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8-K - 8-K - METTLER TOLEDO INTERNATIONAL INC/mtd8-k2012q4.htm
FOR IMMEDIATE RELEASE
 
Exhibit 99.1

METTLER-TOLEDO INTERNATIONAL INC. REPORTS
FOURTH QUARTER 2012 RESULTS

- - Improved Margins Drive Strong Earnings Growth - -

COLUMBUS, Ohio, USA - February 6, 2013 - Mettler-Toledo International Inc. (NYSE: MTD) today announced fourth quarter results for 2012. Provided below are the highlights:

Sales in local currency increased by 2% in the quarter compared with the prior year. Reported sales increased 1%, which included a 1% negative currency impact.

Net earnings per diluted share as reported (EPS) were $3.35, compared with $2.91 in the fourth quarter of 2011. Adjusted EPS was $3.47, an increase of 20% over the prior-year amount of $2.88. Adjusted EPS is a non-GAAP measure and excludes purchased intangible amortization, discrete tax items, restructuring charges and other one-time items. A reconciliation to EPS is provided on the last page of the attached schedules.

Fourth Quarter Results

Olivier Filliol, President and Chief Executive Officer, stated, “We continued to face reduced growth in customer demand throughout the world, particularly in Europe. However, we benefited from the pro-active gross margin and cost control measures we undertook in response to this challenging macro environment. Consequently, although sales growth was modest, we achieved strong improvement in operating margins and very strong growth in EPS.”

EPS was $3.35, compared with the prior-year amount of $2.91. Adjusted EPS was $3.47, an increase of 20% over the prior-year amount of $2.88.

Sales were $657.3 million, a 2% increase in local currency sales, compared with $648.4 million in the prior-year quarter. Reported sales increased 1%, which included a 1% negative currency impact. By region, local currency sales increased 5% in the Americas and 6% in Asia / Rest of World and decreased 4% in Europe. Adjusted operating income amounted to $153.4 million, a 17% increase from the prior-year amount of $131.7 million. Adjusted operating income is a non-GAAP measure, and a reconciliation to earnings before taxes is provided in the attached schedules.

Cash flow from operations was $111.7 million, compared with $103.2 million in the prior-year quarter.

Full Year Results

EPS was $9.14, compared with the prior-year amount of $8.21. Adjusted EPS was $9.67, an increase of 16% over the prior-year amount of $8.36.

Sales were $2.342 billion, a 4% increase in local currency sales, compared with $2.309 billion in the prior-year period. Reported sales growth was 1%, which included a 3% negative currency impact. For the year, local currency sales increased 5% in the Americas and 10% in Asia / Rest of World and decreased 2% in Europe. Adjusted operating income amounted to $444.5 million, a 12% increase from the prior-year amount of $398.5 million. Adjusted operating income is a non-GAAP measure, and a reconciliation to earnings before taxes is provided in the attached schedules.

Cash flow from operations was $327.7 million, compared with $280.9 million in the prior-year period.




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Cost Control Measures

As part of the cost control measures announced in the second quarter of 2012, the Company recorded pre-tax restructuring charges of $5.4 million in the fourth quarter and $16.7 million in 2012.

Outlook

The Company updated its outlook for 2013 and noted that uncertainty in demand exists in most of its markets, which makes forecasting difficult. Based on today's assessment, management anticipates that local currency sales growth in 2013 will be in the range of 1% to 3%, with growth stronger in the second half of the year. This sales growth is expected to result in Adjusted EPS in the range of $10.30 to $10.55, an increase of 7% to 9%. This compares to previous guidance of Adjusted EPS in the range of $10.00 to $10.30.

The Company stated that based on its assessment of market conditions today, management anticipates that sales in constant currency in the first quarter of 2013 will be in line with the prior year and Adjusted EPS will be in the range of $1.75 to $1.80, an increase of 5% to 8%.

Adjusted EPS excludes purchased intangible amortization, discrete tax items, restructuring charges and other one-time items. 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.

