Q3 2020 Mettler-Toledo International Inc Earnings Call
And gentlemen, and welcome to the third quarter Twentytwenty Mettler Toledo International Earnings Conference call. My name is demaria and I will be your audio coordinator for today at this time all participants are in a listen only mode. After the speaker presentation. There will be a question and answer session. So I ask a question during the session you will need to press star.
Our wanting your telephone I would now like to turn our presentation over to your host for today's call Ms. Mary Finnegan. Please proceed ma'am.
Thank you and good evening, everyone I'm Mary Finnegan I'm responsible for Investor Relations at Mettler, Toledo, and happy that you're joining us.
Promotions.
I will have some additional coleman and we will open the like four Q&A.
The highlights for the quarter of the of the presentations.
Local currency sales increased 6% in the third quarter, which was much better than we expected.
The bottom day now and markets continues to be negatively impacted by COVID-19. However, we have excellent growth in China and the performance of our business was very strong.
Is most effective given current customer that up.
Our adjusted go to market model and full leverage of spinnaker has proved to be exceptionally powerful in this environment.
The quarter laboratory sales increased 9% industrial increased 1% with core industrial up 8% in product inspection down 9% food.
Food retail increased 5% in the quarter.
One question I know you have is how much benefit did we have from cobot tailwinds in the quarter, we estimate our local currency sales growth benefited between one and 2% in the third quarter from Covance.
The next slide show sales growth by product area for the nine month period laboratory sales increased 2%.
$2 million.
Operating margins increased 250 basis points in the quarter to 28.5%, we're very pleased with this margin growth.
A couple of final comments on the piano.
Let me now cover the cash flow.
In the quarter adjusted free cash flow amounted to $212 million, which is an increase of 44% on a per share share basis as compared to the prior year, we are very happy with our cash flow generation.
DSO declined three days in the quarter to 36 days as compared to the prior year. We are seeing concrete results from our focus on receivable collections and cash flow management during this period.
IPO came in at 4.3 times.
I also expect to continue to generate margin improvement driven by our pricing and stern drive initiatives.
Now let me cover the specifics for the full year 2020, who now expect local currency sales growth will be approximately 1% as compared to the prior year.
We expect full year adjusted EPS to be in the range of $24 87.
$24 97.
Which is a growth rate of 9% to 10%.
With respect to the fourth quarter, who would expect local currency sales growth to be in the range of 4% to 5% and expect adjusted EPS to be in a range of $8 68.
Expect to the impact of currency on sales growth, we expect currency to increase sales growth by approximately 2% in the fourth quarter.
Hello position to capture grow.
Pent up demand however.
However, it will take some more time you both.
[music].
Mmm polka comparison in the second half of the year.
One final comment on the.
Service and consumables were up 6% in the court.
That concludes my comments up a bit while 2020 has been extraordinary on many different level.
We remain focused on our core growth strategy.
We are the market leader.
Allow them to be paid engagement with our customer. Despite the challenges that Kobe has brought to we both work environment.
Digital sales and marketing one portfolio.
We also used data analysis and machine learning to identify with thousands and thousands.
<unk> of customer site that has the potential sales opportunity.
During this past year.
We also leverage each map of customer segments that helps us navigate kobe resilience and recover.
Incredibly difficult with during the January sales Butler that we provide to our organization.
You'll learn include insightful information such as project description for selling opportunity contact data few rempac CVP.
Fixtures and specific values selling guy.
Okay good product.
We have structured our cross and so that faculty.
Thought it kept qualified sales Lola.
May I have the knowledge of our customer of cat determine if the computer generated.
Has the expected potential and if so the ideal timing for customers correction.
Okay.
And I'm coming point that digital sales marketing tools.
R. One consultant, we also use at bonds data analysis and machine learning to identify thousands and thousands of customer side.
Potential sales opportunity.
During this past year, we also leverage keep map of customer segment that helped us navigate covid resilience in the recovery.
Internally just opportunity January sale color that we provide our prompt and organization.
The alerts include insightful information such as project description cross selling opportunity contact data CRM activity site pictures.
