10-KPeriod: FY2008

AMETEK INC/ Annual Report, Year Ended Dec 31, 2008

Filed February 26, 2009For Securities:AME

Summary

AMETEK, Inc. (AME) reported strong financial performance for the fiscal year ended December 31, 2008, with record sales, operating income, net income, and diluted earnings per share. Sales increased by 18% to $2.5 billion, driven by organic growth across both the Electronic Instruments Group (EIG) and Electromechanical Group (EMG), as well as contributions from strategic acquisitions. Despite the challenging macroeconomic environment that began to impact order rates in the fourth quarter, the company demonstrated resilience through its Operational Excellence initiatives and diversified business model. AMETEK continued its growth strategy through several key acquisitions in 2008, expanding its presence in aerospace, motion control, and high-speed imaging markets. The company also maintained a strong focus on new product development and global market expansion. While facing increased debt due to financing activities for acquisitions, AMETEK's liquidity remained solid, and it was in compliance with all debt covenants. The company anticipates potential impacts from the economic downturn in 2009 but remains confident in its ability to leverage its strategic initiatives for continued growth.

Financial Highlights

50 data points
Beta

Revenue

$2.53B

Net Income

$246.95M

9.8% Net Margin

EPS (Diluted)

$1.02

Total Assets

$3.06B

Cash & Equivalents

$86.98M

Free Cash Flow

$203.05M

Financial Statements
Beta
Revenue$2.53B
R&D Expenses$57.50M
SG&A Expenses$322.55M
Operating Expenses$2.10B
Operating Income$432.65M
Interest Expense$63.65M
Net Income$246.95M
EPS (Basic)$1.03
EPS (Diluted)$1.02
Shares Outstanding (Basic)238.83M
Shares Outstanding (Diluted)241.75M

Key Highlights

  • 1Record Sales and Earnings: AMETEK achieved record sales of $2.5 billion, up 18% year-over-year, and record net income and diluted earnings per share.
  • 2Strategic Acquisitions: The company completed six acquisitions in 2008, totaling approximately $290 million in annualized sales, bolstering its capabilities in aerospace, motion control, and high-speed imaging.
  • 3Segment Growth: Both the Electronic Instruments Group (EIG) and Electromechanical Group (EMG) demonstrated growth, with EIG sales up 16.9% and EMG sales up 20.4%.
  • 4Operational Excellence: AMETEK continued to focus on cost reduction and efficiency improvements through its Operational Excellence strategy, contributing to margin strength.
  • 5Increased Debt: The company increased its debt by $208.2 million (net of repayments) to fund acquisitions and pay down its revolving credit facility.
  • 6Restructuring Charges: AMETEK recorded pre-tax charges of $40 million in Q4 2008 related to restructuring and asset write-downs due to the economic downturn.
  • 7Strong Cash Flow: The company generated $203.1 million in free cash flow, despite increased pension contributions.

Frequently Asked Questions

AMETEK delivered a record year in 2008, with sales up 18% to $2.5 billion and strong growth in operating income and net income. Despite a slowdown in order rates starting in Q4 due to the economic crisis, the company's diversified business segments and ongoing cost reduction efforts helped mitigate some of the impact.

In 2008, AMETEK completed six strategic acquisitions, investing approximately $463 million. These acquisitions aimed to expand its market share and capabilities in areas like aerospace repair services, customized motors, specialty metals, and high-speed imaging. These acquisitions contributed significantly to the reported sales growth.

AMETEK raised $350 million in senior notes during 2008, using the proceeds to pay down its revolving credit facility. The company also repaid $225 million in maturing senior notes. This led to an increase in total debt and a higher debt-to-capitalization ratio, but the company remained in compliance with all debt covenants and maintained adequate liquidity.

AMETEK identified several risks, including the adverse impact of current economic conditions and an uncertain economic outlook, downturns in key industries like aerospace and defense, potential challenges in integrating acquisitions, and risks associated with its substantial international operations and currency fluctuations.