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

Okay. Good morning, everyone. Thanks for joining us again. I think Mettler is one of our last on the life sciences tools side, but it's always fun to talk with Mettler. From the company, we have CFO Shawn Vadala, and we have Mary Finnegan, who heads their investor relations and treasury functions. And I think she's in the background. Shawn, Mary, thanks for taking the time this Morning.

Hey, Vijay. Hello, great to see you. Happy -- thank you for hosting us, and I hope everybody on the call also had a good Thanksgiving holiday.

I was busy writing down the question list put up, but it was fun because I was writing down questions for Mettler, which is always pretty easy. I'm joking. I'm joking. It was all good. But Shawn, maybe on the topic, right? As I was going through the model and looking at some of the numbers, you guys just did 16% core. I mean, that's a big number. I know you've kind of spoken about perhaps some pent-up demand, et cetera, are benefiting year-to-date. But when I look at the Q4 guide of 8% constant currency, that's quite a meaningful step down from the teens that we saw. So maybe talk about what went through for the Q4 guide?

Yes. Maybe before I get into Q4, I just make a couple of comments about Q3 and year-to-date. You're right. We had another really strong quarter. Very pleased with 16% constant currency growth in the quarter. On a year-to-date basis, I think we're up by 20%. So we feel really good about how we've been performing this year. We certainly have seen a lot of favorable trends in our markets. We also feel like our teams are executing very well also. And then I think if you kind of go back to the beginning of COVID, we talked about this in the past, but a key priority for us was to make sure that we were able to really take advantage of markets as they recovered. And initially, the focus was really on which markets were the most resilient and how to make sure, we're allocating resources and focus towards the resilient markets. But over the past year, it's really been trying to optimize this recovery. And I feel very good about the execution in all of our different strategies and approaches to being able to do that. In addition to that, you're right, we've also benefited from some pent-up demand around the world as well as probably some stimulus like especially in countries like China. And it's always difficult for all of us to really try to estimate or quantify these things, which always makes it a little bit difficult to kind of forecast going forward. So then as we kind of like look at the fourth quarter, we still feel like an 8% guide is a very good guide. We feel like it's appropriate in this environment. We do have probably about a 1% headwind from our COVID testing labs in that guidance as well. But as we kind of think about trends, it's not like we're seeing any necessarily a change in trends. We feel like, we do kind of continue to see strong trends in biopharma. We see broader trends, which we can talk a little bit more about during this discussion about automation and digitalization, both in the lab as well as the industrial areas. And we also see a lot of activity in what I would call hot segments like lithium battery, microelectronics and other areas. So we generally feel positive about the business and our ability to execute. But of course, there's always uncertainty in this environment. And as we know, the market is -- things can be very dynamic and can also change quickly.

That's helpful comment, Shawn. You brought up a number of interesting topics out there. I do want to dig into them. But before that, any -- with the EU lockdowns and shutdowns and Omicron, any impact to the business? Most of your peers have said no impact so far. I'm curious on your thoughts.

Yes. No impact on our business either. And as we've kind of like observed from Delta and other waves, a lot of the more recent lockdowns have been a little bit more social in nature and had less impact on the business environment. Maybe the one exception is in China, of course, China has much more stringent protocols regarding COVID. So things always have the ability to change a little bit more differently there. If there were to be cases or an outbreak, but if I just look at our business, certainly, no significant impacts that we are seeing.

Got you. You did bring up the pharma. I know the way, Mettler reports other segment's lab versus industrial and food. Sometimes, it's not clear. Maybe just talk about what percentage of Mettler's revenues are pharma or biopharma? And how does it split between in a small and large molecule?

Yes. So I don't have a specific number for you. But historically, we would say that about 1/3 of our businesses was life sciences. I would say today, it's certainly more than 1/3 of our business. And that would include pharma, Biopharma, CROS, CDMOS, and we probably would include testing labs in that number as well. In terms of small molecule and large molecule, I also don't have a breakout for that, but we would be a little bit more weighted on the small molecule side. But on the large molecule, we also have a wide range of applications. And as you know, one of the strengths of Mettler-Toledo is our diversity. And as we kind of like look at large molecule, it's another good example of that. We would -- if you think about our large molecule exposure, if you kind of start with the labs, we would be selling pipettes, UV/VIS, pH meters into the different labs for research as well as for quality. Of course, every day lab instruments are also often used there as well. And then you kind of get into scale up, and we have automated chemistry instruments. And then in production, in terms of bioprocessing, we have process analytics business, which has a wide range of different analytical sensors. We also have pure water applications in that environment, both upstream, downstream, with PendoTECH. We also have a larger exposure to downstream as well as single-use applications. And then we also sell other things into the bioproduction environment, too, in terms of like industrial load cells and things like that. So it's a pretty broad product exposure there.

