Greetings and welcome to the IDEX Corporation’s Third Quarter 2014 Earnings Conference Call. At this time, all participants are in a listen-only mode. A question-and-answer session will follow the formal presentation. (Operator Instructions) As a reminder, this conference is being recorded. I would now like to turn the conference over to your host Michael Yates, Vice President and Chief Accounting Officer for IDEX Corporation. Thank you. You may now begin.

Thank you, Diego. Good morning everyone. This is Mike Yates, Vice President and Chief Accounting Officer for IDEX Corporation. Thank you for joining us for our discussion of the IDEX third quarter financial highlights. Last night, we issued a press release outlining our Company’s financial and operating performance for the three-month period ending September 30, 2014. The press release, along with the presentation slides to be used during today’s webcast can be accessed on our company website at www.idexcorp.com. Joining me today is Andy Silvernail, our Chairman and CEO and Heath Mitts, our Chief Financial Officer. The format for our call today is as follows: we will begin with Andy providing an update on the market outlook and what we’re seeing in the world and then he will review the third quarter financial results. He will then walk you through the operating performance within each segment. And finally we will wrap up with an outlook for the fourth quarter and full year 2014. Following the prepared remarks, we’ll then open the call for your questions. If you should need to exit the call for any reason, you may access a complete replay, beginning approximately two hours after the call concludes, by dialing the toll-free number 877-660-6853 and entering conference ID 13589617 or you may simply log on to our company’s homepage for the webcast replay. As we begin, a brief reminder: This call may contain certain forward-looking statements that are subject to Safe Harbor language in today’s press release and IDEX’s filings with the Securities and Exchange Commission. With that I’ll turn our call over to our Chairman and CEO, Andy Silvernail.

Thanks Mike. Good morning everybody I appreciate you all joining us here for our third quarter call. Before I get into the color on the quarter I have a little shout-out here for the Kansas City Royals going to the World Series for the first time since 1985. I have to say that because seating beside me our Chief Financial Officer, Heath Mitts is a born-and-bred KC boy and a long-time season ticket-holder. So good luck to them tonight. Look, throughout the year, and really for a long time now we’ve been talking about controlling our own destiny and we did that in the third quarter and we’ll do so going forward. In quarter we had 7% organic sales growth, we had sales and operating margins increased in all segments and we delivered 13% EPS growth. For the year we’re going to up 5% to 6% sales, we’re going to have EPS of between $3.52 and $3.55 and that’s going to up 14% to 15% for the full year. I’ll get into more detail in the numbers here in just a moment. But before that I want to take just a little bit of time and talk about what we’re seeing around the world in terms of geographies and also in the different markets. I also want to take a moment and talk about that the improvement in our cost structure and investments for growth that I outlined in the press release and then just take a minute and talk about the acquisition environment. So first let me get to end markets and geographies. We did see some order softness in August and September, the good news is that we had a nice rebound here so far in October and we’re up to a good start in the fourth quarter.…

Thank you. At this time we’ll conduct our question-and-answer session. (Operator Instructions) Our first question comes from Charley Brady with BMO Capital Markets, please state your question.

Just a couple of questions on the orders. And I jumped on late, so I apologize if you covered this. On FMT, did you give the orders organically ex-acquisitions?

Yes, we did, we have that in their hold on a second Charley so let me make sure I actually speak about this correctly. We said that overall FMT orders were down 1% organically and that was really entirely due to the OEM business with the in Ag and we also have some non-U.S. energy stuff that got pushed out.

Okay. I guess I was -- without the acquisition, it was made in Q2.

Yes, organically, when we say organic we’re excluding that.

Okay. I just wanted to make sure I was clarified on that. And what's the -- on FMT, excluding that large dispensing order last year, what would have orders been up or down?

You mean diversified?

Yes.

We have never kind of characterized it like that but you can kind of back into the math of it. So, it was down 20% in the quarter and in all of that was due to that large order that comp.

Our next question comes from Nathan Jones with Stifel, please state your question.

Just on FST for a minute, I mean I think we are through that diversified order now. None of that shipped in the third quarter, correct?

We don’t know what we’ve been past that since the early second quarter.

So obviously a very strong performance for margins in that business now. Assuming we don't have another large diversified or dispensing order or something like that, are we at margins that are sustainable now? Or was there something in the mix or something else that drove them higher than you expected?

