Q1 2023 AMETEK Inc. Earnings Call
Speaker 1: Uh,
Speaker 2: Four.
Speaker 3: Good day and thank you for standing by. Welcome to the Amatech First Quarter Earnings Conference call. At this time, all participants are in a listen-only mode. After the speaker's presentation, there will be a question and answer session. To ask a question during the session, you'll need to press star 11 on your telephone.
Speaker 3: You'll then hear an automated message advising your hand is raised. To withdraw your question, press star 1 1 again.
Speaker 3: Please be advised that today's conference is being recorded. I would now like to hand the conference over to Kevin Coleman, Vice President of Investor Relations and Treasurer. Please go ahead.
Speaker 4: Thank you, Chris. Good morning and thank you for joining us for Amitex first quarter, 2020 three earnings conference call. With me today are Dave Zappico, chairman and chief executive officer, and Bill Burke, executive vice president and chief financial officer.
Speaker 4: During the course of today's call, we will be making forward-looking statements which are subject to change based on various risk factors and uncertainties that may cause actual results to differ significantly from expectations.
Speaker 4: A detailed discussion of the risk and uncertainties that may affect our future results is contained in Amatex filings with the SEC. Amatex disclaims any intention or obligation to update or revise any forward-looking statements.
Speaker 4: Any references made on this call to 2022 or 2023 results or to 2023 guidance will be on an adjusted basis.
Speaker 4: excluding aftertacks, acquisition related intangible amortization.
Speaker 4: Reconciliation between GAP and adjusted measures can be found in our press release and on the Investor section of our website. We'll begin today's call with prepared remarks by Dave and Bill and then we'll open it up for questions. I'll now turn the meeting over to Dave.
Speaker 5: Thank you Kevin and good morning everyone.
Speaker 5: Amitech had an excellent start to 2023, with outstanding results in the first quarter.
Speaker 5: Continue to all of the demand across our diverse set of M markets, let the strong sales and orders growth and another record back up.
Speaker 5: Our businesses deliver tremendous operating performance with record operating profit and robust margin expansion in the quarter.
Speaker 5: Additionally, we generated record casulos and deployed a portion of that caselo on our first acquisition of the year by think gear and engineering.
Speaker 5: Give any results and the outlook for the remainder of 2023. We are increasing our sales and earnings guidance for the full year.
Speaker 5: Now let me turn to our first quarter results.
Speaker 5: First quarter sales were $1.6 billion.
Speaker 5: Up 10% over the same period in 2022.
Speaker 5: Organic sales growth was actually at 9%.
Speaker 5: Acquisitions added two points while form currency was a sling head one.
Speaker 5: Amatex continues strong organic sales growth reflects the success of our organic growth initiatives and our leadership positions across diverse and attractive niche markets.
Speaker 5: The man also remains solid with overall order scrung 6% in the quarter.
Speaker 5: Organic orders were up low single digits on a percentage basis against a difficult prior year comparison.
Speaker 5: Book to Bill was 1.13 in the quarter or 11th consecutive quarter of positive book to Bill.
Speaker 5: We ended the quarter with a record backlog of $3.4 billion, an increase of over $200 million from the end of 2022.
Speaker 5: As noted, Amitex operating performance in the first quarter was exceptional.
Speaker 5: Our operating income in the quarter was a record, $405.5 million. A 15% increase over the first quarter of 2022.
Speaker 5: Operating margins were a record 25.4% in the quarter, up 120 basis points from the prior year.
Speaker 5: Core operating margins, which exclude I debt acquisition dilution and the game from a facility sale on the first quarter of 2022. We're up an impressive 180 basis point.
Speaker 5: with strong cord margin expansion in each group.
Speaker 5: EBITDA on the quarter was $482 million, up 11% over the prior year, and EBITDA margins were 30.2%.
Speaker 5: This outstanding margin expansion is a testament to the strength of our operating model, the differentiation of our businesses, and the great work of our teams.
Speaker 5: This tremendous operating performance led to a high quality of earnings with the alluded earnings per share of $1.49 up 12% versus a prior.
Speaker 5: First quarter of 2022 and above our guidance range of $1.38.42 per share.
