Item 6. Selected Financial Data.(1)

21K characters. Original on sec.gov · Markdown

Item 6. Selected Financial Data.(1)



(Dollars in thousands, except per share data)	2014			2013			2012 (2)			2011			2010
RESULTS OF OPERATIONS
Net sales	$	2,147,767		$	2,024,130		$	1,954,258		$	1,838,451		$	1,513,073
Gross profit	949,315			873,364			803,700			738,673			618,483
Selling, general and administrative expenses	504,419			477,851			444,490			421,703			358,272
Asset impairments	—			—			198,519			—			—
Restructuring expenses	13,672			—			32,473			12,314			11,095
Operating income	431,224			395,513			128,218			304,656			249,116
Other (income) expense — net	(3,111		)	178			(236		)	1,443			1,092
Interest expense	41,895			42,206			42,250			29,332			16,150
Provision for income taxes	113,054			97,914			48,574			80,024			74,774
Net income	279,386			255,215			37,630			193,857			157,100
Earnings per share (3)
— basic	$	3.48		$	3.11		$	0.45		$	2.34		$	1.93
— diluted	$	3.45		$	3.09		$	0.45		$	2.32		$	1.90
Weighted average shares outstanding
— basic	79,715			81,517			82,689			82,145			80,466
— diluted	80,728			82,489			83,641			83,543			81,983
Year-end shares outstanding	78,766			81,196			82,727			83,234			82,070
Cash dividends per share	$	1.12		$	0.89		$	0.80		$	0.68		$	0.60
FINANCIAL POSITION
Current assets	$	1,075,791		$	990,953		$	881,865		$	789,161		$	692,758
Current liabilities	411,968			304,609			291,427			258,278			353,668
Current ratio	2.6			3.3			3.0			3.1			2.0
Operating working capital (4)	366,209			350,881			373,704			396,126			306,044
Total assets	$	2,908,070		$	2,887,577		$	2,785,390		$	2,836,107		$	2,381,695
Total borrowings	863,952			773,876			786,576			808,810			527,895
Shareholders’ equity	1,486,451			1,572,989			1,464,998			1,513,135			1,375,660
PERFORMANCE MEASURES AND OTHER DATA
Percent of net sales:
Gross profit	44.2		%	43.1		%	41.1		%	40.2		%	40.9		%
SG&A expenses	23.5		%	23.6		%	22.7		%	22.9		%	23.7		%
Operating income	20.1		%	19.5		%	6.6		%	16.6		%	16.5		%
Income before income taxes	18.3		%	17.4		%	4.4		%	14.9		%	15.3		%
Net income	13.0		%	12.6		%	1.9		%	10.5		%	10.4		%
Capital expenditures	$	47,997		$	31,536		$	35,520		$	34,548		$	32,769
Depreciation and amortization	76,907			79,334			78,312			72,386			58,108
Return on average assets	9.6		%	9.0		%	1.3		%	7.4		%	7.0		%
Borrowings as a percent of capitalization	36.8		%	33.0		%	34.9		%	34.8		%	27.7		%
Return on average shareholders' equity	18.3		%	16.8		%	2.5		%	13.4		%	11.9		%
Employees at year end	6,712			6,787			6,717			6,814			5,966
Shareholders at year end	6,500			6,500			6,700			7,000			7,000
NON-GAAP MEASURES (5)
EBITDA	$	511,242		$	474,669		$	206,766		$	375,599		$	306,132
EBITDA margin	23.8		%	23.5		%	10.6		%	20.4		%	20.2		%
Adjusted EBITDA	$	524,914		$	474,669		$	437,758		$	387,913		$	317,227
Adjusted EBITDA margin	24.4		%	23.5		%	22.4		%	21.1		%	21.0		%
Adjusted operating income	$	444,896		$	395,513		$	359,210		$	332,772		$	260,211
Adjusted operating margin	20.7		%	19.5		%	18.4		%	18.1		%	17.2		%
Adjusted net income	$	288,823		$	255,215		$	224,067		$	213,758		$	164,617
Adjusted earnings per share	$	3.57		$	3.09		$	2.68		$	2.56		$	1.99


(1)	For additional detail, see Notes to Consolidated Financial Statements in Part II, Item 8, “Financial Statements and Supplementary Data.”


