Earnings call transcript Q2 2023

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Operator

Good afternoon, and welcome to the Mettler-Toledo Second Quarter 2023 Earnings Conference Call. My name is Briana and I will be your conference operator today. Please note that this call is being recorded. All lines have been placed on mute to prevent any background noise. After the speakers' remarks, there will be a question-and-answer session. Instructions] [Operator

turn Please to go now of Uhlman, call Relations. Investor ahead. the will Adam over Head I

Adam Uhlman

Thanks Briana, and us. good evening, everyone. Thanks for joining

the Vadala today Executive me call Kaltenbach, On Chief our is Officer; Chief our Patrick Shawn Financial Officer. and with

website. This press administrative is replay presentation refer we release website and cover our being A mt.com. to for is available will matters. the me webcast call today on Let copy on at some and available of our is the that

will forward-looking of to of and any those from Act include call factors the cause actual US involve implied the forward-looking or Exchange that statements. expressed meaning This within the other our statements results, also statements Securities uncertainties materially These Securities XXXX of by achievements financial be different and may and risks, condition, Act XXXX. US performance

these company except please on reports a and by to The SEC. Form For statements, obligation updates any provide or forward-looking law. and revisions required any our report filed quarterly XX-K risks of and current or undertaking disclaims recent the annual to as discussion uncertainties, any with see

measure to On most reconciliation of measures measures. today's directly use A is we non-GAAP the financial comparable on call, financial these X-K in our website. will non-GAAP is GAAP and available provided the also

now the call turn me Let over to Patrick.

Patrick Kaltenbach

details call Thanks everyone. the appreciate are we which Tonight, today. our our our for Adam, presentation. reported three evening, quarter you joining of good results, of and you on outlined second financial We page

categories, margin cost in market Focused greater-than-expected Laboratory adjusted part growth performance currency across China. much service execution in included which growth resulted quarter. good product our solid as control the headwind and of business well quarter second Our in industrial in conditions as and despite our this by was EPS offset in being expansion initiatives strong sales growth softer our in

global XXXX, end economy look we the is in uncertainty markets. to and As there increased our the remainder of

China has in demand market deteriorated. addition, In

While weaker we expectations remain for XXXX our marketing our we to the growth factors control, and have can execution and due and we on conditions, programs in expansion sales margin market including reduced cost-saving initiatives. our confident best-in-class

very Our I'm in will changing results efforts that solid deliver and market confident year. our conditions, this remains team to agile adapting

to now turn our the then Shawn? to the cover me additional Let back call commentary guidance, outlook. over on and results business with Shawn I and the financial some come will our and

Shawn Vadala

were as basis, local X%. X%. Thanks increase Patrick, good currency $XXX.X Sales flat an and of in quarter sales sales which currency were reduced growth evening, dollar U.S. a in everyone. represented by the million, On

On slide and number in four, we China the by Local rest currency show flat the X% of in Americas increased quarter. region. Local X% in Asia, sales were in Europe. world; sales sales increased growth currency in X% the

on a half show sales the five, first for and the number months, On increased world. by X% year-to-date in we the slide region six in first currency of the growth year. sales the Asia, Europe, Local growth Americas of Local both currency China rest and sales in growth X% X% for X% basis. grew with

On summarize area. growth currency number slide product sales six, local by we

For we Food the quarter X%. and Retail up grew core in quarter, product and Industrial activity. Laboratory inspection sales the industrial up project increased as X% from X% decreased XX% with significant X% benefited

Laboratory product X%, growth and industrial product across both including Industrial sales by the The growth increased sales area Food next Retail X% currency for increased X%; local shows half. increased slide and inspection. first XX%. core

to amounted higher R&D from was million partially P&L, period, includes and offset on of as is which in move $XX.X prior increase business to and summarized amounted was points is year XXX number currency a benefits mix basis Gross activity. the rest eight. which X% variable prior cost, slide $XXX.X cost-savings lower in million, an decrease in reflecting currency. and increase a now local currency margin the by quarter, XX.X%, me over our Let of increased initiatives. to compensation X% over SG&A the local project the pricing

amounted X% profit increase. an the $XXX.X year. profit increase to margin reduced approximately points in million basis the Adjusted XX.X%, by operating which growth was Adjusted XXX quarter, operating of represents X%. an operating prior Currency over

the of A expense and couple $XX.X to on to million; was the $X $XX million income amounted quarter; final comments million. P&L. interest amounted Amortization other in

XX% stock was tax of the the year. the full guided We previously rate of tax for be in to our effective year. quarter. rate the and above This now adjusting range full XX.X% quarter, discrete option is items in exercises for our XX% Our rate timing the before expect for

million, to prior decline shares XX% XX.X increase diluted unfavorable increase amounted the from is $XX.XX, which X% a prior approximately was for year. X% the quarter a Adjusted currency. Fully excluding EPS year a over or foreign the

$X.XX to year. On the $X.XX includes of in reported prior intangible quarter, a quarter was the EPS restructuring in $X.XX purchased amortization EPS and basis Reported of as $X.XX in compared costs. the

We also benefit $X.XX tax from had a items.

Local X% basis XX%, our excluding or X% unfavorable income illustrates for excluding Adjusted EPS on foreign unfavorable operating XX% year-to-date six-month currency. margin or period. grew X% slide results. currency a increased and currency, expanded next points. grew sales basis operating the XXX year-to-date The our Adjusted

quarter, DSO by $XXX.X P&L me while to grew X.X the ITO amounted XX%. was In flow. comment days, capital. $XX was per cash share up working cash flow favorable cash the times. million, free Year-to-date flow million, let and XX adjusted That on covers helped

Let now guidance. to me turn

uncertainty such food and across And our global As we base there's companies manufacturing. also of conditions. economic the regarding the look remainder and increased greater the to pharma biopharma, chemical there's year, as caution customer

have around investment our in the This sharply Europe. China, customers China the who there growing pharma are pace and economic with as biopharma limited in in uncertainty delaying conditions of growth and particular, and is deteriorated is but In true decisions stimulus. particularly Americas government also

ongoing also to PMIs lower trend in the light been uncertain have XX no growth In and Ukraine -- for many growth of months. and below level growth. manufacturing economic in general war Europe, continued the have the index soft outlook Global remains

