管理層發言
Hello, everyone. Thank you for joining us, and welcome to the Mettler-Toledo Second Quarter 2026 Earnings Conference Call. I will now hand the conference over to Adam Uhlman, Head of Investor Relations. Please go ahead.
Great, Jonathan. Thank you very much, and good morning, everyone. Thanks for joining us. On the call with me today is Patrick Kaltenbach, our Chief Executive Officer; and Shawn Vadala, our Chief Financial Officer. Let me cover some administrative matters. This call is being webcast and is available for replay on our website at mt.com. A copy of the press release and the presentation that we will refer to on today's call is also available on our website. This call will include 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, financial condition, performance and achievements to be materially different from those expressed or implied by any forward-looking statements. For a discussion of these risks and uncertainties, see our recent annual report on Form 10-K and quarterly and current reports filed with the SEC. The company disclaims any obligation or undertaking to provide any updates or revisions to any forward-looking statements, except as required by law. On today's call, we will use non-GAAP financial measures and a reconciliation of these non-GAAP financial measures to the most directly comparable GAAP measure is provided in the 8-K and is available on our website. Let me now turn the call over to Patrick.
Thank you, Adam, and good morning, everyone. We appreciate you joining our call today. Last night, we reported our second quarter financial results, the details of which are outlined for you on Page 3 of our presentation. Our second quarter results were strong and reflected better-than-expected organic sales growth across our portfolio, including very good growth in China and emerging markets. It was driven by improved market conditions and our focused Spinnaker sales and marketing program. Combined with our productivity initiatives, this resulted in excellent adjusted EPS growth in the quarter. Going forward, we are optimistic market conditions will gradually improve. Our team remains agile and focused on capturing growth opportunities, leveraging our sophisticated Spinnaker program and innovative product portfolio while benefiting from trends in automation, digitalization and onshoring investments. I am confident that strong execution of our strategic initiatives will continue to deliver solid financial performance. Let me now turn the call over to Shawn to cover the financial results and our guidance, and then I will come back with some additional commentary on the business and our outlook. Shawn?
Thanks, Patrick, and good morning, everyone. Before I review our Q2 results, I'd like to highlight a special item in our financials this quarter related to tariffs. As disclosed last quarter, we had a one-time gross benefit of $52 million from IEEPA tariff refunds in Q2 that benefited cost of sales, and was offset in part by a $28 million related refund to our customers that reduced our reported net sales by 3%. Discussion of our results today will exclude the impact of both of these items. Sales in the quarter were $1 billion, up 7% in U.S. dollars. And in local currency, our growth was 6% and above our prior guidance of approximately 3% local currency sales growth. Acquisitions contributed approximately 1.5% to sales growth and organic local currency sales growth was 4%. On Slide 4, we show sales growth by region. Organic sales, excluding acquisition and tariff refunds, increased 1% in the Americas, 4% in Europe and 9% in Asia/Rest of World, including 9% growth in China. Slide 5 shows core organic sales growth by region on a year-to-date basis. On Slide 6, we summarize sales growth by product area. Organic sales increased 4% in Laboratory and increased 3% in Industrial, which included 4% growth in Core Industrial and 1% growth in Product Inspection. Food Retail grew 11% in the quarter. Lastly, service revenue grew 9% or 7% organically. Slide 7 details organic sales growth by product area on a year-to-date basis. Let me now move to the rest of the P&L, which is summarized on Slide 8. Adjusted gross margin was 59.3% in the quarter, an increase of 30 basis points. Excluding unfavorable foreign currency and acquisitions, gross margin expanded approximately 90 basis points due to benefits from favorable price realization, lower tariff rates compared to the prior year, volume growth in our productivity and cost savings initiatives, partly offset by higher transportation costs. R&D amounted to $53 million in the quarter and was up 3% on a local currency basis over the prior period. SG&A amounted to $263 million, a 4% increase in local currency over the prior year and includes sales and marketing investments, offset in part by cost savings. Adjusted operating profit amounted to $309 million in the quarter, up 9% versus the prior year. Adjusted operating margin was 29.3%, an increase of 50 basis points versus the prior year or up 100 basis points excluding unfavorable currency. Adjusted EPS for the quarter was $11.46, a 14% increase over the prior year. On a reported basis in the quarter, EPS was $11.55 as compared to $9.76 in the prior year. Reported EPS in the quarter included a $0.92 net tariff refund benefit, $0.26 of purchased intangible amortization, $0.22 of restructuring costs and a $0.04 tax headwind related to the timing of stock option exercises. Finally, we had a $0.31 acquisition-related charge related to higher earn-out achievements on previous acquisitions. That covers the P&L, and let me now comment on adjusted free cash flow, which amounted to $367 million on a