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AMETEK INC/ (AME)·Q1 2025 Earnings Summary

Executive Summary

  • Q1 2025 EPS beat on stronger margins: Adjusted EPS $1.75 vs S&P Global consensus $1.69 (+~$0.06); revenue was $1.73B vs $1.74B consensus (slight miss). Operating margin expanded +60 bps YoY to 26.3% on cost controls and pricing power; free cash flow conversion was 112% . Consensus values marked with asterisks are from S&P Global.*
  • Orders and backlog strengthened: overall orders +8% (organic +3%), book-to-bill 1.04, backlog $3.47B—supporting visibility despite macro/trade uncertainty .
  • Guidance maintained despite tariff headwinds: FY25 sales still “up low single digits” with Adjusted EPS $7.02–$7.18; management outlined mitigation actions and quantified ~$100M direct annual tariff impact they expect to offset. China’s retaliatory tariffs pose ~$70M Q2 shipment timing risk (high-margin instrumentation) but management reiterated confidence in full-year outlook .
  • Capital deployment remains a catalyst: dividend raised 11% to $0.31; new $1.25B repurchase authorization; announced agreement to acquire FARO Technologies for ~$920M enterprise value to expand 3D metrology—bolstering secular growth in Ultra Precision Technologies .

What Went Well and What Went Wrong

  • What Went Well

    • Margin execution: operating margin rose to 26.3% (+60 bps YoY); EIG margin 31.0% (+50 bps) and EMG margin 21.9% (+120 bps), underscoring pricing power and productivity. “Outstanding operating performance… strong margin expansion” .
    • Cash generation: free cash flow $394M; conversion 112%—supporting flexible capital allocation .
    • Orders momentum and backlog: orders +8% (organic +3%), book-to-bill 1.04, backlog $3.47B. “Earnings above our expectations” and strength across niche businesses .

  • What Went Wrong

    • Revenue slight miss vs consensus despite resilient demand: $1.732B vs $1.744B consensus as organic sales dipped 1% YoY; FX neutral . Consensus values are from S&P Global.*
    • Tariff-driven uncertainty: management sized ~$100M direct annual tariff impact (to be mitigated) and flagged ~$70M of high-margin China shipments at risk of Q2 timing slippage, prompting the decision not to issue Q2 guidance .
    • Mixed regional performance: U.S. up modestly, Europe/Asia modest declines in Q1; China down ~10% (ex-China Asia roughly flat), adding near-term choppiness to international demand .

Financial Results

Overall results vs prior year, prior quarter, and consensus

MetricQ1 2024Q4 2024Q1 2025 ActualQ1 2025 Consensus
Revenue ($B)$1.736 $1.762 $1.732 $1.744*
GAAP Diluted EPS ($)$1.34 $1.67 $1.52 —
Adjusted Diluted EPS ($)$1.64 $1.87 $1.75 $1.691*
Operating Margin (%)24.0% 26.6% 26.3% —

Segment performance (Q1 YoY)

SegmentSales ($B) Q1 2024Sales ($B) Q1 2025Op Income ($M) Q1 2024Op Income ($M) Q1 2025Margin YoY Δ (bps)
Electronic Instruments (EIG)$1.157 $1.144 $352.9 $354.1 +50 bps (to 31.0%)
Electromechanical (EMG)$0.579 $0.588 $90.7 $128.7 +120 bps (to 21.9%)

Notes: Q1 2024 EMG included $29.2M Paragon integration costs; adjusted EMG margin in Q1 2024 was 20.7% vs 21.9% in Q1 2025 .

KPIs and balance sheet

KPIQ3 2024Q4 2024Q1 2025
Orders YoY+12% (org +2%) +4% org +8% (org +3%)
Book-to-Bill1.02 1.01 1.04
Backlog ($B)$3.44 ~$3.4 $3.47
Free Cash Flow ($M)$460.9 $498.3 $394.5
FCF Conversion (%)135% 129% 112%
Cash ($M)$396.3 $374.0 $399.0
Total Debt ($M)$2,336.5 (571.1+1,765.5) $2,079.7 (654.3+1,425.4) $1,931.0 (471.5+1,459.4)
Net Debt / EBITDA (x)0.9x gross; 0.9x net (Q3) 0.9x gross; 0.8x net (YE) 0.9x gross; 0.7x net (Q1)

Guidance Changes

MetricPeriodPrevious GuidanceCurrent GuidanceChange
Sales growth (YoY)FY 2025Up low single digits Up low single digits Maintained
Adjusted EPS ($)FY 2025$7.02–$7.18 $7.02–$7.18 Maintained
Adjusted EPS ($)Q1 2025$1.67–$1.69 Delivered $1.75 Beat vs guide
EPS/RevenueQ2 2025—No Q2 guidance given due to tariff timing uncertainty Withheld
Effective Tax RateFY 202519%–20% 19%–20% Maintained
Capex ($M)FY 2025~155 ~155 Maintained
Free Cash Flow ConversionFY 2025~115% ~115% Maintained
D&A ($M) incl. after-tax amort.FY 2025~$400; $194M after-tax ($0.83/sh) ~$410; $203M after-tax ($0.88/sh) Raised
Segment: ProcessFY 2025Up low single digits Roughly flat Lowered
Segment: A&DFY 2025Mid-single-digit growth Mid-single-digit growth Maintained
Segment: Power & IndustrialFY 2025Flat Roughly flat Maintained
Segment: Automation & Engineered SolutionsFY 2025Mid-single-digit growth Mid-single-digit growth Maintained
Dividend per share (quarterly)Current$0.28 (Q4 payout) $0.31 (+11%) Raised
Share Repurchase AuthorizationCurrent—$1.25B authorization (Feb’25) New

