Attached files
| file | filename |
|---|---|
| 8-K - FORM 8-K Q4 2017 PRESS RELEASE - METTLER TOLEDO INTERNATIONAL INC/ | mtd8-kq42017.htm |
FOR IMMEDIATE RELEASE | Exhibit 99.1 | |
METTLER-TOLEDO INTERNATIONAL INC. REPORTS
FOURTH QUARTER 2017 RESULTS
- - Good Sales Growth - -
- - Continued Strong EPS Growth - -
COLUMBUS, Ohio, USA - February 8, 2018 - Mettler-Toledo International Inc. (NYSE: MTD) today announced fourth 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 10% as currency increased sales growth by 4% in the quarter. |
• | Net earnings per diluted share as reported (EPS) were $2.93, compared with $5.17 in the prior-year period. Adjusted EPS was $5.97, an increase of 13% over the prior-year amount of $5.28. EPS includes a $2.74 income tax charge related to the new U.S. tax legislation. Adjusted EPS is a non-GAAP measure, and we have included a reconciliation to EPS on the last page of the attached schedules. |
Fourth Quarter Results
Olivier Filliol, President and Chief Executive Officer, stated, “Sales growth in the quarter was good, with particularly strong broad-based growth in our Laboratory business. Our productivity initiatives continue to generate positive results which contributed to another strong growth in Adjusted EPS.”
EPS in the quarter was $2.93, compared with the prior-year amount of $5.17. Adjusted EPS was $5.97, an increase of 13% over the prior-year amount of $5.28. EPS includes a $2.74 income tax charge related to the new U.S. tax legislation.
Sales were $778.0 million, a 6% increase in local currency sales, compared with $709.7 million in the prior-year quarter. Reported sales increased 10% as currency increased sales growth by 4% in the quarter. As compared with the prior year, local currency sales increased 9% in the Americas, 1% in Europe and 7% in Asia/Rest of World. Adjusted operating income amounted to $217.8 million, a 9% increase from the prior-year amount of $200.2 million. Adjusted operating income is a non-GAAP measure, and a reconciliation to earnings before taxes is provided in the attached schedules.
Full Year Results
EPS for 2017 was $14.24, compared with the prior-year amount of $14.22. Adjusted EPS was $17.57, an increase of 19% over the prior-year amount of $14.80. EPS includes a $2.73 income tax charge related to the new U.S. tax legislation.
Sales were $2.725 billion, an 8% increase in local currency sales, compared with $2.508 billion in the prior-year period. Reported sales increased 9% as currency increased sales growth by 1% in the period.
As compared with the prior year, local currency sales increased 8% in the Americas, 5% in Europe and 11% in Asia/Rest of World. Adjusted operating income amounted to $656.6 million, a 13% increase from the prior-year amount of $583.0 million. Adjusted operating income is a non-GAAP measure, and a reconciliation to earnings before taxes is provided in the attached schedules.
Outlook
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 $19.95 to $20.15, which reflects growth of 14% to 15%. This compares to previous Adjusted EPS guidance of $19.65 to $19.85.
Management anticipates that local currency sales growth in the first quarter 2018 will be approximately 5%, and Adjusted EPS is forecasted to be in the range of $3.65 to $3.70, an increase of 9% to 11%.
-1-
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, "Diligent execution of our strategic initiatives, supported by favorable economic conditions in all major regions of the world, resulted in excellent operating results in 2017. We believe we are well positioned for further share gains with the benefit of our Spinnaker sales and marketing initiatives, excellent product pipeline, additional investments in sales resources and further use of sophisticated tools such as big data analytics to identify growth opportunities in our markets. We expect our growth initiatives combined with our margin and productivity programs will generate strong operating results and provide the capacity for future growth investments."
Other Matters
The Company will host a conference call to discuss its quarterly results today (Thursday, February 8) 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.
