Mettler-Toledo International Inc Q1 2025 Earnings Call Transcript

The following is excerpted from the question-and-answer section of the transcript.

Question: Dan Leonard - UBS Securities LLC - Analyst : My first question is one on China. Can you update us with your new forecast for revenue growth in China in 2025 and maybe parse that between industrial and lab?

Question: Dan Leonard - UBS Securities LLC - Analyst : It may be as a, well, a follow up. You mentioned onshoring and there have been a lot of announcements lately. I don't know, Patrick, if there's any way you could help us better quantify the potential opportunity for from various manufacturing onshoring initiatives.

Question: Dan Leonard - UBS Securities LLC - Analyst : Okay. Thank you very much. REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies.

Question: Patrick Donnelly - Citi - Analyst : Shawn, probably one for you on the tariff side. Appreciate all the color and the gross number and some of the mitigation. Can you just break down where that impact is coming from? Obviously, China was a pretty big concern coming in just in terms of some of the import exports there. Can you talk about that impact? And then again the mitigation efforts that are ongoing, have you already started to move some things around? And then, similarly, on the pricing side, how should we be thinking about that you guys are always quite nimble on pricing increases and surcharges? We'd love to just talk through both the gross impact, where it's coming from and then also the mitigation on the way here.

Question: Patrick Donnelly - Citi - Analyst : Okay. And then just the pricing offsets, how you think about that?

Question: Patrick Donnelly - Citi - Analyst : Yeah, that's helpful. And then, Patrick, maybe just on the industrial market, overall, that's become group a little more concerning just given the macro backdrop, all the volatility out there. What are you hearing from customers on the core industrial piece? What's the right way to think about how you guys are forecasting that today versus, maybe, a few months ago when things were, I guess, slightly different? Appreciate it.

Question: Patrick Donnelly - Citi - Analyst : Thank you guys.

Question: Jack Meehan - Nephron Research LLC - Analyst : We continue on this topic of tariffs, but just in terms of customer behavior, I was curious if you saw any evidence of pull forward in the first quarter or in any of like the April trends that you've seen so far? REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies.

Question: Jack Meehan - Nephron Research LLC - Analyst : Okay. And then within lab, I was curious just for some more color on the process analytics business. Had some encouraging commentary from some of your peers in the bioprocessing world. Was curious how you feel about the set up there? Thank you.

Question: Jack Meehan - Nephron Research LLC - Analyst : Awesome. Thank you.

Question: Daniel Arias - Stifel Nicolaus and Company, Incorporated - Analyst : Shawn, just to follow up on manufacturing. The capabilities in Mexico, I think that's through biotics if I remember right, and it used to be pipette tips and life sciences or agents that you made down there. Have you expanded the production breadth beyond that at this point, or is it still focused on a subsegment of lab and so that's where the gross margin gains would be focused?

Question: Daniel Arias - Stifel Nicolaus and Company, Incorporated - Analyst : Okay. Helpful. And then just when it comes to the tariff offsets, obviously, you're implementing a plan today. If you were to get some de-escalation here like it's possible, do you see the chance for some stickiness that could leave the door open for a benefit relative to where things are today just in the sense that, to your point, you have a low ASP portfolio. REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies.

Question: Daniel Arias - Stifel Nicolaus and Company, Incorporated - Analyst : Yeah, okay. Thank you.

Question: Brandon Couillard - Wells Fargo Securities LLC - Analyst : Shawn, just want to clarify, when you're talking about seeing some orders being delayed, some pushed out for projects, is that isolated to core industrial? Was that a China-specific comment or more global comment?

Question: Brandon Couillard - Wells Fargo Securities LLC - Analyst : Okay. That's helpful. And then, so it doesn't look like your free cash flow guide actually changed at all. Yeah, how do you just, I guess, approach managing working capital in this environment, and are you taking down or pushing out your own CapEx? Just the free cash flow numbers' actually the same.

Question: Brandon Couillard - Wells Fargo Securities LLC - Analyst : Thanks.

Question: Vijay Kumar - Evercore ISI Institutional Equities - Analyst : Maybe my first one on the guidance cadence here. Q1, X the shipping delays, you guys did up 50% low singles. Q2, [0 to 1], what drives that step down in revenues? Are you assuming some demand destruction because of tariffs here in 2Q, and I think like the back half assumes you step back to (technical difficulty) plus to hit the annual. So maybe just talk about this cadence for 2Q and back half. REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies.

Question: Vijay Kumar - Evercore ISI Institutional Equities - Analyst : Understood. And my follow up here on tariffs, that I think you said $50 million was China. The overall $115 million, when you said annualized, what is the impact of FRISCOLYTE 25? Is that something lesser because you're using annualized dot comments and I think --

Question: Vijay Kumar - Evercore ISI Institutional Equities - Analyst : I just like had a follow up on like the, I think, you used cars at current levels and your prepared remarks. So are we assuming the current, I guess, rates to sustain or are you -- is the guide assuming in a post 90-day pause for tariff rates to creep back up? Like what is the guide assuming on tariffs?

Question: Vijay Kumar - Evercore ISI Institutional Equities - Analyst : Understood. Thanks, guys.

