AME - Earnings call 4 2023

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Operator

Good day, and thank you for standing by. Welcome to the Fourth Quarter 2023 AMETEK 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, Kevin Coleman, Vice President of Investment Relations and Treasurer.

You may begin.

Kevin Coleman

Tanya. you, Thank thank Quarter and joining for us Good Earnings you Conference Fourth XXXX Call. AMETEK's morning, for With me Financial today Officer; are Operational Dave Zapico, Chairman Executive Puri, Vice President Finance. Dalip Bill and Vice and and Chief Officer; Senior President, Burke, Chief Executive

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

or will tax, on and XXXX XXXX results today's Dave. made questions. references press between amortization be turn our Any or our found up be excluding for after an XXXX guidance meeting adjusted of I'll release acquisition-related prepared basis, intangible and we'll it measures the then can GAAP Reconciliations to over on with and this adjusted call the to Investors section on to open in begin now We'll website. call remarks,

David Zapico

morning, good and Kevin, you, Thank everyone.

the get changes share quarter, Before results January that leadership, on XX. our is financial into which emotions I financial the with mixed the in it of for I news we announced

our AMETEK, into at our well-deserved organization, and deeply Bill has his Officer, AMETEK's growth His success. of legacy and Financial XX-year and Burke, heartfelt the instrumental exceptional for to of Chief tremendous outstanding woven in contributions. fabric guidance April effective retirement strategic a gratitude our our X, embark been we express his is organization long-term decided an on career XXXX. After finance leadership has Bill's

serving Dalip for AMETEK and Group Treasurer Puri his In light currently and role. delighted President of oversight took Financial role businesses experience joined this Operational a on and of of Chief half transition, Operational announce role current our Officer. in Dalip to before Dalip, into Senior as Finance. Finance, over I'm AMETEK's subsequently expertise to brings financial as Vice of the wealth of Executive providing of XXXX Controller, appointment new transitioning as Vice President, the this

at contributing record Dalip's him key the with continue a our exceptional you, ensure truly proven adviser as future. significantly initiatives stay to that service, lead transition, leadership AMETEK, under your on the organization a senior the Bill will choice future. Dalip's to financial congratulations Bill, financial our along into To a of for Dalip. make leadership, and Thank I'm AMETEK. track XXXX. to natural April financial success confident will organization about I'm of seamless thrive the until excited

to record outstanding me the execution, ahead records we quarter's to and cash for set sales, this results our of performance turn leading Now quarter, results results. income, delivered let exceptional share, EBITDA in delivering flow. earnings In per fourth and AMETEK expectations. operational quarter, operating the

also record ended quarter backlog. the We with

Research all and we model, portfolio on underscore Amplifier acquisitions results year for Medical. of the over Paragon acquisitions, the strategic and Furthermore, also the billion businesses successfully enhancing in growth our your significant employees. acquisitions of AMETEK success XXXX. record our our quarter, growth AMETEK the strength These continued I with in of the is a the deployed cap for and of the $X and global contributions dedicated AMETEK's initiatives. want efforts our colleagues of quality result organic success efforts the thank of to

added operational Organic AMETEK's and approximately XX% quarter We financial the from quarter which margins. to of fourth up quarter incremental turn performance margin $X.XX is X the X.X%. strong record point. the backlog sales was billion period foreign our outstanding, with record of with a points same X sales were over quarter ended the me Acquisitions Now results. billion, up let XXXX. $X.XX a in and Fourth X.X% expansion in growth robust XXXX. added was currency start

prior Operating the increase and the year strength up were in differentiation XXXX. model XXX were businesses. impressive of from was flexibility the expansion our quarter XX% million, of quarter, of up while over our the record Operating the margins reflects the and margins This basis core margin income a quality fourth basis $XXX quarter in operating strong an in points quarter. the XXX and points XX.X% a

quarter record EBITDA $XXX prior million, the year, impressive X% was with the a over an up XX.X%. in margins EBITDA

generation million. free This performance led to guidance in a fourth robust share the performance of diluted XXXX XX% versus tremendous per range earnings XX% up of our the operating share. flow to quarter quarter record with to $X.XX, and led $X.XX operating and above growth $X.XX cash strong per $XXX up cash Our record of to

