Mettler-Toledo International Inc. Reports Third Quarter 2009 Results
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- - Strong Gross Margin and Cost Reduction Help Offset Adverse Market Conditions - - - - Excellent Cash Flow Generation - -
COLUMBUS, Ohio, Oct. 29 /PRNewswire-FirstCall/ --Mettler-Toledo International Inc. (NYSE: MTD) today announced third quarter results for 2009. Provided below are the highlights:
- Sales in local currency declined by 12% in the quarter. Reported sales decreased 14%, which included a 2% negative currency impact.
- Net earnings per diluted share as reported (EPS) were $1.21, compared with $1.52 in the third quarter of 2008. Adjusted EPS was $1.36, a 6% decline from the prior-year amount of $1.44. 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, "As we continued to face challenging market conditions and comparisons with very favorable results last year, our local currency sales declined as expected. However, gross margin increased strongly due to favorable mix as well as our initiatives in pricing and procurement. I am also very pleased with the benefit we are seeing from our cost reduction program. Finally, we again had excellent cash flow generation in the quarter."
EPS was $1.21, compared with the prior-year amount of $1.52. Adjusted EPS was $1.36, compared with the prior-year amount of $1.44.
Sales were $435.7 million, compared with $509.1 million in the prior year, reflecting a 12% decline in local currency sales. Reported sales declined by 14%, which included a 2% negative currency impact. By region, local currency sales decreased 16% in Europe, 12% in the Americas and 6% in Asia / Rest of World. Adjusted operating income amounted to $73.2 million, a 4% decrease from the prior-year amount of $76.5 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 $79.6 million, compared with $76.6 million in 2008.
Nine-Month Results
EPS was $3.02, compared with the prior-year amount of $3.96. Adjusted EPS was $3.48, compared with the prior-year amount of $3.85.
Sales were $1.217 billion, compared with $1.464 billion in 2008, reflecting a 12% decline in local currency sales. Reported sales declined by 17% due to a negative 5% currency impact. By region, local currency sales decreased 15% in Europe, 13% in the Americas and 4% in Asia / Rest of World. Adjusted operating income amounted to $187.2 million, an 11% decrease from the prior-year amount of $210.0 million.
Cash flow from operations was $188.5 million, compared with $160.6 million in 2008.
Cost Reduction Program
Earlier in the year, the Company announced a Cost Reduction Program aimed at reducing costs by approximately $100 million annually. The Program, which is substantially completed, consisted primarily of work force reductions and other cost efficiency measures. The Company reported that the Program will meet its target. Total restructuring charges associated with the Program are expected to be $40 million, of which $34.8 million has been incurred to date.
Fourth Quarter Outlook
The Company stated that forecasting continues to be difficult given the ongoing uncertainty in the global economy. For the fourth quarter 2009, management expects a local currency sales decline in the range of -6% to -7% and Adjusted EPS in the range of $1.90 to $2.00. For the full-year 2009, this results in a local currency sales decline of approximately -10% and Adjusted EPS in the range of $5.39 to $5.50. This compares with previous full-year Adjusted EPS guidance of $4.92 to $5.42.
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. EPS guidance would require an estimate of non-recurring items for 2009, which are not yet known.
Conclusion
Filliol concluded, "We have executed the necessary cost reduction measures and believe our cost structure is well aligned for the remainder of this year and into 2010. Our new product pipeline remains strong, and our sales and marketing programs are focused on capturing growth. Our strong leadership positions, track record for execution and our ability to continue to invest for growth during this difficult environment strongly position us to capture growth and gain market share. We remain convinced we will emerge from this downturn in a stronger competitive position."
Other Matters
The Company will host a conference call to discuss its third quarter results today (Thursday, October 29) 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 is the world's largest manufacturer and marketer of weighing instruments for use in laboratory, industrial and food retailing applications. The Company also holds top-three market positions in several related analytical instruments and is a leading provider of automated chemistry systems used in drug and chemical compound discovery and development. In addition, the Company is the world's largest supplier of metal detection and other end-of-line inspection systems used in production and packaging and holds a leading position in certain process analytics applications. Additional information about METTLER TOLEDO can be found at "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 % of Three months ended % of
September 30, 2009 sales September 30, 2008 sales
Net sales $435,650 (a) 100.0 $509,097 100.0
Cost of sales 210,457 48.3 260,417 51.2
------- ---- ------- ----
Gross profit 225,193 51.7 248,680 48.8
Research and development 22,309 5.1 26,553 5.2
Selling, general and
administrative 129,686 29.8 145,612 28.6
Amortization 3,237 0.7 2,728 0.5
Interest expense 6,974 1.6 6,846 1.3
Other charges (income),
net 6,077 1.4 445 0.1
----- --- --- ---
Earnings before taxes 56,910 13.1 66,496 13.1
Provision for taxes 15,365 3.6 13,772 2.7
------ --- ------ ---
Net earnings $41,545 9.5 $52,724 10.4
======= === ======= ====
Basic earnings per
common share:
Net earnings $1.23 $1.56
Weighted average
number of common
shares 33,728,931 33,856,574
Diluted earnings per
common share:
Net earnings $1.21 $1.52
Weighted average
number of common and
common equivalent
shares 34,413,656 34,727,806
Note:
(a) Local currency sales decreased 12% as compared to the same period
in 2008.
