Mettler Toledo (MTD) Q2 2026 earnings call transcript

Great. Hey, Jonathan. Thank you very much, and good morning everyone. Thanks for joining us. On the call with me today is Patrick Coltonbach, our chief executive officer, and Sean Vidal, our chief financial officer. Let me cover some administrative matters. This call is being webcast and is available for replay on our website at mt. com. A copy of the press release and the presentation that we will refer to on today's call is also available on our website. This call will include forward-looking statements within the meeting of the U. S. Securities Act of 1933 and the U. S. Securities Exchange Act of 1934. These statements involve risks, uncertainties, and other factors that may cause our actual results, financial condition, performance, and achievements to be materially different from those that expressed or implied by any forward-looking statements.

For discussion of these risks and uncertainties, see our recent annual report on form 10k 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 statement except that's required by law. On today's call, we will use non-GAP financial measures and a reconciliation of these non-GAP financial measures to most directly comparable GAP measure is provided in the 8K and is available on our website.

Let me now turn the call over to Patrick.

Thank you, Adam. Good morning, everyone. We appreciate you joining our call today. Last night we reported our second quarter financial results, the details of which are outlined for you on page three of our presentation. Our second quarter results were strong and reflected better than expected organic sales growth across our portfolio, including very good growth in China and emerging markets. It was driven by improved market conditions and our focused spending of sales and marketing program. Combined with our productivity initiatives, this resulted in excellent adjusted EPS growth in the quarter.

Growing forward, we are optimistic market conditions will gradually improve. Our team remains agile and focused on capturing growth opportunities, leveraging our sophisticated Spinger program and innovative product portfolio while benefiting from trends in automation, digitalization and on-shoring investments. I am confident that strong execution of our strategic initiatives will continue to deliver solid financial performance.

Let me now turn the call over to Sean to cover the financial results and our guidance, and then I will come back with some additional commentary on the business in a while. Sean?

Thanks, Patrick and good morning, everyone. Before I review our Q2 results, I'd like to highlight a special item in our financials as quarter related to tariffs. As disclosed last quarter, we had a one-time gross benefit of $52 million from IEPA tariff refunds in Q2 that benefited cost of sales and was offset in part by a $28 million related refund to our customers that reduced our reported net sales by 3%.

Discussion of our results today will exclude the impact of both of these items. Sales in the quarter were $1 billion, up $7% in U. S. dollars, and in local currency, our growth was 6% in above our price, our prior guidance of approximately 3% local currency sales growth. Acquisitions contributed approximately 1.5% to sales growth, and organic local currency sales growth was 4%. On slide number four, we show sales growth by region. Organic sales excluding acquisition and tariff refunds increased 1% in the Americas, 4% in Europe, and 9% in Asia, rest of the world, including 9% growth in China. Slide number five shows core organic sales growth by region on a year-to-day basis. On slide number six, we summarize sales growth by product area.

Organic sales increased 4% in laboratory and increased 3% in industrial, which included 4% growth in core industrial, and 1% growth in product inspection. Food retail grew 11% in the quarter.

Lastly, service revenue grew 9%, or 7% organically. Slide number seven details organic sales growth by product area on a year-to-day basis. Let me now move to the rest of the P&L, which is summarized on slide number eight. Adjusted gross margin was 59.3% in the quarter, an increase of 30 basis points. Excluding unfavorable foreign currency and acquisitions, gross margin expanded approximately 90 basis points due to benefits from favorable price realization, lower tariff rates compared to the prior year, volume growth, and our productivity and cost savings initiatives partly offset by higher transportation costs. R&D amounted to $53 million in the quarter, and was up 3% on a local currency basis over the prior period. SG&A amounted to $263 million, a 4% increase in local currency over the prior year, and include sales and marketing investments offset in part by cost savings.

