IDEX Corporation (IEX) Q4 2016 Earnings Report, Transcript and Summary

Greetings, and welcome to the IDEX Corporation Q4 2016 Earnings Conference Call. At this time all participants are in a listen-only mode. A question-and-answer session will follow the formal presentation. [Operator Instructions] As a reminder, this conference is being recorded. I would now like to turn the conference over to your host, Mr. Michael Yates, Vice President and Chief Accounting Officer. Thank you, Mr. Yates. You may begin.

Great. Thank you, Doug. Good morning, everyone. This is Mike Yates, Vice President and Chief Accounting Officer for IDEX Corporation. Thank you for joining us for a discussion of the IDEX fourth quarter and full-year financial highlights. Last night, we issued a press release outlining our company’s financial and operating performance for the quarter and year-ending December 31, 2016. The press release, along with the presentation slides to be used during today’s webcast, can be accessed on our company’s website at www.idexcorp.com. Joining me today is Andy Silvernail, our Chairman and CEO; and Bill Grogan, our Chief Financial Officer. The format for our call today is as follows. We will begin with Andy providing an overview of the fourth quarter and full-year financial results. And then he will provide an update on our markets and our geographies and discuss our capital deployment. He will then walk you through the operating performance within each of our segments, and finally, we will wrap up with an outlook for the first quarter and full-year 2017. Following our prepared remarks, we will open the call for your questions. If you should need to exit the call for any reason, you may access a complete replay beginning approximately two hours after the call concludes by dialing the toll-free number 877-660-6853 and entering conference ID 13652250 or you may simply log on to our company’s home page for the webcast replay. Before we begin, a brief reminder. This call may contain certain forward-looking statements that are subject to the Safe Harbor language in today’s press release and in IDEX’s filings with the Securities and Exchange Commission. With that, I’ll now turn the call over to our Chairman and CEO, Andy Silvernail.

Thanks, Mike, and good morning, everybody. I appreciate you all joining us for the discussion of our 2016 fourth quarter and our full-year results. Before I get going, I want to introduce Bill Grogan, our new CFO. Bill, welcome to the senior executive team and the CFO chair. Bill has been with us for more than five years and most recently was Head of our Financial Group for Operations working side-by-side with Eric Ashleman. And so he really did an outstanding job there with building the teams, driving the operating model, and has been a key part to our overall success in terms of driving results in the last-half decade. So congratulations, Bill, and welcome to the team.

Thanks, Andy.

Also, I want to thank Mike Yates. Mike has really stepped in in the late summer when we had the interim chair open up and did an outstanding job. And I think it’s a real testament to Mike that we did not miss a beat through this process and really we are incredibly fortunate to have somebody of Mike’s caliber on our team and continuing on our team as we go forward. So thank you, again, Mike, very much, I appreciate it.

Very welcoming, Andy.

