10-QPeriod: Q1 FY2014

AMETEK INC/ Quarterly Report for Q1 Ended Mar 31, 2014

Filed May 6, 2014For Securities:AME

Summary

AMETEK, Inc. (AME) reported a strong first quarter of 2014, demonstrating robust growth across key financial metrics. Net sales increased by 10.5% year-over-year to $975.3 million, driven by a healthy combination of internal sales growth (3%) and contributions from recent acquisitions (7%). This top-line growth translated into significant operating leverage, with operating income rising by 12.4% to $221.6 million and net income growing by 12.4% to $140.6 million. Diluted Earnings Per Share (EPS) improved to $0.57, up from $0.51 in the prior year's quarter. The company's strategic acquisitions, including Teseq Group and VTI Instruments in early 2014, are already contributing to growth and expanding AMETEK's Electronic Instruments Group (EIG). EIG showed particularly strong performance with an 18.1% increase in net sales. The Electromechanical Group (EMG) also saw modest growth. AMETEK maintained a solid financial position with healthy operating cash flow of $161.0 million and a manageable debt-to-capital ratio of 30.1%. The company also announced a significant subsequent event: a definitive merger agreement to acquire Zygo Corporation for approximately $280 million, further underscoring its active M&A strategy.

Financial Highlights

48 data points
Beta

Revenue

$975.29M

Net Income

$140.59M

14.4% Net Margin

EPS (Diluted)

$0.57

Total Assets

$6.09B

Cash & Equivalents

$265.33M

Free Cash Flow

$146.50M

Financial Statements
Beta
Revenue$975.29M
SG&A Expenses$112.63M
Operating Expenses$753.66M
Operating Income$221.63M
Interest Expense$18.84M
Net Income$140.59M
EPS (Basic)$0.57
EPS (Diluted)$0.57
Shares Outstanding (Basic)244.91M
Shares Outstanding (Diluted)247.23M

Key Highlights

  • 1Net sales for Q1 2014 increased 10.5% to $975.3 million compared to Q1 2013 ($882.9 million), driven by 3% internal growth and 7% from acquisitions.
  • 2Operating income grew 12.4% to $221.6 million, with operating margin improving slightly to 22.7% from 22.3% year-over-year.
  • 3Net income increased by 12.4% to $140.6 million, and diluted EPS rose to $0.57 from $0.51 in Q1 2013.
  • 4Record new orders of $998.4 million were achieved in Q1 2014, up 13.7% from Q1 2013, indicating strong future sales potential.
  • 5Acquisitions of Teseq Group and VTI Instruments in early 2014 contributed significantly to the Electronic Instruments Group (EIG), which saw sales increase by 18.1%.
  • 6The company announced a subsequent event: a definitive merger agreement to acquire Zygo Corporation for approximately $280 million, expected to close in Q2 2014.
  • 7Free cash flow remained strong at $146.5 million for the quarter, indicating healthy cash generation alongside growth initiatives.

Frequently Asked Questions

Revenue growth was driven by a combination of factors. Internal sales growth contributed approximately 3%, while strategic acquisitions, including Teseq Group and VTI Instruments, added approximately 7%. Foreign currency translation also had a favorable impact of 1%.

The acquisitions, particularly Teseq Group and VTI Instruments which joined the Electronic Instruments Group (EIG) in early 2014, contributed significantly to the 18.1% sales increase in EIG. While these acquisitions are driving growth, they also slightly compressed EIG's operating margins due to their lower margin profiles compared to the base business, though this was partially offset by Operational Excellence initiatives.

AMETEK maintained a solid financial position. Cash provided by operating activities was $161.0 million, and free cash flow was $146.5 million. Total debt stood at $1,407.9 million at the end of the quarter, with a debt-to-capital ratio of 30.1%, indicating responsible leverage. The company also stated it has sufficient cash-generating capabilities and available credit facilities to meet its obligations.

The acquisition of Zygo Corporation, a leading provider of optical metrology solutions, represents a significant strategic move for AMETEK. Valued at approximately $280 million, it is expected to close in the second quarter of 2014 and will complement AMETEK's existing metrology offerings, enhancing its portfolio within the Electronic Instruments Group.