IDEX Corporation Stock

Hello, everyone. Thank you for joining us. and welcome to the IDEX Corporation Second Quarter 2026 Earnings Conference Call. After today's prepared remarks, we will host a question-and-answer session. [Operator Instructions] I will now hand the conference over to Jim Giannakouros, VP Investor Relations. Jim, please go ahead.

Good morning, everyone, and welcome to IDEX's Second Quarter 2026 Earnings Conference Call. We released our second 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 second 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 2 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.

Thanks, Jim. Good morning, everyone, and thank you for joining us today. I'm on Slide 3. Continuing the momentum established coming into the year and in the first quarter, IDEX delivered strong second quarter results. Organic sales grew 5%, adjusted EBITDA margin expanded 70 basis points year-over-year to 28.1%, and adjusted EPS grew 12% to $2.32. These results exceeded our expectations, driven most significantly by higher volumes from our growth platforms supported by outstanding operational execution. .

Our results this quarter were modestly impacted by IEEPA tariff refunds, which reduced organic growth a bit and provided slight favorability to margins and earnings. Sean will walk through those details later in the call. In addition to the strong sales and earnings performance, orders came in better than expected, growing 28% organically for IDEX overall. We experienced double-digit year-over-year order growth across all 3 segments with our Health & Science Technologies segment, or HST, once again leading the way with organic order growth of 47%.

Please turn to Slide 4. To provide some additional context on key drivers, the HST order growth is predominantly coming from growing demand in 3 areas: data center, semiconductor and space and defense markets. Year-to-date, these application sets collectively have grown to represent over 1/3 of HST revenue. Our Performance Pneumatics Group continues to win as we support primary and standby power generation applications currently fueled by rapid data center build-outs as well as liquid cooling flow control solutions that deploy within the data center infrastructure.

Within semiconductor, material science expertise helps us engineer high-purity gas filtration, ceiling, optical detection and thermal management solutions that support process tools, inspection systems, metrology equipment and many other applications. Our critical components in this area follow the classic IDEX business formula. We provide maximum solutions impact as a small percentage of overall systems cost while retaining flexibility to move laterally across markets to exploit the widest set of commercial opportunities.

Additionally, with the rapid growth of Mott's filtration business, we now have approximately 50% recurring revenues within HST semicon portfolio. Finally, in Space & Defense, we provide highly engineered components that support demanding applications in these rapidly growing end markets. The pace of collaborative innovation within this sector is amazing, and our team's race to set foundational specification points that define how an emerging technical job will be done today and in the future. claiming this territory for IDEX launches strong annuity streams to fuel customer beneficial investments and shareholder value creation for decades to come.

Within the Fluid Metering and Technology segment or FMT, we saw double-digit growth from our water platform. IDEX Intelligent Water provides critical insights for municipal wastewater management, delivering analytics with speed, precision and actionable data. Also, our ultra-high purity pumps, heater and fluid management solutions provide differentiated environmentally sustainable support for semiconductor fabrication facilities.

The strength in these areas, alongside other pockets of improving demand within the portfolio collectively drove record orders of over $1 billion. We are managing and investing to meet our customers' needs, including investments in throughput improvements, supply chain readiness, higher staffing and select capacity expansions.

Also, 8020 is a critical tool to effectively allocate resources toward these highest value opportunities. This performance year-to-date not only gives us greater confidence in our 2026 outlook but also provides greater visibility to sustain this momentum into next year. our fastest-growing customers are increasingly submitting orders with request ages further into the future, primarily to prebook capacity.

Our more traditional rapid replenishment customers on the whole are also running slightly better than we expected earlier in the year. Taken together, our growing backlog gives us the confidence to raise our full year 2026 financial outlook. Sean will provide greater detail later in the call. In addition to the strong order growth, our teams are executing very well to drive margin expansion as they deliver more revenue. Our teams in HST drove year-over-year margin flow-through of approximately 40%, excluding tariff refunds in the second quarter. We expect additional healthy volume leverage through the second half of this year.

Finally, we continue to meaningfully implement 8020 with a focus on newly acquired businesses, many of them producing the highest growth rates in the company to set up greater margin expansion potential into 2027 and beyond. With that, I'll turn it over to Sean to walk through the quarter in more detail, including segment performance and our updated outlook.

Thanks, Eric. Good morning, everyone, and thank you for joining us today. Please turn to Slide 5. In the second quarter of 2026, IDEX delivered strong results, which meaningfully exceeded our guidance for the quarter. Organic revenue growth of 5% was better than we forecasted, with notable strength in HST.

Adjusted EBITDA margin expanded 70 basis points year-over-year and adjusted EPS of $2.32 came in significantly higher than our guided range in the second quarter. Overall, our orders grew 28% organically in the quarter. HST again led with order growth of 47% year-over-year, while FMT orders grew 11% and FSDP orders increased 19%. Touching on some of the more meaningful business demand trends in the quarter. 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.

We also continue to see strength in municipal water, mining, space and defense and in commercial aerospace. As Eric mentioned, we received IEEPA-related tariff refunds in Q2, this impacted our financial results in a few areas. First, the tariff refunds from the U.S. government result in a reduction to our cost of sales. Second, the U.S. government paid interest on the tariff amounts, which slightly reduced our net interest expense in the quarter.

Lastly, in select circumstances, we expect to provide customer rebates for a portion of the tariff refunds. This is accounted for as a reduction to sales in the period. The net impact of all this in the quarter was a benefit of $0.08, which is included in our reported adjusted EPS of $2.32. Even when excluding this benefit, our financial results were meaningfully ahead of our Q2 guidance range of $2.07 to $2.12.

As I go through our financial results, I will note where any impact occurs to provide transparency and visibility to the strong underlying performance of our businesses. Organic sales in the second quarter grew 5% with HST growing at 12% and FMT growing at 1%, while FSDP was down 1%. As just mentioned, sales were partially offset by expected customer rebates related to IEEPA refunds, which reduced organic growth by 2% in the quarter. On a consolidated basis, organic sales growth was primarily driven by higher volume with positive price contribution. IDEX adjusted gross margin expanded 110 basis points to 46.4%, driven by productivity gains, volume leverage and the net benefit of tariff refunds, partially offset by mix.

Volume leverage was led by strong growth in HST. Adjusted EBITDA margin expanded 70 basis points versus last year. As noted on the slide, the net impact of the IEEPA refunds was a benefit of 130 basis points. Importantly, our adjusted EBITDA margin, excluding IEEPA came in towards the high end of our Q2 EBITDA margin guidance of 26.5% to 27%.

IDEX generated $177 million in free cash flow in the second quarter, and we ended the quarter with strong liquidity of over $1.1 billion. And finally, we spent $77 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 6. In HST, organic orders increased 47% and revenue grew 12% organically. 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 and where we have focused our integrated growth strategies.

HST adjusted EBITDA margin expanded 270 basis points year-over-year due to positive volume leverage and positive price cost driven by the net benefit of tariff refunds. As noted, tariff rebates reduced organic growth by 2% and were a 90 basis point benefit to our adjusted EBITDA margin in the quarter.

Our underlying businesses performed exceptionally well with strength across orders, sales growth and margin. Turning to Slide 7. In FMT, organic orders increased 11% and organic sales increased 1%. Sales growth was supported by our water platform and our mining exposures, partially offset by softness in ag, chemical and energy end markets. Looking at our leading indicator, industrial order rates, they continue to show increasingly encouraging signs as second quarter orders and revenue in these businesses were slightly better than we had expected.

FMT's adjusted EBITDA margin declined 20 basis points year-over-year as unfavorable mix more than offset the net impact from tariff refunds and productivity benefits. The net impact of tariff refunds benefited margin by 180 basis points in the quarter.

Last year's adjusted EBITDA margin of 35% is a tough comp as in Q2 last year, we were quick to adjust pricing for tariffs, while the cost of tariffs were slower to impact the P&L. FMT's underlying margin performance is right in line with our expectations and guidance we provided for Q2.

Please turn to Slide 8. FSDP organic orders increased 19% year-over-year and organic sales declined 1%. The FSDP orders were boosted by strong aerospace demand at BAND-IT including a significant blanket order and continued momentum in fire and safety from North American fire and integrated system orders.

Sales declined due to the expected reduction in activity and dispensing and some softer performance in European rescue markets, which was partially offset by continued aerospace strength in BAND-IT. FSDP adjusted EBITDA margin decreased 50 basis points year-over-year, driven by unfavorable mix and volume deleverage, partially offset by strong productivity improvements.

The net impact of tariff refunds benefited margin by 120 basis points in the quarter. Please turn to Slide 9, where I'll touch on capital deployment. First, our gross leverage position decreased from 2.1x a year ago to 1.9x due to strong cash flow and earnings growth. Second, as you can see, we continue to invest in our business as well as return capital to our shareholders. We have increased CapEx from the year ago period as we support the strong growth in our businesses. Additionally, we have continued to return capital to shareholders as we paid $54 million in dividends and repurchased $77 million in shares during the second quarter.

Compared to the prior year, we have increased our share repurchase activity by $53 million or 53%. We plan on maintaining our quarterly repurchase level at around $75 million through the rest of 2026. We can flex above this amount based on leverage levels relative to bolt-on M&A and 8020 led portfolio optimization decisions going forward. We look forward to executing on our capital deployment methodology and are confident in our ability to drive increased shareholder value.

Now I'd like to discuss our updated guidance for 2026. Please turn to Slide 10. For the full year 2026, we now expect organic growth in the 5% to 6% range, an increase over our previous guidance of 3% to 4% organic growth. Our overall IDEX organic growth guidance balances approximate low double-digit growth for HST and outlooks of slightly up year-over-year for FMT and FSDP. These outlooks reflect HST's strong order book, relative stability, but also some signs of improvement at our FMT and FSDP segments.

We are raising adjusted EBITDA margin expectations to a range of 27% to 27.3%, up from 26.5% to 27%. We continue to expect productivity benefits throughout IDEX businesses and solid leverage and margin expansion at HST this year. Taken together, we are raising adjusted EPS guidance for 2026 from a range of $8.35 to $8.55, and to a range of $8.70 to $8.85, representing high single-digit to low double-digit growth year-over-year.

For the third quarter of 2026, we expect 5% to 7% organic growth, adjusted EBITDA margin in the 27% to 27.5% range and adjusted EPS of $2.20 to $2.25. Additionally, we are increasing our capital expenditures forecast from $90 million to approximately $110 million as we make select investments and capacity expansions to support our highest growth and high-return businesses. With that, I'll turn the call back over to Eric.

Thanks, Sean. I'm on Slide 11. As we step back, we're pleased with both the quarter and the momentum we continue to build across IDEX. Strong orders, growing backlog and increasing contributions from the markets where we've invested most intentionally give us confidence in both our updated outlook for 2026 and the opportunities for sustainable value creation ahead. We are clearly seeing the benefits of the work we've done over the last several years to strengthen our capabilities, build durable platforms and improve the quality of growth across the portfolio. .

At the same time, we believe there is still a meaningful opportunity to further enhance shareholder value through continued application of 8020, disciplined portfolio management and thoughtful returns-focused capital allocation. We're also becoming more confident that signals of broad demand support for our premier industrial businesses are starting to form. Remember, these are incredibly positioned, highly profitable businesses that expand margins and generate superior cash flow when volume increases.

With that, I'd like to thank our teams around the world for their hard work and execution. For participants on the call, we appreciate your continued interest in IDEX. And I'll now turn the call back to the operator to take your questions.

[Operator Instructions] Your first question comes from the line of Mike Halloran with Baird.

So maybe, Eric, just a question on what you're seeing on a forward basis. It's kind of a twofold question here. One, on the short cycle side of things, obviously, the advantaged markets are doing very, very well. But you're starting to see some sequential improvement in the more traditional short cycle avenues. Maybe you can talk to what you're seeing there. But then as the first question, more end market commentary, what's working? How much of those are good leading indicators for the stuff that tends to lag, maybe the chemical side, something like that? Any context would be great.

Okay. Yes. Thanks, Mike. So on the kind of the FMT side of house, it is a little interesting in the second quarter. We made a comment in the slide deck talking about longer lead time items. -- what we actually saw was something a little different than we've seen before in inflection points where kind of the leading order capture and backlog generating items were more attributable to specific parts of the business. more direct OEM relationships.

I suspect a lot of this is because they're, in some ways, derivatives of very strong advantaged secular drivers in markets that have that. So our water business with a strong player here. We have longer cycle projects in mining, which we saw in our ABEL business, that was a strong part of the quarter. Even some of the work in a business like Viking, they've got some data center support items in there, which we can attribute to end customers.

So a lot of our backlog build in this particular quarter were those items. However, as we got closer towards the end of Q2, and it's continuing into July, we are seeing more of that typical rotation to kind of up and down the street smaller order flow business that comes through our distribution channels. Typically for us, that had kind of led the other side. But I think because of just so much strength in some of the markets that are driving not just IDEX, but the economy, we saw that flipped around a bit. And so as we sit here today, I mean, we're encouraged -- it's early, but we're encouraged by both sides firing in both the FMT segment as well as the more industrial pieces of FSDP additionally.

Yes. No, that makes sense. And you actually touched on where I wanted to with the second part of the question, which is just the extending lead the concentration of some of those orders in the longer time areas was absolutely interesting. You put that in context of some of the advantaged markets where you're starting to get that forward visibility. Maybe just talk to what backlog build looks like today versus maybe history, what kind of visibility you have on the next 2, 3, 4 quarters out relative to previous times. Any thoughts there would be great on how you're thinking about that?

Sure. Well, kind of starting where we ended, again, this is a little different in terms of the way that the inflection trend would be driven in a segment like FMT. So already here, we've got some great visibility in water. We can see it in mining, the areas that I mentioned. And now it's great to see some of the breadth forming around it, but that's shorter cycle business. HST is where you see this in quite a different way. So we've got -- we've had now a number of quarters with strong backlog build. .

And what's interesting here is if you track that over time, and I'm talking about those 3 sectors I identified, if you look at the businesses that contribute that, and we've been kind of building that momentum for about 1.5 years or so. And then we took an inflective turn up at the beginning of 2026.

Q2, actually, a lot of the businesses are pretty aligned with where they were in Q1. I mean they're strong. They're still building some backlog as we go kind of the 1 exception there on the positive side is we did receive in Q2, a big chunk of data center business in the pneumatics world, that's clearly positioned for 2027. So what we're seeing, most notably in HST is kind of a division between more typical IDEX-like businesses that are based on our lead times. We still have a lot of that in all pockets. But we've increasingly got this portion which is tied to the markets that we mentioned and covered that are driving a lot of growth for us and others, where we're getting some more visibility.

We're getting requirements, not just in the current quarter, but 1 quarter out, 2 quarters out. And then most notably that case in data centers, we've actually got some good volume into 2027. So it's sort of the midpoint of the year, just as an example, we've kind of got twice the business set up for the following year than we had at this point last year. And as you'd suspect, it's in the areas that we're talking about here in isolating. So it's great to have it. It accounts for some of the CapEx inflection you see there. That's a modest lift, but that's, frankly, us getting ready to support business in 2027 and '28 because we have the visibility in that backlog, and most importantly, in the conversations that we're having with a customer.

Good problem to have. Appreciate it. Thanks, Eric. .

Your next question comes from the line of Deane Dray with RBC Capital Markets.

Thank you. really looks like you've regained some nice momentum here. So congrats there. And Sean, thank you for the navigating us through all the tariff impacts. We haven't seen other companies have a revenue impact, but you -- that's crystal clear now.

My question is kind of a follow-up here on the profile of demand. And Eric, you always give some good entry level into some insight into the business when you talk about the day rates the cadence of these orders? And you mentioned some of the bellwethers but if you could help us there in terms of what that order pattern tells you regarding the kind of short-cycle dynamics. Maybe we start there.

Sure. As I said, that built as we went through the quarter. It was probably strongest in June, and then it's continued into July. And specifically, I'm referring to the classic kind of up and down the street, small order flow kind of order quantities of 5 to 10 of things, which is a decent part of IDEX business, almost all of which comes through points of distribution. .

So we've always considered that to be very representative kind of the state of the industrial economy. It indicates things like people working overtime and expanding a shift profile or something like that. So we've got some of that strength starting to show in our businesses.

As I mentioned, though, in the second quarter, the interesting part here is that because of the strength of some of these secular areas and are linked to those they were more pronounced because that duration was each of the months in the second quarter. So a business like BAND-IT is an example, which is 1 that we often cite is a good representative bellwether business kind of the news is dominated by a really, really strong blanket order in the aerospace and defense sector for them.

That, frankly, kind of dwarfs any slight moderate lift on the more classic short-cycle things. So I think right now, it's look like it's settling into a more typical launch where we've got sort of both elements starting to form, and we're encouraged by that. We'll certainly be watching it in terms of that more mixed model breadth as we go through Q3 and Q4. That's an important component. But as of today, we see both forming there.

Again, as we said in Mike's follow-up question, the HST profile has some elements of that. Remember, there are still some kind of classic distribution-based businesses, although they're a smaller percentage now of the segment, but really some dramatic shifts in demand profiles because of the work that we're doing in data centers, semicon and space. These are all areas where not just for us but for others. The customers are intentionally making sure that we're having future-based conversations that in many cases, they're backstopping that with orders and commitments. And it's kind of a different profile for us. We welcome that visibility. It's great to have. It helps set us up. And then as we saw here at the end helps us support the capital moves that we need to make, even though they're modest to be ready for it.

That's really helpful. And that kind of leads into the follow-up question. Again, some further insight into the orders. Seeing A blanket order at BAND-IT is pretty impressive because you don't normally get those. But how about on HST any blanket orders on some of the life science guys. That's been really choppy this quarter. So I'm not expecting too much there, but some color would be helpful. And I'll leave it there.

Yes. Nothing really in the area of blanket, but I wouldn't mind just peeling that business back a little bit because we did see some positive signs in our IDEX Health & Science area. So kind of the core piece of the business that does a lot of fluidics work, providing components for instrumentation. Recall that, that goes into areas that customers will refer to as analytical instruments or liquid chromatography, that's kind of the fort, if you will.

That for a long time had been basically kind of moving along at low single-digit growth rates. We did see that move up a bit in the second quarter. So that business and our optical filters business, which is also completely tight around life sciences, those are sort of mid-single-digit rates right now. And we did see actually part of the backlog build in HST, although it was a smaller piece on a relative basis was in the area of life sciences, and it's around those 2 spaces. That was good to see.

And we've seen some of that as we talk to our customers externally some of that favorability. For us, if we were to look at it on a reportable basis, we do have a larger dollar optical systems program that's in there. We've long had that. It is moving, it's starting to move from 1 platform to another that offsets some of it for us, will, for a little bit. But either way, in the long term, starting to see a little bit more momentum, we do think is a positive sign, and it was really good to see some backlog build there at the end of the second quarter, albeit not coming in the form of large chunky blanket orders.

Great. And just I want to say this is my last IDEX call. I think you all saw the announcement of my retirement. I just appreciate all the support and insight, Eric, you and the team have provided me over the years, and I wish you all continued success.

Well, Deane, you stole my thunder. I was going to recognize that before you signed off, but I appreciate you doing it and really, really enjoy your support and interest in IDEX over the years, and may have a great retirement. .

Your next question comes from the line of Bryan Blair with Oppenheimer.

Thank you. Good morning. It's a very solid quarter. Something we could circle back to SMT and maybe offer some finer points on how orders progressed through the second quarter and then into and what your team is contemplating in terms of back half growth rates. You called out the strength in longer lead time activity. I think that's been building on a multi-quarter basis, orders over the last 4 quarters have averaged kind of high single-digit range versus pretty muted core sales growth. .

Ultimately, I think there has to be a convergence there. Just curious if you expect that to start to read through in the back half?

Yes. Well, as I said, encouraged to see a bit of movement in that category. Again, we're talking about the more fragmented, broadly exposed order pattern that frankly converts a lot faster. We did see some movement and inflection there at the end of the second quarter and maybe most importantly, saw that continue into July.

So that's the piece we will be looking at. I still think there's still a fair amount of uncertainty out there that's going to inflect and play out in industrial markets. I mean, as we talk to distributors and small business owners and people out there. They're still looking for geopolitical things to simmer down. They're still wondering about rate directions. Inflation is higher probably than they'd like. But we also have kind of a duration phenomenon where everybody admits this has been a long time that we've been waiting for some things to move.

And so I think all of that is coming together in some positive ways, and we'll continue to monitor this. But either way, I think it's great to see the strength on both sides, sort of longer lead time, further out chunkier commitments where we've got line of sight to the customer in the end markets as well as the more classic mixed business, which always supports great economics for IDEX. We'll be watching both through the quarter but as I said in the opening here, we maybe atypical to other inflections, we did see the more direct business first and are now starting to see more of that broad lift here in the last few weeks.

Okay. Understood. Appreciate the detail there. And it would be great to drill down a bit on intelligent water. I think you mentioned that the platform grew double digits in Q2. So actually enhanced growth relative to trailing rates, which were already quite healthy. Things your team is definitely winning in the space, difficult to track or isolate growth within that subvertical of the market, but you're certainly winning maybe remind us what really differentiates your team there? And is it fair to assume that double-digit growth continues to be achieved? Or should we think more normalization to mid- to high singles going forward?

Well, look, I think -- remember, our water platform kind of has 2 distinct pieces to it. There's the classic municipal water where we're very, very focused around analytics and inspection on the storm water, wastewater side. So we really don't do anything on the clean water and the drinking water, we stay over on the messy part of things. And as you can imagine and probably see on television, I mean, there's a lot of reasons that people are very focused on that area with catastrophic floods and all the kind of thing, aging infrastructure, et cetera.

The work we do is really classically tied to the IDEX model. We're essentially for relatively low dollar, you get a lot of impact. So we'll come -- we provide inspection tools and cameras and analytical software that essentially tells customers, in most cases, municipal, cities and things like that, that here's where your problems are. This is what you need to go fix. Then that becomes a question of big capital outlays. We don't really have to participate in that side of it. We just help diagnose that you should probably go look and put some capital to work in that area.

And so we always kind of think of like we're the tip of the spear here. And our teams have just done a really nice job. We acquired Envirosight into this platform to give us breadth. We're selling a lot of cutting equipment and cameras and things that go down into the sewer. So that's been strong for quite a while. What's kind of kicked it into another gear is the other part of the water platform where we've got this great franchise that pumps high-purity water for semiconductor applications.

So it's kind of caught up in that cycle. This business, in particular, not only just does work like everyone else, it's very, very differentiated solutions. I referenced it in the comments around environmentally friendly because we actually have a high-purity water solution there that essentially heats water for use. And unlike competitive offerings, ours actually doesn't have to full on idle. So it saves tons of water. And as you can imagine, that is 1 of the pressing needs of that industry.

So we think of this together, the current rate and the current rate profile is really being driven by both pieces, whereas in, let's say, last year and the year before, we only really had the municipal water side of it firing in the positive direction. Both right now, I mean, for us I think see good roads ahead. We don't really see anything on either side that would suggest that they're going to inflect downwards and nothing is really on the radar. So positive, really good platform.

That's very helpful detail and encouraging.

Your next question comes from the line of Joe Giordano with; TD Cowen.

I think it's really to talk next year, but just given the magnitude of the orders in HST, and you mentioned some of these larger orders looking for next year, like talk us off of putting a high single-digit, low double-digit placeholder for revenues there as you start to deliver the orders that you're seeing now?

All right. Well, look, what I'm trying to emphasize probably in the firm part is more typically for IDEX over the all years I've been here. I mean we're a rapid replenishment business everywhere, and we often don't get visibility much past kind of current quarter and beyond. That's always been kind of our story. So while it's true, we've got some chunks of the fast-growing pieces that are there, I will say this is a relative story. That's still maintained. That's a small part of what next year's profile would need to be. It's an important part of it. We love having the visibility. It really helps us understand kind of where floor levels will be and where we need to deploy capital.

