Mettler-Toledo International Inc. (MTD) Earnings Call Transcript & Summary

Okay. Thanks, everyone, for joining us this afternoon. We have Mettler-Toledo next up for our fireside. Representing the company, we have Shawn Vadala, the CFO. And I think Mary Finnegan, the Treasurer and IR, she's in the background. Shawn and Mary, welcome to the conference, albeit it's virtual this year. Nonetheless, it's great to see you guys. Maybe I'll kick it off with something that's been topical, Shawn. Second wave, what's been the impact on the business? If any, I mean, based on some of the comments your peers have made, it's almost preannounced. I mean, it seems to be the tools group has hung in -- it's been pretty resilient if that's the term. I'm curious on what it's been for Mettler because Mettler, as we all know, manages to perform no matter what the environment is.

Yes. Sure. So hey, first of all, thank you for hosting us today, Vijay. Good to see you as well, and I hope everybody on the call had a good holiday weekend. In terms of the second wave, at this point in time, we're not seeing any significant impacts on our business, kind of similar to some of the commentary you would have heard yesterday. Probably the one area where I could imagine there could be some impact could be potentially our Product Inspection business. It's too early to judge that it right now, but that's the one business that we've seen the most impact from the virus throughout the past year. And if anything, it would potentially have the impact of delaying some installations or some project activity. But I would expect that to be a pretty insignificant amount compared to our overall portfolio. But as we kind of continue through the year here, we do see generally favorable trends in different parts of the businesses, like the whole biopharma area as an example or China as another example. But of course, we need to keep in mind that there are other segments out there too that are having different experiences, and it's really some of these other segments like a Chemical segment as an example of the other side of the coin where it could have created some uncertainties for us in terms of like how we entered 2021. But overall, we're very favorable. We feel very good, in particularly about our organizational agility in our -- and the execution in the company. And I think you kind of saw that in our third quarter results. And as we kind of go forward, that's really our mantra. We recognize the situation is very dynamic. Regardless of how we all feel today, tomorrow could be very different. And the most important thing for all of us is to kind of very closely monitor our business and to make sure that we're agile and we react accordingly. And that's very much how we've approach this past year. And I think that's very much how we're going to continue to navigate things as we enter 2021.

That's -- those are helpful comments, Shawn. A couple of things you mentioned out there, China. I think this is one which came up on the 3Q call. Perhaps there was some catch-up in China for 3Q, maybe comment on China in the context of China being positive year-to-date? Have we seen those 3Q trends sustain into Q4 or perhaps should we expect some moderation given those commentaries around catch-up in 3Q?

Yes, sure. So hey, we felt, of course, very good about the Chinese business in the third quarter. As a reminder for everybody on the call, we grew 17%. And what was interesting is that when you start to break apart the business, the Laboratory business was up low double-digit, but the Core Industrial business was up more than 20%. And industrial growing at that kind of a level was much better than what we would have expected, especially when you consider some of the discussion earlier in the year on the different programs surrounding stimulus in the country. They sounded like programs that would have affected more on the Laboratory side, continued investment on life sciences, a lot of talk and rhetoric around public health and public safety. Some of the strategic industries that they wanted to invest in probably would have been more directly linked to some of our analytical instruments on our Laboratory side. A lot less discussion on economic investment and like the economic zone kind of going into the western part of the country, which was something that they talked a lot more about with historical stimulus. But when we saw the third quarter results, of course, as I said, much better than expected, we very much viewed it as a -- yes, we have good execution in the business. Yes, we are doing a nice job of identifying growth opportunities and pursuing more attractive segments to the market, but it certainly felt that there was a pent-up demand topic also going on and perhaps a little bit of stimulus. And it's always hard to quantify either one of those topics. And we'll kind of see how things play out here. But certainly, on the stimulus side, it's not as though we're hearing any necessarily programs behind an industrial type stimulus, but that doesn't mean that there wasn't necessarily some project activity going on in the quarter. As we look to the fourth quarter, our guidance was a high single-digit in China. That high single-digit growth reflected high single-digit in both the Laboratory and on the Industrial side, hey, let's see how things developed during the quarter. December is always an important month in any Q4. But right now, we feel very favorable about the trends in China as we kind of finish 2020 and as we kind of enter 2021. And as we look to next year, probably the bigger thing on our mind is the more challenging comparison we're going to have in Q3 of next year, especially on the industrial side. But as we kind of look beyond 2021, we're very favorable about China. In the short term, there can always be a lot of volatility. I mean, you've heard us say many times in the past that things can change very quickly in China for the positive or for the negative. That's certainly been true here in the past year. So we're always a little bit cautious when we have to provide guidance out for a full year at this time in the year for China, knowing that there can always be short-term volatility. But regardless of what we experience in 2021, as we look at the longer-term trends, we just feel very positive about China. I mean, we have a very well positioned, a very strong business. It's been very much pursuing the more attractive market segments now for several years. So the mix of business is very favorable. I think we're very much positioned for not only trends in life sciences, but also some of the trends in the country wanting to become more self-dependent in some of the different manufacturing sectors beyond life sciences, whether it be microelectronics or other subsectors of the economy. And as a reminder, not a lot of our customers in China are exporters. So I think we would benefit from a lot of these trends. And we also see the Chinese also focusing increasingly more on quality and automation. And this is not a new trend, but I just feel like a lot of trends in 2020, you've kind of seen an acceleration of different topics and I think like these are additional topics that make us well positioned for beyond 2021.

