UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Form 10-Q
(Mark One)
☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 FOR THE QUARTERLY PERIOD ENDED SEPTEMBER 30, 2022,MARCH 31, 2023, OR
☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 FOR THE TRANSITION PERIOD FROM ____________ TO ________________
Commission File Number: 1-13595
Mettler Toledo International Inc
(Exact name of registrant as specified in its charter)
| | | | | | | | |
Delaware | | 13-3668641 |
(State or other jurisdiction of | | (I.R.S Employer Identification No.) |
incorporation or organization) | | |
1900 Polaris Parkway
Columbus, OH 43240
and
Im Langacher, P.O. Box MT-100
CH 8606 Greifensee, Switzerland
1-614-438-4511 and +41-44-944-22-11
(Registrant's telephone number, including area code)
not applicable
(Former name, former address and former fiscal year, if changed since last report)
Securities registered pursuant to Section 12(b) of the Act:
| | | | | | | | |
Title of each class | Trading Symbol | Name of each exchange on which registered |
Common Stock, $0.01 par value | MTD | New York Stock Exchange |
Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐
Indicate by checkmark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes ☒ No ☐
Indicate by checkmark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company” and “emerging growth company” in Rule 12b-2 of the Exchange Act. (Check one): Large accelerated filer. ☒ Accelerated filer ☐ Non-accelerated filer ☐ Smaller reporting company ☐ Emerging growth company ☐
If an emerging growth company, indicate by check mark if the registrant has elected not use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act ☐
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒
The Registrant had 22,294,18922,020,230 shares of Common Stock outstanding at September 30, 2022.March 31, 2023.
METTLER-TOLEDO INTERNATIONAL INC.
INDEX TO QUARTERLY REPORT ON FORM 10-Q
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements
METTLER-TOLEDO INTERNATIONAL INC.
INTERIM CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME
Three months ended September 30,March 31, 2023 and 2022 and 2021
(In thousands, except share data)
(unaudited)
| | | | | | | | | | | |
| September 30, 2022 | | September 30, 2021 |
Net sales | | | |
Products | $ | 783,986 | | | $ | 760,844 | |
Service | 201,860 | | | 191,106 | |
Total net sales | 985,846 | | | 951,950 | |
Cost of sales | | | |
Products | 305,337 | | | 304,290 | |
Service | 95,853 | | | 91,840 | |
Gross profit | 584,656 | | | 555,820 | |
Research and development | 44,129 | | | 42,276 | |
Selling, general and administrative | 233,357 | | | 240,734 | |
Amortization | 16,728 | | | 16,039 | |
Interest expense | 14,484 | | | 11,791 | |
Restructuring charges | 2,022 | | | 650 | |
Other charges (income), net | (1,949) | | | (3,257) | |
Earnings before taxes | 275,885 | | | 247,587 | |
Provision for taxes | 55,288 | | | 43,899 | |
Net earnings | $ | 220,597 | | | $ | 203,688 | |
| | | |
Basic earnings per common share: | | | |
Net earnings | $ | 9.85 | | | $ | 8.83 | |
Weighted average number of common shares | 22,403,393 | | | 23,056,924 | |
| | | |
Diluted earnings per common share: | | | |
Net earnings | $ | 9.76 | | | $ | 8.71 | |
Weighted average number of common and common equivalent shares | 22,610,027 | | | 23,393,579 | |
| | | |
Comprehensive income, net of tax (Note 9) | $ | 178,448 | | | $ | 208,428 | |
| | | | | | | | | | | |
| March 31, 2023 | | March 31, 2022 |
Net sales | | | |
Products | $ | 716,001 | | | $ | 706,615 | |
Service | 212,737 | | | 191,176 | |
Total net sales | 928,738 | | | 897,791 | |
Cost of sales | | | |
Products | 285,751 | | | 289,089 | |
Service | 96,421 | | | 89,117 | |
Gross profit | 546,566 | | | 519,585 | |
Research and development | 45,477 | | | 43,028 | |
Selling, general and administrative | 234,638 | | | 235,312 | |
Amortization | 17,779 | | | 16,604 | |
Interest expense | 18,184 | | | 11,338 | |
Restructuring charges | 4,274 | | | 4,011 | |
Other charges (income), net | (396) | | | (3,709) | |
Earnings before taxes | 226,610 | | | 213,001 | |
Provision for taxes | 38,184 | | | 39,000 | |
Net earnings | $ | 188,426 | | | $ | 174,001 | |
| | | |
Basic earnings per common share: | | | |
Net earnings | $ | 8.53 | | | $ | 7.64 | |
Weighted average number of common shares | 22,083,456 | | | 22,768,298 | |
| | | |
Diluted earnings per common share: | | | |
Net earnings | $ | 8.47 | | | $ | 7.55 | |
Weighted average number of common and common equivalent shares | 22,253,435 | | | 23,040,231 | |
| | | |
Total comprehensive income, net of tax (Note 9) | $ | 187,143 | | | $ | 178,351 | |
The accompanying notes are an integral part of these interim consolidated financial statements.
METTLER-TOLEDO INTERNATIONAL INC.
INTERIM CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOMEBALANCE SHEETS
Nine months ended September 30,As of March 31, 2023 and December 31, 2022 and 2021
(In thousands, except share data)
(unaudited)
| | | | | | | | | | | |
| September 30, 2022 | | September 30, 2021 |
Net sales | | | |
Products | $ | 2,270,845 | | | $ | 2,124,245 | |
Service | 591,179 | | | 556,446 | |
Total net sales | 2,862,024 | | | 2,680,691 | |
Cost of sales | | | |
Products | 902,445 | | | 843,613 | |
Service | 283,677 | | | 272,658 | |
Gross profit | 1,675,902 | | | 1,564,420 | |
Research and development | 131,180 | | | 124,151 | |
Selling, general and administrative | 710,875 | | | 701,531 | |
Amortization | 49,697 | | | 46,141 | |
Interest expense | 38,587 | | | 31,701 | |
Restructuring charges | 7,803 | | | 2,719 | |
Other charges (income), net | (7,818) | | | (5,208) | |
Earnings before taxes | 745,578 | | | 663,385 | |
Provision for taxes | 138,910 | | | 125,271 | |
Net earnings | $ | 606,668 | | | $ | 538,114 | |
| | | |
Basic earnings per common share: | | | |
Net earnings | $ | 26.86 | | | $ | 23.19 | |
Weighted average number of common shares | 22,587,026 | | | 23,203,257 | |
| | | |
Diluted earnings per common share: | | | |
Net earnings | $ | 26.58 | | | $ | 22.86 | |
Weighted average number of common and common equivalent shares | 22,821,408 | | | 23,536,615 | |
| | | |
Comprehensive income, net of tax (Note 9) | $ | 537,378 | | | $ | 575,187 | |
| | | | | | | | | | | |
| March 31, 2023 | | December 31, 2022 |
ASSETS |
Current assets: | | | |
Cash and cash equivalents | $ | 89,085 | | | $ | 95,966 | |
Trade accounts receivable, less allowances of $21,448 at March 31, 2023 | | | |
and $22,427 at December 31, 2022 | 640,050 | | | 709,321 | |
Inventories | 427,549 | | | 441,694 | |
Other current assets and prepaid expenses | 130,083 | | | 128,108 | |
Total current assets | 1,286,767 | | | 1,375,089 | |
Property, plant and equipment, net | 780,013 | | | 778,600 | |
Goodwill | 661,742 | | | 660,170 | |
Other intangible assets, net | 300,134 | | | 306,054 | |
Deferred tax assets, net | 28,116 | | | 27,080 | |
Other non-current assets | 353,135 | | | 345,402 | |
Total assets | $ | 3,409,907 | | | $ | 3,492,395 | |
LIABILITIES AND SHAREHOLDERS’ EQUITY |
Current liabilities: | | | |
Trade accounts payable | $ | 176,733 | | | $ | 252,538 | |
Accrued and other liabilities | 189,324 | | | 205,253 | |
Accrued compensation and related items | 131,189 | | | 200,031 | |
Deferred revenue and customer prepayments | 211,302 | | | 192,759 | |
Taxes payable | 188,570 | | | 191,096 | |
Short-term borrowings and current maturities of long-term debt | 107,131 | | | 106,054 | |
Total current liabilities | 1,004,249 | | | 1,147,731 | |
Long-term debt | 2,015,779 | | | 1,908,480 | |
Deferred tax liabilities, net | 113,397 | | | 111,360 | |
Other non-current liabilities | 300,951 | | | 300,031 | |
Total liabilities | 3,434,376 | | | 3,467,602 | |
Commitments and contingencies (Note 14) | | | |
Shareholders’ equity: | | | |
Preferred stock, $0.01 par value per share; authorized 10,000,000 shares | — | | | — | |
Common stock, $0.01 par value per share; authorized 125,000,000 shares; issued 44,786,011 and 44,786,011 shares; outstanding 22,020,230 and 22,139,009 shares at March 31, 2023 and December 31, 2022, respectively | 448 | | | 448 | |
Additional paid-in capital | 855,673 | | | 850,368 | |
Treasury stock at cost (22,765,781 shares at March 31, 2023 and 22,647,002 shares at December 31, 2022) | (7,564,841) | | | (7,325,656) | |
Retained earnings | 6,912,767 | | | 6,726,866 | |
Accumulated other comprehensive loss | (228,516) | | | (227,233) | |
Total shareholders’ equity | (24,469) | | | 24,793 | |
Total liabilities and shareholders’ equity | $ | 3,409,907 | | | $ | 3,492,395 | |
The accompanying notes are an integral part of these interim consolidated financial statements.
METTLER-TOLEDO INTERNATIONAL INC.
INTERIM CONSOLIDATED BALANCE SHEETSSTATEMENTS OF SHAREHOLDERS’ EQUITY
As of September 30,Three months ended March 31, 2023 and 2022 and December 31, 2021
(In thousands, except share data)
(unaudited)
| | | | | | | | | | | |
| September 30, 2022 | | December 31, 2021 |
ASSETS |
Current assets: | | | |
Cash and cash equivalents | $ | 122,136 | | | $ | 98,564 | |
Trade accounts receivable, less allowances of $22,094 at September 30, 2022 | | | |
and $22,176 at December 31, 2021 | 611,399 | | | 647,335 | |
Inventories | 451,320 | | | 414,543 | |
Other current assets and prepaid expenses | 131,047 | | | 108,916 | |
Total current assets | 1,315,902 | | | 1,269,358 | |
Property, plant and equipment, net | 728,602 | | | 799,365 | |
Goodwill | 636,089 | | | 648,622 | |
Other intangible assets, net | 297,435 | | | 307,450 | |
Deferred tax assets, net | 34,986 | | | 39,496 | |
Other non-current assets | 281,446 | | | 262,507 | |
Total assets | $ | 3,294,460 | | | $ | 3,326,798 | |
LIABILITIES AND SHAREHOLDERS’ EQUITY |
Current liabilities: | | | |
Trade accounts payable | $ | 226,681 | | | $ | 272,911 | |
Accrued and other liabilities | 202,039 | | | 208,811 | |
Accrued compensation and related items | 184,773 | | | 236,265 | |
Deferred revenue and customer prepayments | 198,179 | | | 192,648 | |
Taxes payable | 199,626 | | | 134,769 | |
Short-term borrowings and current maturities of long-term debt | 153,639 | | | 101,134 | |
Total current liabilities | 1,164,937 | | | 1,146,538 | |
Long-term debt | 1,825,253 | | | 1,580,808 | |
Deferred tax liabilities, net | 76,532 | | | 62,230 | |
Other non-current liabilities | 310,547 | | | 365,801 | |
Total liabilities | 3,377,269 | | | 3,155,377 | |
Commitments and contingencies (Note 14) | | | |
Shareholders’ equity: | | | |
Preferred stock, $0.01 par value per share; authorized 10,000,000 shares | — | | | — | |
Common stock, $0.01 par value per share; authorized 125,000,000 shares; | | | |
issued 44,786,011 and 44,786,011 shares; outstanding 22,294,189 shares and | | | |
22,843,103 shares at September 30, 2022 and December 31, 2021, respectively | 448 | | | 448 | |
Additional paid-in capital | 842,421 | | | 825,974 | |
Treasury stock at cost (22,491,822 shares at September 30, 2022 and 21,942,908 shares at December 31, 2021) | (7,064,513) | | | (6,259,049) | |
Retained earnings | 6,463,349 | | | 5,859,272 | |
Accumulated other comprehensive loss | (324,514) | | | (255,224) | |
Total shareholders' equity | (82,809) | | | 171,421 | |
Total liabilities and shareholders’ equity | $ | 3,294,460 | | | $ | 3,326,798 | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | Additional Paid-in Capital | | | | | | Accumulated Other Comprehensive Income (Loss) | | |
| Common Stock | | | Treasury Stock | | Retained Earnings | | | |
| Shares | | Amount | | | | | | Total |
Balance at December 31, 2021 | 22,843,103 | | | $ | 448 | | | $ | 825,974 | | | $ | (6,259,049) | | | $ | 5,859,272 | | | $ | (255,224) | | | $ | 171,421 | |
Exercise of stock options, restricted stock units and performance stock units | 27,795 | | | — | | | 1,020 | | | 6,669 | | | (2,400) | | | — | | | 5,289 | |
Repurchases of common stock | (190,593) | | | — | | | — | | | (275,000) | | | — | | | — | | | (275,000) | |
Share-based compensation | — | | | — | | | 4,509 | | | — | | | — | | | — | | | 4,509 | |
Net earnings | — | | | — | | | — | | | — | | | 174,001 | | | — | | | 174,001 | |
Other comprehensive income (loss), net of tax | — | | | — | | | — | | | — | | | — | | | 4,350 | | | 4,350 | |
Balance at March 31, 2022 | 22,680,305 | | | $ | 448 | | | $ | 831,503 | | | $ | (6,527,380) | | | $ | 6,030,873 | | | $ | (250,874) | | | $ | 84,570 | |
| | | | | | | | | | | | | |
Balance at December 31, 2022 | 22,139,009 | | | $ | 448 | | | $ | 850,368 | | | $ | (7,325,656) | | | $ | 6,726,866 | | | $ | (227,233) | | | $ | 24,793 | |
Exercise of stock options, restricted stock units and performance stock units | 47,849 | | | — | | | 1,278 | | | 12,720 | | | (2,525) | | | — | | | 11,473 | |
Repurchases of common stock | (166,628) | | | — | | | — | | | (249,999) | | | — | | | — | | | (249,999) | |
Excise tax on net repurchases of common stock | — | | | — | | | — | | | (1,906) | | | — | | | — | | | (1,906) | |
Share-based compensation | — | | | — | | | 4,027 | | | — | | | — | | | — | | | 4,027 | |
Net earnings | — | | | — | | | — | | | — | | | 188,426 | | | — | | | 188,426 | |
Other comprehensive income (loss), net of tax | — | | | — | | | — | | | — | | | — | | | (1,283) | | | (1,283) | |
Balance at March 31, 2023 | 22,020,230 | | | $ | 448 | | | $ | 855,673 | | | $ | (7,564,841) | | | $ | 6,912,767 | | | $ | (228,516) | | | $ | (24,469) | |
The accompanying notes are an integral part of these interim consolidated financial statements.
METTLER-TOLEDO INTERNATIONAL INC.
