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

Please note that we will be recording today's session for future marketing purposes, including the possible sharing on the Mettler-Toledo website as an on-demand webinar. Welcome to today's Scale Maintenance in Wet and Hazardous Environments Webinar by Mettler-Toledo. [Operator Instructions]. As well, today's webinar will take approximately 45 minutes, including Q&A. And at this point, I'd like to introduce our presenter. Our presenter today is Doug Dodridge. Doug is a Product Manager for Mettler-Toledo within the Industrial Weighing Group. Over to you, Doug.

All right. Good deal. Thanks, Christina. Much appreciated. And good morning, everybody. Thanks for joining us. Welcome to the scale maintenance in wet and hazardous areas webinar for Mettler-Toledo. We appreciate you taking the time to join us this morning and are looking forward to an engaging session. And like Christina mentioned, just to introduce myself. My name is Doug Dodridge, and I'll be along for the ride to present for you today. Currently, I serve as a Product Manager -- Product Marketing Manager within our Industrial division, so working with all kinds of different manufacturers, food, pharma, chemical and everybody else in between and support our industrial division overseeing our bench and our floor scale product lines. [Operator Instructions]. Just taking a quick look at a little bit of an agenda for our session here today. First, we're going to take a look at some recent recalls that affected producers in the food segment specifically and touch on some regulations and regulators that give guidance on best cleaning practices and hygienic design of industrial equipment. From there, we're going to touch on IP ratings. What they mean to your business and what they don't mean to your business before we get into some principles of sanitary design, in industrial equipment in general and then kind of dig into some critical things to consider when evaluating potential new weighing equipment for your production processes or maybe evaluating current weighing equipment that you have in place and trying to decide is this truly fit for purpose from what we're using it for and for the environment that it's placed in. And then finally, we'll wrap up by talking about some sanitation plans for your equipment, so best practices for regular cleaning and just some ways to think about that as you move forward and hopefully improving the hygiene of your weighing processes moving forward. So before getting into the presentation here, I want to go over some recalls, recent recalls in the food segment that are going to kind of help us set the tone for the types of things that we're going to hope to help avoid through the design of hygienic equipment. So looking at a few of these here on the screen, some memorable recalls from the last couple of years. Before Christmas last year, a major meat producer here in the United States expanded a nationwide recall for pork and pepperoni products, up to about 2.4 million pounds from what was originally about 240,000 pounds for Listeria contamination, another major food manufacturer recalled about 8.5 million pounds of ready-to-eat chicken product, again, for possible Listeria contamination. And then once again, another major food manufacturer recalled around 60,000 pounds of frozen stuffed chicken products sold across the country here in the United States for possible Salmonella contamination. So, in general, we know recalls due to bacteria contamination happen, they're painful and expensive for producers and manufacturers and oftentimes, they're dangerous for the people that we produce for our consumers. Here, we're talking about the food industry specifically, but they happen in all kinds of different places, right? And there can be a number of reasons behind recalls like this, but really finding and mandating use of fit-for-purpose hygienic equipment, is a good, best practice to reduce the risk of these types of recalls in the future. Hey, we know weighing equipment is used in various applications and in manufacturing processes. Sometimes it comes in direct contact with our product, sometimes it doesn't come in direct contact with our product, but regardless, when we have hygienic environments and product that's manufactured with hygiene in mind, we need to make sure that we're carefully selecting those pieces of equipment or evaluating those pieces of equipment that we have in place to make sure that we fulfill our production and regulation requirements and compliance requirements and things along those lines. Talking about compliance before we get into any equipment details, I wanted to kind of quickly summarize some relevant regulations for food and pharmaceutical companies here in the United States specifically, but really most of these groups have a global impact. The listed here are some of the most common regulations and regulators when talking about weighing instruments with hygienic design requirements and built with food safety in mind. So first, on the left side of the screen here, we've got GMP. Most of us are familiar with good manufacturing practice which provide guidelines and criteria for equipment cleaning and then assessments of that cleaning, right? Moving forward, we've got EHEDG and NSF. These are both global internationally-recognized organizations or bodies that provide guidance to manufacturers and expertise in the area of design of sanitary equipment and actually EHEDG and NSF do provide some