Perfect value selling guide for associated products that we.
We have structured our prompt and so the back of it in fact I hope we thought it kept qualified Utah so the older.
I have knowledge customer and kept determine accused of January at the alert.
The potential is still the ideal timing for customer interaction they.
This helps US guide, our darlings field salesforce to the best opportunity and with all the necessary Matilda unaffected customize <unk>.
We also leverage our front end the appellant sales rep to sell to smaller or less complicated accounts.
Digital sales too.
Available to our field force I'll also pull the available to I would tell a sales team, thereby supporting the effort to articulate the value of our called US two cousins.
With investments we have made an insight tell myself resources over the last several years.
Front and if that was the fieldwork spend the majority of their time on non customers assisting customer strong cross selling protection.
The combination of a strong product portfolio innovations, we have missed our sales and marketing.
And the investments we have made over several years to our content organization is leaving to accelerated Martha care gain versus our driveway competitor.
They are still a relatively small gains overall that they have allowed to.
Offset the challenging market conditions of the Kobe environment.
Well.
I want now to all be deferring to open the line for questions.
As a reminder to ask a question you'll need to press star one in your telephone to withdraw your question press the pound key please stand by while we compile the <unk> roster.
Your first question will come from BJ Kumar with Evercore ISI. Please proceed with your question.
Hey, guys. Thanks for taking my question and congrats on a really good friends here.
<unk>, maybe on the China Commons, the 17% growth here could.
Could you maybe help clarify.
Clarifying you know what what portion of that 17% was Ah you know, perhaps empty or pent up demand and now you know I think you guys mentioned one to two points just bought koby Tailwinds is a physical would tell them in the same same as a pent up demand or is that.
A separate item.
Let me do the second part for because of that.
And he wants to know if not.
Not correlated with the.
The Tailwinds are hobbies, mainly called me the.
The pink business that we have without we're writing a biopic businesses they.
So <unk> testing market to Colby typing market, so we call that tailwind I've kind of stuff.
It is no ER labels that way.
Good try now to isolate it tends to affect all the China growth.
It's not so easy to quantify but I think another way to local about our numbers China you today I'm asking you when we call or in the early part of your China had a significant decline and here we have seen a very good recovery in Q3 and in that sense there.
A significant aspect of that is pent up demand, we see kind of be shaped recovery.
But beyond that I certainly you know we have won.
Lose market share gain.
China the team has executed extremely well viewing the whole call. These crises.
We went there was a locked down.
I would Chinese team continues to stay in contact with customers.
We were very far off the bringing deliberately spot has certainly gained a lot of color.
Confident with the customer base and then we have this whole go to market.
Change management that I described before in the prepared remark. This is we did all that out globally, but also particularly in China.
That has benefit that falls in Q3, so different aspects that drove very nice girl.
The pent up demand was actually one of them.
That's helpful. And then now for my follow up but I guess that when you look at day 21, now preliminary outlook for the 6% I'm curious are you assuming any share gains out within that four to six.
And perhaps a comment on what's being as you you know for the different segments.
Yeah. So let me take the first part then there's often take the second part terms of share gain yes, we do LBM share gain but I am.
Our whole strategy is no four bowls share gains, but actually a share gains every year a few.
A basis point.
They took that I've got something significant when we think about organic growth.
Left off on Europe, you know being flat in the fourth quarter little bit single digit next year, obviously Kobe case is going up a lot. They're the horizon 2025, just have been cut.
What gives you kind of confidence in that market being relatively stable.
Yeah, I mean, hey, Cracow I think our guidance right now is based upon we're assuming market conditions remain the same.
Where we sit today as we kind of think about Covid cases of course, it's a very fluid situation. We're currently not experiencing anything in our business where customers are not allowing us on site to do installations or not.
We're not seeing it affect their behavior at this time, but of course, there's certainly risks with Covid and we certainly acknowledge that but as you can kind of see to our guidance for for the fourth quarter for Europe is is flattish. So it's modestly a little bit down from where we were in the third quarter.