Now our turning guidance. to

down be customers. third to to mentioned demand X% single X% digit sales This particularly the currency with in local reflects earlier, from Laboratory. as pharma and in China expect biopharma with mid in a We soft decline conditions deteriorating quarter

also We modest our in sales declines across expect industrial quarter. businesses third the

We implementing and based are our upon expansion, approach savings the cost costs to in that growth the We to for and are operating our estimate in point various XXX environment initiatives. for actions disciplined the sales XX our reduce response manage range while basis margin investments softer productivity will XXXX maintaining productivity, margin increase important future. to to

EPS quarter the decline approximately $X.XX, of X%. EPS of in be adjusted exchange third $X.XX expect to foreign to We to headwind to X% range includes X%. representing of This a

Now full year the XXXX. turning to

local rate $XX.XX EPS $XX.XX foreign Our range about guidance X%, guide representing from X% or local X% of down a growth adjusted be approximately X% approximately our We is of $XX.XX. to compares guidance the growth to full the our X% X% sales currency to now of now to is of in of X%, sales This EPS previous to in expect unfavorable year currency. range previous $XX.XX, to to This earlier. growth. the reflecting mentioned currency factors adjusted excluding

adjusted our earnings three share factors outlook. are per to There revised

efforts. our the guidance, previous compared our First, growth forecast reduction sales partially local for cost offset reduced currency the to by year

of decline our outlook low down digits, sales largely previous reflects digit Laboratory reduced a outlook. mid Our a of single forecast lower single from

our year now in single compared decline to see digits weakness high business digit now we the mid we pronounced our our for Additionally, in single growth. of prior expect where China, total business forecast

expected to to to to a the expected Chinese the the X% And XX% rate the growth our expect last Secondly, and and the to currency be a foreign headwind XXXX renminbi third, year weakening would this of in on full prior XX.X%. now of exchange, franc headwind roughly to in year is be due largely tax compared of the is compared time spoke, to neutral a strengthening earlier, quarter. EPS the for of as euro. versus Relative growth to now sales to the we third impact higher Swiss mentioned X% guidance X% sales, we X%

including share at million the update adjusted compared to and intangible Total $XX repurchase forecast to we'll reduce from guidance EPS forecast million a on $XX and Some now per cash year. amortization, flow is amortization of for final also is excluded million, expense intangible as on free $XXX our Interest $XX is at approximately amortization estimated Purchased by details $X.XX you is similar program We million. approximately estimate purchase be $XXX expect or your our a models. share. million basis of amount. pretax previous

it That's to my and now it from turn back side, I'll Patrick.

Patrick Kaltenbach

Shawn. Thanks

than softer businesses, sales we expected some comments with with Let where me on operating the for were Lab, starting our had start quarter.

batteries, spending and hot have continue demand delayed their lithium-ion to robust see become customers we our biopharma pharma on While like in with increasingly and particularly cautious segments China. decisions, investment have

As lower our the to to was expectations, weak as half reduced continue inventories pipette expected, headwind line the sales become in our impact of ease of second quarter second as of the we previous the sales instrument were customers in year chips declined. pipette sales and expect The in easier. with again and comparisons this

customers, as and As such key in delaying mentioned, also especially our segments see biopharma we purchases. market pharma

our see and Lab and has growth remained in service to quarter. pipeline pleased continued our quoting customer strong, However, were second activity across the business we strong

we but soon, not this XXXX have into normalize guidance. conditions built hopeful are We our

to core our this automation now strong from We demand quarter. saw for Industrial industrial Turning our portfolio solutions business. again

chains uncertainty continue economic around While in benefit localization investments supply the are of the we we to expect to immune automation not from global increased customer to outlook. and globally,

packaged product for investments inflation performance would our in inspection, making this and equipment we also uncertain good cautious the conditions, economic also remainder to softer new have it due but become customers about Regarding of expect and results year. more quarter, had food

Finally, Americas. to this project delivered growth in robust activity quarter due Food Retail strong the

strong again Our and quarter. lumpy, we third in can be Food the Retail would expect growth sales

Service One remained final sales on business. the very XX% in and strong grew quarter. comment the overall

the important be growth part very in our and profitable business. this of We with continue to pleased

Europe industrial make and in geography. offset products. across the product in inspection, the retail core In offset and Now we laboratory let our saw in industrial especially by our businesses with Sales me in quarter offering, some comments laboratory by in by flat additional declines product growth good declines pipette. were growth Americas,

of and as quarter good of with the the been before. following good limited another activity in as particularly in had growth. Asia much more Finally, rest has COVID stimulus X% sentiment, reopening, has become growth mentioned has and grew Industrial, Laboratory there China but slowed world cautious economic

expect capitalize unfold. China the opportunities however growth will conditions As second remain significant a on market half decline in team to in the our of year, today, sales we but in of in China agile

investing are Now, drive thoughts about to we you updated strategic I would some the and like to priorities share with growth over our how long-term.

culture market hallmark and of very investment share over While have we challenged long-term past make expand become profitability is very respond in and execution, the remained our the market the agility the year, future. gain to increasingly of environment market share, of gains. support investments important organization and The incremental team to have to for changes conditions unexpected level continues the focused to well growth at and or growth additional high the

marketing we and our sophisticated do with sales program business -- alerts customers our do not new digital our developed [indiscernible] we our programs, that Spinnaker with feeds on special approaches focus efficiently with pipeline a that increasingly with pipette today. have leads, more Starting

customer we look other end-use investment common points in as an sort format. customer solutions in to pain areas a directly address interactions Webinars in very show applications. can of important how been of have potential efficient customer specific leads increase We very new

segments batteries, our as in to positions strong specific new applications. but or had particularly the which sustainable and us sales in materials also webinars, customers experts trusted subject have lithium-ion This subject in pipeline unique true hot solutions We as provides is matter industry. a applications, seek semiconductor good challenging participation like

to our Our sales leads in data-centric prioritize potential increase win these business efforts field and approach and their hyper allows nurturing qualifying rates. opportunities team on

our excited our LabX, technology pipeline full has This our but of and traceability requirements. to over products very past very workload. about to our continued productivity solutions and customer maintain enhance importance workflow research in potential. support and customers' increasing like and our invest as enhanced late innovative also a new am ensuring our that of I growth for while and leadership have integrity improve year development automation, productivity, and of strongly recently also through We released with topic ensure entire across data compliance regulatory customers been the

important automation sample we through new advanced in software and customers is hot Earlier materials launched analysis this a year, the features. that This thermal new segments instrument and especially segment. to allows analysis throughput increase battery like

released the industry, expensive unmatched for amount that ultra-pure reducing new conductivity while the Additionally, semiconductor sensor helping in of our our for is a for the water operations. water recently measuring yields industry in Process customers, required business Analytics their increasing very ultra-pure microelectronics

our great success and clean customers our XX% help Lastly, that contamination line food help up regulated Industrial pharma. had with to scales faster, in but hygienic business also like their new of eliminate environments scales risk

