AMETEK Announces Record First Quarter Results and Raises 2024 Guidance
AMETEK, Inc. (NYSE: AME) announced record first-quarter results with sales of $1.74 billion, a 9% increase from 2023. Adjusted earnings per share rose to $1.64, up 10% year-over-year. GAAP operating income reached $417.2 million, while adjusted operating income hit a record $446.4 million. The company raised its 2024 guidance, expecting low double-digit sales growth and adjusted EPS of $6.74 to $6.86.
Record first-quarter sales of $1.74 billion, up 9% from the previous year.
Adjusted earnings per diluted share rose to $1.64, a 10% increase year-over-year.
Adjusted operating income reached a record $446.4 million, up 10% from 2023.
Expected low double-digit sales growth for 2024 and adjusted EPS guidance raised to $6.74 to $6.86.
Headwinds from inventory normalization affecting EMG sales in the first quarter.
Continued challenges from the Paragon integration costs and dilutive impact from recent acquisitions.
Insights
AMETEK's first quarter report showcasing a 9% increase in sales year-over-year and a 10% increase in adjusted earnings per share is a robust indicator of the company's financial health. Such performance, especially in the Electronic Instruments Group (EIG), which saw a 14% increase in operating income, signals efficient operations and cost management. However, investors should be aware of the role acquisition-related activities, such as the Paragon Medical integration, have played in affecting both costs and revenue. The increase in guidance for 2024 is a positive signal, yet it's important to monitor how these predictions align with market conditions and industry performance.
The double-digit earnings growth and the revision of earnings guidance upwards suggest that AMETEK is capturing market share and leveraging its market position well. The Electromechanical Group (EMG)'s 21% sales increase is particularly noteworthy, outpacing EIG's growth and suggests a strategic advantage in that segment. However, it's important for investors to contextualize this growth within the broader industry trends, particularly if EMG's stated headwinds, such as inventory normalization, are prevalent among competitors as well.
The record operating margins and free cash flow conversion of 123% reflect a deep operational efficiency which should catch the discerning eye of an investor. The ability of AMETEK to expand its core margins by 180 basis points while integrating acquisitions is a testament to strong management. Yet, it is essential for stakeholders to scrutinize ongoing integration process costs and their long-term impact on profitability. The operational strategy going forward must remain flexible to maintain these efficiencies amidst shifting economic landscapes.
AMETEK's first quarter 2024 sales were a record
GAAP operating income was
"I am very pleased with our results in the first quarter," said David A. Zapico, AMETEK Chairman and Chief Executive Officer. "Our businesses delivered outstanding operating performance resulting in record adjusted operating income, a robust 180 basis points of core margin expansion, and double-digit growth in adjusted earnings per share. We also generated strong cash flow in the quarter with operating cash flow of
Electronic Instruments Group (EIG)
EIG sales in the first quarter were
"EIG delivered strong results in the first quarter," noted Mr. Zapico. "Solid sales growth and tremendous operating performance drove sizeable margin expansion in the quarter. These results underscore the strength of our EIG business and the effectiveness of our flexible operating structure."
Electromechanical Group (EMG)
EMG sales in the first quarter were a record
"Despite the continued headwinds from normalization of inventory levels across a portion of our customer base, our EMG businesses delivered solid results in the first quarter. Our teams are doing an outstanding job managing the short-term impacts on sales and our businesses are well positioned for solid growth in the second half of 2024," commented Mr. Zapico.
2024 Outlook
"Our businesses delivered excellent results in the quarter, highlighting the effectiveness of our growth model in driving double digit earnings growth. Supported by our leading positions within attractive market segments, our proven operating model, and our strong cash flows, we are strategically positioned for sustained success," noted Mr. Zapico.
"For 2024, we continue to expect overall sales to be up low double digits on a percentage basis compared to 2023. Adjusted earnings per diluted share are now expected to be in the range of
"For the second quarter of 2024, overall sales are expected to be up mid to high single digits on a percentage basis compared to the same period last year. Adjusted earnings in the quarter are anticipated to be in the range of
Conference Call
AMETEK will webcast its first quarter 2024 investor conference call on Thursday, May 2, 2024, beginning at 8:30 AM ET. The live audio webcast will be available and later archived in the Investors section of www.ametek.com.