And then for next year again, we're thinking more like a mid single digit growth.
And then you know product inspection you mentioned that was a little bit worse have expected you're talking about mid single digit growth. There next year. So are you getting leading indicators from your consumer package, good customers and others that that demand will come back sooner rather than later.
Yeah I mean.
It's an interesting one you know we certainly have conversations with customers that indicate that there's certainly an interest to do projects, but right. Now we do see you got a lot of customers are are distracted.
Their own operational challenges.
At the moment.
Not.
In terms of having the time to really initiate new projects as something that we're we're still looking forward to but but nonetheless from a cadence perspective, how we do feel like the fourth quarter will be better than than Q3, and we certainly are more optimistic going into next year and as you know we feel very good about this business in terms of.
Overall competitive advantages and the general dynamics that that drive.
Growth in this business around topics like food safety and things like that so so we're much more optimistic for the midterm, it's just a little bit difficult to tell at exactly what time will will they.
Start to see customers returning to more of an investment mode.
And then lastly for Olivia you know there was a lot of talking to call about market share gains and that's great to see I'm wondering if you could talk a little bit more about where those games have been the greatest anything you can kind of quantify and then with the digital infrastructure now built out how will they step up share gains going forward cause they start to accelerate.
Yeah actually could quantifying it very difficult of course, we don't have.
Particularly market date, though.
Compared to just we have some based off 0.4 mile with peers adapted broke a lot of comfort.
I think if more information that we get from our markets around the world.
We.
Also in terms of maybe a new customers that we can <unk>, we have some kpis. That's we use internally to monitor how much of our business comes from existing customers and how much comes with a new customer that's all good.
Indication that we have been winning sure.
We'd be hard pressed to come up with a number.
But I want to.
Let's see if we feel this is something when you get you across the world across businesses.
This is also bandwidth screaming by all these programs that I was glad that we are.
Really.
Everything.
What we certainly also see the biggest spend if it is in that I would direct business.
Our dynamic business has been also growing fault for that company direct business, that's probably a normal indication why these programs work really well.
Okay. Thank you.
Your next question will come from Derek dip room at the payment of America. Please proceed to get to your question.
And it's microscopes for Derek.
Thanks for taking my question first I want to follow up on the guidance comments for 21, both on the on the top line and on the on the just ETS just curious as you as you obviously posted strong results in three Q and you've got a mid single digit Guy for for you. When you go into next year, you're going to be facing significantly easier.
Comps in the first half of the year and you come for all of US to your point is gonna be ultimate easier. So I'm. Just wondering is this more of a not a lot of visibility in the second half of the I know, we walk through some of the Geography's and the the business segment, but just curious why are you seeing that puts and takes given which would be a very you set up for first have plenty.
One.
Hey, Michael I'll take this one is Sean.
Has you know where we don't have a lot of backlog in our business. So we're only about one five months of backlog at a time. So of course, it's always a little bit challenging to put out our first guidance for next year.
We kind of look two parts of the year you are right, we will benefit from easier comparisons in the first half of the year, but then we look at topics like China in Q3 of next year, and we will have more difficult comparisons there.
So overall I would say.
We feel good about the business, we feel good about our execution, we feel good about our momentum, but it's always a little bit challenging to me too.
To kind of to.
Guide with some uncertainty out there if I look at like maybe puts and takes I would say that China.
Is always one that can be an upside or a downside.
China, we always like to say things can move can changed rather quickly in China can I think over the last nine months, we've certainly see things change in both directions very quickly. There. So we're looking for upsides and downsides, I'd say point out and highlight China.
I think another one that I would also highlight as product inspection. It's also a similar size of our total business. We feel very good about this business as I mentioned with Tyco's question. That's also a business that.
Have upside downside based upon some of the dynamics that I described earlier.
Great No problem, then quick follow up along the same lines. If we said over the P&L. If my math is right for 21 I'll take your guiding to about 40 basis points of margin expansion give or take on my mind. So just trying to think through.
