gabelli & company, inc. pump, valve & motor...
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1Clear Vision • Sound Strategies • Solid Performance 1Clear Vision • Sound Strategies • Solid Performance
Gabelli & Company, Inc.Pump, Valve & Motor Symposium
February 6, 2008
2Clear Vision • Sound Strategies • Solid Performance
Statements in this presentation that are not historical are considered “forward-looking statements” and are subject to change based on various factors and uncertainties that may cause actual results to differ significantly from expectations. Those factors are contained in AMETEK’s Securities and Exchange Commission filings.
In this presentation certain non-GAAP financial measures may be used. Please see the Investors section of AMETEK’s website (www.ametek.com) for a reconciliation to the appropriate GAAP measure.
Cautionary StatementsCautionary Statements
3Clear Vision • Sound Strategies • Solid Performance
AMETEK OverviewAMETEK Overview• Diversified manufacturer with annual sales of more than
$2.1 billion• Component of S&P MidCap 400 and Russell 1000• Listed on the New York Stock Exchange (symbol: AME)
4Clear Vision • Sound Strategies • Solid Performance
Diluted Earnings Per ShareDiluted Earnings Per Share$2.25
2.00
1.75
1.50
1.25
1.00
.75
.5003 04 05 06 07
DilutedEarningsPer Share5 year CAGR is 21%
5Clear Vision • Sound Strategies • Solid Performance
We Are In A Strong PositionWe Are In A Strong Position• All our key markets are strong
– Aerospace and Defense– Power– Process
• Only 25% of sales to short cycle U.S. economy– 50% of sales outside the U.S.– Long cycle Aerospace and Power businesses are 30% of sales– Minimal exposure to residential housing and automotive
• Considerable margin leverage– Movement of production to low-cost locales– Strategic procurement initiative– Proven track record of margin improvement in an economic downturn
• Strong new product development focus– Sales from new products was 18% of revenue in 2007– Engineering investment continues to expand
6Clear Vision • Sound Strategies • Solid Performance
We Are In A Strong PositionWe Are In A Strong Position• Continued international expansion
– Expansion in the Russia, China, Middle East and Japan
• Acquisition pipeline is strong• Backlog is at a record level
– Up $151 Million in 2007 to $688 Million
7Clear Vision • Sound Strategies • Solid Performance
Fourth Quarter 2007 ComparisonsFourth Quarter 2007 Comparisons(In Millions, Except EPS)
2006 2007 Change
Sales $480.7 $583.3 21%
Operating Income $79.3 $104.0 31%
Net Income $47.8 $61.9 29%
Diluted EPS $.45 $.57 27%
8Clear Vision • Sound Strategies • Solid Performance
Full Year 2007 ComparisonsFull Year 2007 Comparisons(In Millions, Except EPS)
2006 2007 Change
Sales $1,819.3 $2,136.9 17%
Operating Income $ 309.0 $386.6 25%
Net Income $ 181.9 $228.0 25%
Diluted EPS $ 1.71 $2.12 24%
9Clear Vision • Sound Strategies • Solid Performance
We Produce Electronic Instruments andWe Produce Electronic Instruments andElectromechanical DevicesElectromechanical Devices
Electronic Instruments Group
Electromechanical Group
RevenueRevenue Operating IncomeOperating Income
10Clear Vision • Sound Strategies • Solid Performance
Electronic Instruments GroupElectronic Instruments Group• A leader in the development and manufacture of monitoring,
testing, and calibrating instruments
• Markets served include:– Process & Analytical – Aerospace– Power and Industrial
11Clear Vision • Sound Strategies • Solid Performance
Process & Analytical InstrumentsProcess & Analytical Instruments($840 Million In Revenue)
• Products– Analytical and Emission Monitoring
Instrumentation– Drilling and Completion Instruments– Level Measurement– Pressure Gauges, Transducers,
and Seals– Materials Analysis– Radiation Measurement
• Markets– Chemical/ Petrochemical– Oil and Gas Production– Research/Laboratories
Model 933 Hydrogen Sulfide Analyzer for the natural gas industry
12Clear Vision • Sound Strategies • Solid Performance
