Ladies and gentlemen, thank you for standing by, and welcome to the Fourth Quarter 2019 AMETEK, Inc. Earnings Conference Call. [Operator Instructions]. It is now my pleasure to hand the call over to VP, Investor Relations, Kevin Coleman.

Thank you, Andrew. Good morning, and thank you for joining us for AMETEK's fourth quarter 2019 earnings conference call. With me today are Dave Zapico, Chairman and Chief Executive Officer; and Bill Burke, Executive Vice President and Chief Financial Officer. AMETEK's fourth quarter results were released earlier this morning and are available on market systems and in the Investors section of our website. This conference call is also being webcasted and can be accessed on our website. The webcast will be archived and made available on our site later today. During the course of today's call, we will make 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 2018 or 2019 results will be on an adjusted basis, excluding after tax, acquisition-related intangible amortization and excluding the fourth quarter 2018 gain related to the finalization of the impact of the Tax Cuts and Jobs Act. 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 with prepared remarks by Dave and Bill, and then open it up for questions. I'll now turn the meeting over to Dave.

Thank you, Kevin, and good morning, everyone. AMETEK delivered excellent performance in the fourth quarter, capping another year with exceptional results, highlighted by strong sales growth, outstanding operating performance and robust capital deployment on strategic acquisitions. In 2019, we achieved records for essentially all key financial metrics, including sales, EBITDA, operating income, earnings per share, operating cash flow and free cash flow. As a result of this strong cash flow and consistent cash flow, we successfully deployed $1.1 billion on 2 strategic acquisitions. These excellent results are driven by the AMETEK Growth Model and the efforts of our talented employees worldwide. AMETEK is committed to our mission of solving our customers' most complex challenges with differentiated technology solutions and delivering long-term sustainable success for our stakeholders. Now on to the details of the fourth quarter results. Sales in the quarter were a record $1.3 billion, up 3% over the same period in 2018. Recent acquisitions contributed 5%. Organic sales were down 1.5%, and currency was a 0.5 point headwind. Fourth quarter operating income increased 6% to $298 million. Reported operating margins expanded 60 basis points to 22.8%. Excluding the dilutive impact of acquisitions, operating income margins expanded an outstanding 90 basis points over the prior year. EBITDA was a record $354 million in the quarter, up 7% over 2018 fourth quarter. Earnings for the fourth quarter increased 13% to $1.08 per diluted share, outperforming our guidance range of $1.01 to $1.03. Our businesses also generated a record $342 million in operating cash flow in the quarter, a 16% increase over last year's fourth quarter. This led to a superb cash conversion ratio of 137% for the quarter. Now on to the fourth quarter details for our operating groups. The Electronic Instruments Group delivered strong operating performance with solid sales growth…

Thank you, Dave. As Dave mentioned, AMETEK completed 2019 with excellent performance in the fourth quarter. Let me provide some additional financial highlights for both the quarter and the full year. Fourth quarter general and administrative expenses were down modestly from the prior year and, as a percentage of sales, were 1.3%, down from last year's level of 1.5% of sales. In 2020, general and administrative expenses are expected to be approximately 1.5% of sales, in line with the full year 2019. The effective tax rate in the fourth quarter was 17.6%, down from last year's adjusted rate of 22.8%. The lower tax rate in the quarter was due to the tax benefits from stock compensation and the finalization of our 2018 tax returns. For 2020, we expect our effective tax rate to be between 20% and 21%. And as we've stated in the past, actual quarterly tax rates can differ dramatically, either positively or negatively, from this full year estimated rate. Working capital in the quarter was excellent at 17.3%, down from 18.2% in the third quarter. Capital expenditures were $41 million in the fourth quarter and $102 million for the full year. We expect capital expenditures in 2020 to be at a similar level to 2019 at approximately 2% of sales, reflecting our asset-light business model. Depreciation and amortization expense in the quarter was $64 million, and the full year was $234 million. In 2020, we expect depreciation and amortization to be approximately $265 million, including after-tax, acquisition-related intangible amortization of approximately $120 million or $0.52 per diluted share. As Dave has highlighted, our businesses continued to generate tremendous levels of cash flow. Operating cash flow in the quarter was a record $342 million, up 16% over last year's fourth quarter. Free cash flow was also outstanding, up…

Great. Thank you, Bill. Andrew, can we please open the line for questions?