But to be candid, I mean, it's a relatively narrow corridor that we're describing here and much of IDEX remains, as it always has and quick lead times, rapid replenishment, agility and kind of chasing business up and down the street. So I want to be clear that while this is an inflection, it's a positive one. It's one we've long hoped for. the vast majority of IDEX still kind of operates on the same cadence and rhythm it classically had. That being said, those -- as we've seen here, most of the arrows are pointing in a positive direction there. So we overall feel confidence we've got some specific points that even give us tangible confidence around that, but we still have half a year to go, and we look forward to seeing where we are as we go through it.

As you evaluate the shift towards the platform growth platform strategy, what gives you confidence that, that is impacting this, right? Like how do you separate the strategic changes you've made internally in your go-to-market versus just like, hey, anyone who's in space right now is doing well. Anyone who is in data center is doing well and it does not use with our strategy. So how do you kind of evaluate what the drivers are?

Well, because I go down and actually look at the innovation and the solutions we're providing and how unique they are, not only to the market, but for us, and so what -- I think it's a great question. What we're not doing here is taking things that we've made for, let's say, the last 10 or 15 years and then simply riding along on a wave. What we're actually doing is because we purchased these assets most of them are coming out of the acquired businesses, and we're linking them with usually 1 or 2 other areas.

We're actually developing technology and space and defense is probably the best example of this and coming up with solutions frankly, that never existed at volumes that have never existed. And in many cases, with no real natural direct competitor, at least in terms of the technical solution. And so because we always kind of play close to ground level here and know the business pretty well, and there's not a lot of layers in between [indiscernible] and then the customer. You can see it. You can see where we're winning, how we're solving problem -- and that's probably what gives me the most confidence. And frankly, the most inspiration as to what we're doing and where we're taking it. It's very different from some others in that respect.

Your next question comes from the line of Rob Wertheimer with Melius Research.

And thanks, Eric. I was actually going to ask a similar question to the last one. I'm not sure that you want to quantify it exactly, but I was curious how much impact do you think that kind of innovation, new market focus, et cetera. has delivered in your orders if you formally measure it that way or have a guess. And then just to ask my other question. Within mining, anything that caused that to tick up? You gave a nice breakdown in FMT on water and some of the inflection there. Just curious if just things are coming on stock, if there's nothing you've got.

Yes. I'll probably take it in reverse order. On the mining side, I mean a lot of what we're referencing there is coming out of a business that we acquired kind of at the beginning of the work we've done over the last 5 years or so with Apple pumps. And it's -- that's just a great example of what a great business can do when you introduce it to 8020. We tell them what we're serious and let a great team go to work. So they basically have just built this thing around chasing the mining of critical minerals, and they've done it on a global basis. And so as you can expect, that's kind of what's powering most of the secular trends that are here. They've got some great technology with some connectivity and things that they do a little different from others. It just lends itself perfectly for that work, and they've chased it around the globe with pins in a map.

And Again, I think where we've made it better at IDEX is we've allowed them to just singularly focus, kind of bet the whole franchise on that story and that work and they've grown it every year since we've had it, including this one. So you can kind of easily identifiable trend. I hope I'm illustrating here for you where just the power of 8020 supports that growth. and it's largely coming there. We have a few derivative applications in a few of the other FMT businesses where we know that, that's also going into the area. But kind of the lead story here is that singular business that was acquired just here at the beginning of the decade.

On the other side, in terms of quantifying the remarks to Joe's question, I mean, we have said at a high level, I mean these 3 areas that we're talking about is now 1/3 of the revenue of ST if we kind of went through a dilution by solution, clearly, there are some pieces of it that were incumbent and have been developed that are being pulled along here. But I would say that certainly more than the majority of it. These are things that have come online as businesses come together, done the work and said, "We think we can solve that and maybe do it in a slight different way."

Development has always been 1 of rapid iteration and derivation. And so if we were to line them up on a table, they might look somewhat similar era to era. But if you really get into the guts of them and see that material composition is changing and that is a significant thing, that continued innovation is all over that platform. And frankly, at a faster clip than I think we've seen anywhere else in IDEX. So that really is what's powering things here. kind of a classic IDEX component, but it's in a world that's just moving a lot faster. And I'm really happy to say we've moved along with it.

Your next question comes from the line of Nathan Jones with Stifel.

Good morning, everyone. I'll start with a question on the increased CapEx. Maybe you can just talk a little bit about businesses that need that additional CapEx, what it's going into, what capabilities it's adding to the business or capacity it's expanding? I'll start with that one.

Yes. I would say the vast majority of it is within the HST segment, and it's around those 3 areas that we described. What's important to understand is this is longer-term deployment, so because we're talking with customers and they're telling us what they're thinking about 2, 3, 5 years from now, they know that some of the capital that we use here has pretty long lead times, or if we might need to make an expansion into a facility that takes a while as well. So everything that's in that inflection is really about making things and making them at higher levels in '27, '28 and beyond.

None of it really is being positioned now to break a bottleneck or a logjam that we have today. That's where you want it to be ideally. And also, I'd point out, while it's real money, still a pretty modest level. And as we track and pay attention to capital intensity overall, we see the growth on the revenue side, slight growth in capital, but we're staying nicely where we wanted to. This is still pretty asset-light in terms of the work that we do here. And we're trying to keep it that way as we go.

Not a big number. I guess the second 1 on capital allocation overall. I think it was maybe 1.5 years ago, you guys kind of committed to pulling back on the M&A front, at least in terms of large deals and to doing a decent amount of repeated share repurchase, which Sean talked about doing again in the second half of 2026, that was kind of the end of the road for that commitment. Can you -- and you were looking at what might be the next platform that you'd be looking to invest in. Can you talk about maybe where you are in that process now? Should we expect to see some more chunky acquisitions in '27, '28? Will you continue to repurchase shares in 2027, 2028? Just what you're what your current thinking is around capital allocation?

Yes. No, it's a great question. I think back to where we were at the point that you're mentioning here, the start point, I mean, we had just built what we consider to be a really, really good framework for growth, and we were just starting to integrate a business or 2 here and there. And now we're just starting to see a lot of the really impressive results that are coming out of that innovation.

Alongside it, if I was going to describe what's happening again at a street level, we're in some rooms in some areas that we haven't typically been and we're meeting some people with some interesting technology that are maybe new to us because we're in those arenas. And so remember, our acquisitive model has generally been 1 that's pretty proprietary. It depends a lot on individual conversations, cultivation over time, respected technologies, sharing intelligence about how they see the world. We're doing that. We're doing it around these areas that we're describing here. So the growth platforms that are out in front right now.

So the reason -- I think the best place for us to use our time now is to look for other attachment points that take what we're doing today and make it even stronger. And so we're engaged in those conversations. Because of the nature of how it's done, the proprietary level kind of this business person talking to business owner, timing is kind of hard to predict, but the intensity of that is at a very high level. And I think for right now, it's the absolute right strategy to capitalize on what we're seeing here in terms of momentum.

Yes. And I would just add that the repurchase gives us flexibility around that. So as you mentioned, kind of communicated consistent through the back part of this year. And then thereafter, it will be informed by the M&A pipeline, right? So if it stays in kind of that bolt-on area, we're trying to get some deals done. I think the same level of repo activity would be the base case, and we'll flex it up and down based on what becomes available to us.

Your next question comes from the line of Vlad Bystricky with Citigroup.

Okay. Good morning. Eric, maybe just sticking with the growth team that there's been a lot of focus on. Obviously, the focus on advantaged markets and growth efforts is gaining increasing traction in the same. So can you just talk about where you think the company is in terms of the maturity of the growth efforts and how you see 8020 continuing to evolve to support accelerated growth going forward?

Yes. Look, I think we're still pretty early here. I mean we're -- any of the -- remember, any of the kind of solutions where you see us winning, those generally have been in the works for a while. We engineer them because of the criticality of the solution and the risk-averse nature of these markets, they then are tested and people make sure that we're ready to go and then they're deployed. And so the things that are the kind of points you're seeing put on the board here. I mean, this has been a story that's been building over the last 2 to 5 years depending on when these businesses came in. .

And so as we do this, each opportunity that we introduced and win in many ways, immediately opens another door, where we're able to say, okay, now that that's happened, what else is out there? What would be the other thing that we could take? Where else is this business going? Where else is the sector going? And then I think again, remember, we do a lot of it at kind of the component level here. And I said in my opening remarks that a big piece of our strategy has been able to move right and left with the same technology into different advantaged markets. That's probably what I'm most excited about because you can see evidence of it in our growth patterns that we're presenting here today.

A good example of this is breadth of solutions in semicon. This is not a big part of IDEX. We kind of like keeping it at about the level it is here today, but it's performing really, really well. I made the remarks here that we're now at 50% of it is recurring revenue. And that's bringing Mott in with their filtration solutions next to some of the things that we already had in ceilings. Then we're in metrology, we're in the lithography equipment. Each 1 of those little nodes, if you will, has tentacles and branches that our teams are exploring in terms of what else could we do, where else could we add value.

And very often with the exact same technology and the same people, you see the same thing happening in the space and defense area and certainly in some of the data center applications, we sort of walk that pneumatics and fluidic path and are able to see other problems that we can solve. So I think, I guess, swing back to Nathan's question on the M&A side, what's exciting is to see all this form and then see where there may be gaps, technology gaps or capability gaps that we want to fill in through acquisitions, it all becomes part of this.

We're talking a lot about HST because, of course, it's leading the way now, but we're doing the same work within FMT and the water platforms. There are some other areas that we're interested in as well. But I think very good things to come. You referenced 8020. What 8020 allows us to do is just dedicate resources and swing them towards areas of best growth.

We're really comfortable of being able to segment and say, this is an area of focus, go spend your time on it, spend 100% of your time on it. Here's an area where we shouldn't focus and there's power in the alignment of everyone understanding that too. That's frankly, intuitive now for us. We just got it marshaled over in a way that's supporting growth in addition to the margin expansion, it's always driven for IDEX.

Eric. That's really helpful color. And then maybe if I could just dig into 1 of the segments. Just within FSDP. if I remember correctly, Fire, at least North American fire has been a nice contributor to growth for quite a while now, but you highlighted it as contributing to the accelerating orders in 2Q as well. So can you just talk about sort of what you're seeing in that North American fire market and whether it's more a continuation of positive strength or whether you're seeing some incremental acceleration and then how we should think about potentially that durability of that cycle? .

You gave me a multiple choice test, so I'll pick the first answer. I think it's really a continuation of a theme. We're well represented with multiple technologies on mobile Fire platforms. We've been talking a while about a multiyear backlog in that industry, that continues and then we've sort of enjoyed is that throughput comes through the system, and our share position, it kind of works mathematically, if you will, and that continues.

We've had this additional kicker with the automation gear that we talked about for a number of years here that -- where we're very differentiated and kind of out on our own. And honestly, running the backlog through actually helps drive growth in that area as well because we've had for a while now, some adoption captive in that backlog. So think of the 2 forces working together, throughput of a very long duration backlog with great share presence and then additive automation gear that we have that was embedded in that backlog. So it's a continuation of a theme.

Your next question comes from the line of Andrew Buscaglia with BNP Paribas. Andrew, your line is open. Please go ahead.

Good morning, everyone. Andrew. I wanted to focus on your FMT margins a little bit more. I think it's definitely been a positive surprise your ability to sustain such high margins with almost no organic growth really over the last, call it, 2 to 3 years. So if we indeed see some relief on the volume front, where do you -- where should we, where is the ceiling for SMT margins? Or is it not something we should get carried away with? Are there dynamics that would prevent a really strong expansion from these high levels?

Yes. Good question. I would tie it to as you are to when you see volume growth because when you start to see kind of normalized volume growth where, as you mentioned over the past couple of years, volumes have been slightly down, kind of price and productivity and other things have been what's driving the margin performance and the sustained margin -- but once you start to see that volume pick up, you would see the flow-through in these types of businesses based on their profitability, being in that high 30s, 40-ish percent range. So if we start to see that volume pick up uniformly across the FMT businesses, you'll see the flow-through at that kind of close to 40% type range.

Okay. 4 Yes, interesting. Yes, you guys managed through a tough storm, so margins can only go higher. Another question, I don't think anyone's asked on geographically what you guys are seeing. I know that for some companies, some mixed trends around Asia and China. Can you just comment on what you're seeing, I think broadly on a geographic basis?

Yes. I think for a while, no, I think we've seen greater strength in North America. That's where a lot of the faster-growing markets that we're talking about here are kind of that's their headquarters, if you will. I think Europe has been steady, never too high, never too low, generally, and it depends on market to market.

Asia for us, certainly probably more aggressively growing in India. That's been the case for a while than what we would say in China. China, in both of those regions, we hit pretty surgically. We've got campuses that kind of host IDEX product lines. And we try very hard to pick the ones that are going to be most successful in each 1 of those geographies.

So we've been able to hold our own on the China front with a generally softer economy. But in India, I think we've taken great advantage of that. And increasingly, you're starting to look at that area is a jump-off point for the globalization of some of the growth that we see here in HST is a lot of the customers in these end markets are doing the exact same thing. They're asking us, how can you help globalize this? We want to take it to other markets. We want to continue to grow and grow on a worldwide basis. Our support in India is going to be an important part of that, and we're starting to really talk about flexing it.

Your next question comes from the line of Dan DiCicco with BMO Capital Markets.

Great. So we touched on this some already, and I think you highlighted Space and Defense, but just I guess what are some of the other primary areas where you see the most opportunity to leverage existing technologies across the portfolio or maybe bring some new solutions to some of these higher growth areas?

Yes. Well, a lot of these areas that we highlighted on that opening slide, I mean, they're pretty broad in terms of all the things you can do there. Space and Defense is a good example. I mean we're -- right now, our technologies are deployed and very focused around kind of lower orbit communications on the 1 side, many of our Optics businesses are playing there. And then Mark brings some propulsion actually rocket payload lift technologies through filtration into the game. And then there is a vast array of things in between. It could be interesting for us.

So any heading we have today, even with some great success that we have -- we think there's a big map underneath each 1 of those where we want to continue to move forward. So I'd say from an HST perspective, the areas that are probably most focused for us are the 3 that I've mentioned here, continued expansion into some of the data center solutions, broad work that we can do within semiconductor support. Almost all of it involved in producing wafers and inspecting them to some degree or the facility that does that work.

Space and Defense. The reason defense kind of comes into the picture for us is it leverages a lot of the same technologies imaging and high-quality solutions like that. You're seeing those start to emerge in that space. as well. And then I'm very encouraged and still very supportive of life sciences and technologies there in the long run.

So those would probably be the predominant areas of focus. And again, just remember how much breadth is in each one of those headings and appropriate for IDEX technologies. I always want to remember our water platform and FMT in many ways, has some of the same characteristics. It's high-tech equipment, analytical software, diagnostic imaging and things that happen there as well. So I probably put those at the top of the list and just, again, emphasize that we've got a lot of room to run within those headings.

Your next question comes from the line of Brett Linzey with Mizuho.

Yes, question on HST recovery and margins. So we see this mix shift towards these advantaged markets within HST into '27 late '26 here. Should we begin to see the incremental margins drive higher above where they would and normally an inflection given they're in these higher gross margin businesses that you've acquired and then you've also taken out some costs? Just trying to think about how we think about incremental margins in HST on the way up. .

Yes. Good question. I think you would start to see them higher than the traditional flow through. Kind of HST more recently has been in kind of that low to mid-30%. We had a really nice quarter given the volume and the mix of where it came from on flow through. When you strip out the IEEPA noise, you're in kind of the high 30s for the quarter. And then I think as you look through the balance of this year and into next, that's probably the right place to be with volumes at these levels. So sustaining volumes at these levels. we'll see flow through higher than we have in the recent past within HST. And again, to your point, it's because the mix of the businesses that are driving it, a lot of that is accretive at the gross margin level.

Helpful. And then the rebates that are tied to the refunds, how do we think about the allocation of that? Were those by categories or channels or customers, I'd be curious there. And then just in terms of the impact for the balance of the year, what are you expecting for 3Q, 4Q? Or is this just a onetime true-up? .

Good question. So the nature -- it really depends on the nature of the customer relationship and how the pricing was put in when you go back when the tariffs kind of first came about. And then so selectively seeing some of that rebate activity based on that. And then on point 2, this really should be combined to Q2, meaning we received essentially all the refunds that were eligible for.

And then the rebate -- the associated rebate activity is included in the financial results in this quarter. So as you look into the next couple of quarters, there might be a little on the margin that deviates but I think pretty much all the activity is in this quarter, and it's a credit to the team of moving quick and making sure that we were kind of lined up to receive the refunds and then when we did what the knock-on customer impact would be, but should be combined to Q2.

This concludes our question-and-answer session. I will now turn the call back to Eric Ashleman for closing remarks.

All right. Well, thanks everybody for joining us today. As we step back, I mean, we're pleased with our progress and momentum at the midpoint of the year here. If you recall, as we described our goals for the thoughtful evolution of IDEX over time, we wanted to deploy capital intentionally to acquire some great technologies and capabilities that would really lead the way for growth for IDEX. And I think we seen that build over the last 1.5 years and as we noted earlier in the call, nice inflection point into '26, continuing here in the second quarter. We feel really good about the future path there. .

We also sought to drive margins and make sure in these acquired businesses, they performed like more typical IDEX businesses. We just in the last question, covered some of that and are really pleased to see that lift, specifically in HST here as they're executing well on that volume and remind everybody that we still have some consequential 8020 that we're positioning in those acquired businesses that should give us a nice support into the years to come. And then finally, on the other side of IDEX , our sort of legacy fluidics business is very encouraged to see that early sign of sector-driven inflection now followed by what appears to be some of those more typical bellwether signs of broader industrial support. Again, those are incredible businesses, super profitable, as we just covered in the last question, and they really flex and provide nice growth margins and cash as they move. And so you put it all together, very, very encouraged looking forward to the second half of the year and taking you through our story as we go. Have a great day.

This concludes today's call. Thank you for attending. You may now disconnect.

Good morning, everyone. Welcome to day 4 of the 21st Annual Oppenheimer Industrial Growth Conference. Next up, we have, outperform rated and top pick IDEX, represented by CFO, Sean Gillen; and VP of IR, Jim Giannakouros. Thanks for joining us today, guys.

Thanks for having us. Appreciate you hosting.

Of course. Sean, I guess to kick things off, you're obviously a newer member of the IDEX team. Perhaps start with what attracted you most to the opportunity and also why you thought or knew you were the right guy for the role?

Yes. I appreciate the question. I'd say a couple of things. I think what first attracted me to the opportunity is you look at IDEX and it's an incredibly strong business. And what I mean by that is you got leading market positions, you got an EBITDA margin that I think is a proof point of that, that you have leading market positions, you have IP, and it's a very well-ran business. And then the other piece of that is the cash flow profile of the business, not only because of the margins, but because of the low capital intensity affords you a lot of flexibility. You have a lot of capital to allocate. So that was kind of the -- this is a good business to join.

And then part 2 was, frankly, just where the company was it is on the life cycle of Phase 3, kind of everything that's done over the past few years via acquisition and what the setup was for the future. And the more -- after I kind of did my outside in and started to do some more homework, I just thought this was a really exciting time to join IDEX as well. It's navigated the past few years, a few bumps along the way, but the setup was really strong with kind of this HST advantage market exposure with then an FMT industrial exposure, which has been depressed for a few years, but for a lot of reasons, is inflecting.

So that was kind of my -- hey, this seems like an exciting opportunity. I'm interested to join. And then I think the kind of what I can bring is a bit on the capital allocation piece. That's kind of my background. I mean I started my career as a banker, so that's the hatch you wear as an adviser for a number of years. And then as the CFO of a company for 7 years before joining IDEX. And I think one of the things that we did successfully was allocate capital to drive growth, organic growth and then a bit of allocation of capital to drive returns via M&A. So I think my skill set was well suited for what IDEX was looking for as well and thought that I could bring some value that way.

Okay. Makes perfect sense. And IDEX is obviously a portfolio of rather diverse, high-quality assets, a lot of moving parts that are in. By my count, 50 or so businesses, maybe a little bit more. When you introduce the company to someone, how do you encapsulate all of that? How do you describe an IDEX type business?

Yes. So I'd say maybe 2 pieces. I mean the -- one is we move liquid gases or light is what we do, right? So the movement of those 3 things, whether it's a pump, whether it's optics, whether it's a valve, those are the things that we do. And that's kind of almost across everything in the portfolio. So maybe that's at its simplest. And then it gets more complicated from there. But I think the unifying thing of what makes an IDEX business is, one, it's mission-critical and it's technically tough to do, right, to produce. So there's intellectual property to what we do. And the criticality and the mission-critical is a piece of it. And then it's relatively low on the food chain in terms of the bill of material, right? So these are mission-critical applications that are relatively low price points for the overall solution that the customer is using.

And therefore, what it allows us to do is have a really nice market position in terms of pricing, getting price for the value add. And then it allows us to be very efficient and highly productive on the product that we sell. So that's kind of at the heart of it, what an IDEX business looks like. When we think about M&A, that's what we're looking for when you think about the acquisitions that have been done over the past few years, even though they may serve very different markets than kind of traditional IDEX, they end up looking pretty similar across those metrics.

Understood. That's a good walk-through. And you alluded to Phase 3 before. Over recent years, there has been at least a selective shift away from what was a decentralized operating model of IDEX to integrated growth platforms. Walk us through the impetus for that transition and what it means now, what it means for the future of IDEX?

Yes. Good question. So kind of the traditional IDEX, highly decentralized and the -- whether it's a GM, a President, a site leader, whatever the term was, that person really had, I mean, autonomy overrunning their business, everything that it included, right? Growth, operations, capital allocation within their business. They were the leader of that. And that's still the case, but the overlay is because we have more businesses now that are connected in terms of the markets that they serve. We need this layer of coordination across them. So I think it's kind of bringing the best of a couple of things, that traditional IDEX, where decision-making is at the point of impact, right? So operational, engineering, most of the customer still at the site level.

But because we now have businesses that sell into different parts of semiconductor, space and defense, of course, data centers, having a level of coordination amongst those teams to the customer was something that we needed. And we're seeing some nice traction. You can see it in the growth of that shift in kind of policy and management. So it's not -- and I think of it kind of as a tweak, right? This isn't a wholesale change. You're keeping a lot of the good that drives value around here, but bringing a new layer of coordination to better serve our customers, right? And at the core is what it's about. The customers are asking for it, we need to adapt and move with them. And the nature of the business that enables us to do it in a way that it probably wouldn't have 5-plus years ago.

Okay. Understood. The proof points seem to be accumulating. In terms of the platform strategy, Material Science Solutions or MSS, along with Mott related assets, it received a lot of attention over the last few years, initially not the most positive of attention that seems to be turning now -- maybe speak to the underlying technologies of MSS and Mott and how synergistic they are, what we can expect going forward?

Yes. So I mean, I think from an underlying technology standpoint, in Mott, you have a lot of like -- I mean, there are filters, but they're highly engineered filters, right? It's not a paper filter. It's a kind of centered metal application that can go into different end markets. And then in Material Science Solutions, I mean, you have ceramics in there, you have optical sealing and things like that, that serve different end markets. And I think part of what we've seen in these is the ability to serve a couple of different end markets, right? If it's applicable to semiconductor, it can also be applicable to space and defense. So the ability to kind of tune or move right and left on the product that we have and how it serves its end markets is another thing that's made us -- allowed us to be nimble.

