AME - Earnings call transcript Q4 2020

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Operator

Ladies and gentlemen, thank you for standing by. And welcome to the Fourth Quarter 2020 AMETEK, Inc. Earnings Conference Call. At this time, all participants are in a listen-only mode. After the speaker presentation, there will be a question-and-answer session. Instructions]. [Operator that being advised conference today’s be recorded. is Please Instructions]. [Operator to President of It is Relations, Vice pleasure my now Investor introduce, Kevin Coleman.

Kevin Coleman

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

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

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

David A. Zapico

operating ongoing Kevin strong good presented despite the results by concluded everyone. with delivering morning, and you AMETEK XXXX challenges a Thank record fourth quarter, pandemic.

and quarter, turned solid Our our sales of positive businesses businesses. sequential improvements year-over-year saw while in across growth order several the

We operating expectations, our backlog, the safety of quarter, as well and positioning initiatives. well cash extremely These number set to excellence operational our our look exceptional led XXXX. leveraging broad also one efforts The us performance that margins, quality earnings high to ahead employees as in our exceeded drove record remains as we flow of of priority. a

enforce of businesses and safety the to We possible our limit continue practices adjust protocols across to help our spread our the virus.

are provide we and the framework and continues to deliver the and of restrictions, travel AMETEK cautious over businesses in model strength exceptional the shareholder While the in our our long-term confident testament long-term. the success, returns in we and given The our sustainable of COVID-XX to XXXX are and highly performance the ability short-term, was flexibility growth model. strength a growth for to ongoing

the in quarter. growth, point to added fourth a X% points. $X.X X% of IntelliPower foreign also the down quarter Reading quarter were one down return let [ph], Now, to acquisition point contributing results XXXX. X me billion, of two were the currency compared of Sales our sales Alloys of to Organic for divestiture the with and

robust slightly for was in an up million points down also prior and XX.X%, fourth million, record most was the EBITDA to the record quarters, fourth compared in and $XXX.X led of in period. a XXXX to $XXX.X a quarter in prior This fourth $X.X Operating our up quarter. impacted improve from led margins a performance impressive with were the the a share with earnings matching quarter at us XXX billion, diluted XX.X%, $X.XX a fourth the sight record year into last XXXX. backlog providing saw per to the X.XX quarter. book XX% comfortably positive continuing year’s to of quarter we of the record quarter. margins basis quarter operating guidance of aerospace of quarter fourth the our the the XXX approximately fourth This line of income a to of results points ahead were commercial with Order bill sales XXXX. over EBITDA basis and As pandemic business operating for is up by was our

has conversion and cash to million a during flow XXX% quarter, XX% cash cash up net also outstanding business delivered of Our flow exceptional free flow $XXX record the with income. operating

of additional and quarters. foreign me expectations our The conditions. of the the superb fourth while were remained level market businesses of prior delivers operating aerospace Electronic challenging operating X%. million, Instruments solid sequential EIG provide the were EIG of Now, versus the quarter. in down sales improvements contributing IntelliPower X% the with largest contributing Group the line currency despite weakness, quarter sales other in from down performance acquisition sales and prior the for driver group $XXX.X saw improvement. our let Commercial X% year detail fourth Organic XX%

materials operating operating Our Telular while growth sales prior of over the again XXXX. overall points year-over-year the in income a $XXX year the same the also has in margin an increased EIG’s growth. XXX in analysis new expanding decline, record fourth returned fourth XX.X% other and businesses, and basis million the over period a are EIG including Despite to X% division quarter reached exceptional getting Zygo quarter high to

sales with quarter in XXXX, foreign by the Our large the part headwind in a sales were down EMG down Electromechanical driven in $XXX.X Alloys. divestiture points. from currency Organic of Reading XX% were X% eight two million and fourth the Group point strong also adding delivered results divestiture operating and quarter.

was expanded XXX income see points million continued In business automation impressive quarter growth EMG $XX.X generate to to to operating across organic the pleased XX%. for we businesses, margin defense in were Fourth addition basis growth strong quarter. solid and our our operating an

prior free while results. conditions operating year to AMETEK full end difficult XXXX market levels of the margins operating full a expanding to margins per delivering versus EBITDA basis XXX year able and earnings the cash EBITDA and for sales points record This last sales income was with for up meaningful very a a XX.X% of X% diluted year. Overall $X.XX Despite XX% were $X.X XXXX. headwinds the flat billion year basis currency a adding year down billion Organic year. foreign XX.X% and the year were Reading XX% acquisitions truly were down X% over Alloys year. led declined was in performance. the top-line divestiture XXXX for in Operating full headwind, $X.XX operating record billion of flow, Now for record expand points margins from and from and XX X%, outstanding $X.X XXXX. share was the

a did pandemic while XXXX job way helped operating extremely managed As managing In to capital, summary, $X.XX very I'm drive up challenging, cash bill fantastic flow highlight delivered results. working and will businesses level full was year while colleagues billion. through the AMETEK a our which the record of our tremendous proud cash flow XX% of

key how XXXX, Before I elements outlook for model success. for each I us cover and the to of growth certain highlight wanted AMETEK long-term the position

