Mettler-Toledo International Inc. (NYSE:MTD) Q4 2014 Earnings Conference Call - Final Transcript

Feb 05, 2015 • 05:00 pm ET

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Mettler-Toledo International Inc. (NYSE:MTD) Q4 2014 Earnings Conference Call - Final Transcript

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Presentation
Executive
William Donnelly

specifically, local currency sales increased by 1% in the quarter, which was in line with our expectations.The next slide provides full year sales, which increased 5% in local currency. By region for the year, sales increased by 5% in Europe, 6% in the Americas and 4% in Asia-Rest of World.Turning to slide number five, we outlined sales growth by product line for the quarter. Both laboratory and industrial increased by 6% in local currency; while food retailing was up 4%.For the year, which is on the next slide, laboratory sales increased by 6% in local currency, industrial sales by 4%; and food retailing by 2%.

Turning now to slide number seven, let me walk you through the key items in the P&L. Gross margins were 56.5%, that's a 160 basis point increase over the prior year margin of 54.9%. We're obviously very pleased with this increase, which was driven by the benefit of pricing and lower material costs, specifically, net realized prices increased by about 230 basis points; while our material costs declined by 270 basis points.

R&D amounted to $31.3 million, a 7% increase in local currency. While SG&A was $186.8 million, an increase of 8% in local currency. Higher variable comp and increased investment in our field organization were offset, in part by cost-saving initiatives and lower employee benefit costs. Adjusted operating income amounted to $176.3 million in the quarter, that represents a 7% increase over the prior year amount of 165 million. Our operating margins were 25.3%, an increase of 120 basis points over the prior year.

We estimate the currency reduced operating profit growth, by about 3% or $4.5 million in the quarter, while foreign exchange hurt operating profit by 3%. It actually helped our operating margins by 40 basis points. This is because the percentage impact of currency on the sales line was larger than the impact on operating profit. A couple of final comments on the P&L. Amortization amounted to $7.6 million in the quarter, while interest expense was 6.9 million. Our effective tax rate continued to be 24%. Fully diluted shares for the quarter were 29 million, which is a 4.4% decline from the prior year, reflecting the impact of our share repurchase program. Adjusted earnings per share was $4.24 per share. That's an increase of 11% over the prior year amount of $3.82 per share. Currency proved to be a greater headwind than we expected, reducing adjusted EPS by approximately 3% in the quarter.

Our guidance had assumed a 2% currency headwind on EPS growth. On a reported basis, EPS was $4.17 per share, as compared to $3.63 in the prior year. Reported EPS includes pretax restructuring charges of $1.5 million or $0.04 per share, which is primarily employee-related costs. Reported EPS also includes $0.03 of purchased intangible amortization.The next slide provides details on full year 2014 results, specifically, local currency sales increased by 5%, while operating profit was up 7% and adjusted EPS grew by 11%. We're particularly pleased with the