AME - Earnings call transcript Q1 2018

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Operator

Good day, ladies and gentlemen, and welcome to the First Quarter 2018 AMETEK, Inc. Earnings Conference Call. At this time, all participants are in a listen-only mode. Later, we will conduct a question-and-answer session and instructions will be given at that time.

As a reminder, today's conference may be recorded. to call like to now would turn over the Mr. I Relations. Vice President Coleman, of Kevin Investor Sir, may you begin.

Kevin C. Coleman

conference this section Victor. website results of available electronically first you This on and Vice for earnings systems President in for you, Chief earlier the were joining With Thank Good Bill Financial us being released morning AMETEK's morning, our Investors website. The also be and Executive are is Officer, and archived webcast this first Burke, can Zapico, will our on Chief are today. accessed quarter ametek.com. site available Dave morning our and call and and market thank call. and be on webcasted Chairman made me later Executive and quarter on AMETEK's Officer.

we the nature Before AMETEK to forward-looking by you I historical remind in not to start, statements considered are that made any want call be are that during statements.

are remarks meeting Please or during now turn used based intention discussion our of obligation results is and such, from AMETEK's results this of statements. update Dave reconciliation to Dave. questions. it over I'll detailed revise Investors Bill non-GAAP any today to up and we'll financial measures open to call. A subject actual prepared the in As refer that section of with the to by AMETEK with may forward-looking expectations. the SEC. uncertainties to and ametek.com for begin any for filings differ then cause a We'll contained risk statements on factors the any uncertainties may change future these significantly that and disclaims affect various risk or

David A. Zapico

We We lastly, and overall significant in impressive announced successfully good positive growth. levels XXXX outstanding XXXX first from flow Kevin, resulting so quarter. our generation, generated strong share and earning excellent recent sales And margin morning, quarter strong We growth orders broad-based per continuing record-level robust acquisition morning, capital an an and contributions momentum, operating and operating had tremendous performance, expansion, everyone. our backlog AMETEK and cash of raised results by backed record acquisitions. the delivered given you, organic of Thank we've quarter. this first our guidance; and earnings acquisitions. sales second full year deploy high-quality strong strategic order to on and income,

quarter. Organic onto growth the XXXX. Total first Recent quarter. first a added was the X% sales the foreign $X.XX in and acquisitions the of were up Now a quarter financial highlights benefit. XX% sales compared exceptional, X% the in currency billion, record was to of quarter up X%

across continued businesses see We and our growth key to broad-based geographies. of organic each

on attractive initiatives capitalizing our leading markets, to niche also benefiting are their businesses improve while from positions growth. organic Our in

excellent, Overall were up also orders We in sustained up organic robust quarter, and to growth. orders with see XX% orders the XX%. continue

income last $X.XX, generate margins basis, in As the a basis billion, to per prior to XX% of share outstanding quarter compared up per XX of excellent up share organic XXXX. strong the backlog a the at with points year, core earnings $XXX.X impressive up record were were the from in quarter, a we quarter result, ended Diluted in visibility. reflecting quarter. year's leverage the $X.X record versus XXXX. XX% Reported income quarter providing a the a $X.XX an growth. Operating year margins On points operating in first operating operating the first first compared basis million was sales reported we first same very were strong the with over XX XX%, us

groups. to the turning Now, operating individual

performing our exceptionally EIG Group; Instruments key market our businesses Electronic the are segments. across well First,

of were were for First strong, MOCON Rauland, year. Arizona sales the and versus another the Organic up acquisitions X%. XX% EIG prior contributed Instrument and million, $XXX.X sales up quarter X%

