Mettler Toledo - 10-Q quarterly report FY2024 Q1

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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

Form 10-Q

(Mark One)

☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 FOR THE QUARTERLY PERIOD ENDED MARCH 31, 2024, OR

☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 FOR THE TRANSITION PERIOD FROM ____________ TO ________________

Commission File Number: 1-13595

Mettler Toledo International Inc

_______________________________________________________________________________________________________________________________________

(Exact name of registrant as specified in its charter)


Delaware						13-3668641
(State or other jurisdiction of						(I.R.S Employer Identification No.)
incorporation or organization)

1900 Polaris Parkway

Columbus, OH 43240

and

Im Langacher, P.O. Box MT-100

CH 8606 Greifensee, Switzerland

1-614-438-4511 and +41-44-944-22-11

________________________________________________________________________________

(Registrant's telephone number, including area code)

not applicable

______________________________________________________________________________________________________________________

(Former name, former address and former fiscal year, if changed since last report)

Securities registered pursuant to Section 12(b) of the Act:


Title of each class	Trading Symbol	Name of each exchange on which registered
Common Stock, $0.01 par value	MTD	New York Stock Exchange

Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐

Indicate by checkmark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes ☒ No ☐

Indicate by checkmark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company” and “emerging growth company” in Rule 12b-2 of the Exchange Act. (Check one): Large accelerated filer. ☒ Accelerated filer ☐ Non-accelerated filer ☐ Smaller reporting company ☐ Emerging growth company ☐

If an emerging growth company, indicate by check mark if the registrant has elected not use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒

The Registrant had 21,357,370 shares of Common Stock outstanding at March 31, 2024.

METTLER-TOLEDO INTERNATIONAL INC.

INDEX TO QUARTERLY REPORT ON FORM 10-Q


		PAGE
	PART I. FINANCIAL INFORMATION

Item 1.	Financial Statements

	Unaudited Interim Consolidated Financial Statements:

	Interim Consolidated Statements of Operations and Comprehensive Income for the three months ended March 31, 202 4 and 202 3	3

	Interim Consolidated Balance Sheets as of March 31, 202 4 and December 31, 202 3	4

	Interim Consolidated Statements of Shareholders’ Equity for the three months ended March 31, 202 4 and 202 3	5

	Interim Consolidated Statements of Cash Flows for the three months ended March 31, 202 4 and 202 3	6

	Notes to the Interim Consolidated Financial Statements at March 31, 202 4	7

Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	21

Item 3.	Quantitative and Qualitative Disclosures About Market Risk	29

Item 4.	Controls and Procedures	29

	PART II. OTHER INFORMATION

Item 1.	Legal Proceedings	30

Item 1A.	Risk Factors	30

Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	30

Item 3.	Defaults upon Senior Securities	30

Item 5.	Other Information	30

Item 6.	Exhibits	30

SIGNATURE		32

Table of Contents

PART I. FINANCIAL INFORMATION

Item 1. Financial Statements

METTLER-TOLEDO INTERNATIONAL INC.

INTERIM CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME

Three months ended March 31, 2024 and 2023

(In thousands, except share data)

(unaudited)


	March 31, 2024		March 31, 2023
Net sales
Products	$	700,968	$	716,001
Service	224,981		212,737
Total net sales	925,949		928,738
Cost of sales
Products	271,927		285,751
Service	105,889		96,421
Gross profit	548,133		546,566
Research and development	46,415		45,477
Selling, general and administrative	234,390		234,638
Amortization	18,228		17,779
Interest expense	19,232		18,184
Restructuring charges	9,664		4,274
Other charges (income), net	(343)		(396)
Earnings before taxes	220,547		226,610
Provision for taxes	43,038		38,184
Net earnings	$	177,509	$	188,426

Basic earnings per common share:
Net earnings	$	8.28	$	8.53
Weighted average number of common shares	21,437,673		22,083,456

Diluted earnings per common share:
Net earnings	$	8.24	$	8.47
Weighted average number of common and common equivalent shares	21,543,313		22,253,435

Total comprehensive income, net of tax (Note 9)	$	199,250	$	187,143

The accompanying notes are an integral part of these interim consolidated financial statements.

- 3 -

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METTLER-TOLEDO INTERNATIONAL INC.

INTERIM CONSOLIDATED BALANCE SHEETS

As of March 31, 2024 and December 31, 2023

(In thousands, except share data)

(unaudited)


	March 31, 2024		December 31, 2023
ASSETS
Current assets:
Cash and cash equivalents	$	70,191	$	69,807
Trade accounts receivable, less allowances of $19,069 at March 31, 2024
and $20,103 at December 31, 2023	650,333		663,893
Inventories	373,670		385,865
Other current assets and prepaid expenses	116,920		110,638
Total current assets	1,211,114		1,230,203
Property, plant and equipment, net	773,495		803,374
Goodwill	665,816		670,108
Other intangible assets, net	274,375		285,429
Deferred tax assets, net	31,478		31,199
Other non-current assets	326,839		335,242
Total assets	$	3,283,117	$	3,355,555
LIABILITIES AND SHAREHOLDERS’ EQUITY
Current liabilities:
Trade accounts payable	$	189,449	$	210,411
Accrued and other liabilities	190,023		196,138
Accrued compensation and related items	129,526		160,308
Deferred revenue and customer prepayments	216,659		202,022
Taxes payable	223,102		219,984
Short-term borrowings and current maturities of long-term debt	183,173		192,219
Total current liabilities	1,131,932		1,181,082
Long-term debt	1,903,574		1,888,620
Deferred tax liabilities, net	100,115		108,679
Other non-current liabilities	306,213		327,112
Total liabilities	3,441,834		3,505,493
Commitments and contingencies (Note 14)
Shareholders’ equity:
Preferred stock, $0.01 par value per share; authorized 10,000,000 shares	—		—
Common stock, $0.01 par value per share; authorized 125,000,000 shares; issued 44,786,011 and 44,786,011 shares; outstanding 21,357,370 and 21,526,172 shares at March 31, 2024 and December 31, 2023, respectively	448		448
Additional paid-in capital	876,417		871,110
Treasury stock at cost (23,428,641 shares at March 31, 2024 and 23,259,839 shares at December 31, 2023)	(8,425,613)		(8,212,437)
Retained earnings	7,688,105		7,510,756
Accumulated other comprehensive loss	(298,074)		(319,815)
Total shareholders’ equity	(158,717)		(149,938)
Total liabilities and shareholders’ equity	$	3,283,117	$	3,355,555

The accompanying notes are an integral part of these interim consolidated financial statements.

- 4 -

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METTLER-TOLEDO INTERNATIONAL INC.

INTERIM CONSOLIDATED STATEMENTS OF SHAREHOLDERS’ EQUITY

Three months ended March 31, 2024 and 2023

(In thousands, except share data)

(unaudited)


				Additional Paid-in Capital						Accumulated Other Comprehensive Income (Loss)
	Common Stock					Treasury Stock		Retained Earnings
	Shares	Amount										Total
Balance at December 31, 2022	22,139,009	$	448	$	850,368	$	(7,325,656)	$	6,726,866	$	(227,233)	$	24,793
Exercise of stock options, restricted stock units and performance stock units	47,849	—		1,278		12,720		(2,525)		—		11,473
Repurchases of common stock	(166,628)	—		—		(249,999)		—		—		(249,999)
Excise tax on net repurchases of common stock	—	—		—		(1,906)		—		—		(1,906)
Share-based compensation	—	—		4,027		—		—		—		4,027
Net earnings	—	—		—		—		188,426		—		188,426
Other comprehensive income (loss), net of tax	—	—		—		—		—		(1,283)		(1,283)
Balance at March 31, 2023	22,020,230	$	448	$	855,673	$	(7,564,841)	$	6,912,767	$	(228,516)	$	(24,469)

Balance at December 31, 2023	21,526,172	$	448	$	871,110	$	(8,212,437)	$	7,510,756	$	(319,815)	$	(149,938)
Exercise of stock options, restricted stock units and performance stock units	4,898	—		585		1,406		(160)		—		1,831
Repurchases of common stock	(173,700)	—		—		(212,499)		—		—		(212,499)
Excise tax on net repurchases of common stock	—	—		—		(2,083)		—		—		(2,083)
Share-based compensation	—	—		4,722		—		—		—		4,722
Net earnings	—	—		—		—		177,509		—		177,509
Other comprehensive income (loss), net of tax	—	—		—		—		—		21,741		21,741
Balance at March 31, 2024	21,357,370	$	448	$	876,417	$	(8,425,613)	$	7,688,105	$	(298,074)	$	(158,717)

The accompanying notes are an integral part of these interim consolidated financial statements.

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METTLER-TOLEDO INTERNATIONAL INC.

