Walt Liptak

Walt Liptak sought clarification on the 'mix and construction being weaker' comment, specifically if it referred to ClarkDietrich and the nature of the mix impact. He also asked about the seasonality of ClarkDietrich's performance and whether a lift is expected in the back half of the year, and if there's a tougher comp for smaller gas containers in Q3 due to strong performance last year and recent cold weather.

Answer

CFO Colin Souza clarified that the subdued construction comment primarily referred to ClarkDietrich's new construction exposure and intense competition. President & CEO Joseph Hayek added that ClarkDietrich's mix shifted towards larger, lower-margin projects (stadiums, infrastructure) compared to traditional drywall stud business. Souza stated that ClarkDietrich's seasonality is not too pronounced, expecting no worse than sequentially flat performance, with earnings impacted by steel pricing and project mix. Hayek explained that Q3 and Q4 are seasonally strongest for small gas containers due to winter heating needs and spring construction, and he doesn't foresee significant differences in seasonality this year compared to last year's strong Q3.

Walt Liptak asked for clarification on the HVAC refrigerant container business, specifically whether its recent success represents a one-year bump or a sustained increase in penetration and market growth. He also inquired about the expected seasonality for Worthington's business through the fall, winter, and into the spring selling season, including inventory lifts and indications from large customers in both consumer and building products.

Answer

CEO Joe Hayek indicated that the HVAC refrigerant container business is likely experiencing sustained penetration and market growth, driven by ongoing mandates for environmentally friendly gases, rather than a temporary bump. CFO Colin Souza explained that Q1 and Q2 are typically seasonally weaker than Q3 and Q4, with specific activity in Q2 and Q3 often influenced by unpredictable weather events like colder temperatures or storms.

Walt Liptak, MD and Senior Equity Analyst at Seaport Global Securities, inquired about IDEX's organic revenue outlook for 2026, asking whether the company feels cautious or optimistic, especially given its growth platforms. He also sought guidance on the operating leverage to consider when modeling 2026 EPS.

Answer

Akhil Mahendra, Interim CFO, stated that specific 2026 guidance would be provided later, but highlighted ongoing monitoring of day rates, pricing dynamics, and momentum in growth platforms. He indicated that consolidated incrementals for 2026 should be thought of as 30% plus, with HST potentially higher. Eric Ashleman, President and CEO, added that the degree of market buoyancy would significantly impact incrementals, with better performance expected if organic growth reaches 3-4% rather than remaining flat.

Walt Liptak from Seaport Global Securities asked for management's sentiment on the 2026 organic revenue outlook (cautious vs. optimistic), especially considering the growth platforms. He also requested guidance on the expected operating leverage for modeling 2026 EPS.

Answer

Akhil Mahendra, Interim CFO, stated that IDEX is still monitoring day rates and working on 2026 guidance, considering pricing dynamics, growth platform momentum, and the macro backdrop. He advised thinking of consolidated incrementals at 30% plus, with some segments potentially higher, for modeling 2026 EPS. Eric Ashleman, President and CEO, added that the degree of market buoyancy matters, with incrementals performing better if organic growth reaches 3-4% rather than remaining flattish.