Aerospace Aerospace ($210 Million In Revenue)
• Products– Airframe and Engine Monitoring Systems– Engine Sensors– Avionics– Fluid Gauging Systems– Pressure Transducers and Accelerometers
• Markets– Large Commercial Aircraft– Business and Regional Aircraft– Military
AMETEK hydraulic quantity indicator, heat exchanger and temperature sensors for Boeing 787 Dreamliner
13Clear Vision • Sound Strategies • Solid Performance
Power & Industrial Power & Industrial ($230 Million In Revenue)
• Products– Uninterruptible Power Supplies (UPS)– Power Quality Monitoring Instrumentation– Dash Panel Instruments– Food Service Instruments
• Markets– UPS Systems– Transmission and Distribution– Heavy Trucks– Construction, Agricultural and
Military Vehicles– Food Service
Universal Power Supply System
14Clear Vision • Sound Strategies • Solid Performance
Electromechanical GroupElectromechanical Group• Differentiated Products• Floorcare & Specialty Motors
15Clear Vision • Sound Strategies • Solid Performance
Differentiated Products Differentiated Products ($690 Million In Revenue)
• Products– AC and brushless DC motors,
blowers, and fans– Electromechanical systems– Highly engineered hermetic (moisture-proof)
connectors, terminals and headers, and microelectronic packages
– Metal powders, metal strip, and specialty wire
• Markets– Aerospace & defense– Industrial– Petrochemical– Electronic components– Medical– Business machines and computers
16Clear Vision • Sound Strategies • Solid Performance
Floorcare & Specialty Motors Floorcare & Specialty Motors ($310 Million In Revenue)
• Products– Motors and Motor/Blower Systems
• Markets– Vacuum Cleaners– Commercial Floorcare Equipment– Outdoor Power Equipment– Small Household Appliances Aerotec
Motor
17Clear Vision • Sound Strategies • Solid Performance
Another View of AMETEKAnother View of AMETEK• Differentiated Businesses
– Compete primarily on product features– Niche oriented– Higher margins– Lower capital requirements
• Cost Driven Businesses– Compete primarily on price– Higher capital requirements– Lower margins
18Clear Vision • Sound Strategies • Solid Performance
Strategic View of AMETEKStrategic View of AMETEK• Differentiated Businesses
– Electronic Instruments Group– Materials, Interconnects
and Packaging– Technical Motors & Systems
• Cost Driven Businesses– Floor Care and Specialty Motors
Differentiated businesses will be an increasingly larger part of AMETEK
DifferentiatedDifferentiatedBusinessesBusinesses
87%87%
Cost DrivenCost DrivenBusinessesBusinesses
13%13%
19Clear Vision • Sound Strategies • Solid Performance
VisionVision
Double the Size and Profitability of the
Company in Five Years
20Clear Vision • Sound Strategies • Solid Performance
CommitmentCommitment
Double Digit Earnings Growth
Over the Business Cycle
21Clear Vision • Sound Strategies • Solid Performance
Four Growth StrategiesFour Growth Strategies• Operational Excellence• Global and Market Expansion• New Products• Acquisitions
22Clear Vision • Sound Strategies • Solid Performance
Operational ExcellenceOperational Excellence• Cornerstone strategy for the Company
– Focused on cost and asset management
• Key to delivering value from both existing and acquired businesses– Drives profitability and growth for cost driven businesses– Adds value to our differentiated businesses– Creates value from acquisitions through expense and asset reductions
23Clear Vision • Sound Strategies • Solid Performance
Operational ExcellenceOperational Excellence• Strong margin performance
• Working capital performance ranks at top of peer group
21%
20%
19%
18%
17%
16%
15%03 04 05 06 07
GroupOperatingMargins
24Clear Vision • Sound Strategies • Solid Performance
Operational Excellence ResultsOperational Excellence Results• SPECTRO Integration
– AMETEK acquired SPECTRO Analytical Instruments, a highly differentiated instrument company in June 2005
– SPECTRO produces technologically advanced atomic spectroscopy instrumentation used to analyze the elemental composition of solids and liquids.
