IDEX Corporation (IEX) FY2025 Earnings Quality Report

Grade: F — Slow-Growth Year Masked by Mott Acquisition

Framework: Schilit *Financial Shenanigans* + Beneish M-Score + forensic accounting principles

Data: SEC EDGAR 10-K (Filed 2026-02-19, FY ended December 31, 2025) + Yahoo Finance

Auditor: Deloitte & Touche LLP — Unqualified opinion (1 critical audit matter: revenue disaggregation)

One-line verdict: IDEX delivered only 1% organic sales growth in 2025, with most of the reported 6% growth coming from the Mott Corporation acquisition. GAAP diluted EPS actually fell 3% from $6.64 to $6.41, while adjusted diluted EPS rose just 1% to $7.95. Operating cash flow was strong — $680.4M or 141% of net income — and the company returned $248M in buybacks and $213M in dividends. The MD&A acknowledges the industrial and automotive end markets are weak, the Fire & Safety markets outside the US are weak, and Dispensing is seeing subdued capital spending. The bright spots are HST (Health & Science Technologies) with data center/semiconductor demand and FMT Water businesses. Three screening flags (C4 cash/debt, D1 goodwill, A2 receivables) are structural characteristics of a serial-acquirer mid-cap industrial. The M-Score of -2.54 and Z-Score of 5.26 are both firmly in clean territory.

A Diversified Pump and Flow Control Specialist

IDEX operates three segments — Health & Science Technologies (HST), Fluid & Metering Technologies (FMT), and Fire & Safety/Diversified Products (FSDP). The MD&A describes the company as "a highly diversified business with a wide range of products and services that are offered in various markets throughout the world."

This diversification is exactly why Deloitte identified "Revenue Disaggregation of Revenue" as the critical audit matter: "The Company is a highly diversified business with a wide range of products and services that are offered in various markets throughout the world. The Company's business activities are carried out by numerous individual business units, which offer a unique set of products and include niche markets within specific geographic areas. We identified revenue as a critical audit matter given the disaggregated nature of the Company's operations and business units generating revenue. This required extensive audit effort due to the volume of the underlying transactions and distinctiveness of each individual business unit."

Financial Performance: Organic Growth is Just 1%

From the MD&A Results of Operations:

From the 2025 Highlights in the MD&A: "Record reported Net sales of $3,457.5 million increased 6% overall and increased 1% organically. Reported diluted earnings per common share (EPS) attributable to IDEX of $6.41 decreased 3%. Adjusted diluted EPS attributable to IDEX of $7.95 increased 1%."

Translation: the reported 6% sales growth is mostly inorganic (Mott acquisition). The underlying business grew just 1%. Adjusted EPS of $7.95 — which excludes acquisition intangible amortization and one-time charges — grew 1%. GAAP EPS fell 3%.

From the MD&A: "During 2025, the Company delivered organic sales growth and margin expansion as positive price across all segments more than offset lower volumes in the FMT and FSDP segments. Improved operational results included productivity improvements together with platform optimization savings resulting from restructuring and other cost containment actions taken during 2025. Results were tempered by higher interest expense, the absence of certain tax benefits recognized in 2024 as well as higher amortization on acquisition related intangibles assets."

Three drags: (1) interest expense up $19.9M on Mott financing debt, (2) loss of 2024 one-time tax benefits (effective tax rate jumped 260bp), (3) higher amortization from acquired intangibles.

2026 Outlook from the MD&A

The MD&A provides specific segment-by-segment guidance:

HST (Health & Science Technologies): "the Company anticipates continued growth supported by robust demand across data center, semiconductor, space and defense, and food and beverage and pharmaceutical end markets. By contrast, the industrial and automotive businesses have yet to experience a meaningful recovery in demand."

FMT (Fluid & Metering Technologies): "the Company expects continued momentum in the Water businesses. However, core industrial markets continue to track flat, and the Company is monitoring softer demand trends across chemical, energy and agricultural applications."

FSDP (Fire & Safety/Diversified Products): "near term headwinds are expected to persist due to ongoing weakness in Fire & Safety markets outside the United States and subdued capital spending in Dispensing. BAND IT is generally performing in line with the Company's other industrial businesses, trending flat to start the year."

Net assessment: only data center/semi/defense-exposed HST businesses are growing. Everything else is flat or weakening. This is a slow-growth 2026 at best.

Cash Flow

OCF was 141% of net income (up from 132% in 2024). Free cash flow of $616.8M is 103% of adjusted net income. Cash conversion is the saving grace — even though net income fell, cash generation was roughly flat.

Capital return: "Returned capital to shareholders in the form of $248 million of share repurchases and $213 million of dividends."

Balance Sheet

C4 Cash vs Debt: FAIL. Cash $0.6B covers 31% of debt $1.8B.

D1 Goodwill + Intangibles: FAIL. $4.7B = 116% of equity — the highest ratio in this screening subset. This reflects the Mott Corporation acquisition layered on top of many years of bolt-on deals (Micropump, Airtech, Warren Rupp, ACS, etc.). IDEX's stated strategy is "disciplined bolt on acquisitions" and the cumulative effect is significant goodwill concentration.

