Mettler-Toledo International Inc Q4 2024 Earnings Call Transcript

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

Question: Vijay Kumar - Evercore ISI - Analyst : Hi, guys. Good morning and thank you for taking my question. Congrats on a nice print here. Patrick, maybe my first one on -- if you look at the Q4 performance here, headline 12%, excluding the shipping comp, the underlying is 6%, Wouldn't that imply like if that's your exit rate, shouldn't your underlying be in the mid-single-digit rate for Q1? Were there any one-offs in Q4 in the sense the customers prebuy ahead of potential tariff and geopolitical risk?

Question: Vijay Kumar - Evercore ISI - Analyst : Understood. And that sort of segues into my follow-up on the macro geopolitical situation. I know the guide isn't contemplating (inaudible) in China for low singles growth. Maybe if you can talk about what is your competitive landscape in China? Do you have local competition? And then how should we think about potential risk related to China? I know one of your peers was put on a list. Is there any risk for that spreading broader to life science companies?

Question: Vijay Kumar - Evercore ISI - Analyst : Understood. Thank you, guys.

Question: Daniel Arias - Stifel Nicolaus and Company Inc - Analyst : Hey. Good morning, guys. Thanks for the questions. Shawn, on the Industrial business there and following up on those comments, is there any change in the way that you're feeling about industrial this year? I mean, to Patrick's point, it does seem like there's some good overall momentum in product inspection. I think you have been picking low singles for both Core Industrial and PI, if I remember correctly. So is it fair to assume that that's still the view? Or are you may be tracking a little bit differently at this point?

Question: Daniel Arias - Stifel Nicolaus and Company Inc - Analyst : Yeah. Okay. And then maybe just sort of a similar idea on Lab. I just want to understand the assumptions on biopharma, which looks like it's gradually recovering here. So on the low to mid-singles growth that you had penciled in for that business, is the simple way to think about it just that low singles is modest improvement and mid-singles is better improvement? Or was there not a lot that was baked in? I mean, Patrick, last quarter, you had expressed some optimism there. But it was early, so I wasn't sure whether that was translating to the outlook. I'd just love to sort of get your view there at this point as we're a couple of months into the year, at least 1.5 months in the year.

Question: Daniel Arias - Stifel Nicolaus and Company Inc - Analyst : Okay. And Shawn, just to maybe drive home the point, so there is some level of improvement that you have assumed in the biopharma environment, so to speak, that kind of underpins that growth rate that you're talking about there?

Question: Daniel Arias - Stifel Nicolaus and Company Inc - Analyst : Yeah. Okay. Very good. Thank you, guys.

Question: Jack Meehan - Nephron Research - Analyst : Thank you and good morning. First question is on the Core Industrial piece of the business. We're just curious what your latest take is on some of the macro factors. You saw the PMI go over 50 for the first time in a while on Monday for the US. Was curious if you feel like there's a little bit more wind in the sails entering the year potential for that business to improve.

Question: Jack Meehan - Nephron Research - Analyst : Yeah, agreed. And then just one housekeeping one. The raise to the 2025 EPS forecast, is that just a function of 4Q coming in a little bit better? Or were there any other changes to the assumptions that drove that?

Question: Jack Meehan - Nephron Research - Analyst : Sounds good. Thanks, Shawn.

Question: Matthew Sykes - Goldman Sachs - Analyst : Hi, good morning. Thank you for taking my questions. I just want to go back to the strength that you cited in Europe, particularly in Lab. I know you mentioned there was some element of a budget flush there. But can we extrapolate sort of that improving demand among that customer segment in Europe into other developed market regions like the US? I mean does this encourage kind of your view as to what Lab globally could do, maybe ex-China, could do? 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 - Analyst : Got it. Thank you. And just going back to tariffs for a second, just specifically on Mexico. I know there's been a delay in that, but you do have a manufacturing footprint there. Could you maybe remind us what your exposure is in terms of revenue shipped out of Mexico? And then you've often been very flexible in your manufacturing footprint. If these tariffs were to go through, like what would be the duration? And what would be the decision behind maybe flexing that manufacturing to another region? And what is your capability of doing that?

Question: Matthew Sykes - Goldman Sachs - Analyst : 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: Rachel Vatnsdal - JP Morgan - Analyst : Perfect. Hi, good morning. Thank you so much for taking my questions. First, just housekeeping, I wanted to ask on the first quarter guide. Can you walk us through what are you assuming by segment for the first quarter including and excluding that shipping comp across segments and then geographies as well?

Question: Rachel Vatnsdal - JP Morgan - Analyst : Sure. Yeah, if anything changed on full year, that would be helpful as well.

