Good day, ladies and gentlemen and welcome to our First Quarter 2018 Mettler-Toledo International Earnings Conference Call. My name is Scott and I will be your audio coordinator for today. 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. Thank you. I would now like to turn our presentation over to your hostess for today's call, Ms. Mary Finnegan. Please proceed ma'am.

Thanks Scott and good evening everyone. I'm Mary Finnegan. I handle Treasury and Investor Relations at Mettler-Toledo. I'm glad that you're joining us this evening. I'm joined by Olivier Filliol our CEO and Bill Donnelly our Executive Vice President. I need to cover just a couple administrative matters before we start. This call is being webcast and is available for replay on our website. A copy of the press release and the presentation we refer to are also on our website. Let me summarize the safe harbor language that you see on page 2. Statements in this presentation which are not historical facts constitute 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 levels of activity performance or 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 Form 10-K. All forward-looking statements are qualified in their entirety by reference to the factors discussed under the captions Factors Affecting Our Operating Results and in the Business and Management Discussion Analysis of Financial Condition and Results of Operations in our Form 10-K. Just one last item on today's call we may use non-GAAP financial measures. More detailed information with respect to the use of and the differences between the non GAAP financial measure and the most directly comparable GAAP measure is provided in our Form 8-K. I will now turn the call over to Olivier.

Thank you Mary and welcome to everyone on the call. I will start with a summary of the quarter and then Bill will provide details on our financial results and an update to our guidance. I will then have some additional comments and we will then open the lines for Q&A. The highlights for the quarter are on page three of the presentation. Local currency sales growth of 5% came in pretty much as we expected and was impacted by the excellent growth in the prior year. As a reminder in the first quarter of 2017, we had local currency sales growth of 12%. China did very well in the quarter with a strong base sales growth. Our overall solid top line growth rose another quarter of strong adjusted EPS growth. Demand in our markets remains solid and we believe we are well positioned for further market share gains. Let me turn it over Bill to provide additional details on the financial and our updated guidance for the year. Bill?

Thanks Olivier and hello everybody. Sales were $660.8 million in the quarter and that's a 5% increase in local currency. The Biotix acquisition contributed approximately 1.5% sales growth. On a U.S. dollar basis total sales increased 11% as currencies increased sales growth by 6% in the quarter. On slide number 4, we show local currency sales growth by region. Sales grew 5% in the Americas, 10% in Asia/Rest of World. Sales growth in China was specifically up 15% in the quarter, while sales declined by 1% in Europe. Sales in Europe were impacted by the timing of the Easter holiday and as a reminder, we had local currency sales growth of 13% in the same period last year. On slide number 5, we outlined local currency sales growth by product lines. In the quarter our lab business grew by 10%, industrial sales declined by 1% as growth in core industrial was offset by a decline in our product inspection business. Olivier will have some additional comments on product inspection later in the quarter. Our food retailing business was flat in the quarter. I know some of you have questions on the Q1 organic sales growth and the impact of Easter and other one-time topics. One way I gain confidence is by looking at our April year-to-date organic sales growth. Through April organic sales growth is a healthy mid-single-digit despite a very strong prior year comparison. Now turning to slide number 6, let me walk you through the key items in our P&L for the quarter. One comment to start, as we mentioned last quarter there's a new accounting rule that went into effect at the beginning of the year, which moves a portion of our pension income from operating profit to other expense. This is actually different for Mettler-Toledo than…

Thank you, Bill. I will cover the business in some more detail this quarter. Let me start with our lab business which continues to perform well despite strong growth in the prior year. Lab benefited from some acquisition revenue from Biotix. However, our organic growth in lab was up nicely over the prior year. All product categories continue to do well. Balances, auto-chem and process analytics have particular strong growth in the quarter. Analytical instruments and pipettes had good growth, but faced tougher comparisons due to excellent growth in the same period last year. For lab in general, we continue to lead the market with technology. We have many examples throughout the business. One recent example is our new unique handheld density meters. It can provide automatic digital measurements in an easy to use portable instrument and its proprietary software assists with data management. It has the look and the feel of our Rainin electronic pipettes, which reinforces our commitment to provide reliable, but simple to operate lab instruments. This is a small product line, but I thought it was a good example to share with you to highlight the focus on technology that we are making throughout our product portfolio. We combine this strong product pipeline with our proven Spinnaker sales and marketing strategies and investments in the field resources via our Field Turbo program. Lab receives a disproportionate share of both R&D, marketing and field investment resources. I'm optimistic about the lab business for the rest of the year and into the future. I'm convinced, we are well positioned and can continue to incrementally gain market share. One last comment on lab and this is looking at it from a geographic focus. Asia, in particular China did very well in lab. Europe's lab growth was more moderate principally…

