Third quarter 2026 earnings call, November 3, 2026

AMETEK reported third quarter results that beat its own guidance and pushed full-year EPS expectations meaningfully higher. Sales reached a record $2.22 billion, up 17%, with organic growth of 10% and acquisitions adding 7 points. Adjusted EPS of $2.21 compared with guidance of $2.08 to $2.10 and rose 17% year over year. Full-year EPS guidance now stands at $8.53 to $8.57, up from $8.20 to $8.30, a raise of roughly $0.30 at the midpoint, of which only about $0.08 comes from Indicor. The remainder reflects underlying operational outperformance, which is the more important signal.

Orders Show Project Pipeline Converting, With EIG the Swing Factor

The most consequential data point was organic orders growth of 17%, with both the Electronic Instruments Group and the Electromechanical Group growing 17% organically. Total orders were $2.65 billion, up 35%, and backlog hit a record $4.54 billion, up 27% since the start of the year. CEO Dave Zapico said the change he has watched over the past year is EIG catching up: "What we thought was going to happen is our EIG business is accelerating... that's a function of that project activity being acted upon. The things that were in our pipeline that were quotations we were working with customers on, in EIG specifically, that's accelerated."

The cadence was favorable. September was the strongest month of the quarter and an all-time monthly record, October started "on plan" and "extremely solid," and orders also grew sequentially from the second quarter. Management uses a rule of thumb that 80% of backlog ships within 12 months, and said the shipment profile is fairly ratable by quarter heading into 2027. That gives the company decent visibility, though Zapico was careful to note that part of the business is shorter cycle and still requires fresh orders.

One modeling caution: of the 35% orders growth, roughly 18 points reflected the Indicor backlog coming onto the books. Headline orders growth therefore overstates the organic picture, though the 17% organic figure is strong on its own.

Indicor: Scale, Seasonality and Integration Risk

AMETEK closed the Indicor Instrumentation acquisition during the quarter, funding it with debt that lifted total borrowings to $6.7 billion from $2.3 billion at year-end. Gross leverage is 2.3x EBITDA and net leverage 2.1x, with $2.7 billion of cash and available credit. Interest expense rose $17 million year over year to $40 million.

Indicor contributed a little over $100 million of sales in the roughly five weeks it was owned, with another $15 million to $20 million coming from other acquisitions. Accretion in the quarter was negligible, and the $0.08 in the full-year guide falls entirely in the fourth quarter. Zapico described the asset as a "$1.1 billion annual revenue stream" and "a 30% EBITDA business," with limited seasonality and a meaningful aftermarket component. Organically, it grew at a strong mid-single-digit rate in the short period AMETEK has owned it. Management declined to provide 2027 accretion, pointing to its November and December budget process. CFO Dalip Puri reiterated the synergy target of 10% to 12% over three years, which investors should model ratably.

On integration risk, Zapico argued that scale is mitigated by structure. Indicor comprises about 10 individual businesses that will be distributed across eight to 10 AMETEK business units, so "no individual business sees a $1.1 billion integration." The company also ran a dedicated AMETEK University session for Indicor leaders. This is credible given AMETEK's record of more than 120 deals, but the integration is early, and the synergy target will take years to prove out.

Margins and Pricing Remain a Strength

Operating income rose 20% to $595 million, with a reported margin of 26.8%, up 60 basis points. Core margins, which exclude acquisitions, were 27.3%, up 110 basis points. EMG was the standout, with core margins of 27.5%, up 210 basis points, while EIG core margins rose 60 basis points to 29.5%. Core incrementals exceeded 35% in both groups, and management expects 35% to 40% for the full year.

Price exceeded inflation of about 3%, preserving a positive spread despite tariffs and a broadly inflationary backdrop. Zapico attributed this to "the highly differentiated nature of the AMETEK product portfolio" and leadership in niche markets. Free cash flow was a record $527 million, 124% of net income, and operating working capital improved 160 basis points to 17.3% of sales. Full-year free cash flow conversion guidance was raised to 115% to 120%.

End Markets: Semiconductor and Aerospace Lead, Power Lags, Europe Soft

Semiconductor, about 6% of sales, grew mid-teens in sales with orders up more than 30%. Zapico pointed to three drivers: CAMECA defect-detection instruments, which are multimillion-dollar tools that "just about every expanding fab has one and wants more"; Zygo's EUV optics; and Abaco's ruggedized electronics moving into semiconductor capital equipment.

Aerospace and defense, about 17% of sales and split roughly evenly between commercial and defense, grew mid-teens, led by commercial OEM and aftermarket. Management dismissed concerns about supply chain disruption, citing exposure across platforms rather than dependence on any single aircraft. Asked what a hypothetical end to global conflicts would mean for defense and energy demand, Zapico said, "I don't think it does much at all," arguing defense has shifted "from discretionary spend to required spend," though he acknowledged the business is project-based and somewhat episodic.

Process instrumentation grew high single digits, with full-year guidance still at mid-single digits. Automation and Engineered Solutions grew mid-teens, helped by medical and semiconductor motion control, and its full-year outlook moved up to low double digits. Paragon, the largest piece of the roughly 20% healthcare exposure, grew low double digits, driven by new program wins rather than procedure volumes. FARO, one year after closing, exceeded the profitability in the acquisition model, though Zapico said more work remains in year two.

The Power segment is the laggard in relative terms. Sales grew mid-single digits, although orders rose double digits, and management expects the order strength to carry into the fourth quarter and 2027. Zapico noted the exposure is tied more to grid expansion than data centers, and that "the power market is very conservative. It takes time to grow." Geographically, Asia grew in the mid-20s, with China ahead of the regional average, and the U.S. grew low double digits. Europe was the weak spot, down modestly on tough comparisons and timing, and "hanging in there, but we're not seeing a big growth uptick yet."

Product Note and Capital Deployment

Solidstate Controls introduced its DPP+ uninterruptible power supply, the company's flagship high-end system for applications such as nuclear plants "where failure is not an option." Priced at about $100,000 per unit, it has some data center applications but is aimed at the most rugged use cases. Management said it is separately experimenting with customers on 800-volt architectures in a different product category, which it considers the more exciting data center opportunity. New product vitality was 25%.

On capital allocation, Zapico said "our foot is on the gas pedal" for M&A, with no pause to digest Indicor, backed by a 12-person dedicated team. The priority order remains acquisitions, opportunistic buybacks if valuation dislocates, then a modest dividend.

Fourth Quarter Outlook

For the fourth quarter, AMETEK guided to sales up in the low 20% range and EPS of $2.26 to $2.30, up 12% to 14%. That growth rate is below the third quarter's 17% EPS increase, partly reflecting higher interest costs and an effective tax rate guided to 18% to 18.5% for the year. EIG should grow in the low 20s and EMG in the high teens, with Indicor's larger EIG contribution explaining the gap. Full-year sales are now expected to rise mid-teens, with organic growth in the high single digits.