AME - Earnings call transcript Q2 2021

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Operator

Good day. And thank you for standing by. Welcome to the Second Quarter 2021 AMETEK, Inc. Earnings Conference Call. At this time, all participants are in a listen-only mode. there a presentation, session. speakers' the will question-and-answer be After is advised [Operator be conference being Instruction] Please today's recorded. Vice Relations. I the your Coleman, conference Instructions] over of [Operator would to speaker like today, to hand President Investor Kevin Please go ahead.

Kevin Coleman

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

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

Dave Zapico

and of expectations. established earnings in still levels outstanding AMETEK earnings performance high sales, good exceeded everyone. per share our let operating recovery, we Strong record and second in teams. the quarter. of outstanding and We sales efforts that are Kevin, and the a quality income, you, Thank early of economic in This adjusted outstanding quarter. results as the our orders, growth our performance delivered operating comes morning, reflects to

the orders ended strong strong we year completed providing across driven our strong with backlog acquisitions and this by and business five to also exceptionally a drive integrating and We profile. record are are well-positioned growth, quarter mid nicely, long cycle broad-based The earlier growth. visibility

guidance Given outlook we of year. the results our increased for and back-half for XXXX, and sales have quarter earnings second our

to second turn let results. me quarter our Now,

$X.XX robust billion, record in were $XXX increase the billion, is XX% a were saw quarter. Organic XX% were the currency a the businesses a orders of two broad-based which XX in record over with start prior We points million the sales Our growth quarter. an XXXX. year. impressive up same over quarter in of orders of Overall, up points. the the $X.XX XX% quarter the sharp ended billion, the while from XX%; was organic over year, $X.X period acquisitions backlog added while in added growth sales a to growth, sales Overall, foreign up record

operating also quarter. exceptional Our in the delivered businesses performance

these remain doing fantastic businesses tight, in chains a job is through supply global our reflected While results. are managing as our challenges,

the record margins a points, to expanded operating second nearly operating and basis of million, was XX $XXX over income quarter Second a XXXX, quarter XX% increase XX.X%.

of the to of diluted share, guidance earnings and $X.XX. to range the of up impact with an operating $XXX acquisitions, dilutive EBITDA basis expanded the over up year's XX% This second million, XXX $X.XX margins second quarter was XX.X%. of our of EBITDA operating XXXX, per in the quarter XX%. prior exceptional core of quarter, over Excluding XX% let above margins performance $X.XX points

cash income. flows Our and position in the well $XXX conversion was on quarter, generated the acquisitions. strategic cash to our XXX% operating flow and in businesses was In which businesses second strong in continue also cash flow investing us million, quarter, free

some Both of Group for level. our core the revise Group the group sales quarter. and expansion with Electromechanical up details Instruments additional me million, XX% Electronic organic growth record a margin in operating delivered Let million, were EIG sales excellent Sales year's over strong added EIG's last two recent Organic were income points. nearly margins and was acquisitions versus added quarter XX%, same and foreign operating the quarter second XX.X%. last quarter. $XXX were currency operating up up XX% second year, $XXX XX%,

XXX quarter record was growth our points in in and were to XX.X%, growth added The compared was delivered Organic an versus million. performance. their sales was $XXX XX% up EMG's to $XXX record outstanding particularly Motion XX% three increased strong prior-year period. to and our comparable exceptional XX.X%. growth margins currency business. the Electromechanical businesses, margins period quarter. the basis expanding to with Group sales expanded quarter basis also Growth prior XX%, EMG's operating core second and XXX EIG's EMG's over operating income acquisitions, sales year, broad-based impressive Excluding across a the strong points EMG million, points operating Solutions the Advanced second an

Magnetrol, at previous call, as NSI-MI as Now work quarter. and capital second Abaco the completed capacity continues deployment, our progressing EGS generation beginning of we acquisitions AMETEK's to very cash bolster strong investment well, for acquisition well expected. of the integration during including performing as the in our quarter acquisitions. strategy, we switching these noted first Crank as for to the of flow is Software, acquisitions, are strategic businesses and acquisitions the These and our

of attractive to year. remain opportunities, work of through over the active the Our pipeline to continue and a M&A balance acquisition we robust diligently expect teams

investing of of In Additionally, full-year now customers to we're for to solutions our make research, products, expect second applications. markets continuing to than advanced in initiatives. technology more or of sales. and invest quarter, development X.X% approximately and we $XXX in and million in and niche $XX We the and continue maintaining growth engineering we our the million invested to leading support innovative in investments key to our our remain committed with providing organic RD&E positions

For all approximately investments. invest of incremental million $XXX XXXX, now growth in expect to we

addition our finance and along this sales RD&E, investment to drive transformation functions, help businesses allow our and our marketing digital investments with In accelerate to includes total to growth.

