IDEX CORPORATION

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Amounts in thousands except share data and where otherwise indicated)

(unaudited)

triggered the remeasurement of net periodic benefit cost resulting in a reduction of $1.0 million to Other (income) expense - net in the Condensed Consolidated Statements of Operations for the nine months ended September 30, 2020 as a result of significant decreases in discount rates and strong asset performance in 2020. As of September 30, 2020, the Plan’s funded status is 110%, with assets valued at $93.4 million and liabilities of $84.8 million.

~~19.~~

20. Legal Proceedings

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.

~~20.~~21. Income Taxes

The Company’s provision for income taxes is based upon estimated annual tax rates for the year applied to federal, state and foreign income. The provision for income taxes decreased to ~~$24.0~~$17.4 million for the three months ended September 30, ~~2019 from $26.9~~2020 compared to $24.0 million during the same period in ~~2018.~~2019. The effective tax rate decreased to ~~18.6%~~14.4% for the three months ended September 30, ~~2019~~2020 compared ~~20.2%~~ to 18.6% during the same period in ~~2018~~2019 primarily due to ~~a decrease in~~benefits associated with the ~~impact~~finalization of the Global Intangible ~~Low-Taxed~~Low-Tax Income (“GILTI”) ~~related to U.S. Treasury~~ regulations ~~as well as~~in the ~~mix~~third quarter of ~~global pre-tax income among jurisdictions.~~2020.

The provision for income taxes decreased to ~~$82.2~~$63.8 million for the nine months ended September 30, ~~2019~~2020 from ~~$87.7~~$82.2 million during the same period in ~~2018.~~2019. The effective tax rate decreased to ~~20.0%~~18.7% for the nine months ended September 30, ~~2019~~2020 compared to ~~21.9%~~20.0% during the same period in ~~2018~~2019 primarily due to ~~a decrease~~benefits associated with the finalization of the GILTI regulations in the ~~impact~~third quarter of ~~GILTI related to U.S. Treasury regulations, the excess tax benefits related to share-based compensation as well as the mix of global pre-tax income among jurisdictions.~~2020.

The Company and its subsidiaries file income tax returns in the U.S. federal jurisdiction, and various state and foreign jurisdictions. Due to the potential for resolution of federal, state and foreign examinations, and the expiration of various statutes of limitation, it is reasonably possible that the Company’s gross unrecognized tax benefits balance may change. However, these unrecognized tax benefits are long-term in nature and will not change within the next ~~twelve months by a range~~12 months.

Table of ~~0 to $0.8 million.~~Contents

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations

Cautionary Statement Under the Private Securities Litigation Reform Act

This quarterly report on Form 10-Q, including the “Overview, ~~and Outlook” and~~” “Liquidity and Capital Resources” and “Results of Operations” sections of this Management’s Discussion and Analysis of Financial Condition and Results of Operations, contains “forward-looking” statements within the meaning of the Private Securities Litigation Reform Act of 1995, as amended. These statements may relate to, among other things, the anticipated continuing effects of the coronavirus pandemic, including with respect to the Company’s sales, facility closures, supply chains and access to capital, capital expenditures, acquisitions, cost reductions, cash flow, cash requirements, revenues, earnings, market conditions, global economies, plant and equipment capacity and operating improvements, and are indicated by words or phrases such as “anticipates,” “estimates,” “plans,” “expects,” “projects,” “forecasts,” “should,” “could,” “will,” “management believes,” “the Company believes,” “the Company ~~intends,”~~intends” and similar words or phrases. These statements are subject to inherent uncertainties and risks that could cause actual results to differ materially from those anticipated at the date of this report. The risks and uncertainties include, but are not limited to, the following: the duration of the coronavirus pandemic and the continuing effects of the coronavirus on our ability to operate our business and facilities, on our customers, on supply chains and on the U.S. and global economy generally; economic and political consequences resulting from terrorist attacks and wars; levels of industrial activity and economic conditions in the U.S. and other countries around the world; pricing pressures and other competitive factors and levels of capital spending in certain industries, all of which could have a material impact on order rates and the Company’s results, particularly in light of the low levels of order backlogs it typically maintains; the Company’s ability to make acquisitions and to integrate and operate acquired businesses on a profitable basis; the relationship of the U.S. dollar to other currencies and its impact on pricing and cost competitiveness; political and economic conditions in foreign countries in which the Company operates; developments with respect to trade policy and tariffs; interest rates; capacity utilization and the effect this has on costs; labor markets; market conditions and material costs; and developments with respect to contingencies, such as litigation and environmental matters. Additional factors that could cause actual results to differ materially from those reflected in the forward-looking statements include, but are not limited to, the risks discussed in the “Risk Factors” section included in the Company’s most recent annual report on Form 10-K and the Company’s subsequent quarterly reports, including this quarterly report on Form 10-Q, filed with the Securities and Exchange Commission (“SEC”) and the other risks discussed in the Company’s filings with the SEC. The forward-looking statements included here are only made as of the date of this report, and management undertakes no obligation to publicly update them to reflect subsequent events or circumstances, except as may be required by law. Investors are cautioned not to rely unduly on forward-looking statements when evaluating the information presented here.

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Overview ~~and Outlook~~

IDEX Corporation (“IDEX,” “we,” “our,” or the “Company”) is an applied solutions company specializing in the manufacture of fluid and metering technologies, health and science technologies and fire, safety and other diversified products built to customers’ specifications. IDEX’s products are sold in niche markets across a wide range of industries throughout the world. Accordingly, IDEX’s businesses are affected by levels of industrial activity and economic conditions in the U.S. and in other countries where it does business and by the relationship of the U.S. Dollar to other currencies. Levels of capacity utilization and capital spending in certain industries and overall industrial activity are important factors that influence the demand for IDEX’s products.

The Company has three reportable business segments: Fluid & Metering Technologies, Health & Science Technologies and Fire & Safety/Diversified Products. Within our three reportable segments, the Company maintains 13 platforms where we focus on organic growth and strategic acquisitions. Each of our 13 platforms is also a reporting unit that we annually test for goodwill ~~for~~ impairment.

The Fluid & Metering Technologies segment designs, produces and distributes positive displacement pumps, small volume provers, flow meters, injectors and other fluid-handling pump modules and systems and provides flow monitoring and other services for the food, chemical, general industrial, water and wastewater, agriculture and energy industries. The Fluid & Metering Technologies segment contains the Energy platform (comprised of Corken, Liquid Controls, SAMPI, Toptech and ~~Toptech)~~Flow Management Devices, LLC (“Flow MD”)), the Valves platform (comprised of Alfa Valvole, Richter and Aegis), the Water platform (comprised of Pulsafeeder, OBL, Knight, ADS, Trebor and iPEK), the Pumps platform (comprised of Viking and Warren Rupp) and the Agriculture platform (comprised of Banjo).

The Health & Science Technologies segment designs, produces and distributes a wide range of precision fluidics, rotary lobe pumps, centrifugal and positive displacement pumps, roll compaction and drying systems used in beverage, food processing, pharmaceutical and cosmetics, pneumatic components and sealing solutions, including very high precision, ~~low-flow~~low-

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flow rate pumping solutions required in analytical instrumentation, clinical diagnostics and drug discovery, high performance molded and extruded sealing components, custom mechanical and shaft seals for a variety of end markets including food and beverage, marine, chemical, wastewater and water treatment, engineered hygienic mixers and valves for the global biopharmaceutical industry, biocompatible medical devices and implantables, air compressors used in medical, dental and industrial applications, optical components and coatings for applications in the fields of scientific research, defense, biotechnology, aerospace, telecommunications and electronics manufacturing, laboratory and commercial equipment used in the production of micro and nano scale materials, precision photonic solutions used in life sciences, research and defense markets and precision gear and peristaltic pump technologies that meet exacting original equipment manufacturer specifications. The Health & Science Technologies segment contains the Scientific Fluidics & Optics platform (comprised of Eastern Plastics, Rheodyne, Sapphire Engineering, Upchurch Scientific, ERC, CiDRA Precision Services, thinXXS, CVI Melles Griot, Semrock, Advanced Thin Films and FLI), the Sealing Solutions platform (comprised of Precision Polymer Engineering, FTL Seals Technology, Novotema, SFC Koenig and Velcora), the Gast platform, the Micropump platform and the Material Processing Technologies platform (comprised of Quadro, Fitzpatrick, Microfluidics and Matcon).

The Fire & Safety/Diversified Products segment designs, produces and develops firefighting pumps, valves and controls, rescue tools, lifting bags and other components and systems for the fire and rescue industry, engineered stainless steel banding and clamping devices used in a variety of industrial and commercial applications and precision equipment for dispensing, metering and mixing colorants and paints used in a variety of retail and commercial businesses around the world. The Fire & Safety/Diversified Products segment is comprised of the Fire & Safety platform (comprised of Class 1, Hale, Akron Brass, Weldon, AWG Fittings, Godiva, Dinglee, Hurst Jaws of Life, Lukas and Vetter), the BAND-IT platform and the Dispensing platform.

Management’s primary measurements of segment performance are sales, operating income and operating margin. In addition, due to the highly acquisitive nature of the Company, the determination of operating income includes amortization of acquired intangible assets and as a result, management reviews depreciation and amortization as a percentage of sales. These measures are monitored by management and significant changes in operating results versus current trends in end markets and variances from forecasts are analyzed with segment management.

This report references organic sales, a non-GAAP measure, that refers to sales from continuing operations calculated according to accounting principles generally accepted ~~accounting principles~~ in the United States of America (“U.S. GAAP”) but excludes (1) the impact of foreign currency translation and (2) sales from acquired or divested businesses during the first twelve months of ownership or divestiture. The portion of sales attributable to foreign currency translation is calculated as the difference between (a) the period-to-period change in organic sales and (b) the period-to-period change in organic sales after applying prior period foreign exchange rates to the current year period. 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. The Company excludes the effect of foreign currency translation from organic sales because foreign currency translation is not under management’s control, is subject to volatility and can obscure underlying business trends. The

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Company excludes the effect of acquisitions and divestitures because they can obscure underlying business trends and make comparisons of long term performance difficult due to the varying nature, size and number of transactions from period to period and between the Company and its peers.

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 10 in the Notes to Condensed Consolidated Financial Statements in Part I, Item 1, “Financial Statements.”

Organic sales have been reconciled to net sales and EBITDA has been reconciled to net income in Item 2 under the heading “Non-GAAP Disclosures.” The reconciliation of segment EBITDA to net income was performed on a consolidated basis due to the fact that we do not allocate consolidated interest expense or the consolidated provision for income taxes to our segments.

Management uses Adjusted operating income, Adjusted net income, Adjusted EBITDA and Adjusted EPS as metrics by which to measure performance of the Company since they exclude items that are not reflective of ongoing operations, such as restructuring expenses and a fair value inventory step-up charge.

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.

~~Some of our key financial results for the three months ended September 30, 2019 when compared to the same period in the prior year are as follows:~~

~~Sales of $624.2 million were flat; organic sales (which excludes acquisitions and foreign currency translation) were also flat.~~

Operating income of $141.8 million decreased 2%. Adjusted for a $3.3 million fair value inventory step-up charge and $12.0 million of restructuring expenses, adjusted operating income increased 5% to $157.1 million.

Net income of $105.2 million decreased 1%. Adjusted for a $2.6 million fair value inventory step-up charge and $9.2 million of restructuring expenses, net of tax benefit, adjusted net income increased 6% to $117.0 million.

~~EBITDA of $160.1 million was 26% of sales and covered interest expense by 14 times. Adjusted EBITDA of $175.4 million was 28% of sales and covered interest expense by over 15 times.~~

~~Diluted EPS of $1.37 was flat. Adjusted EPS of $1.52 increased 11 cents, or 8%.~~

~~Some of our key financial results for the nine months ended September 30, 2019 when compared to the same period in the prior year are as follows:~~

~~Sales of $1,888.6 million increased 1%; organic sales (which excludes acquisitions and foreign currency translation) were up 2%.~~

Operating income of $444.8 million increased 4%. Adjusted for a $3.3 million fair value inventory step-up charge and $14.1 million of restructuring expenses, adjusted operating income increased 6% to $462.2 million.

Net income of $328.7 million increased 5%. Adjusted for a $2.6 million fair value inventory step-up charge and $10.7 million of restructuring expenses, net of tax benefit, adjusted net income increased 7% to $342.0 million.

~~EBITDA of $501.5 million was 27% of sales and covered interest expense by over 15 times. Adjusted EBITDA of $518.9 million was 27% of sales and covered interest expense by almost 16 times.~~

~~Diluted EPS of $4.30 increased 28 cents, or 7%. Adjusted EPS of $4.47 increased 37 cents, or 9%.~~

Given the Company’s current outlook, we are projecting fourth quarter 2019 EPS in the range of $1.33 to $1.35 with full year 2019 adjusted EPS of $5.80 to $5.82. We are also projecting fourth quarter organic revenue growth to be flat with full year organic revenue growth of 2%.

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~~Results of Operations~~

The following is a discussion and analysis of our results of operations for the three and nine months ended September 30, 2019 and 2018. Segment operating income and EBITDA exclude unallocated corporate operating expenses of $17.9 million and $18.5 million for the three months ended September 30, 2019 and 2018, respectively, and $55.7 million and $61.2 million for the nine months ended September 30, 2019 and 2018, respectively.

~~Consolidated Results for the Three Months Ended September 30, 2019 Compared with the Same Period in 2018~~

(In thousands) Three Months Ended September 30,
2019 2018
Net sales $ 624,246
$ 622,888
Operating income 141,765
145,133
Operating margin 22.7 % 23.3 %

For the three months ended September 30, 2019, Fluid & Metering Technologies contributed 38% of sales, 49% of operating income and 47% of EBITDA; Health & Science Technologies contributed 37% of sales, 25% of operating income and 28% of EBITDA; and Fire & Safety/Diversified Products contributed 25% of sales, 26% of operating income and 25% of EBITDA. These percentages are calculated on the basis of total segment (not total Company) sales, operating income and EBITDA.

Sales in the third quarter of 2019 were $624.2 million, which was flat compared to the same period in 2018. This reflects flat organic sales and a 1% increase from acquisitions (Velcora - July 2019 and Finger Lakes - July 2018), offset by a 1% unfavorable impact from foreign currency translation. Sales to customers outside the U.S. represented approximately 50% of total sales in both the third quarters of 2019 and 2018.

Gross profit of $282.0 million in the third quarter of 2019 increased $1.7 million, or 1%, compared to the same period in 2018, and gross margin of 45.2% in the third quarter of 2019 increased 20 basis points from 45.0% during the same period in 2018. Both gross profit and gross margin increased compared to the prior year period primarily due to price and productivity initiatives, partially offset by a fair value inventory step-up charge included in the current year period and higher engineering investments.

Selling, general and administrative expenses decreased to $128.3 million in the third quarter of 2019 from $130.5 million during the same period in 2018. The decrease is primarily due to lower variable compensation costs and an overall tighter cost control environment in 2019. Corporate costs of $17.2 million in the third quarter of 2019 decreased to $17.9 million in the same period of 2018 primarily due to lower variable compensation costs. As a percentage of sales, selling, general and administrative expenses were 20.6% for the third quarter of 2019, down 40 basis points compared to 21.0% during the same period in 2018.

The Company incurred $12.0 million of restructuring expenses in the third quarter of 2019 compared with $4.6 million during the same period in 2018. The restructuring expenses included severance benefits of $1.9 million and exit costs of $0.4 million as well as an asset impairment charge of $9.7 million. In the second quarter of 2019, the Company began to evaluate strategic alternatives for one of its businesses in the HST segment. Prior to making a final decision on the options that were presented for this business, the business was informed in the third quarter of 2019 of the loss of its largest customer. As a result, the Company accelerated its restructuring activities for this business and a decision was made to wind down the business over time, requiring the asset impairment charge.

Operating income of $141.8 million and operating margin of 22.7% in the third quarter of 2019 were down from the $145.1 million and 23.3%, respectively, recorded during the same period in 2018. The decrease in operating income and margin is primarily due to a fair value inventory step-up charge and higher restructuring expenses in 2019, partially offset by gross margin expansion and reduced selling, general and administrative expenses in 2019.

Other (income) expense - net increased to $1.2 million of expense in the third quarter of 2019 compared to $0.9 million of expense during the same period in 2018, primarily due to a loss on early retirement of debt assumed in the Velcora acquisition and a tax refund received in 2018 that did not reoccur in 2019, partially offset by lower foreign currency transaction losses in 2019 compared to the same period in 2018.

~~Interest expense of $11.3 million in the third quarter of 2019 was higher than the $11.0 million in the same period of 2018 due to debt assumed in the Velcora acquisition.~~

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The Company’s provision for income taxes is based upon estimated annual tax rates for the year applied to federal, state and foreign income. The provision for income taxes decreased to $24.0 million in the third quarter of 2019 compared to $26.9 million during the same period in 2018. The effective tax rate decreased to 18.6% for the third quarter of 2019 compared to 20.2% for the same period in 2018 due to a decrease in the impact of Global Intangible Low-Taxed Income (“GILTI”) related to U.S. Treasury regulations as well as the mix of global pre-tax income among jurisdictions.