Your first question comes from the line of Dan Arias with Citigroup. Your line is open.

Good afternoon guys. Thanks. Bill, on China when you talk about the uncertainty that exists there, does that at all refer to what you're seeing in the order book or the visibility that you have, or you kind of just calling out what you're seeing in terms of the headlines? Just trying to understand, the relative confidence that you have in that region, at this point, just given the quarter.

Yeah. So I think the – for us, I think one of the uncertainties is the less the Chinese market and more of the impact of tariffs potentially leading towards downturn in the global economy. As we've mentioned, on several occasions the global economy is great, right? There's a lot of good stuff going around in the world and so we're more concerned, if there could be disruption to that and that's what I meant by uncertainty. I think this – the heightened uncertainty comes largely from the current tariff discussions going back and forth. With regard to our current Chinese business, it's performing great. Everything we've seen through April look great. But I would comment that it's a tough comp. They grew quite a bit in the second third quarter of last year; I'm just pulling up some numbers now, so China was up as a reminder 22% in Q2 of last year and 28% in Q3. So I – us putting growth numbers on top of that would be – is a sign that things are really going pretty well down there.

Do you have a full year outlook for China at this point that's updated? Is it any different than what we are looking at last quarter? I think it was 5% to 10%?

Yeah. It's still in that range but probably creeped up closer to the top of that range than the bottom.

Okay. And then if I could just ask one more. How are you feeling about Europe at this point? I mean it looks like some of the macro data points are sliding a bit, but they're still pretty good at relative levels. And it sounds like there was a bit of seasonality for you this quarter with Easter. So, what does the outlook for Europe look like? I think the comp next quarter gets much easier for you.

So, it does get easier. Just as a reminder, Q1 last year we had a big benefit due to the legislation around that retail labeling topic as well as Easter timing benefited us in Q1 last year. So if I look just to give you a feeling the whole, just looking at year-to-date through April for Europe, the number is, looks already much better just adjusting for the Easter timing. I think we're more in kind of the range we would expect for the full year and that's despite having the tough comp anyways. So just adjusting for Easter and we're looking much better April year-to-date. So, we are well positioned there strategically. We've made some investments in Olivier's Field Turbo programs and other topics so our growth rate will be much better in Europe the coming three quarters.

Okay. Thanks, Bill.

Your next question comes from the line of Dan Leonard, Deutsche Bank. Your line is open.

Thank you. I guess, first off, on the new Tampa facility is it possible to quantify the savings you expect to achieve by consolidating your product IT business – I'm sorry, your product ramification business down in Tampa?

So it's a single-digit million would be the first comment, but maybe Dan, the bigger thing we needed to do there and that's just how much infrastructure we're taking out less building cost, things like that. But I think the biggest benefit we have there is we just outgrew our Tampa facility. So, I think I've mentioned it on calls in the past; our team would literally have to move inventory in and out of the plant in the morning just to make room for production to take place. We are one of the best stories inside the company in the last five years has been the growth of our x-ray and metal detection business in Tampa. So they will – it's a little bit more difficult to quantify, but you can imagine ,if you think about a lean supply chain layout in a new facility where we're not doing silly things like having to move inventory around just to do production is going to help. And we've never really been able to try to quantify but we knew it was the right answer to make that investment.

