Mettler-Toledo International Inc. Reports Fourth Quarter 2016 Results

- - Strong Sales Growth - -

- - Continued Margin Expansion and Strong EPS Growth - -

News provided by

Mettler-Toledo International Inc.

Feb 02, 2017, 15:12 ET

COLUMBUS, Ohio, Feb. 2, 2017 /PRNewswire/ -- Mettler-Toledo International Inc. (NYSE: MTD) today announced fourth quarter results for 2016.  Provided below are the highlights:

  • Sales in local currency increased 8% in the quarter compared with the prior year. Reported sales increased 5% as currency reduced sales growth by 3% in the quarter.
  • Net earnings per diluted share as reported (EPS) were $5.17, compared with $4.44 in the prior-year period. Adjusted EPS was $5.28, an increase of 14% over the prior-year amount of $4.65. Adjusted EPS is a non-GAAP measure and excludes purchased intangible amortization, discrete tax items, restructuring charges and other one-time items. A reconciliation to EPS is provided on the last page of the attached schedules.

Fourth Quarter Results

Olivier Filliol, President and Chief Executive Officer, stated, "Sales growth in the quarter was better than expected driven by very good results in Europe and Asia / Rest of the World.  Sales growth in the Americas was modest, principally due to strong prior-year results.  Continued margin expansion drove very good growth in EPS.  Finally, cash flow in the quarter was solid and included the unanticipated purchase of our previously leased U.S. pipette manufacturing facility." 

EPS in the quarter was $5.17, compared with the prior-year amount of $4.44.  Adjusted EPS was $5.28, an increase of 14% over the prior-year amount of $4.65.  

Sales were $709.7 million, an 8% increase in local currency sales, compared with $673.5 million in the prior-year quarter.  Reported sales increased 5% as currency reduced sales growth by 3% in the quarter.  As compared to the prior year, local currency sales increased 3% in the Americas, 7% in Europe and 15% in Asia / Rest of World.  Adjusted operating income amounted to $200.2 million, a 10% increase from the prior-year amount of $182.2 million.  Adjusted operating income is a non-GAAP measure, and a reconciliation to earnings before taxes is provided in the attached schedules.

Cash flow from operations was $152.9 million, compared with $137.0 million in the prior-year quarter.

Full Year Results

EPS in 2016 was $14.22, compared with the prior-year amount of $12.48. Adjusted EPS was $14.80, an increase of 15% over the prior-year amount of $12.92.

Sales were $2.508 billion, a 7% increase in local currency sales, compared with $2.395 billion in the prior-year period.  Reported sales increased 5%, as currency reduced sales growth by 2% in the period. By region, local currency sales increased 5% in the Americas, 5% in Europe and 10% in Asia / Rest of World as compared to the prior-year period.  Adjusted operating income amounted to $583.0 million, a 10% increase from the prior-year period amount of $532.1 million.  Adjusted operating income is a non-GAAP measure, and a reconciliation to earnings before taxes is provided in the attached schedules.

Cash flow from operations was $443.1 million, compared with $426.9 million in the prior-year period.

Outlook 

The Company said that based on its assessment of market conditions today, management anticipates local currency sales growth in 2017 will be approximately 5.5%.  This sales growth is expected to result in Adjusted EPS in the range of $16.55 to $16.75, an increase of 12% to 13%.  Our guidance incorporates the impact of the new accounting regulations related to the tax impact of stock option deductions.      

For the first quarter 2017, local currency sales growth is expected to be approximately 8% and Adjusted EPS in the range of $3.05 to $3.10, an increase of 24% to 26%. 

Adjusted EPS excludes purchased intangible amortization, discrete tax items, restructuring charges and other one-time items.  While the Company has provided an outlook for Adjusted EPS, it has not provided an outlook for EPS as it would require an estimate of non-recurring items, which are not yet known.  

Conclusion

Filliol concluded, "We remain cautious in our outlook on the global economy.  While demand in our markets remains solid, we recognize risks exist in many geographic regions.  We will monitor closely and adapt our planning as necessary.  Assuming our end markets remain stable, we believe the momentum from our initiatives positions us well for sales and earnings growth in 2017 and beyond.  Our investments in Field Turbos, Spinnaker sales and marketing programs and new products are yielding tangible results and helping to drive share gains.  Equally important, our productivity initiatives provide us with capacity to make further investments for growth."    

