Mettler-Toledo(MTD) - 2025 Q2 - Quarterly Report

markdown PART I. FINANCIAL INFORMATION [Item 1. Financial Statements](index=3&type=section&id=Item%201.%20Financial%20Statements) Detailed disclosures cover accounting policies, revenue, financial instruments, debt, share repurchases, and segment performance [Interim Consolidated Statements of Operations and Comprehensive Income (Three Months)](index=4&type=section&id=Interim%20Consolidated%20Statements%20of%20Operations%20and%20Comprehensive%20Income%20for%20the%20three%20months%20ended%20June%2030%2C%202025%20and%202024) Net sales rose 3.85% for Q2 2025, but net earnings fell 8.78% due to higher taxes Interim Consolidated Statements of Operations and Comprehensive Income (Three Months) | Metric | June 30, 2025 (in thousands) | June 30, 2024 (in thousands) | Change (%) | | :----------------------------------- | :--------------------------- | :--------------------------- | :--------- | | Total Net Sales | $983,221 | $946,750 | 3.85% | | Gross Profit | $579,876 | $565,668 | 2.51% | | Earnings Before Taxes | $248,657 | $243,177 | 2.25% | | Provision for Taxes | $46,309 | $21,363 | 116.77% | | Net Earnings | $202,348 | $221,814 | -8.78% | | Basic EPS | $9.78 | $10.42 | -6.24% | | Diluted EPS | $9.76 | $10.37 | -5.90% | [Interim Consolidated Statements of Operations and Comprehensive Income (Six Months)](index=5&type=section&id=Interim%20Consolidated%20Statements%20of%20Operations%20and%20Comprehensive%20Income%20for%20the%20six%20months%20ended%20June%2030%2C%202025%20and%202024) Six-month net sales were flat, but net earnings decreased 8.36% due to a significant increase in tax provision Interim Consolidated Statements of Operations and Comprehensive Income (Six Months) | Metric | June 30, 2025 (in thousands) | June 30, 2024 (in thousands) | Change (%) | | :----------------------------------- | :--------------------------- | :--------------------------- | :--------- | | Total Net Sales | $1,866,965 | $1,872,699 | -0.31% | | Gross Profit | $1,105,755 | $1,113,801 | -0.72% | | Earnings Before Taxes | $450,599 | $463,724 | -2.83% | | Provision for Taxes | $84,664 | $64,401 | 31.46% | | Net Earnings | $365,935 | $399,323 | -8.36% | | Basic EPS | $17.61 | $18.70 | -5.83% | | Diluted EPS | $17.56 | $18.60 | -5.59% | [Interim Consolidated Balance Sheets](index=6&type=section&id=Interim%20Consolidated%20Balance%20Sheets%20as%20of%20June%2030%2C%202025%20and%20December%2031%2C%202024) Total assets grew 4.96% by June 30, 2025, while liabilities rose 8.70% and equity further declined Interim Consolidated Balance Sheets | Metric | June 30, 2025 (in thousands) | December 31, 2024 (in thousands) | Change (%) | | :----------------------------------- | :--------------------------- | :------------------------------- | :--------- | | Total Assets | $3,400,465 | $3,239,999 | 4.96% | | Total Liabilities | $3,659,258 | $3,366,889 | 8.70% | | Total Shareholders' Equity | $(258,793) | $(126,890) | -103.95% | | Cash and Cash Equivalents | $61,825 | $59,362 | 4.15% | | Inventories | $388,081 | $342,274 | 13.37% | | Long-term Debt | $2,123,735 | $1,831,265 | 15.97% | [Interim Consolidated Statements of Shareholders' Equity](index=7&type=section&id=Interim%20Consolidated%20Statements%20of%20Shareholders%27%20Equity%20for%20the%20six%20months%20ended%20June%2030%2C%202025%20and%202024) Shareholders' equity significantly decreased due to substantial share repurchases and higher comprehensive loss Interim Consolidated Statements of Shareholders' Equity (in thousands) | Metric | December 31, 2024 (in thousands) | June 30, 2025 (in thousands) | Change (in thousands) | | :----------------------------------- | :------------------------------- | :--------------------------- | :-------------------- | | Total Shareholders' Equity | $(126,890) | $(258,793) | $(131,903) | | Treasury Stock at Cost | $(9,049,925) | $(9,486,086) | $(436,161) | | Retained Earnings | $8,371,420 | $8,737,339 | $365,919 | | Accumulated Other Comprehensive Loss | $(345,858) | $(421,641) | $(75,783) | - The company repurchased **368,010** shares for **$437.5 million** during the six months ended June 30, 2025, compared to **330,492** shares for **$425.0 million** in the prior year period[15](index=15&type=chunk)[69](index=69&type=chunk) - Excise tax related to the Inflation Reduction Act amounted to **$4.1 million** for the six months ended June 30, 2025, up from **$4.0 million** in the prior year[15](index=15&type=chunk)[69](index=69&type=chunk) [Interim Consolidated Statements of Cash Flows](index=8&type=section&id=Interim%20Consolidated%20Statements%20of%20Cash%20Flows%20for%20the%20six%20months%20ended%20June%2030%2C%202025%20and%202024) Operating cash flow decreased 3.73%, investing cash flow rose 77.33%, and financing cash flow fell 10.47% Cash Flow Metrics (Six Months Ended June 