Nathan, this is Heath. Always the segment the diversified segments always going to have some element of mix just relative with the four businesses that are in there. BAND-IT is performing very well and we obviously enjoy very healthy margins out of the BAND-IT platform. So, I wouldn’t tell you the model of 26 let’s say somewhere in that 24 to 24ish range is probably a good modeling but understand that it can swing a couple of hundred basis points in either side of that given mix in the given quarter.

Okay. So we shouldn't expect it to stay up at 26?

No.

-- some quarters it might be.

-- internally model it but again it’s going to swing on project activity and it’s going to swing on mix within that business.

Okay, that's cool. 24% is more like a baseline number there. Obviously, invested quite a bit of money in CapEx this year relative to what you usually spend. It's still not that high even at these levels. When you are looking forward into 2015, are there still opportunities to deploy CapEx to drive growth in 2015? Have you exhausted those? Will they be less next year?

We actually think that it’s going to continue to ramp up. So part of what you’re seeing in the cost out that we’re doing here in the fourth quarter it’s really a combination of cost reduction and pretty aggressive reinvestment and allows if it’s come down to the segmentation we’ve been doing here for a couple of years just really aggressively segmenting our markets and our businesses so that understand more deeply where some of the these profit pools are and a great example of that is Viking. So, in this quarter alone they’ve had a handful of new products that come out of segmentation that we’ve funded really aggressively and they’re winning and actually just yesterday we received a pretty good size of orders at Viking for those new products that launched and so we’re pretty excited about that so we think there is more and as we’re challenging the teams more deeply that to find more organic opportunities we’re finding them to be more aggressive in terms of asking for money and as I said in the past, we’ll fund organic stuff all day along as aggressively as we can.

So should we expect a higher CapEx number next year?

Nathan, I think a fair number just to model with is still around 2% of revenue. This year we’re going to be attend more than that in prior years we’ve been just under 2% but I still think 2% plus or minus $5 million is probably a good number so, yes I do think it ramps up to Andy’s point next year but we’re not talking about doubling going forward -- going from 45 to 90 we’re talking about going moderately higher and just and these are not made up just as you know as we talked about and as you can imagine given our decentralize nature these are not made up of any one or two items that are driving this. These are series of opportunities across the entire IDEX portfolio.

Okay. But we should consider -- we should think about 2% of revenue as being your CapEx number for the foreseeable future?

Yes, of course plus or minus here.

Okay, cool. You talked about some push outs of projects in Middle East and Europe. What’s your sense for the possibility that those turns from delays into cancellations?

Honestly I’m not sure. In our forecast this year and the next year we have it at zero and so we don’t bet on that kind of stuff so we’ve got it there we know that they’re out there but in particular if you look at what’s going on with the SAMPI stuff, it’s going right into the Middle East and we’ve been awarded the business sitting they’re shooting at each other. So, I don’t expect that’s going to happen anytime soon. The chemical stuff I’m not as concerned about that’s much more what I think is a push out and plus that’s be it made up for in speed what’s going on in the U.S. The energy stuff I want to put a full zero on, for the foreseeable future into the Middle East and then the chemical stuff I do think is a push and that does happen.

Well, I have always known you to plan for the worst, Andy, so on the inventory step-up charges, are they complete now?

Yes, it was 800,000 this quarter and 500,000 last quarter that’s done so you should see a take up there improvement for FMT.

Our next question comes from Allison Poliniak with Wells Fargo. Please state the question.

Can we just going back to energy again, North America obviously concerns crudes and somewhat collapse, obviously, we are seeing it in the energy there, concerns about investments in the U.S. are you guys seeing that, are people talking about that yet?

No, just remember where we play principally right, we’re playing in the midstream so we’re not playing for the most part, where holes are being putting around. So we’re much more affected by the production equation than we are by the hole in the ground equation. So we haven’t seen that yet, I suspect that I don’t think that’s going to be a material impact to our business kind of one way or the other, for the most parts just because where we sit today I do think it’s likely to have some impact on acquisition valuations that are out there and that might actually open up some doors just from opportunities.

Okay, great. And I guess that leads me into my next question. You know, you talked about maybe multiples compressing a little bit on the energy. But multiples have been here -- we've been at this level -- it seems like you've been at this high level for quite a number of quarters here.

Yes.

I mean, is there -- I mean, what’s your thought I mean, do we need to change criteria here if this is a sustained level or are you just expecting that at some point this will kind of come back to you guys?

