What changed in Ametek's 10-K — 2022 vs 2023
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Paragraph-level year-over-year comparison of Ametek's 2022 and 2023 10-K annual filings, covering the Business, Risk Factors, Legal Proceedings, Cybersecurity, MD&A and Market Risk sections. Every new, removed and edited paragraph is highlighted side-by-side so you can see exactly what management changed in the 2023 report.
+173 added−204 removedSource: 10-K (2024-02-22) vs 10-K (2023-02-21)
Top changes in Ametek's 2023 10-K
173 paragraphs added · 204 removed · 136 edited across 7 sections
- Item 7. Management's Discussion & Analysis+68 / −79 · 58 edited
- Item 1. Business+60 / −65 · 40 edited
- Item 1A. Risk Factors+34 / −50 · 28 edited
- Item 5. Market for Registrant's Common Equity+7 / −6 · 6 edited
- Item 2. Properties+2 / −2 · 2 edited
Item 1. Business
Business — how the company describes what it does
40 edited+20 added−25 removed35 unchanged
Item 1. Business
Business — how the company describes what it does
40 edited+20 added−25 removed35 unchanged
2022 filing
2023 filing
Biggest changeAcquired in March 2021, Crank Software is a leading provider of embedded graphical user interface software and services. Crank Software expands the Company's growing portfolio of software solutions. Customers EIG is not dependent on any single customer such that the loss of that customer would have a material adverse effect on EIG’s operations.
Biggest changeCustomers EIG is not dependent on any single customer such that the loss of that customer would have a material adverse effect on EIG’s operations. Approximately 6% of EIG’s 2023 net sales were made to its five largest customers. No single customer comprises more than 2% of net sales.
EIG is a leader in many of the specialized markets it serves. Products supplied to these markets include process control instruments for the life sciences, pharmaceutical, semiconductor, automation, power, food and beverage, oil and gas, and petrochemical industries. It provides a growing range of instruments to the research and laboratory equipment, ultra-precision manufacturing, medical, and test and measurement markets.
EIG is a leader in many of the specialized markets it serves. Products supplied to these markets include process control instruments for the life sciences, pharmaceutical, semiconductor, automation, power, food and beverage, oil and gas, and petrochemical industries. It provides a growing range of instruments to the research and laboratory equipment, ultra-precision manufacturing, optics, medical, and test and measurement markets.
As a result, AMETEK has maintained a consistent investment in new product development and engineering. AMETEK's businesses help solve our customers' most complex challenges with differentiated technology solutions. In 2022, AMETEK added to its highly differentiated product portfolio with a range of new products across many of its businesses. AMETEK focuses on cash generation and capital deployment.
As a result, AMETEK has maintained a consistent investment in new product development and engineering. AMETEK's businesses help solve our customers' most complex challenges with differentiated technology solutions. In 2023, AMETEK added to its highly differentiated product portfolio with a range of new products across many of its businesses. AMETEK focuses on cash generation and capital deployment.
EMG supplies high-purity powdered metals, strip and foil, specialty clad metals and metal matrix composites. EMG's heat exchangers provide electronic cooling and environmental control for the aerospace and defense and semiconductor industries. EMG's motors are widely used in commercial appliances, fitness equipment, food and beverage machines, hydraulic pumps and industrial blowers.
EMG supplies high-purity powdered metals, strip and foil, specialty clad metals and metal matrix composites. EMG's heat exchangers provide electronic cooling and environmental control for the aerospace and defense and semiconductor industries. EMG's motors are widely used in commercial appliances, food and beverage machines, hydraulic pumps and industrial blowers.
Technological and Development Capabilities . AMETEK believes it has certain technological advantages over its competitors that allow it to maintain its leading market positions. Historically, the Company has demonstrated an ability to develop innovative new products and solutions that anticipate customer needs.
Technological and Development Capabilities . AMETEK believes it has certain technological advantages over its competitors that allow it to maintain its leading market positions. Historically, the Company has demonstrated an ability to develop innovative new products and solutions that support customer needs.
Human Capital Management As a global organization, we have seen firsthand that the innovation needed to solve our customers’ biggest challenges can only come from employees that are fully engaged and committed, and who have diverse perspectives and backgrounds. Our Board regularly receives updates and presentations on key topics, including ESG, compliance, diversity and inclusion, and employee development and succession.
Human Capital Management As a global organization, we have seen firsthand that the innovation needed to solve our customers’ biggest challenges can only come from employees that are fully engaged and committed, and who have diverse perspectives and backgrounds. Our Board regularly receives updates and presentations on key topics, including sustainability, compliance, inclusion, and employee development and succession.
The Company has a robust Environmental Health and Safety program responsible for supporting its environmental monitoring and compliance efforts. In connection with acquisitions, the Company will 8 Table of Contents assess potential material environmental liabilities, and determine regulatory and fiduciary obligations during the course of the due diligence process.
The Company has a robust Environmental Health and Safety program responsible for supporting its environmental monitoring and compliance efforts. In connection with acquisitions, the Company will assess potential material environmental liabilities, and determine regulatory and fiduciary obligations during the course of the due diligence process.
AMETEK maintains its principal executive offices in suburban Philadelphia at 1100 Cassatt Road, Berwyn, Pennsylvania, 19312. Listed on the New York Stock Exchange (symbol: AME), the common stock of AMETEK is a component of the Standard and Poor’s 500 and the Russell 1000 Indices.
AMETEK maintains its principal executive offices at 1100 Cassatt Road, Berwyn, Pennsylvania, 19312. Listed on the New York Stock Exchange (symbol: AME), the common stock of AMETEK is a component of the Standard and Poor’s 500 and the Russell 1000 Indices.
Competition is generally based on product innovation, performance and price. There also is competition from alternative materials and processes. Availability of Raw Materials AMETEK’s reportable segments obtain raw materials and supplies from a variety of sources and generally from more than one supplier.
Competition is generally based on product innovation, performance and price. There also is competition from alternative materials and processes. 7 Table of Contents Availability of Raw Materials AMETEK’s reportable segments obtain raw materials and supplies from a variety of sources and generally from more than one supplier.
Business Strategy AMETEK is committed to achieving earnings growth through the successful implementation of the AMETEK Growth Model. The goal of that model is double-digit annual percentage growth in sales and earnings per share over the business cycle and a superior return on total capital.
Business Strategy AMETEK is committed to achieving earnings growth through the successful implementation of the AMETEK Growth Model. The goal of that model is double-digit annual percentage growth in sales and earnings per share over the business cycle, strong cash flow generation, and a superior return on total capital.
Its instruments are used for precision measurement in a number of applications, including radiation detection, trace element and materials analysis, nanotechnology research, ultraprecise manufacturing, and test and measurement. 5 Table of Contents Acquired in September 2022, Navitar is a designer and manufacturer of customized, fully integrated optical imaging systems, components, and software.
Its instruments are used for precision measurement in a number of applications, including radiation detection, trace element and materials analysis, nanotechnology research, ultraprecise manufacturing, advanced optical metrology, and test and measurement. Acquired in September 2022, Navitar is a designer and manufacturer of customized, fully integrated optical imaging systems, components, and software.
AMETEK is also committed to paying a modest quarterly dividend. 3 Table of Contents Attracting, retaining, and developing talent is critical to the success and sustainability of the AMETEK Growth Model as our employees are responsible for successfully driving these strategies. 2022 Overview Operating Performance In 2022, the Company posted record sales, operating income, operating margins, net income, diluted earnings per share, backlog, and orders.
AMETEK is also committed to paying a consistently increasing cash dividend. 3 Table of Contents Attracting, retaining, and developing talent is critical to the success and sustainability of the AMETEK Growth Model as our employees are responsible for successfully driving these strategies. 2023 Overview Operating Performance In 2023, the Company posted record sales, operating income, operating margins, net income, diluted earnings per share, orders, backlog, and operating cash flow.
Customers EMG is not dependent on any single customer such that the loss of that customer would have a material adverse effect on EMG’s operations. Approximately 9% of EMG’s 2022 net sales were made to its five largest customers. No single customer comprises greater than 3% of net sales.
Customers EMG is not dependent on any single customer such that the loss of that customer would have a material adverse effect on EMG’s operations. Approximately 8% of EMG’s 2023 net sales were made to its five largest customers. No single customer comprises greater than 2% of net sales.
Since the beginning of 2018 through December 31, 2022, AMETEK has completed 17 acquisitions with annualized sales totaling approximately $1.3 billion. AMETEK targets companies that offer a compelling strategic, technical and cultural fit. It seeks to acquire businesses in adjacent markets with complementary products and technologies.
Since the beginning of 2019 through December 31, 2023, AMETEK has completed 15 acquisitions with annualized sales totaling approximately $1.6 billion. AMETEK targets companies that offer a compelling strategic, technical and cultural fit. It seeks to acquire businesses in adjacent markets with complementary products and technologies.
Products supplied to these markets include advanced precision motion control solutions, which are used in a wide range of automation applications across the medical, semiconductor, aerospace, defense, and food and beverage industries, as well as highly engineered electrical connectors and electronics packaging used in aerospace and defense, medical, and industrial applications.
Products supplied to these markets include single-use and consumable surgical instruments, implantable components, and drug delivery systems used across a wide range of medical applications, advanced precision motion control solutions, which are used in a wide range of automation applications across the medical, semiconductor, aerospace, defense, and food and beverage industries, as well as highly engineered electrical connectors and electronics packaging used in aerospace and defense, medical, and industrial applications.
The Company achieved these results from organic sales growth in both EIG and EMG, contributions from the 2022 acquisitions of Navitar, Inc. and RTDS Technologies, Inc., as well as the Company's Operational Excellence Initiatives. See "Results of Operations" in Part II, Item 7 Management's Discussion and Analysis of Financial Condition and Results of Operations for further details.
The Company achieved these results from organic sales growth, contributions from recent acquisitions, as well as the Company's Operational Excellence initiatives. See "Results of Operations" in Part II, Item 7 Management's Discussion and Analysis of Financial Condition and Results of Operations for further details.
AMETEK senior management has extensive industry experience and an average of approximately 24 years of AMETEK service. The management team is focused on delivering strong, consistent and profitable growth, growing 2 Table of Contents shareholder value, and creating a sustainable future for all stakeholders. Individual performance is tied to financial results through Company-established stock ownership guidelines and equity incentive programs.
The management team is focused on delivering strong, consistent and profitable growth, growing 2 Table of Contents shareholder value, and creating a sustainable future for all stakeholders. Individual performance is tied to financial results through Company-established stock ownership guidelines and equity incentive programs.
The EEO-1 data captures only U.S. employees and does not reflect the broad diversity of our approximately 9,500 international employees. 10 Table of Contents Available Information AMETEK’s annual report on Form 10-K, quarterly reports on Form 10-Q, current reports on Form 8-K and all amendments to those reports filed or furnished pursuant to Section 13(a) of the Securities Exchange Act of 1934 are made available free of charge on the Company’s website at www.ametek.com in the “Investors – Reporting” section as soon as reasonably practicable after such material is electronically filed with, or furnished to, the U.S.
Available Information AMETEK’s annual report on Form 10-K, quarterly reports on Form 10-Q, current reports on Form 8-K and all amendments to those reports filed or furnished pursuant to Section 13(a) of the Securities Exchange Act of 1934 are made available free of charge on the Company’s website at www.ametek.com in the “Investors – Reporting” section as soon as reasonably practicable after such material is electronically filed with, or furnished to, the U.S.
In 2022, 49% of EMG’s net sales were to customers outside the United States. At December 31, 2022, EMG employed approximately 7,500 people, of whom approximately 1,900 were covered by collective bargaining agreements. At December 31, 2022, EMG had operating facilities in the United States, the United Kingdom, China, Germany, France, Italy, Mexico, Serbia, Czechia, Malaysia and Taiwan.
In 2023, 45% of EMG’s net sales were to customers outside the United States. At December 31, 2023, EMG employed approximately 10,000 people, of whom approximately 2,100 were covered by collective bargaining agreements. At December 31, 2023, EMG had operating facilities in the United States, the United Kingdom, China, Germany, France, Italy, Poland, Mexico, Serbia, Czechia, Malaysia, and Taiwan.
We have created a leadership development program for employees on track to become P&L leaders in the company. This focused and intensive program involves both internal and external training on leadership effectiveness as well as specific job-related skills. In addition, participants receive hands-on experience in key AMETEK business system processes such as growth kaizens and acquisition due diligence.
This focused and intensive program involves both internal and external training on leadership effectiveness as well as specific job-related skills. In addition, participants receive hands-on experience in key AMETEK business system processes such as growth kaizens and acquisition due diligence. We have a long-standing commitment to responsible corporate conduct.