Yes absolutely. And on the topic, Shawn, when you look at the medium to longer-term in China, the new 5-year plan, was that consistent with your expectations? Or some of your peers have sort of made some anecdotal comments about trends being very favorable in the new 5-year plan?

Yes. I mean, it didn't catch us off surprise. I mean, I think that the government has been very focused on life sciences in general in developing their own industry for a while. There's been a lot of investment in this area. And I think really going back to the beginning of this year, there was already a lot of talk about just a general investment in the area of public health and public safety. And there was a feeling that they wanted to have a little bit more balance on that versus some of the economic investment they historically had with developing some of these economic zones. So no particular big surprise to us. But again, we've always been very positive on China. It's 18% of our business, and we've always felt like longer term this is a very favorable trend for us.

Got you. And just maybe to close out this fourth quarter commentary, Shawn. You guys did 6% in 3Q. The guide calls for a little bit of moderation. I couldn't see anything in the comps, were there any timing elements when you think about Q4? Or perhaps this has been more conservatism just given the unknowns and perhaps China, like you mentioned, there might have been some timing elements involving China?

Yes. I think that's really it, Vijay. I mean, from a trend perspective, we didn't necessarily anticipate any significantly change in trends kind of entering the quarter. The one thing that really stood out to us was that we didn't expect China to grow 17% again in Q4 after Q3 and without really understanding exactly how much of that Q3 was pent-up demand or stimulus versus just good execution and market recovery, it's difficult for us to put our finger on. So as I said before, we were guiding towards high single-digit in the fourth quarter, and that's -- I think that's probably the primary difference that you see in our guidance.

Understood. No, that makes sense. On maybe a slightly different topic. When you think about the outlook and it's - one, it's interesting, you guys gave the annual guide. And I think you were one of the first tools companies to give a forward-looking guide, and I've gotten a few questions from investors before your earnings call on whether Mettler would or what not, and I'd taken -- obviously take the other side of the badge, which I lost. But it's -- now that we have the vaccine data with 90%, 95% efficacy rate, the 4% to 6%, are you still comfortable with that? Or perhaps is that looking tad conservative now, especially given the easy comps maybe with a cyclical rebound, and now you have the vaccine data. So help us frame that 4% to 6% outlook for fiscal '21?

Yes. At this point in time, there's no need for us to try to update our guidance. I mean, we're only sitting on 1.5 month worth of backlog at any point in time. And we haven't even started 2021. So we need to see how the year develops. Probably the -- and of course, we're thrilled with the efficacy rates of these vaccines that have been published in the last few weeks. But let's be realistic. The broader distribution is going to still take several months for these vaccines. And for us, there's certainly some positive cases for 2021. The favorable trends that we mentioned before in biopharma entering the year, China has good trends, but we'll have a tough comp. But some of the other business segments will have a more challenging comp. But for us, probably the bigger thing in the back of our mind is just what does the uncertainty of these -- of the virus really mean. And we're kind of experiencing it now when we see the social lockdowns. If that further expands, what does that mean to some of these other industries in the first quarter. And I think the first quarter is going to be a very interesting quarter for everyone to navigate. I think there's -- it will be interesting to see how things develop here over the next couple of months. Maybe the other uncertainty on our mind is there is a question mark in terms of what does this all mean to the economy? Right now, PMIs look very nice. It's great to see. But is there going to be a lingering effect on the economy from the past year, especially once we get beyond various stimulus programs around the world. And so that's maybe another thing in the back of our mind. So with some of those uncertainties, we kind of broadened our range a little bit more than we would have in the past at this point. And we certainly can see a different range of outcomes in 2021. And as you mentioned, it's not like a lot of other companies are providing guidance these days, but at least we felt like it was important to share our current thinking with everyone and how we're managing the business. And we'll see how things develop. But I also think we need to kind of get through the first quarter and really get it into that Q2 when you start to lap things, and then we'll certainly all learn a lot more at that point in time.

