Mettler-Toledo International Inc. Reports Second Quarter 2023 Results

Mettler-Toledo International Inc. (NYSE: MTD) today announced second quarter results for 2023. Provided below are the highlights:

  • Reported sales were flat compared with the prior-year. In local currency, sales increased 2% in the quarter as currency reduced sales growth by 2%.
  • Net earnings per diluted share as reported (EPS) were $9.69, compared with $9.29 in the prior-year period. Adjusted EPS was $10.19, an increase of 9% over the prior-year amount of $9.39. Adjusted EPS is a non-GAAP measure, and a reconciliation to EPS is included on the last page of the attached schedules.

Second Quarter Results

Patrick Kaltenbach, President and Chief Executive Officer, stated, “Sales growth in the second quarter included strong growth in our Service business, as well as solid performance across our Industrial product categories, which was offset in part by softer market conditions in Laboratory and China following very strong growth over the last couple of years. Focused execution of our margin expansion and disciplined cost control initiatives resulted in good growth in Adjusted EPS despite a very significant adverse foreign exchange impact.”

GAAP Results

EPS in the quarter was $9.69, compared with the prior-year amount of $9.29.

Compared with the prior-year, total reported sales were flat at $982.1 million. By region, reported sales increased 1% in both the Americas and Europe, and decreased 1% in Asia/Rest of World. Earnings before taxes amounted to $263.4 million, compared with $256.7 million in the prior-year.

Non-GAAP Results

Adjusted EPS was $10.19, an increase of 9% over the prior-year amount of $9.39.

Compared with the prior-year, total sales in local currency increased 2% as currency reduced sales growth by 2%. By region, local currency sales increased 4% in Asia/Rest of World, 1% in the Americas, and were flat in Europe. Adjusted Operating Profit amounted to $307.7 million, an 8% increase from the prior-year amount of $285.4 million.

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

Six Month Results

GAAP Results

EPS was $18.15, compared with the prior-year amount of $16.84.

Compared with the prior-year, total reported sales increased 2% to $1,910.9 million. By region, reported sales increased 3% in the Americas, 2% in Europe, and 1% in Asia/Rest of World. Earnings before taxes amounted to $490.0 million, compared with $469.7 million in the prior-year.

Non-GAAP Results

Adjusted EPS was $18.82, an increase of 9% over the prior-year amount of $17.25.

Compared with the prior-year, total sales in local currency increased 4% as currency reduced sales growth by 2%. By region, local currency sales increased 3% in both the Americas and in Europe, and 6% in Asia/Rest of World. Adjusted Operating Profit amounted to $574.2 million, a 9% increase from the prior-year amount of $526.7 million.

Outlook

The Company stated that forecasting remains challenging. Management cautions that market conditions are dynamic and changes to the business environment can occur quickly. There is increased uncertainty in the economic environment today, including the risk of recession in many countries, and management acknowledges that market conditions are subject to change.

Based on today's assessment of market conditions, management anticipates local currency sales for the third quarter of 2023 will decline approximately 3% to 4%, and Adjusted EPS is forecast to be $9.55 to $9.85, a decline of 3% to 6%. Included in the third quarter guidance is an estimated 3% headwind to Adjusted EPS growth due to adverse currency.

For the full year, management anticipates local currency sales growth in 2023 will be approximately 0% to 1%, and Adjusted EPS is forecast to be in the range of $40.30 to $41.20, representing growth of approximately 2% to 4%. This compares with previous local currency sales growth guidance of approximately 5% and Adjusted EPS guidance of $43.65 to $43.95. Included in the 2023 guidance is an estimated 3% to 4% headwind to Adjusted EPS growth due to adverse currency.

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.

Conclusion

Kaltenbach concluded, “As we look to the remainder of 2023, there is increased uncertainty in the global economy and our end markets, and we continue to face challenging sales growth comparisons. Market demand in China has deteriorated sharply, and we expect reduced sales during the remainder of 2023. We remain confident in the factors we can control, including executing on our best-in-class sales and marketing programs and our margin expansion and proactive cost savings initiatives. Our team remains very agile in adapting to changing market conditions, and I am confident that our efforts will deliver good financial results this year in a more challenging business environment.”

