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Mettler-Toledo International Inc. Reports Fourth Quarter 2018 Results

- - Excellent Sales Growth - -

- - Strong Earnings Growth - -

COLUMBUS, Ohio, Feb. 7, 2019 /PRNewswire/ -- Mettler-Toledo International Inc. (MTD) today announced fourth quarter results for 2018.  Provided below are the highlights:

  • Reported sales increased 5% compared with the prior year.  In local currency, sales increased 8% in the quarter as currency reduced sales growth by 3%. 

  • Net earnings per diluted share as reported (EPS) were $7.11, compared with $2.93 in the prior-year period.  Adjusted EPS was $6.85, an increase of 15% over the prior-year amount of $5.97.  Adjusted EPS is a non-GAAP measure, and we have included a reconciliation to EPS on the last page of the attached schedules. 

Fourth Quarter Results

Olivier Filliol, President and Chief Executive Officer, stated, "We achieved excellent sales growth in the quarter with very good results in most of our Laboratory and Industrial product lines.  China had another quarter of strong sales growth.  We benefited from our productivity and margin initiatives, and despite adverse currency and higher tariff costs, recognized a strong increase in operating margins and earnings growth."

GAAP Results
EPS in the quarter was $7.11, compared with the prior-year amount of $2.93.  Included in 2018 EPS is a one-time non-cash acquisition-related gain of $0.75 and included in 2017 EPS is a tax charge of $2.74.  Additional details on one-time items included in EPS are found in the attached schedules.    

Compared with the prior year, total reported sales increased 5% to $817.9 million.  By region, reported sales increased 6% in the Americas, 3% in Europe and 7% in Asia/Rest of World.  Earnings before tax amounted to $230.5 million, compared with $193.9 million in the prior year. 

Non-GAAP Results
Adjusted EPS was $6.85, an increase of 15% over the prior-year amount of $5.97.     

Compared with the prior year, total sales in local currency increased 8% as currency reduced reported sales growth by 3%.  By region, local currency sales increased 7% in the Americas, 6% in Europe and 10% in Asia/Rest of World.  Adjusted Operating Income amounted to $239.7 million, an 11% increase from the prior-year amount of $216.9 million

Adjusted EPS and Adjusted Operating Income are non-GAAP measures. Reconciliations to the most comparable GAAP measures are provided in the attached schedules.

Full Year Results

GAAP Results
EPS in 2018 was $19.88, compared with the prior-year amount of $14.24.  Included in 2018 EPS is a one-time non-cash acquisition-related gain of $0.74 and included in 2017 EPS is a tax charge of $2.73.  Additional details on one-time items included in EPS are found in the attached schedules.    

Total reported sales increased 8% in 2018 to $2.936 billion.  By region, reported sales increased 5% in the Americas, 7% in Europe and 12% in Asia/Rest of World.  Earnings before tax amounted to $651.9 million, compared with $574.2 million in the prior year. 

Non-GAAP Results
Adjusted EPS was $20.32, an increase of 16% over the prior-year amount of $17.57.     

Total sales in local currency increased 6% in 2018 as currency benefited reported sales growth by 2%. By region, local currency sales increased 5% in the Americas, 4% in Europe and 10% in Asia/Rest of World.  Adjusted Operating Income amounted to $730.5 million, a 12% increase from the prior-year amount of $652.6 million

Adjusted EPS and Adjusted Operating Income are non-GAAP measures. Reconciliations to the most comparable GAAP measures are provided in the attached schedules.

Outlook

The Company said that based on its assessment of market conditions today, management anticipates local currency sales growth in 2019 will be approximately 5%.  This sales growth is expected to result in Adjusted EPS in the range of $22.50 to $22.70, a growth rate of 11% to 12%.  Previously, the Company provided guidance for Adjusted EPS in the range of $22.40 to $22.60.  

Based on today's assessment of market conditions, management anticipates that local currency sales growth in the first quarter 2019 will be approximately 5.5%, and Adjusted EPS is forecasted to be in the range of $4.00 to $4.05, an increase of 7% to 8%.

While the Company has provided an outlook for local currency sales growth and Adjusted EPS, it has not provided an outlook for reported sales growth or EPS as it would require an estimate of currency exchange fluctuations and non-recurring items, which are not yet known.  The Company noted in making its outlook that economic uncertainty remains in certain regions of the world and market conditions are subject to change.   

Conclusion

Filliol concluded, "We ended 2018 on a positive note as demand in our markets remains solid and our growth initiatives continue to yield strong results.  We are cautious on the global economy as uncertainties exist, particularly concerning trade tariff disputes.  We will continue to monitor developments closely and adapt our plans if economic conditions change.  We assume market conditions will remain favorable and are confident in our ability to execute on our growth initiatives.  With the benefit of our investments in our field force, Spinnaker sales and marketing programs and new product launches, we believe we are well positioned to continue to gain market share.  With the positive impact from margin and productivity initiatives and, despite headwinds due to currency and tariffs, we believe we can deliver strong results in 2019."