Conclusion

Filliol concluded, “Uncertainty continues to exist in our markets and conditions will likely remain challenging until the second half of this year. We have made adjustments to our cost structure in light of the current macro environment but also continue to make meaningful investments for our long term growth. These include investments in emerging markets, sales and marketing programs, product development and our Blue Ocean initiative. We are confident in our ability to successfully execute our business strategies in this environment and believe we can continue to outgrow our markets and build our competitive position.”

Other Matters

The Company will host a conference call to discuss its quarterly results today (Wednesday, February 6) 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 is a leading global supplier of precision instruments and services. The Company has strong leadership positions in all businesses and believes it holds global number-one market positions in a majority of them. Specifically, METTLER TOLEDO is the largest provider of weighing instruments for use in laboratory, industrial and food retailing applications. The Company is also a leading provider in analytical instruments for use in life science, reaction engineering and real-time analytic systems used in drug and chemical compound development and process analytics instruments used for in-line measurement in production processes. In addition, METTLER TOLEDO is the largest supplier of end-of-line inspection systems used in production and packaging for food, pharmaceutical and other industries. Additional information about METTLER TOLEDO can be found at www.mt.com/investors.

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.


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METTLER-TOLEDO INTERNATIONAL INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
(amounts in thousands except share data)
(unaudited)
 
 
 
Three months ended
 
 
 
Three months ended
 
 
 
 
 
December 31, 2012
 
% of sales
 
December 31, 2011
 
% of sales
 
 
 
 
 
 
 
 
 
 
Net sales
$
657,292

(a)
100.0
 
$
648,360

 
100.0
Cost of sales
300,504

 
45.7
 
302,201

 
46.6
Gross profit
356,788

 
54.3
 
346,159

 
53.4
 
 
 
 
 
 
 
 
 
 
Research and development
28,001

 
4.3
 
30,115

 
4.6
Selling, general and administrative
175,379

 
26.7
 
184,368

 
28.4
Amortization
5,586

 
0.8
 
5,066

 
0.8
Interest expense
5,667

 
0.9
 
5,930

 
1.0
Restructuring charges
5,426

 
0.8
 
3,081

 
0.5
Other charges (income), net
767

 
0.1
 
95

 
0.0
Earnings before taxes
135,962

 
20.7
 
117,504

 
18.1
 
 
 
 
 
 
 
 
 
 
Provision for taxes
31,329

 
4.8
 
23,222

 
3.6
Net earnings
$
104,633

 
15.9
 
$
94,282

 
14.5
 
 
 
 
 
 
 
 
 
 
Basic earnings per common share:

 
 
 
 
 
 
Net earnings
$
3.43

 
 
 
$
2.99

 
 
Weighted average number of common shares
30,532,491

 
 
 
31,542,400

 
 
 
 
 
 
 
 
 
 
 
 
Diluted earnings per common share:
 
 
 
 
 
 
 
Net earnings
$
3.35

 
 
 
$
2.91

 
 
Weighted average number of common
 
 
 
 
 
 
 
  and common equivalent shares
31,271,377

 
 
 
32,387,459

 
 
 
 
 
 
 
 
 
 
 
 
Note:
 
 
 
 
 
 
 
 
(a)
Local currency sales increased 2% as compared to the same period in 2011.
 
 
 
 
 
 
 
 
 
 
 
 
RECONCILIATION OF EARNINGS BEFORE TAXES TO ADJUSTED OPERATING INCOME
 
 
 
 
 
 
 
 
 
 
 
 
 
Three months ended
 
 
 
Three months ended
 
 
 
 
 
December 31, 2012
 
% of sales
 
December 31, 2011
 
% of sales
 
 
 
 
 
 
 
 
 
 
Earnings before taxes
$
135,962

 
 
 
$
117,504

 
 
Amortization
5,586

 
 
 
5,066

 
 
Interest expense
5,667

 
 
 
5,930

(b)
 
Restructuring charges
5,426

 
 
 
3,081

 
 
Other charges (income), net
767

 
 
 
95

 
 
Adjusted operating income
$
153,408

(c)
23.3
 
$
131,676

 
20.3
 
 
 
 
 
 
 
 
 
 
Note:
 
 
 
 
 
 
 
 
(b)
Includes a $0.3 million charge associated with the termination of the Company's $950 million Credit Agreement, which was replaced with the Company's new $880 million Credit Agreement during the three months ended December 31, 2011.
(c)
Adjusted operating income increased 17% as compared to the same period in 2011.
 
