Company Delivers Fourth Quarter Revenue of
$629 Million and Diluted GAAP EPS of $2.15 (Non-GAAP EPS of
$2.21)
- Quarterly sales grew 7% as reported (9%
in constant currency)
- Growth was balanced across all customer
and product categories
- Asia Pacific and Europe led strong
global growth
- Fourth quarter capped strong full year
performance
Waters Corporation (NYSE: WAT) reported fourth quarter 2016
sales of $629 million, a 7% increase versus sales of $587 million
in the fourth quarter of 2015. Foreign currency translation reduced
sales growth by 2% in the quarter. On a GAAP basis, earnings per
diluted share (EPS) for the fourth quarter was up 17% to $2.15
compared to $1.83 for the fourth quarter of 2015. On a non-GAAP
basis, including the adjustments in the attached reconciliation,
EPS increased 13% to $2.21 from $1.96 in the fourth 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.”
For the full year, sales for the Company were $2,167 million, up
6% compared with sales of $2,042 million in 2015. Foreign currency
translation reduced sales growth by 1% in the year. On a GAAP
basis, EPS for 2016 was up 13% to $6.41 compared to $5.65 in 2015.
On a non-GAAP basis and including adjustments in the attached
reconciliation, EPS increased 12% to $6.62 in 2016 as compared to
$5.89 in 2015.
Commenting on the Company’s performance, Christopher J.
O’Connell, President and Chief Executive Officer said, “I am
pleased to report that our fourth quarter featured broad-based
sales growth across our major markets, and balance across all
product lines. The global Waters team executed well throughout 2016
and delivered strong financial results, while we continued to
invest for future growth.”
Unless otherwise noted, sales growth percentages are presented
on an as reported basis and are the same as the sales growth
percentages presented on a constant currency basis, each of which
are detailed in the attached reconciliation of GAAP to non-GAAP
sales.
Results from the Company’s markets in the quarter were
highlighted by 4% sales growth (6% in constant currency) from the
broadly defined pharmaceutical market, 13% sales growth (14% in
constant currency) from the industrial market, and 5% sales growth
(6% in constant currency) from the governmental and academic
market. For the full year, sales to the pharmaceutical market grew
9% (10% in constant currency), sales to the industrial market grew
6%, and sales to the governmental and academic market fell 4% (3%
in constant currency).
Geographically, sales during the quarter grew 16% in Asia, 5% in
Europe (9% in constant currency), and 1% in the Americas (2% in
constant currency). For the full year, sales grew 13% in Asia (12%
in constant currency), 4% in Europe (6% in constant currency), and
2% in the Americas (3% in constant currency).
The Company’s recurring revenues, the combination of service and
chemistry consumables, posted 7% sales growth (8% in constant
currency), while instrument system sales grew 7% (9% in constant
currency) in the quarter. For the full year, the Company's
recurring revenues grew 8%, while instrument system sales grew by
4% (6% in constant currency).
As communicated in a prior press release, Waters Corporation
will webcast its fourth quarter 2016 financial results conference
call this morning, January 24, 2017 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
January 31, 2017 at midnight eastern time, similarly by webcast and
also by phone at 203-369-1050.
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 diluted share and adjusted operating income, 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, 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; the affect on the Company’s financial
results from the United Kingdom voting to exit the European Union;
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 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)
December 31, 2016 December 31, 2015
Cash, cash equivalents and investments $ 2,813,032 $
