阿美特克 (AME) 2006 Q2 法說會逐字稿

Good day, everyone, and welcome to the AMETEK Inc. second quarter earnings release conference call.

As a reminder today's call is being recorded.

For opening remarks and introductions, I would like to turn the call over to Mr. Bill Burke, Vice President of Investor Relations.

Please go ahead, sir.

Thank you, Christina.

Good morning and welcome to AMETEK's second quarter earnings conference call.

Joining me this morning are Frank Hermance, Chairman and Chief Executive Officer, and John Molinelli, Executive Vice President and Chief Financial Officer.

AMETEK's second quarter results were released before the market opened today and have been distributed to everyone on our list.

These results are also available electronically on your market systems and on our website at AMETEK.com/investors.

A tape of today's conference call may be accessed until August 2 by calling 888-203-1112 and entering the confirmation code number 492 6961.

This conference call is also webcasted.

It can be accessed at AMETEK.com and at streetevents.com.

The conference call will be archived on both of these websites.

I will remind you that any statements made by AMETEK during the call that are not historical in nature are to be considered forward-looking statements.

As such, the statements are subject to change based on various factors and uncertainties that may cause actual results to differ significantly from expectations.

Those factors are contained in our SEC filings.

I'll also refer you to the Investor Section of AMETEK.com for a reconciliation of any non-GAAP financial measures used during this call.

We will begin today with some prepared remarks and then we will take your questions.

I'll now turn the meeting over to Frank.

Thank you, Bill.

AMETEK had a tremendous second quarter establishing records for sales, operating income, net income and diluted earnings per share.

Sales were up 28% to $450.6 million on strong internal growth of 7% and the contributions from acquired businesses.

Operating income was up 33%, driven by the top-line growth and operational improvements, resulting in an 80 basis point improvement in operating income margin.

Net income of $46.5 million was up 36% and diluted earnings per share of $0.65 were up 33%.

Cash flow from operations was $63 million, up 39% from last year's second quarter level of $45.4 million.

Overall, we are very, very pleased with these results.

Our markets are strong and our businesses are performing well.

Our disciplined acquisition strategy is working and our operational excellence initiatives continue to drive profitability.

Turning our attention to the individual operating groups, the Electronic Instruments Group had great quarter with sales up 28% to $244 million, strong interval growth of 8% driven by our process power and aerospace businesses, together with the contributions from the acquisitions of SPECTRO, Solartron and Pulsar Technologies drove the top-line increase.

EIG's operating income was up 27% for the quarter to $50.4 million.

Operating margins were 20.7% unchanged from the second quarter of last year.

The Electromechanical Group also had great quarter with revenues up 29% to $206.6 million.

EMG's internal growth was 6%, driven by strong performances in its differentiated businesses.

HCC Industries and ten engineering acquisitions contributed to the revenue growth.

Operating income for the quarter was up 35% and operating margins expanded 80 basis points to 17.8%.

In the Homeland Security market we announced earlier this week that we were not selected as a vendor for the Advanced Spectroscopic Portal Monitor contract.

We were very disappointed by this decision and we have contacted DHS to understand the logic behind their procurement decision and hope to have a debriefing with them shortly.

We will continue to pursue other global opportunities for both portal and handheld radiation detectors.

Acquisitions have been a key part of the AMETEK success story. 2006 is shaping up to be another great year with three transactions already completed, including two in the second quarter.

These three businesses have combined annual revenue of nearly $110 million.

This year's activity builds on a terrific year we had in 2005 when we acquired approximately $260 million in annualized revenue.

The three acquisitions we have completed this year are Land Instruments, PennEngineering Motion Technologies and Pulsar Technologies.

Land Instruments, a U.K. based supplier of high-end analytic instrumentation, with approximately $41 million in annual revenue was acquired in June.

Land Instruments offers a full range of online optical temperature measurement instrumentation for industrial applications.

These instruments which measure temperatures up to 3000 degrees Celsius are widely used by the metal, glass and mineral processing industries.

