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Mettler-Toledo International (MTD)
Q3 2011 Earnings Call
November 03, 2011 5:00 pm ET
Olivier A. Filliol - Chief Executive Officer, President and Director
William P. Donnelly - Chief Financial Officer, Principal Accounting Officer and Group Vice President
Mary T. Finnegan - Head of Investor Relations and Treasurer
Gregory Halter - Great Lake Review
Paul R. Knight - Credit Agricole Securities (USA) Inc., Research Division
Jonathan P. Groberg - Macquarie Research
Daniel Arias - UBS Investment Bank, Research Division
Isaac Ro - Goldman Sachs Group Inc., Research Division
Derik De Bruin - BofA Merrill Lynch, Research Division
Jon Davis Wood - Jefferies & Company, Inc., Research Division
Tycho W Peterson - JP Morgan Chase & Co, Research Division
Richard C. Eastman - Robert W. Baird & Co. Incorporated, Research Division
Previous Statements by MTD
» Mettler-Toledo International's CEO Discusses Q2 2011 Results - Earnings Call Transcript
» Mettler-Toledo International Inc. Q2 2009 Earnings Call Transcript
» Mettler-Toledo International, Inc. Q1 2009 Earnings Call Transcript
Mary T. Finnegan
Thank you, Christie, and hello, 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 CFO. I want to cover just a couple of administrative matters. This call is being webcast and is available for replay on our website at mt.com. A copy of the press release and the presentation that we will 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, 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 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 caption "Factors Affecting Our Future Operating Results" and in the "Business" and "Management's Discussion and Analysis of Financial Condition and Results of Operations" sections 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 the differences between the non-GAAP financial measure and the most directly comparable GAAP measure is provided in the 8-K.
I'm now going to turn the call over to Olivier.
Olivier A. Filliol
Thank you, Mary. Good evening. I'm pleased to welcome you to the call. I will start with a summary of the quarter, and then Bill will provide details on our financial results and I will be update the guidance for this year and the initial guidance for 2012. I will then update you on our growth initiatives for 2012 and as always, we will have time for Q&A at the end.
We are very pleased with the results for the third quarter. The highlights for the quarter are on Page 2 of the presentation. Local currency sales growth of 15% was excellent, and I'm particularly pleased with the broad-based nature of the growth. Almost all product lines and geographies showed very strong performance.
Despite significant currency headwinds, we achieved a 15% increase in adjusted operating profit and an 18% increase in adjusted EPS. While we are very cautious on the uncertainty in the economic environment, we expect solid growth in the fourth quarter and 2012. Bill will provide more details on our third quarter results as well as guidance.
Now let me turn it over to him.
William P. Donnelly
Thanks, Olivier, and hello, everybody. Let me start with additional details on sales, which were $601.1 million in the quarter, an increase of 15% in local currency, obviously a level in which we're very pleased. On the U.S. dollar basis, sales increased 23% in the quarter, which included a positive 8% impact from currency.
Turning to Page 3 of the presentation, we outlined sales by geography. In the third quarter, local currency sales increased by 16% in Europe, 10% in the Americas and 21% in Asia/Rest of World. Net acquisitions added 1% to sales growth overall, and 2% in Europe and 1% in the Americas in the quarter.
The next slide provides year-to-date results, and you can see that sales increased 14% in Europe, 10% in the Americas and 21% in Asia/Rest of World for the first 9 months of the year. Year-to-date, net acquisitions had a negligible impact to total sales but contributed approximately 1% to European growth.
On Slide #5 of the presentation, we outlined sales by product area for the third quarter. Laboratory sales increased by 12% in the quarter, industrial sales increased by 22% and food retailing increased by 2%. Divestitures reduced food retailing by approximately 5% in the quarter. Acquisitions contributed 4% growth to the industrial business during the quarter.
The next slide provides year-to-date results. Laboratory sales increased by 10%, industrial increased by 21% and food retailing was up 1%. Year-to-date, divestitures reduced food retailing by 6%. Acquisitions increased the industrial business by 2% for the 9 months.
Turning now to the Slide #7 of the presentation, we show the P&L. Let me walk through the key items. Gross margin was 52.3% in the quarter, a 10-basis-point increase over the prior year. We benefited from operating leverage, pricing and operating efficiencies. Offsetting this was currency, which reduced gross margins by approximately 130 basis points. We also had higher raw material costs overall, primarily related to steel categories and some unfavorable mix as well.