certifications on equipment in some cases. However, they're getting away from that in a lot of places and really just providing guidelines to manufacturers of what hygienically designed equipment should look like and how it should operate. And then finally, for us, because in the United States, we've got the FDA. They obviously aim to ensure that food supply is safe through preventing the contamination instead of responding to it reactively. So all of these bodies here are concerned with, a, how hygienically designed our equipment is in the effort of preventing contamination to protect consumers and then, b, concerned with how we're cleaning that equipment on a regular basis to ensure that we keep all that up to speed. What this really boils down to is that producers have a lot of factors to consider when it comes to making safe products for their consumers and really a good equipment manufacturing partner or vendor should be able to help you navigate those waters with the products and solutions that they offer for those types of environments. Just to kind of get our wheels turning a little bit. These are oftentimes things that we talk to our customers about in terms of cleaning or hygienically designed equipment and just to kind of think if these are things that maybe you brought up to a vendor in the past. So in the area of equipment selection, we often hear things along the lines of needing equipment that is easy to clean, but also robust and able to stand up to an industrial environment. We often get questions along the lines of how do I select the right weighing equipment for my process, especially if that's in a hygienically sensitive area. When it comes to cleaning efficiency, oftentimes, customers will tell us that we need to be able to efficiently clean equipment quickly so that those procedures can be executed in between shifts as we're changing operators, changing processes, and in mind or keeping in mind the fact that inefficient cleaning can be risky and often requires rework or something of that nature. And then finally, from an operator training standpoint, oftentimes, we get questions of where are critical areas to check when cleaning a scale, what are the things that we need to look out for? And then when it comes to training employees, how do we train them and how do we make sure that we maintain a safe standard operating procedure to keep this thing clean throughout its operating life. And so I just ask you to think if you brought up any of these points to your vendor in the past, or these are things that you've thought about when it comes to selecting or buying new pieces of weighing equipment for your production processes. If so, you probably do have a hygienically-sensitive environment where you want to be thinking about some of the design principles that we're going to be talking about here moving forward. So when it comes to those design principles, sanitary standards, what are the sanitary standards or the kind of the different features that we're looking for when it comes to hygienically designed weighing equipment. Well, really, there's 3 main design requirements that we want to keep in mind. First is going to be material construction of the equipment. What is it made out of, what is the makeup of it and the materials that are used to get there. How open is the construction, how accessible are all the different components of the device. And then finally, we want to make sure that there's no cracks or crevices, no niches, open threads, places where contaminants or bacteria might be able to hide. So on the material construction front, we want to make sure that our material construction is corrosion resistant. It's non-toxic. It's non-absorbent. Oftentimes in a hygienic environment that is going to be stainless steel. Full stainless steel material construction is oftentimes what we're looking for, both in the services that are exposed to the environment, but then also the internal components that may get wet or be exposed to moisture and things along those lines. Typically, when we're talking about material construction, we're not making a decision between carbon steel or mild steel and stainless. Again, in these types of environments, it's always stainless steel. We're typically just making the decision between 304 or 316 stainless steel and then what type of a finish we need on that steel by way of polish or something of that nature. Typically, that decision between 304 or 316 stainless steel is going to be decided on based on the cleaning agents that we're using in the environment and how corrosive those cleaning agents are going to be to the stainless steel and what level of protection we need our steel to have. Obviously, 316 is that higher level and is going to be a little bit more protected against those corrosive types of cleaning agents. Something else to keep in mind when it comes to material construction in general is that on hygienically designed equipment, we want to make sure that the surface roughness is below 0.81 micrometers. And this helps prevent the accumulation of microorganisms. So at that rate or at that level, microorganisms don't have the ability to hide and accumulate and so we can easily wash off those microorganisms when the surface roughness is to the right gauge. On the open construction front, we want to make sure that the construction of the device is open and accessible. All internal components, we should be able to see them. We should be able to touch them, reach them with our hands, get our fingers and hands into