The addition of Land's high temperature monitoring instrumentation expands AMETEK online process monitoring capabilities, adding to our existing strengths in online composition and moisture analysis.

In addition, Land Instruments' combustion efficiency and environmental monitoring products, widely used in the power and process industries, nicely complement our existing Thermox productline.

With this acquisition our high-end analytic instrument business now totals of nearly $500 million in annual sales.

In May, we acquired PennEngineering Motion Technologies.

PennEngineering is a leading producer of highly engineered motors for niche applications in the data storage medical electronic equipment and factory automation markets.

It is an excellent strategic fit with our highly differentiated Rotron Technical Motor business.

They share common markets, customers, distribution channels, and motor platforms.

PennEngineering has revenues of approximately $55 million.

And in February we acquired Pulsar Technologies.

Pulsar with $10 million in revenue is a niche-focused business that provides specialized communications equipment to the electric power industry.

Pulsar is a great complement to our existing power instruments business which provides power quality monitoring and metering instrumentation.

I think it is important to note that the pipeline of acquisition candidates remain full, and we expect to have another great year in the acquisitions environment.

Turning now to our outlook for 2006, we expect 2006 revenue to grow by approximately 20% on strong internal growth and the contributions from acquired companies.

Given our strong second quarter results and the expectation of continued strength in our markets, we anticipate our full- year 2006 earnings to be in the range of $2.42 to $2.46 per diluted share, an increase of 25% to 27% over our 2005 earnings of $1.94 per diluted share.

This guidance is in line with the increased guidance we gave on July 17th.

For the third quarter sales are expected to be up approximately 25% from last year's third quarter.

Earnings are expected to be approximately $0.59 to $0.61 per diluted share, an increase of 20% to 24% over last year's third quarter of $0.49 per diluted share.

A key distinguishing factor for AMETEK is our long cycle businesses.

Our long cycle businesses, Aerospace and Power, represent 30% of our volume but a higher percentage of our profits.

They will be showing accelerated growth in the second half of the year and will continue to have strong results for an extended period of time beyond the peak in general industrial markets.

So in summary for the quarter we are delighted with our performance.

A solid internal growth on the contributions from acquired businesses enabled us to grow top line by 28%.

We have been able to translate the top-line growth in the bottom line performance driving margin expansion and strong net income earnings per share and cash flow growth.

Essentially, all the financial metrics look good.

So 2006 is shaping up to be another great year, strong internal growth, continued focus on operational excellence and our ability to make additional acquisitions make me very optimistic for the balance of the year.

We look forward to building on a track record of success during 2006 and remain confident that our four grow strategies will continue to create value for our shareholders.

John will now cover some of the financial details and then we would be delighted to take your questions.

Thank you, Frank.

As Frank has covered our financial results at a high-level, I will provide some additional details.

First, on an overall note as of January 1st, 2006, AMETEK adopted financial accounting standard 123 (R) to expense stock options using the modified retrospective method.

That means all relevant 2005, as well as 2006 numbers, are presented in accordance with this accounting standard.

Turning to the P&L, corporate [GNA] expenses were $8.1 million in the quarter representing 1.7% of sales, down from 2.2% of sales in last year's second quarter.

Year-over-year corporate expenses are up 5% on higher equity compensation costs and other costs to grow the business.

Selling expenses were up 35% in the second quarter.

Excluding acquisitions, selling expense increased 6% in line with our core growth rate.

The acquired businesses tend to have a higher selling expenses as a percentage of sales than the base AMETEK businesses due to their differentiated nature.

The tax rate for the second quarter was 31.9% down from last year's rate of 33.4% due to benefits from tax planning initiatives.

We expect our 2006 tax rate to be about 32%, plus or minus half a percent.

I want to emphasize that this is a full-year tax rate and as we saw in 2005, actual quarterly rates can differ significantly either higher or lower than the 2006 average rate as certain tax events are realized in a given quarter.

On the balance sheet, AMETEK's working capital performance continues to be very good.

