AME - Earnings call transcript Q1 2019

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Operator

Good day, ladies and gentlemen. And welcome to the Q1 2019 AMETEK, Inc. Earnings Conference Call. At this time, all participants are in a listen-only mode. Later, we will conduct a question-answer session, and instructions will be given at that time. reminder, is a recorded. As Instructions] today’s being conference [Operator call to Kevin Relations. I like the over Investor would now of turn to President Coleman, Vice you begin. Sir, may

Kevin Coleman

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

the our of adjusted on our impact and website. to references the excluding Cuts press detailed and the results be the call forward-looking make Any basis, may affect or Jobs on risk and in we contained our uncertainties filings intention factors statements. future course of and measures change made expectations. Investor the that any results acquisition-related disclaims on statements, gain or intangible update amortization which of fourth found discussion GAAP Tax revise to may actual differ obligation with section the any Reconciliations call, XXXX of be and will that based During subject forward-looking Act. excluding related is XXXX the to AMETEK’s A to or finalization this on various in XXXX and to results will can uncertainties significantly XXXX the of SEC. after-tax an adjusted the between from today’s are cause quarter AMETEK release risks

Dave. We the Bill, questions. your then to begin now meeting it I turn will prepared and remarks Dave and call by up over today’s with will open for

Dave Zapico

good and morning, establishing and with Kevin, EBITDA outstanding you, first began for income. XXXX operating an everyone. Thank backlog, AMETEK records orders, quarter, sales,

Our meaningful six overall we growth, businesses solid with the XXXX. completed from growth in and delivered acquisitions sales strong organic contribution

has to margin earnings operating nicely fantastic adjusted impressive growth in leading exceeded deliver expansion business performance, operating income XX% core our which growth Our also expectations. with

generated also flow, flow strong increasing year-over-year. cash cash XX% We operating with

our Given these have strong for results, we guidance increased XXXX. earnings

quarter. growth onto again the sales Total first and X% of currency strong adding at sales quarter headwind. up acquisitions X-point foreign the Organic were compared Now $X.XX quarter financial highlights to was the at with the in XX% billion, first for XXXX. X%,

of orders We also positive a generated of another with record quarter, level in first book-to-bill. the quarter

in quarter XXXX of in and visibility the record backlog $X.X provides EBITDA period period, margins over reported through the Operating XX.X%. were XX% as XXXX. quarter over income with was a up we was excellent the EBITDA year prior record billion same million, the a operating a at $XXX.X at record of solid in million, $XXX XX%. Our XX% move first margins the up

XXXX over operating diluted per the of an over $X to share, XX% impressive range earnings per Excluding per our share for margins exceeding basis diluted $X.XX up of $X.XX points comparable basis quarter. first impact increased acquisitions, XXXX, dilutive Adjusted share. guidance XX were the

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

acquisitions quarter was First, sales up $XXX.X contributed growth increased and XX% in the X%. the Electronic sales Group, Instruments Recent organic to XX% EIG million.

headwind. a X-point currency Foreign was

operating up EIG’s first attractive XX% strong growth were end as Reported markets. over very quarter. to Materials $XXX.X Analysis operating well-positioned income in instrumentation the high Our analytical income XX.X%. businesses quarter XXXX’s was solutions of with in performance continued are outstanding, growth margins operating deliver their million,

a operating performance. headwind. strong first a of sales quarter. very great The EIG $XXX.X record points growth quarter, EMG’s and over FMH with also Excluding acquisition organic strong a first increased had a sales was to the with foreign X%. XXX X-point currency impressive million acquisitions, Electromechanical an expanded X% added sales the quarter X% and year’s margins organic basis of prior excellent dilutive Group growth impact The

our AMETEK’s income and We growth. of combines Materials see with am based also XX capital up sustainable to performance, which and framework points to for continuing operating expanded our on to another each nicely Operating excellent strategies, talent our to the long-term Defense very which well XX.X%. I delivered continue broad value pleased X% continues $XX.X quarter, in year quarter a businesses, growth and deliver driving generation, Automation, with across Engineered has the solid margins for first shareholders. growth million. disciplined positioned focus Aerospace and us to development EMG basis for provide performance four AMETEK operating results. the model cash with record growth very The deployment the increasing

our AMETEK. the Before, Research for leading help fastest success are Congratulations elemental Vision complex products. world. system the the is by provider I materials batch new example characterization solve are systems X,XXX and both powered These business, developing world-class Velocity a most which diffraction in one Vision had these solutions and wanted of sensors materials developed recent R&D products. EDAX per high-speed systems start the Super ultra two is by colleagues EDAX This Velocity of challenges market and and innovative discuss high-speed, March, electron a businesses, solve of new to in our characterization our our EDAX, new Plus help and Both broader highlight noise, just driving for unveiled frames release Super developing updated XXXX, outlook and new Velocity portfolio industrial I effort models. customers’ businesses the in at some achievements to the teams challenges. for to products in coming collaborative velocity cameras. of many offers settings. to together two a new Research customers In composition our leading to low resulted the with camera solution of second leading additions R&D is have of our The between provider I of will the our CMOS superior

