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| 8-K - FORM 8-K Q3 2017 PRESS RELEASE - METTLER TOLEDO INTERNATIONAL INC/ | mtd8-kq32017.htm |
FOR IMMEDIATE RELEASE | Exhibit 99.1 | |
METTLER-TOLEDO INTERNATIONAL INC. REPORTS
THIRD QUARTER 2017 RESULTS
- - Good Sales Growth - -
- - Strong EPS Growth - -
COLUMBUS, Ohio, USA - November 2, 2017 - Mettler-Toledo International Inc. (NYSE: MTD) today announced third quarter results for 2017. Provided below are the highlights:
• | Sales in local currency increased 6% in the quarter compared with the prior year. Reported sales increased 7% as currency increased sales growth by 1% in the quarter. |
• | Net earnings per diluted share as reported (EPS) were $3.99, compared with $3.77 in the prior-year period. Adjusted EPS was $4.36, an increase of 12% over the prior-year amount of $3.89. Adjusted EPS is a non-GAAP measure, and we have included a reconciliation to EPS on the last page of the attached schedules. |
Third Quarter Results
Olivier Filliol, President and Chief Executive Officer, stated, “Sales growth in the quarter was good, with excellent growth in Asia/Rest of World. In the Americas and Europe, sales growth was good in our Lab and Industrial businesses but, as expected, Food Retailing declined. Our productivity and margin initiatives continue to yield tangible results, which contributed to strong growth in EPS.”
EPS in the quarter was $3.99, compared with the prior-year amount of $3.77. Adjusted EPS was $4.36, an increase of 12% over the prior-year amount of $3.89.
Sales were $698.8 million, a 6% increase in local currency sales, compared with $650.6 million in the prior-year quarter. Reported sales increased 7% as currency increased sales growth by 1% in the quarter. As compared with the prior year, local currency sales increased 2% in the Americas, 2% in Europe and 15% in Asia/Rest of World. Adjusted operating income amounted to $162.9 million, a 7% increase from the prior-year amount of $151.7 million. Adjusted operating income is a non-GAAP measure, and a reconciliation to earnings before taxes is provided in the attached schedules.
Nine Month Results
EPS for the nine months was $11.31, compared with the prior-year amount of $9.08. Adjusted EPS was $11.61, an increase of 21% over the prior-year amount of $9.56.
Sales were $1.947 billion, a 9% increase in local currency sales, compared with $1.799 billion in the prior-year period. Reported sales increased 8% as currency reduced sales growth by 1% in the period. As compared with the prior year, local currency sales increased 8% in the Americas, 6% in Europe and 13% in Asia/Rest of World. Adjusted operating income amounted to $438.8 million, a 15% increase from the prior-year amount of $382.8 million. Adjusted operating income is a non-GAAP measure, and a reconciliation to earnings before taxes is provided in the attached schedules.
Acquisition to Expand Channel Access and Brands in the Liquid Handling Market
The Company announced that, during the quarter, it completed the acquisition of Biotix Inc., a manufacturer and distributor of plastic consumables associated with pipettes, including tips, tubes and reagent reservoirs used in the life sciences market. The Company stated the acquisition will expand its consumable offering for the pipette market into indirect distribution channels. Management stated that this expansion is an excellent complement to its Rainin pipette and tips offering that is sold through its direct salesforce. Biotix is headquartered in San Diego with a manufacturing facility in Mexico.
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Outlook
Based on today's assessment, management anticipates that local currency sales growth in the fourth quarter 2017 will be approximately 5.5%, and Adjusted EPS is forecasted to be approximately $5.90, an increase of 12%.
For the full year 2017, local currency sales growth is expected to be approximately 8%. This sales growth is expected to result in Adjusted EPS of approximately $17.50, an increase of 18%. This compares with previous guidance of Adjusted EPS in the range of $17.25 to $17.35.
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 $19.65 to $19.85, which reflects growth of 12% to 13%.
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.
