Earnings call transcript Q4 2022

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Operator

Good day, and welcome to the AMETEK’s Fourth Quarter 2022 Earnings Conference Call. All participants will be in 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. sir. ahead, go Please

Kevin Coleman

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

results XXXX expectations. filings During differ may update disclaims or based future detailed making contained risk on may or A statements, be the will factors call, results call significantly references adjusted cause the are risk to any forward-looking any which and SEC. that this statements. Any XXXX be excluding of will today’s amortization. that actual guidance is various AMETEK intangible in to results subject from course uncertainties an the uncertainties of after-tax, AMETEK's acquisition-related revise made we forward-looking on obligation to discussion or intention basis, XXXX change and or our on with to affect

Reconciliations on the measures between and open for and We'll of and Web our prepared by press section begin Dave it can in site. our we'll remarks GAAP questions. Bill, be call Investors release with found then and today's up adjusted

meeting Dave. over now I'll the turn to

Dave Zapico

quality contributions employees. of you to many everyone. and our Thank impact for the the outstanding fourth with niche-differentiated and excellent the our model, colleagues of importantly, all continued growth of I'm expanding you, quarter, businesses, AMETEK success. for to efforts Thank strength of growth good AMETEK global organic the of the Kevin, our most all our AMETEK's your and morning, reflects initiatives, performance and pleased the very results in XXXX. AMETEK's

even over years many emerge navigated better have only to the stronger few sustained for growth. positioned and challenges We last

as backlog year which as Stronger-than-expected the record the outstanding. excellent We quarter. in across solid our quality earnings ended performance demand markets. of a growth diverse were and results the our increases, was fourth with strong their Organic growth expansion. serving our price operating again key driving exceeded expectations successfully led well businesses end quarter very with growth in performing to sales attractive a across their high Our growth remains we're in are organic teams inflation offsetting expanding resulting and presence and margin the quarter in markets. Operationally, exceptionally strong initiatives

to in flow our cash businesses was Additionally, strategic quarter deploy providing invest capital and flexibility outstanding, the us the acquisitions. on in

record fourth quarter record XX.X% the in a the was a a in points. and quarter on the three-point Now, billion, currency quarter, quarter quarter. up prior million, challenging up solid all of results the was were $X.XX Organic fourth XXXX. comparison, acquisitions the added X%, margins XXXX. $XXX against two fourth backlog in a period Orders were growth income sales basis the to the XXXX, of in difficulty] the quarter quarter X% was from year. in in $X.XX of fourth sales points Operating same [technical headwind a over increase the of XX% Operating billion. foreign over resulting XX And were

to our And versus in of earnings was to were quarter per prior of the of the above over per impressive share, $X.XX an $XXX range XX% record diluted This guidance led fourth $X.XX record operating year. EBITDA EBITDA up a performance share. outstanding and up XXXX, quarter XX% million, XX.X%. $X.XX margins the

the Ultra up Sales excellent sales operating year. first, Instruments fourth XX% additional in last versus and level; a XX.X% performance. the X%, businesses quarter, Electronic up growth prior some strong EIG me was operating provide million, was XX% broad-based X%, details quarter. continued three-point & quarter $XXX currency income were across billion strong were record fourth Group. a growth of sales EIG the was particularly Defense very quarter. with added EIG's in a growth the Group delivered Technologies record at up foreign the the were our strong Precision while and the Organic let in The for year, the $X.XX group operating Instruments headwind. Now, Electronic from a acquisitions quarter margins and in Aerospace EIG

period. margins EMG, prior leading the the quarter The three-point an $XXX operating growing versus $XXX XXX organic prior outstanding Electromechanical EMG's currency growth. a operating businesses up X% up the and the broad-based impressive in Group quarter also million, million, finished sales headwind. performance. the was year was EMG's basis again EMG's year X% income X%, Defense fourth with & sales foreign year. were with were fourth quarter XX.X%, Aerospace fourth with versus across to prior our the up Growth compared year, points

foreign was $X.X Now headwind. year for three-point Operating operating was year. XXXX, basis was performance establishing currency income for up essentially And and XXXX records for sales increased up overall, up XX%. Overall were the $X.XX margins XX.X%, for the were financial full-year outstanding key sales Organic versus billion, XX%, X%, annual XX% prior from the a all XXXX. results; acquisitions XX metrics. added points in billion,

margins core basis XXX challenges. chain manage impressive successfully ability supply points, up and reflecting While and our inflation to

