10-QPeriod: Q2 FY2010

AMETEK INC/ Quarterly Report for Q2 Ended Jun 30, 2010

Filed August 5, 2010For Securities:AME

Summary

AMETEK Inc. reported a strong second quarter and first six months of 2010, demonstrating a significant rebound from the previous year. The company saw substantial increases in net sales, operating income, and net income across both its Electronic Instruments and Electromechanical segments. This growth was driven by higher order rates, organic sales increases, and the successful integration of several strategic acquisitions made in late 2009 and early 2010. Investors can view this period as a strong positive indicator, with the company exceeding prior year performance and showing continued operational improvement. The positive outlook for the remainder of 2010, coupled with robust cash flow generation and a disciplined approach to capital allocation, including share repurchases and strategic acquisitions, suggests AMETEK is well-positioned for sustained growth and profitability.

Financial Highlights

49 data points
Beta

Revenue

$591.94M

Net Income

$67.39M

11.4% Net Margin

EPS (Diluted)

$0.28

Total Assets

$3.27B

Cash & Equivalents

$230.79M

Free Cash Flow

$81.64M

Financial Statements
Beta
Revenue$591.94M
SG&A Expenses$69.85M
Operating Expenses$476.35M
Operating Income$115.59M
Interest Expense$16.73M
Net Income$67.39M
EPS (Basic)$0.29
EPS (Diluted)$0.28
Shares Outstanding (Basic)237.75M
Shares Outstanding (Diluted)240.00M

Key Highlights

  • 1Consolidated net sales increased by 12.8% to $591.9 million for Q2 2010 and by 6.6% to $1,148.6 million for the first six months of 2010, compared to the prior year periods.
  • 2Segment operating income saw significant growth, rising 24.4% in Q2 2010 to $126.0 million and 10.1% in the first six months of 2010 to $238.4 million, with operating margins improving to 21.3% and 20.8% respectively.
  • 3Net income grew by 30.1% to $67.4 million in Q2 2010 and by 13.0% to $125.3 million for the first six months of 2010.
  • 4Diluted Earnings Per Share (EPS) increased by 31.3% to $0.63 for Q2 2010 and by 13.6% to $1.17 for the first six months of 2010, indicating strong profit growth on a per-share basis.
  • 5The company successfully integrated multiple acquisitions (Ameron Global, TSE, Sterling Ultra Precision, Imago Scientific Instruments) which contributed to the sales growth.
  • 6New orders increased significantly by 26.1% for the first six months of 2010, and the backlog of unfilled orders grew to $725.9 million, up 12.0% from year-end 2009, signaling future revenue strength.
  • 7AMETEK repurchased 271,762 shares of common stock for $41.45 per share in Q2 2010 under its authorized repurchase program.

Frequently Asked Questions

The substantial increase in revenue and profit was driven by a combination of factors, including a general increase in order rates, strong internal sales growth of approximately 12% in Q2, and the positive contributions from several acquisitions completed in late 2009 and early 2010, such as Ameron Global and Technical Services for Electronics (TSE). Improved operational efficiency through Operational Excellence initiatives also contributed to margin expansion.

The acquisitions made in late 2009 and early 2010, including Ameron Global, Sterling Ultra Precision, Imago Scientific Instruments, and Technical Services for Electronics (TSE), were integrated successfully and contributed positively to both net sales and segment operating income. For instance, Electromechanical segment sales were boosted by the contributions of Ameron Global and TSE.

The company expressed a positive outlook, expecting operating results throughout the remainder of 2010 to show further strength compared to 2009. This expectation is supported by continued strength in order rates, the growing backlog, and the ongoing integration of acquisitions, alongside the company's focus on operational excellence.

AMETEK generated $180.4 million in cash from operating activities in the first six months of 2010, with free cash flow at $167.7 million. The company is actively managing its capital through strategic acquisitions, a share repurchase program, and maintaining a solid liquidity position with $230.8 million in cash and cash equivalents as of June 30, 2010. Debt levels remain manageable, with a debt-to-capital ratio of 39.5%.