Q1 2025 Mettler Toledo International Inc Earnings Call
Good morning ladies and gentlemen and thank you for standing by. My name is Kelvin and I will be your conference operator today. At this time I would like to welcome everyone to the Mettler-Toledo First Quarters 2020-5 training school.
All lines have been placed on mute to prevent any background noise.
After the speaker's remarks, there will be a question and answer session.
Speaker Change: If you would like to ask a question during this time, simply press star followed by the number one on your telephone keypad. If you would like to withdraw your question, please press star one again. Thank you. I would now like to turn the call over to Adam Umman, Head of Investor Relations. Please go ahead.
Adam Uhlman: Hey, thanks, Kelvin, and good morning, everyone. I appreciate you joining us. On the call with me today is Patrick Kaltenbach, our Chief Executive Officer, and Shawn Vadala, our Chief Financial Officer Officer.
Adam Uhlman: Let me cover some administrative matters. On the call, this call will be webcasts available for replay on our website at mt.com and a copy of the press release and presentation that we'll refer to on today's call is also available on our website.
Adam Uhlman: This call will include four looking statements within the meeting of the U.S. Security's Act of 1933 and the U.S. Security's Exchange Act of 1934. These statements involve risks, uncertainties, and other factors that may cause our actual results, financial condition, performance.
Adam Uhlman: and achievements to be materially different from those expressed or implied by any forward-looking statements.
Adam Uhlman: For discussion of these risks and uncertainties, please see a recent annual report on form 10k and quarterly and current reports filed with the SEC.
Adam Uhlman: The company disclaims any obligation or undertaking to provide any updates [inaudible]
Adam Uhlman: Or revisions to any forward-looking statement except as required by law. On today's call we may use non-GAAP financial measures in a reconciliation of these non-GAAP measures to the most directly comparable gap measure is provided in the 8K and is available on our website. Let me now turn the call over to Patrick.
Patrick Kaltenbach: Thanks, Adam, and good morning, everyone. We appreciate you joining our call today.
Patrick Kaltenbach: Last night, we reported about first quarter financial results, the details of which are outlined for you on page three of our presentation.
Patrick Kaltenbach: We had a good start to the year with solid growth in our laboratory business, excluding the recovery of delayed shipments in the first quarter of 2024.
Patrick Kaltenbach: Additionally, the strong execution of a large and expansion strategies led to better than expected earnings for the quarter.
Patrick Kaltenbach: However, the ongoing global trade disputes and tariffs have significantly increased uncertainty in global customer demand.
Patrick Kaltenbach: You also estimate cross incremental global tariff cost of approximately $115 million on an annual basis.
Unknown Speaker
Speaker Change: We are confident that our strong culture of operational excellence and our highly agile team will continue to improve well in this dynamic environment and we will benefit from the breadth of our innovative product portfolio and strategic programs.
Speaker Change: Let me now turn the call over to Shawn to cover the financial results and all our guidance and then I will come back for some additional commentary on the business and a wild look Shawn.
Sean Vadala: Thanks, Patrick, and good morning, everyone. Sales in the quarter were $884 million, which represented a decrease in local currency of 3%.
Sean Vadala: Excluding the impact of shipping delays from the 4th quarter of 2023 that were recovered in the 1st quarter of 2024, local currency sales group 3%
on a US dollar reported basis sales to climb 5% [inaudible]
Sean Vadala: On slide number four, we show sales growth by region. Local currency sales decline, 1% in the U.S., 7% in Europe , 2% in Asia, rest of the world.
Local currency sales were flattened shiny during the quarter.
Sean Vadala: Excluding the impact of shipping delay recoveries in the prior year, local currency sales grew 3% in the Americas, 4% in Europe , and 3% in Asia, rest of the world, including 3%
Sean Vadala: On slide number five, we summarize local currency sales growth by product area. For the quarter, laboratory sales decrease 3% in industrial decline, 1% with core industrial down 6% in product inspection of 8%.
Food Retail Decline, 12% in the quarter
Sean Vadala: Excluding the impact of shipping recovery's last year, we estimate our laboratory sales grew 5%, industrial grew 2% with core industrial down 2% and product inspection up 8% and food retail decline 5%.
Let me now move to the rest of the P&L.
which is summarized on slide number 6.
Sean Vadala: Gross Margin was 59.5% in the quarter, an increase of 30 basis points as positive price realization and benefits from our Stern Drive program were offset in part by lower volume.
Sean Vadala: We estimate gross margin expanded 90 basis points excluding shipping delays.
Sean Vadala: R&D amounted to $46 million in the quarter, which is a 2% increase in local currency over the prior year.
Sean Vadala: SGNA amounted to $243 million, a 5% increase in local currency over the prior year, and include sales and marketing investments in timing of expenses.
Sean Vadala: Adjusted operating profit amounted to $237 million in the quarter down 11% from the prior year.
Sean Vadala: Adjusted Operating Margin was 26.8%, which represents a decrease of 210 basis points over the prior year.
Sean Vadala: Excluding the impact of shipping delay recoveries in the prior year, our operating margin expanded fifty basis points on three percent sales growth in the quarter.
Sean Vadala: A couple final comments on the P&L. The Emeritization amounted to $17 million in the quarter, interest expense with $17 million in adjusted other income.
Sean Vadala: Amounted to $3 million. Our effective tax rate was 19% in the quarter. This rate is before discrete items and is adjusted for the timing of stock option exercises.
Sean Vadala: Fully diluted shares amounted to 20.9 million, which is approximately a 3% decline from the prior year.
Sean Vadala: Adjusted EPS for the quarter was $8.19, an 8% decrease over the prior year.
Sean Vadala: Adjusted EPS growth was 11% excluding a headwind to EPS growth of approximately 18% from the recovery of delayed shipments and a 1% headwind from foreign exchange.
Sean Vadala: On a reported basis in the quarter, EPS was $7.81 as compared to $8.24 in the prior year.
Sean Vadala: Reported EPS in the quarter included 23 cents of purchased and tangible amortization and 15 cents of restructuring costs.
Sean Vadala: That covers the P&L and let me now comment on adjusted free cash flow, which amounted to $180 million in the quarter. A 1% increase on a per share basis and was impacted by higher bonus payments of $36 million related to prior year performance.
DSO was 35 days while ITO was 4.2 times
Sean Vadala: Let me now turn to our guidance for the second quarter and for the full year 2025.
Sean Vadala: As you review our guidance, please keep in mind the following factors.
