AMETEK delivered what management called fantastic second-quarter 2026 results, with record sales of $2.04 billion up 15% year-over-year (10% organic), record operating income of $544 million, and record diluted EPS of $2.09 (up 17%), all ahead of expectations, prompting a raise to full-year sales and EPS guidance (now $8.20-$8.30). The standout was demand: orders surged 28% (25% organic) to a record $2.3 billion, following Q1's 22% organic growth, lifting backlog to a record $4.11 billion with a 1.12 book-to-bill. Both segments performed strongly -- the Electronic Instruments Group grew 14% on process, aerospace, and power strength, while the Electromechanical Group grew 17% with organic orders up 35% and core margins up 290 basis points, driven largely by Paragon Medical's rebound and new-product wins. Company core margins expanded a strong 110 basis points to 27.1% on roughly 40% incrementals, productivity (raised to $160 million), and positive price-cost, and free cash flow rose 37% to $452 million at 111% conversion. CEO David Zapico framed AMETEK as positioned at the early stages of a multi-year, broad-based infrastructure build-out spanning AI-driven semiconductors, power-grid expansion, defense modernization, energy security, and the commercial aerospace super cycle -- roughly half the business -- diversified rather than dependent on any single driver. Capital allocation centers on the pending ~$5 billion Indicor Instrumentation acquisition (expected to close in H2 with 10%-12% cost synergies), supported by a strengthened balance sheet (0.6x net leverage) and an upsized $3.5 billion revolver. Management flagged only characteristic prudence in the high-single-digit Q3 organic guide against tougher comparisons, while AI tools increasingly automate its growth model.
Thank you, Stephanie. Good morning, and welcome to AMETEK's Q2 2026 earnings conference call. Joining me today are David Zapico, Chairman and Chief Executive Officer, and Dalip Puri, Executive Vice President and Chief Financial Officer. During the course of today's call, we will be making forward-looking statements, which are subject to change based on various risk factors and uncertainties that may cause actual results to differ significantly from expectations. A detailed discussion of the risk and uncertainties that may affect our future results is contained in AMETEK's filings with the SEC. AMETEK disclaims any intention or obligation to update or revise any forward-looking statements. Any references made on this call to historical results will be on an adjusted basis, excluding after-tax acquisition-related intangible amortization and excluding acquisition-related cost. Reconciliations between GAAP and adjusted measures can be found in our press release and on the investor section of our website.
We'll begin today's call with prepared remarks, then we'll open it up for questions. I'll now turn the meeting over to David.
Thank you, Kevin, and good morning, everyone. AMETEK delivered fantastic results in Q2 with double-digit organic sales growth, excellent orders growth, strong core margin expansion, outstanding cash flow generation, and record earnings ahead of our expectations. We also raised our full-year sales and earnings guidance to reflect our outstanding first half results and our positive outlook for the balance of the year. Q2 sales were a record $2.04 billion, up 15% from the same period in 2025. Organic sales were up 10%, acquisitions added five points, with foreign currency flat. Orders were again exceptional in the quarter, with continued broad-based growth across all AMETEK divisions. Overall orders were a record $2.3 billion, up 28% versus the prior year, with organic orders up sharply at 25%, leading to a record backlog of $4.11 billion.
This outstanding Q2 orders growth follows Q1's 22% organic growth, reflecting the strength across our attractive end markets. Operating income for the quarter was a record $544 million, an 18% increase over Q2 of 2025. Operating margins were excellent in the quarter at 26.6%, up 60 basis points from the prior year. Core margins were 27.1%, up a very strong 110 basis points versus last year's Q2. EBITDA was a record $644 million, up 14% versus Q2 of 2025, with EBITDA margins an impressive 31.5%. We also generated strong cash flow in the quarter, with free cash flow up 37% to $452 million, and free cash flow to net income conversion a very strong 111%, reflecting our outstanding operating performance and working capital management.
Diluted earnings per share were a record $2.09, up 17% versus Q2 of 2025, and above our guidance range of $1.96 to $2 per share. We'll share some additional details at the operating group level. Starting with the Electronic Instruments Group. EIG generated outstanding Q2 results with excellent sales growth, strong operating performance, and robust orders growth. EIG sales in the quarter were $1.32 billion, up 14% from last year's Q2. Organic sales were up 7%, and acquisitions added seven points, with foreign currency flat. Orders for EIG were again outstanding, with overall orders up 23% and organic orders up 20% in the quarter. Growth in both sales and orders was broad-based across all EIG divisions with our process instrumentation, aerospace, and power businesses all benefiting from their strong positions in attractive markets.