Speaker 5: Now let me provide some additional details at the operating group level.
Speaker 5: First, the electronic instruments group.
Speaker 5: EIG delivered excellent sales growth and operating performance with sales up 13% versus the prior year to $1.12 billion.
Speaker 5: Organic sales were up 11 percent. Acquisitions added 3 percentage points with foreign currency as slight headwind in the quarter. This strong organic sales growth means a broad base across our businesses and geographies with growth particularly strong across our aerospace and defense businesses in the quarter. This strong organic sales growth means a broad base across our business and geographies with growth.
Speaker 5: He had used operating profit was impressive resulting in a record operating profit in the quarter.
Speaker 5: Operating income was $309.7 million, up 27% versus a prior year.
Speaker 5: While EIG margins were 27.7 percent, upper or busts, 290 basis points from the prior year.
Speaker 5: The electromechanical group also delivered excellent results in the quarter with solid organic sales growth and strong operating performance.
Speaker 5: EMG's first quarter sales for $479.9 million, up 2% versus a prior year, with organic sales growing 4% in the quarter and foreign currency at 2.1.
Speaker 5: Growth was notably stronger across our aerospace and defense businesses in the order.
Speaker 5: EMG's offering income in the first quarter was $120.5 million and operating margins were 25.1%. On a court basis, excluding acquisition dilution and the gain from a facility sale in the first quarter of 2022.
Speaker 5: EMG margins were up 50 basis points versus last year's first quarter.
Speaker 5: So overall, tremendous performance by our businesses and all Amatech colleagues.
Speaker 5: All elements of the Amitech Roof model. Operational Excellence.
Speaker 5: global market expansion, new product development, and strategic acquisitions are working well.
Speaker 5: These strategies allow us to quickly react to changing market conditions, invest in our businesses for long term growth, and deploy our capital on value enhancing acquisitions.
Speaker 5: Now switching to our Capital Deployment and Acquisition Strategy.
Speaker 5: The primary focus for our strong cash flow remains strategic acquisitions. We are managing an active pipeline of attractive acquisitions in this, and we have a strong balance sheet and significant financial opacity to support this strategy.
Speaker 5: I'm excited to announce our most recent acquisition.
Speaker 5: Bison gear and engineering.
Speaker 5: The BICIN is an excellent strategic fit with Amatex Automation businesses.
Speaker 5: helping expand our presence within this attractive secular growth market.
Speaker 5: Bison as a leading provider of customized motion control solutions.
Speaker 5: for use across a wide range of high precision applications within the automation, food and beverage, power and transportation markets.
Speaker 5: providing an expanded product offering that enables wider and deeper market participation in attractive markets and applications, including growing electrification requirements.
Speaker 5: Placin is based in St. Charles's Illinois and is annual sales of approximately $80 million.
Speaker 5: In addition to our acquisition strategy, we remain focused on ensuring sustainable growth by investing in our panic growth initiatives.
Speaker 5: For all of 2023, we now expect to invest approximately $100 million in support of these growth initiatives, including investments in research, development, and engineering, and sales and marketing. One way we celebrate and recognize the great work of our businesses, new product development efforts is through the Amitech Innovation Award. This award is provided annually to the Amitech Business who best demonstrates breakthrough innovation of new technology driving expanded organic growth opportunity.
Speaker 5: For developing its innovative new handheld 3D metrology solution, PIL3. Pre-eform based in Levy, Canada is a leading provider of 3D portable and automated measurement technologies for applications such as reverse engineering, quality control, product development, and non-destructive testing. The introduction of PIL3 further expands the breadth of pre-eforms metrology offering that makes IN 3D scanning accessible to professionals and small enterprises opening up a new attractive market segment.
Speaker 5: pre-eform also recently added a new scanner to their Andy scan 3d platform.
Speaker 5: also recently added a new scanner to their Andy scan 3d platform. The Andy scan black elite limited.
Speaker 5: The latest addition to CREA-Forms flagship metrology grade 3G scanners set a new industry standard for handheld devices. I would like to extend my congratulations to the entire CREA-Form team for innovative new products and ongoing efforts to push into boundaries and metrology. Now, I'll turn into our outlook for the remainder of the year.
