- Earnings call transcript Q3 2022

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Operator

Welcome to the AMETEK’s Third Quarter 2022 Earnings Conference Call. All participants will be listen-only mode. [Operator Instructions] After today's presentation, there will be an opportunity to ask questions. [Operator Instructions] Please note, this event is being recorded. I would now like to turn the conference over to Kevin Coleman, Vice President of Investor Relations and Treasurer. ahead. go Please

Kevin Coleman

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

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

Dave Zapico

successfully in execution, Operationally, offsetting with and the increases, Thank you, leading quarter, results expectations. performing above Kevin, outstanding and margin earnings in our impressive price are with our exceptionally third record everyone. good sales expansion. resulting delivered to growth morning, inflation stronger-than-expected businesses AMETEK well and operational

provide announced organic our backlog acquisition demand more of Navitar we energy precision and strong these electric this details the to markets, continued billion. and will two a businesses, and record of seeing also and growth leading applications. broad-based testing power morning, renewable grid diversified expanding high-end our in acquisitions optics shortly. And across the RTDS order presence solutions I niche and $X.X are Technologies, excellent in We impressive for on

results in our the earnings for and outlook fourth are our for Given quarter full quarter, the year. again we third increasing guidance the

Now, let our results. turn to quarter third me

$X.X was robust quarter of billion billion, operating record operating margin at up of were XXXX. quarter, period orders ninth same a Organic were remains XX%. consecutive group. end the was record the third sales in up quarter Backlog positive a strong record the while book-to-bill. foreign up an expansion a headwind X% points the income $X.XX our one Acquisitions a with quarter, point billion, quarter. book-to-bill the organic XXX in XX.X% end sales approximate Operating up XXXX, also X% our in were XX% each over a markets niche the quarter in Third basis increase margins Demand in over million, currency $X.X was with from quarter quarter from X.XX, the solid across of four-point $XXX and year, growing approximately in was while added XXXX. the prior

diluted year, XXXX quarter of share, record This our $X.XX. $X.XX the above ability EBITDA third record a meaningful our of range was of and drive $XXX of XX% to differentiation XX.X%. earnings to the reflects flexible up of with a our a despite environment expansion million, model. quarter also in of technology the margins Our to XX% led margin the performance EBITDA inflationary over the and versus outstanding record operating guidance solutions up per prior $X.XX

Now let some details me operating provide the level. additional group at

businesses year. for broad-based the were Management XX% were businesses. currency performance Process quarter, $X.XX broad-based acquisitions strong with headwind. Precitech Organic in Group Electronic and with our from a was Instruments Rauland, Growth X-point of Thermal strong continued EIG X% sales Electronic TMC Instruments Sales from within approximate by particularly growth. again the billion X-point up the across foreign last delivered more Group than First, Electronic our offset operating and up with Group. Instruments being an The growth third contribution excellent quarter our

income million, prior were million, year. excellent the with our organic X% with record Third up Growth basis the EMG's XX% up headwind. margins quarter the quarter operating a and operating versus Electromechanical year. operating performance the was growing XX sales exceptional, foreign sales points $XXX.X versus currency the were sales quarter, XX% of results. in prior from third was growth XX.X% four-point year, income in was Group record XX.X%, at $XXX.X the up our prior operating in record And third EMG up were quarter to million, and quarter, quarter environment, the record the The basis macro of uncertain drive year very third XXX to impressive in margins margins all period. expectations. allowing an third year. up our a was broad-based an points quarter businesses EMG's prior meaningfully of a performance XX% manage versus EMG's quarter the prior Overall, compared operating delivered earnings businesses. $XXX.X and ahead us outstanding across our the in expand

to switching our Now strategy. acquisition

We -- are both strategic markets. the our secular and expanding strategic in AMETEK, businesses acquisition with acquisitions attractive very presence growth two pleased businesses. are and of excellent Navitar RTDS for announce to highly highly Technologies