EIG's second quarter operating income was $385 million, up 12% versus Q2 of 2025. Core operating margins were 30.1%, up 40 basis points from the prior year. The Electromechanical Group delivered exceptional results in Q2 with excellent sales growth, sizable orders growth, strong operating performance, and impressive core margin expansion. EMG's Q2 sales were a record $723 million, up 17% versus the prior year. Organic sales were again up double digits at 15%, with acquisitions contributing approximately two points to growth. EMG sales growth in the quarter was balanced across our aerospace, defense, med tech, and automation businesses. EMG organic orders were once again exceptional, up 35% versus the prior year. EMG operating income for Q2 was a record, $191 million, up 32% compared to the prior year.
EMG's core operating margins were 26.2%, a 290 basis point increase versus Q2 of 2025. Overall, I'm very pleased with our performance this quarter and in H1 of the year. Our colleagues continued to deliver exceptional high-quality results and position AMETEK for continued growth. Together, we have delivered an exceptional long-term track record and have created meaningful shareholder value. I'm equally pleased with the work we have done to strategically position and align our portfolio with many powerful secular growth drivers. AI is driving sizable demand for advanced semiconductors that require ultra-precise optics, 3D metrology systems, and expanded power infrastructure. At the same time, recent geopolitical uncertainties and volatile energy prices are increasing the focus on defense modernization and energy security, creating broad-based demand for our businesses.
In addition, innovation-led momentum in med tech, sustained strength in commercial aerospace, and improving demand across precision automation are complementing these secular tailwinds. Looking ahead, we believe these broader investment themes will continue to drive meaningful growth. With that said, I would like to spend a few minutes highlighting how AMETEK's businesses are aligned with key areas of strong demand. RTDS Technologies, a leader in real-time digital simulation of power system infrastructure and hardware-in-the-loop testing, recently received a key order from a data center hyperscaler to help de-risk the power profile of a broader data center build-out. RTDS's real-time simulators enable detailed power system analysis, helping engineers anticipate system and device behaviors that can impact electrical system stability, resilience, and performance. As data center power ecosystems grow increasingly complex, operators must ensure their power architectures can meet evolving requirements across operating conditions, load cycles, and infrastructure changes.
RTDS is well-positioned to support this critical need. Additionally, our Zygo business, a provider of advanced metrology systems and optical components, is supporting accelerated investment in AI infrastructure with its precision metrology and optical solutions. These solutions are designed into leading semiconductor platforms used to manufacture advanced chips to power AI and next-generation computing. As semiconductor complexity increases, precision becomes more critical. Our customers rely on Zygo's technology to meet tighter tolerances and improve manufacturing yields. Alongside this, demand across the broader semiconductor ecosystems, including memory, logic, advanced packaging, and photonics, remain strong. Zygo is positioned to benefit from ongoing investment in these infrastructure-enabling technologies. I also want to note the exceptional growth we're seeing within our Paragon Medical business. Continued superb orders growth is being driven by attractive new design wins tied to orthopedics, drug delivery systems, and highly engineered medical components.
More broadly, Paragon is performing extremely well in delivering outstanding growth and profitability. Excellent job by our RTDS, Zygo, and Paragon teams. Now turning to acquisitions and capital deployment. As I have regularly noted, our top capital deployment priority is strategic acquisitions. Our strong balance sheet and consistent, robust cash flow provide us the ability to deploy a meaningful amount of capital for acquisitions. We continue to maintain a robust pipeline of acquisition opportunities across deal sizes and expect to remain active in executing on this pipeline. We remain excited for the acquisition of Indicor Instrumentation. Our teams are working through the integration planning, and we continue to expect the acquisition to close in the second half of the year. In addition to our acquisition and capital deployment strategy, we are committed to invest in our businesses to ensure they are well-positioned for long-term sustainable growth.
In Q2, our new product vitality was a strong 25%. These investments in new products help continue to drive our organic growth. Our Hughes-Treitler business, a leading provider of advanced heat exchangers and thermal management solutions for mission-critical aerospace and defense applications, recently introduced Microfoil, a next-generation lightweight heat exchanger technology. This new product delivers a compelling combination of exceptional heat transfer performance in an ultra-low weight design, providing customers with a unique solution to address their most demanding applications.
Microfoil's innovative architecture can be easily adapted to curved and conformal spaces, providing exceptional thermal performance for use in aerospace, defense, and industrial cooling applications. Congratulations to the Hughes-Treitler team on this outstanding achievement. I would also like to congratulate our AlphaSense business for receiving AMETEK's annual Innovation Award.