About AMETEK
AMETEK (NYSE: AME) is a leading global provider of industrial technology solutions serving a diverse set of attractive niche markets with annualized sales of approximately
Forward-looking Information
Statements in this news release relating to future events, such as AMETEK's expected business and financial performance are "forward-looking statements." Forward-looking statements are subject to various factors and uncertainties that may cause actual results to differ significantly from expectations. These factors and uncertainties include risks related to AMETEK's ability to consummate and successfully integrate future acquisitions; risks with international sales and operations, including supply chain disruptions; AMETEK's ability to successfully develop new products, open new facilities or transfer product lines; the price and availability of raw materials; compliance with government regulations, including environmental regulations; changes in the competitive environment or the effects of competition in our markets; the ability to maintain adequate liquidity and financing sources; and general economic conditions affecting the industries we serve. A detailed discussion of these and other factors that may affect our future results is contained in AMETEK's filings with the
Contact:
Kevin Coleman
Vice President, Investor Relations and Treasurer
kevin.coleman@ametek.com
Phone: 610.889.5247
AMETEK, Inc. | |||
Three Months Ended | |||
2024 | 2023 | ||
Net sales | $ 1,736,180 | $ 1,597,117 | |
Cost of sales | 1,144,681 | 1,022,525 | |
Selling, general and administrative | 174,283 | 169,051 | |
Total operating expenses | 1,318,964 | 1,191,576 | |
Operating income | 417,216 | 405,541 | |
Interest expense | (35,254) | (20,569) | |
Other (expense) income, net | (633) | (5,373) | |
Income before income taxes | 381,329 | 379,599 | |
Provision for income taxes | 70,386 | 73,887 | |
Net income | $ 310,943 | $ 305,712 | |
Diluted earnings per share | $ 1.34 | $ 1.32 | |
Basic earnings per share | $ 1.35 | $ 1.33 | |
Weighted average common shares outstanding: | |||
Diluted shares | 232,035 | 231,229 | |
Basic shares | 231,097 | 230,126 | |
Dividends per share | $ 0.28 | $ 0.25 | |
AMETEK, Inc. | |||
Three Months Ended | |||
2024 | 2023 | ||
Net sales: | |||
Electronic Instruments | $ 1,156,779 | $ 1,117,247 | |
Electromechanical | 579,401 | 479,870 | |
Consolidated net sales | $ 1,736,180 | $ 1,597,117 | |
Operating income: | |||
Segment operating income: | |||
Electronic Instruments | $ 352,940 | $ 309,747 | |
Electromechanical | 90,691 | 120,504 | |
Total segment operating income | 443,631 | 430,251 | |
Corporate administrative expenses | (26,415) | (24,710) | |
Consolidated operating income | $ 417,216 | $ 405,541 | |
AMETEK, Inc. | |||
March 31, | December 31, | ||
2024 | 2023 | ||
(Unaudited) | |||
ASSETS | |||
Current assets: | |||
Cash and cash equivalents | $ 373,765 | $ 409,804 | |
Receivables, net | 983,893 | 1,012,932 | |
Inventories, net | 1,127,328 | 1,132,471 | |
Other current assets | 290,516 | 269,461 | |
Total current assets | 2,775,502 | 2,824,668 | |
Property, plant and equipment, net | 877,420 | 891,293 | |
Right of use asset, net | 219,887 | 229,723 | |
Goodwill | 6,438,675 | 6,447,629 | |
Other intangibles, investments and other assets | 4,553,497 | 4,630,220 | |
Total assets | $ 14,864,981 | $ 15,023,533 | |
LIABILITIES AND STOCKHOLDERS' EQUITY | |||
Current liabilities: | |||
Short-term borrowings and current portion of long-term debt, net | $ 1,055,406 | $ 1,417,915 | |
Accounts payable and accruals | 1,447,102 | 1,464,658 | |
Total current liabilities | 2,502,508 | 2,882,573 | |
Long-term debt, net | 1,877,772 | 1,895,432 | |
Deferred income taxes and other long-term liabilities | 1,516,486 | 1,515,337 | |