Conclusion
Filliol concluded, "Demand in our markets remains solid. We continue to execute well and are benefiting from our Field Turbo investments, Spinnaker sales and marketing initiatives, new product launches and margin and productivity initiatives. The addition of Biotix will further strengthen our position in the attractive liquid handling market and bring us more exposure to life sciences. As we look to the remainder of this year and into 2018, we believe we are well positioned to continue to gain market share and deliver strong results."
Other Matters
The Company will host a conference call to discuss its quarterly results today (Thursday, November 2) 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 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 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.
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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 | ||||||||||||
September 30, 2017 | % of sales | September 30, 2016 | % of sales | ||||||||||
Net sales | $ | 698,799 | (a) | 100.0 | $ | 650,598 | 100.0 | ||||||
Cost of sales | 298,522 | 42.7 | 281,104 | 43.2 | |||||||||
Gross profit | 400,277 | 57.3 | 369,494 | 56.8 | |||||||||
Research and development | 32,477 | 4.6 | 30,139 | 4.6 | |||||||||
Selling, general and administrative | 204,915 | 29.3 | 187,680 | 28.8 | |||||||||
Amortization | 10,716 | 1.5 | 9,087 | 1.4 | |||||||||
Interest expense | 8,248 | 1.2 | 7,167 | 1.1 | |||||||||
Restructuring charges | 3,385 | 0.5 | 1,494 | 0.3 | |||||||||
Other charges (income), net | 909 | 0.2 | 603 | 0.1 | |||||||||
Earnings before taxes | 139,627 | 20.0 | 133,324 | 20.5 | |||||||||
Provision for taxes | 34,677 | 5.0 | 31,992 | 4.9 | |||||||||
Net earnings | $ | 104,950 | 15.0 | $ | 101,332 | 15.6 | |||||||
Basic earnings per common share: | |||||||||||||
Net earnings | $ | 4.10 | $ | 3.84 | |||||||||
Weighted average number of common shares | 25,613,433 | 26,375,468 | |||||||||||
Diluted earnings per common share: | |||||||||||||
Net earnings | $ | 3.99 | $ | 3.77 | |||||||||
Weighted average number of common and common equivalent shares | 26,303,529 | 2,688,810 | |||||||||||
Note: | |||||||||||||
(a) | Local currency sales increased 6% as compared to the same period in 2016. | ||||||||||||
RECONCILIATION OF EARNINGS BEFORE TAXES TO ADJUSTED OPERATING INCOME | |||||||||||||
Three months ended | Three months ended | ||||||||||||
September 30, 2017 | % of sales | September 30, 2016 | % of sales | ||||||||||
Earnings before taxes | $ | 139,627 | $ | 133,324 | |||||||||
Amortization | 10,716 | 9,087 | |||||||||||
Interest expense | 8,248 | 7,167 | |||||||||||
Restructuring charges | 3,385 | 1,494 | |||||||||||
Other charges (income), net | 909 | 603 | (c) | ||||||||||
Adjusted operating income | $ | 162,885 | (b) | 23.3 | $ | 151,675 | 23.3 | ||||||
Note: | |||||||||||||
(b) | Other charges (income), net include acquisition costs of $1.7 million and $1.1 million for the three months ended September 30, 2017 and 2016, respectively. | ||||||||||||
(c) | Adjusted operating income increased 7% as compared to the same period in 2016. | ||||||||||||
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METTLER-TOLEDO INTERNATIONAL INC. CONSOLIDATED STATEMENTS OF OPERATIONS (amounts in thousands except share data) (unaudited) | ||||||||||||||
Nine months ended | Nine months ended | |||||||||||||
September 30, 2017 | % of sales | September 30, 2016 | % of sales | |||||||||||