XXX of from the highlights per up for through were economic strong year. ability prior very billion, times. margins points navigate with year. an growth model EBITDA XX.X%, $X.XX the was EBITDA up versus XXXX, environment proven year XX% share, the our successfully AMETEK's flexibility and impressive and basis $X.XX earnings from the diluted performance in a uncertain to XX% the Full-year up operating strength AMETEK prior challenging a

leverage the products, businesses operational new and identify to efficiency improvements. to innovative Our and develop model growth, execute key accelerate growth global on AMETEK the elements of continue

corporate annual XXXX in strategic our $X.X sales. businesses strong XXXX in acquisitions, development in million with billion acquired eight acquisitions. capital team pipeline, on closely our over manage deployment our worked we Additionally, resulting In over continued $XXX deployed and to combined, and of on capital acquisition a

our significant financial capital. strong, us provides deploy balance to active deal as capacity We expect XXXX our to remain remains sheet in pipeline very and

In these on impact investments pleased addition to and investing our growth. having we growth remain acquisition are initiatives with in are to the strategy, committed organic very AMETEK's

we I last our portfolio engineering, investments segments. businesses. and are we $XX strategy expect driven market to call, earnings portfolio making acquisition by sales in our these growth strategically in organic incremental of exposure has increased research, and investments by In As an across This higher our initiatives, invest support the including XXXX, to AMETEK's and development, been million with marketing. and growth during evolution has evolved highlighted

sales these was XXXX. which Vitality One our investments through way an success measure we Index, is of XX% the of outstanding in

National to ultra-precise Zygo our technology solutions, diverse including is Connecticut, Facility defense, significant a advanced Zygo, components within inertial assembles including for based optical of which to end manufactures RD&E Middlefield, energy. optics precision in provide National investments provides of and sustainable energy yield Livermore metrology increased set continue leap the of Zygo fusion their Ignition and realization forward research, and optical designs Lawrence innovative advanced high-end in testing and the Laboratory's partnered a systems business. in fusion with semiconductor. Our in support markets, which program,

team with important their energy manufacturing of Zygo. processes heights production scalable Zygo in for supporting these highly research partnership were tremendous congratulate and optics the of in developed I which use contributions technology. precise want advancements to the requires Achieving and

the chain inflation. touch issues on Lastly, let supply briefly me and

seeing in in improvements certain global the and areas, remains supply we're tightness While logistics.

modest also we experienced levels elevated, remains inflation XXXX. are although versus Additionally, seeing improvements in

As we with proactively and our chain confident ahead increases. ability XXXX, to manage will inflation to to in look we price supply continue our remain offset

of macroeconomic ahead, year to our through to the flexibility confident for while are of and outlook navigate shifting uncertainties quality model, times. the Now, in our these AMETEK the uncertain growth the remain, our businesses, ability we

we our operating given outlook and Additionally, in our XXXX. confident for record backlog capability, proven are

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

full-year model the position excellent, $X.XX, X% $X.XX, For backlog, the were the of adjusted nicely quarter, and $X.XX X% strength XXXX. record we class workforce growth and fourth the a of quarter and sales with summary, up results up first us to In up overall world our earnings prior-year. flexibility AMETEK to AMETEK's versus for anticipate the mid-single-digits

it to the Bill be Bill? financial Burke of who we'll will now your quarter. some of cover the over turn Then details will glad questions, I to take

Bill Burke

Dave. you, Thank

a AMETEK had record level highlighted, to earnings. complete year. In a strong Dave fourth of outstanding an we quarter, very at high quality As quarter operating delivered the performance

quarter X.X% and administrative with for costs. and percentage of largely expenses And highlights administrative quarter the prior-year Fourth provide along were of expenses were and flat guidance some for general in X.X% full-year sales versus full-year higher and up some by the XXXX. additional for me a versus the the as were compensation $X for million, Let XXXX. essentially sales driven general fourth financial additional

