filings.toolsItem 1. Financial Statements
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Item 1. Financial Statements
IDEX CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(in millions, except per share amounts)
(unaudited)
| Three Months Ended September 30, | Nine Months Ended September 30, | ||||||||||||||||||||||
| 2024 | 2023 | 2024 | 2023 | ||||||||||||||||||||
| Net sales | $ | 798.2 | $ | 793.4 | $ | 2,405.9 | $ | 2,485.0 | |||||||||||||||
| Cost of sales | 444.3 | 443.8 | 1,327.8 | 1,374.9 | |||||||||||||||||||
| Gross profit | 353.9 | 349.6 | 1,078.1 | 1,110.1 | |||||||||||||||||||
| Selling, general and administrative expenses | 182.9 | 165.9 | 560.8 | 529.9 | |||||||||||||||||||
| Restructuring expenses and asset impairments | 3.0 | 4.1 | 5.4 | 8.2 | |||||||||||||||||||
| Operating income | 168.0 | 179.6 | 511.9 | 572.0 | |||||||||||||||||||
| Gain on sale of business | 0.6 | (93.8) | (4.0) | (93.8) | |||||||||||||||||||
| Other expense (income) – net | 2.7 | (2.1) | — | 5.6 | |||||||||||||||||||
| Interest expense – net | 10.3 | 13.7 | 27.8 | 40.1 | |||||||||||||||||||
| Income before income taxes | 154.4 | 261.8 | 488.1 | 620.1 | |||||||||||||||||||
| Provision for income taxes | 35.5 | 52.8 | 106.7 | 132.8 | |||||||||||||||||||
| Net income | 118.9 | 209.0 | 381.4 | 487.3 | |||||||||||||||||||
| Net loss attributable to noncontrolling interest | 0.2 | 0.1 | 0.4 | 0.2 | |||||||||||||||||||
| Net income attributable to IDEX | $ | 119.1 | $ | 209.1 | $ | 381.8 | $ | 487.5 | |||||||||||||||
| Earnings per common share: | |||||||||||||||||||||||
| Basic earnings per common share attributable to IDEX | $ | 1.57 | $ | 2.76 | $ | 5.03 | $ | 6.44 | |||||||||||||||
| Diluted earnings per common share attributable to IDEX | $ | 1.57 | $ | 2.75 | $ | 5.02 | $ | 6.42 | |||||||||||||||
| Share data: | |||||||||||||||||||||||
| Basic weighted average common shares outstanding | 75.7 | 75.6 | 75.7 | 75.6 | |||||||||||||||||||
| Diluted weighted average common shares outstanding | 75.9 | 75.9 | 75.9 | 75.9 |
See Notes to Condensed Consolidated Financial Statements
IDEX CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
(in millions)
(unaudited)
| Three Months Ended September 30, | Nine Months Ended September 30, | ||||||||||||||||||||||
| 2024 | 2023 | 2024 | 2023 | ||||||||||||||||||||
| Net income | $ | 118.9 | $ | 209.0 | $ | 381.4 | $ | 487.3 | |||||||||||||||
| Other comprehensive income (loss): | |||||||||||||||||||||||
| Pension and other postretirement adjustments, net of tax of $0.1, $—, $0.2 and $0.2, respectively | (0.1) | (0.3) | (0.4) | (0.8) | |||||||||||||||||||
| Cumulative translation adjustment | 91.8 | (58.1) | 21.5 | (19.2) | |||||||||||||||||||
| Other comprehensive income (loss), net of tax | 91.7 | (58.4) | 21.1 | (20.0) | |||||||||||||||||||
| Comprehensive income | 210.6 | 150.6 | 402.5 | 467.3 | |||||||||||||||||||
| Comprehensive loss attributable to noncontrolling interest | 0.2 | 0.1 | 0.4 | 0.2 | |||||||||||||||||||
| Comprehensive income attributable to IDEX | $ | 210.8 | $ | 150.7 | $ | 402.9 | $ | 467.5 |
See Notes to Condensed Consolidated Financial Statements
IDEX CORPORATION
CONDENSED CONSOLIDATED BALANCE SHEETS
(in millions, except per share amounts)
(unaudited)
| September 30, 2024 | December 31, 2023 | ||||||||||
| ASSETS | |||||||||||
| Current assets | |||||||||||
| Cash and cash equivalents | $ | 633.2 | $ | 534.3 | |||||||
| Receivables – net | 475.1 | 427.8 | |||||||||
| Inventories – net | 488.2 | 420.8 | |||||||||
| Other current assets | 81.3 | 63.4 | |||||||||
| Total current assets | 1,677.8 | 1,446.3 | |||||||||
| Property, plant and equipment – net of accumulated depreciation of $595.7 and $545.7 at September 30, 2024 and December 31, 2023, respectively | 468.6 | 430.3 | |||||||||
| Goodwill | 3,316.0 | 2,838.3 | |||||||||
| Intangible assets – net | 1,349.4 | 1,011.8 | |||||||||
| Other noncurrent assets | 155.7 | 138.5 | |||||||||
| Total assets | $ | 6,967.5 | $ | 5,865.2 | |||||||
| LIABILITIES AND EQUITY | |||||||||||
| Current liabilities | |||||||||||
| Trade accounts payable | $ | 210.4 | $ | 179.7 | |||||||
| Accrued expenses | 301.2 | 271.5 | |||||||||
| Current portion of long-term borrowings | 0.6 | 0.6 | |||||||||
| Dividends payable | 52.4 | 48.5 | |||||||||
| Total current liabilities | 564.6 | 500.3 | |||||||||
| Long-term borrowings – net | 2,075.1 | 1,325.1 | |||||||||
| Deferred income taxes | 301.3 | 291.9 | |||||||||
| Other noncurrent liabilities | 208.2 | 206.7 | |||||||||
| Total liabilities | 3,149.2 | 2,324.0 | |||||||||
| Commitments and contingencies (Note 14) | |||||||||||
| Shareholders’ equity | |||||||||||
| Preferred stock: | |||||||||||
| Authorized: 5.0 million shares, $.01 per share par value; Issued: None | — | — | |||||||||
| Common stock: | |||||||||||
| Authorized: 150.0 million shares, $.01 per share par value | |||||||||||
| Issued: 90.1 million shares at both September 30, 2024 and December 31, 2023 | 0.9 | 0.9 | |||||||||
| Treasury stock at cost: 14.2 million shares at September 30, 2024 and 14.3 million shares at December 31, 2023 | (1,176.5) | (1,187.0) | |||||||||
| Additional paid-in capital | 859.9 | 839.0 | |||||||||
| Retained earnings | 4,159.3 | 3,934.3 | |||||||||
| Accumulated other comprehensive loss | (24.7) | (45.8) | |||||||||
| Total shareholders’ equity | 3,818.9 | 3,541.4 | |||||||||
| Noncontrolling interest | (0.6) | (0.2) | |||||||||
| Total equity | 3,818.3 | 3,541.2 | |||||||||
| Total liabilities and equity | $ | 6,967.5 | $ | 5,865.2 |
See Notes to Condensed Consolidated Financial Statements
IDEX CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF EQUITY
(in millions)
(unaudited)
| Common Stock Shares | Common Stock and Additional Paid-In Capital | Treasury Stock Shares | Treasury Stock | Accumulated Other Comprehensive Loss | Retained Earnings | Total Shareholders’ Equity | Noncontrolling Interest | Total Equity | |||||||||||||||||||||||||||||||||||||||||||||
| Three Months Ended September 30, 2024 | |||||||||||||||||||||||||||||||||||||||||||||||||||||
| Balance, June 30, 2024 | 90.1 | $ | 856.8 | 14.2 | $ | (1,179.1) | $ | (116.4) | $ | 4,092.5 | $ | 3,653.8 | $ | (0.4) | $ | 3,653.4 | |||||||||||||||||||||||||||||||||||||
| Net income (loss) | — | — | — | — | — | 119.1 | 119.1 | (0.2) | 118.9 | ||||||||||||||||||||||||||||||||||||||||||||
| Other comprehensive income, net of tax | — | — | — | — | 91.7 | — | 91.7 | — | 91.7 | ||||||||||||||||||||||||||||||||||||||||||||
| Net issuance of shares of treasury stock (net of tax of $0.2) | — | — | — | 2.6 | — | — | 2.6 | — | 2.6 | ||||||||||||||||||||||||||||||||||||||||||||
| Share-based compensation | — | 4.0 | — | — | — | — | 4.0 | — | 4.0 | ||||||||||||||||||||||||||||||||||||||||||||
| Cash dividends declared - $0.69 per common share | — | — | — | — | — | (52.3) | (52.3) | — | (52.3) | ||||||||||||||||||||||||||||||||||||||||||||
| Balance, September 30, 2024 | 90.1 | $ | 860.8 | 14.2 | $ | (1,176.5) | $ | (24.7) | $ | 4,159.3 | $ | 3,818.9 | $ | (0.6) | $ | 3,818.3 | |||||||||||||||||||||||||||||||||||||
| Nine Months Ended September 30, 2024 | |||||||||||||||||||||||||||||||||||||||||||||||||||||
| Balance, December 31, 2023 | 90.1 | $ | 839.9 | 14.3 | $ | (1,187.0) | $ | (45.8) | $ | 3,934.3 | $ | 3,541.4 | $ | (0.2) | $ | 3,541.2 | |||||||||||||||||||||||||||||||||||||
| Net income (loss) | — | — | — | — | — | 381.8 | 381.8 | (0.4) | 381.4 | ||||||||||||||||||||||||||||||||||||||||||||
| Other comprehensive income, net of tax | — | — | — | — | 21.1 | — | 21.1 | — | 21.1 | ||||||||||||||||||||||||||||||||||||||||||||
| Net issuance of shares of treasury stock (net of tax of $2.6) | — | — | (0.1) | 10.5 | — | — | 10.5 | — | 10.5 | ||||||||||||||||||||||||||||||||||||||||||||
| Share-based compensation | — | 20.9 | — | — | — | — | 20.9 | — | 20.9 | ||||||||||||||||||||||||||||||||||||||||||||
| Cash dividends declared - $2.07 per common share | — | — | — | — | — | (156.8) | (156.8) | — | (156.8) | ||||||||||||||||||||||||||||||||||||||||||||
| Balance, September 30, 2024 | 90.1 | $ | 860.8 | 14.2 | $ | (1,176.5) | $ | (24.7) | $ | 4,159.3 | $ | 3,818.9 | $ | (0.6) | $ | 3,818.3 | |||||||||||||||||||||||||||||||||||||
| Three Months Ended September 30, 2023 | |||||||||||||||||||||||||||||||||||||||||||||||||||||
