UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

_________________________

FORM 10-Q

_________________________

(Mark One)


☒			QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended ~~September~~June 30, ~~2021~~2022


☐			TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from to

Commission File Number 1-12981

_________________________

AMETEK, Inc.

(Exact name of registrant as specified in its charter)

_________________________

Delaware

(State or other jurisdiction of

incorporation or organization)

1100 Cassatt Road

Berwyn, Pennsylvania

(Address of principal executive offices)

14-1682544

(I.R.S. Employer

Identification No.)

19312-1177

(Zip Code)

Registrant’s telephone number, including area code: (610) 647-2121

_________________________

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes ☒ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.


Large accelerated filer	☒	Accelerated filer	☐

Non-accelerated filer	☐ (Do not check if a smaller reporting company)	Smaller reporting company	☐

		Emerging growth company	☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒

_________________________

Securities registered pursuant to Section 12(b) of the Act:

Title of each class

Trading

Symbol(s)

Name of each exchange
on which registered

Common Stock

AME

New York Stock Exchange

The number of shares of the registrant’s common stock outstanding as of the latest practicable date was: Common Stock, $0.01 Par Value, outstanding at ~~October~~July 29, ~~2021~~2022 was ~~231,325,166~~229,578,316 shares.

AMETEK, Inc.

Form 10-Q

Table of Contents


			Page

PART I. FINANCIAL INFORMATION

Item 1.Financial Statements

Consolidated Statement of Income for the three and ~~nine~~six months ended ~~September~~June 30, ~~2021~~2022 and ~~2020~~2021			43
Condensed Consolidated Statement of Comprehensive Income for the three and ~~nine~~six months ended ~~September~~June 30, ~~2021~~2022 and ~~2020~~2021			54
Consolidated Balance Sheet at ~~September~~June 30, ~~2021~~2022 and December 31, ~~2020~~2021			65
Consolidated Statement of Stockholders’ Equity for the three and ~~nine~~six months ended ~~September~~June 30 , 2022 and 2021 ~~and 2020~~			76
Condensed Consolidated Statement of Cash Flows for the ~~nine~~six months ended ~~September~~June 30 , 2022 and 2021 ~~and 2020~~			87
Notes to Consolidated Financial Statements			98

Item 2.Management’s Discussion and Analysis of Financial Condition and Results of Operations			2219
Item 4.Controls and Procedures			2723

PART II. OTHER INFORMATION

~~Item 1A.Risk Factors~~			28
Item 2.Unregistered Sales of Equity Securities and Use of Proceeds			2824
Item 6.Exhibits			2925

SIGNATURES			3026

Table of Contents

PART I. FINANCIAL INFORMATION

Item 1. Financial Statements

AMETEK, Inc.

Consolidated Statement of Income

(In thousands, except per share amounts)

(Unaudited)


		Three Months Ended September 30,				Nine Months Ended September 30,					Three Months Ended June 30,				Six Months Ended June 30,
		2021		2020		2021		2020			2022		2021		2022		2021
Net sales	Net sales	$	1,440,681	$	1,126,942	$	4,042,769	$	3,341,082	Net sales	$	1,514,552	$	1,386,346	$	2,973,077	$	2,602,088
Cost of sales	Cost of sales	949,402		732,705		2,651,506		2,226,547		Cost of sales	988,175		912,712		1,937,008		1,702,104
Selling, general and administrative	Selling, general and administrative	153,716		123,496		443,744		384,764		Selling, general and administrative	161,535		157,023		317,987		290,028
Total operating expenses	Total operating expenses	1,103,118		856,201		3,095,250		2,611,311		Total operating expenses	1,149,710		1,069,735		2,254,995		1,992,132
Operating income	Operating income	337,563		270,741		947,519		729,771		Operating income	364,842		316,611		718,082		609,956
Interest expense	Interest expense	(20,476)		(21,187)		(59,865)		(66,597)		Interest expense	(20,350)		(20,442)		(39,920)		(39,389)
Other income (expense), net	Other income (expense), net	2,581		(1,479)		(3,775)		142,428		Other income (expense), net	1,973		(4,414)		4,525		(6,356)
Income before income taxes	Income before income taxes	319,668		248,075		883,879		805,602		Income before income taxes	346,465		291,755		682,687		564,211
Provision for income taxes	Provision for income taxes	62,208		43,494		175,507		154,188		Provision for income taxes	64,092		60,076		127,867		113,299
Net income	Net income	$	257,460	$	204,581	$	708,372	$	651,414	Net income	$	282,373	$	231,679	$	554,820	$	450,912
Basic earnings per share	Basic earnings per share	$	1.11	$	0.89	$	3.07	$	2.84	Basic earnings per share	$	1.23	$	1.00	$	2.40	$	1.96
Diluted earnings per share	Diluted earnings per share	$	1.10	$	0.88	$	3.04	$	2.82	Diluted earnings per share	$	1.22	$	1.00	$	2.39	$	1.94
Weighted average common shares outstanding:	Weighted average common shares outstanding:									Weighted average common shares outstanding:
Basic shares	Basic shares	231,171		229,576		230,811		229,254		Basic shares	230,100		230,828		230,790		230,632
Diluted shares	Diluted shares	233,000		231,460		232,712		230,904		Diluted shares	231,247		232,841		232,156		232,569
Dividends declared and paid per share	Dividends declared and paid per share	$	0.20	$	0.18	$	0.60	$	0.54	Dividends declared and paid per share	$	0.22	$	0.20	$	0.44	$	0.40

See accompanying notes.

Table of Contents

AMETEK, Inc.

Condensed Consolidated Statement of Comprehensive Income

(In thousands)

(Unaudited)

Three Months Ended
September 30, Nine Months Ended
September 30,
2021 2020 2021 2020
Total comprehensive income $ 240,076 $ 229,713 $ 688,575 $ 650,908


	Three Months Ended June 30,				Six Months Ended June 30,
	2022		2021		2022		2021
Total comprehensive income	$	222,033	$	237,673	$	479,334	$	448,499

See accompanying notes.

Table of Contents

AMETEK, Inc.

Consolidated Balance Sheet

(In thousands)


		September 30, 2021		December 31, 2020			June 30, 2022		December 31, 2021
		(Unaudited)					(Unaudited)
ASSETS	ASSETS					ASSETS
Current assets:	Current assets:					Current assets:
Cash and cash equivalents	Cash and cash equivalents	$	358,676	$	1,212,822	Cash and cash equivalents	$	348,653	$	346,772
Receivables, net	Receivables, net	768,386		597,472		Receivables, net	885,080		829,213
Inventories, net	Inventories, net	738,688		559,171		Inventories, net	966,609		769,175
Other current assets	Other current assets	196,065		153,005		Other current assets	211,272		183,605
Total current assets	Total current assets	2,061,815		2,522,470		Total current assets	2,411,614		2,128,765
Property, plant and equipment, net	Property, plant and equipment, net	597,488		526,530		Property, plant and equipment, net	597,153		617,138
Right of use assets, net	Right of use assets, net	169,075		167,233		Right of use assets, net	168,829		169,924
Goodwill	Goodwill	5,180,999		4,224,906		Goodwill	5,173,411		5,238,726
Other intangibles, net	Other intangibles, net	3,344,855		2,623,719		Other intangibles, net	3,234,443		3,368,629
Investments and other assets	Investments and other assets	325,463		292,625		Investments and other assets	399,521		375,005
Total assets	Total assets	$	11,679,695	$	10,357,483	Total assets	$	11,984,971	$	11,898,187

LIABILITIES AND STOCKHOLDERS’ EQUITY	LIABILITIES AND STOCKHOLDERS’ EQUITY					LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:	Current liabilities:					Current liabilities:
Short-term borrowings and current portion of long-term debt, net	Short-term borrowings and current portion of long-term debt, net	$	415,667	$	132,284	Short-term borrowings and current portion of long-term debt, net	$	354,791	$	315,093
Accounts payable	Accounts payable	446,409		360,370		Accounts payable	540,667		470,252
Customer advanced payments	Customer advanced payments	287,404		194,633		Customer advanced payments	327,537		298,728
Income taxes payable	Income taxes payable	66,017		38,896		Income taxes payable	35,216		35,904
Accrued liabilities and other	Accrued liabilities and other	418,329		349,732		Accrued liabilities and other	374,818		443,337
Total current liabilities	Total current liabilities	1,633,826		1,075,915		Total current liabilities	1,633,029		1,563,314
Long-term debt, net	Long-term debt, net	2,238,920		2,281,441		Long-term debt, net	2,147,362		2,229,148
Deferred income taxes	Deferred income taxes	697,688		533,478		Deferred income taxes	711,541		719,675
Other long-term liabilities	Other long-term liabilities	550,865		517,303		Other long-term liabilities	542,948		514,166
Total liabilities	Total liabilities	5,121,299		4,408,137		Total liabilities	5,034,880		5,026,303
Stockholders’ equity:	Stockholders’ equity:					Stockholders’ equity:
Common stock	Common stock	2,686		2,676		Common stock	2,695		2,689
Capital in excess of par value	Capital in excess of par value	986,317		921,752		Capital in excess of par value	1,040,951		1,012,526
Retained earnings	Retained earnings	7,664,682		7,094,656		Retained earnings	8,353,735		7,900,113
Accumulated other comprehensive loss	Accumulated other comprehensive loss	(524,265)		(504,468)		Accumulated other comprehensive loss	(545,930)		(470,444)
Treasury stock	Treasury stock	(1,571,024)		(1,565,270)		Treasury stock	(1,901,360)		(1,573,000)
Total stockholders’ equity	Total stockholders’ equity	6,558,396		5,949,346		Total stockholders’ equity	6,950,091		6,871,884
Total liabilities and stockholders’ equity	Total liabilities and stockholders’ equity	$	11,679,695	$	10,357,483	Total liabilities and stockholders’ equity	$	11,984,971	$	11,898,187

See accompanying notes.

Table of Contents

AMETEK, Inc.

Consolidated Statement of Stockholders’ Equity

(In thousands)

(Unaudited)


		Three months ended September 30,				Nine months ended September 30,					Three months ended June 30,				Six months ended June 30,
		2021		2020		2021		2020			2022		2021		2022		2021
Capital stock	Capital stock									Capital stock

Common stock, $0.01 par value	Common stock, $0.01 par value									Common stock, $0.01 par value
Balance at the beginning of the period	Balance at the beginning of the period	$	2,684	$	2,668	$	2,676	$	2,662	Balance at the beginning of the period	$	2,693	$	2,678	$	2,689	$	2,676
Shares issued	Shares issued	2		3		10		9		Shares issued	2		6		6		8
Balance at the end of the period	Balance at the end of the period	2,686		2,671		2,686		2,671		Balance at the end of the period	2,695		2,684		2,695		2,684
Capital in excess of par value	Capital in excess of par value									Capital in excess of par value
Balance at the beginning of the period	Balance at the beginning of the period	964,791		860,771		921,752		832,821		Balance at the beginning of the period	1,018,433		928,412		1,012,526		921,752
Issuance of common stock under employee stock plans	Issuance of common stock under employee stock plans	10,098		18,989		29,544		27,886		Issuance of common stock under employee stock plans	9,562		24,226		5,898		19,446
Share-based compensation expense	Share-based compensation expense	11,428		10,825		35,021		29,878		Share-based compensation expense	12,956		12,153		22,527		23,593
Balance at the end of the period	Balance at the end of the period	986,317		890,585		986,317		890,585		Balance at the end of the period	1,040,951		964,791		1,040,951		964,791
Retained earnings	Retained earnings									Retained earnings
Balance at the beginning of the period	Balance at the beginning of the period	7,453,401		6,751,686		7,094,656		6,387,612		Balance at the beginning of the period	8,121,781		7,267,856		7,900,113		7,094,656
Net income	Net income	257,460		204,581		708,372		651,414		Net income	282,373		231,679		554,820		450,912
Cash dividends paid	Cash dividends paid	(46,178)		(41,291)		(138,345)		(123,690)		Cash dividends paid	(50,419)		(46,134)		(101,197)		(92,167)
Adoption of ASU 2016-13		—		—		—		(360)