INTERIM CONSOLIDATED STATEMENTS OF CASH FLOWS

Three months ended March 31, 2024 and 2023

(In thousands)

(unaudited)


	March 31, 2024		March 31, 2023
Cash flows from operating activities:
Net earnings	$	177,509	$	188,426
Adjustments to reconcile net earnings to net cash provided by operating activities:
Depreciation	12,522		12,023
Amortization	18,228		17,779
Deferred tax provision (benefit)	(2,063)		602
Share-based compensation	4,722		4,027
Increase (decrease) in cash resulting from changes in:
Trade accounts receivable, net	(1,708)		72,109
Inventories	(3,954)		15,559
Other current assets	(7,469)		(3,720)
Trade accounts payable	(15,944)		(71,941)
Taxes payable	16,632		(3,752)
Accruals and other	(8,488)		(77,850)
Net cash provided by operating activities	189,987		153,262
Cash flows from investing activities:
Purchase of property, plant and equipment	(17,391)		(23,196)
Acquisitions	(1,000)		(613)
Other investing activities	9,456		1,423
Net cash used in investing activities	(8,935)		(22,386)
Cash flows from financing activities:
Proceeds from borrowings	449,863		605,018
Repayments of borrowings	(418,280)		(503,516)
Proceeds from stock option exercises	1,831		11,473
Repurchases of common stock	(212,499)		(249,999)
Other financing activities	—		(611)
Net cash used in financing activities	(179,085)		(137,635)

Effect of exchange rate changes on cash and cash equivalents	(1,583)		(122)

Net (decrease) increase in cash and cash equivalents	384		(6,881)

Cash and cash equivalents:
Beginning of period	69,807		95,966
End of period	$	70,191	$	89,085

The accompanying notes are an integral part of these interim consolidated financial statements.

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METTLER-TOLEDO INTERNATIONAL INC.

NOTES TO THE INTERIM CONSOLIDATED FINANCIAL STATEMENTS – Unaudited

(In thousands, except share data, unless otherwise stated)

1.BASIS OF PRESENTATION

Mettler-Toledo International Inc. (Mettler-Toledo or the Company) is a leading global supplier of precision instruments and services. The Company manufactures weighing instruments for use in laboratory, industrial, packaging, logistics and food retailing applications. The Company also manufactures several related analytical instruments and provides automated chemistry solutions used in drug and chemical compound discovery and development. In addition, the Company manufactures metal detection and other end-of-line inspection systems used in production and packaging and provides solutions for use in certain process analytics applications. The Company's primary manufacturing facilities are located in China, Germany, Switzerland, the United Kingdom, the United States and Mexico. The Company's principal executive offices are located in Columbus, Ohio and Greifensee, Switzerland.

The accompanying interim consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (U.S. GAAP) and include all entities in which the Company has control, which are its wholly-owned subsidiaries. The interim consolidated financial statements have been prepared without audit, pursuant to the rules and regulations of the Securities and Exchange Commission. Certain information and footnote disclosures normally included in financial statements prepared in accordance with U.S. GAAP have been condensed or omitted pursuant to such rules and regulations. The interim consolidated financial statements should be read in conjunction with the consolidated financial statements and the notes thereto included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2023.

The accompanying interim consolidated financial statements reflect all adjustments which, in the opinion of management, are necessary for a fair statement of the results of the interim periods presented. Operating results for the three months ended March 31, 2024 are not necessarily indicative of the results to be expected for the full year ending December 31, 2024.

The preparation of financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, as well as disclosure of contingent assets and liabilities at the date of the financial statements, and the reported amounts of revenues and expenses during the reporting periods. These financial statements were prepared using information reasonably available as of March 31, 2024 and through the date of this report. Actual results may differ from those estimates due to uncertainty around the ongoing developments related to Ukraine and the Israel-Hamas war, as well as other factors.

All intercompany transactions and balances have been eliminated.

2.SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Trade Accounts Receivable

Trade accounts receivable are recorded at the invoiced amount and do not bear interest. The allowance for expected credit losses represents the Company's best estimate based on historical information, current information, and reasonable and supportable forecasts of future events and circumstances.

Inventories

Inventories are valued at the lower of cost or net realizable value. Cost, which includes direct materials, labor and overhead, is generally determined using the first in, first out (FIFO) method. The estimated net realizable value is based on assumptions for future demand and related pricing. Adjustments to the cost basis of the Company’s inventory are made for excess and obsolete items based on usage, orders and technological obsolescence. If actual market conditions are less favorable than those projected by management, reductions in the value of inventory may be required in the future.

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METTLER-TOLEDO INTERNATIONAL INC.

NOTES TO THE INTERIM CONSOLIDATED FINANCIAL STATEMENTS – Unaudited

(In thousands, except share data, unless otherwise stated)

Inventories consisted of the following:


	March 31, 2024		December 31, 2023
Raw materials and parts	$	169,556	$	180,352
Work-in-progress	75,135		81,181
Finished goods	128,979		124,332
	$	373,670	$	385,865

Goodwill and Other Intangible Assets

Goodwill, representing the excess of purchase price over the net asset value of companies acquired, and indefinite-lived intangible assets are not amortized, but are reviewed for impairment annually in the fourth quarter, or more frequently if events or changes in circumstances indicate that an asset might be impaired. The annual evaluation for goodwill and indefinite-lived intangible assets are generally based on an assessment of qualitative factors to determine whether it is more likely than not that the fair values of the assets are less than their carrying amounts.

Other intangible assets include indefinite-lived assets and assets subject to amortization. Where applicable, amortization is charged on a straight-line basis over the expected period to be benefited. The straight-line method of amortization reflects an appropriate allocation of the cost of the intangible assets to earnings in proportion to the amount of economic benefits obtained by the Company in each reporting period. The Company assesses the initial acquisition of intangible assets in accordance with the provisions of ASC 805 “Business Combinations” and the continued accounting for previously recognized intangible assets and goodwill in accordance with the provisions of ASC 350 “Intangibles – Goodwill and Other” and ASC 360 “Property, Plant and Equipment.”

Other intangible assets consisted of the following:


	March 31, 2024						December 31, 2023
	Gross Amount		Accumulated Amortization		Intangibles, Net		Gross Amount		Accumulated Amortization		Intangibles, Net
Customer relationships	$	286,364	$	(106,405)	$	179,959	$	294,180	$	(107,665)	$	186,515
Proven technology and patents	125,662		(74,198)		51,464		129,227		(75,014)		54,213
Trade name (finite life)	7,718		(4,614)		3,104		7,908		(4,535)		3,373
Trade name (indefinite life)	35,110		—		35,110		36,320		—		36,320
Other	12,997		(8,259)		4,738		13,236		(8,228)		5,008
	$	467,851	$	(193,476)	$	274,375	$	480,871	$	(195,442)	$	285,429

The Company recognized amortization expense associated with the above intangible assets of $6.8 million and $6.9 million for the three months ended March 31, 2024 and 2023, respectively. The annual aggregate amortization expense based on the current balance of other intangible assets is estimated at $27.2 million for 2024, $26.2 million for 2025, $22.2 million for 2026, $20.7 million for 2027, $19.4 million for 2028 and $17.7 million for 2029. Purchased intangible amortization was $6.6 million, $5.1 million after tax for both three month periods ended March 31, 2024 and 2023.

In addition to the above amortization, the Company recorded amortization expense associated with capitalized software of $11.3 million and $10.8 million for the three months ended March 31, 2024 and 2023, respectively.

Revenue Recognition

Product revenue is recognized from contracts with customers when a customer has obtained control of a product. The Company considers control to have transferred based upon shipping terms. To the extent the Company’s arrangements have a separate performance obligation, revenue related to any post-shipment performance obligation is deferred until completed. Shipping and handling costs charged to

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Table of Contents

METTLER-TOLEDO INTERNATIONAL INC.

NOTES TO THE INTERIM CONSOLIDATED FINANCIAL STATEMENTS – Unaudited

(In thousands, except share data, unless otherwise stated)

customers are included in total net sales and the associated expense is a component of cost of sales. Certain products are also sold through indirect distribution channels whereby the distributor assumes any further obligations to the end customer. Revenue is recognized on these distributor arrangements upon transfer of control to the distributor. Contracts do not contain variable pricing arrangements that are retrospective, except for rebate programs. Rebates are estimated based on expected sales volumes and offset against revenue at the time such revenue is recognized. The Company generally maintains the right to accept or reject a product return in its terms and conditions and also maintains appropriate accruals for outstanding credits. The related provisions for estimated returns and rebates are immaterial to the consolidated financial statements.

Certain of the Company’s product arrangements include separate performance obligations, primarily related to installation. Such performance obligations are accounted for separately when the deliverables have stand-alone value and the satisfaction of the undelivered performance obligations is probable and within the Company's control. The allocation of revenue between the performance obligations is based on the observable stand-alone selling prices at the time of the sale in accordance with a number of factors including service technician billing rates, time to install, and geographic location.

Software is generally not considered a distinct performance obligation with the exception of a limited number of software applications. The Company primarily sells software products with the related hardware instrument as the software is embedded in the product. The Company’s products typically require no significant production, modification, or customization of the hardware or software that is essential to the functionality of the products.

