IEX Q1 Earnings Call: IDEX Outpaces Expectations, Navigates Tariff Pressures and Margin Headwinds

Manufacturing company IDEX (NYSE: IEX) reported Q1 CY2025 results exceeding the market’s revenue expectations, with sales up 1.7% year on year to $814.3 million. Its non-GAAP profit of $1.75 per share was 6.9% above analysts’ consensus estimates.

Is now the time to buy IEX? Find out in our full research report (it’s free).

StockStory’s Take

IDEX’s first quarter results were shaped by a mix of stable demand in core markets and proactive cost controls as the company responded to ongoing policy-driven uncertainty. CEO Eric Ashleman highlighted that order growth was a key driver, with four consecutive quarters of positive organic order growth, especially in sectors like space, defense, and municipal water. He noted, "This represents our fourth consecutive quarter with positive year-over-year organic growth in our order book," attributing performance to portfolio shaping and targeted productivity measures.

Looking ahead, management reaffirmed its full-year adjusted EPS guidance, emphasizing flexibility in absorbing tariff-related cost pressures through pricing and efficiency initiatives. CFO Abhi Khandelwal explained that incremental cost savings of $20 million were identified to offset potential volume declines, and pricing actions are expected to largely mitigate the impact of new tariffs. Despite acknowledging the uncertain macro environment, leadership stated, “We believe we can fully absorb the impact of the tariffs introduced this year based on our current assumptions.”

Key Insights from Management’s Remarks

IDEX’s leadership provided detailed commentary on the drivers behind first quarter performance, focusing on market stability, segment trends, and the company’s ability to manage external disruptions.

• Orders Momentum: Orders increased both sequentially and year-over-year, marking the fourth consecutive quarter of positive organic order growth, which management attributed to ongoing portfolio optimization and exposure to resilient end markets.
• Segment Trends: The Health & Science segment showed improvement in analytical instrumentation and growth in semiconductor maintenance and repair operations (MRO), while the Fire & Safety segment benefited from strong OEM demand and integrated solution adoption. Conversely, agriculture, automotive, and pure water applications for semiconductor fabs continued to face headwinds.
• Tariff Impact Management: New tariffs are expected to add 5-6% inflation to cost of goods sold this year. Management stated that these costs are being proactively offset through targeted price increases and cost-saving initiatives, with most tariff impacts materializing in the second half of the year.
• Business Platform Integration: IDEX continues to integrate its acquisitions and business units into strategic growth platforms, facilitating cross-business collaboration, technology sharing, and operational efficiency. This approach was credited for success in areas like data center power solutions and advanced filtration for wastewater treatment.
• M&A Pipeline and Capital Allocation: While near-term M&A activity has slowed due to market uncertainty, IDEX continues to pursue proprietary deals and focus on bolt-on acquisitions that align with its growth platforms. Management reiterated its commitment to disciplined capital deployment and returning value to shareholders through share repurchases.

Drivers of Future Performance

Management’s outlook for the coming quarters is shaped by the ability to navigate tariff-driven cost inflation, maintain pricing discipline, and adjust cost structure to support profitability amid uncertain demand trends.

• Tariff Absorption and Pricing: Management believes the company can offset most of the new tariff-related cost increases with incremental pricing actions and cost savings, limiting margin pressure if market conditions remain stable.
• Growth in Strategic Markets: Exposure to sectors such as space, defense, data centers, and municipal water is expected to provide organic growth opportunities and partial insulation from broader industrial slowdowns.
• Cost Optimization Initiatives: Additional productivity measures, including platform optimization and organizational streamlining, are expected to provide flexibility if volumes soften, helping protect margins and support adjusted EPS guidance.

Top Analyst Questions

• Mike Halloran (Baird): Asked about the flexibility in guidance to manage tariff, pricing, and volume risks. Management explained that proactive cost reductions and pricing actions are in place to absorb potential volume declines and offset tariff impacts.
• Nathan Jones (Stifel): Questioned the expected timing and customer impact of tariff-related price increases. CFO Abhi Khandelwal said Q2 will see minor impacts, with the majority of tariff effects—and offsetting price actions—occurring in the second half of the year.
• Vlad Bystricky (Citigroup): Inquired about the scalability of the Mott wastewater filtration project. CEO Eric Ashleman noted it is an important reference case and aligned with IDEX’s strategy of deploying advanced filtration technology, though large-scale adoption will take time.
• Joe Giordano (Cowen): Asked if Mott's backlog and recurring revenue streams are offsetting weakness in semiconductor equipment orders. Management confirmed that new Mott projects and consumables exposure have helped balance lower demand in other semiconductor segments.
• Deane Dray (RBC Capital Markets): Sought detail on municipal water market resilience. Management stated that this vertical’s non-discretionary nature and regulatory drivers provide stability, with ongoing funding and specification engineering supporting demand.

Catalysts in Upcoming Quarters

In the coming quarters, the StockStory team will be closely monitoring (1) the pace at which IDEX can implement further price increases to offset tariff-driven cost inflation, (2) evidence of sustained order strength or any weakening in short-cycle businesses as policy uncertainty persists, and (3) the progress of strategic growth platforms—particularly in data centers, defense, and municipal water. Developments in the M&A pipeline and successful integration of recent acquisitions will also be key areas of focus.

IDEX currently trades at a forward P/E ratio of 22.6×. In the wake of earnings, is it a buy or sell? Find out in our free research report.

The Best Stocks for High-Quality Investors

Donald Trump’s victory in the 2024 U.S. Presidential Election sent major indices to all-time highs, but stocks have retraced as investors debate the health of the economy and the potential impact of tariffs.

While this leaves much uncertainty around 2025, a few companies are poised for long-term gains regardless of the political or macroeconomic climate, like our Top 5 Strong Momentum Stocks for this week. This is a curated list of our High Quality stocks that have generated a market-beating return of 176% over the last five years.

Stocks that made our list in 2020 include now familiar names such as Nvidia (+1,545% between March 2020 and March 2025) as well as under-the-radar businesses like the once-small-cap company Comfort Systems (+782% five-year return). Find your next big winner with StockStory today.