Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations

Recent Trends

In recent months, the United States government announced additional tariffs and trade restrictions on goods imported into the U.S. from various nations. In response, some nations countered with or are considering reciprocal tariffs and other actions. The U.S. government is negotiating with several of these nations regarding the tariffs, however, the outcome of these negotiations is still uncertain. Our businesses have been proactive in addressing the potential impacts of tariffs, including targeted pricing initiatives, strategic adjustments to our global supply chains, and leveraging our worldwide manufacturing footprint to localize production. As the situation continues to evolve, we cannot be certain of the outcome, which could adversely impact demand for our products, costs, inflation, customers, suppliers, and the overall global economy. We continue to monitor and analyze the impacts of the tariffs and will continue to implement appropriate actions as necessary to attempt to mitigate their effects.

Results of Operations

For the quarter ended June 30, 2025, the Company posted record sales as well as strong orders, operating income, and operating margins. Contributions from the acquisitions of Virtek Vision International ("Virtek") in October 2024 and Kern Microtechnik ("Kern") in January 2025 as well as our Operational Excellence initiatives had a positive impact on the second quarter of 2025 results.

Results of operations for the second quarter of 2025 compared with the second quarter of 2024

Net sales for the second quarter of 2025 were a record $1,778.1 million, an increase of $43.3 million or 2.5%, compared with net sales of $1,734.8 million for the second quarter of 2024. The increase in net sales for the second quarter of 2025 was due to a 2% increase from acquisitions as well as a 1% favorable effect of foreign currency translation.

Total international sales for the second quarter of 2025 were $843.0 million or 47.4% of net sales, an increase of $53.0 million or 6.7%, compared with international sales of $790.0 million or 45.5% of net sales for the second quarter of 2024. The increase in international sales was primarily driven by higher demand in all markets, as well as contributions from recent acquisitions.

Orders for the second quarter of 2025 were $1,782.1 million, an increase of $104.9 million or 6.3%, compared with $1,677.2 million for the second quarter of 2024. The increase in orders for the second quarter of 2025 was due to a 2% increase from acquisitions as well as a 5% favorable effect of foreign currency translation. The Company's backlog of unfilled orders at June 30, 2025 was $3,473.1 million, an increase of $69.9 million or 2.1% compared with $3,403.2 million at December 31, 2024.

Cost of sales for the second quarter of 2025 was $1,142.2 million or 64.2% of net sales, an increase of $31.8 million or 2.9%, compared with $1,110.4 million or 64.0% of net sales for the second quarter of 2024.

Segment operating income for the second quarter of 2025 was $488.3 million, an increase of $15.3 million or 3.2%, compared with segment operating income of $473.0 million for the second quarter of 2024. Segment operating margins, as a percentage of net sales, increased to 27.5% for the second quarter of 2025, compared with 27.3% for the second quarter of 2024. In the second quarter of 2025, segment operating margins were negatively impacted 30 basis points by the dilutive impact of recent acquisitions and 50 basis points from foreign currency translation headwinds. Excluding the dilutive impact of recent acquisitions and the effect of foreign currency translation, segment operating margins increased 100 basis points compared to the second quarter of 2024 due to the sales increase discussed above, as well as continued benefits from the Company's Operational Excellence initiatives.

Selling, general and administrative expenses for the second quarter of 2025 were $174.3 million or 9.8% of net sales, a decrease of $2.6 million or 1.5%, compared with $176.9 million or 10.2% of net sales for the second quarter of 2024. General and administrative expenses for the second quarter of 2025 were $26.7 million, compared with $25.4 million for the second quarter of 2024.

Consolidated operating income was $461.6 million or 26.0% of net sales for the second quarter of 2025, an increase of $14.1 million or 3.2%, compared with $447.5 million or 25.8% of net sales for the second quarter of 2024. In the second quarter of 2025, operating margins were negatively impacted 20 basis points by the dilutive impact of recent acquisitions and 50 basis points from foreign currency translation headwinds. Excluding the dilutive impact of recent acquisitions and the effect of foreign currency translation, operating margins increased 90 basis points compared to the second quarter of 2024 due to the sales increase discussed above, as well as continued benefits from the Company's Operational Excellence initiatives.

Interest expense for the second quarter of 2025 was $16.9 million, a decrease of $13.7 million or 44.9%, compared with $30.6 million for the second quarter of 2024. Higher borrowings under the revolving credit facility related to the Paragon acquisition resulted in higher interest expense in the second quarter of 2024.

