Revenue

9 Months Ended

Sep. 30, 2019

Revenue from Contract with Customer [Abstract]

IDEX 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. The Company’s products include industrial pumps, compressors, flow meters, injectors, valves and related controls for use in a wide variety of process applications; precision fluidics solutions, including pumps, valves, degassing equipment, corrective tubing, fittings and complex manifolds, optical filters and specialty medical equipment and devices for use in life science applications; precision-engineered equipment for dispensing, metering and mixing paints; and engineered products for industrial and commercial markets, including fire and rescue, transportation equipment, oil and gas, electronics and communications.

Revenue is recognized when control of products or services is transferred to our customers in an amount that reflects the consideration we expect to be entitled to in exchange for transferring those products or providing those services. We account for a contract when it has approval and commitment from both parties, the rights of the parties are identified, payment terms are identified, the contract has commercial substance and collectability of the consideration is probable. We determine the appropriate revenue recognition for our contracts with customers by analyzing the type, terms and conditions of each contract or arrangement with a customer.

Disaggregation of Revenue

We have a comprehensive offering of products, including technologies, built to customers’ specifications that are sold in niche markets throughout the world. We disaggregate our revenue from contracts with customers by reporting unit and geographical region for each of our segments as we believe it best depicts how the amount, nature, timing and uncertainty of our revenue and cash flows are affected by economic factors. Revenue was attributed to geographical region based on the location of the customer. The following tables present our revenue disaggregated by reporting unit and geographical region.

Revenue by reporting unit for the three and nine months ended September 30, 2019 and 2018 was as follows:



	Three Months Ended September 30,						Nine Months Ended September 30,
	2019			2018			2019			2018
Energy	$	42,876		$	42,403		$	122,882		$	121,941
Valves	30,764			30,972			89,955			85,831
Water	62,611			63,989			188,891			188,000
Pumps	84,936			81,605			260,321			245,006
Agriculture	19,674			20,244			67,523			73,568
Intersegment elimination	(103		)	(94		)	(367		)	(211		)
Fluid & Metering Technologies	240,758			239,119			729,205			714,135
Scientific Fluidics & Optics	108,869			106,917			325,731			310,530
Sealing Solutions	51,389			48,787			148,326			154,123
Gast	32,699			33,574			104,007			92,989
Micropump	8,273			8,801			25,299			27,899
Material Processing Technologies	28,380			24,347			83,790			85,363
Intersegment elimination	(622		)	(75		)	(1,305		)	(219		)
Health & Science Technologies	228,988			222,351			685,848			670,685
Fire & Safety	100,389			102,589			303,094			298,741
BAND-IT	26,087			25,437			81,757			79,892
Dispensing	28,067			33,806			89,894			106,672
Intersegment elimination	(43		)	(414		)	(1,222		)	(553		)
Fire & Safety/Diversified Products	154,500			161,418			473,523			484,752
Total net sales	$	624,246		$	622,888		$	1,888,576		$	1,869,572

Revenue by geographical region for the three and nine months ended September 30, 2019 and 2018 was as follows:



	Three Months Ended September 30, 2019
	FMT			HST			FSDP			IDEX
U.S.	$	133,710		$	103,891		$	74,306		$	311,907
North America, excluding U.S.	13,652			5,450			6,726			25,828
Europe	46,830			65,339			38,078			150,247
Asia	30,182			51,378			26,317			107,877
Other ⁽¹⁾	16,487			3,552			9,116			29,155
Intersegment elimination	(103		)	(622		)	(43		)	(768		)
Total net sales	$	240,758		$	228,988		$	154,500		$	624,246



	Three Months Ended September 30, 2018
	FMT			HST			FSDP			IDEX
U.S.	$	131,403		$	99,474		$	78,902		$	309,779
North America, excluding U.S. ⁽²⁾	—			—			—			—
Europe	46,895			66,762			36,824			150,481
Asia	28,358			46,634			30,265			105,257
Other ⁽³⁾	32,557			9,556			15,841			57,954
Intersegment elimination	(94		)	(75		)	(414		)	(583		)
Total net sales	$	239,119		$	222,351		$	161,418		$	622,888



	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, 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

⁽¹⁾Other in 2019 includes: South America, Middle East, Australia and Africa.

⁽²⁾Revenue from North America, excluding U.S. of $15,391from FMT, $6,348 from HST and $7,544 from FSDP were included in Other for the three months ended September 30, 2018. Revenue from North America, excluding U.S. of $44,610 from FMT, $13,705 from HST and $21,450 from FSDP were included in Other for the nine months ended September 30, 2018.

⁽³⁾Other in 2018 includes: North America, excluding U.S., South America, Middle East, Australia and Africa.

Contract Balances

The timing of revenue recognition, billings and cash collections can result in customer receivables, advance payments or billings in excess of revenue recognized. Customer receivables include both amounts billed and currently due from customers as well as unbilled amounts (contract assets) and are included in Receivables on our Condensed Consolidated Balance Sheets. Amounts are billed in accordance with contractual terms or as work progresses. Unbilled amounts arise when the timing of billing differs from the timing of revenue recognized, such as when contract provisions require specific milestones to be met before a customer can be billed. Unbilled amounts primarily relate to performance obligations satisfied over time when the cost-to-cost method is utilized and the revenue recognized exceeds the amount billed to the customer as there is not yet a right to payment in accordance with contractual terms. Unbilled amounts are recorded as a contract asset when the revenue associated with the contract is recognized prior to billing and derecognized when billed in accordance with the terms of the contract. Customer receivables are recorded at face amount less an allowance for doubtful accounts. The Company maintains an allowance for doubtful accounts for estimated losses as a result of customers’ inability to make required payments. Management evaluates the aging of customer receivable balances, the financial condition of its customers, historical trends and the time outstanding of specific balances to estimate the amount of customer receivables that may not be collected in the future and records the appropriate provision.

