(State or other jurisdiction | (Commission File Number) | (IRS Employer | ||
of incorporation) | Identification No.) |
Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) |
Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) |
Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) |
Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)) |
Title of Each Class | Trading Symbol(s) | Name of Each Exchange on Which Registered | ||
Common Stock, par value $.01 per share | IEX | New York Stock Exchange |
Emerging growth company | ☐ | |||||||
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐ |
(a) | Exhibits |
99.1 | Press release dated October 29, 2019 announcing IDEX Corporation’s quarterly operating results |
99.2 | Presentation slides of IDEX Corporation’s quarterly operating results |
IDEX CORPORATION | ||
By: | /s/ WILLIAM K. GROGAN | |
William K. Grogan | ||
Senior Vice President and Chief Financial Officer | ||
October 30, 2019 |
• | Sales were flat overall and organically |
• | Gross margin was 45.2 percent with adjusted gross margin of 45.7 percent, an all-time high |
• | Reported operating margin was 22.7 percent with adjusted operating margin of 25.2 percent, up 120 bps |
• | Reported EPS was $1.37 with adjusted EPS of $1.52, up 8 percent |
• | Cash from operations of $157.1 million led to FCF of $146.0 million, an all-time high |
“The third quarter was all about operational execution which allowed us to expand both gross and operating margins to all-time highs. Adjusted gross margin of 45.7 percent and adjusted operating margin of 25.2 percent were up 70 and 120 basis points, respectively. This margin expansion helped us deliver record adjusted EPS of $1.52. Free cash flow was strong with a conversion rate of 125 percent of adjusted net income, up 28 percent from the prior year period. On the commercial side, demand was challenging in the third quarter due to the continued softening of the global economy. The unresolved trade conflicts continued to weigh on global growth in most of our end markets, as companies are delaying investments due to the unclear outlook. As a result, organic sales in the third quarter were flat compared to the prior year period. However, I am very pleased with how the team performed in this challenging environment and confident that we will keep delivering strong operating results during these volatile times. | |
M&A continues to be a key priority of the Company. In July, we acquired Velcora and are currently in the process of integrating its operations into our existing Sealing Solutions platform within the Health & Science Technologies segment. We have approximately $2 billion of capacity to support additional opportunities based on existing cash, availability under our revolver and a low debt leverage ratio. | |
Based on recent order trends and instability within the macro-economic environment, we now project approximately 2 percent organic revenue growth for 2019, with flat organic sales in the fourth quarter. We have narrowed full year 2019 adjusted EPS to $5.80 to $5.82, with fourth quarter EPS of $1.33 to $1.35.” | |
Andrew K. Silvernail | |
Chairman and Chief Executive Officer |
• | Sales of $240.9 million reflected a 1 percent increase compared to the third quarter of 2018 (+2 percent organic and -1 percent foreign currency translation). |
• | Operating income of $77.5 million resulted in an operating margin of 32.2 percent, a 270 basis point increase compared to the adjusted prior year period primarily due to price and productivity initiatives, partially offset by higher engineering investments. |
