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Mettler-Toledo International Inc.$724.08$7.581.06%

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 Mettler-Toledo International Inc. Reports Fourth Quarter 2017 Results
   Thursday, February 08, 2018 4:15:00 PM ET

Mettler-Toledo International Inc. (MTD ) today announced fourth quarter results for 2017. Provided below are the highlights:

-- Sales in local currency increased 6% in the quarter compared with the prior year. Reported sales increased 10% as currency increased sales growth by 4% in the quarter.

-- Net earnings per diluted share as reported (EPS) were $2.93, compared with $5.17 in the prior-year period. Adjusted EPS was $5.97, an increase of 13% over the prior-year amount of $5.28. EPS includes a $2.74 income tax charge related to the new U.S. tax legislation. 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, "Sales growth in the quarter was good, with particularly strong broad-based growth in our Laboratory business. Our productivity initiatives continue to generate positive results which contributed to another strong growth in Adjusted EPS."

EPS in the quarter was $2.93, compared with the prior-year amount of $5.17. Adjusted EPS was $5.97, an increase of 13% over the prior-year amount of $5.28. EPS includes a $2.74 income tax charge related to the new U.S. tax legislation.

Sales were $778.0 million, a 6% increase in local currency sales, compared with $709.7 million in the prior-year quarter. Reported sales increased 10% as currency increased sales growth by 4% in the quarter. As compared with the prior year, local currency sales increased 9% in the Americas, 1% in Europe and 7% in Asia/Rest of World. Adjusted operating income amounted to $217.8 million, a 9% increase from the prior-year amount of $200.2 million. Adjusted operating income is a non-GAAP measure, and a reconciliation to earnings before taxes is provided in the attached schedules.

Full Year Results

EPS for 2017 was $14.24, compared with the prior-year amount of $14.22. Adjusted EPS was $17.57, an increase of 19% over the prior-year amount of $14.80. EPS includes a $2.73 income tax charge related to the new U.S. tax legislation.

Sales were $2.725 billion, an 8% increase in local currency sales, compared with $2.508 billion in the prior-year period. Reported sales increased 9% as currency increased sales growth by 1% in the period.

As compared with the prior year, local currency sales increased 8% in the Americas, 5% in Europe and 11% in Asia/Rest of World. Adjusted operating income amounted to $656.6 million, a 13% increase from the prior-year amount of $583.0 million. Adjusted operating income is a non-GAAP measure, and a reconciliation to earnings before taxes is 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 2018 will be approximately 6%. This sales growth is expected to result in Adjusted EPS in the range of $19.95 to $20.15, which reflects growth of 14% to 15%. This compares to previous Adjusted EPS guidance of $19.65 to $19.85.

Management anticipates that local currency sales growth in the first quarter 2018 will be approximately 5%, and Adjusted EPS is forecasted to be in the range of $3.65 to $3.70, an increase of 9% to 11%.

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. 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, "Diligent execution of our strategic initiatives, supported by favorable economic conditions in all major regions of the world, resulted in excellent operating results in 2017. We believe we are well positioned for further share gains with the benefit of our Spinnaker sales and marketing initiatives, excellent product pipeline, additional investments in sales resources and further use of sophisticated tools such as big data analytics to identify growth opportunities in our markets. We expect our growth initiatives combined with our margin and productivity programs will generate strong operating results and provide the capacity for future growth investments."