Other Matters

The Company will host a conference call to discuss its quarterly results today (Thursday, Feb. 7) at 4:30 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 (MTD) is a leading global supplier of precision instruments and services. We have strong leadership positions in all of our businesses and believe we hold global number-one market positions in most of them. We are recognized as an innovation leader and our solutions are critical in key R&D, quality control and manufacturing processes for customers in a wide range of industries including life sciences, food and chemicals. Our sales and service network is one of the most extensive in the industry. Our products are sold in more than 140 countries and we have a direct presence in approximately 40 countries. With proven growth strategies and a focus on execution, we have achieved a long-term track record of strong financial performance. For more information, please visit www.mt.com.

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 10-K.  All of the forward-looking statements are qualified in their entirety by reference to the factors discussed under the caption "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, 2018



% of sales




December 31, 2017



% of sales


















Net sales



$817,923


(a)


100.0





$778,031




100.0



Cost of sales



340,357




41.6





322,256


(b)


41.4



Gross profit



477,566




58.4





455,775




58.6























Research and development



36,205




4.4





32,324


(b)


4.2



Selling, general and administrative



201,653




24.7





206,547


(b)


26.5



Amortization



11,963




1.5





11,661




1.5



Interest expense



8,840




1.1





8,625




1.1



Restructuring charges



4,464




0.5





3,932




0.5



Other charges (income), net



(16,013)




(2.0)





(1,214)


(b)


(0.1)



Earnings before taxes



230,454




28.2





193,900




24.9























Provision for taxes



49,268


(c)


6.0





116,924


(c)


15.0



Net earnings



$181,186




22.2





$76,976




9.9























Basic earnings per common share:



















Net earnings



$7.25









$3.01







Weighted average number of common shares



24,975,303









25,562,542



























Diluted earnings per common share:



















Net earnings



$7.11









$2.93







Weighted average number of common



25,490,270









26,229,052







  and common equivalent shares







































Note:



















(a) Local currency sales increased 8% as compared to the same period in 2017.



(b) In accordance with the new accounting rules that went into effect on January 1, 2018, the Company reclassified a net pension benefit of
     $0.9 million into other charges (income) from other income statement categories for the three months ended December 31, 2017 to be
     consistent with 2018 presentation.



(c) Provision for taxes includes charges of $3.6 million and $72 million for the three months ended December 31, 2018 and 2017, respectively,
     for the implementation of the Tax Cuts and Jobs Act.











































RECONCILIATION OF EARNINGS BEFORE TAXES TO ADJUSTED OPERATING INCOME

























Three months ended









Three months ended











December 31, 2018



% of sales




December 31, 2017



% of sales






















Earnings before taxes



$230,454









$193,900







Amortization



11,963









11,661







Interest expense



8,840









8,625







Restructuring charges



4,464









3,932







Other charges (income), net



(16,013)


(d)







(1,214)







Adjusted operating income



$239,708


(e)


29.3





$216,904




27.9























Note:



















(d) Other charges (income), net includes a one-time gain of $18.7 million relating to the Biotix acquisition contingent consideration and a one-
      time legal charge of $3.0 million for the three months ended December 31, 2018.



(e) Adjusted operating income increased 11% as compared to the same period in 2017.




 

METTLER-TOLEDO INTERNATIONAL INC.

CONSOLIDATED STATEMENTS OF OPERATIONS

(amounts in thousands except share data)

(unaudited)

























Twelve months ended









Twelve months ended











December 31, 2018



% of sales




December 31, 2017



% of sales


















Net sales



$2,935,586


(a)


100.0





$2,725,053




100.0



Cost of sales



1,251,208




42.6





1,149,302


(b)


42.2



Gross profit



1,684,378




57.4





1,575,751




57.8























Research and development



141,071




4.8





128,308


(b)


4.7



Selling, general and administrative 



812,802




27.7





794,861


(b)


29.2



Amortization



47,524




1.6





42,671




1.6



Interest expense



34,511




1.2





32,785




1.2



Restructuring charges



18,420




0.6





12,772




0.5



Other charges (income), net



(21,808)




(0.7)





(9,868)


(b)


(0.5)



Earnings before taxes



651,858




22.2





574,222




21.1























Provision for taxes



139,247


(c)


4.7





198,250


(c)


7.3



Net earnings



$512,611




17.5





$375,972




13.8























Basic earnings per common share:



















Net earnings 



$20.33









$14.62







Weighted average number of common shares



25,215,674









25,713,575



























Diluted earnings per common share:



















Net earnings 



$19.88









$14.24







Weighted average number of common 



25,781,324









26,393,783







  and common equivalent shares







































Note:



















(a) Local currency sales increased 6% as compared to the same period in 2017.



