IDEX's Data Center, Chip And Space Businesses Now Top A Third Of HST, Growing Around 50%
The CFO said the three markets drive the segment's growth, while the CEO said nothing distorts demand despite pockets of noise.
Data center, semiconductor, and space and defense work now makes up more than a third of IDEX's Health & Science Technologies segment and is growing about 50% year to date, Chief Financial Officer Sean Gillen said on the company's third-quarter earnings call on Wednesday. IDEX, which makes pumps, valves, flow meters, seals, fire and rescue equipment and precision optical and fluidic components, said the segment's organic orders rose 21% to $468 million, a third-quarter record.
A third of HST, growing fast
Gillen said the growth in those three advantage markets is running around 50% year over year so far this year. He called the trends durable and said orders and backlog give visibility into 2027, though the company will face tougher comparisons next year.
Life sciences is the next biggest piece, about a third of the HST portfolio, Gillen said. It has dragged on growth for a few years because one program is sunsetting, and he said it should add to growth next year. The rest is more industrial-leaning products that track overall industrial activity.
HST organic sales grew 13% in the quarter, and the segment's adjusted EBITDA margin widened 110 basis points to 28.8%. Gillen said nearly all of the growth came from businesses IDEX bought in recent years.
Lumpy data center orders
CEO Eric Ashleman said that within HST only data center demand arrives in large, unpredictable tranches. He called that piece "a little lumpy, a little unpredictable," while saying backlog is more than enough to run out current demand.
Asked about emerging headwinds, Ashleman said nothing on the board is worrying the company in the near term. For data centers, he said, "we're always keeping an eye on kind of overall aggregate capacity of the system." He described noise in pockets, "none of it caused by us," and said he sees nothing that would distort growth.
Raised outlook and new hiring
IDEX raised its 2026 outlook. It now expects organic growth of 6.5% to 6.8%, up from 5% to 6%, and adjusted earnings per share of $8.91 to $8.96, up from $8.70 to $8.85. Third-quarter adjusted EPS was $2.33, up 15%, and organic sales rose 8%.
Ashleman said IDEX will begin putting growth investments and talent into fast-growing areas after years of living off 80-20, the company's framework for shifting resources toward the best opportunities. He said the high-30s to 40% incremental margin framework Gillen outlined already includes that spending.
The company's market value was $17.2 billion in Wednesday morning trading.
Gillen said management will lay out its 2027 expectations on the fourth-quarter call.
Sources
- Idex (IEX) Q3 Earnings and Revenues Beat Estimates — Yahoo Finance
- IDEX Corp. (NYSE:IEX) : Cases :: Law360 — law360.com
- IDEX Gears Up to Report Q3 Earnings: What's in the Cards? — Yahoo Finance
