Mettler-Toledo International Inc. (MTD)
Q4 2012 Earnings Call
February 6, 2013 5:00 p.m. ET
Mary Finnegan - Head of Investor Relations and Treasurer
Olivier Filliol - Chief Executive Officer
William Donnelly - Chief Financial Officer
Tycho Peterson - JPMorgan
Jon Wood - Jefferies
Daniel Arias - UBS
Paul Knight - CLSA
Jonathan Groberg - Macquarie
Ross Muken - ISI Group
Sung Ji Nam - Cantor Fitzgerald
Isaac Ro - Goldman Sachs
Richard Eastman - Robert W. Baird
Derik de Bruin - Bank of America Merrill Lynch
Greg Halter - Great Lakes Review
Steve Willoughby - Cleveland Research
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Thanks, Alan, and good evening everyone. I am Mary Finnegan, I am the Treasurer and responsible for Investor Relations at Mettler-Toledo, and I’m happy to welcome you to the call. I am joined here today by Olivier Filliol, our CEO; and Bill Donnelly, our Chief Financial Officer.
I want to cover just a couple of administrative matters. This call is being webcast and is available for replay on our website at www.mt.com. A copy of the press release and the presentation that we refer to on today's call is also available on our website.
Let me summarize the Safe Harbor language which is outlined on page one of the presentation. Statements in this presentation which are not historical facts constitute forward-looking statements within the meaning of the U.S. Securities Act of 1933, and the U.S. Securities Exchange Act of 1934. These statements involve risks, uncertainties and other factors that may cause our actual results, level of activity, performance or achievements, to be materially different from those expressed or implied by any forward-looking statements. For a discussion of these risks and uncertainties, please see our discussion in our recent Form 8-K. 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, in the Business and Management Discussion and Analysis of Financial Conditions and Results of Operations in our Form 10-K.
Just one other item. On today's call, we may use non-GAAP financial measures. More detailed information with respect to the use of and differences between non-GAAP financial measure and the most directly comparable GAAP measure is provided in our 8-K. I will now turn the call over to Olivier.
Thank you, Mary. I will start with a summary of the quarter and then Bill will provide details on our financial results and our updated guidance for 2013. I will then update you on our execution focus in this challenging macro environment. As always, we will have time for Q&A at the end. The highlights for the quarter are on page two of the presentation. Local currency sales increased 2% in the quarter, similar to what we experienced in the third quarter, we had solid growth in Americas and Asia, rest of the world with a sales decline in Europe.
Our earnings benefited from pro-active cost measures. Specifically, our actions in pricing and cost control benefitted margin and drove a strong 20% increase in adjusted EPS in the quarter. I am pleased with our execution in the quarter and the continued progress on our strategic initiatives. Uncertainty remains in the global economy today and we expect conditions to remain challenging in the first half of this year. However, with the benefit of the cost control actions and our margin initiative, we expect to have solid EPS growth in 2013.
Let me now turn it to Bill who will provide an update on our guidance for 2013, as well as cover the financial results.
Thank, Olivier, and hello everybody. Let me start with additional details and sales which were $657.3 million in the quarter, an increase of 2% in local currency. On a U.S. dollar basis, sales increased by 1% in the quarter which included a negative 1% impact due to currencies. Turning to page three of the presentation, we outlined sales by geography. In the quarter, local currency sales increased by 5% in the Americas and 6% in Asia/Rest of the world, while sales declined by 4% in Europe.
On the next slide, you will see that for the full year 2012, sales increased by 4% in local currency. Breaking that down by region for the full year, sales increased by 5% in the Americas and 10% in Asia/Rest of the world, sales declined by 2% in Europe. Acquisitions contributed approximately 2% to European sales growth for the full year and approximately 1% to total sales as well.
On slide number five of the presentation, we outlined our sales by product area. In the fourth quarter, lab sales increased by 4% and industrial sales increased by 1%, while food retailing was down 1%. The next slide provides full year sales by product area. In 2012, laboratory sales increased 5%, industrial sales increased by 4%, and food retailing declined by 4%. The acquisitions contributed approximately 1% to industrial sales growth for the year.
I am now turning to slide number seven of the presentation where we show our P&L. Let me walk you through the key items. We are very pleased with our gross margins which were 54.3% in the quarter, a 90 basis point increase over the prior year. We benefited from pricing and lower material costs. These benefits were offset somewhat by a negative mix, both geographic and by product. While mix was slightly negative overall, it was better than the mix we saw in the first half of this year. R&D amounted to $28 million, a decrease of 6% in local currency. SG&A amounted to $175.4 million, a 4% decrease in local currency as compared to the prior year quarter.