And maybe on top of that beyond just the operations benefit we're bringing the teams here together, so we're going to have to check weighing business, with the x-ray with the metal detection business and the latest decision is also to add the vision inspection business all into the Tampa facility. This brings the teams together, cross-selling is supported, but you can imagine also for customers this is very attractive. The new facility offers great ways for us for demo programs, for tests, customer test programs. I think this is going to be extremely powerful going forward for us to further grow the business and totally underline that we have here a leadership position that we can further leverage. So, that's a powerful investment in the future, and it's certainly not just about cost savings opportunities. In contrary, I expect that this is – preliminarily an investment in the franchise.

And Olivier, I think you commented that you like the long-term trends in product inspection during your prepared remarks. Could you talk once you lap these difficult comparisons, how do you look at the growth rate of the product inspection business? Is it something that grows faster than the corporate average, at the corporate average? And what would be some of the macros that would drive that?

So it's definitely one of the businesses that should grow above the group average. The market offers these opportunities and certainly the way how we are managing, allocating resources, again, all that stuff supports that approach. There are different factors. So first of all, I would stress the point that we have the most attractive portfolio of the different technologies and we have leadership positions in the different technologies. We – this plays very well also to the needs of our customers. Then we have an excellent service network that is very much appreciated by our customers. And then for certain technologies there is still an adoption rate opportunity. This is particularly true for x-ray and that's another driver for additional growth. This – what I just said applies across the world, but then you can imagine there is, on top of that the emerging markets opportunities. Packaged foods consumption is growing over proportionally in emerging markets and brand protection quality is a key driver. And so the combination of that offers additional growth opportunities. So yeah, all-in-all, I definitely expect to have above group average. But do also recognize that within product inspection we have a certain project-based aspect of certain lumpiness. If you have a global key account that is rolling out a big project across the world this can have an impact on a quarter-to-quarter comparisons. But, all-in-all, it should be very nice growth.

Appreciate all the color. Thank you.

Your next question comes from the line of Brandon Couillard with Jefferies. Your line is open.

Thanks, good afternoon. Bill, just if you can break down within China the lab versus industrial growth rate in the first quarter? And could you sort of talk about the sustainability of the lab business being double-digit there, I think that's eight straight quarters on a row it's growing over 10% give us some details on that.

Yes. And so first comment on lab is that – it is eight straight quarters, it's probably the average is around kind of eyeballing it's probably 20% during that period. We were in the 20% range again this past quarter in lab. Our industrial business was up low-double digits and retail was actually flat. So, the business is performing well. We are doing quite well with this new focus that we implemented a couple of years ago on priority segments and we are very happy with the performance.

I was actually visiting the team just three weeks ago, I had a chance to visit also the new facilities and I do have a very broad-based business review. And one thing that I really particularly liked is the resource shifting that we have done over the years to follow the market opportunities really play very well. And Bill just shared with you, the lab growth and this is not a coincidence. We really recognized early on the lab has promising end user markets. We continue to invest in these. As on the Industrial part, we did actually reduce resources to certain industry segments that we felt have no long-term or attractive long-term prospects. And seeing how that played out was really powerful. I could say similar thing also about the regional presence. So, we for example in the times where China wasn't growing so well we did – we visit our local office setup that we have. We had in the all-time many local offices across China and we recognize today that there is not the same necessity for that because you have just much better infrastructure. Mobility is better, phones are better, education of people are better. We have ERP system that is better and so on. So, the team really leveraged these opportunities and we allocated resources to drive more growth and that's what we see in our current numbers. And I certainly expect that this will continue to help us to outgrow this market.

That's helpful. And then one more for you, Olivier, I think in your prepared comments with respect to the product inspection business, I think you mentioned an ERP roll-out in the first quarter that may have been disruptive. What exactly was that? And then at a higher level on Blue Ocean could you remind us where you are in terms of the status of the roll-out and implementation? And what the magnitude of the CapEx roll-off is which I think should fall in 2019, if I'm right Bill?