• | EBITDA of $82.7 million resulted in an EBITDA margin of 34.3 percent, a 270 basis point increase compared to the adjusted prior year period primarily due to increased operating income. |
• | Sales of $229.6 million reflected a 3 percent increase compared to the third quarter of 2018 (+1 percent organic, +3 percent acquisition and -1 percent foreign currency translation). |
• | Operating income of $40.2 million resulted in an operating margin of 17.5 percent. Excluding the $3.3 million fair value inventory step-up charge and $11.2 million of restructuring expenses, adjusted operating income was $54.7 million with an adjusted operating margin of 23.8 percent, a 30 basis point increase compared to the adjusted prior year period primarily due to higher volume and price, partially offset by higher engineering investments and increased amortization due to the acquisition. |
• | EBITDA of $49.2 million resulted in an EBITDA margin of 21.4 percent. Excluding the $3.3 million fair value inventory step-up charge and $11.2 million of restructuring expenses, adjusted EBITDA of $63.7 million resulted in an adjusted EBITDA margin of 27.8 percent, a 40 basis point increase compared to the adjusted prior year period primarily due to increased operating income. |
• | Sales of $154.5 million reflected a 5 percent decrease compared to the third quarter of 2018 (-3 percent organic and -2 percent foreign currency translation) mainly attributable to large project orders within our dispensing and fire businesses in the prior year period not repeating. |
• | Operating income of $42.0 million resulted in an operating margin of 27.2 percent. Excluding $0.1 million of restructuring expenses, adjusted operating income was $42.1 million with an adjusted operating margin of 27.2 percent, a 50 basis point decrease compared to the adjusted prior year period primarily due to reduced volume. |
• | EBITDA of $45.6 million resulted in an EBITDA margin of 29.5 percent. Excluding $0.1 million of restructuring expenses, adjusted EBITDA of $45.7 million resulted in an adjusted EBITDA margin of 29.6 percent, a 10 basis point decrease compared to the adjusted prior year period primarily due to a decrease in operating income. |
• | Organic orders and sales are calculated excluding amounts from acquired or divested businesses during the first twelve months of ownership or divestiture and the impact of foreign currency translation. |
• | Adjusted gross margin is calculated as gross margin plus the fair value inventory step-up charge. |
• | Adjusted operating income is calculated as operating income plus the fair value inventory step-up charge plus restructuring expenses. |
• | Adjusted operating margin is calculated as adjusted operating income divided by net sales. |
• | Adjusted net income is calculated as net income plus the fair value inventory step-up charge plus restructuring expenses, net of the statutory tax expense or benefit. |
• | EBITDA is calculated as net income plus interest expense plus provision for income taxes plus depreciation and amortization. We reconciled EBITDA to net income on a consolidated basis as we do not allocate consolidated interest expense or consolidated provision for income taxes to our segments. |
• | Adjusted EBITDA is calculated as EBITDA plus the fair value inventory step-up charge plus restructuring expenses. |
• | Free cash flow is calculated as cash flow from operating activities less capital expenditures. |
Three Months Ended September 30, 2019 | Nine Months Ended September 30, 2019 | ||||||||||||||||||||||
FMT | HST | FSDP | IDEX | FMT | HST | FSDP | IDEX | ||||||||||||||||
Change in net sales | 1 | % | 3 | % | (5 | )% | — | % | 2 | % | 2 | % | (2 | )% | 1 | % | |||||||