XX excellence AMETEK’s temporary the in XX for million incremental savings, in and year full million versus cost stood quarter, proven million were incredible initiatives. and temporary we of with with an including the in savings. structural generated total operational XX businesses savings structural temporary million fourth million million in foremost, our our out travel savings In And XXXX with and job, doing acumens in total $XX $XXX the and operational year furloughs, First reductions, savings driving actions. prior $XXX pay approximately savings

a modest recover costs. of versus look from add XXXX these as savings economy we continues to the and temporary As the we much to the we back ahead XXXX, temporary to of worst continue level pandemic more expect

structural our initiatives, However, we sourcing various drive savings excellence incremental expect do our operational activities. global across meaningful, across including to

most leader. products or incremental of For to we new product customers and or innovation $XXX through our invested fourth is years This dozens $XXX million and Index XXXX, of new In last solve X.X% the to XX%. our over technology XX% an help of invest XXXX, challenges. Shifting the solutions million new as introduced [ph] launches. that products research, development approximately XXXX in complex from downturn increase investing outstanding enhance quarter research excellence in spend. to engineering, In Vitality In to position X.X% RD&E three expect impressive of product generated our committed the percent over the approximately and sales. we we of led their was savings. global a investments development, Even and approximately $XXX sales a sales remain XXXX, we in These engineering development. full this operational to year million expect

IntelliPower, Prior touch high I on the and critical systems leading the division last and to onset performing we power applications. strategy. Finally, of to into acquired uninterruptible instruments IntelliPower industrial provider pandemic defense reliability, has a mission ruggedized systems for want nicely integrated and our of power acquisition our year, is well.

across was XXXX pipeline by acquisition the markets. pandemic, a markets set a in were improvements continued flow strong seeing managing targets in M&A impacted deal While of are and we the broad of

our number when priority shortly, generation As and with one remains acquisition which meaningful robust deployment. balance provides for has cash our Bill AMETEK us significant our with flow support discuss to capacity will capital sheet combined capital strategy,

the for year ahead. outlook our to shifting Now

While our strength cautious confident the the uncertain and manage in the of and times. in timing our remain the businesses we of ability to uncertainty the recovery, given these through short-term, we're pace and

investments our manage to continue initiatives. in We safely growth and continued while prudently key ensuring businesses

$X.XX and per the the versus to up to of Diluted overall are to XXXX. range we expected year be the For year X% $X.XX to in compared earnings mid-single-digits for up XXXX. be expect both sales to share X% organic

positions share, and are now we of all emerging I that like employees environment their summary, the will work In anticipate quarter niche glad of the to asset-light efforts our X% sustainable Burke, mid-single-digits financial strength confident our versus from I'm crisis. before. Bill. sales economic Bill the hard continued as continued and questions. over drive nature year. to to attractive workforce $X.XX impact the I quarter. model, will we the the and businesses, pandemic Again, unprecedented our low global we thank overall first Then to the world-class to were even a first we'll quarter, will take AMETEK would ongoing down down details in markets, $X.XX the to who of long-term of stronger our from For for success. tremendous we with turn to leading this prior than flat cover of per of the continue manage some year-over-year growth your earnings it be

William J. Burke

Thank you, Dave.

in impressive. the an operating guidance highlighted, the quarter. also performance our record contributions colleagues persevered for Dave a Fourth the year, provide all the were administrative As highlights fourth of year. recognize my quality that for in I had past XXXX. general earnings year some but would was with fourth up and AMETEK thank provide The XXXX we'll additional of significant to prior truly outstanding With of additional to to way $XX.X quarter and their high also like modestly AMETEK I teams financial challenges for and full and million expenses from the the XXXX. quarter will finish

down other percentage the years. X.X% reductions. was discretionary XX% as lower full XXXX costs sales from was both to and a total And G&A For compensation due in year of cost

temporary primarily rate was expenses XXXX. returns difference to from the fourth expected up in general tax due XX.X% including the finalization of was XX% in XXXX compensation. of to up primarily the the tax costs, were tax each The fourth in The in and For years. of quarter to administrative the effective XX.X% due of return be rate quarter approximately

For tax to quarterly XXXX, past either And we assuming tax differ rates negatively the the XX% current effective anticipate and as full estimated stated our dramatically we can year tax between positively be or in regime, XX%. rate. rate this from actual

same expected quarter teams. expenditures quarter, related year depreciation $XXX an XX% expect from continued basis our reported the and businesses of Capital to well. the are $XXX XX.X% down impressive in XXXX including share. quarter points were in the the million for we and Depreciation XXXX Operating working fourth in $XX last full or full million approximately was $X.XX amortization fourth million In expenditures Capital the to be quarter by work per approximately and in year, $XXX amortization capital in $XX working approximately million. be outstanding diluted acquisition reflecting $XX manage amortization was million, after-tax was and for to million. $XXX Our the year. intangible XXX the their capital million the exceptionally

As XX% conversion was XXst a Operating debt up up Redding in quarter. Offsetting gain. the is fourth and cash $X.XX cash over XX%. prior was was record resulting was year flow. cash net billion, $XXX Dave tremendous was in year's the levels. for flow free Full Cash levels increase billion adjusted Alloys a Operating record December income. end income XX% for same $X.XX from over cash billion XXXX Free $XXX flow businesses flow this debt up highlighted our of the continue billion of the record a of to cash year down free year, cash billion. quarter $X.X for at flow XXXX. $X.XX last XXX% flow million free the Total of flow at also was conversion generate of of of XX% cash the also equivalents million $X.XX year XXX% year-over-year period full a last over net set cash flow new cash and

to XXXX will quality our a conclude us Our well economic manage our the liquidity, throughout along times to the ratio ratio of material with enter performed initiatives. liquidity maturities continued To with downturn, sheet X.X balance at EBITDA our approximately billion delivering net a strong challenging This to high businesses gross in in and debt debt to enables support the X.X year-end. very and no year, and XXXX exceptionally strategic in deploy growth was our EBITDA was $X.X earnings times on effects capital environment. debt We meaningful until quarter of the fourth acquisitions. also

Our workforce. and positive, our our financial proven world-class remains growth outlook strong model, position, for beyond our XXXX and given Kevin.

Kevin Coleman

Thank take Andrew, now ready questions. you, we're Bill. to

Operator

[Operator Instructions].

Fargo. with The first question Poliniak Wells Allison comes from the line of

Allison Poliniak-Cusic

Hi guys, good morning.

David A. Zapico

Allison. morning, Good

Allison Poliniak-Cusic

noted of mind what's attractive the the X.X today, the a ending pipeline billion beginning XXXX Has as has portfolio? AMETEK been piece lot XXXX of even obviously Just that the in towards and that there you your to caused challenges. of of liquidity, alter M&A of on you think sort and

William J. Burke

sheet our balance great liquidity our pipeline that feel lever and and and the allocation you a be cash a have very we use really opportunity for mean, remains there's for Allison, question, We our seeing -- flow, a capital That's mentioned as and to strong really. us. as not M&A with And we're we're opportunities. an I earnings. to increase in priority top going to substantial positioned uptick we

of is the working very up You market in maintaining our started but we're the sizes. demand to see happen some on hot, discipline, pent QX, we're deals of all

have AMETEK the we're we a some larger working even small deals at. We We and of some looking of we're acquisitions size ozone. have technology typical have on couple

So, way deploying it on we're our is same I on at would busier capital shareholders looking our been think get the best never we've the and M&A way. to We M&A say return.

Allison Poliniak-Cusic

are that, given guess, view importance within that verticals I just Now there your in have, what's any increased happened? in

William J. Burke

we're those. areas. And, acquisition also looking all certainly all plan We're and where return seeing Yeah, some get properties in we high can business a at we all a an at we're I units capital. think, they available on and come have looking XX places develop of

technology our toward So is I'd necessarily looking right of that, say now. market. but deals, all bias a vertical We're not them at more

Allison Poliniak-Cusic

the cadence back Agree. so that XX%. should temporary half, then of last, about of I coming layer G&A in cost know we we And in back? Bill just you up think Should that being more savings, talked how that on that

William J. Burke

exceptions quarter. year, I'd in that be of They're the a the evenly across back costs some bit little lower effects I'd going first continue the with pandemic. to quarter the coming the say the as we to basically say primarily first temporary small in see

Allison Poliniak-Cusic

you. Thank Great.

Kevin Coleman

Thank you.

Operator

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

Deane Dray

Thank you. Good morning, everyone.