systems, a a provide applications medical critical including systems excellent includes and Zygo starting business Their with take sciences robotics, fully automation. acquisitions, on our several fit across semiconductor further around cameras and imaging color and comprehensive of complementary strategic and vision cameras, and moment technical unit research, solutions additional provider Navitar capabilities these as their software. sensors, me leading let optical for product and optics life Zygo's an both Navitar is suite offering. custom markets, Now industrial Navitar. of high-precision, optical solutions expand optical machine integrated with to is

attractive in New solutions markets. was is Navitar and based optical from to benefit privately Additionally, high-growth Navitar for across business, growth a demand York. in Rochester, held growth precision positioned well the is

generation allow RTDS test electric the solutions and renewable help and renewable growth real-time used storage. prototype, to capabilities, and held grid, systems while electric RTDS broadens Their educational Canada. testing The energy costs. RTDS a power space. testing simulation of Power in performance provides and solutions businesses to engineers applications. simulation digital the and by grid distributed modernization in acquisition to Winnipeg, Instruments of role privately and simulation accelerate institutions RTDS energy close-looped our exposure power the our of key testing systems development research the Technologies. simulation is switching cycles are energy and Now utilities expanding the electric development product networks and including based energy, RTDS' well of as infrastructure, to playing verify decreased renewable and supporting drivers, in instruments rapidly power as life and the and grid secular the

are deployed family. sales. excited to in approximately approximately acquiring the We Navitar very million annual RTDS We on acquisitions, these $XXX welcome the and to $XXX AMETEK teams million

the we and Over deployed eight capital acquisitions billion acquired two past years, $X.X and more businesses. than in

pipeline remains solid. Our acquisition

a significant deploying have and financial strong and acquisitions. balance to in We capacity sheet look strategic capital remain on active

ensuring continue sustainable In positioned addition to acquisitions, for growth. AMETEK focus strategically is the to long-term on recent we

and of our new presence, to investments support businesses organic accelerate growth businesses growth and help are adoption initiatives, across growth driving Our digitalization strategic includes product our making growth. broader development. This including

approximately in For expect all support of initiatives. XXXX, these $XXX growth invest million we of to now

teams. each the quarter, efforts the efforts these from In results great have a the These seeing third over and long-term. record from introduced our years six quarters. new over both are short-term of Vitality work last was of in the double-digit level organic great for reflecting growth sales past lead three to our We helped sales XX%, the products Index,

the Now, turning outlook remainder for of the to the year.

confident quality to environment, our through and of remain short-term, the in the our manage the While highly are challenging in dynamic these we cautious ability macro times. businesses given we

earnings balance again year, third and Given outlook increasing sales the the are for our strong and our results of quarter guidance. we

increase be This to our is full an to $X.XX For for now approximately to overall earnings share previous share. year of expected diluted expect high and single-digits. the year, organic now XXXX. be XX% we Diluted XX% in prior $X.XX of per up guidance up of per $X.XX, $X.XX the sales our to range range to from up guidance versus are the compared

earnings expected allow sales challenging to to Bill well guidance mid-single-digits last and For of in evident our expected will far the sales We The who growth. for versus same prior of AMETEK our $X.XX We year another $X.XX will to through conditions. quarter will quarter, high be orders for margin X% diluted now global to strong I thus Burke, earnings strength cover year, quarter. the take long-term the continue we to will the to excellent X% AMETEK your quarter, details and year. model some up a be period had positioned to questions. then the is and of the and are compared performance, fourth this delivered level per of strategic To increased to up talented remain the expansion, the fourth robust continued businesses. glad our results, operate two at year Bill? acquired financial growth, it are turn over summarize, and share, record to growth range workforce market overall us be in

Bill Burke

Dave. you, Thank

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

for additional financial some provide the me Let highlights quarter.