Other	Other	(1)		—		(1)		—		Other	—		—		(1)		—
Balance at the end of the period	Balance at the end of the period	7,664,682		6,914,976		7,664,682		6,914,976		Balance at the end of the period	8,353,735		7,453,401		8,353,735		7,453,401
Accumulated other comprehensive (loss) income	Accumulated other comprehensive (loss) income									Accumulated other comprehensive (loss) income
Foreign currency translation:	Foreign currency translation:									Foreign currency translation:
Balance at the beginning of the period	Balance at the beginning of the period	(256,421)		(315,252)		(250,748)		(286,248)		Balance at the beginning of the period	(291,511)		(260,785)		(275,365)		(250,748)
Translation adjustments	Translation adjustments	(31,207)		46,922		(45,160)		(2,103)		Translation adjustments	(87,391)		7,547		(114,576)		(13,953)
Change in long-term intercompany notes	Change in long-term intercompany notes	(5,475)		9,003		(11,041)		7,979		Change in long-term intercompany notes	(16,252)		1,329		(23,119)		(5,566)
Net investment hedge instruments gain (loss), net of tax of $(5,715) and $10,459 for the quarter ended September 30, 2021 and 2020, and $(10,194) and $3,681 for the nine months ended September 30, 2021 and 2020, respectively		17,668		(32,476)		31,514		(11,431)
Net investment hedge instruments gain (loss), net of tax of $(13,777) and $1,459 for the quarter ended June 30, 2022 and 2021 and $(19,608) and $(4,479) for the six months ended June 30, 2022 and 2021, respectively										Net investment hedge instruments gain (loss), net of tax of $(13,777) and $1,459 for the quarter ended June 30, 2022 and 2021 and $(19,608) and $(4,479) for the six months ended June 30, 2022 and 2021, respectively	42,303		(4,512)		60,209		13,846
Balance at the end of the period	Balance at the end of the period	(275,435)		(291,803)		(275,435)		(291,803)		Balance at the end of the period	(352,851)		(256,421)		(352,851)		(256,421)
Defined benefit pension plans:	Defined benefit pension plans:									Defined benefit pension plans:
Balance at the beginning of the period	Balance at the beginning of the period	(250,460)		(243,525)		(253,720)		(246,891)		Balance at the beginning of the period	(194,079)		(252,090)		(195,079)		(253,720)
Amortization of net actuarial loss and other, net of tax of $(527) and $(531) for the quarter ended September 30, 2021 and 2020, and $(1,581) and $(1,593) for the nine months ended September 30, 2021 and 2020, respectively		1,630		1,683		4,890		5,049
Amortization of net actuarial loss and other, net of tax of $(326) and $(527) for the quarter ended June 30, 2022 and 2021 and $(652) and $(1,054) for the six months ended June 30, 2022 and 2021, respectively										Amortization of net actuarial loss and other, net of tax of $(326) and $(527) for the quarter ended June 30, 2022 and 2021 and $(652) and $(1,054) for the six months ended June 30, 2022 and 2021, respectively	1,000		1,630		2,000		3,260
Balance at the end of the period	Balance at the end of the period	(248,830)		(241,842)		(248,830)		(241,842)		Balance at the end of the period	(193,079)		(250,460)		(193,079)		(250,460)
Accumulated other comprehensive loss at the end of the period	Accumulated other comprehensive loss at the end of the period	(524,265)		(533,645)		(524,265)		(533,645)		Accumulated other comprehensive loss at the end of the period	(545,930)		(506,881)		(545,930)		(506,881)
Treasury stock	Treasury stock									Treasury stock
Balance at the beginning of the period	Balance at the beginning of the period	(1,570,696)		(1,569,908)		(1,565,270)		(1,574,464)		Balance at the beginning of the period	(1,725,629)		(1,565,323)		(1,573,000)		(1,565,270)
Issuance of common stock under employee stock plans	Issuance of common stock under employee stock plans	(143)		(414)		7,309		8,638		Issuance of common stock under employee stock plans	(1,076)		(492)		3,019		7,452
Purchase of treasury stock	Purchase of treasury stock	(185)		(73)		(13,063)		(4,569)		Purchase of treasury stock	(174,655)		(4,881)		(331,379)		(12,878)
Balance at the end of the period	Balance at the end of the period	(1,571,024)		(1,570,395)		(1,571,024)		(1,570,395)		Balance at the end of the period	(1,901,360)		(1,570,696)		(1,901,360)		(1,570,696)
Total stockholders’ equity	Total stockholders’ equity	$	6,558,396	$	5,704,192	$	6,558,396	$	5,704,192	Total stockholders’ equity	$	6,950,091	$	6,343,299	$	6,950,091	$	6,343,299

See accompanying notes.

Table of Contents

AMETEK, Inc.

Condensed Consolidated Statement of Cash Flows

(In thousands)

(Unaudited)


		Nine months ended September 30,					Six months ended June 30,
		2021		2020			2022		2021
Cash provided by (used for):	Cash provided by (used for):					Cash provided by (used for):
Operating activities:	Operating activities:					Operating activities:
Net income	Net income	$	708,372	$	651,414	Net income	$	554,820	$	450,912
Adjustments to reconcile net income to total operating activities:	Adjustments to reconcile net income to total operating activities:					Adjustments to reconcile net income to total operating activities:
Depreciation and amortization	Depreciation and amortization	214,494		190,398		Depreciation and amortization	155,218		139,814
Deferred income taxes	Deferred income taxes	(7,209)		(4,532)		Deferred income taxes	(19,459)		27,482
Share-based compensation expense	Share-based compensation expense	35,021		29,878		Share-based compensation expense	22,527		23,593
Gain on sale of business		(6,349)		(141,020)

Gain on sale of facilities	Gain on sale of facilities	—		(7,523)		Gain on sale of facilities	(7,054)		—
Net change in assets and liabilities, net of acquisitions	Net change in assets and liabilities, net of acquisitions	(60,947)		176,743		Net change in assets and liabilities, net of acquisitions	(245,958)		(58,497)
Pension contributions	Pension contributions	(6,414)		(5,110)		Pension contributions	(3,884)		(4,094)
Other, net	Other, net	1,592		4,850		Other, net	(18,973)		(7,767)
Total operating activities	Total operating activities	878,560		895,098		Total operating activities	437,237		571,443
Investing activities:	Investing activities:					Investing activities:
Additions to property, plant and equipment	Additions to property, plant and equipment	(67,229)		(37,164)		Additions to property, plant and equipment	(52,540)		(41,005)
Purchases of businesses, net of cash acquired	Purchases of businesses, net of cash acquired	(1,839,664)		(116,509)		Purchases of businesses, net of cash acquired	—		(1,840,845)
Proceeds from sale of business		12,000		245,311

Proceeds from sale of facilities	Proceeds from sale of facilities	—		9,508		Proceeds from sale of facilities	11,754		—
Other, net	Other, net	(291)		(2,457)		Other, net	(247)		(292)
Total investing activities	Total investing activities	(1,895,184)		98,689		Total investing activities	(41,033)		(1,882,142)
Financing activities:	Financing activities:					Financing activities:
Net change in short-term borrowings	Net change in short-term borrowings	286,126		109,997		Net change in short-term borrowings	56,490		569,949

Repayments of long-term borrowings		—		(102,947)

Repurchases of common stock	Repurchases of common stock	(13,063)		(4,569)		Repurchases of common stock	(331,379)		(12,878)
Cash dividends paid	Cash dividends paid	(138,345)		(123,690)		Cash dividends paid	(101,197)		(92,167)
Proceeds from stock option exercises	Proceeds from stock option exercises	42,301		39,880		Proceeds from stock option exercises	17,827		31,112
Other, net	Other, net	(5,818)		(3,389)		Other, net	(12,134)		(4,420)
Total financing activities	Total financing activities	171,201		(84,718)		Total financing activities	(370,393)		491,596
Effect of exchange rate changes on cash and cash equivalents	Effect of exchange rate changes on cash and cash equivalents	(8,723)		2,739		Effect of exchange rate changes on cash and cash equivalents	(23,930)		(3,075)
(Decrease) Increase in cash and cash equivalents		(854,146)		911,808
Increase (decrease) in cash and cash equivalents						Increase (decrease) in cash and cash equivalents	1,881		(822,178)
Cash and cash equivalents:	Cash and cash equivalents:					Cash and cash equivalents:
Beginning of period	Beginning of period	1,212,822		393,030		Beginning of period	346,772		1,212,822
End of period	End of period	$	358,676	$	1,304,838	End of period	$	348,653	$	390,644

See accompanying notes.

Table of Contents

AMETEK, Inc.

Notes to Consolidated Financial Statements

~~September~~June 30, ~~2021~~2022

(Unaudited)

1. Basis of Presentation

The accompanying consolidated financial statements are unaudited. AMETEK, Inc. (the “Company”) believes that all adjustments (which primarily consist of normal recurring accruals) necessary for a fair presentation of the consolidated financial position of the Company at ~~September~~June 30, ~~2021,~~2022, the consolidated results of its operations for the three and ~~nine~~six months ended ~~September~~June 30, ~~2021~~2022 and ~~2020~~2021 and its cash flows for the ~~nine~~six months ended ~~September~~June 30, ~~2021~~2022 and ~~2020~~2021 have been included. Quarterly results of operations are not necessarily indicative of results for the full year. The accompanying consolidated financial statements should be read in conjunction with the audited consolidated financial statements and related notes presented in the Company’s Annual Report on Form 10-K for the year ended December 31, ~~2020~~2021 as filed with the U.S. Securities and Exchange Commission.

2. Recent Accounting Pronouncements

Recently Adopted Accounting Pronouncement

In ~~December 2019,~~October 2021, the FASB issued ASU No. ~~2019-12, Income Taxes~~2021-08, Business Combinations (Topic ~~740)~~805): ~~Simplifying the~~ Accounting for ~~Income Taxes (“~~Contract Assets and Contract Liabilities from Contracts with Customers ("ASU ~~2019-12”~~2021-08"), which ~~simplifies~~provides a single comprehensive accounting model for the ~~accounting~~acquisition of contract balances under ASC 805. ASU 2021-08 is effective for ~~income taxes by removing certain exceptions to the general principles in ASC Topic 740.~~fiscal years beginning after December 15, 2022. Early adoption is permitted. The Company ~~prospectively~~early adopted the ASU ~~2019-12, effective~~on January 1, ~~2021,~~2022, and the amendments in this ASU were applied on a prospective basis to all periods presented. The adoption of ASU 2021-08 did not ~~have a significant~~ impact on the ~~Company’s~~Company's consolidated results of operations, financial position, cash flows, ~~and~~or financial statement disclosures.

3. Revenues

The outstanding contract asset and liability accounts were as follows:


		2021		2020			2022		2021
		(In thousands)					(In thousands)
Contract assets—January 1	Contract assets—January 1	$	68,971	$	73,039	Contract assets—January 1	$	95,274	$	68,971
Contract assets – September 30		82,986		68,157
Contract assets – June 30						Contract assets – June 30	107,902		73,853
Change in contract assets – increase (decrease)	Change in contract assets – increase (decrease)	14,015		(4,882)		Change in contract assets – increase (decrease)	12,628		4,882
Contract liabilities – January 1	Contract liabilities – January 1	215,093		167,306		Contract liabilities – January 1	328,816		215,093
Contract liabilities – September 30		311,674		198,660
Change in contract liabilities – increase		(96,581)		(31,354)
Contract liabilities – June 30						Contract liabilities – June 30	369,926		333,409
Change in contract liabilities – (increase) decrease						Change in contract liabilities – (increase) decrease	(41,110)		(118,316)
Net change	Net change	$	(82,566)	$	(36,236)	Net change	$	(28,482)	$	(113,434)

The net change for the ~~nine~~six months ended ~~September~~June 30, ~~2021~~2022 was primarily driven by contract liabilities, ~~from the 2021 acquisitions'~~specifically broad-based growth in advance payments from customers. For the ~~nine~~six months ended ~~September~~June 30, ~~2021~~2022 and ~~2020,~~2021, the Company recognized revenue of ~~$179.1~~$219.3 million and ~~$120.6~~$145.2 million, respectively, that was previously included in the beginning balance of contract liabilities.

Contract assets are reported as a component of Other current assets in the consolidated balance sheet. At ~~September~~June 30, ~~2021~~2022 and December 31, ~~2020, $24.3~~2021, $42.4 million and ~~$20.5~~$30.1 million of Customer advanced payments (contract liabilities), respectively, were recorded in Other long-term liabilities in the consolidated balance sheets.

The remaining performance obligations ~~exceeding~~not expected to be completed within one year as of ~~September~~June 30, ~~2021~~2022 and December 31, ~~2020~~2021 were ~~$545.3~~$422.1 million and ~~$300.8~~$342.5 million, respectively. ~~The increase was primarily driven by the 2021 acquisitions.~~ Remaining performance obligations represent the transaction price of firm, non-cancelable orders, with expected delivery dates to customers greater than one year from the balance sheet date, for which the performance obligation is unsatisfied or partially unsatisfied. These performance obligations will be substantially satisfied within two to three years.

Table of Contents

AMETEK, Inc.

Notes to Consolidated Financial Statements

~~September~~June 30, ~~2021~~2022

(Unaudited)

Geographic Areas

Net sales were attributed to geographic areas based on the location of the customer. Information about the Company’s operations in different geographic areas was as follows for the three and ~~nine~~six months ended ~~September~~June 30:


		Three months ended September 30, 2021						Nine months ended September 30, 2021							Three months ended June 30, 2022						Six months ended June 30, 2022
		EIG		EMG		Total		EIG		EMG		Total			EIG		EMG		Total		EIG		EMG		Total
		(In thousands)													(In thousands)
United States	United States	$	509,075	$	230,524	$	739,599	$	1,393,015	$	666,618	$	2,059,633	United States	$	551,967	$	240,436	$	792,403	$	1,035,593	$	471,813	$	1,507,406
International(1):	International(1):													International(1):
United Kingdom	United Kingdom	25,358		32,846		58,204		67,954		91,465		159,419		United Kingdom	19,050		31,620		50,670		47,005		60,251		107,256
European Union countries	European Union countries	117,035		102,069		219,104		338,556		300,970		639,526		European Union countries	109,425		108,031		217,456		230,139		222,193		452,332
Asia	Asia	242,063		65,624		307,687		657,478		192,267		849,745		Asia	255,232		70,225		325,457		511,652		133,064		644,716
Other foreign countries	Other foreign countries	88,284		27,803		116,087		249,670		84,776		334,446		Other foreign countries	92,574		35,992		128,566		191,618		69,749		261,367
Total international	Total international	472,740		228,342		701,082		1,313,658		669,478		1,983,136		Total international	476,281		245,868		722,149		980,414		485,257		1,465,671
Consolidated net sales	Consolidated net sales	$	981,815	$	458,866	$	1,440,681	$	2,706,673	$	1,336,096	$	4,042,769	Consolidated net sales	$	1,028,248	$	486,304	$	1,514,552	$	2,016,007	$	957,070	$	2,973,077

________________

(1) Includes U.S. export sales of ~~$391.0~~$394.7 million and ~~$1,087.3~~$801.2 million for the three and ~~nine~~six months ended ~~September~~June 30, ~~2021, respectively.~~2022.


