| ☒ | QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 | ||||
March 31, 2024
| ☐ | TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 | ||||
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Net sales Operating expenses: Cost of sales Selling, general and administrative Total operating expenses Operating income Other expenses: Interest expense Other, net Income before income taxes Provision for income taxes Net income Basic earnings per share Diluted earnings per share Weighted average common shares outstanding: Basic shares Diluted shares Dividends declared and paid per share Total comprehensive income ASSETS Current assets: Cash and cash equivalents Receivables, net Inventories, net Deferred income taxes Other current assets Total current assets Property, plant and equipment, net Goodwill Other intangibles, net Investments and other assets Total assets LIABILITIES AND STOCKHOLDERS’ EQUITY Current liabilities: Short-term borrowings and current portion of long-term debt, net Accounts payable Income taxes payable Accrued liabilities Total current liabilities Long-term debt, net Deferred income taxes Other long-term liabilities Total liabilities Stockholders’ equity: Common stock Capital in excess of par value Retained earnings Accumulated other comprehensive loss Treasury stock Total stockholders’ equity Total liabilities and stockholders’ equity Cash provided by (used for): Operating activities: Net income Adjustments to reconcile net income to total operating activities: Depreciation and amortization Deferred income taxes Share-based compensation expense Gain on sale of facility Net change in assets and liabilities, net of acquisitions Pension contribution Other, net Total operating activities Investing activities: Additions to property, plant and equipment Purchases of businesses, net of cash acquired Proceeds from sale of facility Other, net Total investing activities Financing activities: Net change in short-term borrowings Repurchases of common stock Cash dividends paid Excess tax benefits from share-based payments Proceeds from employee stock plans and other, net Total financing activities Effect of exchange rate changes on cash and cash equivalents Increase in cash and cash equivalents Cash and cash equivalents: Beginning of period End of period issued ASU three months ended March 31, 2024. Weighted average shares: Basic shares Equity-based compensation plans Diluted shares Balance at the beginning of the period Other comprehensive income (loss) before reclassifications: Translation adjustments Change in long-term intercompany notes Net investment hedge instruments Gross amounts reclassified from accumulated other comprehensive income (loss) Income tax benefit (expense) Other comprehensive income (loss), net of tax Balance at the end of the period Balance at the beginning of the period Other comprehensive income (loss) before reclassifications: Translation adjustments Change in long-term intercompany notes Net investment hedge instruments Gross amounts reclassified from accumulated other comprehensive income (loss) Income tax benefit (expense) Other comprehensive income (loss), net of tax Balance at the end of the period three months ended March 31, 2023. Fixed-income investments hierarchy, at March 31, 2024 and December 31, 2023: 2023. Short-term borrowings, net Long-term debt, net (including current portion) 2023: Finished goods and parts Work in process Raw materials and purchased parts Total inventories, net March 31, 2024. Property, plant and equipment Goodwill Other intangible assets Long-term liabilities Deferred income taxes Net working capital and other(1) Total purchase price Less: Contingent payment liability Total cash paid balance sheet. The Company is in the process of finalizing the measurement of Amplifier Research Corp. Balance at December 31, 2016 Goodwill acquired Purchase price allocation adjustments and other Foreign currency translation adjustments Balance at September 30, 2017 Balance at December 31, 2016 Additions for tax positions Reductions for tax positions Balance at September 30, 2017 Stock option expense Restricted stock expense Totalpre-tax expense Expected volatility Expected term (years) Risk-free interest rate Expected dividend yield Black-Scholes-Merton fair value per stock option granted Consolidated Financial Statements Outstanding at December 31, 2016 Granted Exercised Forfeited Expired Outstanding at September 30, 2017 Exercisable at September 30, 2017 Nonvested restricted stock outstanding at December 31, 2016 Granted Vested Forfeited Nonvested restricted stock outstanding at September 30, 2017 Three Months Ended Nine Months Ended September 30, September 30, 2017 2016 2017 2016 $ 1,084,799 $ 945,030 $ 3,157,085 $ 2,867,134 719,718 630,744 2,084,392 1,894,136 132,250 113,170 387,179 344,323 851,968 743,914 2,471,571 2,238,459 232,831 201,116 685,514 628,675 (24,709 ) (23,609 ) (73,777 ) (70,716 ) (3,695 ) (3,259 ) (12,533 ) (10,108 ) 204,427 174,248 599,204 547,851 50,896 43,561 156,266 144,801 $ 153,531 $ 130,687 $ 442,938 $ 403,050 $ 0.67 $ 0.56 $ 1.93 $ 1.73 $ 0.66 $ 0.56 $ 1.91 $ 1.72 230,439 231,894 230,049 233,387 232,253 232,721 231,615 234,576 $ 0.09 $ 0.09 $ 0.27 $ 0.27 Three Months Ended
March 31,2024 2023 Net sales $ 1,736,180 $ 1,597,117 Cost of sales 1,144,681 1,022,525 Selling, general and administrative 174,283 169,051 Total operating expenses 1,318,964 1,191,576 Operating income 417,216 405,541 Interest expense (35,254) (20,569) Other (expense) income, net (633) (5,373) Income before income taxes 381,329 379,599 Provision for income taxes 70,386 73,887 Net income $ 310,943 $ 305,712 Basic earnings per share $ 1.35 $ 1.33 Diluted earnings per share $ 1.34 $ 1.32 Weighted average common shares outstanding: Basic shares 231,097 230,126 Diluted shares 232,035 231,229 Dividends declared and paid per share $ 0.28 $ 0.25 Three Months Ended Nine Months Ended September 30, September 30, 2017 2016 2017 2016 $ 185,167 $ 124,135 $ 522,665 $ 378,820 Three Months Ended
March 31,2024 2023 Total comprehensive income $ 285,557 $ 223,639 September 30,
2017 December 31,
2016 (Unaudited) $ 736,415 $ 717,259 640,815 592,326 546,876 492,104 — 50,004 100,377 76,497 2,024,483 1,928,190 494,973 473,230 3,138,742 2,818,950 1,965,973 1,734,021 159,130 146,283 $ 7,783,301 $ 7,100,674 $ 509,567 $ 278,921 409,357 369,537 47,604 29,913 303,813 246,070 1,270,341 924,441 1,920,879 2,062,644 608,971 621,776 216,955 235,300 4,017,146 3,844,161 2,630 2,615 649,807 604,143 4,784,618 4,403,683 (462,662 ) (542,389 ) (1,208,238 ) (1,211,539 ) 3,766,155 3,256,513 $ 7,783,301 $ 7,100,674 March 31,
2024December 31,