(2)	Fiscal year 2012 includes an impairment charge for goodwill and intangible assets within the IOP platform and an impairment charge for goodwill and long-lived assets within the WST group.


(3)	Calculated by applying the two-class method of allocating earnings to common stock and participating securities as required by ASC 260, Earnings Per Share.


(4)	Operating working capital is defined as inventory plus accounts receivable minus accounts payable.


(5)	Set forth below are reconciliations of Adjusted operating income, Adjusted net income, Adjusted EPS, EBITDA and Adjusted EBITDA to the comparable measures of net income and operating income, as determined in accordance with U.S. GAAP. We have reconciled Adjusted operating income to Operating income; Adjusted net income to Net income; Adjusted EPS to EPS; consolidated EBITDA to net income; and segment EBITDA to segment operating income.

(5)

Set forth below are reconciliations of Adjusted operating income, Adjusted net income, Adjusted EPS, EBITDA and Adjusted EBITDA to the comparable measures of net income and operating income, as determined in accordance with U.S. GAAP. We have reconciled Adjusted operating income to Operating income; Adjusted net income to Net income; Adjusted EPS to EPS; consolidated EBITDA to net income; and segment EBITDA to segment operating income.

Management uses Adjusted operating income, Adjusted net income, and Adjusted EPS as metrics by which to measure performance of the Company since they exclude items that are not reflective of ongoing operations, such as asset impairments and restructuring expenses. Management also supplements its U.S. GAAP financial statements with adjusted information to provide investors with greater insight, transparency, and a more comprehensive understanding of the information used by management in its financial and operational decision making.

EBITDA means earnings before interest, income taxes, depreciation and amortization. Given the acquisitive nature of the Company which results in a higher level of amortization expense at recently acquired businesses, management uses EBITDA as an internal operating metric to provide management with another representation of performance of businesses across our three segments and for enterprise valuation purposes. EBITDA is also used to calculate certain financial covenants, as discussed in Note 5 of the Notes to Consolidated Financial Statements in Part II, Item 8, “Financial Statements and Supplementary Data.” In addition, EBITDA has been adjusted for items that are not reflective of ongoing operations, such as asset impairments and restructuring expenses to arrive at Adjusted EBITDA. Management believes that Adjusted EBITDA is useful as a performance indicator on ongoing operations. We believe that Adjusted EBITDA is also useful to some investors as an indicator of the strength and performance of the Company's and its segments ongoing business operations and a way to evaluate and compare operating performance and value companies within our industry. The definition of Adjusted EBITDA used here may differ from that used by other companies.

The non-GAAP financial measures disclosed by the Company should not be considered a substitute for, or superior to, financial measures prepared in accordance with U.S. GAAP, and the financial results prepared in accordance with U.S. GAAP and the reconciliations from these results should be carefully evaluated.



Reconciliations of Consolidated EBITDA

	For the Years Ended December 31,
	2014			2013			2012			2011			2010
	(In thousands)
Net income	$	279,386		$	255,215		$	37,630		$	193,857		$	157,100
+ Provision for income taxes	113,054			97,914			48,574			80,024			74,774
+ Interest expense	41,895			42,206			42,250			29,332			16,150
+ Depreciation and amortization	76,907			79,334			78,312			72,386			58,108
EBITDA	511,242			474,669			206,766			375,599			306,132
+ Restructuring expenses	13,672			—			32,473			12,314			11,095
+ Asset impairments	—			—			198,519			—			—
Adjusted EBITDA	$	524,914		$	474,669		$	437,758		$	387,913		$	317,227

Net sales	$	2,147,767		$	2,024,130		$	1,954,258		$	1,838,451		$	1,513,073
EBITDA margin	23.8		%	23.5		%	10.6		%	20.4		%	20.2		%
Adjusted EBITDA margin	24.4		%	23.5		%	22.4		%	21.1		%	21.0		%