David A. Zapico

Deane. morning Good

Deane Dray

strong like insight guidance cadence there's sequential the to how give and nice, monthly And COVID this time was mean, much the of Hey, finish was uncertainty so would approach into maybe so hear that to the improvement in some you frame the this year. this saw providing as year? to macro different what I us you the what time still guidance,

David A. Zapico

a and able for And cycle us later. mid but businesses those of we're up seeing later discussion. to the developed feel all comfortable and to comfortable and and looking the we we've we're we're going assuming also cycle guidance seeing we're the and them sat created it, we -- have a were you through went as where and And we to tested, are about down short feel And made get times, having and the it markets difficult several to the that execute that were to the and giving in people -- talked us the for plants year. We for clean the businesses we that us it and quarters feeling procedures giving virus and we're and on work, year we so good well close place. the in the January, And days, we quarter and say. situations protocols guidance operate your virus end for there you're we're well, near occur We cycle long your an operate into executing Sure. into operating processes a the and quarter. And seeing for with going we're and be couple confident we're it feel certainly assuming everyone we and a we're was and and back safely. comments couple and uptick bringing we But think environment. feel the thank that demand we trend of are that's able through to allowing up execute got of it to year thought happen processes with that that for pick I'll

Deane Dray

and I effect. quarter seasonality usual back of in the of much how any it's is we're the to in the any but seasonality coming That's is COVID helpful. usual mean, a uncertain if looking at there And just with guide, reaction is first there recovery, effect?

David A. Zapico

QX QX, in Yeah. usually strong in What and that seasonality. us as happens is are our in QX stronger not processed the to that's businesses

of in compensation QX, a a have costs. effect the bottom you you there. you also resetting with along on drop of contribution us and margin revenue some then lack type So that, have in the G&A And have line Reading

And together is add you to mid-single-digits. line $X.XX. that gave we range QX to earnings down all So, our guide the low of and top $X.XX for

way cadence strongest terms the fact year we and also with also And growing part that's the answer grew of sequentially. didn't first we the was pattern quarter a I in you in question. sequentially strongest month typical asked every strong So, your of that strongest year. the got month of had cadence pretty being in of about of month December was quarter us. that. XXXX. a December Orders the with and trend for that the throughout similar And of the the month -- the sales, and The

good. So characterize year over I our support at And January, level of and up guide solid. would full orders ended them that QX then as a in they was sales, in

it And So back growth positive when of trend, where to organic and last improved XX% minus the minus continuing guide, the in the see QX we you you was mid-single-digit was quarter had minus think that completed QX XX%. about then QX, X%. in about low

low mid-single-digit from a to So improvement. minus to minus continuing see to organic you that organic, X% go

the seasonality but business. So we issue, improvement sequential it underlying continuing is calendarization of have a

Deane Dray

looks much. hard all done, January, answered my appreciate a sounds Thank I'm V-shape us. And to like about that I question you of really very also a that so lot it. you in is I getting set. know and there work recovery Yeah,

David A. Zapico

Thank Deane. you

Operator

line our comes Stanley. question Morgan of the with Pokrzywinski Thank you. Josh And next from

Joshua Pokrzywinski

good guys. Hey, morning

David A. Zapico

Josh. Hey,

Joshua Pokrzywinski

to expectation. as the underlying what the the other it know on yourself what margin forward? probably lot touched of the those growth, of moving year with pieces, starts numbers ahead accelerate, the incremental of real you kind to some of or gets know for but as progresses the items, on on a move we margin number just there's as out need we incremental year, to now, small on I start maybe no expectations, chief growth right organic but amongst what and Dave, I is by think of is growth of distorted should AMETEK get kind is that

David A. Zapico

XX you and I cost out it take will to had to fit we're costs the last able have OPEX pricing going million that's about Yeah, On that XXX to we're that And of OPEX of to up temporary about growth what coming margin have a of really stronger And structural combined combined recall quarter, the in we with model great million. this back that that turns talked an got the incremental with P&L the think question. when absorb year. we organic costs and strong back continued the we and top is budget it reductions you to temporary pricing, XX%. we of savings end with the about

Now, includes typically solid margin, the it incremental AMETEK and would have but a number costs. bit a is XX% temporary absorbing the higher all

have we for forecast that be points. we basis the feel the margin margins will core operating think incremental margins we about will up And So XX%. XX about believe be We with XXXX. up comfortable

Joshua Pokrzywinski

just obviously businesses that's of portfolio. on then it, helpful. Got heady the inside a pretty end the markets And themselves, cocktail

participate or for atypical these and of normal that early this downturn of would such in? an and cycle you kind guys to that trajectory some matter out has that call you recovery, markets of being mid that as relative anything recovery given been ahead Just maybe behind late

David A. Zapico

really. Not

military the that. XXXX. We've continue market very think talked been think strong for that'll We us. I has about into

which EUV, seeing the of more the atypical. a tick that's in up are technology that, semiconductor lot seeing A the are people semiconductor. but have tied we that's a is next some in to market, technology We not

Most that mid think it's for recovery demands and behaving low do everything we're general, looks the as in the flat it seeing businesses for bit, not mid-single-digit. That business and flat us. other we're research not we're to the solid would would commercial some we it's a assuming is business of area. during, have are up So XXXX. up long And and in we aerospace single aerospace assuming business going markets the a -- cycle

Joshua Pokrzywinski

Yeah, Thanks Dave. that's great detail.

