AME - Earnings call transcript Q1 2021

Due to licensing restrictions, you must log in to view earnings call transcripts.

Operator

Ladies and gentlemen, thank you for standing by. And welcome to the AMETEK’s First Quarter 2021 Earnings Call. Please note that today’s call is being recorded. At this time, all participants are in a listen-only mode. After the speakers’ presentation, there will be a question-and-answer session. Instructions]. [Operator like Kevin conference Relations. Coleman, now speaker to hand today, for Vice to would over the your I President, Investor the yours. floor Kevin, is

Kevin Coleman

joining and quarter Officer. Jake. for Dave With Chief Zapico, you, Good Financial Chief and Executive are you Thank Executive Vice and Officer; and morning me today AMETEK’s Burke, earnings XXXX for first Chairman conference Bill call. thank us President

will open over the after-tax, section up and release quarter can between turn excluding prepared of we’ll of the the Reconciliations intangible on quarter in Bill, for our our press gain various adjusted on will be be to the now the and SEC. with any Alloys Reading from XXXX or factors making affect our in the the We’ll filings revise results results statements first sale first excluding any detailed and call, course this that Dave. During AMETEK’s XXXX, or may statements. your charge I’ll XXXX the to subject on of meeting discussion the uncertainties which in to of from taken it that with AMETEK references Any call today’s amortization, and change XXXX. realignment uncertainties be site. update may we based forward-looking the in basis, then and found to GAAP measures and results call Investors differ questions. made risk today’s and are of is begin of intention future actual on Web expectations. and also remarks to Dave forward-looking contained cause risks disclaims significantly or adjusted an by acquisition-related obligation A

David Zapico

to at its the with continues first Thank margin orders you, operational growth and as a delivering leading the Operationally, We resulting organic in execution expected in than everyone. sales backlog. than growth recovery, high excellent economy record Kevin, delivered strong stronger and above returned growth quarter performing to strong impressive earnings our we're sales expected earlier good and morning, a are results level, AMETEK experiencing flows. businesses cash expectations. expansion outstanding our and

year Additionally, a acquisition billion far year with sales in of us results and activity, momentum, five the These guidance. with first led our increase notable deploying acquisitions to started on record our quarter earnings a level XXXX. $X.XX acquisitions, orders combined solid we substantially strong thus and full

AMETEK results and for year pandemic. I manage the and colleagues into efforts quarter, work I the difficult testament highly to this again Before employees over talented the hard the dedicated their the a continued environment navigating success thank across in through get for wanted last AMETEK’s company. is the all to we as

vaccine the encouraged remain being ensuring vigilant rollout, the are acceleration are and employees being we our of of health in remain followed. proper protocols the on focused with well While we and we'll safety

billion. led a currency record in last bill record orders of period year divestiture a point up with let $X.XX with orders same versus me Overall, were to billion, XX% X%. Reading to quarter sales quarter year up by the to sales compared and X% X.XX being foreign the quarter tailwind. turn of a up a were Alloys offset Organic up of Overall, were $X.X results. in the the X billion. This organic a Now, the first backlog to to $X prior X% book

was X% flow diluted $XXX operating of margins outstanding EBITDA our to quarter XXX the versus increase the $X.XX up performance over to in led the basis their demand $XXX are first was XX.X%. XX.X%. X% with with to conditions earnings some $X.XX. expanded per an year of $XXX as quarter was over operating XXX% to also points the across the above We $X.XX in to X% of This markets, up are XXXX income longer in quarter a conversion impressive of free XXXX. X% the strong, have share, of businesses income. guidance and many Operating to flow businesses orders seeing very Cash strong cash return encouraged cycle of quarter the margins first prior million flow improved our by while Operating cash net of EBITDA range yet million, million, of quarter our of growth. up and

me additional group details operating some provide level. at Let the

organic quarter, by a of Alloys operating same the was a was sales quarter, a EMG’s organic Electromechanical by expansion. in operating operating strong X.X% EMG’s $XXX X% $XXX in $XXX while strong both modest down point million, Group quarter up quarter basis prior EMG’s income were with in first and XXX Instruments year. XX.X%. Reading our basis driven operating in quarter XXX X quarter with positive sales growth the And compared to $XXX currency reported points in record a for Group Electronic EIG’s quarter last X% operating first first and versus X% over Organic The margin point delivering performance the points XX.X%. and margins sales quarter, driven quarter expanded Electronic the positive impressive was headwind expanded year, sales an up the and impressive and growth X% year's delivered were currency quarter, business. margins Group growth the X million, were our first million, year. groups exceptional foreign to Sales Our a demand tailwind. Electromechanical sales last up the Group income divestiture in up in versus the also record outstanding to organic results the last X% an million foreign was same Instruments tailwind. the automation

