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Mettler-Toledo International Inc. Reports Third Quarter 2019 Results

November 8, 2019

COLUMBUS, Ohio, Nov. 7, 2019 /PRNewswire/ -- Mettler-Toledo International Inc. (NYSE: MTD) today announced third quarter results for 2019. Provided below are the highlights:

Quarterly Results

Olivier Filliol, President and Chief Executive Officer, stated, “Local currency sales growth in the quarter excluding Food Retail, was 6%, with excellent growth in the Americas and solid growth in Europe and Asia/Rest of World. Despite continued challenges from the impact of adverse currency and tariff costs, we achieved strong margin improvement and earnings growth in the quarter.”

GAAP Results
EPS in the quarter was $5.20, compared with the prior-year amount of $4.93.

Compared with the prior year, total reported sales increased 3% to $753.9 million. By region, reported sales increased 6% in the Americas and 2% in Asia/Rest of World. Reported sales in Europe declined by 2%. Earnings before taxes amounted to $169.4 million, compared with $160.4 million in the prior year.

Non-GAAP Results
Adjusted EPS was $5.77, an increase of 13% over the prior-year amount of $5.12.

Compared with the prior year, total sales in local currency increased 4% as currency reduced reported sales growth by 1%. By region, local currency sales increased 7% in the Americas, 2% in Europe and 4% in Asia/Rest of World. Adjusted Operating Profit amounted to $196.2 million, an 8% increase from the prior-year amount of $182.0 million.

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

Year-to-Date Results

GAAP Results
EPS was $14.67, compared with the prior-year amount of $12.81.

Compared with the prior year, total reported sales increased 2% to $2.165 billion. By region, reported sales increased 5% in the Americas and 3% in Asia/Rest of World. Reported sales in Europe declined 2%. Earnings before taxes amounted to $450.3 million, compared with $421.4 million in the prior year.

Non-GAAP Results
Adjusted EPS was $15.02, an increase of 11% over the prior-year amount of $13.50.

Compared with the prior year, total sales in local currency increased 5% as currency reduced reported sales growth by 1%. By region, local currency sales increased 5% in the Americas, 3% in Europe and 7% in Asia/Rest of World. Adjusted Operating Profit amounted to $521.8 million, a 6% increase from the prior-year amount of $490.8 million.

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

Outlook

Based on today’s assessment of market conditions, management anticipates that local currency sales growth in the fourth quarter 2019 will be approximately 3%, and Adjusted EPS is forecasted to be in the range of $7.66 to $7.71, an increase of 12% to 13%.

For the full year 2019, local currency sales growth is expected to be approximately 5%. This sales growth is expected to result in Adjusted EPS in the range of $22.65 to $22.70, an increase of 11% to 12%.

The Company said that based on its assessment of market conditions today, management anticipates local currency sales growth in 2020 will be approximately 4%. This sales growth is expected to result in Adjusted EPS in the range of $24.85 to $25.10. Using the mid-point of 2019 guidance, this would result in Adjusted EPS growth of 10% to 11%.

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 uncertainty remains in the macroeconomic environment and market conditions are subject to change.

Conclusion

Filliol concluded, “We continue to benefit from our growth initiatives including investments in our field force, Spinnaker sales and marketing programs and new product launches. With the exception of Food Retail, demand in our markets is solid and we have generated good growth. As we look to 2020, we remain confident in the factors we can control – namely executing on our growth initiatives to continue to gain market share – but acknowledge greater uncertainty in the macroeconomic environment. We also believe that our margin and productivity initiatives will continue to yield tangible results. Based on market conditions today, we believe we can deliver strong results in 2019 and 2020.”

Other Matters

The Company will host a conference call to discuss its quarterly results today (Thursday, November 7) 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, 2019


% of sales




September 30, 2018


% of sales





















Net sales



$753,866

(a)


100.0





$734,846



100.0



Cost of sales



318,810



42.3





315,592



42.9



Gross profit



435,056



57.7





419,254



57.1






















Research and development



36,015



4.8





34,838



4.7



Selling, general and administrative



202,826



26.9





202,451



27.6



Amortization



12,329



1.6





11,856



1.6



Interest expense



9,800



1.3





9,003



1.2



Restructuring charges



6,732



0.9





2,222



0.3



Other charges (income), net



(2,005)



(0.3)





(1,479)



(0.1)



Earnings before taxes



169,359



22.5





160,363



21.8






















Provision for taxes



39,964



5.3





33,710



4.6



Net earnings



$129,395



17.2





$126,653



17.2






















Basic earnings per common share:



















Net earnings



$5.28








$5.04






Weighted average number of common shares



24,487,268








25,126,061

























Diluted earnings per common share:



















Net earnings



$5.20








$4.93






Weighted average number of common



24,880,179








25,683,365






and common equivalent shares






































Note:

















(a) Local currency sales increased 4% as compared to the same period in 2018.






















