AMETEK (AME) Q3 2026 Earnings Call: Rekordauftragsbestand, angehobene EPS-Prognose

Wichtigste Erkenntnisse

• Der Umsatz im dritten Quartal 2026 erreichte einen Rekordwert von 2,22 Milliarden US-Dollar, was einem Anstieg von 17 % gegenüber dem Vorjahr entspricht. Das organische Umsatzwachstum betrug 10 %, während Übernahmen 7 Prozentpunkte beitrugen.
• Der Auftragseingang stieg um 35 % auf 2,65 Milliarden US-Dollar, einschließlich eines organischen Wachstums von 17 %. Der Auftragsbestand lag am Quartalsende bei einem Rekordwert von 4,54 Milliarden US-Dollar, was ein Plus von 27 % seit Anfang 2026 bedeutet.
• Das Betriebsergebnis stieg um 20 % auf 595 Millionen US-Dollar. Die Kernmarge weitete sich um 110 Basispunkte auf 27,3 % aus, gestützt auf Produktivität und eine positive Preis-Kosten-Entwicklung.
• Der freie Cashflow stieg um 26 % auf den Rekordwert von 527 Millionen US-Dollar, was 124 % des Jahresüberschusses entspricht. Das Management hob seine Prognose für die Free-Cashflow-Konversionsrate auf Jahressicht auf 115 %–120 % an.
• Das Management hob seine Prognose für das verwässerte Ergebnis je Aktie (EPS) für 2026 von 8,20–8,30 US-Dollar auf 8,53–8,57 US-Dollar an. Die aktualisierte Spanne enthält rund 0,08 US-Dollar von Indicor.
• Die Integration von Indicor kommt dem Management zufolge gut voran. Die übernommenen Geschäftsbereiche stehen für einen Jahresumsatz von rund 1,1 Milliarden US-Dollar und eine EBITDA-Marge von 30 %, wobei Synergien von 10 %–12 % über drei Jahre angestrebt werden.

Wichtige Finanzdaten

Geschäfts- und operative Entwicklung

Der Umsatz der Electronic Instruments Group stieg um 16 % auf den Rekordwert von 1,44 Milliarden US-Dollar. Das organische Umsatzwachstum lag bei 9 %, während Übernahmen 7 Prozentpunkte beisteuerten. Der organische Auftragseingang legte um 17 % zu, was die Stärke in den Bereichen Prozessinstrumentierung, Halbleiter, Luft- und Raumfahrt sowie Energie widerspiegelt. Die operative Kernmarge erweiterte sich um 60 Basispunkte auf 29,5 %.

Der Umsatz der Electromechanical Group stieg um 20 % auf die Rekordmarke von 778 Millionen US-Dollar. Das organische Wachstum betrug 13 %, was das dritte Quartal in Folge mit zweistelligem organischem Umsatzwachstum markiert. Das Wachstum verteilte sich ausgewogen auf die Bereiche Luft- und Raumfahrt, Verteidigung, Medizintechnik und Automation. Die operative Kernmarge erreichte dank Produktivität und positiver Preis-Kosten-Entwicklung einen Rekordwert von 27,5 %, was einem Plus von 210 Basispunkten entspricht.

Der organische Umsatz im Bereich Luft- und Raumfahrt sowie Verteidigung wuchs im mittleren 10-Prozent-Bereich, angeführt von der Erstausrüster- und Nachrüstnachfrage in der zivilen Luftfahrt. Das Management rechnet für dieses Segment 2026 weiterhin mit einem organischen Wachstum im niedrigen zweistelligen Prozentbereich. AMETEK gab an, keine Verlangsamung zu beobachten, und verwies auf die Präsenz in mehreren Flugzeug- und Verteidigungsplattformen.

Der organische Umsatz in der Prozessinstrumentierung stieg im hohen einstelligen Prozentbereich. Die Geschäftsbereiche Halbleiter und Energie trugen wesentlich dazu bei. Der Umsatz im Halbleiterbereich wuchs im mittleren 10-Prozent-Bereich, während der Auftragseingang um mehr als 30 % stieg. Dieser Markt macht etwa 6 % des Umsatzes von AMETEK aus.

Der Umsatz im Energiebereich wuchs im mittleren einstelligen Prozentbereich, während der Auftragseingang im zweistelligen Prozentbereich zulegte. Das Management führte die Nachfrage auf den Netzausbau, die Rechenzentrumsinfrastruktur, die Kernenergie und die Erdgasinfrastruktur zurück. Das Unternehmen geht davon aus, dass der stärkere Auftragstrend das Wachstum im vierten Quartal 2026 und im Jahr 2027 stützen wird.

Der Bereich Automation & Engineered Solutions erzielte ein organisches Umsatzwachstum im mittleren 10-Prozent-Bereich, wobei die stärkste Nachfrage aus Halbleiter- und medizinischen Anwendungen stammte. Der Umsatz von Paragon stieg im niedrigen zweistelligen Prozentbereich, gestützt durch neue Programme für Einweg-Chirurgieinstrumente, Verbrauchsmaterialien und implantierbare Komponenten.

Geografisch stieg der Umsatz in den USA im niedrigen zweistelligen Prozentbereich und das internationale Geschäft im hohen einstelligen Prozentbereich. Asien legte im mittleren 20-Prozent-Bereich zu, wobei China schneller als der regionale Durchschnitt wuchs. In Europa gab es aufgrund einer schwierigen Vergleichsbasis und zeitlicher Abgrenzungen einen leichten Rückgang.

Indicor trug während des etwa fünfwöchigen Zugehörigkeitszeitraums etwas mehr als 100 Millionen US-Dollar zum Umsatz im dritten Quartal bei. Weitere Übernahmen steuerten 15 bis 20 Millionen US-Dollar bei. Das Management bezeichnete das zugrunde liegende Wachstum von Indicor während dieses Zeitraums als stark im mittleren einstelligen Prozentbereich.

Prognose des Managements

Das Management erwartet für das Gesamtjahr eine operative Kern-Inkrementalmarge von 35 %–40 %, wobei sich die Kernmargen um etwa 100 Basispunkte ausweiten dürften. Für Q4 deutete das Management an, dass das Umsatzwachstum bei EIG im niedrigen 20-Prozent-Bereich und bei EMG im hohen 10-Prozent-Bereich liegen könnte, was im Wesentlichen den größeren Beitrag von Indicor zu EIG widerspiegelt.

Risiken und Beobachtungspunkte

Die Integration von Indicor befindet sich noch in einem frühen Stadium. AMETEK verteilt das erworbene Portfolio auf 10 einzelne Geschäftseinheiten, um Konzentrationsrisiken bei der Integration zu verringern. Allerdings hat die Transaktion die Schulden und den Zinsaufwand erheblich erhöht. Der Zinsaufwand im dritten Quartal stieg um 17 Millionen US-Dollar auf 40 Millionen US-Dollar.

Die Inflation lag im Quartal bei etwa 3 %. Die Preisanpassungen überstiegen die Inflation, jedoch bleiben Zölle und breitere Kostendrücke Faktoren, denen das Management mit Preiserhöhungen begegnet.

Europa blieb die schwächste Großregion und zeigt noch keine nennenswerte Wachstumsbeschleunigung. Zudem weisen die Energiemärkte lange Projektzyklen auf, während die Verteidigungsnachfrage aufgrund staatlicher Finanzierungsprozesse phasenweise schwanken kann.

Highlights der Analysten-Fragerunde

Dem Management zufolge wird erwartet, dass etwa 80 % des Auftragsbestands von 4,54 Milliarden US-Dollar in den nächsten 12 Monaten ausgeliefert werden können. Der Auftragsbestand verteilt sich relativ gleichmäßig auf die Quartale und bietet Sichtbarkeit bis ins Jahr 2027, obwohl ein anhaltender Auftragseingang weiterhin erforderlich ist.

Die Auftragsdynamik verstärkte sich im Laufe des dritten Quartals, wobei der September einen Allzeitrekord auf Monatsebene aufstellte. Laut Management war der Oktober solide und das vierte Quartal begann planmäßig. Sowohl EIG als auch EMG erzielten ein organisches Auftragswachstum von 17 %.

Das Synergieziel für Indicor bleibt bei 10 %–12 % über drei Jahre, wobei das Management davon ausgeht, dass die Effekte relativ gleichmäßig anfallen. AMETEK plant nicht, Übernahmen während der Integration von Indicor zu pausieren, und gab an, dass die M&A-Pipeline weiterhin aktiv sei.

AMETEK berichtete über Preisanpassungen, die über der Inflation von rund 3 % lagen. Das Management führte diese Entwicklung auf differenzierte, geschäftskritische Produkte und führende Positionen in Spezialmärkten zurück.

Das Unternehmen setzt beim Kapitaleinsatz weiterhin Priorität auf Übernahmen, gefolgt von opportunistischen Aktienrückkäufen und einer moderaten, aber steigenden Dividende. AMETEK wies 2,7 Milliarden US-Dollar an liquiden Mitteln und verfügbaren Kreditlinien aus, um Wachstumsinitiativen und weitere Übernahmen zu unterstützen.

Vollständiges Transkript des Earnings Call

Vollständiges Transkript der Telefonkonferenz

Ausführungen des Managements

Operator

Good day, and thank you for standing by. Welcome to Q3 2026 AMETEK Earnings Conference Call. [Operator Instructions] Please be advised that today's conference call is being recorded.

I would now like to hand the conference over to your first speaker today, Kevin Coleman, VP, Investor Relations and Treasurer.

Kevin Coleman

Thank you, Stephanie. Good morning, and welcome to AMETEK's Third Quarter 2026 Earnings Conference Call. Joining me today are Dave Zapico, Chairman and Chief Executive Officer; and Dalip Puri, Executive Vice President and Chief Financial Officer.

During the course of today's call, we will be making forward-looking statements, which are subject to change based on various risk factors and uncertainties that may cause actual results to differ significantly from expectations. A detailed discussion of the risks and uncertainties that may affect our future results is contained in AMETEK's filings with the SEC. AMETEK disclaims any intention or obligation to update or revise any forward-looking statements.

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 transaction and integration costs. Reconciliations between GAAP and adjusted measures can be found in our press release and on the Investors section of our website.

We'll begin today's call with prepared remarks, and then we'll open it up for questions. I'll now turn the meeting over to Dave.

David Zapico

Thank you, Kevin, and good morning, everyone. AMETEK delivered superb results in the third quarter with double-digit organic sales growth, outstanding orders growth, robust operating profit, excellent core margin expansion, sizable cash flow generation and a high quality of earnings that exceeded our expectations.

During the quarter, we also announced the closing of the Indicor Instrumentation acquisition. Integration is progressing well, and we are excited for the meaningful value creation this acquisition will provide. We also raised our full year sales and earnings guidance to reflect our outstanding results in the quarter and our outlook for the fourth quarter.

Turning to our third quarter results. Third quarter sales were a record $2.22 billion, up 17% from the third quarter of 2025. Organic sales were up 10% and acquisitions added 7 points to growth. Overall orders were $2.65 billion, up 35% versus the prior year, driven by the continued robust organic orders growth and contributions from Indicor. Organic orders were up 17% in the quarter, with growth remaining broad-based across our businesses.

We ended the quarter with a record backlog of $4.54 billion, up 27% from the beginning of the year. Operating income for the quarter was a record $595 million, up an outstanding 20% from the third quarter of 2025. Operating margins were excellent in the quarter at 26.8%, up 60 basis points from the prior year. Core margins were 27.3%, up a very strong 110 basis points compared to the same period of 2025.

EBITDA was a record $704 million, up 19% versus the third quarter of 2025 with EBITDA margins an outstanding 31.7%. Free cash flow for the quarter was very strong at a record $527 million, up 26% from the third quarter of 2025. Our free cash flow to net income conversion was also excellent at 124%.

Diluted earnings per share were a record $2.21, up 17% versus the third quarter of 2025 and above our guidance range of $2.08 to $2.10 per share. Now I'll share some additional details at the operating group level, starting with the Electronic Instruments Group. EIG delivered exceptional third quarter results with excellent sales and orders growth and strong operating performance. EIG's third quarter sales were a record $1.44 billion, up 16% from the third quarter of 2025. Organic sales were up 9% and acquisitions added 7 points to growth. EIG overall orders were up 37% versus the prior year, driven by excellent organic orders growth and contributions from Indicor. Organic orders were up 17% in the quarter with broad-based strength across our EIG businesses.

Our process instrumentation, semiconductor, aerospace and power businesses continue to benefit from the leading position supporting markets with strong secular tailwinds. EIG's third quarter operating income was a record $450 million, up 15% versus the same period of 2025. Core operating margins were 29.5%, up 60 basis points from the prior year.

Turning to the Electromechanical Group. EMG generated outstanding results in the third quarter with exceptional sales growth, continued superb orders growth and impressive operating performance and core margin expansion. EMG sales in the third quarter were a record $778 million, up 20% versus the prior year. Organic sales were up double digits for the third straight quarter at 13%, with acquisitions adding approximately 7 points to growth.

Sales growth in the quarter was well balanced across our aerospace, defense, med tech and automation businesses. EMG's overall orders were up 31% year-over-year driven by contributions from the Indicor acquisition and 17% organic orders growth. EMG operating income for the third quarter was a record $212 million, up sharply at 29% compared to the third quarter of 2025. EMG's core operating margins were a record 27.5%, a sizable 210 basis point increase versus the prior year.

As our third quarter results demonstrate, our businesses are performing exceptionally well and delivering tremendous results. Overall, I'm pleased with how AMETEK is positioned today and for the future. Our outstanding portfolio, strong momentum across attractive end markets, disciplined operating model and value-creating acquisition strategy continue to drive our long-term success. I would like to take a few moments to walk through these elements in more detail.

We have a strategically constructed portfolio of high-quality businesses with leadership positions in attractive niche markets. These businesses provide highly differentiated technologies, supporting mission-critical applications required for the global infrastructure build-out. Through our close relationships with customers and deep domain expertise in niche markets, our solutions are often designed directly into critical applications, creating high barriers to entry and significant switching costs.

In recent years, we have further strengthened our portfolio through organic investments and strategic acquisitions, which has increased our exposure to attractive secular growth markets and enhance our long-term growth opportunities. The breadth of our portfolio also provides significant end market diversification, limiting reliance on any single customer, technology or market. We remain exceptionally well positioned and continue to see strong momentum across our markets.

Our growth is supported by many strong, powerful secular trends including investment in AI-related infrastructure, increasing focus on defense and energy security and strengthening demand across med tech, commercial aerospace and precision automation.

Another important factor driving our strong performance is our proven and disciplined operating model. Our asset-light businesses and global operating capabilities enable us to efficiently manage our cost structure while remaining highly responsive to changing market conditions. We can support growth with moderate capital investments and have consistently and reliably demonstrated our ability to successfully navigate, changing economic environments and evolving business cycles.

Importantly, the highly differentiated nature of our products and our leadership positions in niche markets enable us to effectively offset inflationary pressures with pricing. These strengths continue to be reflected in our operating performance, excellent margin expansion and robust cash flow generation. This cash flow supports a proven capital deployment strategy and a world-class acquisition process that continues to create substantial value for AMETEK shareholders.

The M&A environment remains constructive. Our acquisition pipeline is robust, and we continue to see attractive opportunities that align with our strategic priorities. Overall, we feel confident about the positioning of our businesses and our ability to continue delivering sustainable growth for our shareholders.

Alongside these core strategic elements, we remain committed to investing in our businesses to strengthen our competitive position. Continued investments in innovation and new product development helped drive our strong organic growth. As evidence of this, new product vitality this year remains strong at 25%. I would like to highlight just one example of how AMETEK is supporting critical power infrastructure investments and meeting increasingly complex requirements across demanding industrial, data center and process control environments.

AMETEK's Solidstate Controls recently introduced the next generation of its digital process power uninterruptible power supply platform. The DPP Plus builds on prior platforms with enhanced reliability, diagnostics, monitoring and service capabilities for the most difficult mission-critical applications across power, energy and broad industrial markets. DPP Plus helps meet more advanced application requirements by combining true online double-conversion, uninterruptible power supply technology with modern digital controls, enhanced communications capabilities and a compact footprint. As customers continue to prioritize power quality, uptime and operational resilience, Solidstate Controls is well positioned to address these evolving requirements with this differentiated power solutions.

