PR Newswire | Oct 29, 2020 06:55AM EDT

10/29 05:55 CDT

AMETEK Announces Third Quarter Results and Provides Fourth Quarter 2020 Guidance BERWYN, Pa., Oct. 29, 2020

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 CallAMETEK 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 AMETEKAMETEK 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 InformationStatements 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 ColemanVice President, Investor Relations1100 Cassatt RoadBerwyn, Pennsylvania 19312kevin.coleman@ametek.comPhone: 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 146%(Free cash flow divided by net income)

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 0.17 0.13 0.17 0.17intangible assets

Income tax benefit on amortization of (0.04) (0.03) (0.04) (0.04)acquisition-related intangible assets

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 aU.S. generally accepted accounting principles ("GAAP") basiswith certain non-GAAP financial information to provide investors with greaterinsight, increased transparency and allow for a morecomprehensive understanding of the information used by management in itsfinancial and operational decision-making. Reconciliation ofnon-GAAP measures to their most directly comparable GAAP measures are includedin the accompanying financial tables. These non-GAAPfinancial measures should be considered in addition to, and not as areplacement for, or superior to, the comparable GAAP measure, and maynot be comparable to similarly titled measures reported by other companies. The Company believes that these measures provide useful information toinvestors by reflecting additional ways of viewing AMETEK'soperations that, when reconciled to the comparable GAAP measure, helps ourinvestors to better understand the long-term profitability trendsof our business, and facilitates easier comparisons of our profitability toprior and future periods and to our peers.

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SOURCE AMETEK, Inc.