currency a quarter. X-point the Foreign was for tailwind

points million, a Instruments year. up $XXX.X engineered margins Ultra divisions income operating and additional Electromechanical based, a Analytical up over was in in Aerospace of strength Process increased quarter in X% quarter. our results XX% the organic XX.X% superb. first the tailwind. across XX% to XXXX. XXXX. businesses. EMG core had points $XX of up Reported first sales XX foreign & were XX.X%. operating strength the margins To the X-point And strong for materials for compared provided broad quarter operating first XX also we quarter Technologies impressive quarter While an margins EMG's the $XXX.X systems Group income quarter Recently XXXX. particular increase management quarter record over the during same basis broad-based EIG over points same Organic margins sales basis XXXX. first quarter acquired currency Precision XX% with was up to saw of increased the income XX% quarter quarter the reported million, and operating with On million, summarize, thermal our the FMH basis basis, in fantastic and an at XX continued was prior growth were an automation, core were The were quarter. EIG's versus a a contributed

operating performance for investing people four to our focused our and Our growth for execution position incredible long-term continued in our sustained on model and the businesses colleagues success. remain strategies. to best We drive of AMETEK's us

for XXXX, achievements I of growth our highlight discuss me from we the outlook let some strategies. updated our experienced have Before

we're to markets. of components completed highly-engineered use and defense a in the so of differentiated a XXXX Aerospace, and space First, completed start provider January, leading acquisitions for acquisition we aerospace, great acquisitions; In FMH off with in two the far.

expands of defense solution excited the of as across wide our acquisition and very about are FMH it We aerospace range platforms. offerings a attractive

to welcome [SoundCom the (sic) AMETEK. team we acquisition and announce We are very to SoundCom of also excited Systems] the Corporation

users in systems the Ohio, end integrates SoundCom, healthcare, headquartered for workflow which markets. is designs, educational in clinical and government services and Cleveland, and communication

through and market. acquired for of healthcare healthcare of quarter resellers it also XXXX, value-added the facilities. value-added systems in to and SoundCom the workflow and systems Michigan, was our Rauland recently dynamics attractive in communication California. is we an acquired markets the a attractive as solutions to strong Ohio of It platform in across expand solutions platform new business the existing which for in joining currently was global owns well given growth a mission-critical and foundation leading growth opportunity provider Rauland, serves the Rauland educational first strategic as healthcare hospitals, the Florida a the serves acquisitions. Rauland as acquisition clinical Rauland reseller AMETEK,

value-added healthcare electronic and educational into it Value-added Michigan. the Rauland. Ohio SoundCom high-density is markets and reseller footprint an developed excellent communications in resellers addition are such as and Rauland's systems service SoundCom to this workflow complex by in platform delivery of key expands and as

SoundCom sales approximately million. has annual of $XX

on With $XXX for had the and cash Acquisitions far XXXX, the acquisition now beginning in of free approximately acquisitions our deployed we the deployed since of million XXXX acquisitions. top deployment $XXX two priority five SoundCom, thus on approximately remain we flow. have of million

very Our by deal additional cash pipeline flexibility tremendous pursue sheet attractive candidates. remains plus we very acquisition reform, balance strategically healthy and provided strength, positioned to well are and flow tax AMETEK's the generation

to and service sales positioned invest solutions, also production efficiencies. and and remain optimization, well front-end in growth new We through organic products

customers' continue challenges. greatest solving businesses products and unveil Our solutions new to that our are

performance division, quarter. during our a two launched For Zygo semiconductor, broad Precision and precise automotive, and XD Ultra range business, nanotechnology provide first consumer electronics, of medical, including surface sample XXXX the These optical and heights, including Nexview NewView instruments markets XD roughness, enabling NXX and a wide AMETEK's functionality, across film thickness, types. of applications, of example, non-destructive Technologies measurement offerings latest materials of XD in optical provide next-generation science. profilers a on range improvements precise form The both profiling measurement, highly part and and surface step non-contact area significant

engineering long-term drivers key One development generated the index as to our to of investment AMETEK. quarter, such products year-over-year In the $XXX vitality approximately level within of measure to solutions increase three reflecting development X% work index success expect and our excellent the In success our we New RD&E measures introduced the products was first through these of is the growth our new million. teams. new research, which at and excellent last vitality of the and organic by from we XX%, product way our sustained efforts sales years. XXXX, are

generated drive to continued anticipate by OpEx of savings businesses cost majority reduction sourcing activities. strategic operational global excellence $XX productivity procurement these our improvements a our through and being XXXX, In impressive approximately million, with Additionally, and savings we initiatives. of

through helping Our identification does and our active also of sources through global of an base. manage supplier chain supply of alternative qualification inflationary us sourcing our excellent and the and across team job supply management impacts potential

increases inflation factors inflationary and more potential are in XXXX. will monitoring able offset comfortable We price to than be these closely are we with

