AMETEK Achieves Record Earnings; Cash Flow from Operations Up 35%.Business Editors PAOLI, Pa.--(BUSINESS WIRE)--Oct. 20, 2003 AMETEK Inc. (NYSE NYSE See: New York Stock Exchange :AME See AIT. ) today announced strong third quarter results that established records for operating income Operating Income The profit realized from a business' own operations. Notes: This would not include income from things such as investments in other firms. Also referred to as operating profit or recurring profit. and net income. AMETEK's operating income for the third quarter of 2003 was $39.5 million, up 4% from the third quarter of 2002. Net income of $21.9 million and diluted earnings per share diluted earnings per share An earnings measure calculated by dividing net income less preferred stock dividends for a period by the average number of shares of common stock that would be outstanding if all convertible securities were converted into shares of of $0.65 are up 2% from year-ago levels. Third quarter 2003 sales of $267.8 million were up 4% from the $257.0 million recorded in the third quarter of 2002. This year's third quarter earnings include a one-time, non-cash expense Noun 1. non-cash expense - an expense (such as depreciation) that is not paid for in cash disbursal, disbursement, expense - amounts paid for goods and services that may be currently tax deductible (as opposed to capital expenditures) of $2.1 million, or $0.06 per diluted di·lute tr.v. di·lut·ed, di·lut·ing, di·lutes 1. To make thinner or less concentrated by adding a liquid such as water. 2. To lessen the force, strength, purity, or brilliance of, especially by admixture. share, reflecting the accelerated recognition of deferred compensation expense related to the vesting Vesting The process by which employees accrue non-forfeitable rights over employer contributions that are made to the employee's qualified retirement plan account. Notes: of restricted stock granted to the Company's chairman and chief executive officer. Excluding this expense, operating income would have been $41.6 million, up 9% over the third quarter of 2002. Similarly, earnings would have increased 12% to $24.0 million and diluted earnings per share would have been $0.71, up 11% over the same period of last year. The Company continues to generate strong cash flow. Cash flow from operations Cash flow from operations A firm's net cash inflow resulting directly from its regular operations (disregarding extraordinary items such as the sale of fixed assets or transaction costs associated with issuing securities), calculated as the sum of net income plus noncash expenses was $31.8 million in this year's third quarter and $108.1 million for the first nine months of 2003, each up 35% over the same period of 2002. "AMETEK achieved solid results during the third quarter, despite what continues to be a challenging economic environment for manufacturers," commented Frank S. Hermance, AMETEK Chairman and Chief Executive Officer. "Our revenue growth was driven by the recent acquisitions of Airtechnology Holdings, Solidstate Controls and Chandler Chandler, city (1990 pop. 90,533), Maricopa co., S central Ariz., in the Salt River valley; inc. 1920. It is both a residential community and a center for research and technology. Tourism is also important, and the San Marcos Golf Resort is in Chandler. Instruments, all of which were completed in 2003. These acquisitions and operational excellence improvements across the Company drove our record earnings performance." For the first nine months of 2003, AMETEK sales increased 3% to $812.2 million from $788.0 million in the same period of 2002. Operating income totaled $114.9 million, a 2% increase from $112.2 million earned in the first nine months of last year. Net income for the first nine months of 2003 was $63.5 million, up 2% from $62.4 million in the same period of 2002. Diluted earnings per share were up 1% to $1.88 for the first nine months of 2003. Excluding the compensation expense noted above, operating income for the first nine months of 2003 would have totaled $117.0 million, up 4% over the same period of 2002. Similarly, earnings would have been up 5% to $65.6 million and diluted earnings per share would have been $1.95, also up 5% from the same period of 2002. Electronic Instruments Group (EIG EIG Excellence in Government EIG Engineering Installation Group EIG Evènement Indésirable Grave (French) EIG Erie Insurance Group EIG Ecole Internationale de Genève (French) ) EIG's third quarter 2003 sales were $139.0 million, up 3% from last year's level of $134.7 million. Third quarter group operating income of $24.9 million, was up 9% versus $22.8 million in the same period of 2002. Group operating margins Operating Margin A ratio used to measure a company's pricing strategy and operating efficiency. Calculated by: were 17.9%, up from 16.9% recorded in the third quarter of 2002. "EIG had a great quarter," added Mr. Hermance. "Revenue for the group was up, driven by the Solidstate Controls and Chandler Instruments acquisitions. Margins expanded as a result of improved profitability in our aerospace and power businesses despite the significant market downturn