AMETEK Second Quarter Sets Records For Operating Income and EPS
19 July 1999
AMETEK Second Quarter Sets Records For Operating Income and EPS
PAOLI, Pa., July 19 -- AMETEK Inc. today
announced second quarter 1999 earnings per share reflecting an all-time
quarterly record for operating income and EPS. For the quarter ended June 30,
1999, operating performance benefited from cost reductions, strategic
acquisitions, and significant margin expansion.
AMETEK Sets Second Quarter Records
Walter E. Blankley, AMETEK chairman and chief executive officer stated,
"AMETEK achieved 1999 second quarter net income of $15.6 million or record
earnings of 47 cents per diluted share. That compares with net income of
$15.4 million, or 45 cents per diluted share, earned in the second quarter of
1998 when business conditions were quite strong.
"The second quarter 1999 performance mirrors the positive operating trends
that occurred in the first quarter of 1999. Our operational excellence and
cost reduction initiatives are achieving excellent results, including the
expansion of operating income margins seen in this quarter. Moreover, our
second quarter 1999 operating income of $29.6 million, on sales of
$231.6 million, also was a new all-time quarterly record for the company --
reflecting a one percentage point increase in our operating margin to 12.8%.
This compares with operating income of $28.8 million, or an 11.7% margin, on
sales of $246.1 million in the same quarter of last year."
First-Half 1999 Results Reflect Positive Earnings Comparison to Strong
First Half 1998
For the six-month period ended June 30, 1999, sales were $462.5 million,
down 5% from $488.1 million in the prior-year six-month period. Operating
income was $58.7 million, up 2% from $57.4 million in the same period of 1998.
Net income was $30.2 million, or 92 cents per diluted share in the first half
of 1999, compared with net income of $30.3 million, or 89 cents per diluted
share in the prior-year period.
Cost Reduction Initiatives Are On Track, Building Competitive Advantage
"We are on track to meet our previously announced objective of
significantly reducing operating costs by $14 million in connection with the
one-time $8 million charge taken in the fourth quarter 1998. As our margins
indicate, we have been successful in cost reductions far beyond those related
to the one-time charge. These actions and our four growth strategies are
building long-term competitive advantages and our future growth potential."
Electromechanical Group (EMG) Increases Operating Margin in Mixed Markets
Frank S. Hermance, president and chief operating officer said, "EMG's 1999
second quarter sales declined 13% to $122 million compared with $140.9 million
when strong market conditions prevailed in the 1998 second quarter. EMG's
North American floor care and brushless DC motor businesses continued the
positive trends of the 1999 first quarter. However, their results were again
more than offset by continued weak motor markets in Europe.
"The progress on our aggressive cost reductions, including the
consolidation of our European motor operations, is on track. The transition
of U.S. motor production to our Reynosa, Mexico plant is ahead of schedule --
by the end of the year about 40% of our North American motor production for
household floorcare applications will be from Mexico.
"These actions and operational excellence initiatives throughout EMG were
the primary factors in the expansion of operating margins to 14.8% in the 1999
second quarter from 14.1% in the same period of 1998. We expect EMG's 1999
operating income and margins to increase significantly from 1998 levels," he
added.
Electronic Instruments Group (EIG) Increases Sales and Income
Mr. Hermance continued, "EIG's second quarter sales increased 4% to
$109.6 million due to our acquisitions. Operational Excellence and cost
reductions increased operating margins to 14.8% from 14% in the same quarter
of 1998. As a result, EIG's operating profit grew 10% to $16.2 million in the
second quarter, versus the prior year period.
"Business conditions for EIG during the second quarter 1999 were very
similar to those of the first quarter: the heavy-vehicle instruments business
continued to be very strong, the aerospace business was good, and the process
instruments business had mixed results. EIG will continue executing our plan
to increase 1999 operating income and achieve margins well ahead of those in
1998," noted Mr. Hermance.
Continuing Growth Expected to Produce Sixth Consecutive Record Year in
1999
Mr. Blankley concluded, "During the first half of 1999, we have addressed
challenging conditions in some of our markets, that are likely to continue.
We have demonstrated those situations are manageable, as indicated by our
first half of 1999 operating results and earnings per share of 92 cents per
diluted share. Our expectations for 1999 are on plan -- we should realize
double-digit growth for 1999 and achieve our sixth consecutive year of record
earnings from continuing operations."
Corporate Profile
AMETEK is a leading global manufacturer of electric motors and electronic
instruments. AMETEK's Corporate Growth Plan is based on Four Key Strategies:
Operational Excellence, New Products, Global & Market Expansion, and Strategic
Acquisitions & Alliances. 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
Statements in this news release that are not historical are considered
"forward-looking statements" and are 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,
1999 1998 1999 1998
Net sales $231,640 $246,097 $462,518 $488,055
Expenses:
Cost of sales, (excluding
depreciation) 174,925 188,644 350,497 373,966
Selling, general and
administrative 19,775 21,148 38,428 41,497
Depreciation 7,356 7,546 14,860 15,240
Total expenses 202,056 217,338 403,785 430,703
Operating income 29,584 28,759 58,733 57,352
Other income (expenses):
Interest expense (5,861) (6,530) (11,887) (12,368)
Other, net 683 1,884 363 2,777
Income before income taxes 24,406 24,113 47,209 47,761
Provision for income taxes 8,842 8,724 17,049 17,488
Net income $15,564 $15,389 $30,160 $30,273
Diluted earnings per share $0.47 $0.45 $0.92 $0.89
Basic earnings per share $0.48 $0.47 $0.94 $0.92
Average common shares
outstanding:
Diluted shares 33,104 34,219 32,907 34,200
Basic shares 32,329 32,994 32,252 33,000
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,
1999 1998 1999 1998
Net sales
Electromechanical $122,017 $140,867 $243,681 $277,705
Electronic Instruments 109,623 105,230 218,837 210,350
Total Consolidated $231,640 $246,097 $462,518 $488,055
Operating income
Electromechanical $18,012 $19,836 $35,206 $38,929
Electronic Instruments 16,246 14,771 32,745 29,566
Total segments 34,258 34,607 67,951 68,495
Corporate and other (4,674) (5,848) (9,218) (11,143)
Total Consolidated $29,584 $28,759 $58,733 $57,352
CONTACT: William F. Cleary, 610-889-5249, or James P. McKinley,
610-889-5271, both of AMETEK.