any gaps, things along those lines. And then any horizontal elements, those should be rounded. We shouldn't have any dead spaces or hollow areas because, again, those are places where liquid might accumulate which obviously is going to lead to the growth of contaminants and bacteria and things of that nature. Finally, on the front of no crevices or niches, we want to make sure that any internal corners or angles inside of the device are rounded, any wells that we have that are attaching those metal components are continuous, they're smooth, they're polished. There's no burs or areas where a cloth rag may be able to get stuck and then finally, any fasteners and open threads should be avoided to prevent the accumulation of contaminants. And in those places where we are using fasteners, those fasteners should be stainless steel and they should be rounded and they shouldn't allow for any gaps where they actually fasten down to whatever they're connecting to, okay? So in general, we're going to be talking about what hygienic design looks like on a number of different types of weighing equipment, bench scales, floor scales and weigh modules. But these are the general principles that we're looking for across all those different types of technologies. Before we jump into those specifics, I wanted to quickly touch on IP ratings and kind of how they pertain to hygienic design or maybe more so how they don't pertain to hygienic design. Most of us that purchased or used industrial equipment for industrial manufacturing processes are familiar with IP ratings. IP rating is typically stated as IP and then 2 numerical numbers, in the example here, you see at the bottom of the screen, this is stated as IP65. The IP just states ingress protection, so that's always going to be the leading character of the IP rating. That first number, so in this example, the 6 pertains to the solid ingress protection rating of the device, mainly dust protection rating. So 6 being the highest that can be secured. And then the second number is the liquid ingress protection rating. So here, 6 is letting us know that we've got the highest level of dust protection and then the 5 is letting us know that we've got kind of a mid-level of liquid ingress protection, okay? What's important to remember when it comes to IP ratings is that they tell you how protected your equipment is from dust and liquid ingress from an electrical component standpoint. They do not tell you how hygienically designed that piece of equipment is simply because the product has secured a high IP rating, doesn't necessarily mean that, that equipment is protected from contaminants. And we're going to talk a little bit more about that in the following slides, but keep that in mind, oftentimes, a piece of equipment will be marketed as of hygienic design because it's secured an IP69 rating. While that means that the device is highly protected -- the electrical components of that device are highly protected from solid or dust and liquid or water ingress that does not necessarily mean the device has the appropriate material construction that we're looking for or has no cracks or crevices or niches or has the open construction that we're looking for. So keep in mind that while IP ratings are important, and we need to make sure that equipment that is going into wet environments has the appropriate IP rating, that IP rating is not necessarily a one-to-one relationship between how hygienically designed that equipment is and how protected it is from the environment that it's being placed in, okay? To jump in into some critical design features, ways to ensure hygienic compliance and safety of our bench scales, first and foremost. These are some different things to consider when evaluating the purchase of new bench scales or if we want to evaluate bench scales that we have in use today, these are some things that we can look for to determine, is this the appropriate device for what we're using it for? Or do we have a risk here? And should we think about maybe making a change? So first and foremost for bench scales, we want to make sure that we check all the surfaces. Like we talked about before, we want to make sure that surface roughness is appropriate so that those surfaces should be smooth. All the parts should be seamlessly integrated without any of those niches or crevices where pathogens can hide. Stainless steel is important. We want to make sure that it's used throughout the entire device. And again, in wet environments, we want to make sure that it's not just the parts of the device that are exposed to the environment, but also all of the internal components that may get wet in our cleaning process. Here, specifically with bench scales, we're most concerned with the load cell. Obviously, that's the most critical weighing component of the entire solution. And we want to make sure that, that load cell has full stainless steel material construction. And we also want to make sure that it's hermetically sealed or hermetically welded to ensure that the electrical components of that load cell are as protected as possible from any kind of liquid ingress. We want to inspect the feet on bench scales. So most of our bench platforms that we buy from Mettler-Toledo or any other vendor for that matter, are going to have what are called leveling feet on the bottom of that bench scale. These are typically a threaded in some way, shape or form foot, kind of operates like a bolt that threads into the bottom of the platform, and it gives you the ability to