AME - Earnings call transcript Q4 2018

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Operator

Good day, ladies and gentlemen, and welcome to the Q4 2018 AMETEK, Inc. Earnings Call. At this time, all participants are in a listen-only mode. Later, we will conduct a question-and-answer session and instructions for the participants will follow at that time. [Operator Instructions].

conference being this reminder, a call recorded. is As introduce for today's would now Mr. host to like I conference, your Kevin Coleman, Vice President of Investor Relations. begin. Sir, may you

Kevin Coleman

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

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

diluted AMETEK As to net affect such, statements. after-tax uncertainties and an gain disclaims or contained Please actual related uncertainties update fourth Tax the may change and of cause Cuts any forward-looking based results used the reported intention this during or of the cost, Dave. financial a on to basis the results include that future it with expectations. to references will now today impact an begin Cuts may realignment Any open Act. of XXXX statements this Dave gain per the or revise Investors with gain measures also Factors up XXXX this excluding results call $X.XX our non-GAAP any share and obligation of XXXX finalization to will call. by related to XXXX ametek.com various risk million Risk to in on be other quarter Tax significantly to or then detailed and discussion Act, prepared quarter I'll note excluding AMETEK's any the the your of that $XX.X financial quarter made and from to Jobs refer and and for that over A remarks results We'll of SEC. meeting are fourth adjusted is filings for Jobs XXXX section fourth the our on differ reconciliation Please these subject charges. Bill, and the turn questions.

Dave Zapico

outstanding everyone. Kevin, and had an AMETEK year. to excellent Thank good complete you, morning another fourth quarter

essentially cash and acquisitions We successfully for earnings them full-year, the We which sales all for we metrics. invest share. position generated established our to growth continued organic businesses key flows delivered XX% to we on financial records success. on deployed we diluted For X% and record long-term growth per in strategic

backlog. three to cash repurchases strong quality operating Operating share the result the flows, we opportunistic organic in with and a high on that results. investing growth to in full-year, leading very an million of and by acquisitions, on a profit the were were on deploying up margin solid also the We excellent expectations. Orders $XXX expansion over quarter Sales our at fantastic continued year for exceeded million earnings strong addition and active remained record had $XXX a quarter. record with strong driven the contributions In and we a acquisition grew ended pace impressive fourth also growth. quarter low-double-digits

completed credit also line placement of and We growth balance a an providing strength capacity significant our pursue with flexibility expanded and future bolstered us debt revolving offering the private to sheet opportunities.

a up acquisitions up were organic year Organic a with at over Orders up foreign orders sales contributing of XX% Fourth also solid were prior growth record $X.X overall very the orders quarter XX% currency, fourth with to results. XXXX. solid, the fourth was X%. the headwind. remain Now compared sales billion, X% X% X% for in quarter quarter

as quarter the margins us was over XX.X% was million, book-to-bill XXXX. resulted XX.X%. the Operating over very up the reported visibility providing income positive EBITDA prior enter than points quarter the up basis last XX record EBITDA in year, XX% Another margin same $XXX a we prior quarter record period. period in a $X.X strong a backlog record of year in million, of with with up $XXX quarter solid the a with over more operating XX% year billion

fourth were earnings. points dilutive representing the Diluted increase basis Excluding record of outstanding year's share last an earnings in an year's quarter. XXX prior quarter impressive quarter XX% $X.XX over over a acquisitions, impact fourth per increased the operating margins the

orders full-year the organic in currency for sales up financial up essentially was XX% annual X%, X%, billion point a X% operating Overall XX.X%. was income on metrics were operating to Full-year were basis were Overall key up Organic and delivered acquisitions XXXX margins XXXX. orders in all were one XXXX. record XX billion. results. grew foreign impressive XX% $X.X contributed to Now sales up AMETEK also and points an and benefit. $X.X

up impact acquisitions, up year. operating Full-year XX% over XXXX dilutive margins XXXX. from over an diluted earnings share were points per basis were the the impressive Excluding XXX $X.XX, prior

of quarter individual to operating results the the turning Now groups. fourth

to and contributed Instruments quarter acquisitions Electronic Recent up were sales was sales headwind. $XXX organic currency EIG point foreign one XX% X%, record a million. grew Fourth Group. a First, for the X%,

XX% fourth Materials margins were process with operating our in over record EIG's XX%. continue across a strong growth on see of We businesses, strength the the operating million, quarter quarter Reported was our particular income Analysis XXXX. businesses. to $XXX.X up

