Mettler-Toledo International (NYSE:MTD) executives said the company closed 2025 with “broad-based growth” in the fourth quarter, despite a challenging environment that included trade disputes, soft end markets, and tariff impacts. Management highlighted execution on its Spinnaker sales and marketing program, continued product innovation, and opportunities tied to automation, digitalization, and longer-term onshoring investments.
Fourth-quarter results show broad-based growth and tariff pressure
Chief Financial Officer Shawn Vadala said fourth-quarter sales were $1.1 billion, up 5% in local currency, or 4% excluding previously communicated acquisitions. On a reported U.S. dollar basis, sales increased 8%.
By product area in the quarter:
- Laboratory sales increased 3%.
- Industrial sales increased 7%, including a 3% acquisition benefit; excluding acquisitions, industrial grew 2%.
- Product inspection grew 7%.
- Food retail grew 19%.
- Service revenue grew 8%, including a 2% acquisition benefit.
Vadala reported fourth-quarter gross margin of 59.8%, down 140 basis points year over year. He attributed part of the decline to unfavorable foreign exchange (70 basis points) and acquisition mix. Excluding foreign currency, organic gross margin declined 20 basis points and reflected incremental gross tariff costs of 190 basis points.
Adjusted operating profit was $363 million, up 3% year over year, while adjusted operating margin was 32.1%, down 160 basis points. Vadala said unfavorable currency was a 100 basis point headwind to operating margin, and the company estimated the gross impact of tariffs reduced operating profit by 7% and was a 190 basis point headwind to operating margin.
Adjusted EPS was $13.36, up 8% year over year, with incremental tariff costs described as a gross 7% headwind to EPS. On a reported basis, EPS was $13.98 versus $11.96 a year ago; management noted reported EPS included purchased intangible amortization, restructuring costs, acquisition-related items, and a discrete tax benefit related to a tax audit settlement.
Full-year 2025: sales up 3% in local currency; free cash flow conversion near 100%
For full-year 2025, Vadala said local currency sales increased 3%, adjusted operating profit declined 1%, and operating margin contracted 140 basis points, while adjusted EPS increased 4%. Excluding the impact of 2023 shipping delays that benefited 2024, the company estimated 2025 local currency sales growth of 4%, an 80 basis point operating margin decline, and adjusted EPS growth of 8%.
Management quantified tariff impacts for the year, saying gross incremental tariff costs were a headwind to operating profit by $50 million, operating margin by 130 basis points, and EPS growth by 5%. Unfavorable foreign currency reduced operating margin by 50 basis points in 2025.
Adjusted free cash flow totaled $878 million, representing a conversion ratio of 99% of adjusted net income. Vadala cited DSO of 35 days and inventory turns of 4.2 times.
2026 guidance assumes tariffs remain and customers start cautiously
Looking to 2026, management emphasized its outlook assumes U.S. import tariffs and retaliatory tariffs remain in effect at current levels. Executives also said they expect customers to be cautious early in the year amid geopolitical and macro uncertainty, with gradual improvement as the year progresses, but without assuming a “significant improvement” in market conditions versus 2025.
For full-year 2026, the company guided to:
- Local currency sales growth of approximately 4%, or about 3.5% excluding previously announced acquisitions.
- Operating margin up 60–70 basis points excluding currency; on a reported basis, described as “flattish to up slightly.”
- Adjusted EPS of $46.05 to $46.70, implying 8% to 9% growth.
For the first quarter of 2026, guidance called for approximately 3% local currency sales growth and adjusted EPS of $8.60 to $8.75, representing 5% to 7% growth. Operating margin is expected to decrease about 100 basis points at the midpoint on a reported basis, but “flat” excluding unfavorable currency.