to turning acquisitions. Now

we discussed, XXXX activity the As considerably in acquisition to have pandemic. due slowed

acquisition At return balance same acquisition strengthen significant time, improving year. to billion to and further environment capitalize actions our pipeline time, this we demand excellent us of that deploying swiftly to cost five appropriately remain communicated a align a XXXX. $X.XX in with our During active positioned sheet These meaningful the managing thus acted this business on to we businesses protect acquisition far in our very in an M&A and teams our environment to the support acquire opportunities. and structure manner, of

extreme Now, computing let platforms, key with provider vibration. and industrial is me harsh critical high take leading Headquartered altitude withstand Abaco’s used and meet military on a aerospace moment I'll computing largest are to temperatures, Abaco Abaco including architecture acquisition, start ruggedized and of with additional AMETEK’s Systems. applications. Alabama, to provide along on systems mission open and the deals. standards of embedded electronic systems these ever specialized in Huntsville, color defense conditions,

Abaco leading we billion provider defense the nicely serving and acquisition. existing sales, a deployed attractive aerospace and on growth complements million high solutions technology Abaco As applications, expands $X.XX platform. annual has and approximately our of differentiated in XXX

leading microwave critical and our frequency NSI-MI level sales acquisition Magnetrol exciting Today, test leading $XXX NSI-MI the highly strategic Georgia. radio Combined, test including differentiated Next, communications, autonomous the across our their Based addition outstanding systems. expertise solutions Magnetrol’s million, development in XG based food positioned sensors, we deployed vehicles to million an sensor NSI-MI of the support RF diverse Technologies, calibration Their annual we announced advanced annual measurement $XXX and end business. range of we and deployed has a Magnetrol solutions solutions markets, approximately solutions. and these including leading and $XX of set and high applications, and measurement and test uniquely growth of million, provider markets. and and oil acquisition. with with deep to International. specialized challenging wireless in pharmaceutical, level acquisition. XXX test the is form of platform given measurement of RF process broad medical, on Aurora, measurement technologies. are industry has general is of provider the sales technologies an applications and of microwave businesses and and million microwave fit control Suwanee, a industrial a advanced and Magnetrol approximately Illinois, and flow for in on platform, flow beverage continued for defense gas,

for yet capitalize We services. and and to near expanding which designs headquartered bolt-on attractive robotic the headquarters, graphical German is Crank’s general like award approximately attractive medical, the accelerating customized is devices. these to for engineered user winning in demand automation Software Dunkers, markets. an is acquisitions, secular on addition business, markets. highly Abaco, interface And two to forward smart niche and embedded look storyboard and enabled welcome continued the Magnetrol, digitally manufactures and AMETEK Located positioned would solutions to our them of and XXX smaller beverage to food ideally software and businesses, provider market. software industrial In annual teams Dunkermotoren strategic our these Canada, supporting Combined, aligned closely EGS presence the growth sales and AMETEK add and is million growth. platform Automation. Automation acquisition Software, Crank attractive with their EGS Software Crank for Crank in NSI-MI, working with highly Ottawa, in EGS acquisitions acquired EGS also

as of Additionally, a Bill billion they strong still is integrate well pipeline provide proven AMETEK decentralized to flexibility our discuss will our structure in ownership. going us with these capacity the our continuing in we $X.X while and ample early a strategy. in We're And available to support of businesses, attractive operating very hurdle rates. provides the have the AMETEK’s capability pursue to integrations stated of balance line through candidates. approximately with operating additional sheet stages with Each acquisition excellent returns moment, successfully acquisition acquisitions. working

capital to In continued our we investing addition remain businesses. acquisitions, to in committed deployment also on

around to marketing investments. all sales are These strategy. invest including support growth For expect targeted digital our functions, we investments and investments incremental million research of and in XX and of largely approximately in our centered transformation XXXX, development

advanced RD&E allowing innovative our in to continued our markets. investments yield across niche us leadership expand Our to position solutions, technology

million level RD&E XXXX, last our For of spend X.X% for all $XXX our or in sales expect over This is adding before acquisitions. we RD&E businesses spend up on of approximately recent base of to year's spent. XX%

the our for acquisitions, year. full first our strong and contributions remainder of growth solid backlog, outlook along with guidance. the from increased year our our and orders recent the including we've to a earnings shifting sales results in quarter, With Now record

basis $X.XX be XX% to while to over $X.XX This of For expected range a per sales adjusted previous are range on basis. is of to earnings be guidance XXXX, on share which percentage organic $X.XX $X.XX expected earnings high are our the a increase comparable of is from last teens to up per in share. midpoint versus we increase to year's new up single XXXX. an expect basis a sales $X.XX, percentage overall now digits diluted Diluted now high to be XX%

low the year's in range up be to anticipated versus are sales last XX% overall quarter, second the For quarter.

