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AMETEK INC/ (AME)·Q2 2025 Earnings Summary

Executive Summary

  • Record quarterly sales of $1.78B (+2.5% YoY), operating margin 26.0% (+20bps YoY), and adjusted EPS of $1.78 (+7% YoY); both revenue and EPS exceeded Wall Street consensus, and management raised FY25 EPS guidance .
  • Q2 beat vs S&P Global consensus: revenue $1.78B vs $1.73B (+2.5% surprise) and adjusted EPS $1.78 vs $1.69 (+5.5% surprise); 14 estimates underpin the consensus*.
  • EMG delivered standout performance: sales $618.5M (+6% YoY), operating income +17% YoY, and margin expansion to 23.3% (+210bps YoY); EIG margins remained robust at 29.7% with core margins at 30.7% .
  • FY25 adjusted EPS guidance raised to $7.06–$7.20 from $7.02–$7.18; Q3 adjusted EPS guided to $1.72–$1.76 with sales up mid-single digits; book-to-bill was 1.00 and backlog near record at $3.47B .

What Went Well and What Went Wrong

What Went Well

  • Record sales and EBITDA with “excellent core margin expansion” amid a “sluggish and uncertain economic environment,” highlighting operating flexibility and global footprint .
  • EMG posted strong organic sales/orders, record operating income, and robust margin expansion to 23.3% (+210bps YoY); management noted EMG core margins up 260bps and forecast continued margin improvement into H2 .
  • Raised FY25 EPS guidance and announced FARO acquisition (~$920M), expanding metrology and digital reality capabilities and expected to add “a couple of pennies” to 2025 with mid-teens cost synergies and a path to ~30% EBITDA over ~3 years .

What Went Wrong

  • Process businesses faced customer uncertainty and slower decision-making from global trade challenges; organic sales in process were down 3–4% despite acquisitions and FX tailwinds .
  • Research/academia and semiconductor end markets were headwinds; management sized research exposure at ~10% of AMETEK and noted U.S. funding delays may persist into Q3 .
  • China was down low single digits; while most of the previously flagged ~$70M tariff-impacted shipments went out in Q2, some remain contingent for Q3/Q4 .

Financial Results

Quarterly Financials (oldest → newest)

MetricQ2 2024Q4 2024Q1 2025Q2 2025
Revenue ($USD Billions)$1.7348 $1.7616 $1.7320 $1.7781
GAAP Diluted EPS ($)$1.45 $1.67 $1.52 $1.55
Adjusted Diluted EPS ($)$1.66 $1.87 $1.75 $1.78
Operating Income ($USD Millions)$447.5 $469.0 $454.8 $461.6
Operating Margin (%)25.8 26.6 26.3 26.0

Actual vs S&P Global Consensus – Q2 2025

MetricActualConsensus*Surprise
Revenue ($USD Billions)$1.7781 $1.7347*+$0.0434B / +2.5%*
Adjusted Diluted EPS ($)$1.78 $1.69*+$0.09 / +5.5%*
# of Estimates (EPS / Rev)—14 / 14*—

Note: * Values retrieved from S&P Global.

Segment Breakdown

SegmentQ4 2024 Sales ($MM)Q4 2024 Op Inc ($MM)Q4 2024 Op Margin (%)Q1 2025 Sales ($MM)Q1 2025 Op Inc ($MM)Q1 2025 Op Margin (%)Q2 2025 Sales ($MM)Q2 2025 Op Inc ($MM)Q2 2025 Op Margin (%)
EIG$1,214.9 $386.6 31.8 $1,143.7 $354.1 31.0 $1,159.6 $344.4 29.7
EMG$546.7 $111.2 20.3 $588.3 $128.7 21.9 $618.5 $143.9 23.3
Total$1,761.6 $469.0 26.6 $1,732.0 $454.8 26.3 $1,778.1 $461.6 26.0

KPIs and Balance Sheet Highlights

KPIQ4 2024Q1 2025Q2 2025
Operating Cash Flow ($MM)$550.0 $417.5 $359.0
Free Cash Flow ($MM)$498.3 $394.5 $330.0
FCF Conversion (%)129 112 102 (YTD)
Book-to-Bill——1.00
Backlog ($B)——$3.47
Operating Working Capital (% of Sales)——18.6
EBITDA ($MM)——$565; margin 31.8%
Cash & Equivalents ($MM)$374.0 $399.0 $619.7
Total Debt ($MM)$2,079.8 (ST+LT) $1,930.9 $1,942.0
Gross Debt / EBITDA (x)——0.85 (PF FARO: 1.25)
Net Debt / EBITDA (x)——0.6

Guidance Changes

MetricPeriodPrevious GuidanceCurrent GuidanceChange
Adjusted Diluted EPS ($)FY 2025$7.02–$7.18 $7.06–$7.20 Raised
Adjusted Diluted EPS ($)Q3 2025—$1.72–$1.76 New (quarterly)
Sales Growth (YoY %)FY 2025Low single digits Mid single digits Raised
Effective Tax Rate (%)FY 2025—19.0–19.5 Set/updated
Capex ($MM)FY 2025—~160 Set
D&A ($MM)FY 2025—~425 (incl. ~$210 after-tax amortization; ~$0.91/sh) Set
Dividend ($/share)Q3 2025—$0.31, payable Sep 30, 2025 Declared

Guidance clarifications: Starting Q3, adjusted cash EPS will exclude one-time acquisition-related costs and restructuring charges for FARO and future deals .