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

X.X%, points strong with Organic operating in EIG of First, and with fourth quarter, quarter The record were Materials Analysis an was quarter Aerospace the Instruments were tremendous billion Instruments accounting & for X fourth growth sales up acquisitions sales EIG the across strongest Sales Defense for last sales X% Electronic our $X.XX in division. added and balance. currency businesses by year. grew our the the quarter performance. up Group. a the growth excellent from Electronic

customer across finished from year. despite XXX prior our normalization were record exceptional the profit the EIG's the operating margins continued outstanding income with the performance with and and year, points XX% operating also prior The growth year EIG was a margin OEM impressive million, up inventory impact Operating XX%, from the performance strong $XXX Group base. Electromechanical up basis of expansion. while strong was versus levels

for million, recent EMG year, operating contributions prior acquisitions. income XX.X% by up the were fourth quarter. margins million, was versus the driven sales the $XXX income operating from while quarter -- X% margin Fourth quarter EMG's operating in were $XXX

acquisitions, points the year. from were Excluding prior basis core EMG dilutive impact the XXX margins up versus

for were key accounting in for XX% XXX was up annual and from the XXXX. year. were prior all X% establishing XXXX, acquisitions Organic sales the income year points Overall up for operating of Now $X.X $X.X performance the basis the billion, versus sales up was billion, for growth. outstanding the essentially year, XXXX margins XX.X% full margins increased X%, year with Overall full metrics. the results. records for with balance Operating for financial

for per the the EBITDA with year. earnings XX% full year was versus $X.XX XX.X%. share strong billion In margins year were up prior are very $X EBITDA XXXX, diluted

strength the in of year and highlights performance AMETEK Our the quarter the model. growth fourth full

with while growth. our differentiated are strategically Our us sustained and businesses for markets diverse long-term aligned position attractive initiatives growth organic

This and structure is a businesses on market of evolving This cycles. quickly throughout structure operating distributed execute the asset-light growth flow to to cash economic on dynamics. strong model operational execution and initiatives support balance with to provides empowers our deploy with Our AMETEK to our our result robust business adapt and coupled acquisitions. in cornerstone flow, Furthermore, and navigating growth cash firepower strong our plenty success sheet, our exceptional generation. of strategies different

technology we acquired very acquisition very is offerings they including development as deploying strategic an and welcome to were and expand AMETEK. on modernization of AMETEK Speaking billion excited product renewable the applications our help XXXX, the Each in and $X.XX X growth fit Power the energy markets of quarter. and with highly attractive acquisitions the Paragon group. including of all excellent approximately to successfully companies Amplify fourth I'm acquisitions, active Medical and acquisitions, in Research

a in we expands Medical, technology medical in December, the is of latest our components In in and medical Their manufacturer highly specializing a addition, surgical consumable OEMs. Paragon market. portfolio instruments. and our earned applications customer diverse which presence top-tier middle acquisition, has medical closed precision and the Paragon leading crucial trust including product single-use engineered of medical nicely the the spans base, for quality and reputation device on

to XXXX. Looking ahead

remains Our robust. acquisition pipeline

strong capital we anticipate and sheet balance remaining flexible and have acquisitions. deploying a and noted, As active

addition invested of development growth in to XXXX, AMETEK our majority invest The strategy, In initiatives. $XXX organic this be another And expect an million research, in $XXX and functions. in investment and XXXX, investments marketing will remains within engineering initiatives. growth sales incremental strategic to incremental and our we we to million. In acquisition making committed

Through reflects an from AMETEK's the our X we index, have new quarter, introduced the of XX%. seen acquisitions, products which steady strategic and was years vitality healthy these a In last a transition very sales in investments well for AMETEK evolution exposures in portfolio, growth more secular strategic and the presence acumen, in strong reduced operational cyclical of markets. expanded growth. This positions markets proven continued portfolio, and combined with sustained with our

Now ahead. shifting year to outlook the our for

organic XXXX, For low low on expect be double up growth. a we sales basis overall digits percentage mid-single-digit to sales with to

for to up $X.XX, earnings to the year's of the X% to last are year $X range in be share per to compared expected X% results. Diluted

X% earnings double AMETEK's the outstanding. versus of anticipate overall sales we In be and quarter, year. full up with X% prior share, of quarter to year first $X.XX the performance digits throughout to was per XXXX adjusted $X.XX up For the the in fourth summary, low to

with results the exceptional role of delivered businesses key all playing model, success. in Our our a AMETEK elements growth

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

William Burke

I kind top the Thank your the of you, appreciate Dave. at call. words

growth nearly As honor Dave gratitude entire and the been which we've the the of to noted, I want to Financial shared. Officer. I for deepest retire It X to the my incredible journey after an privilege express serving AMETEK decision had family years and with of tremendous AMETEK. I of XX Chief to to as have AMETEK, made has the success thanks contribute

the your To in confidence me. you Dave for of thank and Board Directors,

behind adviser and am of leadership have company the dedication I has seamless look transition. financial in with force you. driving the to success a closely and forward leadership confident our Your thankful been for as your colleagues, to with the share I'm of talented to strong the And in organization support privilege and remaining April at until my working AMETEK. Dalip's ensure truly been invaluable. senior XXXX very a and I