2,399,263 Accounts receivable 489,340 468,315 Inventories 262,682
263,415 Property, plant and equipment, net 337,118 333,355
Intangible assets, net 207,055 218,022 Goodwill 352,080 356,864
Other assets 200,752 229,443 Total assets $ 4,662,059 $ 4,268,677
Notes payable and debt $ 1,827,263 $ 1,668,336 Other
liabilities 532,847 541,490 Total liabilities 2,360,110 2,209,826
Total equity 2,301,949 2,058,851 Total liabilities and
equity $ 4,662,059 $ 4,268,677
Waters Corporation
and Subsidiaries Consolidated Statements of Operations
(In thousands, except per share data) (Unaudited)
Three Months Ended Twelve Months Ended December
31, 2016 December 31, 2015 December 31, 2016
December 31, 2015 Net sales $ 628,787 $ 586,610 $
2,167,423 $ 2,042,332 Costs and operating expenses: Cost of
sales 251,579 237,915 891,453 842,672 Selling and administrative
expenses 130,238 128,681 513,031 495,747 Research and development
expenses 32,753 28,336 125,187 118,545 Acquired in-process research
and development - 3,855 - 3,855 Purchased intangibles amortization
2,358 2,576 9,889 10,123 Litigation provisions 3,524 3,939 3,524
3,939 Operating income 208,335 181,308 624,339 567,451
Interest expense, net (5,756 ) (6,070 ) (24,225 ) (25,532 )
Income from operations before income taxes 202,579 175,238
600,114 541,919 Provision for income taxes 28,201 24,184
78,611 72,866 Net income $ 174,378 $ 151,054 $ 521,503 $
469,053 Net income per basic common share $ 2.17 $
1.85 $ 6.46 $ 5.70 Weighted-average number of basic common
shares 80,366 81,650 80,786 82,336 Net income per
diluted common share $ 2.15 $ 1.83 $ 6.41 $ 5.65
Weighted-average number of diluted common shares and equivalents
80,954 82,382 81,417 83,087
Waters Corporation and Subsidiaries Reconciliation
of GAAP to Adjusted Non-GAAP Net Sales by Operating Segment,
Products & Services, Geography and Markets Three Months
Ended December 31, 2016 and December 31, 2015 (In
thousands) Constant Three Months
Ended Percent Currency Currency
December 31, 2016 December 31, 2015 Change
Impact Growth Rate (a) NET SALES -
OPERATING SEGMENT Waters $ 554,226 $ 509,393 9 % $ (8,057 )
10 % TA 74,561 77,217 (3 %) (789 ) (2 %)
Total $ 628,787 $
586,610 7 % $ (8,846 )
9 % NET SALES - PRODUCTS & SERVICES
Instruments $ 352,717 $ 329,568 7 % $ (6,370 ) 9 %
Service 185,969 173,196 7 % (2,999 ) 9 % Chemistry 90,101
83,846 7 % 523 7 % Total Recurring 276,070
257,042 7 % (2,476 ) 8 %
Total $ 628,787 $ 586,610
7 % $ (8,846 ) 9 %
NET SALES - GEOGRAPHY Americas $ 222,422 $
219,676 1 % $ (1,189 ) 2 % Europe 180,717 171,967 5 % (6,912 ) 9 %
Asia 225,648 194,967 16 % (745 ) 16 %
Total $ 628,787 $
586,610 7 % $ (8,846 )
9 % NET SALES - MARKETS
Pharmaceutical $ 335,075 $ 320,764 4 % $ (5,274 ) 6 % Industrial
210,899 186,708 13 % (2,404 ) 14 % Government & Academic 82,813
79,138 5 % (1,168 ) 6 %
Total $ 628,787 $ 586,610
7 % $ (8,846 ) 9 %
(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
Net Sales by Operating Segment, Products & Services,
Geography and Markets Twelve Months Ended December 31, 2016
and December 31, 2015 (In thousands)
Constant Twelve Months Ended Percent
Currency Currency December 31, 2016
December 31, 2015 Change Impact Growth
Rate (a) NET SALES - OPERATING SEGMENT
Waters $ 1,928,063 $ 1,806,868 7 % $ (12,733 ) 7 % TA 239,360
235,464 2 % (880 ) 2 %
Total $ 2,167,423 $ 2,042,332
6 % $ (13,613 ) 7
% NET SALES - PRODUCTS & SERVICES
Instruments $ 1,114,883 $ 1,067,315 4 % $ (11,654 ) 6 %
Service 707,127 657,076 8 % (4,848 ) 8 % Chemistry 345,413
317,941 9 % 2,889 8 % Total Recurring
1,052,540 975,017 8 % (1,959 ) 8 %
Total $ 2,167,423 $
2,042,332 6 % $ (13,613 )
7 % NET SALES - GEOGRAPHY
Americas $ 807,182 $ 790,483 2 % $ (4,287 ) 3 % Europe 577,257
555,886 4 % (9,352 ) 6 % Asia 782,984 695,963 13 % 26 12 %
Total $
2,167,423 $ 2,042,332 6 %
$ (13,613 ) 7 %
NET SALES - MARKETS Pharmaceutical $ 1,206,316 $ 1,106,229 9
% $ (9,827 ) 10 % Industrial 690,119 653,213 6 % (1,281 ) 6 %
Government & Academic 270,988 282,890 (4 %) (2,505 ) (3 %)
Total $