Speaker 5: We remain cautious in the short term due to uncertainties in the macroeconomic environment.
Speaker 5: However, given the strength of the Mentech growth model and our proven operations capabilities, we are confident in our ability to manage through these challenges.
Speaker 5: The company's record backlog and leadership positions across attractive, made in long-fleckle markets, positioned us well for continued strong growth. Given our strong first quarter results, and I'll look for the balance of the year, we are increasing our sales and earnings guidance.
Speaker 5: For the full year, we now expect overall sales to be up mid to high single digits first or prior guidance about mid single digits.
Speaker 5: For the full year, we now expect overall sales to be up mid to high single digits first or prior guidance about mid single digits, with organic sales expected to be up mid single digits.
Speaker 5: The alluded earnings per share for the year are now expected to be in the range of $5.96.
Speaker 5: to $6.10, up 5 to 7% compared to last year's results.
Speaker 5: This is an increase from our previous guidance range of $5.84 to $6 per dilute chair.
Speaker 5: for the second quarter.
Speaker 5: We anticipate overall sales to be up mid to high single digits with earnings of a dollar 49 to a dollar 51 per share up 8 to 9% versus a prior year and Summary amitech had an excellent first quarter
Speaker 5: Market leading positions in attractive markets, and proven operating capabilities have allowed us to navigate through challenging economic cycles. Additionally, M-A-Tex strong cash lows and robust balance sheet provide us meaningful flexibility to deploy capital to drive shareholder value. We were made well positioned for continued long-term approval. I will now turn it over to Bill Burke, who will cover some of the financial details of the quarter. Then we will be glad to take your questions. Bill.
Speaker 4: Thank you, Dave. Dave noted Amatech had an outstanding first quarter positioning us well to start the year. We delivered record-level operating performance and a high quality of earnings.
Speaker 4: Let me provide some additional financial highlights. First quarter, general administrative expenses were $24.7 million, up $5 million from the prior year due to higher compensation expense, as well as the return to more normal levels.
Speaker 4: discretionary spending. For 2023, general administrative expenses are expected to be up modestly versus 2022 levels and approximately 1.4% of sales below 2022's level of 1.5% of sales.
Speaker 4: Other incumbent expense was a headwind of $8 million in the quarter due largely to lower pension income and higher due diligence costs.
Speaker 4: The effective tax rate in the first quarter was 19.5% versus 19% in the first quarter of 2022. The second quarter was 19.5% versus 19.5% versus 20% versus 20% versus 20% versus 20%
Speaker 4: For 2023, we continue to anticipate our effective tax rate to be between 19% and 20%. As we stated in the past, actual quarterly tax rates can differ dramatically, either positively or negatively from this full-year estimated rate.
Speaker 4: Capital expenditures in the first quarter were $20 million, and we expect capital expenditures to be approximately $140 million for the whole year, or about 2% of sales.
Speaker 5: depreciation and amortization expense in the quarter was $82 million.
Speaker 5: The full year we expect depreciation and amortization to be approximately $335 million, including after tax acquisition related intangible amortization of approximately $157 million or 68 cents per diluted share. Working capital in the first quarter was 19.2%
Speaker 4: $367 million, up 110% over the prior year.
Speaker 5: While free cash flow conversion was a very strong 120% of net income.
Speaker 5: Total debt at March 31st was $2.25 billion, down from $2.4 billion at the end of 2022.
Speaker 4: of setting this debt is cash and cash equivalence at $400 million.
Speaker 5: Our gross debt to EBITDA ratio at the end of the first quarter was 1.1 times, and our net debt to EBITDA ratio was 0.9 times.
Speaker 5: During the first quarter we acquired Bison Gear and Engineering and we remain very well positioned to deploy additional capital given the strength of our balance sheet and strong cash flows.
Speaker 4: We have significant financial capacity with approximately $2.6 billion of cash and existing credit facilities to support our growth initiatives.
Speaker 4: In summary, our businesses delivered exceptional results to start the year with strong organic sales growth, robust margin expansion, and high quality earnings. Kevin? Thank you, Bill. Chris, can we please open the lines for questions?
