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Ladies and gentlemen, thank you for standing by. My name is Jaco, and I'll be your conference operator today. At this time, I would like to welcome everyone to the Mettler-Toledo's fourth quarter 2025 earnings conference call. [Operator Instructions] I would now like to turn the conference over to Adam Uhlman, Head of Investor Relations. You may begin.

Thanks Jaco, 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 fourth quarter financial results, the details of which are outlined for you on Page 3 of our presentation. We had a great finish to the year with broad-based growth by geography and product category. Our team continues to execute very well in a challenging environment and delivered strong adjusted EPS growth for the quarter with excellent free cash flow conversion for the year. I'm very proud of our organization's resilience and agility over the past year as we successfully navigated the challenges posed by global trade disputes and soft market conditions, and we remain agile in this dynamic environment. Looking ahead, we are very well positioned to drive growth with our Spinnaker sales and marketing program and innovative product portfolio while capitalizing on opportunities related to automation, digitalization and onshoring investments around the world. Our strategic initiatives and strong culture of innovation and operational excellence are deeply embedded in the organization and will help us continue to gain share and deliver strong 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. Sales in the quarter were $1.1 billion, which represented an increase in local currency of 5% or 4% excluding previously communicated acquisitions. On a U.S. dollar reported basis, sales increased 8%. On Slide #4, we show sales growth by region. Local currency sales increased 7% in the Americas, which included a 3% benefit from acquisitions and increased 4% in Europe and 4% in Asia/Rest of the World. Local currency sales in China increased 3% during the quarter. Slide #5 shows local currency sales growth by region for the full year 2025. On Slide #6, we summarize local currency sales growth by product area. For the quarter, Laboratory sales increased 3%, while Industrial increased 7% and included a 3% benefit from recent acquisitions. Excluding acquisitions, core Industrial grew 2% and Product Inspection grew 7%. Food Retail grew 19% in the quarter. Lastly, Service revenue grew 8% in the quarter, including a 2% benefit from acquisitions. Slide #7 summarizes our local currency sales growth by product area for the full year 2025. Let me now move to the rest of the P&L, which is summarized on Slide #8. Gross margin was 59.8% in the quarter, a decrease of 140 basis points and included unfavorable foreign currency of 70 basis points and acquisition mix. Our organic gross margin declined 20 basis points, excluding foreign currency and was impacted by incremental gross tariff costs of 190 basis points. R&D amounted to $52.6 million in the quarter and was flat on a local currency basis over the prior period. SG&A amounted to $259.8 million, a 6% increase in local currency over the prior year and includes sales and marketing investments. Adjusted operating profit amounted to $363 million in the quarter, up 3% versus the prior year. Adjusted operating margin was 32.1%, a decrease of 160 basis points versus the prior year. Unfavorable currency was a 100 basis point headwind to operating margin in the quarter. We estimate the gross impact of tariffs reduced our operating profit by 7% and was a 190 basis point headwind to our operating margin. A couple of final comments on the P&L. Amortization amounted to $19.7 million in the quarter. Interest expense was $17.4 million and adjusted operating income amounted to $4.1 million. Our effective tax rate was 19% in the quarter. This rate is before discrete items and is adjusted for the timing of stock option exercises. This also excludes a $19.5 million discrete tax benefit related to the settlement of a tax audit. Fully diluted shares amounted to $20.4 million, which is approximately a 3% decline from the prior year. Adjusted EPS for the quarter was $13.36, an 8% increase over the prior year. Incremental tariff costs were a gross headwind to EPS of 7%. On a reported basis in the quarter, EPS was $13.98 as compared to $11.96 in the prior year. Reported EPS in the quarter included $0.28 of purchased intangible amortization, $0.18 of restructuring costs, a $0.14 net benefit from acquisition-related items, a $0.01 tax headwind related to the timing of stock option exercises and a $0.95 discrete tax benefit. Slide #9 summarizes our full year 2025 results. Local currency sales increased 3% for the year. Adjusted operating profit declined 1%, and our operating margin contracted 140 basis points. Adjusted EPS increased 4%. Excluding the impact of 2023 shipping delays that benefited 2024 results, we estimate local currency sales grew 4% in 2025, operating margin declined 80 basis points and adjusted EPS grew 8%. Unfavorable foreign currency negatively impacted our operating margin by 50 basis points in 2025. Gross incremental tariff costs was a headwind to operating profit by $50 million, operating margin by 130 basis points and EPS growth by 5% in 2025. That covers the P&L, and let me now comment on adjusted free cash flow, which amounted to $878 million in 2025, a conversion ratio of 99% of our adjusted net income. DSO was 35 days, while ITO was 4.2x. Let me now turn to our guidance for the first quarter and the full year 2026. As you review our guidance, please keep in mind the following factors: first, our guidance assumes U.S. import tariffs as well as the impact of retaliatory tariffs from other countries will remain in effect at current levels. Second, while we acknowledge that headlines from some end markets like life sciences have been more favorable recently, geopolitical tensions remain elevated, and we assume customers are more cautious with their investments to start the year with gradual improvements throughout the year. However, on a full year basis, our forecast does not assume a significant improvement in market conditions in 2026 versus last year. Third, we feel very confident in our ability to exclude -- 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, our local currency sales growth forecast is unchanged at approximately 4% or approximately 3.5%, excluding our previously announced acquisitions. Our operating margin is expected to be up 60 to 70 basis points, excluding the impact of currency, which is flattish to up slightly on a reported basis. Adjusted EPS is forecast to be in the range of $46.05 to $46.70, which represents a growth rate of 8% to 9%. At recent spot rates, foreign exchange is estimated to be a 1% benefit to sales growth and a slight headwind to EPS. For the first quarter of 2026, we expect local currency sales to grow approximately 3%. Operating margin is expected to decrease approximately 100 basis points at the midpoint of our range or flat, excluding unfavorable currency. We expect adjusted EPS to be in the range of $8.60 to $8.75, a growth rate of 5% to 7%. Currency for the quarter at recent spot rates would benefit first quarter sales by approximately 4% and would be neutral to adjusted EPS. Some further comments on our 2026 guidance. We expect total amortization, including purchased intangible amortization to be approximately $78 million. Purchased intangible amortization is excluded from adjusted EPS and is estimated at $27 million on a pretax basis or approximately $1.04. Interest expense is forecast at $70 million for the year. Other income is estimated at approximately $19 million, which is up from our previous guidance and is due to updated pension accounting that is partly offset by higher pension costs that are now -- that are included in operating profit. 