IDEX Corporation (NYSE: IEX) Q4 2025 Earnings Call dated Feb. 04, 2026
Corporate Participants:
James Giannakouros — Vice President of Investor Relations
Eric Ashleman — CEO, President & Director
Sean Gillen — Senior VP & CFO
Analysts:
Deane Dray — Analyst
Vladimir Bystricky — Analyst
Michael Halloran — Analyst
Joseph Giordano — Analyst
Matt Summerville — Analyst
Bryan Blair — Analyst
Nathan Jones — Analyst
Robert Wertheimer — Analyst
Andrew Buscaglia — Analyst
Presentation:
operator
Good morning and welcome everyone to the IDEXX Corporation fourth quarter 2025 earnings conference call. Today’s conference is being recorded. All lines have been placed on mute to prevent any background noise. After the speaker’s remarks, there will be a question and answer session. If you would like to ask a question during this time, simply press the star key followed by the number one on your telephone keypad. If you would like to withdraw your question, press star one again. At this time I would like to turn the conference over to Jim Janakoris, Vice President of Investor Relations.
Please go ahead.
James Giannakouros — Vice President of Investor Relations
Good morning everyone and welcome to IDEX’s fourth quarter 2025 earnings conference call. We released our fourth quarter financial results earlier this morning and you can find both our press release and earnings call slide presentation in the Investors section of our website idexcorp.com on the call with me today are Eric Cashelman, President and Chief Executive Officer of idexx, and Sean Gillen, our Chief Financial Officer. Today’s call will begin with Eric providing highlights of our fourth quarter and full year results and a discussion of our current business outlook and strategies. Then Sean will discuss additional financial details and our outlook for 2026.
Following our prepared remarks, we will open the line for questions, but before we begin, please refer to slide two of our presentation where we note that comments today will include forward looking statements based on current expectations. Actual results could differ materially from these statements due to a number of risks and uncertainties which are discussed in our press release and SEC filings. As IDEX provides non GAAP financial information, we provided reconciliations between GAAP and non GAAP measures in our press release and in the appendix of our presentation materials which are available on our website. With that, I will turn the call over to Eric.
Eric Ashleman — CEO, President & Director
Thanks Jim. Good morning everyone and thank you for joining us today. Before I dive in, I want to welcome Sean Gillen who joined us in January as our Chief Financial Officer. Prior to joining idex, Sean served as CFO at AAR Corp. For over seven years and he brings extensive experience driving profitable growth, operational execution and disciplined capital allocation. His expertise and track record of successfully implementing operational efficiencies, optimizing portfolios and executing on Strategic M and a fully complement idexx’s strategy. He’s hit the ground running as he finishes up his first month of onboarding and we look forward to benefiting from his leadership as we continue to shape and execute our enterprise strategy.
Welcome to the team Sean. I’m proud of the results the idexx teams collectively delivered in the fourth quarter, we’ll go into each of these in more detail, but we delivered organic sales growth and margin expansion for IDEXX while also significantly expanding the order book within HST. As we closed out 2025, these results show signs that our strategy is working and provides strong momentum as we enter our fiscal year 2026. I’d like to thank our teams around the world for their hard work, agility and disciplined execution. Turning to slide three we are progressing well through phase three of IDEXX’s purposeful evolution as we thoughtfully expand and integrate our capabilities in targeted advantaged markets.
With the support of our 8020 playbook, we are making this pivot both organically and through M and A. As a key element of this strategy, we built new scalable growth platforms that allow us to compound our efforts through cross business unit collaboration. Please turn to slide 4 where I’d like to illustrate how this work is paying off. Within our HST segment, we’ve seen acceleration in order rates over the last year and a half with our strongest mark coming in Q4 of 2025 with organic orders growth of 34%. This has driven organic sales growth towards a mid single digit level as we move into 2026.
In our performance pneumatics group, we are helping customers support data center construction driven by demand from artificial intelligence. Specifically, our air tech and gas businesses are collaborating within thermal management applications to support data center liquid cooling and on site behind the meter power generation. We provide blowers, vacuum pumps, valves and other specialty components to solve key problems in these areas. As customers have asked us to scale up quickly, our pneumatics teams have leveraged their own global footprints while also utilizing shared Asia Pacific facilities and capabilities within idexx. We first talked about this emerging growth potential about a year ago.
It’s inspiring to see how far we’ve come since then. We walked through the strategic building blocks of our material science solutions platform on last quarter’s call. At the highest level, we’ve mapped each business’s unique capabilities to one of three competitive attributes as we form unique properties from materials, shape and control surfaces and enable surface function through coatings capabilities. We continue to see strong growth across the platform within space and defense, semiconductor and data center communication markets. In 2025, we complemented our organic efforts with a small but meaningful acquisition in Microlam, a very high quality bolt on that brings proprietary, difficult to machine forming capabilities into our already advantaged optics toolbox.
Integration into idexx is going well and it’s great to see strong growth momentum out of the gate for the business. They are largely booked for 2026 as we work to expand capacity by applying the IDEXX operating model at Mott, which transforms material powders for specialty filtration, we see growth within the same MSS markets for many of the same customers. In fact, our life sciences, MSS and Mott leaders are expanding the scope of coordinated commercial efforts for maximum focused impact. Our life sciences team operating within our longest chartered integrated platform continues to win in the pharma space as a key initiative within their long term growth strategy.
Our Materials Processing Technologies group, with strong food and pharma focused global development and production resources is also driving favorable growth results for HST and our ceiling solutions. Businesses are seeing nice growth from semicon ceiling applications largely in support of the increased demand for data center memory. Our 8020 playbook, which supports the formal resource choices and segmentation to drive growth in this way, also has a part to play to support margin expansion within the segment. Our teams will be taking advantage of the flywheel effect of HST growth from our 80s to support the next round of 20 simplification to help boost overall segment portfolio margin.