Speaker 3: Thank you. At this time, we'll conduct the questions answer session. As a reminder, to ask a question, you will need to press star 11 on your telephone and wait for your name to be announced.
Speaker 3: To withdraw your question, please press star 1-1 again.
Speaker 3: Please stand by while we compile the Q&A roster. Our first question comes from Matt Somerville of DA David Sidden Company. Your line is now open.
Speaker 6: Thanks, Morning. A couple questions. Dave, can you remind us what you considered to be your canary like businesses and how they may be informing your go-forward kind of view on the environment? Obviously, you sound pretty positive this morning, and then I have a follow-up.
Speaker 6: morning. A couple questions. Dave, can you remind us what you consider to be your canary like businesses and how they may be informing your go-forward kind of view on the environment? Obviously, you sound pretty positive this morning and then I have a follow-up.
Speaker 5: We have largely mid and long cycle businesses, so we don't have a short cycle canary. And what used to be our canary was our cost-driven motor business in the floor care market, but we've largely, that's not a part of the portfolio.
What we're looking at right now is really strength across our portfolio. So we don't see any canaries right now.
And just to follow up Dave, can you talk about where you were in Q1 with respect to price costs? That's what it looked like and the magnitude of absolute realization you expect in 2023 versus 2022. Thank you. Right. Great question Matt. In that first quarter. Our pricing continued to more than offset inflation.
Our pricing was a bit more than 5% and inflation was about 4%.
We had a spread of a little more than 100 basis points. And for the full year, we expect the incremental pricing to moderate a bit. So we think we'll get 4% for the entire year. So and the results speak to the highly differentiated nature of the Emmetech product portfolio and growth spared in the process.
our leadership position and in this market that we are operating. So we're pretty positive on pricing and we're getting value and we're adding value to our customers also. So we think it can continue for some time. While inflation may moderate a bit, we think it's going to be here for a while and we think we can outpace inflation with price.
Perfect. Thank you, David. Thank you, Matt. Thank you. One moment for our next question. This question comes from Alison Pliniac of Wells Fargo. Your line is open.
Hi, good morning. Good morning.
Can you say if this talk about, I know you don't really have the canary in the coal mine, but you did note a little bit more cautious view on just giving the macro. I would say any noticeable trends that you're that's driving some of that cautious view for you guys, and just in terms of what you're seeing obviously back well again with politically safe.
Thanks. Yeah, we're confident in our guide and for the balance of the year.
But we are cautious given how early we are in the year and given the risk in a global macro environment.
early we are in the year and given the risk in the global macro environment.
As I mentioned in the prepared remarks,
As I mentioned in the, you know, for pair remarks, the...
Our book to bill was 1.13. That's pretty strong. If you take out the bison acquisition it was still 1.1.
It was positive in both proof Our backlog is
Over 50% of sale annual sales is well above normal historical level. So I think we're pretty well positioned to
50% of annual sales is well above normal historical levels. I think we're pretty well positioned to perform this year.
Half mentioned that there is an expectation that we're returning to more normalized ordering patterns. Now that the supply chain is improving, and we're seeing some of that play out. And we also have some difficult comps.
And when you look across our portfolio, we're feeling really good for a minimum cycle and it feels like the biggest part of our business, EIG is starting to accelerate. So we're feeling pretty good.
Great. And then, you know, a nice acquisition with Bison to start the year. Any color you can provide on and sort of that the M&A pipeline, what you're seeing, you know, are multiple becoming more reasonable for you guys. Just any thoughts there, thanks. Right. That's a great question. And, uh,
We really like the Bison deal. We deployed about $100 million on it, and it's an excellent fit with our automation business. We talked about expanding our capabilities there. More broadly, we have a very, very wide and deep pipeline.
And that pipeline is filled with attractive candidates and it feels like the pricing has come in a bit. And it feels like we're in good position to, you know, continue our acquisition strategy and provide a differentiator in coming.
quarters and years with our strong balance sheet and with our capability there and with our strong pipe. I'm fairly optimistic that what the pricing coming in that and our strong, you know, we've done work for many years on developing the pipeline of deals that we're going to have some success this year. Great. Thank you. Okay, Alison.