Adjusted operating profit amounted to $309 million in the quarter, up 9% versus the prior year. Adjusted operating margin was 29.3%, an increase of 50 basis points versus the prior year, or up 100 basis points, excluding unfavorable currency. Adjusted EPS for the quarter was $11.46, a 14% increase over the prior year. On a reported basis in the quarter, EPS was $11.55 as compared to $9.76 in the prior year. Reported EPS in the quarter included a $0.92 net tariff refund benefit, $0.26 of purchase intangible amortization, $0.22 of restructuring costs, and a $0.04 tax headwind related to the timing of stock option exercises.

Finally, we had a $0.31 acquisition-related charge related to higher earn-out achievements on previous acquisitions. That covers the P&L and let me now comment on adjusted free cash flow, which amounted to $367 million on a year-to-date basis and was negatively impacted by the timing of tax payments, which were $55 million higher than the prior year. DSO was 35.6 days while ITO was 4.2 times.

Let me now turn to our guidance for the third quarter in the full year, 2026. As you review our guidance, please keep in mind the following factors. First, we are encouraged by our Q2 results and improve market conditions, especially in China and emerging markets.

Second, conditions in the Middle East remain volatile, and while we have limited exposure to the region, this could impact customer decision-making should conditions significantly change. We are not currently seeing any change in related customer behavior and have not included an escalation of the conflict in our forecast.

Lastly, we are very confident in our ability to execute on our growth and productivity initiatives and believe we are well positioned to game market share regardless of the macro environment.

Now, turning to our guidance for the full year is approximately 4% to 5% reflecting organic growth of 3% to 4%. Our forecast excludes the impact of the previously described care-free funds. Adjusted EPS for the year is forecast to be in the range of $47.50 to $47.50, which represents a growth rate of 10 to 11% or 11 to 12% excluding currency. This reflects an increase from our previous guidance of 8 to 10% growth. At recent spot rates, foreign currency is estimated to be a 1% benefit to sales growth and a slight headwind to EPS for the year. For the third quarter of 2026, we expect local currency sales to grow approximately 4%, which includes approximately a half percent benefit from acquisitions.

We expect adjusted EPS to be in the range of $12 to $12.15, a growth rate of 8 to 9%, or 9 to 10% excluding currency. Currency for the quarter at recent spot rates would be neutral to third quarter sales, and a 1% headwind to adjusted EPS. Some further comments on our 2026 guidance. We expect total amortization, including purchase and tangible amortization, to be approximately $78 million. Purchase and tangible amortization is excluded from adjusted EPS and is estimated at $28 million on a pre-tax basis or approximately $1.07. Interest expenses forecast at $67 million for the year. Other income is estimated at approximately $24 million.

We expect our tax rate before discrete items will remain at 19% in 2026. Pre-cash flow is expected to be approximately $900 million in 2026, which represents 6% growth on a per-share basis. Share repurchases are now expected to increase to $875 million for the full year as compared to our annualized repurchase level of $825 million during the first half of the year.

That's it for my side, and I'll now turn it back to Patrick.

Thanks, Sean. Let me start with some comments on our operating businesses, starting with Flap, which had good growth in the quarter across most product areas. We saw improving trends across our bio-pharma customer base and continue to see storm growth in process analytics and bio-production. Laboratory balances and analytical instruments growth was also strong and benefited from the many innovations we have brought to the market in the segments like semiconductor, advanced materials, and batteries.

Turning to industrial, core industrial developed this border with sales growth driven by strong demand for our solutions to enable automation. We saw strengths across markets like bio-pharma, food manufacturing, semiconductor, and new energy. As expected, product inspection organic sales growth, this border was modest due to the timing of customer projects, but organic growth is expected to pick up again in the second half.

Lastly, food retail sales growth was better than expected due to the timing of project activity. Now, let me make some additional comments by geography, starting in the Americas where sales grew 1% excluding acquisitions. We had strong momentum in most lab product categories, and in our core industrial automation solutions and product inspection. These results were offset in part by timing of food retail and transportation and logistics project activity.