So I’m going to take a second here and just summarize 2016. As everyone knows, it was a difficult year in terms of the top line with challenging global industrial environment. At the same time, we did a really nice job on the bottom line and with cash flow. And so even with these mixed economic conditions throughout 2016, there were some bright spots and they were really around our Scientific Fluidics business, municipal and commercial markets, and all of those actually performed reasonably well in the year. And then we had some major headwinds really around the global industrial markets clearly within FMT and then the industrial pieces of HST. But I will say, as we had organic quarter growth in the third quarter and again organic growth in the fourth quarter and a promising start to January, we’re cautiously optimistic that we’re beginning to see a recovery. With that said, I’m hesitant and I’m hesitant, because I’m not convinced yet that we’re seeing a comprehensive turn and really I’m not because the global economic environment and very much the global political environment is volatile and it’s uncertain. And I think it’s prudent at this stage to be more conservative than aggressive. And as we built our plan for this year, we took in mind all of the volatility that’s out there. And as you guys full well know, we can respond very well on the upside. We have a very flexible operating model. We have a low overall labor content in our business. We really have no capacity constraints in terms of machinery equipment or facilities. So really it’s supply chain that becomes the sticking point in the upside. So we can respond very quickly. We would have outstanding flow through in case that happened, but we’re going to be prudent right now. And so as we exited 2016 and I look back, I’m very proud of how our team executed. We drove productivity. We improved working capital, and we continue to invest in our teams and the culture of this business. And we come into 2017 with a very strong balance sheet. We have gross leverage of 1.8 times and obviously, net leverage significantly below that. Cash flow was strong and we’re in a great position to exploit this via our capital deployment strategy. That’s fundamentally unchanged here for almost a half decade that we’ve been using and has been driving returns for us. As I mentioned, we did see positive order trends in the third and the fourth quarter. The initial signs in January are decent. And we’re hoping that the global growth challenges are leveling off. And but as I said, we’re going to remain cautious with the uncertain environment. We do believe that there’s a backdrop of low growth as we think about planning our 2017. And so we’re going to be prudent with this uncertainty of the economic and the political environments. As we look at the year, orders grew sequentially each month in the fourth quarter and the improvements were broad-based across our portfolio, so virtually every business saw improvements as we move through the quarter. And this resulted in organic order growth of 3%. In the second-half, half we had our first two sequential positive order growth quarters since the beginning of 2014. And so again, that’s encouraging. We also deployed over $0.5 last year. We acquired three businesses, as you know, and we also divested four businesses, and I’ll get into more detail here in a minute. But the four businesses that we divested weren’t aligned with our strategic objectives, and I’ll walk you through that here in just a little bit. As you know, deep segmentation has been a critical element of our success and really the fundamental, the foundation of our operating model. And the improvements in profitability, cash flow, and return on investment these past years have really been driven by these efforts. And over the last 18 months, we’ve taken this segmentation, which really had – has been focused on the product line in the customer level, and we’re thinking about our entire business portfolio. And we’ve categorized our businesses into growth outperform and fix. And as we sit here today about 70% of our portfolio is in the growth category, 10% is in the outperform, and 20% is in the fix. And so our strategy here with all of the businesses within these different categorizations is to provide a complete clarity of mission of goals, resource deployment across the portfolio, that’s going to allow us to drive innovation, improve customer service and satisfaction, drive profitability and improve return on investment. And so as we look at 2017, and I’ll walk you through this in some detail here at towards the end of my remarks. But we’re going to continue to invest aggressively around a series of areas and we think that’s critical to our long-term success. So in our growth businesses, we’re going to put about $0.10 or $0.11 of earnings so to speak into incremental investments in those businesses. And I think that’s key – it’s been key to us winning these past few years and it’s going to be very important to us winning going forward. And then, our fixed businesses, which again, I said is about 20% of our portfolio. In 2016, these businesses improved by about 300 basis points in profitability. And so, it’s been an important part of the profit execution seen across their businesses, in particular, in FMT, which you saw really strong margin improvement. And these businesses are either going to graduate to growth, or outperform, or eventually if we don’t think we can move them out of the fix category, we would consider divesting some of them. But I will say that that 20% is largely on track to graduate here, and we kind of give it a two-year timeframe. So they’re going to find growth in the future and our teams are executing very well around that. So with that let me pivot here and talk about our markets and some regions. So on the market side, energy – the trajectory is modestly better than it’s been obviously with the improvement in the price of oil that certainly is helpful. But there’s going to be headwinds, right. The CapEx cuts that came in the midstream and downstream are going to impact us this year and that’s going to hit our energy platform Band-it and ceiling to some degree. The downhole business, I think will improve and we are starting to see that on the banded side in particular. But I do think that the LPG market is going to be soft here in 017. On the industrial side and that’s really been the story for a couple of years now and the industrial markets remain challenged in 2016. We did see some stabilization towards the middle part of the year and as we move forward. And we are hopeful that we’re turning a corner, but obviously, we’re going to wait for more evidence before we’re willing to make a bet on that. Ag, depressed commodity prices, low farm incomes have been a huge headwind there. We have seen a slight improvement and we think that’s going to continue into 2017. Life sciences has been a real bright spot for us. It’s been an – that was an outstanding year in that market. Our core markets in bio, analytical and IVD have all performed well, and we think that’s going to continue to do so here in the future. And finally, municipal. All the indicators point towards continued modest growth in 2017. So we think that will be a plus. In terms of geographies in North America, the story goes back to the industrial recession that really existed here for a couple of years. And so, obviously, we’re hopeful of the signs of recovery, but again, we’re going to be cautious. Europe is really a mixed bag, depends on the country and it really depends on the business. Our dispensing and our water businesses, which are two of our bigger European-facing businesses have done quite well. But the performance across Europe is pretty spotty. And so we think that will probably continue in 2017. Asia, India has been terrific for us. We have – we really won in terms of market share and the business focus there. But China has been more difficult with really the industrial recession there also as they move from an investment-driven economy to a consumer economy. We do expect some improvement in China, however, in 2017. Let me turn to a little bit conversation on capital deployment. So, we’ve had this balanced discipline capital deployment strategy for sometime, and I think it works very well. Our overall goal is to drive spiritual [ph] shareholder returns and we have four pillars of this strategy. We’re going to fully fund organic growth. We’re going to take assistant quarterly dividends. We’re going to opportunistically repurchase stock and we’re going to execute strategic M&A. And so here we are with a very strong balance sheet, strong free cash flow, and this is going to give us leverage as we go forward, and we use that leverage well in 2016. So as I mentioned before, we deployed over $0.5 billion in three acquisitions; Akron, AWG and SFC, and those hit two different markets in three different countries. So really spread nicely across our portfolio and our ability to manage and integrate those businesses. The Akron and AWG really changed the face of our fire and safety business, and SFC did the same for our ceiling group. The integrations across the Board are going well and so we’re very positive about these acquisitions going forward and the benefits that we expect to see in 2017 are identical to what we talked about in the third quarter, and I’ll detail that here in a little bit. We did decide to divest some businesses this year four relatively small businesses. Hydra-Stop and two Optics businesses; one in Japan and one in Korea, and then our IETG business, which is in the UK. In total, those businesses had about $40 million of revenue for us in 2016, which obviously will trade-off against the benefits of the three acquisitions that we did. And again, I’ll walk you through the puts and takes of that here towards the end of my remarks. As we think about organic growth, we have continued to invest in organic growth across our businesses. But as we go into 2017, there are a few businesses that are going to get even more money and we’re going to get more aggressive around it. And that’s really around our bio, biopharma businesses, some product launches in water, next-generation of rescue tools, and local for local products in India, and then in some degree an increased investment in China, where we’ve recently opened a facility. And so we’re going to put money really it’s about the future. And as you know, investments for us, it takes time to germinate. The markets move slowly, but you have to be committed and you have to invest year-in and year-out, and that’s what will allow us to be successful in the long-term. On the capital deployment front, in 2016, we increased our dividend by 6% and we returned 38% of net income to our shareholders. And we also bought back 739,000 shares in the year at a cost of about $55 million, which is about 1 percentage here and that happened very early on in 2016. All right. I’m now on the 2016 financial results. That slide four, if you will join me there. So just a reminder, these results exclude the impact of restructuring actions, the gain and loss in divestitures in 2016 and 2015, as well as the pension settlement. But I will detail all of those for folks, so they can get their modeling correct as we go forward. All right. For the full-year, orders and sales were $2.1 billion, up 6% and 5%, respectively. Orders were flat organically and sales were down 1% organically. Organic orders and sales were really pressured by the weak economy that I’ve talked about in detail already around oil and gas in North American industrial. And then our margin actually this a good story. So we finished the year, but there’s a lot of moving parts, let me take a minute here. We finished the year at 20.6%, which was down by 40 basis points year-over-year. But keep in mind that had $14.8 million of fair value step up versus $3.7 million in 2015. So obviously, that’s a big impact. If you neutralize for that, our margins were up about 10 basis points year-over-year. But also keep in mind, that’s diluted – that has a diluted impact of acquisitions. So if you look at apples-to-apples, so if you remove the acquisitions and look at the base business versus base business, 2016 versus 2015, margins were up 80 basis points to 22.5%, so that really shows terrific execution in the base business pre-acquisitions and demonstrates that operating model continues to work. Cash flow, a great story. Cash from operations was $400 million in the year, $362 million of free cash flow, and that was up 12% over last year and 125% of net income. GAAP EPS was $3.53, adjusted EPS is $3.75, that was up $0.20, or 