Dalip like a Before for the say results to into few the I Dalip? fourth quarter, words. would get

Dalip M. Puri

the and and sustained Bill, team portfolio growth thanks and we partner incredible good of to I and AMETEK's you to lead morning, to with the Board want to is working to Directors Dave to deliver Thank future. of finance serve my to and as I of an all meeting our express EVP confidence look in new me. their across leadership too Bill, the as organization AMETEK's to Dave, trust for and CFO honor very strong in and you, businesses. continue I'm everyone. It and with excited to forward

and I turn his also for to my mentorship smooth a Bill I'll want guidance years and back Bill. that, With it thanks the you, to transition. over express to his to commitment

William Burke

Dalip. you, Thank

Now quarter on fourth results. to the

outstanding quarter. fourth finish the results AMETEK to Dave As in an operating highlighted, XXXX had performance with impressive to better-than-expected leading

XXXX. for some year provide as the me financial as for additional additional Let full highlights the and well guidance quarter some fourth

and $X were up general prior year X.X% at but expenses quarter $XX.X sales. administrative from Fourth unchanged million, of the million

For million were be quarter general the and of general XXXX, full additional year, $X X.X%, fourth and In X.X% million levels. to line and other income. of as quarter XXXX pension driven Fourth expenses in and diligence sales up XXXX, by were approximately expenses with expected are administrative percentage administrative and sales. compared costs expense, lower $X expense the due was to income higher a

expense down line expirations. other effective quarter to from be For and XXXX statute levels. XX.X%, the XX.X% with was due The of XXXX the XXXX, in rate income expect fourth tax quarter in we in largely to

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

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

the fourth fourth $X.X up in free in year For Free XXX% $XXX billion, to the for flow operating the the was the net quarter, superb XX% quarter, operating the versus XX% with cash up of a sales. Free with quarter flow $XXX income. XX% flow was XXX% quarter. also cash up of prior conversion record of million, record Cash of XXXX. and XX.X% cash XXXX quarter flow of flow million was for versus cash working of capital was

of XXX% XXXX, be expect flow conversion net For and free to XXX% we cash income. between

cash Total cash $XXX debt and December. the Paragon $X.XX million was million. billion, [ due largely year-end is debt of ] end at $XXX at up Offsetting this equivalents of to XXXX acquisition from the in

fourth we Paragon the during deployed the quarter, As of Amplifier approximately on Dave acquisitions and noted, $X billion Medical. Research

was approximately billion from XXXX, on of X.Xx end despite the the deploying acquisitions Our year. up at XXXX, at X.Xx during of end leverage the gross $X.XX

capital $X.X summary, of We high growth businesses in earnings. support remain the fourth additional well and deploy quarter and to strong well of very facilities cash approximately all have positioned credit and our to billion initiatives. quality existing performed our of growth In and delivering XXXX, a throughout exceptionally

for continued positioned in XXXX. well are We and growth success

again, it to once I'll turn and now you Thank back Kevin.

Kevin Coleman

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

Operator

[Operator Davidson. our Matt Instructions] will from first Summerville question D.A. And come of

Matt Summerville

organic the And I inventory orders in analogy, Bill. normalization there. when business EMG what Congrats, that you the to inning respect within about you're are Using we do start to a in wanted first and see ask to normalization? EMG. with inflection seeing baseball

elaborating follow-up. I there? then So by if And maybe can start a you have first

David Zapico

Maybe thing not EPS to Kevin that it $X.XX I Matt. want year for me the is the outlook first diluted through XXXX, clearly. $X.XX. Sure. may have do Sure, for is and told the The -- come to

I'll So to that's a maybe your it correction question, of And through now said get before, I didn't if had what come clearly. Matt. just

largely we we during our of the destocking parts talked mean OEM played that and think that business expected think I we we QX. out as as about OEM

We're continue finish comps it the in going we're pretty of first forecasting. the half going of year. way good that to -- we're second and have the we're then expect difficult through some We the in year, QX, half for the QX will to

we're again, right backlog our working -- now. off the So

it's not immediate So on impact revenue. an

the the will And in already of good be it's QX But first half that probably think a happen. we the year, than continue destock of for bit to starting half the more year. second but QX, will for

year. Some continue customers the levels, are through of but the will it have first half corrected their inventory

Matt Summerville

what what and capture experienced in and Got it. cost over 'XX in 'XX And should review in price year? then you you this we ultimately, of can about price terms relationship like looks thinking what 'XX be that

David Zapico

total Yes, about And sure. quarter, X.X%. XXXX, fourth price inflation was we In transition inflation see was sales. really we decreasing. when about the of to X% And

is we where inflation the about price time will inflation in at we or we to be above had coming the be And think be an X% pricing across entire increases So significant at X.X%. XXXX think to and about very would end. portfolio,

positive we so And a maintain spread.

value. We're We creating have the product differentiation.

price we You see our new conservatively say budgeted, during products are selling capture very I XXXX. would well. X% at But

Operator

[Operator RBC Instructions] Dray question coming next will be Our Deane from of Capital Markets.

