IDEX Corporation (IEX) | The Buildout — AI Infrastructure
The Verdict
IDEX Corporation designs and produces mission-critical components for niche industrial and scientific markets, organized into Health & Science Technologies, Fluid & Metering Technologies, and Fire & Safety / Diversified Products. Its components move, manage, filter, focus, and protect data, energy, and fluids across data-center power and liquid cooling, semiconductor process tools and fabs, optical switching, and space/defense platforms.
| Market Cap | — |
| Revenue (TTM) | $3.6B |
| Revenue Growth | +7.3% |
| EBITDA Margin (TTM) | 26.7% |
| Net Debt | $1.2B |
| Earnings Beats | 7 of 7 |
| P/E (TTM) | — |
| EV/EBITDA (TTM) | — |
What We Like
- Q2 organic orders rose 28% to a record over $1 billion, with all three segments posting double-digit order growth.
- HST orders accelerated from +17% in Q1 to +47% in Q2; HST sales grew 12% in Q2.
- Data center, semiconductor, and space/defense now represent over 1/3 of HST revenue year-to-date, and the semiconductor portfolio is about 50% recurring.
- Management has raised FY2026 organic growth guidance twice, from 1%–2% to 5%–6%, and adjusted EPS to $8.70–$8.85.
- Q2 free cash flow was $177 million with liquidity over $1.1 billion; gross leverage was 1.9x, and 2026 capex was raised to about $110 million for 2027/2028 capacity.
What We’re Watching
- Orders are running far ahead of revenue: HST orders +47% against sales +12% in Q2, so conversion through H2 2026 is the key test.
- Q2 adjusted EBITDA margin included a 130 bps one-time IEEPA tariff-refund benefit; FMT and FSDP clean margins were down year over year ex-IEEPA.
- Management describes the broad industrial recovery as early and still mixed, with chemical, agriculture, and energy end markets soft.
- The fastest-growing customers are prebooking capacity with future request dates, which management says could pull demand forward.
The thesis looks intact and strengthening: HST order growth accelerated, guidance was raised twice, and the portfolio has quantifiably shifted toward secular data center, semiconductor, and space/defense demand. The key open question is whether record orders translate into sustained revenue without the support of one-time tariff refunds and without prebooking creating a later air pocket.
Earnings Beat
Q2 FY2026 revenue was $920.6 million with gross margin of 46.4%. Organic orders rose 28% to a record over $1 billion, while organic sales grew 5%.
| Metric | Q2 FY2026 | Q1 FY2026 | Q2 FY2025 | YoY |
|---|---|---|---|---|
| Revenue | $921M | $887M | $865M | +6.4% |
| Gross margin | 46.4% | 44.9% | 45.3% | +110bps |
| EBITDA | $253M | $226M | $241M | +5.0% |
| EPS | $1.93 | $1.61 | $1.74 | +11.2% |
| Organic orders growth | +28% | ~+10% | n/a | Record orders over $1B |
We saw a continuation of strong order activity in areas influenced by artificial intelligence, which for us is most meaningfully in power generation for data centers, semiconductor and optical switching.— Sean Gillen, Chief Financial Officer, July 29, 2026
Management tone: Management moved from 'no meaningful signs of demand improvement' in Q4 to 'early signs of improvement' in Q1, then in Q2 said it was becoming more confident that signals of broad demand support were forming while still calling the recovery early and still mixed. Management volunteered the one-time IEEPA benefit, quantified the rebate drag, and confined the benefit to Q2.
Management Guidance
Management raised FY2026 guidance to organic growth of 5%–6%, adjusted EBITDA margin of 27%–27.3%, and adjusted EPS of $8.70–$8.85. HST is guided to low-double-digit growth and FMT/FSDP slightly up. Q3 2026 guidance was initiated at 5%–7% organic growth, 27%–27.5% EBITDA margin, and adjusted EPS of $2.20–$2.25. The company reaffirmed at-least-100% free cash flow conversion and approximately $75 million in quarterly buybacks, and raised 2026 capex to approximately $110 million.
Trajectory
Revenue is stable rather than accelerating: Q2 FY2026 revenue was $920.6 million, up 3.8% sequentially, and trailing twelve-month revenue grew 7.3% year over year. The shift is compositional — HST organic sales rose 12% in Q2 while FMT rose 1% and FSDP fell 1%, and gross margin expanded to 46.4% from 45.3% a year earlier. Orders grew 28% overall and 47% in HST, suggesting the revenue path could strengthen if backlog converts; the earnings bar is in line.
The Model
The model's locked projections are FY+1 revenue of $3,650 million with EBITDA of $975 million at a 26.7% margin, and FY+2 revenue of $3,855 million with EBITDA of $1,041 million at a 27.0% margin. The near-term projection is anchored by HST order strength and the raised FY2026 outlook; FY+2 incorporates continued backlog conversion and the 2027/2028 capacity from increased capex, with FMT and FSDP assumed to stay only slightly positive.
| Metric | FY2025 | Next FY (E) | Following FY (E) |
|---|---|---|---|
| Revenue | $3.5B | $3.6B | $3.9B |
| YoY Growth | — | +5.6% | +5.6% |
| EBITDA | $929M | $975M | $1.0B |
| EBITDA Margin | 26.9% | 26.7% | 27.0% |
Projections are the median of 5 independent model runs. The model’s revenue sits 1.5% above analyst consensus.