As noted, operating structure. performance outstanding expansion, was with the in the having margin second our costs absorb core into of strong to quarter temporary cost despite return

of higher seeing healthy maintain given the price to inflation, were our a the capturing supply differentiated us we While inflation spread. levels global of to tightness higher of versus we're chain, solutions, allowing levels due price

our initiatives. Additionally, we excellence continue various to see the of operational benefits

expect of excellence operational million we full-year, now approximately savings. the $XXX For

updated backlog, the to XXXX, sales second quarter, our XXXX moving have raised earnings our order remainder our Now, and record the performance given in outlook momentum guidance. again we with for and of our strong along

Diluted the range and For over diluted expected of to XX% organic over per approximately full-year, $X.XX XXXX. up of increase now approximately XX% up $X.XX, prior and we expect sales our an per basis, for XXXX's to $X.XX to sales in now XXXX guide XX% overall of $X.XX are share to share. XX% earnings be the above be to comparable

same we quarter, period in up overall anticipate third the mid-XX% the be versus range the For sales last will year. that

AMETEK's to earnings up be now sales between with exceeded Third second quality to year's results and to high quarter $X.XX order expectations. XX% earnings excellent XX% superb diluted per expected quarter $X.XX, share In and growth last third over are were growth summary, quarter.

performance Our strength the year first-half strong of AMETEK in the operating of the model. and the shows growth flexibility

for economic nature through continues have the the proven over differentiated difficult glad AMETEK us and niche sustainable to questions, financial who diverse growth details and of cycles and to stakeholders. of company market stronger the The quarter we'll drive Burke, be cover some a will of applications it leading long-term technology to take model allowed all each AMETEK's Our solutions I'll turn success to now navigate positions emerge your as of Bill? Bill across time.

Bill Burke

Thank you, Dave.

highlighted, AMETEK Dave sales delivered of results a with high strong in As and quality excellent performance, earnings. the second growth, quarter, and operating orders outstanding

provide the additional financial highlights me for some Let quarter.

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

of percentage sales, in quarter, total period X.X% last G&A year. the was for the same a As X.X% versus

be rate XX.X%, was compared expected in $XX driven on by range the our The second or quarter million administrative XXXX, expected in general rate to higher deferred million tax impact to For was $XX and costs. XX.X% the and effective of expenses quarter be approximately a U.K. The -- up tax last the approximately compensation higher to remeasurement year. same of now liabilities. are associated the

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

well. Our to businesses capital exceptionally manage working their continue

quarter in $XX and the the sales, of million. XX.X% the was $XXX capital $XX expense expenditures quarter of million XXXX. XXX working in Capital Depreciation expenditures in the points million, reported was continue an quarter, full-year. second capital second from were XX.X% quarter basis and approximately for the For to expect be down to impressive amortization the we second

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

flow generate Total the In quarter at our quarter, highlighted, asset-light strong cash a cash equivalents strong million, and $XXX working $XXX flow cash end management. was debt billion, cash of this was strong operating flow business continue free given million, $XXX income. quarter of model Dave offsetting cash to levels free debt in very with $X.XX second businesses As of net the our capital million. and conversion cash and was XXX% was

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

sheet, in which deployed the quarter and strong capacity results end, and addition quarter cash dedication billion approximately of ratio delivered well-positioned financial our support At times our tremendous we debt acquisitions performance we thus to credit in and NSI-MI. EBITDA initiatives. flexibility. gross flow XXXX, of summarize, has meaningful and Systems, At on of The our year. was in our To balance to on to businesses quarter, ratio X.X $X.XX cash acquisitions second in were had deployed completed in beyond. Magnetrol our X.X that our five of EGS, second the generation, the strong with the year, growth exceptionally times, approximately our our to Combined, and facilities the first Software, debt have our excellent quarter the Kevin? of were Remain EBITDA deploy respectively. in existing of quarter world-class well through Crank During given company This Abaco invest positioned first-half $X.XX net our far the the and and expectations. approximately of $X billion to the outperformed strategy billion workforce XXXX. in we for acquisition end, businesses capital along strategic additional the and acquisitions growth

Kevin Coleman

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

Operator

comes D.A. Thank question [Operator of Davidson. Matt Instructions] you. Summerville Our first with the from line

line go Your open. is Please ahead.