30, in thousands) | Cash Flow Activity | June 30, 2025 (in thousands) | June 30, 2024 (in thousands) | Change (%) | | :----------------------------------- | :--------------------------- | :--------------------------- | :--------- | | Net Cash Provided by Operating Activities | $430,815 | $447,493 | -3.73% | | Net Cash Used in Investing Activities | $(54,557) | $(30,767) | 77.33% | | Net Cash Used in Financing Activities | $(370,149) | $(413,386) | -10.47% | | Net Increase (Decrease) in Cash and Cash Equivalents | $2,463 | $1,003 | 145.56% | - The decrease in operating cash flow was primarily due to higher cash incentive payments of approximately **$36 million** related to prior year performance[142](index=142&type=chunk) [Notes to the Interim Consolidated Financial Statements](index=8&type=section&id=Notes%20to%20the%20Interim%20Consolidated%20Financial%20Statements%20at%20June%2030%2C%202025) Detailed disclosures cover accounting policies, revenue, financial instruments, debt, share repurchases, and segment performance [Note 1. Basis of Presentation](index=9&type=section&id=1.%20BASIS%20OF%20PRESENTATION) Mettler-Toledo, a global precision instrument supplier, prepares GAAP financials based on estimates amid global uncertainties - Mettler-Toledo is a **leading global supplier** of precision instruments and services, manufacturing weighing instruments, analytical instruments, automated chemistry solutions, and inspection systems[19](index=19&type=chunk) - Interim consolidated financial statements are prepared in accordance with U.S. GAAP and include wholly-owned subsidiaries, with certain disclosures condensed or omitted per SEC rules[20](index=20&type=chunk) - Financial statements rely on management estimates and assumptions, which could differ from actual results due to uncertainties like global trade/tariffs, governmental policies, and conflicts in Ukraine and the Middle East[22](index=22&type=chunk) [Note 2. Summary of Significant Accounting Policies](index=9&type=section&id=2.%20SUMMARY%20OF%20SIGNIFICANT%20ACCOUNTING%20POLICIES) This note details accounting policies for receivables, inventories, intangibles, revenue, share-based compensation, and R&D Inventories (in thousands) | Category | June 30, 2025 | December 31, 2024 | | :------------------ | :------------ | :---------------- | | Raw materials and parts | $179,788 | $161,416 | | Work-in-progress | $79,042 | $69,488 | | Finished goods | $129,251 | $111,370 | | **Total** | **$388,081** | **$342,274** | Other Intangible Assets, Net (in thousands) | Category | June 30, 2025 | December 31, 2024 | | :------------------------ | :------------ | :---------------- | | Customer relationships | $171,273 | $172,366 | | Proven technology and patents | $40,673 | $43,337 | | Tradenames (finite life) | $2,165 | $2,545 | | Tradenames (indefinite life) | $35,167 | $35,088 | | Other | $4,250 | $3,807 | | **Total** | **$253,528** | **$257,143** | - Annual aggregate amortization expense for other intangible assets is estimated at **$27.4 million** for **2025**, decreasing to **$18.1 million** by **2030**[30](index=30&type=chunk) - The company adopted ASU **2023-07** (Improvements to Reportable Segment Disclosures) retrospectively in **2024** and is evaluating the impact of ASU **2023-09** (Improvements to Income Tax Disclosures) for **2025** and ASU **2024-03** (Disaggregation of Income Statement Expenses) for **2027**[40](index=40&type=chunk)[41](index=41&type=chunk)[42](index=42&type=chunk) [Note 3. Revenue](index=12&type=section&id=3.%20REVENUE) Revenue disaggregation shows slight Q2 net sales increase but a six-month decrease, with varied segment performance Total Net Sales by Geographic Operations (in thousands) | Geographic Operations | 3 Months Ended June 30, 2025 | 3 Months Ended June 30, 2024 | 6 Months Ended June 30, 2025 | 6 Months Ended June 30, 2024 | | :-------------------- | :--------------------------- | :--------------------------- | :--------------------------- | :--------------------------- | | U.S. Operations | $372,516 | $362,215 | $718,274 | $708,338 | | Swiss Operations | $49,555 | $50,185 | $96,857 | $104,435 | | Western European Operations | $211,916 | $202,313 | $402,285 | $417,078 | | Chinese Operations | $162,017 | $164,384 | $303,185 | $307,582 | | Other Operations | $187,217 | $167,653 | $346,364 | $335,266 | | **Total** | **$983,221** | **$946,750** | **$1,866,965** | **$1,872,699** | Net Sales by Geographic Customer Destination (in thousands) | Region | 3 Months Ended June 30, 2025 | 3 Months Ended June 30, 2024 | 6 Months Ended June 30, 2025 | 6 Months Ended June 30, 2024 | | :------------------ | :--------------------------- | :--------------------------- | :--------------------------- | :--------------------------- | | Americas | $414,092 | $404,030 | $792,008 | $788,373 | | Europe | $274,103 | $258,836 | $522,078 | $532,697 | | Asia / Rest of World | $295,026 | $283,884 | $552,879 | $551,629 | | **Total** | **$983,221** | **$946,750** | **$1,866,965** | **$1,872,699** | Sales by Product Category (in thousands) | Product Category | 3 Months Ended June 30, 2025 | 3 Months Ended June 30, 2024 | 6 Months Ended June 30, 2025 | 6 Months Ended June 30, 2024 | | :--------------- | :--------------------------- | :--------------------------- | :--------------------------- | :--------------------------- | | Laboratory | $537,916 | $523,233 | $1,038,140 | $1,048,288 | | Industrial | $394,628 | $374,257 | $735,828 | $726,102 | | Retail | $50,677 | $49,260 | $92,997 | $98,309 | | **Total** | **$983,221** | **$946,750** | **$1,866,965** | **$1,872,699** | Changes in Deferred Revenue and Customer Prepayments (in thousands) | Metric | 2025 | 2024 | | :----------------------------------- | :----------- | :----------- | | Beginning balances as of January 1 | $204,166 | $202,022 | | Customer pre-payments/deferred revenue | $363,588 | $338,581 | | Revenue recognized | $(335,082) | $(320,727) | | Foreign currency translation | $11,154 | $(5,671) | | **Ending balance as of June 30** | **$243,826** | **$214,205** | [Note 4. Financial Instruments](index=15&type=section&id=4.%20FINANCIAL%20INSTRUMENTS) The company uses interest rate and cross currency swaps as cash flow hedges and foreign currency forwards for hedging Cross Currency Swaps Designated as Cash Flow Hedges | Agreement Date | Amount Converted | Effective Swiss Franc Interest Rate | Maturity Date | | :------------- | :--------------- | :---------------------------------- | :------------ | | June 2019 | $50 million | (0.82)% | June 2023 | | November 2021 | $50 million | (0.67)% | November 2023 | | June 2021 | $50 million | (0.73)% | June 2024 | | June 2021 | $50 million | (0.59)% | June 2025 | | December 2023 | $50 million | 1.04% | November 2026 | | November 2023 | $50 million | 1.16% | November 2026 | | June 2023 | $50 million | 1.55% | June 2027 | | June 2024 | $50 million | 1.15% | June 2027 | | June 2025 | $50 million | (0.21)% | June 2028 | - A derivative gain of **$5.5 million** from cash flow hedges is expected to be reclassified from other comprehensive income (loss) to earnings in the next twelve months[52](index=52&type=chunk) - Foreign currency forward contracts, not designated as hedging instruments, resulted in a net loss of **$12.6 million** for the three months and **$11.3 million** for the six months ended June 30, 2025[53](index=53&type=chunk)[54](index=54&type=chunk) [Note 5. Fair Value Measurements](index=16&type=section&id=5.%20FAIR%20VALUE%20MEASUREMENTS) Derivative assets and liabilities are measured at fair value (Level 2), with debt fair value below carrying value Derivative Assets and Liabilities (in thousands) | Category | June 30, 2025 | December 31, 2024 | | :------------------------------------------- | :------------ | :---------------- | | Total Derivative Assets | $2,412 | $9,202 | | Total Derivative Liabilities | $40,079 | $8,541 | - All fair value measurements for derivatives are categorized as **Level 2**, based on observable market assumptions and dealer quotes[55](index=55&type=chunk)[58](index=58&type=chunk) - The fair value of the company's debt is approximately **$195.8 million** less than its carrying value as of June 30, 2025[59](index=59&type=chunk) [Note 6. Income Taxes](index=17&type=section&id=6.%20INCOME%20TAXES) Reported tax rates significantly increased due to prior year tax benefits and stock option timing differences Reported Tax Rates | Period | June 30, 2025 | June 30, 2024 | | :-------------------------- | :------------ | :------------ | | Three Months Ended | 18.6% | 8.8% | | Six Months Ended | 18.8% | 13.9% | - The reported tax rate for the three and six months ended June 30, 2024, included a non-cash discrete tax benefit of **$23.0 million** from the reduction of uncertain tax position liabilities[60](index=60&type=chunk) - The company's projected annual **effective** tax rate is **19.0%** before non-recurring discrete tax items[60](index=60&type=chunk) - New U.S. tax legislation enacted on July 4, 2025, is **not expected to have a significant impact** on the company's projected annual tax rate[61](index=61&type=chunk) [Note 7. Debt](index=18&type=section&id=7.