2023(Unaudited) ASSETS Current assets: Cash and cash equivalents $ 373,765 $ 409,804 Receivables, net 983,893 1,012,932 Inventories, net 1,127,328 1,132,471 Other current assets 290,516 269,461 Total current assets 2,775,502 2,824,668 Property, plant and equipment, net 877,420 891,293 Right of use assets, net 219,887 229,723 Goodwill 6,438,675 6,447,629 Other intangibles, net 4,080,603 4,165,317 Investments and other assets 472,894 464,903 Total assets $ 14,864,981 $ 15,023,533 LIABILITIES AND STOCKHOLDERS’ EQUITY Current liabilities: Short-term borrowings and current portion of long-term debt, net $ 1,055,406 $ 1,417,915 Accounts payable 517,352 516,588 Customer advanced payments 391,873 375,513 Income taxes payable 85,843 69,567 Accrued liabilities and other 452,034 502,990 Total current liabilities 2,502,508 2,882,573 Long-term debt, net 1,877,772 1,895,432 Deferred income taxes 836,571 836,695 Other long-term liabilities 679,915 678,642 Total liabilities 5,896,766 6,293,342 Stockholders’ equity: Common stock 2,715 2,709 Capital in excess of par value 1,186,132 1,168,694 Retained earnings 10,186,621 9,940,343 Accumulated other comprehensive loss (510,328) (484,942) Treasury stock (1,896,925) (1,896,613) Total stockholders’ equity 8,968,215 8,730,191 Total liabilities and stockholders’ equity $ 14,864,981 $ 15,023,533 Three months ended March 31, 2024 2023 Capital stock Common stock, $0.01 par value Balance at the beginning of the period $ 2,709 $ 2,700 Shares issued 6 4 Balance at the end of the period 2,715 2,704 Capital in excess of par value Balance at the beginning of the period 1,168,694 1,094,236 Issuance of common stock under employee stock plans 8,497 (12,153) Share-based compensation expense 8,941 10,279 Balance at the end of the period 1,186,132 1,092,362 Retained earnings Balance at the beginning of the period 9,940,343 8,857,485 Net income 310,943 305,712 Cash dividends paid (64,664) (57,492) Other (1) — Balance at the end of the period 10,186,621 9,105,705 Accumulated other comprehensive (loss) income Foreign currency translation: Balance at the beginning of the period (298,835) (368,124) Translation adjustments (34,115) 32,820 Change in long-term intercompany notes (4,673) 3,771 Net investment hedge instruments gain (loss), net of tax of $(3,987) and $3,805 for the quarter ended March 31, 2024 and 2023, respectively 12,242 (11,684) Balance at the end of the period (325,381) (343,217) Defined benefit pension plans: Balance at the beginning of the period (186,107) (206,821) Amortization of net actuarial loss and other, net of tax of $(365) and $(518) for the quarter ended March 31, 2024 and 2023, respectively 1,160 1,592 Balance at the end of the period (184,947) (205,229) Accumulated other comprehensive loss at the end of the period (510,328) (548,446) Treasury stock Balance at the beginning of the period (1,896,613) (1,902,964) Issuance of common stock under employee stock plans 6,603 14,266 Purchase of treasury stock (6,915) (6,502) Balance at the end of the period (1,896,925) (1,895,200) Total stockholders’ equity $ 8,968,215 $ 7,757,125 Nine Months Ended September 30, 2017 2016 $ 442,938 $ 403,050 131,005 122,968 20,492 (2,638 ) 19,689 16,393 (1,133 ) — 19,221 (27,428 ) (52,493 ) (3,003 ) 675 175 580,394 509,517 (45,630 ) (40,497 ) (518,634 ) (359,976 ) 2,239 — (400 ) 500 (562,425 ) (399,973 ) (9,601 ) 237,100 (6,730 ) (236,078 ) (62,003 ) (62,705 ) — 5,061 35,345 15,234 (42,989 ) (41,388 ) 44,176 (3,692 ) 19,156 64,464 717,259 381,005 $ 736,415 $ 445,469 Three months ended March 31, 2024 2023 Cash provided by (used for): Operating activities: Net income $ 310,943 $ 305,712 Adjustments to reconcile net income to total operating activities: Depreciation and amortization 98,000 82,379 Deferred income taxes (2,974) (17,587) Share-based compensation expense 8,941 10,279 Gain on sale of facilities (995) — Net change in assets and liabilities, net of acquisitions 816 4,883 Pension contributions (1,460) (1,415) Other, net (3,044) 2,285 Total operating activities 410,227 386,536 Investing activities: Additions to property, plant and equipment (27,652) (20,006) Purchases of businesses, net of cash acquired — (99,266) Proceeds from sale of facilities 4,246 — Other, net 1,994 (2,888) Total investing activities (21,412) (122,160) Financing activities: Net change in short-term borrowings (363,052) (155,505) Repurchases of common stock (6,915) (6,502) Cash dividends paid (64,664) (57,492) Proceeds from stock option exercises 23,613 10,419 Other, net (6,531) (5,886) Total financing activities (417,549) (214,966) Effect of exchange rate changes on cash and cash equivalents (7,305) 5,077 (Decrease) increase in cash and cash equivalents (36,039) 54,487 Cash and cash equivalents: Beginning of period 409,804 345,386 End of period $ 373,765 $ 399,873 September 30, 20171.Basis of PresentationSeptember 30, 2017,March 31, 2024, the consolidated results of its operations for the three and nine months ended September 30, 2017March 31, 2024 and 20162023 and its cash flows for the ninethree months ended September 30, 2017March 31, 2024 and 20162023 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 onForm 10-K for the year ended December 31, 20162023 as filed with the U.S. Securities and Exchange Commission.2.Recent Accounting PronouncementsMay 2014, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”)No. 2014-09,Revenue from Contracts with Customers(“ASU 2014-09”) and modified the standard thereafter. The objective ofASU 2014-09 is to establish a single comprehensive model for entities to use in accounting for revenue arising from contracts with customers and will supersede most of the existing revenue recognition guidance. The core principle ofASU 2014-09 is that an entity recognizes revenue at the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services.ASU 2014-09 applies to all contracts with customers except those that are within the scope of other topics inNovember 2023, the FASB Accounting Standards Codification.2014-09No. 2023-07, Segment Reporting (Topic 280): Improvements to Reportable Segment Disclosures (“ASU 2023-07”), which requires disclosure of significant segment expenses and other segment items on an annual and interim basis under ASC 280. ASU 2023-07 is effective for interim and annual reporting periods beginning after December 15, 20172023, and may be early adopted for interim and annual reporting periods beginning after December 15, 2016. The Company will adoptASU 2014-09 as of January 1, 2018. The guidance permits2024. Early adoption by retrospectively applyingis permitted and the guidance to each prior reporting period presented (full retrospective method) or prospectively applying the guidance and providing additional disclosures comparing results to previous guidance, with the cumulative effect of initially applying the guidance recognized in beginning retained earnings at the date of initial application (modified retrospective method). The Company expects to use the modified retrospective method of adoption.ASU 2014-09 is primarily expected to impact the Company’s revenue recognition procedures by requiring recognition of certain revenues to move from upon shipment or delivery to over-time. The recording of certain revenues over-time is not expected to have a material impact on the Company’s consolidated results of operations or financial position. Also, the Company is developing the additional expanded disclosures required. The Company is in the process of implementing the appropriate changes to business processes and controls to support recognition and disclosure underASU 2014-09. The Company does not currently expect the adoption ofASU 2014-09 to have a material impact on its consolidated results of operations, financial position and cash flows.In July 2015, the FASB issuedASU No. 2015-11,Simplifying the Measurement of Inventory(“ASU 2015-11”), which applies to inventory that is measured usingfirst-in,first-out (“FIFO”) or average cost. As prescribedamendments in this update, an entityASU should measure inventory that is within scope at the lower of cost and net realizable value, which is the estimated selling prices in the ordinary course of business, less reasonably predictable costs of completion, disposal and transportation. Subsequent measurement is unchanged for inventory that is measured usinglast-in,first-out (“LIFO”). The Company prospectively adoptedASU 2015-11 effective January 1, 2017 and the adoption did not havebe applied on a significant impact on the Company’s consolidated results of operations, financial position or cash flows.AMETEK, Inc.Notesretrospective basis to Consolidated Financial StatementsSeptember 30, 2017(Unaudited)In November 2015, the FASB issuedASU No. 2015-17,Balance Sheet Classification of Deferred Taxes(“ASU 2015-17”).ASU 2015-17 simplifies the presentation of deferred taxes by requiring deferred tax assets and liabilities