Good morning and thank you for joining us for AMETEK's second quarter 2023 earnings conference call. Joining me today are Dave Zapico, Chairman and Chief Executive Officer; and Bill Burke, Executive Vice President and Chief Financial Officer. During the course of today's call, we will be making forward-looking statements which are subject to change based on various risk factors and uncertainties and that may cause actual results to differ significantly from expectations. A detailed discussion of the risks and uncertainties that may affect our future results is contained in AMETEK's filings with the SEC. AMETEK disclaims any intention or obligation to update or revise any forward-looking statements. Any references made on this call to 2022 or 2023 results or to 2023 guidance will be on an adjusted basis, excluding after tax, acquisition-related intangible amortization. Reconciliations between GAAP and adjusted measures can be found in our press release and on the Investors section of our website. We'll begin today's call with prepared remarks by Dave and Bill and then we'll open it up for questions. I'll now turn the meeting over to Dave.

Thank you, Kevin, and good morning, everyone. AMETEK achieved exceptional performance in the second quarter, marked by strong sales growth, outstanding operational execution, and record results ahead of our expectations. In the quarter, we established records for sales, operating income, operating margins, earnings per share, and EBITDA. We also ended the quarter with a record backlog. AMETEK's continued outstanding results reflect the strength of the AMETEK growth model, the quality of our niche differentiated businesses, the benefits from our organic growth initiatives, and, most importantly, the outstanding efforts from our dedicated colleagues. Considering our strong second quarter results and the positive outlook for the remainder of the year, we are again increasing our earnings guidance for the full year. Now let me turn to our second quarter results. Second quarter sales were $1.65 billion, up 9% over the same period in 2022. Organic sales growth was 5%. Acquisitions added 4 points in the quarter, and foreign currency was flat. Our book-to-bill ratio in the second quarter was 1.01, marking our 12th consecutive quarter of positive book-to-bill. As a result, we ended the quarter with a record backlog of $3.44 billion, up $220 million from the end of 2022, and up $1.6 billion or 91% from the end of 2020. Operating income in the quarter was a record $419 million. This represents a 15% increase over the second quarter of 2022. Operating margins were 25.4% in the quarter, up an impressive 130 basis points from the prior year. EBITDA in the quarter was a record $496 million, up 12% over the prior year, while EBITDA margins were also impressive at 30.1%. This operating performance led to record earnings of $1.57 per diluted share, up 14% versus the second quarter of 2022, and above our guidance range of $1.49 to $1.51 per share. Now let me provide some additional details at the operating group level. First, the Electronic Instruments Group. The Electronic Instruments Group had a great quarter with excellent sales growth and tremendous operating performance. Sales for EIG were $1.13 billion in the quarter, up 10% from the second quarter of last year. Organic sales were up a very strong 8% with acquisitions accounting for the balance of the growth. EIG sales growth in the second quarter was widespread across each of our divisions, with growth particularly strong in our Aerospace and Defense and Ultra Precision Technologies businesses. EIG's operating performance was impressive with strong profit growth and margin expansion. Operating income was $307 million, up 16% versus the prior year, while operating margins were 27.1%, up a robust 130 basis points from the prior year. The Electromechanical Group also delivered strong sales growth and excellent operating performance in the quarter. EMG's second quarter sales were a record $511 million, up 5% versus the prior year, driven by the acquisition of Bison Engineering, with organic sales roughly flat in the quarter. EMG's operating income in the quarter was $136 million, up 10% compared to the prior year period. EMG's second quarter operating margins were excellent at 26.6%, up 100 basis points versus the prior year. Overall, AMETEK achieved outstanding performance in the second quarter of 2023. In addition to our continued strong operating execution, our results speak to the attractiveness and diversity of the end markets we serve. Our businesses hold leading positions in attractive niche market segments. Through our continued organic growth investments and strategic acquisitions, we are expanding our presence in market segments and niches aligned with strong secular growth drivers. As a result, our businesses are well positioned with differentiated solutions to benefit from the meaningful long-term investments in areas such as electrification, clean energy, healthcare efficiency, and manufacturing re-insuring. In addition to our alignment with strong growth markets, AMETEK has seen great success from our organic growth initiatives and investments. For all of 2023, we expect to spend over $100 million on incremental growth investments. These investments are largely focused on expanding our sales, marketing, and commercial excellence initiatives as well as broadening our research, development, and engineering efforts. AMETEK's research development and engineering teams across our businesses consistently deliver innovative and next-generation products tailored to meet the unique needs of our customers. While there are numerous examples across the company, I wanted to highlight our Abaco business unit for their outstanding accomplishments. Abaco is a leading provider of commercial off-the-shelf embedded computing systems for aerospace, defense, and specialized industrial applications. Demand for Abaco solutions remains strong, given the position as a leading provider of ruggedized technology solutions with advanced thermal management capabilities. Abaco was awarded the best overall design for high-performance PCBAs at the recent Accelerator Technology Innovation Awards. Abaco also recently introduced a next-generation integrated computing and graphics card with the latest GPU technology. This provides our customers with advanced computing graphics processing and security capabilities required in AI-focused applications such as intelligence, surveillance and reconnaissance, radar signal processing, and deep machine learning for autonomous systems. In addition to Abaco, many other businesses are well positioned to benefit from the growing demand for high computing power and analytics. We recognize the pivotal role of organic growth initiatives in driving our overall growth strategy. These investments in organic growth, coupled with our market leadership and attractive market exposures, position the company for continued success in driving sustainable long-term growth. Now switching to our capital deployment and acquisition strategy. Over the last three quarters, we deployed approximately $530 million on the acquisition of three businesses: Navitar, RTDS, and Bison Engineering. Each of these businesses is integrating nicely into AMETEK and is very well positioned to capitalize on attractive growth opportunities in their markets. Our acquisition pipeline remains very strong, and our businesses and internal M&A teams are actively managing a number of opportunities. AMETEK remains committed to leveraging our strong cash flow to pursue strategic acquisitions that align with our growth objectives. With a robust balance sheet and significant financial capacity, we are well positioned to support our acquisition strategy and capitalize on value-creating opportunities in the future. Now, turning to our outlook for the remainder of the year. While uncertainties in the macroeconomic environment continue to warrant caution in the short term, we are confident in our ability to navigate through these challenges and deliver strong results. Building upon our strong first half results and positive outlook for the remainder of the year, we are again increasing our earnings guidance. For the full year, we expect overall sales to be up mid- to high single digits with organic sales expected to be up mid-single digits. Diluted earnings per share for the year are now expected to be in the range of $6.18 to $6.26, up 9% to 10% compared to last year's results. This is an increase from our previous guidance range of $5.96 to $6.10 per diluted share. For the third quarter, we anticipate overall sales to be up mid-single digits, with adjusted earnings of $1.56 to $1.58 per share, up 8% to 9% versus the prior year. In summary, AMETEK's second quarter results were excellent. Our businesses continued to deliver excellent performance, benefiting from differentiated technology solutions that cater to diverse and growing niche markets. The implementation of our organic growth initiatives has yielded higher levels of growth, while our portfolio remains aligned with attractive mid- and long-cycle markets. Our asset-light business model and strong cash flows provide us with the flexibility to navigate challenging environments while actively deploying capital to drive increased shareholder value. As a result, AMETEK remains firmly positioned to deliver long-term sustainable growth. 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.