6% on an adjusted basis. Let me take a second and walk you through that $0.22 between the adjusted and the GAAP EPS. So we had a $0.03 charge from restructuring actions, I’ll talk about the benefits here in a moment. We had a $0.16 loss on the sale of four divested businesses and we had a $0.03 charge from the pension settlement. On a final note, of the $3.53 in GAAP EPS, there’s also about a $0.04 related to a favorable transaction FX in regards to intercompany loan that we acquired when we bought SFC. So that was favorable by about $0.03 in the fourth quarter and $0.01 in the first quarter. We have hedged that loan and so we won’t see the volatility here in the future. and so but it will be – those $0.04 will be a headwind as we think about 2017. All right. For the fourth quarter, organic orders were $547 million, that was up 10% overall and 3% organically, and we continue to see an uptick in those orders here that we started to talk about in the third quarter. Revenue was $530 million, up 6% flat organically, and organic sales were up slightly 0.3% in the fourth quarter. And although that certainly is modest, it’s the first positive organic sales growth that we’ve seen since the fourth quarter of 2014. Adjusted op margin for the quarter was 20.5%, that was down 50 basis points year-over-year, but again entirely due to the fair value inventory step up. And so exclusive of this charge, we actually improved margins by 40 basis points over last year. Fourth quarter free cash flow very strong, $106 million in the quarter, that was up 20$ from last year and a 143% of net income for the fourth quarter. GAAP EPS were $0.75, adjusted was $0.96, that was a $0.02 increase over last year. We had $0.21 between the Q4 adjusted and the GAAP EPS, and those are all the items that I mentioned before except there was a $0.01 of that that fell into the third quarter, so $0.21 fell into the fourth quarter. I will also note that we did have significant translational FX as we saw the dollar strengthened significantly in the quarter and that cost us about $0.02 in the fourth quarter. All right. So let me spend a few minutes here on the noise in the fourth quarter. I know there’s a lot of moving parts and I want to make sure everybody has these pieces really clearly. So as I discussed earlier, the four divestitures, we incurred about a $20 million pre-tax loss on the two businesses that we sold in the fourth quarter. That’s a $14 million net loss after the $6 million tax benefit that we realized. We also incurred a $3.6 million pension settlement in the fourth quarter. This charge was related to employees taking a lump sum distribution rather than future monthly pension payments. We did talk about this in the third quarter and it was on the low-end of our expectation. We also incurred about $3.7 million of restructuring costs. We noted that we were going to have some restructuring costs we talked about in the third quarter. These are related to severance and facility closures around acquisitions and plus an announced facility consolidation with our MPT platform. We will get about $4 million of benefit in 2017. Okay, let’s pivot now and let’s talk about the segments. I want to start with fluid metering, I’m on Slide 5. So we finished 2016, organic orders were down 2% in the fourth quarter and down 3% for the full-year. Sales were flat in the quarter and down 1% for the full-year. Op margin was a great story, up 190 basis points for the quarter, up a 100 basis points for the year, really terrific execution around productivity and even with difficult market conditions maybe except for water people really got after the cost structure and right-sized their businesses and we had just outstanding margin improvement. And so, as I mentioned before, we had great improvement in our fixed businesses and many of those sit in FMT and we’re a major portion of the margin improvement in the segment. In terms of some of the areas, water services has been strong. It was strong in the fourth quarter. Again, we think it will be solid as we – if you think about 2017. Industrial, the story I told already many times softness across the North American landscape. The impact of oil and gas have certainly been substantial and weakness in the chemical market in Europe also. So, while we do see some beginning signs of recovery, we’re pretty cautious here around this marketplace. Energy, it remains a tough story. Our mobile business, the downstream portions of the business that CapEx cuts just started late last year. Those are going to play negatively to those businesses, I think in 2017, so they will be behind the curve relative to what you’ll see in the downhole side, which I think will pick up faster and certainly some of our peers have seen that. But we will have some headwinds here early in 2017 around those markets. And finally, Ag, as I mentioned earlier, we have seen some positive indications, so we’re looking for kind of very small improvement in 2017. Okay, let’s turn to health and science, I’m on Slide 10. At the end of the day no real changes in our perspective in the health and science markets. Our overall life sciences and scientific businesses are doing really well, and they’ve been offset by weakness in industrial very similar to everything I’ve talked about with FMT. We had a very strong organic order quarter, up 7%, excuse me, on the heels of also a strong order quarter in the third quarter. So this is promising. For the year, organic orders were up 2%, but certainly we finished very strong in the order front with HST. Our sales were down 1%, both in the fourth quarter and for the year, but obviously, we come into the year with momentum. On the op margin side and again, I think, there’ll be a number of questions here on this. So let me take some time on this. They were down 330 basis points in the fourth quarter and down 100 basis points for the year. Both of these decreases were really primarily impacted by the step up in SFC. If you exclude that, margins would have been down a 100 basis points for the fourth quarter and 20 basis points for the year, and really all of that is due to mix. In 2015, we had a very strong overall profitability in our material processed business and that flipped around in the fourth quarter of this year and had relatively weak margins in MPT and that really accounts for that balance. We do expect margins in HST to be in that 23% range in 2017, so we expect that to rebound nicely as we go forward. In terms of the overall segments within health and science, industrial looks a lot like FMT, as I’ve already talked about, and we have seen again some early signs of improvement, but cautiousness generally. Scientific Fluidics and Optics, as I said before, really strong overall performance. The markets are growing. We’re winning share on new platforms. And so, overall, we have a lot of confidence in that business going forward around life sciences. Ceiling solutions is a mixed bag. Oil and gas has been weak, while the semiconductor market has been strong, and those two have really kind of balanced each other off. And then finally, MPT, as I mentioned has been mixed. This is a pretty lumpy business. It had a strong fourth quarter order book. So we think we’ll come out of gates relatively strong with MPT. But it has been a mixed bag between pharma and industrial businesses. All right. I’m on the last segment, diversified on Slide 11. Boy, it’s just an outstanding year for the teams here in diversified. The two major acquisitions really change the landscape for our fire and rescue business, and so now it’s all about driving the execution here. We finished very strong. Organic orders were up 9% in the fourth quarter, up 2% for the year. Our sales were down 3% for the year, but following orders, we had a strong finish at sales being up 3%. Op margin was down a 150 basis points, but entirely due to the step up that we had $7.5 million. So again, we are – this business is performing well and we expect to have really solid margin profile in 2017. Our dispensing was solid across North America, Europe and Asia. The X-Smart product line continues to have momentum and generally the dispensing outperformed. In fire and rescue, a nice uptick in the fourth quarter. As you know, this has been a business has been weak here for sometime and we saw strength across the markets and we had some nice wins in Asia, which we hadn’t seen in quite sometime. The team did an outstanding job with new product launches and they’re doing a nice job of integrating Akron and AWG and we’re on track to hit our goals with those acquisitions. Excuse me. On Band-It, the transportation business was solid. We are seeing some modest improvements on the oil and gas side that would be a good sign here for Band-It going forward. All right. Couple more slides here and really all about guidance for the year and for the fourth quarter. I’m on Slide 12. So we anticipate organic growth to be about 1% to 2% for the year and this should give us somewhere between $0.15 and $0.23 of incremental earnings for 2017. However, we’re going to have a pretty significant $0.12 headwind from FX. The – as you know, the dollar has strengthened significantly. We have exposure to the euro, the Swiss franc, the Canadian dollar, and the pound. And so, those are meaningful headwinds. And as I mentioned before, that’s broken down into about an $0.08 headwind on translational FX and the $0.04 that’s related to the intercompany loan that I mentioned earlier that we’ve hedged here going forward. But in total, as you guide into the back-half of the year and really sort of the back month or so of the year as the dollar strengthened, we lost a lot of ground, a $0.02 in the fourth quarter, and now in total, $0.12 of headwind for the year. As we look at acquisitions, last quarter we told you that that net of divestitures we thought that acquisitions would add about $0.25 to earnings incrementally. That number is now $0.24, but entirely due to the fact that we sold two other businesses in the fourth quarter. And so we’re right on our expectations of what those businesses should add to our portfolio. Share count will creep a little bit and it’s going to be a $0.03 headwind for us. The restructuring actions that I mentioned before are going to be a $0.03 tailwind, and they’re really related to rooftop and severance consolidation – severance items. We did have a couple of one-time corporate items in 2016 that are not going to repeat in 2017. About $0.04 is from the earn-out reversal that we talked about in the first quarter of last year. So if you remember, in our first quarter earnings report of 2016, we had a really strong overall quarter and because we had about $0.04 benefit from that earn-out reversal that obviously we won’t get again in 2017. And we did have a $0.02 of benefit coming from compensation-related items as the CFO change happened and some compensation was forfeited. We’re get about $0.02 of benefit from productivity net of inflation, so our teams have done a really nice job of offsetting wage inflation and very modest material inflation, but we will get $0.02 of net benefit. And then, as I mentioned before, we’re going to keep investing even with this backdrop of continued low growth. We think we need to continue to put money into our best bets and that’s going to be kind of $0.10 or $0.11 in 2017 of incremental spend. All right. I’m on our last page here on Slide 13, and a couple more items here on Q1 2017 and full-year 2017 guidance. So in the first quarter, we think EPS is going to be $0.91 to $0.93, organic growth kind of 1% to 2%, and operating margins ranging from 20.5% to 21%. The tax rate should be around 27%, and we are going to see kind of a 2% FX headwind here on the top line, and this is all based on the December 31, rate. So everything that I talked about relative to FX was based on the rates at the end of the year, which is our traditional practice. Corporate costs in the first quarter will be about $17 million. And if you look at the 2017 just a few more items. So full-year EPS should be $3.87 to $3.95, revenue growth 1% to 2%, and full-year operating margins at 21.5%. Again, we’re going to have about a 2% FX headwind based on the December 31 rates. And we think corporate cost will be around $66 million for the year, and finally, the tax rate should be around 27.5% based on the current U.S. tax rates in the global tax rates. Always, as we think about these things, we exclude the impact of acquisitions, costs, or benefits associated with them or any further restructuring that they might have. So with that, let me pause here, and Doug, let’s turn and open this up for questions.

