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Mettler-Toledo International's CEO Discusses Q1 2012 Results - Earnings Call Transcript

I will have some additional comments on our growth initiatives, but let me turn it to Bill to provide more details on the first quarter results as well as guidance.

William P. Donnelly

Thanks, Olivier, and hello, everybody. Let me start with additional details on sales which were $535.4 million in the quarter, an increase of 8% in local currency. On a U.S. dollar basis, sales increased by 7%, which included a negative impact of 1% due to currency.

Turning to Page 3 of the presentation, we outlined sales by geography. In the quarter, local currency sales growth increased by 2% in Europe, by 7% in the Americas, and by 17% in Asia/Rest of World. Acquisitions contributed approximately 2% to total growth with 3% benefit to Europe and a 2% benefit to the United -- to the Americas.

On Slide #4 of the presentation, we outlined our sales by product area. In local currency, laboratory sales increased by 8% and industrial sales increased by 10%, while food retailing was down 1%. Acquisitions contributed approximately 5% to industrial growth in the quarter.

Turning to Slide #5 of the presentation, we show the P&L. Let me walk you through some key items. Gross margins were 51.8%, a 60 basis point decline versus last year. We benefited from pricing and reduced material costs in the quarter. However, these benefits were more than offset by mix, especially a significant component of lower margin industrial projects in China, as well as the fact that our mix of sales towards Europe was less than usual and we enjoy high margins on our European sales. Currency was also a drag on margins.

R&D amounted to $28.7 million, an increase of 8% in local currency. SG&A amounted to 176 -- $167.6 million, an increase of 4% in local currency. The increase was attributable to higher sales and marketing investments, particularly in emerging markets, which was offset partially by lower variable compensation.

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