X%, up at grew strong while and impact headwind. the acquisitions, with of quarter quarter $XXX.X year. the and with prior XX% the excellent and aerospace XXX over was quarter EMG's margins businesses. versus all dilutive fourth was XX% our basis XX.X%. Electromechanical quarter fourth of had to robust foreign Group income growth growth the in strength were million, EMG were another operating the of to XXX operating Organic the The a up strong million quarter EIG FMH margins basis with expanding increasing nicely sales the and XXXX. performance. Excluding operating across sales points points in currency outstanding EMG sales was businesses X%, contributed acquisition particular outstanding operating one in materials $XX.X Aerospace performance across a engineered Sales point very

execution So disciplined continue quarter our thank to long-term focus growth XXXX. our through summarize, fourth performance AMETEK exceptional which on and a stakeholders. Each combines colleagues all year. of results their create AMETEK to of four capital to for in the throughout of delivered deployment tremendous growth exceptional and the work AMETEK businesses in model the with value strategies for I AMETEK's generation cash success like to all deliver and would

deployed and to level was acquire annual fourth on billion I approximately In having $X.X six XXXX, our are acquired these front I $XXX quarter on deployed acquisitions. an the on our taking to Before year million record of a in for We start highlight businesses completed some acquisitions with to we drive exciting capital the capital outstanding businesses. three over acquisitions. sales. alone, discuss the will efforts I outlook of the AMETEK. XXXX future wanted of acquisition

in $XX set November. call sales. which have and Forza going in leading lubricants of a with during and annual them determine XXXX condition we other provider of Spectro for model acquired and offer solutions monitoring maintenance solutions very are fluids businesses including add help productive critical Scientific and to provides of our end-markets. the growing and expect applications. tremendous lab-based They mission to the into consumables, Scientific which earnings AMETEK Telular forward. and condition that Mass, late integrating Scientific assets based machine need approximately critical the broad customers instrumentation Spectro million last increasing high-value and is differentiated onsite I for the in serve highlighted cloud-based acquired and along Spectro in a Scientific equipment. Spectro They're of both industrial value software Chelmsford, analytics in nicely we in and

$X.X we deploying addition repurchases billion. capital quarter, record nearly acquisitions, million share the of the XXXX deployed to capital one clearly on Acquisitions priority deployed In total $XXX deployment. the capital during a bringing number for also in remain to and level

solutions the important One initiatives generated of these continue were modest a In for further to is index We're capacity touch focused We to sales $XX development. sales speak excellent three new excellent will These As we growth record we our past, continue shareholders. quarter the focused deployment, development new development, level research within sales incremental in respective Despite years driver to have was investing our the vitality in in organic in growth. back opportunistically on strategy products opportunities. organic our from last continue engineering sales we our we in market XXXX, at businesses a success The research, content. moment. investments capital initiatives. engineering this available to our are new drive our fourth continue our seeing will that and traction and will to of significant across have to product and of and remain the In repurchase of gaining our XX%. and and done efforts. pay as approximately growth products strong we growth the Bill this and on support dividend level the which measures million the the shares invested introduced acquisition marketing results to

assist of to our focused designed opening region. enhance new remain many showcases in the enhances markets. growth India. service our technologies in footprint also platforms expand equipment expanding ability of is to center The our This and and adjacent and in the businesses our AMETEK's India's latest In Bangalore, across October, technology products attractive market. selecting celebrated and greatly facility of customers the globe newest We solutions to within our center we position on the right the

our serve customers will flexibility develop add global manufacturing growth. channels, to service our and continue support global better to to and We expand capabilities, additional sales our

full-year was drive initiatives continue in the operational global seen strategic sourcing operating initiatives, fourth in in generated XXXX, we as margin Lastly, approximately our In $XX and by operational driven million in and strong the expansion savings our our largely performance efforts. quarter procurement improvements to excellence our results. from excellence

gains growth focus key We on market strategies the our XXXX. driving top-line These expanded of also as will businesses. drive which model strong remain cornerstone commercial into move additional through a our growth make-up remain across focused toolkit AMETEK's we continues share and to excellence

Now let brief tariffs. provide me on some comments

continue do have businesses streams the address each to managing the job tariffs. place of put help effects a in to of work we Our tremendous

captures model. business tariffs our nature our ship of and situation global business, in proven the to the ability differentiated confident highly to announced AMETEK's to Our given the chain, mitigate fluid. to due remain from the our pricing given flexibility of which of all capture and offset remains various impact incremental ability our capability, supply through the We be headwinds very positions from strength from these Operational Excellence elements asset-light our our to production tariffs and direct to ability for fourth we In offset impact extremely offset our of we will well impacts be quarter, known the tariffs. will able to us fully each of expect tariffs initiatives. also the we XXXX; able the

Now I move year. will outlook the for our to

results share noted We XXXX acquisitive adjusted our EPS our XXXX. guidance aligns expect to this of comparable and report of the generation said, measure the related our range $X.XX $X.XX, the release, be cash understand operating As better back shareholders X% amortization. of acquisition earnings core believe to increase our that to comparably strength more adjusted XX% over an we intangible in to results an peers. flow diluted press we in and per on allows With results going we will that in non-cash adds to after-tax forward, providing basis non-GAAP and

high-single-digits. be segment. expect each are to a be across We to up organic sales X% in overall XXXX level expected X% to similar up of with Organic growth sales reportable

and we quarter, sales in over per exceptionally adjusted conclude, teams delivered to of anticipate high-single-digits, To in diluted to fourth $X.XX increase prior results the performed first range be the the to will earnings be outstanding up share, are the For X% well quarter our XXXX. year. $X.XX XX% expected in and

then to of sustainable your be questions. and to the who growth We Bill financial of achieve positioned execution of and Burke of details are another some success growth AMETEK year model. the quarter over take the will cover Bill? the I solid it glad to will now firmly to we'll long-term turn