Other Matters

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 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.

Forward-Looking Statements Disclaimer

You should not rely on forward-looking statements to predict our actual results. Our actual results or performance may be materially different than reflected in forward-looking statements because of various risks and uncertainties, including statements about expected revenue growth, inflation and ongoing developments related to Ukraine. 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.”

We make forward-looking statements about future events or our future financial performance, including earnings and sales growth, earnings per share, strategic plans and contingency plans, growth opportunities or economic downturns, our ability to respond to changes in market conditions, planned research and development efforts and product introductions, adequacy of facilities, access to and the costs of raw materials, shipping and supplier costs, gross margins, customer demand, our competitive position, pricing, capital expenditures, cash flow, tax-related matters, the impact of foreign currencies, compliance with laws, effects of acquisitions, and the impact of inflation and ongoing developments related to Ukraine on our business.

Our forward-looking statements may not be accurate or complete, and we do not intend to update or revise them in light of actual results. New risks also periodically arise. Please consider the risks and factors that could cause our results to differ materially from what is described in our forward-looking statements, including inflation, and the ongoing developments related to Ukraine. See in particular “Factors Affecting Our Future Operating Results” and “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in our Annual Report on Form 10-K for the year ended December 31, 2022 and other reports filed with the SEC from time to time.

METTLER-TOLEDO INTERNATIONAL INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
(amounts in thousands except share data)
(unaudited)
 

Three months ended

Three months ended

June 30, 2023 % of sales June 30, 2022 % of sales
 
Net sales

$

982,117

 

(a)

100.0

 

$

978,387

 

100.0

 

Cost of sales

 

398,574

 

40.6

 

 

406,726

 

41.6

 

Gross profit

 

583,543

 

59.4

 

 

571,661

 

58.4

 

 
Research and development

 

47,245

 

4.8

 

 

44,023

 

4.5

 

Selling, general and administrative

 

228,594

 

23.3

 

 

242,206

 

24.8

 

Amortization

 

18,042

 

1.8

 

 

16,365

 

1.6

 

Interest expense

 

19,249

 

2.0

 

 

12,765

 

1.3

 

Restructuring charges

 

8,021

 

0.8

 

 

1,770

 

0.2

 

Other charges (income), net

 

(1,011

)

(0.1

)

 

(2,160

)

(0.2

)

Earnings before taxes

 

263,403

 

26.8

 

 

256,692

 

26.2

 

 
Provision for taxes

 

49,476

 

5.0

 

 

44,622

 

4.5

 

Net earnings

$

213,927

 

21.8

 

$

212,070

 

21.7

 

 
Basic earnings per common share:
Net earnings

$

9.75

 

$

9.39

 

Weighted average number of common shares

 

21,944,645

 

 

22,593,375

 

 
Diluted earnings per common share:
Net earnings

$

9.69

 

$

9.29

 

Weighted average number of common

 

22,080,602

 

 

22,821,666

 

and common equivalent shares
 
Note:

(a) Local currency sales increased 2% as compared to the same period in 2022.

 
RECONCILIATION OF EARNINGS BEFORE TAXES TO ADJUSTED OPERATING PROFIT
 

Three months ended

Three months ended

June 30, 2023 % of sales June 30, 2022 % of sales
 
Earnings before taxes

$

263,403

 

$

256,692

 

Amortization

 

18,042

 

 

16,365

 

Interest expense

 

19,249

 

 

12,765

 

Restructuring charges

 

8,021

 

 

1,770

 

Other charges (income), net

 

(1,011

)

 

(2,160

)

Adjusted operating profit

$

307,704

 

(b)

31.3

 

$

285,432

 

29.2

 

 
Note:

(b) Adjusted operating profit increased 8% as compared to the same period in 2022.