Thank you. Ladies and gentlemen, at this time we will be conducting a question-and-answer session. [Operator Instructions] Our first question comes from the line of Mike Halloran from Robert W. Baird. Please proceed with your question.

Hey, good morning, guys.

Hey, Mike, good morning.

And congrats on the new role I would say welcome aboard, but you’ve been here for a while. So let’s start on that bridge, obviously, super helpful providing the puts and takes, because there’s a lot of them…

Yes.

Maybe you could frame the growth investment side. You said you’re basically putting the foot down and really reinvesting this year. Twofold question there, one, frame that level of growth investment that you’ve got in the 2017 bridge to what a typical year would look like? And then two, what the main focus areas look like? Is this to deal with a lot of the acquisition pieces? Is it relative to that 80% of the company that’s really kind of in that growth mode, where the piece is going?

So, Mike, this is – if you go back and you are to look in time, this is not a typical, right. So this is kind of how we thought about things over time. I think why it stands out a little bit now right is the backdrop of slower overall organic growth. And so, I guess, very importantly, we made a conscious decision that we were not going to trim back on those, given the backdrop. And for us, as you know, it takes an awful long time for these investments to germinate. And if we were to go and cut $10 million, $12 million of that cost, which you could easily do by the way, right. These are pretty variable cost you can take these out. We could have easily put up cover the FX headwind that developed here in the latter part of the year. And we just decided that was not the prudent thing to do and we should continue to invest. So very typical for us. I think the difference is Mike, is the – these are investments that are really, really targeted around a few mostly product-related areas. So in the bio, biopharma area that that whole life sciences world has taken off for us obviously and we’ve got some very interesting new products that are going to take few years to germinate. But we’re going to have to put several million dollars a year into those, while those takeoff. And so that fits right into the life sciences, fluidics and optics world, that’s a good piece of the investment. We’ve got a series of new product launches in our water world. And so if you look at our water business that’s led by [indiscernible] they’ve done a great job. They have been part of – a lot of those business have been in the fixed category and they have done an amazing job of changing that profile and have a whole series of new products that are going to come to market here over the next two years, now that’s a major investment. In India, we are, as you know, we built two facilities in the last five, six years here in India with expansion and we’re moving more and more for local needs. So a lot more product development is happening for the local markets. X-Smart has been a home run there. And what we really learned from our success and we were doing more like that. And then if you look at new product developments the next generation on rescue tools, as you know, hydraulic has been a big win for us. So we’re going to continue to invest there. The StrongArm product line we’ve mentioned before, that’s going to continue to get investment. And then finally, around the AWG Akron acquisitions and the combination with our other fire assets, there are some really important product development opportunities around electronics, which is bringing together kind of all of the superior product capability that we have on a fire truck that links it together and creates a closed system that is going to get investment for us. So those are the major areas and they’re all about growth. And so it’s going to take time to germinate, but I think it’s the right thing to do.

And then seeing on the growth side then as we look through the year, obviously highlighted caution going into the year, which I think is prudent. Maybe one, give a sense for what you’re seeing on the industrial side of your pieces once a little more short cycle maybe have some movement that could help the industrial side of Band-it, Viking Warren Rupp.

