Q1 2024 AMETEK Inc Earnings Call

Operator: Good day, and thank you for standing by. Welcome to Ametek's first quarter 2024 earnings conference call. At this time, all participants are in a listen-only mode.

Good day and thank you for standing by welcome to Ametek's first quarter 'twenty 'twenty four earnings conference call.

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Operator: To withdraw your question, please press star 11 again. Please be advised that today's conference is being recorded. I would now like to hand the conference over to your first speaker today, Kevin Coleman, Vice President of Investor Relations and Treasurer. Please go ahead.

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Please be advised that today's conference is being recorded.

I'd now like to hand, the conference over to your first speaker today, Kevin Coleman, Vice President of Investor Relations and Treasurer. Please go ahead.

Kevin C. Coleman: Thank you, Julia. Good morning, and thank you for joining us for Ametek's first quarter 2024 earnings conference call. With me today are Dave Zupiko, Chairman and Chief Executive Officer, and Dala Puri, Executive Vice President, and Chief Financial Officer. 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. For a detailed discussion of the risks and uncertainties that may affect our future results, It contained Amatex's filings with the SEA.

Kevin C. Coleman: Thank you Julia good morning, and thank you for joining us for Ametek's first quarter 2024 earnings conference call.

Kevin C. Coleman: With me today are Dave <unk>, Chairman and Chief Executive Officer, and dollar Perry Executive Vice President and Chief Financial Officer.

Kevin C. Coleman: 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.

Kevin C. Coleman: A detailed discussion of the risks and uncertainties that may affect our future results is contained in ametek's filings with the SEC.

Kevin C. Coleman: Ametek disclaims any intention or obligation to update or revise any forward-looking statement. Any references made on this call to 2023 or 2024 results or 2024 guidance will be on an adjusted basis, excluding after-tax, acquisition-related, intangible amortization and excluding the pre-tax $29.2 million or $0.10 per diluted share charge for the first quarter for integration costs related to the Paragon Medical Act. Reconciliations between GAAP and adjusted measures can be found in our press release and in the investor section of our website. We'll begin today's call with prepared remarks, and then we'll open the call to questions. I'll now turn the meeting over to Dave.

Kevin C. Coleman: AMETEK disclaims any intention or obligation to update or revise any forward looking statements.

Kevin C. Coleman: Any references made on this call for 2023 or 2024 results or 2024 guidance will be on an adjusted basis, excluding after tax acquisition related intangible amortization and.

Kevin C. Coleman: And excluding the pre tax $29 2 million or <unk> 10 per diluted share charge in the first quarter for integration costs related to the Paragon medical acquisition.

Kevin C. Coleman: Reconciliations between GAAP and adjusted measures can be found in our press release and on the investors section of our website.

Kevin C. Coleman: We will begin today's call with prepared remarks, and then we'll open the call for questions I will now turn the meeting over to Dave.

David A. Zapico: Thank you, Kevin, and good morning, everyone. Ametek delivered strong results in the first quarter of 2020, with Outstanding Operating Performance Leading to Double-Digit Growth and Earnings Per Share. During the quarter, we established records for sales. Operating Income, and EBITDA, and Deliver a Robust Core Margin Expansion and Excellent Cash Considering our first quarter results and the positive outlook for the back half of the year, we are increasing our earnings guidance for the full year.

Dave: Thank you, Kevin and good morning, everyone.

Dave: AMETEK delivered strong results in the first quarter of 2024.

Dave: With outstanding operating performance, leading to double digit growth in earnings per share.

Speaker Change: During the quarter, we established records for sales.

Dave: Operating income and EBITDA.

Dave: And deliver robust core margin expansion and excellent cash flows.

Dave: Considering our first quarter results and the positive outlook for the back half of the year.

Dave: We're increasing our earnings guidance for the full year.

David A. Zapico: Ametek's continued success is a testament to the strength and resiliency of our growth, quality of our business, and the outstanding contributions from all Ametek colleagues. Now let me turn to our first quarter results. Sales in the first quarter were $1.74 billion, up 9% over the same period in 2020. Organic sales were down slightly, acquisitions at a nine point nine percent. Booked a bill in the quarter was $0.96.

Dave: Ametek's continued success is a testament to the strength and resiliency of our growth model.

Dave: Quality of our businesses and the outstanding contributions from all AMETEK colleagues.

David A. Zapico: And we ended the quarter with a very strong backlog of $3.46 billion, near record levels. Ametek's operating performance to start the year was excellent. Operating income in the quarter was a record $446 million, a 10% increase over the first quarter of 2020. Operating margins were 25.7% in the quarter, up 30 basis points from the prior year.

Dave: Now, let me turn to our first quarter results.

Dave: Sales in the first quarter were $1 74 billion.

Dave: Up 9% over the same period in 2023.

Dave: Organic sales were down slightly.

Dave: Acquisitions added nine points.

Dave: Foreign currency had a small positive impact.

Dave: Book to Bill in the quarter was zero point 96.

Dave: We ended the quarter with a very strong backlog of $3 $46 billion near record levels.

Dave: Ametek's operating performance to start the year was excellent.

Dave: Operating income in the quarter was a record $446 million or.

Dave: A 10% increase over the first quarter of 2023.

Dave: Operating margins were 25, 7% in the quarter up 30 basis points from the prior year.

Dave: Excluding the dilutive impact from acquisitions core margins were up a very strong 180 basis points versus the prior year.

David A. Zapico: Excluding the dilutive impact from acquisition, core margins were up a very strong 180 basis points versus the prior year. Keep It On The Quarter was also a record at $542 million, up 13% over the prior year, with Ebola margins and a press, 31. This outstanding performance led to earnings of $1.64 per W chair, up 10% versus the first quarter of 2023, above our guidance range of a dollar. Now, let me provide some additional details about the operating group. First, the electronic instrument.

Dave: EBITDA in the quarter was also a record at $542 million up 13% over the prior year.

Dave: EBITDA margin is an impressive 31, 2%.

Dave: This outstanding performance led to earnings of $1 64 per diluted share up 10% versus the first quarter of 2023.

Dave: And above our guidance range of $1 56 to $1 60.

Dave: Now let me provide some additional details of the operating group level.

Dave: First the electronic instruments group.

David A. Zapico: The Electronic Instruments Group had a strong start to the year with tremendous operating performance, leading to record operating margins and impressive margins. Sales for EIG were $1.16 billion in the quarter, up 4% from the first quarter of last year. Organic sales were up 1%, and acquisitions added. Growth in the corridor remains strongest across our aerospace and defense and materials analysis businesses. EIG's operational execution in the first quarter was superb, with strong profits and an Exceptional Operating Margin. Operating income was $353 million, up 14% versus the prior year.

Dave: Electronic instruments group had a strong start to the year with tremendous operating performance leading to record operating margins and impressive margin expansion.

Dave: Sales for AIG were one 6 billion in the quarter up 4% from the first quarter of last year organic sales were up 1% and acquisitions added three points.

Dave: Growth in the quarter remained strongest across our aerospace and defense and materials analysis businesses.

Dave: Aig's operational execution in the first quarter was superb with strong profit and exceptional operating margin expansion.

Dave: Operating income was $353 million up 14% versus the prior year.

David A. Zapico: While EIG operating margins were a record, 30.5% up from a robust 280 base, this level of operating margins speaks to the quality and leadership positions of our highly differentiated, The electromechanical group also delivered solid first quarter operating performance, despite the headwinds from inventory normalization impacting some of our EMDs. EMG's first quarter sales were a record $579 million, up 21% versus the prior year, driven by contributions from recent acquisitions of Paragon Medical and Bison. First quarter operating income was $120 million, while core operating income margins were 24.1%.

Dave: While <unk> operating margins were a record 35% up a robust 280 basis points.

Dave: This level of operating margin speaks to the quality and leadership positions of our highly differentiated businesses.

Dave: The electromechanical group also delivered solid first quarter operating performance, despite the headwinds from inventory normalization impacting some of our EMG businesses.

Dave: Emg's first quarter sales were a record $579 million.

Dave: Up 21% versus the prior year driven by contributions from recent acquisitions of Paragon medical and Bison engineering.

Dave: Okay.

Dave: First quarter operating income was $120 million, while core operating income margins were 24, 1% in the quarter.

David A. Zapico: Our first quarter results reflect the unique capabilities of our growth model to successfully manage short-term market headwinds and deliver a robust margin expansion. Outstanding Cash Flow and Strong Double-Digit Earnings. Our businesses remain focused on executing our strategic initiatives and Delivering Differentiated Technology Solutions to Support Our Customers' Most Complex Challenges. Our Distributed Operating Structure enables flexibility in responding to market dynamics, while our robust cash flow and balance sheet provide ample support for our acquisition strategy.

Dave: Our first quarter results reflect the unique capabilities of our growth model to successfully manage short term market headwinds and deliver robust margin expansion.

Dave: Outstanding cash flow and strong double digit earnings growth.

Dave: Our businesses remain focused on executing our strategic initiatives and delivering differentiated technology solution to support our customers' most complex challenges.

