MTD - Earnings call transcript Q4 2021 | Mettler-Toledo International Inc.

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Operator

Good day! And thank you for standing by. Welcome to the Mettler-Toledo Quarterly Earnings Conference Call. At this time all participants are in listen-only mode. After the speaker presentation, there will be a question-and-answer session. [Operator Instruction]. today's being that advised be conference recorded. is Please Instruction]. [Operator hand over to I would speaker conference to like now your the today, Ms. Mary Finnegan. ahead. go Please

Mary Finnegan

Thank us Vadala, Financial by this Patrick I'm our everyone. I'm joined Investor Chief and good our call I'm evening. that and today the happy joining for Mettler-Toledo, Relations CEO, Mary are Officer. you Kaltenbach, on responsible at you, Finnegan. evening and Shawn

administrative website. Let is matters. copy just me couple This and release our a being on today's press that available is the on call on presentation is we A to call of webcast the also cover and website. the referred

XXXX. historical Let of the Exchange two me be or presentation. presentation, other Act Statements cause any that U.S. language, may which the not Act Securities statements uncertainties, harbor this Securities performance and forward-looking implied risks, achievements of U.S. results, constitute activity, the and of within is those statements statement. facts expressed outlined factors the of different of from or forward-looking actual These meaning our by involve the safe on XXXX level in page are materially summarize to which

these our discussion from other risks please a discussion uncertainties, in time-to-time. of For filed with the recent see and XX-K SEC Form and reports the

differences measure X-K. provided management detailed the the and forward-looking comparable more call of Factors the business other affecting financial use sections qualified One financial of reference may Operating use between and information and is in under measures, GAAP and results are measures factors financial non-GAAP respect statements condition the discussed captions, operations All filings. to our directly the on their and analysis with the entirety the today's to of most by the Results, in of we Future our item, discussion of and non-GAAP

call over turn to now Let Patrick. me the

Patrick Kaltenbach

capitalized results. are customer to in strong demand on the particularly we XXXX respect and world in and chain good presentation. strength a great to very particular quarter The product very three growth of finish and teams the well, quarter had currency Mary, the of fourth was page laboratory meet and have and of Local Thanks, executed our demands. We The and world. Asia We with industrial we the the robust supply agility sales performed strong the around evening everyone. our and these reflected are XX% rest Americas results. highlights on well. lines Both growth of customer

year quarter. again to overall a As expected, significant had a challenges to we decline and as sales adjusted had excellent growth end solid was fourth to costs we in adjusted in an higher strong the and was food The operating material results. the EPS chain, headwind very growth growth in retail transportation the profit the Despite due pacing supply in quarter in quarter. of

full increase an basis achieved in the a XX% local operating margin XXX increase we in sales, year points. resulted which in For adjusted a of profit, improvement currency XX%

was XXXX XX% had cash in great We only results. growth have and in EPS flow We excellent. we finally, outstanding adjusted generation not – achieved

in sales Spinnaker opportunities. XXXX with combinable us capture and our marketing our helped services comprehensive strengthen growth as also and We offering nourished position portfolio product our competitive strategies, excellent innovation

We also did navigating chain. global a in good supply the hurdles job the

further excellent and execution Our already reinforced our agility strong brand.

future last results investments important for us impressive year growth. Importantly, to our make allowed

cover have I the Shawn. are later, first to in deliver continue to results. are ability and to but our let positioned some financial turn results in Shawn beyond. we and will XXXX to gain me comments additional We believe it confident strong share ideally to

Shawn Vadala

XX% currency quarter, end grew XX% the sales increased XXXX. testing that rest shows in sales The in quarter. fourth Sales region. increase Americas, XXXX. quarter, of the to The in growth Local fourth region to and nice our $X.XXX which a the Asia of the growth On was currency of full rest This acquisition currency $X a XX% full billion in first in the while in next good sales currency for year. China we evening quarter. summarized quarter On to of Local sales a by U.S. XX%. world. Asia, Local local in six increased China sales year currency and approximately in dollar growth tips in billion. growth in number and basis Local number XX% currency the sales also estimate a by by Europe were in sales everyone. we XX% COVID was XX%. Patrick XX% way PendoTECH Thanks XXXX Americas, in local the the X% sales Europe X% the XX% This a we represents slide world. volume headwind On in in impact approximately X% four, showed contributed the slide slide currency increase of growth sales local of pipette area. sales represented reduced increased product with XX% growth increased for

The laboratory For up currency industrial increased industrial with increased slide XX%, the product the area increased XXXX. in core sales year industrial up industrial up growth XX%, XX% and Food retail Food shows XX% up for by declined and local with XXXX. XX%, full declined in sales the inspection XX%. XX% inspection core XX% Laboratory fourth sales X% retail increased next XX%. product quarter. product quarter,