Turning to Europe, sales growth this border was solid and included growth across most of the business, including strong growth in core industrial and food retail.

Finally, Asia rest world had very good growth this quarter across the portfolio and in most major markets. Our business in China grew 9% and was stronger than expected as our team continues to do an excellent job identifying high growth markets and leveraging our innovative portfolio.

Bio-pharma customs demand was also healthy and contributed to our results. Markets outside of China also had strong growth this quarter. Emerging markets have been an important element for our long-term growth strategy for many years. India, Southeast Asia, Eastern Europe, and Legend of America offers excellent growth opportunities as these markets develop and mature. And we believe many of them will also benefit from near-shoring investments over the coming years.

Our company is uniquely positioned to capitalize on emerging market growth over the coming years. In the second quarter, emerging markets outside of China represented approximately 18% of our sales slightly more than our business in China and grew high single ditches in the quarter.

Emerging markets, excluding China, have also grown high single ditches on average in local currencies over the last five years that buff the company average and are an important contributor to our growth. To take advantage of these growth opportunities, we have long-standing dedicated market organizations in emerging markets, China, and around the world. Our market organizations are a significant competitive advantage, allowing us to stay close to customers and better understand local market needs. We have dedicated growth plans for each major country and we leverage our broad portfolio of solutions across a range of price and value points to meet varying customer requirements. Additionally, in markets like Mexico, we have further developed local assembly and manufacturing capabilities in recent years, which strengthen our ability to serve local market needs and enhance our competitive position.

The market organizations in emerging economies also leverage the same spinnaker sales and marketing programs we have developed in other countries, including various digital tools, value selling guides, and sales enablement tools. We have also rolled out blue ocean to most of our way most and having a single instance of a global information technology infrastructure provides rich data, analytics, and unique real-time business insights. This is a significant competitive advantage that allows us to target opportunities in various hot segments like bio-processing, GLP-1s, semiconductor, and battery in an agile way.

As domestic and foreign direct investments continues to grow over the coming years, we expect emerging markets to remain a healthy contributor to our growth well into the future.

In summary, we are very pleased with our Q2 results and the solid growth our team has delivered. We remain focused on capitalizing on our customers' investments in automation, digitalization, and onshoring around the world. After a few years of disruptions and uncertainties related to tariffs, governmental policies, and geopolitics, we believe customers will continue to return to a more normal replacement activity going forward. We have maintained a strong focus on investing in innovation and growth in recent years while protecting profitability, which will serve as well as our markets recover. This concludes our prepared remarks. Operator, I'd now like to open the line to questions.

Yeah, thank you, Dan. And yes, of course, we are very happy with the growth we have seen in China. 9% and Q2 was really very strong results versus the guidance we initially had for the quarter. I mean, the growth has really been led by industrial, which had double-digit growth in China. We were benefiting from many of the core segments, such as biopharma, but also food, as well as the hot segments like investments in in battery that is happening in China. Full app, the growth was a bit more modest. We expect to continue to improve when they are also in the second half.

Both also from biopharma and maybe also academia will pick up towards the end of the year. We heard at least some indications of some additional funding for academia in China as well. But then again, they also did the good hot segments and strong investments in areas like lifting battery and gear energy. So overall, I would say really led by industrial growth across many segments, and pharma was a good part of that as well.

Yeah, hey, Dan. And then just to be specific, like in terms of the second half of the year, we're looking at high single-digit now for China also for Q3 and for the full year. And we kind of, this momentum that Patrick referred to on industrial, we feel very good about entering the second half. Also, the trends around automation and digitalization that we talk a lot about, we're definitely seeing those benefits in China as well. And then I think as we kind of go into the second half of the year too, we also feel like the lab business is gradually improving as well.