Other Matters

The Company will host a conference call to discuss its quarterly results today (Thursday, February 2) at 5:00 p.m. Eastern Time.  To hear a live webcast or replay of the call, visit the investor relations page on the Company's website at www.mt.com/investors.  The presentation referenced in the conference call will be located on the website prior to the call.

METTLER TOLEDO is a leading global supplier of precision instruments and services. The Company has strong leadership positions in all businesses and believes it holds global number-one market positions in a majority of them. Specifically, METTLER TOLEDO is the largest provider of weighing instruments for use in laboratory, industrial and food retailing applications. The Company is also a leading provider in analytical instruments for use in life science, reaction engineering and real-time analytic systems used in drug and chemical compound development and process analytics instruments used for in-line measurement in production processes. In addition, METTLER TOLEDO is the largest supplier of end-of-line inspection systems used in production and packaging for food, pharmaceutical and other industries. Additional information about METTLER TOLEDO can be found at www.mt.com/investors.

Statements in this press release which are not historical facts constitute "forward-looking statements" within the meaning of Section 27A of the U.S. Securities Act of 1933 and Section 21E of the U.S. Securities Exchange Act of 1934.  These statements involve known and unknown risks, uncertainties and other factors that may cause our or our businesses' actual results, levels of activity, performance or achievements to be materially different from those expressed or implied by any forward-looking statements.  In some cases, you can identify forward-looking statements by terminology such as "may," "will," "could," "would," "should," "expect," "plan," "anticipate," "intend," "believe," "estimate," "predict," "potential" or "continue" or the negative of those terms or other comparable terminology.  For a discussion of these risks and uncertainties, please see the discussion on forward-looking statements in our current report on Form 8-K to which this release has been furnished as an exhibit.  All of the forward-looking statements are qualified in their entirety by reference to the factors discussed under the captions "Factors affecting our future operating results" and in the "Business" and "Management's Discussion and Analysis of Financial Condition and Results of Operations" sections of our annual report on Form 10-K for the most recently completed fiscal year, which describe risks and factors that could cause results to differ materially from those projected in those forward-looking statements.  

METTLER-TOLEDO INTERNATIONAL INC.

CONSOLIDATED STATEMENTS OF OPERATIONS

(amounts in thousands except share data)

(unaudited)


















Three months ended



Three months ended







December 31, 2016

% of sales

December 31, 2015

% of sales





























Net sales

$709,699

(a)

100.0

$673,535

100.0

Cost of sales

291,089


41.0

282,788

42.0

Gross profit

418,610


59.0

390,747

58.0
















Research and development

30,155


4.2

31,110

4.6

Selling, general and administrative

188,223


26.5

177,418

26.3

Amortization

9,886


1.4

8,022

1.2

Interest expense

7,407


1.1

6,755

1.0

Restructuring charges

1,656


0.3

5,960

0.9

Other charges (income), net

(1)


0.0

(9)

0.0

Earnings before taxes

181,284


25.5

161,491

24.0
















Provision for taxes

43,508


6.1

38,140

5.7

Net earnings

$137,776


19.4

$123,351

18.3
















Basic earnings per common share:











Net earnings



$5.27




$4.53



Weighted average number of common shares

26,139,024




27,228,026



















Diluted earnings per common share:











Net earnings



$5.17




$4.44



Weighted average number of common

26,631,269




27,755,045



  and common equivalent shares



























Note:













(a)

Local currency sales increased 8% as compared to the same period in 2015.



















RECONCILIATION OF EARNINGS BEFORE TAXES TO ADJUSTED OPERATING INCOME




















Three months ended



Three months ended







December 31, 2016

% of sales

December 31, 2015

% of sales
















Earnings before taxes

$181,284




$161,491



Amortization

9,886




8,022



Interest expense

7,407




6,755



Restructuring charges

1,656




5,960



Other charges (income), net

(1)




(9)



Adjusted operating income


$200,232

(b)

28.2

$182,219

27.1
















Note:













(b)

Adjusted operating income increased 10% as compared to the same period in 2015.

METTLER-TOLEDO INTERNATIONAL INC.

