AMETEK(AME) - 2022 Q4 - Annual Report

PART I Business AMETEK is a global manufacturer of electronic instruments and electromechanical devices, operating through two segments and driven by a growth model focused on operational excellence, acquisitions, and global expansion - AMETEK operates through two main groups: Electronic Instruments (EIG) for advanced instruments and Electromechanical (EMG) for precision motion control and specialty materials[7] - The AMETEK Growth Model is built on four pillars: Operational Excellence, Strategic Acquisitions (17 since 2018), Global & Market Expansion, and New Product Development[13][14][15] - The company addresses market challenges like inflation and supply chain constraints through pricing actions, inventory building, and alternative supply sourcing[21] 2022 Financial and Operational Highlights | Metric | 2022 Value | Change vs. 2021 | | :--- | :--- | :--- | | Sales (million USD) | $6,150.5 | +10.9% | | Organic Sales Growth | 11% | - | | Diluted EPS | $5.01 | +17.8% | | Acquisitions | 2 businesses (Navitar, RTDS) | - | | Acquisition Spending (million USD) | $429.7 | - | Risk Factors The company faces significant operational, international, acquisition, and financial risks, including supply chain disruptions, cybersecurity threats, integration challenges, and potential asset impairment - Operational Risks include COVID-19 impacts, economic downturns, supply chain shortages, and cybersecurity threats to IT systems[60][67][82] - International Operations Risks stem from 48.7% of 2022 sales being international, exposing the company to trade restrictions, currency fluctuations, and political instability[70][71][74] - Acquisition Risks include difficulties in identifying suitable candidates, integration challenges, loss of key employees, and assuming unexpected liabilities[85][86] - Financial Condition Risks involve environmental liabilities, litigation, and potential impairment of goodwill and intangible assets, which totaled $8.7 billion (70% of total assets) at year-end 2022[89][90][95] Unresolved Staff Comments The company reports no unresolved staff comments from the U.S. Securities and Exchange Commission - No unresolved staff comments were reported[96] Properties AMETEK operates from owned and leased facilities globally, including its Berwyn, Pennsylvania headquarters, all deemed well-maintained and suitable for current needs - The company operates from owned and leased facilities across the United States and globally, with its corporate headquarters in Berwyn, Pennsylvania[96] Legal Proceedings The company is involved in various incidental legal proceedings, which management does not expect to materially affect its financial condition or results - The company is subject to various incidental litigation, but these are not expected to materially affect its financial condition or results of operations[98] Mine Safety Disclosures This section is not applicable to the company - This section is not applicable[99] PART II Market for Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities AMETEK's common stock trades on the NYSE, with the company repurchasing $332.8 million in shares in 2022 and authorizing a new $1 billion program, significantly outperforming market indices in total stockholder return Share Repurchases | Year | Shares Repurchased (approx.) | Cost (million USD) | | :--- | :--- | :--- | | 2022 | 2,673,000 | $332.8 | | 2021 | 113,000 | $14.7 | - In May 2022, a new $1 billion share repurchase program was authorized, replacing a prior $500 million authorization[103] Five-Year Cumulative Total Return Comparison (2017-2022) | Company/Index | 2017 (Base $100) | 2022 (End Value) | | :--- | :--- | :--- | | AMETEK, Inc. | $100.00 | $199.60 | | S&P 500 Index | $100.00 | $156.89 | | S&P Industrials | $100.00 | $142.63 | Reserved This item is reserved and contains no information Management's Discussion and Analysis of Financial Condition and Results of Operations AMETEK achieved record 2022 financial results with $6.15 billion in net sales and $5.01 diluted EPS, driven by organic growth and acquisitions, while maintaining robust liquidity and mitigating market challenges 2022 Financial Highlights vs. 2021 | Metric | 2022 | 2021 | % Change | | :--- | :--- | :--- | :--- | | Net Sales (million USD) | $6,150.5 | $5,546.5 | +10.9% | | Net Income (million USD) | $1,159.5 | $990.1 | +17.1% | | Diluted EPS | $5.01 | $4.25 | +17.8% | | Orders (million USD) | $6,639.1 | $6,474.4 | +2.5% | | Backlog (million USD) | $3,218.6 | $2,730.1 | +17.9% | - The company navigates a challenging global economic environment, mitigating inflation and supply chain constraints through pricing actions, inventory building, and alternative sourcing[116] Key Cash Flow and Liquidity Metrics (2022) | Metric | Value | | :--- | :--- | | Cash from Operations (million USD) | $1,149.4 | | Free Cash Flow (million USD) | $1,010.4 | | EBITDA (million USD) | $1,829.7 | | Net Debt-to-Capital Ratio | 21.4% | - Key cash uses in 2022 included $429.7 million for acquisitions, $332.8 million for share