Ametek's Earnings Beat, Revs Up Y/Y - Analyst Blog

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Ametek Inc. ( AME ) reported first-quarter 2013 earnings per share of 53 cents beating the Zacks Consensus Estimate of 51 cents per share.

Revenues

The company reported revenues of $882.9 million, up 6.7% year over year and lower than the management's guidance of an approximately 10% increase. The increase was due to strong demand in the Electronic as well as Electro mechanical segments.

During the quarter, orders were $878 million, up 2% from the year-ago quarter. The book-to-bill ratio was 1.

Revenues by Business Segments

Electronic Instruments comprised 54.9% of Ametek's sales in the quarter, up 3.3% from the year-ago quarter to $484.5 million. The first quarter was strong due to strength in Aerospace and oil and gas businesses, combined with the contribution from the Micro-Poise acquisition.

Ametek's Electro mechanical segment generated 45.1% of its sales, up 11.2% from the year-ago quarter to $398.4 million. Management stated that the strong core growth in third party Aerospace MRO business and the Dunkermotoren acquisition drove the top-line increase.

Margins

Reported gross margin for the quarter was 35.0%, down 20 basis points (bps) year over year due to unfavorable mix.

Operating expenses (SG&A and Depreciation) of $111.5 million were up 3.1% from $108.1 million in the year-ago quarter. The reported operating margin was 22.3%, up 20 bps from the year-ago quarter margin of 22.1%. Selling, general and administrative (SG&A) expenses decreased as a percentage of sales, while depreciation expenses remained the same.

The quarter's GAAP net income was $125.1 million or earnings per share of 51 cents compared with $110.2 million or 45 cents in the comparable quarter last year. Excluding special items but including stock-based compensation expenses, adjusted net income was $13.0 million or earnings per share of 53 cents compared with $11.4 million or 47 cents a share in the year-ago quarter.

Balance Sheet

The company ended the first quarter with cash and short-term investments balance of $177.3 million, up from $158.0 million in the prior quarter. Trade receivables were $529.2 million, up from $507.9 million in the prior quarter.

Cash flow from operations was $157 million, up 11.0% year over year. Free cash flow was $146 million in the quarter.

Guidance

For the second quarter of 2013, Ametek expects total revenue to be up mid-to- high single digits over the year-ago quarter revenues. Earnings per share are expected to be in the range of 51 to 52 cents, up 9% to 11% year over year.

For 2013, management expects revenues to be up high single digits on a year- over-year basis.  Earnings are expected to be in the range of $2.08 to $2.12 per share, up 11% to 13% year over year.

Conclusion

Ametek manufactures and sells electronic instruments and electromechanical devices. The company reported a decent first quarter with both earnings and revenues increasing year over year.

We remain encouraged by the improving order rates in the quarter. Management also gave a modest second quarter guidance, which indicates improving demand visibility and an overall improving electronic market.

Additionally, we believe that the company's new products and global market expansion will continue to drive Ametek's growth. We also remain optimistic about Ametek's long-term prospects and contend that its restructuring activities will reduce operating expenses. The company stated that it expects $95 million of cost savings in 2013.

Currently, Ametek has a Zacks Rank #3 (Hold). Investors should look out for some other stocks with a positive Zacks Rank and Expected Surprise Prediction or ESP (Read: Zacks Earnings ESP: A Better Method).

Applied Materials, Inc. ( AMAT ), Earnings ESP of +7.69% and Zacks Rank #2 (Buy)

Fiserv Inc. ( FISV ), with an ESP of +3.03% and a Zacks Rank #2 (Buy)

Amazon.com. ( AMZN ), with an ESP of +14.3% and a Zacks Rank #3 (Hold)



APPLD MATLS INC (AMAT): Free Stock Analysis Report

AMETEK INC (AME): Free Stock Analysis Report

AMAZON.COM INC (AMZN): Free Stock Analysis Report

FISERV INC (FISV): Free Stock Analysis Report

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of The NASDAQ OMX Group, Inc.



This article appears in: Investing , Business , Earnings , Stocks

Referenced Stocks: AMAT , AME , AMZN , FISV

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