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 is an increase of 5% on a per share basis, with the first quarter approximately $100 million, which is impacted by the timing of tax payments. Share repurchases are expected to be in the range of $825 million to $875 million. 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 modest growth in the quarter against strong growth in the prior year and good underlying organic sales growth for the full year. Our results reflect robust bioprocessing growth, especially with single-use consumables, which was offset in part by softer demand from biotech, academia and the chemical sector. While headlines for pharma and life sciences markets have been more favorable recently, we expect customers to still be cautious with their investments to start the year. Our unique go-to-market strategies will ensure that we are very well positioned to capitalize on our customers' growing needs for equipment replacement going forward. Our innovative portfolio remains an important competitive advantage, and we continue to invest to further differentiate ourselves from the competition. For example, we recently launched an entirely new electronic pipette called Vero that is lightweight and has a very compact design. It has an exceptionally long battery life and can complete 2,800 pipetting cycles on a single charge. It is also unique in that it allows scientists to adjust flow rates, which is very helpful when working with delicate cells or nucleic acids, for example. Our Vero introduction complements the many exciting lab innovations we have brought to market in recent years, and we have a deep pipeline for the future. Turning to Industrial. We had modest growth in our core industrial business this quarter, including strong growth in China against easy comparisons. Given the soft market conditions over the past year, we are pleased with the good sales growth core industrial delivered in 2025. However, market demand in most geographies remain subdued, and we have maintained our full year forecast for modest growth. Our teams remain active in identifying new growth opportunities, and we believe we are well positioned to capitalize on investments in automation, digitalization, replacement demand and onshoring in the future. Our Industrial portfolio is in excellent shape. And to support growing demand for automation applications, we recently introduced new high-speed data communication features and protocols across our smart automation weighing indicators that ensure the compatibility of our devices with our customers' IT and OT ecosystems. We have partnered with leading MES providers to enable seamless integration of our intelligent weighing devices through standardized interfaces into factory automation systems. Our solutions assure GMP-compliant batch records and enable intuitive operator applications, helping customers increase efficiency and reduce errors as IT and OT environments continue to converge. Turning to Product Inspection. Sales growth in the fourth quarter was very strong as we have capitalized on our excellent portfolio, and we believe our organic sales growth in 2025 was well ahead of market growth. We continue to enhance our portfolio and recently introduced our new X3 Series of X-ray solutions for end-of-line inspections of loose products like prescription tablets and pills or food items like nuts, fruits and grains. The X3 Series offers both single and dual energy capabilities and is very differentiated in the market. Lastly, Food Retail sales grew strongly against easy year ago comparisons. While our Food Retail business tends to be lumpy, we were very happy with its growth in 2025. Now let me make some additional comments by geography, starting in the Americas, which had good growth across most of the portfolio, especially with our industrial and retail solutions. Growth in our Laboratory business was good and included very strong bioprocessing growth. Turning to Europe. Our fourth quarter results were better than expected due to very strong performance from our product inspection business. For the year, our European market organizations delivered good results despite soft economic conditions in some Western European countries as we continue to benefit from our Spinnaker sales and marketing initiatives and innovative portfolio. However, economic conditions in Europe are mixed, and we do not expect significant improvement in market demand in 2026. Finally, Asia/Rest of the World had good growth in the fourth quarter and was largely in line with our expectations. Our business in China grew 3%, led by good demand for industrial products from biopharma customers. Lab products were flattish, and our team remains very engaged with helping customers to help them address new China pharmacopeia regulations, including stricter minimum weighing standards and quality monitoring of ultrapure water, among others. Market conditions in China have recently been more steady, but as we know from the past, things can change quickly. In markets outside of China, we had very good growth against difficult comparisons in the fourth quarter. Emerging markets outside of China were 18% of our sales in 2025 and grew above our company average due to our dedicated resources and growth initiatives in these countries. Emerging markets are an important component of our growth strategy, and we expect above-average sales growth over the coming years. In summary, we delivered another year of solid growth despite ongoing market headwinds as our team leveraged our sophisticated go-to-market strategies and strong product and service offering. Our team's resilience and agility in our pricing, supply chain productivity and cost-saving initiatives were pivotal in navigating tariff challenges and government policy uncertainties throughout 2025. We are squarely focused on driving growth in 2026. We will continue to benefit from our strong global leadership positions, diversified customer base, innovative product offering and significant installed base. Service and faster-growing emerging markets will remain tailwinds, and we have accelerated our digital capabilities to identify and pursue growth opportunities, increasing the effectiveness of our global sales organization. Our market-leading solutions and innovative portfolio uniquely positions us to meet increasing customer demand for automation and digitalization solutions as well as faster-growing segments. We also look forward to capitalizing on future growth opportunities with customer replacement cycles and investments on the nearshoring activities over the coming years. Now this concludes our prepared remarks. Operator, I'd like to open the line now for questions.