CONSOLIDATED STATEMENTS OF OPERATIONS

(amounts in thousands except share data)

(unaudited)


















Twelve months ended




Twelve months ended







December 31, 2016

% of sales

December 31, 2015

% of sales




























Net sales

$2,508,257

(a)

100.0

$2,395,447

100.0

Cost of sales

1,072,670


42.8

1,043,454

43.6

Gross profit

1,435,587


57.2

1,351,993

56.4
















Research and development

119,968


4.8

119,076

5.0

Selling, general and administrative

732,622


29.2

700,810

29.3

Amortization

36,052


1.4

30,951

1.3

Interest expense

28,026


1.1

27,451

1.1

Restructuring charges

6,235


0.3

11,148

0.5

Other charges (income), net

8,491


0.3

(867)

(0.1)

Earnings before taxes

504,193


20.1

463,424

19.3
















Provision for taxes

119,823


4.8

110,604

4.6

Net earnings

$384,370


15.3

$352,820

14.7
















Basic earnings per common share:











Net earnings



$14.49




$12.75



Weighted average number of common shares

26,517,768




27,680,918



















Diluted earnings per common share:











Net earnings



$14.22




$12.48



Weighted average number of common

27,023,905




28,269,615



  and common equivalent shares



























Note:













(a)

Local currency sales increased 7% as compared to the same period in 2015.



















RECONCILIATION OF EARNINGS BEFORE TAXES TO ADJUSTED OPERATING INCOME




















Twelve months ended




Twelve months ended







December 31, 2016

% of sales

December 31, 2015

% of sales
















Earnings before taxes

$504,193




$463,424



Amortization

36,052




30,951



Interest expense

28,026




27,451



Restructuring charges

6,235




11,148



Other charges (income), net

8,491

(b)


(867)



Adjusted operating income

$582,997

(c)

23.2

$532,107

22.2
















Note:













(b)

Other charges (income), net includes a one-time non-cash pension settlement charge of $8.2 million related to a lump sum settlement to former employees of our U.S. pension plan and acquisition transaction costs of $1.1 million.

(c)

Adjusted operating income increased 10% as compared to the same period in 2015.



METTLER-TOLEDO INTERNATIONAL INC.

CONDENSED CONSOLIDATED BALANCE SHEETS

(amounts in thousands)

(unaudited)






















December 31, 2016

December 31, 2015










Cash and cash equivalents

$158,674



$98,887

Accounts receivable, net

454,988



411,420

Inventories

222,047



214,383

Other current assets and prepaid expenses

61,075



70,642

Total current assets

896,784



795,332










Property, plant and equipment, net

563,707



517,229

Goodwill and other intangible assets, net

643,433



561,536

Other non-current assets

62,853



85,238

Total assets

$2,166,777



$1,959,335










Short-term borrowings and maturities of long-term debt

$18,974



$14,488

Trade accounts payable

146,593



142,075

Accrued and other current liabilities

421,948



401,649

Total current liabilities

587,515



558,212










Long-term debt

875,056



575,138

Other non-current liabilities

269,263



245,528

Total liabilities

1,731,834



1,378,878










Shareholders' equity

434,943



580,457

Total liabilities and shareholders' equity

$2,166,777



$1,959,335




















METTLER-TOLEDO INTERNATIONAL INC.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

 (amounts in thousands)

 (unaudited)













Three months ended

Twelve months ended



December 31,

December 31,



2016

2015

2016

2015










Cash flow from operating activities:







    Net earnings

$    137,776

$    123,351

$    384,370

$    352,820

    Adjustments to reconcile net earnings to







      net cash provided by operating activities:







Depreciation

8,216

8,109

32,743

33,087

Amortization

9,886

8,022

36,052

30,951

Deferred tax provision

12,956

10,382

1,878

7,137

Excess tax benefits from share-based payment arrangements

(514)

(11,511)

(17,680)

(12,929)

Non-cash pension settlement charge

-

-

8,189

-

Other

4,620

3,865

15,487

14,378

Increase (decrease) in cash resulting from changes in






  operating assets and liabilities

(20,009)

(5,176)

(17,961)

1,424

                Net cash provided by operating activities

152,931

137,042

443,078

426,868










Cash flows from investing activities:







    Proceeds from sale of property, plant and equipment

62

668

423

949

    Purchase of property, plant and equipment(a)

(72,723)

(25,750)

(123,957)

(82,506)

    Acquisitions

(1,700)

(2,810)

(111,381)

(13,779)

    Net hedging settlements on intercompany loans

1,428

148

3,459

(5,415)

