• Sales: $1.73 billion, flat compared to Q1 2024.
• Organic Sales: Down 1%; acquisitions added 1 point.
• Orders: Up 8% overall; organic orders up 3%.
• Operating Income: $455 million, a 2% increase over Q1 2024.
• Operating Margins: 26.3%, up 60 basis points from the prior year.
• EBITDA: $559 million, up 3% with margins at 32.2%.
• Free Cash Flow: $394 million, with a conversion rate of 112%.
• Diluted EPS: $1.75, up 7% from Q1 2024.
• Electronic Instruments Group Sales: $1.14 billion, down 1% from last year.
• Electronic Instruments Group Operating Margins: 31%, up 50 basis points.
• Electromechanical Group Sales: $588.3 million, up 2% year-over-year.
• Electromechanical Group Operating Margins: Up 120 basis points.
• General and Administrative Expenses: $28 million, up $1.5 million from the prior year.
• Interest Expense: $19 million.
• Effective Tax Rate: 19%.
• Capital Expenditures: $23 million for the quarter.
• Operating Cash Flow: $418 million, up 2% from Q1 2024.
• Total Debt: $1.9 billion as of March 31.
• Cash and Cash Equivalents: $399 million.
• Gross Debt-to-EBITDA Ratio: 0.9 times.
• Net Debt-to-EBITDA Ratio: 0.7 times.
• Dividend Increase: 11% increase to $0.31 per share.
• Share Repurchase Authorization: $1.25 billion.

• Warning! GuruFocus has detected 2 Warning Sign with AME.

Release Date: May 01, 2025

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

Positive Points

• AMETEK Inc (NYSE:AME) reported strong first-quarter 2025 results with robust margin expansion and earnings above expectations.
• The company generated strong free cash flow of $394 million, with a free cash flow to net income conversion of 112%.
• Orders were strong in the quarter, with overall orders up 8% and organic orders up 3% versus the prior year.
• AMETEK Inc (NYSE:AME) maintained a near-record backlog of $3.47 billion, indicating strong future demand.
• The company is actively pursuing strategic acquisitions and has a robust pipeline of attractive acquisition candidates.

Negative Points

• Organic sales were down 1% in the first quarter, indicating some challenges in core business growth.
• The company faced a 10% decline in the China market, impacting overall international sales.
• There is increased uncertainty due to global trade dynamics and tariffs, which could affect future performance.
• The company did not provide specific guidance for the second quarter due to uncertainty around sales and potential shipping delays.
• Some delays in project timing were noted in the Process business, reflecting cautious customer behavior amid macroeconomic uncertainties.

Q & A Highlights

Q: Can you provide more detail on Paragon and the broader group of medical-related businesses, especially given the recent inflection in orders? A: Paragon, acquired over a year ago, specializes in single-use surgical instruments and implantable components. After a period of destocking, we executed a multiyear improvement plan to enhance cost efficiency. Orders in the medtech OEM businesses, including Paragon, were up significantly, indicating customers are beginning to restock. We expect substantial growth in the second half of the year. - David Zapico, CEO

Q: Can you speak about the order cadence through the first four months of the year and any price realization in Q1? A: We saw a couple of points of inflation offset by price increases, resulting in a positive spread. Overall orders were up 8% in the quarter, with organic orders up 3%. March was the strongest month for orders, and we started Q2 with solid orders despite tariff concerns. - David Zapico, CEO

Q: How are you positioned in key end markets and geographies, and are there any notable positives or negatives? A: We saw positive growth in the US, offset by modest declines internationally. Our China market was down about 10%. In terms of segments, our aerospace and defense business had a strong start, with mid-single-digit growth. We expect organic sales for our Process businesses to be roughly flat for the year. - David Zapico, CEO

Q: Can you size China sourcing as a percent of COGS and discuss your tariff mitigation plans? A: Our annual tariff impact is estimated at $100 million, which we plan to offset through mitigation actions. We have limited exposure to China imports due to proactive sourcing shifts since 2018. We are also 98% compliant with USMCA guidelines. Our mitigation includes pricing initiatives, localization, and productivity actions. - David Zapico, CEO

Q: With the positive momentum in orders, how should we think about the margin trajectory for EMG, and are larger acquisitions on hold due to trade complexities? A: We expect margin improvement in the second half of the year for Paragon and EMG due to ongoing improvement plans and increased volume. Our acquisition pipeline remains robust, and we are actively pursuing opportunities despite trade uncertainties. - David Zapico, CEO

For the complete transcript of the earnings call, please refer to the full earnings call transcript.