also to are crisis The play a capturing for to on share scheduling provider its can the key in focus use event Rauland, multiple during Telecenter for students by for locations messages, emergency focus attractively plan a in positioned within safety serve the expanding and proprietary a it businesses schools schools. automate software responders hospitals is its of minutes its systems on crucial streamlined staff. campuses has helping arrive. and educational Utilizing capabilities districts adjacent students into and teachers healthcare manage our role school of and our markets. Through offering a and synchronizes and to communications expanding before U, across with Our situations, renewed communication mass communication and few and technology leading designed has everyday done expanding situations. suite Rauland security improve Rauland safety hardware job during first technology crisis market applications, facilities schools of U provides first an help in and additional institutions. critical Telecenter flexible, solution and excellent its

results invest to from initiatives expansion product will We outstanding we our market seeing are as continue development these and investments. new

acquired In strategic we on we acquisitions integrating acquisitions into sales. We on them Our approximately and over results capital million are recent free performance, teams our excellent AMETEK. already to $X.X are These acquisitions. flow deployed annual doing remain also our $XXX XXXX, incredible acquisitions strong generate in showing of on focused billion job XXXX. strong in expect and deploying fixed cash

will remain opportunities, we While aggressively we efforts. disciplined these pursuing are our acquisition on

confident are complete teams a and we able value Our be continue broad actively are of we to pursuing acquisitions. that opportunities, will enhancing pipeline to

the In quarter, we our we the on strategic activities. operational generated Finally, continue operational resulting initiatives, and our excellence, AMETEK model. growth strong global driving savings first focus determined corner excellence store largely to sourcing from the of from

we in XXXX, savings. generate operational results enhancing expect operating and to on XXXX beyond. continuous to remain For processes in We all drive excellence over positive and million $XX developing focused improvement of

updated our to outlook. moving Now

adjusted the basis XXXX. range the per X% to quarter to share. of now This our the diluted from outlook earnings in diluted to first an the is of comparable in be XX% performance our our of Given $X.XX $X.XX guidance remainder increase $X.XX we of increase range an the expect over year, and share, previous in XXXX to per for $X.XX

XX% per growth. $X.XX outperformance share, range diluted to period. X% year over We organic to sales and with continue digits second the to up first a expect our AMETEK sales single high the of high for overall businesses To overall of XXXX another to the single earnings to adjusted positions sales increase be quarter year firmly up summarize, in X% to In we anticipate X%. in be prior $X quarter, the in strong be digits up to

to experienced market-leading consistent who businesses growth the allows then of some Our be model the deliver will management and financial Burke, it of our the Bill turn performance. questions. Bill? will teams, and take now will glad to details I and strong cover over your niche we quarter proven to AMETEK

Bill Burke

Thank you, Dave.

expenses up began some growth. exceeded now for in was mentioned, just selling provide quarter in I Dave record the the excellent with our sales Core the AMETEK expectations. year As with core delivering that performance the quarter. line results highlights additional will financial

up general were largely quarter due over XXXX to $X.X the higher costs. First in and period expenses million same administrative compensation

XX.X%. And large rate Working impact depreciation line year quarter we quarter the in with $XX $XXX we acquisitions the cash $X.XX were and parts for in the approximately last sales, up year’s expenditures Capital XX.X%. from quarter. or continue Total this expenditures XX% were quarter can rate. expect to $X.XX of capital diluted the million. to delivering the the was $X.XX rate general debt equivalents in to and billion XXXX, and X.X is as from billion, ratio in due of of past, have Depreciation was cash debt $XXX tax $XXX of stated to XX.X%, $XXX performance versus of year’s XXXX. the XX.X%, Operating tax intangible free approximately negatively a cash or tax times. year’s quarter XX flow either than X.X%, estimated facilities. our cash debt-to-EBITDA over actual approximately with level. quality year, year was million. was capital initiatives expect acquisition last or percentage $XXX As approximately end year first up prior and was well outstanding And million, million amortization first the first from March full rate expenses expense more to flow the quarterly of amortization on from full positively of effective effective of cash growth the X.X% credit was in to related to million, be expect be rates billion results. in sales. of positioned the million, be quarter net $XXX and conclude, quarter we the down for we Offsetting The for our of differ in dramatically, $XXX our In quarter the resulting the $XX XXXX, $X.X amortization And as administrative at million, at support share. end per started To last a million of million, high and including businesses with remain XXXX. this existing We down continue

XXXX outlook sheet balance cash our for remains strong flows. and positive Our given Kevin? excellent

Kevin Coleman

are you, for lines open thank the Bill. questions. now we ready Sydney, Great, to

Operator

And from Summerville with Instructions] comes [Operator D.A. first Davidson. Matt our question

open. Your line is

Kevin Coleman

How you Good there? are Matt. morning,

Dave Zapico

move we don’t on call? why the Sydney, next to

Matt Summerville

Hello

Kevin Coleman

Matt are there? you

Matt Summerville

me? hear you Can Yes.