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

up year, quarter For down the sales was third X.X% in expected XXXX. third of levels expenses and X.X% rate The and the sales be general tax modestly in are versus effective administrative to of approximately XXXX from in XX.X% XXXX. the full from of quarter XX%,

sales. $XX and quarter in capital tax dramatically, in quarterly as million, approximately third For the actual estimated the in the year Depreciation this were $XX positively for can full expenditures XXXX, differ about anticipate or $XXX of or rate. either was be amortization negatively our we've stated we expense Capital approximately XX%. expenditures to the million be expect from to And past, million. X% quarter and we rate full tax rates year effective

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

is quarter, at times, the Total and gross billion the and was debt-to-EBITDA quarter our of net end debt income $XXX $X.XX of cash the cash end of was the debt from $X.XX was Offsetting this from X% times. generated conversion in Operating the Free quarter. was strong For cash year flow to million the flow the quarter versus free $XXX flow flow cash X% of up quarter, of prior in the third operating sales. million, $XXX working XXXX. up quarter, cash and capital At net cash X.X billion, XX.X% levels was X.X third third million. We debt-to-EBITDA was down XXXX. third the ended of XXX%. ratio equivalents at ratio

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

acquired very these $XXX of During acquisitions. the strength capital and third quarter, to Technologies. RTDS quarter, million the Navitar we deployed well cash two we the We Combined, flows. remain balance on subsequent strong acquired end approximately the and to given positioned our sheet deploy additional of we third

material XXXX maturities no leverage. levels due have debt until We modest and of

continue capacity sheet. strong have a and We excellent balance to financial

Following growth XXXX. billion our months support our summary, through and of over two has of to business cash $X have existing nine recent and we first the exceptionally third our acquisitions, initiatives. well still quarter in In performed credit the facilities

for our the workforce. positive, position, growth Kevin? given our year financial remains proven world-class model outlook and of Our the remainder strong

Kevin Coleman

Kate, could you, we lines Thank questions? open Bill. the for please

Operator

first the begin Summerville now go Our from question ahead. We question-and-answer D.A. session. Please of is [Operator Instructions] Davidson. will Matt

Matt Summerville

could Good be type for about follow-up. canary lack then of saw of and bit Dave, morning. macro talk region you I word, a a a might have environment? you telling if what, organic the better your maybe geographic you the about performance anything, businesses little Thanks. by And

Dave Zapico

Okay. Yes.

balanced Process geographic aerospace broad-based businesses. performance notable our the up businesses. up in The strength really Asia process had growth XX%. mean XX%. about in business. notable very all We the was it across was in the process geographies X%, up was our broad-based in storyline, and strength US growth X%, And Europe US automation our strongest, was was Regarding I and up notable strong there, growth.

a canaries solid no So, mine the Orders were growth, for strong. strong are geographically very Sales in balanced. and regions showed coal broad-based us. all

Matt Summerville

price in could it. realization thinking sort a ratio your of then, what XXXX? What was And incremental Thank we price/cost actions quarter? comment Got and how third should like Dave, price look maybe on bit your for little be about the you you.

Dave Zapico

about our inflation third the was inflation In Pricing quarter, continued was X%. more across pricing X% and to price our consistent than was and about Yes. offset the portfolio. very

points. the basis our And of niches. So of we leadership expect positive approximately XXX we basis to had And a and QX results our inflation product points. speak highly differentiated spread price portfolio for the a spread in nature XXX similar position of

and talk I inflation In terms expect we of to do ready will a with go philosophy will going year, to pricing refrain XXXX get reviews that in XXXX to each and to operating that, price next an until able But from businesses. our say with capability. from we bottoms-up really be about through our not we of next offset year. -- discussing inflation we're

there's no but it's ranges yet. and data not we So, positive the be year, don't to think have going next

I'm it answer continue on good really that question, off going hold in QX. and to that your performance we Did expect But So QX, pricing one. Matt? on to in

Matt Summerville

good. David. Thanks, Very

Dave Zapico

Sure.

Matt Summerville

Yes, you, it did. Thank much. very

Operator

Wells Poliniak Allison from Fargo. The Please next go ahead. is question of

Allison Poliniak

Hi. Good morning.

Dave Zapico

Allison. Good morning,

Allison Poliniak

a talked you Dave, certainly -- out bit some caution there. little So

really are orders strong. Your

Just think AMETEK's Just to how relative and position entering there? any perspective downturn your thoughts a cycle of more you is next give maybe past this relative maybe importantly, maybe prior cycles?