 


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METTLER-TOLEDO INTERNATIONAL INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
(amounts in thousands except share data)
(unaudited)
 
 
 
Twelve months ended
 
 
 
Twelve months ended
 
 
 
 
 
December 31, 2012
 
% of sales
 
December 31, 2011
 
% of sales
 
 
 
 
 
 
 
 
 
 
Net sales
$
2,341,528

(a)
100.0
 
$
2,309,328

 
100.0
Cost of sales
1,100,473

 
47.0
 
1,091,054

 
47.2
Gross profit
1,241,055

 
53.0
 
1,218,274

 
52.8
 
 
 
 
 
 
 
 
 
 
Research and development
112,530

 
4.8
 
116,139

 
5.0
Selling, general and administrative
684,026

 
29.2
 
703,632

 
30.5
Amortization
21,357

 
0.9
 
17,808

 
0.8
Interest expense
22,764

 
1.0
 
23,226

 
1.0
Restructuring charges
16,687

 
0.7
 
5,912

 
0.3
Other charges (income), net
1,090

 
0.1
 
2,380

 
0.1
Earnings before taxes
382,601

 
16.3
 
349,177

 
15.1
 
 
 
 
 
 
 
 
 
 
Provision for taxes
91,754

 
3.9
 
79,684

 
3.4
Net earnings
$
290,847

 
12.4
 
$
269,493

 
11.7
 
 
 
 
 
 
 
 
 
 
Basic earnings per common share:
 
 
 
 
 
 
 
Net earnings
$
9.37

 
 
 
$
8.45

 
 
Weighted average number of common shares
31,044,532

 
 
 
31,897,779

 
 
 
 
 
 
 
 
 
 
 
 
Diluted earnings per common share:
 
 
 
 
 
 
 
Net earnings
$
9.14

 
 
 
$
8.21

 
 
Weighted average number of common
 
 
 
 
 
 
 
  and common equivalent shares
31,824,077

 
 
 
32,839,365

 
 
 
 
 
 
 
 
 
 
 
 
Note:
 
 
 
 
 
 
 
 
(a)
Local currency sales increased 4% as compared to the same period in 2011.
 
 
 
 
 
 
 
 
 
 
 
 
 
 
RECONCILIATION OF EARNINGS BEFORE TAXES TO ADJUSTED OPERATING INCOME
 
 
 
 
 
 
 
 
 
 
 
 
 
Twelve months ended
 
 
 
Twelve months ended
 
 
 
 
 
December 31, 2012
 
% of sales
 
December 31, 2011
 
% of sales
 
 
 
 
 
 
 
 
 
 
Earnings before taxes
$
382,601

 
 
 
$
349,177

 
 
Amortization
21,357

 
 
 
17,808

 
 
Interest expense
22,764

 
 
 
23,226

(b)
 
Restructuring charges
16,687

 
 
 
5,912

 
 
Other charges (income), net
1,090

 
 
 
2,380

 
 
Adjusted operating income
$
444,499

(c)
19.0
 
$
398,503

 
17.3
 
 
 
 
 
 
 
 
 
 
Note:
 
 
 
 
 
 
 
 
(b)
Includes a $0.3 million charge associated with the termination of the Company's $950 million Credit Agreement, which was replaced with the Company's new $880 million Credit Agreement during the twelve months ended December 31, 2011.
(c)
Adjusted operating income increased 12% as compared to the same period in 2011.