		Three months ended September 30, 2020						Nine months ended September 30, 2020							Three months ended June 30, 2021						Six months ended June 30, 2021
		EIG		EMG		Total		EIG		EMG		Total			EIG		EMG		Total		EIG		EMG		Total
		(In thousands)													(In thousands)
United States	United States	$	379,744	$	198,440	$	578,184	$	1,125,046	$	622,498	$	1,747,544	United States	$	495,039	$	225,912	$	720,951	$	883,940	$	436,094	$	1,320,034
International(1):	International(1):													International(1):
United Kingdom	United Kingdom	11,488		28,657		40,145		39,708		84,547		124,255		United Kingdom	20,649		28,568		49,217		42,596		58,619		101,215
European Union countries	European Union countries	97,028		78,851		175,879		282,605		246,944		529,549		European Union countries	117,856		103,604		221,460		221,521		198,901		420,422
Asia	Asia	188,254		47,496		235,750		514,189		138,862		653,051		Asia	217,854		65,449		283,303		415,415		126,643		542,058
Other foreign countries	Other foreign countries	71,858		25,126		96,984		208,931		77,752		286,683		Other foreign countries	82,536		28,879		111,415		161,386		56,973		218,359
Total international	Total international	368,628		180,130		548,758		1,045,433		548,105		1,593,538		Total international	438,895		226,500		665,395		840,918		441,136		1,282,054
Consolidated net sales	Consolidated net sales	$	748,372	$	378,570	$	1,126,942	$	2,170,479	$	1,170,603	$	3,341,082	Consolidated net sales	$	933,934	$	452,412	$	1,386,346	$	1,724,858	$	877,230	$	2,602,088

______________

(1) Includes U.S. export sales of ~~$303.2~~$365.5 million and ~~$866.3~~$696.4 million for the three and ~~nine~~six months ended ~~September~~June 30, ~~2020, respectively.~~

~~Major Products and Services~~

~~The Company’s major products and services in the reportable segments were as follows:~~

Three months ended September 30, 2021 Nine months ended September 30, 2021
EIG EMG Total EIG EMG Total
(In thousands)
Process and analytical instrumentation $ 661,243 $ — $ 661,243 $ 1,881,923 $ — $ 1,881,923
Aerospace and power 320,572 130,671 451,243 824,750 379,310 1,204,060
Automation and engineered solutions — 328,195 328,195 — 956,786 956,786
Consolidated net sales $ 981,815 $ 458,866 $ 1,440,681 $ 2,706,673 $ 1,336,096 $ 4,042,769
2021.

Table of Contents

AMETEK, Inc.

Notes to Consolidated Financial Statements

~~September~~June 30, ~~2021~~2022

(Unaudited)

Three months ended September 30, 2020 Nine months ended September 30, 2020
EIG EMG Total EIG EMG Total
(In thousands)
Process and analytical instrumentation $ 557,570 $ — $ 557,570 $ 1,589,550 $ — $ 1,589,550
Aerospace and power 190,802 116,126 306,928 580,929 347,510 928,439
Automation and engineered solutions — 262,444 262,444 — 823,093 823,093
Consolidated net sales $ 748,372 $ 378,570 $ 1,126,942 $ 2,170,479 $ 1,170,603 $ 3,341,082
Major Products and Services

The Company’s major products and services in the reportable segments were as follows:


	Three months ended June 30, 2022						Six months ended June 30, 2022
	EIG		EMG		Total		EIG		EMG		Total
	(In thousands)
Process and analytical instrumentation	$	768,261	$	—	$	768,261	$	1,460,953	$	—	$	1,460,953
Aerospace and power	259,987		137,340		397,327		555,054		264,082		819,136
Automation and engineered solutions	—		348,964		348,964		—		692,988		692,988
Consolidated net sales	$	1,028,248	$	486,304	$	1,514,552	$	2,016,007	$	957,070	$	2,973,077


	Three months ended June 30, 2021						Six months ended June 30, 2021
	EIG		EMG		Total		EIG		EMG		Total
	(In thousands)
Process and analytical instrumentation	$	644,121	$	—	$	644,121	$	1,220,680	$	—	$	1,220,680
Aerospace and power	289,813		126,466		416,279		504,178		248,639		752,817
Automation and engineered solutions	—		325,946		325,946		—		628,591		628,591
Consolidated net sales	$	933,934	$	452,412	$	1,386,346	$	1,724,858	$	877,230	$	2,602,088

Timing of Revenue Recognition


		Three months ended September 30, 2021						Nine months ended September 30, 2021							Three months ended June 30, 2022						Six months ended June 30, 2022
		EIG		EMG		Total		EIG		EMG		Total			EIG		EMG		Total		EIG		EMG		Total
		(In thousands)													(In thousands)
Products transferred at a point in time	Products transferred at a point in time	$	791,486	$	413,062	$	1,204,548	$	2,206,252	$	1,204,662	$	3,410,914	Products transferred at a point in time	$	839,948	$	423,506	$	1,263,454	$	1,652,896	$	836,160	$	2,489,056
Products and services transferred over time	Products and services transferred over time	190,329		45,804		236,133		500,421		131,434		631,855		Products and services transferred over time	188,300		62,798		251,098		363,111		120,910		484,021
Consolidated net sales	Consolidated net sales	$	981,815	$	458,866	$	1,440,681	$	2,706,673	$	1,336,096	$	4,042,769	Consolidated net sales	$	1,028,248	$	486,304	$	1,514,552	$	2,016,007	$	957,070	$	2,973,077


		Three months ended September 30, 2020						Nine months ended September 30, 2020							Three months ended June 30, 2021						Six months ended June 30, 2021
		EIG		EMG		Total		EIG		EMG		Total			EIG		EMG		Total		EIG		EMG		Total
		(In thousands)													(In thousands)
Products transferred at a point in time	Products transferred at a point in time	$	603,602	$	346,237	$	949,839	$	1,762,310	$	1,049,798	$	2,812,108	Products transferred at a point in time	$	767,514	$	408,569	$	1,176,083	$	1,414,766	$	791,600	$	2,206,366
Products and services transferred over time	Products and services transferred over time	144,770		32,333		177,103		408,169		120,805		528,974		Products and services transferred over time	166,420		43,843		210,263		310,092		85,630		395,722
Consolidated net sales	Consolidated net sales	$	748,372	$	378,570	$	1,126,942	$	2,170,479	$	1,170,603	$	3,341,082	Consolidated net sales	$	933,934	$	452,412	$	1,386,346	$	1,724,858	$	877,230	$	2,602,088

Table of Contents

AMETEK, Inc.

Notes to Consolidated Financial Statements

June 30, 2022

(Unaudited)

Product Warranties

The Company provides limited warranties in connection with the sale of its products. The warranty periods for products sold vary among the Company’s operations, but the majority do not exceed one year. The Company calculates its warranty expense provision based on its historical warranty experience and adjustments are made periodically to reflect actual warranty expenses. Product warranty obligations are reported as a component of Accrued liabilities and other in the consolidated balance sheet.

Changes in the accrued product warranty obligation were as follows:


		Nine Months Ended September 30,					Six Months Ended June 30,
		2021		2020			2022		2021
		(In thousands)					(In thousands)
Balance at the beginning of the period	Balance at the beginning of the period	$	27,839	$	27,611	Balance at the beginning of the period	$	27,478	$	27,839
Accruals for warranties issued during the period	Accruals for warranties issued during the period	8,379		9,766		Accruals for warranties issued during the period	5,143		5,964
Settlements made during the period	Settlements made during the period	(9,112)		(11,513)		Settlements made during the period	(6,023)		(6,620)
Warranty accruals related to acquired businesses and other during the period	Warranty accruals related to acquired businesses and other during the period	2,227		2,594		Warranty accruals related to acquired businesses and other during the period	(632)		2,169
Balance at the end of the period	Balance at the end of the period	$	29,333	$	28,458	Balance at the end of the period	$	25,966	$	29,352

Accounts Receivable

The Company maintains allowances for estimated losses resulting from the inability of customers to meet their financial obligations to the Company. The Company recognizes an allowance for credit losses, on all accounts receivable and contract assets, which considers risk of future credit losses based on factors such as historical experience, contract terms, as well as general and market business conditions, country, and political risk. Balances are written off when determined to be uncollectible.

At ~~September~~June 30, ~~2021,~~2022, the Company had ~~$768.4~~$885.1 million of accounts receivable, net of allowances of ~~$12.1~~$11.2 million. Changes in the allowance were not material for the three and ~~nine~~six months ended ~~September~~June 30, ~~2021.~~2022.

~~Table of Contents~~

~~AMETEK, Inc.~~

~~Notes to Consolidated Financial Statements~~

~~September 30, 2021~~

~~(Unaudited)~~

4. Earnings Per Share

The calculation of basic earnings per share is based on the weighted average number of common shares considered outstanding during the periods. The calculation of diluted earnings per share reflects the effect of all potentially dilutive securities (principally outstanding stock options and restricted stock grants). Securities that are anti-dilutive have been excluded and are not significant. The number of weighted average shares used in the calculation of basic earnings per share and diluted earnings per share was as follows:


		Three Months Ended September 30,		Nine Months Ended September 30,			Three Months Ended June 30,		Six Months Ended June 30,
		2021	2020	2021	2020		2022	2021	2022	2021
		(In thousands)					(In thousands)
Weighted average shares:	Weighted average shares:					Weighted average shares:
Basic shares	Basic shares	231,171	229,576	230,811	229,254	Basic shares	230,100	230,828	230,790	230,632
Equity-based compensation plans	Equity-based compensation plans	1,829	1,884	1,901	1,650	Equity-based compensation plans	1,147	2,013	1,366	1,937
Diluted shares	Diluted shares	233,000	231,460	232,712	230,904	Diluted shares	231,247	232,841	232,156	232,569

5. Fair Value Measurements

Fair value is defined as the exchange price that would be received for an asset or paid to transfer a liability (an exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date.

The Company utilizes a valuation hierarchy for disclosure of the inputs to the valuations used to measure fair value. This hierarchy prioritizes the inputs into three broad levels as follows. Level 1 inputs are quoted prices (unadjusted) in active

Table of Contents

AMETEK, Inc.

Notes to Consolidated Financial Statements

June 30, 2022

(Unaudited)

markets for identical assets or liabilities. Level 2 inputs are quoted prices for similar assets and liabilities in active markets or inputs that are observable for the asset or liability, either directly or indirectly through market corroboration, for substantially the full term of the financial instrument. Level 3 inputs are unobservable inputs based on the Company’s own assumptions used to measure assets and liabilities at fair value. A financial asset or liability’s classification within the hierarchy is determined based on the lowest level input that is significant to the fair value measurement.

The following table provides the Company’s assets that are measured at fair value on a recurring basis, consistent with the fair value hierarchy, at ~~September~~June 30, ~~2021~~2022 and December 31, ~~2020:~~2021:

September 30, 2021 December 31, 2020
Fair Value Fair Value
(In thousands)
Mutual fund investments $ 10,456 $ 8,969


	June 30, 2022		December 31, 2021
	Fair Value		Fair Value
	(In thousands)
Mutual fund investments	$	11,365	$	10,703

The fair value of mutual fund investments, which are valued as level 1 investments, was based on quoted market prices. The mutual fund investments are shown as a component of investments and other assets on the consolidated balance sheet.

For the ~~nine~~six months ended ~~September~~June 30, ~~2021~~2022 and ~~2020,~~2021, gains and losses on the investments noted above were not significant. No transfers between level 1 and level 2 investments occurred during the ~~nine~~six months ended ~~September~~June 30, ~~2021~~2022 and ~~2020.~~2021.

Financial Instruments

Cash, cash equivalents and mutual fund investments are recorded at fair value at ~~September~~June 30, ~~2021~~2022 and December 31, ~~2020~~2021 in the accompanying consolidated balance sheet.

~~Table of Contents~~

~~AMETEK, Inc.~~

~~Notes to Consolidated Financial Statements~~

~~September 30, 2021~~

~~(Unaudited)~~

The following table provides the estimated fair values of the Company’s financial instrument liabilities, for which fair value is measured for disclosure purposes only, compared to the recorded amounts at ~~September~~June 30, ~~2021~~2022 and December 31, ~~2020:~~2021:

September 30, 2021 December 31, 2020
Recorded
Amount
Fair Value
Recorded
Amount
Fair Value
(In thousands)
Long-term debt, net (including current portion) $ (2,302,585) $ (2,467,313) $ (2,347,587) $ (2,550,956)


	June 30, 2022				December 31, 2021
	Recorded Amount		Fair Value		Recorded Amount		Fair Value
	(In thousands)
Long-term debt (including current portion)	$	(2,150,381)	$	(2,071,751)	$	(2,233,705)	$	(2,378,930)

The fair value of net short-term borrowings approximates the carrying value. Net short-term borrowings are valued as level 2 liabilities as they are corroborated by observable market data. The Company’s net long-term debt is all privately held with no public market for this debt, therefore, the fair value of net long-term debt was computed based on comparable current market data for similar debt instruments and is considered a level 3 liability.

Foreign Currency

At ~~September~~June 30, 2021, the Company had no foreign currency forward contracts outstanding. For the nine months ended September 30, 2021, the Company had no realized or unrealized gains or losses on foreign currency forward contracts. At September 30, 2020,2022, the Company had a ~~Canadian dollar~~Euro forward contract for a total notional value of ~~24.0~~40.0 million Euros and a Canadian dollar forward contract for a notional value of 8.0 million Canadian ~~dollars and an immaterial unrealized gain outstanding.~~dollars. For the ~~nine~~six months ended ~~September~~June 30, ~~2020~~2022, realized and unrealized gains and losses on the foreign currency forward contracts were not significant. ~~The Company does not typically designate its foreign currency forward contracts as hedges.~~

6. Hedging Activities

The Company has designated certain foreign-currency-denominated long-term borrowings as hedges of the net investment in certain foreign operations. As of ~~September~~June 30, ~~2021,~~2022, these net investment hedges included British-pound-and Euro-denominated long-term debt. These borrowings were designed to create net investment hedges in certain designated foreign subsidiaries. The Company designated the British-pound- and Euro-denominated loans referred to above as hedging instruments to offset translation gains or losses on the net investment due to changes in the British pound and Euro exchange rates. These net investment hedges are evidenced by management’s contemporaneous documentation supporting the hedge designation. Any gain or loss on the hedging instruments (the debt) following hedge designation is reported in

Table of Contents

AMETEK, Inc.

