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AMETEK INC/ (AME)·Q4 2024 Earnings Summary

Executive Summary

  • Q4 2024 delivered record sales ($1.76B), operating income ($469M), and adjusted EPS ($1.87), with operating margin expanding to 26.6%; EIG margins hit a record 31.8% as mix and price/cost drove core margin expansion .
  • Adjusted EPS came in above company guidance ($1.81–$1.86); FY 2024 adjusted EPS was $6.83, slightly ahead of the latest guidance ($6.77–$6.82) as execution offset OEM destocking in EMG .
  • 2025 guidance: adjusted EPS $7.02–$7.18 (+3–5%); Q1 2025 adjusted EPS $1.67–$1.69 with sales roughly flat; tax rate 19–20%, capex ~$155M, FCF conversion ~115% .
  • Capital deployment catalysts: acquisition of Kern Microtechnik (~€50M sales) into Ultra Precision; dividend raised 11% to $0.31 and buyback authorization increased to $1.25B, signaling confidence in cash generation and M&A pipeline .

What Went Well and What Went Wrong

  • What Went Well

    • Record profitability and margins: “Operating margins were 26.6%…core margins…up 140 bps” with Q4 EBITDA margin 31.9% and free cash flow conversion 129% . “It’s AMETEK operational excellence…we got good productivity, positive price-cost, good mix” .
    • EIG performance: Sales $1.21B (-2% YoY) with record operating margin 31.8% and operating income up 8% to $386.6M; “EIG delivered outstanding performance…robust margin expansion” .
    • Orders/backlog momentum: Organic orders +4%, book-to-bill 1.01, backlog $3.4B; order cadence strongest in December and continued into January .

  • What Went Wrong

    • EMG organic softness: Organic sales down 4% amid OEM inventory destocking; EMG Q4 margins 20.3% (vs 22.9% in Q3), reflecting calendar/absorption effects and automation weakness .
    • Project delays in EIG: Year-end customer caution caused temporary pushouts; management expects projects to release in 2025 .
    • Mix headwinds vs prior quarter: Consolidated operating margin improved sequentially, but EMG margin compression vs Q3 highlights lingering destock timing in automation .

Financial Results

Quarterly trends (oldest → newest)

MetricQ2 2024Q3 2024Q4 2024
Revenue ($USD Billions)$1.73 $1.71 $1.76
GAAP Diluted EPS ($)$1.45 $1.47 $1.67
Adjusted Diluted EPS ($)$1.66 $1.66 $1.87
Operating Income ($USD Millions)$447.5 $445.9 $469.0
Operating Margin (%)25.8% 26.1% 26.6%
Operating Cash Flow ($USD Millions)$381.4 $487.2 $550.0
Free Cash Flow ($USD Millions)$360.0 $460.9 $498.3
Net Income ($USD Millions)$337.7 $340.2 $387.3

YoY comparison

MetricQ4 2023Q4 2024
Revenue ($USD Billions)$1.73 $1.76
GAAP Diluted EPS ($)$1.48 $1.67
Adjusted Diluted EPS ($)$1.68 $1.87
Operating Income ($USD Millions)$445.0 $469.0
Operating Margin (%)25.7% approx. (operating income $445.0 / sales $1,730.9) 26.6%

Segment breakdown

MetricQ3 2024Q4 2024
EIG Sales ($USD Billions)$1.13 $1.21
EIG Operating Income ($USD Millions)$339.0 $386.6
EIG Operating Margin (%)29.9% 31.8%
EMG Sales ($USD Millions)$574.0 $546.7
EMG Operating Income ($USD Millions)$131.5 $111.2
EMG Operating Margin (%)22.9% 20.3%

Operational KPIs

KPIQ4 2024
Organic Sales Growth (%)-3%
Organic Orders Growth (%)+4%
Book-to-Bill (ex-FX)1.01
Backlog ($USD Billions)$3.4
EBITDA Margin (%)31.9%
Free Cash Flow Conversion (%)129%
Operating Working Capital (% of Sales)16.8%
Total Debt ($USD Billions)$2.1
Net Debt / EBITDA (x)0.8x

Guidance Changes

MetricPeriodPrevious GuidanceCurrent Guidance / ActualChange
Adjusted EPSQ4 2024$1.81–$1.86 $1.87 Beat vs guidance
Adjusted EPSFY 2024$6.77–$6.82 $6.83 Beat vs guidance
Adjusted EPSFY 2025N/A$7.02–$7.18 New
Adjusted EPSQ1 2025N/A$1.67–$1.69; sales ~flat YoY New
Effective Tax RateFY 2025N/A19–20% New
Capital ExpendituresFY 2025N/A~$155M (~2% of sales) New
Free Cash Flow ConversionFY 2025N/A~115% New
D&A (incl. intangible amort.)FY 2025N/AD&A ~$400M; intangible amort. $194M ($0.83/sh) New
Dividend per quarterStarting Mar 2025$0.28 $0.31 Raised
Share Repurchase AuthorizationFeb 2025$1.0B (with ~$590M remaining) $1.25B Increased