Net income in the third quarter of 2019 of $105.2 million decreased from $106.4 million during the same period in 2018. Diluted earnings per share in the third quarter of 2019 of $1.37 was flat compared to the same period in 2018.

~~Fluid & Metering Technologies Segment~~

(In thousands) Three Months Ended September 30,
2019 2018
Net sales $ 240,861
$ 239,213
Operating income 77,481
69,755
Operating margin 32.2 % 29.2 %

Sales of $240.9 million increased $1.6 million, or 1%, in the third quarter of 2019 compared to the same period in 2018. This reflects a 2% increase in organic sales, partially offset by a 1% unfavorable impact from foreign currency translation. In the third quarter of 2019, sales increased 2% domestically and decreased 1% internationally compared to the same period in 2018. Sales to customers outside the U.S. were approximately 45% of total segment sales in both the third quarters of 2019 and 2018.

Sales within our Pumps platform increased in the third quarter of 2019 compared to the same period in 2018 due to strength in LACT (lease automatic custody transfer) projects and strong OEM activity. Sales within our Energy platform increased slightly in the third quarter of 2019 compared to the same period in 2018 due to strength in Latin America. Sales within our Valves platform were relatively flat in the third quarter of 2019 compared to the same period in 2018 due to the softening global industrial landscape. Sales within our Water platform decreased compared to the same period in 2018, primarily due to weakness within the European and Asian distribution markets and project delays in the U.S. Sales within our Agriculture platform decreased in the third quarter of 2019 compared to the same period in 2018 due to decreased demand across both the agriculture and industrial OEM markets.

Operating income of $77.5 million and operating margin of 32.2% in the third quarter of 2019 were higher than the $69.8 million and 29.2%, respectively, recorded during the same period in 2018, primarily due to price and productivity initiatives, partially offset by higher engineering investments.

~~Health & Science Technologies Segment~~

(In thousands) Three Months Ended September 30,
2019 2018
Net sales $ 229,610
$ 222,426
Operating income 40,170
49,144
Operating margin 17.5 % 22.1 %

Sales of $229.6 million increased $7.2 million, or 3%, in the third quarter of 2019 compared to the same period in 2018. This reflects a 1% increase in organic sales and a 3% increase from acquisitions (Velcora - July 2019 and FLI - July 2018), partially offset by a 1% unfavorable impact from foreign currency translation. In the third quarter of 2019, sales increased 4% domestically and 2% internationally compared to the same period in 2018. Sales to customers outside the U.S. were approximately 55% of total segment sales in both the third quarters of 2019 and 2018.

Sales within our Material Processing Technologies platform increased in the third quarter of 2019 compared to the same period in 2018, primarily due to timing of projects and strength in the pharma market. Sales within our Sealing Solutions platform increased in the third quarter of 2019 compared to the same period in 2018, primarily due to the Velcora acquisition, partially offset by continued softness in the semiconductor and automotive end markets. Sales within our Scientific Fluidics & Optics platform increased in the third quarter of 2019 compared to the same period in 2018 due to new products, market share wins, solid demand in our primary end markets and the FLI acquisition. Sales within our Gast platform decreased in the third quarter of 2019 compared to the same period in 2018, primarily due to a slowdown across various industrial end markets. Sales within our Micropump

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~~platform decreased in the third quarter of 2019 compared to the same period in 2018 due to weakness in core printing and industrial distribution.~~

Operating income of $40.2 million in the third quarter of 2019 was lower than the $49.1 million recorded during the same period in 2018 and operating margin of 17.5% in the third quarter of 2019 was lower than the 22.1% recorded during the same period in 2018, primarily due to higher restructuring expenses (including the asset impairment) in 2019, the fair value inventory step-up charge related to the Velcora acquisition and higher engineering investments and amortization, partially offset by higher volume and price.

~~Fire & Safety/Diversified Products Segment~~

(In thousands) Three Months Ended September 30,
2019 2018
Net sales $ 154,543
$ 161,832
Operating income 41,967
44,726
Operating margin 27.2 % 27.6 %

Sales of $154.5 million decreased $7.3 million, or 5%, in the third quarter of 2019 compared to the same period in 2018. This reflects a 3% decrease in organic sales and a 2% unfavorable impact from foreign currency translation. In the third quarter of 2019, sales decreased 6% domestically and 3% internationally compared to the same period in 2018. Sales to customers outside the U.S. were approximately 52% of total segment sales in the third quarter of 2019 compared to 51% during the same period in 2018.

Sales within our Dispensing platform decreased in the third quarter of 2019 compared to the same period in 2018 primarily due to large projects in the U.S. from 2018 not repeating in 2019, weakness in Asian markets and unfavorable foreign currency translation. Sales within our Fire & Safety platform decreased in the third quarter of 2019 compared to the same period in 2018 due to lower large project tenders globally. Sales within our Band-It platform increased in the third quarter of 2019 compared to the same period in 2018 due to strength in the transportation market.

Operating income $42.0 million and operating margin of 27.2% in the third quarter of 2019 were lower than the $44.7 million and 27.6%, respectively, recorded during the same period in 2018, mainly due to reduced volume.

~~Consolidated Results for the Nine Months EndedSeptember 30, 2019 Compared with the Same Period in 2018~~

(In thousands) Nine Months Ended September 30,
2019 2018
Net sales $ 1,888,576
$ 1,869,572
Operating income 444,830
429,647
Operating margin 23.6 % 23.0 %

For the nine months ended September 30, 2019, Fluid & Metering Technologies contributed 39% of sales, 45% of operating income and 43% of EBITDA; Health & Science Technologies contributed 36% of sales, 30% of operating income and 32% of EBITDA; and Fire & Safety/Diversified Products contributed 25% of sales, 25% of operating income and 25% of EBITDA. These percentages are calculated on the basis of total segment (not total Company) sales, operating income and EBITDA.

Sales in the first nine months of 2019 were $1,888.6 million, which was a 1% increase compared to the same period in 2018. This reflects a 2% increase in organic sales and a 1% increase from acquisitions (Velcora - July 2019 and Finger Lakes - July 2018), partially offset by a 2% unfavorable impact from foreign currency translation. Sales to customers outside the U.S. represented approximately 50% of total sales in the first nine months of 2019 compared to 51% during the same period in 2018.

Gross profit of $858.1 million in the first nine months of 2019 increased $13.9 million, or 2%, compared to the same period in 2018, while gross margin of 45.4% in the first nine months of 2019 increased 20 basis points from 45.2% during the same period in 2018. Both gross profit and gross margin increased compared to the prior year period primarily due to price, volume leverage and productivity initiatives, partially offset by a fair value inventory step-up charge and higher engineering costs.

Selling, general and administrative expenses decreased to $399.2 million in the first nine months of 2019 from $406.4 million during the same period in 2018, primarily due to lower variable compensation costs and amortization in 2019 as well as the stamp

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duty charge in 2018. Corporate costs decreased to $55.0 million in the first nine months of 2019 compared to $60.0 million during the same period in 2018 primarily due to lower variable compensation costs as well as the stamp duty charge in 2018. As a percentage of sales, selling, general and administrative expenses were 21.1% for the first nine months of 2019, down 70 basis points compared to 21.8% during the same period in 2018.

The Company incurred $14.1 million of restructuring expenses in the first nine months of 2019 compared with $8.3 million during the same period in 2018. The restructuring expenses included severance benefits of $3.8 million and exit costs of $0.6 million as well as an asset impairment charge of $9.7 million. In the second quarter of 2019, the Company began to evaluate strategic alternatives for one of its businesses in the HST segment. Prior to making a final decision on the options that were presented for this business, the business was informed in the third quarter of 2019 of the loss of its largest customer. As a result, the Company accelerated its restructuring activities for this business and a decision was made to wind down the business over time, requiring the asset impairment charge.

Operating income of $444.8 million and operating margin of 23.6% in the first nine months of 2019 were up from the $429.6 million and 23.0%, respectively, recorded during the same period in 2018. The increases in operating income and operating margin are primarily due to gross margin expansion and lower selling, general and administrative expenses, partially offset by a fair value inventory step-up charge and higher restructuring expenses in 2019.

Other (income) expense - net was $0.7 million of expense in the first nine months of 2019 compared to $3.6 million of income during the same period in 2018, primarily due to foreign currency transaction gains in 2018 that did not repeat in 2019 as well as a pension settlement charge in 2019.

~~Interest expense of $33.3 million in the first nine months of 2019 was essentially flat compared to the same period in 2018.~~

The provision for income taxes decreased to $82.2 million in the first nine months of 2019 compared to $87.7 million during the same period in 2018. The effective tax rate decreased to 20.0% in the first nine months of 2019 compared to 21.9% during the same period in 2018 due to a decrease in the impact of GILTI related to U.S. Treasury regulations, the excess tax benefits related to share-based compensation as well as the mix of global pre-tax income among jurisdictions.

Net income of $328.7 million in the first nine months of 2019 increased from $312.4 million during the same period in 2018. Diluted earnings per share of $4.30 in the first nine months of 2019 increased $0.28, or 7%, compared to the same period in 2018.

~~Fluid & Metering Technologies Segment~~

(In thousands) Nine Months Ended September 30,
2019 2018
Net sales $ 729,572
$ 714,346
Operating income 223,493
207,149
Operating margin 30.6 % 29.0 %

Sales of $729.6 million increased $15.2 million, or 2%, in the first nine months of 2019 compared to the same period in 2018. This reflects a 4% increase in organic sales, partially offset by a 2% unfavorable impact from foreign currency translation. In the first nine months of 2019, sales increased 2% both domestically and internationally compared to the same period in 2018. Sales to customers outside the U.S. were approximately 44% of total segment sales in the first nine months of both 2019 and 2018.

Sales within our Pumps platform increased in the first nine months of 2019 compared to the same period in 2018 due to strength in OEM activity and LACT projects. Sales within our Valves platform increased in the first nine months of 2019 compared to the same period in 2018 primarily due to strong demand within the chemical end market. Sales within our Water platform increased slightly in the first nine months of 2019 compared to the same period in 2018 due to increased project demand. Sales within our Energy platform increased slightly in the first nine months of 2019 compared to the same period in 2018 due to new product launches. Sales within our Agriculture platform decreased in the first nine months of 2019 compared to the same period in 2018 due to decreased demand across both OEM and distribution channels in North America and Europe.

Operating income of $223.5 million and operating margin of 30.6% in the first nine months of 2019 were higher than the $207.1 million and 29.0%, respectively, recorded in the first nine months of 2018, primarily due to higher volume and productivity initiatives, partially offset by higher engineering investments.

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~~Health & Science Technologies Segment~~

(In thousands) Nine Months Ended September 30,
2019 2018
Net sales $ 687,153
$ 670,904
Operating income 151,087
153,519
Operating margin 22.0 % 22.9 %

Sales of $687.2 million increased $16.2 million, or 2%, in the first nine months of 2019 compared to the same period in 2018. This reflects a 2% increase in organic sales and a 2% increase from acquisitions (Velcora - July 2019 and FLI - July 2018), partially offset by a 2% unfavorable impact from foreign currency translation. In the first nine months of 2019, sales increased 6% domestically and decreased 1% internationally compared to the same period in 2018. Sales to customers outside the U.S. were approximately 55% of total segment sales in the first nine months of 2019 compared to 57% during the same period in 2018.

Sales within our Gast platform increased in the first nine months of 2019 compared to the same period in 2018 primarily due to new product introductions in the food and beverage market. Sales within our Scientific Fluidics & Optics platform increased in the first nine months of 2019 compared to the same period in 2018 due to new product introductions, increased demand for IVD, biotechnology, DNA sequencing and defense and the FLI acquisition. Sales within our Material Processing Technologies platform decreased in the first nine months of 2019 compared to the same period in 2018 primarily due to timing of large projects in 2019 as compared to 2018. Sales within our Sealing Solutions platform decreased in the first nine months of 2019 compared to the same period in 2018 due to market softness in the semiconductor and automotive end markets, partially offset by the Velcora acquisition. Sales within our Micropump platform decreased in the first nine months of 2019 compared to the same period in 2018 due to industrial distribution softness.

Operating income of $151.1 million and operating margin of 22.0% in the first nine months of 2019 were lower than the $153.5 million and 22.9%, respectively, recorded during the same period in 2018, primarily due to higher restructuring expenses (including the asset impairment) in 2019, the fair value inventory step-up charge related to the Velcora acquisition and higher engineering investments, partially offset by higher volume and lower amortization.

~~Fire & Safety/Diversified Products Segment~~

(In thousands) Nine Months Ended September 30,
2019 2018
Net sales $ 474,745
$ 485,305
Operating income 125,909
130,162
Operating margin 26.5 % 26.8 %

Sales of $474.7 million decreased $10.6 million, or 2%, in the first nine months of 2019 compared to the same period in 2018. This reflects flat organic sales offset by a 2% unfavorable impact from foreign currency translation. In the first nine months of 2019, sales were flat domestically and decreased 4% internationally compared to the same period in 2018. Sales to customers outside the U.S. were approximately 52% of total segment sales in the first nine months of 2019 compared with 53% during the same period in 2018.

Sales within our Dispensing platform decreased in the first nine months of 2019 compared to the same period in 2018 due to large projects in the U.S. from 2018 not repeating in 2019. Sales within our BAND-IT platform increased in the first nine months of 2019 compared to the same period in 2018 due to strength in the transportation market. Sales within our Fire & Safety platform increased in the first nine months of 2019 compared to the same period in 2018 primarily due to elevated OEM backlog and strong demand for rescue tools.

Operating income of $125.9 million and operating margin of 26.5% in the first nine months of 2019 were lower than the $130.2 million and 26.8%, respectively, recorded during the same period in 2018, primarily due to lower volume at Dispensing and higher engineering investments.

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~~Liquidity and Capital Resources~~

~~Operating Activities~~

Cash flows from operating activities for the first nine months of 2019 increased $51.1 million, or 16%, to $376.9 million compared to the first nine months of 2018 due to higher earnings and favorable operating working capital, partially offset by higher prepaid taxes and accrued expenses. At September 30, 2019, working capital was $820.0 million and the Company’s current ratio was 3.2 to 1. At September 30, 2019, the Company’s cash and cash equivalents totaled $516.0 million, of which $373.2 million was held outside of the United States.

~~Investing Activities~~

Cash flows used in investing activities for the first nine months of 2019 increased $57.6 million to $122.6 million compared to the same period in 2018 primarily due to $87.2 million spent on the acquisition of Velcora in 2019 compared to $20.2 million spent on the acquisition of FLI in 2018, partially offset by lower capital expenditures in 2019 and $4.0 million spent on the purchase of intellectual property assets from Phantom in 2018.

Cash flows from operations were more than adequate to fund capital expenditures of $36.8 million and $39.9 million in the first nine months of 2019 and 2018, respectively. Capital expenditures were generally for machinery and equipment that supported growth, improved productivity, tooling, business system technology, replacement of equipment and investments in new facilities. Management believes that the Company has ample capacity in its plants and equipment to meet demand increases for future growth in the intermediate term.

~~Financing Activities~~

Cash flows used in financing activities for the first nine months of 2019 were $192.7 million compared to $134.6 million during the same period in 2018, primarily as a result of higher debt repayments due to the repayment of debt assumed in the Velcora acquisition as well as higher share repurchases and dividends paid in 2019.

On June 13, 2016, the Company completed a private placement of a $100 million aggregate principal amount of 3.20% Senior Notes due June 13, 2023 and a $100 million aggregate principal amount of 3.37% Senior Notes due June 13, 2025 (collectively, the “Notes”) pursuant to a Note Purchase Agreement, dated June 13, 2016 (the “Purchase Agreement”). Each series of Notes bears interest at the stated amount per annum, which is payable semi-annually in arrears on each June 13^th ~~and December 13~~^th. The Notes are unsecured obligations of the Company and rank pari passu in right of payment with all of the Company’s other unsecured, unsubordinated debt. The Company may at any time prepay all, or any portion of the Notes; provided that such portion is greater than 5% of the aggregate principal amount of the Notes then outstanding. In the event of a prepayment, the Company will pay an amount equal to par plus accrued interest plus a make-whole amount. In addition, the Company may repurchase the Notes by making an offer to all holders of the Notes, subject to certain conditions.

On May 31, 2019, the Company entered into a credit agreement (the “Credit Agreement”) along with certain of its subsidiaries, as borrowers (the “Borrowers”), Bank of America, N.A., as administrative agent, swing line lender and an issuer of letters of credit, with other agents party thereto. The Credit Agreement consists of a revolving credit facility (the “Revolving Facility”), which is an $800.0 million unsecured, multi-currency bank credit facility expiring on May 30, 2024. The Credit Agreement replaces the Company’s existing five-year, $700 million credit agreement, dated as of June 23, 2015, which was due to expire in June 2020. At September 30, 2019, there was no balance outstanding under the Revolving Facility and $10.1 million of outstanding letters of credit, resulting in a net available borrowing capacity under the Revolving Facility of $789.9 million.

Borrowings under the Revolving Facility bear interest, at either an alternate base rate or an adjusted LIBOR rate plus, in each case, an applicable margin. Such applicable margin is based on the better of the Company’s senior, unsecured, long-term debt rating or the Company’s applicable leverage ratio. Interest is payable (a) in the case of base rate loans, quarterly, and (b) in the case of LIBOR rate loans, on the last day of the applicable interest period selected, or every three months from the effective date of such interest period for interest periods exceeding three months. The Company may request increases in the lending commitments under the Credit Agreement, but the aggregate lending commitments pursuant to such increases may not exceed $400 million.

The Company has the right, subject to certain conditions set forth in the Credit Agreement, to designate certain foreign subsidiaries of the Company as borrowers under the Credit Agreement. In connection with any such designation, the Company is required to guarantee the obligations of any such subsidiaries under the Credit Agreement.

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There are two key financial covenants that the Company is required to maintain in connection with the Revolving Facility and the Notes, a minimum interest coverage ratio of 3.00 to 1 and a maximum leverage ratio of 3.50 to 1. In the case of the leverage ratio, there is an option to increase the ratio to 4.00 for 12 months in connection with certain acquisitions. At September 30, 2019, the Company was in compliance with both of these financial covenants, as the Company’s interest coverage ratio was 15.96 to 1 and the leverage ratio was 1.24 to 1. There are no financial covenants relating to the 4.5% Senior Notes or 4.2% Senior Notes; however, both are subject to cross-default provisions.

On December 1, 2015, the Company’s Board of Directors approved an increase of $300.0 million in the authorized level for repurchases of common stock. This followed the prior Board of Directors approved repurchase authorization of $400.0 million that was announced by the Company on November 6, 2014. Repurchases under the program will be funded with future cash flow generation or borrowings available under the Revolving Facility. During the nine months ended September 30, 2019, the Company repurchased a total of 389 thousand shares at a cost of $54.7 million. During the nine months ended September 30, 2018, the Company repurchased a total of 357 thousand shares at a cost of $51.7 million, of which $1.0 million settled in October 2018. As of September 30, 2019, the amount of share repurchase authorization remaining is $322.3 million.

The Company believes current cash, cash from operations and cash available under the Revolving Facility will be sufficient to meet its operating cash requirements, planned capital expenditures, interest and principal payments on all borrowings, pension and postretirement funding requirements, authorized share repurchases and annual dividend payments to holders of the Company’s common stock for the remainder of 2019. Additionally, in the event that suitable businesses are available for acquisition upon acceptable terms, the Company may obtain all or a portion of the financing for these acquisitions through the incurrence of additional borrowings.

~~Non-GAAP Disclosures~~

Set forth below are reconciliations of Adjusted gross profit, Adjusted operating income, Adjusted net income, Adjusted EPS, EBITDA and Adjusted EBITDA to the comparable measures of gross profit, operating income and net income, as determined in accordance with 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 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.

This report references organic sales, a non-GAAP measure, that refers to sales from continuing operations calculated according to U.S. GAAP but excludes (1) the impact of foreign currency translation and (2) sales from acquired or divested businesses during the first twelve months of ownership or divestiture. The portion of sales attributable to foreign currency translation is calculated as the difference between (a) the period-to-period change in organic sales and (b) the period-to-period change in organic sales after applying prior period foreign exchange rates to the current year period. 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. The Company excludes the effect of foreign currency translation from organic sales because foreign currency translation is not under management’s control, is subject to volatility and can obscure underlying business trends. The Company excludes the effect of acquisitions and divestitures because they can obscure underlying business trends and make comparisons of ~~long term~~long-term performance difficult due to the varying nature, size and number of transactions from period to period and between the Company and its peers.

EBITDA, a non-GAAP measure, 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 11 in the Notes to Condensed Consolidated Financial Statements in Part I, Item 1, “Financial Statements.”

Management uses Adjusted gross profit, Adjusted operating income, Adjusted net income, Adjusted EBITDA and Adjusted EPS as metrics by which to measure performance of the Company since they exclude items that are not reflective of ongoing operations, such as restructuring expenses, a fair value inventory step-up charge and a loss on early debt redemption. Management also uses free cash flow as a measure of operating performance because it provides management a measurement

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of cash generated from operations that is available for mandatory payment obligations and investment opportunities. Each of Adjusted gross profit, Adjusted operating income, Adjusted net income, Adjusted EBITDA, Adjusted EPS and free cash flow are non-GAAP measures and have been reconciled to their most directly comparable GAAP measures in this Item 2 under the heading “Non-GAAP Disclosures.”

Some of our key financial results for the three months ended September 30, 2020 when compared to the same period in the prior year are as follows:

•Sales of $581.1 million decreased 7%; organic sales (which excludes acquisitions and foreign currency translation) were down 12%.

•Operating income of $131.2 million decreased 7%. Adjusted for $2.9 million of restructuring expenses, adjusted operating income decreased 15% to $134.1 million.

•Net income of $103.8 million decreased 1%. Adjusted for $2.2 million of restructuring expenses, net of related tax benefit, adjusted net income decreased 9% to $106.1 million.

•EBITDA of $153.3 million was 26% of sales and covered interest expense by over 14 times. Adjusted EBITDA of $156.2 million was 27% of sales and covered interest expense by almost 15 times.

•Diluted EPS of $1.37 was flat. Adjusted EPS of $1.40 decreased 12 cents, or 8%.

Some of our key financial results for the nine months ended September 30, 2020 when compared to the same period in the prior year are as follows:

•Sales of $1,736.8 million decreased 8%; organic sales (which excludes acquisitions and foreign currency translation) were down 11%.

•Operating income of $381.7 million decreased 14%. Adjusted for a $4.1 million fair value inventory step-up charge and $6.8 million of restructuring expenses, adjusted operating income decreased 15% to $392.6 million.

•Net income of $276.7 million decreased 16%. Adjusted for the $3.2 million fair value inventory step-up charge, $5.2 million of restructuring expenses and a $6.5 million loss on early debt redemption, all net of related tax benefits, adjusted net income decreased 15% to $291.6 million.

•EBITDA of $436.4 million was 25% of sales and covered interest expense by almost 13 times. Adjusted EBITDA of $455.7 million was 26% of sales and covered interest expense by over 13 times.

•Diluted EPS of $3.64 decreased 66 cents, or 15%. Adjusted EPS of $3.84 decreased 63 cents, or 14%.

Results of Operations

The following is a discussion and analysis of our results of operations for the three and nine months ended September 30, 2020 and 2019. Segment operating income and EBITDA exclude unallocated corporate operating expenses of $14.2 million and $17.9 million for the three months ended September 30, 2020 and 2019, respectively, and $48.9 million and $55.7 million for the nine months ended September 30, 2020 and 2019, respectively.

The Company has adapted to help in the fight against COVID-19 with several of our businesses pivoting to support many products that are being used in the fight against COVID-19. We have placed safety atop our list of priorities, implementing protocols at all of our facilities, including temperature taking, social distancing, enhanced cleaning and face coverings. These measures have enabled successful business continuity, allowing our facilities to remain in operation with only temporary shutdowns at the initial onset of the COVID-19 pandemic. Although we have remained in operation throughout the pandemic, satisfying customer needs in part through our focus on the development and manufacturing of products used in the fight against COVID-19, the pandemic and the enacted containment measures have adversely affected our business and results of operations. The businesses of our customers have been harmed by the economic conditions caused by COVID-19 and as a result, our customers are purchasing less product than they have historically purchased outside of these conditions. Based on currently available information and management's current expectations, the Company anticipates that organic sales will be down approximately 3 to 5 percent in the fourth quarter of 2020 but we believe our strong balance sheet, with over $1.6 billion of liquidity and gross leverage of 1.7 times, will provide IDEX the necessary capital to navigate the COVID-19 pandemic for the foreseeable future. Additionally, IDEX implemented cost reduction actions, including employee reductions, and continues to maintain a tight cost control environment. Despite our expectations and the actions taken to reduce costs, we can provide no assurances that access to our invested cash, cash equivalents or short-term investments will not be impacted by adverse conditions in the financial markets, including, without limitation, as a result of the impact of the COVID-19 pandemic and we

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cannot predict how long the COVID-19 pandemic will continue. Moreover, COVID-19 and related measures to contain its impact have caused material disruptions in both national and global financial markets and economies. The continuing impact of COVID-19 and the enacted containment measures cannot be predicted and may continue to adversely affect, perhaps materially, our business, results of operations, financial condition and liquidity.

Consolidated Results for the Three Months Ended September 30, 2020 Compared with the Same Period in 2019


(In thousands)	Three Months Ended September 30,
	2020			2019
Net sales	$	581,113		$	624,246
Operating income	131,213			141,765
Operating margin	22.6		%	22.7		%

Sales in the third quarter of 2020 were $581.1 million, which was a 7% decrease compared to the same period in 2019. This reflects a 12% decrease in organic sales, partially offset by a 1% favorable impact from foreign currency translation and a 4% increase from acquisitions (Flow MD - February 2020 and Velcora - July 2019). Sales to customers outside the U.S. represented approximately 51% of total sales in the third quarter of 2020 compared to 50% during the same period in 2019.

Gross profit of $251.5 million in the third quarter of 2020 decreased $30.5 million, or 11%, compared to the same period in 2019, and gross margin of 43.3% in the third quarter of 2020 decreased 190 basis points from 45.2% during the same period in 2019 as a result of lower volume and business mix, partially offset by price.

Selling, general and administrative expenses decreased to $117.4 million in the third quarter of 2020 from $128.3 million during the same period in 2019. The decrease is primarily due to restructuring savings, discretionary cost controls and lower variable costs. Corporate costs of $14.1 million in the third quarter of 2020 decreased from $17.2 million during the same period in 2019 primarily as a result of tightly controlling discretionary spending in the current year, restructuring savings and lower variable costs. As a percentage of sales, selling, general and administrative expenses were 20.2% for the third quarter of 2020, down 40 basis points compared to 20.6% during the same period in 2019.

The Company incurred $2.9 million of restructuring expenses in the third quarter of 2020 compared with $12.0 million during the same period in 2019. The restructuring expenses in the third quarter of 2020 primarily related to severance benefits for cost reduction actions primarily consisting of employee reductions due to lower demand as a result of the COVID-19 pandemic. The restructuring expenses in the third quarter of 2019 included severance benefits of $1.9 million and exit costs of $0.4 million as well as an asset impairment charge of $9.7 million. In the second quarter of 2019, the Company began to evaluate strategic alternatives for one of its businesses in the HST segment. Prior to making a final decision on the options that were presented for this business, the business was informed in the third quarter of 2019 of the loss of its largest customer. As a result, the Company accelerated its restructuring activities for this business and a decision was made to wind down the business over time, requiring the asset impairment charge.

Operating income of $131.2 million and operating margin of 22.6% in the third quarter of 2020 were down from $141.8 million and 22.7%, respectively, during the same period in 2019. The decreases in operating income and operating margin were driven by lower volume and business mix, partially offset by price, restructuring savings, tightly controlling discretionary spending in the current year and the asset impairment and fair value inventory step-up charges that occurred in the third quarter of 2019.

Other (income) expense - net increased to $0.7 million of income in the third quarter of 2020 compared to $1.2 million of expense during the same period in 2019, primarily due to a $0.7 million loss on early retirement of Velcora debt assumed at acquisition in the third quarter of 2019 that did not reoccur in 2020, $0.5 million of higher gains on pension-related investments, $0.5 million of lower foreign currency transaction losses in 2020 compared to the same period in 2019 and $0.3 million of lower pension expense in 2020.

Interest expense of $10.6 million in the third quarter of 2020 was lower than the $11.3 million in the same period of 2019 due to lower interest expense on the new 3.0% Senior Notes issued during the second quarter of 2020.

The provision for income taxes decreased to $17.4 million for the third quarter of 2020 compared to $24.0 million during the same period in 2019. The effective tax rate decreased to 14.4% for the third quarter of 2020 compared to 18.6% during the

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same period in 2019 primarily due to benefits associated with the finalization of the Global Intangible Low-Tax Income (“GILTI”) regulations in the third quarter of 2020.

Net income in the third quarter of 2020 of $103.8 million decreased from $105.2 million during the same period in 2019. Diluted earnings per share in the third quarter of 2020 of $1.37 was flat compared to the same period in 2019.

For the three months ended September 30, 2020, Fluid & Metering Technologies contributed 38% of sales, 40% of operating income and 40% of EBITDA; Health & Science Technologies contributed 38% of sales, 34% of operating income and 36% of EBITDA; and Fire & Safety/Diversified Products contributed 24% of sales, 26% of operating income and 24% of EBITDA. These percentages are calculated on the basis of total segment (not total Company) sales, operating income and EBITDA.

Fluid & Metering Technologies Segment


(In thousands)	Three Months Ended September 30,
	2020			2019
Net sales	$	220,747		$	240,861
Operating income	58,402			77,481
Operating margin	26.5		%	32.2		%

Sales of $220.7 million decreased $20.1 million, or 8%, in the third quarter of 2020 compared to the same period in 2019. This reflects a 17% decrease in organic sales, partially offset by a 1% favorable impact from foreign currency translation and an 8% percent increase from acquisitions (Flow MD - February 2020). In the third quarter of 2020, sales decreased 9% domestically and 8% internationally compared to the same period in 2019. Sales to customers outside the U.S. were approximately 45% of total segment sales in the third quarters of both 2020 and 2019.

Sales within our Pumps platform decreased in the third quarter of 2020 compared to the same period in 2019 due to continued market declines in industrial and oil and gas markets, compounded by the continued impact of the COVID-19 pandemic driving reduced capital spending. Sales within our Valves platform decreased in the third quarter of 2020 compared to the same period in 2019 due to the softening global industrial landscape and lower energy prices driving decreases in capital spending. Sales within our Agriculture platform decreased in the third quarter of 2020 compared to the same period in 2019 due to timing of pre-season programs and decreased demand across both the agricultural and industrial original equipment manufacturer (“OEM”) markets. Sales within our Water platform decreased in the third quarter of 2020 compared to the same period in 2019 primarily due to project delays from the impact of COVID-19 and market softness. Sales within our Energy platform increased in the third quarter of 2020 compared to the same period in 2019 due to the acquisition of Flow MD, partially offset by declining capital spending in the oil and gas markets.

Operating income of $58.4 million and operating margin of 26.5% in the third quarter of 2020 were lower than $77.5 million and 32.2%, respectively, recorded during the same period in 2019, primarily due to lower volume and higher restructuring expenses, partially offset by price, restructuring savings and tightly controlling discretionary spending in the current year.

Health & Science Technologies Segment


(In thousands)	Three Months Ended September 30,
	2020			2019
Net sales	$	220,378		$	229,610
Operating income	49,912			40,170
Operating margin	22.6		%	17.5		%

Sales of $220.4 million decreased $9.2 million, or 4%, in the third quarter of 2020 compared to the same period in 2019. This reflects a 6% decrease in organic sales, partially offset by a 1% favorable impact from foreign currency translation and a 1% increase from acquisitions (Velcora - July 2019). In the third quarter of 2020, sales decreased 5% domestically and 3% internationally compared to the same period in 2019. Sales to customers outside the U.S. were approximately 55% of total segment sales in both the third quarters of 2020 and 2019.

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Sales within our Micropump platform decreased in the third quarter of 2020 compared to the same period in 2019 due to lower demand from customers in the inkjet printing market. Sales within our Scientific Fluidics & Optics platform decreased in the third quarter of 2020 compared to the same period in 2019 due to the impact of the COVID-19 pandemic which limited or delayed investments in Analytical Instrumentation due to lab closures and IVD/Bio due to lower demand for non-COVID applications, partially offset by increased demand for microfluidics and optical solutions supporting COVID-19 testing applications. Sales within our Gast platform decreased in the third quarter of 2020 compared to the same period in 2019 primarily due to the non-repeat of a large customer project and a slowdown across various industrial end markets, partially offset by new initiatives in response to the COVID-19 pandemic. Sales within our Sealing Solutions platform decreased in the third quarter of 2020 compared to the same period in 2019 primarily due to disruption in the automotive and oil and gas markets, partially offset by the Velcora acquisition and the recovery in the semiconductor market. Sales within our Material Processing Technologies platform increased in the third quarter of 2020 compared to the same period in 2019 primarily due to strong volumes in the food and pharmaceutical industries.

Operating income of $49.9 million and operating margin of 22.6% in the third quarter of 2020 were higher than $40.2 million and 17.5%, respectively, recorded during the same period in 2019, primarily due to the asset impairment and fair value inventory-step up charges that occurred in the prior year period, price, restructuring savings and tightly controlling discretionary spending in the current year, partially offset by lower volume and the impact on margins from the Velcora acquisition.

Fire & Safety/Diversified Products Segment


(In thousands)	Three Months Ended September 30,
	2020			2019
Net sales	$	140,896		$	154,543
Operating income	37,103			41,967
Operating margin	26.3		%	27.2		%

Sales of $140.9 million decreased $13.6 million, or 9%, in the third quarter of 2020 compared to the same period in 2019. This reflects a 10% decrease in organic sales, partially offset by a 1% favorable impact from foreign currency translation. In the third quarter of 2020, sales decreased 12% domestically and 6% internationally compared to the same period in 2019. Sales to customers outside the U.S. were approximately 54% of total segment sales in the third quarter of 2020 compared to 52% during the same period in 2019.

Sales within our Dispensing platform decreased in the third quarter of 2020 compared to the same period in 2019 primarily due to the non-repeat of large projects in North America. Sales within our Band-It platform decreased in the third quarter of 2020 compared to the same period in 2019 due to continued softness in the industrial and transportation markets as a result of the COVID-19 pandemic and lower capital spending in the energy markets. Sales within our Fire & Safety platform decreased in the third quarter of 2020 compared to the same period in 2019 due to timing of large projects and market softness globally for the Fire business.

Operating income of $37.1 million and operating margin of 26.3% in the third quarter of 2020 were lower than $42.0 million and 27.2%, respectively, during the same period in 2019. Operating income and operating margin decreased compared to the prior period as a result of lower volume and higher restructuring expenses, partially offset by price, restructuring savings and tightly controlling discretionary spending in the current year.

Consolidated Results for the Nine Months EndedSeptember 30, 2020 Compared with the Same Period in 2019


(In thousands)	Nine Months Ended September 30,
	2020			2019
Net sales	$	1,736,824		$	1,888,576
Operating income	381,748			444,830
Operating margin	22.0		%	23.6		%

Sales in the first nine months of 2020 were $1,736.8 million, which was an 8% decrease compared to the same period in 2019. This reflects an 11% decrease in organic sales, partially offset by a 3% increase from acquisitions (Flow MD - February 2020 and Velcora - July 2019). Sales to customers outside the U.S. represented approximately 50% of total sales in the first nine months of 2020 and 2019.

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Gross profit of $758.3 million in the first nine months of 2020 decreased $99.9 million, or 12%, compared to the same period in 2019 and gross margin of 43.7% in the first nine months of 2020 decreased 170 basis points from 45.4% during the same period in 2019. Both gross profit and gross margin decreased compared to the prior year period primarily due to lower volume and business mix.

Selling, general and administrative expenses decreased to $369.8 million in the first nine months of 2020 from $399.2 million during the same period in 2019, primarily due to restructuring savings and lower variable costs. Corporate costs decreased to $48.6 million in the first nine months of 2020 compared to $55.0 million during the same period in 2019 primarily due to tightly controlling discretionary spending in the current year, restructuring savings and lower variable costs. As a percentage of sales, selling, general and administrative expenses were 21.3% for the first nine months of 2020, up 20 basis points compared to 21.1% during the same period in 2019.

The Company incurred $6.8 million of restructuring expenses in the first nine months of 2020 compared with $14.1 million during the same period in 2019. The restructuring expenses in the first nine months of 2020 primarily related to severance benefits for cost reduction actions primarily consisting of employee reductions due to lower demand as a result of the COVID-19 pandemic. The restructuring expenses in the third quarter of 2019 included severance benefits of $3.8 million and exit costs of $0.6 million as well as an asset impairment charge of $9.7 million. In the second quarter of 2019, the Company began to evaluate strategic alternatives for one of its businesses in the HST segment. Prior to making a final decision on the options that were presented for this business, the business was informed in the third quarter of 2019 of the loss of its largest customer. As a result, the Company accelerated its restructuring activities for this business and a decision was made to wind down the business over time, requiring the asset impairment charge.

Operating income of $381.7 million and operating margin of 22.0% in the first nine months of 2020 were down from the $444.8 million and 23.6%, respectively, recorded during the same period in 2019. The decreases in operating income and operating margin are primarily due to lower volume, the dilutive impact on margins from the Velcora acquisition and the fair value inventory step-up charge, partially offset by price, lower restructuring expenses in 2020 and an overall reduction in variable costs.

Other (income) expense - net was $7.3 million of expense in the first nine months of 2020 compared to $0.7 million of expense during the same period in 2019, primarily due to an $8.4 million loss on early debt redemption, partially offset by $1.7 million of lower pension expense in 2020.

Interest expense of $34.0 million in the first nine months of 2020 was higher than the $33.3 million in the same period of 2019 due to borrowings under the Revolving Facility in 2020, partially offset by lower interest expense on the new 3.0% Senior Notes issued during the second quarter of 2020.

The provision for income taxes decreased to $63.8 million in the first nine months of 2020 compared to $82.2 million during the same period in 2019. The effective tax rate decreased to 18.7% in the first nine months of 2020 compared to 20.0% during the same period in 2019 primarily due to benefits associated with the finalization of the GILTI regulations in the third quarter of 2020.

Net income of $276.7 million in the first nine months of 2020 decreased from $328.7 million during the same period in 2019. Diluted earnings per share of $3.64 in the first nine months of 2020 decreased $0.66, or 15%, compared to the same period in 2019.

For the nine months ended September 30, 2020, Fluid & Metering Technologies contributed 38% of sales, 41% of operating income and 40% of EBITDA; Health & Science Technologies contributed 38% of sales, 35% of operating income and 37% of EBITDA; and Fire & Safety/Diversified Products contributed 24% of sales, 24% of operating income and 23% of EBITDA. These percentages are calculated on the basis of total segment (not total Company) sales, operating income and EBITDA.

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Fluid & Metering Technologies Segment


(In thousands)	Nine Months Ended September 30,
	2020			2019
Net sales	$	666,720		$	729,572
Operating income	176,111			223,493
Operating margin	26.4		%	30.6		%

Sales of $666.7 million decreased $62.9 million, or 9%, in the first nine months of 2020 compared to the same period in 2019. This reflects a 15% decrease in organic sales, partially offset by a 6% increase from acquisitions (Flow MD - February 2020). In the first nine months of 2020, sales decreased 7% domestically and 11% internationally compared to the same period in 2019. Sales to customers outside the U.S. were approximately 42% of total segment sales in the first nine months of 2020 compared to 44% during the same period in 2019.

Sales within our Pumps platform decreased in the first nine months of 2020 compared to the same period in 2019 due to continued market declines in industrial and oil and gas markets, compounded by the continued impact of the COVID-19 pandemic, driving declines across most end markets and geographies. Sales within our Valves platform decreased in the first nine months of 2020 compared to the same period in 2019 due to the softening global industrial landscape and lower energy prices driving decreases in capital spending. Sales within our Water platform decreased in the first nine months of 2020 compared to the same period in 2019 primarily due to lower project volumes across the U.S. and Asia. Sales within our Agriculture platform decreased in the first nine months of 2020 compared to the same period in 2019 due to decreased demand across both the agricultural and industrial OEM markets. Sales within our Energy platform increased in the first nine months of 2020 compared to the same period in 2019due to the acquisition of Flow MD, partially offset by declining capital spending in the oil and gas markets.

Operating income of $176.1 million and operating margin of 26.4% in the first nine months of 2020 were lower than the $223.5 million and 30.6%, respectively, recorded in the first nine months of 2019, primarily due to lower volume as well as higher restructuring expenses and a fair value inventory step-up ~~charge.~~charge included in the current year period, partially offset by the impact of the Flow MD acquisition, price, restructuring savings and tightly controlling discretionary spending in the current year.

Health & Science Technologies Segment


(In thousands)	Nine Months Ended September 30,
	2020			2019
Net sales	$	660,105		$	687,153
Operating income	150,562			151,087
Operating margin	22.8		%	22.0		%

Sales of $660.1 million decreased $27.0 million, or 4%, in the first nine months of 2020 compared to the same period in 2019. This reflects a 7% decrease in organic sales, partially offset by a 3% increase from acquisitions (Velcora - July 2019). In the first nine months of 2020, sales decreased 7% domestically and 2% internationally compared to the same period in 2019. Sales to customers outside the U.S. were approximately 56% of total segment sales in the first nine months of 2020 compared to 55% during the same period in 2019.

Sales within our Gast platform decreased in the first nine months of 2020 compared to the same period in 2019 primarily due to the non-repeat of a large customer project and a slowdown across various industrial end markets, partially offset by new initiatives in response to the COVID-19 pandemic. Sales within our Micropump platform decreased in the first nine months of 2020 compared to the same period in 2019 due to weakness in core printing and industrial distribution. Sales within our Scientific Fluidics & Optics platform decreased in the first nine months of 2020 compared to the same period in 2019 due to the impact of the COVID-19 pandemic, which limited or delayed investments in Analytical Instrumentation and IVD/Bio due to lab closures and lower demand for non-COVID applications, partially offset by increased demand for microfluidics and optical solutions supporting COVID-19 testing applications. Sales within our Sealing Solutions platform increased in the first nine months of 2020 compared to the same period in 2019 primarily due to the Velcora acquisition and the recovery in the semiconductor market, partially offset by disruption in the automotive and oil and gas markets. Sales within our Material Processing Technologies platform increased in the first nine months of 2020 compared to the same period in 2019 primarily due

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to strong volumes in the food and pharmaceutical industry in response to the COVID-19 pandemic, partially offset by the non-repeat of large projects from the prior year.

Operating income of $150.6 million in the first nine months of 2020 was lower than the $151.1 million recorded during the same period in 2019 while operating margin of 22.8% in the first nine months of 2020 was higher than the 22.0% recorded during the same period in 2019. The decrease in operating income was primarily due to lower volume. The increase in operating margin was due to restructuring savings, tightly controlling discretionary spending in the current year and lower restructuring expenses in the current period, partially offset by the dilutive impact on margins from the Velcora acquisition.

Fire & Safety/Diversified Products Segment


(In thousands)	Nine Months Ended September 30,
	2020			2019
Net sales	$	412,296		$	474,745
Operating income	103,977			125,909
Operating margin	25.2		%	26.5		%

Sales of $412.3 million decreased $62.4 million, or 13%, in the first nine months of 2020 compared to the same period in 2019. This reflects a 13% decrease in organic sales. In the first nine months of 2020, sales decreased 11% domestically and 16% internationally compared to the same period in 2019. Sales to customers outside the U.S. were approximately 51% of total segment sales in the first nine months of 2020 compared with 52% during the same period in 2019.

Sales within our Dispensing platform decreased in the first nine months of 2020 compared to the same period in 2019 primarily due to lower capital spending by customers as a result of the COVID-19 pandemic. Sales within our Band-It platform decreased in the first nine months of 2020 compared to the same period in 2019 due to customer shutdowns in the transportation market as a result of the COVID-19 pandemic and lower capital spending in the energy markets. Sales within our Fire & Safety platform decreased in the first nine months of 2020 compared to the same period in 2019 due to fewer large projects and market softness globally for the Fire and Rescue businesses.

Operating income of $104.0 million and operating margin of 25.2% in the first nine months of 2020 were lower than the $125.9 million and 26.5%, respectively, recorded during the same period in 2019, primarily due to lower volume and higher restructuring expenses, partially offset by price, restructuring savings and tightly controlling discretionary spending in the current year.

Liquidity and Capital Resources

Operating Activities

Cash flows from operating activities for the first nine months of 2020 increased $31.0 million, or 8%, to $407.9 million compared to the first nine months of 2019 due to favorable working capital, partially offset by lower earnings. At September 30, 2020, working capital was $1,111.1 million and the Company’s current ratio was 3.7 to 1. At September 30, 2020, the Company’s cash and cash equivalents totaled $877.8 million, of which $483.3 million was held outside of the United States. The COVID-19 pandemic has impacted and may continue to impact the Company’s operating cash flows through direct and secondary effects on the Company’s operations, customers and supply chain. Although the Company has been able to operate through the COVID-19 pandemic with only temporary shutdowns at the onset of the pandemic, any future disruptions due to operational shutdowns may impact the Company’s ability to operate as well as generate operating cash flow. Based on currently available information and management’s current expectations, the Company anticipates that it has sufficient cash on hand and sufficient access to capital to continue to fund operations for the foreseeable future. However, the continuing impact of COVID-19 and its associated containment measures cannot be predicted with certainty and may increase our borrowing costs and other costs of capital and otherwise adversely affect our business, results of operations, financial condition and liquidity, and we cannot assure that we will have access to external financing at times and on terms we consider acceptable, or at all, or that we will not experience other liquidity issues going forward.

Investing Activities

Cash flows used in investing activities for the first nine months of 2020 increased by $33.0 million to $155.6 million compared to the same period in 2019, primarily due to the acquisition of Flow MD and higher capital expenditures in 2020.

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Cash flows from operations were more than adequate to fund capital expenditures of $39.4 million and $36.8 million in the first nine months of 2020 and 2019, respectively. The COVID-19 pandemic has impacted and may continue to impact the Company’s operating cash flows, which may lead to reductions in capital expenditures. The Company believes it has sufficient operating cash flow to continue to meet current obligations and invest in planned capital expenditures. Capital expenditures are generally expenditures for machinery and equipment that support growth, improved productivity, tooling, business system technology, replacement of equipment and investments in new facilities. Management believes that the Company has ample capacity in its plants and equipment to meet demand increases for future growth in the intermediate term.

Financing Activities

Cash flows used in financing activities for the first nine months of 2020 were $20.8 million compared to $192.7 million used in financing activities during the same period in 2019, primarily as a result of proceeds from the issuance of the 3.0% Senior Notes and the repayment of debt assumed in the Velcora acquisition in the third quarter of 2019, partially offset by the early payment of the 4.5% Senior Notes as well as higher share repurchases and dividends paid in 2020.

On April 29, 2020, the Company completed a public offering of $500.0 million in aggregate principal amount of its 3.0% Senior Notes due 2030 (the “3.0% Senior Notes”). The net proceeds from the offering were approximately $494.4 million, after deducting the issuance discount of $0.9 million, the underwriting commission of $3.3 million and offering expenses of $1.4 million. The net proceeds were used to redeem and repay the $300.0 million aggregate principal amount outstanding of its 4.5% Senior Notes due December 15, 2020 and the related accrued interest and make-whole premium, with the balance used for general corporate purposes. The 3.0% Senior Notes bear interest at a rate of 3.0% per annum, which is payable semi-annually in arrears on May 1 and November 1 of each year. The 3.0% Senior Notes mature on May 1, 2030.

On April 27, 2020, the Company provided notice of its election to redeem early, on May 27, 2020, the $300.0 million aggregate principal amount outstanding of its 4.5% Senior Notes at a redemption price of $300.0 million plus a make-whole redemption premium of $6.8 million and accrued and unpaid interest of $6.1 million using proceeds from the Company’s 3.0% Senior Notes. In addition, the Company recognized the remaining $1.4 million of the pre-tax amount included in Accumulated other comprehensive income (loss) in shareholders’ equity related to the interest rate exchange agreement associated with the 4.5% Senior Notes as well as the remaining $0.1 million of deferred issuance costs and $0.1 million of the debt issuance discount associated with the 4.5% Senior Notes for a total loss on early debt redemption of $8.4 million which was recorded within Other (income) expense - net in the Condensed Consolidated Statements of Operations.

On May 31, 2019, the Company entered into a credit agreement (the “Credit Agreement”) along with certain of its subsidiaries, as borrowers (the “Borrowers”), Bank of America, N.A., as administrative agent, swing line lender and an issuer of letters of credit, with other agents party thereto. The Credit Agreement consists of a revolving credit facility (the “Revolving Facility”), which is an $800.0 million unsecured, multi-currency bank credit facility maturing on May 31, 2024. The Credit Agreement replaced the Company’s prior five-year, $700 million credit agreement, dated as of June 23, 2015, which was due to expire in June 2020. At September 30, 2020, there was no balance outstanding under the Revolving Facility and $7.0 million of outstanding letters of credit, resulting in a net available borrowing capacity under the Revolving Facility of $793.0 million.

Borrowings under the Credit Agreement bear interest, at either an alternate base rate or adjusted LIBOR plus, in each case, an applicable margin. Such applicable margin is based on the lower of the Company’s senior, unsecured, long-term debt rating or the Company’s applicable leverage ratio and can range from 0.00% to 1.275%. Based on the Company’s leverage ratio at September 30, 2020, the applicable margin was 1.00% resulting in a weighted average interest rate of 1.23% for the nine months ended September 30, 2020. Interest is payable (a) in the case of base rate loans, quarterly, and (b) in the case of LIBOR loans, on the last day of the applicable interest period selected, or every three months from the effective date of such interest period for interest periods exceeding three months. The Company may request increases in the lending commitments under the Credit Agreement, but the aggregate lending commitments pursuant to such increases may not exceed $400 million.

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provided that such portion is greater than 5% of the aggregate principal amount of the Notes then outstanding. In the event of a prepayment, the Company will pay an amount equal to par plus accrued interest plus a make-whole amount. In addition, the Company may repurchase the Notes by making an offer to all holders of the Notes, subject to certain conditions.

On December 9, 2011, the Company completed a public offering of $350.0 million 4.2% senior notes due December 15, 2021 (“4.2% Senior Notes”). The net proceeds from the offering of $346.2 million, after deducting a $0.9 million issuance discount, a $2.3 million underwriting commission and $0.6 million of offering expenses, were used to repay $306.0 million of outstanding bank indebtedness, with the balance used for general corporate purposes. The 4.2% Senior Notes bear interest at a rate of 4.2% per annum, which is payable semi-annually in arrears on each June 15th and December 15th. The Company may redeem all or a portion of the 4.2% Senior Notes at any time prior to maturity at the redemption prices set forth in the Note Indenture governing the 4.2% Senior Notes. The Company may issue additional debt from time to time pursuant to the Indenture. The Indenture and 4.2% Senior Notes contain covenants that limit the Company’s ability to, among other things, incur certain liens securing indebtedness, engage in certain sale-leaseback transactions, and enter into certain consolidations, mergers, conveyances, transfers or leases of all or substantially all of the Company’s assets. The terms of the 4.2% Senior Notes also require the Company to make an offer to repurchase the 4.2% Senior Notes 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.

There are two key financial covenants that the Company is required to maintain in connection with the Revolving Facility and the Notes: a minimum interest coverage ratio of 3.00 to 1 and a maximum leverage ratio of 3.50 to 1. In the case of the leverage ratio, there is an option to increase the ratio to 4.00 for 12 months in connection with certain acquisitions. At September 30, 2020, the Company was in compliance with both of these financial covenants, as the Company’s interest coverage ratio was 14.60 to 1 and the leverage ratio was 1.7 to 1. There are no financial covenants relating to the 3.0% Senior Notes or the 4.2% Senior Notes; however, both are subject to cross-default provisions.

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 authorizations of the Board of Directors of $300.0 million on December 1, 2015 and $400.0 million on November 6, 2014. Repurchases under the program will be funded with future cash flow generation or borrowings available under the Revolving Facility. During the nine months ended September 30, 2020, the Company repurchased a total of 876 thousand shares at a cost of $110.3 million. During the nine months ended September 30, 2019, the Company repurchased a total of 389 thousand shares at a cost of $54.7 million. As of September 30, 2020, the amount of share repurchase authorization remaining is $712.0 million.

Although the COVID-19 pandemic has impacted and may continue to impact the Company’s operating cash flows, based on management’s current expectations and currently available information, the Company believes current cash, cash from operations and cash available under the Revolving Facility will be sufficient to meet its operating cash requirements, planned capital expenditures, interest and principal payments on all borrowings, pension and postretirement funding requirements and quarterly dividend payments to holders of the Company’s common stock for the foreseeable future. Additionally, in the event that suitable businesses are available for acquisition upon acceptable terms, the Company may obtain all or a portion of the financing for these acquisitions through the incurrence of additional borrowings. At September 30, 2020, there was no balance outstanding under the Revolving Facility and $7.0 million of outstanding letters of credit, resulting in a net available borrowing capacity under the Revolving Facility of $793.0 million. The Company believes that additional borrowings through various financing alternatives remain available if required. However, the continuing impact of COVID-19 and its associated containment measures cannot be predicted with certainty and may increase our borrowing costs and other costs of capital and otherwise adversely affect our business, results of operations, financial condition and liquidity, and we cannot assure that we will have access to external financing at times and on terms we consider acceptable, or at all, or that we will not experience other liquidity issues going forward.

Non-GAAP Disclosures

Set forth below are reconciliations of Adjusted gross profit, Adjusted operating income, Adjusted net income, Adjusted EPS, EBITDA and Adjusted EBITDA to the comparable measures of gross profit, operating income, net income and EPS, as determined in accordance with 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.

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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 11 in the Notes to Condensed Consolidated Financial Statements in Part I, Item 1, “Financial Statements.”

This report references organic sales, a non-GAAP measure, that refers to sales from continuing operations calculated according to U.S. GAAP but excludes (1) the impact of foreign currency translation and (2) sales from acquired or divested businesses during the first 12 months of ownership or divestiture. The portion of sales attributable to foreign currency translation is calculated as the difference between (a) the period-to-period change in organic sales and (b) the period-to-period change in organic sales after applying prior period foreign exchange rates to the current year period. Management believes that reporting organic sales provides useful information to investors by helping to identify underlying growth trends in our business and facilitating easier comparisons of our revenue performance with prior and future periods and to our peers. The Company excludes the effect of foreign currency translation from organic sales because foreign currency translation is not under management’s control, is subject to volatility and can obscure underlying business trends. The Company excludes the effect of acquisitions and divestitures because they can obscure underlying business trends and make comparisons of long-term performance difficult due to the varying nature, size and number of transactions from period to period and between the Company and its peers.

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 restructuring expenses, a fair value inventory step-up charge and a loss on early debt redemption. 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.

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In addition to measuring our cash flow generation and usage based upon the operating, investing and financing classifications included in the Condensed Consolidated Statements of Cash Flows, we also measure free cash flow (a non-GAAP measure) which represents net cash provided by operating activities minus capital expenditures. We believe that free cash flow is an important measure of operating performance because it provides management a measurement of cash generated from operations that is available for mandatory payment obligations and investment opportunities, such as funding acquisitions, paying dividends, repaying debt and repurchasing our common stock.



1. Reconciliations of the Change in Net Sales to Organic Net Sales

	Three Months Ended September 30, 2020
	FMT		HST		FSDP		IDEX
Change in net sales	(8)	%	(4)	%	(9)	%	(7)	%
- Impact from acquisitions/divestitures	8	%	1	%	—	%	4	%
- Impact from foreign currency	1	%	1	%	1	%	1	%
Change in organic net sales	(17)	%	(6)	%	(10)	%	(12)	%


1. Reconciliations of the Change in Net Sales to Organic Net Sales

	Three Months Ended September 30, 2019									Nine Months Ended September 30, 2020
	FMT		HST		FSDP		IDEX			FMT		HST		FSDP		IDEX
Change in net sales	1	%	3	%	(5	)%	—	%	Change in net sales	(9)	%	(4)	%	(13)	%	(8)	%
- Impact from acquisitions/divestitures	—	%	3	%	—	%	1	%	- Impact from acquisitions/divestitures	6	%	3	%	—	%	3	%
- Impact from foreign currency	(1	)%	(1	)%	(2	)%	(1	)%	- Impact from foreign currency	—	%	—	%	—	%	—	%
Change in organic net sales	2	%	1	%	(3	)%	—	%	Change in organic net sales	(15)	%	(7)	%	(13)	%	(11)	%

Nine Months Ended September 30, 2019
FMT HST FSDP IDEX
Change in net sales 2 % 2 % (2 )% 1 %
- Impact from acquisitions/divestitures — % 2 % — % 1 %
- Impact from foreign currency (2 )% (2 )% (2 )% (2 )%
Change in organic net sales 4 % 2 % — % 2 %

2. Reconciliations of Reported-to-Adjusted Gross Profit and Margin

(dollars in thousands) Three Months Ended September 30, Nine Months Ended September 30,
2019 2018 2019 2018
Gross profit $ 281,978
$ 280,233
$ 858,149
$ 844,252
+ Fair value inventory step-up charge 3,340
—
3,340
—
Adjusted gross profit $ 285,318
$ 280,233
$ 861,489
$ 844,252

Net Sales $ 624,246
$ 622,888
$ 1,888,576
$ 1,869,572

Gross profit margin 45.2 % 45.0 % 45.4 % 45.2 %
Adjusted gross profit margin 45.7 % 45.0 % 45.6 % 45.2 %

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2. Reconciliations of Reported-to-Adjusted Gross Profit and Margin

(dollars in thousands)	Three Months Ended September 30,						Nine Months Ended September 30,
	2020			2019			2020			2019
Gross profit	$	251,500		$	281,978		$	758,256		$	858,149
+ Fair value inventory step-up charge	—			3,340			4,107			3,340
Adjusted gross profit	$	251,500		$	285,318		$	762,363		$	861,489

Net sales	$	581,113		$	624,246		$	1,736,824		$	1,888,576

Gross profit margin	43.3		%	45.2		%	43.7		%	45.4		%
Adjusted gross profit margin	43.3		%	45.7		%	43.9		%	45.6		%



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

(dollars in thousands)	Three Months Ended September 30, 2020
	FMT			HST			FSDP			Corporate		IDEX
Reported operating income (loss)	$	58,402		$	49,912		$	37,103		$	(14,204)	$	131,213
+ Restructuring expenses	585			978			1,249			105		2,917

+ Fair value inventory step-up charge	—			—			—			—		—
Adjusted operating income (loss)	$	58,987		$	50,890		$	38,352		$	(14,099)	$	134,130

Net sales (eliminations)	$	220,747		$	220,378		$	140,896		$	(908)	$	581,113

Operating margin	26.5		%	22.6		%	26.3		%	n/m		22.6		%
Adjusted operating margin	26.7		%	23.1		%	27.2		%	n/m		23.1		%



	Three Months Ended September 30, 2019
	FMT			HST			FSDP			Corporate		IDEX
Reported operating income (loss)	$	77,481		$	40,170		$	41,967		$	(17,853)	$	141,765
+ Restructuring expenses	—			11,196			104			656		11,956
+ Fair value inventory step-up charge	—			3,340			—			—		3,340
Adjusted operating income (loss)	$	77,481		$	54,706		$	42,071		$	(17,197)	$	157,061

Net sales (eliminations)	$	240,861		$	229,610		$	154,543		$	(768)	$	624,246

Operating margin	32.2		%	17.5		%	27.2		%	n/m		22.7		%
Adjusted operating margin	32.2		%	23.8		%	27.2		%	n/m		25.2		%

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

(dollars in thousands) Three Months Ended September 30, 2019
FMT HST FSDP Corporate IDEX
Reported operating income (loss) $ 77,481
$ 40,170
$ 41,967
$ (17,853 ) $ 141,765
+ Restructuring expenses —
11,196
104
656
11,956
+ Fair value inventory step-up charge —
3,340
—
—
3,340
Adjusted operating income (loss) $ 77,481
$ 54,706
$ 42,071
$ (17,197 ) $ 157,061

Net sales (eliminations) $ 240,861
$ 229,610
$ 154,543
$ (768 ) $ 624,246

Operating margin 32.2 % 17.5 % 27.2 % n/m
22.7 %
Adjusted operating margin 32.2 % 23.8 % 27.2 % n/m
25.2 %

Three Months Ended September 30, 2018
FMT HST FSDP Corporate IDEX
Reported operating income (loss) $ 69,755
$ 49,144
$ 44,726
$ (18,492 ) $ 145,133
+ Restructuring expenses 827
3,116
60
618
4,621
Adjusted operating income (loss) $ 70,582
$ 52,260
$ 44,786
$ (17,874 ) $ 149,754

Net sales (eliminations) $ 239,213
$ 222,426
$ 161,832
$ (583 ) $ 622,888

Operating margin 29.2 % 22.1 % 27.6 % n/m
23.3 %
Adjusted operating margin 29.5 % 23.5 % 27.7 % n/m
24.0 %

Nine Months Ended September 30, 2019
FMT HST FSDP Corporate IDEX
Reported operating income (loss) $ 223,493
$ 151,087
$ 125,909
$ (55,659 ) $ 444,830
+ Restructuring expenses 930
11,526
923
703
14,082
+ Fair value inventory step-up charge —
3,340
—
—
3,340
Adjusted operating income (loss) $ 224,423
$ 165,953
$ 126,832
$ (54,956 ) $ 462,252

Net sales (eliminations) $ 729,572
$ 687,153
$ 474,745
$ (2,894 ) $ 1,888,576

Operating margin 30.6 % 22.0 % 26.5 % n/m
23.6 %
Adjusted operating margin 30.8 % 24.2 % 26.7 % n/m
24.5 %

Nine Months Ended September 30, 2018
FMT HST FSDP Corporate IDEX
Reported operating income (loss) $ 207,149
$ 153,519
$ 130,162
$ (61,183 ) $ 429,647
+ Restructuring expenses 1,313
5,298
427
1,213
8,251
Adjusted operating income (loss) $ 208,462
$ 158,817
$ 130,589
$ (59,970 ) $ 437,898

Net sales (eliminations) $ 714,346
$ 670,904
$ 485,305
$ (983 ) $ 1,869,572

Operating margin 29.0 % 22.9 % 26.8 % n/m
23.0 %
Adjusted operating margin 29.2 % 23.7 % 26.9 % n/m
23.4 %

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	Nine Months Ended September 30, 2020
	FMT			HST			FSDP			Corporate		IDEX
Reported operating income (loss)	$	176,111		$	150,562		$	103,977		$	(48,902)	$	381,748
+ Restructuring expenses	2,433			2,162			1,890			273		6,758

+ Fair value inventory step-up charge	4,107			—			—			—		4,107
Adjusted operating income (loss)	$	182,651		$	152,724		$	105,867		$	(48,629)	$	392,613

Net sales (eliminations)	$	666,720		$	660,105		$	412,296		$	(2,297)	$	1,736,824

Operating margin	26.4		%	22.8		%	25.2		%	n/m		22.0		%
Adjusted operating margin	27.4		%	23.1		%	25.7		%	n/m		22.6		%



	Nine Months Ended September 30, 2019
	FMT			HST			FSDP			Corporate		IDEX
Reported operating income (loss)	$	223,493		$	151,087		$	125,909		$	(55,659)	$	444,830
+ Restructuring expenses	930			11,526			923			703		14,082
+ Fair value inventory step-up charge	—			3,340			—			—		3,340
Adjusted operating income (loss)	$	224,423		$	165,953		$	126,832		$	(54,956)	$	462,252

Net sales (eliminations)	$	729,572		$	687,153		$	474,745		$	(2,894)	$	1,888,576

Operating margin	30.6		%	22.0		%	26.5		%	n/m		23.6		%
Adjusted operating margin	30.8		%	24.2		%	26.7		%	n/m		24.5		%



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

(in thousands, except EPS)	Three Months Ended September 30,				Nine Months Ended September 30,
	2020		2019		2020		2019
Reported net income	$	103,848	$	105,194	$	276,710	$	328,671
+ Restructuring expenses	2,917		11,956		6,758		14,082
+ Tax impact on restructuring expenses	(703)		(2,776)		(1,540)		(3,336)
+ Fair value inventory step-up charge	—		3,340		4,107		3,340
+ Tax impact on fair value inventory step-up charge	—		(735)		(932)		(735)
+ Loss on early debt redemption	—		—		8,421		—
+ Tax impact on loss on early debt redemption	—		—		(1,912)		—
Adjusted net income	$	106,062	$	116,979	$	291,612	$	342,022

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

(in thousands, except EPS) Three Months Ended September 30, Nine Months Ended September 30,
2019 2018 2019 2018
Reported net income $ 105,194
$ 106,352
$ 328,671
$ 312,436
+ Restructuring expenses 11,956
4,621
14,082
8,251
+ Tax impact on restructuring expenses (2,776 ) (1,130 ) (3,336 ) (2,003 )
+ Fair value inventory step-up charge 3,340
—
3,340
—
+ Tax impact on fair value inventory step-up charge (735 ) —
(735 ) —
Adjusted net income $ 116,979
$ 109,843
$ 342,022
$ 318,684

Three Months Ended September 30, Nine Months Ended September 30,
2019 2018 2019 2018
Reported EPS $ 1.37
$ 1.37
$ 4.30
$ 4.02
+ Restructuring expenses 0.16
0.06
0.18
0.11
+ Tax impact on restructuring expenses (0.04 ) (0.02 ) (0.04 ) (0.03 )
+ Fair value inventory step-up charge 0.04
—
0.04
—
+ Tax impact on fair value inventory step-up charge (0.01 ) —
(0.01 ) —
Adjusted EPS $ 1.52
$ 1.41
$ 4.47
$ 4.10

Diluted weighted average shares 76,577
77,709
76,415
77,717

5. Reconciliations of EBITDA to Net Income

(dollars in thousands) Three Months Ended September 30, 2019
FMT HST FSDP Corporate IDEX
Operating income (loss) $ 77,481
$ 40,170
$ 41,967
$ (17,853 ) $ 141,765
- Other (income) expense - net 295
1,272
(92 ) (256 ) 1,219
+ Depreciation and amortization 5,507
10,296
3,566
154
19,523
EBITDA 82,693
49,194
45,625
(17,443 ) 160,069
- Interest expense 11,330
- Provision for income taxes 24,022
- Depreciation and amortization 19,523
Net income

$ 105,194

Net sales (eliminations) $ 240,861
$ 229,610
$ 154,543
$ (768 ) $ 624,246
Operating margin 32.2 % 17.5 % 27.2 % n/m
22.7 %
EBITDA margin 34.3 % 21.4 % 29.5 % n/m
25.6 %

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	Three Months Ended September 30,				Nine Months Ended September 30,
	2020		2019		2020			2019
Reported EPS	$	1.37	$	1.37	$	3.64		$	4.30
+ Restructuring expenses	0.04		0.16		0.09			0.18
+ Tax impact on restructuring expenses	(0.01)		(0.04)		(0.02)			(0.04)
+ Fair value inventory step-up charge	—		0.04		0.05			0.04
+ Tax impact on fair value inventory step-up charge	—		(0.01)		(0.01)			(0.01)
+ Loss on early debt redemption	—		—		0.11			—
+ Tax impact on loss on early debt redemption	—		—		(0.02)			—
Adjusted EPS	$	1.40	$	1.52	$	3.84	3.84	$	4.47

Diluted weighted average shares	75,960		76,577		76,119			76,415



5. Reconciliations of EBITDA to Net Income

(dollars in thousands)	Three Months Ended September 30, 2020
	FMT			HST			FSDP			Corporate		IDEX
Operating income (loss)	$	58,402		$	49,912		$	37,103		$	(14,204)	$	131,213
- Other (income) expense - net	(719)			(32)			340			(293)		(704)
+ Depreciation and amortization	7,163			10,230			3,854			104		21,351
EBITDA	66,284			60,174			40,617			(13,807)		153,268
- Interest expense												10,642
- Provision for income taxes												17,427
- Depreciation and amortization												21,351
Net income												$	103,848

Net sales (eliminations)	$	220,747		$	220,378		$	140,896		$	(908)	$	581,113
Operating margin	26.5		%	22.6		%	26.3		%	n/m		22.6		%
EBITDA margin	30.0		%	27.3		%	28.8		%	n/m		26.4		%



	Three Months Ended September 30, 2019
	FMT			HST			FSDP			Corporate		IDEX
Operating income (loss)	$	77,481		$	40,170		$	41,967		$	(17,853)	$	141,765
- Other (income) expense - net	295			1,272			(92)			(256)		1,219
+ Depreciation and amortization	5,507			10,296			3,566			154		19,523
EBITDA	82,693			49,194			45,625			(17,443)		160,069
- Interest expense												11,330
- Provision for income taxes												24,022
- Depreciation and amortization												19,523
Net income												$	105,194

Net sales (eliminations)	$	240,861		$	229,610		$	154,543		$	(768)	$	624,246
Operating margin	32.2		%	17.5		%	27.2		%	n/m		22.7		%
EBITDA margin	34.3		%	21.4		%	29.5		%	n/m		25.6		%

Three Months Ended September 30, 2018
FMT HST FSDP Corporate IDEX
Operating income (loss) $ 69,755
$ 49,144
$ 44,726
$ (18,492 ) $ 145,133
- Other (income) expense - net 411
780
342
(599 ) 934
+ Depreciation and amortization 5,500
9,381
3,541
184
18,606
EBITDA 74,844
57,745
47,925
(17,709 ) 162,805
- Interest expense 10,958
- Provision for income taxes 26,889
- Depreciation and amortization 18,606
Net income $ 106,352

Net sales (eliminations) $ 239,213
$ 222,426
$ 161,832
$ (583 ) $ 622,888
Operating margin 29.2 % 22.1 % 27.6 % n/m
23.3 %
EBITDA margin 31.3 % 26.0 % 29.6 % n/m
26.1 %

Nine Months Ended September 30, 2019
FMT HST FSDP Corporate IDEX
Operating income (loss) $ 223,493
$ 151,087
$ 125,909
$ (55,659 ) $ 444,830
- Other (income) expense - net 612
1,636
273
(1,820 ) 701
+ Depreciation and amortization 16,653
29,438
10,745
510
57,346
EBITDA 239,534
178,889
136,381
(53,329 ) 501,475
- Interest expense 33,262
- Provision for income taxes 82,196
- Depreciation and amortization 57,346
Net income $ 328,671

Net sales (eliminations) $ 729,572
$ 687,153
$ 474,745
$ (2,894 ) $ 1,888,576
Operating margin 30.6 % 22.0 % 26.5 % n/m
23.6 %
EBITDA margin 32.8 % 26.0 % 28.7 % n/m
26.6 %

Nine Months Ended September 30, 2018
FMT HST FSDP Corporate IDEX
Operating income (loss) $ 207,149
$ 153,519
$ 130,162
$ (61,183 ) $ 429,647
- Other (income) expense - net 1,056
(280 ) (3,324 ) (1,017 ) (3,565 )
+ Depreciation and amortization 16,901
30,860
10,912
557
59,230
EBITDA 222,994
184,659
144,398
(59,609 ) 492,442
- Interest expense 33,098
- Provision for income taxes 87,678
- Depreciation and amortization 59,230
Net income $ 312,436

Net sales (eliminations) $ 714,346
$ 670,904
$ 485,305
$ (983 ) $ 1,869,572
Operating margin 29.0 % 22.9 % 26.8 % n/m
23.0 %
EBITDA margin 31.2 % 27.5 % 29.8 % n/m
26.3 %

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	Nine Months Ended September 30, 2020
	FMT			HST			FSDP			Corporate		IDEX
Operating income (loss)	$	176,111		$	150,562		$	103,977		$	(48,902)	$	381,748
- Other (income) expense - net	(35)			(91)			148			7,299		7,321
+ Depreciation and amortization	19,370			30,806			11,409			389		61,974
EBITDA	195,516			181,459			115,238			(55,812)		436,401
- Interest expense												33,958
- Provision for income taxes												63,759
- Depreciation and amortization												61,974
Net income												$	276,710

Net sales (eliminations)	$	666,720		$	660,105		$	412,296		$	(2,297)	$	1,736,824
Operating margin	26.4		%	22.8		%	25.2		%	n/m		22.0		%
EBITDA margin	29.3		%	27.5		%	28.0		%	n/m		25.1		%


	Nine Months Ended September 30, 2019
	FMT			HST			FSDP			Corporate		IDEX
Operating income (loss)	$	223,493		$	151,087		$	125,909		$	(55,659)	$	444,830
- Other (income) expense - net	612			1,636			273			(1,820)		701
+ Depreciation and amortization	16,653			29,438			10,745			510		57,346
EBITDA	239,534			178,889			136,381			(53,329)		501,475
- Interest expense												33,262
- Provision for income taxes												82,196
- Depreciation and amortization												57,346
Net income												$	328,671

Net sales (eliminations)	$	729,572		$	687,153		$	474,745		$	(2,894)	$	1,888,576
Operating margin	30.6		%	22.0		%	26.5		%	n/m		23.6		%
EBITDA margin	32.8		%	26.0		%	28.7		%	n/m		26.6		%



6. Reconciliations of EBITDA to Adjusted EBITDA

(dollars in thousands)	Three Months Ended September 30, 2020
	FMT			HST			FSDP			Corporate		IDEX
EBITDA(1)	$	66,284		$	60,174		$	40,617		$	(13,807)	$	153,268
+ Restructuring expenses	585			978			1,249			105		2,917
+ Fair value inventory step-up charge	—			—			—			—		—

Adjusted EBITDA	$	66,869		$	61,152		$	41,866		$	(13,702)	$	156,185

Adjusted EBITDA margin	30.3		%	27.7		%	29.7		%	n/m		26.9		%

6. Reconciliations of EBITDA to Adjusted EBITDA

(dollars in thousands) Three Months Ended September 30, 2019
FMT HST FSDP Corporate IDEX
EBITDA $ 82,693
$ 49,194
$ 45,625
$ (17,443 ) $ 160,069
+ Restructuring expenses —
11,196
104
656
11,956
+ Fair value inventory step-up charge —
3,340
—
—
3,340
Adjusted EBITDA $ 82,693
$ 63,730
$ 45,729
$ (16,787 ) $ 175,365

Adjusted EBITDA margin 34.3 % 27.8 % 29.6 % n/m
28.1 %

Three Months Ended September 30, 2018
FMT HST FSDP Corporate IDEX
EBITDA $ 74,844
$ 57,745
$ 47,925
$ (17,709 ) $ 162,805
+ Restructuring expenses 827
3,116
60
618
4,621
Adjusted EBITDA $ 75,671
$ 60,861
$ 47,985
$ (17,091 ) $ 167,426

Adjusted EBITDA margin 31.6 % 27.4 % 29.7 % n/m
26.9 %

Nine Months Ended September 30, 2019
FMT HST FSDP Corporate IDEX
EBITDA $ 239,534
$ 178,889
$ 136,381
$ (53,329 ) $ 501,475
+ Restructuring expenses 930
11,526
923
703
14,082
+ Fair value inventory step-up charge —
3,340
—
—
3,340
Adjusted EBITDA $ 240,464
$ 193,755
$ 137,304
$ (52,626 ) $ 518,897

Adjusted EBITDA margin 33.0 % 28.2 % 28.9 % n/m
27.5 %

Nine Months Ended September 30, 2018
FMT HST FSDP Corporate IDEX
EBITDA $ 222,994
$ 184,659
$ 144,398
$ (59,609 ) $ 492,442
+ Restructuring expenses 1,313
5,298
427
1,213
8,251
Adjusted EBITDA $ 224,307
$ 189,957
$ 144,825
$ (58,396 ) $ 500,693

Adjusted EBITDA margin 31.4 % 28.3 % 29.8 % n/m
26.8 %

7. Reconciliations of Cash Flows from Operating Activities to Free Cash Flow

(dollars in thousands) Three Months Ended September 30, Nine Months Ended September 30,
2019 2018 2019 2018
Cash flows from operating activities $ 157,064
$ 133,327
$ 376,902
$ 325,753
- Capital expenditures 11,031
18,888
36,773
39,856
Free cash flow $ 146,033
$ 114,439
$ 340,129
$ 285,897

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	Three Months Ended September 30, 2019
	FMT			HST			FSDP			Corporate		IDEX
EBITDA(1)	$	82,693		$	49,194		$	45,625		$	(17,443)	$	160,069
+ Restructuring expenses	—			11,196			104			656		11,956
+ Fair value inventory step-up charge	—			3,340			—			—		3,340
Adjusted EBITDA	$	82,693		$	63,730		$	45,729		$	(16,787)	$	175,365

Adjusted EBITDA margin	34.3		%	27.8		%	29.6		%	n/m		28.1		%




	Nine Months Ended September 30, 2020
	FMT			HST			FSDP			Corporate		IDEX
EBITDA(1)	$	195,516		$	181,459		$	115,238		$	(55,812)	$	436,401
+ Restructuring expenses	2,433			2,162			1,890			273		6,758
+ Fair value inventory step-up charge	4,107			—			—			—		4,107
+ Loss on early debt redemption	—			—			—			8,421		8,421
Adjusted EBITDA	$	202,056		$	183,621		$	117,128		$	(47,118)	$	455,687

Adjusted EBITDA margin	30.3		%	27.8		%	28.4		%	n/m		26.2		%



	Nine Months Ended September 30, 2019
	FMT			HST			FSDP			Corporate		IDEX
EBITDA(1)	$	239,534		$	178,889		$	136,381		$	(53,329)	$	501,475
+ Restructuring expenses	930			11,526			923			703		14,082
+ Fair value inventory step-up charge	—			3,340			—			—		3,340
Adjusted EBITDA	$	240,464		$	193,755		$	137,304		$	(52,626)	$	518,897

Adjusted EBITDA margin	33.0		%	28.2		%	28.9		%	n/m		27.5		%

(1) EBITDA, a non-GAAP financial measure, is reconciled to net income, its most directly comparable GAAP financial measure, immediately above in Item 5.


7. Reconciliations of Cash Flows from Operating Activities to Free Cash Flow

(dollars in thousands)	Three Months Ended September 30,				Nine Months Ended September 30,
	2020		2019		2020		2019
Cash flows from operating activities	$	153,686	$	157,064	$	407,899	$	376,902
- Capital expenditures	18,353		11,031		39,438		36,773
Free cash flow	$	135,333	$	146,033	$	368,461	$	340,129

Critical Accounting Policies

As discussed in the Annual Report on Form 10-K for the year ended December 31, ~~2018,~~2019, the preparation of financial statements in conformity with U.S. GAAP requires management to make estimates and judgments that affect the reported amount of assets and liabilities, disclosure of contingent assets and liabilities, and reported amounts of revenue and expenses during the reporting period. Actual results could differ from those estimates. See Part 1, Notes to the Condensed Consolidated Financial Statements, Note 1 Basis of Presentation and Significant Accounting Policies. The adoption of recent accounting standards as described in Note 1 had a material impact on our condensed consolidated balance sheet due to the recognition of right of use assets and lease liabilities but did not have and is not expected to have a material impact on our condensed consolidated results of operations or cash flows. Aside from recent accounting standards adopted as described in Note 1, thereThere have been no changes to the Company’s critical accounting policies described in the Annual Report on Form 10-K for the year ended December 31, ~~2018 that have a material impact on our condensed consolidated financial statements.~~2019.

Item 3. Quantitative and Qualitative Disclosures About Market Risk

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The Company is subject to market risk associated with changes in foreign currency exchange rates and interest rates. The Company may, from time to time, enter into foreign currency forward contracts and interest rate swaps on its debt when it believes there is a financial advantage in doing so. A treasury risk management policy, adopted by the Board of Directors, describes the procedures and controls over derivative financial and commodity instruments, including foreign currency forward contracts and interest rate swaps. Under the policy, the Company does not use financial or commodity derivative instruments for trading purposes, and the use of these instruments is subject to strict approvals by senior officers. Typically, the use of derivative instruments is limited to foreign currency forward contracts and interest rate swaps on the Company’s outstanding long-term debt. As of September 30, ~~2019,~~2020, the Company did not have any derivative instruments outstanding.

Foreign Currency Exchange Rates

The Company’s foreign currency exchange rate risk is limited principally to the Euro, Swiss Franc, British Pound, Canadian Dollar, Indian Rupee, Chinese Renminbi and Swedish Krona. The Company manages its foreign exchange risk principally through invoicing customers in the same currency as the source of products. The effect of transaction gains and losses is reported within Other (income) expense-net in the Condensed Consolidated Statements of Operations.

Interest Rate Fluctuation

The Company does not have significant interest rate exposure due to ~~substantially~~ all of the ~~$849.1~~$1,044.3 million of debt outstanding as of September 30, ~~2019~~2020 being fixed rate debt.

Item 4. Controls and Procedures

The Company maintains disclosure controls and procedures that are designed to ensure that information required to be disclosed in the Company’s Exchange Act reports is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms, and that such information is accumulated and communicated to the Company’s management, including its Chief Executive Officer and Chief Financial Officer, as appropriate, to allow timely decisions regarding required disclosure.

As required by SEC Rule 13a-15(b) ~~promulgated under the Securities Exchange Act,~~, the Company carried out an evaluation, under the supervision and with the participation of the Company’s management, including the Company’s Chief Executive Officer and Chief Financial Officer, of the effectiveness of the design and operation of the Company’s disclosure controls and procedures as of the end of the period covered by this report. Based on the foregoing, the Company’s Chief Executive Officer and Chief Financial Officer concluded, as of September 30, ~~2019,~~2020, that the Company’s disclosure controls and procedures were effective.

There has been no change in the Company’s internal controls over financial reporting during the Company’s most recent fiscal quarter that has materially affected, or is reasonably likely to materially affect, the Company’s internal control over financial reporting.

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PART II. OTHER INFORMATION

Item 1. Legal Proceedings

The Company and its subsidiaries are party to legal proceedings as described in Note 1920 in Part I, Item 1, “Legal Proceedings,” and such disclosure is incorporated by reference into this Item 1, “Legal Proceedings.” In addition, the Company and six of its subsidiaries are presently named as defendants in a number of lawsuits claiming various asbestos-related personal injuries, allegedly as a result of exposure to products manufactured with components that contained asbestos. These components were acquired from third party suppliers and were not manufactured by the Company or any of the defendant subsidiaries. To date, the majority of the Company’s settlements and legal costs, except for costs of coordination, administration, insurance investigation and a portion of defense costs, have been covered in full by insurance, subject to applicable deductibles. However, the Company cannot predict whether and to what extent insurance will be available to continue to cover these settlements and legal costs, or how insurers may respond to claims that are tendered to them. Claims have been filed in jurisdictions throughout the United States and the United Kingdom. Most of the claims resolved to date have been dismissed without payment. The balance of the claims have been settled for various immaterial amounts. Only one case has been tried, resulting in a verdict for the Company’s business unit. No provision has been made in the financial statements of the Company, other than for insurance deductibles in the ordinary course, and the Company does not currently believe the asbestos-related claims will have a material adverse effect on the Company’s business, financial position, results of operations or cash flows.

Item 1A. Risk Factors

In light of current global economic events and conditions experienced during the nine months ended September 30, 2020, the following factors are present risks to the Company. Aside from these risk factors, there have been no changes to the Company’s risk factors described in the Annual Report on Form 10-K for the year ended December 31, 2019 that have a material impact on our condensed consolidated financial statements.

Our business, results of operations and financial condition have been and may continue to be materially adversely impacted by the recent coronavirus (COVID-19) pandemic.

The novel coronavirus (COVID-19) pandemic is a rapidly-changing situation that has negatively impacted and could continue to negatively impact the global economy. Our operating results are subject to fluctuations based on general economic conditions and have been adversely affected by the negative general economic conditions. The extent to which COVID-19 continues to impact our business will depend on future developments, which are highly uncertain and cannot be predicted with confidence, such as the duration of the outbreak and business closures or business disruptions for our Company, our suppliers and our customers.

The deterioration in economic conditions materially reduced, and could continue to reduce, the Company’s sales and profitability. The financial distress our customers have experienced due to the deterioration in economic conditions has resulted in and could continue to result in reduced sales and decreased collectability of accounts receivable which has and could continue to negatively impact our results of operations. Based on currently available information and management’s current expectations, we believe the Company’s organic sales will be down approximately 3 to 5 percent in the fourth quarter of 2020. Any changes in or resurgence of the COVID-19 outbreak could also have a material impact on our ability to get the raw materials, parts and components we need to manufacture our products as our suppliers face disruptions in their businesses, closures or bankruptcy as a result of the COVID-19 outbreak. We depend greatly on our suppliers for items that are essential to the manufacturing of our products. Although we have not experienced material supply chain disruptions to date, if our suppliers fail to meet our manufacturing needs in the future, it would delay our production and our product shipments to customers and negatively affect our operations.

U.S and international government responses to the COVID-19 outbreak have included “shelter in place”, “stay at home” and similar types of orders. These orders exempt certain individuals needed to maintain continuity of operations of critical infrastructure sectors as determined by the U.S. federal and international governmental bodies. Although the Company’s operations are currently considered essential and exempt (and in some regions government lockdown mandates have been lifted), if any of the applicable exemptions are curtailed or revoked in the future, including in response to any COVID-19 resurgence, that would adversely impact our business, operating results and financial condition. Furthermore, to the extent these exemptions do not extend to our key suppliers and customers, this would also adversely impact our business, operating results and financial condition. We have also implemented work-from-home policies for certain “non-essential” employees. Although these work-from-home policies have not negatively impacted our business in any material respect to date, the COVID-19

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outbreak is dynamic and any future resurgences could negatively impact productivity, disrupt conduct of our business in the ordinary course and delay our production timelines.

Due to the large remote workforce populations, we may also face informational technology infrastructure and connectivity issues from the vendors that we rely on for certain information technologies to administer, store and support the Company’s multiple business activities. IDEX is heavily dependent on the availability and support of our technology landscape, several of which are provided by external third party service providers (e.g., Microsoft, AT&T and Verizon). Although we have not suffered any disruptions to date, any future disruptions in their operations could also negatively impact our business, operating results and financial condition.

To the extent the COVID-19 outbreak continues to adversely affect our business and financial results, it may also have the effect of heightening many of the other risks described in the risk factors included in the Annual Report on Form 10-K for the year ended December 31, 2019, such as those relating to our international operations, our ability to develop new products, our ability to execute on our growth strategy of acquisitions, our dependency on raw materials, parts and components, the effects on movements in foreign currency exchange rates on our Company, the effects on our Company that result from declines in commodity prices and our reliance on labor availability to operate and grow our business.

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds

The following table provides information about the Company’s purchases of its common stock during the quarter ended September 30, ~~2019:~~2020:

Period
Total Number of
Shares Purchased

Average Price
Paid per Share

Total Number of
Shares Purchased as
Part of Publicly
Announced Plans
or Programs⁽¹⁾

Maximum Dollar
Value that May Yet
be Purchased
Under the Plans
or Programs⁽¹⁾
July 1, 2019 to July 31, 2019 —
$ —
—
$ 322,342,564
August 1, 2019 to August 31, 2019 —
—
—
322,342,564
September 1, 2019 to September 30, 2019 —
—
—
322,342,564
Total —
$ —
—
$ 322,342,564


~~(1)~~Period	~~On December~~Total Number of Shares Purchased	Average Price Paid per Share		Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs(1)	Approximate Dollar Value that May Yet be Purchased Under the Plans or Programs(1)
July 1, 2015, the Company’s Board of Directors approved an increase of $300.0 million in the authorized level of repurchases of common stock. This followed the prior Board of Directors approved repurchase authorization of $400.0 million that was announced by the Company on November 6, 2014. These authorizations have no expiration date.2020 to July 31, 2020	—	$	—	—	$	712,001,005
August 1, 2020 to August 31, 2020	—	—		—	712,001,005
September 1, 2020 to September 30, 2020	—	—		—	712,001,005
Total	—	$	—	—	$	712,001,005

(1)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 authorizations of the Board of Directors of $300.0 million on December 1, 2015 and $400.0 million on November 6, 2014. These authorizations have no expiration date.

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Item 6. Exhibits.


Exhibit Number		Description


~~Exhibit~~ ~~Number~~		~~Description~~
*31.1
*31.1	Certification of Chief Executive Officer Pursuant to Section 302 of Sarbanes Oxley Act of 2002

*31.2		Certification of Chief Financial Officer Pursuant to Section 302 of Sarbanes Oxley Act of 2002

*32.1		Certification of Chief Executive Officer Pursuant to 18 U.S.C. Section 1350

*32.2		Certification of Chief Financial Officer Pursuant to 18 U.S.C. Section 1350

*101		The following financial information from IDEX Corporation's Quarterly Report on Form 10-Q for the quarter ended September 30, ~~2019~~2020 formatted in Inline ~~XBRL (Extensible~~eXtensible Business Reporting ~~Language)~~Language (iXBRL) includes: (i) the Cover Page, (ii) the Condensed Consolidated Balance Sheets, ~~(ii)~~(iii) the Condensed Consolidated Statements of Operations, ~~(iii)~~(iv) the Condensed Consolidated Statements of Comprehensive Income, ~~(iv)~~(v) the Condensed Consolidated Statements of Shareholders’ Equity, ~~(v)~~(vi) the Condensed Consolidated Statements of Cash Flows, and ~~(vi)~~(vii) Notes to the Condensed Consolidated Financial Statements.

*104		Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101).

* Filed herewith

Table of Contents

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.


			IDEX Corporation

			~~IDEX Corporation~~
By:
	~~By:~~	/s/ WILLIAM K. GROGAN
				William K. Grogan
				Senior Vice President and Chief Financial Officer (Principal Financial Officer)

			By:	/s/ MICHAEL J. YATES
				Michael J. Yates
				Vice President and Chief Accounting Officer (Principal Accounting Officer)

Date: October ~~30, 2019~~

28, 2020



☑	QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
	For the quarterly period ended	September 30, ~~2019~~2020



☐	TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
	For the transition period from	to


	September 30, 2019			December 31, 2018				September 30, 2020		December 31, 2019
ASSETS							ASSETS
Current assets							Current assets
Cash and cash equivalents	$	515,985		$	466,407		Cash and cash equivalents	$	877,758	$	632,581
Receivables, less allowance for doubtful accounts of $6,311 at September 30, 2019 and $6,709 at December 31, 2018	317,305			312,192
Receivables, less allowance for doubtful accounts of $6,089 at September 30, 2020 and $6,347 at December 31, 2019							Receivables, less allowance for doubtful accounts of $6,089 at September 30, 2020 and $6,347 at December 31, 2019	275,432		298,186
Inventories	303,494			279,995			Inventories	302,410		293,467
Other current assets	53,840			33,938			Other current assets	65,152		37,211
Total current assets	1,190,624			1,092,532			Total current assets	1,520,752		1,261,445
Property, plant and equipment - net	273,330			281,220			Property, plant and equipment - net	293,304		280,316
Goodwill	1,774,390			1,697,955			Goodwill	1,863,577		1,779,745
Intangible assets - net	390,908			383,327			Intangible assets - net	417,080		388,031
Other noncurrent assets	84,643			18,823			Other noncurrent assets	130,882		104,375
Total assets	$	3,713,895		$	3,473,857		Total assets	$	4,225,595	$	3,813,912
LIABILITIES AND SHAREHOLDERS’ EQUITY							LIABILITIES AND SHAREHOLDERS’ EQUITY
Current liabilities							Current liabilities
Trade accounts payable	$	147,079		$	143,196		Trade accounts payable	$	134,782	$	138,463
Accrued expenses	185,156			187,536			Accrued expenses	236,937		180,290
Short-term borrowings	417			483			Short-term borrowings	150		388
Dividends payable	38,018			33,446			Dividends payable	37,830		38,736
Total current liabilities	370,670			364,661			Total current liabilities	409,699		357,877
Long-term borrowings	848,728			848,335			Long-term borrowings	1,044,112		848,864
Deferred income taxes	162,017			128,007			Deferred income taxes	151,924		146,574
Other noncurrent liabilities	169,427			138,214			Other noncurrent liabilities	223,331		197,368
Total liabilities	1,550,842			1,479,217			Total liabilities	1,829,066		1,550,683
Commitments and contingencies							Commitments and contingencies
Shareholders’ equity							Shareholders’ equity
Preferred stock:							Preferred stock:
Authorized: 5,000,000 shares, $.01 per share par value; Issued: None	—			—
Authorized: 5,000,000 shares, $.01 per share par value; Issued: NaN							Authorized: 5,000,000 shares, $.01 per share par value; Issued: NaN	0		0
Common stock:							Common stock:
Authorized: 150,000,000 shares, $.01 per share par value							Authorized: 150,000,000 shares, $.01 per share par value
Issued: 89,935,175 shares at September 30, 2019 and 90,112,028 shares at December 31, 2018	899			901
Issued: 89,919,727 shares at September 30, 2020 and 89,948,374 shares at December 31, 2019							Issued: 89,919,727 shares at September 30, 2020 and 89,948,374 shares at December 31, 2019	899		899
Additional paid-in capital	754,702			738,339			Additional paid-in capital	778,469		760,453
Retained earnings	2,556,423			2,342,079			Retained earnings	2,778,130		2,615,131
Treasury stock at cost: 13,898,506 shares at September 30, 2019 and 14,159,251 shares at December 31, 2018	(989,110		)	(957,454		)
Treasury stock at cost: 14,260,042 shares at September 30, 2020 and 13,860,340 shares at December 31, 2019							Treasury stock at cost: 14,260,042 shares at September 30, 2020 and 13,860,340 shares at December 31, 2019	(1,079,720)		(985,909)
Accumulated other comprehensive income (loss)	(159,861		)	(129,225		)	Accumulated other comprehensive income (loss)	(81,249)		(127,345)
Total shareholders’ equity	2,163,053			1,994,640			Total shareholders’ equity	2,396,529		2,263,229
Total liabilities and shareholders’ equity	$	3,713,895		$	3,473,857		Total liabilities and shareholders’ equity	$	4,225,595	$	3,813,912


	Three Months Ended September 30,					Nine Months Ended September 30,							Three Months Ended September 30,				Nine Months Ended September 30,
	2019			2018		2019			2018				2020		2019		2020		2019
Net income	$	105,194		$	106,352	$	328,671		$	312,436		Net income	$	103,848	$	105,194	$	276,710	$	328,671
Other comprehensive income (loss):												Other comprehensive income (loss):
Reclassification adjustments for derivatives, net of tax	1,210			1,244		3,661			3,764			Reclassification adjustments for derivatives, net of tax	672		1,210		3,982		3,661
Pension and other postretirement adjustments, net of tax	1,663			1,270		4,181			3,979			Pension and other postretirement adjustments, net of tax	291		1,663		1,956		4,181
Cumulative translation adjustment	(37,825		)	9,164		(38,478		)	(25,903		)	Cumulative translation adjustment	47,343		(37,825)		40,158		(38,478)

Other comprehensive income (loss)	(34,952		)	11,678		(30,636		)	(18,160		)	Other comprehensive income (loss)	48,306		(34,952)		46,096		(30,636)
Comprehensive income	$	70,242		$	118,030	$	298,035		$	294,276		Comprehensive income	$	152,154	$	70,242	$	322,806	$	298,035


	Nine Months Ended September 30,							Nine Months Ended September 30,
	2019			2018				2020		2019
Cash flows from operating activities							Cash flows from operating activities
Net income	$	328,671		$	312,436		Net income	$	276,710	$	328,671
Adjustments to reconcile net income to net cash provided by operating activities:							Adjustments to reconcile net income to net cash provided by operating activities:
Asset impairments	9,680			—			Asset impairments	85		9,680
Depreciation and amortization	29,599			29,725			Depreciation and amortization	30,851		29,599
Amortization of intangible assets	27,747			29,505			Amortization of intangible assets	31,123		27,747
Amortization of debt issuance expenses	1,013			998			Amortization of debt issuance expenses	1,351		1,013
Share-based compensation expense	20,620			19,814			Share-based compensation expense	21,155		20,620
Deferred income taxes	11,528			(1,480		)	Deferred income taxes	1,323		11,528
Non-cash interest expense associated with forward starting swaps	4,737			4,869			Non-cash interest expense associated with forward starting swaps	5,153		4,737
Changes in (net of the effect from acquisitions):							Changes in (net of the effect from acquisitions):
Receivables	(2,071		)	(34,057		)	Receivables	33,291		(2,071)
Inventories	(16,987		)	(27,903		)	Inventories	17,920		(16,987)
Other current assets	(19,186		)	7,635			Other current assets	(27,655)		(19,186)
Trade accounts payable	2,807			(4,420		)	Trade accounts payable	(11,496)		2,807
Accrued expenses	(23,222		)	33			Accrued expenses	24,333		(23,222)
Other - net	1,966			(11,402		)	Other - net	3,755		1,966
Net cash flows provided by operating activities	376,902			325,753			Net cash flows provided by operating activities	407,899		376,902
Cash flows from investing activities							Cash flows from investing activities
Purchases of property, plant and equipment	(36,773		)	(39,856		)	Purchases of property, plant and equipment	(39,438)		(36,773)
Purchase of intellectual property	—			(4,000		)

Acquisition of businesses, net of cash acquired	(87,180		)	(20,205		)	Acquisition of businesses, net of cash acquired	(118,159)		(87,180)

Proceeds from disposal of fixed assets	957			211			Proceeds from disposal of fixed assets	2,230		957
Other - net	407			(1,180		)	Other - net	(238)		407
Net cash flows used in investing activities	(122,589		)	(65,030		)	Net cash flows used in investing activities	(155,605)		(122,589)
Cash flows from financing activities							Cash flows from financing activities

Borrowings under revolving credit facilities							Borrowings under revolving credit facilities	150,000		0
Proceeds from issuance of 3.0% Senior Notes							Proceeds from issuance of 3.0% Senior Notes	499,100		0
Payment of 4.5% Senior Notes							Payment of 4.5% Senior Notes	(300,000)		0
Payments under revolving credit facilities	—			(11,128		)	Payments under revolving credit facilities	(150,000)		0
Payments under other long-term borrowings	(49,923		)	—			Payments under other long-term borrowings	(352)		(49,923)
Payment of make-whole redemption premium							Payment of make-whole redemption premium	(6,756)		0
Debt issuance costs							Debt issuance costs	(4,741)		0
Dividends paid	(109,227		)	(94,913		)	Dividends paid	(114,248)		(109,227)
Proceeds from stock option exercises	35,595			26,793			Proceeds from stock option exercises	28,729		35,595
Repurchases of common stock	(54,668		)	(50,654		)	Repurchases of common stock	(110,342)		(54,668)
Shares surrendered for tax withholding	(12,583		)	(11,260		)	Shares surrendered for tax withholding	(12,198)		(12,583)
Settlement of foreign exchange contracts	—			6,593

Other - net	(1,865		)	—			Other - net	0		(1,865)
Net cash flows used in financing activities	(192,671		)	(134,569		)	Net cash flows used in financing activities	(20,808)		(192,671)
Effect of exchange rate changes on cash and cash equivalents	(12,064		)	(10,337		)	Effect of exchange rate changes on cash and cash equivalents	13,691		(12,064)
Net increase in cash	49,578			115,817			Net increase in cash	245,177		49,578
Cash and cash equivalents at beginning of year	466,407			375,950			Cash and cash equivalents at beginning of year	632,581		466,407
Cash and cash equivalents at end of period	$	515,985		$	491,767		Cash and cash equivalents at end of period	$	877,758	$	515,985

Supplemental cash flow information							Supplemental cash flow information
Cash paid for:							Cash paid for:
Interest	$	18,832		$	18,547		Interest	$	16,415	$	18,832
Income taxes	84,326			73,138			Income taxes	66,268		84,326
Significant non-cash activities:							Significant non-cash activities:
Capital expenditures for construction of new leased facility	—			11,616
Contingent consideration for acquisition	—			3,375

Debt acquired with acquisition of business	51,130			—			Debt acquired with acquisition of business	$	0	$	51,130



Part I. Financial Information
Item 1.	Financial Statements	1
	Condensed Consolidated Balance Sheets	1
	Condensed Consolidated Statements of Operations	2
	Condensed Consolidated Statements of Comprehensive Income	3
	Condensed Consolidated Statements of Shareholders’ Equity	4
	Condensed Consolidated Statements of Cash Flows	6
	Notes to Condensed Consolidated Financial Statements	7
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	3133
	Cautionary Statement Under the Private Securities Litigation Reform Act	3133
	Overview ~~and Outlook~~	3233
	Results of Operations	3435
	Liquidity and Capital Resources	3941
	Non-GAAP Disclosures	4043
	Critical Accounting Policies	49
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	4649
Item 4.	Controls and Procedures	4650

Part II. Other Information
Item 1.	Legal Proceedings	4751
Item 1A.	Risk Factors	51
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	4752
Item 6.	Exhibits	4853
Signatures		4954