[Operator Instructions] Our first question comes from Patrick Donnelly from Citi.

Maybe on the 1Q commentary, Patrick, you talked about baking in that customers in spite of some positive headlines to your point on pharma and life sci customers, you're baking in a little more cautious to start the year. Is that something you're hearing through the first month and change here? Or is it just -- obviously, there's a typical Mettler conservatism. Just wondering if that's something you're picking up in the market or more just, hey, we don't want to bake in any improvement just yet. Let's see how it plays out. So it would be helpful to just talk through that 1Q guide.

Yes. Thanks, Patrick. And I'll let Shawn comment on this as well. But maybe to my comment on the headlines, again, headlines have been still pretty volatile. And while they have been better on the pharma and life sciences side, we all appreciate there's still more uncertainty in the market out there. And this also, across the broader portfolio and the broader markets we serve, still leads to longer deal cycles, et cetera. So as we said also in our Q3 call and also at the JPMorgan conference, we think our customers, and we feel that we'll start the year a bit more cautious, and we have really built that into our guidance for Q1 and for the full year.

Yes. And just to echo what Patrick said, hey, we're of course stepping back, we're of course very pleased with the fourth quarter, came in better than what we expected, some good broad-based growth throughout the portfolio. We can kind of dig into that maybe in a minute. And we're also very pleased with our full year guide carrying forward that into 2026 full year, maintaining the 4% organic -- not organic, local currency guide for the full year on sales. But like Patrick said, as we previously mentioned, we do kind of tend to think that customers will likely start the year a little bit more cautious in Q1. It's always difficult to have visibility into Q1. Every time you're starting a year, it's a new year. You almost have to get through the whole quarter and get through March to really get a feeling for how things are progressing. But just sitting here today, it feels like a prudent approach for us to take in terms of how we're looking at the first quarter. And as he says, we do expect things to kind of gradually get better throughout the year.

Okay. That's helpful. And then, Shawn, maybe one for you, just in terms of the components of the guide. I would love if you could break out how you're thinking about pricing versus volume, both on the revenue side. And then if you could give a bit of a margin build with pricing, FX, et cetera, would be very helpful.

Yes. So we continue to feel really good about our pricing program. Of course, one of the things that I like about pricing the most is that it really highlights the value proposition in the company. We've been really investing a lot in innovation over the last few years. And when you create value, you can realize pricing. So if you kind of like look at our pricing, we're going to start the year off a little bit stronger because of the benefit of midyear pricing actions from last year. So I'm kind of -- would expect Q1 to be in the 3.5% or so kind of a range. And then for the full year, we're kind of maintaining that 2.5% for the full year. From an acquisition perspective, we would expect to benefit about 1% during the first half of the year from acquisitions, which would be about 0.5 point for the full year. And then that would kind of translate into organic volume for the full year of 1%, but it would be down by about 1.5% for Q1. And this kind of just gets back to that same comment about just being a little bit more cautious. And frankly, just not surprised if customers start the year a little bit more cautious with how they spend just given the volatility that we experienced or they experienced last year into some of the uncertainty in the market. But hey, we also recognize headlines have been getting better, and hopefully, we'll start to see things that translate into business as we go through the year. In terms of margins, we -- there's a few things in terms of affecting our margins. So maybe we'll start with operating margins. So on a reported basis -- well, maybe one comment first. Like currency has a pretty significant effect on our margins. It did in the second half of the year. If you remember, we were talking about this last quarter. And it's not a significant effect on like profit, but it is on sales. And so just the math -- when you start calculating operating and profit as a percentage of sales, of course, it's going to have and optically look like a headwind. So that headwind is about 100 basis points for the first quarter, and it's about 50 basis points for the full year of 2026. So excluding that, we would expect our operating margin to be up slightly in Q1 and we would expect it to be up by about 60 to 70 basis points for the full year. But then, of course, on a reported basis, it's going to be different. On a reported basis, Q1 will be down probably in the 100 basis point kind of range, maybe 90 basis points. And then for the full year, it would be up slightly.

Our next question comes from Vijay Kumar from Evercore ISI.