(b) In accordance with the new accounting rules that went into effect on January 1, 2018, the Company reclassified a net pension benefit of $4.0
     million into other charges (income) from other income statement categories for the twelve months ended December 31, 2017 to be consistent
     with 2018 presentation.



(c) Provision for taxes includes charges of $3.6 million and $72 million for the twelve months ended December 31, 2018 and 2017,
     respectively, for the implementation of the Tax Cuts and Jobs Act.











































RECONCILIATION OF EARNINGS BEFORE TAXES TO ADJUSTED OPERATING INCOME

























Twelve months ended









Twelve months ended











December 31, 2018



% of sales




December 31, 2017



% of sales






















Earnings before taxes



$651,858









$574,222







Amortization



47,524









42,671







Interest expense



34,511









32,785







Restructuring charges



18,420









12,772







Other charges (income), net



(21,808)


(d)







(9,868)


(f)





Adjusted operating income 



$730,505


(e)


24.9





$652,582




23.9























Note:



















(d) Other charges (income), net includes a one-time gain of $18.7 million relating to the Biotix acquisition contingent consideration and a one-
     time legal  charge of $3.0 million for the twelve months ended December 31, 2018.



(e) Adjusted operating income increased 12% as compared to the same period in 2017.



(f) Other charges (income), net includes a one-time gain of $3.4 million relating to the sale of a facility in Switzerland in connection with our
     initiative to consolidate certain Swiss operations into a new facility and $1.7 million of acquisition costs for the twelve months ended
     December 31, 2017.



 

METTLER-TOLEDO INTERNATIONAL INC.

CONDENSED CONSOLIDATED BALANCE SHEETS

(amounts in thousands)

(unaudited)























December 31, 2018



December 31, 2017











Cash and cash equivalents



$178,110





$148,687


Accounts receivable, net



535,528





528,615


Inventories



268,821





255,390


Other current assets and prepaid expenses



63,401





74,031


Total current assets



1,045,860





1,006,723












Property, plant and equipment, net



717,526





668,271


Goodwill and other intangibles assets, net



752,088





766,556


Other non-current assets



103,373





108,255


Total assets



$2,618,847





$2,549,805












Short-term borrowings and maturities of long-term debt



$49,670





$19,677


Trade accounts payable



196,641





167,627


Accrued and other current liabilities



488,123





502,369


Total current liabilities



734,434





689,673












Long-term debt



985,021





960,170


Other non-current liabilities



309,329





352,682


Total liabilities



2,028,784





2,002,525












Shareholders' equity



590,063





547,280


Total liabilities and shareholders' equity



$2,618,847





$2,549,805


 

METTLER-TOLEDO INTERNATIONAL INC.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

 (amounts in thousands)

 (unaudited)
















Three months ended


Twelve months ended





December 31,


December 31,





2018


2017


2018


2017












Cash flow from operating activities:










    Net earnings



$181,186


$76,976


$512,611


$375,972

    Adjustments to reconcile net earnings to










      net cash provided by operating activities:










Depreciation



9,278


9,037


37,167


33,458

Amortization



11,963


11,661


47,524


42,671

Deferred tax provision (benefit)



14,203


5,009


2,302


(2,745)

Share-based compensation



5,074


4,759


17,579


16,582

U.S. tax reform charge(a)



3,597


71,982


3,597


71,982

Acquisition gain(b)



(18,674)


-


(18,674)


-

Gain on facility sale 



-


-


-


(3,394)

Other



147


16


(2,559)


243

Decrease in cash resulting from changes in










  operating assets and liabilities



(8,202)


(14,350)


(34,542)


(18,444)

                Net cash provided by operating activities



198,572


165,090


565,005


516,325












Cash flows from investing activities:










    Proceeds from sale of property, plant and equipment



381


1,536


8,190


11,973

    Purchase of property, plant and equipment



(46,061)


(41,600)


(142,726)


(127,426)

    Acquisitions



(565)


-


(5,527)


(108,445)

    Net hedging settlements on intercompany loans



1,899


2,838


1,119


6,554

                Net cash used in investing activities



(44,346)


(37,226)


(138,944)


(217,344)












Cash flows from financing activities:










    Proceeds from borrowings



168,341


258,501


940,615


1,244,195

    Repayments of borrowings



(172,620)


(351,111)


(876,324)


(1,185,172)

    Proceeds from exercise of stock options



9,823


5,334


24,600


28,649

    Repurchases of common stock 



(118,750)