The composition of Customer receivables was as follows:



	September 30, 2019		December 31, 2018
Billed receivables	$	307,180	$	299,227
Unbilled receivables	10,877		14,492
Total customer receivables	$	318,057	$	313,719

Advance payments and billings in excess of revenue recognized are included in Deferred revenue which is classified as current or noncurrent based on the timing of when we expect to recognize the revenue. The current portion is included in Accrued expenses and the noncurrent portion is included in Other noncurrent liabilities on our Condensed Consolidated Balance Sheets. Advance payments represent contract liabilities and are recorded when customers remit contractual cash payments in advance of us satisfying performance obligations under contractual arrangements, including those with performance obligations satisfied over time. We generally receive advance payments from customers related to maintenance services which we recognize ratably over the service term. Billings in excess of revenue recognized represent contract liabilities and primarily relate to performance obligations satisfied over time when the cost-to-cost method is utilized and revenue cannot yet be recognized as the Company has not completed the corresponding performance obligation. Contract liabilities are derecognized when revenue is recognized and the performance obligation is satisfied.

The composition of Deferred revenue was as follows:



	September 30, 2019		December 31, 2018
Deferred revenue - current	$	9,823	$	8,055
Deferred revenue - noncurrent	2,369		3,027
Total deferred revenue	$	12,192	$	11,082

Performance Obligations

A performance obligation is a promise in a contract to transfer a distinct product or service to the customer. A contract’s transaction price is allocated to each performance obligation and recognized as revenue when, or as, the performance obligation is satisfied. For our contracts that require complex design, manufacturing and installation activities, certain promises may not be separately identifiable from other promises in the contract and, therefore, not distinct. As a result, the entire contract is accounted for as a single performance obligation. For our contracts that include distinct products or services that are substantially the same and have the same pattern of transfer to the customer over time, they are recognized as a series of distinct products or services. Certain of our contracts have multiple performance obligations for which we allocate the transaction price to each performance obligation using an estimate of the standalone selling price of each distinct product or service in the contract. For product sales, each product sold to a customer generally represents a distinct performance obligation. In such cases, the observable standalone

sales are used to determine the standalone selling price. In certain cases, we may be required to estimate standalone selling price using the expected cost plus margin approach, under which we forecast our expected costs of satisfying a performance obligation and then add an appropriate margin for that distinct product or service.

Our performance obligations are satisfied at a point in time or over time as work progresses. Performance obligations are supported by contracts with customers that provide a framework for the nature of the distinct products or service or bundle of products and services. We define service revenue as revenue from activities that are not associated with the design, development or manufacture of a product or the delivery of a software license.

Revenue from products and services transferred to customers at a point in time approximated 95% of total revenues in the three and nine months ended September 30, 2019 and 2018. Revenue recognized at a point in time relates to the majority of our product sales. Revenue on these contracts is recognized when obligations under the terms of the contract with our customer are satisfied. Generally, this occurs with the transfer of control of the asset, which is in line with shipping terms.

Revenue from products and services transferred to customers over time approximated 5% of total revenues in the three and nine months ended September 30, 2019 and 2018. Revenue earned by certain business units within the Water, Energy, Material Processing Technologies (“MPT”) and Dispensing reporting units is recognized over time because control transfers continuously to our customers. When accounting for over-time contracts, we use an input measure to determine the extent of progress towards completion of the performance obligation. For certain business units within the Water, Energy and MPT reporting units, revenue is recognized over time as work is performed based on the relationship between actual costs incurred to date for each contract and the total estimated costs for such contract at completion of the performance obligation (i.e. the cost-to-cost method). We believe this measure of progress best depicts the transfer of control to the customer which occurs as we incur costs on our contracts. Incurred cost represents work performed, which corresponds with the transfer of control to the customer. Contract costs include labor, material and overhead. Contract estimates are based on various assumptions to project the outcome of future events. These assumptions include labor productivity and availability; the complexity of the work to be performed; the cost and availability of materials; the performance of subcontractors; and the availability and timing of funding from the customer. Revenues, including estimated fees or profits, are recorded proportionally as costs are incurred. For certain business units within the Energy and Dispensing reporting units, revenue is recognized ratably over the contract term.

As a significant change in one or more of these estimates could affect the profitability of our contracts, we review and update our estimates regularly. Due to uncertainties inherent in the estimation process, it is reasonably possible that completion costs, including those arising from contract penalty provisions and final contract settlements, will be revised. Such revisions to costs and income are recognized in the period in which the revisions are determined as a cumulative catch-up adjustment. The impact of the adjustment on profit recorded to date on a contract is recognized in the period the adjustment is identified. Revenue and profit in future periods of contract performance are recognized using the adjusted estimate. If at any time the estimate of contract profitability indicates an anticipated loss on the contract, we recognize provisions for estimated losses on uncompleted contracts in the period in which such losses are determined.

The Company records allowances for discounts and product returns at the time of sale as a reduction of revenue as such allowances can be reliably estimated based on historical experience and known trends. The Company also offers product warranties (primarily assurance-type) and accrues its estimated exposure for warranty claims at the time of sale based upon the length of the warranty period, warranty costs incurred and any other related information known to the Company.