level that platform on whatever surface you have it sitting on. It's important to remember though that those leveling feet should be protected. So if that's a threaded bolt that's going up into the bottom of that platform, there should be some protection there. So as we pull that leveling foot out to level the platform, those threads are covered. Open threads are a great place for pathogens and bacteria to hide, and they're a great place for liquid to hang out and accumulate after we've cleaned our equipment. So we want to make sure that any place that we might have open threads on a fastener or a leveling foot, we minimize or eliminate those completely. We want to lift up our platters. So where we're actually putting the items that we're weighing. We want to lift up that weighing pan and if the design underneath is not open and easy to clean, this is a hidden risk. So like I mentioned earlier, with the open construction, we want to make sure that we can easily see throughout the entire internal components of the platform. We want to make sure that we can reach around all those components, clean them with a rag or something of that nature. There shouldn't be any areas that we're not able to reach within the platform. We want to take a look at the indicator. We want to make sure that all of our buttons and plugs are sealed from incoming water, any exposed screws or fasteners here are going to be hard to clean. And then just a little tip something to keep in mind, our platter is typically the most important material contact surface, so that is the thing that we should clean the most thoroughly because that's what's coming into contact with our product almost every single time that we're putting something on the scale. Here's just some examples of what that looks like on a bench scale, for example. So you notice up at the top left of the screen, that open design visual kind of gives you an idea of what we talk about is being able to see through the entire assembly of the device as well as being able to reach inside of it, complete indicator protection, so here, we are talking about the IP rating of the indicator and making sure that as this is an electrical component, it's completely protected, has the appropriate gaskets and things along those lines so that we're not getting any water ingress into our electrical components. Again, that smooth surface piece, making sure that the surface roughness is appropriate and then the hygienic foot design. I know it's a little bit tricky to see here, but in this example, the way that this foot has been designed, it gives you the ability to level this platform without exposing any of the threads that are within this assembly here, protecting you again from those open threads in a place that contaminants might be able to hide and hang out. Here on the next slide, we're going to be showing a video that gives some visuals between a bench platform that is hygienically designed or of hygienic design. And then another bench platform that is marketed as of hygienic design because it's made of stainless steel, it has the appropriate IP ratings, but I want to give you some context into or kind of behind how efficient it is to clean something that is truly of hygienic design versus something that has -- that is lacking a bit and leaves some things to be desired. So on the left side of the screen here, that is the hygienically designed platform. You can see that open design, the rounded tube steel construction. On the right side, that's a little bit more of a closed design. It's certainly harder to get our hands into the internal components, the load cell specifically. And you'll notice that, that rounded design of the hygienically designed platform really encourages liquid runoff. So we've been talking quite a bit about preventing liquid accumulation and encouraging contaminants to run off our platform, our equipment as we're cleaning it. And this kind of gives you that visual to see what the difference is here. Again, we're looking at those open threads compared to non-open threads, places where we've got little holes or nonrounded surfaces that those contaminants might stay in and hide. So again, just to kind of give you an idea of how efficiently a piece of equipment that is truly of hygienic design can be cleaned when compared to something that is maybe not of hygienic design, has the appropriate material construction, has the appropriate IP ratings, but maybe not truly fit for the environment that it's intended to be used in. Moving on to floor scales here, some things to consider when we're thinking about floor scales as opposed to bench platforms. We want to make sure that we inspect the exterior surface of the scale. Again, these surfaces should be smooth. They should be free of any ruts or scrapes. If we've got areas where we've got ruts or scrapes, we may want to think about grinding those down and sanding and polishing those surfaces so that those aren't places where bacteria can hide. We want to make sure that high-quality stainless is used on all floor scales and all components. Any of our wells, they should be continuous, no niches, areas where pathogens may hide, things like that. In a truly hygienically designed floor scale, we want to make sure that we've got access to all parts underneath the deck, it's important to facilitate thorough cleaning and making sure that we've got access to all different parts of the deck, both the top deck and the subframe. So we want to make sure that, that can be lifted and that the cleaners