Our operating working capital defined as inventories, plus receivables, less payables enter the quarter at approximately 20.7% of the second quarter sales annualized, in line with the first quarter of 2006.

We have a long-term goal of driving this number below 20% on a consistent basis.

Cash flow from operations was up 39% in the quarter, totaling $63 million.

For the first half of 2006, operating cash flow was $102 million, up 60% from the first half of 2005.

We expect operating cash flow for the Company to be in the range of $220 to $230 million in 2006, reflecting growth in earnings, better working capital management, and the additional working capital needs of a growing business.

Total debt was $692 million at June 30th, an increase of $74 million in the quarter.

We have spent approximately $114 million on acquisitions in 2006.

Our debt-to-capital ratio at quarter-end was 43%, down from 44% at December 31st, 2005.

Our strong cash flow enables us to ponder acquisition strategy and maintain a strong balance sheet.

We have a long-standing philosophy of opportunistically repurchasing our shares in the open market, with the objective of offsetting the diluted impact of shares granted under our benefit plans.

To that end, during the quarter we repurchased approximately 128,000 shares of our stock for a cost of approximately $5.5 million.

We have approximately $47 million remaining on our board authorization for stock repurchases.

Capital expanding was about $7 million for the quarter and $13 million for the first half.

Depreciation and amortization was $11 million in the quarter and $22 million for the first half.

For 2006, we expect that capital expenditures will total approximately $33 million, while depreciation and amortization should be about $46 million.

In addition to the strong cash flow of the Company, we have substantial financial resources at our disposal to continue to fund our growth.

At the end of June, we had about $260 million available under our existing credit lines.

In summary, we continue to manage our cost structure and balance sheet effectively, generating excellent cash flow and positioning ourselves for future growth.

Bill?

That concludes our prepared remarks.

Christina, we would be more than happy to take questions now.

(OPERATOR INSTRUCTIONS).

Jim Lucas, Janney Montgomery Scott.

Two housekeeping questions first.

One, the EIG core number, what was that one again, Frank?

EIG was 8%.

8%.

That excludes currency, same if you include currency; there was no effect.

And, John, the Accounts Payable number?

$155 million, Jim.

Thank you for those numbers.

Switching gears, more big picture, on the Power side historically you have been tied to GE.

Can you talk a little bit about what you're seeing over Power, not necessarily this year, but going into 2007 and what other opportunities, perhaps, beyond GE you see out there for your Power business?

Actually, Jim, that business, through a number of our acquisitions, has dramatically changed, in that just to give you some rough numbers.

If you look at the size of this business now, it is roughly $100 million business.

About $50 million of that is in battery backup systems that are used in power and even some process control plants.

About $40 million is involved in transmission and distribution-type products.

These are power quality monitoring instruments.

Actually only about $10 million of the business is tied to land gas turbines.

So we purposely have diversified that business into a number of different segments.

What we're seeing now is, I think as we've talked in previous conference calls, this was sort of the last market for AMETEK to come back, if you will, after the economic downturn of several years ago and it is now doing extremely well.

We are looking at double-digit growth going into the second half of this year and in particular the battery backup system is doing -- business is doing extremely well and as far as the segment you talked about, the smaller segment, the land gas turbines, you look at GE now and they are up, although from a very low based, they are now up about 16% in terms of the number of turbines that they are shipping.

And so we are seeing growth in that part of the business, but again it is a smaller part of the business.

On the battery backup side, are there any particular end markets that you're seeing the strength in?

Yes, it is particularly the Asian market for power plants is very, very strong area in that business and also a part of the business goes into the process markets because the process industry basically, you know, needs battery backup support in their plants so then the process markets obviously driven by the price of oil have been a key factor in the excellent growth of that business.

Okay.

And, on the aerospace side, if you could give us a little bit of color on what you're seeing in terms of commercial both OEM and aftermarket military regional as well as how the HCC integration is going?

Okay.

Aerospace is a great story right now, Jim.

The markets are very strong.

We are basically seeing the strength in all parts of the business, led by commercial aerospace.

If you look at Boeing and Airbus, they are both having a very strong production years so the commercial side is very, very strong.

In business in regional aircraft, Cessna is our largest customer, and they are doing extremely well.

Our military business is also very, very strong.

The good news here is that if you look at our sales growth in the first half of the year in aerospace and defense, our sales growth was in the mid single-digits but our order growth was up approximately 17%.

So what is going to happen now as we go into the second half of the year is we are going to see accelerated growth in our aerospace and defense businesses.

As you, I think you are aware, the profit margins in that business are extremely good.

So we are looking to have a very good second half and, as I said in my opening comments, I think this is a differentiating point with respect to AMETEK in that when the industrial cycle goes down and we are not seeing any softening in our short cycle businesses so I don't want to infer that, but we all know at some point it is going to go down, and AMETEK is going to have another leg with these businesses.

The other question you had in there was with respect to the HCC acquisition.

Going great.

We acquired a good business.

It is performing well.

There are more synergies with that business than we had anticipated in linking it with our specialty metals division.

It is a different type of synergy from AMETEK because we can now supply raw materials to HCC from specialty metals and also we can basically supply materials.

We can make materials is probably a better way of saying it -- that our new materials that can be supplied to HCC so they can grow their end market.

So I would say on target, HCC looks good, integration is good.

About 70% of that business is related to aerospace and defense so again it is getting -- the leverage of those markets doing very well.

Great.

Thanks for the thorough update.

Amit Daryanani, RBC Capital Markets.

Just on the recent release, I know you said you're hoping to get debriefed by the Homeland Security program that you did not win.

But can you share with us what you've heard from your people in the trenches as to why the decision did go against you?

Was it pride or a functionality issue on the part, perhaps?

We don't know.

Basically we were informed that we did not get the contract and we were not told the reasons and we are in the process of setting up a meeting with the Department of Homeland Security to review and listen to them as to why they made the decision they did.

So we essentially don't know.

All right.

And then could do just talk about the pricing trends in each of the segments and what level of concern you may have with raw material pricing at this point?

Yes, pricing is a lot easier to get today than it was, say, two years ago.

So our pricing is -- we have been aggressive and in essence the impact of commodity inflation factors has been a nonevent in terms of our bottom line.

We have been able to offset the effects of commodity prices which in our case are largely copper, nickel, a little bit of steel and a little bit of gold are probably the four commodities that impact us and in essence the bottom line impact, because of pricing, because of sourcing from other parts of the world has been I would say a nonevent.

Now it does have a little impact on margins in that you can recover your profitability but because both your and volume are going up the same level when you get the pricing, it has a little bit of a negative impact on margins.

But obviously you can see that our margins are super.

So we have been able to offset that as well.

I guess I'm just trying to think of it in terms of copper and a lot of these commodity prices that have come down from the highs they had two months ago.

I am assuming you don't revoke your price increases that quickly so we might have a spot where your cost of goods sold would be a little better and your revenues would be a little higher, so you get -- it's essentially the opposite where you might get a better margin uptick out of it.

No, there is no question about that, and it depends on -- our businesses have a mix of how they put the price increases in place.

Some have done it as a permanent price increase and others have done it as more of a commodity adjusted price increase, so it does depend on the particular contract.

So for those parts of our business that have done the firm price increase, your point is very well taken.

As commodities come down, we are basically going to make more money.

And just finally last quarter you spoke about countermeasure IED product that I believe you are making cooling fans for.

How did that ramp for the quarter?

I believe it was about $5 million run rate that you spoke about.

Before we said in the end of the first quarter is that we saw this at $5 million type of opportunity and, yes, it is moving.

We basically -- right now we have a firm orders $6.5 million of product, all shippable this year.

We have and I'll tell you a little bit more about this because I have now checked and it's okay to talk about who our prime is.

The prime that we are dealing with is General Dynamics and the particular program is called the Chameleon Program.

We have now given additional quotes to General Dynamics and they range over a wide range from low quantities to high quantities and we are basically in the process of waiting to see what General Dynamics end customer does, and therefore what our volume would be.

But at the $6.5 million level, it is a highly profitable business and we're pretty excited about it.

That will all ship this year.

I guess to follow up on this, and you are making cooling fans for both the Humvee mounted device and also the backpack device, right?

I know they have two of those programs.

Yes, yes.

There is another program too that in the past we have supplied these fans.

That's the Warlock Program and there are some potential opportunities in that program, but they will be longer-term opportunities because they are upgrading the Warlock Program.

When you say low to high quantities, $6.5 million is defined as high?

Is at the high end, you think, or is that the lower end?

I'm sorry.

In addition, there is additional orders that we are quoting, and there is just a wide range on it.

So I don't think, even if I gave the numbers, you could discern anything from it.

We really don't know how much additional orders we are going to get for this particular product.

And it will depend on the U.S. government and their deployment.

Fair enough.

Thank a lot, guys.

Matt Summerville, Keybanc.

A couple of questions.

If you look at margins, Frank, the EMG in the quarter, I think I was at least looking back for a couple of years.

I've never seen margins that high in that business.

First can you talk about whether or not you think there is more upside to that, and how much of that improvement has been driven by volume versus mix?

And along those lines, can you talk about the cost driven versus differentiated businesses and their performance in the quarter with any EMG?

Great question, Matt.

We were delighted with the margins on Electromechanical part of the business.

Do we see more upside?

Absolutely.

Absolutely we see more upside in these margins and it really comes down to two factors, that the business model that we put in place a number of years ago that is moving in the Company more towards differentiated businesses is really starting to show on the Electromechanical Group side of the company, because I think some of the data we talked about in either the last conference call or one of my public meetings was that the cost of doing business are now only 15% of the Company.

There has been a lot of focus on EIG, but in fact if you look at EMG, our cost driven businesses within EMG are now less than half of that business.

So you are seeing the impact of our business model just working as we move to more differentiated businesses like the acquisition of HCC, like the acquisition of Airtechnology, etc.

You are also seeing the impact of strong Aerospace defense businesses as we have already talked about as part of that differentiated strategy.

The second key element here is that our cost driven businesses are just doing very good right now.

We had double-digit profit growth in the second quarter in our cost driven businesses.

We -- volume was flat in the quarter in terms of sales, but our order intake in our cost driven businesses was actually up 17%, which bodes well for the rest of the year so it is a positive picture really across of AMETEK, but in particular, in EMG and in both the cost driven side and the differentiated side.

We had double-digit growth in the differentiated side of EMG, and we expect that to continue.

And then if you look at the margins in EIG, despite having included what I think at least right now are still some lower margin acquisitions, I was wondering if you guys had any insight into what operating margins would have been in your core EIG businesses, i.e. how dilutive for the acquisitions on the margins?

We don't have that information so I can't give you that.

But I can also augment that.

First of all, the margins in EIG are very, very good.

But there is a second factor and if you recall at the beginning of the year we decided to make an incremental level of investment in the Company and I think we sized it at the beginning of year at about $9 million or $0.08 a share and a good part of that investment is going into EIG.

So that is a secondary effect, but having -- given the dilutive impact of the acquisitions plus an incremental investment, we are actually delighted with where the markets are in EIG.

Absolutely.

Can you talk a little bit more about you saw across your process businesses?

I sure can.

Process businesses were really strong, driven by the price of oil, obviously, being at record levels.

Our analytic instruments businesses are doing great.

SPECTRO and EDAX in particular are just having an excellent year.

Our new products are doing well and in the second quarter our internal growth rate in process was up double-digits and we expect that to continue.

So it has been a very good picture.

Scott Graham, Bear, Stearns & Co.

I was wondering if you can go a little more granular with us, Frank, and maybe run through each of the sub-segments within the segments in terms of their sales growth year-over-year.

Yes, sure.

I don't want a repeat what I have already said but let's just run through them and we will start with EIG.

