AME - Earnings call 3 2023

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Operator

Good day, and welcome to the AMETEK Third Quarter 2023 Earnings Conference Call. [Operator Instructions] Please be advised that today's conference is being recorded.

I would now like to hand the conference over to your speaker today, Kevin Coleman, Vice President of Investor Relations and Treasurer. Please go ahead.

Kevin Coleman

Thank you, Abigail. you Conference us Call. thank Quarter AMETEK's and Earnings XXXX morning, for for joining Third Good President Officer. With and and Vice Chief today Executive Chief me are Officer; Bill Dave Burke, Zapico, Chairman and Financial Executive

forward-looking AMETEK's During the call, uncertainties various are A today's significantly course that the on may to of based to results factors and uncertainties with results affect disclaims statements, may AMETEK future to from in be change differ any we update subject forward-looking obligation risk risks that which is statements. our will any contained detailed filings of revise making and or cause actual SEC. the expectations. discussion intention or

will acquisition-related made excluding call website. Any on release be found amortization. XXXX intangible section to an this the results press our our adjusted be between and measures after can or on adjusted basis, Investors GAAP XXXX in and tax, references XXXX on Reconciliations guidance or to of

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

David Zapico

Thank quarter, everyone. earnings operational expectations. by cash operating income, the excellent per EBITDA AMETEK superb earnings you, flows share, execution, highlighted cash expansion, quarter, and margin flows. strong outstanding established ahead in the of and records for Kevin, and good results morning, our we third In delivered operating margins,

year, we year. increased strong these again, for results the Given have, and the our earnings of the guidance balance our for full outlook

front. also been the very have active acquisition We on

we Paragon acquisition, medical a end details the technology to the acquired will quarter, of more definitive signing shortly. and third Electronic to our acquisitions in we Amplifier also the which Medical, on Industries acquire of the we completed exposure agreement the a United third I attractive these of announced space. purchase quarter, provide highly broadens During Research. Today, acquisition the subsequent

Now results. quarter let me turn to our third

sales Organic in strong point. in ended Acquisitions $X.X X over billion, sequentially. Book-to-bill of up modest and and record growth points the the a added same levels quarter X.XX. sales very down in X XXXX. quarter X% was were $X.XX added billion, a the backlog We was with quarter Third X% period flat. currency near quarter the foreign

is and Our XX% the or up from third last year's backlog X% end million up from XXXX. quarter $XXX of

in EBITDA quarter in Operating AMETEK's $XXX the XXXX. a XX% the prior was record in the quarter, quarter basis million, the operating Operating at XX% over in performance impressive an a XXX up record $XXX also a quarter increase EBITDA from the million, exceptional. was a were income sizable year, year. record prior up XX.X%. the third quarter points a XX% third the margin, was of margins with over

outstanding $XXX This Operating quarter performance XXXX was a the to in $X.XX up earnings XX% cash and flow diluted record guidance per quarter our million. of of $X.XX. to $X.XX the share, of third range to above up led record XX% versus

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

X% growth and the impact acquisitions sales remains and added our segments Sales leading initiatives. growth. with Instruments a growth the First, in point. X.X%, market currency reflects year. X.X% strong last EIG the attractive Group for Group. impressive organic Organic broad-based foreign quarter, delivered operating and across $X.XX sales sales third added Instruments and from quarter performance, Electronic up Electronic were were The position the continued of broad-based of EIG's up organic billion our

in SPECTRO businesses quarter the our our in well & Aerospace businesses. as CAMECA across as Growth and strong Zygo, particularly was Defense

an the were a impressive the tremendous prior record income from prior in year, EIG work operating quarter, quarter points operating was a $XXX basis the our in by million, up businesses record And XXX year. the up Third XX% versus XX.X% third margins quarter.

