MTD - Earnings call 3 2023 | Mettler-Toledo International Inc.

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Operator

Thank you for standing by, and welcome to the Mettler-Toledo Third Quarter 2023 Earnings Conference Call. I would now like to welcome Adam Uhlman, Head of Investor Relations to begin the call. Adam, over to you.

Adam Uhlman

Thank you, and good morning, everyone. Thanks for joining us.

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

me we replay website. include matters. and administrative the on press mt.com. cover our is the of to Let webcast presentation forward-looking today and being available that A This copy will is refer our statements This on call for call release website of the that different U.S. and will XXXX. Securities at available actual within XXXX some the by Act uncertainties factors and be from statements Exchange other results, meaning implied or may any risks, involve materially of expressed achievements to performance These statements. and forward-looking our those financial and is condition, cause

except measures of obligation see also statements, with For provide A undertaking on non-GAAP current these annual X-K provided is law. report these quarterly uncertainties, any XX-K filed the we our any reports call, on or as to risks disclaims recent or directly of and reconciliation financial today's Form company financial any our use and in forward-looking and On non-GAAP the revisions GAAP to may measure updates measures. SEC. The a the most and comparable is required website. available to as by discussion

Let me now turn the call over to Patrick.

Patrick Kaltenbach

significantly of quarter, to than results, details where our were Last night, X conditions in our in today. the call we expected Page our are and Adam, relative demand joining you presentation. third We morning, Market the expectations. good quarter our you Thanks, third market China of outlined weaker on financial deteriorated appreciate everyone. reported especially for which

these and cost quickly delivered the headwinds. market and adjust despite cash and team has we to flow address performance Our our reacted good margin structure challenges

persist to expect in as into weak, look to on market we these the of today, would to And we expect China. XXXX, conditions remainder especially conditions headwinds we of next based year. As remain market

programs to However, execution in growth our Spinnaker SternDrive capture like and can factors including manage proven the confident and remain we control drive to strong effectively. costs share we corporate of our market

strategy have convinced share go-to-market will emerge innovative market challenging and gains culture efforts help I'm market our conditions, during stronger have been and driven us recovery. Our and important the portfolio in unique to differentiators

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

Shawn Vadala

a sales everyone. in in Europe currency the XX% sales expected X% sales and local as summarized in decreased On decrease Patrick, by and #X, a Slide Local the sales X%. of for in months, and X% region. Americas in quarter X% million, currency with on growth Sales the the U.S. in declined in by growth grew the a #X, in X% Slide we Local by of currency sales world. Americas good X% Asia/Rest growth Asia/Rest local on X we Local dollar Europe, currency by Slide X% of year-to-date we year-to-date which X%. On basis. and were decline currency Thanks, product in the morning, were in in first show a basis. On basis, a currency growth China increased area. lower significantly sales growth growth quarter. On sales region Local the China show #X, than world. represented declined $XXX.X and sales grew X% sales XX% declined declined X% currency

quarter grew significant in X% Laboratory sales slide XX% and quarter. The Industrial industrial benefited the X% X% decreased core quarter, decreased in from sales activity. next Food and up grew X% down X% area and the Service sales on Service The X%. product with the and sales XX%. a inspection. project inspection core decreased currency including increased Retail growth industrial retail For by and basis. grew X% local sales on product growth X%, shows Food X% year-to-date Laboratory in Industrial XX% growth increased a in year-to-date basis. product

quarter, and million, move an decrease me including P&L, the decrease. Currency initiatives. our which includes from and currency. quarter, X%. prior #X. and approximately million local to profit X% points to amounted an margin Gross million. increase by now the basis partially amounted on was to the Amortization which was growth X% other the quarter, offset XX.X%, to pricing XX amounted rest the and increased amounted currency P&L. in summarized a the operating prior amounted million of over margin prior was compared to compensation the mix increase year. A is million cost, comments higher period, Slide was reduced XX on of lower million Adjusted Adjusted benefits project $XX.X of operating as interest increase expense points $XXX.X of year in represents a Let activity. $X.X decline, savings R&D the over income couple the final a in X% which volume variable our currency in basis local SG&A to $XXX $XX.X $XX.X is by profit XX.X%, business operating in to cost

discrete in quarter. for XX% exercises option This Our adjusting timing quarter. the tax stock and rate the before effective items rate of the in was is

foreign foreign currency the EPS X-month basis XXX income results. unfavorable excluding a between our or unfavorable for $XXX.X on quarter. Fully me our to up cash in per in is flow the intangible and X.Xx. in X% a grew X% operating our from $X.XX sales purchased DSO X% which the Adjusted flow. the X% prior P&L, decline and from expect was year. to X% year-to-date favorable or cash adjusted of quarter on X% year slide for days, XX%. excluding $X.XX the exercises. The now rate a grew XX flow or quarter approximately includes period. a of was due XX% In amounted ITO amounted the for to EPS $X.XX, Year-to-date, to $X.XX Adjusted currency. That the $XX.X $X.XX costs points. option be to next shares full continue and over the diluted annual of million, compared currency. On prior tax restructuring timing year. $X.XX free while helped increased quarterly difference million, the quarter, as Adjusted operating our expanded excluding currency comment basis cash X%, $XX EPS Reported tax grew quarter, amortization, and the margin reported basis prior stock million, and capital. covers unfavorable decrease, the illustrates the the X% We was year foreign a let year-to-date in to EPS again rate working decrease by fourth share was Local

guidance to for this turn remainder on the now and initial me year thoughts of our next year. Let our