Got you. And -- or maybe coming at this question from another angle, Shawn. When I look at lab segments at about more than 50% of your revenues, 55%, 56%, and it keeps increasing. I mean, again, year-to-date, very, very strong growth rate, in high teens for fiscal '21, that's a big number, well above historical trends. What is that -- I think your guide for us next year assumes a step down for labs to high singles, I think. Maybe talk about what went into that thought process for labs when you were thinking about outlook versus current inbound demand?

Yes. I mean, we feel very good about our lab business. Maybe I'll make a couple of general comments and then kind of weave into your specific question. But as you said, it's more than half of the business is actually probably more like 55%. It's very -- we have a really strong product offering here. We continue to invest and innovate. We have a lot of leading positions. We sell up to 40% of the instruments on a typical laboratory bench, which I think is really important, especially when you start to think about automated workflows and that opportunity as well as data integrity requirements and the ability to want to connect these instruments with software. And of course, as you know, we sell LabX software, which does, in fact, connect a lot of these instruments. And if you look at that like even just challenges with FDA warning letters, a very significant portion of those warning letters for big pharma companies really is -- comes down to data integrity. So it's a really strong value proposition, but as well as when you start to think about the ability to automate workflows. So we feel very good about our position here. As we think about the market, we do think about that we have been probably taking a little bit more market share than normal, both in our lab and in our industrial business. I feel like our Spinnaker sales and marketing approaches have been very effective here. And I think that there generally have been favorable market conditions in terms of biopharma and just as you kind of think about the increased capacity all the way through the value chain from research labs to quality labs, scale up to bioprocessing and bioproduction. So we feel like we're well positioned there. Now if we look at next year. It's always difficult to forecast at this point in time. We feel really good about our guidance for next year. We think it's the right level. It's very difficult to tell at this moment how much we did benefit from topics like pent-up demand this year. Next year, we will have a little bit -- at least we've assumed, we're going to have a little bit of a headwind when it comes to the COVID testing lab benefit that we would have had over the last 2 years. So that could be a slight decrement to our lab numbers next year. But overall, we'll see how it plays out, but we feel right now that it's -- our guidance is appropriate for next year.

Understood. That's fair. Just given the amount of uncertainty that exists, certainly with the Omicron, who knows. I think, Shawn, you brought up a point on the COVID headwinds. What are COVID headwinds for next year? Is that 100 basis points?

It could be. It's probably in that -- maybe slightly less than that, but it's probably in that kind of a range. And then that's for the total group, and this is specific to the testing labs with Pipettes and Pipette tips. So kind of double that number ish, if you will, for the lab business, given that lab is about 55% of our total business.

Understood. So really, the guide is, if I strip out the COVID headwinds, some of this is like low double digits for labs, ex-COVID headwinds for next year. Is that a fair comment?

I don't know if it quite gets to low double digits, but it's probably at the high end of high single digit, yes.

That's pretty remarkable. When we look at those numbers from that perspective, I think a lot of your peers are ex-COVID headwinds. This makes a whole lot of sense now at the high end of high single labs. You did mention Spinnaker and share gains. Before we get into that, who -- how do you roll the model, Shawn, do you do -- like when you do the segment roll up? And for the guidance, are you doing it geographically or by customer segments, maybe talk to the Mettler sauce and what goes into the guidance?

Well, you can imagine, we look at it from different perspectives, right? We do receive a bottoms up from our global organization. We also have our top-down models as well, and then we can kind of look at it from a geographical and also a product perspective. We don't forecast from an end market perspective. But of course, the product categories have their biases towards different markets. But our approach has been very consistent over many years. It's a very thorough process. As you know, we have a very analytical culture, very detail oriented, and there's a lot of really good process behind it. But I also don't want to pretend that it ends with a crystal ball either. Like we still lack the crystal ball. So we're still giving you our best estimate of what we think is going to happen so.

So disappointed, Shawn. Mettler hasn't figured out the crystal balls. But, you'll get there. On the topic, you did mention it's a very analytical process rate. And I do think Spinnaker comes into as part of that. talk about what Spinnaker is and how it's differentiated Mettler over the years because I know we -- I hear about it every earnings call, but I still feel like I don't understand Spinnaker very well, so maybe spend a few minutes on Spinnaker.