We’ll call out some of these results in the quarters to come as we highlight the top line and bottom line power of 80:20 within our enterprise strategy. Before I turn it over to Sean for more detailed financial commentary, I’d like to pull back up quickly restate the highlights for HST and expand our IDEXX Q4 story with some framing comments around the more industrial and municipal facing businesses within FMT and FSDP. I’m on slide 5. Idexx delivered better than expected 4th quarter results despite the continued challenges our businesses face given macro uncertainties. Our health and science technology segment as I just covered grew organic orders and sales 34% and 5% respectively as they capitalized on advantage growth supporting the AI related ecosystem within and near data centers.
HST is also seeing growth in semiconductor filtration and sealing, consumables, space and defense applications and wins within food and pharma markets. Industrial and auto market exposures within HST which make up about 20% of segment revenues, remain flattish and we have not observed any meaningful signs of demand improvement. HST also drove 60 basis points of margin improvement year over year. As we leverage volume growth, apply 8020 and operational excellence standards in newly acquired entities and improved mix. We will drive continued margin expansion within HST going forward. In fluid and metering technologies, organic orders and sales grew 4% and 1% year over year respectively.
Our municipal water facing businesses remained strong, growing mid single digits and mining through our Abbo franchise continues to be an area of strength as demand for precious metals increases. While the general industrial landscape all in continues to trend flattish FMT is experiencing noticeable softness in chemical, energy and agriculture markets. Regarding the broad, mature and fragmented industrial end markets, there does seem to be an emerging consensus that 2026 will see a return to growth after three years of PMI contraction made more likely if last year’s volatile policy headwinds moderate. But at this point, as we look at our leading indicators, we are not seeing an inflection point in activity and our guidance reflects this reality.
Due to the rapid replenishment nature of our businesses. If there is a return to growth, we’ll see it quickly and we are well positioned to capitalize on it should it occur. Finally, in our fire and safety diversified products segment, growth in our North American fire and rescue business was more than offset by pressures outside the US and cyclical softness in dispensing bandit is trending generally flat alongside our other diversified industrial businesses. And with that I’ll pass it over to Sean to discuss our financials and our 2026 outlook in Greater detail.
Sean Gillen — Senior VP & CFO
Thanks Eric and good morning everyone. I appreciate the warm welcome and I’m thrilled to have joined the IDEXX team. In my first few weeks. I am struck by the solid foundation of the IDEX franchise which is underpinned by a strong focus on 80 20. I am excited to work with this talented team embracing 80 20, targeting key high growth markets and continuing to optimize our portfolio, all while maintaining a disciplined approach to capital allocation. With that, I’ll turn to the financial results in more detail. All the comparisons I will discuss will be against the prior year period unless stated otherwise.
Please turn to Slide 6. As Eric mentioned, in the fourth quarter of 2025 IDEXX delivered better than expected financial performance. Organic revenue growth of 1% came in as expected with strength in HST more than offsetting negative year over year performance at FSDP. Adjusted EBITDA margin expanded 40 basis points year over year on positive price, cost and productivity improvements and adjusted EPS came in higher than our guided range in the fourth quarter. Overall, our orders grew 16% organically in the quarter. Our HST segment reached a record high at 493 million with orders growing 34% organically in the fourth quarter.
FMT orders grew mid single digit and FSDP orders were flat year over year. Recall that we typically enter any given quarter approximately 50% booked overall. However, the Strong order activity and record backlog in HST gives us greater visibility and confidence in our outlook for that portion of the business. In FMT and fsdp. The rapid fulfillment nature of those businesses limit our visibility to approximately midway into a quarter. Touching on some of the more meaningful business demand trends in the quarter, we saw strong order activity in areas influenced by data centers and for us, as Eric mentioned, that’s in power, semiconductor and optical switching.
We also saw strength in municipal water, food and pharma and space and defense and in life sciences we continued to see low single digit growth. Organic sales in the fourth quarter grew 1% as positive price more than offset volume declines. The teams drove positive price across each of the segments. Volumes were flat at HST and declined year over year at FMT and fsdp. IDEXX adjusted gross margin was flat year over year in the fourth quarter as price, cost and productivity benefits were offset by volume deleverage and mix. Adjusted EBITDA margin expanded 40 basis points versus last year reflecting productivity gains, favorable price cost dynamics and cost discipline more than offsetting volume, deleverage and negative mix.
We were successful in our platform optimization and cost containment efforts as they yielded approximately $60 million of full year savings. Free cash flow for the full year 2025 of 617 million increased 2% versus last year and free cash flow conversion for the year came in at 103% of adjusted net income. Our targeted free cash flow conversion of at least 100% at IDEXX remains unchanged. We ended the year with strong liquidity of approximately 1.1 billion and finally we spent $73 million to repurchase IDEX shares in the quarter to taking our total share repurchases for the year to nearly $250 million or 1.4 million shares.
Now quickly some color on our results by Segment I’m on Slide 7 In HST, organic orders increased 34% and revenue grew 5%. Volumes increased in data center applications, semiconductor consumables and space and defense. Volume strength in these areas were partially offset by year over year declines in life sciences, pharma and general industrial. HST Adjusted EBITDA margin expanded 60 basis points Year over year as positive price cost and productivity gains more than offset unfavorable mix and higher variable compensation. Turning to slide 8 in FMT, organic orders increased 4% and organic sales increased 1%. Orders growth was supported by our intelligent water platform which was partially offset by softness in the chemical end markets.
