Date of Report (Date of earliest event reported): | November 8, 2018 |
Delaware | File No. 001-13595 | 13-3668641 | ||
(State or other jurisdiction of incorporation) | (Commission File Number) | (IRS Employer Identification No.) |
1900 Polaris Parkway Columbus, OH and Im Langacher, P.O. Box MT-100 CH Greifensee, Switzerland | 43240 and 8606 | |
(Address of principal executive offices) | (Zip Code) |
(Former name or former address, if changed since last report.) |
o | Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) | |
o | Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) | |
o | Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) | |
o | Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)) |
• | It excludes amortization expense. Because this item is recurring, any measure that excludes amortization expense has material limitations. | |
• | It does not include interest expense. Because Mettler-Toledo has borrowed money to finance some of its operations, interest is a necessary and ongoing part of its costs and has assisted Mettler-Toledo in generating revenue. Therefore any measure that excludes interest expense has material limitations. | |
• | It excludes restructuring charges. Because restructuring charges are a component of operating income under U.S. GAAP, any measure that excludes restructuring charges, has material limitations. | |
• | It excludes other charges (income), net. Because other charges (income), net is a component of operating income under U.S. GAAP, any measure that excludes other charges (income), net, has material limitations. |
• | It includes proceeds from the sale of property, plant and equipment and purchases of property, plant and equipment, which are not considered to be components of net cash provided by operating activities under U.S. GAAP. Therefore any measure that includes proceeds from the sale of property, plant and equipment and purchases of property, plant and equipment has material limitations. | |
• | It excludes restructuring, acquisition cost, and Transition Tax payments, which are considered to be components of net cash provided by operating activities under U.S. GAAP. Therefore any measure that excludes these items has material limitations. |
Exhibit No. | Description | |||
METTLER-TOLEDO INTERNATIONAL INC. | ||||
Dated: | November 8, 2018 | By: | /s/ Shawn P. Vadala | |
Shawn P. Vadala | ||||
Chief Financial Officer |
FOR IMMEDIATE RELEASE | Exhibit 99.1 |
• | Reported sales increased 5% as compared with the prior year. In local currency, sales increased 7% in the quarter as currency reduced sales growth by 2%. |
• | Net earnings per diluted share as reported (EPS) were $4.93, compared with $3.99 in the prior-year period. Adjusted EPS was $5.12, an increase of 17% over the prior-year amount of $4.36. Adjusted EPS is a non-GAAP measure, and we have included a reconciliation to EPS on the last page of the attached schedules. |
METTLER-TOLEDO INTERNATIONAL INC. CONSOLIDATED STATEMENTS OF OPERATIONS (amounts in thousands except share data) (unaudited) | ||||||||||||||
Three months ended | Three months ended | |||||||||||||
September 30, 2018 | % of sales | September 30, 2017 | % of sales | |||||||||||
Net sales | $ | 734,846 | (a) | 100.0 | $ | 698,799 | 100.0 | |||||||
Cost of sales | 315,592 | 42.9 | 297,824 | (b) | 42.6 | |||||||||
Gross profit | 419,254 | 57.1 | 400,975 | 57.4 | ||||||||||
Research and development | 34,838 | 4.7 | 32,203 | (b) | 4.6 | |||||||||
Selling, general and administrative | 202,451 | 27.6 | 207,033 | (b) | 29.6 | |||||||||
Amortization | 11,856 | 1.6 | 10,716 | 1.5 | ||||||||||
Interest expense | 9,003 | 1.2 | 8,248 | 1.2 | ||||||||||
Restructuring charges | 2,222 | 0.3 | 3,385 | 0.5 | ||||||||||
Other charges (income), net | (1,479 | ) | (0.1 | ) | (237 | ) | (b) | 0.0 | ||||||
Earnings before taxes | 160,363 | 21.8 | 139,627 | 20.0 | ||||||||||
Provision for taxes | 33,710 | 4.6 | 34,677 | 5.0 | ||||||||||
Net earnings | $ | 126,653 | 17.2 | $ | 104,950 | 15.0 | ||||||||
Basic earnings per common share: | ||||||||||||||