be classified as noncurrent on the consolidated balance sheet. The Company prospectively adoptedASU 2015-17 effective January 1, 2017 and the adoption did not have a significant impact on the Company’s consolidated results of operations, financial position or cash flows. The December 31, 2016 consolidated balance sheet was not adjusted for the adoption ofASU 2015-17.In February 2016, the FASB issuedASU No. 2016-02,Leases(“ASU 2016-02”). The new standard establishes aright-of-use model that requires a lessee to record aright-of-use asset and a lease liability on the balance sheet for all leases with terms longer than twelve months. Leases will be classified as either finance or operating, with classification affecting the pattern of expense recognition in the income statement.ASU 2016-02 is effective for interim and annual reporting periods beginning after December 15, 2018.ASU 2016-02 is to be adopted using a modified retrospective approach and early adoption is permitted.presented. The Company has not determined the impactASU 2016-022023-07 may have on the Company’s consolidated results of operations, financial position, cash flows and financial statement disclosures.March 2016, the FASB issuedASU No. 2016-09,Improvements to Employee Share-Based Payment Accounting(“ASU 2016-09”).ASU 2016-09 includes changes to the accounting for share-based payment transactions, including the income tax consequences, classification of awards as either equity or liabilities and classification on the statement of cash flows. The Company prospectively adoptedASU 2016-09 effective January 1, 2017. For the three and nine months ended September 30, 2017, the Company recorded a tax benefit of $2.5 million and $11.4 million, respectively, within Provision for income taxes related to the tax effects of share-based payment transactions. Prior to adoption, this amount would have been recorded as a component of Capital in excess of par value. The adoption of this standard could create volatility in the Company’s effective tax rate going forward. The Company elected not to change its accounting policy with respect to the estimation of forfeitures. The Company no longer reclassifies the excess tax benefits from share-based payments from operating activities to financing activities in the consolidated statement of cash flows. For the three and nine months ended September 30, 2017, the Company excluded the excess tax benefits from the assumed proceeds available to repurchase shares in the computation of its diluted earnings per share and the related increase in the Company’s diluted weighted average common shares outstanding was not significant.In January 2017,December 2023, the FASB issued ASUNo. 2017-01,Clarifying2023-09, Income Taxes (Topic 740): Improvements to Income Tax Disclosures ("ASU 2023-09"), which improves income tax disclosures by requiring (1) consistent categories and greater disaggregation of information in the Definitionrate reconciliation and (2) income taxes paid disaggregated by jurisdiction. It also includes certain other amendments to improve the effectiveness of a Business(“income tax disclosures. ASU 2017-01”).ASU 2017-01 provides a more robust framework to use in determining when a set of assets and activities is a business.ASU 2017-01 requires an entity to evaluate if substantially all of the fair value of the gross assets acquired is concentrated in a single identifiable asset or a group of similar identifiable assets; if so, the set of assets is not a business.ASU 2017-01 requires that, to be a business, the set must include, at a minimum, an input and a substantive process that together significantly contribute to the ability to create outputs.ASU 2017-012023-09 is effective for interim and annual reporting periods beginning after December 15, 2017.ASU 2017-01 will be applied prospectively to any transactions occurring within the period of adoption.2024. Early adoption is permitted, including for interim or annual periods in which the financial statements have not been issued or made available for issuance. The Company does not expect the adoption ofASU 2017-01 to have a significant impact on the Company’s consolidated results of operations, financial position, cash flows and financial statement disclosures.In January 2017, the FASB issuedASU No. 2017-04,Simplifying the Test for Goodwill Impairment(“ASU 2017-04”).ASU 2017-04 eliminates the requirement to calculate the implied fair value of goodwill (second step) to measure a goodwill impairment charge. Under the guidance, an impairment charge will be measured based on the excess of the reporting unit’s carrying amount over its fair value (first step).ASU 2017-04 is effective for interim and annual reporting periods beginning after December 15, 2019 and early adoption is permitted. The Company early adoptedASU 2017-04 effective January 1, 2017 and the adoption did not have a significant impact on the Company’s consolidated results of operations, financial position, cash flows and financial statement disclosures.AMETEK, Inc.Notesindicates that all entities will apply its guidance prospectively with an option for retroactive application to Consolidated Financial StatementsSeptember 30, 2017(Unaudited)In March 2017, the FASB issuedASU No. 2017-07,Improving the Presentation of Net Periodic Pension Cost and Net Periodic Postretirement Benefit Cost(“ASU 2017-07”), which changes how employers that sponsor defined benefit pension and/or other postretirement benefit plans present the net periodic benefit costeach period in the income statement.ASU 2017-07 requires employers to present the service cost component of net periodic benefit cost in the same income statement line item as other employee compensation costs. All other components of the net periodic benefit cost will be presented outside of operating income.ASU 2017-07 is effective for interim and annual reporting periods beginning after December 15, 2017 and early adoption is permitted.financial statements. The Company has not determined the impactASU 2017-072023-09 may have on the Company’s financial statement disclosures.2024 2023 (In thousands) Contract assets—January 1 $ 140,826 $ 119,741 Contract assets – March 31 146,948 127,412 Change in contract assets – increase (decrease) 6,122 7,671 Contract liabilities – January 1 432,830 398,692 Contract liabilities – March 31 439,365 432,695 Change in contract liabilities – (increase) decrease (6,535) (34,003) Net change $ (413) $ (26,332) resultsbalance sheet. At March 31, 2024 and December 31, 2023, $47.5 million and $57.3 million of Customer advanced payments (contract liabilities), respectively, were recorded in Other long-term liabilities in the consolidated balance sheets.Three months ended March 31, 2024 EIG EMG Total (In thousands) United States $ 568,897 $ 343,860 $ 912,757 United Kingdom 26,707 28,192 54,899 European Union countries 142,242 114,986 257,228 Asia 298,045 50,199 348,244 Other foreign countries 120,888 42,164 163,052 Total international 587,882 235,541 823,423 Consolidated net sales $ 1,156,779 $ 579,401 $ 1,736,180 Three months ended March 31, 2023 EIG EMG Total (In thousands) United States $ 561,896 $ 247,119 $ 809,015 United Kingdom 28,038 31,062 59,100 European Union countries 135,658 116,807 252,465 Asia 283,892 50,905 334,797 Other foreign countries 107,763 33,977 141,740 Total international 555,351 232,751 788,102 Consolidated net sales $ 1,117,247 $ 479,870 $ 1,597,117 Three months ended March 31, 2024 EIG EMG Total (In thousands) Process and analytical instrumentation $ 791,538 $ — $ 791,538 Aerospace and power 365,241 152,452 517,693 Automation and engineered solutions — 426,949 426,949 Consolidated net sales $ 1,156,779 $ 579,401 $ 1,736,180 Three months ended March 31, 2023 EIG EMG Total (In