Looking at our leading indicator industrial order rates, they appear range bound without any indication of a sustainable inflection in demand. Within fmt, we continue to see subdued spending environments within the oil and gas, chemical and agricultural markets. These exposures make up over a third of FMT. FMT’s adjusted EBITDA margin declined 20 basis points year over year as positive price cost and platform optimization and cost containment actions were more than offset by volume deleverage, higher employee related costs and unfavorable mix. Please turn to Slide 9. FSDP Organic Orders were flat year over year and and organic sales declined by 5% for the second consecutive quarter.
Continued growth in North American fire OEM and stability at Bandit were more than offset by continued weakness in fire and safety outside the US and subdued capital spending in dispensing. These headwinds were identified last quarter and continue to persist. FSDP adjusted EBITDA margin increased 50 basis points year over year as productivity gains and favorable mix more than offset volume deleverage. Please turn to slide 10 where I’ll touch on capital allocation. We drove 190 million of free cash flow in the fourth quarter and 617 million for the full year 2025. During 2025 we reduced our gross leverage position from 2.2 to 2 times.
We did this while paying 213 million in dividends in 2025 and as mentioned previously, repurchasing nearly 250 million worth of shares. Regarding our capital deployment methodology, I view this across four key maintaining a strong balance sheet, organic investments to drive growth, M and A and return of capital to shareholders via dividends and share repurchases. With IDEX’s strong financial position and cash flow generation, we can allocate capital to each of these areas. First, we will maintain our investment grade credit rating which provides reliable access to capital at attractive rates. Second, we will continue to organically invest in our businesses to drive growth where we have the highest return opportunities.
Third, regarding M and A, in the near term we will focus on the integration of recently acquired businesses and new acquisitions will likely be bolt on in nature. In parallel, we are doing the work to chart a roadmap for where idexx goes next. We are looking at what other technologies and market access points could be additive to our portfolio and where potential divestiture could make sense. We expect MA activity to be an ongoing part of our long term growth algorithm. Fourth, we will return capital to shareholders via both dividends and share repurchases. Regarding dividends, our target of 30 to 35% of adjusted net income paid remains unchanged on share repurchases we will look to have a base amount of repurchase that we consistently return to shareholders.
We can flex above this amount based on leverage levels and relative MA activity. We look forward to executing on this capital deployment methodology and driving value for our shareholders. Now I’d like to discuss our guidance for 2026. Please turn to slide 11 for the full year 2026 we expect organic growth of 1% to 2%. Our overall IDEXX organic growth guidance balances approximate mid single digit growth for HST and flat to slightly down outlooks for FMT and FSTP mirroring trends we experienced in the second half of 2025 and and visibility afforded to us by HST’s strong order book in the fourth quarter.
Adjusted EBITDA margin is expected to be in the 26.5% to 27% range in 2026, while we expect solid leverage and margin expansion of perhaps 50 basis points improvement at HST this year. Volume decrementals offsetting price, cost and productivity is our base assumption for both FMT and fsdp. Regarding our effective tax rate, we expect it to be approximately 24% in 2026. Adjusted EPS guidance for 2026 is $8.15 to $8.35 representing low to mid single digit growth year over year. For the first quarter of 2026 we expect organic growth of approximately 1%, adjusted EBITDA margin of approximately 24.5% and adjusted EPS of $1.73 to $1.78 relatively flat year over year.
As a reminder, the first quarter is typically our seasonally softest both from a top and bottom line perspective. Within fmt, businesses such as AG and water are impacted by the winter season, while FSTP and HST experience a reset of budget cycles for larger volume orders. Our initial outlook contemplates a typical low to mid single digit sequential increase in second quarter sales with a more pronounced step up in earnings given higher volumes and normalization at the corporate expense line. Our current Forecast reflects plans for 8020 informed reinvestment into our businesses to drive organic growth and continued execution to improve operational performance across all businesses.
And lastly, we will maintain a balanced capital deployment plan near term, skewing towards tucked in acquisitions and returning capital to shareholders similar to 2025. With that, I’ll turn the call back over to Eric.
Eric Ashleman — CEO, President & Director
Thanks Sean, I’m on slide 12. We believe our strategies will drive increased growth and sustainable value creation for IDEXX going forward and our bookings in the fourth quarter are a strong indicator that our strategies are working. 80:20 is at the heart of all that we do at idexx, and working across integrated business units is a meaningful expansion of our source code. Within our earlier walkthrough of HST momentum, we’ve highlighted how 8020 choices can work powerfully for us to drive growth and margin at a single unit level. A collaborative small group, a formal growth platform, and for a few powerful and select applications across the entire segment to 80 20.
Analytics help us isolate the opportunity and align resources. Our tunable technologies allow us to quickly shift from a pressured to an advantaged area with relative ease, but it’s really our teams and our culture that power this work. We’ve carefully built and nurtured an open, engaged and naturally collaborative culture through all phases of our evolution. In fact, this work began formally before we began to apply 8020 to IDEXX. Our values of trust, team and excellence powered by a shared purpose of trusted solutions. Improving lives helps our leaders unleash potential across business boundaries with an ability to course correct as conditions warrant.
We have more work to do as we move through Phase three, but we’re very pleased to see strong performance feedback in the areas where we’ve spent so much time and effort together. I look forward to sharing more of our story with you in the days ahead. That concludes our prepared remarks, and with that I’ll turn it over to the operator to take your questions.
Questions and Answers:
operator
Thank you. We will now begin the question and answer session. If you have dialed in and would like to ask a question, please press Star one on your telephone keypad to raise your hand and join the queue. If you would like to withdraw your question, simply press Star one again. Our first question comes from Dean Dray at RBC Capital Markets.
