Full Press Release Details
METTLER-TOLEDO INTERNATIONAL INC. REPORTS
SECOND QUARTER 2017 RESULTS
- - Very Strong Sales Growth - -
- - Further Margin Expansion and Excellent EPS Growth - -
COLUMBUS, Ohio, USA - July 27, 2017 - Mettler-Toledo International Inc. (NYSE: MTD) today announced second quarter results for 2017. Provided below are the highlights:
Second Quarter Results
Olivier Filliol, President and Chief Executive Officer, stated, "Sales growth in the quarter was very strong with excellent growth in Asia/Rest of World and the Americas. We continue to benefit from our productivity and margin initiatives which contributed to further margin expansion and excellent growth in EPS."
EPS in the quarter was $3.84, compared with the prior-year amount of $2.93. Adjusted EPS was $3.92, an increase of 22% over the prior-year amount of $3.22.
Sales were $653.7 million, a 10% increase in local currency sales, compared with $608.3 million in the prior-year quarter. Reported sales increased 7% as currency reduced sales growth by 3% in the quarter. As compared to the prior year, local currency sales increased 10% in the Americas, 4% in Europe and 15% in Asia / Rest of World. Adjusted operating income amounted to $148.5 million, a 15% increase from the prior-year amount of $129.1 million. Adjusted operating income is a non-GAAP measure, and a reconciliation to earnings before taxes is provided in the attached schedules.
EPS for the six months was $7.32, compared with the prior-year amount of $5.32. Adjusted EPS was $7.25, an increase of 28% over the prior-year amount of $5.68.
Sales were $1.248 billion, a 11% increase in local currency sales, compared with $1.148 billion in the prior-year period. Reported sales increased 9%, as currency reduced sales growth by 2% in the period. As compared to the prior year, local currency sales increased 12% in the Americas, 8% in Europe and 12% in Asia/Rest of World. Adjusted operating income amounted to $275.9 million, a 19% increase from the prior-year period amount of $231.1 million. Adjusted operating income is a non-GAAP measure, and a reconciliation to earnings before taxes is provided in the attached schedules.
The Company said that based on its assessment of market conditions today, management anticipates local currency sales growth in 2017 will be approximately 8%. This sales growth is expected to result in Adjusted EPS in the range of $17.25 to $17.35, an increase of 17%. This compares to previous guidance of Adjusted EPS in the range of $16.95 to $17.15.
For the third quarter 2017, local currency sales growth is expected to be approximately 5% and Adjusted EPS in the range of $4.25 to $4.30, an increase of 9% to 11%.
While the Company has provided an outlook for Adjusted EPS, it has not provided an outlook for EPS as it would require an estimate of 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.
Filliol concluded, "Our operating results for the last several quarters have been excellent. Our Field Turbo investments, Spinnaker sales and marketing initiatives and new product launches are yielding tangible results and we continue to further our margin and productivity initiatives. We will face more challenging comparisons for the remainder of the year but with continued strong execution, we believe we can continue to gain share and deliver a strong performance in 2017."
The Company will host a conference call to discuss its quarterly results today (Thursday, July 27) at 4:30 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 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 8-K to which this release has been furnished as an exhibit. All of the forward-looking statements are qualified in their entirety by reference to the factors discussed under the captions "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 | ||||||||||
| June 30, 2017 | % of sales | June 30, 2016 | % of sales | ||||||||
| Net sales | $ | 653,656 | (a) | 100.0 | $ | 608,286 | 100.0 | ||||
| Cost of sales | 278,739 | 42.6 | 260,710 | 42.9 | |||||||
| Gross profit | 374,917 | 57.4 | 347,576 | 57.1 | |||||||
| Research and development | 32,854 | 5.0 | 30,701 | 5.0 | |||||||