Bill Burke

Dave. you, Thank

of quality related As fourth finished a on brief AMETEK quarter highlighted, the earnings high additional performance provide with tax will year financial but strong Dave details some a first quarter. the in a gain. the and I fourth comment

of the adjustments in measurement Cuts was the of of period. repatriation to the liabilities a the and and net AMETEK Tax earnings. quarter to of or This adjustments provisional of provisional quarter we XXXX considered million XXXX $X.XX gain Reform. the The deferred during re-measurement related further fourth deemed Jobs the the Tax recognized As part foreign and Act, $XX.X of was our finalization from subject tax gain fourth in recognized the was XXXX

on expected highlights. over down fourth quarter. selling with year's General adjusted Now in with year's administrative are the in up our Core year sales effective quarter rate the fourth the to were Tax be roughly last XX.X%. tax prior the Reform. in rate additional This rate general of line XXXX, expenses down expenses quarter we core the In the XXXX were our The of The X.X% rate sales the was effective XX%. XX.X% in to expense reduction line and in year-over-year of compares of was and to due be tax financial in slightly quarter. and administrative benefits and levels. quarter, last was sales our approximately from to X.X% to in expectations. in expect effective with fourth line tax adjusted in XXXX

the the million sales quarter. differ can quarterly XX.X% the capital in essentially Capital estimated either with million very positively dramatically of at rates line for past, $XX full-year expenditures tax the stated in this and or was negatively we $XX fourth solid As last in actual rate. were year's quarter for quarter full-year. from Working

X.X% reflecting amortization diluted approximately million $XXX sales in approximately asset-light million million full-year. XXXX, we of $XXX or quarter our to be million the $XXX and Depreciation $XX We and to million $X.XX expect per and the approximately acquisition-related amortization XXXX expense model. business intangible or of was in be expenditures share. capital fourth $XXX expect amortization including In depreciation for

and Fourth cash records quarter with flow net respectively XX% of at our to flow. Free at over flow of both up year. generate Dave cash outstanding the conversion businesses $XXX for operating continue quarter $XXX As free mentioned, excellent cash and levels income. million both XXX% were flow prior the adjusted million cash was

front. free both Our was We and cash strong free metrics was deploying and $XXX the this also for outstanding on cash XXXX, acquisitions, quarter million, full-year very as billion AMETEK more acquisitions flow approximately cash operating XXXX mentioned, than had over three of our deployed deployed on million, prior was strategic $XXX an these year. remain with fourth flow six $X.X on flow Dave we up year on In cash of flow on the all strong, XX% million in acquisitions $XXX focused alone.

we at the million in of on million December fourth $X.XX the debt equivalents occurring cash was at XXXX, $XXX with billion up billion, is this from XXst $XXX share $XXX XXXX. debt deployed the repurchases repurchases addition, In $X.XX end Offsetting and million. of of cash quarter. Total in

the our quarter on exceptional as incremental the performance facilities. outstanding November than $X.X were to capacity as December. a note and of X.X of the amended in maturing mid-December. average complete well growth facility reflect we to consisted million The of used weighted existing in The of still through notes businesses revolver I support to credit with To we years. senior $XXX cash record our weighted an X.XX% These our and deployment as in year. private with in a of placement amounts summarize, significant billion credit interest delivered the of initiatives upsized our borrowings in Following maturity million last rate offering capacity financing we revolving during private XXXX, level a announced capital have and offering discussed well placement pay average senior provided $XXX as call outstanding which in fourth our announced more proceeds

are Looking growth well-positioned XXXX, our support our initiatives balance Kevin? outlook and to ahead is flows. excellent sheet strong we as positive our to with cash

Kevin Coleman

for Thanks, questions. the Bill. lines open we Jimmy please could

Operator

Instructions]. [Operator Certainly.

Scott from Capital first Graham Our Markets. comes with question BMO

line is Your open. now

Scott Graham

on orders, easy, your better have which this, the to on have two I'm X% I and time. one orders wondering X% on organic organic for just the questions, running savings at some organic quite one been So is or things two guidance, X%

fourth to to is a relative there to You gets the had good little something maybe that the keeping to bit X%? a X%? quarter, And longer-term that's X% pretty the orders be would just maybe wondering guidance where then what secondly I'm you

Dave Zapico

I Right, question. appreciate the

compared a growth expecting because to we XXXX is trade growth solid But expect the and We’re the completed but organic it to growth moderate nicely. difficult. straight moderating in positive to continue bit certainly the of the tensions six just global we uncertainties XXXX. book-to-bill. and eight X% quarters make the more comparisons average and of to a quarters grow expect We And with with growth will do

year backlog. So and ended we a record with the

very where feel businesses about from what see customers very and demand good we underlying well we positioned operating environment we overall into very and our the this in So that to is takes we're in, we're of well. guidance executing there good environment bit perform our and and we're uncertainty little and account. feel solid a global continue But we're to our and hearing