Deane Dray
Thank you. Good morning everyone. Hey Dean. Hey Eric. Really interested to hear your thoughts about the I don’t want to call it a disconnect because it’s probably a lag effect here, but we finally got a PMI above 50 after 11 months. You have such a array of bellwether businesses that are usually synced to the type of inflection in the macro you mentioned bandit. But just take us through how you see the demand outlook right now based upon what you have for day rates. What do you see in the order size? Are you getting any blanket orders? But this is really helpful to get down to that granular level.
If we could, please.
Eric Ashleman
Yeah, sure. Well look, we were happy to see that readout as well, but as we said in the comments here and you know, we track, you know, about six or seven Businesses that are really, really close to consumption, rapid replenishment, you know, we’ll take an order on a Monday, make it on a Wednesday and ship it on a Friday. That’s pretty typical. You mentioned a few of those businesses. We always look at them and see, you know, if they’re moving together. That usually tells us we’ve seen some inflection. And so far, even through January, we’ve seen them be steady, but we have not seen them inflect up yet.
Now of course it was a weather altered January. We’ll see where things shape up in February and into March and as things warm up a bit. But as of now, happy to see the headline, but don’t really yet see the inflection. It’s kind of the same story in the fourth quarter. Those kind of hung in there but didn’t move around much. We mentioned some of the pressured sectors that we have. Those are being driven by different drivers. But I think for us it’s keeping an eye on it. As I said in my remarks, there’s certainly chatter around the likelihood given the duration, some of the things that are shaping up on the policy side but haven’t seen it yet.
When we do, of course, as you know, we will tend to see it first and I think most importantly we can chase it without frankly adding anything to the resource of the capital base. And our incrementals on that upside would be really, really good.
Deane Dray
That’s really good to hear. And just as a follow up, I’d like to welcome Sean and I noticed you said 80, 20 the requisite number of times. I know that’s a full immersion and it’s going to be ongoing here. But what I’m most interested in hearing from you, Sean, is you’re coming in with a fresh set of eyes. IDEX is one of the high quality compounders, so it’s the opposite of a fixer upper. But there’s still items, metrics that a fresh set of eyes probably sees that you have and just kind of talk us through where you are focusing, what kind of priorities that you think would be helpful for us to hear.
Thank you.
Sean Gillen
Yeah, I appreciate the question. So as you mentioned, I mean a couple observations early on, you know the incredibly strong franchise that IDEX has, as you mentioned, underpinned by 80, 20 and everything that is done here. And from my standpoint, I kind of look at it in a couple ways. You have an incredibly strong franchise with really strong financial characteristics and I’m talking EBITDA margin and the cash flow associated with that. Which affords us nice opportunities to allocate that capital to drive growth. And as I look at it, I see a continuation of a lot of things that have happened here and then helping around the edges in kind of M and a strategy and execution as we see this next kind of know 3.0 in IDEXX.
So a lot of good to work with and you know, bring some of my skill set and some of the things I’ve done in the past to help continue to move the needle.
Deane Dray
Great to hear. Best of luck.
operator
We’ll go next to Vlad Bystriche at Citigroup.
Vladimir Bystricky
Hey, good morning guys. Thanks for taking my call. Sure, Vlad. Maybe I don’t know if I missed it, but can you just talk about how much price ended up contributing to top line overall in 25 and then within your 1 to 2% organic growth outlook for 26, how much of a price contribution is in that number?
Sean Gillen
Yeah, happy to take that. So in fiscal year 25, price was around 3% in Q4, a little higher than that in that 3.5% range. And then as you look into the current fiscal year 2026 and the guidance, we’re kind of forecasting around a point to 2:1 to 2% in terms of price contribution. So coming down from the levels of last year, but still additive overall.
Vladimir Bystricky
Okay, so roughly flattish volumes over overall across the portfolio with positive volumes in HST and some negative in SSDP and fmt. Is that the right way to think about it?
Sean Gillen
That’s exactly right.
Vladimir Bystricky
Okay, perfect. That’s helpful. And then I guess just stepping back, obviously you talked about capital allocation over the past several quarters and today here on the call, with the shift to bolt ons versus larger acquisitions and more focus on buybacks, how should we think about the potential for incremental meaningful portfolio pruning, if you will, outside of the growth platforms?
Eric Ashleman
I think right now, here in the short term, we were really focused on the businesses that link to the capital that we deployed pretty aggressively over the last few years. Taking a look at our portfolio from top to bottom is always something that we’re doing together as a team. I think on the, on the divesting side, you know, nothing really, at least in the short term, that’s beyond kind of the unit of measures that you’ve seen here more recently. You know, it’s things that are associated with 8020 work both in a, in a business unit or a product line spectrum.
So I think most of our focus now is on capitalizing on growth, growth velocity and then As I said in the remarks, specifically within some of the acquired businesses in hst, taking, you know, taking advantage of some of the growth that’s already on the board now and using it in some ways to fund some choices that we know we want to go make through a few of the recently acquired businesses. You know, how those are, you know, the run out and the disposition of those will play a part here. But again, in a more typical kind of smaller unit of measure here in the near term.
Vladimir Bystricky
Got it. That’s helpful, Eric. Thanks. I’ll get back into you.
operator
We’ll go next to Mike Halloran at Baird.
Michael Halloran
So can we just go back to the disconnect between the strength in orders and the building momentum you’re seeing in the orders and the conversion to revenue? I know there has been at least some level of shift and as you’ve reshaped the portfolio, brought on some longer cycle applications. So maybe just refresh the disconnect and then I guess when do you think that starts normalizing towards each other? Right. As you said in your prepared remarks, relatively short cycle tends to convert quickly. So maybe just walk through those dynamics. Yeah.