Net sales | $ | 1,947,022 | (a) | 100.0 | $ | 1,798,558 | 100.0 | |||||||
Cost of sales | 828,928 | 42.6 | 781,581 | 43.5 | ||||||||||
Gross profit | 1,118,094 | 57.4 | 1,016,977 | 56.5 | ||||||||||
Research and development | 96,723 | 5.0 | 89,813 | 5.0 | ||||||||||
Selling, general and administrative | 582,604 | 29.9 | 544,399 | 30.3 | ||||||||||
Amortization | 31,010 | 1.6 | 26,166 | 1.5 | ||||||||||
Interest expense | 24,160 | 1.2 | 20,619 | 1.1 | ||||||||||
Restructuring charges | 8,840 | 0.5 | 4,579 | 0.2 | ||||||||||
Other charges (income), net | (5,565 | ) | (0.3 | ) | 8,492 | 0.5 | ||||||||
Earnings before taxes | 380,322 | 19.5 | 322,909 | 17.9 | ||||||||||
Provision for taxes | 81,326 | 4.1 | 76,315 | 4.2 | ||||||||||
Net earnings | $ | 298,996 | 15.4 | $ | 246,594 | 13.7 | ||||||||
Basic earnings per common share: | ||||||||||||||
Net earnings | $ | 11.60 | $ | 9.25 | ||||||||||
Weighted average number of common shares | 25,764,472 | 26,644,938 | ||||||||||||
Diluted earnings per common share: | ||||||||||||||
Net earnings | $ | 11.31 | $ | 9.08 | ||||||||||
Weighted average number of common and common equivalent shares | 26,446,677 | 27,153,450 | ||||||||||||
Note: | ||||||||||||||
(a) | Local currency sales increased 9% as compared to the same period in 2016. | |||||||||||||
RECONCILIATION OF EARNINGS BEFORE TAXES TO ADJUSTED OPERATING INCOME | ||||||||||||||
Nine months ended | Nine months ended | |||||||||||||
September 30, 2017 | % of sales | September 30, 2016 | % of sales | |||||||||||
Earnings before taxes | $ | 380,322 | $ | 322,909 | ||||||||||
Amortization | 31,010 | 26,166 | ||||||||||||
Interest expense | 24,160 | 20,619 | ||||||||||||
Restructuring charges | 8,840 | 4,579 | ||||||||||||
Other charges (income), net | (5,565 | ) | (b) | 8,492 | (d) | |||||||||
Adjusted operating income | $ | 438,767 | (c) | 22.5 | $ | 382,765 | 21.3 | |||||||
Note: | ||||||||||||||
(b) | Other charges (income), net includes a one-time gain of $3.4 million relating to the sale of a facility in Switzerland in connection with our initiative to consolidate certain Swiss operations into a new facility and $1.7 million of acquisition costs for the nine months ended September 30, 2017. | |||||||||||||
(c) | Adjusted operating income increased 15% 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 and acquisition costs of $1.1 million for the nine months ended September 30, 2016. | |||||||||||||
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METTLER-TOLEDO INTERNATIONAL INC. CONDENSED CONSOLIDATED BALANCE SHEETS (amounts in thousands) (unaudited) | |||||||
September 30, 2017 | December 31, 2016 | ||||||
Cash and cash equivalents | $ | 169,086 | $ | 158,674 | |||
Accounts receivable, net | 483,167 | 454,988 | |||||
Inventories | 263,527 | 222,047 | |||||
Other current assets and prepaid expenses | 70,784 | 61,075 | |||||
Total current assets | 986,564 | 896,784 | |||||
Property, plant and equipment, net | 641,709 | 563,707 | |||||
Goodwill and other intangible assets, net | 768,393 | 643,433 | |||||
Other non-current assets | 100,533 | 62,853 | |||||
Total assets | $ | 2,497,199 | $ | 2,166,777 | |||
Short-term borrowings and maturities of long-term debt | $ | 18,533 | $ | 18,974 | |||
Trade accounts payable | 148,521 | 146,593 | |||||
Accrued and other current liabilities | 485,304 | 421,948 | |||||
Total current liabilities | 652,358 | 587,515 | |||||
Long-term debt | 1,050,681 | 875,056 | |||||
Other non-current liabilities | 281,181 | 269,263 | |||||