Yes, sure, sure. So let me start with maybe some backdrop and some high-level comments, and then I'll kind of maybe delve into some more of the details and kind of get into some of the things we're currently working on. But if you kind of like start at the high level, this is sales and marketing, operational excellence. It's a program we started well more than 15 years ago. What's interesting about Spinnaker is if you try to look at it -- if you look at Mettler-Toledo, right, we operate in very highly fragmented markets, right? So like we would estimate about 75% of the time we're in a global #1 position. But at the same time, our average market share might only be in the 25% kind of a range. So there's plenty of market share to gain. And then as we kind of pursue that opportunity, if you think about it, it's a pretty significant opportunity. We also have about an installed base of instruments, it's, I don't know, it's probably in the $15 billion kind of a range. We have over 1 million contacts in our CRM systems. We're going to the market with over 100,000 SKUs of products. And so how do you go after all that opportunity and all that complexity with only less than 3,000 salespeople. And so what Spinnaker is about is about how to maximize the productivity of these salespeople and really try to point them into the right direction to try to make sure we're going after the most attractive opportunities, try to make their life as easy as possible. But while we're doing it, we're going to hopefully gain a little bit more market share and also increase our exposure to what I'll call them, the more attractive market segments. So like that's kind of what I would say is the backdrop to Spinnaker. Now in the early days, we kind of mapped out all the different processes around sales and marketing. And so you can imagine it was like -- it was kind of like almost like a consultant's view of the world. We kind of like literally looked at all the different processes and all the different sub processes. And there was like you could really map it out in terms of a spider chart. And then we kind of did a self-evaluation around the world and we said, okay, which areas are we wanted to do a self-rating of ourselves in terms of where we're good and where we're not. But then we also want to do a self-rating in terms of what's the most important to actually generate a lead or ultimately gain market share. And based on that, we set some initial priorities. Those initial priorities helped us start to reallocate resources towards accelerating our leads generation and really did some fundamental shifts in how we allocate resources. And so that's maybe another theme of Spinnaker over the many years as we continue to shift and reallocate resources. So like in the early days, it would have been something simple like reducing our spend on trade shows and increasing our e-commerce presence, like that would have been like an early thing. But now we're getting into much more sophisticated things in terms of like organizational setups in terms of digital capabilities, digital approaches that I can talk a little bit more about. But what's important about Spinnaker is that each wave builds on itself. And so you just -- we could never start where we're at now. You almost have to start at the beginning and then build it up. And as you're building it up, you're building processes, you're building data structures. And probably most importantly, you're building a culture in organizational know-how around the world. And you can imagine, as we've done that, there's a change management element to it, and then there's just this organizational cultural element to it. And what's so cool about it is that like when I travel around the world and I meet with colleagues, no matter what country we're talking about, we'll get updates and you could close your eyes, and you're going to hear very similar vernacular, very similar approaches, various similar initiatives and similar passion and energy about it because it really does work. And like anything, when you get success, it breeds energy and it creates more success. So now kind of fast forward, we're now on our fifth wave of Spinnaker. This wave has been a very exciting wave. I think we've seen a real acceleration. And I think COVID has actually helped us with this wave because this wave has a lot more digital approaches behind it. So I'll give you a few examples here. So in the beginning of this wave, we redesigned our sales territories around the world. So like if you think about before this, we would have had a traditional approach. A salesperson would have had a territory, they would have had a quota and then they would have had to meet that quota. Through analytics, we've reanalyzed those territories, and we said, well, hold on a second. Certain customers are always going to buy from us. And so maybe we can service them better or just as well with an inside sales organization. So we started pulling accounts back to inside sales, but we also had to build up an inside sales organization. Frankly, we're also building up a telesales organization along the way, too, that can also start to do more qualifications for the field sales force. So then we redesigned the territories, but then we needed to then guide -- help guide the sales force towards new opportunities. And so we then used analytics internally as well as externally to identify new opportunities. So that could be looking at cross-selling opportunities and penetration opportunities, that could also be just looking at different data feeds from around the world that might indicate new project opportunity or help us go after new customers. And so like -- so now you can imagine there's a big engine behind all this. Right, that then ultimately has some sophisticated algorithms and machine learning and then it produces an individual profiles on these opportunities. And we've really industrialized this over the last few years where we produced the profiles, we have inside resources that qualify them and then we literally feed them to the field in terms of very detailed account assignments and territory planning at the beginning of each year, and there's -- and it's totally linked to their targets. And so now if you think about it, we've now made their job a little bit more difficult because they're going after higher sales, new opportunities or cross-selling. So now we've -- the next part of the digital approaches is that we've been working a lot on building out a digital library over the last handful of years. And what we saw during COVID is that especially in that initial time period, the sales force had a lot more time and opportunity to then study these materials. And so their level of confidence really accelerated during COVID. And at the same time, customers were also much more open to digital approaches, whether it be webinars, things like that. But we also give them a lot of tools that they could use like value-selling guys, cross-selling guys, these types of things. And so now they have better tools, they're more knowledgeable, their competency has increased. And so now the combination of pointing them and directing them towards these more attractive opportunities, and then better preparing them has led to an increase in our conversion rates, which we've kind of seen over the last couple of years, which is part of this story about gaining a little bit more market share. And then on top of that, of course, we're doing a lot of things to digitally engage customers as well, whether it's through different e-platforms or just better connecting with customers digitally. But that's probably a good like landscape of what it is and an example of some of the things we're going to do. And what I would maybe end with is like we still have a lot of passion for it. We still see a lot of runway with it. We were actually just talking about this at a recent executive meeting about the way we're in and how much more runway we seek. And we really feel like there's still a lot more and this wave that we're in before we start to design and create the next wave. But like a lot of our programs at Mettler, we want -- there's always a continued evaluation and continuous improvement. And I think you'll see that with Spinnaker for many years to come.

No, that's extremely helpful, Shawn. I think I learned the most about Spinnaker today and then in the past few years. So thanks for explaining that. Maybe on -- clearly, the program has been a success for Mettler, but are there any metrics that you track internally to I'm sure that look this is working as it's supposed to and it's been a huge success?

Yes. I mean there's a lot of KPIs around the sales funnel and different conversion statistics. There's a lot of KPIs around customer engagement and about how we're engaging customers and then of course, in terms of like effectiveness and productivity within the organization. So you can imagine, we have a lot of analytics to do this. That's part of the change, too, right? It's like is having an organization, a sales organization that's comfortable working and managing around analytics as well. Back to like that example of the old days where someone had a territory and I had a quota. Now it's like, no, no, we're talking about our there's daily dashboards and there's accountability behind it as well, too.

Understood. No, that makes sense. And I think one on industrial side, I think, again, I think your peer -- some of your life science tools peers were talking about like we're in a cyclical upswing or probably in the early to mid-stage so there is upside here, right? And I think when I look at your mid-singles outlook, perhaps is that conservative your industrial outlook?

Yes. So of course, in our industrial business, there's 2 pieces, right? There's the core industrial piece, which is about 60% of industrial. And then there's the product inspection business, which would be about 40% of industrial. The core industrial piece would have the more cyclical exposure. On product inspection, about 70% of that business is sold to packaged food companies with the remainder being largely in pharma as well as a little bit of cosmetics. If we look at core industrial, which is about 25% of our global business, that one historically has been our business that has had the most exposure to the economy. I feel like if you look at that business today, we -- through what I just talked about with Spinnaker, I feel like our Industrial business is arguably benefited as well as any of our businesses from Spinnaker, especially when you think about how fragmented those markets can be back to, if you just left to an individual salesperson to penetrate a territory, they could go in a lot of different directions to sell an industrial scale. But we really deliberately tried to shift the focus towards pharma, food manufacturing and chemical. And I think we've seen a lot of success and progress around that over the last, say, 5 years. And that's a global phenomenon. That's something we talk about when we talk about China, and it's certainly something that we talk about when we talk about the West. Another dynamic that's going on favorable in industrial is this kind of trend towards automation, digitalization and connectivity. And again, this is a trend we're seeing globally in China as well as in the Western markets as well. And it kind of makes sense given the world we're in today for people to try to gain efficiencies in terms of all their different capabilities. And for us, this is a good -- a really good one because it very much plays to our strengths. And it really highlights our value proposition to a customer. And we've been making some nice investments in this area through innovation over the years, too. So it really came together also nicely for us. So if you look at our core industrial business for this year, we're like -- our guidance for this year is mid- to high teens. And so it's not like we're not coming off of a very strong year. And frankly, we've come off a few strong years relative to market conditions. I think relative to market, we've done pretty well. The big question on core industrial going into next year really is how much did we benefit from pent-up demand, how much did we benefit from topics like stimulus in China. And we just don't know. But when I look at like our Chinese core industrial business, I mean, year-to-date, we're up over 30%. That's a really significant comp going into next year. And these are some of the things that kind of weigh on our mind when we think about guidance for 2022. But I do feel that we will continue to perform well relative to whatever market conditions we're confronted with.