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METTLER-TOLEDO INTERNATIONAL INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(amounts in thousands)
(unaudited)
 
 
 
 
 
December 31, 2012
 
December 31, 2011
 
 
 
 
Cash and cash equivalents
$
101,702

 
$
235,601

Accounts receivable, net
437,390

 
425,147

Inventories
198,939

 
241,421

Other current assets and prepaid expenses
126,889

 
116,694

Total current assets
864,920

 
1,018,863

 
 
 
 
Property, plant and equipment, net
469,421

 
410,007

Goodwill and other intangible assets, net
569,915

 
569,153

Other non-current assets
213,144

 
205,451

Total assets
$
2,117,400

 
$
2,203,474

 
 
 
 
Short-term borrowings and maturities of long-term debt
$
41,600

 
$
28,300

Trade accounts payable
142,362

 
168,109

Accrued and other current liabilities
378,715

 
413,435

Total current liabilities
562,677

 
609,844

 
 
 
 
Long-term debt
347,131

 
476,715

Other non-current liabilities
380,373

 
335,778

Total liabilities
1,290,181

 
1,422,337

 
 
 
 
Shareholders’ equity
827,219

 
781,137

Total liabilities and shareholders’ equity
$
2,117,400

 
$
2,203,474



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METTLER-TOLEDO INTERNATIONAL INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(amounts in thousands)
(unaudited)
 
Three months ended
 
Twelve months ended
 
December 31,
 
December 31,
 
2012
 
2011
 
2012
 
2011
 
 
 
 
 
 
 
 
Cash flow from operating activities:
 
 
 
 
 
 
 
Net earnings
$
104,633

 
$
94,282

 
$
290,847

 
$
269,493

 Adjustments to reconcile net earnings to
 
 
 
 
 
 
 
net cash provided by operating activities:
 
 
 
 
 
 
 
Depreciation
9,143

 
8,319

 
33,421

 
31,689

Amortization
5,586

 
5,066

 
21,357

 
17,808

Deferred tax benefit
12,309

 
14,771

 
5,420

 
5,018

Excess tax benefits from share-based payment arrangements
(8,863
)
 
(6,353
)
 
(9,365
)
 
(12,612
)
Other
4,034

 
3,485

 
14,640

 
11,746

Increase (decrease) in cash resulting from changes in
 
 
 
 
 
 
 
operating assets and liabilities
(15,116
)
 
(16,354
)
 
(28,616
)
 
(42,262
)
Net cash provided by operating activities
111,726

 
103,216

 
327,704

 
280,880

 
 
 
 
 
 
 
 
Cash flows from investing activities:
 
 
 
 
 
 
 
Proceeds from sale of property, plant and equipment
82

 
83

 
426

 
2,485

Purchase of property, plant and equipment
(31,296
)
 
(33,994
)
 
(95,588
)
 
(98,500
)
Acquisitions

 
(711
)
 
(2,098
)
 
(35,373
)
Other investing activities

 

 

 
(903
)
Net cash used in investing activities
(31,214
)
 
(34,622
)
 
(97,260
)
 
(132,291
)
 
 
 
 
 
 
 
 
Cash flows from financing activities:
 
 
 
 
 
 
 
Proceeds from borrowings
148,070

 
403,606

 
477,998

 
469,599

Repayments of borrowings
(175,603
)
 
(476,968
)
 
(595,682
)
 
(647,694
)
Proceeds from exercise of stock options
5,741

 
9,581

 
21,927

 
20,770

Excess tax benefits from share-based payment arrangements
8,863

 
6,353

 
9,365

 
12,612

Repurchases of common stock
(70,822
)
 
(33,399
)
 
(278,672
)
 
(204,578
)
Debt issuance costs
(363
)
 
(3,144
)
 
(363
)
 
(3,144
)
Acquisition contingent consideration paid
(325
)
 

 
(325
)
 
(7,750
)
Other financing activities
139

 
(173
)
 
(645
)
 
(284
)
Net cash used in financing activities
(84,300
)
 
(94,144
)
 
(366,397
)
 
(360,469
)
 
 
 
 
 
 
 
 
Effect of exchange rate changes on cash and cash equivalents
116

 
(1,322
)
 
2,054

 
(96
)
 
 
 
 
 
 
 
 
Net decrease in cash and cash equivalents
(3,672
)
 
(26,872
)
 
(133,899
)
 
(211,976
)
 
 
 
 
 
 
 
 
Cash and cash equivalents:
 
 
 
 
 
 
 
    Beginning of period
105,374

 
262,473

 
235,601

 
447,577

    End of period
$
101,702

 
$
235,601

 
$
101,702

 
$
235,601

 
 