Notes to Consolidated Financial Statements

June 30, 2022

(Unaudited)

accumulated other comprehensive income in the same manner as the translation adjustment on the hedged investment based on changes in the spot rate, which is used to measure hedge effectiveness.

At ~~September~~June 30, ~~2021,~~2022, the Company had ~~$303.0~~$273.6 million of British-pound-denominated loans, which were designated as a hedge against the net investment in British pound functional currency foreign subsidiaries. At ~~September~~June 30, ~~2021,~~2022, the Company had ~~$665.7~~$559.9 million in Euro-denominated loans, which were designated as a hedge against the net investment in Euro functional currency foreign subsidiaries. As a result of the British-pound- and Euro-denominated loans designated and 100% effective as net investment hedges, ~~$41.7~~$79.8 million of pre-tax currency remeasurement gains have been included in the foreign currency translation component of other comprehensive income for the ~~nine~~six months ended ~~September~~June 30, ~~2021.~~2022.

7. Inventories, net


		September 30, 2021		December 31, 2020			June 30, 2022		December 31, 2021
		(In thousands)					(In thousands)
Finished goods and parts	Finished goods and parts	$	87,370	$	81,619	Finished goods and parts	$	117,959	$	89,985
Work in process	Work in process	137,283		102,945		Work in process	148,998		122,356
Raw materials and purchased parts	Raw materials and purchased parts	514,035		374,607		Raw materials and purchased parts	699,652		556,834
Total inventories, net	Total inventories, net	$	738,688	$	559,171	Total inventories, net	$	966,609	$	769,175

~~Table of Contents~~

~~AMETEK, Inc.~~

~~Notes to Consolidated Financial Statements~~

~~September 30, 2021~~

~~(Unaudited)~~

8. Leases

The Company has commitments under operating leases for certain facilities, vehicles and equipment used in its operations. Cash used in operations for operating leases was not materially different from operating lease expense for the ~~nine~~six months ended ~~September~~June 30, ~~2021~~2022 and ~~2020.~~2021. The Company's leases have initial lease terms ranging from ~~one month~~four months to 16 years. Certain lease agreements contain provisions for future rent increases.

The components of lease expense were as follows:


		Three Months Ended September 30,				Nine Months Ended September 30,					Three Months Ended June 30,				Six Months Ended June 30,
		2021		2020		2021		2020			2022		2021		2022		2021
		(In thousands)									(In thousands)
Operating lease cost	Operating lease cost	$	13,560	$	10,715	$	37,083	$	31,704	Operating lease cost	$	15,346	$	12,006	$	30,724	$	23,523
Variable lease cost	Variable lease cost	1,737		1,611		4,609		3,701		Variable lease cost	2,399		1,402		4,652		2,872
Total lease cost	Total lease cost	$	15,297	$	12,326	$	41,692	$	35,405	Total lease cost	$	17,745	$	13,408	$	35,376	$	26,395

Supplemental balance sheet information related to leases was as follows:

September 30,
2021 December 31,
2020
(In thousands)
Right of use assets, net $ 169,075 $ 167,233
Lease liabilities included in Accrued Liabilities and other 47,803 44,948
Lease liabilities included in Other long-term liabilities 126,695 128,173
Total lease liabilities $ 174,498 $ 173,121

~~Maturities of lease liabilities as of September 30, 2021 were as follows:~~

Lease Liability Maturity Analysis Operating Leases
(In thousands)
Remaining 2021 $ 13,886
2022 50,802
2023 41,065
2024 29,023
2025 21,312
Thereafter 40,161
Total lease payments 196,249
Less: imputed interest 21,751
$ 174,498

~~The Company does not have any significant leases that have not yet commenced.~~


	June 30, 2022		December 31, 2021
	(In thousands)
Right of use assets, net	$	168,829	$	169,924
Lease liabilities included in Accrued Liabilities and other	47,398		47,353
Lease liabilities included in Other long-term liabilities	127,174		129,101
Total lease liabilities	$	174,572	$	176,454

~~9. Acquisitions and Divestitu~~
re

~~Acquisitions~~

The Company spent $1,839.7 million in cash, net of cash acquired, to acquire Magnetrol International ("Magnetrol"), Crank Software, and EGS Automation ("EGS") in March 2021, and NSI-MI Technologies ("NSI-MI") and Abaco Systems, Inc. ("Abaco") in April 2021. Magnetrol is a leading provider of level and flow control solutions for challenging process applications across a diverse set of end markets including medical, pharmaceutical, oil and gas, food and beverage, and general industrial. Crank Software is a leading provider of embedded graphical user interface software and services. EGS is an automation solutions provider that designs and manufactures highly engineered, customized robotic solutions used in critical applications for the medical, food and beverage, and general industrial markets. NSI-MI is a leading provider of radio

Table of Contents

AMETEK, Inc.

Notes to Consolidated Financial Statements

~~September~~June 30, ~~2021~~2022

(Unaudited)

frequency and microwave test and measurement systems for niche applications across the aerospace, defense, automotive, wireless communications, and research markets. Abaco specializes in open-architecture computing and electronic systems for aerospace, defense, and specialized industrial markets and is a leading providerMaturities of ~~mission critical embedded computing systems. Magnetrol, Crank Software, NSI-MI, and Abaco are part of EIG. EGS is part of EMG.~~

~~The following table represents the allocation of the purchase price for the net assets of the acquisitions based on the estimated fair values at acquisition (in millions):~~

Abaco Other Acquisitions Total
(in millions)
Property, plant and equipment $ 56.2 $ 39.2 $ 95.4
Goodwill 737.9 244.7 982.6
Other intangible assets 616.9 252.8 869.7
Deferred income taxes (122.2) (30.5) (152.7)
Net working capital and other(1)
57.1 (12.4) 44.7
Total cash paid $ 1,345.9 $ 493.8 $ 1,839.7

~~________________~~

~~(1)Includes $66.2 million in accounts receivable, whose fair value, contractual cash flows and expected cash flows are approximately equal.~~

The amount allocated to goodwill is reflective of the benefits the Company expects to realize from the 2021 acquisitions. Abaco's computing and electronic solutions expand and complement the Company's existing aerospace and defense businesses. NSI-MI strengthens the Company's test and measurement platform. Magnetrol's solutions combined with the Company’s existing Sensors, Test and Calibration business, becomes an industry leading differentiated sensor platform with a broad range of level and flow measurement solutions. Crank Software expands the Company's growing portfolio of software solutions. EGS complements the Company's existing Dunkermotoren business providing highly customizable engineering design and automation capabilities. ~~The Company expects approximately $108 million of the goodwill relating to the 2021 acquisitions will be tax deductible in future years.~~

At September 30, 2021, the purchase price allocated to other intangible assets of $869.7 million consists of $116.1 million of indefinite-lived intangible trade names, which are not subject to amortization. The remaining $753.6 million of other intangible assets consists of $569.9 million of customer relationships, which are being amortized over a period of 15 to 20 years, and $183.7 million of purchased technology, which is being amortized over a period of 11 to 20 years. Amortization expense for each of the next five years for the 2021 acquisitions is expected to approximate $41 million per year.

At September 30, 2021, the Company finalized the measurements of certain tangible and intangible assets and liabilities for its 2021 acquisitions of EGS and Crank Software, which had no material impact to the consolidated statement of income. The Company is in the process of finalizing the measurement of the intangible assets and certain tangible assets andlease liabilities as ~~well~~of June 30, 2022 were as ~~accounting for income taxes, for its 2021 acquisitions of Abaco, Magnetrol, and NSI-MI.~~follows:

The acquisitions had an immaterial impact on reported net income and diluted earnings per share for the three and nine months ended September 30, 2021. The acquisitions increased net sales by approximately 11% and 6% for the three and nine months ended September 30, 2021, respectively. Had the acquisitions been made at the beginning of 2021 or 2020, pro forma net income and diluted earnings per share for the three and nine months ended September 30, 2021 and 2020, would not have been materially different than the amounts reported. Pro forma net sales would not have been materially different than the amounts reported for the three and nine months ended September 30, 2021 and would have been approximately 10% higher than the reported amounts for the three and nine months ended September 30, 2020.

~~Divestiture~~


Lease Liability Maturity Analysis	Operating Leases
	(In thousands)
Remaining 2022	$	27,042
2023	46,817
2024	35,024
2025	25,611
2026	18,758
Thereafter	28,245
Total lease payments	181,497
Less: imputed interest	6,925
	$	174,572

The Company completed its sale of Reading Alloys to Kymera International in March 2020 for net cash proceeds of $245.3 million. The sale resulted in a pretax gain of $141.0 million, recorded in Other income, net in the Consolidated

~~Table of Contents~~

~~AMETEK, Inc.~~

~~Notes to Consolidated Financial Statements~~

~~September 30, 2021~~

~~(Unaudited)~~

Statement of Income, and income tax expense of approximately $31.4 million in connection with the sale. Reading Alloys revenue and costs were reported within the EMG segment through the date of sale.does not have any significant leases that have not yet commenced.

~~10.~~9. Goodwill

The changes in the carrying amounts of goodwill by segment were as follows:

EIG EMG Total
(In millions)
Balance at December 31, 2020 $ 3,050.3 $ 1,174.6 $ 4,224.9
Goodwill acquired from 2021 acquisitions 976.7 5.9 982.6
Purchase price allocation adjustments and other 1.9 — 1.9
Foreign currency translation adjustments (15.9) (12.5) (28.4)
Balance at September 30, 2021 $ 4,013.0 $ 1,168.0 $ 5,181.0


	EIG		EMG		Total
	(In millions)
Balance at December 31, 2021	$	4,073.8	$	1,164.9	$	5,238.7

Purchase price allocation adjustments and other	4.2		—		4.2
Foreign currency translation adjustments	(38.8)		(30.7)		(69.5)
Balance at June 30, 2022	$	4,039.2	$	1,134.2	$	5,173.4

The Company finalized its measurements of certain tangible and intangible assets and liabilities for its November 2021 acquisition of Alphasense, which had no material impact to the consolidated statement of income and balance sheet.

~~11.~~10. Income Taxes

At ~~September~~June 30, ~~2021,~~2022, the Company had gross uncertain tax benefits of ~~$156.6~~$161.2 million, of which ~~$103.7~~$118.7 million, if recognized, would impact the effective tax rate.

The following is a reconciliation of the liability for uncertain tax positions (in millions):


Balance at December 31, ~~2020~~2021	$	~~100.7~~147.0
Additions for tax positions	~~56.7~~14.6
Reductions for tax positions	~~(0.8)~~(0.4)
Balance at ~~September~~June 30, ~~2021~~2022	$	~~156.6~~161.2

The additions above primarily reflect the tax positions ~~included as a component of goodwill~~ for ~~businesses recently acquired and~~ foreign tax planning initiatives. The Company recognizes interest and penalties accrued related to uncertain tax positions in income tax expense. The amounts recognized in income tax expense for interest and penalties during the three and ~~nine~~six months ended ~~September~~June 30, ~~2021~~2022 and ~~2020~~2021 were not significant.

The effective tax rate for the three months ended ~~September~~June 30, ~~2021~~2022 was ~~19.5%~~18.5%, compared with ~~17.5%~~20.6% for the three months ended ~~September~~June 30, ~~2020.~~2021. The lower effective tax rate in the second quarter of 2022 is primarily due to improved foreign-derived intangible income ("FDII") benefits on exported products and favorable foreign deferred taxes. The higher effective tax rate in 2021 ~~is primarily due to~~included an increase in the foreign rate differential ~~related~~and the remeasurement of the deferred tax liabilities due to an increase in the ~~mix~~UK tax rate in 2021.

Table of ~~earnings generated in higher taxed jurisdictions.~~Contents

AMETEK, Inc.

Notes to Consolidated Financial Statements

June 30, 2022

(Unaudited)

~~12.~~11. Debt

On ~~April 26, 2021,~~May 12, 2022, the Company along with certain of its foreign subsidiaries amended and restated its credit agreement dated as of September 22, 2011, as amended and restated as of March 10, 2016 and as further amended and restated as of October 30, 2018, with the lenders, JPMorgan Chase Bank, N.A., as Administrative Agent and Bank of America, N.A., PNC Bank, National Association, Trust Bank and Wells Fargo Bank, National Association, as Co-Syndication Agents. The credit agreement amends and restates the Company’s existing revolving credit facility to ~~add a new five-year, delayed draw,~~increase the size from $1.5 billion to $2.3 billion and terminates the $800 million term ~~loan for up to $800 million.~~loan. The credit agreement places certain restrictions on allowable additional indebtedness. At ~~September~~June 30, ~~2021,~~2022, the Company had ~~$150.0~~$360.0 million outstanding on the ~~term loan.~~revolver with a maturity date of May 2027.

~~Table of Contents~~

~~AMETEK, Inc.~~

~~Notes to Consolidated Financial Statements~~

~~September 30, 2021~~

~~(Unaudited)~~

~~13.~~12. Share-Based Compensation

The Company's share-based compensation plans are described in Note 11, Share-Based Compensation, to the consolidated financial statements in Part II, Item 8, filed on the Company’s Annual Report on Form 10-K for the year ended December 31, ~~2020.~~2021.