One moment for our next question. This question comes from Dean Dre of RBC Capital Markets. Your line is open.
Thank you. Good morning, everyone. Good morning, Dean. Maybe we can take the tour of the key end markets and maybe you can start with Arrow and Defense because that got called out in both segments. Thanks. Right. Right, exactly, Dean. Our aerospace and defense business had an excellent start to the year.
overall in organic sales were up mid-20s in the first quarter. And we really saw growth across our system.
sales were up mid-twenties in the first quarter. And we really saw growth across all A&D segment.
But our defense and our commercial aftermarket segments were particularly strong. And given the strong start to the year and the...
The positive end-market tailwinds we now expect are organic sales to increase and to be up 10% for the full year.
with similar growth across both our commercial and defense segments.
Next, I'll go to process. Overall sales for our process businesses increased 10% in the quarter.
Organic sales were up 10%. We had the acquisition of Navatar largely being offset by foreign currency headwinds. And similar to last year, growth was broad-based in the quarter.
End market demand remains solid across key process end markets, including research, medical, oil and gas. Looking ahead, we expect to continue to move into the next phase of the market.
Strong organic sales growth process and we expect to be up mid single digits for the year.
Moving to the power and industrial segment.
Strong results in the first quarter with overall sales up low teens.
This growth was driven by low single digit organic growth and contributions from our recent acquisition RTDS.
And we continue to expect mid-single digit organic growth for our power and industrial businesses in 2023.
with similar growth, expected growth across both our power and industrial segments.
And finally, our automation and engineering solution, organic sales, we're flat in the first quarter and in line with our expectations given prior comparisons and timing of customer shipments.
For all of 2023, we continue to expect organic sale for automation and engineering solutions business to be a mid-single digit with similar growth rates across both our automation and engineer solutions business.
That's a walk around the company, do you?
That's all really helpful, thank you. And a follow-up question is actually a follow-up to Allison's question around normalizing and normalization on the supply chains. And maybe you could just expand on that. Product scarcity, how has that played out?
And anything on the, when you said, normalized order pattern. So what are the customers spacing out the orders at smaller size? And anything, and maybe for Bill, are you releasing buffer inventory? Because before it was,
Recently, it's just in case now coming back a bit more to just in time, but will you be releasing any of this buffer inventory?
just in case, now coming back a bit more to just in time, but will you be releasing any of this buffer inventory? Thanks. Yeah. The... Thanks very much.
I just comment that there is a return to more normalized ordering patterns because lead times are back to normal. Customers aren't ordering early now that the supply chain's improved. We're seeing that dynamic play out. It plays out more in our OEM related businesses.
than are in market businesses. So a little more in EMG than EIG, but it's what we've been communicating for several quarters of what we were expecting.
And overall, we're very pleased with the order of performance. We're very pleased with our record backlog. Our book to bill was up in both groups and
The normalization is really getting back to just getting back to normal lead times.
And Dean from the from the inventory perspective, we did add a little bit in the in the quarter. But we'd expect as we've progressed through the balance of the year, you're going to see that release of. Inventories that we built up over the last year or so, as you say, just in case and protecting our customers and making sure we had enough. Nothing the right inventory on hand.
And would we see that inventory release result in some higher free cash flow conversion, maybe just above normal seasonality? I think it will be, we're going to be continuing to grow the business which requires working capital, but I think you will see a release in the inventories.
it'd be in a benefit to the overall free cash flow, which we'd expect would be in that 120% area for all of 2023. That's great to hear. Thank you. Dean, we had the record operating cash flow, record free cash flow.
120% conversion in the first quarter. So we think as our business is getting back to normal, you're going to see benefits in the cash flow.
the first quarter. So we think as our business is getting back to normal, they're going to see benefits in the cash flow. That's great. Thank you.