Total liabilities | 1,984,220 | 1,731,834 | |||||
Shareholders’ equity | 512,979 | 434,943 | |||||
Total liabilities and shareholders’ equity | $ | 2,497,199 | $ | 2,166,777 | |||
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METTLER-TOLEDO INTERNATIONAL INC. CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (amounts in thousands) (unaudited) | |||||||||||||||
Three months ended | Nine months ended | ||||||||||||||
September 30 | September 30 | ||||||||||||||
2017 | 2016 | 2017 | 2016 | ||||||||||||
Cash flow from operating activities: | |||||||||||||||
Net earnings | $ | 104,950 | $ | 101,332 | $ | 298,996 | $ | 246,594 | |||||||
Adjustments to reconcile net earnings to | |||||||||||||||
net cash provided by operating activities: | |||||||||||||||
Depreciation | 8,502 | 8,411 | 24,421 | 24,527 | |||||||||||
Amortization | 10,716 | 9,087 | 31,010 | 26,166 | |||||||||||
Deferred tax benefit | (3,914 | ) | (2,226 | ) | (7,754 | ) | (11,078 | ) | |||||||
Other | 4,027 | 3,719 | 12,050 | 10,867 | |||||||||||
Gain on facility sale | — | — | (3,394 | ) | — | ||||||||||
Non-cash pension settlement charge | — | — | — | 8,189 | |||||||||||
Increase (decrease) in cash resulting from changes in | |||||||||||||||
operating assets and liabilities | 21,577 | 24,613 | (4,094 | ) | 2,048 | ||||||||||
Net cash provided by operating activities | 145,858 | 144,936 | 351,235 | 307,313 | |||||||||||
Cash flows from investing activities: | |||||||||||||||
Proceeds from sale of property, plant and equipment (a) | 228 | 143 | 10,437 | 361 | |||||||||||
Purchase of property, plant and equipment | (37,297 | ) | (22,376 | ) | (85,826 | ) | (51,234 | ) | |||||||
Acquisitions | (107,748 | ) | (105,352 | ) | (108,445 | ) | (109,681 | ) | |||||||
Net hedging settlements on intercompany loans | 4,749 | 956 | 3,716 | 2,031 | |||||||||||
Net cash used in investing activities | (140,068 | ) | (126,629 | ) | (180,118 | ) | (158,523 | ) | |||||||
Cash flows from financing activities: | |||||||||||||||
Proceeds from borrowings | 312,773 | 317,428 | 985,694 | 709,988 | |||||||||||
Repayments of borrowings | (218,899 | ) | (186,229 | ) | (834,061 | ) | (455,913 | ) | |||||||
Proceeds from exercise of stock options | 6,380 | 6,222 | 23,315 | 20,187 | |||||||||||
Repurchases of common stock | (85,049 | ) | (124,997 | ) | (334,998 | ) | (374,994 | ) | |||||||
Other financing activities | — | — | (7,205 | ) | (680 | ) | |||||||||
Net cash provided by (used in) financing activities | 15,205 | 12,424 | (167,255 | ) | (101,412 | ) | |||||||||
Effect of exchange rate changes on cash and cash equivalents | 1,757 | 756 | 6,550 | (132 | ) | ||||||||||
Net increase in cash and cash equivalents | 22,752 | 31,487 | 10,412 | 47,246 | |||||||||||
Cash and cash equivalents: | |||||||||||||||
Beginning of period | 146,334 | 114,646 | 158,674 | 98,887 | |||||||||||
End of period | $ | 169,086 | $ | 146,133 | $ | 169,086 | $ | 146,133 | |||||||
RECONCILIATION OF NET CASH PROVIDED BY OPERATING ACTIVITIES TO FREE CASH FLOW | |||||||||||||||
Net cash provided by operating activities | $ | 145,858 | $ | 144,936 | $ | 351,235 | $ | 307,313 | |||||||
Payments in respect of restructuring activities | 2,375 | 2,002 | 7,701 | 6,304 | |||||||||||
Payments of acquisition costs | 764 | 910 | 764 | 910 | |||||||||||
Proceeds from sale of property, plant and equipment(a) | 228 | 143 | 10,437 | 361 | |||||||||||
Purchase of property, plant and equipment | (37,297 | ) | (22,376 | ) | (85,826 | ) | (51,234 | ) | |||||||
