Company Delivers Revenue of $537 Million and
Diluted GAAP EPS of $1.57 (Non-GAAP EPS of $1.58)
- Sales Grew 8% As Reported and in
Constant Currency
- Growth Highlights Include Global
Pharmaceutical Market and Recurring Revenues
- Operating Leverage Driven by Revenue
Strength and Margin Improvement
Waters Corporation (NYSE: WAT) reported second quarter 2016
sales of $537 million, an 8% increase versus sales of $495 million
in the second quarter of 2015. Foreign currency translation did not
materially impact sales growth. On a GAAP basis, earnings per
diluted share (EPS) for the second quarter were up 24% to $1.57
compared to $1.27 for the second quarter of 2015. On a non-GAAP
basis, including the adjustments in the attached reconciliation,
EPS increased 20% to $1.58 from $1.32 in the second quarter of
2015. A description and reconciliation of GAAP to non-GAAP EPS is
attached and can be found on the Company’s website at
http://www.waters.com under the caption “Investors”.
Through the first six months of 2016, sales for the Company were
$1,012 million, up 6% compared with sales of $955 million in the
first six months of 2015. Foreign currency translation decreased
sales growth during the first half of 2016 by 1%. On a GAAP basis,
EPS for the first six months of 2016 were up 13% to $2.72 compared
to $2.41 for the comparable period in 2015. On a non-GAAP basis and
including adjustments in the attached reconciliation, EPS increased
13% to $2.85 in the first six months of 2016 as compared to $2.52
in 2015.
Commenting on the Company’s performance, Christopher J.
O’Connell, President and Chief Executive Officer said, “Continued
strength in bio/pharmaceutical end markets and improvement in
industrial end markets, as well as relatively balanced instrument
and recurring revenue growth, highlighted our second quarter
results. Disciplined execution of our business plan contributed to
operating leverage and strong earnings per share growth, while we
continued to invest in innovation to drive future growth.”
The sales growth percentages below are on an as reported basis
and are the same as the sales growth percentages on a constant
currency basis, as detailed in the attached reconciliation of GAAP
to non-GAAP sales.
Results from the Company’s end markets in the quarter were
highlighted by 12% sales growth from the broadly defined
bio/pharmaceutical market and 7% sales growth from the industrial
market, offset by a 4% decline in sales within the government and
academic market.
The Company’s recurring revenues, the combination of service and
consumables, posted 10% sales growth in comparison to a strong
prior year’s result, while instrument system sales grew about 7% in
the quarter.
Geographically, the Company’s sales growth rate in Asia was 9%,
with continued strong demand from China. Sales in Europe increased
by 12%, while sales in the U.S. increased by 5% in the quarter.
As communicated in a prior press release, Waters Corporation
will webcast its second quarter 2016 financial results conference
call this morning, July 26, 2016 at 8:00 a.m. eastern time. To
listen to the call, connect to www.waters.com, choose “Investors”
and click on the “Live Webcast”. A replay will be available through
August 2, 2016 at midnight eastern time, similarly by webcast and
also by phone at 402-998-0509.
About Waters Corporation
Waters Corporation (NYSE: WAT) develops and manufactures
advanced analytical science technologies for laboratory-dependent
organizations. For more than 50 years, the Company has pioneered a
connected portfolio of separations science, laboratory information
management, mass spectrometry and thermal analysis systems.
Non-GAAP Financial Measures
This press release contains financial measures, such as constant
currency growth rate, adjusted operating income, adjusted earnings
per share and adjusted operating margin, among others, which are
considered “non-GAAP” financial measures under applicable U.S.
Securities and Exchange Commission rules and regulations. These
non-GAAP financial measures should be considered supplemental to
and not a substitute for financial information prepared in
accordance with generally accepted accounting principles (GAAP).
The Company’s definition of these non-GAAP measures may differ from
similarly titled measures used by others. The non-GAAP financial
measures used in this press release adjust for specified items that
can be highly variable or difficult to predict. The Company
generally uses these non-GAAP financial measures to facilitate
management’s financial and operational decision-making, including
evaluation of Waters Corporation’s historical operating results,
comparison to competitors’ operating results and determination of
management incentive compensation. These non-GAAP financial
measures reflect an additional way of viewing aspects of the
Company’s operations that, when viewed with GAAP results and the
reconciliations to corresponding GAAP financial measures, may
provide a more complete understanding of factors and trends
affecting Waters Corporation’s business. Because non-GAAP financial
measures exclude the effect of items that will increase or decrease
the Company’s reported results of operations, management strongly
encourages investors to review the Company’s consolidated financial
statements and publicly filed reports in their entirety.
