Good morning. My name is Sarah, and I will be your conference operator today. At this time, I would like to welcome everyone to the IDEX Corporation Q3 2012 Earnings Conference Call. All lines have been placed on mute to prevent any background noise. After the speakers’ remarks, there will be a question-and-answer session. (Operator Instructions) Thank you. Mr. Michael Yates, Vice President and Chief Accounting Officer. You may begin your conference.

Thank you, Sarah. Good morning, everyone. And thank you for joining us for our discussion of the IDEX third quarter 2012 financial highlights. Last night, we issued a press release outlining our company’s financial and operating performance for the three and nine-month period ended September 30, 2012. 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 from IDEX management are Andy Silvernail, our Chairman and CEO; and Heath Mitts, Vice President and Chief Financial Officer. The format for our call today is as follows, we will begin with Andy providing some insights from his first year as CEO, and a summary of our strategic planning process that was recently completed. And then, we will provide an updated view on our capital allocation strategy. Next, we will discuss the third quarter 2012 results, followed by a walk-through of our three business segments. And finally, we will wrap-up with our outlook for the reminder of the year. Following our prepared remarks, we’ll then 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 855-859-2056 and entering conference ID number 40918415 or you may simply log on to our company’s homepage for the webcast replay. As 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. Andy?

Thanks, Mike. Good morning, everyone. I’d like to thank you for joining us as we talk about the third quarter. In the quarter, we beat the high-end of our expectations, profitability and cash flow to good execution across the corporation. I’m proud how the team is delivering in the phase of a difficult micro-economic environment. As Mike said, before going into the quarterly results and our outlook for the balance of the year. I’m going to take a few minutes to give some insight from my first year as CEO and a brief overview of our recently completed strategic plan. As I stepped into the role on August 2012, excuse me, 2011, a new wave of issues started to roll through the global economy. The U.S. government faced off over the debt ceiling, Europe’s financial issues came to the front and China began an aggressive -- aggressively to work to avoid a hard landing, month-to-month and quarter-to-quarter we’ve seen markets, regions and customers want from one side to the other from rapid demand to hesitant restrained and back. This volatility has been a hallmark of the global economy since modeling out of the great recession. I feel very good about how our team is engaging these challenges, delivering solid results, particularly in profitability and cash flow. Our attitude, the attitude we have internalized, that we need to take advantage of these times. We need to out compete to win for our customers, our shareholders and our employees and doing so, we can consistently position ourselves to be the partner of choice and earn the right to grow. Leadership emerges in difficulty and our team has done that in 2012. This has been one of the most satisfying aspects of the past 15 months. My top priority is to foster outstanding…

(Operator Instructions) Your first question comes from the line of Allison Poliniak with Wells Fargo.

Good morning, guys.

Hi, Allison.

On the organic revenue growth assumption for 2012, it seems like you guys have obviously ticked it down a little bit. Is there anything specific from Q2 to Q3 that is driving that or is it just general and macro overall?

Allison, it’s really the general macro. I think, like we’ve all seen here in the news and then the recent releases. The big trends continued to be Europe, that’s kind of been and overall as the biggest hole. China in the quarter, as we’ve talked about before, we saw deceleration happening really late this kind of last time last year, fourth quarter last year. And we saw that in 2Q and 3Q and then, I would say the one thing that might be a little bit different is we get a sense that capital spending -- larger capital spending really tightened up in the third quarter. And from the quote activity that we have, it doesn’t look like that’s a long-term trend. It really looks like that’s some clamping down in advance of the elections and the end of year issues relative to the fiscal cliff.

Great. And then you guys did a great job on the execution side. Obviously there is a lot of uncertainty out there, how should we be thinking about going forward in terms of daily get quote down 5%? Do you still have the ability that you think will hold margins relatively flat at this point, I know without the volumes?

Allison, with core down 5%, that’s awfully tough to offset, right. At the same time, we believe that if we saw in our recession, if we saw recession like we did in 2008, 2009 as you might imagine we get this question a lot. We took out mid-$40 million of costs when that happened. And just to be clear, we don’t have that kind of same amount of cost to take out. We didn’t add back anywhere near the cost that we took out in that time period. But we think we could take out in the neighborhood of $20 million or so if we had a substantial drop. So the way that I kind of encourage people to build up a model and those things is think about the contribution margin flow-through of a drop like that, and then add back on an annualized basis kind of that $20 million rate.

