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. 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 and adapt to changing demand patterns. The recent tariff modifications did not materially impact our results for the first nine months of 2025, however, 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 mitigate their effects.

Results of Operations

For the quarter ended September 30, 2025, the Company posted record sales, operating income, orders, and backlog as well as strong operating margins. Contributions from the acquisitions of Virtek Vision International ("Virtek") in October 2024, Kern Microtechnik ("Kern") in January 2025, and FARO Technologies ("FARO") in July 2025, as well as our Operational Excellence initiatives had a positive impact on the third quarter of 2025 results. In the third quarter of 2025, the Company recorded pre-tax acquisition-related costs related to the FARO acquisition, which are comprised of one-time transaction costs and ongoing integration costs. Integration costs are recorded in Cost of sales and primarily include employee severance, change in control costs, and fair-value inventory adjustments. One-time acquisition-related transaction costs are recorded in Other (expense) income, net and primarily include investment banker fees and representation and warranty insurance costs.

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

Net sales for the third quarter of 2025 were a record $1,892.6 million, an increase of $184.0 million or 10.8%, compared with net sales of $1,708.6 million for the third quarter of 2024. The increase in net sales for the third quarter of 2025 was due to a 4% increase in organic sales, a 6% increase from acquisitions, as well as a 1% favorable effect of foreign currency translation.

Total international sales for the third quarter of 2025 were $906.1 million or 47.9% of net sales, an increase of $92.6 million or 11.4%, compared with international sales of $813.5 million or 47.6% of net sales for the third quarter of 2024. The increase in international sales was primarily driven by higher demand in Europe and contributions from recent acquisitions, partially offset by lower demand in Asia.

Orders for the third quarter of 2025 were a record $1,967.8 million, an increase of $224.4 million or 12.9%, compared with $1,743.4 million for the third quarter of 2024. The increase in orders for the third quarter of 2025 was due to a 7% increase in organic orders, a 7% increase from acquisitions, partially offset by a 1% unfavorable effect of foreign currency translation. The Company's backlog of unfilled orders at September 30, 2025 was a record $3,546.3 million, an increase of $143.1 million or 4.2% compared with $3,403.2 million at December 31, 2024.

Cost of sales for the third quarter of 2025 was $1,206.5 million or 63.7% of net sales, an increase of $113.7 million or 10.4%, compared with $1,092.8 million or 64.0% of net sales for the third quarter of 2024. The cost of sales increase was primarily due to the net sales increase discussed above.

Segment operating income for the third quarter of 2025 was $516.3 million, an increase of $45.8 million or 9.7%, compared with segment operating income of $470.5 million for the third quarter of 2024. Segment operating margins, as a percentage of net sales, decreased to 27.3% for the third quarter of 2025, compared with 27.5% for the third quarter of 2024. In the third quarter of 2025, segment operating margins were negatively impacted 90 basis points by the dilutive impact of recent acquisitions and 40 basis points from acquisition-related costs, primarily employee severance which includes change in control costs. Excluding the dilutive impact of recent acquisitions and acquisition-related costs, segment operating margins increased 110 basis points compared to the third 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 third quarter of 2025 were $197.8 million or 10.4% of net sales, an increase of $27.8 million or 16.4%, compared with $170.0 million or 9.9% of net sales for the third quarter of 2024. Selling expenses increased primarily due to the net sales increase discussed above. General and administrative expenses for the third quarter of 2025 were $27.9 million, compared with $24.6 million for the third quarter of 2024.

Consolidated operating income was a record $488.4 million or 25.8% of net sales for the third quarter of 2025, an increase of $42.5 million or 9.5%, compared with $445.9 million or 26.1% of net sales for the third quarter of 2024. In the third quarter of 2025, operating margins were negatively impacted 80 basis points by the dilutive impact of recent acquisitions and 40 basis points from acquisition-related costs. Excluding the dilutive impact of recent acquisitions and acquisition-related costs, operating margins increased 90 basis points compared to the third 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 third quarter of 2025 was $22.5 million, a decrease of $2.6 million or 10.4%, compared with $25.1 million for the third quarter of 2024.

Other expense, net was $17.9 million for the third quarter of 2025, compared with $1.9 million of other expense, net for the third quarter of 2024. The third quarter of 2025 includes $12.0 million of acquisition-related expenses, primarily investment banker fees, compared with the third quarter of 2024.

The effective tax rate for the third quarter of 2025 was 17.1%, compared with 18.8% for the third quarter of 2024. The lower effective tax rate in the third quarter of 2025 primarily reflects the remeasurement of deferred tax liabilities following the enactment of a lower corporate tax rate in Germany.

Net income for the third quarter of 2025 was $371.4 million, an increase of $31.2 million or 9.2%, compared with $340.2 million for the third quarter of 2024.

Diluted earnings per share for the third quarter of 2025 were $1.60, an increase of $0.13 or 8.8%, compared with $1.47 per diluted share for the third quarter of 2024.

