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Dalip Puri

Thank you, Dave, and good morning, everyone. As Dave noted, AMETEK delivered a strong start to the year, highlighted by excellent operating performance, robust core margin expansion and strong free cash flow conversion. Now, let me provide some additional financial highlights for the first quarter. First quarter general and administrative expenses were $28 million, up $1.5 million from the prior year.
For the full year, we continue to expect general and administrative expenses to be up modestly versus 2024 levels and to remain at approximately 1.5% of sales. First quarter other operating expenses in dollars compared to the first quarter of 2024 due to lower interest and investment income. First quarter interest expense was $19 million. The effective tax rate in the quarter was 19%, in line with the first quarter of 2024. For 2025, we continue to anticipate our effective tax rate to be between 19% and 20%. As we have stated in the past, actual and quarterly tax rates can differ dramatically, either positively or negatively from this full year estimated rate.
Capital expenditures in the first quarter were $23 million. And for the full year, we expect capital expenditures to be approximately $155 million or about 2% of sales. Depreciation and amortization expense in the quarter was $106 million. For the full year, we expect depreciation and amortization to be approximately $410 million including after-tax, acquisition-related intangible amortization of approximately $203 million or $0.88 per diluted share.
Operating working capital in the first quarter was 18.1% of sales. That compares to 18.7% in last year's first quarter. Operating cash flow was $418 million up 2% versus the first quarter of 2024, while free cash flow of $394 million, up 3% over the prior year. Free cash flow conversion was strong at 112% in the quarter. For 2025, we continue to expect free cash flow conversion to be approximately 115% of net income.
Total debt at March 31 was $1.9 billion, down from $2.1 billion at the end of 2024. Offsetting this debt is cash and cash equivalents of $399 million. At the end of the first quarter, our gross debt-to-EBITDA ratio was 0.9 times, and our net debt-to-EBITDA ratio was 0.7 times. We continue to have excellent financial capacity and flexibility with approximately $2.5 billion in cash and available credit facilities to support our growth initiatives and our active acquisition pipeline.
While acquisitions remain our number one capital allocation priority for use of our free cash flow, we also seek to provide value to our shareholders through opportunistic share repurchases and a consistently increasing dividend. In February, we announced an 11% increase in our quarterly cash dividend to $0.31 per share, our sixth consecutive year of 10% plus annual increases in our dividend payout.
Additionally, AMETEK's Board of Directors approved a $1.25 billion share repurchase authorization in February that provides us with added flexibility to enhance shareholder value. In summary, our businesses delivered strong results to start the year. Our proven operating capabilities drove strong earnings, robust margin expansion and outstanding free cash flow conversion.
With a proven strategy, significant capital deployment capacity and a strong track record of execution, we're confident in our positioning to navigate current trade uncertainties and drive growth and value creation in 2025.
I'll now pass it to you, Ken.

Kevin Coleman

Thanks, Dalip. Andrew, could we please open the lines for questions?

Question and Answer Session

Operator

(Operator Instructions) Matt Summerville, D.A. Davidson.

Matt Summerville

Dave, could you maybe provide a little bit more detail on what you are seeing specifically in Paragon and the broader group of medical-related businesses, especially given that you explicitly called out Paragon as seemingly seeing a notable inflection in orders after a period of softness in that business after -- shortly after you acquired it 1.5 years or so ago. So a little bit more color on Paragon and Medical. And then I have a follow-up.

David Zapico

Sure, Matt. As you know, Paragon is a business that we acquired a little over a year ago. They specialize in single-use and consumable surgical instruments and implantable components in attractive medtech markets. And as you said, when we bought it, they were -- right after that, they went through a destocking.
And we took that period of time over the past year to really execute a multiyear improvement plan where we're dramatically improving the cost position of the business. Now, the business is in growing markets that has excellent engineering capability. They have a leading additive manufacturing capability, a substantial number of new program wins, and we just view the softness as customers were realigning with the current market environment.
There was some overbuying during the prior period. And what we saw in the quarter was very encouraging. The customers are beginning to destock. If you look broader at the automation and the med tech OEM businesses, those businesses that are really the places where we saw the destocking in some those orders were up 25% in the quarter.
So across all of those businesses, 25%, and Paragon led all those businesses. So Paragon was greater than 25%, substantially greater than 25%. So the customers are destocking. The business also performed very well on a profit margin basis. It was 25% in the quarter. So we have a new management team there. The business is executing -- we're working through some of our business improvement plans. Those orders that we have in the first half of the year are going to lead to us having some substantial growth in the second half of the year.
So we're feeling really good about it. And the team is performing very well, and it's good that the market is performing exactly as we thought it would, and we told you about the past few quarters.

Matt Summerville

And just as a follow-up, can you speak more broadly across AMETEK as to the order cadence you've experienced through the first four months of the year? Have you seen -- and I wouldn't think so, given most of what you do is fairly customized to a degree. But are you seeing any sort of buy ahead, any sort of discernible demand destruction. And if you can maybe comment on what price realization look like in Q1?

David Zapico

Yes. I'll take the second part first. I mean during the quarter, we saw a couple of points of inflation, we were able to offset that with price, so it's a positive spread. In terms of orders, as I said in the prepared remarks, overall orders were up 8% in the quarter.
Organic orders were up 3%. And so that shows continued improvement that we've seen for our third quarter in a row. And sequentially, they were up about 2%, and we have a near record backlog, so that's very good. The cadence in March was the strongest month for orders in the year. So it improved throughout the quarter.
And then we started Q2, and we were concerned because of all the tariff things going on, but our orders are still solid. We are really, really good, and we feel good about it. So pretty typical quarter with March being the strongest, and we also had a strong April.

Operator

Deane Dray, RBC Capital Markets.

Deane Dray

Maybe we'll start right where you left off with Matt's question, maybe just the next layer of detail because you're really adept at taking us through key end markets, and really, if there's ever been a time where we're interested in the nuances, it sounds like no demand destruction, but just how are you positioned -- it looks like the orders have been strong, but any kind of call-outs positives or negatives within geographies and your particular verticals?

David Zapico

Yes. In the geography area, positive growth in the US, offset by modest declines internationally. So we're up a bit in the US and just down a bit in Europe and Asia. Our China market was down about 10%. Asia, excluding China, was roughly flat. So yes, it kind of played out how we thought it would. But it was, again, strength in the US offset by just modest declines in other areas.
If I go around the worn on our process business, organic sales for that business declined low single digits in the first quarter, sales were pretty much in line with our expectations, and long-term project activity remains solid, but customers are still remaining cautious about when they place the POs given the broader macro uncertainties. And there were some delays in project timing and process.
And we now expect organic sales for our Process businesses to be roughly flat for the year. Our aerospace and defense business had a strong start to 2025. Organic sales were up mid-single digits in the first quarter. Growth was strongest in our commercial OEM business and our aftermarket business also had a very good quarter as we have content across a broad range of commercial aerospace platforms and aftermarket capabilities really position us well.
For the full year in A&D, we continue to expect organic sales to be up mid-single digits. And our third market segment commentary. Organic sales for our Power business were up low single digits in the quarter. We saw the growth really across our power platform. We continue to manage a strong growth funnel good new business pipeline, good opportunities in power grid modernization and electrification.
We are expecting some cautious customer behavior in the international markets in the near term given some of the tariff uncertainty. But for the full year, we continue to expect organic sales to be roughly flat versus the prior year. And then Lastly, I'll talk about our Automation & Engineered Solutions business.
The organic sales were down low single in the quarter, continued solid sequential sales growth orders were strong in the quarter. I talked about our OEM customers already as a response to mass questions. But clearly, the orders are normalizing. With both year-over-year and solid sequential orders growth and highlighted the performance of our Paradigm Medical business.
And for the full year, we continue to expect mid-single-digit organic sales growth. We got through the quarter. I mean, it was a good quarter, pretty much as expected. But margins were good. cash flow strength was good. Base earnings were good. Orders will continue on a positive strength. Our balance sheet strength is really good. So there's a lot of positives in the first quarter, Dean.

Deane Dray

Yes, it really does sound that. So I appreciate that color. And just one data point on the tariffs, and that's exactly what we would have expected you to go through all the mitigation plan. Can you just size for us China as a percent China sourcing as a percent of COGS were just at that data point helps us frame what kind of headwind that you're up against?

David Zapico

Right. I'll go through the entire tariff mitigation, what we're working on. And I'll cover China specifically a couple of different ways, what we're sourcing there and what we're selling there. So it will I think be a good good summary.
We estimate our annual tariff impact, direct impact to tariffs to be about $100 million. And we expect to be able to offset this direct impact through our mitigating actions and that and that's why we feel comfortable to reaffirm our full year sales and EPS guidance. Given our strong start to the year and some of the things that I talked about. Now, if I break down that $100 million that comes from really three sources.
There's a 10% across-the-board tariffs for all countries. The second component it includes is the 145% tariffs on China imports to the US. Now, we have fairly limited exposure here given the proactive actions we started back in 2018 to shift sourcing away from China. We've talked about that multiple times over the years. And in fact, the remaining sourcing cost in this category are firm recently acquired businesses.
So the bulk of AMETEK is not sourcing from China. We're -- when we source from China, we sell in China. But we have some new acquisitions that have to work on like the Paragon deal, like some of the more recent deals, we're doing some work in China. But it's relatively modest to get that 15% tax on trade. The other element of it is in terms of Mexico. We're glad to find out that we're over -- our people have done good work, and we're over 98% compliant with the US MCA guidelines.
So very, very little exposure. So we feel really good about our ability to offset the $100 million of direct tariff exposure through our various mitigating actions. Now, the other element though, I want to make you aware of is separate from those direct impacts, we have the 125% retaliatory tariffs imposed by China on the US. And as you know, we do about 9% of our sales in China.
A lot of it is local for local, but we do have approximately 4% of our sales. So in the case of the second quarter, that will be about $70 million. They're direct US to China. And we expect -- we're seeing short-term delays there given the magnitude of the tariffs. Our customers are taking a wait-and-see attitude. They're confirming to us that they still want the products but they're waiting for lower tariff levels.
Much of this product is our higher-end instrumentation and optics business where there's really limited alternatives to AMETEK with similar capability products. And as you may know, we've been very careful to protect our IP for this product for many years. So we're building the product in the US. We're shipping it around the globe, our Chinese customers desire our products.
But that $70 million in Q2 is very difficult to predict the outcome near term. And we don't have control over that situation. We may be able to ship at all in Q2. We may not be able to ship it in Q2 because there's a risk beyond our control, and they're related to country-to-country dynamics.
So when we looked at that risk, we have ways to fix it. We understand that some of our products are so specialized that there is a, I'll call it, an opaque process in China where customers can go and get exemptions. We understand that some of our products are qualifying for those exemptions, but we don't -- we're monitoring the situation, but we don't have more detail than that.
We're also initiating an element of a manufacturing and localization plan that will change the value-added nature of some of our production processes so that we don't run into this problem. So we're going to use our footprint to change some sourcing, some assemblies, some test and calibration processes. So we get substantial transformation in markets that aren't subject to tariffs. And finally, with the -- I mean, we can sell these products to outside of China. This isn't an issue where we can't sell them there. They're just -- in the queue, they've been started.
There's $70 million planned for Q2. So we're really dealing with a shorter-term issue here. And how that's going to turn out in Q2, I'm not certain. It could turn out well. It could be delayed we're comfortable that we can offset the problem in the year. Over the balance of year, we feel very good with a very good plan that I can talk a little bit more about. But that is the issue that we're dealing with very near term in terms of Q2, and it could swing either way. It could go in Q2, it could shift to Q3.
We just got uncomfortable dealing with the uncertainty in the near term was something we didn't really control. And that's why we're comping the year, but that the swing between Q2 and Q3 were not starting of.

Deane Dray

Dave, that all sounds like you've got it dialed in, right? We understand these are extenuating circumstances, but you guys have been through this before. At least in terms of supply chain challenges. We appreciate all the color here.

Operator

Jamie Cook, Truist.

Jamie Cook

I guess, my question, if you look at the spread, obviously, the EMG margins have been under pressure relative to history for reasons we all know. But I'm just wondering with some of the positive momentum you're seeing in the orders for that segment and in particular, Paragon with some of the cost actions you've taken as orders and sales start to improve? How do we think about the margin trajectory for that business? I guess that's my first question.
And my second question, obviously, acquisitions is your specialty. Just wondering if just given the complexity around trade war and tariffs and all that type of stuff, if some of the larger acquisitions that you guys have been contemplating, if that's sort of on hold at this point.
And then just last, administrative. I think you guys usually guide one quarter out, and I don't think you guided for the second quarter. So I just want to know if I missed anything.

David Zapico

Yes. No, Jamie. You didn't and really the response to Dean in my prior question, uncertainty around the Q2 sales and whether that shifted to later in the year is why we didn't guide for Q2. So we affirmed the year, but we did not to Q2 because of the uncertainty related to the Paragon margins we're going to see upside in the second half of the year for sure because we're continuing to work through our improvement plans and now we have some volume. So we have some upside in margins for sure in Paragon in the second half of the year.

Jamie Cook

And I guess I'm thinking EMG in total, like just the spread between EMG IMG, obviously powered on EMG.

David Zapico

Yes, I think that the way EIG margins are extremely good, and they're performing extremely well. I think if you want to think about it from your perspective, we have a hedge on EMG margins. There's some upside there and given the acceleration in that business and then the third thing you talked.

Jamie Cook

Just M&A, like I'm --

David Zapico

Yes. We have a very, very robust pipeline, and we're very active in the pipeline. Some of the deals the uncertain nature of it, there's been some delays. Some of them are going forward. And we have -- over the history of time, we've been buyers in markets and down markets. And we've been able to buy some of the best businesses, the best returns for our shareholders in down markets. So we're very active. If you think about this thing, I mean, we're ideally positioned to deal in this changing environment. We're very good operators.
We've been through challenge before, as we talked about with Dean. We've got an experienced management team. We've got a distributed operating structure that really empowers local management. We have our portfolio of essential mission-critical businesses that allow us to pass through higher input costs. I mean we expect to differentiate our performance and M&A is going to be part of that. It's very difficult to predict.
If we sign a deal in a couple of weeks or we signed a deal at the end of the year. But we're not backing off at all. And we're in the fortunate position that we can do two things at once. And we're going after M&A, and we also have a balance sheet in periods of dislocation. We've used our balance sheet to initiate buybacks also.

Operator

Jeff Sprague, Vertical Research Partners.

Jeff Sprague

Dave, thanks for that super detailed kind of tariff run down. I wonder if you could just give us the punchline now, like China specifically, what is it that you're looking to overcome there on that 145%.

David Zapico

Well, the 145% is built into the $100 million. And so it's 125%. Well, but on the supply chain, it's $145. That's within the $100 million, and that's fairly small. So again, we just have a couple of recent acquisitions. So that goes into the $100 million on the $100 million is the total amount of things going to the US.

Jeff Sprague

Got it. And then just thinking about this possible shipping delay in Q2 and appreciate the guidance uncertainty it creates. We should just assume that's very high incremental margin business, though, right? I would guess that rose $0.10 or more of sort of variance in an all else equal construct as it relates toQ2?

David Zapico

Yes, I think that that's -- I think you're thinking about it the right way. It's our high-end products. That capability is not available for many places in the world and it's higher margin business, and I think you're thinking about it right.

Jeff Sprague

And we've gotten some inbound questions just about your research exposure and dose risk and anything of that along those lines. Could you just address what, if anything, you're seeing there and what your exposure is?

David Zapico

Yes. The total research exposure is about 10% of sales is international. And a lot of the dose stuff has been in a lot of life science research, and we have some exposure there, but not much. So there are some delays with our government customers. But at this point, for us, it's relatively modest.

Jeff Sprague

And then just maybe last from me. Just on price, can you share -- sorry if I missed it, what price was in the quarter? And I don't think you changed the organic growth outlook, but I would assume your outlook implicitly would now include some more price maybe with some volume detraction on the economic uncertainties?

David Zapico

You're exactly right. And we rolled out the whole year, the volume was down a little bit, but the pricing was up a little bit. And as part of our tariff mitigation plan, and we felt comfortable keeping the full year guide to plus low single digits early. In terms of the specific price, we're not going to give out that specific number, but I can tell you that we covered all inflationary costs in Q1. We had a good positive spread and we expect that to continue throughout the year.

Operator

Andrew Obin, Bank of America.

Andrew Obin

Can we just talk about just a particular in test and measurement side, we've heard a lot of concerns and these are broad macro concerns that a lot of the components that go into the high-end instrumentation are sourced by many in the industry in China. And I think you guys have done a fairly good job, as you pointed out, of adjusting your supply chain away from China over the past five, six, seven years.
What kind of opportunities does it create, right? Because are these big concerns that shipments are going to come to a grinding halt in May. You guys seem to have better supply chains. I would imagine on the margin, some of your competition in the US does come internationally. Could you just describe the opportunity to set that, that creates for you?

David Zapico

Yes. Really, it's a great question, Andrew. We have a good structure, good bones to deal with this situation. We have 100 plants approximately in the US, and we have 50 internationally. And we're already working with some customers that we haven't worked with in the past and on some opportunities in the US to use our infrastructure in the US to be able to win market share. So there's a -- we're clearly focused on the tariff mitigation, but there are opportunities to using our structure in the US.
And I think that, that structure of 50 plants outside the US really gives us some flexibility to look at localization at a different level and the transformation of the value adds, so that as we move through the course of the year, we're going to be able to mitigate the impact of tariffs. So I think it's a comprehensive plan.
Dalip and I reviewed the one of the things we've done a good job after the year is being great operating system, great business system, but providing our structure and then getting all of our teams to execute within it, and we learn from that. So we alone through plans with every one of our businesses, and we're going to continue that for a period of time.
And there were plans in the business and it talked about the tariff mitigation to talk about sourcing changes. It talked about select pricing opportunities. I talked about going on offense. And we spent a lot of time understanding where our competitors are located and where we're located and areas of advantage that we're going to have in the new structure, and we're working on those now. And we're getting positive playback from our customers.

Andrew Obin

And just a follow-up question. Given this new round of tariffs, how are you and the Board thinking about manufacturing footprint your supply chain because clearly, you've made major adjustments in the aftermath of the first wave. What, if any, adjustments just directionally, you and the Board are thinking longer term? And the follow-up question on that is, what are you guys doing to your CapEx spending this year? Is it going up? Or is it going down?

David Zapico

Yes. I think the -- the board is very pleased that we started to reduce our risk from China supply chain five years ago. And we were constantly acquiring businesses. So we're working on exiting those businesses, and that's in process. I think in terms of our manufacturing footprint, I just think having expanded localization in various countries, so that longer term, we're less dependent on some of the tariffs is the right thing to do.
So we're not changing maybe where we build the core technology, but we're shifting the value add to more and more locales around the world, and we've been doing that over time. That's why we have 50 plants outside the US. That's why we've been so successful in these international markets almost, I think, in the quarter, high 40 sales work for international markets, and we're going to continue doing that.
So we think that's the right strategy, the right plan. In terms of CapEx, we're not reducing our (inaudible) we have some very aggressive digital programs going on right now. We have -- we're looking to improve our sourcing with AI. We're looking to improve our e-commerce capabilities. So we have some very, very long-term strategic plans that are around improving our capability through software investments, and we're going to continue those.
And we also have -- we have a good footprint already. So it's largely effectively utilizing that footprint. So I feel good about that. And I see no reason at this time to change our capital spending plan.

Operator

Brett Linzey, Mizuho

Brett Linzey

I wanted to come back to the destocking comment around automation Engineered Solutions. Perhaps just an update on the level of OEM inventory in some of those channels? And then anything in terms of the pulse on capital projects? Are you seeing any shift in time lines as it relates to some of those businesses.

David Zapico

Yes. In terms of the time lines, I talked about a little bit in our process business. We are -- we're not seeing projects canceled, but we're seeing uncertainty and some projects are delayed. And we made an adjustment in our annual outlook related to that business because of that. So that's definitely happening.
Yes, another question, Yes. The OEM inventory. What we're seeing is that the destock is not completed for all customers. But once it ends, then you see a pop. And those customers are recalibrating to the demand levels. And you're going to see that as we work through the course of 2024. So by 2025, excuse me, by the time '25 is completely over. I think all the destocking will be done. I was thinking, but it's starting to happen now, and it's driving -- drove strong orders in the first quarter.

Brett Linzey

Okay. Got it. And I guess just a quick follow-up there. So I guess the assumption for the year from a planning perspective is that persists through the balance of the year? Or does it improve in the second half? Any thoughts there?

David Zapico

Yes. You're talking about our sales or are you talking about orders? Or are you talking about what part of our business?

Brett Linzey

I'm just talking about the level of inventory, like when do you think that gets worked down and were kind of normal.

David Zapico

Yes, I think in the automation area, that's working itself through. We're seeing the US is kind of, I'll call it, finished some destocking is still occurring in Europe, places like Germany. So that's automation. In terms of the medtech OEMs, I think it's OEM dependent. And they all have different supply chains, and they're good at running their business, but they seem to not really have very take control on their inventory.
So we're seeing -- it's difficult to predict. It's difficult for them to predict and it's difficult for us to predict because of that, but you're seeing as they work through their process, the destock is ending, and there's more normalization inventory. And we saw a big chunk of that in Q1, and that's like what we saw with the Paragon orders, right?
Paragon orders were up much, much more than 25%. And in Q1. And that was a customer is getting to the point where they're recalibrating, they're normalized and they're setting their plan for the year. And as we go through the year, we're going to see other med tech customers do that. But it's happening as we thought it would.

Brett Linzey

I appreciate the insight. And then maybe just one more on A&D, not much ground was covered here. How are those businesses performing versus expectations? And is your thinking an outlook changed between commercial and defense based on any developments we've seen?

David Zapico

Yes. We're still feeling really good about the aerospace business. It grew mid-single digits in the quarter. We're expecting it to grow mid-single digits for the year with balanced growth across both our commercial segment and our defense segment. When I think about the commercial segment, you have the OEM multiyear backlogs that was -- that drove a significant part of our growth in Q1, and they have 8-, 10-year backlog depending on what you look at.
So we feel good about that. And in the defense area, the funding is solid, and we feel good about that. In terms of the aftermarket, a lot of older planes are flying now because there's been some delays on this OEM side and that plays to our strength with slower fleet retirements. And that business is a good domestic business, but also a good international business.
And older planes are flying. There's -- in the US, there's some dislocation now (inaudible) fuel costs are coming down and the dynamic there is we don't get the OEM sale, it's okay because we have such a strong aftermarket presence. And that team running that business is just on a great job for us. So for us, and we're in some niches in this aerospace business, it's about 17%, 18% of our company. But it's -- I would say it's very stable, strong growing business for right now.

Brett Linzey

I appreciate all the details always.

Operator

Scott Graham, Seaport Research Partners.

Scott Graham

I wanted to maybe unbundle aerospace and defense a little bit. I know you just did a little bit more just now, Dave. But when you went through your prepared -- or the question-and-answer period with A&D, you didn't specifically talk about defense. And I know that, that business has been a little bit flat down the last couple of quarters. Are you suggesting that defense kind of gets better in the second half of the year?
And then my follow-up on that would also be on the Aerospace side. I know you just indicated that you're comfortable with your aftermarket business. But obviously, there's some passenger weariness to travel, and I'm wondering how that might roll into the second half.

David Zapico

Yes, great question. Specifically on defense, we're expecting growth -- balanced growth across all subsegments. So we're expecting defense to grow in the second half of the year. And we'll see what gets passed in Congress and things, but it's pretty optimistic right now. So I think we're well positioned there, and there's long-term threats, obviously. In terms of the aftermarket, you're exactly right.
I mean you're seeing some airlines with some stress. But again, that's why I was -- the planes are still flying. And older planes in particular are flying longer because fleet retirements have slowed. And I just think that it's our aerospace business and aftermarket is a US and international business. In our international business, we have operations all over. So I have a feeling that if the US slows the international market will strengthen or will stay strong because they're in a little bit different cycle. But right now, what we're looking at is all sides of the business are strong.

Scott Graham

I just wanted to also ask, if I could, about capital allocation. You seem to have a little bit more jump in your speech when you're talking about capital, it seems like you're a little bit more excited about M&A and then talked about share repurchases, a bit more than you've talked about in the past. You have a lot of capital to deploy. Your net leverage number is very low, obviously.
And I was just wondering, on the M&A side, are you seeing bid-ask spreads kind of get a little bit more favorable. And on the share repurchase side, do you see be more active this year?

David Zapico

Yes. I think that we're well positioned, Scott. I mean, we have, as you said, our net debt to EBITDA is 0.7%. When you go through just locations like this a couple of times in your career, you realize that opportunities are going to be there, and we're working with people. I think good assets are still demanding good prices. So it's not like you're seeing tremendous bargains.
They've come in a bit. But we have a really good pipeline. We have a good reputation. We're working with some people, a lot of processes going on. And I think that we're just in an ideal position to acquire some businesses and also act on the dislocation and stock price that could be occurring. And when I put the two together, at a time we're be on your back foot. We're not on our back foot.
So you're bringing our steps forward lean. So I think you got that right. And this is a time where we can differentiate our performance.

Operator

Rob Wertheimer, Melius Research.

Rob Wertheimer

I just wanted to kind of follow on that acquisition topic that's come up a couple of times. And obviously, there's a lot of uncertainty maybe more on our side of the phone than what you guys appear to be seeing to date at least with the comments around April and 1Q being okay.
Have the conversations around acquisitions change? I mean there's uncertainty on cost a little bit of uncertainty in the demand environment. Do you have to wait until you get clarity? Do you -- how do you kind of approach that uncertainty from a valuation and/or close.

David Zapico

Yes, it's a great question, Rob. It's still specific. So for example, if you're going to acquire a business that has a huge supply chain from China, that may be a weight right now and delayed because you see how that is going to play out. But then you deal specifically, you have other dynamics.
So we've been doing this for a long time. It is an uncertain time, especially when you look at it month-to-month, but we're looking at in the long term. And we've been through this before, and it's going to be -- there are opportunities arising and that's -- we got some issues we're managing through.
We talked about them. We have a tremendous amount of detail on them. But overall, think that we're well positioned to do well. And I think that you're correct. The some deals are moving ahead. Some deals have been a sideline for a period of time. But because of the trade dynamics, but there's enough in our pipeline that we're still working aggressively on them. So does that answer your question, Rob?

Rob Wertheimer

It does.

Operator

Joe Giordano, TD Cowen

This is Dan on for Joe. And I had a question on commercial aerospace. You spoke about obviously US travel volumes potentially declining, but you mentioned that international might remain strong. But in terms of actions that the airlines are taking, one of the major line companies talk about reducing maintenance spend. Is that something that you see broadly in the industry? Or is that something that would impact you as later. Basically, any color on what you're hearing from customers or how something like that would impact your business?

David Zapico

Yes. I think that the impact on our business is relatively muted the aftermarket piece of the business is a smaller part compared to the OE piece of the business and compared to the defense business. we could see a downturn in that part of the business. We're not seeing it now, but we're very diversified in some specific areas and there is a future downturn, we'll deal at it, but right now, it's not happening. That's a fact in our business.

I appreciate and I apologize if asked during the call a bit late, but are you seeing any pre-buys broadly in the market? And specifically for you guys was any part of your mitigation actions for tariffs that include you yourself prebuying? Yes. I think that we build customized products. So we didn't see -- there could be some prebuying, but we didn't see a lot of it.
So I think that we see that less than most, but there could have been some there. In terms of inventory purchases, we're certainly doing the smart things. And we have operators in our distributed model that are very, very to run their businesses like they own them. And if they think they want to bring some inventory in because it makes sense, they're making those decisions. Appreciate that.

Operator

Andrew Buscaglia, BNP Paribas.

Andrew Buscaglia

David, I wanted to ask you, your backlog has been at record levels almost every quarter now going back as far as I remember. So I'm curious, what gets this backlog to convert presumably, tariffs are now kind of delaying that conversion?
Well, maybe you're not seeing that, but that's the thought I had I guess this is very unique to AMETEK, and it sets you up pretty interesting once it does start to convert. So kind of what gets to go in your?

David Zapico

Yes. I think that the backlog is at high levels. It's -- there are some delays related to tariffs. We talked about some of the delays for the products that we're shipping directly to China. We're talking about other situations where the tariffs are causing customers that go back and have to get more money to buy products. So I think the tariffs are going to cause some delays.
And I think we have a good tariff mitigation plan. We have good localization plans and there's some comfort in having that backlog as we navigate through this thing over the next -- in terms of the coming quarters. But you're right, there are some delays caused by the tariffs.

Andrew Buscaglia

And we're -- are you saying, I don't know any patterns in the last few quarters, where the backlog specifically is building. It sounds like A&D, even some of your medical stuff, but is there a concentration in one area that you're seeing? Or can you talk a little bit more about the color within that backlog?

David Zapico

No, I don't think it's concentrated. I think you hit the areas. I mean, A&D backlog is a longer-cycle business. It's strong. I think the big change is the med tech with Paragon backlog is increasing.

Operator

Thank you. I'll now hand the call back over to Vice President of Investor Relations and Treasurer, Kevin Coleman for any closing remarks.

Kevin Coleman

Thanks again, Andrew, and thanks, everyone, for joining our call today. And as a reminder, a replay of the webcast can be accessed in the Investors section of ametek.com. Have a great day.

Operator

Ladies and gentlemen, thank you for participating. This does conclude today's program, and you may now disconnect.