Q1 2026 AMETEK Inc Earnings Call

April 30, 2026

David Zapico: Abilities. I will provide more details on First Aviation shortly. Now let me turn to our Q1 financial results. Q1 sales were $1.93 billion, up 11% from the same period in 2025. Organic sales were up 5%. Acquisitions added 5 points, with foreign currency a tailwind. Orders were outstanding in the quarter, with broad-based and meaningful growth across all AMETEK divisions. Overall orders were a record $2.2 billion, up 23% versus the prior year, and organic orders were up 22%, leading to a record backlog of $3.87 billion. Operating income in the quarter was $517 million, a 14% increase over the Q1 of 2025.

Speaker #1: Abilities. I will provide more details on first aviation shortly. Now let me turn to our first quarter financial results. First quarter sales were $1.93 billion.

Speaker #1: Up 11% from the same period in 2025. Organic sales were up 5%. Acquisitions added 5 points with foreign currency at tailwind. Orders were outstanding in the quarter with broad-based and meaningful growth across all AMETEK divisions.

Speaker #1: Overall orders were a record $2.2 billion. Up 23% versus the prior year. And organic orders were up 22%, leading to a record backlog of $3.87 billion.

Speaker #1: Operating income in the quarter was $517 million, up 14% over the first quarter of 2025. Operating margins were 26.8% in the quarter, and quarter margins were an impressive 27.9%, up a robust 160 basis points versus the prior year.

David Zapico: Operating margins were 26.8% in the quarter, and core margins were an impressive 27.9%, up a robust 160 basis points versus the prior year. EBITDA in the quarter was a record $620 million, up 11% versus the prior year, with EBITDA margins a strong 32.1%. Our excellent operating performance led to strong cash generation, with free cash flow to net income conversion of 107%. Diluted earnings per share were $1.97, up 13% versus the Q1 of 2025, and above our guidance range of $1.85 to $1.90 per share. Now let me provide some additional details at the operating group level. First, the Electronic Instruments Group.

Speaker #1: EBITDA on the quarter was a record $620 million. Up 11% versus the prior year, with EBITDA margins as strong 32.1%. Our excellent operating performance led to strong cash generation, with free cash flow to net income conversion of $107%.

Speaker #1: Diluted earnings per share were $1.97, up 13% versus the first quarter of 2025 and above our guidance range of $1.85 to $1.90 per share.

Speaker #1: Now let me provide some additional details at the operating group level. First, the Electronic Instruments Group. EIG had an excellent first quarter with double-digit sales growth, strong operating performance, and a meaningful inflection in orders.

David Zapico: EIG had an excellent Q1, with double-digit sales growth, strong operating performance, and a meaningful inflection in orders. EIG sales in the Q1 were $1.26 billion, up 11% from last year's Q1. Organic sales were up 2% and acquisitions added 7 points, with foreign currency the balance of the growth. Organic orders for EIG were up an impressive 25% in the Q1. This growth was broad-based across all EIG divisions and end markets, with notable growth within our defense, power, and semiconductor businesses. EIG's Q1 operating income was $376 million, up 6% versus the prior year. Core operating margins were an outstanding 31.4%, up 40 basis points from the prior year.

Speaker #1: EIG sales in the quarter were $1.26 billion. Up 11% from last year's first quarter. Organic sales were up 2% and acquisitions added 7 points.

Speaker #1: With foreign currency, the balance of the growth. Organic orders for EIG were up an impressive 25% in the quarter. This growth was broad-based across all EIG divisions and end markets, with notable growth within our defense, power, and semiconductor businesses.

Speaker #1: EIG's first quarter operating income was $376 million. Up 6% versus the prior year. Or operating margins were an outstanding 31.4%, up 40 basis points from the prior year.

Speaker #1: The electromechanical group also delivered excellent results in the quarter with continued strong sales and orders growth, along with exceptional operating performance leading to sizable core margin expansion.

David Zapico: The Electromechanical Group also delivered excellent results in the quarter, with continued strong sales and orders growth, along with exceptional operating performance, leading to sizable core margin expansion. EMG's Q1 sales were a record $664 million, up 13% versus the prior year. Organic sales were again up double digits at 11%, with foreign currency a 2-point tailwind. Sales growth was broad-based, with our automation, engineered solutions, aero- and aerospace and defense businesses all delivering excellent growth in the quarter. Additionally, EMG organic orders were again outstanding, up 16% versus the prior year.

Speaker #1: EMG's first quarter sales were a record $664 million. Up 13% versus the prior year. Organic sales were again up double digits at 11%, with foreign currency a 2-point tailwind.

Speaker #1: Sales growth was broad-based with our automation, engineered solutions, and aerospace and defense businesses all delivering excellent growth in the quarter. Additionally, EMG organic orders were again outstanding, up 16% versus the prior year.

Speaker #1: EMG's operating income in the first quarter was $171 million. Up 33% compared to the prior year period. While EMG's first quarter core operating margins were up sharply, to 26%, a considerable $410 basis point increase, versus the first quarter of 2025.

David Zapico: EMG's operating income in Q1 was $171 million, up 33% compared to the prior year period, while EMG's Q1 core operating margins were up sharply to 26%, a considerable 410 basis point increase versus Q1 2025. I wanted to take a moment to expand on the strength and breadth of AMETEK's order growth in the quarter. The 22% organic orders growth reflects the ongoing strength within our aerospace and defense markets, as well as the continued strong growth across our automation and engineered solution markets. Importantly, it also reflects a meaningful inflection in orders for our process instrumentation and power businesses in the quarter, as the strong pipeline of opportunities we have been highlighting is translating into substantial orders growth.

Speaker #1: I wanted to take a moment to expand on the strength and breadth of AMETEK's order growth in the quarter. The 22% organic orders growth reflects the ongoing strength within our aerospace and defense markets, as well as the continued strong growth across our automation and engineered solution markets.

Speaker #1: Importantly, it also reflects a meaningful inflection in orders for our process instrumentation and power businesses in the quarter. As the strong pipeline of opportunities we have been highlighting is translating into substantial orders growth.

David Zapico: Contributing to the order strength were several large orders in the quarter which help fill in our full-year sales outlook. These large orders are aligned with attractive market segments, including defense, space, power, and semiconductor, all markets where AMETEK is poised to benefit from strong and growing demand. Within defense, we are seeing broad-based strength, including within our missile defense, UAVs, and naval applications. The growth in defense budgets is being driven by modernization of defense capabilities and the ongoing geopolitical conflicts, creating a strong global growth outlook for defense spending, including from NATO allies. Our aerospace and defense businesses was recently selected to provide a range of technologies in support of three UAV programs, one program in the US and two with NATO allies. Products being provided on these programs include ruggedized thermal management systems, power distribution equipment, advanced sensors, and embedded computing solutions.

Speaker #1: Contributing to the order strength were several large orders in the quarter, which helped fill in our full-year sales outlook. These large orders are aligned with attractive market segments, including defense, space, power, and semiconductor.

Speaker #1: All markets where AMETEK is poised to benefit from strong and growing demand. Within defense, we are seeing broad-based strength, including within our missile defense, UAVs, and naval applications.

Speaker #1: The growth in defense budgets is being driven by modernization of defense capabilities and the ongoing geopolitical conflicts, creating a strong global growth outlook for defense spending, including from NATO allies.

Speaker #1: Our aerospace and defense businesses were recently selected to provide a range of technologies in support of three UAV programs, one program in the US and two with NATO allies.

Speaker #1: Products being provided on these programs include ruggedized thermal management systems, power distribution equipment, advanced sensors, and embedded computing application solutions. Our EMIP business also provides highly engineered, specialized fluid transfer solutions for critical military and defense applications.

David Zapico: Our AMETEK EIP business also provides highly engineered, specialized fluid transfer solutions for critical military and defense applications, and in Q1, saw strong order growth across many key defense platforms, including in support of nuclear submarines. Within nuclear, we are also seeing strong commercial nuclear demand in orders. AMETEK businesses provide a range of highly specialized products to this market, including fluid transfer solutions, radiation detection equipment, and uninterruptible power solutions in support of nuclear power facilities. Switching to space and satellite communications market, our Kern Microtechnik business recently received a sizable order to provide ultra-precision machining solutions and manufacturing services in support of critical RF components used in low Earth orbit satellites. Kern's advanced precision machining solutions are targeted for mission-critical applications which require maximum accuracy, stability, and repeatability.

Speaker #1: And in the first quarter, we saw strong orders growth across many key defense platforms, including in support of nuclear submarines. Within nuclear, we're also seeing strong commercial nuclear demand and orders.

Speaker #1: AMETEK businesses provide a range of highly specialized products to this market, including fluid transfer solutions, radiation detection equipment, and uninterruptible power solutions in support of nuclear power facilities.

Speaker #1: Switching to space and satellite communications market, our current microtechnique business recently received a sizable order to provide ultra-precision machining solutions in manufacturing services in support of critical RF components used in low Earth orbit satellites.

Speaker #1: Kern's advanced precision machining solutions are targeted for mission-critical applications which require maximum accuracy, stability, and repeatability. And lastly, our ABACO business, a leading provider of ruggedized embedded computing solutions, continues to see strong demand with a significant win in the semiconductor capital equipment market.

