IDEX (NYSE:IEX) released first-quarter financial results and hosted an earnings call on Wednesday. Read the complete transcript below.
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Summary
IDEX delivered strong Q1 2026 results with 5% organic sales growth and a 26% adjusted EBITDA margin, exceeding expectations.
Orders increased 10% organically, with notable strength in the Health and Science Technologies (HST) segment driven by data center, semiconductor, and space and defense markets.
The company raised its full-year 2026 guidance, now expecting 3-4% organic growth and adjusted EPS between $8.35 and $8.55.
IDEX repurchased $76 million of its shares in Q1 and plans to maintain this pace throughout 2026.
Management highlighted the strategic use of the 8020 business model to focus on advantaged markets and drive growth, margins, and earnings.
Full Transcript
OPERATOR
Hello and welcome to the Q1 26 IDEX Corporation earnings call. All lines have been placed on mute to prevent any background noise. After the Speaker's remarks, there will be a question and answer session. If you would like to ask a question during this time, just press STAR followed by the number one on your telephone keypad and if you would like to withdraw your question, just press star one again. Thank you. Now I would like to turn the call over to Jim Giannakouros, Vice President of Investor Relations. Please go ahead.
Jim Giannakouros
Jim Good morning everyone and welcome to IDEX first quarter 2026 earnings conference call. We released our first quarter financial results earlier this morning and you can find both our press release and earnings call slide presentation in the Investors section of our website idexcorp.com on the call with me today are Eric Ashleman, President and Chief Executive Officer of IDEX and Sean Gillen, our Chief Financial Officer. Today's call will begin with Eric providing highlights of our first quarter results and an update on our business outlook and strategies. Then Sean will discuss additional financial details and our updated outlook for 2026. Following our prepared remarks, we will open the line for questions, but before we begin, please refer to slide two of our presentation where we note that comments today will include forward looking statements based on current expectations. Actual results could differ materially from these statements due to a number of risks and uncertainties which are discussed in our press release and SEC filings. As IDEX provides non GAAP financial information, we provided reconciliations between GAAP and non GAAP measures in our press release and in the appendix of our presentation materials which are available on our website. With that, I will turn the call over to Eric.
Eric Ashleman (President and Chief Executive Officer)
Thanks Jim Good morning everyone and thank you for joining us today. Please turn to Slide 3. IDEX delivered a strong first quarter and continue to see our growth strategies gain traction as we expand and integrate capabilities in targeted advantaged markets. Powered by 80/20 I'd like to thank our teams around the world for their disciplined execution, agility and focus as they help drive long term value creation. In the first quarter, IDEX delivered organic sales growth of 5%, an adjusted EBITDA margin of 26% which reflects a margin expansion of 50 basis points year over year. These results were above our expectations and reflect strong performance across each of our segments. Additionally, orders were better than expected, growing 10% organically year over year. Strength was most pronounced in our Health and Science Technologies or HST segment where secular drivers continue to fuel growth across high value applications in data center, semiconductor and space and defense markets. The strong backlog build in HST improves our visibility to deliver continued solid growth for the balance of the year and into 2027. Finally, orders in our fluid and metering technologies or FMT segment grew 9% organic year over year. This was driven by strong order activity in our water platform and our pumps businesses in our general industrial business units. We are off to a good start to the year and it's encouraging to see signs of improvement in these end markets. Taking our Q1 performance and backlog build into account, we are raising our full year 2026 financial outlook. Sean will get into greater detail later in the call. Before turning it over to Shawn, I'd like to walk through a live example of IDEX's capabilities to drive long term value as 80/20 drives growth, margins and earnings. Please turn to slide 4. At the highest level the this starts with a very high quality portfolio of market leading applied technologies used in environments where performance is critical and failure is not an option. Space and Defense is a prime example of faster growing durable end markets where we are increasingly deploying resources in the HST segment to expand our opportunity set. In simple terms, we provide critical components that move, manage, filter, focus and protect data, energy and fluids in space and defense systems. These markets benefit from growing demand for space based connectivity and breakthrough defense technologies with long program lives and rising system complexity creating a multi year growth Runway. Importantly, our participation spans multiple touch points across the portfolio from optics enabling secure data transmission to MOTs filtration solutions supporting propulsion and thermal management alongside other engineered components for mission critical systems. These solutions are co engineered early with customers allowing us to move quickly, adapt as requirements evolve and reinforce our role as a trusted partner. Please turn to Slide 5. For more than a decade, 80/20 has helped us improve focus, margins and execution within our growth platforms. We are increasingly using it as a growth tool, segmenting markets more deliberately, clarifying where we win and actively reallocating capital and talent toward the highest value opportunities. What's different today is the quality and scale of growth emerging from our platform 80/20 customers and markets. As demand concentrates in more complex higher value applications, our pivot toward durable growth areas is reinforcing a stronger overall outlook for idexx. This momentum also creates a flywheel effect. Strength in our advantage platforms allows us to further simplify, rationalize and refine the portfolio, driving higher growth, stronger margins and enhanced shareholder value over time. It might seem counterintuitive to some, but we grow fastest by focusing and doubling down on fewer customers over time as we help winning customers quickly grow share within advantaged spaces. Our component orientation allows us full flexibility to move right or left into other application arenas to apply 80/20 again moving out the peaks and valleys of dynamic growth as we compound value. We complement this work with balanced and disciplined capital deployment, maintaining a strong balance sheet for flexibility, investing organically, actively pursuing tuck in acquisitions, and returning capital to shareholders. We repurchased $76 million of IDEX shares in the first quarter and expect to maintain that pace throughout 2026. With that, I'll turn it over to Sean to walk through the quarter in more detail, including segment performance and our updated outlook.