thousands) Process and analytical instrumentation $ 794,433 $ — $ 794,433 Aerospace and power 322,814 143,050 465,864 Automation and engineered solutions — 336,820 336,820 Consolidated net sales $ 1,117,247 $ 479,870 $ 1,597,117 Three months ended March 31, 2024 EIG EMG Total (In thousands) Products transferred at a point in time $ 945,998 $ 503,585 $ 1,449,583 Products and services transferred over time 210,781 75,816 286,597 Consolidated net sales $ 1,156,779 $ 579,401 $ 1,736,180 Three months ended March 31, 2023 EIG EMG Total (In thousands) Products transferred at a point in time $ 935,308 $ 413,601 $ 1,348,909 Products and services transferred over time 181,939 66,269 248,208 Consolidated net sales $ 1,117,247 $ 479,870 $ 1,597,117 Three Months Ended March 31, 2024 2023 (In thousands) Balance at the beginning of the period $ 37,087 $ 26,487 Accruals for warranties issued during the period 4,867 3,411 Settlements made during the period (5,761) (3,224) Warranty accruals related to acquired businesses and other during the period 32 133 Balance at the end of the period $ 36,225 $ 26,807 position or cash flows.In May 2017, the FASB issuedASU No. 2017-09,Scope of Modification Accounting(“ASU 2017-09”).ASU 2017-09 clarifies which changesobligations to the terms or conditions of a share-based payment award require an entity to apply modification accounting.ASU 2017-09 is effective for interim and annual reporting periods beginning after December 15, 2017 and early adoption is permitted.Company. The Company doesrecognizes 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.expectmaterial for the adoption ofASU 2017-09 to have a significant impact on the Company’s consolidated results of operations, financial position or cash flows.3.Earnings Per Share Three Months Ended Nine Months Ended September 30, September 30, 2017 2016 2017 2016 (In thousands) 230,439 231,894 230,049 233,387 1,814 827 1,566 1,189 232,253 232,721 231,615 234,576 AMETEK, Inc.Notes to Consolidated Financial StatementsSeptember 30, 2017(Unaudited)4.Accumulated Other Comprehensive Income (Loss)Three Months Ended March 31, 2024 2023 (In thousands) Weighted average shares: Basic shares 231,097 230,126 Equity-based compensation plans 938 1,103 Diluted shares 232,035 231,229 componentscalculation of accumulated other comprehensive income (loss) consisteddiluted earnings per share for the three months ended March 31, 2024 excluded an immaterial number of stock options because the exercise prices of these stock options exceeded the average market price of the following: Three Months Ended Three Months Ended September 30, 2017 September 30, 2016 Foreign
Currency
Items
and Other Defined
Benefit
Pension
Plans Total Foreign
Currency
Items
and Other Defined
Benefit
Pension
Plans Total (In thousands) $ (294,922 ) $ (199,376 ) $ (494,298 ) $ (271,501 ) $ (151,808 ) $ (423,309 ) 37,642 — 37,642 (10,441 ) — (10,441 ) 12,035 — 12,035 3,063 — 3,063 (32,422 ) — (32,422 ) (1,212 ) — (1,212 ) — 3,512 3,512 — 2,484 2,484 12,190 (1,321 ) 10,869 423 (869 ) (446 ) 29,445 2,191 31,636 (8,167 ) 1,615 (6,552 ) $ (265,477 ) $ (197,185 ) $ (462,662 ) $ (279,668 ) $ (150,193 ) $ (429,861 ) Nine Months Ended Nine Months Ended September 30, 2017 September 30, 2016 Foreign
Currency
Items
and Other Defined
Benefit
Pension
Plans Total Foreign
Currency
Items
and Other Defined
Benefit
Pension
Plans Total (In thousands) $ (338,631 ) $ (203,758 ) $ (542,389 ) $ (250,593 ) $ (155,038 ) $ (405,631 ) 101,846 — 101,846 (26,581 ) — (26,581 ) 30,727 — 30,727 6,862 — 6,862 (95,311 ) — (95,311 ) (14,393 ) — (14,393 ) — 10,536 10,536 — 7,452 7,452 35,892 (3,963 ) 31,929 5,037 (2,607 ) 2,430 73,154 6,573 79,727 (29,075 ) 4,845 (24,230 ) $ (265,477 ) $ (197,185 ) $ (462,662 ) $ (279,668 ) $ (150,193 ) $ (429,861 ) ReclassificationsCompany’s common shares, and the effect of their inclusion would have been antidilutive. There were no antidilutive shares for the amortization of defined benefit pension plans are included in Cost of sales in the consolidated statement of income. See Note 12 for further details.AMETEK, Inc.Notes to Consolidated Financial StatementsSeptember 30, 2017(Unaudited)5.Fair Value Measurementsas of September 30, 2017 and December 31, 2016, consistent with the fair value hierarchy: September 30, 2017 December 31, 2016 Fair Value Fair Value (In thousands) $ 7,896 $ 7,317 March 31, 2024 Total Level 1 Level 2 Level 3 (In thousands) Mutual fund investments $ 12,427 $ 12,427 $ — $ — Foreign currency forward contracts (733) — (733) — December 31, 2023 Total Level 1 Level 2 Level 3 (In thousands) Mutual fund investments $ 11,922 $ 11,922 $ — $ — Foreign currency forward contracts 2,035 — 2,035 — fixed-incomemutual fund investments which are valued as level 1 investments, wasis based on quoted market prices. The fixed-incomemutual fund investments are shown as a component of long-terminvestments and other assets on the consolidated balance sheet.ninethree months ended September 30, 2017March 31, 2024 and 2016,2023, gains and losses on the investments noted above were not significant. No transfers between level 1 and level 2 investments occurred during the ninethree months ended September 30, 2017March 31, 2024 and 2016.fixed-incomemutual fund investments are recorded at fair value at September 30, 2017March 31, 2024 and December 31, 20162023 in the accompanying consolidated balance sheet.September 30, 2017March 31, 2024 and December 31, 2016: September 30, 2017 December 31, 2016 Recorded
Amount Fair Value Recorded
Amount Fair Value (In thousands) $ — $ — $ — $ — (2,430,446 ) (2,456,920 ) (2,341,565 ) (2,386,901 ) March 31, 2024 December 31, 2023 Fair Value Fair Value (In thousands) Long-term debt (including current portion) $ (2,179,727) $ (2,072,710) $ (2,197,538) $ (2,087,607) net approximates the carrying value. Short-term borrowings, net are valued as level 2 liabilities as they are corroborated by observable market data. The Company’s net long-term debt net is all privately held with no public market for this debt, therefore, the fair value of net long-term debt net was computed based on comparable current market data for similar debt instruments and is considered to be a level 3 liability.AMETEK, Inc.Notes to Consolidated Financial StatementsSeptember 30, 2017(Unaudited)6.Hedging ActivitiesSeptember 30, 2017,March 31, 2024, these net investment hedges includedBritish-pound-and Euro-denominated long-term debt. These borrowings were designed to create net investment hedges in each of thecertain designated foreign subsidiaries. The Company designated the British-pound- and Euro-denominated loans referred to above as hedging instruments to offsetSeptember 30, 2017,March 31, 2024, the Company had $408.7$284.3 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 30, 2017,March 31, 2024, the Company had $590.7$558.3 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 theBritish-pound-and British-pound- and Euro-denominated loans being designated and 100% effective as net investment hedges, $95.3$16.2 million of pre-tax currency remeasurement lossesgains have been included in the foreign currency translation component of other comprehensive income for the ninethree months ended September 30, 2017.7.Inventories, net September 30, December 31, 2017 2016 (In thousands) $ 79,897 $ 75,827 118,979 101,484 348,000 314,793 $ 546,876 $ 492,104 March 31,
2024December 31,
2023(In thousands) Finished goods and parts $ 147,747 $ 136,003 Work in process 167,751 165,914 Raw materials and purchased parts 811,830 830,554 Total inventories, net $ 1,127,328 $ 1,132,471 Three Months Ended
March 31,2024 2023 (In thousands) Operating lease cost $ 17,604 $ 14,677 Variable lease cost 3,191 3,230 Total lease cost $ 20,795 $ 17,907 March 31,
2024December 31,