David A. Zapico

Sure.

Operator

comes from line Research. Thank And of the Wolfe our next Coe Nigel you. with question

Nigel Coe

Good called to what by I'd process, Difficulty] out year and [Technical anything that pick FY China next of particularly sort up be views the XXXX in in your are geography on plant interested sort the morning. Wanted on of you've your U.S. markets?

David A. Zapico

talk good Europe In showing in start about quarter Yeah, were in low had And first, to across China growth. with with with had a great mixed Asia and and particular question. and geographies and organic we seeing continued strong QX. us both Yeah, QX U.S. strong growth I'll really in our there returning grew Asia. we in trends quarter. and the XX% sequential still were automation we double-digits, negative businesses. improvement, up Asia And We growth but process

the a margins think pickup the was there big U.S. and if on big that weakness, on think prior process business. we about than automation. automation on impact were had see you followed, the defense than weakness, When you business really and EIG down picking other quarters, market Defense we mid-teens process other a in strong we broad down based market. the up, the low the So And based about double-digits Europe, broad were as in and we accounts. about automation talk can

we the maintain going are are continue U.S. is going been in we to China thinking, to Asia well. we're XXXX U.S. did down the or in in were really that of park. we've and What quotation And, seeing improvements our knocked parts it was In improvements Europe incremental that except it Asia sequential think activity for continue. we out the strength. bright of but in the small going to so in portfolio So, and Europe spots, that the Asia

So every I'm in pipeline sure the up in to certainly go in if China, strength [indiscernible]. China XX% we're and not we're going but quarter, seeing

Nigel Coe

confident there, And, high, right still you. to very you, different to ROI multiples in of deals, big M&A obviously and multiples is you multiples seen thank about make in what variety are to the talked pipeline, sense how was you the now can you? how regards public do sizes Great,

David A. Zapico

do that's to of we synergy we're and drive so we there's very to mean, able a that. keep able a XX a that doing and confident strong is years were be going The -- yields. that's five than a or happened we're to been or we've thing far, Yeah, able so pretty lot years it I'm more pipeline few to ago. have I

great to synergy capability us, have to I'm and on deploy matter confident businesses we're to that be to returns the improve We a cash disciplined, and going able we're M&A.

Nigel Coe

Right, thanks again.

Operator

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

Brett Linzey

good morning everybody. Hey,

David A. Zapico

Good morning Brett.

Brett Linzey

programs. to come also Hey, navigate bit back to, to guys acquired the years quite couple you wanted done I cost businesses. last the but structural Obviously, of the have integrate a over pandemic,

cost structure where XXXX, in those to from As they you be standpoint? we programs the businesses the structural about on a think continue do a basis do or got need think you've

David A. Zapico

that. million still going synergies. and of XXXX. in And ongoing in savings million we're execute programs million there's costs of we're because to businesses and we're structural we've combining it's that XX And got OPEX that acquisition there's structural savings, XXX think structural XX I in implementing there's

we program. a from there's but ongoing have remember XXXX, So spillover

no way a we have strategic it time the facilities on look plan is we efficient be over and have I So different. at and will more all to XXX take we OPEX, make operating XXXX combine things the and and the advantages

Brett Linzey

other you on Got price your items or realization to supply constraining against are then raw steel, are ability how serve mat a we terms any And be it, freight, XXXX about are price chain great. you question, for via customers? that? thinking of inflationary cost what that pressures And back about that's just and gross in embedding price worry for should thinking the to point that

David A. Zapico

question. Good

of we of X all point. XXXX price X.X was about for inflation the and about total had points So,

in ticked pricing but the a up So year point at bit. XXXX, our actually spread of all QX a XX for of basis

X.X%. it a higher than little So was

So XXXX, for have inflation. we're that than but slightly added to margins and to slightly pricing going higher higher we see X.X%,

and inflation, higher XX it about price think inflation. you are a higher little a spread, little we basis So point price, as seeing commodity a

we are We under got transportation costs, them seeing control. but

in We been in that our costs people chain see have to good we've differentiated the to pricing them and and pandemic. our highly on leadership supply pass able kind we to got to factored And have very very niche of -- we're our markets, the these those of position pleased customer. with out and I've portfolio typically

mean, press our the top now the us I hasn’t that. had in anything terms market in it little issues and are [indiscernible] chain missed any of Now on it. where material industry the people see of are supply like But a semiconductor -- bit issues you of cost that shortages some and there that or a in there's working having been automotive

