MTD - Earnings call 4 2023 | Mettler-Toledo International Inc.

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Operator

Good morning. My name is Audra, and I will be your conference operator today. At this time, I would like to welcome everyone to the Mettler-Toledo Fourth Quarter 2023 Earnings Call. Today's conference is being recorded. [Operator Instructions]. At this time, I would like to turn the conference over to Adam Uhlman, Head of Investor Relations. ahead. go Please

Adam Uhlman

good for and Good from afternoon Thanks, our morning, call Thanks joining today. Switzerland. Audra, everyone.

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

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

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

call Patrick. to over Let turn the me now

Patrick Kaltenbach

of we financial our night, appreciate Page and for our good today. joining results, which reported Last presentation. you outlined fourth Adam, of everyone. on our We quarter X are you Thanks, morning, the details call

expect provider, to largely external transition to results the significantly recapture we which a service new announced, our the in quarter. fourth previously first quarter impacted logistics European As

not core were expectations. weak end Market China and our with demand these our impact further. in shipments, and across in deteriorated and food chemicals, to pharma results the biopharma, Excluding remained also have has of manufacturing line appear does markets delayed of our previous but

conditions of forward, Looking and we half our to the soft begin in we to year second expect easier we first growth remain as comparisons. sales half to the the expect return in year, would market lap of then the

focused are can We us nurturing control, increasing our corporate continuous things and emerge of through on competitive innovation drive market including the and our confident advantages culture. I'm we unique market help recovery. improvement our stronger gains actions share global will programs these and than

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

Shawn Vadala

everyone. in On currency in Thanks, declined U.S. basis, show #X, in by in currency growth the currency of Europe Slide the XX%. and Patrick, in in sales a by and X% Local dollar China World. Sales good of $XXX quarter Asia/Rest sales X%. On represented in increased sales local quarter. decrease the the we XX% which as XX% declined currency sales XX% Americas, declined XX% million, region. morning, growth were a Local sales

World of declined full currency for with currency X% X%, sales down XXXX. in year XXXX. sales Slide for decreased the down and Excluding Asia the our Americas in Europe sales in Asia/Rest X% related declined approximately estimate sales #X, new in sales the of we Local shipping X%, a Europe logistics and X%, in about provider X% approximately disclosed the the XX% Local X%. region we down show delays impact to Europe, with QX down previously down Americas China by growth down XXXX, the XX%. On approximately

X%. On flat, Europe Slide estimate approximately #X, growth X% Asia the summarize down currency with we we sales year X% full Excluding QX, Americas our local area. logistics in the by decline and sales headwind product up

X% product XX%. decreased down the core with sales Service industrial decreased quarter, XX% down Laboratory the X% Industrial Food inspection and sales Retail quarter. grew X% and in For grew X%.

XX% delays, XX%; logistics down local by Food product and Industrial down Industrial inspection in XXXX. declined Retail Food Laboratory Laboratory sales for product X% estimate with next product we increased inspection slide area core grew with sales XX%; Industrial declined the X% XX%. decreased full flat. approximately and core sales sales declined product year down X% growth Industrial Retail XX%. The Service the X% X% Excluding grew sales currency and shows XXXX. and

was grew Laboratory XX%. Industrial flat product approximately across sales the inspection; declined Industrial delays, and estimate core product Excluding both X%; and we logistic Retail Food

me SG&A move was in margin in decrease the couple summarized decrease to the the million offset amounted benefits our lower amounted XXX is due a margin XX P&L. $XX.X rest million our million, the to of Gross and on $XX.X part XX.X%, million Slide to to the in of the basis $XXX.X interest decreased XX%, local #X. by Adjusted due year final Adjusted and the the initiatives. to X% income million $XXX.X volume. A decrease. and of initiatives from our now million. volume, cost amounted in quarter, profit in comments year X% savings in pricing which points was Let compared cost-saving local $X.X quarter, to amounted to Amortization a quarter, operating operating was expense P&L, prior currency compensation. decrease points lower in represents to which basis $XX.X over XX% variable R&D positive prior the to a a on is other from of our year. decrease prior currency which a amounted

approximately unfavorable the On the to is decreased of year. on prior XXXX, in approximately for X% adjusted cash quarter, and cash rate in flat, covers over currency, operating X%. foreign tax and per EPS income. year-to-date as slide next diluted the from of favorable the EPS for tax $X.XX was income working the net the income XXX% timing adjusted flow. In a currency the of effective $X.XX declined sales a a timing $X.XX let prior XX.X% the $XX.XX adjusted unfavorable Local in amortization, conversion free reduction items now costs quarter. year. Adjusted X% was $XXX at declined to declined year, basis In for shares was EPS was adjusted to before operating the cash last This currency discrete $X.XX, the XXXX, quarter with Our to results. the for XX% adjusting a and intangible impact That approximately Fully conversion our in a was decrease due for the million, of illustrates XX.X purchased $XXX.X or basis, EPS excluding up XXX% reported year me to $X.XX rate restructuring the is our working P&L, year, of capital due a share of year. Adjusted million, flow of option exercises. The on which from net flat stock adjusted exercises. comment X% compared X% year. XX% of free option over million EPS the includes excluding prior capital. quarter of decline headwind the XX% adjusted margin in amounted flow amounted Reported a

for for the to me year. now full and first turn quarter Let guidance the

year we fourth delayed seen have the expect logistics catching this third-party while quarter provider, good in the from shipping we so our quarter. extremely recover up and first to continue First, are in far on disappointed momentum to largely shipments the in delays by these them

the we other logistics global most economy, Secondly, and their our East the core for end expect on costs markets We're our year. and and watching across given Middle the start the could closely potential our customers. impacts war be off events with and cautious to other also of soft the customers to trends have in investments suppliers

the of a programs the to many reminder, impact demand. as year we Lastly, cost implemented have of lower half during last second mitigate savings

and expect to compensation to these savings face also XXXX, We in continue but headwinds variable resetting add maintain inflation. and from programs to

our to turning guidance. Now

to the quarter in X% quarter. delayed approximately local This For expect fourth forecast shipments XXXX, to includes the currency we the decline sales approximate of from benefit first an X% X%.