I'll take the first part and then hand over to Bill. So the first part is the Blue Ocean ERP rollout was for our checkweighing business in Germany. That was quite an important, but also demanding roll-out because in the product inspection business we have a lot of engineered solutions and that requires some new functionality in our template. And in essence our checkweighing business was here to start for it. And as you can imagine such a roll-in takes always a lot of attention of the management. You have always in the first few weeks, sometimes also months, and some learning curve to go down and some fine-tuning and that's the impact that we saw in first quarter. I have already seen that we are – we called up most of it already in April and the remainder will happen in the next few months. So feel good about that. And in that sense not different to what we experienced in all the other roll-ins that we have. I think that's just a natural thing. We highlighted here on the call because it had a certain impact within one quarter. In terms of where we stand, we have rolled, or we have implemented Blue Ocean pretty much on all the significant producing organization. And there is one important one left that it is actually in Tampa. So the one that we just moved facility this is something that will follow, but otherwise we are very advanced. And when it comes to the market organization we are also very advanced. But there are more countries to come. And so we will continue on that journey certainly for a couple of more quarters. But if I look for the whole group, I think in the meantime we are far beyond 80% of the users that are already on the system. And I think that gives you the flavor that we are very, very advanced on the whole program. Bill maybe on the CapEx one?

Yeah. I think you'll see CapEx maybe to not get it confused between maybe CapEx in total you'll see going down already some next year and in 2020 further. I think that you'll see our cash flow conversion which is already pretty good, get even better in the coming years.

Great. Thank you.

Your next question comes from the line of Steve Beuchaw with Morgan Stanley. Your line is open. Steve Beuchaw - Morgan Stanley & Co. LLC: Hi. Good afternoon and thanks for taking the questions, everyone.

You're welcome. Steve Beuchaw - Morgan Stanley & Co. LLC: Bill, in your prepared remarks on gross margins you called out a few considerations there for the year-on-year trend. I think there was mix the PI issue that we've touched on here a little bit. Can you quantify any of those?

Sure. And maybe I cover the biggest topics and then kind of maybe in a quantitative way and give you some qualitative on the other item. So, I think the biggest single item was actually a benefit from our price increases. So, our price increases in the quarter were about 230 basis points and that translated to about 100-basis-point benefit to our gross margin. The biggest negative item was that we had currencies going against us by about 60 basis points, okay. And then there were a series of kind of smaller items that added up a little bit. I would say one is of course, there were some volume effect partly explained by the Easter movement between the years, so a little bit of volume. In the product inspection business, we had as Olivier mentioned this, on the one hand the startup of the Tampa facility. So they weren't running at full capacity I think for two to three week period there and when we ramped up the engineered-to-order part of the Garvens business in Germany that Olivier referred to there was that first month there, I think their output was roughly 60% of what a normal thing was. That's frankly a planned startup when we were doing that business. So, the other interesting item that didn't really have an impact, but I think it's good for you guys to focus on a bit is, material costs were basically flat in the quarter. And I do expect that that's going to get tougher as the rest of the year plays out. I think we'll be able to address that with better price increases, but I think if you look that material line, our current index kind of an inflation index that we measure our year-on-year buying is running almost exactly 100 right now. And I would expect that by the end of the year that'll probably be closer to 101. Did I answer your question? Steve Beuchaw - Morgan Stanley & Co. LLC: Yeah. It's a lot of moving parts Bill, but you did it. I really appreciate that. And then the follow-up that I wanted to...

Hey, Steve, if I could interrupt you maybe – when you say a lot of moving parts, I realize I could easily be confusing. Maybe kind of get into the bottom line because I think one thing is to analyze the pieces of what happened this quarter, but maybe if I could give you some comments about the remainder of the year. So sitting here today, I continue to think that on a constant currency basis our gross margins will be up 40 basis points to 50 basis points for the full year which actually in this most recent quarter, the right sheet in front of me on a constant currency basis our gross profit was down by 42 basis points for some of these reasons we covered. And so you can imagine then it gets better going forward. And then because of currency you'll continue to see headwind down the line but that's a little bit cosmetic. I think the best way to look at it is in constant currency to measure from a performance point of view. But by the time we get through the full year, I think what you'll see is the constant currency improvement in our gross margin will be offset by currency. So year-on-year for the full year I think our gross profit margin will be pretty close to flat. Steve Beuchaw - Morgan Stanley & Co. LLC: That's perfect. Thank you very much.