Kevin Coleman

yes. now, Yes,

Matt Summerville

have comment a in your organic then I am X% regions? the sort was the the sorry. give there. maybe little across you anything quarter, what around color saw linearity growth Anyways, unusual better, throughout Yes. And maybe what know three to of business don’t Could was regional I what worse? as the them you

David Zapico

business, so seemed surprise, March. solid the in I that little pleasant growth. mid-single particularly growth single-digit geographic talk was the our in our will picked a in and about up regions businesses strongly will also all drove growth. February, was roughly EMIP Europe of there our but there U.S., broad-based slow It And it start where dynamic a in that on fired strong different, very Process a activities our And automation that a there Aerospace businesses was Process a really digits, cylinders. growth, I Right. with was a one Asia was dynamic business. flat. and And the It up in to also. high In update. was a was bit

So order our a that March, the some may were record Asia. or But Chinese New Year speculating with up uncertainty our folks for input the business have we of ended of some again activity. slowed in

forward, going haven’t but changed for we was it region. outlook any the So flat, of our

it So across-the-board, was quarter. good pretty

Matt Summerville

you to in you how comment on with then where compared can realization were maybe that And and price QX Dave, just lastly, inflation?

David Zapico

and didn’t we month was answer had QX bit to ‘XX was inflation And percentage strongest I price X less us. of than atypical inflation, XXXX. much entire is Matt, your through an achieved question. price related mean, business. I quarter half like excellent Yes. across about strengthened which our the quarter. for linearity not March, We was a the second our Total points We X.X%. of the

global a our our determination our leadership And focus we portfolio of stay very XXXX. environment. highly of and results, positioned said well are inflation product these I the, changing ahead think in of speaks in also nature are balance continue on So to to differentiated this markets. with we and pleased to the That positions for we the as niche before, economic these the

Operator

question of America. with Andrew our from line And the Bank next Obin comes of

Your line open. is

Andrew Obin

a weaker this being Yes, usually than maybe seasonal half a at is and you are quite if question, kind conservative? looking was annual the And on what or yellow quarter going XX driving I basic a that XX%. second back caution, percentage quarter years. seasonality, the just is than I second are usual, quarter guess, of first of implies just looking any to And just first guide Just the flags you for be but points you that less just guide are seeing basis, wondering bit given couple was,

Bill Burke

the mean, it’s than a is I X, X. higher Andrew. is, point quarter in question, guide first our great Yes, quarter

we earnings QX we year. our point, bit still our in that feel the a the the out, final uncertainty had And the we the in performance. raised quarter -- at bit And prudent. economic QX, letting to early core new your So sales guide. to And very are grew we first are guidance through the But flowed our excellent of environment played it’s we we QX guidance. with it’s good be from range. but we typically how to a higher. we feel the organically margin entire And high-end And comfortable quarter, about the of being to and guidance

Andrew Obin

WTI point guess XX, I can for have north sort of off question. be? tone follow-up your where are for back a from you seeing Energy come if any be you it change maybe just would it just in climb going since waiting And comment we take XXXX, And it’s finally to of your that big customers just really to as that what steady been being to business. used

Bill Burke

had year, business see at and mid-downstream Sure. other high we M&A. XX% our digits. at be are expecting organic digits upstream AMETEK our And starting of it mid X% The was up the mid-single our be we we single in we And Energy about we our of full because of have in recovery, to business mid-single first business, up -- the looking digits. businesses looking digits part and bit quarter, for part single typical the is company gain and business what the the to low largest we are up and year, are the as of to for of be total to have a the about percentage are smaller momentum. full probably in is of and And It’s growth some areas downstream. a it the of that our to starting

good this good it to we great the year a for it’s looks market energy target We really year We like positions grow. last our year about have and feel very feel year. on another and businesses we So business. continuing good about the had

Andrew Obin

months? as change price any oil But past rallied in in the X the near-term behavior

Bill Burke

We of there I nicely. oil have but steady up and picking say few when in the business of of a last I business solid X/X backlogs, notable months as the really that had a a business a behavior downstream and U.S. there and precipitously mid it’s in just change can’t said, feels global the when level dropped was solid. it wasn’t behavior just outside is change price -- a of change We QX. increasing it about raised and And the

Operator

Coe And our Wolfe with next question comes from Research. Nigel

open. is line Your

Bhupender Bohra

This Nigel. in here is Bhupender sitting for

the color see wanted in actually here? So to for you quarter, in color talk orders core Dave, numbers from you the us quarter some which core the EMG? of or about the or weakened whole what of on can about as during And some as mentioned a just are we the strengthened markets, especially orders well give the April company you EIG end kind seeing and

David Zapico

Sure, Bhupender.

for organic in That’s XX% remember the X.X% against The a -- at comp would XXXX. be of plus first They orders. up -- up very quarter. were actually difficult thing were the QX we

So book-to-bill. performance, we really orders excellent had solid

X.XX. was book-to-bill Our

this ended XX of a a $X.X with positive We think I billion. with straight mark quarters book-to-bill. the quarter record backlog

we So a continue businesses, about we demand. good in we our and operating underlying from are from and hearing see feeling solid are what to really we are environment

well to of We the on well as regarding are today, but data really are perform track. April, right positioned seen haven’t and yesterday, we I have of this I seen environment. as in And it

feeling pace no about and QX. in good in So we change are April,

Bhupender Bohra

And up growth are sales do second going quarter. grow for just The built on organic in high guidance those organic Like is to you question of number? your the what single, have kind numbers? a the of

David Zapico

the that AMETEK. we would for The at guided the organic growth year X% X%, the level have same be for X%,

Bhupender Bohra

$X billion maybe you the guys a great got the you more up, here it’s like about the than hone kind of how it’s a of over kind did the Any little the range, on color give color okay, it. us M&A size, job wise bit around -- as the M&A. pipeline, So the at within pipeline, in EMGs, And on least talked Bill, as well lastly, -- mix deploying on just last EIG, XXXX.