[Operator Instructions]. Our first question comes from the line of Matt Summerville with D.A. Davidson.

A couple of questions. First, Dave, can you maybe talk about what your expectation is from a purely an organic standpoint as we sort of cadence throughout the year from quarter-to-quarter, maybe first half versus back half embedded in your guidance?

Yes. Sure, Matt. Really, when we think about our guidance for organic growth in 2020, we're really assuming the same activity level that we saw in the fourth quarter and similar run rates expected throughout all of 2020. So there isn't a back-end hockey stick at all on our forecast. It follows a pretty typical H1, H2 of AMETEK. And now in terms of what it will look like as you proceed through the year, you'll have some negative organic growth comps during the first quarter - or the first half. But in terms of the level of activity, it's pretty linear sequentially and reflects the continuation of the pace of activity we saw in Q4 '19.

And then just as a follow-up. Can you do sort of your traditional walk through the businesses, what you saw in Q4 and kind of what the expectation is for 2020 across the portfolio?

Sure, Matt. I'll start with our Process business. They completed an excellent year in 2019 with a solid fourth quarter. Overall sales were up high single digits driven by contributions from acquisitions of Telular, Spectro Scientific and Gatan. Organic sales were flat in the quarter, generally in line with our expectations. However, we did see some slower discretionary CapEx at year-end. For 2020, we expect organic sales to be roughly flat versus 2019 for Process. Next, Aerospace. Overall sales for Aerospace & Defense businesses were up low single digits in the fourth quarter driven by the acquisition of PDT. Organic sales were down low single digits against a very difficult comp with a plus 10% Q4 '18 in last year's fourth quarter. We saw excellent mid-single-digit growth across our Aerospace & Defense platform in 2019. In 2020, we expect another solid year of growth across our A&D businesses with organic sales up low to mid-single digits and balanced growth across each segment. Organic sales for our Power & Industrial businesses were up low single digits in the quarter, with particularly solid growth in our Programmable Power business. And for 2020, we expect organic sales to be roughly flat across Power & Industrial. And our Automation & Engineered Solutions business saw a mid-single-digit organic sales decline in the fourth quarter driven by continued softness across our global Automation businesses. In 2020, we expect our Automation & Engineered Solutions businesses organic sales to be roughly flat versus the prior year. That's the roundabout, Matt.

And our next question comes from the line of Scott Graham with Rosenblatt.

So a couple of questions. The oil and gas piece, I know, is a piece that has obviously been managed down over time. Acquisition is the whole thing. But obviously, that's taken - that market has taken a quite the turn for the worse with the coronavirus really kind of upsetting the sales side of things, I think, in the upstream. And I was just wondering kind of what you were thinking on oil and gas for the year. And then I do have a follow-up on the Automation business.

Okay. Yes. Our - we - in Q4, our Oil & Gas business was flat. There was some - it performed well. There was some project timing in the Middle East, but it had a flat performance. And for the full year, it was up mid-single-digits. And for '20 - for full year '20, we expect a flat performance, and we have a smaller upstream presence. Over 2/3 of our presence has been downstream. So it's about a 6% exposure for the whole company, about $300 million. And it's been growing, and we've grown around it. And the one point is, if you think back into the 2015, 2016 time period, the commodity-related businesses of AMETEK were 22% of our sales. After the - announcing the divestiture of Reading Alloys, that same commodity level businesses will be about 12% of our sales. So 6% oil and gas, 6% of metals. So we feel really good about our portfolio. We feel good about our exposures. And with the predominant Oil & Gas businesses in the mid and downstream, it looks solid. And we're still at that $50 an order, $50 a barrel level, when in past has been okay for us. So we're feeling pretty good about it, and we have some good projects that we're working on. And we have a good recurring revenue base in that part of the business.

My follow-up on automation is simply could you kind of break that up by end market where things are weakest. I'm assuming that oil - that auto still goes in the lost column for now, but maybe just a little more color on that business.

If you want to understand that business, what really happened is the automation weakness continued, and the European automation was weaker than expected. So if you think back to last quarter, Europe was kind of strong, and Asia was the weak spot for automation. The U.S. - this quarter, the U.S. was positive. The weak spot was really Europe. So Europe and Asia maintained weakness, and that's really the story in the Automation business. Now a little bit of encouragement is in December and January, sequentially, the orders normalized. So we seemed to have found bottom, and we'll see if that continues. But it's pretty much a geographical issue where the European weakness was the unanticipated weakness in Q4.

That's hugely helpful. If I could just sneak this last one in. It's a quick one. What's your productivity expectation for 2020?

Yes. The productivity expectation for 2020 is $90 million. So we began 2019 at $80 million. And through the year, we were - executed very well. We ended up at $95 million. But for 2020, for the start of the year, we set that at $90 million incremental. These are all incremental numbers. Those are incremental productivity numbers that you'll see working through the P&L.

And our next question comes from the line of Deane Dray with RBC Capital Markets.

I might have missed this, but could you tell us what the organic orders were for the segments? And maybe some comments versus expectations.

Yes, sure. I'll go through the whole orders pitch. I mean, it was - orders growth 8 - up 8% in the quarter. Organic orders were down 2%. And both groups were down low single digits. And as I said before, the weakness was driven by the automation and weaker year-end discretionary CapEx spending. And we're seeing - now with January and into the late parts of December, we're seeing sequential orders stabilized with our Automation business. And we have a record backlog of $1.72 billion, and we have a book-to-bill of 1.07 in the quarter. So that's the whole picture on orders, Deane.

Got it. And then, look, the question, does your - this quarter, everyone's being asked how braced you are for disruptions in China. Is that about 9% of your revenues? Just in terms of potential demand disruptions and supply chain disruptions, is there anything embedded in your guidance for that? And kind of what near-term expectations do you have?

Yes. The first point, it's about 7% of our sales, and we're monitoring things very closely. And first and foremost, we're focused on the safety of our employees, well-being of our employees. And from a business perspective, as you know, the situation is very fluid and difficult to quantify, so our full year guidance is based on what we know now. And we do know that we don't have any significant operations in Wuhan and - nor any significant supply chain exposure to suppliers in the Wuhan City area. But we don't expect - we do expect there to be some delays in the global supply chain and some unanticipated consequences of the supply chain disruptions. So we'll monitor this closely. And we do have very global supply chain capability, so we'll adjust as possible and appropriate. It's very difficult at this point to assess any end demand risk without knowing the severity or longevity of the situation. And one point to highlight how fluid the situation is or - although our facilities in China have not reopened following the Lunar New Year, they'll reopen next week. One of our facilities is the Chinese government asked us to reopen to operate in order to provide support to a couple of medical device manufacturers that we have in China. We provide motion control solutions to our customers who supply medical equipment used to help to detect the coronavirus. So we're up and running today with a line to fill that need. So it's really changing all the time. And I think we've taken the steps to focus on the safety of both our employees in China and around the world. And as we learn more and we quantify it, we'll let you know what that is.

Dave, that's real helpful. If I could just squeeze one more in regarding the topic of other potential divestitures. We really did like seeing trimming the Reading Alloys business. I know it's a good business, but the cyclicality didn't quite match what you're looking for. Compounders don't typically divest, so - because it's really hard to redeploy and get the same returns. But just - are you looking - as you look at the portfolio, are there any other potential candidates for trimming at the margin like that?

We do a strategic review every year, so we look hard at our portfolio. And Reading Alloys, as you mentioned, is a really good business. And it was just different for AMETEK. And it was more cyclical. And the value chain was different, where we didn't have the visibility that we have in our other businesses dealing with end customers. So it kind of stood out, and we made the decision to divest it. And it was a good decision. We still have a solid metals business, and we're very comfortable with our portfolio. And no other divestitures are planned at this time.

And our next question comes from the line of Josh Pokrzywinski with Morgan Stanley.

Just a follow-up on Deane's question on the portfolio. I guess, one of the unintended consequences of being kind of a long-term compounder with a good amount of success on the M&A side is that you need to do either larger deals or have higher velocity to kind of keep the momentum going. Clearly, 2019 was good evidence of both. When you look at the pipeline today, is it a bias toward larger acquisitions? And should we see that become more of the norm?

Yes, it's a great question, Josh. I mean, there are clearly some larger acquisitions on our pipeline, but there are also some smaller-sized acquisitions, too, more typical, and - like the IntelliPower one that you saw that we announced today. And as you know, acquisitions are our first priority for capital deployment. We want to deploy all of our free cash flow on M&A. And we had a successful 2019, and we had a successful 2018. If you look over those last 2 years, we completed 9 acquisitions. We deployed about $2.3 billion, and we acquired $610 million in sales. And I would say, our deal funnel remains consistent, so that we should be able to do the same kind of thing going forward. And we're - feels very good right now. We're evaluating a number of opportunities. As Bill mentioned, we have $1.4 billion of existing firepower with unused revolver capacity and cash. And even with these capital outlays, our - we're going to generate another - anticipate to generate another $1.1 billion in free cash flow. So we're very active. We have a team dedicated to it. The acquisitions at AMETEK are a combination of a set of well-defined processes, not a single event. And we have processes to develop the pipeline, and I feel really good about that right now.

Got it. That's helpful. And I guess, related to that, the productivity bogey for 2020 looks very solid. I guess, is part of this kind of ramp in productivity given that there are a lot of newer members of the AMETEK portfolio and running them through that operational rigor just leads to larger numbers? Or is there kind of another element of the productivity deck that you guys are unrolling?

Yes, I think it's a combination of both. The acquisitions do provide more opportunities. But at the same time, our growth model is very flexible. And when we get in times, like where the revenue starts to slow down, you saw it the last couple of quarters. We've been, business by business, looking at businesses and taking actions. And it's resulted in extremely strong execution and excellent margins. And we're continuing to get excellent pricing. We're continuing to get excellent productivity. So we really expect another strong year of execution in 2020, and it's really inherent in our model. We have operators that know how to run businesses through the cycle. And when the revenue line starts to waver a bit, then we know what to do. And we have a variety of contingencies planed. So I feel comfortable managing in this kind of environment.

And if I can just sneak one small one in at the end here. Clearly, CapEx budgets are still very uncertain given all that's going on in the world. Any sense from customers that there's a bit of a coiled spring being formed and that there's projects that are set to release when we kind of get the all clear? Or are people just comfortable spending at lower levels?

With the trade deals that recently have been signed, there's a bit of a momentum building. And now you're dealing with the coronavirus situation. So it's kind of tough to get a read. But certainly, we're feeling some positive momentum building. And it felt like people were willing to spend. And now we just have to see the impact.

And our next question comes from the line of Nigel Coe with Wolfe Research.

So your comments on December, January were interesting because it's sort of very opposite to what we're hearing elsewhere. And I think your comments were more Europe, Asia as being weaker. And therefore, I'm wondering if you're seeing more stability in those regions. But my real question is more on the sequential Q-over-Q decline at EMG. It was down 8%, which tends to speak to some channel destocking activities. I'm just wondering if you could touch on that and then just a comment on the sort of regional stability question as well.

Yes. I mean, in the EMG, typically, parts of that business do have a slower fourth quarter historically, the calendar year. And it was relatively typical. The European Automation business was - we highlighted also on our Aerospace business, our military business is in the EMG segment, and that saw some program delays, that things were just delayed a bit. So - but as I said, the business has operated very well. We had excellent margin expansion. And certainly, that's - the Automation business has been challenged throughout the year, and the team there has done an excellent job of taking actions. And those are included in the results. We haven't spiked those out because it's just an individual business. That's what we do. And I - that's where we're at, at EMG. It's really automation-driven. It's European automation specifically, and there was a little bit of the military. That's just a timing issue. We have a very good backlog, but just a timing issue in Q4. In terms of the globe, we were solid growth in the U.S., while Europe and Asia were down in the quarter. So we had low single-digit growth in the U.S., particularly in Process and Power. And the Asia was down mid-single digits and similar to performance we had in Q3. And Europe was the change. And when we look at 2020, we expect the U.S. to do a little better. And maybe the international market is a little worse, but there is a small difference between them. So as I said, we set our plan for 2020 at the same activity level we saw in Q4. We feel pretty confident with that.

That's helpful. And your comment - I think you mentioned the book-to-bill was 1.07 in the quarter. Is that correct?

Yes.

Yes, that seems like a good number. I mean, I don't have the book-to-bill from last fourth quarter, 4Q '18. How does that 1.07 compare to sort of your normal book rate during 4Q?

Yes. I think that also has the acquisitions in that, where you're booking the backlog of the acquisition. So I think if you normalize out for the acquisitions, it will be around 1 approximately.

Okay. And that would be fairly normal.

Yes, that's fairly normal.

And just a quick one on D&A. I think you said $265 million for 2020. And that breaks up as $145 million for intangibles and then $120 million tangible.

It's about - for 2020, it's about $160 million for amortization and depreciation about $105 million. And then - yes.

And our next question comes from the line of Christopher Glynn with Oppenheimer.

So on record backlog, just wondering if you see kind of normal conversion going forward. It sounds like the military delays helped the backlog a little bit, so wondering if that is just kind of a one quarter push in your view and if EMG organic, kind of, is a little less negative most likely in the first quarter.

Yes. The EMG - the military is definitely going to correct itself, but the comps in Q1 are very difficult for EMG. So it will be roughly sequentially similar to the level it was in Q4. That would be the best way I can describe that, Chris. And did you have another question?

Yes. I'm dealing one - other one right now. A lot has been asked is EMG, I missed acquisition component in the quarter. I did get Pacific in there, but I didn't hear you mention any acquisition contribution.

Yes. There was an acquisition component in EMG in the fourth quarter. It was about 1 point.

And our next question comes from the line of Allison Poliniak with Wells Fargo.

Just want to follow along on Josh's comment on acquisition - or his question. You clearly had a strong year. But as we enter 2020, we talked about size, but has your thought process around technology or end markets changed as you look for deals?

That's a great question. I mean, certainly, it's a similar-type businesses that we're looking for. We're looking for businesses that are noncyclical, businesses that have a good percentage of recurring revenue. If we can't find those types of things, we're looking for the return in an existing - around an existing exposure. And we have teams out there beating the bushes, digging up potential deals in many of these companies we've been following for years and years, so - and when AMETEK is looking at buying a business, it's often the ownership - the private ownership they want to retire or they're trying to - it's not how the stock market is doing or things like that. And the example of IntelliPower, we had a CEO that wanted to retire. And we've been working with them for years. So that's more of the type of deals that we're going to get during this time, and there's a wide horizon. But we're looking in the health care area. We're looking to extend our Process and analytical businesses, Aerospace, Power, it's all the above. We won't buy any cost-driven businesses that went in the market on cost. We're looking for differentiated businesses. That's our key criteria. And because we've been doing this so long, we have approximately 11 people dedicated to it. We know what's going on, and we feel good about the pipeline now. It's always difficult to predict when you're going to do a deal, if it's next quarter or not or - but I feel really good about the pipeline right now.

No, that's great. And then just a last one on IntelliPower. Seems like a nice complement. What does it bring to AMETEK that may be a technology or whatever that you did not have before? Any color there?

