Mettler-Toledo International (MTD)
Q1 2013 Earnings Call
May 02, 2013 5:00 pm ET
Mary T. Finnegan - Head of Investor Relations and Treasurer
Olivier A. Filliol - Chief Executive Officer, President and Director
William P. Donnelly - Chief Financial Officer, Principal Accounting Officer and Group Vice President
Joel Kaufman - Goldman Sachs Group Inc., Research Division
Steve Willoughby - Cleveland Research Company
Derik De Bruin - BofA Merrill Lynch, Research Division
Jonathan P. Groberg - Macquarie Research
Vijay Kumar - ISI Group Inc., Research Division
Richard C. Eastman - Robert W. Baird & Co. Incorporated, Research Division
Jason A. Rodgers - Great Lakes Review
Tycho W. Peterson - JP Morgan Chase & Co, Research Division
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Mary T. Finnegan
Thanks, Jay, and good evening, everyone. I am Mary Finnegan, I'm Treasurer and responsible for Investor Relations at Mettler-Toledo, and I'm happy to welcome you to the call. I am joined by Olivier Filliol, our CEO; and Bill Donnelly, our Chief Financial Officer.
I want to cover just a couple of administrative matters before we begin. 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 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 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 the discussion in our 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 and in the Business and MD&A 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 differences between non-GAAP financial measures and the most directly comparable GAAP measures is provided in the Form 8-K.
I will now turn the call over to Olivier.
Olivier A. Filliol
Thank you, Mary, and welcome, everyone to the call. 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 comment on current business conditions as well as update you on some of our strategic initiatives. As always, we will have time for Q&A at the end.
The highlights for the quarter are on Page 2 of the presentation. Local currency sales declined 2% in the quarter, modestly below what we expected the last time we spoke. Europe and Americas came in pretty much on track with our expectations while market conditions in Asia and Rest of the World were more challenging than expected. In fact, order growth was better than sales growth overall and especially in China. However, we did not convert it to sales at the rate we hoped.
I'm very pleased that despite the decline in sales in the quarter, we were able to strongly expand margins. Our cost actions initiated last year as well as our pricing and supply chain initiatives helps to contribute to this improvement. As a result of this good margin improvement, we were able to increase EPS by 11%.
Uncertainty remains in the global economy, but we continue to believe that global market conditions will improve as the year progresses. We will have more to say on our outlook for 2013 in a few moments. But now let me turn it to Bill, to go over the financial results.
William P. Donnelly
Thanks, Olivier, and hello, everybody. Let me start with additional details on sales, which were $524.4 million in the quarter, a decrease of 2% in local currency. On a dollar basis, sales were also down 2% as we had no currency impact to sales during the quarter. Turning to Page 3 of the presentation, we outlined our sales by geography. In the quarter, local currency sales increased by 1% in the Americas, they decreased by 5% in Europe and 2% in Asia/Rest of World.
On Slide #4 of the presentation, we outlined our sales by product area. In the quarter, industrial sales were flat with the prior year while lab sales decreased 2% and food retailing was down 9%. All of these amounts are local currency and organic.
Turning to Slide #5 of the presentation, we show the P&L. Let me walk you through the key items. We're very pleased with the gross margins, which were 53.3% in the quarter, a 150 basis point improvement over the prior year. We benefit from pricing, from lower material cost and from an overall favorable mix. These benefits were somewhat offset by lower sales volume. R&D was $27.7 million, a 3% decline in local currency versus the prior year. SG&A was $166.1 million, a 1% decline in local currency as compared to the prior-year quarter. We benefited from our cost control measures, which were partially offset by higher variable compensation.