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METTLER TOLEDO INTERNATIONAL INC/ (MTD)·Q1 2025 Earnings Summary

Executive Summary

  • Q1 2025 revenue was $883.7M (-5% YoY; -15% QoQ) and adjusted EPS was $8.19 (-8% YoY); gross margin expanded 30 bps to 59.5% despite lower volume, aided by pricing and productivity programs .
  • Against Wall Street consensus, revenue modestly beat ($883.7M vs $875.8M*) and Primary EPS beat ($8.19 vs $7.88*) — a clean beat on adjusted EPS, with management highlighting stronger-than-expected margin execution; GAAP diluted EPS was $7.81 .
  • FY 2025 guidance cut: local-currency sales growth to 1–2% (from ~3%) and adjusted EPS to $41.25–$42.00 (from $42.35–$43.00) due to tariff headwinds and more cautious volume assumptions, particularly in China; Q2 2025 adjusted EPS guided to $9.45–$9.70 with a net ~3% tariff headwind .
  • Stock-relevant narrative: tariff regime introduces uncertainty and near-term margin pressure, but management expects mitigation (supply-chain optimization, pricing/surcharges) to fully offset gross tariff costs by next year; ex shipping-delay distortion, margins are expanding and Lab/Process Analytics trends remain constructive .

What Went Well and What Went Wrong

  • What Went Well

    • Margin execution: gross margin +30 bps YoY to 59.5% (and +90 bps ex shipping-delay distortion); adjusted operating margin would have expanded ~50 bps ex the prior-year shipment recovery .
    • Lab/Process Analytics strength: robust demand in biopharma (single-use and digital sensors), new lab balances/titrators/thermal analysis driving growth; underlying Lab sales +5% ex shipping delay impact .
    • Product Inspection resilience: +8% LC growth, with mid-market innovation improving productivity and lowering total cost of ownership for food manufacturers .

  • What Went Wrong

    • Topline declines: reported revenue -5% YoY to $883.7M; local currency -3% YoY (Americas -1%, Europe -7%, Asia/RoW -2%); sequential decline vs Q4 reflects seasonal and shipment-distortion normalization .
    • Industrial softness and China caution: core Industrial -6% LC; management flagged project delays and more cautious near-term customer behavior, particularly in China (Q2 indicated low-to-mid single-digit decline) .
    • Tariff headwinds: annualized gross incremental tariff costs estimated at ~$115M; Q2 gross EPS headwind ~6% (net ~3% after mitigation), FY 2025 net EPS headwind ~2% .

Financial Results

MetricQ3 2024Q4 2024Q1 2025
Revenue ($USD Millions)$954.5 $1,045.1 $883.7
GAAP Diluted EPS ($)$9.96 $11.96 $7.81
Adjusted EPS ($)$10.21 $12.41 $8.19
Gross Margin (%)60.0% 61.2% 59.5%
Adjusted Operating Profit ($USD Millions)$296.6 $351.9 $236.7
Adjusted Operating Margin (%)31.1% 33.7% 26.8%
Regional Sales Growth (YoY)AmericasEuropeAsia/RoWTotal
U.S. Dollar Sales Growth-2% -9% -4% -5%
Local Currency Sales Growth-1% -7% -2% -3%
Segment/Category (Local Currency YoY)Q1 2025 (reported LC)Q1 2025 (ex shipping-delay impact)
Laboratory-3% +5%
Industrial-1% +2%
Core Industrial-6% -2%
Product Inspection+8% +8%
Food Retail-12% -5%
Service+6% N/A
KPIsQ1 2025
Adjusted Free Cash Flow ($USD Millions)$179.8
Net Cash from Operations ($USD Millions)$194.4
Capital Expenditure ($USD Millions)$17.3
DSO (Days)35
ITO (Inventory Turns)4.2x
Effective Tax Rate (before discrete)19%
Estimates vs Actuals (S&P Global)ConsensusActualSurprise
Q1 2025 Revenue ($USD Millions)875.8*883.7 +7.9*
Q1 2025 Primary EPS ($)7.88*8.19*+0.31*

Values with an asterisk (*) are retrieved from S&P Global.

Non-GAAP adjustments (EPS reconciliation): purchased intangible amortization $0.23 impact in Q1 2025; restructuring $0.15; no tax-rate timing impact in 2025 vs $0.05 in Q1 2024 .

Guidance Changes

MetricPeriodPrevious GuidanceCurrent GuidanceChange
Local Currency Sales GrowthFY 2025~3% ~1%–2% Lowered
Adjusted EPSFY 2025$42.35–$43.00 $41.25–$42.00 Lowered
Local Currency Sales GrowthQ2 2025N/A~0%–1% New/Updated
Adjusted EPSQ2 2025N/A$9.45–$9.70 New/Updated
Operating MarginQ2 2025N/ADown ~170 bps; down ~70 bps ex net tariffs New/Updated
Tax Rate (before discrete)FY 202519% (unchanged)19% Maintained
Purchased Intangible AmortizationFY 2025N/A$25M pretax ($0.93/share) Provided
Interest ExpenseFY 2025N/A~$72M Provided
Other IncomeFY 2025N/A~$9M Provided
Free Cash FlowFY 2025N/A~$860M Provided
Share RepurchasesFY 2025N/A~$875M Provided
Tariff Headwinds (net to EPS)Q2 2025 / FY 2025N/A~3% net headwind in Q2; ~2% net for FY Provided