Yeah, no, hey, thanks, Dan. So if you remember, we had a really good Q1 in PI, and then we were trying to caution people that Q2 would be a little bit lighter just given the timing of how the project activity was looking like it was playing out. But as we kind of like go into the second half of the year, I mean, we feel very good. I mean, we're probably looking at mid-single digit growth in the third quarter. And for the full year, we're probably looking at high-single digit growth, which is probably more like mid-single digit growth on an organic basis. But when you step back, 70% of that business is food manufacturing. So from an end-market perspective, not quite like pharma, but when we look at how the team is executing, we actually feel really good.

I mean, we talked a lot about the benefits of innovation in this business over the last few years, and we kind of continue to see that. We come in with a couple new products this year, which is pretty exciting. And then this general strategy that we talked a lot about in terms of how to better position ourselves with a mid-market segment seems to be, you know, working very well and well received in the marketplace.

Yeah. Hey, Taiko. I'll take that one. Thank you. Hey, so I'll start with the product categories, and then I'll give you the division. So, lab for Q3 would be mid-single-digit. Core-industrial, we're looking at low-single-digit, and I think it's important to remember that core-industrial had a very challenging comparison to the prior year in Q3 of last year. It grew 10% organically. Product inspection, mid-single-digit, which I just said, and then retail, we're guiding it flat. In terms of the Americas, we're guiding it low to mid-single-digit.

Again, this one had a more challenging comparison just to highlight in Q3 of last year, which was up think 9% organically. Europe, up low-single-digit. China, we talked about high-single-digit, and then maybe just to kind of wrap it up with the full year. Full-year lab would be low to mid-single-digit. Core-industrial would be low to mid-single-digit. Product inspection would be high-single-digit. And, of course, there's a little bit of acquisition from the, largely from the first half of the year, and these numbers, so core-industrial would be low-single-digit organically. PI would be mid-single-digit. Retail would be low to mid-single-digit. If we look at the regions, Americas would be low-single-digit or about flattish organically. Europe would be low-single-digit, and then China would be high-single-digit.

Yeah, sure. Okay, so on the pricing side, continue to be really pleased with the team's execution, but ultimately, pricing comes back to value proposition. I think a lot of the investments we've been making over the last few years on innovation continue to pay off well. So, in the end, our price realization for the quarter was around 3%. So, we're very happy with that. So, a little bit better than the two and a half percent that you were mentioning in terms of our original guidance.

Towards the end of the quarter, we also put in place some additional pricing measures, you know, isolated in a few areas where we're seeing a little bit of inflationary pressures. So, our guidance for the second half of the year is more in the two and a half percent kind of a range. And again, we're, as a reminder, we're also lapping a lot of the mid-year price increase actions that we did last year in response to all the tariffs from last year. So, when you kind of wrap that all up, our full year price realization is now approaching 3% for the full year. I think the other part of your question was China. I mean, not China, chemical or Europe.

Do you want to take that one or?

I can take that one, yeah. So, yeah, on chemical, just as a reminder, I mean, overall, it's under 15% of our total sales and the biggest exposure across industrial and lab for chemical. It's, and as far as it's mostly specialty chemicals. And when we talked in Q1 about the pressures we have seen in the EU, it was mainly energy related. Some of you on things, actually, the EU chemical results were better in Q2, so they recovered. But we still would say we take a bit more cautious stance on your wall segment still because they are more exposed to energy cost fluctuations than other segments that we're seeing. But overall, of course, in the quarters to come, you will also have easier comps in the segment.

Yeah, we will not talk. I think so. We will not talk about 27 yet. But of course, we are actually quite delighted with how lab is performing. And a lot of that is based not only on what's strong go to market strategy and our local market teams that we have that are really very close to our customers. I think it's also based on the fact that we have really put a lot of effort into innovation over the last years. We launched a lot of new great products across the lab portfolio.

And within lab, at the moment, of course, the process analytics business is performing extremely well in bio pharma, as you can imagine. So that drives a lot of the growth as well. And then you look at the rest of the portfolio that we have, analytical instruments have been very good in QQ, and we see that also moving forward. We saw the pipette business coming back to growth as well as quarter, which is very promising. So I would say, yeah, we are actually quite pleased with the momentum we have in lab moving forward. We do expect, as Sean said, full-app mid single digits growth about that range. And it's pretty broad-based. I think if there's even some upside to this, it would be potentially an acceleration in China that still was more in industrial in China, and I think the lab is more to come.

