Item 6. Selected Financial Data.(1)

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Item 6. Selected Financial Data.(1)



(Dollars in thousands, except per share data)	2018			2017			2016			2015			2014
RESULTS OF OPERATIONS
Net sales	$	2,483,666		$	2,287,312		$	2,113,043		$	2,020,668		$	2,147,767
Gross profit	1,117,895			1,026,678			930,767			904,315			949,315
Selling, general and administrative expenses	536,724			524,940			492,398			474,156			500,719
Loss (gain) on sale of businesses - net	—			(9,273		)	22,298			(18,070		)	—
Restructuring expenses	12,083			8,455			3,674			11,239			13,672
Operating income	569,088			502,556			412,397			436,990			434,924
Other (income) expense - net	(3,985		)	2,394			(1,731		)	3,009			589
Interest expense	44,134			44,889			45,616			41,636			41,895
Provision for income taxes	118,366			118,016			97,403			109,538			113,054
Net income	410,573			337,257			271,109			282,807			279,386
Earnings per share: (2)
— basic	$	5.36		$	4.41		$	3.57		$	3.65		$	3.48
— diluted	$	5.29		$	4.36		$	3.53		$	3.62		$	3.45
Weighted average shares outstanding:
— basic	76,412			76,232			75,803			77,126			79,715
— diluted	77,563			77,333			76,758			77,972			80,728
Year-end shares outstanding	75,953			76,694			76,441			76,535			78,766
Cash dividends per share	$	1.72		$	1.48		$	1.36		$	1.28		$	1.12
FINANCIAL POSITION
Current assets	$	1,092,532		$	1,004,043		$	822,721		$	862,684		$	1,075,791
Current liabilities	364,661			360,975			309,158			309,597			411,968
Current ratio	3.0			2.8			2.7			2.8			2.6
Operating working capital (3)	451,552			406,823			396,739			370,213			366,209
Total assets	$	3,473,857		$	3,399,628		$	3,154,944		$	2,805,443		$	2,903,463
Total borrowings	848,818			859,046			1,015,281			840,794			859,345
Shareholders’ equity	1,994,640			1,886,542			1,543,894			1,443,291			1,486,451
PERFORMANCE MEASURES AND OTHER DATA
Percent of net sales:
Gross profit	45.0		%	44.9		%	44.0		%	44.8		%	44.2		%
Selling, general and administrative expenses	21.6		%	23.0		%	23.3		%	23.5		%	23.3		%
Operating income	22.9		%	22.0		%	19.5		%	21.6		%	20.3		%
Income before income taxes	21.3		%	19.9		%	17.4		%	19.4		%	18.3		%
Net income	16.5		%	14.7		%	12.8		%	14.0		%	13.0		%
Capital expenditures	$	56,089		$	43,858		$	38,242		$	43,776		$	47,997
Depreciation and amortization	77,544			84,216			86,892			78,120			76,907
Return on average assets (4)	11.9		%	10.3		%	9.1		%	9.9		%	9.7		%
Borrowings as a percent of capitalization (4)	29.9		%	31.3		%	39.7		%	36.8		%	36.6		%
Return on average shareholders’ equity (4)	21.2		%	19.7		%	18.2		%	19.3		%	18.3		%
Employees at year end	7,352			7,167			7,158			6,801			6,712
NON-GAAP MEASURES (5)
EBITDA	$	650,617		$	584,378		$	501,020		$	512,101		$	511,242
EBITDA margin	26.2		%	25.5		%	23.7		%	25.3		%	23.8		%
Adjusted EBITDA	$	662,700		$	583,560		$	530,546		$	505,270		$	524,914
Adjusted EBITDA margin	26.7		%	25.5		%	25.1		%	25.0		%	24.4		%
Adjusted operating income	$	581,171		$	501,738		$	438,369		$	430,159		$	448,596
Adjusted operating margin	23.4		%	21.9		%	20.7		%	21.3		%	20.9		%
Adjusted net income	$	419,624		$	333,667		$	288,373		$	277,229		$	288,823
Adjusted earnings per share	$	5.41		$	4.31		$	3.75		$	3.55		$	3.57


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


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


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


(4)	Return on average assets is calculated as: Net income / (Current year Total assets + Prior year Total assets) / 2; Borrowings as a percent of capitalization is calculated as: (Long-term borrowings + Short-term borrowings) / (Long-term borrowings + Short-term borrowings + Total shareholders’ equity); Return on average shareholders’ equity is calculated as Net Income / (Current year Total shareholders’ equity + Prior year Total shareholders’ equity) / 2.