So, we are manage just and on. issue it something to is working an

Brett Linzey

is as one on fair? that portfolio, say your just that on down up volatility it more the has of is price Reading dampened and part the fair somewhat with And exit prices, of total

David A. Zapico

exactly Brett. right That’s

are on. You right

Brett Linzey

Got okay. I along. it, Great, Thanks. pass will

Operator

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

Christopher Glynn

you. thank morning everybody. Hey, Good

David A. Zapico

Good morning Chris.

Christopher Glynn

sheet ever seen. the ample I Nice have balance think I numbers, might look the most

through that the for entering base XXXX comp outlook with haven’t long XX% In you some went understanding full backlog in minus case with revenue year. Josh’s this So, case guide of implied covered with margin organic time, record a usually you and my kind and question. hedge the you in are

suggests barring significant I of disruptions. mid-single-digit macro bag the in sort think it pretty

numbers with comp want could. backlog to reconcile Just the you the if organic

William J. Burke

businesses mid of orders of placing think the customers a we is the It backlog confident and year have and not see cycle number the so and in you quarter, AMETEK later. for the quarters of orders couple their the just covered we typically getting are uptick quarters long the that customer couple are first for year. is one Yeah, time, feeling I long is

business cycle automation oil are aero long is and gas seeing but seeing the now Our in not it uptick. businesses and an

So the you you there fact up, year, is that add negative four we is mid-single-digits. growth in a negative QX the that have organic have you number and are numbers one them for when and at

Christopher Glynn

that. for thanks it, Got

David A. Zapico

Okay.

Operator

Thank next Scott you. comes Graham Rosenblatt. question of And line from the with our

Scott Graham

the took on entire little ask backs. back cost a does job on morning. Great that segments? you XX add side is the more so supply wanted cost go good the the to and usual chain. Hey, out and if that add to the I how plan maybe Dave into as bit

David A. Zapico

QX don’t the We the I temporary add you savings think example. in back will Yeah, but XX $XX cost I were will left entire million. an we give

lower ramped really that In by is significantly we So QX it point. on than that.

So, we year meaningful -- that and going as not so I throughout to we is go small through costs are it but adjust think the become anymore. will we the they year go that as are temporary

really drive margin savings is improvement. it So the that structural the

Scott Graham

Bill the capital working you, it’s to maybe pretty wondering incredible. way I then for percentage year, the the like increases one think is was this you were going working to what Got would by capital XXXX? numbers and other just go in have

William J. Burke

working did our in fantastic down, have it plus. think Well, seen a XX performance receivables best about as my was you years capital, businesses with job yeah, inventories the XX on taken years I the company,

I continue, well that So know. fantastic. it don’t was Will

and does that. it sure make on to hard are real work focused to our businesses going are We

on there back year, we in full quarter will bit keep seen expect be focused but to the and have this next that So give the be to trying it year. I fourth very at much are levels little we a some

David A. Zapico

Scott And to point free XXXX I key And net us flow for the targeting income XXX%. had conversion XXX% in cash think for we is, XXXX. we're

the efficiently cash XXX% it put to have grudgingly. we're balance to but a going balance some the to So certainly on even we're back on environment, put and, this sheet, we're operating going sheet back above very

Scott Graham

you. Thank one it. Would you Got squeeze more? if in I mind

David A. Zapico

sure. Yeah,

Scott Graham

Sure.

on Christopher's the in there So, year level there for room Is first is share buybacks half number, some if in room in bit share mean, maybe the little time. your liquidity slower a than the in terms seen was liquidity of sheet this haven't know hoping because M&A balance I there how like, that? is of I comment my there, disciplined in you are buybacks you're I for of

William J. Burke

able the be is you, either buybacks we I And going to to on capital cash Clearly our deploy think M&A can't, to number the to one find M&A. really a back way we'll we're get but, or if through dividends. priority

a But feeling consistently way opportunistic on that buybacks. and right we've have I'm increasing been now. We share not dividend

that for incredible haven't a and before. been there's we us physicians a an position level at for opportunity think liquidity your I to point, and at acquisition

the exciting very it's So I'm to me, excited pipeline. very about and

Scott Graham

Great, thank you.

David A. Zapico

you. Thank

Operator

you. Thank

of from Richard comes Your the Baird. next Eastman with line question

Richard Eastman

Yes, good morning.

David A. Zapico

hear Hey you. Rick, we don't

So to the question. next don't Andrew, why we go

Operator

Certainly.