| Selling, general and administrative | 193,517 | 29.6 | 187,798 | 30.9 | |||||||
| Amortization | 10,249 | 1.6 | 8,655 | 1.4 | |||||||
| Interest expense | 8,171 | 1.3 | 6,872 | 1.1 | |||||||
| Restructuring charges | 4,023 | 0.6 | 2,205 | 0.4 | |||||||
| Other charges (income), net | (744 | ) | (0.1) | 8,173 | 1.3 | ||||||
| Earnings before taxes | 126,847 | 19.4 | 103,172 | 17.0 | |||||||
| Provision for taxes | 25,267 | 3.9 | 23,584 | 3.9 | |||||||
| Net earnings | $ | 101,580 | 15.5 | $ | 79,588 | 13.1 | |||||
| Basic earnings per common share: | |||||||||||
| Net earnings | $ | 3.94 | $ | 2.99 | |||||||
| Weighted average number of common shares | 25,751,374 | 26,631,015 | |||||||||
| Diluted earnings per common share: | |||||||||||
| Net earnings | $ | 3.84 | $ | 2.93 | |||||||
| Weighted average number of common and common equivalent shares | 26,439,529 | 27,143,284 | |||||||||
| Note: | |||||||||||
| (a) | Local currency sales increased 10% as compared to the same period in 2016. | ||||||||||
| RECONCILIATION OF EARNINGS BEFORE TAXES TO ADJUSTED OPERATING INCOME | |||||||||||
| Three months ended | Three months ended | ||||||||||
| June 30, 2017 | % of sales | June 30, 2016 | % of sales | ||||||||
| Earnings before taxes | $ | 126,847 | $ | 103,172 | |||||||
| Amortization | 10,249 | 8,655 | |||||||||
| Interest expense | 8,171 | 6,872 | |||||||||
| Restructuring charges | 4,023 | 2,205 | |||||||||
| Other charges (income), net | (744 | ) | 8,173 | (c) | |||||||
| Adjusted operating income | $ | 148,546 | (b) | 22.7 | $ | 129,077 | 21.2 | ||||
| Note: | |||||||||||
| (b) | Adjusted operating income increased 15% as compared to the same period in 2016. | ||||||||||
| (c) | Other charges (income), net included a one-time non-cash pension settlement charge of $8.2 million relate to a lump sum settlement to former employees of out U.S. pension plan for the three months ended June 30, 2016. |
| METTLER-TOLEDO INTERNATIONAL INC. CONSOLIDATED STATEMENTS OF OPERATIONS (amounts in thousands except share data) (unaudited) | ||||||||||||
| Six months ended | Six months ended | |||||||||||
| June 30, 2017 | % of sales | June 30, 2016 | % of sales | |||||||||
| Net sales | $ | 1,248,223 | (a) | 100.0 | $ | 1,147,960 | 100.0 | |||||
| Cost of sales | 530,406 | 42.5 | 500,477 | 43.6 | ||||||||
| Gross profit | 717,817 | 57.5 | 647,483 | 56.4 | ||||||||
| Research and development | 64,246 | 5.1 | 59,674 | 5.2 | ||||||||
| Selling, general and administrative | 377,689 | 30.3 | 356,719 | 31.1 | ||||||||
| Amortization | 20,294 | 1.6 | 17,079 | 1.5 | ||||||||
| Interest expense | 15,912 | 1.3 | 13,452 | 1.2 | ||||||||
| Restructuring charges | 5,455 | 0.4 | 3,085 | 0.2 | ||||||||
| Other charges (income), net | (6,474 | ) | (0.5 | ) | 7,889 | 0.7 | ||||||
| Earnings before taxes | 240,695 | 19.3 | 189,585 | 16.5 | ||||||||
| Provision for taxes | 46,649 | 3.8 | 44,323 | 3.8 | ||||||||
| Net earnings | $ | 194,046 | 15.5 | $ | 145,262 | 12.7 | ||||||
| Basic earnings per common share: | ||||||||||||
| Net earnings | $ | 7.51 | $ | 5.42 | ||||||||
| Weighted average number of common shares | 25,841,243 | 26,781,154 | ||||||||||
| Diluted earnings per common share: | ||||||||||||
| Net earnings | $ | 7.32 | $ | 5.32 | ||||||||
| Weighted average number of common and common equivalent shares | 26,514,311 | 27,283,012 | ||||||||||
| Note: | ||||||||||||
| (a) | Local currency sales increased 11% as compared to the same period in 2016. | |||||||||||
| RECONCILIATION OF EARNINGS BEFORE TAXES TO ADJUSTED OPERATING INCOME | ||||||||||||
| Six months ended | Six months ended | |||||||||||
| June 30, 2017 | % of sales | June 30, 2016 | % of sales | |||||||||
| Earnings before taxes | $ | 240,695 | $ | 189,585 | ||||||||
| Amortization | 20,294 | 17,079 | ||||||||||
| Interest expense | 15,912 | 13,452 | ||||||||||
| Restructuring charges | 5,455 | 3,085 | ||||||||||
| Other charges (income), net | (6,474 | ) | (b) | 7,889 | (d) | |||||||
| Adjusted operating income | $ | 275,882 | (c) | 22.1 | $ | 231,090 | 20.1 | |||||
| Note: | ||||||||||||
| (b) | Other charges (income), net included a one-time gain of $3.4 million for the six months ended June 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. | |||||||||||
