01—Abstract
Summary
Summary of the 10-K filed February 7, 2020. Cited figures are marked; the original filing is the authoritative source.
Mettler-Toledo International Inc. (NYSE: MTD) reported net sales of $3.01 billiona for 2019, up from $2.94 billion in 2018, with net earnings of $561.1 million, or $22.47 per diluted share, compared with $512.6 million, or $19.88 per diluted share, in 2018.
In local currencies, net sales increased 5% in 2019. Laboratory products (52% of 2019 net sales) grew 7% in local currencies, industrial products (41%) grew 4%, and food retailing (7%) declined 8%, which the company attributed to unfavorable market conditions and project timing. Gross margin rose to 57.9% from 57.4%, and diluted EPS growth was supported by a lower reported tax rate of 17.7%, which included a $15.8 millionb net benefit from Swiss tax reform.
The balance sheet carried $1.29 billionc of total debt at December 31, 2019, against $207.8 million of cash, and operating cash flow was $603.5 million. The company repurchased $775 million of common stock during 2019 and had $1.3 billion of remaining authorization. Shareholders' equity fell to $420.8 million from $590.1 million, reflecting the buybacks.
The company has historically paid no dividends. Management flagged China as a concentration risk, with Chinese operations accounting for 18%d of sales to external customers and 34% of total segment profit, and said it expects China sales may decline in the first quarter of 2020 due to the Wuhan Coronavirus outbreak.
The filing also notes the U.K.'s formal exit from the European Union on January 31, 2020, and ongoing tariffs affecting China-sourced products, estimated at an annualized cost of approximately $25 million. The company adopted the new lease accounting standard on January 1, 2019, recognizing a right-of-use asset of $92.7 million, and issued $50 million of 3.19% senior notes due 2035 on January 24, 2020.
02—Key points
Key Highlights
- Net sales of $3,008.7 million in 2019, up from $2,935.6 million in 2018; up 5% in local currencies and 2% in U.S. dollars.
- Net earnings of $561.1 million in 2019 versus $512.6 million in 2018; diluted EPS of $22.47 versus $19.88.
- Gross profit as a percentage of net sales was 57.9% in 2019, compared with 57.4% in 2018; reported tax rate was 17.7%, including a $15.8 million net Swiss tax reform benefit.
- Laboratory products represented about 52% of 2019 net sales, up 7% in local currencies; food retailing fell 8% in local currencies.
- Cash from operations was $603.5 million; $775 million was spent repurchasing 1,094,648 shares in 2019, with $1.3 billion of authorization remaining.
- Total debt was $1.29 billion at year-end 2019; shareholders' equity declined to $420.8 million from $590.1 million.
- China accounted for 18% of sales to external customers and 34% of total segment profit in 2019; management expects China sales may decline in Q1 2020 due to the Wuhan Coronavirus outbreak.
03—One dollar
04—Financials
Financial Highlights
Figures from 10-KFY2019filed February 7, 2020Financial Statements
FY2019 against FY2018
| Line item | FY2019FY2018 | Change |
|---|---|---|
| Revenue | $3.01B$2.94B | +2.5% |
| Gross Profit | $1.74B$1.68B | +3.4% |
| R&D Expenses | $143.95M$141.07M | +2.0% |
| SG&A Expenses | $819.18M$812.80M | +0.8% |
| Interest Expense | $37.41M$34.51M | +8.4% |
| Net Income | $561.11M$512.61M | +9.5% |
| EPS (Basic) | $22.84$20.33 | +12.3% |
| EPS (Diluted) | $22.47$19.88 | +13.0% |
| Shares Outstanding (Basic) | 24.57M25.22M | −2.6% |
| Shares Outstanding (Diluted) | 24.97M25.78M | −3.1% |
05—Questions
Frequently Asked Questions
How did Mettler-Toledo perform financially in 2019?
Net sales rose to $3.01 billion from $2.94 billion, and net earnings increased to $561.1 million from $512.6 million. Diluted EPS was $22.47 versus $19.88 in 2018. Sales grew 5% in local currencies but only 2% in U.S. dollars, and the company noted that food retailing sales declined significantly.
What are the main risks to the company's China business?
The filing says Chinese operations accounted for 18% of sales to external customers and about 30% of global production in 2019. Risks include tariffs and trade disputes, currency volatility, government approval requirements to convert and repatriate funds, and $165.5 million of cash held in Chinese subsidiaries at December 31, 2019. Management also expects China sales may decline in Q1 2020 because of the Wuhan Coronavirus outbreak.
Does Mettler-Toledo pay dividends, and how is it returning capital to shareholders?
The company states it has historically not paid dividends on its common stock but will evaluate that policy periodically. Instead, it repurchased $775 million of stock in 2019, retiring 1,094,648 shares, and had $1.3 billion of remaining authorization under its share repurchase program as of December 31, 2019.
How leveraged is the company, and what credit facilities does it have?
Total debt was $1.29 billion at December 31, 2019, against $207.8 million of cash. The company had a $1.1 billion revolving Credit Agreement maturing June 15, 2023, with $572.3 million of availability remaining, and senior notes totaling $714.4 million. The company said it was in compliance with its covenants at year-end.
06—Continue