Eric Ashleman
So I mean, if you’re taking a look at how revenue is going to kind of flow from Q4 into 1 and back into 2, which is, you know, things that we’ve talked about here, I mean, there’s kind of two components of that on the, on the top line side, one that’s pretty typical and traditional for idex and one that’s a little newer. So on the FMT side, we’ve always kind of had that dynamic largely associated with weather and weather’s impact in our water franchises and agriculture franchises specifically. And so you kind of see that go a little lower in Q1.
It comes back in Q2, and we have that, that same trend in the, in the guidance that we have here. Looking forward into 26, there is a, there is a small component coming out of HST now that we also referred to. You know, we’ve got some larger orders that we’re capturing here. Some of them are coming from, you know, markets that we’re targeting that have more of a, you know, kind of traditional fiscal spend profile that has, you know, budget running out in Q4 and people making sure that they spend those. You can see it in the big capture number for us in Q4.
And honestly, some of that came in kind of close to the end of the quarter. If you look at just where lead times on the gear that we’re going to make kind of naturally fall out. It’s not unusual to see some of it moving into Q2. That’s how long it’ll take to get moving. So places like our materials processing technologies business, you know, it’s more sustainable, sophisticated capex, that’s probably the place where you see it the most. And so I think starting to see a little bit of an HST dynamic there. As we continue to grow within some of these spaces, we’ll probably add that component onto what we would typically see from the FMT weather related side.
It’s not a lot and frankly think of it as a V which has again been kind of the typical IDEXX profile. You’ll see it here with the HST business as well.
Michael Halloran
Thanks for that. And then you know, maybe just the Life Science piece. Could you talk about what you’re seeing there and how your guide should shape out through the year and maybe the put that in the context of what your client base is saying and how they’re expecting improvement through the year and any kind of correlation points there, please?
Eric Ashleman
Yeah, I think, you know we saw in 25 it was kind of low single digit growth. It was stable, it was predictable really for us. Kind of driven on the positive side by growth in pharma applications and then the derivations that make their way into our products. A little bit pressure on the more academic research piece is that played out the only real change there, the government shutdown, the prolonged nature of it in Q4. I think, you know, put a little pressure on that business at the end of the year and I think added a bit to the uncertainty heading into 26.
You know we think that’ll normalize over time and we’ve kind of got the business still running forward. It’s sort of low single digit growth. Some open questions still remain on, you know, the piece related to China, the innovation very, very strong with inside the business. We continue to work with customers on different products to support platform releases at a healthy clip. But we’ve got that dialed in. It kind of continuing along at mid single digits and looking for different signs of inflection there one specifically I think around some more certainty around where that academic research and support would be through the indirect lever of NIH funding.
Michael Halloran
Thanks Eric, appreciate it.
Eric Ashleman
Thank you.
operator
We’ll take our next question from Joe Giordano at TD Cowan.
Joseph Giordano
So you kind of touched on this but like you know, a year ago when you were giving guidance for 2025 we got into a position where you know, full year guidance looked fine, 1Q guidance looked very weak relative to where people were thinking. And it was, you know, there was this need to have these kind of larger orders come through and some tough comps there. Now, if you think through the businesses that kind of play in that and you kind of marry that with the orders that you saw in hst, like, how is it, you know, how is.
How should we view this guide relative to those like, you know, 1q4q progression differently than we did last year?
Eric Ashleman
It’s a great question. And we are in a different position exactly for the reasons that you talked about. So as an example, in hst, when you just look at backlog kind of year over year, the difference with the exit last year from the year prior, we built over $100 million of backlog. And while, you know, almost half of it is in the data center area that we talked about in the opening remarks, it’s actually broadly applied elsewhere across hst. You see it coming from our materials processing technologies business. You see it coming from the MSS franchises.
We now have Microlam on the board, you know, so we’ve got really, really good order support here and quite a bit more of it than we did at this time last year. Again, some of it, you know, cycles in the way I suggested around Q1 and then moves up again in Q2. But the assurance levels are quite a bit higher this year, especially in hst.
Joseph Giordano
Perfect. And then if we talk about some of these newer markets, like data center power, like, how large is that now? How large can it realistically get in like a year or two? And maybe can you speak to the capital intensity from your standpoint that is required to capitalize on this?
Eric Ashleman
Yeah, I’ll kind of tackle it backwards. The capital intensity is actually not very different from what we typically do. It’s light intensity. Think of this as a lot of critical subcomponents that we’re making. We will just make more of them on a lot of the same equipment that we have. Still pretty rare in idexx, to be running more than two shifts anywhere. And so we’ve got an opportunity to flex the current capital base reasonably and you shouldn’t see a deviation there. We would have to add manpower, of course, and we are, you know, so that, that’s a, that’s something that our teams are working through, but nothing on the really significant on the capital side in terms of where all this can go.
I mean, that’s an open question, obviously, for the whole sector. But, you know, we’re, I Mean, we’re playing in a number of different areas. We talked about, you know, behind the meter power. That’s. You’re seeing a lot of that in the pneumatics area. That’s kind of ramping as we go with, you know, kind of a flagship customer during the year. But we’ve got a number of other areas or applications, largely in the areas of thermal management, discrete thermal management that we’re working. We’ve got some, you know, optical switching and communications work. Even in fmt, we’ve got some power gen support, some of the technologies we have over there for more typical generators.
So, you know, we’re actually managing it. This is one area that we’re managing at a segment level just to make sure that we’re coordinated across. We can see all the opportunities. To the extent we’re working with similar customers, we’re making sure we’re coming together as one idex. So I think still room to run here. We’re innovating a lot in the background and very, very excited overall about the potential. And as we said in the beginning here, won’t need a lot of capital deployment to capitalize on it.
