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Mettler-Toledo (MTD) Q1 Earnings Beat, Revenues Fall Y/Y

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Mettler-Toledo International, Inc. (MTD - Free Report) reported first-quarter 2020 adjusted earnings of $4 per share, beating the Zacks Consensus Estimate by 0.50%. The bottom line declined 2% on a year-over-year basis and 48.6% sequentially.

Net sales of $649.2 million were down 4% on reported basis and 3% on currency neutral basis from the year-ago quarter. The top line also fell 23.1% from the prior quarter.

Notably, the top line missed the Zacks Consensus Estimate of $650 million.

Coronavirus pandemic significantly impacted the company’s sales in China, other Asian countries and Europe negatively. This, in turn, led to decline in the company’s top line.

Further, weak performance by Industrial and Retail segment during the quarter remained a concern.

Coming to the price performance, shares of Mettler-Toledo have lost 7.7% on a year-to-date basis compared with the industry’s decline of 15%.

The company has not provided full year 2020 guidance citing market uncertainties related to coronavirus pandemic.

Nevertheless, the company remains confident on its margin and productivity initiatives. Further, its temporary cost containment measures and declining discretionary spending are expected to aid the performance in the near term.



Top Line in Detail

By Segments: The company reports in three segments — Laboratory Instruments, Industrial Instruments and Food Retail, which accounted for 55%, 39% and 6% of the net sales in the first quarter, respectively. While Laboratory segment experienced 1% year-over-year growth, Industrial and Food Retail segments were down 5% and 16% from the year-ago quarter, respectively.

By Geography: The company reports total sales figure from Americas, Europe and Asia/Rest of the World (ROW). All these regions contributed 41%, 30% and 29% to net sales in the first quarter, respectively. While sales in Americas were up 3% year over year, the same in Europe and Asia/ROW were down 5% and 8% from the year-ago quarter, respectively.


Operating Results

Gross margin was 57.7%, expanding 50 basis points (bps) year over year.

Research & development (R&D) expenses were $34.4 million, down 4.6% from the year-ago quarter. Selling, general & administrative (SG&A) expenses decreased 2.8% year over year to $198.7 million.

As a percentage of sales, R&D expenses remained flat year over year and SG&A expenses contracted 50 bps from the year-ago quarter.

Adjusted operating margin was 21.8%, which remained flat on a year-over year basis.

Balance Sheet and Cash Flow

As of Mar 31, 2020, the company’s cash and cash equivalents balance was $323.6 million, up from $207.8 million as of Dec 31, 2019.

Long-term debt was $1.5 billion, increasing from $1.2 billion in the previous quarter.

Mettler-Toledo generated $65.5 million of cash from operating activities, up from $201.7 million in the prior quarter. Free cash flow was $48.3 million during the reported quarter.

Guidance

For second-quarter 2020, Mettler-Toledo anticipates sales to decline between 8% and 12% on year-over-year basis in local currency. The Zacks Consensus Estimate for sales is pegged at $621.4 million.

Adjusted earnings are anticipated in the range of $4.05-$4.45 per share. The Zacks Consensus Estimate for earnings is pegged at $3.63 per share.

Zacks Rank & Key Picks

Metter-Toledo currently has a Zacks Rank #3 (Hold).

ASE Technology Holding Co., Ltd. (ASX - Free Report) , Twilio Inc. (TWLO - Free Report) and InterDigital, Inc. (IDCC - Free Report) are some better-ranked stocks worth considering in the broader computer and technology sector, each flaunting a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

Long-term earnings growth rate for ASE Technology, Twilio and InterDigital is pegged at 26.63%, 26.61% and 15%, respectively.

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