%20DEBT) Total debt reached $2.18 billion, comprising Senior Notes and a Credit Agreement, with new EUR 100 million notes issued Debt Composition at June 30, 2025 (in thousands) | Debt Type | U.S. Dollar | Other Principal Currencies | Total | | :-------------------------------------------- | :---------- | :------------------------- | :------------ | | Total Senior Notes | $697,794 | $565,727 | $1,263,521 | | $1.35 billion Credit Agreement | $437,637 | $414,432 | $852,069 | | Other local arrangements | $9,243 | $59,089 | $68,332 | | **Total Debt** | **$1,144,674** | **$1,039,248** | **$2,183,922** | | Less: Current portion | $(1,306) | $(58,881) | $(60,187) | | **Total Long-Term Debt** | **$1,143,368** | **$980,367** | **$2,123,735** | - The company entered into a **$1.35 billion** Credit Agreement on May 30, 2024, with a maturity date of **2029**, and had **$493.4 million** of additional borrowings available as of June 30, 2025[62](index=62&type=chunk) - In January **2025**, the company issued **EUR 100 million** 10 1/2-year Senior Notes with a fixed interest rate of **3.8%**, maturing in July **2035**, to refinance existing indebtedness and for general corporate purposes[65](index=65&type=chunk) - Certain Euro-denominated Senior Notes are designated as a hedge of a portion of net investment in euro-denominated foreign subsidiaries, resulting in an unrealized loss of **$63.8 million** for the six months ended June 30, 2025[66](index=66&type=chunk) [Note 8. Share Repurchase Program and Treasury Stock](index=19&type=section&id=8.%20SHARE%20REPURCHASE%20PROGRAM%20AND%20TREASURY%20STOCK) The company has $1.3 billion remaining for share repurchases, spending $437.5 million on 368,010 shares in H1 2025 - As of June 30, 2025, **$1.3 billion** remains available for the share repurchase program[68](index=68&type=chunk) Share Repurchase Activity (Six Months Ended June 30) | Metric | 2025 | 2024 | | :----------------------------------- | :----------- | :----------- | | Amount spent on repurchases | $437.5 million | $425.0 million | | Number of shares repurchased | 368,010 | 330,492 | | Average price per share | $1,188.80 | $1,285.94 | | Excise tax on net repurchases | $4.1 million | $4.0 million | [Note 9. Accumulated Other Comprehensive Income](index=20&type=section&id=9.%20ACCUMULATED%20OTHER%20COMPREHENSIVE%20INCOME) Comprehensive income decreased to $290.2 million due to higher other comprehensive loss from currency and hedging Comprehensive Income, Net of Tax (in thousands) | Metric | 3 Months Ended June 30, 2025 | 3 Months Ended June 30, 2024 | 6 Months Ended June 30, 2025 | 6 Months Ended June 30, 2024 | | :-------------------------- | :--------------------------- | :--------------------------- | :--------------------------- | :--------------------------- | | Net earnings | $202,348 | $221,814 | $365,935 | $399,323 | | Other comprehensive income (loss), net of tax | $(70,542) | $(12,293) | $(75,783) | $9,448 | | **Comprehensive income, net of tax** | **$131,806** | **$209,521** | **$290,152** | **$408,771** | Changes in Accumulated Other Comprehensive Income (Loss) (in thousands) | Component | Balance at Dec 31, 2024 | Net Change (6 Months Ended June 30, 2025) | Balance at June 30, 2025 | | :-------------------------------------- | :---------------------- | :---------------------------------------- | :----------------------- | | Currency Translation Adjustment, Net of Tax | $(133,503) | $(56,366) | $(189,869) | | Net Unrealized Gain (Loss) on Cash Flow Hedging Arrangements, Net of Tax | $(3,920) | $(2,615) | $(6,535) | | Pension and Post-Retirement Benefit Related Items, Net of Tax | $(208,435) | $(16,802) | $(225,237) | | **Total** | **$(345,858)** | **$(75,783)** | **$(421,641)** | [Note 10. Earnings Per Common Share](index=22&type=section&id=10.%20EARNINGS%20PER%20COMMON%20SHARE) Diluted EPS calculations included 51,387 and 59,177 common equivalent shares for Q2 and H1 2025, respectively Common Equivalent Shares Included in Diluted EPS Calculation | Period | 2025 | 2024 | | :--------------- | :----- | :------ | | Three months ended | 51,387 | 113,544 | | Six months ended | 59,177 | 110,656 | - **100,446** and **92,116** shares of common stock for the three and six months ended June 30, 2025, respectively, were excluded from diluted EPS calculation as they were anti-dilutive[76](index=76&type=chunk) [Note 11. Net Periodic Pension Cost](index=22&type=section&id=11.%20NET%20PERIODIC%20PENSION%20COST) Net periodic pension cost decreased to $1.49 million (Q2) and $3.11 million (H1) due to higher asset returns Net Periodic Pension Cost (Credit) (in thousands) | Component | 3 Months Ended June 30, 2025 | 3 Months Ended June 30, 2024 | 6 Months Ended June 30, 2025 | 6 Months Ended June 30, 2024 | | :-------------------------------------- | :--------------------------- | :--------------------------- | :--------------------------- | :--------------------------- | | Service cost, net | $4,894 | $4,289 | $9,622 | $8,706 | | Interest cost on projected benefit obligations | $5,030 | $5,567 | $9,788 | $11,245 | | Expected return on plan assets | $(12,457) | $(10,418) | $(24,072) | $(21,131) | | Recognition of prior service cost | $(1,064) | $(1,139) | $(2,042) | $(2,319) | | Recognition of actuarial losses/(gains) | $5,090 | $4,166 | $9,815 | $8,456 | | **Net periodic pension cost/(credit)** | **$1,493** | **$2,465** | **$3,111** | **$4,957** | - The company expects to make approximately **$25.4 million** in employer contributions to its non-U.S. pension plans during **2025**[77](index=77&type=chunk) [Note 12. Other Charges (Income), Net](index=23&type=section&id=12.