in performance X% operating EMG's in the million, solid inventory down income Group million, impact currency Electromechanical down X quarter foreign while in $XXX prior X% a customer levels third points points. OEM added despite the base. were was the to year EMG's XX.X%. $XXX normalization delivered the versus sales EMG's operating quarter quarter quarter. across sales quarter, operating and The the of year, X% our prior solid X of the also organic down third very margins Acquisitions were added period, with compared

the the AMETEK Our far in the inherent value XXXX, and quarter, thus performance growth third in reflects unique model. in

are organic initiatives businesses differentiated growth attractive position with long-term diverse continue and growth growth. aligned our markets, Our while for sustainable to us

to conditions. their And our businesses flexibility we drive outstanding rate to flow are cash the this strong value-enhancing our business operational sheet robust our on for the and to provides strategy with react generation, strong AMETEK execute quickly model asset-light redeploy differentiators structure operating growth and which distributed market ability cash Our changing in interest key environment. This flow acquisitions. execution higher and balance

Now strategy. switching acquisition our to

active managing pipeline strong of in acquisition very opportunities. As noted, been a we have

Medical. welcome and recent our businesses, United pleased Amplifier Medical. Electronic these some to agreement Paragon a We Research. have Industries provide will to starting with Paragon color most more we of that I each pleased acquire I'm are definitive acquisitions, signed on

to surgery, Paragon surgery and of delivery solutions. leading sold implantable and product Medical broad customer highly a portfolio is device a components engineered minimally single-use leading diverse base of instruments and serving including manufacturer invasive Paragon's applications, robotic blue-chip are medical orthopedics, components medical of drug OEMs.

acquisition med with strong excellent growth and AMETEK. access expands the new presence an segments with tech rates. market for provides in is Paragon us space It attractive to our

and is subject including approximately annual are applicable approvals. regulatory closing We Paragon Paragon at all-cash of $XXX customary to the approximately sales in transaction Indiana. valued of in acquisition acquiring The an has Pierceton, million headquartered closing conditions, is billion. $X.X

automated Industries, and testing diverse simulators or which a needs custom ruggedized UEI, products control the is cater and Now solutions. mission-critical in and acquired hardware provider United systems in acquisition simulation applications. to to to Electronic UEI measurement, test, switching August. we testing, data of from leading loop aircraft UEI's

and semiconductor, the Systems Power $XX complements AMETEK's Massachusetts. generation division, is in sales and in nuclear Norwood, million presence nicely significantly annual UEI strong capabilities. based UEI Instruments acquisition our a data With of defense, expanding and power aerospace approximately has

Next, Amplifier Research RF defense, compliance testing portfolio. sectors. an for the equipment innovative RF has automotive, is strategic solutions capability within is instrumentation and solutions. and complementary test Its provider Amplifier of industrial, Research testing acquisition a is with communication business. existing outstanding electromagnetic and compatibility medical technical broaden our used Their leading our and fit microwave

PA, benefit for Amplifier from of research, well testing. development growth a in Research approximately Souderton, demand $XX positioned has annual growing Amplifier electric Research to sales is in the is and million. based vehicle and business,

very remains Our acquisition pipeline solid.

differentiated and financial In continue where capacity look our them the invest approximately in highly committed plan long-term investing to growth. to develop in balance our quarters. XXXX, remains sheet new to customers' We to in deploying position for complex organic remain $XXX help and to these coming development million efforts active our strong including solve help businesses we significant have most businesses a also capital growth sustainable to initiatives, product technologies AMETEK our in challenges.

over In quarter, were the XX%. healthy our sales prior introduced measures which a from the Vitality years, X Index, products

market. broaden our a efforts, their small As internal acquired detection complement our help company, the recently business radiation to to innoRIID, technology technology development ORTEC capabilities in product new a

of intelligence known an health exceptional in solutions, applications. expertise algorithms a both radiation range security, innovative cutting-edge and their nuclear detection team product specialized technology for having medical development innoRIID, research, and artificial for developed

outlook With once remainder in a our the our guidance. outlook quarter to raising earnings performance turning remainder year, of for are, strong the of Now the and again, for the positive third the year. we

continue continue expect we year, and to we be to full high be the For to sales sales overall up digits. up expect mid-single to organic mid- single digits, to

share. Diluted compared $X.XX to is $X.XX, earnings be in an last to approximately from previous to per XX% $X.XX range the for expected per now of year's year results. share range up increase our the of $X.XX guidance to are This diluted

