| ☒ | QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 | ||||
2023
| ☐ | TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 | ||||
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| Emerging growth company | ☐ | ||||||||||||||||||||
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Net sales Operating expenses: Cost of sales Selling, general and administrative Total operating expenses Operating income Other expenses: Interest expense Other, net Income before income taxes Provision for income taxes Net income Basic earnings per share Diluted earnings per share Weighted average common shares outstanding: Basic shares Diluted shares Dividends declared and paid per share Total comprehensive income ASSETS Current assets: Cash and cash equivalents Receivables, net Inventories, net Deferred income taxes Other current assets Total current assets Property, plant and equipment, net Goodwill Other intangibles, net Investments and other assets Total assets LIABILITIES AND STOCKHOLDERS’ EQUITY Current liabilities: Short-term borrowings and current portion of long-term debt, net Accounts payable Income taxes payable Accrued liabilities Total current liabilities Long-term debt, net Deferred income taxes Other long-term liabilities Total liabilities Stockholders’ equity: Common stock Capital in excess of par value Retained earnings Accumulated other comprehensive loss Treasury stock Total stockholders’ equity Total liabilities and stockholders’ equity Cash provided by (used for): Operating activities: Net income Adjustments to reconcile net income to total operating activities: Depreciation and amortization Deferred income taxes Share-based compensation expense Gain on sale of facility Net change in assets and liabilities, net of acquisitions Pension contribution Other, net Total operating activities Investing activities: Additions to property, plant and equipment Purchases of businesses, net of cash acquired Proceeds from sale of facility Other, net Total investing activities Financing activities: Net change in short-term borrowings Repurchases of common stock Cash dividends paid Excess tax benefits from share-based payments Proceeds from employee stock plans and other, net Total financing activities Effect of exchange rate changes on cash and cash equivalents Increase in cash and cash equivalents Cash and cash equivalents: Beginning of period End of period 2023 2023 three and six months ended June 30, 2023. Weighted average shares: Basic shares Equity-based compensation plans Diluted shares Balance at the beginning of the period Other comprehensive income (loss) before reclassifications: Translation adjustments Change in long-term intercompany notes Net investment hedge instruments Gross amounts reclassified from accumulated other comprehensive income (loss) Income tax benefit (expense) Other comprehensive income (loss), net of tax Balance at the end of the period Balance at the beginning of the period Other comprehensive income (loss) before reclassifications: Translation adjustments Change in long-term intercompany notes Net investment hedge instruments Gross amounts reclassified from accumulated other comprehensive income (loss) Income tax benefit (expense) Other comprehensive income (loss), net of tax Balance at the end of the period Fixed-income investments hierarchy, at June 30, 2023 and December 31, 2022: 2022. Short-term borrowings, net Long-term debt, net (including current portion) 2022: Finished goods and parts Work in process Raw materials and purchased parts Total inventories, net 2023. 2023 EMG. Property, plant and equipment Goodwill Other intangible assets Long-term liabilities Deferred income taxes Net working capital and other(1) Total purchase price Less: Contingent payment liability Total cash paid March 2023 acquisition of Bison. Balance at December 31, 2016 Goodwill acquired Purchase price allocation adjustments and other Foreign currency translation adjustments Balance at September 30, 2017 Balance at December 31, 2016 Additions for tax positions Reductions for tax positions Balance at September 30, 2017 Stock option expense Restricted stock expense Totalpre-tax expense 2023 Expected volatility Expected term (years) Risk-free interest rate Expected dividend yield Black-Scholes-Merton fair value per stock option granted Outstanding at December 31, 2016 Granted Exercised Forfeited Expired Outstanding at September 30, 2017 Exercisable at September 30, 2017 Nonvested restricted stock outstanding at December 31, 2016 Granted Vested Forfeited Nonvested restricted stock outstanding at September 30, 2017 Three Months Ended Nine Months Ended September 30, September 30, 2017 2016 2017 2016 $ 1,084,799 $ 945,030 $ 3,157,085 $ 2,867,134 719,718 630,744 2,084,392 1,894,136 132,250 113,170 387,179 344,323 851,968 743,914 2,471,571 2,238,459 232,831 201,116 685,514 628,675 (24,709 ) (23,609 ) (73,777 ) (70,716 ) (3,695 ) (3,259 ) (12,533 ) (10,108 ) 204,427 174,248 599,204 547,851 50,896 43,561 156,266 144,801 $ 153,531 $ 130,687 $ 442,938 $ 403,050 $ 0.67 $ 0.56 $ 1.93 $ 1.73 $ 0.66 $ 0.56 $ 1.91 $ 1.72 230,439 231,894 230,049 233,387 232,253 232,721 231,615 234,576 $ 0.09 $ 0.09 $ 0.27 $ 0.27 Three Months Ended
June 30,Six Months Ended
June 30,2023 2022 2023 2022 Net sales $ 1,646,111 $ 1,514,552 $ 3,243,228 $ 2,973,077 Cost of sales 1,053,190 988,175 2,075,715 1,937,008 Selling, general and administrative 174,130 161,535 343,181 317,987 Total operating expenses 1,227,320 1,149,710 2,418,896 2,254,995 Operating income 418,791 364,842 824,332 718,082 Interest expense (18,723) (20,350) (39,292) (39,920) Other (expense) income, net (3,684) 1,973 (9,057) 4,525 Income before income taxes 396,384 346,465 775,983 682,687 Provision for income taxes 72,142 64,092 146,029 127,867 Net income $ 324,242 $ 282,373 $ 629,954 $ 554,820 Basic earnings per share $ 1.41 $ 1.23 $ 2.74 $ 2.40 Diluted earnings per share $ 1.40 $ 1.22 $ 2.72 $ 2.39 Weighted average common shares outstanding: Basic shares 230,478 230,100 230,302 230,790 Diluted shares 231,261 231,247 231,245 232,156 Dividends declared and paid per share $ 0.25 $ 0.22 $ 0.50 $ 0.44 Three Months Ended Nine Months Ended September 30, September 30, 2017 2016 2017 2016 $ 185,167 $ 124,135 $ 522,665 $ 378,820 Three Months Ended
June 30,Six Months Ended
June 30,2023 2022 2023 2022 Total comprehensive income $ 350,692 $ 222,033 $ 682,903 $ 479,334 September 30,
2017 December 31,
2016 (Unaudited) $ 736,415 $ 717,259 640,815 592,326 546,876 492,104 — 50,004 100,377 76,497 2,024,483 1,928,190 494,973 473,230 3,138,742 2,818,950 1,965,973 1,734,021 159,130 146,283 $ 7,783,301 $ 7,100,674 $ 509,567 $ 278,921 409,357 369,537 47,604 29,913 303,813 246,070 1,270,341 924,441 1,920,879 2,062,644 608,971 621,776 216,955 235,300 4,017,146 3,844,161 2,630 2,615 649,807 604,143 4,784,618 4,403,683 (462,662 ) (542,389 ) (1,208,238 ) (1,211,539 ) 3,766,155 3,256,513 $ 7,783,301 $ 7,100,674 June 30,
2023December 31,