year-to-date basis and was negatively impacted by the timing of tax payments, which were $55 million higher than the prior year. DSO was 35.6 days, while ITO was 4.2x. Let me now turn to our guidance for the third quarter and the full year 2026. As you review our guidance, please keep in mind the following factors. First, we are encouraged by our Q2 results and improved market conditions, especially in China and emerging markets. Second, conditions in the Middle East remain volatile. And while we have limited exposure to the region, this could impact customer decision-making should conditions significantly change. We are not currently seeing any change in related customer behavior and have not included an escalation of the conflict in our forecast. Lastly, we are very confident in our ability to execute on our growth and productivity initiatives and believe we are well positioned to gain market share regardless of the macro environment. Now turning to our guidance for the full year 2026. We have increased our local currency sales growth from approximately 4% to approximately 4% to 5%, reflecting organic growth of 3% to 4%. Our forecast excludes the impact of the previously described tariff refunds. Adjusted EPS for the year is forecast to be in the range of $47.15 to $47.50, which represents a growth rate of 10% to 11% or 11% to 12%, excluding currency. This reflects an increase from our previous guidance of 8% to 10% growth. At recent spot rates, foreign currency is estimated to be a 1% benefit to sales growth and a slight headwind to EPS for the year. For the third quarter of 2026, we expect local currency sales to grow approximately 4%, which includes approximately 0.5% benefit from acquisitions. We expect adjusted EPS to be in the range of $12 to $12.15, a growth rate of 8% to 9% or 9% to 10%, excluding currency. Currency for the quarter at recent spot rates would be neutral to third quarter sales and a 1% headwind to adjusted EPS. Some further comments on our 2026 guidance. We expect total amortization, including purchase intangible amortization to be approximately $78 million. Purchased intangible amortization is excluded from adjusted EPS and is estimated at $28 million on a pretax basis or approximately $1.07. Interest expense is forecast at $67 million for the year. Other income is estimated at approximately $24 million. We expect our tax rate before discrete items will remain at 19% in 2026. Free cash flow is expected to be approximately $900 million in 2026, which represents 6% growth on a per share basis. Share repurchases are now expected to increase to $875 million for the full year as compared to our annualized repurchase level of $825 million during the first half of the year. That's it from my side, and I'll now turn it back to Patrick.
Thanks, Shawn. Let me start with some comments on our operating businesses, starting with Lab, which had good growth in the quarter across most product areas. We saw improving trends across our biopharma customer base and continue to see strong growth in process analytics and bioproduction. Laboratory balances and analytical instruments growth was also strong and benefited from the many innovations we have brought to the market in recent years, our LabX software and growing demand from hot segments like semiconductor, advanced materials and batteries. Turning to industrial. Core Industrial did well this quarter with sales growth driven by strong demand for our solutions that enable automation. We saw strength across markets like biopharma, food manufacturing, semiconductor and new energy. As expected, Product Inspection organic sales growth this quarter was modest due to the timing of customer projects, but organic growth is expected to pick up again in the second half. Lastly, food retail sales growth was better than expected due to the timing of project activity. Now let me make some additional comments by geography. Starting in the Americas, where sales grew 1%, excluding acquisitions. We had strong momentum in most Lab product categories and in our Core Industrial Automation Solutions and Product Inspection. These results were offset in part by timing of food retail and transportation and logistics project activity. Turning to Europe. Sales growth this quarter was solid and included growth across most of the business, including strong growth in Core Industrial and food retail. Finally, Asia/Rest of the World had very good growth this quarter across the portfolio and in most major markets. Our business in China grew 9% and was stronger than expected as our team continues to do an excellent job identifying high-growth markets and leveraging our innovative portfolio. Biopharma customers' demand was also healthy and contributed to our results. Markets outside of China also had strong growth this quarter. Emerging markets have been an important element of our long-term growth strategy for many years. India, Southeast Asia, Eastern Europe and Latin America offer excellent growth opportunities as these markets develop and mature, and we believe many of them will also benefit from near-shoring investments over the coming years. Our company is uniquely positioned to capitalize on emerging market growth over the coming years. In the second quarter, emerging markets outside of China represented approximately 18% of our sales, slightly more than our business in China and grew high single digits in the quarter. Emerging markets, excluding China, have also grown high single digits on average in local currencies over the last five years, above the company average and are an important contributor to our growth. To take advantage of these growth opportunities, we have