-2-
METTLER-TOLEDO INTERNATIONAL INC. CONSOLIDATED STATEMENTS OF OPERATIONS (amounts in thousands except share data) (unaudited) | |||||||||||||
Three Months Ended | Three Months Ended | ||||||||||||
December 31, 2017 | % of sales | December 31, 2016 | % of sales | ||||||||||
Net sales | $ | 778,031 | (a) | 100.0 | $ | 709,699 | 100.0 | ||||||
Cost of sales | 322,812 | 41.5 | 291,089 | 41.0 | |||||||||
Gross profit | 455,219 | 58.5 | 418,610 | 59.0 | |||||||||
Research and development | 32,542 | 4.2 | 30,155 | 4.2 | |||||||||
Selling, general and administrative | 204,860 | 26.3 | 188,223 | 26.5 | |||||||||
Amortization | 11,661 | 1.5 | 9,886 | 1.4 | |||||||||
Interest expense | 8,625 | 1.1 | 7,407 | 1.1 | |||||||||
Restructuring charges | 3,932 | 0.5 | 1,656 | 0.3 | |||||||||
Other charges (income), net | (301 | ) | (0.0) | (1 | ) | (0.0) | |||||||
Earnings before taxes | 193,900 | 24.9 | 181,284 | 25.5 | |||||||||
Provision for taxes | 116,924 | (b) | 15.0 | 43,508 | 6.1 | ||||||||
Net earnings | $ | 76,976 | 9.9 | $ | 137,776 | 19.4 | |||||||
Basic earnings per common share: | |||||||||||||
Net earnings | $ | 3.01 | $ | 5.27 | |||||||||
Weighted average number of common shares | 25,562,542 | 26,139,024 | |||||||||||
Diluted earnings per common share: | |||||||||||||
Net earnings | $ | 2.93 | $ | 5.17 | |||||||||
Weighted average number of common and common equivalent shares | 26,229,052 | 26,631,269 | |||||||||||
Note: | |||||||||||||
(a) | Local currency sales increased 6% as compared to the same period in 2016. | ||||||||||||
(b) | Provision for taxes for the three months ended December 31, 2017 includes a provisional one-time charge of $72 million for the implementation of the TaxCuts and Jobs Act. Of this amount, $59 million is expected to be paid over a period of up to eight years. The estimated charge may change with the finalization of implementation. | ||||||||||||
RECONCILIATION OF EARNINGS BEFORE TAXES TO ADJUSTED OPERATING INCOME | |||||||||||||
Three Months Ended | Three Months Ended | ||||||||||||
December 31, 2017 | % of sales | December 31, 2016 | % of sales | ||||||||||
Earnings before taxes | $ | 193,900 | $ | 181,284 | |||||||||
Amortization | 11,661 | 9,886 | |||||||||||
Interest expense | 8,625 | 7,407 | |||||||||||
Restructuring charges | 3,932 | 1,656 | |||||||||||
Other charges (income), net | (301 | ) | (1 | ) | |||||||||
Adjusted operating income | $ | 217,817 | (b) | 28.0 | $ | 200,232 | 28.2 | ||||||
Note: | |||||||||||||
(b) | Adjusted operating income increased 9% as compared to the same period in 2016. | ||||||||||||
-3-
METTLER-TOLEDO INTERNATIONAL INC. CONSOLIDATED STATEMENTS OF OPERATIONS (amounts in thousands except share data) (unaudited) | ||||||||||||||
Twelve Months Ended | Twelve Months Ended | |||||||||||||
December 31, 2017 | % of sales | December 31, 2016 | % of sales | |||||||||||
Net sales | $ | 2,725,053 | (a) | 100.0 | $ | 2,508,257 | 100.0 | |||||||
Cost of sales | 1,151,740 | 42.3 | 1,072,670 | 42.8 | ||||||||||
Gross profit | 1,573,313 | 57.7 | 1,435,587 | 57.2 | ||||||||||
Research and development | 129,265 | 4.7 | 119,968 | 4.8 | ||||||||||
Selling, general and administrative | 787,464 | 28.8 | 732,622 | 29.2 | ||||||||||
Amortization | 42,671 | 1.6 | 36,052 | 1.4 | ||||||||||
Interest expense | 32,785 | 1.2 | 28,026 | 1.1 | ||||||||||
Restructuring charges | 12,772 | 0.5 | 6,235 | 0.3 | ||||||||||
Other charges (income), net | (5,866 | ) | (0.2 | ) | 8,491 | 0.3 | ||||||||
Earnings before taxes | 574,222 | 21.1 | 504,193 | 20.1 | ||||||||||
Provision for taxes | 198,250 | (b) | 7.3 | 119,823 | 4.8 | |||||||||
Net earnings | $ | 375,972 | 13.8 | $ | 384,370 | 15.3 | ||||||||