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

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

of $XXX fourth to in Capital XXXX million Capital sales. $XXX expense million, million. $XX be $X.XX amortization we full-year. million, and expected the the amortization be expenditures and In quarter, $XX including million approximately share. million was quarter the intangible approximately for $XXX was of expect and X% are about in expenditures were XXXX, to in for full-year million, Depreciation or per diluted amortization acquisition-related $XXX after-tax, approximately the and depreciation $XXX or

Free quarter XXX% capital Cash was the cash working $XXX $XXX operating was fourth sales. XX% with operating XX.X% quarter, in XXXX. quarter, fourth in up the while the net to quarter up flow versus million of of million, XX% free For flow was excellent conversion of the was cash also of flow income. cash flow

debt $X.XX deployed X.X on and of quarter, net down times. was the end and this cash of the from during ratio debt-to-EBITDA fourth acquisition approximately times billion million at year-end year-end RTDS at Offsetting $XXX was debt-to-EBITDA cash and XXXX. Total our $X.XX of we the ratio billion at equivalents X.X million $XXX Gross is debt Technologies. was

we the As candidates. on acquisition Dave pipeline a remain of active with noted, front acquisition solid

and deploy to leverage, capital. our modest strong cash we're well-positioned levels of flow additional Given

our is fourth businesses of We of in growth strong growth in XXXX, have exceptionally environment. support and AMETEK cash approximately and and proven challenging performed strong workforce. position, well In to XXXX earnings world-class given model, of the operating delivering initiatives. summary, and financial existing throughout for high quarter our our $X.X a well-positioned our all facilities growth credit quality billion our

Kevin?

Kevin Coleman

lines can please Bill. you, questions? for the Thank Rocco, open we

Operator

Today's ahead. question go Instructions] Absolutely. Please Fargo. Wells Poliniak comes with first [Operator from Allison

Allison Poliniak

morning. good Hi,

Dave Zapico

morning, Good Allison.

Allison Poliniak

in 'XX, the think turn any is that's any I unusual out on we step-down just Can nature the what projects color investments, in did there, recall, just conservative organic side? some 'XX, I given there if $XX you just that just a are from there uncertainty thoughts there, million,

Dave Zapico

and Yes, start a mind, that's in incremental; to over incremental off but and Keep year, was and to we've million -- there number, do a what in good the $XX the it's potential XXXX. more, done

and investments it's healthy double incremental, for RD&E, and it's in and investments healthy for year, up we're So, the sales making digits marketing.

appropriate. be $XX if obviously, So, is or flexed down up we million the required. can think that And,

Allison Poliniak

about Great. showing then I concerns, of lot up mean, in potentially And HX. some there out weakness a

back-half into on Is that has the of sort worried bit thoughts popping you terms a that? anything end, out seeing we and concerning what of of as Just your in enter 'XX? you're or 'XX any there

Dave Zapico

get Not we're the good really. good. annual right XXXX, executing feels backlog and usually backlogs our of mean about strong the very the -- less XX% visibility but and -- now, And annual is record running I growth price, us. we're but out and of it you're about feels is getting I well, to because It you at the slowing, And record out, level. at mean, at to it's is second-half our when XX% still this of a there's a further It's sales. sales. obviously,

don't we yet. slowdown So, feel And see really good. we a

Allison Poliniak

thank you. Perfect,

Dave Zapico

Allison. Okay, thank you,

Operator

Please Markets. ahead. the go Deane today with from comes And Dray Capital next question RBC

Deane Dray

Thank morning, you. Good everyone.