RECONCILIATION OF EARNINGS BEFORE TAXES TO ADJUSTED OPERATING PROFIT























Three months ended








Three months ended









September 30, 2019


% of sales




September 30, 2018


% of sales





















Earnings before taxes



$169,359








$160,363






Amortization



12,329








11,856






Interest expense



9,800








9,003






Restructuring charges



6,732








2,222






Other charges (income), net



(2,005)








(1,479)






Adjusted operating profit



$196,215

(b)


26.0





$181,965



24.8






















Note:

















(b) Adjusted operating profit increased 8% as compared to the same period in 2018.






METTLER-TOLEDO INTERNATIONAL INC.

CONSOLIDATED STATEMENTS OF OPERATIONS

(amounts in thousands except share data)

(unaudited)

























Nine months ended









Nine months ended










September 30, 2019



% of sales



September 30, 2018



% of sales


















Net sales



$2,164,684


(a)


100.0





$2,117,663




100.0



Cost of sales



921,771




42.6





910,851




43.0



Gross profit



1,242,913




57.4





1,206,812




57.0























Research and development



108,650




5.0





104,866




5.0



Selling, general and administrative



612,466




28.3





611,149




28.9



Amortization



36,877




1.7





35,561




1.7



Interest expense



27,776




1.3





25,671




1.2



Restructuring charges



11,146




0.5





13,956




0.6



Other charges (income), net



(4,253)




(0.2)





(5,795)




(0.3)



Earnings before taxes



450,251




20.8





421,404




19.9























Provision for taxes



81,891




3.8





89,979




4.2



Net earnings



$368,360




17.0





$331,425




15.7























Basic earnings per common share:



















Net earnings



$14.93









$13.10







Weighted average number of common shares



24,677,546









25,296,680



























Diluted earnings per common share:



















Net earnings



$14.67









$12.81







Weighted average number of common



25,103,173









25,877,979







and common equivalent shares







































Note:



















(a) Local currency sales increased 5% as compared to the same period in 2018.























RECONCILIATION OF EARNINGS BEFORE TAXES TO ADJUSTED OPERATING PROFIT

























Nine months ended









Nine months ended










September 30, 2019



% of sales



September 30, 2018



% of sales






















Earnings before taxes



$450,251









$421,404







Amortization



36,877









35,561







Interest expense



27,776









25,671







Restructuring charges



11,146









13,956







Other charges (income), net



(4,253)









(5,795)







Adjusted operating profit



$521,797

(b)


24.1





$490,797




23.2























Note:



















(b) Adjusted operating profit increased 6% as compared to the same period in 2018.







METTLER-TOLEDO INTERNATIONAL INC.


CONDENSED CONSOLIDATED BALANCE SHEETS


(amounts in thousands)


(unaudited)



























September 30, 2019





December 31, 2018













Cash and cash equivalents



$120,534





$178,110


Accounts receivable, net



503,247





535,528


Inventories



280,978





268,821


Other current assets and prepaid expenses



59,049





63,401


Total current assets



963,808





1,045,860













Property, plant and equipment, net



722,592





717,526


Goodwill and other intangibles assets, net



740,595





752,088


Other non-current assets



208,874

(a)


103,373


Total assets



$2,635,869





$2,618,847













Short-term borrowings and maturities of long-term debt



$48,577





$49,670


Trade accounts payable



148,220





196,641


Accrued and other current liabilities



522,458

(a)


488,123


Total current liabilities



719,255





734,434













Long-term debt



1,124,279





985,021


Other non-current liabilities



354,034

(a)


309,329


Total liabilities



2,197,568





2,028,784













Shareholders' equity



438,301





590,063


Total liabilities and shareholders' equity



$2,635,869





$2,618,847













(a) Includes a lease right-of-use asset of $88.2 million, a short-term lease liability of $26.9 million and a long-term lease liability of $62.0 million in accordance with ASC 842 "Leases" that went into effect on January 1, 2019.