Joseph Giordano
Thanks, guys. Appreciate it.
operator
We’ll take our next question from Matt Somerville at DA Davidson.
Matt Summerville
Thanks. Morning. Maybe, Eric, could you dig into a little bit, adding a little bit of geographic depth and talk about the order cadence that you saw in FMT, kind of the chem O&G and ag side of the business and then in HST, industrial, in auto. Just trying to understand, you know, a little more of the commentary around, just not really seeing any, any sign of inflection. They just further punctuate that a little bit for us.
Eric Ashleman
Yeah, well, you, you mentioned some of the ones you mentioned are the more pressured sectors for us, you know, overall. So I’ll speak specifically to those. You know, I’ll start with energy. We always have to scale that a bit in terms of the work that we do. You know, we do mobility, custody transfer there. We actually had a strong beginning of the year and we saw a lot of truck builds and things and some optimism around the state of those markets. I think is it played out. You kind of take a look at where oil prices landed and some of the geopolitics stuff that was out there.
You know, we just saw a pause, kind of an unexpected pause at the end of the year. So that, that really is micro exposure in the space for us. That had kind of a positive front half and a less positive second half. Now it has been a very, very cold winter Ultimately that, that typically helps that market down the road. So we’ll see the chemical side, you know, that’s been pretty pressured throughout the year. Now a lot of our exposure there is our probably lead franchise is European based. And so when you think of the state of European chemicals in particular, they really haven’t been very strong.
To be fair. The business is chasing international expansion. They’ve done really, really well in India, in our shared campus up there. But I think chemicals, we’re waiting to see signs of just general recovery there. Agriculture is another. We’ve been kind of in a multi year cycle. There’s our orders ebb and flow kind of cyclically around weather patterns, you know. So as we just look at it, we have to look at year over year performance. Team is doing well, executing that business well, certainly well positioned. But we’re still waiting for signs of recovery there. And I would say just broad industrial.
It’s been pretty similar and kind of flattish throughout. I’d say the theme of the day is, you know, just enough orders coming through for maintaining the system, you know, replacing like, for like components where we’ve had that share position for years, if not decades. So that’s all solid and has remained that way and held up that way in January. I think it’s just a question of not enough expansion in more specific projects. People building out plants and doing things that require just more confidence around customer commitments. You know, geographically I would just say the, you know, the trends are not that different with the exception it’s a smaller part of the business.
But you know, India probably at the head for us. North America second, I would say Europe third.
Matt Summerville
Thank you for all that color. I guess with the order activity you saw in hst, is there a way to sort of, you know, parse out how much of that may have been kind of year end budget blanket activity and realizing 34% may not continue. But are you still seeing that forward strength in inbound order Momentum? Now 2026 is kind of kicked off and then also is there any incremental savings from the optimization left over to be realized in 26? Thank you guys.
Eric Ashleman
Sure. I’ll take the first and I’ll let Shawn weigh in on a second. Actually January has been strong as well. So while there is, you know, some phenomenon there tied to year end pieces that that is not, you know, that that is not the majority of what’s going on here. A lot of it is just it’s momentum that we frankly seen building over the last year and a half. It was strongest here in Q4 we’re very happy with what we’ve seen initially in January. And again, while kind of data centers is the headline, the broader base nature of it also lends itself to being something that’s got good rhythm, good cadence and we’re expecting it to continue into the year.
Sean Gillen
And then on part two on the cost containment, as I mentioned in the remarks, we did realize about 60 million of cost savings in last fiscal year and that was really kind of the full targeted amount. Those actions were taken early in the calendar year and so most of the benefit was realized last year. A portion of that was kind of more temporary in nature. So I would expect a portion of that, a portion of about 20 million in temporary, temporary in nature. I expect that a little bit of that we allow to come back into the results this year as we resource and invest in some areas, particularly the ones where we’re seeing growth and the order volume that we’ve been talking about.
Matt Summerville
Understood, thank you guys .
operator
Our next question comes from Brian Blair at Oppenheimer.
Bryan Blair
To take a slightly different angle on the standout HST order strengths, Eric, you just said that data centers were the highlight. Are you willing to speak to how much of Q4 order growth was AI related versus other markets and applications? You’re just trying to frame and I suppose dimensionalize the drivers there.
Eric Ashleman
Well, you know, it is a little tricky because of the nature of the work that we do. While we have a lot, you know, the things that we do in nomadics are clearly linked to data centers. I would even argue a lot of what’s driving nice positive growth in semiconductors, you know, is tangentially related to it as well. What I would be willing to say here is I kind of pointed to that backlog growth year over year, you know, just under half of it. We probably put in direct data center applications. But I would argue a lot of the other segments and pieces that are coming in, they’re one or two steps over, you know, semiconductor is a segment for us has been strong, especially on the consumable side.
A lot of it’s supporting memory production. And then we’ve, you know, we, we think we’re seeing some good things building as well on some of that very, very critical componentry that we supply into lithography. And so it’s kind of all within that same ecosystem. But let’s say about half of the backlog build in very specific data center supportive applications.
Bryan Blair
Okay, that’s helpful. Keller, it would be great if we could drill Down a bit more on municipal and industrial water trends and outlook there. Where did revenue and order growth shake out in Q4? And then looking forward, what drives your team’s confidence in sustainable mid single digit type growth, whether that be external or at a market level or in terms of your team’s value prop and the ability to win in this space?
Eric Ashleman
Yeah, well first, just on the numbers side you just called it. I mean we had a strong Q4 in the municipal facing water side that was double digit growth. We’ve kind of got it mapped out at mid single digit plus going forward. And I think it comes back to the critical nature of the work that we do here. Very, very specifically we’re doing inspection and analytics work. So we’re helping municipalities understand the state of affairs underground and where they might need capital to be vectored in to correct it, you know. So again we’re kind of at the lead tip of the spear, if you will, on you know, putting capital work for infrastructure refurbishment.
You kind of need our diagnostics to be able to do it both to put that capital to work and then frankly you need it operationally as well. So whether it’s significant weather events and we’ve just seen another round of those, those stress infrastructure, it’s our technology that helps you understand where it’s from coming, coming from and how you go mitigate it really, really fast. So I think it’s just a testament to the criticality of what we do. It’s always been a nice piece of the business. It’s made even more so now that more capital is being put to work and we absolutely seeing that continue.
One last piece. When you look at water for idexx, I just always remind people there’s a side of it that’s related to high purity semiconductor work. You know, for a while now that’s been offsetting some of these dynamics on the municipal side. We saw some nice orders growth there as well in Q4 and so we’ll have less need to call that out as an asterisk as we go forward and talk about water as a platform.
Bryan Blair
All very encouraging. Thanks again.
operator
Our next question comes from Nathan Jones at Stifel.
Nathan Jones
Let me start by saying I was late on the call, so if you’ve already answered my questions, just tell me to read the question transcript. I wanted to, I wanted to ask about the platforming strategy that, you know, you’ve been on for a year, a year or two now. Maybe you could talk about what you’re looking to accomplish with that in 2026, I know you had some restructuring expenses around that in 2025 that generated some cost savings. Are there any more of those kinds of things contemplated for. For 2026? Just any more color you can give us around that kind of stuff?
Eric Ashleman
Yeah, look, the optimization side, I’ll let Shawn take a handle at that. We got a little bit of it that flows over into the next year. He can take you through it. But the focus here is growth. I mean, so the whole idea is to get units working together in advantaged markets and take the power of our innovation passion to solve customer problems and frankly, exponentially put it to work. And we’re seeing it work. So the growth that we’re talking about here for idexx overall, a lot of it in hst, it is disproportionately coming out of these platform environments.
And you can see it in applications where generally it’s not just a single unit, but it’s a couple units or a platform working together, taking one piece of technology in one area and leveraging it onto another. Sometimes it’s even just taking talent and putting it to work to make sure we can free up capacity and a sister business and go after data center volume, things like that. So it’s this compounding power of putting things together that have long been IDEX assets, but putting them to work around markets that just have more favorable headwinds. So I think that’s, you know, that’s the headline, that’s the theme, and we’re really happy to see it starting to bear a lot of positive fruit.
We have it now and we see it continuing as we go forward. Just got done talking about the water platform that’s made stronger because of all the technology that’s now working together to provide that analytical output. When we talk about data centers, there’s a number of units that are here. We actually have to coordinate it at the HST segment level. We’ve always had it in life sciences, to be honest. That’s kind of where the original source code came from. So it’s something that we’re really excited about. I’ll let Shawn tackle a little bit more of the productivity flow through.
Sean Gillen
Yeah. And just on that point, on the cost piece, as I mentioned, you know, last year you had about 60 million of savings related with cost actions. 40 of that are structural. Right. That will just continue. Most of that was realized last year. You might have a little bit of bleed over into this year, some incremental benefits, and then the other 20 million was kind of more temporary. In nature based on the environment. Now the environment is pretty similar. So we’re going to keep most of that cost out, but expect some of that we’d allow to come back into the business as we invest, particularly in these areas where we’re seeing growth.
Nathan Jones
But there aren’t any incremental actions planned for 2026.
Sean Gillen
Correct. As you think about the guide, there’s no kind of round two or anything like that on cost takeout, I guess.
Nathan Jones
Just a quick one. Productivity that is part of the business. Got it. Then just a quick one. On share repurchase, idexx hasn’t historically been a serial repurchaser, but you did repurchase every quarter during 2025. Should we expect a continuation of that in 2026? And what’s the plan for share repurchase in 2026? And I’ll leave it there, thanks.
Sean Gillen
Yeah, yeah, good question. And so I think you should expect a similar level of activity that you saw in the second half of last year, which is around 75 million per quarter. That stepped up as you mentioned last year. The first part of last year was around 50 million a quarter stepped it up to around 75 in Q3 and Q4. I think that’s probably the right assumption as you think about this next year, you know, could be different based on M and A activity, but that’d be kind of the base amount I’d have you have to think about.
Nathan Jones
Great. Thanks for taking the questions.
operator
Our next question comes from Rob Rutheimer at Melius Research.
Robert Wertheimer
I had two and I’ll just do them both at once if I may. Could you just share general thoughts around lithography drivers of that potential cycle? There’s a lot going on obviously in various areas. And then secondly, you may or may not want to touch on this, but there’s very strong pricing power in different aspects of data center build out. And do you have any thoughts on how your margins trend as some of those orders flow into revenues? Thank you.
Eric Ashleman
Sure. Well, you know the lithography side we have a, you know, just a bracket it semi con business for IDEXX is just a little under 10% overall. About half of that is consumable parts and things like filters and seals. And then kind of the other half is split between metrology, a lot of those are optics applications and then the other half so we’re down to kind of small single digits. It goes into this advanced lithography area that you’re to going talking about. We only have so much exposure and it tends to be at the very, very high end of the duty cycle.
