10-QPeriod: Q1 FY2018

AMETEK INC/ Quarterly Report for Q1 Ended Mar 31, 2018

Filed May 3, 2018For Securities:AME

Summary

AMETEK, Inc. (AME) reported a strong first quarter for 2018, demonstrating robust growth and improved profitability. Net sales increased by a significant 16.4% year-over-year to $1.17 billion, driven by solid organic growth across both the Electronic Instruments Group (EIG) and Electromechanical Group (EMG) segments, complemented by contributions from recent acquisitions. This top-line growth translated into a substantial increase in operating income, which rose by 18.8% to $258.2 million, with operating margins improving to 22.0% from 21.6% in the prior year period. The company also saw a healthy rise in net income, up 30.5% to $181.3 million, resulting in diluted earnings per share of $0.78, an increase from $0.60 in Q1 2017. This performance was supported by a lower effective tax rate, partly due to the recent U.S. tax reforms. AMETEK's strategic focus on operational excellence and disciplined acquisitions continues to drive value for shareholders, with a strong order backlog indicating positive momentum for the remainder of the year.

Financial Highlights

51 data points
Beta

Revenue

$1.17B

33.8% Gross Margin

Net Income

$181.34M

15.5% Net Margin

EPS (Diluted)

$0.78

Total Assets

$8.06B

Cash & Equivalents

$556.78M

Free Cash Flow

$165.13M

Financial Statements
Beta
Revenue$1.17B
Cost of Revenue$776.80M
Gross Profit$395.85M
SG&A Expenses$137.68M
Operating Expenses$914.48M
Operating Income$258.17M
Interest Expense$21.69M
Net Income$181.34M
EPS (Basic)$0.79
EPS (Diluted)$0.78
Shares Outstanding (Basic)230.93M
Shares Outstanding (Diluted)232.97M

Key Highlights

  • 1Net sales surged 16.4% to $1.17 billion, driven by 8% organic growth and contributions from acquisitions.
  • 2Operating income increased by 18.8% to $258.2 million, with operating margins improving to 22.0%.
  • 3Net income grew substantially by 30.5% to $181.3 million.
  • 4Diluted earnings per share rose 30.0% to $0.78.
  • 5Orders increased 20.0% year-over-year, contributing to a record backlog of $1.57 billion.
  • 6Acquisition of FMH Aerospace for $242.1 million in January 2018 significantly expanded the EMG segment's capabilities in aerospace and defense.
  • 7The company reported a decrease in interest expense due to debt repayment, alongside a lower effective tax rate.

Frequently Asked Questions

AMETEK's revenue growth was driven by a combination of factors, including 8% organic sales growth across its segments, a 5% contribution from acquisitions (notably FMH Aerospace), and a favorable 3% impact from foreign currency translation.

AMETEK adopted ASC 606, Revenue from Contracts with Customers, effective January 1, 2018. While the adoption required adjustments, it did not have a significant impact on the consolidated results of operations, financial position, or cash flows for the first quarter, though it did accelerate revenue recognition for certain custom-made equipment and service repair contracts.

AMETEK expects continued positive momentum, citing favorable market trends, a record backlog, the full-year impact of recent acquisitions, and ongoing Operational Excellence initiatives as key drivers for strong results in the remainder of 2018.

The company continues to execute a disciplined acquisition strategy. The acquisition of FMH Aerospace in January 2018 is expected to broaden AMETEK's offerings in the aerospace and defense markets within the EMG segment. The report notes that the acquisition had an immaterial impact on reported results for Q1 2018, but it contributed to the overall sales growth and is anticipated to provide benefits going forward.