Great. Perfect. Thank you.

Thanks, Allison.

Your next question comes from the line of Scott Graham with Jefferies.

Good morning, Scott.

Same track horse side. You’ve taken restructuring charge in a number of successive quarters, Andy and I’m just wondering, what the cost savings benefit it will be from them? How much have we seen of it and how much is still in front of us?

Scott, we haven’t been real specific with it. Let me give you some general guidance. The cost that we took out again kind of referencing back to ‘08, ‘09, those were costs that came out of regions that typically had quicker payback just frankly because of the structural costs and severance associated with them are lower. The costs that we’ve been going after year here this year are more expensive cost with a little bit longer payback. If the other ones were called 12 to 15 months, these are more 18 to 24 month paybacks generally. I would say, we’ve gotten less than a quarter. Is that fair? With less than a quarter eaten in cost out that we think we’ll see on an annualized basis. The reason being is a lot of the stuff is going to get finalize in the fourth quarter, right, the actual costs finally coming out. So, Heath, anything to add there?

No. That’s right. You’ll see additional restructuring in the fourth quarter, as we wrap up the internally announced items that are in play as we speak. And then obviously you saw the $7 million restructuring number in the third quarter, most of which that we start to see the benefit from late this year but really more in the next Jan.

So think of kind of two-thirds to three quarters, we will see in 2013 and beyond.

So, but when you say payback, are you saying dollar-for-dollar on the charge?

Yeah. It’s kind of how we think. We think of it as kind of a cash basis. You bet.

Okay. Now is this incremental to what has historically been this $20 million to $25 million of productivity?

It is. It is. Scott, most of that $20 million, $25 million is going to be more around sourcing activities than restructuring, right. That $20 million to $25 million is kind of shifted more towards three quarters of which, is more sourcing material savings, and the remaining piece being more the operational excellence savings. As you would expect coming out of the last recession, we just don’t have the direct labor base to work from in terms of that size. There tends to be things more around things that are associated with on-time delivery scrap reduction, overtime reduction and those types of things, so. But the restructuring dollars we are really talking about here are in a different bucket in the sense that they tend to be more associated with facilities going away.

Overhead. Got it. Right.

Good. Thank you. Last question is this picture of this balance between acquisitions and share repurchases are pretty big chunks we’ve seen historically from the company. So, I’m just wondering kind of why we hear, I mean I certainly understand the tenants of returns on invested capital and your focus on them. It’s just that historically you’ve been much more tilted obviously toward M&A, and I’m just kind of wondering, what landed it here? Is it a change in the M&A environment, are prices too high or is this just Andy Silvernail stamp?

That’s a great question, Scott. I appreciate it. We’ve put an awful lot of thought into this over the past year, and it really is a combination of things. So let me first state that our strategic acquisitions remain number one. All things being equal, once we fully funded organic growth and we’ve paid kind of dividend as we’ve kind offsetting range. All things being equal, we want to do strategic acquisitions. That being said, acquisitions don’t exist in a vacuum, they exist in a market. And there are going to be times when acquisitions are not as attractive and they are going to be times when IDEX is more attractive and we think the same valuation techniques and the same level of discipline thinking are going to both of those. And so when we see dislocations, we think we ought to be flexible enough to do so. I think we want to be very, very clear. We don’t intend to be a company that is consistently on the far end of share repurchases, that’s not our intention. But when the opportunities present themselves, we want to be prepared to take advantage of that. And then when you at today’s market, as I mentioned in my prepared remarks if you look at medium and large acquisitions or M&A properties that are of any quality at all, there is a dislocation versus any historical standard that exist right now. You’re seeing industrial properties trading at 12, 13, 14, 15 plus times EBITDA for things that are substantially, substantially of lower quality than IDEX as the whole. And so we’re just, we are not interested in that game. I guess that’s funny math that we can get our head around. Now at the same time, when you look at the small to medium-sized market, there’s still stuff out there. We’ve got stuff in our funnel today that we are very excited about. We could potentially close some this year, we will see. It’s a little bit tougher to do right now, but that is smaller, that are of high quality and we can put capital to work that really fits our strategy. As an example, if you look at the three deals we’ve done this year, they average 7 to 7.5 times EBITDA pre- synergy they all fit nicely into our platform strategy and that’s the kind of game we want to play. Now, we love if they were bigger, if they were three times the size of what they are but we’re going to be disciplined.