Thank you. One moment for the next question. This next question comes from Josh Brzezinski of Morgan Stanley . Your line is open. Our next question comes from
Take good morning, guys. Morning, Josh. So, Dave, I just wanted to dig in a little bit here on through-put. So, you built Baglon Discordr, but yet pretty sizable Revenue B. So, I guess that's the good news, but maybe the other side of that is, how should we think about where you're at? I guess particularly on EIG in terms of...
your own throughput or kind of backlog conversion through the year. Is this sort of where you'd like to be or do you want to raise that high or just give them a stick to go back drop? Yeah, I think EIG is more of a long cycle business. And as these supply issues are solved, we're able to convert on more. And I would expect our backlog to stay strong for the balance of the year. I'd expect it to be a little bit lower at the end of the year, but it's still an excess of typical. And you know, in my view, EIG is just starting to fire on all cylinders. I mean, it's just really across the board.
One of the things that's happening at EIG is, along with strong growth, along with solid pricing, the profit performance from the recent acquisition has been excellent.
And for RTDS and Avacar, the acquisitions we did last year, they're doing well. And you're seeing Abaco also have a very strong year-over-year quarter in margins. So,
It feels really good for EIG and
I don't think we're taking our foot off the gas. Got it, that's helpful. And then I guess just on your automation business, you have some of the folks out there that are more in kind of the controller or a mainline automation gear that are sitting on big orders, record backlogs as well.
This policy might im going to ignore.
We're diverse end markets. We're in medical and factor automation and a bunch of end markets. Just the business that we acquired, Bison Gear and Engineering, is a perfect example of what you're talking about. They have about a year of backlog. They're really capacity limited. That's something that we can fix.
in relatively quick order and you know it's a business with to provide us a lot of cost energy but at the same time
the growth drivers of automation and freeing up capacity to go after reshoring and electrification requirements are really on our sweet spot. So while we largely have the capacity in our existing businesses.
we can really improve license. So, that's in line with what you're saying in these automation markets where there's secular growth drivers and good strong backlogs.
Excellent. That's going to be a good question. Thank you. Thank you. Stand by for the next question. This question comes from Rob Wirtheimer of Melius Research. Your light is open.
Excellent. That's a good question. Thank you. Thank you. Stand by for the next question. This question comes from Rob Wirtheimer of Melius Research. Your life is open. Hello Rob. Thank you. I'd like to stay.
So I wanted to circle back to M&A where some peers have called out, you know, very strong M&A market, including I think one person called it, you know, kind of one of the best ever. And your comments were very positive. They could very well be amateurs execution developing the time. So I'm curious about your general feel on the M&A markets. And if they are quite strong, if I think the indicated prices coming down, what's changing?
in the dynamics there. Yeah, the overall M&A market in the first quarter was down quite a bit, so the overall market is not that good and but what you have is a lot of buyers are cautious now and it's because of financing capability. A lot of the private equity businesses are less active right now.
But we're largely a self-funded acquisition strategy, and we have, as Bill said, over $2.6 billion of cash in existing credit facilities. And our pipeline of opportunities remains strong, and we're very active exploring it.
We are really a meaningful level of financing to make some headway.
You know, it's a good opportunity for us to use this aspect of our strategy to differentiate our performance in the future. We're very excited with the companies that are, we've recently acquired, we're also very excited about the companies that we're working with and we're growing our presence in attractive growth areas and...
We'll stick to delivering our traditional financial arrows. They're important thresholds for us and we want to provide a strong level of returns on the capital we deploy. So it's the same setup, but at the same time I think we're in an incrementally better position because we're a strategic buyer that's...
as a strong balance sheet that has cash flow and has a viable pipeline of deals. Great. That makes total sense. Thank you. And then just to go in a different direction, to follow up on your comment on you mentioned pricing phase before maybe pricing phase a little bit barely really towards the end of the year.
Is it able to give us a sense of what's happening in the cost-based inflation? Have you seen dramatic coming down in some areas or logistics or you know, whatever and you know, is labor still high? I mean just give us a little sense of breakdown there. Right, right. Like as I said, our inflation was about...
4% are seeing decreasing costs in some commodities, some logistic costs, but there's other inflationary costs in things like wages and travel. So there's net inflation for sure and it's sticky.
a bit this year from what we're seeing. So, but we're well positioned to deal with that with our pricing and our portfolio companies. Thank you.