2,167,423 $ 2,042,332 6 %
$ (13,613 ) 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 Twelve
Months Ended December 31, 2016 and December 31, 2015 (In
thousands, except per share data)
Income from
Operations Selling & Research &
Operating before Provision for Diluted
Administrative Development Operating
Income Income Income Net
Earnings Expenses(a)
Expenses(a) Income Percentage
Taxes Taxes Income
per Share Quarter Ended December 31, 2016 GAAP
$ 136,120 $ 32,753 $
208,335 33.1 % $ 202,579
$ 28,201 $ 174,378 $ 2.15
Adjustments: Purchased intangibles
amortization (b)
(2,358 ) - 2,358 0.4 % 2,358 661 1,697 0.02 Restructuring costs,
asset impairments,
acquisition-related costs
& certain other items (d)
(304 ) - 304 0.0 % 304 312 (8 ) - Litigation provisions (f) (3,524
) - 3,524 0.6 % 3,524 1,321 2,203 0.03 Certain income
tax items (g)
- - - - -
(739 ) 739 0.01
Adjusted
Non-GAAP $ 129,934 $ 32,753
$ 214,521 34.1 % $
208,765 $ 29,756 $
179,009 $ 2.21 Quarter Ended
December 31, 2015 GAAP $ 135,196 $
32,191 $ 181,308 30.9 % $
175,238 $ 24,184 $ 151,054
$ 1.83 Adjustments: Purchased intangibles
amortization (b)
(2,576 ) - 2,576 0.4 % 2,576 729 1,847 0.02 Restructuring costs,
asset impairments,
acquisition-related costs
& certain other items (d)
(2,435 ) - 2,435 0.4 % 2,435 606 1,829 0.02 Acquired in-process
research and development (e) - (3,855 ) 3,855 0.7 % 3,855 786 3,069
0.04 Litigation provisions (f) (3,939 ) - 3,939 0.7 % 3,939 1,478
2,461 0.03 Certain income
tax items (g)
- - - - -
(959 ) 959 0.01
Adjusted
Non-GAAP $ 126,246 $ 28,336
$ 194,113 33.1 % $
188,043 $ 26,824 $
161,219 $ 1.96 Twelve Months
Ended December 31, 2016 GAAP $ 526,444
$ 125,187 $ 624,339 28.8
% $ 600,114 $ 78,611 $
521,503 $ 6.41 Adjustments: Purchased
intangibles
amortization (b)
(9,889 ) - 9,889 0.5 % 9,889 2,864 7,025 0.09 Stock award
modification (c)
(7,085 ) - 7,085 0.3 % 7,085 2,657 4,428 0.05 Restructuring costs,
asset impairments,
acquisition-related costs
& certain other items (d)
(6,856 ) - 6,856 0.3 % 6,856 2,812 4,044 0.05 Litigation provisions
(f) (3,524 ) - 3,524 0.2 % 3,524 1,321 2,203 0.03 Certain income
tax items (g)
- - - - -
135 (135 ) -
Adjusted Non-GAAP
$ 499,090 $ 125,187
$ 651,693 30.1 % $
627,468 $ 88,400 $
539,068 $ 6.62 Twelve Months
Ended December 31, 2015 GAAP $ 509,809
$ 122,400 $ 567,451 27.8
% $ 541,919 $ 72,866 $
469,053 $ 5.65 Adjustments: Purchased
intangibles
amortization (b)
(10,123 ) - 10,123 0.5 % 10,123 2,888 7,235 0.09 Restructuring
costs,
asset impairments,
acquisition-related costs
& certain other items (d)
(7,455 ) - 7,455 0.4 % 7,455 2,377 5,078 0.06 Acquired in-process
research and development (e) - (3,855 ) 3,855 0.2 % 3,855 786 3,069
0.04 Litigation provisions (f) (3,939 ) - 3,939 0.2 % 3,939 1,478
2,461 0.03 Certain income
tax items (g)
- - - - -
(2,326 ) 2,326 0.03
Adjusted
Non-GAAP $ 488,292 $ 118,545
$ 592,823 29.0 % $
567,291 $ 78,069 $
489,222 $ 5.89
(a) Selling & administrative expenses include purchased
intangibles amortization and litigation provisions. Research &
development expenses include acquired in-process research and
development.(b) The Purchased intangibles amortization, a non-cash
expense, was excluded to be consistent with how management
evaluates the performance of its core business against historical
operating results and the operating results of competitors over
periods of time.(c) 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.(d) 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.(e) Acquired In-Process Research and Development was
excluded as it relates to milestone payments associated with a
licensing arrangement for mass spectrometry that the Company
believes is infrequent, unusual and not indicative of its normal
business operations.(f) Litigation Provisions were excluded as
these costs are isolated, unpredictable and not expected to recur
regularly.(g) 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/20170124005421/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