Financial Condition
Liquidity and Capital Resources
Cash provided by operating activities totaled $380.5 million for the first six months of 2018, an increase of $39.1 million or 11.5%,
compared with $341.4 million for the first six months of 2017. The increase in cash provided by operating activities for the first six months of 2018 was primarily due to higher net income and a $50.3 million decrease in defined benefit
pension plan contributions, driven by a discretionary $50.1 million contribution to the Companys defined benefit pension plans in the first quarter of 2017, partially offset by higher overall operating working capital levels.
Free cash flow (cash flow provided by operating activities less capital expenditures) was $352.0 million for the first six months of
2018, compared with $313.7 million for the first six months of 2017. EBITDA (earnings before interest, income taxes, depreciation and amortization) was $623.6 million for the first six months of 2018, compared with $529.3 million for
the first six months of 2017. Free cash flow and EBITDA are presented because the Company is aware that they are measures used by third parties in evaluating the Company.
Cash used for investing activities totaled $401.7 million for the first six months of 2018, compared with $546.7 million for the
first six months of 2017. For the first six months of 2018, the Company paid $374.6 million, net of cash acquired, to acquire Motec in June 2018, SoundCom in April 2018 and FMH in January 2018. For the first six months of 2017,
the Company paid $518.6 million, net of cash acquired, to acquire MOCON in June 2017 and Rauland in February 2017. Additions to property, plant and equipment totaled $28.6 million for the first six months of 2018, compared with
$27.7 million for the first six months of 2017.
Cash used for financing activities totaled $55.5 million for the first six
months of 2018, compared with $23.2 million for the first six months of 2017. At June 30, 2018, total debt, net was $2,145.9 million, compared with $2,174.3 million at December 31, 2017. For the first six months of 2018, the
net change in short-term borrowings was not significant, compared with a $6.8 million decrease in short-term borrowings for the first six months of 2017. At June 30, 2018, the Company had available borrowing capacity of
$1,102.4 million under its revolving credit facility, including the $300 million accordion feature.
In the third quarter of
2018, $80 million of 6.35% senior notes and $160 million of 7.08% senior notes will mature and become payable. In the fourth quarter of 2018, $65 million of 7.18% senior notes will mature and become payable. The
debt-to-capital
ratio was 33.1% at June 30, 2018, compared with 35.1% at December 31, 2017. The net
debt-to-capital
ratio (total debt, net less cash and cash equivalents divided by the sum of net debt and stockholders equity) was 26.8% at June 30, 2018,
compared with 27.5% at December 31, 2017. The net
debt-to-capital
ratio is presented because the Company is aware that this measure is used by third parties in
evaluating the Company.
Additional financing activities for the first six months of 2018 included cash dividends paid of
$64.7 million, compared with $41.3 million for the first six months of 2017. Effective February 1, 2018, the Companys Board of Directors approved a 56% increase in the quarterly cash dividend on the Companys common stock
to $0.14 per common share from $0.09 per common share.
As a result of all of the Companys cash flow activities for the first six
months of 2018, cash and cash equivalents at June 30, 2018 totaled $557.7 million, compared with $646.3 million at December 31, 2017. At June 30, 2018, the Company had $450.1 million in cash outside the United States,
compared with $569.4 million at December 31, 2017. The Company utilizes this cash to fund its international operations, as well as to acquire international businesses. In June 2018, the Company acquired Motec for approximately
$93 million utilizing cash outside the United States. The Company is in compliance with all covenants, including financial covenants, for all of its debt agreements. The Company believes it has sufficient cash-generating capabilities from
domestic and unrestricted foreign sources, available credit facilities and access to long-term capital funds to enable it to meet its operating needs and contractual obligations in the foreseeable future.
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