METTLER-TOLEDO INTERNATIONAL INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
(amounts in thousands except share data)
(unaudited)
 

Six months ended

 

 

 

Six months ended

 

 

June 30, 2023

 

% of sales

 

June 30, 2022

 

% of sales

 
Net sales

$

1,910,855

 

(a)

100.0

 

$

1,876,178

 

100.0

 

Cost of sales

 

780,746

 

40.9

 

 

784,932

 

41.8

 

Gross profit

 

1,130,109

 

59.1

 

 

1,091,246

 

58.2

 

 
Research and development

 

92,722

 

4.9

 

 

87,051

 

4.6

 

Selling, general and administrative

 

463,232

 

24.2

 

 

477,518

 

25.5

 

Amortization

 

35,821

 

1.9

 

 

32,969

 

1.8

 

Interest expense

 

37,433

 

2.0

 

 

24,103

 

1.3

 

Restructuring charges

 

12,295

 

0.6

 

 

5,781

 

0.3

 

Other charges (income), net

 

(1,407

)

(0.1

)

 

(5,869

)

(0.3

)

Earnings before taxes

 

490,013

 

25.6

 

 

469,693

 

25.0

 

 
Provision for taxes

 

87,660

 

4.5

 

 

83,622

 

4.4

 

Net earnings

$

402,353

 

21.1

 

$

386,071

 

20.6

 

 
Basic earnings per common share:
Net earnings

$

18.28

 

$

17.02

 

Weighted average number of common shares

 

22,013,662

 

 

22,680,353

 

 
Diluted earnings per common share:
Net earnings

$

18.15

 

$

16.84

 

Weighted average number of common

 

22,164,394

 

 

22,928,933

 

and common equivalent shares
 
Note:

(a) Local currency sales increased 4% as compared to the same period in 2022.

 
RECONCILIATION OF EARNINGS BEFORE TAXES TO ADJUSTED OPERATING PROFIT
 

Six months ended

 

 

 

Six months ended

 

 

 

June 30, 2023

 

% of sales

 

June 30, 2022

 

% of sales

 
Earnings before taxes

$

490,013

 

$

469,693

 

Amortization

 

35,821

 

 

32,969

 

Interest expense

 

37,433

 

 

24,103

 

Restructuring charges

 

12,295

 

 

5,781

 

Other charges (income), net

 

(1,407

)

 

(5,869

)

Adjusted operating profit

$

574,155

 

(b)

30.0

 

$

526,677

 

(b)

28.1

 

 
Note:

(b) Adjusted operating profit increased 9% as compared to the same period in 2022.

METTLER-TOLEDO INTERNATIONAL INC.

CONDENSED CONSOLIDATED BALANCE SHEETS

(amounts in thousands)

(unaudited)

 
 
June 30, 2023 December 31, 2022
 
Cash and cash equivalents

$

83,574

 

$

95,966

Accounts receivable, net

 

648,002

 

 

709,321

Inventories

 

394,959

 

 

441,694

Other current assets and prepaid expenses

 

119,971

 

 

128,108

Total current assets

 

1,246,506

 

 

1,375,089

 
Property, plant and equipment, net

 

780,723

 

 

778,600

Goodwill and other intangibles assets, net

 

959,694

 

 

966,224

Other non-current assets

 

383,472

 

 

372,482

Total assets

$

3,370,395

 

$

3,492,395

 
Short-term borrowings and maturities of long-term debt

$

107,365

 

$

106,054

Trade accounts payable

 

170,230

 

 

252,538

Accrued and other current liabilities

 

730,408

 

 

789,139

Total current liabilities

 

1,008,003

 

 

1,147,731

 
Long-term debt

 

2,045,462

 

 

1,908,480

Other non-current liabilities

 

406,635

 

 

411,391

Total liabilities

 

3,460,100

 

 

3,467,602

 
Shareholders’ equity

 

(89,705

)

 

24,793

Total liabilities and shareholders’ equity

$

3,370,395

 

