QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
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(State or other jurisdiction of incorporation or organization) |
(I.R.S. Employer Identification No.) | |
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(Address of principal executive offices) |
(Zip Code) |
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☒ |
Accelerated filer |
☐ | |||
Non-accelerated filer |
☐ (Do not check if a smaller reporting company) |
Smaller reporting company |
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Emerging growth company |
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Title of each class |
Trading Symbol(s) |
Name of each exchange on which registered | ||
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Page |
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2 |
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3 |
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4 |
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5 |
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6 |
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7 |
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22 |
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26 |
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27 |
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28 |
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29 |
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30 |
Three Months Ended |
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March 31, |
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2020 |
2019 |
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Net sales |
$ |
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$ | |
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Cost of sales |
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Selling, general and administrative |
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Total operating expenses |
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Operating income |
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Interest expense |
( |
) |
( |
) | ||||
Other income (expense), net |
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( |
) | |||||
Income before income taxes |
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Provision for income taxes |
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Net income |
$ |
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$ | |
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Basic earnings per share |
$ |
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$ | |
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Diluted earnings per share |
$ |
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$ | |
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Weighted average common shares outstanding: |
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Basic shares |
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Diluted shares |
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Dividends declared and paid per share |
$ |
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$ | |
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Three Months Ended |
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March 31, |
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2020 |
2019 |
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Total comprehensive income |
$ |
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$ | |
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March 31, |
December 31, |
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2020 |
2019 |
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(Unaudited) |
||||||||
ASSETS |
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Current assets: |
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Cash and cash equivalents |
$ |
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$ | |
||||
Receivables, net |
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Inventories, net |
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||||||
Other current assets |
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||||||
Total current assets |
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Property, plant and equipment, net |