And as you point out, I think now you're seeing -- Kenny said, right, not great attention maybe at the outset on MSS, Muon being a big acquisition in that space. You ran a bit of a semiconductor cycle, the wrong way, shortly after acquisition. Now that's moving for a variety of reasons in the right direction. And then same thing for Mott. The initial kind of growth profile didn't come out of the gate as strong as we expected. But now as we stand here 1.5 years into the acquisition and the end markets are all firing, and we're seeing really good traction of our product. And kind of one of the things that makes these businesses attractive and now will be very attractive going forward is, it's hard to break in.

So I think what we learned is the ability to break into some of these newer markets with the technologies that we have. The sales cycles a touch longer than we anticipated. But now you're spec-ed in and you have a seat at the table and you're working with a variety of customers on these applications, and that's going to make it really sticky going forward. So some of the things that made it tough early on, I think, are going to play to our advantage from here on out.

Okay. That's a great point. Let's circle back to IDEX's diversification. And if you don't mind, I guess, walk through the trends by key end market or segments, however, you prefer to frame, run rate trends and outlook. Where are you seeing the areas of greatest strength? Obviously, HST are there versus relative weakness where there's still some launch items?

Okay. So yes, good question. So in HST, the good thing is the strength is across more than just kind of one trend or end market. Notable strength in data center, right? So in our performance pneumatics business is where we sell into the data center in 2 ways. The biggest way is in the power applications, so the fuel cells that go behind the meter to help deliver power to data centers. We have product there growing significantly. We also have in our valves business, still within that performance pneumatics business, we sell into the kind of liquid cooling applications that are used in the data center. So we got 2 exposures to data center, both performing exceptionally well, as you would expect.

And then we touched on Mott and MSS, a lot of semiconductor exposure, a lot of space and defense exposure performing quite strong. And then pharma in MPT, strong. So kind of you have multiple end markets that are performing well in HST. The one that for now is more kind of flat is Life Sciences. And so that -- obviously, you got kind of the COVID hangover. That was the story for a couple of years. Now it's kind of in that flattish, low single-digit growth. In Q1, it was down slightly year-over-year, mostly a tough comp from the year ago period as well as a little bit of kind of government funding hangover going into the year for some of our customers. So I would expect that to get back to kind of flat to slight growth in the balance of the year.

So HST is kind of like everything is firing with Life Sciences being about flat. And of course, I think the dynamics in the Life Sciences world over time, we'll see growth there. But the near term is that flat piece. And then in FMT, you got a few different pockets, right? On the really strong in the water platform, selling to municipalities as well as a little semiconductor exposure, really good strength out of that. In the mining applications for our pumps saw good growth. On the flip side, seeing that ag headwind. We have ag exposure there. There's been some headwind. And then on the chemical side, particularly in Europe, continued headwind, that's where we sell valves into chemical manufacturing. So you got positive on water and mining, a bit negative on ag and chemicals. And then kind of that general industrial piece, which is the biggest slice, has been flat to some like kind of low single-digit growth.

And so that's the dynamic in FMT. And then in FSD, Fire and Safety performing nicely, dispensing, known headwinds because it's cyclical, and we're kind of on the down cycle of the project refresh and store refresh, particularly here in North America. and then BAND-IT performing well. So kind of a lot of different moving pieces, HST uniformly strong. FMT kind of got some net impacts that get you kind of flat to some low growth and then same thing in FST. And I think the areas where that will improve is, one, as you move through the year, you'll start to get out of some of the year-over-year comps on chemical headwinds, ag headwinds and dispensing.

And then I think we'll continue to see some nice improvement in just general industrial end market, right? I know that the third-party metrics have been watched closely, PMI and what's happening there. I think we did see that in our Q1. What's going on in the Middle East might be putting a little bit of a question mark around it. But I think overall, the setup is pretty good.

Okay. Appreciate all the color there. You just walked through FMC dynamics in general. There's been a bit of a disconnect with the organic sales rate versus orders for the last 3, 4 quarters, more high single-digit kind of range with orders lower, maybe 1% kind of average revenue growth. Can you explain that delta? And is it fair to assume that given the improving short-cycle metrics and the momentum that you have on the order side, that you're leaning at least a bit conservative with the flattish kind of FMT organic sales outlook for the year?

Yes. I mean I think generally, that's probably a fair statement. You probably did see a little bit more, I would say, nontraditional order strength, meaning 2 things. One, in the short-cycle business, right, you're generally consuming the orders as you get them in pretty quick succession. Some of the water orders have been a little bit longer in duration. So that kind of inflates the kind of order versus sales, the book-to-bill.

And then in Q1, we saw some orders come into Q1, the very end of March that we probably would have expected into April. That's kind of another little piece, a little bit of timing on the most recent quarter. But overall, as you mentioned, I think the setup is good. The backlog is in a nice position. We generally go into any quarter in FMT, about 50% booked and then the rest you got to book in the quarter. And I think that dynamic has been holding, but visibility has improved a bit in that segment, as you mentioned.

Got it. And in terms of visibility, I would think that for HST, given some of the project orientation of that business that the outlook for 2027 is increasingly robust. Is there anything you push back on there? I realize that you don't have 2027 guidance, so I'm not looking at...

Yes, exactly. But I think you're right. And we mentioned it on the last call. A lot of the trends that are driving the strength in HST today look to persist over a multiyear period, right? I think data center is extremely well understood, right? And then the AI theme, which then hits the semiconductor part of our business, the Space and Defense dynamics in terms of what the customers there are looking to do over a multiyear period portends to growth. And then in Life Sciences, over time, testing and instrumentation and drug development is not going anywhere.

So I think as you look over not only '27, but into the future, and obviously, one, it portends to some pretty good growth. And just what I'll say is that's the whole thesis behind a lot of the acquisitions that have been made, right, is to get greater exposure to markets that have more durable growth trends over time. And I think you're seeing that, as you mentioned, not only in a quarter or 2 in this year, but I think it should be durable over a multiyear period.

Excellent. To level set a little bit, how should we think about the size of your revenue exposures currently to AI ecosystem overall. You've called out some of these spaces and verticals. In aggregate, how much are we talking about?

Yes. So I mean, I'll give you -- so in HST, it's about 12% is semiconductor. So the HST segment, about 12% of that is semiconductor. That doesn't include the data center piece. So then the data center piece would be in performance pneumatics. That business last year was about $260 million in revenue, roughly evenly split between the gas business, which does not have a data center exposure and the Airtech business, which has the data center exposure. Airtech is not all data center, right? So within the Airtech half, you probably have on a trailing basis, about half of that business is data center exposure. So that can kind of give you a little dimensionalization of how much is semiconductor and then how much is data center.

Okay. And how about Space and Defense, -- that's also a good...

Yes. About 8% of the HST revenue is Space and Defense.

Got it. Okay. I have to quickly ask about tariffs. Remind us how your team has navigated the tariff environment to date. And given the revised framework, is there any material change, at least on a net basis as we look forward?

Good question. So I think kind of good news on 2 fronts. Good news on the maybe historical front is, I think, the pricing power of the company and the nature of our business model, I think, was nicely displayed with tariffs, meaning our ability to price in accordance with what we see from cost and be ahead of the cost showed up nicely, right? I mean it wasn't a massive needle mover in terms of the profitability, but we were on the plus side of price being greater than the tariffs. So the ability to navigate -- and it's just the nature of our business. We don't have super long-term contracts. We have the ability to price kind of dynamically. So for the whole company, from a year ago to today, net positive on price versus tariffs.

And with the IEEPA tariffs being struck down, for us, essentially the tariffs that the administration kind of put in place that at least for now are temporary, but expect they'll find a way to make them permanent, puts us in kind of the same net position. So we don't see a big change in terms of what we need to do on price or what we're seeing on the cost side. So that's kind of the historical and then the IEEPA being struck down in the new normal. So all that's kind of net positive or neutral. I think the historical has been net positive. The kind of forecast is net neutral. And then the question mark is just the refunds on the IEEPA tariffs. As we mentioned on our earnings call, we put ourselves in line for the refunds that we were owed or due like anyone, and we'll see kind of what the timing is and how that plays out. So TBD on the refund side, but kind of on just the business as usual, I think it's net neutral.

Okay. Understood. Something will change on that front anyway.

Exactly, right. Yes, we'll see. Well, I mean -- when I do use the example, I mean, the fact that we were able to nimbly price accordingly with tariffs, which were an exogenous shock to obviously, everyone, I think is the proof point. And it's also kind of the answer to what about -- what's going on in Iran? Is that impacting you? One, no directly because we don't have a lot of exposure there. But then to the extent we see derivative impact on inflation, again, I think the business that -- the businesses that we operate are well suited towards, if not totally getting ahead of them, being able to price accordingly to keep yourself net even.

Okay. Great color. Last topic for me, capital deployment. You mentioned your background, your fit for the role on that front. Over recent past, the team has been focused more so and I think appropriately so on share repurchases. But messaging seems to have shifted at least a little bit that tuck-in bolt-on M&A with the proverbial proof points being there for MSS and Mott, tuck-in bolt-on range M&A could be in play over the near term, correct in that? Two, what kinds of assets would be of greatest interest to the team? And 3, how should we think about the "sweet spot" in terms of deal size?

Good question. So one, yes, that's still the status quo that the near term will be pretty heavy on repo. In the back part of last year, the company stepped up repo to about $75 million a quarter. That's what we've articulated, people should expect for this year, and we did the same -- we did $76 million in Q1 and said you should expect the same balance of repo over the balance of this year with bolt-on M&A at play as well. And I think bolt-on, the way I define that is we did the Micro-LAM acquisition in August of last year. That was about $100 million in size. I think that's the right ZIP code for bolt-on, plus or minus a little bit.

And then the nature of what we would be looking at, I think, fits pretty nicely with the platforms we've created via M&A over the past 5 years, right? So -- if it fits kind of the Material Science Solutions world, if it fits Airtech, if it fits Mott, Space and Defense exposure, if it -- we don't want to get too much semiconductor exposure. Eric has been pretty open about that for a company, we don't want to go over 15% just given the cyclical nature of that. And then anything that could augment our water platform in FMT. Those would be kind of the areas that I think are the most logical for us to acquire. I'll probably say I don't see us chasing data center AI growth with some kind of big multiple on a big EBITDA. I don't see us kind of putting money to work there. It could go against you too quickly. We like the exposure we have. But if it comes with something broader, we'd look at it. But generally, in the advantaged markets and platforms we've created is where we would look to spend incremental M&A dollars.

Okay. All makes sense. I guess I kind of liked because you've mentioned water a couple of times, the Intelligent Water Solutions platform. We're quite intrigued by that. I got a closer look at it last year at Wabtec. For those less familiar, maybe discuss the technologies of that platform, the synergistic nature of the build-out of the platform because, again, we think it's quite intriguing in that space in the high single-digit kind of growth rates that you're...

Maybe, Jim, if I could ask you to give a little color on the nature of the water portfolio and the assets we have there, the products we provide.

Yes. I'll. Well, in a nutshell, I mean, what we do, right, is front-end intelligence, right? We have stuff that goes underground and does detection to inform capital decisions and operating budget decisions by municipalities, wastewater management systems, et cetera, right? So for us, that's a good play. There is a technology overlay that obviously is good from a margin perspective and from a secular growth perspective. But also from a funding perspective, we think that the municipal funding environment is strong. It's stable, but we're less susceptible to volatility there because, again, we core to what we offer the decision-makers is that information so that they can appropriate the dollars meaningfully and with less risk.

So we've covered quite a bit here, guys. Anything you'd like to leave the audience with today?

Yes. I mean I would just say we're very pleased, of course, with the strong start to the year for us. And I think it's showing some of the proof points of the strategy over the last few years, right? We're seeing growth in the advantaged markets and the platforms that we created. A lot of it came via M&A, mostly residing within the HST segment. I think the trends there are durable, as we mentioned, over a multiyear period.

And then I think the franchise that we have in FMT and FSDP and the margins of those businesses and the flow-through that they will see as we see volume in, call it, just the kind of general industrial part of the portfolio, I think the setup is really good, right, for just kind of continued growth in the advantaged markets and the nice performance in general industrial, both with a strong flow-through and therefore, getting the margins even higher than they already are and the cash flow profile that comes with that. I think the setup is pretty exciting for this year and into the future.

All very encouraging. Again, IDEX is our top pick. So we're on board.

All right. Well, really appreciate the questions and appreciate the time as well.

Thank you very much, Sean. Thanks, Jim.

Hello, and welcome to the Q1 '26 IDEX Corporation Earnings Call. [Operator Instructions]

Now I would like to turn the call over to Jim Giannakouros, Vice President of Investor Relations. Please go ahead, Jim.

Good morning, everyone, and welcome to IDEX's 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 2 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.

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 8020. 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% and adjusted EBITDA margin of 26%, which reflects a margin expansion of 50 basis points year-over-year. These results were above our expectations and reflects 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 & 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 & 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 Sean, I'd like to walk through a live example of IDEX's capabilities to drive long-term value as 8020 drives growth, margins and earnings.

Please turn to Slide 4. At the highest level, 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 multiyear growth runway.

Importantly, our participation spans multiple touch points across the portfolio from optics enabling secure data transmission to Mott's 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, 8020 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, 80s 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 IDEX.

This momentum also creates a flywheel effect, strengthen our advantaged platforms allows us to further simplify, rationalize and refine the portfolio, driving higher growth, stronger margins and enhance 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 the other application arenas to apply 8020 again, moving up 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.

Thanks, Eric. Good morning, everyone, and thank you for joining us today. Please turn to Slide 6. As Eric mentioned, in the first quarter of 2026, IDEX delivered better-than-expected financial performance. Organic 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 significantly higher than our guided range in the first quarter.

Overall, our orders grew approximately 10% organically in the quarter, again, led by HST's organic order growth of 17% year-over-year. FMT orders grew 9% organically in the first quarter and FSDP orders declined 4% organically. 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 limit our visibility to approximately midway into any given quarter.

Touching on some of the more meaningful business demand trends in the quarter, we saw a continuation of strong order activity in areas influenced by AI, which for us is most meaningfully in power generation for data centers, semiconductor manufacturing and optical switching. We also continued to see strength in municipal water, mining, pharma and space and defense. Organic 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, organic 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, organic orders increased 17% and revenue grew 11% organically. 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.

Turning to Slide 8. In FMT, organic orders increased 9% and organic sales increased 2%. Orders growth was supported by our intelligent water platform and our mining 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 organic orders declined 4% year-over-year and organic sales decreased 1%. Our Fire & 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 and 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 2x. As outlined last quarter, we continue to maintain a balanced approach to capital deployment. In the near term, we will focus on organic investments to drive growth, bolt-on M&A and capital return to shareholders. In the quarter, we paid $53 million in dividends and repurchased $76 million in shares. We plan on maintaining the 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 organic growth in the 3% to 4% range, an increase over our original 1% to 2% organic growth guidance coming into the year. Our overall IDEX organic 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 this year. 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% organic 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 monitor the changes closely and adapt our businesses accordingly. While the IEEPA tariffs have been repealed, the administration 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 of a net impact to our financial results. As it relates to the expected IEEPA refunds, we have taken the requisite actions to apply for these and we'll 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.

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 8020. 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 questions.

[Operator Instructions] And our first question comes from the line of Joe Giordano with TD Cowen.

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?

Yes. 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, high single-digit to double-digit growth at HST, and that's really driven by the order backlog, as you referenced, where we've seen that momentum.

And I think in FMT, in particular, is where we saw good performance in the quarter. The end of the quarter was stronger than the beginning, seeing some sequential improvement. But as the outlook for the year, still seeing or forecasting a growth outlook that's a bit flat. And that's probably a little bit of the macro world, 1 quarter into the year, some uncertainty in the macro world, and what we're seeing the visibility, keeping that around flat. So that's a little bit of color as first half of the year as we move into the second half.

And then what needs to happen at HST to get margins back to like that 30-ish percent range that you were at a couple of 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?

Yes. Good question. And 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 still, margins are strong, but they're not quite at the segment average yet. And what we'll take to get there is, as we talked in the last couple of quarters, some continued focus on 8020 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, 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.

Your next question comes from the line of Matt Summerville with D.A. Davidson.

A couple of questions. Just on one of the last points Sean 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.

So 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, 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 will 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, we're 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 and -- 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 is going to go.

Can you also maybe highlight just how you saw incoming orders cadence through the first 3 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.

Yes. I mean it's a little different depending on the segments. The HST side, with the momentum that we're seeing there has less of a nonlinearity profile, it's has 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 fragmented, broadly indexed to industrial markets, 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, they didn't move positive in a uniform way. So we don't have sort of every member seeing the exact same thing, the little mix, and even the project business that we saw in there, we don't get a lot of it, but that tells us something, too. Almost all of those, you can trace back, the successful ones back to 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 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.

And your next question comes from the line of Nathan Jones with Stifel.

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, that you -- where you're not seeing some improvement and maybe what you think is required to get those businesses going in the right direction again?

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 1 or 2 here, and they have really quick lead times. So as 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 -- those would be the 2 characteristics. Again, this wasn't a lot of businesses, but there is some mix, there is a mixed nature of how these ran out over the last 4 months.

Fair enough. I'm going to ask the HST margin question a little bit differently. You've seen good positive growth for the last 3 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 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?

Yes. So for the last quarter or 2, and in this quarter, the flow-through in HST was about 33%, so in that low to mid-30% as you referenced. As you think about kind of the guide for the year, we see that improving slightly, getting to kind of those mid-30%. And all that's really in line with where we 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 of 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 8020 actions, what I mean by that is as we start to prune some pieces of the portfolio within those businesses that are dragged 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, Micro-LAM and Mott being some of the ones that have some room for improvement in overall margin. So that's kind of point one. 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 2 is life sciences, which is a nicely profitable business for us. As that grows, it has strong a leverage and EBITDA flow through. I haven't seen that in the first quarter or 2, 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 8020 actions take hold and some improvement in some end markets, I think we'll get towards that 40%.

Your next question comes from the line of Deane Dray with RBC.

You called out some strength in the water business in FMT. Just kind of give us a sense of where that demand is. How much of that is kind of the flow business versus projects? And what are your assumptions for the balance of the year?

Yes. No, it remains a really strong part of the story. And the municipal-facing side of that, that's 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 storm water, storm water flows, 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 group in the last year or so, it's flipped over. It's now positive and growing as well. So we've got kind of both of those firing. That accounts for the high single-digit growth that we posted and we continue that to sustain.

Great. And just as a follow-up, I wanted to ask about M&A activity in your sector, but that was done away. And just what the implications are, and what the thoughts might be. So first, we've seen some deals in the storm water space [indiscernible] to 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&A? Is it organic? That's the 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 2 different sectors, interesting M&A away, what are the implications for IDEX?

Yes. Well, certainly, I mean, you're paying on 2 spots where we play, and we do very, very good work with in both cases, very critical technologies applied to get jobs done that are highly valued. So I think 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.

As things play out 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 think bottom line here is it's -- I take it as a testament to the quality of the work that we do.

Your next question comes from the line of Bryan Blair with Oppenheimer.

Nice start to the year. I was hoping you could offer a little more color on HST's 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 the HST's advantaged 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. I was just curious if you can offer any additional detail.

Yes. 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 for classic IDEX, and 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 these are moving fast. In many cases, these are novel solutions, 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 to make sure that we've properly capitalized, we've got labor lined up, we've got materials available. So we get more than we typically would, let's say, in certainly in FMT and other places, even much of the rest of HST. So that accounts for some of it.

That being said, it's anything that we are recognizing here, of course, is within a 12-month period, and it's -- 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, that same spirit runs into discussions about out years. So 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've typically experienced in IDEX, 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.

Sorry for that. Let me go next to Mike Halloran with Baird.

I'm going to tell you that I have the user error. I might have hung up on you right when Deane was asking his first question, and I came back on. So I apologize ahead of time if I asked anything that's redundant here.

So could you help me a little bit with the sequential dynamics you're assuming for the remainder of the year. Obviously, [indiscernible] are really good. As we sit here today, the short-cycle piece seems like it's going in the right direction, all LC tools, a couple of end market headwinds. 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 dynamic trajectories you work through the year and how you think about sequentials?

Yes, 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 4 months of the year, kind of weak in January, a little better in February, pretty strong March, and then it sort of held at that level in April. [indiscernible] actually, I think that's a testament to the resilience of these markets in the face of some pretty concerning or uncertain headlines geopolitically.

I did reference though, as you know, we have these diagnostic businesses that could give us some insight into 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, we've got a few that are not moving in the same direction. 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 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 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, we kind of have it probably appropriately conservatively modeled that's 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.

So is it fair to say then that the delta in the guidance here, obviously, the uptick is partially in the first quarter strength? But it's -- we're tied to the internal growth initiatives, the investments you've made internally and with some of the M&A than it is any real change in the cyclical dynamics?

That's absolutely true.

Okay. And then just quickly, just thoughts on buybacks versus the M&A side of things and how you're thinking about the pipeline and acquisitions as we sit here today?

Yes. The pipeline on M&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. We did $76 million in the quarter. I mentioned that we'd expect that cadence to continue for each of the quarters through this year. And at those levels, we still have more than enough capacity to execute on bolt-on M&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&A with a pipeline that's active and focused on that bolt-on world.

And then I would just add, 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 involves some integration of units. People see that. They recognize that and increasingly want to be a part of it.

Our next question comes from the line of Bryan Blair with Oppenheimer to continue his follow-up questions.

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 circle back to FMT trends and just the disconnect between order rates being kind of high single-digit range over the last 4 quarters relative to sales being 1%, give or take, on average. It 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?

Yes. Good question. I think that's where -- looking at a quarter or 2 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 4-quarter period, normalize for some of those movements that will help. But in the order activity that we saw in the quarter, which was strong at 9% organic, 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 demand coming in Q1 that we might have expected in Q2. 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. Eric has touched on it. I mentioned it earlier in the call. But there's a piece of that as well, given that we're just 1 quarter in, the world is kind of uncertain. While the trend seems to be reporting in the right direction, not extrapolating that for the balance of the year.

Our next question comes from the line of Andrew Buscaglia with BNP Paribas.

So sort of a trend we're picking up this earnings season. Just some companies talking about this higher energy prices, the near term may be 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?

Yes. We do have a segment involved in energy. A lot of it's downstream custody transfer. We're kind of a cash register for a lot of the industry. So 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 -- list 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, U.S. 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 -- obviously, this whole story runs out. There's a lot of volatility there. But the energy exposure at IDEX at least now has moved more to the green.

Yes. Okay. That's interesting. And then yes, and Eric, the last couple of 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?

Yes. Well, I think the 2 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 the 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 making -- taking a 2-axis story and makes it 3 axis. And so you have to be cognizant of how you define 80s and 20s, 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 on to the board here. I had a graph in the slide deck that showed sort of this -- the 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 code book, it works, 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.

Your next question comes from the line of Dan DiCicco with BMO Capital Markets.

Great. 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 whole industry, particularly on the space side, is developing really, really fast. There's almost always something new there. But we're actually leveraging kind of an early incumbency position. We long ago studied this market, kind of helped. Frankly, I'd argue we've helped it develop. And as we've done that, that's given us presence in the rooms with 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 as space, there's a reason we highlighted it here, I think it's tremendous in terms of growth, growth potential, 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. And then just maybe if you could just touch quickly on your overall exposure in just power generation and then more specifically around fuel cell power support?

Yes. Well, we mentioned in our data center applications in the pneumatic space, we've long talked about that's some of the work that we do there. It's behind the meter, power gen 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 yes, that is an area that we've capitalized on. We've helped support and are excited about for the future.

Your next question comes from the line of Vlad Bystricky with Citigroup.

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 can 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?

Yes. Good question. For the quarter, to the EBITDA line, price/cost was a net positive, not to the same magnitude that we saw in a couple of quarters in the last year given tariff pricing actions, but positive to the quarter. I 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 guidance that 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 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, I expect that to continue and can be revisited depending on what happens in the businesses.