We expect but EPS headwind to approximately headwind would a sales, the than of rates a less the $X.XX be at be recent range $X.XX. spot adjusted in X%. adjusted first quarter of X% Currency EPS to to for to quarter

we our previous local from the is currency year shipments flattish guidance to from hub expect QX sales XXXX, this For grow X%, year. reflect of of up which full the our logistics approximately from to our approximately into to delayed X% QX European of shift

to the approximately adjusted foreign of year be to full to expected $XX.XX X% expect EPS $XX.XX. an growth exchange. in prior unfavorable compares adjusted This guidance to of range EPS our which to includes We $XX.XX of from headwind $XX.XX

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

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

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

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

my approximately continue I'll it in of now side, We back Patrick. to turn XXXX. That's expect and to it repurchases $XXX from share million

Patrick Kaltenbach

Thanks, Shawn.

on Let operating businesses, our start comments starting with Lab. me some with

categories, biopharma. demand remained expected, and most quarter, China. demand Sales continue across all geographies, in had the we customers see and in soft our Lab pharma across across weak of most fourth As product to trends we especially declined especially

expanding have which year many market, programs products. launch conditions sales saw and new capacity. we market focus control, This we on and innovations to the been past includes exciting new enhancing upgraded While and offering our things bringing can weaker, and to marketing service our continue the of

emerge pipeline, growth are market investments and their We innovation even our periods. during maintain organizations stronger excited believe during downturns we that will about recovery

will were of and Sales this significant delays forward, Industrial laboratory of guidance share year in demand emphasis market Industrial the headwind had Core past customers' in resilient declines which despite Europe relatively we data excited for the has are been our a we have you logistics -- European to indexes. investments over from needs developments with our continued for on the a quarter integrity are our business. to hub. with coming and gains purchasing and previous going particular Americas line be manager in the in automation share from our months. Switching additional confident supporting requirements, Our driver despite

solutions, coming interest from looking from solid advanced year. onshoring customers and benefit expect near-shoring to over We customer investments automation for we in see our and continue to the

in Regarding have in the demand demand manufacturing inspection weak and soft food we seen product our customer business, Europe Americas.

We new with target segments a innovative on customers refreshed have and a faster-growing portfolio solutions. to of engaging focus continue

negative year due the solid for project were the European hub. logistics strong, particularly performance Retail Food had from Americas. to impact our in the Lastly, results excluding strong very We activity,

excluding Europe, estimated resilient our European in Now by impact we were expected, year. let the had additional make than of me Sales the delays much for some comments geography. softer logistics hub from following performance

our As manufacturing mentioned food customers from earlier, demand on weak business. product inspection weighed European

from we Middle Europe also Ukraine in East. quarter. in Lab for cautious region. the saw core low We in economy and demand Additionally, for our continuing Industrial the on softer-than-expected additional from and due PMI The readings the to the the the potential conflict outlook for the remain the impacts customers war in

now Turning Americas. the to

Our excluding results Retail robust due logistic better expected growth. estimated than the core we were Industrial headwinds steady demand to quarter, slightly and had for Food

well industries emerging positioned from growth onshoring are increased activities. to we forward, demand capture Going and

we in the Finally, China we in very expect weak has we had as our of results than better anticipated. were the remained World Asia reduced the of biopharma first for than declines Industrial were core Rest expected demand Pharma and year. less and half to continue demand China slightly sales had and

the market Our team doing job adjusting to is current conditions. an excellent

the growth my for region. in confident We our concludes comments in on fourth are for quarter long-term -- That business the the opportunity the results.

identify, the to with and enhancements examples opportunities we and as our are program next deeper like we prioritize analytics some and growth of share sales set sales a our of need and I'd marketing for most our introduced set have you a underway. To the reminder, few that to initiatives on Spinnaker pursue base insights Now tools, of and the processes of customer and profitable means sophisticated wave start, to attractive to teams. and business a ability significant fragmented the

important initiatives, that sales, drive We to and improvement at reinforcing and competitive waves and our program global our very builds new culture, to specific heart opportunities of on initiatives, the and us cross-selling previous increasing of new on constantly enables our waves an market program in and opportunities that much have our and periodically it program. refine existing Spinnaker gain the our is our enhance strategy strong of share. our growth is enhancements releasing advantages. We foundation customer of and focus customers. Spinnaker excellence sales a service Continuous is marketing within part