SG&A increase items margins impacted prior P&L. Amortization factors marketing by couple A and million operating in quarter chain, XX.X%. with the amounted volume on expense and primarily amounted offset which interest were to were growth Adjusted move margin million. execution. now the the we amounted our excluding items as fourth quarter well the XX.X% non-service increase P&L undertaken which the profit transportation greater last XX% actions savings strong supply increase. eight. increase. contributed the the impact final comments income a $XX.X exercises cost combined in amounted project the costs, The to variable investments in is the global impact costs. increased temporary in local in quarter, the rest year reflecting in to for amount was before the higher prior XX.X% currency XX.X% million, quarter, temporary good of of R&D temporary supply last $XXX.X cost Adjusted chain rate on summarized in Other $X.X were related adjusting million million. $XX.X quarter. principal discrete in over million, by increase from effective operating material driving with costs over savings as in and income. pricing, quarter, me $XX.X activity impact rate tax the sales increase currency period. of associated Let the benefited that This the local to to namely this is and Gross of which the over year. quarter; number prior We year X% The timing in pension and stock option We of quarter. our in $XXX.X the sales was the to X% global in year, and undertook slide undertook is reduced XXXX. a cost compensation and challenges from million higher of for in the we reflects of the to amounted was an one-time $XXX.X The transportation to higher the

X% the rate We from which a in are quarter for was the this quarter, over prior pleased to Fully includes in XX% $X.XX $X.XX. amounted On the and the expect $X.XX to quarter decline $XX.XX, and maintain million restructuring. amortization the reported was to a diluted quarter, basis is in with year. Reported reduction the year. in prior a shares as EPS EPS of purchased prior compared Adjusted XXXX. the $XX.X of increase the amount XX% in of year EPS $X.XX intangible $X.XX

We income $X.XX tax items the taxes. stock the of we We quarters. rate $X.XX impacting a due had option due of exercises to difference to rate quarterly had the annual timing benefit for cost to three also our from adjusting our two tax XX% and and first between had

an projections. a to we due year-to-date. acquisition shows out P&L our had – increase primarily the Finally, updated slide acquisition principally reflecting next for earn $X.XX The their PendoTECH charge

currency operating margins our As Patrick year results XXXX, local basis of with and XX% in XXX exceptional of growth and XX% to had sales an mentioned, increasing XX.X%. we increased profit points operating adjusted

Finally, adjusted EPS grew XX% to $XX.XX in XXXX.

decline with covers the which quarter results are and chain and adjusted extremely and $XXX.X these growth our flow. on We amounted to now a let navigate the year. tax of free was prior That cash further on X.Xx environment. better quarter, pleased was than showed year. cash in comment as challenging ITO impacted with me to prior what the flow at XX million, timing to a opportunities two had In P&L, by compared we days capitalize improvement and came supply ability expected the DSO days to in payments. the of flat with the

year free strength compared net is The share XXX% XX% flow per prior of our basis conversion the as the income $XXX.X reached a For in XXXX. cash on which adjusted an increase flow amounted cash full to million apparent year. of to our in

impact and to particularly supply of in challenges creates uncertainty. also favorable, is the the turn there global our in Let in economy, corresponding although The Forecasting Demand me and the China. logistics guidance: and pockets inflationary challenging. markets global end remains now transportation are uncertainty within in chain

believe we recognize behind and stern factors importance margin growth our to and the acknowledge share pricing We occur gain about via remain initiatives. drive our us is agile the changes unexpected not on initiatives. we cautious of our We We and in Finally, and variance can and and outside that to of remain COVID remaining improvement can quickly. lockdowns control drive adapting environment. focused market continue

cover Now, me the specifics. let

year be of This guidance sales previous XXXX, expect now X%. growth full the we compares to local approximately currency to For X%.

This which be year range of XX% adjusted to XX%. compares is of adjusted EPS growth full the $XX.XX. of expect a of We rate $XX.XX previous $XX.XX to EPS in to $XX.XX, in guidance to range to the

on XXXX guidance. comments additional Some

on of growth business. a to expect slight our headwind We sales COVID the pipette from impact testing

for gross increase expect basis XX full year XX the margins to range. in basis We point to the

including excluded further is we be purchased intangible pricing is half total Other $XX other as a intangible we margin approximately $X.XX Interest operating $XX amortization, see million. profit amortization share. pre-tax in and is million margins $XX amortization approximately estimated to improvement is estimated below second gross expect and which and to However, benefit adjusted EPS income million at at in the is of see per in $XX estimated the expense on or from at initiatives. Purchased million. year

annual expect I before tax XX%. mentioned, be rate as will we Finally our items already effective discrete

as in be based first sales the range rate to year. further comparisons conditions XX% adjusted in particularly than more reminder to today, grew XX% higher QX growth expect market and we QX comments: of would of expect be expect $X.XX in that to first chain approximately XX%. on gross a costs. We the are currency margins and growth down to supply adjusted A EPS of of A quarter, to due in challenging the transportation $X.XX, Turning XX% last to EPS local couple quarter

as our EPS currency QX quarter and call, more increased will year. sales We in insight last of but than comparison adjusted that as second tough will the next models, XX% XX% update you a up prior is local provide year it now on very have worth more your were mentioning

by currency respect decreased and to currency expect Some by With in X% to of in approximately impact final the XXXX, growth and X% it we QX. guidance. sales and decrease sales details growth,

X% a to of headwind be time terms quarter. currency and we EPS, adjusted now in EPS guidance. XXXX little adjusted a In the approximately headwind currency in expect last growth the worse of We X% approximately than of will is provided first

cash me on Let free flow. comment

For estimate XXXX reach the $XXX will it full million. year we

this higher on year the performance our by compensation related to variable in we last call, mentioned payments As flow XXXX. cash very strong impacted our is

QX income we In down per share cash fact expect in free get in share prior XXXX, the per be cash net line grow conversion expect flow XXX% range. we will earnings in versus the be flow beyond we to with will Once and year.

