10-QPeriod: Q3 FY2017

AMETEK INC/ Quarterly Report for Q3 Ended Sep 30, 2017

Filed November 2, 2017For Securities:AME

Summary

AMETEK, Inc. (AME) reported a strong third quarter and first nine months of fiscal year 2017, demonstrating robust growth across its key segments. Net sales for the third quarter increased by 14.8% year-over-year to $1.08 billion, driven by a combination of acquisitions and strong organic sales growth. For the first nine months, net sales grew 10.1% to $3.16 billion. The company's operating income also saw significant increases, with third-quarter operating income rising 15.8% to $232.8 million, and nine-month operating income up 9.0% to $685.5 million. Diluted earnings per share for the quarter reached $0.66, a notable increase from $0.56 in the prior year, while nine-month EPS grew to $1.91 from $1.72. Acquisitions played a key role in growth, with the company completing the integration of Rauland-Borg Corporation and MOCON, Inc. during the year. AMETEK's strong operational performance, coupled with strategic acquisitions, positions the company favorably for continued growth. The balance sheet remains solid, with ample liquidity and a manageable debt-to-capital ratio.

Financial Highlights

51 data points
Beta

Revenue

$1.08B

33.7% Gross Margin

Net Income

$153.53M

14.2% Net Margin

EPS (Diluted)

$0.66

Total Assets

$7.78B

Cash & Equivalents

$736.41M

Free Cash Flow

$221.02M

Financial Statements
Beta
Revenue$1.08B
Cost of Revenue$719.72M
Gross Profit$365.08M
SG&A Expenses$132.63M
Operating Expenses$854.76M
Operating Income$230.04M
Interest Expense$24.71M
Net Income$153.53M
EPS (Basic)$0.67
EPS (Diluted)$0.66
Shares Outstanding (Basic)230.44M
Shares Outstanding (Diluted)232.25M

Key Highlights

  • 1Record net sales for the third quarter of $1.08 billion, up 14.8% year-over-year, driven by 7% acquisition growth and 7% organic growth.
  • 2Diluted EPS for the third quarter increased 17.9% to $0.66, from $0.56 in the prior year's quarter.
  • 3Nine-month net sales increased 10.1% to $3.16 billion, with 6% from acquisitions and 5% organic growth.
  • 4Segment operating income margin remained strong at 22.9% for the third quarter and 23.3% for the nine months.
  • 5Acquisitions of Rauland-Borg Corporation and MOCON, Inc. were successfully integrated, contributing to revenue growth.
  • 6Record backlog of unfilled orders at September 30, 2017, was $1.38 billion, up 19.3% from December 31, 2016.
  • 7Operating cash flow for the first nine months increased by 13.9% to $580.4 million, supporting investment and return to shareholders.

Frequently Asked Questions

AMETEK's revenue growth in the third quarter of 2017 was driven by a combination of factors. Net sales increased by 14.8% year-over-year. This growth was attributed to 7% from acquisitions, 7% organic sales growth, and a favorable 1% effect of foreign currency translation. The company successfully integrated recent acquisitions and saw strong performance in both its Electronic Instruments Group (EIG) and Electromechanical Group (EMG).

Acquisitions were a significant contributor to AMETEK's growth. The company completed the integrations of Rauland-Borg Corporation and MOCON, Inc. during 2017, which added to net sales. For the nine-month period, acquisitions contributed 6% to net sales growth. While acquisitions boosted revenue, the EIG segment's operating margin saw a slight decrease due to the inclusion of acquired businesses with potentially lower margins than the group's core operations.

AMETEK expressed optimism for the remainder of 2017. The company noted a strengthening global economic environment compared to 2016. The full-year impact of acquisitions made in 2017 and 2016, along with continued focus on Operational Excellence initiatives, were expected to positively impact results for the rest of the year. The record backlog also indicates strong demand.

AMETEK maintains a solid financial position. Total debt, net, was $2.43 billion at September 30, 2017, and the debt-to-capital ratio was 39.2%, down from 41.8% at the end of 2016. The company also had $736.4 million in cash and cash equivalents. AMETEK has available borrowing capacity under its revolving credit facility and believes it has sufficient cash-generating capabilities and access to capital to meet its obligations.