the share based comp and you exclude the project activity.

Conference Operator: The outlook and then the outlook for the year is also relatively normal seasonality other than how <unk> is shaping up a couple of green shoots there shaping up in your semi commentary.

Is that a fair interpretation? Yeah. All right. And then the second one, just when you think about the platform optimization and delayering comments you made today, you know, maybe talk a little bit about what this means from the for the growth profile and for how you think about incremental margins or incremental leverage on that growth on a forward basis and just, you know, kind of frame up what the tailwind or the benefit could be. Yes, I mean, it's a it's a pretty simple ratio. We're moving the top line, the numerator and the denominator. And so, you know, this is stuff that we always had in mind as we were putting these pieces together.

Conference Operator: That is correct fair interpretation, yes, alright, and then and then the second one just when you think about the platform optimization and de layering comments you made today.

Conference Operator: Maybe talk a little bit about what this means from the for the growth profile and for how you think about incremental margins or incremental leverage on that growth on a forward basis.

Conference Operator: Kind of frame up what the tailwind or the benefit could be from it yes, I mean, it's a pretty simple ratio, we're moving the top line the numerator and the denominator and so this is stuff that we always had in mind as we're putting these pieces together and maybe ill kind of work it around the newer part that we're building around material science applications, but.

And maybe I'll kind of work it around the newer part that we're building around material science applications. These businesses do link together thematically. They're all leveraging technologies, you know, that are unique to each business, but are kind of pinging against the same four to five market. And so you're able to get some commercial efficiency there. You're able to kind of move from a system where kind of they call it the old IDEX way where each business sort of has to support itself in every single function. to now a couple of businesses that are able to intertwine, either commercially or via technology, sometimes shared services and back office.

Conference Operator: These businesses do linked together somatic we they're all leveraging technologies that are unique to each business, but are kind of pinging against the same four to five markets.

Conference Operator: So youre able to get some commercial efficiency, there youre able to kind of move from a system, where kind of they call. It the old IDEXX way, where each business sort of has to support itself and every single function to now a couple of businesses that are able to intertwine either commercially or via technology, sometimes shared services and back office and so youre getting more mass.

And so you're getting more mass close to the customer to support growth resources. and the growth mission of a company. And you're doing it in a way where actually, you know, you're moving up within the organizations that we're interfacing with in the markets that matter the most because we're bringing more power and more mass. You've got a chance to move the needle more on the top end, but you're actually able to do it a lot more efficiently from a resource perspective because you don't have to kind of string along a bunch of pearls. You've got some unique ways to combine things and get that.

Conference Operator: Close to the customer to support growth resources in the growth mission of the company.

Conference Operator: And you're doing it in a way, where we're actually moving up within the organizations that we're interfacing with in the markets that matter. The most because we're bringing more power and more mass to those so you've got a chance to move the needle more than the top end that you're actually able to do it a lot more efficiently from a resource perspective, because you don't have to kind of string along a bunch of hurdles you've got some unique ways to combine.

Conference Operator: Things and get that leverage so.

So you saw that play out. You're seeing it play out in the 25 numbers on both the top line and the bottom because most of the growth highlights we have, they're kind of coming off that page and a lion's share of the productivity we're delivering is in the same. and that's a story that isn't done. We continue to run this out, we keep assembling the pieces, we put more scale and we get more depth and presence with certain customer sets and markets. You know, there's things we can do. Thank you. Our next question comes from the line of Vlad Bystricky.

Conference Operator: So all of that play out Youre seeing it play out in the 25 numbers on both the topline and the bottom because most of the growth highlights we have they're kind of coming off that page.

Conference Operator: <unk> alliance share of the productivity, we're delivering isn't the same areas and Thats a story that isn't done as we can.

Conference Operator: To run this out we keep assembling the pieces, we put more scale and we can get more depth and presence with certain customer sets and markets.

Conference Operator: Things, we can do from a facility's perspective other things along the way here. So it has always been part of how we thought about this to not only drive growth, but get the earnings expansion in the kicks that you want there as well by work on the top and the bottom of the ratio.

Conference Operator: Thank you.

Conference Operator: Thank you. Our next question comes from the line of flat vis tricky with Citi. Please proceed with your questions.

Please proceed with your Morning, guys. Morning, team. Thanks for thanks for taking my call. Thanks for all the color around the outlook and the phasing. I guess just stepping back in terms of the... broader macroeconomic backdrop and what's assumed in your guidance. Have you made any specific assumptions relative to potential tariff impacts coming in? And what are you hearing from your customers as they're thinking about, you know, those potential impacts in this uncertain environment that you mentioned? Well, look, I mean, nothing really material here in the numbers of the quarterly phasing that anticipates direction there, because as you know, they're Some of it's along the lines I would have guessed.

Conference Operator: Good morning, guys. Good morning, Thanks for thanks for taking my call.

Speaker Change: Thanks for all the color around the outlook in the phasing I guess just stepping back in terms of the.

Speaker Change: Broader macroeconomic backdrop.

Speaker Change: What's assumed in your guidance have you made any specific assumptions relative to potential tariff impacts coming in and what are you hearing from your customers is there.

Speaker Change: Thinking about.

Speaker Change: Those potential impacts in this uncertain environment that you mentioned.

Speaker Change: Well look I mean, nothing really material here in the numbers of the quarterly phasing that anticipates direction, there because as you know there.

Speaker Change: Some of it some of it is along the lines I would've guessed. Some other pieces of it are kind of surprising there on and off again in nature. So what I will tell you is I just step back and say here's how we're generally set up for anywhere. This goes we're really really localized.

Some other pieces of it are kind of surprising, and they're on-off again in nature. So what I will tell you is I just step back and say, here's how we're generally set up for any weather. We're really, really localized. In any region, we do business. So the majority of the content that we are procuring and sourcing and putting into production and then selling generally happens within the So that's always been the model kind of before tariff wave one and where we are now. Now, over the last five or six years, like a lot of companies, I mean, we've been more intentional about mitigating far away.

Speaker Change: In any region, we do business. So the majority of the content that we're procuring in sourcing and putting into production and then selling generally happens within the same border.

Speaker Change: So that's always been the model kind of before tariff wave, one and where we are now now over the last five or six years like a lot of companies I mean, we've been more intentional about mitigating far away.

portions of our supply chain. We've moved things around, we've taken certain ratios and fractions down and we've got more second sources. Some of that was trade war related. Some of it is COVID and that whole experience. We've done those things too. And then, as always, you know, we just keep coming back to, you know, the differentiation and the votes around our franchise. Frankly, the long relationships that we have, which gives us some pricing protection. come out, and it's simply unavoidable, and we're delivering critical technology. So we're tracking in any one of these scenarios sort of the price we might pay as an importer.

Speaker Change: Portions of our supply chain, we move things around we have taken certain ratios and fractions down and we've got more second sources.

Speaker Change: Some of that was trade war related some of it is COVID-19 and that whole experience we've done those things too.