XX% we sales, Finally, expansion were regions. markets into adjacent organic seeing of sales geographical significant are AMETEK's all International the key across total with growth around strong globe.

updated in that With me our excellent said, their on Specifically, let organic we saw regions. XXXX. as businesses for in continued growth to presence Asia outlook attractive broad-based expand touch growth our

guidance year, share an overall XXXX digits. XX% share sales low-double up of to This XX% the in from range organic $X.XX diluted per up $X.XX. expected to digits, increase For Earnings earnings now to mid-single XXXX with the anticipate is of $X.XX. from range initial our are for we full per now adjusted $X.XX sales be to up $X.XX, be to of

$X.XX, in AMETEK range second up second with the compared quarter performance. per of quarter, XXXX. off of share compared with the outstanding $X.XX year the second to the be sales are up Diluted to to approximately overall mid-single quarter quarter For of up in XX% XX%, digits organic summary, sales the earnings In to second XXXX. are the expected XX% be to started to projected

and questions. growth another businesses AMETEK's details on glad the and Then strong focused of positioned be the our will now will world-class I the are we'll to turn record who your long-term take Burke quarter. over their through foundation of execution delivering cover strategies. for financial teams we the year. have company it to Bill some four for is Bill? Our success

William J. Burke

Dave. you, Thank

the AMETEK quarter, As quality results with noted, an high record started earnings. generating outstanding and a of Dave year

sales. first and the year's effective line in of of core me sales General, the selling a XXXX XX.X% down quarter expenses level last in line in X.X% benefits reduction first rate tax to year-over-year rate tax percentage additional reform. The highlights. were the expectations. to financial flat core In in our XX.X% provide effective due from administrative as some Let versus was sales and tax of with year's first first last X.X% were were for was expenses with rate growth. The of quarter, of quarter quarter compared our the up

businesses. differ can our performance estimate stated rates we've year negatively, be tax rate full our dramatically, million to $XX in full quarter were sales the and for million capital expenditures positively the as at for we the to or amortization million. continue and be million either year, sales. the expenditures this Working quarter, $XX and quarter reflecting expect was we of the Capital approximately expect We rate. XXXX was full actual in past, of outstanding from excellent XX% or $XXX XX.X% approximately for X.X% be $XX D&A year to approximately Depreciation first of the capital quarterly and to

excellent and was we in operating expectations cash of quarter, up cash the conversion than year the continue was XX% up free the over of XX% full free quarter conversion the $XXX cash net in XXX% XX% million, Free flow cash million, and first income. flow quarter flow XXXX, compared slightly year. expect First flow was prior our to to quarter of better $XXX

active deploying million, acquisitions was acquisition we've from billion equivalents Offsetting to of Aerospace cash mentioned, this the front, end in very and on debt the approximately $XXX in Dave at debt on net XXXX. up March XX XX As Total is SoundCom million of cash $XXX a the thus and FMH resulting at capital of at billion, far $X.XX ratio XX.X%. XXXX. debt $X.XX of March been

summary, and our results support SoundCom, and delivering high flows. well than of more earnings. sheet acquisitions $X.X quarter, initiatives initiatives. the Aerospace to In businesses a record-level we cash existing well billion remain with excellent growth performed exceptionally our and and of first balance We credit our facilities of positioned support Kevin? the our in cash growth FMH quality to Following have strong

Kevin C. Coleman

you, for Great, Bill. up call the we open thank please can questions? Victor,

Operator

Yes, question comes of Graham Capital from from line Markets. the sir. first our And Scott BMO

begin. may You

R. Scott Graham

all. morning, good Hey,

David A. Zapico

morning, Good Scott.