Changed in 2020 relative to your initial expectations and it's just you know a lot of the cost you pulled back on this year coming back horses additional incremental investment on top of what it was normally happened just sort of looking at the the 20th of 21 was there.
Yeah. So I think we'll probably do a little bit better than that Mike, but you're right, it's going to be a little bit lower than our typical guidance of 72 100 basis point range, which we still feel very good about from a medium term perspective.
We also have to keep in mind that we're coming off of a strong year of operating profit margin growth in 2020 of 120 basis points.
Terms of the program supporting our margin we feel really good about the momentum that we have in terms of the pricing program as well as our stern-drive programs, but you are right one of the things that will be.
Maybe a little bit of a headwind next year is the temporary nature of some of the cost savings measures that we had in 2020 that we now need to bring back into the cost structure for 2021.
Okay that makes sense. Thanks, so much.
Thanks.
Your next question will come from Brandon Cool yard with Jeffries. Please proceed with your question.
Hey, good afternoon.
Sean sticking with two.
2021 outlook free cash flow guidance, a little below 10%.
Can you speak to the only working capital needs for next year and then what are your pencil you in for Capex.
Yeah, just one second let me pull it up here. So let me start with the second one so for Capex, we have $103 million in our model for next year, So that's going to be up.
About $10 million from this year, we have.
Some facility investments that we're gonna be making in the first half of next year.
Otherwise, we we feel we feel good about our overall.
Free cash flow growth next year, I think it's gonna be kind of in line with our operating profit growth generally there's always maybe timing topics from one year to to another but I think especially if you look at like the two years combined like this year and next year overall.
We're very pleased with the growth I mean, you saw the cash flow generation that we had here in the third quarter and on a year to date basis really really impressed with the execution and the organization on a lot of different manage for cash initiatives and I feel like we will continue to have.
That momentum as we kind of go into next year as well.
And then one more for you.
Talking about what's embedded in terms of net pricing capture in 21, and as we think about the gross margin or margin expansion generally.
Would that be lean more on the gross margin sided opex, giving some of your comments about some of those cost items coming back into the piano yes.
Yeah sure. So in terms of our gross margin for next year right now.
Like for this year right now where we we did just over 2% in terms of price realisation for Q3, and I think that would probably be at that kind of a level.
For for 2020.
As we looked at 2021.
We do have good momentum in the program, but at the same time, we're looking at a lower inflationary environment. So at this point in time, where right now thinking that we'd be more like in one 5% kind of arrange for next year for price realisation.
And then if we kind of like look at the overall gross margin expansion next year, probably something in the 30 kind of basis point kind of a range.
And that would that would exclude maybe a little bit of unfavorable effect of currency. One of the things that we have is a headwind also to our gross margin next year is going to be.
Some of these temporary cost savings that we talked about that come back that will also be a little bit of a headwind in terms of our of our gross margin expansion next year as well.
Very good thank you.
Okay next question will come from Patrick Donnelly with city. Please proceed with their question.
Thank you. This is Jesse on for Patrick just wanted to touch on that one or 2% of Covid related tailwind wonder.
Wondering if you could break that down a little bit further between the areas you laid out between testing and vaccine research and bio processing and.
And then just curious what's implied there for four 220 and into 2021 guidance.
So <unk>.
Is related to the tips business.
Pipettes, it's related to testing.
Kids or pets.
Centers.
Well pipette tips on used.
The parts that we call tailwind.
Because obviously this is tied to the number of tests being conducted.
The tips demand associated with that.
This Kenny.
Very high.
Volatility demands and we see actually that volatility also.
Following the ways.
Regions.
So the one 2%.
Was for Q3, four Q4 would expect.
More like 1%.
When we think about next year, we could still see some tailwind at the beginning of the year.
Depending how colby people it would start to diminish and then we would start to have some headwinds.
From a comparison.
Okay. Thanks.
And then just looking back at the earlier days depend demick in relation to China.
So I'm pretty strong drop off and when Cuba strong recovery and <unk> Q. So you know as we look ahead would we expect kind of a similar dynamic. If there is you know the the contributed to shutdown kinda due to the resurgence of Covid cases, or do you think kind of this new go to market strategy, you can see more resiliency.