Thank you very much.

Thanks Scott.

Your next question comes from the line of Robert Barry with UBS.

Hello.

Hi, Robert.

I just wanted to clarify on the 4Q outlook for sales. I think you said about flattish organically. It sounds like FSD up nicely, HST up maybe a little and FMT down a fair amount perhaps. Is that kind of directionally how you’re thinking about it?

Robert, this is Heath. We didn’t specifically guide by segment but I think directionally that’s you’re not that far.

Okay.

We’re going to -- we’re going to continue to benefit in FSD on the -- from some of the replenishment activity as well as there is a little bit of seasonality in FSD especially with rescue tools business. It tends to have the strongest quarter of the year. It tends to be the fourth quarter.

Yeah.

So as you think about things on either on sequential basis, you will see a little bit of uptick there. On a year-over-year basis, it’s merely more of the dispensing activity going on.

I wanted to just drill down into FMT a little bit on the chemical project activity. I know a big theme, we’ve been talking about for a while is cheap shale gas…

Yeah.

…investment there, I mean, maybe there is less drilling for gas but the gas is still cheap. Has that dynamic change or maybe within chemical, what’s the dynamic that’s causing that slow down?

There are a couple of things, one is kind of the impact shale gas more broadly and two is is what’s going on in CFP, we call it chemical, food, process. So the shale gas play as we kind of say consistently we don’t play really big in that. We play in the custody transfer side and in the store side to a degree. We never had that kind of crazy ramp-up that happened over the past 24 months and we didn’t have crazy ramp down. So then we can put that to that side.

Yeah. Just talking in the context of a chemical investment that it was engendering?

That’s a good point. What we’ve seen in the overall CFP platform is what I would call is really leveling off right now. A big piece of it, there are two things that work on C. Number one, that the project business that this kind of driven at the OEM level specifically as you look at Asia, that did tighten up in the quarter. There is no doubt about that. The day rate business that is a kind of flow business is coming through distribution. Generally, that looks pretty good. So less concerned about that than I am about some of the capital stuff but there is some leveling off generally of that business as you know that that has been a horse that we’ve ridden. It’s been incredibly strong for us for a long-time here and we’ve seen growth slowdown a little bit.

Maybe if I could quickly shift focus to the margin side and in HST, I know that you had talked about exiting the year at about an 18.5%, mid 18, I think was the comment. How is that trending? I know that the margins sequentially take down a little bit in the quarter. I don’t know if a lot of the restructuring cost should be adjusted out of that 17.3%, just maybe a little color on how you’re thinking about the outlook for the margins on HST?

No, Robert, the sequential margins for the segments actually ticked up about 70 basis points.

140 apples-to-apples.

Yeah, apples-to-apples, it’s been 140 because we did have some acquisition impact with the Matcon deal and the costs associated with that deal, both the step up as well as just the acquisition-related costs there. So we’re on track from the cost. Our perspective and that is mainly around the optics platform that we discussed, I think last quarter. I would say at the current volume rate, we’re probably somewhere between mid 17’s to 18% in terms of that -- where that segment is going to end up for the year on an exit rate. So went down a little bit but that’s really more following the volume trend than anything else. If anything I’d say we’re exceeding our expectations from a costing -- from a cost-out perspective relative to what our plans have been for that segment.

Okay. That’s helpful. Thank you very much.

Thanks Robert.

Thanks Robert.

Your next question comes from the line of Mike Halloran with Robert W. Baird.

So on the commentary you made about refocusing or continuing to focus or even more aggressive focus on higher growth end markets, higher growth product categories, higher growth geographies. Does that have any implications for a divestiture strategy? Any change there?

We’ve really remained very consistent with how we thought about any type of divestitures. One of the challenges that we have in the things that get talked about often is that they’re very, very high return on cash-on-cash returns. And unlike some of our businesses that sit within HST and FMT, you don’t have what I’ll call -- there aren’t really a lot of strategics out there. They’re going to get synergy benefits by and therefore can really pay up in this market. There are really more businesses that would likely be a private equity type transaction and even with the frothy markets that we’re seeing today, those kind of properties are seeing 10 or 11 times multiple. So the answer to your question Mike is we’re not going to sell our business unless we believe it’s absolutely the right thing for the shareholders overall. And that would really have to mean that you got at the right price with the right partner and candidly that’s hard to see happening in the immediate term.

So no real change there and then, just kind of walking through that $1.5 billion plus capital deployment and trying to put the -- put the categories in the buckets, if you continue your dividend growth at the pace you’re at, you probably in that $75 plus million of expenditures per year on that side buybacks, $40 million to $70 million, give or take maybe little bit less. Could you kind of then split how you’re thinking about the internal organic investment side, maybe give some perspective and on how much capital you’ve been spending on that side over the last few years or maybe percent of revenue, percent of cash flow something like that and then maybe compare contrast a little bit on that side?

Yeah. Great question by the way, Mike. As we think about this, you’re right, the dividend is kind of 225 to 250, all up, I think about $1.5 billion as a whole. It probably -- range you laid out for buybacks, all things you’re kind of equal that, that’s probably about right too, right end up, lets just call that $150 million to $200 million plus or minus, somewhere in there. And so you end up with about $1 billion left right and the reason I say billion left is in that number, we’re already thinking about organic investments being fully funded. We very, very rarely say no to an organic investment. The return on tangible capital of our businesses is very, very high and therefore we’re able to make these investments and feel very good about them. And even with that, it’s -- they just simply don’t absorb -- can absorb the kind of free cash flow that we throw off. So now that being said you can tell from my prepared remarks around product development, around business development and around product management. We want to move some more resources across the business ended there but we think we can fund that by kind of taking cost out of other places, some of the overhead cost we’ve been taking out and reinvesting them without having to give up the margin expansion opportunities we talked about. So what that really does is that leaves about $1 billion for either strategic acquisitions or in a likelihood we would have some kind of event where you can do acquisitions and absorb the kind of capital. We’ll redeploy it elsewhere. So go ahead.

So really basically then when you think about it, you guys have been talking on an annualized basis $300 plus million of acquisitions pretty consistently. Now you flexed up and flexed down a little bit in certain years over the last couple of years but honestly, this sounds like not much of a change from the acquisition standpoint from an intense standpoint, just recognizing that the external environment maybe might not be as conducive at periods of time. So augmenting it more to share repurchase side but not much of a change in the overall acquisition stand -- from an overall acquisition deployment standpoint?

Yeah. I think, I think that’s a fair statement that would -- I guess, the only thing I would make exception to is that we’re certainly growing, that we think that EBITDA is going to grow and give us more leverage over time but generally we think -- we agree with you.

That’s great. Thanks for the time guys.

Thanks, Mike.

Your next question comes from the line of Matt McConnell with Citi.

Hey, Matt.

Really, I’d like to follow-up on that, how you get it to $1.5 billion because it looks like that’s a nice multiple of what you have been earnings over the next three years. And even if we give you credit for good free cash flow conversion, what else is in there that can get you that $1.5 billion and had you been talking about the number of like 1 to 1.2 previously?

Matt, this is Heath. We have been talking about number of 1 to 1.2 and it does assume on top of our free cash flow generation, some moderate room for taking on some debt to the flex up into you know somewhere between 2 and 2.5 times EBITDA if we needed to fund the acquisitions and do everything else, we just laid out there.

Okay.

Yeah, Matt, we have $600 million today on our revolver that’s untapped.

Yeah.

And then, you got the cash flow, an incremental leverage on the cash flow.

Okay. Great. That’s helpful. And then if I could touch on CVI, is there anything big left to do from a cost perspective and maybe if you could give us an update of what the revenue run rate is and maybe where we’d need to get. I know, you had been talking about the mid-teens operating margin? How much more incremental revenue would you need to kind of bring that back to the discussion for CVI?

So generally, from a cost execution standpoint, we’ll finish what we had laid out in Q4. And I’ll say that we are very much on track to execute what we had laid out when we talked about in detail and we’ve more detail rather in our Q2 call. As I said, the platform as a whole built, overall we built backlog in the quarter. That was nice because we had done that in a while. So I think we’re on track to that. Now that being said, the defense markets and the semiconductor market are still not being particularly helpful, right. So the overall demand is still not great. We did see a bounce back in on the scientific side and in life sciences generally in the quarter, which is good news. But to get to that kind of mid-teens that we’re talking about we still need a little bit of help on the topline but not of time.

Okay. Great. That’s helpful. Thanks very much.

Thanks Matt.

Your next question comes from the line of Charlie Brady with BMO Capital Markets.

Andy, with respect to your comment and towards the tail end of your prepared comments when you said somewhere along the lines that you’re trailing towards the low end EBITDA. Can you give us the sense of the tenor of business as you went through the quarter and has that changed much going into the first part of October that leads you to kind of comment?

Thanks Charlie. Actually, the order in sales book was pretty level throughout the quarter. I’ll say it improved a little bit towards the back end of the quarter but that’s kind of typical. That’s not atypical. October has been okay and when I say okay it’s been coming in line with our expectations. We’re pretty hesitant to call anything different from the trend what we’ve seen in October, just because it’s so early on. We really only have two weeks of view from it. There is nothing in there. At this point, I think it threatens the bottom end of that expectation that we’re talking about. At the same time, I would say that we’re definitely tracking if the result that we are seeing today in the backlog we came into the quarter with, we expect that we finished at the low-end of those expectations. And I think that’s a safer thing to do. If you see some rebound from capital spending, if you see rebound -- rebound at all in Europe which we don’t expect in China, which could happen and potentially some inventory fill that’s what get you to the higher end of that expectation but I think it’s very, very safe to say that we -- with that lower end is what we expect at this point.

Okay. Thanks. And on the fire, diversified dispensing side of the business how much of that organic growth is being driven by that sell of the large order that’s going to kind of fill out into Q1 of ‘13. It did bulk of that organic growth or is there other stuff within that business that’s also seeing up?

Everything in the quarter was up modestly. Rescue tools and Band-It did okay. So I mean, I was still getting some significant help at the segment level from that order, but it wasn’t the whole thing now.

Okay. And then just on a…

Even the fire piece on organic basis is held in okay, given the macro trends.

Okay. That’s helpful. Thanks. And just on a largest sort of bigger picture longer-term outlook as we look kind of your commentary about how you want to grow the above global GDP by 200 to 300 basis points and kind of your M&A outlook right now, I mean what do you think kind of the mixes on longer-term organic growth, I guess that’s 200 to 300 basis points above global GDP, but kind of where how much more leverage on organic growth kind of across the cycle or no organic growth, acquisition growth do you think you can get across the cycle given kind of your current framework of how you’re positioning your M&A strategy?

Yeah. If we assume that we can buy a reasonable multiple, so let’s picking average of kind of just say 8, 8.5 let’s just pick that -- pick a number like that. In that kind of environment, you can add five plus points of growth to the topline a year. If you are buying at those kind of rates plus or minus assuming that your buying businesses that aren’t quite as good from a profitability standpoint of IDEX as whole but have the ability to get there. You can add kind of that five plus percent in topline.

Okay. Thanks.

Yeah. Thanks, Charlie.

Your next question comes from the line of Mike Wherley with Janney Capital Markets.

On the Fire and Safety segment, it looks like Band-It and Fire Suppression have been doing a great job of finding new markets for their products. And I was just wondering, if the sale strategy is being used there, can be used or already being used by your other segments?

