Q4 2023 Mettler Toledo International Inc Earnings Call

Good morning, My name is Adrienne and I will be your conference operator today.

Audra: Good morning, my name is Audra, and I will be your conference operator today. At this time, I would like to welcome everyone to the Mettler-Toledo fourth quarter 2023 earnings call. Today's conference is being recorded. All lines have been placed on mute to prevent any background noise.

Adrienne: At this time I would like to welcome everyone to the Mettler Toledo fourth quarter 2023 earnings call Today's conference is being recorded.

Speaker Change: All lines have been placed on mute to prevent any background noise. After the speakers' remarks, there will be a question and answer session.

Audra: After the speaker's remarks, there will be a question and answer session. If you would like to ask a question during this time, simply press the star key followed by the number one on your telephone keypad. If you would like to withdraw your question, press star 1 again. At this time, I would like to turn the conference over to Adam Uhlman, Head of Investor Relations. Please go ahead.

Speaker Change: If you would like to ask a question. During this time simply press the star key followed by the number one on your telephone keypad.

Speaker Change: If you would like to withdraw your question Press Star one again.

Speaker Change: At this time I would like to turn the conference over to Adam Uhlman head of Investor Relations. Please go ahead.

Adam Uhlman: Thanks, Audra. And good morning, everyone. Good afternoon from Switzerland.

Adam Uhlman: Thanks, Sondra and good morning, everyone. Good afternoon from Switzerland. Thanks for joining our call today on the line with me is Patrick Kaltenbach, Our Chief Executive Officer, and Sean Videla, Chief Financial Officer, Let me cover some administrative matters. This call is being webcast and is available for replay on our website at <unk>.

Adam Uhlman: Thanks for joining our call today. On the line with me is Patrick Kaltenbach, our Chief Executive Officer, and Shawn Vadala, our Chief Financial Officer. Now, let me cover some administrative matters. This call is being webcast and is available for replay on our website at mt.com.

Adam Uhlman: <unk> Dot com a copy of the press release or the presentation that we will refer to today on the call is available on the website as well. This call will include forward looking statements within the meaning of the U S. Securities Act of $19 33, and the U S Securities Exchange Act of $19 34. These statements involve risks uncertainties.

Adam Uhlman: A copy of the press release and the presentation that we will refer to today on the call is also available on the website. This call will include forward-looking statements within the meaning of the U.S. Securities Act of 1933 and the U.S. Securities Exchange Act of 1934. These statements involve risks, uncertainties, and other factors that may cause our actual results, financial condition, performance, and achievements to be materially different from those expressed or implied by any forward-looking statement. For a discussion of these risks and uncertainties, please see our annual report on Form 10-K and our quarterly and current reports filed with the SEC. The company disclaims any obligation or undertaking to provide any updates or revisions to any forward-looking statement except as required by law. On today's call, we might use non-GAAP financial measures. A reconciliation of these non-GAAP financial measures to the most directly comparable GAAP measure is provided in the 8K and is also available on our website. I will now turn the call over to Patrick. Thanks, Adam. And good morning, everyone.

Adam Uhlman: And other factors that may cause our actual results financial condition performance and achievements to be materially different from those expressed or implied by any forward looking statements.

Adam Uhlman: A discussion of these risks and uncertainties. Please see our annual report on Form 10-K, and our quarterly and current reports filed with the SEC.

Adam Uhlman: Company disclaims any obligation or undertaking to provide any updates or revisions to any forward looking statement, except as required by law.

Adam Uhlman: On today's call, we might use non-GAAP financial measures a reconciliation of these non-GAAP financial measures to the most directly comparable GAAP measure is provided in the 8-K and is also available on our website. Let me now turn the call over to Patrick.

Patrick K. Kaltenbach: Thanks, Adam and good morning, everyone. We appreciate you joining our call today.

Patrick K. Kaltenbach: We appreciate you joining our call today. Last night, we reported our fourth quarter financial results, the details of which are outlined for you on page three of our presentation. As previously announced, the transition to a new external European logistics service provider significantly impacted our fourth quarter results, which we expect to largely recapture in the first quarter. Excluding the impact of these delayed shipments, our results were in line with our previous expectations. Market demand has remained weak in China and across our core end markets of pharma and biopharma, fruit manufacturing, and chemicals, but it also does not appear to have deteriorated further.

Patrick K. Kaltenbach: Last night, we reported our fourth quarter financial results. The details of which are outlined for you on page three of our presentation.

Patrick K. Kaltenbach: As previously announced to transition to a new external European logistics service provider significantly impacted our fourth quarter results, which we expect to largely recapture in the first quarter.

Patrick K. Kaltenbach: Excluding the impact of these delayed shipments our results were in line with our previous expectations.

Patrick K. Kaltenbach: Market demand is has remained weak in China and across our core end markets of pharma and Biopharma food manufacturing and chemicals, but also does not appear to have deteriorated further.

Patrick K. Kaltenbach: Looking forward, we expect market conditions to remain soft in the first half of the year.

Patrick K. Kaltenbach: Looking forward, we expect market conditions to remain soft in the first half of the year, and we would then expect our sales to return to growth in the second half of the year as we begin to make easier comparisons. We are focused on the things we can control, including increasing our competitive advantages through innovation and continuous improvement of our corporate programs and nurturing our unique global culture.

Patrick K. Kaltenbach: And we would then expect our sales returned to growth in the second half of the year as we begin to lap easier comparisons.

Patrick K. Kaltenbach: We are focused on the things we can control <unk>.

Patrick K. Kaltenbach: Including increasing our competitive advantages through innovation and continuous improvement of our corporate programs nurturing our unique global culture.

Patrick K. Kaltenbach: I am confident these actions will drive market share gains and help us emerge stronger the market recovery.

Patrick K. Kaltenbach: I'm confident these actions will drive market share gains and help us emerge stronger in a market recovery. Let me now turn the call over to Shawn to cover the financial results for the quarter and our guidance for the year, and then I will come back with some additional commentary on the business. Thank you.

Patrick K. Kaltenbach: Let me now turn the call over to Sean to cover our financial results for the quarter and our guidance for the year.

Shawn P. Vadala: And then I will come back with some additional commentary on the business sure.

Shawn P. Vadala: Thanks, Patrick. And good morning, everyone. Sales in the quarter were $935 million, which represented a decrease in local currency of 13%. On a US dollar basis, sales declined 12% as currency increased sales growth by 1%. On slide number four, we show sales growth by region. Local currency sales declined 7% in the Americas, 16% in Europe, and 18% in Asia and the Rest of the World. Local currency sales in China declined 23% in the quarter.

Shawn P. Vadala: Thanks, Patrick and good morning, everyone sales in the quarter were $935 million, which represented a decrease in local currency of 13% on a us dollar basis sales declined 12% as currency increased sales growth by 1%.

Shawn P. Vadala: On slide number four we show sales growth by region local currency sales declined 7% in the Americas, 16% in Europe, and 18% in Asia rest of the world.

Shawn P. Vadala: Local currency sales in China declined 23% in the quarter.

Shawn P. Vadala: Excluding the impact of the previously disclosed shipping delays related to a new logistics provider in Europe, we estimate our sales in Q4 declined about 7%, with the Americas down approximately 3%, Europe down approximately 6%, and Asia down approximately 14%. On slide number five, we show sales growth by region for the full year 2023. Local currency sales declined 3% in 2023, with sales in the Americas down 1%, Europe down 2%, and Asia, the rest of the world, down 5%. Local currency sales decreased by 10% in China for 2023.

Shawn P. Vadala: Excluding the impact of the previously disclosed shipping delays related to our new logistics provider in Europe, we estimate our sales in Q4 declined about 7%.

Shawn P. Vadala: With the Americas down approximately 3% Europe down approximately 6% and Asia down approximately 14%.

Shawn P. Vadala: On slide number five we show sales growth by region for the full year 2023.

Shawn P. Vadala: Local currency sales declined 3% in 2023 with sales in the Americas down, 1%, Europe down, 2% and Asia rest of the world down 5%.

Shawn P. Vadala: Local currency sales decreased 10% in China for 2023.

Shawn P. Vadala: Excluding the logistics headwind in Q4, we estimate our full-year sales declined approximately 1%, with the Americas flat, Europe up 1%, and Asia down 5%. On slide number six, we summarize local currency sales growth by product area. For the quarter, laboratory sales decreased 18%, and industrial decreased 8%, with core industrial down 6%, and product inspection down 10%.

Shawn P. Vadala: Excluding the logistics headwind in Q4, we estimate our full year sales decline approximately 1% with the Americas flat Europe up, 1% and Asia down 5%.

Shawn P. Vadala: On slide number six we summarized local currency sales growth by product area for.

Shawn P. Vadala: For the quarter laboratory sales decreased 18% and industrial decreased 8% with core industrial down, 6% and product inspection down 10%.

Shawn P. Vadala: Food retail grew 9% and service sales grew 6% in the quarter. Excluding the logistics delays, we estimate laboratory product sales declined approximately 11 percent, industrial sales declined 5 percent, with core industrial down 2 percent, and product inspection down 10 percent, and food retail grew 17 percent. The next slide shows local currency sales growth by product area for the full year 2023. Laboratory sales decreased 7% and industrial sales declined 1%, with core industrial down 1% and product inspection flat. However, food retail increased 27%.

Shawn P. Vadala: Food retail grew 9%.

Shawn P. Vadala: Service sales grew 6% in the quarter.

Shawn P. Vadala: Excluding the logistics delays, we estimate laboratory product sales declined approximately 11% industrial declined 5% with core industrial down, 2% and product inspection down, 10% and food retail grew 17%.

Shawn P. Vadala: The next slide shows local currency sales growth by product area for the full year 2023.

Shawn P. Vadala: <unk> sales decreased 7% and industrial sales declined 1% with core industrial down 1% in product inspection flat.

Shawn P. Vadala: Food retail increased 27%.

Shawn P. Vadala: Service sales grew 10% in 2023. Excluding the logistic delays, we estimate laboratory product sales declined approximately 5%, industrial was flat across both core industrial and product inspection, and food retail grew 29%. Let me now move to the rest of the P&L, which is summarized on slide number 8. Gross margin was 59%, a decrease of 80 basis points due to our lower volume, offset in part by positive pricing and our cost savings initiative. R&D amounted to $46.4 million in the quarter, which is a 3% decrease in local currency compared to the prior year. SG&A amounted to $223.4 million, a 4% decrease in local currency compared to the prior year and benefits from our cost-saving initiatives and lower variable compensation. Adjusted operating profit amounted to $281.8 million in the quarter, a 21% decrease.

Shawn P. Vadala: Service sales grew 10% in 2023 <unk>.

Shawn P. Vadala: Excluding the logistic delays, we estimate laboratory product sales declined approximately 5%.

Shawn P. Vadala: Industrial was flat across both core industrial and product inspection and food retail grew 29%.

Shawn P. Vadala: Let me now move to the rest of the P&L, which is summarized on slide number eight.

Shawn P. Vadala: Gross margin was 59% a decrease of 80 80 basis points due to our lower volume offset in part by positive pricing and our cost savings initiatives.

Shawn P. Vadala: R&D amounted to $46 4 million in the quarter, which is a 3% decrease in local currency over the prior year.

Shawn P. Vadala: SG&A amounted to $223 4, million% to 4% decrease in local currency compared to the prior year and benefits from our cost saving initiatives and lower variable compensation.

Shawn P. Vadala: Adjusted operating profit amounted to $281 $8 million in the quarter, a 21% decrease.

Shawn P. Vadala: Adjusted operating margin was 30.1%, which represents a decrease of 380 basis points from the prior year due to our decreased volume. A couple of final comments on the P&L. Immunization amounted to $18.1 million in the quarter, interest expense was $19.7 million, and other income amounted to $1.6 million.

Shawn P. Vadala: Adjusted operating margin was 31%, which represents a decrease of 380 basis points from the prior year due to our decreased volume.

Speaker Change: A couple of final comments on the P&L.

Speaker Change: Amortization amounted to $18 $1 million in the quarter interest expense was $19 $7 million and other income amounted to $1 6 million.

Shawn P. Vadala: Our effective tax rate was 19% in the quarter. This rate is before discrete items and adjusting for the timing of stock option exercises. Fully diluted shares amounted to $21.7 million, which is approximately a 3% decline from the prior year.

Speaker Change: Our effective tax rate was 19% in the quarter. This rate is before discrete items and adjusting for the timing of stock option exercises.

Speaker Change: Fully diluted shares amounted to $21 7 million, which is approximately a 3% decline from the prior year.

Speaker Change: Adjusted EPS for the quarter was $9 48.