quarter to XX% expected Second per the are second be diluted of to in over share XX% last to range earnings up quarter. $X.XX $X.XX, year’s

each acquisitions. outstanding results expansion, AMETEK questions. to includes quarter of solutions now growth, orders of who of details first differentiated to our completed Growth meaningful I delivered strength to the our set turn guidance deployment. sustainable strong flexibility will serving AMETEK a along positioned quality high the of of Bill excellent will your revised to we the remain resilience These summarize, opportunities, technology quarter. with glad niche To an of and five growth of aligned class Our Then, end the be cover capital attractive With and over margin with and earnings sales deliver the solid take speak the we financial with Model workforce. a markets long-term some firmly it secular will diverse world growth.

William Burke

Thank Dave. you,

growth of outstanding quarter. quality highlighted, orders a with As year I'll Dave highlighted and financial the earnings. high results and provide for the strong additional began by With AMETEK highlights that, sales

First $XX.X expense. expenses $X higher largely quarter up prior general from to million, the due year, and administrative were million compensation

sales, total in G&A quarter. the of X.X% percentage was a As

in general expenses XX.X%, in of was was with now expected which reported the last a and same up on effective XXXX, rate quarter XX.X% line $XX For the to temporary The in adjusted essentially approximately year. administrative period first the return tax are costs, million be compensation. including

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

job working to do outstanding businesses their continue managing Our capital. an

our from $XX operating points quarter, was in just down the the first working working XXXX, expenditures the the by were For Capital front. reported the of work in basis XX.X% million. capital quarter XXX on XX.X%, first excellent teams quarter capital

million. expense and in $XXX For year, we was the to expect Depreciation expenditures the amortization quarter full be $XX now first capital approximately million.

of amortization all or to approximately now $XXX million, be share. depreciation including per $X.XX we XXXX, tax of For intangible approximately expect diluted million $XXX after and acquisition-related amortization

generate management. highlighted, first $XXX free very in X.Xx cash of over XXX% the businesses continue ratio asset-light flow quarter end of the the ratio EBITDA first the was million, our was gross $X.XX was cash operating quarter to income our debt X% $X.XX model conversion was Dave cash of given As EBITDA down debt our at this to quarter, billion, at net to respectively. of business In debt and to X.Xx. at end flow capital strong XXXX. and levels net the were quarter. billion end both million Total At equivalents of Offsetting up tremendous cash strong $X.X billion. cash and working from debt first $XXX last flow and cash Free and was our year's quarter,

active As acquisition we've Dave been noted, very front. the on

under approximately quarter, Also on the first deployed loan $X.XX the subsequent the to we the the end NSI-MI, we to support Magnetrol, Software announced capital our recent Proceeds bank we acquisitions provide up strategy. will following capital deployed in in to and acquisition $XXX the existing $XXX delayed repay to this borrowings Abaco strategic to billion approximately growth activities, with credit a quarter, term far EGS acquisitions and our deployed be thus million first to X.XX Automation. for from entered the quarter, year. under lenders revolving five-year resulting acquisition Systems into on further our total end we and the term During billion million of acquisition the Subsequent facility. Crank credit facility used revolving of draw on of loan

Abaco the quarter. and Following second at the ratio X.Xx be the expected debt end NSI, respectively, our ratio EBITDA is gross to and net debt and of EBITDA acquisitions to to X.Xx, of our

existing high remain financial growth have the cash We continue quarter our Kevin? balance outpaced capacity given talented facilities performance summarize, credit significant to strong support drove We businesses an in approximately poised to with our our flows expectations. outstanding first billion $X.X quality the our for with and To results efforts excellent excellent our in workforce. in of cash XXXX, that of sheet, growth initiatives.

Kevin Coleman

Thank can we for you, questions? the Bill. please line open Jake,

Operator

Thank Instructions]. you. [Operator

D.A. Our Davidson. first question comes Summerville from Matt the line from of

Your open. is line

Matt Summerville

of late? maybe all you year? than the Good deal in better the driven as performance morning. the Thanks. that by out M&A-driven for being versus is $X.XX core could in the expected a change Dave, parse of guidance the How much business and accretion flow

David Zapico

it's driven Yes, Matt. excellent And of That's an question. by mix items. a really different

from additional of early So And QX. we we QX half drove the of an a Really, organic growth It's too then are deal. improved for both $X.XX, our together basis. those our guide have $X.XX stronger two than of that. on that then the we about unchanged And have $X.XX. to have guide. an $X.XX the expected is change And core second

about in the So from core total. XX% $X.XX the from the deals, is way that business, to $X.XX think

Matt Summerville

just price in then were price in Thank of where maybe then And expect at terms spread you. you and at you QX, realization, cost terms the balance what of from and you're of Perfect. year. where in