Understood. Now that makes sense. And I think you did mention biopharma. Could you perhaps remind us what percentage of Mettler's revenues come from biopharma? You did have some COVID-related tailwinds. Is that coming in biopharma? And how should we think about tailwind? So as these vaccine manufacturing ramps up, is that perhaps a bigger source of upside for Mettler?

Yes. Sure. So hey, maybe there's a few pieces to that question, so I'll kind of take them one at a time. So in terms of life sciences or biopharma, we would define that as traditional pharma, the bio side of it as well, CROs, CDMOs, testing labs. When you put that all together, we would estimate that, that's about 1/3 of our business. Of course, it's going to be a higher percentage of our Laboratory business and a lower percentage of our industrial business. I think one of the interesting things about our biopharma exposure and it's very much a Mettler-Toledo statement in general, is that we have a very diverse exposure. We're in R&D labs, we're in quality labs, we're in process development, and we're also in production. And so we have a very wide range of applications that we're serving with a very wide range of instruments. On the -- in the Laboratory side, as you probably heard us talk about in the past, we can cover up to 40% of the instruments on a typical laboratory bench, and we can connect most of those with our LabX software. And then if you get specific to biopharma and kind of like the research labs and a biopharma or the quality labs, you'll see instruments like liquid handling like our pipettes, you'll see UV/VIS, you'll see PH meters and things like that. As you kind of go down the value chain and get into process development, we have automated chemistry equipment that we sell into process development. We also have automated chemistry instruments that are good quality checks for downstream bioprocessing that can measure things like protein aggregation and things like that. And then if you get into the heart of bioproduction, you get into Process Analytics. And so in Process Analytics, we have a very wide range of different sensors like PH meters, CO2, turbidity, TOC. I mean, we also have pure water applications for like microbial detection as well. And a lot of these are in the upstream parts of bioproduction, but we also have things downstream as well. So again, very broad exposure. So now if you talk about tailwinds related to COVID, the primary tailwinds that we've experienced so far this year have been in the testing labs. And so you can imagine pipette and pipette tips are in high demand and these testing labs to conduct the COVID tests. We estimated that we would have benefited between 1% to 2% from COVID tailwinds in the third quarter. As we kind of look to 2021, I can imagine we'll continue to have some of those benefits certainly during the first half of the year, particularly in Q1. We'll start to lap the impact as we get to the second half of the year. So it might not be an incremental benefit anymore, it could frankly be a decremental to the second half of the year, not that we won't have some benefit. It's just that it might not be as much as what we just experienced in the third quarter. But that business is thriving at the moment as you can imagine and the team is executing really well, extremely well to take care of customers in this situation. The other part of the tailwind benefit that you mentioned in the question is on the production side. The primary product categories that would benefit in production would be our Process Analytics business. And to a certain degree, we also have industrial weighing modules and weighing sensors that would benefit as they kind of weigh bioreactors and things like that. But as we kind of look towards that benefit, of course, it's hard to estimate, but we would probably, at this time, consider it to be less than what we've seen from the pipette and liquid handling side. So it's probably not that significant, although to those specific businesses, of course, it's going to be a good growth in those businesses in 2021.

Got you. So far, the 3Q tailwind that we saw, they were more -- mostly on the testing side, and that should moderate some offsets on the production side, but perhaps production is not big enough to offset the testing headwinds in its entirety. Is that a fair or reasonable summary, Shawn?

Yes. It's going to be hard to see the timing of these things too. Like, I mean, you could start to see both of them having good benefits in Q1, while other businesses are going to struggle in Q1 with lockdowns, as an example, potential. But I think as we get into the second half of the year, that might be more true where we start to see the testing start to come down, but the production kind of continuing to increase.

