Page 4 - AMETEK 2018 Annual Report FINAL

Letter to Shareholders

Overview Market Expansion, and Strategic We continue to see exceptional
Acquisitions — with a disciplined results from these efforts. For the
2018 was an exceptional year for
AMETEK. Our businesses delivered focus on cash generation and year, we generated $90 million in
outstanding operating performance, capital deployment. Additionally, savings through our Operational
resulting in a record level of sales, at the core of the AMETEK Excellence initiatives, including
orders, EBITDA, operating income, Growth Model is a focus on talent more than $70 million from our
operating cash flow, free cash flow development. Combined, these global sourcing and strategic
and diluted earnings per share. We elements provide a scalable procurement activities. Additionally,
deployed a record level of capital on platform for long-term growth. we continue to drive improvements
strategic acquisitions in 2018, while As we look forward to 2019 and in working capital, with year-end
also opportunistically repurchasing beyond, we are confident this working capital reduced to 16.9%
shares and meaningfully increasing growth model will continue to of total sales.
our dividend.
deliver tremendous value for all of Furthermore, in 2018, we
Sales grew 13% to $4.8 billion, AMETEK’s stakeholders. successfully managed a changing
including 7% organic sales growth. In this report, we outline our global environment with proactive
Orders grew 11%, allowing us to performance in 2018, the key initiatives. We remain confident in
end the year with a record backlog secular growth trends that our our ability to manage inflation and
of $1.6 billion and solid visibility businesses serve and the key tariff headwinds. This confidence
entering 2019. Earnings before components of the AMETEK is supported by our ability to
interest, taxes, depreciation and capture incremental pricing due to
amortization (EBITDA) increased Growth Model, along with advances the highly differentiated nature of
we made during the year to
to $1.3 billion, or 26.2% of sales. our businesses, the strength and
Operating income was $1.1 billion, support our mission: Solving flexibility of our global supply chain,
an increase of 16%, and operating our customers’ most complex and our ability to shift production,
challenges with differentiated
margins expanded 70 basis points given our asset-light business
to 22.2%. Earnings per diluted technology solutions. model. Our proven Operational
share were $3.29, an increase of Operational Excellence Excellence capabilities, which
26%. Free cash flow increased 11% capture each of these elements,
to $843 million and we deployed Operational Excellence is the position us extremely well to
a record $1.5 billion of capital in cornerstone strategy of the manage the impacts from tariffs in
2018 on strategic acquisitions AMETEK Growth Model and is 2019.
and share repurchases. We also ingrained in our culture. Within our New Product Development
made significant investments in our Operational Excellence tool kit, we
businesses to position them for the employ systems, processes and New products and technology
future. best practices, including Lean/ are critical to AMETEK’s long-
Six Sigma, Value Analysis/Value term success. Our businesses,
Those excellent results were Engineering, global sourcing and and their highly skilled research,
driven by the AMETEK Growth strategic procurement. These development and engineering
Model, which integrates our tools drive continual efficiency teams, are working closely with our
Four Growth Strategies — improvements and outstanding customers to develop differentiated
Operational Excellence, New operating performance, profitability technology solutions that solve their
Product Development, Global and and working capital. most complex challenges.

2 Letter to Shareholders

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