Net earnings | $ | 5.04 | $ | 4.10 | ||||||||||
Weighted average number of common shares | 25,126,061 | 25,613,433 | ||||||||||||
Diluted earnings per common share: | ||||||||||||||
Net earnings | $ | 4.93 | $ | 3.99 | ||||||||||
Weighted average number of common and common equivalent shares | 25,683,365 | 26,303,529 | ||||||||||||
Note: | ||||||||||||||
(a) | Local currency sales increased 7% as compared to the same period in 2017. | |||||||||||||
(b) | In accordance with the new accounting rules that went into effect on January 1, 2018, the Company reclassified a net pension benefit of $1.2 million into other charges (income) from other income statement categories for the three months ended September 30, 2017 to be consistent with the 2018 presentation. | |||||||||||||
RECONCILIATION OF EARNINGS BEFORE TAXES TO ADJUSTED OPERATING INCOME | ||||||||||||||
Three months ended | Three months ended | |||||||||||||
September 30, 2018 | % of sales | September 30, 2017 | % of sales | |||||||||||
Earnings before taxes | $ | 160,363 | $ | 139,627 | ||||||||||
Amortization | 11,856 | 10,716 | ||||||||||||
Interest expense | 9,003 | 8,248 | ||||||||||||
Restructuring charges | 2,222 | 3,385 | ||||||||||||
Other charges (income), net | (1,479 | ) | (237 | ) | (b) | |||||||||
Adjusted operating income | $ | 181,965 | (c) | 24.8 | $ | 161,739 | 23.1 | |||||||
Note: | ||||||||||||||
(c) | Adjusted operating income increased 13% as compared to the same period in 2017. |
METTLER-TOLEDO INTERNATIONAL INC. CONSOLIDATED STATEMENTS OF OPERATIONS (amounts in thousands except share data) (unaudited) | |||||||||||||||
Nine months ended | Nine months ended | ||||||||||||||
September 30, 2018 | % of sales | September 30, 2017 | % of sales | ||||||||||||
Net sales | $ | 2,117,663 | (a) | 100.0 | $ | 1,947,022 | 100.0 | ||||||||
Cost of sales | 910,851 | 43.0 | 827,046 | (b) | 42.5 | ||||||||||
Gross profit | 1,206,812 | 57.0 | 1,119,976 | 57.5 | |||||||||||
Research and development | 104,866 | 5.0 | 95,985 | (b) | 4.9 | ||||||||||
Selling, general and administrative | 611,149 | 28.9 | 588,313 | (b) | 30.2 | ||||||||||
Amortization | 35,561 | 1.7 | 31,010 | 1.6 | |||||||||||
Interest expense | 25,671 | 1.2 | 24,160 | 1.2 | |||||||||||
Restructuring charges | 13,956 | 0.6 | 8,840 | 0.5 | |||||||||||
Other charges (income), net | (5,795 | ) | (0.3 | ) | (8,654 | ) | (b)(c) | (0.4 | ) | ||||||
Earnings before taxes | 421,404 | 19.9 | 380,322 | 19.5 | |||||||||||
Provision for taxes | 89,979 | 4.2 | 81,326 | 4.1 | |||||||||||
Net earnings | $ | 331,425 | 15.7 | $ | 298,996 | 15.4 | |||||||||
Basic earnings per common share: | |||||||||||||||
Net earnings | $ | 13.10 | $ | 11.60 | |||||||||||
Weighted average number of common shares | 25,296,680 | 25,764,472 | |||||||||||||
Diluted earnings per common share: | |||||||||||||||
Net earnings | $ | 12.81 | $ | 11.31 | |||||||||||
Weighted average number of common and common equivalent shares | 25,877,979 | 26,446,677 | |||||||||||||
Note: | |||||||||||||||
(a) | Local currency sales increased 6% as compared to the same period in 2017. | ||||||||||||||
(b) | In accordance with the new accounting rules that went into effect on January 1, 2018, the Company reclassified a net pension benefit of $3.1 million into other charges (income) from other income statement categories for the nine months ended September 30, 2017 to be consistent with the 2018 presentation. | ||||||||||||||
(c) | Other charges (income), net includes a one-time gain of $3.4 million for the nine months ended September 30, 2017 relating to the sale of the facility in Switzerland in connection with our initiative to consolidate certain Swiss operations into a new facility. | ||||||||||||||
RECONCILIATION OF EARNINGS BEFORE TAXES TO ADJUSTED OPERATING INCOME | |||||||||||||||
Nine months ended | Nine months ended | ||||||||||||||
September 30, 2018 | % of sales | September 30, 2017 | % of sales | ||||||||||||
Earnings before taxes | $ | 421,404 | $ | 380,322 | |||||||||||
Amortization | 35,561 | 31,010 | |||||||||||||