Got it. That's helpful. Appreciate that, Sean. And then I think you talked a little bit about life sciences where you're seeing sort of some pressures in China and NIH. I guess could you just talk more about how you're thinking about the potential for a more positive inflection within life sciences in HST over the coming quarters or into '27?

Yes. Well, 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 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 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.

Your next question comes from the line of Rob Wertheimer with Melius Research.

I apologize. 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. Maybe you could characterize how far along that curve you are.

My second question, I'm not sure you want to answer. But 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 the general cyclical rebound?

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 2026, we see as being very good 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, 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 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 we're kind of pinging these different worlds from multiple points. And so think of those as 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. 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. We're involved in everything from consumables to metrology to lithography. You've got these nice little entry points, each one of which, again, just has the 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.

Water in the FMT space, some of those same characteristics. We're providing data and data sets to people that are now starting to think about how that could be comingled with their own AI applications. So really, really like how the investments that we have made linked to advantaged spaces and then have this nice runway potential.

Your next question comes from the line of Robert Jamieson with Vertical Research Partners.

Just a quick one on CapEx and just the step-up that we're seeing this year. I know no change in guidance, but is this more related to capacity or automation investment? And is that more specific like the HST segment? Just trying to think about where that bulk of the incremental investments being directed towards?

Good question. And as you mentioned, 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 1 or 2 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 like that to help 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 budgeted for some growth in CapEx for the year.

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 the business, very often, it's the same 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 it keeps CapEx increases at a nice level, too. So that's another lever that we have that comes out of 8020 work.

That's great. Super helpful. And then just taking a step back, just given the strategy and the pivot over the last couple of years on advantaged markets with secular tailwinds. I mean, what are maybe some of the top 2 or 3 secular themes outside of AI where you think that IDEX is most under indexed today and potentially when to invest more aggressively in?

Well, look, I mean, when you step back, what's nice about the changes that we've made is -- I actually start with the things that are constant. So we essentially always have kind of moved either fluids, gas or light. That's basically what we're doing even in these advantaged spaces. So we've got great technologies, great access here. I'm particularly excited in terms from an end market perspective. We highlighted space and defense for a reason. I think that, that's 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 and 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 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.

Your next question comes from the line of Brett Linzey with Mizuho.

Question regarding your CapEx-intensive businesses. I guess, as you parse through the composition of your growth in activity, how are those performing versus the more OpEx-oriented businesses? And I guess as IDEX has grown in areas like material science and defense and space, what does that mix look like today? And how has that evolved?

I'd start by saying, I mean, none of the businesses we're in are that capital intensive. And so you're seeing an increase in CapEx, but it's really in line with growth and angle 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.

Yes. That continues to be part of the filter set. When we think about it, space, the technology set or acquisitions, I mean we're looking for kind of max innovation at relatively low capitalization requirements. There's -- not just from the economics of it, but that gives us 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 then just shifting over to Fire & 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 upside here?

Yes. I mean I think on the Fire & Safety European front, I recall it was late in the summer last year. 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 basically remained there. So it's not widely growing, but it's kind of back in its normal corridor, and I think that was actually 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.

And our final question comes from the line of Joe Giordano with TD Cowen.

Appreciate it letting me have the follow-up here. Just like one last kind of bigger picture question on M&A. Eric, as you moved into some of these newer areas like when you bought Mott, you bought Muon, I think from an investor angle, it seemed a little bit more -- are these more complicated? Is this a way from core a little bit more. And then obviously, those businesses started a little slow and now are doing quite well and are directly aligned with what 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&A as a core competency? Does it inform you on timing of when is appropriate to do this and how much work we need to do through the businesses that are in these kind of markets? Just curious like what's your -- 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?

Yes. 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 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 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 is going to work right, make sure that we're a trusted partner. All those things have always been true at IDEX. 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, a 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 are 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 [ 3. ] 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.

That concludes our question-and-answer session. I will now turn the call back over to Eric Ashleman for any closing remarks. Eric?

Yes. Well, thanks, everyone, for your interest and support of IDEX. 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 advantaged growth markets. As we said during the call, perhaps most encouraging for us is the fact that many of their wins have long multiyear tails that points to a 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 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 strategy is supported by our growth platforms, expanded through thoughtful M&A and operational integration are powering IDEX towards a really bright and successful future, and we look forward to updating you as we go along the way. Thanks so much.

That concludes today's call. You may now disconnect.

Good afternoon, everyone. Thanks for joining us. I'm Vlad Bystricky. I cover multis and E&Cs here at Citigroup with Team Kaplowitz. We're very excited to have IDEX joining us today, Eric Ashleman, CEO; and Sean Gillen, CFO. Eric has been CEO since December 2020 after becoming President and -- after becoming COO in 2015. And Sean recently joined IDEX as CFO just in January, coming over from serving 7 years as CFO at AAR Corp. So thanks very much, gentlemen, for being with us. We appreciate it.

Maybe I'll just start, Eric, you've talked over the past few quarters about IDEX' evolution through several phases over time and now being in Phase 3 of its evolution. So for those who are less familiar with IDEX, can you talk about what's changing at IDEX in Phase 3 and what inning of Phase 3 you think you're in?

Sure. So look, it's a wonderful public company story. We're not yet 40 years old. The first phase was kind of a loose holding company, so I don't spend as much time there. The second phase was when I started, was kind of 2010 to '20. So that decade, it's where we started to really drill down on 8020 more than anything else and really release the full potential of these great fundamental IDEX businesses. And so you saw a ton of margin expansion there. You saw some leaders developed. That's kind of where I rose up through the ranks and some people that are still working with us today.

The third phase, super important, that began about the same time I took the helm in this role in 2020. And really, what we're trying to do is we went through a pretty burst acquisitive phase where we had done a lot of research around some technologies and market intersections that we thought would get IDEX really, really well positioned for 21st century problem solving, very similar to what we had in our more industrial fluidics franchises.

So we bought a number of businesses, put a lot of them in the HST segment. And now that some of the pandemic dust is settled, if you will, you can really start to see the momentum. So over the last 1.5 years, kind of every quarter has been a little better than the one before it in HST. And really, really happy in Q4, we saw 34% organic order growth. We've got a nice year positioned for that segment in '26. And you're starting to see a lot of these solutions come together in ways that we anticipated.

I would say from an innings call, we're probably about halfway through it. I do think life for us kind of moves in 10-year increments, and we're probably about the midpoint. And we've got some other things we want to do to kind of perfect the source code, if you will, and further exploit some of the markets where we've got some good positioning now. And we'll continue -- we'll be doing some M&A along the way to flesh it out.

Great. That's helpful. Lots to dig into there, which I'm sure we'll touch on. I guess, Sean, since you recently joined IDEX, can you talk about what made IDEX a compelling opportunity for you and some of your key priorities early in your tenure?

Yes. I think the thing that made it most interesting was you got this really good business, which I would define as multiple businesses with leading positions across everything IDEX does, incredibly strong EBITDA margins and really strong cash flow, right? So you got this great foundation that Eric talked about the couple of phases. And then the ability for when I joined to come in midway through Phase 3 and help partner with Eric and the leadership team to continue to implement that strategy.

And then kind of what I think I can bring some of my background is a bit more around capital deployment to help execute against Phase 3, and that's capital deployment to drive growth in some of these platform markets and some advantaged areas as well as potentially kind of M&A, given my background, both from where I started my career on the banking side and then 7 years at AAR, pretty active on the acquisition, a little bit of divestiture along the way. So I think bringing that skill set to the leadership team and working with Eric to continue to execute Phase 3.

Got it. That's helpful. And then maybe just digging in on capital deployment since you mentioned it. It seems like capital deployment in the near term has been a little different than the higher M&A rate you had before. So you stepped up share repurchases in the second half of '25. And I think you said you expect to continue buying back about $75 million a quarter this year. So can you just talk about how you're thinking about capital deployment, long-term M&A versus share repurchases? And should we think of repurchases maybe continuing beyond '26 as a near-term focus?

Yes. So I think first, kind of in the near term here, it will probably look pretty similar to last year where there'll be some bolt-on M&A. And last year, the company acquired Micro-LAM, which is a pretty good proxy, plus or minus for bolt-on M&A. And as you mentioned, stepped up the share repurchase activity, because to your point, if you go back the past few years, some pretty significant capital deployment across a few acquisitions to help build these platforms and scale them. And last year and near term will be kind of execution, integration on those, some bolt-on M&A and then the increase in share repurchase activity.

Longer term, we're not here to just be a share repurchase machine. We do generate a lot of cash flow, but I think that will more naturally go towards M&A, bolt-on in nature, maybe a little bit bigger. And I do think that the repo, they'll probably -- most likely be a consistent level that occurs, maybe not at the level that happens in this fiscal year. But that's kind of the lever depending on what M&A materializes, given the cash flow generation and the leverage position of the company, we can dial the repo up or down, as maybe bigger M&A once you get through this year starts to come in focus.

Got it. And then I guess, Eric, just stepping back, the world has been undergoing rapid change, really since the post-COVID era. But can you just talk about how changes in the global trade environment have impacted how you're thinking about global expansion in your manufacturing footprint? And then just given we know you've been investing in India, I know it's early, but any initial thoughts on the recent India trading agreement?

Certainly, that the trade and geopolitical side of things is one of the variables. There's a lot that are moving around at present. I mean our model generally is pretty localized in nature. So when we do business, we are typically from original ideation to sourcing to production to selling, it's often within a specific geography. So even when we talk about India or China or things that we're doing on the other side of the world, that's the model there as well. So everything we make in India is largely for that market or something very, very nearby. Very little of it, if any, comes back our way. So I start with that.

But where this has become very important for us is we -- frankly, as we've scaled up a bit and built these platforms and we're chasing some markets that are global in nature with some customers that have global reach, having footprint where we do, it's really, really convenient. So if a company is trying to get more access to emerging markets, and we'll use India here as the example you talked about. We can put the footprint there. We have tons of capabilities. We actually do it with an incubation campus. We have 2 sites in India.

If you were to go in any one of them, there's a series of IDEX product lines, all of which have been localized that are selling into those markets, but they're sharing back office, they're sharing talent and leadership and development. So we have a couple of things that we draw on there, sourcing. We're doing a lot of sourcing kind of centralized around those campuses.

So a couple of examples, dispensing early on, we do architectural coatings and coloring. The #1 market for growth in that area is India. And so we honestly transferred a lot of the core tech, came out with some solutions years ago that are super, super appropriate for that region. Just made our, I think, 250,000 unit after a decade, very, very localized. Again, you don't see it elsewhere.

Now with some of the work going on in businesses like data centers for us, we're actually doing some production in India because the customer that we're working with has got some global reach and needs some things to be done. So just having those capabilities, I mean, one of our big advantages when we're working with an OEM is that we do have -- while we have kind of a small company feel with a lot of our brands and individual businesses. We've got this capability when we need it to flex globally. And then use either shared infrastructure or our own topography to go chase markets around the globe.

That's helpful. And then one of the other things you've talked about in the past is about how IDEX is increasingly adopting digital tools across the portfolio. So can you just give us an update on your digitization efforts and some examples of how you're deploying digital?

So this is a big deal. So we're doing a lot of this focus work now in the FMT kind of more industrial businesses, largely become -- there's been a couple of sea change events there that are having a big impact. So these are very, very mature spaces. They're extremely fragmented, and we often serve in a co-participated way with distribution. And what's happened is you've got a shift, 2 shifts simultaneously they're intersecting. One is just a demographic shift where a lot of people that were in this industry forever are retiring and they're being replaced by, frankly, new people.

And essentially, you're moving from kind of a relationship people-dependent model to one that's very much digital first because honestly, young people, that's generally how they were raised and how they think. So what used to be folks that would say, well, we're going to take you to lunch and explain everything that we do or IDEX does is now self-service queries and searches and AI streams and things like that. So we've had to rally and respond in a big way to make sure that the tool sets that we have can catch those signals and those questions coming at us. And then as they do, we can see who's doing it, what they need and then intersect it, and very often have a great direct conversation that maybe we wouldn't have had before.

So that phenomenon, we've seen it coming for a while. It was kicked into high gear through COVID because obviously, everybody had to kind of go virtual, that accelerated some of the demographic shifts, too. And so we're just putting a lot of things in place. And we're doing it -- this is an IDEX initiative because kind of in a decentralized way, no single IDEX business by itself is going to do a great job at the rate that we need. So we've actually come together here, and we're doing some very focused work, a lot of it in this FMT area, most of it around customer access, acquisition and that engagement experience digitally that used to be people dependent.

Got it. And then just following up on that, can you talk about what role you see AI playing for IDEX in the coming quarters and years?

Yes. So that's an interesting question. We're probably like a lot of companies testing it. We're testing it in kind of 4 different areas. And so we're using it on one side, 2 of the applications are in areas that I would put in more analytical pursuits. So some are outside our four walls. So if we're studying a market or studying competitors or investment alternatives, probably like a lot of you, we're doing the same thing saying, well, that used to be people-based. What can we get this machine based and driven by AI. So we're doing a bunch of loops there and trying to learn from it.

The more interesting piece, at least for us now is we're doing a lot of the same analysis inside the company. So again, if you think of kind of our assets and think of digital assets, we've got these unique franchises that have been very decentralized for a long time that have not just a little bit of experience with end users. I mean we're talking decades. We have a couple of franchises that are over 100 years old. And so a lot of that information about solutions and what's worked and where we've sold it, we have it, but it's often in these kind of disparate databases and things that are independent to the businesses, because we never really went through the effort of trying to streamline it around a central ERP system.

And so we always saw that as kind of the hill that we knew we would love to get over someday, but it was always going to take maximum effort. Well, as you now know, with AI and some of the intelligence there, you don't have to have as rational data as you're used to. And so we're trying to see at what level this can work, and we can have intelligence kind of go through our own data and start to parse out solution sets and intersections and things that are very commercially or technically interesting. So that's half of it.

The other half we're doing is around product development and iteration, things that we're experimenting with our engineering. We don't do a lot of software in IDEX. So it's not the typical coding things you hear a lot about, but things around structural analysis or flow dynamics. We're able to actually accelerate and simulate things that maybe before we would have done trial and error.

And then I guess the last category is more around quality assurance. And so we're doing some loops here around intelligent machine vision, how do you understand that things have been done correctly, validation. So we've got some people that are in charge of different efforts within those 4 pillars, and then we meet centrally to kind of learn together. And then when we see something that works, we figure out how do we export it.

It will be interesting to see how it develops over the coming years. So I just wanted to drill into the segments a bit. And starting with HST, in particular, your highest growth business. You gave a lot of detail at 4Q around the tailwinds you're seeing in markets like data centers, space, defense, semicon, and you had very strong orders. So could you just talk about how you'd characterize visibility to your growth outlook this year in '26 versus maybe a year ago at this point?

Well, I mean, I just start with the numbers. I mean, so coming into this year, we have over $100 million more backlog than we had at the same point a year ago. We built that through the year. We had a really, really nice number in Q4, a lot of it in the data center area that kind of came in, in a chunk.

But what I really like about is it's pretty balanced. It's in all the areas that you talked about. So there is a data center portion that we have a number of little semicon-related applications that are doing well. Mott is in there. That was a big acquisition. The last one we did is a strong contributor. We see it in their semicon applications as well as some space and defense. Space and Defense generally. We have a bunch in optics. That's actually a strong market, very good for us. And then some pharma applications, both within our traditional life science businesses as well as we have an HST business that does material processing kind of in a CapEx way. So it's broad-based. About half of it is data center driven, but the other half comes from kind of the gamut of things in HST.

Got it. And then one question that I've heard from investors since 4Q is just trying to better understand within HST, the strength in orders you had in 4Q, plus 34% versus your guidance for mid-single-digit growth for the year. So can you help walk us through some of the puts and takes?

Yes. And as you mentioned, so 5% for the segment, but with some really nice momentum coming into the fiscal year. I think there's 2 things there. One that Eric called out, just visibility into the year is higher than in previous years given the order activity to last year. But I wouldn't say there's a disconnect, but it's more around there was a lot of orders in Q4 and some of them were covering multiple quarters, particularly around kind of the data center exposure we have. We saw some orders come in that cover kind of not only the first half of the year, but getting into Q3. And part is that they're ramping their production. They need better visibility than usual to their supplier network. So we got a greater volume of orders than we normally would in Q4.

So when you think about kind of hey, really strong order growth with 5% for the year, how do those square up? That's probably the biggest piece that helps explain that. And we do expect that we'll see -- continue to see some order momentum this year. It's not like that's going to go away. We're going to eat into it too much. But that's what lined up to that 5% outlook for the year.

Yes. So timing?

Exactly.

And then just sticking within HST, you'd mentioned life sciences, Eric. Can you talk about -- I think at 4Q, you mentioned life sciences vertical is stable, but we've also seen some pretty positive commentary from others exposed to pharma production and around biopharma. So can you just talk about what are some of the indicators that you're watching for your life sciences business and how you're thinking about potentially inflecting growth there?

Yes. So look, it's -- after a very volatile early in the pandemic period, I mean, it's stabilized and it's returned to kind of low single-digit growth. It's been stable around that area. On the positive side, pharma in general is absolutely driving it. So we do a lot of work in the component level for analytical instrumentation, diagnostic gear. It's used both in drug discovery. Think of it as like an analysis tool in a technician's toolbox, and then it's used in the QC labs in production as well. So you sort of get it on both sides from initial discovery and development to then full production.

So health in that whole sphere, some of the reshoring that's going on there is all positive for that side. And I would argue it's driving probably a disproportionate part of that growth. The 2 offsets that we've continued to see, one, and it's -- this is more of an end customer thing, but then it reads through to us. The international piece, pre-pandemic, there was a lot of buoyancy and growth in China for that sector that really didn't return after things opened up. And it's -- I mean, it's stable, but certainly not contributing from a growth perspective. So that's been sort of an industry secular headwind.

I'd say the other one more near term, particularly in the U.S., is on the kind of institutional funding or the NIH funding assurance or the lack thereof in some cases, as well as some of the pressure in the university markets. So that side of it, not quite where it was before. The biopharma, a lot of that -- I mean, healthy, it depends kind of where you play there. A lot of the same instruments I described in the beginning actually do the same work in that space as well. But we're probably disproportionately skewed there. We don't have like a bunch of bespoke product for that particular sector. So we're not quite exposed in the same way that maybe some others there.

But -- so what would have to change? I think some unlock on the more traditional U.S.-based systems around indirect funding sources would be good. And then ultimately, I think a lot of the end customers are trying to figure out, does China return? If it doesn't, there's still a bunch of developing economies, where do they need to be positioned to go after them. That's actually -- those are the kind of conversations we have with them and kind of circles back to your original question around global support. We can support that from a variety of different geographies.

That makes sense. And then maybe just one more on HST. You talked at 4Q about deploying that 8020 playbook at HST to support simplification and help boost margins. So can you talk about some of the simplification or margin improvement opportunities that you see at HST, and how you're thinking about path back to 30% plus EBITDA margins there?

So I mean 8020 is a big part of everything we do. It's been the sort of one of the central pillars of value drivers for IDEX. So when we acquired a lot of these businesses, we're careful of how we used it. We knew that ultimately, we want to get the top line moving in some of these businesses. We want to put some technologies together. We wanted to get some momentum, and now you're seeing evidence of that happening.

Now if you think about it, we've got -- we can take the benefits of a flywheel effect. We can take some of the growth and use it to kind of stand in as we make some harder calls on some of the acquired businesses. So the second loop is referring to that. We've done some of it already. So last year, we -- on the third quarter call, we walked people through some example of the MSS or Material Science Solutions platform that we created.

We talked a lot about Muon, which was our second biggest acquisition. And we walked people through how sort of initially, we had a piece of semicon business in there. There were some trade disruption and gave us some headwinds from a mix perspective. And we're able to take that same technology, same resource base and shift it, frankly, over into the data center world. As we did it, we got the full-on read-through benefits of a lot of the simplification that we've done that frankly takes headcount out of the equation as we made the call on some dilutive business, because a lot of it was in Europe, it took a little while to read through. But by the time we got halfway through the year, you could see the additive effects of both.

And so we had the top line moving again, largely because of 8020 focused in a different area with portable technology. And we had the cost base in a different position. And finally, the costs were frankly extracted. So we brought the margin rate of that platform back to IDEX level, and now it's moving past it. And so that's sort of the engine.

We've still got work to do in Mott, which was our last acquisition and the largest. And Mott today still is not at the margin position of kind of overall HST, and it's a decent sized business. So that's an area of opportunity. We're doing some of the same work. The only piece I wanted people to kind of understand here is that having the momentum of growth here really does allow us to do it in ways where it's frankly more transparent on the outside. It's not as disruptive here because we're able to fund the top line and you'll see the margin additive benefits on the bottom line.

That makes sense. Before I forget, any questions from the audience? Usually not, but we give them the opportunity. I'll carry on. Oh, do we have one? Perfect.

I just wanted to -- obviously, a question on HST. We've been touching on that. So last year, you grew organically mid-singles in the segment. This year, you said you're going to do the same thing. But as you mentioned, orders much stronger, especially in the back half of the year. You have end markets that are accelerating, life science, semi, data center is very strong, other areas of HST are still strong. So why are we not expecting that to be maybe a little bit stronger than last year?

Well, it's on the way. I'd say the 2 pieces that are still headwinds, our life science business, which is a decent portion of HST is still down around low single digits. And we still have about 20% of the segment that is very industrial in nature. That's down, I mean years -- a few years ago, that was half of the segment. It's becoming a smaller piece of it. And that industrial piece looks an awful lot like the rest of our industrial markets. It's still kind of flattish.

And so you've got 2 pieces that are pressuring the pieces that, frankly, are kind of what we designed them to be. They're north of mid-single digits. That's where we want to take the whole segment. So getting a little bit of industrial support as that becomes a smaller part overall because it will. We're obviously not emphasizing more industrial applications in there over time.

And then life sciences. I think life sciences is still a fairly big lever that we would like to see move up slightly when it does, then we can take the whole fleet average probably to the level that you're thinking about, and that's definitely what we're targeting. We want HST to lead the way for growth for IDEX. We want it to be high single digits as a segment.

So that's actually a good transition. Obviously, you just reported earnings not that long ago, but I'll still ask if you can give us an update on demand trends you're seeing in the shorter cycle sort of day rate businesses that you talk about? And any follow-through? I know 1 month doesn't make a trend, but any follow-through you're seeing from this update in PMI?

So again, so everybody understands on the industrial side because we have this kind of rapid fulfillment engine, we have a few businesses that we call canaries in the coal mine because they're very predictive. They predict inflection early -- either way, plus or negative. And you think of it as like we'll get an order on a Monday, we'll build it Wednesday, it's in service on a Friday, that kind of business. So what we do is we watch them together. And they almost at any point in history, they bob around different rates. When they start to move the same way, it tells you something because it's so broad-based. So that's the collection that we're -- we get asked about a lot, and we're watching.

Now we've had some decent headlines out there. There's -- the PMI number was over 50 for like the first time in a long time. I think there's a sense, and I would agree that it's been a long time of a kind of a contracted environment. It seems like it should be moving by now. And if you look in history, you don't see many periods of time where it's 3, 4 years in duration. That's atypical. Inflation is lower. Policy seems like it's at least bouncing between 2 more reasonable bands now. So a lot of the ingredients are there. We're watching it. To be candid, we haven't seen it yet.

This first quarter, I think March is a pretty important month. January, people are kind of still frozen in half of the country, they're trying to get to work. February has President's Day and vacations. But kind of this point on usually tells us something about the year. So if there is an inflection point, we're really well positioned. We will not miss it, and we'd be more than happy to pass it along. But I still -- when I hear -- when we talk to small business owners, distributors, you still see -- they're still talking about economics and economic forces is a bit of an abstraction. It's like they'll go describe all the things that I've just described. And then when you say, well, what do you -- okay, but let's get down to business. It's still very much the present sort of steady-state reality. They haven't clicked together yet.

