AMETEK Reports Q2 Earnings
20 July 1998
AMETEK Second Quarter Earnings Per Share Rises 25 Percent; Second Quarter Sales Up 14 Percent; Operating Income Up 27 Percent
PAOLI, Pa., July 20 -- AMETEK Inc. today
announced record second quarter sales, operating income, and income and
earnings per share from continuing operations for the quarter ended June 30,
1998.
Second quarter 1998 sales rose 14% to $246.1 million from $216.0 million
in the year-ago quarter. Operating income was $28.8 million, up 27% from
$22.7 million in the second quarter of 1997. Both sales and operating income
were records, compared with any previous quarter.
Income from continuing operations in the 1998 second quarter totaled
$15.4 million, up 26% from $12.2 million in the 1997 second quarter. Diluted
earnings per share from continuing operations rose 25% to 45 cents per share
from 36 cents per share in the 1997 second quarter.
Second quarter 1998 net income was also $15.4 million, or 45 cents per
share on a diluted basis, compared with net income of $14.8 million, or
44 cents per share, in the year-ago second quarter, which included
$2.6 million, or 8 cents per share, of income from its water filtration
business that was spun off in July 1997.
Strong First-Half Results
For the six-month period ended June 30, 1998, sales were $488.1 million,
up 17% from $418.5 million in the prior-year six-month period. Operating
income was $57.4 million, up 29% from $44.5 million in the same period of
1997. Income from continuing operations was $30.3 million, or 89 cents per
share on a diluted basis, versus $23.8 million, or 71 cents per share, in the
first half of 1997.
Net income was $30.3 million, or 89 cents per diluted share, in the first
half of 1998, compared with net income of $28.4 million, or 85 cents per
diluted share, in the prior-year period, which included $4.6 million, or
14 cents of income per diluted share, from the discontinued water filtration
business.
Growth Strategies Contribute to Earnings Momentum
Walter E. Blankley, chairman and chief executive officer, said, "Our
record second quarter performance again demonstrates the ability of both our
Electromechanical and Electronic Instruments Groups to produce double-digit
percentage sales and earnings growth.
"It also reflects the ongoing success of our Four Growth Strategies in
creating positive sales and earnings momentum, improving our market positions,
and expanding our businesses worldwide," he added.
Electromechanical Group (EMG) Posts Strong Sales and Income Gains
Frank S. Hermance, president and chief operating officer, said, "EMG
reported substantially higher sales and operating income as well as operating
margin improvement in the 1998 second quarter.
"Our January 1998 acquisition of Rotron, Inc., a world leader in
brushless, direct-current motors and motor-blowers, contributed to EMG's sales
and income gains as did productivity improvements in our existing brushless
motor business and higher motor sales to the outdoor power equipment market.
Our domestic floorcare sales were flat in a modestly down market," noted Mr.
Hermance.
"Overseas, our Italian motor operations achieved improvements in both
sales and income versus the prior-year period, reflecting the success of
outsourcing initiatives with European floor-care appliance manufacturers as
well as new market expansion initiatives. Those gains, however, were
partially reduced by the translation of the Italian lira into a stronger U.S.
dollar.
"Our second quarter results also reflected positive sales and income
contributions from our Shanghai, China, motor plant, which began operation in
early 1997," he added.
Electronic Instruments Group (EIG) Achieves Higher Sales and Income
Mr. Hermance continued, "At EIG, second quarter sales, operating income,
and operating margins all posted gains, versus the prior-year period. The
Group benefited from higher aerospace and heavy-vehicle instrument sales and a
substantial performance improvement in our process instruments businesses.
"EIG's sales benefited from the June 1997 acquisition of the Chatillon and
Lloyd Instruments product lines in our test and calibration instruments
business and the April 1998 acquisition of Western Research -- a leader in gas
analyzers and emissions-monitoring equipment," noted Mr. Hermance.
"Sales of our aerospace instruments remained strong during the quarter,
although the rate of growth was more modest than that experienced in 1997.
Our market-leading heavy-vehicle dashboard instruments business posted higher
sales and income, reflecting the ongoing strength of the heavy-vehicle
industry.
"Strong income gains in our process instruments businesses reflected a
lower cost structure and favorable product mix," he added.
Outlook for 1998 Remains Positive
Mr. Blankley said, "Despite the softening in our global markets caused
largely by the Asian economic crisis, we remain confident that our 1998 sales
will approach $1 billion for the first time, contributing to our fifth
consecutive year of record sales and earnings. We continue to expect that our
Corporate Growth Plan will also enable us to achieve our long-term
objectives."