| Balance, June 30, 2023 | 90.1 | $ | 835.1 | 14.4 | $ | (1,182.0) | $ | (87.8) | $ | 3,713.4 | $ | 3,278.7 | $ | 0.2 | $ | 3,278.9 | |||||||||||||||||||||||||||||||||||||
| Net income (loss) | — | — | — | — | — | 209.1 | 209.1 | (0.1) | 209.0 | ||||||||||||||||||||||||||||||||||||||||||||
| Other comprehensive loss, net of tax | — | — | — | — | (58.4) | — | (58.4) | — | (58.4) | ||||||||||||||||||||||||||||||||||||||||||||
| Net issuance of shares of treasury stock (net of tax of $0.4) | — | — | (0.1) | 4.3 | — | 4.3 | — | 4.3 | |||||||||||||||||||||||||||||||||||||||||||||
| Share-based compensation | — | 1.9 | — | — | — | 1.9 | — | 1.9 | |||||||||||||||||||||||||||||||||||||||||||||
| Cash dividends declared - $0.64 per common share | — | — | — | — | — | (48.5) | (48.5) | — | (48.5) | ||||||||||||||||||||||||||||||||||||||||||||
| Balance, September 30, 2023 | 90.1 | $ | 837.0 | 14.3 | $ | (1,177.7) | $ | (146.2) | $ | 3,874.0 | $ | 3,387.1 | $ | 0.1 | $ | 3,387.2 | |||||||||||||||||||||||||||||||||||||
| Nine Months Ended September 30, 2023 | |||||||||||||||||||||||||||||||||||||||||||||||||||||
| Balance, December 31, 2022 | 90.1 | $ | 818.1 | 14.5 | $ | (1,184.3) | $ | (126.2) | $ | 3,531.7 | $ | 3,039.3 | $ | 0.3 | $ | 3,039.6 | |||||||||||||||||||||||||||||||||||||
| Net income (loss) | — | — | — | — | — | 487.5 | 487.5 | (0.2) | 487.3 | ||||||||||||||||||||||||||||||||||||||||||||
| Other comprehensive loss, net of tax | — | — | — | — | (20.0) | — | (20.0) | — | (20.0) | ||||||||||||||||||||||||||||||||||||||||||||
| Net issuance of shares of treasury stock (net of tax of $2.5) | — | — | (0.2) | 7.7 | — | 7.7 | — | 7.7 | |||||||||||||||||||||||||||||||||||||||||||||
| Repurchases of common stock | — | — | — | (1.1) | — | — | (1.1) | (1.1) | |||||||||||||||||||||||||||||||||||||||||||||
| Share-based compensation | — | 18.9 | — | — | — | — | 18.9 | — | 18.9 | ||||||||||||||||||||||||||||||||||||||||||||
| Cash dividends declared - $1.92 per common share | — | — | — | — | — | (145.2) | (145.2) | — | (145.2) | ||||||||||||||||||||||||||||||||||||||||||||
| Balance, September 30, 2023 | 90.1 | $ | 837.0 | 14.3 | $ | (1,177.7) | $ | (146.2) | $ | 3,874.0 | $ | 3,387.1 | $ | 0.1 | $ | 3,387.2 |
See Notes to Condensed Consolidated Financial Statements
IDEX CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(in millions)
(unaudited)
| Nine Months Ended September 30, | |||||||||||
| 2024 | 2023 | ||||||||||
| Cash flows from operating activities | |||||||||||
| Net income | $ | 381.4 | $ | 487.3 | |||||||
| Adjustments to reconcile net income to net cash flows provided by operating activities: | |||||||||||
| Gain on sale of business | (4.0) | (93.8) | |||||||||
| Credit loss on note receivable from collaborative partner | — | 7.7 | |||||||||
| Depreciation | 49.9 | 41.9 | |||||||||
| Amortization of intangible assets | 75.0 | 70.6 | |||||||||
| Share-based compensation expense | 20.9 | 18.9 | |||||||||
| Deferred income taxes | 0.4 | (1.8) | |||||||||
| Changes in (net of the effect from acquisitions/divestitures and foreign currency translation): | |||||||||||
| Receivables – net | (14.5) | 11.6 | |||||||||
| Inventories – net | (21.6) | 24.5 | |||||||||
| Other current assets | (4.6) | 0.3 | |||||||||
| Trade accounts payable | 15.3 | (30.2) | |||||||||
| Deferred revenue | (4.3) | 5.6 | |||||||||
| Accrued expenses | (0.5) | (34.0) | |||||||||
| Other – net | 2.1 | 7.1 | |||||||||
| Net cash flows provided by operating activities | 495.5 | 515.7 | |||||||||
| Cash flows from investing activities | |||||||||||
| Capital expenditures | (49.6) | (68.3) | |||||||||
| Acquisition of businesses, net of cash acquired | (984.5) | (110.3) | |||||||||
| Proceeds from sale of business, net of cash remitted | 45.1 | 110.3 | |||||||||
| Purchases of marketable securities | — | (24.6) | |||||||||
| Proceeds from sale of marketable securities | 4.5 | — | |||||||||
| Other – net | (7.3) | 2.9 | |||||||||
| Net cash flows used in investing activities | (991.8) | (90.0) | |||||||||
| Cash flows from financing activities | |||||||||||
| Borrowings under revolving credit facilities | 279.3 | — | |||||||||
| Proceeds from issuance of long-term borrowings | 496.7 | 100.0 | |||||||||
| Payment of long-term borrowings | (25.0) | (250.0) | |||||||||
| Debt issuance costs | (1.2) | — | |||||||||
| Cash dividends paid to shareholders | (153.0) | (142.3) | |||||||||
| Proceeds from share issuances, net of shares withheld for taxes | 10.5 | 7.7 | |||||||||
| Repurchases of common stock | — | (1.1) | |||||||||
| Other – net | (0.6) | (1.0) | |||||||||
| Net cash flows provided by (used in) financing activities | 606.7 | (286.7) | |||||||||
| Effect of exchange rate changes on cash and cash equivalents | 6.6 | (6.5) | |||||||||
| Net increase in cash and cash equivalents and restricted cash | 117.0 | 132.5 | |||||||||
| Cash and cash equivalents at beginning of year(1) | 534.3 | 430.2 | |||||||||
| Cash and cash equivalents and restricted cash at end of period(1) | $ | 651.3 | $ | 562.7 | |||||||
| Supplemental cash flow information | |||||||||||
| Cash paid for: | |||||||||||
| Interest | $ | 25.5 | $ | 30.5 | |||||||
| Income taxes – net | 120.2 | 147.1 |
(1) Includes $18.1 million of restricted cash at September 30, 2024. The restricted cash has been included in Other current assets in the Condensed Consolidated Balance Sheets. There was no restricted cash as of September 30, 2023, December 31, 2023 or December 31, 2022.
See Notes to Condensed Consolidated Financial Statements
IDEX CORPORATION
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Dollars in millions, except per share amounts)
(unaudited)
1. Basis of Presentation and Significant Accounting Policies
The Condensed Consolidated Financial Statements of IDEX Corporation (“IDEX” or the “Company”) have been prepared in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”) applicable to interim financial information and the instructions to Form 10-Q under the Securities Exchange Act of 1934, as amended. The statements are unaudited but include all adjustments, consisting only of recurring items, except as noted, that the Company considers necessary for a fair presentation of the information set forth herein. The results of operations for the three and nine months ended September 30, 2024 are not necessarily indicative of the results to be expected for the entire year.
The Condensed Consolidated Financial Statements set forth in this report should be read in conjunction with the Company’s Annual Report on Form 10-K for the year ended December 31, 2023.
Recently Issued Accounting Standards
In November 2023, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2023-07, Segment Reporting (Topic 280): Improvements to Reportable Segment Disclosures, which improves the disclosures required for reportable segments in the Company’s annual and interim financial statements, primarily through enhanced disclosures about significant segment expenses. ASU 2023-07 is effective for annual periods beginning after December 15, 2023 and interim periods within fiscal years beginning after December 15, 2024. Adoption of this ASU should be applied retrospectively to all prior periods presented in the financial statements. Early adoption is permitted. Adoption of the standard is not expected to have a material impact on the Company’s Consolidated Financial Statements, but will require additional segment expense disclosures when adopted in the Company’s Form 10-K for the year ending December 31, 2024 and in periodic reports thereafter.
In December 2023, the FASB issued ASU 2023-09, Improvements to Income Tax Disclosures, which requires public entities, on an annual basis, to disclose standard categories in tax rate reconciliation, additional information for reconciling items that meet a quantitative threshold and income taxes paid disaggregated by jurisdiction. ASU 2023-09 is effective for annual periods beginning after December 15, 2024. Adoption of this ASU should be applied prospectively, but may be applied retrospectively to all prior periods presented in the financial statements. Early adoption is permitted. The Company is currently evaluating the impact of the adoption of this standard on the Company’s financial statement disclosures.