Dave Zapico

Those I I questions. are terms AMETEK; of strong. mean our great underlying remains I demand the think think in --

As broad-based. really Matt's It's I question, weakness yet. not seeing answered we're

are -- orders went major healthy up organic We're strong. of organic I growth. groups Both just strong. had through. world both positive X%. the groups all are It as a in Our regions They growing was rates growth were

we so a feel and about we record backlog. that, the quarter And with good ended

you ago. growth automation, more our is to differentiation what's organic out good. relative continued forward to And And like years see is was than stronger that in absolute in that portfolio power. or think talk it our both is performance, growth to we in better recent market I seven and the playing attractive about technology, we happened, six if And So acquisition our give we're a examples. in shift incrementally the of have couple -- about portfolio and portfolio our growth I'll without way do delivered much the some as we've going think sacrificing is you markets our And healthcare, are you because growth really we've improved along picture, it big shifts And exposures think. This shape to XXXX, an for exceptional of markets, renewables. us. attractive path. years our

portfolio, XX% healthcare six years Our ago. was it about

six part Now, defense, was it's Aerospace years business the and or was seven double-digits XX%. of it ago. about it -- about low

it's Now, high-teens.

to about Our X% automation business went from XX%.

as So years of more and flip a good X%. portfolio. side, sales our than XX% on improvements about our the And in these more all total those six sales like areas and businesses percentage cyclical right now, And oil gas combined, ago. were metals, of are they

So it's we and any it's kind that we in to portfolio, we now the performing about environment think into. perform run economic good going and feel of

Allison Poliniak

line is a least AMETEK AMETEK better? I And relative with Great. any know on -- margin it Could That's Thanks. just in of just the these color helpful. the then the on acquisitions. little of acquisitions core? at performance growth. And said maybe are you Navitar, to you give on color sort bit high growth more little a

Dave Zapico

right. Right,

going the the high I -- are range. to single-digit double-digit think both to grow acquisitions low in

And both both very So was they're times. good blended businesses. acquisitions XX The growers. are multiple about profitable

each excellent backed has with So each both technology profitable, perfectly to growth very grid in well by of vision, growing the RTDS that exposure price engineering a from expand these there investments and sciences, the made our excited fit optical market. modernization renewables to the businesses niche They're differentiation machine positioned and presence each electrical in We're capabilities. robotics. And And very high-growth in is strategy. companies, leaders positions the being acquisition with power is and markets, have Navitar attractive markets. our really to paid. strong solutions, in they are fair life excellent benefit

good been I'm we've businesses portfolio. in So glad just have time, for working on them to and of these the period really

Allison Poliniak

Great. Thanks, so much.

Dave Zapico

you. Thank Okay.

Operator

Please The is Capital go Markets. ahead. question RBC next Deane of Dray from

Deane Dray

everyone. morning, Good Thank you.

Dave Zapico

Good morning, Dean.

Deane Dray

We far the earlier key touched more maybe just take methodically markets. but bit us in on so a the through questions, end it

weakest strongest were or from from we'll kind aero strong. you there. Thanks. go take of the just Process, like the and Sounded can But it

Dave Zapico

solutions. growth growth across similar mid-single-digits businesses up Process sales take to power for Then, our was in do our and all was for strongest businesses. Roland growth we strength that quarter. Solutions. we and sub-segment, said & expect high And percentage The quarter our Dean. growth segment broad-based. XX%, The also. now we strong sales, digits, be be in organic notable of to strongest And up a with Very across to our percentage And power second expect I'd balanced XX%. approximately on Healthcare Pressitech Organic organic had year low be grow you third basis. fast Industrial full my prepared XX% And Power process is both a third business, the Automation XXXX, the organic single-digits, TMC now business, glad thermal The -- grew remarks, sales up as They each programmable the a approximately business. quarter. instruments double Process. strong Sure, fastest saw now Engineered to with management that. & the a the sales to our low from I that sub-segment & expect Engineered to teens growth up across the segment. in really basis I for that it Automation up up up across particularly XX% was on We for

nicely. the stronger across in in grew to sales and business A&D on -- the mid-single-digits demands business were quarter, the up about growth XX%. than sales business. And for from defense business strongest strong, for to growth. industry. around be in mid-teens really I'll Defense were were year, Defense company, strong by with a Aerospace sales the were Aerospace expect full in we our single-digits underlying OE, quarter. high aftermarket aerospace So up the Commercial jet And sales Commercial low The walk to commercial driven Organic that & talk jet. organic was Dean. the aftermarket the high our single-digits to third That's up single-digits quarter. And the -- for we that percentage up basis businesses all rose be defense & a