RECONCILIATION OF EARNINGS BEFORE TAXES TO ADJUSTED
OPERATING INCOME
Three months ended % of Three months ended % of
September 30, 2009 sales September 30, 2008 sales
Earnings before
taxes $56,910 $66,496
Amortization 3,237 2,728
Interest expense 6,974 6,846
Other charges
(income), net 6,077 (b) 445
----- ---
Adjusted operating
income $73,198 (c) 16.8 $76,515 15.0
======= =======
Notes:
(b) Includes a restructuring charge of $6.1 million which primarily
represents severance and lease termination costs during the three
months ended September 30, 2009.
(c) Adjusted operating income decreased 4% as compared to the same
period in 2008.
METTLER-TOLEDO INTERNATIONAL INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
(amounts in thousands except share data)
(unaudited)
Nine months ended % of Nine months ended % of
September 30, 2009 sales September 30, 2008 sales
Net sales $1,217,171 (a) 100.0 $1,463,657 100.0
Cost of sales 597,822 49.1 734,814 50.2
------- ---- ------- ----
Gross profit 619,349 50.9 728,843 49.8
Research and
development 65,954 5.4 77,511 5.3
Selling, general and
administrative 366,209 30.1 441,311 30.1
Amortization 8,734 0.7 7,800 0.5
Interest expense 18,975 1.6 18,723 1.3
Other charges
(income), net 29,547 2.4 2,620 0.2
------ --- ----- ---
Earnings before taxes 129,930 10.7 180,878 12.4
Provision for taxes 26,775 2.2 41,024 2.8
------ --- ------ ---
Net earnings $103,155 8.5 $139,854 9.6
======== === ======== ===
Basic earnings per
common share:
Net earnings $3.06 $4.06
Weighted average
number of common
shares 33,683,443 34,482,431
Diluted earnings per
common share:
Net earnings $3.02 $3.96
Weighted average
number of common and
common equivalent
shares 34,200,834 35,347,440
Note:
(a) Local currency sales decreased 12% as compared to the same period
in 2008.
RECONCILIATION OF EARNINGS BEFORE TAXES TO ADJUSTED OPERATING INCOME
Nine months ended % of Nine months ended % of
September 30, 2009 sales September 30, 2008 sales
Earnings before
taxes $129,930 $180,878
Amortization 8,734 7,800
Interest expense 18,975 (b) 18,723
Other charges
(income), net 29,547 (c) 2,620
------ -----
Adjusted operating
income $187,186 (d) 15.4 $210,021 14.3
======== ========
Notes:
(b) Includes costs to tender $75 million of the Company's 4.85% $150
million Senior Notes and other financing-related costs totaling
$1.8 million during the nine months ended September 30, 2009.
(c) Includes a restructuring charge of $28.4 million which primarily
represents severance and lease termination costs during the nine
months ended September 30, 2009.
(d) Adjusted operating income decreased 11% as compared to the same
period in 2008.
METTLER-TOLEDO INTERNATIONAL INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(amounts in thousands)
(unaudited)
September 30, 2009 December 31, 2008
Cash and cash equivalents $113,948 $78,073
Accounts receivable, net 284,965 348,614
Inventory 164,761 170,613
Other current assets and prepaid
expenses 84,842 73,565
------ ------
Total current assets 648,516 670,865
Property, plant and equipment, net 303,219 285,008
Goodwill and other intangibles 526,003 520,721
Other non-current assets 202,957 187,462
------- -------
Total assets $1,680,695 $1,664,056
========== ==========
Short-term debt $10,652 $12,492
Accounts payable 92,010 111,442
Accrued and other current
liabilities 321,760 300,938
------- -------
Total current liabilities 424,422 424,872
Long-term debt 318,785 441,588
Other non-current liabilities 286,104 294,349
------- -------
Total liabilities 1,029,311 1,160,809
Shareholders' equity 651,384 503,247
------- -------
Total liabilities and
shareholders' equity $1,680,695 $1,664,056
========== ==========
METTLER-TOLEDO INTERNATIONAL INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(amounts in thousands)
(unaudited)
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
Three months ended Nine months ended
September 30, September 30,
2009 2008 2009 2008
Cash flow from operating
activities:
Net earnings $41,545 $52,724 $103,155 $139,854
Adjustments to reconcile
net earnings to net cash
provided by operating
activities:
Depreciation 7,573 7,200 21,926 22,194
Amortization 3,237 2,728 8,734 7,800
Deferred taxation (4,976) (1,702) (15,773) (7,957)
Excess tax benefits
from share-based
payment arrangements (407) (320) (609) (999)
Other 2,638 2,114 8,485 4,107
Increase in cash resulting
from changes in operating
assets and liabilities 29,971 13,850 62,557 (4,374)