David Zapico

less price Thanks, achieved very a of inflation pleased was than Matt. It offset a bit X.X% our bit business. We're than to entire more our Total with We inflation. across continues pricing. X%.

spread inflation. intention. X.X% maintaining So And slightly out which the when higher than 'XX, a we expect our with all slightly we're pricing achieve two, positive look between of you to higher for is the

between really strive it's and -- So we'll year. the maintain inflation price highly a driven AMETEK the portfolio. pricing product the of bit, positive inflation nature differentiated it's full both and we building And for by see spread our to a and

these We have leadership to in the positions excellent provide our markets value customers. around globe and

we So can when we them get cost increases, likely more than on. pass

Matt Summerville

Dave. you, Thank Great.

David Zapico

Thank you, Matt.

Operator

you. Thank

Next Deane RBC question Markets. from comes from line Dray of the Capital

Your line is open.

Deane Dray

Thank everyone. morning, you. Good

David Zapico

morning, Good Deane.

Deane Dray

the get I'm And broken us spree, a not word had logjam has supposed it here can Dave, I’m -- of went assets screen I’d this. probably context just context. radar COVID. reasonable? before we on get your give love sure all use Did the maybe and pricing to some these some but You you to been into M&A

certainly lifting a be to because you great don't a context, of a look of was give here. that happening amount short a see uncertainty But us the COVID factor deals So volume just just fits, but often such in of time.

David Zapico

no We've overlay Right. the way managed it. question. It's a then on slowed talked great the surprise pent-up dramatically a an drive that economic demand think in we the many was that from you and cycles. about cycles through recovery. activity to economic and about try impact M&A this XXXX, deal particular We year. downturn I'll last seeing And give it that And quick would

built for dedicated we ways a working year in businesses the wanted well sellers sure four well opportunities. the And for last strengthen on positioned team that we pandemic, through we've X.X up our positioned was pipeline year we we been about XXXX we people And are told we net So pipeline as our deals. over stated, of expanding with on development. you year, working and sell we busier focused as these thought we than of cash you one also make to year, talked be a with just And ever with Look, them. the to And like rebound. cash that to the billion our first were exited balances these And companies for months, sheet. X.X. and debt the we focus balance the in of last the of worst the were our of is during and we we would EBITDA have

aerospace for strategic. the acquisition in companies they're has positions. They autonomous growth with technology for acquired capability, for vehicles, more fit us They satellite communications, like expand systems. and companies, attractive billion defense, five strong perfectly each to excited we XG we're strategy. Each highly areas capability really systems capital for automation software of testing allow business, in X.XX acquired. and And embedded IoT differentiated So in we embedded deployed our our expanding

with global So We've custom of being And acquired. of the companies each of we're they're a going to the really each for benefit benefit accelerate help these from to to we are our efficiencies. set the part playbook AMETEK. of developed businesses going from footprint importantly, that And businesses. happy them

we done. the for able deals Importantly were to get us,

which XX% financial our IRR invested We’re an on are a meeting hurdles, traditional return of capital XX%. of and

important are ensure bunch thresholds for these while strong senior the of businesses, parts level and cash multiple a are Bill into we're pipeline of of So active this shareholders. And about, leader other capital talked And as a can AMETEK, the opportunities our remains like of And that for distributed that and operating acquisitions want to one us. have to benefits AMETEK’s responsible of flow. we is AMETEK we and integrate handle acquiring remaining a deployed model acquire returns capacity, providing on with our of These level businesses. And strong. meaningful there's different strong coming for integration. we of

wasn't all than the about of a over pandemic we're at the end before you of work it course I but talking year. It's happened real felt it hard -- just good the and of about things, year some of So it. other course we lot once. to a greater And hope of

Deane Dray

earnings was increased because have additional question but really is the That's do I can deals? capacity, the And what you've got deals. really I from about helpful. did capacity, see you capital management my management guidance, to answered may the about contribution missed the the And helpful. answer that within question more the this, you And

David Zapico

Yes.

deals the from midpoint rise our If the on $X.XX of and is $X.XX you the company. think $X.XX guidance, other this about from organic operations is year the the

Deane Dray

it. appreciate Congrats I work. all it. that Got on

David Zapico

you, Thank Deane.

Operator

you. Thank

of Next question comes from Morgan Josh line the Pokrzywinski of Stanley.

open. Your is line

Joshua Pokrzywinski

guys. Hi. Good morning,

David Zapico

morning, Good Josh.

Joshua Pokrzywinski

maybe maybe first, think the range get forward? possible, kind maybe a little strategy of that Can now over point the complexion talk Abaco, over to for your that to look kind bolt-on I of about and more we're guess pipeline have consistently time, or said Dave, starting getting just to you the own to pretty the here? of you AMETEK look think that appetite it of guess bit of consistent to of I going with properties that your is the where stick in are you've achievable bigger bolt-ons less the something I out be deals, range sort moving kind deals as with that yourself needle is you large.