Dave: Our distributed operating structure enables flexibility in responding to market dynamics.

Dave: Our robust cash flow and balance sheet provide ample support for our acquisition strategy.

David A. Zapico: This acquisition strategy, along with our organic growth initiatives, is expanding Ametek's presence within high-growth markets. These markets include, Ametek. Clean Energy. Electrification, and Aerospace and Defense and help ensure a diverse portfolio is well positioned to capitalize on these attractive, long-term secular growth. We remain committed to investing across our businesses to accelerate new product development. 2024.

Dave: This acquisition strategy, along with our organic growth initiatives as expanding ametek's presence within high growth markets.

Dave: These markets include.

Dave: Med Tech.

Dave: In energy <unk>.

Dave: Electrification and aerospace and defense and help ensure our diverse.

Dave: Portfolio is well positioned to capitalize on these attractive long term secular growth areas.

Dave: We remain committed to investing across our businesses to accelerate new product development and expand our sales and marketing efforts.

Dave: And 2024, we expect to invest an incremental $100 million and growth initiatives with a sizable portion of this in support of our research development and engineering efforts.

David A. Zapico: We expect to invest in incremental $100 million in growth initiatives with a sizable portion of this in support of our research, development, and engineering. The effectiveness of these investments is reflected in our vitality and was a strong 25% of Ametek's commitment to invest in RD&E. This ensures a steady stream of new products that support our customers' critical applications. The position of Zygo. I wanted to take a moment to highlight an example of how the elements of the Ametek road model work together to deliver exceptional results. Zygo, a global leader in the design and manufacture of advanced optical metrology and ultra-precise optical components, was recently awarded Ametek's Dr. John H. Schlux Award.

Dave: The effectiveness of these investments is reflected in our vitality index, which was a strong 25% in the first quarter.

Dave: Ametek's commitment to invest in R&D and.

Dave: And continuously innovate ensures a steady stream of new products that support our customers critical applications and position us for continued success.

Speaker Change: I wanted to take a moment.

Dave: To highlight an example of how the elements of the AMETEK growth model work together to deliver exceptional results.

Dave: AMETEK <unk>, a global leader in the design and manufacture of advanced optical metrology systems and ultra precise optical components was recently awarded Ametek's, Dr. John <unk> Award and annual award provided to the AMETEK business. The best exemplifies our commitment to continuous improvement in <unk>.

David A. Zapico: An annual award provided to the Ametek business that best exemplifies the commitment to continuous improvement in achievements and operations, as part of its market expansion strategy. Zygo identified an attractive new market, Virtual and Augmented Reality, as a compelling growth opportunity for their advanced optical metrology.

Dave: <unk> and operational excellence.

Dave: As part of it's market expansion strategy.

Dave: <unk> identified an attractive new market segment.

Dave: Virtual and augmented reality applications.

Dave: As a compelling growth opportunity for their advanced optical metrology systems.

David A. Zapico: This led to Zygo's new product development and commercial teams working closely together to advance their technology capabilities and commercialize it as a solution to support the highly precise requirements of this. The success of this work resulted in strong demand and the need for ZYGO to meaningfully increase production. Utilizing cross-functional teams and deploying and deploying Lean Six Sigma, they achieved a remarkable three-fold increase in production, allowing them to meet the growing demand

Dave: This led to zeigler as new product development and commercial teams working closely together to advance their technology capabilities and commercializing solution to support the highly precise requirements of this application.

Dave: The success of this work resulted in strong demand and the need for <unk> to meaningfully increase production.

Dave: Utilizing cross functional teams and deploying tools like value stream mapping and lean six Sigma they achieved a remarkable three fold increase in production output.

Dave: Going on to meet the growing demand for the metrology solution.

David A. Zapico: This achievement highlights the synergy between our new product development and Global Market Expansion, an operational excellence strategy to help identify, develop, and deliver exceptional technology solutions to address an important market need and accelerate growth. Congratulations to the ZYGO team for a job well done.

Dave: This achievement highlights to synergy between our new product development.

Dave: Global market expansion and operational excellence strategies to help identify develop and deliver exceptional technology solutions to address an important market need and accelerate growth.

Speaker Change: Congratulations to the <unk> team for a job well done.

David A. Zapico: Now switching to our acquisitions. The acquisitions we completed in 2023 are integrating nicely with them. We are leveraging our proven integration capabilities and our global infrastructure to help accelerate their growth, drive operational improvements, and deliver strong returns. We are very excited about these acquisitions as they expand our market presence. Tractor Growth Market, including the Med Tech space through the Paragon Medical Academy Paragon Medical, which we acquired in December, is a leading manufacturer of highly engineered medical components. Paragon has an outstanding brand.

Speaker Change: Now switching to our acquisition strategy.

Speaker Change: The acquisitions, we completed in 2023 are integrating nicely into AMETEK.

Speaker Change: We are leveraging our proven integration capabilities and our global infrastructure.

Speaker Change: Accelerate their growth drive operational improvements and deliver strong returns.

Speaker Change: We are very excited about these acquisitions as they are expanding our market presence in attractive growth markets, including the med tech space through the Paragon medical acquisition.

Speaker Change: Paragon medical which we acquired in December is a leading manufacturer of highly engineered medical components and single use consumable surgical instruments.

Speaker Change: Paragon has an outstanding brand.

David A. Zapico: Leading Innovation and Design Capabilities. Our integration efforts are focused on supporting and accelerating, while also leveraging Ametek's infrastructure and operational excellence capabilities to drive efficiency. The integration charge we took in the first quarter will allow us to drive these improvements and Better Position Paragon for Accelerated Growth and Profit. Looking ahead, our acquisition pipeline remains robust, and we are actively working on multiple opportunities. We have the balance sheet and financial capacity to deploy meaningful capital and strategic activities. We look forward to delivering continued value to our shareholders. Strategic Acquisitions and Prudent Capital

Speaker Change: Leading innovation and design capabilities and a strong position serving a number of high growth market segments.

Speaker Change: Our integration efforts are focused on supporting and accelerating this growth, while also leveraging ametek's infrastructure and operational excellence capabilities to drive efficiency improvements.

Speaker Change: The integration charge, we took in the first quarter will allow us to drive these improvements and better position paradigm for accelerated growth and profitability.

Speaker Change: Looking ahead, our acquisition pipeline remains robust and we are actively working on multiple opportunities, we have the balance sheet and financial capacity to deploy meaningful capital on strategic acquisitions.

Speaker Change: We look forward to delivering continued value to our shareholders through strategic acquisitions and prudent capital deployment.

David A. Zapico: Now turning to our outlook for the remainder of the year, we expect the impact of inventory normalization to continue through the first half of the year, with improvements in the second half, as we indicated in our last. As a result, for the full year... We continue to expect overall sales to be up low double digits on a percentage basis. Flow to Mid-Single-Digit Organic Sales. Diluted earnings per share for the year are now expected to be in the range of $6.74 to $6.86, up 6% to 8% compared to last year's results, an increase from the previous guidance range. $6.70 to $6.80.

Speaker Change: Now turning to our outlook for the remainder of the year.

Speaker Change: We expect the impact of inventory normalization to continue through the first half of the year.

Speaker Change: With improvements in the second half of the year as we indicated on our last earnings call.

Speaker Change: As a result for the full year, we continue to expect overall sales to be up low double digits on a percentage basis with low to mid single digit organic sales growth.

Speaker Change: Diluted earnings per share for the year are now expected to be in the range of $6 74 to $6 86.

Speaker Change: Up 6% to 8% compared to last year results, an increase from the previous guidance range of $6 70 to $6 85.

Speaker Change: For the second quarter, we anticipate overall sales to be up mid to high single digits with earnings of $1 63 to $1 65 up 4% to 5% versus the prior year.

David A. Zapico: In the second quarter, we anticipate overall sales to be in the high single digits with earnings of $1.63 to $1.65, up 4% to 5% versus the prior quarter. In summary, Ametek delivered a strong first quarter with earnings growth that exceeded our expectations, driven by exceptional operating performance. We are encouraged by these results and remain confident in our ability to navigate the current environment and benefit from improved sales growth in the back half of 2020. We are confident in the future of Ametek.

Speaker Change: In summary, AMETEK delivered a strong first quarter with earnings growth, which exceeded our expectations driven by exceptional operating performance.

Speaker Change: We are encouraged by these results and remain confident in our ability to navigate the current environment and benefit from improved sales growth in the back half of 2024.

Speaker Change: We are confident in the future of AMETEK AMETEK has our world class talent.

David A. Zapico: Our world-class talent and the adaptability of the Ametek road model will continue to drive long-term sustainable success for. I will now turn it over to Dalip Puri. We'll cover some of the financial details of the quarter, then we'll be glad to take your questions.

Speaker Change: And the adaptability of the AMETEK growth model will continue to drive long term sustainable success for our stakeholders.

Speaker Change: I will now turn it over to <unk>, who will.

Speaker Change: I'll cover some of the financial details of the quarter, then we'll be glad to take your questions.