AMETEK has consistently added to its investment in research, development and engineering, and improved its new product development efforts with the adoption of Design for Six Sigma and Value Analysis/Value Engineering methodologies. These have improved the pace and quality of product innovation and resulted in the introduction of a steady stream of new products across all of AMETEK’s businesses.
AMETEK has consistently added to its investment in research, development and engineering, and improved its new product development efforts with the adoption of Design for Six Sigma and Value Analysis/Value Engineering methodologies.
Employee feedback is actively encouraged through an open-door policy for all managers, regular town hall/all hands meetings, executive presentations with Q&A sessions, a regular CEO podcast for all employees, and a hotline that can be used to report complaints. Giving back to our community is an important part of our culture.
Each employee is provided with annual performance goals which are reviewed in a performance review with their manager. Employee feedback is actively encouraged through an open-door policy for all managers, regular town hall/all hands meetings, executive presentations with Q&A sessions, a regular CEO podcast for all employees, and a hotline that can be used to report complaints.
AMETEK also is a leading provider of spare part sales, repairs and overhaul services to commercial aerospace. Acquired in October 2022, RTDS is a leading provider of real-time power simulation systems used by utilities, and research and education institutions in the development and testing of the electric power grid and renewable energy applications.
Acquired in October 2022, RTDS is a leading provider of real-time power simulation systems used by utilities, and research and education institutions in the development and testing of the electric power grid and renewable energy applications. RTDS's solutions complement the Company's existing power instruments businesses.
Automation and Engineered Solutions Markets and Products Automation and Engineered Solution sales represented 71% of EMG’s 2022 net sales. These businesses produce precision motion control solutions, brushless motors, blowers and pumps, heat exchangers and other electromechanical systems. These products are used in a wide variety of high-precision automation applications, including semiconductor equipment, and laboratory and medical equipment.
Automation and Engineered Solutions Markets and Products Automation and Engineered Solution sales represented 70% of EMG’s 2023 net sales. These businesses produce precision motion control solutions, brushless motors, blowers and pumps, heat exchangers and other electromechanical systems.
Environmental, Social, and Governance ("ESG") and Human Capital Management Environmental, Social, and Governance AMETEK is committed to providing a consistent and excellent return to our stakeholders, all while maintaining a strong commitment to environmental stewardship, social responsibility, diversity and inclusion, and sound corporate governance.
Sustainability and Human Capital Management Sustainability AMETEK is committed to providing a consistent and excellent return to our stakeholders, all while maintaining a strong commitment to environmental stewardship, social responsibility, inclusion, and sound corporate governance. We believe that effectively prioritizing and managing our sustainability initiatives will help create long-term value and a better future for our stakeholders.
Established in 1960, the AMETEK Foundation is the charitable giving arm of AMETEK, Inc. The Foundation’s mission is to empower AMETEK colleagues making a positive impact in their local communities, with a focus on health and welfare, civic and social service programs, and education.
The Foundation’s mission is to empower AMETEK colleagues making a positive impact in their local communities, with a focus on health and welfare, civic and social service programs, and education. 9 Table of Contents As of December 31, 2023, we have approximately 21,500 employees.
These businesses produce a wide array of instrumentation, systems and sensors for applications in the aerospace, power and industrial markets. These businesses produce power monitoring and metering instruments, uninterruptible power supply systems and programmable power supplies used in a wide range of industrial settings.
These businesses produce power monitoring and metering instruments, uninterruptible power supply systems and programmable power supplies used in a wide range of industrial settings. It is a leader in the design and manufacture of power measurement, quality monitoring and event recorders for use in power generation, transmission and distribution.
EIG supplies the aerospace industry with aircraft and engine sensors, monitoring systems, power supplies, fuel and fluid measurement systems, and data acquisition systems. In 2022, 49% of EIG’s net sales were to customers outside the United States. At December 31, 2022, EIG employed approximately 11,700 people, of whom approximately 800 were covered by collective bargaining agreements.
EIG supplies the aerospace industry with aircraft 4 Table of Contents and engine sensors, monitoring systems, embedded computing systems, power supplies, fuel and fluid measurement systems, and data acquisition systems. In 2023, 48% of EIG’s net sales were to customers outside the United States.
AMETEK is a leader in highly engineered electrical connectors and electronics packaging used to protect sensitive devices and mission-critical electronics. Its electrical connectors, terminals, headers and packaging are designed specifically for harsh environments and highly customized applications.
Its electrical connectors and electronics packaging are designed specifically for harsh environments and highly customized applications, and are used to protect sensitive devices and mission-critical electronics. In addition, AMETEK is an innovator and market leader in specialized metal powder, strip, wire and bonded products used in medical, aerospace and defense, telecommunications, automotive and general industrial applications.
Efficient and Flexible Manufacturing Operations. Through its Operational Excellence initiatives, AMETEK has established a lean and flexible manufacturing platform for its businesses. In its effort to achieve best-cost manufacturing, AMETEK had operating facilities, as of December 31, 2022, in China, Czechia, Malaysia, Mexico, and Serbia. These facilities offer proximity to customers and provide opportunities for increasing international sales.
In its effort to achieve best-cost manufacturing, AMETEK had operating facilities, as of December 31, 2023, in China, Czechia, Malaysia, Mexico, and Serbia. These facilities offer proximity to customers and provide opportunities for increasing international sales. Acquisitions also have allowed AMETEK to achieve operating synergies by consolidating operations, product lines and distribution channels, benefiting both of AMETEK’s operating groups.
At December 31, 2022, EIG had operating facilities in the United States, the United Kingdom, Germany, Canada, China, Denmark, Finland, France, Switzerland, Argentina, Austria and Mexico. EIG also shares operating facilities with EMG in China and Mexico. Process and Analytical Instrumentation Markets and Products Process and analytical instrumentation sales represented 72% of EIG’s 2022 net sales.
At December 31, 2023, EIG employed approximately 11,800 people, of whom approximately 800 were covered by collective bargaining agreements. At December 31, 2023, EIG had operating facilities in the United States, the United Kingdom, Germany, Canada, China, Denmark, Finland, France, Switzerland, Argentina, Austria, Serbia, and Mexico. EIG also shares operating facilities with EMG in China and Mexico.
It is a leader in the design and manufacture of power measurement, quality monitoring and event recorders for use in power generation, transmission and distribution. These businesses provide uninterruptible power supply systems, multifunction electric meters, annunciators, alarm monitoring systems and highly specialized communications equipment for smart grid applications and renewable energy applications.
These businesses provide uninterruptible power supply systems, multifunction electric meters, and highly specialized communications equipment for smart grid applications and renewable energy applications.
We continue to drive towards our goal of zero lost-time work incidents. 2022 was our lowest lost-time incident rate on record. We continue to enhance our safety initiatives as each facility is tasked with identifying opportunities for additional safety measures. Businesses with zero incidents share best practices and ensure ongoing training to maintain their safety excellence.
We continue to enhance our safety initiatives as each facility is tasked with identifying opportunities for additional safety measures. Businesses with zero incidents share best practices and ensure ongoing training to maintain their safety excellence. In addition to our EHS facility audits, our facilities include safety committees, continual training, documented self-audits, and behavior-based safety observations and feedback. Our U.S.
Approximately 6% of EIG’s 2022 net sales were made to its five largest customers. No single customer comprises more than 3% of net sales. EMG EMG is a differentiated supplier of automation solutions, thermal management systems, specialty metals and electrical interconnects. EMG is a leader in many of the niche markets in which it competes.
EMG EMG is a leader in the design and manufacture of highly engineered medical components and devices, automation solutions, thermal management systems, specialty metals and electrical interconnects. EMG is a leader in many of the niche markets in which it competes.
Selected employees participate in short- and long-term incentive programs that align employee and shareholder interests and promote long-term retention. Additionally, we strive to protect health and safety in every aspect of our enterprise – from the way we design, manufacture and deliver our products to the way our customers use them.
Additionally, we strive to protect health and safety in every aspect of our enterprise – from the way we design, manufacture and deliver our products to the way our customers use them. We continue to drive towards our goal of zero lost-time work incidents. In 2023, we achieved a lost-time incident rate that was significantly below the industry average.
Acquisitions also have allowed AMETEK to achieve operating synergies by consolidating operations, product lines and distribution channels, benefiting both of AMETEK’s operating groups. Experienced Management Team . Another component of AMETEK’s success is the strength of its management team and that team’s commitment to improving Company performance.
Experienced Management Team . Another component of AMETEK’s success is the strength of its management team and that team’s commitment to improving Company performance. AMETEK senior management has extensive industry experience and an average of approximately 25 years of AMETEK service.
Our core values — Ethics and Integrity, Respect for the Individual, Diversity and Inclusion, Teamwork, and Social Responsibility — remain the most critical components of our sustainability efforts. Sustainability is an integral aspect of the core values that guide the way we do business . Environmental Stewardship.
Our Sustainability Report highlights our sustainability initiatives and is available on our website at https://www.ametek.com/who-we-are/sustainability. Key elements in the Company’s approach to sustainability include the following: Core Values. Our core values — Ethics and Integrity, Respect for the Individual, Inclusion, Teamwork, and Social Responsibility — remain the most critical components of our sustainability efforts.
Diluted earnings per share for 2022 were a record $5.01, an increase of $0.76 or 17.8%, compared with $4.25 per diluted share in 2021. Recent Acquisitions AMETEK spent $429.7 million in cash, net of cash acquired, to purchase two businesses: In September 2022, AMETEK acquired Navitar, Inc.
In 2023, the Company achieved record sales of $6,597.0 million, an increase of 7.3% from 2022 due to a 4% organic sales increase and a 3% increase from acquisitions. Diluted earnings per share for 2023 were a record $5.67, an increase of $0.66 or 13.2%, compared with $5.01 per diluted share in 2022.
Our executive management team reviews the key talent across our company annually and assesses the adequacy of talent to meet business challenges and future growth needs. A major area of focus is a review of diversity and inclusion improvement efforts.
Our executive management team reviews the key talent across our company and assesses the adequacy of talent to meet business challenges and future growth needs. We have an active Inclusion Council, which drives initiatives focused on mentorship, education and career guidance. We have created a leadership development program for employees on track to become P&L leaders in the company.
Across AMETEK, our businesses are committed to developing innovative products and solutions to help reduce carbon emissions, increase the use and adoption of renewable energy, and address the impacts of climate change . Commitment to Diversity and Inclusion. AMETEK is committed to developing a diverse and inclusive culture to help power innovation, growth and greater opportunities for all employees.
Our people are the most essential resource in driving AMETEK’s long-term success and in achieving our sustainability ambitions. AMETEK is committed to developing an inclusive culture to help power innovation, growth, and greater opportunities for all employees.
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In 2022, the Company achieved record sales of $6,150.5 million, an increase of 10.9% from 2021 due to an 11% organic sales increase, a 2% increase from acquisitions, partially offset by an unfavorable 2% effect of foreign currency translation.
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These have improved the pace and quality of product innovation and resulted in the introduction of a steady stream of new products across all of AMETEK’s businesses and aligned with attractive secular growth markets. Efficient and Flexible Manufacturing Operations. Through its Operational Excellence initiatives, AMETEK has established a lean and flexible manufacturing platform for its businesses.
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("Navitar"), a designer and manufacturer of customized, fully integrated optical imaging systems, components, and software. In October 2022, AMETEK acquired RTDS Technologies ("RTDS"), a leading provider of real-time power simulation systems used by utilities, and research and education institutions in the development and testing of the electric power grid and renewable energy applications.
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Recent Acquisitions AMETEK spent $2,237.9 million in cash, net of cash acquired, to purchase four businesses: In March 2023, AMETEK acquired Bison Gear & Engineering Corp. ("Bison"), a designer and manufacturer of custom motion control solutions. In August 2023, AMETEK acquired United Electronic Industries ("UEI"), a designer and manufacturer of high-performance test, measurement, simulation and control solutions.
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Financing On May 12, 2022, the Company along with certain of its foreign subsidiaries amended and restated its credit agreement dated as of September 22, 2011, as amended and restated as of March 10, 2016 and as further amended and restated as of October 30, 2018, with the lenders, JPMorgan Chase Bank, N.A., as Administrative Agent and Bank of America, N.A., PNC Bank, National Association, Trust Bank and Wells Fargo Bank, National Association, as Co-Syndication Agents.
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In October 2023, AMETEK acquired Amplifier Research Corp. ("Amplifier Research"), a leading provider of amplifiers and electromagnetic compatibility testing equipment. In December 2023, AMETEK acquired Paragon Medical ("Paragon"), a leading provider of highly engineered medical components and instruments.
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The credit agreement amends and restates the Company’s existing revolving credit facility to increase the size from $1.5 billion to $2.3 billion and terminates the $800 million term loan. The credit agreement places certain restrictions on allowable additional indebtedness.
