Mettler-Toledo International Inc. Reports Third Quarter 2015 Results

- - Strong Margin Expansion - -

05 Nov, 2015, 16:07 ET from Mettler-Toledo International Inc.

COLUMBUS, Ohio, Nov. 5, 2015 /PRNewswire/ -- Mettler-Toledo International Inc. (NYSE: MTD) today announced third quarter results for 2015.  Provided below are the highlights:

  • Sales in local currency increased 3% in the quarter compared with the prior year.  Reported sales decreased 4% as currency reduced sales growth by 7% in the quarter.
  • Net earnings per diluted share as reported (EPS) were $3.16, compared with $2.89 in the prior- year period.  Adjusted EPS was $3.26, an increase of 11% over the prior-year amount of $2.95.  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. 

Third Quarter Results

Olivier Filliol, President and Chief Executive Officer, stated, "Sales growth in the Americas was very strong with broad-based growth in most product lines.  Europe came in as expected and we continue to execute well in this region.  We continued to experience sales declines in China, Russia and Brazil, however our other emerging markets businesses performed well in the quarter.  We had very good margin expansion in the quarter and, despite currency headwinds, achieved solid EPS growth." 

EPS in the quarter was $3.16, compared with the prior-year amount of $2.89.  Adjusted EPS was $3.26, an increase of 11% over the prior-year amount of $2.95.  

Sales were $604.2 million, a 3% increase in local currency sales, compared with $629.1 million in the prior-year quarter.  Reported sales decreased 4% as currency reduced sales growth by 7% in the quarter.  By region, local currency sales increased 10% in the Americas, 1% in Europe and declined 1% in Asia / Rest of World as compared to the prior-year period.  Adjusted operating income amounted to $134.3 million, a 6% increase from the prior-year amount of $126.7 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 $126.0 million, compared with $127.3 million in the prior-year quarter.

Nine Month Results

EPS for the nine months was $8.07, compared with the prior-year amount of $7.30.  Adjusted EPS was $8.31, an increase of 11% over the prior-year amount of $7.51.  

Sales were $1.722 billion, a 4% increase in local currency sales, compared with $1.789 billion in the prior-year period.  Reported sales decreased 4% as currency reduced sales growth by 8% in the period.  By region, local currency sales increased 7% in the Americas, 3% in Europe and 1% in Asia / Rest of World as compared to the prior-year period.  Adjusted operating income amounted to $349.9 million, a 6% increase from the prior-year amount of $330.6 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 $289.8 million, compared with $278.2 million in the prior-year period.

Share Repurchase Authorization 

The Company has a $3.0 billion stock repurchase program of which $2.9 billion has been utilized.  The Company announced that the Board of Directors authorized an additional $1.5 billion to the share repurchase program.  Any amount remaining under the existing program will be incorporated into the new authorization.  Filliol commented, "The additional authorization allows us to continue the share repurchase program which has provided strong returns for our shareholders over many years.  We are confident in our future growth prospects and our balance sheet and cash flow generation remain very strong."  The Company expects the additional authorization will be utilized over the next several years.  The Company added that the repurchases will be made through open market transactions, and the amount and timing will depend on business and market conditions, stock price, trading restrictions, the level of acquisition activity and other factors. 

Outlook 

The Company updated its outlook and noted that forecasting remains challenging.  In particular, weak demand in Brazil, Russia and China remains and the timing of a recovery is uncertain.  Weak economic activity in those markets may also impact demand in other markets.  Foreign exchange rates also represent a headwind and greater volatility in rates may continue. 

Based on today's assessment, management anticipates that local currency sales growth in the fourth quarter 2015 will be approximately 2% and Adjusted EPS is forecasted to be in the range of $4.58 to $4.63, an increase of 8% to 9%. 

For the full year 2015, local currency sales growth is expected to be approximately 3% and Adjusted EPS in the range of $12.85 to $12.90, an increase of approximately 10%.  This compares to previous guidance of Adjusted EPS of $12.75 to $12.90.    

The Company said that based on its assessment of market conditions today, management anticipates local currency sales growth in 2016 will be in the range of 3% to 4%.  This sales growth is expected to result in Adjusted EPS in the range of $14.10 to $14.30, an increase of 9% to 11%.

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 on China, Brazil and Russia as market conditions are challenging and a recovery is not yet visible.  These countries represent less than 20% of our total sales and our focus for those markets is to protect our operating margins and ensure our resources are targeted to long-term growth opportunities.  Our business in the developed world and in other emerging markets is performing well.   We are capitalizing on our strong product pipeline, best-in-class sales and marketing programs and our investment in additional field resources.  Our margin enhancement and productivity initiatives are well on track and allow us to make these investments despite weak demand in the previously-mentioned countries and adverse foreign exchange rates."

