Good afternoon, and welcome to the Mettler-Toledo second quarter 2023 earnings conference call. My name is Brianna, and I will be your conference operator today. Please note that this call is being recorded. All lines have been placed on mute to prevent any background noise. After the speaker's remarks, there will be a Q&A session. If you would like to ask a question during this time, please press Star, followed by one on your telephone keypad. I will now turn the call over to Adam Uhlman, Head of Investor Relations. Please go ahead. Hey, thanks, Brianna, good evening, everyone. Thanks 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. This call is being webcast and 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 conditions, performance, and achievements to be materially different from those expressed 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 to any forward-looking statements, except as required by law. On today's call, we may 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 available on our website. Let me now turn the call over to Patrick. Thanks, Adam. Good evening, everyone. We appreciate you joining our call today. Tonight, we reported our second quarter financial results, the details of which are outlined for you on page three of our presentation. Our sales growth in the second quarter included strong growth in our service business, as well as solid performance across our industrial product categories, which was offset in part by softer market conditions in laboratory and China. Focused execution of our margin expansion and cost control initiatives resulted in good growth in adjusted EPS, despite currency being much greater than expected headwind this quarter. As we look to the remainder of 2023, there is increased uncertainty in the global economy and our end markets. In addition, market demand in China has deteriorated. While we have reduced our growth expectations for 2023 due to weaker market conditions, we remain confident in the factors we can control, including execution on our best-in-class sales and marketing programs and our margin expansion and cost-saving initiatives. Our team remains very agile in adapting to changing market conditions, and I am confident that our efforts will de-deliver solid results this year. Let me now turn the call over to Shawn to cover the financial results and our guidance, and I will then come back with some additional commentary on the business and our outlook. Shawn? Thanks, Patrick, and good evening, everyone. Sales in the quarter were $982.1 million, which represented an increase in local currency of 2%. On a U.S. dollar basis, sales were flat as currency reduced sales growth by 2%. On slide number four, we show sales growth by region. Local currency sales increased 4% in Asia, rest of the world, 1% in the Americas, and were flat in Europe. Local currency sales increased 3% in China in the quarter. On slide number five, we show sales growth by region for the first half of the year. Local currency sales grew 4% for the first six months, with 3% growth in both the Americas and Europe, and 6% growth in Asia, rest of the world. Local currency sales increased 6% in China on a year-to-date basis. On slide number six, we summarize local currency sales growth by product area. For the quarter, laboratory sales decreased 3%, and industrial increased 6%, with core industrial up 6% and product inspection up 5%. Food, food retail grew 17% in the quarter as we benefited from significant project activity. The next slide shows local currency sales growth by product area for the first half. Laboratory sales increased 1%, and industrial increased 6%, including 6% growth across both core industrial and product inspection. Food retail increased 25%. Let me now move to the rest of the P&L, which is summarized on slide number eight. Gross margin was 59.4%, an increase of 100 basis points, as pricing was partially offset by higher costs, business mix, and currency. R&D amounted to $47.2 million in the quarter, which is a 6% increase in local currency over the prior period, reflecting increased project activity. SG&A amounted to $228.6 million, a 6% decrease in local currency over the prior year and includes lower variable compensation and benefits from our cost savings initiatives. Adjusted operating profit amounted to $307.7 million in the quarter, an 8% increase. Currency reduced operating profit growth by approximately 4%. Adjusted operating margin was 31.3%, which represents an increase of 210 basis points over the prior year. A couple of final comments on the P&L. The amortization amounted to $18 million in the quarter, interest expense was $19.3 million, and other income amounted to $1 million. Our effective tax rate was 19% in the quarter, above our previously guided range of 18.5% for the full year. This rate is before discrete items and adjusting for the timing of stock option exercises in the quarter. We now expect our tax rate to be 19% for the full year. Fully diluted shares amounted to 22.1 million, which is approximately a 3% decline from the prior year. Adjusted EPS for the quarter was $10.19, a 9% increase over the prior year, or a 13% increase excluding unfavorable foreign currency. On a reported basis in the quarter, EPS was $9.69, as compared to $9.29 in the prior year. Reported EPS in the quarter includes $0.23 of purchase and tangible amortization, and $0.29 of restructuring costs. We also had a $0.02 benefit from tax items. The next slide illustrates our year-to-date results. Local currency sales grew 4% for the six-month period. Adjusted operating income increased 9% or 14%, excluding unfavorable foreign currency, and our operating margin expanded 190 basis points. Adjusted EPS grew 9% on a year-to-date basis, or 15%, excluding unfavorable currency. That covers the P&L. Let me comment on cash flow. In the quarter, adjusted free cash flow amounted to $260.5 million, up $52 million, helped by favorable working capital. Year-to-date cash flow per share grew 44%. DSO was 35 days, while ITO was 3.7 times. Let me now turn to guidance. As we look to the remainder of the year, there's increased caution across our customer base, such as pharma and biopharma, chemical companies, and food manufacturing. There's also greater uncertainty regarding the global economic conditions. In particular, conditions in China have deteriorated sharply as there is growing uncertainty around the pace of economic growth and limited government stimulus. This is particularly true with our pharma and biopharma customers, who are delaying investment decisions in China, but also in the Americas and Europe. In Europe, the outlook remains uncertain in light of the ongoing war in Ukraine and soft general economic growth. Global manufacturing PMIs have also continued to trend lower and have been below the 50 growth, no growth index level for many months. Now, turning to our guidance. We expect local currency sales to be down 3%-4% in the third quarter, with a mid-single-digit decline in laboratory. This reflects deteriorating conditions in China, as mentioned earlier, with particularly soft demand from pharma and biopharma customers. We also expect modest sales declines across our industrial businesses in the third quarter. We're implementing actions to reduce our costs in response to the softer sales environment and manage productivity while maintaining various growth investments that are important for the future. We estimate our operating margin will increase in the 70-100 basis point range for 2023, based upon our disciplined approach to margin expansion, productivity, and cost savings initiatives. We expect third quarter adjusted EPS to be in the range of $9.55-$9.85, representing a decline of 3%-6%. This includes foreign exchange headwind to EPS of approximately 3%. Turning to the full year 2023. Our local currency sales growth guide is now 0%-1%, reflecting the factors mentioned earlier. This is down from our previous guidance of approximately 5% local currency sales growth. We now expect full year adjusted EPS to be in the range of $40.30-$41.20, representing a growth rate of about 2%-4% or approximately 5%-7%, excluding unfavorable foreign currency. This compares to our previous guidance of adjusted EPS in the range of $43.65-$43.95. There are three factors to our revised adjusted earnings per share outlook. First, the reduced local currency sales growth forecast for the year compared to our previous guidance, partially offset by our cost reduction efforts. Our reduced outlook largely reflects a lower laboratory sales forecast of a decline of low single digits, down from our previous mid-single-digit outlook. Additionally, we now see pronounced weakness in our business in China, where we now expect our total business to decline mid-single digits for the year compared to our prior forecast of high single-digit growth. Secondly, foreign exchange, as mentioned earlier, is now expected to be a 3%-4% headwind to EPS growth this year, compared to 2% the last time we spoke, largely due to the weakening of the Chinese renminbi and the strengthening of the Swiss franc versus the euro. Relative to the impact on sales, currency is expected to be a 1% headwind to sales growth for the full year and roughly neutral in the third quarter. Third, we would now expect a higher tax rate of 19% in 2023, compared to our prior guidance of 18.5%. Some final details and guidance as you update your models. Total amortization, including purchase and tangible 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 $0.93 per share. Interest expense is forecast at $78 million for the year. We now expect free cash flow of approximately $850 million, compared to our previous estimate of approximately $900 million. We'll also reduce our share repurchase program by a similar amount. That's it from my side. I'll now turn it back to Patrick. Thanks, Shawn. Let me start with some comments on our operating businesses, starting with Lab, where sales were softer than we expected for the quarter. While we continue to see robust demand from hot segments like lithium-ion batteries, our pharma and biopharma customers have become increasingly cautious with their spending and have delayed investment decisions, particularly in China. As expected, our pipette sales were again weak in the second quarter as customers reduced inventories of tips and instrument sales declined. The impact of the lower pipette sales was in line with our previous expectations, and we continue to expect this headwind to ease in the second half of the year as comparisons become easier. As mentioned, we also see customers, especially in our key market segments such as pharma and biopharma, delaying purchases. However, our pipeline and customer quoting activity has remained strong, and we were pleased to see continued strong service growth across our lab business in the second quarter. We are hopeful conditions normalize soon, but we have not built this into our 2023 guidance. Turning now to our industrial business. We again saw strong demand for our automation solutions from our core industrial portfolio this quarter. While we expect to continue to benefit from customer investments in automation and localization of supply chains globally, we are not immune to the increased uncertainty around the global economic outlook. Regarding product inspection, it also had good performance this quarter, but our packaged food customers have also become more cautious about making investments in new equipment due to inflation and uncertain economic conditions, and we would expect softer results for the remainder of the year. Food retail delivered strong growth this quarter due to robust project activity in the Americas. Our food retail sales can be lumpy, and we would expect strong growth again in the third quarter. One final comment on the business: service sales remained very strong overall and grew 13% in the quarter. We continue to be very pleased with the growth in this important and profitable part of our business. Let me make some additional comments by geography. Sales in Europe were flat in the quarter, with growth in core industrial and product inspection offset by declines in laboratory products. In the Americas, we saw good growth across our industrial and retail businesses, offset by declines in our laboratory product offering, especially pipettes. Asia and the rest of the world had another quarter of good growth. China grew 3%, with good growth in industrial, sentiment, particularly in laboratory, has become much more cautious as activity has slowed following the COVID reopening, and there has been limited economic stimulus, as mentioned before. As of today, we expect a significant decline in sales in China in the second half of the year, our team in China will remain agile to capitalize on growth opportunities however market conditions unfold. Now I would like to share with you some updated thoughts about our strategic priorities and how we are investing to drive growth over the long term. While market conditions have become increasingly challenged over the past year, we have remained a very high level of incremental investment to support the long-term growth of the organization and market share gains. A hallmark of our culture is the agility and focused execution, and our team continues to respond very well to unexpected changes in the environment to gain market share, expand profitability, and make additional important growth investments for the future. Starting with our sales and marketing programs, we have developed increasingly sophisticated digital approaches with our spinning up of program that more efficiently feeds our pipeline with new leads, including high potential Top-K alerts, with a special focus on customers that we do not do business with today. Webinars have been an important areas of investment and source of new customer leads as we look to increase potential customer interactions in a very efficient format. We can directly show how our solutions address common customer pain points in very specific end-use applications. We have had strong participation in our webinars, which positions us as trusted subject matter experts in specific applications, but also provides a good sales pipeline as customers seek unique solutions to challenging or new applications. This is particularly true in hot segments like lithium-ion batteries, sustainable materials, and the semiconductor industry. Our data-centric approach in nurturing and qualifying these leads allows our field sales team to prioritize their efforts on high-potential business opportunities and increase our win rates. We have also continued to invest very strongly in research and development over the past year to maintain and improve our technology leadership and support our growth potential. I am very excited about our pipeline of new and recently released products that enhance our customers' productivity, but also ensure compliance with regulatory requirements. This has been a topic of increasing importance for our customers as of late, and our innovative solutions, like LabX, enhance productivity through workflow automation while ensuring full data integrity and traceability across customer entire workflow. Earlier this year, we launched a new thermal analysis instrument that allows customers to increase sample analysis throughput through new automation and software features. This is especially important in hot segments like advanced materials and the battery segment. Additionally, our process analytics business recently released a new conductivity sensor that is unmatched in the industry for measuring ultrapure water in the microelectronics industry, helping increasing yields for our semiconductor customers while reducing the amount of very expensive ultrapure water required for their operations. Lastly, our industrial business had great success with our new line of hygienic scales that help customers clean their scales up to 40% faster, but also help eliminate contamination risk in regulated environments