Other expense, net was $2.6 million for the second quarter of 2025, compared with $0.1 million of other income, net for the second quarter of 2024.

The effective tax rate for the second quarter of 2025 and 2024 was 19.0%.

Net income for the second quarter of 2025 was $358.4 million, an increase of $20.7 million or 6.1%, compared with $337.7 million for the second quarter of 2024.

Diluted earnings per share for the second quarter of 2025 were $1.55, an increase of $0.10 or 6.9%, compared with $1.45 per diluted share for the second quarter of 2024.

Segment Results

EIG**’**s net sales totaled $1,159.6 million for the second quarter of 2025, an increase of $6.0 million or 0.5%, compared with $1,153.6 million for the second quarter of 2024. The net sales increase was due to a 2% increase from recent acquisitions, as well as a 1% favorable effect of foreign currency translation, partially offset by a 3% organic sales decrease.

EIG’s operating income was $344.4 million for the second quarter of 2025, a decrease of $5.5 million or 1.6%, compared with $349.9 million for the second quarter of 2024. EIG’s operating margins were 29.7% of net sales for the second quarter of 2025, compared with 30.3% for the second quarter of 2024. In the second quarter of 2025, EIG's operating margins were negatively impacted 50 basis points by the dilutive impact of recent acquisitions and foreign currency exchange headwinds of 50 basis points. Excluding the dilutive impact of recent acquisitions and the effect of foreign currency translation, EIG's operating margins increased 40 basis points compared to the second quarter of 2024 due to the continued benefits from the Company's Operational Excellence initiatives.

EMG’s net sales totaled a record $618.5 million for the second quarter of 2025, an increase of $37.3 million or 6.4%, compared with $581.2 million for the second quarter of 2024. The net sales increase was due to a 5% organic sales increase as well as a 1% favorable effect of foreign currency translation.

EMG’s operating income was a record $143.9 million for the second quarter of 2025, an increase of $20.8 million or 16.9%, compared with $123.1 million for the second quarter of 2024. EMG’s operating margins were 23.3% of net sales for the second quarter of 2025, compared with 21.2% for the second quarter of 2024. Foreign currency exchange headwinds negatively impacted EMG's operating margins in the second quarter of 2025 by 50 basis points. Excluding the effect of foreign currency translation, EMG's operating margins increased 260 basis points compared to the second quarter of 2024 due to the sales increase discussed above, as well as continued benefits from the Company's Operational Excellence initiatives.

Results of operations for the first six months of 2025 compared with the first six months of 2024

Net sales for the first six months of 2025 were $3,510.0 million, an increase of $39.0 million or 1.1%, compared with net sales of $3,471.0 million for the first six months of 2024. The increase in net sales for the first six months of 2025 was due to a 1% increase from acquisitions.

Total international sales for the first six months of 2025 were $1,647.5 million or 46.9% of net sales, an increase of $34.1 million or 2.1%, compared with international sales of $1,613.4 million or 46.5% of net sales for the first six months of 2024. The increase in international sales was primarily driven by contributions from recent acquisitions and increased demand in the Americas, partially offset by lower demand in Asia.

Orders for the first six months of 2025 were $3,579.8 million, an increase of $239.9 million or 7.2%, compared with $3,339.9 million for the first six months of 2024. The increase in orders for the first six months of 2025 was due to a 2% increase from acquisitions, a 4% favorable effect of foreign currency translation, as well as a 1% organic order increase.

Cost of sales for the first six months of 2025 was $2,249.1 million or 64.1% of net sales, a decrease of $6.0 million or 0.3%, compared with $2,255.1 million or 65.0% of net sales for the first six months of 2024.

Segment operating income for the first six months of 2025 was $971.1 million, an increase of $54.5 million or 5.9%, compared with segment operating income of $916.6 million for the first six months of 2024. Segment operating margins, as a percentage of net sales, increased to 27.7% for the first six months of 2025, compared with 26.4% for the first six months of 2024. In the first six months of 2025, the dilutive impact of recent acquisitions negatively impacted segment operating margins by 30 basis points. In the first six months of 2024, segment operating income and operating margins included $29.2 million of integration costs related to the Paragon acquisition, which negatively impacted segment operating margins by 80 basis points. Excluding the dilutive impact of the recent acquisitions and the Paragon integration costs, segment operating margins increased 80 basis points compared to the first six months of 2024, due to the continued benefits from the Company's Operational Excellence initiatives.