Dalip M. Puri: Thank you, Dave, and good morning, everyone. As Dave highlighted, Ametek had a very strong performance, with record level sales highlighted by strong core margin expansion. Now, let me provide some additional financial highlights. First Quarter General and Administrative Expenses. $26.4 million, 1.5 in line with last. For fiscal year 2024, general and administrative expenses are expected to be approximately 1.4. First quarter interest expense was $35 million, up $15 million from the prior year first quarter due to higher debt balances outstanding following the December 2023 acquisition of Paragon.

Speaker Change: Thank you, Dave and good morning, everyone as Dave highlighted AMETEK had a very strong first quarter with record level sales and exceptional operating performance highlighted by strong core margin expansion and free cash flow conversion.

Dalip M. Puri: Other operating expenses were down $5 million, primarily due to higher interest down from 19, first quarter. For 2024, we continue to anticipate our effective tax rate to be between $19,000 and $20,000. As we have stated in the past, Actual Quarterly Tax is dramatically different either positively or negatively from this full year. Capital Expenditure. The first quarter we're $28 million, full year, or about. The depreciation and amortization expense in the quarter was

Speaker Change: Now, let me provide some additional financial highlights for the first quarter.

Speaker Change: First quarter general and administrative expenses were $26 4 million or.

Speaker Change: Or one 5% of sales in line with last year's first quarter for.

Speaker Change: For fiscal year 2020 for general and administrative expenses are expected to be approximately one 4% of sales.

Speaker Change: First quarter interest expense was $35 million up $15 million from the prior year first quarter due to higher debt balances outstanding following the December 2023 acquisition of Paragon medical.

Speaker Change: Other operating expenses were down $5 million, primarily due to higher interest income and higher pension income compared to the prior year's first quarter.

Speaker Change: The effective tax rate was 18, 9% down from 19, 5% in the first quarter of 2023.

Speaker Change: For 2024, we continue to anticipate our effective tax rate to be between 19% and 20% as we have stated in the past actual quarterly tax rates can differ dramatically either positively or negatively from this full year estimated rate.

Speaker Change: Capital expenditures in the first quarter were $28 million and we.

Speaker Change: And you'd expect capital expenditures to be approximately $160 million for the full year or about 2% of sales dipped.

Speaker Change: Depreciation and amortization expense in the quarter was $98 million in 2024, we expect depreciation and amortization to be approximately $400 million <unk>.

Dalip M. Puri: Estimated depreciation and amortization, including after-tax, acquisition-related, intangible amortization, of approximately $190 million. Operating working capital in the first quarter was $18.7 billion.

Speaker Change: Including after tax acquisition related intangible amortization of approximately $190 million or.

Speaker Change: Or <unk> 82 per.

Speaker Change: Per diluted share.

Speaker Change: Operating working capital in the first quarter was 18, 7% of sales operating cash flow was $410 million up 6% versus the first quarter of 2023, while free cash flow was $383 million.

Dalip M. Puri: Operating cash, up 6% versus the first quarter of 2000, while free cash. 300. And we're going to go to the next one. I'm going to be talking about the new technology that is coming out of the United States. And I'm going to be talking, [inaudible] Reporter, Free Cash Flow Conversion was a strong 123% for the remainder of 2024. One hundred and twenty percent.

Speaker Change: Up 4% over the prior year.

Speaker Change: For the quarter free cash flow conversion was a strong 123% of net income.

Speaker Change: For the remainder of 2024, we continue to expect strong key free cash flow conversion in the range of 110 and 120% of net income.

Dalip M. Puri: Total debt at March 31st was $2.9 billion, down from $3.3 billion at the end of 2000. Offsetting this debt is cash and cash-of- At the end of the first quarter, our gross debt-to-EBITDA ratio was 1.1%, and Darnett Depp to EBITDA, continue to have excellent financial capacity and flexibility, approximately 1.8 billion dollars in cash, and available credit.

Speaker Change: Total debt at March 31 was $2 9 billion.

Speaker Change: Down from $3 3 billion.

Speaker Change: At the end of 2023.

Speaker Change: Offsetting this debt is cash and cash equivalents of $374 million at the end of the first quarter, our gross debt to EBITDA ratio was one three times.

Speaker Change: Our net debt to EBITDA ratio was one two times.

Speaker Change: We continue to have excellent financial capacity and flexibility with approximately $1 8 billion.

Speaker Change: Cash and available credit facilities to support our growth initiatives and our active acquisition pipeline.

Dalip M. Puri: We support our growth initiatives and our activities, while acquisitions remain our number one priority for the use of our free cash. We also seek to opportunistically repurchase our shares..., and provider shareholders. In February, we announced a 12% increase, our fifth consecutive year of 10% plus annual increases.

Speaker Change: While acquisitions remain our number one priority for use of our free cash flow. We also seek to opportunistically repurchase our shares and provide our shareholders with a consistently increasing dividend.

Speaker Change: And in February we announced a 12% increase in our quarterly cash dividend to <unk> 28 per share our fifth consecutive year of 10% plus annual increases.

Speaker Change: In summary.

Dalip M. Puri: Our businesses delivered strong results to start. Outstanding Operating, Robust, and Core Margin. Thank you, Dalip.

Speaker Change: Our businesses delivered strong results to start the year with outstanding operating performance, leading to robust core margin expansion and excellent free cash flow Kevin. Thank.

Operator: Julie, could we please open the lines for questions? Thank you. At this time, we will conduct the question and 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 Change: Thank you.

Speaker Change: Julian could we please open the lines for questions.

Speaker Change: Thank you at this time, we will conduct a question and answer session.

Speaker Change: As a reminder to ask a question you will need to press star one on your telephone and wait for your name to be announced.

Speaker Change: To withdraw your question. Please press star one again please.

Speaker Change: Please standby will be compile the Q&A roster.

Speaker Change: Okay.

Operator: To withdraw your question, please press star 11 again. Please stand by while we compile the Q&A roster. Our first question comes from the line of Deane Dray of RBC. Your line is now open. Thank you. Good morning, everyone. Good morning, Deane.

Speaker Change: Our first question comes from the line of Dan Dray of RBC. Your line is now open.

Deane Michael Dray: Thank you and good morning, everyone. Good morning Deane.

David A. Zapico: Hey, can we start off with the usual kind of tour of the end markets and geographies and maybe finish up with just kind of the de-stocking comments. It just continues to be drawn out, and we're seeing it in all kinds of pockets. So it's not Ametek specific in any way, but just kind of refresh on that as well.

Deane Michael Dray: Hey can.

Deane Michael Dray: Can we start off with the usual kind of toward the end markets and geographies and maybe finish up with the <unk>.

Deane Michael Dray: Just kind of the Destocking comment.

Deane Michael Dray: It just continues to be drawn out and we're seeing it in all kinds of pockets. So it's not.

Speaker Change: AMETEK specific in any way, but just kind of what's your refresh for you on that as well. Thanks sure sure glad to do that all Dean <unk>.

David A. Zapico: Thanks. Sure, sure. I'll be glad to do that.

David A. Zapico: I'll start with a walk around the company. I'll start with our process business. Overall sales for our process businesses were roughly flat versus last year and in line with our expectations.

Speaker Change: Start with the a walk around the company.

Dean: And I'll start with our process business overall sales for our process businesses were roughly flat versus last year and in line with our expectations.

David A. Zapico: Growth remains solid across our energy and semiconductor business, and we're really well-positioned there to benefit from the sizable project and investment activity within the, [inaudible] We continue to expect sales for our process businesses to be up low every single day. I'll switch to aerospace and defense. Our A&D business had a strong start to the year, approximately 10% organic growth in the quarter, growth was very solid across both our commercial aerospace and defense segment for all and for all of 2024. We continue to expect organic sales for our A&E businesses to be up high single digits on a percentage basis, similar growth across both our commercial aerospace and defense businesses. I'll move to power.

Dean: Growth remains solid across our energy and semiconductor businesses.

Dean: And we're really well positioned there to benefit from the sizeable project in investment activity within these markets.

Dean: For the full year, we continue to expect sales for our process businesses to be up low.

Dean: Low single digits.

Dean: Next I'll switch to aerospace and defense in our A&D businesses had a strong start to the year of approximately 10% organic growth in the quarter.

Dean: Growth was very solid across both our commercial aerospace and defense segments.

Dean: For all in for all of 2024, we continue to expect organic sales for our A&D business is to be up high single digits on a percentage basis.

Dean: A similar growth across both our commercial aerospace and defense businesses.

Speaker Change: Next I'll move to power.

David A. Zapico: Power Businesses were up low double digits in the first quarter, contributions from the acquisitions of UVI and amplifier research being offset by a low single digit decrease in organic, These recent acquisitions, along with the acquisition of RTDS in 2022, expanded our presence within a number of highly attractive market segments which are expected to benefit from a strong investment cycle, including the expansion of Renewable Energy and Power Grid Infrastructure. We continue to expect low to mid-single-digit organic sales growth, and finally, for the automation segment. Engineering Solutions, market segment, overall sales for A&ES.