Yes.

Trends in the last couple of quarters have they been stable, slightly better, you’re seeing some choppiness and what that lead into for the year?

So, Mike, if you remember kind of back in the summer, I mentioned, we’re seeing some stability, right, things had really been at a decelerating pace in the industrial or an accelerating decline in the industrial landscape up until kind of after the first quarter of 2016 and I mentioned some stability. What we saw in the third quarter was a kind of the back-end of the quarter got meaningfully better, but still spotty. It was still pretty spotty. What we saw in the fourth quarter was much more broad-based across recruitment across their businesses. And then I’d say January has continued that trend. And let me be really candid. We have a lot of internal debate about the top line to market what number we’re picking around the market.

Yes.

And everything that we’re talking about here is based on market estimates because of what we think has really not been taken into account around the economic and the political volatility. And so our – we believe that we’ll beat the markets by a point or two. And so again, it really kind of depends from what you think – what you’re picking the markets to be and we’ve got impressed on some of this commentary. And my point of view Mike is that, people have gotten a little over their skis on the positive sides of some of things that have been talked about and even experienced and not enough attention has really been put into the potential downsides. And so for us, we’re really weighing this both sides of this equation, which has led us to be more conservative. I’ll give you that, there’s no doubt about it. And a lot of it comes down to, we know how our operating model flexes. And if things are better, we’ll flex very quickly up and the incremental margins will be attractive. And if things are worse than some people are talking about right now, we’re already positioned to deal with it.

And then last and an easy one. If you just look at the guidance, is the underlying thought process here stability from current levels normal sequences as you look to the year, or are you embedding any improvement, it doesn’t sound like you are, but I just want to clarify?

Yes, so we’re talking first quarter being up one to two no real big hockey stick built in. So we don’t have, I think the first quarter is going to be telling for us to be candid with you, right. And so that’s going to be an important barometer for how we think the rest of the year is going to play out, and January is decent.

Okay. Thanks. I appreciate your time.

Thanks, Mike.

Our next question comes from the line of Steven Winoker from Bernstein. Please proceed with your question.

Hi, good morning, all.

Hi, Steven, how are you?

Good. Hey I’d love to just start at a little higher level on capital deployment, Andy.

Yes.

So if you think about the pace that you are running at a $0.5 billion this past year based on what you are looking at in the pipeline, obviously you have the capacity. I mean, are your expectations for something as good this year?

See, I think that would be a real challenge to be honest with you. When we at this time last year, we were really bullish on the overall ability to deploy. But we had line of sight at that point with a lot of confidence around a couple of things, while we have a very typical funnel right now. And so if we deployed $0.25 billion, that would be terrific. We don’t have things kind of sitting right in front of us like we did this time last year. And so this feels more like a normal pipeline. That being said, it’s a good pipeline. It’s across the portfolio, and we have, obviously, we have the buyer power to do it, it’s just going to be actionability, Steve.

Okay. All right. And then on that 2017 guidance bridge, I would have thought maybe more than $0.02 on productivity net of inflation. Can you just talk through maybe the pieces there, what are you baking in? And why is it and a more?

Yes, so you’ve got about – what you have is, you’ve got about $20 million of headwind plus or minus and that’s mostly driven by wage inflation, which – it is not a lot of material inflation. Obviously, you’ve got some metals here and there that have which seems a little bit on. We’re in a really good position and obviously, we’re really cognizant of potential inflation spikes something that we’re paying a lot of attention to. But the material side should be modest. The wage side is very typical. So call it $20 million. So we’ll get kind of $22 million of total productivity, and so that will net us or sorry a little bit more in that $23 million, $24 million, and that will net us kind of a $0.02 in total.

Okay. All right, that sound. I guess…

Again by the way right, that’s – that does not include restructuring, right. So you’ve got another $0.03, $0.04 on the restructuring side. So I would call all of that productivity, but we just happened to break it out specifically, because we called out restructuring charges.

Right. No, and then normally that’s how we’d see it, so that’s helpful. I’ll pass it on. Thanks, guys.

Great. Thank you.

Our next question comes from the line of Nathan Jones with Stifel. Please proceed with your question.

Good morning, everyone.

Hi, Nathan.

Andy, I’d like to go back to the growth investments for a minute, and you’ve never been shy about funding growth investments in the company really regardless of the environment, $0.11 is a pretty big step up. Is this something that we should anticipate continuing at that level for the next few years? Will it step up again in 2018, step down in 2018?

I think, it’s what you would expect, right. And so the way I kind of think about the math that the math doesn’t change here, right. So the incremental benefits that we’ve always talked about that 30% to 35% even including these investments is there, right. So when you kind of work through all the puts and takes of all this and you look at it, you go okay, that – those incrementals are there, especially when you kind of step back and you think about the one-time thing that we benefited from in 2016. So we’re not going to compress our incrementals by these kind of investments, Nathan. And but I think the variable here is obviously in a higher growth environment, you’re going to get much better incrementals, in a lower growth environment you get more towards kind of the downside of where guided historically.

Understood. I was more talking about the level of investment that you’re putting in to the growth investments?

ICS being really aggressive, Nathan. I think is, I think everybody – everyone we talk to and we spend time with, the differentiators is going to be organic growth, right. And even when you think about acquisitions, right, when you acquire the way you really drive overall returns, obviously we’re very good at the cost out. But you’ve got to deliver on the top line too, which means you’ve got to deliver overall on the organic side. So these kind of investments I think are prudent and we’re going to do it in good times and in difficult times.

Understood. And you’ve been pretty clear about that over many years.

Yes.

I’m just wondering whether or not we should expect those growth investments to remain at the same level going forward or weather you will get more aggressive in 2018 and step up again, or just how you’re thinking about that over just longer than 2017?

Well, I’m sorry, Nathan. Yes, so I would say that proportional to the size of our business, this feels about, right. Right, so as the business gets bigger, the dollars will get bigger, but I don’t think and proportionally it’s going to change dramatically from what we’re talking about here.

Okay. And then there’s a $0.03 headwind from higher share count. I think IDEX typically looks to offset dilution, is that not the case this year?

No, our practice has been to – we have a really disciplined process that we go through. And so we just said, hey, these levels will probably see some creep, but that could push one way or the other to be honest with you. We’re just kind of basing on the activity that we’ve had here in the last six months. But that that’s one variable that could move throughout the year.