While their own, portfolio, technology value helping drive material gains. are not expanding our share element very they and given our market on diversity individual launches algorithm, provide propositions to new compounding product a our our growth the important leadership, enhancing of

plan products will Going forward, year further of pipeline we to our over position. have that that extend innovative leadership we launch coming a the very exciting

our now Turning to margin initiatives.

in year. very been have pricing supporting this our SternDrive Our margin expansion initiatives and effective

improving manufacturing to driving on with several team hundred and costs operations, material reduce and focused back-office our is productivity across SternDrive reminder, and excellence a improve productivity. projects our operational executing As

excellent We enhanced opportunities around that in platform engineering, manufacturing -- with we to with data-driven launch have us the ahead near and of architectures future. approaches value expect smart advanced common

I for year, earnings year growth guidance the the margins and on updated some to continue context to this in confidence our and to ability solid execute beyond. deliver shows have our also long-term our we hope this our expand initiatives, growth provides but

Now -- like remarks. that that to to questions. now the conclusion open line our for the Operator, concludes I'd is prepared

Operator

[Operator Instructions]

comes Dan Stifel. Your with first from question Arias

Your line is open.

Daniel Arias

more or actually for couple China. start the pointing and the just headed direction there? to reading the are book things on sort Is half it of in over Europe in above picture just up showing in Shawn, Thanks a to the big here to on order was comes points XQ? Patrick Afternoon, deterioration there early writing U.S. guys. Growth the quarter. second wall the that of when is the Or in the that questions. it you're maybe for

Shawn Vadala

to to start, This Patrick probably how as as and starting more basically, Shawn. is related color. of we And I'll we're the -- add exiting don't how Maybe Dan. exiting the you typically even but Hey, were But third Yeah. we quarter. I'll were carry quarter, know, kind certainly, that a lot of some importantly, largely in in quarter, of let see see of the we also kind before, backlog we But the Lab. in area QX. our And towards mentioned third started really of a largely business. started end we conditions as to we the deterioration kind significant started it's of as

in Our could at quarter. Lab of looking forecast for China is decrease. down third very of the something that be excess significantly We're XX% literally like in kind a

Now, couple the had extremely years. some as growth of know, strong you last we've of over course,

But of the in at, seeing Lab If that. XX% well. grew as in you we little of before year China look almost and in year Industrial kind in QX and last we're XX% bit also a slowdown

some how to of QX much a lack time. we're we Not talk built sure our stimulus customers clarity kind sitting kind terms have of overall, there's stimulus. mean, orders. very the country. so, guidance it's like in And for the here of of at the in into in of a not that of significantly, or like to quarter past, seeing But of looking I And and hesitancy in terms the can position build observing things to rest just try the placing quick that's very of lot we're year. negative fact additional in of for just and at recent something just we're decrease related the a this we anything direction for in We that's happen that this in change starting feel feel like to quickly. pivot in the necessarily very of we've times don't fourth many going necessarily it's wrong so with -- as very said sudden kind China something a

we're also So, outlook in of a QX. building kind for negative

Daniel Arias

Okay.

I thought. Just you the for did, give if that year missed a to finish Did it. China, you for forecast

Shawn Vadala

Yeah.

of at mid that's for then down when I do that for just digit math our at digits of, of than provided to of we And I think, related of if single quick kind difference And looking -- then, the so single very quarter on high kind mid step we're And and digit, down if full full what year than looking in back single at for half think you guidance last that's you like guidance. the decrease significant kind a year. So, down mean year. full you We're that, the guidance is look mid-teens. China. more QX, our specifically

Daniel Arias

Yeah.

Okay.

I going of and pipette relative at? tracking have like -- Lab that's Okay. can the better do the you about the you out much Does think way maybe normalize in to that? of you to moving quarter? that of just of you're sort Are just of And business. Or destocking on still it half expectations you second the then, takes of looking to is last activity that attributing the in kind the mean, it just a year? year the remainder to what your that feel wash How to think system? there

Shawn Vadala

one QX. It X.X% out similar That expected. what was Yeah. a is we playing headwind to in pretty about

expected I exactly to second X% was. think what headwind quarter. it were about something That's in saying we a the be we that

would decrease growth would in business our instead if stayed. pipette. growth our So, minus for decline X% pipette. In X% other X% in a wasn't X% wasn't growth of would have decrease been it Lab if for then our And it have have words, been X% plus the the

we out to what playing similar that's very So thought.

say, to pipettes could we're QX. second a of especially still in the little expecting playing because half down out be significantly thought to what overall, in I'd the China, single we -- digit, mean, of maybe it's it's how headwind, not pretty low with down would. much what lapping of be testing. mid For thought it I similar they're But year, going to very

Daniel Arias

it. Got

Shawn. Thanks Okay.

Shawn Vadala

Dan. Thanks Yeah.

Operator

Your with Jack next question Nephron Research. Meehan comes from

open. is line Your

Jack Meehan

afternoon. of more Thank rapid sense maybe was uptick deterioration? in just any local curious had region there might like feedback competition kind what just Is one China. this been have about demand what Or sense from I all? there's at you. I is the you've it is related? Good heard follow-up on your this driven an

Patrick Kaltenbach

is this speaking. Jack, Yeah. Patrick

they really I Let the Shawn momentum of of there beginning China. stimulus already change commented it China, is, with me the about to government would the reopening, the Look, additional customers after much first the are stimulus, they the the I driven about so reluctant the And year, since when take And really and lot part growth, how stimulus. of for also lot really the the That and of fact COVID to it led mainly was lack can a this. think, question and think of a in waiting make by expectation where on that happen. drive now strong become really money. can spend they clear much spend decision a didn't more of government

any The in team. have in we seen is team That's from change the significant are hearing in locally not what China. We portfolio. our product one competition really confident

and in to portfolio We us that compete product China. efficiently have a team very great experienced a sales helps

waiting now. in are about And And really facing back to drop I about we that's the really what's holding that to also would that have confidence it's of certainty missing fact leads major it's that that investments slowdown for that. missing seen lot momentum. the the So, and we off the are the the come. a fast And the economy say customers

we're We big into QX. a of didn't the in careful China and that in and also as and team We our the Shawn don't towards became early with quarter, changing, going QX, didn't mentioned. now why expect momentum well. but end the third QX that see improving definitely QX, the We also don't minus we're as expect in double-digit on and sales we count really that's see outlook really that

Jack Meehan

in the and to statement. to terms possible of Is you're of just taking that going magnitude it then just hit some half just are in income And the of going of cost-savings to to second this where the actions the show it. mitigate quantify of that's kind year that the up across Got pressure.