That approximately to in shares from should X.Xx. in I’ll turn EBITDA a to billion it it to us And leverage is to $X which now repurchase approximately back side. allow ratio maintain net Patrick. my expect debt We XXXX, of

Patrick Kaltenbach

Shawn. Thanks

comments on start results. with me operating some our Let

having Our lab despite the business lines quarter year. great the product in growth. very prior all robust in growth had Almost growth strong showed

we because. sales with while we are laboratory continue year our well the in mid-year and lab start growth quarter effective our momentum in growth be initiatives, believe marketing impacted will share product in gain the capture We very first in quarters remaining excellent by and and good will market positioned comparisons. the portfolio to challenging With to

Turning to in a will the very strong to well industrial and industrial did quarter business. our XXXX. have Core start

from benefiting sales from as and increasing implementation customers and Spinnaker as attractive product are good We of demand portfolio, for initiatives, very digitalization. our our automation marketing well

to will well. We tough but progresses, year gain continue face as comparisons to expect share as here the

are of growth XX% We inspection, good with pleased quarter. another increased in the product in quarter which

good good as will that largest have to start are for in more appetite optimistic we We expect a companies XXXX, year the packaged growth food show investments. and

Finally, retail of project as We electronic quarter. well fourth as impacted XX% shortages declined food timing in the components activities. of by were

do much We the expect and in here not low quarter first double digit overall at decline expect XXXX. growth

and retail line was comments while had additional lab our in geography. Sales X% by Both solid some make in the which Europe down was increased me digits. industrial expectations. let double in growth, quarter, fourth with Now

growth, Europe and for growth progresses. also did strong increase. overall of full quarter Americans face comparisons with good have year Retail more the the the excellent a growth XX% and well. start while will solid Americas expect to had year year industrial We challenging had year very was growth XXXX. in another the Lab then start to strong down also significantly. as very

Finally Asia, quarter, growth in the outstanding and growth and product with good laboratory inspection world excellent grew grew core XX% lab. XX% rest the China in with growth in industrial. in of very fourth

really final well execute China business; up We comment team XX% are performed and quarter. in well. the were service very consumables positioned the continues strongly and the on and One in to

yet to service the and continue to and a That political, proven this strategies have part factors with us, excellent the believe competitive and engrained sales pandemic chain we be and not We behind in marketing offering, on this, growth in an including important comments extensive will well business. very stronger of position. the business. our experienced the my contributed supply pleased and product COVID profitable we concludes Well team. exit agile Many is

which that data program that Another franchise: system and and business, internally initiatives. business Ocean, is our of single data, chain, our HR the processes of process aspects how and With Blue and a Ocean important all do with can processes is factor globally is that standardized our encompasses Blue we corporate program harmonizes programs foundation instance sales, finance. of many and a IT supply harmonization our and customers. enabler service, It and we harmonized transparency. system R&D, our digitalize leverage provides increases multi-year

the Let our me and initiatives. provide some additional insight. Blue for Ocean framework supports Spinnaker marketing sales

offering, harmonizes installed analytics our and of us by guide customers to It potential efficiently the cross customers also for in provides purchasing It CRM our Similarly, marketing Our opportunities. alerts, Ocean in provides allows on extensive on we productivity, for Ocean and details on Blue service comprehensive and basis. other field selling services analytics campaigns sales, provide also Blue provides standardized support services campaigns, data provides foundation also It project that and decisions techniques. data pricing is and customers pricing a program. transparency base data activity. in implement basis. use global us a additional allowing terms global service profitability sales customer on increases highlights us our price to to

Stern and organizations suppliers, is transparency than complex the more between time challenges. supply data collaboration involves Blue back make Drive units mitigating highly business XXX,XXX gain our transparency as Agility chain components, and Blue and is of advantage Ocean XXX,XXX program for helping chain XX data more and in share. the with supply our hubs. Our us three as critical than success provides to possible is us to Ocean competitive leverage X,XXX different real and supply that our production to provides to the improvements productivity. it us continually SKUs, our organizations allow critical a chain market it and logistics manufacturing as office

during has particularly on become our specialized business impact is Ocean changing. been firsthand, Blue market time have to see the to decisions meaningful, us real years alerts We information quickly. data conditions allowing two tailored instrumental make that given and the and last how important us develop Finally, in allow quickly providing

Blue We it become to for a continue and advantage evolve Ocean believe us. has will competitive clear

I also ESG initiatives. brief conclude, on want make I our Before to a comment

across to GreenMT environmental, by act standing is committed long considers sustainable a manner and are social sustainability governance development We We broad to covered believe generations. it the responsibility aspects program. a in future our that

and environmental; two, to achieving three, expect responsible two four, one and chain; accomplishments key neutrality, have carbon ESG, one and We areas: XXX% and including emissions corporate governance. sourcing good score services; supply on sustainable engaged We we great employees; renewable in focus products electricity. five, five which