Thank you. Please stand by for our next question. As a reminder, if you wish to ask a question, please press star 1-1 on your telephone and then wait for your name to be announced. Our next question comes from Nigel Cole of Wolf Research. Your line is open. Thanks. Good morning, everyone. Good morning, Nigel. Good morning. So if we go back to the slide, please. Good morning. So if we go back to, you know, sort of late January , February when you put together the OneQ plan, obviously it came in a lot stronger, which is not untypical, but I think the episode is a bit more than normal. So thank you very much. Thank you.
Let me just talk about what surprised you to the upside. Clearly, A&D was a lot stronger. I'm wondering if you saw an inflection defense. Curious if you saw maybe China coming in a lot better than perhaps expected. Just kind of walk off better. And maybe talk about was it mainly backward conversion supply chain driven or customer demand.
getting much better.
So we're able to convert on more backlog. And in China, in particular, you mentioned it was up about 12% for us. So it was a good grower and as they're recovering from their COVID lockdowns, our business is developing nicely there. So,
It's really both. We had a good book to build, we converted on the backlog, and we were strong across all geographies. No question about it. You talked about the expectation that you'd expect to burn some backlog between now and year-end. You talked about all the patterns changing, which is very natural with the supply chain improvements. Have you seen that change, David, happen already? Did that happen in March, April ? I always tell them to burn backlogs through second quarter.
I'm close to the end of the queue here, so maybe I'll throw in one more question if I can. The Bison deal, motion control, I don't think we've seen motion control acquisitions for some time or one of the sites. Is there a desire to maybe do more of these kinds of deals? Maybe become a bit more of a scale player in motion control?
I think there is a desire but...
We need the technology and the business to be successful and unique and we have to add value to it. And I think there are a few other businesses that we're looking at right now that would be very attractive to us. And Bison just fit all those characteristics. We can add substantial value.
It was a fair price. It adds capability that we don't have. We can really improve the business to address, go after more of the applications that they have been unable to go after. It really fits in our toolkit and really adds value to our solution offerings. There are other businesses like that we're looking at.
And there are several businesses we're looking at, but we're gonna wait for the right opportunities and I think those opportunities are showing up. Great, thank you. Okay, thank you, Nigel.
One moment for the next question. This question comes from Christopher Glynn of Oppenheimer & Company, Inc. Please go ahead.
Thanks. Good morning Dave, Bill, Kevin. Good morning, Chris. Amazing to see the 1.1x organic book to bill at this point in the supply chain and cycle. But I did want to ask about Abaco as you just kind of hit the
two year anniversary. Just curious for an overall kind of update on the past two years integrating, getting to know that business. And you know, is it episodic or is it in a nice kind of scaling mode here, would you project? No, it's definitely not episodic. I mean, we had, you go back after we first bought it, we...
We've got the supply chain crisis and electronics and we had to work through all of that. We've also augmented the management team. I think we're really in the right gear now with that business.
the defense market is strong, we're in the right area, so that business is going to accelerate and be a big contributor for us going forward. Great. And on the organic kind of mid-single digit outlook, could you kind of parse that, how you're thinking about the two segments relative to one another, similar kind of outperformance from the first quarter at EIG? Do we expect that to continue?
Yeah, I think both groups have a very good chance to grow mid-single digits for the four year organically. EIG a little bit stronger than EMG, but both groups have the potential to grow mid-single digits.
Great, thank you. Thank you, Chris. One moment for the next question. Our next question comes from Andrew Oben of Bank of America. Your line is open.
Good morning, this is David Ridley-Lane on for Andrew. A lot of commentary about improvements to supply chain. Just to go down a level, what about in your aerospace business? We've heard more mixed messages about component availability.
It could be constraints revenue obviously had very strong revenue growth this quarter. Update on arrows specific supply chains.
The aerospace-specific supply chain is improving as our entire supply chain is.
We grew mid-20 organic growth in the quarter. We have a good supply chain team, they're a good management team running that business. So...
It feels like that business is accelerating. That was our strongest area. And we took up the year on that segment.
There are always challenges in different markets, but in aerospace right now, I see us accelerating growth as what we're looking at. Thanks for that. Then on the electronic instruments group, the commentary is very interesting that you're actually seeing some sense of reacceleration and demand.
Are there any secular themes that you would point to? Can you identify certain, maybe, reshoring related projects, etc., that are helpful there? More than the secular, there are secular opportunities driving growth. A lot of it is our approach and our niche focus.
We have very flexible businesses that are aggressive. They go after where the niche opportunities are. I'll give you a couple of examples
And the semiconductor market, our semiconductor business, which is about 6% of our sales, it was actually up in the first quarter.
Most semiconductor businesses aren't up in the first quarter, and the reason is that while we participate some in the memory area that was down, we also participate in semiconductor research which is very strong now.
and the EUV optics within semiconductors, which is very strong. So at the same time, there's some weakness in the market. We're very agile and can adapt, and we've been doing that for years, and we're growing. So I think that the big thing, I think, when you look across our old businesses, is there are growth opportunities for sure.
We're very agile, our distributed model lets us get after them with management teams dedicated to businesses and markets, and I don't see that stopping. Thank you for the details. Thank you, David. One moment for the next question.
This question comes from Michael Anastashu of TD Cohen. Please go ahead. Please vote.
This question comes from Michael Anastashu of TD Cohen. Please go ahead. Good morning. Thank you for taking my question.
Hi Michael. There's been some commentaries of late for for D stocking in different areas of the medical and lifestyle related in markets. Can you just briefly describe where your portfolio specifically plays in that area and your allicin here? Any color would be appreciated.
Sure. The medical market's about 15% of our sales now. And in the quarter, it was up high teens with strong growth in our Rollin business and also our engineered...
The medical market's about 15% of our sales now. And in the quarter, it was up high teens with strong growth in our Rollin business and also our engineer...
mechanical components business. And for the full year, we expected to be a high single digit. So we expect to be growing in that medical space. And it's a much like the discussion I just had with David about, we're in the right niches.
Because in Rawland, their primary
in Rowland, their primary
product are really to improve the efficiency of nurses. And as long as I've been alive, you have nursing shortages in the United States and raw and nurse call systems to make nurses more efficient.
So coming out of the pandemic, we see a lot of spending on dealing with the shortages, and Rollin has great products and very successful in that area.
And in our EMC business, we're dealing with a lot of single procedure, single use type devices that we're building components for, and that business is accelerating. So both of those core businesses that make up the large part.
of our medical businesses are doing well, and we were up high teens in the quarter. Great, thank you.
businesses are doing well and we will wrap high keys in the court. Great, thank you. Okay.
Thank you. One moment for our final question. Our last question comes from Joseph Donahue of Baird. Your line is open. Hello everybody, and welcome to the service seal version of Cameron DT's SENSpl S Columbia. How fears connect withfeature Sol's health strategy.
Thank you. One moment for our final question. Our last question comes from Joseph Donahue of Baird. Your line is open. Hey guys, I'm after Rob. How you doing?
Following up on the SME commentary that you had earlier, could you take the temperature on R&D spending? Should we expect it to stay strong through the rest of the year? In relation to the semiconductor, I think there's a lot happening now. We're transitioning from one technology to another.
bit below normal seasonal growth. Is there any difference in supply improvement across the two segments going on or anything else that we should be thinking about? I think when you look at EMG, the organic growth was up 4%, so they had a good quarter. It had some headwinds from currency.
growth, is there any difference in supply improvement across the two segments going on? Or are they also, you should be thinking about? I think when you look at EMG, the organic growth was up 4%. So they had a good quarter, they had some headwinds for currency. And so...
EIG grew faster for sure, but EMG was still really solid. Gotcha. All right. And thank you. That concludes our Q&A segment. I'll now turn it back over to Kevin Coleman for closing remarks.
Thank you, Chris. And thank you everyone for joining our conference call today as a reminder or replay of today's webcast can be accessed in the Investor section of ametak.com. Have a great day. And thank you all for your participation in today's conference. This does conclude the program. You may now disconnect.
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