And I still think the #1 thing there is people are just looking for variables because there's a lot of variables I've just walked through. To frankly, settle down, I don't know that they even need to move in massively positive directions, but get to a place where they're somewhat predictable and you can just say, well, there's the playing field. I think we understand it, let's get to work. We're closer to that, I think, than we have been, but not yet.

Have you heard in those conversations -- have you heard anything from your customers about potential impacts from the One Big Beautiful Bill Act and the changes in CapEx expensing and so on?

I mean it's -- I get what the heading is, but I think most of them are -- that's somebody else's decision. And I mean, we're dealing with a lot of people that are taking components into projects that somebody else is thinking about. So again, it's in that mix of things described in an abstract way. In terms of individual owners, are they changing a lot of the things that they're doing without those catalysts in our world? Not necessarily.

Okay. Makes sense. And then just digging in on the segments, we spent a lot of time on HST, but maybe we could dig into FMT a bit. Can you just talk about some of the cross currents there across your end market exposures? I think you talked about strength in mining and water, softness in oil and gas and chemicals. So can you just talk about how those are translating to your '26?

Yes, yes. So there is always a little bit of a tendency to paint everything with a broad stroke. But I mean, we actually -- as you just said, we have individual points of exposure, and they're not all moving the same way. The most advantaged places for us in FMT, absolutely water is at the head of the list. Again, remember, the job that we're doing here is infrastructure analysis. So we have robot crawlers that go down with data acquisition or cameras. We have flow monitoring that does the same thing. This is the one place of IDEX that has a decent amount of software, all of which we wrote that takes those inputs and then interprets them and we provide the answers to a municipality. That's essentially what we do.

I think the reason, one, the sector is in generally better shape, as you probably know. We do well because we're essentially helping people solve massive problems, and it's always water side of the house. And so if you think about it, everything related to overflows and we've got kind of the perfect ingredients. We've got climate change and thunderstorms. We have bad infrastructure and social media. You put the 3 things together and you get pictures of cars floating by windows and people who want to fix it. And so our products and services help do that, and then we contract with cities. So it's been strong. It was a double-digit grower in Q4, that piece of business, and we've got a high single digit going forward.

We have a companion piece whenever we describe water that is semi-related water. It's high purity. That's -- for a while, that's been an offset. So we've had to sort of explain one and then the other. The order rate flipped over to positive, in line with the rest of the semi cycle, and they'll be both contributory going forward next year. So water, very good. Mining, it's one single business, but it's the biggest pumps we make. They chase precious metals and they do really well. And so you can imagine that's doing well, why it is and it is. Down on the -- I'll skip a bunch, go down to the bottom.

Ag is pressured. I think everybody knows farm income, it's tricky. Trade policy hasn't made it better. It's always been kind of a cyclical business. We have 2 franchises there. Chemicals, chemical exposure is also tricky right now. Ours is a little bit more European slanted as well. So we're trying to offset that with some growth in India. That's actually doing very well for us as chemicals kind of move around the globe.

And then last, I would say, energy. And energy is super specific. We're not a wellhead energy business. We do custody transfer far downstream. But it does tend to move in concert with health of industry. And so that's been a little depressed with oil somewhere around $60. In the middle is the general industrial things that most closely align with PMI because they're so fragmented and fits so many functions. And they're kind of exactly where that reading is sort of right in the middle.

Got it. And then I guess maybe, Sean, just given the context of those sort of moving or cross currents within FMT, how are you thinking about margin potential in the business this year? And do you see potential for any incremental cost-out actions in some of the softer portions of the business?

Yes. Good question. The guidance that we gave contemplates the top line that Eric talked about there, which is essentially kind of flat with volume being slightly down and price getting you to close to flat in the FMT business. And then on the margin side, that really leads to kind of flat margins as well. There's some pressure because of the volume decrementals. We'll seek to offset that with price as well as just productivity gains.

In terms of bigger cost out, I don't think we're there because probably if you see that inflection up in these businesses, you kind of want to have the position in place to capture it, which I think we're in a good position to do. And the company has obviously been pretty disciplined on cost for a period of time here. So I don't see that as a lever in the status quo, of course, if things change, that could be revisited. And to the extent that we do see that order activity increase in the more kind of truly industrial-facing businesses, we're well positioned to capture that. And on the flip side, we don't need to add any cost to capture that volume.

That's helpful. And then -- just shifting to FSDP. I guess a similar question. You've called out, I think, some pressures in international Fire & Safety and maybe a subdued capital cycle in dispensing. So can you talk about, I guess, one, just the relative size of the international Fire & Safety business versus the U.S. for you and sort of the dynamics you're seeing in those global regions that are impacting demand?

Yes. I mean, Q3 of last year, we had a couple of regions move down on the Fire & Rescue piece, which is by far now the biggest part of that segment. It's an integrated platform. China for a while, we've had some decoupling effects over there. That was a great business, but there's a lot of driven interest to have more local offerings and things. So we're kind of picking our battles with that business. So I think that's a longer trend.

Europe, which has always been very stable for us, kind of went negative in Q3. A lot of it, I think, was related to some shifts in discretionary spend moving over into more of like our equivalent would have been FEMA. So think of it as like disaster preparedness or field things that maybe there hadn't been a lot of spend, and there's some different dynamics to how defense is being thought of generally over there. But to be honest, that kind of flipped back in Q4. So I think that was a shorter-term phenomenon. It's never been a massive grower for us, but it's a good stable business.

You asked about the ratio. It's by far a North American-centric business, and that's where most of the growth is coming from. So when we kind of line up segments in terms of growth expectations, obviously, HST now firmly out in front. But we actually have FSDP second, growing a little healthier than the assumption set that Sean just went through on FMT.

Dispensing. Dispensing has always had a little bit of a cyclical rhythm to it because there's some big retail chunks in North America where kind of the fleets get replenished about every 7 years or so. We know where those are in the cycle. We're between those mountain tops. We've flattened it out with a bunch of emerging markets growth. I talked through some of it earlier, but we did a massive program in '24. And so we're kind of comping against some of that. Some of it went into '25. So I don't know if it's so much subdued. It's just there's been some -- there was a big international boom and there's one ready to come eventually here in the North American side. Otherwise, stable business. So -- that's kind of the puts and takes.

BAND-IT, which is the third piece there, operates a lot like a general FMT, more industrial kind of business. So kind of as goes PMI rates and those things tends to go to that business.

Got it. And then you mentioned kind of a 7-year capital cycle in dispensing. Is that North America specific or do you think international?

No, it's because of the retail concentration. You don't -- it just doesn't line up that way anywhere else. There's a lot more players everywhere else.

All right. That's helpful. And then -- the follow-up question, Sean, is just given how we're thinking about volume in FSDP in the near term, how are you thinking about margin progression this year?

A bit similar to FMT, slightly better given that the top line is a little bit better. So there'll be some marginally better flow-through on profitability. So we expect some kind of slight margin expansion, a little bit of a mix dynamic that Eric talked about with the dispensing business continuing to see that kind of cycle come down, and then BAND-IT being pretty steady and growing. So some slight margin expansion, a little bit better than the FMT story.

Got it. And then I guess stepping back, just not to beat a dead horse. But on the orders, so we talked about orders versus organic growth at HST. But for the company overall, can you talk about sort of the mid-teens orders growth you saw in 4Q versus the 1% to 2% organic that you're guiding for the year? Is that mainly driven by HST? Or is there something else that we need to think about there?

That's pretty much the HST story because HST is what drove those orders growth. And then you got the 5% organic growth. We kind of covered what drives that. The other 2 segments are much more of a rapid fulfillment business. And one quarter can be a little misleading, but if you look at the trend line on orders over a couple of quarters, it will track pretty closely to revenue growth. So that's why you see FMT and FSDP in kind of that flat to slightly up over this year.

Great. And then -- just going back to some of the comments you made earlier around capital deployment and potential to sort of reaccelerate the M&A flywheel over time beyond '26. Can you just talk about sort of what are some of the areas you'd be looking at for incremental capital deployment key priorities?

So we've talked about kind of a return to bolt-ons, tuck-ins and things, certainly here in the near term. But to be honest, much of IDEX was built with what looks often like a bolt-on and a tuck-in. So we've got these franchises that are out there and right next to them are near adjacent things that when they attach the 2, the synergy is really, really good. So what we have built now, especially around the HST side in this area of material science concentration has an awful lot of touch points. So Micro-LAM was last year's example of something that sort of seamlessly fit. And we have a number of things that we're thinking about that kind of go around.

We have it drawn -- it was in our slide deck as sort of a triangle around 3 dimensions. Any one of those has plenty of landing spots. And so that's an area of a lot of focus and intensity. And trying to get a sense of like how far can material specialization go, what other materials might be there could potentially be other chapters. That's kind of how we got to nanofiltration with Mott. That's how we got there with Ceramics. So we did the homework and understood where certain parts of the duty cycle, you move from metal to ceramics or where you move from liquid handling to something where you need to filter it. That's why we bought those companies.

So I think a lot around that area. We love what's going on in the kind of the water that we play in. And so we're always looking for things over on that side. to be frank, good industrial tech. There's a few gaps that we'd be interested to fill over there as well. And I'd say there's an effort to think bigger at some level of down the road, where do we think we would -- ultimately, if this source code starts to really, really fire, well, where does it lead? Where does it take us into -- and what could potentially be some interesting bigger chunks. So -- but ultimately, the company was built that way. We'll continue to build it that way.

Makes sense. And then just in the last couple of minutes that we have, Eric, I'll ask you this question that I think I've asked you every year and that we're asking all our companies, which is -- what are the top 2 or 3 innovations and structural changes impacting IDEX over the next 5 years? And are there any emerging trends that maybe are being overlooked in the current environment?

Well, I wouldn't say they're being overlooked. We're living them, but I am really excited about the pace of technology and how it's moving. So markets -- and I suspect there are themes all over this conference, I know they are, where you see industries that didn't exist before. We're participating them in a lot of ways. So we talked about data center exposure, low-orbit communications, things that weren't even a thing a little while ago.

I think the thing as you leave here to think about us, though, I mean, we're looking for ways to make that system work better or fix stuff in it that doesn't work. So I'll use data center as an example, and it's a good one. So there's not a single technology that we have that was originally developed, designed or sold as a data center part, not one.

What we are doing is we're doing the jobs we've long done, but we're finding applications for them in the data center infrastructure that was set up that now is mature enough to not work right. That's a great job to do. And so we're coming in and we're taking heat out of places or we're helping with connectivity, with optical connectivity in an area that used to be mechanical relays or we're coming in, in different spaces with a valve that suddenly was purposed in there quickly, but now they're leaking. And so we're using some IP-driven medical ball stuff that we have.

And that's much more of a typical way that we've often kind of run our business. It's why the attributes, the financial attributes that Sean was talking about are so good. And why I think the continuity and staying power of it is very durable in an environment that changes a lot. So we're not necessarily looking for the kind of boom entry and the potential bust on the back end of it. We're looking for places that are durable and say, look, when this system is here, whether it's this big, this big or this big, it has to run right. It has to be optimized and people are really going to care about it.

So that's kind of the work that we're doing. So the pace of the disruption is exciting because it just creates problems like this to think about and go solve. So I put that down as number one.

I'd say number two, I'd actually go back to the digital stuff that we were talking about earlier. I think so much of our world had been driven by people-dependent relationship kind of commercial sales and interfaces and seeing this move over and start to morph into a digital realm and that -- how quickly that kind of moved from initially thinking of it defensively as a threat to wait a second, this is actually a way to go solve even more problems faster than ever before. So I put those two at the head of the list.

Great. Well, I appreciate all the time today, as always. Thanks, guys.

Thank you.

Thank you. Good to see you.

Good morning, and welcome, everyone, to the IDEX Corporation Fourth Quarter 2025 Earnings Conference Call. Today's conference is being recorded. [Operator Instructions]

At this time, I'd like to turn the conference over to Jim Giannakouros, Vice President of Investor Relations. Please go ahead.

Good morning, everyone, and welcome to IDEX's Fourth Quarter 2025 Earnings Conference Call. We released our fourth 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 fourth quarter and full year results and a discussion of our current business outlook and strategies, then Sean will discuss additional financial details and our outlook for 2026.

Following our prepared remarks, we will open the line for questions. But before we begin, please refer to Slide 2 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.

Thanks, Jim. Good morning, everyone, and thank you for joining us today.

Before I dive in, I want to welcome Sean Gillen, who joined us in January as our Chief Financial Officer. Prior to joining IDEX, Sean served as CFO at AAR Corp. for over 7 years, and he brings extensive experience driving profitable growth, operational execution and disciplined capital allocation. His expertise and track record of successfully implementing operational efficiencies, optimizing portfolios and executing on strategic M&A, fully complement IDEX's strategy. He's hit the ground running as he finishes up his first month of onboarding, and we look forward to benefiting from his leadership as we continue to shape and execute our enterprise strategy. Welcome to the team, Sean.

I'm proud of the results the IDEX teams collectively delivered in the fourth quarter. We'll go into each of these in more detail but we delivered organic sales growth and margin expansion for IDEX, while also significantly expanding the order book within HST as we closed out 2025. These results show signs that our strategy is working and provides strong momentum as we enter our fiscal year 2026. I'd like to thank our teams around the world for their hard work, agility and disciplined execution.

Turning to Slide 3. We are progressing well through Phase III of IDEX's purposeful evolution as we thoughtfully expand and integrate our capabilities in targeted advantage markets. With the support of our 8020 playbook, we are making this pivot both organically and through M&A. As a key element of this strategy, we built new scalable growth platforms that allow us to compound our efforts through cross-business unit collaboration.

Please turn to Slide 4, where I'd like to illustrate how this work is paying off within our HST segment. We've seen acceleration in order rates over the last 1.5 years with our strongest mark coming in Q4 of 2025 with organic orders growth of 34%. This has driven organic sales growth towards a mid-single-digit level as we move into 2026. In our Performance Pneumatics group, we are helping customers support data center construction driven by demand from artificial intelligence. Specifically, our Airtech and gas businesses are collaborating within thermal management applications to support data center liquid cooling and on-site behind-the-meter power generation.

We provide blowers, vacuum pumps, valves and other specialty components to solve key problems in these areas. As customers have asked us to scale up quickly, our pneumatics teams have leveraged their own global footprint while also utilizing shared Asia Pacific facilities and capabilities within IDEX. We first talked about this emerging growth potential about a year ago. It's inspiring to see how far we've come since then.

We walked through the strategic building blocks of our material science solutions platform on last quarter's call. At the highest level, we've mapped each business' unique capabilities to 1 of 3 competitive attributes as we form unique properties from materials, shape and control surfaces, and enable surface function through coatings capabilities. We continue to see strong growth across the platform within space and defense, semiconductor and data center communication markets.

In 2025, we complemented our organic efforts with a small but meaningful acquisition in Micro-LAM, a very high-quality bolt-on that brings proprietary difficult-to-machine forming capabilities into our already advantaged Optics toolbox. Integration into IDEX is going well, and it's great to see strong growth momentum out of the gate for the business. They are largely booked for 2026 as we work to expand capacity by applying the IDEX operating model.

At Mott, which transforms material powders for specialty filtration, we see growth within the same MSS markets, for many of the same customers. In fact, our life sciences, MSS and Mott leaders are expanding the scope of coordinated commercial efforts for maximum focused impact. Our life sciences team operating within our longest chartered integrated platform continues to win in the pharma space as a key initiative within their long-term growth strategy.

Our Materials Processing Technologies group with strong food and pharma focused global development and production resources is also driving favorable growth results for HST, and our Sealing Solutions businesses are seeing nice growth from semicon ceiling applications, largely in support of the increased demand for data center memory.

Our 8020 playbook, which supports the formal resource choices and segmentation to drive growth in this way also has a part to play to support margin expansion within the segment. Our teams will be taking advantage of the flywheel effect of HST growth from our 80s to support the next round of 20s simplification to help boost overall segment portfolio margin. We'll call out some of these results in the quarters to come as we highlight the top line and bottom line power of 8020 within our enterprise strategy.

Before I turn it over to Sean for a more detailed financial commentary, I'd like to pull back up, quickly restate the highlights for HST and expand our IDEX Q4 story with some framing comments around the more industrial and municipal-facing businesses within FMT and FSDP.

I'm on Slide 5. We IDEX delivered better-than-expected fourth quarter results despite the continued challenges our businesses face given macro uncertainties. Our Health & Science Technologies segment, as I just covered, grew organic orders and sales, 34% and 5%, respectively, as they capitalize on advantaged growth supporting the AI-related ecosystem within and near data centers. HST is also seeing growth in semiconductor filtration and sealing consumables, space and defense applications and wins within food and pharma markets.

Industrial and auto market exposures within HST, which make up about 20% of segment revenues remained flattish, and we have not observed any meaningful signs of demand improvement. HST also drove 60 basis points of margin improvement year-over-year. As we leverage volume growth, apply 8020 and operational excellence standards in newly acquired entities and improved mix, we will drive continued margin expansion within HST going forward.

In Fluid & Metering Technologies, organic orders and sales grew 4% and 1% year-over-year, respectively. Our municipal water facing businesses remain strong, growing mid-single digits and mining through our ABEL franchise continues to be an area of strength as demand for precious metals increases. While the general industrial landscape all-in continues to trend flattish, FMT is experiencing noticeable softness in chemical, energy and agriculture markets.

Regarding the broad, mature and fragmented industrial end markets, there does seem to be an emerging consensus that 2026 will see a return to growth after 3 years of PMI contraction, made more likely if last year's volatile policy headwinds moderate. But at this point, as we look at our leading indicators, we are not seeing an inflection point in activity and our guidance reflects this reality. Due to the rapid replenishment nature of our businesses, if there is a return to growth, we'll see it quickly, and we are well positioned to capitalize on it should it occur.

Finally, in our Fire & Safety/Diversified Products segment, growth in our North American Fire & Rescue business was more than offset by pressures outside the U.S. and cyclical softness in dispensing. BAND-IT is trending generally flat alongside our other diversified industrial businesses.

And with that, I'll pass it over to Sean to discuss our financials and our 2026 outlook in greater detail.

Thanks, Eric, and good morning, everyone. I appreciate the warm welcome, and I'm thrilled to have joined the IDEX team.

In my first few weeks, I am struck by the solid foundation of the IDEX franchise, which is underpinned by a strong focus on 8020. I'm excited to work with this talented team embracing 8020, targeting key high-growth markets and continuing to optimize our portfolio, all while maintaining a disciplined approach to capital allocation. With that, I'll turn to the financial results in more detail. All the comparisons I will discuss will be against the prior year period unless stated otherwise.

Please turn to Slide 6. As Eric mentioned, in the fourth quarter of 2025, IDEX delivered better-than-expected financial performance. Organic revenue growth of 1% came in as expected, with strength in HST more than offsetting negative year-over-year performance at FSDP. Adjusted EBITDA margin expanded 40 basis points year-over-year on positive price cost and productivity improvements and adjusted EPS came in higher than our guided range in the fourth quarter. Overall, our orders grew 16% organically in the quarter. Our HST segment reached a record high at $493 million, with orders growing 34% organically in the fourth quarter.

FMT orders grew mid-single digit and FSDP orders were flat year-over-year. Recall that we typically enter any given quarter approximately 50% booked overall. However, the strong order activity and record backlog in HST gives us greater visibility and confidence in our outlook for that portion of the business. In FMT and FSDP, the rapid fulfillment nature of those businesses limit our visibility to approximately midway into a quarter.

Touching on some of the more meaningful business demand trends in the quarter, we saw strong order activity in areas influenced by data centers. And for us, as Eric mentioned, that's in power, semiconductor and optical switching. We also saw strength in municipal water, food and pharma, and space and defense. And in life sciences, we continue to see low single-digit growth.

Organic sales in the fourth quarter grew 1% as positive price more than offset volume declines. The teams drove positive price across each of the segments. Volumes were flat at HST and declined year-over-year at FMT and FSDP. IDEX adjusted gross margin was flat year-over-year in the fourth quarter, as price cost and productivity benefits were offset by volume deleverage and mix.

Adjusted EBITDA margin expanded 40 basis points versus last year, reflecting productivity gains, favorable price cost dynamics and cost discipline more than offsetting volume deleverage and negative mix. We were successful in our platform optimization and cost containment efforts as they yielded approximately $60 million of full year savings. Free cash flow for the full year 2025 of $617 million increased 2% versus last year, and free cash flow conversion for the year came in at 103% of adjusted net income. Our targeted free cash flow conversion of at least 100% at IDEX remains unchanged. We ended the year with strong liquidity of approximately $1.1 billion. And finally, we spent $73 million to repurchase IDEX shares in the quarter, taking our total share repurchases for the year to nearly $250 million or 1.4 million shares.

Now quickly some color on our results by segment. I'm on Slide 7. In HST, organic orders increased 34% and revenue grew 5%. The volumes increased in data center applications, semiconductor consumables and space and defense. Volume strength in these areas were partially offset by year-over-year declines in life sciences, pharma and general industrial. HST adjusted EBITDA margin expanded 60 basis points year-over-year as positive price cost and productivity gains more than offset unfavorable mix and higher variable compensation.

Turning to Slide 8. In FMT organic orders increased 4% and organic sales increased 1%. Orders growth was supported by our intelligent water platform, which was partially offset by softness in the chemical end markets. Looking at our leading indicator, industrial order rates, they appear range-bound without any indication of a sustainable inflection in demand.

Within FMT, we continue to see subdued spending environments within the oil and gas, chemical and agricultural markets. These exposures make up over 1/3 of FMT. FMT's adjusted EBITDA margin declined 20 basis points year-over-year as positive price/cost and platform optimization and cost containment actions were more than offset by volume deleverage, higher employee-related costs and unfavorable mix.

Please turn to Slide 9. FSDP organic orders were flat year-over-year and organic sales declined by 5% for the second consecutive quarter. Continued growth in North American fire OEM and stability at BAND-IT were more than offset by continued weakness in fire and safety outside the U.S. and subdued capital spending in dispensing. These headwinds were identified last quarter and continued to persist. FSDP adjusted EBITDA margin increased 50 basis points year-over-year as productivity gains and favorable mix more than offset volume deleverage.

Please turn to Slide 10, where I'll touch on capital allocation. We drove $190 million of free cash flow in the fourth quarter and $617 million for the full year 2025. During 2025, we reduced our gross leverage position from 2.2x to 2x. We did this while paying $213 million in dividends in 2025, and as mentioned previously, repurchasing nearly $250 million worth of shares.

Regarding our capital deployment methodology, I view this across 4 key areas: maintaining a strong balance sheet, organic investments to drive growth, M&A, and return of capital to shareholders via dividends and share repurchases. With IDEX's strong financial position and cash flow generation, we can allocate capital to each of these areas.

First, we will maintain our investment-grade credit rating, which provides reliable access to capital at attractive rates. Second, we will continue to organically invest in our businesses to drive growth where we have the highest return opportunities. Third, regarding M&A. In the near term, we will focus on the integration of recently acquired businesses and new acquisitions will likely be bolt-on in nature. In parallel, we are doing the work to chart a road map for where IDEX goes next. We are looking at what other technologies and market access points could be additive to our portfolio and where potential divestiture could make sense. We expect M&A activity to be an ongoing part of our long-term growth algorithm. Fourth, we will return capital to shareholders via both dividends and share repurchases.

Regarding dividends, our target of 30% to 35% of adjusted net income paid remains unchanged. On share repurchases, we will look to have a base amount of repurchase that we consistently return to shareholders. We can flex above this amount based on leverage levels and relative M&A activity. We look forward to executing on this capital deployment methodology and driving value for our shareholders.