- Net impact from acquisitions | — | % | 3 | % | — | % | 1 | % | — | % | 2 | % | — | % | 1 | % | |||||||
- Impact from FX | (1 | )% | (1 | )% | (2 | )% | (1 | )% | (2 | )% | (2 | )% | (2 | )% | (2 | )% | |||||||
Change in organic net sales | 2 | % | 1 | % | (3 | )% | — | % | 4 | % | 2 | % | — | % | 2 | % |
Three Months Ended September 30, | Nine Months Ended September 30, | ||||||||||||||
2019 | 2018 | 2019 | 2018 | ||||||||||||
Gross profit | $ | 281,978 | $ | 280,233 | $ | 858,149 | $ | 844,252 | |||||||
+ Fair value inventory step-up charge | 3,340 | — | 3,340 | — | |||||||||||
Adjusted gross profit | $ | 285,318 | $ | 280,233 | $ | 861,489 | $ | 844,252 | |||||||
Net sales | $ | 624,246 | $ | 622,888 | $ | 1,888,576 | $ | 1,869,572 | |||||||
Gross profit margin | 45.2 | % | 45.0 | % | 45.4 | % | 45.2 | % | |||||||
Adjusted gross profit margin | 45.7 | % | 45.0 | % | 45.6 | % | 45.2 | % |
Three Months Ended September 30, | |||||||||||||||||||||||||||||||||||||||
2019 | 2018 | ||||||||||||||||||||||||||||||||||||||
FMT | HST | FSDP | Corporate | IDEX | FMT | HST | FSDP | Corporate | IDEX | ||||||||||||||||||||||||||||||
Reported operating income (loss) | $ | 77,481 | $ | 40,170 | $ | 41,967 | $ | (17,853 | ) | $ | 141,765 | $ | 69,755 | $ | 49,144 | $ | 44,726 | $ | (18,492 | ) | $ | 145,133 | |||||||||||||||||
+ Restructuring expenses | — | 11,196 | 104 | 656 | 11,956 | 827 | 3,116 | 60 | 618 | 4,621 | |||||||||||||||||||||||||||||
+ Fair value inventory step-up charge | — | 3,340 | — | — | 3,340 | — | — | — | — | — | |||||||||||||||||||||||||||||
Adjusted operating income (loss) | $ | 77,481 | $ | 54,706 | $ | 42,071 | $ | (17,197 | ) | $ | 157,061 | $ | 70,582 | $ | 52,260 | $ | 44,786 | $ | (17,874 | ) | $ | 149,754 | |||||||||||||||||
Net sales (eliminations) | $ | 240,861 | $ | 229,610 | $ | 154,543 | $ | (768 | ) | $ | 624,246 | $ | 239,213 | $ | 222,426 | $ | 161,832 | $ | (583 | ) | $ | 622,888 | |||||||||||||||||
Reported operating margin | 32.2 | % | 17.5 | % | 27.2 | % | n/m | 22.7 | % | 29.2 | % | 22.1 | % | 27.6 | % | n/m | 23.3 | % | |||||||||||||||||||||
Adjusted operating margin | 32.2 | % | 23.8 | % | 27.2 | % | n/m | 25.2 | % | 29.5 | % | 23.5 | % | 27.7 | % | n/m | 24.0 | % |
Nine Months Ended September 30, | |||||||||||||||||||||||||||||||||||||||
2019 | 2018 | ||||||||||||||||||||||||||||||||||||||
FMT | HST | FSDP | Corporate | IDEX | FMT | HST | FSDP | Corporate | IDEX | ||||||||||||||||||||||||||||||
Reported operating income (loss) | $ | 223,493 | $ | 151,087 | $ | 125,909 | $ | (55,659 | ) | $ | 444,830 | $ | 207,149 | $ | 153,519 | $ | 130,162 | $ | (61,183 | ) | $ | 429,647 | |||||||||||||||||
+ Restructuring expenses | 930 | 11,526 | 923 | 703 | 14,082 | 1,313 | 5,298 | 427 | 1,213 | 8,251 | |||||||||||||||||||||||||||||
+ Fair value inventory step-up charge | — | 3,340 | — | — | 3,340 | — | — | — | — | — | |||||||||||||||||||||||||||||
Adjusted operating income (loss) | $ | 224,423 | $ | 165,953 | $ | 126,832 | $ | (54,956 | ) | $ | 462,252 | $ | 208,462 | $ | 158,817 | $ | 130,589 | $ | (59,970 | ) | $ | 437,898 | |||||||||||||||||
Net sales (eliminations) | $ | 729,572 | $ | 687,153 | $ | 474,745 | $ | (2,894 | ) | $ | 1,888,576 | $ | 714,346 | $ | 670,904 | $ | 485,305 | $ | (983 | ) | $ | 1,869,572 | |||||||||||||||||
Reported operating margin | 30.6 | % | 22.0 | % | 26.5 | % | n/m | 23.6 | % | 29.0 | % | 22.9 | % | 26.8 | % | n/m | 23.0 | % | |||||||||||||||||||||
Adjusted operating margin | 30.8 | % | 24.2 | % | 26.7 | % | n/m | 24.5 | % | 29.2 | % | 23.7 | % | 26.9 | % | n/m | 23.4 | % |
Three Months Ended September 30, | Nine Months Ended September 30, | ||||||||||||||