Share Based Compensation Expense

Total share-based compensation expense was as follows:


		Three Months Ended September 30,				Nine Months Ended September 30,					Three Months Ended June 30,				Six Months Ended June 30,
		2021		2020		2021		2020			2022		2021		2022		2021
		(In thousands)									(In thousands)
Stock option expense	Stock option expense	$	2,768	$	3,331	$	10,017	$	10,330	Stock option expense	$	3,383	$	3,326	$	6,823	$	7,249
Restricted stock expense	Restricted stock expense	4,848		4,537		16,765		12,665		Restricted stock expense	5,253		5,690		10,031		11,917
Performance restricted stock unit expense	Performance restricted stock unit expense	3,812		2,957		8,239		6,883		Performance restricted stock unit expense	4,320		3,137		5,673		4,427
Total pre-tax expense	Total pre-tax expense	$	11,428	$	10,825	$	35,021	$	29,878	Total pre-tax expense	$	12,956	$	12,153	$	22,527	$	23,593

Pre-tax share-based compensation expense is included in the consolidated statement of income in either Cost of sales or Selling, general and administrative expenses, depending on where the recipient’s cash compensation is reported.

Stock Options

The fair value of each stock option grant is estimated on the grant date using a Black-Scholes-Merton option pricing model. The following weighted average assumptions were used in the Black-Scholes-Merton model to estimate the fair values of stock options granted during the periods indicated:


		Nine Months Ended September 30, 2021			Year Ended December 31, 2020				Six Months Ended June 30, 2022			Year Ended December 31, 2021
Expected volatility	Expected volatility	24.2		%	22.2		%	Expected volatility	24.5		%	24.2		%
Expected term (years)	Expected term (years)	5.0			5.0			Expected term (years)	5.0			5.0
Risk-free interest rate	Risk-free interest rate	0.85		%	0.52		%	Risk-free interest rate	2.33		%	0.85		%
Expected dividend yield	Expected dividend yield	0.66		%	1.14		%	Expected dividend yield	0.65		%	0.66		%
Black-Scholes-Merton fair value per stock option granted	Black-Scholes-Merton fair value per stock option granted	$	25.63		$	11.01		Black-Scholes-Merton fair value per stock option granted	$	32.54		$	25.63

~~The following is a summary of the Company’s stock option activity and related information:~~

Shares Weighted
Average
Exercise
Price Weighted
Average
Remaining
Contractual
Life Aggregate
Intrinsic
Value
(In thousands) (Years) (In millions)
Outstanding at December 31, 2020 3,950 $ 65.16
Granted 552 121.91
Exercised (675) 60.32
Forfeited (96) 84.03
Outstanding at September 30, 2021 3,731 $ 73.95 6.1 $ 186.8
Exercisable at September 30, 2021 2,410 $ 65.00 4.6 $ 142.2

The aggregate intrinsic value of stock options exercised during the nine months ended September 30, 2021 was $40.7 million. The total fair value of stock options vested during the nine months ended September 30, 2021 was $13.7 million. As of

1615

Table of Contents

AMETEK, Inc.

Notes to Consolidated Financial Statements

~~September~~June 30, ~~2021~~2022

(Unaudited)

~~September~~The following is a summary of the Company’s stock option activity and related information:


	Shares	Weighted Average Exercise Price		Weighted Average Remaining Contractual Life	Aggregate Intrinsic Value
	(In thousands)			(Years)	(In millions)
Outstanding at December 31, 2021	3,352	$	76.08
Granted	608	134.69
Exercised	(291)	62.97
Forfeited	(54)	99.43
Outstanding at June 30, 2022	3,615	$	86.64	6.5	$	104.8
Exercisable at June 30, 2022	2,438	$	72.77	5.4	$	92.6

The aggregate intrinsic value of stock options exercised during the six months ended June 30, ~~2021,~~2022 was $18.3 million. The total fair value of stock options vested during the six months ended June 30, 2022 was $11.2 million. As of June 30, 2022, there was approximately ~~$16.4~~$24.3 million of expected future pre-tax compensation expense related to the ~~1.3~~1.2 million non-vested stock options outstanding, which is expected to be recognized over a weighted average period of approximately two years.

Restricted Stock

The following is a summary of the Company’s non-vested restricted stock activity and related information:


		Shares	Weighted Average Grant Date Fair Value			Shares	Weighted Average Grant Date Fair Value
		(In thousands)				(In thousands)
Non-vested restricted stock outstanding at December 31, 2020		701	$	76.86
Non-vested restricted stock outstanding at December 31, 2021					Non-vested restricted stock outstanding at December 31, 2021	413	$	96.07
Granted	Granted	153	122.51		Granted	181	134.63
Vested	Vested	(353)	68.29		Vested	(155)	85.97
Forfeited	Forfeited	(37)	93.97		Forfeited	(25)	105.34
Non-vested restricted stock outstanding at September 30, 2021		464	$	97.07
Non-vested restricted stock outstanding at June 30, 2022					Non-vested restricted stock outstanding at June 30, 2022	414	$	116.13

The total fair value of restricted stock vested during the ~~nine~~six months ended ~~September~~June 30, ~~2021~~2022 was ~~$24.1~~$13.3 million. As of ~~September~~June 30, ~~2021,~~2022, there was approximately ~~$32.6~~$37.9 million of expected future pre-tax compensation expense related to the ~~0.5~~0.4 million non-vested restricted shares outstanding, which is expected to be recognized over a weighted average period of approximately two years.

Performance Restricted Stock Units

In March ~~2021,~~2022, the Company granted performance restricted stock units ("PRSU") to officers and certain key management-level employees. The PRSUs vest over a period up to three years from the grant date based on continuous service, with the number of shares earned (0% to 200% of the target award) depending upon the extent to which the Company achieves certain financial and market performance targets measured over the period from January 1 of the year of grant to December 31 of the third year. Half of the PRSUs were valued in a manner similar to restricted stock as the financial targets are based on the Company’s operating results, which represents a performance condition. The grant date fair value of these PRSUs are recognized as compensation expense over the vesting period based on the probable number of awards to vest at each reporting date.

The other half of the PRSUs were valued using a Monte Carlo model as the performance target is related to the Company’s total shareholder return compared to a group of peer companies, which represents a market condition. The Company recognizes the grant date fair value of these awards as compensation expense ratably over the vesting period.

1716

Table of Contents

AMETEK, Inc.

Notes to Consolidated Financial Statements

~~September~~June 30, ~~2021~~2022

(Unaudited)

The following is a summary of the Company’s non-vested performance restricted stock activity and related information:


		Shares	Weighted Average Grant Date Fair Value			Shares	Weighted Average Grant Date Fair Value
		(In thousands)				(In thousands)
Non-vested performance restricted stock outstanding at December 31, 2020		264	$	72.90
Non-vested performance restricted stock outstanding at December 31, 2021					Non-vested performance restricted stock outstanding at December 31, 2021	289	$	85.29
Granted	Granted	81	121.91		Granted	87	134.69
Performance assumption change 1	Performance assumption change 1	39	78.20		Performance assumption change 1	66	81.76
Vested	Vested	(88)	78.20		Vested	(161)	81.76
Forfeited	Forfeited	(5)	91.58		Forfeited	(3)	96.93
Non-vested performance restricted stock outstanding at September 30, 2021		291	$	85.29
Non-vested performance restricted stock outstanding at June 30, 2022					Non-vested performance restricted stock outstanding at June 30, 2022	278	$	101.95

1 Reflects the number of PRSUs above target levels based on performance metrics.

As of ~~September~~June 30, ~~2021,~~2022, there was approximately ~~$7.3~~$13.2 million of expected future pre-tax compensation expense related to the 0.3 million non-vested restricted shares outstanding, which is expected to be recognized over a weighted average period of less than one year.

~~14.~~13. Retirement and Pension Plans

The components of net periodic pension benefit expense (income) were as follows:


		Three Months Ended September 30,				Nine Months Ended September 30,					Three Months Ended June 30,				Six Months Ended June 30,
		2021		2020		2021		2020			2022		2021		2022		2021
		(In thousands)									(In thousands)
Defined benefit plans:	Defined benefit plans:									Defined benefit plans:
Service cost	Service cost	$	2,009	$	1,979	$	6,060	$	5,858	Service cost	$	1,331	$	2,030	$	2,705	$	4,051
Interest cost	Interest cost	4,563		5,657		13,711		16,893		Interest cost	5,032		4,581		10,152		9,148
Expected return on plan assets	Expected return on plan assets	(14,172)		(13,681)		(42,567)		(40,889)		Expected return on plan assets	(15,033)		(14,221)		(30,301)		(28,395)
Amortization of net actuarial loss and other	Amortization of net actuarial loss and other	7,550		4,008		16,282		11,915		Amortization of net actuarial loss and other	2,123		4,379		4,297		8,732
Pension income	Pension income	(50)		(2,037)		(6,514)		(6,223)		Pension income	(6,547)		(3,231)		(13,147)		(6,464)
Other plans:	Other plans:									Other plans:
Defined contribution plans	Defined contribution plans	7,792		7,068		24,208		23,975		Defined contribution plans	9,811		7,961		23,072		16,416
Foreign plans and other	Foreign plans and other	2,074		1,934		6,431		5,807		Foreign plans and other	2,077		2,123		4,395		4,357
Total other plans	Total other plans	9,866		9,002		30,639		29,782		Total other plans	11,888		10,084		27,467		20,773
Total net pension expense	Total net pension expense	$	9,816	$	6,965	$	24,125	$	23,559	Total net pension expense	$	5,341	$	6,853	$	14,320	$	14,309

For defined benefit plans, the net periodic benefit income, other than the service cost component, is included in “Other (expense) income, net” in the consolidated statement of income.

For the ~~nine~~six months ended ~~September~~June 30, ~~2021~~2022 and ~~2020,~~2021, contributions to the Company’s defined benefit pension plans were ~~$6.4~~$3.9 million and ~~$5.1~~$4.1 million, respectively. The Company’s current estimate of ~~2021~~2022 contributions to its worldwide defined benefit pension plans is in line with the range disclosed in Note 12 of the Company’s Annual Report on Form 10-K for the year ended December 31, ~~2020.~~2021.

1817

Table of Contents

AMETEK, Inc.

Notes to Consolidated Financial Statements

~~September~~June 30, ~~2021~~2022

(Unaudited)

~~15.~~14. Contingencies

Asbestos Litigation

The Company (including its subsidiaries) has been named as a defendant in a number of asbestos-related lawsuits. Certain of these lawsuits relate to a business which was acquired by the Company and do not involve products which were manufactured or sold by the Company. In connection with these lawsuits, the seller of such business has agreed to indemnify the Company against these claims (the “Indemnified Claims”). The Indemnified Claims have been tendered to, and are being defended by, such seller. The seller has met its obligations, in all respects, and the Company does not have any reason to believe such party would fail to fulfill its obligations in the future. To date, no judgments have been rendered against the Company as a result of any asbestos-related lawsuit. The Company believes that it has good and valid defenses to each of these claims and intends to defend them vigorously.

Environmental Matters

Certain historic processes in the manufacture of products have resulted in environmentally hazardous waste by-products as defined by federal and state laws and regulations. At ~~September~~June 30, ~~2021,~~2022, the Company is named a Potentially Responsible Party (“PRP”) at 13 non-AMETEK-owned former waste disposal or treatment sites (the “non-owned” sites). The Company is identified as a “de minimis” party in 12 of these sites based on the low volume of waste attributed to the Company relative to the amounts attributed to other named PRPs. In 8 of these sites, the Company has reached a tentative agreement on the cost of the de minimis settlement to satisfy its obligation and is awaiting executed agreements. The tentatively agreed-to settlement amounts are fully reserved. In the other 4 sites, the Company is continuing to investigate the accuracy of the alleged volume attributed to the Company as estimated by the parties primarily responsible for remedial activity at the sites to establish an appropriate settlement amount. At the remaining site where the Company is a non-de minimis PRP, the Company is participating in the investigation and/or related required remediation as part of a PRP Group and reserves have been established to satisfy the Company’s expected obligations. The Company historically has resolved these issues within established reserve levels and reasonably expects this result will continue. In addition to these non-owned sites, the Company has an ongoing practice of providing reserves for probable remediation activities at certain of its current or previously owned manufacturing locations (the “owned” sites). For claims and proceedings against the Company with respect to other environmental matters, reserves are established once the Company has determined that a loss is probable and estimable. This estimate is refined as the Company moves through the various stages of investigation, risk assessment, feasibility study and corrective action processes. In certain instances, the Company has developed a range of estimates for such costs and has recorded a liability based on the best estimate. It is reasonably possible that the actual cost of remediation of the individual sites could vary from the current estimates and the amounts accrued in the consolidated financial statements; however, the amounts of such variances are not expected to result in a material change to the consolidated financial statements. In estimating the Company’s liability for remediation, the Company also considers the likely proportionate share of the anticipated remediation expense and the ability of the other PRPs to fulfill their obligations.

Total environmental reserves at ~~September~~June 30, ~~2021~~2022 and December 31, ~~2020~~2021 were ~~$33.8~~$37.6 million and ~~$32.4~~$37.2 million, respectively, for both non-owned and owned sites. For the ~~nine~~six months ended ~~September~~June 30, ~~2021,~~2022, the Company recorded ~~$7.3~~$4.5 million in reserves. Additionally, the Company spent ~~$5.9~~$4.1 million on environmental matters for the ~~nine~~six months ended ~~September~~June 30, 2021. The Company’s reserves for environmental liabilities at September 30, 2021 and December 31, 2020 included reserves of $4.8 million and $7.4 million, respectively, for an owned site acquired in connection with the 2005 acquisition of HCC Industries (“HCC”). The Company is the designated performing party for the performance of remedial activities for one of several operating units making up a Superfund site in the San Gabriel Valley of California.2022.

