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

All right, everyone. I think we can go ahead and get started and I have a couple of more people joining throughout. But just as a reminder, we will be reporting this session, so I'm going to go ahead and start the recording now. And yes, just wanted to say thank you so much for joining our webinar today. We're going to be covering Hazardous Area Weighing, so safe solution for truck and rail. And our speaker today is going to be Jon Greutert, so without further ado, I will pass it to Jon.

Hi there everyone. Thanks, [ Morgan ]. Good afternoon, good evening to those of you on the call today. Hey, thanks for joining this session and we're going to be discussing hazardous area weighing and safe solutions around your truck and rail scale here. As [ Morgan ] mentioned, my name is Jon. I'm our global product manager for the Vehicle SP with Mettler-Toledo. So happy today to walk you through the content. So just a quick -- some of the quick agenda items here. We're going to spend the first part kind of discussing, doing some overview of hazardous area locations. We'll talk about some of the terminologies in different agencies when we discuss these types of solutions. And then we'll get into some more Mettler-Toledo specific products here in services. So, hey, before we get into the meat of the presentation here, just a quick audience feedback, menti question. So you can log on your mobile device, go to menti.com or use the QR code. There's a code number there attached. But if you wouldn't mind letting me know what applications do you currently have in hazardous area. So couple here, very common is filling on the truck scale or rail scale. It could be check wing more, hey, you're currently are not using a truck or rail scale but have hazardous area applications, give everyone a minute here.

Hey, Jon. So it looks like a couple of answers are coming in. It's like filling on the truck scale is leading and filling on the rail scale is just behind that. So those are the 2 kind of most popular answers it seems like.

Yes, very good. That's what I would expect to hear. Most especially Zone 1, we'll get into what that means. But yes, most of these types of applications tend to be filling applications when you're discussing a truck or rail scale application. So very good. All right. Well, here to start, trucks and/or rail cars can be weighed in a variety of dangerous environments. These types of applications are processing highly explosive material, in many cases, like grain, petroleum gas. We often think about hazardous areas in the context of doing some sort of plant batching or filling application using, hey, either way modules on a tank or using some sort of floor scale as part of a plant process. But we can see these types of hazardous area locations on the outbound side, outdoors as well and that's the case with your truck or rail scale. An example of this, just like many of you on the call have already mentioned here is, weighing petroleum while it's being filled into a tanker on a scale as an example. Kind of want to start off here with giving some context about, hey, why are these solutions so important to the safety of your operation? And really kind of 2 points I want to make in terms of accidents. One here is that this specific industrial accident involved sugar processing. I think a lot of times, we think about hazardous area locations involving some sort of gas or liquid. But dust, fibers, grain, these are all highly explosive materials and we'll get into how these agencies kind of classify these types of materials. So I wanted to make that known, but also really, a lot of these industrial plants are built within our communities, right? So we're not just concerned about the safety of our employees that are working at the plant, but also the safety of the community at large. To start here, I think it's important to discuss how a hazardous area location is designated and really who can legally designate these areas. Mettler-Toledo or really any manufacturer in general do not classify these areas. That is the responsibility of that particular company. But more specifically, a lot of times, this is either like an electrical engineer at some older plants or even insurance companies, a lot of times get involved in designating expert to classify those areas. I've heard this in the past, but we always offer guidance at, hey, companies can always ask their local electrical authority, whether that's at city state provincial level. And there are local inspectors that have the proper specifications to properly designate these areas. Next, hey, let's talk a little bit about the hazardous area agencies that we typically see. So, hey, across the globe, there's international agencies that specify the type of equipment that are to be used in hazardous area. I'm not going to go through each of these in detail, but a couple I want to mention is one certainly is called ATEX. They're probably the most well-known and it's really the name of 2 directives for controlling explosive environments used typically in the European Union. So what they're really doing is defining laws around minimum requirements for improving safety, health and protection of their workers that are potentially at risk from explosive atmospheres. And then the other here is IEC, which is the International Electrotechnical Commission and really what that EX designation at the end stands for is explosive environments. And then, hey, typically, in North America, we see the National Fire Protection Agency that developed a national electric code that really defines equipment use in hazardous areas. And then on top of these agencies, we also have different groups like FM and UL that are really responsible for writing standards, whereby the product can be tested for use in the hazardous area. So in the case of Mettler-Toledo as an example, our products that are tested and approved for use in hazardous area, you'll actually see a label on the product that would indicate that product is able to be used in a particular hazardous area. Next here, let's take a look at how these agencies classify the hazardous areas. These areas are where possible fire or explosion risks are present and the mixtures or chemical makeup of those materials is really important for how these are classified. These areas typically in North America that would be like United States and Canada, we historically see them classified and discussed in terms of divisions or classes. And in Europe and the rest of the world, they use the zone system typically. So what do we mean when we say classes? So that's defined as the general nature of that hazardous material in the surrounding atmosphere. Division then defines that probability that, that material is going to be present in that surrounding atmosphere. And then finally, you get down to the group level and that really is around the material in general and what type of material is in that surrounding atmosphere. So really, what we're doing here is defining or designating a 3-dimensional zone and you're breaking that down based on what the components are and what's the probability that, that substance is going to be present in that area. When you get into zones, so we talked about class division being -- we see a lot in North America, whereas zones is really in other parts of Europe and Asia Pacific. But the zone strategy follows the same approach, where really a zone is defining the general nature or properties of that hazardous material. And they classify, so when you see zone 0, one or 2, that's really talking about vapors or gases where when you see Zone 20 or 21, that's really classifying dust or flammable fibers. I just wanted to kind of tie this back to an example since on the last slide, there's a lot of terminology there to unpack. But just wanted to kind of show this diagram of a typical petrol station where, hey, we've identified here different zones as part of filling your car. So you can see here in red we have Zone 0, which is really gas or vapor is present at all time. So you can see in the heat map here in the tanker, that's going to be, hey, that gas is enclosed in that storage tank. So that's going to be always classified as Zone 0. But you can see that surrounding 3 dimensional zone around that tanker and even where you're filling your car, where you see there are Zone 1 and Zone 2 areas as part of it as well, right? You can have that gas or vapor can be present or expected to be present for long periods of time under normal operation. When you're filling a tanker on a vehicle scale, for instance, those vapors are going to be present, while the filling applications is going on. So typically, that's why you're going to see these types of areas in truck and rail scale applications classified as Zone one, where, hey, it's not going to be contained all the time since that's going to be enclosed within the tanker itself. But as you're in the filling operation, those vapors and miss are present in the atmosphere. So, hey, with that, let's want to do another kind of get some audience feedback from here, let's do another Menti question. So question here is, what is the most challenging part of operating in your hazardous zones? So feel free, you can use menti.com again, the QR code. Happy to see some comments in the chat as well, if you would like.

