Mettler-Toledo International, Inc. (MTD)
Q4 2008 Earnings Call Transcript
February 5, 2009 5:00 pm ET
Mary Finnegan – Treasurer & IR
Olivier Filliol – CEO
Bill Donnelly – CFO
Peter Lawson – Thomas Weisel
Peter McDonald – Wall Street Access
Sung Ji Nam – JP Morgan
Dan [ph] – UBS
Mike Hamilton – RBC
Greg Halter – Great Lakes Review
Richard Eastman – Robert Baird
Jon Wood – Banc of America
Previous Statements by MTD
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Thank you. I am Mary Finnegan, Treasurer and responsible for Investor Relations at Mettler-Toledo and I'm happy to welcome you to the call today. I'm joined by Olivier Filliol, our CEO and Bill Donnelly, our Chief Financial Officer.
This quarter we have a presentation to help facilitate today's call. It can be found on our Web site at www.mt.com under Investor Relations. Also on our Web site is a copy of our press release which we issued today as well as the webcast which will be available for replay.
Now let me cover the Safe Harbor language which is outlined on Page 1 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 34. These statements involve risks, uncertainties, and other factors that may cause our actual results, levels 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 the 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 caption, “Factors affecting our Future Operating Results” and in the “Business and Management Discussion and Analysis of Financial Condition and Results of Operations, in our Form 10-K.
One other item on today's call, we may use non-GAAP financial measures. More detailed information with respect to the use of and the differences between the non-GAAP financial measures and the most directly comparable GAAP measure is provided in the Press Release.
I'll now turn the call over to Olivier.
Thank you, Mary. Good evening and welcome to the call. I want to start with highlights of the quarter and then Bill will provide details on our financial results and our outlook for 2009. Later on the call, we will provide additional commentary on the business and measures we are taking to manage in the current downturn. As usual, we will have time for Q&A at the end.
Let me start with the highlights of the quarter which are summarized on Page 2 of the presentation. While we had excellent financial results in 2008, market conditions changed clearly in the fourth quarter. The deterioration has been faster and steeper than we had anticipated the last time we spoke to you.
Given this challenging environment we are pleased to have grown local currency sales by 1% in the quarter. We saw growth in Europe and as expected growth in Asia, rest of the world was solid. Strict cost control lead to a 6% increase in operating profit and contributed to the 16% growth in adjusted EPS. We also enjoyed solid cash flow. Absent the timing of tax payment in the fourth quarter, cash flow grew by 20%.
Despite the business slowdown in Q4, we finished 2008 with record financial performance. For the full year, local currency sales increased 6%, operating profit grew 13%, and adjusted EPS increased 23%. We clearly expect more challenging market conditions in 2009 and have proactively initiated a cost reduction program to help insulate us from this economic downturn. We have also updated our assumption for 2009. I will have further comments later on the call but will turn it to Bill to discuss Q4 in more detail.
Thanks, Olivier. And hello, everybody. Let me start with additional details in sales which are outlined on Slide #3. Sales were $509.7 million in the quarter, an increase of 1% in local currency. On a U.S. dollar basis, sales declined 4% in the quarter because of a 5% negative currency impact. For the full year 2008, local currency sales grew by 6%.
Breaking down local currency sales in the fourth quarter by geographic destination, we had 1% local currency growth in Europe. Our industrial business there aided by product inspection and transport and logistics grew modestly while food retailing in Europe enjoyed solid growth as well.
Lab in Europe was down modestly, up against very strong comps from a year earlier. For the full year, sales increased by 6% in Europe. Sales growth in the Americas declined by 3% in the fourth quarter. Retail enjoyed growth while lab and industrial were down.
For the full year, sales growth in the Americas increased by 2%. Sales in Asia, rest of world increased by 6% in the quarter with strong results in lab and food retailing and modest growth in industrial. For the year, sales increased by 16% in Asia, rest of world.
Now looking at sales by product area, laboratory sales declined by 2% in the quarter. This is against a strong 10% growth in the prior year. Pipettes did well in the quarter while most other product lines were down. For the year, laboratory sales increased by 7% on an organic basis.