Question: Matthew Sykes - Goldman Sachs & Company, Inc. - Analyst : Maybe taking the China questions in a different angle. Do you think that if this tariff situation lasts a little bit longer than expected, meaning beyond Q2, there could be some shifts in the competitive landscape in China? REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies.

Question: Matthew Sykes - Goldman Sachs & Company, Inc. - Analyst : Got it. Thank you for that. And maybe just two quick ones. Patrick, one for you just on services growth, you said 6% in the quarter, a little bit below the run rate you were doing last year, if I recall correctly. I'm sure some of this is comps, but just maybe talk about the underlying strength that you continue to have confidence in that services growth. And then Shawn, just could you just, I'm sorry if I missed this, but just any FX assumptions in the EPS guide over the course of the year that might have offset some of the tariff impact?

Question: Matthew Sykes - Goldman Sachs & Company, Inc. - Analyst : Thank you. Very helpful.

Question: Rachel Vatnsdal - J.P. Morgan Securities plc - Analyst : First off, I just wanted to dig into Vijay's question earlier on the second quarter guide and the implied back half range. You highlighted some of the customer caution primarily impacting the second quarter. Can you just walk us through why do you think most of this customer caution in light of the macro environment is mainly going to impact the second quarter and which segments are you expecting to see the most improvement as we get into the back half of the year on that customer caution as well?

Question: Rachel Vatnsdal - J.P. Morgan Securities plc - Analyst : Great. And then just in terms of the tariff offsets. You highlighted supply chain optimization, price increases, and surcharges as well. Can you bucket how much of the $1150 million is offset by each of those drivers? And then follow up to one of the earlier questions. Just in terms of the gross margin impact, can you just walk us through the timing of implementing those mitigation efforts to really how should we think about the cadence of gross margins ramping from the second quarter through the fourth quarter? REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies.

Question: Michael Ryskin - BofA Global Research - Analyst : For my first one, you touched on a lot of these things earlier. You talked about industrial lot. You talked about China. I'm just hoping to get it in one place and maybe bring all those topics together. In terms of the fiscal year '25 guide, the reduction in of [0.5%] of local currency from 3% to 1% to 2% now. Any way you could just bridge that for us? How much of that 150 bps reduction is China? How much is the lab, industrial? Just whatever way you think makes the most sense just so we can see what's changed, obviously, and where you're signing those cuts?

Question: Michael Ryskin - BofA Global Research - Analyst : Okay. That's a great summary of all that. And then I guess, I'll keep the one follow up. You haven't directly addressed, NIH, US government. I know it's a relatively small part of your exposure, but still there's some there, especially if you think about the lab have pets, some of those more -- some balances. Just what's been going on in that end market if you have you seen any meaningful change from customer behavior. Someone asked about stocking earlier, somethings like that hasn't happened. Just your thoughts on USA and US NIH. Thanks.

Question: Michael Ryskin - BofA Global Research - Analyst : Thanks. I'll leave there.

Question: Tycho Peterson - Jefferies - Analyst : Maybe just to round it out on the lab. I'm just -- I want to probe into the pharma a little bit. You touched on bioprocess earlier to Jack's question, but pharma specifically, can you maybe talk about what you're hearing from your customers there? Any concerns about them leaning on you guys on prices, they have to respond to tariffs. How do you think about replacement cycle? Because you've talked about that as an opportunity as well.

Question: Tycho Peterson - Jefferies - Analyst : Okay. Maybe another angle on China manufacturing. Some of your large multinational competitors, including your biggest one in balances and skills, doesn't do a lot in China. And so is there an opportunity to gain share here for you guys, given your manufacturing footprint within the country? REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies.

Question: Tycho Peterson - Jefferies - Analyst : I think if you have multinational competitors that don't manufacture in China where -- so you have a competitive advantage in China.

Question: Tycho Peterson - Jefferies - Analyst : Okay. Are you seeing any stimulus there?

Question: Tycho Peterson - Jefferies - Analyst : Okay. Thank you. REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies.

Question: Catherine Schulte - Robert W. Baird & Co., Inc. - Analyst : Maybe first just on tariffs, for the $100 million or maybe a little more of imports into the US that aren't coming from China and Mexico, how much of that is coming from Switzerland? I'm just trying to think about what the incremental growth impact could be if the country'-specific tariffs go into effect in July as proposed, just given your Swiss exposure and how much of that you think could be offset if necessary?

Question: Catherine Schulte - Robert W. Baird & Co., Inc. - Analyst : Got it. And then maybe just on capital deployment, any appetite to do more on the buyback side just given where the stock is today?

Question: Catherine Schulte - Robert W. Baird & Co., Inc. - Analyst : Okay. Thank you.

Question: Joshua Waldman - Cleveland Research Co - Analyst : First, Patrick, a follow up on core industrial. I think you mentioned softness in the US in the prepared remarks. Is this primarily where you're lowering your outlook and core? Or there are other areas that are tracking below?

Question: Joshua Waldman - Cleveland Research Co - Analyst : Got it. Okay. Patrick, can you remind us what portion of the business is sales to bioproduction, OEMs, maybe how business is tracking there? And then if you're seeing any signs of onshoring in that business?

Question: Joshua Waldman - Cleveland Research Co - Analyst : Okay. Thank you.