Sean Gillen (Chief Financial Officer)
Thanks, Eric Good morNIHng everyone and thank you for joiNIHng us today. Please turn to Slide 6 as Eric mentioned, in the first quarter of 2026 IDEX delivered better than expected financial performance. OrgaNIHc revenue growth of 5% was better than we forecasted, with notable strength in HST. Adjusted EBITDA margin expanded 50 basis points year over year on productivity improvements. Positive volume leverage and positive price cost, partially offset by mix and adjusted EPS came in sigNIHficantly higher than our guided range in the first quarter. Overall, our orders grew approximately 10% orgaNIHcally in the quarter, again led by HST's orgaNIHc order growth of 17% year over year. FMT orders grew 9% orgaNIHcally in the first quarter and FSDP orders declined 4% orgaNIHcally. As a reminder, we typically enter any given quarter approximately 50% booked overall, but the strong order activity in HST is driving a backlog build that offers greater confidence in our ability to deliver better financial performance than we outlined entering 2026 in FMT and FSDP. The Rapid Fulfillment nature of those businesses and limit our visibility to approximately midway into any given quarter. Touching on some of the more meaNIHngful business demand trends in the quarter, we saw a continuation of strong order activity in areas influenced by AI, which for us is most meaNIHngfully in power generation for data centers, semiconductor manufacturing and optical switching. We also continue to see strength in muNIHcipal water, miNIHng, pharma and space and defense. OrgaNIHc sales in the first quarter grew 5% with HST growing at 11% and FMT growing at 2%, while FSDP was down slightly on a consolidated basis, orgaNIHc sales growth was balanced between volume and price contribution. IDEX adjusted gross margin declined 40 basis points year over year to 44.9%, reflecting productivity gains and volume leverage being more than offset by mix. Adjusted EBITDA margin expanded 50 basis points versus last year, reflecting productivity gains, volume leverage and cost discipline more than offsetting negative mix. The first quarter is our seasonally lowest cash flow period. Free cash flow of 86 million declined 5 million versus last year, driven mostly by higher working capital investment. Due to higher growth, we continue to expect free cash flow conversion of at least 100% on an annual basis. We ended the quarter with strong liquidity of approximately 1.1 billion and finally we spent 76 million to repurchase IDEX shares in the quarter and we remain committed to that quarterly pace for 2026. Now quickly some color on our results by Segment I'm on Slide 7 in HST OrgaNIHc orders increased 17% and revenue grew 11% orgaNIHcally. Volumes increased in advantaged markets including semiconductor, OE and consumables, data center applications and space and defense. And notably these exposures are, as Eric mentioned, in the areas we have pivoted the portfolio towards in the last few years and where our integrated growth strategies and platform building reside. Pharma was also an area of strength in the quarter. HST adjusted EBITDA margin expanded 100 basis points year over year as positive volume leverage, positive price cost and productivity benefits more than offset unfavorable mix and acquisitions. TurNIHng to slide 8 in FMT, orgaNIHc orders increased 9% and orgaNIHc sales increased 2%. Orders growth was supported by our intelligent water platform and our miNIHng exposures, partially offset by global softness in chemical end markets. Looking at our leading indicator industrial order rates, they showed growth in the quarter as orders and revenue in these businesses were slightly better than we had expected. Our water platform continued to perform well contributing to both the order and sales growth in the quarter. FMT's adjusted EBITDA margin declined slightly by 10 basis points year over year as productivity benefits were more than offset by mix and volume deleverage. Please turn to Slide 9. FSDP orgaNIHc orders declined 4% year over year and orgaNIHc sales decreased 1%. Our fire and safety franchise grew high single digit in the quarter as we continued to see strong demand for our fire and rescue tools in North America and stable demand in Europe. This growth was offset by an expected decline in dispensing. This decline in dispensing was due to tough comps in project volumes in North America and Asia. We expect to see stability in our dispensing business on a sequential basis. FSDP Adjusted EBITDA margin increased 30 basis points Year over year as strong productivity improvements more than offset mix and volume deleverage influences in the first quarter. Please turn to Slide 10 where I'll touch on capital deployment. Like I mentioned earlier, we drove 86 million of free cash flow in the first quarter, which is our seasonally lowest cash generating period in a given calendar year. Our gross leverage position as of the end of the first quarter is at roughly two times as outlined last quarter. We continue to maintain a balanced approach to capital deployment. In the near term, we will focus on orgaNIHc investments to drive growth, bolt on M and A and capital return to shareholders. In the quarter, we paid 53 million in dividends and repurchased 76 million in shares. We plan on maintaiNIHng this share repurchase level per quarter through the rest of 2026. Now I'd like to discuss our updated guidance for 2026. Please turn to Slide 11. For the full year 2026, we now expect orgaNIHc growth in the 3 to 4% range, an increase over our original 1 to 2% orgaNIHc growth guidance. Coming into the year, our overall IDEX OrgaNIHc Growth guidance balances approximate high single digit growth for HST and flattish outlooks for FMT and FSDP. These outlooks reflect HST's strong order book and relative stability in our FMT and FSDP segments. Adjusted EBITDA margin is expected to be in the 26.5% to 27% range in 2026, unchanged from our previous guidance. We continue to expect productivity benefits throughout IDEX businesses and solid leverage and margin expansion at HST. However, volume decrementals in FMT and FSDP and mix influences keep our near term margin expansion expectations unchanged. We are increasing our adjusted eps guidance for 2026 by $0.20 to $8.35 to $8.55 representing mid to high single digit growth year over year. For the second quarter of 2026 we expect 3 to 4% orgaNIHc growth, adjusted EBITDA margin in the 26.5 to 27% range and adjusted EPS of $2.07 to $2.12. Also, I wanted to provide an update on tariffs. We continue to moNIHtor the changes closely and adapt our businesses accordingly. While the IEPA tariffs have been repealed, the AdmiNIHstration has implemented new tariffs in reaction to this for our businesses. These new tariffs are largely consistent with the ones repealed such that we currently do not anticipate much net impact to our financial results as it relates to the expected IEIPA refunds. We have taken the requisite actions to apply for these and will keep you updated if applicable, as it is expected to play out over the coming months. With that, I'll turn the call back over to Eric.
