Item 6. Selected Financial Data.(1)

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Item 6. Selected Financial Data.(1)


(Dollars in thousands, except per share data)	2020			2019			2018			2017			2016
RESULTS OF OPERATIONS
Net sales	$	2,351,646		$	2,494,573		$	2,483,666		$	2,287,312		$	2,113,043
Gross profit	1,027,424			1,125,034			1,117,895			1,026,678			930,767
Selling, general and administrative expenses	494,935			524,987			536,724			524,940			492,398
Loss (gain) on sale of businesses - net	—			—			—			(9,273)			22,298

Restructuring expenses and asset impairments	11,776			21,044			12,083			8,455			3,674
Operating income	520,713			579,003			569,088			502,556			412,397
Other (income) expense - net	5,627			1,759			(3,985)			2,394			(1,731)
Interest expense	44,746			44,341			44,134			44,889			45,616
Provision for income taxes	92,562			107,382			118,366			118,016			97,403
Net income	377,778			425,521			410,573			337,257			271,109
Earnings per share: (2)
— basic	$	4.98		$	5.62		$	5.36		$	4.41		$	3.57
— diluted	$	4.94		$	5.56		$	5.29		$	4.36		$	3.53
Weighted average shares outstanding:
— basic	75,741			75,594			76,412			76,232			75,803
— diluted	76,400			76,454			77,563			77,333			76,758
Year-end shares outstanding	75,961			76,088			75,953			76,694			76,441
Cash dividends per share	$	2.00		$	2.00		$	1.72		$	1.48		$	1.36
FINANCIAL POSITION
Current assets	$	1,657,231		$	1,261,445		$	1,092,532		$	1,004,043		$	822,721
Current liabilities	399,058			357,877			364,661			360,975			309,158
Current ratio	4.2			3.5			3.0			2.8			2.7
Operating working capital (3)	431,063			453,190			448,991			406,823			396,739
Total assets	$	4,414,398		$	3,813,912		$	3,473,857		$	3,399,628		$	3,154,944
Total borrowings	1,044,442			849,252			848,818			859,046			1,015,281
Total equity	2,540,326			2,263,229			1,994,640			1,886,542			1,543,894
PERFORMANCE MEASURES AND OTHER DATA
Percent of net sales:
Gross profit	43.7		%	45.1		%	45.0		%	44.9		%	44.0		%
Selling, general and administrative expenses	21.0		%	21.0		%	21.6		%	23.0		%	23.3		%
Operating income	22.1		%	23.2		%	22.9		%	22.0		%	19.5		%
Income before income taxes	20.0		%	21.4		%	21.3		%	19.9		%	17.4		%
Net income	16.1		%	17.1		%	16.5		%	14.7		%	12.8		%
Capital expenditures	$	51,545		$	50,912		$	56,089		$	43,858		$	38,242
Depreciation and amortization	83,495			76,876			77,544			84,216			86,892
Return on average assets (4)	9.2		%	11.7		%	11.9		%	10.3		%	9.1		%
Borrowings as a percent of capitalization (4)	29.1		%	27.3		%	29.9		%	31.3		%	39.7		%
Return on average equity (4)	15.7		%	20.0		%	21.2		%	19.7		%	18.2		%
Employees at year end	7,075			7,439			7,352			7,167			7,158
NON-GAAP MEASURES (5)
EBITDA	$	598,581		$	654,120		$	650,617		$	584,378		$	501,020
EBITDA margin	25.5		%	26.2		%	26.2		%	25.5		%	23.7		%
Adjusted EBITDA	$	622,885		$	678,504		$	662,700		$	583,560		$	530,546
Adjusted EBITDA margin	26.5		%	27.2		%	26.7		%	25.5		%	25.1		%
Adjusted gross profit	$	1,031,531		$	1,128,374		$	1,117,895		$	1,026,678		$	930,767
Adjusted gross margin	43.9		%	45.2		%	45.0		%	44.9		%	44.0		%
Adjusted operating income	$	536,596		$	603,387		$	581,171		$	501,738		$	438,369
Adjusted operating margin	22.8		%	24.2		%	23.4		%	21.9		%	20.7		%
Adjusted net income	$	396,516		$	444,204		$	419,624		$	333,667		$	288,373
Adjusted earnings per share	$	5.19		$	5.80		$	5.41		$	4.31		$	3.75

(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 equity); Return on average equity is calculated as Net Income / (Current year Total equity + Prior year Total equity) / 2.