David Zapico: Lastly, our Abaco business, a leading provider of ruggedized embedded computing solutions, continues to see strong demand with a significant win in the semiconductor capital equipment market. Abaco recently secured an agreement to provide advanced computing technology to support AI-driven demand for advanced semiconductor tools. Abaco's orders were excellent in the quarter, with strong defense orders in addition to strength in the semiconductor market. Overall, the breadth and strength of our orders in Q1 reflect the continued trust of our customers and our continued delivery of key technology-driven products that meet our customers' most critical needs. Before we move too far off the topic of key programs and our ability to deliver in the most critical and demanding of applications, I want to take a moment to highlight a particularly timely example of our differentiated technology.

Speaker #1: ABACO recently secured an technology to support AI-driven demand for advanced semiconductor tools. ABACO's orders were excellent in the quarter, with strong defense orders in addition to strength in the semiconductor market.

Speaker #1: Overall, the breadth and strength of our orders in the first quarter reflect the continued trust of our customers and our continued delivery of key technology-driven products that meet our customers' most critical needs.

Speaker #1: Before we move too far off the topic of key programs and our ability to deliver, and the most critical and demanding of applications, I want to take a moment to highlight a particularly timely example of our differentiated technology.

Speaker #1: AMETEK sensors and fluid management systems are a leader in advanced specialized sensing solutions for the aerospace, defense, and space markets, providing critical solutions used on the recent Artemis II mission that eclipsed the record for the furthest manned space mission.

David Zapico: AMETEK Sensors and Fluid Management Systems, a leader in advanced specialized sensing solutions for the aerospace, defense, and space markets, provided critical solutions used on the recent Artemis II mission that eclipsed the record for the furthest manned space mission. Our SFMS business provided thin-film pressure transducers that supported mission-critical life support infrastructure on the Orion Multi-Purpose Crew Vehicle. This application demonstrates our ability to serve even the most demanding of applications and our ongoing commitment to reliability, precision, and accuracy. Congratulations to the AMETEK Sensors and Fluid Management Systems team on this exciting success, and also to the four other AMETEK businesses, FMH, UEI, NSI, and Zygo Pixelink, that also supported the Artemis program of specialized technology. Turning to acquisitions and capital deployment.

Speaker #1: Our SFMS business provided thin-film pressure transducers that supported mission-critical life support infrastructure on the Orion Multipurpose Crew Vehicle. This application demonstrates our ability to serve even the most demanding of applications and our ongoing commitment to reliability, precision, and accuracy.

Speaker #1: Congratulations to the AMETEK sensors and fluid management systems team on this exciting success, and also to the four other AMETEK businesses—FMH, UEI, NSI, and Zygo PixelLink—that also supported the Artemis platform with specialized technology.

Speaker #1: Now turning to acquisitions and capital deployment. With our robust balance sheet, strong cash flows, and disciplined approach to capital deployment, AMETEK is well positioned to continue driving long-term value through our disciplined acquisition strategy.

David Zapico: With our robust balance sheet, strong cash flows, and disciplined approach to capital deployment, AMETEK is well positioned to continue driving long-term value through our disciplined acquisition strategy. We are managing a very strong pipeline of acquisition opportunities across a wide range of deal sizes and markets and are encouraged by the strong pipeline of high-quality acquisition candidates. As Dal will touch on, our significant financial capacity provides the opportunity to deploy well over $5 billion in capital while maintaining an investment-grade credit rating. Our top priority for capital deployment remains acquisitions, and we expect to remain active in this area. We were pleased to announce this morning that we've signed a definitive agreement to acquire First Aviation Services, a leading provider of defense and aviation MRO services, as well as proprietary part design and manufacturing.

Speaker #1: We are managing a very strong pipeline of acquisition opportunities across a wide range of deal sizes and markets, and are encouraged by the strong pipeline of high-quality acquisition candidates.

Speaker #1: As Dalip will touch on, our significant financial capacity provides the opportunity to deploy well over $5 billion in capital while maintaining an investment-grade credit rating.

Speaker #1: Our top priority for capital deployment remains acquisitions, and we expect to remain active in this area. We were pleased to announce this morning that we've signed a definitive agreement to acquire First Aviation Services.

Speaker #1: A leading provider of defense and aviation MRO services as well as proprietary part design and manufacturing. The combination of first aviation with AMETEK's MRO business will provide attractive market expansion opportunities and additional scale for our A&D aftermarket businesses.

David Zapico: The combination of First Aviation with AMETEK's MRO business will provide attractive market expansion opportunities and additional scale for our A&D aftermarket businesses. First Aviation is privately held and has six US-based centers of excellence. They have approximately $80 million in annual sales. The acquisition is subject to customary closing conditions, including regulatory approvals. Alongside this acquisition and capital deployment strategy, we continue to invest in our businesses to ensure AMETEK is strategically positioned for long-term sustainable growth. For 2026, we continue to expect to invest an incremental $100 million to support our growth initiatives, with the majority of this investment going into RD&E and sales and marketing initiatives. These investments continue to deliver excellent returns. In Q1, our vitality index, which measures sales of new products introduced over the last 3 years, was an outstanding 25%.

Speaker #1: First aviation is privately held and has six US-based centers of excellence. They have approximately 80 million in annual sales. And the acquisition is subject to customary closing conditions including regulatory approvals.

Speaker #1: Alongside this acquisition and capital deployment strategy, we continue to invest in our businesses to ensure AMETEK is strategically positioned for long-term sustainable growth. For 2026, we continue to expect to invest an incremental $100 million to support our growth initiatives.

Speaker #1: With the majority of this investment going into RD&E and sales and marketing initiatives. These investments continue to deliver excellent returns, and the first quarter, our vitality index, which measures sales of new products introduced over the last three years, was an outstanding 25%.

Speaker #1: Now, we'll take a moment to highlight an example of an exciting new product from our RTDS technologies business. RTDS is a leader in real-time digital simulation of power systems infrastructure and hardware testing in the loop.

David Zapico: Now, we'll take a moment to highlight an example of an exciting new product from our RTDS Technologies business. RTDS is a leader in real-time digital simulation of power systems, infrastructure, and hardware testing in the loop. Their real-time electromagnetic transient simulators enable detailed studies of power systems, allowing engineers to anticipate system and device behaviors that threaten the stability, resilience, and performance of the power grid. RTDS recently updated their simulator platform with new features, including a data center module and an updated workflow that provides more accurate representations of third-party power solutions. This innovation helps data center operators model the power electronics required for key components, such as the uninterruptible power supply systems and the variable frequency drive used in power and cooling systems.

Speaker #1: The real-time electromagnetic transient simulators enable detailed studies of power systems, allowing engineers to anticipate system and device behaviors that threaten the stability, resilience, and performance of the power grid.

Speaker #1: RTDS recently updated their simulator platform with new features, including a data center module. And an updated workflow that provides more accurate representations of third-party power solutions.

Speaker #1: This innovation helps data center operators model the power electronics required for key components such as the uninterruptible power supply systems and the variable frequency drive used in power and cooling systems.

Speaker #1: This new product led to two new notable orders in the first quarter in support of data center testing applications from large power equipment providers.

David Zapico: This new product led to two new notable orders in the first quarter in support of data center testing applications from large power equipment providers. Congratulations to the RTDS Technologies team on this exciting new product development. I'd like to take a moment to discuss the conflict in the Middle East and how AMETEK is navigating this evolving dynamic. AMETEK has only a small sales exposure to the region, with approximately 2% of sales into the Middle East. Most of that small exposure is within our EIG process sub-segment and is tied to energy markets. We do not expect a meaningful direct impact on AMETEK given this small exposure. Like everyone, we are not immune to the broader macroeconomic uncertainty. We are continuing to monitor developments in the region, especially for impacts on the energy market and potential spillover effects.

Speaker #1: Congratulations to the RTDS Technologies team on this exciting new product development. I would like to take a moment to discuss the conflict in the Middle East and how AMETEK is navigating this evolving dynamic.

Speaker #1: AMETEK has only a small sales exposure to the region, with approximately 2% of sales into the Middle East. Most of that small exposure is within our EIG process subsegment and is tied to energy markets.

Speaker #1: We do not expect a meaningful direct impact on AMETEK given this small exposure. However, like everyone, we are not immune to the broader macroeconomic uncertainty.

Speaker #1: We're continuing to monitor developments in the region, especially for impacts on the energy market and potential spillover effects. With all that said, I am confident that AMETEK will continue to navigate this period of increased uncertainty based on the flexibility and durability of our operating model and our proven track record of performing well in challenging environments.

David Zapico: With all that said, I am confident that AMETEK will continue to navigate this period of increased uncertainty based on the flexibility and durability of our operating model and our proven track record of performing well in challenging environments. Now shifting to our outlook for the balance of the year. For 2026, we now expect overall sales to be up high single digits on a percentage basis, with organic sales now expected to increase mid-single digits versus the prior year. With the strong results from the first quarter, diluted earnings per share for the year are now expected to be in the range of $7.94 to $8.14, up 7% to 10% compared to last year's results. This is an increase from our prior full-year guide of $7.87 to $8.07 per diluted share.

Speaker #1: Now shifting to our outlook for the balance of the year. For 2026, we now expect overall sales to be up high single digits on a percentage basis, with organic sales now expected to increase mid-single digits versus the prior year.

Speaker #1: With the strong results from the first quarter, diluted earnings per share for the year are now expected to be in the range of $7.94 to $8.14, up 7 to 10 percent compared to last year's results.