Eric Ashleman (President and Chief Executive Officer)
Thanks Sean. I'm on slide 12 as we step back. We feel very good about the start to the year and the momentum building across IDEX. Our performance reflects strong execution, increasing traction in our advantaged markets, and continued progress as we execute our growth strategies. The demand signals we're seeing within our growing backlog reinforce our confidence in the direction of the portfolio. Many of the demand trends in our advantaged markets are expected to remain robust well beyond 2026. At the core of this progress is 80/20. It continues to sharpen our focus, guide where we invest capital and talent and help us scale growth across platforms and applications that matter most. Just as importantly, it is enabled by our teams and our culture, one that emphasizes trust, collaboration and accountability across the organization. We recognize there's still work ahead as we continue to execute our strategy and further enhance the quality of growth across the portfolio. But we are encouraged by what we are seeing, confident in the path forward, and excited about the value creation opportunity in front of us. With that, we appreciate your continued interest in IDEX and I'll turn the call back to the operator for your question.
OPERATOR
We will now begin the question and answer session. If you would like to ask a question at this time, simply press star followed by the number one on your telephone keypad. We will pause for a brief moment to compile the Q and A roster and our first question comes from the line of Joe Giordano with D.A. Davidson. Joe, please go ahead.
Joe Giordano
Hey guys, good morning. Just curious on how to think about the guide here. So 1Q comes in 5%, 2Q guided 3 to 4 given the orders here. Why should the second half organic decelerate from the pace that we're on now or is this just kind of look, there's a lot going on in the world and we're just playing it safe.
Shawn Gillen
Yeah, I think to give a little bit of color on that, it's really around. I think HST should continue at a pretty similar clip. As we mentioned the you know, high single digit to you know, double digit growth at HST and that's really driven by the order backlog as you reference where we've seen that momentum and I think in FMT in particular is where we saw good performance in the quarter. You know the end of the quarter was stronger than the beginning, seeing some sequential improvement. But as we outlook for the year still seeing forecasting a growth outlook that's a bit flat and that's probably a little bit of the macro world. You know, one quarter into the year, some uncertainty in the macro world and what we're seeing, the visibility keeping that around flat. So the little bit of color as you know, first half of the year, as we move into the second half
Joe Giordano
and then what needs to happen at HST to get margins back to like that, you know, 30ish percent range that you were at a couple years ago, like, which is that incumbent on life sciences picking back up like what's kind of needed there to get back to historical highs?
Shawn Gillen
Yeah, good question. I think there's two pieces to that. One is the acquired, the recently acquired businesses which are performing quite well and are driving a lot of the growth. As more of the growth in that business has come from the acquired businesses, there's still margins are strong but they're not quite at the segment average yet. And what will take to get there is as we've talked in the last couple quarters, some continued focus on 80/20 to drive margins higher in the acquired businesses. So as they get their margins up and the growth continues to come from them, that will have a mixed benefit. And then the other piece is, as you mentioned, life Sciences, you know, kind of flattish to slightly down in the quarter and that's a nicely profitable business for us. So a little mix there, but would expect growth to return to that as we go forward as well.
OPERATOR
Awesome. Thanks guys, I'll jump back in the queue. Your next question comes from the line of Matt Somerville with DA Davidson. Matt, please.
Matt Somerville
Thanks. A couple questions just on one of the last points Shawn made, can you give a bit more context as to why you expect to see what sounded like maybe some sustained inflection from here in the life sciences portion of hst? And then I have a follow up,
Shawn Gillen
I think, look, the life science business is about exactly where we thought it would be. The core fluidics and optical filters franchises that drive the bulk of the profits there are still growing low single digits and honestly the drivers on both sides remain the same. So Pharma really, really strong. And then the pressure points coming largely from both the China market for our end customers and then the funding, NIH funding, academic pressures that we've seen for a while now. I think for us in the first quarter, you remember about a year ago, this is just starting to play out now we're pretty deep into it and I think most people are expecting that it'll remain at this pressure. And so we had a call here that coming into the year we thought these customers, some of our customers that depend on us, were going to be a little guarded in some of the inventory positions of IDEX product. We saw that play out as we thought. But the dynamics here remain exactly as we've been talking about over the last few quarters and a low single digit growth, some positives, some negatives, but a ton of innovation and things that are going on here that I think longer term will give us a lot of confidence in where this market's going to go.
Matt Somerville
Can you also maybe highlight just how you saw incoming orders cadence through the first three months of the year, what you're seeing in April thus far across the businesses and specifically I'd be curious as to how the general industrial book to Bill has been trending in both FMT and hst. Thank you.
Shawn Gillen
Yep, yep. I mean, and it's a little different depending on the segments. You know, the HST side with the momentum that we're seeing there has, you know, less of a non linearity profile. It's just been generally pretty strong for a while and kind of saw it that way play out that way in the quarter on the FMT and FSDP segments, which are certainly more, you know, fragmented, broadly indexed to industrial markets. You know, that was interesting. It was pretty soft in the beginning of the year in January, it came back a bit in February and it was a much stronger March. And then we've kind of stayed at that level here in April. One thing that's interesting, we've talked a lot about the businesses that we use as diagnostics for kind of near term health. And while those were overall positive, you know, they didn't move positive in a uniform way. So we don't have sort of every member seeing the exact same thing, a little mixed. And even the project business that we saw in there, we don't get a lot of it. But you know, that tells us something too. Almost all of those, you can trace back the successful ones back to, you know, some of the same mega trends that we're referencing in hst, data center work, energy grid, things like that. So I think it's improving. It's better than, you know, we had obviously modeled originally for the quarter. But I would still put it in sort of a mixed place and I think largely that's because of the overhang of the geopolitical situation. Good, thank you.