First, Forecasting remains China. very challenging, particularly our business for in

feel reacted changing our country. and China very good we very team Our position conditions has market in the market to quickly, in about

China, also with economic and However, in economic uncertainty Americas. conditions remain end weakness our challenged, in such today Outside markets as core and there and the there soft continued visibility. Europe is sciences is conditions greater of low life

year-end East lower-than-normal spending. uncertainty. expect conflict additional creates customer Middle also recent The We

team demand, to while support at long-term market culture. market our reallocating is to not our well structure of same investments resources still has adjust cost growth. The during defining the time, executed reduced standing organization conditions important our of attribute exceptionally a to period in this Secondly, our current

Now turning to guidance. our

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

local flow expected of an to headwind to be $XXX We the tax favorable growth and expect $XX.XX. will the This for by working EPS in now in full approximately more includes now Free X% capital. guidance the is our Share X%. range $XXX fourth than prior year XXXX. With cash adjusted of quarter, expected X% respect would $XX.XX as million, to forecast our EPS above payments we of timing sales year approximately currency profit to reduced decline X%. be is to be to adjusted to million offset to the expect repurchases

of EPS approximately decreased X%, approximately the quarter is sales fourth by be but expected expect increase EPS by We to in $XX.XX. to Currency to adjusted range $XX.XX X%.

market expect approximately adjusted sales growth also to local excluding $XX.XX of provided of X% economy. approximately be of have adverse XXXX, expected to which or and assessment remain a initial our is the in in the X% XXXX and our we in $XX.XX expect the for to EPS uncertainty increased guidance sales, today, half to currency. Relative X% our range be sales be to X% would following currency first currency to to based growth cautious spending in customers First, a assumptions: growth the Underpinning are reflecting year, rate X% of conditions the XXXX. with our represents the We to to flattish on guidance we of headwind

of Our economic sales multiyear to expected first to are trends growth in challenging the in as face are China the weak, year remain decline expected comparisons. also and we half

our expect conditions currency We the comparisons the and second in half to local market improve year improve. as easier become of sales

we savings offset and dampened part volume a compensation reset performance to variable sales our Secondly, in in expect cost margin to lower our year-over-year due be programs, our initiatives. by

Lastly, I'll share a XXXX guidance. on our few final comments

approximately intangible to amortization per amortization Interest on other million. EPS is million is a $XX.X $XX at $X We $X.XX from at estimated and purchased Purchased the and $XX is pretax estimated including share. million. total amortization, is at approximately basis be income excluded expense or expect forecast intangible million for year adjusted

expect tax discrete will our remain We rate items at XXXX. XX% before in

$XXX free a of income. of conversion approximately expect million, XXX% of We flow cash net representing approximately adjusted

be side, it also to will back expect share now I'll We my from approximately it turn million. That's Patrick. repurchases $XXX and

Patrick Kaltenbach

Shawn. Thanks,

spending while we constraints and market had some after see customers China flat but their the sales businesses, pandemic. In and our with operating we especially start our chemicals. to demand has teams Americas, on with reduced spending is cautious still and market me of budget weaker where segments pipettes Life levels of across Let in engagement and see where pharma true have key customers, activity and significant demand. significantly unfolded with during continue Sciences, Lab, comments the in customer our investments have destocking expected, as food declines our beverage and This good patterns starting biopharma

also analytics from by analytical weak chemistry We our business customers. demand instruments automated from saw and bioprocessing demand process our again was lower-than-expected and challenged

XXXX, look lab to fundamentals for are businesses we out market good. As our the

activity benefit in expect be full remain outlook to in LabX of normalization anticipate remains has to drugs leveraging in While market. we strong biopharma innovation therapies XXXX automation brought slowed digitalization We software. year, the this pipelines and trends our as long-term market normal the from the and the to pharma, and

on hot focused segments capturing remains like the of materials. significant batteries, sustainable lithium-ion semiconductors team growth our and curing Additionally, in

investments I with exciting product to many from feature XXXX We our that you innovation will also sharing coming in over launches the will forward software and gain year. and look

business. the Overall, industrial our industrial sales to previous in year. Turning very the strong declined against growth now in X% quarter

weaker lower Europe. product we core grew Our to China, a industrial sales demand. very sales the Americas also market inspection in Product sharp were sales growth in due and to had comparisons tough due and decline weaker than in sales in anticipated

this the in our remained was offset Americas cautious their sales customers growth investments manufacturing in weaker have equipment. by as with However, largely food new

As economy, to global slowing business China, our XXXX, world. Industrial benefit the a should faces we core while around reshoring look likely automation, investments global digitalization we particularly trends out and in in from headwinds from

on portfolio with new continue our address production solutions customers' We floor. our challenges upgrade also to to the

as our be is as use provide hazardous chemical hazardous areas our model Weighing certified this areas. pharma be used XXX Earlier in year, released customers. and process For of simple example, those new that powerful customer focus, in we areas to a flagship Industry use proof increased for and explosion the to to for there and control devices Terminal safe

