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Mettler-Toledo International Inc. (MTD)
Q2 2009 Earnings Call
July 23, 2009; 05:00 pm ET
Olivier Filliol - President & Chief Executive Officer
Bill Donnelly - Chief Financial Officer
Mary Finnegan - Treasurer, Investor Relations
Chuck Murphy - Sidoti & Company
Tycho Peterson - JP Morgan
Jon Groberg - Macquarie
John Wood - Bank of America/Merrill Lynch
Peter Lawson - Thomas Weisel Partners
Peter McDonald - Wall Street Access
Derik De Bruin - UBS
Richard Eastman - Robert Baird
Previous Statements by MTD
» Mettler-Toledo International, Inc. Q1 2009 Earnings Call Transcript
» Mettler-Toledo International, Inc. Q4 2008 Earnings Call Transcript
» Mettler-Toledo International Inc. Q3 2008 Earnings Call Transcript
I would now like to turn the call over to your hostess for today’s call, Ms. Marry Finnegan. Please proceed ma’am.
Thanks, Abigail and good evening everyone. I’m Mary Finnegan, 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 some administrative matters. First, the 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, 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’s Discussion and Analysis of Financial Condition and Results of Operation” section of 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 the non-GAAP financial measure and the most directly comparable GAAP measure is provided in the press release.
I will now turn the call over to Olivier.
Thank you, Mary. Good evening and welcome to the call. I want you start with highlights of the quarter and then Bill will provide details on our financial results and our updated outlook for 2009. I will then continue with additional comments on the business and update on our cost reduction program and highlight a few of our new product launches. As always we will have time for Q-and-A at the end.
On page two of the presentation, the highlights of the call are summarized. Market conditions remained very challenging. There are some initial signs that the downturn in the global economy maybe slowing. However given that our business tends to be more late cycle we have not seen it yet. At the same time we believe we are balancing along the bottom.
As we expected, due to the extraordinary second quarter of last year, our local currency sales declines accelerated from the first quarter. We experienced local currency sales decline of 14% in the quarter. However, the two year growth rate remains about the same as the last quarter and we expect a similar number next quarter.
We are pleased that our operating profit and EPS exceeded our expectations, due to strong execution on our cost reduction program and benefits from pricing and improved material costs.
Specifically, operating profit reached $61.7 million while adjusted EPS amounted to $1.17. Finally we had good cash flow generation in the quarter. With our strong Q2 results, we have again increased our full year guidance. Bill will provide some more details on this as well as on our results for the second quarter and I will then have some additional comments. Bill.
Thanks Olivier and hello everybody. Let me start with additional details on sales, which are outlined on slide number three of the presentation. Sales were $407.4 million in the quarter a decrease of 14% in local currency. On you U.S. dollar bases sales declined by 21% in the quarter as the result of negative currency of 7%.
Breaking down local currency sales by geographic destinations, in the quarter we had an 18% local currency decline in Europe, while sales declined 15% in the Americas and 6%
6% in Asia, rest of the world.
For the six months, we had local currency sales declines of 14 in Europe, 13 in the Americas and three in the Asia rest of world. By product area in the quarter, laboratory sales declined by 11%, industrial sales decreased by 16% and food retailing declined by 26%, due impart to a strong project activity in the prior year period, specifically retail group by 16% in the year ago quarter.
For the six months, lab was down 10%, industrial was down 12% and food retailing declined 17 %. Turning now to slide number four, let me cover the rest of the P&L. Gross margins were 50.6% in the quarter, a 40 basis points improvement versus the prior year. The impact of the drop in volume was largely offset by our cost reduction program and overall favorable mix, but in particular the benefits of our pricing initiative, as well as lower raw materials cost. We’re obviously quite pleased with that number.