Shawn Vadala

Yeah. Sure.

So, of maybe the is Jack, best our we're kind full structure for at cost it, looking way to overall year. the flattish to at be that look

think of on half second low like SG&A in of you in -- year. kind second if P&L, of the looks think about try the down you And half year, if if to about of than So, how digit be single that lines. other the terms that, will the we lower the probably it

Of broken also out course, have part necessarily you which our above are separately. profit, gross costs of don't

up to grow in at But other I the everything and second think as stepping at business very and our growth if of I at also growth. important discretionary then example, We're our we still look I productivity you -- see an year. But I just -- continuing still the We half focused back as it's for think for mean, kind from of we in are R&D, much look year-to-date. program, X% invest still spending. the in too. invest mean, R&D on to too. emphasize it's expect the to But

XXX can full the basis a I think to balance feel in on the provide point currency. like operating XX it's range. pretty we where unfavorable despite year some of And margin kind expansion still -- basis good a really we right that's

Jack Meehan

you. Thank Great.

Operator

of Derik with Your next question Bruin America. comes de from Bank

Your is open. line

Derik de Bruin

Hey, good afternoon. for taking question. my Thanks

ones. couple a So, of

the being heard was reason over $XXX,XXX So, certainly mean, that why hear to are on your I have pharma that I I getting surprised up. And so is, biotech down much. things held say comments we purchases

on of I'll price guide? So, What's in what pushback there? mean, complete you a for question, expectations your below is now going your are a Or well the I pricing just ask that. often on pricing? are freeze? lot it getting your just items are the

Patrick Kaltenbach

pharma seeing in with start Look, I we're for let business not and it, freeze. complete then like chime well. total not us. I'll is Yeah. Shawn Derik, as a It's frozen

and CapEx said, in based, and but in we not And products But decline. It's But our off see see that as question the seeing ask, decline of in so a we the many want course, right. how pretty that cliff, we're is see Of course, us, why for it's are spending. to others long it's slowdown this And seeing. We I in that take? will hear slowdown And delays happening? you're sales I'm to from strong we or CapEx orders. engagement. we're broad that our going complete team -- a actually, well, really and it's a quoting but is have lower pharma-biopharma, as we team we below orders of seeing, lot to is, a see happy are activity, what a we mean, that a we not significant sales have speak. said, is

out a are Leads have of sales leads. talking year-to-date. plans. about are actually that with They up teams get We lot their there customers good

see the on they're as do. quickly we momentum turning generation but into So, good they side, orders not lease to used

seeing sales and interacting of investments. are customers our to sales mean in back when how is pleased economy. I'm we're what I certainty with will that coming quoting we're slowdown basis. and I'm continue. opportunities to definitely from customers orders. often part Now on with is the I activity. time increased, that's there turn our and and long definitely into on monitoring But a how daily the discussing also this depend out the orders It have team more that's they with team. hearing will projects the see these now

Shawn Vadala

other Derik, quarter. the was in question, your pricing very good terms the of actually In part

second feel a better by look X%, had was actually put half what proposition on than X% the of probably a kind And what has as as we X%, we bit total increased And little which bit expected. going value kind For of probably initially kind really year up be up the of of over in what years. which us was would the our resonated total it's year is that full about a for it company. second better kind kind to half at we've we we last of year, And expecting a observe we continue like the basis. of were little to look group, and the few like the of the that's the to well as for range than

As the to of our like for customer terms of to the And opportunities excellent base. the portfolio. articulating think digitalization, and strength looks of do an productivity that plays teams really value terms it market job in I proposition in

with kind be as or our pretty implied know to mentioned also And tend question, as price your points you low of you too.

And so proposition really customer justify value from it's a that and to easy resonates, perspective.

program So, about half we second and for year. the feel the how it think we about the of good pricing

Derik de Bruin

it. Got

follow-up. a as Just

about It guidance looks that You're down taking by about X.X%. like X.X% of is China.

want you can industrial, So, what's be just that you're quantify just about pharma, to like having is feelings what's conservative what you And that? not else just good on.

Shawn Vadala

the -- China rest question, it? say you When down piece break or the when you ask of that are you to asking

Derik de Bruin

What's the of China the not cut? just else rest that the piece It's that piece. baked want. that's China what I into is the know remainder We

Shawn Vadala

Yeah. Yeah. Yeah.

we So, as in Europe. see hey, I do the moderation well Americas think as

at we're So, looking now for more Americas, the flattish growth.

seeing our with prior there we're markets. low concern year, is more guide our it's of the more What digit. For single mid kind to end was just like core full like

our things have of under pressure chemical. the that One the markets three moment core at largest food is are we pharma, manufacturing happening end biopharma, and

also for half see U.S., bit of also about the we manufacturing under pressure area, second came the the an especially our in in a see where but year we business, talked a good we these food inspection are food quarter, of pressure. others. and off -- some customers And We as is but manufacturing pharma, little product a lot

the probably end at were least thing in the the And year, there. a it's I that -- also forecast number have lot well the a numbers course, companies European concern prolonged been when and end mean, guiding. in They've recently lot a than pharma, in impressed Previously, lot to if bit have were actually just you low lower chemical our were customer Europe, an held a look and The of but biopharmas, full chemical modestly other decreased the of been have at you particularly like PMIs We're we of there's low been of about lower of digit. Europe. the there's more at are very how up pressure. addition, we've that pressure. at also example like region, for look example this base, little think a a what there course, of year, you their thinking at to if under what low we digit the under And one we're terms there good mid recently, double-digits, uncertainty down than period. just If to markets single reduced very the industries single it Europe, we before, year. give acknowledge that -- in for we again, is we of comes

more So that of geographic a you maybe gives overview.

we If area. kind of overlap business And numbers, through just of has do the kind because these go going kind some it everybody China Maybe kind walk I'm course, of just here some of by down but there's of influencing I'll too. so throughs is break to that of it.

single digit core full quarter third good for project digit then, down looking well, quite retail and year. -- products single the for Lab down the is single digit digit full the down, business full and up We're actually for we're year. digit digit at inspection activity. our So, industrial similarly, year. very And low low for And low low we doing down QX, mid in have single looking up single low the single at

in continue half. the see that to We expect second that --

the We up full to expect for the quarter QX that and also in high-teens for be year.