Deane Dray

margin customers of In times idea lead in bit, the That's to you behavior. in get terms share fabulous. the to bit. buying of put supply cases, any there -- kind How with there They just at come normalizing changes us and chains give as cadence we've of will a the are quarter in don't customer have the about line. to any a seen the in have orders orders? bigger maybe just of Is some change

Dave Zapico

the be input you're XXXX. about, start solid supply position showing more September our due in to the the dynamics. for Right. Yes, orders coming with I We we'll We had I'll I to underlying to normalized about it, strong consistent to think that moderate good comparisons we fact backlog are with cadence. certainly the in our into our talking outlook for orders return strongest expect strong with September. believe and our as that a to an in that factors, and with each had a excellent month ordering very patterns October a results -- the but enter be we matter, being even orders. about customers these And our difficult expect order more orders chain way placed And do performance. we running the And quarters. question due the early

Deane Dray

you. really Thank helpful. That’s

Dave Zapico

No Yes. problem.

Operator

go Pokrzywinski Please question is Josh ahead. The next Morgan Stanley. from at

Josh Pokrzywinski

morning, good guys. Hi,

Dave Zapico

Good Josh. morning,

Bill Burke

Good morning.

Josh Pokrzywinski

maybe about some extra last chain time should than isn't think kind just we to question backlog starting want supply because your guess the for improve year? you of typical and what anything today, convert think of really more would getting really you it? of of more cycle, of Dean's down next about levels frame sort kind I pockets could last being we With comment of long backlog side Dave, the amount entire and I business supply from how is are the where to else, this you say follow-up backlog. to driven on

Dave Zapico

That's think -- one a the annual were sales it that I few you, back it, help our in good about question. may about a XX% if backlog. go way years, you way And

We XX% So now, have about Right had that in in year of backlog. more XX% sales was a annual than of a typical for little we backlog. annual us. sales

we because there. there's XX% supply had order changed, place had have really and So visibility strong patterns prices. a inventory and of customers protect or And because think and customers that's difference input have we've the our chain I that's why the ordering to of in our we solid with

went think that's the XX% of of that the of you. of from sales kind helps sales, increase backlog So, annual about XX% and about way it, annual to I

Josh Pokrzywinski

real That starts and should of well below is think time? with I guess how slowdown. can't demand backlog? of in So guys where trend in associated bit much? to couple between maybe in of a pull a book-to-bill you sort let's fungible pull able have quarters specific little helpful. we that dates it say, to a does for you comps it Or one as that really of Are

Bill Burke

through it a XX it of balance XX you the into ship I in that you next could be -- really, the over to you But a backlog will there'll be Josh, there's say what's flip next the at coming look shipped majority months, of as mean, when due large year. months would I'd almost well, small all great it, portion we at Yes, it of the get XXXX. have, of it look next -- at look over XXXX, of the if you portion

Josh Pokrzywinski

guys. Thanks there. it leave I'll helpful. That’s it. Got

Dave Zapico

you. Thank

Operator

of from ahead. is Please Research. go next The Nigel Wolfe question Coe

Nigel Coe

question. for morning, Good Thanks everyone. Thanks. the

Just are acquisition. I'm the American-centric acquisitions. guessing to these going North back more

say combined. even this? Is sort acquisitions? like a there's the you any that? numbers. want margins? you mean, sounds It And I synergies are actually between on wondering sort Or than just the EBITDA needle margins of just of them? move confirm to can chain, across So, easy some from go can difference any of globalization are quite there they there cetera, two would consistent supply And et to angle these XX% are they that if high higher both those

Dave Zapico

these has little RTDS us They're lower global businesses than for both is already there's businesses. profitability is than from a is maybe Yes, has AMETEK's is you're excellent but opportunities We generation amount and profitability. but profitability rate They're a growth RTDS high will normal globalization higher right revenue private maybe that us profitability of little Navitar the -- and more growth a than synergy for and in there capabilities Navitar's. higher deals. them to business. a improve about And benefit cost a the and scale. the healthy rate, slower globalized -- theme. of there's both Navitar, of still

So, good insight on your part.