Speaker Change: Our power businesses were up low double digits in the first quarter.

Speaker Change: With contributions from the acquisitions of UBI and amplify our research being offset by a low single digit decrease in organic sales.

Speaker Change: These recent acquisitions, along with the acquisition of <unk> in 2022 expanded our presence within a number of highly attractive market segments, which are expected to benefit from our strong investment cycle, including the expansion of renewable energy in the power grid infrastructure.

Speaker Change: The power segment, we continue to expect low to mid single digit organic sales growth.

Speaker Change: For 2024.

Speaker Change: And finally.

Speaker Change: Going to the automation and engineered solutions.

Speaker Change: Market segment overall sales for Aes.

David A. Zapico: We're up 20% on a percentage basis in the quarter. We're up mid-twenties in the quarter with contributions from the acquisitions of Paragon Medical and Bison Engineering being offset by a high single-digit decrease in our. As we expected, the impact from normalization of inventory levels across our OEM customer base continued in the first quarter. And we expect to see a return to growth in the second half of the year, in line with what we had indicated last. And finally, as a result, we continue to expect organic sales for our automation business to be in low single digits.

Speaker Change: We're up 20% on a percentage basis in the quarter.

Speaker Change: We're up mid <unk> in the quarter.

Speaker Change: With.

Speaker Change: Contributions from the acquisitions of Paragon medical advice and engineering being offset by a high single digit decrease in organic sales.

Speaker Change: As we expected the impact from normalization of inventory levels across our OEM customer base continued in the first quarter.

Speaker Change: And we expect to see a return to growth in the second half of the year consistent with what we had indicated last quarter.

Speaker Change: And finally as a result, we continue to expect organic sales for our automation businesses to be up low single digits with stronger growth in the back half of the year. So that's the walk around the company and I think he also asked for.

David A. Zapico: Stronger Growth and the Back Half. So that's the walk around the company, and I think you also asked for a.., what's going on in the various geographies, so we'll get to that too, Deane. The U.S. was down one percent against a pretty difficult comparison.

Speaker Change: What's going on in the various geographies so get to that two <unk>.

Speaker Change: The U S was down 1%.

Speaker Change: Against a pretty difficult comparison in our strongest growth was in our aerospace and defense businesses.

David A. Zapico: And our strongest growth was in our aerospace and defense. Moving to Europe, we were down 2% minus two organic notable growth. Parts of Our Process and Parts of Our Power. And in Asia, we were up low single digits with strength across our processes. So we had a very good performance in Asia. And digging down into that a little further, China was flat in the quarter with solid growth in parts of our process. Soaplow, Single Digits in Asia.

Speaker Change: Moving to Europe, we were down 2% so the minus two organic.

Speaker Change: With notable growth in parts of our process in parts of our power businesses offset by weakness in automation.

Speaker Change: And in Asia, we were up low single digits with strength across our process businesses.

Speaker Change: So we had a very good performance in Asia, and digging down into that a little further China was flat in the quarter with solid growth in our parts of our process businesses, So up low single digits in Asia.

Speaker Change: And China was flat.

David A. Zapico: You asked about the Dease Talk. I think that It's playing out as we talked about last quarter. This talk will continue into the second quarter and into the second half of the year. We expect that to turn around. You know, watching that closely and, uh..., really kind of playing out as we thought. I mean, this talk was probably a bit more positive than I thought it was going to be in Q1. Now that may be positive for later, the second half of the year. Great. And just a quick follow-up on the growth investments. We know this is your playbook.

Speaker Change: And then finally I would really help.

Speaker Change: Yes, you asked about the Destocking.

Speaker Change: Yes.

Speaker Change: I think that.

Speaker Change: It's playing out as we had talked about last quarter.

Speaker Change:

Speaker Change: I think the.

Speaker Change: Destock will continue into the second quarter, but in the second half of the year.

Speaker Change: We expect that the turnaround so so.

Speaker Change: <unk> that closely and.

Speaker Change: It's really kind of playing out as we thought I mean, the destock was probably a bit more than we thought it was going to be in Q1.

Speaker Change: Now that may be positive for later in the year, because we think of the second half of the year is positive.

Speaker Change: Great and just a quick follow up on the growth investments. We know this is your playbook.

David A. Zapico: Is there anything unique in terms of how you're deploying that capital? I mean, typically, it's salespeople are a component, but any other kind of wrinkles here you could share? Yeah, it's salespeople, with the largest chunk of it in engineering, research, development, and engineering. We have a full slate of projects. We have excellent opportunities for the longer term, and we're getting after them, so I'm very, positive about what's happening with our new product. Great, thank you.

Speaker Change: Is there anything unique in terms of how you're deploying that capital I mean, typically it's salespeople is a component, but any other kind of wrinkles here you could share.

Speaker Change: As salespeople with the largest.

Speaker Change: Chunk of it is in the engineering research development and engineering, and we have a full slate of projects.

Speaker Change: We have excellent opportunities longer term and we're getting after them so I'm very.

Speaker Change: Positive on what's happening in our new product development programs.

Speaker Change: Great. Thank you thank.

Speaker Change: Thank you Dean.

Operator: One moment for our next question. Thank you. Our next question comes from the line of Jeffrey Sprague of Vertical Research Partners. Your line is now open. Hey, thanks. Good morning, everyone. Hey, can you just address a little bit more about Tarragon itself, how it's performing, and the charge that you took. I don't recall a large charge like this on prior deals. Maybe there were smaller ones that you just absorbed but didn

Speaker Change: One moment for our next question.

Speaker Change: Okay.

Speaker Change: Thank you. Our next question comes from the line of Jeffrey Sprague of vertical Research partners. Your line is now open.

Jeffrey Todd Sprague: Hey, Thanks, Good morning, everyone. Good morning, Jeff.

Jeffrey Todd Sprague: Hey, can you just address a little bit more.

Jeffrey Todd Sprague: Paragon itself, how it's performing and the charge that you took.

Jeffrey Todd Sprague: I don't recall, a large charge like this on prior deals maybe smaller ones that you've just absorbed but didnt breakout, but kind of the nature of what you're trying to accomplish.

David A. Zapico: But kind of the nature of what you're trying to accomplish, and is this kind of a, you know, a one-time deal in this quarter as you kind of bed down the asset? Yeah, that's a great question, Jeff.

Jeffrey Todd Sprague: And is this kind of a.

Jeffrey Todd Sprague: A one time deal in this quarter I should kind of go down the asset.

David A. Zapico: And it's kind of what you said. I mean, we typically absorb the, you know, smaller acquisitions. As we.. through the years and quarters. And the last time we did something like this when we bought Zygo, it was a bigger acquisition and, because of the size of the acquisition and because of the opportunities that we see, we wanted to take that integration charge because there are tremendous, tremendous opportunities to improve. So it's a one-time nature.

Speaker Change: Yes, that's a great question, Jeff and just kind of what you said I mean, we typically absorb the smaller acquisitions.

Speaker Change: We.

Speaker Change: Proceed through the years and quarters.

Speaker Change: And the last time, we did something like this when we bought I believe ziegel so bigger acquisition.

Speaker Change: Because of the size of the acquisition and because of the the opportunities that we see.

Speaker Change: We wanted to take that integration charge because were tremendous tremendous opportunities to improve the business.

David A. Zapico: It's for larger deals. As you know, Paragon was the largest acquisition that we have done. We spent about 1.9 billion dollars, so as we dug into it, as we worked with their management team, we got really comfortable with this plan. Quite honestly, there are more opportunities than we thought. We have a good team of both Ametek and Paragon leaders that are

Speaker Change: So I'd say its a one time nature is for larger deals that you know Paragon was the largest acquisition that we've done.

Speaker Change: Spent about $1 $9 billion, so as we dug into it as we work with their management team.

Speaker Change: We got really comfortable with this plan quite honestly there is more opportunities than we thought.

Speaker Change: We have a good team of both AMETEK and Paragon leaders that are.

David A. Zapico: I'm really getting after it now, so I feel really good about the business. The integration is being integrated into Ametek Wealth. It's very positive about the future. You know, I think this restructuring is largely going to happen over the next... A couple of years, and what we really see is a less than two-year payback on it, so excellent payback, and we've started on that. We're really proud of what we're doing. Right, and then maybe just switching gears, and I'm sorry if I missed it; I was on a little bit late.

Speaker Change: Really getting after it now so I feel really good about the business.

Speaker Change: The integration is being integrated into AMETEK well.

Speaker Change: It's <unk>.

Speaker Change: Very positive around the future and I think just this.

Speaker Change: Restructuring.

Speaker Change: Largely going to happen over the next.

Speaker Change: Couple of years, and we really see is.

Speaker Change: Less than two year payback on it so excellent excellent payback.

Speaker Change: <unk>.

Speaker Change: We've started on that.

Speaker Change: Yes.

Speaker Change: We're really positive what we're doing and.

Speaker Change: I feel positive about the deal.