OPERATOR
And your next question comes from the line of Nathan Jones with Stifel. Nathan, please go ahead.
Nathan Jones
Morning everyone. I guess I'll follow up on the short cycle industrial question. Maybe you can talk a little bit more about the pieces of that where you're not seeing some improvement and maybe what you think is required to get those businesses going in the right direction again.
Eric Ashleman (President and Chief Executive Officer)
Well, in a few places where that played out, I'D say those businesses are a little bit more indexed to chemical markets and some of the ones that we mentioned or kind of core energy. So their exposure there probably explains some of it. They're also probably the most fragmented businesses. A lot of the orders, there are one or two here and they have really quick lead times. So if somebody is uncertain, they're the kind of businesses that you really don't have to make much of a commitment because we're going to be able to quick turn all of the product. So I would say that's, you know, those would be the two characteristics. Again, this, this wasn't a lot of businesses, but it, but there is some mix, there is a mixed nature of how these ran out over the last four months.
Nathan Jones
Fair enough. I'm going to ask the HST margin question a little bit differently. You've seen good positive growth for the last three quarters and the incremental margins have been in the low 30s. I think I would have expected, and I think you would expect long term those incrementals to be higher. Can you maybe just run through the pieces that are keeping those depressed? I know you talked a little bit about acquisitions. There's probably some drag on that, but maybe just some color on what's depressing those a little bit. What it takes to get back to kind of, you know, maybe into the 40s on incremental margins and when you think you'll be able to get those incrementals to move back to a more historically normal level. Thanks. Yeah. So, you know, for the last quarter or two, and in this quarter, you know, the flow through in HST was about 33%. So in that low to mid 30% as your reference, as you think about kind of the guide for the year, we see that improving slightly again to kind of those mid 30% and all that's really in line with where we expect expected it to be for the year so far. And then kind of what needs to happen to have it tick up? I think it's a couple points which I referenced. It's the acquired businesses which are below the segment EBITDA margins of kind of 26, 27% as we take some 80/20 actions. What I mean by that is as we start to prune some pieces of the portfolio within those businesses that are drags on the margin within the acquired businesses and continue to grow the higher value, add higher margin parts of the acquired businesses. And I'm thinking Muon, Microlam and Mott being some of the ones that have some room for Improvement in overall margin. So that's kind of point one, you know, those acquired businesses and as you mentioned, a lot of the growth you're seeing are coming from those businesses. So as they continue to provide more of the earnings power, getting their margin up will help increase the flow through towards that 40%. And then part two is life sciences which is a nicely profitable business for us. As that grows, it has strong leverage and EBITDA flow through haven't seen that in the first quarter or two. But for all the reasons that Eric mentioned, you would expect that to improve as we move through this fiscal year in terms of getting to 40%. As I mentioned for the year, the guide contemplates kind of mid 30 flow throughs as I think as we get into next year and some of those 80/20 actions take hold and some improvement in some end markets, I think we'll get towards that 40%. Thanks for taking the questions.
OPERATOR
Your next question comes from the line of Dean Dre with rbc. Dean, please go ahead.
Dean Dre
Thank you. Good morning everyone.
Eric Ashleman (President and Chief Executive Officer)
Morning. Hey, you called out some strength in the water business and FMT just kind of give us a sense of where that demand is. You know, how much of that is kind of the flow business versus projects. And what's your, what are your assumptions for the balance of the year? Yeah, now it remains a really strong part of the story and you know, the municipal facing side of that that's, you know, kind of our core inspection and analytical software piece has been really good. We had some nice equipment sales in particular this particular quarter to back that up. So the hardware side was nice. Again I remind people, it's a really great business that's very, very focused around stormwater, stormwater flow. So overflow conditions and remediating those are a big part of what they do that remains really, really relevant as we see given the nature of infrastructure and catastrophic weather events. So it's just really well positioned. The part that's giving it an added boost this year is we do have a component of that platform that is focused on high purity water, largely for semicon applications that has actually been headwind for that for that group in the last year or so. It's flipped over. It's now positive and growing as well. So we've had kind of both of those firing that accounts for the high single digit growth that we posted and we continue that to sustain.
Dean Dre
Great. And just as a follow up I wanted to ask about M and A activity in your sector, but that was done away and just you know, what your Implications are what and what the thoughts might be. So first, we've seen some deals in the stormwater space, combined sewer overflow. I mean, I think that's just a validation of how much a focus this is. Where do you see growth rates for you all in terms of is it M and A, is it organic? That's a question. And then the second one, there was a really interesting transaction in fire and security recently, which I think is a validation of your commitment to this business. So just, you know, two different sectors interesting. M and A away. What are the implications for idexx?
Eric Ashleman (President and Chief Executive Officer)
Yeah, well, certainly, I mean, you're, you're pinging on two spots where we play and, you know, we do very, very good work with, you know, in both cases, very critical technologies applied to get jobs done that are highly valued. So I think, you know, both from small deals to large deals, in the spaces that you referenced here, you're seeing appreciation for work of that nature and quality. And so I think it's a testament, a continued testament to kind of where we are, where we're positioned and the way that we see those businesses as well, you know, as things play out and people and businesses change hands. I mean, we always kind of look at that and just see if that has a competitive impact on the market and we're very, very close to those worlds and customers and we'd respond accordingly in any way we had to. But I think bottom line here is it's, I take it, as a testament to the quality of the work that we do.
Dean Dre
Real helpful. Thank you.
OPERATOR
Your next question comes from the line of Brian Blair with Oppenheimer. Brian, please go ahead.
Brian Blair
Thank you. Morning, guys. Nice start to the end.