Speaker Change: And then as always.

Speaker Change: Keep coming back to the differentiation and the moats around our franchises in and frankly, the long relationships that we have which gives us some pricing protection as things come out and it is simply unavoidable and we're delivering critical technology. So.

Speaker Change: We're tracking in any one of these scenarios sort of the price we might pay as an importer, which we know where that is we know where it is if a supplier is paying it and maybe most importantly, given our model. We know those places where if something were to come out and you know there was long duration, it's going to tend to lag in through value added steps. The example, I would give you here would be electron.

We know where that is. We know where it is if the supplier is paying it. And maybe most importantly, given our model, we know those places where if something were to come out and there was long duration, it's going to tend to lag in through value-added steps. https://www.youtube.com.au And so, you know, we learned some things in the first wave. We know where those points are. We can understand them, potentially move things if we need to, but at the end of the day, we think we can protect it with price. So that's the general approach. We meet on it more actively as, again, I think most companies are.

Speaker Change: <unk>, we buy a lot of it from local board houses and things, but almost all of the components probably are coming from somewhere else.

Speaker Change: So we.

Speaker Change: We learned that we learned some things in the first wave, we know where those points or we can understand them potentially move things, if we need to but at the end of the day, we think we can protect it with price differentiation.

Speaker Change: That's the general approach, we meet on it more actively as again I think most customers are companies are and then were.

And then we're spending the time working different scenarios here. We don't have, at least from a North American perspective, we don't have a facility in Mexico. We have kind of a small to medium one in Canada. And again, a very localized model. Okay, that's that's really helpful. Eric, appreciate that. And then I just wanted to shift to capital deployment for a minute here. M&A funnel update was, you know, interesting and helpful. Is there a way to think about sort of the mix of proprietary versus competitive targets in that $10 billion plus potential funnel? And are there, you know, particular businesses where you see a higher proportion of potentially larger deals that could come through?

Speaker Change: Pending the timing worked in different scenarios here, we don't have.

Speaker Change: At least from a North America perspective, we don't have a facility in Mexico.

Speaker Change: A small to medium one in Canada.

Speaker Change: And again, a very localized model overall.

Speaker Change: Great. That's really helpful. Eric I appreciate that and then.

Speaker Change: I just wanted to just shift to capital deployment for <unk> for a minute here.

Speaker Change: M&A funnel update was was interesting and helpful.

Speaker Change: Is there a way.

Just think about sort of the mix of proprietary versus competitive targets in that $10 billion plus.

Speaker Change: Plus potential funnel.

Speaker Change: And are there.

Speaker Change: Particular businesses, where you see a higher proportion of potentially larger deals that could come through.

Yeah, well, I would still say, I mean, I we're we've got a lot of focus in the areas where we've been deploying capital. So continuing to flesh out that space, the spaces with an A lot of companion technologies to the material science. for for watching. The work we're doing now, that's absolutely our focus, so we talk about going to go over and have that first conversation. introduce them to the concept of IDEC. You can probably imagine the more successful we are with bringing these transactions over the line, it gives us reference points and people that they can then talk to to understand what that experience was like.

Speaker Change: Yeah, well I would still say we're.

Speaker Change: We've got a lot of focus in the areas, where we've been deploying capital so continuing to flesh out that space the spaces with an H S T.

Speaker Change: A lot of companion technologies to the materials science businesses that we put up there I mean, a lot of there's still a decent portion of the funnel that takes that even to another level. That's an area of interest proprietary.

Speaker Change: Transactions are very much what we're trying to drive here.

Speaker Change: Over the last few years as we've stepped up this work we've been about an 80% proprietary level on the transactions that we've done the work we're doing now that's absolutely our focus so when we talk about who's going to go over and have that first conversation with somebody just introduce them to the concept of IDEXX as.

Speaker Change: As you can probably imagine the more successful we are with bringing these transactions over the line. It gives us reference points and people that they can then talk to them to understand what that experience was like.

We start to build some natural credibility and momentum as that approach plays out. So I'd love to hold that ratio, if we could, as we go through it. I think we've got a mix in the funnel right now that would suggest we could. And we're all spending our time in a way that supports largely proprietary transactions, kind of regardless of the spaces we're looking at. I mean, these are, again, we're kind of, you know, we like that low-on-the-bill material, mission-criticality component. It's often not top of mind, you know, for some people. We see things a little differently.

Speaker Change: You start to build some natural credibility and momentum is that approach plays out so I'd love to hold that ratio. If we could as we go through it I think we've got a mix in the funnel right now that would suggest we could and we're all spending our time in a way that supports largely proprietary transactions.

Speaker Change: Regardless of the spaces, we're looking at I mean these are.

Speaker Change: Again, we're kind of we like that low on the bill of material mission criticality component, it's often not top of mind for some people, we see things a little differently I think <unk> was a good example, there.

I think Matt was a good example there. You know, I think we viewed that as a way that it could have some, you know, interdependence with other IDEX businesses in a way that's kind of uniquely IDEX. I think we were out there and were able to tell that story for longer than others were. So we very much want to thank you all for being here. And then Vlad, this will be and as you know, our leverage and and the capacity. So we do have the balance sheet capacity to go support M&A the way we laid out on the page and still maintain our investment.

Speaker Change: We view that as a way that it could have some.

Speaker Change: Interdependence with other IDEXX businesses in a way that is kind of uniquely IDEXX I think we were out there and we're able to tell that story for for longer than others might have been able to so we very much want to keep this approach and then blood this will be.

Speaker Change: Our leverage in and the capacity. So we do have the balance sheet capacity to go support M&A. The way, we laid out in the page and still maintain our investment grade rating.

Great, appreciate it. I'll get back in queue. Thank you. Our next question comes from the line of Nathan Jones with Stiefel. Good morning everyone. I'm going to start off with the back on the 1Q guide and specifically the 40 million projects that shipped in the fourth quarter. Maybe I missed it, maybe I already said it. Which of the, I mean, I assume it's HST, FMT, how did that split between those segments? I'm just trying to get a better idea of, you know, maybe what some core growth numbers in the fourth quarter would have been x some of these project shifts.

Speaker Change: Great I appreciate it I'll get back in queue.

Speaker Change: Thanks, a lot.

Conference Operator: Thank you. Our next question comes from the line of Nathan Jones with Stifel. Please proceed with your question.

Nathan Jones: Good morning, everyone.

Speaker Change: Good morning.

Nathan Jones: I'm going to start off with that.

Nathan Jones: Back on the <unk> guide and <unk>.

Nathan Jones: Specifically, the $40 million projects that shipped in the fourth quarter, maybe I missed it maybe you already said it.

Nathan Jones: Which.

Nathan Jones: I assume it's HSA FMT.

Nathan Jones: How does that split between those segments I'm, just trying to get a better idea of maybe what some call growth numbers in the fourth quarter would have been ex some of these project shipments.

