Any references made on this call to historical results will be on an adjusted basis, excluding after-tax, acquisition-related intangible amortization, and excluding acquisition-related costs. In the quarter, we established records for sales, orders, operating income, EBITDA, diluted earnings per share, operating cash flow, and free cash flow. Today, we announced the acquisition of LKC Technologies, an attractive technology acquisition, which broadens our med tech exposure. Fourth quarter sales were a record $2 billion, up 13% from the same period in 2024.
Organic sales were up 5%, acquisitions added 7 points in the quarter, and foreign currency was a 1-point tailwind. Orders were very strong in the quarter, with overall orders up 18% to a record $2 billion and organic orders up 7% versus the prior year, leading to a record backlog of $3.58 billion. Sales and orders growth consistently improved throughout the year, with the fourth quarter growth the strongest of the year. Operating income was a record $523 million, a 12% increase over the fourth quarter of 2024.
EBITDA in the quarter was a record $618 million, up 10% versus the prior year, and EBITDA margins, a strong 30.9%. Diluted earnings per share were a record $2.01, up 7% versus the fourth quarter of 2024, and above our guidance range of $1.90-$1.95 per share. Adjusting for an abnormally low tax rate in last year's fourth quarter, diluted earnings per share would have increased 11% in the quarter on a 5% increase in organic sales, reflecting strong incremental margins. EIG delivered excellent operating performance in the fourth quarter, with record sales and operating profit, along with impressive core margin expansion.
| Metric | Period | Current guidance |
|---|---|---|
| G&A expense (% of sales) | FY2026 | approximately 1.5% (lower) |
| Effective tax rate | FY2026 | 18.5%-19.5% (higher) |
| Capital expenditures | FY2026 | approximately $160M (about 2% of sales) (higher) |
| Depreciation and amortization | FY2026 | approximately $430M (incl. ~$210M after-tax intangible amortization, or $0.91/share) |
| Free cash flow conversion | FY2026 | 110%-115% of net income (steady) |
| Overall organic sales | FY2026 | low- to mid-single-digits (both EIG and EMG) |
| Reported incremental margins | FY2026 | approximately 35% (lower) |
| Operating margin expansion | FY2026 | approximately 30 basis points |
| Process segment organic sales | FY2026 | up low single digits |
| Aerospace & Defense organic sales | FY2026 | high single-digit growth |
| Power business organic sales | FY2026 | up mid-single digits |
| Automation and Engineered Solutions organic sales | FY2026 | up mid-single digits |
| Healthcare (Paragon/Rauland) growth | FY2026 | up mid-single digits (lower) |
| Metric | YoY | Note |
|---|---|---|
| Total sales | +13% | Organic growth of 5%, acquisitions adding 7 points, and a 1-point foreign currency tailwind. |
| EIG sales | +13% | Organic up 2%, acquisitions adding 10 points and FX a 1-point tailwind, with steady improvement in growth rates through 2025. |
| EMG sales | +15% | Organic up 14% with every division growing double digits, led by Paragon Medical and broad-based strength. |
| EMG operating income | +28% | Strong broad-based growth and operating execution, lifting margins 240 basis points to 22.7%. |
| Operating income | +12% | Record $523 million driven by core margin expansion of 100 basis points. |
| Process businesses sales | up mid-teens | Contribution from FARO and Kern acquisitions, with organic growth turning positive at low single digits for the first time. |
| Aerospace & Defense sales | low double-digit | Broad-based growth across commercial OE and aftermarket businesses with expanding platform content. |
| Power business sales | mid-single digits | Strength in RTDS and Power Instruments driven by grid modernization and data center build-out. |
| China sales | low double-digit | Strength in process, power, and automation businesses despite broader deflation and a real estate hangover. |
| Healthcare (Paragon/Rauland) | low double-digit (Q4) | Strong demand in medical platforms across both EIG and EMG; full-year up high single digits. |
| Topic | Previous mention | Current period | Trend |
|---|---|---|---|
| Acquisitions and M&A pipeline | — | Closed FARO, Kern (~$1B, ~$400M sales) and announced LKC Technologies; strong pipeline with more larger deals and over $5 billion of capacity while keeping investment-grade rating. | Rising |
| Pricing versus inflation and tariffs | — | Positive price-cost spread in Q4 (about 50 bps above inflation plus tariffs); confident pricing will continue to offset inflation and known tariffs in 2026. | Steady |
| Short-cycle / process recovery | Negative organic growth early in 2025 | Process organic growth turned positive at low single digits in Q4 with steady improvement and a healthy project pipeline. | Rising |
| FARO integration and margin improvement | — | Two business units formed; targeting doubling of EBITDA margins from mid-teens to ~30% and 10% ROIC by year three, a couple of years out. | Rising |
| Paragon margin progression | — | Now at EBITDA margins in line with AMETEK, with another leg of improvement expected over the next 12-18 months. | Rising |
| Data center and power demand | Discussed last call | Reconfigured defense products and power systems support grid modernization and the data center ecosystem. | Rising |
| Conservative / prudent 2026 guidance | — | Management repeatedly described the guide as prudent given macro uncertainty and tougher comps, especially in EMG. | Steady |