Selling, general and administrative expenses for the first six months of 2025 were $344.4 million or 9.8% of net sales, a decrease of $6.8 million or 1.9%, compared with $351.2 million or 10.1% of net sales for the first six months of 2024. General and administrative expenses for the first six months of 2025 were $54.6 million, compared with $51.9 million for the first six months of 2024.

Consolidated operating income was $916.5 million or 26.1% of net sales for the first six months of 2025, an increase of $51.8 million or 6.0%, compared with $864.7 million or 24.9% of net sales for the first six months of 2024. In the first six months of 2025, the dilutive impact of recent acquisitions negatively impacted operating margins by 30 basis points. In the first six months of 2024, operating income and operating margins included $29.2 million of integration costs related to the Paragon acquisition, which negatively impacted operating margins by 90 basis points. Excluding the dilutive impact of the recent acquisitions and the Paragon integration costs, operating margins increased 60 basis points compared to the first six months of 2024, due to the continued benefits from the Company's Operational Excellence initiatives.

Interest expense for the first six months of 2025 was $35.9 million, a decrease of $29.9 million or 45.4%, compared with $65.8 million for the first six months of 2024. Higher borrowings under the revolving credit facility related to the Paragon acquisition resulted in higher interest expense in the first six months of 2024.

Other expense, net was $4.2 million for the first six months of 2025, compared with $0.5 million of other expense, net for the first six months of 2024.

The effective tax rate for the first six months of 2025 was 19.0%, compared with 18.8% for the first six months of 2024.

Net income for the first six months of 2025 was $710.1 million, an increase of $61.5 million or 9.5%, compared with $648.6 million for the first six months of 2024.

Diluted earnings per share for the first six months of 2025 were $3.07, an increase of $0.28 or 10.0%, compared with $2.79 per diluted share for the first six months of 2024.

Segment Results

**EIG’**s net sales totaled $2,303.2 million for the first six months of 2025, a decrease of $7.2 million or 0.3%, compared with $2,310.4 million for the first six months of 2024. The net sales decrease was due to a 2% organic sales decrease, partially offset by a 2% increase from acquisitions.

EIG’s operating income was $698.5 million for the first six months of 2025, a decrease of $4.3 million or 0.6%, compared with $702.8 million for the first six months of 2024. EIG’s operating margins were 30.3% of net sales for the first six months of 2025, compared with 30.4% for the first six months of 2024. The dilutive impact of recent acquisitions in the first six months of 2025 negatively impacted EIG's operating margins by 60 basis points. Excluding the dilutive impact of recent acquisitions, EIG's operating margins increased 50 basis points in the first six months of 2025 compared to the first six months of 2024 due to the continued benefits from the Company's Operational Excellence initiatives.

EMG’s net sales totaled $1,206.8 million for the first six months of 2025, an increase of $46.2 million or 4.0%, compared with $1,160.6 million for the first six months of 2024. The net sales increase was due to a 4% organic sales increase.

EMG’s operating income was $272.6 million for the first six months of 2025, an increase of $58.8 million or 27.5%, compared with $213.8 million for the first six months of 2024. EMG’s operating margins were 22.6% of net sales for the first six months of 2025, compared with 18.4% for the first six months of 2024. EMG's operating income and operating margins for

the first six months of 2024 included $29.2 million of integration costs related to the Paragon acquisition, which negatively impacted segment operating margins by 250 basis points. Excluding the Paragon integration costs, segment operating margins increased 170 basis points compared to the first six months of 2024, due to the sales increase discussed above, as well as to the continued benefits from the Company's Operational Excellence initiatives.

Financial Condition

Liquidity and Capital Resources

Cash provided by operating activities totaled $776.6 million for the first six months of 2025, a decrease of $15.1 million or 1.9%, compared with $791.7 million for the first six months of 2024. The decrease in cash provided by operating activities for the first six months of 2025 was primarily due to higher working capital investments, partially offset by higher net income.

Free cash flow (cash flow provided by operating activities less capital expenditures) was $724.3 million for the first six months of 2025, compared with $742.6 million for the first six months of 2024. EBITDA (earnings before interest, income taxes, depreciation and amortization) was $1,123.6 million for the first six months of 2025, compared with $1,057.5 million for the first six months of 2024. Free cash flow and EBITDA are presented because the Company is aware that they are measures used by third parties in evaluating the Company.