Earnings Call Themes & Trends

TopicPrevious Mentions (Q-2: Q3 2024)Previous Mentions (Q-1: Q4 2024)Current Period (Q1 2025)Trend
Tariffs/MacroSoft global conditions; focus on margin programs Strong Q4; 2025 LC growth initially ~3% ~$115M annualized gross tariff costs; net EPS headwinds; mitigation actions accelerating Tariff impact rising; mitigation ramping
ChinaModest growth but challenging Industrial Asia/RoW +14% in Q4; 2025 LC growth guide included shipping effects Q2 China down low-to-mid single-digit; FY slightly down; Industrial softer; Lab low single-digit up Cautious near term
Supply Chain OptimizationSpinnaker/SternDrive programs emphasized Productivity/margin initiatives contributing Accelerated shifts (e.g., Mexico footprint), reducing direct China import exposure; flexibility gains Intensifying
Pricing/SurchargesPricing discipline Pricing tailwind in Q4 2025 pricing assumption lifted from ~2% to ~3% incl. surcharges Increasing
Product InspectionSolid performance Continued strength +8% LC growth; mid-single-digit expected in Q2 Steady strength
Process Analytics/BiopharmaGood growth noted Strong lab demand, esp. Europe Healthy recovery in single-use; broad strength Improving
ServicesStrong in Q3 Robust FCF in Q4 +6% LC; mid- to high single-digit FY outlook Solid

Management Commentary

  • “We had a good start to the year with solid growth in our Laboratory business… Strong execution of our margin expansion strategies led to better-than-expected earnings.” — CEO Patrick Kaltenbach .
  • “We also estimate gross incremental global tariff costs of approximately $115 million on an annualized basis and are implementing mitigating actions this year that will fully offset these costs next year.” — CEO Patrick Kaltenbach .
  • CFO framing: “Excluding the impact of shipping delay recoveries in the prior year, our operating margin expanded 50 basis points on 3% sales growth in the quarter.” — CFO Shawn Vadala .
  • On mitigation mix: “Pricing… before we were communicating ~2% for this year. Right now, we’re thinking it’s going to be 3% or so… including surcharges.” — CFO Shawn Vadala .

Q&A Highlights

  • China trajectory: Q2 down low-to-mid single-digit; FY slightly down overall; Lab up low single-digit and Industrial down low single-digit; management cites customer caution and project delays .
  • Tariff exposure and mitigation: ~$115M annualized gross headwind; Q2 gross EPS headwind ~6% (net ~3% after mitigation). Actions include supply-chain shifts (Mexico expansion), cost savings, pricing, and surcharges; direct China import exposure reduced to ~$50M .
  • Industrial outlook: core Industrial flattish FY; Q2 core Industrial flat with Product Inspection mid-single-digit growth; automation/digitalization remain secular supports .
  • Services and cash flow: Services +6% LC and mid- to high single-digit FY outlook; FCF guide unchanged at ~$860M; working-capital optimization ongoing .
  • Onshoring opportunity: not yet meaningful but expected to be a future upside; MTD believes it is well positioned via Spinnaker and product breadth .

Estimates Context

  • Q1 2025 beats: Revenue $883.7M vs $875.8M*; Primary EPS $8.19 vs $7.88* — both above consensus, consistent with management’s “better-than-expected earnings” commentary .
  • Q2 2025 estimates vs guidance: Consensus Primary EPS at ~$9.60* and revenue ~$958.2M* vs guidance EPS $9.45–$9.70 and LC sales ~0–1%, implying near inline EPS and cautious topline trajectory given tariff and China dynamics .
  • FY 2025: Consensus Primary EPS ~$42.20* vs company guidance $41.25–$42.00, suggesting downward estimate revisions are warranted on tariff headwinds and tempered volume assumptions .
    Values with an asterisk (*) are retrieved from S&P Global.

Key Takeaways for Investors

  • Q1 quality: despite -5% revenue, pricing and productivity lifted gross margin; adjusted EPS beat consensus, and ex shipping-delay distortion, margins expanded — signaling execution strength .
  • Guidance reset: FY LC growth and EPS lowered on tariffs and cautious volume (esp. China); expect models to reflect net ~2% EPS headwind for FY and Q2 net ~3% headwind .
  • Mitigation path: supply-chain reconfiguration (Mexico, reduced China import), pricing/surcharges should offset gross tariff costs fully by next year — monitor cadence and mix through 2H25 .
  • Segment mix: Product Inspection and Process Analytics provide resilience; core Industrial remains mixed; Services a steady contributor (mid- to high single-digit FY outlook) .
  • China lens: near-term caution but local manufacturing footprint and competitive positioning mitigate share risk; volume assumptions aligned with softer macro .
  • Modeling notes: 2025 tax rate 19%, amortization ~$25M pretax (excluded from adjusted EPS), interest ~$72M, other income ~$9M, FCF ~$860M, buybacks ~$875M — key inputs to maintain discipline around EPS bridge .
  • Near-term trading: headline risk around tariff developments and China data likely drives volatility; watch pricing realization, gross-margin trajectory, and any early signs of supply-chain mitigation benefits accelerating in 2H.