Earnings Call Themes & Trends

TopicQ3 2024 (Q-2)Q4 2024 (Q-1)Q1 2025 (Current)Trend
Tariffs/tradeNot a central themeReadying contingency plans; FX/tariff neutral to guidance ~$100M direct annual impact to be mitigated; ~$70M Q2 China shipment timing risk; localization and pricing actions underway Rising near-term risk; mitigation detailed
Orders/backlogOrders +12% (org +2%); backlog $3.44B; B:B 1.02 Org orders +4%; B:B 1.01; backlog ~$3.4B Orders +8% (org +3%); B:B 1.04; backlog $3.47B Improving
Destocking/ParagonDestocking headwinds; EMG org orders +12% Destocking easing; Paragon orders up double-digit seq.; ~$420M FY24 rev base Paragon led >25% orders growth within medtech; margin ~25% in Q1 Improving, 2H’25 margin tailwind
A&D end marketsMid-single-digit growth; balanced OEM/AM High single-digit FY growth; mid-single-digit Q4; strong OEM/AM Mid-single-digit FY growth expected; commercial/defense both solid Consistently strong
T&M/project delaysSome EIG project delays; funnel solid Year-end project delays; pipeline healthy Process project delays; full-year Process now roughly flat Persistent but manageable
Pricing vs inflation~3% price; +100 bps spread (Q3) ~3% price; >2% inflation; modest positive spread in 2025 Positive price/inflation spread continued in Q1 Positive spread sustained
M&A/Capital allocationVirtek acquisition; $60M buybacks Kern Microtechnik acquisition; $155M buybacks FARO deal announced; $1.25B buyback authorization; dividend up 11% Increasingly active

Management Commentary

  • “AMETEK delivered excellent results… outstanding operating performance… and deliver earnings solidly above our expectations.” — CEO David Zapico (press release) .
  • “We estimate our annual tariff impact… about $100 million… we expect to be able to offset this direct impact through our mitigating actions… we continue to expect full year sales to be up low single digits… adjusted EPS $7.02 to $7.18.” — CEO .
  • “Book-to-bill… 1.04, and we ended the first quarter with a backlog of $3.47 billion near record levels.” — CEO .
  • “In February, we announced an 11% increase in our quarterly cash dividend to $0.31 per share… Board… approved a $1.25 billion share repurchase authorization.” — CFO Dalip Puri .
  • “Paragon… orders were… substantially greater than 25%… margin was 25% in the quarter… expect substantial growth in the second half.” — CEO .

Q&A Highlights

  • Paragon/EMG inflection: Paragon orders surged (>25%), margins ~25%, with 2H acceleration expected; EMG margins seen improving as volume returns .
  • Tariff sizing and timing: ~$100M direct tariff impact mitigated; separate ~$70M Q2 China-bound high-margin shipments face timing risk (could slip into Q3), prompting no Q2 guide; mix is high incremental margin .
  • Geography/macro: U.S. growth offset by modest declines in Europe/Asia; China down ~10% in Q1; pricing offset a couple points of inflation (positive spread) .
  • Segment outlook: Process roughly flat for FY; A&D mid-single-digit growth; Power roughly flat; Automation & Engineered Solutions mid-single-digit growth as destock abates through 2025 .
  • Capital deployment: Robust M&A pipeline, willingness to buy back shares opportunistically amid dislocation .

Estimates Context

  • Q1 2025: Adjusted EPS $1.75 vs consensus $1.691* (beat); Revenue $1.732B vs consensus $1.744B* (slight miss) .
  • Q4 2024: Adjusted EPS $1.87 vs consensus $1.849* (beat); Revenue $1.762B vs consensus $1.820B* (miss) .
  • FY 2025: Company guidance $7.02–$7.18 vs EPS consensus $7.346*; sales outlook “up low single digits” vs revenue consensus ~$7.33B*—implies potential upward pressure on guidance if tariff timing issues resolve favorably, or consensus may drift toward management’s range near term .
    Values retrieved from S&P Global.*

Key Takeaways for Investors

  • High-quality beat: EPS upside driven by disciplined cost control and pricing; revenue modestly below consensus but orders/backlog imply improving trajectory into 2H .
  • Trade/tariff overhang is a near-term stock driver: ~$70M of Q2 China shipments (high-margin) could slip to Q3; management withheld Q2 guidance but reiterated FY outlook—resolution/timing will likely move the stock .
  • Paragon turning from headwind to tailwind: orders >25%, ~25% Q1 margin, and 2H upside to EMG margins as destock abates and improvement plans take hold .
  • Segments steady: A&D remains solid (mid-single-digit FY growth), while Process flattens due to project timing; Automation & Engineered Solutions set up for recovery through 2025 .
  • Cash engine intact: 112% FCF conversion, low leverage (net debt/EBITDA ~0.7x), and ample capacity to fund M&A and opportunistic buybacks .
  • Capital deployment accelerates secular exposure: FARO adds scale in 3D metrology adjacent to Creaform/Ultra Precision—expanding an attractive, differentiated portfolio .
  • Tactical setup: Watch for tariff mitigation updates, China shipment timing into Q3, and any revision cadence to FY guide; continued margin resilience could support estimate stability even on flat sales .

Footnote: Consensus estimates marked with asterisks are from S&P Global (Capital IQ).*