Our into new and cybersecurity feature intrinsically deliver terminals are seamless and also features. automation integration customer's systems safe state-of-the-art a

expect our today, business, Now inspection for difficult customers inspection growth limited XXXX. more manufacturing business environment we faced will lead operating regarding in a our to product product food which

labor in contaminants packaged shortages. will physical continue and they to on productivity seek challenged focus their be foods from solutions We continue increased to innovation protect as area increasingly this by as also to our customers

our had addition new well the and to past market to the XX traditional a market. launched This share. X-ray have new range in mid- great success initial over gain detection products contamination that of have line We integrity with demand very wide in checks and of address of to provides positions us line end premium package year both the

robust a Food the strong had Lastly, quarter project to another very Retail due of Americas. in activity growth

Our past with major team has penetration of stores. successful and delivered year grocery remarkable growth club this

and face deliver have means we revenue therefore, challenging very we in would cultivated declines. strong While an opportunity we growth pipeline, comparisons attractive portfolio expect the XXXX expect growth this year to modest

end growth make and in in the very additional with across Sales Europe across product Now the let X% against some grew most quarter me major year. prior by geography. our comments growth portfolio in modest markets

far pleased generated the are Europe in we have region, the in conflict cautious in good due growth While readings for war for we this the the more to outlook in the the East. to disruptions potential soft on Europe year, are for Middle so from and Ukraine the economy PMI continuing

Turning Americas. now the to

as strong in very growth retailing both from the the stimulus and well and CHIPS continues reshoring activities. offset government years over decline Our by the was various food Infrastructure Industrial. optimism like Act the to Customer products coming customers in in Laboratory point feedback as a to Americas Bill programs

and XXXX as advance cycles continue return pharma biopharma Our expected drug pipelines. more customers replacement gradually to to in are spend their normal the to their and increase

the World and Asia of sales Rest the declined XX%. Finally,

in XX%, of was China laboratory product almost years strong and across COVID the economy. significantly the shifted seen Pharma, to in a expected declined in economy following growing of in sales. ago very industrial China towards its very the government we by end slowed. as as core sales lockdowns And biopharma Our China soft year markets weak has other after demand central China have end focus demand The declined their economy broadly also the very has growth. rebound driven several

business lack of declines consumer foreign in estate from However, investments weighing are sector confidence. headwinds on the and direct real the stimulus, and

investment near growth remains long-term opportunity term, for pharma, outlook advanced R&D supporting commitment the to biopharma, and is the the material new China country's significant expanding due uncertain development in energy and the new of to While industries.

towards market China automated solutions also advanced highly by reproducible results. and We desire a continue shift in the laboratory see accurate to more for supported

customers increase for industrial in in as prepare reduce in demand cost years labor to quality, solutions shortages ahead. Our the look increasingly China and are

these solid Our and long business very is term. well growth expect opportunities, capitalize positioned the on over we to growth

Now look Nevertheless, challenging. to as of expect things can remain XXXX, remainder we focused control market remain diligent the the forward our through we execution to initiatives. we XXXX of the conditions on we and

I to guided efficiently enhancing stepping technology We're new and teams Our best more our yet has the year our the with up our about on coming sales sales leadership stronger grown programs sophisticated believe that over digital employees to more we to what as with excited various pillars and be new Mettler-Toledo experience holds programs best which enhanced competitive customers continue Spinnaker position and fully expand be with and further also strategic be with enabled the year. and will over will innovation, of opportunities. the couldn't marketing coming product the tools is ensure come. launches the the are to future

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

Operator

with [Operator comes Instructions] of Dan the Our Arias first line question from Stifel.

Daniel Arias

in sort look in the how be second second half. but predict the implied grow this you next be half, China. maybe first pieces what's in And here start to comps know able just just in like think you're in cadence on to I It be sounds that, China of performance can for in? obviously, the of -- then out, just What's baking Are to will that it's And you hard you half down two about half. but assumed versus talk maybe half those sort the second just 'XX? can the can first knowing what Shawn, will easier all might far you're compare baking year?

Shawn Vadala

Dan. Yes. Thanks,

should we're And a year, high mid-XXs single China expecting decline down down first kind be quarter, the the to more probably similar Like facing fourth second in in think of do in year. the next to But a of are local I expecting the be topics we decline also the QX. kind easier the we're of So growth the of you half but very next said, frankly, significant year. in flushed QX be saw in half expecting some digit, what we market for we in of about in significant also comparisons. we'll But a out. lot optimistic -- different year

that was next at that were year. happening and by customers also some to to think element some we during of half chain I supply appreciate stocking of we that also out going an inventory of second there maybe COVID, flushed constraints with the time is the be get

Daniel Arias

a things I similar this less is delivering more pricing headwind, look for Ocean, talk there op Okay. or of whatever that gas margins. expansion you growth? is also you that? powder of tank, on Can organic there's of you're on when the it just that I the cetera. efficiency would imagine FX Blue sort appropriate things do just about And comes mean, or How et then productivity year in headwind then just term context a the to dry there out the too. SternDrive, just like in obviously, And the maybe and comes

Shawn Vadala

sure. Yes,

So yes.

look we with basis XXX of year, very when expansion. a On for up I margins So margin pleased course, this at what, we're think points. year-to-date we're our like, basis, our

range. probably on point basis, up year, a probably the full probably XXX XX it in excluding points, but over reported the For currency, will be be basis kind up of we'll a basis

one of As think like year, you if probably more and it's to you of basis -- for year. takes margin of kind I the we XX of currency, look in by next terms about operating Probably puts up next will the things exclude like as some our And be flattish. points. highlighted

very well will or probably do more a came of that a when in In X% about of for in the think this the down more terms X.X% Pricing of from next like with bit environment be so normalized in kind level -- for pricing. quarter, probably start X% next little year. the year, in maybe in about quarter, more to range. third fourth But continues It a probably we probably the we're then range, kind year. -- I'll

towards impact an has the of also organization. 'XX But the in that cost you're productivity on year-on-year 'XX. progress From of We're that So savings different in targeted we of kind lot similar very versus overall compare initiated volume. the volume measures. probably with you of terms kind what A pleased a is have it's perspective, that. right,

kind So we things if -- But of going excluding cost we next have bonus might the so levels also year. incentives level into benefits be to to but of year. we have next is from -- have like structure, will think on about we that bonus one our also bring overall have some do year you back normalized down a more and next slightly, we

going final hand, of a I this, like be that's then like as kind we into little go a the And thing think next bit on times So think we're headwind through proactive. go you when very I maybe is to year. of one

On very we when out be very mindful. hand, entered than this it. to the We coming mindful also stronger want of we're situation other of

excited And innovation. invest in we're it's we've still too. also innovation this that continuing year, as about. our a We'll some drive something next And We're our trying that we'll we not been see costs just always about actually at balance service that's thoughtful have lot beyond well. good next very environment. organization of in think I to year, in, things investing we're but past, that to in investments we're our the we're how and very and

step maybe going we I think kind other back, next a one right almost think the the have I mix there's good foreign And company. forgot, I I thing when is currency. we we year. And think of into So in balance have

question, in currency mentioned EPS I about of X% headwind you our kind to a be the will next year. think our

Patrick Kaltenbach

I might has if add, Shawn, SternDrive. Daniel because asked about

cetera. on strong our add shop X side, significantly floor on launched on data savings, to ], expect we on strategic to focus automation office and on the back just Just but automation efficiencies, et also talked I [ to smart when this and the year, to continue SternDrive, SternDrive with also next year stepping performance automation about we it up both Wave our contribute a pillars, drive

next the and running, So to is committed fully drive team additional program the very year. savings is

Operator

comes question the Josh next Cleveland of line Our Research. from with Waldman,

Joshua Waldman

of bit into Shawn wondered, 'XX? guide sequential the as to Maybe a more that on as that to and like into the and an on one into seems progression Patrick. anything capture from like relates QX then absolute trying I into markets 'XX. the 'XX. particularly guide, get we more bit I guide, suggesting trough can than the for it fourth the Shawn, a I you you're mean that to mean one seeing for quarter a talk it in assumptions like went you're start normal maybe better roll within the basis step-up things is implies

Shawn Vadala

Yes.

to less the at guidance. now, topic like be one a anticipating have much I to is fourth Each in tends in we're demand any, And think lab going about year. the fourth pickup going quarter think it year, market the kind pickup, our Josh, especially end than business. market the of think if is if think quarter, to in QX, right the we that -- in is normally of not I that we're of be towards there how look don't demand in get we -- you demand I market

we do more we comps. year we this So year. the year then early, specific the about face second that's look to similar other going year. but the I growth especially year. of the as the to year, the ourselves words, second the topic of get But thinking definitely In first fully versus this see very returning in the half of probably like half down this think we're one not to be think year, to of half expect kind to enter of next maybe too thinking first we're easier we But in half to as is much

destocking like whether been tips of And pipette portfolio, at of better of I whether I it's the or single-use kind different first some as kind dynamic consumables mentioned seeing of into in think stuff then QX And that this well. you issues get the on side. China in and well. year different was time, next there's bioprocessing, the as if be it points question, parts then especially the we're should in

Joshua Waldman

Got it.

comment in? is that Okay. it's on I the the been But any starts holding how pressures recently. business you growth of think risk a service spot to profitability softer And back on into and business then hardware 'XX? and Patrick, bright guess here maybe can that, slow I as we move

Patrick Kaltenbach

the Thanks, an continue service Josh, where our Yes. I'm year extremely also for organization question. of that's I and to proud definitely as we this area mean, invest well.

headcount our make sure have that the that services. our also deliver we can We and demand on on added services customers to

I that us, portfolio our our not go deeper earlier base of but that to of offerings portfolio also services at rate, course, and in improved contract. As drive higher getting help calls, increased our and yet and service the more some are products earnings of have out to after also a not we installed service of point that connect the we mentioned potential more currently only drive under sales there

telemarketing We cetera. campaigns, have established et

the So high low year digits Shawn, was X%, wrong, strong services. correct been has think me QX, half. for performing single for the growth year, in in first on full and up still rate, In the very on really that full if I'm the double-digit our growth I and well. holds It

year. tougher last in we're growth of of half strong facing Now the also second had compares we also because course,

more making go on again again, who are because being the on of of looking likely being still contract products have, think, benefits with opportunity customers contracts know the we understand have from the base us service that the contract, a they buy forward, seen We that Mettler-Toledo. our installed contract I after are sure under with us. to currently service to benefits not full ample Now the much are on customers

in I'm next expect the look also at solutions more offerings digits for to grow drive service. about upbeat we more there, continue will momentum have, -- to to continue and again, and continue sophisticated us year. in I'm would that least mid-single into [indiscernible] out complex to for opportunity services We service it very

Operator

ISI. comes question of Our Evercore next from with Kumar the Vijay line

Vijay Kumar

Patrick, you when a XQ, maybe peer from stepping on -- figure from changing be surprise or end seeing one on non-China? Mettler's perspective, to market like in out Trying China comment versus shouldn't given is the industrial? your guidance, are ex if a you I China QX seeing look this down you're pharma right? commentary, versus what in China what all you is Can Like sequentially at softening.