 
 
 
 
 
 
RECONCILIATION OF NET CASH PROVIDED BY OPERATING ACTIVITIES TO FREE CASH FLOW
 
 
 
 
 
 
 
 
Net cash provided by operating activities
$
111,726

 
$
103,216

 
$
327,704

 
$
280,880

Excess tax benefits from share-based payment arrangements
8,863

 
6,353

 
9,365

 
12,612

Payments in respect of restructuring activities
4,354

 
2,194

 
12,591

 
6,297

Proceeds from sale of property, plant and equipment
82

 
83

 
426

 
2,485

Purchase of property, plant and equipment
(31,296
)
 
(33,994
)
 
(95,588
)
 
(98,500
)
Free cash flow
$
93,729

 
$
77,852

 
$
254,498

 
$
203,774


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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 December 31, 2012
 
(7
)%
 
6
%
 
7
%
 
1
%
 
 
 
Twelve Months Ended December 31, 2012
 
(8
)%
 
4
%
 
11
%
 
1
%
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Local Currency Sales Growth
 
 
 
 
 
 
 
 
 
 
 
 
Three Months Ended December 31, 2012
 
(4
)%
 
5
%
 
6
%
 
2
%
 
 
 
Twelve Months Ended December 31, 2012
 
(2
)%
 
5
%
 
10
%
 
4
%
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
RECONCILIATION OF DILUTED EPS AS REPORTED TO ADJUSTED DILUTED EPS
(unaudited)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Three months ended
 
Twelve months ended
 
 
December 31,
 
December 31,
 
 
2012
 
2011
 
% Growth
 
2012
 
2011
 
% Growth
 
 
 
 
 
 
 
 
 
 
 
 
 
EPS as reported, diluted
$
3.35

 
$
2.91

 
15%
 
$
9.14

 
$
8.21

 
11%
 
 
 
 
 
 
 
 
 
 
 
 
 
Restructuring charges, net of tax
0.13

(a)
0.07

(a)
 
 
0.39

(a)
0.13

(a)
 
Purchased intangible amortization, net of tax
0.03

(b)
0.03

(b)
 
 
0.14

(b)
0.12

(b)
 
Benefit in Q4 of adjusting Q3 YTD tax rate
(0.04
)
(c)
(0.14
)
(c)
 
 

 

 
 
Debt extinguishment and financing costs, net of tax

 
0.01

(d)
 
 

 
0.01

(d)
 
Discrete tax items

 

 
 
 

 
(0.11
)
(e)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Adjusted EPS, diluted
$
3.47

 
$
2.88

 
20%
 
$
9.67

 
$
8.36

 
16%
 
 
 
 
 
 
 
 
 
 
 
 
 
Notes:
 
 
 
 
 
 
 
 
 
 
 
(a)
Represents the EPS impact of restructuring charges of $5.4 million ($4.0 million after tax) and $3.1 million ($2.3 million after tax) for the three months ended December 31, 2012 and 2011, respectively and $16.7 million ($12.5 million after tax) and $5.9 million ($4.4 million after tax) for the twelve months ended December 31, 2012 and 2011, respectively.
(b)
Represents the EPS impact of purchased intangibles amortization, net of tax, of $1.0 million and $1.1 million for the three months ended December 31, 2012 and 2011, respectively and $4.5 million and $4.1 million for the twelve months ended December 31, 2012 and 2011, respectively.
(c)
Represents the EPS impact of adjusting the annual effective tax rate from 24.5% to 24% and 26% to 24% during the three months ended December 31, 2012 and 2011, respectively related to the nine months ended September 30, 2012 and 2011, respectively.
(d)
Represents the EPS impact of costs associated with the termination of the Company's $950 million Credit Agreement that was replaced with the Company's new $880 million Credit Agreement totaling $0.3 million ($0.2 million after tax) for the three and twelve months ended December 31, 2011.
(e)
Represents the EPS impact of discrete tax items of $3.8 million for the twelve months ended December 31, 2011, primarily related to the favorable resolution of certain prior year tax matters.

###