AMETEK Completes Debt Refinancing; Achieves Investment Grade Credit Rating
On July 17, 1998, AMETEK completed a Rule 144A placement of $225 million
principal amount of 7.20% Senior Notes due 2008.
Proceeds of the Senior Note offering were used to repay approximately
$136 million principal amount of the 9-3/4% Senior Notes received in the
concurrent cash tender offer which expired July 15, 1998, as well as fees and
expenses related to the offering. The Company expects to record a third
quarter 1998 extraordinary after-tax charge of approximately $9 million for
the early extinguishment of the 9-3/4% Senior Notes.
The 7.20% Senior Notes were rated investment grade by Standard & Poor's
(S&P) which raised its credit rating to "BBB" from "BB+." According to S&P,
the upgrade reflects the Company's "improved business profile and adherence to
a moderate financial policy."
Concluding, Mr. Blankley said, "We are extremely pleased with the debt
refinancing, the Senior Notes extend the maturity and lower the interest rate
of our long-term indebtedness. They also provide the financial flexibility to
continue with our Corporate Growth Plan and enhance the value of the Company."
Corporate Profile
AMETEK is a leading global manufacturer of electric motors and electronic
instruments in North America, Europe, and Asia. Sales are expected to
approach $1 billion in 1998. Its Corporate Growth Plan is based on Four Key
Strategies: Operational Excellence, New Products, Global & Market Expansion,
and Strategic Acquisitions & Joint Ventures. Its objective is double-digit
percentage growth in earnings per share from continuing operations and a
superior return on total capital. The common stock of AMETEK is a component
of the S&P Mid Cap 400 Index and the Russell 2000 Growth Index.
Forward-looking Information
Information contained in this news release, other than historical
information, are considered "forward-looking statements" and may be subject to
change based on various factors and uncertainties that may cause actual
results to differ significantly from expectations. Those factors are
contained in AMETEK's Securities and Exchange Commission filings.
AMETEK, Inc.
CONSOLIDATED STATEMENT OF INCOME (Unaudited)
(Dollars and shares in thousands, except per share amounts)
Three months ended Six months ended
June 30, June 30,
1998 1997 1998 1997
Net sales $246,097 $216,047 $488,055 $418,502
Expenses:
Cost of sales, excluding
depreciation 188,644 169,349 373,966 327,003
Selling, general and
administrative 21,148 17,165 41,497 33,653
Depreciation 7,546 6,874 15,240 13,369
Total expenses 217,338 193,388 430,703 374,025
Operating income 28,759 22,659 57,352 44,477
Other income (expenses):
Interest expense (6,530) (4,629) (12,368) (9,139)
Other, net 1,884 759 2,777 1,869
Income from continuing
operations before
income taxes 24,113 18,789 47,761 37,207
Provision for income taxes 8,724 6,600 17,488 13,425
Income from continuing
operations 15,389 12,189 30,273 23,782
Income from discontinued
operation, net of taxes -- 2,570 -- 4,643
Net income $15,389 $14,759 $30,273 $28,425
Basic earnings per share:
Income from continuing
operations $0.47 $0.37 $0.92 $0.73
Income from discontinued
operation -- 0.08 -- 0.14
Net income $0.47 $0.45 $0.92 $0.87
Diluted earnings per share:
Income from continuing
operations $0.45 $0.36 $0.89 $0.71
Income from discontinued
operation -- 0.08 -- 0.14
Net income $0.45 $0.44 $0.89 $0.85
Average common shares
outstanding:
Basic shares 32,994 32,821 33,000 32,780
Diluted shares 34,219 33,594 34,200 33,516
Dividends per share $0.06 $0.06 $0.12 $0.12
AMETEK, INC.
INFORMATION BY BUSINESS SEGMENT (Unaudited)
(Dollars in thousands)
Three months ended Six months ended
June 30, June 30,
1998 1997 1998 1997
Net sales
Electromechanical $140,867 $120,108 $277,705 $230,190
Electronic Instruments 105,230 95,939 210,350 188,312
Total Consolidated $246,097 $216,047 $488,055 $418,502
Operating income
Electromechanical $19,836 $15,104 $38,929 $29,812
Electronic Instruments 14,771 12,970 29,566 25,269
Total segments 34,607 28,074 68,495 55,081
Corporate and other (5,848) (5,415) (11,143) (10,604)
Total Consolidated $28,759 $22,659 $57,352 $44,477