Speaker #1: This is an increase from our prior full-year guide of $7.87 to $8.07 per diluted share. For the second quarter, we anticipate overall sales to be up high single digits on a percentage basis, with adjusted earnings of $1.96 to $2 per share, up 10 to 12 percent versus the prior year.

David Zapico: For Q2, we anticipate overall sales to be up high single digits on a percentage basis, with adjusted earnings of $1.96 to $2.00 per share, up 10% to 12% versus the prior year. To summarize, AMETEK delivered an excellent Q1. Our outstanding results reflect the strength of our portfolio and the resilience of our operating model. Our businesses are aligned with attractive secular growth trends and are well diversified across end markets, customers, technologies, and geographies. We are leaders in niche markets where our differentiated technology solutions play a mission-critical role in our customers' most demanding applications. Our highly engineered products are designed into applications governed by strict regulatory and compliance requirements, creating high switching costs. We primarily serve customers in long cycle industries with long asset lifespans, resulting in a low obsolescence risk.

Speaker #1: To summarize, AMETEK delivered an excellent first quarter. Our outstanding results reflect the strength of our portfolio and the resilience of our operating model. Our businesses are aligned with attractive secular growth trends and are well diversified across end markets customers, technologies, and geographies.

Speaker #1: We are leaders in niche markets where our differentiated technology solutions play a mission-critical role in our customers' most demanding applications. Our highly engineered products are designed into applications governed by strict regulatory and compliance requirements, creating high switching costs.

Speaker #1: We primarily serve customers in long cycle industries with long asset lifespans, resulting in a low obsolescence risk. Taken together, these advantages position AMETEK for sustained long-term success, and we see significant opportunities for continued value creation.

David Zapico: Taken together, these advantages position AMETEK for sustained long-term success, and we see significant opportunities for continued value creation. Our culture is deeply ingrained across the organization. Our competitive positions are strong and continuing to expand. Our operating model is durable, flexible, and scalable. Finally, we are supported by an experienced and proven team that has consistently performed through a wide range of market conditions. I will now turn it over to Dalip Puri, who will cover some of the financial details of the quarter. We will be glad to take your questions. Dalip.

Speaker #1: Our culture is deeply ingrained across the organization. Our competitive positions are strong and continuing to expand. Our operating model is durable, flexible, and scalable.

Speaker #1: Finally, we are supported by an experienced and proven team that has consistently performed through a wide range of marketing conditions. I will now turn it over to Dalip Puri, who will cover some of the financial details of the quarter, then we will be glad to take your questions.

Speaker #1: Dalip.

Speaker #2: Thank you, Dave, and good morning, everyone. As Dave noted, AMETEK delivered an outstanding start to the year, highlighted by excellent orders, sales, and earnings growth, robust core margin expansion, and strong cash flow generation.

Dalip Puri: Thank you, Dave. Good morning, everyone. As Dave noted, AMETEK delivered an outstanding start to the year, highlighted by excellent orders, sales, and earnings growth, robust core margin expansion, and strong cash flow generation. Let me provide some additional financial highlights for Q1. Q1 corporate general and administrative expenses were $30 million or 1.5% of sales. For the full year, we continue to expect corporate general and administrative expenses to be approximately 1.5% of sales. Q1 other operating expenses were $1 million, largely in line with Q1 2025. Q1 interest expense was $21 million, up $2 million from Q1 2025. The effective tax rate in the quarter was 19%.

Speaker #2: Now, let me provide some additional financial highlights for the first quarter. First quarter corporate general and administrative expenses were $30 million, or 1.5% of sales.

Speaker #2: For the full year, we continued to expect corporate general and administrative expenses to be approximately 1.5% of sales. First quarter other operating expenses were $1 million, largely in line with the first quarter of 2025.

Speaker #2: First quarter interest expense was $21 million. Up $2 million from the first quarter of 2025. The effective tax rate in the quarter was 19%.

Speaker #2: For 2026, we continued to anticipate our effective tax rate to be between 18 and a half and 19 and a half percent. As we have stated in the past, actual quarterly tax rates can differ dramatically, either positively or negatively, from this full year estimated rate.

Dalip Puri: For 2026, we continue to anticipate our effective tax rate to be between 18.5% and 19.5%. As we have stated in the past, actual quarterly tax rates can differ dramatically, either positively or negatively, from this full-year estimated rate. Capital expenditures in Q1 were $25 million, and for the full year, we expect capital expenditures to be approximately $160 million or about 2% of sales. Depreciation and amortization expense in the quarter was $105 million. For the full year, we expect depreciation and amortization to be approximately $430 million, including after-tax acquisition-related intangible amortization of approximately $210 million or $0.91 per diluted share.

Speaker #2: Capital expenditures in the first quarter were $25 million. And for the full year, we expect capital expenditures to be approximately $160 million, or about 2% of sales.

Speaker #2: Depreciation and amortization expense in the quarter was $105 million. For the full year, we expect depreciation and amortization to be approximately $430 million. Including after-tax acquisition-related intangible amortization of approximately $210 million, or 91 cents per diluted share.

Speaker #2: For the quarter, operating working capital was $17.5%, a 60 basis point improvement versus 18.1% in last year's first quarter. Operating cash flow was $452 million.

Dalip Puri: For the quarter, operating working capital was 17.5%, a 60 basis point improvement versus 18.1% in last year's Q1. Operating cash flow was $452 million, up 8% versus the Q1 of 2025. Free cash flow was also up 8% year over year to $426 million. Free cash flow conversion was strong at 107% for the quarter. For 2026, we continue to expect free cash flow conversion to be approximately 110% to 115% of net income. Total debt at 31 March was $2.2 billion, down from $2.3 billion at the end of 2025.

Speaker #2: Up 8% versus the first quarter of 2025. Free cash flow was also up 8% year over year, to $426 million. Free cash flow conversion was strong, at $107% for the quarter.

Speaker #2: For 2026, we continued to expect free cash flow conversion to be approximately $110 to $115% of net income. Total debt at March 31st was $2.2 billion.

Speaker #2: Down from $2.3 billion at the end of 2025. Offsetting this debt is cash and cash equivalents of $481 million. At the end of the first quarter, our gross debt to EBITDA ratio was 0.9 times.

Dalip Puri: Offsetting this debt is cash and cash equivalents of $481 million. At the end of Q1, our gross debt to EBITDA ratio was 0.9x, and our net debt to EBITDA ratio was 0.7x. We continue to have excellent financial capacity, with flexibility to deploy well over $5 billion on growth initiatives and our active acquisition pipeline while retaining an investment-grade credit rating. While acquisitions remain our number one capital allocation priority for use of our free cash flow, we also seek to provide our shareholders with opportunistic share buybacks and a consistently increasing dividend. In February, we announced a 10% increase in our quarterly cash dividend to $0.34 per share, our seventh consecutive year of 10%+ annual increases in our dividend payout.

Speaker #2: And our net debt to EBITDA ratio was 0.7 times. We continue to have excellent financial capacity, with flexibility to deploy well over $5 billion on growth initiatives and our active acquisition pipeline, while retaining an investment-grade credit rating.

Speaker #2: While acquisitions remain our number one capital allocation priority for use of our free cash flow, we also seek to provide our shareholders with opportunistic share buybacks and a consistently increasing dividend.

Speaker #2: In February, we announced a 10% increase in our quarterly cash dividend to $34 per share, our seventh consecutive year of 10% plus annual increases in our dividend payout.

Speaker #2: I would also like to note that we have enhanced our financial reporting this quarter by including AMETEK's gross margin reporting and a related reconciliation on our investor relations website.

Dalip Puri: I would also like to note that we have enhanced our financial reporting this quarter by including AMETEK's gross margin reporting and a related reconciliation on our investor relations website. With adjusted gross margin at a strong 51% in the quarter, this enhanced disclosure provides investors with greater visibility into AMETEK's margin performance and additional details to better understand our cost structure and the underlying drivers of our profitability. Going forward, we will provide an updated gross margin disclosure quarterly on our website. In summary, our businesses had a great start to the year. Our exceptional operating capabilities delivered excellent revenue and earnings growth, robust margin expansion, and strong free cash flow conversion. With a proven strategy, significant capital deployment capacity, and a strong track record of execution, we are confident in our ability to drive further growth and value creation in 2026.

Speaker #2: With adjusted gross margin at a strong 51% in the quarter, this enhanced disclosure provides investors with greater visibility into AMETEK's margin performance and additional details to better understand our cost structure, and the underlying drivers of our profitability.

Speaker #2: Going forward, we will provide an updated gross margin disclosure quarterly on our website. In summary, our businesses had a great start to the year.

Speaker #2: Our exceptional operating capabilities delivered excellent revenue and earnings growth, robust margin expansion, and strong free cash flow conversion. With a proven strategy, significant capital deployment capacity, and a strong track record of execution, we are confident in our ability to drive further growth and value creation in 2026.

Speaker #2: I'll now pass it back to Kevin.

Dalip Puri: I'll now pass it back to Kevin.

Speaker #1: Great. Thank you, Dalip. Stacy, could we please open the line for questions?

Kevin Coleman: Great. Thank you, Dalip. Stacy, could we please open the line for questions?

Speaker #3: Thank you. At this time, we will conduct the question-and-answer session. As a reminder, to ask a question, you'll need to press star 11 on your telephone and wait for your name to be announced.