(4)

Return on average assets is calculated as: Net income / (Current year Total assets + Prior year Total assets) / 2; Borrowings as a percent of capitalization is calculated as: (Long-term borrowings + Short-term borrowings) / (Long-term borrowings + Short-term borrowings + Total shareholders’ equity); Return on average shareholders’ equity is calculated as Net Income / (Current year Total shareholders’ equity + Prior year Total shareholders’ equity) / 2.


(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 generally accepted accounting principles in the U.S. (“U.S. GAAP”). We have reconciled Adjusted operating income to Operating income; Adjusted net income to Net income; Adjusted EPS to EPS; consolidated EBITDA, segment EBITDA, adjusted EBITDA and adjusted segment EBITDA to net income. The reconciliation of segment EBITDA to net income was performed on a consolidated basis due to the fact that we do not allocate consolidated interest expense or the consolidated provision for income taxes to our segments.

(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 generally accepted accounting principles in the U.S. (“U.S. GAAP”). We have reconciled Adjusted operating income to Operating income; Adjusted net income to Net income; Adjusted EPS to EPS; consolidated EBITDA, segment EBITDA, adjusted EBITDA and adjusted segment EBITDA to net income. The reconciliation of segment EBITDA to net income was performed on a consolidated basis due to the fact that we do not allocate consolidated interest expense or the consolidated provision for income taxes to our segments.

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 gains/losses on the sale of businesses, restructuring expenses and pension settlements. 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 from recently acquired businesses, management uses EBITDA as an internal operating metric to provide another representation of the businesses’ performance across our three segments and for enterprise valuation purposes. EBITDA is also used to calculate certain financial covenants, as discussed in Note 6 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 gains/losses on the sale of businesses, restructuring expenses and pension settlements to arrive at Adjusted EBITDA. Management believes that Adjusted EBITDA is useful as a performance indicator of ongoing operations. We believe that Adjusted EBITDA is also useful to some investors as an indicator of the strength and performance of the Company 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.

Also set forth below is a reconciliation of the change in organic net sales to the comparable measure of net sales as determined in accordance with U.S. GAAP, which represents the year-over-year consistency in net sales after excluding the impact from acquisitions/divestitures and foreign currency translation.

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. The financial results prepared in accordance with U.S. GAAP and the reconciliations from these results should be carefully evaluated.



1. Reconciliations of Consolidated EBITDA

	For the Years Ended December 31,
	2018			2017			2016			2015			2014
	(In thousands)
Net income	$	410,573		$	337,257		$	271,109		$	282,807		$	279,386
+ Provision for income taxes	118,366			118,016			97,403			109,538			113,054
+ Interest expense	44,134			44,889			45,616			41,636			41,895
+ Depreciation and amortization	77,544			84,216			86,892			78,120			76,907
EBITDA	650,617			584,378			501,020			512,101			511,242
+ Restructuring expenses	12,083			8,455			3,674			11,239			13,672
+ Loss (gain) on sale of businesses - net	—			(9,273		)	22,298			(18,070		)	—
+ Pension settlement	—			—			3,554			—			—
Adjusted EBITDA	$	662,700		$	583,560		$	530,546		$	505,270		$	524,914

Net sales	$	2,483,666		$	2,287,312		$	2,113,043		$	2,020,668		$	2,147,767
EBITDA margin	26.2		%	25.5		%	23.7		%	25.3		%	23.8		%
Adjusted EBITDA margin	26.7		%	25.5		%	25.1		%	25.0		%	24.4		%



2. Reconciliations of Segment EBITDA

	For the Years Ended December 31,
	2018									2017									2016
	FMT			HST			FSDP			FMT			HST			FSDP			FMT			HST			FSDP
	(In thousands)
EBITDA	$	296,079		$	246,810		$	186,538		$	263,610		$	225,649		$	159,610		$	242,892		$	200,980		$	135,400
+ Restructuring expenses	2,458			5,904			2,184			3,374			4,696			255			932			1,117			1,425
+ Pension settlement	—			—			—			—			—			—			2,032			—			540
Adjusted EBITDA	$	298,537		$	252,714		$	188,722		$	266,984		$	230,345		$	159,865		$	245,856		$	202,097		$	137,365

Net sales	$	951,552		$	896,419		$	637,028		$	880,957		$	820,131		$	587,533		$	849,101		$	744,809		$	520,009
EBITDA margin	31.1		%	27.5		%	29.3		%	29.9		%	27.5		%	27.2		%	28.6		%	27.0		%	26.0		%
Adjusted EBITDA margin	31.4		%	28.2		%	29.6		%	30.3		%	28.1		%	27.2		%	29.0		%	27.1		%	26.4		%



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

	For the Years Ended December 31,
	2018			2017			2016			2015			2014
	(In thousands)
Operating income	$	569,088		$	502,556		$	412,397		$	436,990		$	434,924
+ Restructuring expenses	12,083			8,455			3,674			11,239			13,672
+ Loss (gain) on sale of businesses - net	—			(9,273		)	22,298			(18,070		)	—
Adjusted operating income	$	581,171		$	501,738		$	438,369		$	430,159		$	448,596

Net sales	$	2,483,666		$	2,287,312		$	2,113,043		$	2,020,668		$	2,147,767

Operating margin	22.9		%	22.0		%	19.5		%	21.6		%	20.3		%
Adjusted operating margin	23.4		%	21.9		%	20.7		%	21.3		%	20.9		%



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

	For the Years Ended December 31,
	2018									2017									2016
	FMT			HST			FSDP			FMT			HST			FSDP			FMT			HST			FSDP
	(In thousands)
Operating income	$	275,060		$	205,679		$	168,601		$	241,030		$	179,567		$	147,028		$	217,500		$	153,691		$	123,605
+ Restructuring expenses	2,458			5,904			2,184			3,374			4,696			255			932			1,117			1,425
Adjusted operating income	$	277,518		$	211,583		$	170,785		$	244,404		$	184,263		$	147,283		$	218,432		$	154,808		$	125,030

Net sales	$	951,552		$	896,419		$	637,028		$	880,957		$	820,131		$	587,533		$	849,101		$	744,809		$	520,009

Operating margin	28.9		%	22.9		%	26.5		%	27.4		%	21.9		%	25.0		%	25.6		%	20.6		%	23.8		%
Adjusted operating margin	29.2		%	23.6		%	26.8		%	27.7		%	22.5		%	25.1		%	25.7		%	20.8		%	24.0		%



5. Reconciliations of Reported-to-Adjusted Net Income and EPS

	For the Years Ended December 31,
	2018			2017			2016			2015			2014
	(In thousands)
Net income	$	410,573		$	337,257		$	271,109		$	282,807		$	279,386
+ Restructuring expenses	12,083			8,455			3,674			11,239			13,672
+ Tax impact on restructuring expenses	(3,032		)	(2,772		)	(1,299		)	(3,586		)	(4,235		)
+ Loss (gain) on sale of businesses	—			(9,273		)	22,298			(18,070		)	—
+ Tax impact on loss (gain) on sale of businesses	—			—			(9,706		)	4,839			—
+ Pension settlement	—			—			3,554			—			—
+ Tax impact on pension settlement	—			—			(1,257		)	—			—
Adjusted net income	$	419,624		$	333,667		$	288,373		$	277,229		$	288,823