						Accumulated Other Comprehensive Income (Loss)
	Common Stock and Additional Paid-In Capital		Retained Earnings			Cumulative Translation Adjustment			Retirement Benefits Adjustment			Cumulative Unrealized Gain (Loss) on Derivatives			Treasury Stock			Total Shareholders’ Equity
Balance, December 31, 2018	$	739,240	$	2,342,079		$	(94,420	)	$	(22,740	)	$	(12,065	)	$	(957,454	)	$	1,994,640
Net income	—		110,268			—			—			—			—			110,268
Adjustment for adoption of ASU 2016-02	—		28			—			—			—			—			28
Cumulative translation adjustment	—		—			(3,281		)	—			—			—			(3,281		)
Net change in retirement obligations (net of tax of $438)	—		—			—			1,262			—			—			1,262
Net change on derivatives designated as cash flow hedges (net of tax of $361)	—		—			—			—			1,227			—			1,227
Issuance of 264,090 shares of common stock from issuance of unvested shares, performance share units and exercise of stock options (net of tax of $3,415)	—		—			—			—			—			8,870			8,870
Repurchase of 369,810 shares of common stock	—		—			—			—			—			(51,706		)	(51,706		)
Shares surrendered for tax withholding	—		—			—			—			—			(11,479		)	(11,479		)
Share-based compensation	5,403		—			—			—			—			—			5,403
Balance, March 31, 2019	$	744,643	$	2,452,375		$	(97,701	)	$	(21,478	)	$	(10,838	)	$	(1,011,769	)	$	2,055,232
Net income	—		113,209			—			—			—			—			113,209
Cumulative translation adjustment	—		—			2,628			—			—			—			2,628
Net change in retirement obligations (net of tax of $435)	—		—			—			1,256			—			—			1,256
Net change on derivatives designated as cash flow hedges (net of tax of $359)	—		—			—			—			1,224			—			1,224
Issuance of 169,785 shares of common stock from issuance of unvested shares, performance share units and exercise of stock options (net of tax of $679)	—		—			—			—			—			11,891			11,891
Repurchase of 19,143 shares of common stock	—		—			—			—			—			(2,962		)	(2,962		)
Shares surrendered for tax withholding	—		—			—			—			—			(30		)	(30		)
Share-based compensation	5,266		—			—			—			—			—			5,266
Cash dividends declared - $1.00 per common share outstanding	—		(75,673		)	—			—			—			—			(75,673		)
Balance, June 30, 2019	$	749,909	$	2,489,911		$	(95,073	)	$	(20,222	)	$	(9,614	)	$	(1,002,870	)	$	2,112,041
Net income	—		105,194			—			—			—			—			105,194
Cumulative translation adjustment	—		—			(37,825		)	—			—			—			(37,825		)
Net change in retirement obligations (net of tax of $525)	—		—			—			1,663			—			—			1,663
Net change on derivatives designated as cash flow hedges (net of tax of $356)	—		—			—			—			1,210			—			1,210
Issuance of 215,823 shares of common stock from issuance of unvested shares, performance share units and exercise of stock options (net of tax of $1,171)	—		—			—			—			—			14,834			14,834
Shares surrendered for tax withholding	—		—			—			—			—			(1,074		)	(1,074		)
Share-based compensation	5,692		—			—			—			—			—			5,692
Cash dividends declared - $0.50 per common share outstanding	—		(38,682		)	—			—			—			—			(38,682		)
Balance, September 30, 2019	$	755,601	$	2,556,423		$	(132,898	)	$	(18,559	)	$	(8,404	)	$	(989,110	)	$	2,163,053


(In thousands)	Total
Current assets, net of cash acquired	$	32,980
Property, plant and equipment	4,230
Goodwill	61,739
Intangible assets	53,000
Other noncurrent assets	1,344
Total assets acquired	153,293
Current liabilities	(35,554)
Deferred income taxes	749
Other noncurrent liabilities	(329)
Net assets acquired(1)	$	118,159


(In thousands, except weighted average life)	Total		Weighted Average Life
Trade names	$	6,000	15
Customer relationships	31,500		10
Unpatented technology	15,500		20
Acquired intangible assets	$	53,000


	September 30, 2020		December 31, 2019
Assets
Fluid & Metering Technologies	$	1,327,303	$	1,150,712
Health & Science Technologies	1,535,745		1,507,108
Fire & Safety/Diversified Products	838,747		825,398
Corporate office	523,800		330,694
Total assets	$	4,225,595	$	3,813,912



	September 30, 2019		December 31, 2018
Assets
Fluid & Metering Technologies	$	1,121,170	$	1,107,777
Health & Science Technologies	1,510,210		1,329,368
Fire & Safety/Diversified Products	812,798		806,075
Corporate office	269,717		230,637
Total assets	$	3,713,895	$	3,473,857


	Three Months Ended September 30, 2018													Three Months Ended September 30, 2019
	FMT			HST			FSDP			IDEX				FMT			HST			FSDP			IDEX
U.S.	$	131,403		$	99,474		$	78,902		$	309,779		U.S.	$	133,710		$	103,891		$	74,306		$	311,907
North America, excluding U.S. ⁽²⁾	—			—			—			—			13,652			5,450			6,726			25,828
Europe	46,895			66,762			36,824			150,481			Europe	46,830			65,339			38,078			150,247
Asia	28,358			46,634			30,265			105,257			Asia	30,182			51,378			26,317			107,877
Other ⁽³⁾⁽¹⁾	32,557			9,556			15,841			57,954			16,487			3,552			9,116			29,155
Intersegment elimination	(94		)	(75		)	(414		)	(583		)	Intersegment elimination	(103)			(622)			(43)			(768)
Total net sales	$	239,119		$	222,351		$	161,418		$	622,888		Total net sales	$	240,758		$	228,988		$	154,500		$	624,246



	Nine Months Ended September 30, 2018
	FMT			HST			FSDP			IDEX
U.S.	$	403,903		$	290,826		$	227,146		$	921,875
North America, excluding U.S. ⁽²⁾	—			—			—			—
Europe	130,591			214,564			127,645			472,800
Asia	89,655			139,422			84,563			313,640
Other ⁽³⁾	90,197			26,092			45,951			162,240
Intersegment elimination	(211		)	(219		)	(553		)	(983		)
Total net sales	$	714,135		$	670,685		$	484,752		$	1,869,572


	September 30, 2020		December 31, 2019
Billed receivables	$	266,074	$	286,196
Unbilled receivables	10,385		11,922
Total customer receivables	$	276,459	$	298,118


	September 30, 2020		December 31, 2019
Deferred revenue - current	$	41,840	$	17,633
Deferred revenue - noncurrent	5,100		2,129
Total deferred revenue	$	46,940	$	19,762


	Three Months Ended September 30,				Nine Months Ended September 30,
	2020		2019		2020		2019
Energy	$	56,155	$	42,876	$	150,483	$	122,882
Valves	26,901		30,764		78,822		89,955
Water	59,822		62,611		172,888		188,891
Pumps	59,585		84,936		201,970		260,321
Agriculture	18,284		19,674		62,557		67,523
Intersegment elimination	(194)		(103)		(533)		(367)
Fluid & Metering Technologies	220,553		240,758		666,187		729,205
Scientific Fluidics & Optics	100,569		108,869		313,275		325,731
Sealing Solutions	50,726		51,389		151,257		148,326
Gast	32,173		32,699		87,558		104,007
Micropump	7,273		8,273		22,260		25,299
Material Processing Technologies	29,637		28,380		85,755		83,790
Intersegment elimination	(707)		(622)		(1,744)		(1,305)
Health & Science Technologies	219,671		228,988		658,361		685,848
Fire & Safety	94,065		100,389		280,428		303,094
BAND-IT	22,692		26,087		64,228		81,757
Dispensing	24,139		28,067		67,640		89,894
Intersegment elimination	(7)		(43)		(20)		(1,222)
Fire & Safety/Diversified Products	140,889		154,500		412,276		473,523
Total net sales	$	581,113	$	624,246	$	1,736,824	$	1,888,576


	Nine Months Ended September 30, 2020
	FMT		HST		FSDP		IDEX
U.S.	$	384,429	$	288,042	$	203,940	$	876,411
North America, excluding U.S.	38,741		15,911		16,980		71,632
Europe	127,906		182,596		108,683		419,185
Asia	77,144		161,342		63,500		301,986
Other (1)	38,500		12,214		19,193		69,907
Intersegment elimination	(533)		(1,744)		(20)		(2,297)
Total net sales	$	666,187	$	658,361	$	412,276	$	1,736,824



	Nine Months Ended September 30, 2019
	FMT			HST			FSDP			IDEX
U.S.	$	411,645		$	309,135		$	227,881		$	948,661
North America, excluding U.S.	41,337			15,839			19,124			76,300
Europe	134,403			200,509			124,953			459,865
Asia	94,452			149,939			76,621			321,012
Other ⁽¹⁾	47,735			11,731			26,166			85,632
Intersegment elimination	(367		)	(1,305		)	(1,222		)	(2,894		)
Total net sales	$	729,205		$	685,848		$	473,523		$	1,888,576


	Nine Months Ended September 30, 2019
	FMT		HST		FSDP		IDEX
U.S.	$	411,645	$	309,135	$	227,881	$	948,661
North America, excluding U.S.	41,337		15,839		19,124		76,300
Europe	134,403		200,509		124,953		459,865
Asia	94,452		149,939		76,621		321,012
Other (1)	47,735		11,731		26,166		85,632
Intersegment elimination	(367)		(1,305)		(1,222)		(2,894)
Total net sales	$	729,205	$	685,848	$	473,523	$	1,888,576


	September 30, 2020		December 31, 2019
Raw materials and component parts	$	187,244	$	182,382
Work in process	30,093		28,761
Finished goods	85,073		82,324
Total inventories	$	302,410	$	293,467


	At September 30, 2020							At December 31, 2019
	Gross Carrying Amount		Accumulated Amortization		Net		Weighted Average Life	Gross Carrying Amount		Accumulated Amortization		Net
Amortized intangible assets:
Patents	$	2,865	$	(1,668)	$	1,197	10	$	6,678	$	(5,276)	$	1,402
Trade names	128,393		(69,568)		58,825		16	123,062		(64,938)		58,124
Customer relationships	313,977		(115,815)		198,162		13	275,575		(96,252)		179,323

Unpatented technology	119,233		(51,307)		67,926		13	101,721		(43,561)		58,160
Other	700		(630)		70		10	700		(578)		122
Total amortized intangible assets	565,168		(238,988)		326,180			507,736		(210,605)		297,131
Indefinite-lived intangible assets:
Banjo trade name	62,100		—		62,100			62,100		—		62,100
Akron Brass trade name	28,800		—		28,800			28,800		—		28,800
Total intangible assets	$	656,068	$	(238,988)	$	417,080		$	598,636	$	(210,605)	$	388,031



	At September 30, 2019								At December 31, 2018
	Gross Carrying Amount		Accumulated Amortization			Net		Weighted Average Life	Gross Carrying Amount		Accumulated Amortization			Net
Amortized intangible assets:
Patents	$	6,583	$	(5,135	)	$	1,448	12	$	6,468	$	(4,693	)	$	1,775
Trade names	120,744		(62,299		)	58,445		16	115,899		(57,227		)	58,672
Customer relationships	273,413		(92,692		)	180,721		14	256,202		(85,652		)	170,550
Unpatented technology	99,967		(40,713		)	59,254		12	96,922		(35,685		)	61,237
Other	700		(560		)	140		10	700		(507		)	193
Total amortized intangible assets	501,407		(201,399		)	300,008			476,191		(183,764		)	292,427
Indefinite-lived intangible assets:
Banjo trade name	62,100		—			62,100			62,100		—			62,100
Akron Brass trade name	28,800		—			28,800			28,800		—			28,800
Total intangible assets	$	592,307	$	(201,399	)	$	390,908		$	567,091	$	(183,764	)	$	383,327


	September 30, 2020		December 31, 2019
Payroll and related items	$	75,658	$	77,556
Management incentive compensation	10,945		14,408
Income taxes payable	31,279		9,905
Insurance	11,955		8,240
Warranty	7,082		5,581
Deferred revenue	41,840		17,633
Lease liability	15,896		15,235
Restructuring	4,026		6,110
Liability for uncertain tax positions	0		890
Accrued interest	12,774		1,735
Contingent consideration for acquisition	0		3,375
Other	25,482		19,622
Total accrued expenses	$	236,937	$	180,290


	September 30, 2020		December 31, 2019
Pension and retiree medical obligations	$	86,325	$	87,478
Transition tax payable	14,208		11,292
Liability for uncertain tax positions	1,071		3,008
Deferred revenue	5,100		2,129

Lease liability	93,507		69,928

Other	23,120		23,533
Total other noncurrent liabilities	$	223,331	$	197,368


	September 30, 2020		December 31, 2019
Revolving Facility	$	0	$	0
4.50% Senior Notes, due December 2020	0		300,000
4.20% Senior Notes, due December 2021	350,000		350,000
3.20% Senior Notes, due June 2023	100,000		100,000
3.37% Senior Notes, due June 2025	100,000		100,000
3.00% Senior Notes, due May 2030	500,000		0
Other borrowings	275		622
Total borrowings	1,050,275		850,622
Less current portion	150		388
Less deferred debt issuance costs	5,019		983
Less unaccreted debt discount	994		387
Total long-term borrowings	$	1,044,112	$	848,864



	Basis of Fair Value Measurements
	Balance at September 30, 2019		Level 1		Level 2		Level 3
Available for sale securities	$	9,702	$	9,702	$	—	$	—
Contingent consideration	3,375		—		—		3,375


	Basis of Fair Value Measurements
	Balance at September 30, 2020		Level 1		Level 2		Level 3
Available for sale securities	$	12,136	$	12,136	$	0	$	0


	Basis of Fair Value Measurements									Basis of Fair Value Measurements
	Balance at December 31, 2018		Level 1		Level 2		Level 3			Balance at December 31, 2019		Level 1		Level 2		Level 3
Available for sale securities	$	7,598	$	7,598	$	—	$	—	Available for sale securities	$	10,462	$	10,462	$	0	$	0
Contingent consideration	3,375		—		—		3,375		Contingent consideration	3,375		0		0		3,375


	Balance Sheet Caption	September 30, 2020		December 31, 2019
Operating leases:
Building right-of-use assets - net	Other noncurrent assets	$	100,904	$	75,381
Equipment right-of-use assets - net	Other noncurrent assets	5,431		6,993
Total right-of-use assets - net		$	106,335	$	82,374
Operating leases:
Current lease liabilities	Accrued expenses	$	15,896	$	15,235
Noncurrent lease liabilities	Other noncurrent liabilities	93,507		69,928
Total lease liabilities		$	109,403	$	85,163



	Three Months Ended September 30, 2019		Nine Months Ended September 30, 2019
Operating lease cost ⁽¹⁾	$	4,817	$	16,387
Variable lease cost	436		1,654
Total lease expense	$	5,253	$	18,041


	Nine Months Ended September 30, 2020		Nine Months Ended September 30, 2019
Cash paid for amounts included in the measurement of operating lease liabilities	$	19,198	$	15,813
Right-of-use assets obtained in exchange for new operating lease liabilities	36,707		6,899


Lease Term and Discount Rate	September 30, 2020		December 31, 2019
Weighted-average remaining lease term (years):
Operating leases - building and equipment	9.65		9.61
Operating leases - vehicles	2.01		1.92
Weighted-average discount rate:
Operating leases - building and equipment	3.57	%	4.08	%
Operating leases - vehicles	2.51	%	2.99	%



~~Lease Term and Discount Rate~~	~~September 30, 2019~~
~~Weighted-average remaining lease term (years):~~
~~Operating leases - building and equipment~~	~~7.97~~
~~Operating leases - vehicles~~	~~2.23~~
~~Weighted-average discount rate:~~
~~Operating leases - building and equipment~~	~~4.02~~	%
~~Operating leases - vehicles~~	~~3.09~~	%



Maturity of Lease Liabilities	Operating Leases ⁽¹⁾
2019 (excluding the nine months ended September 30, 2019)	$	4,356
2020	15,324
2021	12,373
2022	9,373
2023	7,083
Thereafter	31,199
Total lease payments	79,708
Less: Imputed interest	(12,505		)
Present value of lease liabilities	$	67,203


Maturity of Lease Liabilities	Operating Leases (1)
2020 (excluding the nine months ended September 30, 2020)	$	5,080
2021	18,593
2022	15,863
2023	13,195
2024	11,289
Thereafter	67,451
Total lease payments	131,471
Less: Imputed interest	(22,068)
Present value of lease liabilities	$	109,403


Maturity of Lease Liabilities	Operating Leases
2020	$	18,449
2021	15,070
2022	10,647
2023	8,894
2024	7,037
Thereafter	44,284
Total lease payments	104,381
Less: Imputed interest	(19,218)
Present value of lease liabilities	$	85,163


	Three Months Ended September 30, 2019									Three Months Ended September 30, 2020
	Severance Costs		Exit Costs		Asset Impairment		Total			Severance Costs		Exit Costs		Asset Impairment		Total
Fluid & Metering Technologies	$	—	$	—	$	—	$	—	Fluid & Metering Technologies	$	500	$	0	$	85	$	585
Health & Science Technologies	1,164		352		9,680		11,196		Health & Science Technologies	978		0		0		978
Fire & Safety/Diversified Products	104		—		—		104		Fire & Safety/Diversified Products	1,249		0		0		1,249
Corporate/Other	656		—		—		656		Corporate/Other	105		0		0		105
Total restructuring costs	$	1,924	$	352	$	9,680	$	11,956	Total restructuring costs	$	2,832	$	0	$	85	$	2,917



	Restructuring
Balance at January 1, 2019	$	6,170
Restructuring expenses	4,402
Payments, utilization and other	(7,292		)
Balance at September 30, 2019	$	3,280


	Restructuring
Balance at January 1, 2020	$	6,110
Restructuring expenses	6,758
Payments, utilization and other	(8,842)
Balance at September 30, 2020	$	4,026