Thank you, Dave. As Dave highlighted, AMETEK had a very strong second quarter with record-level operating performance and a high quality of earnings. Now let me provide some additional financial highlights for the second quarter. Second quarter general and administrative expenses were $24.5 million, essentially unchanged from the prior year and as a percentage of sales were 1.5% versus 1.6% in last year's second quarter. For 2023, general and administrative expenses are expected to be approximately 1.5% of sales, in line with last year's G&A to sales level. Second quarter other income and expense was a $6 million headwind versus the prior period due largely to lower pension income in the quarter. The effective tax rate was 18.2%, down slightly from the 18.5% in the second quarter of 2022. For 2023, we now anticipate our effective tax rate to be between 19% and 19.5%. And as we've stated in the past, actual quarterly tax rates can differ dramatically, either positively or negatively from this full-year estimated rate. Capital expenditures in the second quarter were $28 million, and we continue to expect capital expenditures to be approximately $145 million for the full year or about 2% of sales, reflecting our asset-light business model. Depreciation and amortization expense in the quarter was $82 million. For the full year, we expect depreciation and amortization to be approximately $335 million, including after-tax, acquisition-related intangible amortization of approximately $157 million or $0.68 per diluted share. Operating working capital in the second quarter was 19% of sales. Cash flow in the quarter was up meaningfully from the prior year. Operating cash flow was $335 million, up 42% from the prior year, and free cash flow was $307 million, up 47% from the second quarter of 2022. Free cash flow conversion was 95% in the quarter. And for the full year, we continue to expect approximately 120% free cash flow to net income conversion. Total debt at June 30 was $2.2 billion, down from $2.4 billion at the end of 2022. Offsetting this debt is cash and cash equivalents of $606 million. At the end of the second quarter, our gross debt-to-EBITDA ratio was 1.1x and our net debt-to-EBITDA ratio was 0.8x. We continue to have excellent financial capacity with approximately $2.9 billion of cash and existing credit facilities to support our growth initiatives. In summary, our businesses continue to deliver exceptional results in the second quarter of 2023. We delivered strong sales growth, achieved robust margin expansion, and a high quality of earnings. Our leading positions across attractive market segments, record backlog, and outstanding operating capabilities have positioned us well for continued success in the back half of the year.