Bill Burke

Yes, sure M&A. on

very is pipeline M&A Our active.

evaluating up of we oil give a the the very needs with to a competitiveness And return the As of select deals a us we environment pipeline, opportunities. have be pricing are our number always, have which pipeline, in broad the capital. we it the are solid on will with broad. Because and broad from environment, we to

of what you the few deal our next at the I the the M&A am to I predict the have is similar the close, confident looking in quarter can’t to And on long with is both deals on the environment in progress going very past been process in we and groups. with if experiencing across So encouraged very pipeline. pipeline. years, and capability with M&A but we our tremendous feel And our are term

So I am very M&A. bullish about

Bhupender Bohra

on want on the down And to tick the Boeing? if explain And Aerospace, -- you pressure here, can lastly, the the from especially XXX the production Any I it’s Max on just on this. at that exposure anything the front? from any leave

David Zapico

you AMETEK any as not on is dependent know, Right, one platform.

lot on on dependent we are or not overly but on platform, we anyone. of are just every So about

XXX first hasn’t So the production orders plan that forecast we reduced when of the you look Boeing and all, at seeing issue, are here.

meeting we are still going So demand. along that

The year of full the be about second in million revenue. XXX for the Max would accounts $XX for point XXXX,

company, think, a an probably small magnitude. in about it order puts that It’s revenue. So I of X.XX% of part of the

in producing we strong rate So OEM fixed But producing problem the We not we very business. quarter commercial certainly want keep overly to the was to at we The on business want are solid. are and see the dependent had it. on.

up we was quarter, the forecasting digit to digits it and mid-single for be year. up the are Aerospace single business in first Our high

and but a in Aerospace all there, all good conservatism segments. really of maybe of market our we strong feel our business in growth there’s So segments about bit

Operator

next Vertical Linzey comes our And Brett from Research. with question

Your line is open.

Brett Linzey

Obviously, the back level through total to to with you the deal what the segment at lot FX reported impacts and that margins, the level? and in wanted come company were a incremental of the quarter margins Just noise margins. at saw moving core

Dave Zapico

it AMETEK XX%. the EIG it level and it At XX% at was Okay. EMG level XX% the and level the at was was

that we very So performance pleased. performance, are pretty strong and very typical

Brett Linzey

within that line then roughly should you the order in then realized order the Appreciate What one that that X.X%. similar question. Okay, positive up. points number, what good. like does level, assume on was color that negative, on two just price, And sales we quarter? both one And complexion, of the the to a were the that includes the at Thanks. the segment look follow-up or

Dave Zapico

Yes.

orders in very our than You and organically a pricing EIG. difficult up up bit probably been group And we and comp was EIG EMG last should in assume EMG because XX% pretty the line, is that had year was at hurdle, consistent.At X% because had toughest the stronger orders. a EMG organically was X%

as businesses and before, really backlog. have performance we So I have, of our book-to-bill an solid and all order said excellent record

the really and good about it’s board. So the we really are feeling orders across

Brett Linzey

update one into And then very and as have the of here. these on to could power how are you last work, metals you year the seen one pricing, us business? specifically balance within really pricing the start all moderate period out just raw us commodities mechanisms pricing Is maybe maybe material of guys you back of remind good you just give some look a there and and year

Dave Zapico

I’d in Yes, isn’t business. for give a back. metals of the AMETEK, There period say except

is price. business. metals don’t count that the really within We think I

recently. the the that’s of metals just is there to stabilized, vanadium on get the And the that’s that passed have one but that’s commodity trough So you metal customer. have as is a price fluctuations strong to of really lot us what important

modest of will EMG’s I we a that at an have So as go don’t impact business, much AMETEK forward the on metals impact but specialty expect level.

Operator

Robert following comes with question from Stephens. McCarthy our And

open. is Your line

Robert McCarthy

excellent that ahead the I that It’s nice in some yeah, questioning was right. have May. from to of boring a AMETEK, And perspective but guess of

Do at dictated and kind properties and a you growth what talk the range underlying in kind about looking is you the you just different terms slightly looking you entered margins. the year. are now have valuation the of and by deals the cadence about you potentially even Do so market it the of so do have you you the that might deals more that a for another that pricing the a bit we the being of little to saying like see fact the some or think blunted, What next guide and I question year is given of it expect given sounds of environment, it the environment. accretion of would at context a that is takes of think far. for for announced have for of kind in of kind even, are lot think accretion you puts XXXX, way Could XXXX?