like food and pharma. While individual new product launches are not material on their own, given the diversity of our portfolio, they provide a very important compounding element to our growth algorithm, expanding our technology leadership, enhancing our value propositions, and helping drive market share gains. Going forward, we have a very exciting pipeline of innovative products that we plan to launch over the coming year that will further extend our leadership position. Turning now to our margin initiatives, our pricing and Stern Drive initiatives have been very effective in supporting our margin expansion this year. As a reminder, Stern Drive is focused on improving productivity and driving operational excellence across our manufacturing and back-office operations, with our team executing several hundred projects to reduce material cost and improve productivity. We have excellent opportunities ahead of us with enhanced with advanced data-driven approaches around value engineering, smart manufacturing, and common platform architectures that we expect to launch in the near future, in the near future. I hope this provides some context to our updated guidance for the year, also shows the confidence we have in our ability to continue to execute on our long-term growth initiatives, expand our margins, and deliver solid earnings growth this year and beyond. That is the conclusion to our prepared remarks. Operator, I'd like to open the line now for questions. At this time, I would like to remind everyone, in order to ask a question, please press star followed by the number one on your telephone keypad. Your first question comes from Dan Arias with Stifel. Your line is open. Good afternoon, guys. Thanks for the questions. Patrick or Shawn, maybe just to start on China. You know, growth there was actually a couple of points above U.S. and Europe in the quarter. Is the deterioration that you're pointing to for the second half showing up in the order book here in early 3Q? You know, is it more just sort of reading the writing on the wall when it comes to the big picture direction that things are headed in over there? Yeah. Hey, Dan, this is Shawn. Maybe I'll start, and I'll let Patrick add some color. You know, basically, as we were kind of exiting the quarter, but probably even more importantly, how we were starting the third quarter. As you know, we don't typically carry a lot of backlog in our business, but certainly, as we kind of started the third quarter, we started to really see a significant deterioration in conditions that we also started to see towards the end of Q2. As kind of we mentioned before, it's largely in the area of lab. Our lab forecast for China is down very significantly in the third quarter. You know, we're, we're kind of looking at, literally something that could be in excess of a 20% decrease. Of course, as you know, we've had some extremely strong growth over the last couple of years. If you, if you kind of look at, we grew 20% last year in lab in China and almost 40% in Q3 in the year before that. We're also seeing a little bit of slowdown in industrial as well. You know, overall, we're just kind of seeing, you know, a lot of hesitancy in terms of customers placing orders. Not sure how much it, it's related to a lack of clarity in terms of stimulus in the country. I mean, there's some, some very recent talk of additional stimulus. You know, that's something that we have not built into our guidance for Q3 or for the rest of the year. You know, kind of just sitting here, looking at this very sudden decrease, and as we've said many times in the past, things in China can change very quickly. We feel like we're observing, you know, something that's a very negative, quick pivot going in the wrong direction. You know, with the fact that it's kind of just starting to happen so significantly, we don't feel like we're in a position to necessarily try to build anything in necessarily for the fourth quarter at this time. We're kind of building in also, a negative outlook for Q4. Okay. Okay, just to finish that thought, did you give a forecast for, for the year for China? If you did, I missed it. How Yeah, down, down mid-single digits for the full year, and then for Q3, down mid-teens. If you kind of think, step back, and you look at that full year guidance of down mid-single digit, I mean, that's a very significant difference than what we're looking at, you know, last quarter when we provided guidance. We're looking at high single digit for the full year, and if you just kind of, like, do the, the quick math on that, that's, that's, you know, kind of, I think more than half of our decrease in our guidance is, is related specifically to China. Yep. Okay. Then just, maybe just moving to lab and the destocking activity that you have going on in the pipette business, how much of what you're looking at are you attributing to that? Does it feel like that's tracking relative to your expectations last quarter? I mean, do you still think you can kind of normalize in the second half of the year, or is the better way to think about it just that it takes the remainder of the year to sort of wash that out of the system? Yeah, that, that one's playing out pretty similar to what we expected. you know, it was about a 2.5% headwind in Q1. I think we were saying that we expected something to be about a 2% headwind in the second quarter. That's exactly what it was. Our 2% growth would've, say, in other words, our 2% growth would've been 4% if it wasn't for the decrease in pipettes. Then our lab business would've been +1% growth instead of a -3% decline if it wasn't for the decrease in pipettes. That's playing out very similar to what we thought. For the second half of the year, we're not expecting much of a headwind. you know, maybe a very, very little in, in Q3. I mean, pipettes could still be down low to mid-single digit. Especially in China, it's going to be down significantly, because of what they're lapping with testing. I'd say overall, it's playing out pretty similar to what we thought it- how we thought it would. Got it. Okay. Thanks, Shawn. Yep, thanks, Dan. Your next question comes from Jack Meehan with Nephron Research. Your line is open. Thank you. Good afternoon. I had one more follow-up on China. I was just curious, like, what feedback you've heard from the region about what might have driven, you know, this kind of rapid deterioration. Is it your sense this is just demand related, or is there any sense maybe there's been an uptick in local competition at all? Yeah, Jack, hello, this is Patrick speaking. Let me take this, and since Shawn already commented the first part of the question about China. Look, the change is, I think, mainly driven really by the lack of stimulus. When after COVID, after COVID reopening, beginning of the year, there was really strong momentum in China, a lot of expectation on growth, and the government would, you know, drive it with additional stimulus. That really didn't happen, and I think it also now led to the fact that a lot of customers really became much more reluctant and waiting for the government to make a decision about the stimulus, so they are clear of how much they can spend and where they can spend the money. We have not seen any significant change in competition locally in China. That's not what we are hearing from the team. The team is really confident in our product portfolio, and we have a very experienced sales team and a, a great product portfolio that helps us to compete efficiently in China. So it's, it's really about the missing momentum and the, I would say, the missing confidence in the economy that really leads to the fact that a lot of customers holding back investments and are waiting for the certainty about what's to come. That's, that's the major slowdown that we are facing right now, and it's also the, the fast drop-off that we have seen that we also didn't expect. Our sales team definitely didn't expect as we're going into Q2, but towards the end of Q2, that, that