Snapshot
Ametek Inc/ reported $1.78B of revenue in Q2 2025, up 2.5% year over year, with diluted EPS of $1.55 and an operating margin of 26.0%.
- Revenue
- $1.78B
- YoY growth
- +2.5%
- Diluted EPS
- $1.55
- Operating margin
- 26.0%
What management said
- •AMETEK delivered strong second-quarter results highlighted by record-level sales and EBITDA, strong core margin expansion, and excellent earnings growth.
- •We also raised our full-year sales and earnings guidance to reflect our second-quarter results and the recent acquisition of FARO Technologies.
- •Sales were a record $1.78 billion, an increase of 2.5% from the second quarter of 2024.
- •Organic sales were flat, acquisitions added 1.5 points, and foreign currency translation was a 1-point benefit.
- •Book to bill in the quarter was 1.00, and we ended the second quarter with a backlog of $3.47 billion, near record levels.
- •Our operating performance in the quarter was excellent, leading to strong margin expansion and earnings growth.
- •Operating income in the quarter was $462 million, a 3% increase over the second quarter of 2024.
- •Operating margins were 26% in the quarter, up 20 basis points from the prior year.
- •Core margins, excluding the dilutive impact from acquisitions and the impact of foreign currency, were very strong at 26.7%, up 90 basis points versus the prior year.
- •EBITDA in the quarter was a record $565 million, up 4% versus the prior year, with EBITDA margins an impressive 31.8%.
- •This operating performance led to earnings of $1.78 per diluted share, up 7% versus the second quarter of 2024.
- •EIG operating income was $344 million, and operating margins were 29.7%, with core margins a very strong 30.7%, up 40 basis points versus the prior year.
What went well
- •AMETEK delivered record second-quarter sales of $1.78 billion, up 2.5% versus the prior year, alongside record EBITDA of $565 million and EBITDA margins of 31.8%.
- •Core margins were very strong at 26.7%, up 90 basis points year-over-year, driving earnings of $1.78 per diluted share, up 7% versus the prior year.
- •The Electromechanical Group had an excellent quarter with record sales of $618 million (up 6%) and record operating income of $144 million (up 17%), with operating margins up 210 basis points and core margins up 260 basis points.
- •The Paragon Medical business posted robust orders growth (the largest increase in AMETEK by far), strong sales, and EBITDA margins now in line with AMETEK at 30%+, with the destock complete.
- •Aerospace and defense businesses grew overall and organic sales by high single digits, with broad-based growth and commercial OEM strongest, leading management to raise the full-year A&D organic outlook to high single digits.
- •The company closed the FARO Technologies acquisition for approximately $920 million, complementing its metrology and Creaform businesses and adding roughly $340 million in annual sales.
What went wrong
- •Organic sales were flat overall, with the Electronic Instruments Group's organic sales down 3% and process businesses' organic sales down 4%.
- •Trade dynamics and tariff negotiations created uncertainty and hesitation in project spending, leading to delayed shipments and slower customer decision-making.
- •The semiconductor and research/academia markets were headwinds in the quarter, both in the U.S. and globally, with reduced U.S. research academia funding expected to persist at least through Q3.
- •China was down low single digits in the quarter, with tariff-related delays affecting project funding.
