AMETEK, Inc.

Good day, ladies and gentlemen. Welcome to the Q2 2019 Ambitech Inc. Earnings Conference Call. At this time, all participants are on a listen-only mode. Later, we will conduct a question-and-answer session, and instructions will follow at that time. If you require operator assistance during the program, please press star then zero on your touchtone telephone. As a reminder, today's conference is being recorded. I would now like to introduce our host for this conference call, Mr. Kevin Kaldman, Vice President, Investor Relations. You may begin.

Great. Thank you, Kevin. Good morning, everyone, and thank you for joining us for Amitek's second 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 second quarter results were released earlier this morning and are available on market systems and in the investor 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 filing with the SEC. AMETEC disclaims any intention or obligation to update or revise any forward-looking statements. Also, 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 with prepared remarks by Dave and Bill, and then open up for the questions. I'll now turn the meeting to Dave.

Thank you, Kevin, and good morning, everyone. Ametek had an excellent second quarter. We exceeded earnings guidance on solid organic sales growth, contributions from acquisitions, and exceptional operating performance. In the process, we delivered a record level of sales, EBITDA, operating income, and adjusted diluted earnings per share. We also delivered impressive growth in operating cash flow in the quarter. Given these strong results on our outlook for the back half of the year, we have again increased our full-year earnings guidance range. These results continue to highlight the strength of the Amatek growth model and our ability to deliver strong and consistent performance for our shareholders. Now on to the financial highlights for the quarter. Total sales were a record $1.29 billion, up 7% compared to the second quarter of 2018. Organic sales growth was solid at 3%, acquisitions added 5%, and foreign currency was a one-point headwind. EBITDA in the second quarter was a record $349 million, up 10% over the same period in 2018, and EBITDA margins were excellent at 27%. Operating income was a record at $295.4 million, a 9% increase over the second quarter of 2018. Reported operating income margins were up 60 basis points to 22.9%. And excluding the dilutive impact of acquisitions, operating margins increased an impressive 110 basis points over the prior year period. This exceptional operating performance reflects the strength of our operational excellence initiatives. Earnings were a record $1.05 per diluted share, up 14% over the prior year, and exceeding our guidance range of $1 to $1.02 per diluted share. Lastly, operating cash flow was superb in the quarter, up 21% to $246 million. Now on to the individual operating groups. First, the electronic instruments group. AIG's second quarter sales were $820.2 million, up 10 percent over last year's second quarter. Recent acquisitions contributed 8 percent, organic sales were up 3 percent, and foreign currency was a one-point headwind. Our materials analysis business delivered another very solid quarter. Their high-end analytical instrumentation solutions, including several new product introductions, are helping our customers solve increasingly complex challenges in attractive growth markets. Our aerospace business has also performed nicely, and its demand remains very solid across the aerospace and defense markets. In addition to the strong top-line growth, EIG delivered outstanding operating performance in the second quarter. Operating income increased 10% to $212.9 million, with reported operating income margins of 26%. Excluding the dilutive impact of acquisitions, EIG's margins expanded 90 basis points over the prior year. The electromechanical group also had a strong quarter, with solid organic sales and impressive operating performance. Second quarter sales for EMG were $469.2 million, up 1% over the same period in 2018. EMG's organic sales growth was 3%, and foreign currency a two-point headwind. EMG's operating performance was excellent, with operating income a record $101.1 million, up 7% over the prior year's second quarter. Operating margins for EMG increased sharply to 21.5%, up 120 basis points over the same period last year. Ametek's results in the second quarter and through the first half of the year were excellent. We are firmly positioned for another year with strong growth and record results. Our highly differentiated businesses continue to execute the Ametek growth model, driving long-term sustainable value for our shareholders. I'd like to highlight some of our businesses' recent accomplishments, and then I'll touch on our updated outlook and guidance for the remainder of the year. First, I would like to congratulate the team at Creaform for recently winning two Red Dot Awards for innovative product design of their HandyScan Black and GoScan Spark metrology products. Launched in April, both new 3D scanners were designed with enhanced features and a sleek new ergonomic design. Now in its third generation, the HandyScan Black has been optimized to meet the needs of design, manufacturing, and metrology professionals looking for the most effective and reliable way to acquire accurate 3D measurements of physical objects. The anti-scan black provides highly accurate and repeatable results even in difficult environments and with complex surfaces. The GoScan Spark offers the fastest and most friendly 3D scanning experience in the market. Designed to scan any object without need for setup, it offers flawless texture and geometry acquisition as well as impressive details in a rich color palette. The Red Dot Award is a world-renowned competition that is used to identify the most innovative new products across several product categories. I'd also like to congratulate our Dunker Motoren business for winning the Machine and Marks Best in Industry Award for their BG95D Pro servo motor solution. Dunker Motoren is a global leader in advanced motion control solutions serving a broad set of end markets including medical, laboratory, factory automation, and motor applications. Their BG95D Pro sets the standard in integrated servo motors with improved flexibility, functionality, precision, and operational reliability. The Red Dot and Best of Industry awards and the success of these new products are testaments to the strength of our new product development teams. So congratulations to everyone at Creaform and Dunker Motor for these outstanding recognitions. We remain committed to investing in our research and development efforts to provide leading edge innovative products and technologies to our customers. In 2019, we expect to spend approximately $260 million on RD&E, up 13% over last year's level. And we are seeing excellent results as our new product vitality index was a very strong 25% in the quarter. Now shifting to operational excellence. Our operational excellence tools are adding significant value for our businesses. We continue to drive efficiency improvements across our operation to enhance our profitability and improve cash flow, as was evident in our operating performance during the second quarter. For all of 2019, we now expect approximately $85 million in savings from our operational excellence initiatives, with the majority of these savings generated from material sourcing. This is an increase from our previous estimate of $80 million in annual savings. Finally, we remain very active yet disciplined in our acquisition efforts. Our business development teams continue to manage a strong pipeline of acquisition opportunities. Amatek remains focused on deploying our strong free cash flow on value-enhancing acquisitions. I'll now move to the updated earnings guidance for 2019. Given our performance in the second quarter and our near-record backlog, we now expect 2019 earnings per diluted share to be in the range of $4.04 to $4.10, up 10% to 12% over 2018 earnings. This new guidance range has increased from our previous guidance range of $3.98 to $4.80 per diluted share. We continue to expect overall sales for the year to be up high single digits with organic sales up 3 to 5 percent. Overall sales in the third quarter are expected to be up high single digits. Earnings for the third quarter are anticipated to be in the range of $1 to $1.02 per dollar each year, up 10 to 12 percent over the prior year period. To summarize, we are pleased with our second quarter results. We remain focused on driving continued growth at the end of the year and well into the future. Our business's market-leading differentiated technologies and their execution of the Amatek growth model are driving strong results for our stakeholders. I will now turn it over to Bill Burke, who will cover some of the financial details of the quarter, then we'll be glad to take your questions. Bill?