2. Acquisitions and Divestitures
All of the Company’s acquisitions of businesses have been accounted for under Accounting Standards Codification (“ASC”) 805, Business Combinations. Accordingly, the assets and liabilities of the acquired companies, after adjustments to reflect the fair values assigned to the assets and liabilities, have been included in the Condensed Consolidated Balance Sheets from their respective dates of acquisition. The results of operations of businesses acquired have been included in the Condensed Consolidated Statements of Income since their respective dates of acquisition. Supplemental pro forma information has not been provided as the acquisitions did not have a material impact on the Condensed Consolidated Financial Statements individually or in the aggregate.
The Company makes a preliminary allocation of the purchase price for each acquisition as of the acquisition date based on its understanding of the fair value of the acquired assets and assumed liabilities. These nonrecurring fair value measurements are classified as Level 3 in the fair value hierarchy. As the Company continues to obtain additional information, primarily related to the valuations of these assets and liabilities, and continues to integrate the newly acquired business, the Company will refine the estimates of fair value and more accurately allocate the purchase price through the completion of the measurement period, which is not to exceed one year from the date of acquisition. Only items that existed as of the acquisition date are considered for subsequent adjustment to the purchase price allocation.
IDEX CORPORATION
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Dollars in millions, except per share amounts)
(unaudited)
2024 Acquisitions
Mott Corporation
On September 5, 2024, the Company acquired Mott Corporation and its subsidiaries (“Mott”) in a stock acquisition. Mott is a leading microfiltration business specializing in the design, customization and manufacturing of sintered porous metal components and engineered solutions used in fluidic applications. Headquartered in Farmington, Connecticut, Mott operates in the Scientific Fluidics & Optics reporting unit within the Company’s Health & Science Technologies segment. Mott was acquired for cash consideration of $986.2 million, net of cash acquired of $3.1 million. The purchase price was funded using a combination of cash on hand of $211.9 million, borrowings under the Company’s Revolving Facility of $279.3 million and net proceeds of $495.0 million from the issuance of the Company’s 4.950% Senior Notes (defined in Note 8, “Borrowings”). Goodwill and intangible assets recognized as part of this transaction were $480.3 million and $415.8 million, respectively. The goodwill is primarily deductible for tax purposes. The goodwill recorded for the acquisition reflects the strategic fit, revenue and earnings growth potential of the acquired business and its synergies with existing IDEX businesses.
As of September 30, 2024, the preliminary allocation of the purchase price to the assets acquired and liabilities assumed, based on their estimated fair values at the acquisition date, is as follows:
| Total | |||||
| Current assets, net of cash acquired | $ | 97.0 | |||
| Property, plant and equipment | 46.0 | ||||
| Goodwill | 480.3 | ||||
| Intangible assets | 415.8 | ||||
| Other noncurrent assets | 12.6 | ||||
| Total assets acquired | 1,051.7 | ||||
| Current liabilities | (40.7) | ||||
| Deferred income taxes | (13.0) | ||||
| Other noncurrent liabilities | (11.8) | ||||
| Net assets acquired | $ | 986.2 |
Acquired intangible assets consist of trade names, customer relationships and unpatented technology. The acquired intangible assets and weighted average amortization periods are as follows:
| Total | Weighted Average Life | ||||||||||
| Trade names | $ | 42.0 | 15 | ||||||||
| Customer relationships | 272.0 | 14 | |||||||||
| Unpatented technology | 101.8 | 13 | |||||||||
| Acquired intangible assets | $ | 415.8 |
2023 Acquisitions
Iridian
On May 19, 2023, the Company acquired Iridian Spectral Technologies (“Iridian”) in a stock acquisition. Iridian is a global leader in designing and manufacturing thin-film, multi-layer optical filters serving the laser communications, telecommunications and life sciences markets and expands the Company’s array of optical technology offerings. Headquartered in Ottawa, Canada, Iridian operates in the Company’s Scientific Fluidics & Optics reporting unit within the Health & Science Technologies segment. Iridian was acquired for cash consideration of $109.8 million. The entire purchase price was funded with cash on hand. Goodwill and intangible assets recognized as part of this transaction were $54.2 million and $44.1 million, respectively. The goodwill is not deductible for tax purposes. The goodwill recorded for the acquisition reflects the strategic fit, revenue and earnings growth potential of the acquired business and its synergies with existing IDEX businesses.
IDEX CORPORATION
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Dollars in millions, except per share amounts)
(unaudited)
The final allocation of the purchase price to the assets acquired and liabilities assumed, based on their estimated fair values at the acquisition date, is as follows:
| Total | |||||
| Current assets, net of cash acquired | $ | 10.6 | |||
| Property, plant and equipment | 19.4 | ||||
| Goodwill | 54.2 | ||||
| Intangible assets | 44.1 | ||||
| Other noncurrent assets | 5.4 | ||||
| Total assets acquired | 133.7 | ||||
| Current liabilities | (1.2) | ||||
| Deferred income taxes | (17.8) | ||||
| Other noncurrent liabilities | (4.9) | ||||
| Net assets acquired | $ | 109.8 |
Acquired intangible assets consist of trade names, customer relationships and unpatented technology. The acquired intangible assets and weighted average amortization periods are as follows:
| Total | Weighted Average Life | ||||||||||
| Trade names | $ | 5.2 | 15 | ||||||||
| Customer relationships | 27.8 | 12 | |||||||||
| Unpatented technology | 11.1 | 11 | |||||||||
| Acquired intangible assets | $ | 44.1 |
STC
On December 14, 2023, the Company acquired STC Material Solutions (“STC”) in a stock acquisition. STC specializes in the design and manufacturing of technical ceramics and hermetic sealing products for critical applications in the semiconductor, aerospace and defense, industrial technology, medical technology and energy markets. Headquartered in St. Albans, Vermont, with additional operations in Santa Ana, California, STC operates in the Company’s Scientific Fluidics & Optics reporting unit within the Health & Science Technologies segment. STC was acquired for cash consideration of $200.4 million. The entire purchase price was funded with cash on hand. Goodwill and intangible assets recognized as part of this transaction were $104.7 million and $92.3 million, respectively. The goodwill is not deductible for tax purposes. The goodwill recorded for the acquisition reflects the strategic fit, revenue and earnings growth potential of the acquired business and its synergies with existing IDEX businesses.
IDEX CORPORATION
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Dollars in millions, except per share amounts)
(unaudited)
As of September 30, 2024, the preliminary allocation of the purchase price to the assets acquired and liabilities assumed, based on their estimated fair values at the acquisition date, is as follows:
| Total | |||||
| Current assets, net of cash acquired | $ | 16.9 | |||
| Property, plant and equipment | 12.2 | ||||
| Goodwill | 104.7 | ||||
| Intangible assets | 92.3 | ||||
| Other noncurrent assets | 2.9 | ||||
| Total assets acquired | 229.0 | ||||
| Current liabilities | (5.5) | ||||
| Deferred income taxes | (20.4) | ||||
| Other noncurrent liabilities | (2.7) | ||||
| Net assets acquired(1) | $ | 200.4 |
(1) The Company finalized the purchase price of STC, resulting in a $1.6 million downward adjustment to the purchase price. Funds were received by the Company in April 2024.
Acquired intangible assets consist of trade names, customer relationships and unpatented technology. The acquired intangible assets and weighted average amortization periods are as follows:
| Total | Weighted Average Life | ||||||||||
| Trade names | $ | 9.3 | 15 | ||||||||
| Customer relationships | 63.0 | 15 | |||||||||
| Unpatented technology | 20.0 | 11 | |||||||||
| Acquired intangible assets | $ | 92.3 |
Acquisition-Related Costs
The Company incurred acquisition-related costs of $5.5 million and $9.3 million during the three and nine months ended September 30, 2024, respectively, and $1.8 million and $5.4 million during the three and nine months ended September 30, 2023, respectively. These costs were recorded in Selling, general and administrative expenses and were related to completed, pending and potential transactions, including transactions that ultimately were not completed.
The Company also recorded fair value inventory step-up charges associated with completed acquisitions of $2.1 million and $4.6 million during the three and nine months ended September 30, 2024, respectively, and $1.2 million during the three and nine months ended September 30, 2023 in Cost of sales in the Condensed Consolidated Statements of Income.
Divestitures
The Company periodically reviews its businesses relative to its core business. As such, from time to time, the Company may sell various businesses or assets for a variety of reasons. Any resulting gain or loss recognized due to divestitures is recorded within Gain on sale of business in the Condensed Consolidated Statements of Income.
On June 3, 2024, the Company completed the sale of Alfa Valvole, Srl (“Alfa Valvole”) for proceeds of $45.1 million, net of cash remitted, resulting in an initial gain on the sale of $4.6 million, net of a release of cumulative foreign currency translation losses of $5.5 million. During the three months ended September 30, 2024, the gain on the sale of Alfa Valvole was finalized, resulting in a downward adjustment to the gain on sale of $0.6 million for a final gain on sale of $4.0 million. There was no income tax impact associated with this transaction in the Condensed Consolidated Statements of Income due to the participation exemption of its consolidated group. The results of Alfa Valvole were reported in the Valves reporting unit within the Fluid & Metering Technologies segment through the date of disposition.
IDEX CORPORATION
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Dollars in millions, except per share amounts)
(unaudited)
On August 3, 2023, the Company completed the sale of Micropump, Inc. (“Micropump”) for proceeds of $110.3 million, net of cash remitted, resulting in a pre-tax gain on the sale of $93.8 million. The divestiture resulted in $22.7 million of income tax expense in the Condensed Consolidated Statements of Income during the three and nine months ended September 30, 2023. Micropump was its own reporting unit and its results were reported within the Health & Science Technologies segment.
3. Business Segments
IDEX has three reportable business segments: Fluid & Metering Technologies (“FMT”), Health & Science Technologies (“HST”) and Fire & Safety/Diversified Products (“FSDP”).