Scott Graham

XXXX of I most secondly was Thank the then wondering you global from that versus year mentioned that maybe for I the Got you was other that of areas if each on it. you're what million the in as global you. that procurement. savings, well? out And this from savings on $XX expecting specifically procurement and -- can know parse kind

Dave Zapico

by P&L. than up, driven that little the guide a way did with as sourcing bit $XX those savings year their was And it our And where ended better largely XXXX that cost initiatives. and are million actually cost and sure, the Sure, we you an savings Scott. started work through in we know for we

XXXX, you of million, starting $XX your $XX that at as Does other ended from strategic initiatives. procurement up of So initiatives, from sourcing was initiatives. and OpEx about from and million about $XX at OpEx mentioned $XX about that we for other $XX was come about million answer that million And $XX million will from guide the million and question? initiatives sourcing we're

Scott Graham

Thanks lot. Yes. a

Dave Zapico

Scott. Thanks, Okay.

Operator

Thank you.

Our Wolfe Coe comes with Nigel next from Research. question

now line open. is Your

Nigel Coe

the to company. and the second ops Yes, known you're not about away from for heavy in get a want repos just repurchase a being share I for XQ, I mean talk

on share the the at November/December backlog a the of So is real your levels that backlog look the price in that's it is M&A a your that and the supporting does options reflection reflection here how M&A table or more the of but those is here? stock from question

Dave Zapico

think Yes, I to the looked equivalent like M&A a great. completed looks We just what year we and the backlog entered looks pipeline XXXX. record it as

and have XXXX for thought opportunistic and have for a fourth a in that balance we shares. strong did a we decision. an sheet. AMETEK shareholders quarter some we it have buy of the view investment to And it We good when has purchases in we a the back time, time pipeline. see adjust So we Over very like market share strong made been good was past that the

Nigel Coe

with agree I And then -- that.

Dave Zapico

about X.XX%. end X.XX%. a X.XX% same you about debt-to-EBITDA -- our XXXX We of When at XXXX entered think with the we Nigel, sheet, balance of level,

M&A over $X.X same deployed still on acquisitions we we debt-to-EBITDA. So and the billion have and

that our control So of a destiny the cash really certain flow the strong fact the and the capability we balance generation and own it's company can generating degree. sheet, strong to

Nigel Coe

tariffs, business? you priced couple XX% in to terms what you about you that you get parts, and there seen in you in two China, do what do And accompanying or re-price then about up question to by March? have have got you're China the one exposure sales, recently see we have how right then tariffs, if go on now large major of a step out And X talked of list you do Great.

Dave Zapico

was to XX%, impact great we remarks, built able we situation is go X% the question. we drove nicely of guidance, the overall and and and X the bit Xst China will XX% offset about the closely. market a tariffs higher a Asia guide the important our in China, that's is The that us, regarding grew And very complexity than for our China as with it's would of so of and to Right, China March completely. prepared trade there an quarter, into into that list that tariff the built it in I certainly feel has said Asia growth sales in to we're our overall growth comfortable watching assumed be

we're So monitor going far we to that. to continue to grow but continue nicely

the power China upgrade said plants products nuclear monitor reality and we capability to to manufacturing up that that As to help their their clean I've market before is needs produce environment.

growth line are moderate for in level but to We expecting growth with XXXX. AMETEK's growth feel about good in we that XXXX more overall in of China

Operator

Summerville from D.A. comes Thank the Davidson. you. And Matt next question with

Your line is now open.

Matt Summerville

about guys how talk first comments XXXX? you do you and XXXX you much upon in you price based much the David, price realized how just for actually Can made, realizing anticipate

Dave Zapico

Matt. Sure,

QX got As you [ph] and than excellent will inflation achieved we bit we our across as inflation price more entire about portfolio. of quarter, the recall, was our increased pricing year QX. an QX tariffs had misolate was we of Total X.X%. X% during ahead a we and

pleased in with we're these continue very to the we're trend XXXX. and we well-positioned results think So

about total about we're inflation expecting two price on of points the and X.X Specifically about level for same XXXX, points.

leadership and So of AMETEK differentiated nature the determination focus position in our global changing our front highly make environment. of markets we niche to sure and and to results the our speak the portfolio in stay

going good pricing feeling we're XXXX. about So into

Matt Summerville

the comparison? and then, what Thank the seeing you. EMG, market you fourth robotics a double-digit specifically? And then, quarter in year-over-year can you comment automation with at comment specifically look can acceleration drove respect with performance And David, organic when specifically you you're to into also what against

Dave Zapico

automation also business. growth was our had business a that. we EMED I EMG we in solid on growth on of military really and mean robotics the driver the it but broad-based and was solid Yes, saw more aerospace growth

cylinders EMG pretty quarter. components much all So all fourth firing were in the the in of