long-standing dedicated market organizations in emerging markets, China and around the world. Our market organizations are a significant competitive advantage, allowing us to stay close to customers and better understand local market needs. We have dedicated growth plans for each major country and we leverage our broad portfolio of solutions across a range of price and value points to meet varying customer requirements. Additionally, in markets like Mexico, we have further developed local assembly and manufacturing capabilities in recent years, which strengthen our ability to serve local market needs and enhance our competitive position. The market organizations and emerging economies also leverage the same Spinnaker sales and marketing programs we have developed in other countries, including various digital tools, value selling guides and sales enablement tools. We have also rolled out Blue Ocean to most of our MOs and having a single instance of a global information technology infrastructure provides rich data, analytics and unique real-time business insights. This is a significant competitive advantage that allows us to target opportunities in various hot segments like bioprocessing, GLP-1s, semiconductor and battery in an agile way. As domestic and foreign direct investments continue to grow over the coming years, we expect emerging markets to remain a healthy contributor to our growth well into the future. In summary, we are very pleased with our Q2 results and the solid growth our team has delivered. We remain focused on capitalizing on our customers' investments in automation, digitalization and onshoring around the world. After a few years of disruptions and uncertainties related to tariffs, governmental policies and geopolitics, we believe customers will continue to return to a more normal replacement activity going forward. We have maintained a strong focus on investing in innovation and growth in recent years while protecting profitability, which will serve us well as our markets recover. This concludes our prepared remarks. Operator, I'd now like to open the line to questions.
分析師問答
Shawn or Patrick, last quarter, you raised the guide for China. So I guess not a surprise to see the pickup there, but it does seem like maybe it improved a bit sooner. Can you just dive into the acceleration a bit? What does the momentum there look like when it comes to pharma versus non-pharma and just sort of the consistency that you expect in the coming quarters? If I remember correctly, the improvement seemed like it was due more to Core Industrial last quarter. So to what extent do you have pharma improvement sort of baked into the outlook for the rest of the year here?
Yes. Thank you, Dan. And yes, of course, we are very happy with the growth we have seen in China, 9% in Q2 was really a very strong result versus the guidance we initially had for the quarter. The growth has really been led by Industrial, which had double-digit growth in China. We are benefiting from many of the core segments such as biopharma, but also food as well as the hot segments like investments in battery that are happening in China. For Lab, the growth was a bit more modest. We expect continued improvement there also in the second half, both from biopharma and academia, which may pick up towards the end of the year. We have indications of some additional funding for academia in China as well. Overall, I would say it was really led by Industrial, with growth across many segments, and pharma was a good part of that as well.
Yes. Dan, then just to be specific, in terms of the second half of the year, we're looking at high single digit now for China also for Q3 and for the full year. This momentum that Patrick referred to in Industrial, we feel very good about entering the second half. Also the trends around automation and digitalization that we talk a lot about are definitely benefiting China as well. As we go into the second half, we also feel the Lab business is gradually improving.
Okay. And then maybe just on Product Inspection. A little bit of growth in that piece. I think you had been pointing to that being down a touch this quarter on some timing elements that you referred to. Can you just expand on that? Was there anything that got pulled forward from Q3 as it relates to that timing? And then if you put the timing aspect aside, maybe just talk about spending and demand relative to the way that you saw things last quarter in PI specifically.
Thanks, Dan. If you remember, we had a really good Q1 in Product Inspection, and we were trying to caution people that Q2 would be a little bit lighter given the timing of how project activity was playing out. As we go into the second half of the year, we feel very good. We're probably looking at mid-single-digit growth in the third quarter. For the full year, we're probably looking at high single-digit growth, which is more like mid-single-digit growth on an organic basis, considering acquisitions. Seventy percent of that business is food manufacturing. From an end market perspective, that's different from pharma. Regarding execution, we're encouraged. We've launched a couple of new products this year that are exciting. Our strategy to better position ourselves for the mid-market segment seems to be working well and is well received in the marketplace.
Just wanted to maybe unpack some of the other trends from Q2. As we think about the revised guide in the back half of the year, can you talk a little bit more about some of the underlying assumptions by end market and segment? Obviously, you just covered PI in China, but maybe walk through where you're changing your assumptions otherwise.
Tycho, I'll take that one. I'll start with product categories, then give you the division. For Q3: Lab would be mid-single digit; Core Industrial, low single digit, noting Core Industrial had a very challenging comparison to the prior year in Q3 when it grew 10% organically; Product Inspection, mid-single digit; Retail, flat. By region: Americas, low to mid-single digit with a challenging comparison last year; Europe, up low single digit; China, high single digit. For the full year: Lab low to mid-single digit, Core Industrial low to mid-single digit, Product Inspection high single digit. Organic assumptions—Core Industrial would be low single digit organically, PI mid-single digit, Retail low to mid-single digit. Regions for full year: Americas low single digit or about flattish organically, Europe low single digit, China high single digit. There is some acquisition contribution largely from the first half of the year in these numbers.
Very helpful. And then a follow-up: you've guided 2.5% on price for Q2. Just curious where you landed and what you're thinking for the back half of the year? And then separately, did you capture or recapture any of the delayed chemical orders?
On the pricing side, we're pleased with the team's execution. Pricing comes back to value proposition, and our investments in innovation continue to pay off. Our price realization for the quarter was around 3%, slightly better than the 2.5% in original guidance. Towards the end of the quarter, we implemented some additional pricing measures in a few areas facing inflationary pressures. Our guidance for the second half of the year is in the 2.5% range. We're also lapping midyear price increases from last year in response to tariffs, so full-year price realization is approaching 3%. On chemical: overall it is under 15% of total sales, with biggest exposure across Industrial and Lab, mostly specialty chemicals. In Q1 we saw pressure in the EU mainly related to energy. EU chemical results were better in Q2 and recovered. We remain somewhat cautious on the segment because it is more exposed to energy cost fluctuations, but comps will ease in the quarters to come.
I have one for Patrick and one for Shawn. Patrick, nice to see the reacceleration in Lab. Can you give more details on what drove this? It would be great to get a sense of what you're hearing from customers on the why behind the inflection in Q2 following what seemed to be a softer start to the year. Was it budgets being delayed, concern around the war or other? And then as you think about durability going forward, the comps get more difficult, but it sounds like you're expecting mid-single digits again in Q3. Do you think Lab should stay in the steady state of mid-single digits here as we work through the second half and maybe into 2027?
Thanks, Josh. We're pleased with Lab's performance. It's based not only on our strong go-to-market strategy and close local market teams, but also on sustained innovation. We've launched many new products across the Lab portfolio. Process analytics is performing extremely well in biopharma, driving a lot of growth. Analytical instruments were very good in Q2 and we see that continuing. The pipette business returned to growth last quarter, which is promising. We expect Lab to be in the mid-single digits range for Q3. If there's upside, it could come from further acceleration in China for Lab, which has momentum more in Industrial so far. Overall, we're well positioned with our LabX software platform—about 40% of instruments on QA/QC benches are typically connected to LabX, which gives customers workflow control and aggregated data for AI. We're very pleased with Lab's momentum and think there's more to come.
Josh, to add, replacement cycles were a topic of interest. In Q2, we saw very strong growth in analytical instruments and laboratory balances. Those types of instruments typically on a QA/QC bench did very well in the quarter.
Okay. And then Shawn, can you give an update on how margins are tracking versus your plan? Any updated view on the full year margin expectation? It seems like you're tracking ahead of plan. Is this reflecting moving pieces on the tariff refunds? Or are there other drivers you'd highlight?
To be clear, the tariff refund topic is excluded from our adjusted results and our guidance. Changes in tariff rates can be a factor. We feel good about the team's execution: programs like SternDrive, productivity and cost savings initiatives are important. Culture and execution matter. In Q2, operating margin was up about 100 basis points excluding currency. For the full year 2026, excluding currency, we expect operating margin to be up roughly 60 to 70 basis points, maybe modestly better than prior expectations. Including currency, on a reported basis, operating margin would be up slightly, perhaps 10 to 20 basis points.
Shawn, quick housekeeping. What was FX and M&A contribution in the quarter?
In terms of acquisitions, contribution was about 1.5%. In terms of foreign exchange, comparing reported numbers to local currency implies about a 1% headwind or benefit depending on direction; with rounding it's a little north of 1%.
When I look at the updated guidance, the implied exit rate for Q4 is somewhere between 4% to 5% depending on the midpoint or high end of the guidance. That's a step-up from Q3. You've spoken about backlog and order visibility in the past. Is that what's driving the sequential step-up? What gives the confidence in this fourth quarter exit rate?