| (c) | Adjusted operating income increased 19% as compared to the same period in 2016. | |||||||||||
| (d) | Other charges (income), net included a one-time non-cash pension settlement charge of $8.2 million relate to a lump sum settlement to former employees of out U.S. pension plan for the six months ended June 30, 2016. |
| METTLER-TOLEDO INTERNATIONAL INC. CONDENSED CONSOLIDATED BALANCE SHEETS (amounts in thousands) (unaudited) | |||||||
| June 30, 2017 | December 31, 2016 | ||||||
| Cash and cash equivalents | $ | 146,334 | $ | 158,674 | |||
| Accounts receivable, net | 448,098 | 454,988 | |||||
| Inventories | 253,734 | 222,047 | |||||
| Other current assets and prepaid expenses | 65,587 | 61,075 | |||||
| Total current assets | 913,753 | 896,784 | |||||
| Property, plant and equipment, net | 600,900 | 563,707 | |||||
| Goodwill and other intangible assets, net | 647,891 | 643,433 | |||||
| Other non-current assets | 85,406 | 62,853 | |||||
| Total assets | $ | 2,247,950 | $ | 2,166,777 | |||
| Short-term borrowings and maturities of long-term debt | $ | 21,608 | $ | 18,974 | |||
| Trade accounts payable | 143,607 | 146,593 | |||||
| Accrued and other current liabilities | 423,594 | 421,948 | |||||
| Total current liabilities | 588,809 | 587,515 | |||||
| Long-term debt | 947,781 | 875,056 | |||||
| Other non-current liabilities | 249,441 | 269,263 | |||||
| Total liabilities | 1,786,031 | 1,731,834 | |||||
| Shareholders' equity | 461,919 | 434,943 | |||||
| Total liabilities and shareholders' equity | $ | 2,247,950 | $ | 2,166,777 |
| METTLER-TOLEDO INTERNATIONAL INC. CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (amounts in thousands) (unaudited) | |||||||||||||||
| Three months ended | Six months ended | ||||||||||||||
| June 30 | June 30 | ||||||||||||||
| 2017 | 2016 | 2017 | 2016 | ||||||||||||
| Cash flow from operating activities: | |||||||||||||||
| Net earnings | $ | 101,580 | $ | 79,588 | $ | 194,046 | $ | 145,262 | |||||||
| Adjustments to reconcile net earnings to | |||||||||||||||
| net cash provided by operating activities: | |||||||||||||||
| Depreciation | 7,953 | 7,994 | 15,919 | 16,116 | |||||||||||
| Amortization | 10,249 | 8,655 | 20,294 | 17,079 | |||||||||||
| Deferred tax benefit | (2,264 | ) | (5,548 | ) | (3,840 | ) | (8,852 | ) | |||||||
| Other | 4,211 | 3,569 | 8,023 | 7,148 | |||||||||||
| Gain on facility sale | - | - | (3,394 | ) | - | ||||||||||
| Non-cash pension settlement charge | - | 8,189 | - | 8,189 | |||||||||||
| Increase (decrease) in cash resulting from changes in | |||||||||||||||
| operating assets and liabilities | 16,049 | 18,425 | (25,671 | ) | (22,565 | ) | |||||||||
| Net cash provided by operating activities | 137,778 | 120,872 | 205,377 | 162,377 | |||||||||||
| Cash flows from investing activities: | |||||||||||||||
| Proceeds from sale of property, plant and equipment (a) | 206 | 83 | 10,209 | 218 | |||||||||||
| Purchase of property, plant and equipment | (27,514 | ) | (14,510 | ) | (48,529 | ) | (28,858 | ) | |||||||
| Acquisitions | (697 | ) | - | (697 | ) | (4,329 | ) | ||||||||
| Net hedging settlements on intercompany loans | (1,345 | ) | (1,053 | ) | (1,033 | ) | 1,075 | ||||||||
| Net cash used in investing activities | (29,350 | ) | (15,480 | ) | (40,050 | ) | (31,894 | ) | |||||||
| Cash flows from financing activities: | |||||||||||||||
| Proceeds from borrowings | 200,189 | 163,147 | 672,921 | 392,560 | |||||||||||
| Repayments of borrowings | (205,281 | ) | (145,217 | ) | (615,162 | ) | (269,684 | ) | |||||||
| Proceeds from exercise of stock options | 8,734 | 8,056 | 16,935 | 13,965 | |||||||||||
| Repurchases of common stock | (124,952 | ) | (124,997 | ) | (249,949 | ) | (249,997 | ) | |||||||
| Other financing activities | (7,205 | ) | (555 | ) | (7,205 | ) | (680 | ) | |||||||
| Net cash used in financing activities | (128,515 | ) | (99,566 | ) | (182,460 | ) | (113,836 | ) | |||||||
| Effect of exchange rate changes on cash and cash equivalents | 1,528 | (1,775 | ) | 4,793 | (888 | ) | |||||||||
| Net increase (decrease) in cash and cash equivalents | (18,559 | ) | 4,051 | (12,340 | ) | 15,579 | |||||||||