– Great strategic addition to our high-end analytical instruments business– Within the first year of ownership improved operating margins from
10% to more than 18% through:• Global sales channel rationalization• Other headcount and expense reductions
• Ability to integrate acquisitions is a core competency
25Clear Vision • Sound Strategies • Solid Performance
Global and Market ExpansionGlobal and Market Expansion• Increase international sales to more than one-half of total
– Penetrate new markets for differentiated products– Add international acquisitions– Expand distribution
26Clear Vision • Sound Strategies • Solid Performance
Global and Market ExpansionGlobal and Market Expansion• Implementing a “best cost” strategy by aggressively moving
manufacturing to low-cost locales– Create a sustainable competitive position in cost driven products that
will allow us to gain market share and strengthen profitability in highly competitive markets
– $326 million in volume produced in low cost locales in 2007• Reynosa, Mexico
• Czech Republic
• Shanghai
– Expect to move an additional $40-$50 million in 2008
27Clear Vision • Sound Strategies • Solid Performance
Global and Market ExpansionGlobal and Market Expansion
– AMETEK Process Instruments is a leading supplier of mass spectrometers and other analytical instrumentation for the process industries.
– We have taken this proven technology and applied it in pharmaceutical manufacturing.
– AMETEK’s ProMaxionTM is being widely used in solvent drying end point detection, reducing manufacturing process time and improving throughput.
– Customers include most major pharmaceutical manufacturers.
• Leverage existing technologies into new markets.
28Clear Vision • Sound Strategies • Solid Performance
New ProductsNew Products• Key strategy for generating internal growth
– Continued strong funding of R&D– Many new product introductions– Well positioned with fresh new products that meet the needs of
the marketplace
29Clear Vision • Sound Strategies • Solid Performance
New ProductsNew Products• Model 5100-NCM Tunable
Diode Laser Analyzer
– Highly reliable, cost-effective method for quickly measuring water vapor content of natural gas
– Rugged, compact unit with fully enclosed optics and sample conditioning system
– Ideally suited for natural gas producers, pipeline operators and service companies
30Clear Vision • Sound Strategies • Solid Performance
New ProductsNew Products• SPECTRO ARCOS Inductively
Coupled Plasma-Optical Emission Spectrometer
– Fastest ICP-OES instrument commercially available
– For ultra-trace analysis of organic materials and metals
– Specially suited for environmental or regulatory compliance applications
31Clear Vision • Sound Strategies • Solid Performance
New ProductsNew Products• Taylor Hobson Talyrond 385
Ultra-high Precision Surface Measurement System
– Offers fully automatic nano-metric analysis of form and geometry
– Designed specifically for ultra-precision manufacturing
– Compatible with latest statistical process control software applications
32Clear Vision • Sound Strategies • Solid Performance
AcquisitionsAcquisitions• Will play an important role in driving the growth of the
company
• One-half to two-thirds of our growth
• Acquisition program is targeted at businesses with revenues between $30 million and $100 million
• Will focus on adding differentiated businesses – over time, these businesses will become a larger part of AMETEK
33Clear Vision • Sound Strategies • Solid Performance
AcquisitionsAcquisitionsAnnual
Name Date Revenue*
California Instruments December 2007 $22 MillionUmeco November 2007 $58 MillionCameca August 2007 $82 MillionHamilton Precision Metals June 2007 $25 MillionAdvanced Industries/ B&S Aircraft Parts June 2007 $25 MillionSeacon Phoenix April 2007 $17 MillionSouthern Aeroparts December 2006 $17 MillionPrecitech November 2006 $19 MillionLand Instruments June 2006 $41 MillionPennEngineering Motion Technologies May 2006 $55 MillionPulsar Technologies February 2006 $10 MillionHCC Industries October 2005 $104 MillionSolartron Group September 2005 $50 MillionSPECTRO June 2005 $104 MillionHughes-Treitler July 2004 $32 MillionTaylor-Hobson June 2004 $70 MillionChandler Instruments August 2003 $30 MillionSolidstate Controls February 2003 $45 MillionAirtechnology January 2003 $46 MillionInstruments for Research and Applied Science December 2001 $50 MillionEDAX, Inc. July 2001 $34 MillionGS Electric May 2001 $65 Million
* At acquisition
34Clear Vision • Sound Strategies • Solid Performance
AcquisitionsAcquisitions• Strong free cash flow levels and ability to prudently expand
our debt levels• Track record of success in making and integrating
acquisitions• Ability to integrate acquisitions is a core competency
– Looked at last twenty four acquisitions through December 2006– Pre-tax profit in first year of our ownership up 40% over previous year
35Clear Vision • Sound Strategies • Solid Performance
SummarySummary• Strong Foundation• Clear Vision• Solid Strategy• Proven Management Team• Committed to creating shareholder value through our Four
Growth Strategies