Congrats on the nice [ spin ]. Just back on the Q1 guidance, Shawn and Patrick. You guys did 4% organic in Q4. I think your Q1 is implying 2% organic, correct me if I'm wrong. What causes that 4% to 2% step down? And what are you assuming for end markets? When you say cautiousness, can you walk us through the different assumptions you're having industrial versus labs and pharma?

Yes, sure. So maybe I'll -- I can walk through maybe, Vijay, kind of like the assumptions for Q1 full year but also Q4. But as I kind of do it, you'll see that when we look at the beat, there was a very good beat on the Industrial side, especially Process Analytics. I mean, I'm sorry, not Process Analytics, Product Inspection. And then when you look at the geographies, you'll see Europe came in better than expected, also to a certain degree in the Americas. And as we were kind of entering the quarter, we were a little bit more concerned about Europe, but our Product Inspection business in Europe did particularly well. And then when we go through it, you'll also see that kind of what steps down a little bit from Q4 to Q1 just in terms of growth rates. You'll see that -- you'll see a little bit on the industrial side. You'll also see a little bit on the retail side. And then -- and also maybe this cautiousness in the Americas as well as to a certain degree in Europe. So in terms of the fourth quarter, I think this might be out there, but I'll just kind of go through it quickly. So Q4 Lab grew 3%. Our guide for Q1 is up low single digit. And our guide for the full year is growing low to mid-single digit. Core Industrial grew 4% and our guide for Q1 is flattish. And our guide for the full year is up low to mid-single digit. Product Inspection grew 11% in Q4. Of course, that was 7% organic. And then the Industrial, by the way, was 2% organic, core industrial. And then our Q1 guidance for Product Inspection is up mid- to high single digit, and our full year guidance is up low to mid-single digit. And then retail grew 19% in Q4, and our guidance for Q1 is up high single digit, and then our guidance for the full year is flattish. And then if we kind of like look at the regions. Americas was up 7%, which was 4% organic. And if you look at Q1, we're guiding up low single digit, and we're guiding for the full year up mid-single digit. And then Europe was up 4% in Q4. And then for Q1, we're guiding up low single digit and then for the full year, also low single digit. And then China was up 3% in Q4. And then for Q1, we're guiding also up low single digit and for the full year up low single digit.

That's very helpful, Shawn. One just on your EPS composition. I think by my math, looks like maybe half to be -- came from below the line, right, between interest expense and higher pension income. What's the other, I guess, $0.30 or so raise coming from? Because it looks like top line didn't change.

So you're talking the full year 2026, Vijay?

Yes, yes.

Yes. Yes. No, no, no. I think, just to clarify, we -- so our beat -- the beat in Q4 was related to sales. I think some of the below OP stuff might be a little confusing, but we excluded that -- some of those benefits from our adjusted EPS, like so for example, the onetime tax benefit. When you look at our 2026 EPS guidance, we've kind of carried forward the beat, the EPS beat from 2025. We also increased our EPS for the benefit from Swiss tax rate. So I mean, tariff rates. So you might remember, the Swiss tariff rate decreased from 39% to 15%. That had a benefit of just under 1% of EPS. And then aside from that, there was a little bit of noise. We had foreign currency, which was a slight headwind, and we updated for that. And then we had a little bit of noise with better pension income that's going to help out a little bit below OP, but that's also -- that's based on like how you do your actuarial accounting at the end of the year, but there's also, maybe, an offset in some of the pension stuff above OP and just some basic fine-tuning at the end of the year. But stepping back, we're very pleased with raising EPS by $0.70 for the full year, which is about 2%, and maintaining our 8% to 9% EPS growth.

Our next question comes from Dan Arias from Stifel.

Shawn, food retail was pretty strong here. Is something picking up? Or is that just sort of the inherent lumpiness of that business. The outlook, I think, for the year is flat. So I'm not sure if spending improvement makes that easier, or if the big 4Q just kind of creates a tougher comp, which makes that harder to reach.

Dan, this is Patrick. Look, I mean, with retail, of course, we are very happy with the performance we have seen from retail in Q4, and also in 2025 as it was growing. But I also want to remind you that the retail business is a pretty lumpy business, a lot of project business. And as we still guide retail for Q1 for high single digit, I think fiscal year '26, we'll see a tough compare, and that we also guided to the flattish growth in 2026. Again, it's a lot of ups and downs, big project business there. We compete really well. We actually spent quite some amount of innovation and brought a lot of good products, new products over the last 2 years and that we compete extremely well. But again, it's more lumpy. And it was as proud as we are of the 2025 growth, we see the full fiscal year '26 given the tougher compares rather flat.

Okay. And then maybe on China, I mean, I know no one thing changes the growth picture for you guys. But how would you characterize the pharmacopeia opportunity over there that you talked about a little bit last quarter just in terms of what might be tangible when it comes to demand? And then when you think that purchasing might ramp up if, in fact, it does?