While for the an excellent have set in future. we track ESG, have we record ambitious targets

recently two the Initiative. to have absolute reduction cover we This criteria committed issued and the by emission emissions. targets latest Science consistent Based will with Targets Importantly, one, scope three

a by reinforce incorporate also set management our as ESG, will executive waste targets. have to To compensation the We of XXXX. specific XX% zero in achieve well importance by to waste landfill and target as intensity reduce diversity environmental, XXXX

like ESG Blue for enhance both Mettler-Toledo are open I examples the think to questions. the Ocean on I call now the of goals long our franchise. would the great on term operator our and value to focuses how

Operator

Instructions]. [Operator

will your Dan proceed question with question. Arias Please Stifel. from come first Your with

Eric Chung

for taking Hi, this the is Eric on for question. Dan. Thanks

deals? besides might for becoming recent you share Just ones a that any the one billion smaller on scale the attractive larger just have you that buyback. discuss $X that, given for looking finding than capital for Like could on deployment, assets your tuck moves year be you market the the plan are in more might usual

Shawn Vadala

two there's guess to parts I so, Maybe hey! question. Yeah that

on platform We a Patrick think in no terms you strategy, we're great M&A of our bolt-on acquisitions. for change I’ll still know that, kind but in comment let our of So strategy.

We also strongly very story. organic about feel our

So the Mettler-Toledo. PendoTECH that been in has really example a very great and like terms at excellent to you of we're acquisition acquisitions. looking I year, that's think selective acquisition But course we if we're of addition of a PendoTECH the of last did type look the for

as we throughout capital do now of in perspective programs consistent to about be terms a and from about X.Xx The repurchase also very net of reminder, deployment, and you In repurchase very we know year. ratio about good program. right we continues and expecting to basis our successful the feel we're shares share leverage our billion on a that XXXX $X target

Eric Chung

just could and top then first of quarter for you see a by provide And the Okay. they assumptions XXXX, guide? segment rundown can improved line the that for

Shawn Vadala

sure. Yeah,

So hey, I’ll start with the divisions.

I'll So for growth our growth full now guidance the digit low single division. start QX is digit with and lab double the for high Right year.

expect digit QX in for industrial, core single growth For digit full we mid-single high year. the growth and

retailing single the we for low grow but give For product the digit inspection, the high you we to also food and double for for down and QX digit QX, full single full I'll geographies. expect then in expect And digit digit year. single growth growth year; high be for

to year and full digit, For Europe to be for high mid-single the QX digit. to up single we expect be digit up mid-single

XX% For and and for digit approximately the for year. full we China double single mid-single to grow approximately in full Americas expect XX% then year; QX digit in to expect grow we low to QX the and grow digit high

Eric Chung

you much. Thank so

Shawn Vadala

welcome. You’re

Operator

with question. Bank line of America. Bruin Your proceed Derik next from De Please your question with come of will the

Unidentified Analyst

thanks for is Derek, question. This on Hey! for the [inaudible]

concern China slow any bioprocessing, lab So segment. geographically tensions specifically from there up and also heating that issues CDMO the some in lockdowns with know impact here. Is trade China could the you demand you seeing trade a touching, any products. Are are for two-parter on

Patrick Kaltenbach

has that been term. me business take strong. Look, mean let I China our very Yeah, in

strong We China. have in very a footprint

we’re years. there served been healthy a XX XX% that of very business broad based. is for as reminder is Also are business, trends customers have many there what but more industrial China and for of to us. all than We We in biopharma seeing

that last the from from are right biopharma now and of are hearing seen not impact in regarding is any impacts overall not lockdowns concerned this the mention what they quarter you have is team, the now. of right We we

Unidentified Analyst

over how more on on you Do to one margins expect saw some think you you more the you for What kind XXXX? do early to some quarter. were going then of can be there? And pressures the the there's on – in and Great! into detail go impact any of of them the carry

Shawn Vadala

I'll one. So take hey! that Yeah,

broadly and then So the hey, of I'll as like, well. kind kind about talk then talk maybe more about of margin XXXX

was So quarter. down had as prepared in mentioned the we On we in favorable remarks, points basis gross price margin our XXX realization. hand one the

translate was approximately to just the price XXX basis margin. quarter, over in Our which the X% to point would benefits realization

probably costs one Of the as like stood a quarter. dynamics similar the bit we course the we know. clearly in costs you of like see QX, out on of will was a the to that transportation. that similar as to But gross also have benefited still very our in for trends perspective continue from expecting X% in with we thing material headwind kind continue look material volume of kind well overall margin our that costs, from be range, And to higher but to a as quarter. pricing are higher transportation and we’ll Probably

So confident QX, but if expand another if basis remain very surprised in points margin. wouldn't still for I look the margin XXX about we're we gross QX, ability to down we at be our

operating still to to at year, margin of XX And to so margin XX typical we our as end points full expand believe overall still basis we we increase gross can the the our look higher expect guidance. by we our and

higher of reminder, points basis So XX that, end about probably We range annual points. we margins XXX can of to towards look points,’ of as the our you mid-point if basis basis guidance, at say expand ‘Hey! a the XX typically basis, the on an would

of pricing it a little in year, for we're get were of of we previously we we're to adjust thinking X% wouldn't of and we especially second course. a be We're half going only about now you not the do that kind quarter structure. or But down, of XXXX in probably X.X% bit previously when will we X% course So range continue surprised expected. because to we be the than if the and year. break guiding to the to are next We expecting better Right so cost as going in doing fourth to some opportunities; also example, of things some pressures the actions to or as supply about for to for in in saw be on reengineer look our pricing for we components continue as our optimizing terms chain see appropriate, it's other supply chain. sources look the

Unidentified Analyst

Great! Thank you.