Information on the Company’s business segments is presented below. The Company uses Adjusted EBITDA as its measure of segment performance. Intersegment sales are contracted with terms equivalent to those of an arm’s-length transaction.
| Three Months Ended September 30, | Nine Months Ended September 30, | ||||||||||||||||||||||
| 2024 | 2023 | 2024 | 2023 | ||||||||||||||||||||
| NET SALES | |||||||||||||||||||||||
| Fluid & Metering Technologies | |||||||||||||||||||||||
| External customers | $ | 300.6 | $ | 300.5 | $ | 933.0 | $ | 945.7 | |||||||||||||||
| Intersegment sales | 0.2 | 0.6 | 0.9 | 2.3 | |||||||||||||||||||
| Total segment sales | 300.8 | 301.1 | 933.9 | 948.0 | |||||||||||||||||||
| Health & Science Technologies | |||||||||||||||||||||||
| External customers | 309.9 | 312.7 | 922.3 | 1,001.4 | |||||||||||||||||||
| Intersegment sales | 1.1 | 0.5 | 2.6 | 2.3 | |||||||||||||||||||
| Total segment sales | 311.0 | 313.2 | 924.9 | 1,003.7 | |||||||||||||||||||
| Fire & Safety/Diversified Products | |||||||||||||||||||||||
| External customers | 187.7 | 180.2 | 550.6 | 537.9 | |||||||||||||||||||
| Intersegment sales | 0.3 | 0.4 | 0.8 | 1.9 | |||||||||||||||||||
| Total segment sales | 188.0 | 180.6 | 551.4 | 539.8 | |||||||||||||||||||
| Intersegment eliminations | (1.6) | (1.5) | (4.3) | (6.5) | |||||||||||||||||||
| Net sales | $ | 798.2 | $ | 793.4 | $ | 2,405.9 | $ | 2,485.0 | |||||||||||||||
| ADJUSTED EBITDA | |||||||||||||||||||||||
| Fluid & Metering Technologies | $ | 98.5 | $ | 103.6 | $ | 311.6 | $ | 323.9 | |||||||||||||||
| Health & Science Technologies | 82.6 | 84.4 | 248.2 | 278.8 | |||||||||||||||||||
| Fire & Safety/Diversified Products | 54.7 | 52.8 | 159.9 | 157.0 | |||||||||||||||||||
| Segment Adjusted EBITDA | 235.8 | 240.8 | 719.7 | 759.7 | |||||||||||||||||||
| Corporate and other(1) | (21.5) | (15.3) | (72.9) | (63.7) | |||||||||||||||||||
| Interest expense – net | (10.3) | (13.7) | (27.8) | (40.1) | |||||||||||||||||||
| Depreciation(2) | (17.4) | (14.7) | (49.9) | (41.9) | |||||||||||||||||||
| Amortization of intangible assets(2) | (26.5) | (23.8) | (75.0) | (70.6) | |||||||||||||||||||
| Fair value inventory step-up charges | (2.1) | (1.2) | (4.6) | (1.2) | |||||||||||||||||||
| Restructuring expenses and asset impairments | (3.0) | (4.1) | (5.4) | (8.2) | |||||||||||||||||||
| Gain on sale of business(3) | (0.6) | 93.8 | 4.0 | 93.8 | |||||||||||||||||||
| Credit loss on note receivable from collaborative partner(4) | — | — | — | (7.7) | |||||||||||||||||||
| Income before income taxes | $ | 154.4 | $ | 261.8 | $ | 488.1 | $ | 620.1 |
(1) Corporate expenses that can be identified with a segment have been included in determining segment results. The remainder are included in Corporate and other.
IDEX CORPORATION
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Dollars in millions, except per share amounts)
(unaudited)
(2) Depreciation and amortization of intangible assets by segment for the three and nine months ended September 30, 2024 and 2023 was:
| Three Months Ended September 30, | Nine Months Ended September 30, | ||||||||||||||||||||||
| 2024 | 2023 | 2024 | 2023 | ||||||||||||||||||||
| Fluid & Metering Technologies | |||||||||||||||||||||||
| Depreciation | $ | 4.3 | $ | 3.1 | $ | 12.9 | $ | 10.3 | |||||||||||||||
| Amortization of intangible assets | 5.2 | 5.6 | 15.7 | 17.3 | |||||||||||||||||||
| Health & Science Technologies | |||||||||||||||||||||||
| Depreciation | 10.6 | 9.0 | 29.5 | 24.1 | |||||||||||||||||||
| Amortization of intangible assets | 19.7 | 16.7 | 54.6 | 48.5 | |||||||||||||||||||
| Fire & Safety/Diversified Products | |||||||||||||||||||||||
| Depreciation | 2.2 | 2.3 | 6.7 | 6.7 | |||||||||||||||||||
| Amortization of intangible assets | 1.6 | 1.5 | 4.7 | 4.8 | |||||||||||||||||||
| Corporate and other | |||||||||||||||||||||||
| Depreciation | 0.3 | 0.3 | 0.8 | 0.8 | |||||||||||||||||||
| Total | $ | 43.9 | $ | 38.5 | $ | 124.9 | $ | 112.5 |
(3) Activity recorded during the three months ended September 30, 2024 represents the finalization of the gain on the sale of Alfa Valvole resulting in a $0.6 million downward adjustment during the third quarter of 2024.
(4) Represents a reserve on an investment with a collaborative partner recorded in Other expense (income) – net during the nine months ended September 30, 2023. During the fourth quarter of 2023, the Company converted the promissory note receivable from the collaborative partner to equity, resulting in a cost method investment with zero value.
| September 30, 2024 | December 31, 2023 | ||||||||||
| ASSETS | |||||||||||
| Fluid & Metering Technologies | $ | 1,668.7 | $ | 1,674.7 | |||||||
| Health & Science Technologies | 4,286.6 | 3,262.4 | |||||||||
| Fire & Safety/Diversified Products | 818.5 | 792.6 | |||||||||
| Corporate and other | 193.7 | 135.5 | |||||||||
| Total assets | $ | 6,967.5 | $ | 5,865.2 |
4. Revenue
Disaggregation of Revenue
The Company has a comprehensive offering of products, including technologies, built to customers’ specifications that are sold in niche markets throughout the world. The Company disaggregates revenue from contracts with customers by reporting unit and geographical region for each segment as the Company believes it best depicts how the amount, nature, timing and uncertainty of its revenue and cash flows are affected by economic factors. Revenue, presented as Net sales on the Condensed Consolidated Statements of Income, was attributed to geographical region based on the location of the customer. The following tables present revenue disaggregated by reporting unit and geographical region.
IDEX CORPORATION
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Dollars in millions, except per share amounts)
(unaudited)
Revenue by reporting unit for the three and nine months ended September 30, 2024 and 2023 was as follows:
| Three Months Ended September 30, | Nine Months Ended September 30, | ||||||||||||||||||||||
| 2024 | 2023 | 2024 | 2023 | ||||||||||||||||||||
| Pumps | $ | 102.5 | $ | 94.7 | $ | 305.8 | $ | 309.0 | |||||||||||||||
| Water | 87.3 | 79.8 | 259.2 | 261.2 | |||||||||||||||||||
| Energy | 48.7 | 53.7 | 159.0 | 160.1 | |||||||||||||||||||
| Agriculture | 33.0 | 39.2 | 111.3 | 117.9 | |||||||||||||||||||
| Valves | 29.3 | 33.7 | 98.6 | 99.8 | |||||||||||||||||||
| Intersegment elimination | (0.2) | (0.6) | (0.9) | (2.3) | |||||||||||||||||||
| Fluid & Metering Technologies | 300.6 | 300.5 | 933.0 | 945.7 | |||||||||||||||||||
| Scientific Fluidics & Optics | 167.6 | 162.1 | 487.9 | 509.7 | |||||||||||||||||||
| Sealing Solutions | 57.0 | 59.2 | 177.3 | 186.3 | |||||||||||||||||||
| Performance Pneumatic Technologies | 58.7 | 60.0 | 175.5 | 195.4 | |||||||||||||||||||
| Material Processing Technologies | 27.7 | 29.7 | 84.2 | 90.4 | |||||||||||||||||||
| Micropump(1) | — | 2.2 | — | 21.9 | |||||||||||||||||||
| Intersegment elimination | (1.1) | (0.5) | (2.6) | (2.3) | |||||||||||||||||||
| Health & Science Technologies | 309.9 | 312.7 | 922.3 | 1,001.4 | |||||||||||||||||||
| Fire & Safety | 123.2 | 112.0 | 340.0 | 328.0 | |||||||||||||||||||
| Dispensing | 35.4 | 41.9 | 122.0 | 122.8 | |||||||||||||||||||
| BAND-IT | 29.4 | 26.7 | 89.4 | 89.0 | |||||||||||||||||||
| Intersegment elimination | (0.3) | (0.4) | (0.8) | (1.9) | |||||||||||||||||||
| Fire & Safety/Diversified Products | 187.7 | 180.2 | 550.6 | 537.9 | |||||||||||||||||||
| Net sales | $ | 798.2 | $ | 793.4 | $ | 2,405.9 | $ | 2,485.0 |
(1) Revenue from Micropump (sold on August 3, 2023) has been included in the Condensed Consolidated Statements of Income through the date of disposition.
