Good morning, and welcome to the Mettler-Toledo First Quarter 2023 Earnings Conference Call. Today's conference is being recorded. All lines have been placed on mute to prevent any background noise. After the speaker's remarks, there will be a question and answer session. If you would like to ask a question during this time, simply press the star key followed by the one on your telephone keypad. At this time, I would like to turn the conference over to Adam Uhlman, Head of Investor Relations. Please go ahead. Hey. Thank you, Angela. Good morning, everyone. Thank you for joining us. On the call with me today is Patrick Kaltenbach, our Chief Executive Officer, and Shawn Vadala, our Chief Financial Officer. Let me cover some administrative matters. Th is call is being webcast and is available for replay on our website at mt.com. A copy of the press release and the presentation that we will refer to today is available on our website. This call will also include forward-looking statements within the meaning of the U.S. Securities Act of 1933 and the U.S. Securities Exchange Act of 1934. These statements involve risks, uncertainties, and other factors that may cause our actual results, financial condition, performance, and achievements to be materially different from those expr essed or implied by any forward-looking statements. For a discussion of these risks and uncertainties, please see our recent annual report on form 10-K and quarterly and current reports filed with the SEC. The company disclaims any obligation or undertaking to provide any updates or revisions in a forward-looking statement, except as required by law. On today's call, we will use non-GAAP financial measures. A reconciliation of these non-GAAP financial measures to the most directly comparable GAAP measure is provided in the 8-K and is also available on our website. Let me now turn the call over to Patrick. Thanks, Adam. Good morning, everyone. We appreciate you joining our call today. Last night, we reported our first quarter earnings results, and I'm happy to share that we have started the year off strong with very good sales and profit growth. The details of our financials are outlined for you on page three of our presentation. Our sales growth was again broad-based this quarter as our team effectively leveraged Spinnaker to identify attractive growth opportunities across a wide variety of markets. I'm also pleased with the strong execution from our team on our margin initiatives and cost control, which resulted in solid earnings growth on top of excellent results in the prior year, despite a very significant currency headwind. Our outlook for the year is largely unchanged from what we have provided earlier this year, although it has increased uncertainty in the economy and our end markets. I'm convinced that our team will continue to capitalize on growth opportunities and manage our cost effectively to help us deliver solid results for the year. Let me now turn the call over to Shawn to cover the financial results and our guidance, and then I will come back with some additional commentary on the business and our outlook. Shawn. Thanks, Patrick. Good morning, everyone. Sales in the quarter were $928.7 million, which represented a local currency increase of 7%. On a U.S. dollar basis, sales increased 3% as currency reduced sales growth by 4%. We estimate that the impact of not shipping to Russia was a headwind of almost 1% to sales growth. On slide slide, we show sales growth by region. We had broad-based sales growth in Q1 as local currency sales increased 6% in both the Americas and in Europe, and 10% in Asia, rest of the world. Excluding Russia, our sales growth in Europe grew 9%. Local currency sales increased 9% in China in the quarter. On slide five, we summarize local currency sales growth by product area. For the quarter, Lab sales increased 5%, Industrial increased 7%, with Core industrial and Product inspection both up 7%. Food retail grew 36% in the quarter as we benefited from significant project activity in prior-year comparisons. Let me now move to the rest of the P&L, which is summarized on slide number six. Gross margin was 58.9%, an increase of 100 basis points as pricing was partially offset by higher cost, business mix, and currency. R&D amounted to $45.5 million in the quarter, which is a 9% increase in local currency over the prior year, reflecting increased project activity. SG&A amounted to $234.6 million, a 2% increase in local currency over the prior year. Adjusted operating profit amounted to $266.5 million in the quarter, a 10% increase. Currency reduced operating profit growth by approximately 7%. Adjusted operating margin was 28.7%, which represents an increase of 180 basis points over the prior year. A couple final comments on the P&L. Amortization amounted to $17.8 million in the quarter. Interest expense was $18.2 million, and other income amounted to $0.4 million. Our effective tax rate was 18.5% in the quarter. This rate is before discrete items and adjusting for the timing of stock option exercises in the quarter, and we expect to maintain this rate for the full year. Fully diluted shares amounted to $22.3 million, which is approximately a 3.5% decline from the prior year. Adjusted EPS for the quarter was $8.69, a 10% increase over the prior year or an 18% increase excluding unfavorable currency. On a reported basis in the quarter, EPS was $8.47 as compared to $7.55 in the prior year. Reported EPS in the quarter includes $0.23 of purchased intangible amortization and $0.16 of restructuring costs. We also had a $0.17 headwind due to the difference between our quarterly and Annual Tax rate due to the timing of stock option exercises that normalizes in the fourth quarter of every year. That covers the P&L, let me now comment on cash flow. In the quarter, Adjusted free cash flow amounted to $135.3 million, up $60 million, helped by better inventory and accounts receivable trends as well as lower incentive payments. DSO was 38 days, while ITO was 3.6 x. Let me now turn to guidance. To start off, forecasting remains challenging, and market conditions remain dynamic. As previously mentioned, there is uncertainty in the economy and our end markets. We're basing our guidance for the second quarter and the full year, assuming market conditions remain as they are today. For the second quarter, we expect approximately 3% local currency sales growth. This level of growth reflects