Yeah. Absolutely, Band-It has long band, really are shining star in taking applications and finding new vertical markets and going really deep in there. They’ve been very, very successful. For Fire, that’s kind of a recent phenomenon and they really moved into the nuclear side of the market, had some success here this year. We had some impact from the Fukushima event but they really has driven some safety initiatives across the global nuclear power front they’ve taken advantage of. So, that’s kind of first and second part is absolutely the focus of grabbing on to some vertical markets and going deep is very valuable. At the same time, I think what’s really important is you got to stay close to your core. Our core businesses are exceptionally good and even in places that we have what I call high market share, this deal lots a room for growth. On a global basis and new applications or new adjacent applications and my real focus with the teams here is let’s maximize our core to the customers that were exceptionally successful with that we over served today and that we know we can make money by creating real value for them. And so, that’s really priority one. But we do, do it, but focus is absolutely on the core.

Okay. And then on the rescue side you said that, you think that this sort of pullback in China is temporary and you expect to get these sales in 2013. What gives you that confidence?

A couple of things, the biggest chunk of the business that we are talking about right here is relative to the Chinese army. And we had some real success in actually signing a long-term agreement there. And I feel very, very good that that spending is going to continue. So, we have an agreement that we think is going to be successful. Unlike, the other players who are in the market, we have an exceptionally strong local presence in China. So, we feel good that that’s going to play out.

Okay. And last of all just on your strategy page, you said that you want to reduce complexity through business segmentation and simplification, can you just add a little bit more detail there?

Yeah. Absolutely, when you look at, at anyone of IDEX businesses, the beauty and the curse of a highly engineered model as you bring in off a lot of complexity into the mix. And as we focused around our best customers and our best products, you can actually take product design, you can simplify product design, you can simplify channel management, you can simplify in the supply chain execution, so getting really tight around those core products and core channels. And then the long tail in businesses like ours, the long tail tends to creep in over the cycle back and back again. And so, you’ve got to take out that complexity and make sure you’re servicing that long tail well, but they are going to be treated differently than the core. And how you resource in terms of how you align people, how you align really throughout the entire supply chain is pretty important.

Thanks a lot.

Thanks, Mike.

Your next question comes from the line of Andrew Noorigian with Vertical Research.

I was just…

Hi, Andrew.

Wanted to touch base on water real quick, I think last quarter kind of sounded like things have turned the corner and maybe you mentioned some signs of life now. Since I could push out past 2013, I was just wondering if anything had change there in the quarter and that what you are seeing in that end market?

What we start to see kind of in the second quarter, specifically in the U.S. as we start to see the order, excuse me, that the quote activity really turn up and just the number of quotes that start to play out. At the same time, if you recall what we said was those quotes were look like they were coming out of operating budgets with smaller over a longer period of time. And they look like things call it necessary maintenance or necessary programs so to speak. And we said we were cautiously optimistic. And I think what’s happening here and I’m talking about the U.S. very specifically municipal water is the funding just has not broke yet. And we -- until you see municipal receipts substantially change and we’ve said there is a couple times in the past, that’s just going to be tough for that to play out. Europe, the Europe piece, we’ve been relatively pessimistic about I would say that pessimism was realized in the third quarter. And you’re just seeing real tightness across that the European municipal budgets that they deal with their fiscal issues. The industrial water piece is okay, that has been solid especially North America, but its municipal Europe that’s the biggest problem. And just we’re not seen quotes turn into -- into order yet in the U.S.

Okay. And then going to be M&A real quick, can you maybe flush out where is the priority allocate the dollars are, is it more in HST, FMT, balance approaching, what kind of end markets are you looking at?

First of all, we really like the balance between FMT and HST. We think that’s an excellent balance over a business cycle. It certainly takes out cyclicality. It allows us, it gives us leverage across multiple platforms. And so, we’ve thought about M&A, is we have the three strategic platforms in HST and three strategic platforms in FMT, and we’ve built organizational muscle around each of those. And its our belief that we’ll be able to far better balance and take advantage of the markets when they are more attractive to us by having that balance approach. And also, and I think very importantly, that organizational structure gives us more muscled to integrate. And if you look at the acquisitions that we’ve done this year so far, yet they all three are happened to be in HST. And pricing by the way is better in HST generally in the marketplaces. We paid very reasonable multiples and each of those sit in a different platform and really eases integration and reduces risks. So you should expect to see that overtime. As you move to a cycle, you’re going to get emphasis in one area over another in period of time, but as you move, generally as you go through the cycle, our intend is to really have balance.