Operator

you. Thank

comes Allison Fargo. Poliniak with from question Wells Our next

open. now is line Your

Allison Poliniak

product on there? point? give bit Could color XXXX at obviously for XXXX in you development dollars you are investment us focusing growth investments new know else little growth I your more Where a maybe this

Dave Zapico

for Right, marketing growth and then investments, opportunities, and opportunities. $XX going and incremental investments be engineering our they're sales probably they're And incremental in up spread they investments about XXXX are XXXX about we're going three to invest million across X% to incremental about incremental in equally across those growth versus incrementally and are buckets opportunities, buckets. growth

Allison Poliniak

there then helpful. for it drive incremental for That's And could mindful of be leverage we that operating should anything you? maybe XXXX, outside of the normal

Dave Zapico

company for and incrementals there's XX% -- the operating ex-acquisitions incrementals feel the is margin We XX think see the we but margins, performance And there's margin core XX were about -- XXX nothing about income how of -- to we're to XX%, the operating of to XXXX, to company. income the back expansion the that XXXX about points really we're we had points of have basis way XX, performing we we except of excellent basis about and about gets going and we about we're to good expansion were started back driving the year and XX%.

Operator

you. Thank

Glynn question next with Christopher comes Our Oppenheimer. from

Your line is now open.

Christopher Glynn

the about does some aspects the you million to have been I've range just forecast as wondering more evergreen XXXX, want delivering that, long that of in as similar been point? about in ask at you, to that challenging covering get Dave, Hey $XX executed savings

Dave Zapico

of that mean element go reductions come an to of at and and cost we new core there's look as I provide the think don't environment then our around our always kind some it our in each D&A. fold opportunities. into I that it acquisitions new we does, Chris businesses is operating of

long-term, XXXX. will when executing look opportunities. strategy they keep as long think So I we evergreen And for I think we're as solid I remain our

Christopher Glynn

the in And are aerospace that into other whereas clearly areas in curious some that. outlook, I'm just you're notably peers or that vertical stable acceleration there are potentially overall any are rollover? and if seeing seeing for accelerating Thanks if that some

Dave Zapico

you it I across businesses aerospace other lot quarter. has Yes, defense what a is outstanding I see of our businesses. think had mean and fourth an

up by sales organic a high Our strong the percentage driven the was basis were growth teens and quarter in on very growth.

was a strength organic both for markets on we're aerospace so with business commercial year, quarters we feeling had military growth We good to fourth in across quarter. Our continue our balanced our aerospace growth first similar business. and aerospace XX% and see three notable solid across businesses the and the about

Operator

you. Thank

Research. with Our from next question comes Brett Vertical Linzey

is line now open. Your

Brett Linzey

pattern Hey, about between major pace perform just through or to the any, activity October wanted fluctuations December total QX company? did then for of the talk January and and any orders how

Dave Zapico

Yes, in terms and typical out was great December question, QX month Brett. of strongest like QX a the strengthened QX. sales. in and our orders We played

that's and a When So plan. our us at right pretty were typical completed look January anticipated. for December as you we we had very on orders strong recently

we January board, about about too. feel good they that real and across so plan, feel we then orders So the across business, all on good came in

Brett Linzey

and interest given heavy more Thanks. deal within for are you expense any in assuming housekeeping, more QX and in are XXXX load deleveraging Okay. then assuming the just what that assumption? And you

Dave Zapico

in going Yes, little Brett? up to a interest be -- expense question, was is and what bit XXXX, our second up for a the bit

Brett Linzey

Just --

Dave Zapico

it. have We

profile, debt revolver. our fixed it at most with look balance some debt you on the is If of

and So acquisition close XX% interest private quarter, see you'll through modest that's of activity really on go we fixed, you'll as revolver. of year-over-year. and the the is new acquisition going or most given we debt And the share our to year pay so. the pace But as activity that December repurchase deleveraging the increase of placement fourth again our heavy see given everything in probably in expense to depend down in an upwards

on and deleveraging deal won't Our be the be very is front continue full to a expectation active we'll factor.

Operator

Thank you.

Markets. Dray from with Capital RBC question Deane next Our comes

now is line Your open.

Deane Dray

be cash field competitors. guys of the internally of the fundamentals in playing are with but certainly obviously this? What Hey, line internally, I can would are bit time but you all like on doesn't seeing the process I level maybe about acknowledge puts with willing your on the the focus with any do to we you acquisition you to it a adapt but is like first and it deliberation change us be EPS to to insight also beginning would it to the congratulations you move the flexible, on at that share year a so start

Dave Zapico

it allow said cash window we strength how to just change understand Yes, or it's our it business, you our we're cash as and flows anyhow. deals, doesn't consistent doesn't have more down And comes flows that into basis all the we're financials a always strong will of cash operating cash But those shareholders capabilities. generating to we aligns change flow comparably better our value another and our valuing the acquisitive with it how on peers. deals it cash

into additional window it's for most that aggregate a decision fans will versus we was go cash And provide to that our we us didn't everyone some that it, really peers. it investors the with we've minority, view. got were net-net of So but EPS, the want our a business a because to want disadvantage talk not information, to different people good