Got you. And then I guess, turning to the industrial side of things, what percentage of your business is exposed to PMI type of business, right? And I think -- feel like I always have a tough time in tools when -- industrial is not really industrial for tools companies. So maybe just talk about industrial, what is core versus noncore? And what is exposed to PMIs? And if PMIs continue to be an expansion territory, what does that mean to your business in fiscal '21?

Yes. Sure, sure. So our industrial business in total is just over 40% of our business. But as you mentioned, there's kind of 2 big pieces to that 40-something percent. One is the Core Industrial, which is about 60% or 25% of the global company. The other piece is Product Inspection, which is 40% of industrial and about 16% of the global company. The Product Inspection side is very much a secular exposure. It's less tied to PMI than the Core Industrial business. About 70% of our Product Inspection business is sold to packaged food companies. The remaining portion is sold largely to pharmaceutical and to a certain degree, cosmetics and other industries. So the drivers of that business is going to be a lot more about food safety, brand protection, productivity and for end-of-line inspection systems. And so that's going to be less related, and it's going to be much more tied to capital cycles of those industries. On the Core Industrial side, historically, that was the business that I would say would be the most correlated to PMIs out of all of our businesses. We've seen that be a little bit less so in the last few years. I think part of the reason is that we've been gradually shifting that business towards what we refer to as the more attractive market segments. But one of those more attractive market segments is Pharmaceutical. And so I think as we gradually increase the mix of that business towards areas like pharmaceutical or food manufacturing, it becomes, to a degree, less cyclical. We've certainly seen that in China, and we've seen that in the west. And if you kind of observe our industrial numbers over the last couple of years, you would see that we were doing much better when PMIs were moderating. Now as PMIs increase, we'll see what that means for us. I can't imagine that it's not going to be -- I can't imagine it would be a bad thing. I would certainly expect to benefit, but to determine like what the degree of correlation is, it's always hard to tell because we're not so specifically correlated. But as a general rule, we're not immune to the economy and the industrial business either. And -- but like a lot of things we talk about in the end, it's going to be about our ability to execute and our agility to identify the growth opportunities that present ourselves -- are presenting to us. And if you think about our Industrial business, our Industrial business also has benefited quite a bit from our different digital marketing strategies that we've talked about recently as well.

Absolutely. And when you look at the Core Industrial, Shawn, 3Q, I mean, it did remarkably well, up high singles. That was a pretty dramatic sequential step up, if you will. Was it all just driven by China? I know you mentioned China was up 20%. What drove that sequential improvement in looking at where PMIs are? Should that business continue to be at those high singles level?

It was totally driven by China. And like you said, China, the Core Industrial business was up actually more than 20% in the third quarter. The Core Industrial business in Europe and the Americas was actually down slightly. For us, we were pleased with only being down slightly in this environment. We feel like it's still a very resilient performance when you compare it to other companies in the industrial sector, but very -- but for the same reason, this China topic, as we look to Q4, we kind of -- our guidance is more low to mid-single-digit on the Core Industrial side, and it's very much related to -- we don't expect this Core Industrial pent-up demand topic in Q3 to necessarily transfer to Q4. And so our guidance for Q4 for Core Industrial, China would be more like high single-digit.

Understood. Anything on new products in the segment on the industrial part, which would perhaps when you think about the medium-term '21, '22 which would see some benefit from new product contribution?

I mean, we have some really interesting things in the business. Nothing that I necessarily want to comment on in the call today, but I would say we have some nice things coming out in 2021. I would say also in our normal cadence too though, we've had a good track record of innovation in this business over the last few years, which combined with the digital marketing, I think, has really been a nice combination. But if you just think about -- a lot of our innovation is also looking at market opportunities where we see market trends and just kind of further expanding the portfolio to capture opportunities. And I kind of see that both happening on the industrial side -- on the Core Industrial side of the business as well as on the Product Inspection side. So some very nice things coming out in both of those businesses. But I always want to caution everyone that in our business, no single product introduction ever moves the needle with such a broad portfolio. But that's why it's also important for us to maintain a constant cadence of product introductions as well.