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Right of use assets, net |
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Goodwill |
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Other intangibles, net |
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Investments and other assets |
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Total assets |
$ |
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$ | |
||||
LIABILITIES AND STOCKHOLDERS’ EQUITY |
||||||||
Current liabilities: |
||||||||
Short-term borrowings and current portion of long-term debt, net |
$ |
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$ | |
||||
Accounts payable |
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||||||
Customer advanced payments |
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||||||
Income taxes payable |
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Accrued liabilities and other |
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Total current liabilities |
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Long-term debt, net |
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Deferred income taxes |
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Other long-term liabilities |
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Total liabilities |
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Stockholders’ equity: |
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Common stock |
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|
||||||
Capital in excess of par value |
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||||||
Retained earnings |
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||||||
Accumulated other comprehensive loss |
( |
) |
( |
) | ||||
Treasury stock |
( |
) |
( |
) | ||||
Total stockholders’ equity |
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|
||||||
Total liabilities and stockholders’ equity |
$ |
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$ | |
||||
Three months ended |
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March 31, |
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2020 |
2019 |
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Capital stock |
||||||||
Preferred stock, $ |
$ | — |
$ | — |
||||
Common stock, $ |
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Balance at the beginning of the period |
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Shares issued |
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Balance at the end of the period |
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Capital in excess of par value |
||||||||
Balance at the beginning of the period |
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Issuance of common stock under employee stock plans |
( |
) |
|
|||||
Share-based compensation costs |
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|
||||||
Balance at the end of the period |
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Retained earnings |
||||||||
Balance at the beginning of the period |
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Net income |
|
|
||||||
Cash dividends paid |
( |
) |
( |
) | ||||
Adoption of ASU 2016-13 |
( |
) |
— |
|||||
Balance at the end of the period |
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|
||||||
Accumulated other comprehensive (loss) income |
||||||||
Foreign currency translation: |
||||||||
Balance at the beginning of the period |
( |
) | ( |
) | ||||
Translation adjustments |
( |
) |
|
|||||
Change in long-term intercompany notes |
( |
) |
( |
) | ||||
Net investment hedge instruments gain (loss), net of tax of ( $) and ($ |
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|
||||||
Balance at the end of the period |
( |
) |
( |
) | ||||
Defined benefit pension plans: |
||||||||
Balance at the beginning of the period |
( |
) | ( |
) | ||||
Amortization of net actuarial loss (gain) and other, net of tax of ($ |
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|
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Balance at the end of the period |
( |
) |
( |
) | ||||
Accumulated other comprehensive loss at the end of the period |
( |
) |
( |
) | ||||
Treasury stock |
||||||||
Balance at the beginning of the period |