Operator

will Cleveland Your Waldman question. from come proceed with next question Josh from Research. your Please

Josh Waldman

Hi! the growth questions, you. taking organic a you from your couple versus up or I areas year. days I demand to regions Shawn the or my plan guess that your Thanks product early you the through ago led that improved perspective, for pull guess a Patrick, just XX in outlook for talk could

Patrick Kaltenbach

I’ll and you as in chime start Maybe Shawn let well.

forward, has So QX of – so categories. terms would our let me business you sustained expectations, talk see to growth gave up in I Shawn healthy the demand moving strong we It in so holds very say in lab the been and the product strong. ready. I demand, we numbers lab mean

pleasantly We very by the see demand that portfolio digitalization there we product surprised well. driven really automation our and industrial, and still for demand momentum the have serves we are also by in that

out there. the some also product fact from in mentioned food I comments companies some my healthy in inspections we’re still appetite seeing the of think that packaged I

than that's anticipated that Overall here, and any nicely – point specific see we the say That's we broader any we wouldn't are I these gave mentioned, when demand actually, just guidance. would are would that not surprised basically obviously I to region front we guidance last we end I to on stronger a demand across the you why expected. I overall market than say. So raised categories better we specific we

Josh Waldman

of to wondered of to that Got the of and most guide. Shawn, range you us it, and relates helpful. would growth; provide I your it low kind provide I EPS that growth if correct? earnings got bridge it. the increase organic a for mean is the organic could you the due end be us to sounds And guess high assumptions maybe as updated then could I margin, was if Then like the it

Shawn Vadala

So it's sales a Yeah has of know EPS, hey! I'd the said, lot do you of kind growth, if sales it like increasing you say you to with you bridge know, growth. higher

lower also XXXX, we was bit, beat that currency. rate XX% a course you offset our includes and added tax Of was in unfavorable that a bit know a at for which little little by offset

Josh Waldman

the guide, Can the the into or that updated for you went assumptions provide guide? range EPS the range

Shawn Vadala

a you appropriate lot can time recipe. the Josh. – hey! bit higher, get things always of I we could be high – the low bit for bit you end the very, course a worse. the there's so as margin so of there's to little that bit start of lower, know a too from little try in example of range. a can there's to little the little know is but ingredients better, seven is that don't deviating dynamic you know a be into terms a going very an environment know the know you said your assumptions X%, be specific want year. like for you Yeah sense we don't I for and the you there's mean into you six but this there's a would point we that things EPS or the typically of things the top We But a much At line end. I model probably what translate into to this and get point get you mean that flex – and It’s point know you of or for know a approximately year can and lot change lot can

Josh Waldman

Sure. it I appreciate guys.

Shawn Vadala

welcome. You're

Operator

your question with come Peterson next question. will Tycho proceed JPMorgan. Your Please from with

Unidentified Analyst

the Rachel Thanks is and on This questions for Hi! for quarter you congrats taking guys. the on Tycho.

so, lab. on a And few questions here

So lab was better than expectations.

You guys guidance double for growth of grew digit XX% XQ. about low

other you the and spending to changes underlying there saw of side up things market beat any catch any lab can if then there? about talk the on the drive So you in were

Patrick Kaltenbach

We for No, wouldn't or was catch demand pent-up up strong any look see demand. there say really products. I our

We portfolio. a strong very have product

very expensive, impact really competes etc. that also our to able we have end a as buys, Overall, I our strong deliver sure us for segment that the Pharma, said little deliver margin, demand also specific biopharma well, products been some it and we not more to think in as market to. point some think customers. we reflected is those our would Shawn I I cost very very as numbers. There's a for it's has see drives segment to other make of to segments strong that customers that extent because or look on in segment it's if course but make labs can some – is of but deployed for like broker extremely at [ph], our you the to battery important of products even that chemical also gross do we broader us bit we came in components but – in mentioned and course.

is guided change them from buy end these what the we terms that markets, specifically really QX. sticks versus have of in of regarding us and last a from demand products of there All none out

Shawn Vadala

you also guidance, QX see know strong double for Yeah, and in reflected you lab. low is can momentum digit of that our

Unidentified Analyst

going appreciate Yeah, off I by the the geography as segment so. comments then maybe I expectations And so well. for hope that around guidance, the

the improved Americas and you like year. an Europe in outlook So it have looks for

what's increase Is driving kind it about the drove there? specific our confidence or driving that’s it you just segments those can what of in talk So regions?