We of share have and and on improvements leveraging some guidance programs. topK the wave are experience. currently initiatives we underway. Starting offered digitalization tangible making with we focused with our force This by of to efforts. is of processes like digitalization launching new Spinnaker, our examples to the sixth which I'd are enhancing the year, possibilities multiple customer you further sales

opportunities These automatically, analytics by leveraging solutions, data qualified internal and deep and are are in addition into own alerts software various marketing reminder, and actionable topK generating opportunity leads field generated program created external are and fed about proprietary sources to our a sales that our fully databases. provides teams through our learning data CRM. specific tailored activities, our As sales our investment with sales alerts

areas to big With to unlock our high provide background significant because our each In very our sources features sites improvements include installed a equipment penetration by to in other of for also us teams CRM a business, is data of rather us additional including specialists, smart timely businesses, opportunity prioritize intelligent expansion real-time our product service analytics addition digital our provide to data aging opportunities. This the important efforts. also sales and program profile cross-selling of is support for capabilities sales including conversion leads to reports big across have our generated prioritization existing transparency to our to wave including data helping warehouse, Other potential enabling base. This engagements on these our tool dedicated having capabilities on sales enables our follow-up our Spinnaker expanding categories us. of wave but various our feed campaigns field team and teams. more features the own expanded on customers is with data optimize this their target of next processes still Spinnaker Spinnaker customers, is most across replacing help rates. Today, cross-selling of our across an topK additional of data and for accurate ensure marketing activities, growth low excellent cross-selling product from big colleagues sales areas to Spinnaker leads sales and

Spinnaker experience. are also a several advancing enhancements to customer improve customer from our we important to Now perspective,

our connectivity We digital have previously focused on increasing customers. with our

additional experiences value that across see or service insights advanced or the to platforms be deep impactful contract now customer our and access dates Examples strengthen we instruments, create to However, base renewal that ability known provide further certificates their to relationship customers of opportunities proposition. will calibration coverage Mettler-Toledo overall gain installed last or agreements. include it offering

to consumables through experience order digital By integrations product our enhanced levels into and aim buying from today, entire XX% customer orders, for mainly systems providing we streamline various of efficiencies increase productivity a efficient drive types We and and offering complex We our to our less process. interfaces process out procure-to-pay integration already our punch to about have the invoice also integration, and receive seamless for customers. customers. of products and

browse allows catalogs, portal to real-time levels in review customer orders product inventory place. Our and manage all customers one personalized

configuration end-to-end order product online and and efficient include systems intuitive includes selection orders of and Our offline management tracking both process. management and an

sales technologies through easily to can and product a their find not wave simplify new assisted the next Mettler-Toledo our expert. automatically information meeting make click For of improving order provide by enhanced specialists, configuration require selection experience they and element informed at includes use tailored facilitate tool smart to need our rooms process of the specific a time do from book less digital to all them customers customers Spinnaker the that that complex chat or the support products products leveraging decision. any representative includes guides process sales with This with a functionality, an to ordering. One

virtual instruments, also we solutions, complex more demonstrations demonstrations providing on-site that of customers in our are to very provide For addition effective. to

very way. Customers gaining continuous deeper, more intuitive a have demonstration a frequently representatives curating technical a in focused, find features, adjustable customers' by already it enhanced accessible and of we it new our addresses of a experience, reducing and that customers' our of reported questions helps easier our demo our makes of significantly revamped product have time series more to asked studio part improvement, approach. based virtual this This on questions. demos, menus concise an the our efficient it instruments most preparation deliver understanding As details making more showcase with and setups and comprehensive

we their exceeding sales through customer for of in our Promoter for -- meeting to to our This Lastly, source loops with for and step we to teams. are and Net already be proven to also Scores process are a program. ensure service with feedback expect teams, have our has journey and implement sales our expanded addition very customers' we do we what every already expectations effective doing we results improved begun what opportunities product of improvements,

you time teams flavor competition set are customer So to I examples continue marketing expand they that our new the opportunities relationship. with while ensure win will our of and hope these a rates most with the much initiatives our Spinnaker spending program. our few give their We broader new optimize further underway for sales and strengthening lead our our over attractive and are believe

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

Operator

Meehan at Nephron [Operator Instructions] Research. We'll Jack go first to

Jack Meehan

be to for the first by you it want your to and get forecast just year? would Shawn, the great quarter -- start for segment

Shawn Vadala

sure. Yes,

start me business. So the let with Lab

year, mid-single to single digit. digit. be So to in expect I'm And down in mean, for sorry, -- QX expect I to low Lab full the it low be we we up XXXX QX

QX and be for single single QX in down digit for in year, to look the Industrial, and digit. And Americas be the expect geographies, for year low at year, QX XX% expect to For we flattish. about down the to expect digit up the to single then Product for to full inspection, Retail, we be flattish. down high digit. full full digit and then and mid-single full the low to if mid- year, we core down mid-single then be we expect the for QX down be we And

in single mid-single Europe expect the full the low up low for up to in be in but digit -- We QX, -- digit year. to

We to the high QX full for in expect digit China mid-XXs year. be and to down single low down

Jack Meehan

then And follow-up, what guidance full margins? a walk through the pacing of your And year as the what Excellent. for kind EBIT us just does just year, quarter first bridges can the assumed like forecast? you to throughout

Shawn Vadala

Yes, sure.