Cash used by investing activities totaled $155.7 million for the first six months of 2025, compared with cash used by investing activities of $43.5 million for the first six months of 2024. For the first six months of 2025, the Company paid $104.1 million, net of cash acquired, to purchase Kern Microtechnik ("Kern"). For the first six months of 2024, the Company received $4.2 million from the sale of a facility. Additions to property, plant and equipment totaled $52.3 million for the first six months of 2025, compared with $49.1 million for the first six months of 2024.

Cash used by financing activities totaled $409.4 million for the first six months of 2025, compared with cash used by financing activities of $751.7 million for the first six months of 2024. At June 30, 2025, total debt, net was $1,942.0 million, compared with $2,079.7 million at December 31, 2024. For the first six months of 2025, total borrowings decreased by $252.7 million compared with a $640.6 million decrease for the first six months of 2024. In the second quarter of 2025, the Company paid in full, at maturity, a $50.0 million in aggregate principal amount of 3.91% senior notes. At June 30, 2025, the Company had available borrowing capacity of $2,221.7 million under its revolving credit facility, excluding the $700 million accordion feature.

The debt-to-capital ratio was 15.7% at June 30, 2025, compared with 17.7% at December 31, 2024. 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 11.3% at June 30, 2025, compared with 15.0% at December 31, 2024. 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.

Additional financing activities for the first six months of 2025 included cash dividends paid of $143.0 million, compared with $129.4 million for the first six months of 2024. Effective February 7, 2025, the Company’s Board of Directors approved an 11% increase in the quarterly cash dividend on the Company’s common stock to $0.31 per common share from $0.28 per common share. The Company repurchased $18.1 million of its common stock for the first six months of 2025, compared with $7.6 million for the first six months of 2024. Proceeds from stock option exercises were $12.3 million for the first six months of 2025, compared with $34.5 million for the first six months of 2024.

As a result of all of the Company’s cash flow activities for the first six months of 2025, cash and cash equivalents at June 30, 2025 totaled $619.7 million, compared with $374.0 million at December 31, 2024. At June 30, 2025, the Company had $388.7 million in cash outside the United States, compared with $361.5 million at December 31, 2024. The Company utilizes this cash to fund its international operations, as well as to acquire international businesses. The Company is in compliance with all covenants, including financial covenants, for all of its debt agreements. The Company believes it has sufficient cash-generating capabilities from domestic and unrestricted foreign sources, available credit facilities and access to long-term capital funds to enable it to meet its operating needs and contractual obligations in the foreseeable future.

Subsequent Event

In July 2025, the Company acquired all outstanding shares of FARO Technologies ("FARO") common stock for approximately $920.0 million, net of cash acquired. The transaction was completed following the approval of FARO's stockholders and receipt of all regulatory approvals. FARO has annual sales of approximately $340 million. FARO is a leading

provider of 3D measurement and imaging solutions, including portable measurement arms, laser scanners and trackers, software solutions, and comprehensive service offerings. FARO will join the Electronic Instruments Group segment.

Critical Accounting Policies

The Company’s critical accounting policies are detailed in Part II, Item 7, Management’s Discussion and Analysis of Financial Condition of its Annual Report on Form 10-K for the year ended December 31, 2024. Primary disclosure of the Company’s significant accounting policies is also included in Note 1 to the Consolidated Financial Statements included in Part II, Item 8 of its Annual Report on Form 10-K.

Forward-Looking Information

Information contained in this discussion, other than historical information, is considered “forward-looking statements” and is subject to various factors and uncertainties that may cause actual results to differ significantly from expectations. These factors and uncertainties include risks related to the Company’s ability to consummate and successfully integrate future acquisitions; risks associated with international sales and operations, including supply chain disruptions; tariffs, trade disputes and currency conditions; the Company’s ability to successfully develop new products, open new facilities or transfer product lines; the price and availability of raw materials; compliance with government regulations, including environmental regulations; changes in the competitive environment or the effects of competition in the Company’s markets; the ability to maintain adequate liquidity and financing sources; and general economic conditions affecting the industries the Company serves. A detailed discussion of these and other factors that may affect the Company’s future results is contained in AMETEK’s filings with the U.S. Securities and Exchange Commission, including its most recent reports on Form 10-K, 10-Q, and 8-K. AMETEK disclaims any intention or obligation to update or revise any forward-looking statements, unless required by the securities laws to do so.