( |
) | ( |
) | ||||
Issuance of common stock under employee stock plans |
|
( |
) | |||||
Purchase of treasury stock |
( |
) |
( |
) | ||||
Balance at the end of the period |
( |
) |
( |
) | ||||
Total stockholders’ equity |
$ |
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$ | |
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Three Months Ended |
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March 31, |
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2020 |
2019 |
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Cash provided by (used for): |
||||||||
Operating activities: |
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Net income |
$ |
$ | ||||||
Adjustments to reconcile net income to total operating activities: |
||||||||
Depreciation and amortization |
||||||||
Deferred income taxes |
( |
) |
||||||
Share-based compensation expense |
||||||||
Gain on sale of business |
( |
) |
— |
|||||
Gain on sale of facilities |
( |
) |
( |
) | ||||
Net change in assets and liabilities, net of acquisitions |
( |
) | ||||||
Pension contributions |
( |
) |
( |
) | ||||
Other, net |
( |
) |
||||||
Total operating activities |
||||||||
Investing activities: |
||||||||
Additions to property, plant and equipment |
( |
) |
( |
) | ||||
Purchases of businesses, net of cash acquired |
( |
) |
— |
|||||
Proceeds from sale of business |
— |
|||||||
Proceeds from sale of facilities |
||||||||
Other, net |
( |
) |
||||||
Total investing activities |
( |
) | ||||||
Financing activities: |
||||||||
Net change in short-term borrowings |
( |
) | ||||||
Proceeds from long-term borrowings |
||||||||
Repurchases of common stock |
( |
) |
( |
) | ||||
Cash dividends paid |
( |
) |
( |
) | ||||
Proceeds from stock option exercises |
||||||||
Other, net |
( |
) |
( |
) | ||||
Total financing activities |
( |
) | ||||||
Effect of exchange rate changes on cash and cash equivalents |
( |
) |
||||||
Increase in cash and cash equivalents |
||||||||
Cash and cash equivalents: |
||||||||
Beginning of period |
||||||||
End of period |
$ |
$ | ||||||
1. |
Basis of Presentation |
2. |
Recent Accounting Pronouncements |
3. |
Revenues |
2020 |
2019 |
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(In thousands) |
||||||||
Contract assets—January 1 |
$ | $ | ||||||
Contract assets – March 31 |
||||||||
Change in contract assets – increase |
||||||||
Contract liabilities – January 1 |
||||||||
Contract liabilities – March 31 |
||||||||
Change in contract liabilities – increase |
( |
) |
( |
) | ||||
Net change |
$ |
( |
) |
$ | ||||
Three months ended March 31, 2020 |
||||||||||||
EIG |
EMG |
Total |
||||||||||
(In thousands) |
||||||||||||
United States |
$ |
$ |
$ |
|||||||||
International (1) : |
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United Kingdom |
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European Union countries |
||||||||||||
Asia |
||||||||||||
Other foreign countries |
||||||||||||
Total international |
||||||||||||
Consolidated net sales |
$ |
$ |
$ |
|||||||||
(1) | Includes U.S. export sales of $ |
Three months ended March 31, 2019 |
||||||||||||
EIG |
EMG |
Total |
||||||||||
(In thousands) |
||||||||||||
United States |
$ | $ | $ | |||||||||
International (1) : |
||||||||||||
United Kingdom |
||||||||||||
European Union countries |
||||||||||||
Asia |
||||||||||||
Other foreign countries |
||||||||||||
Total international |
||||||||||||
Consolidated net sales |
$ | $ | $ | |||||||||
(1) | Includes U.S. export sales of $ |
Three months ended March 31, 2020 |
||||||||||||
EIG |
EMG |
Total |
||||||||||
(In thousands) |
||||||||||||
Process and analytical instrumentation |
$ |
$ |
— |
$ |
||||||||
Aerospace and power |
||||||||||||
Automation and engineered solutions |
— |
|||||||||||
Consolidated net sales |
$ |
$ |
$ |
|||||||||
Three months ended March 31, 2019 |
||||||||||||
EIG |
EMG |
Total |
||||||||||
(In thousands) |
||||||||||||
Process and analytical instrumentation |
$ | $ | — |
$ | ||||||||
Aerospace and power |
||||||||||||
Automation and engineered solutions |
— |
|||||||||||
Consolidated net sales |
$ | $ | $ | |||||||||
Three months ended March 31, 2020 |
||||||||||||
EIG |
EMG |
Total |
||||||||||
(In thousands) |
||||||||||||
Products transferred at a point in time |