The way I look at it is we first start Allison, with saying, does this matter to us strategically? And once we answer that question we’ve historically said 12% to 15% ROIC cash-on-cash ROIC, there are some businesses that we would buy that would be lower than that in terms of hurdle to be candid with you. There are some things that we would buy that would be kind of in the 10ish percent range because they matter to us and we’re rolling distraction and obviously the spread of capital is pretty attractive. So there are few things out there that we would do that for. But for the most part I really think that we got to remain disciplined. We’ve all seen this movie many, many times. And it eventually, it does tip over and even though we saw in the public markets here in the last month or two months that has availed some opportunities in terms of capital deployment that weren’t as good at that period of time. So I think we got to be patient we’ve got a great balance sheet, outstanding cash flow and we’re going to keep disciplined here.

Our next question comes from Paul Knight with Janney Capital. Please state your question.

If I look at the bookings growth on the health and science side or the order of the 2% decrease, it seems to go counter to kind of a low-single digit revenue growth of your customers. Can you talk to that spread?

Yes, couple of things, first and foremost we’re tied to the equipment side not to the consumable piece and that has been the piece that has been outperforming lately has been the consumable piece of businesses. And also we don’t perfectly match in terms of quarter-by-quarter we bought because of how new product shift, how inventory moves in the system but certainly within two or three quarters you’ll see a pretty good correlation. So I’m not particularly concerned about what we’re seeing in the marketplace right now in terms of a gap between us and our major customers.

Do you think that China is improving or kind of the same?

It’s kind of the same. I think what’s been talked about in the press now is more accurate to what has been happening here for some time. So I think the new cycle has caught up with reality. I will say that I don’t think it is deteriorating further I think that’s important because if you’d asked me that question this time last year even into the first quarter I think we’d have said that the growth rates had deteriorated significantly. So I think we’re kind of in the relatively steady state but also realizing steady state in China is a lot of volatility.

Our next question comes from Scott Graham with Jefferies. Please state your question.

So I'm looking at the orders across the businesses, and I know, Andy, you mentioned at the top that you saw August and September softer, and then October better, and which does explain some things. You know one of the things I think we are trying to gauge here is the impact of the headlines on order patterns; you guys are particularly short cycle with your product sales. Do you think that that was a reaction to what some of the negative headlines that have come across over the last couple of months? And then maybe October picked back up again because it needed to, because they had under-ordered? How are you looking at that?

I think Scott, I think that’s partially correct I think number one, I think we should recognize that Europe in particular and the Middle East in particular, they actually that the business is softened because of what’s going on in those regions right in terms of the economic growth and also some of the conflict in the region. So I think that’s very much real I think that got exacerbated some of the new cycle and some people pulling back on those things and probably what we’re seeing a little bit October is a rebound from that. So October for us and the order book has been pretty solid and so it’s encouraging and I don’t think that what we’re seeing in October is necessarily sustainable I think there is some snap back.

Right. But since you are short cycle, that at least gives you, call it, the first three weeks of the month of the quarter that at least gives you some confidence on your fourth-quarter organic sales guide, yes?

Yes, if you remember right, we go into any quarter and we’ve got about plus or minus we’ve got half of our business booked going into a quarter. So, we’ve got a book in turn the other half and so generally if it’s the first 4 to 6 weeks of our quarter are strong we are in good shape.

Understood. I want to maybe just, with my follow-up question, just go back to a prior question about M&A.

Sure.

And you have a lot of directions to go here. I mean, obviously, I'm sure nothing has changed; FMT and SHT are still the main areas of focus. Here's a question I just maybe want to ask you, I don't know if you can answer it. But if you say that, in the second quarter, you had two situations where you were at the finish line but then needed to walk, but now that you have four to six, are those four to six or any of them or all of them as close to the altar as the two? Or further away?

No, I wouldn’t say they’re necessarily as close the differences is both two that we walked away from were auctions. And so you can live with that volatility, right? You eat the cost of the diligence and then at the end of the day if someone decides to write a big foolish check at their business and so that’s it -- there is not much you can do about that one. So, what we’re seeing right now is we do have some more preparatory stuff right now and I feel good about but also couple of things that we’re looking at are in Europe and as you know the diligence cycle is it’s a little bit longer and if you get anywhere close to the holidays being pushed into next year that’s just reality. So, not quite as close but a little bit better in terms of profile not being auctions.

Our next question comes from Mark Douglass with Longbow Research, please state your question.

Andy, can you discuss IOP in the quarter and what the outlook is there?