Now I'd like to discuss our guidance for 2026. Please turn to Slide 11. For the full year 2026, we expect organic growth of 1% to 2%. Our overall IDEX organic growth guidance balances approximate mid-single-digit growth for HST and flat to slightly down outlooks for FMT and FSDP, mirroring trends we experienced in the second half of 2025 and visibility afforded to us by HST's strong order book in the fourth quarter. Adjusted EBITDA margin is expected to be in the 26.5% to 27% range in 2026. While we expect solid leverage and margin expansion of perhaps 50 basis points improvement at HST this year, volume decrementals offsetting price/cost and productivity is our base assumption for both FMT and FSDP.

Regarding our effective tax rate, we expect it to be approximately 24% in 2026. Adjusted EPS guidance for 2026 is $8.15 to $8.35 representing low to mid-single-digit growth year-over-year. For the first quarter of 2026, we expect organic growth of approximately 1%, adjusted EBITDA margin of approximately 24.5% and adjusted EPS of $1.73 to $1.78, relatively flat year-over-year.

As a reminder, the first quarter is typically our seasonally softest both from a top and bottom line perspective. Within FMT businesses such as ag and water are impacted by the winter season, while FSDP and HST experienced a reset of budget cycles for larger volume orders. Our initial outlook contemplates a typical low to mid-single-digit sequential increase in second quarter sales with a more pronounced step-up in earnings given higher volumes and normalization at the corporate expense line. Our current forecast reflects plans for 8020 informed a reinvestment into our businesses to drive organic growth and continued execution to improve operational performance across all businesses.

And lastly, we will maintain a balanced capital deployment plan near term skewing towards tuck-in acquisitions and returning capital to shareholders, similar to 2025.

With that, I'll turn the call back over to Eric.

Thanks, Sean. I'm on Slide 12. We believe our strategies will drive increased growth and sustainable value creation for IDEX going forward. And our bookings in the fourth quarter are a strong indicator that our strategies are working.

8020 is at the heart of all that we do at IDEX and working across integrated business units is a meaningful expansion of our source code. Within our earlier walk-through of HST momentum, we've highlighted how 8020 choices can work powerfully for us to drive growth and margin at a single unit level, a collaborative small group, a formal growth platform and for a few powerful and select applications across the entire segment. 8020 analytics help us isolate the opportunity and align resources, our tunable technologies allow us to quickly shift from a pressure to an advantaged area with relative ease.

But it's really our teams and our culture that power this work. We've carefully built and nurtured an open, engaged and naturally collaborative culture through all phases of our evolution. In fact, this work began formally before we began to apply 8020 to IDEX. Our values of trust, team and excellence, powered by a shared purpose of trusted solutions, improving lives, helps our leaders unleash potential across business boundaries with an ability to course correct as conditions warrant.

We have more work to do as we move through Phase III, but we're very pleased to see strong performance feedback in the areas where we've spent so much time and effort together. I look forward to sharing more of our story with you in the days ahead. That concludes our prepared remarks. And with that, I'll turn it over to the operator to take your questions.

[Operator Instructions] Our first question comes from Deane Dray at RBC Capital Markets.

Eric, really interested to hear your thoughts about the -- I don't want to call it a disconnect because it's probably a lag effect here, but we finally got a PMI above 50 after 11 months. You have such an array of bellwether businesses that are usually synced to the type of inflection in the macro.

You mentioned BAND-IT. But just take us through how you see the demand outlook right now based upon what you have for day rates what you see in the order size? Are you getting any blanket orders, but this is really helpful to get down to that granular level, if we could, please.

Yes, sure. Well, look, we were happy to see that readout as well. But as we said in the comments here and you know, we track about 6 or 7 businesses that are really, really close to consumption. Rapid replenishment, we'll take an order on a Monday, make it on a Wednesday and ship it on a Friday. That's pretty typical. You mentioned a few of those businesses. We always look at them and see if they're moving together, that usually tells us we've seen some inflection. And so far, even through January, we've seen them be steady, but we have not seen them inflect up yet.

Now of course, it was a weather altered January. We'll see where things shape up in February and into March and as things warm up a bit. But as of now, happy to see the headline, but don't really yet see the inflection. It's kind of the same story in the fourth quarter. Those kind of hung in there but didn't move around much. We mentioned some of the pressured sectors that we have. Those are being driven by different drivers.

But I think for us, it's keeping an eye on it. As I said in my remarks, there's certainly chatter around the likelihood, given the duration, some of the things that are shaping up on the policy side. But I haven't seen it yet. When we do, of course, as you know, we will tend to see it first. And I think most importantly, we can chase it without frankly, adding anything to the resource of a capital base and our incrementals on that upside would be really, really good.

That's really good to hear. And just as a follow-up, I'd like to welcome Sean. And I noticed you said 8020, the requisite number of times. I know that's a full immersion and it's going to be ongoing here. But what I'm most interested in hearing from you, Sean, is you're coming in with a fresh set of eyes. IDEX is one of the high-quality compounder. So it's the opposite of a fixer upper, but there's still items metrics that a fresh set of eyes probably sees that you have.

And just kind of talk us through where you are focusing, what kind of priorities that you think would be helpful for us to hear?

Yes. I appreciate the question. So as you mentioned, I mean, a couple of observations early on. incredibly strong franchise that IDEX has. As you mentioned, underpinned by 8020 and everything that is done here. And from my standpoint, I kind of look at it in a couple of ways. You have an incredibly strong franchise, with really strong financial characteristics, and I'm talking EBITDA margin and the cash flow associated with that which affords us nice opportunities to allocate that capital to drive growth.

And as I look at it, I see a continuation of a lot of things that have happened here and then helping around the edges in kind of M&A strategy and execution as we see these -- this next, kind of, 3.0 in IDEX. So a lot of good to work with and bring some of my skill set and some of the things I've done in the past to help continue to move the needle.

We'll go next to Vlad Bystricky at Citigroup.

Maybe -- I don't know if I missed it, but can you just talk about how much price ended up contributing to top line overall in '25? And then within your 1% to 2% organic growth outlook for '26, how much of a price contribution is in that number?

Yes, happy to take that. So in fiscal year '25, price was around 3% in Q4. It was a little higher than that in that 3.5% range. And then as you look into the current fiscal year 2026 and the guidance, we're kind of forecasting around 1 point to 2 -- 1% to 2% on in terms of price contribution. So coming down from the levels of last year, but still additive overall.

Okay. So roughly flattish volumes overall across the portfolio was positive volumes in HST and some negatives in FSDP and FMT? Is that the right way to think about it?

That's exactly right.

Okay. Perfect. That's helpful. And then I guess, just stepping back, obviously, you talked about capital allocation over the past several quarters and today here on the call. But the shift to bolt-ons versus larger acquisitions and more focus on buybacks, how should we think about the potential for incremental meaningful portfolio pruning, if you will, outside of the growth platforms?

I think right now here in the short term, I mean, we're really focused on the businesses that link to the capital that we deployed pretty aggressively over the last few years. That's taking a look at our portfolio from top to bottom is always something that we're doing together as a team.

I think on the divesting side, nothing really, at least in the short term that's beyond kind of the unit of measures that you've seen here more recently. It's things that are associated with 8020 work, both in a business unit or a product line spectrum.

So I think most of our focus now is on capitalizing on growth, growth velocity. And then as I said in the remarks, specifically within some of the acquired businesses in HST taking advantage of some of the growth that's already on the Board now and using it in some ways to fund some choices that we know we want to go make through a few of the recently acquired businesses. How those are -- the runout and the disposition of those will play a part here. But again, in a more typical kind of smaller unit of measure here in the near term.

We'll go next to Mike Halloran at Baird.

So can we just go back to the disconnect between the strength in orders and the building momentum you're seeing in the orders and the conversion to revenue. I know there has been at least some level of shift and you've -- as you've reshaped the portfolio, brought on some longer-cycle application. So maybe just refresh the disconnect. And then I guess, when do you think that starts normalizing towards each other, right? I mean as you said in your prepared remarks, relatively short cycle tends to convert quickly. So maybe just walk through those dynamics.

Yes. So I mean, if you're taking a look at how revenue is going to kind of flow from Q4 into 1 and back into 2, which is things that we've talked about here. I mean there's kind of 2 components of that on the top line side, one that's pretty typical and traditional for IDEX and one that's a little new -- newer.

So on the FMT side, we've always kind of had that dynamic largely associated with weather and weather's impact in our water franchises and agriculture franchises specifically. And so you kind of see that go a little lower in Q1, it comes back in Q2. And we have that same trend in the guidance that we have here looking forward into '26.

There is a small component coming out of HST now that we also referred to. We're -- we've got some larger orders that we're capturing here. Some of them are coming from markets that we're targeting that have more of a kind of traditional fiscal spend profile that has budgets running out in Q4, and people making sure that they spend those. You can see it in the big capture number for us in Q4. And honestly, some of that came in kind of close to the end of the quarter.

If you look at just where lead times is on the gear that we're going to make kind of naturally fall out. It's not unusual to see some of it moving into Q2. That's how long it will take to get moving. So places like our Materials Processing Technologies business, it's more sophisticated CapEx. That's probably the place where you see it the most.

And so I think starting to see a little bit of an HST dynamic there as we continue to grow within some of these spaces. We'll probably add that component onto what we would typically see from the FMT weather-related side. It's not a lot. And frankly, to think of it as a V, which has, again, been kind of the typical IDEX profile, you'll see it here with the HST business as well.

And then maybe just the life science piece. Could you talk about what you're seeing there and how your guide should shape out through the year? And maybe the put that in the context of what your client base is saying and how they're expecting improvement through the year? And any kind of correlation points there, please?

Yes. I think we saw '25, it was kind of low single-digit growth. It was stable. It was predictable, really for us kind of driven on the positive side by growth in pharma applications and then the derivations that make their way into our products a little bit pressure on the more academic research piece.

As that played out, the only real change there, the government shutdown, the prolonged nature of it in Q4, I think put a little pressure on that business at the end of the year. And I think added a bit to the uncertainty heading into '26. We think that will normalize over time. And we've kind of got the business still running forward at sort of low single-digit growth. Some open questions still remain on the piece related to China. The innovation, very, very strong with inside the business. We continue to work with customers on different products to support platform releases at a healthy clip.

But we've got that dialed in, it kind of continuing along at mid-single digits and looking for different signs of inflection there. One, specifically, I think, around some more certainty around where that academic research and support would be through the indirect lever of NIH funding.

We'll take our next question from Joe Giordano at TD Cowen.

So you kind of touched on this like a year ago when you were giving guidance for 2025, we got into a position where full year guidance looks fine. 1Q guidance looked very weak relative to where people were thinking. I know there was this need to have these kind of larger orders come through and some tough comps there now. If you think through the businesses that kind of play in that and you kind of marry that with the orders that you saw in HST, like how is it how should we view this guide relative to those like 1Q, 4Q progression differently than we did last year?

It's a great question, and we are in a different position exactly for the reasons that you talked about. So as an example, in HST, when you just look at backlog kind of year-over-year, the difference with the exit last year from the year prior, we built over $100 million of backlog and while almost half of it is in the data center area that we talked about in the opening remarks, it's actually broadly applied elsewhere across HST. You see it coming from our Materials Processing Technologies business. You see it coming from the MSS franchises. We now have Micro-LAM on the board.

So we've got really, really good order support here and quite a bit more of it than we did at this time last year. Again, some of it cycles in the way I suggested around Q1 and then moves up again in Q2, but the assurance levels are quite a bit higher this year, especially in HST.

Perfect. And then if we talk about some of these newer markets like data center power, like how large is that now? How large can it realistically get in like a year or 2? And maybe can you speak to the capital intensity from your standpoint that is required to capitalize on this?

Yes. I'll kind of tackle it backwards. The capital intensity is actually not very different from what we typically do. It's light intensity. So think of this as a lot of critical subcomponents that we're making. We will just make more of them on a lot of the same equipment that we have. Still pretty rare in IDEX to be running more than 2 shifts anywhere. And so we've got an opportunity to flex the current capital base reasonably and you shouldn't see a deviation there.

We would have to add manpower of course, and we are. So that's something that our teams are working through, but nothing really significant on the capital side. In terms of where all this can go, I mean, that's an open question, obviously, for the whole sector. But we're playing in a number of different areas. We talked about behind the meter power that you're seeing a lot of that in the pneumatics area. That's kind of ramping as we go with kind of a flagship customer during the year.

But we've got a number of other areas or applications largely in the areas of thermal management -- discrete thermal management that we're working. And we've got some optical switching and communications work. Even in FMT, we've got some power gen support of some of the technologies we have over there for more typical generators. So we're actually managing it. This is one area that we're managing at a segment level, just to make sure that we're coordinated across. We can see all the opportunities. To the extent we're working with similar customers, we're making sure we're coming together as one IDEX.

So I think still room to run here. We're innovating a lot in the background and very, very excited overall about the potential. And as we said in the beginning here, won't need a lot of capital deployment to capitalize on it.

We'll take our next question from Matt Summerville at D.A. Davidson.

Maybe Eric, could you dig into a little bit, adding a little bit of geographic depth and talk about the order cadence that you saw in FMT, kind of the chem, O&G and ag side of the business and then in HST industrial in auto. Just trying to understand a little more of the commentary around just not really seeing any sign of inflection may just further punctuate that a little bit for us.

Well, you mentioned -- some of the ones you mentioned are the more pressured sectors for us overall. So I'll speak specifically to those. I'll start with energy. We always have to scale that a bit in terms of the work that we do. We do mobility custody transfer there. We actually had a strong beginning of the year. We saw a lot of truck builds and things and some optimism around the state of those markets.

I think as it played out, and you kind of take a look at where oil prices landed and some of the geopolitical stuff that was out there, we just saw a pause, kind of an unexpected pause in -- at the end of the year. So that really is micro exposure in the space for us that had kind of a positive front half and a less positive second half.

Now it has been a very, very cold winter. Ultimately, that typically helps that market down the road. So we'll see. The chemical side, that's been pretty pressured throughout the year. A lot of our exposure there is our probably lead franchise is European-based. And so when you think of a state of European chemicals, in particular, they really haven't been very strong. To be fair, the business is chasing international expansion. They've done really, really well in India in our shared campus up there. But I think chemicals, we're waiting to see signs of just general recovery there.

Agriculture is another. That's -- we've been kind of in a multiyear cycle there. Our orders ebb and flow kind of cyclically around weather patterns. So as we just look at it, we have to look at year-over-year performance. Team is doing well, executing that business well, certainly well positioned, but we're still waiting for signs of recovery there.

And I would say just broad industrial, it's been pretty similar and kind of flattish throughout. I'd say the theme of the day is just enough orders coming through for maintaining the system, replacing like-for-like components where we've had that share position for years, if not decades.

So that's all solid and has remained that way and held up that way in January. I think it's just a question of not enough expansion in more specific projects, people building out plants and doing things that require just more confidence around customer commitments. Geographically, I would just say the trends are not that different with the exception, it's a smaller part of the business. But India, probably the head for us. North America, second. I would say, Europe, third.

I guess with the order activity you saw in HST, is there a way to sort of parse out how much of that may have been kind of year-end budget flush/blanket activity and realizing the 34% may not continue. But are you still seeing that forward strength in the inbound order momentum now? 2026 has kind of kicked off? And then also, is there any incremental savings from the optimization left over to be realized in '26?

Sure. I'll take the first, then I'll let Sean weigh in on the second. Actually, January has been strong as well. So while there is some phenomenon there tied to year-end pieces, that is not the majority of what's going on here. A lot of it is just, it's momentum that we frankly seen building over the last 1.5 years. It was strongest here in Q4. We're very happy with what we've seen initially in January.

And again, while kind of data centers is the headline the broad-based nature of it also lends itself to being something that's got good rhythm, good cadence, and we're expecting it to continue into the year.

And then on part 2 on the cost containment, as I mentioned in the remarks, we did realize about $60 million of cost savings in last fiscal year. And that was really kind of the full targeted amount. Those actions were taken early in the calendar year. And so most of the benefit was realized last year.

A portion of that was kind of more temporary in nature. So I would expect a portion of that -- a portion of it was about $20 million in temporary in nature. I'd expect that a little bit of that we allowed to come back into the results this year as we resource and invest in some areas, particularly the ones where we're seeing growth in the order volume that we've been talking about.

Our next question comes from Bryan Blair with Oppenheimer.

To take a slightly different angle on the standout HST order strength, you just said that data centers were the highlight. Are you willing to speak to how much of Q4 order growth was AI related versus other markets and applications? I'm just trying to frame, I suppose, dimensionalize the drivers there.

Well, it is a little tricky because of the nature of the work that we do. While we have a lot -- the things that we do in pneumatics are clearly linked to data centers. I would even argue, a lot of what's driving nice positive growth in semiconductors is tangentially related to it as well.

What I would be willing to say here as I kind of pointed to that backlog growth year-over-year, just under half of it, we probably put in direct data center applications. But I would argue a lot of the other segments and pieces that are coming in, they're 1 or 2 steps over. Semiconductor is a segment for us has been strong, especially on the consumables side, a lot of it is supporting memory production.

And then we've -- we think we're seeing some good things building as well on some of that very, very critical componentry that we supply into lithography. And so it's kind of all in within that same ecosystem. But let's say, about half of the backlog build in very specific data center supportive applications.

Okay. That's helpful color. And it would be great if we could drill down a bit more on municipal and industrial water trends and outlook there. Where did revenue and order growth shake out in Q4? And then looking forward, what drives your team's confidence in sustainable mid-single-digit type growth, whether that be external or at a market level or in terms of your team's value prop and the ability to win in this space?

Yes. Well, first, just on the numbers side, you just called it. I mean we had a strong Q4 in the municipal-facing water side that was double-digit growth. We've kind of got it mapped out at mid-single digit plus going forward. And I think it comes back to the critical nature of the work that we do here. Very, very specifically, we're doing inspection and analytics work. So we're helping municipalities understand the state of affairs underground and where they might need capital to be vectored in to correct it.

So again, we're kind of at the lead tip of the spear, if you will, on putting capital work for infrastructure refurbishment. You kind of need our diagnostics to be able to do it, both to put that capital to work. And then frankly, you need it operationally as well. So whether it's significant weather events, and we've just seen another round of those, those stress infrastructure, it's our technology that helps you understand where it's coming from and how you go mitigate it really, really fast. So I think it's just a testament to the criticality of what we do. It's always been a nice piece of the business. It's made even more so now that more capital is being put to work, and we're absolutely seeing that continue.

One last piece when you look at water for IDEX, I just always remind people, there's a side of it that's related to high-purity semiconductor work. For a while now, that's been offsetting some of these dynamics on the municipal side. We saw some nice orders growth there as well in Q4. And so we'll have less need to call that out as an asterisk as we go forward and talk about water as a platform.

Our next question comes from Nathan Jones at Stifel.

Let me start by saying I was late on the call. So if you've already answered my questions, just tell me to read the transcript.

I wanted to ask about the platforming strategy that you've been on for a year or 2 now. Maybe you could talk about what you're looking to accomplish with that in 2026. I know you had some restructuring expenses around that in 2025 that generated some cost savings. Are there any more of those kinds of things contemplated for 2026? Just any more color you can give us around that kind of stuff.

Yes. Look, the optimization side, I'll let Sean take a handle of that. We got a little bit of it that flows over into the next year. He can take you through it. But the focus here is growth. I mean, so the whole idea is to get units working together in advantaged markets and take the power of our innovation, passion to solve customer problems and frankly, exponentially put it to work, and we're seeing it work. So the growth that we're talking about here for IDEX overall, a lot of it in HST, it is disproportionately coming out of these platform environments.

And you can see it in applications where generally, it's not just a single unit, but it's a couple of units or a platform working together, taking one piece of technology in one area and leveraging it under another. Sometimes it's even just taking talent and putting it to work to make sure we can free up capacity in a sister business and go after data center volume, things like that.

So it's this compounding power of putting things together that have long been IDEX assets, but putting them to work around markets that just have more favorable headwinds. So I think that's the headline, that's the theme, and we're really happy to see it starting to bear a lot of positive fruit. We have it now, and we see it continuing as we go forward. I just got done talking about the water platform, that's made stronger because of all the technology that's now working together to provide that analytical output.

When we talk about data centers, there's a number of units that are here. We actually have to coordinate it at the HST segment level. We've always had it in life sciences. To be honest, that's kind of where the original source code came from. So it's something that we're really excited about.

I'll let Sean tackle a little bit more of the productivity flow through.

Yes. And just on that point on the cost piece, as I mentioned, last year, you had about $60 million of savings related with cost actions. $40 million of that are structural, right, that will just continue. Most of that was realized last year. You might have a little bit of a bleed over into this year, some incremental benefit.

And then the other $20 million was kind of more temporary in nature based on the environment. Now the environment is pretty similar. So we're going to keep most of that cost out, but we expect some of that we'd allow to come back into the business as we invest particularly in these areas where we're seeing growth.

But there aren't any incremental actions planned for 2026?

Correct. As you think about the guide, there's no kind of round 2 or anything like that on cost takeout. Other than the normal course productivity, that is part of the business.

Then just a quick one on share repurchase. IDEX hasn't historically been a serial repurchaser but you did repurchase every quarter during 2025. Should we expect a continuation of that in 2026? And what's the plan for share repurchase in 2026? And I'll leave it there.

Yes. Good question. And so I think you should expect a similar level of activity that you saw in the second half of last year, which is around $75 million per quarter. that stepped up, as you mentioned last year, the first part of last year was around $50 million a quarter, stepped it up to around $75 million in Q3 and Q4, I think that's probably the right assumption as you think about this next year, could be different based on M&A activity, but that would be kind of the base amount if you think about.

Our next question comes from Robert Wertheimer at Melius Research.

I had 2, and I'll just do them both at once, if I may. Could you just share general thoughts around lithography drivers of that potential cycle? There's a lot going on, obviously, in various areas.

And then secondly, you may or may not want to touch on this, but there's very strong pricing power and different aspects of data center build-out? And do you have any thoughts on how your margins trend as some of those orders flow into revenues?

Sure. Well, the lithography side, we have a -- just to bracket it, semicon business for IDEX is just a little under 10% overall. About half of that is consumable parts and things like filters and seals and then kind of the other half is split between metrology. A lot of those are optics applications and then the other half, so we're down to kind of small single digits, it goes into this advanced lithography area that you're talking about. We only have so much exposure, and it tends to be at the very, very high end of the duty cycle.

So as you know, we've been talking about it probably maybe disproportionately because one of our recent acquisitions had some nice exposure here. And then we saw it swing around quite aggressively because of the trade restrictions around that type of business. That's really kind of unchanged at this point. I think those boundaries are largely set.

What has been more positive here lately is, I think, just the general momentum around chip builds for either advanced AI or some of the stuff related to memory for data center racks. There's just a lot more activity and a lot more need for capital gear. So we have heard more positive comments.

The only thing -- and some of those referencing order velocity and order capture. These are high-ticket items, and the lead times are very long. So for us, we have to kind of look at current inventories of components, where lead times might fall into build schedules and things like that specifically around this part of the business. But we will generally be much happier with positive momentum, positive headlines and we've seen more for those reasons. You talked about pricing power, specifically within data centers. I would argue this is -- it doesn't really work differently for us than it does through much of the rest of IDEX. We typically are entering with high critical items pretty low on the bill of materials. So the work that we're doing here is not atypical for IDEX.

And so the way that we think about pricing is material inputs come up and the recovery arguments that we make there, I wouldn't argue they're very different than they are anywhere else. Sure, the market is growing and everything there is mission-critical and delivering on those has to be perfect. That's not different from all the business that we do on IDEX. So I think we have actually similar pricing dynamics. And as we have started to ramp up that business, the flow-through on our business has been very good.

And next, we'll move to Andrew Buscaglia with BNP Paribas.

