AMETEK INC/

AMETEK is a leading global manufacturer of electronic instruments and electromechanical devices with operations in North America, Europe, Asia and South America. The company operates through two reportable segments: Electronic Instruments Group (EIG), a leader in advanced instruments for the process, power and industrial, and aerospace markets, and Electromechanical Group (EMG), a differentiated supplier of precision motion control solutions, highly engineered medical components and devices, thermal management systems, specialty metals and electrical interconnects. EIG's end markets include process and analytical instrumentation, which represented 70% of EIG's 2025 net sales, and aerospace and power instrumentation, which represented 30% of EIG's 2025 net sales. EMG's end markets include automation and engineered solutions, which represented 70% of EMG's 2025 net sales, and aerospace, which represented 30% of EMG's 2025 net sales. The company's common stock is a component of the Standard and Poor's 500 and the Russell 1000 Indices.

Management believes AMETEK has significant competitive advantages including strong market share in a number of targeted niche markets, technological and development capabilities, efficient and flexible manufacturing operations, and an experienced management team. EIG has strong market positions in niche segments of the process, power and industrial, and aerospace markets. EMG holds strong positions in niche segments of the aerospace and defense, automation and medical markets. The company's senior management has an average of approximately 24 years of AMETEK service. In general, AMETEK's markets are highly competitive with competition based on technology, performance, quality, service and price. In EIG's markets, AMETEK believes it ranks as a leader in certain analytical measurement and control instruments, and power and industrial markets, and it is also a major instrument and sensor supplier to commercial aviation. In process and analytical instruments, numerous companies compete in each market on the basis of product quality, performance and innovation. EMG's businesses compete with a number of companies in each of its markets, with competition generally based on product innovation, performance and price, and there is also competition from alternative materials and processes.

AMETEK generates revenue through the design, manufacture, and sale of electronic instruments and electromechanical devices marketed and sold worldwide through two operating groups: EIG and EMG. The majority of the company's revenues on product sales were recognized at a point in time when the customer obtains control of the product. For a small percentage of sales where title and risk of loss transfers at the point of delivery, the company recognized revenue upon delivery to the customer. The company determined that revenues from certain of its customer contracts met the criteria of satisfying its performance obligations over time, primarily in the areas of the manufacture of custom-made equipment and for service repairs of customer-owned equipment. Products and services transferred over time totaled $1,267.0 million ¹ in 2025, compared to $1,149.1 million ² in 2024. Products transferred at a point in time totaled $6,134.1 million ³ in 2025, compared to $5,792.1 million ⁴ in 2024. EIG is not dependent on any single customer; approximately 4% of EIG's 2025 net sales were made to its five largest customers, and no single customer comprises more than 2% of net sales. EMG is not dependent on any single customer; approximately 15% of EMG's 2025 net sales were made to its five largest customers, and no single customer comprises greater than 5% of net sales.

EIG is a leader in the design and manufacture of advanced analytical, test and measurement instruments for the process, aerospace, medical, research, power and industrial markets. Products supplied include process, test, measurement and analytical instruments for the life sciences, pharmaceutical, semiconductor, automation, power, food and beverage, oil and gas, and petrochemical industries. EIG provides a growing range of instruments to the research and laboratory equipment, ultra-precision manufacturing and metrology, optics, medical, and test and measurement markets. It is a leader in power quality monitoring and metering, uninterruptible power systems, programmable power equipment, electromagnetic compatibility test equipment, sensors for gas turbines, dashboard instruments for heavy trucks, and instrumentation and controls for the food and beverage industries. EIG supplies the aerospace industry with aircraft and engine sensors, monitoring systems, embedded computing systems, power supplies, fuel and fluid measurement systems, and data acquisition systems. Process and analytical instrumentation sales represented 70% of EIG's 2025 net sales, totaling $3,464.3 million ⁵. Aerospace and power instrumentation sales represented 30% of EIG's 2025 net sales, totaling $1,454.8 million ⁶. In 2025, 52% of EIG's net sales were to customers outside the United States. At December 31, 2025, EIG employed approximately 12,800 people ⁷, of whom approximately 900 ⁸ were covered by collective bargaining agreements. EIG had operating facilities in the United States, the United Kingdom, Germany, Canada, Denmark, Finland, France, Switzerland, Argentina, Austria, Serbia, and Mexico, and also shared operating facilities with EMG in China, Serbia, and Mexico.