Interest expense | 25,671 | 24,160 | |||||||||||||
Restructuring charges | 13,956 | 8,840 | |||||||||||||
Other charges (income), net | (5,795 | ) | (8,654 | ) | (b)(c) | ||||||||||
Adjusted operating income | $ | 490,797 | (d) | 23.2 | $ | 435,678 | 22.4 | ||||||||
Note: | |||||||||||||||
(d) | Adjusted operating income increased 13% as compared to the same period in 2017. |
METTLER-TOLEDO INTERNATIONAL INC. CONDENSED CONSOLIDATED BALANCE SHEETS (amounts in thousands) (unaudited) | |||||||
September 30, 2018 | December 31, 2017 | ||||||
Cash and cash equivalents | $ | 137,448 | $ | 148,687 | |||
Accounts receivable, net | 494,887 | 528,615 | |||||
Inventories | 277,266 | 255,390 | |||||
Other current assets and prepaid expenses | 61,898 | 74,031 | |||||
Total current assets | 971,499 | 1,006,723 | |||||
Property, plant and equipment, net | 697,689 | 668,271 | |||||
Goodwill and other intangible assets, net | 758,766 | 766,556 | |||||
Other non-current assets | 129,710 | 108,255 | |||||
Total assets | $ | 2,557,664 | $ | 2,549,805 | |||
Short-term borrowings and maturities of long-term debt | $ | 55,753 | $ | 19,677 | |||
Trade accounts payable | 156,447 | 167,627 | |||||
Accrued and other current liabilities | 485,269 | 502,369 | |||||
Total current liabilities | 697,469 | 689,673 | |||||
Long-term debt | 988,894 | 960,170 | |||||
Other non-current liabilities | 339,686 | 352,682 | |||||
Total liabilities | 2,026,049 | 2,002,525 | |||||
Shareholders’ equity | 531,615 | 547,280 | |||||
Total liabilities and shareholders’ equity | $ | 2,557,664 | $ | 2,549,805 |
METTLER-TOLEDO INTERNATIONAL INC. CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (amounts in thousands) (unaudited) | |||||||||||||||
Three months ended | Nine months ended | ||||||||||||||
September 30, | September 30, | ||||||||||||||
2018 | 2017 | 2018 | 2017 | ||||||||||||
Cash flow from operating activities: | |||||||||||||||
Net earnings | $ | 126,653 | $ | 104,950 | $ | 331,425 | $ | 298,996 | |||||||
Adjustments to reconcile net earnings to | |||||||||||||||
net cash provided by operating activities: | |||||||||||||||
Depreciation | 9,283 | 8,502 | 27,889 | 24,421 | |||||||||||
Amortization | 11,856 | 10,716 | 35,561 | 31,010 | |||||||||||
Deferred tax benefit | (1,792 | ) | (3,914 | ) | (11,901 | ) | (7,754 | ) | |||||||
Other | 2,763 | 4,027 | 9,799 | 8,656 | |||||||||||
Increase (decrease) in cash resulting from changes in | |||||||||||||||
operating assets and liabilities | 911 | 21,577 | (26,340 | ) | (4,094 | ) | |||||||||
Net cash provided by operating activities | 149,674 | 145,858 | 366,433 | 351,235 | |||||||||||
Cash flows from investing activities: | |||||||||||||||
Proceeds from sale of property, plant and equipment | 3,279 | 228 | 7,809 | 10,437 | |||||||||||
Purchase of property, plant and equipment | (35,079 | ) | (37,297 | ) | (96,665 | ) | (85,826 | ) | |||||||
Acquisitions | (4,462 | ) | (107,748 | ) | (4,962 | ) | (108,445 | ) | |||||||
Net hedging settlements on intercompany loans | (7,822 | ) | 4,749 | (780 | ) | 3,716 | |||||||||
Net cash used in investing activities | (44,084 | ) | (140,068 | ) | (94,598 | ) | (180,118 | ) | |||||||
Cash flows from financing activities: | |||||||||||||||
Proceeds from borrowings | 169,094 | 312,773 | 772,274 | 985,694 | |||||||||||
Repayments of borrowings | (201,180 | ) | (218,899 | ) | (703,704 | ) | (834,061 | ) | |||||||
Proceeds from exercise of stock options | 4,817 | 6,380 | 14,777 | 23,315 | |||||||||||
Repurchases of common stock | (118,750 | ) | (85,049 | ) | (356,249 | ) | (334,998 | ) | |||||||
Other financing activities | (29 | ) | — | (1,664 | ) | (7,205 | ) | ||||||||
Net cash used in financing activities | (146,048 | ) | 15,205 | (274,566 | ) | (167,225 | ) | ||||||||
Effect of exchange rate changes on cash and cash equivalents | (5,284 | ) | 1,757 | (8,508 | ) | 6,550 | |||||||||
Net (decrease) increase in cash and cash equivalents | (45,742 | ) | 22,752 | (11,239 | ) | 10,412 | |||||||||
Cash and cash equivalents: | |||||||||||||||