Operator: Thank you. At this time, we will conduct a question and answer session. As a reminder, to ask a question, you will need to press star one one on your telephone and wait for your name to be announced. To withdraw your question, please press star one one again. Please stand by while we compile the Q&A roster. Our first question comes from the line of Deane Dray with RBC Capital Markets. Deane, you have the floor.

Speaker #3: 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 Diane Dre with RBC Capital Markets.

Speaker #3: Diane, you have the floor.

Speaker #4: Thank you. Good morning, everyone.

Deane Dray: Thank you. Good morning, everyone.

Speaker #1: Good morning, Dean.

David Zapico: Good morning, Deane.

Deane Dray: Hey, Dave, you normally, at this point, take us for a tour of the key end markets, but your prepared remarks really covered that well. I appreciate it. You also highlighted the really small exposure to the Middle East, but how about just the rest of the regions and maybe the idea of, are you seeing anything at the margin in terms of buying hesitancy? You certainly don't see it in the orders, but take us through the end, the regions and any kind of sentiment in terms of macro pressures that you might be seeing.

Speaker #4: Hey, Dave, you normally at this point take us for a tour of the Kian Markets, but you prepared remarks really covered that well. So I appreciate it.

Speaker #4: But maybe just and you also highlighted the really small exposure to the Middle East. But how about just the rest of the regions, and maybe the idea of are you seeing anything at the margin in terms of buying hesitancy?

Speaker #4: Certainly don't see it in the orders, but take us through the regions and any kind of sentiment in terms of macro pressures that you might be seeing.

Speaker #1: Sure. Yeah, I'll start with the performance around the geographies. And we really had balanced growth. US and international markets were both up mid-single digits.

David Zapico: Sure. I'll start with the performance around the geographies. We really had balanced growth. US and international markets were both up mid-single digits. The strongest growth was in Asia. In the US, we were up mid-single digits. Had very strong growth in our A&D and materials analysis business. Europe was up low single digits. That's where we had, you know, strength in power, strength in our automation businesses, modest headwinds from the Middle East. We had about, I'd say $15 million of discrete orders that, you know, due to safety reasons and disruptions that didn't ship during the quarter. That would have ended up a little bit higher, that occurred. We have not seen any cancellation in orders from the Middle East.

Speaker #1: The strongest growth was in Asia. In the US, we were up mid-single digits. Had very strong growth in our A&D and materials analysis business.

Speaker #1: Europe was up low single digits. That's where we had strength and power, strength in our automation businesses, but modest headwinds from the Middle East.

Speaker #1: We had about, I'd say, 15 million dollars of discrete orders that due to safety reasons and disruptions that didn't ship during the quarter. So that would have ended up a little bit higher, but that occurred.

Speaker #1: And we have not seen any cancellation in orders from the Middle East. In fact, we're seeing quotations to really rebuild infrastructure. The energy infrastructure.

David Zapico: In fact, we're seeing, you know, quotations to, really, you know, rebuild infrastructure, the energy infrastructure. It's gonna be when this thing settles down. In terms of getting back to the geographies, in terms of Asia was up low double digits, driven by strong China. China was up high teens, it was driven by our process in power markets. You know, across the board, you know, it was balanced growth, solid, and all geographies really performing well.

Speaker #1: So there's going to be when this thing settles down. In terms of getting back to the geographies in terms of Asia, Asia was up low double digits, driven by strong China.

Speaker #1: China was up high teens. And it was driven by our process and power markets. So across the board, it was balanced growth, solid, and all geographies really performing well.

Deane Dray: All good to hear.

David Zapico: Yeah, we're not seeing any cancellations or delays or anything at all. In fact, March was an all-time record of any quarter for orders at AMETEK. It's strong. It feels extremely good. April's not over yet, but I just looked at it and it's on target for another good month. We're in full steam ahead.

Speaker #1: Yeah. And we're not seeing any cancellations. Or delays or anything at all. In fact, March was an all-time record of any quarter for orders at AMETEK.

Speaker #1: So it's strong. It feels extremely good. And April is not over yet, but I just looked at it. And it's on target for another good month.

Speaker #1: So we're in full steam ahead.

Speaker #4: Great to hear. Now, just a follow-up question. And you are likely limited in what you can say. There were some unconfirmed media reports about a potential sizable deal you all are looking at.

Deane Dray: Great to hear. Now, just a follow-up question, you are likely limited in what you can say. There were some unconfirmed media reports about a potential sizable deal you all are looking at. Dave, I don't often see your name in The Wall Street Journal. This is an asset we're familiar with, the size would be bigger than what you typically do. We know you have that capacity, but just implications on a larger deal for AMETEK. You know, would it box you out of doing bolt-on deals over, you know, kind of the near term? Yeah, whatever you can share with us would be helpful. There's a lot of interest.

Speaker #4: And Dave, I don't often see your name in the Wall Street Journal. But this is an asset we're familiar with. But the size would be bigger than what you typically do.

Speaker #4: We know you have that capacity. But just implications on a larger deal for AMETEK. Would it box you out of doing bolt-on deals over kind of the near term?

Speaker #4: But whatever you can share with us would be helpful. There's a lot of interest.

Speaker #1: Yeah. AMETEK policy is not to comment on market rumors or speculation related to M&A activity. I just go back to what I said before.

David Zapico: AMETEK policy is not to comment on market rumors or speculation related to M&A activity. You know, I just go back to what I, what I said before. Our pipeline is strong. There's a mix of larger, medium, and small technology deals, and we're looking to create great deals for our shareholders. We announced the MRO deal today, First Aviation Services. We're really happy about that. You know, we have, Dal-as Dal have said, we have significant financial capacity that provides the opportunity to deploy well over $5 billion in capital and still maintain an investment-grade credit rating. M&A is our top priority for capital deployment. I mentioned a few quarters ago that that's the way we're gonna differentiate our performance over the next few years.

Speaker #1: Our pipeline is strong. There's a mix of larger medium and small technology deals. And we're looking to create great deals for our shareholders. We announced the MRO deal today, first aviation service.

Speaker #1: We're really happy about that. We have as Dalip said, we have significant financial capacity that provides the opportunity to deploy well over $5 billion in capital.

Speaker #1: And still maintain an investment-grade credit rating. And M&A is our top priority for capital deployment. And I mentioned a few quarters ago that that's the way we're going to differentiate our performance over the next few years.

Kevin Coleman: We are really engaged with a lot of different businesses and a lot of different opportunities, and we're gonna make good disciplined deals for our shareholders, for sure. As you know, at AMETEK, acquisitions are the combination of a set of processes, well-defined processes. Integration is our secret sauce, and returns are very important for us.

Speaker #1: So we are really engaged with a lot of different businesses and a lot of different opportunities. And we're going to make good disciplined deals for our shareholders, for sure.

David Zapico: We are really engaged with a lot of different businesses and a lot of different opportunities, and we're gonna make good disciplined deals for our shareholders, for sure. As you know, at AMETEK, acquisitions are the combination of a set of processes, well-defined processes. Integration is our secret sauce, and returns are very important for us.

Speaker #1: And as you know, at AMETEK, acquisitions are the culmination of a set of processes, well-defined processes, integration is our secret sauce, and returns are very important for us.

Speaker #4: That's all really good to hear. Best of luck. Thank you.

Deane Dray: That's all really good to hear. Best of luck. Thank you.

Speaker #1: Thank you.

David Zapico: Thank you.

Operator: Stand by for our next question. Our next question comes from Andrew Obin of Bank of America. Andrew, go ahead with your question.

Speaker #3: Stand by for our next question. Our next question comes from Andrew Orban of Bank of America. Andrew, go ahead with your question.

Speaker #5: Yeah. Good morning.

Andrew Obin: Yeah, good morning.

Speaker #1: Good morning, Andrew.

David Zapico: Good morning, Andrew.

Andrew Obin: you know, pretty sporty growth in orders. Just a question. you know, you highlighted large orders, and, you know, I appreciate that, you know, maybe some of them, you know, fairly lumpy. Do you get a sense that there's any pull forward from Q2 in terms of orders, and there's gonna be something unusually weak about Q2 orders given the strength in Q1?

Speaker #5: Pretty sporty growth in orders. Just a question. You highlighted large orders and I appreciate that maybe some of them fairly lumpy. But do you get a sense that there's any pull forward from second quarter in terms of orders?

Speaker #5: And there's going to be something unusually weak about second quarter orders given the strength in Q1?

Speaker #1: Yeah. I don't think there was much pull ahead at all. In fact, if you go back and look at my last couple of calls, we were signaling that this was going to happen.

David Zapico: Yeah, I don't think there was much pull ahead at all. In fact, if you go back and look at my last couple of calls, we were signaling that this was gonna happen. What you really saw is continued strength in our EMG businesses and EIG businesses just bopped. We were talking about them usually following EMG about six months or nine months, and it's happened. I don't, you know, I don't know some of the orders that we've got are for shipments to fill out the year, but I don't see any kind of pull forward or any kind of slowdown. That doesn't mean that we're gonna have a, you know, a 25%, 23% orders in the next Q.

Speaker #1: And what you really saw is continued strength in our EMG businesses. And EIG businesses just popped. And we were talking about them usually following EMG about six months or nine months.

Speaker #1: And it's happened. So I don't know. Some of the orders that we got are for shipments to fill out the year. But I don't see any kind of pull forward or any kind of slowdown.