William J. Burke

Good morning, Scott.

R. Scott Graham

versus Hey. what sort basis. the you with that I on was I quarter, price expect maybe to be positive know least at you inflation – wanted what of price/cost Could a us to for Dave, said, be you was? full-year specific

David A. Zapico

Sure, Scott. to cost In think I to than able offset about We and inflation our with chain product our increased our to offset results for the QX, speak markets X.X%. was we more inflation portfolio achieved that X.X% and niche of pricing inflationary total capability, price the differentiated price. were to of the our nature continue with we'll position we and and in year and and leadership expect outstanding be supply about able

R. Scott Graham

Got you.

However, bit what in we commodities first both after those with up quarter? should inflation a numbers the little drift saw

David A. Zapico

Yeah, I could going up year. of think both you them course through see the the

R. Scott Graham

Great. what's expect? Thanks. you happening by Also, do typical sort division of of could and you your what synopsis

David A. Zapico

Scott. start with the business. process Sure, I'll

broad-based we strong low-teens strength quarter, FMH solid we're from Our organic last in a MOCON remained our and aerospace across military XX%. good contributions TMC, with growth and to businesses Growth all of U.S. our businesses. growth demand High-single-digit sales are the acquisitions recently to across up organic commercial businesses. growth expect had strong start the the broad-based Continuing XXXX, our were the digits. continue particularly sales drivers. had & growth we mid-single year, very process seeing were businesses seeing They and by for we the Precitech were from key solid in Process organic mid-single-digit outstanding Overall an and contributions and solid continued Energy across with Instrumentation the Overall acquired Creaform, internationally, both driven up Rauland trend year. quarter and in as and quarter. Zygo, aerospace up the And our aftermarket saw also growth. sales from organic

we segment. XXXX, solid to market businesses with of aerospace all organic growth for continue For be mid-single up across expect sales digits to each growth

our acquired strong mid-single-digit and in power solid driven sales industrial first growth recently growth industrial was Growth overall notable in Arizona contributions segments measurement by saw test from and organic and Instrument. Our strength and power for including (sic) solutions quarter both up our power the excellent businesses finally, our sales had with with across up And and business, power programmable start organic VTI. year, low-double-digit to be to the industrial expect the power And first growth we digits. business engineered now organic sales XXXX, and quarter. and with in mid-single an automated [automation] XX%,

mid In high-single-digit We all automation and and to [automation] of businesses. solutions That's order strengths engineered now we around the continued and across (sic) sales automated strong our organic engineered XXXX, see Scott. both business. for horn, businesses expect solutions sales our to growth our

R. Scott Graham

you. Got Thank much. you very

David A. Zapico

you. Thank

William J. Burke

Thanks, Scott.

Operator

of Thank next you. Glynn And our question comes from from line Christopher the Oppenheimer.

You may begin.

Christopher Glynn

Good you. Thank morning.

David A. Zapico

Chris. morning, Good

Christopher Glynn

Hey, Dave.

It a interesting. of like a kind to. more than SoundCom's little So, business sounds services of used we're

So, little dive that and is how the to you the tied maybe in arena. communication view bolt-on systems Rauland curious much deeper how of on a just runway

David A. Zapico

right. Right,

– of Rauland's SoundCom represent is Rauland VARs the in a to for reseller the And actually very and value-added Rauland of they're they X% healthcare are about sales, high-density markets Rauland model. and and important Michigan. Ohio

Rauland a and that logical own. Florida and they natural VARs California, was I mentioned business and a in had long-term relationship this So, has regions adjacency. they've some

end have customer. solutions the they're provide customers that key like integrated solutions Rauland systems Cleveland the include in Mercy So, Health, State, facilities the closer Ohio healthcare advanced State, technical Rauland that educational and Rauland They to like the to they that designing have integrating expertise Clinic, move and really they because Michigan deep delivers. large

represent type VARs it for So, population is adjacent companies a and resellers, also the positions value-added those products. high-density areas also acquirer for really natural make a markets, attractive of acquirer Rauland those natural the because Rauland they in

grown own lot Rauland synergies has of that average see so This addition because contact for VARs. very over five the in to regional growth particular it their that, the digits last in expand closer to have then And a processes, attractive has they annually opportunities. provides compounded VARs, we there's these optimized Rauland as a So, years. way and customer low-double business

but some to nice the resellers a less very it's sense dense opportunity parts a country, customers. the for expand it's and the to Rauland and makes footprint make to So, customer. get places the closer value-added get In for their sense, closer of parts in grower. EBITDAs Rauland still Low-double-digit it world, to of good