Shawn Vadala

a we Yes, fourth I just I well. little Americans so the word, but quarter the I continue the the Americans portfolio our did as saw – not up the mean what bit. that growth you very to mean in in really yeah was was the despite food just being retailing good broad in based mean really, overuse in and momentum, the quarter. it's business down we

division. be as great just both lot And have help to Patrick good to and know years, resilient business very just lab that towards business towards there much a in industrial a know fortunate you lot we're as dividends. these is segments our demand You you be to the would side know productive – industrial our I are very lot was position doing And we a we done digitalization. growth. just also more been earlier, that the market capturing but saying and there’s we've are segments that huge world, well really really a there's continue this of the is know very business the in from see lab I be performing serve good we of able more demand. say to the have in to and well, in in these continues trying be and trends and teams the also side good There's paying you job to hot over of also industrial world also you benefiting terms pivot on and mentioned, a innovation; then execution the a attractive Patrick such to automation the you mean our know know been as at of business

Unidentified Analyst

you. Great! That's Thank me. it for

Patrick Kaltenbach

you. thank Yeah,

Operator

Your Jason with question Please will Reiver next from your with proceed Citi. question. come

Jason Reiver

Hey color into there! Thanks. quick there. quarter! shed Patrick. the one, Just industrial is ’XX. to you; Jason expectations you wondering are to into on And then PendoTECH strength and the got how questions Two that further market? a for seeing visibility strength on any great two, just about on for performing Congrats in relative curious You

Shawn Vadala

questions take that. I’ll industrial. Yeah, Good on

towards driven that it demand a as course fundamental we’re is XXXX mentioned regions the half, demand comparisons well. but of we as think I It’s by good I into we the tougher markets. really all That’s look in for digitalization; going into efficiently driver. Shawn and – we said will major XXXX, in automation as as second face end deeper see

an to of platform like these will outstanding launched side the – that those there performance the also products new media presence, this the and we XXX year we We and continue our it confident on have nicely, serve industry product that in XXXX. demands that demands think and we one are

On strong in you continued comparisons the we can second XXXX competing tougher pleased for was it demand see well regarding our outperformed see growth acquisition. the rate we products. Actually but have you PendoTECH, all very XXXX we with extremely we as expectations half, same go your and the in if even into course, that. that comment Of are

Jason Reiver

Thank you. Great!

Operator

of Please the Jack Research. line next your come will Meehan from Nephron Your question. question with with proceed

Jack Meehan

afternoon. good Thanks and

you Another question weigh could was in. industrial, hoping but on

we're playing talk based know customer commodity just along the if seeing that any amongst prices side. you a You from saw industrial with around curious on the industrial terms just coverage, of Was perspective, higher demand inflation. out in for your customers your

Shawn Vadala

is this Shawn. No. Hey Jack,

all. customer of from not no, comment, that customer not a seeing but are interesting An seeing any at our impact we it demand We side. are

Jack Meehan

back then inspection. and Okay, on Interesting! product

you So the though, headline the have high the for good, of the kind low I quarter guide that the single digit compounding looks comps. given in still singles, know first

your you're curious, in when a bit spend be more think, the as little to with could just to just when the some customers of Just going get for be the timing talking reviews you CapEx. color

Shawn Vadala

Jack. sorry, I'm

Patrick Kaltenbach

its Okay. Jack, okay.

Shawn Vadala

Okay. Yeah. Patrick. Go ahead

Patrick Kaltenbach

it, okay. Okay Shawn, I’ll take

the results. the really are in inspection with We of product and with year full results happy QX also

clearly are We inspections. a leader in product

network. broadest the services the also have range product We and largest

we Our XXXX outlook manufacturing. good and investment that is see last from are for assuming we more

service So why pent-up in for had year accounts also fact also food we inspection in really, reminder for that to all the that's see also quarter coming product It some better these perform well. of digit so service difficult manufacturers demand we and deliver back. some XX% double last customers well. the it by a we of back, That segment is impacted really as we the to growth this been that year this expect and us business. we Remember in to and was But about COVID. last guided represented And also understand, growth have get these there's first our people only as will come to has segment talked nicely about service.

Jack Meehan

That’s helpful. you, Thank Patrick.

Operator

Your next from question Please with your line Skykes with Goldman the Sachs. question. proceed come will Matt of

Matt Skykes

a with appreciate you’ve a see Ocean has one that try points pressure with a you improve think supply as environment is, this we chain, in sounds about alleviate for you've Blue question be It you led made that to might feel chain other of you spend. and up, level like if that, do to investments and to I number come a making to Thanks and guess questions, does supply you But number out it been have sure my Hi! able you dealing the just I I'm Maybe do margin put this, for you, my start it. loosen so you've because if far the to of better. there. probably of get the business to we like Patrick out acceleration taking efficiencies high investments lot maybe challenges and it will already greater and productivity been of make into of areas of what lead a to expansion

Patrick Kaltenbach

we question Matt, many look in I We'll since continuously mean – Blue years, many, very good so thanks. Ocean a invest [inaudible].

improvement, acceleration it all doing mean I be We we an Blue we will making a of across on continue is board, but still don't do, some there. targeting benefit overall have rolling we we are the I right XX% business Definitely now are margin Ocean. good to the Whether have But of history. about investments so. will have couple so progress of think we to the productivity those. from are enhancements

good these all expansion. made have margin in improvements We

that So move I wouldn't into we when consideration forward. put

to but the will We see Blue investments acceleration continue do improvements, will will – make that by of we these think just we make fact I we Ocean.