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

Andrew Obin

good guys, Hi morning.

David A. Zapico

Good morning, Andrew.

Andrew Obin

Hey, congratulations on another great quarter.

David A. Zapico

you. Thank

Andrew Obin

Just was something a the around calculated if as down [ph] like there? orders, aerospace, X%. on rates book of sort question about I we number little from more a sort for give we of just maybe could you of I color bill, wondering to market, the I mean, to maybe it's color tried by it sort into back were China your think highlighted, highlighted talk bit but us auto and

William J. Burke

the Yeah, numbers. you I'll give

X%. But X%. EIG and we're Our down And organic organic overall X%. down EMG we're organic down were X% we're down orders

orders at So correct minus you organic had good what and a overall with two. backed was month we into the

Andrew Obin

you you XXXX talk your spending that makes on CAPEX of you, spend CAPEX think how about or where you you shape and pandemic? sense. spend about Thank how way, are into any of a you the Got Can guys on, own just about what lot changed how into form, aftermath CAPEX have you. you will in thinking

William J. Burke

million we -- this on to Yeah, that excellent year. -- opportunities And plan provide we have is going XXX CAPEX are returns. opportunities

emerging We expertise projects different some improvements, and we XXXX in CAPEX, we couldn't travel. efficiency about mid-year, get from expansion people and growth couldn't we talked For footprint there. we emerging our in to needed markets, some to had markets, expanding recall you the in if emerging regions at get markets,

So delayed them. we

XXXX plan and in million XXX original was million. XX our spent we So

X% very a still We're high little we're spend makeup -- and rates little with returns they're efficiency of internal there. have over bit spending of the XX%, year term in make because growth And up projects, projects a going X%. number. other these ended little of is a this we're have XX%, But we and CAPEX in XX%. longer than areas. less there's So of projects projects to up those that bit going of still like we opportunity sales XXXX to XXXX a rates returns great X% And or

the kind want of is that to stuff fund. this you So

slew want that You done. we're a And of have projects getting after. we whole to get

Andrew Obin

you are on And software, anything are you just kind more different what are spending changing of you buying, spending your you're equipment suppliers? on

William J. Burke

I or yeah, of think that software in from there of all a strategy mix businesses. Yeah, But digital think that. there's is I lot driving and it's up a the bottoms definitely

putting market we're that that. emerging the think driving I place is in infrastructure

we the get particularly group are year great this to on a returns got and just we're So of projects, have and we right on in you large done areas those going and them.

Andrew Obin

very hear. much. great Fantastic, to Thank you

David A. Zapico

Andrew. you Thank

Operator

from our the And line with you. Berenberg. next question Andrew Buscaglia comes of Thank

Andrew Buscaglia

curious M&A a morning -- of you am out I out talk this is about the out pandemic, because of to bit wanted -- due I Good philosophy deals. of little size to guys. larger more do other your some capacity the

up you had? that at going a large there do off, -- whatever kind to be you time, are then low stuff deals And that's a you're here, buy the that to down, to after First there's certain more buying assets here sized beaten philosophy sort see you wherever of opportunistic deal that as likely? could medium good secondly, at is of is beaten go

David A. Zapico

of to above. to that are $XXX revenue Right, we -- $XXX deals big. at considered you about our I we're million Those And expanded the when all the $XXX so million It's think looking the acquisition range. see in it's million both. targets, I think can

AMETEK So of be harder not the value. even that would half size the AMETEK. talking those We size bigger think create to about of deals, we're it's the or acquisitions much

growing size we're the of company, a company size So there's bigger but now. smaller deals, the with the

sweet, growth, we're very existing organic So, there's there's fit are each that one that multiple like categories. our And deals I will that sweet said, there's spot, And capital deals close positions a bigger augment on there's technology of very high our us, deals return those in at markets. get to one. in our looking with but deals some in adjacent

we're be to that So optimistic I'm prudent But we add busy, we're capital effective. deploy our and are able businesses very and going strong approach. to

Andrew Buscaglia

minus, percentage you us this think can a And is just remind that, pretty you was it's you what medical of are then what can year a Okay. as what in about you what thinking And you going I like that XXXX? platform for area forward? that guys, as interesting budding know, sales

David A. Zapico

of in sales medical XXXX sales. of XXXX, the XX% are range Yeah,

all are So there. their and businesses there's AMETEK that's area have very of approximately expansion that $XXX well that we million. doing And, like and positions in niche opportunities

space we'd the be So bigger we're and percentage see a medical to like healthcare company. actively at looking that of

