10-QPeriod: Q2 FY2021

AMETEK INC/ Quarterly Report for Q2 Ended Jun 30, 2021

Filed August 3, 2021For Securities:AME

Summary

AMETEK, Inc. reported strong financial results for the second quarter and first six months of 2021, demonstrating significant year-over-year growth in net sales, operating income, and earnings per share. This performance was driven by robust organic sales growth across both its Electronic Instruments Group (EIG) and Electromechanical Group (EMG) segments, as well as the successful integration of recent acquisitions. The company achieved record sales, orders, and backlog in the second quarter, indicating strong market demand and effective execution of its operational strategies. Despite facing headwinds such as material cost inflation and logistics challenges, AMETEK has effectively managed these pressures, highlighting its operational resilience. The company's strategic acquisitions, including Magnetrol International, Crank Software, EGS Automation, NSI-MI Technologies, and Abaco Systems, Inc., have contributed positively to revenue growth and expanded its market reach. AMETEK also continues to return value to shareholders through dividend increases and share repurchases. Looking ahead, the company anticipates continued growth, supported by ongoing economic recovery, benefits from its 'Operational Excellence' initiatives, and the strategic integration of its acquired businesses.

Financial Highlights

53 data points
Beta

Revenue

$1.39B

34.2% Gross Margin

Net Income

$231.68M

16.7% Net Margin

EPS (Diluted)

$1.00

Total Assets

$11.76B

Cash & Equivalents

$390.64M

Free Cash Flow

$263.57M

Financial Statements
Beta
Revenue$1.39B
Cost of Revenue$912.71M
Gross Profit$473.63M
SG&A Expenses$157.02M
Operating Expenses$1.07B
Operating Income$316.61M
Interest Expense$20.44M
Net Income$231.68M
EPS (Basic)$1.00
EPS (Diluted)$1.00
Shares Outstanding (Basic)230.83M
Shares Outstanding (Diluted)232.84M

Key Highlights

  • 1Record Net Sales: Achieved $1.39 billion in Q2 2021, a 37% increase YoY, and $2.60 billion for the first six months, up 17.5% YoY.
  • 2Strong Profitability Growth: Q2 2021 operating income reached a record $316.6 million, up 39.5% YoY, with diluted EPS of $1.00, up 38.9% YoY.
  • 3Significant Acquisitions: Completed multiple strategic acquisitions in early 2021, including Magnetrol, Crank Software, EGS Automation, NSI-MI, and Abaco, contributing 10% to Q2 sales growth and expanding market presence.
  • 4Record Orders and Backlog: Q2 2021 orders were a record $1.91 billion, up 91.8% YoY, leading to a record backlog of $2.51 billion as of June 30, 2021.
  • 5Segment Strength: Both EIG and EMG segments showed robust growth; EIG's net sales increased by 44.2% YoY in Q2, while EMG's net sales grew by 24.3% YoY.
  • 6Shareholder Returns: Increased quarterly dividend by 11% to $0.20 per share and continued share repurchases.
  • 7Operational Resilience: Effectively managed challenges like material cost inflation and logistics, demonstrating strong operational execution and recovery from pandemic impacts.

Frequently Asked Questions

The acquisitions completed in early 2021, including Magnetrol International, Crank Software, EGS Automation, NSI-MI Technologies, and Abaco Systems, Inc., contributed significantly to AMETEK's revenue growth. These acquisitions accounted for approximately 10% of the net sales increase in the second quarter of 2021 and 7% for the first six months. While they diluted operating margins in the EIG segment by 200 basis points in Q2, the company expects them to contribute positively to future results.

The substantial increase in net sales and orders was driven by a combination of strong organic sales growth across both the Electronic Instruments Group (EIG) and Electromechanical Group (EMG) segments, the successful integration of recent acquisitions, and a favorable foreign currency translation effect. In Q2 2021, organic sales grew by 25%, and orders increased by 44% organically. The company also benefited from a recovering global economy and its 'Operational Excellence' initiatives.

AMETEK anticipates continued positive impacts on its results for the remainder of 2021 from the full-year contribution of its 2021 acquisitions, ongoing economic recovery, and its Operational Excellence initiatives. However, the company expects to continue facing challenges related to material cost inflation and logistics, which have been present since the recovery began. Despite these challenges, AMETEK has implemented measures to mitigate these impacts and remains confident in its ability to meet future needs and obligations.

AMETEK generated strong operating cash flow of $571.4 million in the first six months of 2021, slightly down from the prior year due to higher working capital requirements but offset by higher net income. Free cash flow was $530.4 million. The company's cash and cash equivalents decreased to $390.6 million from $1.21 billion, largely due to significant investments in acquisitions ($1.84 billion). The company also increased its debt to support these acquisitions and returned capital to shareholders through an 11% dividend increase and share repurchases. AMETEK believes it has sufficient liquidity and access to financing to meet its obligations.