2023(In thousands) Right of use assets, net $ 219,887 $ 229,723 Lease liabilities included in Accrued Liabilities and other 60,058 61,055 Lease liabilities included in Other long-term liabilities 173,811 182,436 Total lease liabilities $ 233,869 $ 243,491 September 30, 20178.AcquisitionsLease Liability Maturity Analysis Operating Leases (In thousands) Remaining 2024 $ 45,287 2025 49,818 2026 40,043 2027 28,987 2028 21,126 Thereafter 85,921 Total lease payments 271,182 Less: imputed interest 37,313 $ 233,869 spent $518.6 million in cash, net of cash acquired, to acquireRauland-Borg Corporation (“Rauland”) in February 2017 and MOCON, Inc. in June 2017. does not have any significant leases that have not yet commenced.Raulandinitial accounting for the December 2023 Paragon Medical acquisition includes a potential $30 million contingent payment due uponis being finalized, including the achievement of certain milestones as described further below. Rauland is a global provider of enterprise clinical and education communications solutions for hospitals, healthcare systems and educational facilities. MOCON is a provider of laboratory and field gas analysis instrumentation to research laboratories, production facilities and quality control departments in food and beverage, pharmaceutical and industrial applications. Rauland and MOCON are part of AMETEK’s Electronic Instruments Group.The following table represents the preliminary allocationmeasurement of the aggregate purchase price foracquired tangible and intangible assets and liabilities, as well as, the net assetsassociated income tax considerations. All amounts could change, potentially materially, as there is significant additional information that the Company must obtain to finalize the valuations of the 2017 acquisitions based on their estimated fair values at acquisition (in millions): $ 21.5 256.4 269.5 (10.6 ) (27.2 ) 34.5 544.1 (25.5 ) $ 518.6 (1)Includes $30.7 million in accounts receivable, whose fairassets acquired and liabilities assumed, and to finalize the 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 2017 acquisitions as follows: Rauland provides the Company with attractive new growth opportunities within the medical technology market, strong growth opportunities in its core markets and incremental growth opportunities through acquisitions and international expansion. MOCON’s products and technologies complement the Company’s existing gas analysis instrumentation business and provides it with opportunities to expand into the growing food and pharmaceutical package testing market. intangible assets.expects approximately $146 millionfinalized its measurements of the goodwill recorded in connection with the 2017 acquisitions will be tax deductible in future years.At September 30, 2017, purchase price allocated to othertangible and intangible assets and liabilities for its August 2023 acquisition of $269.5 million consistsUnited Electronic Industries, which had no material impact to the consolidated statement of $53.6 million of indefinite-lived intangible trade names, which are not subject to amortization. The remaining $215.9 million of other intangible assets consists of $162.0 million of customer relationships, which are being amortized over a period of 18 yearsincome and $53.9 million of purchased technology, which is being amortized over a period of 18 years. Amortization expense for each of the next five years for the 2017 acquisitions is expected to approximate $12 million per year.certain tangible andthe intangible assets and tangible assets and liabilities, for its 2017 acquisitions, including inventory, property, plant and equipment, goodwill, customer relationships, trade names, purchased technology, and the accounting for income taxes, and certainlong-term liabilities.The above mentioned contingent payment is based on Rauland achieving a certain cumulative revenue target over the periodfor its October 1, 2016 to September 30, 2018. If Rauland achieves the target, the $30 million contingent payment will be made; however, if the target is not achieved, no payment will be made. At the2023 acquisition date, the estimated fair value of the contingent payment liability was $25.5 million, which was based on a probabilistic approach using level 3 inputs. At September 30, 2017, there was no change to the estimated fair value of the contingent payment liability.The 2017 acquisitions had an immaterial impact on reported net sales, net income and diluted earnings per share for the three and nine months ended September 30, 2017. Had the 2017 acquisitions been made at the beginning of 2017 or 2016, unaudited pro forma net sales, net income and diluted earnings per share for the three and nine months ended September 30, 2017 and 2016, respectively, would not have been materially different than the amounts reported.AMETEK, Inc.Notes to Consolidated Financial StatementsSeptember 30, 2017(Unaudited)9.Goodwill Electronic
Instruments
Group Electro-
mechanical
Group Total (In millions) $ 1,817.0 $ 1,002.0 $ 2,819.0 256.4 — 256.4 0.1 0.6 0.7 31.2 31.4 62.6 $ 2,104.7 $ 1,034.0 $ 3,138.7 10.Income TaxesEIG EMG Total (In millions) Balance at December 31, 2023 $ 4,365.0 $ 2,082.6 $ 6,447.6 Purchase price allocation adjustments and other 11.8 0.6 12.4 Foreign currency translation adjustments (16.0) (5.3) (21.3) Balance at March 31, 2024 $ 4,360.8 $ 2,077.9 $ 6,438.7 September 30, 2017,March 31, 2024, the Company had gross unrecognizeduncertain tax benefits of $58.5$244.1 million, of which $49.0$195.1 million, if recognized, would impact the effective tax rate. $ 57.9 8.7 (8.1 ) $ 58.5 Balance at December 31, 2023 $ 233.5 Additions for tax positions 10.6 Reductions for tax positions — Balance at March 31, 2024 $ 244.1 and nine months ended September 30, 2017March 31, 2024 and 20162023 were not significant.11.Share-Based Compensation Three Months Ended Nine Months Ended September 30, September 30, 2017 2016 2017 2016 (In thousands) $ 2,482 $ 2,311 $ 7,449 $ 7,634 3,094 3,047 12,240 8,759 $ 5,576 $ 5,358 $ 19,689 $ 16,393 Three Months Ended
March 31,2024 2023 (In thousands) Stock option expense $ 3,509 $ 3,584 Restricted stock expense 4,797 5,040 Performance restricted stock unit expense 635 1,655 Total pre-tax expense $ 8,941 $ 10,279 The nine months ended September 30, 2017 includes a second quarter of 2017 $2.5 millionpre-tax charge in corporate administrative expenses related to the accelerated vesting of restricted stock grants in association with the retirement of the Company’s Executive Chairman of the Board of Directors.AMETEK, Inc.Notes to Consolidated Financial StatementsSeptember 30, 2017(Unaudited) of grant using aBlack-Scholes-Merton option pricing model. The following weighted average assumptions were used in theBlack-Scholes-Merton model to estimate the fair values of stock options granted during the periods indicated: Nine Months Ended Year Ended September 30, 2017 December 31, 2016 18.0 % 21.8 % 5.0 5.0 1.94 % 1.23 % 0.60 % 0.77 % $ 11.05 $ 9.14 Expected volatility is based on the historical volatilityThree Months Ended
March 31, 2024Year Ended December 31, 2023 Expected volatility 28.2 % 26.0 % Expected term (years) 5.0 5.0 Risk-free interest rate 4.31 % 3.54 % Expected dividend yield 0.62 % 0.72 % Black-Scholes-Merton fair value per stock option granted $ 56.42 $ 38.11 estimate the stock options’ expected term, which represents the period of time that the stock options granted are expected to be outstanding. Management anticipates that the future stock option holding periods will be similar to the historical stock option holding periods. The risk-free interest rate for periods within the expected term of the stock option is based on the U.S. Treasury yield curve at the time of grant. Compensation expense recognized for all share-based awards is net of estimated forfeitures. The Company’s estimated forfeiture rates are based on its historical experience. Shares Weighted