%20OTHER%20CHARGES%20(INCOME)%2C%20NET) Other charges (income), net, includes non-service pension benefits, which increased to $3.4 million for Q2 2025 Non-Service Pension Benefits (in thousands) | Period | June 30, 2025 | June 30, 2024 | | :--------------- | :------------ | :------------ | | Three months ended | $3,400 | $1,900 | | Six months ended | $6,500 | $3,800 | [Note 13. Segment Reporting](index=23&type=section&id=13.%20SEGMENT%20REPORTING) The company operates five segments; total segment profit decreased 5.69% to $520.0 million for H1 2025 Segment Profit Reconciliation to Earnings Before Taxes (in thousands) | Metric | 3 Months Ended June 30, 2025 | 3 Months Ended June 30, 2024 | 6 Months Ended June 30, 2025 | 6 Months Ended June 30, 2024 | | :---------------------- | :--------------------------- | :--------------------------- | :--------------------------- | :--------------------------- | | Segment profit | $283,293 | $284,101 | $520,027 | $551,429 | | Amortization | $(17,581) | $(18,178) | $(34,774) | $(36,406) | | Interest expense | $(16,779) | $(18,950) | $(33,432) | $(38,182) | | Restructuring charges | $(3,557) | $(5,329) | $(7,324) | $(14,993) | | Other income, net | $3,281 | $1,533 | $6,102 | $1,876 | | **Earnings before taxes** | **$248,657** | **$243,177** | **$450,599** | **$463,724** | Segment Assets, Depreciation, Capital Expenditures, and Goodwill (Six Months Ended June 30, 2025, in thousands) | Segment | Depreciation | Purchase of Property, Plant, and Equipment | Goodwill | | :---------------------- | :----------- | :--------------------------------------- | :--------- | | U.S. Operations | $8,321 | $(5,804) | $532,394 | | Swiss Operations | $3,346 | $(2,282) | $28,920 | | Western European Operations | $2,800 | $(2,429) | $108,380 | | Chinese Operations | $4,659 | $(4,375) | $611 | | Other Operations | $3,117 | $(2,702) | $13,817 | | Eliminations and Corporate | $3,091 | $(23,540) | — | | **Total** | **$25,334** | **$(41,132)** | **$684,122** | [Note 14. Commitments and Contingencies](index=26&type=section&id=14.%20COMMITMENTS%20AND%20CONTINGENCIES) Management anticipates no material adverse effect from ongoing legal proceedings or environmental matters - Management does not expect any current legal proceedings or environmental matters to have a **material adverse effect** on the company's financial condition, results of operations, or cash flows[91](index=91&type=chunk) [Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations](index=26&type=section&id=Item%202.%20Management%27s%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) Analysis covers consolidated and segment performance, liquidity, capital, debt, share repurchases, and currency impacts [General](index=27&type=section&id=General) GAAP-based interim results are not full-year indicative; local currency data assesses performance amid economic uncertainty - Operating results for the three and six months ended June 30, 2025, are not necessarily indicative of the full year ending December 31, 2025[94](index=94&type=chunk) - The recent escalation in global trade disputes/tariffs has increased economic uncertainty, including the risk of recession, which could adversely impact financial results[102](index=102&type=chunk) [Results of Operations – Consolidated](index=28&type=section&id=Results%20of%20Operations%20%E2%80%93%20Consolidated) Consolidated net sales rose 4% (Q2) but were flat (H1); gross profit margins declined due to tariffs, net earnings fell Consolidated Statements of Operations and Comprehensive Income (in thousands) | Metric | 3 Months Ended June 30, 2025 | 3 Months Ended June 30, 2024 | 6 Months Ended June 30, 2025 | 6 Months Ended June 30, 2024 | | :-------------------------- | :--------------------------- | :--------------------------- | :--------------------------- | :--------------------------- | | Net sales | $983,221 | $946,750 | $1,866,965 | $1,872,699 | | Cost of sales | $403,345 | $381,082 | $761,210 | $758,898 | | Gross profit | $579,876 | $565,668 | $1,105,755 | $1,113,801 | | Research and development | $49,285 | $45,771 | $95,631 | $92,186 | | Selling, general and administrative | $247,298 | $235,796 | $490,097 | $470,186 | | Amortization | $17,581 | $18,178 | $34,774 | $36,406 | | Interest expense | $16,779 | $18,950 | $33,432 | $38,182 | | Restructuring charges | $3,557 | $5,329 | $7,324 | $14,993 | | Other charges (income), net | $(3,281) | $(1,533) | $(6,102) | $(1,876) | | Earnings before taxes | $248,657 | $243,177 | $450,599 | $463,724 | | Provision for taxes | $46,309 | $21,363 | $84,664 | $64,401 | | Net earnings | $202,348 | $221,814 | $365,935 | $399,323 | - Net sales increased **4%** in U.S. dollars (**2%** in local currencies) for the three months ended June 30, 2025, but were flat in U.S. dollars (flat in local currencies) for the six months, impacted by prior year shipping delay recovery[103](index=103&type=chunk)[104](index=104&type=chunk) - Gross profit as a percentage of net sales decreased to **59.0%** (from **59.7%**) for the three months and **59.2%** (from **59.5%**) for the six months ended June 30, 2025, primarily due to increased tariff costs, partially offset by favorable price realization[112](index=112&type=chunk)[114](index=114&type=chunk) - Research and development expenses increased **8%** (**3%** in local currencies) for the three months and **4%** (**3%** in local currencies) for the six months ended June 30, 2025[116](index=116&type=chunk) - Selling, general and administrative expenses increased **5%** (**2%** in local currencies) for the three months and **4%** (**4%** in local currencies) for the six months ended June 30, 2025, driven by sales and marketing investments[117](index=117&type=chunk) [Results of Operations – by Operating Segment](index=32&type=section&id=Results%20of%20Operations%20%E2%80%93%20by%20Operating%20Segment) Segment profit varied; U.S. and Chinese operations declined due to tariffs and lower sales, others saw mixed results [U.S. Operations](index=32&type=section&id=U.S.%20Operations%20(amounts%20in%20thousands)) U.S. Operations' net sales rose 3% (Q2) and 1% (H1), but segment profit decreased 8% and 9% due to tariffs U.S. Operations Financial Performance (in thousands) | Metric | 3 Months Ended June 30, 2025 | 3 Months Ended June 30, 2024 | 6 Months Ended June 30, 2025 | 6 Months Ended June 30, 2024 | | :-------------------------- | :--------------------------- | :--------------------------- | :--------------------------- | :--------------------------- | | Net sales to external customers | $372,516 | $362,215 | $718,274 | $708,338 | | Segment profit | $92,700 | $100,247 | $176,996 | $193,883 | - Segment profit decreased due to higher tariff costs and unfavorable business mix, with lower sales volume in Q1 **2025** also impacting the six-month period[126](index=126&type=chunk) [Swiss Operations](index=32&type=section&id=Swiss%20Operations%20(amounts%20in%20thousands)) Swiss Operations' net sales fell 1% (Q2) and 7% (H1), yet segment profit increased 26% and 15% from inter-segment sales Swiss Operations Financial Performance (in thousands) | Metric | 3 Months Ended June 30, 2025 | 3 Months Ended June 30, 2024 | 6 Months Ended June 30, 2025 | 6 Months Ended June 30, 2024 | | :-------------------------- | :--------------------------- | :--------------------------- | :--------------------------- | :--------------------------- | | Net sales to external customers | $49,555 | $50,185 | $96,857 | $104,435 | | Segment profit | $70,581 | $55,804 | $131,576 | $114,890 | - The decline in net sales to external customers for the six months ended June 30, 2025, includes a **6%** decline from the recovery of previously disclosed shipping delays in the prior year[128](index=128&type=chunk) - Segment profit increased primarily due to higher net sales to other segments, partially offset by unfavorable foreign currency translation[129](index=129&type=chunk) [Western European Operations](index=33&type=section&id=Western%20European%20Operations%20(amounts%20in%20thousands)) Western European net sales rose 5% (Q2) but fell 4% (H1); segment profit increased 15% (Q2) but decreased 1% (H1) Western European Operations Financial Performance (in thousands) | Metric | 3 Months Ended June 30, 2025 | 3 Months Ended June 30, 2024 | 6 Months Ended June 30, 2025 | 6 Months Ended June 30, 2024 | | :-------------------------- | :--------------------------- | :--------------------------- | :--------------------------- | :--------------------------- | | Net sales to external customers | $211,916 | $202,313 | $402,285 | $417,078 | | Segment profit | $51,880 | $45,124 | $94,925 | $95,435 | - Net sales to external customers for the six months ended June 30, 2025, were reduced approximately **5%** from the recovery of previously disclosed shipping delays in the prior year[131](index=131&type=chunk) - The increase in segment profit for the three months was due to increased net sales, margin expansion initiatives, and favorable foreign currency translation[132](index=132&type=chunk) [Chinese Operations](index=33&type=section&id=Chinese%20Operations%20(amounts%20in%20thousands)) Chinese Operations' net sales decreased 1% (Q2 & H1); segment profit fell 10% (Q2) and 6% (H1) due to tariffs Chinese Operations Financial Performance (in thousands) | Metric | 3 Months Ended June 30, 2025 | 3 Months Ended June 30, 2024 | 6 Months Ended