Deane Dray

Great. we're so And record applaud for move, of the that. big we fans the

Dave Zapico

you. Thank

Deane Dray

on then question And is second CapEx.

higher in highest $XX probably nice So be industry going around to plus you boost. if the multi the And $XXX XX% healthy XXXX, percentage increases. a if that's look the did one of million not we that's million, sector

but kind of to first of spend closer flat, can the committed what speaks thought are here is the -- rate with and share CapEx you this all kind it's about it you think that look at expecting? your I confidence to and of are to returns growth how seeing ambitions so and investing you we're us

Dave Zapico

they're and really X% spend asset-light $XXX sense and our sales an X.X% to being on fund than CapEx returns. and good and across them we million all of businesses business they're of and up it sales have less about excellent projects ends the We're makes historically

there do and businesses our have So a that plans. I is commitment good think to

acquire we made is business, be bigger we're sales there of investments less are being business capital. and So that spending than some of needed businesses, X% on asset-light context within some to the still

Deane Dray

returns algorithm acquisitions you the do to look there? the comparison same those thresholds And what's in on at

Dave Zapico

budget and returns are we process usually they on we there bottom is Yes, process internal much a higher. the where them evaluate up CapEx that's that similar a returns and metrics But the year. from ended our on and is this come up during businesses

Operator

from next Robert with The question you. McCarthy comes Thank Stephens.

open. now line is Your

Robert McCarthy

morning Can Good hear you everyone. me?

Dave Zapico

Yes, great.

Robert McCarthy

back direct be Great good question. asked to say, a I must very had Brett, very, and while

know the can So I of I here. guess we're couple one growth a the of things, I bingo trends? just horn on typical the end But the across the been number and orders nevertheless for I've card organic mean around getting while it do but out of segments to a you

Dave Zapico

SoundCom, driven with Scientific. the sales across growth up and be for we Forza, analysis businesses from with at for Spectro of process to strong mid-single-digits. sales Telular, start with particularly around quarter acquisitions by are our solid process Rob, materials and talk finished and little expected excellent year glad you Organic the contributions And the XXXX in up mid-single-digits were fourth horn. aerospace quarter. teens we we businesses an the so I a about I to year with will Sure, our overall mid back and bit sales our expect were organic and business. will go I have another order The

engineered has quarter. in Our fourth closed solutions the with organic quarter high-single-digits another out automation sales excellent the with up year and business

deliver results Our to new in as excellent precision exciting their growth Dunkermotoren funnel continues driving control. motion applications is

low-single-digits for by business. the acquisitions in industrial. balanced growth down a contributions difficult from of of against our I expect engineered solid low-to-mid-single-digit in prior Arizona were to Organic across And and power mid-single-digit our with up mentioned business. our automation power and expect solutions me are that comparison mid-single-digits brings and across as growth sales solution power XXXX, solid organic driven power quarter and demand we growth Motec. our continued businesses And markets. before we Overall were for year industrial. and engineered instrumentation XXXX, Instrument Additionally, recent industrial for key And sales across seeing our

if So power and look at automation you are and engineered for segments our industrial process, different mid-single and mid-single we mid-single solutions. for for low-to-mid for aerospace, market expecting

Robert McCarthy

and that question, metals then gas context, think just the sense quarter next for the that And especially just in your of year context about do this break you expectations of in us? exposure for oil how for and

Dave Zapico

oil decline didn't our and really was mid-teens It was up fourth mid-single-digits, a business precipitous us. Yes, and downstream quarter; conditions and for In in the it increase upstream and significant the our was our impact sure, then gas Rob. much quarter, up was flat. mid

and low-to-mid-single-digits, still and and and be and our business mid gas mid-single-digits, expect but growth oil for the oil be gas XXXX, to For all up grow our of to upstream high-single-digits, so we downstream up to expect moderating we solid businesses.

Robert McCarthy

And in specialty for metals, I didn't note that. mean I

Dave Zapico

metals Yes, business higher was up a EMG. bit than

solid so and to are is moderating at the seeing with to in XXXX it in a medical, we good be it markets, AMETEK strong industrial quarter. had and somewhat business doing growth, had expecting growth end line specialized aerospace, expect metals that basis. we're XXXX, markets well there so we're continue EMG a And specialty So we for

Robert McCarthy

going these gross making then would mean focus formally of articulate sauce question, If companies a would you is would businesses, they to of what someone R&D but you besides excellence to what your a one would the better? how I were go procurement, you SG&A them real fundamentally have these on ostensible at buying and stories, you're better would there's private markets, international all in capital it focus fundamentally and definitely on and front, on acquisition different how but businesses articulated what around enhancement, business how think you buy public comps all some view they you or formally on, expansion secret narrative companies both and narrative improving public a about multiples, follow-up, working the your you looking take if deployment in explain how you not and focus capital global them, of being focus and front a make to making selecting would you kind -- on margin I for

Dave Zapico

playbook of over of the and have doubling EBITDA really margins we XX% and are then that look value it's that businesses. the terms improving in comes in of the in on one improving experienced be very and based in terms service on we terms number improving organic certainly be selection, we existing do some be in deals, terms thing adjacency, and gross that have be that's what markets it Rob, are one be have in we -- above we and presence years global to G&A, that in the whole we of into we all and XX% can willing exporting insight on margins to sourcing, we pay. experienced we it, to near growth can know being five M&A how can And for can of a a operators the and for based how -- by seasoned customers mean, global of track develop to think very these can And it businesses attribute. really taking pricing opportunities a our are down we playbook and there's I look long Right, product what add to record based paid reducing is it the price differentiation, the differentiation, course three of that

we system closing very playbooks we integration. of modeling, have AMETEK financial improving results so, a operators very in the great pipeline and and they XXXX it them of at strong capability the business we businesses secret joined into So to and for we is XXXX across strong none delivery deal in class well forward that bringing across well provide individual metrics ran has sauce looking of process, our to we defined in for also AMETEK deal a deal company. each excellent and process changed. And think process that and do, looking business, and are in for I we ownership have business a that the our and custom have And diligence have each capability are

M&A feel good the very opportunities we AMETEK. So for about

Operator

you. Thank

Our Bank next comes from Lynch. question America Andrew with Merrill Obin of

open. now is line Your

Andrew Obin

China can surprised lot think questions different us markets very by to what give number, end you driving some are just of couple Just from color I performance? your strong competitors, more this of really a growth from your me, I was as

Dave Zapico

customers biggest the products their our and their performance the strong businesses process are think I manufacturing Yes, analytics because market allow it's capabilities. driving chiefly enhance primary that's instrumentation to

chain that through do up as So sophisticated businesses their to wants value our China capability more instrumentation. manufacturing, moves provide and process the

that the So that's we the I said the we've is well doing we but good going about think reason as feel so market. to growth primary in moderate And China. been still

Andrew Obin

Sure. concerned, oil on then that's And M&A, process? we manufacturing process and the follow-up way process and the when say just question gas too not by

Dave Zapico

Yes.

Andrew Obin

Right.

guys still your us lot Thank you on the give Okay. sourcing execute you guys on how years? just pipeline, if way. changed great of of because a sourcing M&A, of could about pricing seem quarter you deals to you be the past and the deals have to of complain companies you the of M&A and a able your evolution the question some And sort guys very in source over well by color availability, couple

Dave Zapico

advantage Well, thank you, Andrew. is competitive AMETEK. Deal sourcing a for

developing in is a have presence deals. dedicate niche We our to pipeline we resources of

by that deals So that operate the we deals some niche some of sourced in but typical of the through see are come privately how we're our markets auction in. businesses process our

acquisitions it's an deals we M&A that to, XX business and So we who of dedicated professionals, us nine and to strategic just allows nine, businesses XX M&A an or they of closely with identify work process dedicated have and have people a we pipeline our to build asset intangible a professionals about not that have there's field process, so follow XX and years. these over it's off we the event actually,

we're to So they them, how see acquire operate we buyers. we're looking preferred and

operate the really record year. last as a entering it's good pipeline, the commitment we markets the So I to long-term we strong did that said, and had it about as targets now and year and year look knowledge a last in so

Operator

Thank you.

Josh from comes question next with Pokrzywinski Morgan Our Stanley.

now is line Your open.

Josh Pokrzywinski

brought if as prior think lot first the we of just sanity a of have in around a of been in some actions on macro some the that check, up give -- other of come the far much guess saw you a off how to fourth kind and kind not as difficult the were to far remind into bit some had of follow-up there I quarter questions that sensitivity or saw us as volatility some Yes, the that you some still we trough in the of dislocation, can asked. just XXXX who price on businesses maybe a peak XXXX, back then for those more time a of are downside businesses of the oil back folks I timeframe particularly how away there's scenario maybe was frame? us from

Dave Zapico

sure, our about oil is was total at $XXX If peak right $XXX And Yes, we about million. Josh. go now exposure and gas exposure back million.

about expansion, about come million, we we're what of And XX% and so So downstream pretty peak XX% and still then it's out it is gas is starts our and our you of about mid it upstream downstream. markets international presence. seeing and $XXX of in one-third presence about and the well typical that is and of we the company of and of a have X% as transitions U.S. downstream and and off bigger are the mid of is and upstream oil cycle mid a and it to two-third

up a bit little So this we're expecting downstream mid pick to the and year.

oil think now our well we about So feeling we're presence good pretty we're right and gas and positioned.