Average
Exercise
Price Weighted
Average
Remaining
Contractual
Life Aggregate
Intrinsic
Value (In thousands) (Years) (In millions) 6,011 $ 42.25 1,331 60.32 (1,388 ) 30.96 (180 ) 52.17 (8 ) 52.10 5,766 $ 48.81 4.4 $ 99.3 3,010 $ 43.74 3.1 $ 67.1 Shares Weighted
Average
Exercise
PriceWeighted
Average
Remaining
Contractual
Life Aggregate
Intrinsic
Value(In thousands) (Years) (In millions) Outstanding at December 31, 2023 2,741 $ 101.20 Granted 231 181.93 Exercised (321) 79.67 Forfeited (8) 139.23 Outstanding at March 31, 2024 2,643 $ 110.77 6.9 $ 190.7 Exercisable at March 31, 2024 1,962 $ 96.35 6.1 $ 169.8 ninethree months ended September 30, 2017March 31, 2024 was $37.4$30.0 million. The total fair value of stock options vested during the ninethree months ended September 30, 2017March 31, 2024 was $12.4$14.5 million. As of September 30, 2017,March 31, 2024, there was approximately $24$26.5 million of expected futurepre-tax compensation expense related to the 2.80.7 million nonvestednon-vested stock options outstanding, which is expected to be recognized over a weighted average period of approximately two years.nonvestednon-vested restricted stock activity and related information: Shares Weighted
Average
Grant Date
Fair Value (In thousands) 1,019 $ 48.59 335 60.24 (317 ) 47.41 (66 ) 51.33 971 $ 53.32 AMETEK, Inc.Notes to Consolidated Financial StatementsSeptember 30, 2017(Unaudited)Shares Weighted
Average
Grant Date
Fair Value(In thousands) Non-vested restricted stock outstanding at December 31, 2023 296 $ 135.39 Granted 144 181.93 Vested (135) 132.65 Forfeited (3) 139.47 Non-vested restricted stock outstanding at March 31, 2024 302 $ 158.83 ninethree months ended September 30, 2017March 31, 2024 was $15.0$18.0 million. As of September 30, 2017,March 31, 2024, there was approximately $32$43.2 million of expected futurepre-tax compensation expense related to the 1.00.3 million nonvestednon-vested restricted shares outstanding, which is expected to be recognized over a weighted average period of approximately two years.Shares Weighted
Average
Grant Date
Fair Value(In thousands) Non-vested performance restricted stock outstanding at December 31, 2023 239 $ 131.90 Granted 77 181.93 24 121.91 Vested (99) 121.91 Forfeited — — Non-vested performance restricted stock outstanding at March 31, 2024 241 $ 151.05
| Three Months Ended September 30, | Nine Months Ended September 30, | |||||||||||||||
| 2017 | 2016 | 2017 | 2016 | |||||||||||||
| (In thousands) | ||||||||||||||||
Defined benefit plans: | ||||||||||||||||
Service cost | $ | 1,919 | $ | 1,628 | $ | 5,657 | $ | 4,956 | ||||||||
Interest cost | 6,904 | 7,448 | 20,566 | 22,688 | ||||||||||||
Expected return on plan assets | (13,343 | ) | (12,693 | ) | (39,884 | ) | (38,639 | ) | ||||||||
Amortization of net actuarial loss and other | 3,512 | 2,484 | 10,536 | 7,452 | ||||||||||||
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Pension income | (1,008 | ) | (1,133 | ) | (3,125 | ) | (3,543 | ) | ||||||||
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Other plans: | ||||||||||||||||
Defined contribution plans | 5,830 | 5,660 | 18,788 | 18,537 | ||||||||||||
Foreign plans and other | 1,435 | 1,525 | 4,323 | 4,203 | ||||||||||||
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Total other plans | 7,265 | 7,185 | 23,111 | 22,740 | ||||||||||||
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Total net pension expense | $ | 6,257 | $ | 6,052 | $ | 19,986 | $ | 19,197 | ||||||||
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| Three Months Ended March 31, | |||||||||||||||||||||||
| 2024 | 2023 | ||||||||||||||||||||||
| (In thousands) | |||||||||||||||||||||||
| Defined benefit plans: | |||||||||||||||||||||||
| Service cost | $ | 730 | $ | 740 | |||||||||||||||||||
| Interest cost | 6,989 | 7,501 | |||||||||||||||||||||
| Expected return on plan assets | (13,632) | (12,996) | |||||||||||||||||||||
| Amortization of net actuarial loss and other | 2,337 | 2,821 | |||||||||||||||||||||
| Pension income | (3,576) | (1,934) | |||||||||||||||||||||
| Other plans: | |||||||||||||||||||||||
| Defined contribution plans | 14,595 | 13,516 | |||||||||||||||||||||
| Foreign plans and other | 1,689 | 2,571 | |||||||||||||||||||||
| Total other plans | 16,284 | 16,087 | |||||||||||||||||||||
| Total net pension expense | $ | 12,708 | $ | 14,153 | |||||||||||||||||||
The Company provides limited warranties in connection with the sale2023.
September 30, 2017
AMETEK, Inc.
Notes to Consolidated Financial Statements
September 30, 2017
(Unaudited)
2024.
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 personal injury, and seeking compensatory and punitive damages. Given the state
The Company has two reportable segments, Electronic Instruments Group (“EIG”) and Electromechanical Group (“EMG”). The Company’s operating segments are identified based on the existence of segment managers. Certain of the Company’s operating segments have been aggregated for segment reporting purposes primarily on the basis of product type, production processes, distribution methods and similarity of economic characteristics.
At September 30, 2017, there were no significant changes in identifiable assets of reportable segments from the amounts disclosed at December 31, 2016, other than those described in the acquisitions footnote (Note 8), nor were there any significant changes in the basis of segmentation or in the measurement of segment operating results. Operating information relating to the Company’s reportable segments for the three and nine months ended September 30, 2017 and 2016 can be found in the table included in Part I, Item 2. “Management’s Discussion and Analysis of Financial Condition and Results of Operations” of this Quarterly Report onForm 10-Q.
The Company had a Shareholder Rights Plan, which expired in June 2017. Under the Plan, the Company’s Board of Directors declared a dividend of one Right for each share of Company common stock owned at the close of business on June 2, 2007, and had authorized the issuance of one Right for each share of common stock of the Company issued between the Record Date and the Distribution Date. The Plan provided, under certain conditions involving acquisition of the Company’s common stock, that holders of Rights, except for the acquiring entity, would be entitled (i) to purchase shares of preferred stock at a specified exercise price, or (ii) to purchase shares of common stock of the Company, or the acquiring company, having a value of twice the Rights exercise price.
AMETEK, Inc.
Notes to Consolidated Financial Statements
September 30, 2017
(Unaudited)
During the fourth quarter of 2016, the Company recordedpre-tax restructuring charges totaling $25.6 million, which had the effect of reducing net income by $17.0 million. The restructuring charges were reported in the consolidated statement of income as follows: $24.0 million in Cost of sales and $1.6 million in Selling, general and administrative expenses. The restructuring charges were reported in segment operating income as follows: $12.4 million in EIG, $11.6 million in EMG and $1.6 million in corporate administrative expenses. The restructuring actions primarily related to $19.3 million in severance costs for a reduction in workforce and $6.2 million of asset write-downs in response to the impact of a weak global economy on certain of the Company’s businesses and the effects of a continued strong U.S. dollar. The restructuring activities will be broadly implemented across the Company’s various businesses through the end of 2017, with most actions expected to be completed in 2018.