You just heard me talk about what is happening in the end markets in process, so their internal growth rate was up double-digits for that part of EIG.

Aerospace as we have already talked about, the internal growth was mixed single digits, but as we look out that is going to go up to the double-digit region because of the significant order growth that we saw for all of aerospace and defense businesses in the first half.

Power, we are expecting strong growth going forward, as I talk about to Jim's question, and the internal growth rate in the second quarter was in the 6%, 7% region and we expect that to accelerate some.

The other part of EIG at the industrial business and that business, the heavy truck market itself, remains strong.

It's at a market peak.

The market -- the latest estimates we saw for the overall market were up about 9% over last year about 371,000 trucks being produced in North America and the nice thing that is going to happen in this business, Scott, is that you may recall that we had part of this industrial part of EIG, we had a flood in one of our plants and we decided to get out of a bunch of product lines.

So actually, our internal growth in the first half of the year was actually down and in the second quarter it was down about 7%.

However that is going to change now, because that is now behind us on a comparison basis.

So going forward for the second half of the year, we're going to see great growth in the industrial side of the business, again driven by the heavy truck marketplace.

And flipping to the other side of the Company, as I've already indicated the differentiated part of EMG is doing just great, strength in both aerospace and specialty metals and particular our U.S. military business is strong and the Q2 internal growth rate was double digits.

It was great and as I have already mentioned on the cost-driven side, the internal growth was flat on sales but up 22% on orders.

So that bodes well for the second half of year.

So we're just firing on all cylinders right now.

That sounds very good, Frank, and if you wouldn't mind any type of elaboration you can give us on what you are seeing in the M&A environment, with the second half might lineup?

Could we have a repeat performance of last year's second half?

Is that in the offing or something like it?

The M&A environment for us remains attractive.

We have got lots of backlog and we are working on a number of opportunities as we speak.

We have obviously already done over $100 million in sales in the first half of the year.

I don't want to predict what we are going to close because you never know until you get to the end of an acquisition whether in fact you're going to close it or not.

And as you know we do a very thorough due diligence process and we're not afraid to walk away if something has got problems that either haven't been told to us upfront or we find through our due diligence problems that we were not aware of upfront.

So I don't see that I think -- let me word it this way.

It is definitely possible that we could have another year like last year, but I don't want to sit here and say we definitely will just say the backlog looks great and I would be surprised if you didn't see more acquisitions coming from AMETEK in the second half of year.

That's very helpful.

Thank you.

Wendy Caplan, Wachovia Securities.

A couple of things.

First of all, your forecast for this year, it's a pretty narrow one which given that we are sort of in the beginnings of the second half of the year and you have narrowed your third quarter and obviously fourth quarter results, can you talk about assumptions in terms of we typically have come to view you as a conservative forecaster.

Are there assumptions you're making here that are conservative in terms of what we should, what kind of second half results we should see, what could go right I guess to make this, to prove this conservative; what could go wrong to make it too aggressive?

Sure.

You know we did raise our forecast for -- obviously we did well in the second quarter and we not only raised our forecast by that amount, but we also raised it by a sizable amount above that.

So our estimates are probably not as conservative as they have been.

However saying that, I think there definitely is more upside in these numbers than there is downside in the numbers.

Things that can go right is basically if all of these markets continue to perform at the level they are through the full second half of the year and we just put some conservativism into the fourth quarter and just in case we do start to see some economic downturn, although we are not seeing, it is not in our backlog etc.

We are feeling very good right now, but if the businesses continue to perform as we are talking about, we are going to probably do better than these numbers.

And the downside is right in.

If there is -- I mean the Stock Market in a way is predicting some type of downturn coming in the general industrial businesses.

Now we will have an offset to that, with our long cycle businesses but I mean that is probably the biggest downside in the numbers.

Okay.

That's helpful.

To follow up on Homeland Security, maybe asking it a little different way.

These are some questions I had and I'm not sure if you have the answers to them yet, but I figure I will throw them out anyway.