June 30, 2025 | 6 Months Ended June 30, 2024 | | :-------------------------- | :--------------------------- | :--------------------------- | :--------------------------- | :--------------------------- | | Net sales to external customers | $162,017 | $164,384 | $303,185 | $307,582 | | Segment profit | $89,338 | $99,496 | $165,355 | $175,319 | - The decrease in segment profit for both periods includes lower sales volume and increased tariff costs, partially offset by cost savings initiatives[136](index=136&type=chunk) [Other Operations](index=34&type=section&id=Other%20(amounts%20in%20thousands)) Other Operations' net sales rose 12% (Q2) and 3% (H1); segment profit increased 26% (Q2) and 12% (H1) from sales growth Other Operations Financial Performance (in thousands) | Metric | 3 Months Ended June 30, 2025 | 3 Months Ended June 30, 2024 | 6 Months Ended June 30, 2025 | 6 Months Ended June 30, 2024 | | :-------------------------- | :--------------------------- | :--------------------------- | :--------------------------- | :--------------------------- | | Net sales to external customers | $187,217 | $167,653 | $346,364 | $335,266 | | Segment profit | $31,103 | $24,628 | $55,594 | $49,810 | - The increase in segment profit for both periods is primarily related to increased sales volume and benefits from margin expansion initiatives[139](index=139&type=chunk) [Liquidity and Capital Resources](index=34&type=section&id=Liquidity%20and%20Capital%20Resources) Liquidity is strong, supported by operating cash flows and available borrowings, sufficient for anticipated needs - Cash flows from operating activities, available liquidity under the Credit Agreement, local working capital facilities, and cash balances are expected to be **sufficient** to fund working capital and spending requirements[141](index=141&type=chunk) Cash Flow Metrics (Six Months Ended June 30, in thousands) | Metric | 2025 | 2024 | | :----------------------------------- | :----------- | :----------- | | Cash provided by operating activities | $430,815 | $447,493 | | Capital expenditures | $41,100 | $41,200 | | Cash flows used in financing activities | $370,149 | $413,386 | - The decrease in operating cash flow for the six months ended June 30, 2025, is primarily related to approximately **$36 million** in higher cash incentive payments[142](index=142&type=chunk) [Senior Notes and Credit Facility Agreement](index=35&type=section&id=Senior%20Notes%20and%20Credit%20Facility%20Agreement) Debt includes Senior Notes and a $1.35 billion Credit Agreement, with $493.4 million available and new EUR 100M notes Debt Composition at June 30, 2025 (in thousands) | Debt Type | U.S. Dollar | Other Principal Currencies | Total | | :-------------------------------------------- | :---------- | :------------------------- | :------------ | | Total Senior Notes | $697,794 | $565,727 | $1,263,521 | | $1.35 billion Credit Agreement | $437,637 | $414,432 | $852,069 | | Other local arrangements | $9,243 | $59,089 | $68,332 | | **Total Debt** | **$1,144,674** | **$1,039,248** | **$2,183,922** | | Less: Current portion | $(1,306) | $(58,881) | $(60,187) | | **Total Long-Term Debt** | **$1,143,368** | **$980,367** | **$2,123,735** | - As of June 30, 2025, **$493.4 million** of additional borrowings were available under the Credit Agreement[146](index=146&type=chunk) - The company was **in compliance** with its debt covenants as of June 30, 2025[147](index=147&type=chunk) - In January **2025**, **EUR 100 million** 10 1/2-year Senior Notes with a **3.8%** fixed interest rate were issued to refinance existing indebtedness and for general corporate purposes[148](index=148&type=chunk) [Other Local Arrangements](index=36&type=section&id=Other%20Local%20Arrangements) Non-U.S. pension plans renewed $39.6 million (CHF 38 million) in loans to a subsidiary for one year - Loans totaling **$39.6 million** (Swiss franc **38 million**) from non-U.S. pension plans to a subsidiary were renewed for one year in April **2025**, bearing interest at SARON plus **87.5** basis points[149](index=149&type=chunk) [Share Repurchase Program](index=36&type=section&id=Share%20Repurchase%20Program) The company has $1.3 billion remaining for share repurchases, spending $437.5 million on 368,010 shares in H1 2025 - As of June 30, 2025, **$1.3 billion** of remaining availability for the share repurchase program[150](index=150&type=chunk) Share Repurchase Activity (Six Months Ended June 30) | Metric | 2025 | 2024 | | :----------------------------------- | :----------- | :----------- | | Amount spent on repurchases | $437.5 million | $425.0 million | | Number of shares repurchased | 368,010 | 330,492 | | Average price per share | $1,188.80 | $1,285.94 | | Excise tax on net repurchases | $4.1 million | $4.0 million | [Effect of Currency on Results of