So as you know, you know, we’ve been talking about it probably maybe disproportionately because one of our recent acquisitions had some nice exposure here and then we saw it, you know, swing around quite aggressively because of some trade restrictions around that type of business that’s really kind of unchanged at this point. I think those boundaries are largely fair. What has been more positive here lately is I think just the general momentum around chip builds for either advanced AI or some of the stuff related to memory for data center racks. There’s just a lot more activity and a lot more need for capital gear.
So we have heard more positive comments. The only thing, and some of those referencing order velocity and order capture, these are high ticket items and the lead times are very long. So. So for us we have to kind of look at current inventories of components where lead times might fall into build schedules and things like that specifically around this part of the business. But we will generally be much happier with positive momentum, positive headlines. And we’ve seen more for those reasons. You talked about pricing power specifically within data centers. I would argue this is, it doesn’t really work differently for us than it does through much of the rest of idexx.
We, you know, we typically are entering with high critical items pretty low on the bill of materials, you know, so the work that we’re doing here is not atypical for idexx. And so the way that we think about pricing as material inputs come up and the recovery arguments that we make there, I wouldn’t argue they’re very different than they are anywhere else. Sure, the market is growing and everything there is mission critical and delivering on those has to be, you know, has to be perfect. That’s not different from all the business that we do in idec.
So I think we have actually similar pricing dynamics and as we have started to ramp up that business, the flow through on our business has been very good.
Robert Wertheimer
Perfect, thank you.
operator
And next we’ll move to Andrew Pascaglia with BNP Paribus.
Andrew Buscaglia
. I just wanted to give you parse out a couple things within your, your segments. First off with fmt, you know, I would think that this business would see strong accelerating orders in the, in the event dust for production recovery. If that were to happen this year. Orders were okay this quarter. But my question is, is there anything that’s changed or evolved within FMT that makes it, that would make it act a little bit longer cycle versus you know, its typical Short cycle history. I just know like a lot of changed in the last five years Post Covid so wondering if you could comment on that.
Eric Ashleman
Yeah, nothing different within those markets. You know, these are, these are franchises, some of which are over 100 years old. The positions that we have with customers are decades. And the work that we’re doing a lot of the businesses like for like replacement and that really hasn’t changed. And so if you just broke this down and started thinking about it as a story, you know, today we’re seeing order rates that suggest if it’s pumps in a factory that they’re still running and they’re running the same number of shifts and they still need the, you know, replacement levels to be the same.
If things were to vector up, it would probably say that we’re going to put more maintenance on the shelf or we might expand, you know, part back end of our plant and we’d need more pumps so that we’re kind of as we always have been laid out there. Our fulfillment rates are the same, we still have the same level of relationships and frankly just share doesn’t move around very fast in this market. So with acceleration we would see really no different and what we should expect on our side in terms of both capture rates as well as really nice flow through on the incremental volume.
Andrew Buscaglia
Yeah, okay. And kind of a similar question with an FMT and hst. You know I get, sometimes you listen to the call, you get excited over portions of the business that seem to be doing well, data center, space and defense, biopharma and you do a little work on it and you realize you’re kind of talking about percentage of sales or so or like that or that ballpark. Maybe if you could bucket together these kind of higher growth areas between FMT and HST as a portion of those segments could help. I don’t know if you have an estimate on how much we’re talking about here when you kind of jumble it all together in each segment.
Eric Ashleman
Well, I mean, you know, if we, a lot of what we’re referring to, particularly on the growth and momentum side is in HST and you know, we were talking about this this morning. It is interesting that you know, we made a mention here that the industrial and automotive side of HS HST is now 20% and there were days long past where that was almost half of the segment. Our life sciences piece, which is kind of classic life sciences analytical instrumentation and pharma exposed markets, that’s about a third that at one time was a significant, more significant piece of this as well.
So the diversification of HST has come a long way over the last few years. And so if you think of kind of the markets that we’ve been talking about here, it’s this significant percentage of hst. We’re talking about pneumatics with a lot of the data center exposure, everything happening within the MSS. I mean that platform in Q4 was double digit growth. And so we’re just seeing nice broad diversification across these target advantage markets. And you’re seeing that kind of relative pie graph start to tilt in the right direction because of the capital that we’ve deployed there.
I think FMT is pretty similar profile. Maybe the water growth has changed it to a slight degree, but that’s long been kind of a broad industrial exposed area with some discrete callouts in chemicals and agriculture. And we talked about some of the pressures we have there.
Andrew Buscaglia
Yeah. Okay, thank you.
operator
And that concludes our Q and A session. I will now turn the conference back over to Eric Ashelman for questions, closing remarks.
Eric Ashleman
Well, thanks very much and I want to thank everybody for joining today as we close out the year and launch into 2026. I really think today three headlines and takeaways. Number one, our growth platform strategy is working and it’s really powered by the cross business collaboration and innovation that we talked about through the questions today. Our strongest growth is coming out of our growth platforms. We’re really, really happy of the work that’s happening there and the things that lay ahead for us. Number two, HST as a segment overall is doing very, very well. The teams are working phenomenally across the businesses and across the units on the growth side and feel good about the margin expansion and some of the things we’re going to drive there as well in a focused way in 26.
And then we’ve touched on it a lot. I think our industrial businesses are really well set up to capitalize on growth, you know, at the first sign of inflection. I’ll just remind you that when that when it does move, we will see it, we’ll see it early and we’ll jump on it quick. And then the incremental performance as we do that will be very good as we’re able to chase significant upside without really any change to the resource or capital base of the company. So with those headlines in mind, I wish you all a great day and thanks for your support and joining us today.
Take care.
operator
And this concludes today’s conference call. Thank you for your participation. You may now disconnect.
The post IDEX Corporation (IEX) Q4 2025 Earnings Call Transcript first appeared on AlphaStreet.
