Ametek Inc.
04/30/2026 | Press release | Distributed by Public on 04/30/2026 12:28
Quarterly Report for Quarter Ending March 31, 2026 (Form 10-Q)
Management's Discussion and Analysis of Financial Condition and Results of Operations
Recent Trends
Recent geopolitical developments in the Middle East, including the conflict involving Iran, have contributed to increased uncertainty in global markets. Although we have limited Middle East sales exposure and do not have material operations or assets located in the region, we are not immune to the broader macroeconomic uncertainty an extended conflict may create on the global economy.
Our businesses have been proactive in addressing the impacts of tariffs, including targeted pricing initiatives, strategic adjustments to our global supply chains, and leveraging our worldwide manufacturing footprint to localize production and adapt to changing demand patterns. While recent tariff-related changes did not have a material impact on our results of operations for the three months ended March 31, 2026, as the situation continues to evolve, we cannot be certain of the outcome, which could adversely impact demand for our products, costs, inflation, customers, suppliers, and the overall global economy. We continue to monitor and analyze the impacts of the tariffs and the evolving macroeconomic environment and will continue to implement appropriate actions as necessary to mitigate their effects on our businesses.
Results of Operations
For the quarter ended March 31, 2026, the Company posted record operating income, orders, and backlog, as well as strong operating margins. Contributions from the acquisitions of FARO Technologies ("FARO") in July 2025 and LKC Technologies in January 2026 as well as our Operational Excellence initiatives had a positive impact on the first quarter of 2026 results. The Company recorded $1.6 million of pre-tax acquisition-related costs related to the FARO acquisition, which are comprised of ongoing integration costs, in the first quarter of 2026. These integration costs are recorded in Cost of sales and primarily include employee severance.
Results of operations for the first quarter of 2026 compared with the first quarter of 2025
Net sales for the first quarter of 2026 were $1,928.4 million, an increase of $196.4 million or 11.3%, compared with net sales of $1,732.0 million for the first quarter of 2025. The increase in net sales for the first quarter of 2026 was due to a 5% increase in organic sales, a 4% increase from acquisitions, as well as a 2% favorable effect of foreign currency translation.
Total international sales for the first quarter of 2026 were $923.7 million or 47.9% of net sales, an increase of $119.3 million or 14.8%, compared with international sales of $804.4 million or 46.4% of net sales for the first quarter of 2025. The increase in international sales was primarily driven by higher demand in Europe and Asia, as well as contributions from recent acquisitions.
Orders for the first quarter of 2026 were a record $2,217.6 million, an increase of $419.8 million or 23.3%, compared with $1,797.8 million for the first quarter of 2025. The increase in orders for the first quarter of 2026 was due to a 22% increase in organic orders, a 2% increase from acquisitions, partially offset by a 1% unfavorable effect of foreign currency translation. The Company's backlog of unfilled orders at March 31, 2026 was a record $3,870.7 million, an increase of $289.2 million or 8.1% compared with $3,581.5 million at December 31, 2025.
Cost of sales for the first quarter of 2026 was $1,210.9 million or 62.8% of net sales, an increase of $103.9 million or 9.4%, compared with $1,107.0 million or 63.9% of net sales for the first quarter of 2025. The cost of sales increase was primarily due to the net sales increase discussed above, partially offset by continued benefits from the Company's Operational Excellence initiatives.
Segment operating income for the first quarter of 2026 was $544.7 million, an increase of $61.9 million or 12.8%, compared with segment operating income of $482.8 million for the first quarter of 2025. Segment operating margins, as a percentage of net sales, increased to 28.2% for the first quarter of 2026, compared with 27.9% for the first quarter of 2025. In the first quarter of 2026, segment operating margins were negatively impacted 90 basis points by the dilutive impact of recent acquisitions and 10 basis points from acquisition-related costs. Excluding the dilutive impact of recent acquisitions and acquisition-related costs, segment operating margins increased 130 basis points compared to the first quarter of 2025 due to the sales increase discussed above, as well as continued benefits from the Company's Operational Excellence initiatives.
Selling, general and administrative expenses for the first quarter of 2026 were $202.6 million or 10.5% of net sales, an increase of $32.4 million or 19.1%, compared with $170.2 million or 9.8% of net sales for the first quarter of 2025. Selling expenses increased primarily due to the net sales increase discussed above, as well as higher selling expense related to recent
acquisitions. General and administrative expenses for the first quarter of 2026 were $29.8 million, compared with $27.9 million for the first quarter of 2025.
Consolidated operating income was a record $514.9 million or 26.7% of net sales for the first quarter of 2026, an increase of $60.1 million or 13.2%, compared with $454.8 million or 26.3% of net sales for the first quarter of 2025. In the first quarter of 2026, operating margins were negatively impacted 80 basis points by the dilutive impact of recent acquisitions and 10 basis points from acquisition-related costs. Excluding the dilutive impact of recent acquisitions and acquisition-related costs, operating margins increased 130 basis points compared to the first quarter of 2025 due to the sales increase discussed above, as well as continued benefits from the Company's Operational Excellence initiatives.
Interest expense for the first quarter of 2026 was $20.9 million, an increase of $1.9 million or 10.1%, compared with $19.0 million for the first quarter of 2025.
Other expense, net was $1.0 million for the first quarter of 2026, compared with $1.6 million of other expense, net for the first quarter of 2025.
The effective tax rate for the first quarter of 2026 and 2025 was 19.0%.
Net income for the first quarter of 2026 was $399.4 million, an increase of $47.6 million or 13.5%, compared with $351.8 million for the first quarter of 2025.