Sean Vadala: First, our guidance assumes US import tariffs as well as the impact of retaliatory tariffs from other countries will remain in effect at current levels.
Sean Vadala: Geopolitical tensions are elevated and include the potential for new tariffs or retaliatory tariffs that we have not factored into our guidance.
Sean Vadala: As of today, we estimate our incremental global tariff costs at approximately $150 million on an annualized basis.
Sean Vadala: which already includes initial actions we have taken to lower our gross exposure.
Sean Vadala: Secondly, we are taking various actions to offset the impact of higher tariffs, including supply chain optimization, cost savings, price increases, and surcharges.
Sean Vadala: Our actions are expected to fully offset tariff costs on an annualized basis, but we will have a headwind in our gross margin in 2025, especially Q2, until the full benefit is realized.
Sean Vadala: Third, the U.S. administration's trade policies have created increased risk to the outlook for our core markets in the global economy. Our outlook assumes market conditions will be slower than previously expected, especially in China.
This implies volume growth in the second half [inaudible]
Sean Vadala: of the year is similar to the first half of the year, excluding the impact of shipping delays.
Sean Vadala: We assume foreign currency at current rates which would not material impact sales or adjusted at EPS in 2025.
Sean Vadala: Finally, please keep in mind that our third party logistics provider delays negatively impacted that are Q4, 2000, and 23 results by $58 million.
Sean Vadala: Nearly all of which was recovered in our Q1 2020-24 results.
Sean Vadala: For the full year 2025, this will reduce our sales by 1.5% and is a headwind to operating margin expansion of approximately 60 basis points and a headwind to adjusted EPS growth of approximately 4% [inaudible]
Sean Vadala: Now turning to our guidance. For the second quarter of 2025, we expect local currency sales to grow approximately 0% to 1%.
Sean Vadala: Operating margin is expected to decrease 170 basis points at the midpoint of our range, or down 70 basis points excluding the net impact of Paris.
Sean Vadala: We expect adjusted EPS to be in the range of $9.45 to $9.70, a growth rate of down 2% to up 1%.
Sean Vadala: Included within the EPS guidance is a gross headwind of approximately 6% from higher tariff costs, and we expect to offset about half resulting in a net headwind to EPS growth of 3%.
Sean Vadala: For the fully year 2025, our local currency sales growth forecast is 1% to 2% or up to 1.5% to 3.5% excluding the shipping delays.
Unknown Speaker
Speaker Change: Operating Margin is expected to decrease 130 basis points at the midpoint of our range and would be up slightly excluding the net impact of tariffs and prior year shipping delays.
Speaker Change: compared to our previous guidance of $42.35 to $43, which reflects EPS growth of 0% to 2% or 4% to 6% excluding the shipping delays.
Speaker Change: Included within the EPS guidance is a gross headwind of approximately 7% from fire tariff costs or a net headwind of 2% including the benefits of our mitigating actions.
Speaker Change: Lastly, I'd like to share a few other details on our 2025 guidance to help you as you update your models.
Speaker Change: We expect total amortization, including purchased intentable amortization, to be approximately $72 million.
Speaker Change: Purchased Intangible Amortization is excluded from adjusted EPS and is estimated at $25 million on a pre-tax basis for 93 cents per share.
Speaker Change: Interest expenses forecast at $72 million for the year, other income is estimated at approximately
Speaker Change: Free cash flow is expected to be approximately $860 million in 2025, and Sherry Purchases are expected to be approximately $875 million. That's it from my side, and I'll now turn it back to Patrick.
Thanks, all.
Patrick Kaltenbach: Let me start with some comments on our operating businesses, which will exclude the impact of from the recovery of the lay shipments in the first quarter of last year.
Speaker Change: I will start with lap, which had solid growth in the water [inaudible]
Speaker Change: To continue benefit from recent innovations like our new line of laboratory balances, titrators, and thermal analysis instruments, and our sophisticated go-to-market approaches have helped us penetrate underserved market segments.
Speaker Change: Red Strong Growth in our Process Analytics Business in this quarter
Speaker Change: which continues to benefit from favorable biopharma market trends, especially in single-use technologies and recent innovations like our digital sensors with intelligence and the management that provide reliable inline measurement of critical analytical parameters.
Speaker Change: Precise Analytics, Monitoring and Control Systems are crucial for optimizing bioprocess operations.
Speaker Change: By providing real-time data and feedback, our systems can help ensure ideal cell viability, nutrition feeding and consistent productivity throughout the bioprocessing life cycle, from R&D to manufacturing in both reusable and single-use formats.
Thank you.
Speaker Change: Turning to our industrial business, our underlying sales growth was led by our product inspection business
Speaker Change: where our growth and objectives and new portfolio have offset challenging market conditions for the food manufacturing industry.
Are we innovation investments or well received in the market?
Speaker Change: Our new innovations have looked total cost of ownership and can significantly improve productivity, for example by enabling much higher line speeds in production and reducing waste, which is more important than ever to protect margins, improved manufacturing.
Speaker Change: Switching to core industrial, sales for down slightly, excluding the impact of prior year shipment delay recoveries, as industry conditions remain mixed across most end markets.
Speaker Change: Our team remains active in engaging with customers, with cost-saving solutions like our quality control software that improves process control and reduces waste in the manufacturing operations
Speaker Change: Our suite of smart technical terminals helps customers transition manual processes to Cine or fully automated process control that includes full traceability for reliable reporting.
Speaker Change: These solutions are increasingly important for customers looking to explain manufacturing in higher cost geographies and automate more of them production processes.
And lastly, full retail decline as we had expected.
Speaker Change: Now, let me make some additional comments by geography, which also excludes the impact of last year's shipping recovery.
Speaker Change: Starting in the Americas, our underlying sales growth was led by strong growth in process analytics and product inspection.
Speaker Change: This growth was partially offset by lower core industrial sales against strong growth in the prior year.
Speaker Change: Turning to Europe , we had underlying state schools across our businesses with the exception of retail.
Speaker Change: Our team continues to execute very well and we have benefited from our innovative portfolio and
Speaker Change: And finally, Asia and rest of the world results were about as expected and grew modestly against easy comparisons.
Speaker Change: Market conditions in China remain soft, and economic uncertainty is increasing. We continue to leverage our spending of programs to identify growth opportunities, and our team remains highly archived to take advantage of opportunities.
Speaker Change: In summary, we are pleased to have a good start with 2025, although we recognize there's increased uncertainty due to tariffs and the potential impact to our end markets and global economic growth.
Speaker Change: During uncertain times, our strong culture of teamwork, collaboration and focused execution has been a critical asset that has helped our company successfully navigate uncertainty very well in the past.
Speaker Change: He also benefits from our business diversity and health customers across their entire value chain from research and development, scale up, quality control and production.
Speaker Change: He also served a wide range of diverse end markets, and over 70% of our sales are in core end markets of pharma, bio-pharma, fruit manufacturing and chemicals.
Speaker Change: No end customer is more than 1% of sales and we also benefit from our geographic diversity as we sell it over 140 countries around the world.
Speaker Change: He also have a broad and diverse product offering and have introduced new innovations across a wide range of old portfolio in the recent years that provide tangible benefits to customers, significantly enhancing our value proposition.
Speaker Change: Our automation and digitalization solutions help customers improve their productivity and reduce costs, while enhancing compliance with relevant regulations.
Speaker Change: Additionally, our average price points are low and typically below $10,000 and our large install base and replacement demand helps reduce civic equity.
Speaker Change: Approximately 35% of what was said last year was service and consumables, and we are confident our dedicated growth initiatives in this area would remain a creative job of growth and profitability.
[inaudible]
Speaker Change: Our go-to-market approach is also a competitive advantage during periods of increased uncertainty.
Speaker Change: Our sales and marketing excellence programs, vinegar, ensures we are identifying and guiding our sales teams to the most attractive opportunities in the market.
Speaker Change: For example, the expectancy increased US-on-shore investment over the coming years, and we will benefit from these investments [inaudible]
Speaker Change: Our strong direct sales force helps us to communicate our value proposition directly to end users.
Speaker Change: I will build the blight shine is another important asset as we serve customers around the world with twenty-one manufacturing locations in seven countries.
Speaker Change: The also continue to increase the resilience of all manufacturing footprint which allows us to produce products in multiple regions [inaudible]
Speaker Change: US import tariffs, represent additional costs, we plan to offset with supply chain optimization actions, cost savings, price increases into the judges.
Speaker Change: Our global pricing program is deeply ingrained throughout our organization and is based on a sophisticated set of data analytics and tools that help support our enter-end pricing process.
Speaker Change: Our PLU Ocean program has also allowed us to have centralized pride administration with robust processes so we can react quickly to changing conditions.
Speaker Change: Overall, we recognize there is increased uncertainty in the economy and we remain agile to respond to the changes in the market conditions as necessary.
Speaker Change: At the same time, we remain convinced in the long-term growth opportunity in our markets and our ability to gain market share and grow faster than the market, especially in very dynamic market conditions.
Speaker Change: We remain focused on the things we can control and continue to implement strategies with the good balance of initiatives focused on growth, innovation, and operational excellence.
Speaker Change: Now this concludes some of the prepared remarks, operator, I'd like now to open the line to questions.
Thank you.
Speaker Change: Ladies and gentlemen, we will now begin the question and answer session. At this time, I would like to remind everyone to ask a question. Please press star followed by the number one on your telephone keypad. If you would like to withdraw your question, please press star one again. One moment please for your first question.
Speaker Change: Your first question comes from the line of Dan Leonard of UBS, please go ahead [inaudible]
Dan Leonard: Thank you very much. My first question is one on China. Can you update us with your new forecast for revenue growth in China in 2025 and maybe parse that between an industrial and lab?
Sean Vadala: Yeah, hey, Dan, this is Shawn. I'll take that one. So for China for 2025, for the full year on our reported basis.
Sean Vadala: We expect China to be down slightly. Maybe I'll comment on Q2. We expect Q2 to be down like low to mid-single digit on the full year basis.
Sean Vadala: You know, we expect that to be kind of like up low single digit in terms of the lab business.
Sean Vadala: and down low single digit in terms of the industrial business.
Sean Vadala: And for Q2, we expect Lab to be down, uh, low single digit and industrial to be down mid single digit and hey, this probably is a good parlay until like a little bit our thoughts on guidance, you know, when Patrick talks about uncertainty clearly China is
Sean Vadala: Probably higher on the list in terms of areas where there's uncertainty, you know, in terms of like where we're seeing maybe some caution in the market in terms of customers may be holding off in terms of investments. We see that a little bit here in the second quarter. So we're just a little bit more cautious here in Q2 and how we're thinking about kind of trying and developing for the rest of the year. [inaudible]
You know, but I think going that yeah, okay [inaudible]
Thank you.
Sean Vadala: Sure, then, I'm happy to take that questions. Look, I mean, the whole reshoring, home showing, on showing, whatever, you will call it, um, is definitely something that will be important for us moving forward.
Sean Vadala: That said, as these companies are starting to restore reshoring programs, and factories are raised at La Via, and bid later in the process, we are not in the initial construction phase, etc, involved in these companies.
Sean Vadala: But we are of course talking to many customers out there whether it's semi-contact on other areas who plan to make these relocations to make sure they understand the full benefit of all portfolio when they are ready to put in place their manufacturing control systems to help them with our industrial solutions at the same time in the QC with all QC products and of course also in the R&D environment with the broad span of our research and development tools at the airport discussions.
Sean Vadala: But so far, I would say the impact on our business from reshoring and, uh, and hope showing is not yet, um, of any meaningful size, but we expected to be an upside in the, let's say, quarters and years to come.
Speaker Change: You know, we just feel like we're a very well-positioned for this trend as a global company, but also with our Spinnaker Program, which really helps us to identify these types of opportunities.
Okay, thank you very much.
Speaker Change: Here next question comes from the line of Patrick Donnelly of City, please go ahead.
So guys, thank you for your questions.
Speaker Change: Shawn, I want to tell you one for you on the tariff side. Appreciate all the color and the gross number and some of the mitigation.
Speaker Change: Please break down, kind of where that impact is coming from, obviously China, it was a pretty big concern coming in, just in terms of some of the import exports there.
Speaker Change: Can you talk about that impact and then again the mitigation efforts that are ongoing have you already started to move some things around and then similarly on the pricing side, how should we be thinking about
Speaker Change: where you bet they're always quite nimble on pricing increases and surcharging. So we'd love to just talk through, you know, both the gross impact where it's coming from, and then also, we'll be making sure it's all the way here.
Yeah, no hate, Patrick, great questions. So-
Speaker Change: I think the first comment is, of course, we, you know, we already started to want to have more flexibility in our global supply chain going back coming out of COVID.
So as part of that, we had...
Speaker Change: You know, kind of expanded in Mexico, which was part of an acquisition that we did a while back.
and then, you know, with this...
Speaker Change: Need to have more flexibility in our supply chain, we started to build out Mexico [inaudible]
More recently with with the global trades disputes kind of on the horizon, we've been
Speaker Change: Accelerating a lot of our plans here. This is one example, of course we do a lot of things with our global supply chain but we've been making a lot of progress in our optimization of our global supply chain processes here recently and made a lot of progress here already this year and as a result
are our exposure to-
Speaker Change: To imports from directly from China, we estimate that number is more in the range of about $50 million right now. So, you know, previously we would have said that that number was under 100. It was a little bit dynamic and we wanted to seek a little bit how things played out here with the time and with the timing of tariffs, but we're really pleased to make good progress in terms of that number. Of course, China, of course, Mexico. Thank you, Kyle.
Speaker Change: It is now higher than China, but you know, expect it to still be below a hundred million dollars.
Speaker Change: And then as we think about the rest of the world, you know, we expect imports to the US to be in the range of about $250 million with a significant portion of that coming out of Switzerland.
Speaker Change: Okay, I'm just surprising offside for thinking about that. Yeah, I'm sorry. That's the impact of course and then the mitigation so there's the there's the supply chain there is also some cost savings.
Speaker Change: and then there's pricing. So pricing, you know, we expect our pricing before we were communicating pricing to be kind of like in the range of about 2%.
Speaker Change: Uh, for this year, um, right now we're thinking it's going to be 3% or so, um, it will depend a little bit on how the tariffs play out because some of our pricing is going to be, um, price increases related to inflationary, um, you know, higher inflationary conditions that we expect from. [inaudible]
Speaker Change: with the trade war, but also a significant part of our mitigation actions also with surcharges, [inaudible]
Speaker Change: It gives us a little bit of flexibility as things can go up or down, you know, with the tariff rates and so that that could change a little bit going forward, but I think the flexibility will play out kind of well here as we kind of go forward. And you know and then as we kind of go on to next year, you'll see, you know, the mix changing a little bit as we continue to work on supply chain optimization to put us in a position where we really have a lot of confidence in terms of our ability to mitigate. [inaudible] know, you know, you know
The Gross Air had one at the current rates.
Speaker Change: Yeah, that's helpful. And then Patrick, maybe just on the industrial market overall, you know, that's become pretty group a little more concerning just giving the macro backdrop of all the volatility out there.
Speaker Change: What do you hear from customers on the core industrial piece? What's the right way to think about how you guys are forecasting that today versus maybe a few months ago when things were I guess slightly different appreciated? [inaudible]
Patrick Kaltenbach: Yes, sure. I'll make a general comment on how I see the industrial and market and let that Shawn break it down of how we see the growth.
Sean Vadala: podcast for the second quarter and the full year. Look, I mean, I think we are exceptionally positioned with our product to serve the automation needs and the utilization needs and the industrial markets.
Sean Vadala: And yes, we have seen recently a some delays with customers that had larger projects that moved that's also why we see a bit of a slower movement in Q2 and our industrial but overall we are confident in our
Sean Vadala: Solutions that we see, they're the trend for automation, the need for automation, given
Aging Populations, Reduction, Red Force, World Wide,
Sean Vadala: Will stay in place, and if you take also into account [inaudible]
Sean Vadala: The whole reshoring and hub-shoring activities that are coming, these customers will not start with a lot of manual processes that they will try to start to automate as much as possible, given the higher labor cost they will face in the home-shoring countries [inaudible]
Sean Vadala: So I think that's why we're seeing currently some softness, given the uncertainty, I think for the long term, we are very well positioned with the portfolio And Shawn, can you break it down in terms of the industrial growth numbers for Q2 in the full year?
Speaker Change: Yeah, hey, so for on the industrial side for Q2, for core industrial, we expect core industrial to be flat and we expect product inspection to be up mid single digit and for the full year we expect core industrial to be flatish.
and we expect product inspection to be mid-single digit.
Thank you.
Thank you very much.
Dr. Ryskin, Dr. Ryskin, Dr. Ryskin
Speaker Change: Here next question comes from the line of Jack Meehan of Netfront Research. Please go ahead.
Hey, good morning everyone.
Jack Meehan: When's the continue on this topic of tariffs, but just in terms of customer behavior, I was curious if you saw any evidence of pull forward in the first quarter or in any of like the April trends that you've seen so far.
Speaker Change: Yeah, thanks Jack. We have not seen a significant joint in meaningful proof forward action in the corner. I know there was something in the newsroom in the car industry, but I would say in our industry we have not seen.
Jack Meehan: Customers highlighting their plating orders earlier because they are concerned about...
Unknown Executive, Adam Uhlman
[inaudible]
Okay.
Speaker Change: And then within Lab, I was curious just for some more color on the process analytics business, had some, you know, encouraging commentary from some of your peers in the bioprocessing world, I was curious how you feel about the set up there. Thank you.
Speaker Change: Exactly, yes, and we have seen also some really nice growth and close the analytics, also driven by some of the comments, of course, that you have heard from a lot of the...
Speaker Change: Bioform are customers that they really increase manufacturing, see a good increase of both single use, but all of them multi-use sensors in the space.
Speaker Change: So there has been a very healthy recovery also on the portfolio of single-use sensors which have been over the last years subdued and there was also kind of an overstocking issue still last year that has been fully resolved from now we see some really healthy old income again.
Awesome. Thank you.
Speaker Change: Here next question comes from the line of Dan Arias of Stiefel, please go ahead [inaudible]
Dan Arias: Good morning, guys. Thank you. Shawn, just a follow-up on manufacturing the capabilities in Mexico. I think that's through bio-ticks, if I remember right. And it used to be pipette tips and life-slides to your agents that you made down there. Have you expanded the production breath beyond that at this point, or is it still focused on a...
Dan Arias: A sub-segment of lab, and so that's where the gross margin gains would be focused [inaudible]
Dan Arias: No, it's significantly expanded. We literally added on to the facility a few years ago and we've been moving a wide range of products throughout the portfolio, you know, which will include lab
Industrial and also on the food retailing side.
Speaker Change: Okay, helpful. And then just when it comes to the tariff offsets, obviously you're implementing a plan today. If you were to get some de-escalation here, like it's possible.
Speaker Change: Do you see the chance for some stickiness that could kind of leave the door open for a benefit relative to where things are today? Just in a sense that, you know, to your point you have a lowest ASP portfolio.
Unknown Executive, Adam Uhlman
Speaker Change: Would you not necessarily have to pull it all the way back until you could be left with some upside, or is the idea related to sort of select back down on pricing and surcharges as situation changes?
Speaker Change: And, hey, we'll see how things play out, right? I mean, there's a lot of different scenarios that could happen. I mean, things have changed so much here in the last.
Speaker Change: Two to three months more than what we would expect in terms of the surcharges, of course, yes, they would...
Speaker Change: You know, we'd have to pull them back if rates change, but I think we'll just see how things play out here. Yeah, yeah, of course, but also on the manufacturing side.
Speaker Change: And as we have now really increased our manufacturing footprint for example in Mexico, we also have put a lot of effort.
Speaker Change: into really making sure these steps are very strong, local supply chain there as well. And that is there to stay. I mean, we have a very competitive set up there especially in North American market is that is...
Speaker Change: In some, to some extent, redundant to the Chinese operations that we have as well, but given the, again, given that we are already almost two years into the whole, yeah.
Speaker Change: We location, we don't have to be building, that will not prove our background. Yeah, yeah, yeah, I was thinking more in terms of pricing But I think that's like probably a key outcome from all this is because when we talk about Mexico, we're still going to have a very significant
Speaker Change: Manufacturing, Footprint in China, Four China, and for the rest of the world, we are just building some redundancies here, which just increases our flexibility, and I just think that is a longer term strategy that's going to be a good strength for the organization going forward.
Thank you.
Speaker Change: Here next question comes from the line of Brandon Tullard, a Flails Fard though, please go ahead.
Brandon Cullard: Hey, good morning. Shawn, I just want to clarify when you're talking about
Speaker Change: Sting some orders, being delayed, some pushouts for projects. Is that isolated to core industrial? Was that a China-specific comment or more global comment? My comment was specific to China that we sense that there's a little bit more
You know, if you talk to the different regions. [inaudible]
Speaker Change: You know, if you talk directly to the sales organization, there's actually still a lot of optimism.
in the Western markets, just given really good customer activity.
Speaker Change: Uh, but we we we we're a little more cautious from the pop down here just
Speaker Change: Just recognizing the situation, but when we talk to maybe the Chinese organization, they're optimistic for the media, like going out a little bit, but they're a little bit more cautious in terms of just timing in the short term if you kind of look at their Q2 outlook.
Speaker Change: So that's an area where we're we're feeling a little bit more hesitation from customers to to to delay things a little bit here kind of a wait and see mode kind of make sense right when you look at the the significant level of tariffs.
Speaker Change: Uh, that are going on, I'm sure some companies are going to try to take a wait and see approach just to see how it plays out a little bit.
Speaker Change: Fortunately for Russ Brandon, though, maybe it's a good point to comment on his
Speaker Change: If you look at our customers in China, you know, we're not typically selling to the exporters, you know, a very significant part of our business there is still our core markets, which are serving the local market, you know, we've talked a lot in the past about, you know, I think something like 15% or less of our business is actually sold to multinational [inaudible]
and then, you know, within that...
Speaker Change: Chinese portion of most of its private companies, and like I said, most of a very small portion of that relates to actually exporters. And a lot of what we're doing is actually supporting them with their own strategic initiatives to build up their own life science industry, etc.
Speaker Change: Unknown Speaker I'm going to go ahead and get started. Okay,
Okay, that's helpful.
Speaker Change: And then Shawn, it doesn't look like your free cash flow guide actually changed at all. Um, yeah, how do you just I guess
Speaker Change: Approach managing work in capital in this environment. And are you taking down or pushing out your own capex?
Speaker Change: That's it, you know, the pre-cashel and that was actually a thank [inaudible]
Speaker Change: Yeah, yeah, hey, I think we still feel good about it. Well, you know, we'll revisit as we go along. We, you know, we felt like we did
Speaker Change: Pretty good here in the first quarter, especially if you exclude the timing of the bonus payments you're on year related to prior year performance, you know, I think we we're up.
Speaker Change: You know, was it like 17% on a per share basis or something like that? And so I feel like
Speaker Change: I feel like we had a good first quarter. Of course, we're looking at things to kind of optimize [inaudible]
Speaker Change: Things in terms of how we how we think about other types of you know line items on the cash flow statement too that you know will allow us to continue to reinvest in our businesses we expect, but also just maybe optimize.
Speaker Change: uh, things, um, in terms of how we, you know, how we, how we can benefit from this year, it's in this environment, but, you know, we'll see, uh, we'll see how things play out here a little bit.
Thanks. Yeah, thanks.
Speaker Change: Our next question comes from the line of Vijay Kumar of Evercore ISI. Please go ahead.
Vijay Kumar: Uh, step down in the revenues. Are you assuming some demand destruction because of tariffs here in Tycho? And I think like the back half sort of assumes you step back to the P plus uh, to hit the annual
Vijay Kumar: Um, so maybe just talk about this, uh, cadence for two, two and a half. Yeah, I mean, I think if you kind of like cut through our guidance and you look at price versus volume, you're right, Q2 will be kind of the low point of the year. I think it's very much related to these comments on
on Uncertainty in the Short-Term.
Vijay Kumar: with, you know, maybe more optimism in the medium term. And part of that caution in the short
Vijay Kumar: is going to be China, but I think, you know, maybe just to kind of like look at the regions here. I mean, we are expecting, you know, kind of
Flatish Results Here [inaudible]
Vijay Kumar: and Lab and Industrial. We all already talked about mid-single digit and product inspection. We expect retail to be down a little bit in Q2, but then from a regional perspective.
Vijay Kumar: Um, we expect, you know, the America's to be flashed up, low single digits, so it's probably another area where there's
Vijay Kumar: where there's a little bit of caution, and then with Europe up low single digit, and we already talked about China being like down low to mid single digits. So maybe the two areas that jump out a little bit was the China comments, and then maybe just a little bit more cautious on.
on the Americas in the short term. [inaudible]
Vijay Kumar: I'm the third. And my follow up here on tariffs, but I think you said 50 million was China.
Vijay Kumar: So, you know, the overall 115 million, we just have to analyze, what would it be, um,
Vijay Kumar: What is the impact for Festival of 25? Is that something lesser? Because you're using Analyze.com and that thing? Yeah, so maybe, yeah, so maybe one way to think about it, not to put an exact number on it is about...
Vijay Kumar: 7%, it would probably be about a 7% gross headwind to EPS.
Vijay Kumar: You know, in terms of the tariff impact this year, and you know, we expect to offset, you know, probably 75% or more of that, you know, this year, which would result in a net headwind to EPS of about 2%.
Vijay Kumar: Sorry, I just had a follow-up on like the I think you used a Paris but current levels in the prepared tomorrow. So it's a re assuming the current I guess.
Vijay Kumar: Rates of the day, or are you, if the guy is assuming, in a post-90 day, pause for race to, character, for race to creep back up, like what is the guy assuming on carives?
Vijay Kumar: Yeah, no, good, good question. We assume it's at current rates, it's, we assume it's at current rates and recognizing it can go up or down, you know, so and we'll, you know, we'll see.
Understood. Thanks, guys. Yep
Speaker Change: Your next question comes from the line of Matt Sykes of Goldman Sachs. Please go ahead.
Matt Sykes: Good morning, thanks for taking my questions. Maybe taking the China questions in a different angle. Do you think that if
Speaker Change: This tariff situation lasts a little bit longer than expected, meaming beyond Q2. .
There could be some chefs.
Speaker Change: Yeah, thanks. Thanks, Matt. Look, I mean, there's a thing we want to appreciate that most of the products that we sell in China, we actually manufacture in China, so we import very little from the US to China, so wild as-
Speaker Change: that be the Selen-Shine of the Manufacturing Shine at a very, very competitive...
Um, um,
in a very competitive situation, but also...
Unknown Executive, Adam Uhlman
Speaker Change: Bullet, we are fully emerged there with the customers, we are very quick at bumping off to local application demand changes, etc. We have a strong R&D and marketing team that helps us to really understand customer rules.
Speaker Change: So we think we can continue to compete very effectively in the local market without a set out there.
Speaker Change: and the few products that we still manufacture in the US or in Germany or in Switzerland and to China.
Speaker Change: We are looking all the day into options to localize some of them, but it of course depends on other priorities and also on IP questions etc. But the exposure of that tariff in China for U.S.?ovtis for us, we're up for smaller.
Speaker Change: And if we think really we are set up for long-term good competitive position in the market.
Speaker Change: Got it. Thank you for that. And maybe just a two quick ones. Patrick won for you just on services growth. You said 6% in the quarter. A little bit below kind of the run rate you're doing last year, if I recall correctly. I'm sure some of this is comps.
Speaker Change: But just maybe talk about the underlying strength that you continue to have confidence in that services growth and then Shawn just, I'm sorry if I missed this but just any FX assumptions in the EPS guide over the course of the year that might have offset some of the tariff impacts.
Speaker Change: Thanks, Emma. I'll start with the services questions. There's QQ1 or a bit of a tougher compare compared last year, but we're still pretty pleased with six percent growth that we have seen in Q1 for the full year before comes mid to high single-digit growth in 2025.
Speaker Change: A lot of the last year into growth program services to make sure that really can tap deeper into salt base that is currently not serviced.
Speaker Change: by our team. So we have implemented more marketing intelligence resources to reach out to customers, have real sales programs in place, and also added a significant number of new service people in the field.
Speaker Change: I think the whole growth program is still a long runway. [inaudible] we've had a lot of fun,
Speaker Change: Um, and I'm actually quite pleased with this year. I'll look at what I'm hearing from the team. Also want to recognize the team here for having really outstanding feedback from our, from our customers in terms of network motor scores. They are higher than ever. So it also tells me that our customers are really pleased with the service. Thank you very much. Thank you very much. Thank you very much.
Speaker Change: So, hey, maybe the second part of your question, Matt, so we reduced our full-year EPS guidance by 2% at the high end of our range, and 2.5% at the midpoint, at the midpoint, about two-thirds of that relates to
Speaker Change: The gross tariffs offset by our mitigation actions. The other third reflects the lower sales volume for the year offset by better operating performance.
Speaker Change: and more favorable for in currency. So currency, we expect from an EPS perspective to be at current rates, flatish or neutral for the year. And then, you know, at last quarter we were expecting it to round to like a 2% kind of a headwind.
Thank you. Very helpful.
Doug Schenkel: Here next question comes from the line of Doug Schenkel, full research. Please go ahead.
Thank you.
Doug Schenkel: Good morning. This is Avery on for Doug. Thank you for the question. Just looking at your margin for the quarter. Obviously we have a shipping impact, but gross margin was up 30 basis points. I was wondering if there is any favorable mix there.
Unknown. Unknown.
Doug Schenkel: Looking at the OpEx line, it seems like that number was a bit elevated in dollar terms specifically
Doug Schenkel: So just wondering if you could give any color there, was that preparation being done in advance of the tariffs and then going forward through the balance of this year would make sense to expect that level of optics as a percentage of sales to be somewhat elevated relative to last year.
Speaker Change: Yeah, hey, so, you know, in terms of the gross margin for the quarter, we were actually very pleased with our gross margin, certainly a little bit better than what we had expected.
Speaker Change: Impact of the shipping delays from a year ago, it was up 90 bits.
Speaker Change: You know, we had good performance in pricing. It came in about two in the two percent kind of a range, but we also saw some good.
Speaker Change: Good progress continued on our Stern Drive program and productivity initiatives in the company. In terms of mix there might have been, I think there was a little bit of favorable mix there as well too.
Speaker Change: in the quarter as well, but otherwise we feel good about the performance and then, you know, if you kind of like
Speaker Change: Look through the year, there's a lot of moving parts this year, but if you kind of like kind of exclude the shipping delay topic, you exclude.
Speaker Change: The tear of net of our mitigation actions, our gross margin is probably up in the, you know, 30 basis points kind of a range, which, you know, given the top line, not having the volume that maybe we expected at the beginning of the year, we feel actually pretty good about that.
Speaker Change: S-G-N-A, of course there's always going to be, you know, we are investing in the business, you know, we, you know, this was an important topic for us too, as we entered the year in terms of continuing to drive growth in the business, we have a lot of...
Speaker Change: Great programs, a lot of great ideas, and we're going to continue to do that. But when you look at one quarter versus another, there can always be a little bit of timing, so I wouldn't...
Speaker Change: You know, try to overread from one quarter to another quarter, you know, and of course we're gonna, you know, we're gonna look at non-sales activities for the rest of the year and try to be a little bit more cautious.
Speaker Change: You know, until we get a little bit more clarity on the top line, but I think if you just kind of cut through everything and you look at our operating margin for the full year and you kind of exclude the shipping delay topic from last year, which is
Like I had one of about 60 basis points.
Speaker Change: and if you, so on a reported basis, maybe we're going to be down by about 130 vips.
Speaker Change: But if you exclude the shipping delay topic, which is about a 60 basis point headwind, and if you exclude the tariff costs and the mitigation activities, you know, our operating margin is probably up slightly for the full year.
Unknown Speaker
Speaker Change: Thank you. And then just one on industrial. So corn dust rule is down 6% of TI was up 8%. Are you seeing a fundamental difference in customer trends between the two businesses? And what's really driving the strength in TI?
Speaker Change: Well, I mean, P.I. is, you know, 70% or so that business is sold in food manufacturing where our industrial business has a broader mix.
Speaker Change: Our industrial, core industrial business, this is also the broader geographic mix with a large China element, just proportional to not only product inspection but to other parts of the world.
Speaker Change: On a product inspection side, I mean food manufacturers are still under pressure, but we're very pleased with our team's performance. We've come out with some new products.
Speaker Change: in the last few years that have addressed needs in the mid-market. They're very well received in the marketplace.
Speaker Change: and we're just competing really well, you know, and so I think the market is still a challenging market, but we're having some good success here.
Speaker Change: Your next question comes from the line of racial bent style of JP Morgan. Please go ahead.
Rachel Bentz-Dow: Perfect. Good morning and thanks so much for taking the questions.
Speaker Change: First up, I just wanted to dig into the next question earlier on the second quarter guide and the implied back half range.
Speaker Change: So you highlighted some of the customer caution, primarily impacting the second quarter. Can you just walk us through? Why do you think most of this customer caution in light of the macro environment is mainly going to impact the second quarter? And, you know, which segment are you expecting to see the most improvement as we get into the back half of the year on that customer caution as well? Well, we'll see you in the next video.
Yeah, so-
Speaker Change: So if you kind of look at the second half, just to keep in mind, Rachel, the second half will benefit from...
from pricing in a relative to like Q1. [inaudible]
Speaker Change: So I think if we kind of just like look at volume in the second half versus volume in the first half and when I say the first half I mean excluding the shipping delay in Q1.
They're probably pretty similar [inaudible]
Speaker Change: And so, you know, our view is that at the beginning of the year our guidance assumed that things were going to improve in the second half of the year. Right now we're kind of taking that off the table for the moment and we're just saying that we think things will probably be more consistent for the second half of the year on a volume basis. [inaudible]
Speaker Change: But we do have some benefit a little bit on pricing in the second half relative to the first half [inaudible]
Speaker Change: Great, and then just in terms of the tariff off, but you highlighted supply to optimization, price increases, and surcharges as well.
Speaker Change: Can you bucket how much of the 115 million is offset by each of those drivers?
Speaker Change: And then follow up to one of the earlier questions just in terms of the gross margins impact. Can you just walk us through the timing of implementing those mitigation efforts to really how should we think about the cadence of gross margins ramping from the second quarter through the fourth quarter? Yeah.
Speaker Change: Yeah, hey, we're, it's a little bit early for us to give Q4 guidance. We did our best to give provide Q2 in the full year, but of course we we do have our internal thoughts on that.
Speaker Change: Uh, but let's see how, let's get through Q2 first and we'll give you an update on, on, uh, on Q3, um, in terms of the pieces, of course, I understand your, you know, where your questions coming from, but it's pretty dynamic, you know, I mean, the, probably the one number I I'll provide is that our, our pricing assumption for the year, what was, was 2%.
Unknown Speaker
Speaker Change: We expect it to be more at 3% or so now for the full year so that kind of gives you maybe some context for you know what we're doing of course pricing is something we can do quicker than on the supply chain side. That pricing will have an element like I mentioned before price increases and surcharges so that so it might go up or down on the surcharge side so that's a little bit you know something that could be a little bit fluid as we kind of go through the year as we kind of get to the end of the year we get to the end of the year we get to the end of the year we get to the end of the year
Speaker Change: You know, or maybe even better said, as we go into 2026, you know, the, you know, we're going to see a lot of the supply chain optimization kicking in a lot kind of going into next year and, you know, precise timing, you know, things will happen throughout the year, but the reality is is that we're accelerating a lot of things and it's probably best just to think of them as like being in place by the end of this year as we kind of go into next year. And yeah, if we go a little bit faster, maybe there's a little bit upside, but it's
Unknown Executive, Adam Uhlman
Michael Royskin: Your next question comes from the line of Michael Ryskin of Bank of America. Please go ahead.
Michael Royskin: Hey, thanks for taking the question, yes. For my first one, you touched on a lot of these things really, you talked about industrial, I talked about China. I'm just kind of hoping to get it in one place and maybe bring all those topics together. In terms of the, you know, fiscal year 25th guy, the reduction in.
Michael Royskin: in one and a half percent local currency from three to, you know, one to two percent now.
Speaker Change: Anyway, you could just sort of bridge that for us. How much of that 150-bit of production is China? How much is the lab industrial? Just whatever way you think makes the most sense, just so we can see sort of what's changed, obviously, and where you're signing those cuts? [inaudible]
Speaker Change: Yeah, so, you know, I think, you know, you could probably do the math with me a little bit here But, you know, before we were saying
You know China was gonna be up [inaudible]
Low Single Digit for...
Speaker Change: The full year, and now we're saying it stands slightly, so that that might be about a point in itself, you know, and then, and then in terms of other changes, you know, we're, you know, we're
Speaker Change: We're takin' down, you know, both the Americas and Europe are at mid-single digit [inaudible]
Speaker Change: before on a reported basis. And that was, I'm sorry, excluding the shipping delay topic. And so now America is down more like little single digit excluding the shipping delay. So it would be, you know,
Speaker Change: Yeah, actually both on a reported and excluding shipping delay and then and then the Europe is maybe just slightly slightly lower than expected and then in terms of like
The-
Speaker Change: The, the divisional, you can kind of see probably the one thing that kind of jumps out is
Speaker Change: is, you know, before on an adjusted for the shipping delay basis.
Speaker Change: Okay, so that's a great summary of all that. And then I guess I'll keep it the one follow-up. You haven't directly addressed NIH, US government. I know it's a relatively small part of your exposure, but so there's some of the air, especially about so-the-wab, pipette, some of those more.
Speaker Change: Some balances, just what's been gone on in that end market, if you've ever seen any meaningful change from customer behavior, someone asked about stocking or something that hasn't happened, there's sort of your thoughts on US-A and G-U-S-R-I-H.
Speaker Change: Yeah, so I mean, of course, our direct exposure to NIH is closer to zero than it is to one, but if you look at our broader
Academia Exposure in the US . . .
Speaker Change: Um, and you look, just look at our US academia exposure, it's about 2% of our global sales. And then if we add in government, it probably probably gets about 3%. So it's um,
Speaker Change: and I'm talking specifically the U.S. ANG as a percentage of our total sales.
Speaker Change: So it's a smaller part of our business, but certainly a part of the business that is, you know, we are seeing under pressure, and, you know, it doesn't have a big impact on our numbers, but certainly.
Speaker Change: You know, it's adding to a little bit of, you know, the headwind that we see in the Americas here, especially in the short term.
Okay, thanks. I'll leave there. Yep.
Speaker Change: Your next question comes from the line of Tycho Peterson and Jeffries. Please go ahead.
Okay, thanks.
Speaker Change: Maybe just to kind of round it out on the lab. I'm just, I want to probe it to pharma a little bit, you know, you touched on bioprocessor later Jack's question but
Speaker Change: You know, if I'm specifically, can you maybe talk about what you're hearing from your customers there? Any concerns about, you know, them leaning on, you know, you guys on prices, they have to respond to tariffs. How do you think about replacement cycle because you've talked about that as an opportunity as well? [inaudible]
Speaker Change: Yeah, good, thanks. I'll take that, Tycho. We are actually not hearing from our former customers yet any big impact in terms of their rising concerns.
Speaker Change: We have a very healthy engagement with farmer, farmer, small molecule and large molecule customers right now. I think they are excited about the laptop fully behaving, including your automation features. Thank you so much.
Speaker Change: I would say, not a negative impact yet. I mean, both will see, but if there's anything else coming up, but I'm hearing from the Salesforce
Very strong, positive engagement with former customers [inaudible]
Okay.
Speaker Change: Maybe another angle on China manufacturing, you know, some of your large multinational competitors, including your biggest one of balances and skills, you know, doesn't do a lot in China. And so is there an opportunity to gain share here for you guys, giving your manufacturing, you know, footprint was in the country? Yeah, great.
Speaker Change: Yeah, yeah, maybe look at our team is very close to customers there, but I want to remind you of a total exposure to customers there in China about 60% is actually local companies and only 15% are multinationals
Speaker Change: and 25% of government and state owned companies. So, yeah, we are talking customers there. If there's more happening with companies in that space, we will definitely use them a worldwide footprint and the references we have from other countries.
Speaker Change: But Tycho, I find her senior question. I think you mean like our competitive is in China, you know, versus other competitors I think of your other multinational competitors that, you know, don't manufacture it in China, where, you know, so you have a competitive advantage in China. Yeah, exactly, yeah, exactly. So I, I agree. I think we, we do have a competitive advantage in China versus a lot, a lot of our competition. And you know, as you know, we've been there for a long time since the 80s. And we, we, we.
Speaker Change: Not only manufacturer mostly in China for China, but we actually develop a lot of products in China for China. So we really have a good sense in the strength of what the market expectations are at the right price points.
Speaker Change: and because of that, we've been very much perceived as a Chinese company over the years, and if we're not making it in China, we tend to import from...
Speaker Change: from Europe like specifically Switzerland. So yeah, we feel good about our posture there in China, and frankly we feel like we're competing well globally in general against competition.
Okay are you seeing any stimulus there? [inaudible]
Speaker Change: Not really. Not a big thing. I mean, just talk about stimulus and in the last time I was telling him was quite engaged with customer self again, bundling products together to comply with benefit guidelines.
Speaker Change: but not right now any new stimulus that we would be around.
Okay. Thank you.
Speaker Change: Your next question comes from the line of Catherine Schulte, Baird, please go ahead Thank you very much for your time.
Speaker Change: Hey guys, thanks for the questions. Maybe first just on tariff for the hundred million or maybe a little more of imports into the US that aren't coming from China and Mexico
Speaker Change: How much is that is coming from Switzerland? I'm just trying to think about, you know, what the incremental growth impact could be if the country's specific tariffs go into effect in July as proposed, just given your solicit exposure and, you know, how much of that you think could be offset if necessary?
Speaker Change: Yeah, hey, Catherine, so if you look at our exposure, you know, we've been very specific about our Chinese exposure, especially given the nature of the rates. So we've expected now to be more in the $50 million range.
Speaker Change: We've also given some color on Mexico given at such a significant moving piece, and it relates to the China situation. You know, in terms of the rest of the world, we prefer not to go into every single country, but we would say that, you know, we are importing about $250 million into the US from Europe and the rest of the world in a significant portion of that is coming out of Switzerland.
Speaker Change: Got it, and then maybe just on capital deployment. Any appetite to do more on the buyback side? Just give them where the stock is today?
Speaker Change: No, hey, we, you know, we're very consistent here, right? We, you know, we don't try to time the market, and, you know, we try to stick to exactly what we say at the beginning of the year. So, you know, our assumptions are the same for the year.
Thank you very much.
Speaker Change: Your next question comes from the line of Josh Waldman, Cleveland Research. Please go ahead.
Josh Waldman: Morning, guys. Thanks for squeezing me in. Uh, first, Patrick, a follow-up on core industrial. I think you mentioned softness in the US in the prepared remarks. Is this primarily where you're lowering your outlook and core? Yes, sir.
or the other areas that are tracking below. Hello.
Josh Waldman: No, I'll take that, Josh. Look, it's more in China that we did lower the outlook and corn dust. In the US, what I referred to in Q2 was
Josh Waldman: Some delays of larger projects, but these are these are really larger projects, projects industrial automation projects and they
Josh Waldman: They're not always really close. We're kind of the time we know that the center field initially thinks they're both close.
Josh Waldman: So we saw, we, we forecast, we recently saw some forecast delay in YouTube, but overall the biggest takedown in industrial and in the growth rate compared to what we said in the last earnings called the steadily in China.
Speaker Change: Patrick, can you remind us what portion of the business is, sales to bio-production, OEMs, maybe how business is tracking there, and if you're seeing any signs of ensuring in that business.
Speaker Change: And you're talking about insura industrial, so we don't break that out, Josh, but we, you know, what we've said in the past is that
Speaker Change: About 60% of core industrial is a combination of pharma-bio-pharma, food manufacturing and chemical and for us chemical means more specialty chem.
Okay.
Thank you.
D.P.
Speaker Change: There are no further questions about this time, and with that, I will now turn the call back over to Adam Olman for closing remarks. Please go ahead.
Adam Uhlman: Okay, great. Thanks. Hey, everybody. Um, if you have any questions, feel free to reach out to me and I hope everybody has a great weekend and take care. Bye.
Everything done for me. Just concludes your conference.