10-QPeriod: Q2 FY2013

AMETEK INC/ Quarterly Report for Q2 Ended Jun 30, 2013

Filed August 7, 2013For Securities:AME

Summary

AMETEK, Inc. reported a solid second quarter and first half of 2013, demonstrating consistent growth and operational efficiency. For the second quarter, net sales increased by 6.4% to $878.8 million, driven by strategic acquisitions and steady operational excellence initiatives. Net income rose by 12.8% to $128.3 million, resulting in diluted earnings per share of $0.52, up from $0.47 in the prior year period. The company highlighted strong performance in both its Electronic Instruments Group (EIG) and Electromechanical Group (EMG), with EIG seeing a 6.9% sales increase and EMG an increase of 5.8%, both benefiting from recent acquisitions and efficiency gains. For the first six months of 2013, AMETEK continued its positive trajectory with net sales up 6.6% to $1.76 billion. Net income for the period grew by 13.3% to $253.5 million, translating to diluted EPS of $1.03, an improvement from $0.92 in the same period last year. The company generated strong free cash flow of $263.4 million, indicating robust operational performance and effective cash management. AMETEK's financial health remains strong, with a declining debt-to-capital ratio and ample liquidity to support ongoing operations and future growth opportunities, including a recent acquisition announced in August 2013.

Financial Highlights

48 data points
Beta

Revenue

$878.81M

Net Income

$128.32M

14.6% Net Margin

EPS (Diluted)

$0.52

Total Assets

$5.19B

Cash & Equivalents

$207.61M

Free Cash Flow

$117.47M

Financial Statements
Beta
Revenue$878.81M
SG&A Expenses$94.91M
Operating Expenses$676.20M
Operating Income$202.61M
Interest Expense$18.15M
Net Income$128.32M
EPS (Basic)$0.53
EPS (Diluted)$0.52
Shares Outstanding (Basic)243.67M
Shares Outstanding (Diluted)246.10M

Key Highlights

  • 1For the second quarter of 2013, AMETEK reported record operating income, net income, and diluted earnings per share, highlighting operational strength and successful integration of recent acquisitions.
  • 2Consolidated net sales for Q2 2013 increased by 6.4% year-over-year to $878.8 million, driven by contributions from acquisitions like Micro-Poise and Dunkermotoren.
  • 3Net income for Q2 2013 grew by 12.8% to $128.3 million, and diluted EPS rose to $0.52 from $0.47 in Q2 2012.
  • 4First six months of 2013 saw net sales increase 6.6% to $1.76 billion, with net income up 13.3% to $253.5 million and diluted EPS at $1.03.
  • 5Free cash flow for the first six months of 2013 was robust at $263.4 million, demonstrating strong cash generation capabilities.
  • 6The company's balance sheet shows improved financial health, with total debt decreasing and the debt-to-capital ratio falling to 31.1% as of June 30, 2013.
  • 7AMETEK announced the acquisition of Controls Southeast (CSI) in August 2013 for approximately $160 million, expanding its presence in the thermal management solutions market.

Frequently Asked Questions

AMETEK's sales growth in the second quarter of 2013 was primarily driven by the contributions from recent acquisitions, notably Micro-Poise Measurement Systems (acquired October 2012) and Dunkermotoren GmbH (acquired May 2012). The company also benefited from its ongoing 'Operational Excellence' initiatives.

Profitability improved significantly. Operating income increased by 9.5% to $202.6 million, and net income grew by 12.8% to $128.3 million. Diluted earnings per share rose to $0.52 from $0.47 in the prior year's second quarter, reflecting improved operational margins and effective cost management.

AMETEK reported strong liquidity with $207.6 million in cash and cash equivalents as of June 30, 2013. Cash provided by operating activities increased by 11.1% to $285.0 million for the first six months of 2013. The company's debt-to-capital ratio improved to 31.1%. Management believes it has sufficient cash-generating capabilities, available credit facilities, and access to long-term capital to meet its operating needs and obligations in the foreseeable future.

AMETEK is involved in asbestos-related lawsuits, which it believes it has strong defenses against and is vigorously defending. Regarding environmental matters, the company is a Potentially Responsible Party (PRP) at 14 non-owned former waste disposal sites, with most being 'de minimis' in nature. Reserves of $21.9 million were established for environmental liabilities at June 30, 2013. Management believes these reserves are sufficient and the ultimate costs will not materially affect the consolidated financial statements.