Christopher Glynn

good addressable wondering on new progress just execution Great. versus channel organic the what's the I'm introduction, on and very how then into obviously. markets gauging you're lift here? And your and X%, product measuring it's the cyclical

David A. Zapico

X% with from Yeah, in orders, some organic certainly organic growth growth and initiatives. growth XX% seeing success we're organic our tangible

key new and kaizens from and end optimistic there's and come. success the We benefits the driving I see efforts front about certainly economic improvements Our is continuing more it's all at we're focus at driver, is no effort product two. a this to But growth way our groups. from very geographies between strong now. But what the difficult with looking general growth see distinguish our We're business in development and and market also really talked the can across actions to tangible we're say, improving gains. slowdown on our and share we specific all right world We've really growing seeing product feeling very before of of in we're the all we're good.

Christopher Glynn

the Sounds for good. Thanks color.

David A. Zapico

Thank you.

Operator

of question Robert And you. the our next McCarthy from from Thank comes line Stifel.

begin. may You

Robert Paul McCarthy

Good morning, everyone.

David A. Zapico

morning, Rob. Good

Robert Paul McCarthy

strong Maybe be of overall structure, of and year. nature the context just nice value should a on price garnering we because spectra. firm over pretty about a market couple to Congrats particularly in spread. years the pricing a start could price business, the talk benefit definitely One the two a the on is your that very you're next add the just price

XXXX we think, should think has of that lift So, full be that little of you're come about and forward kind from part positive just to structurally expect margin Could incremental price/cost – going about strong has the company pricing. I how your you talk into conceptually bit? a a would because year you historically, for

David A. Zapico

question, Great Right. Rob.

we're differentiated the we price pass inflation. a a to total have maintain and And businesses. inflation, wide we're number. not We for closeness customer, our our price whole and for spread the with about cost around we're businesses pure a can positive talking to the talking just productivity. increased year, expect on inflation moat inflation, our about about We just That's inflation talking

that and a we this to positive the to inflation expect bps XXXX. XX no there's really reason spread and range year continue we hold won't XX So, into expect in that price that

Robert Paul McCarthy

seen in clearly you've your maybe the – to then capital balance about some And interesting like terms issue able sellers' because can't expectations year? on deployed very you because to We still pretty as it's tough, more the of But a the reach acquisition of state probably And do an probably Great. elevated remain but firepower? or you be environment, Do switching and public everything. you've just bid/ask front probably could see you in just of think on have your could big maybe this but talk and companies pullback dear price could you to some nicely. to environment you deals sheet, still would going their is of scale, thinking people transact kind a terms think in shake you size here. comment being

David A. Zapico

to we've M&A Rob. of been environment the questions, elevated. experiencing deals. great I is There cash-chasing all years. plenty are current is couple Pricing Those of what very the past is mean similar

companies start capital remains great we successful the my of market since flow back we've off pipeline eventually – XXXX. remarks, $XXX in been deployed a public the deploying will our prepared we're acquisitions. Now private again, since And flow five in in our million in XXXX on the coming mentioned but and mean, I free cash I very despite market and market, active. acquired the nearly beginning with into this that to

know you'll expect if in something transact from again term, be going never M&A. to hearing the us year You short on is but I this