2019 | 2018 | 2019 | 2018 | ||||||||||||
Reported net income | $ | 105,194 | $ | 106,352 | $ | 328,671 | $ | 312,436 | |||||||
+ Restructuring expenses | 11,956 | 4,621 | 14,082 | 8,251 | |||||||||||
+ Tax impact on restructuring expenses | (2,776 | ) | (1,130 | ) | (3,336 | ) | (2,003 | ) | |||||||
+ Fair value inventory step-up charge | 3,340 | — | 3,340 | — | |||||||||||
+ Tax impact on fair value inventory step-up charge | (735 | ) | — | (735 | ) | — | |||||||||
Adjusted net income | $ | 116,979 | $ | 109,843 | $ | 342,022 | $ | 318,684 |
Three Months Ended September 30, | Nine Months Ended September 30, | ||||||||||||||
2019 | 2018 | 2019 | 2018 | ||||||||||||
Reported diluted EPS | $ | 1.37 | $ | 1.37 | $ | 4.30 | $ | 4.02 | |||||||
+ Restructuring expenses | 0.16 | 0.06 | 0.18 | 0.11 | |||||||||||
+ Tax impact on restructuring expenses | (0.04 | ) | (0.02 | ) | (0.04 | ) | (0.03 | ) | |||||||
+ Fair value inventory step-up charge | 0.04 | — | 0.04 | — | |||||||||||
+ Tax impact on fair value inventory step-up charge | (0.01 | ) | — | (0.01 | ) | — | |||||||||
Adjusted diluted EPS | $ | 1.52 | $ | 1.41 | $ | 4.47 | $ | 4.10 | |||||||
Diluted weighted average shares outstanding | 76,577 | 77,709 | 76,415 | 77,717 |
Three Months Ended September 30, | |||||||||||||||||||||||||||||||||||||||
2019 | 2018 | ||||||||||||||||||||||||||||||||||||||
FMT | HST | FSDP | Corporate | IDEX | FMT | HST | FSDP | Corporate | IDEX | ||||||||||||||||||||||||||||||
Reported operating income (loss) | $ | 77,481 | $ | 40,170 | $ | 41,967 | $ | (17,853 | ) | $ | 141,765 | $ | 69,755 | $ | 49,144 | $ | 44,726 | $ | (18,492 | ) | $ | 145,133 | |||||||||||||||||
- Other (income) expense - net | 295 | 1,272 | (92 | ) | (256 | ) | 1,219 | 411 | 780 | 342 | (599 | ) | 934 | ||||||||||||||||||||||||||
+ Depreciation and amortization | 5,507 | 10,296 | 3,566 | 154 | 19,523 | 5,500 | 9,381 | 3,541 | 184 | 18,606 | |||||||||||||||||||||||||||||
EBITDA | 82,693 | 49,194 | 45,625 | (17,443 | ) | 160,069 | 74,844 | 57,745 | 47,925 | (17,709 | ) | 162,805 | |||||||||||||||||||||||||||
- Interest expense | 11,330 | 10,958 | |||||||||||||||||||||||||||||||||||||
- Provision for income taxes | 24,022 | 26,889 | |||||||||||||||||||||||||||||||||||||
- Depreciation and amortization | 19,523 | 18,606 | |||||||||||||||||||||||||||||||||||||
Reported net income | $ | 105,194 | $ | 106,352 | |||||||||||||||||||||||||||||||||||
Net sales (eliminations) | $ | 240,861 | $ | 229,610 | $ | 154,543 | $ | (768 | ) | $ | 624,246 | $ | 239,213 | $ | 222,426 | $ | 161,832 | $ | (583 | ) | $ | 622,888 | |||||||||||||||||
Reported operating margin | 32.2 | % | 17.5 | % | 27.2 | % | n/m | 22.7 | % | 29.2 | % | 22.1 | % | 27.6 | % | n/m | 23.3 | % | |||||||||||||||||||||
EBITDA margin | 34.3 | % | 21.4 | % | 29.5 | % | n/m | 25.6 | % | 31.3 | % | 26.0 | % | 29.6 | % | n/m | 26.1 | % |
Nine Months Ended September 30, | |||||||||||||||||||||||||||||||||||||||
2019 | 2018 | ||||||||||||||||||||||||||||||||||||||
FMT | HST | FSDP | Corporate | IDEX | FMT | HST | FSDP | Corporate | IDEX | ||||||||||||||||||||||||||||||
Reported operating income (loss) | $ | 223,493 | $ | 151,087 | $ | 125,909 | $ | (55,659 | ) | $ | 444,830 | $ | 207,149 | $ | 153,519 | $ | 130,162 | $ | (61,183 | ) | $ | 429,647 | |||||||||||||||||
- Other (income) expense - net | 612 | 1,636 | 273 | (1,820 | ) | 701 | 1,056 | (280 | ) | (3,324 | ) | (1,017 | ) | (3,565 | ) | ||||||||||||||||||||||||
+ Depreciation and amortization | 16,653 | 29,438 | 10,745 | 510 | 57,346 | 16,901 | 30,860 | 10,912 | 557 | 59,230 | |||||||||||||||||||||||||||||
EBITDA | 239,534 | 178,889 | 136,381 | (53,329 | ) | 501,475 | 222,994 | 184,659 | 144,398 | (59,609 | ) | 492,442 | |||||||||||||||||||||||||||
- Interest expense | 33,262 | 33,098 | |||||||||||||||||||||||||||||||||||||
- Provision for income taxes | 82,196 | 87,678 | |||||||||||||||||||||||||||||||||||||
- Depreciation and amortization | 57,346 | 59,230 | |||||||||||||||||||||||||||||||||||||
Reported net income | $ | 328,671 | $ | 312,436 | |||||||||||||||||||||||||||||||||||
Net sales (eliminations) | $ | 729,572 | $ | 687,153 | $ | 474,745 | $ | (2,894 | ) | $ | 1,888,576 | $ | 714,346 | $ | 670,904 | $ | 485,305 | $ | (983 | ) | $ | 1,869,572 | |||||||||||||||||
Reported operating margin | 30.6 | % | 22.0 | % | 26.5 | % | n/m | 23.6 | % | 29.0 | % | 22.9 | % | 26.8 | % | n/m | 23.0 | % | |||||||||||||||||||||
EBITDA margin | 32.8 | % | 26.0 | % | 28.7 | % | n/m | 26.6 | % | 31.2 | % | 27.5 | % | 29.8 | % | n/m | 26.3 | % |
Three Months Ended September 30, | |||||||||||||||||||||||||||||||||||||||
2019 | 2018 | ||||||||||||||||||||||||||||||||||||||
FMT | HST | FSDP | Corporate | IDEX | FMT | HST | FSDP | Corporate | IDEX | ||||||||||||||||||||||||||||||
EBITDA | $ | 82,693 | $ | 49,194 | $ | 45,625 | $ | (17,443 | ) | $ | 160,069 | $ | 74,844 | $ | 57,745 | $ | 47,925 | $ | (17,709 | ) | $ | 162,805 | |||||||||||||||||
+ Restructuring expenses | — | 11,196 | 104 | 656 | 11,956 | 827 | 3,116 | 60 | 618 | 4,621 | |||||||||||||||||||||||||||||
+ Fair value inventory step-up charge | — | 3,340 | — | — | 3,340 | — | — | — | — | — | |||||||||||||||||||||||||||||
Adjusted EBITDA | $ | 82,693 | $ | 63,730 | $ | 45,729 | $ | (16,787 | ) | $ | 175,365 | $ | 75,671 | $ | 60,861 | $ | 47,985 | $ | (17,091 | ) | $ | 167,426 | |||||||||||||||||
Adjusted EBITDA margin | 34.3 | % | 27.8 | % | 29.6 | % | n/m | 28.1 | % | 31.6 | % | 27.4 | % | 29.7 | % | n/m | 26.9 | % |
Nine Months Ended September 30, | |||||||||||||||||||||||||||||||||||||||
2019 | 2018 | ||||||||||||||||||||||||||||||||||||||
FMT | HST | FSDP | Corporate | IDEX | FMT | HST | FSDP | Corporate | IDEX | ||||||||||||||||||||||||||||||
EBITDA | $ | 239,534 | $ | 178,889 | $ | 136,381 | $ | (53,329 | ) | $ | 501,475 | $ | 222,994 | $ | 184,659 | $ | 144,398 | $ | (59,609 | ) | $ | 492,442 | |||||||||||||||||
+ Restructuring expenses | 930 | 11,526 | 923 | 703 | 14,082 | 1,313 | 5,298 | 427 | 1,213 | 8,251 | |||||||||||||||||||||||||||||
+ Fair value inventory step-up charge | — | 3,340 | — | — | 3,340 | — | — | — | — | — | |||||||||||||||||||||||||||||
Adjusted EBITDA | $ | 240,464 | $ | 193,755 | $ | 137,304 | $ | (52,626 | ) | $ | 518,897 | $ | 224,307 | $ | 189,957 | $ | 144,825 | $ | (58,396 | ) | $ | 500,693 | |||||||||||||||||
Adjusted EBITDA margin | 33.0 | % | 28.2 | % | 28.9 | % | n/m | 27.5 | % | 31.4 | % | 28.3 | % | 29.8 | % | n/m | 26.8 | % |
Three Months Ended | Nine Months Ended | ||||||||||||||||||
September 30, | June 30, | September 30, | |||||||||||||||||
2019 | 2018 | 2019 | 2019 | 2018 | |||||||||||||||
Cash flows from operating activities | $ | 157,064 | $ | 133,327 | $ | 131,175 | $ | 376,902 | $ | 325,753 | |||||||||
- Capital expenditures | 11,031 | 18,888 | 12,867 | 36,773 | 39,856 | ||||||||||||||
Free cash flow | $ | 146,033 | $ | 114,439 | $ | 118,308 | $ | 340,129 | $ | 285,897 |
Three Months Ended September 30, | Nine Months Ended September 30, | ||||||||||||||
2019 | 2018 | 2019 | 2018 | ||||||||||||
Net sales | $ | 624,246 | $ | 622,888 | $ | 1,888,576 | $ | 1,869,572 | |||||||
Cost of sales | 342,268 | 342,655 | 1,030,427 | 1,025,320 | |||||||||||
Gross profit | 281,978 | 280,233 | 858,149 | 844,252 | |||||||||||