Hopefully I think [Technical Difficulty] (00:39:32) more moving parts, Steve. So what was your second question? Steve Beuchaw - Morgan Stanley & Co. LLC: The second was actually on China and in a scenario where the tariff issue does become real. I can appreciate that – for the team, be a pretty substantial operational challenge. But given that you guys have mitigation plans maybe it would just be helpful to understand those mitigation plans a little bit more deeply alternative sourcing import/export dynamics there. What I'm wondering is while I really appreciate the quantification of the potential impacts of a tariff scenario, what I'm wondering is given the implementation or offset programs that you have in mind is there a scenario where this does become real in terms of the financial impact or can we really work around it very effectively? Thanks.

So let me take the first part. Operationally, it wouldn't be too disruptive to us in a sense that one of the key mitigation factor is pricing. And we have already started to do all this analysis. We know how to implement these things and that would certainly work well. And then on the supply chain itself, yeah, there is some parts that are supplier related, where you do a sampling and all that stuff, but it's not that major. And in that sense we feel this is absolutely manageable. I think the part that would be much bigger for us in terms of the impact is if it's -- if it influences the world economy. That's really the bigger part. But the other part as Bill described in the prepared remarks in terms of million dollars it's not so huge. And we have this mitigating factor that we feel actually our plans are already quite solid and we would know how to do it.

Yeah, maybe one additional to Olivier's comments would be is that I think in the course of a full year, we probably could largely offset what would happen. But maybe in the first quarter or two quarters, Steve there might be a little bit of catch up work. Steve Beuchaw - Morgan Stanley & Co. LLC: Got it. Exactly, what we needed. Thanks so much.

Your next question comes from the line of Tycho Peterson with JPMorgan. Your line is open.

Hey. Thanks. Bill, I appreciate all the color you gave on margins. Just as we think about the sequential progression here should we expect 2Q margins to be up or down I guess in light of the facility consolidation and ERP and some of these other transit issues?

Let me get my favorite cheat sheet in front of me so in Q2 we would say margin should be flattish which would be approaching 30 basis point or 40 basis point improvement in a constant currency basis.

Got it. Okay. And then on guidance you're raising by $0.10 you beat by $0.01. Can you maybe just obviously you touched on margins earlier, but is the rest of that from buybacks?

I think the biggest thing what we're kind of looking at what would be appropriate guidance. I think for us is if we look at where we expect to be at the midpoint of the year, we're ahead of where we thought we would be three months ago. And so we adjusted our guidance accordingly. There's always a little bit of speculation Tycho for what the second half of the year can bring. But at this stage we see no reason to change our assumptions for the second half of the year. So it's kind of this combination of the beat which we described here in the current quarter. And then how we view the full first half of the year compared to maybe what we felt three months ago.

Got it. Okay. And then I guess lastly on lab. Obviously that's continued to perform well early days on NIH increase but are you starting to see any benefit from that yet here in the U.S.?

I mean as part of our business that has the most impact from NIH budgets would be our pipette businesses. What I can tell you that given everything kind of going on in those two businesses right now we're very happy with their performance but it would be tough for us to specifically link it to NIH and I didn't really look at April year-to-date by segment.

Yeah. I would say our whole bio life science business in U.S. did very well. Typically that's the Rainin and the auto-chem business that has particular exposure to that. Both businesses did very well on that one. But the NIH we are not so much exposed, the pipette business is really one of the most. So that's so why I answer yes bio life science in general.

Okay. Thank you.

Your next question comes from the line of Patrick Donnelly with Goldman Sachs. Your line is open. Charles Steinman - Goldman Sachs & Co. LLC: Hey guys. This is Charlie on for Patrick. Just curious as we kind of trend through the year putting into our models kind of for the lab and industrial business looks like lab was probably the toughest comp of the year. So, are we in a position to think that that business might actually accelerate as we actually go throughout the rest of the year?

So, understood the question. I think at this point we're largely seeing maybe next quarter not as much, but it could be in Q3 and Q4 we see some modest increases there, yes. Charles Steinman - Goldman Sachs & Co. LLC: Got it, makes sense. And then just on pricing I think when you were answering Steve's question you said that pricing in the quarter was up 230 bps. I think that was probably a little above where we were modeling, so just kind of any update on pricing expectations for the year?

