AMETEK(US:AME)2019-05-01 18:56Financial Data and Key Metrics Changes - Total sales in Q1 2019 were $1.29 billion, up 10% compared to Q1 2018, with organic sales growth of 5% and acquisitions contributing 7% [8][9] - EBITDA reached a record $337 million, up 10% year-over-year, with EBITDA margins at 26.2% [8][9] - Operating income was a record $283.3 million, also up 10% from the previous year, with reported operating margins of 22% [8][9] - Adjusted earnings per share were $1, reflecting a 15% increase over the comparable period in 2018 [9] Business Line Data and Key Metrics Changes - The Electronic Instruments Group (EIG) saw sales increase by 13% to $806.9 million, with organic growth of 4% and acquisitions contributing 10% [9][10] - The Electromechanical Group (EMG) reported sales of $480.8 million, a 5% increase, with organic sales growth of 7% [10][11] - EIG's operating income was $203.1 million, up 11% year-over-year, while EMG's operating income increased by 9% to $98.8 million [10][11] Market Data and Key Metrics Changes - In the U.S., there was strong high single-digit growth, particularly in Aerospace and Process businesses [23] - Europe experienced mid-single-digit growth, driven by automation and Process businesses [23] - Asia was roughly flat, with a slowdown in February but a strong recovery in March, leading to record order input [23] Company Strategy and Development Direction - The company continues to focus on its growth model, which includes cash generation, capital deployment, and talent development [11][15] - AMETEK is actively pursuing strategic acquisitions, having deployed over $1.1 billion in capital for acquisitions in 2018 [15] - The company aims to generate over $80 million in operational excellence savings in 2019 [16] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the company's performance and outlook for 2019, raising earnings guidance to a range of $3.98 to $4.08 per diluted share [16] - The company anticipates overall sales growth in 2019 to be in the high single digits, with organic sales growth of 3% to 5% [16] - Management noted the importance of staying ahead of inflation and maintaining pricing power in a changing economic environment [25] Other Important Information - The effective tax rate for Q1 2019 was 20.5%, down from 23.1% in the previous year [19] - Total debt at the end of Q1 was $2.47 billion, down from $2.63 billion at the end of 2018, with a net debt-to-EBITDA ratio of 1.6 times [20] Q&A Session Summary Question: Can you comment on the linearity you saw in your business throughout the quarter? - Management noted strong growth in the U.S. and a pleasant surprise in Europe, while Asia was flat but showed strong recovery in March [23] Question: What was the impact of price realization compared to inflation? - The company achieved about 2 percentage points of price realization, while total inflation was less than 1.5% [25] Question: What is the outlook for the Energy business given the current oil prices? - The Energy business is expected to grow mid-single digits, with solid momentum in the mid and downstream sectors [30][32] Question: Can you provide details on core orders for the company and its segments? - Organic orders were up 3.5% for the quarter, with EIG up 5% and EMG up 1% [35][47] Question: What is the expected conversion rate of the backlog in 2019? - Approximately 85% of the $1.7 billion backlog is expected to convert in 2019, providing good visibility [59] Question: How much of the $80 million in operational excellence savings have been realized in Q1? - The company realized $18 million of the $80 million target in the first quarter [84]