Ladies and gentlemen, thank you for standing by, and welcome to the quarterly earnings conference call. At this time all participants are in a listen-only mode. After the speakers' presentation, there will be a question-and-answer session. Please be advised that today's conference is being recorded. I would now like to hand the conference over to your speaker for today, Ms. Mary Finnegan. Thank you, ma'am. Please go ahead.

Thanks, Catherine, and good evening, everyone. I'm Mary Finnegan. I'm responsible for Investor Relations at Mettler-Toledo and happy that you're joining us tonight. I'm on the call today with Olivier Filliol, our CEO; and Shawn Vadala, our Chief Financial Officer. Let me cover just a couple of administrative matters. This call is being webcast and is available for replay on our website. A copy of the press release and the presentation that we refer to on today's call is also available on our website. Let me summarize the safe harbor language, which is outlined on Page 2 of the presentation. Statements in this presentation, which are not historical facts, constitute forward-looking statements within the meaning of the U.S. Securities Act of 1933 and the U.S. Securities Exchange Act of 1934. These statements involve risks, uncertainties, and other factors that may cause our actual results, level of activity, performance, or achievements to be materially different from those expressed or implied by any forward-looking statements. For a discussion of these risks and uncertainties, please see our most recent Form 10-K and other reports filed with the SEC from time to time. All forward-looking statements are qualified in their entirety by reference to the factors discussed under the captions Factors Affecting Our Future Operating Results and in the Business and Management Discussion and Analysis of Financial Condition and Results of Operations sections of our filings. Just one other item. On today's call, we may use non-GAAP financial measures. More detailed information with respect to the use of and the differences between non-GAAP financial measures and the most directly comparable GAAP measure is provided in our Form 8-K. I will now turn the call over to Olivier.

Thank you, Mary, and good evening, everyone. I'm calling in from Switzerland tonight, while Shawn and Mary are in Columbus, Ohio. Patrick Kaltenbach is also joining the call with me from Switzerland, and we are excited to have him on board. Patrick and I have had very productive onboarding sessions over the last few weeks, and he has most recently begun to meet with the senior leadership team who are very happy to welcome him. Patrick, I will turn it to you, as I know you want to make a few comments.

Thanks, Olivier. And good evening, everyone. I am very happy to join this call tonight and more importantly, to be part of Mettler-Toledo. I spent my time so far working with Olivier, meeting senior leaders virtually throughout the world and studying thorough strategy documents, comprehensive materials on Spinnaker approaches, and detailed R&D priorities.

Thank you, Patrick, for these very kind words. From my side, we're off to a great start and I look forward to our continued teamwork. I will start with a summary of the quarter and then Shawn will provide details on our financials. The highlights for the quarter on Page 3 of the presentation. We ended the year with a very strong fourth quarter, which came in better than we expected. Local currency sales increased 7% in the quarter and growth was relatively broad-based throughout the world. Our laboratory business and our Chinese business did particularly well in the quarter. We benefited from strong execution and we’re well positioned to capture growth as customer demand improved. However, we continued to be negatively impacted by COVID-19 in certain areas. From the onset of the global pandemic, our focus has been to identify and pursue pockets of growth within our end markets and to be well positioned to capture growth as demand improves, which is what we saw in Q4. Our innovative go-to-market approach really played very well into this environment, and allowed us to capture this growth. Good cost control and the continuous benefits of our margin and productivity initiatives contributed to strong growth in adjusted operating profit and very strong growth in adjusted EPS in the quarter. Finally, cash flow not only in the quarter but also for the full year was excellent. 2020 was an extraordinary year with some of the most challenging market conditions we have faced in more than a decade. Our organizational ability helped us to quickly adapt approaches and processes to the new environment. A broad end market diversification and the use of sophisticated data analytics allowed us to shift our sales and marketing focus to the most promising end markets early on.

