CORPORATE OFFICE 37 North Valley Road, Building 4, P.O. Box 1764, PAOLI, PA 19301-0801
Contact: William J. Burke (610) 889-5249
AMETEK ACHIEVES RECORD QUARTERLY RESULTS —Sales Increase 28%, Net Income Rises 36%—
Paoli, PA, July 20, 2006 — AMETEK Inc. (NYSE: AME) today announced second quarter results that established quarterly records for sales, operating income, net income and diluted earnings per share.
AMETEK’s second quarter 2006 sales of $450.6 million were up 28% from the $352.1 million recorded in the second quarter of 2005. Operating income for the second quarter of 2006 was $79.1 million, up 33% from the second quarter of 2005. Net income in the second quarter of 2006 increased 36% to $46.5 million, or $.65 per diluted share, from the second quarter 2005 level of $34.1 million, or $.49 per diluted share.
“AMETEK had an outstanding quarter which exceeded our expectations,” noted Frank S. Hermance, AMETEK Chairman and Chief Executive Officer. “Strong internal growth of 7%, combined with the contributions from acquired businesses enabled us to grow the top-line by 28%. We translated this top-line growth into bottom-line performance, increasing net income 36% and improving operating income margins by 80 basis points,” he commented.
Operating cash flow continues to be very strong, totaling $63.0 million for the second quarter, up 39% from the second quarter of 2005. For the first half of 2006, operating cash flow of $101.7 million is up 60% over the same period of 2005.
For the first half of 2006, AMETEK sales increased 27% to $874.5 million from $686.1 million in the same period of 2005. Operating income totaled $149.9 million, a 33% increase from $112.9 million earned in the first half of last year. Net income for the first half of 2006 was $86.7 million, up 33% from $65.1 million in the same period of 2005. Diluted earnings per share were $1.22 for the first half of 2006, up 31% from $.93 per diluted share in the first half of 2005.
Electronic Instruments Group (EIG) EIG’s second quarter 2006 sales were $244.0 million, up 28% from last year’s level of $191.4 million. Second quarter group operating income was up 27% to $50.4 million, versus $39.7 million in the same period of 2005. Group operating margins were 20.7%, unchanged from the second quarter of 2005.
“EIG had a tremendous quarter,” noted Mr. Hermance. “Revenue for the Group was up 28% driven by strength in our end markets and contributions from the acquisitions of SPECTRO, Solartron and Pulsar. Operating income jumped 27%, driven by the top-line strength and our operational excellence initiatives.”
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AMETEK ACHIEVES RECORD QUARTERLY RESULTS PAGE 2
Electromechanical Group (EMG) EMG’s sales of $206.6 million were up 29% from $160.7 million in the second quarter of 2005. Second quarter group operating income of $36.8 million was up 35%, versus $27.3 million reported for the same period of 2005. EMG’s operating income margin in the second quarter of 2006 was 17.8%, up 80 basis points from the second quarter of 2005.
“EMG also had a tremendous quarter. Sales were up sharply, driven by solid core growth and the contribution from the acquisitions of HCC Industries and PennEngineering Motion Technologies. Profitability was strong as a result of the increased sales volume and broad-based operating improvements,” commented Mr. Hermance.
2006 Outlook “We expect 2006 revenue to grow by approximately 20%,” commented Mr. Hermance. “Given our strong first half results and the expectation of continued strength in our markets, we anticipate our full year 2006 earnings to be in the range of $2.42 to $2.46 per diluted share, an increase of 25% to 27% over the 2005 level of $1.94 per diluted share and in-line with the increased guidance we gave on July 17, 2006.”
“Our third quarter 2006 sales are expected to be up approximately 25% from last year’s third quarter. We expect third quarter earnings will be approximately $.59 to $.61 per diluted share, an increase of 20% to 24% over last year’s third quarter,” concluded Mr. Hermance.
Accounting for Stock Options The above operating results reflect the adoption of FAS 123R, effective January 1, 2006, for expensing stock options under the modified retrospective method. Results for 2005 have been adjusted on this basis.
Conference Call AMETEK, Inc. will Web cast its Second Quarter 2006 investor conference call on Thursday, July 20, 2006, beginning at 8:30 AM ET. The live audio Web cast will be available atwww.ametek.com and atwww.streetevents.com. To access the Web cast from ametek.com, click on “Investors” and a link will be provided to access the Web cast. The call will also be archived atwww.ametek.com/investors.
Corporate Profile AMETEK is a leading global manufacturer of electronic instruments and electric motors with annualized sales of $1.8 billion. AMETEK’s Corporate Growth Plan is based on Four Key Strategies: Operational Excellence, Strategic Acquisitions & Alliances, Global & Market Expansion and New Products. AMETEK’s objective is double-digit percentage growth in earnings per share over the business cycle and a superior return on total capital. The common stock of AMETEK is a component of the S&P MidCap 400 Index and the Russell 1000 Index.
