Ametek Pricing Spineometer: 2 of 5 Vertebrae

AMETEK, a global provider of electronic instruments and electromechanical devices, had a positive FY 2024. Revenue rose 5.2% to $6.9 billion and earnings before interest and taxes rose 4.2% to $1.8 billion over the same period last year.

A review of AMETEK’s 4 February 2025 earnings call and associated financial reports provided insight regarding the importance of pricing on performance.

Dave Zapico, Chairman and CEO of AMTEK, expressed an orientation toward value-based pricing. He stated: “We can get premium prices by adding features to products and having providing new value to our customers that we weren’t providing before.”

Elsewhere, Dave Zapico also addressed the issue of inflation or possible new tariffs. On inflation, he stated: “We think the environment for inflation … is mitigated to a great degree and I think you’re in that 1.5% to 2% number for the pricing.” On tariffs, he stated, “We’ve been making contingency plans since shortly after the elections for tariffs. And our 2017 and 2018 playbook is relevant. That’s when we executed a China for China manufacturing strategy and decoupled our supply chains from China, we executed flawlessly and we’re ready to do the same thing now if it’s required.”

Out of the 21,500 professionals employed at AMTEK, industry benchmarks would suggest that 14 to 70 professionals should be dedicated to pricing. Given the global customer footprint, high emphasis on new product development and acquisition, and impacts of volatile input prices on certain raw materials, and a significant number of branded business units, we would expect AMETEK to be positioned at the upper end of this range.

• AMETEK operates with two business groups, Electronic Instruments and Electromechanical, with over 40 branded business units within these groups. The Electronic Instruments group serves power, industrial, and aerospace markets. Electromechanical delivers precision motion control systems, thermal mechanical systems, specialty metals, and electrical interconnects. The variety of products and brands would suggest pricing professionals within each business unit.
• AMETEK is significantly active in acquisitions with 15 companies acquired between 2019 and 2023. With each new acquisition, AMETEK has an opportunity to review pricing and improve business performance.
• AMTEK’s annual report indicates the use of Value Analysis/ Value Engineering methodologies, which would be classified under the generic heading of Economic Value to Customer in pricing. This implies that pricing should be engaged with each new product development or enhancement effort to ensure pricing tracks the benefits delivered.
• We suspect that most of the goods sold by AMETEK are priced by the unit however alternatives could be enforced. For instance, if AMETEK enters into long-term supply contracts with customers on goods with volatile input costs, AMETEK could deploy index-based pricing to ensure profitability while enabling multi-year contractual supply arrangements.
• AMETEK has many customers with no single customer delivering more than 5% of revenue. With multiple products and multiple customers, price variance analysis to deliver negotiated sales price guidance would enable AMETEK to capture its fair share of value delivered with every transaction. Supplementing this price guidance, profit-based incentives for salespeople would align goals.
• AMETEK operates in many different countries for both production and sales. Each country may have its own commercial policy aligned with the culture and buying patterns of its customers. As such, pricing professionals working with sales, product, and finance to align discounts and rebates to business performance and goals would be warranted.
• Applied economists should be informing executives of the proper price response to economic shocks. As a global producer and seller, AMETEK’s performance is subject to new tariffs, geopolitical conflicts, and macroeconomic shifts.

Research into the investment by AMETEK in pricing yielded underwhelming results.

1. Pricing at AMETEK and its many business units does not appear to be a strategic business function with dedicated professionals. Rather, most professionals engaged in pricing decisions come from finance and sales. An individual could be identified with titles denoting “Market Access and Pricing”, yet a single professional cannot conduct the full level of due diligence on the plethora of potential pricing decisions identified above.
2. A search for pricing careers at AMETEK also came up empty.

Given the importance and capability of pricing at AMETEK as indicated in financial reports, management statements, and our pricing team research, and given their performance, we have come to the following conclusion as of February 2025.

AMETEK Pricing Spineometer: 2 out of 5 Vertebrae. No bad pricing decision was identified and executives clearly understand the importance of pricing, yet the ability of pricing to deliver positive business results at AMETEK is unrealized.

AME (AMETEK, Inc.) rose slightly from 184 the day prior to their earnings call to 186 one week later. FY 2024 revenue of $6.9 billion with a 26% operating margin and P/E ratio near 31.

For FY 2024, a 1% improvement in price would yield a 4% improvement in operating profits holding all else constant at AMETEK.