2022(Unaudited) ASSETS Current assets: Cash and cash equivalents $ 605,587 $ 345,386 Receivables, net 936,909 919,335 Inventories, net 1,107,824 1,044,284 Other current assets 249,235 219,053 Total current assets 2,899,555 2,528,058 Property, plant and equipment, net 637,540 635,641 Right of use assets, net 171,616 170,295 Goodwill 5,449,590 5,372,562 Other intangibles, net 3,279,269 3,342,085 Investments and other assets 402,281 382,479 Total assets $ 12,839,851 $ 12,431,120 LIABILITIES AND STOCKHOLDERS’ EQUITY Current liabilities: Short-term borrowings and current portion of long-term debt, net $ 5,401 $ 226,079 Accounts payable 487,663 497,134 Customer advanced payments 382,611 357,674 Income taxes payable 48,178 48,171 Accrued liabilities and other 417,337 435,144 Total current liabilities 1,341,190 1,564,202 Long-term debt, net 2,186,299 2,158,928 Deferred income taxes 652,695 694,267 Other long-term liabilities 578,296 537,211 Total liabilities 4,758,480 4,954,608 Stockholders’ equity: Common stock 2,707 2,700 Capital in excess of par value 1,123,920 1,094,236 Retained earnings 9,372,368 8,857,485 Accumulated other comprehensive loss (521,996) (574,945) Treasury stock (1,895,628) (1,902,964) Total stockholders’ equity 8,081,371 7,476,512 Total liabilities and stockholders’ equity $ 12,839,851 $ 12,431,120 Three months ended June 30, Six months ended June 30, 2023 2022 2023 2022 Capital stock Common stock, $0.01 par value Balance at the beginning of the period $ 2,704 $ 2,693 $ 2,700 $ 2,689 Shares issued 3 2 7 6 Balance at the end of the period 2,707 2,695 2,707 2,695 Capital in excess of par value Balance at the beginning of the period 1,092,362 1,018,433 1,094,236 1,012,526 Issuance of common stock under employee stock plans 18,977 9,562 6,824 5,898 Share-based compensation expense 12,581 12,956 22,860 22,527 Balance at the end of the period 1,123,920 1,040,951 1,123,920 1,040,951 Retained earnings Balance at the beginning of the period 9,105,705 8,121,781 8,857,485 7,900,113 Net income 324,242 282,373 629,954 554,820 Cash dividends paid (57,579) (50,419) (115,071) (101,197) Other — — — (1) Balance at the end of the period 9,372,368 8,353,735 9,372,368 8,353,735 Accumulated other comprehensive (loss) income Foreign currency translation: Balance at the beginning of the period (343,217) (291,511) (368,124) (275,365) Translation adjustments 29,840 (87,391) 62,660 (114,576) Change in long-term intercompany notes 2,132 (16,252) 5,903 (23,119) Net investment hedge instruments gain (loss), net of tax of $2,317 and $(13,777) for the quarter ended June 30, 2023 and 2022 and $6,122 and $(19,608) for the six months ended June 30, 2023 and 2022 , respectively (7,114) 42,303 (18,798) 60,209 Balance at the end of the period (318,359) (352,851) (318,359) (352,851) Defined benefit pension plans: Balance at the beginning of the period (205,229) (194,079) (206,821) (195,079) Amortization of net actuarial loss and other, net of tax of $(518) and $(326) for the quarter ended June 30, 2023 and 2022 and $(1,036) and $(652) for the six months ended June 30, 2023 and 2022 , respectively 1,592 1,000 3,184 2,000 Balance at the end of the period (203,637) (193,079) (203,637) (193,079) Accumulated other comprehensive loss at the end of the period (521,996) (545,930) (521,996) (545,930) Treasury stock Balance at the beginning of the period (1,895,200) (1,725,629) (1,902,964) (1,573,000) Issuance of common stock under employee stock plans (406) (1,076) 13,860 3,019 Purchase of treasury stock (22) (174,655) (6,524) (331,379) Balance at the end of the period (1,895,628) (1,901,360) (1,895,628) (1,901,360) Total stockholders’ equity $ 8,081,371 $ 6,950,091 $ 8,081,371 $ 6,950,091 Nine Months Ended September 30, 2017 2016 $ 442,938 $ 403,050 131,005 122,968 20,492 (2,638 ) 19,689 16,393 (1,133 ) — 19,221 (27,428 ) (52,493 ) (3,003 ) 675 175 580,394 509,517 (45,630 ) (40,497 ) (518,634 ) (359,976 ) 2,239 — (400 ) 500 (562,425 ) (399,973 ) (9,601 ) 237,100 (6,730 ) (236,078 ) (62,003 ) (62,705 ) — 5,061 35,345 15,234 (42,989 ) (41,388 ) 44,176 (3,692 ) 19,156 64,464 717,259 381,005 $ 736,415 $ 445,469 Six months ended June 30, 2023 2022 Cash provided by (used for): Operating activities: Net income $ 629,954 $ 554,820 Adjustments to reconcile net income to total operating activities: Depreciation and amortization 163,935 155,218 Deferred income taxes (38,144) (19,459) Share-based compensation expense 22,860 22,527 Gain on sale of facilities — (7,054) Net change in assets and liabilities, net of acquisitions (51,627) (245,958) Pension contributions (2,880) (3,884) Other, net (2,315) (18,973) Total operating activities 721,783 437,237 Investing activities: Additions to property, plant and equipment (47,835) (52,540) Purchases of businesses, net of cash acquired (99,266) — Proceeds from sale of facilities — 11,754 Other, net (2,886) (247) Total investing activities (149,987) (41,033) Financing activities: Net change in short-term borrowings (219,610) 56,490 Repurchases of common stock (6,524) (331,379) Cash dividends paid (115,071) (101,197) Proceeds from stock option exercises 29,055 17,827 Other, net (4,941) (12,134) Total financing activities (317,091) (370,393) Effect of exchange rate changes on cash and cash equivalents 5,496 (23,930) Increase in cash and cash equivalents 260,201 1,881 Cash and cash equivalents: Beginning of period 345,386 346,772 End of period $ 605,587 $ 348,653 September20171.Basis of PresentationSeptemberJune 30, 2017,2023, the consolidated results of its operations for the three and ninesix months ended SeptemberJune 30, 20172023 and 20162022 and its cash flows for the ninesix months ended SeptemberJune 30, 20172023 and 20162022 have been included. Quarterly results of operations are not necessarily indicative of results for the full year. The accompanying consolidated financial statements should be read in conjunction with the audited consolidated financial statements and related notes presented in the Company’s Annual Report onForm 10-K for the year ended December 31, 20162022 as filed with the U.S. Securities and Exchange Commission.2.Recent Accounting PronouncementsIn May 2014,2023 2022 (In thousands) Contract assets—January 1 $ 119,741 $ 95,274 Contract assets – June 30 137,444 107,902 Change in contract assets – increase (decrease) 17,703 12,628 Contract liabilities – January 1 398,692 328,816 Contract liabilities – June 30 443,768 369,926 Change in contract liabilities – (increase) decrease (45,076) (41,110) Net change $ (27,373) $ (28,482) Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”)No. 2014-09,Revenuesix months ended June 30, 2023 was primarily driven by contract liabilities, specifically growth in advance payments from Contracts with Customers(“ASU 2014-09”)customers. For the six months ended June 30, 2023 and modified2022, the standard thereafter. The objectiveCompany recognized revenue ofASU 2014-09 is to establish a single comprehensive model for entities to use in accounting for revenue arising from contracts with customers $268.0 million and will supersede most of the existing revenue recognition guidance. The core principle ofASU 2014-09 is$219.3 million, respectively, that an entity recognizes revenue at the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services.ASU 2014-09 applies to all contracts with customers except those that are within the scope of other topicswas previously included in the FASB Accounting Standards Codification.ASU 2014-09 is effective for interimbeginning balance of contract liabilities.annual reporting periods beginning after December 15, 201731, 2022, $61.2 million and may be early adopted for interim and annual reporting periods