Derik de Bruin

really was Appreciate Great. it. That Thanks Shawn. detailed.

Shawn Vadala

Yeah. Yeah. Derik. Thanks

Operator

comes Your with Citigroup. from next Donnelly question Patrick

Your open. is line

Patrick Donnelly

where kind linger you issues out of controls back, look temporary transitory maybe when into look you're cost guess, I and or more XXXX. that see being you which Patrick, of I guess, you doing you've kind kind could do taking the out about out these of when and little what you think, of Thanks in you assessed figure you look a at Hey, for questions. various step linger called into versus say, XXXX. question to kind headwinds bit, this guys. the them, I you and these trying could prior talked

you frame helpful. to us kind be If view that just and bracket of try help up can would it for

Patrick Kaltenbach

Sure. that too say say for look at of XXXX. the pre-COVID uptick pipette the will in Absolutely. right on next our side. half. QX now, report But do would in transitory that to easier of we That mean, thing what I this have forecast the it's mean, normalizing. earnings normalizing. I happening is we Again, we QX. it now. when our what Look, early seen to slowly, make I of us call to We The to We a but capture levels anticipate for pipette. and Right pipette consumption destocking have is course, steadily. we see the second is probably -- is

-- now, will the have. I just be this say But economy rest probably us Shawn When forecast chemical too will be very us, and PMIs given also to mid-XXXX, second a we economic it to significant comes the industry, to this biopharma hard early course, rest continuing outlined, economy, are that's think to it industry The the are of the the evolve the predict downturn. under from How how pressure. it and at look information -- under elongated of course, we and will time suffer half seeing. will -- also that is early the it from right here? downturn for XXXX, is pressure It's, will it's, the we of that to good of when to call. leads say pharma a It turn, long the

there, You may frankly. call

the see analytical business to et as earnings of highlighted pockets form performing semiconductor sensors. beginning also we of pockets in also good where I very been on I segments the what call take well. in automation. performing like driving across [ph] comes battery the the increasing example, good extremely to our industrial count is it Lab on of like we the momentum see They we have some in really some almost well, in momentum see is grow. cetera, as business, businesses successful segment, mean, We've continue when of call, we for we have And hot good of that. businesses. We emphasized the If interest ultra-pure still our still all -- we growth water,

and really So, there growth on of are pockets this. we're going capture, we good for that still hard

on team how to drive XXXX. a be direction. second pressure, on for pockets the our of long broader We have to and it sales forecast But will here really and see it's think of right too long the we us right half. take. under QX, growth none will And now, give early tell the you honest. tools then how we'll towards the get guidance that We're we economy But can these second call at looking once half I the you

Patrick Donnelly

guess, that. understood. And Shawn, follow-up No, I then, Yeah. a maybe on

that Just the Can just work as these But you like them you strong our the little the margins, about some around still through pricing you margins. for cost bit. of I in Again, guys the boost reduction when think a talk moving seems of quite guess it's pieces second half? we lever, about activities. touched terms you for on way

on nimble then, then I be as be is you to the cost and going pricing, how into And we want assume, going to side I move year forward. next still positive guess,

You well. protect margins the guys pretty always

how curious there helpful. would think it, be just about you pieces moving the So,

Shawn Vadala

Sure. Yeah.

bit closer to end have I basis still great and quarter mean, think XXX margin very a hey, -- It continue still in the little expand point might little for us I in by wouldn't the of puts of to story. an QX. And that up as ability higher I if bit be unfavorable a So, be end might operating that's range. surprised that up the I expansion before, year. mean, good down a the But to feel year, really to some we margin currency. in about range, we I And margin operating XX full full kind the be overall, I despite deliver to probably QX. for we mentioned we're frankly, the expecting think,

I a it's Patrick then said, like that. next year, go into think we of kind And as at little bit look early

think we'll actions we savings course, feel year. still we well. of we this will about the as There great have that from about away some that Of some be goes pricing, probably some And as stuff did depend But thoughts call you as our bit little also inflationary all the our and that November. guidance will we'll on more insights on a environment. -- next it provide propositions. And in know, and on value we'll

Patrick Donnelly

Okay. That's helpful. Thank guys. you

Patrick Kaltenbach

Thanks. Yeah.

Operator

Evercore. Your with next question Kumar Vijay comes from

Your line is open.

Vijay Kumar

for third declines. question. low guess, Hey, guys. I digit my Thanks one on quarter single guidance, first taking my the

basis And the point I And about QX. You of XXX basis a in That's down is from change. China. mid-teens XXX think X% down coming seeing perspective? just did softness for the points you XXX Are China July? XXX remaining where basis market from end it's mid-teens coming in if the of points from, perhaps, an rest And the is assumption, the quarter?

