AME Ametek 10-Q 2026-09-30 section summaries

AMETEK (AME) — Q3 and nine months ended September 30, 2026

Consolidated results

Q3 sales grew 17.3%, while gross margin improved to approximately 36.5% from 36.2% and operating margin to approximately 26.3% from 25.8%. Operating income rose 19.8% and net income 14.8% in the quarter; for 9M, sales increased 14.6%, operating income 15.9%, and net income 14.0%. Higher interest expense partly offset operating growth. Nine-month interest expense includes $10.0 million of acquisition-related financing fees.

Segment performance and operating reconciliation

EMG sales rose 20.4% and segment operating income 28.1%; EIG sales grew 15.7% and operating income 15.4%.

International sales include $653.8 million of U.S. exports in Q3 2026.

Cash flow and capital spending

Balance sheet and debt

The growth in assets and intangibles reflects $5,345.8 million of acquisition spending, primarily for Indicor. Equity less goodwill and other intangible assets implies tangible common equity of approximately negative $5,036.8 million, compared with negative $670.4 million at year-end 2025.

The debt footnote reports $6,376.471 million of recorded long-term debt, including current portion, versus $1,527.238 million at year-end; disclosed fair value was $6,344.444 million and $1,488.009 million, respectively. Fair value is a Level 3 estimate based on comparable market data. In Q3 AMETEK borrowed $4.0 billion under new term loans and €550 million and C$500 million under its revolver. September 30 outstanding balances included $4.0 billion of term loans, $975.7 million under the revolver, and $306.0 million of commercial paper. The revolver was expanded from $2.3 billion to $3.5 billion and extended to June 2031; the term loans mature in three, four, and five years and carry variable rates and customary covenants. The $5.0 billion Indicor bridge commitments were terminated after the new facilities were established; AMETEK also repaid $100.0 million of 3.83% senior notes at maturity.

Acquisitions, orders, and costs

AMETEK spent $5,345.8 million cash, net of cash acquired, on LKC Technologies, First Aviation, and Indicor Instrumentation. Indicor accounted for $4,921.4 million and the other acquisitions $424.4 million. Indicor businesses have approximately $1.1 billion in annual sales; First Aviation has approximately $80 million. The acquisitions extend the portfolio in ophthalmic diagnostics, defense and aviation maintenance, proprietary components, and industrial and scientific instrumentation. They had an immaterial impact on reported Q3 and 9M sales, net income, and EPS; pro forma sales including the acquired businesses would have been approximately 8% higher for Q3 and 11% higher for 9M 2026, while the comparable pro forma 2025 periods would each have been approximately 15% higher.

Purchase-price allocations included $2,920.2 million of goodwill and $2,639.6 million of other intangible assets. Acquired intangibles include $374.2 million of indefinite-lived trade names and $2,265.4 million of amortizable assets ($1,835.6 million of customer relationships and $429.8 million of technology). Expected annual amortization for the 2026 acquisitions is approximately $133 million for each of the next five years. Indicor purchase accounting remains incomplete, and valuations and the final tax-deductible goodwill amount may change.

Remaining performance obligations expected to be fulfilled beyond one year were $767.7 million, up from $627.4 million at December 31, 2025; these firm, non-cancelable orders are expected to be substantially fulfilled within two to three years. Contract liabilities increased, primarily reflecting higher customer advances, particularly from Indicor.

Acquisition-related integration costs in cost of sales were $9.8 million in Q3 2026 versus $7.8 million in Q3 2025, and $27.6 million for 9M 2026 versus $7.8 million for 9M 2025. Other expense included $18.1 million of acquisition transaction costs in 9M 2026, compared with $12.0 million in 9M 2025.

Other financial and risk factors

Q3 effective tax rate was 18.3%, versus 17.1%; the prior-year rate benefited from remeasurement of German deferred tax liabilities after a corporate tax-rate reduction. Gross uncertain tax benefits were $271.8 million at September 30, up from $229.3 million at year-end, of which $219.9 million would affect the effective tax rate if recognized. AMETEK recorded $12.5 million of Pillar Two top-up tax in 9M 2026. Foreign-currency debt designated as net-investment hedges included $298.5 million sterling, $351.8 million Canadian dollars, and $1,276.2 million euros; the hedges were fully effective and generated $49.2 million of pretax currency gains in 9M AOCI.

Share-based compensation expense was $14.1 million in Q3 versus $12.9 million, and $37.7 million for 9M versus $35.2 million. Outstanding awards included 1.905 million options with $210.8 million aggregate intrinsic value, 272,000 nonvested restricted shares, and 238,000 performance restricted stock units. Nine-month research, development and engineering costs were $327.9 million versus $283.8 million.

