Item 6. Selected Financial Data.(1)

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Item 6. Selected Financial Data.(1)



(Dollars in thousands, except per share data)	2019			2018			2017			2016			2015
RESULTS OF OPERATIONS
Net sales	$	2,494,573		$	2,483,666		$	2,287,312		$	2,113,043		$	2,020,668
Gross profit	1,125,034			1,117,895			1,026,678			930,767			904,315
Selling, general and administrative expenses	524,987			536,724			524,940			492,398			474,156
Loss (gain) on sale of businesses - net	—			—			(9,273		)	22,298			(18,070		)
Restructuring expenses	21,044			12,083			8,455			3,674			11,239
Operating income	579,003			569,088			502,556			412,397			436,990
Other (income) expense - net	1,759			(3,985		)	2,394			(1,731		)	3,009
Interest expense	44,341			44,134			44,889			45,616			41,636
Provision for income taxes	107,382			118,366			118,016			97,403			109,538
Net income	425,521			410,573			337,257			271,109			282,807
Earnings per share: (2)
— basic	$	5.62		$	5.36		$	4.41		$	3.57		$	3.65
— diluted	$	5.56		$	5.29		$	4.36		$	3.53		$	3.62
Weighted average shares outstanding:
— basic	75,594			76,412			76,232			75,803			77,126
— diluted	76,454			77,563			77,333			76,758			77,972
Year-end shares outstanding	76,088			75,953			76,694			76,441			76,535
Cash dividends per share	$	2.00		$	1.72		$	1.48		$	1.36		$	1.28
FINANCIAL POSITION
Current assets	$	1,261,445		$	1,092,532		$	1,004,043		$	822,721		$	862,684
Current liabilities	357,877			364,661			360,975			309,158			309,597
Current ratio	3.5			3.0			2.8			2.7			2.8
Operating working capital (3)	453,190			448,991			406,823			396,739			370,213
Total assets	$	3,813,912		$	3,473,857		$	3,399,628		$	3,154,944		$	2,805,443
Total borrowings	849,252			848,818			859,046			1,015,281			840,794
Shareholders’ equity	2,263,229			1,994,640			1,886,542			1,543,894			1,443,291
PERFORMANCE MEASURES AND OTHER DATA
Percent of net sales:
Gross profit	45.1		%	45.0		%	44.9		%	44.0		%	44.8		%
Selling, general and administrative expenses	21.0		%	21.6		%	23.0		%	23.3		%	23.5		%
Operating income	23.2		%	22.9		%	22.0		%	19.5		%	21.6		%
Income before income taxes	21.4		%	21.3		%	19.9		%	17.4		%	19.4		%
Net income	17.1		%	16.5		%	14.7		%	12.8		%	14.0		%
Capital expenditures	$	50,912		$	56,089		$	43,858		$	38,242		$	43,776
Depreciation and amortization	76,876			77,544			84,216			86,892			78,120
Return on average assets (4)	11.7		%	11.9		%	10.3		%	9.1		%	9.9		%
Borrowings as a percent of capitalization (4)	27.3		%	29.9		%	31.3		%	39.7		%	36.8		%
Return on average shareholders’ equity (4)	20.0		%	21.2		%	19.7		%	18.2		%	19.3		%
Employees at year end	7,439			7,352			7,167			7,158			6,801
NON-GAAP MEASURES (5)
EBITDA	$	654,120		$	650,617		$	584,378		$	501,020		$	512,101
EBITDA margin	26.2		%	26.2		%	25.5		%	23.7		%	25.3		%
Adjusted EBITDA	$	678,504		$	662,700		$	583,560		$	530,546		$	505,270
Adjusted EBITDA margin	27.2		%	26.7		%	25.5		%	25.1		%	25.0		%
Adjusted operating income	$	603,387		$	581,171		$	501,738		$	438,369		$	430,159
Adjusted operating margin	24.2		%	23.4		%	21.9		%	20.7		%	21.3		%
Adjusted net income	$	444,204		$	419,624		$	333,667		$	288,373		$	277,229
Adjusted earnings per share	$	5.80		$	5.41		$	4.31		$	3.75		$	3.55


(1)	This selected financial data should be read in conjunction with our Consolidated Financial Statements and related Notes in Part II, Item 8, “Financial Statements and Supplementary Data” and with Item 7, “Management’s Discussion and Analysis of Financial Condition and Results of Operations.”