Thanks, Olivier, and hello, everyone. Sales were $938 million in the quarter, an increase of 7% in local currency. On a U.S. dollar basis, sales increased 11% as currency benefited sales by 4% in the quarter. On Slide number 4 we show sales growth by region. Local currency sales increased 8% in the Americas, 7% in Europe, and 8% in Asia rest of the world. Local currency sales increased 12% in China in the quarter. The next slide shows sales growth by region for the full year 2020. Local currency sales increased 2% in the Americas, 1% in Europe, and 3% in Asia rest of the world. China local currency sales grew by 7% in 2020. On Slide number 6 we outlined local currency sales growth by product area. For the fourth quarter laboratory sales increased 12%, industrial increased 1% with core industrial up 5% and product inspection down 5%. Food retail increased 7% in the quarter. We estimate that we benefited 1% to 2% from COVID tailwinds in the quarter related to our pipette business for COVID testing. The next slide shows sales growth by product area for the full year. Laboratory sales increased 5%, industrial declined 1% with core industrial up 2% and product inspection down 7%. Food retail declined 4% in 2020. Let me now move to the rest of the P&L for the fourth quarter which is summarized on the next slide. Gross margin in the quarter was 59.6%, a 60 basis point increase over the prior year level of 59.0%. Our margin initiative centered on pricing in Stern Drive, as well as temporary cost savings contributed to the margin growth offset in part by higher transportation costs and unfavorable business mix. R&D amounted to $39.9 million, which represents a 6% increase in local currency. SG&A amounted to $226.4 million, a 5% increase in local currency over the previous year. Increased variable compensation was offset in part by our temporary cost savings and ongoing cost containment initiatives.

Thank you, Shawn. Let me start with some comments on our pricing results. Our lab business had exceptional growth in the quarter, pipette had excellent growth and benefited from COVID-related testing demand. Process analytics had another quarter of strong growth, while demand for analytical instruments and balances recovered nicely in the quarter. Sales growth in all regions was very strong. We expect lab to continue to be very strong in the first half of 2021, due to favorable biopharma trends, vaccine research and testing, and bio production scale up and production. Lab will face tougher comparisons in the second half of the year. With our excellent lab product portfolio, including our power band solutions focused on automation, digital interfaces, and data management and proven Spinnaker sales and marketing strategies, we believe we're well positioned to continue to capture market share. In terms of industrial business, core industrial did well in the quarter with a 5% increase, driven by double-digit growth in China. We returned to growth in core industrial in Europe, while the Americas were flat, although they had very good growth in the prior year. We are particularly pleased with how resilient our core industrial has proven throughout 2020, given the challenges of the pandemic. We believe this reflects the strength and diversity of our product portfolio, our success in identifying and pursuing pockets of growth, and strong focus on execution. Our outlook for core industrial remains solid, but we acknowledge we are not immune to the overall economy and we'll face difficult comparisons in China during the second half of the year. Product inspection came in weaker than we had anticipated, with a 5% decline in the quarter. Both Europe and Asia declined while the Americas were flat with the prior year. While our outlook has improved for this business, and we expect to start 2021 with solid growth, we are cautious as large packaged food companies continue to face operational challenges at their manufacturing sites related to COVID. We believe pent up demand exists for our instruments, but ultimate timing is still hard to determine. Food retail came in better than we expected with 7% growth overall and growth in all regions. Now let me make some additional comments by geography. Sales in Europe increased 7% in the quarter with excellent growth in lab and good growth in core industrial and food retail. We expect solid growth in Europe in 2021. The Americas increased 8% in the quarter with excellent growth in lab, offset by flat results in both product inspection and core industrial. We expect good growth in the Americas in 2021. Finally, Asia rest of the world grew 8% in the quarter with both lab and core industrial doing very well. As mentioned, China had 12% growth in the quarter with excellent growth across product lines. We expect market conditions in China to be very favorable as we start 2021, while they face much tougher comparisons in the second half of the year. One final comment on the business, service and consumables were up 13% in the quarter and 8% for the full year. That concludes my comments on the business. As I reflect on 2020, I'm very pleased with our performance given the exceptional challenges we faced. This performance would not have been possible without the strong foundation and well-ingrained corporate programs that we have in place, which allowed us to quickly pivot and adapt to the new environment. We have always considered agility and focus on execution a key pillar of Mettler-Toledo. And I think you saw evidence of both of these in our results. Probably most important, however, our success in 2020 sets the stage for us