repurchases, and $202.2 million for dividends[131][134][135] Quantitative and Qualitative Disclosures About Market Risk AMETEK's primary market risks are interest rate, foreign currency, and commodity price fluctuations, which are managed through operational activities, financing strategies, and price adjustments, with potential losses deemed immaterial - The company's main market risks are fluctuations in interest rates, foreign currency exchange rates, and commodity prices[163] - Significant foreign currency exposures, including Euro and British pound, are managed through local borrowings and derivative instruments[164] - Primary commodity exposures to materials like nickel and copper are generally mitigated through selling price adjustments and purchase arrangements[165] Financial Statements and Supplementary Data This section presents the company's audited consolidated financial statements for 2020-2022, including management's report on internal controls and Ernst & Young LLP's unqualified opinions on both financial statements and internal controls - Management concluded that internal control over financial reporting was effective as of December 31, 2022, excluding recently acquired businesses as permitted[174][175] - Ernst & Young LLP issued an unqualified opinion, affirming the fair presentation of financial statements in conformity with U.S. GAAP[183] Key Financial Statement Data (2022 vs 2021) | Metric | 2022 | 2021 | | :--- | :--- | :--- | | Net Sales (million USD) | $6,150.5 | $5,546.5 | | Operating Income (million USD) | $1,500.7 | $1,308.7 | | Net Income (million USD) | $1,159.5 | $990.1 | | Total Assets (million USD) | $12,431.1 | $11,898.2 | | Total Stockholders' Equity (million USD) | $7,476.5 | $6,871.9 | | Cash from Operations (million USD) | $1,149.4 | $1,160.5 | Changes in and Disagreements with Accountants on Accounting and Financial Disclosure The company reports no changes in or disagreements with its accountants regarding accounting principles, financial disclosure, or auditing scope - No changes in or disagreements with accountants were reported[394] Controls and Procedures Management concluded the company's disclosure controls and procedures were effective as of December 31, 2022, with no material changes to internal control over financial reporting identified in Q4 2022 - The principal executive and financial officers concluded that disclosure controls and procedures were effective at a reasonable assurance level as of December 31, 2022[394] - No material changes to internal control over financial reporting occurred during the fourth quarter of 2022[395] Other Information The company reports no other information for this item - No other information was reported for this item[396] PART III Directors, Executive Officers and Corporate Governance Information on directors, executive officers, corporate governance, and the code of ethics is incorporated by reference from the 2023 Proxy Statement - Information on Directors, Executive Officers, and the Audit Committee is incorporated by reference from the 2023 Proxy Statement[398][399][400] - The company has adopted a Code of Ethics for its principal executive and financial officers, available on its website[402] Executive Compensation Information regarding executive compensation, including compensation tables and potential payments, is incorporated by reference from the 2023 Proxy Statement - Executive compensation information is incorporated by reference from the 2023 Proxy Statement[403] Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters Information on security ownership of beneficial owners and management is incorporated by reference from the 2023 Proxy Statement - Security ownership information is incorporated by reference from the 2023 Proxy Statement[405] Certain Relationships and Related Transactions, and Director Independence Information on certain relationships, related transactions, and director independence is incorporated by reference from the 2023 Proxy Statement - Information on related transactions and director independence is incorporated by reference from the 2023 Proxy Statement[406] Principal Accountant Fees and Services Information regarding principal accountant fees and services is incorporated by reference from the 2023 Proxy Statement - Principal accountant fees and services information is incorporated by reference from the 2023 Proxy Statement[407] PART IV Exhibits and Financial Statement Schedules This section lists financial statements, schedules, and exhibits filed with the Form 10-K, noting financial statements are in Item 8 and schedules are omitted, with a comprehensive exhibit list provided - Financial statements are included in Part II, Item 8 of the report[411] - Financial statement schedules are omitted as not applicable or included elsewhere in the financial statements or notes[411] - A list of exhibits, including CEO and CFO certifications, is provided with the report[425] Form 10-K Summary The company has not provided a summary for this item - No summary has been provided for this item[426]