AMETEK, Inc. (AME) Cash Flow Statement

The OCF/NI ratio has remained above 1.0 in every quarter, with a notable spike to 1.47 in 2025Q4, suggesting that earnings are well-backed by cash generation. The gap between net income and operating cash flow is modest, with D&A and working capital changes being the primary reconciling items, which is typical for a capital-light industrial. This consistency implies that reported profits are not being inflated by aggressive accrual accounting, reinforcing the reliability of AMETEK's earnings.

The FCF trajectory shows a clear upward trend, with the 2026Q2 FCF margin of 22.1% representing a 360 basis point improvement year-over-year. This growth is driven by both revenue expansion and stable capex intensity, which has remained below 3% of revenue. The strong FCF generation provides ample internal funding for dividends, buybacks, and acquisitions, supporting the company's capital deployment strategy without straining its balance sheet.

AMETEK's capex-to-revenue ratio is consistently below 3%, with the highest quarter at 2.9% in 2025Q4 and 2024Q4, likely reflecting year-end investments. This low capital intensity suggests that the company's growth is not heavily dependent on heavy asset investments, allowing for high FCF conversion. The modest capex levels also imply that maintenance capex is minimal, and the company can allocate more cash to M&A and shareholder returns, which is a hallmark of its business model.

The working capital swings are typical for a company with project-based and OEM sales, but the cumulative effect over the period is modest, indicating that AMETEK manages its receivables, inventory, and payables effectively. The negative working capital changes in some quarters (e.g., 2026Q2 -$25.5M) suggest that cash is being tied up in operations, but this is offset by strong operating cash flow. Investors should monitor inventory levels, especially given the high-precision electronics nature, but the current data does not indicate a concerning build-up.

The cash flow statement reveals a clear pattern: the company prioritizes acquisitions, with net cash outflows for acquisitions in most quarters, including $214.9M in 2026Q2 and $209.6M in 2026Q1. Dividends are consistently paid and have grown from $64.7M to $77.9M per quarter over the period, indicating a commitment to returning cash to shareholders. Buybacks are sporadic and small, suggesting that management sees better value in M&A than in repurchasing shares, which aligns with the 'AMETEK Growth Model' of acquiring niche businesses.

The cumulative OCF exceeds cumulative net income by approximately $910M, which is a strong indicator of earnings quality. This divergence is largely due to non-cash charges like D&A and SBC, which are added back to net income to arrive at OCF. The fact that OCF consistently outpaces net income suggests that AMETEK's earnings are not only real but also that the company is generating excess cash that can be used for growth initiatives. This positive divergence reinforces the robustness of the company's cash generation and supports its premium valuation.