AMETEK, Inc.

Good day, ladies and gentlemen, and welcome to the Q1 2019 Amatek, Inc. Earnings Conference Call. At this time, all participants are in a listen-only mode. Later, we will conduct a question-and-answer session, and instructions will be given at that time. If anyone should require operator assistance during today's conference, please press star then zero on your telephone keypad. As a reminder, today's conference is being recorded. I would now like to turn the call over to Kevin Coleman, Vice President of Investor Relations. Sir, you may begin.

Thank you, Sydney. Good morning. Thank you for joining us for Amitek's first quarter 2019 earnings conference call. With me today are Dave Zepico, Chairman and Chief Executive Officer, and Bill Burke, Executive Vice President and Chief Financial Officer. Amitek's first quarter results were released earlier this morning and are available on Market Systems and in the Investors section of our website. This call is also being webcasted and can be accessed on our website, The webcast will be archived and made available on our site later today. During the course of today's call, we will make forward-looking statements which are subject to change based on various risk factors and uncertainties that may cause actual results to differ significantly from expectations. A detailed discussion of the risk and uncertainties that may affect our future results is contained in AMETEC's filings with the SEC. AMATAC disclaims any intention or obligation to update or revise any forward-looking statements. Any references made on this call to 2018 or 2019 results will be on an adjusted basis, excluding after-tax acquisition-related intangible amortization and excluding the fourth quarter 2018 gain related to the finalization of the impact of the 2017 Tax Cuts and Jobs Act. Reconciliations between GAAP and adjusted measures can be found in our press release and on the investor section of our website. We'll begin today's call with prepared remarks by Dave and Bill, and then I'll open it up for your questions. I'll now turn the meeting over to Dave.