Dave Zapico

in about Yes, from M&A that there we XXXX, benefit. of deals at In XX% I of think $X.XX said about lot deals, was is and $X.XX a end XXXX, the an of had of XXXX. -- of benefit sluggish we

through working are deals there a lot of and certainly are system on. those integration So going activities their way the

well. positive the potentially wise seeing bigger, though from bigger integrations those that’s those we core deals deals So with on good are and be business, have XXXX. a very our progressing But timing benefit will yes, in and now I margins very the are still

out So they them. units are our operating spread about feel good amongst and we

Robert McCarthy

and me perception years. as of do grade in another you it ask so you past changed three in kind pitfalls style but has question, the on has were over the you where in yourself three yourself the your impolitic with these you critical do rallied as Or stock easier four when as it’s how terms AMETEK years strategic the miss for has going But investor to M&A, questions, if of And, after forgive terms radically significantly how it last organization of are over on a years about has assets? are transaction? and

Dave Zapico

year look equates I return deals we all we we capital, invested and are return were kind And haven’t can deals a after-tax, getting that. we these return done on. returns. in on are three and the think that that get chasing not on our style a we And on deals was cash-on-cash, changed to that one XX% for getting of

run So capital and comfortable lot is on we take long our in at we that on in on maybe discipline feel very paying per to the balance first the but return system, inflated not return are quarter. that look The a prices, capital total our that maintain there’s XX% want sheet. discipline, the we in the about our of we

between closely. and the are shareholders and of very cost our more X.X% look value a is for capital at we two difference creating the we what Our like think we as that long-term

the key behind driver acquisition that’s our strategy. So

discipline lot and don’t We have that. a plan to change we of

Operator

Deane And with question Capital Markets. from comes Dray our following RBC

Your line open. is

Deane Dray

Just like to if takes go the in quarter, into puts I variables some of and and the could.

companies tariff? The is Some of you that that have and regarding second seen dynamics the been puts with contending any pull-in. takes have one the industrial

the then there there of where had typically first there Some And you cases the of the complain Just any weather, companies any about anything Did to factor fourth the saw was pulled out quarter start - they too? about you of but actually please. too, bigger that? see demand quarter. are not someone to

Dave Zapico

the start didn’t business. impact I it and our measurable have with guess I a will weather on

our So to with in that direct We XXXX, about activities as had we have active predicted. out reducing impact tariff, those what QX tariffs there was continuing we sourcing and successful and and been offset price played from tariffs growth and the sourcing we the totally situation plan. from $X.XX are

than tariffs we the it there different end always avoid But we is So pull-ins, other question price some good any actions QX before of And at completely offset that. year. year there wasn’t hard prior increase. the to your look and, maybe regarding price pulled things the pull-ins a very the any and into feel about last

So QX same the And a looked, we are put we hard. thought. saying about it XXXX. into lot not We at really looked

answered. are those So

Deane Dray

the could convert going gives record much visibility Good. to that just about and good That’s backlog are those percent all. your back talk you hear. of just Yes, that how XXXX? in and remind that What all And us to of just backlog you? would

Dave Zapico

Deane. Yes,

out It I comes about year. next in think XX%. the it’s

the visibility. So and ship month there our our were it the you are good of book of that in some But very quarter. that businesses gives quite frankly a number

billion $X.X want too don’t take going of year. we it that is up far. this So to XX% to go But

Deane Dray

me. out? the is would And quarter us then What any growth you what that XXXX? Was question there for last in investments just call budget investment remind growth from the

Dave Zapico

the product and the And and marketing we roll-on. the EDAX the $XX of for engineering activities. in also incremental in investments development development highlighted and regarding about are product year, I investing Those million highlights. sales, Right. adjacent were investment the expansion

we than XXXX. As $XX million more invested in

and linear spend year So, through and return we it. a good is that are on relatively the getting

on product pleased heavily our our capability improving new excellence, So and done focused development to to go also getting are are are with we really businesses certainly, are commercial return very in our work activities but the we market. investing we and a and

Operator

Thank comes Baird. next from with [Operator Eastman Our Instructions] you. Richard question

Your line is open.

Richard Eastman

Yes. Good morning.

Dave Zapico

morning. Good

Richard Eastman

positive there any at EMG and maybe the quarter, order Dave, maybe -- between is think rates first quarter, a X% bit to core the between was just there a the for didn’t in quarter ship of was surprise anything that any am segments that I was the there EIG segments, a looking out and became relative the -- against tough movement maybe EMG the the an comp. EIG here macro? or really X% revenue as for curious movement in in the growth shook

Dave Zapico

X% a one -- small in make what The X%. not will first that I said. Yeah. was growth you EIG point organic correction QX, there,

Richard Eastman

Okay. applies. Fair enough. Same then question

Dave Zapico

forecast. -- it met of business sides that and applies mean, we had was we out as thought. I a both question their forecast Same and the really played

pretty So much a… it’s

Richard Eastman

Okay.

