Q1 2024 Mettler Toledo International Inc Earnings Call

Sarah: Thank you for standing by. My name is Sarah, and I will be your conference operator today. At this time, I would like to welcome everyone to the Mettler-Toledo first quarter 2024 earnings call. All lines have been placed on mute to prevent any background noise.

Thank you for standing by my name is Sarah and I will be your conference operator today at this time I would like to welcome everyone to the Mettler Toledo first quarter 2024 earnings call. All lines have been placed on mute to prevent any background noise. After the speakers' remarks, there will be a question and answer session and if you would like to ask a quest.

During this time simply press star one on your telephone keypad.

I'd now like to turn the conference over to Adam Uhlman head of Investor Relations you may begin.

Sarah: After the speaker's remarks, there will be a question and answer session. And if you would like to ask a question during this time, simply press star one on your telephone keypad. I would now like to turn the conference over to Adam Uhlman, Head of Investor Relations. You may begin.

Adam Uhlman: Hey, thank you, Sarah. And good morning, everyone. Thanks for joining us.

Adam Uhlman: Thank you Sarah and good morning, everyone. Thanks for joining us on the call with me today is Patrick Kaltenbach, Our Chief Executive Officer, and Shawn Vadala, Our Chief Financial Officer, Let me cover some administrative matters. This call is being webcast and is available for replay on our website empty dot com a copy of the press.

Adam Uhlman: On the call with me today 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. A copy of the press release and the presentation that we will refer to during today's 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.

Adam Uhlman: The release and the presentation that we will refer to on today's call is also available on the website. This call will include forward looking statements within the meaning of the U S. Securities Act of $19 33 in the U S Securities Exchange Act of $19 34. These statements involve risks uncertainties and other factors that may cause our actual.

Adam Uhlman: 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 recent 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.

Adam Uhlman: Results financial condition performance and achievements to be materially different from those expressed or implied by any forward looking statements.

Adam Uhlman: Discussion of these risks and uncertainties. Please see our recent 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 on the call. We may use non-GAAP financial measures. A reconciliation of these non-GAAP financial measures to the most directly comparable GAAP measures is provided in the 8-K.

Adam Uhlman: On the call, we may use non-GAAP financial measures. A reconciliation of these non-GAAP financial measures to the most directly comparable non-GAAP measures is provided in the 8K and is available on our website. I will now turn the call over to Patrick.

Adam Uhlman: It is 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 us on our call today. Last night, we reported our first quarter financial results, the details of which are outlined for you on page three of our presentation. Overall, our results in the first quarter were much better than anticipated across most product categories and geographies. As discussed last quarter, we also had a benefit this quarter from recovering delayed product shipments from the fourth quarter. However, we recovered more than expected and shipped nearly all of our delayed orders, and we are glad to have this disruption behind us.

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

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

Patrick K. Kaltenbach: Overall, our results in the first quarter were much better than anticipated across most product categories and geographies.

Patrick K. Kaltenbach: As discussed last quarter. We also had the benefit this quarter from recovering delayed product shipments from the fourth quarter. However, we recovered more than expected and shipped nearly all of our delayed orders and are glad to have this disruption behind us.

Patrick K. Kaltenbach: While our team executed well this quarter, underlying market demand is still soft, especially in China, and there remains considerable uncertainty in the global economic and geopolitical environment. We continue to maintain a cautious outlook, and we still expect to return to sales growth in the second half of the year, largely due to easier comparisons. Otherwise, we remain focused on executing on our growth and productivity initiatives, so we will emerge stronger as our markets improve. Let me now turn the call over to Shawn to discuss the financial results for the quarter and our guidance for this year, and then I will come back with some additional commentary on the business. Shawn

Patrick K. Kaltenbach: While our team executed well this quarter underlying market demand is still soft, especially in China and there remains considerable uncertainty in the global economic and geopolitical environment. We continue to maintain a cautious outlook and reveal and we still expect to return to sales growth in the second half of the year.

Patrick K. Kaltenbach: Largely due to easier comparisons otherwise, we remain focused on executing on our growth and productivity initiatives. So we really move stronger into some of our markets improve.

Patrick K. Kaltenbach: Let me now turn the call over to Sean to cover our financial results for the quarter and our guidance for this year and then I will come back with some additional commentary on the business. Thanks.

Shawn P. Vadala: Thanks, Patrick, and good morning, everyone. Sales in the quarter were $926 million, largely unchanged from prior year levels, both on a U.S. dollar basis and in local currencies. Our sales in the quarter benefited by approximately 6% from recovering nearly all of our previously disclosed delayed product shipments from the fourth quarter of 2023, above our guidance of an approximate benefit of 5%. On slide number four, we show sales growth by region. Local currency sales grew 6% in Europe and 3% in the Americas and declined 8% in Asia and the rest of the world. However, local currency sales in China declined 19% in the quarter.

Sean: Thanks, Patrick and good morning, everyone.

Sean: Sales in the quarter were $926 million largely unchanged from prior year levels, both on a U S dollar basis and in local currencies.

Sean: Our sales in the quarter benefited by approximately 6% from recovering nearly all of our previously disclosed delayed product shipments from the fourth quarter of 2023 above our guidance of an approximate benefit of 5%.

Sean: On slide number four we show sales growth by region.

Sean: Local currency sales grew 6% in Europe, and 3% in the Americas and declined 8% and Asia rest of the world.

Sean: Local currency sales in China declined 19% in the quarter.

Shawn P. Vadala: Excluding the benefit from recovering our fourth quarter shipping delays, we estimate our sales in Q1 declined about 6%, with the Americas down approximately 1%, Europe down approximately 5%, and Asia and the rest of the world down approximately 12%, including a 21% sales decline in China. On slide number five, we summarize local currency sales growth by product area. For the quarter, laboratory sales increased 2%, and industrial sales were flat, with both core industrial and product inspection flattish. Food retail declined 9%.

Sean: Excluding the benefit from recovering our fourth quarter shipping delays, we estimate our sales in Q1 declined about 6% with the Americas down approximately 1% Europe down approximately 5% and Asia rest of the world down approximately 12%, including a 21 person.

Sean: <unk> sales decline in China.

Sean: On slide number five we summarized local currency sales growth by product area.

Sean: For the quarter laboratory sales increased 2% and industrial sales were flat with core with both core industrial.

Sean: In product inspection flattish.

Sean: Food retail declined 9%.

Shawn P. Vadala: Service sales grew 6% in the quarter. Excluding the Q4 shipping delay benefit, we estimate laboratory product sales declined approximately 6%, industrial declined 3%, with core industrial down 4%, and product inspection flattish, and food retail declined 15%. Let me now move to the rest of the P&L, which is summarized on slide number 6. Gross margin was 59.2%, an increase of 30 basis points due to improved productivity, positive pricing, and favorable mix, partially offset by lower volume due to currency headwinds. R&D amounted to $46.4 million in the quarter, unchanged in local currency over the prior period.

Sean: Service sales grew 6% in the quarter <unk>.

Sean: Excluding the Q4 shipping delay benefit we estimate laboratory products sales declined approximately 6% industrial declined 3% with core industrial down, 4% and product inspection flattish in food retail declined 15%.

Sean: Let me now move to the rest of the P&L, which is summarized on slide number six gross margin was 59, 2% an increase of 30 basis points due to improved productivity positive pricing and favorable mix, partially offset by lower volume and currency headwinds.

Sean: R&D amounted to $46 $4 million in the quarter unchanged in local currency over the prior period.

Shawn P. Vadala: SG&A amounted to $234.4 million, a 1% decrease in local currency compared to the prior year, and included benefits from our cost savings initiative. Adjusted operating profit amounted to $267.3 million in the quarter, approximately flat with the prior year amount. Unfavorable foreign currency was a headwind to adjusted operating profit of approximately 4%. Adjusted operating margin was 28.9%, which represents an increase of 20 basis points from the prior year. A couple of final comments on the P&L. Amortization amounted to $18.2 million in the quarter.

Sean: SG&A amounted to $234 4, million% to 1% decrease in local currency compared to the prior year and includes benefits from our cost savings initiatives.

Sean: Adjusted operating profit amounted to $267 $3 million in the quarter approximately flat with the prior year amount.

Sean: Unfavorable foreign currency was a headwind to adjusted operating profit of approximately 4%.

Sean: Adjusted operating margin was 28, 9%, which represents an increase of 20 basis points from the prior year.

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

Speaker Change: Amortization amounted to $18 2 million in the quarter interest expense was $19 $2 million and other income amounted to zero point $3 million.

Shawn P. Vadala: Interest expense was $19.2 million, and other income amounted to $0.3 million. Our effective tax rate was 19% in the quarter. This rate is before discrete items and adjusted for the timing of stock option exercises.

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

Shawn P. Vadala: Fully diluted shares amounted to $21.5 million, which is approximately a 3% decline from the prior year. Adjusted EPS for the quarter was $8.89, a 2% increase over the prior year, or plus 7% excluding unfavorable foreign currency. On a reported basis, EPS was $8.24 as compared to $8.47 in the prior year. Reported EPS in the quarter included $0.24 of purchase intangible amortization, $0.36 of restructuring costs, and a $0.05 tax headwind from the timing of option exercise.

Speaker Change: Fully diluted shares amounted to $21 5 million, which is approximately a 3% decline from the prior year.

Speaker Change: Adjusted EPS for the quarter was $8 89.

Speaker Change: A 2% increase over the prior year or plus 7% excluding unfavorable foreign currency.

Speaker Change: On a reported basis EPS was $8 24.

Speaker Change: As compared to $8 47.

Speaker Change: In the prior year.

Speaker Change: Reported EPS in the quarter included 24 cents of purchase intangible amortization 36 cents of restructuring costs and a <unk> <unk> tax headwind from the timing of option exercises.

Shawn P. Vadala: That covers the P&L, and let me now comment on cash flow. In the quarter, adjusted free cash flow amounted to $182.3 million, a 39% increase on a per-share basis from the prior year levels due to favorable working capital, including lower cash incentive payments related to last year's performance. Let me now turn to our guidance for the second quarter and the full year. As you review our guidance, please keep in mind the following factors.

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

Speaker Change: In the quarter adjusted free cash flow amounted to $182 3, million% to 39% increase on a per share basis from the prior year levels due to favorable working capital, including lower cash incentive payments related to last year's performance.

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

Speaker Change: As you review our guidance please keep in mind the following factors.

Shawn P. Vadala: First, while we do not see any negative change in business conditions today, we continue to take a cautious approach with our forecast and expect our customers will be conservative with their investments in the second quarter. We also expect our sales in China to decline over 20% again in the second quarter before returning to growth in the second half against significantly easier year-ago comparisons. Additionally, there is uncertainty in the economy and geopolitical risks, which have also created volatility in foreign exchange rates.

Speaker Change: First while we do not see any negative change in business conditions. Today, we continue to take a cautious approach with our forecast and expect our customers will be conservative with their investments in the second quarter.

Speaker Change: We also expect our sales in China to decline over 20% again in the second quarter before returning to growth in the second half against significantly easier year ago comparisons.

Speaker Change: Additionally, there is uncertainty in the economy and geopolitical risks, which also has created volatility in foreign exchange rates.

Patrick K. Kaltenbach: Lastly, as mentioned last year, we will face higher variable compensation this year relative to prior year levels. Now, turning to our guidance for the second quarter of 2024, we expect local currency sales to decline approximately 4%. We expect adjusted EPS to be in the range of $8.90 to $9.05. Currency for the quarter at recent spot rates would be an approximate 2% headwind to second quarter sales. For the full year 2024, we expect local currency sales to grow approximately 2%, which is up from our previous guidance of approximately one to 2% growth.

Speaker Change: Lastly, as mentioned last year, we will face higher variable compensation this year relative to prior year levels.

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

Speaker Change: We expect adjusted EPS to be in the range of $8 90.

Speaker Change: To $9 five.

Speaker Change: Currency for the quarter at recent spot rates would be an approximately approximate 2% headwind to second quarter sales and adjusted EPS.

Speaker Change: For the full year 2024, we expect local currency sales to grow approximately 2%, which is up from our previous guidance of approximately 1% to 2% growth.