$ |
$ |
$ |
|||||||||
Products and services transferred over time |
||||||||||||
Consolidated net sales |
$ |
$ |
$ |
|||||||||
Three months ended March 31, 2019 |
||||||||||||
EIG |
EMG |
Total |
||||||||||
(In thousands) |
||||||||||||
Products transferred at a point in time |
$ | $ | $ | |||||||||
Products and services transferred over time |
||||||||||||
Consolidated net sales |
$ | $ | $ | |||||||||
Three Months Ended |
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March 31, |
||||||||
2020 |
2019 |
|||||||
(In thousands) |
||||||||
Balance at the beginning of the period |
$ | $ | ||||||
Accruals for warranties issued during the period |
||||||||
Settlements made during the period |
( |
) |
( |
) | ||||
Warranty accruals related to acquired businesses and other during the period |
( |
) | ||||||
Balance at the end of the period |
$ |
$ | ||||||
4. |
Earnings Per Share |
Three Months Ended |
||||||||
March 31, |
||||||||
2020 |
2019 |
|||||||
(In thousands) |
||||||||
Weighted average shares: |
||||||||
Basic shares |
||||||||
Equity-based compensation plans |
||||||||
Diluted shares |
||||||||
5. |
Fair Value Measurements |
March 31, |
December 31, |
|||||||
Fair Value |
Fair Value |
|||||||
(In thousands) |
||||||||
Mutual fund investments |
$ |
$ |
March 31, 2020 |
December 31, 2019 |
|||||||||||||||
Recorded Amount |
Fair |
Recorded Amount |
Fair Value |
|||||||||||||
(In thousands) |
||||||||||||||||
Long-term debt, net (including current portion) |
$ |
( |
) |
$ |
( |
) |
$ | ( |
) | $ | ( |
) |
6. |
Hedging Activities |
7. |
Inventories, net |
March 31, |
December 31, |
|||||||
2020 |
2019 |
|||||||
(In thousands) |
||||||||
Finished goods and parts |
$ |
$ | ||||||
Work in process |
||||||||
Raw materials and purchased parts |
||||||||
Total inventories, net |
$ |
$ | ||||||
8. |
Leases |
Three Months Ended |
||||||||
March 31, |
||||||||
2020 |
2019 |
|||||||
(In thousands) |
||||||||
Operating lease cost |
$ |
$ | ||||||
Variable lease cost |
||||||||
Total lease cost |
$ |
$ | ||||||
March 31, |
December 31, |
|||||||
2020 |
2019 |
|||||||
(In thousands) |
||||||||
Right of use assets, net |
$ |
$ | ||||||
Lease liabilities included in Accrued Liabilities and other |
||||||||
Lease liabilities included in Other long-term liabilities |
||||||||
Total lease liabilities |
$ |
$ | ||||||
Three Months Ended |
||||||||
March 31, |
||||||||
2020 |
2019 |
|||||||
(In thousands) |
||||||||
Right-of-use assets obtained in exchange for new operating liabilities |
$ |
$ |
||||||
Weighted-average remaining lease terms—operating leases (years) |
||||||||
Weighted-average discount rate—operating leases |
% |
% |
Lease Liability Maturity Analysis |
Operating Leases |
|||
(In thousands) |
||||
Remaining 2020 |
$ |
|||
2021 |
||||
2022 |
||||
2023 |
||||
2024 |
||||
Thereafter |
||||
Total lease payments |
||||
Less: imputed interest |
||||
$ |
||||
9. |
Acquisition and Divestiture |
Property, plant and equipment |
$ |
|||
Goodwill |
||||
Other intangible assets |
||||
Deferred income taxes |
( |
) | ||
Net working capital and other (1) |
||||
Total cash paid |
$ |
|||
(1) | Includes $ |
10. |
Goodwill |
EIG |
EMG |
Total |
||||||||||
(In millions) |
||||||||||||
Balance at December 31, 2019 |
$ | $ | $ | |||||||||
Goodwill acquired |
— |
|||||||||||
Purchase price allocation adjustments and other |
||||||||||||
Foreign currency translation adjustments |
( |
) |
( |
) |
( |
) | ||||||
Balance at March 31, 2020 |
$ |
$ |
$ |
|||||||||
11. |
Income Taxes |
Balance at December 31, 2019 |
$ | |||
Additions for tax positions |
||||
Reductions for tax positions |
( |
) | ||
Balance at March 31, 2020 |
$ |
|||
12. |
Share-Based Compensation |
Three Months Ended |
||||||||
March 31, |
||||||||
2020 |
2019 |
|||||||
(In thousands) |
||||||||
Stock option expense |
$ |
|
$ | |
||||
Restricted stock expense |
|
|
||||||
PRSU expense |
|
|
||||||
Total pre-tax expense |
$ |
|
$ | |
||||
Three Months Ended |
Year Ended |
|||||||
March 31, 2020 |
December 31, 2019 |
|||||||
Expected volatility |
|
% |
|
% | ||||
Expected term (years) |
|
|
||||||
Risk-free interest rate |
|
% |
|
% | ||||
Expected dividend yield |
|
% |
|
% | ||||
Black-Scholes-Merton fair value per stock option granted |
$ |
|
$ | |
Shares |