be the with fourth mid-single sales digits, quarter, $X.XX X% to overall up we For prior to the to versus of year. $X.XX earnings per anticipate X% share, adjusted up

our XXXX strong growth third businesses, outstanding, record AMETEK's with for operating summary, quarter In were and strong activity. results acquisition performance across long-cycle

differentiated solutions markets. by excel, serving driven and to continue diverse businesses our Our technology growing

navigate value. to Our asset-light cash and sustainable us positioned long-term for flexibility actively flows model economic deploying business shareholder firmly to challenging the remains with while capital enhance AMETEK growth. strong provide environments,

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

William Burke

Thank you, Dave.

Dave results robust noted, cash delivered performance, in exceptional As outstanding AMETEK the quarter, operating strong third margin and with flows. expansion

some for financial the provide me Let additional highlights quarter.

year, million, $XX.X in unchanged and essentially prior sales, the of as third from versus general X.X% were administrative a and quarter. X.X% last percentage expenses year's quarter Third were

in of to income $X with sales be For XXXX, effective approximately X.X% due XXXX, tax and of was lower diligence and a third quarter XX.X%, in expense pension administrative income utilization from to headwind rate the year's The in expected improved XX% are quarter, sales, quarter last the due the to was Other level. G&A credits. of to due tax largely expenses million of in higher line costs. down general

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

quarter and Capital in full sales. expenditures X% be million. the to continue was expect year $XXX the third about to $XX in or million Depreciation we quarter million, for and expenditures $XX expense were approximately capital the of amortization

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

conversion versus was was in XX% in while flow capital outstanding third growth quarter the XXXX, XX.X% also of net Operating of the the Free was million, conversion. free to the quarter record for $XXX was XXX% third flow Cash quarter prior approximately the year. in over million, year, with we working up continue excellent cash a Operating income versus a record $XXX cash the sales. free flow XX% to cash the flow full prior flow was up year. expect And XXX% at quarter. cash

billion, $XXX was our debt-to-EBITDA and and third at and our ratio down million. capacity At significant acquisitions. of debt ratio $X.X deploy XXXX. us XX the was cash cash available on the of to the from is leaving equivalents debt-to-EBITDA debt Total strategic with end this financial X.Xx, net end was $X.X billion Offsetting cash September at quarter, gross X.Xx, of

been has As active. we've very noted, Dave

announced end signing of UEI of Research. would largest acquisition of acquire for subsequent During Amplifier to Medical the we acquisition $XXX Also quarter, quarter, of end the deployed be quarter, innoRIID. million the third agreement definitive the date. which Paragon $X.X approximately billion, the to and of the And approximately subsequent the to to the on third we acquisitions $XXX a we million deployed our on

have we to credit existing growth Paragon, in of acquisition cash of billion capacity significant the initiatives. facilities $X.X would still our approximately financial Following available with support

expansion margin significant had AMETEK delivered quarter. and in summary, In exceptional achieved the results high-quality third earnings. We

position in strong with capabilities, segments, Our coupled backlog for us very and success. Kevin? strong operating continued exceptional positions a key market well

Kevin Coleman

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

Operator

Markets. first Deane question with Instructions] Dray comes Our [Operator RBC from Capital

Deane Dray

the on right in we Paragon. Medical, Congrats M&A It Precision wheelhouse, looks all here. successes with can Maybe robotics. start your

of some terms We're those are applications. like If in on you use like company could what one color percent all provide the seeing consumables? really

So consumables, comment margins if could, on you please? growth, and

David Zapico

give I'll of my Sure. you Yes. view Paragon.

components highly aging As demographic market instruments. you medical you engineered the acquisition, the population, stated, have key at you of the When drivers look leading provider this of the shifts. and

the have that. percentages surgeries, do job more a great are also with becoming procedure of minimally where they invasive innovation, and You procedures

want want about to positioned serves drug applications. continuing new in this they this toward market, OEMs. with accelerate robotic -- the wins there's their invasive surgery is delivery. significant minimally surgery, and to in trend talked time really specialty I Paragon a market, well also outsourcing And OEMs to product orthopedics, It And the and space. the

the is they're but in of each strong applications. positions Orthopedics largest, the

is of the of your nature. surgical implantable portfolio XX% components, in and of is and business consisted and single-use recurring Now one instruments about consumable questions, the

the are consumables surgical of and revenue. single-use XX% So about instruments the

So that. we like really

with business a switching As lengthy on It's approval high programs, Paragon, very, costs. of When base, chip there's sticky processes About regulatory a sources the capabilities and sole-source programs. diverse XXX the you very combine customer XX% with is blue the environment business. over of of revenue.

highest It's did a value true is lot a their design customers. A of the a have by unique considered them provider. really business they're development And differentiator base. and that capability. to its They surveys their excellent partner has I in customer customer for the We and quality market, service.

from look XX%. I And does when that's -- this our at tech When look at I Paragon. from for med it increases it It's now one what about to exposure EMG, about the AMETEK, over grower. been of -- revenue achieve. goals Paragon, low revenue million double-digit to comes of is to It which is we've and secular trying adds that $XXX a

provide It's the It's model And unique a our products opportunity profitable value really It that business there's customers. expand margins. that multiple to us really business, growing, highly plenty room by improve avenues profitable AMETEK for growth. the provides to business the an of engineered AMETEK fits applying with of margins apply there's model and to but already us for growth model. growth a

Paragon from is team, we're the AMETEK's on what accomplish team. the ], sure, talented capital. economics deal the AMETEK's and will for importantly, management of can dealers benefit large deployment and infrastructure highly And a excited together. this and a like traditional we we global They're about [ meant

this return met are our on So deal. by invested capital orders

XXx about And we the for paid TTM EBITDA business.

Paragon some amongst time a and business It's it's for we're been excited at universal for these looking AMETEK. a We've us. the So excitement businesses and for good very business.

Deane Dray

you That right. the margins and questions key all on a hit and All the overview, growth. great consumables, was

like a a And I if on EMG. on follow-up great -- sounds could it question story. just So

the destocking biopharma med So we're seeing all in sector and over tech.

love hearing in terms has the destocking, you, no slowing look, interested any a lasts, on there? of this one's of crystal you I'd long kind those inventory ball expectation seeing Be the this from end of -- here in think normalization. you read-through how hear in duration And markets your besides Are any is businesses? getting but on one there no the to

David Zapico

Deane. Great Yes. Sure, questions.

quarter, For line a on mid-single-digit top our we guide. the grew X%

And performed our organic the year And maintained, single saw the that guides. our sales is Our mid- anticipated. revenue, in Aerospace the That's we acquisition a full was we said, one Defense of than offsetting. guide weaker. in digits of revenue growth automation To for organic automation line high digits. and destocking AMETEK the I our specifically QX & of we year, maintain And of better. stronger terms mid-single business as in our is and to bit with The portfolio. faster they're businesses full guide benefits

So we the that's expect the year. to through end saw And there. continue we what the destocking of

largely But it risk, in, being the or factoring an sure. And projects with rate lots is They're right for what we from new and are looks not question, difficult and your is the environment a dynamic of delayed correction. see, or in projects the of a terms inventory many with It's interest offing uncertainties, this In destock increases. canceled. constructive, demand the very downturn? now geopolitical

Our defense looks aerospace and solid.

projects Our semiconductor, and medical sold. Significant energy, clean grid. power looks

XXXX, So of sit we will But destocking. in constructive. on. what's teams post that general, remain think understand And going positive And our destocking terms down year. the we continue going to through of we're end with in we're and the

Operator

comes Our with Summerville next Davidson. question Matt D.A. from

Matt Summerville

as as zip EIG OP of dynamics. quarter kind about flat new your could the sequential $XX about Rev was a performance, margin this the code million you just year-over-year Dave, well AMETEK. right, talk profitability as for on think moved key maybe really into wondering line up you drivers if I the the

that you that helpful. if I And flesh have be kind of of a would maybe can all out, just follow-up. then So