Understood. I guess switching gears to on the lab side of things. I know we touched upon biopharma. You mentioned it's about 1/3 of our company revenues, industrial is 40%. So that leaves us about roughly about a 25%, did I get the math right? Yes, something like 25% of remaining revenues. Some of it is food. Ex food, what is that other bucket? It's about 15%, 20%. Is that just applied markets or what goes in that bucket? And how should we think about new products on the Lab side of the business for you guys?

Yes. So in terms of the Lab business, I'm sorry, I missed the math that you were doing, so I can't confirm it or not confirm it. But as I mentioned before, on the biopharma side is that the third that I mentioned was the global business, the Lab side is going to be higher. I don't have a specific number, but I would certainly guess that it would be more than 50%. The other portion of that business would be a variety of industries. Chemical would certainly be one, food labs would be another one, academia labs would be another one. And just mentioning those 3, you can imagine we're seeing different experiences. Chemical labs -- and of course, there's subcategories within them. But in chemical, you have specialty chemical that might be a little bit better, but you have petrochemical, which is going to be worse. And so out of the 3, probably chemical overall has -- for the Lab side, I'd say, probably has more question marks kind of entering 2021. Academia has been a very slow recovery even in China. We've just -- it's not a significant exposure to us compared to some of the other companies, but it's still an exposure. And we've just seen slower pace of reopenings there and there's still a question mark on how much money will be available on the academic side from our perspective. And then food manufacturing, I think that's going to be another one to kind of monitor. So for us, these are -- on one hand, we have the very favorable trends on biopharma, then we have these other categories. And so it will be interesting to see some of the uncertainties kind of resolve in these other categories as we kind of navigate 2021.

And if I look at your Lab business overall, Shawn, it's done high singles, double digits over the last 5 years. I mean, '20 was a pandemic year. And you guys will still be up 4% or 5%, somewhere in that ballpark. So really very strong. When you think about the biopharma versus the non biopharma piece, right, what kind of trends have you seen between those 2 buckets within labs over the past few years? And how should we be thinking about those trends sustaining when you look at the medium term?

Yes. I think on the -- over the past few years, I mean, the biopharma side certainly is growing more than the non biopharma side. I mean, we see that very much in the product categories that have the highest exposure to biopharma. We consciously invest more in those businesses because we think it's a longer term, sustainable trend. And when we invest, we're talking end-to-end investments, not only on the product side, but in terms of the front-end resources of the organization, a lot of our field turbo resources have been targeting this year. And frankly, we have probably a smaller wave of investments specific to this area as well. In 2020, of course, things were very exacerbated. We probably saw much more -- on the extreme sides, you had biopharma doing very well and then you had academia doing very poorly. And so in terms of what that's going to look like in 2021, it's going to be more difficult to determine, you'd imagine that things get a little bit closer. I'm not sure we'll have -- that we'll go back to normal trends. But in our mindset, we always kind of have a prioritization for all the different segments. And that's kind of the key for us is to kind of have an overview of the different segments and to consciously navigate or pivot towards the segments that are going to provide the better opportunity. So let's say that the mix of growth opportunities totally changes in 3 months. Well, we're not just going to sit here and reflect on it. I mean, we -- our job is to kind of monitor that and to try to pivot our marketing activities and direct our sales force towards the pockets that are providing growth. And the key is to do it at a subsegment level. If you think about like a chemical or pharma might be a level 1, we kind of go down to that level 3 in terms of like how we're specifically targeting market opportunities. And that's been really a lot of the success of the company, not only this year but over the last few years.

Understood. And when you think about biopharma, could you perhaps parse out the small molecule versus large molecule? That's been another interesting debate depending on whose perspective you listen to? What kind of trench has Mettler seen? And you did mention about investments have stepped up in the biopharma piece. Anything on new product side that we should look forward to on the biopharma side?

Yes. I mean, I think it's going to be our normal cadence of product introductions. We have some good stuff coming out in the Lab business in 2021, but nothing particular to point out. Always -- can you repeat the first part of your question, Vijay, I don't.

The small molecule versus the large molecule trends?