David A. Zapico: But can we just decompose revenue growth in the quarter for the segments, and give some color on what the organic performance was at the segment level? And if you have any color on price or other elements of revenue? Yeah, if you look at our overall sales were up 9%, that's us both. The organic group, the organic growth was just down modest, about about a half a point. EIG's overall sales were plus 4%. The organic growth in AIG was plus one.

Speaker Change: Great and then.

Speaker Change: Maybe just switching gears on Im sorry, if I missed that I was on a little bit late but can we just decompose revenue growth in the quarter.

Speaker Change: The segments. Some some color on what the organic performance was at the segment level and if you have any color on price or other elements of revenue.

Speaker Change: Good to hear.

Speaker Change: Yes, if you look at.

Speaker Change: Our overall sales were up were up 9%.

Speaker Change: Both groups.

Speaker Change: The organic group the organic growth was just down modestly about about a half a point.

Speaker Change: Overall sales were plus 4%.

Speaker Change: The organic growth in AIG was plus one.

David A. Zapico: EMG's overall sales were plus 21%, and in the organic field that EMG was mining, you had to find Group Dynamics. And maybe just one last one back to this kind of whole D stock question. Just to comment that it was more in Q1 than expected. And I know it's kind of hard to know what your customers are going to do.

Speaker Change: EMG overall sales were plus 21%.

Speaker Change: The organic sales at EMG were minus four.

Speaker Change: So you had.

Speaker Change: That defines the.

Speaker Change: Group dynamics for revenue.

Speaker Change: And maybe just one last one back to this kind of whole destock question.

Speaker Change: Just to comment that it was more in Q1 than expected and I know, it's kind of hard to know what your customers are going to do but.

David A. Zapico: But just your confidence level that you know it actually is D stock, and you have visibility on sell through being better on the other side. Yeah, maybe just kind of address that if you could. Yeah, yeah.

Speaker Change: Just your confidence level that.

Speaker Change: Actually is in fact destocking.

Speaker Change: You have visibility on.

Speaker Change: Through being better on the other side.

Speaker Change: Yes, maybe just to kind of address that if you could yeah.

David A. Zapico: The first point is, when you look at Ametek's first half, second half... typically, we have 48% of our revenue and profits in the first half of the year, and 52% of our revenue and profits in the second half of the year. That's exactly what we have this year.

Speaker Change: The first point is when you look at ametek's.

Speaker Change: First half second half.

Speaker Change: We typically have a 48% of our revenue and profits in the first half of the year in <unk>.

Speaker Change: 52% of our revenue and profits in the second half of the year and.

David A. Zapico: So our second half of the year is not back-end loaded, so we feel good about that. Another point that you may not see, it really appears orders are stable. Specifically, when I look at Q4-23 to Q3-23, and then I look at the next quarter.

Speaker Change: That's exactly what we have this year so our second half of the year is not.

Speaker Change: Backend loaded so we feel good about that.

David A. Zapico: Another point that you may not see it really appears our orders have stabilized.

Speaker Change: Specifically.

Speaker Change: When I look at Q4, 'twenty three two to $3 23.

Speaker Change: And then I look at the next call.

David A. Zapico: Q124 is the last quarter to compare to Q23. So the last. Unknown Executive, Scott Graham, Michael Anastasiou, Dalip Puri, Ametek, We've seen low single-digit growth in orders in both Q4-23 and Q1-23. So it feels like we've bottomed, and we're starting to see some modest. At the same time, you know, in Q1-23, we had an extremely good quarter.

David A. Zapico: Q1, 24% last quarter, two compared to Q2 2003, so the last two quarters sequentially with all of the acquired backlog removes so really looking at a true run rate sequentially. We've seen low single digit growth in orders in both Q4 dollars 23 in Q1 24.

Speaker Change: It feels like we've bottomed and we're starting to see some modest improvements.

Speaker Change: At the same time.

Speaker Change: In Q1, 'twenty three we had an extremely good quarter. So we have a difficult comp we're battling.

David A. Zapico: And finally, and perhaps most importantly, we've had customer commentary that continues to communicate to us that in the second half of the year, the destocking phase will come to an end, and we should return to a positive book to build. So, you know, in terms of the economic environment, we're not in, you know; we're watching it closely, but You know, for the balance of the year, we're just assuming modest economic growth, not any kind of economic acceleration, and at the same time, not a recessionary environment.

And finally, and perhaps most importantly.

Speaker Change: We've had customer commentary that continues to.

David A. Zapico: <unk> to us in the second half of the year. The Destocking phase will come to an end and we should return to a positive book to bill. So in terms of the economic environment, we're not and we're watching it closely but.

David A. Zapico: For the balance of the year, we're just assuming more.

David A. Zapico: Modest economic growth.

David A. Zapico: Not any kind of economic acceleration and at the same time, not a recessionary environment and we expect that will grow sale.

David A. Zapico: And we expect that we'll grow sales modestly each quarter, and the comparables get easier in the second half of the year. And as I said, this 48%, 52% split, H1 to H2, is very much aligned with our historical average. And I'm sorry, did you have a comment on price? I missed it, and I'll cede the floor.

David A. Zapico: Sales modestly each quarter and the comparable is get easier in the second half of the year and as I said this.

David A. Zapico: 48%, 52% split <unk> is very much aligned with our historical averages.

Speaker Change: And I'm, sorry did you have a comment on price I missed it and I'll cede the floor. Thank you.

David A. Zapico: Thank you. No, that's a good question, Jeff. You know, pricing continued to more than offset inflation. Pricing was approximately 4% in the quarter, and inflation was about 3%. The results speak for themselves, demonstrating the highly differentiated nature of the Ametek product portfolio and our leadership position in these niche markets around the globe. And for the full year, we do expect pricing to come in a bit and inflation to come in a bit.

Speaker Change: Good question Jeff.

David A. Zapico: But we expect to maintain a positive spread between them. Thank you. Our next question comes from the line of Brett Linzey of Mizzouho. Your line is now open. Bye guys, this is Peter Grashom from Brett Linzey.

David A. Zapico: Pricing was.

David A. Zapico: Continued to more than offset inflation.

Peter Grashom: Pricing was approximately 4% in the quarter and inflation was about 3%.

Peter Grashom: The results speak to the highly differentiated nature of the AMETEK product portfolio.

Peter Grashom: And our leadership position in these niche niche markets around the grow globe and for the full year, we do expect that.

Peter Grashom: Pricing to come in a bit and inflation to come in a bit, but we expect to maintain.

Peter Grashom: Positive spread between them.

Peter Grashom: Thank you.

Peter Grashom: Thank you Jeff.

Peter Grashom: One woman Sir our next question.

David A. Zapico: Okay.

Peter Grashom: Our next question comes from the line of Brett Linzey of Mizuho. Your line is now open.

Peter Grashom: Hi, guys. This is <unk> on for Brett Linzey.

David A. Zapico: Hey, so as we look at a potentially more aggressive tariff regime, can you just talk about how nimble your supply chain configuration is and then your ability to flex around different regions if needed? Yeah, it's a great, great question. I mean, we look at tariffs and that became a bigger issue back in the 2017 timeframe. In the quarter, we had a minimal impact from tariffs, and they were completely offset by price, and, you know, they give you an idea across the whole company that tariffs are only going to cost us about a penny, three or four million dollars. And what happened there is we've aggressively rebalanced our supply chain. It's largely done, so we're not overexposed to any region of the globe.

Peter Grashom: So as we look at it more potential potentially more aggressive tariff tariff regime could you just talk about how nimble your supply chain configuration is and then your ability to flex around different regions if needed.

Speaker Change: Yes, it's a great great question I mean, we look at.

David A. Zapico: Tariffs and that became a bigger.

David A. Zapico: Issue back in 2017 timeframe and in the quarter, we had a minimal impact from tariffs and they were completely offset for price.

David A. Zapico: And they give you.

David A. Zapico: And idea across the whole company tariffs are only going to cost us about a penny I would like three or $4 million and what happened. There is we have aggressively rebalanced our supply chain is largely done so.

David A. Zapico: We're not overexposed to any region of the globe and we have.

David A. Zapico: And we have a strategy where, from the U.S., we're largely sourcing from Mexico and other regions of the Americas and in Europe, dot com. The hard work that we did over the past few years is really rebalancing our supply chain. We're essentially finished with it, just a very, very small bit of work that would continue. We are very well positioned to be able to deal with an increasing tariff. Specifically, with China in particular, we don't have a real risk there.

David A. Zapico: Strategy were from the U S were largely sourcing from.

David A. Zapico: Mexico and other regions of the Americas and in Europe, We do a lot of sourcing from to Czech Republic in Serbia.

David A. Zapico: And in Asia, we do a lot of sourcing from Malaysia. So we've got a nice balanced around the world. So I think.

David A. Zapico: The hard work that we did over the past few years of really.

David A. Zapico: Rebalancing our supply chain, we're essentially finished with it just very very small bit of work that would continues.

David A. Zapico: We're very well positioned to be able to to deal with an increasing tariff regime.

