Mettler-Toledo International, Inc.MTD delivered third-quarter 2018 adjusted earnings of $5.12 per share, beating the Zacks Consensus Estimate by 13 cents and also came ahead of management's guided range of $4.97-$5.02 per share. The figure increased 17.4% on a year-over-year basis and 10.1% sequentially.
Net sales of $734.85 million were up 5.1% year over year and 1.8% from the previous quarter. In local currency, sales grew 7% from the year-ago quarter, exceeding management's expectation of 6% growth.
The robust performance of Laboratory business drove top-line growth. Further, strengthening Food business also contributed well. Further, Mettler-Toledo performed well in China which propelled growth.
However, revenues missed the Zacks Consensus Estimate of $739.76 million.
Nevertheless, the company remains confident on its growth strategies that include productivity and margin initiatives. Moreover, Mettler-Toledo's continued investments in product portfolio expansion, field force, Spinnaker sales and marketing programs are expected to continue benefiting its business growth.
Coming to the price performance, shares of Mettler-Toledo have lost 3.9% on a year-to-date basis compared with the industry 's decline of 0.9%.
Top Line in Detail
By Segments: The company reports in three segments - Laboratory Instruments, Industrial Instruments and Food Retail Weighing Solutions which accounted for 50%, 42% and 8% of the net sales in the third quarter, respectively. Further, these segments witnessed year-over-year growth of 11%, 1% and 14% in the quarter under review, respectively.
By Geography: The company reports total sales figure from Americas, Europe and Asia/Rest of the World. All these regions contributed 38%, 30% and 32% to the net sales in the third quarter, respectively. Further, the sales in these regions went up 5%, 3% and 11% on a year-over-year basis.
Gross margin was 57.1%, contracting 30 basis points (bps) year over year.
Research & development (R&D) expenses were $34.8 million, up 8.2% from the year-ago quarter. Selling, general & administrative (SG&A) expenses decreased 2.2% year over year to $202.4 million.
Adjusted operating margin was 24.8%, which expanded 170 bps from the previous-year quarter.
Mettler-Toledo International, Inc. Price, Consensus and EPS Surprise
Mettler-Toledo International, Inc. Price, Consensus and EPS Surprise | Mettler-Toledo International, Inc. Quote
Balance Sheet and Cash Flow
As of Sep 30, 2018, the company's cash and cash equivalents balance was $137.4 million compared with $183.2 million as of Jun 30, 2018.
Long-term debt was $988.9 million, decreasing from $1.02 billion in the previous quarter.
Mettler-Toledo generated $149.8 million of cash from operating activities, up from $140.2 million in the prior quarter. Free cash flow was $121.3 million compared with $120.8 million in the second quarter.
For fourth-quarter 2018, Mettler-Toledo expects sales growth of 6% in local currency. The Zacks Consensus Estimate for sales is pegged at $823.84 million.
Adjusted earnings are expected in the range of $6.72-$6.77 per share, up 13% year over year. The Zacks Consensus Estimate for earnings is projected at $6.81 per share.
However, management assumes that high tariff costs and unfavourable currency fluctuations are likely to bring 5% negative impact on earnings growth.
For 2018, the company continues to expect sales to grow 6% at local currency. The Zacks Consensus Estimate is projected at $2.95 billion.
Adjusted earnings are expected to be in the range of $20.20-$20.25 per share. The Zacks Consensus Estimate is pegged at $20.18 per share.
Zacks Rank and Stocks to Consider
Mettler-Toledo currently carries a Zacks Rank #3 (Hold).
A few better-ranked stocks in the broader technology sector are Twitter, Inc. TWTR , Intel Corporation INTC and Adobe Systems Incorporated ADBE . While Twitter and Intel sport a Zacks Rank #1 (Strong Buy), Adobe Systems carries a Zacks Rank #2 (Buy). You can see the complete list of today's Zacks #1 Rank stocks here.
Long-term earnings growth for Twitter, Intel and Adobe Systems is projected to be 22.05%, 8.42% and 16.4%, respectively.
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