A couple of things. Part of it is the comparison effect: Q3 last year had stronger comps in some areas like Core Industrial. From a growth perspective the implied Q4 being higher than Q3 partly reflects easier comps. Sequentials in flows from quarter to quarter are fairly in line with historical patterns. We feel we have good momentum entering the back half of the year and that's reflected in the guidance.
I'd like to dig into biopharma. It sounds like that's one of the places you're feeling better this quarter. You mentioned bioprocess analytics, bioproduction balances—can you expand? Was this a step-up above expectations? Where are you seeing that momentum most and what are your expectations going forward? Do you feel like you're early in this cycle or have you already crested it?
Thanks, Mike. On bioprocessing, which is a low double-digit portion of sales, Pro performed very well in Q2, especially in the Americas with bioprocessing demand. There's good equipment demand from industrial automation providers we serve. Momentum in biopharma and bioprocessing is strong. Regarding reshoring activities, we are well positioned: about 50% of our sales go into production and about 20% into QA/QC. We cover a lot of the value chain. We're seeing RFQs related to reshoring and facility investments, but it's early innings. Momentum should continue to pick up in the second half and into 2027 as facilities are founded and built out. For now, we see facility investments and capacity expansion in the U.S.
Another dynamic is replacement cycles. While one quarter doesn't make a trend, we were encouraged to see strong growth in analytical instruments and laboratory balances. Those categories are commonly used on QA/QC benches and did very well in Q2.
Going back to the second half outlook, you noted geopolitical risks like the Middle East remain. How much buffer is in the guide if things escalate? Is the guide conservative to absorb a repeat of Q1 dynamics if macro risk increases?
There is a difference today versus earlier in the year. We see strong customer activity and feel well positioned for the second half. We're short-cycle with about 1.5 months of backlog, but overall momentum is positive. Q1's hesitancy was partly customers delaying budget commitments at the start of the year. Now budgets are finalized and projects are moving. Things can change, but we feel good about the momentum and the team's focus on execution regardless of the environment.
A couple of follow-up guidance questions. You beat the second quarter by about $0.70 and the midpoint of guidance is going up by $0.70. It seems like a lot of the raise is related to what you saw in Q2. How do you square that with your comment that overall conditions are improving? Is that conservatism or are there other offsets you're building in?
Jack, very happy with Q2 and to raise full-year guidance. The second half model compared to three months ago might look slightly more conservative. It isn't reflecting anything negative we're seeing, but it de-risks concerns around geopolitical uncertainty. Overall, we feel good about the business and the momentum into the second half.
I wanted to dig a bit more into Core Industrial. You talked about chemicals earlier. We now have six months of U.S. manufacturing PMIs over 50, so one might expect more momentum. Can you discuss macro-sensitive stuff—do you still see correlation? Is there a reason Core Industrial might diverge?
A few points: categories supporting automation and digitalization are growing very well. We're less correlated to PMIs than 10 years ago, but a better economy generally helps us with a lag. Within Industrial there is lumpiness from project activity—transportation and logistics is one example—and timing of large customer projects can mitigate other positive results. Despite that, we feel good and the Q3 guide reflects that even while lapping large comps from the prior year.
Now that we're in the back half of the year, curious how reshoring conversations have trended—have they picked up? Would you expect orders to roll through before year-end?
Casey, we see some activity with RFQs related to reshoring as customers expand manufacturing in the United States. Larger factories and investments still take time, so it's early innings. We see pharma and biopharma investments as largely incremental for us when it comes to instrumentation, tank scale and QA/QC labs. We're in discussions with key customers about their plans. Momentum has picked up and we are positive this will carry into 2027 and 2028.
Got it. And Patrick, can you walk through how performance trended in the Americas by business segment and end market? You mentioned pipetting returned to growth. Within that 1% organic number in the Americas, what drove it and what's still lagging? How do you see that region playing out in the back half?
The guide for Americas for Q3 is low to mid-single digit, but we're lapping 9% in the prior year. We're seeing improvement in areas that were softer such as academia and biotech; pipetting is a good example. Bioprocessing is a hot segment in the U.S. Hot segments like process analytics and semiconductor are doing well. Trends around industrial automation and digitalization have good momentum. There is lumpiness at times from categories like retail, but underlying business looks positive.