Shawn Vadala

I'll Vijay. maybe Yeah. Hey, take one, that

the year I and mean, of months, typically as seen you -- how individual -- July as much we heavily know, what for certainly too kind quarter at to We don't the we're detail So, on before. alluded it go we and influenced of start rest typically of I but absolutely, China. experienced -- looking don't kind into we we've we

we're our at Laboratory weighted and much business. so mid-teens And especially yeah, looking very then, down in

mentioned significantly more before, there, as expecting you be lapping I there. even Lab at to we're If pretty comparisons Laboratory some we're business down but the look big our business,

full looking single core of the I the mean, It's kind of at Americas. it's to in digit Derik, end much about. portfolio, this kind answered topic of markets. we how If delay same about I'd say, results. rest very pharma, low There, it's similar Patrick I at talked like that look biopharma the we're year the in growth on the

about as course, have also quarter, a we smaller last pipettes, exposure -- Of that course, we that, within also we about well. of we talked PendoTECH bioprocessing but within talked single-use like with

a prior I in also pressure the similar companies. we're at as mean, that the inspection answer, well to Americas looking in in manufacturing product quarter from decline we're seeing the with third then the food And

to more about we single digit we're different before. Europe, then, but acknowledging have we low that And still quarter, third in be expecting uncertainties that Europe talked the

-- it, in again. the the down actually, If terms we're so so we But terms mention it by guidance kind business, I like Lab areas, the of to of for I look overall business third terms in QX. already need than more don't of the of the in well, areas for I at looking being different mentioned mean, other quarter,

Vijay Kumar

does kind maybe customers It in placing cost XQ, then much of [ph] a And looks specifically Lynx benefit have -- one stimulus to If for from you in maybe heard actions taken take And -- if more is cost mean, stimulus, purchasing? Understood. about flow pacing orders what mentioned. the expecting? that perhaps here, I to is -- the there on but -- revenue, down stimulus? Is And the a QX? long are it what on in like the the of benefit actions? magnitude what you not you the actions is than cost what's it how about through actions cost from benefits EPS you've

Shawn Vadala

so Hey, Yeah. there. lot a

first you stimulus. the So, talking about thing the was were

don't coming been an have any the stimulus, the So, think specific out to terms any with probably I I comments have in else. the mean provided. think, week government, don't were there we stimulate. of like intention in some than of -- more details insights last anybody I

point of this time. kind in to comment hard that it's on at So,

And so, said, and that we second see I built economy. that the and the like anything our out to end it affects plays to takes long for haven't into that of have think long how half get we'll really markets now, forecast our to -- how in directly how year. the for But takes right how I

how kind it out. So, see of plays we'll

than been in do do foreign kind of year. currency. sorry we as unfavorable impacted our of time us I kind In last of significantly it's the have also guidance. EPS mentioned us hurting I'm unfavorable this remarks, mean, provided foreign currency we -- We we more that's have I And mean, opening throughout terms -- EPS, much in

currency. from And So, headwind quarter. to a foreign we last for at if X% looking back at headwind X% original don't we're in something I the think were more much very were looking all think expecting X% think I guidance to year, go I our we the at And initially range. now we

certainly something us. affecting that's that's So

So, half also you as kind it's second kind for EPS I the at that of to year. the consider look think growth of of important the

end at the to X% And kind foreign of to we are for sales look growing minus anywhere of be X% our if you than much then year modest a from be guidance, and year, the end guidance currency, X%. the the you if QX, in flattish at like will full X%. would where So, high to exclude more our lower X%

and to and the So, talked still But the about to business, comments, then continue to the in otherwise, feel to terms ability good medium same details. that of as too. about of say, we which the -- invest time terms expand important I we've which us at is still no well, longer course the term feel like able protect year specific to being in other during we this margins would in

Vijay Kumar

Understood. Thanks guys.

Shawn Vadala

Thanks. Yeah.

Operator

Your with Sykes comes next from question Goldman Matt Sachs.

Your line is open.

Matthew Sykes

for help dynamic growth? us year just little maybe bit it's caution what about and the and services customer growth a Good lot of better Hi. business to your of And more for assuming time my for questions. about Maybe understand that the talk and as out services spent you the Patrick, you services, afternoon. for it assumptions are maybe called relates my defensive. little a segment. you for Thanks the Could quarter focus some taking one, on a this first strong full pretty portion

expect Just this in perform of that about environment. maybe type talk business how to you

Patrick Kaltenbach

more Very with question. service couldn't our hey, of And be good Yeah. I pleased the performance business.

recall, in XX% now quarter. probably first grew grew we XX% you quarter. the the As in second It

just still we to the of that's also people. performance service team. everybody hiring outstanding And business where on is call reminder a the So, -- over actually,

our use year or good to good see business opportunity because portfolio. there. demand We extend see over momentum also offering our the team, two So, for we're the service We in our more technicians we last customers. our adding service to

sales restructured more team trained sales, the of we selling, on team service point obviously on the quoting the sales at efficiently emphasis services in increased We on contracts. quoting. the included services. We more sure We service service that that sell are more the making selling the process

really here. out all pays that more I think And in in at strong outlook services. So, looking seeing now year the the full also we're growth

the forecasting at high we're of full least terms I service digits, for growth. think in single year,

on Shawn, one? correct am I this

Shawn Vadala

single Yeah. digit be and probably even yeah, yeah, single high be might yeah. digit, even but to maybe low yeah, even close to even high might XX%, for QX might double-digit, high single Might -- XX%,

Patrick Kaltenbach

on at Good. a demand the and And the see And see again, see pushback that's lot -- category, driven by pricing. momentum. really stronger don't we we moment, ongoing the in we than of product

And so, I continuing. would see really see continue momentum -- to that

of between on had we're course, momentum underlying also quarters quite we comparisons already strong growth. as service couple and next tougher move Of QX been the as the also QX having last is strong. But year

is service strong way sure to extremely and of That possible of customers best that an serve with experience. directly and can what customer out [indiscernible] in that is differentiating our the we compete organization. our is to we have continue many us outstanding We our in team continue the an team make build can we service in deliver strength field invest that build, the from services us competitors leader a that really and as

Matthew Sykes

some just offsets then And potential other given challenges the just the Lab Great. of in of thinking business. some

also of and and about sort sort you of globally, batteries semis. you're what maybe of sizing of by growth maybe the kind understand materials, talked seeing that in You sustainable Can but business help region. us terms of

of the kind can what of year? be better the course of understand offsets we could over so the Just some

Patrick Kaltenbach

Yeah.

in gaining super are momentum to us compensate itself, in the in gaining of we growth And in but segments. terms Let have, pockets is in we the course, business semiconductor the the offset of I -- the semiconductor it's call moment, segments, is, not good call see of really strong again, the and lithium-ion the for of see homeshoring terms sustainable right? these some momentum they that reshoring down of is size. the strongly some by momentum -- really in we But with that other at importance. battery weaknesses plants important Shawn areas. this that significant We driven is materials of and mean, it size, And that of hot building up growth what break in

Shawn Vadala

Yeah.