So significant to in first in volume I first first -- a going course, the I mean, -- in guess, year. the quarter of the well, have half the of we're quarter, decline the

in probably So for to basis be down XXX, XXX XXX the first we're points, the range. of kind like quarter, basis over point going

currency too, to the a first Now big it's important understand, like pretty quarter. on has effect

So our a we release change it's as the margin into quarter. first And out the per second going the to a of to bit especially negative half we to that's year, headwind I quarter. press the X% earnings the in fourth think headwind called probably in quite like XXX% But share. get

of margin And currency, like the a the if the a range. looking kind probably bps the range. for XX-plus of year, like up it's in operating you XX exclude so kind kind kind to of And of in bps be full at we're

Operator

our Dan to Arias question from next at Stifel. move We'll

Daniel Arias

to in it out Shawn, X outlook guiding like that the to be be a add the dollars it to of But million need or you to growth. and it you X the up that maybe point have would does order you the or take seems so same, $XX guide, to just back if get points for to. going you're XXXX, the

partial So do logistics you something a quarter else see is now there the issue? last that's offset? exclude versus the you to amounting How outlook when

Shawn Vadala

-- as quarter of the expect the shipping first Yes. we you we built mentioned, the fair Like largely this delays Dan, it's to a point. year. benefit

that as acknowledge year upside there's of of the we of. base because the to also get like to addition given kind growth quarter, benefit, end the in the a to so growing in rate the off year benefit we that And fourth there's guidance we're full

at We early kind in we we're the step market. felt all still yes, when it's at when like just very this mean, business there's We the to remarks the various to but uncertainties of still about But I from a in good. bit back in But of we're just the for while I year. the feel still kind not we the be prefer year. But -- we little really in prepared of challenges talked in of confirm, we're talked of in remarks. seeing not early about product the it's new launches And half these year, Patrick back want we like second just seeing cautious weighting positioned year. new look prepared that point, the in that, We new second anything given feel still some well the the the half. anything

have mean, really that I spent little lot we're Spinnaker the talking but well. time corporate working We other that exciting there's programs about bit a a as remarks, in X on launching. programs we're prepared of we of

second I bit bit. how we of little think upside. but the see well to feel Yes, want for cautious play things we little out to And a we positioned year, bit acknowledge, are So little we there's just half. start being a the just like a as we're

Daniel Arias

Okay.

a estimation? passing to be but that fair full the than along logistics don't you amount before has looking the in or clear end has just also makeup than not for that less anything you're you market less of confident see before. Is offset, here, feeling the growth that So you

Shawn Vadala

I fair. Yes, that's think

Daniel Arias

quarter. just be which the just of color thoughts give end it just an conversation, if changed a updated has you a -- sort China when but to ground And at level versus get et it degree then the great be maybe market on hasn't to on could on from street would an would it in get on could view comes all, word it standpoint, on any last the to follow-up, the sentiment as quarter Okay. cetera. rebound, would Maybe good it you

Patrick Kaltenbach

we that. -- Look, any with are conversations and with sales in reported course, in management in they there what China situation to the during December. I from in the the been our the we're the growth investment weak, see have reduced conference. Clearly, as the JPMorgan not on headwinds deteriorated has had period. There some from right at spending stimulus still the foreign if changes. seen would well. of moment take perhaps team a as facing is quite a and there's I COVID biopharma. -- there. of local lot especially continued I'll we're significant China is there's say Shawn But government, still many of But pharma, has been And facing at a now, where there situation uncertainty team lack from perspective, still very

And just on market. to demand real focused think weaker at is I the softer estate stabilizing that itself So that moment. also overall, economy a in leads the

hasn't overall, But changed. it

I in because much core than the 'XX has As be half our my for outlook and comments, cost half but expected there -- we a have better second we first said -- QX, is easier bit still compares. us in a the of in been actually on Industrial bit easier will remain

had reminder, in XX% had As QX. a been -- year, QX down XX% we we last in

first down. will the that be half we told year, you This

will second compare. will in an now And for be us XXXX easier the -- be half so

good lot a we drivers have I strategic of there. think

as we before, has have in long you that be our our there's And the continue also strong single-digit are We that opportunities. market -- that gain have to a China able and we'll there. very high programs, with to term told products share growth market team, confident has we we

Operator

next go Derik at De America. Bruin to We'll of Bank

Derik De Bruin

the not what's little just about And it -- and about like you for had I to the or just what issues guess, you made really -- are can mean be of but Sea, through the you -- the -- that. Middle that can you've done I East. do the some about more and of think Are do talk sort I to ameliorate mean, sort much to And as So don't your third about there? fix what you fix I to around you seeing sort is? of logistical what is some are ship think these Red of of bit just you that? comment like party confident talk going You you a allusion to sort of you sort risk issues

Shawn Vadala

Derik, start off. maybe I'll

our have coming of I'll Sea that maybe So customers? not start the course, we related costs of have is year. question East. little that the going of Middle to with will through as really thing It's the freight to the bigger on really Red with I the Asia we and higher really latter directly as about what our say, what and does mean, so off Sea does are a part boats ships the do bit things kind we -- from mean that on customers. Red you to mean go it's over this us, But I it think

know in of still thing around kind just sensitivity is of it's general. couple Europe, lot especially topics So of there. have all another inflationary whether years, I unknown it's in mix. various or a in just there's the geopolitics on over that been This inflation whether I there's last energy think an costs put the pressure the

just don't be into In to terms our clear, you're at sell of region. right, much very all that business, we

at impact direct all. a not it's So

the doing you to -- yes. to of Patrick, improve do logistical situation. In we that take want are what terms