INTERIM CONSOLIDATED STATEMENTS OF SHAREHOLDERS’ EQUITYCASH FLOWS
NineThree months ended September 30,March 31, 2023 and 2022 and 2021
(In thousands, except share data)thousands)
(unaudited)
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | Additional Paid-in Capital | | | | | | Accumulated Other Comprehensive Income (Loss) | | |
| Common Stock | | | Treasury Stock | | Retained Earnings | | | |
| Shares | | Amount | | | | | | Total |
Balance at December 31, 2020 | 23,471,841 | | | $ | 448 | | | $ | 805,140 | | | $ | (5,283,584) | | | $ | 5,095,596 | | | $ | (334,925) | | | $ | 282,675 | |
Exercise of stock options and restricted stock units | 22,388 | | | — | | | 1,239 | | | 4,682 | | | (872) | | | — | | | 5,049 | |
Repurchases of common stock | (224,808) | | | — | | | — | | | (262,500) | | | — | | | — | | | (262,500) | |
Share-based compensation | — | | | — | | | 4,575 | | | — | | | — | | | — | | | 4,575 | |
Net earnings | — | | | — | | | — | | | — | | | 149,663 | | | — | | | 149,663 | |
Other comprehensive income (loss), net of tax | — | | | — | | | — | | | — | | | — | | | 23,181 | | | 23,181 | |
Balance at March 31, 2021 | 23,269,421 | | | $ | 448 | | | $ | 810,954 | | | $ | (5,541,402) | | | $ | 5,244,387 | | | $ | (311,744) | | | $ | 202,643 | |
Exercise of stock options and restricted stock units | 13,248 | | | — | | | — | | | 2,849 | | | (65) | | | — | | | 2,784 | |
Repurchases of common stock | (165,730) | | | — | | | — | | | (212,499) | | | — | | | — | | | (212,499) | |
Share-based compensation | — | | | — | | | 4,581 | | | — | | | — | | | — | | | 4,581 | |
Net earnings | — | | | — | | | — | | | — | | | 184,763 | | | — | | | 184,763 | |
Other comprehensive income (loss), net of tax | — | | | — | | | — | | | — | | | — | | | 9,152 | | | 9,152 | |
Balance at June 30, 2021 | 23,116,939 | | | $ | 448 | | | $ | 815,535 | | | $ | (5,751,052) | | | $ | 5,429,085 | | | $ | (302,592) | | | $ | 191,424 | |
Exercise of stock options and restricted stock units | 35,488 | | | — | | | — | | | 7,889 | | | (808) | | | — | | | 7,081 | |
Repurchases of common stock | (166,772) | | | — | | | — | | | (252,499) | | | — | | | — | | | (252,499) | |
Share-based compensation | — | | | — | | | 4,737 | | | — | | | — | | | — | | | 4,737 | |
Net earnings | — | | | — | | | — | | | — | | | 203,688 | | | — | | | 203,688 | |
Other comprehensive income (loss), net of tax | — | | | — | | | — | | | — | | | — | | | 4,740 | | | 4,740 | |
Balance at September 30, 2021 | 22,985,655 | | | $ | 448 | | | $ | 820,272 | | | $ | (5,995,662) | | | $ | 5,631,965 | | | $ | (297,852) | | | $ | 159,171 | |
| | | | | | | | | | | | | |
Balance at December 31, 2021 | 22,843,103 | | | $ | 448 | | | $ | 825,974 | | | $ | (6,259,049) | | | $ | 5,859,272 | | | $ | (255,224) | | | $ | 171,421 | |
Exercise of stock options and restricted stock units | 27,795 | | | — | | | 1,020 | | | 6,669 | | | (2,400) | | | — | | | 5,289 | |
Repurchases of common stock | (190,593) | | | — | | | — | | | (275,000) | | | — | | | — | | | (275,000) | |
Share-based compensation | — | | | — | | | 4,509 | | | — | | | — | | | — | | | 4,509 | |
Net earnings | — | | | — | | | — | | | — | | | 174,001 | | | — | | | 174,001 | |
Other comprehensive income (loss), net of tax | — | | | — | | | — | | | — | | | — | | | 4,350 | | | 4,350 | |
Balance at March 31, 2022 | 22,680,305 | | | $ | 448 | | | $ | 831,503 | | | $ | (6,527,380) | | | $ | 6,030,873 | | | $ | (250,874) | | | $ | 84,570 | |
Exercise of stock options and restricted stock units | 44,613 | | | — | | | 1,496 | | | 10,925 | | | — | | | — | | | 12,421 | |
Repurchases of common stock | (218,308) | | | — | | | — | | | (274,999) | | | — | | | — | | | (274,999) | |
Share-based compensation | — | | | — | | | 4,691 | | | — | | | — | | | — | | | 4,691 | |
Net earnings | — | | | — | | | — | | | — | | | 212,070 | | | — | | | 212,070 | |
Other comprehensive income (loss), net of tax | — | | | — | | | — | | | — | | | — | | | (31,491) | | | (31,491) | |
Balance at June 30, 2022 | 22,506,610 | | | $ | 448 | | | $ | 837,690 | | | $ | (6,791,454) | | | $ | 6,242,943 | | | $ | (282,365) | | | $ | 7,262 | |
Exercise of stock options and restricted stock units | 8,058 | | | — | | | — | | | 1,941 | | | (191) | | | — | | | 1,750 | |
Repurchases of common stock | (220,479) | | | — | | | — | | | (275,000) | | | — | | | — | | | (275,000) | |
Share-based compensation | — | | | — | | | 4,731 | | | — | | | — | | | — | | | 4,731 | |
Net earnings | — | | | — | | | — | | | — | | | 220,597 | | | — | | | 220,597 | |
Other comprehensive income (loss), net of tax | — | | | — | | | — | | | — | | | — | | | (42,149) | | | (42,149) | |
Balance at September 30, 2022 | 22,294,189 | | | $ | 448 | | | $ | 842,421 | | | $ | (7,064,513) | | | $ | 6,463,349 | | | $ | (324,514) | | | $ | (82,809) | |
| | | | | | | | | | | | | |
| | | | | | | | | | | |
| March 31, 2023 | | March 31, 2022 |
Cash flows from operating activities: | | | |
Net earnings | $ | 188,426 | | | $ | 174,001 | |
Adjustments to reconcile net earnings to net cash provided by operating activities: | | | |
Depreciation | 12,023 | | | 11,880 | |
Amortization | 17,779 | | | 16,604 | |
Deferred tax provision (benefit) | 602 | | | (1,096) | |
Share-based compensation | 4,027 | | | 4,509 | |
Increase (decrease) in cash resulting from changes in: | | | |
Trade accounts receivable, net | 72,109 | | | 23,293 | |
Inventories | 15,559 | | | (37,643) | |
Other current assets | (3,720) | | | (15,031) | |
Trade accounts payable | (71,941) | | | (15,396) | |
Taxes payable | (3,752) | | | 16,308 | |
Accruals and other | (77,850) | | | (86,592) | |
Net cash provided by operating activities | 153,262 | | | 90,837 | |
Cash flows from investing activities: | | | |
Purchase of property, plant and equipment | (23,196) | | | (19,151) | |
Proceeds from government funding | — | | | 18,000 | |
Acquisitions | (613) | | | (9,704) | |
Other investing activities | 1,423 | | | 3,743 | |
Net cash used in investing activities | (22,386) | | | (7,112) | |
Cash flows from financing activities: | | | |
Proceeds from borrowings | 605,018 | | | 684,037 | |
Repayments of borrowings | (503,516) | | | (478,479) | |
Proceeds from stock option exercises | 11,473 | | | 5,289 | |
Repurchases of common stock | (249,999) | | | (275,000) | |
Other financing activities | (611) | | | (332) | |
Net cash used in financing activities | (137,635) | | | (64,485) | |
| | | |
Effect of exchange rate changes on cash and cash equivalents | (122) | | | (855) | |
| | | |
Net (decrease) increase in cash and cash equivalents | (6,881) | | | 18,385 | |
| | | |
Cash and cash equivalents: | | | |
Beginning of period | 95,966 | | | 98,564 | |
End of period | $ | 89,085 | | | $ | 116,949 | |
The accompanying notes are an integral part of these interim consolidated financial statements.
METTLER-TOLEDO INTERNATIONAL INC.
INTERIM CONSOLIDATED STATEMENTS OF CASH FLOWS
Nine months ended September 30, 2022 and 2021
(In thousands)
(unaudited)
| | | | | | | | | | | |
| September 30, 2022 | | September 30, 2021 |
Cash flows from operating activities: | | | |
Net earnings | $ | 606,668 | | | $ | 538,114 | |
Adjustments to reconcile net earnings to net cash provided by operating activities: | | | |
Depreciation | 35,001 | | | 33,440 | |
Amortization | 49,697 | | | 46,141 | |
Deferred tax benefit | (4,881) | | | (6,072) | |
Share-based compensation | 13,931 | | | 13,893 | |
Increase (decrease) in cash resulting from changes in: | | | |
Trade accounts receivable, net | (16,239) | | | (19,153) | |
Inventories | (78,574) | | | (87,568) | |
Other current assets | (14,509) | | | (3,596) | |
Trade accounts payable | (26,614) | | | 44,170 | |
Taxes payable | 73,815 | | | 42,474 | |
Accruals and other | (82,871) | | | 65,876 | |
Net cash provided by operating activities | 555,424 | | | 667,719 | |
Cash flows from investing activities: | | | |
Proceeds from sale of property, plant and equipment | 236 | | | 3,399 | |
Purchase of property, plant and equipment | (89,213) | | | (69,796) | |
Proceeds from government funding | 28,670 | | | — | |
Acquisitions | (25,588) | | | (193,387) | |
Other investing activities | (3,463) | | | 8,559 | |
Net cash used in investing activities | (89,358) | | | (251,225) | |
Cash flows from financing activities: | | | |
Proceeds from borrowings | 1,732,169 | | | 1,638,321 | |
Repayments of borrowings | (1,348,152) | | | (1,249,177) | |
Proceeds from stock option exercises | 19,460 | | | 14,914 | |
Repurchases of common stock | (824,999) | | | (727,498) | |
Acquisition contingent consideration payment | (7,912) | | | — | |
Other financing activities | (1,172) | | | (2,864) | |
Net cash used in financing activities | (430,606) | | | (326,304) | |
Effect of exchange rate changes on cash and cash equivalents | (11,888) | | | (772) | |
Net increase (decrease) in cash and cash equivalents | 23,572 | | | 89,418 | |
Cash and cash equivalents: | | | |
Beginning of period | 98,564 | | | 94,254 | |
End of period | $ | 122,136 | | | $ | 183,672 | |
The accompanying notes are an integral part of these interim consolidated financial statements.
METTLER-TOLEDO INTERNATIONAL INC.
NOTES TO THE INTERIM CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)– Unaudited
(In thousands, except share data, unless otherwise stated)
1.BASIS OF PRESENTATION
Mettler-Toledo International Inc. (Mettler-Toledo or the Company) is a leading global supplier of precision instruments and services. The Company manufactures weighing instruments for use in laboratory, industrial, packaging, logistics and food retailing applications. The Company also manufactures several relatedrelated analytical instrumentsinstruments and provides automated chemistry solutions used in drug and chemical compound discoverydiscovery and development. In addition, the Company manufactures metal detection and other end-of-line inspection systems used in production and packaging and provides solutions for use in certain process analytics applications. The Company's primary manufacturing facilities are located in China, Germany, Switzerland, the United Kingdom and the United States. The Company's principal executive offices are located in Columbus, Ohio and Greifensee, Switzerland.
The accompanying interim consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (U.S. GAAP) and include all entities in which the Company has control, which are its wholly-owned subsidiaries. The interim consolidated financial statements have been prepared without audit, pursuant to the rules and regulations of the Securities and Exchange Commission. Certain information and footnote disclosures normally included in financial statements prepared in accordance with U.S. GAAP have been condensed or omitted pursuant to such rules and regulations. The interim consolidated financial statements should be read in conjunction with the consolidated financial statements and the notes thereto included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2021.2022.
The accompanying interim consolidated financial statements reflect all adjustments which, in the opinion of management, are necessary for a fair statement of the results of the interim periods presented. Operating results for the three and nine months ended September 30, 2022March 31, 2023 are not necessarily indicative of the results to be expected for the full year ending December 31, 2022.2023.
The preparation of financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, as well as disclosure of contingent assets and liabilities at the date of the financial statements, and the reported amounts of revenues and expenses during the reporting periods. These financial statements were prepared using information reasonably available as of September 30, 2022March 31, 2023 and through the date of this report. Actual results may differ from those estimates due to uncertainty in the uncertainty around the global economy, the magnitudeeconomic environment and duration of the COVID-19 pandemic, theour end markets, ongoing developments related toin Ukraine and inflation, as well as other factors.
All intercompany transactions and balances have been eliminated.
2.SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Trade Accounts Receivable
Trade accounts receivable are recorded at the invoiced amount and do not bear interest. The allowance for expected credit losses represents the Company’sCompany's best estimate based on historical information, current information, and reasonable and supportable forecasts of future events and circumstances.
METTLER-TOLEDO INTERNATIONAL INC.
NOTES TO THE INTERIM CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)
(In thousands, except share data, unless otherwise stated)
Inventories
Inventories are valued at the lower of cost or net realizable value. Cost, which includes direct materials, labor and overhead, is generally determined using the first in, first out (FIFO) method. The estimated net realizable value is based on assumptions for future demand and related pricing. Adjustments to the cost basis of the Company’s inventory are made for excess and obsolete items based on usage, orders and technological obsolescence. If actual market conditions are less favorable than those projected by management, reductions in the value of inventory may be required.
METTLER-TOLEDO INTERNATIONAL INC.
NOTES TO THE INTERIM CONSOLIDATED FINANCIAL STATEMENTS – Unaudited
(In thousands, except share data, unless otherwise stated)
Inventories consisted of the following: | | | | | | | | | | | |
| September 30, 2022 | | December 31, 2021 |
Raw materials and parts | $ | 215,397 | | | $ | 184,624 | |
Work-in-progress | 80,898 | | | 76,019 | |
Finished goods | 155,025 | | | 153,900 | |
| $ | 451,320 | | | $ | 414,543 | |
| | | | | | | | | | | |
| March 31, 2023 | | December 31, 2022 |
Raw materials and parts | $ | 215,534 | | | $ | 222,170 | |
Work-in-progress | 78,650 | | | 77,848 | |
Finished goods | 133,365 | | | 141,676 | |
| $ | 427,549 | | | $ | 441,694 | |
Goodwill and Other Intangible Assets
Goodwill, representing the excess of purchase price over the net asset value of companies acquired, and indefinite-lived intangible assets are not amortized, but are reviewed for impairment annually in the fourth quarter, or more frequently if events or changes in circumstances indicate that an asset might be impaired. The annual evaluation for goodwill and indefinite-lived intangible assets are generally based on an assessment of qualitative factors to determine whether it is more likely than not that the fair value of the asset is less than its carrying amount.
Other intangible assets include indefinite-lived assets and assets subject to amortization. Where applicable, amortization is charged on a straight-line basis over the expected period of benefit.to be benefited. The straight-line method of amortization reflects an appropriate allocation of the cost of the intangible assets to earnings in proportion to the amount of economic benefits obtained by the Company in each reporting period. The Company assesses the initial acquisition of intangible assets in accordance with the provisions of ASC 805 "Business Combinations"“Business Combinations” and the continued accounting for previously recognized intangible assets and goodwill in accordance with the provisions of ASC 350 "Intangible -“Intangibles – Goodwill and Other"Other” and ASC 360 "Property,“Property, Plant and Equipment".Equipment.”
Other intangible assets consisted of the following:
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| September 30, 2022 | | December 31, 2021 |
| Gross Amount | | Accumulated Amortization | | Intangibles, Net | | Gross Amount | | Accumulated Amortization | | Intangibles, Net |
Customer relationships | $ | 289,709 | | | $ | (88,707) | | | $ | 201,002 | | | $ | 282,470 | | | $ | (79,782) | | | $ | 202,688 | |
Proven technology and patents | 109,967 | | | (60,200) | | | $ | 49,767 | | | 115,680 | | | (56,305) | | | 59,375 | |
Tradenames (finite life) | 7,490 | | | (3,223) | | | $ | 4,267 | | | 8,206 | | | (3,731) | | | 4,475 | |
Tradenames (indefinite life) | 35,683 | | | — | | | $ | 35,683 | | | 35,949 | | | — | | | 35,949 | |
Other | 13,242 | | | (6,526) | | | $ | 6,716 | | | 10,641 | | | (5,678) | | | 4,963 | |
| $ | 456,091 | | | $ | (158,656) | | | $ | 297,435 | | | $ | 452,946 | | | $ | (145,496) | | | $ | 307,450 | |
METTLER-TOLEDO INTERNATIONAL INC.
NOTES TO THE INTERIM CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)
(In thousands, except share data, unless otherwise stated)
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| March 31, 2023 | | December 31, 2022 |
| Gross Amount | | Accumulated Amortization | | Intangibles, Net | | Gross Amount | | Accumulated Amortization | | Intangibles, Net |
Customer relationships | $ | 293,036 | | | $ | (96,771) | | | $ | 196,265 | | | $ | 292,713 | | | $ | (92,981) | | | $ | 199,732 | |
Proven technology and patents | 123,912 | | | (66,519) | | | 57,393 | | | 123,623 | | | (64,089) | | | 59,534 | |
Trade name (finite life) | 7,703 | | | (3,779) | | | 3,924 | | | 7,675 | | | (3,543) | | | 4,132 | |
Trade name (indefinite life) | 36,280 | | | — | | | 36,280 | | | 36,252 | | | — | | | 36,252 | |
Other | 13,298 | | | (7,026) | | | 6,272 | | | 13,271 | | | (6,867) | | | 6,404 | |
| $ | 474,229 | | | $ | (174,095) | | | $ | 300,134 | | | $ | 473,534 | | | $ | (167,480) | | | $ | 306,054 | |
The Company recognized amortization expense associated with the above intangible assets of $6.7$6.9 million and $5.7$6.8 million for the three months ended September 30,March 31, 2023 and 2022, and 2021, respectively, and $20.1 million and $15.9 million for the nine months ended September 30, 2022 and 2021, respectively. The annual aggregate amortization expense based on the current balance of other intangible assets is estimated to be $25.4 million for 2022, $23.6at $26.3 million for 2023, $22.8$25.8 million for 2024, $21.9$25.0 million for 2025, $21.1 million for 2026, $19.7 million for 2026,2027 and $18.4$18.9 million for 2027.2028. Purchased intangible amortization was $6.4$6.6 million, $5.0 million after tax, and $5.5 million, $4.1$5.1 million after tax, for the three monthsmonth periods ended September 30, 2022March 31, 2023 and 2021, respectively, and $19.4 million, $15.0 million after tax, and $15.2 million, $11.5 million after tax, for the nine months ended September 30, 2022 and 2021, respectively.2022.
In addition to the above amortization, the Company recorded amortization expense associated with capitalized software of $10.0$10.8 million and $10.3$9.7 million for the three months ended September 30,March 31, 2023 and 2022, and 2021, respectively, and $29.4 million and $30 million for the nine months ended September 30, 2022 and 2021, respectively.
Revenue Recognition
Product revenue is recognized from contracts with customers when a customer has obtained control of a product. The Company considers control to have transferred based upon shipping terms. To the extent the Company’s arrangements have a separate performance obligation, revenue related to any post-shipment performance obligation is deferred until completed. Shipping and handling costs charged to
METTLER-TOLEDO INTERNATIONAL INC.
NOTES TO THE INTERIM CONSOLIDATED FINANCIAL STATEMENTS – Unaudited
(In thousands, except share data, unless otherwise stated)
customers are included in total net sales and the associated expense is a component of cost of sales. Certain products are also sold through indirect distribution channels whereby the distributor assumes any further obligations to the end customer. Revenue is recognized on these distributor arrangements upon transfer of control to the distributor. Contracts do not contain variable pricing arrangements that are retrospective, except for rebate programs. Rebates are estimated based on expected sales volumes and offset against revenue at the time such revenue is recognized. The Company generally maintains the right to accept or reject a product return in its terms and conditions and also maintains appropriate accruals for outstanding credits. The related provisions for estimated returns and rebates are immaterial to the consolidated financial statements.
Certain of the Company’s product arrangements include separate performance obligations, primarily related to installation. Such performance obligations are accounted for separately when the deliverables have stand-alone value and the satisfaction of the undelivered performance obligations is probable and within the Company's control. The allocation of revenue between the performance obligations is based on the observable stand-alone selling prices at the time of the sale in accordance with a number of factors including service technician billing rates, time to install, and geographic location.
Software is generally not considered a distinct performance obligation with the exception of a fewlimited number of small software applications. The Company generally does not sellprimarily sells software products withoutwith the related hardware instrument as the software is embedded in the product. The Company’s products typically require no significant production, modification, or customization of the hardware or software that is essential to the functionality of the products.
Service revenue not under contract is recognized upon the completion of the service performed. Revenue from spare parts sold on a stand-alone basis is recognized when control is transferred to the customer, which is generally at the time of shipment or delivery. Revenue from service contracts is recognized ratably over the contract period using a time-based method. These contracts represent an obligation to perform repair and other services including regulatory compliance qualification, calibration, certification, and preventative maintenance on a customer’s pre-defined equipment over the contract period.
METTLER-TOLEDO INTERNATIONAL INC.