David Zapico

we are similar Abaco include to deal Yes, that businesses deploy also in and talked most businesses growth. size. good they're really mean probably smaller that still our that going A pipeline. few every million That X our businesses. size it's investors that doing million XXX operate that Those like are but to are to internal necessarily and ago, that call medium XXX we be on some deals there those And And slightly them, of businesses are become But included let we bigger I’ll to we deals pipeline that our deal is augment that expanding that our and plus in billion range. questions. $XXX were working we range. strategically to know are, million many important capital doesn't years had our then we still them the And will the in core, so a Magnetrol. businesses often. NSI-MI And the about

to So size. think from company those a value occasionally. you're can I company half a in $XXX size the that, AMETEK and the going the us going makes size to to buy sense, revenue now our companies see those We you'll create not think don't you million sizes. a like $XXX buy million those of but that deals or is mix of our of company just see

Joshua Pokrzywinski

the up business, then over moving core nicely order intake it it, like Got picked here. that's seems just helpful. to pretty And

a of backlog. a businesses to maybe or where growth along in otherwise AMETEK tend up recovery, some book-and-turn backlog bit the record day built I you've but has with and one. You like talked cycle up quicker orders than has fundamentally about of seems little than you there the that only have would of momentum that maybe maybe here. expected? maybe Can not a been picked out marketplace develop talk longer is about perception what necessarily It you the history these stemming or guess little out from, slightly there

David Zapico

Right. When organic was you -- bit. a orders I’ll the broad-based organic EIG orders XX%, X% orders was growth company unpack first the a We EMG was and X%. it order had and organic in

it think So That's was mid single we from indication good growth. about raised portfolio, to to single of both see broad-based our digits you orders. high When another and EMG, EIG digits. broad-based

segments, I improved better engineering think look digits; and And single single company sequentially the digits growing that digits; than the automation commercial. overall industrial power as quarter. our market improved grow to but high defense sales mid aerospace and single to we at we expect and digits; defense segment, four with improved single high will low each process high continue

along any XXXX, point is, key very which trend for the will activity profitable properly way maybe and are improvements be small I in out sized about business, But And half going the think up this business you to when that carve for that we trend oil it So entire going and and two long commercial of think aerospace business the will year the gas XXXX, XXXX. second have the businesses, level the current is up the of not really well. we until us. cycle

to seeing in cycle So We're mid and cycle down as kicking the we the really businesses attractive. the going long it have up. pick we're look already at road

feeling So we're optimistic pretty recovery. the about

Joshua Pokrzywinski

Congrats on all Got deals quarter, the it, and that's of helpful. the luck. best

David Zapico

Josh. you, Thank

Operator

you. Thank

from question Poliniak the line Allison Fargo. of Wells Next of comes

is open. Your line

Allison Poliniak

guys. Hi. Good morning,

David Zapico

Allison. morning, Good

Allison Poliniak

businesses, of year of that long that in cycle are to coming the leverage that, operating some just the for maybe the you And could and you orders talk see in you? sort sort based line on with of core mid about expect this

David Zapico

inflation, We're XX core margin good the solid and temporary execution, to of incrementals that's going the back core about strong performance Yes, in see includes points. productivity. all excellent both excellent margins basis XX%, improvements business. margin price the a operating in EMG, had increase into question. And bringing first the strong for that and quarter, We costs year a EIG will

grow we’ll acquisitions margin key So the though margins. A dilutive. is are point

AMETEK reported years, and we will are over them to at the and profitability three the our of hard room we that what AMETEK. be years, are level pretty these to to profitability. we when of margin lower of that's than of a XX% margins XX%, down that businesses have a it's We all level course up kind bit, businesses some do. bring acquire acquire the improve worth So EBITDA, businesses AMETEK couple And with

will the about that's be So acquisitions margin operating with way dilutive. I the think the be business will leverage the core margins on the then reported the -- And positive.

Allison Poliniak

bit with that increase we to maybe slip Got little level you then expect the impressive it, thanks. Would sales. is a about think or it? And working capital, an obviously, sort sustainable a number as at of of XX.X% that

David Zapico

-- we're and receivables the Yes. be come sheet. in support that customers business making going right support we to good see more and some to to move Allison, you're sure got we've cost focused balance be some adding sales back and make going on sheet It expect inventory I on as balance to can all go the forward. our levels would grow, sure the we'd the would to probably as expect that come the growth we're that the back. to Particularly

So really I first quarter. we the in well think did

sheet, receivables job and payments did teams from the and up balance back great the on did I a put think customers we while inventories advanced getting our -- like.

bit trend So to see over the up year. that a was the the a good course but I'd that of balance expect of result,

Allison Poliniak

you. Thank Understood.