Stockholders' equity | 8,968,215 | 8,730,191 | |
Total liabilities and stockholders' equity | $ 14,864,981 | $ 15,023,533 | |
AMETEK, Inc. | |||
Three Months Ended | |||
2024 | 2023 | ||
EMG Segment operating income (GAAP) | $ 90,691 | $ 120,504 | |
Paragon integration costs | 29,231 | — | |
Adjusted EMG Segment operating income (Non-GAAP) | $ 119,922 | $ 120,504 | |
Operating income (GAAP) | $ 417,216 | $ 405,541 | |
Paragon integration costs | 29,231 | — | |
Adjusted Operating income (Non-GAAP) | $ 446,447 | $ 405,541 | |
Diluted earnings per share (GAAP) | $ 1.34 | $ 1.32 | |
Paragon integration costs | 0.13 | — | |
Income tax benefit on Paragon integration costs | (0.03) | — | |
Pretax amortization of acquisition-related intangible assets | 0.27 | 0.22 | |
Income tax benefit on amortization of acquisition-related intangible assets | (0.06) | (0.05) | |
Rounding | (0.01) | — | |
Adjusted Diluted earnings per share (Non-GAAP) | $ 1.64 | $ 1.49 | |
Cash provided by operating activities (GAAP) | $ 410,227 | $ 386,536 | |
Deduct: Capital expenditures | (27,652) | (20,006) | |
Free cash flow (Non-GAAP) | $ 382,575 | $ 366,530 | |
Free cash flow conversion (Non-GAAP) | 123 % | 120 % | |
EMG Segment operating margin (GAAP) | 15.7 % | 25.1 % | |
Paragon integration costs | 5.0 % | — % | |
Adjusted EMG Segment operating margin (Non-GAAP) | 20.7 % | 25.1 % | |
Dilutive impact of acquisitions | 3.4 % | — % | |
Adjusted EMG Core Segment operating margin (Non-GAAP) | 24.1 % | 25.1 % | |
Operating income margin (GAAP) | 24.0 % | 25.4 % | |
Paragon integration costs | 1.7 % | — % | |
Adjusted Operating income margin (Non-GAAP) | 25.7 % | 25.4 % | |
Dilutive impact of acquisitions | 1.5 % | — % | |
Adjusted Core Operating income margin (Non-GAAP) | 27.2 % | 25.4 % | |
AMETEK, Inc. | |||||||
Forecasted Diluted Earnings Per Share | |||||||
Three Months Ended | Year Ended | ||||||
June 30, 2024 | December 31, 2024 | ||||||
Low | High | Low | High | ||||
Diluted earnings per share (GAAP) | $ 1.42 | $ 1.44 | $ 5.82 | $ 5.94 | |||
Paragon integration costs | — | — | 0.13 | 0.13 | |||
Income tax benefit on Paragon integration costs | — | — | (0.03) | (0.03) | |||
Pretax amortization of acquisition-related intangible | 0.27 | 0.27 | 1.08 | 1.08 | |||
Income tax benefit on amortization of acquisition- | (0.06) | (0.06) | (0.26) | (0.26) | |||
Adjusted Diluted earnings per share (Non-GAAP) | $ 1.63 | $ 1.65 | $ 6.74 | $ 6.86 | |||
Use of Non-GAAP Financial Information
The Company supplements its consolidated financial statements presented on a U.S. generally accepted accounting principles ("GAAP") basis with certain non-GAAP financial information to provide investors with greater insight, increased transparency and allow for a more comprehensive understanding of the information used by management in its financial and operational decision-making. Reconciliation of non-GAAP measures to their most directly comparable GAAP measures are included in the accompanying financial tables. These non-GAAP financial measures should be considered in addition to, and not as a replacement for, or superior to, the comparable GAAP measure, and may not be comparable to similarly titled measures reported by other companies.
The Company believes that these measures provide useful information to investors by reflecting additional ways of viewing AMETEK's operations that, when reconciled to the comparable GAAP measure, helps our investors to better understand the long-term profitability trends of our business, and facilitates easier comparisons of our profitability to prior and future periods and to our peers.
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SOURCE AMETEK, Inc.
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