Question: Rachel Vatnsdal - JP Morgan - Analyst : Great. That's super helpful. And If I could just squeeze in my follow-up then, just on -- sticking on that topic of China. You guys pointed towards low single-digit growth for the year, which results to your prior assumption. So have you seen any impact regarding some of this equipment stimulus to date yet? And is anything embedded for stimulus within that full number? 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: Joshua Waldman - Cleveland Research - Analyst : Hey, good morning. Thanks for taking my questions. Patrick, I mean it sounds like the strength in Europe, maybe even the US, was focused within biopharma. I guess, is that right? And I mean, do you -- or did you see an uptick in other markets? And then I guess how do you interpret the strength in the fourth quarter as it relates to confidence of customers to return to normal growth and spending going forward? And curious what you're hearing from customers as it relates to their desire to spend on more replacement-type purchases in '25. Any change there?

Question: Joshua Waldman - Cleveland Research - Analyst : Got it. Okay. And then, Shawn, a question on tariffs, maybe asked another way. I mean it sounds like the updated guide contemplates potential impacts on tariffs. Any way to frame up how you're thinking about offsetting the cost impact? I mean do you think more of the offset will come from price? Or is it more weighted towards supply chain levers?

Question: Joshua Waldman - Cleveland Research - Analyst : Okay. Thanks, guys.

Question: Patrick Donnelly - Citigroup Inc - Analyst : Hey, guys. Thanks for taking the questions. Shawn, maybe just to pick up right where you left off there on the margin front. Can you just talk about the margin build this year? It's always helpful to hear about the price contribution, the moving pieces, both 1Q and for the year, would be helpful just to think about the margin side.

Question: Patrick Donnelly - Citigroup Inc - Analyst : That's really helpful detail. Thanks, Shawn. And then Patrick, maybe one for you. I think on one of the earlier questions on the exit rates, you kind of said you wouldn't be surprised if end-markets started a little more cautious this year. Just listening to the call, I mean it sounds like Product Inspection momentum is picking up, Pharma seems better. Just curious if that was more conservatism or something you're seeing to start the year in specific markets. I mean it sounds like most of these markets are picking up, but I just wanted to clean that up, if you could.

Question: Patrick Donnelly - Citigroup Inc - Analyst : Yeah. Thanks a lot.

Question: Catherine Schulte - Robert W. Baird & Co - Analyst : Hey, guys. Thank you for the question. Maybe first on your Services business. I think this was the second consecutive quarter of high single-digit growth there. And I believe your guidance in the mid to high single digits for '25. Do the results this quarter make you confident in hitting the high end of that range?

Question: Catherine Schulte - Robert W. Baird & Co - Analyst : Okay. Great. And maybe just on the new administration. I know you don't have much NIH exposure. But are there any other policies more broadly that you think could either disrupt or benefit you other than the tariff piece that you've already talked about?

Question: Catherine Schulte - Robert W. Baird & Co - Analyst : All right. Thank you.

Question: Tycho Peterson - Jefferies Group LLC - Analyst : Okay. Thanks. You guys noted accelerating growth in India. I mean, it feels like it's been a while since you've called that out. Just curious what secular trends you're seeing there that warrant increased investments?

Question: Tycho Peterson - Jefferies Group LLC - Analyst : Okay. And then two quick follow-ups. Shawn, I appreciate your commentary on pricing 2% for the quarter and first quarter and for the year. How high could you take that if you needed to an inflationary environment? Is there kind of a natural ceiling on where you think you could take it? And then maybe totally separately, you talked about process analytics strength. Is that more greenfield? Or are you taking kind of share there in bioproduction? Thanks.

Question: Tycho Peterson - Jefferies Group LLC - Analyst : Okay. Thank you.

Question: Michael Ryskin - BofA Securities Inc - Analyst : Great. Thanks for squeeing me in guys. I'm sort of scratching the bottom of the barrel for questions, almost everything has been asked by a lot of the other analysts. But maybe just a couple of miscellaneous cleanups. You alluded to this earlier, Shawn, on the EPS bridge for '25, the $0.50 increase. You talked about [50%] and FX in terms of the Swiss franc have an impact. Any chance you could just give us the numbers. I'm sure we could do the math, but in terms of being more precise in terms of how much each contributed?

Question: Michael Ryskin - BofA Securities Inc - Analyst : Okay. All right. Fair enough. And then just on the margins, to an earlier question, you talked through the margin -- gross margin versus op margins for the year. But in my notes, I had you guys having gross margin up a little bit previously. I think you said you expect gross margins up 30 to 40 bps. Now it seems like it's a little bit less than that. Is that FX having an issue? Or is there anything else in terms of moving pieces there?

Question: Michael Ryskin - BofA Securities Inc - Analyst : Okay. That works. All right, thank you so much.