Selling, general and administrative expenses | 128,257 | 130,479 | 399,237 | 406,354 | |||||||||||
Restructuring expenses | 11,956 | 4,621 | 14,082 | 8,251 | |||||||||||
Operating income | 141,765 | 145,133 | 444,830 | 429,647 | |||||||||||
Other (income) expense - net | 1,219 | 934 | 701 | (3,565 | ) | ||||||||||
Interest expense | 11,330 | 10,958 | 33,262 | 33,098 | |||||||||||
Income before income taxes | 129,216 | 133,241 | 410,867 | 400,114 | |||||||||||
Provision for income taxes | 24,022 | 26,889 | 82,196 | 87,678 | |||||||||||
Net income | $ | 105,194 | $ | 106,352 | $ | 328,671 | $ | 312,436 | |||||||
Earnings per Common Share: | |||||||||||||||
Basic earnings per common share | $ | 1.39 | $ | 1.39 | $ | 4.34 | $ | 4.07 | |||||||
Diluted earnings per common share | $ | 1.37 | $ | 1.37 | $ | 4.30 | $ | 4.02 | |||||||
Share Data: | |||||||||||||||
Basic weighted average common shares outstanding | 75,698 | 76,562 | 75,532 | 76,507 | |||||||||||
Diluted weighted average common shares outstanding | 76,577 | 77,709 | 76,415 | 77,717 |
September 30, 2019 | December 31, 2018 | ||||||
Assets | |||||||
Current assets | |||||||
Cash and cash equivalents | $ | 515,985 | $ | 466,407 | |||
Receivables - net | 317,305 | 312,192 | |||||
Inventories | 303,494 | 279,995 | |||||
Other current assets | 53,840 | 33,938 | |||||
Total current assets | 1,190,624 | 1,092,532 | |||||
Property, plant and equipment - net | 273,330 | 281,220 | |||||
Goodwill and intangible assets | 2,165,298 | 2,081,282 | |||||
Other noncurrent assets | 84,643 | 18,823 | |||||
Total assets | $ | 3,713,895 | $ | 3,473,857 | |||
Liabilities and shareholders' equity | |||||||
Current liabilities | |||||||
Trade accounts payable | $ | 147,079 | $ | 143,196 | |||
Accrued expenses | 185,156 | 187,536 | |||||
Short-term borrowings | 417 | 483 | |||||
Dividends payable | 38,018 | 33,446 | |||||
Total current liabilities | 370,670 | 364,661 | |||||
Long-term borrowings | 848,728 | 848,335 | |||||
Other noncurrent liabilities | 331,444 | 266,221 | |||||
Total liabilities | 1,550,842 | 1,479,217 | |||||
Shareholders' equity | 2,163,053 | 1,994,640 | |||||
Total liabilities and shareholders' equity | $ | 3,713,895 | $ | 3,473,857 |
Nine Months Ended September 30, | |||||||
2019 | 2018 | ||||||
Cash flows from operating activities | |||||||
Net income | $ | 328,671 | $ | 312,436 | |||
Adjustments to reconcile net income to net cash provided by operating activities: | |||||||
Asset impairments | 9,680 | — | |||||
Depreciation and amortization | 29,599 | 29,725 | |||||
Amortization of intangible assets | 27,747 | 29,505 | |||||
Amortization of debt issuance expenses | 1,013 | 998 | |||||
Share-based compensation expense | 20,620 | 19,814 | |||||
Deferred income taxes | 11,528 | (1,480 | ) | ||||
Non-cash interest expense associated with forward starting swaps | 4,737 | 4,869 | |||||
Changes in (net of the effect from acquisitions): | |||||||
Receivables | (2,071 | ) | (34,057 | ) | |||
Inventories | (16,987 | ) | (27,903 | ) | |||
Other current assets | (19,186 | ) | 7,635 | ||||
Trade accounts payable | 2,807 | (4,420 | ) | ||||
Accrued expenses | (23,222 | ) | 33 | ||||
Other - net | 1,966 | (11,402 | ) | ||||
Net cash flows provided by operating activities | 376,902 | 325,753 | |||||
Cash flows from investing activities | |||||||
Purchases of property, plant and equipment | (36,773 | ) | (39,856 | ) | |||
Purchase of intellectual property | — | (4,000 | ) | ||||
Acquisition of businesses, net of cash acquired | (87,180 | ) | (20,205 | ) | |||
Proceeds from disposal of fixed assets | 957 | 211 | |||||
Other - net | 407 | (1,180 | ) | ||||
