IDEX's Order Explosion: AI, Data Center and Tariff Refunds Define a Strong Quarter
HST orders surge 47% organically, guidance raised, but IEEPA refunds complicate the margin story.
IEX · Earnings Call · 2026-07-29
A Breakout Quarter, Led by HST
IDEX's second quarter was a clear step change. Consolidated organic orders grew 28%, with strong order growth across all three segments, but the star was Health & Science Technologies, where backlog build accelerated and organic orders surged 47% year over year. The drivers are concentrated in three secular end markets: data center power and cooling, semiconductor process tools, and space & defense. As CEO Eric Ashleman said, “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%.” — Eric Ashleman, CEO · 2026-07-29 Yet the quarter also came with a noisy accounting item that obscures the underlying strength: tariff refunds under IEEPA. CFO Sean Gillen walked through the mechanics: “As Eric mentioned, we received IEEPA-related tariff refunds in Q2. This impacted our financial results in a few areas.” — Sean Gillen, CFO · 2026-07-29 The net effect was a $0.08 benefit to adjusted EPS and 130 basis points of adjusted EBITDA margin expansion. Excluding that, EBITDA margin still came in at the high end of guidance — a testament to operating leverage.Visibility from Data Center & Semicon
The order strength is not just a one-quarter spike. Eric described a growing pipeline of future-dated orders, particularly for data center and semiconductor capacity, with customers prebooking capacity and pulling deliveries forward. This is already showing up in blanket order momentum at BAND-IT in aerospace and in HST's margin: adjusted EBITDA margin expanded 270 basis points year over year. In the Q&A, Eric noted the broadening of demand: “We are encouraged by both sides firing in both the FMT segment as well as the more industrial pieces of FSDP additionally.” — Eric Ashleman, CEO · 2026-07-29 That is a marked shift from the tone earlier in the year. In April, management was still cautious about the durability of the recovery. Sean had said: “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.” — Sean Gillen, Chief Financial Officer · 2026-04-29 And as recently as February, Eric admitted that the bellwether day rates had yet to inflect: “And so far, even through January, we've seen them be steady but we have not seen them inflect up yet.” — Eric Ashleman, Chief Executive Officer · 2026-02-04 Now, the inflection has clearly arrived.Guidance Raised, Capital Deployed
Given the momentum, IDEX raised full-year guidance: organic growth from 3–4% to 5–6%, adjusted EBITDA margin to 27–27.3%, and adjusted EPS to $8.70–$8.85. The company also increased its CapEx plan to $110 million to support the growth. As Eric explained, “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” — Eric Ashleman, CEO · 2026-07-29. This was paired with continued buybacks of $77 million in Q2 and leverage down to 1.9x. The fundamentals back up the story. Operating margin has been on a rollercoaster, but the latest quarter shows the kind of flow-through that comes with volume recovery. The stock has responded: +16.6% over the last 90 days and within ~5% of its late-2024 peak.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.