| Cash and cash equivalents: | |||||||||||||||
| Beginning of period | 164,893 | 110,595 | 158,674 | 98,887 | |||||||||||
| End of period | $ | 146,334 | $ | 114,646 | $ | 146,334 | $ | 114,646 | |||||||
| RECONCILIATION OF NET CASH PROVIDED BY OPERATING ACTIVITIES TO FREE CASH FLOW | |||||||||||||||
| Net cash provided by operating activities | $ | 137,778 | $ | 120,872 | $ | 205,377 | $ | 162,377 | |||||||
| Payments in respect of restructuring activities | 2,748 | 2,461 | 5,326 | 4,302 | |||||||||||
| Proceeds from sale of property, plant and equipment | 206 | 83 | 10,209 | 218 | |||||||||||
| Purchase of property, plant and equipment | (27,514 | ) | (14,510 | ) | (48,529 | ) | (28,858 | ) | |||||||
| Free cash flow | $ | 113,218 | $ | 108,906 | $ | 172,383 | $ | 138,039 | |||||||
| Notes: | |||||||||||||||
| (a) Proceeds from sale of property, plant and equipment included $9.9 million relating to the sale of a facility in Switzerland in connection with our initiative to consolidate certain Swiss operations into a new facility for the six months ended June 30, 2017. |
| METTLER-TOLEDO INTERNATIONAL INC. OTHER OPERATING STATISTICS | |||||||||||||||||||
| SALES GROWTH BY DESTINATION | |||||||||||||||||||
| (unaudited) | |||||||||||||||||||
| Europe | Americas | Asia/RoW | Total | ||||||||||||||||
| U.S. Dollar Sales Growth (Decrease) | |||||||||||||||||||
| Three Months Ended June 30, 2017 | 1% | 9% | 13% | 7% | |||||||||||||||
| Six Months Ended June 30, 2017 | 4% | 11% | 10% | 9% | |||||||||||||||
| Local Currency Sales Growth (Decrease) | |||||||||||||||||||
| Three Months Ended June 30, 2017 | 4% | 10% | 15% | 10% | |||||||||||||||
| Six Months Ended June 30, 2017 | 8% | 12% | 12% | 11% | |||||||||||||||
| RECONCILIATION OF DILUTED EPS AS REPORTED TO ADJUSTED DILUTED EPS | |||||||||||||||||||
| (unaudited) | |||||||||||||||||||
| Three months ended | Six months ended | ||||||||||||||||||
| June 30 | June 30 | ||||||||||||||||||
| 2017 | 2016 | % Growth | 2017 | 2016 | % Growth | ||||||||||||||
| EPS as reported, diluted | $ | 3.84 | $ | 2.93 | 31% | $ | 7.32 | $ | 5.32 | 38% | |||||||||
| Restructuring charges, net of tax | 0.12 | (a) | 0.06 | (a) | 0.16 | (a) | 0.09 | (a) | |||||||||||
| Purchased intangible amortization, net of tax | 0.06 | (b) | 0.04 | (b) | 0.11 | (b) | 0.08 | (b) | |||||||||||
| Income tax expense | (0.10 | ) | (c) | - | (0.24 | ) | (c) | - | |||||||||||
| Gain on facility sale | - | (d) | - | (0.10 | ) | (d) | - | ||||||||||||
| Non-cash pension settlement charge, net of tax | - | 0.19 | (e) | - | 0.19 | (e) | |||||||||||||
| Adjusted EPS, diluted | $ | 3.92 | $ | 3.22 | 22% | $ | 7.25 | $ | 5.68 | 28% | |||||||||
| Notes: | |||||||||||||||||||
| (a) | Represents the EPS impact of restructuring charges of $4.0 million ($3.1 million after tax) and $2.2 million ($1.7 million after tax) for the three months ended June 30, 2017 and 2016, and $5.5 million ($4.3 million after tax) and $3.1 million ($2.3 million after tax) for the six months ended June 30, 2017 and 2016, respectively, which primarily include employee related costs. | ||||||||||||||||||
| (b) | Represents the EPS impact of purchased intangibles amortization, net of tax, of $1.5 million and $1.0 million for the three month periods ended June 30, 2017 and 2016, and $3.0 million and $2.1 million for the six months ended June 30, 2017 and 2016, respectively. | ||||||||||||||||||
| (c) | Represents the EPS impact of the difference between our reported tax rate of 20% and 19% during the three and six months ending June 30, 2017 and our estimated annual income tax rate of 22% pertaining to excess tax benefits associated with stock option exercises. | ||||||||||||||||||
| (d) | Represents the EPS impact of a one-time gain of $3.4 million ($2.7 million after tax) for the six months ended June 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. | ||||||||||||||||||
| (e) | Represents the EPS impact of a one-time non-cash pension settlement charge of $8.2 million ($5.1 million after tax) related to a lump sum settlement to former employees of our U.S. pension plan for the three and six months ended June 30, 2016. |