Other Matters

The Company will host a conference call to discuss its quarterly results today (Thursday, November 5) 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

September 30, 2015

% of sales

September 30, 2014

% of sales

Net sales

$604,154

(a)

100.0

$629,100

100.0

Cost of sales

264,625

43.8

285,549

45.4

Gross profit

339,529

56.2

343,551

54.6

Research and development

29,711

4.9

30,352

4.8

Selling, general and administrative 

175,546

29.1

186,499

29.6

Amortization

7,767

1.3

7,198

1.1

Interest expense

7,029

1.1

5,991

1.0

Restructuring charges

2,561

0.4

1,050

0.2

Other charges (income), net

(8)

(0.0)

625

0.1

Earnings before taxes

116,923

19.4

111,836

17.8

Provision for taxes

28,062

4.7

26,840

4.3

Net earnings

$88,861

14.7

$84,996

13.5

Basic earnings per common share:

Net earnings 

$3.23

$2.96

Weighted average number of common shares

27,547,734

28,732,152

Diluted earnings per common share:

Net earnings 

$3.16

$2.89

Weighted average number of common and common equivalent shares

28,113,287

29,408,614

Note:

(a)  Local currency sales increased 3% as compared to the same period in 2014.

RECONCILIATION OF EARNINGS BEFORE TAXES TO ADJUSTED OPERATING INCOME

Three months ended

Three months ended

September 30, 2015

% of sales

September 30, 2014

% of sales

Earnings before taxes

$116,923

$111,836

Amortization

7,767

7,198

Interest expense

7,029

5,991

Restructuring charges

2,561

1,050

Other charges (income), net

(8)

625

Adjusted operating income 

$134,272

(b)

22.2

$126,700

20.1

Note:

(b)  Adjusted operating income increased 6% as compared to the same period in 2014.

 

METTLER-TOLEDO INTERNATIONAL INC.

CONSOLIDATED STATEMENTS OF OPERATIONS

(amounts in thousands except share data)

(unaudited)

 

Nine months ended

 

Nine months ended

September 30, 2015

% of sales

September 30, 2014

% of sales

Net sales

$1,721,912

(a)

100.0

$1,788,555

100.0

Cost of sales

760,666

44.2

824,187

46.1

Gross profit

961,246

55.8

964,368

53.9

Research and development

87,966

5.1

91,974

5.1

Selling, general and administrative 

523,392

30.4

541,793

30.3

Amortization

22,929

1.3

21,575

1.2

Interest expense

20,696

1.2

17,613

1.0

Restructuring charges

5,188

0.3

4,447

0.2

Other charges (income), net

(858)

(0.0)

1,348

0.1

Earnings before taxes

301,933

17.5

285,618

16.0

Provision for taxes

72,464

4.2

68,549

3.9

Net earnings

$229,469

13.3

$217,069

12.1

Basic earnings per common share:

Net earnings 

$8.24

$7.47

Weighted average number of common shares

27,833,541

29,056,663

Diluted earnings per common share:

Net earnings 

$8.07

$7.30

Weighted average number of common and common equivalent shares

28,443,478

29,747,321

Note:

(a)  Local currency sales increased 4% as compared to the same period in 2014.

RECONCILIATION OF EARNINGS BEFORE TAXES TO ADJUSTED OPERATING INCOME

 

Nine months ended

 

Nine months ended

September 30, 2015

% of sales

September 30, 2014

% of sales

Earnings before taxes

$301,933

$285,618

Amortization

22,929

21,575

Interest expense

20,696

17,613

Restructuring charges

5,188

4,447

Other charges (income), net

(858)

1,348

Adjusted operating income 

$349,888

(b)

20.3

$330,601

18.5

Note:

(b)  Adjusted operating income increased 6% as compared to the same period in 2014.

 

METTLER-TOLEDO INTERNATIONAL INC.

CONDENSED CONSOLIDATED BALANCE SHEETS

(amounts in thousands)

(unaudited)

September 30, 2015

December 31, 2014

Cash and cash equivalents

$123,299

$85,263

Accounts receivable, net

390,540

435,648

Inventories

225,542

204,531

Other current assets and prepaid expenses

128,934

123,988

Total current assets

868,315

849,430

Property, plant and equipment, net

513,568

511,462

Goodwill and other intangible assets, net

562,697

556,869

Other non-current assets

108,966

91,349

Total assets

$2,053,546

$2,009,110

Short-term borrowings and maturities of long-term debt

$21,061

$116,164

Trade accounts payable

136,565

145,896

Accrued and other current liabilities

435,789

416,830

Total current liabilities

593,415

678,890

Long-term debt

601,731

335,790

Other non-current liabilities

272,048

274,835

Total liabilities

1,467,194

1,289,515

Shareholders' equity

586,352

719,595

Total liabilities and shareholders' equity

$2,053,546

$2,009,110

 

METTLER-TOLEDO INTERNATIONAL INC.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