Overall, extremely well positioned for lab products with our labx software platform. As you know, we provide about 40% of the instruments that are used typically in a QA, QC lab, and most of them are connected to our labx portfolio, which gives our customers a really unique opportunity to do just their testing in a very compliant way and using labx as a complete workflow control system, and also aggregate the data to use AI on the next level if they want to. So I think we are very pleased with where we are the flap, and I think there's more to come. Thank you. Yeah, good to hear. Okay.

Yeah, so just to be clear that the tariff refund topic is excluded from our results, our adjusted results, and our guidance.

Now, of course, changes in tariff rates is a different story, and so that can be a factor here. But we feel very, very good about the team's execution. I think we've been trying to really focus on this always in the past. I think if you look at the different initiatives that we have kind of underlying margin expansion, like the Stern Drive program, productivity programs, cost savings initiatives, they're all, I think, very important, and I think it definitely highlights, I think, some of the culture in the company as well. If we look at Q2, you kind of heard if you look at the operating margin, we're up like 100 basis points if you exclude currency. If you look at that from a full-year perspective in terms of what we're thinking for 2026, we'll probably be excluding currency probably up 67 basis points, maybe modestly better than what we were thinking before.

Now, there's some currency in that, so on a reported basis, or not excluding currency, it would be up slightly, maybe in the 10 to 20 basis point kind of range.

Yeah, it was about, so in terms of, in your talk, I'm sorry, Vijay, you said, did you say FX in M&A in terms of revenue? In terms of revenue. So correct. Yeah, yeah, yeah. So I usually don't think in terms of foreign exchange. So the acquisition contribution was about one and a half percent. And then in terms of FX, I think if you kind of like look at our reported numbers versus our local currency, it implies 1%, but I think with rounding, it's north of 1%.

Yeah. So Vijay, a couple things. So first of all, I think if you look at it from a growth perspective, the implied Q4 is a little bit higher than the Q3 guidance. I think a lot of that also has to do with the fact that Q3 has a much more challenging comparison to the prior year. I kind of called out a little bit the industrial business as an example, and also the Americas had a challenging comp. So I think that's kind of part of it. But I think if you also just look at sequentials in terms of just the flow of quarters and dollars from one quarter to another, I feel like the sequentials are pretty in line with historical sequentials.

And then as we exit the year, we feel like we have some good momentum entering into the back half of the year. And I think when you look at what we're seeing in the business today, we definitely feel good about the momentum that we're carrying into the second half.

I started with bio-processing, which is all, I think, a low double digit of total sales. It's mostly pro, but also part of the industrial automation portfolio. Place here pro at really good growth again in Q2, especially in Americas, with bio-processing. And there's also some good equipment demand from industrial coming on from these automation providers where we serve and we serve them with our automation solution equipment from industrial products that we have. So there's really good momentum there.

When you ask about the investments and farm on bio-farm, I'm probably referring here to the re-shoring activities, I guess. We, I think we are, number one, we are extremely well positioned for that because we about 50% of our sales go into production plus about 20% QAQC. We cover a lot of the value chain there and we are in an excellent position with our bio-farmer portfolio, but also helping on the industrial automation portfolio. We see some activity, some good activities, some art cues here related to re-shoring, but I still would say it's early in its think it is momentum will continue to pick up in the second half and also as we go into 2027.

But yes, there's some like activities and you're probably all I've heard about, you know, companies expanding their manufacturing in the U. S. I think until there will be really some groundbreaking of additional facilities that will still take some time and then will then be more investment coming in the years 27 and 28 for now again.