METTLER-TOLEDO INTERNATIONAL INC.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(amounts in thousands)

(unaudited)












Three months ended


Nine months ended



September 30,


September 30,



2019


2018


2019


2018










Cash flow from operating activities:








Net earnings

$129,395


$126,653


$368,360


$331,425

Adjustments to reconcile net earnings to








net cash provided by operating activities:








Depreciation

9,958


9,283


29,348


27,889

Amortization

12,329


11,856


36,877


35,561

Deferred tax expense (benefit)

(3,082)


(1,792)


(17,963)


(11,901)

Other

4,465


2,763


13,255


9,799

Increase (decrease) in cash resulting from changes in








operating assets and liabilities

22,811


911


(28,136)


(26,340)

Net cash provided by operating activities

175,876


149,674


401,741


366,433










Cash flows from investing activities:








Proceeds from sale of property, plant and equipment

32


3,279


1,248


7,809

Purchase of property, plant and equipment

(26,928)


(35,079)


(71,627)


(96,665)

Acquisitions

(1,500)


(4,462)


(2,004)


(4,962)

Net hedging settlements on intercompany loans

(2,873)


(7,822)


(4,099)


(780)

Net cash used in investing activities

(31,269)


(44,084)


(76,482)


(94,598)










Cash flows from financing activities:








Proceeds from borrowings

168,881


169,094


807,711


772,274

Repayments of borrowings

(128,066)


(201,180)


(660,795)


(703,704)

Proceeds from exercise of stock options

159


4,817


37,916


14,777

Repurchases of common stock

(186,250)


(118,750)


(558,749)


(356,249)

Acquisition contingent consideration payment

-


-


(10,000)


-

Other financing activities

-


(29)


1,753


(1,664)

Net cash used in financing activities

(145,276)


(146,048)


(382,164)


(274,566)










Effect of exchange rate changes on cash and cash equivalents

(3,236)


(5,284)


(671)


(8,508)










Net decrease in cash and cash equivalents

(3,905)


(45,742)


(57,576)


(11,239)










Cash and cash equivalents:








Beginning of period

124,439


183,190


178,110


148,687

End of period

$120,534


$137,448


$120,534


$137,448



















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










Net cash provided by operating activities

$175,876


$149,674


$401,741


$366,433

Payments in respect of restructuring activities

2,604


3,292


9,450


16,701

Payment for acquisition costs

-


140


-


140

Transition tax payment

-


-


4,289


4,200

Proceeds from sale of property, plant and equipment

32


3,279


1,248


7,809

Purchase of property, plant and equipment

(26,928)


(35,079)


(71,627)


(96,665)

Adjusted free cash flow

$151,584


$121,306


$345,101


$298,618










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 September 30, 2019



(2%)


6%


2%


3%




Nine Months Ended September 30, 2019



(2%)


5%


3%


2%
















Local Currency Sales Growth (Decrease)













Three Months Ended September 30, 2019



2%


7%


4%


4%




Nine Months Ended September 30, 2019



3%


5%


7%


5%





























RECONCILIATION OF DILUTED EPS AS REPORTED TO ADJUSTED DILUTED EPS

(unaudited)
















Three months ended

Nine months ended



September 30,

September 30,



2019


2018


% Growth


2019


2018


% Growth














EPS as reported, diluted

$5.20


$4.93


5%


$14.67


$12.81


15%














Restructuring charges, net of tax

0.22

(a)

0.07

(a)



0.36

(a)

0.42

(a)


Purchased intangible amortization, net of tax

0.11

(b)

0.10

(b)



0.32

(b)

0.29

(b)


Income tax expense

0.24

(c)

0.02

(c)



(0.33)

(c)

(0.02)

(c)















Adjusted EPS, diluted

$5.77


$5.12


13%


$15.02


$13.50


11%














Notes:












(a)

Represents the EPS impact of restructuring charges of $6.7 million ($5.4 million after tax) and $2.2 million ($1.7 million after tax) for the three months ended September 30, 2019 and 2018, and $11.1 million ($8.9 million after tax) and $14.0 million ($10.9 million after tax) for the nine months ended September 30, 2019 and 2018, respectively, which primarily include employee related costs.

(b)

Represents the EPS impact of purchased intangibles amortization, net of tax, of $3.7 million ($2.8 million after tax) and $3.4 million ($2.5 million after tax) for the three months ended September 30, 2019 and 2018, and $10.6 million ($8.0 million after tax) and $10.0 million ($7.5 million after tax) for the nine months ended September 30, 2019 and 2018, respectively.

(c)

Represents the EPS impact of the difference between our reported and estimated annual tax rate during the three and nine months ending September 30, 2019 and 2018, due to the timing of excess tax benefits associated with stock option exercises.

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SOURCE Mettler-Toledo International Inc.