Speaker #1: That doesn't mean that we're going to have a 25, 23 percent orders in the next quarter. But the markets for us, we've created a business that's in niche markets where technology is really, really needed.

David Zapico: The markets for us, you know, we've created a business that's in niche markets where technology is really needed for key infrastructure, for key technologies, for key mission-critical platforms, and we're just in the right place, and we're feeling good about the business.

Speaker #1: For key infrastructure, for key technologies, for key mission-critical platforms. And we're just in the right place. And we're feeling good about the business.

Andrew Obin: David, how do you think about, you know, given your order cadence, your top-line outlook, you know, is fairly conservative, as it always is, you know, that's what AMETEK does. What are you thinking about sort of risk, consumer risk and just overall macro risk in Q2? You said orders are good, but any red or yellow flags that you're seeing in your end markets so far, quarter to date? Are you adjusting, you know, the behavior in business units, any sort of business plans to maybe prepare for some turbulence? Thank you.

Speaker #5: And Dave, how do you think about given your order cadence, your top line outlook, is fairly conservative as it always is? That's what AMETEK does.

Speaker #5: But what do you think about sort of risk consumer risk and just overall macro risk in the second quarter? You said orders are good.

Speaker #5: But any red or yellow flags that you're seeing in your end markets so far, quarter to date? And are you adjusting the behavior in business units, any sort of business plans to maybe prepare for some turbulence?

Speaker #5: Thank you.

Speaker #1: Yeah. Yeah. That's a good question. And yeah, I'd start with we're obviously performing very well. We've got strong execution. Discipline operation. And we're gaining momentum across the portfolio.

David Zapico: Yeah. Yeah. That's a good question. Yeah, I start with we're obviously performing very well. We've had strong execution, disciplined operation, and we're gaining momentum across the portfolio. We feel very good about our businesses performing, but there's obviously some ongoing geopolitical uncertainty, and we're remaining prudent with our guidance. You know, we have places in our business where we're laser-focused on material input costs. We believe we're gonna be able to offset any inflationary costs with pricing. We expect to offset inflation, including tariffs with pricing. We feel good.

Speaker #1: We feel very good about our businesses performing. But there's obviously some ongoing geopolitical uncertainty. And we're remaining prudent with our guidance. We have places in our business where laser-focused on material input costs.

Speaker #1: We believe we're going to be able to offset any inflationary costs with pricing. So we expect to offset inflation, including tariffs, with pricing. But we feel good.

David Zapico: We're laser-focused on changes in the macro and, you know, with our distributed structure, we have business leaders out there close to their customers, looking at everything, and we're making sure that we have the right focus on it. From what we know now, you know, it feels good to us, but we're laser-focused on what could be a bigger change. As I said, we're confident in our guide, and we feel really good about the momentum in the portfolio.

Speaker #1: But we're laser-focused on changes in the macro. And with our distributed structure, we have business leaders out there close to their customers looking at everything.

Speaker #1: And we're making sure that we have the right focus on it. So from what we know now, it feels good to us. But we're laser-focused on what could be a bigger change.

Speaker #1: And but as I said, we're confident in our guide. And we feel really good about the momentum in the portfolio.

Speaker #5: Thank you.

Andrew Obin: Thank you.

Speaker #1: Thank you, Andrew.

David Zapico: Thank you, Andrew.

Operator: The next question comes from Nicole DeBlase with Deutsche Bank. Nicole, go ahead.

Speaker #3: Stand by for our next question. The next question comes from Nicole DeBlaise with Deutsche Bank. Nicole, go ahead.

Operator: The next question comes from Nicole DeBlase with Deutsche Bank. Nicole, go ahead.

Speaker #6: Yeah. Thanks for the question. And good morning, David and the whole team.

Nicole DeBlase: Yeah, thanks for the question and good morning, David and the whole team.

Speaker #5: Good morning.

Speaker #6: Good morning. I guess maybe just kind of piggybacking on the questions that were asked about orders already. Sorry to dive into this further, Dave.

David Zapico: Good morning, Nicole.

Nicole DeBlase: Good morning. I guess maybe just kind of piggybacking on the questions that were asked about orders already. Sorry to, you know, dive into this further, Dave. Just on the, on the large orders, I think you mentioned that there were a few that came in during the quarter, but you're basically saying that you don't think that this order result should be viewed as one time. Does that mean that the large, if we look at like your pipeline of large order activity, it's similarly strong and you expect to book further large orders as we move forward?

Speaker #6: But just on the large orders, I think you mentioned that there were a few that came in during the quarter. But you're basically saying that you don't think that this order result should be viewed as one-time.

Speaker #6: So does that mean that the large, if we look at your pipeline of large order activity, it's similarly strong and you expect to book further large orders as we move forward?

Speaker #1: Yeah. I would expect the bookings to continue to reflect some larger orders. And I think that what we're seeing is we had a period where the industrial economy had below 50 PMIs for an extended period of time.

David Zapico: Yeah. I would expect the bookings to continue to reflect some larger orders. You know, I think that what we're seeing is, you know, we had a period where the industrial economy, you know, below 50 PMIs for an extended period of time. That's changing. We were signaling that's changing. Our EMG business picked up, and historically, EIG has picked up 6 or 9 months later. We said that the last couple of quarters, and it's just happening like we thought it would. EIG is just beginning to pick up.

Speaker #1: That's changing. We were signaling that's changing. And our EMG business picked up. And historically, EIG has picked up six or nine months later. And we said that the last couple of quarters.

Speaker #1: And it's just happening like we thought it would. And EIG is just beginning to pick up. So I think the order strength will continue.

David Zapico: I think the order strength will continue. I wanted to highlight some of the orders that, some were lumpy. I wanted to highlight them both to, you know, let people understand the areas that we're in and their great technology, and also to understand some of that is for shipments throughout the rest of the year.

Speaker #1: But I wanted to highlight some of the orders that are somewhat lumpy. And I wanted to highlight them both to let people understand the areas that we're in.

Speaker #1: And there are great technology. And also to understand some of that is for shipments throughout the rest of the year.

Speaker #6: Got it. Okay. Clear. And then I just wanted to spend a little bit of time on the medical end market. I don't think that was mentioned a whole lot.

Nicole DeBlase: Got it. Okay. Clear. I just wanted to spend a little bit of time on the medical end market. I don't think that was mentioned a whole lot in the prepared remarks.

Speaker #6: And then prepared remarks. Dave, could you just talk a little bit about what you're seeing there?

David Zapico: Right.

David Zapico: David, could you just talk a little bit about what you're seeing there?

Nicole DeBlase: David, could you just talk a little bit about what you're seeing there?

Speaker #1: Yeah. I mean, it's about a little over 20% of our exposure in Q1. We had a great quarter. It was up low double digits.

David Zapico: I mean, it's about a little over 20% of our exposure. In Q1, we had a great quarter. It was up low double digits. Once again, it was led by Paragon. Paragon is just performing extremely well. For that full year, there's some tougher comps in the rest of the year. We have the full year, we expect mid-single digits, largely due to the comps. You know, we have other business in there, like our record business. It also had a very good quarter. Paragon and Record led us, and the strength in Paragon continuing is notable.

Speaker #1: And once again, it was led by Paragon. Paragon is just performing extremely well. And for that full year, there's some tougher comps than the rest of the year.

Speaker #1: So we have the full year we expect mid-single digits, largely due to the comps. But we have other business in there like our Ryker business.

Speaker #1: It also had a very good quarter. So Paragon and Ryker led us. And the strength in Paragon continuing is notable.

Speaker #6: Thank you. I'll pass it on.

Nicole DeBlase: Thank you. I'll pass it on.

Speaker #1: Thank you.

David Zapico: Thank you.

Operator: Standby for our next question. The next question comes from Andrew Buscaglia with BNP Paribas. Andrew, go ahead with your question.

Speaker #3: Stand by for our next question. The next question comes from Andrew Boscaglia with BNP Paribas. Andrew, go ahead with your question.

Speaker #5: Hey. Good morning, everyone. Excuse me. Good morning, everyone.

Andrew Buscaglia: Hey, good morning, everyone. Excuse me. Good morning, everyone.

Speaker #1: Good morning, Andrew.

David Zapico: Morning, Andrew.

Andrew Buscaglia: I wanted to get your take on, you know, just kind of what's going on in the world related to your aerospace and defense businesses, given the, you know, heightened geopolitics. I know you guys have a number of niche offerings, so it's hard to know in real time what you see going forward. Can you comment on any impacts, positive or negative, to A&D?

Speaker #5: I wanted to get your take on just kind of what's going on in the world related to your aerospace and defense businesses given the heightened geopolitics.

Speaker #5: I know you guys have a number of niche offerings. So it's hard to know in real time what you see going forward. But can you comment on any impact positive or negative to A&D?

Speaker #1: Yeah. Well, I think what we saw in the quarter, our A&D business continued strong activity. High single-digit growth in the quarter. And the growth was broad-based.

David Zapico: Yeah. Well, I think what we saw in the quarter, our A&D business continued strong activity. High single-digit growth in the quarter. The growth was broad-based. All segments continued strong demand with notable strength in our defense markets. Our A&D businesses are very well-positioned to benefit from growing demand given our broad portfolio of differentiated technologies. We now increased our outlook for the year. We increased it to from high single digits to up approximately 10%. That's with balanced commercial and defense activity. The way I look at it is, if you look at our 18% of the in A&D, about 60% of that is defense, and about 40% of that is commercial.