Dave Zapico

Deane. morning, Good

Deane Dray

you'd take then end it's And hoping was also the maybe interesting, on the got too updates, us negative been Europe. markets. people on I through key regional

China reopening, that So, like to impact then does know you all? did. how And how Europe

Dave Zapico

broad-based Sure, most with Deane. across I'll Strong, the second start outlook. geographical geographies. question, your growth

quarter aerospace was strength, and said, performance process flat headwinds. was defense, strength it China up organically; was And notable strong the and flat, really fastest was up And your our our in with in And we're pretty I our as difficult market process and picture low impact growth, and growing broad-based we region And to defense strength of Asia Asia, weakness. the prior-year in in U.S., down markets. Europe around had XX% was XX% we comp, COVID then for in that's Most Europe. China reopening Asia, notable second-half. notable point, both a broad-based some think and And the on But to policy. the digits is with in really was businesses. strength double Our good, going really the China aerospace on as the process. in for of the us And situation the and turn China a second Zero occurs. strong optimistic it in in Asia was U.S. strongest there QX, Europe, that

was of we -- but the throughout businesses the businesses sales digits also our up market company. up process process currency growth second was you segment's headwinds. saw as around broad-based, In the was our particularly quarter. Navitar the were from process our by quarter. acquisition they was last and across question And high-single Organic overall were Precision contributions in the I'll had Technologies the and and was in area, Okay, walk summery. offset strong year, a foreign in in XX%, take Ultra it businesses, our it particularly

And businesses look expect to we XXXX, organic year. process for ahead for be digits as mid-single up we sales the to

Aerospace about talk I'll & Next Defense.

had strong the finish Aerospace & businesses very and with up Defense organic mid year, a sales and Our overall teens. to

the was & Defense. year rate that for growth So, Aerospace the of strongest

the a And sales Our was commercial Defense business double quarter. the quarter, commercial had strong on also the teens led in business. the high in growth growing low percentage businesses in aerospace for We And mid-to-high stronger be all Aerospace expected up our of expect growth sales growth. modestly XXXX, for digits. we commercial to to defense than businesses digits, Defense organic be & with of single

fourth Industrial to high I'll the power driven & single-digit the RTDS. strong & by sales our in businesses quarter, Power particularly single our contributions overall were from digits organic programmable Industrial, growth acquisition our up was quarter Power of next the go the across mid for in Growth business. and

organic Power our across segments. with we mid of to digits, expect both up Power be similar & all sales XXXX, Industrial Industrials growth For for business & single the

exposures Engineered performance Medical had were Automation with Engineered Solutions Solutions fourth And sales the solid that was They're continuing single segment. I the markets. attractive some currency about very finally, in niche & single-digit growth, and pleased overall in talk segment. I'll with our market saw in sales growth quarter, headwind in growth the And in XXXX. low very of up the our digits Automation mid And expand overall to quarter. strong & particular, Engineered Components business in organic

we Solutions growth Engineered up organic expected Automation single XXXX, be both businesses sales Automation across & in similar our Engineered mid And and to for Solutions business. digits, with our expect

the company. any have That's do questions? around walk a Deane, you more

Deane Dray

might industrial with how businesses? demand, happening normalization be just how -- characterize to just of orders, there of AMETEK's orders, is Yes, just follow-up, as a pace the would respect the you size for

Dave Zapico

question, great a Deane. That's

remarks. demand Our XXth We And up all-time quarter. ended feels book-to-bill as the overall backlog were X.X% straight had Allison's I with the as the in XXXX. I level said, as of the was from the above end mentioned up sales, XX% it's backlog, well And annual this normal XX% XX%. And of of of level I our environment, we really solid. our record overall positive questions, answered orders an quarter. in prepared And

in strong a we're enter really position we as XXXX. So,

comparisons But of nuances, order over was orders couple the context, over prior grew To as the some the our nine of some give dynamics XX% quarter. a earnings strong we're calls, on over period an would we question impact our because of facing been have your last that for quarters, a first difficult of So, couple time. the you recall, highlighted the if orders growth. extended

So, helped it's the been build that sizable backlog. and sustained that

customers we second The normalized of to to dynamic highlighted more expectation was ordering return patterns. the

Now that quarter. -- the started and is supply out dynamic fourth chain that improving in play the see we to

January order order January and levels our comfortable January, sold just we finished QX. off a another ahead we're starting orders up month, levels. expectations, overall, had of from After So, XXXX with solidly we and our in in

pretty hanging a again, So, feeling orders and we're strong our are there. in backlog good with

we're that at pretty good in think -- we looking a So, year.