NOTES TO THE INTERIM CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)
(In thousands, except share data, unless otherwise stated)
Employee Termination Benefits
In situations where contractual termination benefits exist, the Company records accruals for employee termination benefits when it is probable that a liability has been incurred and the amount of the liability is reasonably estimable. All other employee termination arrangements are recognized and measured at their fair value at the communication date unless the employee is required to render additional service after the legal notification period, in which case the liability is recognized ratably over the future service period.
Share-Based Compensation
The Company recognizes share-based compensation expense within selling, general and administrative in the consolidated statements of operations and other comprehensive income with a corresponding offset to additional paid-in capital in the consolidated balance sheet. The Company recorded $4.7recognized $4.0 million and $13.9$4.5 million of share-based compensation expense for the three and nine months ended September 30,March 31, 2023 and 2022, respectively, compared to $4.7 million and $13.9 million for the corresponding periods in 2021.respectively.
Research and Development
Research and development costs primarily consist of salaries, consulting and other costs. The Company expenses these costs as incurred.
METTLER-TOLEDO INTERNATIONAL INC.
NOTES TO THE INTERIM CONSOLIDATED FINANCIAL STATEMENTS – Unaudited
(In thousands, except share data, unless otherwise stated)
Business Combinations and Asset Acquisitions
The Company accounts for business acquisitions under the accounting standards for business combinations.combinations utilizing the acquisition method of accounting. The results of each acquisition are included in the Company's consolidated results as of the acquisition date. The purchase price of an acquisition is allocated to tangible and intangible assets and assumed liabilities based on their estimated fair values and any consideration in excess of the net assets acquired is recognized as goodwill. The determination of the values of the acquired assets and assumed liabilities, including goodwill and intangible assets, require significant judgment.judgement. Acquisition transaction costs are expensed when incurred.
In circumstances where an acquisition involves a contingent consideration arrangement, the Company recognizes a liability equal to the fair value of the expected contingent payments as of the acquisition date. Subsequent changes in the fair value of the contingent consideration are recorded to other charges (income), net.
Recent Accounting Pronouncements
In March 2020, and January 2021 and December 2022, the FASB issued ASU 2020-04, ASU 2021-01 and ASU 2021-01:2022-06: Reference Rate Reform, which provides optional expedients and exceptions for applying GAAP to contracts, hedging relationships, and other transactions affected by the discontinuance of LIBOR or another referenced rate. The guidance may be applied to any applicable contract entered into before December 31, 2022.2024. The Company's interest rate and cross currency swaps, as mentioned in Note 4 to the consolidated financial statements, are governed by International Swaps and Derivatives Association ("ISDA")(ISDA) agreements, and the Company adhereswill adhere to the ISDA's fallback protocol when LIBOR is discontinued. In addition, the Company renewed the LIBOR basedLIBOR-based credit agreement, as discussed further in Note 10 of the Annual Report Form 10-K, which includes a fallback protocol when LIBOR is discontinued. Based on these procedures, when LIBOR is discontinued, the interest rate and cross currency swaps will not require de-designation if certain criteria are met. The Company expects the financial impact of the rate change when LIBOR is discontinued to be immaterial to its financial statements.
METTLER-TOLEDO INTERNATIONAL INC.
NOTES TO THE INTERIM CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)
(In thousands, except share data, unless otherwise stated)
3.REVENUE
The Company disaggregates revenue from contracts with customers by product, service, timing of revenue recognition, and geography. A summary of revenue by the Company’s reportable segments for the three and nine months ended September 30, 2022 and 2021 follows:
| For the three months ended September 30, 2022 | U.S. Operations | | Swiss Operations | | Western European Operations | | Chinese Operations | | Other Operations | | Total | |
Three months ended March 31, 2023 | | Three months ended March 31, 2023 | U.S. Operations | | Swiss Operations | | Western European Operations | | Chinese Operations | | Other Operations | | Total |
Product Revenue | Product Revenue | $ | 287,948 | | | $ | 32,366 | | | $ | 129,089 | | | $ | 212,163 | | | $ | 122,421 | | | $ | 783,987 | | Product Revenue | $ | 246,529 | | | $ | 36,461 | | | $ | 140,707 | | | $ | 170,430 | | | $ | 121,874 | | | $ | 716,001 | |
Service Revenue: | Service Revenue: | | Service Revenue: | |
Point in time | Point in time | 65,596 | | | 6,401 | | | 29,071 | | | 13,543 | | | 30,248 | | | 144,859 | | Point in time | 70,626 | | | 7,461 | | | 41,165 | | | 11,347 | | | 30,045 | | | 160,644 | |
Over time | Over time | 20,220 | | | 2,205 | | | 22,799 | | | 4,016 | | | 7,760 | | | 57,000 | | Over time | 20,247 | | | 2,447 | | | 17,552 | | | 3,990 | | | 7,857 | | | 52,093 | |
Total | Total | $ | 373,764 | | | $ | 40,972 | | | $ | 180,959 | | | $ | 229,722 | | | $ | 160,429 | | | $ | 985,846 | | Total | $ | 337,402 | | | $ | 46,369 | | | $ | 199,424 | | | $ | 185,767 | | | $ | 159,776 | | | $ | 928,738 | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
For the three months ended September 30, 2021 | U.S. Operations | | Swiss Operations | | Western European Operations | | Chinese Operations | | Other Operations | | Total |
Product Revenue | $ | 263,885 | | | $ | 33,612 | | | $ | 142,318 | | | $ | 193,727 | | | $ | 127,302 | | | $ | 760,844 | |
Service Revenue: | | | | | | | | | | | |
Point in time | 56,325 | | | 6,092 | | | 37,524 | | | 12,680 | | | 30,120 | | | 142,741 | |
Over time | 16,498 | | | 2,146 | | | 18,790 | | | 4,053 | | | 6,878 | | | 48,365 | |
Total | $ | 336,708 | | | $ | 41,850 | | | $ | 198,632 | | | $ | 210,460 | | | $ | 164,300 | | | $ | 951,950 | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
For the nine months ended September 30, 2022 | U.S. Operations | | Swiss Operations | | Western European Operations | | Chinese Operations | | Other Operations | | Total |
Product Revenue | $ | 816,193 | | | $ | 99,567 | | | $ | 404,060 | | | $ | 593,283 | | | $ | 357,742 | | | $ | 2,270,845 | |
Service Revenue: | | | | | | | | | | | |
Point in time | 190,340 | | | 20,072 | | | 97,250 | | | 34,578 | | | 89,390 | | | 431,630 | |
Over time | 54,197 | | | 6,665 | | | 62,798 | | | 14,376 | | | 21,513 | | | 159,549 | |
Total | $ | 1,060,730 | | | $ | 126,304 | | | $ | 564,108 | | | $ | 642,237 | | | $ | 468,645 | | | $ | 2,862,024 | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
For the nine months ended September 30, 2021 | U.S. Operations | | Swiss Operations | | Western European Operations | | Chinese Operations | | Other Operations | | Total |
Product Revenue | $ | 721,744 | | | $ | 95,797 | | | $ | 424,904 | | | $ | 525,855 | | | $ | 355,945 | | | $ | 2,124,245 | |
Service Revenue: | | | | | | | | | | | |
Point in time | 162,409 | | | 19,517 | | | 110,243 | | | 34,655 | | | 87,708 | | | 414,532 | |
Over time | 47,824 | | | 6,653 | | | 57,557 | | | 11,545 | | | 18,335 | | | 141,914 | |
Total | $ | 931,977 | | | $ | 121,967 | | | $ | 592,704 | | | $ | 572,055 | | | $ | 461,988 | | | $ | 2,680,691 | |
A summary of revenue by major geographic destination for the three and nine months ended September 30 follows:
| | | | | | | | | | | | | | | | | | | | | | | |
| Three Months Ended | | Nine Months Ended |
| 2022 | | 2021 | | 2022 | | 2021 |
Americas | $ | 408,207 | | | $ | 367,278 | | | $ | 1,154,602 | | | $ | 1,024,033 | |
Europe | 228,145 | | | 258,925 | | | 720,667 | | | 760,491 | |
Asia / Rest of World | 349,494 | | | 325,747 | | | 986,755 | | | 896,167 | |
Total | $ | 985,846 | | | $ | 951,950 | | | $ | 2,862,024 | | | $ | 2,680,691 | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Three months ended March 31, 2022 | U.S. Operations | | Swiss Operations | | Western European Operations | | Chinese Operations | | Other Operations | | Total |
Product Revenue | $ | 248,807 | | | $ | 33,910 | | | $ | 138,009 | | | $ | 167,989 | | | $ | 117,900 | | | $ | 706,615 | |
Service Revenue: | | | | | | | | | | | |
Point in time | 60,154 | | | 7,168 | | | 36,223 | | | 10,327 | | | 28,600 | | | 142,472 | |
Over time | 16,860 | | | 2,192 | | | 18,654 | | | 4,390 | | | 6,608 | | | 48,704 | |
Total | $ | 325,821 | | | $ | 43,270 | | | $ | 192,886 | | | $ | 182,706 | | | $ | 153,108 | | | $ | 897,791 | |
METTLER-TOLEDO INTERNATIONAL INC.
NOTES TO THE INTERIM CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)– Unaudited
(In thousands, except share data, unless otherwise stated)
A breakdown of net sales to external customers by geographic customer destination for the three months ended March 31 follows:
| | | | | | | | | | | |
| 2023 | | 2022 |
Americas | $ | 372,073 | | | $ | 352,689 | |
Europe | 253,974 | | | 249,784 | |
Asia / Rest of World | 302,691 | | | 295,318 | |
Total | $ | 928,738 | | | $ | 897,791 | |
The Company's global revenue mix by product category is comprised of laboratory (56% of sales), industrial (39%(38% of sales) and retail (5%(6% of sales). The Company's product revenue by reportable segment is proportionately similar to the Company's global mix except the Company's Swiss Operations is largely comprised of laboratory products, while the Company's Chinese Operations has a slightly higher percentage of industrial products. A summarybreakdown of the Company’s revenuesales by product category for the three and nine months ended September 30 is asMarch 31 follows:
| | | | | | | | | | | | | | | | | | | | | | | |
| Three Months Ended | | Nine Months Ended |
| 2022 | | 2021 | | 2022 | | 2021 |
Laboratory | $ | 555,112 | | | $ | 536,489 | | | $ | 1,614,586 | | | $ | 1,487,222 | |
Industrial | 386,543 | | | 370,505 | | | 1,114,454 | | | 1,049,295 | |
Retail | 44,191 | | | 44,956 | | | 132,984 | | | 144,174 | |
Total | $ | 985,846 | | | $ | 951,950 | | | $ | 2,862,024 | | | $ | 2,680,691 | |
| | | | | | | | | | | |
| 2023 | | 2022 |
Laboratory | $ | 520,031 | | | $ | 513,550 | |
Industrial | 355,181 | | | 343,738 | |
Retail | 53,526 | | | 40,503 | |
Total | $ | 928,738 | | | $ | 897,791 | |
The payment terms in the Company’s contracts with customers do not exceed one year and therefore contracts do not contain a significant financing component. In most cases, after appropriate credit evaluations, payments are due in arrears and are recognized as receivables. Unbilled revenue is recorded when performance obligations have been satisfied, but not yet billed to the customer. Unbilled revenue as of September 30, 2022March 31, 2023 and December 31, 20212022 was $34.7$34.4 million and $32.1$29.2 million, respectively, and is included within accounts receivable. Deferred revenue and customer prepayments are recorded when cash payments are received or due in advance of the performance obligation being satisfied. Deferred revenue primarily includes prepaid service contracts, as well as deferred installation.
Changes in the components of deferred revenue and customer prepayments during the nine month periods ending September 30,ended March 31, 2023 and 2022 and 2021 are as follows:
| | | 2022 | | 2021 | | 2023 | | 2022 |
Beginning balances as of January 1 | Beginning balances as of January 1 | | $ | 192,648 | | | $ | 149,106 | | Beginning balances as of January 1 | $ | 192,759 | | | $ | 192,648 | |
Customer pre-payments/deferred revenue | Customer pre-payments/deferred revenue | | 545,997 | | | 496,437 | | Customer pre-payments/deferred revenue | 190,262 | | | 182,539 | |
Revenue recognized | Revenue recognized | | (523,022) | | | (446,775) | | Revenue recognized | (172,890) | | | (156,141) | |
Foreign currency translation | Foreign currency translation | | (17,444) | | | (3,534) | | Foreign currency translation | 1,171 | | | (3,366) | |
Ending balance as of September 30 | | $ | 198,179 | | | $ | 195,234 | | |
Ending balance as of March 31 | | Ending balance as of March 31 | $ | 211,302 | | | $ | 215,680 | |
The Company generally expenses sales commissions when incurred because the amortizationcontract period is one year or less. These costs are recorded within selling, general, and administrative expenses. The Company has not disclosed the value of unsatisfied performance obligations other than customer prepayments and deferred revenue above as mostassociated with contracts have an expected length of one year or less and amounts greater than one year areis immaterial.
METTLER-TOLEDO INTERNATIONAL INC.
NOTES TO THE INTERIM CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)
(In thousands, except share data, unless otherwise stated)
4. FINANCIAL INSTRUMENTS
The Company has limited involvement with derivative financial instruments and does not use them for trading purposes. The Company enters into certain interest rate and cross currency swap agreements in order to manage its exposure to changes in interest rates. The amount of the Company's fixed obligation interest payments
METTLER-TOLEDO INTERNATIONAL INC.
NOTES TO THE INTERIM CONSOLIDATED FINANCIAL STATEMENTS – Unaudited
(In thousands, except share data, unless otherwise stated)
may change based upon the expiration dates of its interest rate and cross currency swap agreements and the level and composition of its debt. The Company also enters into certain foreign currency forward contracts to limit the Company's exposure to currency fluctuations on the respective hedged items. For additional disclosures on derivative instruments regarding balance sheet location, fair value, and the amounts reclassified into other comprehensive income and the effective portionportions of the cash flow hedges, also see NoteNotes 5 and Note 9 to the interim consolidated financial statements. As also describedmentioned in Note 7, the Company has designated its euro-denominated debt as a hedge of a portion of its net investment in euro-denominated foreign subsidiary.subsidiaries.
Cash Flow Hedges
In November 2021, the Company entered into a cross currency swap arrangement designated as a cash flow hedge. The agreement converts $50 million of borrowings under the Company's credit facility into synthetic Swiss franc debt, which allows the Company to effectively change the floating rate LIBOR-based interest payments, excluding the credit spread, to a fixed Swiss franc income of 0.64%. The swap matures in November 2023.
In June 2021, the Company entered into a cross currency swap arrangement designated as a cash flow hedge. The agreement converts $50 million of borrowings under the Company's credit facility into synthetic Swiss franc debt, which allows the Company to effectively change the floating rate LIBOR-based interest payments, excluding the credit spread, to a fixed Swiss franc income of 0.57%. The swap matures in June 2025.
In June 2021, the Company entered into a cross currency swap arrangement designated as a cash flow hedge. The agreement converts $50 million of borrowings under the Company's credit facility into synthetic Swiss franc debt, which allows the Company to effectively change the floating rate LIBOR-based interest payments, excluding the credit spread, to a fixed Swiss franc income of 0.66%. The swap matures in June 2024.
In June 2019, the Company entered into a cross currency swap arrangement designated as a cash flow hedge. The agreement converts $50 million of borrowings under the Company's credit facility into synthetic Swiss franc debt, which allows the Company to effectively change the floating rate LIBOR-based interest payments, excluding the credit spread, to a fixed Swiss franc income of 0.82%. The swap began in June 2019 and matures in June 2023.
In 2015, the Company entered into an interest rate swap agreement designated as a cash flow hedge. The agreement has the effect of changing the floating rate LIBOR-based interest payments associated with $100 million of borrowings under the Company's credit agreement to a fixed obligation of 2.25% beginning in February 2017 and matured in February 2022.
The Company's cash flow hedges are recorded gross at fair value in the consolidated balance sheet at September 30, 2022March 31, 2023 and December 31, 2021,2022, respectively. A derivative gain of $7.2$6.2 million based upon interest rates and foreign currency rates at September 30, 2022,March 31, 2023, is expected to be reclassified from other comprehensive income (loss) to earnings in the next twelve months. The cash flow hedges remain effective as of September 30, 2022.
METTLER-TOLEDO INTERNATIONAL INC.
NOTES TO THE INTERIM CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)
(In thousands, except share data, unless otherwise stated)
March 31, 2023.Other Derivatives
The Company enters into foreign currency forward contracts in order to economically hedge short-term trade and non-trade intercompany balances largely denominated in Swiss franc, other major European currencies, and the Chinese Renminbirenminbi with its foreign businesses. In accordance with U.S. GAAP, these contracts are considered “derivatives not designated as hedging instruments.” Gains or losses on these instruments are reported in current earnings. The foreign currency forward contracts are recorded at fair value in the consolidated balance sheet at September 30, 2022March 31, 2023 and December 31, 2021, respectively, and2022, as disclosed in Note 5. The Company recognized in other charges (income) related to these instruments, a net lossgain of $20.9$3.5 million and net gain of $3.3$1.5 million during the three months ended September 30,March 31, 2023 and 2022, and 2021, respectively, and a net loss of $29.3 million and a net gain of $16.5 million duringwhich offset the nine months ended September 30, 2022 and 2021, respectively. The gains and losses are primarily offset by the underlyingrelated transaction gains and losses on the related intercompany balances.(losses) associated with these contracts. At September 30, 2022March 31, 2023 and December 31, 2021,2022, these contracts had a notional value of $757.5$783.2 million and $1.0 billion,$930.3 million, respectively.
5. FAIR VALUE MEASUREMENTS
At September 30, 2022March 31, 2023 and December 31, 2021,2022, the Company had derivative assets totaling $20.5$11.6 million and $6.0$11.5 million, respectively, and derivative liabilities totaling $12.2$6.9 million and $10.3$5.4 million,
METTLER-TOLEDO INTERNATIONAL INC.
NOTES TO THE INTERIM CONSOLIDATED FINANCIAL STATEMENTS – Unaudited
(In thousands, except share data, unless otherwise stated)
respectively. The Company has limited involvement with derivative financial instruments and therefore does not need to present all the required disclosures in tabular format. The fair values of the interest rate swap agreements, the cross-currencycross currency swap agreements, and the foreign currency forward contracts that economically hedge short-term intercompany balances are estimated based upon inputs from current valuation information obtained from dealer quotes and priced with observable market assumptions and appropriate valuation adjustments for credit risk. The Company has evaluated the valuation methodologies used to develop the fair values by dealers in order to determine whether such valuations are representative of an exit price in the Company’s principal market. In addition, the Company uses an internally developed model to perform testing on the valuations received from brokers. The Company has also considered both its own credit risk and counterparty credit risk in determining fair value and determined these adjustments were insignificant at September 30, 2022March 31, 2023 and December 31, 2021.2022.