Matt Summerville

couple Thanks. or but A pricing the what price actually of talk What you're in was surcharges experienced questions, of realization any whether actions back-half? contemplating could mentioned you of you year-on-year, QX? in price terms your spread costs, and in Dave, you incremental sort about

Dave Zapico

In we two Matt. entire the our portfolio, inflation. pleased continues X% our We across pricing question, was quarter, about achieved price Great and second offset to very points. were of that about inflation total

that So, the all showed XXX margin we did acquisitions, We with those points deliver acquisitions there. front point we and really in all that. And basis from want about had core We up. to spread. XXX of want positive us costs it. we expansion. basis it to helped of a And stay stay that pricing the had And

the ahead plan staying with inflation, with on X% were game inflation, the there. our pricing now, very There is but we're we quarter. of pleased increasing the during and So, we performance the X%

Matt Summerville

follow-up, you July? you in a cadence then And if maybe a speak Thank course what quarter? on of order over experienced can can you read the give you. as you the just organic the And to us saw

Dave Zapico

sure. said mean orders before, we up the as were I Yes, substantially. organic

the trend was month very grew During so the June it month, sequentially. month a And also And a strongest every the our also quarter, solid June supportive strong the month of during month, they and was with July, Sales forecast the and of was of then quarter. with grew every being quarter, strongest and quarter. very guide. the

the in So, we trend feel orders real good about the business.

Matt Summerville

Thank you, guys. Great.

Dave Zapico

Matt. you, Thank

Operator

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

go Your line is Please ahead. open.

Josh Pokrzywinski

guys. morning, Hi. Good

Dave Zapico

morning, Good Josh.

Josh Pokrzywinski

one the only Dave, guess it. material discussion, of piece inflation just is on I side the

there. in You have kind you labor, logistics things a there's costs, of have of cocktail

Dave Zapico

Right.

Josh Pokrzywinski

of should Like being of How XQ for kind watermark to we think as get perhaps a the inflation the when high that of year easier? [indiscernible] relative does or little back-half? the

Dave Zapico

-- it's business, our we're gave And we're it's I peaking I that's of out, that's in so the is front I say inflation total increasing, to total then number staying yet. is terms you, peaked the mean that X%, Yes, it. not in in inflation think just inflation. ready of don't material,

element to temporary think very basis. bifurcate of spiking, the on a inflation I underlying that it's difficult that there is cost happening between an and temporary but what's

So, we're ahead but the we're going honest answer to sure, we're that's is the it. not And business. managing the way stay

Josh Pokrzywinski

bounce helpful. of all of Or the then just in or are recovery behaviors or kind back seems that guys in just end but out. different ways, markets anything classic customer would it it. you on industries sort And you could the Got sort more mix a CapEx-facing This applications of is or terms that be unusual seeing standing comment in of few are the together?

Dave Zapico

what -- cycle kind think this quarter of we Yes, beginning what saw of classic is great. is mid the we're I Yes, seeing recovery.

mid then have growth businesses, quarter, And staying on what it's power of and the following the our I of and up. really That cycle -- automation automation cycle road, us business are cycle and But recovery. beginning the the up businesses businesses, mid where during the have seeing business. kind And mid or a strong. in XX% a in, businesses. saw saw mainly would we're of that's we organic cycle. was of businesses we we a and process power lead maybe earlier we we're picked the long our and were year growth, year, organic our down mid those business cycle engineered our our kind So, think along classic the solution is then think, two And strong even we and what our commercial aerospace so power picked

customers following chain issue, the little to think. the cycle bifurcate and get It's classic the trying difficult rebound supply COVID reacting to So, is I'm we're a from kind what the of queue we all of from feeling really But seeing. and because in that to bit have cycle the a industrial that a has broader confident. longer And years, not well-positioned can the lot a benefit part last we're as invested investment. and strength over underlying five demand cycle, think the tail world I to

kind at recovery, you be. Does cycle bit? I'm beneath our that it So, the part seeing cyclical recovery of the it's COVID the -- help we a little out hitting where of so businesses and this would think classic a really --

Josh Pokrzywinski

great Thanks, Dave. Perfect, color.

