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Mettler-Toledo International Inc. (MTD)
Q2 2013 Earnings Call
July 25, 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
Vijay Kumar - ISI Group Inc., Research Division
Jonathan P. Groberg - Macquarie Research
Isaac Ro - Goldman Sachs Group Inc., Research Division
Daniel Arias - UBS Investment Bank, Research Division
S. Brandon Couillard - Jefferies LLC, Research Division
Tycho W. Peterson - JP Morgan Chase & Co, Research Division
Derik De Bruin - BofA Merrill Lynch, Research Division
Sung Ji Nam - Cantor Fitzgerald & Co., Research Division
Richard C. Eastman - Robert W. Baird & Co. Incorporated, Research Division
Steve Willoughby - Cleveland Research Company
Previous Statements by MTD
» Mettler-Toledo International Management Discusses Q1 2013 Results - Earnings Call Transcript
» Mettler-Toledo International's CEO Discusses Q4 2012 Results - Earnings Call Transcript
» Mettler-Toledo International Management Discusses Q3 2012 Results - Earnings Call Transcript
I would now like to turn our presentation over to your hostess for today's call, Ms. Mary Finnegan. Please proceed, ma'am.
Mary T. Finnegan
Thanks, Victoria, and good evening to everyone. I am Mary Finnegan, I'm the Treasurer and responsible for Investor Relations at Mettler-Toledo, and I'm happy to welcome you to the call tonight. I am joined here with Olivier Filliol, our CEO; and Bill Donnelly, our Chief Financial Officer.
I want to cover just a couple of administrative matters before we get started. 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 will refer to 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, levels of activity, performance or achievements to be materially different from those expressed or implied.
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, in the Business and Management Discussion and Analysis of Financial Condition sections of 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 the non-GAAP financial measures and the most directly comparable GAAP measures is provided in our 8-K.
I will now turn the call over to Olivier.
Olivier A. Filliol
Thank you, Mary, and welcome to everyone on 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 the current business conditions, as well as provide an update on our Service business. 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 increased 1% in the quarter, in line with the range we outlined on our last call. Both Europe and Americas did better than we expected, while market conditions in Asia, particularly China, were more challenging than expected. In particular, we saw the situation in China deteriorate in June.
We had another quarter of strong gross margin improvement, which combined with the benefit of our cost control initiatives, drove a solid increase in operating profit. I'm pleased with the 9% increase in earnings per share.
Despite modest conditions, which are less than ideal, we believe we will generate solid earnings per share growth in the second half of the year. We will have more to say on our outlook for 2013 in a few moments. But now, let me turn it to Bill to cover the financial results.
William P. Donnelly
Okay, thanks, Olivier, and hello, everybody. Let me start with additional details on sales which were $578.7 million in the quarter, an increase of 1% in local currency. On a U.S. dollar basis, sales also increased 1%, as we had no currency impact to sales this quarter.
Turning to Page 3 of the presentation, we outline sales by geography. In the quarter, local currency sales increased 5% in the Americas, increased 2% in Europe, while Asia/Rest of World decreased by 5%.
On Slide #4, we outline the results for the first half by geography. Sales increased by 3% in the Americas in the first 6 months, and declined by 1% in Europe, and declined by 3% in Asia/Rest of World. All these amounts are local currency and organic.
On Slide #5, we show sales by product line for the quarter. Laboratory Products increased by 3% in local currency, while Industrial declined 2% and Food Retailing increased by 5%.
In the 6-month period, which is shown on the next slide, Laboratory Products increased by 1%, while Industrial declined 1% and Food Retailing declined 2%.
Turning to Slide #7 of the presentation, we show the P&L. Let me walk you through the key items. We're pleased with our gross margins, which were 53.4% in the quarter, a 100-basis-point improvement over the prior year. We benefited from pricing, lower material cost and an overall favorable mix. R&D amounted to $29.0 million, a 4% increase in local currency versus the prior year. SG&A amounted to $173.4 million, a 2% increase in local currency as compared to the prior year quarter. We benefited from our cost control measures, which were partially offset by higher sales and marketing investments, as well as variable compensation.