AMETEK (AME) Q2 FY26 earnings call: guidance and Q&A

Can you provide an update on end market and regional performance, and are you seeing positive inflection in the non-data center industrial economy, similar to ISM trends?

Dave Zapico provided a comprehensive overview of end market performance (Process, A&D, Power, Automation) and regional strength (US, Asia, Europe). He confirmed broadening growth beyond just AI, citing defense modernization, energy security, and commercial aerospace as multi-year infrastructure build-outs driving demand for AMETEK's mission-critical products.

“So when I look at this thing, we're really -- there's durability because the underlying capital spend our customers is driving a multiyear infrastructure build-out, and we are supplying mission-critical essential products for new semiconductor fabs, new power plants, the A&D market, defense modernization. So I believe we're in the beginning stages of a multiyear infrastructure built on, and we're incredibly well positioned.”

asked by Deane Dray · answered by David Zapico

Discuss the duration and visibility of the current backlog compared to historical averages. Also, how much of the business is tied to data center/AI, and does inbound demand allow for greater pricing power?

The backlog is $4.11 billion, with ~80% expected to ship within 12 months, providing good visibility into 2027. The data center/AI, military modernization, commercial aerospace, and power infrastructure combined represent about half of the business. The company's differentiated, IP-driven products and high switching costs enable it to offset inflation and tariffs with price.

“Our backlog was now $4.11 billion, up about 21% from the end of the year, and we had a positive book-to-bill of 1.12 in the quarter, both groups positive -- and we also are executing very well. We saw an acceleration of organic growth from Q1 to Q2. And what you really have is our customers are related to the infrastructure buildout or placing orders with us.”

asked by Matt Summerville · answered by David Zapico

Given the strong orders, what is the sustainability of this trend, including July's performance? Why is Q3 organic revenue growth guided to decelerate despite strong orders?

Orders were excellent, with June being a record month and July also performing very well, indicating continued momentum. The company believes the underlying capital spend by customers drives multi-year infrastructure build-out, providing organic growth durability. The Q3 guide reflects a flow-through of Q2 beats and an increased H2 outlook, with some AMETEK prudence built in.

“In terms of cadence, June was the strongest month for orders in the quarter at all time. So we had a record for the month of June. And we just finished July, and the orders were very good. So it's continuing.”

asked by Nicole DeBlase · answered by David Zapico

Which end markets saw the most acceleration, and were any below expectations? Can you provide an update on internal AI pilot programs and potential commercial opportunities?

Semiconductor and Medtech (especially Paragon) were the standout markets for acceleration. No markets came in below expectations. AMETEK is using AI to improve efficiency and accelerate growth across all functions, with successful pilot projects in areas like due diligence, customer service, supply chain prediction, and product design. They are now in 'Wave 2' of AI projects, aiming for company-wide deployment of successful instances.

“We're using AI to improve efficiency and accelerate growth across the entire company. And it impacts all functions. It helps us speed up due diligence. We have agents that are automating document processing agents to improve customer service. They're helping us to predict and mitigate supply delays are improving our products, the predictive maintenance nature of our products, really having a substantial effect in improving the custom engineering design processes.”

asked by Daniel Pacheco · answered by David Zapico

What drove the 110 basis points of core margin expansion? Can you provide an update on the Indecor acquisition, including any new identified synergies?

Core margin expansion was driven by strong incrementals (around 40% for both groups), excellent productivity (increased target to $160 million), and positive price realization that more than offset inflation and tariffs. For Indecor, integration and regulatory approval are progressing well, with high confidence in the 10-12% cost synergy target, driven by global sourcing, shared service infrastructure, and facility rationalization.

“But when you look across it all, we had strong incrementals, about 40% and both groups were near 40%. We had, as you mentioned, the sales growth, good incrementals. But really, we had excellent productivity, too. So we increased our productivity enterprise-wide productivity target to $160 million this year.”

asked by Scott Graham · answered by David Zapico

What is the current capacity utilization, and how much of the CapEx is growth-related? Can you provide an update on the Ferro acquisition?

Approximately two-thirds of the $160 million CapEx is growth-related. AMETEK's business is IP-driven with a high return on tangible capital, allowing for flexible scaling without hitting capacity limits. The Ferro acquisition is integrating well and on plan, with expectations for substantial margin upside over the next 6-12 months, complementing Creaform's metrology capabilities.

“Yes, I think the growth CapEx is probably about 2/3 of it. And remember that we're largely IP drives our business. So it's not like we have a lot of fixed assets. We were at 2% of sales as CapEx.”

asked by Andrew Obin · answered by David Zapico