In specific are single about number growth a relatively -- don't the to of relative development to I kind I And certainly opportunities but what's for all lot range. still to kind in way a lot solutions terms the of these end here. in A higher Matt, the and and But it segments low from markets of these through mean the you, term in the have we R&D. growth they of neat growth us help digit can of end of end. goes the that It hot manufacturing. they them size, very given portfolio a perspective, provide starts for is rest smaller of -- the kind longer terms

And more so, our a business, cases, benefits large see through so in benefit analytical instrument some in we but portion we portfolio. of also our

Matthew Sykes

Great. Thank you.

Operator

from Catherine comes question Schulte next Baird. Your with

open. is line Your

Catherine Schulte

concentrated business is are broad-based? Hey, guys. product And better any holding business? the you Thanks Lab seeing in within side up for the consumables questions. guess, there? the of first I your in is more China, categories and the Or weakness it services

Patrick Kaltenbach

you on more market would broad-based point and pharma specific the there broad-based category. can't effective. any take Catherine. Look, pretty that and product is this, in really focused It's single it's for point segment. the But I to product I biopharma. I category,

Catherine Schulte

maybe… then, And Okay.

Shawn Vadala

testing all China that COVID actually still specific in because the to are down consumables was And Catherine, on last of with more so year. going consumables,

Catherine Schulte

Yeah.

been talking on Okay. to comps easier point And in prior to when there? start in about point might food that now. anything At do caution improvements what the there? as Got you seeing category start it. to side, some quarters there lapping environment several And packaged for maybe you've inflationary is you

Patrick Kaltenbach

will have in last as I we that in in taken are we see pretty quite the And a especially, strong. probably comparison not well market because a think this the performed well. of Americas, year confident, second is business, with also been Yeah. we share comparison we this year growth. we half bit In we why slowdown this but any are and almost easier confident we face have have

investment investment year the that more of And customers last beginning see packaged And to so their they're we of trying A or the are in pointed industry. continue investments it Europe to reluctance when right to now margins, lot year. in actually going had food their of We Europe push of in out environment end the just as well. under on. pressure the is the comes not same

trade had we interest had and our Europe, a in product just we Interpac said, That portfolio. in show big have seen great the recently

compete launched in and course, that x-ray really a of our also and midrange products us, We segment set new also future drive to products, And growth. in the others. that also category of helps effectively

quite market taking outstanding. is the share the actually in that segment we're now, are not We right growth sure although

pushing think two new And now in into invested competitors. especially a the more some soon I solutions. over but are expanding outcompeting portfolio, pretty be in we that higher the business midrange it's our last launching there we, to years end again, also more the effectively,

Catherine Schulte

Great. Thank you.

Operator

Cleveland Research. with Waldman from Josh next Your comes question

open. is line Your

Joshua Waldman

taking but my held quarter, Patrick, on like just it's for Maybe, Good to seems in and Thanks pulling inspection. evening. I CPG, mean, of signs from like back. the it questions. follow-up seeing pharma it product softening sounded food

end entering correct. the maybe modestly, how mean, the orders quarter of Just and only down seen the third what level kind reflects seems guide, maybe I you've It moved curious guide I'm of if softer those like markets.

Patrick Kaltenbach

is are tougher investments. slowing becoming it And that customers guidance compares, difficult. we the modestly. in it's the environment The like bit mainly U.S. Yes. where a but are right. Again, the down they see That's for more also looks also down their

we if in terms could of anything the else Shawn, for PI. say guidance

Shawn Vadala

think look expected. QX, than we I we mean, I better also, actually we No. if did at

what better, says. but And little So, it's was of kind second is maybe Patrick bit worse. QX the a half like

of the of U.S., situation the quarter. kind more in what at kind the what also in especially Europe into from going we're look second negative -- like hearing just from you but experienced If in just the we than if look seeing just we -- how a quarter, customers we're at and organization,

Joshua Waldman

in prod this wonder CDMO question a and you talk Is of will you're on your saw analytics. some or follow-up perspective something the a business? a Or accounts seeing think perspective bio I peers, the resiliently? then up demand from guess, I or the seen QX I peers on on that we've hold in incremental then, second show growth process chemical what and half. And business mean, softness. do more assumptions it. you in Got

Shawn Vadala

quarter, color and process of But had in add start if modest but I'll I'll let very there storylines one terms terms hand, downstream Yeah. the were did Patrick specific some growth very, very color the in we have of like. he'd we definitely different in so -- headwind bioprocessing. additional kind analytics, the covers. On under bioprocessing to more single-use technologies a of significant and

for analytics given segment segments as the process we too, in nonetheless, We been expectation some here say, in business. just off of general pharma half also see in or should of softness modest also some is biopharma, have that in more the -- then more that some offsetting and pressure for talked growth But But more like coming about is biopharma these hot have we well previous semiconductors an of a years. and kind important very with pharma good strong comparisons I biopharma. second

Patrick Kaltenbach

Yeah. add Shawn, I yours. if to might

we PendoTECH, a seeing that good that stocking sensor And segment. having sensors, on reusable But market is the the same we're [ph] have course, Of the in PendoTECH with we Ingold are topic actually not on business. you biopharma some end hand, the with but we that single-use still for ongoing mentioned mainly. dynamics headwinds also other seen there recurring have

market sensor is also dairy It story it in segments. here And innovation, we I is to really unbreakable also us our business, into for and I really differentiating and we lot a want about now launched us the talk great launch that we year last from competitors. new a but to know add success new continue a [ph]

share how the positive portfolio in even market I will also product to help very difficult there gain us So, it am and market about environments.

Joshua Waldman

guys. the Appreciate detail,

Operator

comes question with from JPMorgan. Rachel next Your Vatnsdal

open. is line Your

Rachel Vatnsdal

for Great. taking Thank you the question.

