AMETEK, Inc. Q2 FY2025 earnings call

• AMETEK delivered strong second quarter results with record sales and EBITDA, core margin expansion, and earnings growth. - Raised full-year sales and earnings guidance after Q2 results and acquiring FARO Technologies. - Strategic growth investments of $85 million in 2025 focused on R&D, engineering, sales, and marketing. - New product introduction from SPECTRO Analytical Instruments (SPECTROGREEN MS) for advanced elemental analysis. - Mitigation plans for tariffs including targeted pricing, supply chain adjustments, and manufacturing localizations. - FARO acquisition complements AMETEK's metrology and precision imaging capabilities, with potential to expand operating margins through integration.

The Electronic Instruments Group (EIG) had sales of $1.16 billion in Q2 2025, up 1% from Q2 2024. Organic sales were down 3%, acquisitions added 2 points, and foreign currency was a 1 point tailwind. Operating income was $344 million, with operating margins at 29.7% and core margins at 30.7%, up 40 basis points versus prior year. The Electromechanical Group (EMG) had record sales of $618 million in Q2 2025, up 6% from the prior year. Organic sales were up 5% and foreign currency was a 1 point tailwind. Operating income was a record $144 million, up 17% compared to the prior year. EMG's operating margins were 23.3%, up 210 basis points, with core margins up 260 basis points. The acquisition of FARO Technologies, with annual sales of approximately $340 million, was noted as complementing AMETEK's existing metrology and precision measurement businesses.

• Full-year sales expected to be up mid-single digits compared to 2024. - Diluted earnings per share range for 2025 is $7.06 to $7.20, up 3% to 5% versus prior year. - Third quarter sales anticipated to be up mid-single digits, with earnings in the range of $1.72 to $1.76 per share, up 4% to 6% versus prior year. - Guidance incorporates contributions from the FARO acquisition.

• Fluid global trade landscape and tariffs creating uncertainty in business operations. - Uncertainty in research academia funding impacting the process business. - Potential delays in projects due to tariff-related funding issues affecting certain market segments.

Q: Can we start off with the end market and regional tour and given all of the fluid trading environment. It's really interesting to get your perspective on kind of the puts and takes. And Dave, could you also include the cadence of the months because we've heard reports recently where it was choppy month-to-month, and I know you've got some perspective there? We heard June was down but then July came back. I don't know if that was a pattern you saw.

A: Yes, discussed end markets, trade dynamics, and month-to-month cadence, noting June was the strongest month for orders and July looking good.

Q: Congrats on getting FARO done. I wonder if you could just talk about that a little bit more in terms of the integration plan. I believe you see a lot more synergies there than typical AMETEK playbook given their margins coming in and the fit with Creaform and other things.

A: Talked about integration synergy, expecting mid-teens cost synergies, FARO's EBITDA margins expected to expand to 30% in 3 years, similar to Zygo acquisition potential.

Q: As I look at your guide, I'm just trying to understand the puts and takes and I guess, level of conservatism in the guide because you're saying FARO adds a couple of pennies, it sounds like tariffs should be more of a tailwind. So can you help us understand what you're assuming now relative to the $100 million in tariff costs that you talked about last quarter and then the $70 million from China.

A: Explained that tariff impacts were offset, with $100 million tariff cost not being a headwind, and $70 million from China partially resolved with good portion shipped in Q2.

Q: A couple of questions. You talked in detail about Paragon, which was very helpful. Can you go through the same kind of analysis specifically the Automation side of the business, where -- how that business is performing from a profitability standpoint? What you're seeing from an inbound order point of view? Where you are with the inventory sort of reductions you were seeing in the channel there as that's been one of the more challenged businesses for you guys.

A: Stated Automation business's destock is over, strong orders growth, driving profit growth and contributing to EMG margins increase.

Q: I wanted to just kind of follow up on some of the commentary on back half growth. It seems like with FARO and some of the prior M&A done, that M&A could be about almost a mid-single-digit tailwind. And I would imagine there's some FX tailwinds on top of that kind of pushing collectively maybe into that mid- to high single-digit range in the back half. So I guess, is that right? And then what do you guys assume for organic growth into the back half of the year.

A: Discussed FX tailwind of about 1 percentage point on top line, organic growth assumed positive low single digits for the year, with acquisitions contributing to mid-single-digit growth.