What most of what we see is facility investments and in capacity expansion in the U. S. And another interesting dynamic too is like, you know, there's been a lot of questions and talk about replacement cycles and if you just look at our results in Q2 and you know, Q1 quarter doesn't, you know, necessarily make a trend, but it was encouraging to see, you know, very strong growth in the analytical instrument business as well as laboratory balances. And if you think about the types of instruments that are typically on a QA, QC bench, you know, that that cat those categories actually did very well in the quarter here.

Yeah. Hey, Mike, maybe I'll take that one. Patrick can end some color if you'd like. But, um, but, you know, hey, I think there's a little bit of a difference right now. I think one is like, there is very strong momentum that we're seeing in terms of customer activity. And so we feel very good about how we're sitting to the second half. Now, we always acknowledge we're pretty short cycle with one and half, once a backlog. But when we look at everything holistically, we actually feel good. And we start to laugh also some some topics from a year ago, like academia and biotech, which are smaller and markets in general. But we feel like some of these markets are starting to improve.

We're starting to see growth again and the pipetting liquid handling business, which has also been really good. It's been a headwind for a while for us. If you look at like the Q1 dynamic, like you mentioned, you know, absolutely. And I think one of the issues there was that, you know, we had expected, we had expected companies maybe start the year slow. I think with all the uncertainty that was hitting companies right at the beginning of the year, you know, one of the things we kind of felt was that a lot of customers were holding off on finalizing budget commitments within their organization. So a lot of things were also getting held up as kind of like a generic statement.

Right now, it seems like, you know, people have their budgets. They know what they want to do. There are the projects and and while things can always change, we feel like there's pretty good momentum going into the second half of the year. And then I think we'll, you know, we'll learn a lot more about what it means over the next three months and it might be more of a question on what it could mean for 2027. But, you know, I think the reality is that there's a lot of dynamic topics going on always in the world and we'll continue to monitor them. But regardless of the environment, I feel like the team is trying to stay focused on what we can control and executing well.

Okay. Thanks, Christian. Yeah.

Yeah, I think it's fair, Jack. I mean, I think if you kind of like look at how we're, you know, how the second half is like very happy with our Q2 results, of course. Very happy to raise guidance for the full year. Very happy with the momentum we're seeing in the business. Acknowledge, if you're trying to look at what your second half model looks like today versus, you know, three months ago, it looks like maybe there's a little bit of conservatism or moderation slightly. It's not reflecting anything we're seeing in the business, but, you know, we feel like, yeah, maybe that kind of de-risk city concerns out there for any of the geopolitical stuff. And we feel generally, you know, pretty good as we kind of go into the second half of the year.

Yeah. Yeah, no, it's a good question because, you know, if you kind of look at, well, first of all, there's a couple different things. The one thing that, you know, isn't necessarily evident in the results until you like look internally in a vacuum is like the categories that are really supporting automation and digitalization around the world are actually growing very well. And we see that. We also well were less correlated to PMIs than we were 10 years ago. We also recognize that, you know, in the economy does better. We generally should do better as well too. And even though there's a little bit of a delay.

But the one thing that maybe doesn't jump out is that, you know, within industrial, there can be small pockets of project activity. And one of those pockets is our transportation and logistic business. And the reality is there's just like some timing going on with larger customer projects. And that's kind of like mitigating some of the other positive results you're seeing in that business. But overall, we feel actually quite good. And if you kind of like look at even our Q3 guide, you know, despite lapping also some pretty from a year ago, we we've actually feel pretty good about, you know, our guidance and how it's how the outlook is for the second half.

Yeah. Okay. Good morning. I mean, I think I partly at least had to listen in one of my former answers. We see some activity there. If I have cues that are related to reshowing, again, as customers are expounding manufacturing in the United States, that is a good indication that there's more business to come. Again, the larger factories and investments still have to be made, so there's still early innings. But we see, we truly see the former bio-former investments as largely in commendable for us moving forward when you think about bio-former cap explains, especially when it comes to instrumentation. Think about the tank scales, think about the QAQC lab, so that it will be moving forward some good momentum.