David Zapico

Allison. Thank you,

Operator

you. Thank

the from Wolfe comes question Next from Research. Nigel line of Coe

Your line is open.

Nigel Coe

Thanks. Good everyone. morning,

David Zapico

Nigel. Good morning,

Nigel Coe

morning. Good

to it's So all the way, congratulations deal obviously by back want go on flow, -- deals. I the to because

companies, these You got changes health changes in to you gains, be there's you of that source interest seeing pulling tax changes. selling lot in the and on increased yet? an and horizon? companies, maybe family think seen to more on disposables got rate Have private cap tax ahead a inherent trigger of buy with [ph] and interest I've businesses Are some the any

David Zapico

bit this of have that, of looking they're some I that's someone owners Nigel. is and But capital in to a to see some changed, They're suite private they that -- of a little pandemic some access owners stability at businesses things through private to. and what and access the bought, there lot got they provide and we were looking larger and some a didn't they're at that world

macro company years environment, more it's the the driven we're I made consider has think I owners that That's certainly happening couple bit now. from private little in more were that. a of the to is think a do and likely exit they what uncertainty the So going of maybe pandemic, the to uncertainty seeing by

Nigel Coe

that I and sense. of EMG here. the XXs notably range we’re the for then mid of out, pre-pandemic sort And think Reading that moving EMG is higher, is mid do sort teens, XXs. Do understand makes the XX% you in now moving from maybe range, high Okay, think came you margins sustainable? that level we're into but Alloys

David Zapico

our all drove happened, two the part time. XX.X%, nicely have been our dissect were and a record up the parts points And basis margin of on up. automation you for at look and They a period business, and are growing what profitable of business businesses, XXX this at when that margins you both quarter that margins the their very that of firing and business defense cylinders

margins. margins a those is as as really group businesses would I stay among that businesses the mix And to long it's strong, the within the driving EMG good. be expect So

Nigel Coe

Okay. Thanks, Dave.

David Zapico

you. Thank

Operator

Thank you.

line Next of from from Rosenblatt Graham question comes Scott Securities. the

open. is line Your

Scott Graham

Dave morning, and Good Hi. Bill.

David Zapico

you doing? Good morning, How are Scott.

Scott Graham

nice of report. All this good. Always to wake up to type

last of $XX year. in layering bit think you on cost-outs see a How this this within I SG&A. temporary do we're little Bill, million those you So year? about touched

William Burke

think XX cause the I XXXX Yes, that for restructuring, from there benefit XX million and actually into was the was of got temporary structural the last we year, Scott.

Scott Graham

sorry. Okay,

William Burke

going you're second a in of more the of little came bit say you're the those I’d in second come the what all half temporary half little costs to going quarter. they're back second -- the first see year, have And to in a But in quarter, But year, in. in, is back the the in.

the we So look and it. modeled that's how at we’ve year

Scott Graham

listened I nary nothing peep And supply of Thank kind chain. calls press quarter it's release, remarks prepared And your your you on on like this that. the really from and guys. conference you all for I read to and rage a

you is internally could of give what that us things -- maybe in both back first maybe not could quarter seeing view but sort back So what's And as not keeping you're plus happening internally, you? a your of maybe something in fact, that the backs costs, that into again, concern the the half of you up up externally, and could guidance second externally but could add check? the that does in into

David Zapico

materials logistics You're supply are Scott. now. in right The right chain challenges certainly -- and there on,

semiconductor this aggressively. shortages Specifically, team are the working issue attention have our chain our supply and

effective effective an they're global job company-wide it our of overlay and on Our period so an is reflects and we're with known a guidance it for personnel this sourcing, an our And some serious time. we've likely dedicated This all risks. But will team serious us one unit done is be of business and issue. a that issue, far. chain with supply with managing

in half Our think guide it can the a and guidance reflects risks known early we that. nice was it. earnings confident too we because -- deliver we're improve it's the to really second just balance. felt and of the it year sales We But

Scott Graham

throw the outlooks those also question in My on kind your last a their me you've heard question is segments you before. for sense. big know ask segments? four you organic. of went I Makes through Could