I just wanted if you can parse out a couple of things within your segments. First off, with FMT. I would think that this business would see strong accelerating orders in the event it test production recovery, if that were to happen this year. Orders were okay this quarter. But my question is, is there anything that's changed or evolved within FMT that makes it -- that would make it act a little bit longer cycle versus its typical short-cycle history? I just sound like a lot has changed in the last 5 years post count. So wondering if you could comment on that.

Yes, nothing different within those markets. These are franchises, some of which are over 100 years old. The positions that we have with customers are decades. And the work that we're doing, a lot of the business is like-for-like replacement, and that really hasn't changed. And so if you just broke this down and start to think about it as a story, today, we're seeing order rates that suggest if it's pumps in a factory that they're still running and they're running the same number of shifts and they still need the replacement levels to be the same.

If things were to vector up, it would probably say that we're going to put more maintenance on the shelf where we might expand back end of our plant and we need more pumps. So we're kind of, as we always have been laid out there. Our fulfillment rates are the same. We still have the same level of relationships and frankly, just share doesn't move around very fast in this market. So with acceleration, we would see really no different and what we should expect on our side in terms of both capture rates as well as really nice flow-through on the incremental volume.

Yes. Okay. And kind of a similar question within FMT and HST, I get -- sometimes you listen to the call, you get excited over portions of the business that seems to be doing well, data center space and defense, biopharma and you do a little work on it and you realize you're kind of talking about the percentage of sales or so or that or in that ballpark.

Maybe if you could bucket together these kind of higher-growth areas between FMT and HST as a portion of those segments could help -- I don't know if you have an estimate and how much we're talking about here when you kind of jumble it all together in each segment?

Well, I mean if we -- a lot of what we're referring to, particularly on the growth and momentum side is in HST and we were talking about it this morning. It is interesting that we made a mention here that the industrial and automotive side of HST is now 20%. And there were days long past where that was almost half of the segment. Our life sciences piece, which is kind of classic life sciences, analytical instrumentation and pharma exposed markets, that's about 1/3. That at one time was a significant -- more significant piece of this as well.

So the diversification of HST has come a long way over the last few years. And so if you think of kind of the markets that we've been talking about here, it's a significant percentage of HST. We're talking about pneumatics, with a lot of the data center exposure, everything happening within the MSS, I mean, that platform in Q4 was double-digit growth.

And so we're just seeing nice broad diversification across these target advantage markets, and you're seeing that kind of relative pie graph start to tilt in the right direction because of the capital that we've deployed there. I think FMT is pretty similar profile than maybe the water growth has changed it to a slight degree, but that's long been kind of a broad industrial exposed area with some discrete callouts in chemicals and agriculture, and we talked about some of the pressures we have there.

And that concludes our Q&A session. I will now turn the conference back over to Eric Ashleman for closing remarks.

Well, thanks very much, and I want to thank everybody for joining today as we close out the year and launch into 2026. I really think today, 3 headlines and takeaways. Number one, our growth platform strategy is working. And it's really powered by the cross-business collaboration and innovation that we talked about through the questions today. Our strongest growth it's coming out of our growth platforms. We are really, really happy of the work that's happening there and the things that lay ahead for us.

Number two, HST as a segment overall is doing very, very well. The teams are working phenomenally across the businesses and across the units. On the growth side and feel good about the margin expansion and some of the things we're going to drive there as well in a focused way in '26.

And then we touched on it a lot. I think our industrial businesses are really well set up to capitalize on growth at the first sign of inflection. I'll just remind you that when that when it does move, we will see it. We'll see it early, and we'll jump on it quick, and then the incremental performance as we do that will be very good is we're able to chase significant upside without really any change to the resource or capital base of the company.

So with those headlines in mind, I wish you all a great day, and thanks for your support and joining us today. Take care.

And this concludes today's conference call. Thank you for your participation. You may now disconnect.

Greetings, and welcome to the Third Quarter 2025 IDEX Corporation Earnings Conference Call. [Operator Instructions]. As a reminder, this conference is being recorded.

It is now my pleasure to introduce your host, Jim Giannakouros. Thank you. You may begin.

Good morning, everyone, and welcome to IDEX's Third Quarter 2025 Earnings Conference Call. We released our third quarter financial results earlier this morning, and you can find both our press release and earnings call slide presentation in the Investor Relations section of our website, idexcorp.com.

On the call with me today are Eric Ashleman, President and Chief Executive Officer of IDEX and Akhil Mahendra, our Interim Chief Financial Officer and Vice President of Corporate Development.

Today's call will begin with Eric providing highlights of our third quarter results and a discussion of our current business outlook and strategies. Then Akhil will discuss additional financial details and our updated outlook.

Following our prepared remarks, we will open the line for questions. But before we begin, please refer to Slide 2 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.

Thanks, Jim. Good morning, everyone, and thank you for joining us today. The IDEXX teams across the globe collectively delivered better-than-expected results in the third quarter of 2025 and I'm proud of our team's hard work and steadfast commitment to execution, particularly given today's challenging economic conditions. I'm on Slide 3.

Regardless of the business environment, our business model and 80/20 philosophy, along with our strong balance sheet and continued robust cash generation position us to quickly address challenges and pursue opportunities as they arise. We do this while remaining focused on driving long-term sustainable growth and value for all of our stakeholders. As we'll discuss further today, our team is laser-focused on the things we can control. thoughtfully executing our strategy amid a dynamic economic environment.

Before I provide an overview into our results, I'd like to step back and highlight where we are in IDEX's evolution and frame our priorities in the months and quarters ahead. When IDEX was founded almost 40 years ago, it was effectively a holding company with a portfolio of disparate but attractive industrial businesses. These were strong brands operating independently without a clear governing framework.

In Phase 2, we introduced a common IDEX culture and business approach, powered by an operating model with 80/20 as its heartbeat, not only enhance the efficiency of our operations, but also served as a decision-making framework and growth accelerator, guiding our focus, resource allocation and portfolio optimization.

In our current Phase III, we've made a number of foundational acquisitions accompanied by complementary bolt-ons to expand our capabilities in targeted advantaged end markets. These additions helped us establish higher growth platforms leverage to 21st century secular trends. Today, we are intensively deploying 80/20 in these areas to enhance efficiencies and productivity and unlock integrated growth potential.

We followed this playbook over the previous decade to build our IDEX Health & Science platform. Now we want to repeat the work at a faster pace with more power as we integrate new businesses and technologies into IDEX. I'd like to take a moment and shine a light on the 3 pillars of 80/20 driven higher growth, so you can best understand our strategy to unlock sustainable value for shareholders.

Please turn to Slide 4. The first pillar involves targeting high-growth advantaged markets as we allocate capital within our portfolio. We acquired 11 outstanding companies over the past 5 years. Each business brings one or more critical technologies to IDEX alongside a series of attractive market access points. Examples of the critical solution set that's expanded for us include support for data centers, space and defense advanced semiconductor manufacturing and water.

Each acquired company links and integrates in some way with other pieces of IDEX, providing scale and efficiency while reducing enterprise complexity. In parallel to this work, we divested 4 businesses with less attractive market exposures and lower potential to scale.

Our collective growth entitlement has moved to the right of traditional industrial indexes. We now have 5 thematic growth platforms that cover half of our revenue, and we believe they will disproportionately fuel organic growth for IDEX as we move forward.

In prior earnings calls, we talked about our build-out of the intelligent water platform. expanded in the last few years with the acquisitions of Nexit and Subterra. These businesses were a strong contributor of organic growth for IDEX in Q3. In September, we were proud to host a number of analysts and investors at the largest water industry trade show in North America. They were impressed by what we've built.

We've also publicly referenced some great work at AirTech within our Performance pneumatics Group. The team continues to win as they support power gen applications for data centers. They were a top driver of orders and sales growth for HST this quarter, making great businesses work together is the second pillar of Phase III growth outperformance.

Please turn to Slide 5. Here, we integrate technologies and market access points within growth platforms. As an active example, I'd like to take you through our integration progress within our material science solutions platform. The teams there have done excellent work. They also were strong contributors to HST's growth in Q3.

All of the companies within MSS map close to 1 of 3 critical jobs to do for customers. One, we form critical material properties. Two, we shape materials to create and control surfaces. And three, we had functionality by applying coatings. The platform brings these capabilities together for power.

Our teams like to say, if we hit one of these attributes, we can bid on a project. If we hit 2, we're highly likely to get the order, if we hit all 3, we can set specifications in the space and drive transformative growth. Within MSS, I'd like to highlight how the team at Muon is doing a great job effectively offsetting pressures within semicon lithography to drive performance.

With 80/20 at the heart of the work, Muon is improving productivity, rationalizing its cost structure, focusing on higher quality revenue and redeploying resources towards higher-value commercial opportunities. An example of tuning towards advantage markets is the development work Muon is actively pursuing now within data center cooling applications after recently winning business in the optical switching space, which we mentioned last quarter.

We are excited about the results our 80/20 actions are driving, which notably improved Muon's profitability in the third quarter to above HST segment average. The MSS platform is well positioned to drive profitable growth going forward.

Please turn to Slide 6. The third key component of Phase II of IDEX' evolution is balanced capital allocation. Akhil will get into more details here, but after the last few years of accelerating larger M&A to build our growth platforms, our current focus is on optimizing our business portfolio, tuning our capabilities in an ever-evolving marketplace, augmenting those efforts with strategic bolt-on acquisitions and returning capital to shareholders.

I hope you found this overview of the evolution of IDEX helpful and engaging. We are confident in the strategic plans to drive sustainable profitable growth for shareholders in the years ahead.

Now I'd like to move to our third quarter 2025 results, which demonstrate traction on these collective efforts and position us well to deliver within the guidance we set for the second half of 2025.

I'm on Slide 7. IDEX delivered better-than-expected third quarter results despite continued macro uncertainty. Our Health & Science Technologies segment, or HST, is building momentum as our teams continue to identify integrated growth opportunities. Overall, organic orders and sales increased 5% and 10%, respectively, year-over-year on the back of growth in pharma and data centers.

Our most recent acquisition, Micro-LAM is off to a great start, enhancing our capabilities and optics given their proprietary material shaping technology. As discussed earlier, we saw strength from our businesses within MSS, notably within our Optics businesses and Muon. Also drove strong margin improvement due to volume leverage and full run rate of their platform optimization efforts. We see a path for continued margin expansion going forward.

While HST continues to successfully turn its capabilities towards advantage markets, the segment's more fragmented industrial market exposures are netting to flattish, and we see little evidence of near-term improvements. And Fluid & Metering Technologies, or FMT, third quarter sales and profitability exceeded expectations, driven by strong execution and pricing.

Our water businesses facing municipal markets were standouts in terms of orders and revenue growth. FMT's general industrial exposure points remain stable without signs of positive inflection.

Finally, in our Fire & Safety Diversified Products segment, or FSDP disruptions in the funding environment and sluggish replenishment spend impacted our third quarter results and temper our expectations for near to midterm demand. So overall, we see a dynamic macro environment with an uncertainty overhang that we expect will continue into 2026. It's not clear how and when broad external catalysts will line up to support more predictable and positive conditions.

But at IDEX, we plan to continue to make our own luck through 80/20, tuning our resources and technologies towards those opportunities with higher growth velocities and work together as a team to integrate our growth platforms. providing more solutions power for key customers. We're on track to deliver the second half of the year and look forward to continuing our momentum into 2026.

With that, I'll pass it over to Akhil to discuss our financials and our updated outlook in greater detail.

Thanks, Eric, and good morning, everyone. All the comparisons I will discuss will be against the prior year period. unless stated otherwise.

As Eric mentioned, in the third quarter of 2025, IDEX delivered strong financial performance. Organic revenue growth of 5% was better than we expected with momentum in HST driving the outperformance. And adjusted EBITDA margin and adjusted EPS came in higher than our forecast for the company overall. Orders grew 7% organically in the quarter.

Our HST segment reached a record high at $390 million, and both FMT and FSDP posted high single-digit order growth in the quarter. While order activity was strong on a year-over-year basis, much was received and shipped within the quarter, leaving overall backlog levels relatively flat sequentially, and as a reminder, given the nature of IDEX's rapid fulfillment business model, we typically enter a quarter approximately 50% booked, which limits our overall visibility.

Touching on some of the more meaningful business demand trends in the quarter, we saw strong order activity within municipal water, data centers, semiconductor MRO, pharma and Space and Defense.

Semiconductor lithography remained below prior year levels. In Life Sciences, where IDEX provides niche components for analytical instruments, we continue to see low single-digit growth. Finally, while we posted order growth in FSDP this increase was largely due to timing of orders last year. FSDP order activity was subdued in the third quarter, specifically in dispensing and Fire & Safety outside of the U.S.

Organic sales in the third quarter grew 5% with both positive price and higher volumes contributing versus last year's third quarter. Strong price execution across segments was a primary driver, while volumes increased in both our HST and FMT segments, but declined in FSDP. IDEX adjusted gross margin contracted slightly or 10 basis points versus last year given unfavorable mix.

These headwinds were largely offset by productivity gains across our businesses.

Adjusted EBITDA margin expanded 40 basis points versus last year, reflecting productivity gains, favorable price cost and volume leverage. These more than offset unfavorable mix. Our platform optimization and cost containment efforts yielded $17 million in savings in the third quarter. These initiatives remain on track to deliver over $60 million in full year savings.

Free cash flow of $189 million decreased 2% versus last year on higher working capital. Free cash flow conversion was 123% of adjusted net income. And we remain on pace to achieve our target of at least 100% free cash flow conversion for 2025.

We ended the third quarter with strong liquidity of approximately $1.1 billion. And finally, we deployed another $75 million to repurchase IDEX shares in the quarter, taking our total to $175 million for the first 3 quarters of 2025, continuing our acceleration of returning cash to shareholders as Eric noted earlier.

Now quickly, some color on our results by segment. I'm on Slide 9. In HST, organic orders grew 5% and revenue grew 10%. Volumes increased on strength in life sciences, space and defense, semiconductor consumables, pharma and data centers. These areas more than offset year-over-year declines in semiconductor lithography and industrial businesses.

HST adjusted EBITDA margin expanded 120 basis points year-over-year given strong volume leverage, platform optimization savings, cost containment actions and favorable price cost. These more than offset the dilutive impact of unfavorable mix.

Turning to Slide 10. In FMT, organic orders increased 8% and organic sales increased 4%. Orders growth was supported by our intelligent water platform, which delivered strong performance this quarter, with project timing and favorable prior year comps driving results otherwise.

Looking at our leading indicator industrial order rates, they appear to be range bound and notably without any strong indication for sustainable inflection in the near term. We also are seeing continued hesitation on larger orders from customers across most of our industrial end markets. FMT achieved adjusted EBITDA margin improvement of 90 basis points driven by favorable price cost and execution of platform optimization and cost containment actions.

Please turn to Slide 11. FSDP organic orders increased 7%, but organic sales declined by 5%. Orders benefited from continued growth within North America fire OEM and growth in BAND-IT. Within dispensing, orders increased, but this was largely driven by timing. Organic sales declined in the quarter, primarily due to soft volumes across fire OEM, rescue tools and dispensing.

While short-term headwinds impacted sales in Fire and Rescue, the broader outlook for these businesses remains steady, albeit with limited catalysts for near-term acceleration as macroeconomic and geopolitical factors weigh on order activity.

Dispensing volumes were also pressured, reflecting the natural progression of the business' refresh cycle. As customers increasingly shift towards refurbishing existing equipment, rather than investing in new machinery, we anticipate continued softness in this area. FSDP experienced adjusted EBITDA margin contraction of 200 basis points, mainly due to volume deleverage. This headwind was partially offset by platform optimization and cost containment actions and favorable price cost.

I'm on Slide 12. Let us turn to capital allocation for the quarter. As Eric mentioned, free cash flow generation remains strong, allowing us to continue to allocate resources towards the areas we think will generate the highest returns. We drove $189 million of free cash flow after investments for organic growth, including CapEx spend of $15 million in the quarter.

And IDEX has generated 97% free cash flow conversion year-to-date. We ended the quarter with strong liquidity of $1.1 billion including cash levels of about $600 million and revolver capacity of about $500 million. Our current gross leverage position sits at approximately 2.1x. And while we feel comfortable with our current leverage and liquidity position, we attend for our leverage to migrate lower and get to our typical target range of under 2 in the next several quarters.

Our balance sheet provides financial flexibility to meet capital allocation priorities. As mentioned earlier, we accelerated our pace of share repurchases. We're purchasing 75 million shares in the quarter and $175 million year-to-date. And in September, we increased our share repurchase authorization to $1 billion.

We paid approximately $54 million in dividends in the third quarter and continue to target 30% to 35% of adjusted net income in dividends paid. Regarding M&A, we do not expect to pursue large acquisition opportunities in the near term after investing in the establishment of our growth platforms over the last couple of years. Instead, we will be focused on bolt-ons and portfolio optimization in the coming quarters.

Please turn to Slide 13. We are narrowing our full year guidance range to $7.86 to $7.91, which remains within our previously communicated outlook of $785 million to $795 million. This reflects continued strength in HST, particularly within our advantaged markets. Data centers, space and defense, semiconductor MRO and pharma which are helping offset pressure in our FSDP business stemming from funding disruptions and sluggish equipment replenishment spending. FMT continues to perform in line with expectations, contributing to overall portfolio stability.

Both our organic growth expectation of 1% for the fiscal year '25 and adjusted EBITDA margin expectation of between 26.5% and to 27.5% remain unchanged. Our updated guidance reflects more of a level load of sales between the third and fourth quarters, reflective of the typical historical seasonal cadence at items.

Our strong third quarter results have positioned us well to deliver on the second half expectations we set this summer.

With that, I'll turn the call back over to Eric.

Thanks, Akhil. I'm on Slide 14, where we highlight the key drivers of IDEX's shareholder value creation. As I mentioned earlier, we are squarely in the midst of driving Phase 3 of our evolution. We are applying 80/20 to drive integration, operational improvement and enhanced growth prospects across our high-margin growth platforms.

We intend to remain very selective around bolt-on acquisitions to augment our organic efforts taking a balanced long-term approach to capital allocation, supported by near-term intentionality. And as Akhil said, our current focus here is smaller bolt-ons and returning capital to shareholders. In the past couple of years, we identified acquisition opportunities and pulled forward activity to more quickly establish attractive value-creating growth platforms. We are now acutely focused on applying 80/20 to maximize their potential.

We believe all of this will drive meaningful EPS growth over the longer term, driven by organic growth we can leverage and capital deployment that amplifies IDEX's value creation potential for all stakeholders. We have outstanding and passionate teams and talent, a portfolio of highly critical and adaptable technologies in advantaged markets and a culture of operational excellence and the heartbeat of 80/20, which powers it all, supported by a robust balance sheet that we leverage via a balanced and effective capital deployment philosophy.

We believe we are in a position of strength to deliver as a premier growth compounder as we close out the decade and head towards our next phase of evolution.

That concludes our prepared remarks. And with that, I'll turn it over to the operator to take your questions.

[Operator Instructions]. Our first question comes from the line of Deane Dray with RBC Capital Markets.

I really appreciate that Slide 3 on the evolution. And also just kind of giving us the near-term clarity on capital allocation, portfolio optimization. And so that was a big help. This seems always appropriate, especially given the macro uncertainty, Eric, have you give us your insight into the tone of business? You mentioned some order hesitation. But just the metrics that you typically use the day rates, order size, some of the bellwether businesses? And can you also weave in whether there have been any blanket orders that's also a good indicator for us.

Sure, sure. Well, really, look, I think there's kind of 2 realities out there. There's -- those areas that we focus that are really contributing to our growth, and those are dynamic and aggressive and exciting data centers and the things we're doing in water space, I know you know well. So those kind of have their own rhythm of positive energy.

And then you have kind of the broad economy next to it. And this is, for us, is a lot more fragmented. I'd say it's certainly stable. I don't -- it's not really inflecting one way or the other. The way that we kind of pulse that, as you know, as we line up at 6 or 7 businesses. We look at what we call the sort of day rates, a lot of it comes through fragmented distribution. We watch them together. And if they ever move in the same cadence, it generally tells us we're approaching some inflection point, either positive or negative.

And so as we've been monitoring those throughout the year, I'll actually take you through it. I'd say in kind of Q1 leading up to the events of the spring around policy, those were stable, but they were a little higher than they are now. Then of course, we went through the spring and summer periods of tariff announcements and policy stuff, and we had a lot of things swinging back and forth. That kind of resolved itself in July as we talked through on the last call. And now it's stable again.

It's just a slightly lower level than it was in the first quarter, and it kind of makes sense. There's an extra dimension of uncertainty hanging over everyone's heads here related to where policy direction might take us. So I think we're still looking for things to turn there. We monitor them every week, but as of now, very, very stable without inflection.

On the large order side, which is not as big a part of the order flow for us, but does tell us things these would be discrete items where we actually know the end customer and how many they require and what they're actually building out. We just see the same kind of hesitancy. We don't see things being canceled. We see the decision process being elongated. We'll typically kind of see the funnel move a little bit to the right in terms of timing of outcomes.

And largely, we're capturing the orders we would expect. It's just taking longer, and so not really an inflection positive there either. But again, just that's kind of one world. It's sit next to another world that almost operates with an entirely different cadence because it's being driven by other macro forces that are not as affected by these things.

That's all really helpful. And just as a follow-up, and then I'll hand it off. Just can you reference any of the bellwether businesses, in particular, and also the impact of government shutdown on the fire business, in particular.

Yes, yes. So the kind of bellwether businesses, a lot of them for us are in FMT. There's much more fragmented user base through indirect distribution. So you can think of places like [ gast warn ] up, Viking -- over on the HST side, a business like BAND-IT, which does clams, there's a portion of that business that's pretty fragmented as well through kind of industrial applications. There's a few others, but that's generally the nature of what we're looking at.

And the reason it's meaningful for us is, I mean, it's really, really rapid fulfillment, as you mentioned. So we can get an order on a Monday, make it on a Wednesday and it's in service on a Friday. So it gives you a really good indication of what consumption actually looks like on the outside. And when those are constant, it generally tells us the system is working, people are fixing things, maintaining, replacing like-for-like.

When it starts to move, they're doing more work. They're running extra shifts. They might even be expanding the facilities. So that's kind of how we use it as a filter.

And sorry, the government funding question. Really, that's doesn't have the effect you might think. The North American fire and rescue markets are actually really good. They've been good for a while now. As you know, we do -- we've got kind of an enhanced automation offering there as well that's kind of helping us grow above baseline entitlements. So what we're really seeing when we reference government support, it's more of a European and Far East issue for us, that's China markets and some broader Southeast Asia.

Typically, at kind of this point back half of the year, they start to move up a bit as you get closer to the end of a budget cycle. And this particular year in both geographies, we didn't see that. In fact, thought it kind of turn the other way. If you think about it, in Europe, a lot of the funding over there is being used for other purposes, you can think of like the European equivalent for FEMA and sort of preparedness, so there's not as much to go around in our line of work.

And I just think in China, it's the continuation of a theme there. It's a desire to support more local industries, if you will, and be really, really careful on decision-making around higher government spend at a time where the economy is just not as strong, but not as affected on the U.S. side, it's not that direct relationship.

Our next question comes from the line of Mike Halloran with Baird.

So no, I agree with Dean. I like those 4 slides you put at the front that kind of laid things out. One question on it. Can you frame what this means from a growth perspective for the portfolio relative to history? I know that the 2010, the growth was pressured by the 80-20 piece, but it was kind of that 3%, 4% kind of range, all else equal on a reported organic basis.

What does that look like on a forward basis in a normal environment? Or however you want to frame the growth algorithm today versus the previous decade before you embarked on Page 3.

Well, sure. I think like if you kind of track IDEX historically, especially in that period or before, you'll see that we kind of track right along with industrial production or the [ ISMX ] index, I mean almost 1 for one. It's very high correlation in those years. And so by doing this work on the integrated side, bringing in, frankly, higher levels of vitality in the technologies that we've acquired. A lot of it in HST, some of it in the water space, certainly captive within our growth platforms. What we're trying to do is move that fulcrum to the right.