Deane Dray

and distinguished Just a to that add just Dalip, of my is epitome congrats to career. Bill the

So congratulations, be missed. and you'll

William Burke

appreciate I Deane. that,

Deane Dray

the to with? that you maybe terms you're seeing do then percent do of terms there? what take Paragon what Dave, Is does of orders. and us medical? of comfortable in in demand it that And from your you in can markets range you're And through key how expect the end increasing grow

David Zapico

that. with start I'll Yes,

to see we tech With the our into Paragon of about even acquisition, that med like has And the sales portfolio space. XX% larger.

acquisition that that businesses fact, digits And plan the within integrated. fourth we space. space, and for on growth up looking were EMC still strong quarter and in to mid-single we grow Paragon we're we nicely with QX, before So in got our Roland in

we're happy still for So it, in continue want space. the to to and We the with deals we're space. grow looking

strong of with segment. start I a low are go and in saw subsegments. across sales per for se, the various growth our largest were and a around digits completing that broad-based the subsegments the end organic single our I'll I'll markets, Now year which the businesses, look Process at quarter, horn, our And Process up component

look applications. for given sales and research optics full position the within their Zygo was strongest be Process to Growth attractive We we XXXX, CAMECA strong digits organic technology year. medical businesses low expect businesses to up and the with our single for

single it's segments. & digits a year. an single fourth Defense, to XXXX. across low So digits was low complete quarter all XXXX, in Aerospace excellent Growth in strong broad-based

the the single single high similar for up businesses. quarter. up again commercial of the high aerospace across to businesses And with defense. Defense growth was Aerospace expect digits balanced & in organic XXXX, and across we commercial aerospace be growth was and Organic growth digits our The sales

power I'll from up and contributions being double offset quarter digits move our They fourth the single-digit Amplifier low growth. businesses. Research were with low UEI acquisitions of to the organic RTDS, in by sales

renewable on of very Our to have acquisition active grid. highly acquisitions the broaden been power applications months. with strategic power XX energy the modernization past These the businesses to front acquisitions tied exposure attractive X over and our

we the mid-single XXXX, organic up expect sales For Power be businesses to Industrial for & digits. low to

good be Engineered in projects, evolutions. from Bison that we with mid-single some project decrease offset -- is contributions Automation to And segment pretty positive then that grow Paragon digits and certain more and finally, the impacted in to low Medical mid-single to digits business up mid-single-digit our XXXX, sales. we're So being there's feel Solutions, some acquisitions & of going in able the quarter, by the was a Engineering, organic by project

with levels inventory business line growth our back customer the into to to them in normalization across Results XXXX. they the half single XXXX, year impact inventory OEM the Engineered continued Matt of first with and of half. we stronger and the our the expect base, be with up levels quarter were really in expect the & In about expectations Automation digits than customer Solutions low of base in in normalizes continue as as the we expected, asked that

] be horn, Deane around the second [ half growth stronger [ in the ]. subsoil So That's will the that for half. first

Deane Dray

or just And the that stack on investments? appreciate we're momentum $XXX quick up one this just carry terms it there in growth I Is And in of anything 'XX from quarter. How it other? from seeing 'XX. target in that is You're for remarkable mind?. Is way the XX% your your skewed where million there product Is how a it. new fabulous. the expectations one does quarter, product it's That's into XX% vitality go last And in evenly does -- distributed? here? categories? follow-up

David Zapico

Yes.

XX% anywhere and think I is number. between good a XX%

always what range. that's And XX% tracking we've said. it in started So the this, we back was

So development our progress have product with tremendous efforts. we made new certainly

comes where of really $XXX the up. million bottom terms In it's from,

and it's want those our business about they it's our the together. in if we to year. million and business. ] put It budgeting go at their plans and best opportunities, growth So invested what goes will plans they beyond the And prior year, this going units [ to spread $XXX across pitch be

Operator

moment X In for next our question.

Our coming next be Fargo. Poliniak from Allison question Wells of will

Allison Poliniak-Cusic

Bill Congrats, to and look with forward you, working Dalip.

the the into Just from that R&D go you does investment this those $XXX did million question. The Deane's following did $X business? think million, just is need push incremental space, trying mean tech to 'XX as higher? on that needed number for those trajectories million up to you through med continue that I'm $XXX to I

David Zapico

research, investing of Yes. We're X.X% that and we businesses, currently buy engineering. number modestly. under technology will just higher And sales as increase development on

year, RD&E, on I million which healthy good is double-digit the $XXX a up spend. think we R&D total this spend to expect on amount

So our key business. our of R&D part is a

portfolio to anywhere, us we're a jump that products of providing to but it's value we the pricing think big lot customers. you're leadership our our because in. happening higher to technology It allows see to have maintain that to as evolve products. We want we positions get naturally don't going a I can we unique industrial get technology

Allison Poliniak-Cusic

Great. any color And on M&A. just

You year Any Just go still med expecting? should Where we we the know vertical in obviously seeing seeing or mentioned good of last a a in size thoughts what tech of I from you greatest are be you sort standpoint. are record What leverage a position into? opportunities? are terms had through? difference any is you year, thinking want there. that to you a

David Zapico

it. the -- our would No, Paragon it I at of size. traditional deals our billion. pipeline, different We're the few more And expanded I our on across that the looking larger larger think characterize attractive got X we're were a We high-quality in and in we're also did have markets. happy size outer They deployed very They we business deals. in $X.XX deals additions. presence of size with the edge we We the growth of parts done.

Remember, a have meet We to technology return financial strong it's on year path add a XX% business value clear capital X. a will position. companies. Each has these invested our very deals The in to traditional hurdles.

across remains In our of number pipeline terms actively a set at of deals strong. very our And looking pipeline, are a we of broad high-quality markets.

when remain we'll always, disciplined do this. As we

market I because And markets excel quarter, probably quarter, see strategy, with combined we the sheet our -- with that opportunity that The growth choppy great the performance we are and of great OpEx X, to our X, have with M&A had second it's we element tracking. opportunities in evolving, I think market we're and fourth M&A, cash and be quarter, or differentiate our the values tremendous and balance way the going slowing is to positions. the mean third flow really we X of are. the bulk the

So we're pipeline this good, -- year, but and looks really, optimistic. the

Operator

our coming Vertical be Instructions will of next [Operator Sprague. Research.. Jeffrey from question

Jeffrey Sprague

deals, Just Dave. on

is I your XXXX, color you the in think what in also? the to little or Paragon, not and deals EPS really on on expecting 'XX. other give kick the 'XX Paragon embedded in But guide can impact in, much most a us so just accretion you're for

David Zapico

of prove Related to is going One, product market Paragon couple to the year, the going the look areas. potentially first and the correction for of specifically, there be portfolio muted Well, reasons. half expect an -- on some some and product doing a to less sure. in inventory we're growth during less going we're at profitable some -- medtech

integration as -- in is exciting. continue we because within going And the to costs. very the be are that XXXX. got that half we're XX% very strong expecting introductions they second product the but in through And to accretion expect all we're new that guidance X% during our a loaded this said, go But to -- half. first some back-end there's So we whole layer in this process to is

Unknown Executive

$X.XX? Is clarifying? to what $X.XX that

Jeffrey Sprague

And the $X.XX. around of going to for markets, $X.XX Yes, some thanks and which markets it just turn. are bottom And exist and been in world. have of vein the of end you what What drilling the does the the in But of of further a semi-related lot see a Yes. Like of in quarter seeing little then the those here the particular, bit XXXX doing recently that how people for into kind kind do kind you in specifically? looking kind of look? markets?

David Zapico

We is have a too. little We seeing. of different dynamic demand have memory in a CAMECA same it saw that just semiconductor, and But in time, our because business. a technology really technology of at have about fabs. people the on exceptional we all in I It's the that calls lot talked downturn next-generation that's couple a we about some in are past

have also Zygo semiconductor few of and business. the EUV, We're we companies And our manufacture one ultraviolet that optics fabrication. can extreme

in -- to offset were to the of up a memory call X It's growing able the the They be. those XXXX, place good we are of portfolio. XX%. part core some I'll had for ended And dynamics. we weakness So the it,

it us. So growing was for a market

And for grow plus digits. to mid-single another we expect XXXX, additionally

grow grow So were in we to technology, able and in the think we'll 'XX, we largely of to continue because 'XX.

Operator

Research. will of question Coe Wolfe come next Our Nigel from

Nigel Coe

on retirement. congratulations your Bill,

coming coming from about sort level? Paragon. Is in [ few that ballpark right The obviously, kind for lines mainly got of M&A, single a the right So X% digits just revenue I've in growth from low X%, guidance me double the of that for organic. of X% for 'XX. high M&A, implies which Is digits ]

David Zapico

You're in Nigel. ballpark, the

Nigel Coe

Okay. off pretty both coming incremental across We're Great. That's just comps to on And in tough EIG. margins out helpful. some then segments. call anything

margins, we how curious, just core overall incremental importantly, but about more margins. maybe So think should

David Zapico

you or XXXX about XXXX? for Are talking

Nigel Coe

XXXX.

David Zapico

XXXX?

Nigel Coe

Yes.

David Zapico

And XXX mean were basis a away up and XXX fourth Yes. what I Core we they're acquisitions. quarter. peel margins reported in was up actually margins in points. points fantastic you basis going points. of because were up. quarter, was great had XXX had margins it dilutive the year EIG EMG, margin a on, basis when up XXXX are

to going And margins, going be moderate think for XX they're believe a up to continue they're think moderate the basis basis that to XXXX, we XXXX, going to And to but going are be going margins to a good So really that really points. XX incrementals. good about core bit. core them, They're for we up points. are We incrementals grow bit.

And be cost year, and those we pricing our and dilution. at margins like reductions is being the built XX thing to the you core as and probably but points. that's up whole the reported core due to for model things that, incremental the acquisition XX look about basis basis When down on have margins up will XX points

So the story. whole that's

Nigel Coe

on really helpful. That's quickly Okay. And then just geographies.

the anything 'XX but You've if out gone end there's markets just to wondering through call in geographically?

David Zapico

the And Yes, in the growth QX I'll Asia. do quarter we stand. a by and we led summary U.S. of geographically, where so know had you

been U.S. the has all strong So along.

The part single automation digits up was Europe high U.S. Asia down strength division in Analysis in by our digits, a with and business. picking mid-single was is Aerospace & notable Materials Defense, up our bit. driven

in was Materials Precision our our about strength division and Ultra with little Analysis Asia about a up under division. Technology X% XX%, And

dynamic the was general in what's a little marketplace. We a going have than on that different

China sales Our up QX. were XX% in

flattish -- that project some a but one were we XXXX, of moderate they into division that So there growth benefited about because was we QX. in from. Asia, think we up market Materials -- in XX% is look we UPT. When to Analysis the going our businesses more we'll XX% think and of to in in China grow XX%, Strong year,

in and on think So it's still and flattish going basis the Asia. broader to economy, we'll be good an on the orders we for in it are in us, China, will but seeing impacts we grow be XXXX

Operator

will question from of next Partners. Our Graham coming Research Seaport be Scott

Scott Graham

you a invest Bill, great I run. you. been hope happy to complete Thank remain working family. a congratulations with on your It's pleasure you.

William Burke

very Scott. you Thank Appreciate much, it.

Scott Graham

through was bit in for Dave, could organically? go both and you the I total hoping, orders a the quarter,

David Zapico

up XX%. make here. Yes, stuff The orders -- the in for we're let the sure I'm Sure. looking right total Yes. quarter Yes. at me the

as was that the acquisition acquire largely orders booked business. a when the Now you Paragon the get because driven first backlog by

orders XX% were were orders that and EIG up So EMG X% orders, XX%. up

by were translated a minus And ]. Organically, driven book-to-bill and the into orders EMG again, it X%, the were Paragon. orders [ of X.XX

Scott Graham

into And the sometime really half, second the orders that second and would to start you quarter of Bill, the then flatten organically first kind in half? that expect, be out progress for may you perhaps the

David Zapico

Yes.

I the have pretty quarter, difficult think comps. some first in we

the second So trailing we trend in maybe similar even in as outpace orders with then quarter, I the But will out I second orders expect think the a get half Yes. sales. the year, sales. of

Scott Graham

it. Got Mike one [ ], other And just question. then

a guidance, Would you're was of little summary the from the are, defense to guess, that, versus the Within what out I at you're Defense parsing and And and surprised bit you your in in maybe looks way. businesses. aerospace off company for kind tack in good me organic particularly total that's expecting expecting the on drivers a this stemming sort Aerospace what it year mind of of the level of I commercial?

David Zapico

in good level that strong, are the digits. year have at and single terms in OE plus about mid-single-digit OE the EIG too. same really the mean this think to commercial going And the for strong, commercial number, And that's and military in the Aerospace, we're Yes. that the going and a to both business. we are good, growth of are high groups, did company we overall aftermarket is I organic And low and we to EMG. be grow diversity orders

that. are the in both military to and largely we XXXX. commercial markets the be So the single think up optimistic going high Pretty about -- digits total

Operator

Wertheimer next Research. of question Rob from Our Melius will come

Robert Wertheimer

up algorithm. ticks So comes some normal the know 'XX And like that starting bigger than first kind we environment. more in as the don't and out pricing maybe a volume growth more into we we're looking if as at first the year you just I where that seems growth? then assume, is back, XH, return holding is are core of that world in X% on or destock talked beyond we And price-led to the It Are a going? your view my volume. growth exit expectations picture and get as channel we on question. is I But of even place That's have maybe volume about back. question year? is on into of obviously, you