beginning after December 15, 2016. $41.0 million of Customer advanced payments (contract liabilities), respectively, were recorded in Other long-term liabilities in the consolidated balance sheets.Company will adoptASU 2014-09 as of January 1, 2018. The guidance permits adoption by retrospectively applying the guidance to each prior reporting period presented (full retrospective method) or prospectively applying the guidance and providing additional disclosures comparing results to previous guidance, with the cumulative effect of initially applying the guidance recognized in beginning retained earnings at the date of initial application (modified retrospective method). The Company expects to use the modified retrospective method of adoption.ASU 2014-09 is primarily expected to impact the Company’s revenue recognition procedures by requiring recognition of certain revenues to move from upon shipment or delivery to over-time. The recording of certain revenues over-time isremaining performance obligations not expected to have a material impact onbe completed within one year as of June 30, 2023 and December 31, 2022 were $573.0 million and $526.0 million, respectively. Remaining performance obligations represent the Company’s consolidated resultstransaction price of operationsfirm, non-cancelable orders, with expected delivery dates to customers greater than one year from the balance sheet date, for which the performance obligation is unsatisfied or financial position. Also, the Company is developing the additional expanded disclosures required. The Company is in the processpartially unsatisfied. These performance obligations will be substantially satisfied within two to three years.September2017In November 2015, the FASB issuedASU No. 2015-17,Balance Sheet Classification of Deferred Taxes(“ASU 2015-17”).ASU 2015-17 simplifies the presentation of deferred taxes by requiring deferred tax assets and liabilities be classified as noncurrentconsolidated balance sheet. The Company prospectively adoptedASU 2015-17 effective January 1, 2017 andlocation of the adoption did not have a significant impact oncustomer. Information about the Company’s consolidated results of operations financial position or cash flows. The December 31, 2016 consolidated balance sheetin different geographic areas was not adjustedas follows for the adoption ofASU 2015-17.In February 2016, the FASB issuedASU No. 2016-02,Leases(“ASU 2016-02”). The new standard establishes aright-of-use model that requires a lessee to record aright-of-use asset and a lease liability on the balance sheet for all leases with terms longer than twelve months. Leases will be classified as either finance or operating, with classification affecting the pattern of expense recognition in the income statement.ASU 2016-02 is effective for interim and annual reporting periods beginning after December 15, 2018.ASU 2016-02 is to be adopted using a modified retrospective approach and early adoption is permitted. The Company has not determined the impactASU 2016-02 may have on the Company’s consolidated results of operations, financial position, cash flows and financial statement disclosures.In March 2016, the FASB issuedASU No. 2016-09,Improvements to Employee Share-Based Payment Accounting(“ASU 2016-09”).ASU 2016-09 includes changes to the accounting for share-based payment transactions, including the income tax consequences, classification of awards as either equity or liabilities and classification on the statement of cash flows. The Company prospectively adoptedASU 2016-09 effective January 1, 2017. For the three and ninesix months ended September 30, 2017, the Company recorded a tax benefitJune 30:Three months ended June 30, 2023 Six months ended June 30, 2023 EIG EMG Total EIG EMG Total (In thousands) United States $ 575,281 $ 284,611 $ 859,892 $ 1,137,177 $ 531,730 $ 1,668,907 United Kingdom 23,150 28,402 51,552 51,188 59,464 110,652 European Union countries 130,811 110,876 241,687 266,469 227,683 494,152 Asia 290,636 52,753 343,389 574,528 103,658 678,186 Other foreign countries 114,768 34,823 149,591 222,531 68,800 291,331 Total international 559,365 226,854 786,219 1,114,716 459,605 1,574,321 Consolidated net sales $ 1,134,646 $ 511,465 $ 1,646,111 $ 2,251,893 $ 991,335 $ 3,243,228 $2.5$439.1 million and $11.4$873.3 million respectively, within Provision for income taxes related to the tax effects of share-based payment transactions. Prior to adoption, this amount would have been recorded as a component of Capital in excess of par value. The adoption of this standard could create volatility in the Company’s effective tax rate going forward. The Company elected not to change its accounting policy with respect to the estimation of forfeitures. The Company no longer reclassifies the excess tax benefits from share-based payments from operating activities to financing activities in the consolidated statement of cash flows. For the three and ninesix months ended SeptemberJune 30, 2017,2023, respectively.Three months ended June 30, 2022 Six months ended June 30, 2022 EIG EMG Total EIG EMG Total (In thousands) United States $ 551,967 $ 240,436 $ 792,403 $ 1,035,593 $ 471,813 $ 1,507,406 United Kingdom 19,050 31,620 50,670 47,005 60,251 107,256 European Union countries 109,425 108,031 217,456 230,139 222,193 452,332 Asia 255,232 70,225 325,457 511,652 133,064 644,716 Other foreign countries 92,574 35,992 128,566 191,618 69,749 261,367 Total international 476,281 245,868 722,149 980,414 485,257 1,465,671 Consolidated net sales $ 1,028,248 $ 486,304 $ 1,514,552 $ 2,016,007 $ 957,070 $ 2,973,077 Company excluded the excess tax benefits from the assumed proceeds available to repurchase sharesthree and six months ended June 30, 2022, respectively.computationreportable segments were as follows:Three months ended June 30, 2023 Six months ended June 30, 2023 EIG EMG Total EIG EMG Total (In thousands) Process and analytical instrumentation $ 798,667 $ — $ 798,667 $ 1,593,100 $ — $ 1,593,100 Aerospace and power 335,979 149,792 485,771 658,793 292,842 951,635 Automation and engineered solutions — 361,673 361,673 — 698,493 698,493 Consolidated net sales $ 1,134,646 $ 511,465 $ 1,646,111 $ 2,251,893 $ 991,335 $ 3,243,228 Three months ended June 30, 2022 Six months ended June 30, 2022 EIG EMG Total EIG EMG Total (In thousands) Process and analytical instrumentation $ 768,261 $ — $ 768,261 $ 1,460,953 $ — $ 1,460,953 Aerospace and power 259,987 137,340 397,327 555,054 264,082 819,136 Automation and engineered solutions — 348,964 348,964 — 692,988 692,988 Consolidated net sales $ 1,028,248 $ 486,304 $ 1,514,552 $ 2,016,007 $ 957,070 $ 2,973,077 Three months ended June 30, 2023 Six months ended June 30, 2023 EIG EMG Total EIG EMG Total (In thousands) Products transferred at a point in time $ 936,934 $ 463,618 $ 1,400,552 $ 1,872,242 $ 877,219 $ 2,749,461 Products and services transferred over time 197,712 47,847 245,559 379,651 114,116 493,767 Consolidated net sales $ 1,134,646 $ 511,465 $ 1,646,111 $ 2,251,893 $ 991,335 $ 3,243,228 Three months ended June 30, 2022 Six months ended June 30, 2022 EIG EMG Total EIG EMG Total (In thousands) Products transferred at a point in time $ 839,948 $ 423,506 $ 1,263,454 $ 1,652,896 $ 836,160 $ 2,489,056 Products and services transferred over time 188,300 62,798 251,098 