The Company has agreements with other former owners of certain of its acquired businesses, as well as new owners of previously owned businesses. Under certain of the agreements, the former or new owners retained, or assumed and agreed to indemnify the Company against, certain environmental and other liabilities under certain circumstances. The Company and some of these other parties also carry insurance coverage for some environmental matters. ~~To date, these parties have met their obligations in all material respects.~~

The Company believes it has established reserves for the environmental matters described above, which are sufficient to perform all known responsibilities under existing claims and consent orders. ~~The Company has no reason to believe that other third parties would fail to perform their obligations in the future.~~ In the opinion of management, based on presently

~~Table of Contents~~

~~AMETEK, Inc.~~

~~Notes to Consolidated Financial Statements~~

~~September 30, 2021~~

~~(Unaudited)~~

available information and the Company’s historical experience related to such matters, an adequate provision for probable costs has been made and the ultimate cost resulting from these actions is not expected to materially affect the consolidated results of operations, financial position or cash flows of the Company.

The Company has been remediating groundwater contamination for several contaminants, including trichloroethylene (“TCE”), at a formerly owned site in El Cajon, California. Several lawsuits have been filed against the Company alleging damages resulting from the groundwater contamination, including property damages and funds for medical monitoring to detect causally related personal injury, and seeking compensatory and punitive damages. After extensive negotiations, the Company finalized and paid in April 2021 a global settlement of these lawsuits for an aggregate amount of $6.8 million, for which the Company had previously established reserves sufficient to cover this settlement.

2018

Table of Contents

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations

Results of Operations

The following table sets forth net sales and income by reportable segment and on a consolidated basis:


		Three Months Ended September 30,				Nine Months Ended September 30,					Three Months Ended June 30,				Six Months Ended June 30,
		2021		2020		2021		2020			2022		2021		2022		2021
		(In thousands)									(In thousands)
Net sales:	Net sales:									Net sales:
Electronic Instruments	Electronic Instruments	$	981,815	$	748,372	$	2,706,673	$	2,170,479	Electronic Instruments	$	1,028,248	$	933,934	$	2,016,007	$	1,724,858
Electromechanical	Electromechanical	458,866		378,570		1,336,096		1,170,603		Electromechanical	486,304		452,412		957,070		877,230
Consolidated net sales	Consolidated net sales	$	1,440,681	$	1,126,942	$	4,042,769	$	3,341,082	Consolidated net sales	$	1,514,552	$	1,386,346	$	2,973,077	$	2,602,088
Operating income and income before income taxes:	Operating income and income before income taxes:									Operating income and income before income taxes:
Segment operating income:	Segment operating income:									Segment operating income:
Electronic Instruments	Electronic Instruments	$	245,118	$	203,749	$	678,652	$	534,613	Electronic Instruments	$	265,115	$	226,637	$	509,889	$	433,534
Electromechanical	Electromechanical	114,571		84,303		332,038		245,154		Electromechanical	124,371		112,434		252,580		217,467
Total segment operating income	Total segment operating income	359,689		288,052		1,010,690		779,767		Total segment operating income	389,486		339,071		762,469		651,001
Corporate administrative expenses	Corporate administrative expenses	(22,126)		(17,311)		(63,171)		(49,996)		Corporate administrative expenses	(24,644)		(22,460)		(44,387)		(41,045)
Consolidated operating income	Consolidated operating income	337,563		270,741		947,519		729,771		Consolidated operating income	364,842		316,611		718,082		609,956
Interest expense	Interest expense	(20,476)		(21,187)		(59,865)		(66,597)		Interest expense	(20,350)		(20,442)		(39,920)		(39,389)
Other (expense) income, net		2,581		(1,479)		(3,775)		142,428
Other income (expense), net										Other income (expense), net	1,973		(4,414)		4,525		(6,356)
Consolidated income before income taxes	Consolidated income before income taxes	$	319,668	$	248,075	$	883,879	$	805,602	Consolidated income before income taxes	$	346,465	$	291,755	$	682,687	$	564,211

Recent Events and Market Conditions

Recent events and market conditions impacting our business include the COVID-19 pandemic, increased material and transportation cost inflation, supply chain constraints, and the ongoing conflict in Ukraine. As a result of these events and conditions, we anticipate a challenging global economic environment for the remainder of 2022. There still remains uncertainty around the COVID-19 pandemic, its effect on labor, government mandated lockdowns and other restrictive measures, and the pandemic's ultimate duration. The recent lockdowns in China limited our ability to access customer sites, operate certain facilities, and placed additional constraints on our supply chain during the second quarter. Depending on the course of the pandemic, additional lockdowns in China or elsewhere could impact our operations and results of operations. Beginning in 2021, we experienced heightened levels of inflation in material and transportation costs and we expect elevated levels of cost inflation to persist throughout 2022. We have taken steps to mitigate the impacts of inflation by implementing pricing actions. We experienced additional pressure in our supply chain due to component shortages and strained transportation capacity, as well as the impact of continued elevated customer demand. In response to these supply chain pressures, we have taken actions to build inventory and seek alternative sources of supply to support sales and backlog growth. The invasion of Ukraine by Russia and the sanctions imposed in response to this conflict have increased global economic and political uncertainty. Russia and Ukraine represent an insignificant portion of our business, but a significant expansion of the conflict's current scope could further complicate the economic environment. While the ultimate impact of these events remains uncertain, we will continue to evaluate the extent to which these factors will impact our business, financial condition, and results of operations.

Results of operations for the second quarter of 2022 compared with the second quarter of 2021

For the quarter ended ~~September~~June 30, ~~2021,~~2022, the Company posted record sales, operating income, and backlog as well as strong ~~operating cash flow.~~orders. The Company achieved these results from organic sales growth in both EIG and EMG, ~~contributions from the 2021 acquisitions of Abaco Systems, Inc., Magnetrol International, NSI-MI Technologies, Crank Software, and EGS Automation,~~ as well as the Company's Operational Excellence initiatives.

The full year impact of the 2021 acquisitions, continued economic recovery, and benefits from its Operational Excellence initiatives are expected to have a positive impact on the remainder of the Company's 2021 results. While the ultimate duration and impact of the COVID-19 pandemic is unknown, the Company will continue to monitor and address the challenges of the pandemic throughout the remainder of the year.

~~Impact of COVID-19 Pandemic on our Business~~

The COVID-19 pandemic resulted in significant global economic disruption and had an adverse impact on the Company's financial results throughout 2020. As the global economy has begun to recover, the Company eliminated certain of the temporary cost saving actions put in place in 2020, but continues to closely monitor its fixed costs, capital expenditure plans, inventory, and capital resources to respond to changing conditions and to ensure it has the resources to meet its future needs. The Company has seen sequential improvement in its financial results since the third quarter of 2020, and this trend has continued in the first nine months of 2021. The current economic environment in which the Company operates is characterized by increased material cost inflation, logistics challenges, labor availability issues, and component part shortages. The Company continues to monitor and closely manage through these conditions. The Company expects the impact of these conditions to continue through the fourth quarter of 2021 and has taken steps to mitigate such impacts.

On September 24, 2021, the U.S. Safer Federal Workforce Task Force issued guidance requiring federal contractors and subcontractors to comply with COVID-19 safety protocols, including requiring certain employees to be fully vaccinated against COVID-19 by December 8, 2021, except in limited circumstances. The vaccination requirements will be incorporated in new government contracts, renewals, extensions and other modifications signed on and after October 15, 2021, and will apply to employees working on or in connection with such contracts, as well as to employees working at a location at which an employee working on such contract is likely to be present. The Company has determined the December 8, 2021 deadline for vaccination will apply to many of the Company's U.S. sites and is in the process of implementing this executive order across its U.S. workforce. It is uncertain to what extent compliance with the vaccine mandate may result in workforce attrition. While this mandate may have an impact on the Company's operations, we do not expect it to have a material adverse effect on the Company's financial condition, results of operations, or liquidity.

~~Table of Contents~~

The Company's top priority during this pandemic is the health and safety of its employees. All global manufacturing facilities remained fully operational during the third quarter and continue to operate with safety protocols in place to ensure the health and safety of its employees and communities. The Company will continue to evaluate the nature and extent of future impacts of the COVID-19 pandemic on its business. See Risk Factors, included in Part I, Item 1A of our Annual Report on Form 10-K, for further discussion of the possible impact of the COVID-19 pandemic on our business.

~~Results of operations for the third quarter of 2021 compared with the third quarter of 2020~~

Net sales for the ~~third~~second quarter of ~~2021~~2022 were a record ~~$1,440.7~~$1,514.6 million, an increase of ~~$313.8~~$128.3 million or ~~27.8%~~9.2%, compared with net sales of ~~$1,126.9~~$1,386.3 million for the ~~third~~second quarter of ~~2020.~~2021. The increase in net sales for the ~~third~~second quarter of ~~2021~~2022 was due to a ~~17%~~12% increase in organic sales, ~~and an 11% increase from acquisitions.~~

Total international sales for the third quarter of 2021 were $701.1 million or 48.7% of net sales, an increase of $152.3 million or 27.8%, compared with international sales of $548.8 million or 48.7% of net sales for the third quarter of 2020. The increase in international sales was primarily driven by strong demand in Europe and Asia during the quarter as well as contributions from recent acquisitions.

Orders for the third quarter of 2021 were $1,552.6 million, an increase of $417.1 million or 36.7%, compared with $1,135.5 million for the third quarter of 2020. The increase in orders for the third quarter of 2021 was due to a ~~31% increase in organic orders, a 9%~~1% increase from acquisitions, partially offset by an unfavorable 3% effect of foreign currency translation.

Total international sales for the second quarter of 2022 were $721.4 million or 47.6% of net sales, an increase of $55.7 million or 8.4%, compared with international sales of $665.7 million or 48.0% of net sales for the second quarter of 2021. The increase in international sales was primarily driven by strong demand in Asia during the quarter as well as contributions from recent acquisitions.

Table of Contents

Orders for the second quarter of 2022 were $1,644.5 million, a decrease of $269.2 million or 14.1%, compared with $1,913.7 million for the second quarter of 2021. The decrease in orders for the second quarter of 2022 was due to a 20% decrease from $371 million of acquired backlog from the 2021 acquisitions, an unfavorable 5% effect of foreign currency translation, partially offset by an 11% increase in organic orders. As a result, the Company's backlog of unfilled orders at ~~September~~June 30, ~~2021~~2022 was a record ~~$2,623.5~~$3,104.4 million, an increase of ~~$821.3~~$374.3 million or ~~45.6%~~13.7% compared with ~~$1,802.2~~$2,730.1 million at December 31, ~~2020.~~2021.

Segment operating income for the ~~third~~second quarter of ~~2021~~2022 was ~~$359.7~~$389.5 million, an increase of ~~$71.6~~$50.4 million or ~~24.9%~~14.9%, compared with segment operating income of ~~$288.1~~$339.1 million for the ~~third~~second quarter of ~~2020.~~2021. Segment operating income was positively impacted in 2022 by the increase in sales discussed above. Segment operating margins, as a percentage of net sales, ~~decreased~~increased to ~~25.0%~~25.7% for the ~~third~~second quarter of 2022, compared with 24.5% for the second quarter of 2021. Excluding the dilutive impact of the 2021 acquisitions, segment operating margins for the core businesses increased 130 basis points compared to the second quarter of 2021, ~~compared with 25.6% for~~due to benefits from the ~~third quarter of 2020.~~Company's Operational Excellence initiatives.

Cost of sales for the ~~third~~second quarter of ~~2021~~2022 was ~~$949.4~~$988.2 million or ~~65.9%~~65.2% of net sales, an increase of ~~$216.7~~$75.5 million or ~~29.6%~~8.3%, compared with ~~$732.7~~$912.7 million or ~~65.0%~~65.8% of net sales for the ~~third~~second quarter of ~~2020.~~2021. The cost of sales increase was primarily due to the net sales increase discussed above.

Selling, general and administrative expenses for the ~~third~~second quarter of ~~2021~~2022 were ~~$153.7~~$161.5 million or 10.7% of net sales, an increase of ~~$30.2~~$4.5 million or ~~24.5%~~2.9%, compared with ~~$123.5~~$157.0 million or ~~11.0%~~11.3% of net sales for the ~~third~~second quarter of ~~2020. Selling, general and administrative expenses increased primarily due to the net sales increase discussed above.~~2021.

Consolidated operating income was a record ~~$337.6~~$364.8 million or ~~23.4%~~24.1% of net sales for the ~~third~~second quarter of ~~2021,~~2022, an increase of ~~$66.9~~$48.2 million or ~~24.7%~~15.2%, compared with ~~$270.7~~$316.6 million or ~~24.0%~~22.8% of net sales for the ~~third~~second quarter of ~~2020.~~2021.

Other income, net was ~~$2.6~~$2.0 million for the ~~third~~second quarter of ~~2021,~~2022, compared with ~~$1.5~~$4.4 million of other expense, net for the ~~third~~second quarter of ~~2020,~~2021, a change of ~~$4.1~~$6.4 million. The second quarter of 2022 includes higher pension income of $2.5 million and lower due diligence expense compared to the second quarter of 2021.

The effective tax rate for the ~~third~~second quarter of ~~2021~~2022 was ~~19.5%~~18.5%, compared with ~~17.5%~~20.6% for the ~~third~~second quarter of ~~2020.~~2021. The ~~higher~~lower effective tax rate in ~~2021~~the second quarter of 2022 is primarily due to ~~an increase in the~~improved foreign-derived intangible income ("FDII") benefits on exported products and favorable foreign ~~rate differential related to the mix of earnings generated in higher taxed jurisdictions.~~deferred taxes.

Net income for the ~~third~~second quarter of ~~2021~~2022 was ~~$257.5~~a record $282.4 million, an increase of ~~$52.9~~$50.7 million or ~~25.8%~~21.9%, compared with ~~$204.6~~$231.7 million for the ~~third~~second quarter of ~~2020.~~2021.

Diluted earnings per share for the ~~third~~second quarter of ~~2021~~2022 were ~~$1.10,~~$1.22, an increase of $0.22 or ~~25.0%~~22.0%, compared with ~~$0.88~~$1.00 per diluted share for the ~~third~~second quarter of ~~2020.~~2021.