the challenging multiyear sales growth comparisons we face in the second quarter, as well as a growth headwind of approximately 2% from reduced sales in our pipette business. We expect second quarter adjusted EPS to be in the range of $9.90 to $10, representing a growth rate of 5%-7% or 10%-11%, excluding unfavorable foreign currency. For the full year 2023, we have left our local currency sales growth guidance of approximately 5% unchanged. We expect full-year adjusted EPS to be in the range of $43.65 to $43.95, representing a growth rate of about 10%-11% or approximately 12%-13%, excluding unfavorable foreign currency. This compares to our previous guidance of adjusted EPS in the range of $43.55 to $43.95. Total amortization, including purchased intangible amortization, is forecast to be $72 million. Purchased intangible amortization is excluded from Adjusted EPS and is estimated at $26 million on a pre-tax basis or $0.92 per share. Let's turn to cash flow. For 2023, we continue to expect free cash flow in the range of $900 million, and we still expect to repurchase approximately $1 billion of our shares this year. That's it for my side, and I'll now turn it back to Patrick. Thanks, Shawn. Let me start with some comments on our operating businesses, starting with lab, which had good growth in the quarter considering challenging prior year comparisons. We also had a larger-than-expected sales decline in our pipette business as customers continue to work down their inventories. We believe this headwind will continue in the second quarter and ease in the second half of the year. Outside of pipettes, we had strong growth across most of our portfolio, particularly as our team pursues growth opportunities in hot segments like lithium-ion batteries and sustainable polymers, among others. Turning now to our industrial business. We had very strong growth across our core industrial products this quarter as we continue to benefit from strong demand for our solutions that automate custom processes and enhance productivity. Product inspection also had a strong quarter as it capitalized on stronger demand from food manufacturers in the Americas, while we experienced only modest growth in Europe. While we are pleased with the good start to the year, our core industrial business is also not immune from the economy. We expect softer results in product inspection as these customers face increased headwinds, and we expect lower growth for the remainder of the year. Finally, food retail delivered very strong growth this quarter due to robust project activity in the Americas and Europe. Comparisons were also favorable as sales declined 14% in the first quarter of last year. Our food retail sales can be lumpy depending on our customers' project activity, and we would expect lower growth rates for the remainder of the year. One final comment on the business. Service sales continue to show excellent momentum and grew 15% in the quarter. We continue to be very pleased with the growth in this important and profitable part of our business. Now let me make some additional comments by geography. Sales in Europe increased 6% in the quarter, or 9%, excluding the impact of stopping shipments to Russia. Sales growth this quarter benefited from very strong growth from our food retail business, as well as strong growth in our core industrial businesses, offset in part by a significant decline in pipettes. Sales in the Americas were solid with strong growth across most of our businesses, especially food retail, offset in part by a significant decline in pipettes. Finally, Asia and the rest of the world had another quarter of good growth, led by the lab business. China grew 9% against very strong prior year growth rates, with particular strong growth in lab. Speaking of China, at the end of March, I traveled to visit our operations in China, and I couldn't be more excited about the strength of the team we have in place and the substantial opportunity ahead of us. I'd like to share with you some additional insights on our business in China and why we are quite optimistic about our long-term growth opportunity there. First, as an overview, we have a very long track record of operations in China, having wholly owned subsidiaries there for more than 35 years. China represents 21% of our total global sales, and we design, manufacture, and distribute products in China for the local market. We have three manufacturing locations in China, representing approximately 1/3 of our global production, again, over half of which is sold into the local market. China and the other emerging markets have historically been an important source of growth for our company, and we believe this will be a source of future growth. Our business in China overall has grown at a 13% CAGR over the last 20 years, including 14% growth in 2022, as the mix of our business has shifted to faster-growing and more resilient industries. Customers in China increasingly seek out our most advanced solutions, where we have a very strong competitive advantage and leverage our unique go-to-market approaches. Our portfolio is extremely well-positioned to serve the demand for automated solutions, automation solutions, drive for productivity, and to help ensure compliance. We also benefit from the government's focus on developing a broader life sciences industry and other strategic market segments. Our colleagues in China are very agile to respond to local market needs with local application development in support of China's specific demand. We leverage this unique approach with our Spinnaker sales and marketing programs to capture growth in hot segments like lithium-ion batteries. I visited a very large battery customer and saw firsthand how massive these investments in e-mobility and stationary power solutions are, but also how our solutions are excellently positioned to provide substantial value to this rapidly growing industry. Overall, our business in China remained strong during the first quarter, and our outlook for Q2 is also positive despite challenging multi-year comparisons. We see continued investments in key segments like Lithium-ion batteries, Pharma, Biopharma, but also healthy investments in industry as our customers look to reduce direct labor and improve productivity with Automation Investments. I would note that market sentiment is also optimistic in anticipation of potential further government investments to support growth segments