BERWYN, PA — AMETEK, Inc. (NYSE: AME) announced its financial results for the second quarter of 2024, showcasing robust performance amid a slower growth environment. The company also adjusted its outlook for the remainder of the year due to inventory normalization and cautious customer spending.
AMETEK’s second-quarter sales reached $1.73 billion, a 5% increase from the same period last year. Operating income climbed 7% to a record $447.5 million, with margins expanding to 25.8%. Operating cash flow surged 14% to $381.4 million.
On a GAAP basis, earnings per diluted share were $1.45. Adjusted earnings, excluding non-cash, after-tax acquisition-related intangible amortization, were $1.66 per share, up 6% from last year.
“Our operating performance in the second quarter was strong with outstanding core margin expansion, record operating income and EBITDA, and earnings growth ahead of our expectations,” said David A. Zapico, AMETEK Chairman and CEO.
“We also generated excellent cash flows, with free cash flow up 17% and free cash flow conversion of 107% in the quarter. These results reflect the strength and flexibility of our operating model as well as our team’s ability to successfully manage through a slower growth environment.”
Electronic Instruments Group (EIG)
EIG sales were $1.15 billion, up 2% year-over-year. Operating income rose 14% to $349.9 million, with margins improving to 30.3%.
“EIG delivered strong results this quarter with excellent operating performance leading to outstanding profit growth and robust margin expansion,” Zapico noted. “Our EIG businesses are well positioned across a diverse set of attractive market segments.”
Electromechanical Group (EMG)
EMG sales hit a record $581.2 million, up 14% from the previous year. Operating income was $123.1 million, with margins at 21.2%.
“EMG continued to experience headwinds in the quarter from the normalization of inventory levels across our OEM customer base,” said Zapico. “Despite these headwinds, our teams delivered solid operating performance with sequential margins improving 50 basis points versus the first quarter’s adjusted margins.”
2024 Outlook
“Our operating results through the first half of 2024 have been solid against the backdrop of a slower growth environment. We now expect the impact of inventory normalization within our OEM customer base will continue through the balance of 2024. Additionally, customers are turning more cautious leading to some short-term delays in project spending,” said Zapico.
He continued, “As a result, we are adjusting our sales and earnings guidance for the year. We remain confident in our ability to successfully manage through these near-term demand headwinds, deliver strong operating performance and cash flows, and ensure AMETEK is well positioned for strong growth and profitability.”
AMETEK now expects overall sales for 2024 to increase between 5% and 7% compared to 2023. Adjusted earnings per share are projected to be between $6.70 and $6.80, up 5% to 7% over last year.
For the third quarter, sales are expected to grow by mid-single digits year-over-year. Adjusted earnings per share are anticipated to be between $1.60 and $1.62, a slight decrease from the same period in 2023.
Is AMETEK a Buy, Sell, or Hold?
AMETEK’s robust second-quarter performance and strategic adjustments indicate resilience in a challenging market. The company’s diversified portfolio and strong cash flow generation provide a solid foundation for future growth. However, inventory normalization and cautious customer spending are short-term headwinds.
Investors should consider AMETEK a Hold. The company’s fundamentals remain strong, but near-term uncertainties warrant caution. Long-term prospects are positive, and shareholders should monitor upcoming quarters for signs of sustained growth.
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