Revenue by geographical region for the three and nine months ended September 30, 2024 and 2023 was as follows:
| Three Months Ended September 30, 2024 | |||||||||||||||||||||||
| FMT | HST | FSDP | IDEX | ||||||||||||||||||||
| U.S. | $ | 168.5 | $ | 139.9 | $ | 88.9 | $ | 397.3 | |||||||||||||||
| North America, excluding U.S. | 17.2 | 6.0 | 10.0 | 33.2 | |||||||||||||||||||
| Europe | 45.7 | 100.4 | 44.4 | 190.5 | |||||||||||||||||||
| Asia | 43.6 | 59.4 | 35.1 | 138.1 | |||||||||||||||||||
| Other(1) | 25.8 | 5.3 | 9.6 | 40.7 | |||||||||||||||||||
| Intersegment elimination | (0.2) | (1.1) | (0.3) | (1.6) | |||||||||||||||||||
| Net sales | $ | 300.6 | $ | 309.9 | $ | 187.7 | $ | 798.2 |
IDEX CORPORATION
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Dollars in millions, except per share amounts)
(unaudited)
| Three Months Ended September 30, 2023 | |||||||||||||||||||||||
| FMT | HST | FSDP | IDEX | ||||||||||||||||||||
| U.S. | $ | 168.4 | $ | 139.2 | $ | 94.4 | $ | 402.0 | |||||||||||||||
| North America, excluding U.S. | 15.5 | 3.2 | 8.8 | 27.5 | |||||||||||||||||||
| Europe | 52.3 | 106.0 | 39.0 | 197.3 | |||||||||||||||||||
| Asia | 43.1 | 57.8 | 29.0 | 129.9 | |||||||||||||||||||
| Other(1) | 21.8 | 7.0 | 9.4 | 38.2 | |||||||||||||||||||
| Intersegment elimination | (0.6) | (0.5) | (0.4) | (1.5) | |||||||||||||||||||
| Net sales | $ | 300.5 | $ | 312.7 | $ | 180.2 | $ | 793.4 |
| Nine Months Ended September 30, 2024 | |||||||||||||||||||||||
| FMT | HST | FSDP | IDEX | ||||||||||||||||||||
| U.S. | $ | 522.3 | $ | 420.6 | $ | 259.5 | $ | 1,202.4 | |||||||||||||||
| North America, excluding U.S. | 50.8 | 16.3 | 26.3 | 93.4 | |||||||||||||||||||
| Europe | 159.8 | 303.0 | 135.7 | 598.5 | |||||||||||||||||||
| Asia | 129.8 | 168.9 | 102.3 | 401.0 | |||||||||||||||||||
| Other(1) | 71.2 | 16.1 | 27.6 | 114.9 | |||||||||||||||||||
| Intersegment elimination | (0.9) | (2.6) | (0.8) | (4.3) | |||||||||||||||||||
| Net sales | $ | 933.0 | $ | 922.3 | $ | 550.6 | $ | 2,405.9 |
| Nine Months Ended September 30, 2023 | |||||||||||||||||||||||
| FMT | HST | FSDP | IDEX | ||||||||||||||||||||
| U.S. | $ | 525.9 | $ | 437.3 | $ | 280.5 | $ | 1,243.7 | |||||||||||||||
| North America, excluding U.S. | 52.8 | 16.6 | 25.4 | 94.8 | |||||||||||||||||||
| Europe | 163.0 | 338.1 | 126.1 | 627.2 | |||||||||||||||||||
| Asia | 137.0 | 189.6 | 80.4 | 407.0 | |||||||||||||||||||
| Other(1) | 69.3 | 22.1 | 27.4 | 118.8 | |||||||||||||||||||
| Intersegment elimination | (2.3) | (2.3) | (1.9) | (6.5) | |||||||||||||||||||
| Net sales | $ | 945.7 | $ | 1,001.4 | $ | 537.9 | $ | 2,485.0 |
(1) Other includes: South America, Middle East, Australia and Africa.
Performance Obligations
The Company’s performance obligations are satisfied either at a point in time or over time as work progresses. Revenue from products and services transferred to customers at a point in time comprised approximately 95% of the Company’s revenue and over time comprised approximately 5% of the Company’s revenue in all periods presented.
Contract Assets and Liabilities
The timing of billings and cash collections can result in customer receivables, billings in excess of revenue recognized, advance payments or deposits. Customer receivables include both amounts billed and currently due from customers as well as unbilled amounts (contract assets) and are included in Receivables – net on the Condensed Consolidated Balance Sheets.
IDEX CORPORATION
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Dollars in millions, except per share amounts)
(unaudited)
The composition of customer receivables was as follows:
| September 30, 2024 | December 31, 2023 | ||||||||||
| Billed receivables | $ | 451.4 | $ | 408.1 | |||||||
| Unbilled receivables | 15.9 | 10.9 | |||||||||
| Total customer receivables | $ | 467.3 | $ | 419.0 |
Billings in excess of revenue recognized, advance payments and deposits represent contract liabilities and are included in deferred revenue which is classified as current or noncurrent based on when the Company expects to recognize the revenue. The current portion is included in Accrued expenses and the noncurrent portion is included in Other noncurrent liabilities on the Condensed Consolidated Balance Sheets.
The composition of deferred revenue was as follows:
| September 30, 2024 | December 31, 2023 | ||||||||||
| Deferred revenue – current | $ | 65.0 | $ | 55.9 | |||||||
| Deferred revenue – noncurrent | 16.3 | 17.3 | |||||||||
| Total deferred revenue | $ | 81.3 | $ | 73.2 |
5. Earnings Per Common Share
Diluted earnings per common share (“EPS”) attributable to IDEX is computed by dividing Net income attributable to IDEX by the weighted average number of common shares outstanding (basic) plus common stock equivalents outstanding (diluted) for the period. Common stock equivalents consist of restricted stock, performance share units and stock options, which have been included in the calculation of weighted average common shares outstanding using the treasury stock method.
ASC 260, Earnings Per Share (“ASC 260”), concludes that all outstanding unvested share-based payment awards that contain rights to non-forfeitable dividends participate in undistributed earnings with common shareholders. If awards are considered participating securities, the Company is required to apply the two-class method of computing basic and diluted earnings per share. The Company has determined that its outstanding shares of restricted stock granted prior to the adoption of the 2024 Incentive Award Plan are participating securities. Accordingly, Diluted EPS attributable to IDEX was computed using the two-class method prescribed by ASC 260. Under the 2024 Incentive Award Plan, dividend rights for restricted stock are subject to the same vesting requirements as the underlying restricted stock awards. Consequently, any restricted stock awarded under the 2024 Incentive Plan will not be considered participating securities.
Basic weighted average common shares outstanding reconciles to diluted weighted average common shares outstanding as follows:
| Three Months Ended September 30, | Nine Months Ended September 30, | ||||||||||||||||||||||
| 2024 | 2023 | 2024 | 2023 | ||||||||||||||||||||
| Basic weighted average common shares outstanding | 75.7 | 75.6 | 75.7 | 75.6 | |||||||||||||||||||
| Dilutive effect of restricted stock, performance share units and stock options | 0.2 | 0.3 | 0.2 | 0.3 | |||||||||||||||||||
| Diluted weighted average common shares outstanding | 75.9 | 75.9 | 75.9 | 75.9 |
Share-based payment awards of approximately 0.5 million shares of common stock for both the three and nine months ended September 30, 2024 and 0.2 million shares of common stock for both the three and nine months ended September 30, 2023 were not included in the computation of Diluted EPS attributable to IDEX because the effect of their inclusion would have been antidilutive.
IDEX CORPORATION
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Dollars in millions, except per share amounts)
(unaudited)
6. Balance Sheet Components
| September 30, 2024 | December 31, 2023 | ||||||||||
| RECEIVABLES – NET | |||||||||||
| Customers | $ | 467.3 | $ | 419.0 | |||||||
| Other | 16.0 | 16.3 | |||||||||
| Total | 483.3 | 435.3 | |||||||||
| Less: allowance for credit losses | 8.2 | 7.5 | |||||||||
| Receivables – net | $ | 475.1 | $ | 427.8 | |||||||
| INVENTORIES – NET | |||||||||||
| Raw materials and component parts | $ | 314.9 | $ | 268.1 | |||||||
| Work in process | 43.8 | 44.5 | |||||||||
| Finished goods | 129.5 | 108.2 | |||||||||
| Inventories – net | $ | 488.2 | $ | 420.8 | |||||||
| ACCRUED EXPENSES | |||||||||||
| Payroll and related items | $ | 101.0 | $ | 97.1 | |||||||
| Management incentive compensation | 13.0 | 16.4 | |||||||||
| Income taxes payable | 18.2 | 18.5 | |||||||||
| Deferred revenue | 65.0 | 55.9 | |||||||||
| Lease liability | 26.6 | 22.0 | |||||||||
| Other | 77.4 | 61.6 | |||||||||
| Accrued expenses | $ | 301.2 | $ | 271.5 | |||||||
7. Goodwill and Intangible Assets
The changes in the carrying amount of goodwill for the nine months ended September 30, 2024, by reportable business segment, were as follows:
| FMT | HST | FSDP | IDEX | ||||||||||||||||||||
| Goodwill | $ | 805.7 | $ | 1,834.5 | $ | 398.7 | $ | 3,038.9 | |||||||||||||||
| Accumulated goodwill impairment losses | (20.7) | (149.8) | (30.1) | (200.6) | |||||||||||||||||||
| Balance at January 1, 2024 | 785.0 | 1,684.7 | 368.6 | 2,838.3 | |||||||||||||||||||
| Foreign currency translation | 0.3 | 5.2 | 1.3 | 6.8 | |||||||||||||||||||
| Acquisitions | — | 480.3 | — | 480.3 | |||||||||||||||||||
| Measurement period adjustments | — | 2.2 | — | 2.2 | |||||||||||||||||||
| Divestitures | (11.6) | — | — | (11.6) | |||||||||||||||||||
| Balance at September 30, 2024 | $ | 773.7 | $ | 2,172.4 | $ | 369.9 | $ | 3,316.0 |
ASC 350, Goodwill and Other Intangible Assets (“ASC 350”), requires that goodwill be tested for impairment at the reporting unit level on an annual basis and between annual tests if an event occurs or circumstances change that would more likely than not reduce the fair value of the reporting unit below its carrying value. Annually, on October 31, goodwill and other acquired intangible assets with indefinite lives are tested for impairment. Based on the results of the Company’s annual impairment test at October 31, 2023, all reporting units had fair values in excess of their carrying values. During the nine months ended September 30, 2024, there were no events or circumstances that would have required an interim impairment test.