And we are, of course, in a lot of discussions with some of our key customers there about their plans. And still early innings, but yes, the momentum has picked up and we have pretty positive that this will carry well in 2027, 2028.

Maybe Sean, you can repeat again how you guided America's for Q3 and for the school year.

Yeah, so the Americas, the guide for Q3 is modem is single digit, but again, we're lapping 9% in the prior year. And if you kind of look at the different end markets, I don't know, Patrick, if you want to contribute here, but I can kind of run with it if you want. In terms of the end markets, we're certainly seeing improvement in some of the areas that have been softer, like academia or biotech. And, you know, our pipetting business is a good example of that. You know, it's larger exposure for that business, smaller for the Americas overall. So that feels pretty good. Bioprocessing has been a very hot segment in the US for us. A lot of the different hot segments as well that process analytics particularly benefits from power semiconductor are also doing very well.

And then if you think about like these trends around industrial automation, digitalization, good momentum there, as I mentioned. And, you know, like Patrick said, you know, ensuring we're well positioned for it, but still probably very early innings there. And then what was also nice is just like I kind of commented on earlier about like the, like, if you think about the value chain, you know, that QAQC space where like analytical instrumentation, like that was a nice, that was good momentum also in the quarter. So I think, you know, kind of like the setup, the trends continue to, I think, go generally in the a good direction. You know, we do get lumpiness from time to time from things like retail.

But, but if you kind of look beyond that, you know, the underlying business is, you know, looks positive today.

Yeah. And we'll talk probably more about those types of assumptions that are upcoming analysts today, but I certainly wouldn't expect us to come out with an higher price increase guidance than 2% we feel pretty good about that one for the long term.

You know, in terms of breaking it down, Callum, we we typically wouldn't get into too much detail, but maybe a good way to think about it is that, you know, you know, we tend to do well in most geographies in the world. And, but, you know, geographies where there's higher inflationary pressures are going to have higher price increases. So, and so, for example, like in the United States, of course, we had a lot of the care pressures, you know, a year ago. So, of course, the U. S. would have had a higher price realization than some of the other geographies.

Yeah. Thanks, Kalamay. Hey, these hot segments, whether it's semiconductor, battery, GOP1, and others, these are all low-sing solution, digit contributions, all sales, but they see really good growth. And, of course, our market teams are really focused on solutions for these areas. So, I would say we play well in them. If you look at the U. S. , as Sean said, semiconductor definitely is a really good segment, GOP1s, the whole biopharma segment.

If you go to all the areas around the world, if you go to, for example, to China, at the battery segment, it's really also back there to a very good momentum and also investment in biopharma and GOP1s. But don't think this is a larger part of our business, again, the broader part of our business is in pharma, biopharma, in chemical and food. And other areas, but these hot segments are important from a perspective that we really want to maximize our growth in these areas as well. And we do very strategic investment when it comes to solutions for these end markets and working very, very close with customers whenever they need specific tailored solutions for their segments, for example, very good results there working closely with some of the largest battery manufacturers over the last couple of years to make sure that we develop tailored solutions that really drove significant growth for us in these areas.

Yeah. When you look at lab, I mean, as a lot of it is, of course, to invite innovation via broader, not only in terms of automation and digitalization capabilities, but that's a good part of it as well. You got that. I mean, when you think about how pharma companies are automating their experimental setups, they'll use a lot of our equipment together with some of the automation partners that we have and to automate their experiments and to really try to towards higher throughput. What is essential there is that they also have an informatics platform like LabEx that collects all the information and then they can use it on an equidicated level to drive the next experimental conditions, etc. But lab overall is benefiting across the board, not only from automation, but also from the number of new products and new features with the products innovation that we released over the last years, and it goes almost across the entire value chain in the lab.