Other Matters

The Company will host a conference call to discuss its quarterly results today (Thursday, February 8) 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 (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 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, 2017                            % of sales                                 December 31, 2016                         % of sales
Net sales                                                      $778,031             (a)                     100.0                                      $709,699                                  100.0
Cost of sales                                                  322,812                                      41.5                                       291,089                                   41.0
Gross profit                                                   455,219                                      58.5                                       418,610                                   59.0
Research and development                                       32,542                                       4.2                                        30,155                                    4.2
Selling, general and administrative                            204,860                                      26.3                                       188,223                                   26.5
Amortization                                                   11,661                                       1.5                                        9,886                                     1.4
Interest expense                                               8,625                                        1.1                                        7,407                                     1.1
Restructuring charges                                          3,932                                        0.5                                        1,656                                     0.3
Other charges (income), net                                    (301)                                        (0.0)                                      (1)                                       (0.0)
Earnings before taxes                                          193,900                                      24.9                                       181,284                                   25.5
Provision for taxes                                            116,924              (b)                     15.0                                       43,508                                    6.1
Net earnings                                                   $76,976                                      9.9                                        $137,776                                  19.4
Basic earnings per common share:
Net earnings                                                   $3.01                                                                                   $5.27
Weighted average number of common shares                       25,562,542                                                                              26,139,024
Diluted earnings per common share:
Net earnings                                                   $2.93                                                                                   $5.17
Weighted average number of common                              26,229,052                                                                              26,631,269
and common equivalent shares
Note:
(a)                  Local currency sales increased 6% as compared to the same period in 2016.
(b)                  Provision for taxes for the three months ended December 31, 2017 includes a provisional one-time charge of $72 million for the implementation of the Tax Cuts and Jobs Act. Of this amount, $59 million is expected to paid over a period of up to eight years.  The estimated charge may change with the finalization of implementation.
RECONCILIATION OF EARNINGS BEFORE TAXES TO ADJUSTED OPERATING INCOME
                                           Three months ended                                                                      Three months ended
                                           December 31, 2017                            % of sales                                 December 31, 2016                         % of sales
Earnings before taxes                                          $193,900                                                                                $181,284
Amortization                                                   11,661                                                                                  9,886
Interest expense                                               8,625                                                                                   7,407
Restructuring charges                                          3,932                                                                                   1,656
Other charges (income), net                                    (301)                                                                                   (1)
Adjusted operating income                                      $217,817             (c)                     28.0                                       $200,232                                  28.2
Note:
(c)                  Adjusted operating income increased 9% as compared to the same period in 2016.
METTLER-TOLEDO INTERNATIONAL INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
(amounts in thousands except share data)
(unaudited)
                                           Twelve months ended                                                                     Twelve months ended
                                           December 31, 2017                            % of sales                                 December 31, 2016                            % of sales
Net sales                                                      $2,725,053           (a)                     100.0                                      $2,508,257                                   100.0
Cost of sales                                                  1,151,740                                    42.3                                       1,072,670                                    42.8
Gross profit                                                   1,573,313                                    57.7                                       1,435,587                                    57.2
Research and development                                       129,265                                      4.7                                        119,968                                      4.8
Selling, general and administrative                            787,464                                      28.8                                       732,622                                      29.2
Amortization                                                   42,671                                       1.6                                        36,052                                       1.4
Interest expense                                               32,785                                       1.2                                        28,026                                       1.1
Restructuring charges                                          12,772                                       0.5                                        6,235                                        0.3
Other charges (income), net                                    (5,866)                                      (0.2)                                      8,491                                        0.3
Earnings before taxes                                          574,222                                      21.1                                       504,193                                      20.1
Provision for taxes                                            198,250              (b)                     7.3                                        119,823                                      4.8
Net earnings                                                   $375,972                                     13.8                                       $384,370                                     15.3