David Zapico

had We leverage mean put mean really sure, was you, I last and up Matt. to at look in We margins. were points, We EIG gaining had showed excellent and momentum certainly it an on if price and driven I quarter my together acquisitions, margins operating the strongly or back XXX by contribution go Yes, told up came high the record momentum, X, cost. all QX. growth. EIG had I basis up excellent quarter. you'll performing

Matt Summerville

accretion With look you parse follow-up. X what kind appreciate timing And the what out way there might stats for And think be closure I of any the expected year would then just Is like? that? then cash as to to respect shared. EPS Paragon, a you

David Zapico

Matt. We but atypical. -- approvals Great quarter. questions, the closure think on and get dependent think the regulatory approval, sometime close we nothing the in -- we'll it's first But

excited be X. cash business accretion. we're going It's this In X, We'll but costs. we'll under very excited. getting cost we'll And cash improving financing impacted We're and EPS accretion our wing, debt. year accounting, the and pay terms to year in purchase a a have mix very integration with by of costs, strong to with delivering. about modest very the of And -- business realignment have

Matt Summerville

Just Dave. real quick,

planning out, then? not them P&L you're the through those just you're going non-GAAP to So run items to

David Zapico

We'll sense that. that to make decision but the Historically, have at we them make with that time. of It may not the out, amount broke have. activity we do acquisition

yet. a made decision haven't We

Operator

from comes with Wells Fargo. Allison Our next question Poliniak

Allison Poliniak-Cusic

want Just to back I'm that I clarify recall, for your to your just market? I what it seems more sure just from it to reading something go seems canary I want that -- a be in destocking in the to that But typically was comments make Or that's want comments I you mine. on to coal it understand. If through, automation. industry

David Zapico

it's And destocking the think the And destocking. destocking. We remain constructive. Yes. -- post destocking, We think we but last it's through year-end.

health -- to that of other think but sells markets lot a the we that of and doing care some the of not automation and now are right is exposures, clearly market it's well part business destocking. We

Allison Poliniak-Cusic

typical about thinking talked Is the it. R&D? about that it R&D? in we $XXX AMETEK? about? higher investments, could think Got just part to should And 'XX? being there Paragon, be then then How million. on what's be of that. should there? a And of I design something the that be does keeping design raise the big -- think very piece it even we Is thinking you with into it you growth How How a than

David Zapico

should think the profile. matching AMETEK Paragon about think is I you

Allison Poliniak-Cusic

is? 'XX Got it. of And we then kind as organic to look investments

David Zapico

But are businesses. of discuss to the We're each we're next weeks. going review individual as what next market cost reduction things XXXX. with February. go sales get opportunities, in the understand to terms to they you -- about to be CapEx until will to mean and do about detailed with tell overall have meetings teams, talking deep meet our of we our X% like XXXX there's so through each and over of commentary inflation before in any opportunities, sit we'll the niches, their seeing and of into know, dynamics, teams to in typical dives, the their that -- expect in X defer going want We at you going a from I talking Yes, growth that. down We'll early these But level. year, like price plan we things we're we and offset about

Operator

Our next question Research comes Partners. Vertical from Jeffrey Sprague with

Jeffrey Sprague

come back it one to time. it of to right, looks will Just just XX% more want going forward. somebody maybe improvement again. -- maybe margin come Because kind Paragon, math rough to understand so. the Maybe margins, EBITDA or is plan profit I like the at else

You're doing EIG. better XXX that to X,XXX than in bps now

business the talk other cutting how you be we of the When over time? for if And and is the sort a zip of here? long kind of the cost so, that kind and about should about code period and aspirations improvement of opportunities, thinking margin

David Zapico

code it's is all and you're That and over the the about And the is AMETEK with we and in the time. Yes. that business a them zip our show what what to team zip processes. talking some we're code planned. of But of resources plan have management has going build

Jeffrey Sprague

we business? on Or should the operational of kind a into or with of parts drops of this that this think as a of little kind how just interesting, portfolio? the there business more to just elaborate commercial synergy And Is fits. an a bit stand-alone healthy other

