Mettler-Toledo International Inc. Reports Third Quarter 2016 Results

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- - Very Strong Sales Growth - - - - Continued Margin Expansion and Excellent EPS Growth - -

November 3, 2016 4:11 PM EDT

COLUMBUS, Ohio, Nov. 3, 2016 /PRNewswire/ -- Mettler-Toledo International Inc. (NYSE: MTD) today announced third quarter results for 2016.  Provided below are the highlights:

  • Sales in local currency increased 9% in the quarter compared with the prior year.  Reported sales increased 8% as currency reduced sales growth by 1% in the quarter.
  • Net earnings per diluted share as reported (EPS) were $3.77, compared with $3.16 in the prior-year period.  Adjusted EPS was $3.89, an increase of 19% over the prior-year amount of $3.26.  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 quarter was very strong with broad-based growth in all regions and most product lines.  Demand in the Americas and Europe was very good.  Asia / Rest of the World did particularly well with good growth in China and strong results in most other countries in the region.  We further improved gross and operating margins which contributed to an excellent growth in EPS.  Finally, cash flow in the quarter was robust." 

EPS in the quarter was $3.77, compared with the prior-year amount of $3.16.  Adjusted EPS was $3.89, an increase of 19% over the prior-year amount of $3.26.  

Sales were $650.6 million, a 9% increase in local currency sales, compared with $604.2 million in the prior-year quarter.  Reported sales increased 8% as currency reduced sales growth by 1% in the quarter.  As compared to the prior year, local currency sales increased 7% in the Americas, 8% in Europe and 11% in Asia / Rest of World.  Adjusted operating income amounted to $151.7 million, a 13% increase from the prior-year amount of $134.3 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 $138.9 million, compared with $126.0 million in the prior-year quarter.

Nine Month Results

EPS for the nine months was $9.08, compared with the prior-year amount of $8.07. Adjusted EPS was $9.56, an increase of 15% over the prior-year amount of $8.31.

Sales were $1.799 billion, a 6% increase in local currency sales, compared with $1.722 billion in the prior-year period.  Reported sales increased 4%, as currency reduced sales growth by 2% in the period. By region, local currency sales increased 7% in the Americas, 4% in Europe and 8% in Asia / Rest of World as compared to the prior-year period.  Adjusted operating income amounted to $382.8 million, a 9% increase from the prior-year period amount of $349.9 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 $290.1 million, compared with $289.8 million in the prior-year period.

Senior Management Changes

The Company announced that Shawn Vadala, Chief Financial Officer, will join the Group Management Committee (GMC).  The Company also announced that Oliver Wittorf, Head of Supply Chain, will also assume responsibility for IT and the Company's Blue Ocean initiative and will join the GMC.  Mr. Vadala and Mr. Wittorf will continue to report to Bill Donnelly, Executive Vice President.  These management changes will take place on January 1, 2017, and have been undertaken to ensure a smooth transition as Mr. Donnelly will gradually reduce his time commitment and plans to retire at the end of 2018. 

Filliol commented on the management changes, "Both Shawn and Oliver are strong leaders with extensive experience and proven track records over many years at METTLER TOLEDO.  I am confident they will be strong contributors to the GMC and will further the development of the Finance, Supply Chain, IT and Blue Ocean functions.   I am very pleased that we have orchestrated a very smooth and well-planned succession for Bill Donnelly and that we can continue to leverage Bill's unique contribution to the Company for another two years."

Outlook 

The Company updated its outlook for 2016 and noted that forecasting remains challenging.      

Based on today's assessment, management anticipates that local currency sales growth in the fourth quarter 2016 will be approximately 5%, and Adjusted EPS is forecasted to be in the range of $5.08 to $5.13, an increase of 9% to 10%.

For the full year 2016, local currency sales growth is expected to be approximately 6% and Adjusted EPS in the range of $14.61 to $14.66, an increase of approximately 13%.  This compares to previous guidance of local currency sales growth of approximately 5% and Adjusted EPS in the range of $14.40 to $14.50.    

The Company said that, based on its assessment of market conditions today, management anticipates local currency sales growth in 2017 will be approximately 5%.  This sales growth is expected to result in Adjusted EPS in the range of $16.05 to $16.25.  Using the midpoint of the 2016 Adjusted EPS, this reflects a growth of 10% 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, "Demand in most of our markets is solid.  We continue to execute very well and are benefiting from our robust product pipeline, Spinnaker sales and marketing initiatives, Field Turbo investments and our productivity and margin enhancement measures.  Assuming market conditions remain stable, we believe we are well-positioned to continue to gain share and generate good sales and earnings growth in 2017 and beyond."    