You know within China, even if we do see quite a big resurgence of Covid this quarter and ended the 2021.
Yeah, I think what shape.
Jane Smith.
<unk> for your lungs to to deal with call it.
And the more differentiated way.
I see that I experienced that myself being based in Switzerland Europe.
Second ways.
<unk> different feedback on the business world.
It is because government, we ask that quickly but of course also because business and individual people react different due to that we are so much more knowledgeable about things we have today face masks that protect us as one.
So the B two b whoa.
That we are living is north impacted off the wall.
Anymore.
See also the reaction a hold of our customers to be much more controlled.
We have semi lockdowns wakes up with Europe right now.
We don't see it in the same way in all Dwang tree bleach generation, that's long and the second factor is what you're just also make sure that we have already addressed because that will go to markets.
Roaches.
In that sense.
We do expect much smaller impact on our business from any second ways that are is taking place right now.
Okay, great. Thank you.
Your next question will come from Jack Me in with my friend Research. Please proceed with your question.
Thanks, Good afternoon.
Uhm I was hoping you could tease out for us just how much of a sales in the quarter. You think might have benefited from some sort of catch up from earlier in the year and are there any dynamics looking at the three businesses you should just be keeping in mind going into the fourth quarter catch it might impact.
Yeah, Hey, Jack This is Shaun Hayes of course, it's always difficult to try to know or to quantify that I think the one region that certainly stood out the most from our perspective was China in terms of of catch up and as we talked about we definitely see more of a of these.
Shaped recovery in China compared to maybe some of the other regions.
In terms of some of the other geographies, it's a little bit more difficult to say was there a little bit of catch up in Europe.
Maybe but by very difficult to say, but I think maybe just been kind of pivot towards.
We're currently seeing the fourth quarter in terms of guidance and those types of factors would've been considerations for us as we kind of provided our our guidance for the fourth quarter.
Great and then wanted to follow up on R&D investment Uhm, just a clarification I think I heard five per cent of sales, but I wasn't sure if that was for the full year or for the fourth quarter and you know regardless I. Thank you for calling for a nice step up going into the fourth quarter, just maybe talk about where you're.
Finding new projects and you know.
Do you think you'll continue to invest abuse, you know probably more normalised rates in 2021.
Okay. So the 5% is more for the full year.
The 5% is actually a good number for also midterm, we always up a little bit of a fluctuations per quarter to quarter.
But.
Yeah, when you think about it.
When it's independent called a clock shoes or.
Particular events.
5% of the reason why you saw this summer.
A bit of a slowdown.
Spending was on one huh.
Timing of projects.
<unk>, including also product launches.
Some of the temporary cost measures that we incur.
Including also <unk> Bible follow in Europe had also some impact on the Rd spending.
In that sense, yes, Q4 will resume more normal level, maybe even a little bit higher level of.
New spending.
Your next question will come from Richard Eastman with Bird. Please proceed with your question.
Yes, Thank you and thanks for the thanks for the question Olivia when you look at the or Sean decor Industrial business was was up 8% in the quarter and I I may have caused that you said America's in Europe was down modestly so what's the what's the growth was that the case and was the growth of 8%.
Pretty much.
Derived from China.
Yes, yes, yes, it was very much China was very strong.
Also be related to this pent up demand. The fact that we were talking about before.
11.
Overall strong momentum that we see about which items business, but.
You might also we call that a.
Couric industrial in China has a little bit of a higher percentage of the business makes them the rest of the world. So.
In that sense adult electric.
And given given there's.
Cyclical element, obviously covid would have impacted the business there as well just just.
Access I guess, if nothing else but.
If you think about the cyclical aspect of of core industrial in the Americas and Europe, how does it feel if you sift through covid.
Does it feel like that business businesses may be bottoming, when you think about capital budgets and expenditures encore industrial and and the two bigger geography Sir.
Okay. So if you would have asked me.