David Zapico

EMG existing components. $XXX business, -- It's an business. And or it's our have our We about million business. called medical engineered a

but about that segments. that these greater with markets, position, scale. familiar additive a There's different we're completely in think existing end as to So but

Jeffrey Sprague

one maybe med me. last world has the then post-COVID, The little And of a one been tech years, rocky everything. couple procedures here just from last

here, are characterized sitting it a little forces? You by of kind those as they grower. sorts Or bit in double-digit of the... impacted trough a of But secular maybe just a of kind

David Zapico

be resources nicely. from growth growing They're they well and market I you fastest really. the they're fastest from, mean faster not happen that benefiting -- areas. the to and They've in areas. their benefiting the they're deployed growth have No,

they and programs, share. good They're customers, winning did is definitely surveys new it's a and business their business new on these on substantial. pretty And how capability their in take care of really terms this and winning of businesses, we they're

few to So next low for double-digit it's and that's lot in. a be programmed grower going the of a years,

the business Now that's solid is we're going at. as way this growth prospects. the to ups and be downs years, really looking throughout There's good but with go we a

Operator

Graham Our Partners. Seaport next Research with question from comes Scott

Scott Graham

quarter. Nice

What the working So capital of percent Bill. couple just last a year? was items,

William Burke

one second me on Give that.

Scott Graham

Sure. another one. Sure. I'll -- just I'll ask

William Burke

X. I got it. It was XX

Scott Graham

XX X.

assumption $X.X net about maybe the billion then is That at is I there. us walk And X.Xx just like through assume? of Paragon, availability, Okay. And of that leverage? an

William Burke

level. cash No, X.Xx availability our be that's leverage post-Paragon. at the revolver amount would post-Paragon The EBITDA of only about gross and under the

So as acquisition well And say. talked to flexibility of the continue we're lots I has other substantial as as Dave about, would as we to financial look still us strategy. well opportunities underlevered, available

again, portfolio businesses So constrained. not the finding the always AMETEK for capital it's is right

Scott Graham

Right. Yes, you how do as that well. Right. that's

David Zapico

way number can there and that, spend for above at we've as take said, have not X.X is up $X.X all. that's billion Other leverage. make and leverage, beyond wanted a high We before, post-Paragon, to Paragon. which X.X We acquisitions, been we on to Bill to

M&A and these So to looks pipeline balance businesses. game, we're on have our to to really integrate sheet good. the be And the capability in able the it we and execute

Scott Graham

kind deals of higher are lot decisions? you're a these make more maybe now rate impute interest off rates when sheet When an of of you rate looking funding days off you balance in the that But and them liquidity this is market-oriented obviously are at revolver. these you environment, interest of admittedly,

David Zapico

Yes.

current as that decision-making part process. use of rates borrowing models Our

Scott Graham

you divisions? kind typical Got Dave, mind on the of one, unbundling the four it. maybe Last question would is

David Zapico

process with markets were demand our the And sales remains contribution Sure, I'll the start solid. overall, process acquisition up our low Scott. of and around from mid-single Navitar. organic at sales I'll across business. process business. the walk for single-digit And digits --

secular products end in health strongest was growth aligned important are energy Growth like with well quarter and the trends Our transition care. markets. the technologies and across these

in While businesses. year, continue Zygo to for expect growth we organic to for And optics well, custom optical our strong our business demand very with sales the mid-single-digit continues Process full for high-end perform our solutions.

& Organic to Aerospace digits Aerospace were and low perform Defense to & strong Next. A&D well. in sales Growth continues subsegments. Defense Going remains up across double quarter. broad-based our the

in Our grew while strongest was aftermarket growth the also healthy defense and at quarter commercial businesses OEM our businesses, in levels.