Speaker #1: All segments continued strong demand with notable strength in our defense markets. And our A&D businesses are very well positioned to benefit from growing demand given our broad portfolio of differentiated technologies.

Speaker #1: And we now, we increased our outlook for the year. We increased it to from high single digits to up approximately 10%. And that's what balanced the commercial and defense activity.

Speaker #1: And the way I look at it is if you look at our 18% of the in A&D, about 60% of that is defense. And about 40% of that is commercial.

David Zapico: Defense is knocking it out of the park. The OE part of commercial and the business jet market are doing very good. Our M&A, our MRO businesses that service airlines had an excellent quarter for orders. The one area that we're watching closely is some of the international markets related to aviation fuel availability and fuel costs. That's a small part of our portfolio, you know, like less than 2%. At the same time we're watching it. Right now we don't see, we have good backlogs, good execution, you know, I think that if we see something, it'll come in the flying, you know, airlines, the flying public first. Right now we're not seeing it.

Speaker #1: Defense is knocking it out of the park. The OE part of commercial and the business jet market are doing very good. Our M&A or MRO businesses that service airlines had an excellent quarter for orders.

Speaker #1: So the one area that we're watching closely is some of the international markets related to aviation fuel availability and fuel costs. That's a small part of our portfolio.

Speaker #1: Less than 2%. But at the same time, we're watching it. But right now, we don't see we have good backlogs good execution and I think that if we see something, it'll come in the flying airlines the flying public first.

Speaker #1: But right now, we're not seeing it. But the key thing is, the vast majority of our aerospace portfolio—we're taking our whole portfolio up.

David Zapico: The key thing is the vast majority of our aerospace portfolio, we're taking our whole portfolio up. Even the part that we're watching closely had a fantastic Q1.

Speaker #1: And even the part that we're watching closely, had a fantastic first quarter.

Speaker #5: Yeah. Good to hear. And along those lines, you make an acquisition in the quarter, first aviation, on the MRO side, which is interesting. I didn't see did you disclose the price you paid or deal price?

Andrew Buscaglia: Yeah. Good to hear.

David Zapico: Yeah.

David Zapico: You know, along those lines, you know, you make an acquisition in the quarter, First Aviation on the MRO side, which is interesting. I didn't see, did you disclose the price you paid or deal price? Then is there any other details? I think I saw $80 million in revenue, but any other details you can disclose on that?

Andrew Buscaglia: You know, along those lines, you know, you make an acquisition in the quarter, First Aviation on the MRO side, which is interesting. I didn't see, did you disclose the price you paid or deal price? Then is there any other details? I think I saw $80 million in revenue, but any other details you can disclose on that?

Speaker #5: And then is there any other details? I think I saw 80 million in revenue. But any other details you can disclose on that?

Speaker #1: Yeah. Yeah. Sure. I'll provide some more details on it, Andrew. And at the high level, our MRO businesses were largely commercial biased. And we were looking for something that really added a defense aspect to it because of the strength in the market.

David Zapico: Yeah, yeah, sure. I'll provide some more details on it, Andrew. At a high level, our MRO businesses were largely commercial-biased, and we were looking for something that really added a defense aspect to it because of the strength in the market. We're really pleased to find First Aviation Services. It's an engineering-driven provider of aftermarket services and proprietary parts. Their primary market's defense. They also have some business jet and commercial pieces of it, but it's primarily a defense business. You know, they have about two-thirds of their business are on MRO service. They actually have about one-third of it is on proprietary parts that, you know, we have businesses that have, you know, the parts and the services together, we typically do best with them.

Speaker #1: And we were really pleased to find first aviation services as an engineering-driven provider of aftermarket services and proprietary parts that are primary markets defense.

Speaker #1: They also have some business jet and commercial pieces of it. But it's primarily a defense business. They have about two-thirds of their business are on MRO service.

Speaker #1: And they actually have about one-third of it on proprietary parts. We have businesses that have the parts and the services together. We typically do best with them.

Speaker #1: So they're really into PMA and DER approved repairs. They add new capability to us. Rotocraft and fixed-wing platforms. They're on a lot of good military programs.

David Zapico: They're really into PMA and DER-approved repairs. You know, they add new capability to us, rotor craft and fixed wing platforms. There are a lot of good military programs. It expands our military, our MRO capabilities to additional critical systems. Includes propeller blades, rotor assemblies, landing gear, some advanced electronics. It's a, you know, so sizable and growing proprietary aftermarket solutions business. Strong engineering capabilities. Nicely expands our defense MRO, and just fits like a glove and with our existing MRO capabilities. We're really excited and getting this business to closing and welcoming the First Aviation team to AMETEK.

Speaker #1: It expands our MRO capabilities to additional critical systems. Includes propeller blades, rotor assemblies, landing gear, some advanced electronics. So it's a sizable and growing proprietary aftermarket solutions business.

Speaker #1: Strong engineering capabilities. Nicely expands our defense MRO and just fits like a glove. And with our existing MRO capabilities. So we're really excited and getting this business to closing and welcoming the first aviation team to AMETEK.

Speaker #5: Thank you.

Andrew Buscaglia: Thank you.

Operator: Our next question comes from Scott Graham with Seaport Research Partners. Scott, go ahead with your question.

Speaker #3: Our next question comes from Scott Graham with Seaport Research Partners. Scott, go ahead with your question.

Scott Graham: Hey, good morning. Congratulations on the quarter. Dave, could you continue the matrix as you just did for A&D?

Speaker #5: Hey. Good morning. Congratulations on the quarter. Dave, could you continue the matrix as you just did for A&D with this first quarter organic and full year for process power and automation?

David Zapico: Yes

David Zapico: ... with the Q1 organic and full year for process? Power and automation. Secondarily, I don't know if this is possible to do this, but would you be able to maybe carve out some of the larger projects that were in the orders and maybe tell us what, you know, sort of maybe the trend line for bookings was, you know, on that basis?

Scott Graham: ... with the Q1 organic and full year for process? Power and automation. Secondarily, I don't know if this is possible to do this, but would you be able to maybe carve out some of the larger projects that were in the orders and maybe tell us what, you know, sort of maybe the trend line for bookings was, you know, on that basis?

Speaker #5: And then secondarily, I don't know if this is possible to do this, but would you be able to maybe carve out some of the larger projects that were in the orders and maybe tell us what sort of maybe the trend line for bookings was on that basis?

Speaker #1: Yeah, yeah. I'll start with the—I’ll finish the walk around the company. I did it for Aerospace and Defense and covered some of it in my opening remarks.

David Zapico: I'll finish the walk around the company. I did it for aerospace and defense, and covered it, some of it in my opening remarks, but there's some details still that is probably you're interested in. I'll start with the process business. You know, it was up mid-teens in Q1, and driven by acquisitions and low single-digit organic growth. We have a solid pipeline of orders we highlighted during our last earnings call. These translated into broad-based orders growth in the quarter, and we remain encouraged by continued momentum and a growing pipeline of opportunities across our process markets. Now for the full year 2026, we're increasing our guide for process.

Speaker #1: But there's some details still that is probably your interested in. I'll start with the process business. And it was up mid-teens in the first quarter.

Speaker #1: And driven by acquisitions and low single-digit organic growth. And we have a solid pipeline of orders. We highlighted it during our last earnings call.

Speaker #1: These translated into broad-based orders growth in the quarter. And we remain encouraged by continued momentum and a growing pipeline of opportunities across our process markets.

Speaker #1: So now, for the full year 2026, we're increasing our guide for Process. We now expect organic sales for the Process segment to be up low to mid-single digits.

David Zapico: We now expect organic sales for process segment to be up low to mid-single digits, so increasing it from low to low to mid. We talked about aerospace. We're increasing it from high single digits to approximately 10%. Go into power next. Power sub-segment delivered low single-digit sales growth with strong record level orders. Our power business continues to see strong demand across a growing pipeline of opportunities for power generation, backup power, data center microgrids, and power simulation systems. I highlighted one of the new products in the orders received for power simulation systems in my prepared remarks. Looking to 2026, we continue to expect organic sales to be up mid-single digits for that sub-segment. Finally, our automation and engineering solutions, excellent quarter again with high single-digit organic sales growth.

Speaker #1: So, increasing it from low to low-to-mid. We talked about aerospace. We're increasing it from high single digits to approximately 10%. Go into Power.

Speaker #1: Next, power subsegment. Deliver low single-digit sales growth with strong record-level orders. Power business continues to see strong demand across a growing pipeline of opportunities for power generation, backup power, data center microgrids, and power simulation systems.

Speaker #1: I highlighted one of the new products in the orders we see for power simulation systems in my prepared remarks. Looking to 2026, we continue to expect organic sales to be up mid-single digits for that subsegment.

Speaker #1: And finally, our automation and engineering solutions excellent quarter. Again, with high single-digit organic sales growth. Broad-based, both our automation and engineering solutions business and our EMIT business.

David Zapico: Broad-based, both our automation and engineering solutions business and our EIG business, demand across attractive niche markets remains solid. We continue to expect organic sales for automation and engineering solutions business to be up mid-single digits. In terms of digging in on the orders, I was trying to, in my prepared remarks, do that a little bit. We talked about, you know, a big order in the semiconductor market from Abaco. We're providing computing solutions. We talked about the space satellite market that is really doing well, which we have specialized machining solutions that can make precision components like no one else. We're actually building machines and we're doing some contract manufacturing for the lower orbit satellite systems.