to continue to capture growth in 2021 and beyond. Our strategy over many years has been remarkably consistent. As a leader in fragmented markets, we have established strategies that allow us to gain a little market share each year while continuously expanding our margin. The initiatives within these strategies will evolve, but the strategies remain the same. As we look to 2021, let me comment on how we are going about this. I will start with our Spinnaker sales and marketing initiatives. As we discussed on our last call, we made some leapfrog advances in digital transformation during 2020 that positioned us very well for the future. We will continue to refine our sophisticated analytics to guide our sales force to the best opportunities. We will continue to support our market organization with tools and methodologies to increase sales force time with the most strategic account while leveraging our value selling and cross-selling tools to further penetrate opportunities. We will also continue to leverage digitalization to develop new approaches that drive sales force efficiency and refined techniques to improve the effectiveness of telesales teams, but also look forward to returning to visit accounts to generate new opportunities. Finally, we'll look to execute more telemarketing campaigns and have tools to increase order conversion. Service will continue to be an essential element of our customer value proposition. Our almost 3,000 service technicians are an important competitive advantage for us. This year, we will focus on further AI-based penetration and utilizing many of the same sales force guidance telesales and digital tools that we use for product sales to further drive service sales. Our team in China did an exceptional job in 2020, not only in continuing to serve customers and penetrate growth opportunities, but also in terms of manufacturing and supply chain. The team's priority is to continue to optimize the organization to focus on high potential growth areas, attractive segments, and further leverage digital technology to engage customers and generate leads. Introducing products for the local market such as an entry-level X-ray instrument for our product inspection portfolio is also an important element for growth in China and throughout emerging markets. We remain very optimistic about the growth potential, not only in China but throughout emerging markets over the medium term. Constantly coming to market with new product launches is another important strategy. Given the diversification of our product portfolio, a new product launch will never be material by itself. But together these launches reinforce our market leadership, help trigger replacement of existing customers, help open doors to new customers, and help support our price differentiation. Later this month, we will launch a new automatic laboratory balance that will set a new standard for weighing powders and liquids in research labs, testing labs, and quality control labs. Addressing the need in the laboratory for automation, smaller sample sizes, flexibility, ease of use, and seamless documentation, these new balances offer an unmatched value proposition. It is a simple, fully integrated solution that will support our customers in their everyday operation. It is just one example of the many product launches we will have this year, but it illustrates how we are continually focused on bringing products to market that demonstrate clear value to our customers. Similar to the continued evolution of growth strategies, we also continue to develop our pricing and productivity initiatives. We have good developments within pricing, utilizing analytics and machine learning to most effectively price our offering. On the supply chain side, the team was able to continue to make progress on their Stern drive productivity goals in 2020. But we will be able to make further progress in 2021 when the team won't have as many challenges as they faced last year. Finally, I think you will continue to see us explore strategic acquisitions that leverage our technology leadership and global distribution. I acknowledge that we have not had an acquisition for a while, but continue to believe if we can benefit from acquisition. However, these acquisitions will be smaller and strategic, not transformational. I believe our franchise is stronger than ever, as demonstrated in how we performed in 2020, despite all the challenges. As I look back over the last decade plus years, we have made much progress in many areas. Our continuous improvement programs of Spinnaker, sales and marketing, and Stern drive productivity, which I just discussed, are well ingrained throughout our organization and will continue to evolve and be important ingredients for the future. Emerging Markets are an important growth driver of 35% of sales today, compared with 25% in 2007. Similarly, our faster-growing laboratory business is now 54% of sales, up from 44%. Finally, service and consumables now account for 33% of sales, compared to 28%. Redirecting resources and investments to fast-growing businesses has always been at the heart of our initiatives. And these businesses will continue to fuel growth in the future. The strength of the organization and how well we are positioned for the future contributed to my decision to step down as CEO. Under Patrick's leadership, I believe we have the organization, corporate programs, senior leadership team, and tools in place to continue to gain share and continue our successful track record. That concludes our prepared remarks. And now I want to open the line for questions.