Yes, so orders were basically flat year-over-year not concerning for us great profitability improvement as you remember we had a really strong order quarter last quarter in IOP so feel good about that. Some of the end markets Mark aren’t quite as robust as I think maybe we thought they would be we kind of thought that some of the semi business would even be stronger than spend. So it’s not quite as strong as we thought maybe going into this I think the fourth quarter I think we’re in pretty decent shape in total and just generally that the overall profit improvement there has been great. I think we’ve said this before in the past but we’re now into the 20s in terms of EBITDA margin in the platform and it’s performing like we hope it would.

Okay. So, semis is still --?

It’s still soft, I don’t know what you thought but we thought it would be stronger here at this time this year and it kind of softened up.

I thought it would be stronger for multiple quarters.

Yes, yes.

It keeps getting pushed out kind of like the energy stuff.

Yup.

Speaking of energy, what is your exposure -- you talk about North America is good, but with the petrochem build out expected in 2015 and beyond in North America --.

Yes.

-- how does IDEX benefit, or will you benefit on the petrochem side?

Yes, so we actually capture that in our chemical food process platform more the most part not totally but for the most part and we feel really good about that so we’ve done a handful of things first and foremost with actually if we put a bunch more resources down into that region from our long standing businesses. We also the acquisition of Aegis was important for us. We’re putting a new facility in the Huston area for Aegis. As you know Aegis is out of Baton Rouge and we’re actually putting a new facility in Huston because that’s a high touch business very very high touch business. And Aegis actually allows us to bring our Richter business closer to the U.S. market one of the things that we struggled within the past, it was not really having the right kind of channel into the U.S. for our Richter pumps and valves and we’ve got that now. So and also in our Corken business touches it too. So we feel pretty good about that exposure and we think 2015 is going to be good year.

Would you say it’s still less than 5% of sales, though? Or --?

In total the petrochem fees less than 5% sale fees.

Right, it’s more than that yes.

I have to going back and exactly quantify it, because you’ve got to kind of break apart some different businesses. But you could probably say that’s 5 to 10 definitely.

Yes, it’s in the range and it touches multiple areas of IDEX that’s the only reason we have to go and look at in all the different spots in IDEX that are impacting by that Mark.

I mean you got Viking itself which is 10% of sales and good chunk of Viking goes there you got a big piece of Richter and all of Aegis right --

Element of Seals --

Yes, element, so you got pieces of the company that touch in so many ways.

Right. And then finally, on the cost-outs in 4Q, are you planning on excluding those? Is that why you’re not inputting that in --

No, we’ll take it in our P&L it’s just that we didn’t have it nail down exactly because there are going to be some moving parts here before it’s all finalized. But we’ll actually take it in the P&L.

Okay, but it’s not in guidance at this point?

No, it’s not in guidance at this point, no.

(Operator Instruction) Our next question comes from Kevin Maczka with BB&T Capital Markets. Kevin Maczka - BB&T Capital Markets: Can we go back to the 20% margin guidance for Q4? It seems like you’ve been guiding that level all year, and to your credit, exceeding it. I know you talked about FSD, and maybe there is some mix shift. We shouldn’t necessarily think that that margin continues at that high level. But is there anything else going on in terms of mix or currency or the segments that you can point to as to why that would come down like that sequentially?

Yes, there are really two things. So one is the very, very strong performance in FSD if you think about that sequentially that’s going to be a big impact. But also to be fair the MPT had really strong quarter with health and science and that was a nice profitability in terms of incremental profitability that on a sequential basis we don’t see in fourth quarter. So that 20% I think is a pretty good number. Kevin Maczka - BB&T Capital Markets: Okay. And then, just in terms of currency, on slide 8, you mentioned the 2% FX headwind. I’m assuming that’s a revenue headwind, can you bring that down to the bottom line and comment on what that means at EPS? And then, as we look forward and think about 2015, assuming rates kind of stay where they are, can you just quantify at all or give some goal posts on what that might mean to 2015?

Kevin this is Heath. It really is just the currency translation but that the flow through and in the quarter we’re expecting somewhere around 9 million at current rates we don’t try to predict what the rates will be throughout the rest of the quarter. But at current rates we’re anticipating around $9 million headwind and so it’s just really the statutory flow through that 9 million impacts are earnings by a couple of cents. But it’s really just the translation not so much that we have some type of hedge that’s out of place. Kevin Maczka - BB&T Capital Markets: How about next year?

Next year we haven’t quantified it yet to be honest we’ll need some time to see where the fourth quarter settles in, but when we give our guidance for next year we’ll certainly come out with that.

Our next question comes from Matt Summerville with KeyBanc. Please state your question.