During the fourth quarter of 2015, the Company recordedpre-tax restructuring charges totaling $20.7 million, which had the effect of reducing net income by $13.9 million. The restructuring charges were reported in the consolidated statement of income as follows: $20.0 million in Cost of sales and $0.7 million in Selling, general and administrative expenses. The restructuring charges were reported in segment operating income as follows: $9.3 million in EIG, $10.8 million in EMG and $0.7 million in corporate administrative expenses. The restructuring actions primarily related to a reduction in workforce in response to the impact of a weak global economy on certain of the Company’s businesses and the effects of a continued strong U.S. dollar. The restructuring activities have been broadly implemented across the Company’s various businesses with all actions expected to be completed in 2018.
Accrued liabilities in the Company’s consolidated balance sheet included amounts related to the fourth quarter of 2016 and fourth quarter of 2015 restructuring charges as follows (in millions):
| Fourth Quarter of 2016 Restructuring | Fourth Quarter of 2015 Restructuring | |||||||
Balance at December 31, 2016 | $ | 19.2 | $ | 9.2 | ||||
Utilization | (5.4 | ) | (1.7 | ) | ||||
Foreign currency translation adjustments and other | 0.1 | (0.1 | ) | |||||
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Balance at September 30, 2017 | $ | 13.9 | $ | 7.4 | ||||
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Contents
Item 2. Management’s Discussion and Analysis of Financial Condition and |
Results of Operations
| Three Months Ended September 30, | Nine Months Ended September 30, | |||||||||||||||
| 2017 | 2016 | 2017 | 2016 | |||||||||||||
| (In thousands) | ||||||||||||||||
Net sales(1): | ||||||||||||||||
Electronic Instruments | $ | 671,606 | $ | 579,298 | $ | 1,949,038 | $ | 1,744,246 | ||||||||
Electromechanical | 413,193 | 365,732 | 1,208,047 | 1,122,888 | ||||||||||||
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Consolidated net sales | $ | 1,084,799 | $ | 945,030 | $ | 3,157,085 | $ | 2,867,134 | ||||||||
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Operating income and income before income taxes: | ||||||||||||||||
Segment operating income(2): | ||||||||||||||||
Electronic Instruments | $ | 164,448 | $ | 142,695 | $ | 486,385 | $ | 436,642 | ||||||||
Electromechanical | 84,059 | 71,439 | 248,968 | 231,181 | ||||||||||||
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Total segment operating income | 248,507 | 214,134 | 735,353 | 667,823 | ||||||||||||
Corporate administrative and other expenses | (15,676 | ) | (13,018 | ) | (49,839 | ) | (39,148 | ) | ||||||||
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Consolidated operating income | 232,831 | 201,116 | 685,514 | 628,675 | ||||||||||||
Interest and other expenses, net | (28,404 | ) | (26,868 | ) | (86,310 | ) | (80,824 | ) | ||||||||
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Consolidated income before income taxes | $ | 204,427 | $ | 174,248 | $ | 599,204 | $ | 547,851 | ||||||||
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| Three Months Ended March 31, | |||||||||||||||||||||||
| 2024 | 2023 | ||||||||||||||||||||||
| (In thousands) | |||||||||||||||||||||||
| Net sales: | |||||||||||||||||||||||
| Electronic Instruments | $ | 1,156,779 | $ | 1,117,247 | |||||||||||||||||||
| Electromechanical | 579,401 | 479,870 | |||||||||||||||||||||
| Consolidated net sales | $ | 1,736,180 | $ | 1,597,117 | |||||||||||||||||||
| Operating income and income before income taxes: | |||||||||||||||||||||||
| Segment operating income: | |||||||||||||||||||||||
| Electronic Instruments | $ | 352,940 | $ | 309,747 | |||||||||||||||||||
| Electromechanical | 90,691 | 120,504 | |||||||||||||||||||||
| Total segment operating income | 443,631 | 430,251 | |||||||||||||||||||||
| Corporate administrative expenses | (26,415) | (24,710) | |||||||||||||||||||||
| Consolidated operating income | 417,216 | 405,541 | |||||||||||||||||||||
| Interest expense | (35,254) | (20,569) | |||||||||||||||||||||
| Other (expense) income, net | (633) | (5,373) | |||||||||||||||||||||
| Consolidated income before income taxes | $ | 381,329 | $ | 379,599 | |||||||||||||||||||
Thefirst quarter of 2024 results. In the first quarter of 2024 , the Company recorded realignmentpre-tax integration costs totaling $25.6 million in the fourth quarter of 2016 (the “2016 realignment costs”). The restructuring actions primarily related to $19.3 million in severance costs for a reduction in workforce and $6.2the Paragon acquisition totaling $29.2 million, of asset write-downs in response to the impact of a weak global economy on certain of the Company’s businesses and the effects of a continued strong U.S. dollar. See Note 17 to the Consolidated Financial Statements included in Part I, Item 1 of this Quarterly Report onForm 10-Q for further details.
For 2017, the strengthening global economic environment compared to 2016, thewhich $22.4 million is employee severance. The integration costs reduced net income by $22.2 million ($0.10 per diluted share). The full year impact of the 20172023 acquisitions, including the continued integration of Paragon, and 2016 acquisitions and continued focus on and implementation of our Operational Excellence initiatives including the 2016 realignment actions, are expected to have a positive impact on the remainder of the Company’s 2017our 2024 results.
Results of Operations (continued)
2023
acquisitions.
contributions from recent acquisitions.
translation, partially offset by a 3% increase from acquisitions. The Company's backlog of unfilled orders at March 31, 2024 was $3,460.7 million, a decrease of $73.4 million or 2.1% compared with
$3,534.1 million at December 31, 2023.Cost of sales for the third quarter of 2017 was $719.7 million or 66.3% of net sales, an increase of $89.0 million or 14.1%, compared with $630.7 million or 66.7% of net sales for the third quarter of 2016. The cost of sales increase for the third quarter of 2017 was affected by the net sales increase noted above.
Selling, general and administrative (“SG&A”) expenses for the third quarter of 2017 were $132.3 million or 12.2% of net sales, an increase of $19.1 million or 16.9%, compared with $113.2 million or 12.0% of net sales for the third quarter of 2016. SG&A expenses increased primarily due to the higher sales mentioned above.
Consolidated operating income was $232.8 million or 21.5% of net sales for the third quarter of 2017, an increase of $31.7 million or 15.8%, compared with $201.1 million or 21.3% of net sales for the third quarter of 2016.
The effective tax rate for the third quarter of 2017 was 24.9%, compared with 25.0% for the third quarter of 2016. The effective tax rates for the third quarter of 2017 and 2016 reflect the impact of foreign earnings, which are taxed at lower rates, tax benefits related to international and state tax planning initiatives and the release of uncertain tax position liabilities relating to certain statute expirations. The third quarter of 2017 effective tax rate reflects $2.5 million of tax benefits related to share-based payment transactions in accordance with the January 1, 2017 adoption ofASU 2016-09. See Note 2 to the Consolidated Financial Statements included in Part I, Item 1 of this Quarterly Report onForm 10-Q for further details.
Net income for the third quarter of 2017 was $153.5 million, an increase of $22.8 million or 17.4%, compared with $130.7 million for the third quarter of 2016.
Diluted earnings per share for the third quarter of 2017 were $0.66, an increase of $0.10 or 17.9%, compared with $0.56 per diluted share for the third quarter of 2016.
Results of Operations (continued)
2023. Segment Results
EIG’s netsales totaled $671.6 million for the third quarter of 2017, an increase of $92.3 million or 15.9%, compared with $579.3 million for the third quarter of 2016. The net sales increase was due to an 11% increase from the 2017 acquisitions of MOCON and Rauland, and 5% organic sales growth. Foreign currency translation was essentially flat period over period.
EIG’s operating income was $164.4 million for the third quarter of 2017, an increase of $21.7 million or 15.2%, compared with $142.7 million for the third quarter of 2016. The increase in EIG’s operating income for the third quarter of 2017 was primarily due to the higher sales mentioned above. EIG’s operating margins were 24.5% of net sales for the third quarter of 2017, compared with 24.6% of net sales for the third quarter of 2016. The decrease in EIG’s operating margins for the third quarter of 2017 was driven by the impact of the acquisitions noted above, which have lower operating margins than the Group’s base businesses.
EMG’s net sales totaled $413.2 million for the third quarter of 2017, an increase of $47.5 million or 13.0%, compared with $365.7 million for the third quarter of 2016. The net sales increase was due to 11% organic sales growth, a 2% increase from the 2016 acquisition of Laserage and favorable 1% effect of foreign currency translation.
EMG’s operating income was $84.1 million for the third quarter of 2017, an increase of $12.7 million or 17.8%, compared with $71.4 million for the third quarter of 2016. EMG’s operating margins were 20.3% of net sales for the third quarter of 2017, compared with 19.5% of net sales for the third quarter of 2016. The increase in EMG’s operating income and operating margins for the thirdfirst quarter of 2017 was primarily2024 included $29.2 million of integration costs related to the Paragon acquisition, which negatively impacted segment operating margins by 160 basis points. Segment operating margins were also negatively impacted in the first quarter of 2024 by the dilutive impact of the 2023 acquisitions. Excluding the dilutive impact of recent acquisitions and the Paragon integration costs, segment operating margins increased 200 basis
Results
Net sales for the first nine monthsquarter of 2017 were $3,157.1 million, an increase of $290.02024 was $1,144.7 million or 10.1%, compared with net sales of $2,867.1 million for the first nine months of 2016. The increase in net sales for the first nine months of 2017 was due to a 6% increase from acquisitions and 5% organic sales growth, partially offset by an unfavorable 1% effect of foreign currency translation.
Total international sales for the first nine months of 2017 were $1,615.1 million or 51.2%65.9% of net sales, an increase of $110.4$122.2 million or 7.3%11.9%, compared with international sales of $1,504.7$1,022.5 million or 52.5%64.0% of net sales for the first nine monthsquarter of 2016. The $110.4 million increase in international sales was primarily driven by organic sales growth. Both reportable segments of the Company maintain strong international sales presences in Europe and Asia.
Orders for the first nine months of 2017 were $3,379.7 million, an increase of $503.2 million or 17.5%, compared with $2,876.5 million for the first nine months of 2016. The increase in orders for the first nine months of 2017 was due to 10% organic order growth, a 7% increase from acquisitions and favorable 1% effect of foreign currency translation. As a result, the Company’s backlog of unfilled orders was a record at September 30, 2017 of $1,379.2 million, an increase of $222.7 million or 19.3%, compared with $1,156.5 million at December 31, 2016.
Segment operating income for the first nine months of 2017 was $735.4 million, an increase of $67.6 million or 10.1%, compared with segment operating income of $667.8 million for the first nine months of 2016. Segment operating income, as a percentage of net sales, was 23.3% for both the first nine months of 2017 and 2016. The increase in segment operating income for the first nine months of 2017 resulted primarily from the increase in net sales noted above.
2023. Cost of sales for the first nine monthsquarter of 20172024 included $29.2 million of Paragon integration costs discussed above. Excluding the impact of the Paragon integration costs, the cost of sales for the first quarter of 2024 was $2,084.464.2% of net sales.
Results of Operations (continued)
SG&A2023. General and administrative expenses for the first nine monthsquarter of 20172024 were $387.2$26.4 million, compared with $24.7 million for the first quarter of 2023.
Consolidated operating income was $685.5$11.7 million or 21.7%2.9%, compared with $405.5 million or 25.4% of net sales for the first nine monthsquarter of 2017, an increase of $56.8 million or 9.0%, compared with $628.7 million or 21.9% of net sales2023. Operating income and operating margins for the first nine monthsquarter of 2016.
2024 included $29.2 million of integration costs related to the Paragon acquisition, which negatively impacted operating margins by 170 basis points. Operating margins were also negatively impacted in the first quarter of 2024 by the dilutive impact of the 2023 acquisitions. Excluding the dilutive impact of recent acquisitions and the Paragon integration costs, operating margins increased 180 basis points compared to the first quarter of 2023.
2023.
2023.
2023.
EIG’s netsales
recent acquisitions.
2024 is due to customer inventory normalization in our automation and engineered solutions core businesses
operating margins for the first quarter of 2024 included $29.2 million of integration costs related to the Paragon acquisition, which negatively impacted segment operating margins by 500 basis points. Segment operating margins were also negatively impacted in the first quarter of 2024 by the dilutive impact of the 2023 acquisitions. Excluding the dilutive impact of recent acquisitions and the Paragon integration costs, segment operating margins decreased 100 basis points compared to the first quarter of 2023, due to the organic sales decrease discussed above.
amortization expense related to recent acquisitions.
2023.
For the first nine months of 2017, the Company repurchased approximately 112,000 shares of its common stock for $6.7 million,
At September 30, 2017, total debt, net was $2,430.4 million, compared with $2,341.6 million27.5% at December 31, 2016. In the fourth quarter of 2017, $270 million of 6.20% senior notes will mature and become payable. In the third quarter of 2018, $80 million of 6.35% senior notes and $160 million of 7.08% senior notes will mature and become payable. Thedebt-to-capital ratio was 39.2% at September 30, 2017, compared with 41.8% at December 31, 2016.2023. The netdebt-to-capital ratio (total debt, net less cash and cash equivalents divided by the sum of net debt and stockholders’ equity) was 31.0%22.2% at September 30, 2017,March 31, 2024, compared with 33.3%25.0% at December 31, 2016.2023. The netdebt-to-capital ratio is presented because the Company is aware that this measure is used by third parties in evaluating the Company.
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 | ||||||||||||
July 1, 2017 to July 31, 2017 | 20,306 | $ | 61.55 | 20,306 | $ | 368,870,746 | ||||||||||
August 1, 2017 to August 31, 2017 | 106 | 61.58 | 106 | 368,864,218 | ||||||||||||
September 1, 2017 to September 30, 2017 | — | — | — | 368,864,218 | ||||||||||||
|
|
|
| |||||||||||||
Total | 20,412 | 61.55 | 20,412 | |||||||||||||
|
|
|
|
|
| |||||||||||
March 31, 2024:
| 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 | |||||||||||||||||||
| January 1, 2024 to January 31, 2024 | — | $ | — | — | $ | 816,130,993 | |||||||||||||||||
| February 1, 2024 to February 29, 2024 | 73 | 168.50 | 73 | 816,118,693 | |||||||||||||||||||
| March 1, 2024 to March 31, 2024 | 41,228 | 167.42 | 41,228 | 809,216,260 | |||||||||||||||||||
| Total | 41,301 | $ | 167.42 | 41,301 | |||||||||||||||||||
| Exhibit Number | ||||||||
| Description | ||||||||
| 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). | |||||||
| AMETEK, Inc. | ||||||||
| By: | /s/ THOMAS M. MONTGOMERY | |||||||
| ||||||||
| Thomas M. Montgomery | ||||||||
| Senior Vice President – Comptroller | ||||||||
| (Principal Accounting Officer) | ||||||||
| May 2, 2024 | ||||||||
November 2, 2017
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