Your first question comes from the line of Tycho Peterson with JP Morgan.

Hey, thanks. Olivier, I know you have one more quarter so we will strive to get you on the transition just yet. But maybe thinking about the service and consumable numbers you highlighted quotes sales up 30%. Can you maybe just talk about the durability? How much of that was pent-up versus maybe some of the newer initiatives, especially on the server side?

Yes. So we would estimate that the COVID tailwinds were about 1% to 2% for the group. That was really related to the consumer business mainly or almost exclusively around tips that we produce in our Rainin and Biotech facility. So that was actually really strong. But then the remainder of the service and consumable business was healthy and quite sustainable. I was actually pleased to see how we continued to perform service well, even under, again, more difficult lockdown situations particularly also in Europe, starting at the end of Q4. And nevertheless, our service business could nicely hold up. And I would expect the same for this year. So I would almost say for our service business, we have a healthy environment. And I continue to expect similar growth as we had in the past.

Okay, that's helpful. And then product inspection, I know you've been talking about pent-up demand with the CPG customers for a while, obviously, we're not seeing it yet. Maybe talk a little bit about what you're hearing in that channel.

Yes. So, indeed, we still see good demand for quotes. We feel we have a very good market position. But we see that customers are just not committing to great and new packaging lines and so on, which is not surprising. All these food companies really need to protect their production from any COVID exposures. And you can imagine, they have very rigid safety procedures, not wanting to let in any external suppliers. And that really drives the demand. And I wouldn’t be surprised if this takes six months, there are many production companies that really hold back on CapEx. And as a reminder, more than 70% of our revenue in product inspection is coming from food production. So, we count on the second half that we would really see a strong pent-up demand. But I do expect that already in Q1 we will see better numbers, but not necessarily coming from pent-up.

Okay. And then lastly, on China last quarter, you talked about some pull forward, you still had good growth 12% overall, industrial double digits. Maybe just talk a little bit about the sustainability. And then if you could quantify what is baked in the guidance for China's growth this year?

So let me take the first part regarding the specifics, then Shawn can add in. Yes, indeed. We are very happy about how Q4 came together, the Chinese team did perform really, really well. There is also a good market for us. We see that the Chinese local investment is going very well and we benefit from that. The investments also go in the right market segments for us that we can benefit from. And I would certainly expect that this momentum will still go on for a while. We have here, for example, Q1, I still have good expectations. For the second part of the year, however, we are going to face tougher comparisons, and that's certainly one of the reasons why we guys, when it comes to China a good start, but then a slowdown in the second part of the year. Now, Shawn, do you want to add some flavor to that last comment?

Yes, sure. Thanks, Olivier and, hi, Tycho. Yes, so for the full year in China, Tycho, we're now looking at high single-digit growth for the full year. That's an improvement from our previous guidance where we were saying mid-single digits. And right now we're feeling that high single-digit would be both in the laboratory and the industrial business. But as Olivier mentioned, the pacing is going to be pretty unique just given the whole situation with the comparison in Q1 of last year, and then when we look at the second half of last year as well. So just to be even a little bit more specific on that, in Q1, we expect China to be up mid to high 20s in terms of growth. But again, that was versus a minus 13% in Q1 of last year. And then, of course, we're going to have to lap some of these tougher comparisons, which included 17% growth in Q3 of last year and now 12% in Q4 of this year.

Okay, thank you.

Our next question comes from the line of Derik De Bruin with Bank of America.

Hi, good afternoon. How are you doing?

Yes, hey, Derik.

So I guess the first question is, how did pricing come through in 2020? And just sort of curious that you've got better pricing than normal given the huge demand for pipette. And just if you took some price advantage there. And just sort of like, what are you expecting in the '21 numbers for pricing?

Yes. So hey, Derik, I'll take, it’s Shawn. So in the fourth quarter, we did just under 2.5% in terms of price realization. So that was a little bit of an improvement from what we were seeing earlier in the year. I think each quarter we started to see things progressively get a little bit better. Part of that improvement was that we were able to take a little bit more price in the area of pipette, as you just mentioned. We also were able to do a couple of other things where we're trying to offset some of these higher transportation costs as well. As we look to 2021, we were previously guiding a little bit more cautiously in the 150 basis point kind of a range with the concern that inflationary forecasts a few months ago were quite low for 2021 but still feel extremely good about the momentum in the program. Olivier also alluded to a few of those things in the prepared remarks as well. At this point in time, we're looking at probably a range of 150 to 200, wouldn't be surprised if we were more towards the higher end of that range. As we kind of see some of the dynamics in the market, we do see some opportunities to maybe gain a little bit more price than we saw maybe a few months ago. And we'll see how that plays out. But that's certainly something on our mind right now. Of course, the other side of that is that some of these opportunities and price are also looking at higher material costs in certain areas that we're mindful of that, that we might be facing as well, too.

Great, that's really helpful. And Olivier, you made an interesting comment in the opening remarks just talking about accelerating market share gains in many categories? Can you sort of give us a little bit more color on that?

Yes. Like always, it's difficult to parse data on that. Our competitors do not publish specific comparable numbers. And so we need to base this on the observation of our field force. We certainly also observe the growth momentum we see in the different industry segments and what we can expect. And based on that, we feel actually really good. We have also clear anecdotes that we are winning share, and I feel we are outpacing the market. We have this MGDP benchmark, and I certainly feel that we are outpacing that. And so that gives us all this confidence of the share gain, there are some other data points that we use internally. I mentioned that we leverage data analytics to guide our sales force. Last year, we had a special effort to guide the sales force to non-customers. We did so because suddenly our sales force spent much less time behind the wheel. They have much more time doing cold calling and engaging new customers through virtual demos and virtual calls. And that was at the base for us to expand the targets to our sales force. And we were very pleased to see the results in converting more than ever non-customers. So that is a kind of confidence that this allows us to win share. So in a nutshell, we feel that we've protected well our existing customer base, while we accelerated the access of the conversion to non-customers. Certainly a strategy that we're going to pursue. I many times said, the crisis last year was for us an opportunity to leapfrog some of the changes, and in terms of go-to-market leapfrog the adaptation of internal new tools and techniques, and one of them was certainly all about the sales force guidance and reaching out to non-customers. We are going to certainly maintain that one.