Given on this strong performance, we now Defense year. for full mid-teens expect sales to for the Aerospace increase basis percentage & a

in & the from Power those in overall single-digit organic was In results quarter across third power up and businesses simulation a saw Technologies. acquisition sales Industrial, with contribution solid growth low renewable businesses, This sales RTDS. including and RTDS the We growth delivered the mid-teens. our by of quarter, the energy strongest driven the growth

the And expect power globally. Our build-out of modernize our to energy businesses to organic benefit all for the renewable grid from continue are power to and XXXX, infrastructure electric business. investments for mid-single-digit required well Power we growth positioned long-term of sales

And with by sales. being finally, a in than organic down acquisition for Overall double-digit more decrease of from mid-single Engineered business. were sales digits Automation our Bison AE&S, low Engineering, Solutions the contributions the offset & in quarter,

OEM across from our talked year for we prior exposed short-term a expected, inventory which customer As about we our combined challenging with levels, businesses. the headwind normalization the earlier, OEM comparisons, base, impact of created

demand underlying solid. believe is We

mid-single do & normalization as we throughout markets, about the Solutions But we talked expect, we Engineered year. for businesses constructive. & the to recur the to our base year. Automation end versus now sales diverse Engineered we the remain and organic of earlier, customer prior we inventory the As will said for continue going full through across Solutions expect And down is our OEM be Automation year, the before, digits

for here, all Scott. the commentary subsegment that's So

Operator

Our next Research. Nigel Coe with Wolfe comes from question

Nigel Coe

Congrats deals the deal, on even.

couldn't I good, hear Okay, you.

business XQ. on so Maybe perspective you about curious some contribution and geographically, maybe core acquisition just I'd what do performance. seeing gave Okay also, you Europe and the talk Maybe and you for you're China. for talk could final -- could maybe a growth about talk be process by about point on And geography. about XQ. same

David Zapico

Okay. QX and geography.

Okay. growth We continued the solid U.S., the in I'll international slowing a geographies. had across go bit. the with

with U.S. Automation. low unpack but and our I'll up in a single process notable in digits, in digits, strength Europe bit. our So that Aerospace notable business, was strength business. was The weakness mid-single down Process

China. mentioned You

Our was Process, XX%. down down in And China Strong Asia weakness Automation. X%. about overall, in growth exposure was

So did China of Asia, than overall of kind better sales. about X%

earnings QX and for our tax QX. higher in is costs some in rate. So there's again, QX for the a one to sales in our second grow second and integration of them markets. asked the is There the was up guide U.S., they're digits. up one in confident in mid-single completed. international related be two impacting acquisition, the the very And QX. will slowing We'll the And question And and on deals we you revenue. But guide are we're factors

Nigel Coe

core David, for the sorry, XQ? is I'm growth what

David Zapico

Core QX growth digits. for mid-single was to low

Nigel Coe

Okay.

So XQ. acceleration that's from What's driving acceleration? obviously that

David Zapico

selling on business side is that the seeing the EIG from well. we're good year-end think of spending, EIG some typically get we -- demand I year-end typical plus sales performing capital the

Process in and be that's to higher So Aerospace the performing businesses driving than and what sales QX. in well, our are QX our organic organic the sales

Nigel Coe

Got it. one That's for helpful. Maybe just more me.

Paragon, deal. obviously, big So

You've deal. posed another smaller

really the well. sound outlook on bullish as You

sort Any I are that willing sellers [indiscernible] here Are in multiples we seems here? still like any change mean sellers? of pretty from market on see the in more be a it is the we color seeing helpful. we line seeing would So fertile. behavior change cut

David Zapico

higher. interest Yes, little I it's rates And a are choppy think reevaluating. in people the and are the market

the in pipeline debt So strong. as on I continuing And categorize organization said very a would challenge. that a I financing is now right be our is beginning year, pipeline may strong. the of our

bullish being months lot over performance M&A. just We we're of to XX on able a candidates I'm at. have OpEx to next XX AMETEK's our differentiate the And attractive our looking with and

Operator

question Glynn with next Our from Christopher comes Oppenheimer.