EMG is a leader in the design and manufacture of highly engineered medical components and devices, automation solutions, thermal management systems, specialty metals and electrical interconnects. Products supplied include single-use and consumable surgical instruments, implantable components, and drug delivery systems used across a wide range of medical applications, advanced precision motion control solutions used in a wide range of automation applications across the medical, semiconductor, aerospace, defense, and food and beverage industries, as well as highly engineered electrical connectors and electronics packaging used in aerospace and defense, medical, and industrial applications. EMG supplies high-purity powdered metals, strip and foil, specialty clad metals and metal matrix composites. EMG's heat exchangers provide electronic cooling and environmental control for the aerospace and defense and semiconductor industries. EMG's motors are widely used in commercial appliances, food and beverage machines, hydraulic pumps and industrial blowers. Additionally, EMG operates a global network of aviation maintenance, repair and overhaul (MRO) facilities. Automation and engineered solution sales represented 70% of EMG's 2025 net sales, totaling $1,749.7 million ⁹. Aerospace sales represented 30% of EMG's 2025 net sales, totaling $732.4 million ¹⁰. In 2025, 42% of EMG's net sales were to customers outside the United States. At December 31, 2025, EMG employed approximately 9,400 people ¹¹, of whom approximately 2,300 ¹² were covered by collective bargaining agreements. EMG had operating facilities in the United States, the United Kingdom, China, Germany, France, Italy, Poland, Mexico, Serbia, Czechia, Malaysia, and Taiwan, and also shared operating facilities with EIG in China, Serbia, and Mexico.

In 2025, AMETEK completed two acquisitions, spending $933.2 million ¹³ in cash, net of cash acquired. In January 2025, AMETEK acquired Kern Microtechnik, a leading manufacturer of high-precision machining and optical inspection solutions, for total purchase price of $113.0 million ¹⁴. In July 2025, AMETEK acquired FARO Technologies, a leading provider of 3D measurement and imaging solutions, for total purchase price of $1,023.7 million ¹⁵. In the second quarter of 2025, the Company paid in full, at maturity, a $50.0 million ¹⁶ in aggregate principal amount of 3.91% senior notes. In the third quarter of 2025, the Company paid in full, at maturity, a $100.0 million ¹⁷ in aggregate principal amount of 3.96% senior notes. In the fourth quarter of 2025, the Company paid in full, at maturity, a $275.0 million ¹⁸ in aggregate principal amount of 4.18% senior notes. The Company repurchased approximately 2,306,500 ¹⁹ shares of its common stock for $443.0 million ²⁰ in 2025. Effective February 7, 2025, the Company's Board of Directors approved a $1.25 billion ²¹ share repurchase authorization, replacing the previous $1 billion ²² share repurchase authorization approved in May 2022. Effective February 7, 2025, the Company's Board of Directors approved an 11% ²³ increase in the quarterly cash dividend on its common stock to $0.31 ²⁴ per share from $0.28 ²⁵ per share. On January 6, 2025, the Company established a commercial paper program under which it may issue short-term, unsecured commercial paper notes, with the aggregate face or principal amount not to exceed $2.3 billion ²⁶ at any time. In January 2026, the Company acquired LKC Technologies, a leading provider of innovative technology to enable effective diagnosis and management of ophthalmic conditions. Effective February 12, 2026, the Company's Board of Directors approved a 10% ²⁷ increase in the quarterly cash dividend on its common stock to $0.34 ²⁸ per share from $0.31 ²⁹ per share.

In 2025, the Company posted record sales, operating income, net income, diluted earnings per share, orders, and backlog, as well as strong operating cash flow. Net sales for 2025 were a record $7,401.1 million ³⁰, an increase of $459.9 million ³¹ or 6.6% ³², compared with net sales of $6,941.2 million ³³ in 2024. Net income for 2025 was a record $1,480.1 million ³⁴, an increase of $104.0 million ³⁵ or 7.6% ³⁶, compared with $1,376.1 million ³⁷ in 2024. Diluted earnings per share for 2025 were a record $6.40 ³⁸, an increase of $0.47 ³⁹ or 7.9% ⁴⁰, compared with $5.93 ⁴¹ per diluted share in 2024. Orders for 2025 were a record $7,579.4 million ⁴², an increase of $769.1 million ⁴³ or 11.3% ⁴⁴, compared with $6,810.3 million ⁴⁵ in 2024. The Company's backlog of unfilled orders at December 31, 2025 was a record $3,581.5 million ⁴⁶. Cash provided by operating activities totaled $1,801.8 million ⁴⁷ in 2025. Free cash flow was $1,671.6 million ⁴⁸ in 2025. EBITDA was a record $2,296.9 million ⁴⁹ in 2025, compared with $2,151.7 million ⁵⁰ in 2024. Segment operating income for 2025 was $2,026.0 million ⁵¹, an increase of $141.1 million ⁵² or 7.5% ⁵³, compared with segment operating income of $1,884.9 million ⁵⁴ in 2024. Segment operating income, as a percentage of net sales, increased to 27.4% ⁵⁵ in 2025, compared with 27.2% ⁵⁶ in 2024.