No that's helpful commentary. I think you did bring up China. Again, I think you kind of answered it, but just to put a finer point to it. double-digit growth in China against the mid-20s comp. Again, it seems like China should be better. And any cadence issues here? I think one of your peers spoke about the Chinese New Year impact in Q1.

Yes. I think it might be because of the timing of their year-end versus our year-end. But if you look at like the Chinese New Year holiday, it's more towards the beginning of February this year versus the second half of February or middle of February last year. So like next year versus this year, I should say. So from our perspective, I'm not -- we're not seeing any real impact from Chinese New Year or any other issues like that. In terms of China, we still are -- when we look to the medium to long term, we continue to be optimistic. We continue to see a lot of opportunity with the focus on life sciences in China. Just the general focus on health and safety through their 5-year plan. You see a lot of focus, like I mentioned on the industrial side on automation and digitalization. You also see that in the lab side, our LabX software is a key differentiator in China, which gives you insight so that they're taking these topics seriously as well. And then just longer term, the focus on growing GDP per capita, the number of sciences graduating universities each year, all these things, I think and for an attractive longer-term growth opportunity. In the short term, we also have been seeing or more recently, we've also been seeing a lot of emergence of hot segments in China. And not only China, you see them globally as well, but topics, areas like lithium batteries, microelectronics, new materials and I think we'll continue to see that in China as well as in other parts of the world. So overall, we're optimistic. Of course, in the short term, we've always said, and it's not just a comment for today, but whenever we talk about China, we always want to remind people that things can always change quickly there. I mean, they have several times in the past that can be changing for the better or changing for the worst, but it just can be based on the nature of the economy there, things can be a little more volatile at times in the short term. We're not currently seeing anything at the moment, but I just I think it's always a good reminder. And the other thing is, in the short term, their protocols versus COVID, as I mentioned before, they're much more stringent and that always has the creates an opportunity to be disruptive. And what we've -- we've been managing very well through that for almost 2 years now. but it's something that it's always out there as a potential risk in terms of the short term. But again, taking a step back, we feel positive. And we also are making additional investments for growth there. We actually have I've been talking a lot internally about an accelerated growth plan in China that we've recently reviewed with our Board. And it's -- and we're committing additional resources to being able to pursue that over the medium to long term.

Got it. No, that's helpful. You mentioned hard segments in lithium batteries, a couple of times. That's my queue as a good sell-side analyst to dive into the topic. How -- what products does Mettler serve these markets trade? And could that become more meaningful down the road?

Well, this comes back to our diversity, right? Like just like when I kind of set up the whole Spinnaker thing, you could do a similar setup for something like this. And it's like, okay, when you see a segment get hot, you look that portfolio and then you try to match up the right products pursue that opportunity and then through our sales force guidance with Spinnaker, you go after it, right? And so like when you look at lithium batteries, you're going to have different analytical instruments that would benefit from that, whether they be titrators or other types of instruments. Like in microelectronics, we even sell like things like pure water applications in our process and analytics business that would benefit from microelectronics. Of course, there's broader exposures throughout the portfolio as well. And some of the things that we do also are everyday instruments or everyday weighing each applications are often used in many industries. So it's oftentimes a question of just pivoting towards some of our core products.

Got you. No, that makes sense. I mean, what's the best way to think about these emerging markets for life science tools industries, Shawn, is this -- I don't want to say it's bioprocessing, but that's a pretty big term in life science tools. Could this end up end up becoming something like more meaningful as the world pivots to EVs?

I think in general, I mean, there's going to be a very good opportunity there. I mean, I think if you look at our business, about 35% of our business is in emerging markets, probably close to 20% of our business is in China. And so when we talk about emerging markets, we're often talking about China. And I think if you look at China, in particular, you'll see that there's going to be a lot of opportunity throughout the whole value chain. I mean there's a lot of focus in terms of research and development, and there's going to be a lot of opportunities going forward in terms of bioprocessing and bioproduction. But it's not just China. I mean the Indians of the world, will also have opportunities. But for us, our bigger opportunity at the moment would be in China, just given the size of our business that exists there today.