Christopher Glynn

keep bit. going it on Paragon a to little want I

and OEM and -- for wondering listed medical history of if the ownership the and on you process, think is little competitiveness spaces? some such. and And components I a also deal I'm instruments. as the instrument bit it

David Zapico

about surgical Yes. directly the Paragon, but of Securities. tech think job customer When in parts their We a business with from of American largely OEM And excellent you their and some of the instruments they to do an customer kind base. sell some they're to an fantastic did selling other an play, portfolio. OEM they're end a business largely med team view, purchased is from customer, they have got base, really strategy. -- growth our a but it's running management what this good And pure they did by place, position positioning the

we're pretty excited buying. about what So we're

Operator

Our with Peter Mizuho. question from comes next Costa

Peter Costa

This Brett as Linzey. is on for Peter

orders. during So or just your monthly moving provide coming Have internal context into you then Could anything back anything cadence expectations? concerning order seeing to through been October? the quarter than and some the tracking you better

David Zapico

No.

our results. what I quarterly and deliver of evolution what line And book-to-bill to is think orders see. things the in mentioned we those We about in QX, need started out with that. we like we

strong period impact highlighted our we last dynamics have talked So of couple for a orders earnings we orders, our of been time. and in few extended very -- had an calls, that would

positive and organic XX% XXXX, book-to-bill. we consecutive averaged and we fact, XX XXXX up with growth quarter quarters to In this had in

we So playing out as as a are as a we have result, we backlog, anticipated. record dynamics near the said,

Operator

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

David Ridley-Lane

measurement the impact any seen Wondering those of And for interest some you've Ridley-Lane particular, lines? on This demand? and project mentioned China. have seen test publicly from on end in delays, along you traded the in Have is particularly higher David other companies rates market Obin. if anything Andrew

David Zapico

Yes.

As organically in China. about I were down mentioned, we X%

it but So delays, there substantial. some wasn't was

interest are now. very And rates, for And clearly increasing the right that's like that a projects it's looking one or this at on of that dynamic terms we're uncertainties interest In sure, not but of an environment point. we're at. the proceeding there impact rates factors from anything seeing

David Ridley-Lane

a and a are greater in accelerating time? aerospace over of businesses? chain it. even supply that and this at Got And on defense point growth your constrained you sort limiter Is

David Zapico

supply at chain not are in We limited time. this aerospace

difficulties, supply we're some Now is limited. the but with industry dealing chain not

Operator

Cowen. TD with Anastasiou Michael from comes question next Our

Michael Anastasiou

medical-related about, you it take, give currently, Paragon, about to are And after to of acquisition, takes XX% this revenues XX%. or Back sales.

expecting expecting And dollars for if -- then markets like just of balancing think what into sort helpful. be to was would well? is medical just a the Any make these end way about different forward? push deeper best like as color moving curious M&A So you're to

David Zapico

balance in and of we there's Yes, why right a really AMETEK's now. navigate that end some that able we're the going through markets, to we're challenges balance. like That's

-- there like So space, keeping the the we'll it's balance. But are -- But at areas it's that balance other the them. plan portfolio. in if medical on look certainly we we in attractive

their are work what operating make to I your have was their that Michael? forward trying and we In strategy candidates. businesses, mean other dollars. question, there of teams our M&A doing And have they're model. acquisition and businesses management all better, businesses a we distributed around bringing

deal for don't quality, we predefined capital of predefined the we're -- if businesses We're be teams management them. apply to the to the certain the we the So integrate that to going have deal, a and amount looking have of going quality to markets. number of

it the We look So at of we terms different in down a top allocated dollars market. from have don't per viewpoint.

Michael Anastasiou

kind That's it. into you. just Got And helpful. diving of back

potentially, expect total on you of expect as And market medical So and over do assets end availability increasing how time? do revenues such, that? the to depending you

David Zapico

that us. plan on having it's XX%, go revenue XX%, bother But a XX% Yes, we diversified could wouldn't base. now. It

Operator

it That remarks. I time, closing concludes back session. to the At Coleman question-and-answer would for Kevin to this like turn

Kevin Coleman

call. our us for for Thank joining you, Abigail, and thanks, everyone, conference

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

Operator

Thank program. today's your does conclude This in the conference. you participation for

now may disconnect. You

AMETEK (AME) 31 Oct 232023 Q3 Earnings call transcript