Patrick Kaltenbach

That's of Yes, biggest again part China absolutely have had QX. percent is, of is also decline China, good piece initially, important now declines I question, outlined, planning it. mean for we're Vijay. That's Shawn we mid-double-digit -- as the in to it we probably in we because planned what double-digit are XX-ish facing for. definitely one

mainly business, we see overall don't to the be see which this basically the we is and piece flush budget honest. action there limited from affecting we very should also lab account that other for year, by now, The customers

well. factor that into So we as didn't growth the QX

demand I don't of our peers a spending, they're So the lack also some at said, flush they're unusual budget that continue I of in that year, it's this a year. and market. Customers with flush several look end regard, the with are their of the similar for mentioned big into releasing QX cautious budget seeing orchard And bit and they just next to think year, we expect this and QX us customers but in together look, year. key out have had budgets. from we will kind hold to year of more this demand opportunities their there, contact not our

that's biggest think I probably the thing.

flush. lack the a budget of with together China So

the XXXX no into with, that in we QX have or in of still in long QX. terms plays disruption to would factored a Europe, be where the U.S. expect chemical little term, in that But In major the say, market, market. other how chemical we saw to and it's no is, we also out a would the say U.S., maybe in significant there into momentum I changes, say, I I slowdown market industry, it see a would the going bit unless I would whether

Vijay Kumar

And you helpful. being little ] That's the Understood. visibility pricing in end normalized assume being the like margins on gross tougher, flattish on -- Patrick's Shawn, I you. [ year? next hear for consistent points markets And a being we maybe proof right pricing Did comments should about year-on-year? pricing one gives a Like does you year? what for just given next

Shawn Vadala

Yes.

for next very So feel I think year. mean, I confident the X% with yes, I

the it. the well I of why look seen to leadership last value have I'm I And relative at all, in process think to the of go are the many And value digitalization. whole of more with, start investing sure of a respects. we portfolio through there's way, I always go But seek we the we're But market that's in we actually proposition customers make innovation portfolio what the remains differentiated you're metrics. proposition. from strengths that's a couple think we competition. always, sure a it organization you our as years our also and course, And we've in our I of And These we're the towards over very is course, lot move solutions, maintain more strong. pretty in and is familiar as that automated key. factors literally step terms think in into that portfolio summer robust that with different when back we very think of

of I our us pricing certainly think kind versus position so maintain competition. that And helps

bit at the actually mentioned gross of flattish, margin, you next be terms look margin, I but it operating I a In think up little the will year. if

Operator

comes Bank of Bruin line from question next the America. of Derik De Our with

Derik De Bruin

mean when is, [ one what the revenue sort assumed down line market point. of years? to different. much be it time just are I things ] and it for or usual to you the think think for it do different, Day, had X% a crystal up a China going that first that embed in pick assumption will broad of don't is rebounds? not had but for a growth. going agree with going that the know as to at was question. important. Look, that think November, you you sort your for guide did top the forever, X% raised been you politics it So last long in it's And once long-term of So ball, to Analyst I But today, like be you it? world guide like business do China looks guess that robust to I not How I sort prior I we're is be you as with have what down X% of I some different

Patrick Kaltenbach

important. it Yes, is

Shawn are and let have I'll the well. one, we China in for And then -- and long to talk to X% I in in there here single start term. is a in that, for chime -- when factored think we Look, growth me as growth relative that very we that number think about still equation mid several Mettler-Toledo, Let high model digits Number that. reasons long be long-term term.

last again the we I rates probably midterm that say have in But X years. this the that will unlikely is would see growth it's single China. over high not digit not we seen in So the still,

are inspection if opportunity software, continue to account maybe market products industrial And should positioning product unique we there, demand software, in strong lab see have for we to a piece the in side. in into we around story into automation. it's give at the industries, us us get demand underlying very look the think going for that products faster-growing that to also underlying on given have important taking term a X.X%, share the strong out by time. see whole portfolio also are even and lack where And very, we just And is -- very growth lab if market the capture remember to whether or on range X% our say, X% automation, well. to that over I and still different other at the and market, the will populations, continues share. long the portfolio, business, we driving something you working These life us in but science of you that we will an labor both The of aging as the shifted related digitalization side, differentiate the out where all also market after. there that are the industrial mid markets That segments over sequentially

the have I portfolio. think we right

our the years solutions are also X the increased to investments We investment drive have last increasing we to our and new over significantly market.

