AMETEK Announces Third Quarter Results and Provides Fourth Quarter 2020 Guidance

BERWYN, Pa., Oct. 29, 2020 /PRNewswire/ -- AMETEK, Inc. (NYSE: AME) today announced its financial results for the third quarter ended September 30, 2020.

AMETEK's third quarter 2020 sales were $1.13 billion, a 12% decline compared to the third quarter of 2019. Operating income in the quarter was $270.7 million and operating margins were a record 24.0%, up 40 basis points from the third quarter of 2019.

On a GAAP basis, third quarter earnings per diluted share were $0.88. Adjusted earnings in the quarter were $1.01 per diluted share, down 5% compared to the prior-year's comparable period. Adjusted earnings adds back non-cash, after-tax, acquisition-related intangible amortization of $0.13 per diluted share. A reconciliation of reported GAAP results to adjusted results is included in the financial tables accompanying this release and on the AMETEK website.

"Our teams did an outstanding job in the third quarter, managing ongoing challenges presented by the COVID-19 pandemic while providing essential support to our customers," said David A. Zapico, AMETEK Chairman and Chief Executive Officer. "We continue to prioritize our employees' safety and well-being by taking appropriate precautions across our facilities."

"In the midst of the pandemic, AMETEK was able to deliver record operating margins as well as EBITDA margins of 29.5%. These outstanding results reflect the flexibility of the AMETEK Growth Model and the exceptional talent and dedication of our employees," continued Mr. Zapico.  "Operating cash flow in the quarter was $310 million, resulting in excellent free cash flow conversion of 146% of net income, further strengthening our balance sheet and liquidity position, providing us tremendous flexibility to deploy capital on strategic acquisitions," said Mr. Zapico.

Electronic Instruments Group (EIG)
EIG sales in the third quarter were $748.4 million, down 8% from the third quarter of 2019. EIG's operating income in the quarter was $203.7 million and operating income margins were 27.2%, an increase of 30 basis points over the prior-year period.

"EIG experienced strong, broad-based sequential sales improvement in the third quarter as the global economy began its recovery from a difficult second quarter," noted Mr. Zapico. "Despite a year-over-year decline in sales as a result of the pandemic, EIG delivered excellent operating performance with solid margin expansion in the quarter."

Electromechanical Group (EMG)
EMG sales in the third quarter were $378.6 million, down 18% versus last year's third quarter. Operating income for EMG in the quarter was $84.3 million and operating income margins were 22.3%, down 10 basis points versus the same period last year.

"While EMG's top line was impacted by the divestiture of Reading Alloys and the effects of the pandemic, EMG delivered strong operating results in the quarter through continued focus on its Operational Excellence initiatives," commented Mr. Zapico.  

2020 Outlook
"Our businesses have managed exceptionally well through the first nine months of what has certainly been an extraordinary year. We remain committed to investing in long-term, sustainable growth initiatives while reacting to the current dynamic market environment with a focus on cost and asset management," continued Mr. Zapico. "While the pandemic continues to present uncertainty, our end markets are gradually recovering, and we are well positioned to deliver strong results."

"Given this recovery and improved visibility across our businesses we are reinstating quarterly guidance," said Mr. Zapico. "For the fourth quarter, we expect solid sequential improvements in sales versus the third quarter with year-over-year sales down high single digits on a percentage basis compared to last year's fourth quarter. We anticipate fourth quarter adjusted earnings will be in the range of $1.00 to $1.04 per diluted share," Mr. Zapico concluded.

Conference Call
AMETEK will webcast its third quarter 2020 investor conference call on Thursday, October 29, 2020, beginning at 8:30 AM ET. The live audio webcast will be available and later archived in the Investors section of www.ametek.com.

About AMETEK
AMETEK is a leading global manufacturer of electronic instruments and electromechanical devices with 2019 sales of approximately $5.0 billion. The AMETEK Growth Model integrates the Four Growth Strategies - Operational Excellence, New Product Development, Global and Market Expansion, and Strategic Acquisitions - with a disciplined focus on cash generation and capital deployment. AMETEK's objective is double-digit percentage growth in earnings per share over the business cycle and a superior return on total capital. The common stock of AMETEK is a component of the S&P 500.

Forward-looking Information
Statements in this news release relating to future events, such as AMETEK's expected business and financial performance are "forward-looking statements." Forward-looking statements are subject to various factors and uncertainties that may cause actual results to differ significantly from expectations. These factors and uncertainties include risks related to COVID-19 and its potential impact on AMETEK's operations, supply chain, and demand across key end markets; AMETEK's ability to consummate and successfully integrate future acquisitions; risks with international sales and operations, including supply chain disruptions; AMETEK's ability to successfully develop new products, open new facilities or transfer product lines; the price and availability of raw materials; compliance with government regulations, including environmental regulations; changes in the competitive environment or the effects of competition in our markets; the ability to maintain adequate liquidity and financing sources; and general economic conditions affecting the industries we serve. A detailed discussion of these and other factors that may affect our future results is contained in AMETEK's filings with the U.S. Securities and Exchange Commission, including its most recent reports on Form 10-K, 10-Q and 8-K. AMETEK disclaims any intention or obligation to update or revise any forward-looking statements.

Contact:
AMETEK, Inc.
Kevin Coleman
Vice President, Investor Relations
1100 Cassatt Road
Berwyn, Pennsylvania 19312
kevin.coleman@ametek.com
Phone: 610.889.5247


 

AMETEK, Inc.

Consolidated Statement of Income

(In thousands, except per share amounts)

(Unaudited)



 Three Months Ended


 Nine Months Ended


 September 30,


 September 30,


2020


2019


2020


2019

Net sales

$1,126,942


$1,276,633


$3,341,082


$3,853,736









Cost of sales

732,705


823,262


2,226,547


2,512,722

Selling, general and administrative

123,496


152,315


384,764


461,289

     Total operating expenses

856,201


975,577


2,611,311


2,974,011









Operating income

270,741


301,056


729,771


879,725









Interest expense

(21,187)


(21,308)


(66,597)


(65,436)

Other (expense) income, net

(1,479)


(5,517)


142,428


(12,521)









Income before income taxes

248,075


274,231


805,602


801,768









Provision for income taxes

43,494


53,482


154,188


161,248









Net income

$   204,581


$   220,749


$   651,414


$   640,520









Diluted earnings per share

$        0.88


$        0.96


$        2.82


$        2.79

Basic earnings per share

$        0.89


$        0.97


$        2.84


$        2.82









Weighted average common shares outstanding:








     Diluted shares

231,460


229,560


230,904


229,191

     Basic shares

229,576


228,041


229,254


227,493









Dividends per share

$        0.18


$        0.14


$        0.54


$        0.42

 

 

AMETEK, Inc.

Information by Business Segment

(In thousands)

(Unaudited)



 Three Months Ended


 Nine Months Ended


 September 30,


 September 30,


2020


2019


2020


2019

Net sales:








     Electronic Instruments

$   748,372


$   815,552


$2,170,479


$2,442,710

     Electromechanical

378,570


461,081


1,170,603


1,411,026

          Consolidated net sales

$1,126,942


$1,276,633


$3,341,082


$3,853,736









Operating income:








Segment operating income:








     Electronic Instruments

$   203,749


$   219,451


$   534,613


$   635,448

     Electromechanical

84,303


103,451


245,154


303,329

          Total segment operating income

288,052


322,902


779,767


938,777

     Corporate administrative expenses

(17,311)


(21,846)


(49,996)


(59,052)

          Consolidated operating income

$   270,741


$   301,056


$   729,771


$   879,725

 


 

AMETEK, Inc.

Condensed Consolidated Balance Sheet

(In thousands)



 September 30,


 December 31,


2020


2019


 (Unaudited)



ASSETS




Current assets:




     Cash and cash equivalents

$  1,304,838


$     393,030

     Receivables, net

614,773


744,760

     Inventories, net

584,753


624,567

     Other current assets

138,654


263,414

          Total current assets

2,643,018


2,025,771





Property, plant and equipment, net

508,645


548,908

Right of use asset, net

166,728


179,679

Goodwill

4,188,754


4,047,539

Other intangibles, investments and other assets

2,926,241


3,042,662

          Total assets

$10,433,386


$  9,844,559





LIABILITIES AND STOCKHOLDERS' EQUITY




Current liabilities:




     Short-term borrowings and current portion of long-term debt, net

$     505,030


$     497,449

     Accounts payable and accruals

898,464


928,409

          Total current liabilities

1,403,494


1,425,858





Long-term debt, net

2,295,810


2,271,292

Deferred income taxes and other long-term liabilities

1,029,890


1,031,917

Stockholders' equity

5,704,192


5,115,492

          Total liabilities and stockholders' equity

$10,433,386


$  9,844,559

 


 

AMETEK, Inc.


Reconciliations of GAAP to Non-GAAP Financial Measures


(In thousands, except per share amounts)


(Unaudited)





























EBITDA











Three Months Ended







(In millions)


September 30, 2020







Net income


$                     204.6







Add (deduct):









Interest expense


21.2







Interest income


(0.3)







Income taxes


43.5







Depreciation


24.4







Amortization


38.6







EBITDA


$                     332.0
















EBITDA Margin (EBITDA divided by net sales)


29.5%
















FREE CASH FLOW











Three Months Ended







(In millions)


September 30, 2020







Cash provided by operating activities


$                     309.7







Deduct: Capital expenditures


(10.1)







Free cash flow


$                     299.6
















Free Cash Flow Conversion
(Free cash flow divided by net income)


146%






















Forecasted

ADJUSTED DILUTED EARNINGS PER SHARE






  Diluted Earnings Per Share



Diluted Earnings Per Share


Three Months Ended



Three Months Ended


December 31,



September 30,


September 30,


Low


High



2020


2019


2020


2020










Diluted earnings per share (GAAP)


$                       0.88


$                    0.96


$          0.87


$          0.91

Pretax amortization of acquisition-related
intangible assets


0.17


0.13


0.17


0.17

Income tax benefit on amortization of
acquisition-related intangible assets


(0.04)


(0.03)


(0.04)


(0.04)

Adjusted Diluted earnings per share (Non-GAAP)


$                       1.01


$                    1.06


$          1.00


$          1.04



















Use of Non-GAAP Financial Information
 
The Company supplements its consolidated financial statements presented on a U.S. generally accepted accounting principles ("GAAP") basis
with certain non–GAAP financial information to provide investors with greater insight, increased transparency and allow for a more
comprehensive understanding of the information used by management in its financial and operational decision-making.  Reconciliation of
non–GAAP measures to their most directly comparable GAAP measures are included in the accompanying financial tables. These non–GAAP
financial measures should be considered in addition to, and not as a replacement for, or superior to, the comparable GAAP measure, and may
not be comparable to similarly titled measures reported by other companies.
 
The Company believes that these measures provide useful information to investors by reflecting additional ways of viewing AMETEK's
operations that, when reconciled to the comparable GAAP measure, helps our investors to better understand the long-term profitability trends
of our business, and facilitates easier comparisons of our profitability to prior and future periods and to our peers. 












 

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SOURCE AMETEK, Inc.

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