Patrick K. Kaltenbach: We expect full-year adjusted EPS to be in the range of $39.90 to $40.40, which compares to our prior guidance of $39.60 to $40.30. This includes an expected headwind to sales of 1% and adjusted EPS growth of approximately 2% from unfavorable foreign exchange. Lastly, I would like to share a few other details on our 2024 guidance to help you as you update your models. We expect total amortization, including purchased intangible amortization, to be approximately $73 million.

Speaker Change: We expect full year adjusted EPS to be in the range of $39 90.

Speaker Change: To $40 40.

Speaker Change: Which compares to our prior guidance of $39 60.

Speaker Change: To $40 30.

Speaker Change: This includes an expected headwind to sales of <unk> of 1% and adjusted EPS growth of approximately 2% from unfavorable foreign exchange.

Speaker Change: Lastly, I would like to share a few other details on our 2024 guidance to help you as you update your models.

Speaker Change: We expect total amortization, including purchased intangible amortization to be approximately.

Speaker Change: Proximately $73 million purchased intangible amortization is excluded from adjusted EPS and is estimated at $26 million on a pretax basis or <unk> 95 per share.

Patrick K. Kaltenbach: Purchase intangible amortization is excluded from adjusted EPS and is estimated at $26 million on a pre-tax basis or $0.95 per share. Interest expenses are forecast at $82 million for the year, and other income is estimated at approximately $2 million. We expect our tax rate before discrete items will remain at 19% in 2024. We expect adjusted 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 in 2024. That's it from my side, and I'll now turn it back to Patrick.

Speaker Change: Interest expense is forecast at $82 million for the year and other income is estimated at approximately $2 million, we expect our tax rate before discrete items will remain at 19% in 2024.

Speaker Change: We expect adjusted free cash flow of approximately $850 million, representing a conversion of approximately 100% of adjusted net income.

Speaker Change: We continue to expect share repurchases of approximately $850 million in 2024.

That's it from my side and I'll now turn it back to Patrick.

Patrick K. Kaltenbach: Thanks, Sean.

Patrick K. Kaltenbach: Let me start with some comments on our operating businesses, starting with labs. As Shawn mentioned earlier, excluding the Q4 shipping delay benefits this quarter, local currency sales in our laboratory business declined approximately 6% compared to last year.

Let me start with some comments on level operating businesses starting with lab.

Patrick K. Kaltenbach: As Shawn mentioned.

Patrick K. Kaltenbach: Earlier, excluding the Q4 shipping delay benefits this quarter.

Patrick K. Kaltenbach: Local currency sales.

Patrick K. Kaltenbach: Laboratory business declined approximately 6% compared to last year.

Patrick K. Kaltenbach: This was better than we anticipated, but we saw cautious spending patterns from our pharma and biopharma customers, especially in China. We have a very strong product portfolio and pipeline of new innovations that directly address our customers' needs for solutions that enhance their productivity and ensure regulatory compliance. Combined with the enhancements we have made to our Spinnaker sales and marketing program, our go-to-market approach is a significant competitive differentiator during this period of reduced demand and Mark Demand. Our industrial sales for the quarter were also better than we had expected and declined about 3%, excluding the benefit of shipping delays.

Patrick K. Kaltenbach: This was better than we anticipated, but we saw cautious spending patterns from our pharma and biopharma customers, especially in China.

Patrick K. Kaltenbach: We have a very strong product portfolio and pipeline of new innovations that directly address our customer needs for solutions that enhance their productivity and ensure regulatory compliance.

Patrick K. Kaltenbach: Combined with the enhancements we have made on our spinnaker sales and marketing program.

Patrick K. Kaltenbach: Our go to market approach is a significant competitive differentiator during this period of reduced.

Patrick K. Kaltenbach: End market demand.

Patrick K. Kaltenbach: Our industrial sales for the quarter were also better than we had expected and declined about 3% excluding the benefit of shipping delays.

Patrick K. Kaltenbach: Our sales of core industrial products have performed better than we would have expected in a soft economic environment, benefiting from our upgraded portfolio of products that enable automation and digitalization in our customers' production and logistics facilities. We also continue to be optimistic about growth opportunities related to home-shoring and near-shoring as customers aim to increase resiliency in their supply chain. Our product inspection business also had better-than-expected performance in a soft market environment with benefits from recent product introductions and strong service growth. Lastly, food retail sales declined in line with our expectations against significant project-driven sales growth in the first quarter of last year.

Patrick K. Kaltenbach: Our sales of core industrial products have performed better than you would have expected in a soft economic environment benefiting from our upgraded portfolio of products with enable automation and digitalization.

Patrick K. Kaltenbach: Customers' production and logistics facilities.

Patrick K. Kaltenbach: We also continue to be optimistic about growth opportunities related to home shoring and mutual ring as customers aimed to increase resiliency in their supply chains.

Patrick K. Kaltenbach: Our product inspection business also had better than expected performance in a soft market environment with benefits from recent product introductions and strong service growth.

Patrick K. Kaltenbach: Lastly, <unk>.

Patrick K. Kaltenbach: Food retail sales declined in line with our expectations against significant project driven sales growth in the first quarter of last year.

Patrick K. Kaltenbach: Now, let me make some additional comments about geography. Starting in the Americas, our sales declined slightly in the quarter, excluding the benefit from recovering our shipping delays. He benefited from strong project-related growth in industrial, which was offset by a decline in lab and retail. As expected, our customers have been somewhat cautious this year, especially in pharma and biopharma, which we expect to improve as we face easier comparisons in the second half of the year. Retail also faced very difficult comparisons related to very strong growth in the prior year.

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

Patrick K. Kaltenbach: Starting in the Americas, our sales declined slightly in the quarter, excluding the benefit from recovering our shipping delays.

Patrick K. Kaltenbach: We benefited from strong project related growth in industrial which was offset by a decline in lab and retail.

Patrick K. Kaltenbach: As expected our customers have been somewhat cautious starting the year.

Patrick K. Kaltenbach: Especially in pharma and Biopharma, which we expect to improve risk we face easier comparisons in the second half of the year.

Patrick K. Kaltenbach: Retail also faced very difficult comparisons related to very strong growth in the prior year.

Patrick K. Kaltenbach: Sales in Europe, excluding the estimated benefit from recovering our European logistics <unk> <expletive>.

Patrick K. Kaltenbach: Sales in Europe, excluding the estimated benefit from recovering our European logistics hub delays, declined about 5%, and we're largely in line with our expectations across each of all these. We continue to see soft economic indicators across most of Europe and acknowledge the potential risk to the European economy and energy prices from the conflict in the Middle East. However, we have a very strong team and go-to-market approach that positions us very well to capture growth opportunities.

Patrick K. Kaltenbach: <unk> declined about 5% and were largely in line with our expectations across each of our businesses.

Patrick K. Kaltenbach: We continue to see soft economic indicators across most of Europe and acknowledge the potential risk to the European economy and energy prices from the conflict in the Middle East. However, we have a very strong team and go to market approach that positions us very well to capture growth opportunities.

Patrick K. Kaltenbach: Lastly, Asia and the rest of the world results were also slightly better than expected, although demand in China remains very weak relative to very strong growth over the past few years. We continue to target pockets of growth opportunities, including semiconductor and new energy industries, and our approach to the market has remained a significant competitive advantage against the competition. Those are all my comments on the businesses for the quarter. And I'd now like to share with you why we are so optimistic about the long-term growth opportunities for our company.

Patrick K. Kaltenbach: Lastly, Asia rest of the World results were also slightly better than expected, although demand in China remains very weak relative to very strong growth over the past few years.

Patrick K. Kaltenbach: We continue to target pockets of growth opportunities, including semiconductor and new energy industries and our approach to the market is remains a significant competitive advantage against the competition.

Patrick K. Kaltenbach: Total all my comments on the businesses for the quarter and I would now like to share with you why we are so optimistic on the long term growth opportunity for our company.

Patrick K. Kaltenbach: First.

Patrick K. Kaltenbach: I have been in the life science and analytical tools industry for a long time and believe the exciting advancements our customers are bringing to the market will continue to support healthy market growth in our industry over the long term. We also see many new opportunities in fast-growing segments, such as sustainable materials, semiconductors, and alternative energy.

Patrick K. Kaltenbach: I have been in the life science and analytical tools industry for a long time and believe the exciting environment advancement of our customers are bringing to the market. We will continue to support healthy market growth in our industry over the long term.

Patrick K. Kaltenbach: You also see many new opportunities in fast growing segments, such as sustainable materials semiconductors and alternative energy.

Patrick K. Kaltenbach: Our customers also continue to look to us to help them achieve their goals, including improving productivity and quality while supporting their efforts in automation and digitalization. Our very broad and diverse portfolio of solutions is an important differentiator, and we lead the industry with new innovations for our target market. Innovation is at the heart of our culture and is essential to our continued success. We are constantly coming out with new products and have accelerated our rate of innovation over the past few years. New products help stimulate replacement cycles.

Patrick K. Kaltenbach: Our customers also continue to look to us to help them achieve their goals, including improving productivity and quality, while supporting their efforts in automation and digitalization our.

Patrick K. Kaltenbach: Our very broad and diverse portfolio of solutions is an important differentiator.

Patrick K. Kaltenbach: And we lead the industry with new innovations for our target markets.

Patrick K. Kaltenbach: Innovation is at the heart of our culture and is essential to our continued success.

Patrick K. Kaltenbach: We are constantly coming out to market with new products and have accelerated our rate of innovation over the past few years.

Patrick K. Kaltenbach: New products, new products help stimulate replacement cycles support market share gains and enhance our value proposition that's affordable pricing.

Patrick K. Kaltenbach: Support market share gains and enhance our value propositions that support our prices. We are uniquely positioned to serve customers throughout the value chain, from R&D to production and logistics. This also creates a tremendous opportunity for us to add automation and digitalization features to our products and drive productivity and provide insights throughout the value chain. Over the past three years, we have invested over half a billion dollars in research and development into three key areas, technology advancements to support new products and features that increase the value of our products.

Patrick K. Kaltenbach: We are uniquely positioned to serve customers throughout the value chain.

Patrick K. Kaltenbach: From R&D through production and logistics.

Patrick K. Kaltenbach: This also creates a tremendous opportunity for us to add automation and digitalization features to our products and drive productivity and provide insights throughout the value chain.

Patrick K. Kaltenbach: Second, application and software development to complement our products. And third, design enhancements to simplify the manufacturing and serviceability of our products. The significant investments we are making have been an important contributor to expanding our innovation leadership at MarketShare Games.

Patrick K. Kaltenbach: Over the past three years, we have invested over half a billion dollars in research and development into three key areas.

Patrick K. Kaltenbach: First <unk>.

Patrick K. Kaltenbach: Technology advancement to support new products and features that increase the value of our products.

Patrick K. Kaltenbach: Second application and software development to complement our products and third design enhancements to simplify manufacturing and service ability of our products.

Patrick K. Kaltenbach: The significant investments, we are making have been an important contributor to expanding our innovation leadership and market share gains.

Patrick K. Kaltenbach: I'd like to share with you a few examples of innovations we have recently brought to market and why we are so excited about our future. I'll start with our biggest launch of the year, our entirely new and redesigned portfolio of standard and advanced level laboratory balances, which you may have seen featured in our annual report. We are the global market leader in laboratory weighing but also have ample room to gain further market share, which includes expanding our access to growth sectors.

Patrick K. Kaltenbach: I'd like to share with you a few examples of innovations we have recently brought to market and why we're so excited about <unk> future.

Patrick K. Kaltenbach: I'll start with our biggest launch of the year, our entirely new and redesigned portfolio of standard and advanced level laboratory balances reached.

Patrick K. Kaltenbach: You may have seen featured in our annual report.

Patrick K. Kaltenbach: Yeah.

Patrick K. Kaltenbach: We are the global market leader in laboratory rating, but also have ample room to gain further market share that includes expanding our access to growth segments.

Patrick K. Kaltenbach: Our new range of balances addresses this opportunity with the best products for entry-level applications all the way up to advanced weighing requirements. They feature increased robustness, seamless data management, a harmonized user interface, and up to 30% better measurement and performance. Our design approach also improves sustainability by using improved packaging and reducing their power consumption.

Patrick K. Kaltenbach: Our new range of balances address this opportunity with the best products for entry level applications, all the way up to advanced waiting requirements.

Patrick K. Kaltenbach: Yeah.

Patrick K. Kaltenbach: But the future increased robustness seamless data management, a harmonized user interface and up to 30% better measurement and performance.

Patrick K. Kaltenbach: Our design approach also improve sustainability and using improved packaging and reducing the power consumption.

Patrick K. Kaltenbach: Weighing is a critical step in the sample preparation process, and our LabX software connects our higher-end balances to our broad portfolio of analytical instruments to help automate workflows and ensure secure and compliant data capture. This is a very important competitive advantage, considering we provide about 40% of the instruments that are found in a typical quality control app. And we recently introduced several new analytical instruments with new automation and digitalization features. For example, we are the global number two player in titration, and last month we launched two completely new call fissure titrator models.

Patrick K. Kaltenbach: Weighting is a critical step in the sample preparation process and it will FX software connects of a higher end balances to our broad portfolio of analytical instruments to help automate workflows and ensure secure and compliant data capture.

Patrick K. Kaltenbach: This is a very important competitive advantage considering we provide about 40% of the instruments that are found in a typical quality control app and we recently introduced several new analytical instruments with new automation and digitalization features.

Patrick K. Kaltenbach: For example, we held a global number two player and titration and last month, we launched two completely new call feature to a trader models.

Patrick K. Kaltenbach: Our new EVA titrators are ideal for efficiently determining the water content of challenging samples, and our new control algorithm speeds up reaction rates and allows for fast analysis and cycle time. It also has an automated solvent exchange system that ensures safety by minimizing exposure to potentially hazardous chemicals. Importantly, our new titrators have full compatibility with our LabX software to enable automated seamless workflows with secure data management, all while complying with data integrity regulations. Hot segments have been an important driver of growth for analytical instruments, and water determination by titration is an important part of lithium battery production.

Patrick K. Kaltenbach: Although new EBA titrated.

Patrick K. Kaltenbach: Ideal for efficiently determining the water content of challenges challenging samples and our new control algorithm speeds up reaction rates and allows for faster analysis and cycle times.

Patrick K. Kaltenbach: It also has an automated Sullivan exchange system that ensures safety by minimizing exposure to potentially hazardous chemicals.

Patrick K. Kaltenbach: Importantly, our new titrated as half full comparability with our Olympics software to enable automated seamless workflows with secure data management, all while complying with data integrity regulations.

Patrick K. Kaltenbach: Hot segments have been an important driver of growth fall by legal analytical instruments and waters determination to titration is an important part of lithium battery production.

Patrick K. Kaltenbach: Our voice-of-customer program, Jetstream, uncovered a specific customer need in the market to be able to analyze multiple samples with only one titration instrument. To address this, our team developed a new automated sample prep solution, the InMotion Carl Fischer 6, that is used with our titrators. With our InMotion 6, customers can process up to six samples fully automatically and unattended with only one titrator, addressing our customers' need for a cost-effective solution on a very small footprint.

Patrick K. Kaltenbach: Our voice of customer program Jetstream uncovered specific customer needs in the markets to be able to analyze multiple samples with only one duration instrument.

Patrick K. Kaltenbach: Yeah.

Patrick K. Kaltenbach: To address this our team developed a new automated sample prep solution. The emotion call Fisher six that is used with our titrated.

Patrick K. Kaltenbach: If I were in motion six customers can process up to six samples fully automatically and unintended with only one titrated addressing our customers' need for cost effective solution onto some very small footprint.

Patrick K. Kaltenbach: Automation has also been an important differentiator for our thermal analysis customers in fast-growing markets, such as the development of new materials. And we recently introduced a new thermal analysis instrument called the DSC5PLUS with a fully automated sample change. This instrument also increases the efficiency of the entire workflow from sample handling to result assessment, generating reproducible results with less resources. Our artificial intelligence wizard software automatically detects and evaluates many types of thermal effects.

Patrick K. Kaltenbach: Automation has also been an important differentiator for thermal analysis customers in fast growing markets such as development of new materials.

Patrick K. Kaltenbach: And we recently introduced a new thermal analysis instrument called the TFC five plus with a fully automated sample changer.

Patrick K. Kaltenbach: This instrument also increases the efficiency of the entire workflow from sample handling to result assessment generating reproducible results with less resources.

Patrick K. Kaltenbach: Our artificial intelligence with the software automatically detects and evaluates many types of thermal effects.

Patrick K. Kaltenbach: Saving valuable time and providing consistent and reliable measurement results regardless of the user's level of experience. Our software also has different neural networks that are trained on dedicated data, so customers can download the most appropriate package for their experiment. Our core industrial business has been very successful in integrating advanced automation and connectivity features into its products and has focused its new product development on terminals and digital load cells that provide seamless integration into factory automation systems.

Patrick K. Kaltenbach: Saving valuable time, and providing consistent and reliable measurement results, regardless of the user's level of experience.

Patrick K. Kaltenbach: Our software also has.

Patrick K. Kaltenbach: It has different neural networks that are trained on dedicated data so customers can download the most appropriate package for their experiments.

Patrick K. Kaltenbach: Our core industrial business has been very successful in integrating advanced automation and connectivity features into its products and has focused its new product development on terminals and digital load sales that provides seamless integration into factory automation systems.

Patrick K. Kaltenbach: A great example of this is our industry 360 terminal.

Patrick K. Kaltenbach: A great example of this is our Industry 360 terminal, which is an ultra-fast weight indicator for automated filling, dosing, and tank weighing applications across a variety of industries from biopharma to food manufacturing. The terminal connects our scales and weighing sensors and seamlessly integrates our pre-programmed, ready-to-use weighing applications into a customer's programmable logic controllers for Process Control Automation. It also seamlessly feeds data to customer IT systems. And because of our unique ability to combine IT and operations technology communication on a single network, it saves customers integration and programming costs and time and eliminates the need for an additional gateway to the server or cloud.

Which is an ultrafast weight indicator for automated feeling dosing and tank weighing applications across a variety of industries from biopharma to food manufacturing.

Patrick K. Kaltenbach: The terminal connects our scales and weighing sensors and seamlessly integrates our pre programmed.

Patrick K. Kaltenbach: Ready to use weighing applications into our customers' programmable logic controllers.

Patrick K. Kaltenbach: For process control automation.

Patrick K. Kaltenbach: It also seamlessly peds data two customer it system.

Patrick K. Kaltenbach: And because of our unique ability to combine <unk> and operations technology communication on a single network. It saves customers integration and programming cost and time and eliminates the need for an additional gateway to the server or cloud.

Patrick K. Kaltenbach: This product line has been very successful, and new derivatives like our Industry 700 and Industry 400 have recently been launched to further expand our portfolio. We have also expanded our capabilities in pharma manufacturing IT systems, helping customers by having a simplified and standardized integration of our weighing solution. These advanced terminals also connect to our new Ph. D. low-profile hygienic floor scale family that offers unmatched hygiene and safety features. Our new scales are very well suited for industries like pharma, where their cleanliness is paramount. These scales offer a unique, fully sealed design that reduces contamination risks and simplifies cleaning procedures, and also has a state-of-the-art digital load cell.

Patrick K. Kaltenbach: This product line has been very successful in <unk>.

Patrick K. Kaltenbach: New derivatives like our industry 700 industry 400.

Patrick K. Kaltenbach: Have been very recently launched to further expand our portfolio.

Patrick K. Kaltenbach: We have also expanded our capabilities in pharma manufacturing systems, helping customers by having a simplified and standardized integration of our <unk> solutions.

Patrick K. Kaltenbach: These advanced terminals also connect to our new Phd low profile hygienic floor scaled family that almost unmatched hygiene and safety features.

Patrick K. Kaltenbach: Our new scales are very well suited for industries like pharma, they're cleaning list is paramount Paramount.

Patrick K. Kaltenbach: These scales offer unique fully seal design that reduces condemnation risks and simplified cleaning procedures.

Patrick K. Kaltenbach: And also has a state of the all digital load sale.

Patrick K. Kaltenbach: We have had great success with the 2023 launch of this product, and we believe this and other new core industrial products have been very important contributors to the relative resilience of this business over the past year. We have also recently launched several new products across our product inspection business over the past year that are highly differentiated and bring considerable value to the cost. We expect these innovations, including our new series of x-ray inspection technology, to help drive market share gains, especially in the mid-market sector.

Patrick K. Kaltenbach: <unk> had great success with the 2023 launch of this product and we believe this and other new core industrial products have been very important contributor to the relative resilience of this business over the past year.

We have also recently launched several new products.

Patrick K. Kaltenbach: Across our product inspection business over the past year.

Patrick K. Kaltenbach: That are highly differentiated and bring considerable value to the customers.

Patrick K. Kaltenbach: We expect these innovations, including our new series of X Ray inspection technology to help drive market share gains, especially in the mid market segment.

Patrick K. Kaltenbach: We have an excellent pipeline of innovations in product inspection that will further build on our market leadership. Lastly, we are also pleased with our success in the food retail business, which we have seen with new product introductions like our FreshBase scales, which was an important contributor to market share gains and strong sales growth last year. Additionally, our new FreshBase plus AI scale with advanced image recognition technology is an exciting innovation we are looking forward to bringing to additional markets outside of China.

Patrick K. Kaltenbach: Do you have an excellent pipeline.

Patrick K. Kaltenbach: Of innovations of product inspection that will further build on our market leadership.

Patrick K. Kaltenbach: Lastly, we are also pleased with our success of food retail business.

Patrick K. Kaltenbach: They have seen it with new product introductions like our fresh base scales.

Patrick K. Kaltenbach: Which has an import which was an important contributor to the market share gains and strong sales growth last year.

Patrick K. Kaltenbach: Additionally, our new fresh faced plus AI scale with advanced image recognition technology is an exciting innovation, we are looking forward to bringing to additional markets outside of China.

Patrick K. Kaltenbach: So that is a brief overview of a few new products, we have launched over the past year.

Patrick K. Kaltenbach: So that is a brief overview of a few new products we have launched over the past year. And there are many, many more to come this year as we have accelerated certain innovation investments to capture growth opportunities. These investments continue to provide a portfolio that is stronger than ever and continues to increase our value proposition, and, most importantly, help our customers gain new insights, increase their productivity, and ensure regulatory compliance throughout their value chain. That is the conclusion of our prepared remarks. Operator, I'd like to open the line now for questions. Thank you.

Patrick K. Kaltenbach: Good morning, many more to come this year SPF accelerated innovation investments to capture growth opportunities.

Patrick K. Kaltenbach: These investments continue to provide a portfolio that is stronger than ever and continues to increase our value proposition at.

Patrick K. Kaltenbach: Most importantly help our customers gained new insights increase their productivity and ensure regulatory compliance throughout the value chain.

Yeah.

Speaker Change: That is the conclusion of our prepared remarks operator.

Speaker Change: Operator, I'd like to turn to open the line up to questions.

Operator: Thank you. If you would like to ask a question, please press star 1 on your telephone keypad. If you would like to withdraw your question, simply press star 1 again. If you are called upon to ask your question and are listening via the loudspeaker on your device, please pick up your handset and ensure your phone is not on mute. Your first question comes from the line of Dan Arias with Stiefel. Your line is open.

Speaker Change: If you would like to ask a question. Please press star one on your telephone keypad. If you would like to withdraw your question simply press Star. One again. Thank you all called upon to ask your question and our listening via loud speaker on your device. Please pick up your handset and Im sure. Your phone is not on mute.

Speaker Change: Your first question comes from the line of Dan Arias with Stifel.

Daniel Anthony Arias: Stifel. Your line is open.

Daniel Anthony Arias: Morning, guys. Thanks for the questions. Shawn, the 50 bits or so that you're raising on the organic guide and then 20 cents, I believe, on the bottom line, is that just feeling better about the logistics issue, given that last quarter you sort of held back a bit, given that it was early in the year? Or is that reflective of better results that you saw in one cue and maybe the way that the year might unfold on demand. Yeah, hey, thanks, Dan.

Daniel Anthony Arias: Good morning, guys. Thanks for the questions, Sean the 50 bps or so that you are raising on the organic guide and then.

Daniel Anthony Arias: <unk> I believe on the bottom line is that just feeling better about the logistics issue given that last quarter, you sort of held back a bit given that it was early in the year.

Daniel Anthony Arias: Or is that.

Daniel Anthony Arias: Reflective of better results that you saw on <unk> and maybe the way that the year might unfold on demand.

Shawn P. Vadala: I think it's pretty much as you interpreted it. It's largely related to doing a little bit better on the shipping delays that we had in Q4. Of course, we did a little bit better than that in terms of Q4 results in general. But even though we're not seeing any negative changes in the business, we also prefer to be a little bit cautious here until we get closer to the second half and have a little bit more visibility.

Shawn P. Vadala: Yeah, hey, thanks, Dan. Thanks for the question.

Speaker Change: Yeah, Hey, Thanks, Dan. Thanks for the question I think it's pretty much as you interpret it it's it's largely related to doing a little bit better on.

Speaker Change: On the shipping delays that we had in Q4.

Speaker Change: Of course, we did a little bit better than that in terms of Q4 results in general.

Speaker Change: But even though we're not seeing any negative changes in the business. We also prefer to be a little bit cautious here until we get closer to the second half and have a little bit more visibility.

Speaker Change: Okay.

Shawn P. Vadala: And then maybe on the outlook for China, you pointed to continued challenges there in QQ. That's not exactly a surprise, just given the way that things have unfolded this quarter. But it does sound like you expect some deceleration on what is an easier comp. I think the China comp gets six points easier next quarter. Is there something to that? And are you seeing any of the green shoots that have been discussed a little bit across the earnings cycle this quarter? [inaudible]

Speaker Change: And then maybe on the outlook for China, you pointed to continued challenges there in Q2, that's not exactly a surprise just given the way that things have unfolded this quarter, but it does sound like you expect some deceleration on what is an easier comp I think the China comp get six points easier next quarter is there something to that.

Speaker Change: And are you seeing any of the green shoots that have been discussed a little bit across the earnings cycle. This quarter. Thanks.

Patrick K. Kaltenbach: I can take this then. Look, we are definitely pleased that we have seen a somewhat better result in Q1 than we had expected. That said, we still expect Q2 to be quite weak. I mean, as Shawn said, we'll have more than a 20% decline in China's second quarter based on the very tough comparisons we see against Q2 last year and the years before, where there has been quite heavy investment in China. There was significant spending during COVID and also some, of course, inventory buildup, et cetera. For the second half of the year, the comps will become much easier for us.

Speaker Change: Yes, it kind of takes us then.

Speaker Change: Look at it.

Speaker Change: We are pleased to have seen a somewhat better result in Q1 than we had expected that said, we still expected to be quite weak I mean.

Speaker Change: As Sean said, we will have more than 20% decline in China second quarter based on the very tough compares we see against Q2 last year and the years before but it has been quite heavy investment in China that was significant spending to recover it and also some of course inventory buildup et cetera for the second half of the year the comps will be.

Shawn P. Vadala: So we expect positive growth. And regarding your questions regarding the stimulus that was announced, I think this is definitely a positive sign for the market. We have not yet seen an impact yet, and we have to see whether it will move the needle. But I think it also helps to reestablish confidence in the market. So the stimulus will help. But I think most importantly, you need to understand that we think we are really well positioned with our product portfolio and our local team that is executing really well in developing local products for the Chinese market. I think we are in a great position to compete in this market and, as the market recovers, to gain even more. Yeah, and maybe even more.

Speaker Change: Much easier for us so we expect positive growth and regarding your question regarding the stimulus that was announced I think this is definitely a positive sign for the market. If you have not yet seen.

Speaker Change: An impact yet and we have to see whether it will move the needle, but I think it helps to reestablish a lot of confidence in the market. So the stimulus bill help.

Speaker Change: But I think most importantly, you need to understand that we think we are.

Speaker Change: Really well positioned with our product portfolio to help with our local team is executing really well.

Speaker Change: Ultra developing local products for the Chinese market I think.

Speaker Change: In a great position to compete in this market and as the market recovers to gain even more momentum and just maybe specifically address the comment about potential deceleration I think it's important to also just look at maybe the multi year comparisons here and if you just look at the trends in terms of like dollar terms or Robin.

Shawn P. Vadala: Yeah, and just to maybe specifically address the comment about potential deceleration, I think it's important to also just look at maybe the multi-year comparisons here, and if you just, like, look at the trends in terms of, like, dollar terms or rum and bee terms, you know, we're kind of hitting a high watermark a year ago in Q2 in terms of what we're lapping in terms of comps, so actually the comp level that we have in Q2 is a more difficult comp than we had in the first quarter.

Speaker Change: The terms.

Speaker Change: We're kind of hitting a high watermark a year ago in Q2 in terms of what we're lapping in terms of comps so actually the comp level that we have in Q2 as is.

Speaker Change: More difficult comp than we had in the first quarter.

Shawn P. Vadala: Okay, I got you. Thanks, Kevin. Your next question comes from the line of Jack Meehan with Nefron Research.

Speaker Change: Okay I got you thanks, guys.

Jack Meehan: Your next question comes from the line of Jack Meehan with Nefron Research. Your line is open. Thank you. Good morning, guys. Um, I was wondering if you'd just reflect...

Speaker Change: Your next question comes from the line of Jack Meehan.

Ron Research: Ron Research your line is open.

Operator: Your line is open. Thank you. Good morning, guys.

Jack Meehan: Thank you good morning, guys.

Jack Meehan: I was wondering if you could just reflect on the first quarter a little bit.

Jack Meehan: Posted flat local currency growth, you're guiding to down 4% to 6% about.

Jack Meehan: About one point came from better capture of logistics.

Ron Research: Where did the rest of the upside come from can you just walk us through that.

Shawn P. Vadala: Yeah, hey, thanks, Jack. You know, hey, the rest of it, we're pleased, you know, despite being down, you know, 6%, excluding the shipping benefit, we're pleased we did better than expected. You know, we kind of expected customers to start a little more cautiously this year. I think they did start cautiously, but we're glad that they didn't, they weren't as cautious as maybe we were thinking at the beginning of the quarter. If you look at kind of the where, like, where did it come from?

Speaker Change: Yes, hey, thanks Jack.

Speaker Change: The rest of it.

Despite being down 6%, excluding the shipping benefit we're pleased we did better than expected.

We kind of expected customers to start a little more cautiously this year I think they did start cautiously, but we're glad that they didn't they weren't as cautious as maybe we were thinking at the beginning of the quarter. If you look at kind of the where like where does it come from it was actually pretty broad based whether it be by region or by product area and I think.

Shawn P. Vadala: It was actually pretty broad-based, you know, whether it be by region or by product area. And, and I think if we look internally, you know, Patrick, and I just came out of some executive meetings earlier this week, we just really walk away feeling very good about the things that we're controlling. The execution and the organization, I would say are very high. You know, we talked about a lot of different corporate programs that we're rolling out on our last call, whether it be Spinnaker 6, or other programs.

Speaker Change: If we look internally Patrick can I just came out of some executive meetings earlier. This week, we just really walk away feeling very good about the things that we're controlling the execution in the organization I would say is very high.

Speaker Change: Talked about a lot of different corporate programs that we're rolling out on our last call whether it be spinnaker six or other programs.

Speaker Change: Today, we talked a lot about innovation and all the things we're doing in terms of launching new products in and so I have to also believe that the teams are just executing well and we're seeing some benefit from from all that that could work.

Shawn P. Vadala: Today, we talk a lot about innovation and all the things we're doing in terms of launching new products. And, and so I have to also believe that the teams are just executing well, and we're seeing some benefit from all that good work. Great. And then, do you mind just walking us through, in terms of the guidance for 2Q and the full year, just by segment, what the expectations are? Thanks.

Speaker Change: Alright, and then do you mind, just walking us through in terms of the guide.

Speaker Change: For <unk> in the full year just by segment, what the expectations are.

Shawn P. Vadala: Yeah, sure. So let me start by business area. So our Q2 guide for lab is to be down low single digits and for the full year to be up low to mid single digits. Product inspection, you know. I don't know if I could also maybe add, if you exclude the shipping delay for the full year, that would be flattish. If we look at core industrial, it would be up a low single digit in Q2. I'm sorry, that was product inspection.

Speaker Change: Yes, sure so let me start by.

Speaker Change: By business area. So our Q2 guide for lab is to be down low single digit and for the full year to be up low to mid single digit.

Product inspection.

Speaker Change: I don't know if I could also maybe add if you exclude the shipping delay for the full year that would be.

Speaker Change: Flattish if if we look at core industrial it would be up low single digit in Q2.

Shawn P. Vadala: Product inspection would be up a low single digit in Q2 and up a low single digit for the full year. And that would be the same if you excluded the shipping delays for the full year. Core industrial would be down high single digits for Q2 and flattish for the full year, and it would be down slightly excluding the benefits of the shipping delays for the full year. And then food retail would be down about 10% for Q2 and down mid to high single digits for the full year.

Speaker Change: Im sorry.

Speaker Change: That was product inspection product inspection would be up low single digit in Q2.

In up low single digit for the full year and that would be the same if you exclude the shipping delays for the full year.

Speaker Change: Core industrial would be down high single digit for Q2 and flattish for the full year.

Speaker Change: And it would be down slightly excluding the benefits of the shipping delays for the full year and then food retail would be down about 10% for Q2 and down mid to high single digit for the full year and similarly down mid to high single digit.

Speaker Change: For the full year, excluding the shipping delay benefit and then in terms of the Americas.

Shawn P. Vadala: And similarly, down into single-high single-digits for the full year, excluding the shipping delay benefit. And then, in terms of the Americas, we would be flat for Q2. We would be up low single digits for the full year, and then we would be up slightly, excluding the shipping delay benefit. Europe would be up low single digits for Q2, up mid single digits for the full year, but flattish excluding the shipping delay benefit. And then China would be down mid 20s in Q2, down high single digits for the full year, and similarly down high single digits, excluding the shipping delay benefit.

Speaker Change: We would be flat for Q2, we would be up low single digit for the full year and then we would be up slightly for excluding the shipping delay benefit Europe would be.

Speaker Change: Low single digit for Q2.

Speaker Change: Mid single digit for the full year flattish, excluding the shipping delay benefit and then China would be down mid twenty's in Q2.

Down high single digit for the full year, and similarly down high single digit excluding the shipping delay benefit.

Speaker Change: Yeah.

Speaker Change: Thank you.

Operator: Your next question comes from the line of Vijay Kumar with Epicor ISI. Your line is open.

Your next question comes from the line of Vijay Kumar with Evercore your.

Vijay Muniyappa Kumar: Your line is open.

Vijay Muniyappa Kumar: Hey, guys. Thanks for taking my question and congrats on the Q1 execution. Maybe, Shawn, for you, you beat Q1 by 500 basis points, right, at the minimum, relative to your expectations, so that's annualized 125 basis points, but you've raised guidance by 50 basis points. So, did anything change around the back half assumptions that makes you perhaps want to be a little bit more cautious?

Vijay Muniyappa Kumar: Hey, guys. Thanks for taking my question.

Vijay Muniyappa Kumar: Congrats on that.

Q1 execution.

Sean: Maybe Sean for you.

Sean: The Ub Ub Q1.

Sean: <unk> by 500 basis points right at the minimum relative to your expectations.

Sean: Thats annualized 125 basis points.

Sean: You've raised guidance by 50 basis points, so I mean anything changed around the back half assumptions.

Sean: That makes you perhaps.

Speaker Change: One would be a little bit more cautious.

Shawn P. Vadala: No, hey, Vijay, thanks for the question. No, I mean, we're not seeing, you know, I want to be clear, we're not seeing anything negative or new, you know, new negative changes in the business. You know, we just feel like it's still a little bit early in the year. You know, we only have one and a half months' worth of backlog. And, you know, we're just a little bit cautious here kind of going into the second quarter.

Speaker Change: No H D. J. Thanks for the question no I mean, we're not seeing and I want to be clear, we're not seeing anything.

Speaker Change: Negative and our new new negative changes in the business.

Speaker Change: We just feel like it's still a little bit early in the year.

Speaker Change: We only have one five months worth of backlog and.

Speaker Change: We're just a little bit cautious here kind of going into the second quarter and we just like to have a little bit more visibility to the second half of the year.

Shawn P. Vadala: And we just want to have a little bit more visibility into the second half of the year. You know, and I think after the end of Q2, we'll be in a better position to reassess the second half. But I think we're still optimistic about growing in the second half. And we just want to have a little bit more visibility here before we, you know, kind of get out over our skis.

Speaker Change: After the end of the Q2 will be in a better position to reassess the second half, but I think we're we're still optimistic about growing in the second half and but we just like to have a little bit more visibility here before we.

Speaker Change: Kind of get out over our skis.

Patrick K. Kaltenbach: And maybe, Patrick, for you as a follow-up, you know, Shawn mentioned visibility for the back half and a backlog, right? What is the typical backlog for Mettler? You know, when you say visibility, is that sort of being driven by funnel activity, customer conversations, or are you hoping, or do you have any expectations for the Chinese stimulus to play out in the back half?

Speaker Change: Understood and maybe Patrick for you as a follow up.

Speaker Change: Sean mentioned visibility for back half in our backlog right.

Patrick K. Kaltenbach: Where does the typical backlog for Matador.

Patrick K. Kaltenbach: When you say visibility is that is that sort of being driven by funnel activity customer conversations or are you, hoping or do you have any expectations for China stimulus to play out in the back half.

Patrick K. Kaltenbach: Thanks for the question, Vijay. Look, as Shawn just said, we have about one and a half months of backlog, so we have a pretty fast turnover in most of our businesses. When we look at the second half, again, the comps will get much easier for us based on what we saw last year, so that, of course, implies positive growth for the second half. We see very good customer engagement out there.

Patrick K. Kaltenbach: Thanks for the question Vijay look as Sean said, we have about one five months of backlog.

Patrick K. Kaltenbach: <unk> turnover.

Speaker Change: And most of our businesses when we look at the second half again, the comps will get much easier for us.

Speaker Change: Based on what we have seen last year and of course implies in positive growth for the second half.

Speaker Change: We see very good customer engagement out there.

Patrick K. Kaltenbach: Also, during Q1, our teams are in great discussions with customers. I think there's great interest in our new products that we just launched. And, and we are confident that we are really well positioned. What we're seeing, however, is that, you know, the sales cycle times are still somewhat longer at the moment. But, as Shawn also mentioned, given where we are with the portfolio, given what we see in terms of customer engagement, we don't see any negative trends or changes to what we have said in the first quarter. We think we are well positioned to achieve the goals we have for the second half, to be honest.

Speaker Change: So in Q1 and our teams are.

Speaker Change: And great discussions with customers I think there's great interest in our new products that we just launched.

Speaker Change: And we are confident that we are really well positioned what does seeing however is that the sales cycle times are still somewhat alone longer at the moment.

Speaker Change: But.

Speaker Change: As shown also mentioned given where we are with the portfolio given what we see what we see.

Speaker Change: In terms of customer engagement, we don't see any negative trends or changes to what we have said in the first quarter.

Speaker Change: We think we believe we are well positioned to achieve the goals we have for the second half to be honest.

Operator: understood. Thanks, guys.

Speaker Change: Thanks, guys.

Operator: Your next question comes from the line of Michael Riskin with Bank of America. Your line is open.

Speaker Change: Your next question comes from the line of Michael Lewis, Kevin with Bank of America. Your line is open.

Speaker Change: Yes.

Michael Riskin: Great, thanks for taking the question, guys. I'm going to ask another one about market conditions as you go through the year because I think that's where there's the most interest. Just following up on your comments just there, is there anything in particular you're looking for as you go through the year? I mean, is it really just a matter of time, you don't want to call for an improvement until you're only about three or six months out?

Michael Lewis: Great. Thanks for taking the question guys.

Michael Lewis: Going to ask another one about market conditions as we go through the year, because I think that's where there's the most interest.

Michael Lewis: Just following up on your comments just there is there anything in particular Youre looking for as you go through the year. I mean is it really just a matter of time of you don't want to call for an improvement until you are only about three or six months out or are there any specific indicators, whether it's PMI, whether it's funding levels, whether it's just the budgets being unlocked.

Michael Riskin: Or are there any specific indicators, whether it's PMI, whether it's funding levels, you know, whether it's just some budgets being unlocked, whether it's a recovery in China, just walk us through sort of like what are the indicators you're looking for as you go through the year to gain a little bit more confidence in that, you know, reopening of the markets and that acceleration?

Whether it's a recovery in China, just walk us through sort of like what are the indicators you're looking for as you go through the year to gain a little bit more confidence in that reopening of the markets that acceleration.

Shawn P. Vadala: Yeah, hey Mike, this is Shawn. Maybe it's not going to entirely repeat what we just said, but it probably will echo it to a large degree. You know, I think it comes back to this. We are sitting on pretty much one and a half months worth of backlog. But we do see good activity in our pipeline. As Patrick, I think, mentioned before, we are seeing order cycles being elongated a little bit in the first quarter.

Michael Lewis: Yeah, Hey, Mike This is Sean.

Sean: Maybe not entirely repeat what you just said, but it probably will echo it to a large degree I think it comes back to this sitting on pretty much one five months worth of backlog, we do see good activity in our pipeline.

Sean: As Patrick I think mentioned before.

Sean: We are seeing order cycles being elongated a little bit in the first quarter.

Sean: It would be nice to see those.

Shawn P. Vadala: You know, certainly would be nice to see those, you know, the conversions actually starting to happen here in the second quarter, but the activity is good, but I think it comes back to we only sit on about one and a half months worth of backlog. We still have some difficult comparisons on a multi-year basis here in the second quarter. It would be nice just to gain a few more months here, you know, and just kind of get a little bit closer to that second half. And then I think, you know, our second half growth story has also largely been about easier comparisons, and so it would be nice to see, you know, how the market kind of develops here in the second quarter in addition to those easier comparisons.

Sean: The conversion is actually starting to happen here in the second quarter, but the activity is good but I think it comes back to we only sit on about one five months worth of backlog, we have still some <unk>.

Sean: Difficult comparisons on a multiyear basis here in.

Sean: In the second quarter, it would be nice to see.

Sean: To gain a few more months here and.

Sean: And just kind of get a little bit closer to that second half and then I think we've generally been our second half growth story is also largely been about easier comparisons and so it would be nice to see.

Sean: How the market kind of develops here in the second quarter. In addition to those easier comparisons and of course, they hate this plenty of uncertainty and risks in the world that are out there nothing specific to our business.

Shawn P. Vadala: And of course, there is plenty of uncertainty and risks in the world that are, you know, out there, nothing specific to our business, but whether it is, you know, economic risks or geopolitical risks, and we will just kind of see how the world plays out here for a few more months.

Sean: But whether it's economic risks or geopolitical risks and we'll just kind of see how the world plays out here for a few more months.

Michael Riskin: Okay, thanks. And I want to ask one on the P&L. I mean, 1Q earnings beat pretty handily, obviously. Shipping, recovery, and the underlying business being better probably played a decent role in that. But could you sort of parse that out?

Speaker Change: Okay, Thanks, and I wanted to ask one on the on the on the P&L.

Speaker Change: <unk> earnings beat pretty handily, obviously ship.

Speaker Change: Shipping recovery and the underlying business being better probably quite a decent role in that but.

Speaker Change: But could you just sort of parse that out I mean, you gave a lot of color on what.

What revenues would've been if it wasn't for the shipping recovery.

Michael Riskin: I mean, you gave a lot of color on what revenues would have been if it wasn't for the shipping recovery. Any color you can give on the P&L in terms of how much benefit it was to EPS? And what I'm getting at is your, you know, your 2Q EPS guide of roughly 9 bucks is essentially flat versus 1Q. You normally see a pretty nice sequential step up. So again, I appreciate that the shipping recovery had some noise associated with it, but just trying to get a better sense of like the, you know, the margin cadence 1Q to 2Q. Yeah, hey, so until

Speaker Change: Any any color you can give on the P&L in terms of how much benefit or what's the EPS and what I'm getting at is your EPS guide of roughly nine box is essentially flat versus <unk>.

Speaker Change: You normally see a pretty nice sequential step up so again.

Speaker Change: Appreciate the shipwreck recovery had some noise to that but I'm, just trying to get a better sense of like the margin cadence once you're into the queue. Thanks.

Shawn P. Vadala: Yeah, hey, so in terms of the first quarter, as we kind of said, we benefited about 6% in terms of sales from the shipping delay benefit. Our expectation was that we were going to benefit about 5%. So we had a 1% benefit. So you can kind of maybe draw your own conclusions about, you know, what that would have meant or not.

Speaker Change: Yes, hey, so in terms of the first quarter as we kind of said we.

Speaker Change: We benefited.

Speaker Change: 6% in terms of sales from the shipping delay benefit Rx.

Speaker Change: Our expectation was.

Speaker Change: Does that we were going to benefit about 5%. So we had a 1% benefit. So you can kind of maybe draw your own conclusions on what that would've meant or not.

Shawn P. Vadala: But, but, maybe more importantly, if you just take that reported number of sales in Q1, and you look at our guidance for Q2, regardless of the shipping delay benefit, like, with that benefit, the reported number is actually a very similar dollar number sequentially to what we see in the second quarter. If we look at our gross margins, we expect the gross margin to be down probably about 20 basis points versus the prior year.

Speaker Change: But maybe more importantly, if you just take that reported number of sales in Q1, and you look at our guidance for Q2, regardless of shipping delay benefit like with that benefit the reported number is actually a very similar dollar number.

Speaker Change: Chile to what we see in the second quarter and if you look at the EPS for Q2, it's actually our guidance is higher than in Q1, which I think point to a little bit to some of the good execution, we're doing on our side in terms of cost savings and productivity measures.

Speaker Change: You look at the second quarter versus prior year of course, there is different moving parts you have.

Speaker Change: A 2% headwind when it comes to foreign currency.

Speaker Change: If we look at our gross margins, we expect the gross margin to be down probably about 20 basis points versus the prior year and a lot of that has to do with volume being down in the second quarter versus the prior year.

Shawn P. Vadala: And a lot of that has to do with volume being down in the second quarter versus the prior year. There's a little bit of noise as well with maybe a little bit of higher transportation costs with some of the Red Sea topics, you know, some investments we're making in our service business. And then our pricing, of course, you know, offsets that a little bit. Our pricing came in at about 2%, which was in line with our expectation for the first quarter.

Speaker Change: There's a little bit of noise as well with a little bit of higher transportation costs with some of the red Sea to Opex.

Speaker Change: Some investments, we're making in our service business.

Speaker Change: And then our pricing of course.

Speaker Change: Offsetting that a little bit.

Shawn P. Vadala: And we kind of expect that to continue into the second quarter and for the full year. And then maybe one other comment on the P&L kind of going below the gross margin. In addition to the volume and the things that I just said in terms of headwinds, we also will have higher variable comp in Q2 this year relative to last year. But if you kind of then step back from all that, you know, and you maybe pivot to the full year, we're actually pleased that our full year operating margin is now probably going to be up about 50 basis points.

We are pricing came in about 2%, which was in line with our expectation for the first quarter.

Speaker Change: And we kind of expect that.

Speaker Change: To continue here into the second quarter and for the full year and then maybe one other comment on on the P&L kind of going below the gross margin. In addition to the the volume and the things that I. Just said in terms of headwinds. We also will have higher variable comp Q2, this year relative to last year.

Speaker Change: But if you kind of then step back from all that.

Speaker Change: And you maybe pivot to the full year, we're actually pleased that.

Speaker Change: Our full year operating margin is now probably going to be up about 50 basis points.

Shawn P. Vadala: And if you exclude currency, it's probably up about 70 basis points. So, in a year where there is, you know, pretty modest top-line growth, we feel good about our ability to continue to drive operating margin improvement.

If you exclude currency, it's probably up about 70 basis points. So in a year, where there is.

Speaker Change: Pretty modest topline growth.

We feel good about our ability to continue to drive.

Speaker Change: Operating margin improvement.

Operator: Your next question comes from the line of Rachel Battenstall with J.P. Morgan. Your line is open.

Speaker Change: Your next question comes from the line of Rachel <unk> with JP Morgan Your line is open.

Rachel Marie Vatnsdal Olson: Great, good morning guys, and thanks for taking the questions. So I wanted to dig into the industrial performance in the quarter. You mentioned some strengths in Americas and 1Q on some project level activity, but then you also said that you expect core industrial to be down in the high single digits in 2Q. So can you just kind of walk us through the drivers of that core industrial business in the first half of the year? Were there any one-timers that we need to be aware of in 1Q, for example?

Speaker Change: Marie France.

Marie France: Thank you.

Rachel: My last one.

Rachel: Our outperformance in the quarter, you mentioned with Bank of America has been one from product mobile activity. But then you also said that you expect core industrial to be down high singles in QQ. So can you just kind of walk us through the drivers of that core industrial business in the first half of the year were there any one timers that we need to be aware I for one can't for example.

Patrick K. Kaltenbach: Yeah, thank you, Rachel, and I'll start and maybe let Shawn chime in as well. Look, we are very proud of the performance of our industrial business. I think it comes down to really the outstanding portfolio enhancements we have made over the last year. I mentioned the Industry 360 Terminal and other things we launched, driving productivity for our customers, and they really pick it up nicely.

Speaker Change: Thank you Rachel and I will start and maybe let Sean chiming in Israel.

We are very proud of the performance of our industrial business I think it comes down to really the outstanding portfolio enhancements. We have made over the last year I mentioned industry 362, Yamal and novel things, we launched are driving productivity for our customers and really pick it up.

Patrick K. Kaltenbach: When you look at Q2, I mean, the major driver for the decline that we outlined is a very tough competitor against very strong business we saw in Q2 last year in industrial. That's, we are not concerned about, you know, the effectiveness of our products or the engagement we see from our customers simply based on a decline on a very tough comparison versus last year. In the quarter, we definitely look forward to maintaining the momentum or gaining even more momentum with the new products that I indicated, like the Industry 400 and 700 and the new industry scales that we are launching. So, overall, I would say not a concern; the decline is purely because we had a very big fall last year in the industry.

Speaker Change: Lee.

Speaker Change: When you look at Q2, I mean, the major driver for the decline that we outlined is a very tough compare against a very strong business. We have seen in Q2 last year in industrial so.

Speaker Change: We are not concerned about.

Speaker Change: The safety of attractive nickel products already engaged with receipt of our customers simply there is a decline on a very tough compare versus last year in the quarter, particularly look forward to.

Speaker Change: Keeping the momentum we're gaining even more menu with new products that are indicated like the industry 400, 700, and a new industry scales that we're launching.

Speaker Change: So overall I would say not a concern the decline has been purely because we had a very big quarter last year in the industry.

Shawn P. Vadala: Yeah, hey, maybe just to get to the other part of your question, Rachel, you know, the first quarter in the U.S. certainly has project activity is lumpy, you know, and so we certainly will not see that in the second quarter. So there's an element of that. And then maybe the other point I make here is that in core industrial, it has a larger mix of business weighted towards China versus our other businesses.

Speaker Change: Yes, Hey, maybe just to get to the other part of your question Rachel.

Speaker Change: The first quarter in the U S. Certainly that project activity is lumpy and so we certainly will not see that in the second quarter. So theres an element of of that.

Speaker Change: And then maybe the other point I'd make here is that in core industrial it has a larger mix of business weighted towards China versus our other businesses and then if you kind of look at maybe the multiyear comparisons of that China business.

Shawn P. Vadala: And then if you kind of look at maybe the multi-year comparisons of that China business, you know, we do have a very difficult comparison, as Patrick mentioned. So it will be a little bit and it will be a little bit bigger of a headwind there that we saw versus Q1.

Speaker Change: We do have a very difficult comparison as Patrick mentioned, so it will be a little bit and it will be a little bit bigger of a headwind there.

Speaker Change: That we saw versus Q1.

Speaker Change: Okay.

Patrick K. Kaltenbach: Great. And then, just for my follow-up, I wanted to dig into some of the biopharma commentary that you gave. So you mentioned some of the slower spending to start the year. We've been hearing that across the sector this earnings season. But can you just unpack for us what guidance assumes in terms of those biopharma customer budgets starting to open up? And then have you seen any activity levels from biopharma customers pick up in April and then early May here in that group as well?

Speaker Change: And then just my follow up I wanted to go home for some of the Biopharma commentary.

Speaker Change: Paul mentioned some of the slower spending to start the year, we've been hearing that across the sector and Thats earnings, but can you just unpack for us what does guidance assume in terms of biopharma customer budgets starting to open up and then have you seen any activity level from biopharma customers pick up in April and then early next year.

Speaker Change: Thanks, Bob.

Patrick K. Kaltenbach: Well, look, when we talk about biopharma, I think the business we really focus on here is our process analytics business. Biopharma definitely has been soft in the first quarter, and we also expect it, given what we're hearing from our customers, to be soft in the second quarter as well. I mean, when we talk about growth in the second half for biopharma, the same thing is true as for many other businesses.

Bob: Well, let me talk about Viropharma office business, we really focus on here is our process analytics business.

Bob: Biopharma is definitely still has been soft in the first quarter meals are expected given what we're hearing from our customers to be soft in the second quarter as well.

Bob: I mean, when we talk about the growth in the second half for Biopharma same things as tourists from any other businesses.

Patrick K. Kaltenbach: We just expect easier comparisons. When you look at the underlying engagement and the momentum we're seeing right now, especially in China, we are still facing some inventory issues with our pro-sensors, and they're still sitting on some inventory there that they're working down. On the single-use sensors that you use in biopharma, we're actually also encouraged by the more recent interest in single-use sensors that come from our Pantotec business for biopharma companies.

Bob: Just expect also easier compares.

Bob: When you look at the underlying engagement and the momentum you're seeing right now obviously, especially in China, we are still facing some inventory issues.

Bob: With our pro sensors, they still sitting on some inventory that they are working down.

Bob: On the single use sensors that are used in biopharma.

Bob: Also encouraged by let's say the reasonable reason.

Bob: Interest again into single use sensors that come from all kinds of tank business for Biopharma customers.

Patrick K. Kaltenbach: And the other part of biopharma, of course, is pipettes. And we certainly have seen improvement in pipettes relative to some of the destocking issues that we were dealing with last year.

Bob: And the other part of Biopharma of course, this type pets, and we certainly have seen improvement in pipettes relative to some of the destocking issues that were dealing with last year.

Operator: Your next question comes from the line of Matt Sykes with Goldman Sachs. Your line is open.

Bob: Your next question comes from the line of Matt <unk> with Goldman Sachs. Your line is open.

Matthew Carlisle Sykes: Hi, good morning. Thanks for taking my questions. Patrick, maybe, I'm sorry if I've missed it, but maybe just some commentary around the services business. I think you mentioned it was strong in Q1, but just any expectations and progress that you've made on your services initiative over the course of this quarter and your expectations for the full year.

Hi, good morning, Thanks for taking my questions.

Matt: Patrick maybe sorry, if I've missed it but maybe just some commentary.

Around the services business I think you mentioned it was strong in Q1, but just any expectations.

Matt: And progress that you've made on your services initiative over the course of this quarter and your expectations for the full year.

Patrick K. Kaltenbach: Yeah, very good, thanks. Matt, I mean, again, we are very proud about the performance of our service business. We had 6% growth in the first quarter against a very strong growth in the first quarter last year. We see strong demand for our services. We continue to build out the service portfolio that we can deliver to our customers. We compete extremely well. We still have a lot of opportunity with the installed base that we have out there to connect more of our services to the installed base.

Speaker Change: Very good thanks.

Speaker Change: I mean again very proud about the performance of our well service business, we had 6% growth in the first quarter against a very strong growth the first quarter last year.

Speaker Change: We see strong demand for services.

Speaker Change: We continue to build out the service portfolio.

Speaker Change: We can deliver to our customers compete extremely well and.

Speaker Change: We still have a lot of opportunity <unk> installed base that we have out there connecting more public services through the installed base and we have dedicated.

Speaker Change: Marketing programs in place to connect more of the business I think that it will drive a lot of profitable growth for us moving forward.

Patrick K. Kaltenbach: And we have dedicated marketing programs in place to connect more of the business. I think that will drive a lot of profitable growth for us moving forward. I'd also like to remind you that our operating profit on services is actually higher than the average of our portfolio, so that's a big benefit.

Speaker Change: I'd like to remind you also that it will operating profit on services is actually higher than average.

Speaker Change: Of our portfolio.

Speaker Change: It's a big benefit.

Broadening the portfolio and increasing the reach to our customers with dedicated campaigns in order to go to market strategies will help us to continue that momentum that we see guidance services services is one of the areas that we continue to invest all flow through the down cycle last year.

Patrick K. Kaltenbach: And broadening the portfolio and increasing the reach to our customers with dedicated campaigns and also go-to-market strategies will help us to continue that momentum that we see behind services. Services is one of the areas that we continue to invest in during the down cycle last year. We have a very strong service team, and we see moving forward still more opportunities out there for services. Our services are very well recognized in the market by our customers.

Speaker Change: Have a very strong services team and <unk>.

Speaker Change: We see moving forward still more opportunity out there for services.

Speaker Change: Our services are very well recognized in the market.

Speaker Change: Our customers, we have very unique solutions that many of our competitors cannot offer like for example, the rapid <unk> solutions when it comes to Teng.

Patrick K. Kaltenbach: We have very unique solutions that many of our competitors cannot offer, like, for example, a rapid kill solution when it comes to tank calibration, etc. So it is, again, a big opportunity for us. And we are seeing strong demand and will continue to invest.

Speaker Change: Tank calibration et cetera, so it is.

Speaker Change: Again big opportunity for us.

Speaker Change: Youre seeing strong demand and we will continue to invest in this business.

Shawn P. Vadala: Great. And then maybe a little more color on Europe. I know you're guiding to those single digits for Q2 and mid-single digits for the full year, but you've been cautious on Europe for some time, and you kind of reiterated that caution again. I'm sure comps are helping in the succeeding quarters, but just any additional color on what you're seeing from an end market demand standpoint from Europe and any reasons for continued caution over the course of the year.

Speaker Change: Great and then just maybe a little more color on Europe, I know youre guiding to low single digits for Q2.

Speaker Change: Mid single digits for the full year, but.

<unk> been cautious on Europe for some time, you've kind of reiterated that caution again I'm sure comps are helping.

Speaker Change: In succeeding quarters, but just any additional color on what youre seeing from an end market demand standpoint from Europe in any.

Speaker Change: Any.

Speaker Change: Reasons for continued caution over the course of the year.

Operator: Yeah, hey Matt, this is Sha-

Shawn P. Vadala: Yeah, hey Matt, this is Shawn. Maybe I'll take that one.

Speaker Change: Yeah, Hey, Matt This is Sean maybe I'll take that one so.

Speaker Change: <unk>.

Shawn P. Vadala: So, you know, we're very pleased with the execution from our team in Europe. We have our most direct sales organization there in terms of a direct channel to the customer, and I tend to think we always feel the best benefit of our Spinnaker sales and marketing programs in Europe. So I think that's one of the things that we feel very good about. Now, the other side of that is, you know, the economies have been soft.

Sean: We're very pleased with the execution from our team in Europe.

Sean: We have our most direct sales organization there in terms of direct channel to the customer.

Tend to think we always feel the.

The best benefit of our spinnaker sales and marketing programs in Europe. So I think thats one of the things that we feel very good about now the other side of that is.

Shawn P. Vadala: You know, when you look at some of the Ps, especially some of the larger countries like Germany, you see elevated costs of energy in the region affecting some of our end markets. So, you know, there's certainly uncertainty there at the same time. As we look to the second quarter, I think there's going to be some benefit from the timing of Easter, but otherwise, you know, it's kind of like yin and yang.

Sean: The economies have been soft.

Sean: You look at some of the Pis, especially some of the larger countries like like Germany, you see elevated.

Sean: Cost of energy in the region affecting some of our end markets.

Sean: So there's certainly uncertainty there at the same time as we look to the second quarter I think there is going to be some benefit here from the timing of Easter.

Shawn P. Vadala: On the one hand, we see a lot of market uncertainty, but on the other hand, I feel like we're fighting a great fight, and the team's doing really well. And as we always kind of say, the economy tends to just need to be good enough there for people to stick to replacement cycles. But at the same time, you know, there are opportunities with reshoring and some of these hot segments like semiconductors or lithium batteries in Europe. And I think our teams do a really great job of identifying those opportunities when they're available and capturing them.

But otherwise.

Sean: It's kind of like a ying and Yang I think on one hand, we see a lot of market uncertainty, but on the other hand I feel like we're fighting a great fight and the team's doing really well and as we always kind of say the <unk>.

Sean: The economy tends to just need to be good enough there for people to stick to replacement cycles, but at the same time, there are opportunities with re shoring and some of these hot segments like semiconductor or lithium battery in Europe, and I think our teams do a really great job of identifying those opportunities.

Sean: <unk> when they are available in capturing them.

Sean: Yeah.

Speaker Change: Thank you.

Speaker Change: Yeah.

Operator: Your next question comes from the line of Catherine Schulte with Baird. Your line is open.

Speaker Change: Your next question comes from the line of Catherine Schulte with Baird. Your line is open.

Catherine Walden Ramsey Schulte: Hey, guys, thanks for the questions. First, I guess it's great to see the recapture of those tipping delays coming in above your expectations and recapturing pretty much all of that lost revenue. Just when it comes to the new logistics provider, would you say that situation is fully resolved? You've got the protocols and processes in place to move smoothly going forward? Yeah.

Catherine Walden Ramsey Schulte: Hey, guys. Thanks for question.

Catherine Walden Ramsey Schulte: First of all great to see the recap.

Catherine Walden Ramsey Schulte: Sure.

Catherine Walden Ramsey Schulte: Coming in above your expectation.

Catherine Walden Ramsey Schulte: And then a follow up I'll ask Robin there.

Catherine Walden Ramsey Schulte: Okay.

Robin: Provider would you say that situation will fully resolve at the protocols and processes in place.

Robin: Tim is going forward.

Patrick K. Kaltenbach: Yeah, thanks Catherine. I'm really happy with how the team performed in Q1 and how we could resolve that issue that we had in Q4. Looking at all the major KPIs that we have for the logistics provider, I would say today we are in a very, very good situation. We can, of course, keep a very close eye on it because, you know, a couple of months of great performance is not enough for us to say everything is locked down. But I am happy with the performance right now.

Tim: Yes, Thanks, Katherine I'm really happy our team performed in Q1 and I'll recruit resolve that issue that we had in Q4.

Tim: Actually the.

Provider: Looking at all the major Kpis that we have ordered two Super line I would say today that we are in a very very good situation.

Speaker Change: Of course, keep a very close eye on it because there were a couple of months.

Speaker Change: Okay, Great performance is not enough for us to move to say everything is locked down but so are.

Speaker Change: Happy with the performance right now our team of our own team has been really deeply engaged with fixing the situation.

Patrick K. Kaltenbach: Our team, our own team, has been really deeply engaged in fixing the situation. We have seen very strong collaboration between our own logistics teams and this external logistics provider to get these issues resolved. And again, we have all the monitoring KPIs in place. If we see any deterioration, we will have these teams come back into action right now.

Speaker Change: <unk> has seen very strong collaborations between our own logistics teams in this external logistics provider to get these issues resolved and.

Speaker Change: It can be have all monitoring kpis in place.

Speaker Change: You see any deterioration we.

Speaker Change: We'll have these these teams come come back interaction right now everything is running smooth, which I'm very happy with that.

Patrick K. Kaltenbach: Everything is running smoothly, which I'm very happy with. But, as with everything we do at Mettler-Toledo, there are continued performance improvement plans in place. Even here, even though it's now today, we are not satisfied where we are today. We think we can still do better and make sure that this is not an issue moving forward, but also continue to deliver outstanding customer experiences when it comes to delivery times. Quality of deliveries, et cetera, is definitely front and center with this logistics partner.

Speaker Change: Everything we do at medical legal there is continued performance improvement plans in place even here, even though it's now today, we are not satisfied where we are able to do everything we can still do better than them and make this really.

Make sure that this is not an issue moving forward, but also.

Speaker Change: <unk> continued to deliver outstanding customer experience when it comes to delivery times.

Speaker Change: Quality of deliveries et cetera is federally funded sandler.

Speaker Change: <unk> logistics partner.

Patrick K. Kaltenbach: We are making great progress, and I'm confident that we won't see any issues in the near term, but again, we keep it – we have monitoring KPIs in place to make sure that we don't miss any potential deviation.

Speaker Change: We made great progress and I'm confident that the.

Speaker Change: Don't see any issues in the near term, but and we keep monitoring.

Monitoring.

Speaker Change: Kpis in place to make sure that that would be.

Speaker Change: Don't Miss any potential deviation.

Catherine Walden Ramsey Schulte: All right, great. And then maybe on the second quarter guide, you know, it's implying a slower sequential increase than what you've typically seen historically. So can you just talk through any areas of conservatism that you feel are in the second quarter guide? It looks like maybe on the industrial side where there's a slower uptick sequentially than historically, but curious if you could just give some more color there. Yeah, sure, Catherine, maybe I can take that.

Speaker Change: Alright, Great and then maybe on the second quarter guide is implying a slower sequential increase from Corporately seamless correctly. So can you just talk to your any areas of conservatism that you see around that second quarter guide it looks like maybe on the industrial side, where that growth slower uptick sequentially then.

Speaker Change: Historically, but curious if you can just give some more color there.

Shawn P. Vadala: So, of course, there was the shipping delay benefit in Q1, but if you exclude that, I think the multi-year CAGRs still look pretty similar between Q2 and Q1. Sometimes, we're looking at pre-COVID CAGRs when we say that. The industrial business, like one of the things that kind of stands out there is it kind of ties to the comments we're making about China earlier or industrial before, where I said China is a higher percentage of that business and on a multi-year basis.

Shawn P. Vadala: Yeah, sure. Catherine, maybe I'll take that one.

Speaker Change: Yes, sure Katherine maybe I'll take that one so of course, there was the shipping delay benefit in Q1, but.

Katherine: But if you exclude that I think the.

Katherine: Like the multiyear CAGR.

Katherine: Still.

Katherine: Look pretty similar between Q2 and Q1.

Katherine: Sometimes we're looking at pre Covid CAGR, when we say that.

Katherine: But if you do look at like the.

Katherine: The industrial business like one of the things that kind of stands out there is that kind of <unk>.

Shawn P. Vadala: We just have higher comps. So if you start looking at it, you know, on a multi-year basis instead of on a one-year basis, I think that's maybe affecting a little bit some of the sequentials on a more disaggregated basis.

Nice of the comments, we're making about China earlier, our industrial before where I said China is.

Katherine: As a higher percentage of that business on a multiyear basis, we have just higher comps. So if you start looking at it on a multiyear basis instead of a one year basis, I think that's maybe affecting a little bit some of the sequential on a more disaggregated basis.

Katherine: Yeah.

Speaker Change: Great. Thank you okay. Thanks.

Operator: Your next question comes from the line of Patrick Donnelly with Citi. Your line is open.

Speaker Change: Your next question comes from the line of Patrick Donnelly with Citi. Your line is open.

Patrick Bernard Donnelly: Hey guys, thanks for taking the questions. I want to follow up on I think it was Rachel asking about kind of the underlying improvement as we work our way through the year, like that was biopharma. Can you talk about China just the assumption there, obviously the comps get easier, and it sounds like 2q will be down 20 plus. But can you talk about the underlying improvement you're assuming as we work away in the Sounds like maybe core industrial is still a little bit soft, but we'd love to just talk through the expectations there. You know, I understand the counselor easier, but just the underlying expectations.

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

Patrick Bernard Donnelly: I want to follow up on I think it was Rachel asking about kind of the underlying improvement as we work our way through the year that was Biopharma can you talk about China, just the assumptions there obviously the comps get easier it sounds like <unk> will be down 20, plus but can you talk about the underlying improvement you're assuming as we work arrangements.

Patrick Bernard Donnelly: Sounds like maybe core industrial.

Patrick Bernard Donnelly: A little bit soft, but would love to just talk through the expectations. There I get the comps are easier, but just the underlying.

Patrick Bernard Donnelly: I think if you like look at our.

Shawn P. Vadala: Like if you look at our full year guide for China, we're still expecting to be down, you know, high single digits. I think if you try to break it out between the businesses, maybe, maybe on a full year basis, industrial might be a little bit better than that than lab, but I think that's largely because of what we saw in Q1. I think as we kind of look at Q2, they're probably down similarly, maybe a little bit more on the industrial side because of some of these longer-term comp issues that we talked about. I think we have a good setup in terms of comparisons, certainly going into the second half of the year.

Like if you look at our full year guide for China, we're still expecting to be down.

Patrick Bernard Donnelly: High single digit.

Patrick Bernard Donnelly: I think if you try to break it out between the businesses, maybe maybe on a full year basis industrial might be a little bit better than that then then lab, but I think thats largely because of what we saw in Q1 I think as we kind of like look at Q2, they are probably down similarly, maybe a little bit more on the industrial side because.

Patrick Bernard Donnelly: Some of these longer term comp issues that we've talked about.

Patrick Bernard Donnelly: I think we have a good setup in terms of comparisons certainly going into the second half of the year and if you look at if you think about last year. The lab business was down disproportionately versus the industrial business. So I think the level will benefit from that more than the industrial in the second half of the year.

Shawn P. Vadala: And if you think about last year, you know, the lab business was down disproportionately versus the industrial business. So I think the lab will benefit from that more than the industrial business in the second half of the year. You know, in terms of the market, we always say things in China can change very quickly either way. So, I think this is a good example of just wanting to get another quarter under our belt before we talk too much about the second half of the year. You know, we, you know, and I think, you know, right now, we don't have any particular new insights.

Patrick Bernard Donnelly: In terms of the market, we always say things in China can change very quickly either way so.

Patrick Bernard Donnelly: So I think this is a good example of just wanted to get another quarter under our belt before we talk too much about the second half of the year.

Patrick Bernard Donnelly: We.

Patrick Bernard Donnelly: I think right now we don't have any particular, new insights I mean, I think everyone is seeing the same headlines here in about potentials for stimulus in these types of things, but nothing like that is necessarily influencing how we're thinking about guiding for the second half of the year. I think we are I think probably the bigger theme is the more that can happen from a governmental perspective to instill a <unk>.

Patrick K. Kaltenbach: I mean, I think everyone is seeing the same headlines hearing about potentials for stimulus and these types of things, but nothing like that's necessarily influencing how we're thinking about guiding for the second half of the year. I think we're, I think the probably the bigger theme is, you know, the more that can happen from a governmental perspective to instill confidence in the economy and in terms of people starting to reinvest.

Patrick Bernard Donnelly: <unk> and the economy in terms of people starting to reinvest I think theres been a lot of outreach.

Patrick Bernard Donnelly: In the country to companies and including to multinationals too to really re instill that confidence level and I think as that confidence builds.

Patrick K. Kaltenbach: I think there's been a lot of outreach in the country to both companies and, including multinationals, to really, you know, reinstill that confidence level. And I think, as that confidence builds, we'll start to see probably more, more investment happening in the country. But, you know, in the mid to long-term, we're still really, really optimistic here. You know, there's still a lot of growth opportunities in China for China.

Patrick Bernard Donnelly: We'll start to see probably more for investment happening in the country, but.

Mid to long term, we're still really really optimistic here, there's still a lot of growth opportunity in China for China, and I think we're very well positioned for that growth. When you look at how well we align with the government's priorities and then and then even getting into some of the trends that we talk a lot about with automation and digitalization.

Patrick K. Kaltenbach: And I think we're just very well positioned for that growth when you look at how well we align with the government's priorities. And then, and then even getting into some of the trends that we talk a lot about with

Patrick K. Kaltenbach: And we see very good engagement with customers in China as well. The sales team has really good engagement. We monitor this very closely. So there's a lot of customer interest out there that I think will help us also to get back to that growth. Yeah, and then to kind of feed off that, our team there has just always been such an agile team to pivot to where the growth opportunities are, and certainly that was a topic we were talking about this week at the executive level about some of the programs that they're doing locally to identify those pockets of growth and go after them. So we feel like, you know, we're well positioned as things improve.

Patrick Bernard Donnelly: Yes, and received very good engagement with customers in China as we overall sales team is really good.

Patrick Bernard Donnelly: <unk>.

Patrick Bernard Donnelly: We monitor this very closely.

Patrick Bernard Donnelly: There's also a lot of customer interest out there and help us also to get back to that growth in the second half Yeah and then.

Patrick Bernard Donnelly: Kind of feed off that our team. There is just always been such an agile teams to pivot to where the growth opportunities are and certainly that was a topic. We were talking about throughout this week with our at the executive level is just some of the programs that they're doing locally to identify those pockets of growth and go after them. So so we feel like.

Patrick Bernard Donnelly: We're well positioned as things improve.

Patrick Bernard Donnelly: Okay, that's helpful. And then Shawn, maybe just on the margin bill, can you just talk about, you know, the pricing piece, you know, in the quarter and as you work your way through the year, and then similarly, just how you're thinking about the cost base, given, again, if you're still a little bit of a softer macro, how nimble you're being on the cost side would be helpful Thank you guys. Yeah, so I

Speaker Change: Okay. That's helpful. And then maybe just on the margin build can you just talk about the pricing piece on the quarter and as you work your way through the year and then similarly, just how youre thinking about the cost base, given again still a little bit of a softer macro how nimble you are being on the cost side would be helpful. Thank you guys.

Shawn P. Vadala: Yeah, so I kind of mentioned earlier in one of the other questions that pricing came in pretty much as expected in the quarter at 2%. We're still kind of holding our guide for the full year on pricing at 2%.

Speaker Change: Yes, so I kind of mentioned earlier in one of the other questions pricing came in pretty much as expected in the quarter at 2%.

Speaker Change: We're still kind of holding our are our guide for the full year on pricing at 2%.

Shawn P. Vadala: You know, of course, we're going to try to do better than that. You know, I think all the things we're doing on innovation certainly continue to enhance our value proposition. And so that's, you know, that always helps. I see good execution on this topic as well, too. So we'll see how it plays out for the rest of the year.

Speaker Change: Of course, we're going to try to do better than that I think all the things we're doing on innovation certainly continues to enhance our value proposition and so.

Speaker Change: That always helps.

Speaker Change: Good good execution on this topic as well too. So so we will see how it plays out for the rest of the year.

Shawn P. Vadala: You know, in terms of margins, on a quarterly basis, it can be kind of lumpy, as we saw with the second quarter in terms of volumes, but I think, you know, the team continues to do a good job in terms of material costs. I think there are some modest benefits we saw in Q1 there that we'll kind of continue to see through the rest of the year. And then in terms of like just our overall cost structure, you know, we have, you know, it's like a balancing act, right?

Speaker Change: In terms of margins on a quarterly basis. It can be kind of lumpy as we saw with the second quarter with volumes, but but I think the team continues to do a good job in terms of material costs. I think there is some some modest benefits. We saw in Q1, there that will kind of continue to see through the rest of the year and then in terms of.

Speaker Change: Like just our overall cost structure.

Speaker Change: We have it's like.

Speaker Change: A balancing act right. We've done a lot of I think very good things in terms of driving productivity in the organization and cost savings that were kind of necessary to adjust to our current volumes, but of course that also creates the.

Shawn P. Vadala: We've done a lot of, I think, very good things in terms of driving productivity in the organization and cost savings that were kind of necessary to adjust to our current volumes. But of course, that also creates the ability for us to continue to reinvest in the business to ensure long-term success, which is something that we've always been very focused on. And so, I think we have a very good balance and mix in the business.

Speaker Change: It creates the ability for us to continue to reinvest in the business.

Speaker Change: To ensure long term success, which is something that we've always been very focused on and so I think we I think we have a very good balance and mix in the business of course, Patrick and I are.

Shawn P. Vadala: Of course, Patrick and I are going to spend a lot of time with our teams here starting next month. We start to go into our normal planning cycles, and that kind of continues until the fall, where we really kind of look at the different growth opportunities, investment opportunities, and then, at the same time, drive productivity throughout the organization.

Speaker Change: We're going to spend a lot of time with our teams here starting starting next month, we start to go into our normal planning cycles and.

Speaker Change: And that kind of continues until until the fall, where we really kind of look at the different growth opportunities investment opportunities and then at the same time driving.

Speaker Change: Productivity throughout the organization.

Operator: Your next question comes from the line of Joshua Waldman with Cleveland Research. Your line is open.

Speaker Change: Your next question comes from the line of Joshua Waldman with Cleveland Research. Your line is open.

Joshua Paul Waldman: Good morning. Thanks for taking my questions. First, Patrick or Shawn, just to follow up on a previous theme, any more color you can provide on what types of accounts started to open up in the latter part of Q1 or any customers that you point to that were sitting on the sidelines in late December and maybe January that then started to improve?

Joshua Paul Waldman: Hey, good morning, Thanks for taking my questions.

Joshua Paul Waldman: First Patrick or Sean just to follow up on a previous theme any more color you can provide on what types of accounts starting to open up in the latter part of Q1 or any customers that you would point to you that we're sitting on the sidelines in 'twenty three and maybe January that then started to improve.

Patrick K. Kaltenbach: Yeah, look, I think we saw very good interest in our products and performances, as we say, better than expected throughout the end markets and Product Portfolio. If I would point to maybe one segment, it could be food, actually, but in the food market, we saw really good interest for our product inspection business, which also drove a little bit of the better performance there. That market definitely, while there is still, you know, the same topic about elongated sales cycles, we see that as well, there's strong engagement, and a lot of that is driven by our new product portfolio.

Sean: Yeah look I mean, I think we saw very good interest in our products.

Sean: Performance as we said better than we expected throughout the end markets.

Sean: And.

Sean: And product portfolio.

Sean: Would point to maybe one segment it could be food actually bearing the fruit market.

Sean: Really good interest.

Our product inspection business that also drive drove a little bit of a better performance there that market differently, while there is still.

Sean: Same topic about elongated sales cycles, because he does as well as strong engagement and.

Sean: And a lot of that is driven by our new product portfolio I mentioned, a new X ray products.

Patrick K. Kaltenbach: I mentioned the new X-ray products, and new metal detector products, so that drives a lot of customer interest, to be honest, and also us getting more into what we call the mid-range market. We had historically been more focused on the high end of that market. We have a broader portfolio now for mid-range customers, meaning more cost-conscious customers that don't need the highest amount of performance there, and that probably is one of the market segments I would say that opened up maybe a bit more than expected, but overall, we saw really good engagement. All in, Margaret and Jill.

Sean: It will detect the product so that drives a lot of customer interest to be honest in the <unk>.

Sean: Also us getting more into what we call. The mid range market. We have historically been more focused on the high end of that market. We have a broader portfolio now for for mid range customers, meaning more cost conscious customers that fit that need.

Sean: We need to.

Sean: The highest amount of performance there.

Sean: And therefore, it is one of the market segments I would say, let's say that opened up maybe a bit more than expected, but overall, we saw really good engagement across all end markets and geographies.

Patrick K. Kaltenbach: Got it. And then, Shawn, maybe a related question on price. I guess, I forget if you commented whether or not, you know, price is tracking kind of in line or how it is tracking versus expectations. But It's curious if you could comment on price-risk expectations. In the recent past, you talked about using tough times to support share gains. Any recent success stories or examples you could point to that you think are driving share gains, maybe supporting upside versus the guide year-to-date? I think Patrick mentioned benefits from the go-to-market strategy. I guess any changes to the go-to-market strategy, for example, anything like that driving upside versus maybe what you expected year-to-date? Hey, Joshua. Hey, maybe.

Sean: Got it and then.

Sean: Sean maybe a related question on <unk>.

Sean: On price.

I guess I forget if you've commented whether or not pricing is tracking kind of in line or how it is tracking versus expectations.

Sean: But just.

Sean: So curious if you could comment on on price versus expectations and then in the recent past you've talked about using tough times to support share gains any.

Sean: A recent success stories or examples you could point to that.

Sean: Do you think are.

Sean: Driving share gain maybe supporting upside versus.

Sean: First the guide year to date.

Sean: I think Patrick mentioned benefits from go to market.

Sean: Strategy I guess any changes on the go to market strategy for example.

Sean: Anything like that kind of driving upside versus maybe what you expected here year to date.

Shawn P. Vadala: Hey Josh, so hey, maybe I'll take that one.

Speaker Change: Hey, Josh Hey, maybe I'll take that one so we'll start with price. So so as I mentioned price came in as expected in the quarter came in at 2%. So we were happy with that.

Shawn P. Vadala: So we'll start with price. As I mentioned, price came in as expected in the quarter; it came in at 2%. So we were happy with that. We expect prices to be 2% again in Q2 and for the full year, which is kind of consistent with our previous guidance, and as I kind of mentioned, we do feel very good about our value proposition. All the stuff we talked about earlier about innovation really strengthens that value proposition so that it helps to always support our pricing in the market. But at the same time, we'll, of course, look to see if we can do better than that as we kind of go through the year.

Speaker Change: We.

Josh: We expect price to be 2% again in Q2 and for the full year, which is kind of consistent with our previous guidance and as I kind of mentioned, we we do feel very good about our our value proposition all the.

Josh: The stuff, we talked about earlier about innovation really strengthen that value proposition. So that it helps to always support our pricing in the market and so but at the same time, we will of course look to see if we can do better than that as we kind of go through the year.

Shawn P. Vadala: In terms of market share gains, I do think we're executing really well. It's always hard to tell how much share we're taking, but if I just look at some of our results by region, Europe, I think, was a good example. Even the comments on food, some of that is we're executing well. We have new products that are being very well received in the market. It's not like there's not softness in some of these end markets, particularly in the US, but the teams are doing quite well there.

Josh: In terms of market share gains.

Josh: Do think we're executing really well, it's always hard to tell how.

Josh: How much share, we're taking but if I if I look at.

Josh: <unk>.

Josh: If I just look at some of our results by region Europe I think was a good example, I mean, even the comments on food right. Some of that as we're executing well we have new products that are being very well received in the market. It's not like there's not softness in some of these end markets, particularly in the U S, but but the teams are doing quite well.

Josh: There. So in terms of go to market approach I mean, I think we continue to just.

Shawn P. Vadala: In terms of our go-to-market approach, I think we continue to do very well within the umbrella of Spinnaker. That program really has allowed us to use a lot of analytics to really identify growth opportunities and pursue those opportunities. We have a lot of great tools to help prepare the team, to help with conversion and value selling, and cross-selling. And so I think a lot of the programs we have are very effective. If you go back to the beginning of the year, we talked about rolling out and introducing the next generation of Spinnaker to the organization, Spinnaker 6.

Josh: Do very well within the umbrella of spinnaker that program really has allowed us to be.

Josh: Use a lot of analytics to really identify growth opportunities and pursue those opportunities. We have a lot of great tools to help prepare the team to help with conversion and value selling.

Josh: Cross selling and so I think a lot of the programs. We have are very effective.

Shawn P. Vadala: You know, I think it's still a little early to say that Spinnaker 6 is driving share gains, but certainly it creates, you know, momentum in the organization and focus on the program in general because it's not like a different Spinnaker. They all kind of build on all the other waves and generations.

Josh: Go back to the beginning of the year, we talked about rolling out and introducing spent the next generation of spinnaker to the organization spinnaker six.

I think it's still a little early to say that spinnaker six is driving share gains, but certainly it creates.

Josh: <unk> momentum in the organization and focus on the program in general because it's not like a different spinnaker. They all kind of build on all the other waves in generations.

Josh: Okay.

Speaker Change: Got it I appreciate it guys.

Speaker Change: Yes.

Adam Uhlman: This concludes the question and answer session. I'll turn the call over to Adam Uhlman for closing remarks.

Speaker Change: This concludes the question and answer session I'll turn the call to Adam Goldman for closing remarks.

Adam Uhlman: Great. Thank you, everybody, for joining us this morning. If you have any follow-up questions, please feel free to reach out to me, and I hope you all have a great weekend. We'll talk to you soon. Thank you.

Adam Uhlman: Great. Thank you everybody for joining us. This morning, if you have any follow up questions. Please feel free to reach out to me and I Hope you all have a great weekend and we'll talk to you soon thank you.

Operator: This concludes today's conference call. Thank you for joining us. You may now disconnect.

Speaker Change: This concludes today's conference call. Thank you for joining you may now disconnect.

Speaker Change: Okay.

Speaker Change: Yeah.