363,111 120,910 484,021 Consolidated net sales $ 1,028,248 $ 486,304 $ 1,514,552 $ 2,016,007 $ 957,070 $ 2,973,077 FASB issuedASU No. 2017-07,Improvingsale of its products. The warranty periods for products sold vary among the PresentationCompany’s operations, but the majority do not exceed one year. The Company calculates its warranty expense provision based on its historical warranty experience and adjustments are made periodically to reflect actual warranty expenses. Product warranty obligations are reported as a component of Net Periodic Pension CostAccrued liabilities and Net Periodic Postretirement Benefit Cost(“ASU 2017-07”), which changes how employers that sponsor defined benefit pension and/or other postretirement benefit plans present the net periodic benefit cost in the income statement.ASU 2017-07 requires employers to present the service cost component of net periodic benefit costconsolidated balance sheet.same income statement line itemaccrued product warranty obligation were as other employee compensation costs. All other components of the net periodic benefit cost will be presented outside of operating income.ASU 2017-07 is effective for interim and annual reporting periods beginning after December 15, 2017 and early adoption is permitted. follows:Six Months Ended June 30, 2023 2022 (In thousands) Balance at the beginning of the period $ 26,487 $ 27,478 Accruals for warranties issued during the period 9,397 5,143 Settlements made during the period (7,289) (6,023) Warranty accruals related to acquired businesses and other during the period 244 (632) Balance at the end of the period $ 28,839 $ 25,966 has not determinedmaintains allowances for estimated losses resulting from the impactASU 2017-07 may have on the Company’s consolidated resultsinability of operations,customers to meet their financial position or cash flows.In May 2017, the FASB issuedASU No. 2017-09,Scope of Modification Accounting(“ASU 2017-09”).ASU 2017-09 clarifies which changesobligations to the terms or conditions of a share-based payment award require an entity to apply modification accounting.ASU 2017-09 is effective for interim and annual reporting periods beginning after December 15, 2017 and early adoption is permitted.Company. The Company doesrecognizes an allowance for credit losses, on all accounts receivable and contract assets, which considers risk of future credit losses based on factors such as historical experience, contract terms, as well as general and market business conditions, country, and political risk. Balances are written off when determined to be uncollectible.expectmaterial for the adoption ofASU 2017-09 to have a significant impact on the Company’s consolidated results of operations, financial position or cash flows.3.Earnings Per Share Three Months Ended Nine Months Ended September 30, September 30, 2017 2016 2017 2016 (In thousands) 230,439 231,894 230,049 233,387 1,814 827 1,566 1,189 232,253 232,721 231,615 234,576 AMETEK, Inc.Notes to Consolidated Financial StatementsSeptember 30, 2017(Unaudited)4.Accumulated Other Comprehensive Income (Loss)The components of accumulated other comprehensive income (loss) consisted of the following: Three Months Ended Three Months Ended September 30, 2017 September 30, 2016 Foreign
Currency
Items
and Other Defined
Benefit
Pension
Plans Total Foreign
Currency
Items
and Other Defined
Benefit
Pension
Plans Total (In thousands) $ (294,922 ) $ (199,376 ) $ (494,298 ) $ (271,501 ) $ (151,808 ) $ (423,309 ) 37,642 — 37,642 (10,441 ) — (10,441 ) 12,035 — 12,035 3,063 — 3,063 (32,422 ) — (32,422 ) (1,212 ) — (1,212 ) — 3,512 3,512 — 2,484 2,484 12,190 (1,321 ) 10,869 423 (869 ) (446 ) 29,445 2,191 31,636 (8,167 ) 1,615 (6,552 ) $ (265,477 ) $ (197,185 ) $ (462,662 ) $ (279,668 ) $ (150,193 ) $ (429,861 ) Nine Months Ended Nine Months Ended September 30, 2017 September 30, 2016 Foreign
Currency
Items
and Other Defined
Benefit
Pension
Plans Total Foreign
Currency
Items
and Other Defined
Benefit
Pension
Plans Total (In thousands) $ (338,631 ) $ (203,758 ) $ (542,389 ) $ (250,593 ) $ (155,038 ) $ (405,631 ) 101,846 — 101,846 (26,581 ) — (26,581 ) 30,727 — 30,727 6,862 — 6,862 (95,311 ) — (95,311 ) (14,393 ) — (14,393 ) — 10,536 10,536 — 7,452 7,452 35,892 (3,963 ) 31,929 5,037 (2,607 ) 2,430 73,154 6,573 79,727 (29,075 ) 4,845 (24,230 ) $ (265,477 ) $ (197,185 ) $ (462,662 ) $ (279,668 ) $ (150,193 ) $ (429,861 ) Reclassifications for the amortization of defined benefit pension plans are included in Cost of sales in the consolidated statement of income. See Note 12 for further details.AMETEK, Inc.Notes to Consolidated Financial StatementsSeptember 30, 2017(Unaudited)5.Fair Value MeasurementsThree Months Ended June 30, Six Months Ended June 30, 2023 2022 2023 2022 (In thousands) Weighted average shares: Basic shares 230,478 230,100 230,302 230,790 Equity-based compensation plans 783 1,147 943 1,366 Diluted shares 231,261 231,247 231,245 232,156 as of September 30, 2017 and December 31, 2016, consistent with the fair value hierarchy: September 30, 2017 December 31, 2016 Fair Value Fair Value (In thousands) $ 7,896 $ 7,317 June 30, 2023 Total Level 1 Level 2 Level 3 (In thousands) Mutual fund investments $ 10,539 $ 10,539 $ — $ — Foreign currency forward contracts (476) — (476) — December 31, 2022 Total Level 1 Level 2 Level 3 (In thousands) Mutual fund investments $ 9,856 $ 9,856 $ — $ — Foreign currency forward contracts 3,032 — 3,032 — fixed-incomemutual fund investments which are valued as level 1 investments, wasis based on quoted market prices. The fixed-incomemutual fund investments are shown as a component of long-terminvestments and other assets on the consolidated balance sheet.ninesix months ended SeptemberJune 30, 20172023 and 2016,2022, gains and losses on the investments noted above were not significant. No transfers between level 1 and level 2 investments occurred during the ninesix months ended SeptemberJune 30, 20172023 and 2016.fixed-incomemutual fund investments are recorded at fair value at SeptemberJune 30, 20172023 and December 31, 20162022 in the accompanying consolidated balance sheet.SeptemberJune 30, 20172023 and December 31, 2016: September 30, 2017 December 31, 2016 Recorded
Amount Fair Value Recorded