Under U.S. GAAP, fair value is defined as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. A fair value measurement consists of observable and unobservable inputs that reflect the assumptions that a market participant would use in pricing an asset or liability.
A fair value hierarchy has been established that categorizes these inputs into three levels:
Level 1: Quoted prices in active markets for identical assets and liabilities
Level 2: Observable inputs other than quoted prices in active markets for identical assets and liabilities
Level 3: Unobservable inputs
METTLER-TOLEDO INTERNATIONAL INC.
NOTES TO THE INTERIM CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)
(In thousands, except share data, unless otherwise stated)
The following table presents the Company'sCompany’s assets and liabilities, which are all categorized as Level 2 thatand are measured at fair value on a recurring basis.basis at March 31, 2023 and December 31, 2022. The Company does not have any assets or liabilities which are categorized as Level 1 or Level 3, with the exception of the PendoTECH contingent consideration described below.1. | | | | | | | | | | | | | | | | | | | | |
| | September 30, 2022 | | December 31, 2021 | | Balance Sheet Classification |
Foreign currency forward contracts not designated as hedging instruments | | $ | 4,058 | | | $ | 3,927 | | | Other current assets and prepaid expenses |
Cash Flow Hedges: | | | | | | |
Cross currency swap agreement | | 125 | | — | | | Other current assets and prepaid expenses |
Cross currency swap agreement | | 16,318 | | 2,119 | | | Other non-current assets |
Total derivative assets | | $ | 20,501 | | | $ | 6,046 | | | |
| | | | | | |
Foreign currency forward contracts not designated as hedging instruments | | $ | 12,187 | | | $ | 4,510 | | | Accrued and other liabilities |
Cash Flow Hedges: | | | | | | |
Interest rate swap agreements | | — | | | 352 | | | Accrued and other liabilities |
Cross currency swap agreement | | — | | | 5,482 | | | Other non-current liabilities |
Total derivative liabilities | | $ | 12,187 | | | $ | 10,344 | | | |
| | | | | | | | | | | | | | | | | | | | |
| | March 31, 2023 | | December 31, 2022 | | Balance Sheet Location |
Foreign currency forward contracts not designated as hedging instruments | | $ | 5,783 | | | $ | 3,958 | | | Other current assets and prepaid expenses |
Cash flow hedges: | | | | | | |
Cross currency swap agreements | | — | | | 609 | | Other current assets and prepaid expenses |
Cross currency swap agreements | | 5,842 | | 6,890 | | | Other non-current assets |
Total derivative assets | | $ | 11,625 | | | $ | 11,457 | | | |
| | | | | | |
Foreign currency forward contracts not designated as hedging instruments | | $ | 2,622 | | | $ | 2,056 | | | Accrued and other liabilities |
Cash Flow Hedges: | | | | | | |
Cross currency swap agreements | | 4,322 | | 3,366 | | Accrued and other liabilities |
Total derivative liabilities | | $ | 6,944 | | | $ | 5,422 | | | |
The Company had $26.6$22.6 million and $18.5$25.3 million of cash equivalents at September 30, 2022March 31, 2023 and December 31, 2021,2022, respectively, the fair value of which is determined using Level 2 inputs, through quoted and corroborated prices in active markets. The fair value of cash equivalents approximates cost.
The fair value of the Company's debt is less than the carrying value by approximately $242.3$237.2 million as of September 30, 2022.March 31, 2023. The fair value of the Company's fixed interest rate debt was estimated using Level 2 inputs, primarily utilizing discounted cash flow models based on estimated current rates offered for similar debt under current market conditions for the Company.
During the nine months ended September 30, 2022, $10.0 million ofThe Company has a contingent consideration was paidobligation relating to the PendoTECH acquisition of which $7.9 million is included in financing activities for the amount accrued at the acquisition date and $2.1 million is included in operating activities for the amount not accrued at the acquisition date on the Consolidated Statement of Cash Flows in accordance with U.S. GAAP. The estimated fair value of the remaining contingent consideration obligation of $10.0 million is based upon actual results and future financial projections as of September 30,March 31, 2023 and December 31, 2022. The fair value measurements are based on significant inputs not observable in the market and thus represent a Level 3 measurement.
6. INCOME TAXES
The Company's reported tax rate was 20.0% and 17.7% during the three months ended September 30, 2022 and 2021, respectively and 18.6% and 18.9% during the nine months ended September 30, 2022 and 2021, respectively. The provision for taxes is based upon using the Company's projected annual effective tax rate of 19.0% and 19.5% before non-recurring discrete tax items during 2022 and 2021, respectively. The difference between the Company's projected annual effective tax rate and the reported tax rate is primarily related to the timing of excess tax benefits associated with stock option exercises.
METTLER-TOLEDO INTERNATIONAL INC.
NOTES TO THE INTERIM CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)– Unaudited
(In thousands, except share data, unless otherwise stated)
measurement is based on significant inputs not observable in the market and thus represents a Level 3 measurement.
6. INCOME TAXES
The Company's reported tax rate was 16.9% and 18.3% during the three months ended March 31, 2023 and 2022, respectively. The provision for taxes is based upon using the Company's projected annual effective tax rate of 18.5% and 19.0% before non-recurring discrete tax items during 2023 and 2022, respectively. The difference between the Company's projected annual effective tax rate and the reported tax rate is related to the timing of excess tax benefits associated with stock option exercises.
7. DEBT
Debt consisted of the following at September 30, 2022:
| | | | | | | | | | | | | | | | | |
| U.S. Dollar | | Other Principal Trading Currencies | | Total |
3.67% $50 million ten-year Senior Notes due December 17, 2022 | $ | 50,000 | | | $ | — | | | $ | 50,000 | |
4.10% $50 million ten-year Senior Notes due September 19, 2023 | 50,000 | | | — | | | 50,000 | |
3.84% $125 million ten-year Senior Notes due September 19, 2024 | 125,000 | | | — | | | 125,000 | |
4.24% $125 million ten-year Senior Notes due June 25, 2025 | 125,000 | | | — | | | 125,000 | |
3.91% $75 million ten-year Senior Notes due June 25, 2029 | 75,000 | | | — | | | 75,000 | |
2.83% $125 million twelve-year Senior Notes due July 22, 2033 | 125,000 | | | — | | | 125,000 | |
3.19% $50 million fifteen-year Senior Notes due January 24, 2035 | 50,000 | | | — | | | 50,000 | |
2.81% $150 million fifteen-year Senior Note due March 17, 2037 | 150,000 | | | — | | | 150,000 | |
2.91% $150 million fifteen-year Senior Note due September 1, 2037 | 150,000 | | | — | | | 150,000 | |
1.47% Euro 125 million fifteen-year Senior Notes due June 17, 2030 | — | | | 120,301 | | | 120,301 | |
1.30% Euro 135 million fifteen-year Senior Notes due November 6, 2034 | — | | | 129,925 | | | 129,925 | |
1.06% Euro 125 million fifteen-year Senior Notes due March 19, 2036 | — | | | 120,301 | | | 120,301 | |
Debt issuance costs, net | (2,398) | | | (1,521) | | | (3,919) | |
Total Senior Notes | 897,602 | | | 369,006 | | | 1,266,608 | |
$1.25 billion Credit Agreement, interest at LIBOR plus 87.5 basis points | 495,806 | | | 159,149 | | | 654,955 | |
Other local arrangements | 4,563 | | | 52,766 | | | 57,329 | |
Total debt | 1,397,971 | | | 580,921 | | | 1,978,892 | |
Less: current portion | (100,983) | | | (52,656) | | | (153,639) | |
Total long-term debt | $ | 1,296,988 | | | $ | 528,265 | | | $ | 1,825,253 | |
March 31, 2023: | | | | | | | | | | | | | | | | | |
| U.S. Dollar | | Other Principal Trading Currencies | | Total |
4.10% $50 million ten-year Senior Notes due September 19, 2023 | 50,000 | | | — | | | 50,000 | |
3.84% $125 million ten-year Senior Notes due September 19, 2024 | 125,000 | | | — | | | 125,000 | |
4.24% $125 million ten-year Senior Notes due June 25, 2025 | 125,000 | | | — | | | 125,000 | |
3.91% $75 million ten-year Senior Notes due June 25, 2029 | 75,000 | | | — | | | 75,000 | |
5.45% $150 million ten-year Senior Notes due March 1, 2033 | 150,000 | | | — | | | 150,000 | |
2.83% $125 million twelve-year Senior Notes due July 22. 2033 | 125,000 | | | — | | | 125,000 | |
3.19% $50 million fifteen-year Senior Notes due January 24, 2035 | 50,000 | | | — | | | 50,000 | |
2.81% $150 million fifteen-year Senior Notes due March 17, 2037 | 150,000 | | | — | | | 150,000 | |
2.91% $150 million fifteen-year Senior Notes due September 1, 2037 | 150,000 | | | — | | | 150,000 | |
1.47% Euro 125 million fifteen-year Senior Notes due June 17, 2030 | — | | | 135,516 | | | 135,516 | |
1.30% Euro 135 million fifteen-year Senior Notes due November 6, 2034 | — | | | 146,357 | | | 146,357 | |
1.06% Euro 125 million fifteen-year Senior Notes due March 19, 2036 | — | | | 135,516 | | | 135,516 | |
Senior notes debt issuance costs, net | (2,951) | | | (1,455) | | | (4,406) | |
Total Senior Notes | 997,049 | | | 415,934 | | | 1,412,983 | |
$1.25 billion Credit Agreement, interest at LIBOR plus 87.5 basis points | 452,213 | | | 197,017 | | | 649,230 | |
Other local arrangements | 5,693 | | | 55,004 | | | 60,697 | |
Total debt | 1,454,955 | | | 667,955 | | | 2,122,910 | |
Less: current portion | (52,342) | | | (54,789) | | | (107,131) | |
Total long-term debt | $ | 1,402,613 | | | $ | 613,166 | | | $ | 2,015,779 | |
As of September 30, 2022,March 31, 2023, the Company had $589.3$595.1 million of additional borrowings available under its Credit Agreement, and the Company maintained $122.1$89.1 million of cash and cash equivalents.
In December 2022, the Company entered into an agreement to issue and sell $150 million 10-year Senior Notes in a private placement. The Company issued $150 million with a fixed interest rate of 5.45% (5.45% Senior Notes) in March 2023. The 5.45% Senior Notes are senior unsecured obligations of the Company. The 5.45% Senior Notes mature on March 1, 2033. The terms of the 5.45% Senior Notes are consistent with the previous Senior Notes as described in the Company's Annual Report Form 10-K. The Company used the proceeds from the sale of the 5.45% Senior Notes to refinance existing indebtedness and for other general corporate purposes.
In December 2021, the Company entered into an agreement to issue and sell $300 million 15-year Senior Notes in a private placement. The Company issued $150 million with a fixed interest rate of 2.81% (2.81% Senior Notes) in March 2022 and an additional $150 million with a fixed interest rate of 2.91% (2.91% Senior
METTLER-TOLEDO INTERNATIONAL INC.
NOTES TO THE INTERIM CONSOLIDATED FINANCIAL STATEMENTS – Unaudited
(In thousands, except share data, unless otherwise stated)
Notes) in September 2022. The 2.81% and 2.91% Senior Notes will beare senior unsecured obligations of the Company. The 2.81% Senior Notes mature in March 2037, and the 2.91% Senior Notes mature in September 2037. Interest on the 2.81% and 2.91% Senior Notes will beis payable semi-annually in March and September each year. Interest payments on the 2.81% Senior Notes will beginbegan in September 2022 and interest payments on the 2.91% will begin in March 2023. The terms of the 2.81% and 2.91% Senior Notes are consistent with the previous Senior Notes as described in the Company's Annual Report Form 10-K. The Company will useused the proceeds from the sale of the notes2.81% and 2.91% Senior Notes to refinance existing indebtedness and for other general corporate purposes.
The Company has designated the EUR 125 million 1.47% Euro Senior Notes, the EUR 135 million 1.30% Euro Senior Notes, and the EUR 125 million 1.06% Euro Senior Notes as a hedge of a portion of its net investment in euro-denominateda euro denominated foreign subsidiariessubsidiary to reduce foreign currency risk associated with thethis net investment. Changes in the carrying value of this debt resulting from fluctuations in the euro to U.S. dollar exchange rate are recorded as foreign currency translation adjustments within other comprehensive income (loss). The Company recorded in other comprehensive income (loss) related to this net investment hedge an unrealized gainloss of $35.8$5.3 million and an unrealized gain of $9.4$11.3 million for the
METTLER-TOLEDO INTERNATIONAL INC.
NOTES TO THE INTERIM CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)
(In thousands, except share data, unless otherwise stated)
three months ended September 30,March 31, 2023 and 2022, and 2021, respectively, and an unrealized gain of $66.2 million and an unrealized gain of $21.2 million for the nine month periods ended September 30, 2022 and 2021, respectively. The Company has a gain of $71.7$24.8 million recorded in accumulated other comprehensive income (loss) as of September 30, 2022.
March 31, 2023.
Other Local Arrangements
In April 2018, two of the Company's non-U.S. pension plans issued loans totaling $39.6 million (Swiss franc 38$38 million) to a wholly owned subsidiary of the Company. The loans have the same terms and conditions which include an interest rate of SARON plus 87.5 basis points. The loans were renewed for one year in April 2022.2023.
8. SHARE REPURCHASE PROGRAM AND TREASURY STOCK
In November 2022, the Company's BoardThe Company has $3.2 billion of Directors authorized an additional $2.5 billion to be added toremaining availability for its share repurchase program which has $1.2 billion of remaining availability as of September 30, 2022.March 31, 2023. The share repurchases are expected to be funded from cash generated from operating activities, borrowings, and cash balances. Repurchases will be made through open market transactions, and the amount and timing of purchases will depend on business and market conditions, the stock price, trading restrictions, the level of acquisition activity, and other factors.
The Company has purchased 30.831.2 million common shares since the inception of the program in 2004 through September 30, 2022.March 31, 2023. During the ninethree months ended September 30,March 31, 2023 and 2022, and 2021, the Company spent $825.0$250.0 million and $727.5$275.0 million on the repurchase of 629,380166,628 shares and 557,310190,593 shares at an average price per share of $1,310.79$1,511.78 and $1,305.35,$1,442.84, respectively. The Company also reissued 80,46647,849 shares and 71,12427,795 shares held in treasury uponfor the exercise of stock options and vesting of restricted stock units during the ninethree months ended September 30,March 31, 2023 and 2022, and 2021, respectively.
9. ACCUMULATED OTHER COMPREHENSIVE INCOME
Comprehensive income (loss), net In addition, the Company incurred $1.9 million of excise tax consisted ofduring the followingthree months ended March 31, 2023 related to the Inflation Reduction Act which is reflected as of September 30:
| | | | | | | | | | | | | | | | | | | | | | | |
| Three Months Ended | | Nine Months Ended |
| 2022 | | 2021 | | 2022 | | 2021 |
Net earnings | $ | 220,597 | | | $ | 203,688 | | | $ | 606,668 | | | $ | 538,114 | |
Other comprehensive income (loss), net of tax | (42,149) | | | 4,740 | | | (69,290) | | | 37,073 | |
Comprehensive income, net of tax | $ | 178,448 | | | $ | 208,428 | | | $ | 537,378 | | | $ | 575,187 | |
a reduction in shareholders' equity in the Company's consolidated financial statements.
The following table presents changes in accumulated other comprehensive income by component for the nine months ended September 30, 2022 and 2021:
METTLER-TOLEDO INTERNATIONAL INC.