Nigel Coe

details are impact follow-on And we great. EMG some EMG? exceptional. price margins, seeing land be aftermarket? Or commercial then is would great. cost into in mix disproportionate Did my we amount of the which as Any from dig That's there pretty a were aero

Dave Zapico

record portfolio. Yes. I businesses XX.X%. with EMG's particular. growing differentiation AMETEK of lower-margin the mean in moving much to quarter we the curve exited the And over And some the had continues of it time. are businesses look consumer EMG done quarter, was do pretty biggest their product mentioned. is in and at what you you performance up the is excellent They factor And when our the higher-margin in faster as margins --

curve of they're business go in of getting differentiation was better So, pricing the that. across But good and because as of forward up we AMETEK. terms really all they're pricing, broad-based it of really book

-- mix higher-margin to businesses about it So the of and terms EIG wasn't price. the EMG really want -- because it, certain faster quarter. grew the you similar -- think It's were if in effect in

Nigel Coe

Very Thanks, David. clear.

Dave Zapico

you. Thank

Operator

question ahead. Please The next is Capital go Graham from Loop of Scott Markets.

Scott Graham

Hey David, Kevin. Bill, morning, good

Dave Zapico

Good morning, Scott.

Scott Graham

I bit to XX shippable. on is question. the was indicated, Bill, piggyback it about like kind Bill, that little more the talk wanted think months I Josh's a to of you backlog,

sort these push dynamic also that can't that customers the you like are are dates? there? saying of that back, shipment contracted So look What's

Bill Burke

to only to the to The make I through and really XX Dave the it's have due I to Yes. year's making was reason to trying the half That's and of pushouts always work And And there. going point your of continue months but backlog the next I is it. was as of with was shippable year. took and I us shipments, or -- point be next pull-ins. work year, think orders get those. you customers on ship much we're to to that that able But next book is we'll said, against end

Scott Graham

Okay.

you about customers a that you of talked with out this, talked is -- when So quarter chance about or say things a there two? some pushed be these could

Bill Burke

Yes.

Dave Zapico

mean, inevitably, happens every And firm on backed it's with firm quarter. and it's Yes. a I by Yes. that a typical backlog we POs, business. push-outs -- but work there and our customers both pull-ins

Scott Graham

is question other you. acquisitions. it. Got around Thank My

it's at quiet year, least. this deals, been two So

eternal? Right. acceleration? question because I'm hopes just is it's the close there a couple an to see two, be -- maybe one, situation of spreads starting Or Is not deals? this are So, in a might asking this to you brings point right? a it And was where something it's that bid-ask

you So do mean next does that what think? six the for months, like

Dave Zapico

and cash When I few I now going backlog we're a our and we're look flow exploring very very, deals, potential right free is deals that pipeline say, -- at months, exciting We our businesses deploy some able quite -- next, acquisitions. very a and with to XX There's the working be and opportunities. actively feel to over strong. optimistic the

our like has buying, deals private we position have now do competitive in financing versus I mean and equity can it? on relative the So starting to the some come pricing to is other improved.

pretty supports, about our flow and I'm backlog And to balance So sheet support optimistic it. XXXX. strong is looking deals our I'm cash going -- support for

the AMETEK part it's be of story. So going big a future to

Scott Graham

next over So the you're flow you're your confident months, XX you XXX% deploy saying, of Dave, cash can that deals? free on

Dave Zapico

Yes, true. that be to I believe

Scott Graham

Great. Thank you.

Dave Zapico

Okay.