Two quarters ago, or even one quarter ago, I would have thought that Cora industrial would be.
The impact before my call based on.
The recession.
I mean that sounds pleasantly surprised.
I I certainly explain it on the one that's.
The global economy recovered faster than we expected, but the second one also is we were very successful in shifting our resources to the more resilient industry. The.
The more resilience agency or if that would be an biopharma.
Hold up very nicely Uhm, we certainly feel we put gate.
Sure. They're also with our core industrial business. So yeah, I'm happy to see you get the less cyclical than we would have expected.
Shows that we have also good execution of it there are individuals second light.
We call it the M P marketable material plastic or electronic Margaret at these clearly dial and suffering from the economic environment.
And you said is when you when you talked about earlier in your presentation. Olivia when you talked about the digital marketing tools do these does that account for some of those more resilient them and as a part of how you're you shift your resources few deploy those on the core industrial site as well.
Oh, yes, yes, absolutely, we really did point everywhere.
There is a multitude of tools that are helping so the one we do the second of the analysis Uhm <unk> masks that are so which account side has the most potential we guide our sales force go after this opportunity and then we use.
The digital tools sales tools virtual fell on top of that so that for example, our salespeople also or industrial business. It would engage customers northern want me by physical visit but more and more by video call.
By online Whoopi doors that are dedicated to account.
We have the digital library and all of that all these topics apply across the business including call industrial.
I see okay very good thank you.
Your next question will come from Steve Willoughby with Cleveland to research. Please proceed with your question.
Hi, good evening two questions for you.
Just wondering if you could breakout you commented that consume Bulls in service was up 6% in the quarter.
If I remember correctly I believe service was down year over year in the second corner I was wondering if you could give me a little bit more color between consumables in service I guess, along with that too where do you stand in terms of being able to you know meet demand for pipe S. These days or are you building backlog at all given the increase demanded eyepatch.
Any capex you need to do and then my my second question or topic is Mary.
Looks like you're stepping up to share repurchases in the fourth quarter versus what you were expecting 90 days ago, you know how much in share repurchase activities implied within within the Guy that you gave it.
So do you want to take the first one I take the second one that married the third one [laughter] perfect like I've got everybody.
Good Hey, Steve So on the first one I want to also clarify in the script, we realized that the 6% should be on a year to date basis for servicing consumables.
And a quarter and the quarter service and consumables, we're actually up by 12% and that included.
About 4% growth.
In in the core service business with very strong double digit growth and our consumables business.
Gotcha.
Well on the second one <unk>.
The pipettes themselves are not sofa capacity constrained issue, it's more of a tip.
I'm sure on the tip sites you have.
Capacity problem in the whole industry. So not just up we are in the.
Reasonable situation because we have so he production facility we have one in Mexico, we have one in California, and what have won the China.
All running at four P and of course, we blabber H P different facilities for the global supply and they'll just the local supply we have been successfully the cleaning the capacity over the last few months and will continue to further expand capacity.
<unk>.
They are different leave us that we have we feel good about it and we certainly feel that this could possibly inquiries will also allow us to gain sure.
The demand is certainly here I think we are in a good position to be.
Foster.
Two two August in terms of raising the capacity. This includes all so.
A bigger facility expands and or new facility that will go live next summer.
But our whole focus is actually two weeks expand capacity alright, and you're in the next couple of weeks and took me also eight to the first quarter.
He's very your case number please.
Hey in terms of share repurchase and Sean mentioned on the call. He we want to keep our next steps.
One five times range and so of course, the actual mountain Dew next tier well it depends a little bit on your assumption in terms of EBITDA cashflow, if I just look at the midpoint of our range.
Need repurchasing somewhere in around 850 million dollar level and of course, it could be a little higher little Miller, just depending on how things play out.
Okay. Thank you very much.
Your next question will come from Dan areas, but Stifel. Please proceed with your question.
Afternoon, guys. Thank you maybe yeah, maybe just picking around the edges and sticking with the market share gang conversation, obviously, that's easier to do in some places than others. So I guess I'm just curious and.
On the segments or areas of the market, where you've found it to actually be more difficult to take sure what is it about the competitive or competitive offerings.
Allowed them to kind of hold serve more than others as a customer loyalty price what are the factors that are hardest to overcome that you're finding.
Suddenly the air that we.
Talked about bills, so in the past and that's retail.
And food retail.
I was feedback approaches I would fail marketing approaches have not the same benefit.
In retail clueless <unk> that we have.
A highly competitive market because it's more difficult to.
Do value selling to differentiate the customers cause the project of typically also people. So that's certainly an area where.
Well not focused on market share gaze, but actually.
Walkability.
The second.
Jason I could may is direct or indirect channel.
Wherever we go direct child these approaches play.
Much better to our benefit.
We are introducing pinochle applying spin doctor approaches also to indirect tunnel, but you can imagine we don't have the same impact.
And recall implement all the Tuesday, the same way so that's probably the way most at this point Jake.
Your graphic standpoint, I, Don wooden different shades and for the call business.
Outside the retail if it's not particularly big project or so all of what we do here is applicable luck with help us on the Shagging.
Okay. That's a great color, maybe just operationally are you guys through the S. A P implementation within product inspection and then on Blue Ocean. When you think about where how you finished a year there what percentage of users do you think are fully under the umbrella blue ocean by that point.
[laughter].
So indeed, we have the last implementation.
Product inspection going live in.
<unk> this was.
The most demanding at the most complicated.
Fill it the operation to go through.
Go let me.
As you can imagine it was even more difficult to do that on the Kobe.
Very difficult people being a home office.
International team there'll be easily be traveling.
Giving all these challenges we are happy with how things went.
Nevertheless have some impact on our two three numbers Sean highlight that before.
We still have.
Some more work to do.
So.
I agree implementation of the Ocean has been there solids also often go lives. There is always challenges in workflow that need to be all commodities, it's still has material.
So that means.
We are still going through these.
But I do expect that through the night.
Next couple of weeks, we will have pool Federalisation and then he'll starting to have the benefit like we have seen in all although units, including the <unk>.
Two we call. It a few years ago, we went live with golf grew up close to check weighing business that initially it was it was a very difficult on today just check wait.
So much benefit big.
The Blue Ocean implementation come so he'll call saving operational efficiency I do expect that D. C will also come to top but right now we're still.
Kind of.
Three blinding things.
Things that we have to stay protected.
So do you want to talk about the second point.
Yeah. So.
Most of the units remaining are I would say smaller units in the company. So, but we have a handful of smaller units in Europe skills ago as well as in Asia. The rest of the world. The largest unit that we would have B R. French market organization, which will go live in a couple of years.
In terms of the overall users I'd, probably estimated it's in the 80% kind of a range.
HM HM.
That are currently on the system.
Yeah.
All the put the old major producing organization or Blue Ocean.
Was the key.
Park missing was with Tom cough.
And that's also one of the reason why the majority of the benefits that we can get out of the blue Ocean or no operational mode.
Yep very good guys. Thanks, a ton.
I mean do you have one final question in queue and that will come from Dan Leonard with Wells Fargo. Please proceed with your question.
Thank you so <unk> for starters could you be specific on and the growth in China between Labrid industrial if you disclose that earlier I Miss it.
Yeah, we had high single digit growth and and both of those areas stance.
I mean, I think or I'm, sorry, double digit [laughter] <unk>.
And we have double digit growth in both theory, and both laboratory and industrial in China in the third quarter.
It's safe to assume lab was above 20%.
No actually.
Actually our industrial business was stronger than our laboratory business in the third quarter, which is kind of supports our comments on why we felt like there was pent up demand on the industrial side.
Got it and then my my follow up Sean can you help me think about how your your framing any year and year and uncertainty in your Fourthquarter Guy does it is it fair to assume that you're 4% to 5% local currency assumption reflects a better result than that during the month of October with with more caution around December or are you.
You.
Sydney Moore linearity and your performance.
Yeah, Hey, I think it's always difficult to try to comment on any particular months I mean, there's all obviously prior.
Prior year comparisons that can come into play here, but I would just say that hey, we we feel very good about our guidance.
We we feel good about how we enter the quarter of course, we had the benefit of seeing the month of October when we provided our guidance and.
And we don't have any.
Factor in anything particular from an uncertainty perspective other than that we acknowledged that there is uncertainty in the market and and things can always change quickly.
Oh, great. Thank you have a good night.
Okay. Thank you.
We do have one other question that just came into the queue and that is from Dan brand them with you B S. Please proceed with your question.
Hey, guys, sorry about that I guess, let me just get into an appropriately. So thanks for the question and congrats on the corner, maybe just two questions Olivier Uhm.
So the Guy for 21, and I don't think this is covered but like that core grow with that little single seems really essentially conservative I know you're.
To me that the World is so you know kind of we're not there yet with covid, but nonetheless, given what you just posted this quarter and then also <unk> I know there was some questions earlier, but just maybe give us a little flavor for those two particular guide kind of what kind of what goes behind that you, assuming maybe things get a little worse from here and that's been taken thank you.
No Hey, Dan I will take the question. This is Shaun so on the core industrial side is Olivier mentioned before we're really pleased with the resilience of the industrial Division recently and actually for the past couple of years. So we feel very good about the execution. There we feel really good about our ability to it to target the.
More attractive faster growing more resilience segments of the market.
Nonetheless, we're not immune to the economy, you know and so when we look historically, we we do have that in the back of our minds at this business historically is the more susceptible to the global economy and that and so that's a little bit on Ah are aligned with the low single digit growth and then maybe the second thing is that.
We just had extremely strong growth in China in industrial as we just mentioned a few minutes ago and so we're going to have a much more difficult comparison in China. When it comes to the industrial business next year and as we mentioned earlier, China has a disproportionate percentage of the next for that business compared to our other businesses.
And then I think the second part of your question was China for next year was it.
Yeah, Yeah, Yeah, Yeah, I know I know you're covered it several times over but could you just maybe encouraging just give us a flavor for kind of what's happening now I think there was a question earlier about what is already kind of catch up I think maybe Jack ass, So just to be clear.
Benefit from my ketchup quarter, and if not the 5% next year is really.
Perfect isn't with a cough or just any color in it.
Yeah, So just to clarify in the third quarter, China was up 17% we had.
Double digit growth both in the laboratory business and the industrial business with stronger growth in our industrial business.
We did feel like there was a pent up demand.
In China in the quarter I mean, if you kind of look at the sequential quarter, starting with Q3 being down 13% in China.
Very much of a v-shaped type recovery.
We feel like the team is doing well, we feel like we're executing extremely well.
All the digital marketing approaches that Olivier mentioned earlier also benefit in China, we feel like we're gaining a little bit of market share there.
So so we feel very good about our execution of course, we also feel very good about the growth prospects of China kind of going forward, especially from a medium to longer term perspective, especially with trends alpharma and things like that as we think about 2021.
Like to say in China things can always change very quickly and and so we and we saw examples of that going in both directions already in the last nine months. So we're always a little bit cautious in that regard when we try to forecast.
And China, but currently sitting here today, we feel like mid single digit we feel good about that could.
Could it be higher could it be lower we'll see.
We tend to think that the laboratory business will be <unk>.
Stronger in terms of growth for 2021, compared to 2020 compared to our industrial business and a lot of that is just.
Coming off this very strong quarter on the industrial side in Q3, and just kind of acknowledging that we're going to have a harder comparison in the second half of next year I think we're going to start the first half of the are very strong in China they'll have a much easier comparison in Q1, it's really about the second half of next year.
Great. Thanks, Sean.
You're welcome.
And at this time, we have no further questions. Thank you I will now turn it back over to the channel for closing remarks.
Thank you and he thanks, everyone for joining us this evening.
Do you have any questions. Please don't hesitate to reach out take care Bye bye.
Ladies and gentlemen, this concludes today's conference call. Thank you for participating you may now disconnect.
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