You will differentiation that see also to a profitability. year that, lot solutions coming also help us drive growth next of believer exciting because a but I'm will strong

Shawn Vadala

in changes of global opportunities a as for too. there's landscape us well, course, as company, the as there's And

for businesses in outside can reinvest already as to more we up companies countries China, of too. of as kind we've opportunities seen So those our well, in pick start areas maybe

the leverage to I So pursue programs to are make opportunities where there, for us and an keep those think and sure key our always opportunities. identify eye is on the we're

Derik De Bruin

Got your business is a cycle. it. And follow-up, short as relatively

build or aggressive, the tons where you for a into going surprised than to on how about which of normal sort of pharma given backlog. your biopharma on question, You of back of hear the also, say you bit how of like normal the a this your other half can half my And of relatively frankly. replacement talked understanding confidence with a visibility And particularly getting Do back sort like in returning curious don't -- like is I'm cycle. comps the that ramp, year. quarters, from? you of what's I'm next and little what more to we just easier just -- you is little same next sort couple business tougher into to visibility that just you're regard and looks

Shawn Vadala

some on typically I let kind hey, think we're point add months and I'll of backlog. sitting the worth maybe I only Well, mean, -- start, X.X about of color. Patrick understand I'll I

next here. start part. versus you So a to a here at step like I look think at ourselves you CAGRs, of like of the type XXXX, kind But back this in get see see our you we year. we of from take kind I half second like are the even X-year mean, of I what if And year half that look starting you when CAGRs, moderating to see multiyear consistency more back, too, if

high at I that so we And is level, reasonable. think think that, a

flush we throughout right funds kind from and we the the a that there out reinvest out going topics world, of think be in predict that sales demand is are in and to particularly lot like, out to the environment from some what our COVID. a the will question and out going will maybe inventory have that it tremendous QX look available. easier We what in unusual we coming as but to I interest comps. of also faced China think year terms there's know amount I'd talking comment of quarter one other hear have think people of of of with just say a we excess I We at system maybe the that see that probably And in activity just a It's to customers lack when is of of There's there. for next can't quarter, to still expect more the this wouldn't I end of we're a that the be same is start setting there. we market organization uptick now. And year just year's be of terms fourth quarter fourth group like fourth up to is then normally

Patrick Kaltenbach

them. we that the back that we in in And of mean and they Definitely. to we ] seen cycles in our of pipettes cetera. in destocking terms for and normal what used, example, manufacturing. customers are order back pro it clearly may you're that don't most are think business, have order et add in I around we model inventory sensors to Customers on build is more have year that see if seen [indiscernible] centers. something behind use is also consumables normal excess here, That's anymore. us. from pattern in [ But these for I and the up census the a we topic hear

Operator

question of with comes line from Sykes next Matt Our the Sachs. Goldman

Matthew Sykes

maybe where you strength we're just chemical PMIs. things on Europe in to the was first the 'XX core on on just that core seem But data of getting, some about there. but industrial side, Europe Maybe just and there and and you've talked the the side? points Can side, on about be particularly the context talk deteriorating the there, sort industrial for relative

Patrick Kaltenbach

our to EMEA our and actually this the year That but I'll ] [ to we -- also much also to that more into start -- spinning segments our cetera, year have high had and had areas. last address a share. some some comparisons -- China, with concerns us QX good -- sales lithium-ion team and where performance on et easier Actually, we that it over in in sales for mainly that have in market, leverage year, X Europe have seen And team versus to batteries, held the prices was up seen. help drive market. like other Europe very last they compared yes, opportunities factors. you said, also goes the the we we in it's Europe, to Number capability shortfalls strong continue but it quite we -- very growth I our U.S. sales compensate market as the markets, quickly impact think well of direct had energy us. direct hot our more capabilities one on Remember, to market seen going chemical which to would referred than also our year end it's one, in

We more expect QX more are, a then a bit cautious of course, also moderate on much XXXX.

also Southern Portugal, healthy. for would it's -- the example, we Europe, why You're it's Spain, next sentiment for is The pointing downwards. year. also I go Europe, investment us, right, say more PMI across amounts which if quite you significant are cautious It's quite to are

lot be. example, On would of where into forward. in France. this thought in to battery hand, the which some plan within for and semiconductors, lithium-ion will XXXX than pharma, to I think excitement, the but also in put place continue year plan invest drive a also technologies these has and of biopharma growth market, moving they energy core we But Europe France it has other Germany -- been see Europe, slower in we France

I in long next still Europe year, holds growth say, to expect for overall again, moderate. Europe. very I'd it think that So But low we model our term, mid-single-digit

Shawn Vadala

was for exceeded and And for on be again, industrial, next year question say, really it, your expecting hitting answer specifically, that's, core flattish some we're on and growth after for up Europe then a of total little frankly, probably year. top the bit to year. the year, probably I we're going specifically, overall. since to numbers I'm just Europe to coming looking more our cautious next for in more year clearly, for year And this solid slightly expectations next for it at

Matthew Sykes

at question then underlying going be recovery? away, assumptions growth you some the kind back And half just on of half to the then were year we kind possible? context up of Shawn, if the for of in that Is isolate could of demand half Derik's on inventory following are the visibility in your next -- level second of that that look it. assumptions. maybe comp just and where second Got destocking there might impact what

