• Fourth Quarter Sales: $1.76 billion, up 2% from the same period in 2023.
• Organic Sales: Down 3% in the fourth quarter.
• Operating Income: $469 million, a 5% increase over the fourth quarter of 2023.
• Operating Margins: 26.6%, up 90 basis points from the prior year.
• EBITDA: $561 million, up 7% versus the prior year, with a margin of 31.9%.
• Free Cash Flow: $498 million, up 4% versus last year's fourth quarter.
• Diluted Earnings Per Share: $1.87, up 11% versus the fourth quarter of 2023.
• Electronic Instruments Group (EIG) Sales: $1.21 billion, down 2% from the fourth quarter of last year.
• EIG Operating Income: $386.6 million, up 8% versus the prior year.
• EIG Operating Margins: 31.8%, up 280 basis points from the prior year.
• Electromechanical Group (EMG) Sales: $546.7 million.
• EMG Operating Income: $111.2 million, down 1% compared to the prior year period.
• EMG Operating Margins: 20.3%.
• Full Year 2024 Sales: $6.94 billion, up 5% from 2023.
• Full Year 2024 Operating Income: $1.81 billion, up 6%.
• Full Year 2024 EBITDA: $2.18 billion, up 8%.
• Full Year 2024 Earnings Per Share: $6.83, up 7% versus the prior year.
• Share Repurchases: $155 million in the fourth quarter, $220 million for the year.
• Acquisition of Kern Microtechnik: Approximately EUR105 million.
• Capital Expenditures: $52 million in the fourth quarter, $127 million for the full year.
• Effective Tax Rate: 12.8% in the fourth quarter, 17.3% for the full year.
• Total Debt at Year End: $2.1 billion, down $1.2 billion from the end of 2023.

• Warning! GuruFocus has detected 5 Warning Sign with AME.

Release Date: February 04, 2025

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

Positive Points

• AMETEK Inc (NYSE:AME) delivered strong fourth-quarter results with record sales of $1.76 billion, operating income of $469 million, and EBITDA of $561 million.
• The company achieved a robust free cash flow of $498 million in the quarter, with a free cash flow to net income conversion of 129%.
• AMETEK Inc (NYSE:AME) announced the acquisition of Kern Microtechnik, enhancing its capabilities in high-precision machining and optical inspection solutions.
• The Electronic Instruments Group (EIG) showed impressive margin expansion with operating margins reaching a record 31.8%, up 280 basis points from the prior year.
• AMETEK Inc (NYSE:AME) has a strong pipeline of acquisition candidates and a healthy balance sheet, providing flexibility for strategic capital deployment.

Negative Points

• Organic sales in the fourth quarter were down 3%, indicating some challenges in achieving organic growth.
• The Electromechanical Group (EMG) faced headwinds from inventory destocking, with organic sales down 4% in the quarter.
• The company experienced project delays in the EIG segment, attributed to customer caution at year-end.
• AMETEK Inc (NYSE:AME) anticipates macroeconomic uncertainties in 2025, which could impact growth projections.
• The effective tax rate is expected to increase to between 19% and 20% in 2025, up from 17.3% in 2024.

Q & A Highlights

Q: Can you discuss the nature of delays within the Electronic Instruments Group (EIG) and the outlook for OEM destocking in the Electromechanical Group (EMG)? A: The project delays in EIG were widespread but not significant, with some shipment delays. However, orders were strong, and we are seeing improved order patterns from some OEM customers in EMG. The destocking is easing, with sequential orders growth in Paragon and continued order strength into January.

Q: What is the outlook for Paragon, and how did it perform in 2024? A: Paragon, which operates in the med tech space, faced customer destocking in 2024. However, some customers have resumed ordering aggressively, leading to a significant double-digit increase in order input. We expect Paragon to grow faster than AMETEK overall in 2025, especially in the second half, with substantial margin improvement anticipated.

Q: How do you view the potential impact of tariffs and foreign exchange on your 2025 outlook? A: We have contingency plans for tariffs, leveraging our past success in decoupling supply chains from China. We plan to pass on any cost impacts to customers. Our guidance does not assume a broader economic slowdown due to trade tensions. Regarding foreign exchange, we are primarily a US dollar-centric business with a balanced footprint, minimizing impact from currency fluctuations.

Q: Can you provide an update on the Aerospace and Defense segment's outlook for 2025? A: Our Aerospace and Defense business had a strong year, with mid-single-digit growth in the fourth quarter. We expect mid-single-digit growth in 2025, with strength in both commercial and defense markets. The shift to more original equipment (OE) versus aftermarket sales is not expected to impact profitability.

Q: What is the expected organic growth rate for AMETEK in 2025, and how does it break down between EMG and EIG? A: We anticipate low-single-digit organic growth for 2025, with EMG expected to have slightly higher growth than EIG. The destocking in EMG is expected to abate, contributing to improved growth trends throughout the year.

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