Shawn P. Vadala: Adjusted EPS for the quarter was $9.40, a 22% decrease over the prior year. On a reported basis, EPS was $8.52 as compared to $11.86 in the prior year. Reported EPS in the quarter includes $0.23 of purchased intangible amortization, $0.49 of restructuring costs, and a $0.16 tax headwind from the timing of option exercise. The next slide illustrates our year-to-date results. Local currency sales declined by 3% for the year.

Speaker Change: A 22% decrease over the prior year.

Speaker Change: On a reported basis.

<unk> was $8 and 52 is.

Speaker Change: As compared to $11 86 in the prior year.

Speaker Change: Our reported EPS in the quarter includes 23 <unk> of purchased intangible amortization 49 cents of restructuring costs and a 16 tax headwind from the timing of option exercises.

Speaker Change: The next slide illustrates our year to date results local currency sales declined 3% for the year adjusted operating income decreased 3% or flat excluding unfavorable foreign currency.

Shawn P. Vadala: Adjusted operating income decreased 3% or flat, excluding unfavorable foreign currency, and our adjusted operating margin was flat at 30.4% for the year. Adjusted EPS declined 4% in 2023, excluding the impact of unfavorable foreign currency for the year. Adjusted EPS declined 1%.

Speaker Change: And our adjusted operating margin was flat at 34% for the year adjusted.

Speaker Change: Adjusted EPS declined 4% in 2023, excluding the impact of unfavorable currency for the year adjusted EPS declined 1%.

Shawn P. Vadala: That covers the P&L. Let me now comment on cash flow. In the quarter, adjusted free cash flow amounted to $260.1 million, a conversion of approximately 130% of adjusted net income due to favorable working capital.

Speaker Change: That covers the P&L, let me now comment on cash flow and.

Speaker Change: In the quarter adjusted free cash flow amounted to $261 million a conversion of approximately 130% of adjusted net income due to favorable working capital.

Shawn P. Vadala: In 2023, free cash flow was $908 million, up 20% over last year on a per share basis due to the reduction in working capital with a conversion of approximately 109% of adjusted net income. Now, I will turn to guidance for the first quarter and for the full year.

Speaker Change: In 2023 free cash flow was $908 million up 20% over last year on a per share basis due to the reduction in working capital with a with a conversion of approximately 109% of adjusted net income.

Speaker Change: Let me now turn to guidance for the first quarter and for the full year.

Speaker Change: First while we are extremely disappointed by the shipping delays in the fourth quarter from our third party logistics provider, we have seen good momentum so far this year and catching up on these delayed shipments and continue to expect to largely recover them in the first quarter.

Shawn P. Vadala: While we are extremely disappointed by the shipping delays in the fourth quarter from our third-party logistics provider, we have seen good momentum so far this year in catching up on these delayed shipments and continue to expect to largely recover them in the first quarter. Secondly, given the soft trends across most of our core end markets in the global economy, we expect our customers to be cautious with their investments to start off the year. We're also closely watching events in the Middle East and other potential impacts the war could have on logistics and other costs for our suppliers and customers. Lastly, as a reminder, we implemented many cost savings programs during the second half of last year to mitigate the impact of lower demand.

Speaker Change: Secondly, given the soft trends across most of our core end markets and the global economy, we expect our customers to be cautious with their investments to start off the year.

Speaker Change: We're also closely watching events in the middle East and other potential impacts the war could have on logistics and other costs for our suppliers and customers.

Speaker Change: Lastly, as a reminder, we have implemented many cost savings programs. During the second half of last year to mitigate the impact of lower demand. We continue to expect to maintain and add to these savings in 2024, but also face headwinds from resetting variable compensation programs and inflation.

Shawn P. Vadala: We continue to expect to maintain and add to these savings in 2024 but also face headwinds from resetting variable compensation programs and inflation. Now, turning to our guidance. For the first quarter of 2024, we expect local currency sales to decline approximately 4 to 6%.

Speaker Change: Now turning to our guidance for the first quarter of 2024, we expect local currency sales to decline approximately 4% to 6%.

Speaker Change: This forecast includes an approximate 5% benefit from the delayed shipments in the fourth quarter.

Shawn P. Vadala: This forecast includes an approximate 5% benefit from the delayed shipments in the fourth quarter. We expect adjusted EPS to be in the range of $7.35 to $7.75. Currency at recent spot rates for the quarter would be less than a 1% headwind to first quarter sales but a headwind to adjusted EPS of approximately 4%. For the full year 2024, we expect local currency sales to grow approximately 1 to 2%, which is up from our previous guidance of approximately flattish to reflect the shift of our delayed shipments from our European logistics hub from Q4 into Q1 of this year. We expect full-year adjusted EPS to be in the range of $39.60 to $40.30, which compares to our prior guidance of $39.10 to $39.80.

Speaker Change: We expect adjusted EPS to be in the range of $7 35.

Speaker Change: To $7 75.

Speaker Change: Currency at recent recent spot rates for the quarter would be less than a 1% headwind headwind to first quarter sales, but a headwind to adjusted EPS of approximately 4%.

Speaker Change: For the full for the full year 2024, we expect local currency sales to grow approximately 1% to 2%, which is up from our previous guidance of approximately flattish to reflect the shift of our delayed shipments from our European logistics hub from Q4 into Q1 of this year, we expect full year.

Speaker Change: Our adjusted EPS to be in the range of $39 60.

To $40 30.

Speaker Change: Which compares to our prior guidance of $39 10 to $39 80.

Shawn P. Vadala: This includes an expected headwind to adjusted EPS growth of approximately 2% from unfavorable foreign exchange. Lastly, I'll share a few comments on our 2024 guidance. We expect total amortization, including purchased intangible amortization, to be approximately $73 million. Purchased intangible amortization is excluded from adjusted EPS and is estimated at $26 million on a pre-tax basis, or 99 cents per share.

Speaker Change: This includes an expected headwind to adjusted EPS growth of approximately 2% from unfavorable foreign exchange.

Speaker Change: Lastly, I'll share a few comments on our two.

Speaker Change: 2024 guidance, we expect total amortization, including purchased intangible amortization to be approximately $73 million purchased intangible amortization is excluded from adjusted EPS and is estimated at $26 million on a pre tax basis or <unk> 99 per share.

Speaker Change: Interest expense forecast at $84 million for the year and other income is estimated at approximately $3 million.

Shawn P. Vadala: Interest expense is forecast at $84 million for the year, and other income is estimated at approximately $3 million. We expect our tax rate before discrete items will remain at 19% in 2024. We expect free cash flow of approximately $850 million, representing a conversion of approximately 100% of adjusted net income. We continue to expect Sherry purchases of approximately $850 million in 2024. That's it for my side, and I'll now turn it back to Patrick.

Speaker Change: We expect our tax rate before discrete items will remain at 19% in 2024, we expect free cash flow of approximately $850 million, representing a conversion of approximately 100% of adjusted net income we continue to expect share repurchases of approximately 850 million.

Speaker Change: In 2024, that's it from my side and I'll now turn it back to Patrick.

Patrick K. Kaltenbach: Thanks, Shawn. Let me start with some comments on our operating businesses, starting with LAPS. As we had expected, demand trends across most of our lab customers remained weak in the fourth quarter, especially in pharma and biopharma. Sales declined across most product categories, and we continue to see soft demand across all geographies, especially in China.

Patrick K. Kaltenbach: Thanks, Shawn let.

Patrick K. Kaltenbach: Let me start with some comments on our operating businesses starting with lap.

Patrick K. Kaltenbach: As we had expected demand trends across most of our lab customers remained weak in the fourth quarter specialty pharma and Biopharma.

Patrick K. Kaltenbach: Sales declined across most product categories, and we continue to see soft demand across all geographies, especially in China.

Patrick K. Kaltenbach: While market conditions have been weaker, we continue to focus on the things we can control, which includes bringing new innovations to market, enhancing our sales and marketing programs, and expanding our service offering and capacity. This past year saw the launch of many exciting new and upgraded products. We are excited about our innovation pipeline, and we believe organizations that maintain their growth investments during market downturns will emerge even stronger during the recovery period. Our investments have had a particular emphasis on supporting our customers' needs for laboratory automation and data integrity requirements, which we are confident will be a significant driver of continued market share gains going forward, and we are excited to share with you additional developments over the coming months. Switching to our industrial business, sales for the quarter were in line with our previous guidance despite the headwind from delays from our European logistics hub. Co-industrial demand in the Americas and in Europe has been relatively resilient this past year despite declines in the purchasing manager index.

Patrick K. Kaltenbach: While market conditions have been weaker.

Patrick K. Kaltenbach: Continue to focus on the things, we can control, which includes bringing new innovations to market enhancing our sales and marketing programs and expanding our service offering and capacity.

Patrick K. Kaltenbach: This past year saw the launch of many exciting new and upgraded products.

Patrick K. Kaltenbach: We are excited about our innovation pipeline and we believe organizations that maintained their growth investments during market downturns really emerged even stronger during recovery periods.

Patrick K. Kaltenbach: Our investments have had a particular emphasis on supporting our customers' needs for laboratory automation and data integrity requirements.

Patrick K. Kaltenbach: Which we are confident there'll be a significant driver of continued market share gains going forward.

Patrick K. Kaltenbach: We are excited to share with you additional developments over the coming months.

Patrick K. Kaltenbach: Switching to our industrial business sales for the quarter were in line with our previous guidance. Despite the headwind from delays of our European logistics hub.

Patrick K. Kaltenbach: Core industrial demand in the Americas, and Europe has been relatively resilient this past year, despite declines declines in purchasing minutes manager indexes.

Patrick K. Kaltenbach: We continue to see solid interest from customers looking for advanced automation solutions, and we expect to benefit from customer investments in onshoring and near shoring over the coming year.

Patrick K. Kaltenbach: We continue to see solid interest from customers looking for advanced automation solutions, and we expect to benefit from customer investments in on-shoring and near-shoring over the coming year. Regarding our product inspection business, we have seen weak food manufacturing customer demand in Europe and soft demand in the Americas. We continue to target faster growing segments and have a focus on engaging new customers with a refreshed portfolio of innovative solutions. Lastly, food retail results were very strong, excluding the negative impact from our European logistics hub.

Regarding our product inspection business and you have seen weak food manufacturing customer demand in Europe and soft demand in the Americas.

Patrick K. Kaltenbach: We continue to target faster growing segments and to have a focus on engaging new customers with a refreshed portfolio of innovative solutions.

Patrick K. Kaltenbach: Lastly, food retails results were very strong excluding the negative impact from our European logistics hub.

Patrick K. Kaltenbach: We had solid performance for the year due to strong project activity, particularly in the Americas.

Patrick K. Kaltenbach: We had solid performance for the year due to strong project activity, particularly in the Americas. Now, let me make some additional comments by geography. Sales in Europe, excluding the estimated impact from our European Logistics Hub, are delayed. We are softer than we had expected, following resilient performance for much of the year. As mentioned earlier, weak demand from European food manufacturing customers weighed on our product inspection business.

Patrick K. Kaltenbach: Now, let me make some additional comments by geography.

Patrick K. Kaltenbach: Sales in Europe, excluding the estimated impact from our European logistics hub delays.

Patrick K. Kaltenbach: Our software than we had expected following resilient performance from much of the year.

Patrick K. Kaltenbach: As mentioned earlier, the demand from European food manufacturing customers weighed on our product inspection business.

Patrick K. Kaltenbach: Additionally, we also saw softer than expected demand from our lab and core industrial customers in the quarter. Do you remain cautious on the outlook for Europe due to low PMI readings in the region, the continuing war in Ukraine, and the potential for additional impacts for the economy from the conflict in the Middle East?

Patrick K. Kaltenbach: Additionally, we also saw a softer than expected demand from our lab and core industrial customers in the quarter.

Patrick K. Kaltenbach: We remain cautious on the outlook for Europe due to low PMI readings in the region.

Patrick K. Kaltenbach: The continuing order, Ukraine, and the potential for additional impacts for the economy.

Patrick K. Kaltenbach: From the conflict in the Middle East.

Patrick K. Kaltenbach: Turning now to the Americas, our results for the quarter, excluding estimated logistic headwinds, were slightly better than we had expected due to steady core industrial demand and robust food retail growth. Going forward, we are well positioned to capture increased demand from emerging growth industries and onshoring activity. Finally, Asia and the rest of the world results were slightly better than we had expected as our core industrial sales declines in China were less than we had anticipated. However, pharma and biopharma demand in China has remained very weak, and we continue to expect reduced demand for the first half of the year.

Patrick K. Kaltenbach: Turning now to the Americas, our results for the quarter, excluding estimated logistics headwinds were slightly better than we had expected due to steady core industrial demand and robust food retail growth.

Patrick K. Kaltenbach: Going forward, we are well positioned to capture increased demand from emerging growth industries and onshoring activities.

Patrick K. Kaltenbach: Finally, Asia rest of the World results were slightly better than we had expected as our core industrial sales declines in China were less than we had anticipated.

Patrick K. Kaltenbach: Pharma and Biopharma demand in China has remained very weak and we continue to expect reduced demand for the first half of the year.

Patrick K. Kaltenbach: Our team is doing an excellent job adjusting to the current market conditions. We are confident in the long term growth opportunity for the portal business in the region.

Patrick K. Kaltenbach: Our team is doing an excellent job adjusting to the current market conditions, and we are confident in the long-term growth opportunities for our business in the region. That concludes my comments on the fourth quarter results. Now, I'd like to share with you some deeper insights on the next wave of sales and marketing initiatives we have introduced into our Spinnaker program and a few examples of enhancements that are on the way. To start, and as a reminder, the significant diversity of our business and the fragmented customer base means we need to set up a set of sophisticated tools, analytics, and processes to identify, prioritize, and pursue the most attractive and profitable growth opportunities for our sales team, with a specific focus on new customer opportunities and cross-selling opportunities within our existing customers. Spinnaker is our global excellence program in sales, service, and marketing that enables us to drive sales growth and gain market share.

Speaker Change: That concludes that concludes my comments on the fourth quarter results now I'd like to share with you. Some deeper insights on the next wave of sales and marketing marketing initiatives. We have introduced to our clinical program and a few examples of enhancements that are underway.

Speaker Change: To start.

Speaker Change: And as a reminder.

Speaker Change: The significant diversity of our business and the fragmented customer base means we need to set a set of sophisticated tools analytics and processes to identify prioritize and pursue the most attractive and profitable growth opportunities for our sales teams.

With a specific focus on new customer opportunities and cross selling opportunities within our existing customers.

Speaker Change: Spinnaker is our global excellence program in sales service and marketing that enables us to drive sales growth and gain market share.

Patrick K. Kaltenbach: Continuous improvement is an important part of our strategy and culture, and it is very much at the heart of our spinnaker program. We constantly enhance and refine our initiatives, releasing new waves of enhancements to the program periodically that build on previous waves of initiatives, reinforcing our strong foundation and increasing our competitive advantage. We are currently launching the sixth wave of Spinnaker, which is focused on leveraging new possibilities offered by the digitalization of processes and further enhancing the customer experience.

Speaker Change: Continuous improvement is an important part of our strategy and culture.

Speaker Change: This is very much at the heart of our Spinnaker program.

Speaker Change: We constantly enhance and refine our initiatives releasing new waves of <unk> Harmon enhancements to the program per the ultimately the builds on previous waves initiatives reinforcing of our strong foundation and increasing our competitive advantages.

Speaker Change: We are currently launching to six wave of spinnaker, which is focused on leveraging new possibilities offered by digitalization of processes and further enhancing the customer experience.

Speaker Change: I would like to share with you some tangible examples of the initiatives we have underway.

Patrick K. Kaltenbach: I'd like to share with you some tangible examples of the initiatives we have on the way. Starting with our digitalization efforts, this year we are making multiple improvements to our top K in Salesforce guidance program. As a reminder, in addition to generating sales leads for our various marketing activities, our Top K program provides our field teams with tailored and actionable investment alerts about specific sales opportunities that are generated by proprietary data analytics and deep learning software solutions, leveraging external data sources and our own internal database. These sales opportunity alerts are created fully automatically, qualified, and are fed into our CRM.

Speaker Change: Starting with our Digitization digitalization efforts this year, you're making multiple improvements to our top canyon sales force guidance programs.

Speaker Change: As a reminder.

Speaker Change: In addition to generating sales leads through our various marketing activities. Our top K program provides our field teams with tailored and actionable investment alerts about specific sales opportunities that are generated by proprietary data analytics and deep learning software solutions leveraging external data sources.

Speaker Change: And our own internal databases.

Speaker Change: These sales opportunity alerts are created fully automatically qualified.

Speaker Change: Into our CRM.

Speaker Change: In addition to expanding our top K program to more areas of our business. This next wave of spinnaker features a significant expansion of.

Patrick K. Kaltenbach: In addition to expanding our Top K program to more areas of our business, this next wave of Spinnaker features a significant expansion of data sources to feed our big data warehouse, enabling Spinnaker to provide intelligent prioritization of target sites for our field sales. This also enables real-time smart profile reports to ensure timely follow-up and the most accurate background of potential customers, including data on their digital engagements with us. Other improvements include expanded capabilities to optimize and prioritize our marketing activities, including campaigns for replacing aging equipment across our installed base. This wave of Spinnaker also features additional big data capabilities to support our sales team's cross-selling efforts. Cross-selling is a very important growth opportunity for us because leads generated by colleagues in other product areas have high conversion rates. Today, our cross-selling penetration to existing customers is still rather low, but big data analytics across our CRM and various processes is helping us unlock sales leads across our businesses, including from our service teams, and Spinnaker is an excellent tool to help provide additional transparency on these sales opportunities.

Speaker Change: Data sources to feed our big data warehouse, enabling spinnaker provide intelligent prioritization of target sites global field sales teams.

Speaker Change: This also enables real time smart profile reports to ensure timely follow up and the most accurate <unk> and potential customers, including data on the digital engagements with us.

Speaker Change: Yeah.

Speaker Change: Although improvements include expanded capabilities to optimize and prioritize our marketing activities, including campaigns for replacing aging equipment across our installed base.

Speaker Change: This wave of Spinnaker also features additional big data capabilities to support our sales team cross selling efforts.

Speaker Change: With each of our product categories, having their own dedicated sales specialists cross selling is a very important growth opportunity for us because leads generated by colleagues in other product areas with high conversion rates.

Speaker Change: Today, our cross selling penetration assisting customers is still rather low, but big data analytics across our CRM and various processes is helping us unlock sales leads.

Speaker Change: Our businesses.

Speaker Change: Including from our service teams and spinnaker is an excellent tool to help provide additional transparency on these sales opportunities.

Patrick K. Kaltenbach: Now, from a customer perspective, you're also advancing several important enhancements to Spinnaker to improve our customer experience. We have previously focused on increasing our digital connectivity with our customers. However, we now see additional opportunities to provide advanced platforms that will create impactful experiences that further strengthen our customer relationship and overall value proposition. Examples include offering customers the ability to gain deep insights across their installed base of Mettler-Toledo instruments, be it Access to Calibration Certificates or Known Last Service Dates, Contract Coverage, or Renewal Agreement.

Speaker Change: Now from a customer perspective, we are also advancing several important.

Speaker Change: Enhancements to spinning out to improve our customer experience.

Speaker Change: You have previously focused on increasing our digital connectivity with our customers.

Speaker Change: However, we now see additional opportunities to provide advanced platforms, it'll create impactful experiences that throughout to strengthen our customer relationship and overall value proposition.

Examples include offering customers the ability to gain deep insights across the installed base of Mettler Toledo instruments.

Speaker Change: Access to calibration certificates, well known lost service dates.

Speaker Change: While contract coverage or renewal agreements.

We have also enhanced our integration to do customer systems to streamline the entire procure to pay process.

Patrick K. Kaltenbach: We have also enhanced our integration into customer systems to streamline the entire procure-to-pay process. By offering various levels and types of integration, from punch out to order and invoice integration, we aim to increase productivity and drive process efficiencies for our customers. We already receive about 40% of our product orders, mainly consumables and less complex products, through digital interfaces today, providing a seamless and efficient buying experience for our customers. Our customer portal allows customers to browse personalized product catalogs, review real-time inventory levels, and manage orders all in one place. Our end-to-end order management systems include efficient tracking and management of both online and offline orders and includes an intuitive product selection and configuration process. For less complex products that do not require support from our specialists, customers can easily find specific products and use our smart configuration tool to simplify their ordering.

Speaker Change: Our offering various levels on types of integration from punch out to order an invoice integration, we aimed to increase productivity and drive process efficiencies for our customers.

Speaker Change: You already receive about 40% of our product orders, mainly consumables and less complex products through digital interfaces today, providing a seamless and efficient buying experience for our customers.

Speaker Change: Our customer portal allows customers to browse personalized product catalogs.

Speaker Change: We view real time inventory levels can manage orders all in one place.

Speaker Change: Our end to end order management systems include efficient tracking and management of both online and offline orders and includes an intuitive.

Speaker Change: Product selection and configuration process.

Speaker Change: For less complex products that do not require support from our specialists customers can easily find specific products and use our smart configuration tool to simplify the ordering.

Patrick K. Kaltenbach: One element of the next wave of spinnaker includes improving the order process by leveraging new technologies to facilitate an assisted experience with a Mettler-Toledo expert. This includes enhanced chat functionality, click to book a meeting, or the Fotella sales representative or digital sales rooms that automatically guide customers through the product selection process and provide them with all the information they need at any time to make an informed decision.

Speaker Change: One element of the next wave of spinnaker includes improving.

Speaker Change: The order process by leveraging new technologies to facilitate assisted experience with a metal Toledo expert.

Speaker Change: This includes enhanced chat functionality click to book a meeting.

Speaker Change: If a tenant sales representative or digital sales rooms that ultimately guide customers through the product selection process and provide them all the information they need at any time.

Speaker Change: To make an informed decision.

Speaker Change: For more complex solutions. In addition to providing onsite demonstrations of our instruments. We also provide virtual demonstrations of customers that are very effective.

Patrick K. Kaltenbach: For more complex solutions, in addition to providing on-site demonstrations of our instruments, we also provide virtual demonstrations to customers that are very effective. As part of our continuous improvement, we have revamped the studio setups of our virtual demos, making them more efficient and focused, significantly reducing preparation time by curating a series of demonstration menus based on customers' most frequently asked questions. This helps to deliver a comprehensive demo that addresses customers' questions in a very concise way. Customers have already reported an enhanced experience, gaining a deeper, more intuitive understanding of our instruments, and our representatives find it easier to showcase our product features, and it makes technical details more accessible and adjustable with this new approach. Lastly, to ensure we are meeting and exceeding our customers' expectations through every step of their journey with our sales teams, we have also begun to implement customer feedback loops and net promoter scores for product sales. In addition to what we are already doing, or what we already do for our service...

Speaker Change: As part of our continuous improvement we have revamped the Stooges setups of our video virtual demos.

As part of our continuous improvement we have revamped the Stooges setups of our video virtual demos.

Speaker Change: Making it more efficient and focused significantly reducing preparation time by Curating a series of demonstration menus based on customers' most frequently asked questions.

Speaker Change: This helps to deliver a comprehensive demoed that addresses customers' questions in a very concise way.

Speaker Change: Customers have already reported an enhanced experience gaining a deeper more intuitive understanding of <unk> instruments, and our representatives find it easier to showcase our product features and it makes technical details more accessible and digestible with this new approach.

Speaker Change: Lastly to ensure we are meeting and exceeding our customers' expectations through every step of their journey Republic sales teams.

Speaker Change: We've also begun to implement customer feedback loops and net promoter scores for product sales.

Speaker Change: In addition to what we're already doing of what you already do for our service teams.

Speaker Change: This has proven to be a very effective source of opportunities for process improvements and we expect improved results Republic sponsored program.

Audra: This has proven to be a very effective source of opportunities for process improvements, and we expect improved results with our expanded program. So I hope these few examples give you a flavor for the much broader set of new initiatives that are underway with our new Spinnaker program. We believe they will continue to expand our sales and marketing lead over our competition and ensure our teams are spending their time with the most attractive opportunities and optimizing our win rates, while further strengthening our customer relationships. So that is the conclusion of all prepared remarks. Operator, I'd like now to open the line for questions. Thank you. At this time, I would like to remind everyone that in order to ask a question, press star, then number one on your telephone keypad. We'll go first to Jack Meehan at Nefron Research. Thank you. Good morning.

Speaker Change: Yes.

Speaker Change: So I hope you see example, skip you a flavor for a much broader set of new initiatives that are underway with our newest clinical program.

Speaker Change: We believe they will continue to expand our sales and marketing lead over our competition and ensure our teams are spending the time with the most attractive opportunities and optimize our win rates.

Speaker Change: Filppula strengthening our customer relationships.

Speaker Change: So that is the conclusion of our prepared remarks, operator, I'd like now to open the line for questions.

Speaker Change: Thank you.

Speaker Change: At this time I would like to remind everyone in order to ask a question Press Star then the number one on your telephone keypad.

Speaker Change: We will go first to Jack Meehan at Nephron research.

Jack Meehan: Thank you good morning.

Jack Meehan: Sean This is Jack I'll start.

Shawn P. Vadala: Shawn, just wanted to start. It would be great to get your forecast by segment for the first quarter and for the year. Yeah, sure. So let me start with the lab business.

Jack Meehan: Would be great to get your forecast by segment for the first quarter and for the year.

Shawn P. Vadala: Yes, sure. So let me start with the lab business. So we expect.

Shawn P. Vadala: So we expect lab in Q4, I mean, I'm sorry, in Q1 2024 to be down low to mid single digit. And for the full year, we expect it to be up low single digit. For core industrial, we expect Q1 to be down mid-single digit and for the full year to be flattish. For product inspection, we expect it to be down mid-single digit for Q1 and for the full year to be flattish. And then retail, we expect to be down about 10% in Q1, and for the full year, down mid-to-high single digits. And then, if we look at the geographies, we expect.

Shawn P. Vadala: Lab in Q4, I mean, I'm, sorry in Q1 2024 to be down low to mid single digit and for the full year, we expect it to be up low single digit.

Shawn P. Vadala: For core industrial we expect Q1 to be down mid single digit and for the full year to be flattish.

Shawn P. Vadala: <unk> inspection, we expect to be down mid single digit for Q1 and for the full year flattish and then retail we expect to be down about 10% in Q1.

Shawn P. Vadala: And for the full year down mid to high single digit.

Shawn P. Vadala: And then if we look at the geographies we expect.

Shawn P. Vadala: The Americas to be down low single-digit in Q1 and then for the full year up low single-digit. We expect Europe to be up low single-digit in Q1, but up low to mid single-digit for the full year. We expect China to be down low to mid-20s in Q1 and down high single-digit for the full year. Excellent.

Shawn P. Vadala: The Americas to be down low single digit in Q1, and then for the full year up low single digit.

Shawn P. Vadala: We expect Europe to be up low single digit in Q1.

Shawn P. Vadala: But in up low low to mid single digit and for the full year.

Shawn P. Vadala: We expect China to be down low to mid <unk> in Q1 and down high single digit for the full year.

Shawn P. Vadala: Excellent.

Shawn P. Vadala: And then just as a follow-up, what does your first quarter guidance assume for EBIT margins, and can you just walk us through, like, the pacing throughout the year, which, you know, kind of bridges to the full-year forecast? Yeah, sure. So, in the first quarter, I mean, of course, the first quarter, we're going to have, you know, a significant volume decline in the fall, actually, in the first half of the year. So for the first quarter, we're going to be down over 200 basis points, probably in like the 230-240 kind of basis point range. Now, it's important to understand that currency has a pretty big effect on the first quarter. So it's probably like a 100% negative headwind to our margin.

Speaker Change: And then just as a follow up what does your first quarter.

Speaker Change: Guidance assume for EBIT margins and can you just walk us through like the pacing throughout the year, what kind of bridges for the full year forecast.

Speaker Change: Yes sure so.

Speaker Change: In the first quarter I mean of course, the first quarter, we're going to have.

Speaker Change: A significant volume decline.

Speaker Change: The volume decline in the fall legacy in the first half of the year. So for the first quarter, we're going to be down over 200 basis points, probably in like the 230 240 basis point range now it's important to understand too like currency is a pretty big effect on the first quarter. So it's probably like a 100% negative headwind to our March.

Speaker Change: <unk>.

Shawn P. Vadala: In the first quarter, and I think we called out in the press release, a 4% headwind to earnings per share. But that's going to change quite a bit as we get into the second half of the year, especially the fourth quarter. And so for the full year, we're looking at the operating margin to be up in the kind of like 30 bps kind of a range. And if you exclude currency, it's probably in the 70, 70 plus kind of bps kind of a range. Super, thank you.

Speaker Change: In the first quarter and I think we called out in the press release, a 4% headwind to.

Speaker Change: Earnings per share.

Speaker Change: But that's going to change quite a bit as we get into the second half of the year, especially.

Speaker Change: The fourth quarter.

Speaker Change: And so for the full year, we're looking at the operating margin to be up in the kind of like 30 bps kind of a range and if you exclude currency, it's probably like the 70 70, plus kind of bps kind of a range.

Speaker Change: Super Thank you.

Speaker Change: Yeah welcome.

Shawn P. Vadala: Welcome. We'll move to our next question from Dan Arias at C4. Hi guys, thanks for the questions. Shawn, I think I'll just go back to the guide.

Speaker Change: We'll move to our next question from Dan Arris at Stifel.

Dan Arias: Yeah, Hi, guys. Thanks for the questions, Sean maybe just going back to the guide if you take out the $58 million and you add it to 2024. It does get you to that up a point or two that youre guiding to.

Shawn P. Vadala: If you take out the $58 million and you add it to 2024, it does get you to that upper point or two that you're guiding to. But in order to have the dollars be the same, it seems like the outlook would need to be for three points or so of growth. So is there something else that's amounting to a partial offset? How do you see the outlook now versus last quarter when you exclude the logistics? Yeah, hey, Dan, it's a fair point.

Dan Arias: But in order to have the dollars be the theme it seems like the outlook, we need to be four three points or so of growth. So.

Shawn P. Vadala: Is there something else thats amounting to a partial offset.

Speaker Change: How do you see the outlook now versus last quarter when you exclude the logistics this year.

Speaker Change: Yeah, Hey, Hey, Dan It's a fair point like as you mentioned, we built the.

Shawn P. Vadala: Like, as you mentioned, we built the, we expect the shipping delays to largely benefit the first quarter of this year. And so we acknowledge there's upside to the full-year guidance because, in addition to that benefit, there's also a growth rate benefit as we get to, you know, the end of the year in the fourth quarter, you know, given the base that we're kind of growing off of. But you know, when we kind of stepped back from all that, we just kind of felt like it's, it's still very early in the year.

Speaker Change: We expect the shipping delays to largely.

Speaker Change: Benefit the first quarter of this year.

Speaker Change: And so we acknowledge there is upside to the full year guidance. Because in addition to that benefit. There's also like a growth rate benefit as we get to.

Speaker Change: To the end of the year in the fourth quarter.

Speaker Change: Given the base that we're kind of growing off of.

Speaker Change: But when we kind of step back from all that we just kind of felt like it's still very early in the year and while we're not seeing anything new in the business I mean, Patrick talked about in the prepared remarks that yes. There are still challenges in the market, but just want to confirm we're not seeing anything new at this point, but it's still early in the year, we just prefer to be a little bit cautious.

Shawn P. Vadala: And while we're not seeing anything new in the business, I mean, you know, Patrick talked about in the prepared marks that yes, there are still challenges in the market, but I just want to confirm that we're not seeing anything new at this point, but it's still early in the year. We just prefer to be a little bit cautious, given various uncertainties and the back-end waiting of the year. But you know, when we look at the second half of the year, we still feel good. We feel like we're really well positioned for the second half.

Speaker Change: It's giving various uncertainties in the back weighting of the year.

Speaker Change: But when we look at the second half of the year, we still feel good we feel like we're really well positioned for the second half.

Shawn P. Vadala: You know, we talked about some of these new product launches in the prepared remarks; we have a lot of really exciting programs that we're launching. I mean, we spent a little bit of time talking about Spinnaker six in the prepared remarks, but there are other corporate programs that we're working on as well. So we feel like, you know, we are well positioned for the second half.

Speaker Change: We talked about some of these new product launches in the prepared remarks.

Speaker Change: We have a lot of really exciting programs that we're launching we spent a little bit of time talking about spinnaker six in the prepared remarks, but theres other corporate programs that we're working on as well. So we feel like we are well positioned for the second half and just technology I think theres, a little bit of upside, yes, we're being a little bit cautious as we start the year.

Shawn P. Vadala: Yeah, I think there's a little bit of upside. You know, we're being a little bit cautious as we start the year, but we just want to see how things play out a little bit. Okay, so just to be clear here, you're not passing along the full amounts of the logistics offset, but you also don't see anything in the end market makeup that has you feeling less confident than before or that has you looking for less growth than before. Is that a fair summation?

Speaker Change: But we just want to see how things play out a little bit.

Speaker Change: Okay. So just to be clear, you're not passing along the full amount of.

Speaker Change: The logistics offset but you also don't see anything in the end market makeup that have you feeling.

Speaker Change: Less confident than before or that as you're looking for less growth than before is that a fair summation.

Speaker Change: Yes, I think Thats fair.

Patrick K. Kaltenbach: Yeah, I think that's okay, and then just as a follow-up, maybe from an end market standpoint, it would be great if you could just give any color you could on the degree to which sentiment on China has changed in the quarter versus last quarter. Maybe it hasn't changed at all, but it would just get, it would be good to get it. Sort of an updated view on the word on the street when it comes to ground-level conversation, thoughts on the rebound, etc. I'll take that. Look, Shawn and I were in China in December, and, of course, we have continued conversations with the local team there, the sales management team, to see if there are any changes. I would say China at the moment is still quite weak, especially in pharma and biopharma, but from our perspective, the situation has not deteriorated from what we reported on at the JPMorgan conference.

Speaker Change: Okay, and then just as a follow up maybe from an end market standpoint, it would be great. If you could just give any color you could on the degree to which sentiment on China has changed in the quarter versus last quarter, maybe it hasnt at all but it would just get it would be good to get it.

Speaker Change: Sort of an updated view on.

Speaker Change: The word on the street when it comes to ground level conversation and thoughts on the rebound et cetera.

Speaker Change: I'll take that.

Speaker Change: Okay, Sean I have been in China in December and of course, we're in continued conversations with the local team since management team to see if there any changes I.

Shawn P. Vadala: I would say China at the moment is still quite weak, especially in pharma biopharma, but from our perspective to situation is not deteriorate from what we reported on that at Jpmorgan Conference.

Shawn P. Vadala: Clearly.

Shawn P. Vadala: They have seen still facing many headwinds to us.

Shawn P. Vadala: Perhaps has been very significant spending in growth during the Covid period.

Shawn P. Vadala: But.

Patrick K. Kaltenbach: Clearly, they are still facing many headwinds, um www.thevenusproject.com www.thevenusproject.com. And there is, the second half will be easier for us because we have much easier comparisons. As a reminder, we had been down 25% in Q3 last year, 23% in Q4. This year, we told you that the first half would be down, so the second half will be now for us in 2024 will be an easier comparison

Shawn P. Vadala: Right now we are facing situation that is a lack of stimulus from the government as a lot of uncertainty still there.

Shawn P. Vadala: There is some reduced foreign investment as well.

Shawn P. Vadala: So all of these are currently calling me that his focus on stabilizing the real estate markets.

Shawn P. Vadala: That in itself leads to just also softer demand at the moment.

Shawn P. Vadala: Overall, it Hasnt changed as I said in my in my comments core industrial has been actually a bit better.

Shawn P. Vadala: Other than expected in Q4.

Shawn P. Vadala: We remain.

Shawn P. Vadala: It costs and our outlook is still in the first half of 'twenty four.

Shawn P. Vadala: And.

Shawn P. Vadala: There is.

Shawn P. Vadala: The second half will be easier for us because we have much easier compares.

Shawn P. Vadala: Reminder, that we had.

Shawn P. Vadala: Down 25% in Q3 last year, 23% in Q4. This year. We told you that the first half will be down in the second half will be now for us in 'twenty, three and four will be an easier compare I think.

Patrick K. Kaltenbach: I think we have a lot of good strategic drivers there. We have a very strong team, and we're confident that we will be able to continue to gain market share with our programs and our products that we have there. And there's also the long-term that the market in China has, as we told you before, high single-digit growth opportunities. Thank you, guys. Yeah. We'll go next to Derik DeBruin at Bank of America. Hi, good morning.

Shawn P. Vadala: We have a lot of good strategic drivers do you have a very strong team and we're confident we'll be able to continue to gain market share with all of our programs or products that you have there and there's also long term total market in China is.

Shawn P. Vadala: We told you before is high single digit growth opportunities.

Speaker Change: Okay. Thank you guys.

Speaker Change: Yes.

Speaker Change: Okay.

Speaker Change: We will go next to Derik de Bruin at Bank of America.

Speaker Change: Hi, good morning, Thanks for taking my question.

Shawn P. Vadala: Thanks for taking my question. So can you talk a little bit more about what you had to do to sort of like fix the logistical issues and what your third party is? And I guess just, you know, are you confident that these are not going to be at that? And you made some sort of allusion to or comment about the Middle East.

Speaker Change: So.

Speaker Change: Can you talk a little bit amount more about what you had to do to sort of like fix the logistical issues and what your third party is and I guess just.

Speaker Change: Are you.

Speaker Change: Are you confident that these are not going to be at with that and you made some sort of illusion to our comment about the middle East are you seeing.

Shawn P. Vadala: Are you seeing, you know, I mean, what do you think is really sort of the risk there? I mean, I don't think you ship much through the Red Sea, but can you just sort of talk about sort of like what you've done to sort of ameliorate and fix some of the issues around that? Thanks. Yeah, hey, Derik, maybe I'll start off.

Speaker Change: I mean, what do you think it's really throw the risks there I mean, I don't think you shipped much through the Red Sea, but can you just sort of talk about sort of like what you've done this or ameliorate and fix some of the issues around that thanks.

Speaker Change: Okay.

Speaker Change: Yeah, Hey, Derik, maybe maybe I'll start off so maybe I'll start off with the latter part of the question with the Red Sea and the Middle East I mean of course, we do have things coming from Asia that are on.

Shawn P. Vadala: So maybe I'll start off with the latter part of the question about the Red Sea in the Middle East. I mean, of course, we do, you know, have things coming from Asia that are on, you know, that are on boats and ships, you know, going through the Red Sea, so we will have higher freight costs, you know, a little bit as we kind of go into this year. But I think the bigger thing is really what that means to our customers. You know, it's not really directly related to us, as you say, it's really about what it means to our customers. So I think there's still an unknown factor there.

Speaker Change: That are on boats and ships.

Speaker Change: Going through the Red Sea that so we will have higher.

Speaker Change: Freight costs, a little bit as we kind of go into this year, but I think the bigger thing is really what does that mean to our customers. It is not really directly related to us as you say, it's really about what does it mean to our customers. So.

Speaker Change: I think there is still an unknown there.

Shawn P. Vadala: You know, I know, especially in Europe, there's been a lot of sensitivity around various inflationary topics over the last couple of years, whether it's all the geopolitics that have put pressure on energy costs or whether it's just inflation in general. This is just another thing kind of in the mix in terms of our business. Just to be clear, you're right. We don't sell very much at all into that region, so it's not a direct impact at all.

Speaker Change: No, especially in Europe, there's been a lot of sensitivity around various inflationary topics over the last couple of years, whether it's all the geopolitics that have put pressure on energy costs or whether it's just inflation in general. This is just another thing kind of in the mix in terms of our business just to be clear you are right. We don't sell very much at all into that region.

Speaker Change: So it's not a direct impact at all.

Patrick K. Kaltenbach: In terms of what we are doing to improve the logistical situation, Patrick, did you want to take that? Sure, I can take that. We are actually quite pleased with the ongoing progress that we're making, and we are also expecting to really work down the backlog during Q1. We have a lot of our own experts there on site as well to help the local management team of our service partner there to get all the processes in place and stabilized, which might have been the issue during Q4, when we transferred the full 100% of the volume from our former logistics provider to this new logistics provider. There are a lot more comprehensive processes involved on site there, like mini-finish processes, et cetera.

Speaker Change: In terms of what are we doing to improve the logistical situation and Patrick did you want to take a sure I can take that.

Patrick K. Kaltenbach: We are making extra we are quite pleased with the ongoing progress that we're making and we are also expecting really to work down the backlog. During Q1, we have a lot of our own export sales side as well to help the local management team of <unk>.

Patrick K. Kaltenbach: Service partners.

Patrick K. Kaltenbach: To get all the programs and processes in place and stabilize which we're happy to issue during Q Q4, when we transfer the pool, 100% of the volume from our former logistics providers, we give new logistics provider.

Patrick K. Kaltenbach: I will tell more comprehensive processes involved on site there like many finished processes et cetera, and there can be brought our expert.

Patrick K. Kaltenbach: And again, we brought our experts there to help them understand these processes, build enough capacity, and make sure that everything from product into the logistics center to product out of the logistics center, that process flow is stable and really matching the volumes that we are expecting. As I said, we're making good progress there. We expect the backlog to go down and for the operation to be more stable clearly at the end of Q1. And while it still might require some more oversight from us during the next couple of quarters, we are confident that this is a very good logistics provider moving forward and that they can deliver the performance that we expect. Got it. And then just one follow-up question. I say, are we done with this?

Patrick K. Kaltenbach: Our expert staff to help them understand as processes building off capacity and making sure that everything from product into the logistics and not too product out of producing some of the process flow and stable and to really mentioned the volumes that you're expecting.

Patrick K. Kaltenbach: As I said, we're making good progress there we expect the backlog to go down and having a more stable operation clearly at the end of Q1 and <unk>.

Patrick K. Kaltenbach: But it's still my maintained some more oversight from us during the next couple of quarters. We are confident that this is very good which is six bottom moving forward and that they can deliver the performance that we expect from them.

Speaker Change: Got it and then just one follow up.

Speaker Change: Hi, Ah redone with I mean, where are we on the stocking issues and pipette tips and sensors and all that can you just sort of like give us an update I mean do you solve it is theyre still waiting for customers to burn down inventory.

Patrick K. Kaltenbach: I mean, where are we on the stocking issues and pipette tips and sensors and all that? Can you just sort of give us an update? I mean, are you still waiting for customers to burn down inventory? Yeah, I'll start with it. And, Shawn, feel free to chime in. You mentioned pipette tips.

Speaker Change: Yes, I'll start with it and financial and feel free to chime in on that.

You mentioned pipette tips I think we're done with Dupont, Patrick stocking issue and the reason why im signing saying that to extent, we see no more normal order patterns, meaning customers are ordering more frequently not at very high volumes, but the auto pet almost back to normal so viola volume is still a bit lower.

Patrick K. Kaltenbach: I think we're done with the pipette tip stocking issue. And the reason why I'm saying that is that we now see more normal order patterns, meaning customers are ordering more frequently, not at very high volumes, but the order pattern is back to normal. So while the volume is still a bit lower than during, or still lower than during the pandemic, the frequency of orders has normalized, and that, for me, is an indication that the overstocking of pipette tips is behind us. We still are working down, or our customers are still working down, some inventory more in the process analytics business with the sensors they have ordered, mainly in the biopharma area, and we expect that to remain through Q1 and Q2, and then by the end of Q2 or towards the second half of the year, at least what we're hearing right now from the channels, they should also have worked off that inventory as well. Thank you. We'll go next to Joshua Waldman at Cleveland Research.

Speaker Change: Ben Julien was still lower than during the pandemic to frequency of orders it has normalized.

Speaker Change: And that for me is an indication that the overstocking.

Speaker Change: <unk> is behind US we still are working down of our customers are working down some inventory more on the process analytics business into San Jose have ordered mainly also in the Biopharma area and we expect that to remain through Q1 and Q2 and then by the end of Q2 all towards the <unk>.

Speaker Change: After a year that's at least what we're hearing right now from the channels. They should also have worked off that inventory as well.

Speaker Change: Thank you.

Speaker Change: We'll go next to Joshua Walkman at Cleveland Research.

Patrick K. Kaltenbach: Patrick, wondered if you could, hey guys, wondered if you could give Patrick, hey Patrick, hey Patrick, I'll start with you. I wondered if you could give an update on how you perceive visibility in the business, has visibility improved or deteriorated over the last 90 days. I guess, like you commented that market conditions seem to have stabilized or are not getting worse, but maybe also mentioned that you're seeing a softer Sure, absolutely. And again, probably give you some insights into the different regions but also the different end markets. So what we're seeing is a lot of very good activity out there, meaning customers are really interested, especially in the new products that we have launched over the last year.

Speaker Change: Yeah.

Speaker Change: Yeah.

Speaker Change: Patrick.

Joshua Waldman: Wondering if you could hey, guys.

Joshua Waldman: Wondering if you could talk Patrick.

Patrick K. Kaltenbach: Hey, Patrick.

Patrick K. Kaltenbach: Hey, Patrick I'll start with you I wondered if you could give an update on how you perceive.

Patrick K. Kaltenbach: Visibility in the business has visibility improved or deteriorated over the last 90 days.

Patrick K. Kaltenbach: I guess you commented that market conditions seem to have stabilized or are not getting worse, but maybe also mentioned seeing a softer start to the year could you just kind of unpack what you're seeing there.

Speaker Change: Sure absolutely and we can probably give you some insights into two different reach.

Speaker Change: Regions, but also the different end markets. So what we're seeing.

Yes.

Speaker Change: A lot of very good activity out there, meaning customers are really interested especially in the new products have been launched over the last year and Thats. Why we are so excited about the future as good customer engagement, we have a lot of discussions.

Patrick K. Kaltenbach: And that's why we're so excited about the future. There is good customer engagement; we have a lot of discussions. But still, it takes longer than normal to close opportunities to orders. And that's also a sign that our customers are still reluctant to spend the budgets that they have now at hand, or maybe they have some reduced budgets. But there's really very good activity.

Speaker Change: Still it takes longer than normal to close.

Speaker Change: The opportunities to orders and Thats also a sign that our customers are still reluctant to really.

Speaker Change: To spend a bunch of steps now to handle maybe to have some good use budgets, but is really very good activity and if I look into the leads in the funnel that we have the opportunities I think we are.

Patrick K. Kaltenbach: And if I look at the leads and the funnel that we have, and the opportunities, I think we are quite positive about the momentum we are seeing there. And we don't see any further deterioration from what we saw last year. So that's why we positioned ourselves and said, hey, the underlying market visions haven't deteriorated further, whether it's in the biopharma market where it's still soft, whether it's in the industrial space where we see actually very good demand for industrial automation and digitalization efforts, and we have a great portfolio as well. We saw a bit of softening, especially in Europe, on product inspection throughout Q4 Big customers in the food area that are still holding back budgets, they have projects, but they are not ready to spend the money yet. And I think that's also based on the fact that they are under pressure.

Speaker Change: Client.

Speaker Change: <unk> about some of the momentum you're seeing there but.

Speaker Change: And we don't see any further deterioration from what we had seen last year. So thats why we why we position and saying.

Speaker Change: The underlying market questions Catherine.

Speaker Change: Deteriorate further whether it's in the into pharma biopharma market brands still soft.

Speaker Change: Whether it's in the industrial space, where we see actually a very good demand for industrial automation.

And digitization efforts in behalf of great performance, there as well.

Speaker Change: A bit soft demand, especially in Europe on product inspection tungsten <unk>.

Speaker Change: Throughout Q4, and also now starting into Q1.

Speaker Change: And that's largely in Europe.

Speaker Change: It's.

Speaker Change: Okay.

Speaker Change: Customers in the food area that is still holding back budgets to have projects, but they are not ready to spend spend the money and I think that's also based on the fact that downward pressure I mean, if you read the news you hear a lot of news about packaged food customers that also on the customer on the potential of <unk>.

Patrick K. Kaltenbach: I mean, if you read the news, you hear a lot of news about these packaged food customers that are also under pressure with, you know, reduced profits and higher demand as well. Otherwise, I would say markets are stable. The regions have developed as we expected, and China, as I have outlined already, the U.S., and good demand, and Shawn has outlined the growth for the year for the different regions as well. The EU is a bit softer at the moment.

Speaker Change: <unk> profits and better demand as well, but otherwise I would say markets all markets are stable the regions.

Speaker Change: <unk> developed as we expected it.

Speaker Change: And.

Speaker Change: China I outlined already.

Speaker Change: The U S.

Speaker Change: Demand.

Speaker Change: And Shaun has outlined.

Speaker Change: Growth for the year for the different regions as well.

Speaker Change: Do you use a bit softer at the moment. It was very resilient last year at the moment, it's a bit softer than you have seen in last year, especially in Germany.

Patrick K. Kaltenbach: It was very resilient last year. At the moment, it's a bit softer than we saw it last year, especially in. Thanks for that. And then, Shawn, for the follow-up, I wondered if you could walk through the moving pieces on the 24 EPS raise.

Speaker Change: Okay. Okay. Thanks for that and then Sean for the follow up I wondered if you could walk through the moving pieces on the 24 EPS raise how much of the raise was.

Shawn P. Vadala: How much of the raise was from the shipping-related revenue push-out versus other inputs like FX and maybe margin? I guess the impetus of the question is, you missed the Q4 guide by calling it $1.20. Shouldn't that have been added to the 24 guide, or were there other moving pieces?

Shawn P. Vadala: The shipping related revenue push out versus other inputs like FX and maybe margin I guess the impetus of the question is.

Shawn P. Vadala: You missed the Q4 guide by call it about 20 Shouldn.

Shawn P. Vadala: Shouldnt that had been added to the 24 guide or or were there other moving pieces that were missing.

Shawn P. Vadala: Yeah, it's very, very much related to how we position sales. I mean, you know, and I think I go back to Dan's question towards the beginning, it's very much how we position our sales guidance. I mean, in terms of, you know, margins and costs, I mean, there's, of course, some moving pieces, you know, within there.

Speaker Change: Yes, it's very very much related to how we position sales I mean, like and I think I'd go back to.

Speaker Change: Dan's question towards the beginning.

Speaker Change: It's very much how we positioned our sales guidance I mean in terms of <unk>.

Speaker Change: Margins and costs I mean, there is of course, some moving pieces within there.

Shawn P. Vadala: There's, you know, a couple of nits and nats, you know, but I'd say, in the end, I feel like the margin is actually, you know, I feel good about our margin guidance for the year. I mean, I think we'd already mentioned it earlier, but the operating margin should go up about 30 basis points on a full year basis. And if you exclude currency, you know it's probably about 70 basis points, so Josh, I kind of go back to it being a reflection of how we guided on the top line. Okay, thanks guys. Thank you. Next, we'll go to Vijay Kumar with Evercore ISI.

Speaker Change: Couple nits and nats, but I'd say in the end I feel like the margin is actually I.

Speaker Change: I feel good about it.

Speaker Change: Margin guidance for the year I mean I think.

Speaker Change: We had already mentioned it earlier, but for the the operating margin should go up about 30 basis points on a full year basis, and if you exclude currency.

Speaker Change: <unk>.

Speaker Change: It's up probably about 70 basis points. So it so Josh I kind of go back it's very much to how we were thinking.

Speaker Change: <unk> of how we guided on the on the top line.

Speaker Change: Okay. Okay. Thanks, guys.

Speaker Change: Yes.

Speaker Change: Next we'll go to Vijay Kumar with Evercore ISI.

Shawn P. Vadala: Hey guys, thanks for taking my question. A couple of, you know, guidance questions. Your Q1, minus six to minus seven percent guidance. If I go back to Q4, pre-logistics, I think the guide was minus high single digits, and if we assume the first half of 24 to be similar to last year, one would have assumed Q1 to be down high singles, but now given the timing of these logistic push-out, the revenue push-out, shouldn't Q1 have been a little bit better than I'm just trying to think about the year-on-year with the sequential cadence and how you're looking at Q1 guidance. Yeah, sure, Vijay, I'm happy to answer that one. So hey, just to clarify, our Q1 guidance and constant currencies is minus four to minus six. So it's minus four to minus six.

Vijay Muniyappa Kumar: Hey, guys. Thanks for taking my question a couple of guidance questions.

Vijay Muniyappa Kumar: Q1.

Minus six to minus 7% guidance.

Vijay Muniyappa Kumar: If I go back to Q4 pre logistics I think the guide was minus high single and if we would assume.

In the first half of 2004 to be similar to last year.

Vijay Muniyappa Kumar: One would assume Q1 to be down high singles wouldn't have given.

Vijay Muniyappa Kumar: Timing.

Vijay Muniyappa Kumar: Of these logistic push up the revenues pushout shouldn't Q1 have been a little bit better than the minus six to minus seven I'm just.

Speaker Change: Trying to trying to think.

Speaker Change: Think about the the year on year with the sequential cadence and how youre looking at Q1 guidance.

Speaker Change: Yes, sure Vijay I'm happy to answer that one so hey, just to clarify our Q1 guidance and constant currencies as minus four to minus six so its minus four to minus six and as we mentioned there is there is about a 5% benefit here from the shipping delays, which I can understand.

Shawn P. Vadala: And as we mentioned, there's about a 5% benefit here from the shipping delays, which I can understand, you know, asking a question about that. But I think there are also a few things that are very important to our first quarter. The first one is that comps really do matter. You know, yes, Q1 was our strongest quarter last year; we grew 7%. But I think it's important to kind of go back to the, We're happy that it came in a little bit better than what we expected if you excluded the effect of the shipping delay, but nonetheless, you know, it's still down over 20%. And as we kind of look here at the first quarter, you know, we have 20% of our business kind of down, you know, low to mid 20s in the first quarter. So that's another thing that's a bit on our minds. And again, that's a bit of a comparison topic as well as kind of like this reset that's going on in the country.

Speaker Change: Asking a question about that.

Speaker Change: But I think there's also a few things that are very important to our first quarter. The first one is that comps really do matter.

Speaker Change: Yes, Q1 was our strongest quarter last year, we grew 7%, but but I think it's important to kind of go back to the <unk>.

Speaker Change: Couple of years before that like what we're growing on top of and we're really cycling a very difficult multiyear comparison. If you kind of go back we grew 14% in Q1 of 2022 and that was on top of 18% growth in Q1 of 2021, So I.

Speaker Change: It's hard for us to ignore that as we as we are.

Speaker Change: Looking at the first quarter here.

Speaker Change: China of course, we were we were happy that it came in.

Speaker Change: Little bit better than what we expected if you excluded the effect of the shipping delay, but nonetheless, it's still down over 20% and as we kind of like look here at the first quarter, we have 20% of our business kind of down.

Shawn P. Vadala: And then, but just to be clear, we're not seeing anything new in our end markets, but we do assume that customers here are going to likely start the year a bit more cautious with a more normalized budget flush at the end of the year. But, of course, we acknowledge it's early; it's difficult for us to tell at this point in time. March is a very important month in the first quarter, but that's kind of how at least we were thinking about Q1 at this point.

Speaker Change: Low to mid <unk> in the first quarter. So thats another thing thats a bit on our mind and again thats a bit of a comparison topic as well as kind of like this resetting thats going on in the country and then but just to be clear, we're not we're not seeing anything new in our end markets.

Shawn P. Vadala: And then one on what's being assumed for the share count, the share repurchase, and is free cash conversion expected to be similar to fiscal 23? Yeah, so our share buyback assumption is $850 million, which I think is the same or similar number as we're thinking free cash flow for this year. And that's also assuming, you know, plus or minus right around 100% free cash flow conversion. So we're really happy with the focus around the company on cash flow. I mean, it's something we always like to focus on.

Speaker Change: But we do we do assume that customers here are going to likely start the year a bit more cautious with a more normalized budget flush at the end of the year, but of course, it's we acknowledge it's early it's difficult for us to tell.

Speaker Change: At this point in time marches, a very important month in the first quarter, but that's kind of how at least we were thinking about.

Speaker Change: Q1 at this point in time.

Speaker Change: Understood and then one on one.

Speaker Change: What's the what's being assumed for share count share repurchases.

Speaker Change: Is free cash.

Speaker Change: Conversion expected to be similar to fiscal.

Speaker Change: Fiscal 'twenty three.

Speaker Change: Yes, so our our share buyback assumption is $850 million, which I think is the same or similar number as we're thinking free cash flow for this year and.

Shawn P. Vadala: And very, very pleased with the teams around the world, all the efforts on working capital and all the other things that go into, you know, efficient end-to-end processes that can drive an order-to-cash cycle. So, it's something we're going to continue to focus on this year. Okay. Thanks, guys. We'll take our next question from danleonard.ubs. Thank you.

Speaker Change: And that's also assuming.

Speaker Change: Plus or minus right around 100% free cash flow conversion. So we're we're really happy with.

Speaker Change: The focus around the company on cash flow I mean, it's something we always like to focus on.

Shawn P. Vadala: First off, what was the pricing benefit in Q4 and what is your outlook for 2024? Yeah, so for Q4, we came in pretty much as we expected. It was about 4%.

Speaker Change: Very very pleased with the teams around the world all the efforts on working capital and all the other things that go into.

Efficient end to end processes that can drive an order to cash cycle. So that's something we're going to continue to focus on this year.

Shawn P. Vadala: That put us on a full-year basis in 2023 at about 5%. And as we kind of mentioned in previous quarters, we were benefiting a bit in the first half of the year from some pricing actions that we took in the second half of 2022. But we're very pleased with how things came together this year.

Speaker Change: Understood. Thanks, guys.

Speaker Change: Okay.

Speaker Change: We will take our next question from Dan Leonard at UBS.

Speaker Change: Okay.

Dan Leonard: Hi, Thank you two questions first off what was the pricing benefit in Q4, and what is your outlook for 2024.

Dan Leonard: Yes. So for Q4, we came in pretty much as we expected was about 4% and.

Shawn P. Vadala: I think it really shows the value proposition that we have to customers. I feel, I've said it many times, but I do feel like our value proposition has very much increased over the last few years. Especially as the markets have moved towards topics like automation and digitalization, it really plays to a lot of the strengths of our portfolio, which can provide tangible paybacks to customers. All the things that we're doing from an innovation perspective will also really help fuel that going forward too. So that's something that we feel good about.

Dan Leonard: That put us on a full year basis in 2023 at about 5% and as we kind of mentioned in previous quarters, we were benefiting a bit in the first half of the year from some pricing actions that we did in the second half of 2022.

Dan Leonard: But we're very pleased with how we things came together this year I think.

Dan Leonard: It really shows the value proposition that we have to customers I feel I've said it many times, but I do feel like our value proposition is very much increased over the last few years.

Shawn P. Vadala: And then in terms of 2024, we're consistent with how we were thinking about pricing in our earlier guidance for the year, and we're expecting price realization to be around 2%. I appreciate that.

Dan Leonard: Especially as the markets have moved towards topics like automation and digitalization. It really plays to a lot of the strength of our portfolio that can provide tangible paybacks to customers.

Shawn P. Vadala: And my follow-up question, I'm curious about your outlook for pipette tips and really any other part of your business that suffered from destocking. Does growth normalize back to trend, or is there an above-trend growth period since you're comping and experiencing inventory burndown? No, I mean, I'll start and let Patrick jump in if he wants to, you know, I think that the challenge with pipettes right now is that there is just weak market demand in general. We don't have at Mettler-Toledo a significant exposure to early research or to biotech, R&D, but we certainly do in pipette tips.

Dan Leonard: All the things that we're doing from an innovation perspective also will really help fuel that going forward too. So thats something that we feel good about and then in terms of 2024.

Dan Leonard: We're consistent with how we were thinking about pricing with our earlier guidance for the year and we're expecting.

Dan Leonard: Price realization to be around 2%.

Dan Leonard: Yeah.

Speaker Change: I appreciate that and my follow up I'm curious on your outlook for pipette tips and really any other part of your business. It suffered from Destocking does growth normalized back to trend or is there an above trend growth periods since youre comping, an inventory burn down.

Speaker Change: No I mean, I'll start and let patrik jump in if he wants to.

Shawn P. Vadala: And so we're not immune to those trends right now at the moment. And so there are softer market conditions there. But, but, but I think, you know, I think we were more optimistic because, as Patrick mentioned, ordering patterns are looking a little bit better as well. And, you know, just similar to my comments on innovation, we have, you know, we have a couple things there as well, too. And, you know, we were actually out at facilities last month, and, you know, it was really fun to spend some time with the team there and look at Some of them are more medium-term, but some of them are things that we have in the market this year. Thank you.

Speaker Change: I think the challenge with play pets right now is that there is just weak market demand in general like we don't have at Mettler Toledo, a significant exposure to early research or to biotech.

Speaker Change: R&D, but we certainly do and pipette tips and so we're not immune to those trends right now at the moment. So there are softer market conditions, there, but but but I think I think we were more optimistic as we get into the second half of the year as Patrick mentioned, the ordering patterns are looking a little bit better as well.

Speaker Change: And just similar to my comments on innovation, we have we have a couple of things there as well too that we were actually out at.

Speaker Change: Facilities.

Speaker Change: Recently last month and was really fun to spend some time with the team there and look at some of the things. They are working on some of them are more medium term, but some of them are things that we have in the market. This year.

Shawn P. Vadala: Yeah, cool. We'll move next to Matt Sykes at Goldman Sachs. Good morning, thanks for taking my questions.

Shawn P. Vadala: Maybe just the first one, just going back to the logistics issue, you outlined the revenue impact, and that seems isolated to Q1. Could you maybe talk about any cost implications that could bleed into Q2? My understanding is there had to be some temporary changes in how things were being shipped out of Europe, and I'm just wondering if there could be any lingering costs that could impact margins in Q2 or beyond.

Speaker Change: Okay.

Speaker Change: Thank you.

Speaker Change: Yeah welcome.

Speaker Change: We'll move next to Matt Saks at Goldman Sachs.

Matt Saks: Hi, good morning, Thanks for taking my questions, maybe just the first one just going back to the logistics issue you outlined the revenue impact and it seems isolated to Q1 could you maybe talk about any cost implications that could bleed into Q2. My understanding is there has to be some temporary changes in how things are being shipped out of Europe and I'm, just wondering thing Manny lingering costs.

Shawn P. Vadala: Yeah, I mean, of course, there's some incremental cost associated with it. But a lot of the costs are really opportunity costs because we're allocating resources to support the transition. I mean, the incremental travel costs, those things are less of an issue. Yes, there are some higher transportation costs, but when you step back from it, I'd say it's not overall, you know, significant to our overall financial statements and certainly something we kind of considered as we provided guidance here for the first quarter. I got it.

Matt Saks: Could impact margins in Q2 or beyond.

Speaker Change: Yes, I mean of course, there is some incremental cost associated with it a lot of the costs are really opportunity cost because we're reallocating resources.

Speaker Change: To support the.

Speaker Change: The transition I mean, the incremental travel costs those things are less less of an issue. Yes. There is some higher transportation costs, but when you step back from it I would say, it's not overall significant.

Shawn P. Vadala: Thanks for that. And then just on Europe, you've talked pretty cautiously about it, but I still think, unless I misheard, that you're expecting positive growth this year. Can you maybe just talk about your cautious comments versus the growth you're expecting this year in Europe and what's driving that? Yeah, hey, that's a good question.

Speaker Change: To our overall financial statements and certainly something we considered as we provided guidance here.

For the first quarter.

Speaker Change: Got it thanks for that and then just on Europe, you've talked pretty cautiously about it but I still think unless I misheard that you're expecting positive growth. This year can you maybe just talk about.

Speaker Change: Through your cautious comments versus sort of the growth you're expecting this year in Europe, and what's driving that.

Speaker Change: Yeah, Hey, that's a good question.

Shawn P. Vadala: You know, Europe, of course, is going to benefit the most from the shipping delays. So I think if you exclude that, you get to a different answer. And it's probably, you know, if you take the fact of the Q1, and if you also look at maybe the easier comp in Q4, Europe's probably more flattish on the year if you exclude those two things. So, so, it's marginally a bit softer than what we were originally expecting, but, you know, we, you know, we'll caution again, like we did early in the year, we, you And a lot of it had to do with product inspection, as Patrick mentioned, you know, but we did see just generally weaker market conditions.

Speaker Change: Europe of course is going to benefit.

Speaker Change: Most from.

Speaker Change: From from the shipping delays. So I think if you if you exclude that.

Speaker Change: You get to a different answer than it's probably.

Speaker Change: If you take the fact of the Q1 and if you also look at maybe the easier comp in Q4.

Speaker Change: Europe's probably more flattish on the year, if you exclude those two things. So so so it's marginally.

Speaker Change: A bit softer than what we were originally expecting but we.

Speaker Change: We.

Speaker Change: We will caution again like we it's early in the year. We it was softer in the fourth quarter than we expected a lot of it had to do with product inspection as Patrick mentioned.

Speaker Change: But we did see just generally weaker market conditions, we've been very pleased with how resilient.

Shawn P. Vadala: We're very pleased with how resilient Europe was in 2023. If you had asked us a year ago, out of the major regions of the world, we would have probably expected things to be a little bit softer there, just given all the concerns with the energy crisis and what that impact might be on our customers. So, we're very pleased with how the business performed in 2023, but, you know, just sitting here today, we're just a little bit more cautious. I got it. Thank you very much. Yeah, he will.

Speaker Change: Europe was in 2023.

Speaker Change: If you would've asked us a year ago out of the major regions of the World. We would have probably expected things that would be a little bit softer there just given all the concerns with the energy crisis, and what that impact might be to our customers.

Speaker Change: So we're very pleased with how the business performed in 2023.

Speaker Change: Just just sitting here today, we're just a little bit more cautious on it.

Speaker Change: Got it thank you very much.

Speaker Change: Yes Youre welcome.

Speaker Change: Yes.

Speaker Change: We will go next to Catharine sheltering at Baird.

Shawn P. Vadala: We'll go next to Katherine Schulte at Baird. Hey guys, thanks for the questions. Maybe first, just on the revenue guide, I get that you want to leave a little bit of a cushion given where we are in the year, but if we looked at your outlook by segment, excluding the shipping delays, I guess, which segments are you baking in some extra conservatism into? Yeah, good question. I'd say, you know, PI, you know, and I guess you can see that one because it doesn't have as much of an impact, if any, from the shifting delays.

Speaker Change: Okay.

Speaker Change: Hey, guys. Thanks for the questions and maybe first just on the revenue guide you get that you want to leave a little bit of a question given where we are in the year, but if we looked at your outlook by segment, excluding the shipping Marine I guess, which.

Speaker Change: Are you baking in extra conservatism and then Tim.

Tim: Yeah. Good question I would say.

Tim: Pi I.

Tim: I guess you can see that one because it doesn't have as much of an impact if any from the shifting delays so I think.

Shawn P. Vadala: So I think, I think we were saying that it was up slightly the last time we guided for the full year, and this time, we're saying it's flat, you know, about flattish. And then, you know, this comment on Europe, you know, Europe is a little bit lighter than we would have guided before. And then when you kind of break it into divisions, it kind of trickles into lab a little bit. And so lab might be excluding the shipping delays more. Instead of saying it up slightly, it's probably more flattish.

Tim: I think we were saying that was up slightly the last time, we guided for the full year and this time, we are saying.

Tim: It's flat at about flattish.

Tim: And then this comment on Europe Europe is is a little bit lighter than what we would've guided before and then when you kind of break it into divisions, it kind of trickles into to lap a little bit and so so lab might be excluding the shipping delays more instead of staying up slightly it's probably more more flattish.

Shawn P. Vadala: Okay, got it. And then maybe on the margin guide, what should we be expecting for gross margins for the first quarter and the full year? Yeah, for the first quarter, we should be down about 40 basis points, and there's a lot of currency in the margin in Q1. So if you excluded the currency margin, you'd probably be up about 20 bips.

Speaker Change: Okay got it and then maybe on the margin guide what should we be expecting for gross margin for that first quarter and up all year.

Speaker Change: Yes for the first quarter.

Speaker Change: We should be down about 40 basis points and there is a lot of currency and the margin in Q1. So if you excluded the margins that the currency would probably be up about 20 bps.

Shawn P. Vadala: And then if you look at the full year for gross margin, we'll be up, you know, our estimate is we'll be up around 50 basis points. And again, currency has an impact on that. So if you excluded that, it would be up probably more like 90. Great, thank you.

Speaker Change: And then if you look at the full year for gross margin will be up.

Speaker Change: Our estimate is we'll be up around 50 basis points and again currency has an impact on that so if you excluded that it would be up probably more like 90 bps.

Speaker Change: Okay.

Speaker Change: Yeah.

Speaker Change: Okay. Thank you.

Speaker Change: Thanks Catherine.

Shawn P. Vadala: We'll go next to Rachel Vatsdal at J.P. Morgan. Perfect. Thanks for taking the questions and good morning.

Speaker Change: We will go next Terry.

Terry: That stall at J P. Morgan.

Terry: Perfect.

Terry: Good morning.

Patrick K. Kaltenbach: So you mentioned that you're expecting customers to be more cautious with investments starting off the year. We've heard this from some of your peers as well. So can you just dig into what you've specifically been hearing from customers in January and now into the first week of February here? And then in which markets and geographies have you been seeing more of that cautious spending to kick off the year as well? Yeah, thanks, Rachel, and I'll start, and then Shawn, if you have some additional comments, feel free to chime in.

Terry: Now that youre expecting customer <unk>, our cost of basketball, starting up where that symphony our peers as well. So can you just dig into that typically and hearing from customers in January the first week of February here, and then which market and geography, and even seen more of that cautious spending ticket copyright law.

Speaker Change: Yeah, Thanks rifle, Linda I'll start showing up in some of these clients feel free to chime in so I think.

Patrick K. Kaltenbach: So I think the majority of the cautiousness we have heard was in Europe, and also down in what we told you in the PI business in the food segments, where we see customers not making purchases as fast as we had expected. Again, there's good engagement for the sales teams. We have launched a great fleet of new products, also mid-range products that help us to get into accessing market segments, but the whole conversion from opportunity to final sale still takes longer than we expected. And that's part of what we're hearing in the European market. Otherwise, I think that, as we said, it's not a big change. Anything else? No?

Speaker Change: The majority of Cautiousness, we have protocols in Europe, and also down what we told you in the <unk> foods segments, where we.

Speaker Change: C customers.

Speaker Change: Not not really using buses as fast as we had expected again there is good engagement from our sales teams.

Speaker Change: We have launched very great fleet of new product sales of mid range products that help us to get to your <unk> market segments, but the whole conversion from no opportunity to two final sale.

Speaker Change: It takes longer than you expected.

Speaker Change: It's part of the hearing.

Speaker Change: In the European market, otherwise something that as we said.

Speaker Change: Multi change anything.

Speaker Change: Anything else okay.

Shawn P. Vadala: Okay. Right, and then just my follow-up question, given that you're expecting most of this logistics issue to really benefit 1Q, can you just walk us through the sequentials on how we should be thinking about 2Q and the step up there, and then kind of leading into the back half of the top line as well? Yeah, hey, I mean, I, uh... Yeah, you know, I think it's a little early for us to provide too much color on Q2. But we, you know, we, you know, we kind of stick to what we said before: we expect the first half of the year to be down. I expect Q2 to still be down. A big part of that is going to be China, you know; we still have to lap, I think, a full cycle in China for Q2.

Speaker Change: Yes.

Speaker Change: Great and then just for my follow up given that you're expecting less but this logistic issues you really benefit in <unk> can you just walk us through the sequential on how should we be thinking about.

Speaker Change: And then kind of leading the back half on top line as well.

Speaker Change: Yeah, Hey, I mean.

Speaker Change: I think it's a little early for us to provide too much color on Q2, but we we kind of stick to what we said before is that we expect the first half of the year to be down.

Speaker Change: We expect Q2 to still be down a big part of that is going to be China. We still have to lap I think a full cycle in China for Q2, So thats something thats very.

Shawn P. Vadala: So that's something that's, you know, very much on our minds. But I think when we get to the second half, we, you know, we do have you know, with a company that only typically sits on one and a half months of backlog, it's hard to have too much confidence when you're starting to go out for several months. But I do think we feel encouraged by lapping these comps as we get into the second half of the year, as we just, you know, feel, you know, maybe the organization, looking at the initiatives, looking at how we're trying to position things. You know, a lot of our focus has always been on coming out of this stronger, you know, and I think we try to focus on the things we can control.

Speaker Change: Very much on our minds.

Speaker Change: But I think when we get to the second half we do have.

Speaker Change: With a company that only typically sits on one and half months of backlog, it's hard to have too much confidence. When you are starting to go out several months, but I do think we feel encouraged by lapping these comps as we get into the second half of the year as we just.

Speaker Change: Field, maybe the organization looking at the initiatives looking at how we're trying to position things.

Speaker Change: A lot of our focus has always been on coming out of this stronger.

Speaker Change: And I think we try to focus on the things we can control and.

Shawn P. Vadala: And, you know, when we talk about all these product launches, all these launches of corporate programs, Spinnaker 6, things we're doing with the customer experience, there's a lot of good things that I think should help us out for the second half of the year. And, you know, we'll get through the first quarter, and then, you know, we'll provide a little bit more color as to how we're seeing things at that point in time. We'll go next to Brandon Couillard at Jeffries.

Speaker Change: When we talk about all of these product launches all of these launching a corporate programs spinnaker six.

Things we're doing.

Speaker Change: With the customer.

Speaker Change: Experience.

Speaker Change: There's a lot of good things that I think should help us out for the second half of the year.

Speaker Change: We'll get through the first quarter, and then provide a little bit more color as to how we're seeing things at that point in time.

Speaker Change: Okay.

Speaker Change: We'll go next to Brandon Couillard at Jefferies.

Patrick K. Kaltenbach: Thanks, good morning. Patrick, the service business, you know, remains pretty healthy. I mean, you grew 10% last year against double-digit comp. Where are you having the most success driving attach rates, and what's your outlook for that business in 2021? Yeah, very good question. Brandon, thanks for that.

Speaker Change: Okay.

Brandon Couillard: Hey, Thanks, good morning.

Brandon Couillard: Patrick the service business remains pretty healthy and the <unk> grew 10% last year against the double digit comp where you're having the most driving.

Brandon Couillard: Driving attach rates and what's your outlook for <unk>.

Brandon Couillard: That business in 'twenty four.

Patrick K. Kaltenbach: Yes, very good question Bryan Thanks for that I mean services again Im Super excited about our service opportunity and by the way. This also.

Patrick K. Kaltenbach: I mean, service again. I'm super excited about our service opportunity. By the way, it's also an organization that we continue to invest in throughout 2023. While we have to make some adjustments in other areas, we continue to invest in service because we see a big opportunity out there. Broadening our service portfolio, there's good demand from our customers. We have a large installed base.

Bryan: Organization that we continue to invest in.

Patrick K. Kaltenbach: Throughout 2023, while we have to make some adjustment and other areas to continue to invest in services, because we see big opportunity to have their broadening our service portfolio is good demand from our customers we have a large installed base.

Patrick K. Kaltenbach: Last year, if you said it, we grew 10%, and we expected to grow in a mid-single-digit range. Just this year again, so another year where you will see services growing ahead of products. We continue to work with our sales teams to make sure that they can sell services at the point of sale, train them about the value of services, and make sure they have the value proposition when they talk to customers, increasing the connect rates.

Patrick K. Kaltenbach: Last year in Q set of between 10% and we expect it to.

Patrick K. Kaltenbach: To grow in the mid single digit range. This year again, so another year, but you will see service is growing ahead of <unk>.

Patrick K. Kaltenbach: <unk> B.

Patrick K. Kaltenbach: We continue to work with our sales teams to make sure that they can sell those services at a point of sales trained them.

Patrick K. Kaltenbach: About the value of services about.

Patrick K. Kaltenbach: I'll make sure to have better proposition when they talk to customers increasingly cannot grades and of course. These are different from product category competitive product category, but we continue to make improvements there.

Patrick K. Kaltenbach: And of course, these are different from product category to product category, but we continue to make improvements there. And I still see a lot of opportunity for us moving forward to increase our share of services. And then just one more, Shawn, on China.

Patrick K. Kaltenbach: I still see a lot of opportunity for us moving forward to increase open shale services.

Speaker Change: Thanks, and then just one more shot on on China.

Shawn P. Vadala: If I break it down, the first quarter being down, we call it low to mid-20s. Does this imply that China is back to kind of double-digit growth in the second half of the year? How should we think about the cadence in the first half?

Speaker Change: In the first quarter being down call it low to mid twenties.

Speaker Change: Does this imply that China is back to kind of double digit growth in the second half of the year.

Speaker Change: How should we think about cadence first half versus second half.

Shawn P. Vadala: Yeah, I mean, again, I don't want to get too specific. But I think if you do the math, you'll probably kind of get into that neighborhood for the second half of this year. You know, but we'll provide more guidance on our next call, depending on how we're thinking about the pacing with q2 and everything. You know, right now we do see, you know, for the full year lab, you know, lab being down more than the industrial business. So, you know, kind of looking at lab being down more like low teens while industrial would be down more like mid single digits, so the industrial business was a pleasant surprise in the fourth quarter. We're a little bit more cautious on it for q1, but we'll see how things play out. Yeah, and just to read correctly, Brandon, that doesn't mean that the algorithm going forward is going to be double digit growth. And in China I think, you know, one of the topics. There are a few topics there, right?

Speaker Change: Yes, I mean again I don't want to get too specific but I think if you do the math Youll, probably you had probably kind of get into that neighborhood for the the second half of this year.

Speaker Change: But we'll provide more guidance on our next call depending on how we're how we're thinking about the pacing with Q2 and everything right now we do see.

Speaker Change: For the full year lab lap being down more than the industrial business, So kind of looking at lab being down more like.

Speaker Change: Low teens.

While industrial will be down like more mid single digits. So the industrial business was a pleasant surprise in the fourth quarter were a little bit more cautious on it for Q1.

Speaker Change: But we'll see how things play out here.

Speaker Change: Great Yeah, and just to read correctly, Brendan that doesn't mean that the algorithm going forward, we're expecting double digit growth in China. We just we just know that not only they have easier comp we know that they are lapping a law.

Speaker Change: Lot of things in the market I think one of the topics Theres a few topics there.

Shawn P. Vadala: Well, you know, one of them was all the spending during COVID, you know, potentially an acceleration of replacement cycles. But then the other thing is, I think there's just a lot of inventory, you know, throughout, throughout the, you know, throughout the customers. And I think just given the nature of the lockdowns during COVID and all the logistical challenges, you know, there's just more people purchasing a lot more inventory than in other regions.

Speaker Change: One of them was all the spending during COVID-19.

Speaker Change: Potentially an acceleration of replacement cycles, but then the other thing is I think there's just a lot of inventory.

Speaker Change: Throat throughout the throughout the customers end.

Speaker Change: I think just given the nature of the Lockdowns during Covid and all the logistical challenges. There is just more people purchasing a lot more.

Speaker Change: Inventory than in other regions and I think that's one of the things that just kind of on our mind as well for the second half of the year. So as we kind of go forward I mean, just to reiterate what we said in the past we kind of view China is more of a high single digit growth.

Shawn P. Vadala: And I think that's one of the things that is kind of on our mind as well for the second half of the year. So as we kind of go forward, I mean, just to reiterate what we said in the past, we kind of view China as more of a high single-digit growth opportunity in the longer term. Mm-hmm. Next, we'll move to Patrick Donnelly at City.

Speaker Change: Opportunity more longer term.

Speaker Change: Very helpful.

Speaker Change: Mhm.

Speaker Change: Next we'll move to Patrick Donnelly at Citi.

Shawn P. Vadala: Hey, guys, thanks for taking the questions. Shawn, I wanted to pick up on that kind of ramp question. I think Rachel and Brandon both agreed on a little bit there.

Patrick Donnelly: Hey, guys. Thanks for taking the questions.

Patrick Donnelly: Sean I wanted to pick up on that kind of ramp question I think Rachel and could ran about a little bit there.

Shawn P. Vadala: You know, if we just back out the comps, because that's pretty formulaic, just in terms of the sequential dollar improvement as you work your way through the year into the second half, you know, China being obviously one example, you know, you mentioned the month, month and a half of backlog. Can you just talk about, I guess, the visibility into it? Is it just the confidence level that, you know, there was a lot of inventory in the channel in areas like China and that just, you know, you guys are confident it normalizes as you get to the second half and dollars come back? Maybe just talk about confidence again, you know, comps excluded on that dollar ramp as we work our way through the year, China and otherwise. Yeah, I mean, of course, there's also a lot of noise and sequences right now, right? Like not, you have a lack of a budget flush in Q4 of 2023. You know, now we add more complexity with these shipping delays.

Patrick Donnelly: If we just back out the comps that's pretty formulaic in terms of the sequential improvement as you work your way through the year into the second half China being obviously one example.

Speaker Change: You mentioned that month month, and a half of backlog can you just talk about I guess the visibility into it and then just the confidence level of that.

Speaker Change: There was a lot of inventory in the channel in areas like China and not just you guys are confident that normalizing as you get to the second half in dollars come back maybe just talk about again the confidence comps excluded on that dollar ramp as we work our way through the year, China and otherwise.

Speaker Change: Yes, I mean of course, there's also a lot of noise and sequentially right now right.

Speaker Change: You have a lack of a budget flush in Q4 of 2023.

Speaker Change: Now we added more complexity with these shipping delays.

Shawn P. Vadala: And then we'll probably throw another one at you saying like, we just expect customers to potentially start a little bit slower in Q4, I mean, Q1 of this year, you know, with more normalized seasonality in the back half. So but I think if you kind of cut through all that, and you look at maybe longer-term, sequentials for us, I think we're actually very consistent, you know, and so that's one thing I think when we look at like multi-year comps, you know, and you know, multi-year keggers, and just kind of like cut through the whole COVID period. You look at that by quarter, and I think that gives us a lot more confidence as well, too.

Speaker Change: And then and then we probably throw another one at you, saying like we just expect customers to potentially start a little bit slower in Q4, I mean Q1 of this year.

Speaker Change: With a more normalized seasonality in the back half so, but I think if you kind of cut through all that and you look at maybe longer term sequential for US I think we are actually very consistent.

Speaker Change: And.

Speaker Change: So that's one thing I think when we look at like multiyear comps.

Multi year, CAGR, and just kind of like cut through the whole COVID-19 period.

Speaker Change: Look at that by quarter.

Speaker Change: That gives us a lot of more confidence as well too.

Shawn P. Vadala: And then you kind of layer in some of these things that we know, like the one-year comms and some of these de-stocking topics, the comments I just made on China. And then the final thing is I think we are doing a lot inside the company to drive growth, too. And so I think nothing drives growth like new products, and we have some really cool things that we're launching right now. We're going to probably spend more time talking about that on our next call next quarter. And I think those are the types of things that will help. And, of course, Spinnaker 6, right?

Speaker Change: And then you kind of layer in some of these things that we know like like the one year comps in some of these destocking topics. The comments I just made on China.

Speaker Change: And then and then the final thing is I think we are.

Speaker Change: We are doing a lot inside the company to drive growth too and so I think nothing drives growth like new products and we have some really cool things that we're launching right now we're going to probably spend more time talking about that on our next call next quarter.

Speaker Change: I think those are types of things that will help and of course spinnaker six right. There is a reason why we're talking about it in the call. It's kind of like I think a preface to like a lot of things we're doing to focus on growth in the company and the combination of all these.

Shawn P. Vadala: There's a reason why we're talking about it on this call. It's kind of like, I think, a preface to a lot of things we're doing to focus on growth in the company and the combination of all these digitalization things that just continue to improve, plus all the things that we're doing to further enhance that relationship with a customer. It's a very powerful combination, and we think those things will gain momentum as we kind of get into the second half of the year as well. Okay, that's helpful.

Speaker Change: Digitalization and things that are just continue to improve.

Speaker Change: All the things that we're doing to further enhance that relationship with a customer it's a very powerful combination and we think those things will.

Speaker Change: Gain momentum as we kind of get into the second half of the year as well.

Speaker Change: Okay. That's helpful. And then maybe just on the cost structure. I think you mentioned a few times you guys want to come out of this stronger can you just talk about I guess the level of <unk>.

Shawn P. Vadala: And then maybe just on the cost structure, I think you mentioned a few times that you guys want to come out of this stronger. Can you talk about, I guess, the level of, you know, investments you're making currently with the softer backdrop versus how you're trying to be mindful of protecting the margins? How nimble can you be on the cost side, and how are you guys approaching that?

Speaker Change: Investments Youre, making currently with the softer backdrop versus trying to be mindful of protecting the margins. How nimble can you be on the cost side and how are you guys approaching that thank you.

Shawn P. Vadala: Thank you. Yeah, I mean, hey, this has been a very important balancing act for us, something that we've been spending a lot of time as an executive team, you know, really thinking about and reviewing over the last year. You know, I feel like we have a really good balance. On the one hand, we're really looking at parts of the organization where we've lost productivity over the last year. And so we're working on those areas. But on the other hand, you know, there are growth opportunities. So we're, you know, we're trying to make sure that we're continuing to invest in those. I mean, sir, Patrick mentioned service as an example. On a full year basis, we continue to invest in service throughout the year.

Speaker Change: Yes, I mean, hey, this has been a very important balancing act for us something that we've been spending a lot of time as an executive team.

Speaker Change: Really thinking about and reviewing over the last year.

Speaker Change: I feel like we have a really good balance on one hand, we're really looking at parts of the organization, where we've lost productivity over the last year and so we're working on those areas on the other hand, there are growth opportunities.

Speaker Change: So we're we're trying to make sure that we're continuing to invest for those <unk>.

Speaker Change: Rick mentioned service as an example on a full year basis, we continue to invest in and service throughout the year and that's something that we'll continue to do in 2024, but such a service there are theres different regions of the world there is different.

Shawn P. Vadala: And that's something that we're, we'll continue to do in 2024. But it's not just service, you know; there are different regions of the world, there are different, there are also things, you know, like, like innovation that we talked about a few times already today, as well as other things, you know, that I think will help make us a stronger organization going forward. So when you kind of step back from that, I feel very good. Of course, we do have a headwind next year, too, with variable comp coming back to more normalized levels. So there's a lot of moving parts. But when you look through it all, I feel good that we can still expand margins, even though it's maybe a little bit lower than what we normally do. We can still expand margins next year with a low growth year. And then, if you look at 2023, we were able to hold our margins flat for the full year, despite, you know, a lot of the challenges that we had as well.

Speaker Change: There's also things like like innovation that we talked about a few times already today.

Speaker Change: As well as other things.

Speaker Change: I think will help make us a stronger organization going forward. So when you kind of step back from that I feel very good of course, we do have a headwind next year or two with variable comp coming back to more normalized levels. So theres a lot of moving parts, but when you. When you look through it all I feel like good that we can still expand margins, even though it may be.

Speaker Change: But lower than what we normally do we can still expand margins next year with a low growth year and then if you look at 2023, we were able to hold our margins flat for the full year. Despite a lot of the challenges that we had as well too so I feel like in the end we have a good balance.

Adam Uhlman: So I feel like, in the end, we have a good balance, and there are no further questions at this time. I would like to turn the conference over to Adam Uhlman for closing remarks. Hey, thanks, Audra. And thank you, everybody, for joining our call today. If you have any questions, feel free to reach out to me. Hope you have a great rest of your day. We'll talk to you soon. Thank you. And this concludes today's conference call. Thank you for your participation. You may now disconnect. www.globalonenessproject.org

Speaker Change: Okay.

Speaker Change: And there are no further questions at this time I would like to turn the conference over to Adam Almond for closing remarks.

Adam Almond: Hey, Thanks, Andrzej and thank you everybody for joining our call today. If you have any questions feel free to reach out to me.

Adam Uhlman: Hope you have a great rest of your Dave will talk to you soon thank you.

Speaker Change: And this concludes today's conference call. Thank you for your participation you may now disconnect.

Speaker Change: Thanks.

Speaker Change: