Mettler-Toledo(MTD) - 2019 Q1 - Quarterly Report

PART I. FINANCIAL INFORMATION Item 1. Financial Statements Presents unaudited interim consolidated financial statements for Q1 2019 and 2018, covering operations, balance sheets, cash flows, and detailed notes Interim Consolidated Statements of Operations and Comprehensive Income Total net sales increased to $679.5 million in Q1 2019, with net earnings rising to $111.8 million and diluted EPS reaching $4.42 Consolidated Statements of Operations Highlights (Q1 2019 vs Q1 2018) | Metric | Three months ended March 31, 2019 (thousand) | Three months ended March 31, 2018 (thousand) | | :--- | :--- | :--- | | Total Net Sales | $679,452 | $660,821 | | Gross Profit | $388,319 | $374,933 | | Earnings Before Taxes | $125,676 | $117,439 | | Net Earnings | $111,805 | $93,304 | | Diluted EPS | $4.42 | $3.58 | Interim Consolidated Balance Sheets Total assets were $2.64 billion, liabilities $2.07 billion, and shareholders' equity $561.8 million as of March 31, 2019, impacted by repurchases Consolidated Balance Sheet Highlights | Metric | March 31, 2019 (thousand) | December 31, 2018 (thousand) | | :--- | :--- | :--- | | Total Current Assets | $969,384 | $1,045,860 | | Total Assets | $2,636,697 | $2,618,847 | | Total Current Liabilities | $707,964 | $734,434 | | Total Liabilities | $2,074,947 | $2,028,784 | | Total Shareholders' Equity | $561,750 | $590,063 | Interim Consolidated Statements of Cash Flows Net cash from operating activities increased to $98.8 million in Q1 2019, while financing activities used $136.2 million, resulting in a $51.6 million net decrease in cash Consolidated Statements of Cash Flows Highlights (Q1 2019 vs Q1 2018) | Metric | Three months ended March 31, 2019 (thousand) | Three months ended March 31, 2018 (thousand) | | :--- | :--- | :--- | | Net Cash from Operating Activities | $98,795 | $76,564 | | Net Cash used in Investing Activities | ($17,530) | ($22,463) | | Net Cash used in Financing Activities | ($136,199) | ($107,683) | | Net Decrease in Cash | ($51,630) | ($49,738) | Notes to the Interim Consolidated Financial Statements Detailed notes explain accounting policies, including revenue recognition, segment reporting, debt, share repurchases, and the adoption of ASC 842 - The company is a leading global supplier of precision instruments and services, with primary manufacturing in China, Germany, Switzerland, the UK, and the US[18] Revenue by Geographic Destination (Q1 2019 vs Q1 2018) | Region | 2019 (thousand) | 2018 (thousand) | | :--- | :--- | :--- | | Americas | $258,631 | $252,279 | | Europe | $209,555 | $205,840 | | Asia / Rest of World | $211,266 | $202,702 | | Total | $679,452 | $660,821 | Revenue by Product Category (Q1 2019 vs Q1 2018) | Category | 2019 (thousand) | 2018 (thousand) | | :--- | :--- | :--- | | Laboratory | $359,732 | $345,159 | | Industrial | $271,320 | $262,656 | | Retail | $48,400 | $53,006 | | Total | $679,452 | $660,821 | - On January 1, 2019, the company adopted the new lease accounting standard ASC 842, recognizing a $92.7 million right-of-use asset and a $93.5 million lease liability[88] Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations Management discusses Q1 2019 financial results, highlighting 3% net sales growth (7% local currency), gross profit, operating expenses, liquidity, and capital resources Results of Operations – Consolidated Consolidated net sales grew 3% (7% local currency) to $679.5 million, with gross profit margin improving to 57.2% and net earnings increasing to $111.8 million Net Sales Growth by Geography (Q1 2019 YoY) | Region | Growth in U.S. Dollars | Growth in Local Currency | | :--- | :--- | :--- | | Americas | 3% | 3% | | Europe | 2% | 9% | | Asia/Rest of World | 4% | 9% | Net Sales Growth by Product Category (Q1 2019 YoY, Local Currency) | Product Category | Local Currency Growth | | :--- | :--- | | Laboratory | 8% | | Industrial | 8% | | Food Retailing | -5% | - The company estimates an annualized cost increase of approximately $25 million from U.S. tariffs on products imported from China and is implementing actions to mitigate the effects[112] Results of Operations – by Operating Segment Operating segments showed varied performance, with Chinese Operations leading with 13% local currency sales growth, followed by Western European Operations at 9% - U.S. Operations: Net sales to external customers grew 2%, driven by strong laboratory product growth despite a decline in food retailing[119] - Swiss Operations: Net sales to external customers increased 7% in local currency, driven by strong growth across most product categories[122] - Western European Operations: Net sales to external customers grew 9% in local currency, with strong performance in core industrial, laboratory balances, and process analytics[125] - Chinese Operations: Net sales to external customers increased 13% in local currency, reflecting strong growth in both laboratory and industrial products[129] Liquidity and Capital Resources Liquidity remains strong with cash from operations increasing to $98.8 million, total debt at $1.06 billion, and $186.3 million spent on share repurchases - Cash provided by operating activities increased to $98.8 million for the three months ended March 31, 2019, up from $76.6 million in the prior year period, due to higher net earnings and lower working capital outflow[135] - As of March 31, 2019, the company had total debt of $1.06 billion and $575.2 million of availability under its Credit Agreement[66][139] - In April 2019, the company entered an agreement to issue $75 million of ten-year Senior Notes with a fixed interest rate of 3.91%, maturing in June 2029[141] - The share repurchase program has $1.9 billion of remaining availability as of March 31, 2019, with 290,429 shares repurchased for $186.3 million in Q1 2019[146][147] Item 3. Quantitative and Qualitative Disclosures About Market Risk No material changes were reported regarding market risk disclosures compared to the 2018 Form 10-K - As of March 31, 2019, there were no material changes to the market risk information previously disclosed in the company's 2018 Form 10-K[154] Item 4. Controls and Procedures Management concluded disclosure controls and procedures were effective, with modifications to internal controls for the adoption of ASC 842 - The CEO and CFO concluded that the company's disclosure controls and procedures are effective as of the end of the period covered by this report[155] - The company modified its processes and internal controls over financial reporting (ICFR) due to the adoption of the new lease accounting standard ASC 842 on January 1, 2019[156] PART II. OTHER INFORMATION Item 1. Legal Proceedings The company reported no material legal proceedings during the quarter - The company reports no legal proceedings[158] Item 1A. Risk Factors No material changes were reported regarding risk factors compared to the 2018 Form 10-K - No material changes from the risk factors disclosed in the 2018 Form 10-K were reported for the quarter[158] Item 2. Unregistered Sales of Equity Securities and Use of Proceeds The company repurchased 290,429 shares for $186.3 million in Q1 2019, with $1.9 billion remaining under the program Issuer Purchases of Equity Securities (Q1 2019) | Period | Total Shares Purchased | Average Price Paid per Share ($) | | :--- | :--- | :--- | | January 2019 | 105,963 | $575.72 | | February 2019 | 92,362 | $660.49 | | March 2019 | 92,104 | $697.42 | | Total | 290,429 | $641.27 | - As of March 31, 2019, $1.9 billion remained available for repurchase under the company's share repurchase program[159] Item 6. Exhibits This section lists exhibits filed with the Form 10-Q, including CEO and CFO certifications and XBRL data