(5)Set forth below are reconciliations of Adjusted gross profit, Adjusted operating income, Adjusted net income, Adjusted earnings per share (“EPS”), EBITDA and Adjusted EBITDA to the comparable measures of gross profit, operating income, net income and EPS, 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; and 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, Adjusted EPS and Adjusted EBITDA 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 asset impairments, fair value inventory step-up charges, a loss on early debt redemption 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. Management believes that EBITDA is useful to investors as an indicator of the strength and performance of the Company and a way to evaluate and compare operating performance and value companies within our industry. Management believes that EBITDA margin is useful for the same reason as EBITDA. EBITDA is also used to calculate certain financial covenants, as discussed in Note 7 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 asset impairments, fair value inventory step-up charges, a loss on early debt redemption 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. Management believes that reporting organic sales provides useful information to investors by helping identify underlying growth trends in our business and facilitating easier comparisons of our revenue performance with prior and future periods and to our peers. 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,
	2020			2019			2018			2017			2016
	(In thousands)
Net income	$	377,778		$	425,521		$	410,573		$	337,257		$	271,109
+ Provision for income taxes	92,562			107,382			118,366			118,016			97,403
+ Interest expense	44,746			44,341			44,134			44,889			45,616
+ Depreciation and amortization	83,495			76,876			77,544			84,216			86,892
EBITDA	598,581			654,120			650,617			584,378			501,020
+ Restructuring expenses and asset impairments	11,776			21,044			12,083			8,455			3,674
+ Loss (gain) on sale of businesses - net	—			—			—			(9,273)			22,298
+ Pension settlement	—			—			—			—			3,554
+ Fair value inventory step-up charge	4,107			3,340			—			—			—
+ Loss on early debt redemption	8,421			—			—			—			—
Adjusted EBITDA	$	622,885		$	678,504		$	662,700		$	583,560		$	530,546

Net sales	$	2,351,646		$	2,494,573		$	2,483,666		$	2,287,312		$	2,113,043
EBITDA margin	25.5		%	26.2		%	26.2		%	25.5		%	23.7		%
Adjusted EBITDA margin	26.5		%	27.2		%	26.7		%	25.5		%	25.1		%


2. Reconciliations of Segment EBITDA

	For the Years Ended December 31,
	2020						2019						2018
	FMT		HST		FSDP		FMT		HST		FSDP		FMT		HST		FSDP
	(In thousands)



EBITDA	$261,804		$248,161		$159,008		$306,933		$237,480		$178,820		$296,079		$246,810		$186,538
+ Restructuring expenses and asset impairments	5,580		2,742		2,524		2,879		14,249		1,364		2,458		5,904		2,184


+ Fair value inventory step-up charge	4,107		—		—		—		3,340		—		—		—		—
Adjusted EBITDA	$271,491		$250,903		$161,532		$309,812		$255,069		$180,184		$298,537		$252,714		$188,722

Net sales	$896,304		$895,962		$562,851		$957,028		$914,446		$626,770		$951,552		$896,419		$637,028
EBITDA margin	29.2	%	27.7	%	28.3	%	32.1	%	26.0	%	28.5	%	31.1	%	27.5	%	29.3	%
Adjusted EBITDA margin	30.3	%	28.0	%	28.7	%	32.4	%	27.9	%	28.7	%	31.4	%	28.2	%	29.6	%


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

	For the Years Ended December 31,
	2020			2019			2018			2017			2016
	(In thousands)
Operating income	$	520,713		$	579,003		$	569,088		$	502,556		$	412,397
+ Restructuring expenses and asset impairments	11,776			21,044			12,083			8,455			3,674
+ Loss (gain) on sale of businesses - net	—			—			—			(9,273)			22,298

+ Fair value inventory step-up charge	4,107			3,340			—			—			—

Adjusted operating income	$	536,596		$	603,387		$	581,171		$	501,738		$	438,369

Net sales	$	2,351,646		$	2,494,573		$	2,483,666		$	2,287,312		$	2,113,043

Operating margin	22.1		%	23.2		%	22.9		%	22.0		%	19.5		%
Adjusted operating margin	22.8		%	24.2		%	23.4		%	21.9		%	20.7		%


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

	For the Years Ended December 31,
	2020						2019						2018
	FMT		HST		FSDP		FMT		HST		FSDP		FMT		HST		FSDP
	(In thousands)
Operating income	$235,011		$206,356		$144,191		$285,256		$200,200		$165,258		$275,060		$205,679		$168,601
+ Restructuring expenses and asset impairments	5,580		2,742		2,524		2,879		14,249		1,364		2,458		5,904		2,184

+ Fair value inventory step-up charge	4,107		—		—		—		3,340		—		—		—		—
Adjusted operating income	$244,698		$209,098		$146,715		$288,135		$217,789		$166,622		$277,518		$211,583		$170,785

Net sales	$896,304		$895,962		$562,851		$957,028		$914,446		$626,770		$951,552		$896,419		$637,028

Operating margin	26.2	%	23.0	%	25.6	%	29.8	%	21.9	%	26.4	%	28.9	%	22.9	%	26.5	%
Adjusted operating margin	27.3	%	23.3	%	26.1	%	30.1	%	23.8	%	26.6	%	29.2	%	23.6	%	26.8	%


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

	For the Years Ended December 31,
	2020			2019			2018			2017			2016
	(In thousands)
Gross profit	$	1,027,424		$	1,125,034		$	1,117,895		$	1,026,678		$	930,767
+ Fair value inventory step-up charge	4,107			3,340			—			—			—
Adjusted gross profit	$	1,031,531		$	1,128,374		$	1,117,895		$	1,026,678		$	930,767

Net sales	$	2,351,646		$	2,494,573		$	2,483,666		$	2,287,312		$	2,113,043

Gross margin	43.7		%	45.1		%	45.0		%	44.9		%	44.0		%
Adjusted gross margin	43.9		%	45.2		%	45.0		%	44.9		%	44.0		%


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

	For the Years Ended December 31,
	2020		2019		2018		2017		2016
	(In thousands)
Net income	$	377,778	$	425,521	$	410,573	$	337,257	$	271,109
+ Restructuring expenses and asset impairments	11,776		21,044		12,083		8,455		3,674
+ Tax impact on restructuring expenses and asset impairments	(2,722)		(4,966)		(3,032)		(2,772)		(1,299)
+ Fair value inventory step-up charge	4,107		3,340				—		—
+ Tax impact on fair value inventory step-up charge	(932)		(735)		—		—		—
+ Loss (gain) on sale of businesses	—		—		—		(9,273)		22,298
+ Tax impact on loss (gain) on sale of businesses	—		—		—		—		(9,706)

+ Pension settlement	—		—		—		—		3,554
+ Tax impact on pension settlement	—		—		—		—		(1,257)
+ Loss on early debt redemption	8,421		—		—		—		—
+ Tax impact on loss on early debt redemption	(1,912)		—		—		—		—
Adjusted net income	$	396,516	$	444,204	$	419,624	$	333,667	$	288,373

EPS	$	4.94	$	5.56	$	5.29	$	4.36	$	3.53
+ Restructuring expenses and asset impairments	0.15		0.28		0.16		0.11		0.05
+ Tax impact on restructuring expenses and asset impairments	(0.03)		(0.07)		(0.04)		(0.04)		(0.02)
+ Fair value inventory step-up charge	0.05		0.04		—		—		—
+ Tax impact on fair value inventory step-up charge	(0.01)		(0.01)		—		—		—
+ Loss (gain) on sale of businesses	—		—		—		(0.12)		0.29
+ Tax impact on loss (gain) on sale of businesses	—		—		—		—		(0.13)



+ Pension settlement	—		—		—		—		0.05
+ Tax impact on pension settlement	—		—		—		—		(0.02)
+ Loss on early debt redemption	0.11		—		—		—		—
+ Tax impact on loss on early debt redemption	(0.02)		—		—		—		—
Adjusted EPS	$	5.19	$	5.80	$	5.41	$	4.31	$	3.75

Diluted weighted average shares	76,400		76,454		77,563		77,333		76,758


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

	For the Year Ended December 31, 2020
	FMT			HST			FSDP			Corporate		IDEX
Operating income (loss)	$	235,011		$	206,356		$	144,191		$	(64,845)	$	520,713
- Other (income) expense - net	(854)			(27)			399			6,109		5,627
+ Depreciation and amortization	25,939			41,778			15,216			562		83,495
EBITDA	261,804			248,161			159,008			(70,392)		598,581
- Interest expense												44,746
- Provision for income taxes												92,562
- Depreciation and amortization												83,495
Net income												$	377,778

Net sales (eliminations)	$896,304			$895,962			$562,851			$(3,471)		$2,351,646

Operating margin	26.2		%	23.0		%	25.6		%	n/m		22.1		%
EBITDA margin	29.2		%	27.7		%	28.3		%	n/m		25.5		%


	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		%


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

	For the Year Ended December 31,
	2020								2019								2018
	FMT		HST		FSDP		IDEX		FMT		HST		FSDP		IDEX		FMT		HST		FSDP		IDEX
Change in net sales	(6	%)	(2	%)	(10	%)	(6	%)	1	%	2	%	(2	%)	—	%	8	%	9	%	8	%	9	%
- Net impact from acquisitions/divestitures	6	%	2	%	—	%	3	%	—	%	2	%	—	%	1	%	(2	%)	2	%	—	%	—	%
- Impact from foreign currency	—	%	—	%	1	%	—	%	(1	%)	(1	%)	(2	%)	(2	%)	1	%	1	%	1	%	1	%
Change in organic net sales	(12	%)	(4	%)	(11	%)	(9	%)	2	%	1	%	—	%	1	%	9	%	6	%	7	%	8	%

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

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