Basic earnings per common share: | ||||||||||||||
Net earnings | $ | 14.62 | $ | 14.49 | ||||||||||
Weighted average number of common shares | 25,713,575 | 26,517,768 | ||||||||||||
Diluted earnings per common share: | ||||||||||||||
Net earnings | $ | 14.24 | $ | 14.22 | ||||||||||
Weighted average number of common and common equivalent shares | 26,393,783 | 27,023,905 | ||||||||||||
Note: | ||||||||||||||
(a) | Local currency sales increased 8% as compared to the same period in 2016. | |||||||||||||
(b) | Provision for taxes for the twelve months ended December 31, 2017 includes a provisional one-time charge of $72 million for the implementation of the TaxCuts and Jobs Act. Of this amount, $59 million is expected to be paid over a period of up to eight years. The estimated charge may change with the finalization of implementation. | |||||||||||||
RECONCILIATION OF EARNINGS BEFORE TAXES TO ADJUSTED OPERATING INCOME | ||||||||||||||
Twelve Months Ended | Twelve Months Ended | |||||||||||||
December 31, 2017 | % of sales | December 31, 2016 | % of sales | |||||||||||
Earnings before taxes | $ | 574,222 | $ | 504,193 | ||||||||||
Amortization | 42,671 | 36,052 | ||||||||||||
Interest expense | 32,785 | 28,026 | ||||||||||||
Restructuring charges | 12,772 | 6,235 | ||||||||||||
Other charges (income), net | (5,866 | ) | (c) | 8,491 | (e) | |||||||||
Adjusted operating income | $ | 656,584 | (d) | 24.1 | $ | 582,997 | 23.2 | |||||||
Note: | ||||||||||||||
(c) | 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 Swiss operations into a new facility and $1.7 million of acquisition costs for the twelve months ended December 31, 2017. | |||||||||||||
(d) | Adjusted operating income increased 13% as compared to the same period in 2016. | |||||||||||||
(e) | Other charges (income), net includes a one-time non-cash pension settlement charge of $8.2 million related to a lump sum settlement to former employees of our U.S. pension plan and acquisition costs of $1.1 million for the twelve months ended December 31, 2016. | |||||||||||||
-4-
METTLER-TOLEDO INTERNATIONAL INC. CONDENSED CONSOLIDATED BALANCE SHEETS (amounts in thousands) (unaudited) | |||||||
December 31, 2017 | December 31, 2016 | ||||||
Cash and cash equivalents | $ | 148,687 | $ | 158,674 | |||
Accounts receivable, net | 528,615 | 454,988 | |||||
Inventories | 255,390 | 222,047 | |||||
Other current assets and prepaid expenses | 74,031 | 61,075 | |||||
Total current assets | 1,006,723 | 896,784 | |||||
Property, plant and equipment, net | 668,271 | 563,707 | |||||
Goodwill and other intangible assets, net | 766,556 | 643,433 | |||||
Other non-current assets | 108,255 | 62,853 | |||||
Total assets | $ | 2,549,805 | $ | 2,166,777 | |||
Short-term borrowings and maturities of long-term debt | $ | 19,677 | $ | 18,974 | |||
Trade accounts payable | 167,627 | 146,593 | |||||
Accrued and other current liabilities | 502,369 | 421,948 | |||||
Total current liabilities | 689,673 | 587,515 | |||||
Long-term debt | 960,170 | 875,056 | |||||
Other non-current liabilities | 352,682 | 269,263 | |||||
Total liabilities | 2,002,525 | 1,731,834 | |||||
Shareholders’ equity | 547,280 | 434,943 | |||||
Total liabilities and shareholders’ equity | $ | 2,549,805 | $ | 2,166,777 | |||
-5-
METTLER-TOLEDO INTERNATIONAL INC. CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (amounts in thousands) (unaudited) | |||||||||||||||
Three months ended | Twelve months ended | ||||||||||||||
December 31, | December 31, | ||||||||||||||
2017 | 2016 | 2017 | 2016 | ||||||||||||
Cash flow from operating activities: | |||||||||||||||
Net earnings | $ | 76,976 | $ | 137,776 | $ | 375,972 | $ | 384,370 | |||||||
Adjustments to reconcile net earnings to | |||||||||||||||
net cash provided by operating activities: | |||||||||||||||
Depreciation | 9,037 | 8,216 | 33,458 | 32,743 | |||||||||||
Amortization | 11,661 | 9,886 | 42,671 | 36,052 | |||||||||||
Deferred tax provision (benefit) | 5,009 | 12,956 | (2,745 | ) | 1,878 | ||||||||||
Share-based compensation | 4,759 | 4,445 | 16,582 | 15,306 | |||||||||||
Provisional onetime charge on U.S. tax reform | 71,982 | — | 71,982 | — | |||||||||||
Gain on facility sale | — | — | (3,394 | ) | — | ||||||||||
Non-cash pension settlement charge | — | — | — | 8,189 | |||||||||||
Other | 16 | 175 | 243 | 181 | |||||||||||
Decrease in cash resulting from changes in | |||||||||||||||
operating assets and liabilities | (14,350 | ) | (20,009 | ) | (18,444 | ) | (17,961 | ) | |||||||
Net cash provided by operating activities | 165,090 | 153,445 | 516,325 | 460,758 | |||||||||||
Cash flows from investing activities: | |||||||||||||||
Proceeds from sale of property, plant and equipment (a) | 1,536 | 62 | 11,973 | 423 | |||||||||||
Purchase of property, plant and equipment | (41,600 | ) | (72,723 | ) | (127,426 | ) | (123,957 | ) | |||||||
Acquisitions | — | (1,700 | ) | (108,445 | ) | (111,381 | ) | ||||||||
Net hedging settlements on intercompany loans | 2,838 | 1,428 | 6,554 | 3,459 | |||||||||||
Net cash used in investing activities | (37,226 | ) | (72,933 | ) | (217,344 | ) | (231,456 | ) | |||||||
Cash flows from financing activities: | |||||||||||||||
Proceeds from borrowings | 258,501 | 195,786 | 1,244,195 | 905,774 | |||||||||||
Repayments of borrowings | (351,111 | ) | (138,265 | ) | (1,185,172 | ) | (594,178 | ) | |||||||
Proceeds from exercise of stock options | 5,334 | 5,284 | 28,649 | 25,471 | |||||||||||
Repurchases of common stock | (64,999 | ) | (124,998 | ) | (399,997 | ) | (499,992 | ) | |||||||
Acquisition contingent consideration paid | — | — | — | (471 | ) | ||||||||||
Other financing activities | — | — | (7,205 | ) | (209 | ) | |||||||||
Net cash used in financing activities | (152,275 | ) | (62,193 | ) | (319,530 | ) | (163,605 | ) | |||||||
Effect of exchange rate changes on cash and cash equivalents | 4,012 | (5,778 | ) | 10,562 | (5,910 | ) | |||||||||
Net increase (decrease) in cash and cash equivalents | (20,399 | ) | 12,541 | (9,987 | ) | 59,787 | |||||||||
Cash and cash equivalents: | |||||||||||||||
Beginning of period | 169,086 | 146,133 | 158,674 | 98,887 | |||||||||||
End of period | $ | 148,687 | $ | 158,674 | $ | 148,687 | $ | 158,674 | |||||||
RECONCILIATION OF NET CASH PROVIDED BY OPERATING ACTIVITIES TO FREE CASH FLOW | |||||||||||||||
Net cash provided by operating activities | $ | 165,090 | $ | 153,445 | $ | 516,325 | $ | 460,758 | |||||||
Payments in respect of restructuring activities | 4,962 | 2,072 | 12,663 | 8,376 | |||||||||||
Payments for acquisition costs | 672 | — | 1,436 | 910 | |||||||||||
Proceeds from sale of property, plant and equipment (a) | 1,536 | 62 | 11,973 | 423 | |||||||||||
Purchase of property, plant and equipment | (41,600 | ) | (72,723 | ) | (127,426 | ) | (123,957 | ) | |||||||
Free cash flow | $ | 130,660 | $ | 82,856 | $ | 414,971 | $ | 346,510 | |||||||
(a) Proceeds from sale of property, plant and equipment includes $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 twelve months ended December 31, 2017. | |||||||||||||||
-6-
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, 2017 | 9 | % | 9 | % | 10 | % | 10 | % | |||||||||||||
Twelve Months Ended December 31, 2017 | 6 | % | 8 | % | 11 | % | 9 | % | |||||||||||||
Local Currency Sales Growth | |||||||||||||||||||||