Amount Fair Value (In thousands) $ — $ — $ — $ — (2,430,446 ) (2,456,920 ) (2,341,565 ) (2,386,901 ) June 30, 2023 December 31, 2022 Fair Value Fair Value (In thousands) Long-term debt (including current portion) $ (2,188,710) $ (2,033,991) $ (2,161,643) $ (2,010,867) net approximates the carrying value. Short-term borrowings, net are valued as level 2 liabilities as they are corroborated by observable market data. The Company’s net long-term debt net is all privately held with no public market for this debt, therefore, the fair value of net long-term debt net was computed based on comparable current market data for similar debt instruments and is considered to be a level 3 liability.AMETEK, Inc.Notes to Consolidated Financial StatementsSeptember 30, 2017(Unaudited)6.Hedging ActivitiesSeptemberJune 30, 2017,2023, these net investment hedges includedBritish-pound-and Euro-denominated long-term debt. These borrowings were designed to create net investment hedges in each of thecertain designated foreign subsidiaries. The Company designated the British-pound- and Euro-denominated loans referred to above as hedging instruments to offset translation gains or losses on the net investment due to changes in the British pound and Euro exchange rates. These net investment hedges are evidenced by management’s contemporaneous documentation supporting the hedge designation. Any gain or loss on the hedging instruments (the debt) following hedge designation is reported in accumulated other comprehensive income in the same manner as the translation adjustment on the hedged investment based on changes in the spot rate, which is used to measure hedge effectiveness.SeptemberJune 30, 2017,2023, the Company had $408.7$260.5 million of British-pound-denominated loans, which were designated as a hedge against the net investment in British pound functional currency foreign subsidiaries. At SeptemberJune 30, 2017,2023, the Company had $590.7$584.1 million in Euro-denominated loans, which were designated as a hedge against the net investment in Euro functional currency foreign subsidiaries. As a result of theBritish-pound-and British-pound- and Euro-denominated loans being designated and 100% effective as net investment hedges, $95.3$24.9 million of pre-tax currency remeasurement losses have been included in the foreign currency translation component of other comprehensive income for the ninesix months ended SeptemberJune 30, 2017.7.Inventories, net September 30, December 31, 2017 2016 (In thousands) $ 79,897 $ 75,827 118,979 101,484 348,000 314,793 $ 546,876 $ 492,104 June 30,
2023December 31,
2022(In thousands) Finished goods and parts $ 124,959 $ 130,989 Work in process 151,875 138,043 Raw materials and purchased parts 830,990 775,252 Total inventories, net $ 1,107,824 $ 1,044,284 September20178.AcquisitionsThree Months Ended
June 30,Six Months Ended
June 30,2023 2022 2023 2022 (In thousands) Operating lease cost $ 15,905 $ 15,346 $ 30,582 $ 30,724 Variable lease cost 2,716 2,399 5,946 4,652 Total lease cost $ 18,621 $ 17,745 $ 36,528 $ 35,376 June 30,
2023December 31,
2022(In thousands) Right of use assets, net $ 171,616 $ 170,295 Lease liabilities included in Accrued Liabilities and other 46,158 46,366 Lease liabilities included in Other long-term liabilities 129,557 129,227 Total lease liabilities $ 175,715 $ 175,593 Lease Liability Maturity Analysis Operating Leases (In thousands) Remaining 2023 $ 26,538 2024 45,798 2025 35,527 2026 26,931 2027 18,351 Thereafter 41,206 Total lease payments 194,351 Less: imputed interest 18,636 $ 175,715 $518.6$99.3 million in cash, net of cash acquired, to acquireRauland-Borg Corporation (“Rauland” Bison Gear & Engineering Corp. ("Bison") in February 2017 and MOCON, Inc. in June 2017. The Rauland acquisition includes a potential $30 million contingent payment due upon the achievement of certain milestones as described further below. RaulandMarch 2023. Bison is a global providerleading manufacturer of enterprise clinicalhighly engineered motion control solutions serving diverse markets and education communications solutions for hospitals, healthcare systems and educational facilities. MOCONapplications. Bison is a provider of laboratory and field gas analysis instrumentation to research laboratories, production facilities and quality control departments in food and beverage, pharmaceutical and industrial applications. Rauland and MOCON are part of AMETEK’s Electronic Instruments Group.preliminary allocation of the aggregate purchase price for the net assets of the 2017 acquisitionsBison acquisition based on theirthe estimated fair values at acquisition (in millions): $ 21.5 256.4 269.5 (10.6 ) (27.2 ) 34.5 544.1 (25.5 ) $ 518.6 (1)Includes $30.7 million in accounts receivable, whose fair value, contractualProperty, plant and equipment $ 10.1 Goodwill 23.5 Other intangible assets 52.8 12.9 Total cash flows and expected cash flows are approximately equal.paid$ 99.3 2017 acquisitions as follows: Rauland provides the Company with attractive new growth opportunities within the medical technology market, strong growth opportunities in its core marketsBison acquisition. Bison's engineering expertise and incremental growth opportunities through acquisitions and international expansion. MOCON’s products and technologiesbroad product portfolio complement the Company’sCompany's existing gas analysis instrumentation businessmotion control and provides it with opportunities to expand into the growing food and pharmaceutical package testing market. automation solutions business. The Company expects approximately $146$23.5 million of the goodwill recorded in connection withrelating to the 2017 acquisitionsBison acquisition will be tax deductible in future years.SeptemberJune 30, 2017,2023, the purchase price allocated to other intangible assets of $269.5$52.8 million consists of $53.6$8.8 million of indefinite-lived intangible trade names, which are not subject to amortization. The remaining $215.9$44.0 million of other intangible assets consists of $162.0$33.0 million of customer relationships, which are being amortized over a period of 1817 years, and $53.9$11.0 million of purchased technology, which is being amortized over a period of 1817 years. Amortization expense for each of the next five years for the 2017 acquisitions2023 acquisition is expected to approximate $12$3 million per year.certainthe intangible assets and tangible and intangible assets and liabilities for its 2017 acquisitions, including inventory, property, plant and equipment, goodwill, customer relationships, trade names, purchased technology, and the accounting for income taxes and certainlong-term liabilities.above mentioned contingent payment is based on Rauland achieving a certain cumulative revenue target over the period October 1, 2016 to September 30, 2018. If Rauland achieves the target, the $30 million contingent payment will be made; however, if the target is not achieved, no payment will be made. At theBison acquisition date, the estimated fair value of the contingent payment liability was $25.5 million, which was based on a probabilistic approach using level 3 inputs. At September 30, 2017, there was no change to the estimated fair value of the contingent payment liability.The 2017 acquisitions had an immaterial impact on reported net sales, net income, and diluted earnings per share for the three and ninesix months ended SeptemberJune 30, 2017.2023. Had the 2017 acquisitionsacquisition been made at the beginning of 20172023 or 2016, unaudited2022, pro forma net sales, net income, and diluted earnings per share for the three and ninesix months ended SeptemberJune 30, 20172023 and 2016, respectively,2022, would not have been materially different than the amounts reported.AMETEK, Inc.Notes to Consolidated Financial StatementsSeptember 30, 2017(Unaudited)9.Goodwill Electronic
Instruments
Group Electro-
mechanical