like e-mobility, expanding R&D capabilities with new labs, and long-term investments in Pharma, Biopharma to support better healthcare. Details of these are still limited, but I would note that the government has announced structural changes in its organization responsible for accelerating the pace of scientific development, highlighting the emphasis being placed on this important topic. As we think about these trends and how they impact our business in China, we remain optimistic about our long-term growth opportunity in the region and would expect our business in China to grow at a faster pace than the overall business. As we always like to remind everyone, while we are optimistic for the long term and for 2023, China has historically been a more volatile market and things can change quickly in the shorter term. In China, like the rest of the world, we believe our unique growth strategies, tremendous diversity, and culture of operational excellence and agility position us very well to gain market share and deliver solid financial results in 2023. That concludes our prepared remarks. Now we would like to open the call to questions. At this time, I would like to remind everyone, if you would like to ask a question, please press star one on your telephone keypad. Your first question comes from the line of Josh Waldman with Cleveland. Morning, guys. Thanks for all the detail and thanks for taking my questions. One for Shawn and then one for Patrick. Shawn, I wanted to start on the near term organic growth guide and the implications for the quarterly cadence for the full year. Curious how the 3% local currency guide for Q2 compares to what you had previously penciled in for your full year assumptions. Are there factors beyond destocking that have come into play since your last guide that are leaving you more cautious on the second quarter? Yeah, sure. Thanks, Josh. Hey, I think as we mentioned in the prepared remarks, you know, destocking is a factor in Q2. If you look at our 3%, you know, the decline that we expect in pipettes, specifically in the second quarter, reduces our growth by about 2%. Excluding that, headwind, our growth would be 5%. I think another important thing to comment on for the second quarter is that, I think it's important to look at the multi-year comparison. If we, if we look back the last couple years, our three-year CAGR with the 3% is about 13% growth. That's a CAGR 13%, and that's actually very similar to what we did in Q1 of this year with the 7% growth. Again, to put that in perspective, that we grew on top of 10% last year, but that 10% growth was on top of 27% in the prior year. That is very much is weighing on us as we, as we think about the business. Then maybe to just kinda like walk through our typical guidance by business area and region, I can kinda go through that kinda quickly. When we look at the lab business, we're looking at a low single-digit growth in the second quarter. Keep in mind, of course, lab is dealing with this headwind in the pipette business. That headwind for Q2 is probably estimated in the 4% kind of a range for the lab business, so it would be high single-digit excluding that. Then for the full year, we're now looking at mid-single-digit for the lab business, and that's down a little bit from what we were thinking before because this headwind was a little bit more than expected. When you look at the first quarter results of 7%, that includes about a 2.5% headwind from the decline in the pipette business. Product Inspection, we're looking at low single digit in the second quarter, and then low to mid-single digit for the full year. One of the things we're seeing in PI is we actually had a very good start to the year in PI, in the Americas, but we are seeing maybe some more challenges and caution in investment activity in packaged foods. As you can appreciate, there's a lot of headlines in that regard for that industry. For core industrial, low single digit for the second quarter, and then mid-single digit for the full year. That's on a full year basis, a little bit better than what we were expecting. We're just continue to be very impressed with the resilience of that business, and how well we've been executing there. Food retailing, we're looking at mid-single digit for Q2, and then high single digit for the full year. Obviously got off to a better than expected start with very strong project activity. For the regions, we're looking at low single digit for the Americas in Q2, and then low to mid-single digit for the full year. That business is a little bit more disproportionately hit with this headwind in the decline in pipettes. Europe, we're looking at low single digit for Q2, and then low to mid-single digit for the full year. A little bit better than what we were looking for the full year last time we spoke, given the very strong start to the year in Q1. Then for China, we're looking at mid-single digit for Q2 and high single digit for the full year, which is consistent with what we were looking at the last time we spoke. Got it. Appreciate all that, Shawn. Patrick, appreciate the comments on China. Wondered if you could provide a bit more context on the cadence through the quarter, maybe what you're seeing by end market, and I guess whether or not you guys are seeing the stimulus benefits show up in the order book yet. Good. Happy to do so. Good morning, Josh. Look at the cadence in China. As you have seen, we started off strong in Q1 with 9% growth in China. Very solid results. That, of course, was a quarter where, as you know, we had, you know, the COVID wave at the beginning of the quarter. Yet our organization really executed extremely well and delivered strong results. As Shawn mentioned, the plan or schedule right now for Q2, mid-single digit growth for China. That is, of course, also based on the fact that we have very strong compares for Q2. For the full year, we have China still at high single digit growth. That's kind of the outline in terms of growth. What we're seeing there, again, we have seen very strong growth for the lab business. That's specifically for analytical instruments. The analytical business is performing really well for us, and also benefits from the hot segments. Shawn made a comment on the industrial business. The growth has moderated against really difficult comparisons. Again, a reminder, we grew over 60% in industry in Q1 2021 and over 20% in Q1 2022. Those compares, of course, will also count for Q2 moving forward. When we break it down and say, where does the growth come from, we still see a lot of interest in solid growth opportunities in the hot segments, like the battery manufacturing, for example. It's really impressive how China is putting emphasis behind building out an industry beyond car. I mentioned, also, you know, the power grid and how they start producing large modules that they will place along the power grids next to solar power plants, et cetera, to take up excess energy and give it back at night, et cetera. I think there will be continued investment. That goes along with the overall investment that we see in automation solutions across lab and industry. China is continuous to look for productivity gains. They are facing an aging workforce and the fact that they will not have enough workforce moving forward. They're proactively really looking for automation and productivity solutions where our portfolio plays really well. That's where, again, our overall confidence in the China business comes from. We are extremely well-positioned with the team we have, and we are confident that the long-term trends that the government wants to follow up on and drive growth and invest in a longer five-year China growth plan, whether it's the healthcare, whether it's stronger research and development in China all plays very well into our portfolio. Got it. Thanks for all the detail, guys. Your next question comes from the line of Jack Meehan with Nephron Research. Thank you. Good morning. Good day. I was wondering if you could update us on how much pricing contributed in the quarter and, you know, how has your full year expectation for that changed at all? Yeah, thanks, Jack. Pricing came in, you know, pretty much as we expected in the 6% kind of a range. We expected to get off to a good start this year given all the different actions that we took last year when we were kind of mitigating inflation. As we look to the full year, we're still expecting about 4% growth for the full year. As we look to Q2 specifically, we're looking at 4% growth. The reason why Q2 would be lower than Q1 is because of the timing of some of the actions we put in place last year. Great. either, Shawn or Patrick, can you just elaborate a little bit more on the pipette destocking that you're seeing? just to be clear, like, how much of this do you think is specifically related to COVID? just how much visibility do you have into improvement in the second half of the year? Yeah, I can take it. Look, I mean, the destocking affects not only the testing, COVID testing related markets, to be honest. I mean, when there was this huge demand in the market last year, you should also appreciate that also the pharma, biopharma customers and others really loaded up inventory because there was a shortage in the market. I think the whole industry, and when I say a whole industry, I say everybody who's using pipettes actually is suffering from the fact now that they still have quite some inventory that they're working down. We do expect, as we said, this to be reduced in the second half, so we will get more back to normal volumes the second half, but it will definitely be still a topic for Q2. Thank you. Your next question comes from the line of Dan Arias with Stifel. Morning, guys. Thanks for the questions. Shawn, maybe just following on Jack's question on pricing there. Can you kind of put a 1% volume year that's implied here with the guide in the context of prior years or prior periods where you had some macro and market factors moving around? How often did you see flattish volume growth? As we move through the year here, what about this year makes you think that that's most likely to be true? Well, I think what stands out this year, Dan, is we're just coming off of a unprecedented period of growth. I mean, the, like, the CAGRs that I mentioned before, 13% CAGRs for the last three years is much higher than our, you know, our how we envision ourselves for the longer term in terms of our algorithm. We've always expected to see some level of moderation at some point during this year. It's hard to compare it to maybe a historical precedent, but of course, in 2020, you know, we had a slower start to the year when it came to volumes during COVID. That kind of, like, reversed in the second half of the year. I think we'll see how it plays out. I think, you know, we have the comparisons. We've been kind of in a weak macro environment for quite some time now with PMIs below 50. It's hard to while we've been resilient in executing very well specific, particularly in our core industrial business, which has been historically more susceptible to the economy, we're also not resilient, right? As headlines continue to come out, in our end markets in particular with some of the challenges that our end markets are facing, whether it be, you know, food manufacturing companies or chemical companies or, you know, other industries like biopharma, we, you know, we do have a little bit of that on our mind as well. Yeah. Okay. Maybe just as a follow-up, small and emerging Biotech is obviously getting a ton of attention these days. What would you call your exposure there? Can you kind of just describe your sensitivity to spending by that portion of the customer base? Then anything you would add to the conversation on how that's likely to evolve this year? Thanks a bunch. Yeah. I think our overall exposure to small biotech is relatively small. You know, of course, that affects a little bit of our Rainin pipette business, but it's generally a very small part of that business. I have nothing in particular that I would call out. Operator, next question, please. Your next question comes from Patrick Donnelly with Citi. Hey, guys. Thanks for taking the questions. I just wanted to follow up on, I think it was Jack's question there on the pipette side. Patrick, can you just talk about, I guess, the visibility into the normalization in the back half? Is it a comp dynamic? Is it customer conversations that give you know, some level of confidence on a normalization? You know, just given the-You know, the chatter across the market about this- Mm-hmm -sector. I just wanna make sure we have a good feel as to, you know, what gives you guys the confidence in terms of that second half ramp? Look, I think the truth is it's part of... It's both, right? We, of course, look at historical data, the growth rates being the