Downturn The transition point between a rising, expanding economy to a falling, contracting one. downturn A decline in security prices or economic activity following a period of rising or stable prices or activity. , as well as the impact of operational excellence activities throughout the Group." Electromechanical The use of electricity to run moving parts. Disk drives, printers and motors are examples. Electromechanical systems must be designed for the eventual deterioration of moving components that wear over time. The first TVs were electromechanical systems (see video/TV history). Group (EMG EMG abbr. electromyogram Electromyography (EMG) A diagnostic test that records the electrical activity of muscles. ) EMG's sales of $128.8 million were up 5% from $122.3 million in the third quarter of 2002. Third quarter group operating income of $21.6 million was up 11%, compared with the $19.5 million reported for the same period of 2002. EMG's operating margin in the third quarter of 2003 was 16.8%, up from 16.0% in the third quarter of 2002. "EMG also had a great quarter. Revenues benefited from the contribution of Airtechnology, acquired during the first quarter. Our European motor businesses continue to perform well, while our U.S. floor care and specialty motor businesses are weak. Operating margins were up on strength in our differentiated technical motor platform. Both our core Rotron motor business and the recently acquired Airtechnology business performed well in the quarter," added Mr. Hermance. Outlook "Many macroeconomic mac·ro·ec·o·nom·ics n. (used with a sing. verb) The study of the overall aspects and workings of a national economy, such as income, output, and the interrelationship among diverse economic sectors. indicators point to an improving economy, however we have not yet seen our business levels increase. While we are poised to capitalize on Cap´i`tal`ize on` v. t. 1. To turn (an opportunity) to one's advantage; to take advantage of (a situation); to profit from; as, to capitalize on an opponent's mistakes s>. an economic recovery when it occurs, we continue to closely manage our cost structure. For the full year 2003, we anticipate mid single-digit revenue growth with diluted earnings per share of approximately $2.60," concluded Mr. Hermance. Acquisition of Chandler Instruments Effective August 28, 2003, AMETEK acquired Chandler Instruments Company, LLC (Logical Link Control) See "LANs" under data link protocol. LLC - Logical Link Control , a leading manufacturer of high-quality measurement instrumentation instrumentation, in music: see orchestra and orchestration. instrumentation In technology, the development and use of precise measuring, analysis, and control equipment. for the oil and gas industry, for approximately $50 million. With its headquarters in Tulsa, OK, Chandler has annual sales of approximately $30 million. "We are very pleased with our acquisition of Chandler Instruments," commented AMETEK Chairman and Chief Executive Officer Frank S. Hermance. "This acquisition further expands our high-end analytical analytical, analytic pertaining to or emanating from analysis. analytical control control of confounding by analysis of the results of a trial or test. instrument platform, building on a set of differentiated, higher-growth businesses that now total nearly $180 million in revenue." "Chandler adds to AMETEK's strong presence in the oil and gas industry by expanding into upstream From the consumer to the provider. See downstream. (networking) upstream - Fewer network hops away from a backbone or hub. For example, a small ISP that connects to the Internet through a larger ISP that has their own connection to the backbone is downstream from the larger drilling and completion instruments and extends our product offering in downstream From the provider to the customer. Downloading files and Web pages from the Internet is the downstream side. The upstream is from the customer to the provider (requesting a Web page, sending e-mail, etc.). markets, adding new technologies and customers," he added. Chandler Instruments designs and manufactures products through two operating companies operating company A business that engages in transactions with outsiders. : Chandler Engineering and Grabner Instruments. Chandler Engineering focuses on upstream markets of oil and gas exploration and production, selling to many of the world's major integrated petroleum and oil services companies. It produces instruments for the drilling and completion market as well as instrumentation for production enhancement, reservoir development and pipeline transmission. Grabner, based in Austria, is a world leader in the design and manufacture of test instruments for analyzing fuels and other liquids. Grabner produces vapor pressure vapor pressure, pressure exerted by a vapor that is in equilibrium with its liquid. A liquid standing in a sealed beaker is actually a dynamic system: some molecules of the liquid are evaporating to form vapor and some molecules of vapor are condensing to form liquid. measurement instruments, flash point analyzers and spectrometers. Its products focus on downstream petroleum refining refining, any