Segment Results

EIG’s net sales totaled ~~a record $981.8~~$1,028.2 million for the ~~third~~second quarter of ~~2021,~~2022, an increase of ~~$233.4~~$94.3 million or ~~31.2%~~10.1%, compared with ~~$748.4~~$933.9 million for the ~~third~~second quarter of ~~2020.~~2021. The net sales increase was due to a ~~15%~~12% increase in organic sales, ~~and~~ a ~~16%~~1% increase from ~~acquisitions.~~acquisitions, partially offset by an unfavorable 3% effect of foreign currency translation.

EIG’s operating income was ~~a record $245.1~~$265.1 million for the ~~third~~second quarter of ~~2021,~~2022, an increase of ~~$41.4~~$38.5 million or ~~20.3%~~17.0%, compared with ~~$203.7~~$226.6 million for the ~~third~~second quarter of ~~2020. EIG's operating income increased primarily due to the sales~~

~~Table of Contents~~

~~increase discussed above.~~2021. EIG’s operating margins were ~~25.0%~~25.8% of net sales for the ~~third~~second quarter of ~~2021,~~2022, compared with ~~27.2%~~24.3% for the ~~third~~second quarter of ~~2020. The 2021 acquisitions~~2021. Excluding the dilutive impact of ~~Abaco, Magnetrol, NSI-MI, and Crank Software diluted operating margins by 220 basis points. Excluding the~~recent acquisitions, EIG operating margins ~~were flat when~~for the core business increased 170 basis points compared to the ~~third~~second quarter of ~~2020.~~2021, due to benefits from the Company's Operational Excellence initiatives.

EMG’s net sales totaled ~~$458.9~~$486.3 million for the ~~third~~second quarter of ~~2021,~~2022, an increase of ~~$80.3~~$33.9 million or ~~21.2%~~7.5%, compared with ~~$378.6~~$452.4 million for the ~~third~~second quarter of ~~2020.~~2021. The net sales increase was due to ~~a 20%~~an 11% organic sales increase, ~~as well as a favorable 1%~~partially offset by an unfavorable 3% effect of foreign currency translation.

EMG’s operating income was ~~a record $114.6~~$124.4 million for the ~~third~~second quarter of ~~2021,~~2022, an increase of ~~$30.3~~$12.0 million or ~~35.9%~~10.6%, compared with ~~$84.3~~$112.4 million for the ~~third~~second quarter of ~~2020.~~2021. EMG’s operating margins were ~~a record 25.0%~~25.6% of net sales for the ~~third~~second quarter of 2022, compared with 24.9% for the second quarter of 2021. EMG operating margins increased compared to the second quarter of 2021 ~~compared with 22.3% for the third quarter of 2020. EMG's operating income and operating margins increased primarily~~ due to ~~the increase in sales discussed above as well as~~ benefits from the Company's Operational Excellence initiatives.

Table of Contents

Results of operations for the first ~~nine~~six months of ~~2021~~2022 compared with the first ~~nine~~six months of ~~2020~~2021

Net sales for the first ~~nine~~six months of ~~2021~~2022 were ~~$4,042.8~~$2,973.1 million, an increase of ~~$701.7~~$371.0 million or ~~21.0%~~14.3%, compared with net sales of ~~$3,341.1~~$2,602.1 million for the first ~~nine~~six months of ~~2020.~~2021. The increase in net sales for the first ~~nine~~six months of ~~2021~~2022 was due to a ~~14%~~13% organic sales increase, a 6%3% increase from acquisitions, ~~as well as a favorable 1%~~partially offset by an unfavorable 2% effect of foreign currency translation.

Total international sales for the first ~~nine~~six months of ~~2021~~2022 were ~~$1,983.1~~$1,465.7 million or ~~49.1%~~49.3% of net sales, an increase of ~~$389.6~~$183.6 million or ~~24.4%~~14.3%, compared with international sales of ~~$1,593.5~~$1,282.1 million or ~~47.7%~~49.3% of net sales for the first ~~nine~~six months of ~~2020.~~2021. The increase in international sales was primarily driven by strong demand in Europe and Asia as well as contributions from recent acquisitions.

Orders for the first ~~nine~~six months of ~~2021~~2022 were ~~$4,864.0~~$3,347.4 million, an increase of ~~$1,520.4~~$36.0 million or ~~45.5%~~1.1%, compared with ~~$3,343.6~~$3,311.4 million for the first ~~nine~~six months of ~~2020.~~2021. The increase in orders for the first ~~nine~~six months of ~~2021~~2022 was due to a ~~27%~~14% organic order increase, partially offset by a 10% decrease from acquisitions, as well as ~~an 18% increase from acquisitions.~~a 3% unfavorable effect of foreign currency translation.

Segment operating income for the first ~~nine~~six months of ~~2021~~2022 was ~~$1,010.7~~$762.5 million, an increase of ~~$230.9~~$111.5 million or ~~29.6%~~17.1%, compared with segment operating income of ~~$779.8~~$651.0 million for the first ~~nine~~six months of ~~2020.~~2021. Segment operating income was positively impacted in 2022 by the increase in sales discussed above, as well as a $7.1 million gain on the sale of a facility. Segment operating margins, as a percentage of net sales, increased to 25.6% for the first six months of 2022, compared with 25.0% for the first ~~nine~~six months of ~~2021, compared with 23.3%~~2021. Segment operating margins for the first ~~nine~~six months of ~~2020. The Company recorded realignment costs of $43.7 million in~~2022 were negatively impacted by the ~~first quarter of 2020 in response to the~~dilutive impact of recent acquisitions. Excluding the dilutive impact of recent acquisitions and the gain on the sale of a weak global economy as a result of the COVID-19 pandemic. The 2020 realignment costs were composed of $35.3 million in severance costs for a reduction in workforce and $8.4 million of asset write-downs, primarily inventory, which decreased margins by130 basis points for the first nine months of 2020. Segment operating income andfacility, segment operating margins for the core businesses increased 140 basis points compared to the first ~~nine~~six months of 2021, ~~were positively impacted by the increase in net sales discussed above as well as~~due to the Company's Operational Excellence ~~initiatives, including the 2020 realignment actions.~~initiatives.

Cost of sales for the first ~~nine~~six months of ~~2021~~2022 was ~~$2,651.5~~$1,937.0 million or ~~65.6%~~65.2% of net sales, an increase of ~~$425.0~~$234.9 million or ~~19.1%~~13.8%, compared with ~~$2,226.5~~$1,702.1 million or ~~66.6%~~65.4% of net sales for the first ~~nine~~six months of ~~2020.~~2021. The cost of sales increase was primarily due to the net sales increase discussed above. ~~The first nine months of 2020 included the realignment costs discussed above.~~

Selling, general and administrative expenses for the first ~~nine~~six months of ~~2021~~2022 were ~~$443.7~~$318.0 million or ~~11.0%~~10.7% of net sales, an increase of ~~$58.9~~$28.0 million or ~~15.3%~~9.6%, compared with ~~$384.8~~$290.0 million or ~~11.5%~~11.1% of net sales for the first ~~nine~~six months of ~~2020.~~2021. Selling, general and administrative expenses increased primarily due to the ~~increase in~~ net sales increase discussed above.

Consolidated operating income was ~~$947.5~~$718.1 million or 24.2% of net sales for the first six months of 2022, an increase of $108.1 million or 17.7%, compared with $610.0 million or 23.4% of net sales for the first ~~nine~~six months of ~~2021, an increase of $217.7 million or 29.8%, compared with $729.8 million or 21.8% of net sales for the first nine months of 2020.~~2021. The consolidated operating income and operating income margins for the first ~~nine~~six months of ~~2021~~2022 were positively impacted by the increase in net sales discussed above as well as the benefits of the Company's Operational Excellence initiatives. ~~The first nine months of 2020 included the realignment costs discussed above, which negatively impacted consolidated operating margins by 140 basis points.~~

Other ~~expense,~~income, net was ~~$3.8~~$4.5 million for the first ~~nine~~six months of ~~2021,~~2022, compared with ~~$142.4~~$6.4 million of other ~~income,~~expense, net for the first ~~nine~~six months of ~~2020,~~2021, a change of ~~$146.2~~$10.9 million. ~~In March 2020,~~The first six months of 2022 includes higher pension income of $5.0 million and lower acquisition-related due diligence expense compared to the ~~Company completed~~first six months of 2021.

The effective tax rate for the ~~sale~~first six months of ~~its~~2022 was 18.7%, compared with 20.1% for the first six months of 2021. The lower effective tax rate in 2022 is primarily due to improved FDII benefits and a favorable foreign tax rate differential.

Net income for the first six months of 2022 was $554.8 million, an increase of $103.9 million or 23.0%, compared with $450.9 million for the first six months of 2021.

Diluted earnings per share for the first six months of 2022 were $2.39, an increase of $0.45 or 23.2%, compared with $1.94 per diluted share for the first six months of 2021.

2321

Table of Contents

Reading Alloys business ("Reading") to Kymera International for net proceeds of $245.3 million in cash. The sale resulted in a pre-tax gain of $141.0 million recorded in other income, net in the first quarter of 2020. The first nine months of 2021 also includes higher acquisition-related due diligence expense compared to the first nine months of 2020.

The effective tax rate for the first nine months of 2021 was 19.9%, compared with 19.1% for the first nine months of 2020. The higher effective tax rate in 2021 is primarily due to an increase in the foreign rate differential and from the remeasurement of the deferred tax liabilities due to an increase in the UK tax rate in 2021.

~~Net income for the first nine months of 2021 was $708.4 million, an increase of $57.0 million or 8.7%, compared with $651.4 million for the first nine months of 2020.~~

Diluted earnings per share for the first nine months of 2021 were $3.04, an increase of $0.22 or 7.8%, compared with $2.82 per diluted share for the first nine months of 2020. In the first nine months of 2020, diluted earnings per share included $0.47 for the net gain on the sale of Reading and $0.15 for the net realignment costs.

Segment Results

EIG’s net sales totaled ~~$2,706.7~~$2,016.0 million for the first ~~nine~~six months of ~~2021,~~2022, an increase of ~~$536.2~~$291.1 million or ~~24.7%~~16.9%, compared with ~~$2,170.5~~$1,724.9 million for the first ~~nine~~six months of ~~2020. The net sales increase was due to a 13% organic sales increase, a 10% increase from acquisitions, and a favorable 1% effect of foreign currency translation.~~

EIG’s operating income was $678.7 million for the first nine months of 2021, an increase of $144.1 million or 26.9%, compared with $534.6 million for the first nine months of 2020. EIG’s operating margins were 25.1% of net sales for the first nine months of 2021, compared with 24.6% for the first nine months of 2020. EIG's operating income and operating margins in the first nine months of 2021 were positively impacted by the sales increase discussed above as well as the Company's Operational Excellence initiatives. The 2021 acquisitions of Abaco, Magnetrol, NSI-MI, and Crank Software diluted operating margins by 150 basis points. Excluding the acquisitions, EIG operating margins would have been 26.6% for the first nine months of 2021. ~~EIG’s operating margins were negatively impacted in the first nine months of 2020 by 110 basis points due to the 2020 realignment costs discussed above.~~

~~EMG’s~~ ~~net sales totaled $1,336.1 million for the first nine months of 2021, an increase of $165.5 million or 14.1%, compared with $1,170.6 million for the first nine months of 2020.~~ The net sales increase was due to a 14% organic sales increase, a ~~favorable 2% effect of foreign currency translation,~~5% increase from acquisitions, partially offset by an unfavorable 2% ~~impact from the Reading divestiture.~~effect of foreign currency translation.

~~EMG’s~~EIG’s operating income was ~~$332.0~~$509.9 million for the first ~~nine~~six months of ~~2021,~~2022, an increase of ~~$86.8~~$76.4 million or ~~35.4%~~17.6%, compared with ~~$245.2~~$433.5 million for the first ~~nine~~six months of ~~2020. EMG’s~~2021. EIG’s operating margins were ~~24.9%~~25.3% of net sales for the first ~~nine~~six months of ~~2021,~~2022, compared with ~~20.9%~~25.1% for the first ~~nine~~six months of ~~2020. EMG's operating income and~~2021. EIG's operating margins in the first ~~nine~~six months of 2022 were negatively impacted by the dilutive impact of the 2021 acquisitions. Excluding the dilutive impact of recent acquisitions, EIG operating margins increased 160 basis points compared to the first six months of 2021, ~~were positively impacted by the sales increase discussed above as well as~~due to benefits from the Company's Operational Excellence initiatives.

EMG’s net sales totaled $957.1 million for the first six months of 2022, an increase of $79.9 million or 9.1%, compared with $877.2 million for the first six months of 2021. The net sales increase was due to an 11% organic sales increase, partially offset by an unfavorable 2% effect of foreign currency translation.

EMG’s operating income was $252.6 million for the first six months of 2022, an increase of $35.1 million or 16.1%, compared with $217.5 million for the first six months of 2021. EMG's operating income included a $7.1 million gain on the sale of a facility during the first six months of 2022. EMG’s operating margins were ~~negatively impacted in~~26.4% of net sales for the first ~~nine~~six months of ~~2020 by 180~~2022, compared with 24.8% for the first six months of 2021. Excluding the gain on the sale of a facility, EMG operating margins increased 90 basis points compared to the first six months of 2021, due to the ~~2020 realignment costs discussed above.~~Company's Operational Excellence initiatives.