NOTES TO THE INTERIM CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)– Unaudited
(In thousands, except share data, unless otherwise stated)
| | | | | | | | | | | | | | | | | | | | | | | |
| Currency Translation Adjustment, Net of Tax | | Net Unrealized Gain (Loss) on Cash Flow Hedging Arrangements, Net of Tax | | Pension and Post-Retirement Benefit Related Items, Net of Tax | | Total |
Balance at December 31, 2021 | $ | (19,566) | | | $ | 2 | | | $ | (235,660) | | | $ | (255,224) | |
Other comprehensive income (loss), net of tax: | | | | | | | |
Unrealized gains (losses) cash flow hedging arrangements | — | | | 18,512 | | | — | | | 18,512 | |
Foreign currency translation adjustment | (101,250) | | | — | | | 17,842 | | | (83,408) | |
Amounts recognized from accumulated other comprehensive income (loss), net of tax | — | | | (14,434) | | | 10,040 | | | (4,394) | |
Net change in other comprehensive income (loss), net of tax | (101,250) | | | 4,078 | | | 27,882 | | | (69,290) | |
Balance at September 30, 2022 | $ | (120,816) | | | $ | 4,080 | | | $ | (207,778) | | | $ | (324,514) | |
| | | | | | | | | | | | | | | | | | | | | | | |
| Currency Translation Adjustment, Net of Tax | | Net Unrealized Gain (Loss) on Cash Flow Hedging Arrangements, Net of Tax | | Pension and Post-Retirement Benefit Related Items, Net of Tax | | Total |
Balance at December 31, 2020 | $ | (31,101) | | | $ | (1,479) | | | $ | (302,345) | | | $ | (334,925) | |
Other comprehensive income (loss), net of tax: | | | | | | | |
Unrealized gains (losses) cash flow hedging arrangements | — | | | 7,327 | | | — | | | 7,327 | |
Foreign currency translation adjustment | 8,102 | | | — | | | 12,062 | | | 20,164 | |
Amounts recognized from accumulated other comprehensive income (loss), net of tax | — | | | (5,773) | | | 15,355 | | | 9,582 | |
Net change in other comprehensive income (loss), net of tax | 8,102 | | | 1,554 | | | 27,417 | | | 37,073 | |
Balance at September 30, 2021 | $ | (22,999) | | | $ | 75 | | | $ | (274,928) | | | $ | (297,852) | |
9. ACCUMULATED COMPREHENSIVE AND OTHER COMPREHENSIVE INCOME
Comprehensive income (loss), net of tax consisted of the following:
| | | | | | | | | | | |
| March 31, 2023 | | March 31, 2022 |
Net earnings | $ | 188,426 | | | $ | 174,001 | |
Other comprehensive income (loss), net of tax | (1,283) | | | $ | 4,350 | |
Comprehensive income, net of tax | $ | 187,143 | | | $ | 178,351 | |
The following table presents amounts recognized fromchanges in accumulated other comprehensive income (loss) by component for the three and nine month periods ended September 30:March 31, 2023 and 2022: | | | | | | | | | | | | | | | | | | | | | | | |
| Currency Translation Adjustment | | Net Unrealized Gain (Loss) on Cash Flow Hedging Arrangements, Net of Tax | | Pension and Post-Retirement Benefit Related Items, Net of Tax | | Total |
Balance at December 31, 2022 | $ | (82,864) | | | $ | 4,256 | | | $ | (148,625) | | | $ | (227,233) | |
Other comprehensive income (loss), net of tax: | | | | | | | |
Unrealized gains from cash flow hedging arrangements | — | | | 19 | | | — | | | 19 | |
Foreign currency translation adjustment | (893) | | | — | | | (728) | | | (1,621) | |
Amounts recognized from accumulated other comprehensive income (loss), net of tax | — | | | (1,259) | | | 1,578 | | | 319 | |
Net change in other comprehensive income (loss), net of tax | (893) | | | (1,240) | | | 850 | | | (1,283) | |
Balance at March 31, 2023 | $ | (83,757) | | | $ | 3,016 | | | $ | (147,775) | | | $ | (228,516) | |
| | | | | | | | | | | | | | | | | | | | |
| | Three Months Ended | | |
| | September 30, | | |
| | 2022 | | 2021 | | Location of Amounts Recognized in Earnings |
Effective portion of (gains) / losses on cash flow hedging arrangements: | | | | | | |
Interest rate swap agreements | | $ | — | | | $ | 551 | | | Interest expense |
Cross currency swap agreement | | (7,612) | | | (1,793) | | | (a) |
Total before taxes | | (7,612) | | | (1,242) | | | |
Provision for taxes | | (1,446) | | | (201) | | | Provision for taxes |
Total, net of taxes | | $ | (6,166) | | | $ | (1,041) | | | |
| | | | | | |
Recognition of defined benefit pension and post-retirement items: | | | | | | |
Recognition of actuarial losses and prior service cost, before taxes | | $ | 4,173 | | | $ | 6,449 | | | (b) |
Provision for taxes | | 896 | | | 1,361 | | | Provision for taxes |
Total, net of taxes | | $ | 3,277 | | | $ | 5,088 | | | |
| | | | | | | | | | | | | | | | | | | | | | | |
| Currency Translation Adjustment | | Net Unrealized Gain (Loss) on Cash Flow Hedging Arrangements, Net of Tax | | Pension and Post-Retirement Benefit Related Items, Net of Tax | | Total |
Balance at December 31, 2021 | $ | (19,566) | | | $ | 2 | | | $ | (235,660) | | | $ | (255,224) | |
Other comprehensive income (loss), net of tax: | | | | | | | |
Unrealized gains from cash flow hedging arrangements | — | | | 3,961 | | | — | | | 3,961 | |
Foreign currency translation adjustment | 5,342 | | | — | | | (4,779) | | | 563 | |
Amounts recognized from accumulated other comprehensive income (loss), net of tax | — | | | (3,623) | | | 3,449 | | | (174) | |
Net change in other comprehensive income (loss), net of tax | 5,342 | | | 338 | | | (1,330) | | | 4,350 | |
Balance at March 31, 2022 | $ | (14,224) | | | $ | 340 | | | $ | (236,990) | | | $ | (250,874) | |
METTLER-TOLEDO INTERNATIONAL INC.
NOTES TO THE INTERIM CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)– Unaudited
(In thousands, except share data, unless otherwise stated)
The following table presents amounts recognized from accumulated other comprehensive income (loss) for the three months ended March 31:
| | | | | | | | | | | | | | | | | | | | |
| | 2023 | | 2022 | | Location of Amounts Recognized in Earnings |
Effective portion of (gains) losses on cash flow hedging arrangements: | | | | | | |
Interest rate swap agreements | | $ | — | | | $ | 352 | | | Interest expense |
Cross currency swap | | (1,554) | | | (4,797) | | | (a) |
Total before taxes | | (1,554) | | | (4,445) | | | |
Provision for taxes | | (295) | | | (822) | | | Provision for taxes |
Total, net of taxes | | $ | (1,259) | | | $ | (3,623) | | | |
| | | | | | |
Recognition of defined benefit pension and post-retirement items: | | | | | | |
Recognition of actuarial (gains) losses, plan amendments and prior service cost, before taxes | | $ | 2,002 | | | $ | 4,393 | | | (b) |
Provision for taxes | | 424 | | | 944 | | | Provision for taxes |
Total, net of taxes | | $ | 1,578 | | | $ | 3,449 | | | |
(a)The cross currency swap reflects an unrealized gainloss of $6.2$1.1 million for the three months ended September 30, 2022 recorded in other charges (income) that was offset by the underlying unrealized loss ongain in the hedged debt.debt for the three months ended March 31, 2023. The cross currency swap also reflects a realized gain of $1.5$2.6 million recorded in interest expense for the three months ended September 30, 2022.March 31, 2023.
(b)These accumulated other comprehensive income (loss) components are included in the computation of net periodic pension and post-retirement cost. See Note 1112 for additional details for the three months ended September 30, 2022March 31, 2023 and 2021.
| | | | | | | | | | | | | | | | | | | | |
| | Nine Months Ended | | |
| | September 30, | | |
| | 2022 | | 2021 | | Location of Amounts Recognized in Earnings |
Effective portion of (gains) / losses on cash flow hedging arrangements: | | | | | | |
Interest rate swap agreements | | $ | 352 | | | $ | 1,625 | | | Interest expense |
Cross currency swap agreement | | (18,144) | | | (8,625) | | | (a) |
Total before taxes | | (17,792) | | | (7,000) | | | |
Provision for taxes | | (3,358) | | | (1,227) | | | Provision for taxes |
Total, net of taxes | | $ | (14,434) | | | $ | (5,773) | | | |
| | | | | | |
Recognition of defined benefit pension and post-retirement items: | | | | | | |
Recognition of actuarial losses and prior service cost, before taxes | | $ | 12,788 | | | $ | 19,460 | | | (b) |
Provision for taxes | | 2,748 | | | 4,105 | | | Provision for taxes |
Total, net of taxes | | $ | 10,040 | | | $ | 15,355 | | | |
(a) The cross currency swap reflects an unrealized gain of $15.6 million for the nine months ended September 30, 2022 recorded in other charges (income) that was offset by the underlying unrealized loss on the hedged debt. The cross currency swap also reflects a realized gain of $2.6 million recorded in interest expense for the nine months ended September 30, 2022.
(b) These accumulated other comprehensive income (loss) components are included in the computation of net periodic pension and post-retirement cost. See Note 11 for additional details for the nine months ended September 30, 2022 and 2021.
10. EARNINGS PER COMMON SHARE
In accordance with the treasury stock method, the Company has included the following169,979 and 271,933 common equivalent shares in the calculation of diluted weighted average number of common shares outstanding for the three and nine months ended September 30,March 31, 2023 and 2022, respectively, relating to outstanding stock options and restricted stock units:
| | | | | | | | | | | | | | |
| | 2022 | | 2021 |
Three months ended | | 206,634 | | | 336,655 | |
Nine months ended | | 234,382 | | | 333,358 | |
units.Outstanding options and restricted stock units to purchase or receive 39,21435,063 and 3,69229,296 shares of common stock for the three month periodmonths ended September 30,March 31, 2023 and 2022, and 2021, respectively, have been excluded from the calculation of diluted weighted average number of common and common equivalent shares as such options and restricted stock units would be anti-dilutive. Options and restricted stock units to purchase or receive 38,870 and 20,384 shares for the nine month period ended September 30, 2022 and 2021, respectively, have been excluded from the calculation of diluted weighted average of common and common equivalent shares as such options and restricted stock units would be anti-dilutive.
METTLER-TOLEDO INTERNATIONAL INC.
NOTES TO THE INTERIM CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)– Unaudited
(In thousands, except share data, unless otherwise stated)
11. NET PERIODIC PENSIONBENEFIT COST
Net periodic pension cost for the Company’s defined benefit pension plans and U.S. post-retirement medical plan includes the following components for the three months ended September 30:March 31:
| | | U.S. Pension Benefits | | Non-U.S. Pension Benefits | | Other U.S. Post-retirement Benefits | | Total | | U.S. Pension Benefits | | Non-U.S. Pension Benefits | | Other U.S. Post-retirement Benefits | | Total |
| | 2022 | | 2021 | | 2022 | | 2021 | | 2022 | | 2021 | | 2022 | | 2021 | | 2023 | | 2022 | | 2023 | | 2022 | | 2023 | | 2022 | | 2023 | | 2022 |
Service cost, net | Service cost, net | $ | 416 | | | $ | 374 | | | $ | 4,732 | | | $ | 4,858 | | | $ | — | | | $ | — | | | $ | 5,148 | | | $ | 5,232 | | Service cost, net | $ | 289 | | | $ | 416 | | | $ | 3,396 | | | $ | 4,990 | | | $ | — | | | $ | — | | | $ | 3,685 | | | $ | 5,406 | |
Interest cost on projected benefit obligations | Interest cost on projected benefit obligations | 674 | | | 546 | | | 1,447 | | | 843 | | | 3 | | | 2 | | | 2,124 | | | 1,391 | | Interest cost on projected benefit obligations | 1,256 | | | 674 | | | 4,876 | | | 1,558 | | | 7 | | | 3 | | | 6,139 | | | 2,235 | |
Expected return on plan assets | Expected return on plan assets | (1,548) | | | (1,494) | | | (8,951) | | | (8,851) | | | — | | | — | | | (10,499) | | | (10,345) | | Expected return on plan assets | (1,383) | | | (1,547) | | | (8,567) | | | (9,424) | | | — | | | — | | | (9,950) | | | (10,971) | |
Recognition of prior service cost | Recognition of prior service cost | — | | | — | | | (1,046) | | | (462) | | | (19) | | | (18) | | | (1,065) | | | (480) | | Recognition of prior service cost | — | | | — | | | (1,050) | | | (1,095) | | | (19) | | | — | | | (1,069) | | | (1,095) | |
Recognition of actuarial losses/(gains) | Recognition of actuarial losses/(gains) | 584 | | | 728 | | | 4,665 | | | 6,211 | | | (8) | | | (10) | | | 5,241 | | | 6,929 | | Recognition of actuarial losses/(gains) | 548 | | | 584 | | | 2,537 | | | 4,930 | | | — | | | (26) | | | 3,085 | | | 5,488 | |
Net periodic pension cost/(credit) | Net periodic pension cost/(credit) | $ | 126 | | | $ | 154 | | | $ | 847 | | | $ | 2,599 | | | $ | (24) | | | $ | (26) | | | $ | 949 | | | $ | 2,727 | | Net periodic pension cost/(credit) | $ | 710 | | | $ | 127 | | | $ | 1,192 | | | $ | 959 | | | $ | (12) | | | $ | (23) | | | $ | 1,890 | | | $ | 1,063 | |
Net periodic pension cost for the Company’s defined benefit pension plans and U.S. post-retirement medical plan includes the following components for the nine months ended September 30:
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| U.S. Pension Benefits | | Non-U.S. Pension Benefits | | Other U.S. Post-retirement Benefits | | Total |
| 2022 | | 2021 | | 2022 | | 2021 | | 2022 | | 2021 | | 2022 | | 2021 |
Service cost, net | $ | 1,248 | | | $ | 1,122 | | | $ | 14,497 | | | $ | 14,710 | | | $ | — | | | $ | — | | | $ | 15,745 | | | $ | 15,832 | |
Interest cost on projected benefit obligations | 2,022 | | | 1,644 | | | 4,497 | | | 2,551 | | | 9 | | | 6 | | | 6,528 | | | 4,201 | |
Expected return on plan assets | (4,642) | | | (4,482) | | | (27,398) | | | (26,726) | | | — | | | — | | | (32,040) | | | (31,208) | |
Recognition of prior service cost | — | | | — | | | (3,187) | | | (1,398) | | | (56) | | | (56) | | | (3,243) | | | (1,454) | |
Recognition of actuarial losses/(gains) | 1,753 | | | 2,186 | | | 14,304 | | | 18,756 | | | (23) | | | (28) | | | 16,034 | | | 20,914 | |
Net periodic pension cost/(credit) | $ | 381 | | | $ | 470 | | | $ | 2,713 | | | $ | 7,893 | | | $ | (70) | | | $ | (78) | | | $ | 3,024 | | | $ | 8,285 | |
As previously disclosed in the Company'sCompany’s Annual Report on Form 10-K for the year ended December 31, 2021,2022, the Company expects to make employer contributions of approximately $28.2$27.5 million to its non-U.S. pension plansplan during the year ended December 31, 2022.2023. These estimates may change based upon several factors, including fluctuations in currency exchange rates, actual returns on plan assets and changes in legal requirements.
12. OTHER CHARGES (INCOME), NET
Other charges (income), net includes non-service pension costs (benefits), (gains) losses from foreign currency transactions and related hedging activities, interest income and other items. Non-service pension benefits for the three months ended September 30,March 31, 2023 and 2022 and 2021 were $4.2$1.8 million and $2.5$4.3 million, respectively, and $12.7 million and $7.5 million for the nine months ended September 30, 2022 and 2021, respectively. Other charges (income), net also included $0.7 million and $2.8$0.5 million of acquisition costs for the ninethree months ended September 30, 2022 and 2021, respectively.March 31, 2022.
METTLER-TOLEDO INTERNATIONAL INC.
NOTES TO THE INTERIM CONSOLIDATED FINANCIAL STATEMENTS – Unaudited
(In thousands, except share data, unless otherwise stated)
13. SEGMENT REPORTING
As disclosed in Note 18 to the Company's consolidated financial statements for the year ended December 31, 2021,2022, the Company has determined there are five reportable segments: U.S. Operations, Swiss Operations, Western European Operations, Chinese Operations and Other.
METTLER-TOLEDO INTERNATIONAL INC.
NOTES TO THE INTERIM CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)
(In thousands, except share data, unless otherwise stated)
The Company evaluates segment performance based on Segment Profit (gross profit less research and development and selling, general and administrative expenses, before amortization, interest expense, restructuring charges, other charges (income), net and taxes).
The following tables show the operations of the Company’s operatingreportable segments:
| | | Net Sales to | | Net Sales to | | As of September 30, | | Net Sales to | | Net Sales to | |
For the three months ended | For the three months ended | External | | Other | | Total Net | | Segment | | 2022 | For the three months ended | External | | Other | | Total Net | | Segment | | |
September 30, 2022 | Customers | | Segments | | Sales | | Profit | | Goodwill | |
March 31, 2023 | | March 31, 2023 | Customers | | Segments | | Sales | | Profit | | Goodwill |
U.S. Operations | U.S. Operations | $ | 373,764 | | | $ | 35,077 | | | $ | 408,841 | | | $ | 93,823 | | | $ | 514,057 | | U.S. Operations | $ | 337,402 | | | $ | 33,248 | | | $ | 370,650 | | | $ | 81,796 | | | $ | 524,470 | |
Swiss Operations | Swiss Operations | 40,972 | | | 207,349 | | | 248,321 | | | 77,457 | | | 21,950 | | Swiss Operations | 46,369 | | | 202,134 | | | 248,503 | | | 76,422 | | | 25,195 | |
Western European Operations | Western European Operations | 180,959 | | | 49,486 | | | 230,445 | | | 38,950 | | | 86,222 | | Western European Operations | 199,424 | | | 44,876 | | | 244,300 | | | 44,523 | | | 97,558 | |
Chinese Operations | Chinese Operations | 229,722 | | | 79,285 | | | 309,007 | | | 123,345 | | | 606 | | Chinese Operations | 185,767 | | | 60,452 | | | 246,219 | | | 81,241 | | | 643 | |
Other (a) | Other (a) | 160,429 | | | 705 | | | 161,134 | | | 20,603 | | | 13,254 | | Other (a) | 159,776 | | | 957 | | | 160,733 | | | 24,243 | | | 13,876 | |
Eliminations and Corporate (b) | Eliminations and Corporate (b) | — | | | (371,902) | | | (371,902) | | | (47,008) | | | — | | Eliminations and Corporate (b) | — | | | (341,667) | | | (341,667) | | | (41,774) | | | — | |
Total | Total | $ | 985,846 | | | $ | — | | | $ | 985,846 | | | $ | 307,170 | | | $ | 636,089 | | Total | $ | 928,738 | | | $ | — | | | $ | 928,738 | | | $ | 266,451 | | | $ | 661,742 | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Net Sales to | | Net Sales to | | | | | | |
For the nine months ended | External | | Other | | Total Net | | Segment | | |
September 30, 2022 | Customers | | Segments | | Sales | | Profit | | |
U.S. Operations | $ | 1,060,730 | | | $ | 114,965 | | | $ | 1,175,695 | | | $ | 261,805 | | | |
Swiss Operations | 126,304 | | | 611,632 | | | 737,936 | | | 220,791 | | | |
Western European Operations | 564,108 | | | 147,087 | | | 711,195 | | | 112,963 | | | |
Chinese Operations | 642,237 | | | 234,847 | | | 877,084 | | | 313,769 | | | |
Other (a) | 468,645 | | | 2,377 | | | 471,022 | | | 63,298 | | | |
Eliminations and Corporate (b) | — | | | (1,110,908) | | | (1,110,908) | | | (138,779) | | | |
Total | $ | 2,862,024 | | | $ | — | | | $ | 2,862,024 | | | $ | 833,847 | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Net Sales to | | Net Sales to | | | | | | |
For the three months ended | External | | Other | | Total Net | | Segment | | |
March 31, 2022 | Customers | | Segments | | Sales | | Profit | | Goodwill |
U.S. Operations | $ | 325,821 | | | $ | 39,573 | | | $ | 365,394 | | | $ | 75,186 | | | $ | 514,022 | |
Swiss Operations | 43,270 | | | 193,835 | | | 237,105 | | | 71,322 | | | 23,198 | |
Western European Operations | 192,886 | | | 50,127 | | | 243,013 | | | 38,780 | | | 97,612 | |
Chinese Operations | 182,706 | | | 80,438 | | | 263,144 | | | 84,968 | | | 709 | |
Other (a) | 153,108 | | | 963 | | | 154,071 | | | 20,452 | | | 14,577 | |
Eliminations and Corporate (b) | — | | | (364,936) | | | (364,936) | | | (49,463) | | | — | |
Total | $ | 897,791 | | | $ | — | | | $ | 897,791 | | | $ | 241,245 | | | $ | 650,118 | |
(a)Other includes reporting units in Eastern Europe,Southeast Asia, Latin America, Southeast Asia and other countries.