Following up on Tycho's question on price: could you break out more specifically which segments and geographies you've been more aggressive with on price? Given the uptick in end market health and innovation, any reason price couldn't sit above 2% when thinking about 2027 and beyond?
We'll discuss long-term assumptions more at Analyst Day, but I wouldn't expect us to come out with a higher long-term price increase guidance than 2%. In terms of detail, we typically don't provide too much granular breakdown, but geographies with higher inflationary pressures will have higher price increases. For example, the United States had higher price realization due to tariff pressures a year ago.
And though they're relatively small portions of the business, can you talk in more detail about what you've seen in high-growth areas like bioprocess and semiconductors? For those areas, are you comfortable with the portfolio you have today or is there appetite to offer something broader in the future?
Kallum, those hot segments—semiconductor, battery, GLP-1—are low single-digit contributors to overall sales but see very strong growth. Our market teams focus on solutions for these areas and we play well in them. In the U.S. semiconductor and GLP-1s are strong; in China, battery and biopharma momentum is strong. These are not the largest parts of our business, but they are important. We make strategic investments to develop tailored solutions and work closely with customers. For example, we've worked with large battery manufacturers to develop tailored solutions that drove significant growth.
First, touching on Lab and what's driving improvement: are you starting to see pharma invest more heavily in lab-in-the-loop and automation capabilities as they shore up AI strategies? Or is the improvement in pharma and Lab more general certainty returning to the market?
When you look at Lab, a lot is driven by innovation we've introduced, including automation and digitalization capabilities. Pharma companies automating experimental setups will use our equipment together with automation partners and need an informatics platform like LabX to collect information and aggregate data for AI. Lab benefits across the board from automation and many new products and features we've released. We launched a new semi-automatic pipette this year, which has been well received. We have many new products across Lab categories and are positioned well for continued momentum.
To add, the increased certainty in the market certainly helps. We heard a lot about biopharma hesitation earlier in the year, and that has eased.
Great. And then maybe touch on your service business, how that trended in the quarter and updated expectations going forward?
Service in the quarter grew 9% and 7% organically. It continues to grow faster than products and is an important business for customer loyalty. Our Net Promoter Scores are very high in service. We launched new capabilities: our service engineers now have access to an AI-supported knowledge base that aggregates internal information like earlier service records, R&D material and application notes. Service engineers can use these AI tools to deliver best-in-class service, improving first-fix ratios and customer loyalty. This capability is unique to us and leverages our installed base data. We see continued growth opportunities. Last year we exceeded $1 billion in services revenue for the first time, growing at a high single-digit rate.
To put it in perspective, for the year service is probably going to be high single digit for the full year. Q3 might be more like mid- to high single digit, but full year we're very happy with the performance.
My understanding is the U.S. Pharmacopeia had material revisions into effect earlier this year around pharmaceutical weighing requirements with compliance effective in Q1. Is this an influence to call out? If so, what activities does it drive at customers and how is Mettler exposed to such a change?
That's a very good point. It's not only the U.S. Pharmacopeia; we saw revisions in the Japanese Pharmacopeia and China Pharmacopeia last year with similar weighing regulation changes, which helped drive incremental growth. We're extremely well positioned with our recently launched portfolio of new Lab balances to help customers comply with these regulations.
Patrick, revisiting your comments on emerging markets outside China growing high single digits, can you offer more color? Is that all volume? Do you have pricing power? Anything to share on service attachment rate and the long tail of emerging regions?
We're growing high single digits in emerging markets outside China. India has great momentum, and regions like Southeast Asia and Latin America are seeing good growth and investments. Near-shoring ongoing in these regions helps us benefit across our platform, across end markets including pharma, chemical and battery investments. This drives demand for new instruments and related services. There's not a significant difference in connect rate for laboratory instruments in these emerging markets compared to other regions, which supports recurring revenue opportunities.
We also do well on pricing in these markets. The value proposition resonates globally, which is favorable for price realization.
Does the opportunity in these emerging markets map to manufacturing GDP by country or are there areas of disproportionate opportunity?
India is a standout with very impressive growth over the last couple of years and is prioritized. There are also good opportunities across Asia, Eastern Europe and Latin America. A strength of our model is direct sales organizations in individual countries with application know-how, which makes a difference in local markets.
Thanks, Jonathan, and thank you, everybody, for joining us this morning. Please feel free to reach out to me if you have any follow-up questions, and I hope you all have a great weekend. Take care.