– pipeline or We've gives pipeline our the been confidence. to structured capital to the can deployments mentioned doing, execute be still the deals deals to either $X but our we've size strong Our larger of of can million $XXX billion, do smaller revenue up we acquisition the million that in the the growth one our deals slightly M&A processes the opened way to we along And range, there because our the we get $XXX me strategy. with we're will of process. execute business earnings can going deals keep doing and we and larger

really was mentioned our generate feeling XXXX. I'm another have most $XXX million you finally we cash mentioned cash good about billion about And think Bill So, in $XXX firepower, free – existing about million, and we'll flow in $X.X our in facility it. firepower I credit importantly, and

we have So, really the firepower.

net X.XX. about Our debt-to-EBITDA is

Our gross debt-to-EBITDA is X.XX.

and the for in I very the total value we return see limited, on and capital that optimistic That's gives billion we has whole the in on now. deploy a in clear year limiter acquisitive I we can to, approve the year, that not I'm is hurdle the you capital we deals we – about right select clearly pipeline's and so and make key that now. – XX% But most think us. X-plus So, extremely total discipline most, of really three. what the for are capital finding discipline could our looking strategy maintain That capital for acquisitions on can company, those our can full, key invested this the things that return at the an but that maintain AMETEK add the capital strong be to return we'll we pipeline right and and it's can we is business,

Robert Paul McCarthy

If one on on that, make just sneak earnings. whether update to amortization, to cash move looking studying and could that more a I you want any in,

David A. Zapico

Yeah.

XX% quarter. this million a of so a very It's Our number. EBITDA was good sales, record $XXX

about And for year. year call, that's again beginning decision to million, at the next that said it. But made and the it in looked as decided of was at we D&A we and XXXX. I last our we do $XX the look Our we'll that not at

Robert Paul McCarthy

time. Thanks for your

David A. Zapico

you. Thank

Operator

Allison Fargo. question next the And from Wells you. comes from of our Poliniak line Thank

You may begin.

Allison A. Poliniak-Cusic

morning. good guys, Hi

David A. Zapico

Allison. Hi,

Allison A. Poliniak-Cusic

the I more Any there So, you across maybe but bit areas with any are likely ahead cautious little thoughts group. strong, price the accelerating the said broadly outlook's even a about customers orders becoming or of are you the talk there. know pretty conversations customers increases? maybe could where

David A. Zapico

product executive our It's went in whole portfolio. We much even review Europe, very the groups seeing were of region XXXX. some pretty we're projects breaking U.S., the Asia, military for and bigger Asia in very bullish, mid regional We're all cycle office longer in are into seeing about parts positive. the and annual of they're elements downstream bullish continuing of our and our in the of gas, in like our the our across the and quarter, portfolio, bullish was and this and strength incredibly later oil year strength that business,

automation on cylinders. all are So, firing businesses our

not we're year's about the So, year. good about slowdown really and really any good seeing We playing feel feel we how the out.

Allison A. Poliniak-Cusic

are terms more bit, then And there a up little could inflation to but on us, and to thoughts that price maybe businesses, specific just you pricing? the your in beat are through not any susceptible of that issue of inflation sort Great. passing remind the

David A. Zapico

a only that fair Yeah, leaders those providing these are on we're in can I sticky situations pass relationships. we've that a we customers. in that it value as to like of in we we're customers get are acquire and are to these time had markets And this, and providing value, period we lot puts more long a customer prices view that niche think of for markets position – really strategy businesses a us to

feel of portfolio about really we we price inflation about really XXXX. feel So, our achieving and and in good out XXXX good

Allison A. Poliniak-Cusic

Great, thank you.

David A. Zapico

Thanks.

Operator

line Markets. from from Capital our Dray Deane And the comes next of RBC question

begin. may You

Deane Dray

everyone. Good you. Thank morning,

David A. Zapico

Deane. morning, Good

Deane Dray

any customer demand follow you playing have any dialogue are thought incentives seeing. Like whether and through Hey. color do on tax of that to on that train you're of CapEx and reform in the

David A. Zapico

just uptick business that reform. we tax from Deane, not measurable. But increase an we We in pretty incremental seen strong. our XXXX, It's into it. XXXX was second half have seeing were in the in an remained saw and

really that seen tied customers say reform I way. can't So, an and It's staying increase reform. tax to good it's with specifically we've with to that and just tax regard specific