Thank you, Kevin, and good morning, everyone. Amitek began 2019 with an outstanding first quarter, establishing records for sales, orders, backlog, EBDA, and operating income. Our businesses delivered strong overall sales growth with solid organic growth and meaningful contributions from the six acquisitions we completed in 2018. Our businesses also delivered fantastic operating performance with impressive operating income growth and core margin expansion leading to 15% adjusted earnings growth, which nicely exceeded our expectations. We also generated strong cash flow with operating cash flow increasing 11% year over year. Given these strong results, we have increased our earnings guidance for 2019. Now on to the financial highlights for the quarter. Total sales in the first quarter were $1.29 billion, up 10% compared to the first quarter of 2018. Organic sales growth was again strong at 5%, with acquisitions adding 7%, and foreign currency a two-point headwind. We also generated a record level of orders in the first quarter with another quarter of positive book to bill. Our record backlog of $1.7 billion provides us solid visibility as we move through 2019. EBDA in the first quarter was a record, $337 million, up 10% over the same period in 2018. And EBDA margins were excellent at 26.2%. Operating income in the quarter was a record at $283.3 million, up 10% over the prior year period, with reported operating margins of 22%. Excluding the dilutive impact of acquisitions, operating margins increased an impressive 70 basis points over 2018's first quarter. Adjusted earnings were $1 per share, up 15% over the comparable basis for 2018, exceeding our guidance range of 95 to 97 cents per diluted share. Now turning to the first quarter results of the individual operating groups. First, the electronic instruments group. EIG sales in the quarter increased 13 percent to $806.9 million. Recent acquisitions contributed 10 percent and organic sales growth were up 4 percent. Foreign currency was a two-point headwind. Our materials analysis businesses continue to deliver strong growth as their high-end analytical instrumentation solutions are very well positioned in attractive growth markets. EIG's operating performance in the quarter was outstanding, with operating income of $203.1 million, up 11% over 2018's first quarter. Reported operating income margins were 25.2%. Excluding the dilutive impact of acquisitions, EIG margins expanded an impressive 110 basis points over the prior year's first quarter. The electromechanical group also had a great quarter with strong organic sales growth and excellent operating performance. EMG's first quarter sales increased 5% to a record $480.8 million with organic sales growth a very strong 7% The acquisition of FMH added 1%, and foreign currency was a two-point headwind. We continue to see broad-based growth across our automation, engineered materials, and aerospace and defense businesses, each continuing to deliver solid growth. EMG also delivered excellent operating performance in the quarter, with operating income increasing 9% to $98.8 million, Operating margins expanded nicely, up 70 basis points to 20.6 percent. I am very pleased with the MSX first quarter performance, which has positioned us very well for another year of record results. The MSX growth model, which combines our four growth strategies with a disciplined focus on cash generation, capital deployment, and talent development, continues to provide the framework for driving long-term and sustainable value for our shareholders. Before I discuss our updated outlook for 2019, I wanted to highlight some of the recent achievements our colleagues have had in driving success for Ametek. I'll start with a collaborative R&D effort between two of our businesses which resulted in the release of two innovative new products. In March, EDACS, a leading provider of materials characterization systems, unveiled its VelocityPlus and VelocitySuper models. The Velocity Super at 4,500 frames per second is the fastest electron backscatter diffraction camera system in the world. Both new Velocity systems are powered by high-speed, low-noise CMOS sensors developed by our vision research business, a leading provider of ultra-high-speed cameras. These new additions to the EDAC's portfolio offers our customers a superior solution to help solve materials characterization and elemental composition challenges in both R&D and broader industrial settings. Congratulations to the EDACs and vision research teams for coming together and developing these world-class new products. This is just one example of the many market-leading new products and solutions our businesses are developing to help solve our customers' most complex challenges. Our businesses are also capturing additional market share. by expanding into attractively positioned adjacent markets. Rolland, a leading provider of communication systems for use in hospitals and healthcare facilities, has a renewed focus on expanding its technology offering to serve schools and educational institutions. Through its Telecenter U, Rolland provides school districts and campuses with flexible, streamlined communication capabilities for its students and staff. Utilizing a suite of proprietary hardware and software applications, Telecenter U synchronizes mass communications across multiple locations for everyday messages, event scheduling, and in critical emergency situations. The solution can play a key role in helping to improve the safety and security of students and teachers during crisis situations, and it is designed to help automate and manage a school's crisis plan during the crucial first few minutes before first responders arrive. Rollin has done an excellent job expanding its technology focus on safety within our schools. We will continue to invest our new product development and market expansion initiatives as we are seeing outstanding results from these investments. Our teams are also doing an incredible job integrating our recent acquisitions into Ametek. In 2018, we deployed over $1.1 billion of capital on six acquisitions and acquired approximately $350 million in annual sales. These acquisitions are already showing strong performance and we expect them to generate excellent results in 2019. We remain focused on deploying our strong fee cash flow on strategic acquisitions. While we are aggressively pursuing these opportunities, we will remain disciplined on our acquisition efforts. Our teams are actively pursuing a broad pipeline of opportunities and we are confident that we'll be able to continue to complete value enhancing acquisitions. Finally, we continue to focus on driving operational excellence, the cornerstone of the Ametek growth model. In the first quarter, we generated strong savings from our operational excellence initiatives, largely resulting from our global sourcing and strategic procurement activities. For all of 2019, We expect to generate over $80 million in operational excellence savings. We remain focused on developing and enhancing continuous improvement processes to drive positive operating results in 2019 and beyond. Now moving to our updated outlook. Given our performance in the first quarter and our outlook for the remainder of the year, we now expect 2019 adjusted earnings to be in the range of $3.98 to $4.08 per diluted share, an increase of 9% to 11% over the comparable basis in 2018. This is an increase from our previous guidance range of $3.95 to $4.05 per diluted share. We continue to expect overall sales in 2019 to be up high single digits with organic sales up 3% to 5%. In the second quarter, We anticipate overall sales to be up high single digits and adjusted earnings to be in the range of $1 to $1.02 per diluted share, a 9% to 11% increase over the prior year period. To summarize, our businesses' outperformance in the first quarter firmly positions Ametek for another year of strong growth. Our experienced management teams, our market-leading niche businesses, and our proven growth model allows Ametek to deliver strong and consistent performance. I will now turn it over to Bill Burke, who will cover some of the financial details of the quarter, and then we'd be glad to take your questions. Bill?