Beginning of period | 183,190 | 146,334 | 148,687 | 158,674 | |||||||||||
End of period | $ | 137,448 | $ | 169,086 | $ | 137,448 | $ | 169,086 | |||||||
RECONCILIATION OF NET CASH PROVIDED BY OPERATING ACTIVITIES TO ADJUSTED FREE CASH FLOW | |||||||||||||||
Net cash provided by operating activities | $ | 149,674 | $ | 145,858 | $ | 366,433 | $ | 351,235 | |||||||
Payments in respect of restructuring activities | 3,292 | 2,375 | 16,701 | 7,701 | |||||||||||
Payments for acquisition costs | 140 | 764 | 140 | 764 | |||||||||||
Transition tax payment | — | — | 4,200 | — | |||||||||||
Proceeds from sale of property, plant and equipment | 3,279 | 228 | 7,809 | 10,437 | |||||||||||
Purchase of property, plant and equipment | (35,079 | ) | (37,297 | ) | (96,665 | ) | (85,826 | ) | |||||||
Adjusted free cash flow | $ | 121,306 | $ | 111,928 | $ | 298,618 | $ | 284,311 | |||||||
METTLER-TOLEDO INTERNATIONAL INC. OTHER OPERATING STATISTICS | ||||||||||||||||||||
SALES GROWTH BY DESTINATION | ||||||||||||||||||||
(unaudited) | ||||||||||||||||||||
Europe | Americas | Asia/RoW | Total | |||||||||||||||||
U.S. Dollar Sales Growth | ||||||||||||||||||||
Three Months Ended September 30, 2018 | 1% | 5% | 9% | 5% | ||||||||||||||||
Nine Months Ended September 30, 2018 | 9% | 5% | 14% | 9% | ||||||||||||||||
Local Currency Sales Growth | ||||||||||||||||||||
Three Months Ended September 30, 2018 | 3% | 5% | 11% | 7% | ||||||||||||||||
Nine Months Ended September 30, 2018 | 3% | 5% | 10% | 6% | ||||||||||||||||
RECONCILIATION OF DILUTED EPS AS REPORTED TO ADJUSTED DILUTED EPS | ||||||||||||||||||||
(unaudited) | ||||||||||||||||||||
Three months ended | Nine months ended | |||||||||||||||||||
September 30, | September 30, | |||||||||||||||||||
2018 | 2017 | % Growth | 2018 | 2017 | % Growth | |||||||||||||||
EPS as reported, diluted | $ | 4.93 | $ | 3.99 | 24% | $ | 12.81 | $ | 11.31 | 13% | ||||||||||
Restructuring charges, net of tax | 0.07 | (a) | 0.10 | (a) | 0.42 | (a) | 0.26 | (a) | ||||||||||||
Purchased intangible amortization, net of tax | 0.10 | (b) | 0.07 | (b) | 0.29 | (b) | 0.18 | (b) | ||||||||||||
Income tax expense | 0.02 | (c) | 0.15 | (c) | (0.02 | ) | (c) | (0.09 | ) | (c) | ||||||||||
Acquisition costs, net of tax | — | 0.05 | (d) | — | 0.05 | (d) | ||||||||||||||
Gain on facility sale | — | — | — | (0.10 | ) | (e) | ||||||||||||||
Adjusted EPS, diluted | $ | 5.12 | $ | 4.36 | 17% | $ | 13.50 | $ | 11.61 | 16% | ||||||||||
Notes: | ||||||||||||||||||||
(a) | Represents the EPS impact of restructuring charges of $2.2 million ($1.7 million after tax) and $3.4 million ($2.6 million after tax) for the three months ended September 30, 2018 and 2017, and $14.0 million ($10.9 million after tax) and $8.8 million ($6.9 million after tax) for the nine months ended September 30, 2018 and 2017, respectively. Restructuring charges in 2018 primarily relates to employee and other costs associated with the consolidation of facilities. | |||||||||||||||||||
(b) | Represents the EPS impact of purchased intangibles amortization, net of tax, of $3.4 million ($2.5 million after tax) and $2.6 million ($1.7 million after tax) for the three months ended September 30, 2018 and 2017, and $10.0 million ($7.5 million after tax) and $7.2 million ($4.7 million after tax) for the nine months ended September 30, 2018 and 2017, respectively. | |||||||||||||||||||
(c) | Represents the EPS impact on our reported tax rate during the three and nine months ending September 30, 2018 and 2017, respectively, due to excess tax benefits associated with stock option exercises. | |||||||||||||||||||
(d) | Represents the EPS impact of acquisition costs of $1.7 million ($1.3 million after tax) for the three and nine months ended September 30, 2017. | |||||||||||||||||||
(e) | Represents the EPS impact of a one-time gain of $3.4 million ($2.7 million after tax) for the nine months ended September 30, 2017 relating to the sale of a facility in Switzerland in connection with our initiative to consolidate certain Swiss operations into a new facility. |