Eric Ashleman (President and Chief Executive Officer)
Thank you. I was hoping you could offer a little more color on HST visibility starting with backlog expansion. I think last quarter you had cited around 100 million in year on year build. Where does that fit now? And given the investment trends and project orientation of some of HST's advantage markets, how are you thinking about underlying demand support through the back half and into 2027? Eric, you had alluded to solid Runway in your prepared remarks. Just curious if you can offer in any additional detail. Yeah, well, as you saw, we drove a nice backlog number again increase for HST this quarter. And it's interesting here we're getting more visibility than we've typically had. You know, for classic idex, you can see that growing in HST and it's really growing in these faster growing order wins and application spaces. And the nature of it is, you Know, these are moving fast. Many cases these are novel solutions, you know, where we're just kind of bringing them to market. And then you've got customers here that are trying to ramp pretty aggressively. And so they're giving us and as well as other suppliers some good visibility to the road ahead. You know, to make sure that we properly capitalized. We've got labor lined up, we've got materials available. So we get more than we typically would, let's say and certainly in FMT and other places, even much of the rest of hst. So that accounts for some of it. That being said, you know, it's. Anything that we are recognizing here of course is within the 12 month period period and it's, you know, you don't, it's actually pretty linear as it runs also in the discussions that we have with customers as we're booking it and we're working with them, you know, that same, that same spirit runs into discussions about out years. So you know, what comes next in terms of technology is something we talk about, what kind of volume requirements might be needed there so that again we get the jump on any capital we and others might need to lay in. That's why we're able to point towards continued growth beyond a 12 month horizon here. Because of those conversations that kind of look forward. That again is a little different from what we typically experience in idexx, but it's something that we had planned to be part of our growth story here and it's playing out that way. Hence the references to confidence both for this year and the out years.
Brian Blair
That's very helpful, thank you.
OPERATOR
Sorry for that. Let me do go next to Mike Halloran with Baird. Mike, please, go ahead.
Mike Halloran
Hey everybody, how you doing? Hi Mike. I'm gonna tell you that I have some user error. I might have hung up on you right when Dean was asking his first question and I came back on. So I apologize ahead of time if I ask anything that's redundant here. So could you help me a little bit with the sequential dynamics you're assuming for the mean of the year. Obviously the orders are really good. As we sit here today, the short cycle piece seems like it's going the right direction. All else equal with a couple of end market headwinds. You know, Eric, maybe simply, do you feel like we're at an inflection point or close enough to an inflection point to be comfortable with the trajectory on those short cycle pieces yet? Obviously you just talked about the higher growth areas, the investment areas. You feel Good there, but maybe more just on the short cycle dynamics trajectory as you work through the year and how you think about sequentials.
Eric Ashleman (President and Chief Executive Officer)
Yeah, we did talk about this a little earlier, but I think it's worth restating. We definitely saw a cadence of improvement across really the four months of the year. You know, kind of, kind of weak in January, a little better in February, pretty strong March, and then it sort of held at that level in April. I actually think that's a testament to the resilience of these markets in the face of, you know, some pretty concerning or uncertain headlines geopolitically. I did reference though, as you know, we have these diagnostic businesses that you give us some insight into, you know, strength of inflection. And that usually comes about when they're all moving in the exact same way. That's the one piece that I pointed to and said, you know, we've got a few that are not moving in the same direction. You know, they're okay, they're stable, but they're not jumping yet. So I think. And that matches the conversations we're having. You still see an awful lot of references to what might play out in terms of energy, energy pricing, material availability, all the, you know, usual suspects when something like this is going on in the world around us. So I think we're better. I believe it is an indicator of, you know, how strong maybe that industrial world wants to run here. But I would also say pretty reasonably guarded because of some of the things that are out there. So the way that we have it modeled, you know, we kind of have it probably appropriately, conservatively modeled as flattish running out kind of not too far from our original assumption. But I think that's the right call based on what we're seeing and what we're hearing.
Mike Halloran
So is it fair to say then that the delta in the guidance here, obviously the uptick is partially the first quarter strength, but it's more tied to the internal growth initiatives, the investments you've made internal and with some of the M and A than it is any real change in the cyclical dynamics.
Eric Ashleman (President and Chief Executive Officer)
That's absolutely true.
Mike Halloran
Okay, thank you for that. And then just quickly, just thoughts on buybacks versus the M and A side of things and how you. How you're thinking about the pipeline on acquisitions as it sits here today.
Shawn Gillen
Yeah, the pipeline on M and A continues to be active and continues to be kind of focused in that bolt on type size of deal. We have sufficient capacity to take that on while continuing to maintain the current buyback levels. You know, we did 76 million in the quarter mentioned that we'd expect that cadence to continue for each of the quarters through this year. And at those levels we still have, you know, more than enough capacity to execute on bolt on M and A as it comes into focus. So I'd say kind of no change from a capital allocation specifically as it relates to repurchase and then still focused on M and A with with a pipeline that's active and focused on that bolt on world.
Eric Ashleman (President and Chief Executive Officer)
And then I would just add that the cultivation for those tuck ins, I mean it continues to improve. So the more traction we get on our initiatives, largely, almost all of which involve some integration of units, people see that, they recognize that and increasingly want to be a part of it.
OPERATOR
Our next question comes from the line of Brian Blair with Oppenheimer to continue his follow up questions. Brian, please go ahead.
Brian Blair
Thanks guys. I actually cut out a bit. I appreciate you letting me ask a follow up. I'm not sure if this was just addressed so apologies if it was the case. I wanted to to circle back to FMT trends and just the disconnect between order rates being kind of high single digit range over the last four quarters relative to sales being 1% give or take on average, sounds like trends are generally positive and there is that disconnect between order and revenue recognition. Just trying to get a sense of how much conservatism you're baking in versus something else that would drive continued delta on that front.
Shawn Gillen
Yeah, good question. I think that's where looking at a quarter or two in FMT can be a little bit misleading because a lot of that order activity is consumed within the quarter. If you look over a longer call it kind of four quarter period, you normalize for some of those movements. That'll help. But in the order activity that we saw in the quarter which was strong at 9% organic, you know, water really led the way on that performance and we would expect that performance to continue as we have them pegged in kind of that high single digit growth. And we saw some notable bright spots in our mining end markets in the quarter as well as in just the overall pumps market. Some of that was a little bit of, you know, demand coming in Q1 that we might have expected in Q2. So. So that probably led to the order growth being at 9% in excess of the sales growth and in excess of what we expect for the balance of the year. But I do think, as you mentioned, there's a touch of conservatism as you think about the guide on flattish growth in fmt. You know, Eric's touched on it. I mentioned it earlier in the call, but there's a piece of that as well. Given that we're just one quarter in, the world's kind of uncertain, while the trend seems to be pointing in the right direction, you know, not extrapolating that for the balance of the year.
Brian Blair
Okay, all makes sense. Appreciate the color.
OPERATOR
Our next question comes from the line of Andrew Buscaglia with BNP Paribas. Andrew, please go ahead.
Andrew Buscaglia
Hey, good morning everyone. Morning. So, you know, sort of a trend we're picking up this earnings season, just some companies talking about these higher energy prices. The near term maybe some volatility, but long term, maybe positive impact for their businesses. And I know direct energy exposure is not huge for idex, but I'm wondering how you're thinking about your business in that context.
Eric Ashleman (President and Chief Executive Officer)
Well, yeah, we do have a segment involved in energy. A lot of it's downstream custody transfer. We're kind of the cash register for a lot of the industry. So it, it never directly correlates. It's not a wellhead kind of business. But I would say higher energy prices and activity tend to have kind of a derivative impact positively over time. We saw some of that in the first quarter, you'll note. We didn't put it blissed energy as a significant pressure point, whereas we have in some of the preceding quarters we've seen certainly more activity there, more money being put to work, US Exports, all of that stuff. So as that happens, it generally kind of back feeds into the markets that we're a part of. So we've kind of got that in a slightly better place. We'll watch it as it obviously this whole story runs out. There's a lot of volatility there, but the energy exposure at idexx at least now has moved more to the green.
Andrew Buscaglia
Yeah. Okay, that's interesting. And then, yeah, and Eric, the last
Eric Ashleman (President and Chief Executive Officer)
couple quarters, the execution has been strong and you're talking about 8020 and the growth investments you're making. But is there any other subtle changes to the 8020 process that's been going on under the hood? Are you doing anything differently in terms of that process that's driving these better margins? Yeah, well, I think that the two extensions of the playbook which we've had in place a long time here, really, it's in the areas where we're growing and acquiring businesses, we're integrating some of the units together into these growth platforms in a way that are a little different from kind of classic idex. And so when you do that, it does add another dimension. It's kind of taking a two axis story and makes it three axis. And so you have to be cognizant of how you define 80s and 20s, how, how you allocate resources, sometimes crossing business units. So we're doing a lot of work this year to kind of write that code, codify it and train it in those areas. Because as I referenced in my opening comments, I mean, what's exciting about it is the scale of opportunity here also grows. And so you're seeing some of that come onto the board here. I had a graph in the slide deck that showed sort of this difference between a customer set that's declining as we focus on the winners and then sales and margins ramping on the backside of that. That's that codebook at work, that extension. So very, very exciting piece of it. Very much pivoted towards growth. And then of course you get almost one for one margin support as we grow the company. So that's a great question and that's sort of the new chapters that are being written right now.
Andrew Buscaglia
Yeah, Interesting. Thanks, Eric.
OPERATOR
Your next question comes from the lineup. Dan DeCicco with BMO Capital Markets. Dan, please go ahead.
Dan DeCicco
Thank you for taking My question. Slide 4. Space and defense. Were a lot of these products already in place or have you kind of tweaked and tailored some of these solutions and platforms to better align to these markets? And then is there any more opportunity here down the road? Well, I mean this, this whole industry, particularly on the space side, is developing really, really fast. There's almost always something new there, but we're actually leveraging, you know, kind of an early incumbency position. And we, we long ago studied this market, kind of helped, frankly, I'd argue we helped it develop. And as we've done that, you know, that's given us presence in the rooms with, you know, the people that matter to help solve problems along the way. So you have an incumbent position that was very thoughtfully deployed and then that access point allowed us to see where things needed to go from there. And then our innovation stream is actually enabling it. So I'd argue you have some of all of that. And then just, you know, as a space, there's a reason we highlighted here. I think it's tremendous in terms of growth, growth potential, you know, both in terms of depth of applications as well as the number of people that are starting to play here. So just couldn't be more excited about it. Absolutely. Great, thanks. And then just Maybe if you could
Eric Ashleman (President and Chief Executive Officer)
just touch quickly on your overall exposure in just power generation and then more specifically around fuel cell power support. Thanks. Yeah, well, we mentioned in our data center applications in the pneumatic space we've long talked about, you know, that's some of the work that we do there. It's behind the meter power gen, you know, to power data centers essentially with standby power. And we do a very, very critical job there of thermal management within those applications. And so, yeah, that is an area that we've capitalized on, we've helped support and are excited about for the future. Great, thank you.
OPERATOR
Your next question comes from the line of Vlad Bristrici with Citigroup. Vlad, please go ahead.
Vlad Bristrici
Hey, good morning guys. Thanks for, thanks for taking my question.
Shawn Gillen
Morning, Vlad. So nice quarter, obviously and like the positive outlook for 26. I did want to ask you, you mentioned some price cost pressures impacting gross margin in 1Q. So you just talk about what price cost was in the quarter, how you see it evolving going forward through the year, and whether you're expecting to take or need to take incremental price related to tariffs or any other inflationary pressures. Yeah, good question. For the quarter to the EBITDA line, price cost was, it was a net positive, not to the same magnitude that we saw in a couple of quarters in the last year. Given, you know, tariff pricing actions, but positive to the quarter would expect that to continue, kind of be net, even a little bit positive. We're not contemplating any second round price actions in the guide as it stands today based on what's happening in the world. If it continues and we need to do those things, those are, of course, actions that we'll continue to do. I think the tariff example is a good one in that it shows that the businesses within IDEX have the ability to, to move price in accordance with what they're seeing in cost. And so if we do start to see some sustained price pressures or we expect that on the cost side, we will revisit our price assumptions and actions with our customers. So for the quarter, positive, kind of for the guide, expect that to continue
Vlad Bristrici
and can be revisited depending on what happens in the businesses. Got it. That's helpful. Appreciate that, Shawn.