Good morning. With respect to the margins in HST, I went back and looked they are at the best level they’ve been in three years plus I guess, this breakout, is it really related just solely to mix or is there something else sort of driving that and I guess what’s the right way to think about margins in this business going forward?

Yes, so Matt if you exclude the sequential improvement from material process and you look at the underlying other pieces that make that up, those are all still positive. So it’s a good story almost no matter what you’re talking about. And so we feel pretty good you’re seeing improvement and where is that coming from principally, it’s coming from the couple of places. We continue to see better overall profit execution at optics, that’s been a really good story. But also on the industrial side our gas business it’s in there and they have just done a great job over the last, really the last couple of years we are continuing to expand profitability. That’s a business that has just done -- really if you back five years you look at today that’s entirely different business than it was five years ago in terms of overall profit profile and growth rate. So those are the big pieces.

And then is there any way you can quantify the magnitude of business that you’ve sort of zeroed out at this point related to the Mideast and energy, is it $2 million, is it $20 million? Can you at least triangulate on that a little bit?

It’s around $10 million. So if you actually looked at what got pushed into the second or third and we’re not going to kind of count it, it’s about a $10 million impact in the quarter.

Our next question comes from Joe Giordano with Cowen, please state your question.

Hey, guys, thanks for taking my call. So I guess order of weakness, if we could talk about HST a bit on a sequential basis. You talked about it on a year-on-year versus the one order, but it's down a bit from where we've been over the last three quarters. So could you talk maybe more on a bit of a sequential?

Are you talking about order rates, sales rates?

Yes, order rates in HST.

It nothing that’s particularly meaningful Joe, when you look at that and you’ll have some swings here and there quarter-to-quarter it’s not that big a deal so that is not been in there that you look and you say it is a big yellow flag or red flag.

Okay.

Joe, I’d jump in, this is Heath. There is a -- the element of the segment that is depend upon kind of daily book and bill is something along according to expectations which would be fine. It’s the noise and it comes generally from the project activity on a year-over-year basis.

Okay. Okay. And then I guess more of an esoteric question, I guess. But how should we think -- how would you gauge and characterize the level of your conservatism when you are giving your guidance now? Since five quarters in a row, not just meeting the midpoint but meeting the -- beating the top end. And obviously, a credit to you guys, that would be better if more companies did that. But how would you gauge, like, the level of conservatism inherent in your guidance now, as it was maybe late last year or something like that?

Well, first and foremost Heath can’t spell esoteric. So we -- I don’t know, I try to look at that and we try to guide in a way that is he is responsible and we feel that we have real confidence in delivering on that and by the way it’s also how we manage the business so one of the things that I said time to time again is we’re a company that can respond very very fast with an uptick in business because our direct labors is single digits and so we can move quickly on the upside on the downside as you think about how high our contribution margins are, that’s a painful equation so, as you look at what we’re going to do here in the fourth quarter and we’ve done a lot of hard work here to prepare our organization to be able to do that to get in better and better fighting shape. But another piece of that is that it continues to lower that breakeven point to the company and so that’s how we manage the business and so we’re not trying to be overly conservative at the same time, the bottom line is we’re just trying to be responsible.

Okay. And just last from me. Have you talked about at all where -- like which businesses the cost-out might be? And then last, what are you seeing in European Union right now? You've mentioned Asia; you mentioned North America.

So, this is not some big companywide thing that we’re doing, we haven’t might picked some random number is really been excellent organization and segmentation of businesses have opened up opportunities across the company. So we’re able to do this in kind of rifle shots and it’s a kind of thing that in any one place you wouldn’t really notice but when it adds all up it becomes meaningful. So, it really is across the company and by the way that’s on the cost side and that’s also on the investment side. So we’re moving a whole bunch of resources from some areas to other areas all around growth and productivity and so what you seen is we kind of use the term cut and build and that’s how we think about it here. So, it’s pretty broad spread but it’s not any kind of massive swap anywhere. And pretty much all of that stuff would be done by the end of this month for the most part here and there. So, in terms of European municipal still weak, there is no two ways about it, you seen a couple of projects that have come out of the wood works in recent months specifically out of the UK but for the most part it’s still pretty soft.

Ladies and gentlemen there are no further questions at this time. I’ll turn the conference back to management for closing remarks. Thank you.

Thanks, Diego. Well, thank you very much for joining us here today obviously we’re proud of the results we have and most importantly really congratulations to the team in the field at IDEX who has continue to execute time and time again. So, we appreciate your support and we look forward to talking to you at the fourth quarter call. Take care