Fair enough. And then just one on North American industrial, do you have any visibility into the parts of North American industrial, where you’re seeing improvement or is this going through distribution and you lose visibility into it?

Well, so I think the way I’d say it, so you do lose some visibility going to distribution. But what I’d say is, what we saw in the fourth quarter and what were seen early in January, and I want to be – the reason I’m being so cautious here around this is – a few months does not make a trend, right. And so, but I will say that what we saw through the fourth quarter early in January it is pretty broad-based. And so whether you’re talking about kind of classic distribution at Viking, or say gas as an example of Warren Rupp, or you’re talking about more value-added distribution, or you’re talking about even on the OE side, it’s been pretty broad-based.

All right. That’s helpful. Thanks very much.

Thanks, Nathan.

Our next question comes from the line of Matthew Mishan from KeyBanc. Please proceed with your question.

Thank you and good morning.

Good morning.

Hey, I just want to go back to the 2017 guidance bridge and maybe I missed it. But it seems like the incrementals from the $20 million to $40 million of organic growth going down to $0.15 and $0.23 of EPS seems very high. Can you talk about the incrementals you’ve assumed on that?

Yes. So you’ve got to remember that includes price, right. So that that’s not just volume, and so the price side of it flows through at a 100%. And so when you’re looking at numbers that are that – that are 1% to 2% kind of that granular that the call it 7 to eight-tenths of a point that will get price in 2017 that that’s going to flow through very high.

All right, got it. So assuming that, let’s call it 80 basis points in price. What should we be thinking about if you were able to do as far as incremental go, if you were able to go from 1% or 2% growth to 3% or 4% like what would an additional incremental 100 basis points of growth give you?

Yes, a really kind of simple rule of thumb for us is a point of organic growth, it’s going to give us about $0.08 on earnings.

All right. And then on the health and science technology side, I’m just curious what you’re hearing from customers around the expectations for pharma and biotech in 2017. And if you saw any change in scientific fluidics in the fourth quarter?

So, Matthew, if you recall even kind of two years ago at this time, we were talking about a product cycle – lifecycle – product cycle in the industry that was going to get a lot better starting in 2017. We said we had a lot of visibility to that and that’s playing itself out now, right. So the product launches that we’re seeing across the industry are pretty good and you could pick your submarket, right, they’re generally – it’s pretty healthy, and we’re well-positioned in terms of content by platform. So we think that that 2017 and 2018 are going to be pretty good years here. If you look at the analytical instrument, IBD bio genomics, you pick your market, it’s going to be pretty good. Obviously, we don’t know how policy might impact that that’s one wildcard that we really – everyone needs to pay attention to and just with the uncertainty that we’ve seen early days we all know. But generally, in current conditions, we think both the industry is going to be pretty good and we’re well-positioned.

Thank you very much.

You bet, Matthew. Thank you.

Our next question comes from the line of Deane Dray with RBC Capital Markets. Please proceed with your question.

Thank you. Good morning. This is Andrew Krill on for Deane.

Hi, Andrew.

Hi, good morning. Thank you. So I want to ask, there’s been a lot of speculation on tax reform in the U.S., can you comment on how IDEX might fair, given these various proposals, including the border adjustability please?

It’s really tough to put your finger on it. So let me kind of walk you a couple of things and Bill if you want to add some color to this. So obviously, if you just assumed that you had a 10 point U.S. tax cut, right a way to think of that is you can put some math on that again. We said 10 points. 10 – we have about $100 million pre-tax in the U.S. So you’re talking $0.09, $0.10 of earnings impact if you went down to a 25% statutory tax rate in the U.S., right. So that’s one way to put your finger on it. In terms of the cross-border issues, Bill, any commentary on that?

Yes. I don’t think we have any material risk if there were significant tariffs and replace of NAFTA. So I think for the most part, our production and supply chain is local for local, So not a lot of exposure there.

Yes, and probably not a ton of negative. I mean, obviously, the thing that I’m most worried about, Andrew, is trade war. I think everybody in my seat is nervous about that same possible reality. And one of the reasons why, frankly, we’ve hedged our bets here going into 2017.

Got it. Thank you. That will make sense. And there’s a quick follow-up like in terms of a customer weighing with if there’s any favorable repatriation holiday, can you remind us like how much of your cash is overseas and I guess maybe what this could be used for?

Yes, I mean, there’s about $200 million kind of overseas, primarily within Europe. So if there was a repatriation, we’d have to look at that and t see we’ve done several deals in Europe so to pay a 10%, the repatriation tax might not be worth it if we have line of sight some uses for that cash within Europe or abroad.

Great. Thank you.

Thank you, Andrew.

Our next question comes from the line of Matt Summerville from Alembic Global. Please proceed with your questions.

Hi, this is Nick Chen from Matt Summerville this morning. Thanks for taking our question. You guys touched on it a little bit before, but I just wanted to dig a little deeper into M&A. I was hoping you could talk about sort of some of the multiples you’re seeing following the recent melt up in the market? And additionally, what verticals are seeing the most activity from your view?

Yes. So, generally, Nick, the world has not changed that much that we look at right. So, excuse me. The biggest changes have really been around the public markets. And obviously, we don’t play a time in that world we have. We bought some businesses from public companies in the past and whatnot. But – so that level of volatility so far we haven’t seen it play itself through the broader M&A funnel that we look at. That being said, we’re in the same position we’ve been for an awful long time, which is things are expensive. There’s no doubt about it. You’ve got to be incredibly disciplined, and you’ve got to be disciplined around price, but you also have to be really disciplined around what fits in your operating model. And so, we’re – there’s very few things that can make a deal go sour faster than overpaying and we’re just not going to do that. And so, we like our funnel, but we’re going to be very disciplined about prices in the marketplace, and that fundamentally hasn’t changed here in the last few months.

Great. And then just finally, I was hoping you could talk about in terms of an improvement in energy in the industrial – general industrial markets? What’s your guys view there?

So I’m going to call it cautious optimism, right. So, as I said before, we have seen some sequential improvement and it’s relatively broad-based. The downhole-related things, which we don’t have a lot of exposure to, right, it’s kind of 2%, 3% of our total business. That has been, obviously, the much more volatile piece and where people are calling more potential upside, it’s a really small piece for us. So I don’t get too excited about that on one side or the other. The things that are further downstream from there, those CapEx cuts came a lot later in the cycle and they’re still playing themselves out now. So I think we’ll actually be behind that curve to some degree as that plays itself through and then we’ll see if capital investment makes its way downstream, again. So I’m cautious generally with industrial and oil and gas. I’m more favorable in general industrial, I think, the oil and gas stuff will take more time to play itself through.

That’s great. Thanks so much, guys. I’ll jump back into the queue.

Thank you.

Our next question comes from the line of Scott Graham from BMO Capital Markets. Please proceed with your questions.

Hey, good morning, Andy, Mike, and welcome, Bill.

Thank you, Scott.

Did you say, Eric was there as well?

No he is not.

Oh, okay, all right. A lot of questions have been answered, but I do have a couple others. The acquisition divestiture, this is just a simple one. Is that sort of like a 75, 35, 80, 40 territory on the acquisition adds versus divestiture subtracts on revenue?

Scott, I’m not exactly sure what you mean?

The $40 million of incremental sales from acquisitions?

Yes.

Yes.

So the $40 million is the amount of revenue that we had in IDEX in 2016 from the businesses that we sold. So we had $40 million of revenue in those businesses. If you look at it kind of on an apples that if you look at it kind of on a trade-off basis incremental revenue of what we’re going to lose from divestitures versus the incremental that we’re going to get from the acquisitions because of where they landed in the year, you get somewhere around $40 million, $45 million of incremental good guy in revenue in 2017. Does that makes sense and that’s all…

Yes, I was just looking for the two numbers that net?

Yes. So you’re talking about $40 million of divestiture that we won’t get next year, right?

Okay.

Against about $80 million, $85 million of revenue that will get incrementally this year netting out to call it plus $40 million to $45 million.

Yep, that’s exactly what I was looking for.

Yep.

So let’s say things don’t get better from here and your conservatism is valid on your organic side, Andy? Where you have flexibility down the bridge here, obviously, I’m talking more specifically about, the restructuring savings, the corporate expenses, productivity, where can you flex up a little bit to make sure that you make the guidance maybe even at the high-end?

Yes. It’s a – I’m not really worried about our ability to execute here, right. So, we’ve proven our ability to manage these items operationally manage the investments. If the business were to slowdown, could we accelerate some restructuring? Yes, we could. Could we slowdown some timing of investments? Certainly, we could, and I think we’ve demonstrated a pretty good ability to do that over time.

Fair enough. Last question on the M&A pipe. So, obviously, you had a big year in 2016, based on kind of where you sit today with things at various levels and in the funnel. Can you get halfway there? I mean kind of where is your head?

At this stage, it’s tough to say, because as I mentioned, I think it was Steve who asked the earlier question around this. We’ve got a decent funnel. We don’t have anything kind of imminent. And so, we could end up having a really big year or soft year. My hope would be that we get somewhere between. But at the end of the day, it’s not something that I can peg at this point.

It’s fine. Thanks.

Thanks, Scott.

Our next question comes from the line of Patrick [indiscernible] from SunTrust. Please proceed with your question.

Hi, I’m standing in for Charlie Brady this morning. Thanks for taking my questions.

You bet.

Just one more, I guess for you guys on the growth investments, I know you guys have been talking about it quite a bit on the call. How should we think about sort of the margin impacts on each segment from these investments? And sort of I’m looking at FMT right, the adjusted margin at 27.2%.

Yes.

It’s a pretty peaked out, how should we think about that moving forward? Is there potential to move up?

Yes, I don’t – I wouldn’t think about the growth investments kind of how they would impact, that is not going to be material so to speak. If you look at the overall margin performance that we expected in 2017 by segment, I think FMT for the year, it should be in the 25% range, maybe a little bit higher 26%. HST in that 22% to 23% range, and FSD in that kind of 25% range. At the segment operating level, that’s what you should expect next year. So the investment should materially impact that. Again, as I answered before, even with the investments, we’re still very much in line with our expectations for incremental operating margins.

Gotcha. Thank you. And then just last one for me. What are you guys seeing sort of the – for the exit order rates in January? I mean, obviously, 2% growth in organic orders in 4Q is obviously welcoming sign. But and how do you guys sort of see January shaping up, and is that progressing more in February?

Yes So far the January things have been decent. I think the trend that we saw at the back-half of the fourth quarter have continued. I – at this stage, again, I’m hesitant to get more aggressive, because it’s such a short period of time. And hey, the level of uncertainty that’s out there economically and politically, it’s prudent to be cautious.

Right, thanks. That’s all I have.

Thank you.

Our next question comes from the line of Brett Linzey from Vertical Research Partners. Please proceed with your question.

Hi, good morning, all.

Good morning, Brett.

Hey, just I wanted to come back to HST orders up 7%, you mentioned a large pharma order there. What was the contribution in the quarter. And then I guess, were you able to put a finer point on if you sort of unbundle that and look at the industrial related businesses within HST?

Yes.

What are the underlying order rates looking like there?

Yes, so the strength that you mentioned that was within MPT, right, so we had some strength there in the MPT business. But even minus that orders were solid. We’re good – very good in the life-sciences side and industrial similar to what we talked about in FMT. So some, I’ll call it a few light spots, but not ready to call it, Semicon was strong. The general industrial gas micro pump still saw meaning kind of flattish, but certainly better than the trends that we’re in the first-half or even in little bit later than that in 2016.

Okay. And then fire and safety, I mean, orders are big there at 9% obviously pretty easy comp…

Yes.

You mentioned a lot of the close system opportunities and new product opportunities. But just in terms of the channel side, did you see any pull-through activity from AWG and Akron and then as we look forward here and you’ve owned these now for about six months or how you feel about the cost side?

So it’s still very early days for any kind of what I would tell revenue synergies right, that’s – those are things that take a meaningful time in those businesses, because you don’t want to break it already very good channels. And so nothing meaningful there, nothing different than our expectations, but it’s not like that’s accelerating yet. On the cost side very much in line with our expectations, right. The restructuring charges that we took were related to that and both Akron and AWG are on track for what we committed. We talked about getting 500 basis point of improvement in those businesses over three years and I think we’ll get there.

Okay. And just one last one, you talked about the – having a difficulty obviously forecasting 2017 growth. You did mention, you’d would like to outgrow those markets by 1 to 2 points…

Yes.

Are you assuming that for this year and implicitly does that mean you’re basically kind of saying, the market is flattish in your view for 2017, and you get a little bit of outgrowth above that…

Yes.

Could you kind of square that for me?