Thank you, Bill. Can we please open the lines for questions?

Could you discuss the positive book-to-bill ratio as a strong outcome given the uncertainties? Additionally, can you share insights on the order trends you have observed since then? Are there any concerns? I understand you mentioned focusing on the long term, but are there any short-term challenges beginning to emerge?

Great question. The overall demand environment still feels solid. We had the 12th straight quarter of positive book-to-bill and ended with an all-time record of $3.44 billion. So our book-to-bill was 1.01 and it was positive in both groups, so that's really great. Our backlog is over 50% of our annual sales and well above normal historical levels, which is around 30%. So we're in a strong position as we proceed throughout 2023. If you recall in the last couple of earnings calls, we highlighted a couple of dynamics that would impact order growth. The first are difficult comparisons. In fact, in all of 2021 and 2022, we averaged 18% organic growth. So we have some difficult comparisons that we're running up against. The second dynamic we highlighted is our expectation to return to more normalized ordering patterns. We had a situation where customers were ordering early, and now that the supply chain is improving and getting back to normal, lead times are returning to normal and we see this dynamic play out. But we're well positioned to deal with it, and our record backlog and positive book-to-bill give us confidence for the remainder of the year.

And leverage is clearly low here. You talked about a pipeline being pretty active. Can you maybe give us some color on what's been holding it back? Is it still in terms of executing, is it still, I would say, valuations at this point? You're just not seeing anything of great interest? Just any color there would be helpful.

Yes. Our pipeline remains very strong and we're actively looking at a number of high-quality deals across a broad set of our markets. As always, we will remain disciplined. The discipline is in full force but we expect it to be active in the back half of the year. And more broadly, over the next couple of years, we really have the opportunity to differentiate our performance with the M&A aspect of our growth strategy. We're very well positioned with a strong balance sheet and we're working hard at it. Sometimes you can't predict which quarter they're going to close on or which quarters are going to happen, but the backlog is at an elevated level and we are extremely busy.

David, could you maybe just go ahead and do the kind of around the horn, if you will, with respect to the businesses, the divisions, what you saw in Q2 and how that informs your organic expectations for those areas for the balance of the year?

I'd be glad to, Matt. I'll start with our largest market segment, our Process segment. Overall sales for our Process businesses were up high single digits in the quarter, which included mid-single-digit organic growth and contributions from the recent acquisition of Navitar. Growth remains solid across each of our process divisions. As mentioned in the prepared remarks, our Ultra Precision Technologies business delivered notably strong growth driven by high-end optics and metrology businesses. We also saw solid growth across our med tech businesses and the Rauland business that we mentioned a couple of quarters ago continues to perform extremely well. So for the full year, we continue to expect mid-single-digit organic growth for the Process businesses, which is very solid. For Aerospace and Defense, growth remains very strong across our aerospace and defense businesses. In the quarter, both overall and organic sales were up low double digits on a percentage basis. This reflects strong performance in all of the subsegments in A&D. Growth was particularly strong across our aftermarket businesses as air travel returns to pre-pandemic levels, driving very strong demand for MRO products and services. Given the strong growth in the quarter, we now expect sales for the full year to increase low double digits on a percentage basis versus 2022, so we increased our outlook for our Aerospace and Defense businesses. Moving to Power & Industrial, overall sales were up mid-teens on a percentage basis in the second quarter, fueled by mid-single-digit organic sales growth and the contributions from the RTDS acquisition, which has performed extremely well. Organic growth in the quarter was strongest in our power test and measurement business, programmable power. For the full year, we continue to expect mid-single-digit organic sales growth for our Power and Industrial businesses. Finally, for our Automation & Engineered Solutions, overall sales were up mid-single digits, with mid-single-digit decline in organic sales being offset by the contributions from the Bison acquisition. And as we noted previously, normalization of inventory levels is continuing across our OEM businesses, and the impact is most significant in our automation business. For the full year, we now expect organic sales for our Automation & Engineered Solutions business to be up low single digits, with stronger growth expected across our EMIP businesses. That's across the board.

And then maybe just to your last point, can you comment on how long this normalization period might last with respect to automation? If you could maybe just switch gears a little bit and give a little bit of geographic color in terms of what you're seeing, both organically and from an incoming order rate standpoint.

Yes, I'd be glad to. In terms of the automation business, I think this will last a couple of quarters. It's probably going to bottom near the end of this year. What we have there is the end markets for automation are very interesting. The places where the inventory correction is steepest include our medical technology customers and life science customers. We have been positioned on a lot of COVID test equipment. Also, our semiconductors, especially in the memory area, is weak right now. So the correction is happening and will continue in the second half. But I really think the end markets that this business serves are poised to respond upward. So we kind of saw this coming. It's impacting OEM businesses but very significantly in our automation business. However, we're positioned well to manage through that, increase our guidance, and we are really operating well. Our productivity programs are progressing nicely. As I mentioned, the recent acquisitions are performing very well. We have good visibility on price inflation, and the A&D business is accelerating. It's our highest margin segment. Now moving on to your next question about geography. We saw strong broad-based growth across all segments. The U.S. was up mid-single digits, with notable strength in our process and aerospace and defense businesses. Europe was up high single digits; we experienced very positive performance there with notable strength in our process and power businesses, while Asia was up with 3 points, showing notable strength in process.

First, I want to start by complimenting the one-pager on your website that provides a recap of the quarter, backlog, and free cash flow. I really appreciate having that available; thank you. Many good questions have already been addressed. Regarding the normalization, we are observing it everywhere, and it doesn't seem to be causing much disruption for your team. Is there an opportunity here? Perhaps for Bill, will you be releasing any buffer inventory as things begin to normalize, transitioning from just in case to a bit closer to just in time? Is that a possibility?

Absolutely, and that's something our businesses are very much focused on. We did all the right things to work our way through the supply chain, protecting our customers given our extensive backlogs. However, as that starts to normalize, our businesses are pivoting now to reducing inventories, and I think you'll see that happen as we move through the second half of the year.

Good. That was the timing we were looking for. And maybe some commentary on price cost, any kind of pricing carryover benefit and contribution from new products in the quarter?

Yes. On the pricing issue in the second quarter, we continued to more than offset inflation. Our pricing was about 5%, and inflation was about 4%. This gave us a positive spread of approximately 100 basis points. So, solid performance there. We're seeing decreasing costs in some commodities and logistics, offset by other costs in wages and travel. But I feel like we have that really under control with good visibility; the results there speak to the highly differentiated nature of AMETEK's product portfolio.

Great new products?

Yes. New products had a solid quarter. 24% of sales come from our vitality index. Our customers are buying our new products, which are hitting really good markets. We feel really good about that. There were significant introductions across the business, and I mentioned the Abaco introduction as well. While these are not home-run type swings, our product development is spread across the business, but we have a lot of good things going on.

You can get to the Hall of Fame with lots of singles and doubles.

That's right. That's AMETEK's strategy.

So, Dave, reacting to your pitch on Abaco, you closed that out talking about demand for high computing power and analytics like many other AMETEK businesses. I’m wondering if we could dive into that last dilution there.

Yes. When I'm talking about other businesses, I'm referring to what's happening, for example, in some of our process instrumentation businesses, where we're doing a lot of work to improve how we bring some technologies that were in the lab to the field. We're implementing AI algorithms in our Spectro Scientific business, transitioning measurements that were previously done in the lab to the field. So that's really good and is all around our predictive maintenance programs with Spectro Analytics. We're really positive about that. If you think about our materials analysis businesses, there is an enormous amount of data coming from those analyses, and we're showcasing this to our users in unique ways, highlighting our measurement technology. So, across our businesses, we see trends around predictive maintenance, moving measurements to the field, and leveraging analytical computational power to provide our users with actionable intelligence.

It's very interesting. And then, I'm curious about any areas that might be inflecting higher. I think the question is yours; more about anything reaching an inflection or peak junctures. But you did raise the aerospace defense market, and I think defense might be one particular area, if you could elaborate.

Yes. Regarding both our aerospace and defense markets, we have not peaked. Demand is strong in the commercial market, and our outlook for the year, both commercial and defense, are projecting low double-digit growth. So, we are well positioned in the defense market, and some of the things I talked about with Abaco play into that. Both sides of A&D, commercial and defense, are robust and we clearly have not peaked.

I just wanted to come back to orders. I was hoping you might be able to provide some context for how things tracked throughout the quarter, any preliminary view on July. Is there anything notable to glean from the changes in the mix of orders between project or CapEx related versus more OpEx purchases?

Yes, I'll answer the second part of that first. The thing that I would glean is it is more OEM versus end user. OEMs have inventory in place, and as we get back to more normalized activities, the order is normalizing in the OEM parts of the business. Regarding end users, we’re not seeing any slow down there; demand remains strong. In terms of how we progressed throughout the month, we had solid orders in Q2, and typically, orders ramp higher each month of the quarter. So, June was the strongest month of the quarter. Notably, when we adjust for acquisitions, as we book the entire backlog with order input upon closing an acquisition, we can see that June was among the top booking months over the last couple of years. So June was really strong for us. As for July, we’ve just closed and haven’t in-depth analyzed it yet, but it certainly aligns with the growth we’re communicating in our guidance for the second half of the year.

And then, just shifting over to pricing. As we work through this normalization of some of the destock dynamics, are there any areas you think there might be price concessions? Or do you think you can hold the line on prices, if not grow it, in your businesses?

Yes, there will be small amounts of giveback. However, we're going to retain the vast majority. I expect inflation to moderate a bit but we're going to keep that 100 basis point spread. So we feel good about our analysis and control over this situation; the pricing impact shouldn't be significant.

This is David Ridley-Lane on for Andrew Obin. I guess what's directionally embedded in the revenue guidance for year-ending backlog? I understand there's going to be this normalization of the backlog. I'm wondering if you see that kind of playing out in the second half? Or is that more of a 2024 story?

Yes. As I mentioned in the last couple of calls, I expect our sales to outpace orders in the second half of the year, but it will have a moderate impact. We will end the year with a historically high backlog compared to what we've done in the past, so it will be a modest impact as we progress through the second half of the year.

And then, if I'm doing the math right, guidance seems to imply about 40% core incremental margins versus earlier expectations of 30% to 35%. What's been improving, what's been going better than you expected?

Yes. Margin performance has been great. In fact, in the second quarter, we achieved really healthy core incrementals of 52%. You're correct in your outlook for the year, and it probably will be a bit higher because our performance has been outstanding. We have seen reported anchor improvements of 130 basis points at the company level and healthy incrementals are expected. We anticipate that 40% is a good number.

This is Joe Giordano. I wanted to see if there are any insights on specific end markets. Can you provide any information on customer trends, particularly in the medical sector? We've heard there may be some pressure on biotech and a slowdown in that area.

I mentioned that some of our automation customers are in the med tech and life sciences world, and we are seeing the impact of inventory destock. That’s included in our overall guidance. In terms of our overall medical business, excluding that piece of the automation business, Q2 showed we were up mid-teens. So, really strong growth was evident in our engineered medical components business, and we saw significant performance for AMETEK in the second quarter, and we anticipate that to continue for the full year.

I do not see any other questions at this point. I would now like to turn the conference back to Kevin Coleman for closing remarks. Thank you for all your help and thank you for joining us for our conference call today. As a reminder, a replay of today's webcast can be accessed in the Investors section of ametek.com. Have a great day.

Thank you. This concludes today's conference call. Thank you for participating. You may now disconnect.