Deane Dray

Thank It's you. all really helpful.

Dave Zapico

you, Deane. thank Okay,

Operator

question today ahead. with And Please comes Brett next go our from Linzey Mizuho.

Brett Linzey

morning, good all. Hey,

Dave Zapico

Brett. morning, Good

Brett Linzey

inventories, to some of have about the And talking been wanted Hey. the elevated to just come in back peers some of some channels. your inventory OEM

Just curious there? concern there in markets, serve you're any area there's and seeing some your if of what of businesses, serve

Dave Zapico

you're they're make that Yes, are customized, at the to first when customer a like inventories, is and products. point lot I'd our high-value of looking products

of true there's to really about. and with have distributor particularly patterns where on deal a pretty in don't we where an the we a at. you're that's the worry lot about OEM got normalize. customer good EMG, it, seeing But of EIG. base, a issues stocking of handle That's In we've customer more bit think good we and feel ordering overall, So, we're

Brett Linzey

on backlog, mean as that's okay, I finer And And you'll first-half, to or second-half? put work the phasing, it the expect do decline underlying there How a volume? both I the begin you you quarterly in was on hoping great. growth do you could second-half, specific assumptions. anything the just think outlook, in just point then the price XXXX maybe does down to you shifting Yes, get verses the much

Dave Zapico

great with first traditional much I model, question. Yes, budget mean we quarter. our a pretty have

year. And And have we budget we about price. it's grow points terms our points So, the X.X have we think inflation. we in of that the in in assume really that each pricing, And of second-half-biased. we'll not model of assume of of we quarters four about

inflation points. and price by are XX we to about offset So, going basis

XXXX, for bit being our are a decrease price, we about XXX% our X in XXX% of cash probably And points flow. very addition shortages we bit points abate. entire little year. net price. that. And will going But, to on And Also than we conversion guide inflation offset staying to are the now. a for of I XXXX will XXXX. mean out believe that’s income six where conservative that’s to it’s in inflation. healthy to levels And, front we plan the we the in normalized a think Now, better levels start supply capital with of working to more chain But, a down to free from

of vertical to longer also terms than bit balance expect that We in defense aerospace a the stronger be we the think and businesses markets cycle our do of portfolio.

the was commentary, it was one through to-high mid- So, outlook. Deane, mortgage segment had higher, -- little a bit a

So, we of was quarter think accelerating be we that’s true. that XXXX each as going really. to -- And

We And, historically Do of assumptions that’s our We have went backlog. the single that to grow groups expect budget. you our questions, digits. into strong any both mid about talked some Brett?

Brett Linzey

No, Great the all it. I that’s appreciate and quarter, insight.

Dave Zapico

Brett. you, Thank

Operator

is ahead. Scott Thank Please our questioner Loop. from you. Graham today And next go

Scott Graham

good Hey, a that And deal. morning Zygo, pretty all. on congrats that’s really big

Dave Zapico

really And energy Hey, our working team great a but capability. And, it’s great helping, that’s fusion really did shows is just on job. interesting, that's that it thing. a a

Scott Graham

you. orders the you gave Yes, split organic? said for The that you sure. Thank quarter. tell also in can up segment? Was And by X.X the

Dave Zapico

was X. Yes. down overall worse. That was Organic minus

both X.X. X. X:X that segments Organic And overall book-to-bill. was were about orders And were at same so, up minus

XX So, demand a the straight book-to-bill. difference environment of wasn’t segments, I a distinct solid as showed said, and between quarter overall

this we patterns, strong to And a have backlog. have customers a have we ordering backlog. of strong more we normalized as dynamic So, returning

we pretty feel it. good So, about

Scott Graham

volumes essentially prior Okay, year. growth wise? thinking the in cadence you half that Based what is price? sales it the on then sort possible that And you second of Is of all out are to what are you. is answer great. the Thank your organic flatten your could question,