Reconciliations of Segment EBITDA

	For the Years Ended December 31,
	2014									2013									2012
	FMT			HST			FSDP			FMT			HST			FSDP			FMT			HST			FSDP
	(In thousands)
Operating income (loss)	$	216,886		$	152,999		$	130,494		$	211,256		$	136,707		$	102,730		$	146,650		$	(62,835	)	$	96,120
- Other (income) expense	(560		)	(542		)	(990		)	1,789			(508		)	(342		)	(25		)	511			(143		)
+ Depreciation and amortization	26,453			42,478			6,583			27,633			43,496			6,852			29,637			39,981			7,107
EBITDA	243,899			196,019			138,067			237,100			180,711			109,924			176,312			(23,365		)	103,370
+ Restructuring expenses	6,413			4,912			1,034			—			—			—			6,262			14,744			8,340
+ Asset impairments	—			—			—			—			—			—			27,721			170,798			—
Adjusted EBITDA	$	250,312		$	200,931		$	139,101		$	237,100		$	180,711		$	109,924		$	210,295		$	162,177		$	111,710

Net sales	$	899,588		$	752,021		$	502,749		$	871,814		$	714,650		$	445,049		$	833,288		$	695,235		$	437,053
EBITDA margin	27.1		%	26.1		%	27.5		%	27.2		%	25.3		%	24.7		%	21.2		%	(3.4		)%	23.7		%
Adjusted EBITDA margin	27.8		%	26.7		%	27.7		%	27.2		%	25.3		%	24.7		%	25.2		%	23.3		%	25.6		%



Reconciliations of Consolidated Reported-to-Adjusted Operating Income and Margin

	For the Years Ended December 31,
	2014			2013			2012			2011			2010
	(In thousands)
Operating income	$	431,224		$	395,513		$	128,218		$	304,656		$	249,116
+ Restructuring expenses	13,672			—			32,473			12,314			11,095
+ Asset impairments	—			—			198,519			—			—
+ CVI fair value inventory charge	—			—			—			15,802			—
Adjusted operating income	$	444,896		$	395,513		$	359,210		$	332,772		$	260,211

Net sales	$	2,147,767		$	2,024,130		$	1,954,258		$	1,838,451		$	1,513,073

Operating margin	20.1		%	19.5		%	6.6		%	16.6		%	16.5		%
Adjusted operating margin	20.7		%	19.5		%	18.4		%	18.1		%	17.2		%



Reconciliations of Segment Reported-to-Adjusted Operating Income and Margin

	For the Years Ended December 31,
	2014									2013									2012
	FMT			HST			FSDP			FMT			HST			FSDP			FMT			HST			FSDP
	(In thousands)
Operating income (loss)	$	216,886		$	152,999		$	130,494		$	211,256		$	136,707		$	102,730		$	146,650		$	(62,835	)	$	96,120
+ Restructuring expenses	6,413			4,912			1,034			—			—			—			6,262			14,744			8,340
+ Asset impairments	—			—			—			—			—			—			27,721			170,798			—
Adjusted operating income	$	223,299		$	157,911		$	131,528		$	211,256		$	136,707		$	102,730		$	180,633		$	122,707		$	104,460

Net sales	$	899,588		$	752,021		$	502,749		$	871,814		$	714,650		$	445,049		$	833,288		$	695,235		$	437,053

Operating margin	24.1		%	20.3		%	26.0		%	24.2		%	19.1		%	23.1		%	17.6		%	(9.0		)%	22.0		%
Adjusted operating margin	24.8		%	21.0		%	26.2		%	24.2		%	19.1		%	23.1		%	21.7		%	17.6		%	23.9		%



Reconciliations of Reported-to-Adjusted Net Income and EPS

	For the Years Ended December 31,
	2014		2013		2012		2011		2010
	(In thousands)
Net income	$	279,386	$	255,215	$	37,630	$	193,857	$	157,100
+ Restructuring expenses, net of tax	9,437		—		22,926		8,716		7,517
+ Asset impairments, net of tax	—		—		163,511		—		—
+ CVI fair value inventory charge, net of tax	—		—		—		11,185		—
Adjusted net income	$	288,823	$	255,215	$	224,067	$	213,758	$	164,617

EPS	$	3.45	$	3.09	$	0.45	$	2.32	$	1.90
+ Restructuring expenses, net of tax	0.12		—		0.27		0.10		0.09
+ Asset impairments, net of tax	—		—		1.96		—		—
+ CVI fair value inventory charge	—		—		—		0.14		—
Adjusted EPS	$	3.57	$	3.09	$	2.68	$	2.56	$	1.99

Diluted weighted average shares	80,728		82,489		83,641		83,543		81,983

Previous: Item 4. Mine Safety Disclosures. · Next: Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations.