Mettler-Toledo International Inc. Reports Third Quarter 2018 Results

PRNewswire 8-Nov-2018 4:10 PM

COLUMBUS, Ohio, Nov. 8, 2018 /PRNewswire/ -- Mettler-Toledo International Inc. (NYSE:MTD) today announced third quarter results for 2018.  Provided below are the highlights:

  • Reported sales increased 5% compared with the prior year.  In local currency, sales increased 7% in the quarter as currency reduced sales growth by 2%. 
  • Net earnings per diluted share as reported (EPS) were $4.93, compared with $3.99 in the prior-year period.  Adjusted EPS was $5.12, an increase of 17% over the prior-year amount of $4.36.  Adjusted EPS is a non-GAAP measure, and we have included a reconciliation to EPS on the last page of the attached schedules. 

Third Quarter Results

Olivier Filliol, President and Chief Executive Officer, stated, "We had very good sales growth with particularly strong results in our Laboratory products.  In addition, China had very good growth despite a difficult comparison with excellent sales growth in the prior year.  Earnings growth was again strong as we continue to benefit from our margin and productivity initiatives."

GAAP Results

EPS in the quarter was $4.93, compared with the prior-year amount of $3.99.  

Compared with the prior year, total reported sales increased 5% to $734.8 million.  By region, reported sales increased 5% in the Americas, 1% in Europe and 9% in Asia/Rest of World.  Earnings before tax amounted to $160.4 million, compared with $139.6 million in the prior year. 

Non-GAAP Results

Adjusted EPS was $5.12, an increase of 17% over the prior-year amount of $4.36.      

Compared with the prior year, total sales in local currency increased 7% as currency reduced reported sales growth by 2%.  By region, local currency sales increased 5% in the Americas, 3% in Europe and 11% in Asia/Rest of World.  Adjusted Operating Income amounted to $182.0 million, a 13% increase from the prior-year amount of $161.7 million

Adjusted EPS and Adjusted Operating Income are non-GAAP measures. Reconciliations to the most comparable GAAP measures are provided in the attached schedules.

Nine Month Results

GAAP Results

EPS in the first nine months was $12.81, compared with the prior-year amount of $11.31.  

Compared with the prior-year period, total reported sales increased 9% to $2.118 billion.  By region, reported sales increased 5% in the Americas, 9% in Europe and 14% in Asia/Rest of World.  Earnings before tax amounted to $421.4 million, compared with $380.3 million in the prior year. 

Non-GAAP Results

Adjusted EPS was $13.50, an increase of 16% over the prior-year amount of $11.61.     

Compared with the prior-year period, total sales in local currency increased 6% as currency benefited reported sales growth by 3%. By region, local currency sales increased 5% in the Americas, 3% in Europe and 10% in Asia/Rest of World.  Adjusted Operating Income amounted to $490.8 million, a 13% increase from the prior-year amount of $435.7 million

Adjusted EPS and Adjusted Operating Income are non-GAAP measures. Reconciliations to the most comparable GAAP measures are provided in the attached schedules.

Share Repurchase Authorization 

The Company has a $4.5 billion stock repurchase program of which $4.3 billion has been utilized.  The Company announced that the Board of Directors authorized an additional $2.0 billion to the share repurchase program.  Any amount remaining under the existing program will be incorporated into the new authorization.  Filliol commented, "The additional authorization allows us to continue the share repurchase program which has provided strong returns for our shareholders over many years.  We are confident in our future growth prospects and our balance sheet and cash flow generation remain very strong."  The Company expects the additional authorization will be utilized over the next several years.  The Company added that the repurchases will be made through open market transactions, and the amount and timing will depend on business and market conditions, stock price, trading restrictions, the level of acquisition activity and other factors. 

Outlook

Based on today's assessment of market conditions, management anticipates that local currency sales growth in the fourth quarter 2018 will be approximately 6%, and Adjusted EPS is forecasted to be in the range of $6.72 to $6.77, an increase of 13%.  Included in the fourth quarter guidance is an estimated 5% headwind to Adjusted EPS growth due to adverse currency and higher tariff costs. 

For the full year 2018, local currency sales growth is expected to be approximately 6%.  This sales growth is expected to result in Adjusted EPS in the range of $20.20 to $20.25, an increase of 15%.  This compares with previous guidance of Adjusted EPS in the range of $20.10 to $20.25.

The Company said that based on its assessment of market conditions today, management anticipates local currency sales growth in 2019 will be approximately 5%.  This sales growth is expected to result in Adjusted EPS in the range of $22.40 to $22.60.  Using the mid-point of 2018 guidance, this would result in Adjusted EPS growth of 11% to 12%.  The percentage headwind to Adjusted EPS growth in 2019 due to adverse currency and higher tariff costs will be similar to what we expect in the fourth quarter 2018. 

While the Company has provided an outlook for local currency sales growth and Adjusted EPS, it has not provided an outlook for reported sales growth or EPS as it would require an estimate of currency exchange fluctuations and non-recurring items, which are not yet known.  The Company noted in making its outlook that economic uncertainty remains in certain regions of the world and market conditions are subject to change.   

Conclusion

Filliol concluded, "Demand remains solid in our markets and we are benefiting from our growth initiatives including investments in our field force, Spinnaker sales and marketing programs and new product launches. While global business activity remains good overall, we are more cautious on the global economy compared with earlier in the year.  We will monitor closely and remain agile and adapt our plans if market conditions change.  We are confident in our ability to execute on our growth initiatives and believe we are well positioned to continue to gain market share.  Looking ahead to 2019, we assume current market conditions will remain largely unchanged.  With the benefit of our margin and productivity initiatives, and despite greater headwinds due to currency and tariffs, we believe we can continue to deliver strong results for 2018 and 2019."

Other Matters

The Company will host a conference call to discuss its quarterly results today (Thursday, Nov. 8) at 5:00 p.m. Eastern Time.  To hear a live webcast or replay of the call, visit the investor relations page on the Company's website at www.mt.com/investors.  The presentation referenced in the conference call will be located on the website prior to the call.

METTLER TOLEDO (NYSE:MTD) is a leading global supplier of precision instruments and services. We have strong leadership positions in all of our businesses and believe we hold global number-one market positions in most of them. We are recognized as an innovation leader and our solutions are critical in key R&D, quality control and manufacturing processes for customers in a wide range of industries including life sciences, food and chemicals. Our sales and service network is one of the most extensive in the industry. Our products are sold in more than 140 countries and we have a direct presence in approximately 40 countries. With proven growth strategies and a focus on execution, we have achieved a long-term track record of strong financial performance. For more information, please visit www.mt.com.

Statements in this press release which are not historical facts constitute "forward-looking statements" within the meaning of Section 27A of the U.S. Securities Act of 1933 and Section 21E of the U.S. Securities Exchange Act of 1934.  These statements involve known and unknown risks, uncertainties and other factors that may cause our or our businesses' actual results, levels of activity, performance or achievements to be materially different from those expressed or implied by any forward-looking statements.  In some cases, you can identify forward-looking statements by terminology such as "may," "will," "could," "would," "should," "expect," "plan," "anticipate," "intend," "believe," "estimate," "predict," "potential" or "continue" or the negative of those terms or other comparable terminology.  For a discussion of these risks and uncertainties, please see the discussion on forward-looking statements in our current report on Form 10-K.  All of the forward-looking statements are qualified in their entirety by reference to the factors discussed under the caption "Factors affecting our future operating results" and in the "Business" and "Management's Discussion and Analysis of Financial Condition and Results of Operations" sections of our annual report on Form 10-K for the most recently completed fiscal year, which describe risks and factors that could cause results to differ materially from those projected in those forward-looking statements.

 

METTLER-TOLEDO INTERNATIONAL INC.

