Full Press Release Details
METTLER-TOLEDO INTERNATIONAL INC. REPORTS
SECOND QUARTER 2018 RESULTS
- - Very Good Sales Growth - -
- - Strong EPS Growth - -
COLUMBUS, Ohio, USA - July 26, 2018 - Mettler-Toledo International Inc. (NYSE: MTD) today announced second quarter results for 2018. Provided below are the highlights:
Second Quarter Results
Olivier Filliol, President and Chief Executive Officer, stated, "We had very good sales growth in the quarter against an excellent prior year. Our sales performance was broad-based with China being especially robust. We also achieved another quarter of strong EPS growth."
EPS in the quarter was $4.31, compared with the prior-year amount of $3.84.
As compared with the prior year, total reported sales increased 10% to $722.0 million. By region, reported sales increased 4% in the Americas, 14% in Europe and 15% in Asia/Rest of World. Earnings before tax amounted to $143.6 million as compared to $126.8 million in the prior year.
Adjusted EPS was $4.65, an increase of 19% over the prior-year amount of $3.92.
As compared to the prior year, total sales in local currency increased 7% as currency benefited reported sales growth by 3%. By region, local currency sales increased 4% in the Americas, 7% in Europe and 9% in Asia/Rest of World. Adjusted operating income amounted to $169.3 million, a 15% increase from the prior-year amount of $147.4 million.
Adjusted EPS and Adjusted operating income are non-GAAP measures. Reconciliations to the most comparable GAAP measures are provided in the attached schedules.
EPS in the first six months was $7.88, compared with the prior-year amount of $7.32.
As compared with the prior-year period, total reported sales increased 11% to $1.383 billion. By region, reported sales increased 5% in the Americas, 13% in Europe and 16% in Asia/Rest of World. Earnings before tax amounted to $261.0 million as compared to $240.7 million in the prior year.
Adjusted EPS was $8.38, an increase of 16% over the prior-year amount of $7.25.
As compared to the prior-year period, total sales in local currency increased 6% as currency benefited reported sales growth by 5%. 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 $308.8 million, a 13% increase from the prior-year amount of $273.9 million.
Adjusted EPS and Adjusted operating income are non-GAAP measures. Reconciliations to the most comparable GAAP measures are provided in the attached schedules.
The Company said that, based on its assessment of market conditions today, management anticipates local currency sales growth in 2018 will be approximately 6%. This sales growth is expected to result in Adjusted EPS in the range of $20.10 to $20.25, which reflects growth of 14% to 15%. This guidance remains the same as previous guidance.
Management anticipates that local currency sales growth in the third quarter 2018 will be approximately 6%, and Adjusted EPS is forecasted to be in the range of $4.97 to $5.02, an increase of 14% to 15%.
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.
Filliol concluded, "Demand remains solid in our markets and we continue to achieve favorable results from our growth initiatives. Our sales growth achievement in the first half of the year was especially impressive given the excellent growth in the prior-year period. Earnings growth was very good in the first half and, assuming market conditions do not deteriorate, we remain confident in our outlook for the remainder of the year. We believe we are well-positioned to continue to gain share and drive further earnings growth through new product launches, sales and marketing programs, sales investments, and margin and productivity initiatives."