Jon, so we've got a couple of answers so far. First of all, just looking at like the all of the paperwork required in these environments and rules and regulations, also liquid filling on the scale seems to be a challenge as well.

Yes, very, very good points. Yes, the paperwork involved ensuring the safety of these operations is critical. And yes, there tends to be a lot of paperwork and ensuring proper use of that area, so that seems to be common. And we do get into -- we do talk a lot about transferring material, material handling, liquid filling, these can all be challenges that companies have to understand and work with them. So very good, very good comments. All right. Let's transition here and talk a little bit about common pain points and then I think kind of discuss a little more detail some of the Mettler-Toledo solutions we have to offer. So truck and rail scales are -- those of you that have them understand, they're typically operating in really demanding industrial environments, right? They're exposed to the elements, typically outdoors, harsh chemicals, heavy traffic. And it's -- it really is the cash register for your business. So any time there's any equipment failures that can lead to downtime, that can lead to lost profits and you're dealing with increased maintenance and service costs, things that you really want to avoid. So on the next couple of slides, we're going to talk about what Mettler-Toledo offers in terms of intrinsically safe solutions, one being POWERCELL PDX or load cell technology that can help solve some of these common problems around the scale. So, hey, few things I want to mention in terms of POWERCELL and digital processing of that weight signal is, one, POWERCELL employees, we do A to D conversion within the cell, but what we're really doing is improving the overall accuracy of that weight signal. So when we say digital signal processing, what we're really doing is taking all the errors that we see in terms of weighing due to temperature, load cycle, signal noise, loading time on the scale. These can all cause errors to that weight signal. And we're really doing -- compensating for those error, so we can provide the most pure and accurate way possible. And paired with that -- with POWERCELL, we also have a system of intrinsically safe designs that -- so that you don't have to sacrifice that scale performance and you can really leverage that accurate way. We're typically doing that with safety barrier so that we can properly lower that voltage into that hazardous area to lower that risk and comply with these hazardous zones. And then, hey, most importantly, in terms of reliability of our product. The -- typically, we're operating outdoors and reliability is really critical. So we have approvals for both IP69K and 68 which are both critical wash down and some version approvals that really helps for that easy maintenance and cleaning, but certainly a flood protection, moisture and water in general, tend to be high failure causes of a load cell and for scales in general. And so we ensure a high reliability of our products and good quality design. In terms of approvals here for our load cell technology, so in around the globe, we have approvals both in terms of class and zones. So all classes, all divisions and zones here are covered. For POWERCELL specifically, we have approvals for Group C, D, F and G. Just a reminder, when we talk about groups, that's getting into what material is present in those hazardous areas. We also have approval for our analog load cells. And those cover all groups, including both A and B. We also have approvals for Zone 2 and 22, which we'll cover here on the next slide. So in terms of POWERCELL approvals for Zone 2 and Division 2 hazardous area locations, these are zones where the gas vapor or miss are not normally present, but could be in abnormal situations. So, hey, in these areas, we do not require a safety barrier to be between the terminal in the load cells. You can have both the scale and the terminal located in a Zone 2 area. We have approved terminals for use in these zones. And really, what that helps with is, hey, with POWERCELL PDX, there's no additional expense. If you have a non-hazardous area today and then later it gets classified as Zone 2, which means there's, hey, there's no upgrade needed with changing designations in this case. So wanted to kind of highlight as an important point. Hey, also, this is not just related to a truck or rail scale. Mettler-Toledo is a full solution provider with intrinsically safe solutions across the entire value chain. So I mentioned at the beginning of the presentation, we have a number of different