Three Months Ended December 31, 2017 | 1 | % | 9 | % | 7 | % | 6 | % | |||||||||||||
Twelve Months Ended December 31, 2017 | 5 | % | 8 | % | 11 | % | 8 | % | |||||||||||||
RECONCILIATION OF DILUTED EPS AS REPORTED TO ADJUSTED DILUTED EPS | |||||||||||||||||||||
(unaudited) | |||||||||||||||||||||
Three months ended | Twelve months ended | ||||||||||||||||||||
December 31, | December 31, | ||||||||||||||||||||
2017 | 2016 | % Growth | 2017 | 2016 | % Growth | ||||||||||||||||
EPS as reported, diluted | $ | 2.93 | $ | 5.17 | (43)% | $ | 14.24 | $ | 14.22 | —% | |||||||||||
Restructuring charges, net of tax | 0.12 | (a) | 0.05 | (a) | 0.38 | (a) | 0.18 | (a) | |||||||||||||
Purchased intangible amortization, net of tax | 0.09 | (b) | 0.06 | (b) | 0.27 | (b) | 0.18 | (b) | |||||||||||||
U.S. tax reform | 2.74 | (c) | — | 2.73 | (c) | — | |||||||||||||||
Income tax expense | 0.09 | (d) | — | — | — | ||||||||||||||||
Acquisition costs, net of tax | — | — | 0.05 | (e) | 0.03 | (e) | |||||||||||||||
Gain on facility sale | — | — | (0.10 | ) | (f) | — | |||||||||||||||
Non-cash pension settlement charge, net of tax | — | — | — | 0.19 | (g) | ||||||||||||||||
Adjusted EPS, diluted | $ | 5.97 | $ | 5.28 | 13% | $ | 17.57 | $ | 14.80 | 19% | |||||||||||
Notes: | |||||||||||||||||||||
(a) | Represents the EPS impact of restructuring charges of $3.9 million ($3.1 million after tax) and $1.7 million ($1.3 million after tax) for the three months ended December 31, 2017 and 2016, and $12.8 million ($10.0 million after tax) and $6.2 million ($4.7 million after tax) for the twelve months ended December 31, 2017 and 2016, respectively, which primarily include employee related costs. | ||||||||||||||||||||
(b) | Represents the EPS impact of purchased intangibles amortization of $3.7 million ($2.3 million after tax) and $2.2 million ($1.5 million after tax) for the three months ended December 31, 2017 and 2016, and $10.9 million ($7.1 million after tax) and $7.4 million ($5.0 million after tax) for the twelve months ended December 31, 2017 and 2016, respectively. | ||||||||||||||||||||
(c) | Represents the EPS impact of a provisional one-time charge of $72.0 million for the three and twelve months ended December 31, 2017 for the implementation of the TaxCuts and Jobs Act ("Tax Act") which was signed into law in December 2017. The enactment of the Tax Act results in a one-time cash charge for un-repatriated foreign earnings of $59 million which is expected to be paid over a period of up to eight years, and a one-time non-cash charge of $13 million related to certain deferred tax and other non-cash items. The estimated charge may change with the finalization of the implementation. | ||||||||||||||||||||
(d) | Represents the EPS impact of the difference between our reported tax rate of 23% before a one-time charge related to U.S. tax reform during the three months ending December 31, 2017 and our annual income tax rate of 22%, which reflects a 2% annual benefit pertaining to excess tax benefits associated with stock option exercises. | ||||||||||||||||||||
(e) | 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 twelve months ended December 31, 2017 and 2016, respectively. | ||||||||||||||||||||
(f) | Represents the EPS impact of a one-time gain of $3.4 million ($2.7 million after tax) for the twelve months ended December 31, 2017 relating to the sale of a facility in Switzerland in connection with our initiative to consolidate certain Swiss operations into a new facility. | ||||||||||||||||||||
(g) | 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 twelve months ended December 31, 2016. | ||||||||||||||||||||
-7-
-8-