Basic earnings per common share:
Net earnings                                                   $14.62                                                                                  $14.49
Weighted average number of common shares                       25,713,575                                                                              26,517,768
Diluted earnings per common share:
Net earnings                                                   $14.24                                                                                  $14.22
Weighted average number of common                              26,393,783                                                                              27,023,905
and common equivalent shares
Note:
(a)                  Local currency sales increased 8% as compared to the same period in 2016.
(b)                  Provision for taxes for the twelve months ended December 31, 2017 includes a provisional one-time charge of $72 million for the implementation of the Tax Cuts and Jobs Act. Of this amount, $59 million is expected to paid over a period of up to eight years.  The estimated charge may change with the finalization of implementation.
RECONCILIATION OF EARNINGS BEFORE TAXES TO ADJUSTED OPERATING INCOME
                                           Twelve months ended                                                                     Twelve months ended
                                           December 31, 2017                            % of sales                                 December 31, 2016                            % of sales
Earnings before taxes                                          $574,222                                                                                $504,193
Amortization                                                   42,671                                                                                  36,052
Interest expense                                               32,785                                                                                  28,026
Restructuring charges                                          12,772                                                                                  6,235
Other charges (income), net                                    (5,866)              (c)                                                                8,491                (e)
Adjusted operating income                                      $656,584             (d)                     24.1                                       $582,997                                     23.2
Note:
(c)                  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.
(d)                  Adjusted operating income increased 13% as compared to the same period in 2016.
(e)                  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 costs of $1.1 million for the twelve months ended December 31, 2016.
METTLER-TOLEDO INTERNATIONAL INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(amounts in thousands)
(unaudited)
                                                        December 31, 2017   December 31, 2016
Cash and cash equivalents                                     $148,687            $158,674
Accounts receivable, net                                      528,615             454,988
Inventories                                                   255,390             222,047
Other current assets and prepaid expenses                     74,031              61,075
Total current assets                                          1,006,723           896,784
Property, plant and equipment, net                            668,271             563,707
Goodwill and other intangibles assets, net                    766,556             643,433
Other non-current assets                                      108,255             62,853
Total assets                                                  $2,549,805          $2,166,777
Short-term borrowings and maturities of long-term debt        $19,677             $18,974
Trade accounts payable                                        167,627             146,593
Accrued and other current liabilities                         502,369             421,948
Total current liabilities                                     689,673             587,515
Long-term debt                                                960,170             875,056
Other non-current liabilities                                 352,682             269,263
Total liabilities                                             2,002,525           1,731,834
Shareholders’ equity                                          547,280             434,943
Total liabilities and shareholders’ equity                    $2,549,805          $2,166,777
METTLER-TOLEDO INTERNATIONAL INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(amounts in thousands)
(unaudited)
                                                             Three months ended                                      Twelve months ended
                                                             December 31,                                            December 31,
                                                             2017                        2016                        2017                        2016
Cash flows from operating activities:
Net earnings                                                 $76,976                     $137,776                    $375,972                    $384,370
Adjustments to reconcile net earnings to
net cash provided by operating activities:
Depreciation                                                 9,037                       8,216                       33,458                      32,743
Amortization                                                 11,661                      9,886                       42,671                      36,052
Deferred tax provision (benefit)                             5,009                       12,956                      (2,745)                     1,878
Share-based compensation                                     4,759                       4,445                       16,582                      15,306
Provisional one-time charge on US tax reform                 71,982                      -                           71,982                      -
Gain on facility sale                                        -                           -                           (3,394)                     -
Non-cash pension settlement charge                           -                           -                           -                           8,189
Other                                                        16                          175                         243                         181
Decrease in cash resulting from changes in
operating assets and liabilities                             (14,350)                    (20,009)                    (18,444)                    (17,961)
Net cash provided by operating activities                    165,090                     153,445                     516,325                     460,758
Cash flows from investing activities:
Proceeds from sale of property, plant and equipment(a)       1,536                       62                          11,973                      423
Purchase of property, plant and equipment                    (41,600)                    (72,723)                    (127,426)                   (123,957)
Acquisitions                                                 -                           (1,700)                     (108,445)                   (111,381)
Net hedging settlements on intercompany loans                2,838                       1,428                       6,554                       3,459
Net cash used in investing activities                        (37,226)                    (72,933)                    (217,344)                   (231,456)
Cash flows from financing activities:
Proceeds from borrowings                                     258,501                     195,786                     1,244,195                   905,774
Repayments of borrowings                                     (351,111)                   (138,265)                   (1,185,172)                 (594,178)