Yes, sure. I mean, the big thing, we already have an existing presence in uninterruptible power supplies. And we sell it to the life sciences market, we sell it to the process market. And what IntelliPower brings is really those products, ruggedized uninterruptible power systems sold to mission-critical defense and industrial applications. So they're the largest supplier of ruggedized UPSs for the DoD. They serve a robust set of key programs and applications. Their products include UPS, power conditioners, external battery packs, power distribution units. And they're really a unique company in that they have a sole-source provider for numerous programs. They're on ships, land vehicles, ground stations, mobile networks, so with a blue-chip customer base. And they also have an industrial component that we think we can grow. So we're pretty happy with the acquisition, and there's a meaningful synergy opportunity. It's a mid-single-digit grower, strong visibility on revenue in the short term, solid management team remaining with the business, so we like the deal.

And our next question comes from the line of Ivana Delevska with Gordon Haskett.

So just wanted to ask about some of your higher-growth businesses, like Telular, Spectro and Creaform. Are they getting affected by the weaker macro at all?

Those are in our EIG segment and in our Process segment. And that businesses - those businesses are holding up very well. We did see some - we usually see a year-end - some capital spending and capital pledge, where people spend their capital at year-end, and that was a bit lighter. But overall, those businesses are doing very well.

And then just one follow up on Gatan. How did the performance in the quarter and the current outlook compare to your acquisition plan?

Right, great question. I mean, the business performed well. It was a bit better than our forecast. So we're very pleased with that performance. And we also announced the combination of Gatan with another business unit within AMETEK. So that was announced in January, and it will drive a substantial synergy as we have really the same customer base. And I would characterize the integration as proceeding very well.

And our next question comes from the line of Robert McCarthy with Stephens.

I guess the first question I would have is around the orders - the organic orders. Anything you can talk about the backlog in terms of price and how you feel about price because price is such a key lever for you, not only for, obviously, growth organically, but also for really shoring up your incremental margin conversion?

Yes. I mean, the price that we got in the fourth quarter was much like full year '19. So we had a positive spread of about 50 bps and very pleased with the results. And for '20, we expect about a 50 bp spread. Now we think there might be slightly lower inflation, about 1%. And the pricing that we have built into our operating model is about 1.5 points. But we expect a 50 basis point spread, improving productivity for next year. And we're confident that we're going to be able to deliver that because we've been performing so well over the past couple of years. And it is a bit lower than 2019, and that's because the incremental impact from tariffs will be lower also.

Remind us what your pricing was in kind of the '15, '16 time frame during the teeth of the oil and gas recession. Was it a negative spread for several years?

I don't think it went negative, I don't think it went negative. I don't have those numbers in front of me. You can check with Kevin on that after the call, but I don't recall going negative at all.

Okay. And then I guess, in terms of fourth quarter of '18, you weren't afraid at that time, and there was a pretty material drawdown in the market, obviously, to deploy capital for share repurchase when you thought it was prudent. Given the prospect that we might have a year of unclear macro, given the coronavirus, geopolitical trends, the election, it could be harder to transact on deals given kind of a tacit bid/ask spread in terms of properties, meaning people have a higher justification for selling than perhaps you're willing to buy, do you think you could amp up the share repurchase if you hit an air pocket in terms of the ability to transact on deals or you just don't see that happening?

Now it's a great question, Rob. I mean, the reality is we have a great pipeline, and we want to deploy our capital on M&A. And I think we're going to do that. But we look at our buyback strategy as more opportunistic. And we have a strong balance sheet. And if the - in the short term, there's overreaction from the marketplace, then we'll deploy our balance sheet to buybacks. But right now, we're focused on M&A.

And our next question comes from the line of Andrew Obin with Bank of America.

This is David Ridley-Lane on for Andrew. Curious if you expect any follow-on impact in the first half from Boeing's kind of 737 Max production cost?

Yes, that's a great question, David. I mean, they - we're on a lot of different programs and all commercial aircraft, military, business jets, so we're not dependent on any one aircraft. But specifically to your question, the 737 Max will be about a $10 million headwind in 2020, and that assumes a start-up of production based mid-year in our current build plan. So it's about a $10 million headwind versus 2018 - 2019, excuse me.

Got it. And as a quick follow-up. How did EMG bookings, maybe the pipeline develop as you went through the quarter? And any commentary on first quarter to date?

Yes, yes. The EMG bookings, like I had said previously, it was weaker as the quarter started. But the orders stabilized in December, and that continued in January. So we showed a typical - fairly typical ramp in Q4 for the entire business, and EMG was included in that. And then in January, we had a good order month, right in line with our plan. And as I said, sequentially, from December, January, it feels like the EMG automation orders have stabilized and - during that short time period.

And our next question comes from the line of Andrew Buscaglia with Berenberg.

Can you touch on - you talked about the automation weakness continuing and orders somewhat normalized December, January. But can you talk about what - I know you talked regionally, but what about your other areas of the business? What other areas normalized or weakened or got worse because the major - organic orders are down about 2% or low single digits in each business. I would think some things got worse.

Yes. The other thing, there's really another major factor, and I mentioned that earlier. We experienced weaker discretionary CapEx spend than we anticipated. And then the related point, and it's more of a sales issue versus an orders issue, was program delays in - and for military in our Aerospace business in the fourth quarter.

And our next question comes from the line of Richard Eastman with Baird.

Dave, just a quick question around - as you look into 2020 with kind of a flat core growth expectation, when you look at Process, and I think your commentary around the Automation business and EMG both flat-flat, it seems like Aerospace, I think you commented low single to mid-single digits. When you look at those 3 buckets of exposure, where do you see the risk to 2020 from a core growth standpoint?

Yes. We try to put a plan together that deal with that by taking the run rates that we're currently at. So we didn't want a hockey stick budget, and we think we have that factored in. But there's clearly risks, and they're more macroeconomic risk than AMETEK's specific risk because the businesses are executing very well. We have a record backlog. We're going to be able to execute on that backlog. We had excellent pricing in the backlog. We're showing the capability to generate excellent productivity. So we're expecting another strong year of execution. And with our crystal ball, we called it flat. And we've tried to base the run rates based on 2019 because we don't like hockey stick plans. And that's where we're at, and that's our best attempt to moderate the guidance with the realities of the market.

As you look out into 2020, so difficult to sift out op margins from acquisitions and that contribution. But what kind of improvement do you expect to see in op margins for the full year? Are we talking about maybe 50 basis points? Or what kind of...

Yes, we had 100 basis points in all of 2019. We had 90 basis points core margins in the fourth quarter. And in our plan, we have 30 to 40 basis points of margin improvement - core operating income margin improvement.

Okay, for '20. Okay. And then just a very last question here. Just a quick question around Gatan. You mentioned it had a good fourth quarter as it came in for the partial quarter. As we spoke when the business was acquired, I think we're thinking maybe $100 million of - or excuse me, $180 million of revenue for the - for a full year. Growth rate was mid-singles to high singles. There's been some commentary maybe a thermo kind of speaking to weakness in the electron microscope market, which I'm curious. What would be a good revenue contribution in your plan for '20 from Gatan?

Yes. I think it's pretty much what we laid out. It's roughly $180 million.

And our last question comes from the line of Joe Giordano with Cowen and Company.

This is Rob Jamieson on for Joe this morning. Just a quick question on IntelliPower. Can you maybe talk about the margin profile or what your expectations for that business are?

Yes. It's a profitable business, and we paid 9x EBITDA, so it's - you can figure that out. It's roughly a 30% EBITDA business. And we paid $150 million, approximately 3x sales. And we think there's a meaningful synergy opportunity, so we're going to get great return for our stakeholders.

Okay. Great. And then just a quick follow-up on the 737 Max. I know this is a small - a very small piece of your Aero's total business. But in terms of what's baked in your guide, how many planes or production number? Like, what's your production number embedded in your guidance there? Is it like 0? Or...

No, I think our - the number is a little bit difficult for us to forecast. And I don't know what disclosure agreements we have with Boeing. I can say that we plan on starting our activity midyear, and it would be about a $10 million headwind, yes.

Okay. And you guys have like 37,000 per plane content-wise, right?

Yes, that's right.

We would like to thank you for participating in today's conference. This does conclude the program, and you may now disconnect. Everyone, have a wonderful day.