Well some of that reflects Charlie that we started to see some inflation so we did see some moves there and started to implement some things in response to it. We do see higher wage growth for example in some other areas. What I would say is that Shawn Vadala and his team are working on some mid-year pricing topics. I think we haven't finalized what that's going to be in part because we want to see how the tariff situation plays out. But I feel reasonably confident that we can do something that brings net dollars hopefully to the second half of the year. Charles Steinman - Goldman Sachs & Co. LLC: Got it. Thanks.

You're next question comes from the line of Richard Eastman with Baird. Your line is open. Richard Eastman - Robert W. Baird & Co., Inc. (Broker): Hi. Good afternoon. Olivier could you kind of speak maybe for a minute or two just to when we talk about China industrial I'm curious how developed and how much scale there is to the PI business versus the core industrial business? And maybe we could just start there, but I'm curious how each of those two pieces did relative to Bill's low-double-digit growth rate for the quarter.

Yeah. So I will start to say that we – our mix that we have in China is different to the global mix that we have. If I look to the West and then in particular in the U.S., we have a very high share of product inspection, versus core industrial, and in China, it's still the reverse, core industrial is much bigger than product inspection. And that is historically driven. You will always see that more mature markets have more demand for product inspection equipment, because it's very much quality driven, it's very much about automated packaging and even the industry structure is different. We, in that sense, have benefited heavily in the past for this industrial business. Our product inspection business in China has been growing nicely in the last couple of years, but it is still underrepresented. And then in that sense, I do expect that product inspection is outgrowing our core industrial business, in particular also China. This has not always been the case every quarter, but in the long-term should be that way. To be specific on a group level, product inspection is roughly 17%. As in China, it is 5% of total sales. That alone gives you a clear indication how much upside we have when China starts to further mature and has an industry structure similar to what we have in the West. Richard Eastman - Robert W. Baird & Co., Inc. (Broker): I get you. And then, can I just back the question up and when I look at industrial for the full year in 2018, for calendar 2018, is both PI and core industrial, are both of those businesses expected to be kind of plus mid-singles? I mean, is that kind of order of magnitude should they both grow about, in parity?

Sorry. Just to make sure I got your question. We weren't sure if you were asking what China industrial or total industrial? Richard Eastman - Robert W. Baird & Co., Inc. (Broker): I left China. Sorry. I left China. I backed up to the corporate level. Just curious, given the start here in the first quarter and I realized the comps and things, but I'm curious, do both pieces of industrial kind of grow at that, maybe Mettler average core growth rate?

I think you'll see them both finish the year at about the same growth rate. But I think you'll see the product inspection business growing faster on average for the remainder of this year. Richard Eastman - Robert W. Baird & Co., Inc. (Broker): Okay, okay. And then just, maybe the last question. It may not direct us back. Olivier, could you just kind of update us a little bit on the Field Turbo program? And maybe, are we on track through April here for full year investments there, and maybe where they're slanted, where they're weighted?

Yeah. So the program is very much ongoing. We do these in waves. And I always said, I would continue with the programs as long as I feel the market offers growth opportunities and I definitely feel that way. And I see – continue to see very good results on it. I have seen that last year when I had detailed business reviews with the countries. I mentioned before I was in China, but I also spent quite some time in Southeast Asia was particularly excited about seeing the impact of Field Turbos in Indonesia, Vietnam and so on. So, my commitments to continue with the program is ongoing. In terms of waves, we certainly had an important wave, review wave end of the year where I committed to quite a lot of additional head count. And there's another one upcoming here or more in the summer. And from a regional perspective that might be – the last one that I expect – also the next one is certainly more weighted now to the emerging markets. As when I looked a few years ago, we were more focused also in Western markets. So that changes a little bit in terms of business mix. That's kind of unchanged still very much laboratory and product inspection business that benefits from it. Richard Eastman - Robert W. Baird & Co., Inc. (Broker): Okay, great. Thank you much.

Thank you Rick.

The next question comes from the line of Derik de Bruin with Bank of America. Your line is open.

Hi good afternoon.

Hi Derik.