Hey Nathan, this is Abhishek. So it's about 80% HST with a couple of projects in FMT and FSTP, but majority of this was HST driven. And so that means then that probably, because I mean, Mike, the same as Mike said, we're getting a lot of questions about the revenue guide in the first quarter, I think you've explained some of the earning stuff. Any color on how you're expecting that, you know, minus three to 4% to play out across the segments in the first quarter of 25? Absolutely, I can give you that, Nathan. So think of FMT, kind of going back to my backlog conversation I just had, you know, starting the year, FMT is going to be down mid single digit, with HST low single digit to mid single digit decline and FSDP up, up low single digit.

Nathan Jones: So it's about 80% that just deal with a couple of projects in FMT and FSB, but majority of this was <unk> driven in Q4.

Nathan Jones: And so that means then that probably.

Nathan Jones: Because I mean, the same as Mike said, we're getting a lot of questions about that revenue guide in the first quarter I think you've explained some of the <unk> stuff.

Nathan Jones: Any color on how you're expecting that minus 3% to 4% to play out across the segments in the first quarter of 'twenty absolutely.

Nathan Jones: Yeah, absolutely I can give you that net and so think of SMT kind of going back to my backlog conversation I just had.

Nathan Jones: Starting the year FMT is going to be down mid single digit, but just did low single digit to mid single digit decline in FSD up.

That's how, that's how we've laid out this guide to get to three to 4%. That's helpful, thanks. And then I wanted to talk a little bit more about, I think it was slide four or slide five, with the leveraging scale to drive growth and earnings. Eric, you've given some color there around, you know, some of the initiatives. I was hoping to dig a little bit more into some of the financial impacts I mean, when you're talking about supply chain leverage, that should show up in gross margins, and you're also talking about SG&A leverage here. Over time, how does that contribute to the financial performance of the business?

Nathan Jones: Up low single digits, that's how that's how we have laid out this guide to get to 2% to 4% decline.

Speaker Change: That's helpful. Thanks, and then I wanted to talk a little bit more about.

Speaker Change: Slide slide four slide five with the leveraging scale to drive growth in earnings.

Speaker Change: Eric you've given some color there.

Speaker Change: And some of the initiatives I was hoping to dig a little bit more into some of the financial impacts.

Speaker Change: I mean, when you are talking about supply chain leverage that should show up in gross margin and Youre also talking about SG&A leverage here.

Speaker Change: Over time, how does that contribute to the financial performance of the business.

Like, I mean, you must have in your model somewhere some expectations of, you know, this has 20 basis points to gross margins a year or 20 basis points to SG&A leverage a year, just how we should think about how that moves the needle for IDEX from a financial perspective. Yeah, Nathan, so the best way to think about it is kind of going back to what we've been talking about over the last, you know, 12 months, which is really thinking about EBITDA margins here. So if you kind of think about HSD long term, what we've laid out is a low to mid 30% EBITDA business in HSD, right?

Speaker Change: I mean, you must have in your models some way SMA expectations of.

Speaker Change: He had 20 basis points to gross margins, a year or 20 basis points to SG&A leverage just how we should think about how that moves the needle for IDEXX from a financial perspective, yes, Nathan So the best way to think about it is kind of going back to what we've been talking about over the last 12 months, which is really thinking about EBITDA margins here. So if we kind of think about it.

Speaker Change: <unk> long term will be laid out.

Low to mid 30% EBITDA business in HST right. So as you start to think about the work we're doing around delivering around from platform optimization and building scale, you should expect to see that SG&A benefit and expect to see that gross margin benefit because the cost is not just in SG&A. It's also above the gross margin line. So we should start to see the margin needle move.

So as you start to think about the work we're doing around de-layering, around, you know, platform optimization and building scale, you should expect to see that SG&A benefit, expect to see that, you know, gross margin benefit, because the cost is not just in SG&A, it's also above, you know, in the gross margin line. So you should start to see the margin needle move, and you should expect HSD to get to low to mid 30%. And then FMT, you know, it's already North Authority and then FSP. I know you got. I was just going to say, you know, I mean, one example here, we talked a little bit, and we brought Mott on board and talked about where it kind of came in from an EBITDA perspective and how we're going to, we're going to help them aggressively start to boost.

Speaker Change: And you should expect SSD to get to low to mid 30% EBITDA business and then FMT, it's already north of 30, and then <unk> to be closer to 30% EBITDA.

Speaker Change: I mean, we.

Speaker Change: I know you've got.

Speaker Change: Got it.

Speaker Change: Just going to say.

Speaker Change: One example, here, we talked a little bit.

Speaker Change: <unk> onboard and talked about where it kind of came in from an EBITDA perspective, and how we can kind of help them aggressively start to boost it.

Some of what we're talking about here is how that work is done. Sharper on the front end, 8020 says you're localizing around your highest margin products. Great drop-down contribution margin when you do that. Super careful about where you're sort of leveraging resources elsewhere, what you need to run a business. Transcripts by Transcription Outsourcing, www.transcriptionoutsourcing.com one of these areas, whether it's castings in one or optics in another motor. You can start to, you can approach that in a very. Great. Thanks for taking my questions. I'll get back in the queue. Thank you. Our next question comes from the line of Deane Dray with RBC Capital Markets.

Speaker Change: Some of what we're talking about here is how that work is done here you're sharper on the front end 80, 20 says your localizing around your highest margin products for the kind of afford in the franchises and you're moving those the most with most consequence, great dropdown contribution margin. When you do that I know your Super careful about where you are sort of leveraging.

Speaker Change: Resources elsewhere, what do you need to run a business within a company like <unk> to get that bottom line pick up as well.

Speaker Change: Early days in some of the things we're doing in sourcing.

Speaker Change: Just to get your head around it if you start to think about it over time, you put lots and lots of lots of an optics franchises together the tie in a lot of the same base level materials, and we're kind of seeing that in each one of these areas, whether it's castings in one or optics and another motors and a third yes, you can start that youre going to approach that in a very different way.

Speaker Change: Great. Thanks for taking my questions I'll get back in the queue.

Speaker Change: Yes.

Conference Operator: Thank you. Our next question comes from the line of Deane Dray with RBC capital markets. Please proceed with your question.

Please proceed with your Thank you. Good morning, everyone. Hey, just for starters, I appreciate all the specifics on the first quarter guide. You know, we were all in a bit of a vacuum. release and it was very helpful to hear those. Thank you. I appreciate how you've bridged that for us. And so first question is, and if there's ever been a time to kind of plumb what you're seeing in terms of tone of business. And related to that, I don't normally ask about blanket orders, but the return of them is a positive that your key customers are giving you that kind of line of sight.

Deane Dray: Thank you and good morning, everyone.

Speaker Change: Good morning.

Speaker Change: Just for starters I appreciate all of the specifics on the first quarter guide.