The Company will host a conference call to discuss its quarterly results today (Thursday, July 26) 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 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 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, 2018 | % of sales | June 30, 2017 | % of sales | ||||||||||
| Net sales | $ | 721,996 | (a) | 100.0 | $ | 653,656 | 100.0 | ||||||
| Cost of sales | 309,371 | 42.8 | 278,044 | (b) | 42.5 | ||||||||
| Gross profit | 412,625 | 57.2 | 375,612 | 57.5 | |||||||||
| Research and development | 35,315 | 4.9 | 32,582 | (b) | 5.0 | ||||||||
| Selling, general and administrative | 208,024 | 28.8 | 195,624 | (b) | 29.9 | ||||||||
| Amortization | 11,970 | 1.7 | 10,249 | 1.6 | |||||||||
| Interest expense | 8,309 | 1.2 | 8,171 | 1.3 | |||||||||
| Restructuring charges | 7,321 | 1.0 | 4,023 | 0.6 | |||||||||
| Other charges (income), net | (1,916 | ) | (0.3 | ) | (1,884 | ) | (b) | (0.3 | ) | ||||
| Earnings before taxes | 143,602 | 19.9 | 126,847 | 19.4 | |||||||||
| Provision for taxes | 32,134 | 4.5 | 25,267 | 3.9 | |||||||||
| Net earnings | $ | 111,468 | 15.4 | $ | 101,580 | 15.5 | |||||||
| Basic earnings per common share: | |||||||||||||
| Net earnings | $ | 4.41 | $ | 3.94 | |||||||||
| Weighted average number of common shares | 25,299,414 | 25,751,374 | |||||||||||
| Diluted earnings per common share: | |||||||||||||
| Net earnings | $ | 4.31 | $ | 3.84 | |||||||||
| Weighted average number of common and common equivalent shares | 25,867,383 | 26,439,529 | |||||||||||
| 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 $1.1 million into other charges (income) from other income statement categories for the three months ended June 30, 2017 to be consistent with the 2018 presentation. | ||||||||||||
| RECONCILIATION OF EARNINGS BEFORE TAXES TO ADJUSTED OPERATING INCOME | |||||||||||||
| Three months ended | Three months ended | ||||||||||||
| June 30, 2018 | % of sales | June 30, 2017 | % of sales | ||||||||||
| Earnings before taxes | $ | 143,602 | $ | 126,847 | |||||||||
| Amortization | 11,970 | 10,249 | |||||||||||
| Interest expense | 8,309 | 8,171 | |||||||||||
| Restructuring charges | 7,321 | 4,023 | |||||||||||
| Other charges (income), net | (1,916 | ) | (1,884 | ) | (b) | ||||||||
| Adjusted operating income | $ | 169,286 | (c) | 23.4 | $ | 147,406 | 22.6 | ||||||
| Note: | |||||||||||||
| (c) | Adjusted operating income increased 15% as compared to the same period in 2017. |
| METTLER-TOLEDO INTERNATIONAL INC. CONSOLIDATED STATEMENTS OF OPERATIONS (amounts in thousands except share data) (unaudited) | |||||||||||||
| Six months ended | Six months ended | ||||||||||||
| June 30, 2018 | % of sales | June 30, 2017 | % of sales | ||||||||||
| Net sales | $ | 1,382,817 | (a) | 100.0 | $ | 1,248,223 | 100.0 | ||||||
| Cost of sales | 595,259 | 43.0 | 529,222 | (b) | 42.4 | ||||||||
| Gross profit | 787,558 | 57.0 | 719,001 | 57.6 | |||||||||
| Research and development | 70,028 | 5.1 | 63,782 | (b) | 5.1 | ||||||||
| Selling, general and administrative | 408,698 | 29.6 | 381,280 | (b) | 30.5 | ||||||||
| Amortization | 23,705 | 1.7 | 20,294 | 1.6 | |||||||||
| Interest expense | 16,668 | 1.2 | 15,912 | 1.3 | |||||||||
| Restructuring charges | 11,734 | 0.8 | 5,455 | 0.4 | |||||||||
| Other charges (income), net | (4,316 | ) | (0.3 | ) | (8,417 | ) | (b)(c) | (0.6 | ) | ||||
| Earnings before taxes | 261,041 | 18.9 | 240,695 | 19.3 | |||||||||
| Provision for taxes | 56,269 | 4.1 | 46,649 | 3.8 | |||||||||
| Net earnings | $ | 204,772 | 14.8 | $ | 194,046 | 15.5 | |||||||
| Basic earnings per common share: | |||||||||||||
| Net earnings | $ | 8.07 | $ | 7.51 | |||||||||
| Weighted average number of common shares | 25,383,402 | 25,841,243 | |||||||||||
| Diluted earnings per common share: | |||||||||||||
