10-QPeriod: Q3 FY2019

AMETEK INC/ Quarterly Report for Q3 Ended Sep 30, 2019

Filed November 1, 2019For Securities:AME

Summary

AMETEK, Inc. (AME) reported strong financial results for the third quarter and the first nine months of 2019, demonstrating robust sales growth, increased operating income, and improved profitability. Net sales for the third quarter rose by 7.0% to $1.28 billion, driven by a combination of organic growth and contributions from recent acquisitions. This growth translated into a record operating income of $301.1 million and a diluted EPS of $0.96, marking a 15.4% and 17.1% increase, respectively, compared to the prior year period. The company also saw positive trends in its year-to-date performance, with net sales up 7.8% to $3.85 billion and net income increasing by 13.1% to $640.5 million. AMETEK's operational excellence initiatives and strategic acquisitions, including the recent purchase of Pacific Design Technologies, Inc. (PDT), are contributing to its sustained financial strength. The company maintains a healthy balance sheet with a decreasing debt-to-capital ratio and significant cash reserves, positioning it well for future growth and shareholder returns.

Financial Highlights

54 data points
Beta

Revenue

$1.28B

35.5% Gross Margin

Net Income

$220.75M

17.3% Net Margin

EPS (Diluted)

$0.96

Total Assets

$9.22B

Cash & Equivalents

$735.38M

Free Cash Flow

$311.39M

Financial Statements
Beta
Revenue$1.28B
Cost of Revenue$823.26M
Gross Profit$453.37M
SG&A Expenses$152.31M
Operating Expenses$975.58M
Operating Income$301.06M
Interest Expense$21.31M
Net Income$220.75M
EPS (Basic)$0.97
EPS (Diluted)$0.96
Shares Outstanding (Basic)228.04M
Shares Outstanding (Diluted)229.56M

Key Highlights

  • 1Record third quarter net sales of $1.28 billion, a 7.0% increase year-over-year, driven by 3% organic growth and 5% from acquisitions.
  • 2Third quarter net income of $220.7 million, up 15.4% from the prior year, with diluted EPS reaching $0.96, a 17.1% increase.
  • 3First nine months net sales grew 7.8% to $3.85 billion, and net income increased 13.1% to $640.5 million.
  • 4Operating income for the third quarter reached a record $301.1 million, a 13.5% increase, with segment operating margins improving to 25.3%.
  • 5Acquisition of Pacific Design Technologies, Inc. (PDT) for $122.1 million in September 2019, enhancing AMETEK's aerospace and defense offerings.
  • 6Strong operating cash flow generation, with $772.2 million for the first nine months, an increase of 22.7% year-over-year.
  • 7Company continues to demonstrate effective financial management with a declining debt-to-capital ratio and a solid cash position of $735.4 million as of September 30, 2019.

Frequently Asked Questions

AMETEK's revenue growth in the third quarter of 2019 was driven by a combination of factors. Net sales increased by 7.0% to $1.28 billion, with 3% attributed to organic sales growth and another 5% from acquisitions. Acquisitions, particularly the recent purchase of Pacific Design Technologies, Inc. (PDT), along with the company's operational excellence initiatives, contributed significantly to this performance.

Profitability saw a marked improvement. Net income rose by 15.4% to $220.7 million, and diluted earnings per share (EPS) increased by 17.1% to $0.96. This was supported by a record operating income of $301.1 million, up 13.5%, and an improvement in segment operating margins to 25.3% from 23.7% in the prior year's quarter.

AMETEK continues to pursue a strategy of growth through acquisitions. In September 2019, the company acquired Pacific Design Technologies, Inc. (PDT) for $122.1 million, which is expected to enhance its product offerings in the aerospace and defense sectors. The company also noted the impact of its 2018 acquisitions. Furthermore, AMETEK announced the acquisition of Gatan for approximately $925 million in October 2019, shortly after the reporting period.

AMETEK is managing its debt effectively. Total debt, net, decreased to $2.43 billion at the end of September 2019 from $2.63 billion at the end of 2018. The company's debt-to-capital ratio improved to 33.3% from 38.3%, and the net debt-to-capital ratio decreased to 25.8% from 34.9%. The company also reported available borrowing capacity of $1.97 billion under its revolving credit facility and ended the period with $735.4 million in cash and cash equivalents, indicating a strong liquidity position.