Speaker Change: We're all in a bit of a vacuum with the release and it was very helpful to hear the specifics this morning, but that that was probably the the bulk of our questions that we were getting before the call.

Speaker Change: But I appreciate all you've bridge that for us.

Speaker Change: So first question is and this has ever been a time to kind of plug in what youre seeing in terms of tone of business. It seems now.

Speaker Change: Last quarter. It was election uncertainty that seems to have been replaced with policy uncertainty.

Speaker Change: And but at the end you have got great indicators in terms of sentiment that your customers on the short cycle stuff. So what are the bellwether businesses, telling you and related to that I don't normally ask about blanket orders, but the return of them is a positive that you're.

Speaker Change: Key customers are giving you that kind of line of sight. So is that also part of a tone of business.

So is that also part of a tone of business? And are you going to calibrate that? Yeah, thanks for the questions and the comments in the beginning there. I mean, so let's start over on the more industrial side of this, the thing where we're closer to consumption. I mean, I would say, you know, that that has been very stable. It was stable all last year. I mean, even though, as I said, my comments, we got some certainty around Candidate selection in Q4, I mean you didn't really see a bounce necessarily because it very quickly went into the other area which you mentioned.

Speaker Change: Are you going to calibrate that for us.

Speaker Change: Yes.

Speaker Change: Thanks for the questions and the comments in the beginning there.

Speaker Change: So let's start over on the more industrial side of this thing where we're closer to consumption I mean, I would say that that has been very stable with stable all last year I mean, even though as I said in my comments, we got some certainty around.

Speaker Change: Candidate selection in Q4, I mean, you don't really see a bounce necessarily because it very quickly went into the other area, which you mentioned, which is which of the.

which of the many policies that are being suggested are likely to play out? And can everybody get their head around whether that's good, bad, negative, indifferent, all of that? The reason I called it Uncertain Optimism is I do think in most of those conversations, you are seeing people sort of lean forward saying, It's going to be a good business environment. Like, we're having more discussions about future projects, we're being asked... I think that's a positive. That being said, it's not like they're running the system higher, the factories are not working extra shifts, we're not really seeing that yet.

Speaker Change: Many policies that are being suggested are likely to play out and can everybody to get their head around whether that's good that negative in different all of those things.

Speaker Change: The reason I call that uncertain optimism is I do think in most of those conversations you are seeing people sort of lean forward, saying I think it's going to be a good business environment.

Speaker Change: We're having more discussions about future projects were being asked to think and consider and quote on some things even in those industrial spaces that I thought we were.

Speaker Change: Two or three quarters ago.

Speaker Change: I think the I think that's a positive that being said, it's not like they're running the system higher the factories are not working extra shifts we're not really seeing that yet so it's it's.

It's a more positive environment, I think. really would like to get some clarity on where we need to go. Again, we're kind of set up to deal with either one of those swim... which one we're likely to get. So I think that's on the industrial side. I think you're pointing at the blankets is super important because that is kind of a different world. And it's reflective of why we've spent so much time trying to build our critical mass in some of these HST markets. So I'll pick a couple. and get your head around it. We're doing a lot of work around It's not a huge part of IDEX today, but its growth potential is really high.

Speaker Change: It's a more positive environment I think I think.

Speaker Change: Really would like to get some clarity on where we need to go again, we're kind of set up to deal with one of those swim lanes. It would just be nice to know, which one we're likely to get.

Speaker Change: So I think that's on the industrial side I think you're pointing at the blank is super important because that is kind of a different world.

Speaker Change: And it's reflective of why we've spent so much time trying to build our.

Speaker Change: Our critical mass in some of these H S. T markets. So I'll pick a couple so you can kind of get your head around it we're doing a lot of work around the space side of things, it's not a huge part of IDEXX today, but its growth potential is really high and so the conversations when you're talking about people that are in that space.

And so the conversations, when you're talking about people that are in that... It's not about what's the policy. where are interest rates going? How many people are going to be shooting rockets up into the atmosphere? How many people want to play? Satellite. Are they going to be able to get payloads in another... And so when we're getting orders and positions on solutions in those areas, those are annuities that I don't think are subject to some of the distortions, you know, month to month, quarter to quarter that we've seen in some of the other areas of the business.

Speaker Change: It's not about what's the policy and where interest rates going.

Speaker Change: How many people are going to be shooting rockets up into the atmosphere of how many people want to play with communication satellites.

Speaker Change: And to be able to get payloads at another level.

Speaker Change: And so when we're getting orders in positions on solutions in those areas. Those are annuity streams that I don't think are subject to some of the distortions month to month quarter to quarter that we've seen in some of the other areas of the business.

So there's one example. I mean, I think we have others, and some of the things we're doing, we've got some good things going on in pharma. You know, the mop solution that we talked about in Q4 that they delivered, it's the first time that work's ever been done. And so a lot of this work and those orders and those order positions and the things we're putting out there are about setting specification points for evolving markets that I think are a little less dependent. Some of the ups and downs and sideways of, you know, kind of news of the day.

Speaker Change: So there is one example, I mean I think we have others in.

Speaker Change: I guess one of the things we're doing we've got some good things going on in pharma.

Speaker Change: Yeah.

The box solution that we talked about in Q4 that they delivered the first time that works ever been done.

Speaker Change: Sure a lot of this work and those orders and those order positions and things that we're putting out there are about setting specification points for evolving markets that I think are a little less dependent on some of the ups and downs in sideways of kind of.

Speaker Change: News of the day.

And so, I mean, we're really encouraged, as you can tell, by those Q3 brankets, the Q4, because the numbers are good, but largely what they represent and how they position us. And Dean, just to add to that, when we when we talk about blankets, more and more for the near term above and beyond what Eric also said is, those blankets that we're talking about have specific ship dates in 2025. So they are, they're going to get shipped in 2025. Of course, that you know, once you book a blanket doesn't get shipped on January 1, but they have delivery schedules tied to it throughout the year that we're going to get, you know, get the product out.

Speaker Change: And so.

Speaker Change: I mean, we're really encouraged as you can tell by that was Q3 buckets in the Q4, because the numbers are good but largely what they represent and how they position us for the years to come.

Speaker Change: <unk> just to add to that when we when we talk about blankets more for the near term above and beyond what I also said at those branches that we're talking about have specific ship dates in 2025. So they are they're going to get shipped in 2025 of course once you book, a blinker and doesn't get shipped on January one, but they have delivery schedule is tied to it throughout the year that we're going to get.

Speaker Change: Get the product out the door.

That's really helpful. And second question, and I might have missed it in the the 25 assumptions is our growth investment. That's always a lever that you have. It's a way of investing for the future. Page 4 probably had a number of those growth investments, but do you have a specific number embedded in 25, and what was that number in 24? Well, this is kind of an interesting one because in many ways they don't stick out in ways that they have before as a bridge item because, as I said in the comments here, we've largely self-funded.

Speaker Change: That's really helpful and <unk>.

Speaker Change: Second question and I might have missed it in the.