Thank you. Yes. So in terms of small molecule versus large molecule. So if you go back to my comments earlier, when I was talking about Lab business in the earlier part of the presentation, I was talking about the breadth of our portfolio. And you could get a -- you certainly get a flavor that there's certainly a lot of business on both sides of small molecule and large molecule. We don't have a specific breakdown in terms of large versus small, I mean, small is probably the more -- it's the larger piece of the pie. But certainly, large molecule is a meaningful part of the overall mix of our business as well. And you can see that we're certainly growing very well in categories like pipetting, like UV/VIS, like PH meters, like Process Analytics as well. And so for us, as long as we have a good offering into those segments, I think we can capture opportunities that are offered on the large molecule side. And if you think about small molecule, it's not like we're tied to any particular application, either that's going to go up. So we're talking about very every day laboratory instruments and often the most frequently used instruments in a lab like a laboratory balance. And so we still feel good about the instruments we have on the small molecule side as well, and we see good dynamics there. And a lot of these instruments also happen to be used in BioLabs as well.

Got you. And I think one of the topics that came up on the 3Q call, I think digital sales effort. I know that Mettler always was focused on these digital tools. But it really seems to have paid off during the pandemic. One, I guess, what percentage of Mettler revenues are currently coming from eCommerce? And talk a little bit about your digital sales strategy, right? How can this be a tailwind for you guys when you look at the medium term?

Yes, sure. So I think the most important thing is like when you think about our e-marketing or our digital sales, it's a lot more than just having an e-Channel. Like we do have e-Channels, but that's a very small part of the business, probably bigger than a typical e-commerce site which we have for just a handful of products would be customer portals. And -- but I think what's important is to really look at the bigger -- the bigger story around what we're doing with digital marketing because I think that's also where the benefit is and the power is actually seeing the analytics, the tools, and then the whole go-to-market strategy really come together with our digital approaches. So maybe I'll spend a couple of minutes talking about that, if you don't mind.

Yes please.

So on the analytics side, so think about it as how do we best -- we have such fragmented markets. And I talked -- already referred to a few times about being agile and targeting market segments. So in a COVID world, we're looking at which segments are the most COVID resilient or would have the best COVID recovery. And once we identify those segments, we use our analytics to identify opportunities, whether they are using our internal data sources or external data sources. And so our internal data sources might look for opportunities to do cross-selling or further penetrate an account where external data sources might just be picking up on project activity or investment through other external sources of information. And so we have a very complex machine-learning behind it that ultimately will generate individual profiles of an opportunity. And we have thousands of these opportunities that we published to our organization all around the world. And those profiles will include a very wide range of information pertaining to the opportunity including potentially even like Google maps of the site and things like that, but also would show us like typical buying behaviors or even antidotal testimonies around the world if we know the account and what their applications are and what they like. And so we provide all this information to our sales force. And then it's up to them to then convert it into a sale. And so to help them with that and to help them be more effective, we've developed a lot of digital tools, okay? And so these digital tools can be as simple as presentations and videos, e-demo capabilities, a lot of value-selling guys, a lot of cross-selling guides because think about it, their job just got a little bit more difficult because we're asking them to really penetrate an account deeper than they have in the past or cross-sell. And for us, that's a new opportunity in a way because on one hand, we have a dedicated sales force that has application expertise and is fully dedicated to an application, but they're not a generalist. And so their strength might not be necessarily in spotting the cross-selling opportunity. And so we've really tried to use some of these tools to facilitate that so that they can better identify opportunities, but also know like door-opening phrases to be able to start the opportunity to then involve one of their colleagues. One of the things we've observed this past year is that the change management associated with the utilization of these tools has really accelerated. You can imagine, we had a lot of these tools before COVID, but some people were using them, some people weren't using them. This year, they had more time with less travel to like really checkout what's out there. We actually used the opportunity to do a lot more training on the tools. But then they also kind of needed to use them as well. And as they used them and learned more about the tools, we saw the adoption rate significantly increase. And then we also saw some of their results in terms of conversions also increase. And then the third part is, how do we approach the customer and how do we engage the customer. So there's 3 parts to the engagement. One is the go-to-market strategy. So we've been already investing a lot on inside sales and telesales over the last few years. And in fact, this was a big part of the last wave of field turbos we had entering in 2020. So it was good fortune for us that we had just hired a lot of inside in telesales folks kind of entering this year that we could leverage during the crisis. And what's important about these resources is that they also better leverage the field. They're better leveraging the field. So they can take more routine accounts, less complex accounts, and then create more capacity for our field to spend time penetrating those profiles that I just talked about, which is going to be a little bit more time-intensive, but also have better returns. The second part of our digital approaches is our -- is e-marketing. And just like any other company, we're doing all kinds and forms of e-marketing, and we increased our investments obviously this year in that regard. And then the last part would be the digital channels, which you kind of asked in the question and that I already mentioned about customer portals and different ways to engage customers. But when you kind of like take a step back, we've had all the KPIs we have around customer engagement have actually increased significantly this year, whether it's how many times we're touching a customer, our leads, our conversion rates, and so overall, we feel very good about the momentum we have on this. And similar to what I said on change management accelerating with our inside organization, of course, there's a change management that accelerated from the customer side as well too. The willingness to engage in an e-demo or make purchasing decisions with digital platforms and things like that too. So we feel very good about our progress here. As you mentioned in the question, it's been a multiyear journey. It's not just something we flipped the switch on this year. We've been investing for many years in this. And then we -- it's really nice to see how it's really come together, and I think we'll continuously improve from this platform going forward. And it really serves us well given that we are serving highly fragmented markets. And all we need is -- we talk about market share gains, all we need is a little bit of market share gain each year. It's always difficult to measure, but literally a few basis points will make a meaningful difference.