Bill Burke

And, have second sales are I to our going mean also. increase are price. going about that the think orders half mid to I think of a going growth think single But order we to in you second-half. digit we bit We year. healthy the don’t rates the have we grow some I think it’s forecasted. actually in if

And as of forecast. the orders elevated bit be little are bit, elevated but really less grow is our So, end be will sales to But, still at are they backlog by going down the year, levels a to than historically. to going levels. at going grow. a It our

it a of with of So, but is don’t our little buffer right orders we which a we strong And of now. end provide sales. be less there backlog now. to elevated kind are similar done up backlog have clearly than And our will at it downturn. historically some will is will again, levels We up, be see XXXX, the

Scott Graham

thank Hey, great. you. Yes,

Bill Burke

Scott. Yes,

Operator

[Operator D.A. Instructions] from Please at comes Davidson. Matt go question ahead. next Our Summerville

Will Jellison

Jellison Hi, Will good morning. is on for This Summerville Matt today.

Dave Zapico

Hello, morning. good

Will Jellison

just related how curious companies portfolio. Navitar unfold was with the about and RTDS. recent I the expectations? first into observations things going with And your those are fold? part acquisitions them bringing AMETEK to about of things with How your as did And

Dave Zapico

and met Yes, both with they integration very Bill have are positive. well. teams going I I mean the really and acquisition of

power recap power bit, that instruments and simulation testing differentiated capabilities. our measurement RTDS a provides strategic little with and to real-time various and simulations businesses by Just broadens used acquisitions utilities

it's that growth kind I good attractive fun high about and experts mean, interacting AMETEK And position And of with it's one. really feel team, and in adopting good they're them. Really just market. field. the So,

good markets. in the has doing they capabilities. is growth well quite semiconductor with Navitar, unique is with their main play some in customers and space, differentiated Navitar that's optics very market The And is one even where Same us.

there. So, a that And outlook business different our that a integrated along with as very into Life there's vision, with good bit Sciences being business. machine little along is Zygo

capability going Much new and needed well. very capacity is for for Zygo. Zygo integration has the it So,

Will Jellison

level at strong are to respect where And seem observations assets mentioned moving curious be the juncture. you. as for overall, pipeline your M&A, and is your multiples about a Great, theme follow-up, thank what in to of the on in staying you competition I'm of market And this your the observation? very then, with

Dave Zapico

us. was, advantage rates to interest money, is increasing, as free actually and think yes, as with Right, it the with I an not

we active So, a good with have good deals, very the a and valuations We're quality bit. come looking And balance though. a of solid a pipeline some assets, have at sheet. in we remain pipeline

providing come a these So, no levels, our deals and are ensure acquisition a do year These of disciplined which a deploy in. still returns in level And by have bid with all don't we're debt, the this less, is XX% a has a been equity. pipeline of system capital now we period but going historically important up shareholders. us they've bigger are around hallmark to And ownership. strong And for for than they're that's deals. bit as our process. third doubt our a And the the elevated pipeline, money when cash we We thresholds historical on meet from been return right use because to invested for of AMETEK's to important for acquisition hurdles, long primarily on of traditional program there's a financial we time. want capital very less there's us

they're about meet capital in available. if believe something, our I to be financing all will we're going about to near pretty where to and $X.X feel and grade have and credit deals we committed do investment we with And at. to traditional plenty we're we billion be, going we the of you And So, an hurdles. of capacity talking got good they're of rating, future,

M&A strategy. key a going very have is terms discipline our word always been forward-looking AMETEK. for it's environment, be of to as been this in key executing But So, in

Will Jellison

for questions. you my taking Thank great. That's

Dave Zapico

Yes, okay.