| Net earnings | $ | 7.88 | $ | 7.32 | |||||||||
| Weighted average number of common and common equivalent shares | 25,979,508 | 26,514,311 | |||||||||||
| 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 $1.9 million into other charges (income) from other income statement categories for the six months ended June 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 six months ended June 30, 2017 relating to the sale of the 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 | |||||||||||||
| Six months ended | Six months ended | ||||||||||||
| June 30, 2018 | % of sales | June 30, 2017 | % of sales | ||||||||||
| Earnings before taxes | $ | 261,041 | $ | 240,695 | |||||||||
| Amortization | 23,705 | 20,294 | |||||||||||
| Interest expense | 16,668 | 15,912 | |||||||||||
| Restructuring charges | 11,734 | 5,455 | |||||||||||
| Other charges (income), net | (4,316 | ) | (8,417 | ) | (b)(c) | ||||||||
| Adjusted operating income | $ | 308,832 | (d) | 22.3 | $ | 273,939 | 21.9 | ||||||
| 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) | |||||||
| June 30, 2018 | December 31, 2017 | ||||||
| Cash and cash equivalents | $ | 183,190 | $ | 148,687 | |||
| Accounts receivable, net | 486,203 | 528,615 | |||||
| Inventories | 270,047 | 255,390 | |||||
| Other current assets and prepaid expenses | 63,867 | 74,031 | |||||
| Total current assets | 1,003,307 | 1,006,723 | |||||
| Property, plant and equipment, net | 678,706 | 668,271 | |||||
| Goodwill and other intangible assets, net | 756,265 | 766,556 | |||||
| Other non-current assets | 119,938 | 108,255 | |||||
| Total assets | $ | 2,558,216 | $ | 2,549,805 | |||
| Short-term borrowings and maturities of long-term debt | $ | 52,052 | $ | 19,677 | |||
| Trade accounts payable | 170,865 | 167,627 | |||||
| Accrued and other current liabilities | 465,900 | 502,369 | |||||
| Total current liabilities | 688,817 | 689,673 | |||||
| Long-term debt | 1,020,420 | 960,170 | |||||
| Other non-current liabilities | 316,545 | 352,682 | |||||
| Total liabilities | 2,025,782 | 2,002,525 | |||||
| Shareholders' equity | 532,434 | 547,280 | |||||
| Total liabilities and shareholders' equity | $ | 2,558,216 | $ | 2,549,805 |
| METTLER-TOLEDO INTERNATIONAL INC. CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (amounts in thousands) (unaudited) | |||||||||||||||
| Three months ended | Six months ended | ||||||||||||||
| June 30, | June 30, | ||||||||||||||
| 2018 | 2017 | 2018 | 2017 | ||||||||||||
| Cash flow from operating activities: | |||||||||||||||
| Net earnings | $ | 111,468 | $ | 101,580 | $ | 204,772 | $ | 194,046 | |||||||
| Adjustments to reconcile net earnings to | |||||||||||||||
| net cash provided by operating activities: | |||||||||||||||
| Depreciation | 9,449 | 7,953 | 18,606 | 15,919 | |||||||||||
| Amortization | 11,970 | 10,249 | 23,705 | 20,294 | |||||||||||
| Deferred tax benefit | (3,693 | ) | (2,264 | ) | (10,109 | ) | (3,840 | ) | |||||||
| Other | 3,951 | 4,211 | 7,036 | 4,629 | |||||||||||
| Increase (decrease) in cash resulting from changes in | |||||||||||||||
| operating assets and liabilities | 7,050 | 16,049 | (27,251 | ) | (25,671 | ) | |||||||||
| Net cash provided by operating activities | 140,195 | 137,778 | 216,759 | 205,377 | |||||||||||
| Cash flows from investing activities: | |||||||||||||||
| Proceeds from sale of property, plant and equipment | 23 | 206 | 4,530 | 10,209 | |||||||||||
| Purchase of property, plant and equipment | (31,812 | ) | (27,514 | ) | (61,586 | ) | (48,529 | ) | |||||||
| Acquisitions | - | (697 | ) | (500 | ) | (697 | ) | ||||||||
| Net hedging settlements on intercompany loans | 3,738 | (1,345 | ) | 7,042 | (1,033 | ) | |||||||||
| Net cash used in investing activities | (28,051 | ) | (29,350 | ) | (50,514 | ) | (40,050 | ) | |||||||