------ ------ ------ ------
Net cash provided by
operating activities 79,581 76,594 188,475 160,625
------ ------ ------- -------
Cash flows from investing
activities:
Proceeds from sale of
property, plant and
equipment 62 536 1,979 13,184
Purchase of property,
plant and equipment (12,626) (17,250) (36,646) (37,460)
Acquisitions - (303) (170) (607)
--- ---- ---- ----
Net cash used in
investing activities (12,564) (17,017) (34,837) (24,883)
------- ------- ------- -------
Cash flows from financing
activities:
Proceeds from borrowings 30,167 66,575 198,072 235,710
Repayments of borrowings (106,615) (27,151) (323,948) (121,123)
Debt issuance costs (18) (3,085) (620) (3,085)
Debt extinguishment costs (15) - (1,316) -
Proceeds from exercise of
stock options 1,464 864 6,073 3,319
Excess tax benefits from
share-based payment
arrangements 407 320 609 999
Repurchases of common
stock - (69,071) - (225,296)
Other financing
activities 94 (515) (984) 243
--- ---- ---- ---
Net cash used in
financing activities (74,516) (32,063) (122,114) (109,233)
------- ------- -------- --------
Effect of exchange rate
changes on cash and cash
equivalents 1,721 (1,999) 4,351 3,308
Net (decrease) increase in
cash and cash equivalents (5,778) 25,515 35,875 29,817
Cash and cash equivalents:
Beginning of period 119,726 85,524 78,073 81,222
------- ------ ------ ------
End of period $113,948 $111,039 $113,948 $111,039
======== ======== ======== ========
RECONCILIATION OF NET CASH PROVIDED BY OPERATING ACTIVITIES TO
FREE CASH FLOW
Net cash provided by
operating activities $79,581 $76,594 $188,475 $160,625
Excess tax benefits from
share-based payment
arrangements 407 320 609 999
Payments in respect of
restructuring activities 4,226 - 18,538 -
Proceeds from sale of
property, plant and equipment 62 536 1,979 13,184
Purchase of property, plant
and equipment (12,626) (17,250) (36,646) (37,460)
------- ------- ------- -------
Free cash flow $71,650 $60,200 $172,955 $137,348
======= ======= ======== ========
METTLER-TOLEDO INTERNATIONAL INC.
OTHER OPERATING STATISTICS
LOCAL CURRENCY SALES GROWTH BY DESTINATION
(unaudited)
Europe Americas Asia/RoW Total
------ -------- -------- -----
Three Months Ended September 30, 2009 -16% -12% -6% -12%
Nine Months Ended September 30, 2009 -15% -13% -4% -12%
RECONCILIATION OF DILUTED EPS AS REPORTED TO ADJUSTED DILUTED EPS
(unaudited)
Three months ended Nine months ended
September 30, September 30,
------------------------- -----------------------
2009 2008 % Growth 2009 2008 % Growth
---- ---- -------- ---- ---- --------
EPS as reported,
diluted $1.21 $1.52 -20% $3.02 $3.96 -24%
Restructuring
charge, net of
tax 0.13 (a) - 0.61 (a) -
---- --- ---- ---
Debt
extinguishment
and financing
costs, net of
tax - - 0.04 (b) -
--- --- ---- ---
Purchased
intangible
amortization,
net of tax 0.02 (c) 0.02 (c) 0.06 (c) 0.06 (c)
---- ---- ---- ----
Discrete tax
items - (0.10) (e) (0.25) (d) (0.17) (e)
--- ----- ----- -----
Adjusted EPS,
diluted $1.36 $1.44 -6% $3.48 $3.85 -10%
===== ===== ===== =====
Notes:
(a) Represents the EPS impact of restructuring charges of $6.1 million
($4.4 million after tax) for the three months ended September 30,
2009 and $28.4 million ($20.7 million after tax) for the nine
months ended September 30, 2009, which primarily include severance
and lease termination costs.
(b) Represents the EPS impact of costs to tender $75 million of the
Company's 4.85% $150 million Senior Notes and other financing-
related costs totaling $1.8 million ($1.3 million after tax) for
the nine months ended September 30, 2009.
(c) Represents the EPS impact of purchased intangibles amortization,
net of tax, of $0.7 million for both the three months ended
September 30, 2009 and 2008 and $2.0 million for both the nine
months ended September 30, 2009 and 2008.
(d) Discrete tax items for the nine months ended September 30, 2009
pertain to the EPS impact of a net tax benefit of $8.3 million
primarily related to the favorable resolution of certain prior year
tax matters.
(e) Discrete tax items in the three months ended September 30, 2008
pertain to the EPS impact of a $3.5 million benefit primarily
related to the closure of certain tax matters. The nine months
ended September 30, 2008 includes the EPS impact of an additional
$2.5 million discrete tax item related to favorable withholding tax
law changes in China.
SOURCE Mettler-Toledo International Inc.
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