$

3,492,395

METTLER-TOLEDO INTERNATIONAL INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(amounts in thousands)
(unaudited)
 
Three months ended Six months ended
June 30, June 30,

2023

2022

2023

2022

 
Cash flow from operating activities:
Net earnings

$

213,927

 

$

212,070

 

$

402,353

 

$

386,071

 

Adjustments to reconcile net earnings to
net cash provided by operating activities:
Depreciation

 

12,194

 

 

11,447

 

 

24,217

 

 

23,327

 

Amortization

 

18,042

 

 

16,365

 

 

35,821

 

 

32,969

 

Deferred tax benefit

 

(2,368

)

 

(2,141

)

 

(1,766

)

 

(3,237

)

Other

 

4,195

 

 

4,691

 

 

8,222

 

 

9,200

 

Increase (decrease) in cash resulting from changes in
operating assets and liabilities

 

20,821

 

 

(23,276

)

 

(48,774

)

 

(138,337

)

Net cash provided by operating activities

 

266,811

 

 

219,156

 

 

420,073

 

 

309,993

 

 
Cash flows from investing activities:
Proceeds from sale of property, plant and equipment

 

412

 

 

118

 

 

412

 

 

118

 

Purchase of property, plant and equipment

 

(28,751

)

 

(43,240

)

 

(51,947

)

 

(62,391

)

Proceeds from government funding (a)

 

1,264

 

 

7,013

 

 

1,264

 

 

25,013

 

Acquisitions

 

-

 

 

(1,061

)

 

(613

)

 

(10,765

)

Other investing activities

 

(15,837

)

 

3,629

 

 

(14,414

)

 

7,372

 

Net cash used in investing activities

 

(42,912

)

 

(33,541

)

 

(65,298

)

 

(40,653

)

Cash flows from financing activities:
Proceeds from borrowings

 

475,903

 

 

555,776

 

 

1,080,921

 

 

1,239,813

 

Repayments of borrowings

 

(455,215

)

 

(474,080

)

 

(958,731

)

 

(952,559

)

Proceeds from exercise of stock options

 

7,614

 

 

12,421

 

 

19,087

 

 

17,710

 

Repurchases of common stock

 

(250,000

)

 

(274,999

)

 

(499,999

)

 

(549,999

)

Acquisition contingent consideration payment

 

(5,626

)

 

(7,912

)

 

(5,626

)

 

(7,912

)

Other financing activities

 

(103

)

 

(50

)

 

(714

)

 

(382

)

Net cash used in financing activities

 

(227,427

)

 

(188,844

)

 

(365,062

)

 

(253,329

)

 
Effect of exchange rate changes on cash and cash equivalents

 

(1,983

)

 

(4,271

)

 

(2,105

)

 

(5,126

)

 
Net increase (decrease) in cash and cash equivalents

 

(5,511

)

 

(7,500

)

 

(12,392

)

 

10,885

 

 
Cash and cash equivalents:
Beginning of period

 

89,085

 

 

116,949

 

 

95,966

 

 

98,564

 

End of period

$

83,574

 

$

109,449

 

$

83,574

 

$

109,449

 

 
RECONCILIATION OF NET CASH PROVIDED BY OPERATING ACTIVITIES TO ADJUSTED FREE CASH FLOW
 
Net cash provided by operating activities

$

266,811

 

$

219,156

 

$

420,073

 

$

309,993

 

Payments in respect of restructuring activities

 

5,415

 

 

2,331

 

 

7,398

 

 

4,245

 

Transition tax payment

 

8,042

 

 

4,289

 

 

8,042

 

 

4,289

 

Proceeds from sale of property, plant and equipment

 

412

 

 

118

 

 

412

 

 

118

 

Purchase of property, plant and equipment, net (a)

 

(24,907

)

 

(20,054

)

 

(44,815

)

 

(37,526

)

Acquisition payments (b)

 

4,775

 

 

2,405

 

 

4,775

 

 

2,579

 

Adjusted free cash flow

$

260,548

 

$

208,245

 

