) second quarter earnings of $61 cents per share beat the Zacks
Consensus Estimate by two cents and were better than management's
guidance. Earnings also increased 6.7% sequentially and 16.3% on a
year-over-year basis. Higher revenue base primarily led to the
increase in earnings.
Ametek Inc - Earnings Surprise |
AMETEK reported revenues of $990.7 million for the quarter, up 1.6%
sequentially and 12.7% on a year-over-year basis. Moreover, it was
ahead of the Zacks Consensus Estimate of $973.0 million. The
increase in revenues was driven partly by acquisitions and partly
by solid execution of its four growth strategies. Organic sales
added 4%, acquisitions contributed 8% and currency added 1% to
International revenues contributed 56% of the total revenue, which
was up from 54% in the year-ago quarter. The increase in
international sales was primarily due to strong organic growth in
Asia, which was up mid-teens on a percentage basis aided by
broad-based strength across its businesses and synergies from
Orders were at $1.1 billion, up 21% from the year-ago quarter aided
by solid organic growth and contributions from recent acquisitions.
Backlog was $1.25 billion. The book-to-bill ratio in the quarter
AMETEK has two operating segments-
Electronic Instruments Group
("EMG"), which generated 58% and 42% of revenues, respectively in
Revenues by Segment
revenues were up 0.2% sequentially and 18.6% on a year-over-year
basis to $573.3 million. About 14 percentage points of the
year-over-year increase was attributed to acquisitions. Organic
volume was also strong, contributing 4 percentage points. The
company's ultra-precision technologies and materials analysis
businesses did particularly well. Foreign currency contributed 1
percentage point of the growth. AMETEK saw strong core growth
across the Aerospace, Process, and Power & Industrial
sales were up 3.6% from the previous quarter and 5.6% on a
year-over-year basis to $417.4 million. About 4 percentage points
of the year-over-year increase was attributed to organic growth.
Favorable currency impact added another 2 percentage points.
Organic strength was broad-based but the precision motion control
and engineered materials interconnect and packaging businesses were
AMETEK's gross margin for the quarter was 36.3%, up 45 basis points
(bps) from 35.9% in the preceding quarter and 93 (bps) from the
year-ago quarter's 35.4%.
AMETEK's operating income of $231.7 million was higher than the
previous quarter's $221.6 million as well as the year-ago quarter's
202.6 million. Its operating margin of 23.4% was up 67 bps from the
prior quarter and 33 bps from the year-ago quarter.
Operating Profit by Segment
Operating income in the EIG segment of $151.5 million was up 17%
from the year-ago quarter. Its operating margin was 27.6%, up 80
basis points from the year-ago quarter.
EMG operating income increased 10% on a year-over-year basis to
$92.1 million. Operating margin was 22.1%, up 100 bps from the
AMETEK's net income was $150.1 million or a 15.1% net income
margin, compared with $128.3 million or 14.6% net income margin in
the year-ago quarter. Reported earnings per share were 61 cents per
share compared with 52 cents per share in the same quarter last
year. There were no one-time items.
The cash and cash equivalents balance at quarter end was $282.8
million, up from $265.3 million in the previous quarter. Accounts
receivables were $594.2 million versus $592.4 million in the prior
quarter. Total debt was $1.6 billion versus $1.41 billion at the
end of the prior quarter.
Capital expenditures were $15 million and operating cash flow was
$155 million, up 21% from the year-ago quarter. Free cash flow was
Management provided limited guidance for the third quarter and for
For the third quarter, management expects revenues to be up
mid-teens on a percentage basis from the year-ago quarter. Organic
growth is expected to be up low to mid single-digits. Earnings per
share are expected to be approximately 59 cents to 61 cents
(mid-point 60 cents). The Zacks Consensus Estimate is pegged at 60
cents, within the guided range.
For 2014, management expects the tax rate to be between 28% and
29%. Capital expenditures are expected to be $70 million.
Depreciation and amortization is expected to be around $142 million
and free cash flow is likely to be 110% of net income.
AMETEK reported better-than-expected second quarter results with
both the top and bottom lines beating the Zacks Consensus Estimate.
Moreover, both revenues and earnings increased year over year.
Management provided moderate earnings guidance for the third
The company believes that strong execution of its four core growth
strategies of operational excellence, global market expansion, new
product development, and strategic acquisitions will continue to
play an important role in driving its growth. This in combination
with its excellent backlog and strong portfolio of businesses will
help the company post better results quarter after quarter.
Currently, AMETEK has a Zacks Rank #3 (Hold). Some better-ranked
stocks in the technology sector include National Instruments
), Agilent Technologies Inc. (
) and Cognex Corporation (
), all holding a Zacks Rank #2 (Buy).
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