Why it is profiled? Poised to benefit from improving economy
After enduring a tough 2009, Ametek Inc. (AME), a maker of precision instruments, is beginning to see signs of improved performance in its served market segments.
The company, which has operations in North America, Europe, Asia and South America, has two reportable segments - EIG (Electronic Instruments Group) and EMG (Electromechanical Group). Ametek serves the aerospace, defense, mass transit, medical, office products, power and other industrial markets.
Read on to find out more...
Over the past five years from 2005 through 2009, except for one down year in 2009, Ametek's sales and earnings have increased year over year.
In 2009, revenues decreased 17% from the previous year to $2.1 billion. Earnings for the year also declined to $205.7 million or $1.91 per share from $274 million or $2.55 per share in 2008. Ametek's 2009 results were impacted by the distress in financial markets, as well as a general slowdown in demand, including in many of the end markets the company serves.
New orders for 2009 were $2.03 billion, a decrease of 20.8% when compared with $2.56 billion in 2008. Due to lower order rates as a result of the global economic recession, in 2009, EIG segment's sales declined 18% from the prior year to $1.15 billion while the EMG segment's sales dropped nearly 16% to $0.95 billion.
The EIG segment accounted for 54% of net sales in 2009 while the EMG segment accounted for the remaining 46%. The international sales accounted for 49.2% of consolidated sales in 2009, up from 48.4% of consolidated sales in 2008.
With improving economy, the company has begun to see strong order trends in many of its markets, with particular strength in its shorter cycle businesses.
In the first quarter ended March 31, 2010, Ametek's revenue improved to $556.6 million from $552.8 million in the year-ago quarter. Orders for the first quarter of 2010 were $582 million, up 19% over the first quarter of 2009. The international sales accounted for 51% of consolidated sales in the first quarter of 2010.
The EIG segment's sales for the quarter were $298.6 million, a decline of 1.2% from last year, while the EMG segment's sales were $257.9 million, an increase of 3% over the same period of 2009.
The company's net income for the quarter declined to $57.9 million or $0.54 per share from $59.1 million or $0.55 per share in the year-ago quarter on slightly higher operating expenses.
Looking ahead, Ametek expects its markets overall to show good growth during 2010 and remains optimistic of benefiting from the leveraged impact of core growth and its streamlined cost structure.
For the second quarter of 2010, the company expects earnings to range between $0.53 and $0.55 per share, and sales to be up mid single digits on a percentage basis from the comparable year-ago quarter. In the second quarter of 2009, Ametek earned $51.8 million or $0.48 per and generated sales of $524.9 million. Wall Street analysts have earnings estimate pegged at $0.55 per share and sales growth estimate of 5.5%.
Ametek foresees 2010 revenue also to be up mid single digits on a percentage basis from 2009. The company expects earnings for the year to range between $2.20 and $2.28 per share, up 15% to 19% over 2009. Wall Street analysts are looking for earnings of $2.24 per share and sales growth of 5.6%.
In January 2009, Ametek embarked on a restructuring plan that included job cuts to realign its cost structure with expected market conditions.
As part of the restructuring plan, Ametek has reduced its workforce by about 1,900 since the beginning of 2009 and more than 2,600 people since June of 2008. At December 31, 2009, the company employed approximately 10,100 people in its EMG, EIG and corporate operations. As a result of the restructuring activities and reduced spending helped by global sourcing office and strategic procurement initiatives, the company saved $135 million last year and expects to save $22 million this year.
Strategic acquisitions are part of the company's growth strategies. Since the beginning of 2005, through December 31, 2009, Ametek has completed 24 acquisitions. In January of this year, Ametek acquired the assets of Sterling Ultra Precision, a privately held reseller of machine tools for the ophthalmic lens market. Last month, the company acquired Imago Scientific Instruments, a privately held manufacturer of 3D atom probes, based in Madison, Wisconsin. The company expects to close a number of deals in the reminder of this year.
Ametek pays a quarterly dividend of $0.06 per share and the annual dividend yield is 0.6%. At the end of the most recent quarter, the company had $260.93 million in cash and $1.03 billion in total debt.
The improving economy, lower cost structure, and a successful focus on strategic acquisitions can be expected to drive Ametek's sales and earnings in the coming quarters.
AME has thus far hit a 52-week low of $29.62 and 52-week high of $44.38. The stock is currently trading around $43 - above its 50-day and 200-day moving averages.
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May 01, 2026 15:54 ET Central banks dominated the economics news flow this week with almost all major ones announcing their latest policy decisions and many boosted expectations for a rate hike in June. In other news, several countries released the preliminary data for first quarter economic growth. In the U.S., comments by Fed Chair Jerome Powell were also in focus as his term ends this month.