Yes, that's a good question, Dan. Look, I mean, in China, again, we are really well positioned with our team there. We have an outstanding portfolio and pharmacopeia is one of the opportunities. We have seen some really good customer engagement also in Q3 and Q4 of last year. We expect this to continue, but it's not like a step change, right? This is a continued upgrade of existing balances and customers' labs as they want to comply with things like minimum weight requirements, et cetera. So I think it's supporting our ongoing growth in China in the Lab business in 2026, but it's not a huge step change that comes all at once.

Our next question comes from Michael Ryskin from Bank of America.

Congrats on the quarter and the guide. First, I want to touch on -- you talked about the reshoring or onshoring opportunity a number of times in the past and you flagged it again today. Just curious if you could give us an update on that, any change in conversations or in tone? I know it's still really early, but just sort of what's your sense around timing on when you might start seeing at least the beginning [indiscernible] late '26 or still more of a '27, '28 dynamic.

Yes. Thanks, Mike. Look, I mean, yes, there's a lot of good news, I would say, out there. But think about our product portfolio, I mean, a lot of -- a significant part of our portfolio, almost 50% of our portfolio is actually for manufacturing, then you have another 25% -- 20% to 25% is for QA/QC. So if you think about this reshoring, onshoring, specifically for pharma, I mean, these factories still have to be built, right? And then we come into play that whole portfolio is to build it out. So we see this more as a 2027 and beyond opportunity. For us, of course, it's important that we are out there in discussions with our existing customers. We help our existing customers a lot of our portfolio and make sure that they are well aware as they plan then of building out potential additional facilities in the U.S. to make sure that we are their preferred supplier for these opportunities. And it's pharma, but it's also other areas if you think about the -- for example, the battery segment and others. So they are around the world, I would say, in the coming years, a lot of good opportunities when it comes to reshoring, where customers build redundant setups to make sure that they also derisk the setup that they had in the past. And I see this for the coming years as a good opportunity, but we have not factored it in as a big growth opportunity for 2026. I think it's still very early innings.

Okay. That's helpful. And then I want to touch a little bit on Europe. It feels that that's been doing a little bit better than expected. I think it stands out a little bit more for us the last couple of quarters despite tough comps. Can you just talk about what you see driving that on the ground there? And how sustainable that is going forward?

Yes. Mike, maybe I'll take that one. So as I kind of was alluding to before, kind of coming into the quarter, we were a little bit more cautious on Europe. We've been extremely proud of our European organization over the years. If you just look at the economy in Europe, it's the softer economy in the world in more recent times. PMI is kind of in the low 40s at times, and we continue to, I think, do extremely well with that kind of a backdrop. I think a lot of it would benefit from, of course, a strong organization, but also our Spinnaker program really -- with the combination of us going most direct in Europe, I think, allows us to also be a little bit more precise in terms of that ability to gain a little bit of market share each year. If we just kind of like look at the fourth quarter, though, one thing that I mentioned before that really stood out was our Product Inspection business. We just had really strong growth in that business. And I think it's a theme we've seen in other regions throughout the year, which is some of the innovation that we've introduced to the market recently and has been just very well received. And a lot of that innovation is really trying to go more specifically at the mid-market segment, and we're doing quite well there. Otherwise, I'd say we're competing well in the other product categories in general, but with, I'd say, a more challenging backdrop in some of the other regions.

Our next question comes from Catherine Schulte from Baird.

Maybe just on service. I think you said up 8% in the quarter, 6% organic. What's the outlook for that side of the business in '26, both including and excluding acquisitions?

Yes. Do you want to take it?

Yes. So yes, you're correct, Catherine. So we grew 8%, like looking at my notes to make sure I got it right. We grew 8% in the quarter, 6% organic. As we kind of think about next year, we're thinking about mid- to high single-digit growth overall for the business for the first quarter in the full year. And when you look at the first quarter, there's some acquisition growth in that. So Q1 would be more mid-single digit. I think the full year probably still rounds to mid- to high single digit. And as we've talked about in the past, we just continue to see Service as a great opportunity. The team kind of recently celebrated the fact that they achieved $1 billion in sales for the first time. And that was a nice milestone. It's a business that we've been really focusing on in terms of trying to penetrate. I think you're familiar, like if you look at the serviceable iBase that we have available to us as an opportunity, it's about $3 billion. So we penetrated about 1/3, and we continue to see opportunities to go after that. And as we do that, we have been putting additional resources into that business, and we continue to be optimistic kind of going forward for the medium to long term here.

Okay. Great. And then for China, another quarter of modest growth there in the fourth quarter. Sounds like maybe some easy comps in Core Industrial and Lab about flat. Can you just unpack a bit more what you're seeing in that market and the outlook for Lab versus Industrial in the low single guide for the year?