Great. Thanks for the detail.

Your next question comes from the line of Vijay Kumar with Evercore ISI.

Hey guys, congrats on a nice earnings here. Olivier, maybe I'll start with a high-level question for you. The guidance here 5 to 7 it's a pretty solid guide. What is it assuming from a business environment perspective? Are you assuming the environment is back to normal? Or is there some cushion for perhaps disruption from second wave? And then your comments on M&A, it felt like a tone change, I'm curious if we read that the right way, is that a change in tone?

Let me take the first. We assume a relatively stable environment in terms of second wave. In Europe we are in the middle of the second wave. We are definitely on quite a strict lockdown in many of the countries starting already before Christmas. It feels very different from the first lockdown. The business while many of us are in home offices, we have here an infrastructure and an understanding with our customer base that business is going on. We definitely leverage all this. We have also less customer visits but effective relationships, and we do not see that the core customer base is putting investments on hold. So that's why this second wave is very different from the first wave when it comes to the business impact. On personal levels, it feels kind of similar, but not on the business level. If the environment stays about what it is right now, that's probably our base for our guidance here. And I am not particularly worried that the lockdown situation will significantly impact our business, and that means if the lockdown gets more severe or if everything would suddenly ease up, it looks like we have built here a certain resilience in our own business approach, as well as the business or the industry segments that we are targeting. I want to also remind, we did quite a shift last year in terms of the industry segments that we are targeting, and that shift we are going to maintain. Don't read too much into the M&A language. It's really in the sense that reinforcement of the strategy that we have been running in the past. We are very interested in adjacencies. We are interested in companies that fit well in our current business focus. And my point was even now that we have here leadership transition, Patrick and I share a common understanding here that we don't need any transformational acquisitions. We are not seeking any additional lag to the company. We feel we have an excellent franchise, but we want to leverage the franchise when there are good opportunities out there. Again, technology synergies or selective market consolidation opportunities. These are the typical adjacencies that we did in the past and that we certainly are going to continue to pursue.

Understood. Shawn, one quick one for you. On the margins, looks like the margin guidance, it's implied it's gone up versus the prior guidance. Is that a fair statement?

I'm sorry, Vijay, can you repeat that question?

On the margin guidance, it seems versus your prior expectations margin expansion perhaps is closer to triple digits at the high end of the guidance? Is that correct?

No, no. So for the full year, well, I mean for Q1 of course, we have triple-digit numbers, but for the full year, just to be clear, we're expecting the operating margin to expand about 60 to 70 basis points if we exclude the impact of currency. So currency will be favorable to operating profit, but it will actually have a negative impact on the margin. And that negative impact will probably be in the range of 20 basis points. But then just to link it back to your comment about what we were saying before, we were saying before that we would be a little bit below our typical guide of 70 to 100 in terms of our midterm expectations. So we might be slightly lower, but we're a little bit more optimistic just given the higher sales volume as well in terms of what we'd expect. And I think the other thing to always remember is, we did a 130 basis points this year. So now when we're looking at the two-year combined growth, we're probably in the 190 to 200 basis point expansion, excluding currency, which we feel really good about. And as we kind of mentioned in the comments before, we feel like there is really excellent momentum on all the different margin expansion initiatives, whether it be pricing or Stern drive, et cetera.

Understood. Thanks guys.

Yes, thank you.

Your next question comes from the line of Patrick Donnelly with Citi.

Thanks guys. Olivier, maybe just one on the core industrial side certainly proved a lot more resilient than we expected. It sounds like maybe you expected as well. Can you just pull back the curtain a little bit in terms of what you saw in 4Q and then also the expectations going forward? Again, kind of held in there a lot better, particularly in the developed markets than we would have expected. So we would love a bit more color on the performance and then the expectations as we go through '21 here?