Andrew Buscaglia

Thank guys. you

David A. Zapico

you. Thank

Operator

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

Unidentified Analyst

is Francesco Joe. This morning. for good guys, Hey on

David A. Zapico

good Hello morning. Francesco,

Unidentified Analyst

Hey, forward? and your be this do coming in you implications on about to soon are bit can aerospace, what little guys the talk bottoming expectations think a you going out mix

David A. Zapico

lower one profitable businesses. average Yeah, than now. the is cost has an the it's the our the pandemic volume, point is than and is It And of profitable question. first a And more our excellent business. the and more realigning before the structure, company was great average. aerospace job team done but That business right very of profitable definitely AMETEK greater still

volume is contribution to any high cost think we structure. result because so margins So bring change going in we have in the down

fourth including half the talking those pandemic when by About the demand, the We that commercial aerospace airline is we is been aerospace along. The competence and demand year. and up public but a variables space, growth of point the business all to different That predict in predict defense space. in government the capacity And many support, flat it'll saying and things the the second pattern for it's of and commercial difficult impacting still commercial the was aerospace XXXX about raging. business down the about in we've is overriding military see up more we're all think XXXX, very XX% decisions, business there's business flying distinctly our about quarter, business mid-single-digits. down in And mid-teens entire in that fourth is quarter. that be full And in impacted low single-digits. XX% for is thing the to was

going don't business management looking eventually to aerospace pretty be The commercial to conservative at it's team we're we I is outstanding. come is we the back. XXXX. going And think So about have how are in that.

I be and our that. beyond guidance think it's going to that reflects

have thing business. we our done and -- really really the done hard we're right work So the in aerospace

good that the and company. business for margins even to long eventually, poised drive sales will we're and growth earnings So up small the deliver of cycle incremental pick

Unidentified Analyst

much. helpful. Great, you Thank very that's extremely

David A. Zapico

Okay.

Operator

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

Richard Eastman

Alright, you. thank Try this…

David A. Zapico

Try one more time.

Richard Eastman

Yeah, Hey, not we when quick Dave, what happened sure just a thought, talk… there.

David A. Zapico

got Alright, Rick, we I you we you again. now. think lost

Richard Eastman

growth outlook Okay. Hey, AMETEK our segment try XXXX. to for the growth to just core we when reconcile

we're kind rate? So maybe coming a with on EMG, high EMG of growth I And the back X% X%. end EIG to X% of X% XXXX core my stronger, to process presume does is is, question

David A. Zapico

Yeah, gave a mid-single-digit range. we

to between X% and So be to going plus end EMG but is in the the in not X%, better that they're little the But are start year, probably mid-single-digit we range, to for we the a both businesses X%. going when certainly that me -- going that out think both range. And to says X% year, be growth. X% of to X% in

Richard Eastman

a level, math and revenue below at of below the are Dave, other? when be XXXX being my rate both that I segments is aerospace end thought then projected mean longer that's any gas I I cycle, perhaps the business kind of the XXXX and be there would XX be of oil through at the would and guess that there still look to numbers below here, run at

David A. Zapico

is gas for be if you the to a you But, oil lower, gas like us quarter, and positive, analysis in division, all oil business right organic our materials growth is to showed strong way our think now. organic. looks of and and XXXX research -- projected for the at that right that our division Yeah, defense if in was going the where about have fourth some we're now businesses businesses process, it positive

our organic. Our Telular was was business UPG positive organic. organic, automation and business positive was The Zygo positive business

out with year, go half the the strong for in back we some while get we mid second XXXX through not cycle the yeah, our markets, as matter to is that'll will change. and So long fact exposure, the our of of But and XXXX.

Richard Eastman

Dave, defense, enough. when talk you that… And fair is Yes,

David A. Zapico

I we Rick, think lost you your there. question and

Kevin Coleman

we wrap it don’t why up. Andrew,

David A. Zapico

you now we hear I Rick, think.

Richard Eastman

don't it. I understand

defense, to else is Okay, aerospace anything all but in that? that there you're when with defense, Dave, you defense capturing that's speak

David A. Zapico

No, but right. land do all programs have it aerospace based business, within aerospace, -- defense that's it's we some is but

Richard Eastman

the tolerating you. problems. for Thanks again. Thank Thanks Okay.

David A. Zapico

No problem.

Operator

turn Relations, will call I Coleman for you. remarks. Investor now over Thank Vice to Kevin of the any closing back President

Kevin Coleman

a Great, as ametek.com. thank for the a be call replay of of you, have a Thanks our in today's Andrew. great And joining section today. And thanks reminder, everyone may investor webcast and accessed day.

Operator

Ladies and for gentlemen, you Thank you this today's disconnect. concludes and conference now may call. participating

AMETEK (AME) 4 Feb 212020 Q4 Earnings call transcript