David Zapico

well That happen, Rob. Yes. very could

And half I think world. think to our half. a in the stronger be volume think has X% the little in the first second pricing a I we're potential -- the I than

about So something We've that -- been exceed was second could of it, be we're our there half volume kind that organically. you're volume. outlook. it. half thinking what saying second it conservative the But is if will Sales pretty in how

Robert Wertheimer

I there. give core, then of in the given the you And in Is a value general different from Perfect. could your just rise portfolio, just the if there. tech it white general anything wonder, med more if there, on all, Okay. general add thoughts on differs thoughts growth the thoughts it's competing environment core space, And others at if Just more would. if if couple then and deals? you it's acquisition against of a

David Zapico

and been back and an the that that go mean in market a that gave businesses. that winner medical I successful. Paragon Yes, we business us very fabulous for acquired has some that we've as has EMC growing Rauland and made acquisition, look the business business we And And similar confidence. is market. the in is us business been good been

And We But whole they're basically, based OEM in it's than more engineering. market. than is end OEM our EMG market on the a win classic business little market. on businesses. based more end technology, -- AMETEK They're

the looks in future. in at your terms of building to you're You have longer going what customers be

just market. next going we down that of on. are Paragon to will of the years slower be some pretty the because bit a X over get the little in And things it's think the on gate that a So stable of case growth

few confident pretty a low going it's the be grower over next double-digit we're to years. But

So we of our think base with going just additions, those a they're grow portfolio the rate bit portfolio. than greater to

Operator

question Our Buscaglia come Paribas. from of next BNP will Andrew

Kevin Coleman

queue. go Andrew, the are to and back the [indiscernible] you next caller there? Let's in

Operator

. Certainly moving from Bank America. Andrew Andrew question forward? to Obin next Our is come of going of

Andrew Obin

you Bill, congratulations. Yes. hear can me? guess I

little more So just a bit color.

automation You -- half other short I companies rebound. cycle expect think like second

everybody very from of view half? that? your visibility And things hear to much something second going similar. very sort of confidence consistent we do acknowledge turn have And that in comments you What I what are the with actually is else. Your you what indicate kind are that on gives

David Zapico

Yes.

our for forecasting the the I getting we're think that the second from to input conservative we're And entire we're be in that for that it that half in digits. Automation, on customers particular, segment, I marketplace. in think single low up

we're out. would our not be it are customers So telling in higher. If us we just what put there

we conservative So been of that we've in placed as a it. -- bit

and -- half set -- the think do understanding second largely And that work depleted. we'll from those positive see to year. to talking plan inventory and we customers we are their it's those a it's backlogs the orders, it's -- typical for the levels a as And

Andrew Obin

maybe just a follow-on on Excellent. that. And building

that differently sort capacity, there expanding you and are broadly about about capacity this your in capacity increasing need as are supply utilization? going start you are of talked what pre-COVID? to And to units chain but expanding putting finally, where are capacity, business You investment, are where do maybe you you versus

David Zapico

work of did COVID. of the did mean I a before China, we actually terms Yes. lot it we in and chain, risks to eliminate supply from

So And of as it. the world our we I different around chain it's well positioned regions because the -- China-centric and developing during the naturally not think supply that. is of were

that's So item. X

investments Mexican typical We away our in I our our years. sales. We X% did to get incremental incremental facilities, it capacity We're of We think we from CapEx come and our put the that you in we guideline. facilities. X% in And low of facilities. Malaysian capacity to over put capacity, put few a have capacity don't our Serbian capacity incremental put in sales within in of business. we -- not terms past it's significant

the have model think I quickly, usually pretty an have cost and we and we we're flexibility asset-light quickly. up -- So business pretty we ramp very can to reduce

of without we investments model AMETEK with CapEx can environment. downsize. stringent when one the sales that's investments low and on So We adjust our of capacity big without the downside grow advantages sales the

done we're the few be to that years the confident excellent we've in we're up growth so, to next grow through going able or position keep and feel with I So to cycle. all growth past that work really over the

Operator

question. next our for moment my In

Our Mizuho. Brett is from of Linzey question coming next

Brett Linzey

to to back comment on the come everyone. Paragon. pruning Congratulations wanted I to

the indicated makes areas do less higher you continue you're portfolio, you pruning running I this profitable AMETEK to towards on total the So more some side context of growth, to the in of the shift there down the portfolio? context in as guess other higher-margin the of broader sense. areas, is

David Zapico

every acquisition. we This about that with do printing new something process is just

and a not little going is we time. that business careful be the this Paragon And but with is we're all new. bigger And to So it's something it. do

be going the deals all So in will going first M&A go Paragon half. to through process. through this is

time. kind And we at we the and thing our own look of that do portfolio all

pretty So and yes, question, Do have portfolio continue, things. we're you it that rationalization can at another Brett? good