(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 gross profit, 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 accounting principles generally accepted in the United States of America (“U.S. GAAP”). We have reconciled Adjusted gross profit to Gross profit, Adjusted operating income to Operating income; Adjusted net income to Net income; Adjusted EPS to EPS; consolidated EBITDA, segment EBITDA, adjusted consolidated 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 gross profit, 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 accounting principles generally accepted in the United States of America (“U.S. GAAP”). We have reconciled Adjusted gross profit to Gross profit, Adjusted operating income to Operating income; Adjusted net income to Net income; Adjusted EPS to EPS; consolidated EBITDA, segment EBITDA, adjusted consolidated 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 gross profit, 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, a fair value inventory step-up charge 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, a fair value inventory step-up charge 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. Refer to Item 7, Management’s Discussion and Analysis of Financial Condition and Results of Operations for additional discussion of organic net sales.

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,
	2019			2018			2017			2016			2015
	(In thousands)
Net income	$	425,521		$	410,573		$	337,257		$	271,109		$	282,807
+ Provision for income taxes	107,382			118,366			118,016			97,403			109,538
+ Interest expense	44,341			44,134			44,889			45,616			41,636
+ Depreciation and amortization	76,876			77,544			84,216			86,892			78,120
EBITDA	654,120			650,617			584,378			501,020			512,101
+ Restructuring expenses	21,044			12,083			8,455			3,674			11,239
+ Loss (gain) on sale of businesses - net	—			—			(9,273		)	22,298			(18,070		)
+ Pension settlement	—			—			—			3,554			—
+ Fair value inventory step-up charge	3,340			—			—			—			—
Adjusted EBITDA	$	678,504		$	662,700		$	583,560		$	530,546		$	505,270

Net sales	$	2,494,573		$	2,483,666		$	2,287,312		$	2,113,043		$	2,020,668
EBITDA margin	26.2		%	26.2		%	25.5		%	23.7		%	25.3		%
Adjusted EBITDA margin	27.2		%	26.7		%	25.5		%	25.1		%	25.0		%



2. Reconciliations of Segment EBITDA

	For the Years Ended December 31,
	2019									2018									2017
	FMT			HST			FSDP			FMT			HST			FSDP			FMT			HST			FSDP
	(In thousands)
EBITDA	$	306,933		$	237,480		$	178,820		$	296,079		$	246,810		$	186,538		$	263,610		$	225,649		$	159,610
+ Restructuring expenses	2,879			14,249			1,364			2,458			5,904			2,184			3,374			4,696			255
+ Fair value inventory step-up charge				3,340						—			—			—			—			—			—
Adjusted EBITDA	$	309,812		$	255,069		$	180,184		$	298,537		$	252,714		$	188,722		$	266,984		$	230,345		$	159,865

Net sales	$	957,028		$	914,446		$	626,770		$	951,552		$	896,419		$	637,028		$	880,957		$	820,131		$	587,533
EBITDA margin	32.1		%	26.0		%	28.5		%	31.1		%	27.5		%	29.3		%	29.9		%	27.5		%	27.2		%
Adjusted EBITDA margin	32.4		%	27.9		%	28.7		%	31.4		%	28.2		%	29.6		%	30.3		%	28.1		%	27.2		%



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

	For the Years Ended December 31,
	2019			2018			2017			2016			2015
	(In thousands)
Operating income	$	579,003		$	569,088		$	502,556		$	412,397		$	436,990
+ Restructuring expenses	21,044			12,083			8,455			3,674			11,239
+ Loss (gain) on sale of businesses - net	—			—			(9,273		)	22,298			(18,070		)
+ Fair value inventory step-up charge	3,340			—			—			—			—
Adjusted operating income	$	603,387		$	581,171		$	501,738		$	438,369		$	430,159

Net sales	$	2,494,573		$	2,483,666		$	2,287,312		$	2,113,043		$	2,020,668

Operating margin	23.2		%	22.9		%	22.0		%	19.5		%	21.6		%
Adjusted operating margin	24.2		%	23.4		%	21.9		%	20.7		%	21.3		%



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

	For the Years Ended December 31,
	2019									2018									2017
	FMT			HST			FSDP			FMT			HST			FSDP			FMT			HST			FSDP
	(In thousands)
Operating income	$	285,256		$	200,200		$	165,258		$	275,060		$	205,679		$	168,601		$	241,030		$	179,567		$	147,028
+ Restructuring expenses	2,879			14,249			1,364			2,458			5,904			2,184			3,374			4,696			255
+ Fair value inventory step-up charge	—			3,340			—			—			—			—			—			—			—
Adjusted operating income	$	288,135		$	217,789		$	166,622		$	277,518		$	211,583		$	170,785		$	244,404		$	184,263		$	147,283

Net sales	$	957,028		$	914,446		$	626,770		$	951,552		$	896,419		$	637,028		$	880,957		$	820,131		$	587,533

Operating margin	29.8		%	21.9		%	26.4		%	28.9		%	22.9		%	26.5		%	27.4		%	21.9		%	25.0		%
Adjusted operating margin	30.1		%	23.8		%	26.6		%	29.2		%	23.6		%	26.8		%	27.7		%	22.5		%	25.1		%



5. Reconciliations of Consolidated Reported-to-Adjusted Gross Profit and Margin

	For the Years Ended December 31,
	2019			2018			2017			2016			2015
	(In thousands)
Gross profit	$	1,125,034		$	1,117,895		$	1,026,678		$	930,767		$	904,315
+ Fair value inventory step-up charge	3,340			—			—			—			—
Adjusted gross profit	$	1,128,374		$	1,117,895		$	1,026,678		$	930,767		$	904,315

Net sales	$	2,494,573		$	2,483,666		$	2,287,312		$	2,113,043		$	2,020,668

Gross margin	45.1		%	45.0		%	44.9		%	44.0		%	44.8		%
Adjusted gross margin	45.2		%	45.0		%	44.9		%	44.0		%	44.8		%



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

	For the Years Ended December 31,
	2019			2018			2017			2016			2015
	(In thousands)
Net income	$	425,521		$	410,573		$	337,257		$	271,109		$	282,807
+ Restructuring expenses	21,044			12,083			8,455			3,674			11,239
+ Tax impact on restructuring expenses	(4,966		)	(3,032		)	(2,772		)	(1,299		)	(3,586		)
+ Fair value inventory step-up charge	3,340			—			—			—			—
+ Tax impact on fair value inventory step-up charge	(735		)	—			—			—			—
+ 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	$	444,204		$	419,624		$	333,667		$	288,373		$	277,229

EPS	$	5.56		$	5.29		$	4.36		$	3.53		$	3.62
+ Restructuring expenses	0.28			0.16			0.11			0.05			0.14
+ Tax impact on restructuring expenses	(0.07		)	(0.04		)	(0.04		)	(0.02		)	(0.04		)
+ Fair value inventory step-up charge	0.04			—			—			—			—
+ Tax impact on fair value inventory step-up charge	(0.01		)	—			—			—			—
+ 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	$	5.80		$	5.41		$	4.31		$	3.75		$	3.55

Diluted weighted average shares	76,454			77,563			77,333			76,758			77,972



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

	For the Year Ended December 31, 2019
	FMT			HST			FSDP			Corporate			IDEX
Operating income (loss)	$	285,256		$	200,200		$	165,258		$	(71,711	)	$	579,003
- Other (income) expense - net	475			2,441			771			(1,928		)	1,759
+ Depreciation and amortization	22,152			39,721			14,333			670			76,876
EBITDA	306,933			237,480			178,820			(69,113		)	654,120
- Interest expense													44,341
- Provision for income taxes													107,382
- Depreciation and amortization													76,876
Net income													$	425,521

Net sales (eliminations)	$	957,028		$	914,446		$	626,770		$	(3,671	)	$	2,494,573

Operating margin	29.8		%	21.9		%	26.4		%	n/m			23.2		%
EBITDA margin	32.1		%	26.0		%	28.5		%	n/m			26.2		%



	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		%



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

	For the Year Ended December 31,
	2019								2018								2017
	FMT		HST		FSDP		IDEX		FMT		HST		FSDP		IDEX		FMT		HST		FSDP		IDEX
Change in net sales	1	%	2	%	(2	)%	—	%	8	%	9	%	8	%	9	%	4	%	10	%	13	%	8	%
- Net impact from acquisitions/divestitures	—	%	2	%	—	%	1	%	(2	)%	2	%	—	%	—	%	(2	)%	3	%	9	%	2	%
- Impact from FX	(1	)%	(1	)%	(2	)%	(2	)%	1	%	1	%	1	%	1	%	—	%	(1	)%	—	%	—	%
Change in organic net sales	2	%	1	%	—	%	1	%	9	%	6	%	7	%	8	%	6	%	8	%	4	%	6	%

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

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