Net cash flows used in investing activities | (122,589 | ) | (65,030 | ) | |||
Cash flows from financing activities | |||||||
Payments under revolving credit facilities | — | (11,128 | ) | ||||
Payments under other long-term borrowings | (49,923 | ) | — | ||||
Dividends paid | (109,227 | ) | (94,913 | ) | |||
Proceeds from stock option exercises | 35,595 | 26,793 | |||||
Repurchases of common stock | (54,668 | ) | (50,654 | ) | |||
Shares surrendered for tax withholding | (12,583 | ) | (11,260 | ) | |||
Settlement of foreign exchange contracts | — | 6,593 | |||||
Other - net | (1,865 | ) | — | ||||
Net cash flows used in financing activities | (192,671 | ) | (134,569 | ) | |||
Effect of exchange rate changes on cash and cash equivalents | (12,064 | ) | (10,337 | ) | |||
Net increase in cash | 49,578 | 115,817 | |||||
Cash and cash equivalents at beginning of year | 466,407 | 375,950 | |||||
Cash and cash equivalents at end of period | $ | 515,985 | $ | 491,767 |
Three Months Ended September 30, (a) | Nine Months Ended September 30, (a) | |||||||||||||||
2019 | 2018 | 2019 | 2018 | |||||||||||||
Fluid & Metering Technologies | ||||||||||||||||
Net sales | $ | 240,861 | $ | 239,213 | $ | 729,572 | $ | 714,346 | ||||||||
Operating income (b) | 77,481 | 69,755 | 223,493 | 207,149 | ||||||||||||
Operating margin | 32.2 | % | 29.2 | % | 30.6 | % | 29.0 | % | ||||||||
EBITDA | $ | 82,693 | $ | 74,844 | $ | 239,534 | $ | 222,994 | ||||||||
EBITDA margin | 34.3 | % | 31.3 | % | 32.8 | % | 31.2 | % | ||||||||
Depreciation and amortization | $ | 5,507 | $ | 5,500 | $ | 16,653 | $ | 16,901 | ||||||||
Capital expenditures | 3,627 | 6,487 | 10,207 | 15,142 | ||||||||||||
Health & Science Technologies | ||||||||||||||||
Net sales | $ | 229,610 | $ | 222,426 | $ | 687,153 | $ | 670,904 | ||||||||
Operating income (b) | 40,170 | 49,144 | 151,087 | 153,519 | ||||||||||||
Operating margin | 17.5 | % | 22.1 | % | 22.0 | % | 22.9 | % | ||||||||
EBITDA | $ | 49,194 | $ | 57,745 | $ | 178,889 | $ | 184,659 | ||||||||
EBITDA margin | 21.4 | % | 26.0 | % | 26.0 | % | 27.5 | % | ||||||||
Depreciation and amortization | $ | 10,296 | $ | 9,381 | $ | 29,438 | $ | 30,860 | ||||||||
Capital expenditures | 4,984 | 8,614 | 16,201 | 17,296 | ||||||||||||
Fire & Safety/Diversified Products | ||||||||||||||||
Net sales | $ | 154,543 | $ | 161,832 | $ | 474,745 | $ | 485,305 | ||||||||
Operating income (b) | 41,967 | 44,726 | 125,909 | 130,162 | ||||||||||||
Operating margin | 27.2 | % | 27.6 | % | 26.5 | % | 26.8 | % | ||||||||
EBITDA | $ | 45,625 | $ | 47,925 | $ | 136,381 | $ | 144,398 | ||||||||
EBITDA margin | 29.5 | % | 29.6 | % | 28.7 | % | 29.8 | % | ||||||||
Depreciation and amortization | $ | 3,566 | $ | 3,541 | $ | 10,745 | $ | 10,912 | ||||||||
Capital expenditures | 2,257 | 3,787 | 8,744 | 7,232 | ||||||||||||
Corporate Office and Eliminations | ||||||||||||||||
Intersegment sales eliminations | $ | (768 | ) | $ | (583 | ) | $ | (2,894 | ) | $ | (983 | ) | ||||
Operating income (b) | (17,853 | ) | (18,492 | ) | (55,659 | ) | (61,183 | ) | ||||||||
EBITDA | (17,443 | ) | (17,709 | ) | (53,329 | ) | (59,609 | ) | ||||||||
Depreciation and amortization | 154 | 184 | 510 | 557 | ||||||||||||
Capital expenditures | 163 | — | 1,621 | 186 | ||||||||||||
Company | ||||||||||||||||
Net sales | $ | 624,246 | $ | 622,888 | $ | 1,888,576 | $ | 1,869,572 | ||||||||
Operating income | 141,765 | 145,133 | 444,830 | 429,647 | ||||||||||||
Operating margin | 22.7 | % | 23.3 | % | 23.6 | % | 23.0 | % | ||||||||
EBITDA | $ | 160,069 | $ | 162,805 | $ | 501,475 | $ | 492,442 | ||||||||
EBITDA margin | 25.6 | % | 26.1 | % | 26.6 | % | 26.3 | % | ||||||||