Proceeds from exercise of stock options                      5,334                       5,284                       28,649                      25,471
Repurchases of common stock                                  (64,999)                    (124,998)                   (399,997)                   (499,992)
Acquisition contingent consideration paid                    -                           -                           -                           (471)
Other financing activities                                   -                           -                           (7,205)                     (209)
Net cash provided used in financing activities               (152,275)                   (62,193)                    (319,530)                   (163,605)
Effect of exchange rate changes on cash and cash equivalents 4,012                       (5,778)                     10,562                      (5,910)
Net (decrease) increase in cash and cash equivalents         (20,399)                    12,541                      (9,987)                     59,787
Cash and cash equivalents:
Beginning of period                                          169,086                     146,133                     158,674                     98,887
End of period                                                $148,687                    $158,674                    $148,687                    $158,674
RECONCILIATION OF NET CASH PROVIDED BY OPERATING ACTIVITIES TO FREE CASH FLOW
Net cash provided by operating activities                    $165,090                    $153,445                    $516,325                    $460,758
Payments in respect of restructuring activities              4,962                       2,072                       12,663                      8,376
Payments for acquisition costs                               672                         -                           1,436                       910
Proceeds from sale of property, plant and equipment(a)       1,536                       62                          11,973                      423
Purchase of property, plant and equipment                    (41,600)                    (72,723)                    (127,426)                   (123,957)
Free cash flow                                               $130,660                    $82,856                     $414,971                    $346,510
(a)             Proceeds from sale of property, plant and equipment includes $9.9 million relating to the sale of a facility in Switzerland in connection with our initiative to consolidate certain Swiss operations into a new facility for the twelve months ended December 31, 2017.
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, 2017                                                                    9%         9%        10%                                                   10%
                        Twelve Months Ended December 31, 2017                                                                   6%         8%        11%                                                   9%
Local Currency Sales Growth
                        Three Months Ended December 31, 2017                                                                    1%         9%        7%                                                    6%
                        Twelve Months Ended December 31, 2017                                                                   5%         8%        11%                                                   8%
RECONCILIATION OF DILUTED EPS AS REPORTED TO ADJUSTED DILUTED EPS
(unaudited)
                                                                          Three months ended                                                         Twelve months ended
                                                                          December 31,                                                               December 31,
                                                                          2017                                                  2016       % Growth  2017                                                  2016       % Growth
EPS as reported, diluted                                                  $2.93                                                 $5.17      (43%)     $14.24                                                $14.22     0%
Restructuring charges, net of tax                                         0.12                                              (a) 0.05   (a)           0.38                                              (a) 0.18   (a)
Purchased intangible amortization, net of tax                             0.09                                              (b) 0.06   (b)           0.27                                              (b) 0.18   (b)
U.S. tax reform                                                           2.74                                              (c) -                    2.73                                              (c) -
Income tax expense                                                        0.09                                              (d) -                    -                                                     -
Acquistion costs, net of tax                                              -                                                     -                    0.05                                              (e) 0.03   (e)
Gain on facility sale                                                     -                                                     -                    (0.10)                                            (f) -
Non-cash pension settlement charge, net of tax                            -                                                     -                    -                                                     0.19   (g)
Adjusted EPS, diluted                                                     $5.97                                                 $5.28      13%       $17.57                                                $14.80     19%
Notes:
(a)                     Represents the EPS impact of restructuring charges of $3.9 million ($3.1 million after tax) and $1.7 million ($1.3 million after tax) for the three months ended December 31, 2017 and 2016, and $12.8 million ($10.0 million after tax) and $6.2 million ($4.7 million after tax) for the twelve months ended December 31, 2017 and 2016, respectively, which primarily include employee related costs.
(b)                     Represents the EPS impact of purchased intangibles amortization of $3.7 million ($2.3 million after tax) and $2.2 million ($1.5 million after tax) for the three months ended December 31, 2017 and 2016, and $10.9 million ($7.1 million after tax) and $7.4 million ($5.0 million after tax) for the twelve months ended December 31, 2017 and 2016, respectively.
(c)                     Represents the EPS impact of a provisional one-time charge of $72.0 million for the three and twelve months ended December 31, 2017 for the implementation of the Tax Cuts and Jobs Act ("Tax Act") which was signed into law in December 2017. The enactment of the Tax Act results in a one-time cash charge for un-repatriated foreign earnings of $59 million which is expected to be paid over a period of up to eight years, and a one-time non-cash charge of $13 million related to certain deferred tax and other non-cash items.  The estimated charge may change with the finalization of implementation.
(d)                     Represents the EPS impact of the difference between our reported tax rate of 23% before a one-time charge related to U.S. tax reform during the three months ending December 31, 2017 and our annual income tax rate of 22%, which reflects a 2% annual benefit pertaining to excess tax benefits associated with stock option exercises.
(e)                     Represents the EPS impact of acquisition costs of $1.7 million ($1.3 million after tax) and $1.1 million ($0.8 million after tax) for the twelve months ended December 31, 2017 and 2016, respectively.
(f)                     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.
(g)                     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.

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