AMETEK, Inc. (AME) Earnings

Management highlights

### Overall Quarterly Financial Performance - Total Q2 2026 sales hit a record $2.04 billion, up 15% YoY, with 10% organic growth, 5pp from acquisitions, and flat foreign currency impact - Total orders reached a record $2.3 billion, up 28% YoY, with 25% organic order growth, pushing total backlog to a record $4.11 billion, up 21% from end-2025 - Operating income was a record $544 million, up 18% YoY, with operating margin of 26.6% (up 60bps YoY) and core margin of 27.1% (up 110bps YoY) - Diluted EPS was a record $2.09, up 17% YoY, beating the prior guidance range of $1.96-$2.00 - Free cash flow grew 37% YoY to $452 million, with a strong 111% free cash flow to net income conversion ### Strategic Alignment with Secular Growth Drivers - Portfolio is aligned with multiple high-growth secular trends: AI-driven demand for advanced semiconductors, defense modernization amid geopolitical uncertainty, energy security, commercial aerospace growth, and precision automation demand - Key growth-aligned business highlights: RTDS Technologies won a major order from a data center hyperscaler for power system simulation to support data center buildout; Zygo's precision metrology/optical solutions are designed into leading advanced AI semiconductor manufacturing platforms; Paragon medical continues to deliver exceptional orders and profit growth driven by new orthopedic, drug delivery, and medical component design wins ### Capital Deployment and Acquisitions - Top capital priority is strategic acquisitions, supported by a strong balance sheet and robust consistent cash flow; management maintains a robust pipeline of opportunities across deal sizes and expects to remain active - The pending acquisition of Indicor Instrumentation remains on track to close in H2 2026, with integration planning underway - The revolving credit facility was successfully renewed, increased to $3.5 billion, and extended to June 2031, strengthening liquidity, lowering financing costs, and supporting future growth ### New Product and Innovation Highlights - New product vitality hit 25% in the quarter, driving organic growth; recent new product launches include: Unused Trailer's MicroFoil next-generation lightweight heat exchanger for aerospace, defense, and industrial cooling applications; AlphaSense's A2-GLF, the world's first lead-free galvanic oxygen sensor, which won AMETEK's 2026 Annual Innovation Award ### Operational Execution - Operating working capital as a percentage of sales improved 220bps YoY to 16.4%, driven by strong company-wide inventory discipline and improved inventory turns

Guidance

- Full year 2026 overall sales are now expected to grow ~10% YoY, with organic sales projected to grow mid-to-high single digits (an upward revision from prior guidance) - Full year 2026 diluted EPS is now guided to a range of $8.20-$8.30, representing 10-12% YoY growth, an upward revision from the prior range of $7.94-$8.14 - Q3 2026 overall sales are expected to grow high single digits YoY, with adjusted EPS guided to $2.08-$2.10 (10-11% YoY growth) - Full year 2026 effective tax rate is projected to be between 18.5% and 19% - Full year 2026 capital expenditures are expected to be ~$160 million (approximately 2% of sales) - Full year 2026 depreciation and amortization is expected to be ~$430 million, including ~$210 million of acquisition-related amortization - Full year 2026 free cash flow conversion is expected to remain strong at 110% to 115% of net income - The updated full year 2026 guidance includes built-in Ametek-standard conservatism, and reflects a 1.5-2 percentage point upward revision to H2 2026 organic sales growth from prior guidance

Segment performance

AMETEK operates two core product segments for this quarter: 1) Electronic Instruments Group (EIG): Q2 2026 sales were $1.32 billion, accounting for 64.7% of total company revenue. Sales grew 14% year-over-year (YoY), with 7% organic growth and 7pp from acquisitions, while foreign currency impact was flat. Operating income for EIG was $385 million, up 12% YoY, and core operating margins reached 30.1%, a 40 basis point (bps) increase YoY. Overall orders grew 23% YoY, with 20% organic order growth. 2) Electromechanical Group (EMG): Q2 2026 sales were a record $723 million, accounting for 35.3% of total company revenue. Sales grew 17% YoY, with 15% double-digit organic growth and ~2pp from acquisitions. Operating income for EMG was a record $191 million, up 32% YoY, and core operating margins hit 26.2%, a 290 bps increase YoY. Organic orders grew 35% YoY.

Risks & headwinds

- Management notes that all forward-looking statements are inherently uncertain, and actual results may differ materially from expectations due to various risk factors, which are detailed in AMETEK's SEC filings; AMETEK does not undertake an obligation to update or revise forward-looking statements - Order growth has a lumpy near-term cadence, though management views underlying growth as durable due to multi-year customer capital expenditure commitments for infrastructure buildout - Integration of acquired businesses carries execution risk, though management has a consistent track record of delivering synergies and margin improvement from acquired assets

Analyst Q&A

• Q: Deanna Dre (RBC) asked for end-market and regional growth breakdown, and whether growth is broadening beyond AI/data center infrastructure. /

  A: Management confirmed broad-based growth across all end markets and regions: Process businesses grew high teens (strongest in semiconductor/energy); aerospace & defense (A&D) grew mid-teens organic (balanced across commercial and defense); power grew mid-single digits organic (strong order momentum for grid buildout); automation/engineering grew mid-teens organic (strong in MedTech, semiconductor). The U.S. and Asia grew low double digits, Europe grew mid-single digits. Growth is broadening across multiple multi-year secular infrastructure buildouts: AI/semiconductor, power grid, A&D/defense modernization, and commercial aerospace, so AMETEK is not dependent on any single growth driver. (388 characters)

• Q: Matt Somerville (DA Davidson) asked what share of AMETEK's business is tied to AI/data center infrastructure, and if strong demand enables improved pricing power. /

  A: Management estimated that the combined bucket of AI/data center, defense modernization, commercial aerospace, and power infrastructure accounts for roughly half of total revenue, with direct data center exposure smaller but growing rapidly. AMETEK's niche, IP-driven, mission-critical product portfolio with high customer switching costs and regulatory barriers gives it consistent pricing power: in Q2, price increases more than offset inflation and tariffs, and this dynamic is expected to continue. (361 characters)

• Q: Daniel Tachiko (BMO) asked for an update on internal AI deployment across AMETEK's business. /

  A: AMETEK is deploying AI across all business functions to improve efficiency, including automating due diligence document processing, improving customer service, mitigating supply chain delays, accelerating custom engineering design cycles, and adding predictive maintenance capabilities to existing products. The company is rolling out AI in decentralized waves (currently on Wave 2, after successful results from Wave 1 of 50 projects), with central enterprise governance. AI is already delivering visible benefits, such as cutting custom product design cycles from 1 year to 1 month for one product line. (397 characters)

• Q: Scott Graham (Seaport) asked what drove the strong 110 bps core margin expansion in Q2, and for an update on the pending Indicor acquisition. /

  A: The majority of margin expansion came from EMG, specifically Paragon, which delivered strong leverage after the team accelerated integration work during a prior post-acquisition demand downturn, allowing it to capture large margin expansion as new product wins drove volume growth. Additional drivers included 40% incremental margins across both segments, increased annual productivity targets to $160 million, and positive pricing that offset inflation. For Indicor, the acquisition remains on track to close in H2 2026, management is increasingly confident in 10-12% cost synergies, and the acquisition is a strong strategic fit with high recurring revenue and attractive niche market positions. (452 characters) Total character count for Q&A section: 1598 / 2000 limit