Yes. Yes. So China overall came in as expected. We're pleased with that. Yes, we recognize that Industrial had an easier comparison, but we'll still take it. They actually had quite strong growth in the quarter. When we kind of came out of the budget toward last year, kind of we were in China in September, one of the takeaways for me was you could just feel that there was a lot more positive energy coming out of our Industrial team. So it's really kind of cool to actually see it translating into results here. So I think they're doing very well there at the moment, and that's good in the context of an economy that still has some challenges. And when you kind of cut through and look at the markets, one of the markets that really is doing better there is the pharmaceutical end market. We see that in both sides of the business. Maybe the one area that is more challenging is on the chemical side. And for us, chemical means mostly specialty chem, but that's a more challenging end market at the moment. But when we look forward to China for this year, we're still looking to guide in that low single-digit range for Q1 and for the full year. Right now, I'd probably think Lab and Industrial will probably both be in that kind of a range. Maybe some quarters better than others, depending on how things play out here a little bit. But big picture, I think we've had at least a year of things have moderated there. We've had some modest growth. I think it's a good base, hopefully, to now grow on. We're not building anything too significant to get over our skis. As we know, things in China can change quickly in either direction, but hopefully, we'll start to see things pick up at some point. And I think longer term, we still feel very optimistic. I think when you look at like the 5-year plan, and you look at all the investments going into the pharmaceutical industry and life science industry in China, it's very encouraging. And then you look at some of these trends about GLP-1s and the number of companies in China that are investing in that, it's also a good opportunity, just as an example. So I think our team is well positioned for that. As you know, we have a really great China for China story with us making most of our products in China for China, and selling mostly to Chinese private companies. I think that's just a good setup for us. And we've always performed well there relative to the market.

Our next question comes from Luke Sergott from Barclays.

I just wanted to kind of touch on somewhat more of the pharma side and also the ANG weakness that you talked about. And also, I guess, part of that in 4Q was the biotech weakness as well. So we're starting to see some green shoots in biotech. Pharma is doing a lot more M&A. And I know that it's probably going to track a different cycle than obviously the clinical research. But how are you guys thinking about when that funding starts coming back? And where in that cycle would you guys start to see some of the pickup? Or if this biotech or like the early-stage pharma where you're seeing weakness now is more just associated with kind of the academic funding environment?

Yes. Maybe I'll take that, Luke. Look, we are, I think, quite excited about the overall biopharma and specifically biopharma processing activities that are going on and Shawn made a comment here on GLP-1 and others. I think that, that's actually where we see good momentum in the market, almost around the world. So we -- that's what I would say is a growth driver for us as well. When you mentioned academia, government and biotech, we have actually pretty small exposure in that area, mainly in the area of liquid handling and pipette business, et cetera. Otherwise, we are not really prominent in that segment. And it's hard to say when we really would see a pickup there. It, of course, depends on some real good funding that should come back into the biotech and academia area. Again, we would first see that on the pipette business if that is picking up again. And right now, we saw that business in Q4 is still a little bit under pressure. I think it was slightly declining in Q4. And we have to wait and see again when the funding is really coming back and then when we see more momentum. But that's -- I think I would say that the indicator there for us would be more on the pipette business. But as a reminder, it's a smaller part of our overall business.

Got you. And then one for Shawn. On the GMs, and I understand it's a completely fluid tariff environment for you guys. But more generally, we've kind of seen this kind of tick down in gross margins across the space. And is there a dynamic going on with you guys where your tariff mitigation efforts outside of pricing, those are ongoing, and then you're starting to get some pressure here from your suppliers. And there's just going to be a mismatch between timing of when you can pass that on to your customers? Is that -- just trying to figure out where this kind of ultimately shakes out or for you guys, it's just being forced right now to kind of eat it until things normalize?

No. Actually, we're doing quite well in terms of managing the input costs. I think the SternDrive program has really been helping us out. That program has a lot of sophistication, like a lot of our programs when it comes to like digital capabilities and our ability to like really look at what should something cost. So it's called should costing and we can like really diagnose opportunities that we can leverage as we look at our cost structure. I think what's making -- what was already a confusing year with tariffs more confusing is that currencies have changed quite a lot more here in the second half of the year. And I was trying to explain that earlier in the call, but I wouldn't dismiss that, right? Like it's like a 70 basis point headwind to gross margin in Q4. And as I mentioned before, we're going to see that kind of carry forward to the first half of next year. And then some of these recent acquisitions, while on an OP basis, they're fine. Just when you start to look at some mix effects, we start to get a little bit of unfavorable mix in terms of gross margins, kind of like the way you think about the Service business, right? It's like good when it comes to OP. But in terms of gross margin, it might be a little bit dilutive, and that's because a lot of these recent acquisitions were distributors, which were largely service businesses, and then any incremental product sales is going to be smaller just by the virtue of the fact that they were a distribution partner. But when you kind of cut through all that, like I was trying to say -- I don't know if we got into this before or not, but like if you cut through FX and you cut through the organic -- the acquisition side, the organic gross margin was down 20 basis points for the quarter and for the full year. And that's despite a very significant headwind -- gross headwind on tariffs, right? It was like 190 bps in the quarter. And if you think about it, while we were mitigating things throughout the year, we did have this topic of the Swiss tariffs that kicked in at 39%. And then we were going to -- we were having to absorb that during the fourth quarter. So the step down to 15% tariff rate in Swiss tariffs, that's something that will -- that benefit will happen more in 2026, not in Q4. And I think there's even maybe a little bit bleeding into the first part of Q1, just given stuff that was maybe in inventory already. So I hope that helps a little bit.

It does.

Our next question comes from Tycho Peterson from Jefferies.

I wanted to dive in a little more on the industrial strength, Product Inspection. Shawn, I appreciate your comments that some of this is new product intros and opening up the mid-tier market. Is there any way to kind of delineate how much of this is kind of broader market recovery versus actually opening up new markets? And then I know in the past, you've talked about replacement cycle here, in particular, the industrial portfolio well positioned. Is that business benefiting at all from replacement cycle at this point?

I'll take it, Tycho. I think the growth you're seeing in our Product Inspection business, we cannot point here to any underlying market recovery, or market strength. Actually, we think the market is still under considerable pressure, the food market, but we are really, I would say, very well positioned with our portfolio and all the innovations we have pushed across the portfolio. Whether it was in x-ray detection or an injection weighing and there's more to come. Again, we have a clear dedicated plan to not only dominate the high end but also attack the mid-range market. That strategy is playing out really well. So yes, I would say it's mostly innovation, our trusted growth that you see there. And when it comes to the installed base and replacement market, what we are seeing across the board, across the portfolio, and that is not only true for Product Inspection businesses, we see a little bit of aging of the installed base. I think we have now seen probably 2 years of subdued replacement and what it needs really to -- for that to pick up is what I mentioned at the beginning is more certainty in the market, more confidence of customers that they can invest. I mean, they, of course, cannot hold off forever, but I think once the market gets a bit more stable and there's more certainty in the market and less noise, we will see a gradual pickup again in the replacement business to more normal levels and probably also a bit more. But it will not be again a step change. This will be a gradual phasing in often the replacement business again.

Okay. That's helpful. And then following up on the pharma onshoring, reshoring comments earlier, I appreciate that's more of a '27 and beyond story. Fair to assume, Lab will see that later, but maybe you'll see it on the Industrial side earlier, weighing in dimensioning for transport, logistics, things like that?

Yes. That's a good way to think about it. As you know, for these onshoring, reshoring, of course, also we work with industrial partners with automation solution providers, et cetera, that use our equipment. And I think they will pick up [ for ] as they prepare for the manufacturing solutions there, the automation lines and everything that is needed, and also our own products for production. And then Lab, including the QA/QC products that we deliver for these markets will be probably a bit later.

Okay. And then maybe just one last one on bioprocessing. I know it's a smaller part of the business. Maybe just touch on what you're seeing there? How do volumes look? And what are you baking in this year?

I'm sorry, Tycho, can you repeat the question?

Just bioprocessing, and consumables, single-use. Can you just talk a little bit about volumes and what you're baking in on the bioprocessing side this year?

Yes. So we didn't bake in specific guidance for it. But certainly, on the bioprocessing side, we had a very strong fourth quarter, especially when we -- geographically, we look at the Americas, the U.S. bioprocessing did especially well. Single-use also did particularly well in that market as well, too. We kind of look at that as an above-average growth driver in the Lab business and certainly feel good about the momentum they're kind of carrying into -- in and through 2026.

Our next question comes from Doug Schenkel from Wolfe Research.

So I guess another question on Lab. I think in Tycho's last question, he got at the bioprocessing component there. But again, Q4 results came in pretty well ahead of estimates. You grew solid mid-single digits on a really tough comp, and you accelerated on a 2-year stack basis. What would you call out as driving the underlying improvement? So not just in process analytics and bioprocessing, but more broadly, what's driving underlying improvement? Did you see any signs of budget flush? And then I'm just kind of underlying in there, was there anything that you would call out in terms of just the change in trend in key end markets?

Yes. I think, Doug, in terms of the pharma, biopharma market overall, it's -- a lot of it is biopharma processing, which is more on the process analytics piece. And then we -- to your question regarding the budget flush, have seen, I would say, some budget flush, it's always hard for us to clearly assess how much is budget flush, but we have seen better momentum towards the very end of the quarter, which points to a budget flush. And that was also affecting the Lab portfolio, as we saw some flush coming there as well. I mean if you think about Lab and where we play and how we play, a lot of it is also linked to our strong software solution that we have there with LabX, which really helps us to connect a broader portfolio of our products in either R&D labs or QA/QC labs, it helps our customers to also automate more workflows. And I think that's kind of the trend that we see overall that helps us to compete very effectively and drives momentum also forward. That's something where we have really a stronghold where we invest a lot to not only drive automation in the Industrial piece, but also on the Lab side. And I think that's probably one of the things that also helps us to pick up more momentum in the market.

Our next question comes from Dan Leonard from UBS.

I want to revisit, Patrick, the comments you made on your emerging market view. You commented that you have an expectation for above-market sales growth from emerging markets. And I want to clarify, does that comment include China? Or were you speaking to emerging markets outside of China?

Yes. A very good question, Dan. Yes, and thanks for that question. I think it's an important one. We really speak about outside of China. So we expect for the emerging markets, which we also said, in the meantime, make about 18% of our total revenues versus China is like 15% or 16% of total revenues, but above average growth and above corporate growth rate is specifically pointing towards the emerging markets ex China.

Appreciate that clarification then. And then what is your updated view on growth in China over the medium term? Is that fleet accretive or fleet neutral?