Speaker Change: 25 assumptions are growth investments, that's always a lever that you have it's a way of investing for the future.

Speaker Change: Page four probably had a number of those growth investments, but do you have a specific number embedded in 'twenty five and what was that number in 2024.

Speaker Change: It's kind of an interesting one because in many ways. They don't stick out in ways that they had before as a bridge item because and as I said in our comments here, we've largely self funded a.

A lot of the growth investments within those five areas that we talked about. So we have a net productivity benefit because we've been able to resource lever, but that's sort of after the fact of us building some scalable mass as we go at some of these spaces. So I guess. Because of the way that this architecture is being built, that we've actually got more natural productivity, so you have to look less at it. There are some exceptions around the edges, but you're actually getting more power underneath the hood than is showing as an exceptional bridge item because of that work.

Speaker Change: A lot of the growth investments within those five areas that we talked about so we have a net productivity benefit because we've been able to resource lever, but that's sort of after the fact of US building scalable mass as we go out some of these spaces. So.

Speaker Change: It's because of the way that this architecture is being built that we've actually got more natural productivity. So you have to look less at it there are some exceptions around the edges, but.

Speaker Change: You're actually getting more power underneath the hood and is showing as a exceptional bridge item because of that work correct.

Appreciate all that color. Thank you. Thank you, our next question comes from the line of Joe Giordano with TD Cowen, please proceed. Hi, guys. Good morning. Hey, Joe. Just to start on the projects that you got, the $40 million, was that contemplated when you gave, when you guys reported 3Q, was that contemplated originally in the fourth quarter or was that kind of a pull-in? Because I'm just curious, you got to the low end of the organic guide for the quarter, but the margin was below the low end, so just what, if any, of that was expected?

Speaker Change: I appreciate all that color. Thank you.

Speaker Change: Yeah.

Conference Operator: Thank you. Our next question comes from the line of Joe Giordano with Cowen. Please proceed with your question.

Joe Giordano: Hey, guys good morning, Hey, Joe.

Conference Operator: Just to start on the projects that you got the $40 million.

Joe Giordano: Was that contemplated when you gave.

Joe Giordano: When you guys reported <unk> was that contemplated originally in the fourth quarter or was that kind of a pull in because I'm. Just curious you got to the low end of the organic guide for the quarter, but.

Joe Giordano: Margin was below the low end so just.

Speaker Change: What if any of that was expected yes, so Joe when we guided Q4 as part of the Q3 call. We were very very specific around the project.

Yeah, so Joe, when we guided Q4 as part of the Q3 call, we were very, very specific around the project delivery that we're expecting in Q4, in fact, the exact, or the language that we used around it was, hey, if you think about Q3 to Q4 RAM, the businesses in general are stable and sequentially flat, and on top of it, what you have is project activity that we're going to see from Q3 to Q4. So we specifically called it out as part of our guidance. Okay. And then if I look at the bridge, and I think that's obviously where all the confusion is with people today.

Speaker Change: Project delivery that we're expecting in Q4 and in fact, the exact or the language that we use round. It was hey, if you think about Q3 to Q4 ramp.

Speaker Change: Businesses in general are stable and sequentially flat and on top of it what you have as project activity that we're going to see from Q3 to Q4, So we specifically called it out as part of our guidance.

Speaker Change: Okay.

And then if I look at the bridge I mean, I think that's obviously, where all the confusion is with people today.

I thought you said, I have kind of a couple of questions here. Like on SEMI, I thought you said that it decelerated out of Q4 and now it sounds like that's a major part of the acceleration in the second half of the year. So maybe if you can dig in there on like where in SEMI are you talking about, whether it's memory or other things, and then like the life science, how does that play with NIH potential defunding and like export restrictions on tools and things like that? I'm getting to like how much of that ramp is, you know, secured with firm orders or is it just an expectation of the market?

Speaker Change: I thought you said.

Speaker Change: A couple of embedded questions here on semi I thought you said does it decelerate is it out of Q4 and now it sounds like that's a major part of the acceleration in the second half of the year. So maybe if you can dig in there on like where in semi or are you talking about whether it's memory or other things and then like the life science, how does that play with NIH potential defunding and Mike.

Speaker Change: Export restrictions on tools and things like that.

Speaker Change: I'm getting to like how much of that ramp is.

Secured with a firm orders or is it just an expectation of a market change.

Yeah, so so the two areas that you talked about on the on the semi side, we kind of have two pieces of it on the positive side in our ceiling solution. smaller percentage, but that was positive in Q4, it remains positive in Q1, and it's kind of, think of it as like MRO aftermarket business, kind of a wearable item. So we're calling that out. It's not the major driver, but it's important because it is positive and in some ways... and Matt Summerville. Thank you. The more impactful disruption is in the first half of the year, here sitting in first quarter.

Speaker Change: So but.

Speaker Change: Two areas that you talked about on this on the semi side kind of two pieces of it.

Speaker Change: On the positive side in our sealing solutions business and a smaller percentage, but that was positive in Q4. It remains positive in Q1, and it's kind of think of it as like MRO aftermarket business kind of a wearable item that you're using as you maintained.

Speaker Change: Maintain the system, so we're calling that out.

Speaker Change: It's not the major driver, but it's important because it is positive and in some ways. We think it's a precursor of days ahead.

Speaker Change: The more impactful disruption is in the first half.

Speaker Change: Of the year here sitting.

Speaker Change: Sitting in first quarter.

This is on the kind of tool equipment side. the line share the rest of our work. I mean, we do we do have some inventory adjustments that are being taken, probably for some of those because of those impacts. So there are economic variables or political variables that you talked about, that we know is happening. And so we've got kind of a phenomenon where we pause a bit inside the business for that part of what we deliver in semi, and then we pick it up again in the second half of the year. It's not necessarily a market effect, it's more of a discreet customer item that we know about.

This is on the kind of tool equipment side, where we do some.

Speaker Change: <unk> share of the rest of our work I mean, we do have we do have some inventory adjustments that are being taken probably for some of those because of those impacts centers, there's economic variables or political variables that you talked about that we know is happening and so we've got kind of a phenomenon, where we pause a bit inside the business for that part of what we deliver in semi and then wed.

Speaker Change: Pick it up again in the second half of the year, it's not necessarily a market effect, it's more of a discrete customer item that we know about the <unk>.

The third item that I was talking about for more long-range support is, hey, we're seeing very good commercial activity around the kind of ragged edge of the spectrum where we do a lot of the work that ultimately supports future run-outs towards 2030 and beyond. So we kind of got near-term positive, we got this bump in existing programs where we have to navigate that first half to second half, and then we've got some long-term indicators that I On the life science side, you know, you talk through some of those things, look, we see low single-digit to mid-single-digit lift in that kind of core fluidics handling franchise that we have around analytical instrumentation.