(64,999)


(474,999)


(399,997)

    Other financing activities



(250)


-


(1,914)


(7,205)

                Net cash used in financing activities



(113,456)


(152,275)


(388,022)


(319,530)












Effect of exchange rate changes on cash and cash equivalents



(108)


4,012


(8,616)


10,562












Net increase (decrease) in cash and cash equivalents



40,662


(20,399)


29,423


(9,987)












Cash and cash equivalents:










    Beginning of period



137,448


169,086


148,687


158,674

    End of period



$178,110


$148,687


$178,110


$148,687























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












Net cash provided by operating activities



$198,572


$165,090


$565,005


$516,325

    Payments in respect of restructuring activities



4,119


4,962


20,820


12,663

    Payments for acquisition costs



233


672


375


1,436

    Transition tax payment



-


-


4,200


-

    Proceeds from sale of property, plant and equipment



381


1,536


8,190


11,973

    Purchase of property, plant and equipment



(46,061)


(41,600)


(142,726)


(127,426)

Adjusted free cash flow



$157,244


$130,660


$455,864


$414,971












(a) Represents U.S. tax reform charges of $3.6 million and $72 million for the three and twelve months ended December 31, 2018 and
      2017, respectively, for the implementation of the Tax Cuts and Jobs Act.

(b) Represents a one-time gain of $18.7 million relating to the Biotix acquisition contingent consideration for the three and twelve
      months ended December 31, 2018.

 

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, 2018



3%


6%


7%


5%




Twelve Months Ended December 31, 2018



7%


5%


12%


8%
















Local Currency Sales Growth













Three Months Ended December 31, 2018



6%


7%


10%


8%




Twelve Months Ended December 31, 2018



4%


5%


10%


6%





























RECONCILIATION OF DILUTED EPS AS REPORTED TO ADJUSTED DILUTED EPS 


(unaudited)

















Three months ended

Twelve months ended



December 31,

December 31,



2018


2017


% Growth


2018


2017


% Growth














EPS as reported, diluted

$7.11


$2.93


143%


$19.88


$14.24


40%














Restructuring charges, net of tax

0.14

(a)

0.12

(a)



0.56

(a)

0.38

(a)


Purchased intangible amortization, net of tax

0.10

(b)

0.09

(b)



0.39

(b)

0.27

(b)


U.S. tax reform

0.14

(c)

2.74

(c)



0.14

(c)

2.73

(c)


Income tax expense

0.02

(d)

0.09

(d)



-


-



Acquistion (gain) cost, net of tax

(0.75)

(e)

-




(0.74)

(e)

0.05

(e)


Legal charge, net of tax

0.09

(f)

-




0.09

(f)

-



Gain on facility sale

-


-




-


(0.10)

(g)















Adjusted EPS, diluted

$6.85


$5.97


15%


$20.32


$17.57


16%














Notes:












(a)

Represents the EPS impact of restructuring charges of $4.5 million ($3.5 million after tax) and $3.9 million ($3.1 million after tax) for the three months ended December 31, 2018 and 2017, and $18.4 million ($14.5 million after tax) and $12.8 million ($10.0 million after tax) for the twelve months ended December 31, 2018 and 2017, respectively, which primarily include employee related costs.

(b)

Represents the EPS impact of purchased intangibles amortization of $3.3 million ($2.5 million after tax) and $3.7 million ($2.3 million after tax) for the three months ended December 31, 2018 and 2017, and $13.3 million ($10.0 million after tax) and $10.9 million ($7.1 million after tax) for the twelve months ended December 31, 2018 and 2017, respectively.

(c)

Represents the EPS impact of U.S. tax reform charges of $3.6 million and $72.0 million for the three and twelve months ended December 31, 2018 and 2017, respectively, for the implementation of the Tax Cuts and Jobs Act. 

(d)

Represents the EPS impact of the difference between our quarterly and annual tax rate from excess tax benefits associated with stock option exercises.

(e)

Represents the EPS impact of a one-time gain of $18.7 million ($19.2 million after tax) for the three and twelve months ended December 31, 2018 associated with the Biotix acquisition contingent consideration. Amounts for the twelve months ended December 31, 2017 represent the EPS impact of acquisition costs of $1.7 million ($1.3 million after tax).

(f)

Represents the EPS impact of a one-time legal charge of $3.0 million ($2.4 million after tax) for the three and twelve months ended December 31, 2018.

(g)

Represents the EPS impact of a one-time gain of $3.4 million ($2.7 million after tax) for the twelve months ended December 31, 2017 relating to the sale of a facility in Switzerland in connection with our initiative to consolidate certain Swiss operations into a new facility.

 

 

Cision

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