Reconciliations of the non-GAAP financial measures to the most
directly comparable GAAP financial measures are included in the
tables accompanying this release.
CAUTIONARY STATEMENT
This release may contain “forward-looking” statements regarding
future results and events. For this purpose, any statements that
are not statements of historical fact may be deemed forward-looking
statements. Without limiting the foregoing, the words, “feels”,
“believes”, “anticipates”, “plans”, “expects”, “intends”,
“suggests”, “appears”, “estimates”, “projects”, and similar
expressions, whether in the negative or affirmative, are intended
to identify forward-looking statements. The Company’s actual future
results may differ significantly from the results discussed in the
forward-looking statements within this release for a variety of
reasons, including and without limitation, the affect on the
Company’s financial results from the United Kingdom voting to exit
the European Union; foreign exchange rate fluctuations potentially
affecting translation of the Company’s future non-U.S. operating
results; the impact on demand among the Company’s various market
sectors from economic, sovereign and political uncertainties;
fluctuations in expenditures by the Company’s customers, in
particular large pharmaceutical companies; introduction of
competing products by other companies and loss of market share;
pressures on prices from competitors and/or customers; regulatory,
economic and competitive obstacles to new product introductions;
other changes in demand from the effect of mergers and acquisitions
by the Company’s customers; increased regulatory burdens as the
Company’s business evolves, especially with respect to the U.S.
Food and Drug Administration and U.S. Environmental Protection
Agency, among others; shifts in taxable income in jurisdictions
with different effective tax rates; the outcome of tax examinations
or changes in respective country legislation affecting the
Company’s effective tax rate; the ability to access capital,
maintain liquidity and service our debt in volatile market
conditions, particularly in the U.S., as a large portion of the
Company’s cash is held and operating cash flows are generated
outside the U.S.; environmental and logistical obstacles affecting
the distribution of products and risks associated with lawsuits and
other legal actions, particularly involving claims for infringement
of patents and other intellectual property rights. Such factors and
others are discussed more fully in the sections entitled
“Forward-Looking Statements” and “Risk Factors” of the Company’s
annual report on Form 10-K for the year ended December 31, 2015 as
filed with the Securities and Exchange Commission, which
“Forward-Looking Statements” and “Risk Factors” discussions are
incorporated by reference in this release. The forward-looking
statements included in this release represent the Company’s
estimates or views as of the date of this release report and should
not be relied upon as representing the Company’s estimates or views
as of any date subsequent to the date of this release.
Waters Corporation and Subsidiaries Condensed
Preliminary Unclassified Consolidated Balance Sheets (In
thousands and unaudited) July 2,
2016 December 31, 2015 Cash, cash
equivalents and investments 2,599,786 2,399,263 Accounts receivable
445,953 468,315 Inventories 286,447 263,415 Property, plant and
equipment, net 330,235 333,355 Intangible assets, net 217,393
218,022 Goodwill 352,987 356,864 Other assets 215,272 229,443 Total
assets 4,448,073 4,268,677 Notes payable and debt
1,756,958 1,668,336 Other liabilities 541,771 541,490 Total
liabilities 2,298,729 2,209,826 Total equity 2,149,344
2,058,851 Total liabilities and equity 4,448,073 4,268,677
Waters Corporation and Subsidiaries Consolidated
Statements of Operations (In thousands, except per share
data) (Unaudited)
Three Months Ended Six Months Ended July 2,
2016 July 4, 2015 July 2, 2016 July 4,
2015 Net sales $ 536,560 $ 494,740 $ 1,011,806 $ 955,144