Operator

Rob next Please Instructions] The question Melius go ahead. Wertheimer Research. of is [Operator from

Rob Wertheimer

Hi, thanks.

Dave Zapico

Hey, Rob.

Rob Wertheimer

battery the on changes the working some know niches in reason factories and Navitar. attack growth the on. question -- ongoing rate with they and is world's My don't the very America reshoring participate about investments? I'm helped there's investment just historical wondering I by hey, And question large they and that And at some is way that's in. if the factories expand and really whether in can so North semiconductor for the where future of on you rate, with growth

Dave Zapico

Right. Yes.

it's semiconductor business, sciences They some big mean it they and the business, in the for -- go very optics various think area, is machine vision some on just very to just customers and we I'm us. the tools to business of have they're to in deal us gives additional low-risk think together companies some future of with And market. to -- and combination And with. optimistic our this puts that's help our primary the lot in at market Zygo high-end and and sell very the name the the optical going their they're very, successful -- applications. the in them. is of the medical I of optics also reshoring There a largest life I and segment robotics where types of are good, are penetration used very very microscopes.

Rob Wertheimer

longer-term… of of question And a Power the some with Great. changes Grids, the upcoming to I I if ask same that's may, on Okay. maybe sort RTDS can

Dave Zapico

Yes.

Rob Wertheimer

…situation, but seeing there. I don't know opportunity you're inflection if and

Dave Zapico

they farm it's electric devices the of or put And electrification, a have charging I of right of on in that grid things vehicles, to they We impact the of and field to a those has on panels, And there's simple. the a There at energy business or the to renewable the add grid. to lot because for investment they're time, solar as -- the this is same at grid and analysis understand of grid. got one the time adding be not they have done wind a are. lot think we each people the whether

Some of is act to the the grid. really the modernize investment and help grid. putting And in simulate used infrastructure RTDS is

what's used to and their all utilities So a grid. they going the happen high electric by have understand share market they're modernizing with to

the And an team have So, for they're of future. well really people. they positioned technical excellent

under business that with we're AMETEK. can optimistic do So what on

Rob Wertheimer

answers. the Great. Thank you for

Dave Zapico

Okay.

Operator

of Obin Please America. Andrew from ahead. of is question Bank go next The

Andrew Obin

morning. guys, Hey hear good Can me? you

Dave Zapico

morning, Andrew. Good Yes.

Andrew Obin

RTDS. Just on a question

of for optimizing integrating the Thank to into apply had taking up. your make have business As but How churn you asset to digital apply making to how very software, adjustments you you and move playbook interesting? do you something framework And RTDS? an transition, assets do you fit they amazing you. seems were that you like system, I to margins have more into try your what the and as a business. your playbook Clearly, peers more some know because guys a the like

Dave Zapico

of case It's AMETEK the RTDS, hardware operate and then many the of like Yes. software combination business. businesses. it's a In to

the really your it's So it. has not add businesses. we And high, the good largely software-only to we've And very not from see point, synergy to it's a been different, don't get a because and software-only that return on pricing businesses the away stayed business. couldn't we'll we and

that systems, need So complex same very at is gets and time, hardware the in that's systems right specialty AMETEK. our It's -- these software, RTDS that. and but to software into important combined very

Andrew Obin

a follow-up before. has great capacity, businesses then happening Are question on that's way to any plans there? to to of some capacity another there AMETEK added Just for on where get were smart out asked you. add what's questions the or software. And given No, has

Dave Zapico

Yes.

-- have year, add facilities Serbia. but those in the regions. in bringing expanded this I We we're were We facility additional of our expanded our works, lot in in our we've year mean, place And capacity. on during in put expanded facility We -- we more to Malaysia. in Mexico. capacity low-cost a And have all this we

our dealing we're market volume access for in us. synergy local -- and and a regions, to it provides low-cost So with

good production been And Malaysia Serbia low-cost Europe, investing is in Eastern manufacturing. for us. Again, and facility becoming a we've the heavily for So, Mexico US.