CONSOLIDATED STATEMENTS OF OPERATIONS

(amounts in thousands except share data)

(unaudited)
























Three months ended







Three months ended









September 30, 2018


% of sales



September 30, 2017


% of sales






















Net sales



$734,846


(a)


100.0





$698,799




100.0



Cost of sales



315,592




42.9





297,824


(b)


42.6



Gross profit



419,254




57.1





400,975




57.4























Research and development



34,838




4.7





32,203


(b)


4.6



Selling, general and administrative 



202,451




27.6





207,033


(b)


29.6



Amortization



11,856




1.6





10,716




1.5



Interest expense



9,003




1.2





8,248




1.2



Restructuring charges



2,222




0.3





3,385




0.5



Other charges (income), net



(1,479)




(0.1)





(237)


(b)


(0.0)



Earnings before taxes



160,363




21.8





139,627




20.0























Provision for taxes



33,710




4.6





34,677




5.0



Net earnings



$126,653




17.2





$104,950




15.0























Basic earnings per common share:



















Net earnings 



$5.04









$4.10







Weighted average number of common shares


25,126,061









25,613,433



























Diluted earnings per common share:



















Net earnings 



$4.93









$3.99







Weighted average number of common 



25,683,365









26,303,529







  and common equivalent shares







































Note:



















(a)  Local currency sales increased 7% as compared to the same period in 2017.



(b)  In accordance with the new accounting rules that went into effect on January 1, 2018, the Company reclassified a net pension benefit 
      of $1.2 million into other charges (income) from other income statement categories for the three months ended September 30, 2017 to 
      be consistent with the 2018 presentation.






















RECONCILIATION OF EARNINGS BEFORE TAXES TO ADJUSTED OPERATING INCOME
























Three months ended







Three months ended









September 30, 2018


% of sales



September 30, 2017


% of sales






















Earnings before taxes



$160,363









$139,627







 Amortization



11,856









10,716







 Interest expense



9,003









8,248







 Restructuring charges



2,222









3,385







 Other charges (income), net



(1,479)









(237)


(b)





Adjusted operating income 



$181,965


(c)


24.8





$161,739




23.1























Note:



















(c)  Adjusted operating income increased 13% as compared to the same period in 2017.



 

 

METTLER-TOLEDO INTERNATIONAL INC.

CONSOLIDATED STATEMENTS OF OPERATIONS

(amounts in thousands except share data)

(unaudited)
























Nine months ended







Nine months ended









September 30, 2018


% of sales



September 30, 2017


% of sales


















Net sales



$2,117,663


(a)


100.0





$1,947,022




100.0



Cost of sales



910,851




43.0





827,046

(b)


42.5



Gross profit



1,206,812




57.0





1,119,976




57.5























Research and development



104,866




5.0





95,985

(b)


4.9



Selling, general and administrative 



611,149




28.9





588,313

(b)


30.2



Amortization



35,561




1.7





31,010




1.6



Interest expense



25,671




1.2





24,160




1.2



Restructuring charges



13,956




0.6





8,840




0.5



Other charges (income), net



(5,795)




(0.3)





(8,654)

(b)(c)


(0.4)



Earnings before taxes



421,404




19.9





380,322




19.5























Provision for taxes



89,979




4.2





81,326




4.1



Net earnings



$331,425




15.7





$298,996




15.4























Basic earnings per common share:



















Net earnings 



$13.10









$11.60







Weighted average number of common shares


25,296,680









25,764,472



























Diluted earnings per common share:



















Net earnings 



$12.81









$11.31







Weighted average number of common 



25,877,979









26,446,677







  and common equivalent shares







































Note:



















(a)  Local currency sales increased 6% as compared to the same period in 2017.



(b)  In accordance with the new accounting rules that went into effect on January 1, 2018, the Company reclassified a net pension benefit of 
      $3.1 million into other charges (income) from other income statement categories for the nine months ended September 30, 2017 to be 
      consistent with the 2018 presentation.


(c)  Other charges (income), net includes a one-time gain of $3.4 million for the nine months ended September 30, 2017 relating to the sale 
      of a facility in Switzerland in connection with our initiative to consolidate certain Swiss operations into a new facility.























RECONCILIATION OF EARNINGS BEFORE TAXES TO ADJUSTED OPERATING INCOME
























Nine months ended







Nine months ended









September 30, 2018


% of sales



September 30, 2017


% of sales






















Earnings before taxes



$421,404









$380,322







 Amortization



35,561









31,010







 Interest expense



25,671









24,160







 Restructuring charges



13,956









8,840







 Other charges (income), net



(5,795)









(8,654)

(b)(c)





Adjusted operating income 



$490,797

(d)


23.2





$435,678




22.4























Note:



















(d)  Adjusted operating income increased 13% as compared to the same period in 2017.



 

 

METTLER-TOLEDO INTERNATIONAL INC.

CONDENSED CONSOLIDATED BALANCE SHEETS

(amounts in thousands)

(unaudited)























September 30, 2018



December 31, 2017











Cash and cash equivalents



$137,448





$148,687


Accounts receivable, net



494,887





528,615


Inventories



277,266





255,390


Other current assets and prepaid expenses



61,898





74,031


Total current assets



971,499





1,006,723












Property, plant and equipment, net



697,689





668,271


Goodwill and other intangibles assets, net



758,766





766,556


Other non-current assets



129,710





108,255


Total assets



$2,557,664





$2,549,805












Short-term borrowings and maturities of long-term debt


$55,753





$19,677


Trade accounts payable



156,447





167,627


Accrued and other current liabilities



485,269





502,369


Total current liabilities



697,469





689,673












Long-term debt



988,894





960,170


Other non-current liabilities



339,686





352,682


Total liabilities



2,026,049





2,002,525












Shareholders' equity



531,615





547,280


Total liabilities and shareholders' equity



$2,557,664





$2,549,805


 

 

METTLER-TOLEDO INTERNATIONAL INC.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

 (amounts in thousands)

 (unaudited)












Three months ended


Nine months ended



September 30,


September 30,



2018


2017


2018


2017










Cash flow from operating activities:








    Net earnings

$126,653


$104,950


$331,425


$298,996

    Adjustments to reconcile net earnings to








      net cash provided by operating activities:








   Depreciation

9,283


8,502


27,889


24,421

   Amortization

11,856


10,716


35,561


31,010

   Deferred tax benefit

(1,792)


(3,914)


(11,901)


(7,754)

   Other

2,763


4,027


9,799


8,656

 Increase (decrease) in cash resulting from changes in








  operating assets and liabilities

911


21,577


(26,340)


(4,094)

                Net cash provided by operating activities

149,674


145,858


366,433


351,235










Cash flows from investing activities:








    Proceeds from sale of property, plant and equipment

3,279


228


7,809


10,437

    Purchase of property, plant and equipment

(35,079)


(37,297)


(96,665)


(85,826)

    Acquisitions

(4,462)


(107,748)


(4,962)


(108,445)

    Net hedging settlements on intercompany loans

(7,822)


4,749


(780)


3,716

                Net cash used in investing activities

(44,084)


(140,068)


(94,598)


(180,118)










Cash flows from financing activities:








    Proceeds from borrowings

169,094


312,773


772,274


985,694

    Repayments of borrowings

(201,180)


(218,899)


(703,704)


(834,061)

    Proceeds from exercise of stock options

4,817


6,380


14,777


23,315

    Repurchases of common stock 

(118,750)


(85,049)


(356,249)


(334,998)

    Other financing activities

(29)


-


(1,664)


(7,205)

                Net cash (used in) provided by financing activities

(146,048)


15,205


(274,566)


(167,255)










Effect of exchange rate changes on cash and cash equivalents

(5,284)


1,757


(8,508)


6,550










Net (decrease) increase in cash and cash equivalents

(45,742)


22,752


(11,239)


10,412










Cash and cash equivalents:








    Beginning of period

183,190


146,334


148,687


158,674

    End of period

$137,448


$169,086


$137,448


$169,086



















RECONCILIATION OF NET CASH PROVIDED BY OPERATING ACTIVITIES TO ADJUSTED FREE CASH FLOW










Net cash provided by operating activities

$149,674


$145,858


$366,433


$351,235

    Payments in respect of restructuring activities

3,292


2,375


16,701


7,701

    Payments for acquisition costs

140


764


140


764

    Transition tax payment

-


-


4,200


-

    Proceeds from sale of property, plant and equipment

3,279


228


7,809


10,437

    Purchase of property, plant and equipment

(35,079)


(37,297)


(96,665)


(85,826)

Adjusted free cash flow

$121,306


$111,928


$298,618


$284,311

 

 

METTLER-TOLEDO INTERNATIONAL INC.


OTHER OPERATING STATISTICS




























SALES GROWTH BY DESTINATION


(unaudited)



















Europe


Americas


Asia/RoW

Total
















U.S. Dollar Sales Growth













Three Months Ended September 30, 2018



1%


5%


9%


5%




Nine Months Ended September 30, 2018



9%


5%


14%


9%
















Local Currency Sales Growth













Three Months Ended September 30, 2018



3%


5%


11%


7%




Nine Months Ended September 30, 2018



3%


5%


10%


6%





























RECONCILIATION OF DILUTED EPS AS REPORTED TO ADJUSTED DILUTED EPS 


(unaudited)

















Three months ended


Nine months ended



September 30,


September 30,



2018


2017


% Growth


2018


2017


% Growth














EPS as reported, diluted

$4.93


$3.99


24%


$12.81


$11.31


13%














Restructuring charges, net of tax

0.07

(a)

0.10

(a)



0.42

(a)

0.26

(a)


Purchased intangible amortization, net of tax

0.10

(b)

0.07

(b)



0.29

(b)

0.18

(b)


Income tax expense

0.02

(c)

0.15

(c)



(0.02)

(c)

(0.09)

(c)


Acquisition costs, net of tax

-


0.05

(d)



-


0.05

(d)


Gain on facility sale

-


-




-


(0.10)

(e)















Adjusted EPS, diluted

$5.12


$4.36


17%


$13.50


$11.61


16%














Notes:












(a)

Represents the EPS impact of restructuring charges of $2.2 million ($1.7 million after tax) and $3.4 million ($2.6 million after tax) for the three
months ended September 30, 2018 and 2017, and $14.0 million ($10.9 million after tax) and $8.8 million ($6.9 million after tax) for the nine
months ended September 30, 2018 and 2017, respectively. Restructuring charges in 2018 primarily relates to employee and other costs
associated with the consolidation of facilities.

(b)

Represents the EPS impact of purchased intangibles amortization, net of tax, of $3.4 million ($2.5 million after tax) and $2.6 million ($1.7 million
after tax) for the three months ended September 30, 2018 and 2017, and $10.0 million ($7.5 million after tax) and $7.2 million ($4.7 million after
tax) for the nine months ended September 30, 2018 and 2017, respectively.

(c)

Represents the EPS impact on our reported tax rate during the three and nine months ending September 30, 2018 and 2017, respectively, due
to excess tax benefits associated with stock option exercises. 

(d)

Represents the EPS impact of acquisition costs of $1.7 million ($1.3 million after tax) for the three and nine months ended September 30, 2017.

(e)

Represents the EPS impact of a one-time gain of $3.4 million ($2.7 million after tax) for the nine months ended September 30, 2017 relating to
the sale of a facility in Switzerland in connection with our initiative to consolidate certain Swiss operations into a new facility.

 

Cision View original content:http://www.prnewswire.com/news-releases/mettler-toledo-international-inc-reports-third-quarter-2018-results-300747089.html

SOURCE Mettler-Toledo International Inc.

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