Service revenue not under contract is recognized upon the completion of the service performed. Revenue from spare parts sold on a stand-alone basis is recognized when control is transferred to the customer, which is generally at the time of shipment or delivery. Revenue from service contracts is recognized ratably over the contract period using a time-based method. These contracts represent an obligation to perform repair and other services including regulatory compliance qualification, calibration, certification, and preventative maintenance on a customer’s pre-defined equipment over the contract period.

Share-Based Compensation

The Company recognizes share-based compensation expense within selling, general and administrative in the consolidated statements of operations and comprehensive income with a corresponding offset to additional paid-in capital in the consolidated balance sheet. The Company recognized $4.7 million and $4.0 million of share-based compensation expense for the three months ended March 31, 2024 and 2023, respectively.

Research and Development

Research and development costs primarily consist of salaries, consulting and other costs. The Company expenses these costs as incurred.

Business Combinations and Asset Acquisitions

The Company accounts for business acquisitions under the accounting standards for business combinations utilizing the acquisition method of accounting. The results of each acquisition are included in the Company's consolidated results as of the acquisition date. The purchase price of an acquisition is generally allocated to tangible and intangible assets and assumed liabilities based on their estimated fair values and any consideration in excess of the net assets acquired is recognized as goodwill. The determination of the values of the acquired assets and assumed liabilities, including goodwill and intangible assets, require significant judgement. Acquisition transaction costs are expensed when incurred.

In circumstances where an acquisition involves a contingent consideration arrangement, the Company recognizes a liability equal to the fair value of the expected contingent payments as of the acquisition date. Subsequent changes in the fair value of the contingent consideration are recorded to other charges (income), net.

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METTLER-TOLEDO INTERNATIONAL INC.

NOTES TO THE INTERIM CONSOLIDATED FINANCIAL STATEMENTS – Unaudited

(In thousands, except share data, unless otherwise stated)

Recent Accounting Pronouncements

In March 2020, January 2021 and December 2022, the FASB issued ASU 2020-04, ASU 2021-01 and ASU 2022-06: Reference Rate Reform, which provides optional expedients and exceptions for applying GAAP to contracts, hedging relationships, and other transactions affected by the discontinuance of LIBOR or another referenced rate. The guidance may be applied to any applicable contract entered into before December 31, 2024. The Company amended its credit agreement and cross currency swap agreements in June 2023 to change the interest rate benchmark from LIBOR to SOFR and other non-U.S. dollar references, which did not change the amount or timing of cash flows. As a result, the discontinuation of LIBOR did not have a material impact on the Company's financial statements.

In November 2023, the FASB issued ASU 2023-07: Improvements to Reportable Segment Disclosures which requires incremental disclosures about a public entity's reportable segments but does not change the definition of a segment or the guidance for determining reportable segments. The Company will adopt the annual disclosure requirements in 2024 and is currently evaluating the impact of these requirements on the consolidated financial statements.

In December 2023, the FASB issued ASU 2023-09: Improvements to Income Tax Disclosures, which enhances income tax disclosures, especially related to the rate reconciliation and income taxes paid information. The Company will adopt the annual disclosure requirements in 2025 and is currently evaluating the impact of these requirements on the consolidated financial statements.

3.REVENUE

The Company disaggregates revenue from contracts with customers by product, service, timing of revenue recognition, and geography. A summary by the Company’s reportable segments follows:


Three months ended March 31, 2024	U.S. Operations		Swiss Operations		Western European Operations		Chinese Operations		Other Operations		Total
Product Revenue	$	250,737	$	43,621	$	151,535	$	129,011	$	126,064	$	700,968
Service Revenue:
Point in time	73,133		7,765		42,821		9,901		31,210		164,830
Over time	22,253		2,865		20,409		4,286		10,338		60,151
Total	$	346,123	$	54,251	$	214,765	$	143,198	$	167,612	$	925,949


Three months ended March 31, 2023	U.S. Operations		Swiss Operations		Western European Operations		Chinese Operations		Other Operations		Total
Product Revenue	$	246,529	$	36,461	$	140,707	$	170,430	$	121,874	$	716,001
Service Revenue:
Point in time	70,626		7,461		41,165		11,347		30,045		160,644
Over time	20,247		2,447		17,552		3,990		7,857		52,093
Total	$	337,402	$	46,369	$	199,424	$	185,767	$	159,776	$	928,738

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METTLER-TOLEDO INTERNATIONAL INC.

NOTES TO THE INTERIM CONSOLIDATED FINANCIAL STATEMENTS – Unaudited

(In thousands, except share data, unless otherwise stated)

A breakdown of net sales to external customers by geographic customer destination for the three months ended March 31 follows:


	2024		2023
Americas	$	384,342	$	372,073
Europe	273,861		253,974
Asia / Rest of World	267,746		302,691
Total	$	925,949	$	928,738

The Company's global revenue mix by product category is laboratory (57% of sales), industrial (38% of sales) and retail (5% of sales). The Company's product revenue by reportable segment is proportionately similar to the Company's global revenue mix except the Company's Swiss Operations is largely comprised of laboratory products, while the Company's Chinese Operations has a slightly higher percentage of industrial products. A breakdown of the Company’s sales by product category for the three months ended March 31 follows:


	2024		2023
Laboratory	$	525,056	$	520,031
Industrial	351,845		355,181
Retail	49,048		53,526
Total	$	925,949	$	928,738

The payment terms in the Company’s contracts with customers do not exceed one year and therefore contracts do not contain a significant financing component. In most cases, after appropriate credit evaluations, payments are due in arrears and are recognized as receivables. Unbilled revenue is recorded when performance obligations have been satisfied, but not yet billed to the customer. Unbilled revenue as of March 31, 2024 and December 31, 2023 was $40.1 million and $35.7 million, respectively, and is included within accounts receivable. Deferred revenue and customer prepayments are recorded when cash payments are received or due in advance of the performance obligation being satisfied. Deferred revenue primarily includes prepaid service contracts, as well as deferred installation.

Changes in the components of deferred revenue and customer prepayments during the periods ended March 31, 2024 and 2023 are as follows:


	2024		2023
Beginning balances as of January 1	$	202,022	$	192,759
Customer pre-payments/deferred revenue	188,295		190,262
Revenue recognized	(169,663)		(172,890)
Foreign currency translation	(3,995)		1,171
Ending balance as of March 31	$	216,659	$	211,302

The Company generally expenses sales commissions when incurred because the contract period is one year or less. These costs are recorded within selling, general, and administrative expenses. The value of unsatisfied performance obligations other than customer prepayments and deferred revenue associated with contracts greater than one year is immaterial.

4. FINANCIAL INSTRUMENTS

The Company has limited involvement with derivative financial instruments and does not use them for trading purposes. The Company enters into certain interest rate swap agreements in order to manage its exposure to changes in interest rates. The amount of the Company's fixed obligation interest payments

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METTLER-TOLEDO INTERNATIONAL INC.

NOTES TO THE INTERIM CONSOLIDATED FINANCIAL STATEMENTS – Unaudited

(In thousands, except share data, unless otherwise stated)

may change based upon the expiration dates of its interest rate swap agreements and the level and composition of its debt. The Company also enters into certain foreign currency forward contracts to limit the Company's exposure to currency fluctuations on the respective hedged items. For additional disclosures on derivative instruments regarding balance sheet location, fair value, and the amounts reclassified into other comprehensive income and the effective portions of the cash flow hedges, also see Notes 5 and 9 to the interim consolidated financial statements. As also mentioned in Note 7, the Company has designated its euro-denominated debt as a hedge of a portion of its net investment in euro-denominated foreign subsidiaries.

Cash Flow Hedges

The Company has entered into a number of cross currency swaps designated as cash flow hedges. The agreements convert borrowings under the Company’s credit facility into synthetic Swiss franc debt, which allows the Company to effectively change the floating rate SOFR-based interest payments, excluding the credit spread, to a fixed Swiss franc income or expense as follows:

Agreement Date

Amount
Converted

Effective Swiss Franc
Interest Rate

Maturity Date

June 2019

$50 million

(0.82)%

June 2023

November 2021

$50 million

(0.67)%

November 2023

June 2021

$50 million

(0.73)%

June 2024

June 2021

$50 million

(0.59)%

June 2025

December 2023

$50 million

1.04%

November 2026

November 2023

$50 million

1.16%

November 2026

June 2023

$50 million

1.55%

June 2027

The Company amended all active cross currency swap agreements to replace all references of LIBOR to SOFR as the interest rate benchmark to align with the amendment to the Company's Credit Facility Agreement, as discussed in Note 10 to the consolidated financial statements for the year ended December 31, 2023. As part of these amendments, the corresponding fixed Swiss franc interest rates were amended as well to reflect the change in the benchmark.

The Company's cash flow hedges are recorded gross at fair value in the consolidated balance sheet at March 31, 2024 and December 31, 2023, respectively. A derivative gain of $7.2 million based upon interest rates at March 31, 2024, is expected to be reclassified from other comprehensive income (loss) to earnings in the next twelve months. The cash flow hedges remain effective as of March 31, 2024.