The AMETEK Innovation Award recognizes our business' efforts to develop and advance next-generation technology, products, and solutions for the markets we serve, and celebrates the most innovative product development from across the company. AlphaSense, which is part of our Process & Analytical Instruments division, is a leading provider of advanced sensors used in environmental, health, and safety applications. The latest product, the A2GLF oxygen sensor, was named the recipient of our Innovation Award. This sensor, the world's first galvanic lead-free oxygen sensor, is designed for accurate oxygen gas measurement in demanding environments, targeted to OEMs of portable and fixed gas detectors, seeking regulatory compliance and environmental controls without sacrificing performance. The sensor is designed to retrofit a large installed base, along with next generation instrument development. Well done to the AlphaSense team for this outstanding achievement. Now shifting to our outlook for the balance of the year.
Our increased sales and earnings guidance for the year incorporates our strong second quarter results and positive outlook for the balance of the year. For 2026, we now expect overall sales to be up approximately 10% on a percentage basis, with organic sales now expected to be up mid to high single digits versus the prior year. Our diluted earnings per share for the year are now expected to be in the range of $8.20 - $8.30, up 10%-12% compared to last year's results. This is an increase from our prior full-year guide of $7.94 - $8.14 per diluted share. For the third quarter, we anticipate overall sales to be up high single digits on a percentage basis, with adjusted earnings of $2.08 - $2.10 per share, up 10%-11% versus the prior year. To summarize, AMETEK delivered an outstanding second quarter.
Thank you, Dave, and good morning, everyone. As Dave noted, AMETEK delivered another excellent quarter with strong orders, sales and earnings growth, robust core margin expansion, and outstanding free cash flow generation. Now let me provide some additional financial highlights for Q2. Q2 general administrative expenses were 1.5% of sales, in line with last year's second quarter. Second quarter interest expense was $20 million. Q2 other operating expenses were $6 million, compared to $3 million in Q2 of 2025, due to higher acquisition diligence spend in the quarter. The effective tax rate for the quarter was 17.5%, down from 19% in Q2 of 2025. For 2026, we now anticipate our effective tax rate to be between 18.5% and 19%.
As we have stated in the past, actual quarterly tax rates can vary above or below our full-year expected rate due to the timing of discrete tax items. Capital expenditures in Q2 were $32 million. For the full year, we expect capital expenditures of approximately $160 million or about 2% of sales. Depreciation and amortization expense in the quarter was $106 million. For the full year, we expect depreciation and amortization to be approximately $430 million, including after-tax acquisition-related intangible amortization of approximately $210 million, or $0.91 per diluted share. Operating working capital in the second quarter was 16.4% of sales, an impressive 220 basis point improvement versus 18.6% in last year's Q2. The improvement reflects excellent operational execution across all working capital components, led by strong inventory discipline and improvement in inventory turns, an outstanding company-wide operational achievement.
Operating cash flow was exceptionally strong in Q2 at $484 million, up 35% versus Q2 of 2025. Free cash flow was also strong, up 37% to $452 million, with outstanding free cash flow conversion of 111% for the quarter. For 2026, we continue to expect strong free cash flow conversion of 110%-115% of net income. Total debt at June 30th was $2 billion, down from $2.3 billion at the end of 2025. Offsetting this debt was cash and cash equivalents of $495 million. At the end of Q2, our gross debt to EBITDA ratio was 0.8 times, and our net debt to EBITDA ratio was 0.6 times. During the quarter, we also completed the renewal of our committed revolving credit facility.
As part of the renewal, the size of AMETEK's revolver facility increased to $3.5 billion, and the maturity was extended till June 2031. This renewal strengthens our liquidity profile, lowers financing costs, and positions us well to support future growth initiatives. As Dave noted, we expect to deploy $5 billion on the acquisition of Indicor Instrumentation in H2 of the year. Following the closing of the acquisition, we will continue to have substantial financial capacity, including approximately $2.5 billion of cash and available credit facilities to support our growth initiatives and strategic acquisitions. In summary, AMETEK delivered another outstanding quarter, with excellent orders, revenue, and earnings growth, robust margin expansion, and strong free cash flow conversion.
Our leading positions across attractive market segments, combined with our global operating capabilities and strong track record of execution, leaves us very well positioned to drive further growth and value creation in 2026.
Kevin?
Thank you, Dalip. Stephanie, could we please open the lines?