Dave Zapico

…very, very was side, us. quarter very the from predictable for execution -- it a sales

Richard Eastman

in on a steps Okay. of, thing perspective, the was said core from margin the basis side. that I up one points margin you XXX out it core think, EIG And your

Dave Zapico

Right.

Richard Eastman

was there, mix, price primarily, positive that a what is product there there the seems dynamics or more it variance. just lines I like mix or very -- mean, it in Was EIG are was

Dave Zapico

Yeah.

Rick. They this had it’s of positive. we are positive positive right, are our I You a bit money EIG our higher option stage and mix. the products. is than buying a in at and our mix EMG definitely fully and have people that to based little spend have factored cycle, mean, But It reduction you our the the portfolio, is quarter a variance cost also. got but X% pricing broad in we was across in

So got and positive. we managed two EIG mix those price good are cost really -- well, have the factors. the in was three We

Richard Eastman

Okay. pipeline things. One, they question are skewed they deals potential couple address is kind they and pipeline, of in the perhaps? And just EIG and in businesses that a M&A then towards you that are in EMG your or a products? of the around around deals theme just your skewed are there or last of could the prospects, Maybe pipeline the either the type or the

Dave Zapico

of about two-thirds business about a is third. EMG EIG Yes. our and is

skewing. So think reflects I pipeline the that

business is are a lot We based. our looking broad of on

the the Looking cyclical be a… markets versus products, at would differentiated secular

Richard Eastman

Yeah.

Dave Zapico

very what … recently. some properties you it’s there’s have is and seen instrumentation, business, automation a we an healthcare, segment. priority, Industrial looking so of Power the is good lot There there there process, more at, is are

business, the Board, So and... we Aerospace the mean, I across are looking

Richard Eastman

well? Okay. in Yeah. theme to of element of kind that extensions Is type as representative a any there or hardware? there connectivity healthy software this of the Is

Dave Zapico

bit. little A

Richard Eastman

Yeah.

Dave Zapico

a little things that, in little a that’s see bit, like around bit telearm it’s with You certainly… and

Richard Eastman

Yeah.

Dave Zapico

looking …a we sure. pipeline -- are for But it’s theme define our not doesn’t entire at.

Richard Eastman

Yeah.

Okay. Thank Very good. you.

Dave Zapico

Richard. you, Thank

Operator

comes from Giordano. our Joe following question you. Thank And

Your open. line is

Joe Giordano

guys. morning, Good

Dave Zapico

Joe. morning, Good

Joe Giordano

Hey.

you on you that’s that than if it your did deals, guess, Is now? six in deal, more the pipeline than deals, a less how in have six in if you in you likely XXXX more So, XXXX. right six skewing amount same like the spend size M&A,

Dave Zapico

you deals to what guess, are to disciplined also going has want approach, the some don’t pipeline more our it sizable find. Because with and I and know you has some deals Joe. smaller don’t

spend can could We a could We spend lot same the the we and So lot deals last sizes. could spend different of we be more. year. spent a less as

at So the predict year. want point hard of to pretty that’s this I don’t --

Joe Giordano

one results on on Dave, that getting the role to spending came you your of organic shown through you when end enough. part of that’s CEO front the things And was of have better. focused but is certainly to the also growth business. Fair and on kind of market in underlying is reinvigorate on

between down AMETEK that getting couple So years at to just the over how of internally of better relative markets your success kind break here? would last

Dave Zapico

finished organic our row growth just our in we a -- with quarter That’s of Yeah. ninth average X%.

are also. is us, improved are the But, we and So economic focus helped with work really we but the doing that. that clearly, environment certainly pleased

results seeing more improved capability positive force digital is really effective. teams and and are are our Our we Kaizens customer is our from facing much sales and excited and growth marketing,

growth culture aftermarket driving are our part becoming and business it’s of of and our part We important system.

the between let great So growth will themselves. to we for progress making and the can just market tell the bifurcate it’s very But I difficult company speak specific growth. and are that you numbers we

Joe Giordano

up do last, on if kind maybe year? everything of could wrap your you of then And

Dave Zapico

Yeah. Sure.

Joe Giordano

Yeah.

Dave Zapico

will If around market -- commentary, process process. our horn with I go Yeah. segment start with I the

sales the Our Spectro single-digit year. growth Scientific. start businesses up mid-teens. contributions the to and acquisitions The Overall was of Telcellular mid SoundCom, process and Forza, organically from outstanding had were

broad-based did are Analysis business particularly Materials demand solid saw they and for high see analytical end strong instrumentation. their to and continuing growth Our

So excellent that has job. an team done

sales For be all digits. of expect up organic XXXX, we to mid-single continue to

as before, Aerospace Our I growth Defense single-digit high the talked delivered organic business about and results quarter. excellent for

markets Military our across with solid various Commercial remains notable OEM Aerospace and growth our Our strength businesses. across

mid XXXX, expect of single-digit each organic across growth all we continue market. sales growth with to For balanced