Got you. A couple of other points. I think on the call, you mentioned pricing assumptions for '22 being at around 300 basis points. Talk about -- that's an initial view, right? And then there is a potential perhaps for that to move up and what it means for margins?

Yes. I mean we -- of course, it's a very dynamic situation, especially these days. I mean every year, we start the year with initial assumptions on pricing. And then, of course, we get into a year and we look at opportunities to optimize and whether we do some sort of a mid-year price increase in certain categories or certain geographies. We try to have tailored differentiated approaches. At the moment, you can imagine there's a lot going on. And it's very -- literally as soon as we started 2021, I think we were into January or February and we're already working with the pricing team on like, hey, inflation looks like it's higher than what we expected, we better get working on this. And so by the end of Q1, we were already initiating some initial actions. As things continue to unfold, we continue to introduce additional actions. And then by the summer, we were doing more broad price increases through a lot of the portfolio globally, but again, in a highly differentiated way. And so over the past year, we've done a series of very different tactics in terms of raising list prices to using surcharges a lot more than we've used in the past. They don't work in all countries. They don't work with all product categories, but when we felt like the fact pattern was appropriate, we did some surcharges where we could be kind of quick and bold. But of course, the other side of that is that the surcharge doesn't last forever, and you need to think through those implications as well. But I think -- and then, of course, we've looked at things defensively in terms of discounting controls. So probably like most companies, we're doing a wide range of activities. I think to me, the real key here is to continue to stay close to it. It is dynamic the -- on the supply chain side, the cost of materials, the cost of transportation and even just thinking about topics like wage inflation. These are all things that are important to evaluate, and they all have maybe different pricing answers. And so I think as you -- as we enter 2022, we're certainly not sitting back on our initial guidance for pricing. I think it's -- I expect it will continue to be dynamic. And if it makes sense, we'll continue to do additional actions as we kind of get in 2022. But again, it's really going to be in response to the facts that we see in the market and whether we think it's appropriate or not.

Understood. And then one on the macro side. With the passage of the Infrastructure Bill recently, I think, some noise about ARPU is getting passed. Is that a source of upside in the model, perhaps for Mettler or maybe the tools industry?

I think we will see some benefit there. But I mean it's very difficult to determine how significant it will be or not. I mean I wouldn't think it would be that significant for us. But I would expect we'll see certainly some benefit certainly on the heavy industrial side of our business. Probably the bigger question is, like over what time horizon we would see those benefits.

Yes That's a fair comment. I think one of your peers was noting perhaps a '23 kind of benefit if there is. My last question now for you Shawn, is does Mettler track any of the DE&I ESG metrics? And is management tightening any of these metrics?

Yes. I mean both topics, DE&I and ESG are really important topics. They're very important to us as a company. We actually spend a lot of time on it at the executive level as well as with our Board. You can imagine with the Mettler culture, we also have analytics behind it that we are tracking for both DE&I as well as for ESG. On the DE&I I just give one example I mean we track female leadership, which is something that is important to us. As a company, we value all forms of diversity. We really want -- we really believe that it's important that our -- and we aspire that our workforce really does resemble the communities in which we operate. But if I go back to female leadership, that's something that we track and is important to us. And I think you'll see in our next sustainability report that we'll even make some specific comments for our targets for what we target for female leadership at the executive level as well as at the board level. And then if I maybe kind of go to more ESG in general, ESG, I would say, is not entirely new for us either. We started a green MT program well over 10 years ago. We were very pleased that in the last year or so, we achieved carbon neutrality with level -- with Scope 1 and Scope 2. We do aspire to make a commitment to science-based targets for Scope 1, 2 and 3 in the future. We have a lot of KPIs where we track the different environmental topics like carbon intensity, carbon emissions, renewable energy and waste reduction. Another target that we've made recently is to reduce our waste intensity by 20% by 2025. And as I mentioned, we also have KPIs in other areas like how we look at employee engagement and things like that. To address the other part of your question, as we kind of like look at 2022, our executive team will be incentivized based upon 9 different ESG targets depending on the role, some of them will be common targets for all of us. Some of them will be targeted based upon our role in the organization. And the targets will address all 3 of environmental, social and government related topics.

Fantastic. I think with that, we're at the end of the time, Shawn and Mary, thank you so much for spending the time with us this afternoon. Always a pleasure at Mettler and all the analytics that goes behind it.

Great. Hey, Vijay, thank you for hosting us again. It was great to see you, and wish everybody a happy holiday season.

Thanks, Shawn.