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METTLER TOLEDO INTERNATIONAL INC/ (MTD)·Q3 2025 Earnings Summary

Executive Summary

  • Q3 2025 delivered solid top-line and EPS growth: reported revenue rose 8% to $1.03B and adjusted EPS rose 9% to $11.15, supported by strong Industrial and Product Inspection performance; gross margin contracted 80 bps year over year on tariff headwinds, partially offset by price and productivity initiatives .
  • Results exceeded Wall Street consensus: revenue beat by ~$32M (+3.2%) and adjusted EPS beat by ~$0.49 (+4.6%); fully diluted shares fell ~3% YoY to 20.6M, enhancing per-share growth .
  • Guidance updated: Q4 local-currency sales +~3% with adjusted EPS $12.68–$12.88 (includes ~7% tariff headwind); FY25 adjusted EPS narrowed to $42.05–$42.25 and initial FY26 adjusted EPS set at $45.35–$46.00 (+8–9%), with management expecting to fully offset tariff costs in 2026 .
  • Board authorized an additional $2.75B for share repurchases (on top of $1.1B remaining), a supportive capital-return catalyst amid sustained free cash flow generation .

What Went Well and What Went Wrong

  • What Went Well

    • Industrial strength: “very good growth, especially in Industrial,” with core industrial up ~10% (ex-acquisitions) and Product Inspection up 7% in local currency; service grew 8% .
    • Geographic breadth: the Americas +10% LC and Europe +6% LC drove the quarter; China returned to modest growth in core industrial for the first time in two years .
    • Strategic execution and innovation: management highlighted ongoing traction of the Spinnaker sales program and new launches (e.g., NineFocus pH meter, automation integrations with LabX and autosamplers) strengthening competitive positioning .

  • What Went Wrong

    • Margin pressure from tariffs: gross margin fell to 59.2% (−80 bps YoY), and adjusted operating margin declined to 30.1% (−100 bps YoY); management estimates tariffs reduced operating margin by ~140 bps and were a ~6% gross headwind to EPS in Q3 .
    • Mixed lab end-market: bioprocessing solid, but softness in liquid handling instruments tied to biotech/academia funding and policy uncertainties .
    • Europe macro caution and Q4 deceleration: Europe outlook flattish and core industrial expected to step down to low single-digit growth in Q4 due to timing and tougher comps .

Financial Results

MetricQ1 2025Q2 2025Q3 2025
Revenue ($USD Millions)$883.7 $983.2 $1,029.7
GAAP Diluted EPS ($)$7.81 $9.76 $10.57
Adjusted Diluted EPS ($)$8.19 $10.09 $11.15
Gross Margin %59.5% 59.0% 59.2%
Adjusted Operating Margin %26.8% 28.8% 30.1%
Earnings Before Taxes ($USD Millions)$201.9 $248.7 $269.2
Geography Sales Growth (YoY)AmericasEuropeAsia/RoWTotal
Reported (Q3 2025)10% 13% 1% 8%
Local Currency (Q3 2025)10% 6% 1% 6%
Product Area Local Currency Growth (Q3 2025)Growth YoY
Laboratory4%
Industrial (incl. acquisitions +1%)9%
Product Inspection7%
Food Retail5%
Service (incl. acquisitions +1%)8%
KPIsQ3 2025YTD 2025
Adjusted Free Cash Flow ($USD Millions)$280.7 $689.5
DSO (Days)—34
Inventory Turns (ITO)—4.2x
Diluted Shares (Millions)20.6 —

Guidance Changes

MetricPeriodPrevious GuidanceCurrent GuidanceChange
Local Currency Sales GrowthQ4 2025—~3% New outlook
Adjusted EPS ($)Q4 2025—$12.68–$12.88; includes ~7% tariff headwind New outlook
Local Currency Sales GrowthFY 2025~1–2% (Q2 guide) ~2% (incl. ~1.5% shipping delay headwind) Raised vs Q2
Adjusted EPS ($)FY 2025$42.10–$42.60 (Q2 guide) $42.05–$42.25 (incl. ~5% gross tariff headwind; ~4% shipping delay headwind) Narrowed/lowered range
Local Currency Sales GrowthFY 2026—~4% Initial guide
Adjusted EPS ($)FY 2026—$45.35–$46.00 (+8–9%) Initial guide
Gross Tariff Impact (EPS)Q4 2025—~7% gross headwind New detail
Tariff Offset PlanFY 2026—Expect full offset of ~6% gross headwind via supply chain and pricing New execution plan
Tax Rate (before discrete)FY 2026—~19% Provided
Interest Expense ($)FY 2026—~$72M Provided
Other Income ($)FY 2026—~$12M Provided
Amortization ($)FY 2026—~$77M total; ~$26M purchased intangibles (≈$1/sh pre-tax) Provided
Share Repurchases ($)FY 2025 / FY 2026$800M FY25; $825–$875M FY26 Additional $2.75B authorization (program had $1.1B remaining Q3) Expanded authorization

Note: The Q3 8-K references “previous” FY25 EPS guidance of $41.70–$42.20; a prior Q2 press release showed $42.10–$42.60. We present the Q2 baseline for investor continuity and flag the 8-K note for completeness .