Free cash flow | $ | 111,928 | $ | 125,615 | $ | 284,311 | $ | 263,654 | |||||||
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 nine months ended September 30, 2017. | |||||||||||||||
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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 September 30, 2017 | 7% | 2% | 15% | 7% | ||||||||||||||||
Nine Months Ended September 30, 2017 | 5% | 8% | 12% | 8% | ||||||||||||||||
Local Currency Sales Growth | ||||||||||||||||||||
Three Months Ended September 30, 2017 | 2% | 2% | 15% | 6% | ||||||||||||||||
Nine Months Ended September 30, 2017 | 6% | 8% | 13% | 9% | ||||||||||||||||
RECONCILIATION OF DILUTED EPS AS REPORTED TO ADJUSTED DILUTED EPS | ||||||||||||||||||||
(unaudited) | ||||||||||||||||||||
Three months ended | Nine months ended | |||||||||||||||||||
September 30 | September 30 | |||||||||||||||||||
2017 | 2016 | % Growth | 2017 | 2016 | % Growth | |||||||||||||||
EPS as reported, diluted | $ | 3.99 | $ | 3.77 | 6% | $ | 11.31 | $ | 9.08 | 25% | ||||||||||
Restructuring charges, net of tax | 0.10 | (a) | 0.04 | (a) | 0.26 | (a) | 0.13 | (a) | ||||||||||||
Purchased intangible amortization, net of tax | 0.07 | (b) | 0.05 | (b) | 0.18 | (b) | 0.13 | (b) | ||||||||||||
Acquisition costs, net of tax | 0.05 | (c) | 0.03 | (c) | 0.05 | (c) | 0.03 | (c) | ||||||||||||
Income tax expense | 0.15 | (d) | — | (0.09 | ) | (d) | — | |||||||||||||
Gain on facility sale | — | — | (0.10 | ) | (e) | — | ||||||||||||||
Non-cash pension settlement charge, net of tax | — | — | — | 0.19 | (f) | |||||||||||||||
Adjusted EPS, diluted | $ | 4.36 | $ | 3.22 | 12% | $ | 11.61 | $ | 9.56 | 21% | ||||||||||
Notes: | ||||||||||||||||||||
(a) | Represents the EPS impact of restructuring charges of $3.4 million ($2.6 million after tax) and $1.5 million ($1.1 million after tax) for the three months ended September 30, 2017 and 2016, and $8.8 million ($6.9 million after tax) and $4.6 million ($3.5 million after tax) for the nine months ended September 30, 2017 and 2016, respectively, which primarily include employee related costs. | |||||||||||||||||||
(b) | Represents the EPS impact of purchased intangibles amortization $2.6 million ($1.7 million after tax) and $2.0 million ($1.3 million after tax) for the three months ended September 30, 2017 and 2016, and $7.2 million ($4.7 million after tax) and $5.2 million ($3.5 million after tax) for the nine months ended September 30, 2017 and 216, respectively. | |||||||||||||||||||
(c) | Represents the EPS impact of acquisition costs of $1.7 million ($1.3 million after tax) and $1.1 million ($0.8 million after tax) for the three and nine months ended September 30, 2017 and 2016, respectively. | |||||||||||||||||||
(d) | Represents the EPS impact of the difference between our reported tax rate of 25% and 21% during the three and nine months ending September 30, 2017 and our estimated annual income tax rate of 22%, which reflects 2% estimated annual benefit pertaining to excess tax benefits associated with stock option exercises. | |||||||||||||||||||
(e) | Represents the EPS impact of a one-time gain of $3.4 million ($2.7 million after tax) for the nine months ended September 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. | |||||||||||||||||||
(f) | 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 nine months ended September 30, 2016. | |||||||||||||||||||
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