Cost of sales 220,379 208,707 421,530 397,953 Gross profit
316,181 286,033 590,276 557,191 Selling and administrative
expenses 129,581 122,660 258,932 242,411 Research and development
expenses 32,578 30,555 62,016 59,506 Purchased intangibles
amortization 2,411 2,500 5,055 4,974 Operating income
151,611 130,318 264,273 250,300 Interest expense, net (6,156
) (6,546 ) (12,188 ) (13,181 ) Income from operations before
income taxes 145,455 123,772 252,085 237,119 Provision for
income taxes 17,238 18,115 29,816 35,401 Net income $
128,217 $ 105,657 $ 222,269 $ 201,718 Net income per
basic common share $ 1.59 $ 1.28 $ 2.74 $ 2.44
Weighted-average number of basic common shares 80,804 82,564 81,043
82,798 Net income per diluted common share $ 1.57 $
1.27 $ 2.72 $ 2.41 Weighted-average number of diluted common
shares and equivalents 81,455 83,332 81,663 83,551
Waters Corporation and Subsidiaries Quarterly
Reconciliation of GAAP to Adjusted Non-GAAP Net Sales by
Operating Segment, Products & Services, Geography and
Markets Quarters Ended July 2, 2016 and July 4, 2015
(in thousands) Constant Three Months
Ended Percent Currency Currency July 2,
2016 July 4, 2015 Change Impact Growth
Rate (a) NET SALES - OPERATING SEGMENT
Waters $ 478,731 $ 442,232 8% $ 497 8% TA 57,829 52,508 10% (167)
10%
Total $
536,560 $ 494,740 8% $
330 8% NET SALES - PRODUCTS &
SERVICES Instruments $ 272,639 $ 254,297 7% $ (460) 7%
Service 176,873 162,704 9% (358) 9% Chemistry 87,048
77,739 12% 1,148 11% Total Recurring 263,921 240,443
10% 790 10%
Total
$ 536,560 $ 494,740 8% $
330 8% NET SALES - GEOGRAPHY
Americas $ 202,895 $ 192,652 5% $ (1,850) 6% Europe 143,317 127,414
12% 2,188 12% Asia 190,348 174,674 9% (8) 9%
Total $ 536,560 $
494,740 8% $ 330 8%
NET SALES - MARKETS Pharmaceutical $ 310,009 $
276,851 12% $ (191) 12% Industrial 166,686 155,379 7% 939 7%
Government & Academic 59,865 62,510 (4%) (418) (4%)
Total $
536,560 $ 494,740 8% $
330 8%
(a) The Company believes that referring to comparable, constant
currency growth rates is a useful way to evaluate the underlying
performance of Waters Corporation's net sales. Constant currency
growth rate, a non-GAAP financial measure, measures the change in
net sales between current and prior year periods ignoring the
impact of foreign currency exchange rates during the current
period. See description of non-GAAP financial measures contained in
this release.
Waters Corporation and Subsidiaries Quarterly
Reconciliation of GAAP to Adjusted Non-GAAP Net Sales by
Operating Segment, Products & Services, Geography and
Markets Six Months Ended July 2, 2016 and July 4, 2015
(in thousands) Constant Six Months
Ended Percent Currency Currency July 2,
2016 July 4, 2015 Change Impact Growth
Rate (a) NET SALES - OPERATING SEGMENT
Waters $ 902,924 $ 851,900 6% $ (5,824) 7% TA 108,882 103,244 5%
(318) 6%
Total
$ 1,011,806 $ 955,144 6%
$ (6,142) 7% NET SALES -
PRODUCTS & SERVICES Instruments $ 496,346 $ 478,987 4% $
(4,891) 5% Service 344,262 320,235 8% (2,210) 8% Chemistry
171,198 155,922 10% 959 9% Total Recurring
515,460 476,157 8% (1,251) 9%
Total $ 1,011,806 $
955,144 6% $ (6,142) 7%
NET SALES - GEOGRAPHY Americas $ 381,636 $ 370,232 3%
$ (2,616) 4% Europe 268,349 251,815 7% 671 7% Asia 361,821 333,097
9% (4,197) 10%
Total $ 1,011,806 $ 955,144
6% $ (6,142) 7% NET SALES
- MARKETS Pharmaceutical $ 569,095 $ 518,154 10% $ (4,627)
11% Industrial 320,207 310,389 3% (250) 3% Government &
Academic 122,504 126,601 (3%) (1,265) (2%)
Total $ 1,011,806
$ 955,144 6% $ (6,142) 7%
(a) The Company believes that referring to comparable, constant
currency growth rates is a useful way to evaluate the underlying
performance of Waters Corporation's net sales. Constant currency
growth rate, a non-GAAP financial measure, measures the change in
net sales between current and prior year periods ignoring the
impact of foreign currency exchange rates during the current
period. See description of non-GAAP financial measures contained in
this release.