know how to lift it safely, keep it up during the cleaning procedure and then clean all of the components within the floor scale assembly there. We want to inspect underneath the top deck. Is water able to easily drain from the corners to prevent buildup or does water pool within any gaps? If water is pooling within any gaps, that's a potential risk and something that we want to look out for. And have any exposed cables been minimized? So again, cables are replaced where bacteria can latch on to. And so we want to have most of our cables routed through the frame if possible and any open cables are minimized to the furthest extent. Just a cleaning tip for floor scales here. When it comes to floor scales, I mentioned that typically a truly hygienic floor scale is going to be one where we can lift the top deck. Most of us are probably familiar with kind of standard floor scales, it's just a single platform that sits on the floor that doesn't allow you to lift the top deck. That's a little bit tricky to fully clean that device because you can't get underneath it and things along those lines. However, a mobile scale could potentially be a good solution to help there if we don't have the ability to lift the top deck in the environment that we're in. So with the mobile scale, we've got the ability to move that scale, clean the scale, clean the area underneath the scale where it was sitting and then return it back to its operating place. So what do some of these ideas look like? On floor scale specifically, again, we want to make sure that we've got easy cleaning access. Most of the time, this looks like pneumatic springs that enable us to open up the top deck or gas springs that allow us to open up the top deck of that floor scale platform and clean underneath. We want to make sure that we've got an open and rigid construction. Again, that open construction, anything that's adding rigidity to the floor scale assembly, we want to make sure that there's an openness to that design. So we've got the ability to clean all of those ribs and things like that, that are adding rigidity to the deck. And then again, finally, that smooth surface that I've repeated again and again and again as it's extremely important to make sure that the surface of this equipment is smooth and doesn't have any scrapes or crevices or things like that. Moving on to tank weighing applications. Tank weighing applications give us the ability to reduce risks when it comes to hygienic risks or the introduction of bacteria, things like that. The idea here is that the product is not coming into contact with the weighing device or the scale in any way, shape or form. So in most tank scale applications, a tank or a hopper or a vessel, something like that is mounted on top of a series of load cells or weigh modules. And while it's important that those weigh modules are appropriate for the environment, the weigh modules themselves, the load cells themselves likely would not introduce a hygienic risk to the product because they're not directly interacting with it. Again, we want to make sure that they are hygienically designed, so they're appropriate for the environment, but they may not be introducing a risk to the product specifically because they're not interacting with it directly. When we're talking about load cells or weigh modules, some things to look out for here. We want to again check our weigh module surfaces, make sure that we've got none of those scraps or scratches. All of our surfaces should be self-draining on weigh modules, meaning they cannot be totally horizontal. You'll notice in the picture on the right side, the base plate is slanted so that from the back to the front, any water that is on that base plate is going to naturally run off it with gravity. So we want to make sure we're avoiding any horizontal surfaces on these types of solutions. We want to make sure that the weigh module can be cleaned 360 degrees all the way around the foot of the tank that it's mounted underneath. We want to make sure that we're inspecting any bolts, cable connections. There's not places where we've got niches where pathogens might be able to hide. And then finally, in most weigh module or load cell situations or setups they're using a junction box. And the junction box is a device that is mounted typically somewhere near the tank or on the tank and it's used to sum the values of all the different weigh modules or load cells to then send the total weight value over to the display. We want to make sure that, that junction box is also protected and any place where a weigh module or a load cell is feeding a cable into that junction box, we want to make sure that, that connection is sealed by gaskets and things like that to protect the junction box from liquid ingress as much as possible. Weigh modules, what does this look like? I mentioned the angled base plate. We want to see those angled surfaces and less of those horizontal surfaces on hygienically designed weigh modules. We want to make sure that we've got a hygienically designed load cell. Again, the idea here is that it's got the appropriate material construction. It's got the appropriate finish, but it's also hermetically welded and sealed to prevent any liquid ingress. And then finally, patented gasket designs and cable glands, we want to make sure that areas that have these cable glands or gaskets are in good shape. There's no cracks, no degradation of the rubber or things along those lines. Moving on to sanitation planning for our equipment. It's important