Operations](index=36&type=section&id=Effect%20of%20Currency%20on%20Results%20of%20Operations) Earnings are sensitive to currency fluctuations, with specific impacts from Swiss franc/euro and renminbi/USD movements - A **1%** strengthening of the Swiss franc against the euro is estimated to reduce earnings before tax by approximately **$2.6 million** to **$2.9 million** annually[152](index=152&type=chunk) - A **1%** weakening of the Chinese renminbi against the U.S. dollar is estimated to reduce earnings before tax by approximately **$2.1 million** to **$2.4 million** annually[153](index=153&type=chunk) - A **5%** weakening of the U.S. dollar against the currencies in which debt is denominated could increase the reported U.S. dollar value of debt by approximately **$54.8 million**[154](index=154&type=chunk) [Forward-Looking Statements Disclaimer](index=37&type=section&id=Forward-Looking%20Statements%20Disclaimer) Forward-looking statements are subject to risks and uncertainties, including global trade disputes, policies, and conflicts - Forward-looking statements are subject to risks and uncertainties, including global trade disputes/tariffs, governmental policies, inflation, and conflicts in Ukraine and the Middle East[155](index=155&type=chunk)[156](index=156&type=chunk) [Item 3. Quantitative and Qualitative Disclosures About Market Risk](index=37&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) No material changes in market risk disclosures from the 2024 Annual Report on Form 10-K - **No material change** in market risk information from the Annual Report on Form 10-K for the year ended December 31, 2024[157](index=157&type=chunk) [Item 4. Controls and Procedures](index=37&type=section&id=Item%204.%20Controls%20and%20Procedures) Disclosure controls and procedures were effective as of June 30, 2025, with no material internal control changes - Disclosure controls and procedures were evaluated and deemed **effective** as of June 30, 2025[158](index=158&type=chunk) - **No material changes** in internal control over financial reporting occurred during the quarter ended June 30, 2025[158](index=158&type=chunk) PART II. OTHER INFORMATION [Item 1. Legal Proceedings](index=38&type=section&id=Item%201.%20Legal%20Proceedings) No legal proceedings to report - **No legal proceedings** to report[160](index=160&type=chunk) [Item 1A. Risk Factors](index=38&type=section&id=Item%201A.%20Risk%20Factors) No material changes to risk factors from the 2024 Annual Report on Form 10-K - **No material changes** from risk factors disclosed in Part I, Item 1A of the Annual Report on Form 10-K for the year ended December 31, 2024[160](index=160&type=chunk) [Item 2. Unregistered Sales of Equity Securities and Use of Proceeds](index=38&type=section&id=Item%202.%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds) The company repurchased 197,053 shares for $218.7 million in Q2 2025, with $1.3 billion remaining in the program Issuer Purchases of Equity Securities (April 1 to June 30, 2025) | Period | Total Number of Shares Purchased | Average Price Paid per Share | Total Number of Shares Purchased as Part of Publicly Announced Program | | :---------------------- | :------------------------------- | :--------------------------- | :------------------------------------------------------------------- | | April 1 to April 30, 2025 | 70,935 | $1,045.20 | 70,935 | | May 1 to May 31, 2025 | 69,260 | $1,123.97 | 69,260 | | June 1 to June 30, 2025 | 56,858 | $1,174.09 | 56,858 | | **Total** | **197,053** | **$1,110.08** | **197,053** | - As of June 30, 2025, **$1.3 billion** of remaining availability for the share repurchase program[161](index=161&type=chunk) - During the six months ended June 30, 2025, the company spent **$437.5 million** on repurchasing **368,010** shares and incurred **$4.1 million** in excise tax related to the Inflation Reduction Act[162](index=162&type=chunk) [Item 3. Defaults Upon Senior Securities](index=38&type=section&id=Item%203.%20Defaults%20Upon%20Senior%20Securities) No defaults upon senior securities - **No defaults** upon senior securities[163](index=163&type=chunk) [Item 5. Other Information](index=38&type=section&id=Item%205.%20Other%20Information) No other information to report - **No other information** to report[163](index=163&type=chunk) [Item 6. Exhibits](index=38&type=section&id=Item%206.%20Exhibits) This section lists all exhibits filed with the quarterly report, including certifications and XBRL documents - The exhibit index includes certifications (CEO, CFO, Section 906) and XBRL taxonomy documents[164](index=164&type=chunk) SIGNATURE [SIGNATURE](index=39&type=section&id=SIGNATURE) The report was signed by Shawn P. Vadala, Chief Financial Officer, on August 1, 2025 - The report was signed by **Shawn P. Vadala**, Chief Financial Officer, on **August 1, 2025**[166](index=166&type=chunk)