Josh Pokrzywinski

a ambition thoughts your the that lot just than peers probably call that in on kind moved considered kind develop peers side something and that your you at the recurring it, is that's have something software lot that maybe Got of a one maybe revenue idea near competitors being something are of there, is also an strategically, more to there in of to lot who same the during a of me, out And more to what I've from any or up your I through looked touch the in bit a curious is you've helpful. as more cash compounders space, of profile, recurring those? think are you've questions a of the pipeline, data step revenue also on category M&A I EPS, then of tried think

Dave Zapico

they're Telular those acquisitions we there with Scientific, and dealing last and to did customer problems. the two It’s Spectro about a with software, the with at algorithms; tied have it's we recurring and both Spectro cases you information, with about great revenue. revenue data with they solving in recurring that's Telular with dealing both is theme in information -- recurring question, the a of if businesses is and to think XX% are both this XX% look tied the I And making they're dealing

a over capability, it's and we're a in developing been us we've definitely about engineers have us software growing software in many So tremendous for investing focus we India for in years XXX Bangalore.

grow our So acquisition and key looking is internal that that profile we're it's certainly we with a is in something good and capability something have to nature recurring at us for the AMETEK.

Operator

Thank you.

next Our Markets. Steve KeyBanc Capital question comes from Barger with

Your line is now open.

Ken Newman

fitting changes sure had or the for some in. I really good Steve. guide? to actually the question this on foreign thanks not within hedge to I'm any for for is quarter, in impact Ken exchange sales flexibility embedded FX this just been if just is This margin expectations curious Hey, but there on Newman had you modeling me covered has and already a quick

Dave Zapico

about balance Yes, in we general for full-year on the profit then a largely point. revenues is X%. the was bottom-line, the move currencies. naturally negative of And we're the the a of and at FX hedged to given for full-year when the benefit XXXX we've across costs top-line But communicated line a past FX XXXX as the

resulted see either of in the movements, results year how a has won't way from profitable you how So the history meaningful FX we and the impact that's model so on that's our business been the operations.

Ken Newman

margin me, this that revert saw someone the for before, little run one pretty, last rate is on believe in any to this I reason touched the the you of or first saw kind same in -- else bit think then incremental And a for pretty incremental for you XXXX of half incrementals as type could last margin of kind solid XXXX? of a decent the EMG, it. that for is acceleration there pretty to in Got back

Dave Zapico

we And solid had and were business at a had our a EIG XXXX XX%. we good XXXX around QX, EMG good our Yes, but or XX% incrementals in around the expecting year XX%, good more and incrementals for with XX% are business in our solid we then year in XX% range.

Operator

And Baird. Richard our from with comes Thank question next Eastman you.

Your now line is open.

Richard Eastman

more and kind in of responses language of mean the against feeling core language generally questions, guide segments? body issue -- to the to so strong business as just the I'm right run steady kind about for stay really tone comps the X% is body up that this orders the kind businesses X% the the backlog, largely through now of tone your comp reading we X% all the curious any business through X% of how here is so the is those but of than the Dave, the and XXXX, you're I -- given is that the and such here

Dave Zapico

accurate I that an of are think Ric. we is Yes, representation feeling, how

Richard Eastman

business was like same and you in would how those strong as I being indicator, of maybe the it oil the but trend cyclical commented out fourth all or kind maybe mean but an think in I when that early to and no break Yes, of look gas Dunkermotoren, quarter businesses in you XXXX?

Dave Zapico

about automation and think a the When and Dunkermotoren automation you macro trends think global trend. is really secular and

good well gas, really performing backlog and performing oil positioned quite is we're peak it's mid well is very now is downstream as quite do are business and well. feeling and larger to strong exceptionally a So and Dunkermotoren pretty with our a way said and with that -- about presence from And so that. we I

Richard Eastman

of an geographically the terms for the to regions in pretty across major X% expectation X% they're spread and Yes, Okay. much XXXX? three

Dave Zapico

a maybe X% at much U.S. that's X% much bit geographies in are growing better growth range. Yes, pretty little all to pretty the but

Richard Eastman

Okay. the from is I of have, mix a it And could more difficult would it basis, might exposure presume or we you I when what that at food now months be at mean, but --? revenue question you billion, XX business maybe north coming take AMETEK’s be call of then little on just a look last $X.X must this and bit medical next swing

Dave Zapico

XX% Yes, Kevin sales legal is have on about I'm a work the and not exposure. you with to exposure our out. medical of XX%, expert food coming

healthcare and So XX%, performing a and XX% us. for and of medical, but well in the our businesses automation businesses little sales it's that's process the business about up it’s combining presence shows a is our about also. growing actually But bit

Richard Eastman

do you still question, the BizJet as piece four may but last terms look XXXX aerospace in against built the what's and how And Okay. in the of commercial the be forecast? aerospace for of and just there growth lead do all military they're a or backlog with of we this or as segments the business XXXX, at provided we expectation

Dave Zapico

We are seeing and we're guide business segments in our growth all in expecting positive still strong four and mid-single-digit the growth commercial and is military side.

commercial going So going business strength a jet military. we have is year we and solid more to to in but think have are

Operator

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

Kevin Coleman

Thanks Jimmy. accessed replay you, and as our conference for webcast Thank a the ametek.com. in joining Investor today's a great may everyone reminder be Have a today of of call Section day.

Operator

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

AMETEK (AME) 5 Feb 192018 Q4 Earnings call transcript