Mettler-Toledo (MTD) Q3 Earnings & Sales Beat, Increase Y/Y

Mettler-Toledo International, Inc. MTD reported third-quarter 2021 adjusted earnings of $8.72 per share, which beat the Zacks Consensus Estimate by 5.7%. The bottom line also improved 24.2% on a year-over-year basis.

Net sales of $951.95 million were up 18% on a reported basis and 16% on a currency-neutral basis from the year-ago quarter’s respective levels. The figure surpassed the Zacks Consensus Estimate of $925 million.

Solid momentum across the Laboratory and Industrial segments in the reported quarter drove top-line growth. Strong performance delivered by the company across all geographies remained a major positive.

However, the company witnessed sluggishness in its Food Retail segment.

Headwinds related to the pandemic remain concerning for the company in the days ahead. However, portfolio strength, cost-cutting efforts, margin and productivity initiatives, and robust sales and marketing strategies are expected to remain tailwinds.

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Top Line in Detail

By Segments: The company reports under three segments, namely Laboratory Instruments, Industrial Instruments and Food Retail, which accounted for 56%, 39% and 5% of the net sales in the third quarter, respectively. The Laboratory and Industrial segments witnessed year-over-year growth of 23% and 12%, respectively, in the quarter under review.

The Food Retail business was down 19% on a year-over-year basis.

By Geography: The company reports total sales from the Americas, Europe and Asia/Rest of the World. All the regions contributed 39%, 28% and 33% to net sales in the third quarter, respectively. Sales in the Americas, Europe and Asia/Rest of the World went up 21%, 15% and 23%, respectively, on a year-over-year basis.

Operating Results

Gross margin was 58.4%, expanding 20 basis points (bps) year over year.

Research & development (R&D) expenses were $42.3 million, up 21.9% from the year-ago quarter’s level. Selling, general & administrative (SG&A) expenses increased 17.4% year over year to $240.7 million.

As a percentage of sales, R&D expenses expanded 10 bps year over year to 4.4%. SG&A expenses contracted 10 bps year over year to 25.3%.

Adjusted operating margin was 28.7%, which expanded 20 bps from the prior-year quarter’s level.

Balance Sheet & Cash Flow

As of Sep 30, 2021, the company’s cash and cash equivalent balance was $183.7 million, up from $142.3 million as of Jun 30, 2021.

Long-term debt was $1.64 billion at the end of the third quarter, increasing from $1.60 billion at the end of the second quarter.

Mettler-Toledo generated $263.3 million in cash from operating activities in the reported quarter, up from $245.5 million in the previous quarter. Free cash flow was $243.05 million in the reported quarter.

Guidance

For fourth-quarter 2021, Mettler-Toledo projects year-over-year sales growth of 8% in local currency. The Zacks Consensus Estimate for sales is pegged at $1.02 billion.

Adjusted fourth-quarter earnings are anticipated to be $10-$10.05 per share, implying an 8-9% rise from the year-ago quarter’s reported figure. The Zacks Consensus Estimate for earnings is pegged at $9.96 per share.

For 2021, the company anticipates year-over-year sales growth of 17%. The Zacks Consensus Estimate for current-year sales is pegged at $3.67 billion.

Mettler-Toledo raised the guidance for adjusted 2021 earnings from $32.60-$32.90 per share to $37.25-$37.65. The Zacks Consensus Estimate for the same is pegged at $32.86 per share.

Zacks Rank & Stocks to Consider

Currently, Mettler-Toledo has a Zacks Rank #3 (Hold).

Other better-ranked stocks in the broader technology sector include Advanced Micro Devices AMD, PerkinElmer PKI and Mimecast Limited MIME. While Advanced Micro Devices sports a Zacks Rank #1 (Strong Buy), PerkinElmer and Mimecast carry a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

Long-term earnings growth rates for Advanced Micro Devices, PerkinElmer, and Mimecast are currently projected at 46.2%, 41.7%, and 35%, respectively.

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