IDEX CORPORATION
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Dollars in millions, except per share amounts)
(unaudited)
The following table provides the gross carrying value and accumulated amortization for each major class of intangible asset at September 30, 2024 and December 31, 2023:
| September 30, 2024 | December 31, 2023 | ||||||||||||||||||||||||||||||||||
| Gross Carrying Amount | Accumulated Amortization | Net | Gross Carrying Amount | Accumulated Amortization | Net | ||||||||||||||||||||||||||||||
| Amortized intangible assets: | |||||||||||||||||||||||||||||||||||
| Patents | $ | 2.7 | $ | (2.1) | $ | 0.6 | $ | 2.7 | $ | (2.0) | $ | 0.7 | |||||||||||||||||||||||
| Trade names | 207.0 | (58.2) | 148.8 | 171.9 | (54.3) | 117.6 | |||||||||||||||||||||||||||||
| Customer relationships | 1,109.0 | (266.3) | 842.7 | 860.7 | (228.7) | 632.0 | |||||||||||||||||||||||||||||
| Unpatented technology | 336.2 | (82.3) | 253.9 | 233.5 | (66.3) | 167.2 | |||||||||||||||||||||||||||||
| Software | 15.6 | (3.1) | 12.5 | 5.3 | (1.9) | 3.4 | |||||||||||||||||||||||||||||
| Total amortized intangible assets | 1,670.5 | (412.0) | 1,258.5 | 1,274.1 | (353.2) | 920.9 | |||||||||||||||||||||||||||||
| Indefinite-lived intangible assets: | |||||||||||||||||||||||||||||||||||
| Banjo trade name | 62.1 | — | 62.1 | 62.1 | — | 62.1 | |||||||||||||||||||||||||||||
| Akron Brass trade name | 28.8 | — | 28.8 | 28.8 | — | 28.8 | |||||||||||||||||||||||||||||
| Total intangible assets | $ | 1,761.4 | $ | (412.0) | $ | 1,349.4 | $ | 1,365.0 | $ | (353.2) | $ | 1,011.8 |
The Banjo and Akron Brass trade names are indefinite-lived intangible assets which are tested for impairment on an annual basis in accordance with ASC 350 or more frequently if events or changes in circumstances indicate that the assets might be impaired. Based on the results of the Company’s annual impairment test at October 31, 2023, these indefinite-lived intangible assets had fair values in excess of their carrying values. During the nine months ended September 30, 2024, there were no events or circumstances that would have required an interim impairment test on these indefinite-lived intangible assets.
Amortization of intangible assets was $26.5 million and $75.0 million for the three and nine months ended September 30, 2024, respectively. Amortization of intangible assets was $23.8 million and $70.6 million for the three and nine months ended September 30, 2023, respectively. Based on the intangible asset balances as of September 30, 2024, expected amortization expense for the remaining three months of 2024 and for the years 2025 through 2028 is as follows:
| Estimated Amortization | ||||||||
| Remainder of 2024 | $ | 32.6 | ||||||
| 2025 | 128.1 | |||||||
| 2026 | 126.4 | |||||||
| 2027 | 122.7 | |||||||
| 2028 | 119.5 |
IDEX CORPORATION
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Dollars in millions, except per share amounts)
(unaudited)
8. Borrowings
Borrowings at September 30, 2024 and December 31, 2023 consisted of the following:
| September 30, 2024 | December 31, 2023 | ||||||||||
| 3.37% Senior Notes, due June 2025 (the “3.37% Senior Notes”)(1) | $ | 100.0 | $ | 100.0 | |||||||
| 5.13% Senior Notes, due June 2028 (the “5.13% Senior Notes”) | 100.0 | 100.0 | |||||||||
| 4.950% Senior Notes, due September 2029 (the “4.950% Senior Notes”) | 500.0 | — | |||||||||
| 3.00% Senior Notes, due May 2030 (the “3.00% Senior Notes”) | 500.0 | 500.0 | |||||||||
| 2.625% Senior Notes, due June 2031 (the “2.625% Senior Notes”) | 500.0 | 500.0 | |||||||||
| $800.0 million Revolving Facility, due November 2027 (the “Revolving Facility”)(2) | 360.6 | 81.0 | |||||||||
| $200.0 million Term Facility, due November 2027 (the “Term Facility”)(3) | 25.0 | 50.0 | |||||||||
| Other borrowings | 1.8 | 2.3 | |||||||||
| Total borrowings | 2,087.4 | 1,333.3 | |||||||||
| Less: current portion | 0.6 | 0.6 | |||||||||
| Less: unamortized debt issuance costs and discount on debt | 11.7 | 7.6 | |||||||||
| Long-term borrowings | $ | 2,075.1 | $ | 1,325.1 |
(1) As of September 30, 2024, the $100.0 million 3.37% Senior Notes, due in June 2025, have been classified as Long-term borrowings on the Condensed Consolidated Balance Sheets. The Company has the ability and intent to either refinance or repay these Notes using the available borrowing capacity of the Revolving Facility, due November 2027.
(2) During the third quarter of 2024, the Company drew down an aggregate amount of $279.3 million under the Revolving Facility to finance a portion of Company’s acquisition of Mott. At September 30, 2024, there was $360.6 million outstanding under the Revolving Facility and $2.7 million of outstanding letters of credit, resulting in a net available borrowing capacity under the Revolving Facility of approximately $436.7 million. The weighted-average interest rate for borrowings outstanding under the Revolving Facility was 4.72% and 4.22% as of September 30, 2024 and December 31, 2023, respectively. During October 2024, the Company repaid $69.1 million of the $360.6 million outstanding under the Revolving Facility.
(3) The weighted-average interest rate for borrowings outstanding under the Term Facility was 6.55% and 6.22% as of September 30, 2024 and December 31, 2023, respectively. During the second quarter of 2024, the Company repaid $25.0 million of the $50.0 million previously outstanding under the Term Facility. During October 2024, the Company repaid the remaining $25.0 million outstanding under the Term Facility.
At September 30, 2024, the Company was in compliance with the covenants contained in the credit agreement associated with the Revolving Facility as well as other long-term debt agreements.
Issuance of 4.950% Senior Notes due 2029
On August 21, 2024, the Company completed an underwritten public offering of $500.0 million in aggregate principal amount of its 4.950% Senior Notes. The 4.950% Senior Notes bear interest at a rate of 4.950% per annum, which is payable semi-annually in arrears during the first and third quarters of the year, beginning in the first quarter of 2025. The 4.950% Senior Notes will mature on September 1, 2029. The 4.950% Senior Notes are senior, unsecured obligations of the Company and (i) rank equal in right of payment to all of the Company’s existing and future senior unsecured indebtedness, (ii) rank senior in right of payment to all of the Company’s existing and future subordinated indebtedness, and (iii) rank effectively subordinated in right of payment to the Company’s future secured indebtedness. The net proceeds from the 4.950% Senior Notes offering were approximately $495.0 million, after deducting the underwriting discount and offering expenses paid and payable by the Company. The Company used the net proceeds from the offering, together with the Revolving Facility borrowings discussed above and cash on hand, to fund the Mott acquisition and pay related fees and expenses.
IDEX CORPORATION
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Dollars in millions, except per share amounts)
(unaudited)
The Company may redeem all or a portion of the 4.950% Senior Notes at any time prior to maturity at the redemption prices set forth in the Supplemental Indenture governing the 4.950% Senior Notes (the “Indenture”). The terms of the 4.950% Senior Notes also require the Company to make an offer to repurchase all or a portion of the 4.950% Senior Notes (unless otherwise redeemed) upon a “Change of Control Triggering Event” (as defined in the Indenture) at a price equal to 101% of their principal amount plus accrued and unpaid interest, if any, to, but excluding, the repurchase date. The 4.950% Senior Notes are not subject to any financial covenants under the Indenture; however, they are subject to cross-acceleration provisions.
9. Fair Value Measurements
ASC 820, Fair Value Measurements and Disclosures, defines fair value, provides guidance for measuring fair value and requires certain disclosures. This standard discusses valuation techniques, such as the market approach (comparable market prices), the income approach (present value of future income or cash flow) and the cost approach (cost to replace the service capacity of an asset or replacement cost). The standard utilizes a fair value hierarchy that prioritizes the inputs to valuation techniques used to measure fair value into three broad levels. The following is a brief description of those three levels:
-
Level 1: Observable inputs such as quoted prices (unadjusted) in active markets for identical assets or liabilities.
-
Level 2: Inputs, other than quoted prices that are observable for the asset or liability, either directly or indirectly. These include quoted prices for similar assets or liabilities in active markets and quoted prices for identical or similar assets or liabilities in markets that are not active.
-
Level 3: Unobservable inputs that reflect the reporting entity’s own assumptions.
The following table summarizes the basis used to measure the Company’s financial assets (liabilities) at fair value on a recurring basis in the balance sheets at September 30, 2024 and December 31, 2023:
| Basis of Fair Value Measurements | |||||||||||
| September 30, 2024 | December 31, 2023 | ||||||||||
| Level 1 | Level 1 | ||||||||||
| Trading securities - mutual funds held in nonqualified SERP(1) | $ | 10.4 | $ | 10.5 | |||||||
| Available-for-sale securities - equities(2) | — | 4.4 | |||||||||
(1) The Supplemental Executive Retirement Plan (“SERP”) investment assets are offset by a SERP liability which represents the Company’s obligation to distribute SERP funds to participants. The SERP investment assets and liability are included in Other noncurrent assets and Other noncurrent liabilities, respectively, on the Condensed Consolidated Balance Sheets.