Financial Condition

Liquidity and Capital Resources

Cash provided by operating activities totaled ~~$878.6~~$437.2 million for the first ~~nine~~six months of ~~2021,~~2022, a decrease of ~~$16.5~~$134.2 million or ~~1.8%~~23.5%, compared with ~~$895.1~~$571.4 million for the first ~~nine~~six months of ~~2020.~~2021. The decrease in cash provided by operating activities for the first ~~nine~~six months of ~~2021~~2022 was primarily due to higher ~~working capital requirements,~~investments in inventory to support sales and backlog growth, and to mitigate inventory supply chain constraints, partially offset by higher net ~~income, net of the gain on the sale of the Reading business in 2020.~~income.

Free cash flow (cash flow provided by operating activities less capital expenditures) was ~~$811.3~~$384.7 million for the first ~~nine~~six months of ~~2021,~~2022, compared with ~~$857.9~~$530.4 million for the first ~~nine~~six months of ~~2020.~~2021. EBITDA (earnings before interest, income taxes, depreciation and amortization) was ~~$1,157.2~~$877.2 million for the first ~~nine~~six months of ~~2021,~~2022, compared with ~~$1,060.9~~$742.5 million for the first ~~nine~~six months of ~~2020, which included the gain on the sale of the Reading business.~~2021. Free cash flow and EBITDA are presented because the Company is aware that they are measures used by third parties in evaluating the Company.

Cash used by investing activities totaled ~~$1,895.2~~$41.0 million for the first ~~nine~~six months of ~~2021,~~2022, compared with cash ~~provided~~used by investing activities of ~~$98.7~~$1,882.1 million for the first ~~nine~~six months of ~~2020.~~2021. For the first ~~nine~~six months of 2022, the Company received proceeds of $11.8 million from the sale of a facility. For the first six months of 2021, the Company paid ~~$1,839.7~~$1,840.8 million, net of cash acquired, to purchase Abaco Systems, Magnetrol International, NSI-MI

~~Table of Contents~~

Technologies, Crank Software, and EGS Automation compared to $116.5 million, net of cash acquired, to purchase IntelliPower in the first nine months of 2020. For the first nine months of 2020, the Company received proceeds of $245.3 million from the sale of its Reading business.Automation. Additions to property, plant and equipment totaled ~~$67.2~~$52.5 million for the first ~~nine~~six months of ~~2021,~~2022, compared with ~~$37.2~~$41.0 million for the first ~~nine~~six months of ~~2020.~~2021.

Cash used by financing activities totaled $370.4 million for the first six months of 2022, compared with cash provided by financing activities ~~totaled $171.2~~of $491.6 million for the first ~~nine~~six months of ~~2021, compared with cash used by financing activities of $84.7 million for the first nine months of 2020.~~2021. At ~~September~~June 30, ~~2021,~~2022, total debt, net was ~~$2,654.6~~$2,502.2 million, compared with ~~$2,413.7~~$2,544.2 million at December 31, ~~2020.~~2021. For the first ~~nine~~six months of ~~2021,~~2022, total borrowings increased by ~~$286.1~~$56.5 million ~~driven by the 2021 acquisitions,~~ compared with a ~~$7.1~~$569.9 million increase for the first ~~nine~~six months of ~~2020.~~2021. At ~~September~~June 30, ~~2021,~~2022, the Company had available borrowing capacity of ~~$2,407.3~~$2,600.1 million under its revolving credit facility, ~~and $800 million term loan,~~ including the ~~$500~~$700 million accordion feature.

Table of Contents

indebtedness. At ~~September~~June 30, ~~2021,~~2022, the Company had ~~$150.0~~$360.0 million outstanding on the ~~term loan.~~revolver with a maturity date of May 2027.

The debt-to-capital ratio was ~~28.8%~~26.5% at ~~September~~June 30, ~~2021,~~2022, compared with ~~28.9%~~27.0% at December 31, ~~2020.~~2021. The net debt-to-capital ratio (total debt, net less cash and cash equivalents divided by the sum of net debt and stockholders’ equity) was ~~25.9%~~23.7% at ~~September~~June 30, ~~2021,~~2022, compared with ~~16.8%~~24.2% at December 31, ~~2020.~~2021. The net debt-to-capital ratio is presented because the Company is aware that this measure is used by third parties in evaluating the Company.

Additional financing activities for the first ~~nine~~six months of ~~2021~~2022 included cash dividends paid of ~~$138.3~~$101.2 million, compared with ~~$123.7~~$92.2 million for the first ~~nine~~six months of ~~2020.~~2021. Effective February ~~11, 2021,~~9, 2022, the Company’s Board of Directors approved ~~an 11%~~a 10% increase in the quarterly cash dividend on the Company’s common stock to ~~$0.20~~$0.22 per common share from ~~$0.18~~$0.20 per common share. The Company repurchased $331.4 million of its common stock for the first six months of 2022, compared with $12.9 million for the first six months of 2021. Effective May 5, 2022, the Company's Board of Directors approved a $1 billion share repurchase authorization. This authorization replaces an earlier $500 million share repurchase authorization approved by the Board in February 2019. Proceeds from stock option exercises were ~~$42.3~~$17.8 million for the first ~~nine~~six months of ~~2021,~~2022, compared with ~~$39.9~~$31.1 million for the first ~~nine~~six months of ~~2020.~~2021.

As a result of all of the Company’s cash flow activities for the first ~~nine~~six months of ~~2021,~~2022, cash and cash equivalents at ~~September~~June 30, ~~2021~~2022 totaled ~~$358.7~~$348.7 million, compared with ~~$1,212.8~~$346.8 million at December 31, ~~2020.~~2021. At ~~September~~June 30, ~~2021,~~2022, the Company had ~~$319.9~~$326.8 million in cash outside the United States, compared with ~~$344.0~~$334.0 million at December 31, ~~2020.~~2021. The Company utilizes this cash to fund its international operations, as well as to acquire international businesses. The Company is in compliance with all covenants, including financial covenants, for all of its debt agreements. The Company believes it has sufficient cash-generating capabilities from domestic and unrestricted foreign sources, available credit facilities and access to long-term capital funds to enable it to meet its operating needs and contractual obligations in the foreseeable future.

Critical Accounting Policies

The Company’s critical accounting policies are detailed in Part II, Item 7, Management’s Discussion and Analysis of Financial Condition of its Annual Report on Form 10-K for the year ended December 31, ~~2020.~~2021. Primary disclosure of the Company’s significant accounting policies is also included in Note 1 to the Consolidated Financial Statements included in Part II, Item 8 of its Annual Report on Form 10-K.

Forward-Looking Information

Information contained in this discussion, other than historical information, is considered “forward-looking statements” and is subject to various factors and uncertainties that may cause actual results to differ significantly from expectations. These factors and uncertainties include risks related to the COVID-19 pandemic and its potential impact on AMETEK’s operations, supply chain, and demand across key end markets; general economic conditions affecting the industries the Company serves; changes in the competitive environment or the effects of competition in the Company’s markets; risks associated with international sales and operations; the Company’s ability to consummate and successfully integrate future acquisitions; the Company’s ability to successfully develop new products, open new facilities or transfer product lines; the price and availability of raw materials; compliance with government regulations, including environmental regulations; and the ability to maintain adequate liquidity and financing sources. A detailed discussion of these and other factors that may affect the Company’s future results is contained in AMETEK’s filings with the U.S. Securities and Exchange Commission, including its most recent reports on Form ~~10-K,10-Q~~10-K, 10-Q, and 8-K. AMETEK disclaims any intention or obligation to update or revise any forward-looking statements, unless required by the securities laws to do so.

~~Table of Contents~~

Item 4. Controls and Procedures

The Company maintains a system of disclosure controls and procedures that is designed to provide reasonable assurance that information, which is required to be disclosed, is accumulated and communicated to management in a timely manner. Under the supervision and with the participation of our management, including the Company’s principal executive officer and principal financial officer, we have evaluated the effectiveness of our system of disclosure controls and procedures as required by Exchange Act Rule 13a-15(b) as of ~~September~~June 30, ~~2021.~~2022. Based on that evaluation, the Company’s principal executive officer and principal financial officer concluded that the Company’s disclosure controls and procedures are effective at the reasonable assurance level.

Such evaluation did not identify any change in the Company’s internal control over financial reporting during the quarter ended ~~September~~June 30, ~~2021~~2022 that has materially affected, or is reasonably likely to materially affect, the Company’s internal control over financial reporting.

2623

Table of Contents

PART II. OTHER INFORMATION

~~Item 1A. Risk Factors~~

~~A disruption in, shortage of, or price increases for, supply of our components and raw materials may adversely impact our operations.~~

While we manufacture certain parts and components used in our products, we require substantial amounts of raw materials and purchase some parts and components, including semiconductor chips and other electronic components, from suppliers. The availability and prices for raw materials, parts and components may be subject to curtailment or change due to, among other things, suppliers' allocation to other purchasers, interruptions in production by suppliers, changes in exchange rates and prevailing price levels. In addition, our facilities, supply chains, distribution systems, and products may be impacted by natural or man-made disruptions, including armed conflict, damaging weather or other acts of nature, pandemics or other public health crises. A shutdown of, or inability to utilize, one or more of our facilities, our supply chain, or our distribution system could significantly disrupt our operations, delay production and shipments, damage our relationships and reputation with customers, suppliers, employees, stockholders and others, result in lost sales, result in the misappropriation or corruption of data, or result in legal exposure and large remediation or other expenses. Furthermore, certain items, including base metals and certain steel components, are available only from a limited number of suppliers and are subject to commodity market fluctuations. Shortages in raw materials or price increases therefore could affect the prices we charge, our operating costs and our competitive position, which could adversely affect our business, financial condition, results of operations and cash flows.

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds

The following table reflects purchases of AMETEK, Inc. common stock by the Company during the three months ended ~~September~~June 30, ~~2021:~~2022:

Period
Total Number
of Shares
Purchased (1)
Average Price
Paid per Share
Total Number
of Shares
Purchased as
Part of Publicly
Announced
Plan
Approximate
Dollar Value of
Shares that
May Yet Be
Purchased Under
the Plan
July 1, 2021 to July 31, 2021 558 $ 137.25 558 $ 471,486,433
August 1, 2021 to August 31, 2021 785 138.09 785 471,378,035
September 1, 2021 to September 30, 2021 — — — 471,378,035
Total 1,343 $ 137.74 1,343


Period	Total Number of Shares Purchased (1)(2)	Average Price Paid per Share		Total Number of Shares Purchased as Part of Publicly Announced Plan (2)	Approximate Dollar Value of Shares that May Yet Be Purchased Under the Plan
April 1, 2022 to April 30, 2022	—	$	—	—	$	313,006,100
May 1, 2022 to May 31, 2022	1,444,565	120.91		1,444,565	825,344,405
June 1, 2022 to June 30, 2022	—	—		—	825,344,405
Total	1,444,565	$	120.91	1,444,565

________________

(1) ~~Represents~~Includes 14,945 shares surrendered to the Company to satisfy tax withholding obligations in connection with employees’ share-based compensation awards.

(2) Consists of the number of shares purchased pursuant to the Company’s Board of Directors $1 billion authorization for the repurchase of its common stock announced in May 2022, which replaces the previous $500 million authorization for the repurchase of its common stock announced in February 2019. Such purchases may be effected from time to time in the open market or in private transactions, subject to market conditions and at management’s discretion.

Table of Contents

Item 6. Exhibits


Exhibit Number						Description


31.1*						Certification of Chief Executive Officer, Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

31.2*						Certification of Chief Financial Officer, Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

32.1*						Certification of Chief Executive Officer, Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

32.2*						Certification of Chief Financial Officer, Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

101.INS*						XBRL Instance Document.

101.SCH*						XBRL Taxonomy Extension Schema Document.

101.CAL*						XBRL Taxonomy Extension Calculation Linkbase Document.

101.DEF*						XBRL Taxonomy Extension Definition Linkbase Document.

101.LAB*						XBRL Taxonomy Extension Label Linkbase Document.

101.PRE*						XBRL Taxonomy Extension Presentation Linkbase Document.

104						Cover Page Interactive Data File (formatted as inline XBRL with applicable taxonomy extension information contained in Exhibits 101).

________________

* Filed electronically herewith.

2825

Table of Contents

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.


		AMETEK, Inc.
		~~(Registrant)~~

	By:	/s/ ~~THOMAS M. MONTGOMERY~~WILLIAM J. BURKE
		~~Thomas M. Montgomery~~William J. Burke
		~~Senior~~Executive Vice President – ~~Comptroller~~Chief Financial Officer
		~~(Principal Accounting Officer)~~
~~November~~August 2, ~~2021~~2022

2926


	September 30, 2021		December 31, 2020
	Fair Value		Fair Value
	(In thousands)
Mutual fund investments	$	10,456	$	8,969


	Abaco		Other Acquisitions		Total
	(in millions)
Property, plant and equipment	$	56.2	$	39.2	$	95.4
Goodwill	737.9		244.7		982.6
Other intangible assets	616.9		252.8		869.7
Deferred income taxes	(122.2)		(30.5)		(152.7)
Net working capital and other(1)	57.1		(12.4)		44.7
Total cash paid	$	1,345.9	$	493.8	$	1,839.7


	EIG		EMG		Total
	(In millions)
Balance at December 31, 2020	$	3,050.3	$	1,174.6	$	4,224.9
Goodwill acquired from 2021 acquisitions	976.7		5.9		982.6
Purchase price allocation adjustments and other	1.9		—		1.9
Foreign currency translation adjustments	(15.9)		(12.5)		(28.4)
Balance at September 30, 2021	$	4,013.0	$	1,168.0	$	5,181.0


Period	Total Number of Shares Purchased (1)	Average Price Paid per Share		Total Number of Shares Purchased as Part of Publicly Announced Plan	Approximate Dollar Value of Shares that May Yet Be Purchased Under the Plan
July 1, 2021 to July 31, 2021	558	$	137.25	558	$	471,486,433
August 1, 2021 to August 31, 2021	785	138.09		785	471,378,035
September 1, 2021 to September 30, 2021	—	—		—	471,378,035
Total	1,343	$	137.74	1,343