to remember that typically weighing equipment suppliers, like Mettler-Toledo don't provide in-depth cleaning instructions for our equipment. And the reason for that is that most of our customers have vastly different cleaning [indiscernible] solutions that they're using to clean their equipment based on the environment and the products they're creating. And so to ensure compliance here, we really recommend that a cleaning validation procedure is decided on with your preferred cleaning supplier, whoever that might be, the vendor that's providing you with your cleaning products. Again, each facility is different, requires unique sanitation plan. And so we really recommend to work with your cleaning providers to kind of think about, what solutions should we use on this device for our environment and ultimately, what we're looking to do to stay compliant. And then at what frequency should that be completed? The photo here on the slide is just an example of what that might look like. But again, depending on the cleaning provider and the portfolio of equipment that you have, this may look a little bit different. Now we can provide some insight when it comes to cleaning and hygienic environments and things like that. So reach out to us if this is something that you're looking for some help with. We do have some SOPs that we can provide that are a little bit more general in nature, but give you the ability to kind of think about a general cleaning procedure and what variables you might want to apply to it. We've also got a 7-step cleaning poster that I'll link in the chat here at the end of the presentation. This poster just provides some steps for cleaning bench scales as well as floor scales and is something that could be put in a hygienic environment just to make sure that an operator is up to speed on cleaning equipment and things along those lines. Something else to mention. If you're using Mettler-Toledo indicators or considering using Mettler-Toledo indictors in the future, we do have the ability to build in some SOPs or some instructions onboard the indicator. So if you wanted an operator to go into cleaning mode, the indicator would have the ability to walk the operator through the different steps needed to clean that device. So as we look to wrap up our session today, just a quick summary of the topics that we've covered. First, hygienically designed weighing equipment helps prevent cross contamination and ensures regulatory compliance. So that's a big thing here. We want to make sure that we're using hygienically-designed equipment, not only to protect us, but to protect our consumers as well. We know that poorly designed weighing solutions can be a contamination risk and the fact that hygienically designed weighing solutions help to increase cleaning efficiency. So not only are we protecting ourselves with more hygienically designed equipment, but we're likely speeding up the process in which it takes to actually clean that equipment. And then finally, hygienic design can mean different things to manufacturers. As a producer, you should focus on those 3 things that we talked about: material construction, open design, no crevices or niches and then ensure that the IP ratings match up with your expectations and things along those lines, but keeping those things in mind by way of material construction, open design and no crevices or niches, will definitely help us as we're looking to make equipment selections moving forward for weighing applications specifically. And that brings us to the end of our presentation today. So thanks so much for joining this webinar on scale maintenance in wet and hygienic areas. For more information such as white papers, guides, additional webinars that we'll be hosting in the future, you're certainly welcome to visit us on mt.com for all of that type of content. So with that being said, I'll jump into the chat here and see if there's any questions to address from the duration of the presentation. But Christina, I'll let you come back and close it out if not.

Sure. So there was one individual who said they were joining in on their phone. So if we -- I don't think we have their e-mail yet, but if we get their e-mail, would you be willing to share the slides with them since they were unable to see their slides, they only just saw your face?

Sure. Absolutely. I see David, that message came from you. So I'd be happy to share those slides following the presentation today.

Okay. So that was so far the only question. I do want to bring people's attention to another industrial weighing webinar that we have coming up on April 13. It's related to good weighing practice. So feel free to join us for that session as well as Doug mentioned, please feel free to check the mt.com site, both for Canada, the U.S. and the U.K. because we will be posting more webinars in the next few weeks. So take a look and you're welcome to join any that are of interest to you. Do we have any other questions by chance?

I'll just mention quickly folks. I said I was going to include that poster in the chat, and I just dropped the link in the chat there. So if that poster is something that you want to take a look at or potentially print out to post in your environment, please feel free to take a look at that link there in the chat.

So thank you very much, Doug. We do appreciate you joining us today, and we'll be following up with you in the near future. Thank you very much, everybody. And Doug I have a question for you. If you could just stay online for a sec.

Sure.