It's the – a lot of my questions have been asked but just some cleanup. Can you – anything that we need to watch out on like the interest income line? Obviously rates are moving up and just sort of wondering what sort of -- how do you look at net interest expense for the full year?

Mary has got everything locked down. Derik would be the short answer.

Yeah.

We're highly fixed right now, and have been for a few quarters.

I think we're modeling about $36 million for the year in net interest expense. Is that about right?

Yeah see that – hey Derik I think closer to about $33 million, $34 million for interest. And then of course we have other income is income of about $6.5 million. Does that make sense?

Got it.

Okay.

Yeah. And the $1.6 million for the pension continues on in the other income line?

That's correct.

Correct.

Okay. That's helpful. Thank you. And for the full year for the Biotix acquisition, is that still tracking at about 1%? It looks it was a little bit – CAD below where we had modeled it for the quarter, is that still a good way to look at it somewhere in the 0.5% to 1% range?

It'll be 1% for the full year, but without really any impact on fourth quarter. So that's somewhat above 1% for the first three quarters of the year.

Got it, okay. Thanks.

You're welcome.

Your next question from the line of Ross Muken with Evercore ISI. Your line is open.

Hi, good afternoon guys. Just trying to put together the picture here in sort of interesting economic environment, right? You talked about inflation taking up and pricing being maybe a bit better or accelerating and the material cost accelerating and yet we've got industrial here, it's tough comps that were sort of flat to down. And growth in general seems good but then PMIs have ticked down. I guess just trying to think through like this environment versus environments you've seen in the past. I guess it seems like an odd picture a bit comparative to what we would sort of expect at this part of the cycle. And so as you just start planning and thinking, I mean, what are the sorts of things you're keyed in on or looking at? And do you sort of agree with the idea that the PMIs while they're slower are still kind of elevated and suggesting that growth will be quite good for a while? Is it really just a question then in your mind of duration given how long we're sort of into this cycle?

Hey, Ross. Actually yes. But I would also say that when I look at our early indicators lead generation and so on, we have no signals of slowdown at all. And we still feel that the world economy is very strong. We know that we are facing these comparisons topics and that's certainly true for China, but there are no clouds out there that worry us. But of course, we want to stay agile if something happens. But you hear me talking before about Field Turbo the same is true (00:56:20) investments in marketing, investments overall. We are very much in the growth mode and we will adjust our plans if need be, but at this stage we are all in growth models.

I would kind of add to that. We've talked about it in the past Ross that, I mean, yes, we prefer higher GDP growth than lower, but we don't need a huge GDP growth. We need people to stick to their replacement cycles. When they do that we take our piece of that, we take a little bit of share and we can do well in that type of environment. So, yeah, that would be my addition.

Thanks, guys.

Your next question comes from the line of Steve Willoughby with Cleveland Research. Your line is open.

Hi. Good evening. Couple of quick questions for you. Bill, I was just wondering first if you could comment on the product inspection business here in the quarter. I mean I apologize if you had already commented on this, as I'm jumping on late. But, how much of the software trends were related to the internal disruptions you referenced versus what you think is going on in the market? And then I have a follow-up.

Okay. So – hey, so we were down 5% in the quarter to put one number on it. And if you look at the prior year comp we were plus 15%. And so the biggest single reason is we had a tough comp. The second we had two then kind of what I would describe as operational issues where we had expected reductions in our capacity capability for lack of a better expression. One related to we were moving a very large facility in Tampa and are – it took a few weeks for our guys to get fully ramped up there. And then the second was we went live with the new ERP system in the middle of the quarter in our German checkweighing business. That business in April its output was back to normal, but in the month of February when they went live it was – they were producing at a lower than historical levels. So those two items were probably the – maybe had a little bit of an additional impact. And I guess to a certain extent there was probably some Easter impact for our European PI business but it would be tough to quantify the last three. The biggest item is the tough comp. And by the way we also have a tough comp in product inspection next quarter. But I think if I remember right Olivier commented about if you look already at April year-to-date, I believe our business was already caught up to flattish or something.

I mean in essence the quarter came in as expected. You might recall that a lot of time on the call we did already anticipate that this will be a tough quarter because the comparisons and the operational topics we did anticipate that. This wasn't a surprise.

