10-QPeriod: Q2 FY2015

AMETEK INC/ Quarterly Report for Q2 Ended Jun 30, 2015

Filed August 5, 2015For Securities:AME

Summary

AMETEK, Inc. (AME) reported solid financial results for the quarter and six months ended June 30, 2015, demonstrating resilience in a challenging global economic environment, exacerbated by a strong U.S. dollar. Despite currency headwinds and a slight decrease in new orders, the company achieved record operating income and diluted earnings per share for the second quarter, driven by successful acquisitions and effective operational excellence initiatives. Net sales saw a modest increase, with growth primarily attributed to acquisitions, while internal sales remained flat. The company's segment operating income margin improved, reflecting strong execution within its Electronic Instruments Group (EIG) and ongoing efficiency efforts across both EIG and the Electromechanical Group (EMG). While EMG experienced a slight decline in net sales due to currency impacts and internal sales, its operating margins remained stable, benefiting from operational improvements. The company also successfully integrated recent acquisitions and announced a new acquisition shortly after the quarter's end, indicating a continued focus on strategic growth.

Financial Highlights

50 data points
Beta

Revenue

$1.00B

Net Income

$155.51M

15.5% Net Margin

EPS (Diluted)

$0.64

Total Assets

$6.56B

Cash & Equivalents

$326.59M

Free Cash Flow

$151.85M

Financial Statements
Beta
Revenue$1.00B
SG&A Expenses$112.70M
Operating Expenses$763.41M
Operating Income$240.32M
Interest Expense$22.68M
Net Income$155.51M
EPS (Basic)$0.64
EPS (Diluted)$0.64
Shares Outstanding (Basic)241.50M
Shares Outstanding (Diluted)243.62M

Key Highlights

  • 1Record quarterly operating income and diluted earnings per share for Q2 2015.
  • 2Net sales increased slightly by 1.3% year-over-year to $1,003.7 million for Q2 2015, with acquisitions contributing 5% and foreign currency translation having a negative 4% impact.
  • 3Segment operating income margin improved to 25.2% in Q2 2015 from 24.6% in Q2 2014, driven by operational excellence initiatives.
  • 4Acquisition of Global Tubes in May 2015 for $198.8 million, bolstering the Electromechanical Group.
  • 5Announced acquisition of Cognex Corporation's Surface Inspection Systems Division (SISD) in July 2015 for approximately $160 million.
  • 6Strong free cash flow generation of $259.4 million for the first six months of 2015.
  • 7Repurchased approximately 1,075,000 shares of common stock for $57.2 million during the first six months of 2015.

Frequently Asked Questions

Acquisitions, notably Global Tubes in May 2015 and Amptek, Inc. in August 2014, had a positive impact on AMETEK's net sales, contributing 5% to the increase in the second quarter. While acquisitions generally boosted sales, the Electromechanical Group's (EMG) margins were slightly impacted by the Global Tubes acquisition due to its lower margin profile compared to EMG's base businesses.

AMETEK continues to experience a headwind from foreign currency translation due to a stronger U.S. dollar. For the second quarter, this had a negative 4% impact on net sales and a 3% impact on new orders. Management expects this to remain a challenge for the remainder of 2015.

AMETEK has been actively managing its debt. In June 2015, the company obtained a $50 million funding for senior notes. Total debt outstanding at June 30, 2015, was $1,665.8 million, a decrease from December 31, 2014. The debt-to-capital ratio was 32.5%, and the net debt-to-capital ratio was 27.9%, indicating a healthy financial position. The company also has ample availability under its share repurchase authorization.

Yes, in the first quarter of 2015, AMETEK recorded pre-tax restructuring charges totaling $15.9 million. These charges were primarily related to a planned reduction in workforce in response to the strong U.S. dollar and a weak global economy. At June 30, 2015, $11.0 million of these costs were accrued as liabilities.