10-QPeriod: Q3 FY2008

AMETEK INC/ Quarterly Report for Q3 Ended Sep 30, 2008

Filed November 5, 2008For Securities:AME

Summary

AMETEK, Inc. (AME) reported strong financial results for the third quarter and the first nine months of 2008, demonstrating robust growth despite a challenging economic environment. The company achieved record sales, operating income, net income, and diluted earnings per share in the third quarter, driven by significant organic growth and strategic acquisitions. This performance underscores AMETEK's diversified business model and its ability to execute effectively across its Electronic Instruments Group (EIG) and Electromechanical Group (EMG). For the nine months ended September 30, 2008, AMETEK saw a substantial increase in net sales (22.8%) and net income (22.2%), largely fueled by a combination of strong internal growth (approximately 6% organic, excluding currency effects) and contributions from recent acquisitions. The company's backlog also reached a record high, indicating continued demand for its specialized products and solutions. Despite increased debt levels due to acquisitions and financing activities, AMETEK maintains a strong liquidity position and confidence in its ability to meet future financial obligations.

Financial Highlights

30 data points
Beta

Revenue

$647.42M

Net Income

$70.92M

11.0% Net Margin

EPS (Diluted)

$0.29

Cash & Equivalents

$166.50M

Free Cash Flow

$51.66M

Financial Statements
Beta
Revenue$647.42M
SG&A Expenses$78.22M
Operating Expenses$527.36M
Operating Income$120.06M
Interest Expense$15.53M
Net Income$70.92M
EPS (Basic)$0.30
EPS (Diluted)$0.29
Shares Outstanding (Basic)239.27M
Shares Outstanding (Diluted)242.05M

Key Highlights

  • 1Record-breaking third quarter and nine-month performance with significant increases in net sales, operating income, and net income.
  • 2Strong organic growth of approximately 6% (excluding currency impact) across both Electronic Instruments Group (EIG) and Electromechanical Group (EMG).
  • 3Aggressive acquisition strategy continued, with approximately $399 million invested in six acquisitions during the first nine months of 2008, contributing to sales growth.
  • 4Diluted earnings per share (EPS) saw a substantial increase, rising 24.5% year-over-year for Q3 and 21.9% for the nine-month period.
  • 5Company's backlog reached a record $789.0 million as of September 30, 2008, up 14.6% from December 31, 2007, indicating strong future demand.
  • 6Increased debt levels due to acquisitions and senior note issuances, leading to a rise in the debt-to-capital ratio to 45.9% from 42.1% at year-end 2007.
  • 7AMETEK affirmed its strong liquidity position, with approximately $457 million available under credit facilities and confidence in meeting future financial needs despite broader economic concerns.

Frequently Asked Questions

AMETEK continued its active acquisition strategy, investing approximately $399 million in six businesses during the first nine months of 2008. These acquisitions, along with those from prior periods, significantly contributed to the reported increase in net sales and expanded the company's market presence and technological capabilities across both the Electronic Instruments Group (EIG) and Electromechanical Group (EMG).

Despite an increase in total debt to $1,157.9 million due to recent acquisitions and senior note placements, AMETEK reported a strong liquidity position. As of September 30, 2008, the company had approximately $457 million available under its credit facilities. Management expressed confidence in the company's cash-generating capabilities and access to long-term capital to meet its financial obligations and support future growth.

Both segments demonstrated strong performance. The Electronic Instruments Group (EIG) saw a 19.6% increase in sales for Q3 and a 20.5% increase for the nine months, with operating margins improving to 22.4% (Q3) and 22.8% (nine months), driven by its aerospace, power, and process/analytical businesses. The Electromechanical Group (EMG) experienced a 26.1% sales increase in Q3 and a 25.6% increase for the nine months; however, its operating margins saw a slight decrease to 17.4% from 18.1% in the prior year's nine-month period, primarily attributed to the dilutive impact of recent acquisitions.

AMETEK highlighted several forward-looking risks, including the ability to successfully integrate future acquisitions, risks associated with international operations, product development, raw material costs, government regulations (especially environmental), competitive pressures, maintaining adequate liquidity and financing, and general economic conditions affecting the industries it serves.