David A. Zapico: Specifically with China in particular, we don't have a real risk there we do excellent business in China.

David A. Zapico: We do excellent business in China. It's a China for China strategy, about 9% of our sales, and largely we... sell in China, are in a pretty good position in terms. Perfect, thanks. And then if you can just provide some color on the tempo or monthly cadence of trends in the quarter and then look into April. Yeah, I mean, it was a pretty typical quarter. Marsh was the strongest.

David A. Zapico: It's a China for China strategy is about 9% of our sales and largely we.

Speaker Change: Source what we.

David A. Zapico: We sell in China. So we're in pretty good position in terms of tariffs.

David A. Zapico: Perfect. Thanks, and then if you could provide some color on the tempo or monthly cadence of trends in the quarter and then looking into April.

Speaker Change: Yeah, I mean it was.

David A. Zapico: Pretty typical quarter.

David A. Zapico: March was the strongest.

David A. Zapico: Excuse me, Mark was the strongest quarter. Okay, yeah, pretty typical quarter with March being the strongest on both orders. So it's sales. We had the highest sales for the quarter in March.

David A. Zapico: Excuse me March was the strongest quarter.

David A. Zapico: Wait a minute.

Speaker Change: Okay, Yes.

David A. Zapico: Yes, a pretty typical quarter with March being the strongest.

David A. Zapico: On both orders and sales.

David A. Zapico: So it's.

David A. Zapico: Sales.

David A. Zapico: Were the highest for the quarter in March and.

David A. Zapico: And then in April, we're right on plan, so we feel good about that. Guidance, and You know, it's pretty, as I said, it's and a lot of people bouncing around there. We're not seeing any incremental improvements... for everything. Thank you. One moment for our next question. Thank you. Our next question comes from the line of Scott Graham of Seaport Research Partners. Your line is now open. Hi, good morning.

David A. Zapico: And then in April we're right on plan. So we feel good about.

Scott Graham: The guidance and.

Scott Graham: It's pretty as I said, it's a.

Scott Graham: Bouncing around there but.

Scott Graham: We're not seeing any incremental weakness at this point.

Scott Graham: Perfect. Thank you.

Scott Graham: Thank you.

Scott Graham: One moment for our next question.

David A. Zapico: Thank you. Our next question comes from the line of Scott Graham of Seaport Research Partners. Your line is now open.

Operator: Thanks for taking the question. Really, maybe the first question is about the M&A environment. You know, EBITDAs do seem to have firmed up, even though this first quarter, I think most would say industrial land has been, you know, a little uneven. Nevertheless, when EBITDAs firm up, that's kind of when I think Ametek does a lot of striking. And I'm just wondering, you know, are we looking at a year this year that could mirror last year?

Scott Graham: Yes, hi, good morning, Thanks for taking the question.

Operator: Really maybe the first question is about the M&A environment.

Operator: Ebitdas do seem to have firmed up even though first quarter I think most would say industrial and that's been a little uneven Nevertheless.

Operator: Ebitdas firm up that's kind of when I think AMETEK does a lot of striking and I'm just wondering.

Operator: Are we looking at a year this year that could mirror last year I mean, what is like the really near term pipeline look like Dave.

David A. Zapico: I mean, what does the really near-term pipeline look like, David? It's very, very difficult to predict the very near term, but... Scott, the pipeline remains very strong, and we're actively looking at a number of high-quality deals across a broad set of markets. So, you know, we have $1.8 billion of existing cash and credit facilities post-Beragon. We have a balance sheet that would support it. You know, if the deal would meet our criteria, we could, we could, you know, do it.

David A. Zapico: It's very very difficult to predict the very near term but.

David A. Zapico: Scott the pipeline remains very strong.

David A. Zapico: And we're actively looking at a number of high quality deals across a broad set of markets.

David A. Zapico: So we have $1 8 billion of existing cash and credit facilities post Paragon.

David A. Zapico: We have a <unk>.

David A. Zapico: Balance sheet would support.

David A. Zapico: If the deals meet our criteria, we could we could do.

David A. Zapico: <unk>.

David A. Zapico: Over four billion in deals this year, and that would only take our leverage up to about two and a half times. So we're really in an excellent position. It's not a balance sheet issue, it's not a cash flow issue. We are performing extremely well. It comes down to finding the right businesses.

David A. Zapico: Over $4 billion of deals this year and that would only take our leverage up to about two five times. So we're really in an excellent position.

David A. Zapico: A balance sheet issue, it's not a cash flow issue performing extremely well it comes down to finding the right businesses.

David A. Zapico: We have a good pipeline right now, a very good pipeline. We really have the opportunity, as you said, Typically, we have this opportunity to differentiate our performance with the M&A element of our growth. With this strong balance and with these strong, So, you know, in this market that's a bit choppy, our combination of OPEX and M&A and this proven acquisition strategy, I'm really looking to differentiate our performance with our M&A and our OPEX over the next couple of years. Thank you for that.

David A. Zapico: We have a good pipeline right now very good pipeline and.

David A. Zapico: We really have the opportunity as you said <unk>.

David A. Zapico: Typically this opportunity to differentiate our performance what the M&A element of our growth strategy.

David A. Zapico: With a strong balance sheet and with the strong cash flow position so <unk>.

David A. Zapico: This market is a bit choppy or combination of Opex and M&A and has proven acquisition strategy I'm really looking to differentiate our performance with where with our M&A and our opex during the next couple of quarters.

David A. Zapico: You answered one of Jeff's questions earlier saying you're expecting sales to be up modestly each quarter. Were you referring to organic for the next three quarters? Yeah, this is sequential, Scott. Okay, so sequentially, you're expecting sales dollars to be a bit higher than q2, q3 a bit higher than q2, and q4 will be a bit higher. Okay, and the last one is just, you know, sort of back on the orders. I know you do have a pretty significant comp that you're up against when you stack them.

David A. Zapico: Thank you for that.

David A. Zapico: You answered one of Jeff's questions earlier, saying you were expecting sales to be up modestly each quarter.

David A. Zapico: Were you referring to organic for the next three quarters.

David A. Zapico: Yes.

David A. Zapico: The sequential Scott.

David A. Zapico: Okay. So sequentially Youre expecting sales dollar you want to be a bit higher than Q2, Q3, a bit a bit higher than Q2, and Q4 will be a bit higher than Q.

David A. Zapico: Q3.

David A. Zapico: What were orders in the quarter in dollars and in organic? Yeah, the orders were, orders were minus eight, and organic orders were minus 10. And again, we had a tough comp, and I went through the process of they sequentially grew low single digits the last couple of quarters when you take out the comp. I think when in Q1 of 23, we had exceptional orders from some projects, and EIG in particular. So when you take that out and you look at what's going on sequentially, we get more, Yeah, no, I get it. 22 and 21 were also exceptional organic periods for you.

David A. Zapico: Okay and the last one is just sort of back on the orders I know you do have.

David A. Zapico: A pretty significant comp.

David A. Zapico: That youre up against when you stack them.

David A. Zapico: What were orders in the quarter.

David A. Zapico: In dollars and inorganic.

David A. Zapico: Yes.

David A. Zapico: Orders were.

David A. Zapico: Orders were minus eight.

David A. Zapico: And organic orders were minus 10.

David A. Zapico: And.

David A. Zapico: We had a tough comp and I went through the <unk>.

David A. Zapico: The process of de sequentially grew low single digits. The last couple of quarters. When you take out the comp I think in Q1 of.

David A. Zapico: 'twenty three we had exceptional orders from some project business.

David A. Zapico: And AIG in particular, so so when you take that out and you look at what's going on sequentially.

David A. Zapico: We get more comfortable.

Speaker Change: Yes, no again at 'twenty, two and 'twenty. One were also exceptional organic periods for you. So okay. Thank you. Thank.

Speaker Change: Thank you Scott.

Speaker Change: One moment for our next question.

David A. Zapico: Okay, thank you. Thank you. One moment for our next question. Thank you. Our next question comes from the line of Andrew Obin of Bank of America. Your line is now open. Hey guys, good morning. Good morning, Andrew.

David A. Zapico: Thank you. Our next question comes from the line of Andrew <unk> of Bank of America. Your line is now open.

Operator: Just a question, how should we think about the Paragon Medical integration costs? So what's the payback on this restructuring that's now because I assume it's extra. So what's the payback on this restructuring that's embedded in the 24 guide and how much of it should I add to 25? Yeah, well, in 24, we had told you in a previous, [inaudible] Paragon was going to contribute $0.08 to $0.10 to Ametek's EPS, and that still holds.

Andrew Burris Obin: Hey, guys. Good morning, good morning, Andrew.

Operator: Just a question on how to think about the Paragon medico integration costs. So what's the payback.

Operator: This restructuring that's now because I assume it's extra so what's the payback on this restructuring that's embedded.

Operator: 24 guide and how much of it should I add $2 25.

Operator: And 24, we had told you in prior.

Operator: Meeting that.

Operator: Paragon was going to contribute eight to 10.

Operator: Ametek's EPS and that still holds.

