IEX Q2 Deep Dive: Cautious Guidance and Delayed Orders Pressure Outlook

August 12, 2025 at 00:59 AM EDT

IEX Cover Image

Manufacturing company IDEX (NYSE: IEX) reported revenue ahead of Wall Street’s expectations in Q2 CY2025, with sales up 7.2% year on year to $865.4 million. On the other hand, next quarter’s revenue guidance of $818.2 million was less impressive, coming in 5.6% below analysts’ estimates. Its non-GAAP profit of $2.07 per share was 4% above analysts’ consensus estimates.

Is now the time to buy IEX? Find out in our full research report (it’s free).

IDEX (IEX) Q2 CY2025 Highlights:

Revenue: $865.4 million vs analyst estimates of $857.5 million (7.2% year-on-year growth, 0.9% beat)
Adjusted EPS: $2.07 vs analyst estimates of $1.99 (4% beat)
Adjusted EBITDA: $237.2 million vs analyst estimates of $229.4 million (27.4% margin, 3.4% beat)
Revenue Guidance for Q3 CY2025 is $818.2 million at the midpoint, below analyst estimates of $866.8 million
Management lowered its full-year Adjusted EPS guidance to $7.90 at the midpoint, a 4.5% decrease
Operating Margin: 21.7%, in line with the same quarter last year
Organic Revenue rose 1.2% year on year (-4% in the same quarter last year)
Market Capitalization: $11.86 billion

StockStory’s Take

IDEX’s second quarter results were marked by better-than-expected revenue and non-GAAP profitability, but the market responded negatively, with shares declining significantly following the report. Management attributed the quarter’s performance to strong execution across its business segments, especially in data center, pharmaceutical, and defense applications. However, CEO Eric Ashleman noted that “unpredictable trade policy changes and tariff announcements” led to dynamic swings in customer order patterns, freezing some large orders and creating volatility in demand. This environment, particularly in recently acquired businesses, slowed growth and contributed to a less favorable outlook for the remainder of the year.

Looking to the coming quarters, IDEX’s guidance was heavily influenced by continued uncertainty in customer decision-making and persistent policy-driven delays in large projects, notably in semiconductor-related businesses. Management was cautious, with CFO Akhil Mahendra emphasizing that expectations for a rebound in high-margin areas have been tempered due to the timing of order releases and the impact of new tariffs. Ashleman added, “We are recalibrating our projections to better reflect the current pace of recovery and the slower acceleration in our most recently acquired growth platforms.” The company plans to offset inflationary pressures from tariffs through price increases and cost containment, while closely monitoring order trends and execution in its growth segments.

Key Insights from Management’s Remarks

Management identified trade policy uncertainty, delayed large orders, and mixed demand across end markets as primary factors shaping both Q2 performance and the revised outlook.

Trade policy disruptions: Unpredictable tariff announcements caused customers to pause or delay large orders, particularly in semiconductor and data center markets. CEO Eric Ashleman described “oscillation in both small order patterns and decision-making” that resulted in order volatility and weaker visibility.
Segment performance uneven: While pharmaceutical, space, defense, and data center businesses saw growth, the chemicals, automotive, and semiconductor lithography segments faced persistent headwinds. The Materials Science Solutions (MSS) platform, linked to advanced semiconductor applications, was notably impacted by geopolitical tensions and slower customer decisions.
Mott and Airtech integration: Recently acquired businesses like Mott and Airtech were highlighted for their potential to drive growth through integration with existing IDEX capabilities. However, the pace of margin improvement and revenue acceleration at Mott slowed due to delayed customer decision-making, prompting management to recalibrate growth expectations.
Cost containment and productivity: IDEX achieved $14 million in savings from platform optimization and delayering initiatives, with full-year cost savings still on track. However, management acknowledged that some productivity improvements are volume-dependent and could face further headwinds if demand weakens.
M&A focus on tuck-ins: The company announced the acquisition of Micro-LAM, a precision optics manufacturer, to complement its Optical Technologies business. Management reiterated a focus on smaller, strategic acquisitions with strong synergies, aiming to scale up in advantaged markets while maintaining a disciplined approach to capital allocation.

Drivers of Future Performance

IDEX’s outlook is shaped by ongoing trade policy uncertainty, delayed large orders, and the company’s efforts to optimize its cost structure while pursuing targeted growth investments.

Order timing and policy risks: Management cited that unpredictable trade policy changes and ongoing tariff risks continue to slow decision-making for large capital projects, especially in semiconductor and data center applications. These delays have directly impacted guidance for the next quarter and the full year.
Margin and cost actions: The company expects ongoing mix headwinds and lower volumes to pressure margins in the near term. However, IDEX plans to mitigate the impact of tariffs and inflation through price increases and continued cost containment, with full-year savings targets supported by platform optimization and delayering initiatives.
Growth platform execution: Success in recently acquired segments, such as Mott and Micro-LAM, will depend on the speed of customer order recovery and integration with existing IDEX businesses. Management believes that, as trade and policy environments stabilize, demand in core growth markets like data centers, pharma, and defense could accelerate, supporting future revenue and profit expansion.

Catalysts in Upcoming Quarters

In the coming quarters, the StockStory team will focus on (1) the pace of order recovery in semiconductor and data center applications, (2) evidence that cost containment and price increases are offsetting tariff and mix pressures on margins, and (3) integration and performance of recent tuck-in acquisitions like Micro-LAM and Mott. Monitoring further trade policy developments and their effects on customer order patterns will also be essential for assessing the company’s progress.

IDEX currently trades at $160.29, down from $185.59 just before the earnings. At this price, is it a buy or sell? See for yourself in our full research report (it’s free).

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