Dave Zapico

Thank you, Josh.

Operator

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

open. Please ahead. Your line go is

Allison Poliniak

good morning. Hi,

Dave Zapico

Good morning.

Allison Poliniak

I would business. on that just any in of want color color it specific back your broad comment incremental into investment bit little to is more go is give the is terms just or incremental going, you additional investment Could a it more verticals be spread, to helpful? the much where us

Dave Zapico

Sure.

our up. opportunities with we about That's with the million. and business, digitization in stay the and and a of benefits in other in said, it raised investing development. incremental some that in mean core we quarter, third are several marketing sales areas. our As $XXX is last our of putting million happening, our from products coming the of I the so product customers. was And two-thirds our we're $XXX to new probably that we're P&L. I'd And And want million that's about about best then effort. investment That's in put $X future

capability. depths we're able continued doing working digital doing of accelerating and a the virus, we're We're our investing are and our lot sales force of well, things teams things during motivated And to of and improve to now. customer-facing lot marketing, do around effectiveness. we've the So, a is

but sales digital and is marketing, the product So, in it's space. it development, million, lot of in and it's $XXX a in it's

Allison Poliniak

a just just recovery the market a the of concerns -- you view more then in altered aerospace getting Has little marketing. if commercial And variant. on bit commercial I either aerospace could Great. see general? a or give the of color lot terms we're the Delta your with MRO little maybe that in the of know

Dave Zapico

sure because about not The very happen. what's And we're portfolio commercial is X% variant going question. of that watching Great now. closely, Delta exactly aerospace obviously our we're to

We up mean haven't variant. we from our very aerospace good a seen had commercial were XX% commercial in business yet the I Delta aerospace. And a downturn quarter.

business we than were And market year. Our our year, and OEM for haven't that changed aftermarket stronger business outlook markets. jet the for the our business, our

For our of now, the yet watching with right haven't in but that OE whole still aerospace not digits, up same I we're we change of Delta doing could seen better kind because variant. sure, business. seeing partially and for closely so passenger is aftermarket and staying that business, defense business, the traction stabilized low-to-mid we're But the single mean business than it X% model, it's the happen. it's our in we're a

give best the information that's you. I can So,

Allison Poliniak

so much. Great. Thanks

Dave Zapico

Thank you.

Operator

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

Your line is open. Please go ahead.

Scott Graham

and Thank Bill, Dave, Kevin. you. Hi,

Dave Zapico

morning, Good Scott.

Scott Graham

Good morning to you.

you just quarter in last of add-backs a So, kind the from year maybe costs of second-half? the I reduction second the was temporary and quantify for feel the wondering, were what could

Dave Zapico

Yes, about is year; last answer $XX in million we from that the way best we can about, talked P&L. temporary we removed had the costs I

in month fast-forward the at, end except we're they much during were the all by so pretty came of of they the QX, about But quarter. out the quarter a to travel Now expenses. end backend, ago,

travel, million $XX million we than the or in are the travel in back P&L. expenses. They're all earlier about but largely bleeding besides year, was there So anticipated the slower $XX of in expenses,

Scott Graham

that. on you if would, on me, the math correct So,

we and on will declining third quarter, in So, a fourth basis? but the see some quarter add-backs

Dave Zapico

headwind budget, our from good compensation a Yes, having also be that quarter compensation we're a systems, system. some because from and We're effects, get definitely our too. target add-backs full we'll that so we year, -- headwinds we and be there'll will there's there

second-half will costs the be some So, in the year additional of impact there'll that. that

Scott Graham

your you. you it, Got now? of market sketch like Dave, thank mind giving us, Would right research a what looks

Dave Zapico

doing research start to of It's lot market, bit. is a probably to pick up. up starting to facilities. a market because Yes, well. more the classic the research getting that industrial the difficulty market slow is were impacted than institutions But There's the access

as So, the in inflecting not hanging it's the in well. certainly there, markets. general doing as up But it's market industrial is much

Scott Graham

the more of like on the number And You talked borrow you importantly, look update what and us like the does know about thank you, doing the but Thanks. of call, the can possibility and in terms on does Okay, in the then, of pipeline to more, talked have right in acquisition lastly, of first-half. you look certainly, What Could because, last that quality pipeline. what did $X what billion you now? you -- on you. some the availability. I that the something the close second-half about, thinking? capacity,

Dave Zapico

deal Yes, end in done our activity up end we'd get story. to market, going -- for now now sure, that right active the a of that. very we lot different of of teams properties those part between is And lot a but but the certainly and acquire becoming of there's on no guarantee and finding a gems a are the we year, now. a there's like on the portfolio There's AMETEK

the acquisitions is many great to not acquisition before teams acquire, you times, doing are job. told now, a we strategy our very and As active right it's and we're capital-limited, our finding

comment maybe capacity to-do I'll have that. deals, on terms the Bill of In

Bill Burke

borrow us and Yes, tell only and happy kind banks more, Thanks, lend billion leverage. couple Yes. we give certainly, our to dollars the a of Dave. us That of point, others more mid-twos could than go they're still to would you us. made

even you for underleveraged say company. still So, could somewhat the

think even portfolio our billion, and the more plenty finding we for isn't mentioned, of businesses us I fit this opportunity the think the is that value a Dave this long-term. of available over plenty resources as can do to and to our strategy, than capital-constrained $X right So, to shareholders with generate

Scott Graham

Yes.

you, both. Okay. Thank

Dave Zapico

Thank you, Scott.

Operator

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

Your line ahead. is Please open. go

Andrew Obin

Hi. Yes, good morning.

Dave Zapico

Andrew. Good morning,

Andrew Obin

it its couple putting just I first And of you together, AMETEK a to investments. Just things said, know adding to a sort strings. takes what loosen growth for of are you've question,

the You the among did industrials talk five underinvestment years. over about past

you Looking see your the over need do customers? high forward, for structurally CapEx years couple from next of

Dave Zapico

had could had pandemic. good There recession situation had but growth, a yet Yes, the And there the a we you few could the in timeframe. of where then be. XXXX-XXXX years then be industrial we

think So, we're issues, dealing -- economic that to they're clearly, the current be be could but that this and of outcomes of cycle capacity going there's in. going are chains with are some in. people put supply stressed to I put one that the And

So, from to it's industrial now. I mentioned in COVID we planning bullish than we there earlier, customers bounce bounce. a the bifurcate that's pretty on different And are seeing right long-term and think pretty COVID growth, is cycle -- a difficult the as we're a bounce, way there just but certainly the

Andrew Obin

on I variant region? you. specifically. you something your figure are sort are China, as you're in the then is impact Thank in to Delta Asia, Thank And question, talk China on is there in any but about chain? rate what market, impact Could what you're in from aerospace, but not it mean people people growth that that also Asia, trying variant ask out you. and Is seeing tracking follow-up also if me end of Delta hearing having supply you variant headlines only just Asia, of some Delta about I think

Dave Zapico

And Yes, Asia during instruments was was XX%. in our process automation and had of business quarter the strength many but out. second up And good It a -- we businesses, growth broad-based our a it good was up in pretty pretty stood about Asia, month were within strength. specifically we in XX%. our Asia, China business notable quarter

process our businesses China, in did And very instrumentation well. strong. remains it So,

seeing the been little now. it's China dealing probably four plants. all fact we're not So, regions. in on as going more pockets We're where But have some our press spread solid that of anybody three a in growth with reports issues about the China. COVID understand do or unlike as well except We've operating still in those there's still past We months, right the what's we're it's now.

we're strong So, for XX% in and that the the watching growth your quarter. China us, -- but remains growth the closely, to point, was

Andrew Obin

appreciate the quarter, Great a answers. lot. Really thanks

Dave Zapico

Thank you, Andrew.

Operator

you. next Sprague comes the And Vertical of Thank with from line our question Jeff Research.

go open. is Please line Your ahead.

Jeff Sprague

morning, Good thanks. everyone. Hi,

Dave Zapico

Good Jeff. morning,

Jeff Sprague

morning. Good

were deals coming thinking next you've Just around and accretion the carryover actually $X.XX year about year-to-date, $X.XX so previously this and you and or to $X.XX year. done what think benefit I to into of a

wondering much now that assets these Just betting in-house and does change particular that fully you're down, outlook actually anything in are does and them stand out?

Bill Burke

No, I think looking haven't it for of the good all. that's $X.XX we about in we and a going same outlook. at get be benefit It's XXXX, said, like changed number we us. And it's to

Jeff Sprague

want of sorry, in to somewhere didn't there availability? any Great. you issues perhaps kind own unable the kind their coming place the just chains a minutes issues late, call necessarily I was even customer to down of was then and And portfolio and there up I'm meet that, demand few of supply because but with the where or on back could was but deliver, else the it you supply deliverability chain where were

Dave Zapico

out going all we with are issues the issue an get to of we're had general, the Jeff, to. And had job say that needed quarter, material There are reflects going we us some managing labor execution excellent now, and our the to I'd were logistics the but challenges like that over in period certainly broader be issues materials teams did dedicated the Yes. time. with that in had second business and the and in right we risks. we for and These our what unit personnel. There known guidance on

So, delivery effective job and availability. resources their there. over each that supply from an semiconductor for overlay now. you of comes but day do area a situation now right on a the right business an global where not also we're supply we chains. focus sourcing doing team very or you firm unit on have and has company-wide can it's you the think a big chain, is they're end The looking to secure trying closely us have And up with And delivery at and chip our team

everybody where risks. me in reflects right it world you're second a did but our Whac-A-Mole our think good of known prudent scrambling I that guidance And second-half with get the quarter. is our delivering causes out judgment to game element guide. all job industrial there with And But output now. people is your of an of in in our the a

Jeff Sprague

Great. the Thanks perspective. I a lot. appreciate

Dave Zapico

Jeff. you, Thank

Operator

Thank you. on line Glenn question with the of And our next Oppenheimer. Christopher

line ahead. Your is open. go Please

Christopher Glenn

Thanks. morning, Good and Bill, Dave, Kevin.

I I wanted steeper think I you growth. clarify to of sales rate just highest got, April June. the comps had thought and June would've the from So orders through year-over-year organic got Dave, said

So one what's comps. to there just wanted clarify if steeper on accelerating implied you're and two

Dave Zapico

the and Yes. I I grew may the have orders both month sales said acceleration month, being the sequentially wrong of of if thing quarter. said orders, every but June the strongest highest

means was for both that May that July higher than May, doesn't trend mean strong they're June ready we had and a change; the orders, in to that was So, accelerated, higher April, also. that very

Christopher Glenn

what motion Is of to you front you're just Okay. increasing your And terms end right. seeing automation coming talked changes just controls, automation curious wanting advanced Thanks. There of competitiveness, you particular, had end that there. I there. front about go panoramic are types then heard in architectures. space? might've of into going in I'm the of curious way motion your investment solutions, kind that

Dave Zapico

what also of few doing automation automation some years. and lot the done factory A discrete is Yes. we're heavily we've past invested over and we've

we bases at our their has to benefiting technology And up, change. it don't because customer our and demand now been and the of the position is the as quarters. capability we're strong market, product and better automation So many from portfolio top customers serve ramp for expect our that helping them

Christopher Glenn

Okay. Thank you.

Dave Zapico

Welcome.

Operator

question Thank you. our of with Melius Rob from the Research. comes next Wertheimer And line

Please ahead. Your line is open. go

Rob Wertheimer

Thanks. everybody. Good morning,

Dave Zapico

Rob. morning, Good

Rob Wertheimer

forth. will in bit changes little some industrial that's maybe a if on a if curious and hearing There be automation, if on and coming then businesses, where actually it into. Thank Are customers? breadth based back Bye. an from a little on more out. that whether it I you. you technology just So I'm so flush of focused are or things kind you're the do you bit that's I'm you hearing just a And investment think strongly. I encouraging comment also spend And comments CapEx, don't know question wide have on the may of insight or had etcetera. the across pharma to your curious just go desire you localization industry, medical

Dave Zapico

is seeing. point of more Yes, demand of I the chains developing It localization think people What the we're and Rob? supply was definitely question is your second first durable one the manufacturing the drivers was of

Rob Wertheimer

so Well, are breadth it changes also and whether doing then portfolio. of technology

Dave Zapico

portfolio, so our robust we're seeing part durable, if drive again, grew portfolio, first you Breadth the look of start process really demand. more all quarter. our supply our localization What and local demand with organic it, people It more we're Really strong business. sales go Those definitely chains. with levels the the look MRs, essentially really for let's of largest leading businesses seeing through mid-XXs to during question, orders.

pleased power been And And that that business. on one business the growth power segments related low-XXs lagers up. that. the from in business in about see one about pick businesses and continuing. was quarter. particularly and for strong did instrumentation they're a we the that had and the of well to there, of think great technology really we and ultra our metrology and organic power in XX% business, solutions and called business both industrial measurement strong then was businesses of our was a Again, The you And technology industrial period industrial were engineer growth business. Our broad-based. our up demand automation. benefiting strong Brookfield that precision quarter was up and orders and to with of a our to kind that's organic [indiscernible] a business They our robust time were automation And strong and talked particularly

strong. of all So, those are

really percentage year. teens aerospace a sales good business basis Our versus defense quarter. had The were and on prior up high the a

of about all basis, up So a solid percentage this high across on is were XX% sales portfolio. a Organic segments. teens growth our

not and XX% commercial to organic Allison's our XX%. XX was question I We're digit defense we're all as business an that up our the business up still business, As single expect about to mentioned low-to-mid And changing. earlier, continuing growth. for was answer

the pulled looking defense aerospace I that OEM and doing But of that's say else portfolio, business well. the it's showing an besides is I'd that's, and still it's business watching it we're uptrend. bottomed bottom, that the commercial if outside and one everything at So but

Rob Wertheimer

you. Great, thank

Dave Zapico

Rob. Thanks,

Rob Wertheimer

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

is line ahead. Please open. Your go

Joe Giordano

morning. Hey, guys, good

Dave Zapico

Good morning, Joe.

Joe Giordano

you see sell nature of nature the sales specialized kind marketing investments, you interested like easier in and forward? you in and growth products towards these? change of change digital of the in-person is you just like two of of like your Are Like, of million given do you it less talked it -- was of going finding how I it coming bespoke like how about $XXX business. Is and and like, and your it in digitally kind a like going fundamental products? like be, and a of business there to your seeing to COVID kind Yes. do it aspects the the thirds going out just

Dave Zapico

different is functions of change and of have impacting all there and of our the transformation to some sales business, technology marketing these Joe, digital think I businesses, them. we niche I but that a the applies think and and elements of all is

augmented transformation. lot into of a to and we're a use routine digital remote our the marketing and to There's digital getting of tasks out efficiency service we to e-commerce reality plans that to automating things process the the going clerical demo products from digital So have, improvement.

So do of niches. kind And businesses. across a independent of our our and it's we all all theme impact have of they

or And lot lot area. some downturn the and practices. pandemic focused did learn during what our it making we're that in improving on learned business we a the a and institutionalizing So taking and best we're better we're of we

Joe Giordano

of the of you a changing kind that, that you ahead in businesses, a you Are that? China here? kind the And anything that at anything more least little a then, operating are reflects least the on there bit you're kind at seeing your the of of weaker macro follow-up, in little to way on margins getting of get just recently, seen data, have like Asia that margins mirror kind

Dave Zapico

they we're one anything a not were first seeing been not strong, yet. Yes, economies of we're But very China changing downturn. has the And of pandemic. the out

where I about growth have in have we at that the we But remains on. reports And our looking notable slowing it as economy strong about mentioned, niches strength. seen was I've strong, of some up playing, we're It down, Chinese closely. XX%. all we're activity. our So going there's and quotation particular the probably and

Joe Giordano

guys. Thanks

Dave Zapico

you. thank Okay,

Operator

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

ahead. open. is line Your go Please

Deane Dray

you. morning, Thank Good everyone.

Dave Zapico

morning, Deane. Good

Deane Dray

some of dynamics, on as terms just coming incrementals? Hey, the in temporary higher compensation, as what costs second-half on back for does that in, the expectations do incentive well of some of

Dave Zapico

are core that think the for I have to incrementals in year some coming going into back the the costs we're But P&L. second-half, XX%. Yes,

that related us the of the guide reflected margin are the can the dynamics Deane, So a very in bit, difficult comparison And our remember, acquisitions temporary very cost guidance, a a also, may back tough, tough supply the structure. are our as of during margins we is costs in the second-half chain. down be cautious into bit terms but you dilutive, to in of there's had being coming And QX. our

were margins think I EBITDA over XX%. our

have we comp also. So tough

talked bit are Those there's margin to that second-half, So, in can got reflected we it's we about acquisitions be one-time going all guidance. the there of back be dilution working system. costs our temporary but through a the -- in, the for in some coming costs of

Deane Dray

is think you these a some I seeing supply on do you to for chain Dave, quarter, well to carry handling how the businesses, last? question on your helpful. it said, expected XXXX, this here, you multiple time, comments And key just it last your long conditions and expectation everyone across how That's challenges would But the plays is to today, from in your period think you're what very out, that this price love just you're of hear costs.

Dave Zapico

those it could the That's think that place. last a four semiconductor, chain so challenges. last as semiconductor I element in can semiconductor two, question, little I great specific Yes, three, see couple in capacity moderating But gets put supply of to quarters. longer, bit quarters of to a longer. a but Deane, can broader can to Not go out

Deane Dray

just to more kind are and about, are of we any surprises you that delivery, the working you the carrying And the from it's inventory expected that protect buffer capital? yourself not your and in seeing businesses there. is in But

Dave Zapico

down Yes, in more that in points, $XX the million more basis actually working but inventory. embedded was capital XXX than was about about

teams need. guide time, in we've They they scrimping secure parts So, you the certainly need, and we're at But the that parts operating and allowed it's that that same tough. area. not the the get

oversight, as with So it local corporate we we're our good and now. I closely a us both managing combined a for that is getting But good results. business have within our team, right units said, big we're challenge

Deane Dray

to good Thank all That's hear. you.

Dave Zapico

you, Thank Deane.

Operator

from Thank Steve you. KeyBanc question the And next Capital our Barger Markets. line comes of with

Please Your line ahead. is go open.

Ken Newman

Hey, good Newman Ken on It's morning, guys. for Steve.

Dave Zapico

good to you. Hey, hear Ken

Ken Newman

Thanks. that today? outlook you how back made. is sub capital to I market investments from the you us curious Can your sector the on customers? just terms of remind you comments market big just just wanted And to if for just semiconductor talk the for in touch I'm you

Dave Zapico

talking is chips I semiconductor want chain clear, the for do important but about Ken. that I'll was the was semiconductor I AMETEK. was are market what talking to when tightness, But an the to that, be AMETEK, I supply about supplied market

it's from So the X% business. do of we about viewpoint our it in sales participate of and

market, $XXX little up and market, ZYGO mid-teen our XX% and the we're growth CAMECA So, this doing participate expect level in semiconductor semiconductor research research optics well the market named solid we our because chip particular be and ramp we EUV we're in both the production some the seeing businesses in and and are there be the quite application under year. there areas seeing would strength sales million to

Ken Newman

just curious seeing how year, on investments back R&D us trended to if color And Index new for the on your quarter? Vitality then, for I'm product new incremental any start touching the Vitality thoughts how some that these you And see the just that, give as on Index have are change, you monetize? you the you investments through has development Understood. can where

Dave Zapico

was our Index quarter better Yes, in a Vitality XX%. the than little

to So it put was we And get some a we've place with these our that done. system of good acquisitions have in number.

So in there's put tracking place the all that yet. systems acquisitions the in aren't we

in we're the a good product our opportunities story us the introducing organic general, So and development we same big way, front there's those look can't we together, fundamental niche we in new our businesses strong we a in businesses, also area low And of for we're to businesses, important it's teams, of but as the for XXs, able for both vitality, have that's working is AMETEK funding get at look happy. to we're the have they at because markets for be us growth in pricing we and growing them a our inflation that think stay current number in. leaders products, and

us. So really to it's important

Ken Newman

Thanks the color. for

Dave Zapico

you, Thank Ken.

Operator

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

Kevin Coleman

a Thank you today. day. Michelle. Have wonderful you, joining call our for Thank everyone

Operator

you This for concludes Thank participating. today's conference call.

disconnect. now may You

AMETEK (AME) 3 Aug 212021 Q2 Earnings call transcript