 (amounts in thousands)

 (unaudited)

Three months ended

Nine months ended

September 30,

September 30,

2015

2014

2015

2014

Cash flow from operating activities:

    Net earnings

$        88,861

$        84,996

$      229,469

$      217,069

    Adjustments to reconcile net earnings to

      net cash provided by operating activities:

Depreciation

8,320

8,595

24,978

25,469

Amortization

7,767

7,198

22,929

21,575

Deferred tax benefit

(564)

(2,660)

(3,245)

(6,102)

Excess tax benefits from share-based payment arrangements

(140)

(890)

(1,418)

(10,459)

Other

3,443

3,306

10,513

9,883

Increase (decrease) in cash resulting from changes in

  operating assets and liabilities

18,354

26,716

6,600

20,803

                Net cash provided by operating activities

126,041

127,261

289,826

278,238

Cash flows from investing activities:

    Proceeds from sale of property, plant and equipment

154

137

281

433

    Purchase of property, plant and equipment

(20,833)

(24,288)

(56,756)

(61,408)

    Acquisitions

(10,669)

(130)

(10,969)

(3,385)

    Net hedging settlements on intercompany loans

7,248

236

(5,563)

182

                Net cash used in investing activities

(24,100)

(24,045)

(73,007)

(64,178)

Cash flows from financing activities:

    Proceeds from borrowings

56,552

202,959

550,002

512,977

    Repayments of borrowings

(60,968)

(181,918)

(374,891)

(438,529)

    Proceeds from exercise of stock options

4,096

5,013

21,834

14,045

    Excess tax benefits from share-based payment arrangements

140

890

1,418

10,459

    Repurchases of common stock 

(123,750)

(112,498)

(371,223)

(296,476)

    Acquisition contingent consideration paid

(150)

-

(572)

-

    Debt issuance costs

-

(914)

(432)

(941)

                Net cash used in financing activities

(124,080)

(86,468)

(173,864)

(198,465)

Effect of exchange rate changes on cash and cash equivalents

(3,871)

(1,449)

(4,919)

(1,158)

Net increase (decrease) in cash and cash equivalents

(26,010)

15,299

38,036

14,437

Cash and cash equivalents:

    Beginning of period

149,309

111,012

85,263

111,874

    End of period

$      123,299

$      126,311

$      123,299

$      126,311

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

Net cash provided by operating activities

$      126,041

$      127,261

$      289,826

$      278,238

    Excess tax benefits from share-based payment arrangements

140

890

1,418

10,459

    Payments in respect of restructuring activities

1,580

2,019

3,602

7,977

    Proceeds from sale of property, plant and equipment

154

137

281

433

    Purchase of property, plant and equipment

(20,833)

(24,288)

(56,756)

(61,408)

Free cash flow

$      107,082

$      106,019

$      238,371

$      235,699

 

METTLER-TOLEDO INTERNATIONAL INC.

OTHER OPERATING STATISTICS

SALES GROWTH BY DESTINATION

(unaudited)

Europe

Americas

Asia/RoW

Total

U.S. Dollar Sales Growth (Decrease)

Three Months Ended September 30, 2015

(13%)

8%

(8%)

(4%)

Nine Months Ended September 30, 2015

(13%)

6%

(4%)

(4%)

Local Currency Sales Growth

Three Months Ended September 30, 2015

1%

10%

(1%)

3%

Nine Months Ended September 30, 2015

3%

7%

1%

4%

RECONCILIATION OF DILUTED EPS AS REPORTED TO ADJUSTED DILUTED EPS 

(unaudited)

Three months ended 

Nine months ended

September 30,

September 30,

2015

2014

% Growth

2015

2014

% Growth

EPS as reported, diluted

$3.16

$2.89

9%

$8.07

$7.30

11%

Restructuring charges, net of tax

0.07

(a)

0.03

(a)

0.14

(a)

0.11

(a)

Purchased intangible amortization, net of tax

0.03

(b)

0.03

(b)

0.10

(b)

0.10

(b)

Adjusted EPS, diluted

$3.26

$2.95

11%

$8.31

$7.51

11%

Notes:

(a)

Represents the EPS impact of restructuring charges of $2.6 million ($1.9 million after tax) and $1.1 million ($0.8 million after tax) for the three months ended September 30, 2015 and 2014, respectively and $5.2 million ($3.9 million after tax) and $4.4 million ($3.4 million after tax) for the nine months ended September 30, 2015 and 2014, respectively, which primarily include employee related costs.

(b)

Represents the EPS impact of purchased intangibles amortization, net of tax, of $0.9 million and $1.0 million for the three months ended September 30, 2015 and 2014, respectively and $2.9 million and $2.8 million for the nine months ended September 30, 2015 and 2014, respectively.

 

 

SOURCE Mettler-Toledo International Inc.



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