Waters Corporation and Subsidiaries Reconciliation of
GAAP to Adjusted Non-GAAP Financials Quarters and Six Months
Ended July 2, 2016 and July 4, 2015 (in thousands, except
per share data)
Income
fromOperationsbeforeIncomeTaxes
Gross Selling & Research &
Operating Interest
Provision
forIncomeTaxes
DilutedEarningsper
Share
Net Gross Profit Administrative
Development Operating Income Expense,
Net Sales Profit
Percentage Expenses Expenses Income
Percentage Net Income Quarter Ended July 2,
2016 GAAP $ 536,560 $
316,181 58.9% $ 131,992 $
32,578 $ 151,611 28.3% $
(6,156) $ 145,455 $ 17,238
$ 128,217 $ 1.57 Adjustments: Purchased
intangibles
amortization (a)
- -
- (2,411) - 2,411 0.4% - 2,411 721 1,690 0.02
Restructuring costs,
asset impairments,
acquisition-related costs
& certain other items (c)
- -
- (1,980) - 1,980 0.4% - 1,980 519 1,461 0.02 Certain
income
tax items (d)
- -
- - - -
- - - 2,367 (2,367) (0.03)
Adjusted Non-GAAP $ 536,560 $
316,181 58.9% $ 127,601 $
32,578 $ 156,002 29.1% $
(6,156) $ 149,846 $ 20,845
$ 129,001 $ 1.58 Quarter
Ended July 4, 2015 GAAP $ 494,740 $
286,033 57.8% $ 125,160 $
30,555 $ 130,318 26.3% $
(6,546) $ 123,772 $ 18,115
$ 105,657 $ 1.27 Adjustments: Purchased
intangibles
amortization (a)
- -
- (2,500) - 2,500 0.5% - 2,500 717 1,783 0.02
Restructuring costs,
asset impairments,
acquisition-related costs
& certain other items (c)
- -
- (2,016) - 2,016 0.4% - 2,016 636 1,380 0.02 Certain
income
tax items (d)
- -
- - - -
- - - (793) 793 0.01
Adjusted
Non-GAAP $ 494,740 $ 286,033
57.8% $ 120,644 $ 30,555
$ 134,834 27.3% $ (6,546)
$ 128,288 $ 18,675 $
109,613 $ 1.32 Six Months Ended July
2, 2016 GAAP $ 1,011,806 $
590,276 58.3% $ 263,987 $
62,016 $ 264,273 26.1% $
(12,188) $ 252,085 $ 29,816
$ 222,269 $ 2.72 Adjustments: Purchased
intangibles
amortization (a)
- -
- (5,055) - 5,055 0.5% - 5,055 1,471 3,584 0.04 Stock
award
modification (b)
- -
- (7,085) - 7,085 0.7% - 7,085 2,657 4,428 0.05
Restructuring costs,
asset impairments,
acquisition-related costs
& certain other items (c)
- -
- (5,588) - 5,588 0.6% - 5,588 1,661 3,927 0.05 Certain
income
tax items (d)
- -
- - - -
- - - 1,630 (1,630) (0.02)
Adjusted Non-GAAP $ 1,011,806 $
590,276 58.3% $ 246,259 $
62,016 $ 282,001 27.9% $
(12,188) $ 269,813 $ 37,235
$ 232,578 $ 2.85 Six Months
Ended July 4, 2015 GAAP $ 955,144 $
557,191 58.3% $ 247,385 $
59,506 $ 250,300 26.2% $
(13,181) $ 237,119 $ 35,401
$ 201,718 $ 2.41 Adjustments: Purchased
intangibles
amortization (a)
- -
- (4,974) - 4,974 0.5% - 4,974 1,421 3,553 0.04
Restructuring costs,
asset impairments,
acquisition-related costs
& certain other items (c)
- -
- (3,288) - 3,288 0.3% - 3,288 999 2,289 0.03 Certain
income
tax items (d)
- -
- - - -
- - - (3,199) 3,199 0.04
Adjusted Non-GAAP $ 955,144 $
557,191 58.3% $ 239,123 $
59,506 $ 258,562 27.1% $
(13,181) $ 245,381 $ 34,622
$ 210,759 $ 2.52
(a) The Purchased intangibles amortization, a non-cash expense,
was excluded to be consistent with how our management evaluates the
performance of our core business against our historical operating
results and the operating results of our competitors over periods
of time.(b) The non-cash expense associated with accelerating the
vesting of certain stock awards was excluded as the Company
believes these expenses are not indicative of normal operating
costs.(c) Restructuring costs, asset impairments,
acquisition-related costs and certain other items were excluded as
the Company believes that the cost to consolidate operations and
reduce overhead; the cost to complete acquisitions; the non-cash
expense to record asset impairments and certain other income or
expense items are not normal and do not represent future ongoing
business expenses of a specific function or geographic location of
the Company.(d) Certain income tax items were excluded as these
non-cash expenses and benefits represent updates in management's
assessment of ongoing examinations or other tax items that are not
indicative of the Company’s normal or future income tax
expense.
View source
version on businesswire.com: http://www.businesswire.com/news/home/20160726005333/en/
Waters CorporationJohn Lynch, 508-482-2314Vice President,
Treasurer and Investor Relations
Waters (NYSE:WAT)
Historical Stock Chart
From Mar 2024 to Apr 2024
Waters (NYSE:WAT)
Historical Stock Chart
From Apr 2023 to Apr 2024