Okay. Thank you and then as a follow-up for Olivier, I saw in your press release you made a reference to new products, which I know historically new products have not been a major driver to overall reported growth, so I was just wonder if there's anything different with new products overall?

No, no. It's the constant enhancement of new products, so not at all. In the prepared remarks I had one example but throughout the quarter we have multiple new products but none that would really move the needle.

Okay, very good. Thank you.

Your next question comes from the line of Jack Meehan with Barclays. Your line is open.

Hi, thanks. Good afternoon.

Hi.

I was hoping you could just update us on growth in aftermarket revenue, service consumables and where some of the initiatives you're working on there to drive growth?

Okay. Let me take – so first of all, we continue to experience here good progress, operational progress but also all the sales and marketing programs that we have around service. I'm very happy how that goes. This is true particularly also for the contract, service contract business (01:00:50) of service. When you look at our numbers, we always need to outgrow with service contracts because our break/fix business is more challenged. Our products last longer, they're better. And so we compensate that actually with having more labor content in our service offering, more pre-emptive maintenance programs and so on. So that's all going well. When Bill afterward shares with you the Q1 numbers, please keep in mind that for service actually Eastern has a much bigger impact, and in that sense we report to you the Q numbers really have a good picture of how the momentum is for the year. But, Bill, maybe quickly comment on the numbers?

So we grew 3% in the quarter. Just as a reminder, last year for the full year we grew 7%, or just shy of 7%. And in the first quarter of last year, we grew by just short of 11%. So if you look at it on a two-year basis in Q1, we're just north of 7% and that's kind of in line with what we grew last year. So, we feel service business, as Olivier mentioned, key strategic focus and execution seems to go well there.

Yeah. That's great. And sorry if I missed it but did you quantify how much specifically you thought Easter impacted the overall results? And the European results specifically?

I think it's tough to do specifically, but I think if you look for example at service, last year we grew 7%. In the first quarter we grew 11% of that 7%, and then if I look at the Q1 of this year we grew 3%. So our two-year growth rate is basically right in line with our – what we achieved last year. So somehow in the area of service because it's labor intensive, it's a bigger impact than it is on product but you see it also on our product business.

Very helpful. Thank you.

And I guess Jack maybe one more thing. I made a point in the script to say that April year-to-date we were a healthy mid-single-digit which of course speaks to kind of where we are if you throw out Easter effects.

Make sense. Thanks, Bill.

Your next question comes from line of Jason Rodgers with Great Lakes Review. Your line is open.

Yes, pretty much everything's been asked. But I do want to ask about Stern Drive and some of the progress you're making with initiatives there?

Yeah. Very happy about how that's going. To recall we launched that last year and one of the countries that actually is the pilot for here and most advanced is China. And when I was down there, I could visit our four facilities there and I was really very, very happy to see how this caused momentum. We see it on the floor. We see it in all the training communication and activities of our teams. And I start to clearly see it also in the numbers in the KPIs that we have. So, very pleased. The program proves that it's scalable. That's always the key success factor. And I definitely compare Stern Drive also to Spinnaker in the sense that we recognize that it's a journey. And we get more sophisticated every year, every way. And one of the key success factor is that we are doing that with our teams, with our employees. This is not just top down toolboxes or methodologies, no, this is very much with an inclusion of the teams and that helps us actually to get this continuous improvement. So bottom line, very happy. In terms of quantification, the way you need to look at it, this is feeding our margin expansion. You see Stern Drive impacting material costs but it definitely also impacts productivity and so the whole margin expansion program.

All right. That sounds good. And Bill, do you happen to have the number of shares that were purchased in the quarter?

Mary's going to look that up for you.

Sure. Jason, we repurchased 187,900 shares in the quarter.

All right. Thanks very much.

There are no further questions at this time. Ms. Finnegan, I will turn the call back over to you.

Thanks, Scott. Thank you. And hey, thanks everyone for joining us this evening. As always if you have any questions, don't hesitate to reach out. Take care and have a good night everyone.

This concludes today's conference call. You may now disconnect.