And we're starting to break from it now just because of the collective weight, a lot of it being delivered in the HST segment. And so if you think of that as historically something that's been kind of the lower side of low single digits is an entitlement, the industrial piece, we see that moving up and ultimately would like to get it sitting closer to mid-single digits for the company.

It's kind of GDP plus and really being just driven on the backs of 2 things, really, the portfolio itself, the composition of just higher tech assets that are more in line with, as I said on the call -- the prepared remarks, 21st century secular trends. But at the same time, and I think this is important a source code that we're writing in terms of how these technologies actually work together in a company like IDEX with tunable technology.

And you really, really see that taking shape in the Material Science Solutions platform that I outlined. And its impact on a single business like Muon. We're actually you're seeing faster results because of the collaboration across the dimensions that we've outlined here. So it's those 2 things. It's assets coming on board and the way we work those assets together, but then moves us off of kind of an industrial fulcrum to something closer to mid-single digits.

That's helpful. Appreciate that. And then maybe the answer here is obvious with some of the stuff you said in the earlier remarks, but you look back over the last 7 or so quarters, orders have been positive. They've kind of trended if I take a really lose average in that 3%, 4% kind of range from an organic growth perspective.

How do you think about when the revenue levels can start more consistently normalizing towards that range? We've had a lot of moving pieces quarter-to-quarter for a while now. But just when do you think there's going to be more of a consistent relationship between those things emerging?

Well, I think 2 things got to happen there. I mean we -- obviously, we're getting a lot of price, too. So as you referenced those numbers, what we're looking at is not just the organic rates, especially on the industrial businesses, but we're actually looking for the volume step up underneath it. And so I do think it's been a while now since that sort of base level in industrial world started to move or inflect.

So at some point, when it does, I mean we're going to be really, really well positioned to move on top of it. That's still an important part of the business, and it covers a lot of IDEX. I think back to this theme of controlling what we can control and having more pieces available at our disposal to do it, that's the part that's more impactful and where we're spending all our time and energy. So stories like you see in the Material Science Solutions platform, the work that I've referenced long ago about kind of how data centers are coming together in our pneumatic space, that's kind of leading the way for growth for us right now.

Water, which on the municipal facing side, that was a high single-digit grower for us here in this quarter. And so having more of those cases and points put down and then ultimately Mott being part of that as well as we continue the exact same work there. I think it's those 2 components. It's an entitlement shift that I think is overdue. On the industrial side and then us just doing the work that I'm describing here on top of it.

Our next question comes from the line of Joe Giordano with TD Cowen.

I'm just curious, Eric, like when you -- if you just like step back now, like after the -- and kind of take in the last year, 18 months or so, and you look at the deals you've done clearly like interesting deals with positioned into the growth areas that you mentioned. But like if I compare like what we've been acquiring to what we used to acquire like -- was there a sense of like maybe we chase growth in a different way?

And did we get away from what made IDEX unique in terms of the the positioning and the -- like the visibility of these businesses? Or I'm just curious how you would kind of push more on the whole like the last 2 years here on the M&A side. Now that we're refocusing on 80/20 look as a specific mandate again.

Yes. Yes. I appreciate the question. I think -- well, look, from probably the most positive aspect, the line of sight between the technology and the market access points we've acquired and areas of growth in the economy that are not affected by some of the things we've talked through, I think, is really positive.

Almost every single point we've referenced here in terms of us making our own luck, you can trace it back to areas very close to the businesses that we've acquired. So I think that part of the thesis I feel very confident about. The actual work being performed is not that different then I remember kind of the earlier days of IDEX, while a lot of our traditional technology was pretty industrial in nature.

The actual development and iterative innovation work that goes on there is very, very difficult in cutting edge. And so Part of the thesis here really is to essentially set the same specification points now in emerging industries, be a part of that, be a partner with customers as they develop things and then solve problems that I think are honestly pretty equivalent to what we did back in the earlier industrial times.

But there's new markets and new worlds here that are available that we need to be a part of that will be essentially annuity streams for us over the next decades here. They're different assets. We do a lot more of the work in clean room environments than we used to do in traditional manufacturing. But the nature of engineering first rapid iteration, kind of a big capital D and a small R in R&D, I mean, that's classic IDEX.

And then the ultimate business filter here that looks at delivering massive criticality at a kind of low point of the bill of materials is just -- that's the sort of secret source code of our economic engine, that's constant as well. So I think it's -- while it is an evolutionary shift and probably the newest nature piece of it is the way that we're collaborating across borders within business.

I actually think that's reflective of just where the world is now as well. The kind of solutions they're asking us to solve some of the best customers that are out there. They often demand work that transcends a single business or a single technology. So we're setting ourselves up in a way that we can continue to participate with a world that's evolving -- developing and evolving as well.

That's great color. And just kind of like an extension of that. And I understand that policies can change and they do change all the time from like a governmental, but -- if we think about what's in place now and if I was to like ask you to do kind of like a 5-year kind of growth outlook, I'm not looking for the number, but if you were to compare that now versus like if I asked you 5 years ago, are any of like your businesses do you think like structurally differently positioned in a world where policy is kind of here thinking some of the -- maybe some of the -- on the Med tool side and something like the the lab-based clinical applications.

Well, look, I think there's no question in certainly the last 5 years, things have changed and the pace of change is a lot faster than it used to be.

So when I think of that from the highest level, I think about businesses in a company that's agile and can move on a dime and being able to quickly rally around change, I think we're actually really, really well set up for that. I'll just give you a quick example.

We highlighted a lot of great things going on in this material science solutions platform. Got some applications there on the data center side, they didn't even exist, on. They really weren't on our horizon. Even 1 year, 1.5 years ago. And there are a testament to the teams and the flat organizational nature of the way we run things and autonomy of decision rights, those teams jumped on that kind of put 100% effort on it, segmented it with 80/20, went out, put prototypes in front of people and ultimately won the day very, very quickly.

So I'll step back and say in a world of change, I do think we're very, very well set up just in terms of kind of how we run and lead IDEX to go after that. Now there are specific places, you mentioned one there on the life sciences side. And that's in a different space than it was years ago. But I think even there, the tunability of our technology allows us to respond to things very, very well.

In Life Sciences today, there's absolutely some pressure on the kind of academic funding side of things. But there's a lot of strength on the pharma side, and we're able to tune resources and shift accordingly. So that ability to do that within kind of a small- to medium-sized organizational construct and do it fast. I do think sets us up for change sort of no matter what direction it takes us.

And then just from a kind of a trade policy perspective, which is sort of the big headline today that we're dealing with, remember, this is a really localized business model. We tend to iterate, ideate, produce, source, make stuff and sell it within the same geography. So it protects us a bit from unexpected shifts there on that side as well.

Our next question comes from the line of Nathan Jones with Stifel.

I guess I'll come from the other side of the platforming strategy and some of the acquisitions that have been made here. Questions have obviously been focusing on growth. I think there are opportunities for you guys to take some more cost out of those businesses, maybe combining some rooftops. I know you did some headcount reductions earlier in the year. So maybe if you could just talk about it from the other side and the potential for reducing costs, expanding margins as part of this strategy as well.

Yes. Well, look, that's kind of a classic part of how we drive value at IDEX. We're very good at operational excellence. We apply 80/20 to understand where resources are being well leveraged and where they're not. I'd kind of within a more recent framework, take you through maybe 3 of the acquisitions, so you can understand the work there. I'll go back a bit in time a few years ago, we bought Airtech. We did a lot of work with that business. We -- at one point, we did a kind of President's Kaizen event there and brought in most of the senior leaders of IDEX and helped out on a number of elements to make sure that they were set up to grow that business.

I was happy to say when I went back a year later that there you can see it, it's alive today and they've taken that and they've incorporated into their business, and it's how they're able to grow at the levels that they have. We've got some insight into the material science solutions platform and Muon specifically here, where as you know, we took some cost actions there. In Q3, we see that at -- we can appreciate it at full run rate. And as you can see now, we've got profitability above the consolidated HST levels. and are well set up now to lever it as we go forward. And then more recently and certainly at a different scale, the work we're doing with Mott, it's the same thing.

We're in there and we're making calls on business, where do we think the 80s are? Where are the 20s? How does this help us map resources accordingly. And we're doing a lot of work on the efficiency side. One of the highlights of Q3, as you know, Mott has a ramp kind of a long linear ramp to Q4. They're going to step up that business, actually executed some of it early into the third quarter because of efficiency gains and some of the great work that, that team has done as well as the work on our side.

More structurally, we've long referenced the work that we did around operational -- or structural productivity and delayering and things like that at the platform level, that's part of it, too. And when we move from single businesses and kind of a classic IDEX sense that has all the back office and all the administrative things happening business to business, and we combine them and they work together, we get back-office efficiencies there. So a lot of the things that are on the plate right now, that's where it came from.

And now we're seeing full run rate here in the third quarter and we're -- it upticks a bit even into Q4.

Nathan, just maybe to put some numbers around it, right? Eric mentioned the dealer and the platform optimization efforts. And then we -- the second bucket was really cost containment efforts and actions that we put into place in the -- starting in the second quarter. What you see today is we delivered $17 million across those 2 buckets and the step-up will be a few million dollars and run rating at about $20 million here in the fourth quarter.

Are there further opportunities for these kinds of restructuring savings. I think you've talked about maybe consolidating some rooftops as 1 of the things to do in the future. as part of combining these businesses, moving them closer together. Is there something that you're likely to move on in 2026.

Well, that's certainly a chapter that we'll take a look at. One of the advantages when you put similar businesses together, as you can absolutely look at your infrastructure topology and then ask questions around how to effectively lever that.

I will say we haven't done as much of it here this year because that's a big variability element as we've worked on some of the other aspects of 80/20 and bringing people together, particularly in a commercial and a technical way that's different. We've been a little careful not to superimpose more variability on top of it and run the risk that any of that then manifest through to the customer base. So that's a chapter to come.

It's something that we'll certainly consider here, and we'll be thoughtful in how we layer it across, so that it doesn't interrupt growth. But that is an open up area of opportunity for us. And certainly, as we scale the company, we're always thinking of that because we want to take some of that complexity out of the system.

I guess my follow-up is going to be around capital allocation. Specific change in priorities, I guess, really this quarter with I know you talked about M&A maybe taking more of a backseat now smaller deals, not the transformational deals. And you have repurchased shares each quarter this year, increase the authorization. Is part of the plan here to be more of a serial repurchaser of stock going forward? I would imagine that you think the stock is probably well below intrinsic value right now and IDEX has historically been a share repurchaser in that situation. So just how we should think about share repurchase, both opportunistically in the short term and Morrow's a long-term avenue for capital deployment?

Yes, Nathan, let me just sort of walk you through that framework, right? And first, I think it's important for me to recognize the high-quality portfolio we've built, which actually enables us to generate strong free cash flow consistently that we're actually able to deploy, right? And you sort of called it out M&A, there was a period of heavy investment for us during our growth platform building phase, and now we're focused on bolt-ons that are going to have attachment points to these growth platforms that we've built. And 1 of the greatest examples here that half for you who was in 1 of the slides was Micro LAM, which we announced a quarter ago, right? -- its integration is going really well. It's sort of plug in very nicely into the MSS platforms.

Look, from a funnel perspective, our funnel is strong. We continue to cultivate proprietary ideas. And so we'll -- as those opportunities are available to us, right, we'll execute on them. And then as we think about excess cash flow, we'll continue to return that capital to shareholders. And that's through dividends. I do want to make sure that we spend a minute on that. That is sort of a policy that -- where we've grown our dividend here historically. We aim for 30% to 35% adjusted net income to be paid out from that front and then share repurchases, which, as you mentioned, right, we stepped up.

So coming into the year, we had already stepped up the share repurchases because we were outside of that heavier deployment of capital towards platform building. And so if you look at sort of where -- how the numbers stack up, right, year-to-date, we've returned about 80% of our free cash flow to shareholders. So -- as we think about this framework and look at what's ahead, especially us moving towards more bolt-on being able to add more things to the growth platforms, you'll see that excess cash being returned to shareholders.

But I think, Nathan, long-term -- also people to recognize, I mean, we've got some work in parallel. We're always thinking about where does IDEX go next, what other technologies are out there that could be interesting for us, are there access points for markets, so that work continues, but it's of a longer duration. So we're not -- it's really important that we don't interrupt it, but we're kind of do 2 parallel tracks here.

And we're thinking ultimately about deploying capital to the points of highest return I think right now, for us, taking advantage of what we purchased, getting it to work together effectively working on both the top and the bottom line and driving a ton of value out of the base that we've acquired is absolutely a point of high return.

And then as we do that, returning cash and capital to the shareholders, we think if nothing else, a real signal and sign of the confidence we have in the long-term growth strategy for the company.

Our next question comes from the line of Bryan Blair with Oppenheimer & Company.

The intelligent water platform has gotten a decent amount of airtime today. I think that's fair. Eric, as you called out, the team presented quite well at [ WesTech. ] So wondering if you could offer some finer points on contribution in the quarter. And I think you would noted high single digit. I don't know if that was a revenue or order expansion. A clarification there would be helpful.

And then even more importantly, just speak to the underlying demand trends, visibility and growth prospects of the platform as we look to '26?

Sure. The high single digits is on the revenue side, orders were good as well. We point out the municipal facing side because when we talk about water platform as a whole, we also have a piece of it that's vectored towards high-purity applications. A lot of that's in kind of semi fab build-out areas. So we want to make the distinction, but the bulk of it is municipal facing. And it's -- I mean, the great businesses. We're doing a job there that is absolutely critical. We help people understand what's going on underneath the ground.

These are environments, as you know, you don't want to spend a lot of time in. And we've augmented that through acquisition as well. So Nexsight, it brought us some more critical inspection gear and a lot of analytical intelligence -- this is our most software-intensive business in all of IDEX. And we use it -- the 2 technologies together, think of it as flow monitoring, flow detection in very difficult environments. I assure you that's not an easy job to do.

And then a data capture portion of it that then sends it into an analytical framework, which essentially allows us to help municipalities understand how the system is working. And so we present that information all across the global customers. And essentially, if you think about it, there's 2 primary customers.

On the one side, there's the operator side that's trying to just run a good system day-to-day. But maybe even more importantly for us, we're actually supplying that analytical input into capital specification engineers, and they're using it then to essentially vector capital into larger scale projects and infrastructure build-out. Without the work that we do, that would be very difficult. So it's much more integrated than it was originally.

We presented it that way at WesTech. It works that way in actual fact. And here with the latest addition, Subterra, that allows us kind of to go in, in an untethered way, a lot further and extends our reach with a pretty simple device. So we're really, really pleased with what we have there. It's great to see the growth as a reward, and we look for more in the future.

That's excellent. I appreciate the color. And Q3, HST results were pretty encouraging overall. I know your team has been navigating challenging market conditions for a while, and perhaps there are stand out free shoots quite yet, but it seems like, I guess, the aggregate demand outlook is I believe is gradually improving.

Given the restructuring and optimization work your team has done, how should we think about HST incrementals once we do get back to a more supportive demand environment?

Ryan, it's Akhil. Yes, I can take this one. Look, the way I would think about it is sort of from an incremental standpoint, just given sort of the demand dynamics that you laid out, we'd expect somewhere in that 35% to 40% incrementals. And again, as sort of if those demand dynamics weren't there, right, we'd vector to the lower end of that, but that's sort of how we're thinking about with demand there to support the business.

And I think as you said, and I want to highlight here, especially for the teams that are doing the work in HST. Yes, they had a really good year. I mean this segment has grown orders, sales and profitability each of the 3 quarters that we've had here, and they're going to step it up again in the fourth quarter.

Again, the underlying markets are -- some of them are better than others in IDEX, but a lot of this is on the backs of great work like we've outlined in MSS or in data center applications and Airtech and other places.

Our next question comes from the line of Vlad Bystricky with Citigroup.

So maybe just going back to your commentary, Eric, on sort of the price versus volume dynamics that you've seen and you mentioned that you've been seeing strong price realization overall. So could you give any color on what price actually contributed in 3Q and how you're thinking about pricing heading into 2, particularly if kind of a still sideways or sluggish demand environment in portions of the business line.

Yes. Well, look, so price capture has increased, obviously, as we've gone through the year, much of it in response to the tariff announcements. And so in Q3, we were about 3.5%. That's a high point for the year. that's higher than everything we had in 2024, and it's kind of starting to approach some of the levels at the tail end of '23, which was kind of the end of that big inflationary cycle. So it's increasing. And 2 things I would say about it. One, I always want to remind people here.

One of the reasons that we're able to do that and do it effectively, it is a testament to the differentiation that we have in our technologies, the positioning of our businesses and the great work of our teams. I say that because I think as this goes on and the levels get higher, I think this is an area where it's getting a little more difficult. I think there's some real pricing fatigue that is out there generally.

And I think this is where I appreciate the differentiation that we have in our businesses and our ability to kind of withstand that argument. It goes back to the original business filter of the company. of lots of criticality at a relatively low price point, so that when our increases do hit, they're easier to rationalize than some others.

So heading forward, I think, obviously, from a pricing perspective, a lot of it is going to depend on where does policy go. So much of it has been a response to that. kind of the base level pricing entitlement that does things like covers traditional inflation for us and others. We've -- we're planning for that. We've got some of it out now as kind of a preannouncement getting ready.

So nothing really interrupting that side of the cycle. The real open question is, does policy become more aggressive? Does that then force us to go to even higher levels? And then ultimately, that's into an environment that I think is starting to have some real fatigue.

Yes. And Vlad, I can put some dimensions around sort of the 3.5%, right? I think you heard us talk about it earlier in the year. We came out with sort of traditional price of about 1.5 points -- and then in the second quarter, once we started to put tariff pricing in place to be able to offset that incremental cost. -- we're now at about a 2% run rate just to help you put some numbers around what Eric mentioned, and we expect that to continue here in the fourth quarter unless there's maybe a positive announcement here or it could go the other way, just given what's on the horizon. So we're not accounting for that, but our intention is to continue to offset it, just given the remarks Eric made here.

Okay. That's helpful color helpful to understand. And then could you just -- maybe help me understand a little better kind of the cadence between 3Q and 4Q and whether you saw some shift in demand, just given the upside here in 3Q with the full year largely reiterated. Just what's changed amongst the quarters?

Yes. Look, I think if you go back when we were out here in the summer, right, we talked about sequentially 2% to 3% would generally be flat and there was that step-up -- and as we said in our prepared remarks, right, the teams did a really nice job executing with this backdrop and you think about certain order timing materialized earlier than we anticipated, the 80/20 work that Eric mentioned with Mott and the operational improvements that we're seeing there. That left us with more of a balance 3 to 4Q, which is more reflective of a historical pattern for IDEX overall.

We're in the 4Q, we still see a ramp in HST, but we've got line of sight to it. It's in our backlog. So we're pretty confident in being able to deliver on that.

Our next question comes from the line of Rob Jamieson with Vertical Research Partners.

Just -- I know you're not going to give formal guidance on 26. But can you provide us maybe a little bit of framework of how you're thinking about next year. Just as we're trying to drive the business back to our historic mid-single-digit organic growth algorithm, like what are some of the key risks and opportunities that we should be thinking about and considering into next year?

Yes. Well, I mean, I think a lot of it still will come down to where is the -- what's the nature of kind of base level industrial entitlement because that still covers a decent part of IDEX. So as we go through Q4, monitoring those bellwether businesses to see if there is some inflection, that will be a key input for where we end up on a lot of IDEX on -- in terms of industrial coverage. Pricing dynamics will be important as well.

So as Akhil mentioned, where are we going to be between that ratio of kind of a lower figure, which takes care of our own inflation and then a higher figure, which has to offset whatever policy may be at that point. That will go into the calculus. And then the bulk of it is really going to come down to momentum and where we are in these individual areas where we're creating our loan lock. So kind of each one of the 5 growth platforms, we're starting there.

We are having those discussions now around what's in the funnel, what are we winning? When does it look like it's going to come out. So I think those 3 pieces moving together is how we'll be thinking about the year to come out. The last piece is in our control.

The other 2 largely, we are somewhat captive to how the world goes and how that shapes out given the diversified nature of the company. But we will be looking for signs of inflection as we go through Q4 and certainly would be referencing those as we talk together.

Our next question comes from the line of Walt Liptak with Seaport Global Securities.

Just a quick follow-on on that last one, thinking about 2026. I guess, one, just on the organic revenue, what's your feel at this point, if you can give us any about, are you cautious about 2026 or you're optimistic about the organic growth and especially given the platforms?

And then maybe second, just help us think about the operating leverage that we should get when we're thinking about modeling 2026 EPS.

Yes Walt, it's Akhil. So sort of just building on what Eric mentioned, right, we'll talk about guidance when we see here next. But just at a higher level, look, he sort of mentioned us monitoring the day rates. We are short cycle, have limited visibility. So we are continuing to do the work around 26 and what that's going to look like, taking into account all the factors that Eric mentioned, right? The pricing dynamics us being able to make our own luck and the work that we're doing within our growth platforms and then really just some of this macro backdrop around rapid fulfillment, and we're going to continue to monitor that pretty closely.

But as you think about generally the incrementals, right, we sort of I mentioned, I would say, think of it as 30 on a consolidated basis, 30-ish percent. Plus some are going to be higher here. So that is what we're going to be looking at from an incremental standpoint. Earlier in the call, right, we mentioned where HST would be, so I think taken together, that should hopefully give you some level of guidance of where we expect '26 incremental land.

And I would just say, Walt, to add on, the degrees matter here. closer the world tends to tilt towards flattish. Our incrementals don't spring as well. You get a little bit of buoyancy in the system and get that up around 3%, 4%, things start to perform a lot better. So kind of where we are in that spectrum will matter as well around that point that Akhil mentioned.

Our next question comes from the line of Brett Linzey with Mizuho Securities.

I wanted to come back to the platform optimization savings and the cost containment. So the $60 million, I guess, -- how should we think about any carryover into next year? And then how much would be maybe structural versus discretionary that would flex back up as these volumes might improve?

Brett, it's Akhil. I'll take that one. So as you think about the couple of buckets here, right, you got this platform optimization and dealer layering bucket. I would think of that as more structural in nature, and that's going to achieve run rate this quarter here. And so you'll see that moving forward. That was about -- think of that as the a $42 million bucket that we had put forward here when we announced that on the back of our 4Q earnings earlier this year. And then you think about the second bucket that we talked about cost containment, Again, that's also going to hit run rate here. That's more temporal in nature.

I would think of that 1 as possibly coming back depending on the opportunity set that we're expecting to pursue here, we could make some of those investments to land those opportunities. So that's that $20 million bucket for a total of $62 million. So that's how I would parse the 2.

And we have reached the end of the question-and-answer session. I would like to turn the floor back to Eric Ashleman for closing remarks.

Well, thank you. Thanks for joining today, and thanks for your interest and support in IDEX. I think key takeaways here certainly, we're making our own luck with 80/20 in a really broadly uncertain world that taking you through our evolution, I hope you can appreciate we built some real strong foundational assets.

We've got some outstanding businesses, very strong teams in talent, a highly engaged and collaborative culture and effective operating model powered by 80/20. And now we boosted our technical and commercial vitality through these strategic acquisitions and divestitures and and we're writing the source code for a new way of working together as a team within scalable growth platforms.

And I'm happy to see we're starting to put some growth points on the board there as we do that work together. We're confident overall that we'll continue to build momentum through this work, focused work as we move forward to drive value for all of our shareholders. And I really look forward to talking to you about it more in the quarters ahead. Thanks so much, and have a great day.

Thank you. And this concludes today's conference. You may disconnect your lines at this time. Thank you for your participation.