Weighted Average Exercise Price |
Weighted Average Remaining Contractual Life |
Aggregate Intrinsic Value |
|||||||||||||
(In thousands) |
(Years) |
(In millions) |
||||||||||||||
Outstanding at December 31, 2019 |
|
$ | |
|||||||||||||
Granted |
|
|
||||||||||||||
Exercised |
( |
) |
|
|||||||||||||
Forfeited |
( |
) |
|
|||||||||||||
Outstanding at March 31, 2020 |
|
$ |
|
|
$ |
|
||||||||||
Exercisable at March 31, 2020 |
|
$ |
|
|
$ |
|
||||||||||
Shares |
Weighted Average Grant Date Fair Value |
|||||||
(In thousands) |
||||||||
Nonvested restricted stock outstanding at December 31, 2019 |
$ | |||||||
Granted |
||||||||
Vested |
( |
) |
||||||
Forfeited |
( |
) |
||||||
Nonvested restricted stock outstanding at March 31, 2020 |
$ |
|||||||
13. |
Retirement and Pension Plans |
Three Months Ended |
||||||||
March 31, |
||||||||
2020 |
2019 |
|||||||
(In thousands) |
||||||||
Defined benefit plans: |
||||||||
Service cost |
$ |
$ | ||||||
Interest cost |
||||||||
Expected return on plan assets |
( |
) |
( |
) | ||||
Amortization of net actuarial loss and other |
||||||||
Pension income |
( |
) |
( |
) | ||||
Other plans: |
||||||||
Defined contribution plans |
||||||||
Foreign plans and other |
||||||||
Total other plans |
||||||||
Total net pension expense |
$ |
$ | ||||||
14. |
Contingencies |
15. |
Realignment Costs |
First Quarter of 2020 realignment costs |
||||
Balance at December 31, 2019 |
$ |
|||
Pre-tax charges |
||||
Utilization |
( |
) | ||
Foreign currency translation and other |
( |
) | ||
Balance at March 31, 2020 |
$ |
|||
Three Months Ended March 31, |
||||||||
2020 |
2019 |
|||||||
(In thousands) |
||||||||
Net sales: |
||||||||
Electronic Instruments |
$ |
774,225 |
$ |
806,911 |
||||
Electromechanical |
427,993 |
480,780 |
||||||
Consolidated net sales |
$ |
1,202,218 |
$ |
1,287,691 |
||||
Operating income and income before income taxes: |
||||||||
Segment operating income: |
||||||||
Electronic Instruments |
$ |
171,271 |
$ |
203,084 |
||||
Electromechanical |
76,564 |
98,813 |
||||||
Total segment operating income |
247,835 |
301,897 |
||||||
Corporate administrative expenses |
(15,795 |
) |
(18,638 |
) | ||||
Consolidated operating income |
232,040 |
283,259 |
||||||
Interest expense |
(22,741 |
) |
(22,653 |
) | ||||
Other income (expense), net |
141,776 |
(3,668 |
) | |||||
Consolidated income before income taxes |
$ |
351,075 |
$ |
256,938 |
||||
2020 |
||||||||
Realignment Costs |
Operating Margins |
|||||||
EIG |
$ | 22.8 |
(300 |
) | ||||
EMG |
20.9 |
(490 |
) | |||||
Total reported in segment operating income |
43.7 |
(370 |
) | |||||
Selling, general and administrative expenses |
0.2 |
|||||||
Total reported in the consolidated statement of income |
$ | 43.9 |
(370 |
) | ||||
Item 1A. |
Risk Factors |
Period |
Total Number of Shares Purchased (1) |
Average Price Paid per Share |
Total Number of Shares Purchased as Part of Publicly Announced Plan |
Approximate Dollar Value of Shares that May Yet Be Purchased Under the Plan |
||||||||||||
January 1, 2020 to January 31, 2020 |
— |
$ | — |
— |
$ | 489,125,278 |
||||||||||
February 1, 2020 to February 29, 2020 |
612 |
101.40 |
612 |
489,063,223 |
||||||||||||
March 1, 2020 to March 31, 2020 |
399 |
97.81 |
399 |
489,024,195 |
||||||||||||
Total |
1,011 |
99.98 |
1,011 |
|||||||||||||
(1) | Represents shares surrendered to the Company to satisfy tax withholding obligations in connection with employees’ share-based compensation awards. |
Exhibit Number |
Description | |||
3.2* |
||||
31.1* |
||||
31.2* |
||||
32.1* |
||||
32.2* |
||||
101.INS* |
XBRL Instance Document. | |||
101.SCH* |
XBRL Taxonomy Extension Schema Document. | |||
101.CAL* |
XBRL Taxonomy Extension Calculation Linkbase Document. | |||
101.DEF* |
XBRL Taxonomy Extension Definition Linkbase Document. | |||
101.LAB* |
XBRL Taxonomy Extension Label Linkbase Document. | |||
101.PRE* |
XBRL Taxonomy Extension Presentation Linkbase Document. | |||
104 |
Cover Page Interactive Data File (formatted as inline XBRL with applicable taxonomy extension information contained in Exhibits 101). |
* | Filed electronically herewith. |
AMETEK, Inc. (Registrant) | ||
By: |
/s/ Thomas M. Montgomery | |
Thomas M. Montgomery | ||
Senior Vice President – Comptroller | ||
(Principal Accounting Officer) |