Earnings Call Themes & Trends

TopicPrevious Mentions (Q2 & Q3 2024)Current Period (Q4 2024)Trend
Orders & BacklogCustomers more cautious; project delays; lowered sales outlook (Q2) . Double-digit orders growth and margin expansion (Q3) .Organic orders +4%; backlog $3.4B; cadence strongest in Dec/Jan .Improving momentum; supportive backlog.
OEM Destocking (EMG/Automation)Normalization to continue through 2024 (Q2) . EMG sequential margin improvement; double-digit organic orders growth (Q3) .Destock easing; EMG organic -4%; automation bottoming; Paragon orders up double-digit .Gradual improvement expected through 2025.
Aerospace & DefenseBenefiting from end-market investments (Q3) .Mid-single-digit growth expected 2025; OE and aftermarket both profitable; Q4 growth mid-single digits .Sustained strength, commercial slightly stronger.
Tariffs/Macro & FXN/AContingency plans; “China-for-China” supply chain decoupling playbook; pass-through of tariff costs; FX balanced footprint .Prepared; limited FX impact; guidance assumes no trade-war demand destruction.
Technology/AI & Product InnovationVirtek acquisition with AI-driven machine vision (Q3) .CAMECA LEAP 6000 XR launch; RD&E investments (~$85M in 2025); Kern Microtechnik acquisition .Elevated innovation; vitality index at 30% .
Regional TrendsQ2 outlook cautious; Q3 steady execution .2024: Europe/Asia up; U.S. down on automation; 2025: balanced growth across regions; China roughly flat .International strength; U.S. recovery with automation improvement.

Management Commentary

  • “Operating margins were 26.6%…core margins…up 140 basis points…EBITDA margin an impressive 31.9%…free cash flow…129%” — David A. Zapico .
  • “EIG delivered outstanding performance…record 31.8% operating margins” — David A. Zapico .
  • “We could probably spend $5B in 2025 on deals…very aggressive in M&A…balance sheet where we can do it all” — David A. Zapico .
  • “Guidance…takes into account [tariffs]; executed a China-for-China strategy…plan to pass on tariff costs…well positioned to manage through” — David A. Zapico .
  • “Effective tax rate…12.8% in Q4; FY 2025 expected 19–20%. Capex ~$155M; D&A ~$400M; intangible amortization $194M ($0.83/sh)” — Dalip Puri .

Q&A Highlights

  • EIG project delays are temporary; pipeline strong; orders improved into January; EMG destocking easing with Paragon double-digit sequential orders .
  • Price/cost: captured “a bit more than 3%” price vs “a little more than 2%” inflation in 2024; planning 1.5–2% pricing in 2025 .
  • Book-to-bill 1.01; organic orders +4%; EMG slightly more positive than EIG .
  • A&D outlook: mid-single-digit growth in 2025, OE and aftermarket both profitable; commercial slightly stronger .
  • Regional view: 2024 Europe/Asia up, U.S. down (automation); 2025 balanced growth; China roughly flat; labs demand strong in Asia .

Estimates Context

  • S&P Global consensus for Q4 2024 EPS and revenue was unavailable due to a data access limit during retrieval; therefore, a beat/miss vs Wall Street consensus cannot be assessed in this report. However, adjusted EPS was above company guidance ($1.87 vs $1.81–$1.86), and revenue grew +2% YoY, with consolidated operating margin expansion to 26.6% .
  • Where estimates may adjust: EIG margin durability and backlog/orders momentum could support upward revisions to 2025 EBIT/EBITDA assumptions; EMG organic recovery path into H2 2025 likely informs segment mix and margin updates .

Key Takeaways for Investors

  • Margin quality and cash conversion are standout: record EIG margins (31.8%), consolidated margin expansion, EBITDA margin ~32%, FCF conversion 129% — underpinning higher dividend ($0.31) and larger buyback ($1.25B) .
  • Narrative shift to offense in M&A: Kern adds ultra-precision capability; management signals capacity to deploy up to ~$5B in 2025 while maintaining conservative leverage — a potential re-rating catalyst on accretive deals .
  • Orders/backlog strength and easing destock suggest sequential organic acceleration through 2025; watch automation and Paragon trajectory for EMG margin inflection in H2 .
  • Tariff readiness and FX insulation mitigate macro shocks; guidance assumes no demand destruction — monitor policy developments but expect pass-through and supply chain agility .
  • Near-term trading: emphasize Q1 inline sales with EPS up 2–3% (adjusted $1.67–$1.69), plus dividend/buyback news flow; medium-term thesis: margin resilience, disciplined capital deployment, and innovation pipeline (vitality index 30%) sustain EPS CAGR targets .