On November 5, 2020 Mettler-Toledo International Inc. (NYSE: MTD) reported third quarter results for 2020 (Press release, Mettler-Toledo, NOV 5, 2020, View Source [SID1234570214]). Provided below are the highlights:
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Reported sales increased 7% compared with the prior year. In local currency, sales increased 6% in the quarter as currency benefited reported sales growth by 1%.
Net earnings per diluted share as reported (EPS) were $6.68, compared with $5.20 in the prior-year period. Adjusted EPS was $7.02, an increase of 22% over the prior-year amount of $5.77. Adjusted EPS is a non-GAAP measure, and a reconciliation to EPS is included on the last page of the attached schedules.
Quarterly Results
Olivier Filliol, President and Chief Executive Officer, stated, "Outstanding growth in China and strong growth in our Laboratory business resulted in excellent performance in the quarter despite negative impacts on our business from COVID-19. Our strong product portfolio combined with innovative sales and marketing strategies are yielding very good results despite the overall challenging environment. With the benefit of our temporary cost initiatives as well as ongoing margin and productivity initiatives, we had a strong increase in Adjusted Operating Profit margins and excellent growth in Adjusted EPS. Finally, cash flow generation was also very robust."
GAAP Results
EPS in the quarter was $6.68, compared with the prior-year amount of $5.20.
Compared with the prior year, total reported sales increased 7% to $807.4 million. By region, reported sales increased 2% in the Americas, 9% in Europe and 11% in Asia/Rest of World. Earnings before taxes amounted to $205.8 million, compared with $169.4 million in the prior year.
Non-GAAP Results
Adjusted EPS was $7.02, an increase of 22% over the prior-year amount of $5.77.
Compared with the prior year, total sales in local currency increased 6% as currency benefited sales growth by 1%. By region, local currency sales increased 3% in the Americas, 4% in Europe and 10% in Asia/Rest of World. Adjusted Operating Profit amounted to $230.0 million, a 17% increase from the prior-year amount of $196.2 million.
Adjusted EPS and Adjusted Operating Profit are non-GAAP measures. Reconciliations to the most comparable GAAP measures are provided in the attached schedules.
Year-to-Date Results
GAAP Results
EPS was $15.92, compared with the prior-year amount of $14.67.
Compared with the prior year, total reported sales decreased 1% to $2.147 billion. By region, reported sales decreased 1% in the Americas and 1% in Europe and was constant in Asia/Rest of World. Earnings before taxes amounted to $479.6 million, compared with $450.3 million in the prior year.
Non-GAAP Results
Adjusted EPS was $16.30, compared with the prior-year amount of $15.02.
Compared with the prior year, total sales in local currency was constant as currency reduced reported sales by 1%. By region, local currency sales decreased 1% in the Americas and 2% in Europe and increased 1% in Asia/Rest of World. Adjusted Operating Profit amounted to $547.9 million, a 5% increase from the prior-year amount of $521.8 million.
Adjusted EPS and Adjusted Operating Profit are non-GAAP measures. Reconciliations to the most comparable GAAP measures are provided in the attached schedules.
Share Repurchase Authorization
The Company has $0.9 billion remaining under the current authorization for the share repurchase program. The Company announced that the Board of Directors authorized an additional $2.5 billion to the share repurchase program. Any amount remaining under the existing program will be incorporated into the new authorization. Filliol commented, "The additional authorization allows us to continue the share repurchase program, which has provided strong returns for our shareholders over many years. We are confident in our future growth prospects, and our balance sheet and cash flow generation remain very strong." The Company expects the additional authorization will be utilized over the next several years. The Company added that the repurchases will be made through open market transactions, and the amount and timing will depend on business and market conditions, stock price, trading restrictions, the level of acquisition activity and other factors.
Outlook
The Company stated that forecasting continues to be challenging given the significant uncertainty surrounding COVID-19 and ensuing impact to the global economic environment. While the Company is providing an estimate for sales growth and Adjusted EPS for 2020 and 2021, management cautions that market dynamics and impacts related to COVID-19 are fluid and changes to the business environment can happen quickly. The estimates include significant uncertainty and management acknowledges that market conditions are subject to change.
Based on today’s assessment of market conditions, management anticipates the local currency sales growth in the fourth quarter 2020 will be in the range of 4% to 5%, and Adjusted EPS is forecasted to be in the range of $8.60 to $8.70, an increase of 11% to 12%.
For the full year 2020, local currency sales growth is expected to be approximately 1% and Adjusted EPS is forecasted to be $24.87 to $24.97, a growth rate of 9% to 10%. This compares with previous guidance for Adjusted EPS of $22.70 to $23.20.
The Company said that based on its assessment of market conditions today, management anticipates local currency sales growth in 2021 to be in the range of 4% to 6%. This sales growth is expected to result in Adjusted EPS in the range of $27.50 to $28.30. Using the mid-point of 2020 guidance, this would result in Adjusted EPS growth of 10% to 14%.
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.
Conclusion
Filliol concluded, "The regional dynamics surrounding COVID-19 continue to change rapidly and the outlook for the global economy remains uncertain. We remain focused on factors we can control, namely ensuring the safety of our employees while serving our customers, the majority of which are in essential end markets including life sciences and food manufacturing. We continue to launch leading-edge instruments and services and have adapted our innovative digital sales and marketing approaches to ensure our go-to-market approach is highly effective given current market conditions. As we look to the remainder of 2020 and to 2021, we believe we will continue to gain share and deliver solid results. We will remain agile and adapt as necessary to changes in market conditions."
Other Matters
The Company will host a conference call to discuss its quarterly results today (Thursday, Nov 5) at 5:00 p.m. Eastern Time. To hear a live webcast or replay of the call, visit the investor relations page on the Company’s website at www.mt.com/investors. The presentation referenced in the conference call will be located on the website prior to the call.