Other Matters

The Company will host a conference call to discuss its quarterly results today (Thursday, November 3) 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, 2016

% of sales

September 30, 2015

% of sales

Net sales

$650,598

(a)

100.0

$604,154

100.0

Cost of sales

281,104

43.2

264,625

43.8

Gross profit

369,494

56.8

339,529

56.2

Research and development

30,139

4.6

29,711

4.9

Selling, general and administrative 

187,680

28.8

175,546

29.1

Amortization

9,087

1.4

7,767

1.3

Interest expense

7,167

1.1

7,029

1.1

Restructuring charges

1,494

0.3

2,561

0.4

Other charges (income), net

603

0.1

(8)

(0.0)

Earnings before taxes

133,324

20.5

116,923

19.4

Provision for taxes

31,992

4.9

28,062

4.7

Net earnings

$101,332

15.6

$88,861

14.7

Basic earnings per common share:

Net earnings 

$3.84

$3.23

Weighted average number of common shares

26,375,468

27,547,734

Diluted earnings per common share:

Net earnings 

$3.77

$3.16

Weighted average number of common 

26,888,810

28,113,287

  and common equivalent shares

Note:

(a) Local currency sales increased 9% as compared to the same period in 2015.

RECONCILIATION OF EARNINGS BEFORE TAXES TO ADJUSTED OPERATING INCOME

Three months ended

Three months ended

September 30, 2016

% of sales

September 30, 2015

% of sales

Earnings before taxes

$133,324

$116,923

Amortization

9,087

7,767

Interest expense

7,167

7,029

Restructuring charges

1,494

2,561

Other charges (income), net

603

(b)

(8)

Adjusted operating income 

$151,675

(c)

23.3

$134,272

22.2

Note:

(b) Other charges (income), net includes acquisition transaction costs of $1.1 million. 

(c) Adjusted operating income increased 13% as compared to the same period in 2015.

 

METTLER-TOLEDO INTERNATIONAL INC.

CONSOLIDATED STATEMENTS OF OPERATIONS

(amounts in thousands except share data)

(unaudited)

Nine months ended

Nine months ended

September 30, 2016

% of sales

September 30, 2015

% of sales

Net sales

$1,798,558

(a)

100.0

$1,721,912

100.0

Cost of sales

781,581

43.5

760,666

44.2

Gross profit

1,016,977

56.5

961,246

55.8

Research and development

89,813

5.0

87,966

5.1

Selling, general and administrative 

544,399

30.3

523,392

30.4

Amortization

26,166

1.5

22,929

1.3

Interest expense

20,619

1.1

20,696

1.2

Restructuring charges

4,579

0.2

5,188

0.3

Other charges (income), net

8,492

0.5

(858)

(0.0)

Earnings before taxes

322,909

17.9

301,933

17.5

Provision for taxes

76,315

4.2

72,464

4.2

Net earnings

$246,594

13.7

$229,469

13.3

Basic earnings per common share:

Net earnings 

$9.25

$8.24

Weighted average number of common shares

26,644,938

27,833,541

Diluted earnings per common share:

Net earnings 

$9.08

$8.07

Weighted average number of common 

27,153,450

28,443,478

  and common equivalent shares

Note:

(a) Local currency sales increased 6% as compared to the same period in 2015.

RECONCILIATION OF EARNINGS BEFORE TAXES TO ADJUSTED OPERATING INCOME

Nine months ended

Nine months ended

September 30, 2016

% of sales

September 30, 2015

% of sales

Earnings before taxes

$322,909

$301,933

Amortization

26,166

22,929

Interest expense

20,619

20,696

Restructuring charges

4,579

5,188

Other charges (income), net

8,492

(b)

(858)

Adjusted operating income 

$382,765

(c)

21.3

$349,888

20.3

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 9% as compared to the same period in 2015.

 

METTLER-TOLEDO INTERNATIONAL INC.

CONDENSED CONSOLIDATED BALANCE SHEETS

(amounts in thousands)

(unaudited)

September 30, 2016

December 31, 2015

Cash and cash equivalents

$146,133

$98,887

Accounts receivable, net

414,607

411,420

Inventories

239,985

214,383

Other current assets and prepaid expenses

145,377

138,125

Total current assets

946,102

862,815

Property, plant and equipment, net

527,477

517,229

Goodwill and other intangible assets, net

651,261

561,536

Other non-current assets

96,140

75,059

Total assets

$2,220,980

$2,016,639

Short-term borrowings and maturities of long-term debt

$21,779

$14,488

Trade accounts payable

129,650

142,075

Accrued and other current liabilities

469,420

438,564

Total current liabilities

620,849

595,127

Long-term debt

826,022

575,138

Other non-current liabilities

273,592

265,917

Total liabilities

1,720,463

1,436,182

Shareholders' equity

500,517

580,457

Total liabilities and shareholders' equity

$2,220,980

$2,016,639

 

METTLER-TOLEDO INTERNATIONAL INC.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

 (amounts in thousands)

 (unaudited)

Three months ended

Nine months ended

September 30,

September 30,

2016

2015

2016

2015

Cash flow from operating activities:

    Net earnings

$      101,332

$        88,861

$      246,594

$      229,469

    Adjustments to reconcile net earnings to

      net cash provided by operating activities:

Depreciation

8,411

8,320

24,527

24,978

Amortization

9,087

7,767

26,166

22,929

Deferred tax benefit

(2,226)

(564)

(11,078)

(3,245)

Excess tax benefits from share-based payment arrangements

(6,014)

(140)

(17,166)

(1,418)

Non-cash pension settlement charge

-

-

8,189

-

Other

3,719

3,443

10,867

10,513

Increase (decrease) in cash resulting from changes in

  operating assets and liabilities

24,613

18,354

2,048

6,600

                Net cash provided by operating activities

138,922

126,041

290,147

289,826

Cash flows from investing activities:

    Proceeds from sale of property, plant and equipment

143

154

361

281

    Purchase of property, plant and equipment

(22,376)

(20,833)

(51,234)

(56,756)

    Acquisitions

(105,352)

(10,669)

(109,681)

(10,969)

    Net hedging settlements on intercompany loans

956

7,248

2,031

(5,563)

                Net cash used in investing activities

(126,629)

(24,100)

(158,523)

(73,007)

Cash flows from financing activities:

    Proceeds from borrowings

317,428

56,552

709,988

550,002

    Repayments of borrowings

(186,229)

(60,968)

(455,913)

(374,891)

    Proceeds from exercise of stock options

6,222

4,096

20,187

21,834

    Excess tax benefits from share-based payment arrangements

6,014

140

17,166

1,418

    Repurchases of common stock 

(124,997)

(123,750)

(374,994)

(371,223)

   Other financing activities

-

(150)

(680)

(1,004)

                Net cash provided by (used in) financing activities

18,438

(124,080)

(84,246)

(173,864)

Effect of exchange rate changes on cash and cash equivalents

756

(3,871)

(132)

(4,919)

Net increase (decrease) in cash and cash equivalents

31,487

(26,010)

47,246

38,036

Cash and cash equivalents:

    Beginning of period

114,646

149,309

98,887

85,263

    End of period

$      146,133

$      123,299

$      146,133

$      123,299

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

Net cash provided by operating activities

$      138,922

$      126,041

$      290,147

$      289,826

    Excess tax benefits from share-based payment arrangements

6,014

140

17,166

1,418

    Payments in respect of restructuring activities

2,002

1,580

6,304

3,602

    Payments for acquisition transaction costs

910

-

910

-

    Proceeds from sale of property, plant and equipment

143

154

361

281

    Purchase of property, plant and equipment

(22,376)

(20,833)

(51,234)

(56,756)

Free cash flow

$      125,615

$      107,082

$      263,654

$      238,371

 

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, 2016

7%

7%

10%

8%

Nine Months Ended September 30, 2016

3%

6%

4%

4%

Local Currency Sales Growth

Three Months Ended September 30, 2016

8%

7%

11%

9%

Nine Months Ended September 30, 2016

4%

7%

8%

6%

 

RECONCILIATION OF DILUTED EPS AS REPORTED TO ADJUSTED DILUTED EPS 

(unaudited)

Three months ended 

Nine months ended

September 30,

September 30,

2016

2015

% Growth

2016

2015

% Growth

EPS as reported, diluted

$3.77

$3.16

19%

$9.08

$8.07

13%

Restructuring charges, net of tax

0.04

(a)

0.07

(a)

0.13

(a)

0.14

(a)

Purchased intangible amortization, net of tax

0.05

(b)

0.03

(b)

0.13

(b)

0.10

(b)

Acquisition transaction costs, net of tax

0.03

(c)

-

0.03

(c)

-

Non-cash pension settlement charge, net of tax

-

-

0.19

(d)

-

Adjusted EPS, diluted

$3.89

$3.26

19%

$9.56

$8.31

15%

Notes:

(a) Represents the EPS impact of restructuring charges of $1.5 million ($1.1 million after tax) and $2.6 million ($1.9 million after tax) for the three months ended September 30, 2016 and 2015, and $4.6 million ($3.5 million after tax) and $5.2 million ($3.9 million after tax) for the nine months ended September 30, 2016 and 2015, respectively, which primarily include employee related costs.

(b) Represents the EPS impact of purchased intangibles amortization, net of tax, of $1.3 million and $0.9 million for the three months ended September 30, 2016 and 2015, and $3.5 million and $2.9 million for the nine months ended September 30, 2016 and 2015, respectively.

(c) Represents the EPS impact of acquisition transaction costs of $1.1 million ($0.8 million after tax) for the three and nine months ended September 30, 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 nine months ended September 30, 2016.

 

To view the original version on PR Newswire, visit:http://www.prnewswire.com/news-releases/mettler-toledo-international-inc-reports-third-quarter-2016-results-300357194.html

SOURCE Mettler-Toledo International Inc.


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