Group Total (In millions) $ 1,817.0 $ 1,002.0 $ 2,819.0 256.4 — 256.4 0.1 0.6 0.7 31.2 31.4 62.6 $ 2,104.7 $ 1,034.0 $ 3,138.7 10.Income TaxesEIG EMG Total (In millions) Balance at December 31, 2022 $ 4,236.1 $ 1,136.5 $ 5,372.6 Goodwill acquired from 2023 acquisitions — 23.5 23.5 Purchase price allocation adjustments and other 25.4 — 25.4 Foreign currency translation adjustments 16.9 11.2 28.1 Balance at June 30, 2023 $ 4,278.4 $ 1,171.2 $ 5,449.6 SeptemberJune 30, 2017,2023, the Company had gross unrecognizeduncertain tax benefits of $58.5$191.1 million, of which $49.0$140.3 million, if recognized, would impact the effective tax rate. $ 57.9 8.7 (8.1 ) $ 58.5 Balance at December 31, 2022 $ 174.7 Additions for tax positions 16.4 Reductions for tax positions — Balance at June 30, 2023 $ 191.1 ninesix months ended SeptemberJune 30, 20172023 and 20162022 were not significant.11.Share-Based Compensation Three Months Ended Nine Months Ended September 30, September 30, 2017 2016 2017 2016 (In thousands) $ 2,482 $ 2,311 $ 7,449 $ 7,634 3,094 3,047 12,240 8,759 $ 5,576 $ 5,358 $ 19,689 $ 16,393 Three Months Ended
June 30,Six Months Ended
June 30,2023 2022 2023 2022 (In thousands) Stock option expense $ 3,596 $ 3,383 $ 7,180 $ 6,823 Restricted stock expense 5,257 5,253 10,297 10,031 Performance restricted stock unit expense 3,728 4,320 5,383 5,673 Total pre-tax expense $ 12,581 $ 12,956 $ 22,860 $ 22,527 The nine months ended September 30, 2017 includes a second quarterSeptember2017 of grant using aBlack-Scholes-Merton option pricing model. The following weighted average assumptions were used in theBlack-Scholes-Merton model to estimate the fair values of stock options granted during the periods indicated: Nine Months Ended Year Ended September 30, 2017 December 31, 2016 18.0 % 21.8 % 5.0 5.0 1.94 % 1.23 % 0.60 % 0.77 % $ 11.05 $ 9.14 Expected volatility is based on the historical volatility of the Company’s stock over the stock options’ expected term. The Company used historical exercise data to estimate the stock options’ expected term, which represents the period of time that the stock options granted are expected to be outstanding. Management anticipates that the future stock option holding periods will be similar to the historical stock option holding periods. The risk-free interest rate for periods within the expected term of the stock option is based on the U.S. Treasury yield curve at the time of grant. Compensation expense recognized for all share-based awards is net of estimated forfeitures. The Company’s estimated forfeiture rates are based on its historical experience.Six Months Ended
June 30, 2023Year Ended December 31, 2022 Expected volatility 26.0 % 24.5 % Expected term (years) 5.0 5.0 Risk-free interest rate 3.54 % 2.33 % Expected dividend yield 0.72 % 0.65 % Black-Scholes-Merton fair value per stock option granted $ 38.11 $ 32.54 Shares Weighted
Average
Exercise
Price Weighted
Average
Remaining
Contractual
Life Aggregate
Intrinsic
Value (In thousands) (Years) (In millions) 6,011 $ 42.25 1,331 60.32 (1,388 ) 30.96 (180 ) 52.17 (8 ) 52.10 5,766 $ 48.81 4.4 $ 99.3 3,010 $ 43.74 3.1 $ 67.1 Shares Weighted
Average
Exercise
PriceWeighted
Average
Remaining
Contractual
Life Aggregate
Intrinsic
Value(In thousands) (Years) (In millions) Outstanding at December 31, 2022 3,060 $ 79.46 Granted 453 138.46 Exercised (457) 70.55 Forfeited (51) 122.05 Outstanding at June 30, 2023 3,005 $ 99.43 6.9 $ 187.7 Exercisable at June 30, 2023 2,070 $ 83.59 5.9 $ 162.1 ninesix months ended SeptemberJune 30, 20172023 was $37.4$34.7 million. The total fair value of stock options vested during the ninesix months ended SeptemberJune 30, 20172023 was $12.4$12.8 million. As of SeptemberJune 30, 2017,2023, there was approximately $24$25.6 million of expected futurepre-tax compensation expense related to the 2.80.9 million nonvestednon-vested stock options outstanding, which is expected to be recognized over a weighted average period of approximately two years.nonvestednon-vested restricted stock activity and related information: Shares Weighted
Average
Grant Date
Fair Value (In thousands) 1,019 $ 48.59 335 60.24 (317 ) 47.41 (66 ) 51.33 971 $ 53.32 AMETEK, Inc.Notes to Consolidated Financial StatementsSeptember 30, 2017(Unaudited)Shares Weighted
Average
Grant Date
Fair Value(In thousands) Non-vested restricted stock outstanding at December 31, 2022 356 $ 117.18 Granted 154 138.60 Vested (155) 104.06 Forfeited (21) 125.89 Non-vested restricted stock outstanding at June 30, 2023 334 $ 132.59 ninesix months ended SeptemberJune 30, 20172023 was $15.0$16.1 million. As of SeptemberJune 30, 2017,2023, there was approximately $32$34.7 million of expected futurepre-tax compensation expense related to the 1.00.3 million nonvestednon-vested restricted shares outstanding, which is expected to be recognized over a weighted average period of approximately two years.Shares Weighted
Average
Grant Date
Fair Value(In thousands) Non-vested performance restricted stock outstanding at December 31, 2022 275 $ 101.98 Granted 79 138.46 48 63.37 Vested (161) 63.37 Forfeited (2) 131.67 Non-vested performance restricted stock outstanding at June 30, 2023 239 $ 131.90
| Three Months Ended September 30, | Nine Months Ended September 30, | |||||||||||||||
| 2017 | 2016 | 2017 | 2016 | |||||||||||||
| (In thousands) | ||||||||||||||||
Defined benefit plans: | ||||||||||||||||
Service cost | $ | 1,919 | $ | 1,628 | $ | 5,657 | $ | 4,956 | ||||||||
Interest cost | 6,904 | 7,448 | 20,566 | 22,688 | ||||||||||||
Expected return on plan assets | (13,343 | ) | (12,693 | ) | (39,884 | ) | (38,639 | ) | ||||||||
Amortization of net actuarial loss and other | 3,512 | 2,484 | 10,536 | 7,452 | ||||||||||||
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Pension income | (1,008 | ) | (1,133 | ) | (3,125 | ) | (3,543 | ) | ||||||||
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Other plans: | ||||||||||||||||
Defined contribution plans | 5,830 | 5,660 | 18,788 | 18,537 | ||||||||||||
Foreign plans and other | 1,435 | 1,525 | 4,323 | 4,203 | ||||||||||||
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Total other plans | 7,265 | 7,185 | 23,111 | 22,740 | ||||||||||||
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| |||||||||
Total net pension expense | $ | 6,257 | $ | 6,052 | $ | 19,986 | $ | 19,197 | ||||||||
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| Three Months Ended June 30, | Six Months Ended June 30, | ||||||||||||||||||||||
| 2023 | 2022 | 2023 | 2022 | ||||||||||||||||||||
| (In thousands) | |||||||||||||||||||||||
| Defined benefit plans: | |||||||||||||||||||||||
| Service cost | $ | 749 | $ | 1,331 | $ | 1,489 | $ | 2,705 | |||||||||||||||
| Interest cost | 7,566 | 5,032 | 15,067 | 10,152 | |||||||||||||||||||
| Expected return on plan assets | (13,071) | (15,033) | (26,067) | (30,301) | |||||||||||||||||||
| Amortization of net actuarial loss and other | 2,842 | 2,123 | 5,663 | 4,297 | |||||||||||||||||||
| Pension income | (1,914) | (6,547) | (3,848) | (13,147) | |||||||||||||||||||
| Other plans: | |||||||||||||||||||||||
| Defined contribution plans | 10,512 | 9,811 | 24,028 | 23,072 | |||||||||||||||||||
| Foreign plans and other | 1,999 | 2,077 | 4,570 | 4,395 | |||||||||||||||||||
| Total other plans | 12,511 | 11,888 | 28,598 | 27,467 | |||||||||||||||||||
| Total net pension expense | $ | 10,597 | $ | 5,341 | $ | 24,750 | $ | 14,320 | |||||||||||||||
The Company provides limited warranties in connection with the sale of its products. The warranty periods for products sold vary among the Company’s operations, but generally do not exceed one year. The Company calculates its warranty expense provision based on its historical warranty experience and adjustments are made periodically to reflect actual warranty expenses.