Patrick Kaltenbach

take Yes, can one. sure. I that

also and really We are making the -- we we're actually, are we are during backlog that QX. expecting quite to ongoing pleased work with progress making, the down

and issue QX the of from volume they logistics cetera, the an build site of really what local to making there expert flow we provider can processes, the management former from partner lot well there in is team sure processes that our which stable understand when our by to to comprehensive and our capacity into during mini all there matching -- that product logistics a a and XXX% to as experts like logistics et out involved product place and there volumes to lot enough full be the processes had of them have the everything new We logistics own stabilized, help these get processes, are more experts of brought center, our been are expecting. we on-site transferred help center of process the this service on there that provider. There finished

there. said, As I good we're making progress

a it that backlog more the expect stable clearly and good And more of expect having and still us a QX. that we moving from are deliver is this while can down might the performance they them. the to of partner logistics we quarters, forward maintain from during very We oversight go couple confident next end the some operation that at

Derik De Bruin

And inventory? waiting Can it. issues there where mean, the -- is just -- done like are we tips just and burn one we for you all us I saw mean I in you stocking still customers with Got pipette the I -- follow-up. then of to update? an that. are sensors and down on give sort

Patrick Kaltenbach

the normal. And we're pattern more order saying I'm join done very normal mentioned that I'll to the Shawn, at tips, ordering in. that volumes, you customers is with think now pipette but feel back tips with why we When and I more order meaning high pipette see not the it stocking is start issue. Yes, free to are patterns, frequently, reason

with from remain as through the indication more a for the area, hearing is we by what mainly lower the orders that frequency expect some lower our and sensors, also analytics customers that, And or me, business during channels, ordered year, that's bit second than and biopharma working the are at of to pipette of tips of worked right an still And the well. they still are the inventory pandemic, than also then that the down on overstocking of have the So us. We end process the off inventory -- now volume should have or normalized. the behind they has during in half while QX working is QX. still towards least down, the we're QX that still is

Operator

Cleveland Research. at Waldman Joshua to next go We'll

Joshua Waldman

conditions Has seeing visibility the start softer seem could over an just days. mentioned or just update Can XX on Patrick, wondering maybe in -- seeing Wondering guess the give if like how kind I last start what the unpack you're getting you Patrick, you but perceive that are deteriorated have just you stabilized improved with you. if to I'll you or market visibility to of also worse, a commented year. not there? business.

Patrick Kaltenbach

some different but Sure, also again, regions, absolutely. I'll markets. different into probably in you the give end insights And

good really we the in interested, year, is activity we there, last very about have over are engagement. future. of a are that's So what seeing new that is lot especially and excited launched the customers customer out meaning There are products we good so why the

good But are and -- leads last positive we sign discussions. Still, some very and a the close we to reduced into lot seeing have of the longer are deterioration orders, that spend we the hand the that budgets. they I really we activity. opportunities further We it there's maybe But and takes customers opportunities, have to budgets reluctant funnel I quite that's they normal to think year. the don't really have also had are momentum the still there. that now than a or our about any seen see -- we have to if what And from look at

actually for And it. soft, -- news, we have space was great demand where for as market, outlined expected whether demand efforts, underlying have regions otherwise, for also now big It year different say stable. in especially at the position especially about U.S., we saw very Europe, resilient had that's And The as based market it's profits been well. But portfolio good China, in it it's why are EU digitalization industrial the well. deteriorated last in inspection the you still -- we on I pressure softer saying largely well. We spend -- bit very see with QX. and the position and growth I a it's if customers has in there already; and that's the I year, read industrial money Germany. the packaged demand further, whether last moment, than markets they are area biopharma in as ready and holding outlined the food are into the the and on that that's as throughout product they starting are where moment. softening, is pressure. The seen a it's Shawn also that of a it's weaker the you At year. bit bit pharma, think a that the news projects in and lot developed QX softer in back also regions we would And towards have reduced good we under have budgets. So hear a automation to I or fact these They food but the under Europe mean, yet. not are customers still

Joshua Waldman

Okay.

missed I and to raise? the call revenue question guess other walk of the have 'XX the was that I pieces on Okay. Shawn, the follow-up. Or added there could you QX push been the out And guide 'XX How maybe of like through guide? missing? the you $X.XX, versus then, moving FX raise shouldn't for if we're impetus much pieces the the margin. is were shipping-related moving EPS that it, wondered inputs the from other by,

Shawn Vadala

I'd moving very mean question it's mean our I nats, we to much there's, There's of in Yes, within mean, nits position -- about had I feel like you basis. margin up And guidance our up currency, mean, I a actually it I the is should for it's we XX if probably on basis year. points earlier, basis operating in for think costs, guidance. I of the related sales think go exclude I course, say, couple there. Dan's terms margin some I -- It's points. we good and I sales. margin beginning. end, pieces of to and mentioned how much year but back already full but very I the like the how go margins position the feel and XX a towards about about

of it's were -- of back, So go top Josh, we reflection I how thinking how to line. on very of much guided the we kind a

Operator

to with go Evercore we'll Kumar ISI. Next, Vijay

Vijay Kumar

A guidance couple questions. of

out to X%, the to was minus guide if first think we year-on-year I X% -- push think Look, trying X% single. similar be back just to minus at guidance. how assumed revenues the year. 'XX down last I X%? high pre-logistics, about One be minus the given would minus QX have assume have the to logistics guidance. these QX shouldn't to out, of would cadence QX half you're and minus -- than a go And sequential little of I'm QX, to QX, timing Your been versus the to bit better the if singles, push looking high

Shawn Vadala

Sure, I'm to answer happy that one. Yes. Vijay.