Sure. Yes, our expectation was that our industrial business would be more exposed to the slowdown of the economy. I am very pleased to see how Q4 came together across the globe pretty much, and also across the different product lines in industrial. And I expect this will continue on to be relatively healthy. But of course, in the second part of the year, then comparisons might also play again and certainly also China, where of course, we have a very significant industrial business. I would attribute it to a little bit the same things that we see for the whole group that we early on did go for the pockets of growth that still exist in this market, redirecting our resources and our attention to the most attractive accounts and that played well. There are industry segments that are very healthy at this stage. The whole pharma production, there is transport and logistics that is healthy for us and many other sub segments. And in combination with the sales force guidance topic that I raised before offered really good opportunities in spite that the overall economy is challenging. So there are segments that are down for us and other segments that we consider are up, and it is really up to us to focus on the right ones.

Yes, understood. And then maybe, in response to the last question seems like you kind of acknowledge there's potentially some upside to the revenue guidance, maybe its baking in more kind of status quo than much of a recovery. I guess when you think about that, 5 to 7 for '21, when you look at it, what do you think are kind of one or two segments that have the most upside in terms of the lever if you kind of end up beating that number, where do you think the most conservatism is in your projection kind of when you go through the numbers there?

I wouldn't talk about conservatism. I think we recognize that there are some industry segments with good upsides and orders that will be more difficult. At this stage, we would extrapolate kind of the trends that we have seen also in recent months where we say biopharma is strong and certain chemicals sub-segments are strong, and that should remain that way. Then I would expect that in the second part of the year, we're going to see good growth in PI pent-up demand, as we mentioned before. But then on the flip side, you have, of course, the comparison topic. So China will, for example, be rather down than to say, not the same growth rate in the second part of the year. So that's a bid. In terms of where we might experience positive or hopefully not negative surprises, product inspection in China are certainly the ones that have potential in both directions.

Understood. Thanks, Olivier. I appreciate it.

Your next question comes from the line of Dan Arias with Stifel.

Good afternoon, guys. Thank you. Shawn just to follow up on Tycho’s question on products inspection and then some of the comment that Olivier just made there. I think the comp NPI gets 8 points easier for you guys next quarter than it was here in 4Q. So I certainly appreciate Olivier’s point on maybe some of the pent-up demand drying up, but I think you said down 5% this quarter. Is there a reason why you wouldn't get the high singles, maybe even low doubles in 1Q in product inspection?

So, hey, Dan, just to clarify. So for Q4 product inspection was down 5%, it wasn’t up 5%, it was down 5%. Yes, so that probably helps a little bit. But you're right, it does have an easier comparison in Q1. But, as we kind of look at product inspection, this continues to be the one business in the portfolio that's been the most negatively impacted by COVID in high case counts. And as Olivier was describing earlier, these customers really are operationally distracted at the moment. We do think that there's a really great opportunity for pent-up demand at some point that the timing of course is just very difficult to predict at this point in time. But when we look at the guidance, mid-single digit is kind of what we're looking at for Q1 and mid-single digit is kind of what we're looking at for the full year.

Okay, very good. Thanks for the clarification there. Olivier, on your point on new product launches, if I think back to the last time you guys actually held a site visit down in Tampa, which seems like a long time ago. We were focused on the PI business, obviously, just given where we were. But you guys talked a lot about what you were doing in terms of product development for biopharma. Do you feel like 2020 was a year where you saw some traction there, just given the things that you were doing? Or should we think about 2021 kind of being the year that 2020 could have been just given the pandemic-related headwinds? And also the fact that it sounds like some of the launches this year are pointed in that direction.

Yes, I don't want to overstate the impact of our product launches on the top line. We often talked; our strategy is to continuously upgrade and launch new products. And they add up. But I would say, from one year to another, there is not that much difference. Of course, the products that we showed to you in Tampa, these were particularly also products in the area of auto cam. These products are going very well, very happy with the adoption rates. They will also continue to contribute very well this year. But they are made in all other categories, being it processed analytics, being in industrial. I talked before about lab balances. And all the moments I talked in the analytical space about new products we had for you, for example, and so on. So this is the whole portfolio that makes the difference to keep the technology leadership, but it's a continued thing. And again, last year or also 2021, I wouldn't highlight a particular product that will make the big difference to the top line.

Okay. Thanks very much.

Your next question comes from the line of Steve Beuchaw with Wolfe Research.