Environmental reserves were $39.5 million at September 30, up from $37.4 million at year-end; AMETEK recorded $8.8 million of reserves and spent $6.7 million on environmental matters in 9M. It is a potentially responsible party at 13 non-owned waste sites, generally as a de minimis contributor, and says remediation costs are not expected to materially affect results, financial position, or cash flows. Guarantees, letters of credit, and surety bonds had $518.0 million of maximum future payment obligations and $193.9 million of outstanding liability. For asbestos claims relating to an acquired business, the seller assumed defense and indemnity obligations; no judgments have been rendered against AMETEK.

AME — Q3 and first nine months of 2026

AME achieved record third-quarter sales, operating income, net income and diluted EPS. Growth reflected organic demand, acquisitions and Operational Excellence; acquisition-related costs and dilution weighed on reported margins, while underlying margin performance improved. Acquisition financing also sharply increased debt and leverage.

Consolidated results

Amounts in $M, except per-share data.

Q3 sales grew 17.3% (10% organic and 7% acquisitions); first-nine-month sales increased 14.6% (8% organic, 6% acquisitions and 1% favorable foreign exchange). Cost of sales declined to 63.5% of sales from 63.7% in Q3 and from 64.0% for the nine-month period, reflecting Operational Excellence. Consolidated operating margin increased to 26.3% from 25.8% in Q3 and to 26.3% from 26.0% for 9M. The effective tax rate was 18.3% versus 17.1% in Q3; the prior-year rate benefited from remeasurement of German deferred tax liabilities following a lower enacted corporate tax rate. For 9M, the rate was 18.2% versus 18.3%.

Q3 segment results

EIG revenue growth was 9% organic and 7% from acquisitions; EMG growth was 13% organic and 7% from acquisitions. EIG included $7.8M of Indicor integration costs and 60 bps of acquisition dilution; underlying margin, excluding these effects, improved 100 bps. EMG included $2.0M of integration costs and 10 bps of acquisition dilution; underlying margin improved 190 bps.

Orders, backlog and cash flow

Q3 orders rose 34.7% (17% organic and 18% acquisitions); 9M orders increased 29.0% to $7,152.1M from $5,545.7M. Backlog was a record $4,540.5M at September 30, 2026, up 26.8% from $3,581.5M at December 31, 2025. International sales were $1,060.9M in Q3, up from $906.1M, and $2,948.2M for 9M, up from $2,553.6M.

Operating cash flow increased with higher net income and lower working-capital needs. Investing cash outflow was $5,436.1M, including $5,345.8M net cash paid for LKC, First Aviation and Indicor acquisitions; financing cash inflow was $4,158.0M. EBITDA and free cash flow are non-GAAP measures.

Capitalization and financing

Borrowings increased $4,428.0M during the nine months. Debt-to-capital rose to 36.3% from 17.7%. On June 9, AME increased revolving-credit commitments from $2.3B to $3.5B and extended maturity to June 2031; $2,168.1M was available at September 30. A separate $4.0B senior unsecured term-loan facility was fully outstanding, with tranches maturing three, four and five years after funding. AME reported covenant compliance and access to domestic and unrestricted foreign funding sources. Cash included $482.4M held outside the U.S.

Acquisition costs, shareholder returns and risks

Q3 interest expense increased mainly because of Indicor-related borrowing; 9M interest expense also included $10.0M of terminated bridge-loan fees. Other expense included $18.1M of Indicor transaction costs, primarily representation-and-warranty insurance. Indicor integration costs included $9.8M in cost of sales, including fair-value inventory adjustments. Acquisitions—FARO in July 2025, LKC in January 2026, First Aviation in May 2026 and Indicor in August 2026—supported growth but added integration costs, margin dilution and financing needs.

Dividends paid were $233.5M versus $214.4M; the quarterly dividend increased 10% to $0.34 per share from $0.31 effective February 12, 2026. Share repurchases were $28.2M versus $163.6M.

Management cited Operational Excellence, targeted pricing, supply-chain adjustments and localized production in responding to tariffs. Tariff changes had no material effect on 9M results, but changing trade measures, geopolitical uncertainty (including the Iran conflict), supply-chain disruption, raw-material costs, acquisition integration, financing access, cybersecurity and general economic conditions could affect future results.

As of September 30, 2026, AME’s CEO and CFO concluded that its disclosure controls and procedures were effective at the reasonable-assurance level. No change in internal control over financial reporting during the quarter materially affected, or was reasonably likely to materially affect, those controls. This section reported no financial results or other material business developments.

For the quarter ended September 30, 2026, no Company director or officer adopted or terminated a Rule 10b5-1 or non-Rule 10b5-1 trading arrangement. This section reports no financial or business developments.