QX minus just X%. guidance is clarify, our in minus to So currency X% to constant

So a from a which it's think there first a mentioned, is X%. the are shipping I But understand that. can question minus benefit important minus delays, to to as we that also things few And X% asking about there's here I X% about quarter. our very

on go last growing first before it's grew really but we're we X%, of. quarter And back that, very kind the cycling multiyear we're important top year, really difficult is to what of Yes, QX think like comparison. a matter. comps that do one years I strongest The our was couple to of

grew in growth kind top on that XX% you XXXX. QX of XX% of we QX go If was of back, of in XXXX, and

delay. of in first XX% XX%. of quarter. down first business kind we're of happy excluded expected And here at first in quarter still course, better the So But a here. China, as we we that effect bit our of if it's than down the us what hard of you the to we it's to at the were looking low like over nonetheless, have shipping look quarter, we kind I think the for ignore little that came mid-XXs it as

start another mind. thing topic kind at point but as bit seeing a -- normalized course, at year we're And here of our a But be clear, So least of more it's in important this quarter, at -- that's very it's cautious were are early. new more how but the for kind March that that's going but point bit of a in in bit difficult tell of of well markets, going again, month end this budget then a that's to year. time. in at resetting the in is about customers like we a with assume acknowledge the thinking time. country. And first likely on this do a that's the we flush comparison anything not It's end on we us that's just QX as the to to our

Vijay Kumar

expected is share Understood. conversion count, what's fiscal repurchases? cash And for then to to one being And assumed on similar share be free 'XX?

Shawn Vadala

Yes.

assuming think cash is flow or or So minus we're our is similar number million, assumption thinking which plus for I same $XXX right that's free this share buyback as year. free cash the And flow around conversion. also XXX%

around all can processes end-to-end I with order-to-cash capital cycle. an So the pleased the very the focus we teams flow. efforts mean on to with the focus drive like the it's efficient we're really into always happy and the other world, and company that working around that on all something cash go on things

we're this continue year. something on to to So it's going focus

Operator

next at our UBS. Leonard from take We'll question Dan

Daniel Leonard

Two questions.

for First QX? is what off, in what was And your the pricing XXXX? benefit outlook

Shawn Vadala

Yes.

That much X%. came we the bit as pretty in about of did about kind we were the very we together benefiting basis half year in pricing mentioned actions QX, at of with was some And a we of on It the how quarters, a first pleased we're in us that from this in XXXX. things half But year. previous second full as came year XXXX for X%. expected. So put we in

I the it of from customers. is a much moved fuel have lot -- shows feel that we towards said really to of but to especially things the feel will topics I've going proposition times, it I value our think the markets increased value the really like really to last automation over proposition as strengths customers. All I paybacks and innovation tangible plays our do years an portfolio digitalization, very like help doing that many few perspective we're it that have also that forward, too. provide can the

realization we're XXXX, thinking terms our we're about. around we expecting consistent how good pricing of then something the be with we year, earlier feel in X%. with for and that to about price So guidance And were that's

Daniel Leonard

of follow-up, above-trend suffered period business my your outlook And comping and down? there Or tips, from that growth an since on really part for other back does trend? an inventory burn is that. curious destocking, any I'm pipette normalize Appreciate you're your growth to

Shawn Vadala

No. mean if I let in to. I'll Patrick wants jump start he and

just we're exposure we the market with don't in at the certainly have tips, those in challenge weak a moment. Like early pipette trends right now at biotech pipettes to significant demand think Mettler-Toledo so to deal immune I now and not to research general. is that but is there right we R&D, or

market the optimistic there. half softer as I there are But So think more second we're we conditions get the of into year.

bit As as a well, a well. And comments have to there Patrick just things similar mentioned, better couple little we on patterns are we looking innovation, as the ordering of look too, some spend of my last working they're with were at there and recently the facilities actually fun really out time month was to and on. our at it that things some team

year. of have are them are the we but things some that in medium Some market them term, of this more

Operator

to Sykes at next Goldman Sachs. move Matt We'll

Matthew Sykes

could first QX. back and shipped is that some wondering being logistics be bleed isolated how issue, My temporary just into you think outlined to implications that costs to the maybe impact out going margins And any understanding had one, just revenue QX Maybe impact, or you've if you of that lingering I'm QX. things to are could Could in changes there talk seems about the in just cost beyond? the any that Europe.

Shawn Vadala

the and associated things mean, the the those we of Yes. first there's really kind higher I resources of statements A some I'd I are we're to considered transportation with there's our incremental opportunity from cost something incremental it, you the costs Yes, for transition, overall travel significant an provided of back But not when costs overall it's we cost, reallocating are financial course, some step certainly costs. quarter. here of issue. as guidance say it. to support mean, lot less because

Matthew Sykes

cautious that growth expecting Could expecting it. you've on that? what's of I comments about versus Europe misheard, pretty maybe talked you I still cautiously in you're just your but driving Got Europe, unless year positive of and this just about year. think, And you're talk the it, then sort this sort growth

Shawn Vadala

That's the good Europe, question. delay. going shipping the a most from benefit Yes. to course, is of

you exclude probably So maybe QX, you exclude on you look you comp if you and the that, effect it's if to I also those different a flattish -- more the if probably and think easier take year at the of get if X answer QX is the Europe things. in

caution Patrick we So expected. do A with in fourth -- it's it's of Europe early was with had expecting. how it in conditions. We've mentioned. marginally to lot a as originally the very product like quarter But did resilient we it XXXX. than been inspection, we just in pleased see market weaker we'll But bit again we softer what softer -- was than the were year. We generally

have world, and given a to have out probably us might things bit be little expected would with concerns all be a we impact what major the our there, to the the you just customers. year softer of energy If would crisis regions that asked ago the of

just XXXX. in cautious very on pleased performed business bit But today, here how just more a we're sitting we're So with it. little the

Operator

We'll go next to Baird. Catherine at Schulte

Catherine Ramsey

if we your little I cushion by are a bit the But Maybe just in the I that the are outlook excluding extra in delays, into? you to a segments leave some guide. want guess, first shipping on revenue conservatism of at baking you get which where segment, we year. given looked

Shawn Vadala

from see that much impact, it of question. because shipping have one as Yes. and an guess PI, can if any, doesn't you say delay. I'd the Good I

into what into than when a Europe, we Europe was we it on for then of full think that before. is were the slightly flattish. And we're last saying And trickles a I guided little little So bit comment it And kind guided -- up then saying it's this flat of we bit. year. time you the this lighter kind would about time, Lab divisions, break have

it's excluding staying more more And so delays slightly, of probably shipping up Lab might instead be the flattish.

Catherine Ramsey

the on Okay. first should expecting Got for what margins quarter for guide, full it. the year? And margin be then we gross and the maybe

Shawn Vadala

Yes.

should XX in the lot currency and points, QX. be about first of in the we quarter, margin down basis For a there's

we'll it has if -- year our be if would gross up excluded up currency, look XX then margin, up is, So currency on be at again, full bps. you the that. the an be probably XX around estimate impact basis about you we'll for And And points.

excluded So like XX that, probably would you more up be it if bps.

Operator

JPMorgan. vast at Vatnsdal Rachel to next go We'll

Rachel Vatnsdal Olson

off We've some mentioned your you that more from to you're year. starting well. be the peers of customers with as cautious So that expecting heard investments

hearing dig the seeing February and in as just customers into first have and spending of what can year more the markets specifically into then off January of have you week geographies you So you here? from been now well? to kick been And cautious that which

Patrick Kaltenbach

Yes. start Thanks, in. some if Shawn additional and chime And I'll have to free comments, then you feel Rachel.

So -- proper in as as in majority also food fast and releasing customers expected. we I think see purposed had you a sales in not PI Again, Europe engagement, cautiousness, the good what the of down we the have segment, where we there budgets we teams. business told in is

new from we Okay. conversion Shawn, not mid-range Otherwise, very We products, opportunity the in European market as whole to a have to anything we hearing of of we but help it's big think products great change. that to final segments fleet do part than we're I what longer us expected. also And -- else? takes sale No? that's get the said, market. access that new still launched -- a

Rachel Vatnsdal Olson

Great. just you should And bleeding this kind we logistics be on the you're really up how well. on XQ. as then sequentials to issue half expecting back walk XQ the the on given Can top there most and of follow-up, us just that line about and benefit then into my of thinking through step

Shawn Vadala

in to the QX. China to think, a China, for early full -- that provide us of be to first cycle on down. to mean part too still is we that color before Yes. down. it's A still little half we we year going be kind have said I but we I QX to be I stick I expect what of of the lap, to much for big a think QX, is expect

months, the looking hard very think have feel the that's much the the has into I our get we year. comps the only half when several we'll as think half So point good quarter, a at a customer launching I try that's something lapping been that think coming with initiatives, these of at on year company as things to and things second on should a first feel there's we that X.X about out think looking starting position get you're confidence we organization, seeing do get things we these when we but help just lot color we're more as typically product focus always all encouraged go the talk lot it's for months sits of have little that doing how backlog, And minds. But to much stronger. half, too of do out to I trying we're when things, we these our we -- on I of this corporate provide things Spinnaker second to all us And maybe we'll bit to out launches, of focus by how we a the and to time. the second at we're with of the on through X, experience, programs, of control in can the then

Operator

We'll Jefferies. go next at to Brandon Couillard

S. Brandon Couillard

you your having 'XX? success against that healthy. year double-digit business And grew for mean XX% Patrick, driving comp. Where the pretty I in what's most you last remains the outlook the service rates? are attach business

Patrick Kaltenbach

invest question, I service also -- throughout services, about continue an organization it's that. while make Yes. again, we thanks Brandon, had by And that in in excited the areas. Very I'm we adjustments our good opportunity. other XXXX, for super way, to mean, to some

opportunity there. continued good because see out invest customers. there's service We our Broadening we portfolio, to from in big service demand our a

again. year XX%, we We this grew if have expect installed large mid-single range the digit to base. Last you it grow year, we in a and said

going So where another will of products. see you services ahead year

our services, And they a of that point us connect they at rates. improvements category see make sales We continue from about are sure they make lot of product about increase there. And teams can trained -- value sell I them our with share still to the talk these have to continue category, make customers, to the the product to increasing they for when moving of proposition to work of of opportunity sale, value but course, different we better forward to the services. sure services

S. Brandon Couillard

it, on And low of the first I then first just Does one down kind more, China. quarter in imply the half being Shawn, China in of call mid-XXs. should think about that in bake this is half back double-digit the If year? to cadence versus second half? to How second growth we the,

Shawn Vadala

again, with our more the the get than year. But I I provide the you'd QX being don't neighborhood think to Yes. you on next full and half of about now, Industrial of do Lab math, do we'll this see we're for depending down the year, get probably that we the pacing business. I if but too mean, call more want second for thinking guidance everything. Right how into specific, kind on

be being Lab mid-single like low down at more down looking Industrial digits. teens, more while would of kind So like

Industrial the for we'll So pleasant out it business see play bit fourth more the on QX, in but a We're how things a quarter. cautious surprise little was here.