of various processes for separating impurities from crude or semifinished materials. It includes the finer processes of metallurgy, the fractional distillation of petroleum into its commercial products, and the purifying of cane, beet, and maple sugar and distribution markets as well as the fragrance, flavors and paint markets. Conference Call AMETEK, Inc. will Web cast it's Third Quarter 2003 investor conference call on Tuesday, October 21, 2003, beginning at 9:00 AM ET. The live audio Web cast will be available at www.ametek.com/investors and at www.streetevents.com. To access the Web cast from ametek.com, click on the Audio Conference Call link. The call will be archived at www.ametek.com/investors. To access the audio archive, click on the Audio Conference Call link in the Investors Section. Corporate Profile AMETEK is a leading global manufacturer of electronic instruments and electric motors with 2002 sales of more than $1 billion. AMETEK's Corporate Growth Plan is based on Four Key Strategies: Operational Excellence, Strategic Acquisitions & Alliances, Global & Market Expansion and New Products. AMETEK's objective is double-digit percentage growth in earnings per share over the business cycle and a superior return on total capital. The common stock of AMETEK is a component of the S&P MidCap mid·cap adj. 1. Or or relating to corporations whose retained earnings and outstanding shares of common stock have a value between those of small cap companies and large cap corporations. 2. 400 Index and the Russell 1000 Index The Russell 1000 Index is a stock market index of US stocks. The ticker is "RUI" or similar. See Russell Indexes page for main discussion. See also the iShares Russell 1000. External links
Forward-looking Information Statements in this news release that are not historical are considered "forward-looking statements forward-looking statement A projected financial statement based on management expectations. A forward-looking statement involves risks with regard to the accuracy of assumptions underlying the projections. " and are subject to change based on various factors and uncertainties that may cause actual results to differ significantly from expectations. Those factors are contained in AMETEK's Securities and Exchange Commission filings. (Financial Information Follows)
AMETEK, Inc.
CONSOLIDATED STATEMENT OF INCOME (Unaudited)
(In thousands, except per share amounts)
Three months ended Nine months ended
September 30, September 30,
------------------- -------------------
2003 2002 2003 2002
--------- --------- --------- ---------
Net sales $267,781 $256,995 $812,182 $787,979
--------- --------- --------- ---------
Expenses:
Cost of sales, excluding
depreciation 190,049 184,550 586,398 570,756
Selling, general and
administrative (a) 30,130 26,123 85,697 80,907
Depreciation 8,123 8,262 25,191 24,118
--------- --------- --------- ---------
Total expenses 228,302 218,935 697,286 675,781
--------- --------- --------- ---------
Operating income (a) 39,479 38,060 114,896 112,198
Other income (expenses):
Interest expense (6,459) (6,175) (19,426) (19,452)
Other, net 160 (591) (939) (701)
--------- --------- --------- ---------
Income before income taxes 33,180 31,294 94,531 92,045
Provision for income taxes 11,262 9,913 31,079 29,674
--------- --------- --------- ---------
Net Income (a) $21,918 $21,381 $63,452 $62,371
========= ========= ========= =========
Diluted earnings per share (a) $0.65 $0.64 $1.88 $1.86
========= ========= ========= =========
Basic earnings per share (a) $0.66 $0.65 $1.92 $1.90
========= ========= ========= =========
Average common shares
outstanding:
Diluted shares 33,861 33,566 33,694 33,623
========= ========= ========= =========
Basic shares 33,237 32,926 33,036 32,906
========= ========= ========= =========
Dividends per share $0.06 $0.06 $0.18 $0.18
========= ========= ========= =========
(a) The three and nine month periods ended September 30, 2003 include
a third quarter non-cash charge of $2.1 million, or $0.06 per
share, reflecting the accelerated amortization of deferred
compensation expense due to the vesting of restricted stock.
AMETEK, INC.
INFORMATION BY BUSINESS SEGMENT (Unaudited)
(In thousands)
Three months ended Nine months ended
September 30, September 30,
------------------- -------------------
2003 2002 2003 2002
--------- --------- --------- ---------
Net sales
------------------------------
Electronic Instruments $138,978 $134,726 $409,942 $406,835
Electromechanical 128,803 122,269 402,240 381,144
--------- --------- --------- ---------
Total Consolidated $267,781 $256,995 $812,182 $787,979
========= ========= ========= =========
Operating income
------------------------------
Electronic Instruments $24,886 $22,826 $66,753 $64,442
Electromechanical 21,640 19,549 65,131 61,986
--------- --------- --------- ---------
Total segments 46,526 42,375 131,884 126,428
Corporate and other (a) (7,047) (4,315) (16,988) (14,230)
--------- --------- --------- ---------
Total Consolidated (a) $39,479 $38,060 $114,896 $112,198
========= ========= ========= =========
(a) See note on Consolidated Statement of Income.
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