Shawn Vadala

for have next of trying specifics I any year. for give Yes. start I'm of early to sorry, course, to our Matt. that in level don't model. And very it's granularity quarter

how what to I we know the we like try early, helps everybody know but as about of and think time your at of course, we'll as year, recognizing always it about we to trends our feel think we on least into you to year, year. to we at get it's more share this we enter what's refine But helps as learn the mind the it organize models. things

Operator

the Our Citi. Donnelly from comes Patrick next question line with of

Patrick Donnelly

for Shawn, one you. maybe

out and kind in maybe too. know and segment terms breaking Europe that you I helpful the mentioned you kind subsegment geographies, next just China. just to It's mind Just pretty of usually do forecast? detail of year, of hear

Shawn Vadala

Yes, sure.

gets just repeat to it. these what bottom like So maybe go but -- to everybody kind some already of said, I'll I've of I'll make just sure top

the year next year full the think growth sales for I flattish. overall is So

up we And to start so if expect be lab, we with lab slightly.

industrial expect core slightly. We to be down

expect, low that. From first the inspection the at digit of be down growth up a then as digit, expect then slightly, it more half food a up And be expect mid-single We digit. I be decrease bit and little Europe second the perspective, be second retail to -- we in half single high expect and than mentioned China in to product we with probably in down year a to geographical single might slightly. of to the least Americas year. we be And the bigger the before,

Patrick Donnelly

Shawn. Yes, terms in I of on it's earnings I in got looking side, of you. X/X And one at the year XQ just then mean maybe years, the typical earnings. about

$XX below bit a here for You're little XQ.

and I'm as just to what You a is about relative take to the earnings just kind that for trying that point away jumping to $XX. more year next think gap bridging like rate, down as year for a seems I that of holding side something guidance XQ It XQ something next off run year? the get goes on The $XX. to right? guess, guidance that suggests imply. next is there to

Shawn Vadala

trying Yes. year-end dynamic try And extrapolate. talked typical has having near to take we I fourth like you're that quarter quarter to mean, course, about not this market feel of low a the and I demand. with

that. so of And try do to little to be bit any I'd a correlations off cautious

building a at together. more is levers we're different it and pull way the to granular lot course, all Of up looking trying it

still to stay right that the we the to mentioned think do term organization and medium we're for regard. is before, is striking I here And a so excellence dynamic, And we I we provided. of of the lot but amazing. company. the operational guide mean The course, there's just in try doing that impressive long guidance. agility moving feel culture and the I of And that about well resilience find good amount the committed too. very we've is with things of inside I And the are like think parts, amount very balance this really and

Patrick Donnelly

Okay.

next So XQ a depressed I little number seems you maybe of than more how think of guess. like year, a

Shawn Vadala

Yes.

Operator

Nephron line Our from comes next with of Meehan Research. Jack the question

Jack Meehan

through quarter. the impacting demand and called went So one the of lab third closures quarter peers is into they your fourth as out

if into group. factor outlook? that's the curious was a just kind You you're amongst that's visibility that really best in obviously into probably regard, this, good have in the playing what I of seeing the peer

Shawn Vadala

I'll Yes. Jack. start, Maybe

a a I part on our geared about I small kind know, of biotech maybe really research. that's as you early So our heard lot some articles like of not it a certainly mean, isn't business. effect start-up smaller recently. mean towards thing business, I've that is of but lot only a there's the gone But of of business, has big pipetting our on really portfolio have out that

for we're hearing So an than us. of that, not impact But anything. other less

Patrick Kaltenbach

Absolutely, not.

Jack Meehan

could I year, a million Okay. over decade, or this the And business give just or trending on obviously well from this future we back some line pull there here before swing below then you so Do take, Is there. been retail, forward get has the last $XXX equilibrium? food above look a you're risk as this This view trend to that can that. years?

Shawn Vadala

we've it's accounts had actually new in lumpy, the It's a being year. great like always some a beyond just business been and some see where U.S. lumpy years down we've nice have It's in But recently. won to retail Europe.

great the with job really So done has actually team that. a

view have little that bit. activity, comparison, next going forward, long-term a on doing year see down But project of single-digit But in the I it's We be refresh it added a received I really visibility is think have I of well because say, pleased with how out portfolio, or kind So have never long-term in of you another the projects as growth retail. it's has then think but the on have innovation it's have of some that -- then marketplace it's would last always lumpy, our couple to won still couple well year year. new been years to come really in really anything retail And the good we've of from well, in here. too. have nice to to view that cycles, our we the that given I investment extrapolate this but portfolio also as a things a should a And the like lower better see we always we should of new still but business. cyclicality like going

Operator

Our the with of JPMorgan. line from Vatnsdal next Rachel comes question

Rachel Vatnsdal Olson

to wanted here? CAGR there just your I up, Derik's of and first gives the month few half how And see could exit mentioned segments into November confidence the in spend a then some performed the September next so of minutes back into on question, talking ramp seeing October your year. So you you that side then the and if early about far for volume stabilization during and you rates

the just exit just you rates and likely can a some talk So sounds are given XQ that really Or here, the about you're bit like were it looking those August are July CAGRs referring to about at overall CAGR? stronger? you of

