AMETEK Inc.’s AME second-quarter 2015 earnings of 64 cents per share came in line with the Zacks Consensus Estimate but were at the higher end of management’s guidance range. Earnings increased 1.36% sequentially and 5.24% year over year. Strong operating performance primarily led to the year-over-year earnings growth.
Total Revenue
AMETEK reported revenues of $1.0 billion for the quarter, up 2% sequentially and 1.3% year over year. Revenues also beat the Zacks Consensus Estimate of $995.0 million.
The company has two operating segments — Electronic Instruments Group (EIG) and Electromechanical Group (EMG) — which accounted for 60% and 30% of total revenue, respectively, in the quarter.
Revenues by Segment
EIG revenues were up 0.4% sequentially and 4% on a year-over-year basis to $596.5 million. The strong sales growth was backed by broad-based strength in the Aerospace market and contributions from the Zygo and Amptek acquisitions under the Process business.
EMG sales were up 4.4% from the first quarter but down 2.4% year over year to $407.3 million. The lower sales were attributed to currency headwinds, partly offset by sales from the acquisition of Global Tubes.
Operating Performance
AMETEK’s gross margin for the quarter was 36.8%, up 147 basis points (bps) from 35.4% in the preceding quarter and 50 bps from the year-ago quarter level of 36.3%.
The company reported operating income of $240.3 million, higher than the previous quarter’s $236.8 million as well as the year-ago quarter figure of $231.7 million. The company’s operating margin of 23.9% was down 13 bps from the prior quarter but up 55 bps from the year-ago period.
Operating Profit by Segment
The EIG segment reported operating income (excluding realignment costs) of $164.0 million, up 8% from the year-ago quarter. Operating margin went up 110 bps to 27.5%.
EMG operating income (excluding realignment costs) decreased 3% year over year to $89.3 million while operating margin was 21.9%.
Net Income
AMETEK’s net income was $155.5 million or a 15.5% net income margin, compared with $152.9 million, or 15.5% in the previous quarter and $150.1 million or 15.1% in the year-ago quarter. There were no one-time items in the last quarter unlike both the previous and year-ago quarters.
Earnings of 64 cents in the last quarter compared with adjusted earnings of 63 cents in the previous quarter and 61 cents in second-quarter 2014.
GAAP EPS in the previous and year-ago quarters were 59 cents and 61 cents, respectively.
Balance Sheet
Cash and cash equivalents balance at quarter end was $326.6 million, down from $406.6 million in the previous quarter. Accounts receivables were $619.1 million versus $592.3 million in the prior quarter. Total debt was $1.48 billion versus $1.42 billion at the end of the last quarter.
Outlook
For the third quarter, management expects revenues to be more or less flat year over year. Earnings per share are expected within 64 cents to 65 cents. This earnings guidance represents an increase of 3% to 5% year over year.
For 2015, management expects organic sales to be up in low single-digits on a percentage basis. Earnings for 2015, excluding first-quarter realignment costs, are expected in the range of $2.58 to $2.63 per share, up 7% to 9% on a year-over-year basis.
Recommendation
AMETEK reported decent second-quarter results with the bottom line matching the Zacks Consensus Estimate and the top line surpassing the same. Both revenues and earnings increased from the year-ago period.
The company believes that strong execution of its four core growth strategies of operational excellence, global market expansion, investments in new product development, and strategic acquisitions will continue to drive growth. This, in combination with a strong portfolio of businesses, will help the company to post better results, going forward.
Stocks to Consider
AMETEK has a Zacks Rank #2 (Buy). Some better-ranked stocks in the technology sector are PetMed Express Inc. PETS, Amazon.com Inc. AMZN and Expedia Inc. EXPE. While PetMed and Amazon sport a Zacks Rank #1 (Strong Buy), Expedia sports a Zacks Rank #2 (Buy).
Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report >>
Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report
Be the first to comment