Diluted earnings per share for the first quarter of 2026 were a record $1.74, an increase of $0.22 or 14.5%, compared with $1.52 per diluted share for the first quarter of 2025.
Segment Results
EIG's net sales totaled $1,264.5 million for the first quarter of 2026, an increase of $120.8 million or 10.6%, compared with $1,143.7 million for the first quarter of 2025. The net sales increase was due to a 2% organic sales increase, 7% increase from recent acquisitions, as well as a 1% favorable effect of foreign currency translation.
EIG's operating income was $373.9 million for the first quarter of 2026, an increase of $19.8 million or 5.6%, compared with $354.1 million for the first quarter of 2025. EIG's operating margins were 29.6% of net sales for the first quarter of 2026, compared with 31.0% for the first quarter of 2025. In the first quarter of 2026, EIG's operating margins were negatively impacted 140 basis points by the dilutive impact of recent acquisitions and 10 basis points from acquisition-related expenses. Excluding the dilutive impact of recent acquisitions and acquisition-related expenses, EIG's operating margins increased 10 basis points compared to the first quarter of 2025 due to the sales increase discussed above, as well as continued benefits from the Company's Operational Excellence initiatives.
EMG's net sales totaled a record $663.9 million for the first quarter of 2026, an increase of $75.6 million or 12.9%, compared with $588.3 million for the first quarter of 2025. The net sales increase was due to a 11% organic sales increase, as well as a 2% favorable effect of foreign currency translation.
EMG's operating income was a record $170.8 million for the first quarter of 2026, an increase of $42.1 million or 32.7%, compared with $128.7 million for the first quarter of 2025. EMG's operating margins were 25.7% of net sales for the first quarter of 2026, compared with 21.9% for the first quarter of 2025. EMG's operating margins increased 380 basis points compared to the first quarter of 2025 due to the sales increase discussed above, as well as continued benefits from the Company's Operational Excellence initiatives.
Financial Condition
Liquidity and Capital Resources
Cash provided by operating activities totaled $451.5 million for the first three months of 2026, an increase of $34.0 million or 8.1%, compared with $417.5 million for the first three months of 2025. The increase in cash provided by operating activities for the first three months of 2026 was primarily due to higher net income, partially offset by higher working capital requirements.
Free cash flow (cash flow provided by operating activities less capital expenditures) was $426.0 million for the first three months of 2026, compared with $394.4 million for the first three months of 2025. EBITDA (earnings before interest,
income taxes, depreciation and amortization) was $618.3 million for the first three months of 2026, compared with $558.5 million for the first three months of 2025. 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 $234.6 million for the first three months of 2026, compared with cash used by investing activities of $125.7 million for the first three months of 2025. For the first three months of 2026, the Company paid $209.6 million, net of cash acquired, to purchase LKC Technologies. For the first three months of 2025, the Company paid $103.2 million, net of cash acquired, to purchase Kern Microtechnik. Additions to property, plant and equipment totaled $25.5 million for the first three months of 2026, compared with $23.1 million for the first three months of 2025.
Cash used by financing activities totaled $188.0 million for the first three months of 2026, compared with cash used by financing activities of $277.7 million for the first three months of 2025. At March 31, 2026, total debt, net was $2,177.5 million, compared with $2,283.3 million at December 31, 2025. For the first three months of 2026, total borrowings decreased by $82.7 million compared with a $185.1 million decrease for the first three months of 2025. At March 31, 2026, the Company had available borrowing capacity of $1,573.4 million under its revolving credit facility, excluding the $700 million accordion feature.
The debt-to-capital ratio was 16.6% at March 31, 2026, compared with 17.7% at December 31, 2025. 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 13.4% at March 31, 2026, compared with 14.7% at December 31, 2025. 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 three months of 2026 included cash dividends paid of $77.8 million, compared with $71.5 million for the first three months of 2025. Effective February 12, 2026, the Company's Board of Directors approved an 10% increase in the quarterly cash dividend on the Company's common stock to $0.34 per common share from $0.31 per common share. The Company repurchased $27.9 million of its common stock for the first three months of 2026, compared with $18.0 million for the first three months of 2025. Proceeds from stock option exercises were $9.6 million for the first three months of 2026, compared with $4.7 million for the first three months of 2025.
As a result of all of the Company's cash flow activities for the first three months of 2026, cash and cash equivalents at March 31, 2026 totaled $481.3 million, compared with $458.0 million at December 31, 2025. At March 31, 2026, the Company had $380.5 million in cash outside the United States, compared with $374.5 million at December 31, 2025. 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.
Acquisition subsequent to March 31, 2026
In April 2026, the Company entered into a definitive agreement to acquire First Aviation Services, Inc. ("First Aviation"), a leading provider of highly engineered, mission-critical defense and aviation maintenance, repair and overhaul services and a manufacturer of related proprietary components. First Aviation has annual sales of approximately $80 million. First Aviation will join the Electromechanical Group.
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, 2025. 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 Company's ability to consummate and successfully integrate future acquisitions; risks associated with international sales and operations, including supply chain disruptions; tariffs, trade disputes and currency conditions; 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; changes in the competitive environment or the effects of competition in the Company's markets; the ability to maintain
adequate liquidity and financing sources; and general economic conditions affecting the industries the Company serves. 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, 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.
Ametek Inc. published this content on April 30, 2026, and is solely responsible for the information contained herein. Distributed via EDGAR on April 30, 2026 at 18:29 UTC. If you believe the information included in the content is inaccurate or outdated and requires editing or removal, please contact us at [email protected]