EPS	$	5.29		$	4.36		$	3.53		$	3.62		$	3.45
+ Restructuring expenses	0.16			0.11			0.05			0.14			0.17
+ Tax impact on restructuring expenses	(0.04		)	(0.04		)	(0.02		)	(0.04		)	(0.05		)
+ Loss (gain) on sale of businesses	—			(0.12		)	0.29			(0.23		)	—
+ Tax impact on loss (gain) on sale of businesses	—			—			(0.13		)	0.06			—
+ Pension settlement	—			—			0.05			—			—
+ Tax impact on pension settlement	—			—			(0.02		)	—			—
Adjusted EPS	$	5.41		$	4.31		$	3.75		$	3.55		$	3.57

Diluted weighted average shares	77,563			77,333			76,758			77,972			80,728



6. Reconciliations of EBITDA to Net Income (dollars in thousands)

	For the Year Ended December 31, 2018
	FMT			HST			FSDP			Corporate			IDEX
Operating income (loss)	$	275,060		$	205,679		$	168,601		$	(80,252	)	$	569,088
- Other (income) expense - net	1,351			(1,192		)	(3,444		)	(700		)	(3,985		)
+ Depreciation and amortization	22,370			39,939			14,493			742			77,544
EBITDA	296,079			246,810			186,538			(78,810		)	650,617
- Interest expense													44,134
- Provision for income taxes													118,366
- Depreciation and amortization													77,544
Net income													$	410,573

Net sales (eliminations)	$	951,552		$	896,419		$	637,028		$	(1,333	)	$	2,483,666

Operating margin	28.9		%	22.9		%	26.5		%	n/m			22.9		%
EBITDA margin	31.1		%	27.5		%	29.3		%	n/m			26.2		%



	For the Year Ended December 31, 2017
	FMT			HST			FSDP			Corporate			IDEX
Operating income (loss)	$	241,030		$	179,567		$	147,028		$	(65,069	)	$	502,556
- Other (income) expense - net	1,007			(795		)	1,959			223			2,394
+ Depreciation and amortization	23,587			45,287			14,541			801			84,216
EBITDA	263,610			225,649			159,610			(64,491		)	584,378
- Interest expense													44,889
- Provision for income taxes													118,016
- Depreciation and amortization													84,216
Net income													$	337,257

Net sales (eliminations)	$	880,957		$	820,131		$	587,533		$	(1,309	)	$	2,287,312

Operating margin	27.4		%	21.9		%	25.0		%	n/m			22.0		%
EBITDA margin	29.9		%	27.5		%	27.2		%	n/m			25.5		%



	For the Year Ended December 31, 2016
	FMT			HST			FSDP			Corporate			IDEX
Operating income (loss)	$	217,500		$	153,691		$	123,605		$	(82,399	)	$	412,397
- Other (income) expense - net	3,066			(1,991		)	161			(2,967		)	(1,731		)
+ Depreciation and amortization	28,458			45,298			11,956			1,180			86,892
EBITDA	242,892			200,980			135,400			(78,252		)	501,020
- Interest expense													45,616
- Provision for income taxes													97,403
- Depreciation and amortization													86,892
Net income													$	271,109

Net sales (eliminations)	$	849,101		$	744,809		$	520,009		$	(876	)	$	2,113,043

Operating margin	25.6		%	20.6		%	23.8		%	n/m			19.5		%
EBITDA margin	28.6		%	27.0		%	26.0		%	n/m			23.7		%



7. Reconciliation of the Change in Net Sales to Net Organic Sales

	For the Year Ended December 31,
	2018								2017								2016
	FMT		HST		FSDP		IDEX		FMT		HST		FSDP		IDEX		FMT		HST		FSDP		IDEX
Change in net sales	8	%	9	%	8	%	9	%	4	%	10	%	13	%	8	%	(1	)%	1	%	23	%	5	%
- Net impact from acquisitions/divestitures	(2	)%	2	%	—	%	—	%	(2	)%	3	%	9	%	2	%	1	%	3	%	27	%	7	%
- Impact from FX	1	%	1	%	1	%	1	%	—	%	(1	)%	—	%	—	%	(1	)%	(1	)%	(1	)%	(1	)%
Change in organic net sales	9	%	6	%	7	%	8	%	6	%	8	%	4	%	6	%	(1	)%	(1	)%	(3	)%	(1	)%

Refer to Management’s Discussion and Analysis for definition and further discussion on organic sales.

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