For Power sales and with and single-digit the was the of quarter the low-to-mid acquisition we flat mid Automation patterns we mid of across that finally we solid in We strength continue Industrial growth in we in growth Solutions, Engineered in and for year first growth in quarter difficult our were first had driven those mid saw our and all single-digit Motec. growth the the comparison the XXXX, our sub-segment, remain sales Test Power for expectations. saw solid with by Industrial driven our growth, business. single-digit backlog expect for line saw the we And recent Measurement seeing prior businesses. Organic our And Power order of and in businesses. -- organic single-digit They and organic quarter. these by across to that are a

automation see We business growth macro Dunkermotoren serving. to our in continue excellent the trend tied from to

strength a single-digit is doing Automation team the of really In in quarter. That Medical Engineered solid XXXX, business. sales all Solutions growth mid for expect business. to continue we our addition, for Components And organic Engineer and we businesses our saw across notable fantastic job, EMC the

that’s the horn, walk you, Joe. around a So, thank

Joe Giordano

Thank you.

Dave Zapico

Thank you.

Operator

Capital our with And question KeyBanc following Markets. you. Steve Barger from Thank comes

open. Your is line

Ken Newman

Hey. for guys. morning, This Steve. Good Ken on is Newman

Dave Zapico

Ken. morning, Good

Bill Burke

morning. Good

Ken Newman

the hurdle haven’t rates prior terms return Hey. Good wanted in you and your of size calls. M&A changed morning. said correct? metrics on Is pipeline deal I just within and clarify, that to so multiples versus have what

Dave Zapico

No change.

Ken Newman

change. No

on larger upper echelon? size million deal size at the So, revenue that end the to or is $XXX in million type $XXX probably then

Dave Zapico

Correct.

Ken Newman

are hear my as that you in positive on what of from given uncertainty your am the -- we it are maybe your think the cycle, the guidance. but seems to outside then you think? I it seem, is And policy, Okay. some have does do where follow-on, do legs pretty some much maybe markets end cycle trade conservatism right more what how and now on view think you you inning curious does in this of

Dave Zapico

very They difficult to are predict.

typically pretty conservative. it macro tensions, our have As we global year, about by play year. the trade out, year, a some we the we going growth because is it’s to close this things staying in it’s driven growth moderate feels but and where see we waiting a overall, communicated difficult to are uncertainty, additionally, the of the to the trade comps. difficulties, -- bit are And guys early expect the solid feel we And we but good good very And Asia, but and bit.

Ken Newman

missed and realized in Got savings have I how the the it. much million $XX Last it, am of quarter? me in first been one if from OpEx sorry I

Dave Zapico

right $XX million, the million our $XX plan… on of

Ken Newman

Okay.

Dave Zapico

accelerate and year. bit as through we … that a progressed the

Ken Newman

lot. a Thanks

Dave Zapico

Thank you, Ken.

Operator

with next Stephens. you. question our Thank from And Robert is McCarthy

Your open. line is

Robert McCarthy

more get of it’s rid penny. like can’t bad You a me

end Asia you just terms exactly March mean, China comments, hour. you did some the we bellwether even softness but Touching a right, not about obviously, think like different Asia out couple the of touching in for a made a in coming incremental a octopus So you market, are I some round of since versus the whole, February I And uncertainty, as broad kind highlight of three more comment every it rebounding. are on your specifically.

comments just you your could what going what’s -- So are terms on? seeing maybe in there you amplify in terms of of

Dave Zapico

Yeah.

comp. said, China I as flat. sales down a digits, was roughly So the mid-single -- were against Asia difficult

Chinese done there mentioned had order tied better March. while We so Asia, the slow over low-single Year. input in New I China dynamic the were of of China we the very part for have well the digits to years. similar two orders up, tremendous QX, for in February And to

off in business quarter our some a businesses thing a and bit. Analysis with comps great project our our The other Materials China had were little MAT difficult business of

we at to for the QX for look be had of a whole, you of the China, when digits in full with expect in for orders line So good as the all and AMETEK. year we China to the line X% X% growth low-single with

situation. was bit but solid staying uncertainty global double-digit and growth the past So are It’s but still it’s close because moderating uncertainty. the of from watching that the we of of trade couple there still of for closely are one a that, years, we

Robert McCarthy

about you be about? if should kind more impact me. we there any Two mail ask Brexit, will thinking forgive to One were of wanted that you

Dave Zapico

of U.K. The AMETEK accounts sales. Yeah. for X% about

preparing for We our are Brexit.

not assuming there solution. is So we are political a

sure the to are a -- pounds may the preposition sustain maybe already we that lot in different carrying fall. are until there issues issue. exporting to very not Mainland. make been road, our a businesses with the can’s cause down the Mainland, from of and U.K. short-term the inventory getting in Europe it’s million kicked some about to businesses product in Now We out into that Certainly problem, a of to administrative tune the be to going the of able but but are to probably them delayed delays our we

So be hard there issues for Brexit. preparing administrative again U.K., short-term the solution, a are the but we for may in not hoping from we some and

Robert McCarthy

guys where are, ultimately the what do hit better And and as you And last you closely some where the companies, is compounder. of create go then repurchase valuations a ultimately you environment, question which got the do value, the funding an finally portfolio the think do, have select held as environment, months? given for just obviously private them how six optionality. potential is on a the out work the obviously, make companies, which in prevailing lot about you but a you option companies, know guess M&A public the of on I is wonderful. you heck for and about a I divestitures over think lot ignition How these and But buy

Dave Zapico

Yeah.