Earnings Call Themes & Trends

TopicPrevious Mentions (Q4’24, Q1’25)Current Period (Q2’25)Trend
Tariffs/MacroOutlook framed with low-single-digit FY25 growth; mitigation actions anticipated Executing tariff response plans; positive price/cost spread; most of flagged ~$70M China shipments went out; organic process demand hindered by uncertainty Improving mitigation, uncertainty fading
Aerospace & DefenseStrength cited across A&D in Q4 A&D organic growth high single digits; book-to-bill above 1.0; broad-based strength Strengthening
Automation/ParagonQ4: EMG growth aided by Paragon; Q1: Paragon orders strong Destock over; robust orders; EMG margin +260bps core; Paragon at 30%+ EBITDA margins Inflecting up
Research/AcademiaNot highlighted in Q4; Q1 noted uncertainty Research ~10% of AME; U.S. funding delays; headwind in Q3; semiconductor also soft Headwind persists
FXNot emphasized~1% top-line tailwind but bottom line naturally hedged Neutral to modest tailwind
FARO AcquisitionAnnounced/closed~$920M; mid-teens cost synergies; path to ~30% EBITDA in ~3 years; 2025 adds a “couple of pennies” Integration upside
Tax/Policy—Effective tax rate 19–19.5%; tax reconciliation bill seen favorably Clarified FY outlook
Capex/R&D—Capex ~ $160M; incremental $85M strategic growth investments in R,D&E and S&M; vitality index 26% Sustained investment

Management Commentary

  • “We delivered record sales and EBITDA, strong earnings growth, and excellent core margin expansion against the backdrop of a sluggish and uncertain economic environment.” — David A. Zapico, CEO .
  • “EMG had an excellent quarter… record-level operating income and robust margin expansion.” — David A. Zapico .
  • “Book to bill in the quarter was 1.00, and we ended the second quarter with a backlog of $3.47 billion, near record levels.” — Prepared remarks .
  • “We have mid-teens cost synergy [for FARO]… from ~15% EBITDA to ~30% in about three years.” — CEO on FARO integration .
  • “We saw direct benefits from [tariff mitigation] actions in the second quarter, including pricing, supply chain changes, and localization.” — CEO .

Q&A Highlights

  • Guidance conservatism and tariff dynamics: management acknowledged a “bit of conservatism” in Q3 guide; most of the previously flagged $70M China shipments went out in Q2, with remainder expected in Q3/Q4; tariff headwinds ($100M) are being effectively offset .
  • EMG margin trajectory: EMG margins expanded 210bps reported and 260bps core; management expects continued margin improvement in H2, supported by Paragon and automation recovery .
  • FARO integration and synergy outlook: couple of pennies accretion in 2025; mid-teens cost synergies; longer-term path to ~30% EBITDA through AMETEK operating playbook (analogy to Zygote) .
  • Orders/backlog cadence: overall orders +6% in Q2; EMG double-digit orders; June strongest month; book-to-bill 1.00; A&D book-to-bill >1 due to backlog nature .
  • End-market color: A&D high single-digit organic growth; power/industrial improving; process sluggish due to research/semiconductor headwinds; automation inflecting upward .

Estimates Context

  • Q2 beat vs consensus: revenue $1.778B vs $1.735B*, EPS (adjusted) $1.78 vs $1.69*; 14 estimates for both EPS and revenue underpin consensus*.
  • Prior quarters: Q1 actual $1.75 adjusted EPS vs $1.69* consensus; Q4 actual $1.87 adjusted EPS vs $1.85* consensus; Q2 2024 actual $1.66 vs $1.64* consensus*.
  • Implications: FY25 EPS guidance raised and segment trajectory (EMG) improving suggest upward estimate revisions for H2, particularly margins and adjusted EPS.
    Note: * Values retrieved from S&P Global.

Consensus vs Actuals (selected periods)

PeriodRevenue Consensus ($B)*Revenue Actual ($B)EPS Consensus ($)*EPS Actual ($, Adjusted)
Q2 20241.7817*1.7348 1.6439*1.66
Q4 20241.8198*1.7616 1.8493*1.87
Q1 20251.7438*1.7320 1.6907*1.75
Q2 20251.7347*1.7781 1.6865*1.78

Note: * Values retrieved from S&P Global.

Key Takeaways for Investors

  • Quality beat with raised FY guidance: both top line and adjusted EPS exceeded consensus, and FY25 EPS range moved higher; expect incremental upward estimate revisions and supportive sentiment .
  • EMG inflection drives margin narrative: automation destock is over; Paragon and automation strength underpin sustained EMG margin expansion into H2, a core driver for continued EPS leverage .
  • FARO integration offers multi-year upside: synergy realization and operating discipline point to material EBITDA margin uplift (toward ~30% in ~3 years), expanding AME’s metrology/digital reality portfolio .
  • Cash flow/Balance sheet optionality: strong FCF (YTD conversion 102%), low net leverage (net debt/EBITDA 0.6), and over $2B of cash/credit capacity support ongoing strategic M&A and shareholder returns .
  • Macro/trade risks being managed: tariff impacts offset by pricing/supply chain/localization; uncertainty remains a near-term headwind for process and research/semiconductor, but backlog and book-to-bill provide visibility .
  • Near-term trading setup: Q3 guide carries modest conservatism; with EMG momentum and backlog strength, downside appears buffered—watch integration updates on FARO and order cadence across A&D and automation .
  • Medium-term thesis: durable margin structure, accretive M&A, and secular exposures (A&D, grid modernization, metrology/digital reality) support compounding EPS and cash generation; valuation sensitivity hinges on execution of EMG margin expansion and FARO synergies .