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AMETEK ACHIEVES RECORD QUARTERLY RESULTS PAGE 3
Forward-looking Information Statements in this news release that are not historical are considered “forward-looking statements” and are subject to change based on various factors and uncertainties that may cause actual results to differ significantly from expectations. Those factors are contained in AMETEK’s Securities and Exchange Commission filings.
# # # (Financial Information Follows)
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AMETEK, Inc. CONSOLIDATED STATEMENT OF INCOME (Unaudited) (In thousands, except per share amounts)
Three months ended
Six months ended
June 30,
June 30,
2006
2005 (a)
2006
2005 (a)
Net sales
$
450,585
$
352,051
$
874,452
$
686,147
Expenses:
Cost of sales, excluding depreciation
308,308
242,907
601,076
477,083
Selling, general and administrative
53,315
41,240
104,127
79,267
Depreciation
9,863
8,586
19,349
16,917
Total expenses
371,486
292,733
724,552
573,267
Operating income
79,099
59,318
149,900
112,880
Other expenses:
Interest expense
(10,301
)
(7,702
)
(20,389
)
(15,334
)
Other, net
(589
)
(360
)
(1,326
)
(202
)
Income before income taxes
68,209
51,256
128,185
97,344
Provision for income taxes
21,741
17,138
41,459
32,255
Net income
$
46,468
$
34,118
$
86,726
$
65,089
Diluted earnings per share
$
0.65
$
0.49
$
1.22
$
0.93
Basic earnings per share
$
0.66
$
0.49
$
1.24
$
0.94
Average common shares outstanding:
Diluted shares
71,232
70,268
71,178
70,060
Basic shares
70,086
69,075
69,989
68,889
Dividends per share
$
0.06
$
0.06
$
0.12
$
0.12
(a)
Results for 2005 have been adjusted to reflect the retrospective application of FAS 123R to expense stock options, which was adopted effective January 1, 2006. The retrospective application reduced 2005 net income by $1.1 million, or $0.01 per diluted share for the quarter ended June 30, 2005, and by $2.1 million, or $0.02 per diluted share for the six months ended June 30, 2005.
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AMETEK, INC. INFORMATION BY BUSINESS SEGMENT (Unaudited) (In thousands)
Three months ended
Six months ended
June 30,
June 30,
2006
2005 (a)
2006
2005 (a)
Net sales
Electronic Instruments
$
244,031
$
191,356
$
480,470
$
372,277
Electromechanical
206,554
160,695
393,982
313,870
Total Consolidated
$
450,585
$
352,051
$
874,452
$
686,147
Operating income
Electronic Instruments
$
50,399
$
39,697
$
98,111
$
75,947
Electromechanical
36,752
27,287
68,704
51,729
Total segments
87,151
66,984
166,815
127,676
Corporate and other
(8,052
)
(7,666
)
(16,915
)
(14,796
)
Total Consolidated
$
79,099
$
59,318
$
149,900
$
112,880
(a)
Operating income for 2005 has been adjusted to reflect the retrospective application of FAS 123R to expense stock options, which was adopted effective January 1, 2006. The retrospective application reduced 2005 operating income by $1.5 million for the quarter ended June 30, 2005, and by $2.9 million for the six months ended June 30, 2005.
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AMETEK, Inc. CONDENSED CONSOLIDATED BALANCE SHEET (Unaudited) (In thousands)
June 30,
December 31,
2006
2005
ASSETS
Current assets:
Cash, cash equivalents
and marketable securities
$
53,923
$
43,788
Receivables, net
315,538
269,395
Inventories
235,205
193,099
Other current assets
53,863
50,025
Total current assets
658,529
556,307
Property, plant and equipment, net
239,932
228,450
Goodwill, net
870,405
785,185
Other intangibles, investments and other assets
243,199
210,658
Total assets
$
2,012,065
$
1,780,600
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
Short-term borrowings and current
portion of long-term debt
$
182,062
$
156,130
Accounts payable and accruals
314,348
249,662
Total current liabilities
496,410
405,792
Long-term debt
509,765
475,309
Deferred income taxes and
other long-term liabilities (a)
95,075
89,978
Stockholders’ equity (a)
910,815
809,521
Total liabilities and stockholders’ equity
$
2,012,065
$
1,780,600
(a)
Amounts for 2005 have been adjusted to reflect the retrospective application of FAS 123R, which was adopted effective January 1, 2006. The retrospective application reduced deferred income taxes and increased stockholders’ equity by $4.0 million.
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