Speaker #1: And demand across attractive niche markets remains solid. And we continue to expect organic sales for automation and engineering solutions business to be up mid-single digits.

Speaker #1: In terms of digging in on the orders, I was trying to in my prepared remarks do that a little bit. We talked about a big order in the semiconductor market from ABACO.

Speaker #1: We're providing computing solutions. That's we talked about the space satellite market that is really doing well. We have specialized machining solutions that can make precision components like no one else.

Speaker #1: So we're actually building machines. And we're doing some contract manufacturing for the lower orbit satellite systems. I talked a bit about defense and what's going on in defense and our strength and UAVs and our strength and missile defense systems.

David Zapico: I talked a bit about defense, you know, what's going on in defense and our strength in UAVs and our strength in missile defense systems. I talked about the nuclear industry, both on the commercial and the civil and defense, very strong for us, and we got a substantial order for the submarine program. You know, these programs are things we're winning because of our technology, because we work with customers. These are highly engineered technologies. There are not a lot of people that can do these things, and we just think we're well positioned for where the world's going. We're in the right places, and we feel really optimistic right now.

Speaker #1: I talked about the nuclear industry and both on the commercial and the civil and defense. Very strong for us. And we got a substantial order for the submarine program.

Speaker #1: And these are these programs are things we're winning because of our technology, because we work with customers. These are highly engineered technologies. They're not a lot of people that can do these things.

Speaker #1: And we just think we're well-positioned for where the world's gone. We're in the right places. And we feel really optimistic right now.

Speaker #6: And if I could just add, in terms of the order strength, as we said, it was broad-based. Unless there were some large orders in the aerospace and defense area.

Dalip Puri: If I could just add, in terms of the order strength, as we said, it was broad-based, unless there were some large orders in the aerospace and defense area. Every sub-segment saw double-digit organic orders growth, and every division was up at least 5%. Automation was very strong, and really in process, our metrology and material analysis businesses also saw really strong order growth. It was really broad-based, and it really wasn't driven by lumpiness in orders in certain areas.

Speaker #6: But every subsegment saw double-digit organic orders growth. And every division was up at least 5%. And automation was very strong. And really, in process, our metrology and material analysis business is also really strong order growth.

Speaker #6: So it was really broad-based. And it really wasn't any it wasn't driven by lumpiness in orders in certain areas.

Speaker #5: Thanks a lot.

Scott Graham: Thanks a lot.

Speaker #3: Our next question comes from Joe Giordano with TD Cohen. Joe, go ahead with your question.

Operator: Our next question comes from Joe Giordano with TD Cowen. Joe, go ahead with your question.

Speaker #7: Hey. Good morning, guys.

Joe Giordano: Good morning, guys.

Speaker #5: Hello, Joe.

David Zapico: Hello, Joe.

Speaker #7: There seems to be emerging concerns that potentially aerospace aftermarket, I guess, on the commercial side is peaking. It doesn't seem like there's any there's real evidence in your business of that.

Joe Giordano: There seems to be emerging concerns that potentially aerospace aftermarket, I guess on the commercial side, is peaking. It doesn't seem like there's any real evidence in your business of that, but what are you kind of hearing, seeing, and what would you really be looking at to see if something like that was starting to form?

Speaker #7: But what do you kind of hearing, seeing, and what would you really be looking at to see if something like that was starting to form?

Speaker #1: Yeah. As I mentioned before, that's the third-party aftermarkets, the smallest part of our MRO businesses. And we watch it very closely. We have some specialized capability, and the U.S. is extremely strong right now.

David Zapico: As I mentioned before, that's the third party aftermarket's the smallest part of our MRO businesses. You know, we watch it very closely and we have some specialized capability. The US is extremely strong right now. We're involved in some retrofit programs that are driving the business, so there may be a bit of a counter-market there. In Europe, you know, that, you know, Europe and Asia, the MRO, you know, if there's a place that turns down, it'll probably be that area, so we're watching that closely. Again, this is less than 2% of our sales, and the fact is we had an incredibly strong first quarter.

Speaker #1: We're involved in some retrofit programs. They're driving the business. So there may be a bit of a countermarket there. And in Europe, Europe and Asia, the MRO, if there's a place that turns down, it'll probably be that area.

Speaker #1: So we're watching that closely. But again, this is less than 2% of our sales. And the fact is, we had an incredibly strong first quarter.

David Zapico: The order rates are continuing to have strength, but as the conflict goes on in the Gulf and there's a bit of a shortage in aviation fuel, we think it'll, the weakness may show up first in Asia, second in Europe, and the US, seems pretty insulated right now, but it'll be last. You know, that could all change in a week.

Speaker #1: The order rates are continuing to have strength. But as the conflict goes on in the Gulf and there's a bit of a shortage in aviation fuel, we think it'll the weakness may show up first in Asia, second in Europe, and the US seems pretty insulated right now.

Speaker #1: But it'll be last. But that can all change in a week. So we're making the call the best we can, and right now, we feel good.

David Zapico: Sure

David Zapico: You know, we're making the call the best we can, and right now we feel good. If we think there's any downside, it's extremely modest.

David Zapico: Sure

David Zapico: You know, we're making the call the best we can, and right now we feel good. If we think there's any downside, it's extremely modest.

Speaker #1: And if we think there's any downside, it's extremely modest.

Speaker #5: And then I was interested you mentioned ABACO, the organized computers into semiconductors. I tend to think of that more as like defense-oriented field applications.

Joe Giordano: Then I was interested, you mentioned the ruggedized computers into semiconductors. I tend to think of that more as like defense-oriented field application. Can you talk about like where, what you guys are doing there on semis and how that business-?

Speaker #5: Can you talk about what you guys are doing there on semis and how that business is fitting in?

David Zapico: Yeah

David Zapico: Is fitting in?

Joe Giordano: Is fitting in?

Speaker #1: Yeah. So ABACO makes advanced computing solutions. And when you have the most precision applications, have to work in the most durable environments, you'll use the ABACO equipment.

David Zapico: Yeah. You know, Abaco makes, you know, advanced computing solutions. When you have the most precision applications to have to work in the most durable environments, you'll use the Abaco equipment. Along with the needs and the data explosion in defense right now, where everybody's more data to process and in RF systems and things like that, it's a great demand driver. Abaco also has a business where, you know, we're selling that technology to the semiconductor market. Really in the quarter, there was a semiconductor tool manufacturer that's using the, you know, the semiconductor tool manufacturer is dealing with a ramp-up in demand from AI and everything that's going on in the semiconductor market, and they're using the Abaco computing technology to control their tool.

Speaker #1: And along with the needs and the data explosion in defense right now, where everybody's more data to process and in RF systems and things like that, it's a great demand driver.

Speaker #1: ABACO also has a business where we're selling that technology to the semiconductor market. So really, in the quarter, there was a semiconductor tool manufacturer that's using the semiconductor tool manufacturer is dealing with a ramp-up in demand from AI and everything that's going on in the semiconductor market.

Speaker #1: And they're using the Abaco computing technology to control their tool. So we were pleased to book that order in the quarter.

David Zapico: We were pleased to, you know, book that order in the quarter.

Speaker #5: Thank you.

Joe Giordano: Thank you.

Speaker #1: Thank you, Joe.

David Zapico: Thank you, Joe.

Speaker #3: As a reminder, to ask a question, you'll need to press star 11 on your telephone and wait for your name to be announced. To withdraw your question, please press star 11 again.

Operator: Our next question comes from Nigel Coe with Wolfe Research. Nigel, go ahead with your question.

Speaker #3: Our next question comes from Nigel Koh with Wolf Research. Nigel, go ahead with your question.

Operator: Our next question comes from Nigel Coe with Wolfe Research. Nigel, go ahead with your question.

Speaker #8: Thanks. Good morning. Obviously, a lot of ground covered here, but thanks for the question. So the guide increase from mid to high singles to high singles and the obviously the bump in core growth as well.

Nigel Coe: Thanks. Good morning. Obviously a lot of ground covered here, but thanks for the question. The, the guide increase, you know, from mid to high singles to high singles and the, obviously the bump in core growth as well, is that in the realm of 2 points of sales accretion versus the prior plan? That's how I think about it. Where I'm going with this is twofold. One, the $0.07 increase in the guide, obviously a nice surprise, but seems light if it is a 2-point increase in sales. Secondly, with the EIG, I'm just curious, given the order strength and the broad-based nature of the order strength, I'm just wondering how we should think about the H2 core growth profile for EIG.

Speaker #8: Is that in the realm of 2 points of sales accretion versus the prior plan? That's how I think about it. And where I'm going with this is twofold.

Speaker #8: One, the 7-cent increase in the guide obviously unites the price. But it seems light if it is a 2-point increase in sales. And then secondly, with the EIG, I'm just curious given the order strength and the broad-based nature of the order strength, I'm just wondering how we should think about the second half core growth profile for EIG.

Speaker #1: Yeah. The first point is probably an increase more like a point and a half. And it was really driven by process and aero. So that kind of puts that in the bucket.