products, terminals, industrial products like way modules, floor scale products that all have hazardous area approvals. So really have a full portfolio of solutions in the industrial space, depending on the application and the need. Then on top of the safe solutions that Mettler-Toledo provides, we also have a consultative approach to really ensure smooth execution of these projects. I know many of you on the call mentioned the amount of paperwork. These tend to be complex projects to execute, right, especially being concerned with meeting local regulations around how the area is defined. We're here to help. We have experts that can get into the full detail regarding the portfolio and how we can execute these projects on site. And then, hey, it's not just around the truck and rail scale, but that data is important and we have a full suite of other offerings like software and different peripherals to really help you maximize the total solution. And then, hey, last but not least, I want to talk a little bit about service. Hey, just as important as specifying the equipment for use in these hazardous areas, having a regular schedule and really maintaining the asset for the long term is really important as well. In a -- we see it across the entire industry, but the better that we're using correct and proper preventive and maintenance procedures doing performing health checks, understanding how that asset is performing on a regular basis is really important to extending the life of the asset in the long term, just as important as specifying the right equipment for the location. So, hey, Mettler-Toledo has comprehensive services to help meet those goals, right? When we talk about scale cleaning, you're filling liquid, right? It's important to make sure the asset is cleaned off, doing regular power washing, can be important to keep that asset operating at peak performance. And really, we have a professional team of service technicians and trained technicians that could help select the right level of services you need for your specific application. And then in closing, I wanted to talk about some of the project support documentation Mettler-Toledo offers. So hey, the first one here is our truck scale weighbridge buying guide. This is probably your most comprehensive resource, really detailing everything you would need to know about executing on a truck scale or weighbridge bridge project, a lot of good information about just project management and overall applications and what we offer for Mettler-Toledo. And then we also have some other documentation specific to hazardous area locations, right? We have some technology comparison or reports in the chemical industry, as well as hazardous area markings and posters so that you can really help yourself and kind of better defining these areas for your operation as a whole. So good, with that, that was my last slide here. Appreciate the engagement in the Mentis. I'm glad to speak with you today on this topic. At this time, are there any -- open it up to the floor, any questions you have, you can also share some comments in the chat. And then [ Morgan ], I believe that this recording will be made available or at least the content in some way?

Yes, yes. So looks like no questions in the chat so far. But if anyone -- if you think of something after, please reach out, let us know. If you want a copy of the reporting, you may be able to do that in the -- from within the meeting. But if you want to go ahead and drop your e-mail into the chat that way, I can also directly send you a link to the recording. So feel free to do that. It does look like a question just came in, Jon, let's see, is...

So [indiscernible].

POWERCELL PDX from hydrogen, yes.

Yes, so, Dale, POWERCELL PDX is not approved for Group B. So very good question. Let me -- and I'll just show the chart again because it is in the presentation, we get back here. So POWERCELL here on the top, approved all classes and divisions, Group C,D, F and G. So it's just A and B that those are not designated for, whereas analog has the full range. So B, hydrogen would be -- have a approval for analog load cells. Very good question, Dale. Thanks.

Good. Well, hey, if there's any other questions, feel free, unmute your line, drop those in the chat. And then like I said, if you do want a copy of this recorded webinar, please just put your e-mail into the chat and I will send that to you directly. Otherwise, thank you so much for attending today and we hope to see you on some future webinars as well. And thanks, Jon, for the great presentation.

Yes, thank you, everyone, for attending.

All right. Have a good day, everyone. Thank you.

Good day.