S. Brandon Couillard

Great...

Shawn Vadala

that the growth that the Brandon, mean have expecting we're read to that a going know lapping just doesn't in that comp, we an forward, they things China. in double-digit And market. know lot of Yes. only easier just not correctly, they're algorithm We

for inventory the few than during the there's the of nature of the of there's then the regions. a them But topics throughout other one an more just just well that as the all lot a I customers. lockdowns topics there's was all -- a replacement people that's the year. I cycles. mind one things think And second thing in of the the And of of on kind spending I during there, right? more purchasing and given lot potentially logistical COVID think the is of inventory our think COVID, just think acceleration of is challenges, I other half One

China mean, So single-digit kind past, go high a said I what term. the we growth reiterate opportunity view of as of of as we just to in more kind longer forward, more we

Operator

move Citi. Patrick Donnelly Next, at we'll to

Patrick Donnelly

that of ramp I on Shawn, the wanted up kind pick to question.

Brandon and Rachel think I the on because pretty just there. both out little hit comps back that's formulaic. we a bit If

your half, through second dollar the the you sequential being work as way obviously terms in year one of into the improvement example. China Just

You just Can it mentioned just lot confidence that into backlog. and the level in areas a about, Is a I X month, X.X there inventory months of of in channel it? just the like visibility that's talk guess, you the was China dollar are guys just again, Maybe dollars confident second talk and as ramp confidence, come year, the back. and on it get otherwise. the to the our you we comps way work about, as -- half normalizes through that China you excluded,

Shawn Vadala

lack have lot right a in a in of noise Yes. also you Like of QX I budget mean, right? of XXXX. flush there's of now, course, a sequentials

And expect start a complexity I more mean, shipping QX add seasonality potentially more in like slower the year throw QX of another to half. Now a little normalized one in we at then you delays. -- this the just we with bit customers we probably saying back with

So I kind maybe through for look at sequentials all very -- but of think I consistent. you longer-term, and actually if we're cut that us, you think

that's And thing. so one

CAGRs topics, think us we comps cut the you too. I confidence multiyear like And by COVID a when look look and as at you of lot kind think and multiyear quarter, and through then of more period, that like that well, we doing whole at that the comps the kind I of just a gives know on and final think like China. And X-year is company then growth, some too. things thing these some in these to we layer lot destocking of are I the the comments inside made I just drive of

like about enhance And now. nothing -- doing combination probably cool new continue think the things that plus spend going in and And all time we're drives lot further as focus it's the momentum to get talking our I a right more into products, with a to that some call combination. as growth next have we're year company next really that we're of on so things launching of of we why X, it in right? talking a gain we like, to help. And the and the to kind It's about that There's I things customer, of the course, relationship second And growth think will on all half things reason of we're quarter. preface a those we very powerful well. will like that I the doing are of think things a that Spinnaker types are call. kind of improve, these those We're things to digitalization just think,

Patrick Donnelly

on And structure. cost That's then helpful. maybe the Okay. just

nimble stronger. you mentioned the few cost the come a talk guess, Can How of how side? you guys that? approaching And backdrop the of times about, think a mindful on currently I out are I to you versus can be level softer with you're of protecting investments you just trying margins? this want you making guys to be

Shawn Vadala

over reviewing that we've I of productivity last the Yes. over looking On us, lot year. I a organization a and like really we're a been lost team where hand, executive feel about spending of for very balancing one important time has last have the balance. we at something as really year. mean, we've good been thinking an parts this the really act

on working those areas. we're so And

on about things opportunities sure we're other that the that going we in that it's world. service. growth a things today, basis, we're of as the and other times that for throughout organization are to in Patrick few to we'll innovation make that just invest stronger a continue make us continue I like is different different already as There's full continuing the talked we I there service as there's think those. hand, that's There forward. an example, year XXXX. But to also regions not help do -- well will and service, On to invest something a mean, trying year, mentioned

So when you kind I of step very that, back feel good. from

coming comp next we normalized headwind Of with variable have course, year, do levels. to more a back too,

were a that though moving that if a can well, expand than feel the I look But year lower XXXX, year can parts. maybe we to margins full it a the challenges And low we we with we then too. even able little like normally do, it's next you of all, there's still growth had hold you margins good of as bit expand we for still through lot flat when a year. margins So our at look what despite lot

end, So I in have good the we like feel balance. a

Operator

at And Uhlman Adam the there to turn remarks. this questions to time. further conference for like closing over no are would I

Adam Uhlman

today. for everybody, you, thank our joining call and Audra, Thanks,

hope free If I a we'll to your to Thank you. out of me. day, you you any rest and feel reach have questions, you have great soon. talk to

Operator

And this Thank your concludes participation. today's conference you call. for

You may now disconnect.

Mettler-Toledo International (MTD) 9 Feb 242023 Q4 Earnings call transcript