Operator

Merrill question ahead. comes of Please Obin next with from Bank America go our Andrew Lynch. today And

David Ridley-Lane

Andrew on Ridley-Lane is David Hi, Obin. for this

Dave Zapico

David. Hi,

David Ridley-Lane

forecasts? electronics, Good in chain I'm guessing wondering morning. higher the How meaningful disruptions costs the fall-off a those your freight in and is costs, kind supply last year, much all buys of the spot this I'm XXXX? tailwind one-time around of things

Dave Zapico

to still time, of an inventory there's Yes, level go going the going away. are But to of elevated one-time I same think at the inflation. that purchases distributor what of see, you're some

to expect So, there's budget some savings in million. that natural tailwinds in model, productivity/cost for margins, about $XXX of terms in working us going our we be the our P&L of

at largely starting forces, a, costs that's of products. where going and the working we still couple prices some chain are shipping up. it'll with are we're things And maybe you're basis there way dealing distributors think upside especially But other the and but is some the higher year the to be a and of And So, of one-time there's of out we to to paid issues opposing a on it's that even same the substantial. that. to electronics think supply time, some we inflation continue the some related

David Ridley-Lane

it been XXXX, Got thinking and you in guess kind of to adding what's then or maintenance want have CapEx, use I framework through the in whatever additions how of about versus discuss to you you're growth kind capacity capacity here XXXX?

Dave Zapico

We we've about a cost some lot that. we of capacity low in brought online, XXXX, added region facilities talked

to than be we XXXX, our a bit capital For sales, little expenditures flat, expect historically. more X% of as done we've

reductions. cost good maintenance and funding CapEx CapEx, balance CapEx a between and it's growth So,

David Ridley-Lane

if one contribution from in, and more your RTDS? could Navitar is expected what I get Then, EPS

Dave Zapico

the not to I'm but out break slightly going accretive. be deal, Yes, there'll

David Ridley-Lane

Thank you much. very

Dave Zapico

you, thank David. Okay,

Operator

And Please ahead. our Joe go Cowen. Giordano with from next question today comes

Joe Giordano

little getting or out, seeing, maybe actual and that? are bit Yes, pushed you're normalized what can finer their you mentioned on ordering just -- more you mentioned customers real a are getting like, of get on ordering you And patterns, point times? like, their kind they things behavior

Dave Zapico

during faster period, pandemic our we able that's and at And fact, were Yes, if is inventory pandemic, companies to most and a lead by view, in of grow we time. to you ship rate to are that the buffer. the think they've it reason deliver able part got now, trained about from of we businesses And including getting the things back early. getting kind being order deliver in had to customer's the the AMETEK

normalize have And that's think their customers we're what's happening the happening, supply what's across as that. is, seeing to and So, patterns, anymore. order don't broader early really buying chain, I they

we're about. that the that's talking main So, normalization

Joe Giordano

different How relying that when pipeline are results you forward than you year, and getting you mentioned And given is like companies getting be is on do that looks trailing then industrial the of execution, think at. good. you're XX just timing for macro might about for acquired looking weaker looks it M&A XX lighter, the given

So, to your we business the does where actionable right it be now, cycle? desire how in do given impact are

Dave Zapico

bought down cycles. both historically has AMETEK upcycles through and

deals can sometimes down forward. what EBITDA best but the your forward-looking you of the trailing, the really during cycle. And a not have to is get And be you cognizant

been aware it. focused So, that for on it's we've years, we're keenly of and something

Joe Giordano

Thanks, guys.

Dave Zapico

you, Thank Joe.

Operator

Rob from our next Baird. And today question ahead. Please go comes of Mason

Rob Mason

Yes, morning. good

Dave Zapico

Hello, Rob.

Rob Mason

good terms relative more, you of Hey, process higher a that into cut And morning, just morning. into growth, more of little the to just I'm function part see production 'XX does mix carry more versus stronger of you if process going into sales drill level Dave. to leads business? a Good R&D in Dave, Precision called that then segment segment, environment? of the with Ultra just what of the could forward that anyway what that an maybe out