Yes. So we're not necessarily formally updating guidance on China. I think we are very optimistic still about the medium to long term. We clearly acknowledge that it doesn't need to grow at the rates that it grew in the pre-COVID era. The last time we updated our algorithm for growth, we were kind of looking at high single digits for China. But sitting here today would be very comfortable if it was mid-single digit with our ability to still hit our 6%-plus long-term sales growth algorithm. And just as one example, the emerging markets outside of China are now bigger than China, and we kind of see a lot of growth opportunity there, but there's also a lot of other things going on inside the company that we feel good about.

Our next question comes from Jack Meehan from Nephron Research.

I had a couple of questions on core industrial. The first is called out seeing some signs of life on the PMI side. I was just curious in that context, can you unpack the first quarter guide? I think you're assuming flat growth. Is there some timing dynamics going on? Or just piece those together for me.

Yes. So yes, you're right. I mean it's definitely a little bit of a step down here from what we did in the second half of 2025. I think as we kind of look at it, it is a little out of all of our businesses. It has a little bit more sensitivity to the economy. Some of the recent PMIs, nice to see the direction. Certainly, there's a lag in terms of when we would see that in our business. Kind of as a reminder, about 60% of core industrial is sold into a combination of pharma, biopharma, food manufacturing and chemical. And out of those 3 sectors, the chemical sector has been under more pressure this year, probably expect it to continue to be under pressure in Q1. And we're just assuming as the typical company starts the year, they're just going to be a little bit more cautious with how they release funds. And we'll see how it plays out. As you know, we only sit on 1.5 months of backlog typically at any point in time. So -- but that's just kind of how we were thinking about it when we guided last quarter for this year. We've tried to communicate on that, that we wouldn't be surprised if things start off a little bit slower this year. And certainly, that's how we feel sitting here today.

Got it. Okay. And let's say there's a scenario where we continue to see positive trends on the PMI front. Can you talk about -- just remind us like what the drop-through is? Like if we did see incremental organic growth, what the flow-through would be on the margin line?

I think on the core industrial side, it's going to be right around corporate average. It depends, of course, what part of the portfolio you're in. But like if you're into the part of the portfolio that's really serving the opportunities regarding automation and digitalization, which is the faster-growing sector, that's above corporate average. But some of the stuff that's a little bit more cyclical tends to be below corporate average.

Our next question comes from Josh Waldman from Cleveland Research.

One for Shawn and then one for Patrick, I think. Shawn, can you talk through how you're thinking about the organic growth progression through the latter 3 quarters of the year? I guess, are you factoring in a larger than normal ramp off of the Q1 to get to the full year? And then on the embedded caution to start the year, I guess, are you seeing this in the order book when you consider normal kind of order seasonality for January?

Yes. So maybe I'll take the first part of the question first. So I think if you look at our ramp up, it's not like a significant ramp. Yes, we're going to be down a little bit organic volume in Q1 per our guidance. But if you, like, look at the second half of the year, it probably implies something in the 2% kind of a range in terms of organic growth. Now in the second half of the year, we'll have a little bit less pricing and a little bit less acquisition benefit. So that number might not be as high as just simply adding the increment of organic volume. But that's kind of like how I would probably see it sitting here today. But certainly, I wouldn't want to get into specific quarters. I think every year is the same, and this year is no different, and probably even has a little bit less visibility as you started, just given all the volatility from last year. But we're going to learn a lot more here over the next couple of months. And I think once we get through the full quarter, we'll have a much better perspective on what Q2 looks like, and what the rest of the year looks like. And then in terms of orders, we never comment on months and particularly just in Q1, I mean, January is always a goofy month, right? February is a goofy month. You have Chinese New Year timings. Seasonality-wise, these are lower months in the year, so we'll see. And like I said before, we only sit on about 1.5 months' worth of of backlog. So we'll see how it plays out. And we're executing well. We feel really good about how we're positioned. We have, I think, a really good balance of looking at growth opportunities and also keeping an eye on productivity topics, and we'll continue to have that balance going forward.

Got it. Okay. And then, Patrick, on service, I think you said the group reached $1 billion in sales. Can you remind us how that's dispersed across the Lab and Industrial segments? And then in the past, I think you've talked about service as an area of strategic investment. I wondered if you could talk through what you see as the near-term opportunities in service to drive incremental share growth on the hardware side?

Yes. Very good. Thanks, Josh. Yes, look, I'm very excited about services and also the growth rates we have seen over the last years. We made a really conscious decision to overinvest in services as well and drive that opportunity. As Shawn said, we currently cover about 1/3 of the installed base. There's ample of opportunity for us to continue to cover more of that with strategic programs. We are making good progress. When you think about the breakdown between Industrial and Lab, for example, it's almost a longer revenue line because in Industrial, you would have to differentiate between, for example, PI where you have a stronger service business versus core industrial as a bit less. But I think it almost balances it out across the portfolio in terms of the contribution and comparison to the product business. But we are very excited about where we stand. It's a great strategic program for us as a company, and we are, of course, super proud that the team achieved this major milestone of $1 billion revenues in services.

That concludes the question-and-answer session. I would now like to turn the call back over to Adam Uhlman for closing remarks.

Thanks, everybody, for joining us today and for your excellent questions. Please feel free to reach out if you have any follow-ups. And have a great weekend. Take care. Bye.