Yes, I mean that’s the math, right, it’s kind of flattish to modestly up, given the environment. Back at the Baird Conference, of course, I think I – my – I gave my talk on the on the day of the election. I said I thought that world was going to be kind of negative 1 to plus 1. And I’m still kind of there maybe with even more volatility, given what’s going on. So maybe I’ll revert back to negative 2 to plus 2. But yes, my overall view has changed a lot obviously. The strengthening of the dollar plays into this and then obviously hit us as we think about 2017. And then there’s just a lot of uncertainty right that’s – it’s really hard to peg.

Yes. Okay, great. Thanks Andy.

Thank you.

Our next question comes from the line of Joe Giordano from Cowen & Company. Please proceed with your question.

Hey, guys, thanks for taking my questions.

You bet.

I just wanted to talk FMT orders a little bit here. I’d strip out forget about like the year-on-year just looking sequentially pretty flat. I’m trying to reconcile that with what some others have said on the short cycle a bit of a budget flush happened in 4Q. So would you have expected like how do that – how did the orders come in for that segment versus how you might have thought.? And then I appreciate your conservatism for 2007, as it’s appropriate, but…

Yes. So the energy business sequentially was down and that was really kind of tied to the LPG business. And so other than that, sequentially look pretty similar, not a lot of changes from what we saw in the third quarter.

Okay. And then on undiversified when you look at your dispensing business, obviously, you guys are outpunching that market…

Yes.

But what are you thinking – but inherent in your guidance, what are you thinking for those markets that they – that those products play in like maybe slowing down…

Yes, I think…

Maybe at your level when you think…

Yes, I think you’re right, Joe. I think those markets are going to slow here as we look at the underlying performance. I think the business will do well. We’ve got a significant product launch that happens here a little bit later in the year that I think, it probably won’t make a big impact in 2017, but I think will be a nice going forward. But I think those underlying markets are – the growth is going to moderate to kind of flattish to 2017.

And that’s in your guided note?

It is. Yes.

Okay. And maybe just last thinking on the diversified that order growth there made the comp is a little easy, but..

Yes.

How would you look at that regionally?

Well, regionally, we are having some…

Yes, I’d say, we had throughout the year some softness in sort of our emerging markets and we saw a pick up in the fourth quarter.

Yes.

So some projects that have been kind of out a bit for a while finally went to official tender and…

Mostly on rescue. Yes, that was kind of like…

Are you seeing like, how was China rescue like municipal spend over there, how is that kind of looking right now?

Actually that was one of the big ones you’ve got better, right. So, with the anticorruption probes, things really came to a screeching halt, right. And we finally saw some – that liberated a little bit here, and we actually had a very nice win in the rescue tool market in the fourth quarter with our Dinglee brand.

Great. Thanks, guys.

Thank you.

Our next question comes from the line of Chris Dankert from Longbow Research. Please proceed with your question.

Good morning, guys. Thanks for putting me in here.

You bet.

Just one quick question. I guess talking to some of the market players on the municipal water side, that’s been an area, it’s been identified by the incoming administration as kind of a spot for investment.

Yes.

There is some concern that we’re going to see a bit of a pause on the state and local side hoping to get some clarity on when do the money flow through, how do we get, it cetera, is that conservative baked in, excuse me, conservatism baked into your guidance right now or have you heard anything on that front?

We haven’t heard it kind of specifically that people are having a big pause. Obviously, anything where things are – where moneys are coming from a government, we [indiscernible] conservatism around there, right. So, that obviously fits there certainly around the U.S. because there is so much uncertainty. It could be a bunch of money that flows there and frankly it could get caught. There is no clarity. And so we are – that is a piece of our hesitance.

Got it, got it. And then just finally I guess, any kind of update on the footprint consolidation within diversified, how much is left to go there, any kind of timetables?

We are kind of – stuff we’ve announced, it’s going well. For the most part, we should have everything done here by the end of the first quarter across the company. And so, we’ve got some stuff in NPT as I mentioned before and then the specific work around the acquisitions, most of that’s actually been done that we finished up in this year, so it’s not a lot more to go.

Got it. Great, thanks so much guys.

You bet.

Our next question comes from the line of Bhupender Bohra from Jefferies. Please proceed with your question.

Hi, good morning, guys.

Good morning.

So, just wanted to, Andy, on your commentary on the press release here that you are seeing some encouraging indicators within North America, could you talk about that from the perspective of your customers capital spending versus maintenance spending plans, like, how do you think 2017 – any indications on the – I mean you talked about CapEx to be weak, but on the maintenance side, do you think that kind of picks up?

I don’t think that maintenance spend really took a big hit, right. In the world that we play in, those aren’t really optional. It really is kind of the CapEx related stuff that has been – the bulk of what drove the industrial recession. And so I think that what we are seeing earlier here in this year and late last year are very modest improvements around CapEx. And so if – what’s going to drive an acceleration is going to increases in CapEx.

Okay. And the other question is on China here, I think somebody did ask, but I just wanted to – could you remind us how big China is and what are you hearing from that industrial land in China, especially with the – when you look at the ISM numbers, which have been inching like above 50 for the last few months now? Thanks.

Yeah, so, it’s – call it in the range of 5% of total business, right, so about half of that or so is done in China, for China, and another half comes from other places around the world, other businesses around the world. I would say there are certainly some modest improvements that you are seeing in China, that’s really been a real struggle for everybody here with this transition from investment to consumer. And so it is, I’m going to call it, modestly positive, but it’s not like it’s going to pick to where it was pre-2014.

Okay, got it. Thank you.

You bet.

There are no further questions in queue. I would like to hand the call back over to management for closing comments.

Well, thank you all very much for joining the call here today. And I know we had a lot of moving parts to talk about and I appreciate your patients and your good questions. Obviously as we think about 2017, we think about this much like the Apple the last couple of years, which is we need to make our own good fortune and I think we have positioned ourselves very well on the cost side, productivity, how we manage the balance sheet, how we deploy capital, and very importantly the growth investments that we are making for the future. And I think we are very, very well positioned regardless of what those markets do. And so, while we’ve taken probably a more conservative view of the markets, we are in a great position to take advantage of that and to drive overall profitability and returns on investment and ideally that’s going to translate into total reassurance for our shareholders. So, I want to thank our teams here at IDEX for continuing to execute extremely well and thank you all for your time and your interest in IDEX. And I look forward to talking to you here in 90 days. Take care.

Ladies and gentlemen, this does conclude today’s teleconference. Thank you for your participation. You may disconnect your lines at this time and have a wonderful day.