(2) The securities are included in Other current assets on the Condensed Consolidated Balance Sheets and are available for overnight cash settlement, if necessary, to fund current operations.
There were no transfers of assets or liabilities between Level 1 and Level 2 during the three and nine months ended September 30, 2024 or the year ended December 31, 2023.
The carrying values of the Company’s cash and cash equivalents, accounts receivable, accounts payable and accrued expenses approximate fair value because of the short-term nature of these instruments.
The following table provides the fair value of the outstanding indebtedness described in Note 8, “Borrowings,” which is based on quoted market prices and current market rates for debt with similar credit risk and maturity, as well as the carrying value. These fair value measurements are classified as Level 2 within the fair value hierarchy since they are determined based
IDEX CORPORATION
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Dollars in millions, except per share amounts)
(unaudited)
upon significant inputs observable in the market, including interest rates on recent financing transactions to entities with a credit rating similar to the Company’s rating.
| September 30, 2024 | December 31, 2023 | ||||||||||||||||||||||||||||||||||
| Fair Value | Carrying Amount | Fair Value | Carrying Amount | ||||||||||||||||||||||||||||||||
| Total Borrowings, less unaccreted debt discount | $ | 2,014.7 | $ | 2,086.1 | $ | 1,203.5 | $ | 1,332.2 |
IDEX CORPORATION
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Dollars in millions, except per share amounts)
(unaudited)
10. Accumulated Other Comprehensive Loss
The components of Accumulated other comprehensive loss for the three and nine months ended September 30, 2024 and 2023 are as follows:
| Cumulative Translation Adjustment | Pension and Other Postretirement Adjustments | Accumulated Other Comprehensive Loss | ||||||||||||||||||
| Three Months Ended September 30, 2024 | ||||||||||||||||||||
| Balance, June 30, 2024(1) | $ | (119.6) | $ | 3.2 | $ | (116.4) | ||||||||||||||
| Other comprehensive income before reclassification adjustments | 91.8 | — | 91.8 | |||||||||||||||||
| Gain reclassified from Accumulated other comprehensive loss(2)(3) | — | (0.2) | (0.2) | |||||||||||||||||
| Tax impact | — | 0.1 | 0.1 | |||||||||||||||||
| Net other comprehensive income (loss)(1) | 91.8 | (0.1) | 91.7 | |||||||||||||||||
| Balance, September 30, 2024(1) | $ | (27.8) | $ | 3.1 | $ | (24.7) | ||||||||||||||
| Nine Months Ended September 30, 2024 | ||||||||||||||||||||
| Balance, December 31, 2023(1) | $ | (49.3) | $ | 3.5 | $ | (45.8) | ||||||||||||||
| Other comprehensive income before reclassification adjustments | 16.0 | — | 16.0 | |||||||||||||||||
| Gain reclassified from Accumulated other comprehensive loss(2)(3) | — | (0.6) | (0.6) | |||||||||||||||||
| Loss reclassified related to divestitures(4) | 5.5 | — | 5.5 | |||||||||||||||||
| Tax impact | — | 0.2 | 0.2 | |||||||||||||||||
| Net other comprehensive income (loss)(1) | 21.5 | (0.4) | 21.1 | |||||||||||||||||
| Balance, September 30, 2024(1) | $ | (27.8) | $ | 3.1 | $ | (24.7) | ||||||||||||||
| Three Months Ended September 30, 2023 | ||||||||||||||||||||
| Balance, June 30, 2023(1) | $ | (98.2) | $ | 10.4 | $ | (87.8) | ||||||||||||||
| Other comprehensive loss before reclassification adjustments | (58.1) | — | (58.1) | |||||||||||||||||
| Gain reclassified from Accumulated other comprehensive loss(2)(3) | — | (0.3) | (0.3) | |||||||||||||||||
| Tax impact | — | — | — | |||||||||||||||||
| Net other comprehensive loss(1) | (58.1) | (0.3) | (58.4) | |||||||||||||||||
| Balance, September 30, 2023(1) | $ | (156.3) | $ | 10.1 | $ | (146.2) | ||||||||||||||
| Nine Months Ended September 30, 2023 | ||||||||||||||||||||
| Balance, December 31, 2022(1) | $ | (137.1) | $ | 10.9 | $ | (126.2) | ||||||||||||||
| Other comprehensive loss before reclassification adjustments | (19.2) | — | (19.2) | |||||||||||||||||
| Gain reclassified from Accumulated other comprehensive loss(2)(3) | — | (1.0) | (1.0) | |||||||||||||||||
| Tax impact | — | 0.2 | 0.2 | |||||||||||||||||
| Net other comprehensive loss(1) | (19.2) | (0.8) | (20.0) | |||||||||||||||||
| Balance, September 30, 2023(1) | $ | (156.3) | $ | 10.1 | $ | (146.2) |
IDEX CORPORATION
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Dollars in millions, except per share amounts)
(unaudited)
(1) Amounts are presented net of tax.
(2) Included in the computation of net periodic cost. See Note 13, “Retirement Benefits.”
(3) Included in Other expense (income) – net in the Condensed Consolidated Statements of Income.
(4) In conjunction with the divestiture of Alfa Valvole during the second quarter of 2024, the Company released
associated cumulative foreign currency translation losses and included the release as part of the gain on sale of business.
11. Share Repurchases
On March 17, 2020, the Company’s Board of Directors approved an increase of $500.0 million in the authorized level of repurchases of common stock. This approval is in addition to the prior repurchase authorization of the Board of Directors of $300.0 million on December 1, 2015. These authorizations have no expiration date. There were no share repurchases during the nine months ended September 30, 2024. During the nine months ended September 30, 2023, the Company repurchased a total of 5,400 shares at a cost of $1.1 million. As of September 30, 2024, the amount of share repurchase authorization remaining was $539.7 million.
12. Share-Based Compensation
The Company typically grants equity awards annually at its regularly scheduled first quarter meeting of the Board of Directors based on the recommendation from the Compensation Committee.
The Company’s policy is to recognize compensation cost on a straight-line basis, assuming forfeitures, over the requisite service period for the entire award. Classification of share-based compensation cost within the Condensed Consolidated Statements of Income is consistent with the classification of cash compensation for the same employees.
Stock Options
Stock options granted under the Company’s plans are generally non-qualified and are granted with an exercise price equal to the market price of the Company’s stock on the date of grant. The fair value of each option grant was estimated on the date of the grant using the Black Scholes valuation model. Stock options generally vest ratably over four years, with vesting beginning one year from the date of grant, and generally expire 10 years from the date of grant. The service period for certain retiree eligible participants is accelerated. The assumptions used in determining the fair value of the stock options granted in the respective periods were as follows:
| Three Months Ended September 30, | Nine Months Ended September 30, | ||||||||||||||||||||||
| 2024 | 2023 | 2024 | 2023 | ||||||||||||||||||||
| Weighted average fair value of grants | $49.83 | $56.47 | $63.63 | $60.49 | |||||||||||||||||||
| Dividend yield | 1.42% | 1.20% | 1.09% | 1.07% | |||||||||||||||||||
| Volatility | 26.47% | 26.78% | 26.66% | 27.17% | |||||||||||||||||||
| Risk-free interest rate | 4.08% | 4.26% | 4.31% | 4.12% | |||||||||||||||||||
| Expected life (in years) | 4.60 | 4.50 | 4.60 | 4.50 |
IDEX CORPORATION
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Dollars in millions, except per share amounts)
(unaudited)
A summary of the Company’s stock option activity as of September 30, 2024 and changes during the nine months ended September 30, 2024 are presented in the following table:
| Stock Options | Shares | Weighted Average Exercise Price | Weighted-Average Remaining Contractual Term (years) | Aggregate Intrinsic Value | |||||||||||||||||||
| Outstanding at January 1, 2024 | 983,267 | $ | 178.86 | 6.88 | $ | 39.3 | |||||||||||||||||
| Granted | 196,600 | 234.59 | |||||||||||||||||||||
| Exercised | (79,005) | 155.56 | |||||||||||||||||||||
| Forfeited | (38,796) | 205.39 | |||||||||||||||||||||
| Outstanding at September 30, 2024 | 1,062,066 | $ | 189.84 | 6.78 | $ | 31.9 | |||||||||||||||||
| Vested and expected to vest as of September 30, 2024 | 1,025,776 | $ | 188.79 | 6.71 | $ | 31.7 | |||||||||||||||||
| Exercisable at September 30, 2024 | 603,219 | $ | 168.07 | 5.47 | $ | 28.7 |
As of September 30, 2024, there was $11.0 million of total unrecognized compensation cost related to stock options that is expected to be recognized over a weighted-average period of 1.4 years.
Restricted Stock
Restricted stock awards generally cliff vest after three years for employees and non-employee directors. The service period for certain retiree eligible participants is accelerated. Unvested restricted stock carries dividend and voting rights and the sale of the shares is restricted prior to the date of vesting. Dividends are paid on restricted stock awards and their fair value is equal to the market price of the Company’s stock at the date of the grant. A summary of the Company’s restricted stock activity as of September 30, 2024 and changes during the nine months ended September 30, 2024 are presented in the following table:
| Restricted Stock | Shares | Weighted-Average Grant Date Fair Value | |||||||||
| Unvested at January 1, 2024 | 112,891 | $ | 193.03 | ||||||||
| Granted | 102,915 | 211.55 | |||||||||
| Vested | (24,125) | 201.52 | |||||||||
| Forfeited | (11,600) | 210.94 | |||||||||
| Unvested at September 30, 2024 | 180,081 | $ | 201.32 |
As of September 30, 2024, there was $18.0 million of total unrecognized compensation cost related to restricted stock that is expected to be recognized over a weighted-average period of 1.2 years.