Can and and to remind some I those can detail a walk biopharma how smaller some small want you us follow-up, decision-making about of difference those difference large buying around biotechs. customers. is then two? spending any you those can of us your then And And just are are pharma as your comments on customers between biotech between you the pharma in seeing follow-up you through, emerging So, us exposure? how on just trends conversations

Patrick Kaltenbach

customer The and us pharma for So, overall, customer base of the our really are biopharma customers. larger majority in small base. is biotech small. that's I not mean, major our exposure

different your not there's second saying specific seeing what about the the across question And cautious just But real of board delay our different to root slowdown, be the of we're part might that affects decision-making. particular the decision could What I just think businesses. pharma with more of reason product has become causes that for is spending. that to. portfolio. a I We're And guess overall, in point us we

Rachel Vatnsdal

a And Great. then, on maybe here follow-up just pricing.

roughly that said around You year. you'll take X% pricing this

contribution You last also had year average as pricing above the well.

range? really below? the you. you we normalized back go XXXX? there? that translating to about pricing go guys Could into are should it What how Will Thank your So, think expectations

Shawn Vadala

course, But insights thinking to about in we're very we Rachel, good what feel many about is good Hey, I it's too Yeah. still feel would program. I maybe of how terms still value XXXX. early still propositions. very provide of that say our about mean, our We

heavily more how depending kind in invest to to but we'll I R&D would on into the the situation I be us year, in out. have environment inflationary continue to value continue of kind normalized next We plays environment, expect going probably of those inflationary enhance to a propositions. And think see

Operator

Liza Your with next UBS. from question Garcia comes

line is open. Your

Elizabeth Garcia

much so in. Thanks squeezing guys. for me evening, Good

keep brief. it to try I'll So,

Just circling about China. we're talking since back

talk about kind for pharma seeing on Industrial the and a has focus a called been really balance obviously, the quickly. your bit you actually and how you follow-up of there expectations what out And on Can on I the business. And growth the of businesses the have detailed and know China year just I'll there. quite of I we in to think the other then, about think that? side the you're piece biopharma China

Shawn Vadala

Yeah.

Okay. Liza. Yeah. Thanks,

mid one. quarter, that mean, was Industrial. second take The growth more single I in I'll digit the So, for

So, we're pleased on that.

lapping part kind business you as we've been that comparisons As know, of big in some well. of the

of looking probably half look kind second we single though, the the be we're at the to down year to like As of mid industrial business digit.

And in part the of remember, some to are the I well, market important business exposures exposed We as to these of end in think decline as seeing same that exposed a to that well. some it's Laboratory too. we're like lot also customers of are

So, business when down, biopharma it's also industrial pharma we affecting our also. say is and

of year half as flattish so, seeing in what Lab year the on full but And down maybe still the much down not as basis. second probably and pronounced we're in the more business, a

Elizabeth Garcia

wave can and kind market I quarters obviously levers in next mean, think what I I SternDrive obviously the and terms were the underway how Spinnaker of be launched, the there's -- deliver have. obviously, Spinnaker of yeah, about that's with believe, share to guys think great initiative. guess, of has mentioned I you of over I that of And you that But another that how been you now. kind believe wave. of Mettler to be should to or supposed coming kind talking Great. about under right mean, about and next in couple that

Shawn Vadala

Yeah.

to hear? -- we terms We innovate can to So, Spinnaker, continue in Spinnaker of work. in Patrick, continue you can

Okay.

live though. You’re

live. You’re Yeah.

can Liza, -- still hear of you terms in So, me?

Elizabeth Garcia

great. you hear I

Shawn Vadala

-- the just to the hear hey, question. Patrick lost Hey ability Yeah. think so I

it. answer So, of I'll just kind

opportunities So, Spinnaker, to of kind continue that And I some it something on doing just we for journey going a going innovate of of in beginning continue in details new of until we We're of excited the the kind further, us there's that we're we Spinnaker. terms some think kind terms roll of the of to share the little launching out at in interesting we really process forward about. of have a and but are And very that wave. Spinnaker. bit very to in

Elizabeth Garcia

a Thanks lot. Great.

Operator

from Fargo. Tim question Daley with next is Your Wells

Your open. line is

Timothy Daley

Great. Thanks.

But your the can industry, across you have whoever us, or a if Can brought or Patrick fall flush again, given life budget of considerably the you at any stabilize if flush would by science the Shawn, historical prior macro So, the you outcome. your theory conditions pharma the biotech. Patrick, get potential you from pretty year-end outcome end budget factors discounts, don't or for potential year-end year, up Shawn Mettler or But Mettler. potential a given answer lives will, and narratives yourself, that here. experience, that's it's game the off clear experience guide in influence for a

Shawn Vadala

take Yeah. Hey, is that Shawn. one. Tim, I'll this

same, So much it how anything in more hey, about flush difficult thinking implicitly, we of cautious did in especially build judge specific We our kind budget business. pharma looking like be of exactly the from look flush. biopharma to at third didn't -- budget we're and It's always guidance, just And we're as what similar to kind able said, at the of course, for like a quarter. exit you just the have I QX year-to-year, terms we in not kind view to but in and just quantify thinking think general. year. his it's you not if of And our we can quite how pretty it's about of

had a we're spend, biopharma be more that pharma of certainly if looking and an upside robust things. certainly, to could year So, end at how

Timothy Daley

it. just just dead here critical thesis beat horse now, Got standardization long-term right. that sorry growth China. within is And then pretty the Lab, the to investment Western again, piece -- given a in But All of the facilities. of for

because there? it? that is facility productions temporary potential that one curious, within of weighing just which -- is been pullback global risk Has format, still a us? utilize there change Mettler Western stuff there geopolitical Or is of standardization impetus Just the on from whole in any companies

Patrick Kaltenbach

mean, can me. -- disconnect I hear hope I you Thank got you. we just to yeah.

take I'll Well, question. that Okay.

you want see way China U.S., is to are significant multinationals they pulling see do investments here, China happening. course, of think Europe these us impact pull as moving to as homeshoring, don't to But yet. what for if back this, go the multinational forward India, right, whether out think we're reshoring, the regard out now, opportunity and we the for capture China also I of from seeing investments potential as I With Okay. of they it and to to about a we go some or

somewhere is they're in in as the the for I putting would this either that businesses the solutions But right market what if these Europe China. China. -- driver are to of going major else these team not sensing U.S., our definitely have driving our it. companies are now, and of they we out -- the earlier they if then Then, market sensing sales going tools guide reinvest in is not capture as slowdown in place opportunities That's to say to or

the on us, mode stimulus much lack forward. in and how confidence for sentiment, how can the For overall budget decide of the companies they the and until wait they moving it's much really they the market have really invest

Timothy Daley

Appreciate you. Got it. it. Thank

Operator

There we at are us joining Thank With will the end that, no call. questions for you time. further this today. conference

disconnect. You may now

Mettler-Toledo International (MTD) 27 Jul 232023 Q2 Earnings call transcript