The company states it is committed to achieving earnings growth through the successful implementation of the AMETEK Growth Model, the goal of which is high single digit annual percentage growth in sales and double digit annual percentage growth in earnings per share over the business cycle, strong cash flow generation, and a superior return on total capital.

A key growth vector is the company's strategic acquisition strategy. Since the beginning of 2021 through December 31, 2025, AMETEK has completed 15 ⁵⁷ acquisitions with annualized sales totaling approximately $1.8 billion ⁵⁸. The company targets businesses that provide attractive growth opportunities aligned with strong secular growth themes, often in new and emerging markets. The recent acquisitions of Kern Microtechnik and FARO Technologies are expected to expand and enhance the company's existing ultra precision technologies business. Kern's design and engineering capabilities complement the company's existing ultra precision technologies business, and FARO's 3D metrology and digital reality solutions expand and enhance the company's existing ultra precision technologies business. The company also pursues global and market expansion as a growth vector, having experienced significant growth outside the United States, reflecting an expanding international customer base, investments in its global infrastructure and the attractive growth potential of its businesses in overseas markets. While Europe remains its largest overseas market, AMETEK has pursued growth opportunities worldwide, especially in key emerging markets, and has grown sales in Latin America, Middle East and Asia by driving its global and market expansion strategy and initiatives.

New product development is another major growth vector. The company states that new products are essential to its long-term growth and has maintained a consistent investment in new product development and engineering. In 2025, AMETEK added to its highly differentiated product portfolio with a range of new products across many of its businesses. Approximately 27% ⁵⁹ of sales in 2025 were from products introduced in the past three years. The company has consistently added to its investment in research, development and engineering, and improved its new product development efforts with the adoption of Design for Six Sigma and Value Analysis/Value Engineering methodologies along with artificial intelligence tools, which have improved the pace and quality of product innovation and resulted in the introduction of a steady stream of new products across all of AMETEK's businesses and aligned with attractive secular growth markets.

The company's margin trajectory is supported by its Operational Excellence initiatives, which have yielded lower operating and administrative costs, shortened manufacturing cycle times, resulted in higher cash flow from operations and increased customer satisfaction. Segment operating income, as a percentage of net sales, increased to 27.4% ⁶⁰ in 2025, compared with 27.2% ⁶¹ in 2024. Excluding the dilutive impact of recent acquisitions, acquisition-related integration costs, and the Paragon acquisition-related integration costs, segment operating margins increased 70 basis points ⁶² compared to 2024, due to the continued benefits from the Company's Operational Excellence initiatives. The company's Operational Excellence strategies include lean manufacturing, global sourcing, Design for Six Sigma, Value Engineering/Value Analysis, growth kaizens, digitalization and use of artificial intelligence technology. The company's cost of sales for 2025 was $4,733.7 million ⁶³ or 64.0% ⁶⁴ of net sales, compared with $4,464.7 million ⁶⁵ or 64.3% ⁶⁶ of net sales for 2024.

Capital expenditures in 2026 are expected to be approximately 2% ⁶⁷ of net sales, with a continued emphasis on spending to improve productivity. Capital expenditures were $130.2 million ⁶⁸ or 1.8% ⁶⁹ of net sales in 2025, compared with $127.1 million ⁷⁰ or 1.8% ⁷¹ of net sales in 2024. The company has a lean and flexible manufacturing platform for its businesses, with operating facilities as of December 31, 2025 in China, Czechia, Malaysia, Mexico, and Serbia, which offer proximity to customers and provide opportunities for increasing international sales. The company's supply chain posture is being proactively managed in response to recent tariff announcements, with targeted pricing initiatives, strategic adjustments to global supply chains, and leveraging its worldwide manufacturing footprint to localize production and adapt to changing demand patterns.

The company's capital allocation strategy focuses on cash generation and capital deployment, with its primary focus on strategic, value-enhancing acquisitions. Research, development and engineering costs were $382.8 million ⁷² in 2025, $371.9 million ⁷³ in 2024 and $351.7 million ⁷⁴ in 2023. Capital expenditures were $130.2 million ⁷⁵ in 2025, compared with $127.1 million ⁷⁶ in 2024. Effective February 7, 2025, the Company's Board of Directors approved a $1.25 billion ⁷⁷ share repurchase authorization. At December 31, 2025, $807.0 million ⁷⁸ was available under the Company's Board of Directors authorization for future share repurchases. The company is also committed to paying a consistently increasing cash dividend. Cash dividends paid were $285.3 million ⁷⁹ in 2025, compared with $258.8 million ⁸⁰ in 2024. Effective February 12, 2026, the Company's Board of Directors approved a 10% ⁸¹ increase in the quarterly cash dividend on its common stock to $0.34 ⁸² per share from $0.31 ⁸³ per share.