D2 Leverage: PASS. Debt/EBITDA of 2.0x is healthy investment grade.

The 18-Point Screening

Revenue Quality

A2 fails for the two-year pattern, though only modestly.

Expense Quality

B1 is on the edge — inventory grew 11.6% on COGS of 5.2%. Part of this is Mott acquisition inventory coming on-balance-sheet plus safety stocking in an uncertain demand environment. Not flagged but worth tracking.

Cash Flow Quality

Balance Sheet

Acquisition Risk

Manipulation Score

Key Risks from the 10-K

1. End-Market Cyclicality Across Many Business Units

Item 1A: "A Slowdown in the U.S. or International Economy Could Materially Adversely Affect the Sales and Profitability of the Company's Businesses. In 2025, 51% of the Company's sales were derived from customers within the U.S. and 49% were derived from customers outside of the U.S. The Company's largest end markets include industrial, life sciences, energy, water, fire suppression, semiconductor, automotive and aviation, chemical, paint dispensing and food and beverage. A slowdown in the U.S. or global economy and, in particular, any of these specific end markets could materially reduce the Company's sales and profitability."

2. AI/Data Center Demand Volatility

The risk factor continues: "In addition, the increasing use and development of AI has increased demand for AI-related projects, including data center power solutions and semiconductor applications. The growth and development of this rapidly-evolving industry is difficult to predict. Changes in demand can affect the timing and amounts of customer investments in our products, which could materially affect the Company and its financial condition and results of operations."

IDEX acknowledges that its main 2026 growth tailwind (HST data center/semi) is exposed to a demand cycle that could reverse quickly. A single quarter of semiconductor capex deferral would directly affect HST growth.

3. International/Tariff Exposure

Item 1A: "Changes to Geopolitical and Economic Conditions in the U.S. and Foreign Countries in Which the Company Operates Could Adversely Affect the Company. The Company expects international operations and export sales to continue to be significant for the foreseeable future. The Company's sales from international operations and sales from export are both subject in varying degrees to risks inherent in doing business outside the U.S. These risks include the following: possibility of unfavorable circumstances arising from host country laws or regulations... the imposition of and changes in the United States and other governments trade regulations, trade wars, increased or new tariffs and other trade barriers, and variability and unpredictability in trade relations..."

49% of sales are international and 34% of net sales come from non-USD functional currency subsidiaries. IDEX is fundamentally exposed to trade war escalation.

4. FX Translation Risk

Item 1A: "Significant Movements in Foreign Currency Exchange Rates May Harm the Company's Financial Results. The Company is exposed to fluctuations in foreign currency exchange rates arising from its global business operations. Approximately 34% of net sales in 2025 were recorded by subsidiaries with functional currencies other than the U.S. Dollar."

5. Acquisition Integration — Serial Acquirer

While not quoted directly from Item 1A, IDEX's entire growth strategy relies on bolt-on M&A. The Mott Corporation deal in 2025 was one of the largest in recent years. The C4 fail on cash/debt partly reflects the increased leverage to fund this acquisition. If the Mott integration disappoints or revenue synergies don't materialize, there is a goodwill impairment pathway.

6. Revenue Disaggregation — Critical Audit Matter

Deloitte flagged this because of the practical audit complexity of auditing revenue across hundreds of product lines in dozens of business units serving distinct end markets. It is not an accounting estimate risk — it is a volume-of-work risk. The benign interpretation: IDEX has a complex structure and the audit takes a lot of effort. The less benign interpretation: with that many business units, small adjustments in any one could aggregate to material changes that are hard for auditors to detect.

Summary

Grade: F. A slow-growth year for a serial-acquirer industrial with three structural balance-sheet flags.

IDEX's 2025 financial profile is defensive rather than growth. Organic sales growth of 1% is well below the company's historical ~4-5% organic growth target. GAAP diluted EPS fell 3%. Interest expense rose 45% on Mott financing. Adjusted EPS rose 1%. The MD&A's 2026 guidance points to continued pressure in FMT core industrial, FSDP Fire & Safety international, and Dispensing, with HST data center/semi as the only bright spot.

The F grade reflects three mechanical issues:

What to watch in 2026:

IDEX is the kind of diversified industrial that does well in moderate economic conditions and struggles when customers defer capex. 2025 was a capex deferral year for much of the customer base. If 2026 follows the same pattern, the F grade becomes more meaningful; if there is a cyclical recovery, the balance sheet items look manageable.

**Disclaimer**: This report is based on IDEX Corporation's FY2025 10-K filed with SEC EDGAR on February 19, 2026. This is NOT investment advice.

Data: SEC EDGAR 10-K (Accession 0000832101-26-000003) + Yahoo Finance

Auditor: Deloitte & Touche LLP (Unqualified opinion, 1 critical audit matter — revenue disaggregation)

Fiscal year ended: December 31, 2025