Changes in the accrued product warranty obligation were as follows:
| Nine Months Ended September 30, | ||||||||
| 2017 | 2016 | |||||||
| (In thousands) | ||||||||
Balance at the beginning of the period | $ | 22,007 | $ | 22,761 | ||||
Accruals for warranties issued during the period | 12,235 | 9,630 | ||||||
Settlements made during the period | (13,690 | ) | (11,697 | ) | ||||
Warranty accruals related to acquired businesses and other during the period | 2,372 | 1,233 | ||||||
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| |||||
Balance at the end of the period | $ | 22,924 | $ | 21,927 | ||||
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Certain settlements of warranties made during the period were for specific nonrecurring warranty obligations. Product warranty obligations are reported as current liabilities in the consolidated balance sheet.
AMETEK, Inc.
Notes to Consolidated Financial Statements
September 30, 2017
(Unaudited)
2022.
AMETEK, Inc.
Notes to Consolidated Financial Statements
September 30, 2017
(Unaudited)
2023.
The Company has been remediating groundwater contamination for several contaminants, including trichloroethylene (“TCE”), at a formerly owned site in El Cajon, California. Several lawsuits have been filed against the Company alleging damages resulting from the groundwater contamination, including property damages and personal injury, and seeking compensatory and punitive damages. Given the state
The Company has two reportable segments, Electronic Instruments Group (“EIG”) and Electromechanical Group (“EMG”). The Company’s operating segments are identified based on the existence of segment managers. Certain of the Company’s operating segments have been aggregated for segment reporting purposes primarily on the basis of product type, production processes, distribution methods and similarity of economic characteristics.
At September 30, 2017, there were no significant changes in identifiable assets of reportable segments from the amounts disclosed at December 31, 2016, other than those described in the acquisitions footnote (Note 8), nor were there any significant changes in the basis of segmentation or in the measurement of segment operating results. Operating information relating to the Company’s reportable segments for the three and nine months ended September 30, 2017 and 2016 can be found in the table included in Part I, Item 2. “Management’s Discussion and Analysis of Financial Condition and Results of Operations” of this Quarterly Report onForm 10-Q.
The Company had a Shareholder Rights Plan, which expired in June 2017. Under the Plan, the Company’s Board of Directors declared a dividend of one Right for each share of Company common stock owned at the close of business on June 2, 2007, and had authorized the issuance of one Right for each share of common stock of the Company issued between the Record Date and the Distribution Date. The Plan provided, under certain conditions involving acquisition of the Company’s common stock, that holders of Rights, except for the acquiring entity, would be entitled (i) to purchase shares of preferred stock at a specified exercise price, or (ii) to purchase shares of common stock of the Company, or the acquiring company, having a value of twice the Rights exercise price.
AMETEK, Inc.
Notes to Consolidated Financial Statements
September 30, 2017
(Unaudited)
During the fourth quarter of 2016, the Company recordedpre-tax restructuring charges totaling $25.6 million, which had the effect of reducing net income by $17.0 million. The restructuring charges were reported in the consolidated statement of income as follows: $24.0 million in Cost of sales and $1.6 million in Selling, general and administrative expenses. The restructuring charges were reported in segment operating income as follows: $12.4 million in EIG, $11.6 million in EMG and $1.6 million in corporate administrative expenses. The restructuring actions primarily related to $19.3 million in severance costs for a reduction in workforce and $6.2 million of asset write-downs in response to the impact of a weak global economy on certain of the Company’s businesses and the effects of a continued strong U.S. dollar. The restructuring activities will be broadly implemented across the Company’s various businesses through the end of 2017, with most actions expected to be completed in 2018.
During the fourth quarter of 2015, the Company recordedpre-tax restructuring charges totaling $20.7 million, which had the effect of reducing net income by $13.9 million. The restructuring charges were reported in the consolidated statement of income as follows: $20.0 million in Cost of sales and $0.7 million in Selling, general and administrative expenses. The restructuring charges were reported in segment operating income as follows: $9.3 million in EIG, $10.8 million in EMG and $0.7 million in corporate administrative expenses. The restructuring actions primarily related to a reduction in workforce in response to the impact of a weak global economy on certain of the Company’s businesses and the effects of a continued strong U.S. dollar. The restructuring activities have been broadly implemented across the Company’s various businesses with all actions expected to be completed in 2018.
Accrued liabilities in the Company’s consolidated balance sheet included amounts related to the fourth quarter of 2016 and fourth quarter of 2015 restructuring charges as follows (in millions):
| Fourth Quarter of 2016 Restructuring | Fourth Quarter of 2015 Restructuring | |||||||
Balance at December 31, 2016 | $ | 19.2 | $ | 9.2 | ||||
Utilization | (5.4 | ) | (1.7 | ) | ||||
Foreign currency translation adjustments and other | 0.1 | (0.1 | ) | |||||
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| |||||
Balance at September 30, 2017 | $ | 13.9 | $ | 7.4 | ||||
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Contents
Item 2. Management’s Discussion and Analysis of Financial Condition and |
Results of Operations
| Three Months Ended September 30, | Nine Months Ended September 30, | |||||||||||||||
| 2017 | 2016 | 2017 | 2016 | |||||||||||||
| (In thousands) | ||||||||||||||||
Net sales(1): | ||||||||||||||||
Electronic Instruments | $ | 671,606 | $ | 579,298 | $ | 1,949,038 | $ | 1,744,246 | ||||||||
Electromechanical | 413,193 | 365,732 | 1,208,047 | 1,122,888 | ||||||||||||
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Consolidated net sales | $ | 1,084,799 | $ | 945,030 | $ | 3,157,085 | $ | 2,867,134 | ||||||||
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Operating income and income before income taxes: | ||||||||||||||||
Segment operating income(2): | ||||||||||||||||
Electronic Instruments | $ | 164,448 | $ | 142,695 | $ | 486,385 | $ | 436,642 | ||||||||
Electromechanical | 84,059 | 71,439 | 248,968 | 231,181 | ||||||||||||
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Total segment operating income | 248,507 | 214,134 | 735,353 | 667,823 | ||||||||||||
Corporate administrative and other expenses | (15,676 | ) | (13,018 | ) | (49,839 | ) | (39,148 | ) | ||||||||
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| |||||||||
Consolidated operating income | 232,831 | 201,116 | 685,514 | 628,675 | ||||||||||||
Interest and other expenses, net | (28,404 | ) | (26,868 | ) | (86,310 | ) | (80,824 | ) | ||||||||
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Consolidated income before income taxes | $ | 204,427 | $ | 174,248 | $ | 599,204 | $ | 547,851 | ||||||||
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| Three Months Ended June 30, | Six Months Ended June 30, | ||||||||||||||||||||||
| 2023 | 2022 | 2023 | 2022 | ||||||||||||||||||||
| (In thousands) | |||||||||||||||||||||||
| Net sales: | |||||||||||||||||||||||
| Electronic Instruments | $ | 1,134,646 | $ | 1,028,248 | $ | 2,251,893 | $ | 2,016,007 | |||||||||||||||
| Electromechanical | 511,465 | 486,304 | 991,335 | 957,070 | |||||||||||||||||||
| Consolidated net sales | $ | 1,646,111 | $ | 1,514,552 | $ | 3,243,228 | $ | 2,973,077 | |||||||||||||||
| Operating income and income before income taxes: | |||||||||||||||||||||||
| Segment operating income: | |||||||||||||||||||||||
| Electronic Instruments | $ | 307,052 | $ | 265,115 | $ | 616,799 | $ | 509,889 | |||||||||||||||
| Electromechanical | 136,215 | 124,371 | 256,719 | 252,580 | |||||||||||||||||||
| Total segment operating income | 443,267 | 389,486 | 873,518 | 762,469 | |||||||||||||||||||
| Corporate administrative expenses | (24,476) | (24,644) | (49,186) | (44,387) | |||||||||||||||||||
| Consolidated operating income | 418,791 | 364,842 | 824,332 | 718,082 | |||||||||||||||||||
| Interest expense | (18,723) | (20,350) | (39,292) | (39,920) | |||||||||||||||||||
| Other (expense) income, net | (3,684) | 1,973 | (9,057) | 4,525 | |||||||||||||||||||
| Consolidated income before income taxes | $ | 396,384 | $ | 346,465 | $ | 775,983 | $ | 682,687 | |||||||||||||||
The Company recorded realignmentinitiatives. We continue to experience heightened levels of inflation in material costs, totaling $25.6 millionsupply chain constraints, as well as continued uncertainty in the fourth quarter of 2016 (the “2016 realignment costs”). The restructuringglobal economy. We expect material cost inflation to remain elevated throughout 2023, but anticipate pricing actions primarily related to $19.3 million in severance costs for a reduction in workforce and $6.2 million of asset write-downs inmitigate this inflationary pressure. In response to supply chain pressures, we are maintaining elevated levels of inventory and seek alternative sources of supply, when necessary, to support sales and backlog growth. We continue to evaluate the extent to which these factors will impact our business, financial condition, and results of a weak global economy on certain of the Company’s businessesoperations and the effects of a continued strong U.S. dollar. See Note 17will take additional actions as necessary throughout 2023 to the Consolidated Financial Statements included in Part I, Item 1 ofmitigate this Quarterly Report onForm 10-Q for further details.