If you think about the more early research part, we launched a new semi-automatic pipette this year, which is really received really well in all the chem majors, launched a new solution that I think will drive some good growth moving forward, and then on the lab product categories we have also launched a lot of new products. So I think given that we have also a big exposure to the QA, QC market, that will be a good momentum for us moving forward.

Yeah, and I think the part of your question was also the uncertainty. I think the the increase certainty certainly helps, right? We hear that a lot in terms of like biopharmine, generally spending more than they, where there was a lot of hesitation at the beginning of the year.

Yeah, service in the quarter grew, what was it like? It was 9% and organically it was 7. Again, it's 7. So again, really growing faster than our products at the moment, and maybe proud of that, we continue to make really strategic investment. In our service business, we have still a good opportunity to continue to out go. The rest of the market number one, our service is an important business for us because it drives across a lot of customer loyalty. Our net promoter scores are very high in this area. We launched all the new capabilities in service. For example, our service engineers have no access to an AI-supported knowledge base, but they can basically use all of the internal information that we have regarding earlier service records about R&D material, application notes, etc. Whenever they go out and serve as a product, they basically can use these AI-supported tools to do best in class service, which drives, of course, our first fixed ratio a lot and also drives customer loyalty up.

There's a lot of things that customers can get, but I say only at MT, because we have access to this data. We have access to solutions that none of our competitors have and comes to servicing instruments that I install base. And there's still a growing opportunity for us moving forward. So I'm very optimistic that services will continue to grow as well, but last year we, for the first time, exceeded $1 billion revenues and services, and that's at a high-sing electrical fund.

Yeah, so to put it in perspective for the year, it's probably going to be a high-single digit for the full year. Q3 might be more like mid to high, but when you step back for the full year, we're very happy with that performance.

Yeah, thanks. That's a very good point. I mean, it's not only the U. S. pharmacopia, we have seen over the last year and already seen in the generations of the Japanese pharmacopoeia and the China pharmacopoeia last year, which actually had the same to same revisions when it comes to weighing regulations with help, which helped to drive incremental growth and be extremely well-positioned before, except with the reasonably launched portfolio of new lap balances to help our customers to support them with complying with these regulations.

Yeah, very good question, Dan. Thank you. Yeah, if you're growing high single-digit in these emerging markets outside of China, and of course, if you think about, for example, India has great momentum, if you think also regions outside of Southeast Asia, I think about Latin America, Mexico, Brazil, et cetera, where we see pretty good growth and also good investments of many companies out there. There is also some reassuring or home-shoring, but let's say, benefit a lot from the growth opportunities across other platforms. So this is a play that goes across, I mean, if you think about the markets, it goes across pharma, but also chemical, and the chemical. So if you think, for example, about investments in, do the battery segment, where manufacturers have expanded their footprint outside of China into other areas, into Asia-Pacific, and that comes along with a lot of investment in new instruments, but also, of course, related services.

I wouldn't say that there's a significantly difference in terms of connect rate when it comes to the laboratory instruments outside of or in these emerging markets compared to other regions. So that, of course, then also drives an additional incremental revenue opportunity for us moving forward and also recurring revenues. We also do well on price as well in these markets. It's, like I said before, it's very much a global topic for us where the value proposition tends to resonate globally, which is great.

It's certainly a geography that we prioritize on. And we just think we have a lot of great opportunity there. And if you look at the underlying, some of the near-shoring and opportunities with generics, those types of things, there's just a lot of good things on the horizon there. But I mean, hey, all the other areas too, we differentiate on as we allocate resources and not to repeat them all, but Patrick mentioned a lot of them. But like, but they're all, whether they're in the Asia, East, and Europe, Latin, South America, there's a lot of great opportunity. And one of the strengths of Metler has always been that we have direct sales organizations in these individual countries so that we can really understand the local markets and really have teams that really have that application know-how and work with the local customers.

And that really makes a difference.

Thanks, Jonathan. And thank you, everybody, for joining us this morning. Please feel free to reach out to me if you have any follow-up questions. And I hope you all have a great weekend. Take care.