Hi, good afternoon. Thanks for bringing me on here. I wondered, if I could spend a little time just trying to understand more deeply Olivier. How it is you think the operating environment evolve around COVID over the balance of the year? Just that we have as much context as we can for your planning assumptions. Sorry, I hate to try to put words in your mouth. But my sense is that you think that in the back half of the year, there will still be some amount of macroeconomic pressure. Maybe there's a lingering impact of the virus and so the macro is a little tougher. That's part one. Part two is, it also seems like you think that in some of the life sciences categories, maybe around pharma, that you've had some good tailwinds and that those also maybe sort of taper off in the back half of the year. I just want to make sure I'm understanding that correctly. Is that a fair characterization?

You're right, we are cautious about the macro environment also for the rest of the year. I don't think the macro environment will just immediately improve when the lockdowns go away. I think there are too many drivers for a macro environment and so we have not particularly forecasted here an improved macro environment. We more or less assume things remain about what they are today. So I wouldn't say this is particularly cautious. I think we just don't know if all these industry segments that are today down will suddenly recover. I would think that the momentum that we see in the industry segments, like in bioproduction, I don't think it goes necessarily away in the second part of the year. I think that can be actually quite sustainable. Yes, and we had modest benefit from investments in vaccine production. But in terms of share of our total revenue remains very small. So if that would slow down, that wouldn't necessarily have a big impact on us. The investment in pharma production and particularly also bioproduction, I think has a long way to go. So, in essence, I feel like the current macro environment that we have could last for quite a few more quarters, including the industry mix.

Okay, that was extremely helpful. Thank you for that perspective. I've got one more follow up to ask, but before I ask it, I know it's too soon to say goodbye to Olivier. But I am going to say hello to Patrick, it's good to hear your voice again after a little while. Thank you for being on the call here.

Thanks, Steve.

The question I would leave with is sort of a follow up to one that was asked earlier. There was a question asked which, frankly, I would have liked to have asked too about market share gains and the success of what you've done in this operating environment where some of your nimble approaches really pay off in a unique way. I wonder if maybe we could just zoom in, though. Maybe talk about it, particularly as it relates to service where your ability to get people in the field in an appropriate way of course, in the right place might be particularly helpful. Can you talk at all about the extent to which you might see service attached rates or service relationships evolving during the pandemic environment? And then, sorry after some very long-winded questions, I'll get back in the queue. Thank you.

Yes. On the service side here, I would say this is more of an operational topic very early on. We were extremely forced in making sure that we equip our service technician with all the safety gears, and we went very early on made sure that our customers knew about that. And then we keep really operations going. You will recall, when we talked about Q2, how we did many good things to maintain production going. We were one of the first ones that we do production also in China. And similar things that we did also for the service technician. So we will really up and running. And what we benefit continue to benefit from is we do this net promoter score. And we had a very nice jump in customer satisfaction in Q2 that we saw in our NPS, and it went on throughout the year. And I feel this gives tribute to really our service force, how well they are performing. Having 3,000 people in the field here is powerful, then you need also to know that for service, our biggest competition is with local, I would almost say family-owned companies. And for these companies, it is much more difficult to operate in the current COVID environment than for us, where we have a global organization and we have a lot of professional support of the field force. That's one. And the second one, our efforts to migrate to contract-based service was very beneficial. That protects a lot of our business.

Your next question comes from the line of Brandon Couillard with Jefferies. Brandon Couillard, your line is open.

Thanks. Shawn, on the working capital front DSOs continue to trend lower. You talked about applying some analytics and better productivity tools, which I think are new, I may be wrong. But are you finding new ways to apply these in that area? And how much more room do you think is left there?

Thanks, Brandon, thanks for the question. These are new tools, and so I'm kind of happy to be able to respond to it. So like many other things in the company, I think it's just a really good example of agility. So back in March, we really kind of launched into a variety of crisis management initiatives, around COVID. And then one of those initiatives, of course, was to manage for cash, that's what we refer to it as internally. And so within that initiative, we challenged ourselves to come up with some new analytics, but even more importantly, to try to make the connection between the analytics and the actions to be more efficient. So we literally are broadcasting today individual KPI charts that are highly actionable with top 10 lists on a very daily basis to each finance organization that goes into the leader every single day. And we found that that in itself has become very actionable and it's allowed them to work with their local management teams and really get people behind areas for improvement. And so that's just one example. We've done a lot of other things in the manage for cash initiative during the course of the year. In terms of more legs, we'll see, I think we just hit another good milestone, but when I take a step back, I think the best way to look at it is that our free cash flow conversion this year was over 100%. When we look at next year, we'll probably be right around 100% again. And so I think this is a level that, I don't think it's going to get too much more than 100%. But I just think that flow-through around 100% is a good range. I'm comfortable looking at that for 2021. And I think as we go out, we'll kind of take it on a year-by-year basis. But right now, we feel really good about the cash flow conversion.