Dave Zapico

been job. were they're our process. rolling sales, you really hospital post-pandemic. idea. but Yes, it's a systems for that's a new QX, look -- a that our And stood part good doing of color you component big about some at give XX% put good XX% about And business And healthcare all XXXX, And of has big And market mean, I to was I'll component. is people it. us, healthcare up part of a has more process into way it's organically, if spending try of across that. to think was what so in I'll the our an and AMETEK, putting out fantastic

the high semiconductor process downtick majority sales, have in of but X% applications lot continuing and markets and also is slight And the in the growing that there, grow. and of up we research we that'll to low-to-mid semiconductor the single-digits market vast in there'll still because are think XXXX, up about was and areas in QX. that the Also be a a of be

in right we're So, in the semiconductor. places

got semiconductor. you So, healthcare, you got

You got SIMS one have every the to to every probes, world lab in market lab our our CAMECA we've had business has research where with of the atom in some products. the our has world have just of

expect was up in high-single-digits. up double-digits. doing well old backlog they're And oil the high-single-digits. for got well. 'XX, So, And it And and was it good. very you gas doing their is we for And 'XX, part process. all low And plus then, traditional that's of really QX,

very So, future. continue in it's well. to we think process is going doing And the

Rob Mason

very helpful. That's Excellent.

very a going as in But they think were, will incrementals EIG did was look certainly EMG, you how speak you EMG in follow-up, strong how to could 'XX just those the comparatively? look 'XX. versus Just for forward

Dave Zapico

question. Good

incrementals, XX XX% In to up XX%. terms reported of XX be in margins up incrementals be groups, I think the And core and will core the Bps. to I both will think

And clear sight able to margins. increase we'll core So, have go we to we be healthy there'll of Again, be really as our think line forward. margins incrementals. we a grow

Rob Mason

you. Thank good. Very

Dave Zapico

you, Rob. Thank

Operator

And Barger our today question next ahead. comes from KeyBanc Please go Markets. at Steve Capital

Steve Barger

Hey, good morning, guys.

Dave Zapico

Steve. Hello,

Steve Barger

about robotics what about a to that in talk can bottlenecks that near-term the distribution have for Some being seeing you're future? automation channel recently market, talked in both hindrance and expectations OEMs how just you growth, market and grows

Dave Zapico

mid-single-digits, up engineering our to Yes, for think XXXX, selling solutions that will be and And there. at both I business we OEM be that think our customers we're I mainly think automation will mid-single-digits.

you're a have have but of ordering a a of there, healthy the going change patterns really ordering So, we the patterns, in backlog. effect bit to

So, customers ordering it's changing really at what talked about good We're are delivery. really we patterns.

at they're customer lead now ordering So, our we're commitments, times. so meeting normal

backlog corrections you'll I a the see record talked comments of bit we for about QX still But all made that the a continuing. little that and of hold the we that in So, also. part business have order

Steve Barger

just right year obviously or what's in a in tools on this and to of Got the That pressure, memory semiconductor mean, you that places logic makers the demand has grow. tough supplying of foundry context the will you said go you're pretty grow it. But the been side? especially Thanks. just how under side. And you're memory to

Dave Zapico

we grew pretty tough. again, it's Right, in mid-teens And XXXX.

So, that is growth up for XXXX low-to-mid.

So, we're for key the it's a really at decline. semiconductor in in in development and growing optics we're area continuing generation. for semiconductor haves we our next backlogs CAMECA and areas, And then, and fabrication. the really substantial have is staying growing and business, EUV market, are well. the strong they're area But are orders involved the research some that the second reason we're must used semiconductor tools and And and ahead the getting application still

market from and separate the is memory really market the EUV of kind So, strong.

and mid-single-digits really low those areas semiconductor able that's part the So, to are we they're strong. you have business we'll two of of some to still in our an be where grow why the good And environment think headwinds.

Steve Barger

That's great you. Thank detail.

Dave Zapico

Steve. you, thank Okay,

Operator

question-and-answer And this remarks. our concludes ladies for gentlemen, and like to turn the any conference Coleman session. I to would back Kevin closing over

Kevin Coleman

conference for And again, our you Rocco. everyone thank call. Thank you, joining for us Great.

be replay ametek.com. accessed great a reminder, today's As of the section can day. in of webcast a Have Investors a

Operator

concludes and Ladies today's today's this all thank We call. for gentlemen, you you. presentation. conference attending Thank

and disconnect day. now have lines may a your wonderful You

AMETEK (AME) 2 Feb 232022 Q4 Earnings call transcript