Other Derivatives

The Company enters into foreign currency forward contracts in order to economically hedge short-term trade and non-trade intercompany balances largely denominated in Swiss franc, other major European currencies, and the Chinese renminbi with its foreign businesses. In accordance with U.S. GAAP, these contracts are considered “derivatives not designated as hedging instruments.” Gains or losses on these instruments are reported in current earnings. The foreign currency forward contracts are recorded at fair value in the consolidated balance sheet at March 31, 2024 and December 31, 2023, as disclosed in Note 5. The Company recognized in other charges (income) a net gain of $8.8 million and net gain of $3.5 million during the three months ended March 31, 2024 and 2023, respectively, which offset the related transaction gains (losses) associated with these contracts. At March 31, 2024 and December 31, 2023, these contracts had a notional value of $774.3 million and $793.9 million, respectively.

5. FAIR VALUE MEASUREMENTS

At March 31, 2024 and December 31, 2023, the Company had derivative assets totaling $13.2 million and $8.3 million, respectively, and derivative liabilities totaling $8.1 million and $25.2 million,

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METTLER-TOLEDO INTERNATIONAL INC.

NOTES TO THE INTERIM CONSOLIDATED FINANCIAL STATEMENTS – Unaudited

(In thousands, except share data, unless otherwise stated)

respectively. The Company has limited involvement with derivative financial instruments and therefore does not present all the required disclosures in tabular format. The fair values of the interest rate swap agreements, the cross currency swap agreements, and the foreign currency forward contracts that economically hedge short-term intercompany balances are estimated based upon inputs from current valuation information obtained from dealer quotes and priced with observable market assumptions and appropriate valuation adjustments for credit risk. The Company has evaluated the valuation methodologies used to develop the fair values by dealers in order to determine whether such valuations are representative of an exit price in the Company’s principal market. In addition, the Company uses an internally developed model to perform testing on the valuations received from brokers. The Company has also considered both its own credit risk and counterparty credit risk in determining fair value and determined these adjustments were insignificant at March 31, 2024 and December 31, 2023.

Under U.S. GAAP, fair value is defined as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. A fair value measurement consists of observable and unobservable inputs that reflect the assumptions that a market participant would use in pricing an asset or liability.

A fair value hierarchy has been established that categorizes these inputs into three levels:

Level 1: Quoted prices in active markets for identical assets and liabilities

Level 2: Observable inputs other than quoted prices in active markets for identical assets and liabilities

Level 3: Unobservable inputs

The following table presents the Company’s assets and liabilities, which are all categorized as Level 2 and are measured at fair value on a recurring basis at March 31, 2024 and December 31, 2023. The Company does not have any assets or liabilities which are categorized as Level 1.


	March 31, 2024		December 31, 2023		Balance Sheet Location
Foreign currency forward contracts not designated as hedging instruments	$	10,306	$	8,330	Other current assets and prepaid expenses
Cash Flow Hedges:
Cross currency swap agreements	577		—		Other current assets and prepaid expenses
Cross currency swap agreements	2,275		—		Other non-current assets
Total derivative assets	$	13,158	$	8,330

Foreign currency forward contracts not designated as hedging instruments	$	5,652	$	8,245	Accrued and other liabilities
Cash Flow Hedges:
Cross currency swap agreements	—		2,678		Accrued and other liabilities
Cross currency swap agreements	2,429		14,270		Other non-current liabilities
Total derivative liabilities	$	8,081	$	25,193

The Company had $5.2 million and $4.0 million of cash equivalents at March 31, 2024 and December 31, 2023, respectively, the fair value of which is determined using Level 2 inputs, through quoted and corroborated prices in active markets. The fair value of cash equivalents approximates cost.

The fair value of the Company's debt is less than the carrying value by approximately $211.5 million as of March 31, 2024. The fair value of the Company's fixed interest rate debt was estimated using Level 2 inputs, primarily utilizing discounted cash flow models based on estimated current rates offered for similar debt under current market conditions for the Company.

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METTLER-TOLEDO INTERNATIONAL INC.

NOTES TO THE INTERIM CONSOLIDATED FINANCIAL STATEMENTS – Unaudited

(In thousands, except share data, unless otherwise stated)

6. INCOME TAXES

The Company's reported tax rate was 19.5% and 16.9% during the three months ended March 31, 2024 and 2023, respectively. The provision for taxes is based upon using the Company's projected annual effective tax rate of 19.0% and 18.5% before non-recurring discrete tax items during 2024 and 2023, respectively. The difference between the Company's projected annual effective tax rate and the reported tax rate is related to the timing of excess tax benefits associated with stock option exercises.

7. DEBT

Debt consisted of the following at March 31, 2024:


	U.S. Dollar		Other Principal Trading Currencies		Total
3.84% $125 million ten-year Senior Notes due September 19, 2024	125,000		—		125,000
4.24% $125 million ten-year Senior Notes due June 25, 2025	125,000		—		125,000
3.91% $75 million ten-year Senior Notes due June 25, 2029	75,000		—		75,000
5.45% $150 million ten-year Senior Notes due March 1, 2033	150,000		—		150,000
2.83% $125 million twelve-year Senior Notes due July 22. 2033	125,000		—		125,000
3.19% $50 million fifteen-year Senior Notes due January 24, 2035	50,000		—		50,000
2.81% $150 million fifteen-year Senior Notes due March 17, 2037	150,000		—		150,000
2.91% $150 million fifteen-year Senior Notes due September 1, 2037	150,000		—		150,000
1.47% Euro 125 million fifteen-year Senior Notes due June 17, 2030	—		135,303		135,303
1.30% Euro 135 million fifteen-year Senior Notes due November 6, 2034	—		146,127		146,127
1.06% Euro 125 million fifteen-year Senior Notes due March 19, 2036	—		135,303		135,303
Senior notes debt issuance costs, net	(2,573)		(1,323)		(3,896)
Total Senior Notes	947,427		415,410		1,362,837
$1.25 billion Credit Agreement, interest at SOFR plus 87.5 basis points	446,920		214,704		661,624
Other local arrangements	8,534		53,752		62,286
Total debt	1,402,881		683,866		2,086,747
Less: current portion	(129,694)		(53,479)		(183,173)
Total long-term debt	$	1,273,187	$	630,387	$	1,903,574

As of March 31, 2024, the Company had $583.6 million of additional borrowings available under its Credit Agreement, and the Company maintained $70.2 million of cash and cash equivalents.

In December 2022, the Company entered into an agreement to issue and sell $150 million 10-year Senior Notes in a private placement. The Company issued $150 million with a fixed interest rate of 5.45% (5.45% Senior Notes) in March 2023. The 5.45% Senior Notes are senior unsecured obligations of the Company. The 5.45% Senior Notes mature on March 1, 2033. The terms of the 5.45% Senior Notes are consistent with the previous Senior Notes as described in the Company's Annual Report Form 10-K for the year ended December 31, 2023. The Company used the proceeds from the sale of the 5.45% Senior Notes to refinance existing indebtedness and for other general corporate purposes.

The Company has designated the EUR 125 million 1.47% Euro Senior Notes, the EUR 135 million 1.30% Euro Senior Notes, and the EUR 125 million 1.06% Euro Senior Notes as a hedge of a portion of its net investment in a euro denominated foreign subsidiary to reduce foreign currency risk associated with this net investment. Changes in the carrying value of this debt resulting from fluctuations in the euro to U.S. dollar exchange rate are recorded as foreign currency translation adjustments within other comprehensive income (loss). The Company recorded in other comprehensive income (loss) related to this net investment hedge an unrealized gain of $8.2 million and $5.3 million for the three months ended

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METTLER-TOLEDO INTERNATIONAL INC.

NOTES TO THE INTERIM CONSOLIDATED FINANCIAL STATEMENTS – Unaudited

(In thousands, except share data, unless otherwise stated)

March 31, 2024 and 2023, respectively. The Company has a gain of $25.5 million recorded in accumulated other comprehensive income (loss) as of March 31, 2024.

Other Local Arrangements

In 2018, two of the Company's non-U.S. pension plans issued loans totaling $39.6 million (Swiss franc 38 million) to a wholly owned subsidiary of the Company. The loans have the same terms and conditions which include an interest rate of SARON plus 87.5 basis points. The loans were renewed for one year in April 2024.

8. SHARE REPURCHASE PROGRAM AND TREASURY STOCK

The Company has $2.3 billion of remaining availability for its share repurchase program as of March 31, 2024. The share repurchases are expected to be funded from cash generated from operating activities, borrowings, and cash balances. Repurchases will be made through open market transactions, and the amount and timing of purchases will depend on business and market conditions, the stock price, trading restrictions, the level of acquisition activity, and other factors.

The Company has purchased 31.9 million common shares at an average price per share of $287.08 since the inception of the program in 2004 through March 31, 2024. During the three months ended March 31, 2024 and 2023, the Company spent $212.5 million and $250.0 million on the repurchase of 173,700 shares and 166,628 shares at an average price per share of $1,223.35 and $1,511.78, respectively. The Company reissued 4,898 shares and 47,849 shares held in treasury for the exercise of stock options and restricted stock units during the three months ended March 31, 2024 and 2023, respectively. In addition, the Company incurred $2.1 million and $1.9 million of excise tax during the three months ended March 31, 2024 and 2023, respectively, related to the Inflation Reduction Act which is reflected as a reduction in shareholders' equity in the Company's consolidated financial statements.

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METTLER-TOLEDO INTERNATIONAL INC.

NOTES TO THE INTERIM CONSOLIDATED FINANCIAL STATEMENTS – Unaudited

(In thousands, except share data, unless otherwise stated)

9. ACCUMULATED COMPREHENSIVE AND OTHER COMPREHENSIVE INCOME

Comprehensive income (loss), net of tax consisted of the following:


	March 31, 2024		March 31, 2023
Net earnings	$	177,509	$	188,426
Other comprehensive income (loss), net of tax	21,741		$	(1,283)
Comprehensive income, net of tax	$	199,250	$	187,143

The following table presents changes in accumulated other comprehensive income (loss) by component for the three months ended March 31, 2024 and 2023:


	Currency Translation Adjustment		Net Unrealized Gain (Loss) on Cash Flow Hedging Arrangements, Net of Tax		Pension and Post-Retirement Benefit Related Items, Net of Tax		Total
Balance at December 31, 2023	$	(117,230)	$	120	$	(202,705)	$	(319,815)
Other comprehensive income (loss), net of tax:
Unrealized gains from cash flow hedging arrangements	—		16,074		—		16,074
Foreign currency translation adjustment	8,519		—		11,841		20,360
Amounts recognized from accumulated other comprehensive income (loss), net of tax	—		(17,169)		2,476		(14,693)
Net change in other comprehensive income (loss), net of tax	8,519		(1,095)		14,317		21,741
Balance at March 31, 2024	$	(108,711)	$	(975)	$	(188,388)	$	(298,074)


	Currency Translation Adjustment		Net Unrealized Gain (Loss) on Cash Flow Hedging Arrangements, Net of Tax		Pension and Post-Retirement Benefit Related Items, Net of Tax		Total
Balance at December 31, 2022	$	(82,864)	$	4,256	$	(148,625)	$	(227,233)
Other comprehensive income (loss), net of tax:
Unrealized gains from cash flow hedging arrangements	—		19		—		19
Foreign currency translation adjustment	(893)		—		(728)		(1,621)
Amounts recognized from accumulated other comprehensive income (loss), net of tax	—		(1,259)		1,578		319
Net change in other comprehensive income (loss), net of tax	(893)		(1,240)		850		(1,283)
Balance at March 31, 2023	$	(83,757)	$	3,016	$	(147,775)	$	(228,516)

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METTLER-TOLEDO INTERNATIONAL INC.

NOTES TO THE INTERIM CONSOLIDATED FINANCIAL STATEMENTS – Unaudited

(In thousands, except share data, unless otherwise stated)

The following table presents amounts recognized from accumulated other comprehensive income (loss) for the three months ended March 31:


	2024		2023		Location of Amounts Recognized in Earnings
Effective portion of (gains) losses on cash flow hedging arrangements:
Cross currency swap	(21,196)		(1,554)		(a)
Provision for taxes	(4,027)		(295)		Provision for taxes
Total, net of taxes	$	(17,169)	$	(1,259)

Recognition of defined benefit pension and post-retirement items:
Recognition of actuarial (gains) losses, plan amendments and prior service cost, before taxes	$	3,108	$	2,002	(b)
Provision for taxes	632		424		Provision for taxes
Total, net of taxes	$	2,476	$	1,578

(a)The cross currency swap reflects an unrealized gain of $18.2 million recorded in other charges (income) that was offset by the underlying unrealized loss in the hedged debt for the three months ended March 31, 2024. The cross currency swap also reflects a realized gain of $3.0 million recorded in interest expense for the three months ended March 31, 2024.

(b)These accumulated other comprehensive income (loss) components are included in the computation of net periodic pension and post-retirement cost. See Note 12 for additional details for the three months ended March 31, 2024 and 2023.

10. EARNINGS PER COMMON SHARE

In accordance with the treasury stock method, the Company has included 105,640 and 169,979 common equivalent shares in the calculation of diluted weighted average number of common shares outstanding for the three months ended March 31, 2024 and 2023, respectively, relating to outstanding stock options and restricted stock units.

Outstanding options and restricted stock units to purchase or receive 72,089 and 35,063 shares of common stock for the three months ended March 31, 2024 and 2023, respectively, have been excluded from the calculation of diluted weighted average number of common and common equivalent shares as such options and restricted stock units would be anti-dilutive.

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METTLER-TOLEDO INTERNATIONAL INC.

NOTES TO THE INTERIM CONSOLIDATED FINANCIAL STATEMENTS – Unaudited

(In thousands, except share data, unless otherwise stated)

11. NET PERIODIC BENEFIT COST

Net periodic pension cost for the Company’s defined benefit pension plans and U.S. post-retirement medical plan includes the following components for the three months ended March 31:


	U.S. Pension Benefits				Non-U.S. Pension Benefits				Other U.S. Post-retirement Benefits				Total
	2024		2023		2024		2023		2024		2023		2024		2023
Service cost, net	$	397	$	289	$	4,020	$	3,396	$	—	$	—	$	4,417	$	3,685
Interest cost on projected benefit obligations	1,192		1,256		4,479		4,876		7		7		5,678		6,139
Expected return on plan assets	(1,368)		(1,383)		(9,345)		(8,567)		—		—		(10,713)		(9,950)
Recognition of prior service cost	—		—		(1,161)		(1,050)		(19)		(19)		(1,180)		(1,069)
Recognition of actuarial losses/(gains)	521		548		3,761		2,537		8		—		4,290		3,085
Net periodic pension cost/(credit)	$	742	$	710	$	1,754	$	1,192	$	(4)	$	(12)	$	2,492	$	1,890

As previously disclosed in the Company’s Annual Report on Form 10-K for the year ended December 31, 2023, the Company expects to make employer contributions of approximately $27.3 million to its non-U.S. pension plan during the year ended December 31, 2024. These estimates may change based upon several factors, including fluctuations in currency exchange rates, actual returns on plan assets and changes in legal requirements.

12. OTHER CHARGES (INCOME), NET

Other charges (income), net includes non-service pension costs (benefits), (gains) losses from foreign currency transactions and related hedging activities, interest income and other items. Non-service pension benefits for the three months ended March 31, 2024 and 2023 were $2.0 million and $1.8 million, respectively.

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METTLER-TOLEDO INTERNATIONAL INC.

NOTES TO THE INTERIM CONSOLIDATED FINANCIAL STATEMENTS – Unaudited

(In thousands, except share data, unless otherwise stated)

13. SEGMENT REPORTING

As disclosed in Note 18 to the Company's consolidated financial statements for the year ended December 31, 2023, the Company has determined there are five reportable segments: U.S. Operations, Swiss Operations, Western European Operations, Chinese Operations and Other.

The Company evaluates segment performance based on Segment Profit (gross profit less research and development and selling, general and administrative expenses, before amortization, interest expense, restructuring charges, other charges (income), net and taxes).

The following tables show the operations of the Company’s reportable segments:


	Net Sales to		Net Sales to
For the three months ended	External		Other		Total Net		Segment
March 31, 2024	Customers		Segments		Sales		Profit		Goodwill
U.S. Operations	$	346,123	$	37,418	$	383,541	$	93,636	$	526,385
Swiss Operations	54,251		223,371		277,622		59,086		25,601
Western European Operations	214,765		47,738		262,503		50,311		99,985
Chinese Operations	143,198		80,641		223,839		75,823		605
Other (a)	167,612		3,331		170,943		25,182		13,240
Eliminations and Corporate (b)	—		(392,499)		(392,499)		(36,710)		—
Total	$	925,949	$	—	$	925,949	$	267,328	$	665,816


	Net Sales to		Net Sales to
For the three months ended	External		Other		Total Net		Segment
March 31, 2023	Customers		Segments		Sales		Profit		Goodwill
U.S. Operations	$	337,402	$	33,248	$	370,650	$	81,796	$	524,470
Swiss Operations	46,369		202,134		248,503		76,422		25,195
Western European Operations	199,424		44,876		244,300		44,523		97,558
Chinese Operations	185,767		60,452		246,219		81,241		643
Other (a)	159,776		957		160,733		24,243		13,876
Eliminations and Corporate (b)	—		(341,667)		(341,667)		(41,774)		—
Total	$	928,738	$	—	$	928,738	$	266,451	$	661,742

(a)Other includes reporting units in Southeast Asia, Latin America, Eastern Europe and other countries.

(b)Eliminations and Corporate includes the elimination of inter-segment transactions and certain corporate expenses and intercompany investments, which are not included in the Company’s operating segments.

A reconciliation of earnings before taxes to segment profit for the three months ended March 31 follows:


	Three Months Ended
	March 31, 2024		March 31, 2023
Earnings before taxes	$	220,547	$	226,610
Amortization	18,228		17,779
Interest expense	19,232		18,184
Restructuring charges	9,664		4,274
Other charges (income), net	(343)		(396)
Segment profit	$	267,328	$	266,451

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METTLER-TOLEDO INTERNATIONAL INC.

NOTES TO THE INTERIM CONSOLIDATED FINANCIAL STATEMENTS – Unaudited

(In thousands, except share data, unless otherwise stated)

14. CONTINGENCIES

The Company is party to various legal proceedings, including certain environmental matters, incidental to the normal course of business. Management does not expect that any of such proceedings, either individually or in the aggregate, will have a material adverse effect on the Company’s financial condition, results of operations or cash flows.

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Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations

The following discussion and analysis of our financial condition and results of operations should be read in conjunction with the Unaudited Interim Consolidated Financial Statements included herein.

General

Our interim consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America. Operating results for the three months ended March 31, 2024 are not necessarily indicative of the results to be expected for the full year ending December 31, 2024.

Changes in local currencies exclude the effect of currency exchange rate fluctuations. Local currency amounts are determined by translating current and previous year consolidated financial information at an index utilizing historical currency exchange rates. We believe local currency information provides a helpful assessment of business performance and a useful measure of results between periods. We do not, nor do we suggest that investors should, consider such non-GAAP financial measures in isolation from, or as a substitute for, financial information prepared in accordance with GAAP. We present non-GAAP financial measures in reporting our financial results to provide investors with an additional analytical tool to evaluate our operating results.

We also include in the discussion below disclosures of immaterial qualitative factors that are not quantified. Although the impact of such factors is not considered material, we believe these disclosures can be useful in evaluating our operating results.

Results of Operations – Consolidated

The following tables set forth items from our interim consolidated statements of operations and comprehensive income for the three month periods ended March 31, 2024 and 2023 (amounts in thousands).


	Three months ended March 31,
	2024			2023
	(unaudited)		%	(unaudited)		%
Net sales	$	925,949	100.0	$	928,738	100.0
Cost of sales	377,816		40.8	382,172		41.1
Gross profit	548,133		59.2	546,566		58.9
Research and development	46,415		5.0	45,477		4.9
Selling, general and administrative	234,390		25.3	234,638		25.3
Amortization	18,228		2.0	17,779		1.9
Interest expense	19,232		2.1	18,184		2.0
Restructuring charges	9,664		1.0	4,274		0.4
Other charges (income), net	(343)		—	(396)		—
Earnings before taxes	220,547		23.8	226,610		24.4
Provision for taxes	43,038		4.6	38,184		4.1
Net earnings	$	177,509	19.2	$	188,426	20.3

Net sales

Net sales were $925.9 million for the three months ended March 31, 2024, compared to $928.7 million for the corresponding period in 2023. Sales in U.S. dollars were flat for the three months ended March 31, 2024. Excluding the effect of currency exchange rate fluctuations, or in local currencies, net sales were also flat for the three months ended March 31, 2024. We estimate that net sales benefited by approximately 6% from the recovery of our previously disclosed shipping delays in 2023 related to a new external European logistics service provider. We also continued to experience reduced market demand, particularly in China. We continue to benefit from the execution

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of our global sales and marketing programs and our innovative product portfolio. However, there is uncertainty in the economic environment and our end markets, including the risk of recession in many countries, and market conditions may change quickly. The ongoing developments related to Ukraine, the Israel-Hamas war, and inflation also present several risks to our business as further described in Part I, Item 1A of our Annual Report on Form 10-K for the year ended December 31, 2023. These topics could adversely impact our financial results and could have a greater impact on our operating results in future periods.

Net sales by geographic destination for the three months ended March 31, 2024 in U.S. dollars increased 3% in the Americas and 8% in Europe, and decreased 12% in Asia/Rest of World. In local currencies, our net sales by geographic destination increased 3% in the Americas, and 6% in Europe, and decreased 8% in Asia/Rest of World, including a 19% decrease in China, for the three months ended March 31, 2024 compared to the corresponding period in 2023. Excluding the benefit of delayed fourth quarter 2023 shipments, local currency sales decreased 5% in Europe, 1% in the Americas, and 12% in Asia/Rest of World, with 21% in China, during the three months ended March 31, 2024. A discussion of sales by operating segment is included below.

As described in Note 18 to our consolidated financial statements for the year ended December 31, 2023, our net sales comprise product sales of precision instruments and related services. Service revenues are primarily derived from repair and other services, including regulatory compliance qualification, calibration, certification, preventative maintenance and spare parts.

Net sales of products decreased 2% in U.S. dollars and 1% in local currency for the three months ended March 31, 2024 compared to the prior year period. Service revenue (including spare parts) increased 6% in both U.S. dollars and local currency during the three months ended March 31, 2024 compared to the corresponding period in 2023.

Net sales of our laboratory product and services, which represented approximately 57% of our total net sales for the three months ended March 31, 2024, increased 1% in U.S. dollars and 2% in local currencies during the three months ended March 31, 2024. Laboratory net sales benefited approximately 8% from the previously disclosed shipping delays during the three months ended March 31, 2024. Excluding this impact, the local currency net sales decrease in our laboratory-related products includes a decline in most products, particularly in China.

Net sales of our industrial products and services, which represented approximately 38% of our total net sales for the three months ended March 31, 2024, decreased 1% in U.S. dollars and were flat in local currencies during the three months ended March 31, 2024. Industrial net sales benefited approximately 3% from the previously disclosed shipping delays during the three months ended March 31, 2024. Excluding this impact, the local currency net sales decrease in our industrial-related products includes a decline in core-industrial products, particularly in China, which was partially offset by strong project activity in the Americas.

Net sales in our food retailing products and services, which represented approximately 5% of our total net sales for the three months ended March 31, 2024, decreased 8% in U.S. dollars and 9% in local currencies during the three months ended March 31, 2024. Retail net sales benefited approximately 6% from the previously disclosed shipping delays during the three months ended March 31, 2024. Excluding this impact, the local currency net sales decrease in food retailing products primarily reflects the timing of project activity related to especially strong growth in the prior year.

Gross profit

Gross profit as a percentage of net sales was 59.2% for the three months ended March 31, 2024 compared to 58.9% for the corresponding period in 2023.

Gross profit as a percentage of net sales for products was 61.2% and 60.1% for the three month periods ended March 31, 2024 and 2023, respectively.

Gross profit as a percentage of net sales for services (including spare parts) was 52.9% for the three months ended March 31, 2024 compared to 54.7% for the corresponding period in 2023.

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The increase in gross profit as a percentage of net sales for the three months ended March 31, 2024 primarily reflects favorable price realization and business mix, partially offset by unfavorable foreign currency.

Research and development and selling, general and administrative expenses

Research and development expenses as a percentage of net sales was 5.0% for the three months ended March 31, 2024 compared to 4.9% in the corresponding period of 2023. Research and development expenses increased 2% in U.S. dollars and were flat in local currencies, during the three months ended March 31, 2024 compared to the corresponding period in 2023.

Selling, general and administrative expenses as a percentage of net sales were 25.3% for both the three months ended March 31, 2024 and the corresponding period during 2023. Selling, general and administrative expense was flat in U.S. dollars and decreased 1% in local currencies during the three months ended March 31, 2024 compared to the corresponding period in 2023. The local currency decrease includes benefits from our cost savings programs.

Amortization, interest expense, restructuring charges, other charges (income), net and taxes

Amortization expense was $18.2 million for the three months ended March 31, 2024 and $17.8 million for the corresponding period in 2023.

Interest expense was $19.2 million for the three months ended March 31, 2024 and $18.2 million for the corresponding period in 2023. The increase in interest expense is primarily related to higher variable interest rates.

Restructuring charges were $9.7 million and $4.3 million for the three months ended March 31, 2024 and 2023, respectively. Restructuring expenses are primarily comprised of employee-related costs.

Other charges (income), net includes non-service pension costs (benefits), net (gains) losses from foreign currency transactions and hedging activities, interest income and other items. Non-service pension benefits for the three months ended March 31, 2024 and 2023 were $2.0 million and $1.8 million, respectively.

Our reported tax rate was 19.5% and 16.9% during the three months ended March 31, 2024 and 2023, respectively. The provision for taxes is based upon using our projected annual effective tax rate of 19.0% and 18.5% before non-recurring discrete tax items for the three months ended March 31, 2024 and 2023, respectively. The difference between our projected annual effective tax rate and the reported tax rate is related to the timing of excess tax benefits associated with stock option exercises.

Results of Operations – by Operating Segment

The following is a discussion of the financial results of our operating segments. We currently have five reportable segments: U.S. Operations, Swiss Operations, Western European Operations, Chinese Operations, and Other. A more detailed description of these segments is outlined in Note 18 to our consolidated financial statements for the year ended December 31, 2023.

U.S. Operations (amounts in thousands)


	Three months ended March 31,
	2024		2023		%
Total net sales	$	383,541	$	370,650	3	%
Net sales to external customers	$	346,123	$	337,402	3	%
Segment profit	$	93,636	$	81,796	14	%

Total net sales and net sales to external customers each increased 3% for the three months ended March 31, 2024 compared with the corresponding period in 2023. Net sales to external customers benefited by approximately 3% from the previously disclosed shipping delays during the

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three months ended March 31, 2024. Excluding this impact, net sales to external customers includes strong growth in core-industrial products offset by a significant decline in food retailing related to strong project activity in the prior year, as well as a decline in laboratory products.

Segment profit increased $11.8 million for the three months ended March 31, 2024 compared to the corresponding period in 2023. Segment profit during the three months ended March 31, 2024 includes benefits from our margin expansion and cost savings initiatives.

Swiss Operations (amounts in thousands)


	Three months ended March 31,
	2024		2023		%1)
Total net sales	$	277,622	$	248,503	12	%
Net sales to external customers	$	54,251	$	46,369	17	%
Segment profit	$	59,086	$	76,422	(23)	%

1) Represents U.S. dollar growth.

Total net sales increased 12% in U.S. dollars and 6% in local currency for the three months ended March 31, 2024 compared to the corresponding period in 2023. Net sales to external customers increased 17% in U.S. dollars and 13% in local currency during the three months ended March 31, 2024 compared to the corresponding period in 2023. Net sales to external customers benefited by approximately 14% from our previously disclosed shipping delays during the three months ended March 31, 2024. Excluding this impact, the local currency net sales to external customers decrease for the three months ended March 31, 2024 includes a decline in food retailing related to strong project activity in the prior year, partially offset by modest growth in laboratory products.

Segment profit decreased $17.3 million for the three month period ended March 31, 2024 compared to the corresponding period in 2023. Segment profit during the three months ended March 31, 2024 includes unfavorable inter-segment pricing, increased costs, unfavorable foreign currency translation and mix.

Western European Operations (amounts in thousands)


	Three months ended March 31,
	2024		2023		%1)
Total net sales	$	262,503	$	244,300	7	%
Net sales to external customers	$	214,765	$	199,424	8	%
Segment profit	$	50,311	$	44,523	13	%

1) Represents U.S. dollar growth.

Total net sales increased 7% in U.S. dollars and 6% in local currencies during the three months ended March 31, 2024 compared to the corresponding period in 2023. Net sales to external customers increased 8% in U.S. dollars and 6% in local currencies during the three months ended March 31, 2024 compared to the corresponding period in 2023. Net sales benefited by approximately 10% from our previously disclosed shipping delays during the three months ended March 31, 2024. Excluding this impact, the local currency net sales to external customers decrease for the three months ended March 31, 2024 includes declines in most categories.

Segment profit increased $5.8 million for the three month period ended March 31, 2024 compared to the corresponding period in 2023. Segment profit increased during the three months ended March 31, 2024 primarily due to higher volume from our previously disclosed shipping delays, benefits from our margin expansion and cost savings initiatives.

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Chinese Operations (amounts in thousands)


	Three months ended March 31,
	2024		2023		%1)
Total net sales	$	223,839	$	246,219	(9)	%
Net sales to external customers	$	143,198	$	185,767	(23)	%
Segment profit	$	75,823	$	81,241	(7)	%

1) Represents U.S. dollar growth.

Total net sales decreased 9% in U.S. dollars and 5% in local currency for the three months ended March 31, 2024 compared to the corresponding period in 2023. Net sales to external customers by origin decreased 23% in U.S. dollars and 20% in local currency for the three months ended March 31, 2024 compared to the corresponding period in 2023. Net sales to external customers benefited by approximately 2% from our previously disclosed shipping delays during the three months ended March 31, 2024. Excluding this impact, the decrease in local currency net sales to external customers during the three months ended March 31, 2024 reflects a significant decline in market demand in most product categories. Uncertainties continue to exist and market conditions may change quickly.

Segment profit decreased $5.4 million for the three month period ended March 31, 2024 compared to the corresponding period in 2023. The decrease in segment profit for the three month period ended March 31, 2024 primarily relates to lower sales volume and unfavorable currency, offset in part by benefits from our margin expansion and cost savings initiatives.

Other (amounts in thousands)


	Three months ended March 31,
	2024		2023		%1)
Total net sales	$	170,943	$	160,733	6	%
Net sales to external customers	$	167,612	$	159,776	5	%
Segment profit	$	25,182	$	24,243	4	%

1) Represents U.S. dollar growth.

Total net sales increased 6% in U.S. dollars and 9% in local currencies during the three months ended March 31, 2024 compared to the corresponding period in 2023. Net sales to external customers by origin increased 5% in U.S. dollars and 7% in local currency for the three months ended March 31, 2024 compared to the corresponding period in 2023. Net sales to external customers benefited by approximately 9% from our previously disclosed shipping delays during the three months ended March 31, 2024. Excluding this impact, the decrease in net sales to external customers includes a decline in most product categories.

Segment profit increased $0.9 million for the three months ended March 31, 2024 compared to the corresponding period in 2023. The increase in segment profit is primarily related to our increased sales volume and margin expansion initiatives, offset in part by unfavorable foreign currency translation.

Liquidity and Capital Resources

Liquidity is our ability to generate sufficient cash flows from operating activities to meet our obligations and commitments. In addition, liquidity includes available borrowings under our Credit Agreement, the ability to obtain appropriate financing and our cash and cash equivalent balances. Currently, our liquidity needs are primarily driven by working capital requirements, capital expenditures, share repurchases and acquisitions. Global market conditions can be uncertain, and our ability to generate cash flows could be reduced by a deterioration in global markets.

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We currently believe that cash flows from operating activities, together with liquidity available under our Credit Agreement, local working capital facilities, and cash balances, will be sufficient to fund currently anticipated working capital needs and spending requirements for at least the foreseeable future.

Cash provided by operating activities totaled $190.0 million during the three months ended March 31, 2024, compared to $153.3 million in the corresponding period in 2023. The increase for the three months ended March 31, 2024 compared to the prior year is primarily related to working capital, including lower cash incentive payments of approximately $35 million.

Capital expenditures are made primarily for investments in information systems and technology, machinery, equipment and the purchase and expansion of facilities. Our capital expenditures totaled $17.4 million for the three months ended March 31, 2024 compared to $23.2 million in the corresponding period in 2023.

In September 2021, we entered into an agreement with the U.S. Department of Defense to increase domestic production capacity of pipette tips and enhance manufacturing automation and logistics. We have received the maximum allowable funding of $35.8 million related to the agreement during prior years, which offset associated capital expenditures.

We continue to explore potential acquisitions. In connection with any acquisition, we may incur additional indebtedness.

Cash flows used in financing activities are primarily comprised of share repurchases. In accordance with our share repurchase program, we spent $212.5 million and $250.0 million on the repurchase of 173,700 shares and 166,628 shares, during the three months ended March 31, 2024 and 2023, respectively.

The Inflation Reduction Act (IRA) was enacted on August 16, 2022. The IRA includes provisions imposing a 1% excise tax on net share repurchases that occur after December 31, 2022, and introduces a 15% corporate alternative minimum tax (CAMT) on adjusted financial statement income. The financial impact of the IRA is immaterial to our financial statements.

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Senior Notes and Credit Facility Agreement

Our debt consisted of the following at March 31, 2024:


	U.S. Dollar		Other Principal Trading Currencies		Total
3.84% $125 million ten-year Senior Notes due September 19, 2024	125,000		—		125,000
4.24% $125 million ten-year Senior Notes due June 25, 2025	125,000		—		125,000
3.91% $75 million ten-year Senior Notes due June 25, 2029	75,000		—		75,000
5.45% $150 million ten-year Senior Notes due March 1, 2033	150,000		—		150,000
2.83% $125 million twelve-year Senior Notes due July 22, 2033	125,000		—		125,000
3.19% $50 million fifteen-year Senior Notes due January 24, 2035	50,000		—		50,000
2.81% $150 million fifteen-year Senior Notes due March 17, 2037	150,000		—		150,000
2.91% $150 million fifteen-year Senior Notes due September 1, 2037	150,000		—		150,000
1.47% Euro 125 million fifteen-year Senior Notes due June 17, 2030	—		135,303		135,303
1.30% Euro 135 million fifteen-year Senior Notes due November 6, 2034	—		146,127		146,127
1.06% Euro 125 million fifteen-year Senior Notes due March 19, 2036	—		135,303		135,303
Senior notes debt issuance costs, net	(2,573)		(1,323)		(3,896)
Total Senior Notes	947,427		415,410		1,362,837
$1.25 billion Credit Agreement, interest at SOFR plus 87.5 basis points	446,920		214,704		661,624
Other local arrangements	8,534		53,752		62,286
Total debt	1,402,881		683,866		2,086,747
Less: current portion	(129,694)		(53,479)		(183,173)
Total long-term debt	$	1,273,187	$	630,387	$	1,903,574

As of March 31, 2024, approximately $583.6 million of additional borrowings was available under our Credit Agreement, and we maintained $70.2 million of cash and cash equivalents.

In May 2023 we amended our Credit Agreement to replace all references of LIBOR to SOFR and other non-U.S. dollar references as the interest rate benchmark.

Changes in exchange rates between the currencies in which we generate cash flows and the currencies in which our borrowings are denominated affect our liquidity. In addition, because we borrow in a variety of currencies, our debt balances fluctuate due to changes in exchange rates. Further, we do not have any downgrade triggers relating to ratings from rating agencies that would accelerate the maturity dates of our debt. We were in compliance with our debt covenants as of March 31, 2024.

In December 2022, we entered into an agreement to issue and sell $150 million 10-year Senior Notes in a private placement. We issued $150 million with a fixed interest rate of 5.45% (5.45% Senior Notes) in March 2023. The 5.45% Senior Notes are senior unsecured obligations of the Company. The 5.45% Senior Notes mature on March 1, 2033. The terms of the 5.45% Senior Notes are consistent with the previous Senior Notes as described in the Company's Annual Report Form 10-K for the year ended December 31, 2023. We used the proceeds from the sale of the 5.45% Senior Notes to refinance existing indebtedness and for other general corporate purposes.

Other Local Arrangements

In 2018, two of the Company's non-U.S. pension plans issued loans totaling $39.6 million (Swiss franc 38 million) to a wholly owned subsidiary of the Company. The loans have the same

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terms and conditions which include an interest rate of SARON plus 87.5 basis points. The loans were renewed for one year in April 2024.

Share Repurchase Program

We have $2.3 billion of remaining availability for our share repurchase program as of March 31, 2024. The share repurchases are expected to be funded from cash generated from operating activities, borrowings, and cash balances. Repurchases will be made through open market transactions, and the amount and timing of purchases will depend on business and market conditions, the stock price, trading restrictions, the level of acquisition activity, and other factors.

We have purchased 31.9 million common shares at an average price per share of $287.08 since the inception of the program in 2004 through March 31, 2024. During the three months ended March 31, 2024 and 2023, we spent $212.5 million and $250.0 million on the repurchase of 173,700 shares and 166,628 shares at an average price per share of $1,223.35 and $1,511.78, respectively. We reissued 4,898 shares and 47,849 shares held in treasury for the exercise of stock options and restricted stock units during the three months ended March 31, 2024 and 2023, respectively. In addition, the Company incurred $2.1 million and $1.9 million of excise tax during the three months ended March 31, 2024 and 2023, respectively, related to the Inflation Reduction Act which is reflected as a reduction in shareholders' equity in the Company's consolidated financial statements.

Effect of Currency on Results of Operations

Our earnings are affected by changing exchange rates. We are most sensitive to changes in the exchange rates between the Swiss franc, euro, Chinese renminbi, and U.S. dollar. We have more Swiss franc expenses than we do Swiss franc sales because we develop and manufacture products in Switzerland that we sell globally, and have a number of corporate functions located in Switzerland. When the Swiss franc strengthens against our other trading currencies, particularly the U.S. dollar and euro, our earnings decrease. We also have significantly more sales in the euro than we do expenses. When the euro weakens against the U.S. dollar and Swiss franc, our earnings also decrease. We estimate a 1% strengthening of the Swiss franc against the euro would reduce our earnings before tax by approximately $2.0 million to $2.3 million annually.

We also conduct business in many geographies throughout the world, including Asia Pacific, the United Kingdom, Eastern Europe, Latin America, and Canada. Fluctuations in these currency exchange rates against the U.S. dollar can also affect our operating results. The most significant of these currency exposures is the Chinese renminbi. The impact on our earnings before tax of the Chinese renminbi weakening 1% against the U.S. dollar is a reduction of approximately $3.0 million to $3.3 million annually.

In addition to the effects of exchange rate movements on operating profits, our debt levels can fluctuate due to changes in exchange rates, particularly between the U.S. dollar, the Swiss franc, and euro. Based on our outstanding debt at March 31, 2024, we estimate that a 5% weakening of the U.S. dollar against the currencies in which our debt is denominated would result in an increase of approximately $36.1 million in the reported U.S. dollar value of our debt.

Forward-Looking Statements Disclaimer

You should not rely on forward-looking statements to predict our actual results. Our actual results or performance may be materially different than reflected in forward-looking statements because of various risks and uncertainties, including statements about expected revenue growth, inflation, ongoing developments related to Ukraine, and the Israel-Hamas war. You can identify forward-looking statements by terminology such as “may,” “will,” “could,” “would,” “should,” “expect,” “plan,” “anticipate,” “intend,” “believe,” “estimate,” “predict,” “potential,” or “continue.”

We make forward-looking statements about future events or our future financial performance, including earnings and sales growth, earnings per share, strategic plans and contingency plans,

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growth opportunities or economic downturns, our ability to respond to changes in market conditions, planned research and development efforts and product introductions, adequacy of facilities, access to and the costs of raw materials, shipping and supplier costs, gross margins, customer demand, our competitive position, pricing, capital expenditures, cash flow, tax-related matters, the impact of foreign currencies, compliance with laws, effects of acquisitions, and the impact of inflation, ongoing developments related to Ukraine, and the Israel-Hamas war on our business.

Our forward-looking statements may not be accurate or complete, and we do not intend to update or revise them in light of actual results. New risks also periodically arise. Please consider the risks and factors that could cause our results to differ materially from what is described in our forward-looking statements, including inflation, the ongoing developments related to Ukraine, and the Israel-Hamas war. See in particular “Factors Affecting Our Future Operating Results” and “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in our Annual Report on Form 10-K for the year ended December 31, 2023 and other reports filed with the SEC from time to time.

Item 3.Quantitative and Qualitative Disclosures About Market Risk

As of March 31, 2024, there was no material change in the information provided under Item 7A in the Company’s Annual Report on Form 10-K for the year ended December 31, 2023.

Item 4.Controls and Procedures

Under the supervision and with the participation of our management, including the Chief Executive Officer and Chief Financial Officer we have evaluated the effectiveness of our disclosure controls and procedures as required by Exchange Act Rule 13a-15(b) as of the end of the period covered by this report. Based upon that evaluation, the Chief Executive Officer and Chief Financial Officer have concluded that these disclosure controls and procedures are effective. There were no changes in our internal control over financial reporting during the quarter ended March 31, 2024 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

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PART II. OTHER INFORMATION

Item 1.Legal Proceedings. None

Item 1A.Risk Factors.

For the three months ended March 31, 2024 there were no material changes from risk factors disclosed in Part I, Item 1A of the Company’s Annual Report on Form 10-K for the year ended December 31, 2023.

Item 2.Unregistered Sales of Equity Securities and Use of Proceeds.

Issuer Purchases of Equity Securities


	(a)	(b)		(c)	(d)
	Total Number of Shares Purchased	Average Price Paid per Share		Total Number of Shares Purchased as Part of Publicly Announced Program	Approximate Dollar Value (in thousands) of Shares that may yet be Purchased under the Program


January 1 to January 31, 2024	59,834	$	1,183.61	59,834	$	2,487,610
February 1 to February 29, 2024	62,191	$	1,198.70	62,191	$	2,413,061
March 1 to March 31, 2024	51,675	$	1,299.03	51,675	$	2,345,932
Total	173,700	$	1,223.35	173,700	$	2,345,932

The Company has $2.3 billion of remaining availability for its share repurchase program as of March 31, 2024. We have purchased 31.9 million shares at an average price per share of $287.08 since the inception of the program through March 31, 2024.

During the three months ended March 31, 2024 and 2023, we spent $212.5 million and $250.0 million on the repurchase of 173,700 and 166,628 shares at an average price per share of $1,223.35 and $1,511.78, respectively. We reissued 4,898 shares and 47,849 shares held in treasury for the exercise of stock options and restricted stock units for the three months ended March 31, 2024 and 2023, respectively. In addition, the Company incurred $2.1 million and $1.9 million of excise tax during the three months ended March 31, 2024 and 2023, respectively, related to the Inflation Reduction Act which is reflected as a reduction in shareholders' equity in the Company's consolidated financial statements.

Item 3. Defaults Upon Senior Securities. None

Item 5.Other information. None

Item 6.Exhibits. See Exhibit Index.

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EXHIBIT INDEX


Exhibit No.		Description

	31.1*	Certification of the Chief Executive Officer Pursuant to Section 302 of the Sarbanes — Oxley Act of 2002

	31.2*	Certification of the Chief Financial Officer Pursuant to Section 302 of the Sarbanes — Oxley Act of 2002

	32*	Certification Pursuant to Section 906 of the Sarbanes — Oxley Act of 2002

	101.INS*	XBRL Instance Document - the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document

	101.SCH*	XBRL Taxonomy Extension Schema Document

	101.CAL*	XBRL Taxonomy Extension Calculation Linkbase Document

	101.LAB*	XBRL Taxonomy Extension Label Linkbase Document

	101.PRE*	XBRL Taxonomy Extension Presentation Linkbase Document

	101.DEF*	XBRL Taxonomy Extension Definition Linkbase Document

_______________________

* Filed herewith

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SIGNATURE

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

Mettler-Toledo International Inc.

Date:

May 10, 2024

By:

/s/Shawn P. Vadala

Shawn P. Vadala

Chief Financial Officer

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Mettler Toledo - 10-Q quarterly report FY2024 Q1

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