| Cash flows from financing activities: | |||||||||||||||
| Proceeds from borrowings | 266,668 | 200,189 | 603,180 | 672,921 | |||||||||||
| Repayments of borrowings | (171,410 | ) | (205,281 | ) | (502,524 | ) | (615,162 | ) | |||||||
| Proceeds from exercise of stock options | 4,291 | 8,734 | 9,960 | 16,935 | |||||||||||
| Repurchases of common stock | (118,749 | ) | (124,952 | ) | (237,499 | ) | (249,949 | ) | |||||||
| Other financing activities | (1,635 | ) | (7,205 | ) | (1,635 | ) | (7,205 | ) | |||||||
| Net cash used in financing activities | (20,835 | ) | (128,515 | ) | (128,518 | ) | (182,460 | ) | |||||||
| Effect of exchange rate changes on cash and cash equivalents | (7,067 | ) | 1,528 | (3,224 | ) | 4,793 | |||||||||
| Net increase (decrease) in cash and cash equivalents | 84,242 | (18,559 | ) | 34,503 | (12,340 | ) | |||||||||
| Cash and cash equivalents: | |||||||||||||||
| Beginning of period | 98,948 | 164,893 | 148,687 | 158,674 | |||||||||||
| End of period | $ | 183,190 | $ | 146,334 | $ | 183,190 | $ | 146,334 | |||||||
| RECONCILIATION OF NET CASH PROVIDED BY OPERATING ACTIVITIES TO ADJUSTED FREE CASH FLOW | |||||||||||||||
| Net cash provided by operating activities | $ | 140,195 | $ | 137,778 | $ | 216,759 | $ | 205,377 | |||||||
| Payments in respect of restructuring activities | 8,167 | 2,748 | 13,409 | 5,326 | |||||||||||
| Transition tax payment | 4,200 | - | 4,200 | - | |||||||||||
| Proceeds from sale of property, plant and equipment | 23 | 206 | 4,530 | 10,209 | |||||||||||
| Purchase pf property, plant and equipment | (31,812 | ) | (27,514 | ) | (61,586 | ) | (48,529 | ) | |||||||
| Adjusted free cash flow | $ | 120,773 | $ | 113,218 | $ | 177,312 | $ | 172,383 |
| 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 June 30, 2018 | 14% | 4% | 15% | 10% | |||||||||||||||
| Six Months Ended June 30, 2018 | 13% | 5% | 16% | 11% | |||||||||||||||
| Local Currency Sales Growth | |||||||||||||||||||
| Three Months Ended June 30, 2018 | 7% | 4% | 9% | 7% | |||||||||||||||
| Six Months Ended June 30, 2018 | 3% | 5% | 10% | 6% | |||||||||||||||
| RECONCILIATION OF DILUTED EPS AS REPORTED TO ADJUSTED DILUTED EPS | |||||||||||||||||||
| (unaudited) | |||||||||||||||||||
| Three months ended | Six months ended | ||||||||||||||||||
| June 30, | June 30, | ||||||||||||||||||
| 2018 | 2017 | % Growth | 2018 | 2017 | % Growth | ||||||||||||||
| EPS as reported, diluted | $ | 4.31 | $ | 3.84 | 12% | $ | 7.88 | $ | 7.32 | 8% | |||||||||
| Restructuring charges, net of tax | 0.22 | (a) | 0.12 | (a) | 0.35 | (a) | 0.16 | (a) | |||||||||||
| Purchased intangible amortization, net of tax | 0.10 | (b) | 0.06 | (b) | 0.19 | (b) | 0.11 | (b) | |||||||||||
| Income tax expense | 0.02 | (c) | (0.10 | ) | (c) | (0.04 | ) | (c) | (0.24 | ) | (c) | ||||||||
| Gain on facility sale | - | - | - | (0.10 | ) | (d) | |||||||||||||
| Adjusted EPS, diluted | $ | 4.65 | $ | 3.92 | 19% | $ | 8.38 | $ | 7.25 | 16% | |||||||||
| Notes: | |||||||||||||||||||
| (a) | Represents the EPS impact of restructuring charges of $7.3 million ($5.7 million after tax) and $4.0 million ($3.1 million after tax) for the three months ended June 30, 2018 and 2017, and $11.7 million ($9.2 million after tax) and $5.5 million ($4.3 million after tax) for the six months ended June 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 $2.5 million and $1.5 million for the three months ended June 30, 2018 and 2017, and $5.0 million and $3.0 million for the six months ended June 30, 2018 and 2017, respectively. | ||||||||||||||||||
| (c) | Represents the EPS impact of the difference between our reported tax rate during the three and six months ending June 30, 2018 and 2017, respectively, and our annual income tax rate of 22%, due 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. |