Great. Thank you.

Thanks.

Your next question comes from the line of Jim Giannakouros with Oppenheimer.

You targeted ROIC, can you put some numbers to that as far as, I guess, what your hurdle rates are for internal investments or just how you’re thinking about ROIC overtime on future acquisitions, specific to your strategic plan?

Yeah. No problem, Jim. So, let me talk about ROIC more holistically. The way we’re thinking about it and I know people kind of measured sometimes a little differently, so just to be very consistent. The way we think of it, is EBITDA multiple -- with the tax rate to EBITDA times one minus to tax rate divided by total capital. So, we are looking at a cash on cash returns that include all the goodwill, et cetera, so cash on cash return. As we sit today, we’re sitting at about 11.5% on that measurement. Our goal over time is to increase that and I think a reasonable goal is going to take few years to get there, is to get to that closer to 15%. Our return on tangible assets is multiples of that, right, its very, very good. And our return on investment for our acquisitions, our goal is 12% by year three and 15% by year five. So we can bring up that average closer to the 50% in total. So, that’s how we’re thinking about return on invested capital the businesses and it’s not a fast metric, it doesn’t move quickly. But with expansion on the operating earning side and with good capital management, we think we can get there.

Okay. That is helpful. And just one other quick one. I noticed that your CapEx, I’m sorry, if I missed it, if you commented on that earlier, but it seems like you lowered just a smidge by about $2 million or so versus your previous guidance, is there anything specific you can call out there?

Jim, this is Heath. No. It just really where our run rates coming in for the year. I mean our CapEx items tend to be things with the average ticket prices of $50,000 or less, so it’s not, we deferred a project or anything like that, but we’re about $28 million year-to-date and with our anticipated fourth quarter number it will be somewhere between $37 million and $39 million, we expect to have another $9 million or $10 million in the fourth quarter. So, no changes there, just a couple million off of our earlier expected run rate.

Okay. Great. Thanks very much.

Thank you.

Your final question comes from the line of Matt Summerville with KeyBanc.

I just want to follow-up on Health & Science, make sure, I understand some of the dynamics here. So orders were down 9% organically, but it sounded like from a comment made earlier in the call, you expect that business to grow organically in Q4. Can you just help me filling those blanks or bridge that in terms of how you guys get there?

Yeah. I think you might be confusing, one of the comments I was talking specific about the scientific fluidic platform, so that...

Okay.

… help into analytical instrumentation diagnostics, biotechnology. We -- as you know its been a business is really face the most of the funding concerns, call it governmental funding concerns. And we saw, some we saw -- some of that track down in fourth quarter of last year. So, frankly, we get some easier comparables. If you look at the segment as a whole, we’re still going to comp against the stronger backlog that we had from the optics and photonic platform, and from the -- we had a very strong backlog build coming out of our material process. So, organics, for HST, probably down 3 to 4 in the fourth quarter, somewhere in there and but, I would say, improving sequential trends, certainly from optics and photonics and certainly, from scientific fluidics.

Got it. So the fluidics piece grows a little bit the MPT piece in the industrial side are the worst kind of hit in Q4?

They are. We had a really, really strong third and fourth quarter MPT last year. And it’s a little bit longer cycle business than you folks are used to seeing with us. And so, that was pretty weak from third quarter perspective in this quarter. And the industrial businesses were also weaker, but that takes a little bit longer to play through the backlog.

Great. Thanks, Andy.

Thanks, Matt.

There are no further questions at this time.

Well, thank you all again, very much for joining us for the quarterly call. Again, in a difficult market environment, we think the teams are executing well, specifically on profit and cash flow. and that really is going to be our focus as we move forward, continuing to out compete in a difficult environment and make very good decisions on how we deploy our capital. So, again, thank you very much for your time and we will see you in the next quarter. Thank you.

This concludes today’s conference call. You may now disconnect.