In Q&A, Vadala provided additional building blocks underpinning the outlook, including expected pricing of about 3.5% in Q1 (benefiting from mid-year pricing actions) and about 2.5% for the full year. He also said acquisitions are expected to add about 1% in the first half (about 0.5 point for the full year), with organic volume implied at about 1% for the full year but down about 1.5% in Q1, reflecting the company’s cautious assumption early in the year.
Vadala also discussed currency’s optical impact on margins, describing about a 100 basis point headwind to operating margin in Q1 and 50 basis points for full-year 2026, driven by the effect of currency on sales when calculating margins.
Other 2026 items included expected free cash flow of about $900 million and share repurchases of $825 million to $875 million. Interest expense is forecast at $70 million, and the company expects a 19% tax rate before discrete items.
Business commentary: lab cautious early; product inspection driven by innovation; China steady
Chief Executive Officer Patrick Kaltenbach said lab posted “modest growth” in the quarter, with “robust bioprocessing growth,” especially in single-use consumables, offset by softer demand from biotech, academia, and the chemical sector. While life sciences headlines have been more favorable recently, Kaltenbach said the company expects customers to remain cautious early in the year.
He pointed to new product introductions, including an electronic pipette called Vero, which he said is lightweight with compact design, offers long battery life, and allows scientists to adjust flow rates for delicate applications.
In industrial, management cited subdued demand in most geographies, though Kaltenbach said the company had “strong growth in China against easy comparisons.” He highlighted initiatives supporting automation, including new high-speed data communication features across smart automation weighing indicators and partnerships with MES providers to integrate weighing devices into factory automation systems.
Product inspection was described as particularly strong, with Kaltenbach saying the business has benefited from portfolio strength and that organic growth in 2025 was “well ahead of market growth.” He emphasized innovation and the company’s strategy to “dominate the high end” while also targeting the mid-range market. New products mentioned included the X3 series of X-ray solutions for end-of-line inspections of loose products, offering single and dual energy capabilities.
On China, executives characterized conditions as “more steady” recently but cautioned the market can change quickly. Kaltenbach said demand was led by industrial products for biopharma customers, while lab products were “flattish.” Management also discussed engagement around China Pharmacopoeia regulations, which include stricter minimum weighing standards and other quality requirements, describing it as supporting ongoing growth rather than a step-change catalyst.
Onshoring seen as longer-term catalyst; services and emerging markets remain priorities
Management reiterated that onshoring and reshoring are viewed as longer-cycle opportunities. Kaltenbach said manufacturing facilities “still have to be built,” and he framed the impact as more of a 2027 and beyond opportunity, not a major contributor in 2026. He added the theme spans pharma as well as other areas such as batteries, and that industrial and automation partners may see opportunities earlier in the cycle than lab and QA/QC.
Service was highlighted as a strategic focus. Vadala said the service team “achieved $1 billion in sales for the first time,” and estimated the serviceable addressable base at about $3 billion, implying roughly one-third penetration. The company expects service growth in the mid- to high-single-digit range overall for 2026, with Q1 closer to mid-single-digit due to acquisition timing.
Kaltenbach also emphasized emerging markets outside China, noting they represented 18% of 2025 sales and grew above the company average. In Q&A, management clarified that its “above-average” emerging market growth expectation refers to ex-China markets, and Vadala said the company would be comfortable with China growing at mid-single-digit rates over the medium term.
About Mettler-Toledo International (NYSE:MTD)
Mettler-Toledo International Inc is a global manufacturer and distributor of precision instruments and services for laboratory, industrial and food retail applications. The company’s product portfolio includes laboratory balances and analytical instruments, industrial weighing systems, process analytics and sensors, metal detection and x-ray inspection equipment, checkweighers, and a range of automated inspection and data-management solutions. Mettler-Toledo also provides software, calibration and lifecycle services intended to support compliance, quality control and operational efficiency across customer facilities.
The company serves a broad set of end markets including pharmaceutical and biotech laboratories, chemical and food processors, logistics and manufacturing operations, and retail environments where accurate weighing and inspection are critical.
