Mettler-Toledo International Inc. (NYSE:MTD) Q2 2023 Earnings Call Transcript

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And we also see increasing interest — as I highlighted in the beginning of the earnings call, also in the semiconductor business, we have been successful in some of our form [ph] business when it comes to ultra-pure water, et cetera, sensors. So, there are pockets of still good growth that we capture, and we’re really going hard on for this. We have the right tools that we see these pockets of growth and drive our sales team towards the direction. But how long broader economy will under pressure, I think none of us here on the call can really tell you how long it will take. We’re looking at the second the second half and forecast for half. And then once we get to Q4, we’ll give you a guidance on 2024. But right now, it’s too early to be honest.

Patrick Donnelly: Yeah. No, understood. And then, Shawn, I guess, maybe a follow-up on that. Just around the margins, you touched on them a little bit. But I guess when you think about the pricing lever, that seems like it’s still quite strong for you guys in terms of the boost for margins. Again, some of these cost reduction activities. Can you just talk about the moving pieces as we work our way through second half? And then, I guess, how nimble you want to be on the cost side going into next year and then pricing, I assume, is still going to be positive as we move forward. You guys always protect the margins pretty well. So, just curious how you think about it, the moving pieces there would be helpful.

Shawn Vadala: Yeah. Sure. So, I mean, hey, I think we still have a really great margin story. I mean, I think, as I kind of mentioned before, for the full year, we’re still expecting to deliver an operating margin expansion in the 70 to 100 basis point range. And frankly, I wouldn’t be surprised if we end up closer to the higher end of that range, and that’s despite some unfavorable currency. And that probably puts us — the operating margin by quarter might be down a little bit in Q3. It might be up a little bit in Q4. But overall, we feel very good about the ability to continue to expand for the full year. And then I think as we kind of go into next year, like Patrick said, it’s a little bit early look at that. Of course, we’ll probably have some savings from some of the actions that we did this year.

There will be some stuff that goes away as well. And as we think about pricing, we still feel great about our value propositions. But it will also depend a little bit on the inflationary environment. And we’ll — as you know, we’ll provide more thoughts and guidance and insights on all that on our next call in November.

Patrick Donnelly: Okay. That’s helpful. Thank you guys.

Patrick Kaltenbach: Yeah. Thanks.

Operator: Your next question comes from Vijay Kumar with Evercore. Your line is open.

Vijay Kumar: Hey, guys. Thanks for taking my question. I guess, my first one on the third quarter guidance, low single digit declines. You just did 2% in Q2. That’s a 500 basis point change. And I think about 300 basis points of the 500 is coming from China. Are you seeing China down mid-teens in July? And if the assumption, it’s down mid-teens for the rest of the quarter? And where is the remaining 200 basis points softness coming from, perhaps, from an end market perspective?

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