really became a big momentum. Now, starting Q3, we don't see that changing, and that's why we're also careful with the outlook Shawn mentioned. We see China minus double-digit in the third quarter, and we don't really count on that improving in Q4 as well. Mm-hmm. Got it. Then just in terms of some of the actions that you're taking to mitigate this pressure, is it possible to quantify just, you know, the magnitude of the cost savings that are going to hit in the second half of the year and just where that's going to show up, you know, kind of across the income statement? Yeah, sure. Hey, maybe the best way to look at it, Jack, is that, you know, we're kind of looking at our overall cost structure to be flattish for the full year. You know, if you kind of, like, think about that, in terms-... the, the second half of the year, probably, you know, probably down, you know, down low single digit in the second half of the year. If we- if you try to think about that, how it looks on the P&L, you know, SG&A will be, will be lower, you know, than, than the other lines. Of, of course, part of our costs are also above gross profit, which you, you don't necessarily have broken out separately. You know, I think as we look at at our program, you know, we are focused on productivity and, and other discretionary, spending. I think it's also important to, to emphasize too, we're, we're still continuing very much to, to grow and invest I mean, invest in the business for growth. I mean, if you look at our R&D as an example, it's still up 7% year-to-date. We still expect to see growth in R&D for the second half of the year. Then kind of just stepping back from everything too, I think we feel pretty like it's the right balance, where we can still provide really good operating margin expansion on a full-year basis, you know, in a 70-100 basis point kind of a range. That's despite some unfavorable currency. Great. Thank you. Your next question comes from Derik De Bruin with Bank of America. Your line is open. Hey, good afternoon. Thanks for taking my question. A couple of ones. I was surprised to hear, you know, your pharma biotech comments on, on things being down so much. The reason why I say that is, I mean, we certainly have heard that purchases over $100,000 are getting held up. Your items are often, you know, well below that. What's going on there? I mean, is it just a complete freeze, or are you just getting a lot of pushback on pricing? To play off the pricing question, what are your expectations now, for the price in your guide? Yeah, I'll start with it, Derek, and then I'll let Shawn chime in as well. Look, we're not seeing a complete freeze. It's not like total pharma business is, is frozen for us. Of course, we see a decline, and as we said, we see delays in, in, in orders. It's not... You're right, I mean, our, our products are in lower CapEx or below CapEx spending. That said, we see a slowdown in orders, and it's in, in, in pharma, biopharma, and it's, it's pretty broad-based, but it's not a complete going off the cliff, so to speak. It's, it's a significant decline that, that we are seeing and slowdown that we are seeing. For us, of course, the question is, as many others ask, is: How long will this take, and why is that happening? What we hear from our sales team is, well, we have a lot of quoting activity. Actually, what we're seeing, what I'm really happy to see, is that we have a strong sales team engagement. We have our sales team is out there with customers. They're talking about, you know, their plans. They get good leads. Leads are actually up year to date. We see good momentum on the leads generation side, but they're not turning into orders as quickly as they used to do. How long this will continue, will definitely also depend on when more certainty is coming back to the economy. I mean, it's, that's what we're hearing from our, from our sales team. Yeah, I'm pleased with the quoting activity. I'm monitoring that on a, on a daily basis. I see, how our sales team is interacting with customers and how often they're out there with customers, discussing projects and investments. The time to turn these opportunities into orders have definitely increased, and that's part of the slowdown we're seeing in orders. Mm-hmm. In terms of the other part of your question, Derek, you know, pricing actually was very good in the quarter. For the total group, it was actually up 6%, which was a little bit better than what we had expected. You know, as we kind of like, look at the second half of the year, that's for the total company. As we kind of look for the second half of the year, you know, it's probably gonna be a little bit better than what we were initially expecting as well too, probably up by about 4%, which would kind of put us in the 5% kind of a range on a full year basis. What we've kind of continued to observe is that we feel like our value proposition has really resonated and increased over the last few years. You know, as the market like, looks for opportunities in terms of productivity and digitalization, it really plays to, to the strengths of our portfolio. I think our teams do a, an excellent job in terms of articulating that value proposition to the customer base. As, as you kind of mentioned, or, or implied with your question, you know, our, our, our price points also tend to be pretty low, as, as you know, too. That value proposition really resonates, and it's, it's easy to, to justify from a customer perspective. so we feel good about the pricing program, and, and, how we think about it for the second half of the year. Got it. Just as a follow-up, you're taking guidance down by about 4.5%. It looks like about 2.5% of that is China. Yeah. Can you quantify what else is that? Just like, what's pharma, what's industrial, what's your just not having good feelings about that you just want to be conservative on? When you ask that question, are you asking to break down? Yeah ... the China piece or the, the rest of it? Okay, the rest- The rest of the piece. Yeah, we know, we know the China piece. It's the rest of the piece that I just really want. What's, what's, what else is baked into that remainder, re- remainder that's not the China cut? Yeah, yeah, yeah. Hey, I, I think we do see moderation in, in the Americas as well as, as Europe. For the Americas, we're now looking at more flattish growth. ... for the full year, our prior guide was, like, more like low to mid-single digit. What we're kind of seeing there is just, it's more concern with, with our core end markets. You know, one of the things that's just happening at the moment is we have, you know, our, our three largest core end markets are under pressure, you know, pharma, biopharma, food manufacturing, and chemical. You know, in the U.S., you know, food manufacturing is another, you know, we talked a little bit about pharma, but food manufacturing is also an area, especially in our product inspection business, where we, we came off a good quarter, but we also see, you know, some pressure for the second half of the year as, as these customers are, are under a lot of pressure. If you look at Europe, we're probably modestly a little bit lower than what we were before, at least at the lower end of what we were guiding. We're thinking more like low single digit for the full year. Previously, we were, you know, in the low to mid-single digit. You know, the one thing, we've actually been very impressed at how well the European numbers have held up this year. You know, we also acknowledge that PMIs have been down very low there. They've, they've decreased recently, it's been a prolonged period. Of course, there's a lot of uncertainty in the region, of course, our, our end markets there are also under pressure. If we think about Europe, like a good example is, is in addition... Again, to give you an example, other than pharma, biopharma, is the chemical industry is under a lot of pressure. I mean, if you just look at the number of chemical companies that have reduced their, their