                Net cash used in investing activities

(72,933)

(27,744)

(231,456)

(100,751)










Cash flows from financing activities:







    Proceeds from borrowings

195,786

191,862

905,774

741,864

    Repayments of borrowings

(138,265)

(219,586)

(594,178)

(594,477)

    Proceeds from exercise of stock options

5,284

7,722

25,471

29,556

    Excess tax benefits from share-based payment arrangements

514

11,511

17,680

12,929

    Repurchases of common stock


(124,998)

(123,743)

(499,992)

(494,966)

    Other financing activities

-

(934)

(680)

(1,938)

                Net cash used in financing activities

(61,679)

(133,168)

(145,925)

(307,032)










Effect of exchange rate changes on cash and cash equivalents

(5,778)

(542)

(5,910)

(5,461)










Net increase (decrease) in cash and cash equivalents

12,541

(24,412)

59,787

13,624










Cash and cash equivalents:







    Beginning of period

146,133

123,299

$98,887

85,263

    End of period

$    158,674

$      98,887

$    158,674

$      98,887




















RECONCILIATION OF NET CASH PROVIDED BY OPERATING ACTIVITIES TO FREE CASH FLOW










Net cash provided by operating activities

$    152,931

$    137,042

$    443,078

$    426,868

    Excess tax benefits from share-based payment arrangements

514

11,511

17,680

12,929

    Payments in respect of restructuring activities

2,072

2,966

8,376

6,568

    Payments for acquisition transaction costs

-

-

910

-

    Proceeds from sale of property, plant and equipment

62

668

423

949

    Purchase of property, plant and equipment

(72,723)

(25,750)

(123,957)

(82,506)

Free cash flow

$      82,856

$    126,437

$    346,510

$    364,808










(a) Purchase of property, plant and equipment includes the purchase of our previously leased U.S. pipette manufacturing facility for $37 million.





















METTLER-TOLEDO INTERNATIONAL INC.

OTHER OPERATING STATISTICS


























SALES GROWTH BY DESTINATION

(unaudited)

















Europe

Americas

Asia/RoW

Total














U.S. Dollar Sales Growth













Three Months Ended December 31, 2016

4%

2%

12%

5%


Twelve Months Ended December 31, 2016

3%

5%

6%

5%














Local Currency Sales Growth













Three Months Ended December 31, 2016

7%

3%

15%

8%


Twelve Months Ended December 31, 2016

5%

5%

10%

7%



























RECONCILIATION OF DILUTED EPS AS REPORTED TO ADJUSTED DILUTED EPS

(unaudited)















Three months ended


Twelve months ended


December 31,

December 31,


2016

2015

%
Growth

2016

2015

%
Growth













EPS as reported, diluted

$5.17

$4.44

16%

$14.22

$12.48

14%













Restructuring charges, net of tax

0.05

(a)

0.17

(a)

0.18

(a)

0.30

(a)

Purchased intangible amortization, net of tax

0.06

(b)

0.04

(b)

0.18

(b)

0.14

(b)

Acquisition transaction costs, net of tax

-

-


0.03

(c)

-

Non-cash pension settlement charge, net of tax

-

-


0.19

(d)

-














Adjusted EPS, diluted

$5.28

$4.65

14%

$14.80

$12.92

15%













Notes:










(a)

Represents the EPS impact of restructuring charges of $1.7 million ($1.3 million after tax) and $6.0 million ($4.6 million after tax) for the three months ended December 31, 2016 and 2015, and $6.2 million ($4.7 million after tax) and $11.1 million ($8.5 million after tax) for the twelve months ended December 31, 2016 and 2015, respectively, which primarily include employee related costs.

(b)

Represents the EPS impact of purchased intangibles amortization, net of tax, of $1.5 million and $1.1 million for the three months ended December 31, 2016 and 2015, and $5.0 million and $3.9 million for the twelve months ended December 31, 2016 and 2015, respectively.

(c)

Represents the EPS impact of acquisition transaction costs of $1.1 million ($0.8 million after tax) for the twelve months ended December 31, 2016.

(d)

Represents the EPS impact of a one-time non-cash pension settlement charge of $8.2 million ($5.1 million after tax) related to a lump sum settlement to former employees of our U.S. pension plan for the twelve months ended December 31, 2016.













SOURCE Mettler-Toledo International Inc.