Operator: When I look at that $22 million dollar charge, we said the payback was going to be less than two years. And at run rates, so it'll take us, you know, a couple of years to get there, but at the run rate, we have $70 million in benefits. So we spent approximately $29 million; we're going to get approximately $70 million in benefits. The payback is less than two years.

Operator: When I look at that.

Operator: $2 million charge.

Operator: We said the payback is going to be less than two years and at run rates. So it will take us.

Operator: A couple of years to get there, but the run rate, we have $70 million of benefits. So we spent approximately $29 million were going to get approximately $70 million of benefits that payback is less than two years. So that really tells you what a great return it has and it's just.

David A. Zapico: So that really tells you what a great return it has, and it's just, there wasn't a lot of focus, and we can run things really efficiently. I'm excited that the management team sees it that way too, and we're really going to make Paragon an exceptional business from an operating perspective. Regarding 2025, I think we've come out and said that we should see a substantial increase in operating earnings related to Paragon in 2025, but I'm not willing to quantify what's going to happen in 2025. We're much too far away to do that.

David A. Zapico: It wasn't a lot of focus and we can run things really efficiently and.

David A. Zapico: I'm just excited that the management team sees it that way too and we're really going to make paragon and exceptional business from an operating perspective.

David A. Zapico: Regarding 2025.

David A. Zapico: I think we've come out and said that we should see a substantial increase in.

David A. Zapico: Operating earnings related to Paragon in 2025.

David A. Zapico: But I'm not willing to quantify what's going to happen in 2025 were much too far away to do that but again the metrics I would point you to or we spent 29 million, we'll see $70 million benefit.

David A. Zapico: Spent $29 million. It's the $70 million in benefit at the max run rate, and the payback for the project is a little less than two years. So we feel really good about it. It's a good investment for us.

David A. Zapico: At Max run rate and the payback from the project is a little less than two years. So we feel really good about it could payback for our shareholders.

David A. Zapico: Sorry, I probably, and I should probably take it offline. But just to be sure. So I thought the Paragon restructuring was extra because you saw incremental opportunities. So you're saying that I should have that that was embedded all along but was not in the guide.

Speaker Change: Probably I should probably take it offline, but just to make sure. So.

David A. Zapico: I saw the Paragon restructuring was extra because you saw incremental opportunities. So you are saying that.

David A. Zapico: Should have that.

Speaker Change: That was embedded all along.

David A. Zapico: But was not in the guide I'm sorry.

David A. Zapico: I'm sorry, I just think that it's a larger deal. And we saw a lot of opportunities over it. Okay, I'll take it offline because I'm not sure if I should have had it in my numbers, or this 10 cents is extra on top of your thinking. Just confirming that I apologize, and I'm happy to take it offline with Kevin.

David A. Zapico: I think that it's a <unk>.

David A. Zapico: Larger deal and we saw a lot of opportunities over it will take us a few years of doing so reported forward.

David A. Zapico: So okay I'll take it offline because I'm not sure if I. So I should have had it in my numbers or this 10 cents is extra on top of you were thinking just confirming that I apologize I'm happy to take it offline with Kevin I apologize I don't know, which Avenue numbers, Andrew I don't really look at them, but I can tell you that we're expecting to get eight to 10.

David A. Zapico: I apologize. Yeah, I don't know what you have in your numbers, Andrew. I don't really look at them.

David A. Zapico: But I can tell you that we're expecting to get eight to 10 cents of benefit from Paragon, and this restructuring doesn't. And then just on revenue, and you did give very good color, was basically the D-Stock what drove it. I guess you were expecting, I think you guided for low double-digit revenue in the first quarter, a little bit below, so it's just you said it was D-Stock pulled forward.

David A. Zapico: The benefits from Paragon and this restructuring doesn't change that.

David A. Zapico: Got you that makes sense and then just on revenue.

David A. Zapico: And you did give very good color.

David A. Zapico: Basically the destock.

David A. Zapico: What drove I guess, you would expect kind of thing you guided for low double digit.

David A. Zapico: Revenue in the first quarter, a little bit below so it's just you said, it's destock pull forward correct.

David A. Zapico: Yes.

Speaker Change: Thanks, so much thank.

Speaker Change: Thank you Andrew.

Speaker Change: One moment for our next question.

Operator: One moment for our next question. Thank you. Our next question comes from the line of Christopher Glynn of Oppenheimer & Co. Inc. Your line is now open. Thanks. Good morning, everyone.

David A. Zapico: Thank you. Our next question comes from the line of Christopher Glynn of Oppenheimer <unk> Co incorporated your line is now open.

Christopher D. Glynn: Thanks, Good morning, everyone.

David A. Zapico: Yeah, I was curious, just to go into the topic a little bit of the long-term, multi-year kind of secular trends where you see an impact. It occurs to me, maybe the power business could be on your leading edge with energy transition and electrification. But curious your comments in general on the kind of secular trends, and in particular, what you're seeing is kind of street-level evidence of the reshoring type trend.

Christopher D. Glynn: Yes. It was curious just to go into the topic a little bit of the.

David A. Zapico: Long term multi year kind of secular trends, where you see it impact it occurs to me maybe the the power business could be on your leading edge with energy transition in electrification.

David A. Zapico: But curious your comments in general on the.

David A. Zapico: Secular trends and in particular, what you're seeing is kind of a street level evidence on the re shoring type trend.

David A. Zapico: Yeah, I think when I think about the long-term secular growth drivers, and we talked about a few of them in my talk, but a lot of Project Activity around the Stomach Conductor Market, and that's finally, you're moving closer and closer to the point where that's going to start turning into business for us. West. There's a lot of project work on semiconductors. The power market, as you said, and there are really two drivers there, the driver for renewable energy and energy, but also the driver for investments in power.

Speaker Change: Yes, I think.

David A. Zapico: When I think about the long term secular growth drivers and we've talked about a little a few of them in my talk but a lot of.

David A. Zapico: Project activity around the semiconductor market and Thats finally.

David A. Zapico: So, we're moving closer and closer to the.

David A. Zapico: The point.

David A. Zapico: That's going to start turning into business for us in the West there is a lot of project work on semiconductors.

David A. Zapico: The power market as you said and there's really two drivers there the driver for renewables energy.

David A. Zapico: But also the driver for investments in the power grid.

David A. Zapico: Our RTDS business, our power instrumentation business, are really levered to those. That's starting to happen as work is quick. Think about the aerospace and Defense business. Again, we had a great quarter again, and that's continuing, and I think both Airbus and Boeing have a nine-year backlog for the commercial market. Looks good. Our defense business, we're in the right position in defense.

David A. Zapico: Our our Tds business or power instrumentation business are really <unk>.

David A. Zapico: Levered to those so.

David A. Zapico: That's starting to happen has worked its way through.

David A. Zapico: When I think about the aerospace and defense business.

David A. Zapico: Again, we had a great quarter again, and that's continuing and.

David A. Zapico: Yes, I think both.

David A. Zapico: Airbus and Boeing have a nine year backlog for the commercial market.

David A. Zapico: Look as good or defense, we're in the right position in defense, we had another good quarter in defense.

David A. Zapico: We had another good quarter in defense. So, you know, I think about those kinds of markets and those trends. I feel good about the future and a lot of fiscal stimulus in the U.S., which has not been there in the past. But it takes time to work through the system.

David A. Zapico: I think about those kind of markets in those trends.

David A. Zapico: I feel good about the future and.

David A. Zapico: Lot of fiscal stimulus in the U S, which has not been there in the past.

David A. Zapico: But it takes time to work through the system. So so we think longer term I think we're in the right places to do well.

David A. Zapico: So, you know, I think, longer term, we're in the right places to do well. Thank you. One moment for our next question. Thank you. Our next question comes from the line of Joe Giordano of TD Cohen. Your line is now open.

Joseph Craig Giordano: Thank you thank.

Joseph Craig Giordano: Thank you Chris.

Joseph Craig Giordano: One moment for our next question.

David A. Zapico: Thank you. Our next question comes from the line of Joe Giordano of Cowen. Your line is now open.

Operator: Hi, good morning; this is Van on for Joe. I'm sorry, I know de-stocking and bottoming of orders within automation has been discussed a few times. So just a quick follow-up. This is obviously something a lot of companies have been struggling with in the past few quarters, but some have also been talking about changing their internal processes to gain more visibility of the end market and end users.

David A. Zapico: Hi, Good morning, this is zane on for Joe.

Operator: Sorry, I know Destocking and bottoming of orders within automation has been discussed a few times.

Operator: Quick follow up is obviously something a lot of companies have been struggling with in the past few quarters.

Operator: But some have also been talking about changing their internal processes to gain more visibility.

Operator: End market and end users is there anything that you guys have done essentially.

David A. Zapico: Is there anything that you guys have done, potentially? more frequent conversations or reaching out to like end market users to understand a bit better their demand going forward. Anything you've changed recently?

Operator: More frequent conversations or reaching out to like end market users to understand a bit better their demand going forward anything you've changed recently.