The company faces structural headwinds from the cyclical nature of many of the industries in which it operates, which are affected by factors beyond its control. A downturn in the U.S. or global economy, and, in particular, in the aerospace and defense, oil and gas, process instrumentation or power markets could have an adverse effect on its business, financial condition and results of operations. The company's growth depends in part on the growth of the markets which it serves, and visibility into the future performance of certain of its markets is limited, particularly for markets into which it sells through distribution. The company's quarterly sales and profits depend substantially on the volume and timing of orders received during the fiscal quarter, which are difficult to forecast. Additionally, a number of the company's businesses operate in industries that may experience periodic, cyclical downturns, and demand depends on customers' capital spending budgets, as well as government funding policies.

The company faces significant constraints from foreign and domestic economic, political, legal, compliance and business factors that could negatively affect its international sales and operations. International sales for 2025 and 2024 represented 48.2% ⁸⁴ and 47.4% ⁸⁵ of consolidated net sales, respectively. As a result of its growth strategy, the company anticipates that the percentage of sales outside the United States will increase in the future. As of December 31, 2025, the company has manufacturing operations in 22 ⁸⁶ countries outside the United States, with significant operations in Canada, China, France, Germany, Mexico, Serbia, Poland and the United Kingdom. Risks include imposition of trade or foreign exchange restrictions, including in the United States; overlap of different tax structures, including the development of a global minimum tax; unexpected changes in regulatory requirements; trade protection measures, such as the imposition of or increase in tariffs and other trade barriers; increasing trade tensions between the United States and certain countries, including China; and fluctuations in foreign currency exchange rates. During 2025, the United States government announced additional tariffs and trade restrictions on goods imported into the U.S. from various nations, and while the recent tariff modifications did not materially impact results for 2025, the company cannot be certain of the outcome, which could adversely impact demand for products, costs, inflation, customers, suppliers, and the overall global economy.

The company's growth could suffer if the markets into which it sells its products and services decline, do not grow as anticipated, experience cyclicality, or a general downturn in the economy could adversely affect its business. A number of the industries in which the company operates are cyclical in nature and are affected by factors beyond its control, particularly in the aerospace and defense, oil and gas, process instrumentation or power markets. The company's growth depends in part on the growth of the markets which it serves, and visibility into the future performance of certain of its markets is limited. The company's international sales and operations are subject to significant risks, as international sales for 2025 represented 48.2% ⁸⁷ of consolidated net sales, and the company has manufacturing operations in 22 ⁸⁸ countries outside the United States. These risks include the imposition of trade or foreign exchange restrictions, trade protection measures such as tariffs, increasing trade tensions between the United States and certain countries including China, and fluctuations in foreign currency exchange rates. The company's growth strategy includes strategic acquisitions, and its ability to successfully effectuate future acquisitions and integrate recent and future acquisitions is dependent on a number of factors including identifying acceptable candidates, integrating management and operational processes, and mitigating assumed liabilities. The company's goodwill and other intangible assets represent a substantial proportion of its total assets, totaling $11,299.2 million ⁸⁹ or 70% ⁹⁰ of total assets at December 31, 2025, and any impairment of such substantial goodwill and intangible assets could have a negative impact on its financial condition and results of operations.

Management's message emphasizes the successful execution of the AMETEK Growth Model, which integrates the four growth strategies of Operational Excellence, Strategic Acquisitions, Global and Market Expansion, and New Product Development with a focus on cash generation and capital deployment. The company states it is committed to achieving earnings growth through the successful implementation of the AMETEK Growth Model, with the goal of high single digit annual percentage growth in sales and double digit annual percentage growth in earnings per share over the business cycle, strong cash flow generation, and a superior return on total capital. In 2025, the Company posted record sales, operating income, net income, diluted earnings per share, orders, and backlog, as well as strong operating cash flow. The company achieved these results from organic sales growth, contributions from recent acquisitions, as well as the Company's Operational Excellence initiatives. The management team is focused on delivering strong, consistent and profitable growth, growing shareholder value, and creating a sustainable future for all stakeholders. Individual performance is tied to financial results through Company-established stock ownership guidelines and equity incentive programs. The company's strategic priorities for the period ahead include continuing to execute its acquisition strategy, investing in new product development, and expanding globally, all while maintaining a focus on Operational Excellence to drive margin improvement and cash generation.