Guidance changes
| Metric | Period | Previous | Current | Change |
|---|---|---|---|---|
| Full-year sales and earnings | FY2025 | — | Raised to reflect Q2 results and the FARO acquisition | Raised |
| Aerospace & defense organic sales | FY2025 | Mid single digits | Up high single digits | Raised |
| Power & industrial organic sales | FY2025 | Flat | Up low single digits | Raised |
| Process businesses organic sales | FY2025 | — | Flat to down low single digits | Updated |
| Automation & engineered solutions organic growth | FY2025 | — | Mid single digits | Maintained |
| Total organic growth | FY2025 | — | Positive low single digits | Maintained |
| FARO EPS contribution | FY2025 | — | A couple of pennies (partial Q3 plus Q4) | New |
| Effective tax rate | FY2025 | — | 19% to 19.5% | Updated |
| Capital expenditures | FY2025 | — | Approximately $160 million (about 2% of sales) | Updated |
| Depreciation and amortization | FY2025 | — | Approximately $425 million | Updated |
| Free cash flow conversion | FY2025 | — | Approximately 115% of net income | Maintained |
| Operating expense (growth investments worked through P&L) | FY2025 | $150 million | $155 million | Raised |
Performance breakdown
| Metric | YoY change | Reason |
|---|---|---|
| Total sales | +2.5% | Organic flat, acquisitions added 1.5 points, foreign currency translation added 1 point. |
| Electronic Instruments Group sales | +1% | Organic down 3%, acquisitions added 2 points, foreign currency added 1 point. |
| Electromechanical Group sales | +6% | Organic up 5% and foreign currency a 1-point tailwind, with notable order strength in Paragon and automation businesses. |
| EMG operating income | +17% | Strong sales and orders growth plus profitability gains from Paragon and automation as destocking ended. |
| Operating income | +3% | Strong operating performance and margin expansion. |
| EBITDA | +4% | Record sales, productivity, and strong acquisition performance. |
| Earnings per diluted share | +7% | Core margin expansion, positive price-cost, and strong operating execution. |
| Process businesses sales | Flat | Acquisition contribution offset a 4% organic decline amid project-spending hesitation. |
| Total orders | +6% | EMG up double digits, EIG up single digits; book-to-bill of 1.00. |
Earnings call themes & trends
| Topic | Previous mention | Current period | Trend |
|---|---|---|---|
| Tariffs and trade uncertainty | Flagged $100 million headwind and $70 million at-risk China revenue with mitigation plans | Mitigation actions (pricing, supply chain, localization) delivering benefits; $100 million no longer a headwind and most of the $70 million shipped | steady |
| M&A and acquisition pipeline | — | Two deals closed deploying ~$1 billion for ~$400 million in revenue; pipeline robust with ~$4.5-$5 billion of capacity at 2.5x leverage | rising |
| Destocking in MedTech and automation | Ongoing destock in Paragon and automation | Destock complete in both, driving strong orders and EMG margin expansion | rising |
| Margin expansion | — | Core margins up 90 basis points; EMG core margins up 260 basis points | rising |
| FARO integration | — | Mid-teens cost synergies, public-company cost elimination, targeting 30% EBITDA in about three years from ~15%, likened to the Zygo playbook | rising |
| Research/academia and semiconductor weakness | — | Both were headwinds; research is about 10% of AMETEK with U.S. funding delays expected through at least Q3 | declining |
Q&A summary
Can you give an end-market and regional tour, plus the monthly cadence given the fluid trade environment?
Process businesses were flat (acquisitions offset a 4% organic decline); A&D up high single digits with commercial OEM strongest; power up low single digits; automation and engineered solutions returned to growth. Tariff mitigation (pricing, supply chain, localization, cost reductions) delivered Q2 benefits. June was the strongest order month of the quarter and year, and July month-to-date looked very good with no slowdown.
Can you elaborate on FARO synergies and its 2025 contribution?
FARO should add a couple of pennies in 2025 (partial Q3 plus Q4). Synergies are higher than typical with mid-teens cost synergies plus elimination of public-company costs; FARO is running ~15% EBITDA and is targeted to reach 30% EBITDA in about three years. Management likened it to the Zygo acquisition, where sales grew ~9% CAGR, EBITDA grew over 5x, and working capital fell 50%.
What are the puts and takes and level of conservatism in the guide versus Q1, including the $100 million tariff cost and $70 million China exposure?
The guide was raised after beating earnings; a couple of cents from FARO is built in, with some conservatism in the Q3 guide. A good portion of the $70 million China exposure shipped, the $100 million is no longer a negative headwind, and EMG margins should remain a leading source of improvement into the back half.
How is the automation business performing on profitability, orders, and channel inventory?
Like Paragon, the automation destock is over with strong orders growth; together Paragon and automation drove EMG's profitability increase and the 260-basis-point core margin gain. The segment is inflecting up and expected to lead AMETEK's next phase of growth.
What is the back-half organic growth assumption given M&A and FX tailwinds?
FX is about a one-point top-line tailwind for the year but the company is largely naturally hedged at the bottom line. Organic growth is assumed at positive low single digits with both groups positive, and acquisitions bring the total to mid single digits.
Was there pull-forward in China metrology, and has the short-cycle industrial cycle bottomed?
No meaningful metrology pull-forward; China was down low single digits due to project funding delays. Management does not view MedTech and automation as short-cycle but as mid-cycle, where a specific destock has ended; A&D, power, and automation outlooks improved, while process remains sluggish with semiconductor and research as headwinds.