Speaker Change: Third item that I was talking about from our long range support us and we're seeing very good commercial activity around the kind of ragged edge of the spectrum, where we do a lot of the work that ultimately supports future run out towards 2030 and beyond so.

Speaker Change: Got near term positive you got this bump in existing programs, where we have to navigate that first half to second half and then we've got some long term indicators that actually we think are really positive.

Speaker Change: On the life Science side, you talked through some of those things like we see low single digit to mid single digit lift in that kind of core.

Speaker Change: So what X handling franchise that we have around animals analytical instrumentation and within the life science stuff.

Speaker Change: Good stuff with an optical filters, which we have a life science component that's tucked in there.

Speaker Change: Offset a little bit by some of the work that we do around genomics that is tied a little bit more to some of the uncertainty around government funding why did I choose for population surveillance and those things.

But a net positive overall as we run through the year and what we... We call H&S or Life Sciences. Thank you. Our next question comes from the line of Brett Linzey with Mizzou Health. Hey, good morning, all. Thanks. First question just on price cost. Can you just clarify within that 15 to 40 cents that that's organic? How much are you embedding for price cost and then any context on the phasing through the years? Is it negative in in the first quarter? Do you catch up? Any context would be good. Absolutely. I can answer that for you.

Speaker Change: But a net positive overall as we run through the year and what we see and what we call <unk> life Sciences.

Speaker Change: Thanks, guys.

Speaker Change: Okay.

Conference Operator: Thank you. Our next question comes from the line of Brett Linzey with Mizuho. Please proceed with your question.

Speaker Change: Hey, good morning, all Thanks first question just on price cost can you just clarify within that 15 to 40 cents. That's organic how much are you embedding for price cost and then any context on the phasing through.

Through the year or is it is it negative in the first quarter or do you catch up.

Speaker Change: Any context, because absolutely, but if I can answer that for you. So when you think about price cost spread that we've laid out and just got laid out about 60 to 80 basis points of price cost spread in the guide if you think about phasing on the pricing piece first half to second half.

So when you think about price cost spread that we've laid out in this guide, I've laid out about 60 to 80 basis points of price cost spread. If you think about phasing on the pricing piece, first half to second half, I'd say it's about incremental $10 million of pricing in the back half of the year, because if you really think through the pricing mechanism and how we do it, we typically announce a pricing increase that goes into effect in Q1. So there's a quarter worth of lag. So think of it as first half to second half, but an incremental $10 million in price.

Speaker Change: I'd say its about incremental incremental $10 million of pricing in the back half of the year, because if you really think through the pricing mechanism and how we do it we typically announce a price increase that goes into effect in Q1. So there is a quarter worth of lag. So think of it as first half to second half about an incremental $10 million in price you should expect to see well, we don't have a negative position now.

But we don't have a negative position. No, it's positive 60 to 80 business points for the Okay, great. You know, appreciate the color there. And then just a question on HST, and this in slide 13. So you indicated that the challenging comparable in life science and analytical as an offset to strength elsewhere, just just a little bit of context there, I guess, on the moving pieces, I, I thought orders were down about 19. And sales pretty soft. I don't know if that suggests that life science and analytical was was up in the prior quarter, just just any color be great.

Speaker Change: Positive 60 to 80 basis points for the year Yeah Yeah.

Speaker Change: Okay, Great I appreciate the color there and then just a question on HST and slide 13, so you'd indicated that the challenging comparable in life science and analytical.

Speaker Change: As an offset to strength elsewhere, just just a little bit of context, there I guess on the moving pieces I thought Wow, we're down about 19 in sales pretty soft I don't know.

Speaker Change: That suggests that life science and analytical was up in the prior quarter, just any color would be great.

I'm sorry, but try that question again. I'm not sure it completely follows. Oh, on slide 13, you said that you had noted a challenging comparable in life science and analytical instrumentation was an offset to strength elsewhere. I guess, was that a Q4 comment? I know Q4'23 HST was down pretty significantly, so just wanted to square the moving pieces within the divisions. Yeah, so look, I think if you think about Q4'23, first of all, 2024 for life sciences has been pretty much flat. If I kind of take a look at ourselves and where we've been in the last four quarters and 24, it's been pretty much similar throughout.

Speaker Change: I'm, sorry, but to other question again, but I'm not sure I completely follow too.

Speaker Change: So on Slide 13, you you said that.

Speaker Change: You had noted a challenging comparable in life science and analytical instrumentation.

Speaker Change: An offset to strength elsewhere.

Speaker Change: I guess was that a Q4 comment.

Speaker Change: I know Q4, 'twenty three HST was down pretty significantly. So just just wanted to square the moving pieces within the divisions. Yes. So look I think if you think about Q4 'twenty.

Speaker Change: First of all 2024 for life Sciences has been pretty much flat sequentially. If I kind of didn't kind of take a look at our sales and where we'd be in the last four quarters in 24, it's been pretty much similar throughout the year.

While they have been flat on a year-over-year basis, there has still been pressure on the life sciences side from 24 to 23. So that's what we're talking about when we say we've always talked about life science in the context of 24 being, hey, sequentially, we have seen a flat, flat top line, but on a year-over-year basis, it's still. That's what it looks like. Okay, great. Appreciate the detail. Thank you. Our next question comes from the line of Andrew Buscaglia with BNP Paribas. Hey, good morning, guys. You know, I had a kind of high level strategic question I wanted to ask, and that, you know, HST has really come, it's really not come back the way we thought it would.

Speaker Change: While while they have been flat on a year over year basis. There has still been pressure on the life Sciences side.

Speaker Change: From 'twenty to 'twenty three so that's what we're talking about when we say we've always talked about lifestyles in the context of a 24 being hey sequentially. We are seeing a flat flat topline, but on a year over year basis is still down.

Speaker Change: What that refers to.

Speaker Change: Okay, great appreciate the detail.

Speaker Change: Thank you. Our next question comes from the line of Andrew Buscaglia with BNP Paribas. Please proceed with your question.

Andrew Buscaglia: Hey, good morning, guys good morning.

Speaker Change: So yeah.

Speaker Change: I had a kind of a high level strategic question I wanted to ask it.

Speaker Change: And that no HST.

Speaker Change: Had really come.

Speaker Change: It's really not come back the way we thought it would.

And it had a good year out of COVID or good two years. But it's been a long time since we really seen that growth pick up. And it seems to be, you know, quite a long cycle business. I'm wondering, you know, does this inform kind of where you want to go with this segment in terms of strategic acquisitions? I, has it surprised you how long cycle and how tough it's been? And if you could just comment, like, is that is that a fair criticism in that it's, it's much more longer than we thought. Well, I mean, longer cycle would kind of, I think, imply that there's a consistent wave and it's going to come around again and again and again, that I wouldn't agree with.

You had a good year out of Covid are good two years, but it's been it's been a long time since we've really seen that growth pick up and it seems to be quite a long cycle business.

Speaker Change: I'm wondering does this inform kind of where you want to go with the segment in terms of strategic acquisition.