Shawn Vadala

Yes. with second your part maybe question. Rachel, so the start of I'll

taken segment, on So it both through guiding months. terms I business. I fourth a the kind QX And of year. individual we too the step more certainly color in run providing about in kind to CAGR of of say looking entering, how little we're judgment fourth how moderation were parts guidance to and at as next to all, guidance or numbers And those usually we're then from provide as kind just our reasonable perspective, quarter, and looks at but normalization think upon by haven't maybe for what then like in as just terms really quarter and of a about touched we're bit we of different the own exiting we QX I maybe rate kind applying saw the But on that like that understood much a us if would a don't here. back helps that could we just thinking of try of comment of to we as and

lab So We're the at down kind range. in at down being a the we're for of fourth digit. looking looking quarter mid-single being XX% industrial core

down single growing the inspection from mid-single And with down but like digit perspective, being product mentioned I've in being then geographic geographic range. low the Europe And of already China digit. Our mid-XXs. a XX% single a a down from down being digit, retail Americas high being perspective, then kind with

Rachel Vatnsdal Olson

then year. it. first helpful. more want And second perhaps I bit just dynamic to half, little a on half that next Got That's

of and is in step-up again, off pressured industrial the the next about and wanted being China in businesses. we meaningful those talked of starting optimistic growth both demand lab year. half a But You How should driven the to accelerating? versus the segments pretty then growth around see the rates half about that in press types of comp to dynamic back get on first I of underlying of much And year? those year then much in really how assumptions

Shawn Vadala

I industrial up side, before, said for to the slightly, I like Yes. lab on up mean, I expect think slightly slightly. product mean, the flattish industrial full we we it's expect down be year and with going I to overall, core be inspection then and

I seasonality think is big a be of course, next part China, year. like of the to going

be to the refine -- half to the regarding in don't half in we'll provide second arrive you so as we color. we other the earlier, enter models at some And said share And like year help then granularity have But how I of more we and provide expect the the of down the of and specifics said and year. as of would first things would like before, up can I year, have more visibility that. I we relatively

Operator

next with of the comes Schulte Our Baird. Catherine from question line

Catherine Ramsey

spend maybe being about around know customer equipment. about new product mentioned the have what with group manufacturing and being a you that food first, for customers in I year. to little remained Americas in constructive outlook slightly more inspection gets up them talk on start the you spend? But talked Maybe 'XX cautious next

Shawn Vadala

Patrick Yes. start, up. pick Maybe I'll it I'll Catherine, let then and

do couple about see say years. lot enough expectations kind save going year, a that. to a to over this probably our talked by we've on hey, I'd of quarter the into pressure the this fourth we visibility certain food and that lot a overall, have but it's segment. So time, of manufacturing last of exceeded we degree

quarter in with frankly, or That in but of year, seeing So say, both has for this of a Americas, negative of cost should results structure, pressure own inflation. I terms their been also we're under the lot Europe. fourth own their challenges the declines, in market segment

other food interest You've just lot some XXXX, good not things, of where a antidotes example getting kind are is innovation plans, as enter a the the lot of hey, held of a certain lot of this to approved. into portfolio moment. seen of good at closing and getting coming our executing a Things like a team of really degree. growth But there, they're And say seeing but plans, there's restructuring also off we're from companies a of outside Americas actually have the we we out. the Europe, nice in lot like,

in the think lot different inspection our areas of a good have of X-ray remarks. we I in business, We in products prepared talked it product about like

some products out some new a stuff were show from And being We really metal at coming and very, antidotes in are innovation detection guys marketplace. of We heard products. market trade recently about well. in that reception the the good also very the as the good new and well just have of some received the by updates yesterday

positioning. a It's and I market So to what little down. and can that. we really them, bit it's more with little difficult doing, recognize But been proposition they help still while. productivity, up the frankly we environment. But Like value we're think that we the is good about need these control right? much there, help feel companies and a a for been just -- like we're what can It's it's a how

there. in those as address they of safety So And needs too. I seek as help focus to certainly in you protection, that think the well, food And the brand that's on just can things companies course, regard. see then still we and that news

Catherine Ramsey

and your how it on is update on any performing PendoTECH And Great. going Okay. forward? thoughts

Patrick Kaltenbach

this, take can yes. I

mean has redevelopment performing with went I over PendoTECH. really for years. been well So the PendoTECH again, us integration last

strongly be Of biopharma on what have offering shouldn't we before. That the there. a underlying we to with is have surprise. a course, years the they are and done also dependent we market, compared expanded slowdown the seen PendoTECH But

portfolio. their new have within parts We

have et portfolio. cetera, not it's only monitoring pressure So They now their UV monitors, also sensors. in

negative see year, we strong. last portfolio And different future, really, expanding growth of PendoTECH's So this course, also think are is optimistic year. demand we while, we seeing although compared we quite lower of application the really are to course, by it on rates,

Operator

closing like would I to now turn remarks. the call to for Adam over Uhlman

Adam Uhlman

our of have look Thanks Great. any to call be replay And seeing available you on joining events A please feel to for conferences. Thanks. us will the forward at out me, and today. if questions, website. Thanks. future you and follow-up reach free we to

Shawn Vadala

you. Thank

Patrick Kaltenbach

Thank you.

Operator

to and disconnect. for This like I today's would joining thank concludes for you presentation, thank us. today's all call, now speakers you and may now our

Mettler-Toledo International (MTD) 10 Nov 232023 Q3 Earnings call transcript