AME - Earnings call transcript Q2 2018

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Operator

Good day, ladies and gentlemen, and welcome to the Q2 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 follow at that time.

As a reminder, this conference may be recorded. introduce Investor for Relations. to Coleman, conference, like President, Vice would your today's host Kevin I

You begin. may

Kevin C. Coleman

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

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

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

David A. Zapico

following organic growth good We quarter quarter excellent strong another significant reported recent backlog from diluted record sales and resulting second record sizable delivered strong acquisitions. and operating quarter level in growth. a We were and AMETEK's excellent share. results ended orders per expansion, you, performance, record Thank with in morning, We of growth superb. very margin of contributions earnings record Kevin, everyone. the in level the income, with EBITDA, operating

We completed deploy acquisitions. quarter, in another robust cash acquisition also flow the a strategic continuing free on to

results, we outstanding these again for our guidance Given XXXX. raised have

So overall, quarter with high just very a quality fantastic results.

Total sales quarter $X.XX X%, XX% sales on a two-point Now were second Organic record currency up in quarter was highlights. X%, of billion, XXXX. acquisitions up to tailwind. second a the to financial were foreign added the the compared and

with very X% X% organic second it quarter are of pleased orders with up across geographies. quarter. remains our growth Overall was difficult the from even broad orders XXXX. businesses as were also growth a with very We and in solid the based up comparison Orders organic the

the in a XX% XX.X%. over As points second Reported income quarter record with quarter a quarter Operating a the up the up are a the record XX.X%. margins the billion. quarter second EBITDA second $XXX.X basis to prior margins of $X.X million, $XXX.X was of in with EBITDA record backlog result, XX% second XXXX we finished strong income million, over XX up very was were operating year.

last Excluding the speaks points year. basis margins operating dilutive expansion leverage the businesses generate. to level impressive operating over the from XXX margin impact an up excellent of were acquisitions, our This quarter second

period and of compared diluted earnings quarter last up the Second $X.XX $X.XX guidance same our were to $X.XX share, to above outstanding year, per an per XX% share.

the excellent $XXX.X sales acquisitions EIG Group. second Sales tremendous same recent the sales second record in also were contributed XX% were X%. XXXX. and EIG quarter with quarter had turning X% groups, strong individual of for quarter the the over operating first, up a Instruments Now, operating and to growth Organic an Electronic million, performance. up

in EIG a Foreign to quarter. the was benefit X% currency sales

Precision broad growth While based Ultra organic was division. a EIG across growth Technologies our particularly businesses, we our across saw strong

operating million, excellent the XXXX. over $XXX.X basis up income XX% second income margins quarter over up Reported year. operating XX%, for EIG at quarter Second the points was were XXX of prior

summary, the Excluding sales Group thermal the over FMH Operating XXX in the the the with of the $XXX.X quarter. were had across of same record a and another million, in million, benefit results. over margins demand basis outstanding provided also quarter. Organic up solid quarter engineered AMETEK additional last with quarter. dilutive growth management currency operating X% X% XX% an at contributed the quarter In and second acquisition materials The the year. increase was XXXX. excellent margins and income our a acquisitions, up Aerospace $XX.X delivered points was to record a sales quarter of second sales for record fantastic impact systems EIG X% Operating XX.X% EMG an strong exceptional an businesses. compared at prior a quarter in foreign The period year. XX% were Electromechanical were

Our and success focused and teams remain people sustained generate our quality are We our in remain committed to to performing delivering at for our high results. long-term businesses a very on investing high level shareholders.

where acquisition cash half to have capital. million we had the we business meaningful strong three committed and to on on strong free deploying the leverage drive strategic front, $XXX model of deploying can completing And improvements. the in deals year AMETEK remain also approximately acquisitions a We flow our first

workflow quick care, we which we SoundCom, differentiated markets. communication designs, and Aerospace, in acquisition recap, space January, engineered provider and use leading In clinical the the aerospace a in the April, and highly of services for and through integrates, in for acquisition users the FMH the components defense capabilities expanded government, of markets. end businesses of educational systems a announced and our As aerospace, and of health defense

up XXXX, solutions second for hospitals, Rauland-Borg, in a acquired care to health leading double the being provider communications critical educational and very has reseller job systems, a wonderful SoundCom a experienced of was market value-added facilities. first and care our its improve communication platform health done to strong growth in fantastic solutions system mission quarter. its addition profitability. a growing local Rauland to workflow leveraging since as demand low digits sales has robust Rauland the quarter business the AMETEK's seeing organic and for leading solutions is with of clinical

a enhance mobile cameras advanced we of software in market. leading In high addition position we end vision recently transportation, in the differentiated approximately Germany, $XX vision approximately to for and in SoundCom, and deployed used $XX Headquartered agriculture, mobile combine Specialty and very a of These Motec applications are automation, million operational high and improve machine including the market million acquisition. systems provides vision segment. on and AMETEK logistics. with to leadership FMH of acquisition Motec, Instrumentation provider complement the variety adjacent growth a ruggedized our completed markets, provide business, sales Motec's defense, solutions with growth integrated this systems safety. Motec and that nicely has efficiency of Controls annual

remain Our teams strong acquisition flow cash are acquisition on acquisitions. we active strategic very on free pipeline focused managing our deploying a and

position strength, tax to reform, excited opportunities Given plus from in the strong are resulting pipeline. flexibility a about very in we our are opportunities additional our the and pursue sheet additional acquisition balance

from initiatives We our as are these very organic about success results businesses very excited positive are efforts. also the our growth seeing of

businesses, efforts strong, organic across with our be markets sales optical the growth products continued can applications. Technologies enhance and of solutions, This seen tremendous new our providing to our edge One division. highly leading a and set our technologies and example and a division While are for having product processes attractive markets sales metrology ultra and precise of focus Ultra of includes excellent marketing differentiated success an solutions end indicates Precision remain a efforts set our on of impact. development our positive precision

with success tremendous robust These initiatives, growth these orders. are in new businesses as sales of in niche serve. incremental across their the noted they development positions growth efforts. a and their delivered and the and reflects capturing As market of This global markets have technology expansion with businesses market both share earlier, their product recently result strength leadership results

example, is CUBE-R efficiency for an and the the recently as and provides and XD CUBE-R the automated XD measuring turnkey reliability metrology in with of up components known customers in that quality automated solution solution As scanning control a unveiled their a Creaform's floor environment. our Creaform, enhance industrial length along scanner, safe, The to parts complete a and technology, meters XD shop allowing measuring cell, grade inspect manner. This reliable, measurement capability efficient in a measurement robotic precise, measure machine, accuracy. three and with pioneer metrology is their MetraSCAN to fast, CUBE-R. can coordinate latest Utilizing

success. to be continue and New like for products organic long-term key solutions CUBE-R growth AMETEK's sustained the and a driver

approximately of is of to one XX%, the half year-over-year solutions. index In introduced Our and of design sales years, and generated and investment million. tremendous teams vitality efforts. the new work way year, measure of engineering new the and within level to index, our our success vitality expect research, which these excellent X% was products development, $XXX to we Through to at RD&E implement the by products reflecting from measures first three the our increase XXXX, the last our solutions

situation. updated our a global few comments wanted to on XXXX, provide providing trade I outlook Before the for

will thus need effect far, we on be managed to are tariffs and as business headwinds do While expect implemented adjust. have supply had incremental minimal tariffs that a chains our

remains but businesses, of we XXXX, of the our to to situation highly be of We balance given headwind at our impact global these flexibility headwinds, largely reflected ability to in only our plus this are the expect is pricing supply to headwind capture our confident what of for this our in modest guidance. now strength chain. the a and fluid we point, differentiated and The mitigate the nature and net due tariffs uncertain, ability know incremental

on the Now, to outlook.

$X.XX the share diluted range of outstanding of the diluted $X.XX. previous share, an This up first for the to half range in performance to XXXX be and our half outlook earnings is XXXX, per XX% positive our of now to in year per of to adjusted $X.XX guidance back from earnings increase our expect of from we the $X.XX. XX% Given $X.XX

and up EMG organic sales up up of mid-single mid-single We sales overall organic digits high sales also be with single double sales digits, organic for to digits digits. to EIG with up XXXX, continue low AMETEK all expect

For the quarter to digits to same projected up digits of overall high single be third compared with organic quarter, sales mid-single are the up XXXX. sales

per of six over the a prior $X.XX to year earnings XX% summarize, performance be the diluted quarter XX% Third up through are the first in year to expected months outstanding. AMETEK's $X.XX, share to range To was period. of

our executing results be will four growth to continued backed world glad in XXXX the quarter. record Bill in of teams details who to take We focus positioned deliver your our and the long-term, over financial success by it we'll are Burke, to on Then I questions. class turn strategies. will some firmly now for Bill? and the cover

William J. Burke

Thank you, Dave.

highlighted, second Dave results had of and earnings. As quality high AMETEK quarter with excellent record an a

selling financial core with Let in sales quarter, In me expenses second provide some were up details. additional the growth. line core

were XX%. last of year's level Our of the The as second administrative due year's was and tax reduction last the second percentage general XXXX effective X.X%, versus reform. our modestly in of rate expenses sales of benefits XX.X% tax tax to was X.X% of and The a from to down were sales. rate rate quarter year-over-year for quarter compared effective down

ago. of sale sales X.X% to in be quarter, million second for million. was $XX actual capital XX%. from expenditures We year, year, $XXX quarter, very positively rate. sales. and Working was the $XX expect million to we capital to Capital rates approximately our we dramatically XX.X% estimated rate a year full of be And to the for year amortization Depreciation the expenditures be And for solid and can the either XX.X% differ for amortization the were quarter as approximately depreciation from tax the in at range past, expect full this we've negatively and million. or XXXX $XX or full expect quarterly of the of stated from down XX.X% tax

was operating flow and million cash flow $XXX cash Second $XXX million. quarter was free

period. income. For of free months of And full approximately year prior we year, the XXX% XXXX, expect of up was first flow cash for net free conversion flow XX% cash the six over the

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

with was facilities quarter growth high completed delivered more cash We the summary, acquisitions existing $X.X remain in In credit year, with of balance flows. Kevin? during a our of performance second businesses the growth and have the billion our excellent support Following we initiatives. support level results this from our to three quality we our to outstanding. we record sheet earnings, cash initiatives strong well-positioned and than

Kevin C. Coleman

questions? line Great. Thank you, we could please Bill. for open Glenda, the

Operator

Certainly. our the line comes of Graham BMO And Markets. from first Scott question from Capital

Your line is now open.

R. Scott Graham

Can you morning. Good Hi. me hear okay?

David A. Zapico

Scott, coming you're Yeah, clear. in

R. Scott Graham

good. done quarter. on Very the Well

David A. Zapico

Thank you.

R. Scott Graham

I I have as tend and two facing know comp, questions tough to certainly of be the X% know lumpy. we organic for that you. position you a up orders orders

slower? all, Dave, should all in that double-digit reading we the the the plus into had You've past and X%, Is be anything there this. at

David A. Zapico

No.

tough quarter in strong, X.XX, up some Scott. had orders digits, a book-to-bill the positive QX of mid-single think I comps. We were

that customers, recall replace growth of in factor. was our up being were there the that both EMG you XX% business based. our nature But And in OEM balance QX EMG in orders. and the business had XXXX, will of the seasonality a a growth. mid-single-digit Both our remember order You balanced we if year. was broad the EIG And organic bit for businesses little the in of QX, and

was military to in saw orders know, also happened as lumpy. that QX. business. we strongly So, that And in some be related can very And those our QX really you TMS –

the and growth, at nothing balanced very across to orders book-to-bill, there's positive worry a based, So, business. is about. all There's strong broad

R. Scott Graham

My essentially you. on Thank tariffs. follow-up it. Got is the

a we production low-cost moving of facilities, areas. So, have low-cost strategy to

how amount guess I kind when you markets China maybe I say manufacturing in that, you was bit of a impact to nominal not for Could a hear So, the or only little to China. fair in all through get of are that and do impact surprised of go half? nominal a second you small you in

David A. Zapico

managing executive has the actively our been It's office teams. in involved Right. with a great and question, business our situation

So, we a great and business the position from model have. we start of because our capabilities

differentiated low niche have we CapEx know, businesses you by As with design. requirements

model structure. in provides chain best operating the one with combined power, And business. we our So, have supply flexible the of pricing organizations capability-wise, a

really working There's we're capability, work supplier and So, been well-positioned obviously, few production There's locations. from several currently negotiations. of on ongoing, activities a we've resourcing streams. relocation

just paying through that you bit we tariff, you do, from import process U.S., different which to the the recollect We've export based also in a on but the of tariffs ahead XX% aluminum, drawback that in and $X.XX about you duty $XXX were a that July. And not QX bunch both the only that includes tariff. items. know, billion on even have QX, that impact you If less proposed and know Section a and implemented the components have can than we everything tariffs avoid and the includes of built at and the proposed the entire XXX, go steel and was of we on inventory tariffs

Now, factored into. change, that but that also we've can

our tariff capability our and chain, situated we with comfortable I supply our of process place. capability and it's and in to ideally capability situation and a great in manage we're a now So, very have our feel process, the price,

R. Scott Graham

And savings, you think $XX said the million. Is productivity quarter, that I intact? about last

David A. Zapico

We're still $XX $XX million. year we'll going to and still We're million. get No. having a get strong

still the we're going million. but load, $XX additional this have teams chain supply Our to get

R. Scott Graham

it. Got you. Thank

David A. Zapico

Thanks, Scott.

Operator

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

line Your open. now is

Christopher Glynn

morning. you. Thank Good

David A. Zapico

Good morning.

William J. Burke

Good morning.

Christopher Glynn

line terms Motec. longer it, vehicle given a opportunities, the on in cycles given the if just somewhat the measure of wondering pipeline high expanding And wondering of market. growth reading profile that direct spec play it, of Hey. I'm of you trend probably of the Question on some there? description electrical if just is also

David A. Zapico

the Motec's Chris. market. much Yeah, provider vision electric a of on mobile great leading not vehicles, business, And systems. on but so it's is It's machine it a embedded

for combined that with unique ruggedized So, their processing, applications enhance high algorithms and vision make video harsh and automate systems for products hardware and improve speed machines electronic proprietary mobile operational They and environments, software integrated safer. cameras have efficiency for safety.

company's cameras, together, operations, ISC has years. our fits it last factors are construction, Their in been growing long-term has and the in applications, balanced sales The Europe. end are XX%-plus across growth very burgeoning three unique in in ruggedized transportation, three those engineering. their logistics, And put ag, They're business unique good military the drivers. they're And the of year a safety video you The the really very capability a helping and position very their algorithms, of majority well vehicles. the that a processing, improve for software where at with business. and Germany. quality when headquartered in customers strong they're the markets So, market the their

channel sales opportunities the both So, are really good. for businesses

relatively from optimistic really to So, and do be bought optimistic. founders. private The what two with small. competitors going well-positioned, really we're it business. We the They're are we're able to we're

Christopher Glynn

And cool. platforms tapering next given toppy look business markets, or have just pretty you to that in breadth? are my as feel units, you terms any one off you geographies seen starting widespread have is, Sounds around, of or

David A. Zapico

Yeah, it's up better. EMG at Chris. a when digits look great EIG both question, and business, are you our or business our mid-single mean I

the businesses look and engineering, market ask Scott process, our power you that or you at and industrial, but at digits aerospace, question, all if mid-single up look If and market all areas, all and didn't are our of areas of those in automated better.

the or geographies all better. world, are the go digits mid-single you around up If

slowdown. we're not we're feeling seeing very optimistic So, of and sign any

Christopher Glynn

you. That sounds good. Thank

David A. Zapico

Thank you.

Operator

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

Your now open. is line

Deane Dray

Good you. Thank morning, everyone.

David A. Zapico

Good morning.

William J. Burke

morning. Good

Deane Dray

Hey.

and well all it tariffs, on sounds to being Just like back and managed. like price/cost circle the that's

in power. that good we Can pricing taken? because you've that on with us or specifics What you niche color these any schedule, typically couple you would that helpful. really have be with differentiated Just feedback, a of pricing customers? acceptance markets, share such from leadership But kind is real actions associate

David A. Zapico

Sure, Deane. we QX, In achieved of price X.X%.

X.X% was that QX. from So, in up

So, price business in the great get we our that had a quarter. inflation of teams mentioned did was ahead we getting this and job of X.X%. Total would about

increased And the of than the a costs speak inflationary to nature increasing were had portfolio. positive more spread we And the with results our to able differentiated So, offset there. we pricing.

a think it's the terms that a in inflation bit on pass I And We expect bit of I to for environment, now. of a the think the and pick becoming building. see easier channel full year, we So, tariffs to little with pricing right can bit. inflation, in the up

we the So, of a QX remain strong for maintain in inflation in and had X.X% see up going year. think we'll We our year. bit QX. that positive spread But we can and the full is balance pricing a the to picking

Deane Dray

Got that serious And We've helpful. things that. of just real potential heard part terms are explicitly in you it call That's game plan. Is you'll out that escalate? like companies potential at move of is how or production? on Danaher stuff forward that of their if that's looking relocation that

David A. Zapico

We have we where in low-cost setup regions. have manufacturing a very flexible

are certain have and relocating lines already region. looking product because manufacture at portfolio, So, we're product in there the our but capability by lines to no certain means entire we

a that's likely and and in where not we'll of capability couple impacted looking manufacturing a select of that we're have at will are areas we regions, that a happen. But really So, there place it by tariffs. move couple to

Deane Dray

you and participate please additional it. investments just then gas. How and some that in was be position pipeline in this oil was news quarter? on squeeze coming, And And to about more in the in a Got week would one there that? if I

David A. Zapico

Deane. question, great Yeah,

saw our QX. digits. would was for Our that digits. refinery, was single that mid-single our in strength upstream and oil more And it up pipelines downstream low It quarter. well the the we and was tied in And was your good be mid business up mid-teens. gas to and downstream business business That performed up

And high business downstream to and the where digits, we're activity. the mid through bit up sales year, year. single oil, a progress mid to better For as the strong, the $XX little upstream full with be stays get we solid expect seeing we but

capital budgets Our are spending increasing.

seeing investments lack pickup few there's global activity. We in a past a been are And over the years. of

next So, we're viewing as positive. years gas very over and business oil the outlook the on few the

Deane Dray

Good to hear. Thank you.

David A. Zapico

Deane. Thanks,

Operator

you. from comes Thank our question of from Summerville D.A. the Matt Davidson. line And next

Your line is now open.

Matt J. Summerville

Couple questions. Thanks. of

acquisitions, if company, they then you what your at have please? the First, you would segment look whole been margins, if just level, at incremental for the ex-currency and don't and mind

David A. Zapico

Okay.

and We For XXX EIG, about XX% we were operating basis were were and XX%. points, points, had basis excluding margins. acquisitions, up incrementals the XXX

For EMG, the were XX%. around incrementals

includes that and FX M&A effect. the So,

Matt J. Summerville

then... it. And Got

William J. Burke

Up XX%.

David A. Zapico

business, Bill. the it was Yeah, XX%. and for Good about overall total point,

Matt J. Summerville

you. runaround a are Thank Maybe you're business, it. that strength, remarks, that. just driving could visibility your end on might into as what please. have little backlog And and if go do what you well markets how much in Got end various then in your more dig And ahead prepared into maybe bit well just markets Dave, more then seeing the you some color the there? as UPT

David A. Zapico

And fantastic right. And story. and and nanometric is you just General do and where nanotechnology a it things Group to with we division, UPT Sure. very very acquired very in businesses first the acquisition we've the manufacturing Vice is measurements. the President was of and did he that Right, acquired small on technology acquired we the We're the measure as acquired precision Creaform, President. I niche Wilson well. other their we small mean measuring Bruce are businesses want end markets Zygo, space. Manager things I and broad

a bit So, the market. manufacturing. There's precision optics it's market. little in consumer There's of

their laser around good very on I'll horn, with us. a nicely a is businesses, with process based. growth They're this it's driver just business managed new And and XD around start cylinders all is it's scanning benefiting measurement. is our firing a broad in go the products. Creaform businesses. well So, Military based. go secular for particular the with from broad growing

SoundCom the sales MOCON single-digit the was Organic growth contributions driven from great overall a up mid-teens. had high with the Our acquisitions. remains our businesses mentioned reflects organic digits and well, and strength This did recent really process niche by quarter. process It growth quarter of business. based business broad the growth our and sales leadership in double low UPT positions. across We the growing

that business business. double Rauland grew was our Another low digits

business be digits. well. for process of aerospace sales all mid-single were really to acquired to mid-teens, recently Our doing growth. up driven for XXXX, FMH by Rauland-Borg from Overall, we organic is sales mid-single-digit And continue up and organic expect contributions

We commercial our see aftermarket continue excellent military demand solid and we to OEM have also. as business across growth

Our commercial, and legacy defense across exposure overall key next-generation aerospace diverse aftermarket, also a segments, range businesses platforms. are well-positioned. They're and across balanced. market wide military, and jets, Exposure business of

be So, we're mid-single expect for we feeling for with of and segment. great about organic to aerospace to business market all growth each across sales digits that our businesses XXXX continue up

continued and businesses up organic XX% measurement our and of businesses, strong programmable from and across power with mid-single-digit recent the growth Our acquisitions. were test power businesses. for the second each and industrial growth overall and power across our saw industrial sales contributions our broad-based in quarter VTI We growth

finally, organic our for growth growth For engineered these that solid strong of automated XXXX, and demand all into continue translating and power And excellent businesses. our quarters organic The automation engineered a both solutions solutions in for businesses, businesses is in And high to and and single-digit experienced remains up recent solid we all mid-single XXXX, solutions organic had orders quarter, growth. now of organic industrial growth, we automation expect very to sales XX% organically. we up another across engineered excellent digits. for and be our expect

increased company. digits high that organic we around Thanks. year. for growth So, single That's for to the the

Operator

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

now is line Your open.

Allison A. Poliniak-Cusic

Good guys. Hi, morning.

David A. Zapico

Hi.

William J. Burke

morning. Good

Allison A. Poliniak-Cusic

to strong in Very going mix? sort and be be still point on EIG. is the touch we very UPT this sounds terms of seem diminish of there that at that of thinking It like Can you about? to anything in mindful execution? Is would strong,

David A. Zapico

I powering a strong mean, sequentially. it's a orders I ticked The well. EIG think little business. is just executing It's forward. bit up

business our of positive the balance for the a it's EMG also. outlook is And year. well executing So,

So, really feeling on executing management and the execution I'm teams good our well. side, very are

Allison A. Poliniak-Cusic

the just going then like revenue outlook, everything is strong. reconcile And Perfect. sounds trying it to

you You the it and back keeping half here? in? a of a that kept of reason of sort in year range of conservatism as somewhat the we the lot sort that quarter Is of provide. Any the enter uncertainty just

David A. Zapico

and think the organically for mid-single, mid-single. got we got company it we growth mid-single-digit QX I Yeah, in QX, had whole in we it the

up end pick the of doesn't move high we to fact very that it So, the mid-single-digit.

there an was EIG the happened business. largely happened what So, in automation our that process was what business increase our and in in solutions of side also guidance engineered the by and and driven

high mid-single-digit, So, don't really playing it end year good the at was guided toward is of the you that. but see We're how feeling out.

We have terrific momentum.

well Pricing expanding. of are inflation. margins Our ahead is running

trade-related matter. to Allison, to impact the our with of We be we're bit some But have minimize to half second that plan strong demand in confident clear, be our And the solid tariffs. of all underlying said, we're a and it's the seeing cautious prudent outlook. for

Allison A. Poliniak-Cusic

so Great. much. Thanks

David A. Zapico

Thank you.

Operator

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

Your line is now open.

David A. Zapico

Hi, Brett.

Operator

is now line open. Linzey, Brett your

Brett Logan Linzey

me Hey, can you guys okay? hear

David A. Zapico

can we you, Brett. hear Yeah,

Brett Logan Linzey

the so Yeah, defense. and just aerospace to okay. Yeah, back

include backlog, were today? the here coming on years to a large months we you just FMH, deliverables, quarters standpoint is in it that then revenue And those or you guess So, how whether total platform-by-platform, have business go if or from do be separately if much how what's I visibility in so?

David A. Zapico

Right.

can out. That's million backlog. aerospace $XXX we best the visibility Our in the and terms between business it $XXX look business of million has total of and revenue, is

has really you mid-cycle. military there lot the We process a backlog. and of of get have – Then a into business it's firm business, mix where there's

mid-cycle. is solutions engineered and automated Our

visibility give combination So, power of businesses and and long really our aerospace a mid-cycle it's future. And into the looking the cycle. us best

Brett Logan Linzey

at what sort projections I back guess closed we of XXXX? you some this and then synergies some step accretion XXXX year, of just a of M&A into deals as announced these be And year, you from guess rollover the look just next accretion in net to and Okay. I in deals about from should thinking

David A. Zapico

haven't XXXX to we the this of entering a put end XXXX, estimate Yeah, out be our $X.XX. get at it's But to well, up number XXXX. that we kind similar was And our firm guidance we finished we'll for for closer XXXX, net when but a best it and in is about year planning as the the going for of time. of

Brett Logan Linzey

great. Any one there? price of can color last multiple? on profitability Okay, one give terms then paid And detail Motec. in just Any you

David A. Zapico

year Yeah, sure, of was one margins. about profitability times was XX%s low It times X.X sure. profitable is business business, the XX about It pretty The sales. EBITDA EBITDA.

Brett Logan Linzey

great. Okay, I'll pass along. it Thanks.

David A. Zapico

Brett. Thanks,

Operator

line Research. Bhupender question And the Bohra comes you. our next from from of Thank Wolfe

line open. is now Your

Bhupender Bohra

Good guys. morning, Hey.

David A. Zapico

Hello, Bhupender.

Bhupender Bohra

Hey. Nigel question. and had Yeah, for Wolfe, sitting just at in here a

basically think in second earlier with of mid-single was built I orders digits say it second there's guidance. half conservatism half the here. Dave, the organic in But, up you sales like did some your how you on don't you've if you're seen, July, I from going sort? talk the know all kind this traffic, that entering can of tariff anything any about trends stuff, slowdown into now, or the asked

David A. Zapico

No, (sic) a it's good question, [Bhupender] (XX:XX). Nigel

[ph] from strong July, we're end no have (XX:XX). impact terms of almost really any demand We seen and impact July in that the And – through not demand looks orders.

no our line and with all. So, right slowdown in at plan

demand orders point. the about seen haven't really impact the outlook, So, this we're a and feeling we and good at

Bhupender Bohra

the Motec, with like looks here. new have platform you a And Okay.

of particular If where can again sense space to (XX:XX)? want vision some us just this here in you you give do robotics grow machine

David A. Zapico

Yeah.

adjacent it's called market. complementary U.S. have it's with fit and and ISC, a and business We ISC, natural in a the

ISC have and the going that. customers Motec help customers Europe in to through demand doesn't the AMETEK And ramp have. well-positioned Motec's has doesn't in ISC do that very that extreme, has is very, So, is Motec and that them U.S.

the around the a cameras a or processing, also really video said, really combination of environments, we're the unique, the and transportation market, harsh increase as it's really and So, optimistic that secular a in them great I platform, a vehicle, the specific and it. video about and processes is growth improve safety moving algorithms for business and let

Bhupender Bohra

at looking market remember market which in you you a on some Is platform I Rauland Dave, snapshot, Motec? Again, the business. like you size yeah. there for separate or last basis of when Okay, kind growth something health the is there gave are year, market acquired a care

David A. Zapico

it businesses. this looking bigger, space. now, in it right high because that into we see we're it's But there's I at one be enough our acquisitions small think Yeah, space more growth with expanding and of existing certainly this could something is a that will

Bhupender Bohra

a Cool. it. Okay, Thanks got lot.

David A. Zapico

Thank you, Bhupender.

Operator

from our Joe Cowen. the And line question next from you. Giordano of comes Thank

line now is open. Your

Tristan Margot

guys, morning. for good This in is Tristan Hey, Joe.

Just it specifically? a pertains spending. and military if to on I highlight there anything you you're the quick question I on as don't any know platforms, know F-XX Thank don't seeing if can you. acceleration

David A. Zapico

up of AMETEK mentioned a on single and as platforms platform military Tristan, we're with that had is new picked on the F-XX has Yeah, prior lot we in platforms. calls, and we're to-date. won a really it's on lot fact legacy largest spending, of some And the

very we're So, the bullish on F-XX.

customer So, to UK and forward in looking not we we're the it's satisfying also a there seeing that U.S. the the demands. Military, but international continuing spending serves markets. And the just business have

So, we're seeing also. a strong there growth

bullish on So, market. the military we're

And it's year. for growth through outlook an mid-single-digit still We largest part... this the have

Tristan Margot

Thank you, guys.

David A. Zapico

our Aerospace of part largest of business. XX% it. about the It's It's

it's So, us. for substantial

Tristan Margot

I'll back the Thanks. queue. join

David A. Zapico

Thank you.

Operator

our Thank Bank Lefland from Lynch. Merrill question line you. of from of comes And Danielle America the next

now line Your open. is

Andrew Burris Obin

Yeah, you? hi. It's guys. Andrew How Hi, are actually Dani. Obin for

David A. Zapico

Hello, Andrew. Good.

William J. Burke

Hi.

Andrew Burris Obin

Just a question. question, broader a

are guys do trends, we've to Do the into think likely think going to how you CapEx likely? the XXXX, less spend you would we've thinking you people you spend had customers, what are CapEx tariffs. reform, the had you about customers going your to in U.S.? think on the As they're be seeing? When talk more tax Just CapEx

David A. Zapico

I global us to growth for And our meeting the about was also tax has Asia, QX. China. customers reform. seeing in had we we clearly about talking aren't It saw but was tax strong And Europe. in up for geographies. demand. reform in talking the strongest market in an impact, and We're growth. of mean and quarter, XX% X% of good up single us was China digits in great us digits mid-single just and They're the all high U.S.

all because customers most activity and of environment seeing U.S. strong. tax impact are them most business the from – discussions, And the with demand the going from not we're not I in people I monitoring think stopping So, the the demand think but is are side, are there any it's on so forward those, tariff with reform. benefiting

Andrew Burris Obin

you. Got

would sort CapEx if So, terms guess again guys we were you customers, what guess? of, talking cycle, of, what are you in to inning once your to

David A. Zapico

recession feeling I guess and XXXX we're we're that through would XXXX, I and fourth coming my industrial – is think we went Yeah, an of inning. and out in in the

Andrew Burris Obin

Got sorry. you. Yeah,

a Just follow-up question.

sort I model guys doing. question if you longer-term think a their the toward more been think apologize of portfolio? been about like has Fortive on adding little to late. I has How asked. of, shifting been do software margin announced I've a series your the bit of deals, And Roper sort sounds

David A. Zapico

the you repeat question, last Could part. the Andrew,

Andrew Burris Obin

acquisition. deals. has industrial Just you announced software more a of service as question, How doing Fortive It seems guys software acquisitions going software another acquisition, the do about as think software as a following sort forward? service

David A. Zapico

is Yeah, of softwares AMETEK's an I lot important EIG leaders components. businesses and critical A mean software niche portfolio. part of are are our

the announced So, is and opportunities software today, exploring we're business that certainly business. we the Motec, to that critical

of we QX a business. business Rauland-Borg that burgeoning enterprise that has Our business XXXX, purchased in software

So, software we and businesses our help the that that businesses are at area. existing in us looking could to is important

Andrew Burris Obin

Terrific. Thanks a lot.

David A. Zapico

you, Andrew. Thank

Operator

remarks. Thank you. like I'd over question-and-answer Coleman our concludes Kevin to to for today. for back the And call session that closing turn

Kevin C. Coleman

Glenda. you so may reminder, Thank the our of have and call And accessed be day. Investors joining Thank great a replay for ametek.com. webcast today. much, you everyone, in as of today's Thanks, a section

Operator

Everyone, conference. participation you and in may today's great you have and thank the for disconnect. your concludes now Ladies gentlemen, a This program day.

AMETEK (AME) 31 Jul 182018 Q2 Earnings call transcript