Management raised FY2026 guidance to organic growth of 5%–6%, adjusted EBITDA margin of 27%–27.3%, and adjusted EPS of $8.70–$8.85. HST is guided to low-double-digit growth and FMT/FSDP slightly up. Q3 2026 guidance was initiated at 5%–7% organic growth, 27%–27.5% EBITDA margin, and adjusted EPS of $2.20–$2.25. The company reaffirmed at-least-100% free cash flow conversion and approximately $75 million in quarterly buybacks, and raised 2026 capex to approximately $110 million.
What Could Go Right — and Wrong
- HST backlog converts into sustained low-double-digit or better revenue, and order strength persists into 2027.
- The broader industrial recovery confirms, and FMT volume returns uniformly so flow-through approaches the ~40% management described.
- Space/defense specification wins become visible annuity streams across long program lives.
- Recurring semiconductor revenue — already about 50% of the HST semicon portfolio — continues to rise with Mott filtration.
- Management sees sector deals as validation of market positioning in advantaged spaces, though it did not disclose M&A intention.
- AI/data-center or semiconductor capex pauses and the large 2027-positioned orders get deferred or cancelled.
- Prebooking unwinds and customers push out orders, leaving the 28% order growth as a demand air pocket.
- The late-Q2 distribution order flow proves to be a spike, keeping FMT/FSDP flat and clean margins under pressure.
- HST margin expansion stalls if acquired businesses below segment average do not complete their 8020 margin ramp.
- Life sciences and China remain below trend and fail to offset any stumble in advantaged markets.
Looking Ahead
The next twelve months center on whether record HST orders convert into revenue. Management guided Q3 2026 to 5%–7% organic growth and 27%–27.5% adjusted EBITDA margin, with full-year 2026 organic growth of 5%–6% and adjusted EPS of $8.70–$8.85. The 2027-positioned data center pneumatic order, the space/defense specification work, 8020 margin expansion at acquired businesses below segment average, and the raised 2026 capex of approximately $110 million for 2027/2028 capacity are the milestones management points to.
- Q3 2026Q3 results and guide test — Tests 5–7% organic growth, 27–27.5% EBITDA margin, and clean ex-IEEPA margins.
- H2 2026HST backlog conversion — Whether HST remains high-single to low-double digit through year-end.
- 20272027-positioned data center order — Converts the large Pneumatics order into revenue.
- 2027 and beyond8020 margin expansion — Acquired businesses below segment average ramp toward HST flow-through near 40%.
- OngoingSpace/defense specification wins — Specification positions become visible annuity streams.
- No timing disclosedM&A implications from sector deals — Management did not disclose intention; called sector deals validation of market positioning.
Financials
Annual Summary
| Metric | FY2024 | FY2025 | TTM | YoY |
|---|---|---|---|---|
| Revenue | $3.3B | $3.5B | $3.6B | +5.8% |
| Gross Margin | 43.3% | 44.5% | 44.7% | +127bps |
| EBITDA | $872M | $929M | $7.7B | +6.4% |
| EBITDA Margin | 26.7% | 26.9% | 26.7% | +17bps |
| Net Income | $505M | $483M | $520M | -4.3% |
| Free Cash Flow | $603M | $617M | $5.1B | — |
| Net Cash | — | — | — | — |
Key Ratios (Trailing)
- P/E TTM—
- EV/EBITDA TTM—
- EV/Revenue TTM—
- Price/FCF TTM—
- Gross Margin (TTM)44.7%
- EBITDA Margin (TTM)26.7%
- Net Margin (TTM)14.5%
- ROIC11.2%
- FCF Conversion67.0%
- SBC / Revenue0.8%
The Company
IDEX is a global applied solutions provider serving niche markets with mission-critical components. Its Health & Science Technologies segment makes precision fluidics, pumps, sealing, optical components, coatings, ceramics, and porous flow-control products; Fluid & Metering Technologies makes pumps, valves, meters and systems; and Fire & Safety / Diversified Products makes firefighting, rescue, banding, and dispensing equipment. The AI build-out reaches IDEX mainly through HST products for data-center power and cooling, semiconductor tools and fabs, and optical switching.
The company runs over 50 wholly-owned subsidiaries with high autonomy under the 8020 operating philosophy, which concentrates resources on the highest-value customers and markets. The 10-K names manufacturing sites including Bristol, Connecticut; Carlsbad and Rohnert Park, California; Rochester, New York; Cedar Falls, Iowa; Ocala, Florida; and locations in Germany, Japan, Ireland, England, Canada, and China. In Q2 management cited existing international campuses in Asia and called India a growing platform for HST.
Business Segments
Competitive Landscape
IDEX operates through over 50 wholly-owned subsidiaries under the 8020 principle, concentrating resources on the highest-value customers and markets. The provided sources do not confirm direct competitor relationships; competitor names come from supply-chain wiring and are mostly spider-generated.
- Named in supply-chain wiring; not documented as a competitor in the provided filings or transcripts.
- Named in supply-chain wiring; not documented as a competitor in the provided filings or transcripts.
- Named in supply-chain wiring; not discussed in provided filings or transcripts.
- Named in supply-chain wiring; not discussed in provided filings or transcripts.
- XylemNamed in supply-chain wiring; not discussed in provided filings or transcripts.
Supply Chain
IDEX sits as a component and subsystem supplier between materials/component suppliers and equipment makers, data-center infrastructure, semiconductor fabs, and space/defense platforms. No supply-chain neighbor mentioned IDEX by name in the provided neighbor read-through.
More on IEX: Earnings recap