10-QPeriod: Q3 FY2018

AMETEK INC/ Quarterly Report for Q3 Ended Sep 30, 2018

Filed November 2, 2018For Securities:AME

Summary

AMETEK Inc. reported strong financial results for the third quarter and the first nine months of 2018. Net sales increased by 10.0% to $1.19 billion for the quarter and by 13.2% to $3.57 billion for the nine-month period, driven by both organic growth across its Electronic Instruments Group (EIG) and Electromechanical Group (EMG) segments, and contributions from recent acquisitions. Net income rose significantly, with diluted earnings per share reaching $0.82 for the quarter and $2.43 for the nine months, marking substantial year-over-year improvements. The company demonstrated solid operational performance, with segment operating margins improving to 23.7% for the quarter and 23.7% for the nine-month period. Cash flow from operations was robust, totaling $629.4 million for the nine months, enabling the company to fund acquisitions, pay down debt, and increase its dividend payout. AMETEK also proactively managed its balance sheet, reducing total debt and strengthening its credit facilities with a new $1.5 billion revolving credit facility in October 2018. The company's strategic acquisitions in aerospace, healthcare, and vision systems are expected to contribute to future growth.

Financial Highlights

52 data points
Beta

Revenue

$1.19B

34.4% Gross Margin

Net Income

$191.21M

16.0% Net Margin

EPS (Diluted)

$0.82

Total Assets

$8.11B

Cash & Equivalents

$518.72M

Free Cash Flow

$229.89M

Financial Statements
Beta
Revenue$1.19B
Cost of Revenue$782.99M
Gross Profit$409.97M
SG&A Expenses$144.70M
Operating Expenses$927.70M
Operating Income$265.27M
Interest Expense$19.39M
Net Income$191.21M
EPS (Basic)$0.83
EPS (Diluted)$0.82
Shares Outstanding (Basic)231.50M
Shares Outstanding (Diluted)233.25M

Key Highlights

  • 1Net sales increased by 10.0% to $1.19 billion for Q3 2018 and by 13.2% to $3.57 billion for the first nine months of 2018, driven by organic growth and acquisitions.
  • 2Diluted earnings per share grew to $0.82 for Q3 2018 (up 24.2% YoY) and $2.43 for the first nine months of 2018 (up 27.2% YoY).
  • 3Segment operating income margin improved to 23.7% for both the quarter and the nine-month period, indicating strong operational efficiency.
  • 4The company completed several strategic acquisitions in 2018 (FMH, SoundCom, Motec) for $376.2 million, and announced the acquisition of Telular and Forza for approximately $565 million post-period.
  • 5Cash flow from operations was strong at $629.4 million for the nine months, and free cash flow was $581.9 million.
  • 6AMETEK repaid $240 million in senior notes during Q3 2018 and secured a new $1.5 billion revolving credit facility in October 2018, enhancing financial flexibility.
  • 7The company increased its quarterly cash dividend by 56% to $0.14 per share, reflecting confidence in its financial performance.

Frequently Asked Questions

AMETEK's net sales for the third quarter of 2018 were $1.19 billion, a 10.0% increase compared to $1.08 billion in the third quarter of 2017. This growth was attributed to 7% organic sales growth and a 3% increase from acquisitions.

AMETEK has an active acquisition strategy. In the first nine months of 2018, they acquired FMH Aerospace, SoundCom Systems, and Motec GmbH for $376.2 million. Subsequent to the quarter, in October 2018, they acquired Telular Corporation and Forza Silicon Corporation for approximately $565 million. These acquisitions are in sectors like aerospace, healthcare, and vision systems, aligning with the company's growth objectives.

Profitability improved significantly, with net income increasing by 24.6% to $191.2 million for the quarter and by 27.9% to $566.4 million for the nine months. Diluted EPS rose to $0.82 for the quarter and $2.43 for the nine months. AMETEK also demonstrated a commitment to shareholder returns by increasing its quarterly cash dividend by 56% to $0.14 per share.

AMETEK maintained a strong financial position. Cash provided by operating activities was $629.4 million for the nine months. The company reduced its total debt and enhanced its liquidity by repaying $240 million in notes and entering into a new $1.5 billion revolving credit facility. With $518.7 million in cash and cash equivalents at period end and available borrowing capacity, AMETEK believes it has sufficient resources to meet its obligations and fund future growth.