Brett Linzey

in that all? on last Yes. in guess as and spending spending I or capital And then just on a planning have the capital versus businesses OpEx the the changed look type spending few the businesses, just you CapEx. customer this second to the assumptions in months capital for were year, intensive if at you tone environment those -- at hone question

David Zapico

level from the of spending And grid, been In number just a semiconductor, government is power they're backing. different a record before. a of the energy, at lot U.S., they've clean projects that than there's and from

in optimistic And going point, for it's field So continued. at that's a lot industry. largely provide playing to some an the of people

model have that spending particular -- upside right is now. built planning the dynamic on U.S. we typical going projects. our think now, don't driving that of right there's those the but about And I with it's kind And projects into

we're So to tracking number. high a very

Operator

our Joe will next at from come TD question Cowen. Giordano

Joseph Giordano

of chain. And fine. it's are Harvey conditions [ ], -- orders anything has attributed not seen anyone inventory for companies have of decline to supply lot underlying all multiple And organically quarters a said So about kind being seeing now. predominantly, adjustment and

So curious if adjustments. worries anything you than and agree is And one, two, declines order chain is with one just that if supply seeing other saying would everyone it you if that. is no happening

David Zapico

done It The the mean XXX-year really business doesn't I broken. And put inventory the talking place. what so is project got it's to happened. pandemic. I in chains last as supply were call, just People strong. because saw you

in defense, health a view. our similar businesses power lot a have care, and and well. aerospace of We're They we have are energy So performing projects.

think we we're muscle off we and we to industrial market. nobody the at going they're area. good typical the end to a then mean, into though, day, member have inventory And just be return And knows. for I growth the recession, going more to that run in the if a work of that

during great we our people select react a react excess able be did been fact, 'XX that and So already job those And always can to we removing of automation in have business run appropriately. we'll our doing in costs from businesses business. margins as the business,

that. good have the our we're We reacting. So in with projects pretty inventory right worked at future, we new don't the looking the being off, in But number future. optimistic of we toward the and see now, OEM see businesses mainly we're

Operator

going Steve Barger from is question KeyBanc Capital Markets. to Next with come

Unknown Analyst

that does exposure And getting of for For next looking great, expected Something the extend is exposure years? mentioned rates advanced which but the show strong specific couple at is to if you which the to not, there? semi M&A? growth business, are is for optics, your to applications, packaging team

David Zapico

Yes.

the advanced some exposure across bit it's to We we're in business components. have little packaging, a selling spread places, different of but

So like more. of teams the we'd but that's looking to at, that our exposure, M&A one items and are have have we

Unknown Analyst

Okay. starting the rates to cleared And specifically? side, translating on yet? then seems is still memory and maybe the a product finally, on utilization memory like pricing inflection it needs be into that side fab improving Or bit. for improve Is is there that to you inventory are

David Zapico

Yes.

bottomed. is pretty side, I think market that the much on market memory that

going when -- to that's immediately to So to be that I bottom there's I ticks flow think there's the -- a think don't up, line. going

mainly think I out. there the cleared inventory is

Operator

Papes. from Andrew I'm BNP line. going release Andrew's Our next of Buscaglia comes question to

be coming of question Mason Baird. Rob from will next And our

Robert Mason

for been have Yes. And circle lot the of Bill. back just my [indiscernible] congratulations questions process a asked. Dave, I business. as well, to

anything there Could that speak low or about that say that outperform mix out? industry the single lot for to stand a actual going clarity, would could up talked And You there now? digits be low process single maybe business and a is you just year. for to that exposure anything in digits from the what market There's standpoint.

David Zapico

Yes. of and process instruments see there -- more businesses instruments part in industry to for and and The they you're QX, is process XXXX. at analytical analytical the outlook our specific which process broader and process our are business, grew they good it. that is energy is look And I good going the a what nicely would be a business think a perhaps have

is flat. -- China I talked lot sell a think told about and I to being business Asia we a of it we you

something as are we state-of-the-art projects we're competitors, that process. for evidenced to as fine developing by sales. our UPT, be concerned MAD as CAMECA, that's year unmatched Zygo, going process. long by that within in keep And the we're So But our broader broader

It's that the applications in the and medical it's business that optics the research market there some are So driving are rolling in are market. our that business, segment.

again, digits total, market And So parts international calling you this low there's business weaker different we're it than a But drivers. mix in U.S. at when be of single end of thing parts. the the look will the year. up the

Operator

back would closing showing now to to I no further Kevin remarks. conference like for Coleman turn questions. I'm And the

Kevin Coleman

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

Operator

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

You disconnect. may now

AMETEK (AME) 6 Feb 242023 Q4 Earnings call transcript