Speaker Change: Has it surprised you how long cycle and how tough it Ben.

Speaker Change: And yes, if you could just comment.

Speaker Change: Is that is that a fair criticism and that it is.

Speaker Change: Much more longer than we thought.

Speaker Change: Well I mean longer cycle, what kind of I think imply that there is a consistent wave and it's going to come around again, and again and again that I wouldn't agree with I think.

I think, you know, what is surprising is probably the impact and the duration and overall numbers involved on the sort of COVID post COVID run up and run down on two sectors of that segment that formed You know, originally, now that percentage is actually lower today, as we've acquired things in, I mean, we're acquiring them in different spaces, Mott alone, with its focus on energy transition, starts to take those levels down. They're not as critical as they were, just singularly with two dimensions. But, you know, I'd go back and say, in hindsight, it all looks totally rational, but you had a global health event, so the very sector that was involved in trying to keep people safe and, I mean, got max funding, max velocity, and was really, really hot.

Speaker Change: What is surprising is probably the impact and the duration and.

Speaker Change: Uh huh.

Speaker Change: Overall numbers involved on the sort of Covid post COVID-19 run up and run down on two sectors have that segment that foreign to half of it.

Speaker Change: Originally now that percentage is actually lower today as we've acquired things in I mean, we're acquiring them in different spaces motto loan with its focus on energy transition starts to take those levels down theyre not as critical as they were just singularly with two dimensions.

Speaker Change: Yeah.

Speaker Change: Go back and say in hindsight, it all looks totally rational, but you had a we had a global health event. So the various sector that was involved in trying to keep people safe and I mean got Max funding Max velocity and was really really hot and yes. It was a little surprising and how long. It took you know multi years to recalibrate.

And yeah, it was a little surprising in how long it took, you know, multi-years to recalibrate itself back and find its footing. You know, but the dynamics of that market, they don't, I don't think they're changed. We've still got tremendous challenges out there. health events, and things that we're trying to crack the code and figure out, you know, we're winning and the platforms that we're working on today. ultimately make life a lot better for people as we go forward. So I don't think that thesis changed. It's on the back end of a very, very singular event that in itself was health.

Speaker Change: Itself back and find its footing again, but the.

Speaker Change: The dynamics of that market. They don't I don't think they are changed I mean, we still got tremendous challenges out there in terms of health events and things that we're trying to crack the code and figure out.

Speaker Change: We're winning the platforms that we're working on today.

Ultimately make life a lot better for people as we go forward. So I don't think that thesis change. It's on the back end of a very very singular event that in itself was health.

health consequential and driven. Right next to it was the semi side of it. Everybody went from working here to working at their house. They all bought PCs and it's been a long time since they've needed new ones. So you've got two things that were half of our segment that I still think, while Semonite always has a certain amount of cyclicality and we're always going to be careful to keep that ratio reasonable within IDEX, I think the two of them together, the duration of it and what caused it, pretty exceptional. And I think, you know, what's important to realize here is while it's been a while, we're actually seeing the swing.

Speaker Change: Health consequential and driven.

Speaker Change: Right next to it was the semi side of it everybody wants that working here to working at their house. They all bought P. CS and it's been a long time since they've needed new ones.

Speaker Change: And so you've got two things that were half of our segments.

Speaker Change: Still think all satellite always has a certain amount of cyclicality and we're always going to be careful to keep that ratio reasonable with an IDEXX.

Speaker Change: I think the two of them together the duration of it and what caused it.

Speaker Change: Pretty exceptional.

Speaker Change: I think what's important to realize here is while it's been a while we're actually seeing the swing we're seeing the swing now where HST comes back or twenty-five guidance hasnt, leading the way in growth for IDEXX as a pause.

We're seeing the swing now where HST comes back. Our 25 guidance has it leading the way in growth for IDEX. The series of... That is what we were all expected to remain in. And I think we're going to see less and less of any of those echoes and ripples. Yeah, and a similar question with FMT, I would think that that would be recovering pretty strongly this year. And it seems as though, kind of similarly, it seems like the, it's not a short cycle either. Is something changed? In that business where you're finding you're on a lot more of these long-duration projects than you used to be in the past.

Speaker Change: And we should expect it to remain in.

Speaker Change: And I think we're going to see less and less and less of any of those echos and ripples and now frankly very very exciting days ahead.

Speaker Change: Yes.

Speaker Change: So my question with FMT I would think that that would be recovering pretty strongly this year and it seems as though.

Similarly, it seems like the.

Speaker Change: It's not a short cycle, either or has something changed.

Speaker Change: And that business, where you're finding your own a lot more of these long duration projects then there needs to be in the past.

I mean, largely the FMT, when taken entirely, doesn't have a lot of projects in it. We talk about it. They're usually in kind of our chemical spaces, energy, that's where you see a couple of them. Yeah. ...fragmented space that's reflective of general industry, that's why it tends to oscillate pretty fast. We referenced, frankly, pretty dramatic up-down in 2024 as the world dialed in differently. I think, you know, what you're seeing there, with kind of FMT being in sort of a third place positioning for for growth in the current Environment. is the uncertainty that we talked about with Deane playing out.

Speaker Change: No I mean.

Speaker Change: I mean, largely the FMT when taken entirely doesn't have a lot of projects in it we talk about it theyre usually in kind of our chemical spaces energy, that's where you see a couple of them.

Speaker Change: It's been a fragmented space.

Speaker Change: Reflective of general industry, that's why it tends to oscillate pretty fast we referenced frankly pretty dramatic up down in 2024 as well.

Speaker Change: [noise] World dialed in differently.

Speaker Change: I think what you're seeing there.

Speaker Change: Kind of FMT being in sort of a third place positioning for for growth in the current.

Speaker Change: <unk>.

Speaker Change: Is the uncertainty that we've talked about with Dean playing out I mean, we're looking for direction on policy and things that.

I mean, we're looking for direction on policy. get some of those conversations that I referenced to turn into commitments, orders, and positions. When that happens at IDEX, we typically chase it pretty quick and ramp it up. Yeah, okay. All right. Thank you. Ladies and gentlemen, our final question this morning comes from the line of Rob Wertheimer with Miele's Research. Hi. Thanks for the question. I wanted to kind of follow up on where you were going a minute ago, Eric. I mean, if you look at, obviously, HST, you cited the sources of the volatility, both up and down.

Some of those conversations that I referenced to turn into commitments orders and positions when that happens at IDEXX.

Speaker Change: Typically chase it pretty quick and wrap it up.

Speaker Change: Yeah, Okay, alright, thank you.

Speaker Change: Thank you ladies and gentlemen, our final question. This morning comes from the line of Rob Wertheimer with Melius Research. Please proceed with your question.

Speaker Change: Hi, Thanks for the question I wanted to kind of follow up on where you were going a minute ago. Eric I mean, if you look at obviously HST you cited the sources of the volatility both up and down and if you look across the trend line.