So it's very successful these we in hubs it's place lot And -- of and that have a we're put for capacity us. this we've building year. regional up,

Andrew Obin

much. so Thanks

Operator

The next Oppenheimer. question is of from go Christopher Please Glynn ahead.

Christopher Glynn

Kevin. Thank. Good morning, Dave, Bill,

Dave Zapico

Good morning, Chris.

Christopher Glynn

the XX%, about record level. Vitality curious Was Index, a

level kind that. an and lot some discussion into EMG a it And I'm don't just of negative, a a on but you've for the about ties thinking how as think a you that of of the I think entrenched business? your mean as for got level there market of margins. is the you're curious products I mature that vitality But of

Dave Zapico

Yes.

because from years, and only and And very I'm we're for developing because a pleased it, Vitality. it our end products want put product not and it tracking to very We're new is also And buy. having we making, with, that's thing AMETEK. think I the higher is XX% it that price good mid-XXs. win years. XX% vitality new fresh We XX% investment again, very continually And our sales garner was first got to not customers it number XX% around And XXs that our really the share pricing, with and enables good it into XX and with And adding products, think our over first in you range for Index, number. The features Vitality consistent benefits products the but in pricing. the to helps the is our we're with new the or between a helps now, a a our general, only engineering us markets, over engineering can the Vitality, working. realized customers, development the is pricing of helps many XX us Clearly, process past of products investment over -- mid-teens. just new started X% I

Christopher Glynn

capacity called modernizations? in you're -- inflection And bit. if or markets whether it's of investments leaning It's then certain really I'm to you some wanted markets curious or maybe into end I towards your process go any out seeing brands. a Great. stepping Thanks. the little just particular out applications

Dave Zapico

space just that other across high multiple energy the the -- it's two a that are process, then people Yes. in Precitech, -- and TMC areas And say the space doing can't strong do I orders board technology our the and would with out stood for we're quarter. been have healthcare the but where quarters. and precision things

are sales catching up. the Now,

Christopher Glynn

the for Thanks color. Great.

Dave Zapico

Thank you, Chris.

Operator

Please of Joe ahead. is The question go from Cowen. Giordano next

Dave Zapico

Hi, Joe.

Tristan Margot

taking to This good we question. a if Hey, guess little go morning. ask to guys, bit bit for is the Tristan question to it I in I'd differently. get But of current ago? portfolio a your you would the do recession, six fare XXXX, have likes magnitude years industrial the portfolio think there. how back sense example, a little an for to were and Just Joe. like Allison's maybe Thanks versus you. Thank for trying of your

Dave Zapico

specifics think portfolio I the that I And been we in that in with all improved when mean Yes. our inflation they're pricing. all think understand stay to would because think recession difficult other I things until I But the as dramatically. it's different. about of you has I said, you're a mentioned, front

XX will see think to businesses margins vertical decremental believe to XXXX. abate, appropriately cycle up the and in when we playbook, A&D think and XX%. a the we time, a we'll in works only both chain recession backlog terms to see we down historically I we we enter of let's expect start at the working be in And proven was we recession, going businesses longer our XXXX. have look have and how of markets. markets, if do our were energy, as And slowing sales and well through do and both In we a strong in our see performed actually but supply recent XXXX capital say business we in have more that basis manage in our decrease the normalized a in most during recession margins done And we this to that, the strong from learn level. and we past. And wait despite as markets do to model the shortages COVID-driven we grew during you what the react points expect I'm our and weakness a example

capability both comes. next recession believe I cycles And different that cycles. down whenever and in the got to the no we've manage up it be will So

Tristan Margot

Awesome. I had. Thank all That’s you.

Dave Zapico

Okay.

Operator

our session. Coleman the concludes to closing Kevin for turn back conference This I would question-and-answer to remarks. like over

Kevin Coleman

Great. as a for a you, call. day. the for of Thank you And in our everyone, replay again, Kate, be reminder, ametek.com. great accessed conference Investors today's section of webcast us joining can Have thank and a

Operator

for The now you has attending conference presentation. concluded. Thank today's

may now You disconnect.

AMETEK (AME) 1 Nov 222022 Q3 Earnings call transcript