David Zapico: Yeah. The first point is probably an increase more like 1.5 points, and it was really driven by process and aero. That kind of, you know, puts that in the bucket. Really, I go back to my, you know, original comments. It's a conservative guide. We have a strong start to the year, excellent execution. Orders were outstanding, you have the geopolitical uncertainty, we balanced it all and, you know, we're very confident in our guide. We think it's prudent to do what we did.

Speaker #1: And really, I go back to my original comments as a conservative guy. We have a strong start to the year. Excellent execution. Orders were outstanding.

Speaker #1: But then you have the geopolitical uncertainty. And we balanced it all. And we're very confident in our guide. We think it's prudent to do what we did.

Speaker #8: Okay. No, I'd say it does seem conservative. And then maybe going back to Dean's question at the front end around obviously, you don't speculate on press rumors.

Nigel Coe: Okay. No, it does seem conservative. Maybe going back to Deane's question at the front end around, obviously you don't speculate on, you know, press rumors, but I'm just curious, you know, AMETEK's evolved from doing a lot of bolt-on deals to much larger deals under your leadership. I'm just wondering, you know, how you view the risk/reward of larger deals versus small bolt-ons. Just I'll leave it open like that.

Speaker #8: But I'm just curious, AMETEK's evolved from doing a lot of bolt-on deals to much larger deals under your leadership. And I'm just wondering how you view the risk-reward of larger deals versus small bolt-ons.

Speaker #8: Just I'll leave it open like that.

Speaker #1: Yeah. I think the there's an important risk-reward. And you have to make sure what you're buying is matches our strategy, matches what we're trying to do.

David Zapico: Yeah. I think there's an important risk/reward, and you have to make sure what you're buying is matches our strategy, matches what we're trying to do, and we can add value to it. We've naturally increased the size of deals over the past 10 years. We're still focused on niche markets. We're still focused on the areas that we're currently operating in. You know, I think that, you know, I plan on continuing to expand a lot. You know, it's we've got an unblemished record. We've never had a write-off of goodwill. We're very conservative. We look to get a return on every deal. Returns on capital are very, very strong for us. It's our, it's part of our basic operating model.

Speaker #1: And we can add value to it. So we have naturally increased the size of deals over the past 10 years. We're still focused on niche markets.

Speaker #1: We're still focused on the areas that we're currently operating in. And I think that I plan on continuing to expand a lot. And it's again, an unblemished record.

Speaker #1: We've never had a write-off of goodwill. We're very conservative. We look to get a return on every deal. Returns on capital are very, very strong for us.

Speaker #1: It's part of our basic operating model. That's what we do, our growth model, is to add M&A to our portfolio of niche businesses. We don't have any over-dependency on any one market, any one technology, any one customer.

David Zapico: That's what we do. Our growth model is to add M&A to our portfolio of niche businesses. We don't have any over-dependency on any one market, any one technology, any one customer. We just think we have a bulletproof model that's robust, and we'll continue to add acquisitions. In no way are we gonna do an acquisition that's the size of AMETEK, and no way will we add an acquisition that's half the size of AMETEK. We're still looking at these, you know, I'll call them bite-sized deals that are a small percentage of our market capitalization. We're gonna continue to do that. The environment for us is providing a lot of opportunities for us. We're assessing a lot of opportunities.

Speaker #1: So we just think we have a bulletproof model that's robust. And we'll continue to add acquisitions. And no way are we going to add an acquisition that's the size of AMETEK and no way will we add an acquisition that's half the size of AMETEK.

Speaker #1: So we're still looking at these I'll call them bite-sized deals that are a small percentage of our market capitalization. And we're going to continue to do that.

Speaker #1: And the environment for us is providing a lot of opportunities for us. So we're assessing a lot of opportunities. We haven't made a decision on any of them.

David Zapico: We haven't made a decision on any of them, but we're gonna pick the ones that we add the most value for our shareholders.

Speaker #1: But we're going to pick the ones that we add the most value for our shareholders.

Speaker #8: Got it. Okay. Thanks, Dave. Appreciate that.

Nigel Coe: Got it. Okay. Thanks, Dave. Appreciate that.

Speaker #3: Our next question comes from Julian Mitchell with Barclays. Julian, go ahead with your question.

Operator: Our next question comes from Julian Mitchell with Barclays. Julian, go ahead with your question.

Speaker #9: Hi, thanks, good morning. Maybe just moving away from the top line for a second, looking at operating leverage and kind of incremental margins—is the sort of guide based off a steady improvement year-on-year in operating leverage as you go through 2026?

Julian Mitchell: Hi. Thanks. Good morning. Maybe just moving away from the top line for a second, looking at operating leverage and kind of incremental margins. Is the sort of guide based off a steady improvement year on year in operating leverage as you go through 2026? You know, just wanted to clarify that.

Speaker #9: Just wanted to clarify that. And if you see any movement in kind of price net of cost within the year moving around.

David Zapico: Yeah.

Julian Mitchell: If you see any movement in kind of price net of cost within the year moving around.

Speaker #1: Right. So if you want to dig into margins, Julian, in the first quarter, we had excellent operating quarter. So our reported margins were up 50 basis points.

David Zapico: If you want to dig into margins, Julian, you know, in Q1 we had excellent operating quarter. Our core margins, so we take out acquisitions, and we take out FX, they were up 160 basis points. They were just outstanding. If you look at both of our groups, EIG had core margins up 40 basis points driven by excellent productivity. EMG reported core margins up 410 basis points. They got excellent productivity plus leverage from the excellent sales growth. If you want to dig into that and say, what were the incrementals, you know, on a 1 dollar of sales, what were the incrementals? Our incrementals were greater than 50% for the company, core incremental.

Speaker #1: But our core margins, so we take out acquisitions and we take out FX, they were up 160 basis points. We were just outstanding. And if you look at both of our groups, EIG had core margins up 40 basis points, driven by excellent productivity.

Speaker #1: And EMG reported core margins up 410 basis points. So they got excellent productivity plus leverage from the excellent sales growth. If you want to dig into that and say what were the incrementals on a dollar of sales?

Speaker #1: What were the incrementals? Our incrementals were greater than 50% for the company core incrementals. So we back out the acquisitions and you back out FX.

David Zapico: When you back out the acquisitions, and you back out FX, core incrementals were up 50% both on the whole company. EIG core incrementals were greater than 50, and EMG core incrementals were greater than 50. Really strong. You know, related to the guide for the year, we're expecting 35% incrementals and core margins will be up around 50 basis points. You know, and again, I'll go back to it's a prudent guide. There's a lot of uncertainty right out here related to, you know, potential inflation and things like that, where we're laser-focused on. Performing extremely well. Plan to continue performing very well for the year, and those are the numbers, and they're outstanding in the quarter.

Speaker #1: Core incrementals were up 50%, both for the whole company. EIG core incrementals were greater than 50%, and EMG core incrementals were greater than 50%.

Speaker #1: So really strong. And related to the guide for the year, we're expecting 35% incrementals. And core margins will be up around 50 basis points.

Speaker #1: So and again, I'll go back to it's a prudent guide. There's a lot of uncertainty out here related to potential inflation and things like that.

Speaker #1: We're laser-focused on. So performing extremely well. Plan to continue performing very well for the year. And those are the numbers. And they're outstanding in the quarter.

Speaker #1: And we plan to continue driving it forward. And we have a track record of being able to navigate through changing conditions and we're laser-focused on what we think we need to do.

David Zapico: We plan to continue driving it forward, and we have a track record of being able to navigate through changing conditions, and we're laser-focused on what we think we need to do.

Speaker #9: That's very helpful. Thank you. And then just to circle back to the EMG segment and the top line outlook there. So as you noted earlier, for medical-specifically, you've got tough comps later in the year.

Julian Mitchell: That's very helpful. Thank you. Then just to circle back to the EMG segment and the top-line outlook there. As you noted earlier, you know, for medical specifically, you've got tough comps later in the year. The overall EMG segment, the comps get very tough on sales in the second half. At the same time, your orders are growing double-digit organic still. Just wondered sort of are you kind of baking in like a mid-single-digit exit rate on organic growth for EMG just because of the comps? Is that the right way to look at it?

Speaker #9: And the overall EMG segment, the comps get very tough on sales in the second half. But at the same time, your orders are growing double-digit organic still.

Speaker #9: So just wondered sort of are you kind of baking in a mid-single-digit exit rate on organic growth for EMG just because of the comps?

Speaker #9: Is that the right way to look at it?

Speaker #1: Yeah. You're in the ballpark. You're in the ballpark. That's the way I look at it.

David Zapico: Yeah, you're in the ballpark. That's the way I look at it.

Speaker #9: Great. Thank you.

Julian Mitchell: Great. Thank you.

Speaker #1: Thank you.

David Zapico: Thank you.

Speaker #3: This concludes the question and answer session. I would now like to turn the call back over to Kevin Coleman for closing remarks.

Operator: This concludes the question and answer session. I would now like to turn the call back over to Kevin Coleman for closing remarks.

Speaker #1: Thanks, everyone, for joining our call today. And as a reminder, a replay of today's webcast can be accessed in the investor section of AMETEK.com.

Kevin Coleman: Thanks, everyone, for joining our call today. As a reminder, a replay of today's webcast can be accessed in the investor section of ametek.com. Have a great day.

Speaker #1: Have a great day.

Operator: Thank you for your participation in today's conference. This does conclude the program. You may now disconnect.

Q1 2026 AMETEK Inc Earnings Call

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