Mettler-Toledo International, Inc. MTD reported second-quarter 2020 adjusted earnings of $5.29 per share, which beat the Zacks Consensus Estimate of $4.27. The bottom line increased 3% on a year-over-year basis and 32.3% sequentially.
Net sales of $690.7 million were down 6% on a reported basis and 4% on a currency neutral basis from the year-ago quarter. However, the top line expanded 6.4% from the prior quarter.
Notably, the top line surpassed the Zacks Consensus Estimate by 6.7%.
Impressive growth in China, and the diversity in the company’s Laboratory and Industrial businesses contributed to better-than-expected performance.
However, demand in its end markets was negatively impacted by the COVID-19 pandemic.
Nevertheless, it remains confident of margin and productivity initiatives. Further, Mettler-Toledo’s temporary cost-containment measures and declining discretionary spending are expected to aid near-term performance.
Top Line in Detail
By Segments: The company reports in three segments — Laboratory Instruments, Industrial Instruments and Food Retail, which accounted for 52%, 42% and 6% of second-quarter net sales, respectively. The segments were down 4%, 3% and 11% from the year-ago quarter, respectively.
By Geography: It reports sales from Americas, Europe and Asia/Rest of the World (ROW). These regions contributed 39%, 28% and 33% to second-quarter net sales, respectively. While sales in Americas and Europe were down 7% and 5% from the year-ago quarter, respectively, the same in Asia/ROW was up 1%.
MettlerToledo International, Inc. Price, Consensus and EPS Surprise
MettlerToledo International, Inc. price-consensus-eps-surprise-chart | MettlerToledo International, Inc. Quote
Operating Results
Gross margin was 57.6%, expanding 20 basis points (bps) year over year.
Research & development (R&D) expenses were $31.2 million, down 17.3% from the year-ago quarter. Selling, general & administrative (SG&A) expenses decreased 7.9% year over year to $190.1 million.
As a percentage of sales, R&D as well as SG&A expenses contracted 50 and 60 bps, respectively, from the year-ago quarter.
Adjusted operating margin was 25.6%, which expanded 130 bps on a year-over year basis.
Balance Sheet and Cash Flow
As of Jun 30, 2020, the company’s cash and cash equivalent balance was $127.3 million, down from $323.6 million on Mar 31, 2020.
Long-term debt was $1.1 billion, decreasing from $1.5 billion in the first quarter.
Mettler-Toledo generated $183.2 million of cash from operating activities, up from $65.5 million in the first quarter. Free cash flow was $170 million during the reported quarter.
Guidance
For third-quarter 2020, Mettler-Toledo anticipates sales to decline between 1% and 3% on a year-over-year basis in local currency. The Zacks Consensus Estimate for sales is pegged at $686.5 million.
Adjusted earnings are anticipated in the range of $5.80-$6 per share. The Zacks Consensus Estimate for earnings is pegged at $4.92 per share.
For the full year of 2020, it anticipates sales to decline between 1% and 3% on a year-over-year basis in local currency. The Zacks Consensus Estimate for sales is pegged at $2.82 billion. Adjusted earnings are anticipated in the range of $22.70-$23.20 per share. The Zacks Consensus Estimate for the same is pegged at $21.09 per share.
Zacks Rank & Other Key Picks
Metter-Toledo currently has a Zacks Rank #2 (Buy). Other top-ranked stocks in the broader technology sector include Dropbox DBX, Everbridge EVBG and Analog Devices ADI. While both Dropbox and Everbridge sport a Zacks Rank #1 (Strong Buy), Analog Devices carries a Zacks Rank #2. You can see the complete list of today’s Zacks #1 Rank stocks here.
Both Dropbox and Everbridge are scheduled to report quarterly earnings on Aug 6. Analog Devices is set to release quarterly results on Aug 19.
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