Cash-Settled Restricted Stock
The Company also maintains a cash-settled share-based compensation plan for certain employees. Cash-settled restricted stock awards generally cliff vest after three years. The service period for certain retiree eligible participants is accelerated. Cash-settled restricted stock awards are recorded at fair value on a quarterly basis using the market price of the Company’s stock on the last day of the quarter. At September 30, 2024 and December 31, 2023, the Company had accrued $3.7 million and $4.2 million, respectively, for cash-settled restricted stock in Accrued expenses in the Condensed Consolidated Balance Sheets and had accrued $2.5 million and $2.9 million, respectively, for cash-settled restricted stock in Other noncurrent liabilities in the Condensed Consolidated Balance Sheets. These recurring fair value measurements are classified as Level 1 in the fair value hierarchy. Dividend equivalents are paid on certain cash-settled restricted stock awards. A summary of the Company’s unvested cash-settled restricted stock activity as of September 30, 2024 and changes during the nine months ended September 30, 2024 are presented in the following table:
IDEX CORPORATION
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Dollars in millions, except per share amounts)
(unaudited)
| Cash-Settled Restricted Stock | Shares | Weighted-Average Fair Value | |||||||||
| Unvested at January 1, 2024 | 56,655 | $ | 217.11 | ||||||||
| Granted | 23,555 | 229.87 | |||||||||
| Vested | (15,275) | 235.39 | |||||||||
| Forfeited | (5,430) | 214.50 | |||||||||
| Unvested at September 30, 2024 | 59,505 | $ | 214.50 |
As of September 30, 2024, there was $4.9 million of total unrecognized compensation cost related to cash-settled restricted shares that is expected to be recognized over a weighted-average period of 1.1 years.
Performance Share Units
The performance share units are market condition awards and have been assessed at fair value on the date of grant using a Monte Carlo simulation model. The assumptions used in determining the fair value of the performance share units granted in the respective periods were as follows:
| Nine Months Ended September 30, | |||||||||||
| 2024 | 2023 | ||||||||||
| Weighted average fair value of grants | $349.59 | $308.18 | |||||||||
| Dividend yield | —% | —% | |||||||||
| Volatility | 22.23% | 27.00% | |||||||||
| Risk-free interest rate | 4.45% | 4.37% | |||||||||
| Expected life (in years) | 2.94 | 2.94 |
A summary of the Company’s performance share unit activity as of September 30, 2024 and changes during the nine months ended September 30, 2024 are presented in the following table:
| Performance Share Units | Shares | Weighted-Average Grant Date Fair Value | |||||||||
| Unvested at January 1, 2024 | 67,455 | $ | 265.15 | ||||||||
| Granted | 27,135 | 349.59 | |||||||||
| Vested | (9,606) | 245.40 | |||||||||
| Forfeited | (11,444) | 252.92 | |||||||||
| Unvested at September 30, 2024 | 73,540 | $ | 300.35 |
On January 31, 2024, 19,200 performance share units vested. Based on the Company’s relative total shareholder return rank during the three-year period ended January 31, 2024, the Company achieved a 50% payout factor and issued 9,606 common shares in February 2024 for awards that vested in 2024.
As of September 30, 2024, there was $3.9 million of total unrecognized compensation cost related to performance share units that is expected to be recognized over a weighted-average period of 1.0 year.
IDEX CORPORATION
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Dollars in millions, except per share amounts)
(unaudited)
Summary of Share-Based Compensation Expense
Pre-tax compensation cost is recognized in both Cost of sales and Selling, general and administrative expenses in the Condensed Consolidated Statements of Income depending on the functional area of the underlying employees. Total compensation cost related to all share-based awards was as follows:
| Three Months Ended September 30, | Nine Months Ended September 30, | ||||||||||||||||||||||
| 2024 | 2023 | 2024 | 2023 | ||||||||||||||||||||
| Stock options expense | $ | 1.5 | $ | 1.1 | $ | 8.4 | $ | 8.7 | |||||||||||||||
| Restricted stock expense | 1.6 | 1.1 | 5.7 | 4.4 | |||||||||||||||||||
| Cash-settled restricted stock expense | 1.2 | 0.6 | 2.8 | 2.3 | |||||||||||||||||||
| Performance share units expense(1) | 0.9 | (0.3) | 6.8 | 5.7 | |||||||||||||||||||
| Total pre-tax share-based compensation expense | 5.2 | 2.5 | 23.7 | 21.1 | |||||||||||||||||||
| Income tax benefit | (0.7) | (0.5) | (2.3) | (2.1) | |||||||||||||||||||
| Total share-based compensation expense, net of income taxes | $ | 4.5 | $ | 2.0 | $ | 21.4 | $ | 19.0 |
(1) Performance share units expense for the three and nine months ended September 30, 2023 reflects lower expense of $1.1 million of executive forfeitures, which occurred during the third quarter of 2023.
13. Retirement Benefits
The Company sponsors several qualified and nonqualified defined benefit and defined contribution pension plans as well as other postretirement plans for its employees. The following tables provide the components of net periodic cost for its major defined benefit plans and its other postretirement plans.
| Pension Benefits | |||||||||||||||||||||||
| Three Months Ended September 30, | |||||||||||||||||||||||
| 2024 | 2023 | ||||||||||||||||||||||
| U.S. | Non-U.S. | U.S. | Non-U.S. | ||||||||||||||||||||
| Service cost | $ | 0.1 | $ | 0.3 | $ | 0.1 | $ | 0.3 | |||||||||||||||
| Interest cost | 0.1 | 0.6 | 0.1 | 0.6 | |||||||||||||||||||
| Expected return on plan assets | (0.1) | (0.4) | (0.1) | (0.4) | |||||||||||||||||||
| Net amortization | — | — | — | (0.1) | |||||||||||||||||||
| Net periodic cost | $ | 0.1 | $ | 0.5 | $ | 0.1 | $ | 0.4 | |||||||||||||||
| Pension Benefits | |||||||||||||||||||||||
| Nine Months Ended September 30, | |||||||||||||||||||||||
| 2024 | 2023 | ||||||||||||||||||||||
| U.S. | Non-U.S. | U.S. | Non-U.S. | ||||||||||||||||||||
| Service cost | $ | 0.1 | $ | 1.1 | $ | 0.1 | $ | 0.9 | |||||||||||||||
| Interest cost | 0.3 | 1.9 | 0.3 | 2.0 | |||||||||||||||||||
| Expected return on plan assets | (0.2) | (1.3) | (0.2) | (1.2) | |||||||||||||||||||
| Net amortization | 0.2 | (0.1) | 0.1 | (0.4) | |||||||||||||||||||
| Net periodic cost | $ | 0.4 | $ | 1.6 | $ | 0.3 | $ | 1.3 |
IDEX CORPORATION
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Dollars in millions, except per share amounts)
(unaudited)
| Other Postretirement Benefits | |||||||||||||||||||||||
| Three Months Ended September 30, | Nine Months Ended September 30, | ||||||||||||||||||||||
| 2024 | 2023 | 2024 | 2023 | ||||||||||||||||||||
| Service cost | $ | 0.2 | $ | 0.1 | $ | 0.4 | $ | 0.3 | |||||||||||||||
| Interest cost | 0.2 | 0.2 | 0.6 | 0.6 | |||||||||||||||||||
| Net amortization | (0.2) | (0.2) | (0.7) | (0.7) | |||||||||||||||||||
| Net periodic cost | $ | 0.2 | $ | 0.1 | $ | 0.3 | $ | 0.2 |
The Company recognizes the service cost component in both Cost of sales and Selling, general and administrative expenses in the Condensed Consolidated Statements of Income depending on the functional area of the underlying employees and the interest cost, expected return on plan assets and net amortization components in Other expense (income) – net in the Condensed Consolidated Statements of Income.
The Company expects to contribute approximately $3.6 million to its defined benefit plans and $1.1 million to its other postretirement benefit plans in 2024. The Company contributed a total of $3.5 million and $3.9 million to fund these plans during the nine months ended September 30, 2024 and 2023, respectively.
14. Commitments and Contingencies
The Company and certain of its subsidiaries are involved in pending and threatened legal, regulatory and other proceedings arising in the ordinary course of business. These proceedings may pertain to matters such as product liability or contract disputes, and may also involve governmental inquiries, inspections, audits or investigations relating to issues such as tax matters, intellectual property, environmental, health and safety issues, governmental regulations, employment and other matters. Although the results of such legal proceedings cannot be predicted with certainty, the Company believes that the ultimate disposition of these matters will not have a material adverse effect, individually or in the aggregate, on the Company’s business, financial condition, results of operations or cash flows.
15. Income Taxes
The Company’s provision for income taxes is based upon estimated annual tax rates for the year applied to federal income as well as state and foreign income in various jurisdictions, permanent differences between book and tax items, tax credits and the Company’s change in relative income in each jurisdiction. The provision for income taxes and the effective tax rates for the periods presented were as follows:
| Three Months Ended September 30, | Nine Months Ended September 30, | ||||||||||||||||||||||
| 2024 | 2023 | 2024 | 2023 | ||||||||||||||||||||
| Income before income taxes | $ | 154.4 | $ | 261.8 | $ | 488.1 | $ | 620.1 | |||||||||||||||
| Provision for income taxes | 35.5 | 52.8 | 106.7 | 132.8 | |||||||||||||||||||
| Effective tax rate | 22.9 | % | 20.2 | % | 21.9 | % | 21.4 | % |
The three months ended September 30, 2024 had no material discrete tax items impacting the effective tax rate. The nine months ended September 30, 2024 benefited from the finalization of prior years’ research and development tax incentives with taxing authorities in a foreign jurisdiction and the finalization of tax impacts of a previously recorded legal entity restructuring. Both the three and nine months ended September 30, 2023 benefited from the finalization of the impact of research expenditure capitalization on the foreign derived intangible income deduction and the reduction of Global Intangible Low-Tax Income as a result of the tax amortization of goodwill related to the acquisition of Muon B.V. and its subsidiaries.
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