And if you look across the trend line, and I know the business has changed, but do you think that we're back to normal there? And as you mentioned, that we're ready to resume growth. Is there any reversion to mean upwards versus maybe a higher trend line growth that you would expect from that segment? That's my first question. Thanks. Yeah. Well, look, I think we're heading into positive territory. We're careful on the life science recovery and the lift that we're talking about here. I don't think it's a snapback kind of thing. Ultimately, that should be more growing at higher levels than even what we have projected in here.

Speaker Change: I know the business has changed but.

Speaker Change: Do you think that there that we're back to normal there and as you mentioned that we are ready to resume growth is there any.

Speaker Change: Reversion to mean upwards versus maybe a higher trend line growth that you would expect from that segment. That's my first question. Thanks.

Speaker Change: Well look I think I think we're heading into positive territory, where we're careful on the life science.

Speaker Change: Recovery in the lift that we're talking about here I don't think it's a snapback kind of thing.

Speaker Change: Ultimately that should be growing at higher levels than even what we have projected in here, but we're kind of following the moderate trend lines to move away from where we've been to where we're going.

But we're kind of following the moderate trend lines to move away from where we've been to where we're going. think long term? I mean, that has tremendous growth prospects. Traditionally I worked on behalf of INTC and I think that may also most infer much of the traditional faculties instructors fall out in the True blueberry borgues for the exams. Obviously we've got the item I mentioned internally with customer positioning here, but generally we see that we're closer to where that next cycle is going to be. We're super well positioned in terms of how we're represented across critical technology.

Speaker Change: Long term I mean that has tremendous growth prospects that should be a mid single.

Speaker Change: At a minimum kind of franchise for us, we're just being pretty careful and moderate about our projections as we start to approach that the semi side I'd say, we're conservative there as well we're seeing some good things and we're seeing obviously we got.

Speaker Change: Item I mentioned internally with customer positioning here, but generally we see that we're closer to where that next cycle is going to be we're super well positioned.

Speaker Change: Hardware represented across critical technology, I think that's going to be an important component.

I think that's going to be an important component. Those two things where we typically have spent the bulk of our time talking about HST when we get here, as I said, they used to be half the segments. They're actually lower now. Things that Mott is doing in delivering within energy transition, they're doing great work around the water franchise that they have inside that business. You're going to start to hear some things as those come out. We're going to be talking about those more. It's going to be a more balanced Product. And again, I think, you know, one of the reasons we like it is it's not as dependent.

Speaker Change: Those two things, where we've typically ive spent the bulk of our time talking about HST. When we got here because I said they used to be half of segments are actually lower now.

Speaker Change: Is that modest doing and delivering within energy transitions or just a framework around there the water franchise that they have with inside that business, you're going to start to hear some things as those come out we're going to be talking about those four it's going to be a more balanced suite.

Speaker Change: Product.

Speaker Change: And again I think.

Speaker Change: Or one of the reasons, we like it is it is not as dependent on sort of the temporal shifts in mood.

Temporal Shift This is really, really important. Okay, I'll stop there. Thank you. Ladies and gentlemen, that concludes our question and answer session. I'll turn the floor back to Mr. Ashleman for any follow-up. So thanks. Thanks for joining today. I appreciate all the questions and the interest, as always. And I'll probably conclude with some comments that are going to echo some of the things we've talked about, but I want to make sure that we end with them here. You know, we're at an important inflection point for IDEX as we begin to bring together some of these recently acquired businesses with select legacy businesses that we've long had to build scale and power in the focus that I talked about on slide four.

Speaker Change: Things because these are fast evolving applications that are moving pretty rapidly from phase one to phase two of their own evolution being there first.

Speaker Change: Really really important and exciting.

Speaker Change: Okay.

Speaker Change: I'll stop there thank you.

Speaker Change: Thank you, ladies and gentlemen that concludes our question and answer session I will turn the floor back to Mr. Ashok <unk> for any final comments.

Speaker Change: Thanks for joining us today appreciate all the questions and the interest as always and I'll, probably conclude with some comments that are going to echo some of the things we've talked about but I want to make sure that we had with them here. We are at an important inflection point for IDEXX as we began to be bringing together. Some of these recently acquired businesses with select legacy businesses that we've long.

Speaker Change: Have to build scale and power and the focus that I talked about on slide four.

And you see that that's, you know, that's set up to deliver and is starting to deliver nice growth on the top line, and then some really, really nice productivity and leverage on the bottom line. So working both sides of this ratio we think is really important. And we're now watching HST make that transition and that swing from a tough couple of years, we talked about why that happened, you know, to being back out in the lead as we, you know, leading the way for growth for IDEX. And again, and I like the conversation we had with Deane, I mean, you know, blanket orders, they're numbers, they're important, they help with the comps, but each one of them has a story.

Speaker Change: You see that that's that's set up to deliver and is starting to deliver nice growth on the top line and then some really really nice productivity and leverage on the bottom line. So work on both sides of this ratio we think is really important.

Speaker Change: Now watching H S T make that transition in that swing from a tough couple of years, we talked about why that happened.

Speaker Change: Being back out in the lead.

Speaker Change: Leading the way for growth for for IDEXX.

Speaker Change: And again.

Speaker Change: I like the conversation, we had with Dean I mean blanket orders their numbers. They are important they help with the comps, but each one of them as a story and the story that you see there is in many cases entry points into some of the best applications that we're going to be talking about for the next five to 10 years.

And the story that you see there is, in many cases, entry points into some of the best applications that we're going to be talking about for the next five minutes. really, really important that we get out there, super innovative, first to get there. And to see Mott contributing in that way this early as part of the company, really, really provides some nice energy. We're not leaving FMT and FSDP behind. We didn't touch on it much here today, but that point around digitization and automation and being able to apply that at scale to go drive growth out ahead of some of the industrial municipal markets they're in.

Speaker Change: Really really important that we get out there super innovative first to get there.

Speaker Change: And to see Marc contributing in that way. This early as part of the company really really provide some nice energy we're not leave in FMT in FSD paint behind we didn't touch on it much here today, but that point around digitization and automation being able to apply that at scale to go drive growth kind of out out ahead of some of the industrial municipal.

Speaker Change: They are in.

Speaker Change: Fire and rescue that is now automated solutions, that's an important milestone in the threshold. So don't want to lose sight of that either.

That's an important milestone and a threshold, so I don't want to lose sight of that either. Look, end of the day, we think we're building something special here. We are excited to keep talking about it with you along the way, and I look forward to the next time we get to do it. Have a great day. Thank you. This concludes today's conference call. You may disconnect your lines at this time. Thank you for your...

Speaker Change: End of the day, we think we're building something special here, we are excited to keep talking about it with you along the way and I look forward to the next time, we get to do it have a great day.

Conference Operator: Thank you. This concludes today's conference call you may disconnect. Your lines at this time. Thank you for your participation.