(b)Eliminations and Corporate includes the elimination of inter-segment transactions and certain corporate expenses and intercompany investments, which are not included in the Company’s operating segments.
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Net Sales to | | Net Sales to | | | | | | As of September 30, |
For the three months ended | External | | Other | | Total Net | | Segment | | 2021 |
September 30, 2021 | Customers | | Segments | | Sales | | Profit | | Goodwill |
U.S. Operations | $ | 336,708 | | | $ | 36,895 | | | $ | 373,603 | | | $ | 72,638 | | | $ | 508,942 | |
Swiss Operations | 41,850 | | | 208,411 | | | 250,261 | | | 78,454 | | | 23,319 | |
Western European Operations | 198,632 | | | 52,259 | | | 250,891 | | | 40,288 | | | 91,228 | |
Chinese Operations | 210,460 | | | 79,001 | | | 289,461 | | | 108,636 | | | 696 | |
Other (a) | 164,300 | | | 835 | | | 165,135 | | | 24,381 | | | 14,999 | |
Eliminations and Corporate (b) | — | | | (377,401) | | | (377,401) | | | (51,587) | | | — | |
Total | $ | 951,950 | | | $ | — | | | $ | 951,950 | | | $ | 272,810 | | | $ | 639,184 | |
METTLER-TOLEDO INTERNATIONAL INC.
NOTES TO THE INTERIM CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)
(In thousands, except share data, unless otherwise stated)
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Net Sales to | | Net Sales to | | | | | | |
For the nine months ended | External | | Other | | Total Net | | Segment | | |
September 30, 2021 | Customers | | Segments | | Sales | | Profit | | |
U.S. Operations | $ | 931,977 | | | $ | 112,186 | | | $ | 1,044,163 | | | $ | 215,581 | | | |
Swiss Operations | 121,967 | | | 594,057 | | | 716,024 | | | 212,849 | | | |
Western European Operations | 592,704 | | | 160,386 | | | 753,090 | | | 116,630 | | | |
Chinese Operations | 572,055 | | | 220,608 | | | 792,663 | | | 275,323 | | | |
Other (a) | 461,988 | | | 3,207 | | | 465,195 | | | 65,967 | | | |
Eliminations and Corporate (b) | — | | | (1,090,444) | | | (1,090,444) | | | (147,612) | | | |
Total | $ | 2,680,691 | | | $ | — | | | $ | 2,680,691 | | | $ | 738,738 | | | |
(a)Other includes reporting units in Eastern Europe Latin America, Southeast Asia and other countries.
(b)Eliminations and Corporate includes the elimination of inter-segment transactions and certain corporate expenses and intercompany investments, which are not included in the Company’s operating segments.
A reconciliation of earnings before taxes to segment profit for the three and nine month periodsmonths ended September 30March 31 follows:
| | | Three Months Ended | | Nine Months Ended | | Three Months Ended |
| | 2022 | | 2021 | | 2022 | | 2021 | | March 31, 2023 | | March 31, 2022 |
Earnings before taxes | Earnings before taxes | $ | 275,885 | | | $ | 247,587 | | | $ | 745,578 | | | $ | 663,385 | | Earnings before taxes | $ | 226,610 | | | $ | 213,001 | |
Amortization | Amortization | 16,728 | | | 16,039 | | | 49,697 | | | 46,141 | | Amortization | 17,779 | | | 16,604 | |
Interest expense | Interest expense | 14,484 | | | 11,791 | | | 38,587 | | | 31,701 | | Interest expense | 18,184 | | | 11,338 | |
Restructuring charges | Restructuring charges | 2,022 | | | 650 | | | 7,803 | | | 2,719 | | Restructuring charges | 4,274 | | | 4,011 | |
Other income, net | (1,949) | | | (3,257) | | | (7,818) | | | (5,208) | | |
Other charges (income), net | | Other charges (income), net | (396) | | | (3,709) | |
Segment profit | Segment profit | $ | 307,170 | | | $ | 272,810 | | | $ | 833,847 | | | $ | 738,738 | | Segment profit | $ | 266,451 | | | $ | 241,245 | |
METTLER-TOLEDO INTERNATIONAL INC.
NOTES TO THE INTERIM CONSOLIDATED FINANCIAL STATEMENTS – Unaudited
(In thousands, except share data, unless otherwise stated)
14. CONTINGENCIES
The Company is party to various legal proceedings, including certain environmental matters, incidental to the normal course of business. Management does not expect that any of such proceedings, either individually or in the aggregate, will have a material adverse effect on the Company’s financial condition, results of operations or cash flows.
Item 2.Management's Discussion and Analysis of Financial Condition and Results of Operations
The following discussion and analysis of our financial condition and results of operations should be read in conjunction with the Unaudited Interim Consolidated Financial Statements included herein.
General
Our interim consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America. Operating results for the three and nine months ended September 30, 2022March 31, 2023 are not necessarily indicative of the results to be expected for the full year ending December 31, 2022.2023.
Changes in local currencycurrencies exclude the effect of currency exchange rate fluctuations. Local currency amounts are determined by translating current and previous year consolidated financial information at an index utilizing historical currency exchange rates. We believe local currency information provides a helpful assessment of business performance and a useful measure of results between periods. We do not, nor do we suggest that investors should, consider such non-GAAP financial measures in isolation from, or as a substitute for, financial information prepared in accordance with GAAP. We present non-GAAP financial measures in reporting our financial results to provide investors with an additional analytical tool to evaluate our operating results.
We also include in the discussion below disclosures of immaterial qualitative factors that are not quantified. Although the impact of such factors is not considered material, we believe these disclosures can be useful in evaluating our operating results.
COVID-19Results of Operations – Consolidated
Since late 2019,The following tables set forth items from our interim consolidated statements of operations and comprehensive income for the coronavirus pandemic (COVID-19) has spread globallythree month periods ended March 31, 2023 and 2022 (amounts in all countries where we conduct business. The COVID-19 pandemic is evolvingthousands).
| | | | | | | | | | | | | | | | | | | | | | | |
| Three months ended March 31, |
| 2023 | | 2022 |
| (unaudited) | | % | | (unaudited) | | % |
Net sales | $ | 928,738 | | | 100.0 | | | $ | 897,791 | | | 100.0 | |
Cost of sales | 382,172 | | | 41.1 | | | 378,206 | | | 42.1 | |
Gross profit | 546,566 | | | 58.9 | | | 519,585 | | | 57.9 | |
Research and development | 45,477 | | | 4.9 | | | 43,028 | | | 4.8 | |
Selling, general and administrative | 234,638 | | | 25.3 | | | 235,312 | | | 26.2 | |
Amortization | 17,779 | | | 1.9 | | | 16,604 | | | 1.8 | |
Interest expense | 18,184 | | | 2.0 | | | 11,338 | | | 1.3 | |
Restructuring charges | 4,274 | | | 0.4 | | | 4,011 | | | 0.5 | |
Other charges (income), net | (396) | | | — | | | (3,709) | | | (0.4) | |
Earnings before taxes | 226,610 | | | 24.4 | | | 213,001 | | | 23.7 | |
Provision for taxes | 38,184 | | | 4.1 | | | 39,000 | | | 4.3 | |
Net earnings | $ | 188,426 | | | 20.3 | | | $ | 174,001 | | | 19.4 | |
Net sales
Net sales were $928.7 million for the three months ended March 31, 2023, compared to $897.8 million for the corresponding period in 2022. This represents an increase in U.S. dollars of 3%. Excluding the effect of currency exchange rate fluctuations, or in local currencies, net sales increased 7% for the three months ended March 31, 2023. We experienced broad-based growth in most businesses and has led to the implementation of various responses, including government-imposed quarantines, stay-at-home orders and lockdowns, travel restrictions, vaccination and testing requirements, and other public health safety measures. These restrictions continue to change as COVID-19 evolves, variants and subvariants are discovered, and vaccinations and booster doses are distributed in each country and region. The emergence of COVID-19 variants and subvariants have presented particular challenges to the global economy given the high level of transmissibility, which can cause many people to be affected at the same time or over a short period of time. For example, China continues to institute lockdowns in certain cities as part of the government's response to COVID-19 outbreaks. The location and length of potential future lockdowns will determine the extent to which any lockdowns impact our business and supply chain, as well as the Chinese and global economies.regions. We continue to monitor and comply with all global restrictions and requirements relating to COVID-19.
The health and safetybenefit from the execution of our employeesglobal sales and business partners have beenmarketing programs, our highest priority throughoutinnovative product portfolio, and investments in our field organization, particularly surrounding digital tools and techniques. However, there is uncertainty in the COVID-19 pandemic, and we have implemented several preventative and protective measures. We also have continued to support our customers with their essential businesses, such as life sciences, food manufacturing, chemicals (e.g., sanitizers, disinfectants, soaps, etc.), food retail, and transportation and logistics.
Our production and logistics facilities are currently operational, and our employees continue to adhere to any applicable jurisdictional lockdowns and stay-at-home orders. Our supply chain is currently facing wide-ranging global challenges, although we have been able to meet delivery requirements of our customers with some interruption. We continue to closely monitor risks associated with our supply chain, including ongoing and potential future lockdowns in China, availability of certain components, material shortages, supplier delays, potential transportation delays, and higher transportation and material costs, which could significantly adversely affect sales and/or profitability in future quarters. We also continue to leverage our digital and remote sales capabilities, and our service organization continues to provide on-site and remote customer support to facilitate uptime, productivity, and regulatory compliance.economic
COVID-19 presentsenvironment and our end markets, including the risk of recession in many countries, and market conditions may change quickly. The ongoing developments related to Ukraine and inflation also present several risks to our business as further described in Part I, Item 1A of our Annual Report on Form 10-K for the year ended December 31, 2021. Uncertainties related to COVID-19 and the resulting impact to the global economy continue in most regions of the world and market conditions can change quickly. The longer-term effects on our business will be impacted by the global economy and any recession implications in different regions of the world.
Ongoing Developments Related to Ukraine
In 2021, approximately 1% of our net sales were in Russia and Ukraine, and we have an immaterial amount of assets and liabilities in both countries as of September 30, 2022. We also do not have manufacturing in Russia or Ukraine.
We remain in constant contact with our employees in Ukraine and have provided financial assistance and supplies as they seek safety. We also have suspended all shipments to Russia since the beginning of the invasion of Ukraine in February 2022. In addition, the U.S., the European Union, and certain other countries imposed economic sanctions on Russian financial institutions, businesses in Russia, and on Russian interests and individuals, and the Russian government implemented sanctions and regulations in response. Also, due to the impact of reduced energy supplies from Russia, the Council of the European Union (EU Council) proposed that all European member states strive for a voluntary 15% reduction in gas consumption compared to their average consumption over the last five years. The reduction timeframe commenced August 1, 2022 and is expected to continue through March 31, 2023. Accordingly, the availability and cost of energy will continue to be impacted.
While it is difficult to estimate the impact of the ongoing invasion on the global economy, including increased inflation, higher energy and transportation costs and potential energy shortages, the invasion of UkraineThese topics could adversely impact our financial results and presents several risks tocould have a greater impact on our business as further describedoperating results in Part II, Item 1A, “Risk Factors” of this Quarterly Report. Uncertainties related to this conflict and the resulting impact to the global economy and market conditions can change quickly.
Results of Operations – Consolidated
The following tables set forth certain items from our interim consolidated statements of operations for the three and nine month periods ended September 30, 2022 and 2021 (amounts in thousands).
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Three months ended September 30, | | Nine months ended September 30, |
| 2022 | | 2021 | | 2022 | | 2021 |
| (unaudited) | | % | | (unaudited) | | % | | (unaudited) | | % | | (unaudited) | | % |
Net sales | $ | 985,846 | | | 100.0 | | | $ | 951,950 | | | 100.0 | | | $ | 2,862,024 | | | 100.0 | | | $ | 2,680,691 | | | 100.0 | |
Cost of sales | 401,190 | | | 40.7 | | | 396,130 | | | 41.6 | | | 1,186,122 | | | 41.4 | | | 1,116,271 | | | 41.6 | |
Gross profit | 584,656 | | | 59.3 | | | 555,820 | | | 58.4 | | | 1,675,902 | | | 58.6 | | | 1,564,420 | | | 58.4 | |
Research and development | 44,129 | | | 4.5 | | | 42,276 | | | 4.4 | | | 131,180 | | | 4.6 | | | 124,151 | | | 4.6 | |
Selling, general and administrative | 233,357 | | | 23.7 | | | 240,734 | | | 25.3 | | | 710,875 | | | 24.8 | | | 701,531 | | | 26.2 | |
Amortization | 16,728 | | | 1.7 | | | 16,039 | | | 1.7 | | | 49,697 | | | 1.7 | | | 46,141 | | | 1.7 | |
Interest expense | 14,484 | | | 1.5 | | | 11,791 | | | 1.2 | | | 38,587 | | | 1.3 | | | 31,701 | | | 1.2 | |
Restructuring charges | 2,022 | | | 0.2 | | | 650 | | | 0.1 | | | 7,803 | | | 0.3 | | | 2,719 | | | 0.1 | |
Other charges (income), net | (1,949) | | | (0.3) | | | (3,257) | | | (0.3) | | | (7,818) | | | (0.2) | | | (5,208) | | | (0.2) | |
Earnings before taxes | 275,885 | | | 28.0 | | | 247,587 | | | 26.0 | | | 745,578 | | | 26.1 | | | 663,385 | | | 24.8 | |
Provision for taxes | 55,288 | | | 5.6 | | | 43,899 | | | 4.6 | | | 138,910 | | | 4.9 | | | 125,271 | | | 4.7 | |
Net earnings | $ | 220,597 | | | 22.4 | | | $ | 203,688 | | | 21.4 | | | $ | 606,668 | | | 21.2 | | | $ | 538,114 | | | 20.1 | |
Net sales
Net sales were $985.8 million and $952.0 million for the three months ended September 30, 2022, and 2021, respectively, and $2.9 billion and $2.7 billion for the nine months ended September 30, 2022 and 2021, respectively. This represents an increase of 4% and 7% in U.S. dollars for the three and nine months ended September 30, 2022, respectively. Excluding the effect
of currency exchange rate fluctuations, or in local currencies, net sales increased 10% and 11% for the three and nine months ended September 30, 2022, respectively. We experienced strong growth in most businesses with excellent execution and lower growth in Europe. We continue to benefit from our best-in-class sales and marketing programs, innovative product portfolio, and investments in our field service organization. However, uncertainties exist in the macro environment and global economy including the impact of COVID-19, related lockdowns in China, and the impact from the ongoing developments related to Ukraine. Furthermore, we face continuing challenges in the global supply chain and inflationary cost increases, and market conditions may change quickly.future periods.
Net sales by geographic destination for the three months ended September 30, 2022March 31, 2023 in U.S. dollars increased 11%5% in the Americas and 7%2% in both Europe and in Asia/Rest of World and decreased 12% in Europe.World. In local currencies, our net sales by geographic destination increased 11%6% in both the Americas 1%and in Europe, and 15% in Asia/Rest of World. Our net sales by geographic destination for the nine months ended September 30, 2022 in U.S. dollars increased 13% in the Americas and 10% in Asia/Rest of World, and decreased 5% in Europe. Net sales by geographic destination for the nine months ended September 30, 2022 in local currencies increased 13% in the Americas, 5% in Europe, and 15% in Asia/Rest of World. Net sales in the Americas benefited approximately 1% from the PendoTECH acquisition for the nine months ended September 30, 2022. Net sales growth in Asia/Rest of World in local currency includes 15%with 9% growth in China, duringfor the three and nine months ended September 30,March 31, 2023 compared to the corresponding period in 2022. A discussion of sales by operating segment is included below.
As described in Note 18 to our consolidated financial statements for the year ended December 31, 2021,2022, our net sales comprise product sales of precision instruments and related services. Service revenues are primarily derived from repair and other services, including regulatory compliance qualification, calibration, certification, preventative maintenance and spare parts.
Net sales of products increased 3%1% in U.S. dollars and 9%5% in local currenciescurrency for the three months ended September 30, 2022 and increased 7% in U.S. dollars and 11% in local currencies for the nine months ended September 30, 2022,March 31, 2023 compared to the corresponding periods in 2021.prior period. Service revenue (including spare parts) increased by 6%11% in U.S. dollars and 13%15% in local currencies forcurrency during the three months ended September 30, 2022 and increased 6% in U.S. dollars and 12% in local currencies for the nine months ended September 30, 2022,March 31, 2023 compared to the corresponding periodsperiod in 2021.2022.
Net sales of our laboratory products and services, which represented approximately 56% of our total net sales increased 3% in U.S. dollars and 10% in local currencies for the three months ended September 30, 2022, and March 31, 2023, increased 9% 1% in U.S. dollars and 13%5% in local currencies forduring the ninethree months ended September 30, 2022. March 31, 2023.The local currencycurrency increase in net sales of our laboratory-related products for the three and nine months ended September 30, 2022 includes very strong growth in most product categories. Net sales of our laboratorycategories offset in part by a significant decline in pipette products also benefited approximately 1% from the PendoTECH acquisition for the nine months ended September 30, 2022.primarily related to customer inventory reductions.
Net sales of our industrial products and services, which represented approximately 39%38% of our total net sales increased 4% in U.S. dollars and 10% in local currencies for the three months ended September 30, 2022, andMarch 31, 2023, increased 6%3% in U.S. dollars and 10%7% in local currencies forduring the ninethree months ended September 30, 2022.March 31, 2023. The local currency increase in net sales of our industrial-related products for the three and nine months ended September 30, 2022March 31, 2023 includes very strong growth in our core industrial business, especially in the U.S. and China.product inspection.
Net sales in our food retailing products and services, which represented approximately 5%6% of our total net sales decreased 2% in U.S. dollars and increased 7% in local currencies for the three months ended September 30, 2022, and decreased 8%March 31, 2023, increased 32% in U.S. dollars and 2%36% in local currencies for the nine months ended September 30, 2022. Food retailing forduring the three months ended September 30, 2022 includedMarch 31, 2023. The increase in food retailing includes very strong growthproject activity in the Americas offset in part by reduced sales in China. The local currency decrease in net sales in our food retailing products for the nine months ended September 30, 2022 was negatively impacted by weak market dynamics, especially in China, offset in part by very strong growth in the Americas.
Gross profit
Gross profit as a percentage of net sales was 59.3% and 58.4%58.9% for the three months ended September 30, 2022 and 2021, respectively, and 58.6% and 58.4%March 31, 2023 compared to 57.9% for the nine months ended September 30, 2022 and 2021, respectively.corresponding period in 2022.
Gross profit as a percentage of net sales for products was 61.1%60.1% and 60.0%59.1% for the three monthsmonth periods ended September 30, 2022March 31, 2023 and 2021, respectively, and 60.3% and 60.3% for the nine months ended September 30, 2022 and 2021.2022.
Gross profit as a percentage of net sales for services (including spare parts) was 52.5% and 51.9%54.7% for the three months ended September 30, 2022 and 2021, respectively, and 52.0% and 51.0%March 31, 2023 compared to 53.4% for the nine months ended September 30, 2022 and 2021, respectively.corresponding period in 2022.
The increase in gross profit as a percentage of net sales for the three and nine months ended September 30, 2022March 31, 2023 primarily reflects favorable price realization, and increased sales volume,partially offset in part by higher material costs.costs, business mix and unfavorable foreign currency.
Research and development and selling, general and administrative expenses
Research and development expenses as a percentage of net sales was 4.5% and 4.4%4.9% for the three months ended September 30,March 31, 2023 compared to 4.8% in the corresponding period during 2022, and 2021, respectively, and was 4.6% for the nine months ended September 30, 2022 and 2021.respectively. Research and development expenses increased 4% in U.S. dollars and 10% in local currencies for the three months ended September 30, 2022, and increased 6% in U.S. dollars and 10%9% in local currencies, forduring the ninethree months ended September 30, 2022, respectively,March 31, 2023 compared to the corresponding periodsperiod in 2021. The local currency increase primarily relates2022 due to increased project activity.
Selling, general and administrative expenses as a percentage of net sales were 23.7% and 25.3% for the three months ended September 30,March 31, 2023 compared to 26.2% in the corresponding period during 2022, and 2021, respectively, and were 24.8% and 26.2% for the nine months ended September 30, 2022 and 2021, respectively. Selling, general and administrative expenses decreased 3%was flat in U.S. dollars and increased 3%2% in local currencies, forduring the three months ended September 30, 2022, and increased 1%March 31, 2023 compared to the corresponding period in U.S. dollars and 6% in local currencies for the nine months ended September 30, 2022. The local currency increase includes investments in sales and marketing.marketing initiatives offset in part by lower incentive compensation and cost savings.
Amortization, interest expense, restructuring charges, other charges (income), net and taxes
Amortization expense was $16.7 million and $16.0$17.8 million for the three months ended September 30, 2022March 31, 2023 and 2021, respectively, and $49.7 million and $46.1$16.6 million for the nine months ended September 30, 2022 and 2021, respectively.corresponding period in 2022.
Interest expense was $14.5 million and $11.8$18.2 million for the three months ended September 30, 2022March 31, 2023 and 2021, respectively, and $38.6 million and $31.7$11.3 million for the nine months ended September 30, 2022 and 2021, respectively.corresponding period in 2022. The increase in interest expense is related to higher variable interest rates, as well as additional borrowings.
Restructuring charges were $2.0$4.3 million and $0.7$4.0 million for the three months ended September 30,March 31, 2023 and 2022, and 2021, respectively, and $7.8 million and $2.7 million for the nine months ended September 30, 2022 and 2021, respectively. Restructuring expenses are primarily comprised of employee-related costs.
Other charges (income), net includes non-service pension costs (benefits), net (gains) losses from foreign currency transactions and hedging activities, interest income and other items. Non-service pension benefits were $4.2 million and $2.5 million for the three months ended September 30,March 31, 2023 and 2022 and 2021, respectively, and $12.7were $1.8 million and $7.5$4.3 million, and for the nine months ended September 30, 2022 and 2021, respectively. Other charges (income), net also included $0.7 million and $2.8$0.5 million of acquisition costs for the ninethree months ended September 30, 2022 and 2021, respectively.
Our reported tax rate was 20.0%16.9% and 17.7%18.3% during the three months ended September 30,March 31, 2023 and 2022, and 2021, respectively, and 18.6% and 18.9% during the nine months ended September 30, 2022 and 2021, respectively. The provision for taxes is based upon using our projected annual effective tax rate of 19%18.5% and 19.5%19.0% before non-recurring discrete tax items for the periodsthree months ended September 30,March 31, 2023 and 2022, and 2021, respectively. The difference between our projected annual effective tax rate and the reported tax rate is related to the timing of excess tax benefits associated with stock option exercises.
Results of Operations – by Operating Segment
The following is a discussion of the financial results of our operating segments. We currently have five reportable segments: U.S. Operations, Swiss Operations, Western European Operations, Chinese Operations, and Other. A more detailed description of these segments is outlined in Note 18 to our consolidated financial statements for the year ended December 31, 2021.2022.
U.S. Operations (amounts in thousands)
| | | Three months ended September 30, | | Nine months ended September 30, | | | Three months ended March 31, |
| | 2022 | | 2021 | | % | | 2022 | | 2021 | | % | | 2023 | | 2022 | | % |
Total net sales | Total net sales | $ | 408,841 | | | $ | 373,603 | | | 9% | | $ | 1,175,695 | | | $ | 1,044,163 | | | 13% | Total net sales | $ | 370,650 | | | $ | 365,394 | | | 1 | % |
Net sales to external customers | Net sales to external customers | $ | 373,764 | | | $ | 336,708 | | | 11% | | $ | 1,060,730 | | | $ | 931,977 | | | 14% | Net sales to external customers | $ | 337,402 | | | $ | 325,821 | | | 4 | % |
Segment profit | Segment profit | $ | 93,823 | | | $ | 72,638 | | | 29% | | $ | 261,805 | | | $ | 215,581 | | | 21% | Segment profit | $ | 81,796 | | | $ | 75,186 | | | 9 | % |
Total net sales increased 9% and 13% for the three and nine months ended September 30, 2022, respectively, compared with the corresponding periods in 2021. Netnet sales to external customers increased 11%1% and 14%4%, respectively for the three and nine months ended September 30, 2022, respectively,March 31, 2023 compared with the corresponding periodsperiod in 2021. Net2022. The increase in total net sales and net sales to external customers for the three and nine months ended September 30, 2022 March 31, 2023
includes strong growth in most product categories, particularly industrialespecially food retailing, partially offset by a significant decline in pipette products.
Segment profit increased $6.6 million for the three months ended March 31, 2023 compared to the corresponding period in 2022. Segment profit during the three months ended March 31, 2023 includes benefits from our margin expansion and food retailing.cost savings initiatives, offset in part by unfavorable business mix.
Swiss Operations (amounts in thousands)
| | | | | | | | | | | | | | | | | |
| Three months ended March 31, |
| 2023 | | 2022 | | %1) |
Total net sales | $ | 248,503 | | | $ | 237,105 | | | 5 | % |
Net sales to external customers | $ | 46,369 | | | $ | 43,270 | | | 7 | % |
Segment profit | $ | 76,422 | | | $ | 71,322 | | | 7 | % |
1) Represents U.S. dollar growth.
Total net sales increased 5% in both U.S. dollars in local currency for the three months ended March 31, 2023 compared to the corresponding period in 2022. Net sales to external customers increased 7% in ourboth U.S. Operations also benefited approximately 1% fromdollars and in local currency during the PendoTECH acquisitionthree months ended March 31, 2023 compared to the corresponding period in 2022. The increase in local currency net sales to external customers for the nine monthsthree month period ended September 30, 2022.March 31, 2023 includes particularly strong growth in food retailing and excellent results in industrial, offset in part by a decline in laboratory products, especially pipette products.
Segment profit increased $21.2 million and $46.2$5.1 million for the three and nine monthsmonth period ended September 30, 2022, respectively,March 31, 2023 compared to the corresponding periodsperiod in 2021.2022. Segment profit during the three and nine months ended September 30, 2022March 31, 2023 includes higher net sales volume and benefits from our margin expansion initiatives, offset in part by higher material costs.unfavorable business mix and foreign currency translation.
SwissWestern European Operations (amounts in thousands)
| | | Three months ended September 30, | | Nine months ended September 30, | | | Three months ended March 31, |
| | 2022 | | 2021 | | %1) | | 2022 | | 2021 | | %1) | | 2023 | | 2022 | | %1) |
Total net sales | Total net sales | $ | 248,321 | | | $ | 250,261 | | | (1)% | | $ | 737,936 | | | $ | 716,024 | | | 3% | Total net sales | $ | 244,300 | | | $ | 243,013 | | | 1 | % |
Net sales to external customers | Net sales to external customers | $ | 40,972 | | | $ | 41,850 | | | (2)% | | $ | 126,304 | | | $ | 121,967 | | | 4% | Net sales to external customers | $ | 199,424 | | | $ | 192,886 | | | 3 | % |
Segment profit | Segment profit | $ | 77,457 | | | $ | 78,454 | | | (1)% | | $ | 220,791 | | | $ | 212,849 | | | 4% | Segment profit | $ | 44,523 | | | $ | 38,780 | | | 15 | % |
1)Represents U.S. dollar growth (decline) for net sales and segment profit.
growth.
Total net sales decreasedincreased 1% in U.S. dollars and increased 4%7% in local currency forcurrencies during the three months ended September 30, 2022, andMarch 31, 2023 compared to the corresponding period in 2022. Net sales to external customers increased 3% in U.S. dollars and 7%increased 9% in local currency forcurrencies during the ninethree months ended September 30, 2022, respectively,March 31, 2023 compared to the corresponding periodsperiod in 2021. Net2022. Local currency net sales to external customers for the three months ended March 31, 2023 includes strong growth in most product categories, especially in food retailing, process analytics, and core-industrial, offset in part by a significant decline in pipette products.
Segment profit increased $5.7 million for the three month period ended March 31, 2023 compared to the corresponding period in 2022. Segment profit increased during the three months ended March 31, 2023 primarily due to benefits from our margin expansion and cost savings initiatives, offset in part by unfavorable business mix and foreign currency translation.
Chinese Operations (amounts in thousands)
| | | | | | | | | | | | | | | | | |
| Three months ended March 31, |
| 2023 | | 2022 | | %1) |
Total net sales | $ | 246,219 | | | $ | 263,144 | | | (6) | % |
Net sales to external customers | $ | 185,767 | | | $ | 182,706 | | | 2 | % |
Segment profit | $ | 81,241 | | | $ | 84,968 | | | (4) | % |
1) Represents U.S. dollar growth.
Total net sales decreased 2%6% in U.S. dollars and increased 1% in local currency for the three months ended September 30, 2022 andMarch 31, 2023 compared to the corresponding period in 2022. Net sales to external customers by origin increased 4%2% in U.S. dollars and 7%9% in local currency for the ninethree months ended September 30, 2022,March 31, 2023 compared to the corresponding periodsperiod in 2021.2022. The increase in local currency net sales to external customers for the three and nine months ended September 30, 2022 includes growth in laboratory and industrial products.
Segment profit decreased $1.0 million and increased $7.9 million the three and nine months ended September 30, 2022, compared to the corresponding periods in 2021. Segment profit during the nine months ended September 30, 2022 includes higher net sales volume and benefits from our margin expansion initiatives, offset in part by unfavorable foreign currency translation and higher material costs.
Western European Operations (amounts in thousands)
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Three months ended September 30, | | | | Nine months ended September 30, | | |
| 2022 | | 2021 | | %1) | | 2022 | | 2021 | | %1) |
Total net sales | $ | 230,445 | | | $ | 250,891 | | | (8)% | | $ | 711,195 | | | $ | 753,090 | | | (6)% |
Net sales to external customers | $ | 180,959 | | | $ | 198,632 | | | (9)% | | $ | 564,108 | | | $ | 592,704 | | | (5)% |
Segment profit | $ | 38,950 | | | $ | 40,288 | | | (3)% | | $ | 112,963 | | | $ | 116,630 | | | (3)% |
1)Represents U.S. dollar growth (decline) for net sales and segment profit.
Total net sales decreased 8% in U.S. dollars and increased 8% in local currencies for the three months ended September 30, 2022 and decreased 6% in U.S. dollars and increased 6% in local currencies for the nine months ended September 30, 2022, compared to the corresponding periods in 2021. Net sales to external customers decreased 9% in U.S. dollars and increased 7% in local currencies for the three months ended September 30, 2022, and decreased 5% in U.S. dollars and increased 7% in local currencies for the nine months ended September 30, 2022, compared to the corresponding periods in 2021. The increase in local currency net sales to external customers for the three and nine months ended September 30, 2022 includes solidMarch 31, 2023 reflects very strong growth in most product categories, especially laboratory products, with modest growth in industrial products. However, uncertainties exist and core-industrial products. Net salesmarket conditions may change quickly. We also will continue to external customers for the three months ended September 30, 2022 includes declinesface difficult prior period comparisons in pipettes and product inspection.2023 relating to our strong prior years performance.
Segment profit decreased $1.3 million and $3.7 million for the three and nine month periodsperiod ended September 30, 2022, respectively,March 31, 2023 compared to the corresponding periodsperiod in 2021. Segment2022. The decrease in segment profit decreased duringfor the three and nine monthsmonth period ended September 30, 2022March 31, 2023 primarily duerelates to unfavorable currency translation and higher material costs,lower inter-segment sales, offset in part by higherincreased sales volumeto external customers and benefits from our margin expansion initiatives.
Chinese OperationsOther (amounts in thousands)
| | | Three months ended September 30, | | Nine months ended September 30, | | | Three months ended March 31, |
| | 2022 | | 2021 | | %1) | | 2022 | | 2021 | | %1) | | 2023 | | 2022 | | %1) |
Total net sales | Total net sales | $ | 309,007 | | | $ | 289,461 | | | 7% | | $ | 877,084 | | | $ | 792,663 | | | 11% | Total net sales | $ | 160,733 | | | $ | 154,071 | | | 4 | % |
Net sales to external customers | Net sales to external customers | $ | 229,722 | | | $ | 210,460 | | | 9% | | $ | 642,237 | | | $ | 572,055 | | | 12% | Net sales to external customers | $ | 159,776 | | | $ | 153,108 | | | 4 | % |
Segment profit | Segment profit | $ | 123,345 | | | $ | 108,636 | | | 14% | | $ | 313,769 | | | $ | 275,323 | | | 14% | Segment profit | $ | 24,243 | | | $ | 20,452 | | | 19 | % |
1)Represents U.S. dollar growth for net sales and segment profit.growth.
Total net sales increased 7% in U.S. dollars and 13% in local currency for the three months ended September 30, 2022 and increased 11% in U.S. dollars and 13% in local currency for the nine months ended September 30, 2022, compared to the corresponding periods in 2021. Netnet sales to external customers both increased 9% in U.S. dollars and 15% in local currency by origin for the three months ended September 30, 2022 and increased 12% in U.S. dollars and 15% in local currency during the nine months ended September 30, 2022, compared to the corresponding periods in 2021. Net sales to external customers during the three and nine months ended September 30, 2022 includes very strong growth in laboratory and core-industrial products, offset in part by a decline in food retailing. However, uncertainties exist, especially relating to potential additional COVID-19 lockdowns and the related impact on the economy, and market conditions may change quickly.
Segment profit increased $14.7 million and $38.4 million for the three and nine month periods ended September 30, 2022, respectively, compared to the corresponding periods in 2021.
The increase in segment profit for the three and nine months ended September 30, 2022 primarily reflects increased sales volume and benefits from our margin expansion initiatives, offset in part by unfavorable currency translation and higher material costs.
Other (amounts in thousands)
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Three months ended September 30, | | | | Nine months ended September 30, | | |
| 2022 | | 2021 | | %1) | | 2022 | | 2021 | | %1) |
Total net sales | $ | 161,134 | | | $ | 165,135 | | | (2)% | | $ | 471,022 | | | $ | 465,195 | | | 1% |
Net sales to external customers | $ | 160,429 | | | $ | 164,300 | | | (2)% | | $ | 468,645 | | | $ | 461,988 | | | 1% |
Segment profit | $ | 20,603 | | | $ | 24,381 | | | (15)% | | $ | 63,298 | | | $ | 65,967 | | | (4)% |
1)Represents U.S. dollar growth for net sales and segment profit.
Net sales to external customers decreased 2% in U.S. dollars and increased 7% in local currencies for the three months ended September 30, 2022 and increased 1%4% in U.S. dollars and 9% in local currencies forduring the nine monthsthree month period ended September 30, 2022,March 31, 2023 compared to the corresponding periodsperiod in 2021.2022. The increase in net sales to external customers for the three and nine months ended September 30, 2022 includes particularly strongsolid growth in laboratory products.most product categories.
Segment profit decreasedincreased $3.8 million and $2.7 million for the three and nine months ended September 30, 2022, respectively,March 31, 2023 compared to the corresponding periodsperiod in 2021.2022. The decreaseincrease in segment profit for the three and nine months ended September 30, 2022 is primarily related to our margin expansion initiatives and increased sales volume, offset in part by unfavorable foreign currency translation and higher material costs, offset by increased sales volume.translation.
Liquidity and Capital Resources
Liquidity is our ability to generate sufficient cash flows from operating activities to meet our obligations and commitments. In addition, liquidity includes available borrowings under our Credit Agreement, the ability to obtain appropriate financing and our cash and cash equivalent balances. Currently, our liquidity needs are primarily driven by working capital requirements, capital expenditures, share repurchases and acquisitions. Global market conditions can be uncertain, and our ability to generate cash flowflows could be reduced by a deterioration in global markets.
We currently believe that cash flows from operating activities, together with liquidity available under our Credit Agreement, local working capital facilities, and cash balances, will be sufficient to fund currently anticipated working capital needs and spending requirements for at least the foreseeable future.
Cash provided by operating activities totaled $555.4$153.3 million during the ninethree months ended September 30, 2022,March 31, 2023, compared to $667.7$90.8 million in the corresponding period in 2021.2022. The decreaseincrease for the ninethree months ended September 30,March 31, 2022 compared to the prior year is primarily related to higherworking capital, especially inventory, and lower cash incentive payments related to our strong previous year performance, as well as increased inventory levels.of $20 million.
Capital expenditures are made primarily for investments in information systems andsystems and technology, machinery, equipment and the purchase and expansion of facilities. Our capital expenditures totaled $89.2$23.2 million for the ninethree months ended September 30, 2022March 31, 2023 compared to $69.8$19.2 million in the corresponding period in 2021.2022.
In September 2021, we entered into an agreement with the U.S. Department of Defense to increase domestic production capacity of pipette tips and enhance manufacturing automation and logistics. As of September 30, 2022,March 31, 2023, we have obtained $28.7$29.7 million of the $35.8 million of total funding to be received through 2023, which will offset associatedfuture capital expenditures. During the ninethree months ended September 30,March 31, 2023 and 2022, we incurred approximately $28.6$3.3 million and $1.7 million, respectively, of capital expenditures relating to this funding agreement.
We continue to explore potential acquisitions. In connection with any acquisition, we may incur additional indebtedness. During the nine months ended September 30, 2022, $10.0 million of
contingent consideration was paid relating to the PendoTECH acquisition of which $7.9 million is included in financing activities for the amount accrued at the acquisition date and $2.1 million is included in operating activities for the amount not accrued at the acquisition date on the Consolidated Statement of Cash Flows in accordance with U.S. GAAP.
In 2022, we also incurred acquisition payments totaling $25.6 million. Goodwill recorded in connection with these acquisitions totaled $8.9 million. We also recorded $10.7 million of identified intangibles primarily pertaining to customer relationships in connection with these acquisitions, which will be amortized on a straight-line basis over 10 to 15 years.
Cash flows used in financing activities are primarily comprised of share repurchases. In accordance with our share repurchase program, we spent $825.0$250.0 million and $727.5$275.0 million on the repurchase of 629,380166,628 shares and 557,310190,593 shares, during the ninethree months ended September 30,March 31, 2023 and 2022, and 2021, respectively.
The Inflation Reduction Act (IRA) was enacted on August 16, 2022. The IRA includes provisions imposing a 1% excise tax on net share repurchases that occur after December 31, 2022 with payments expected to commence in 2024, and introduces a 15% corporate alternative minimum tax (CAMT) on adjusted financial statement income. We expect the financial impact of the IRA to be immaterial to our financial statements.
Senior Notes and Credit Facility Agreement
Our debt consisted of the following at September 30, 2022:
| | | | | | | | | | | | | | | | | |
| U.S. Dollar | | Other Principal Trading Currencies | | Total |
3.67% $50 million ten-year Senior Notes due December 17, 2022 | $ | 50,000 | | | $ | — | | | $ | 50,000 | |
4.10% $50 million ten-year Senior Notes due September 19, 2023 | 50,000 | | | — | | | 50,000 | |
3.84% $125 million ten-year Senior Notes due September 19, 2024 | 125,000 | | | — | | | 125,000 | |
4.24% $125 million ten-year Senior Notes due June 25, 2025 | 125,000 | | | — | | | 125,000 | |
3.91% $75 million ten-year Senior Notes due June 25, 2029 | 75,000 | | | — | | | 75,000 | |
2.83% $125 million twelve-year Senior Notes due July 22, 2033 | 125,000 | | | — | | | 125,000 | |
3.19% $50 million fifteen-year Senior Notes due January 24, 2035 | 50,000 | | | — | | | 50,000 | |
2.81% $150 million fifteen-year Senior Note due March 17, 2037 | 150,000 | | | — | | | 150,000 | |
2.91% $150 million fifteen-year Senior Note due September 1, 2037 | 150,000 | | | — | | | 150,000 | |
1.47% Euro 125 million fifteen-year Senior Notes due June 17, 2030 | — | | | 120,301 | | | 120,301 | |
1.30% Euro 135 million fifteen-year Senior Notes due November 6, 2034 | — | | | 129,925 | | | 129,925 | |
1.06% Euro 125 million fifteen-year Senior Notes due March 19, 2036 | — | | | 120,301 | | | 120,301 | |
Debt issuance costs, net | (2,398) | | | (1,521) | | | (3,919) | |
Total Senior Notes | 897,602 | | | 369,006 | | | 1,266,608 | |
$1.25 billion Credit Agreement, interest at LIBOR plus 87.5 basis points | 495,806 | | | 159,149 | | | 654,955 | |
Other local arrangements | 4,563 | | | 52,766 | | | 57,329 | |
Total debt | 1,397,971 | | | 580,921 | | | 1,978,892 | |
Less: current portion | (100,983) | | | (52,656) | | | (153,639) | |
Total long-term debt | $ | 1,296,988 | | | $ | 528,265 | | | $ | 1,825,253 | |
March 31, 2023: | | | | | | | | | | | | | | | | | |
| U.S. Dollar | | Other Principal Trading Currencies | | Total |
4.10% $50 million ten-year Senior Notes due September 19, 2023 | 50,000 | | | — | | | 50,000 | |
3.84% $125 million ten-year Senior Notes due September 19, 2024 | 125,000 | | | — | | | 125,000 | |
4.24% $125 million ten-year Senior Notes due June 25, 2025 | 125,000 | | | — | | | 125,000 | |
3.91% $75 million ten-year Senior Notes due June 25, 2029 | 75,000 | | | — | | | 75,000 | |
5.45% $150 million ten-year Senior Notes due March 1, 2033 | 150,000 | | | — | | | 150,000 | |
2.83% $125 million twelve-year Senior Notes due July 22, 2033 | 125,000 | | | — | | | 125,000 | |
3.19% $50 million fifteen-year Senior Notes due January 24, 2035 | 50,000 | | | — | | | 50,000 | |
2.81% $150 million fifteen-year Senior Notes due March 17, 2037 | 150,000 | | | — | | | 150,000 | |
2.91% $150 million fifteen-year Senior Notes due September 1, 2037 | 150,000 | | | — | | | 150,000 | |
1.47% Euro 125 million fifteen-year Senior Notes due June 17, 2030 | — | | | 135,516 | | | 135,516 | |
1.30% Euro 135 million fifteen-year Senior Notes due November 6, 2034 | — | | | 146,357 | | | 146,357 | |
1.06% Euro 125 million fifteen-year Senior Notes due March 19, 2036 | — | | | 135,516 | | | 135,516 | |
Senior notes debt issuance costs, net | (2,951) | | | (1,455) | | | (4,406) | |
Total Senior Notes | 997,049 | | | 415,934 | | | 1,412,983 | |
$1.25 billion Credit Agreement, interest at LIBOR plus 87.5 basis points | 452,213 | | | 197,017 | | | 649,230 | |
Other local arrangements | 5,693 | | | 55,004 | | | 60,697 | |
Total debt | 1,454,955 | | | 667,955 | | | 2,122,910 | |
Less: current portion | (52,342) | | | (54,789) | | | (107,131) | |
Total long-term debt | $ | 1,402,613 | | | $ | 613,166 | | | $ | 2,015,779 | |
As of September 30, 2022,March 31, 2023, approximately $589.3$595.1 million of additional borrowings was available under our Credit Agreement, and we maintained $122.1$89.1 million of cash and cash equivalents.
Changes in exchange rates between the currencies in which we generate cash flows and the currencies in which our borrowings are denominated affect our liquidity. In addition, because we borrow in a variety of currencies, our debt balances fluctuate due to changes in exchange rates.
Further, we do not have any downgrade triggers relating to ratings from rating agencies that would accelerate the maturity dates of our debt. We were in compliance with our debt covenants as of September 30, 2022.March 31, 2023.
In December 2022, we entered into an agreement to issue and sell $150 million 10-year Senior Notes in a private placement. We issued $150 million with a fixed interest rate of 5.45% (5.45% Senior Notes) in March 2023. The 5.45% Senior Notes are senior unsecured obligations of the Company. The 5.45% Senior Notes mature on March 1, 2033. The terms of the 5.45% Senior Notes are consistent with the previous Senior Notes as described in the Company's Annual Report Form 10-K. We used the proceeds from the sale of the 5.45% Senior Notes to refinance existing indebtedness and for other general corporate purposes.
In December 2021, we entered into an agreement to issue and sell $300 million 15-year Senior Notes in a private placement. We issued $150 million with a fixed interest rate of 2.81% (2.81% Senior Notes) in March 2022, which will mature in March 2037, and an additional $150 million with a fixed interest rate of 2.91% (2.91% Senior Notes) in September 2022, which will mature in September 2037. We will useused the proceeds from the sale of the notes to refinance existing indebtedness and for other general corporate purposes.
Other Local Arrangements
In April 2018, two of ourthe Company's non-U.S. pension plans issued loans totaling $39.6 million (Swiss franc 38 million) to a wholly owned subsidiary of the Company. The loans have the same
terms and conditions which include an interest rate of SARON plus 87.5 basis points. The loans were renewed for one year in April 2022.2023.
Share Repurchase Program
In November 2022, our BoardWe have $3.2 billion of Directors authorized an additional $2.5 billion to be added toremaining availability for our share repurchase program which has $1.2 billion of remaining availability as of September 30, 2022.March 31, 2023. The share repurchases are expected to be funded from cash generated from operating activities, borrowings, and cash balances. Repurchases will be made through open market transactions, and the amount and timing of purchases will depend on business and market conditions, the stock price, trading restrictions, the level of acquisition activity, and other factors.
We have purchased 30.831.2 million common shares since the inception of the program in 2004 through September 30, 2022.March 31, 2023. During the ninethree months ended September 30,March 31, 2023 and 2022, and 2021, we spent $825.0$250.0 million and $727.5$275.0 million on the repurchase of 629,380166,628 shares and 557,310190,593 shares at an average price per share of $1,310.79$1,511.78 and $1,305.35,$1,442.84, respectively. We also reissued 80,46647,849 shares and 71,12427,795 shares held in treasury uponfor the exercise of stock options and vesting of restricted stock units during the ninethree months ended September 30,March 31, 2023 and 2022, and 2021, respectively. In addition, we incurred $1.9 million of excise tax during the three months ended March 31, 2023 related to the Inflation Reduction Act which is reflected as a reduction in shareholders' equity in our consolidated financial statements.
Effect of Currency on Results of Operations
Our earnings are affected by changes inchanging exchange rates. We are most sensitive to changes in the exchange rates between the Swiss franc, euro, Chinese renminbi, and U.S. dollar. We have more Swiss franc expenses than we do Swiss franc sales because we develop and manufacture products in Switzerland that we sell globally, and have a number of corporate functions located in Switzerland. When the Swiss franc strengthens against our other trading currencies, particularly the U.S. dollar and euro, our earnings decrease. We also have significantly more sales in the euro than we do expenses. When the euro weakens against the U.S. dollar and Swiss franc, our earnings also decrease. We estimate a 1% strengthening of the Swiss franc against the euro would reduce our earnings before tax by approximately $1.9 million to $2.1 million annually.
We also conduct business in many geographies throughout the world, including Asia Pacific, the United Kingdom, Eastern Europe, Latin America, and Canada. Fluctuations in these currency exchange rates against the U.S. dollar can also affect our operating results. The most significant of these currency exposures is the Chinese renminbi. The impact on our earnings before tax of the Chinese renminbi weakening 1% against the U.S. dollar is a reduction of approximately $3.5$3.8 million to $3.7$4.3 million annually.
In addition to the effects of exchange rate movements on operating profits, our debt levels can fluctuate due to changes in exchange rates, particularly between the U.S. dollar, the Swiss franc, and the euro. Based on our outstanding debt at September 30, 2022,March 31, 2023, we estimate that a 5% weakening of the U.S. dollar against the currencies in which our debt is denominated would result in an increase of approximately $30.7$35.2 million in the reported U.S. dollar value of our debt.
Forward-Looking Statements Disclaimer
You should not rely on forward-looking statements to predict our actual results. Our actual results or performance may be materially different than reflected in forward-looking statements because of various risks and uncertainties, including statements about expected revenue growth, and long-term impacts of the COVID-19 pandemicinflation and ongoing developments related to Ukraine. In some cases, youYou can identify forward-looking statements by terminology such as “may,” “will,” “could,” “would,” “should,” “expect,” “plan,” “anticipate,” “intend,” “believe,” “estimate,” “predict,” “potential”“potential,” or “continue.”
We make forward-looking statements about future events or our future financial performance, including earnings and sales growth, earnings per share, strategic plans and contingency plans, growth opportunities or economic downturns, our ability to respond to changes in market conditions, customer demand, our competitive position, pricing, our supply chain,planned research and development efforts and product introductions, adequacy of our facilities, access to and the costs of raw materials, shipping and supplier costs, gross margins, planned research and development efforts and product introductions,customer demand, our competitive position, pricing, capital expenditures, cash flow, tax-related matters, the impact of foreign currencies, compliance with laws, effects of acquisitions, and the impact of the COVID-19 pandemicinflation and ongoing developments related to Ukraine on our businesses.business.
Our forward-looking statements may not be accurate or complete, and we do not intend to update or revise them in light of actual results. New risks also periodically arise. Please consider the risks and factors that could cause our results to differ materially from what is described in our forward-looking statements, including the uncertain durationinflation, and severity of the COVID-19 pandemic and ongoing developments related to Ukraine. See in particular “Factors Affecting Our Future Operating Results” and “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in our Annual Report on Form 10-K for the year ended December 31, 20212022 and other reports filed with the SEC from time to time.
Item 3.Quantitative and Qualitative Disclosures About Market Risk
As of September 30, 2022,March 31, 2023, there was no material change in the information provided under Item 7A in the Company’s Annual Report on Form 10-K for the year ended December 31, 2021.2022.
Item 4.Controls and Procedures
Under the supervision and with the participation of our management, including the Chief Executive Officer and Chief Financial Officer we have evaluated the effectiveness of our disclosure controls and procedures as required by Exchange Act Rule 13a-15(b) as of the end of the period covered by this report. Based upon that evaluation, the Chief Executive Officer and Chief Financial Officer have concluded that these disclosure controls and procedures are effective. There were no changes in our internal control over financial reporting during the quarter ended September 30, 2022March 31, 2023 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting, except as described below.
Recently, our sales and marketing organization in France went live on our Blue Ocean program. As a result of the implementation, certain internal controls have changed. Management has taken steps to ensure appropriate controls were designed and operating as part of the implementation process. This initiative is not in response to any identified deficiency or weakness in our internal control over financial reporting.
PART II. OTHER INFORMATION
Item 1.Legal Proceedings. None
Item 1A.Risk Factors.
For the three and nine months ended September 30, 2022March 31, 2023 there were no material changes from risk factors disclosed in Part I, Item 1A of the Company’s Annual Report on Form 10-K for the year ended December 31, 2021, and as updated in the Company's Form 10-Q for the period ended June 30, 2022.
Item 2.Unregistered Sales of Equity Securities and Use of Proceeds.
Issuer Purchases of Equity Securities
| | | | | | | | | | | | | | |
| (a) | (b) | (c) | (d) |
Total Number of Shares Purchased | Average Price Paid per Share | Total Number of Shares Purchased as Part of Publicly Announced Program | Approximate Dollar Value (in thousands) of Shares that may yet be Purchased under the Program |
|
|
July 1 to July 31, 2022 | 69,336 | | $ | 1,189.72 | | 69,336 | | $ | 1,425,938 | |
August 1 to August 31, 2022 | 78,525 | | $ | 1,329.46 | | 78,525 | | $ | 1,321,540 | |
September 1 to September 30, 2022 | 72,618 | | $ | 1,213.32 | | 72,618 | | $ | 1,233,430 | |
Total | 220,479 | | $ | 1,247.26 | | 220,479 | | $ | 1,233,430 | |
| | | | | | | | | | | | | | |
| (a) | (b) | (c) | (d) |
Total Number of Shares Purchased | Average Price Paid per Share | Total Number of Shares Purchased as Part of Publicly Announced Program | Approximate Dollar Value (in thousands) of Shares that may yet be Purchased under the Program |
|
|
January 1 to January 31, 2023 | 51,153 | | $ | 1,528.86 | | 51,153 | | $ | 3,380,858 | |
February 1 to February 28, 2023 | 53,677 | | $ | 1,534.44 | | 53,677 | | $ | 3,298,978 | |
March 1 to March 31, 2023 | 61,798 | | $ | 1,477.97 | | 61,798 | | $ | 3,208,431 | |
Total | 166,628 | | $ | 1,511.78 | | 166,628 | | $ | 3,208,431 | |
In November 2022, the Company's BoardThe Company has $3.2 billion of Directors authorized an additional $2.5 billion to be added toremaining availability for its share repurchase program which has $1.2 billion of remaining availability as of September 30, 2022.March 31, 2023. We have purchased 30.831.2 million shares since the inception of the program through September 30, 2022.March 31, 2023.
During the ninethree months ended September 30,March 31, 2023 and 2022, and 2021, we spent $825.0$250.0 million and $727.5$275.0 million on the repurchase of 629,380166,628 and 557,310190,593 shares at an average price per share of $1,310.79$1,511.78 and $1,305.35,$1,442.84, respectively. We also reissued 80,46647,849 shares and 71,12427,795 shares held in treasury uponfor the exercise of stock options and vesting of restricted stock units for the three months ended March 31, 2023 and 2022, respectively. In addition, we incurred $1.9 million of excise tax during the ninethree months ended September 30, 2022 and 2021, respectively.
March 31, 2023 related to the Inflation Reduction Act which is reflected as a reduction in shareholders' equity in the our consolidated financial statements.
Item 3.Defaults Upon Senior Securities. None
Item 5.Other information. None
Item 6.Exhibits. See Exhibit Index.
EXHIBIT INDEX
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Exhibit No. | | Description |
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| 101.INS* | XBRL Instance Document - the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document |
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| 101.SCH* | XBRL Taxonomy Extension Schema Document |
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| 101.CAL* | XBRL Taxonomy Extension Calculation Linkbase Document |
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| 101.LAB* | XBRL Taxonomy Extension Label Linkbase Document |
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| 101.PRE* | XBRL Taxonomy Extension Presentation Linkbase Document |
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| 101.DEF* | XBRL Taxonomy Extension Definition Linkbase Document |
_______________________
* Filed herewith
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.
| | | | | | | | | | | | | | | | | | | | |
| | | Mettler-Toledo International Inc. | |
Date: | November 4, 2022May 5, 2023 | | By: | /s/Shawn P. Vadala | |
| | | | | | |
| | | | Shawn P. Vadala | |
| | | | Chief Financial Officer | |