$

395,885

 

$

283,698

 

Notes:

(a)

In September 2021, the Company entered into an agreement with the U.S. Department of Defense to increase the domestic production capacity of pipette tips and enhance manufacturing automation and logistics. The Company will receive funding of $35.8 million, which will offset future capital expenditures. Funding proceeds of $1.3 million and $7.0 million during the three months ended June 30, 2023 and 2022, respectively and the related purchase of property, plant and equipment of $3.8 million and $23.2 million for the three months ended June 30, 2023 and 2022, respectively, are excluded from Adjusted free cash flow. Funding proceeds of $1.3 million and $25.0 million during the six months ended June 30, 2023 and 2022, respectively and the related purchase of property, plant and equipment of $7.1 million and $24.9 million for the six months ended June 30, 2023 and 2022, respectively, are excluded from Adjusted free cash flow.

(b)

Includes $4.4 million and $2.4 million of the PendoTECH contingent consideration payment that was reported in net cash provided by operating activities as required by U.S. GAAP for the three and six months ended June 30, 2023 and 2022, respectively.
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, 2023

 

1

%

1

%

 

(1

%)

 

0

%

Six Months Ended June 30, 2023

 

2

%

3

%

 

1

%

 

2

%

 
Local Currency Sales Growth
Three Months Ended June 30, 2023

 

0

%

1

%

 

4

%

 

2

%

Six Months Ended June 30, 2023

 

3

%

3

%

 

6

%

 

4

%

 
 
RECONCILIATION OF DILUTED EPS AS REPORTED TO ADJUSTED DILUTED EPS
(unaudited)
 
Three months ended Six months ended
June 30, June 30,

2023

2022

% Growth

2023

2022

% Growth
 
EPS as reported, diluted

$

9.69

 

$

9.29

 

4

%

$

18.15

 

$

16.84

 

8

%

 
Purchased intangible amortization, net of tax

 

0.23

 

(a)

 

0.22

 

(a)

 

0.46

 

(a)

 

0.44

 

(a)
Restructuring charges, net of tax

 

0.29

 

(b)

 

0.06

 

(b)

 

0.45

 

(b)

 

0.20

 

(b)
Income tax expense

 

(0.02

)

(c)

 

(0.18

)

(c)

 

(0.24

)

(c)

 

(0.25

)

(c)
Acquisition costs, net of tax

 

-

 

 

-

 

 

-

 

(d)

 

0.02

 

(d)
 
Adjusted EPS, diluted

$

10.19

 

$

9.39

 

9

%

$

18.82

 

$

17.25

 

9

%

Notes:

(a)

Represents the EPS impact of purchased intangibles amortization of $6.7 million ($5.2 million net of tax) and $6.4 million ($4.9 million net of tax) for the three months ended June 30, 2023 and 2022, and of $13.3 million ($10.3 million net of tax) and $13.0 million ($10.1 million net of tax) for the six months ended June 30, 2023 and 2022, respectively.

(b)

Represents the EPS impact of restructuring charges of $8.0 million ($6.5 million after tax) and $1.8 million ($1.4 million after tax) for the three months ended June 30, 2023 and 2022, and $12.3 million ($10.0 million after tax) and $5.8 million ($4.7 million after tax) for the six months ended June 30, 2023 and 2022, respectively, which primarily include employee related costs.

(c)

Represents the EPS impact of the difference between our quarterly and estimated annual tax rate before non-recurring discrete items during the three and six months ended June 30, 2023 and 2022 due to the timing of excess tax benefits associated with stock option exercises. Also includes a $0.05 EPS charge for the three months ended June 30, 2023 for the increase of our annualized effective tax rate to 19.0% for the first quarter of 2023.

(d)

Represents the EPS impact of acquisition costs of $0.5 million ($0.4 million after tax) for the six months ended June 30, 2022.

 

Contacts

Adam Uhlman

Head of Investor Relations

METTLER TOLEDO

Direct: 614-438-4794

adam.uhlman@mt.com

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