Depreciation and amortization (c) | $ | 19,523 | $ | 18,606 | $ | 57,346 | $ | 59,230 | ||||||||
Capital expenditures | 11,031 | 18,888 | 36,773 | 39,856 |
Three Months Ended September 30, (a) | Nine Months Ended September 30, (a) | |||||||||||||||
2019 | 2018 | 2019 | 2018 | |||||||||||||
Fluid & Metering Technologies | ||||||||||||||||
Net sales | $ | 240,861 | $ | 239,213 | $ | 729,572 | $ | 714,346 | ||||||||
Adjusted operating income (b) | 77,481 | 70,582 | 224,423 | 208,462 | ||||||||||||
Adjusted operating margin | 32.2 | % | 29.5 | % | 30.8 | % | 29.2 | % | ||||||||
Adjusted EBITDA | $ | 82,693 | $ | 75,671 | $ | 240,464 | $ | 224,307 | ||||||||
Adjusted EBITDA margin | 34.3 | % | 31.6 | % | 33.0 | % | 31.4 | % | ||||||||
Depreciation and amortization | $ | 5,507 | $ | 5,500 | $ | 16,653 | $ | 16,901 | ||||||||
Capital expenditures | 3,627 | 6,487 | 10,207 | 15,142 | ||||||||||||
Health & Science Technologies | ||||||||||||||||
Net sales | $ | 229,610 | $ | 222,426 | $ | 687,153 | $ | 670,904 | ||||||||
Adjusted operating income (b) | 54,706 | 52,260 | 165,953 | 158,817 | ||||||||||||
Adjusted operating margin | 23.8 | % | 23.5 | % | 24.2 | % | 23.7 | % | ||||||||
Adjusted EBITDA | $ | 63,730 | $ | 60,861 | $ | 193,755 | $ | 189,957 | ||||||||
Adjusted EBITDA margin | 27.8 | % | 27.4 | % | 28.2 | % | 28.3 | % | ||||||||
Depreciation and amortization | $ | 10,296 | $ | 9,381 | $ | 29,438 | $ | 30,860 | ||||||||
Capital expenditures | 4,984 | 8,614 | 16,201 | 17,296 | ||||||||||||
Fire & Safety/Diversified Products | ||||||||||||||||
Net sales | $ | 154,543 | $ | 161,832 | $ | 474,745 | $ | 485,305 | ||||||||
Adjusted operating income (b) | 42,071 | 44,786 | 126,832 | 130,589 | ||||||||||||
Adjusted operating margin | 27.2 | % | 27.7 | % | 26.7 | % | 26.9 | % | ||||||||
Adjusted EBITDA | $ | 45,729 | $ | 47,985 | $ | 137,304 | $ | 144,825 | ||||||||
Adjusted EBITDA margin | 29.6 | % | 29.7 | % | 28.9 | % | 29.8 | % | ||||||||
Depreciation and amortization | $ | 3,566 | $ | 3,541 | $ | 10,745 | $ | 10,912 | ||||||||
Capital expenditures | 2,257 | 3,787 | 8,744 | 7,232 | ||||||||||||
Corporate Office and Eliminations | ||||||||||||||||
Intersegment sales eliminations | $ | (768 | ) | $ | (583 | ) | $ | (2,894 | ) | $ | (983 | ) | ||||
Adjusted operating income (b) | (17,197 | ) | (17,874 | ) | (54,956 | ) | (59,970 | ) | ||||||||
Adjusted EBITDA | (16,787 | ) | (17,091 | ) | (52,626 | ) | (58,396 | ) | ||||||||
Depreciation and amortization | 154 | 184 | 510 | 557 | ||||||||||||
Capital expenditures | 163 | — | 1,621 | 186 | ||||||||||||
Company | ||||||||||||||||
Net sales | $ | 624,246 | $ | 622,888 | $ | 1,888,576 | $ | 1,869,572 | ||||||||
Adjusted operating income | 157,061 | 149,754 | 462,252 | 437,898 | ||||||||||||
Adjusted operating margin | 25.2 | % | 24.0 | % | 24.5 | % | 23.4 | % | ||||||||
Adjusted EBITDA | $ | 175,365 | $ | 167,426 | $ | 518,897 | $ | 500,693 | ||||||||
Adjusted EBITDA margin | 28.1 | % | 26.9 | % | 27.5 | % | 26.8 | % | ||||||||
Depreciation and amortization (c) | $ | 19,523 | $ | 18,606 | $ | 57,346 | $ | 59,230 | ||||||||
Capital expenditures | 11,031 | 18,888 | 36,773 | 39,856 | ||||||||||||
(a) | Three and nine month data includes the results of Velcora (July 2019) and Finger Lakes Instrumentation (July 2018) in the Health & Science Technologies segment from the date of acquisition. | |||||||||||||||
(b) | Segment operating income excludes unallocated corporate operating expenses which are included in Corporate Office and Eliminations. | |||||||||||||||
(c) | Depreciation and amortization excludes amortization of debt issuance costs. |
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