Eric Ashleman (President and Chief Executive Officer)
And then I think you talked a little bit about Life Sciences, you know, where you're seeing sort of some pressures in China and nih, I guess could you just talk more about, you know, how you're thinking about the potential for a more positive inflection within Life Sciences in HST over the coming quarters or into 27. Yeah, well, you know, we're going to focus where we can focus and that's in core innovation with the customers that we've long had relationships with. And there's some. The team is driving some great things there. We're seeing that now playing out positively in largely in the pharma space. There's just a number of things going on in that area. Even some of the questions around geography and how that's going to all play out. Given that the world turns in different ways there. I'd say we actually are helping customers think through that too, because. And we've got great global scale. And so if people want to position, reposition assets or target different markets around the globe, we can support that. And we're talking through those situations with customers too. So for us, we're just going to focus on what we do best, which is kind of double down on the global span that we have. The scale that we have within the business. Remember, those are long been integrated units where people are used to working together and driving that scale of solutions and then bring innovation to bear in the markets that are inflecting the most positively.
Vlad Bristrici
Thanks for that, Eric.
OPERATOR
Your next question comes from the line of Rob Wertheimer with Milius Research. Rob, please go ahead. Rob, your line is now open.
Rob Wertheimer
I apologize. Thank you. You've had a lot of success in some of the growth investments you've made and I'm curious how much kind of remains in the pipeline. Products you haven't launched, products you're developing. You know, maybe you could characterize how far along that curve you are. And my second question, I'm not sure you'll want to answer, but you know, of the total order growth, maybe in dollars, how much was attributable to kind of your new markets or advantaged markets or growth investments you've done, versus a general cyclical rebound. Thanks.
Eric Ashleman (President and Chief Executive Officer)
Sure. Well, look, I think these spaces have a lot of potential, not just this year, but in later years. It's one of the reasons we've indexed so positively that the years past 20, 26 we see as being very good for, for us because we're involved in the discussions, we're working on the technology, we're talking about problems that need to be solved. We know kind of when those would go to market and how they would run out. And obviously, you know, the investment cycle here has got multiple chapters and we're exposed to it. To your second question. It's related actually to the first. I mean, I wouldn't give a Specific number here, but I mean, you know, much of what we're talking about is you can point back to recently acquired units, very specific investments, the choices that we made to link to units of this quality. So a fair amount of it is coming from there. What I particularly like about it is it's, you know, we're kind of pinging these different worlds from multiple points. And so think of those as entrances, you know, entrances into really great application spaces, each one of which has their own subsequent chapters to write through our innovation efforts. So we talked about data centers, you know, we talked about kind of behind the meter power gen over there. We're also involved in really interesting things related to optical switching and how that's going to play out. We've got valves there that are positioned around liquid cooling and other aspects of thermal management, broad semi exposure, which has been very positive for us. And we're involved in everything from consumables to metrology to lithography. We've got these nice little entry points, each one of which again just has this sort of extended discussion about here's what we need today, here's what we're going to need tomorrow, and here's what we're thinking about in terms of the future. You know, water in the FMT space has some of those same characteristics. You know, we're providing data and data sets to people that are now starting to think about how that could be commingled with their own AI applications. So really, really like how the investments that we have made link to to advantage spaces and then have this nice Runway potential.
OPERATOR
Your next question comes from the line of Robert Jamison with Vertical Research Partners. Robert, please go ahead.
Robert Jamison
Morning. Thanks for taking my questions. Just a quick one on capex and just the step up that we're seeing this year. I know no changes, guidance, but is this more related to capacity or automation investment and is that more specific like the HSC segment? Just trying to think about like where that bulk of the incremental investments being directed towards.
Shawn Gillen
Good, good question. And as you mentioned, you know, we have guided and no change to the guide on that front, an increase in capex for the year and it's really supporting all the growth that you're seeing. So it is overweight towards HST. There's the nature of the business. There's no one or two really big ticket items in terms of CapEx that we need to drive the growth. It's really across a variety of the businesses. But we are allowing for more growth capex to be spent in this year to help support the growth and the demand that we're seeing. And that's in the form of equipment and other things, you know, like that to help support, support the growth. So not a huge step up, but a meaningful one. It's still relatively low in terms of kind of the overall size of the business. But you budgeted for some growth in CapEx for the year.
Eric Ashleman (President and Chief Executive Officer)
This is actually an area where 8020 helps us a lot as well in line with our component orientation. Because if we make choices to, let's say move on from a small part of a business, very often it's the same component capital or the same technology that we would run faster growing applications across. So it actually kind of gives us an internal funding source or an offset so that, you know, it keeps, keeps capex increases at a nice level too. So that's, that's another lever that we have that comes out of 8020 work.
Robert Jamison
That's great, super helpful. And then just taking a step back, just given the strategy and you know, the pivot over the last couple years on advantage markets with secular tailwinds. I mean what are maybe some of the top two or three secular themes, you know, outside of AI where you think that IDEX is most under indexed today and potentially willing to invest more aggressively in.
Eric Ashleman (President and Chief Executive Officer)
Well, you know, look, I mean when you step back, what's, what's nice about the changes that we made is, are I actually start with the things that are constant, you know, so we essentially always have kind of moved either fluids, gas or light. That's basically what we're doing even in these advantage spaces. So we've got great technologies, great access here. I'm particularly excited in terms from an end market perspective. You know, we highlighted space and defense for a reason. I think that that's, you know, just getting off on the ground and we were there from the beginning and so our positioning there is really, really good. Our optics technologies in specifically tie very nicely to that world. And here's where the acquisition work comes in very handy because we're actually kind of moving technologies and joining them across a couple of the businesses here to create solutions that are pretty novel and really could only kind of come from us. And that's part of the thesis too. So I think you know, how we position mss, the material science solutions platform, that's where optics sits. I mean that whole thesis really gives us a nice jump off point into virtually every market that we've talked about here that is advantaged. So continuing to expand it through bolt on tuck in work. That's why we're excited about that as well. There are some other things we'd like to bring in as our presence increases. So more to come here, but I think off to a great start and kind of playing out the way that we had hoped and expected.
OPERATOR
Your next question comes from the line of Brett Lindsay with Mizuho. Brett, please go ahead.
Brett Lindsay
Hey, good morning all. Question regarding your capex intensive businesses, I guess as you parse through the composition of your, your growth and activity, how are those performing versus the more opex oriented businesses? And I guess as IDEX says, growth grown in areas like material science and defense and space. What does that mix look like today and how's that evolved?
Shawn Gillen
I'd start by saying, I mean, none of the businesses we're in are that capital intensive. And so, you know, you're seeing an increase in Capex, but it's really in line with growth and angled towards the HST segment as well as some other platforms where we're seeing that growth. So I don't think that there's a material shift in the capex intensity of the business. We're just allowing for some capital to support the growth that we're seeing. So no material move in terms of what you should expect in terms of capex for our businesses going forward?
Eric Ashleman (President and Chief Executive Officer)
Yeah, that continues to be part of the filter set. When we think about a space, a technology set or acquisitions. I mean, we're looking for kind of maximum innovation at relatively low capitalization requirements. You know, there's not just from the economics of it, but that gives us the, you know, the agility, the optionality of moving the technology fast. So it's all kind of part of the. For us, it's simply rising here because frankly the growth rates are rising and
Brett Lindsay
then just shifting over to fire and safety. So encouraging to see the strong demand in North America. You noted the relative stability in Europe and Asia. The stable Europe comment I think is maybe a change in trend, perhaps just some color there. Are the local spending priorities maybe firming up and shifting a little bit to the, to the upside here?
Eric Ashleman (President and Chief Executive Officer)
Yeah, I mean, I think on the fire and safety European front, you know, we call it late in the summer last year we had, we had that turned down kind of unexpectedly. We saw some very specific positioning over to alternate spend that actually came back to something more normal at the end of the year and it's, it's basically remained there. So, you know, it's not widely growing, but it's kind of back in its normal corridor. And I think that was actually kind of, kind of a temporal shift. And then we've seen again the further from home markets have been stable for a while and as you said most of the growth strength on the North American side.
Brett Lindsay
Thanks for the color.
OPERATOR
And our final question comes from the lineup. Joe Giordano with Dede Cohen. Joe, please go ahead.
Joe Giordano
Hey guys, appreciate letting me have the follow up here. Just like one last kind of bigger picture question on M A. You know Eric, as you moved into some of these newer areas like when you bought Mod, you bought Muon. I think from an investor angle it seemed a little bit more. Are these more complicated? Is this a, is this away from core a little bit more. And then obviously those businesses started a little slow and, and now are doing quite well and are directly aligned with what you, with what your, your strategy is. So I'm just curious as you look back on the last couple of years with these businesses, what's like the takeaway in your head? Does this like reinforce that IDEX knows how to do M and A as a core competency? Does it inform you on timing of when it is appropriate to do this and how much work we need to do to the businesses that are in these kind of markets? Just curious like what you're. I know we're in a good place to talk about it now but just curious like what you guys kind of like took away from the, from getting from where you were when you started to where you are today.
Eric Ashleman (President and Chief Executive Officer)
Yeah, no, no, thanks for that. Well look, a big part of the thesis here was supporting stronger growth for the company. I mean that's why we went down this direction. And I think one of the insights that comes out of, out of this, given all that you cited is actually I put it in the end, I put it into a strength category. I mean these are mission critical markets where you know, the uptick on growth takes a little longer than maybe we would like out of the gate but that actually becomes the moat for us once we get through it. So that defensibility of people that are super risk averse got to make sure everything's going to work right, make sure that we're a trusted partner. All those things have always been true at idexx. They're probably even more true in these kind of critical markets. So that delayed some things out of the gate in terms of take up and adoption and it was remember pretty crazy world at the same time. But what we're seeing now is the backside of that. And so the same characteristics I actually think are massively in our favor because that's the deep moat that now surrounds us. We're in the room, we're having a discussion, we're at the table to say, hey, what comes next? Then what can we do? Then what can we do? And now we have more pieces and parts to play with. We're not a single business in there. We're actually a couple of units to three. We've got more people in the room, we've got more depth and we've gained that trusted partner status. So I think that's the insight and I think it's a net positive as we sit here today. Thank you. That concludes our question and answer session. I will now turn the call back over to Eric Ashleman for any closing remarks. Eric yeah, well thanks everyone for your interest and support of idexx. I'd say to sum up here, we're very pleased with the strong start to the year. HST in particular continues to build strong sequential momentum within its target advantage growth markets. As we said during the call, perhaps most encouraging for us is the fact that many of their wins have long multi year tails that point to really nice growth over time. With FMT and FSDP we saw some encouraging positive signs of early inflection, but we still most likely need to come clear the uncertainty of geopolitical stuff to move materially to the next level of support. Our businesses there are really well positioned to capitalize on that strength as it plays out from here. So I think bottom line, our growth strategies, supported by our growth platforms, expanded through thoughtful M and A and operational integration, are powering IDEXX towards a really bright and successful future and we look forward to updating you as we go along the way. Thanks so much.
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