David Zapico

in Yes, mid positive color really end single our returned prior A good digits than digits and year. very in and it year across to high talked they're it digits be to for AMETEK process precision growth It overall. high quarters those our the in mid single businesses for higher full than guide versus for little so and orders demand quarters expected. divisions we and growth improving sure. to there. Alter we expect They’re in sales our digits. We're had seeing quarter little the earlier we’ve a research, single process strong was extra organic industrial Organic organic year, the double up up of and now it across digit, In a businesses. And the raised up we set bit were seeing the markets. single original low about the process, broad Analysis markets. also Materials technologies in was semiconductor

orders defense aerospace robust And approximately the The in bifurcation first digits process expectation. the process Year-on-year really still are rates down commercial Commercial going modestly or all look continuing percentage our remained the But effects to overall have XX% is were the there's basis. of cylinders. to businesses feeling So aerospace starting In first sales ahead XX%. a very low going Asia. divisions are quarter, well sales up aerospace our business, with approximately pandemics. in down on our improve. there. certain on on good, fire And declined and a defense A&D in double quarter, sales of for were

organic demand mid year, Power automation strong did of across So prior from digits. to the remained and automation the low as and and strong outlook we Sales slightly year. last year's sales we solutions, prior markets, change of in business. automation for three. XXXX, single And now high their up from we're up particular. sales single other with now China than and businesses that be teens expect digits in segment Very solutions continue single sales year. the conditions our Asia for we businesses not the organic seeing up industrial solid growth to digits for orders. digits businesses all international high first in quarter. we business. Overall, outlook all Reading on first I 'XX, sales of mentioned that businesses, were engineered stronger organic in to across Alloys orders, divestiture industrial single single while were and modestly changed our of were up aerospace and And quarter growth power by for the to finally, up and our and first our as said sales versus mid remarks, prepared impacted in our our the up engineer solution the we mid in expect engineering before, up automation mid like We We growth expect from organic the did overall digit the be sales defense on

single end single high being And you both raised up up EIG digits. so EMG with mid from and digits

Okay, Scott?

Scott Graham

Thank Dave. you for Awesome. that summary,

David Zapico

you. Thank

Operator

you. Thank

the of from of question Next Andrew America. line Bank comes of Obin

line is open. Your

David Ridley-Lane

growth Good was for of This the there is morning. you had Qualitatively, think bit forward in first David precautionary a Ridley-Lane or X% And on pull organic quarter? the were a any in there Obin. those tailwind orders for quarter? the you orders Andrew do

David Zapico

question. Good

have products. engineered We highly

to need. So But want I get macro products current don't to orders their they them. orders placed get in that their think people the sure that the they are get can stocking make people want certainly environment, to customers --

about So customers confident expected. earlier their chain, concerned placing we're orders supply and seeing global than the

David Ridley-Lane

is We've slower. And saw then by been on the trends? trends where other geography. question I the Europe heard have in organic relatively inflection Interested the largest in you your has

David Zapico

in it us, And strength and and our commercial of star mid mid digits with was commercial oil was The and oil gas. All most the and aerospace but the a by were business. in weaknesses improvements the automation picture but decline business in single Really, U.S. good improvement, improvements. Europe aero XXs the same by geographies gas. showed was we areas broad-based for led down our mid digits, driven was Asia up where single process down and

David Ridley-Lane

much. very you Thank

David Zapico

you. Thank

Operator

Thank you.

Research. of Rob Wertheimer Melius from the comes question line Next of

open. Your line is

Rob Wertheimer

Hi. Good morning.

David Zapico

Good morning, Rob.

Rob Wertheimer

up of a question asked supply that question chain earlier. My is the follow on kind was

did maybe of good have yet. back throughout chain the to Thanks. do quantify a out hadn't maximum the chain margin wondering getting kind when just pull about better the on importantly, big, how performance that disruption more the XQ was you've in can any, more point in sense XQ the reached quarter stops I'm get done if risk stuff supply the all worrying revenues and to And out come of Your supply XQ? folks we sort there, you in leaves or as drag. Are whether that stop things you issue. quite can

David Zapico

And going In excellent the are didn't worst going team any good based QX, work working on it teams to we have ship we our of a I of them. chain. semiconductors. inability we but there supply and on full and are to just an have them on job because challenges, the think solve we've and what's did year happening yet, certainly seen on to don't

supply you're with the V-shaped a recovering from there semiconductor or really we're of with issues capability. and effectively, not some with we but We're logistics continue midyear, dealing dealing it global chain it. issues I the XXXX. shortages think chain supply could have think during will prices we good into but to higher the moderate And recovery, a are immune

we're stay on our any doing In it. to top guidance. have best we're confident So guidance QX, in our our issues, reflects didn't we issues the and of known and

Rob Wertheimer

you. Thank

David Zapico

Thank you, Rob.

Operator

Thank you.

Brett of Next question comes from from line the Vertical Partners. Research Linzey

is open. line Your

Brett Linzey

morning, Hi. all. Good

David Zapico

morning, Good Brett.

Brett Linzey

Hi. to versus acquisitions. out specifically? also then growth. it's you that curious very maybe growth And two like three My U.S. area years? business. first defense grow I'm you've with over just It the next looks a question is parse international seen I if that for rate been these know And the an continues platforms. defense of you're what just variety on on could strong to just

David Zapico

questions, great Brett. Yes,

AMETEK. is at to sure to at of when to make have over look were about And four defense wanted looked we sure XX% thing, that make there's And last substantial existing years, you in the platforms, Abaco, focus wanted very, or changing most intensive on compelling processing growth first back upgrades healthy. of embedded in about XX% this. they grew intensive a focus the and feel the three grow we a administration, data we able computing sales through if the The defense Abaco we to mission opportunities of the is very future. DoD on modernization that's because We and and A&D It's excellent. we that capabilities among

over design amassed they've $X underpin years. next -- over wins with comfortable in several the that got also billion growth We the

we all headwinds, grower at positioned past. a those modeled time, any overall of line to good. our top because DoD the funding same recent that's as So the high well think factors. offset in the single teens we’ve digit mid versus But And they're

you The high areas. the environmental in think terms right management this we're of doing higher of exposure first digits a business very in in heating at outside look the business for the and Abaco, still into up kind we there. conservative us. of defense model a mid team year but There's been it And had driving of lot a market. So single growth went now, digits, we And conservatively. our strong will we we cooling the controls, for defense And into those XXXX is saying in we're well we beyond core to got and Abaco, be quarter. electronics going it's in single modeled right But broader we AMETEK’s the and rates. of when think electronics year

we single to the So improved defense business high mid to digits.

Brett Linzey

back early up the even above the recovery? that range, capital optimal available capacity. up we’re velocity Great. pick flex Thanks see on and million that. deals changes improving to the curious volumes in your fact of pick potential for of the you'd X.X And be the tax the just up. interactions opportunistically given are back great maybe flexing fact comfortable that here, to up M&A, and back is But as Just the but

William Burke

Yes, sure.

at spent capacity billion available. that X.X certainly about, there'd if you look we be talked more -- we that If

still Our be leverage that in time. point at X.X would below only

So we'd to there have room from deals along. came additional if flex up right the

that's have not always, it's capacity, as sure we to to be that the all his sheet earlier balance deals effectively, in making those a it's Dave capability touched say, bring that from issue able management in about an So and and comments. on we

David Zapico

Yes.

is not below we're at our strategy Even really well Our capacity X.X, covenants. constrained.

are so Our finding by improve. meet strategy differentiated deals that requirements, we can is good that constrained our

the we're really we're them. not we have to it's optimistic this going we key finding but again Brett, year. can to And issue, that able we return. So do that talking get later And finding pipeline, hopefully, that. That's get a those you be we're deals good to a confident

Brett Linzey

Congrats Yes. flow. and the deal on quarter the

David Zapico

Thank you.

Operator

Thank you.

Next Joe line question the Cowen. of Giordano comes from of

Your open. line is

Joseph Giordano

morning, Good Hi. everyone.

David Zapico

Hi, Joe. doing? How are you

Joseph Giordano

Good.

So there. you guys chain a touched supply job couple good of doing on are we and times a

there and the not existing it stress the potential Like that, you new too embedded how went framework things through comfortable these bringing and deals, in that and on the supply computing you or weren't you you pop all requirements things when how did curious that do when about get can your diligence into problems? Just like you get chains your think comfortable businesses, that I of much?

David Zapico

Yes, time that's they on their in they question. spent and obviously XXXX. a -- a great particular, And all And based on their that. on have committed for lot of questions Abaco we plan our have order

an was it and pushed responded, of it our area we So focus and they heavy diligence. on

the the You were have good. business. that very supply with by well business, to chain access team, full understood And but don't to deal they Abaco in it's we're I positioned the think issues that

Joseph Giordano

like now think opinion two do And when AMETEK a think your Are forma, in We transparency about pretty getting the company, not they're providing we to or adequate segmentation I how do pro have think about the they large. give maybe about into got structure? more overall we structure? but total to new segments, you guys work,

David Zapico

we're about new four We externally. under got sub-segments segments not structure. Yes, the the reporting thinking two a

is power insight And is provide and XX% is XX% pro have in of pro about EMG. about which of And and we and XX% EMG process, about of industrial forma. Aerospace company EIG and company one-third. we is disaggregation defense solutions the into about of of is company. XX%. was XX%. is forma. the revenue engineering the and about company Power automation industrial about the size So the two-thirds EIG which

with the few think is years. So this going and for we're grow next And us go it. to comfortable we structure let

Joseph Giordano

guys. Thanks,

David Zapico

Joe. Thanks,

Operator

I turn the now Kevin like call closing Thank questions. to to for are remarks. further no would back you. There

Kevin Coleman

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

Operator

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

You day. may now Have a great disconnect.

AMETEK (AME) 4 May 212021 Q1 Earnings call transcript