Was the Homeland Security Department aware that CANBERRA was a French origin?

Was the Department aware that CANBERRA's technology required ongoing replacement of coolant?

And, third, do you see any implications relative to your portable product or any other Homeland Security product determined by this decision?

Obviously, and maybe it's not obvious, but surely the Department of Homeland Security was knowledgeable that CANBERRA was a French-owned company.

They knew the differences in technology which from our viewpoint are significant; that our technology is much better, much lower maintenance cost, etc.

And obviously it was a surprise to us when they didn't select us, but again we don't the reason and once we do, it may become clear or it may not become clear as to what was driving their thought process.

I can't answer the last question on portables until we have the debriefing with the DHS.

Until I know what happened, I don't know what the implications are for portable devices in terms of at least the Department of Homeland Security effort that -- in the portable area.

You know when I heard about your not being selected after picking myself up off the floor, I reminded myself that these were the same people that cut New York City's security funding by 40% because we weren't significant -- under significant threat.

So I guess we will be reading more about that whole thing in the paper.

All right, well, that was kind of my question.

I just -- and finally, from a big picture perspective, you and I have talked often about kind of getting a sense of when the margins -- when the business starts to look wishy, and I heard you say on a call that you saw no evidence of that at this point.

Is there a particular business or geography that we should look to to -- that you look to to identify any softness in your businesses?

Well, I mean, obviously, there would be in the short cycle part of our businesses, and we are simply seeing nothing that would indicate a slow down, almost every one of our short cycle businesses is doing just fine right now and particularly the cost-driven side of the Company is one that we look at.

That is usually one that will fallout of bed sooner rather than later.

As I mentioned, our orders on the cost-driven side were up 17%.

So I am just not feeling any indication of a downturn.

That doesn't mean that I won't feel differently three or six months from now, but right now it is just -- I can say the markets are the strongest they have been probably since I have been CEO of the Company, so seven years.

Well, that is saying something.

Thank you very much, Frank.

(OPERATOR INSTRUCTIONS).

Richard Eastman, Robert W. Baird.

Just a couple of questions.

One, was there any currency impact on the EMG side of the business?

Well there was a rounding effect and if you actually look at the numbers, we said the internal growth was a 6% in EMG and that excluded currency.

If you included currency, it rounded to 7%, rounded up a point.

But the actual impact -- I don't remember the exact number.

It was 4/10 of a percent.

It was just a rounding situation, rather than a full point.

That's fine.

So currency added a half a point and then the quarter was 6?

Right.

And then -- okay.

And then no currency on EIG.

Acquisitions added 19% to 20% of the growth?

That must be right.

That is right.

And then also, Frank, could you just give any commentary as you see it geographically?

Sure.

Our businesses are actually doing well in all parts of the world.

In particular, Asia is really strong.

We were up for the first half of the year we were up 54% in Asia, and Europe, although the GDPs of those countries are lower, we have historically not had as much marketshare in Europe so even though the general economy might be somewhat weaker, our growth there has been excellent and in the first half of the year I don't have the numbers exactly in front of me, but it was 20% plus kind of growth, maybe even 30%.

John, if you can look them --

28.

28 is the number.

And the U.S. is obviously good.

So I am not seeing any weakness geographically, although clearly if you look at the market dynamics and you rank them, it would be Asia, the U.S. and then Europe from an overall GDP kind of situation.

So your business tends to track with GDP, plus the acquisitions, I mean just overall?

Yes, except in Europe we are gaining share there because our marketshare was lower so that would be the only exception to that and that's why we're seeing the higher growth there.

Very good.

Thank you.

(OPERATOR INSTRUCTIONS).

At this time there appears to be no further questions in the queue.

Thank you, Christina.

Thank everyone on the call for joining us.

As a reminder, the replay can be heard by calling 888-203-1112 and entering the confirmation code number 492-6961 or on the Internet at AMETEK.com or streetevents.com.

Thank you.

That does conclude our teleconference for today.

We would like to thank everyone for your participation and have a wonderful day.