10-QPeriod: Q3 FY2001

AMETEK INC/ Quarterly Report for Q3 Ended Sep 30, 2001

Filed November 9, 2001For Securities:AME

Summary

AMETEK, Inc. reported steady financial performance for the nine months ended September 30, 2001, with net sales increasing by 2.0% to $782.0 million compared to the prior year's $766.4 million. Net income also saw a modest rise to $54.7 million from $51.3 million, translating to diluted EPS of $1.63, up from $1.58. This growth was primarily driven by strategic acquisitions within the Electromechanical Group (EMG), which offset declines in some of the Electronic Instruments Group's (EIG) markets due to a general economic slowdown. Despite revenue pressures in certain segments, the company demonstrated effective cost management and operational excellence, maintaining segment operating income margins at approximately 15.1%. The company also strengthened its financial flexibility by securing a new $300 million revolving credit facility.

Key Highlights

  • 1Net sales for the nine months ended September 30, 2001, increased by 2.0% to $782.0 million, compared to $766.4 million in the prior year.
  • 2Net income grew to $54.7 million for the nine-month period, up from $51.3 million in the same period last year, with diluted EPS rising to $1.63 from $1.58.
  • 3The company completed two key acquisitions in 2001: EDAX, Inc. for $37 million and GS Electric for approximately $32 million, integrating them into the Electronic Instruments Group and Electromechanical Group, respectively.
  • 4Despite a general economic slowdown impacting some markets, particularly within the Electronic Instruments Group, overall segment operating income increased slightly to $118.1 million from $116.9 million.
  • 5AMETEK secured a new $300 million, five-year unsecured Revolving Credit Facility on September 17, 2001, replacing a previous $195 million facility, to support growth plans.
  • 6The company is preparing for new accounting standards, including FASB Statements No. 141 and 142, which will impact business combinations and goodwill accounting, potentially eliminating approximately $12 million in annual goodwill amortization expense.
  • 7As of September 30, 2001, the company had $7.9 million in cash and cash equivalents and $129.7 million in unused borrowing commitments under its new credit facility.

Frequently Asked Questions

For the third quarter ended September 30, 2001, AMETEK reported net sales of $256.5 million, a slight increase of $1.4 million (0.5%) compared to $255.1 million in the prior year. For the first nine months of 2001, net sales increased by 2.0% to $782.0 million from $766.4 million in the same period of 2000.

AMETEK completed two significant acquisitions in 2001: EDAX, Inc. for $37 million and GS Electric for approximately $32 million. The acquisition of EDAX contributed to the sales increase in the Electronic Instruments Group (EIG), while the GS Electric acquisition helped offset sales declines in the Electromechanical Group (EMG). The company states that had these acquisitions been made at the beginning of 2001 or 2000, they would not have materially affected reported sales or earnings.

The company noted a general economic slowdown affecting its process and industrial businesses within EIG, as well as weakness in North American and European floor-care markets for EMG. The aftermath of September 11, 2001, has led to significant weakening in order input. Consequently, AMETEK expects fourth-quarter operating results to be lower than the fourth quarter of 2000.

AMETEK strengthened its liquidity by securing a new $300 million revolving credit facility. Total debt outstanding increased to $447.2 million from $406.2 million at the end of 2000, partly to fund acquisitions. However, debt as a percentage of capitalization slightly decreased to 57.8% from 59.1%. EBITDA coverage of interest expense improved to 6.5 times. The company believes it has sufficient cash generation and credit facilities for its foreseeable needs.