in process. We great the have and making done past this

is to us absolutely improvements, not and but a competitive are for convinced, it drive it. will advantage accelerate continue We it

Matt Skykes

prepared kind you sort or growth Got your regarding of I around type apparent, know year. lockdown of COVID is Anything for that you the had concerned some think is are pretty issues. of it. sort uncertainty Shawn, are that And it China, maybe that looking mentioned you related, comment related underlying for in which XX% China you remarks about then uncertainty

Shawn Vadala

XX there's tolerance always right that's quickly the floating seeing I been mean in could be can you off, quickly, around but been way could like have business very know knowledge things mean their we either uncertainty that handle said we're go that but always general, there, of that our be right, direction you about, Matt, could on it business just zero change things can be and say then the on PMIs economy. everyone going COVID specific they and could policy, history like it anything always the and you have implications it's our I always – has in they on with or there's COVID, know there’s lock-downs, Yeah, not in local there lot just – it there. a there.

we type risks. us to to to those the so very very the But for continue of we look we business. and that we in, And understand portfolio. plan, long also terms important good heavily at give remind feel health automation of the that feel and and they big as We to it's is general our a think digitalization lot that their they always five and about that when this I and government's provide term, about in good safety, we feel our of year theme I theme to in well. mean very people favorable. look of So caution the industries all China when China, life-sciences guidance investing we were the are of medium to very lot focus like continue growth, emerging a well with played a people

– and mean expand so I they development economic industrial And – business to also we’ll continue benefit. our as to the will the west,

So volatility. always we the but continue can it, about short term strongly to feel very in there be

Matt Skykes

Understood. Thanks, very helpful.

Operator

from next Please will question. Evercore with Kumar Your come question ISI. with proceed Vijay your

Vijay Kumar

gross guys gross had here is margin. Historically print Hey here the QX strong thanks guys! element on Congrats I'm happened have to gross taking in curious, a what on around defining question. my very there two, itself. The a Q year and the margin flattish. one margins? for have any you I was sequentially QX guess nice I

Shawn Vadala

it's which be systems have little saw components No, and a monitor like, I electronic facing cost new as like think much the you increase we is going if others, can Shawn. quickly to kind – of back we This cost that was of and and in categories, was expected, place an environment I’d what surprise higher react but we area and probably we and and transportation than of know Vijay! what about transportation Hey year. just these think the is key a that came know so to to just than like it No. – already also topic of in mean much make that’s – lot able you was But inputs in headwinds I different bit highlight the based a we think faster a in you in not of QX say, broad cost doing. last basically always to this we were terms that sure the changes than costs are I higher expected we

focused are as it We highly an organization. on

expect we’ll and the the for then year, our from margin to the full margins to as at I points similar at see expand of some guidance. We the operating XX XX year, probably guidance, high certainly ability and midpoint trends the feel earlier, around of we about are an points, we going think be expand before gross still basis kind end full said I margin in believe basis but QX, our good to we’ll look you our of basis XX perspective as typical to still to

Vijay Kumar

in That’s those much the And pricing downs China, by points, XXX and Patrick here for a what I'm you you that maybe one have are of given guidance The basis will? visibility the is year here, helpful guidance do curious, versus QX comps or for here. lock your the if how really Shawn. [inaudible] numbers though. was driving just into raised what the margin

Patrick Kaltenbach

that out. Yeah well, get I it's to have I look, mean –

Our confidence we in seeing. demand driven is QX are the by

not expect only might also it’s solid performing by a Pacific XX% that dramatically bit confidence pretty not QX. uncertainty We forward. some that solid, of the are have Asia course Europe only a but China; you we see we confident really have There and performing that US will given is is right we impacted we China the QX. It and little we demand, that and now. the said, us as we see gives regions moving for in are we on impact, lockdowns As any have

I course little the both. of of terms questions, Shawn bit both, little it’s on a pricing, it. of make component volume of of a but you know we In outlook bit also of already mean it’s it’s quantify bit a comments want don't little it’s a pricing. and

and increase well. have as impact we some volume have pricing We

Vijay Kumar

Got you it. Thank guys.

Operator

Your Please Couillard proceed question from will next come line with your with question. Jefferies. Brandon of the

Brandon Couillard

Hey! Thanks. Good afternoon.

Just a couple for you Shawn.

is other. we pricing think year, one between terms secondly, looking second at fairly the material by paid weighted of it similar headwinds that your industrial about expectation half that as still should gross margin gross margin outlook, towards line? or And kind a is for of your the and being more the that drag In or is or transport segment on lab the

Shawn Vadala

question, Hey! portfolio, you if about good of of think have good know hey side. Brandon. both on the lab probably divisions. So we'll Yeah, side in on increases And course industrial just price terms the pricing, but the in than I it's better slightly

the benefit get a I drag But fourth the costs, to terms year. time get to through probably are you I'd of of to a there's right we out. hopefully think think not first wouldn't see see we by little I half of by on play going we now to a and time until see know we material quarter. bit so in a like count too the things QX certainly drag, we'll the the much certainly In

Patrick Kaltenbach

up for material true That's second but also half. for ease true transportation. don't will the both, before think We that that’s

Brandon Couillard

one for the businesses on helpful. China are for that’s just and just of segments ’XX, you out two fourth what the for versus fourth Could industrial within lab you kind follow-up And quarter. then those the the assuming break in China? you, Got

Shawn Vadala

Yes sure.

the So kind and with quarter low in grew like business to then lab about digit, our we expecting full the digit XXs our high like quarter digit. know double fourth and industrial grew and probably industrial then business for in mid-single are you mid-single be lab probably the of year,

Brandon Couillard

Okay. Thank you.