inflationary pressure. For 2017, the strengthening global economic environment compared to 2016,2023, our record backlog, the full year impact of the 2017 and 20162022 acquisitions, the 2023 acquisition of Bison, and continued focus on and implementation of our Operational Excellence initiatives including the 2016 realignment actions, are expected to have a positive impact on the remainder of the Company’s 2017our 2023 results.
Results of Operations (continued)
2022
acquisitions.
during the quarter as well as contributions from the 2022 acquisitions.
translation, partially offset by an organic order decrease. As a result, the Company's backlog of unfilled orders at June 30, 2023 was a record $3,441.9 million, an increase of $223.3 million or 6.9% compared with
$3,218.6 million at December 31, 2022.discussed above, as well as continued benefits from the Company's Operational Excellence initiatives.
General and administrative expenses for the second quarter of 2023 were $24.5 million, compared with $24.6 million for the second quarter of 2022.
2022.
credits.
2022.
Results of Operations (continued)
2022.
EIG’s netsales
2022 acquisitions.
Company's Operational Excellence initiatives.
2023 acquisition.
2023 acquisition. Excluding the dilutive impact of the 2023 acquisition, EMG's operating margins increased 180 basis points compared with the second quarter of 2022.
2022
Asia as well as contributions from the 2022 acquisitions.
organic order decrease.
a facility which increased operating margins by 20 basis points.
Results of Operations (continued)
SG&A
2022.
2022.
2022.
2022.
2022.
EIG’s netsales
EIG’s operating income was $486.4 million for the first nine months of 2017, an increase of $49.8 million or 11.4%, compared with $436.6 million for the first nine months of 2016. The increase in EIG’s operating income for the first nine months of 2017 was primarily due to the higher sales mentioned above, as well as the benefits of the Group’s Operational Excellence initiatives. EIG’s operating margins were 25.0% of net sales for both the first nine months of 2017 and 2016.
EMG’s net sales totaled $1,208.0 million for the first nine months of 2017, an increase of $85.1 million or 7.6%, compared with $1,122.9 million for the first nine months of 2016. The net sales increase was due to 7% organic sales growth and a 2% increase from the 2016 acquisition of Laserage, partially offset by an unfavorable 1% effect of foreign currency translation.
the gain on the sale of a facility, EMG operating margins for the first six months of 2023 increased 120 basis points compared to the first six months of 2022.
income.
2022.
For the first nine months of 2017, the Company repurchased approximately 112,000 shares of its common stock for $6.7 million,
At September 30, 2017, total debt, net was $2,430.4 million, compared with $2,341.6 million24.2% at December 31, 2016. In the fourth quarter of 2017, $270 million of 6.20% senior notes will mature and become payable. In the third quarter of 2018, $80 million of 6.35% senior notes and $160 million of 7.08% senior notes will mature and become payable. Thedebt-to-capital ratio was 39.2% at September 30, 2017, compared with 41.8% at December 31, 2016.2022. The netdebt-to-capital ratio (total debt, net less cash and cash equivalents divided by the sum of net debt and stockholders’ equity) was 31.0%16.4% at SeptemberJune 30, 2017,2023, compared with 33.3%21.4% at December 31, 2016.2022. The netdebt-to-capital ratio is presented because the Company is aware that this measure is used by third parties in evaluating the Company.
Period | Total Number of Shares Purchased (1)(2) | Average Price Paid per Share | Total Number of Shares Purchased as Part of Publicly Announced Plan (2) | Approximate Dollar Value of Shares that May Yet Be Purchased Under the Plan | ||||||||||||
July 1, 2017 to July 31, 2017 | 20,306 | $ | 61.55 | 20,306 | $ | 368,870,746 | ||||||||||
August 1, 2017 to August 31, 2017 | 106 | 61.58 | 106 | 368,864,218 | ||||||||||||
September 1, 2017 to September 30, 2017 | — | — | — | 368,864,218 | ||||||||||||
|
|
|
| |||||||||||||
Total | 20,412 | 61.55 | 20,412 | |||||||||||||
|
|
|
|
|
| |||||||||||
2023:
| Period | Total Number of Shares Purchased (1)(2) | Average Price Paid per Share | Total Number of Shares Purchased as Part of Publicly Announced Plan (2) | Approximate Dollar Value of Shares that May Yet Be Purchased Under the Plan | |||||||||||||||||||
| April 1, 2023 to April 30, 2023 | — | $ | — | — | $ | 817,400,913 | |||||||||||||||||
| May 1, 2023 to May 31, 2023 | 152 | 145.02 | 152 | 817,378,870 | |||||||||||||||||||
| June 1, 2023 to June 30, 2023 | — | — | — | 817,378,870 | |||||||||||||||||||
| Total | 152 | $ | 145.02 | 152 | |||||||||||||||||||
| Exhibit Number | Description | |||||||
|
| |||||||
| 101.INS* | XBRL Instance Document. | |||||||
| 101.SCH* | XBRL Taxonomy Extension Schema Document. | |||||||
| 101.CAL* | XBRL Taxonomy Extension Calculation Linkbase Document. | |||||||
| 101.DEF* | XBRL Taxonomy Extension Definition Linkbase Document. | |||||||
| 101.LAB* | XBRL Taxonomy Extension Label Linkbase Document. | |||||||
| 101.PRE* | XBRL Taxonomy Extension Presentation Linkbase Document. | |||||||
| 104 | Cover Page Interactive Data File (formatted as inline XBRL with applicable taxonomy extension information contained in Exhibits 101). | |||||||
| AMETEK, Inc. | ||||||||
| By: | /s/ THOMAS M. MONTGOMERY | |||||||
| ||||||||
| Senior Vice President – Comptroller | ||||||||
| (Principal Accounting Officer) | ||||||||
| August 1, 2023 | ||||||||
November 2, 2017