On that market share, that was my next question. Thanks for brining that up. What is your share within the end markets that you play right now? And why do you think your share could go ultimately, right? And does conversion to digital sales efforts, does it accelerate your share gains? Help us understand the share dynamics?

Yes. So if you look at the global company, we estimate that our global market share is in the range of about 25%. Of course, we've also been expanding our addressable markets over the years by entering categories like UV/VIS as well too. This year, we do -- we feel like each year, we take a little bit of share. But again, we're probably more likely talking about basis points. If you think about the size of -- our market share and then the size of the market, and you do the math, you really don't need very much market share gain to deliver mid-single-digit sales growth. I do feel like in 2021, we did gain a little bit more than we typically would. It's -- I would think that we would -- we're very well positioned going forward in this regard. But to just try to say what we think that translates into for 2021 and beyond, it's still too early for us to make that call. And of course, we don't -- to make a call on market share target, that's not something that we would typically think of. We don't typically think of it like that. So the key for us always is about continuous improvement and just doing a little bit better each year, and that formula serves us well.

It just feels like -- I do feel like in a tough environment, in a customer loyalty, brand becomes really important. And I think you guys have delivered in a tough environment to your customers. I can't help but think -- I know you can't comment, but from our side, it does feel like this should translate into new business opportunities for Mettler. And we'll see, I mean, to your point, it's hard to, just given all the variables out there to comment at this point. But it does feel like you guys are set up for incremental share gains over the coming years. Maybe one last question from my side was, when you think about pricing you mentioned the guidance bakes in about 100 basis points of pricing. Did you guys see a pricing benefit in 2020? How sustainable is those pricing? Because one -- I think there's a little bit of a misnomer. And I think people think about pricing, it's not just taking like-for-like pricing. I do think you provide value-added services. So there's a mixed benefit that goes on when you make the price comment. So help us understand when you say 100 base of pricing, is that like-for-like? Or is this -- you're providing more value-added services, and that's why that mix is helping you take more price?

Yes. It's actually like-for-like. I mean, we do have mix benefits that sometimes makes the number even slightly better. But no, the number that we talk about is like-for-like. But just to clarify, too. So this year, the estimated impact from pricing is more in the 200 basis point kind of range. In terms of price realization, the impact on the gross margin is probably closer to your 100 basis point number. And then for next year, our guidance is more in the 150 basis point kind of range for price realization. And the difference is very much related to the lower producer inflation forecast for next year. We just see a very low inflationary environment. And of course, we need to adapt each year to the environment. But I think the difference between what the inflation will offer and what we can accomplish, I think that differential, I still feel good about in terms of what we can execute against. We have a great platform for pricing, as you know, selling personal instruments at relatively low price points directly, often to the end user with dedicated direct sales force and all the different tools that we have are very -- we have a lot of momentum in terms of the level of sophistication there and some new things that we're actually introducing and starting to roll out globally in 2021.

Well, fantastic. I think with that, we're at the end of the time, Shawn and Mary, thank you so much for your time this afternoon. This was enjoyable. As always, it's amazing what you guys have done with Spinnaker. I know I didn't bring up Spinnaker, but I'm sure it was [indiscernible] Alberta, fantastic. Have a wonderful rest of the day.

Yes. Thank you very much, Vijay. Wish everybody in the call, a happy holiday season, and great to see you as well. Take care.