Operator

with your Schulte come from next proceed your Please not Catherine will question the question. line Baird. of You're with

Catherine Schulte

going categories and forward XXXX? expectation sustainable first, the your were and the you quarter. from for growth mentioned I guess that services Thanks How is Hi! you consumables in in those do think what’s question. up XX%

Patrick Kaltenbach

a question their potential Very have contract you. after who customers on we do in also because contract, a them making products to consumables very thank we services. early all in just panel, can base, maintenance, have I single for we on XX% of it we switch we our a the emphasis in and strong expectation broadening more very profitable those gives you for not offering of are have going good our high terms sure know Catherine, services range look, service would over It’s it time. digit service us QX. the understand of The lot services putting installed for my of I services, In seen, the benefits good mean our and very think making and I XXXX. that that course in are definitely maintains etc. reliable say business both customers are sure the

has this think I runway. So quite some

Shawn Vadala

Maybe testing additional the the that we've in the course, COVID had Catherine! one is consumables of have we comment past. hey of the Yeah, on won't benefit

So that a could be a of little headwind. bit

Catherine Schulte

be do it. out? out. to for market? longer creating then bigger And chain capacity tailwind you curious think think other much pharma Where seen, could a redundancy push of in terms that some got a supply and as in the COVID are on-shoring how okay played build we've I’m that Yes, continue for and we and just you has industries in phenomenon

Patrick Kaltenbach

way. some United now next coming XXXX core years. will from United back which a very is of only big is business are we are one pharma monitoring, it's States, in closely seeing it not played good lot continue up out think as at by know you the see for momentum a also some the XXXX facilities least also think or of very two the us. That’s facility to probably coming and that where I I We accounts into it we in where the are States in what the good semiconductor probably and

market. again for So good It's through from overall and that may perspective I think XXXX. continue that the tailwind some our least XXXX be definitely will also at

Catherine Schulte

you. Thank Great!

Operator

from next Please with Wells with Li your question. Fargo. come Your Lu proceed will question

Lu Li

Thank questions. my you taking for

pricing. to want follow-up on Just the

even or you for mentioned customers, to ability Do and X.X% think back does your impact I year. the that then year? further pricing to you next hear push close this increase X% any for from

Shawn Vadala

to guidance wouldn't our kind thinking it's full that just we were of range I so surprised X% hey year, of yeah, be previously kind the we’ve clarify, and the so the So but if was hey! – the in like X.X% or year. we X% a in half for said Yeah, second we about of

we We these face continue to we to, inflationary market pass continue good that feel do when price as I to change. conditions ability think need about and our we'll to on challenges, when

Lu Li

Got it.

question long guidance. that outlook the like should change we growth X% forward? Another your going X% on Does growth term like, of about think

Patrick Kaltenbach

out are Maybe, have some in question. to with COVID strong. backdrop. good that tend throughout and strength we Very I’ll competitive our believe pandemic We the start position believe we coming of

and have excellent product portfolio we leading network. very service positions, global foundation a strong a we have many businesses, We have across market

in I the think share we many and able times, we sales gain these it new are despite we marketing as our and to challenge techniques to tools a to environment adapt result mentioned a and environments. continue as

effectively rebounded Our capitalize in to market these and it is worked XXXX very on growth. nicely

that goes think where you depend back the forward, dimension about It looking the think digit on we it. a underlying an course Now us organic basis It of been still think about to it performs. on also how growth in has market I mid-single about the should mid-term. as will pre-pandemic. That’s

range wide the thinking are right that’s now. we think I

again Of will still would digits. to underline course mid-single goal we – if our think grow you to market. there is I a a is But, momentum in like the market, above our

Lu Li

very That's it. Thank Got helpful. you.

Operator

no turn back queue. call the I to questions closing Mary would over remarks. any for there At this now time like in to are Finnegan further

Mary Finnegan

you Thank you. I additional comments And I just night. the let have two go before for

plan meeting year. your mention our coming you months, Monday, this to Boston now we for details but with X. it come as to First, more in anticipate calendars back facility you at Investor to wanted November We'll on an the you holding in

Uhlman Investor Adam Analyst over Relations take formally to Senior Second, Adam I as due introducing the year, recently Investor look our joined are great to team. Research the this look onboard towards XXXX. He at in we announce a happy has him to have join will and Cleveland Company. will of later Equity It's the him, retire please Relations Research lead I that and forward in time. to forward Adam you I me – welcoming end in was

continue to the please Investor For Relations being, time matters your to me. director

don't hesitate always, have any reach to Take please you if As everybody. questions, care Bye-bye. out.

Patrick Kaltenbach

Bye-bye.

Operator

conference Thank for This you call. participating. concludes today's

You may now disconnect.

Mettler-Toledo International (MTD) 11 Feb 222021 Q4 Earnings call transcript