Ametek, Inc. (AME) reported Tuesday, higher profit for the fourth-quarter that beat Street view by a penny, helped by significant order improvement, coupled with a reduction in expenses. Along with its earnings release for quarter ended December, 31, the group provided guidance for the forthcoming first-quarter and fiscal. Separately, it announced the acquisition of assets of Sterling Ultra Precision.
The Paoli, Pennsylvania-based group posted higher quarterly net income of $51.9 million or $0.48 per share compared with $43.8 million or $0.41 per share last year. On average, ten analysts polled by Thomson Reuters expected the company to report profit of $0.47 per share for the quarter. Analysts' estimates typically exclude special items.
Ametek's quarterly net sales declined 16% year-over-year to $523.50 million, yet surpassed Wall Street prediction of $513.06 million, from $623.74 million. The company stated that it had a "good fourth quarter, despite still difficult market conditions," and saw a sequentially higher sales. Fourth-quarter orders totaled $577 million, representing a 4% increase over the fourth quarter of 2008 and a 20% sequential improvement.
Segmentally, sales at its Electronic Instruments Group, or EIG, decreased 21% to $286.0 million from $361.63 million, while sales at Electromechanical Group, or EMG, declined 9% to $237.49 million from $262.10 million. However, operating margins improved to 19.6% and 17.1% from 19.1% and 9.4%, in EIG and EMG divisions respectively.
In the EIG arm, the group saw sequential sales of instruments for research and metals applications improved, while its oil and gas related instrument businesses stabilized. Also, sequential orders grew in low double digits. EMG demonstrated sequential sales improvement in both cost driven motor and differentiated businesses, with a 30% raise in sequential order.
In the latest fourth quarter, operating income grew to $89.2 million from $82.2 million in the same period of 2008. Total operating expenses plunged to $434.30 million from $541.49 million in the prior year year period. On a sequential basis, fourth quarter operating income margins expanded 140 basis points to 17%. The group's operating cash flow rose 155% year-over-year to $109 million.
For the full year 2009, net income fell to $205.77 million or $1.91 per share from $246.96 million or $2.30 per share a year earlier. The group's sales dropped 17% to $2.09 billion from $2.53 billion in 2008.
Looking ahead, Ametek expects first-quarter earnings to be about $0.45-$0.47 per share. First-quarter sales are expected to be down to mid single digits on a percentage basis from last year's first quarter. Analysts' numbers call for earnings of $0.54 per share on revenues of $533.84 million, for the first-quarter.
For fiscal 2010, the group forecasts earnings in the range of $2.10-$2.20 per share, up 10%-15% over 2009. On a percentage basis, revenues are expected to be up low to mid single digits, from 2009. consensus estimate calls for earnings of $2.18 per share on revenues of $2.15 billion, for 2010.
"We expect our markets overall to show modest growth during 2010, with this growth becoming more evident as we move through the year. We believe that AMETEK's strong portfolio of businesses, proven operational capabilities, lower cost structure, and a successful focus on strategic acquisitions will enable us to perform well in 2010," noted Frank S. Hermance, Ametek Chairman and Chief Executive.
Acquisition of Sterling Ultra Precision
In a separate statement, Ametek announced the acquisition of the assets of Sterling Ultra Precision, a privately held reseller of machine tools for the ophthalmic lens market. The deal value was undisclosed.
Sterling Ultra Precision currently bundles Ametek's Precitech Optoform machine tools with proprietary software and specialty fixtures that are used in the design and manufacture of contact lenses, contact lens molds and intraocular lenses. Ametek's Precitech business provides ultra-precision machining systems for applications requiring nano-metric levels of accuracy. Its Optoform machine tool systems are designed specifically for the high-speed lathing of spherical, multi-curve or aspheric contact and intraocular lenses.
"Our Precitech business has a long-standing relationship with Sterling, which enjoys strong brand recognition, large customer base and excellent market share in the ophthalmic lens market. By acquiring Sterling, we gain direct access to a highly profitable niche market that has excellent growth opportunities worldwide," commented Mr. Hermance.
AME closed Monday's regular trading at $37.13, on the NYSE.
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