Segment Results

EIG**’**s net sales totaled a record $1,246.3 million for the third quarter of 2025, an increase of $111.7 million or 9.8%, compared with $1,134.6 million for the third quarter of 2024. The net sales increase was due to a 9% increase from recent acquisitions, as well as a 1% favorable effect of foreign currency translation.

EIG’s operating income was $352.4 million for the third quarter of 2025, an increase of $13.4 million or 4.0%, compared with $339.0 million for the third quarter of 2024. EIG’s operating margins were 28.3% of net sales for the third quarter of 2025, compared with 29.9% for the third quarter of 2024. In the third quarter of 2025, EIG's operating margins were negatively impacted 150 basis points by the dilutive impact of recent acquisitions and 60 basis points from acquisition-related expenses. Excluding the dilutive impact of recent acquisitions and acquisition-related expenses, EIG's operating margins increased 50 basis points compared to the third quarter of 2024 due to the sales increase discussed above, as well as continued benefits from the Company's Operational Excellence initiatives.

EMG’s net sales totaled a record $646.3 million for the third quarter of 2025, an increase of $72.3 million or 12.6%, compared with $574.0 million for the third quarter of 2024. The net sales increase was due to a 12% organic sales increase as well as a 1% favorable effect of foreign currency translation.

EMG’s operating income was a record $163.9 million for the third quarter of 2025, an increase of $32.4 million or 24.6%, compared with $131.5 million for the third quarter of 2024. EMG’s operating margins were 25.4% of net sales for the third quarter of 2025, compared with 22.9% for the third quarter of 2024. EMG's operating margins increased 250 basis points compared to the third 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 nine months of 2025 compared with the first nine months of 2024

Net sales for the first nine months of 2025 were $5,402.7 million, an increase of $223.1 million or 4.3%, compared with net sales of $5,179.6 million for the first nine months of 2024. The increase in net sales for the first nine months of 2025 was due to a 3% increase from acquisitions, as well as a 1% organic sales increase.

Total international sales for the first nine months of 2025 were $2,559.0 million or 47.4% of net sales, an increase of $132.1 million or 5.4%, compared with international sales of $2,426.9 million or 46.9% of net sales for the first nine months of 2024. The increase in international sales was primarily driven by contributions from recent acquisitions and increased demand in Europe and the Americas, partially offset by lower demand in Asia.

Orders for the first nine months of 2025 were $5,545.7 million, an increase of $462.4 million or 9.1%, compared with $5,083.3 million for the first nine months of 2024. The increase in orders for the first nine months of 2025 was due to a 4% increase from acquisitions, a 3% organic order increase, as well as a 2% favorable effect of foreign currency translation.

Cost of sales for the first nine months of 2025 was $3,455.6 million or 64.0% of net sales, an increase of $107.7 million or 3.2%, compared with $3,347.9 million or 64.6% of net sales for the first nine months of 2024. The cost of sales increase was primarily due to the net sales increase discussed above.

Segment operating income for the first nine months of 2025 was $1,487.4 million, an increase of $100.3 million or 7.2%, compared with segment operating income of $1,387.1 million for the first nine months of 2024. Segment operating margins, as a percentage of net sales, increased to 27.5% for the first nine months of 2025, compared with 26.8% for the first nine months of 2024. In the first nine months of 2025, segment operating margins were negatively impacted 50 basis points by the dilutive impact of recent acquisitions and 20 basis points from acquisition-related costs. In the first nine months of 2024, segment operating income and operating margins included $29.2 million of acquisition-related costs related to Paragon, which negatively impacted segment operating margins by 50 basis points. Excluding the dilutive impact of the recent acquisitions, acquisition-related costs, and the Paragon acquisition-related costs, segment operating margins increased 70 basis points compared to the first nine months of 2024, due to the continued benefits from the Company's Operational Excellence initiatives.

Selling, general and administrative expenses for the first nine months of 2025 were $542.2 million or 10.0% of net sales, an increase of $21.1 million or 4.0%, compared with $521.1 million or 10.1% of net sales for the first nine months of 2024. Selling expenses increased primarily due to the net sales increase discussed above. General and administrative expenses for the first nine months of 2025 were $82.6 million, compared with $76.5 million for the first nine months of 2024.

Consolidated operating income was $1,404.8 million or 26.0% of net sales for the first nine months of 2025, an increase of $94.2 million or 7.2%, compared with $1,310.6 million or 25.3% of net sales for the first nine months of 2024.

Interest expense for the first nine months of 2025 was $58.4 million, a decrease of $32.6 million or 35.8%, compared with $91.0 million for the first nine months of 2024. Higher borrowings under the revolving credit facility related to the Paragon acquisition resulted in higher interest expense in the first nine months of 2024.

Other expense, net was $22.1 million for the first nine months of 2025, compared with $2.4 million of other expense, net for the first nine months of 2024. The first nine months of 2025 includes $12.0 million of acquisition-related expenses, compared to the first nine months of 2024.

The effective tax rate for the first nine months of 2025 was 18.3%, compared with 18.8% for the first nine months of 2024. The lower effective tax rate in the first nine months of 2025 reflects the remeasurement of deferred tax liabilities following the enactment of a lower corporate tax rate in Germany, partially offset by higher taxes on foreign earnings.

Net income for the first nine months of 2025 was $1,081.5 million, an increase of $92.6 million or 9.4%, compared with $988.9 million for the first nine months of 2024.

Diluted earnings per share for the first nine months of 2025 were $4.67, an increase of $0.41 or 9.6%, compared with $4.26 per diluted share for the first nine months of 2024.

Segment Results

**EIG’**s net sales totaled $3,549.6 million for the first nine months of 2025, an increase of $104.6 million or 3.0%, compared with $3,445.0 million for the first nine months of 2024. The net sales increase was due to a 4% increase from acquisitions and a 1% favorable effect of foreign currency translation, partially offset by a 2% decrease in organic sales.

EIG’s operating income was $1,050.9 million for the first nine months of 2025, an increase of $9.1 million or 0.9%, compared with $1,041.8 million for the first nine months of 2024. EIG’s operating margins were 29.6% of net sales for the first nine months of 2025, compared with 30.2% for the first nine months of 2024. EIG's operating income was negatively impacted 90 basis points by the dilutive impact of recent acquisitions and 20 basis points for acquisition-related expenses in the first nine months of 2025. Excluding the dilutive impact of recent acquisitions and acquisition-related expenses, EIG's operating margins increased 50 basis points in the first nine months of 2025 compared to the first nine months of 2024 due to the sales increase discussed above, as well as continued benefits from the Company's Operational Excellence initiatives.

EMG’s net sales totaled $1,853.1 million for the first nine months of 2025, an increase of $118.5 million or 6.8%, compared with $1,734.6 million for the first nine months of 2024. The net sales increase was due to a 6% organic sales increase and a 1% favorable effect of foreign currency translation.

EMG’s operating income was $436.5 million for the first nine months of 2025, an increase of $91.2 million or 26.4%, compared with $345.3 million for the first nine months of 2024. EMG’s operating margins were 23.6% of net sales for the first nine months of 2025, compared with 19.9% for the first nine months of 2024. EMG's operating income and operating margins for the first nine months of 2024 included $29.2 million of acquisition-related costs related to Paragon, which negatively impacted segment operating margins by 170 basis points. Excluding the Paragon acquisition-related costs, segment operating margins increased 200 basis points compared to the first nine 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 $1,217.5 million for the first nine months of 2025, a decrease of $61.3 million or 4.8%, compared with $1,278.8 million for the first nine months of 2024. The decrease in cash provided by operating activities for the first nine 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 $1,144.2 million for the first nine months of 2025, compared with $1,203.5 million for the first nine months of 2024. EBITDA (earnings before interest, income taxes, depreciation and amortization) was $1,696.0 million for the first nine months of 2025, compared with $1,590.5 million for the first nine 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 $1,005.8 million for the first nine months of 2025, compared with cash used by investing activities of $69.5 million for the first nine months of 2024. For the first nine months of 2025, the Company paid $933.2 million, net of cash acquired, to purchase Kern Microtechnik ("Kern") and FARO Technologies ("FARO"). For the first nine months of 2024, the Company received $4.2 million from the sale of a facility. Additions to property, plant and equipment totaled $73.3 million for the first nine months of 2025, compared with $75.4 million for the first nine months of 2024.

Cash used by financing activities totaled $176.7 million for the first nine months of 2025, compared with cash used by financing activities of $1,228.4 million for the first nine months of 2024. At September 30, 2025, total debt, net was $2,464.2 million, compared with $2,079.7 million at December 31, 2024. For the first nine months of 2025, total borrowings increased by $187.7 million compared with a $998.1 million decrease for the first nine months of 2024. In the third quarter of 2025, the Company paid in full, at maturity, a $100.0 million in aggregate principal amount of 3.96% senior notes. 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 September 30, 2025, the Company had available borrowing capacity of $1,582.2 million under its revolving credit facility, excluding the $700 million accordion feature.

The debt-to-capital ratio was 19.0% at September 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 16.1% at September 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 nine months of 2025 included cash dividends paid of $214.4 million, compared with $194.1 million for the first nine 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 $163.6 million of its common stock for the first nine months of 2025, compared with $68.0 million for the first nine months of 2024. Proceeds from stock option exercises were $21.6 million for the first nine months of 2025, compared with $39.7 million for the first nine months of 2024.

As a result of all of the Company’s cash flow activities for the first nine months of 2025, cash and cash equivalents at September 30, 2025 totaled $439.2 million, compared with $374.0 million at December 31, 2024. At September 30, 2025, the Company had $341.4 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.

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.