Deane Dray

And the price/cost then just dynamic. on other color

what impact tariffs, do be You that's didn't here? on any though mention including could as the you horizon feel

David A. Zapico

so great much We it's Yeah, import minimal and a impact steel Deane. really that. from aluminum, a do not question,

We you are can including secondary imagine, watching the entire situation impacts. closely as

We quickly. to the chain side, flexibility react cost relationships have and and to doing And and planning sticky we're increases supply very pass point ability have need if pricing, good the goes customers. and the to in markets same to leaders on customer supply some we're we chain we that capability have on niche

don't be So, measurable numerous to Right something see monitoring just it. but we're enacted. we're countermeasures, uncertain examining and a now we closely impact business, our it's

Deane Dray

can investments, along those Got in either growth and would there lines? force just And were me, investments it. anything last question any that the for sales – quarter you you or highlight along digital marketing

David A. Zapico

about investments in in this product growth heavy investing marketing, year and and We're heavy tools the million lot a investments of development. investments it's also Yeah, digital in $XX all heavy investments in above. selling

a the really we're investments. feeling about good getting we're So, in optimistic that about great we're We future. return and the think

Deane Dray

much how of quarter this that any there you would in spread of across the be in sense a Is segments? corporate? Do and have that

David A. Zapico

the is segments and it's out Most year. in spread of through that the

Deane Dray

you. it. Got Thank

David A. Zapico

Thank you.

Operator

And our from line next Brett question Vertical comes from the of Research. Linzey

You may begin.

Brett Logan Linzey

all. morning, good Hi,

David A. Zapico

Good morning.

William J. Burke

Good Brett. morning,

Brett Logan Linzey

wanted on to EMG to just incremental back Hey, margins. and come specifically

in thought price/cost incrementals I in or else – of mean a would have (XX:XX) I incrementals, deliveries, quarter little have and cost, the EMG? terms but excess dropped FX better impacted anything I mix there drop-through strong the you would realize here that in Given been within volume, bit quarter

David A. Zapico

mean, up were basis, they up core XXX I basis the had sequentially, were great margins on a points bps. Brett, a EMG quarter. and XX

with So, the we're performance. pretty pleased

Brett Logan Linzey

think Okay. And margins incremental balance EMG of for about should I the guess we the how year? within

David A. Zapico

the we've XX% in XX% a side general, the incrementals lower XX% little bit in the I think and to so incrementals, in the has I our range. higher XX% EMG business little guided range, say Yeah, would is I Instruments bit to the think and to low-XXs, in of XX%

Brett Logan Linzey

comment deals your a long in Okay, the great. on you've cycle, lot deploying been And obviously shifting on to then of context visibility, here. back I guess just

the characterize look deals, longer size forma you these of were would the at portfolio as you If recent of construct some today? cycle total what how pro percent would portfolio, the of a you including (XX:XX)

David A. Zapico

the mid longer vast many bulk We in would in I characterize of cycle and don't short businesses. is the and have of the longer cycle majority businesses, mid the but cycle businesses. portfolio portfolio

Brett Logan Linzey

then XXXX incremental so terms are to the of more, some about how Any just of abate? (XX:XX) acquisitions, and earnings recent SoundCom, maybe Arizona, can And thinking Okay. you one framework accretion look we there? list into we in FMH, starts as

David A. Zapico

Yeah, XXXX can for XXXX, benefit I you of the saw tell M&A done haven't that plan a we net for in our yet, $X.XX. about we but work of

Brett Logan Linzey

Great Thanks. Okay, great. guys. quarter,

David A. Zapico

Brett. Thanks,

Operator

our question Richard Baird. from from comes of the Eastman next And line

may You begin.

Richard Eastman

morning. good Yes,

David A. Zapico

Good morning, Richard.

Richard Eastman

speak gas. to markets Could thinking Dave, plus average were Could I'm to And you order to you might just the more I oil core some XX%. minute, of above maybe number? think strength? that for specifically of just orders speak to maybe talk end mentioned order a driving the kind that perhaps a you've couple cyclical, core growth be and

David A. Zapico

Yeah.

Richard Eastman

around maybe order biz side, on just there, growth seeing also then XX% a regional maybe color are the jet? number. aerospace outsized I little the you Or mean, And

David A. Zapico

our sales in Sure. in regarding we quarter, very outpaced saw and terms oil business. the commercial And gas, I aerospace business, that performance in low-double up digits orders of our first bit. strong the mean, a and were

and a first orders good was quarter, the There our and it out. all from regions strong very across performance the in And military automation of out. both There military, OE the in was also of business viewpoint automation so really business stands digits stands strong quarter low-double up was a very was aftermarket. orders. it globe, the So, and orders in

Richard Eastman

how out? Does oil orders, was – also expectation kind mid-single and led started I given now number shook how for Does oil quarter think by, of think year, to it your and out, I and your that first the of quarter comments downstream upstream. higher with first gas was the drift this up maybe there gas an kind digits be around

David A. Zapico

that's and of was in about quarter up, Yeah, it first our strongly. our a high-single-digit was mid $XXX the business only the mid/downstream about very quarter gas up exposure. up the oil and million XX% performance, up the first But was upstream presence, It is upstream XX% and range. in the was

but the of the yet some changed digits the we work projects the for that'll now haven't year, markets. planning for the ship XXXX what for seeing in the So, and downstream is guidance in for It's bigger mid-single in second orders year half that. year we're mid still the

Richard Eastman

to element flow little just advantage words, big the stream component a Understood. acquisition SoundCom does the In Rauland-Borg's the around curious, of revenue element then VARs? a markets, bit does SoundCom, VARs of service the the last bring I'm Okay. hence through that key the the other to there's Rauland? – business owning and Systems, recurring of the And service a is service few question, in

David A. Zapico

bring some. I parts, direct revenue from of stream is also software the the It does from and service spare mean, the client. recurring upgrades, from

for the Rauland. So, the acquisitions revenue does augment the recurring business VARs of

Richard Eastman

the year. to you. Thank great And start Understood. Okay.

David A. Zapico

Thank you.

Operator

Cowen. our And from question Giordano next from comes Joe

begin. may You

Joseph Giordano

Hey, guys good morning.

David A. Zapico

Good morning.

William J. Burke

Joe. Hey,

Joseph Giordano

trying or your sheet, that stock some a some little people kind safety you keep ahead that tightness of yourself? that. Curious components are you levels and been have balance of you to of but of levels seeing for and commentary there's seeing you you're not in on in Are seeing in that the about the that are the really on and increase market it inventory buy your parts, doing market some

David A. Zapico

supply seeing it of tightness supply and chain we're about seeing some through is but talked We're we cost tightness. there it, in electronic last some some we that but there inflationary but transportation excellent there have some but tightness. we're chain quarter, the capability, managing not the also is is We're doing out there, some in much and tightness increased

Joseph Giordano

now then And quarter in those high side, versus exposed something kind businesses metals of the a at been Okay. your markets? tracking throughout like on is maybe And specialty the that's run of been quarter? beginning pretty consistent the that progressing – of movements rates right and the kind price closely with they have

David A. Zapico

pass and very Yeah. customer. we're to is value But doing That is it on the the the recall materials. well. structured material way prices that the progressing is business, that business we you we business And to have adding

Joseph Giordano

Great. Thanks, guys.

David A. Zapico

you. Thank

Operator

Kevin time. would Mr. showing further at And back Coleman no you. turn questions to I'm I closing the to call remarks. Thank this like actually for

Kevin C. Coleman

Great. replay as Have of Thank you, Investors reminder, Victor. webcast today. great a today's the be us Thank ametek.com. you day. of everyone a in And may for section accessed joining a

Operator

gentlemen, for great a today's participating have and and program in you conclude thank you Ladies the conference. This does all Everyone may day. disconnect.

AMETEK (AME) 2 May 182018 Q1 Earnings call transcript