As I have touched on, we were pleased to complete the acquisition of Indicor in the third quarter. As a reminder, Indicor is a portfolio of exceptional industrial technology businesses that provide highly differentiated mission-critical solutions to a diverse set of customers across a complementary set of end markets. Indicor is an excellent fit with AMETEK given their mission-critical niche market strategy and highly differentiated technology.

While our integration process is still in its early stages, we are encouraged by the progress we have made to date. We remain confident in our ability to add meaningful value as the Indicor businesses to integrate into the AMETEK growth model. I would also like to add that we recently conducted a special AMETEK University session, specifically designed for our Indicor colleagues in support of their onboarding into AMETEK. AMETEK University is our flagship 3-day leadership development program, where we provide colleagues with a deep dive into the key elements of the AMETEK growth model, our culture, operating structure and leadership approach. We also combined the learnings with practical breakout activities and direct exchanges with executive-level AMETEK leadership.

The passion and excitement from the Indicor colleagues was notable. The program only further strengthened my belief in the quality of the Indicor businesses and colleagues and the strength of their leadership teams.

Moving to our outlook for 2026 in the fourth quarter. We are raising our sales, earnings and cash flow conversion guidance for the year to incorporate our excellent performance in the third quarter, the contributions from the Indicor acquisition and our positive outlook for the fourth quarter. For 2026, we now expect overall sales to be up mid-teens on a percentage basis with organic sales now expected to be up high single digits versus 2025. Our diluted earnings per share for the year are now expected to be in the range of $8.53 to $8.57, up 15% compared to last year's results. This is an increase from our prior full year guide of $8.20 to $8.30 per diluted share and includes approximately $0.08 of contribution from the Indicor businesses. For the fourth quarter, we anticipate overall sales to be up in the low 20% range with adjusted earnings of $2.26 to $2.30 per share, up 12% to 14% versus the prior year.

To summarize, AMETEK delivered an exceptional third quarter, reflecting the strength of our businesses and the continued effectiveness of the AMETEK growth model. Our outstanding performance highlights the quality of our market-leading portfolio of businesses and our ability to leverage competitive positions to capture opportunities and deliver meaningful value to customers.

With mission-critical technology solutions and leadership positions across niche markets, AMETEK remains well positioned to benefit from a favorable secular growth trends and to continue generating strong and sustainable long-term value for shareholders.

I will now turn the call over to Dalip Puri, who will cover some of the financial details of the quarter. Then we'll be happy to take your questions. Dalip?

Dalip Puri

Thank you, Dave, and good morning, everyone. As Dave noted, AMETEK delivered an excellent third quarter with strong growth and outstanding operational performance. We set records across most of our key financial metrics, alongside double-digit growth in orders, sales, operating income and earnings per share in the quarter.

Now let me provide some additional financial highlights for the third quarter. Third quarter general and administrative expenses were 1.4% of sales, down from 1.5% in the third quarter of 2025. Third quarter interest expense was $40 million. This was an increase of $17 million from the third quarter of 2025, reflecting incremental borrowings related to the acquisition of Indicor. Third quarter other operating expenses were $5 million, down from $6 million in the third quarter of 2025.

The effective tax rate for the quarter was 18.5%, up from 17.2% in last year's third quarter. For 2026, we now anticipate our effective tax rate to be between 18% and 18.5%. As we have stated in the past, actual quarterly tax rates can vary above or below our full year expected rate due to the timing of discrete tax items.

Capital expenditures in the third quarter were $33 million. For 2026, we continue to expect capital expenditures of approximately $160 million or 2% of sales. Depreciation and amortization expense for the quarter was $116 million. For the full year, we now expect depreciation and amortization to be approximately $470 million, including after-tax, acquisition-related intangible amortization of approximately $240 million or $1.05 per diluted share.

Operating working capital in the third quarter was 17.3% of sales, an excellent 160 basis point improvement versus the same period of 2025, reflecting outstanding work by our businesses in managing key working capital components.

Operating cash flow was exceptionally strong in the third quarter at $561 million, up 27% versus the third quarter of 2025. Free cash flow was also strong, up 26% to a record $527 million with excellent free cash flow conversion of 124% in the quarter. We are increasing our full year cash flow expectations and now expect free cash flow conversion to be between 115% and 120% of net income, reflecting the high quality of our earnings throughout the year and our expectations for continued strong performance in the fourth quarter.

Total debt at September 30 was $6.7 billion, up from $2.3 billion at the end of 2025 due to the acquisition of Indicor Instrumentation. Offsetting this debt was cash and cash equivalents of $667 million. At the end of the third quarter, our gross debt-to-EBITDA ratio was 2.3x, and our net debt-to-EBITDA ratio was 2.1x. As Dave noted, the M&A environment remains constructive, and our pipeline of acquisition opportunities is strong.

We continue to have significant financial capacity and flexibility with $2.7 billion in cash and available credit facilities to support our growth initiatives and strategic acquisitions.

In summary, AMETEK delivered another outstanding quarter, delivering record results across sales, orders, earnings and free cash flow conversion in the quarter. With leadership positions across attractive market segments, differentiated technology portfolio, global manufacturing capabilities and a demonstrated history of exceptional operating performance, we are well positioned to build on our momentum and deliver further growth and shareholder value in '26 and beyond.

I'll now pass it back to Kevin.

Kevin Coleman

Thank you, Dalip. Stephanie, can we please open the line for questions?

Operator

[Operator Instructions] Our first question is from Nicole DeBlase of Deutsche Bank.

Fragen und Antworten

Nicole DeBlase

Just wanted to start, Dave, maybe if you could do the usual rundown of the organic order trends that you saw by end market and anything on geography to would be really helpful.

David Zapico

Okay. That's a good way to start, Nicole. In the Process segment, we had organic sales up high single digits in the quarter. Project activity remains strong and broad-based across our Process Instrumentation businesses. We had notable strength across our semiconductor and energy-related businesses. So for the full year for process 2026, we continue to expect organic sales up mid-single digits. I'll move to aerospace and defense, delivered just another excellent outstanding quarter with our organic sales up mid-teens. Growth was strong and well distributed across subsegments with the strongest growth in our commercial OEM and aftermarket businesses. For 2026, we continue to expect organic sales for our A&D businesses to be up low double digits versus the prior year.

Next, I'll talk about the Power segment, up mid-single digits in the quarter. Very pleased with the continuation of excellent orders growth in the quarter. The orders growth is tied to broad-based build-out and investments in the power grid and data center infrastructure. For 2026, we continue to expect to be up mid-single digits for the year.

And finally, our Automation & Engineered Solutions subsegment, growth was again excellent with mid-teens organic sales growth in the quarter. Growth was balanced across our businesses with the strongest growth within the semiconductor and medical end markets. And for 2026, we now expect organic orders for our A&ES businesses to be up low double digits. That's around the -- for the market.

And then in terms of the geographies, Nicole, balanced U.S. and international growth, the U.S. was up low double digits, and the international growth was up high single digits. In the U.S., it was really balanced growth across the markets. I'd highlight our UPT business, and Paragon has a little bit of an outstanding performance. And when I look across the globe, Asia was the strongest. Asia was up in the mid-20s. And that's a view around the horn, Nicole.

Nicole DeBlase

Dave, that's tremendously helpful. I don't want to take up too much time because you were pretty thorough there. But just maybe one follow-up on orders. If you look at the order trends through the quarter, was that 17% kind of pretty stable across the months? And then anything that you would give us on what you're seeing in October?

David Zapico

Sure. Yes. The cadence -- first of all, we had orders up 35% in the quarter, with strong organic orders up 17%. So we're very pleased with that. And when you look at the cadence, September was the strongest month for orders. So it's stair stepped up to September. September was the strongest month for orders in the quarter, and September was also an all-time monthly record. So we're very happy with that. So September was very strong, and we started off Q4 on plan. So October was extremely solid. And an important point is, sequentially, we also grew from Q2. So very pleased with the orders. We're very pleased with the orders momentum. Both EIG and EMG happen to be up 17% organically. So it's rock solid.

Operator

Our next question is from Matt Summerville of D.A. Davidson.

Matt Summerville

A couple of questions. Maybe just first on Indicor. You mentioned $0.08 of accretion kind of factored into the guide for '26. I was curious if you were willing to share maybe early thoughts on incremental accretion from that business in 2027? And can you remind us what you're targeting for year 1 synergies with that business? And then I have a follow-up.

David Zapico

Yes. In terms of Indicor, we have $0.08 for the balance of this year. There was very little accretion in the 5 weeks that we owned it in Q3, so the balance of that in Q4. I think that -- you have a situation where that this is a business that doesn't really have a lot of seasonality, so you can get a good sense of what Q4 looks like. In terms of next year, we're really going to follow our typical budgeting process. And as we always do, we'll take a deep dive with each business in November. In December, as part of that process to get an annual operating plan, and that will give us a clear view of 2027, and we'll share a detailed outlook with you next year. But in general, as a $1.1 billion annual revenue stream, it's a 30% EBITDA business. And we're off to a good start. Any other questions, Matt?

Dalip Puri

Matt, you mentioned year 1 synergies as communicated when we announced the Indicor acquisition, I guess, it was about 6 weeks ago, 7 weeks ago. We talked about 10% to 12% being our synergy target. That's over 3 years. And we're going to track probably from your perspective, think about that cadence as being ratable.

Matt Summerville

Okay. Perfect. That's very helpful color. And then can you put a finer point on what you're seeing from an M&A pipeline standpoint? And is AMETEK officially full speed ahead on that? Or is there a bit of a pause here with trying to digest Indicor, how should we be thinking about capital deployment over the next 6 to 12 months?

David Zapico

You should think that our foot is on the gas pedal. There is no pause, and we're very excited about both our recent acquisitions but also the acquisitions that are in our pipeline. We're very active.

Operator

Our next question is from Andrew Obin of Bank of America.

Andrew Obin

Just a question on orders. We've had very strong organic order pace year-to-date. How should we think about sort of this actually translating into organic revenue? And I know we're not here to provide '27 guide. But historically, orders become revenue 6 to 9 months later. How much visibility do you have at this point in the sustainability of growth into first half of '27? And how much visibility do you have in the second half of '27?

David Zapico

It's a great question, Andrew. And we're going to get details on our budget process. But the one rule of thumb that I've always followed that ends up being very accurate as 80% of our backlog is shippable in the next 12 months. So we have a really good backlog of $4.5 billion, and 80% of that will be shippable over the next 12 months. And it's pretty ratable going into next year. It looks pretty good by quarter. So -- the way I think about it is we're going to enter next year with a strong backlog. As you know, part of our business is longer cycle and part of a shorter cycle, and we still need to get strong orders. But we're entering next year with a very strong backlog. So that's a good factor for us in terms of 2027.

Andrew Obin

And maybe just a bit of a modeling question. So acquisitions on ForEx, I think, was 7% to sales but 17% to orders. So how does the backlog from acquisition shows up? How do we front load the backlog from the acquisitions?

David Zapico

Yes, sure. The order input in the quarter was the Indicor backlog. So if you look at, I think it was 35% that we had in the quarter, 17% of that was organic. And the other 18% was essentially the Indicor backlog.

Operator

The next question is from Jeffrey Sprague of Vertical Research.

Jeffrey Sprague

Good-looking results here. I just want to come back to Indicor. Again, maybe my modeling was off a little bit, but it looks like you got more revenue in the quarter anyhow than I was thinking. Are you still thinking about $350 million in revenue for 2026? And do you have any kind of color on how Indicor itself grew in the quarter separate and apart from the revenues coming in, now if you have a good baseline on what they actually did last year. But is the organic growth of that set of business is sort of tracking to the AMETEK average here?

David Zapico

Yes. The first point is Indicor did a little greater than $100 million in the quarter. So that may help you square your model. We also had $15 million to $20 million of contribution from other acquisitions. So you set that and I think the Indicor, it's hard to get a clean number on it. But organically, it looks like they performed in line with what we thought they would do. They were a strong mid-single-digit grower for the short time we had them, so that all lines up. And I think we have the -- I think you're right, it's not a very high seasonality business at all. There's a lot of aftermarket components. So figure that out for Q4, but you're in the ballpark.

Jeffrey Sprague

Great. And then this UPS Solidstate product you mentioned, is that a data center-related application or what sort of application is it? And of course, in data centers, right, there's a lot of focus on solid state moving towards other bulk DC and the like. So I was wondering if you could elaborate on actually what that application is and what the opportunity is there?

David Zapico

Yes. That is our highest-end flagship UPS system. So that goes into the most difficult applications. You can think about a nuclear power plant where failure is not an option. The pricing of that product will be $100,000 a piece. So it's a new product. It's durable. It's very, very -- delivers tremendous value to our customers. And -- there are some data center applications for that, but they're in the most rugged type applications. We have other products that are tied to that I talked about in prior that are tied to other parts of the data center build out. And we also have some 800-volt experimentation is going on with customers right now in a different product category. So we're not really -- we're all around it. And the 800-volt work that we're doing now is the one we're most excited about.

Operator

Our next question is from Brett Linzey of Mizuho.

Brett Linzey

Congrats. Just a bigger picture question. Order sales, obviously very robust. I guess, where have you seen the most incremental change over the last, call it, 3, 4, 5 months on the demand side? Is it customers actually getting more confident to put capital in the ground on projects and whatnot? Or is this sort of pent-up release on activity or MRO or spending that was maybe put on hold for several months as companies and customers were sorting through tariffs and other geopolitical items?

David Zapico

Yes, it's a good question. And we talked about this about a year ago when I started seeing a tremendous pipeline of potential orders. And the biggest change that I'm seeing right now is what we thought was going to happen is our EIG business is accelerating. So if you look at the orders of EIG and EMG both being organic 17%, that's a function of that project activity being act upon. So the things that were in our pipeline that were quotations that we're working with customers and EIG specifically, that's accelerated.

Brett Linzey

And then just a follow-up on price and costs. What was the price contribution in the quarter? And how did that fare relative to inflation? Obviously, the whole industry is dealing with a pretty heavy bout of inflation. Any preliminary expectation on what you think that spread could look like here in the coming quarters and the early part of '27?

David Zapico

Yes. I'll tell you, Brett. We had a positive price inflation spread again. Our inflation number was about 3% and pricing was in excess of that. The results speak to the highly differentiated nature of the AMETEK product portfolio, and we got leadership positions in these niche markets around the globe. So as I said in my prepared remarks, we have a track record of being able to offset inflation with pricing and inflation and tariffs with pricing. So very good performance. So we have highly customized businesses. We're solving the most difficult mission-critical applications, and we're getting price to protect ourselves in this inflationary environment.

Operator

Our next question comes from Andrew Buscaglia of BNP Paribas.

Andrew Buscaglia

I was hoping to get an update on Life Sciences and that. I think last quarter, it sounded like things are really picking up. And if you could tie in how Paragon is trending over the last year? And then similarly, in FARO technology, I think that you were implying that strength is or things are strong in that area, but wondering if you could talk about those trends you're seeing with that deal.

David Zapico

Okay. You had Paragon, you had Life Sciences, and FARO. I'll start with the Paragon. Health care is our largest market. And within our health care, 20% exposure Paragon led us. So Paragon was up low double digits in sales, another extremely strong quarter. -- We're very pleased with that business. So Paragon continues to perform exceptionally well. In terms of FARO, we completed our 1-year anniversary during the quarter, and we're reviewing that with our Board this week and we're very pleased to say that the model that we built, the profitability on the model we exceeded it. So very happy with that. And I think there's still more work to do with FARO during year 2, but all of our expectations are in line with what we thought initially. So very pleased with the integration and the teams are working hard on putting that together.

And the third question was around our Life Sciences business. And what we're seeing now is probably the strength of that most shows up within our automation business because we're building motion control systems, subsystems for all these life sciences and medical equipment, and that's our fastest-growing segment within that automation business. So is strong, it's getting stronger, and we're doing a good job of servicing our customers in that business.

Andrew Buscaglia

Got it. Very helpful update. Can you talk a little bit more -- I mean, presumably, the trends in Americas are very strong. But wondering if you're not seeing any changes or differences in the regions like Europe and APAC were hearing a little bit of potential change or other companies that are reported. Just curious if you could update us on those two regions.

David Zapico

Yes. I mean as I've said, U.S. is the strongest. Asia was the strongest and it was up mid-20s and China was up more than the average. So very strong in China. Europe was the weakest of the three. And yes, some challenging comps there and some timing issues. So it was down a bit. But really strong in the U.S., really strong in Asia. And Europe has been like it's been for the past several quarters. It's hanging in there, but we're not seeing a big growth uptick yet.

Operator

Next question is from Scott Graham of Seaport Research Partners.

Scott Graham

Congrats on the earnings. I wanted to ask about Indicor maybe in a little bit of a different way. I know it's being moved as you integrate it to 10 businesses to probably 8 to 10 business units within AME. But I was just wondering how you're managing the risk. It's a very big deal. It has a lot of markets. And I was just wondering, Dave, how you're managing that risk? And then I have a follow-up.

David Zapico

Yes, it's a great question, and -- that's part of the reason we had the AMETEK University session with all the leaders of Indicor. But it goes back to what I talked about initially. Although it's a big acquisition, these acquisitions, it ends up being 10 individual businesses that fit into different parts of AMETEK. And they honestly fit like a glove. So we have very seasoned leaders working with the Indicor team, integrating it into AMETEK. We went through a lot of the expectations and a lot of the ways we do business. The Indicor people were very pleased to see the practicality of our business system and how they could use that to improve their business. So I'm pretty optimistic with Indicor. And we got some real good people running businesses that know how to run businesses. So the capability Indicor people, the experienced nature of the AMETEK integrators combined with this thing is going into various parts of AMETEK, where no individual business. These are a $1.1 billion integration as fill into smaller integrations. It's a good way to disperse the risk and they're performing very well. They're obviously contributing. It's a cash-generative business. So we're excited.

Scott Graham

My follow-up question was simply around the conflicts around the world, and hypothetical hopeful, but unfortunately, hypothetical situation that they all end at some point in the next 6 months. What does that do to your defense and energy sales? You've been calling out energy a couple of times this year, kind of the first time we've heard that in a little bit of a while. And I know it wasn't a big business for you, but still you've been calling it out. So what is the end of the conflicts due to those sales?

David Zapico

I don't think it does much at all. I think the -- we're dealing with, I consider energy, I mean, the defense market changed from discretionary spend to required spend. And so it's -- and it's expanding from just the U.S. also Europe, where we have a very strong distribution system and a very strong business. So very well positioned. I talked in past calls about some UAV applications we won with NATO Allies. We're very well positioned in that market. And with -- we include space in that market, but there's a very strong ordering pattern. So I don't see that giving way. It's become required spend, not -- and it was discretionary. Obviously, it's project-based. It's a bit episodic. You have funding things with governments that you have to deal with. But overwhelmingly, it's positive, and we're in the right places with our focus in niche technologies and areas we're the clear leader, and we have a lot of people that want to do business with us.

Operator

Our next question is from Andy Kaplowitz of Citigroup.

Andrew Kaplowitz

Dave, can you give more color into what you're seeing in aerospace and defense? I know you just talked about defense, but earlier you mentioned the biggest piece of the strength that you've seen is in commercial OE and aftermarket. Can you just talk about the visibility of that growth continuing given there are some supply chain and macro concerns out there?

David Zapico

Yes. It's -- the first thing is about 17% of our business overall and split about evenly between commercial and defense businesses. And we are seeing higher growth right now in the commercial OE and aftermarket businesses, but our defense business is also strong. The -- we're on just about every commercial plane. Commercial backlogs are very solid. The aftermarket business is one of the fastest growing in AMETEK. We talked about that being a concern a couple of quarters ago, it didn't happen -- we added the First Aviation acquisition as a defense based business. About half of the business is defense. That's really bolstered our capability and it's with some unique capability in that business. So in general, we're not seeing any slowdown at all. And I realize that the big OEs are going to go up a little bit or down a little bit. And -- but we're keeping up with their demands. And because we're not dependent on any one aircraft or any one platform, our demand looks solid to us as we go forward.

Andrew Kaplowitz

That's helpful. And then your power focused business continue to be in that sort of mid-single-digit growth area. And I know, Dave, you said it could grow faster. Does it start to grow faster than '27? Or maybe why isn't it growing a bit faster now?

David Zapico

Yes. We're tied more to the grid expansion versus data center growth. So we have some data centers, as I talked about before, but it's mainly grid expansion. And it is -- we grew mid-single digits in the quarter, but our orders were up double digits. So we're starting to grow faster. And we have a couple of businesses, our RTDS business, the real-time system business is -- it's a T&M business, a test and measurement business, but it's growing nicely. We have good businesses and they're providing sensors to the power -- nuclear power and the natural gas infrastructure. So I mean, it's -- it takes -- the power market is very conservative. It takes time to grow. But again, I think the double-digit orders growth is a trend of what we'll see in the fourth quarter of this year and next year.

Operator

Our next question is from Christopher Glynn of Oppenheimer & Co.

Christopher Glynn

Wondering about over the years, as you've scaled, you've evolved the M&A sourcing infrastructure, not revolutionary but evolutionary. Just curious, any developments culturally in that sense. I haven't heard you expound on the topic in a while, but obviously, continued scaling. Paragon come in anchor of the medical piece, do they have a particular role in sourcing, for instance?

David Zapico

I think our M&A team has done an excellent job, Chris. I think we have some of the best people in the industry. We have a dedicated team. We have a dedicated investment of 12 M&A professionals. They work closely with our businesses and our operators to identify strategic acquisitions. They own our process. The acquisitions at AMETEK are a combination of a set of well-defined processes, are not a single event. We have excellent capability that includes well-defined processes for deal sourcing, for deal modeling, for diligence and integration. And as I've talked about many times, integration is our secret sauce with very strong business operators, well ingrained in the AMETEK business system, providing ownership to deliver the results that they committed to upfront in the acquisition. So we have clear metrics, clear deliverables for each deal. And I have people managing those deals that are delivered over and over again. We've done over 120 deals. So we're very good there.

Our capital allocation strategy remains consistent. Our #1 priority and #1a, #1b is to deploy our free cash flow on strategic acquisitions. It remains a clear priority. Priority 2 is opportunistic buybacks. And as we have shown in the past, if we see a dislocation in our valuation, and we're poised to act. And the third priority is the modest but ever-increasing dividend. So that's going to stay consistent and our M&A team is outstanding.

Christopher Glynn

Appreciate that. And then curious on semiconductor markets, any shifts in cadence geographically moving into some of the greenfield initiatives at all and research for filed equipment, if you could have any comments there.

David Zapico

Yes. I think the semiconductor market is really -- its strength on strength. I mean it's -- I think for the quarter, we had -- get the number for you here. Yes, we were -- we grew mid-teens, but the orders growth was greater than 30%. So its about 6% of AMETEK and the orders were about 30%. So orders outpaced sales and we were very strong in certain areas. I mean, if you're trying to make yield improvements with the latest technology and you want to find defects in your process, you're going to buy instruments from CAMECA. These are multimillion dollar instruments and they're kind of unique and just about every expanding fab has one and wants more. The other area that we're specialized in is EUV optics in the semiconductor fabrication. That's with our Zygo business. And -- then the third area is with the semi CapEx expansion, our Abaco business, which is mainly an A&D business, has made a good penetration into the CapEx equipment -- they want more durable electronics and control electronics and to do their data analysis. So Abacos having quite a good year in semiconductor. So really from the detection of imperfections. We have a good presence there. EUV optics, we're very unique and very few people can do the kinds of things that we can do. And we also have very durable products to do a data analysis and one of our businesses expanding there. So it's -- as I said, it's up greater than 30%, and it's about 6% exposure and it's positive for us.

Operator

And our next question is from Michael Anastasiou of TD Cowen.

Michael Anastasiou

This is Michael on for Joe. I have a two-parter. So when you look at the businesses acquired over the last 5 to 10 years. How is the organic growth rate evolved under your ownership? And then if there's any assets you like to call in particular, that would be great. And then the second part, I just realized organic orders have been high double digits the last several quarters. How do you parse out specific growth to AMETEK versus the underlying market growth? Any color there would be great.

David Zapico

Yes. I think that -- we're in niche markets. And because we're in niche markets very specialized technology. We spend quite a bit on RD&E, and we're introducing new products. So bifurcating the market growth from the AMETEK unique growth is sometimes difficult, but I think we benchmark ourselves against our competitors, and I think we benchmarked very well. We do that during our strategic planning session. And I think another thing that helped us back during COVID, it seems like a long time ago, but we were able to deliver when other people couldn't. So you really combine the AMETEK operational excellence with a continuing research development and engineering focus and then our technology that we have in these niches that really differentiates ourselves.

If we look back in the, I guess, the last 10 years, our organic growth has been a step above what it was the 5 years before that. So that's one thing that we look at. And quite honestly, we're focused on serving our customers now, and we're growing now, and we see more opportunities.

Operator

Our next last question is from Quinn Fredrickson of Baird.

Quinn Fredrickson

I just wanted to double click on med tech and Paragon. Can you discuss what your exposure looks like to elective procedures versus other procedure types in consumables? And whether you're seeing any impact from elective procedure deferrals this year? I mean, it sounds like not based on your performance in the quarter, but I'm not sure if that's just based on your mix or outsized growth in a few areas offsetting.

David Zapico

Yes. It's a good question, Quinn. And really, it's driven by new product wins. So there's an element of procedure growth, but it can go up or down. But when we're winning share and you're winning business like we are that drives is a bigger component of it. So to recap, Paragon is really single-use and consumable surgical instruments, implantable components. And the markets that we're in are have good growth rates, but adding to the good growth rates is the excellent engineering capability and the new programs what you want. So that's what's driving Paragon's performance.

Quinn Fredrickson

And second, I was just wondering if you could further unpack. The 210 basis points of core margin expansion in EMG in the quarter, which -- so that is really strong. Obviously, the strong top line growth helps, but just any details on price cost or mix or any other factors that enable that as well as any thoughts around fourth quarter for that segment would be helpful.

David Zapico

Yes. I think we had an excellent quarter in terms of margins. So overall, we reported up 60 basis points margins, but our core margins, which backs out the acquisitions were up 110 basis points. So very strong. And in EMG, the core margins were up 210 basis points, and it was driven by excellent productivity and very solid positive price inflation, price cost. So that drove it. And we had a similar performance in EIG. We had good productivity and we had good price cost. And one of the things that I look at are always the incrementals, okay? So we had core incrementals. Both groups were greater than 35%, and EMG was a little stronger than EIG, but they were both strong and those core incrementals drive revenue. So for the fourth quarter -- for the full year, we expect 35% to 40% core incrementals. So with core margins up about 100 bps. So it's been really good margin performance all year. It's good execution.

In terms of the fourth quarter -- in terms of EMG, I mean I think EMG and EIG will have -- I think we have low 20s overall sales and EIG might be a bit stronger than EMG related to the M&A because Indicor has a bigger contribution there, but it will be low 20s. EIG maybe low 20s and EMG maybe high teens. It's that kind of number. So strong across both of them.

Operator

This concludes the question-and-answer session. I would now like to turn it back to Kevin Coleman for closing remarks.

Kevin Coleman

Thank you, Stephanie. Thanks, everyone, for joining our call today. As a reminder, a replay of today's webcast can be accessed in the Investors section of ametek.com. Have a great day.

Operator

Thank you for your participation in today's conference. This does conclude the program. You may now disconnect.