Our the generated that’s number At one support to long-term businesses good an priority buy capital a them and buybacks. to for priority. we return acquisitions, end for opportunistic year, approach and capital clear our have make and better, allocation and it’s shareholders our last is of

and we then at amount of the and take be will stock a that Our a move ‘XXs some will modest time. priority in significant deployed this a the significant capital three allocation capital shares the low dislocation back bought consistent good and market a And dividend. for

portfolio. concluded In portfolio, of are your the strategic look year, we our all of other for businesses. growth our completing at in each our comfortable This of profitable review. we we and are of we terms review closely about our annual question we clear are opportunities process is our In with very elements where portfolio that last

review and it a know, on become and review but performance. niche you customer, will markets different don’t you set any single our to comfortable but that a come decision we year we So want share. may to market of diverse technology exposed haven’t go one we that through our we broad let are our strategy completed and is to every We we with do to and focus

Robert McCarthy

your for time. again Thanks

Dave Zapico

you. Thank

Bill Burke

Thanks, Rob.

Operator

And question comes with Graham BMO Markets. our Thank you. Scott next from Capital

is line Your open.

Scott Graham

Dave, How’s Bill. morning, it and Good going? Kevin Hey.

Dave Zapico

Whatever in. -- wherever that

Scott Graham

Rob I the -- quarter saw there. the a right, queue happened but took nap, here, mean napping was don’t was boringly I I comfortable. I Yeah. just what know but was I on

Dave Zapico

Rob one. questions how got got you before two wondering am I and

Scott Graham

in, nine about got Rob, but that’s… think, I

Dave Zapico

That’s said.

Scott Graham

questions good. usual. good He I have more, or believe this not. three is as That’s -- do

are first came second your of this stack the that year. jump up half if on Obviously versus of this thinking look at kind kind But you XXX cadence you So the the end organic half. the also I comps you quarter comp, want organic. understand just obviously basis high to points in at the of

half in would X second to comes are of in So little kind a -- X you guys the of first and the that thinking kind half? heavier

Dave Zapico

early wouldn’t I still much mean, grew read to organically and the high of end it’s we guidance want sales I really. I year at the too in at mean, it. and into be we range prudent. Not our

the So be driver. that will biggest

mentioned moderating we are before, us. tough have but how the behind some and year we more we playing some one growth, As do good nicely comps feeling with that’s driving is out

Scott Graham

for question guess And is One you a both this I Bill. is next. and

after As I of out an know capital working from his year Could good your get first, that we of the as can progresses? kind history, acquisitions thing. typically flow expect in six really you free to some cash acceleration XX months

Bill Burke

AMETEK able were you front it as time I cash think all And drive we portfolio year benefits businesses. capital would well back say after the of for you, of the I getting as mentioned, now our the be heavily are as that longer performance in to across base the half period inside businesses a free of flow the as that improving it’s, weighted is more into the working probably than little a half. from

Scott Graham

Will. you, Thank it. Got

over know And of I the connectivity at looking the thinking that I back are question And Dunkermotoren EIG is but wonder am been EMG. a the question just couple earlier am I specifically, I is you more is kind into electromechanical house. on I There to am they mean an last have the last that segments. in years on to side So been my outstanding. saying versus organics why going and M&A, difference in also M&A, on the profound has of trying that from

like kind M&A we house? where is So not that more of side of the are what’s not seeing on that going on there

Bill Burke

Yes.

very of strategic we aerospace you plan our We we have Dunkermotorenwith characteristics are of out. at major are opportunities. And presence. did look aerospace differentiation, have some together and M&A businesses and set those our in when We seeing at put differentiated last businesses, a year we all the look with looking actively

outstanding So business had quarter. an our aerospace

point about bigger. EIG just looking think little EIG And same is and the size grown I past are XX our there’s and one we So at were of the that house. bit over EMG years, a both sides

desire is the side clearly either do a there to So acquisitions strong on of business.

Scott Graham

Would which want prices is corollary that you you a oriented the aerospace your maybe guess… for what as speculation you is of of bad connectivity on the ROIC or the little higher deals assets, aftermarket well that, a as a my for are just side that particularly as this than that those would are electromechanical to say would house course,

Bill Burke

sellers. the wouldn’t looking that niche is The that. expectations of wouldn’t pricing say I really we dependent and on I that the - market are the say

users from and EIG So in I a part mean, direct is I lot except business. EMG supplier, wouldn’t has for that there big of portfolio. EMG OEM with is EIG product say the a end a difference aftermarket the between the large aerospace and and

So, your are on looking from sides but we really prior and draw both anything I point. wouldn’t

Operator

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

Kevin Coleman

be for you Great, today. a later joining accessed great webcast Thank today. replay today’s a day. a thank And as Sydney. Have reminder, can you, on website our everyone of

Dave Zapico

you. Thank

Operator

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

AMETEK (AME) 1 May 192019 Q1 Earnings call transcript