Earnings Call Themes & Trends

TopicPrevious Mentions (Q2 and Q1)Current Period (Q3)Trend
Tariffs & Margin ImpactQ2: gross tariff cost estimated ~$60M annualized; largely mitigated in 2025 . Q1: ~$115M annualized gross tariff costs; full offset expected next year .Gross margin −80 bps YoY; operating margin −100 bps YoY; ~6% EPS headwind; plan to fully offset ~6% gross tariff headwind in 2026 via supply chain optimization and pricing .Improving mitigation, full offset targeted FY26
Automation/Digitalization ProgramsContinued focus on Spinnaker and digital tools .Spinnaker 6 traction; AI-enabled pipeline management; Blue Ocean ERP/CRM single instance supporting digitalization .Scaling digital GTM and analytics
China & Regional DynamicsQ1/Q2 cautious outlook; shipping delays impact earlier periods .Modest growth; first core industrial growth in China in two years; watch anti-involution policy, minimal direct exposure to overcapacity sectors .Early stabilization; cautious optimism
Bioprocessing & Process AnalyticsOngoing strength noted .Strong bioprocessing demand across lab/process analytics; durable into Q4/FY26; tank-scale weighing also positive .Strengthening
Product Inspection (mid-market pivot)Strategy shift highlighted earlier .High single-digit growth expected in Q4; sustained momentum with cadence of product launches; mid-market focus to continue .Sustained growth
Replacement CycleNot highlighted previously.Two years of subdued replacement; upside potential not fully baked into FY26 guide .Potential tailwind (timing uncertain)

Management Commentary

  • “Our third quarter results were strong and reflected very good growth, especially in Industrial. I am very pleased with our team’s strong execution as we leverage our Spinnaker sales and marketing program and innovative product portfolio to drive growth while delivering solid EPS.” — Patrick Kaltenbach, CEO .
  • “Gross margin was 59.2%… a decrease of 80 basis points, primarily due to incremental tariff costs offset in part by positive price realization and benefits from our Stern Drive program… We estimate the gross impact of tariffs reduced our operating margin by 140 basis points.” — Shawn Vadala, CFO .
  • “We continue to invest in global market trends around automation, digitalization, nearshoring… Spinnaker 6 has strong traction… enhancing the capabilities of our sales force to leverage AI to further optimize our pipeline management… Blue Ocean provides globally harmonized processes… essential to effective digitalization.” — Management .
  • “We continue to expect to fully offset incremental tariffs cost in 2026.” — Management .

Q&A Highlights

  • 2026 outlook: LC sales ~4% with ~2.5% price realization next year; modest organic volume; currency-neutral operating margin expansion ~+60 bps; reported +20–30 bps due to FX mix .
  • Tariff mechanics: ~6% gross headwind in 2026 expected to be fully offset through supply chain flexibility and pricing; strong execution in 2025 accelerates mitigation .
  • China: low single-digit growth expected across lab and industrial in 2026; Q3 saw first growth in core industrial in two years; minimal exposure to government-targeted overcapacity sectors .
  • Product Inspection: sustained momentum targeting mid-market; high single-digit growth expected in Q4; synergy opportunities from recent small acquisitions .
  • Replacement cycle: install base aging offers upside potential, but not fully assumed in FY26 guidance timing .

Estimates Context

MetricQ3 2025 ActualQ3 2025 ConsensusSurprise
Revenue ($USD Millions)$1,029.7 $997.35*+$32.35; +3.2%
Adjusted EPS ($)$11.15 $10.66*+$0.49; +4.6%
# of Estimates (EPS / Revenue)—11 / 10*—

Values retrieved from S&P Global.*

Key Takeaways for Investors

  • Strong beat on revenue and adjusted EPS despite tariff headwinds; sequential momentum across Q1→Q2→Q3 in revenue and adjusted operating margin supports near-term confidence .
  • Tariff-driven margin compression should gradually abate; management’s 2026 plan to fully offset tariffs and currency-neutral margin expansion suggests EPS durability .
  • Industrial and Product Inspection growth, plus service attach expansion, underpin resilient cash generation (Q3 adj. FCF ~$281M; YTD ~$689M) supporting buybacks and bolt-ons .
  • FY25 EPS range narrowed/lowered vs Q2 baseline; watch Q4 tariff impact (~7% gross headwind) and core industrial deceleration; upside from replacement cycle is not fully embedded .
  • Strategic digital programs (Spinnaker, AI-enhanced CRM, Blue Ocean) and bioprocessing exposure provide structural growth levers beyond macro volatility .
  • Capital return remains robust with an additional $2.75B authorization; share count reduction (~3% YoY) magnifies per-share metrics .
  • Near-term trading: potential positive reaction to beat and expanded buyback; medium-term thesis: tariff mitigation + incremental margin recovery + secular automation/bioprocessing tailwinds.