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Process and Analytical Instrumentation Markets and Products Process and analytical instrumentation sales represented 71% of EIG’s 2023 net sales.
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Recent Events and Market Conditions Recent events and market conditions impacting our business include the inflationary cost environment, rising interest rates, supply chain constraints, the COVID-19 pandemic, and the ongoing conflict in Ukraine. As a result of these events and conditions, we anticipate the challenging global economic environment to continue into 2023.
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Navitar's market leading optical components and solutions complement the Company's existing optics portfolio. Aerospace and Power Instrumentation Markets and Products Aerospace and Power Instrumentation sales represented 29% of EIG’s 2023 net sales. These businesses produce a wide array of instrumentation, systems and sensors for applications in the aerospace, power and industrial markets.
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Beginning in 2021, we experienced heightened levels of inflation in material and transportation costs. We have taken steps to mitigate the impacts of material and transportation cost inflation by implementing pricing actions. We experienced additional pressure in our supply chain due to component shortages and strained transportation capacity, as well as the impact of continued elevated customer demand.
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AMETEK also is a leading provider of spare part sales, repairs and overhaul services to commercial aerospace. 5 Table of Contents Acquired in October 2023, Amplifier Research is a leading provider of amplifiers and electromagnetic compatibility testing equipment. Amplifier Research's diverse product portfolio complements the Company's existing capabilities in the electromagnetic compatibility testing market.
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In response to these supply chain pressures, we have taken actions to build inventory and seek alternative sources of supply to support sales and backlog growth. The inflationary environment has also resulted in central banks raising short-term interest rates.
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Acquired in August 2023, UEI is a designer and manufacturer of high-performance test, measurement, simulation and control solutions. UEI's innovative solutions complement the Company's existing testing and data acquisition expertise.
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We expect inflation to continue into 2023 and will continue to take actions to mitigate this inflationary pressure. 4 Table of Contents There still remains uncertainty concerning the COVID-19 pandemic, its effect on labor, government mandated lockdowns and other restrictive measures, and the pandemic's ultimate duration.
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These products are used in a wide variety of high-precision automation applications, including semiconductor equipment, and laboratory and medical equipment. 6 Table of Contents AMETEK is a leader in highly engineered single-use and consumable surgical instruments, implantable components and drug delivery systems.
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Lockdowns in China during 2022 limited our ability to access customer sites, operate certain facilities, and placed additional constraints on our supply chain. Depending on the course of the pandemic, additional lockdowns in China or elsewhere could impact our operations and results of operations.
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Acquired in March 2023, Bison is a designer and manufacturer of custom motion control solutions. Bison's engineering expertise and broad product portfolio complement the Company's existing motion control and automation solutions business. Acquired in December 2023, Paragon is a leading provider of highly engineered medical components and instruments.
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The invasion of Ukraine by Russia and the sanctions imposed in response to this conflict have increased global economic and political uncertainty. While we do not have operations in Russia or Ukraine and do not have significant exposure to customers and vendors in those countries, a significant expansion of the conflict's current scope could further complicate the economic environment.
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Paragon's product portfolio includes single-use and consumable surgical instruments and implantable components sold to a diverse blue-chip customer base of leading medical device manufacturers. Paragon expands the Company's presence in the MedTech space and provides access to new market segments with strong growth rates. Aerospace Markets and Products Aerospace sales represented 30% of EMG’s 2023 net sales.
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While the ultimate impact of these events remains uncertain, we will continue to evaluate the extent to which these factors will impact our business, financial condition, and results of operations.
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Sustainability is an integral aspect of the core values that guide the way we do business . Upholding Sound Governance . Our commitment to transparency, accountability, and ethical and responsible decision-making is demonstrated through our core values, corporate governance structure, compliance measures, and focus on sustainability oversight.
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Navitar's market leading optical components and solutions complement the Company's existing optics portfolio. Acquired in November 2021, Alphasense is a leading provider of gas and particulate sensors for use in environmental, health and safety, and air quality applications. Alphasense complements the Company's existing sensor business expanding the Company's presence in the environmental health and safety market.
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Together, AMETEK’s governance structure underpins our distributed 8 Table of Contents operating structure and provides our colleagues with the foundation to advance sustainability initiatives across their businesses. Protecting Our Environment. Our ongoing commitment to serve as environmental stewards and protect the environment for future generations is reflected in our proactive approach to environmental management and sustainability.
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Acquired in March 2021, Magnetrol is a leading provider of level and flow control solutions for challenging process applications across a diverse set of end markets including medical, pharmaceutical, oil and gas, food and beverage, and general industrial.
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From emissions reduction initiatives to optimizing resource consumption, we emphasize environmental protection in every facet of our operations. We are firmly committed to reducing our carbon footprint and have made outstanding progress toward our stated greenhouse gas emissions reduction target. Investing in Our People.
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Magnetrol's solutions combined with the Company's existing Sensors, Test and Calibration business, becomes an industry leading differentiated sensor platform with a broad range of level and flow measurement solutions. Aerospace and Power Instrumentation Markets and Products Aerospace and Power Instrumentation sales represented 28% of EIG’s 2022 net sales.
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Through strategic investments in talent acquisition, learning and development, and employee well-being, we foster a culture of empowerment, innovation, and inclusivity, driving our collective success and sustainable growth. We are continually expanding our employee development, engagement, and training initiatives to provide meaningful opportunities for personal and professional development. Driving Sustainable Product Solutions. AMETEK is committed to advancing a low-carbon economy.
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RTDS's solutions complement the Company's existing power instruments businesses. Acquired in April 2021, Abaco Systems specializes in open-architecture computing and electronic systems for aerospace, defense, and specialized industrial markets and is a leading provider of mission critical embedded computing systems.
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Our growing portfolio of clean technology and sustainability-related solutions includes a wide range of products and solutions that have a positive, global environmental impact across a broad set of diverse end markets, supporting customers in achieving their sustainability goals and creating a more sustainable future.
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Abaco's solutions expand and complement the Company's existing aerospace and defense businesses. 6 Table of Contents Acquired in April 2021, NSI-MI is a leading provider of radio frequency and microwave test and measurement systems for niche applications across the aerospace, defense, automotive, wireless communications, and research markets. NSI-MI strengthens the Company's test and measurement platforms.
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Through collaborative partnerships with our customers, we develop solutions which help reduce carbon emissions, promote renewable energy adoption, improve efficiency and productivity, and improve healthcare outcomes. Partnering with Our Communities . We cultivate strong and lasting relationships with the communities in which we operate, actively contributing to their social and economic prosperity.
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In addition, AMETEK is an innovator and market leader in specialized metal powder, strip, wire and bonded products used in medical, aerospace and defense, telecommunications, automotive and general industrial applications. 7 Table of Contents Aerospace Markets and Products Aerospace sales represented 29% of EMG’s 2022 net sales.
Added
Our charitable arm, the AMETEK Foundation, provides wide-ranging support to non-profit and educational organizations. Through employee volunteerism, financial support, and contributions from the AMETEK Foundation, we partner to strengthen the work of non-profit charities around the world.
Removed
We believe that effectively prioritizing and managing our ESG initiatives will help create long-term value and a better future for our stakeholders. Our Sustainability Report highlights our sustainability initiatives and is available on our website at www.ametek.com/aboutus/sustainability. The Company's ESG highlights include the following: Core Values.
Added
Giving back to our community is an important part of our culture. Established in 1960, the AMETEK Foundation is the charitable giving arm of AMETEK.
Removed
Our ongoing commitment to serve as environmental stewards and protect the environment for future generations is reflected in our corporate governance and oversight of compliance and risk management. We are reducing our environmental impact and increasing operational efficiency across our global footprint, and have established greenhouse gas emission reduction targets.
Added
Our compensation programs are designed to provide competitive salaries and benefit programs to attract, retain and motivate a world-class workforce. Selected employees participate in short- and long-term incentive programs that align employee and shareholder interests and promote long-term retention.
Removed
Our hiring practices are geared toward identifying the most diverse set of candidates for open positions. Our training and development programs are focused on providing meaningful opportunities for personal and professional development. And our charitable arm, the AMETEK Foundation, provides wide-ranging support to nonprofit and educational organizations in the communities where we operate . 9 Table of Contents Our Solutions.
Added
Federal Employment Information Report (EEO-1) for 2022 is available at www.ametek.com.
… 5 more changes not shown on this page.
Item 1A. Risk Factors
Risk Factors — what could go wrong, per management
28 edited+6 added−22 removed52 unchanged
Item 1A. Risk Factors
Risk Factors — what could go wrong, per management
28 edited+6 added−22 removed52 unchanged
2022 filing
2023 filing
Biggest changeOur quarterly sales and profits depend substantially on the volume and timing of orders received during the fiscal quarter, which are difficult to forecast. Any decline or lower than expected growth in our served markets could diminish demand for our products and services, which would adversely affect our financial statements.
Biggest changeOur growth depends in part on the growth of the markets which we serve. Visibility into the future performance of certain of our markets is limited (particularly for markets into which we sell through distribution). Our quarterly sales and profits depend substantially on the volume and timing of orders received during the fiscal quarter, which are difficult to forecast.
International sales and operations are subject to the customary risks of operating in an international environment, including: • Imposition of trade or foreign exchange restrictions, including in the United States; • Overlap of different tax structures; • Unexpected changes in regulatory requirements, including in the United States; • Trade protection measures, such as the imposition of or increase in tariffs and other trade barriers, including in the United States; • The difficulty and/or costs of designing and implementing an effective control environment across diverse regions and employee bases; • Restrictions on currency repatriation; • General economic conditions; • Unstable political situations and social unrest, both internationally and in the United States; • Increasing trade tensions between the United States and certain countries, including China; • Nationalization of assets; and • Compliance with a wide variety of international and U.S. laws and regulatory requirements.
International sales and operations are subject to the customary risks of operating in an international environment, including: • Imposition of trade or foreign exchange restrictions, including in the United States; • Overlap of different tax structures, including the development of a global minimum tax; • Unexpected changes in regulatory requirements, including in the United States; • Trade protection measures, such as the imposition of or increase in tariffs and other trade barriers, including in the United States; • The difficulty and/or costs of designing and implementing an effective control environment across diverse regions and employee bases; • Restrictions on currency repatriation; • General economic conditions; • Unstable political situations and social unrest, both internationally and in the United States; • Increasing trade tensions between the United States and certain countries, including China; • Nationalization of assets; and • Compliance with a wide variety of international and U.S. laws and regulatory requirements.
We cannot assure you that these indemnification provisions will protect us fully or at all, and as a result we may face unexpected liabilities that adversely affect our financial statements.
We cannot assure you that these indemnification provisions and insurance policies will protect us fully or at all, and as a result we may face unexpected liabilities that adversely affect our financial statements.
Demand for our products and services is also sensitive to changes in customer order patterns, which may be affected by announced price changes, changes in incentive programs, new product introductions and customer inventory levels. Any of these factors could adversely affect our growth and results of operations in any given period.
Demand for our products and services is also sensitive to changes in 10 Table of Contents customer order patterns, which may be affected by announced price changes, changes in incentive programs, new product introductions and customer inventory levels. Any of these factors could adversely affect our growth and results of operations in any given period.
Although we maintain cyber risk insurance, damages and claims arising from such incidents may not be covered or may exceed the amount of any insurance available. Risks Related to Our Acquisitions Our growth strategy includes strategic acquisitions. We may not be able to consummate future acquisitions or successfully integrate recent and future acquisitions.
Although we maintain cyber risk insurance, damages and claims arising from such incidents may not be covered or may exceed the amount of any insurance available. 14 Table of Contents Risks Related to Our Acquisitions Our growth strategy includes strategic acquisitions. We may not be able to consummate future acquisitions or successfully integrate recent and future acquisitions.
Upon the occurrence of an event of default under a Debt Facility, and the expiration of any grace periods, the lenders could elect to declare all amounts outstanding under one or more of our other Debt Facilities, together with accrued interest, to be immediately due and payable.
Upon the occurrence of an event of default under a Debt 16 Table of Contents Facility, and the expiration of any grace periods, the lenders could elect to declare all amounts outstanding under one or more of our other Debt Facilities, together with accrued interest, to be immediately due and payable.
We cannot predict the form any such new laws or regulations will take or the impact any of these laws and regulations will have on our business or operations. We operate in highly competitive industries, which may adversely affect our results of operations or ability to expand our business. Our markets are highly competitive.
We cannot predict the form any such new laws or regulations will take or the impact any of these laws and regulations will have on our business or operations. 13 Table of Contents We operate in highly competitive industries, which may adversely affect our results of operations or ability to expand our business. Our markets are highly competitive.
We rely on information technology systems, some of which are managed by third-parties, to process, transmit and store electronic information (including sensitive data such as confidential business information and personally identifiable data relating to employees, customers, other business partners and patients), and to manage or support a 15 Table of Contents variety of critical business processes and activities (such as receiving and fulfilling orders, billing, collecting and making payments, shipping products, providing services and support to customers and fulfilling contractual obligations).
We rely on information technology systems, some of which are managed by third-parties, to process, transmit and store electronic information (including sensitive data such as confidential business information and personally identifiable data relating to employees, customers, other business partners and patients), and to monitor, manage, and support a variety of critical business processes and activities including receiving and fulfilling orders, billing, collecting and making payments, shipping products, providing services and support to customers and fulfilling contractual obligations.
In addition, failure to comply with any of these regulations could result in civil and criminal, monetary and non-monetary penalties, 13 Table of Contents disruptions to our business, limitations on our ability to import and export products and services and damage to our reputation.
In addition, failure to comply with any of these regulations could result in civil and criminal, monetary and non-monetary penalties, disruptions to our business, limitations on our ability to import and export products and services and damage to our reputation.
These initiatives are often complex, and a failure to implement them properly may, in addition to not meeting projected cost savings or benefits, adversely affect our business and operations. 12 Table of Contents Foreign and domestic economic, political, legal, compliance and business factors could negatively affect our international sales and operations.
These initiatives are often complex, and a failure to implement them properly may, in addition to not meeting projected cost savings or benefits, adversely affect our business and operations. Foreign and domestic economic, political, legal, compliance and business factors could negatively affect our international sales and operations.
We cannot assure you that our liabilities in connection with litigation and other legal and 17 Table of Contents regulatory proceedings will not exceed our estimates or adversely affect our financial statements and reputation.
We cannot assure you that our liabilities in connection with litigation and other legal and regulatory proceedings will not exceed our estimates or adversely affect our financial statements and reputation.
Our businesses, operations and facilities are subject to a number of federal, state, local and foreign environmental and occupational health and safety laws and regulations concerning, among other things, air emissions, discharges to waters and the use, manufacturing, generation, handling, storage, transportation and disposal of hazardous substances and wastes. Environmental risks are inherent in many of our manufacturing operations.
Our businesses, operations and facilities are subject to a number of federal, state, local and foreign environmental and occupational health and safety laws and regulations concerning, among other things, air 15 Table of Contents emissions, discharges to waters and the use, manufacturing, generation, handling, storage, transportation and disposal of hazardous substances and wastes.
International sales for 2022 and 2021 represented 48.7% and 49.5% of our consolidated net sales, respectively. As a result of our growth strategy, we anticipate that the percentage of sales outside the United States will increase in the future.
International sales for 2023 and 2022 represented 47.4% and 48.7% of our consolidated net sales, respectively. As a result of our growth strategy, we anticipate that the percentage of sales outside the United States will increase in the future.
Certain laws provide that a current or previous owner or operator of property may be liable for the costs of investigating, removing and remediating hazardous materials at such property, regardless of whether the owner or operator knew of, or was responsible for, the presence of such hazardous materials.
Environmental risks are inherent in many of our manufacturing operations. Certain laws provide that a current or previous owner or operator of property may be liable for the costs of investigating, removing and remediating hazardous materials at such property, regardless of whether the owner or operator knew of, or was responsible for, the presence of such hazardous materials.
At December 31, 2022, goodwill and other intangible assets, net of accumulated amortization, totaled $8,714.6 million or 70% of our total assets. The goodwill results from our acquisitions, representing the excess of cost over the estimated fair value of the net tangible and other identifiable intangible assets we have acquired.
At December 31, 2023, goodwill and other intangible assets, net of accumulated amortization, totaled $10,612.9 million or 71% of our total assets. The goodwill results from our acquisitions, representing the excess of cost over the estimated fair value of the net tangible and other identifiable intangible assets we have acquired.
As of December 31, 2022, we have manufacturing operations in 18 countries outside the United States, with significant operations in China, Czechia, Germany, Mexico, Serbia and the United Kingdom.
As of December 31, 2023, we have manufacturing operations in 20 countries outside the United States, with significant operations in Canada, China, France, Germany, Mexico, Serbia, Poland and the United Kingdom.
A downturn in the U.S. or global economy, and, in particular, in the aerospace and defense, oil and gas, process instrumentation or power markets could have an adverse effect on our business, financial condition and results of operations.
A number of the industries in which we operate are cyclical in nature and therefore are affected by factors beyond our control. A downturn in the U.S. or global economy, and, in particular, in the aerospace and defense, oil and gas, process instrumentation or power markets could have an adverse effect on our business, financial condition and results of operations.
We are not currently aware of any emerging standards or new products which could render our existing products obsolete, although there can be no assurance that this will not occur or that we will be able to develop and successfully market new products.
We are not currently aware of any emerging standards or new products which could render our existing products obsolete, although there can be no assurance that this will not occur or that we will be able to develop and successfully market new products. 12 Table of Contents Our technology is important to our success and our failure to protect this technology could put us at a competitive disadvantage.
While we manufacture certain parts and components used in our products, we require substantial amounts of raw materials and purchase some parts and components, including semiconductor chips and other electronic components, from suppliers.
A disruption in, shortage of, or price increases for, supply of our components and raw materials may adversely impact our operations. While we manufacture certain parts and components used in our products, we require substantial amounts of raw materials and purchase some parts and components, including semiconductor chips and other electronic components, from suppliers.
Further, given a significant subset of our employees have transitioned to working from home, disaster recovery may take longer to complete. Attacks may also target hardware, software and information installed, stored or transmitted in our products after such products have been purchased and incorporated into third-party products, facilities or infrastructure.
Attacks may also target hardware, software and information installed, stored or transmitted in our products after such products have been purchased and incorporated into third-party products, facilities or infrastructure.
These systems, products and services may be damaged, disrupted or shut down due to attacks by computer hackers, computer viruses, ransomware, human error or malfeasance, power outages, hardware failures, telecommunication or utility failures, catastrophes or other unforeseen events. In any such circumstances our system redundancy and other disaster recovery planning may be ineffective or inadequate.
Despite our implementation of certain controls to protect our systems and sensitive, confidential or personal data or information, these systems, products, data and services may be damaged, compromised, disrupted or shut down due to attacks by computer hackers, computer viruses, ransomware, human error or malfeasance, power outages, hardware failures, telecommunication or utility failures, catastrophes or other unforeseen events.
For example, increased strength in the U.S. dollar will increase the effective price of our products sold overseas, which may adversely affect sales or require us to lower our prices. In addition, our consolidated financial statements are presented in U.S. dollars, and we must translate our assets, liabilities, sales and expenses into U.S. dollars for external reporting purposes.
For example, increased strength in the U.S. dollar will increase the effective price of our 11 Table of Contents products sold overseas, which may adversely affect sales or require us to lower our prices.
Certain of the acquisition agreements by which we have acquired companies require the former owners to indemnify us against certain liabilities related to the operation of the company before we acquired it. In most of these agreements, however, the liability of the former owners is limited, and certain former owners may be unable to meet their indemnification responsibilities.
The indemnification provisions of acquisition agreements by which we have acquired companies may not fully protect us and as a result we may face unexpected liabilities. Certain of the acquisition agreements by which we have acquired companies require the former owners to indemnify us against certain liabilities related to the operation of the company before we acquired it.
Our technology is important to our success and our failure to protect this technology could put us at a competitive disadvantage. Many of our products rely on proprietary technology; therefore, we endeavor to protect our intellectual property rights through patents, copyrights, trade secrets, trademarks, confidentiality agreements and other contractual provisions.
Many of our products rely on proprietary technology; therefore, we endeavor to protect our intellectual property rights through patents, copyrights, trade secrets, trademarks, confidentiality agreements and other contractual provisions. Despite our efforts to protect proprietary rights, unauthorized parties or competitors may copy or otherwise obtain and use our products or technology.
A number of our businesses operate in industries that may experience periodic, cyclical downturns. In addition, in certain of our businesses, demand depends on customers’ capital spending budgets, as well as government funding policies. Matters of public policy and government budget dynamics, as well as product and economic cycles, can affect the spending decisions of these customers.
Any decline or lower than expected growth in our served markets could diminish demand for our products and services, which would adversely affect our financial statements. A number of our businesses operate in industries that may experience periodic, cyclical downturns. In addition, in certain of our businesses, demand depends on customers’ capital spending budgets, as well as government funding policies.
Failure to continue with our acquisition strategy and the successful integration of acquired businesses could have an adverse effect on our business, financial condition, results of operations and cash flows. 16 Table of Contents The indemnification provisions of acquisition agreements by which we have acquired companies may not fully protect us and as a result we may face unexpected liabilities.
Furthermore, even if successfully integrated, the acquired business may not achieve the results we expected or produce expected benefits in the time frame planned. Failure to continue with our acquisition strategy and the successful integration of acquired businesses could have an adverse effect on our business, financial condition, results of operations and cash flows.
Our growth could suffer if the markets into which we sell our products and services decline, do not grow as anticipated or experience cyclicality. Our growth depends in part on the growth of the markets which we serve. Visibility into the future performance of certain of our markets is limited (particularly for markets into which we sell through distribution).
Risks Related to Our Operations Our growth could suffer if the markets into which we sell our products and services decline, do not grow as anticipated, experience cyclicality, or a general downturn in the economy could adversely affect our business.
Actions to enforce our rights may result in substantial costs and diversion of resources and we make no assurances that any such actions will be successful. 14 Table of Contents A disruption in, shortage of, or price increases for, supply of our components and raw materials may adversely impact our operations.
In addition, our ability to protect and enforce our intellectual property rights may be limited in certain countries outside the U.S. Actions to enforce our rights may result in substantial costs and diversion of resources and we make no assurances that any such actions will be successful.
Removed
Risks Related to Our Operations The coronavirus global pandemic could have a material adverse effect on our ability to operate, results of operations, financial condition, liquidity and ability to consummate future acquisitions. We continue to address the impact of the COVID-19 pandemic.
Added
Matters of public policy and government budget dynamics, as well as product and economic cycles, can affect the spending decisions of these customers.
Removed
The outbreak of COVID-19, and any other significant outbreak of epidemic, pandemic or contagious disease, could have a negative effect on our ability to operate, results of operations, financial condition, liquidity and ability to consummate future acquisitions.
Added
In addition, our consolidated financial statements are presented in U.S. dollars, and we must translate our assets, liabilities, sales and expenses into U.S. dollars for external reporting purposes.
Removed
In addition, the outbreak of COVID-19 has resulted in a widespread health crisis that is adversely affecting the economies and financial markets of many countries and the end markets for many of our products, which could result in an economic downturn that may negatively affect demand for our products.
Added
In any such circumstances our system redundancy and other disaster recovery planning may be ineffective or inadequate. Further, we also face information security risks due to our reliance on internet technology and use of hybrid work arrangements, which could strain our technology resources or create additional opportunity for cyber-attackers to exploit vulnerabilities.
Removed
The extent to which COVID-19 will impact our business, results of operations and financial condition is highly uncertain and will depend on future developments.
Added
Further, given the increasing sophistication of cyber-attacks and the complexity of techniques used, any of these attacks or breaches could potentially persist for an extended period before being detected.
Removed
Such developments may include the geographic spread and duration of the virus, the severity of the disease and the actions that may be taken by various governmental authorities and other third parties in response to the outbreak.
Added
As a result, it could take a significant time before an investigation can be completed and new disclosure regulations could result in us being required to disclose information about a material cybersecurity incident before it has been mitigated or resolved, or even fully investigated.
Removed
Our global manufacturing facilities remain open with a focus on safety protocols, though a range of external factors related to the pandemic that are not within our control have restricted our ability to keep our manufacturing facilities fully operational.
Added
In most of these agreements, however, the liability of the former owners is limited, and certain former owners may be unable to meet their indemnification responsibilities. We may also obtain representation and warranty insurance to address certain potential risks and liabilities.
Removed
Any decline or lower than expected demand in our served markets could diminish demand for our products and services, which would adversely affect our financial condition and results of operations.
Removed
Moreover, the COVID-19 pandemic may adversely affect the financial condition of our customers and suppliers in the future or their ability to purchase Company products, may delay customers’ purchasing decisions, result in a shift to lower-priced products or away from discretionary products, and may result in longer payment terms or inability to collect customer payments.
Removed
These issues may also materially affect our future access to our sources of liquidity, particularly our cash flows from operations, financial condition and ability to consummate future acquisitions. In compliance with stay-at-home orders issued in connection with the COVID-19 pandemic, a significant subset of our employees have transitioned to working from home.
Removed
As a result, more of our employees are working from locations where our cybersecurity program may be less effective and IT security may be less robust.
Removed
This change may create increased vulnerability to cybersecurity incidents, including breaches of information systems 11 Table of Contents security, which could result in a disruption of our operations, customer dissatisfaction, damage to our reputation and a loss of customers or revenues.
Removed
If significant portions of our workforce are unable to work effectively, including because of illness, quarantines or absenteeism; government actions; facility closures; work slowdowns or stoppages; limited supplies or resources; or other circumstances related to COVID-19, our operations will be further impacted.
Removed
We may be unable to perform fully on our customer obligations and we may incur liabilities and suffer losses as a result. The continued spread of COVID-19 may also affect our ability to hire, develop and retain our talented and diverse workforce, and our ability in short periods to fully maintain and support our corporate culture.
Removed
A scarcity of resources or other hardships caused by the COVID-19 pandemic may result in increased nationalism, protectionism and political tensions which may cause governments and/or other entities to take actions that may have significant negative impact on the Company, its suppliers, and its customers to conduct business in the future.
Removed
Risks related to consumers and businesses lowering or changing spending, which impact domestic and cross-border spend, are described in our risk factor titled “Foreign and domestic economic, political, legal, compliance and business factors could negatively affect our international sales and operations”.
Removed
The duration and intensity of the impact of the COVID-19 pandemic and the resulting disruption to our operations is uncertain but could have a material impact on our operations, cash flows, financial condition and ability to consummate future acquisitions. We will continue to assess the financial impact of the pandemic on our business.
Removed
A downturn in the economy generally or in the markets we serve could adversely affect our business. A number of the industries in which we operate are cyclical in nature and therefore are affected by factors beyond our control.
Removed
Despite our efforts to protect proprietary rights, unauthorized parties or competitors may copy or otherwise obtain and use our products or technology. In addition, our ability to protect and enforce our intellectual property rights may be limited in certain countries outside the U.S.
Removed
For example, we are subject to federal, state and international privacy laws relating to the collection, use, retention, security and transfer of personally identifiable information.
Removed
In many cases, these laws apply not only to third-party transactions, but also to transfers of information between the Company and its subsidiaries, and among the Company, its subsidiaries and other parties with which the Company has commercial relations. Several jurisdictions have passed laws in this area, and other jurisdictions are considering imposing additional restrictions.
Removed
Furthermore, even if successfully integrated, the acquired business may not achieve the results we expected or produce expected benefits in the time frame planned.
Removed
For the year ended December 31, 2022, the Company recorded an $8.6 million non-cash impairment charge related to certain of the Company's trade names.
Item 2. Properties
Properties — owned and leased real estate
2 edited+0 added−0 removed0 unchanged
Item 2. Properties
Properties — owned and leased real estate
2 edited+0 added−0 removed0 unchanged
2022 filing
2023 filing
Biggest changeThe Company believes that all facilities have been adequately maintained, are in good operating condition, and are suitable for our current needs. 18 Table of Contents
Biggest changeThe Company believes that all facilities have been adequately maintained, are in good operating condition, and are suitable for our current needs.
Item 2. Properties At December 31, 2022, the Company conducted business from office and operating facilities at owned and leased locations throughout the United States and select global markets. The Company’s leases a facility in Berwyn, Pennsylvania for its corporate headquarters.
Item 2. Properties At December 31, 2023, the Company conducted business from office and operating facilities at owned and leased locations throughout the United States and select global markets. The Company leases a facility in Berwyn, Pennsylvania for its corporate headquarters.
Item 3. Legal Proceedings
Legal Proceedings — active lawsuits and investigations
1 edited+0 added−0 removed2 unchanged
Item 3. Legal Proceedings
Legal Proceedings — active lawsuits and investigations
1 edited+0 added−0 removed2 unchanged
2022 filing
2023 filing
Biggest changeBased upon the Company’s experience, the Company does not believe that these proceedings and claims will have a material adverse effect on its results of operations, financial position or cash flows. Item 4. Mine Safety Disclosures Not Applicable. 19 Table of Contents PART II
Biggest changeBased upon the Company’s experience, the Company does not believe that these proceedings and claims will have a material adverse effect on its results of operations, financial position or cash flows. Item 4. Mine Safety Disclosures Not Applicable. 18 Table of Contents PART II
Item 5. Market for Registrant's Common Equity
Market for Common Equity — stock, dividends, buybacks
6 edited+1 added−0 removed2 unchanged
Item 5. Market for Registrant's Common Equity
Market for Common Equity — stock, dividends, buybacks
6 edited+1 added−0 removed2 unchanged
2022 filing
2023 filing
Biggest changeUnder its share repurchase program, the Company repurchased approximately 2,673,000 shares of its common stock for $332.8 million in 2022 and approximately 113,000 shares of its common stock for $14.7 million in 2021.
Biggest changeUnder its share repurchase program, the Company repurchased approximately 55,800 shares of its common stock for $7.8 million in 2023 and approximately 2,673,000 shares of its common stock for $332.8 million in 2022. The objective and rationale of the share repurchases is to enhance shareholder value through the opportunistic repurchases of the Company’s common stock.
Item 5. Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities The principal market on which the Company’s common stock is traded is the New York Stock Exchange and it is traded under the symbol “AME.” On January 31, 2023, there were approximately 1,700 holders of record of the Company’s common stock.
Item 5. Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities The principal market on which the Company’s common stock is traded is the New York Stock Exchange and it is traded under the symbol “AME.” On January 31, 2024, there were approximately 1,700 holders of record of the Company’s common stock.
AMETEK’s stock price is a component of both indices. The performance graph and table assume a $100 investment made on December 31, 2017 and reinvestment of all dividends. The stock performance shown on the graph below is based on historical data and is not necessarily indicative of future stock price performance.
AMETEK’s stock price is a component of both indices. The performance graph and table assume a $100 investment made on December 31, 2018 and reinvestment of all dividends. The stock performance shown on the graph below is based on historical data and is not necessarily indicative of future stock price performance.
Such purchases may be effected from time to time in the open market or in private transactions, subject to market conditions and at management’s discretion. 20 Table of Contents Securities Authorized for Issuance Under Equity Compensation Plan Information The following table sets forth information as of December 31, 2022 regarding all of the Company’s existing compensation plans pursuant to which equity securities are authorized for issuance to employees and non-employee directors: Plan category Number of securities to be issued upon exercise of outstanding options, warrants and rights (a) Weighted average exercise price of outstanding options, warrants and rights (b) Number of securities remaining available for future issuance under equity compensation plans (excluding securities reflected in column (a)) (c) Equity compensation plans approved by security holders 3,059,845 $ 79.46 6,118,226 Equity compensation plans not approved by security holders — — — Total 3,059,845 $ 79.46 6,118,226 21 Table of Contents Stock Performance Graph The following graph and accompanying table compare the cumulative total stockholder return for AMETEK over the last five years ended December 31, 2022 with total returns for the same period for the Standard and Poor’s (“S&P”) 500 Index and S&P Industrials.
Such purchases may be effected from time to time in the open market or in private transactions, subject to market conditions and at management’s discretion. 19 Table of Contents Securities Authorized for Issuance Under Equity Compensation Plan Information The following table sets forth information as of December 31, 2023 regarding all of the Company’s existing compensation plans pursuant to which equity securities are authorized for issuance to employees and non-employee directors: Plan category Number of securities to be issued upon exercise of outstanding options, warrants and rights (a) Weighted average exercise price of outstanding options, warrants and rights (b) Number of securities remaining available for future issuance under equity compensation plans (excluding securities reflected in column (a)) (c) Equity compensation plans approved by security holders 2,741,164 $ 101.20 5,526,792 Equity compensation plans not approved by security holders — — — Total 2,741,164 $ 101.20 5,526,792 20 Table of Contents Stock Performance Graph The following graph and accompanying table compare the cumulative total stockholder return for AMETEK over the last five years ended December 31, 2023 with total returns for the same period for the Standard and Poor’s (“S&P”) 500 Index and S&P 500 Industrials.
Issuer Purchases of Equity Securities The following table reflects purchases of AMETEK, Inc. common stock by the Company during the three months ended December 31, 2022: Period Total Number of Shares Purchased (1)(2) Average Price Paid per Share Total Number of Shares Purchased as Part of Publicly Announced Plan (2) Approximate Dollar Value of Shares that May Yet Be Purchased Under the Plan October 1, 2022 to October 31, 2022 43 $ 120.45 43 $ 825,294,533 November 1, 2022 to November 30, 2022 10,202 136.39 10,202 823,903,036 December 1, 2022 to December 31, 2022 — — — 823,903,036 Total 10,245 $ 136.33 10,245 _____________________ (1) Represents shares surrendered to the Company to satisfy tax withholding obligations in connection with employees’ share-based compensation awards.
Issuer Purchases of Equity Securities The following table reflects purchases of AMETEK, Inc. common stock by the Company during the three months ended December 31, 2023: Period Total Number of Shares Purchased (1)(2) Average Price Paid per Share Total Number of Shares Purchased as Part of Publicly Announced Plan (2) Approximate Dollar Value of Shares that May Yet Be Purchased Under the Plan October 1, 2023 to October 31, 2023 — $ — — $ 817,325,034 November 1, 2023 to November 30, 2023 8,323 143.46 8,323 816,130,993 December 1, 2023 to December 31, 2023 — — — 816,130,993 Total 8,323 $ 143.46 8,323 _____________________ (1) Represents shares surrendered to the Company to satisfy tax withholding obligations in connection with employees’ share-based compensation awards.
COMPARISON OF FIVE-YEAR CUMULATIVE TOTAL RETURN December 31, 2017 2018 2019 2020 2021 2022 AMETEK, Inc. $ 100.00 $ 94.11 $ 139.53 $ 170.55 $ 208.62 $ 199.60 S&P 500 Index 100.00 95.62 125.72 148.85 191.58 156.89 S&P Industrials 100.00 86.71 112.17 124.59 150.89 142.63 Item 6. Reserved 22 Table of Contents
COMPARISON OF FIVE-YEAR CUMULATIVE TOTAL RETURN December 31, 2018 2019 2020 2021 2022 2023 AMETEK, Inc. $ 100.00 $ 148.26 $ 181.23 $ 221.68 $ 212.10 $ 251.99 S&P 500 Index 100.00 131.49 155.68 200.37 164.08 207.21 S&P 500 Industrials 100.00 129.37 143.68 174.02 164.49 194.31 Item 6. Reserved 21 Table of Contents
Added
The Company takes a balanced approach when determining how to deploy capital, including strategic acquisitions, dividends, and share repurchases. The factors evaluated when considering how to deploy capital include: the Company’s share price, the Company’s cash balances, balance sheet flexibility, business prospects, the leverage of the Company, and other investment opportunities.
Item 7. Management's Discussion & Analysis
Management's Discussion & Analysis (MD&A) — revenue / margin commentary
58 edited+10 added−21 removed39 unchanged
Item 7. Management's Discussion & Analysis
Management's Discussion & Analysis (MD&A) — revenue / margin commentary
58 edited+10 added−21 removed39 unchanged
2022 filing
2023 filing
Biggest changeThe increase in net sales for 2022 was due to an 11% organic sales increase, a 2% increase from acquisitions, partially offset by an unfavorable 2% effect of foreign currency translation. • Net income for 2022 was a record $1,159.5 million, an increase of $169.4 million or 17.1%, compared with $990.1 million in 2021. • Diluted earnings per share for 2022 were a record $5.01, an increase of $0.76 or 17.8%, compared with $4.25 per diluted share in 2021. • Orders for 2022 were a record $6,639.1 million, an increase of $164.7 million or 2.5%, compared with $6,474.4 million in 2021.
Biggest changeNet income for 2023 was $1,313.2 million, an increase of $153.7 million or 13.3%, compared with $1,159.5 million in 2022. Diluted earnings per share for 2023 were $5.67, an increase of $0.66 or 13.2%, compared with $5.01 per diluted share in 2022.
Leases expire over a range of years from 2023 to 2032. Most of the leases contain renewal or purchase options, subject to various terms and conditions. See Note 14 to the Consolidated Financial Statements included in Part II, Item 8 of this Annual Report on Form 10-K for more information on the nature and timing of lease obligations.
Leases expire over a range of years from 2024 to 2032. Most of the leases contain renewal or purchase options, subject to various terms and conditions. See Note 14 to the Consolidated Financial Statements included in Part II, Item 8 of this Annual Report on Form 10-K for more information on the nature and timing of lease obligations.
Based on experience with these arrangements, the Company believes that any obligations that may arise will not be material to its financial position. 28 Table of Contents Non-GAAP Financial Measures EBITDA represents earnings before interest, income taxes, depreciation and amortization.
Based on experience with these arrangements, the Company believes that any obligations that may arise will not be material to its financial position. 26 Table of Contents Non-GAAP Financial Measures EBITDA represents earnings before interest, income taxes, depreciation and amortization.
In 2022, approximately 64% of capital expenditures were for improvements to existing equipment or additional equipment to increase productivity and expand capacity. Capital expenditures in 2023 are expected to be approximately 2% of net sales, with a continued emphasis on spending to improve productivity.
In 2023, approximately 64% of capital expenditures were for improvements to existing equipment or additional equipment to increase productivity and expand capacity. Capital expenditures in 2024 are expected to be approximately 2% of net sales, with a continued emphasis on spending to improve productivity.
The Company undertakes no obligation to publicly update any forward-looking statements, whether as a result of new information, subsequent events or otherwise, unless required by the securities laws to do so. 32 Table of Contents
The Company undertakes no obligation to 30 Table of Contents publicly update any forward-looking statements, whether as a result of new information, subsequent events or otherwise, unless required by the securities laws to do so.
When testing goodwill for impairment, the Company has the option to first assess qualitative factors to determine whether the existence of events or circumstances leads to a determination that it is more likely than not that the estimated fair value of a reporting unit is less than its carrying amount.
When testing goodwill for impairment, the Company has the option to first assess qualitative factors to determine whether the existence of events or circumstances leads to a determination that it is more likely 28 Table of Contents than not that the estimated fair value of a reporting unit is less than its carrying amount.
A discussion regarding our financial condition and results of operations for the year ended December 31, 2021 compared to the year ended December 31, 2020 can be found under Item 7 in our Annual Report on Form 10-K for the fiscal year ended December 31, 2021, filed with the Securities and Exchange Commission on February 22, 2022.
A discussion regarding our financial condition and results of operations for the year ended December 31, 2022 compared to the year ended December 31, 2021 can be found under Item 7 in our Annual Report on Form 10-K for the fiscal year ended December 31, 2022, filed with the Securities and Exchange Commission on February 21, 2023.
These amounts included research and development expenses of $198.8 million, $194.2 million and $158.9 million in 2022, 2021, and 2020, respectively. All such expenditures were directed toward the development of new products and solutions and the improvement of existing products and solutions.
These amounts included research and development expenses of $220.8 million, $198.8 million and $194.2 million in 2023, 2022, and 2021, respectively. All such expenditures were directed toward the development of new products and solutions and the improvement of existing products and solutions.
Research, Development and Engineering The Company is committed to, and has consistently invested in, research, development and engineering activities to design and develop new and improved products and solutions. Research, development and engineering costs before customer reimbursement were $322.1 million in 2022, $299.6 million in 2021 and $246.2 million in 2020.
Research, Development and Engineering The Company is committed to, and has consistently invested in, research, development and engineering activities to design and develop new and improved products and solutions. Research, development and engineering costs before customer reimbursement were $351.7 million in 2023, $322.1 million in 2022 and $299.6 million in 2021.
GAAP to free cash flow: Year Ended December 31, 2022 2021 2020 (In millions) Cash provided by operating activities $ 1,149.4 $ 1,160.5 $ 1,281.0 Deduct: Capital expenditures (139.0) (110.7) (74.2) Free cash flow $ 1,010.4 $ 1,049.8 $ 1,206.8 Net debt represents total debt, net minus cash and cash equivalents.
GAAP to free cash flow: Year Ended December 31, 2023 2022 2021 (In millions) Cash provided by operating activities $ 1,735.3 $ 1,149.4 $ 1,160.5 Deduct: Capital expenditures (136.2) (139.0) (110.7) Free cash flow $ 1,599.1 $ 1,010.4 $ 1,049.8 Net debt represents total debt, net minus cash and cash equivalents.
Subsequent Event Effective February 9, 2023, the Company’s Board of Directors approved a 14% increase in the quarterly cash dividend on the Company’s common stock to $0.25 per common share from $0.22 per common share.
Subsequent Event Effective February 9, 2024, the Company’s Board of Directors approved a 12% increase in the quarterly cash dividend on the Company’s common stock to $0.28 per common share from $0.25 per common share.
As a result of all of the Company’s cash flow activities in 2022, cash and cash equivalents at December 31, 2022 totaled $345.4 million, compared with $346.8 million at December 31, 2021. At December 31, 2022, the Company had $334.1 million in cash outside the United States, compared with $344.0 million at December 31, 2021.
As a result of all of the Company’s cash flow activities in 2023, cash and cash equivalents at December 31, 2023 totaled $409.8 million, compared with $345.4 million at December 31, 2022. At December 31, 2023, the Company had $375.9 million in cash outside the United States, compared with $344.0 million at December 31, 2022.
The following table presents the reconciliation of net income reported in accordance with U.S. generally accepted accounting principles (“GAAP”) to EBITDA: Year Ended December 31, 2022 2021 2020 (In millions) Net income $ 1,159.5 $ 990.1 $ 872.4 Add (deduct): Interest expense 83.2 80.4 86.1 Interest income (1.7) (1.4) (2.1) Income taxes 269.2 233.1 209.9 Depreciation 113.7 108.5 101.3 Amortization 205.8 183.6 154.0 Total adjustments 670.2 604.2 549.2 EBITDA $ 1,829.7 $ 1,594.3 $ 1,421.6 Free cash flow represents cash flow from operating activities less capital expenditures.
The following table presents the reconciliation of net income reported in accordance with U.S. generally accepted accounting principles (“GAAP”) to EBITDA: Year Ended December 31, 2023 2022 2021 (In millions) Net income $ 1,313.2 $ 1,159.5 $ 990.1 Add (deduct): Interest expense 81.8 83.2 80.4 Interest income (11.1) (1.7) (1.4) Income taxes 293.2 269.2 233.1 Depreciation 122.5 113.7 108.5 Amortization 215.1 205.8 183.6 Total adjustments 701.5 670.2 604.2 EBITDA $ 2,014.7 $ 1,829.7 $ 1,594.3 Free cash flow represents cash flow from operating activities less capital expenditures.
On February 9, 2022, the Company’s Board of Directors approved a 10% increase in the quarterly cash dividend on the Company’s common stock to $0.22 per common share from $0.20 per common share. Proceeds from the exercise of employee stock options were $49.9 million in 2022, compared with $60.3 million in 2021.
Effective February 9, 2023, the Company’s Board of Directors approved a 14% increase in the quarterly cash dividend on the Company’s common stock to $0.25 per common share from $0.22 per common share. Proceeds from the exercise of employee stock options were $50.9 million in 2023, compared with $49.9 million in 2022.
The Company has standby letters of credit and surety bonds of $64.9 million related to performance and payment guarantees at December 31, 2022.
The Company has standby letters of credit and surety bonds of $193.6 million related to performance and payment guarantees at December 31, 2023.
This authorization replaces an earlier $500 million share repurchase authorization approved by the Board in February 2019. At December 31, 2022, $823.9 million was available under the Company’s Board of Directors authorization for future share repurchases. 27 Table of Contents Additional financing activities for 2022 included cash dividends paid of $202.2 million, compared with $184.6 million in 2021.
This authorization replaces an earlier $500 million share repurchase authorization approved by the Board in February 2019. At December 31, 2023, $816.1 million was available under the Company’s Board of Directors authorization for future share repurchases. Additional financing activities for 2023 included cash dividends paid of $230.3 million, compared with $202.2 million in 2022.
Cash used by investing activities totaled $552.8 million in 2022, compared with cash used by investing activities of $2,055.8 million in 2021.
Cash used by investing activities totaled $2,376.4 million in 2023, compared with cash used by investing activities of $552.8 million in 2022.
GAAP to net debt: December 31, 2022 2021 (In millions) Total debt, net $ 2,385.0 $ 2,544.2 Less: Cash and cash equivalents (345.4) (346.8) Net debt 2,039.6 2,197.4 Stockholders’ equity 7,476.5 6,871.9 Capitalization (net debt plus stockholders’ equity) $ 9,516.1 $ 9,069.3 Net debt as a percentage of capitalization 21.4 % 24.2 % 29 Table of Contents Internal Reinvestment Capital Expenditures Capital expenditures were $139.0 million or 2.3% of net sales in 2022, compared with $110.7 million or 2.0% of net sales in 2021.
GAAP to net debt: December 31, 2023 2022 (In millions) Total debt, net $ 3,313.3 $ 2,385.0 Less: Cash and cash equivalents (409.8) (345.4) Net debt 2,903.5 2,039.6 Stockholders’ equity 8,730.2 7,476.5 Capitalization (net debt plus stockholders’ equity) $ 11,633.7 $ 9,516.1 Net debt as a percentage of capitalization 25.0 % 21.4 % 27 Table of Contents Internal Reinvestment Capital Expenditures Capital expenditures were $136.2 million or 2.1% of net sales in 2023, compared with $139.0 million or 2.3% of net sales in 2022.
Certain impairment models have discount rates calculated based on a debt/equity cost of capital. While the Company uses the best available information to prepare its cash flow and discount rate assumptions, actual future cash flows or market conditions could differ significantly resulting in future impairment charges related to recorded intangible balances.
While the Company uses the best available information to prepare its cash flow and discount rate assumptions, actual future cash flows or market conditions could differ significantly resulting in future impairment charges related to recorded intangible balances.
Purchase obligations primarily consist of contractual commitments to purchase certain inventories at fixed prices. At December 31, 2022, the Company had $1,003.9 million of purchase obligations due within one year and $115.8 million of purchase obligations due in more than one year.
Purchase obligations primarily consist of contractual commitments to purchase certain inventories at fixed prices. At December 31, 2023, the Company had $723.6 million of purchase obligations due within one year and $66.4 million of purchase obligations due in more than one year.
In estimating the U.S. and foreign discount rates, the Company’s actuaries developed a customized discount 31 Table of Contents rate appropriate to the plans’ projected benefit cash flow based on yields derived from a database of long-term bonds at consistent maturity dates.
In estimating the U.S. and foreign discount rates, the Company’s actuaries developed a customized discount rate appropriate to the plans’ projected benefit cash flow based on yields derived from a database of long-term bonds at consistent maturity dates. The Company determines the expected long-term rate of return based primarily on its expectation of future returns for the pension plans’ investments.
The Company can elect to perform a qualitative analysis to determine if it is more likely than not that the fair values of its indefinite-lived intangible assets are less than the respective carrying values of those assets. The Company elected to perform its annual goodwill impairment test using the quantitative analysis method.
The Company can elect to perform a qualitative analysis to determine if it is more likely than not that the fair values of its indefinite-lived intangible assets are less than the respective carrying values of those assets. The Company elected to bypass performing the qualitative screen. The Company may elect to perform the qualitative analysis in future periods.
(See "Non-GAAP Financial Measures" for a reconciliation of U.S. GAAP measures to comparable non-GAAP measures). In 2022, the Company repurchased approximately 2.7 million shares of its common stock for $332.8 million, compared with $14.7 million used for repurchases of approximately 113,000 shares in 2021. Effective May 5, 2022, the Company's Board of Directors approved a $1 billion share repurchase authorization.
In 2023, the Company repurchased approximately 0.1 million shares of its common stock for $7.8 million, compared with $332.8 million used for repurchases of approximately 2.7 million shares in 2022. Effective May 5, 2022, the Company's Board of Directors approved a $1 billion share repurchase authorization.
The Company completed its required annual indefinite-lived intangibles impairment tests in the fourth quarter of 2022 and determined that the carrying values of certain of the Company’s indefinite-lived intangibles were impaired as a result of higher discount rates driven by higher interest rates.
The Company completed its required annual indefinite-lived intangibles impairment tests in the fourth quarter of 2023 and determined that the carrying values of certain of the Company’s indefinite-lived intangibles were impaired primarily as a result of higher discount rates associated with higher interest rates, as well as decreased forecasted sales growth of specific product lines.
Results of Operations for the year ended December 31, 2022 compared with the year ended December 31, 2021 Net sales for 2022 were a record $6,150.5 million, an increase of $604.0 million or 10.9%, compared with net sales of $5,546.5 million in 2021.
Results of Operations for the year ended December 31, 2023 compared with the year ended December 31, 2022 Net sales for 2023 were $6,597.0 million, an increase of $446.5 million or 7.3%, compared with net sales of $6,150.5 million in 2022.
The cost of sales increase was primarily due to the net sales increase discussed above. Selling, general and administrative expenses for 2022 were $644.6 million or 10.5% of net sales, an increase of $40.7 million or 6.7%, compared with $603.9 million or 10.9% of net sales in 2021.
Selling, general and administrative expenses for 2023 were $677.0 million or 10.3% of net sales, an increase of $32.4 million or 5.0%, compared with $644.6 million or 10.5% of net sales in 2022. Selling expenses increased primarily due to the increase in net sales discussed above.
Free cash flow and EBITDA are presented because the Company is aware that they are measures used by third parties in evaluating the Company. (See "Non-GAAP Financial Measures" for a reconciliation of U.S. GAAP measures to comparable non-GAAP measures).
EBITDA (earnings before interest, income taxes, depreciation and amortization) was $2,014.7 million in 2023, compared with $1,829.7 million in 2022. Free cash flow and EBITDA are presented because the Company is aware that they are measures used by third parties in evaluating the Company. (See "Non-GAAP Financial Measures" for a reconciliation of U.S. GAAP measures to comparable non-GAAP measures).
In conducting a qualitative assessment, the 30 Table of Contents Company analyzes actual and forecasted net sales and selling profit for each reporting unit, as well as historical performance and the results of prior quantitative tests performed.
If the Company performs a qualitative assessment and determines that an impairment is more likely than not, then performance of a quantitative impairment test is required. In conducting a qualitative assessment, the Company analyzes actual and forecasted net sales and selling profit for each reporting unit, as well as historical performance and the results of prior quantitative tests performed.
In estimating this rate for 2022, the Company considered rates of return on high-quality, fixed-income investments that have maturities consistent with the anticipated funding requirements of the plan.
At the end of each 29 Table of Contents year, the Company determines the assumed discount rate to be used to discount plan liabilities. In estimating this rate for 2023, the Company considered rates of return on high-quality, fixed-income investments that have maturities consistent with the anticipated funding requirements of the plan.
The process of providing for income taxes and determining the related balance sheet accounts requires management to assess uncertainties, make judgments regarding outcomes and utilize estimates.
Additionally, the Company considers historical returns on comparable fixed-income and equity investments and adjusts its estimate as deemed appropriate. • Income Taxes. The process of providing for income taxes and determining the related balance sheet accounts requires management to assess uncertainties, make judgments regarding outcomes and utilize estimates.
The net debt-to-capital ratio (total debt, net less cash and cash equivalents divided by the sum of net debt and stockholders’ equity) was 21.4% at December 31, 2022, compared with 24.2% at December 31, 2021. The net debt-to-capital ratio is presented because the Company is aware that this measure is used by third parties in evaluating the Company.
The debt-to-capital ratio was 27.5% at December 31, 2023, compared with 24.2% at December 31, 2022. The net debt-to-capital ratio (total debt, net less cash and cash equivalents divided by the sum of net debt and stockholders’ equity) was 25.0% at December 31, 2023, compared with 21.4% at December 31, 2022.
The Company may elect to perform the quantitative analysis in future periods. The Company estimates the fair value of its indefinite-lived intangibles using the relief from royalty method using level 3 inputs, which is a widely used valuation technique for such assets.
The Company estimates the fair value of its indefinite-lived intangibles using the relief from royalty method using level 3 inputs, which is a widely used valuation technique for such assets. The fair value derived from the relief from royalty method is determined by applying a royalty rate to a projection of net revenues discounted using an appropriate discount rate.
These estimates are based on historical experience and information obtained from the management of the acquired companies and are inherently uncertain. • Goodwill and Other Intangible Assets. Goodwill and other intangible assets with indefinite lives, primarily trademarks and trade names, are not amortized; rather, they are tested for impairment at least annually.
Goodwill and other intangible assets with indefinite lives, primarily trademarks and trade names, are not amortized; rather, they are tested for impairment at least annually.
While the ultimate impact of these events remains uncertain, we will continue to evaluate the extent to which these factors will impact our business, financial condition, and results of operations. 24 Table of Contents Results of Operations The following table sets forth net sales and income by reportable segment and on a consolidated basis: Year Ended December 31, 2022 2021 2020 (In thousands) Net sales: Electronic Instruments $ 4,229,353 $ 3,763,758 $ 2,989,928 Electromechanical 1,921,177 1,782,756 1,550,101 Consolidated net sales $ 6,150,530 $ 5,546,514 $ 4,540,029 Operating income and income before income taxes: Segment operating income: Electronic Instruments $ 1,089,729 $ 958,183 $ 770,620 Electromechanical 503,593 437,378 324,962 Total segment operating income 1,593,322 1,395,561 1,095,582 Corporate administrative expenses (92,630) (86,891) (67,698) Consolidated operating income 1,500,692 1,308,670 1,027,884 Interest expense (83,186) (80,381) (86,062) Other (expense) income, net 11,186 (5,119) 140,487 Consolidated income before income taxes $ 1,428,692 $ 1,223,170 $ 1,082,309 ______________________ The following “Results of Operations of the year ended December 31, 2022 compared with the year ended December 31, 2021” section presents an analysis of the Company’s consolidated operating results displayed in the Consolidated Statement of Income.
Results of Operations The following table sets forth net sales and income by reportable segment and on a consolidated basis: Year Ended December 31, 2023 2022 2021 (In thousands) Net sales: Electronic Instruments $ 4,624,250 $ 4,229,353 $ 3,763,758 Electromechanical 1,972,700 1,921,177 1,782,756 Consolidated net sales $ 6,596,950 $ 6,150,530 $ 5,546,514 Operating income and income before income taxes: Segment operating income: Electronic Instruments $ 1,310,962 $ 1,089,729 $ 958,183 Electromechanical 496,569 503,593 437,378 Total segment operating income 1,807,531 1,593,322 1,395,561 Corporate administrative expenses (100,072) (92,630) (86,891) Consolidated operating income 1,707,459 1,500,692 1,308,670 Interest expense (81,795) (83,186) (80,381) Other (expense) income, net (19,252) 11,186 (5,119) Consolidated income before income taxes $ 1,606,412 $ 1,428,692 $ 1,223,170 ______________________ The following “Results of Operations of the year ended December 31, 2023 compared with the year ended December 31, 2022” section presents an analysis of the Company’s consolidated operating results displayed in the Consolidated Statement of Income.
At December 31, 2022, the Company had available borrowing capacity of $2,745.2 million under its revolving credit facility and term loan, including the $700 million accordion feature.
In 2023, total borrowings increased by $892.3 million, compared with a decrease of $73.7 million in 2022. At December 31, 2023, the Company had available borrowing capacity of $1,829.3 million under its revolving credit facility and term loan, including the $700 million accordion feature.
Third party appraisal firms and other consultants are engaged to assist management in determining the fair values of certain assets acquired and liabilities assumed. Estimating fair values requires significant judgments, estimates and assumptions, including but not limited to: discount rates, future cash flows and the economic lives of trade names, technology, and customer relationships.
Estimating fair values requires significant judgments, estimates and assumptions, including but not limited to: discount rates, future cash flows and the economic lives of trade names, technology, and customer relationships. These estimates are based on historical experience and information obtained from the management of the acquired companies and are inherently uncertain. • Goodwill and Other Intangible Assets.
Orders for 2022 were a record $6,639.1 million, an increase of $164.7 million or 2.5% compared with $6,474.4 million in 2021. The increase in orders was due to a 9% organic order increase, partially offset by a 3% unfavorable effect of foreign currency translation, as well as a 3% decrease from the year-over-year impact of acquisitions.
The increase in orders was due to a 7% increase from acquisitions, a 1% favorable effect of foreign currency translation, partially offset by an organic order decrease. The Company’s backlog of unfilled orders at December 31, 2023 was a record $3,534.1 million, an increase of $315.5 million or 9.8%, compared with $3,218.6 million at December 31, 2022.
Cash used by financing activities totaled $575.7 million in 2022, compared with $39.3 million of cash provided by financing activities in 2021. At December 31, 2022, total debt, net was $2,385.0 million, compared with $2,544.2 million at December 31, 2021. In 2022, total borrowings decreased by $73.7 million, compared with an increase of $183.9 million in 2021.
Additions to property, plant and equipment totaled $136.2 million in 2023, compared with $139.0 million in 2022. Cash provided by financing activities totaled $697.3 million in 2023, compared with $575.7 million of cash used by financing activities in 2022. At December 31, 2023, total debt, net was $3,313.3 million, compared with $2,385.0 million at December 31, 2022.
The net sales increase was due to an 11% organic sales increase, a 4% increase from acquisitions, partially offset by an unfavorable 3% effect of foreign currency translation. EIG’s operating income was a record $1,089.7 million for 2022, an increase of $131.5 million or 13.7%, compared with $958.2 million in 2021.
The net sales increase was due to a 5% increase from acquisitions, partially offset by an organic sales decrease. EMG’s operating income was $496.6 million for 2023, a decrease of $7.0 million or 1.4%, compared with $503.6 million in 2022. EMG’s operating margins were 25.2% of net sales for 2023, compared with 26.2% of net sales in 2022.
The increase in net sales for 2022 was due to an 11% organic sales increase, a 2% increase from acquisitions, partially offset by an unfavorable 2% effect of foreign currency translation. EIG net sales were $4,229.4 million in 2022, an increase of 12.4%, compared with $3,763.8 million in 2021.
The increase in net sales for 2023 was due to a 4% organic sales increase and a 3% increase from acquisitions. EIG net sales were $4,624.3 million in 2023, an increase of 9.3%, compared with $4,229.4 million in 2022. EMG net sales were $1,972.7 million in 2023, an increase of 2.7%, compared with $1,921.2 million in 2022.
Other income, net was $11.2 million for 2022, compared with $5.1 million of other expense in 2021, a change of $16.3 million. During 2022, the Company recorded higher pension income of $9.9 million and lower acquisition-related due diligence expense compared to 2021. The effective tax rate for 2022 was 18.8%, compared with 19.1% in 2021.
During 2023, the Company recorded lower pension income of $21.1 million and higher acquisition-related due diligence expense compared to 2022. The effective tax rate for 2023 was 18.3%, compared with 18.8% in 2022. See Note 9 to the Consolidated Financial Statements included in Part II, Item 8 of this Annual Report on Form 10-K for further details.
The increase in international sales was primarily driven by strong demand in all regions as well as contributions from recent acquisitions. Export shipments from the United States, which are included in total international sales, were $1,688.7 million in 2022, an increase of $213.1 million or 14.4%, compared with $1,475.6 million in 2021.
Export shipments from the United States, which are included in total international sales, were $1,732.4 million in 2023, an increase of $43.7 million or 2.6%, compared with $1,688.7 million in 2022. Orders for 2023 were $6,912.4 million, an increase of $273.3 million or 4.1% compared with $6,639.1 million in 2022.
The fair value derived from the relief from royalty method is determined by applying a royalty rate to a projection of net revenues discounted using an appropriate discount rate. Each royalty rate is determined based on the profitability of the trade name to which it relates and observed market royalty rates.
Each royalty rate is determined based on the profitability of the trade name to which it relates and observed market royalty rates. Certain impairment models have discount rates calculated based on a debt/equity cost of capital.
There can be no assurance that goodwill or indefinite-lived intangibles impairment will not occur in the future. • Pensions. The Company has U.S. and foreign defined benefit and defined contribution pension plans. The most significant elements in determining the Company’s pension income or expense are the assumed pension liability discount rate and the expected return on plan assets.
As a result, in the fourth quarter of 2023, the Company recorded an immaterial non-cash impairment charge related to certain of the Company's trade names. There can be no assurance that goodwill or indefinite-lived intangibles impairment will not occur in the future. • Pensions. The Company has U.S. and foreign defined benefit and defined contribution pension plans.
In 2022, the Company posted record sales, operating income, operating margins, net income, diluted earnings per share, backlog, and orders. The Company also benefited from its strategic initiatives under AMETEK's four key strategies: Operational Excellence, Strategic Acquisitions, Global & Market Expansion and New Products.
The Company also benefited from its strategic initiatives under AMETEK's four key strategies: Operational Excellence, Strategic Acquisitions, Global & Market Expansion and New Products. Highlights in 2023 were: • Net sales for 2023 were a record $6,597.0 million, an increase of $446.5 million or 7.3%, compared with net sales of $6,150.5 million in 2022.
Free cash flow (cash flow provided by operating activities less capital expenditures) was $1,010.4 million in 2022. 23 Table of Contents • EBITDA (earnings before interest, income taxes, depreciation, and amortization) was a record $1,829.7 million in 2022, compared with $1,594.3 million in 2021. • The Company continued its emphasis on investment in research, development and engineering, spending $322.1 million in 2022.
("Amplifier Research"), a leading provider of amplifiers and electromagnetic compatibility testing equipment. 22 Table of Contents • In December 2023, AMETEK acquired Paragon Medical ("Paragon"), a leading provider of highly engineered medical components and instruments. • EBITDA (earnings before interest, income taxes, depreciation, and amortization) was a record $2,014.7 million in 2023, compared with $1,829.7 million in 2022. • The Company continued its emphasis on investment in research, development and engineering, spending $351.7 million in 2023.
Excluding the gain on the sale of a facility, EMG operating margins increased 130 basis points compared to 26 Table of Contents 2021, due to the increase in net sales discussed above, as well as continued benefits from the Company's Operational Excellence initiatives.
EIG's operating margins increased in 2023 compared to 2022 due to the sales increase discussed above, as well as continued benefits from the Company's Operational Excellence initiatives. 24 Table of Contents EMG’s net sales totaled $1,972.7 million for 2023, an increase of $51.5 million or 2.7%, compared with $1,921.2 million in 2022.
Excluding the dilutive impact of recent acquisitions, segment operating margins for the core businesses increased 120 basis points compared to 2021, due to the Company's Operational Excellence initiatives. Cost of sales for 2022 was $4,005.3 million or 65.1% of net sales, an increase of $371.4 million or 10.2%, compared with $3,633.9 million or 65.5% of net sales for 2021.
Cost of sales for 2023 was $4,212.5 million or 63.9% of net sales, an increase of $207.2 million or 5.2%, compared with $4,005.3 million or 65.1% of net sales for 2022. The cost of sales increase was primarily due to the net sales increase discussed above.
Liquidity and Capital Resources Cash provided by operating activities totaled $1,149.4 million in 2022, a decrease of $11.1 million or 1.0%, compared with $1,160.5 million in 2021.
Excluding the dilutive impact of the 2023 acquisitions and the gain on the sale of a facility, EMG operating margins increased 70 basis points compared to 2022. Liquidity and Capital Resources Cash provided by operating activities totaled $1,735.3 million in 2023, an increase of $585.9 million or 51.0%, compared with cash provided by operating activities of $1,149.4 million in 2022.
Segment operating income was positively impacted in 2022 by the increased sales discussed above. Segment operating income, as a percentage of net sales, increased to 25.9% in 2022, compared with 25.2% in 2021. Segment operating margins for 2022 were negatively impacted by the dilutive impact of the 2021 acquisitions.
Segment operating income for 2023 was $1,807.5 million, an increase of $214.2 million or 13.4%, compared with segment operating income of $1,593.3 million in 2022. Segment operating income, as a percentage of net sales, increased to 27.4% in 2023, compared with 25.9% in 2022.
Diluted earnings per share for 2022 were a record $5.01, an increase of $0.76 or 17.8%, compared with $4.25 per diluted share in 2021. Segment Results EIG’s net sales totaled a record $4,229.4 million for 2022, an increase of $465.6 million or 12.4%, compared with $3,763.8 million in 2021.
Segment Results EIG’s net sales totaled $4,624.3 million for 2023, an increase of $394.9 million or 9.3%, compared with $4,229.4 million in 2022. The net sales increase was due to a 6% organic sales increase and a 3% increase from acquisitions.
Free cash flow (cash flow provided by operating activities less capital expenditures) was $1,010.4 million in 2022, compared with $1,049.8 million in 2021. EBITDA (earnings before interest, income taxes, depreciation and amortization) was a record $1,829.7 million in 2022, compared with $1,594.3 million in 2021.
The increase in cash provided by operating activities for 2023 was primarily due to improved working capital management and higher net income. Free cash flow (cash flow provided by operating activities less capital expenditures) was $1,599.1 million in 2023, compared with $1,010.4 million in 2022.
The pension discount rate reflects the current interest rate at which the pension liabilities could be settled at the valuation date. At the end of each year, the Company determines the assumed discount rate to be used to discount plan liabilities.
The most significant elements in determining the Company’s pension income or expense are the assumed pension liability discount rate and the expected return on plan assets. The pension discount rate reflects the current interest rate at which the pension liabilities could be settled at the valuation date.
At December 31, 2022, goodwill and other indefinite-lived intangible assets totaled $6,262.2 million or 50.4% of the Company’s total assets.
At December 31, 2023, goodwill and other indefinite-lived intangible assets totaled $7,471.4 million or 49.7% of the Company’s total assets. The Company completed its required annual qualitative goodwill impairment test in the fourth quarter of 2023 and determined that the carrying values of the Company’s goodwill was not impaired.
EMG’s operating income was a record $503.6 million for 2022, an increase of $66.2 million or 15.1%, compared with $437.4 million in 2021. EMG's operating income included a $7.1 million gain on the sale of a facility during 2022. EMG’s operating margins were a record 26.2% of net sales for 2022, compared with 24.5% of net sales in 2021.
Consolidated operating income was $1,707.5 million or 25.9% of net sales for 2023, an increase of $206.8 million or 13.8%, compared with $1,500.7 million or 24.4% of net sales in 2022. Other expense, net was $19.3 million for 2023, compared with $11.2 million of other income in 2022, a change of $30.5 million.
EMG net sales were $1,921.2 million in 2022, an increase of 7.8%, compared with $1,782.8 million in 2021. Total international sales for 2022 were $2,996.3 million or 48.7% of net sales, an increase of $250.7 million or 9.1%, compared with international sales of $2,745.6 million or 49.5% of net sales in 2021.
EIG’s operating income was $1,311.0 million for 2023, an increase of $221.3 million or 20.3%, compared with $1,089.7 million in 2022. EIG’s operating margins were 28.3% of net sales for 2023, compared with 25.8% of net sales in 2022.
In 2022, the Company paid $429.7 million, net of cash acquired, to purchase Navitar, Inc. and RTDS Technologies Inc., compared to $1,959.2 million, net of cash acquired, to purchase Abaco Systems, Magnetrol International, NSI-MI Technologies, Crank Software, EGS Automation, and Alphasense in 2021. Additions to property, plant and equipment totaled $139.0 million in 2022, compared with $110.7 million in 2021.
In 2023, the Company paid $2,237.9 million, net of cash acquired, to purchase Bison Gear & Engineering Corp., United Electronic Industries, Amplifier Research Corp. and Paragon Medical, compared to $429.7 million, net of cash acquired, to purchase Navitar, Inc. and RTDS Technologies Inc. in 2022.
Excluding the dilutive impact of the 2021 acquisitions, EIG operating margins increased 100 basis points compared to 2021, due to the increase in net sales discussed above, as well as continued benefits from the Company's Operational Excellence initiatives.
Segment operating income and operating margins were positively impacted by the increase in sales discussed above, which was primarily driven by our higher margin businesses, as well as continued benefits from the Company's Operational Excellence initiatives.
Removed
Highlights in 2022 were: • Net sales for 2022 were a record $6,150.5 million, an increase of $604.0 million or 10.9%, compared with net sales of $5,546.5 million in 2021.
Added
In 2023, the Company posted record sales, operating income, operating margins, net income, diluted earnings per share, orders, backlog, and operating cash flow. Positive market trends, the Company's record backlog, contributions from recent acquisitions, and continued focus on and implementation of Operational Excellence initiatives had a positive impact on 2023 results.
Removed
The increase in orders was due to a 9% organic order increase, partially offset by a 3% unfavorable effect of foreign currency translation, as well as a 3% decrease from the year-over-year impact of acquisitions.
Added
The increase in net sales for 2023 was due to a 4% organic sales increase and a 3% increase from acquisitions. • Net income for 2023 was a record $1,313.2 million, an increase of $153.7 million or 13.3%, compared with $1,159.5 million in 2022. • Diluted earnings per share for 2023 were a record $5.67, an increase of $0.66 or 13.2%, compared with $5.01 per diluted share in 2022. • Cash provided by operating activities totaled a record $1,735.3 million in 2023, an increase of $585.9 million or 51.0%, compared with cash provided by operating activities of $1,149.4 million in 2022. • The Company's backlog of unfilled orders at December 31, 2023 was a record $3,534.1 million. • During 2023, the Company spent $2,237.9 million in cash, net of cash acquired, to purchase four businesses: • In March 2023, AMETEK acquired Bison Gear & Engineering Corp.
Removed
As a result, the Company's backlog of unfilled orders at December 31, 2022 was a record $3,218.6 million. • During 2022, the Company spent $429.7 million in cash, net of cash acquired, to purchase two businesses: • In September 2022, AMETEK acquired Navitar, Inc.
Added
("Bison"), a designer and manufacturer of custom motion control solutions. • In August 2023, AMETEK acquired United Electronic Industries ("UEI"), a designer and manufacturer of high-performance test, measurement, simulation and control solutions. • In October 2023, AMETEK acquired Amplifier Research Corp.
Removed
("Navitar"), a designer and manufacturer of customized, fully integrated optical imaging systems, components, and software. • In October 2022, AMETEK acquired RTDS Technologies Inc.
Added
Approximately 25% of sales in 2023 were from products introduced in the past three years.
Removed
("RTDS"), a leading provider of real-time power simulation systems used by utilities, and research and education institutions in the development and testing of the electric power grid and renewable energy applications. • Cash flow provided by operating activities for 2022 was $1,149.4 million.
Added
Total international sales for 2023 were $3,128.2 million or 47.4% of net sales, an increase of $131.9 million or 4.4%, compared with international sales of $2,996.3 million or 48.7% of net sales in 2022. The increase in 23 Table of Contents international sales was primarily driven by strong demand in Europe and Asia as well as contributions from recent acquisitions.
Removed
Sales from products introduced in the past three years were $1,674.2 million. Recent Events and Market Conditions Recent events and market conditions impacting our business include the inflationary cost environment, rising interest rates, supply chain constraints, the COVID-19 pandemic, and the ongoing conflict in Ukraine.
Added
General and administrative expenses for 2023 were $100.1 million, compared with $92.6 million in 2022. The general and administrative expenses in 2023 include higher employee compensation costs compared to 2022.
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As a result of these events and conditions, we anticipate the challenging global economic environment to continue into 2023. Beginning in 2021, we experienced heightened levels of inflation in material and transportation costs. We have taken steps to mitigate the impacts of material and transportation cost inflation by implementing pricing actions.
Added
EMG's operating margins were negatively impacted by the dilutive impact of the 2023 acquisitions. In 2022, EMG's operating income included a $7.1 million gain on the sale of a facility, which increased EMG operating margins by 40 basis points.
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We experienced additional pressure in our supply chain due to component shortages and strained transportation capacity, as well as the impact of continued elevated customer demand. In response to these supply chain pressures, we have taken actions to build inventory and seek alternative sources of supply to support sales and backlog growth.
Added
At December 31, 2023, the Company had $1,116.0 million outstanding on the revolver with a maturity date of May 2027. The amount outstanding under the revolver that the Company expects, but is not required, to repay in 2024 is recorded in current liabilities on the consolidated balance sheet at December 31, 2023.
Removed
The inflationary environment has also resulted in central banks raising short-term interest rates. We expect inflation to continue into 2023 and will continue to take actions to mitigate this inflationary pressure. There still remains uncertainty concerning the COVID-19 pandemic, its effect on labor, government mandated lockdowns and other restrictive measures, and the pandemic's ultimate duration.
Added
The net debt-to-capital ratio is presented because the Company is aware that this measure is used by third parties in evaluating the 25 Table of Contents Company. (See "Non-GAAP Financial Measures" for a reconciliation of U.S. GAAP measures to comparable non-GAAP measures).
Removed
Lockdowns in China during 2022 limited our ability to access customer sites, operate certain facilities, and placed additional constraints on our supply chain. Depending on the course of the pandemic, additional lockdowns in China or elsewhere could impact our operations and results of operations.
Added
Third party appraisal firms and other consultants are engaged to assist management in determining the fair values of certain assets acquired and liabilities assumed. In the absence of a third party appraisal, the Company uses internal valuation estimates based on pertinent data from comparable prior acquisitions .
Removed
The invasion of Ukraine by Russia and the sanctions imposed in response to this conflict have increased global economic and political uncertainty. While we do not have operations in Russia or Ukraine and do not have significant exposure to customers and vendors in those countries, a significant expansion of the conflict's current scope could further complicate the economic environment.
Removed
The Company’s backlog of unfilled orders at December 31, 2022 was a record $3,218.6 million, an increase of $488.5 million or 17.9%, compared with $2,730.1 million at December 31, 2021. 25 Table of Contents Segment operating income for 2022 was $1,593.3 million, an increase of $197.7 million or 14.2%, compared with segment operating income of $1,395.6 million in 2021.
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Item 7A. Quantitative and Qualitative Disclosures About Market Risk
Market Risk — interest-rate, FX, commodity exposure
1 edited+0 added−0 removed7 unchanged
Item 7A. Quantitative and Qualitative Disclosures About Market Risk
Market Risk — interest-rate, FX, commodity exposure
1 edited+0 added−0 removed7 unchanged
2022 filing
2023 filing
Biggest changeBased on a hypothetical ten percent adverse movement in interest rates, commodity prices or foreign currency exchange rates, the Company’s best estimate is that the potential losses in future earnings, fair value of risk-sensitive financial instruments and cash flows are not material, although the actual effects may differ materially from the hypothetical analysis. 33 Table of Contents
Biggest changeBased on a hypothetical ten percent adverse movement in interest rates, commodity prices or foreign currency exchange rates, the Company’s best estimate is that the potential losses in future earnings, fair value of risk-sensitive financial instruments and cash flows are not material, although the actual effects may differ materially from the hypothetical analysis. 31 Table of Contents