volumes we have come from, but we also, of course, are in conversations with customers, and we have clear signals that they say, well, Q2 will be for another destocking quarter. And then they should get back more to normal inventory levels, put it that way. The overall volumes that we expect, again, will then get back to, if you would normalize the growth rates over the last three, four years, we would get back to the volume that we would expect for Q3 and Q4. It's a, it's a mix of calculations saying, okay, what was the underlying market growth and what is our anticipated market share gains that we have? You know, we have a very strong pipette and pipette tips portfolio, but even unique also with Rainin business that has very strong market share, especially in the U.S. If you take all these factors into account, then we basically look at a picture and we say, yes, we will see more headwind again in Q2, but then in Q3 and Q4 getting back to normal growth rates again. Okay. Understood. Shawn, maybe one, you know, following up on that pricing piece. On the margin side, you know, can you talk about, you know, the expectations for 2Q? You know, obviously the earnings came in a little light of where the Street was, and then just that similar, that ramp in the second half, just the moving pieces on the margins would be helpful. Yeah, sure. You know, I think one of the things to kinda keep in mind is that if we're looking at our gross margin, you know, we grew about 130 basis points excluding currency. Actually, I think it was 140 basis points excluding currency in the quarter. That wasn't that much different if on a currency neutral basis to what we were guiding. currency clearly had an impact. We also had a little bit of unfavorable mix in the quarter between the different businesses. Of course, Pipette's a more profitable business, and retail is kind of on the other side of that. As we kinda like look towards the rest of the year, we're looking at our guidance for gross margin would be about 60 basis point improvement in the second quarter. If you exclude currency on a currency neutral basis, that would be about 100% improvement. Then for the full year, we're looking at 70 basis point improvement. Again, on a currency neutral basis, that's about 110 basis point improvement, which is just down slightly, like about 10 basis points from the last time that we spoke. Then on operating margins, we're looking at, you know, we got off to a very strong start to the year as we kind of expected. We're looking at about a 90 basis point improvement in the second quarter. Again, on a currency neutral basis, that would be about 180 basis point improvement. Again, another very good number to start the year. Then for the full year, we're still looking at about 130 basis point improvement, which is similar to last time. What's a little bit different is that we, on a currency neutral basis, we're up about 200 basis points. That's gotten a lot better. Understood. Thanks for that color. Thanks. Your next question comes from Vijay Kumar with Evercore ISI. Hey, guys. Thanks for taking my question. Maybe my first one, Patrick, here. I think, you made some comments on the macro environment. It seems like a bit more cautious tone on this call, but I see your industrial outlook did not change. When you say, you know, macro, you know, taking a more cautious tone, can you give us a sense for is this specific regions or perhaps end markets? Because industrial is where I would have expected perhaps some change. But when you look at the guidance, all of the change came from labs. How should we think about the macro commentary? Sure. A good question, Vijay. If you look at the macro economy and the end markets, a couple of things I want to highlight here. First, as you probably watch also, the PMIs continue to really be very soft. That's historically has been indicator for us that the industry business might slow down. We are not yet fully in sync with that, fortunately, because we have a strong portfolio, but it's a concern for us that the PMIs stay pretty low. We have seen also more, I would say, negative headlines, for example, in the packaged food market. We said in Q1 that Europe is already a problem. We're hearing also in the U.S. that some of the customers are actually slowing down their investments, and also their results are not as good as they used to be. Those headlines are also not too promising. The overall comment that Bill already was made about biotech, why they're not broadly exposed in biotech, but there's still, in terms of end market group, commented out there is concerns about biotech, and we of course factor it in our total macroeconomic pictures as well. You look at the regions, I think Sean, you outlined them before. Europe in the first quarter performed better than expected from our perspective. It was really strong. We're still cautious about the impact of the war in Ukraine and what it might mean for the economy moving forward. Also there be, again, we keep our forecast for Europe still quite moderate. The U.S., with potential recession ahead, it is, I think it's also, you need to be a bit cautious about the outlook for the U.S. overall. That's helpful, Patrick. I know, you know, the customer base that you serve, it's pretty large. When you look at your daily run rate items like pipettes and order rates, did you do a survey of your customer base on when this, you know, order rates might pick up? I'm curious on when you thought about 2Q and the back half assumptions, you know, what kind of customer feedback have you gotten, you know, that gives you confidence in the back half guide? I mainly refer here to number one, the compares will of course be easier for us also in the second half in terms of growth rates. We had very strong growth last year in the second quarter. That's why also we see a stronger decline this year. In terms of customers we talk to, a lot of them are, you know, in pharma, biopharma research areas where they use our pipettes quite intensely. From them actually, from some of the customers, we get really good indications that overstocking issues will be less of an issue in the second half. Understood. Thanks, guys. Your next question comes from the line of Tim Daly with Wells Fargo. Great. Thank you. Just quickly, I know a lot of talk on lab here, but can you guys just help us with the underlying regional forecasts that are rolling up to that, you know, growth guidance for the year within lab? Yeah, sure. You know, hey, I think as we kinda like look at Q2, we had low single digit growth for lab as a division. You know, I think we're kinda like looking in that low single digit range for the Americas and Europe. Again, I mean, Americas is gonna be the most impacted region by this decline in pipettes, so we'll probably see the softer growth in that region versus the other ones. Then, China will probably be in the kind of, you know, mid to high single digit kind of a range there. You know, I think a lot of the lab business too, it's also important that we... You know, if you look at like the first quarter as an example, you know, we had actually double digit growth in most of the other product categories and we are still seeing good growth in a lot of these hot segments. It's just these multi-year comps and then this topic that we talked about with the headwind in pipettes as we kind of enter the rest of the year. All right. Great. Just wanted to dig into the service and consumables line. You know, how did, I guess, service grow in the quarter? Can you help us understand how you're thinking about that, you know, contract versus value add services growth for the year, and just kind of general commentary? I don't think we touched on that much in the earnings call today. No, great question. I mean, service is kind of a really good story. We, you know, we featured it on our last call. We, you know, we grew last year 12%, and we got off to a really good start this year with 15% growth. You know, we continue to see great opportunity here when you kind of look at the overall installed base that we serve and when you kind of put dollars to that in terms of what it could mean to our service business, it's a, it's a very significant opportunity. We have a very strong value proposition here with helping companies with uptime and compliance and accuracy of their results and reducing waste and those value propositions rally are resonating very well in the marketplace. We can also do a lot of very value-added activities like validating and certifying processes. As we kind of go after these opportunities with our big data analytics program and how we penetrate that iBase or whether we have gotten better at selling service at the point of sale by embedding these into our quotation process, we've seen very good traction in terms of the ability to capture this opportunity. Maybe one other final comment on services, like our Net Promoter Scores have or continue to be at like all-time highs, and they were already high before. It just shows you how well our team executes around the world. As we kind of look towards the rest of the year, we continue to be positive here. Wouldn't be surprised if we're in the 10% range again for Q2. Then for the full year, we'll see how it plays out. Great. Thank you for the time. Appreciate it. Yep. Thank you. Your next question comes from the line of Derik De Bruin with Bank of America. Hi. Good morning. Hey, Derik. Hey. Apologies if I missed this, can you remind us what your FX assumptions are for the revenue impact in Q2 and for the full year now? Has that been updated? Yeah, just a second. FX on Q2 is just under 1%. Then for the full year, that would be a detriment. Then for the full year, it's about neutral, maybe up modestly. Yeah. I think that. Great. To, Derik, just to make sure you got this one, the bigger one from my perspective is the FX impact on EPS. Yeah. That's a 4% headwind we mentioned, I think, in the press release for Q2, and it's about a 2% headwind to EPS for the full year. In our previous guidance, it was like, you know, that's like a 1.5% worse than prior guidance. Great. Yep. Got that. Can you remind us the split in PI versus core industrial. Also just sort of like the margin differentials between lab and industrial. Just trying to, once again, sort of like think back about the margin activity, the margin progression for the year. Yeah. In terms of the split, our core industrial business is about 60% of our industrial exposure, and PI is about 40%. It might be a little bit more than 60 and a little bit less than 40. I don't know the exact math, but it's probably in that kind of a range. Then as we kinda think about the margin differentials, our lab business does have higher margins than the rest of the business. You know, then within that, of course, you know, Pipettes is a higher margin business. Right. Great. Have you seen, I guess, any cancellations? I mean, I know your business is more short cycle and orders are sort of, you know, build a backlog. Have you seen any sort of like cancellations, particularly in any of your instruments, you know, people not buying pH meters, just hesitation at all in buying? Does the, you know... Are things still looking relatively healthy? Not seeing any cancellations. you know, Q1 was actually quite good. Of, you know, of course, hard to talk about if they're, you know, hesitant or not. I think we'll see how those types of things play out. In terms of cancellations, not seeing anything like that. Okay. Nothing that we're seeing. Yeah. Yep. There's one final one. What was the actual growth percentage in Pipettes and Process Analytics in the first quarter? For Pipettes, our business was down high teens, and Pipettes is just over 10% of our business. What was the other part? Pro- You said Process Analytics. Process Analytics- Process Analytics. Yeah. Process Analytics actually had a very good quarter. I think they were up double digit in Q1. You know, if you're trying to, like, look for you know, insights on bioprocessing there because a lot of that business is bioprocessing. Yep A lot of the business is holding up actually quite well. Of course, there are some vaccine production comps that we, you know, that we have to deal with in that business. The one area where we have seen weakness is in single-use sensors and, you know, and that, of course, is a much smaller part of our business and portfolio. Yes. That is exactly where I was going with that Process Analytics question. Yeah. Thanks, Derik. Yeah, sure. Absolutely. Thank you very much. See you next week. All right. See you, Derik. Take care. Your next question comes from the line of Catherine Schulte with Baird. Hey, guys. Thanks for the questions. Can I ask first, you talked about services growing 15% in the quarter. How did consumables perform both overall and then excluding pipette tips? Yep. Good question. Our... Let me just make sure I get the right number here. Our consumable business was down about 12% and that was almost entirely due to the decline that we saw in pipettes. I think we had growth in all of our other consumable categories. Okay. sounds like core industrial is trending better than you expected coming into the year. Can you just talk to what kind of trends you're seeing there and any order book commentary that gives you confidence to raise that full year despite some of the macro weakness that we're seeing? Yeah, I'll take that, Catherine. Good morning. Look, again, in industry, it comes down to our portfolio and solutions to help customers automate processes. We see still very healthy investment and interest in our product portfolio, and I think we compete extremely well, especially also with the new products that we released last year with the Industry 360. I think we talked about it at the Investor Day. Very successful product, but also the overall OEM business for us is doing really well. We see strong demand. I think, again, around the world, there's still a lot of interest in building out automated solutions, and we play a significant part as a supplier in this, in this segment. That gives us quite some confidence moving forward that industry will, besides a very negative PMI trend, will not be as affected as badly as the PMI looks. Again, we are pointing to low single-digit growth in Q2 because it's also tough compares. Don't forget, we are really looking at super tough compares on a 3-year basis here. For industry, we had massive growth in China over the last three years in industry. We had very good investments in Europe and the US. Of course, these compares to put additional positive growth on it means quite something. Okay, great. Thank you. Your next question comes from Matt Sykes with Goldman Sachs. Great. Good morning. Thanks for taking my questions. Patrick, maybe the first one for you. Just as we're going through this pretty significant normalization, particularly in the lab business, and then looking at your comments on services and the growth that you've shown last year and then obviously this quarter, could you maybe help us understand a little bit more the historical, three-year CAGR or longer on services, just so we can understand essentially the algorithm post this normalization and the contribution that services could actually make to the overall group growth algorithm? Meaning if it's services are sort of 20-ish%, and please correct me if I'm wrong on that, but growing at a higher rate without the comp difficulty that the rest of the business has, could that actually change the longer term growth algorithm for Mettler if services were to continue to grow at the rate it's growing at? Yeah. Actually, I forward you to Shawn here on this question because he has the growth numbers right in front of him. Yeah. Thanks, Matt. I mean, of course, we're very pleased with the growth we've been seeing in service. As I mentioned before, we see that as a really good opportunity. You know, if we kinda look at how we started the year, it's like a 10% three-year CAGR. You know, but, you know, we were kind of exited last year with maybe a 7% CAGR in Q4, so I don't have the full year number in front of me. I certainly wouldn't wanna characterize this as a double-digit business going forward, although, you know, we're pleased with it and we're gonna, you know, challenge the organization to do well this year. I think kind of going forward, it... I would just characterize it as above corporate average, you know, which would imply high single digit, and it certainly will have, you know, should have benefits and upside to our overall algorithm over time. Nothing that I would highlight differently than how we've thought about it historically other than we're just executing very well at the moment. Got it. Thanks for that. Then, just on automation, that space, you guys typically compete against, you know, within fragmented markets. Is automation any different from that? I'm just thinking of sort of the larger European players or Japanese players in automation as you sell into China and other regions. Is that a different type of competitive landscape that you guys are facing in automation or is it similar, or are you gonna find other ways to compete? I think it's different. Maybe I'll start and let Patrick jump in. Like, you know, a lot of our automation, we're selling to system integrators. So there's a whole business model that has to do with not only quality and all that kind of stuff, but how easy are you to integrate into their solutions. So that's an area where we have a lot of competitive advantage as well. Agreed. I mean, it's about how easy our sensors and our terminals plug in and how both into the system but also in the overall software environment that the end user has. I think we have a very strong portfolio there and very up-to-date portfolio that resonates very well with the system integrators. Mm-hmm. Thank you. Mm-hmm. Your next question comes from Liza Garcia with UBS. Hey, guys. Good morning. Thanks so much for taking the question. I guess just talking about customer types, even if you just more broadly on the pharma, I think there's, like, a lot of questions on pharma more broadly. I know you spoke a little bit earlier on the sensors. Could you just talk about kind of what you're seeing in the pharma environment more broadly and the growth trends there, even if qualitatively? Yeah. I can start with that. Yes. Look, I mean, when you look at pharma and biopharma, the first thing you should appreciate is our diverse exposure given the broad portfolio we have. We serve customers in R&D with the broad-based analytical portfolio, also with pipettes. When you go downstream with solutions to scale up manufacturing, the other AutoChem business is pretty strong in pharma as well. The whole pro business and bioprocessing that we have, plus the industry portfolio when it comes to downstream in industry. I think we have a really broad-based exposure. What we are seeing, I think, is continued investment, long-term investment anyway, into pharma, biopharma. Yes, there was a slowdown in of course, mRNA manufacturing as... We saw some of that exposure in biopharma, and I think Shawn referred to this as well with, for example, with PendoTECH, where we saw for single-use sensors with these plastic bags that are used in biopharma process. We saw a slowdown there. We see still really healthy demand on the R&D side, healthy investment. Also on the QA/QC side, there's a huge installed base of instruments out there that we also serve, and there's a continuous replacement business that we also address with our portfolio that addresses pharma on a broader scale. Regionally, I would say, we see no big slowdown at the moment for pharma, biopharma in the U.S., in sales in Q1. In China, it looks similar. We had actually quite good sales in Q1 into the segment. What it means moving forward, whether there will be a change in biopharma, which could be one of the segments in China that you could look at, say is under more pressure. Again, given the broad portfolio we have, I think we are very well positioned to capture the growth opportunities. Mm-hmm. just to clarify, his comment on U.S. was excluding the. Excluding pipettes, of course. that we talked about. Okay, helpful. Then just, you know, you talked about lithium ion and sustainable polymers in that business, and I know it may be a bit of a smaller. Can you talk about kind of how you think about the a bit of a longer-term question, like how you think about the runway there and how we should think about the growth outlook there? Yeah, absolutely. Look, I mean, there's a lot of investment in that area and a lot of research going on in the area of sustainable polymers and new materials, that we serve with a broader portfolio. Again, a lot of it is on the lab business. If you look at our material characterization portfolio, we are very closely working with our customers to understand the demand and the workflows that they use there and what solutions they are looking for. Given where we are in terms of the overall market trend, I think it's still in the early innings. There's a lot of demand and opportunities to come up with solutions to, I would say, standard plastic, for example, and also more sustainable materials moving forward. We are confident that it... That will be, while it's still a smaller segment for us, it's one of these hot segments similar to what we have seen and continue to see with lithium-ion batteries. That if we are early enough there to customers and provide them with the right solutions and the right workflows, we can be a leader participating in that growth as they build up, build out research, later on manufacturing and of course also keep QA/QC. That's what we have done in, for example, with the battery segment. We have been very early with all these customers to understand what their needs are. Now we are participating really nicely in the growth opportunities, both on the R&D but also now on the manufacturing side in terms of tools they are using. Thanks so much, guys. Thank you. Your next question comes from Brandon Couillard with Jefferies. Hey, good morning. Thanks for squeezing me in. Just one for you, Shawn. Can you split out the lab versus industrial business in China in the first quarter? Any update on the forecasts for those two subsegments for the year? Then Patrick, any change in local competition or dynamics on the ground there? Mm-hmm. Care to call out? Okay, good. Hey, Brandon, I'll take the first part of that question then. For Q1, we actually had a really good start to the year in our lab business. We were up mid-teens. We saw a lot of growth throughout the portfolio with the exception of they also have a pipette headwind, but it's a smaller part of their business. In the lab business in China, we, like a lot of our other businesses, we also have been benefiting from a lot of these hot segments that we were just talking about, like lithium ion batteries is a good example, in which really been to a very strong growth in our analytical instrument business. Then on our industrial side, we grew low single digit in the quarter. I think that's important to put that in context with the comparison. That's on top of about 24% growth in Q1 of last year, but on top of 63% growth in the year before that. China's lapping some very, very challenging comparisons in the first half of the year for their industrial business. As we kinda like look towards Q2 and the rest of the year, we're kinda looking at low single digit again in industrial for Q2, given challenging comps also in the second quarter. We're expecting better results in the second half as the comparisons improve. You know, probably still thinking of that business as low to mid for the full year, which is kinda similar to how we were thinking before. Then, lab might have, you know, some moderation also because of some comp topics on a multi-year basis in Q2. Maybe it's more in the mid or mid to high single digit kind of a growth range. Still optimistic for the full year, especially given the strong start in Q1. Still thinking that, you know, double digit for the full year on the lab side. Mm-hmm. You know, I think, the topic there, like a lot of other regions, but especially in China, is gonna be how... You know, how With all the investment that they've had in COVID, you know, what is that looking like, you know, for the rest of the year? Given the fact that they just went through the reopening, we'll kinda see how that plays out. Okay. Good. Thanks. Brandon, maybe from my side, you asked about the competitive situation in China with the market, that there's a significant change. I would say no. Look, it's a very competitive market. We have local players there as well, but I want to remind you that we have a really strong history in China. We have strong R&D and manufacturing base there. We, as I said in my remarks, we manufacture a lot of products locally in China and also tailor some of the applications to the local market needs. That helps us to really effectively compete with the product portfolio. Our sales and marketing team uses the very same Spinnaker sales and marketing approach to really go after the growth opportunities, identify those in the China market. I mentioned that example about a battery segment, and they have been very successful to do those. Yes, the market is competitive, but I would say it hasn't changed dramatically for us. Our team is well positioned to continue to compete. We made, from my perspective, also a lot of good investments to make sure that we have the right portfolio to compete effectively in the market. Very helpful. Thank you. With no further questions, we will conclude today's conference. Thank you for your participation. You may now disconnect.