That's it for me. Thank you.

Your next question comes from the line of Jack Meehan with Nephron Research.

Thanks. Good afternoon. First one for Shawn. I was just wondering if you could walk us through the different factors that led to the EPS guidance raise for 2021 at this point. I think, I caught China pricing FX and tax rate. What did I miss?

So, probably even bigger picture, Jack. So we have increased sales overall for the group. So that's not just China, that's just the overall group. The next thing I would say is that we would have and probably within that, yes, you have China being a little bit better, you have Europe being a little bit better, you have core industrial being a little bit better, and you have lab being a little bit better. And then we have the second thing would be our 2020. You have a more favorable currency environment. And then of course, we have the reduced tax rate. And so when you add that all up, I think that's how you bridge our guidance.

Great. Thanks for walking through that. And then just one on food retail. So saw a nice little rebound in the second half of the year. But I was just wondering if maybe that was some deferred sales from earlier in the year and if your thoughts have changed all around the outlook for 2021 there?

No, we still look at food retail as a low-single-digit business for 2021. The business always can be a little bit lumpy. We're very much tied to customer projects and buying cycles. So I wouldn't necessarily read anything particular into the fourth quarter results. Although, I would say that we are looking at a more favorable outlook again in the first quarter and probably will start the year more high single-digit there.

Great. Thanks, Shawn.

Yes, welcome.

Your next question comes from the line of Dan Brennan with UBS.

Great, thank you. Thanks for the questions. Hoping to dig in a little bit on lab. I know you've talked about a lot of the initiatives there, but it was a nice beat in the quarter. So I'm just wondering, as you guys flush out, like, how would you prioritize what the biggest reasons were for the upside? And for 2021, I think previously you were thinking mid-single, high-single, is that still the case? Or it sounds like it's kind of ticked up a little bit? Maybe you can just kind of walk us through a little bit of lab drivers.

Yes. So, maybe I'll start with the last part of the question, Dan. So we're thinking high single-digit for lab for the full year for 2021 and then for Q1, we're looking at low teens. In terms of the results in Q4, we really felt good about the whole portfolio. I mean of course the pipette business is of course continuing to do well. We probably had a little bit better in terms of the COVID tailwinds, in terms of what we were expecting. But if I look at the other categories, like Process Analytics had a great quarter and we also did really well in our analytical instrument business as well as our laboratory balance business. So we feel like generally there is really good momentum there globally, good market trends. Of course, there's also pockets of challenging in other industries, but in particular, biopharma is doing very well.

Great. Thank you. And then just the second one. Some product inspection, just given the delayed spending cycle that's been ongoing here, like how much pent-up demand is there? Like in the food manufacturers put this stuff off and they're going to be a big catch-up. So how do we think about product inspection? I know you talked about a nice recovery in the second half, but then kind of what happens beyond that, just any color on that would be helpful?

That's probably quite difficult to quantify, but a little bit the way to see you. We had now a few quarters of decline. I would expect that we can catch up quite a bit of this. The big question will be how fast. And is it going to be at the same time in the U.S. as in Europe or not. There might be also differences by industry segments. For example, the meat industry in the U.S. has been very much impacted by COVID, certainly in an area where there was very little investment or activities. So hopefully that will come back not too far away and then to be seen. So internally, I would say we count on the second part of the year. We were just talking also today with people from the industry. They were kind of hinting to us that the decision-making might really start to ramp up again in Q3, as customers that would, yes, support our hypothesis. It should go along then into next year. I would certainly hope that 2022 has also some good PI quarters.

Great. Thanks, Olivier.

And I'm showing no further questions. At this time, I would like to turn the call back over to the company for any closing comments.

Yes, thank you. Hey, let me end this call with a simple thank you to you analysts and shareholders listening here on this call. Thank you for your support and commitment to Mettler-Toledo over the many years. I have truly appreciated your engagement and the rigor you brought to our various interactions during this time. While my focus over the next two months is successful handover to Patrick, and still delivering a very strong Q1. But I also very happy to remain involved with Mettler-Toledo in the future to my board role, as well as supporting Patrick on marketing and all the organizational matters. I wish you all a very successful 2021, and again, a big thank you and all the best to you. Bye-bye, everybody.

Ladies and gentlemen, this concludes today's conference call. We thank you for your participation. You may now disconnect.