David A. Zapico: I can't point to anything to be changed. I mean, if you go back and you follow We kind of caught exactly what happened when we talked about the first half of the year of Sales Outpacing Orders, so that means you'd have a slightly below one booked bill. We talked about the Dease talk in the first half, and we thought it would turn positive in the second half. We did that before this quarter.

David A. Zapico: I can't point to anything that changed.

David A. Zapico: Go back and you follow us.

David A. Zapico: We kind of call it exactly what happened and we talked about the first half of the year of.

David A. Zapico: Sales outpacing orders so that mean you would have.

David A. Zapico: Slightly below one book to Bill.

David A. Zapico: Talked about the destock in the first half and.

David A. Zapico: We thought it would turn positive in the second half we did that before this quarter.

David A. Zapico: I think we have a pretty robust... Communication System with our field, but there's always opportunities to get better, and we work on those. I feel like the information that we get from the field is pretty accurate, and we're on top of it, so, but there's always room to improve, and we're always looking at ways. Great, thank you. I'll relay that.

David A. Zapico: I think we have a pretty robust.

David A. Zapico: Communication system with our field, but there's always opportunities to get better and we work on those.

David A. Zapico: And continuously improve our businesses, but.

David A. Zapico: I feel like the information that we got from the field is.

David A. Zapico: Pretty accurate and we're on top of it so.

David A. Zapico: But theres always room to improve and we're always looking at ways to improve.

David A. Zapico: Yeah.

Speaker Change: Great. Thank you I'll relate that thank you so much.

Speaker Change: Thank you.

Speaker Change: One moment for our next question.

Operator: Thank you so much. One moment for our next question. Thank you. Our next question comes from the line of Nigel Coe of Wolf Research. Your line is now open. Oh, thanks. Good morning, everyone.

Speaker Change: Thank you.

David A. Zapico: Our next question comes from the line of Nigel Coe of Wolfe Research.

Nigel Edward Coe: Line is now open.

Operator: Thanks for the question. Hey, David, I just want to come back to the order math. I think you said down 8% and then down 10% organic. We've got about nine points of contribution from Paragon in our numbers. So just wondering, you know, what am I missing?

Nigel Edward Coe: Thanks, Good morning, everyone and thanks for the question.

Nigel Edward Coe: Hey, David I, just wanted to come back to the math I think you said down 8% and down 10% organic right. We've got about nine points of contribution from Paragon in our numbers.

Nigel Edward Coe: So just wondering.

Operator: Well.

David A. Zapico: Because I've expected there to be a significant contribution from Paragon in the order numbers. So just help me out with that math, please. Yeah, we had 9% acquisition. Paragon is in the acquisitions, not sales. Okay, but then the orders, you know, 8% organic to down 10% reported down 10% organic, was there no material impact from Paragon there?

Nigel Edward Coe: Am I missing because I would have expected.

Nigel Edward Coe: That would be a significant contribution from paragon in the order number so.

David A. Zapico: Just help me out with that math please.

David A. Zapico: We had 9% acquisition growth and Paragon is in the acquisitions not the organic.

David A. Zapico: So.

David A. Zapico: Paragon sales orders sales excuse me yes.

David A. Zapico: Okay, but then the orders 8% organic to synthetic <unk> reported down in terms of organic.

Speaker Change: No material impact from Paragon.

David A. Zapico: Yeah, with Paragon, we obviously had a large backlog of orders and uh... And then in Q1, there's a timing issue because Paragon's going through the same thing. Okay. Okay, that impacts the work. So the medical market, it's in both our EMC business and Paragon, we're seeing the same kind of destock. You know, if we look at medical procedures, they're all growing at mid-to-high single digits, but medical device demands are...

Speaker Change: Yes, with Paragon, we had obviously the large job.

David A. Zapico: Look the backlog of orders in.

David A. Zapico: Q4, and then in Q1.

David A. Zapico: There is a timing issue because paragon is going through the same destock that.

David A. Zapico: AMD businesses, so there's a bit of a destock there.

David A. Zapico: Okay.

David A. Zapico: <unk> so the medical market, it's in both our <unk>.

David A. Zapico: IMC business and Paragon, we're seeing those same kind of destock in the EMG businesses if you.

David A. Zapico: What we look at the medical procedures, they're all growing at mid to high single digits, but the medical device Oems are.

David A. Zapico: Yeah.

David A. Zapico: Unknown Executive, Scott Graham, Michael Anastasiou, Dalip Puri, Unknown Executive, Scott Graham, We think it's going to run its pace. Okay, does that impact the full year forecast? I think we've got, you know, close to five million dollars of sales paragon. Does that destock impact that outlook? But also, I do... Go ahead.

David A. Zapico: <unk> their inventory correcting our inventories, it's kind of a widely communicated the piece of information and we monitor and procedures and they're growing. So this this destocking. We think is going to run a space through the first half of the year.

David A. Zapico: Okay does that impact the full year forecast.

David A. Zapico: We've got close to a farmer.

David A. Zapico: Fundamental sales Paragon, that's up destock impact that that outlook, but yes I do.

David A. Zapico: <unk>.

Speaker Change: Go ahead I'm sorry.

David A. Zapico: Yeah, I think for the first year we talked about mid-single-digit growth, so that's still exactly what we have in our model. So we think that we can get out of this year, and we think... double-digit growth for the next couple years, but the Paragon model from the viewpoint of what we had going into the year and what it is now is pretty much identical.

Speaker Change: No no it.

Speaker Change: It does go ahead Dave.

David A. Zapico: I think for the for the year.

David A. Zapico: When you bought Paragon it was a little less than $500 million in the first year, we talked about mid single digit growth. So that's still exactly what we have in our model. So we think that we get out of this year and we think it'll be.

David A. Zapico: Double digit growth over the next couple of years, but.

David A. Zapico: Paragon model from from the viewpoint of what we had going into the year and what it is now is pretty much identical.

David A. Zapico: Okay, and then just sorry, a follow-up on the $29 million. Is that all restructuring? Or is there some, you know, inventory and accounting? Yeah, I'd say the vast majority of it was restructuring, and there was a small part of it that was other integrations, and the vast majority of the public.

Speaker Change: Okay, and then just a follow up on the $29 million.

David A. Zapico: Is that all restructuring or was there some.

David A. Zapico: Inventory accounting.

David A. Zapico: Yes, I would say the vast majority of it was.

David A. Zapico: <unk>.

David A. Zapico: Restructuring.

David A. Zapico: And there was a small part of it that were other integration costs.

David A. Zapico: The vast majority.

David A. Zapico: And does some of that come into 2Q as well, you know? Do we need to think about that in 2Q? Yeah, we started the effort in Q1. As I said, we pulled forward all the benefits that we had.

David A. Zapico: Okay.

David A. Zapico: Does that come into <unk> as well.

David A. Zapico: Good when you think about that.

David A. Zapico: Yes, we started the effort in Q1 and.

David A. Zapico: Yes.

David A. Zapico: As I said, we pulled forward all the benefits that we had and.

David A. Zapico: Yes.

David A. Zapico: Just restructuring as was done in Q1, so I don't think we're going to have another restructuring charge in Q2.

David A. Zapico: Structuring was done in Q1, so I don't think we're going to have another Structuring Charge in Q2. Okay, thanks. Great. Thank you. It's a one-off charge. Okay, great. At the Zygo business, we had a big acquisition. We did a similar thing when we got comfortable with what we could do.

David A. Zapico: Okay.

David A. Zapico: Great. Thanks for that one it's a one off charge. So I wonder if George Okay, Great <unk> business, we had a big acquisition, we did a similar thing when we got comfortable with what we could do in and that we may have another charter with Paragon down the road. If we think there's other ways to improve it but right. Now this is a onetime charge to <unk>.

David A. Zapico: We may have another charge with Paragon down the road if we think there's other ways to improve it. But right now, this is a one-time charge to... You know, dramatically improve the operating capability of that business. The returns that I communicated to you are very, much. Makes better sense.

David A. Zapico: Dramatically improve the operating capability of that business and.

David A. Zapico: The returns that I communicated to you were very positive.

Speaker Change: It makes perfect sense, thanks for that.

David A. Zapico: Okay.

Kevin C. Coleman: Thanks. I am showing no further questions at this time. I would now like to turn it back to Kevin Coleman, Vice President of Investor Relations and Treasurer, for closing remarks. Thank you. Thanks, everyone, for joining our call today. And as a reminder, a replay of today's webcast may be accessed in the investor section of Ametek.com. Have a great day. Thank you for your participation and this conference. This does conclude the program

David A. Zapico: I am showing no further questions at this time I would now like to turn it back to Kevin Coleman, Vice President of Investor Relations and Treasurer for closing remarks.

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Kevin C. Coleman: Thank you thanks, everyone for joining our call today and as a reminder, a replay of today's webcast may be accessed in the investors section of AMETEK Dot com have a great day.

Speaker Change: Thank you for your participation in today's conference.

Speaker Change: This does conclude the program you may now disconnect.

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