forecast for the year, just recently, double digits, there's a lot of concern there in terms of that, that customer base, particularly, when it comes to Europe. That maybe gives you a more of a geographic overview. If, if we kind of break it down by business area, maybe I'll just kind of do the walkthrough so everybody kinda has that too. Of course, there's some overlap here because China's influencing some of these numbers, but I'm just gonna kind of go through it. We're looking at lab down mid-single digit in the third quarter and down low single digit for the full year. We're looking at core industrial down low single digit and up low single digit for the full year. Similarly, products inspection down low single digit for Q3, up low single digit for the full year. Our retail business is actually doing quite well. Very good project activity. We continue to see that, expect that in the second half, expect that to be up high teens in the quarter for Q3 and also for the full year. Great. Thanks, Shawn. That was really detailed. Appreciate it. Yeah. Yep, thanks, Derik. Your next question comes from Patrick Donnelly with Citigroup. Your line is open. Hey, guys, thanks for taking the questions. Patrick, you know, I guess when you kind of look at these various headwinds you've, you've called out, and you kind of assess them, you, you talked a little bit, I think, in the, the prior question about, you know, trying to figure out what could linger into 2024. I guess when you, when you kind of step back, which do you see, you know, being more temporary or transitory versus, you know, issues where you look, and you're just kind of doing these cost controls, that you look out and say, "Maybe this could linger into 2024?" Yeah, if you can just kind of bracket it up for us and, and try to help. Yeah ... frame, that view, it'd be helpful. Sure, absolutely. Look, I mean, of course, it's too early to make a forecast for, for 2024. Right now, we'll do this in, in our next earnings call when we report our Q3 and look at Q4. To say what is transitory for right now, I mean, we have I would say the easiest thing to, to capture for us is what we have seen on the pipette side, the, the destocking of pipettes. We, we anticipate that it is normalizing again, the consumption of pipettes, probably to pre-COVID levels in the second half. We see, we see that uptick happening, slowly but steadily, that is normalizing. When it comes to the rest of the industry, it's of course, very hard to predict, to, to say, how is the economy continuing to evolve from here? How long will, you know, pharma and biopharma be under pressure? Also, will the, the rest of the economy, the channels, the outlier, the chemical industry, suffer from this economic downturn that, that we are seeing? The PMIs are under pressure. It just leads us to know right now, we look at the second half and say, "This is probably a good forecast for us, given the information we have." It's of course, a significant downturn, but when it will turn, will it be early 2024 or mid-2024? I think that's too early to call, to make a call there, frankly. I mean, we have, we have pockets where we see really still very good momentum, and we count on that they continue to grow. If we take what we call the, the hot segments, like the battery segment, for example, is performing extremely well, driving good growth almost across all of our businesses. We've emphasized on some, some of the lab businesses, like analytical, is performing well. We still see pockets, good momentum in i- industrial automation. We, we also see increasing interest, as I highlighted in the beginning of the earnings call. Also, in the semiconductor business, we have been successful with some of our form business when it comes to ultrapure water, et cetera, sensors. So there are pockets of, of, of still good growth that we capture, and we're really going hard after these. We have the right toolset to, to see these pockets of growth and drive our sales store team towards the direction. How long the broader economy will under pressure, I think, none of us here on the call can really tell you how long it will take. We are looking at the second half and forecast the second half, then once we get to Q4, we'll give you a whole guidance on 2024. Right now, it's too early to be honest. Yep. No, understood. Shawn, I guess maybe a follow-up on that, just around the margins. You touched on them a little bit, but I guess when you think about, you know, the pricing lever, that seems like it's still quite strong for you guys in terms of the, the boost for margins, you know, again, some of these cost reduction activities. Can you just talk about the moving pieces as we work our way through the second half? I guess how nimble you want to be, you know, on the cost side, going into next year, and then, you know, pricing, I assume, is still gonna be, you know, positive as we move forward. You know, you guys always protect the margins pretty well. Just curious how you think about it, and the moving pieces there will be helpful. Yeah, sure. I mean, hey, I think, you know, as we still have a really great margin story, I mean, I think, you know, as I kind of mentioned before, for the, for the full year, we're still expecting to deliver an operating margin expansion in the 70-100 basis point range, and frankly, wouldn't be surprised if we end up closer to the higher end of that range. You know, that probably puts us, you know, the operating margin by quarter might be down a little bit in Q3, might be up a little bit in Q4, but overall, you know, we feel very good about the ability to continue to expand for the full year. I think as we kind of go into next year, like, like Patrick said, it's a little bit early to look at that. Of course, we'll probably have some savings from some of the, from some of the actions that we did this year. There will be some stuff that, that goes away as well. You know, as we think about pricing, we, yeah, we still feel great about our value propositions, and, but it will also depend a little bit on the inflationary environment. You know, and we'll as you know, we'll provide more, you know, provide more thoughts and guidance and insights on all that on our next call in November. Okay. That's helpful. Thank you, guys. Yeah, thanks. Your next question comes from Vijay Kumar with Evercore. Your line is open. Hey, guys. Thanks for taking my question. I guess, my first one on the third quarter guidance, low single-digit declines. You just did 2% in Q2. That's a 500 basis points change. I think about 300 basis points of the 500 is coming from China. Are you seeing China down mid-teens in, in July? Is the assumption it's down mid-teens for the rest of the quarter? Where is the remaining 200 basis points softness coming from, perhaps from an end market perspective? Yeah, hey, maybe I'll take that one, Vijay. I mean, you know, we don't as you know, we typically don't go into too much detail on individual months, but absolutely, we, you know, I kind of alluded to it before, what we experienced and as we've seen July kind of start, certainly heavily influenced how we're looking at the quarter and the rest of the year for China. Yeah, very much we're looking at down mid-teens and then especially weighted in our laboratory business. You know, if you look at our laboratory business, as I mentioned before, we're lapping some pretty big comparisons there. But we're expecting the lab business to be down even more, more significantly there. If we kind of, like, look at, you know, the rest of the portfolio, it's kind of similar to how I answered, Derek, I'd say, on the full-year results. I mean, we're looking at, you know, low single-digit growth in the Americas. You know, there, it's very much the same topic about core end markets. You know, this, it's this delay in pharma, biopharma that Patrick talked about. Of course, we also within that, we talked about pipettes, but of course, we also have, you know, a smaller exposure, you know, on, in, within single-use bioprocessing that we talked about last quarter, like with PendoTECH, as well. Then, similar to the, the prior answer, I mean, we're, we're also looking at, a decline in product inspection in the Americas, in the third quarter as, as well, with the, the pressure that we're seeing, from food, food, food manufacturing companies. Then Europe... Thanks. We're, we're still expecting Europe to be more low single-digit in the third quarter, but acknowledging that we have, you know, different uncertainties that we talked about before. If we kind of, like, look at the, the business in terms of overall by, by business for the third quarter, you know, we're looking. Well, actually, I already mentioned it, so I don't need to mention it again. In terms of the, the different areas, I mean, lab being down more so than, than the other areas, in terms of the guidance for Q3. understood. Then one maybe on, on the stimulus that you mentioned. If what specifically have you heard about from links about a stimulus? If there is a stimulus, how long does it take for, for it to flow through to customers placing orders in purchasing? And on the cost actions here, what, what is the, you know, the pacing of cost actions? Is what kind of benefits are, are you expecting? It looks like, I mean, EPS is down more than revenues. Maybe, perhaps not much benefit here in 3Q, but what's the magnitude of the cost actions, the benefit from cost actions you're taking in Q4? Yeah. Hey, a lot there. The first thing you were talking about was the stimulus. You know, in terms of the stimulus, like, we don't have any probably more insights than anybody else. I mean, there, there were some comments coming out of the government, I think, in the last week, with an intention to, to stimulate. I don't think any specific details have been provided, so it's, it's hard to kinda comment on that at this point in time. I think we'll have to see, you know, how that plays out and, and, and how long that takes to really. How directly that affects our end markets and how long it takes to get into the economy. Like I said, right now, we haven't built anything in for, for our forecast for, for the second half of the year. We'll, we'll kinda see how, how it plays out. In terms of, in terms of EPS, I mean, you know, we do have unfavorable EPS in, in, you know, I mean, I'm sorry, foreign currency. We do have unfavorable foreign currency that's been hurting us throughout this year, and as we kinda mentioned in the opening remarks, it's, it's also kind of impacted us much more significantly than our last time we provided guidance. I think we were initially looking at a 2% headwind last quarter, and now we're looking at something in more in the 3%-4% range. I think if we go back to our original guidance for the year, I don't think we were expecting very much headwind at all from, from foreign currency, so that's certainly something that's affecting us. I think it's important to kind of also consider that as you kinda look at the EPS growth for the second half of the year. If you kinda, like, look at Q3, if you exclude foreign currency, we'll be anywhere from, at the high end of our guidance, flattish, and then to the lower end of our guidance, -3%. For the full year, we would be growing 5%-7%, you know, in a year where, you know, sales are, are much more modest than the 0%-1%. We feel like... We still feel good about that, you know, in terms of, you know, the ability to still expand margins, during the course of, of this year, and then at the same time, being able to continue to invest in the business, you know, which we've talked about, which is important to us to protect the medium and, and longer term as well, too. Otherwise, you know, no other specific comments, I would say, in terms of details. Yeah. Understood. Thanks, guys. Yeah, thanks. Your next question comes from Matt Sykes with Goldman Sachs. Your line is open. Hi, good afternoon. Thanks for taking my questions. Maybe for our first one, Patrick, you spent a lot of time and focus on the services portion of the business, and you called out some pretty strong growth this quarter for that, for that segment. Could you maybe talk about what your assumptions are for the full year for services growth? Just maybe help us understand a little bit better about the customer dynamic and caution as it relates to services, assuming it's a little more defensive. Just maybe talk about how you expect that business to perform in this type of environment. Yeah, very good question. Hey, I couldn't be more, more pleased with the performance of our service business. As you probably recall, we grew 14% in the first quarter. We grew 13% now in the second quarter, outstanding performance of the service team. Actually, that's also a business, just a reminder to everybody on the call, is where we're still also hiring people. We're adding more service technicians to our team because we see good business momentum there. We see good demand for our customers. We used the opportunity over the last year or two to also, you know, extend our service offering, our portfolio. We increased the emphasis on service sales. At the point of sales, making sure that we sell more service contracts. We restructured the quoting process, that services are always included in the quoting. We trained the service team more efficiently on selling, the sales team more on selling services. I think that that all really now pays out in, in, in the growth we're seeing in services. We're looking at the full year of, also, for a strong outlook here. I think for the full year, we're forecasting high single digits, at least in terms of service growth. Shawn, am I correct on this one? Yeah, might even, you know, high single digit for, for Q3, and, probably might even be high single digit, might even be low double digit, maybe close to 10. But yeah, high single- Good ... to 10, yeah. Good. Again, that's, that's driven by the ongoing momentum. At the moment, we see really stronger demand than than in, in the product category, and we don't see a lot of push, pushback on, on pricing. I would really see continuing to see that momentum continue. Of course, we're also having tougher compares into a tougher compares as we move between the next couple of quarters, as Q3 and Q4 last year also had been already quite strong on service growth. The underlying momentum is strong. We have an extremely strong service team, and we continue to invest in services, and we'll continue to, to build out that team and make sure that we can serve our customers in the best possible way and deliver an outstanding customer experience. That is really what is differentiating us as a Mettler-Toledo from many of our competitors that compete directly with us in the field, is the strength of our service organization. Great. Then just thinking of some other potential offsets, just given some of the challenges in the lab business. You talked about sustainable materials, batteries, and semis. Can you maybe help us understand sort of the sizing of that business and what kind of you're seeing in terms of growth, sort of globally, but maybe also by region, so we can kind of better understand what some of the offsets could be over the course of the year? Yeah, let Shawn break it down in terms of the size, but, I mean, this is what we call the hot segments, right? It's really, at the moment, strongly driven by lithium-ion battery segments. We see strong, a really good momentum building up in the semiconductor business, with the reshoring and home shoring of some of the semiconductor plants, that is gaining momentum. In sustainable materials that are, gaining importance, and, that is, again, we call these pockets of growth. In itself, they are, of course, not super significant in terms of size, but the growth momentum is important for us, to compensate and offset some of the weaknesses that we see in other areas. Yeah, in terms of the size, Matt, I don't have a specific number for you. I mean, these are still relatively smaller end markets for us in the kind of low double-digit kind of a range. But from a growth perspective, they certainly help a lot in terms of growth, given the higher growth relative to the rest of the portfolio, and, you know, the longer-term, you know, opportunities here, you know? What's kind of neat about these hot segments is that we can provide solutions very end-to-end, you know. A lot of them, it starts in R&D, it goes all the way through development and into manufacturing. We, we benefit, you know, in some cases, more so in our analytical instrument business, but, but we also see benefits through a, a large portion of our portfolio. Great. Thank you. Your next question comes from Catherine Schulte with Baird. Your line is open. Hey, guys. Thanks for the questions. I guess first in China, is the weakness concentrated in any product categories within your lab business, or is it more broad-based? Are you seeing the consumables and services side of the business holding up better there? Look, look, Catherine, I'd take this, it's really broad-based in the market segment. I can't point you to any specific product category for. It's, it's pretty broad-based, again, focused on pharma and biopharma. There's not a single product category I would point you to say it is more effective. Okay, maybe on the- Specific to consumables, Catherine, consumables are actually down more so because of, you know, all the testing that was still going on in China with COVID last year, so. Yeah. Okay, got it. Then maybe on the packaged food side, you've been talking about caution in that category for several quarters now. You know, at what point do you start lapping some easier comps there? Is there anything to point to in prior inflationary environments as to when you might start seeing improvements there? I think we will not face any easier comparison pretty soon because we had performed pretty well last year in, in this business, and we are almost confident, or we are confident that we have taken market share as well. Yeah. In, in the Americas, especially, we have been, we have been quite strong, and, and this is also why we see probably in the second half this year, tougher compares and a bit of a slowdown in, in growth. We had pointed more reluctance of investment in Europe in beginning of the year or end of last year, we continue to see that going on. Europe is just not the same investment environment right now in, in the packaged food industry. A lot of the, the customers are actually under, under pressure, when it comes to, to their margins, so they're trying to push out, their investments as well. That said, we just recently had a big trade show in Europe, in the pack, and we had seen great interest in our product portfolio. We also launched and, a set of new products, also mid-range products, in the X-ray category and others. That, that helps us, of course, to also really effectively compete in that segment and drive our, our future growth. We are actually quite sure that we're taking market share in the segment right now, although the growth is not outstanding. I think we are outcompeting our competitors, and it's a business that we, again, invested in over the last two years in expanding the portfolio, especially pushing more into the mid-range to compete there more effectively, but also now launching, pretty soon some new higher-end solutions. Great. Thank you. Your next question comes from Josh Waldman with Cleveland Research. Your line is open. Good evening. Thanks for taking my questions. Maybe, Patrick, just to follow up on product inspection, I mean, it sounded like it held in, in the quarter, but seeing signs of softening from CPG, food, and pharma seems like it's pulling back. Just curious what level of orders you've seen kind of entering the third quarter and maybe how the guide reflects those, maybe softer end markets. It seems like, seems like the guide, I mean, only moved down modestly, if I'm correct. Yes, that's, that's right. The guidance is down modestly. Again, it's mainly in the U.S., where we see also tougher compares, but also, the environment also for the customers, they're becoming a bit more difficult. It looks like they, they are slowing down their investments. Shawn, anything else we, we could say in terms of the guidance for, for PI? No, I mean, I mean, I think I think also, you know, if we look at Q2, we actually did better than we expected, so maybe Q2 was better, but the second half is a little bit worse, you know? It's, it's kind of like what Patrick says, if you just kind of like, look at, you know, if we kind of just look at how, how, what we're hearing from customers and from the organization, especially in the U.S. but also in Europe, going into the quarter, we're just seeing a more negative situation than what we experienced in the second quarter. Got it. I guess, a, a follow-up or, or a question on process analytics. I, I wonder what you saw in Q2 from a demand perspective or growth perspective, and then your assumptions on the second half. I mean, we've seen just some of the bioprod peers, CDMO peers, and chemical accounts talk on incremental softness. Is this something you, you're seeing show up in the business, or do you think that business will hold in more resiliently? Yeah. I'll, I'll start, and I'll let Patrick add some color, additional color if he'd like. But, you know, in terms of process analytics, you know, we had very, very modest growth in the, in the quarter. But, you know, there were definitely different storylines kind of under the covers. You know, on one hand, we, we did have a very significant headwind in terms of bioprocessing, specific more so to the single-use technologies, and downstream bioprocessing. We also see softness in pharma and biopharma, or more biopharma, I should say, coming off some very strong comparisons, in, in previous years. But then, kind of offsetting some of that is also have been good growth in some of these hot segments, like semiconductors is an important segment for the process analytics business. you know, but nonetheless, we, you know, we, we have a more modest expectation here, for, for the second half as well too, you know, just, just given, more, more pressure that we talked about in general with pharma and biopharma. Yeah. Good. If I might, might add here is, of course, we're seeing some headwind there in, in biopharma mainly, and you mentioned also the single-use sensor topic that we have with, with PendoTECH, for the, for that market segment. On the other hand, on, on Ingold reusable sensors, we are not having the same stocking dynamics that we had seen with PendoTECH, that it actually is still good ongoing with your business. I also want to add here, Rick, and I know we talk a lot about innovation, but we also launched last year a new unbreakable sensor that is now really a great success story for us in the dairy business, and we continue to launch it into new market segments. It really is differentiating us from, from our competitors. I'm very positive about the product portfolio and how it will help us to also gain market share there, even in difficult market environments. Appreciate the detail, guys. Mm-hmm. Your next question comes from Rachel Vatnsdal with JP Morgan. Your line is open. Great. Thank you for taking the question. I want to follow up on some of those comments around pharma and biopharma customers. Can you just walk us through, are you seeing any difference in buying trends between your large pharma customers and some of those smaller biotechs? Can you detail us, how are those conversations about decision-making on spending difference between the two? As a follow-up, just can you remind us how small is your emerging biotech exposure? Overall, our small biotech exposure is really small. I mean, that's not the majority of our customer base. The major customer base for us in pharma and biopharma are larger customers. To your second part of the question about this decision slowdown, I guess there's not a specific particular reason we could point to. We're just saying what we're seeing is that delay in decision-making. What the, the, the real root causes of that might be different for different businesses, but I think overall, pharma just has become more cautious with spending, and that affects us across the board of our product portfolio. Great. Then maybe just a follow-up here on pricing. You said that you'll take roughly around 5% pricing this year. You also had above-average pricing contribution last year as well. How should we think about that pricing translating into 2024? Will you guys go back to your normalized range, put it below? What are really the expectations there? Thank you. Yeah. Hey, Rachel. I mean, of course, it's early to still, to provide too many insights in terms of how we're thinking about 2024, but maybe what I would say is that we still feel very good about our value propositions. We still feel very good about our, our program. We continue to invest heavily in R&D to continue to enhance those value propositions. You know, depending on the inflationary environment, I would expect this to be probably more in a normalized situation, kind of going into next year. You know, I think we'll, we'll kind of have to see how the inflationary environment plays out. Your next question comes from Liza Garcia with UBS. Your line is open. Good evening, guys. Thanks so much for squeezing me in. I'll try to keep it brief. just circling back since we're talking about China, I think you called out good growth, actually, on the industrial side of the China business. I know the focus has been on the biopharma and pharma piece. Obviously, you've detailed quite a bit there. Can we just talk about your expectations on the other businesses in China for the balance of the year and kind of what you're seeing there and how to think about that? I'll have a follow-up really quick. Mm-hmm. Yeah. Okay. Yeah, thanks, Liza. I'll, I'll take that one. The growth in the second quarter, I mean, was more mid-single digit for industrial. We're, we're pleased on that. As you know, we've been kind of lapping some, some big comparisons in that part of the business as well. You know, as we kind of look to the second half of the year, though, we're looking at the industrial business to be down, probably mid, mid-single digit. We are seeing some, some decline in that part of the business as well. You know, and, and I, and I think it's important to remember, like, some of these these customers are also exposed to a lot of the same end market exposures that we're exposed to in laboratory as well, too. When we say pharma and biopharma is down, that's also affecting our industrial business, also. Maybe not as down as much as what we're seeing pronounced in, in the lab business, but still down in the second half of the year and probably more, more flattish on a full year basis. Great. Yeah, and, you know, you guys were talking about, obviously, you mentioned, SternD rive and that initiative, but I believe there's another wave of Spinnaker that's supposed to be underway or kind of coming under, that should be launched, I believe, in right now. I guess kind of how to think about that and kind of the levers that you have. You know, Spinnaker's obviously been great in terms of market share and how to think about, you know, what Mettler can deliver over the next couple of quarters, with the next wave. Yeah. so in terms of Spinnaker, we continue to, to innovate, and, and Spinnaker, Patrick, can you hear? Yeah. We continue to work- I can't hear the question, so something's wrong. Okay. You, you're live, though. You're live. Yeah. in terms of... Liza, can you still hear me? I hear you great. Yeah, hey. Hey, I, I think Patrick just lost lost the ability to hear the question. I'll, I'll just kind of answer it. In terms of Spinnaker, we continue to innovate in terms of Spinnaker. We, we are in the process of launching a new wave. We, we we're gonna share some of the details on that until we kind of roll it out a little bit further. But something that we're just at the very beginning of doing and kind of very excited about, and I think there's some really interesting opportunities for us kind of going forward to continue the journey that we have in Spinnaker. Great. Thanks so much. Your next question is from Tim Daley with Wells Fargo. Your line is open. Great, thanks. You know, Shawn or Patrick, whoever can answer here, but you know, it's pretty clear the, the guide discounts any year-end budget flush in pharma biotech. Again, you know, Patrick, given your experience, you brought up Mettler from your prior lives across the life science industry, and, you know, or Shawn, yourself, given the, you know, historical experience you have at Mettler. You know, can you guys game theory for us, if you will? Potential scenarios or factors that would influence the outcome for a potential year-end budget flush. You know, if macro conditions stabilize or don't, you know, considerably fall off by the end of the year, and that's, that's a potential outcome. Yeah. Hey, Tim, this is Shawn. I'll, I'll, I'll take that one. Hey, of course, we didn't, it's, it's always difficult to be able to judge exactly what is budget flush and quantify it from year- to- year, especially in, in our business. We did not build in anything specific for budget flush, and I think just like you said, just kind of implicitly, looking at our guidance, we have a much more cautious view in terms of pharma and biopharma, you know, as we kind of exit, exit the year. If you just kind of like look at how we're thinking about Q4 in general, it's, it's, it's not quite the same, but it's, it's pretty similar to how we're thinking about the, the third quarter. Certainly, if, if pharma and biopharma had a, a more robust, you know, end-of-year spend, that certainly could be an, an upside to how we're looking at things. All right, got it. Just, you know, again, sorry to beat a dead horse here on China, but just note, given that is a pretty critical piece of the investment or the, you know, the, the long-term pieces for growth within lab, you know, the standardization of, of Western facilities, just, just curious, is there a pullback from Western companies because of geopolitical, you know, potential risk there? Has there been any, you know, change in impetus around that, that whole, you know, standardization of, of, one global facility format, which, utilizes Mettler's products within it? Or is that still? Yeah ... you know, this is just temporary stuff weighing on us. Thank you. I hope you can hear me. I mean, we just- Yes ... got disconnected. Yeah. Okay, well, I'll take that question. Look, with regard to, you know, multinationals pulling out of China and, and what we are seeing here, right? As for now, I think we don't see significant impact yet, but, the way I want you to think about this is, if multinationals pull out of China into some reshoring, home shoring, whether they go from China to India, whether they go back to Europe or to U.S., we also see this, of course, moving forward as an potential opportunity for us to, you know, to capture these investments as the investments are happening, happening then. We have definitely the right market-sensing tools and market-sensing solutions in place to capture these opportunities early and guide our sales team to these companies as they are going, if they are going to reinvest either in the U.S., in Europe, or somewhere else, if they're pulling businesses out of China. As of now, I would say that is not the major driver for the slowdown in China. That's not what is driving it. For us, for us, it's really the overall sentiment, the lack of confidence in the market and the wait, the wait mode for stimulus until the companies there really decide on how much budget they have and how much they can invest moving forward. Got it. Thank you. Appreciate it. Yeah. Thanks. There are no further questions at this time. With that, we will end the conference call. Thank you for joining us today. You may now disconnect.