AMETEK Q3 Earnings Call Highlights

Key Points

• Record third-quarter performance: Sales rose 17% year over year to $2.22 billion, while organic sales grew 10%, orders increased 35%, and backlog reached a record $4.54 billion.
• Profitability and cash flow strengthened: Operating margin expanded to 26.8%, adjusted EPS climbed 17% to $2.21, and free cash flow rose 26% to $527 million, representing 124% conversion of net income.
• Outlook raised after the Indicor acquisition: AMETEK now expects 2026 adjusted EPS of $8.53–$8.57, mid-teens sales growth and free-cash-flow conversion of 115%–120%; Indicor is expected to add about $0.08 per share in 2026 earnings.

AMETEK NYSE: AME reported record third-quarter results for 2026, citing double-digit organic sales growth, strong order activity, margin expansion and cash generation. The company also raised its full-year sales, earnings and cash-flow conversion outlook following the closing of its acquisition of Indicor Instrumentation.

Third-quarter sales rose 17% year over year to a record $2.22 billion. Organic sales increased 10%, while acquisitions added 7 percentage points to growth. Orders increased 35% to $2.65 billion, including 17% organic order growth, and the company ended the quarter with a record backlog of $4.54 billion, up 27% from the start of the year.

“Our businesses are performing exceptionally well and delivering tremendous results,” Chairman and Chief Executive Officer Dave Zapico said during the company’s earnings call.

Record Profitability and Cash Flow

Operating income increased 20% from a year earlier to a record $595 million. Operating margin was 26.8%, up 60 basis points, while core operating margin rose 110 basis points to 27.3%. EBITDA increased 19% to a record $704 million, representing an EBITDA margin of 31.7%.

Diluted earnings per share rose 17% to a record $2.21, exceeding AMETEK’s prior guidance range of $2.08 to $2.10 per share. Free cash flow increased 26% to a record $527 million, and free-cash-flow conversion reached 124% of net income.

Executive Vice President and Chief Financial Officer Dalip Puri said operating working capital represented 17.3% of sales, an improvement of 160 basis points from the prior-year quarter. Operating cash flow increased 27% to $561 million.

Capital expenditures were $33 million during the quarter. AMETEK continues to expect approximately $160 million of capital expenditures for the full year, or about 2% of sales.

Segment Performance

The Electronic Instruments Group, or EIG, reported sales of $1.44 billion, up 16% from the prior-year period. Organic sales increased 9%, and acquisitions added 7 percentage points. EIG orders rose 37%, including 17% organic growth, while operating income increased 15% to $415 million. Core operating margin was 29.5%, up 60 basis points.

Zapico said EIG benefited from strength in process instrumentation, semiconductors, aerospace and power markets. He said recent acceleration in the segment reflects customers moving forward with project activity that had previously been in the quotation and planning pipeline.

The Electromechanical Group, or EMG, posted sales of $778 million, up 20%, including 13% organic growth and about 7 percentage points from acquisitions. Sales growth was balanced across aerospace, defense, medical technology and automation businesses. EMG orders increased 31%, including 17% organic growth.

EMG operating income rose 29% to $212 million, while core operating margin expanded 210 basis points to a record 27.5%. Zapico attributed the improvement to productivity efforts and a favorable price-cost relationship. The company said pricing exceeded inflation during the quarter, with inflation at approximately 3%.

Market Trends and Geographic Activity

Management said growth remained broad-based across end markets. Process instrumentation organic sales rose by high single digits, with notable demand in semiconductor and energy-related businesses. Aerospace and defense organic sales increased by the mid-teens, led by commercial original-equipment and aftermarket activity.

Power-market sales rose by the mid-single digits, while orders grew by double digits as customers invested in grid expansion and data-center infrastructure. Automation and Engineered Solutions reported mid-teens organic sales growth, supported by semiconductor and medical end markets.

Semiconductor sales increased by the mid-teens, while orders in the market grew by more than 30%, according to Zapico. He said the company’s semiconductor exposure is about 6% of AMETEK’s business and includes Cameca’s defect-detection instrumentation, Zygo’s extreme ultraviolet optics capabilities and Abaco’s durable electronics for semiconductor capital equipment.

Geographically, U.S. sales increased by the low double digits and international sales rose by the high single digits. Asia was the strongest international region, with growth in the mid-20% range. Zapico said China grew faster than the company average, while Europe was down modestly because of challenging comparisons and timing issues.

Indicor Integration and Updated Outlook

AMETEK completed the acquisition of Indicor Instrumentation during the third quarter. Indicor contributed slightly more than $100 million of revenue in the period, while other acquisitions contributed $15 million to $20 million, management said. Zapico described Indicor as a roughly $1.1 billion annual revenue business with a 30% EBITDA margin.

The company expects Indicor to contribute about $0.08 per share to 2026 earnings, mostly during the fourth quarter because AMETEK owned the business for only five weeks in the third quarter. Puri said AMETEK is targeting synergies equal to 10% to 12% of Indicor’s business over three years, with a roughly ratable cadence.

Despite increased borrowing for the transaction, management said AMETEK remains active in pursuing acquisitions. Total debt was $6.7 billion at Sept. 30, compared with $2.3 billion at the end of 2025, while cash and cash equivalents totaled $667 million. Net debt-to-EBITDA was 2.1 times, and the company had $2.7 billion of cash and available credit facilities.

For 2026, AMETEK now expects total sales growth in the mid-teens and organic sales growth in the high single digits. It raised projected adjusted diluted earnings per share to $8.53 to $8.57, up 15% from the prior year and above its previous forecast of $8.20 to $8.30.

For the fourth quarter, the company expects overall sales growth in the low 20% range and adjusted earnings per share of $2.26 to $2.30, representing growth of 12% to 14% from the prior-year period. AMETEK also raised its full-year free-cash-flow conversion expectation to 115% to 120% of net income.

About AMETEK (NYSE:AME)

AMETEK, Inc is a global manufacturer of industrial technology solutions. The company develops and produces advanced analytical, monitoring, testing, and measurement instruments, as well as engineered electromechanical products used in industrial, aerospace, defense, energy, medical, and other specialized markets.

AMETEK operates through two primary business groups: Electronic Instruments and Electromechanical. Its products include process and power monitoring systems, analytical instruments, automation and control technologies, aerospace and defense equipment, precision motion-control systems, motors, thermal-management solutions, engineered materials, and specialty metal products.

The company traces its roots to 1930 and has expanded through the development and acquisition of specialized technology businesses.

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