Mettler-Toledo (MTD) Beats Q1 Earnings, Revenue Estimates

Mettler-Toledo International Inc.’s (NYSE:MTD) first-quarter 2017 results beat the Zacks Consensus Estimate on earnings and revenues. While adjusted earnings per share (EPS) of $3.34 beat the consensus mark by 8.4%, revenues of $594.6 million beat the same by 4.3%.

The better-than-expected results were driven by strong growth across all product lines and regions. The company’s growth initiatives - Field Turbo investments, marketing initiatives, Spinnaker sales and new product launches continued delivering positive results. Margin and productivity initiatives also bode well.

Overall, we remain positive about Mettler-Toledo’s leading market position, focus on product development and cost reduction, sales and marketing efforts and operational excellence programs. The company has had an impressive run on the bourse over the last one year. It gained roughly 45.5%, higher than the Zacks Instruments - Scientific industry’s addition of almost 21%.

However, seasonality, volatility in emerging market growth, foreign exchange risk and business concentration in China remain major concerns.

Let’s check out the numbers:

Revenues

Net revenue was down 16.2% sequentially but up 10.2% on a year-over-year basis. The year-over-year improvement was driven by strengths across all the segments and contribution from the Troemner acquisition. Laboratory, Industrial and Food Retail increased 13%, 12% and 8%, respectively.

Operating Results

Gross margin was 57.7%, down 131 basis points (bps) sequentially but up 210 bps year over year. The year-over-year increase was driven by pricing and productivity gains in plants and Service business. Pro-forma operating margin was 21.4%, up 680 basis points (bps) sequentially and 250 bps year over year.

Non-GAAP net income was $88.9 million or $3.34 per share compared with $67.4 million or $2.46 per share a year ago. GAAP net income was $92.5 million or $3.48 per share compared with $65.7 million or $2.40 per share a year ago.

Mettler-Toledo International, Inc. PE Ratio (TTM)

Balance Sheet and Cash Flow

At the end of the first quarter, cash and cash equivalents balance was $164.9 million compared with $158.7 million in the previous quarter. Long-term debt was $944.2 million compared with $875.1 million in the previous quarter.

The company generated $67.6 million in cash from operating activities and spent $21 million on capex. During the quarter, the company returned nearly $125 million to shareholders by repurchasing shares.

Outlook

For the second quarter of 2017, Mettler-Toledo expects local currency sales to grow approximately 8% to 9%. Adjusted EPS is expected to grow 20% to 21% to $3.85 to $3.90. The Zacks Consensus Estimate for EPS is pegged at $3.60.

Zacks Rank and Stocks to Consider

Mettler-Toledo currently has a Zacks Rank #2 (Buy). Other stocks worth considering in the broader technology sector include Alphabet Inc. (NASDAQ:GOOGL) , Monolithic Power Systems, Inc. (NASDAQ:MPWR) and Internap Corp. (NASDAQ:INAP) . While Alphabet sports a Zacks Rank #1 (Strong Buy), Monolithic Power and Internap carry a Zacks Rank #2. You can see the complete list of today’s Zacks #1 Rank stocks here.

Long-term expected earnings per share growth rates for Alphabet, Internap and Monolithic Power are 16.7%, 3% and 17%, respectively.

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