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Waters Officials Cite Emerging Markets, Industrial Applications for 13 Percent Q2 Revenues Rise

This article has been updated to include comments from a conference call and a stock quote.
NEW YORK (GenomeWeb News) – Waters today reported that its second-quarter revenues rose 13 percent, or 7 percent excluding the effect of foreign currency translation, while its net earnings jumped 38.7 percent year over year.
Company officials cited strength in emerging markets, particularly Asia, and in sales of instruments for industrial applications as key drivers of revenue growth, while its core pharmaceutical market remained challenging.
Waters Chairman, President, and CEO Douglas Berthiaume said during a conference call today that the firm prospered during the quarter even though it faced the “toughest conditions we’ve seen in our industry in years.”

“The key drivers of sales growth in the second quarter were strong demand from developing markets in Asia, continued expansion of our industrial businesses, and another impressive quarter for our TA Instruments division,” he said.

Berthiaume said that demand from pharmaceutical customers was in line with the firm’s expectations and was flat with the prior year’s results.

He noted that instrumentation sales growth “was pretty evenly balanced” between Waters’ chromatography and mass spec systems, with the firm’s Acquity UPLC and tandem quadrupole instruments having stronger revenue growth, “especially outside the classical pharmaceutical applications.”

Sales in the US were up 6 percent in the second quarter, while sales in Europe were up 3 percent and sales in Japan fell 6 percent. Sales for Asia, excluding Japan, were up 22 percent.

Company officials said instrument systems sales grew 3 percent for Q2, while service and chemistries sales increased 11 percent year over year.

Waters’ TA Instruments division had revenue growth of 15 percent for the quarter.

The Milford, Mass.-based manufacturer of chromatography, mass spectrometry, and thermal analysis systems posted a profit of $83.1 million, or $.82 per share, for the three months ended June 28, compared to net earnings of $59.9 million, or $.59 per share, for the second quarter of 2007.
Waters’ R&D costs increased 16.2 percent to $22.2 million from $19.1 million, while its SG&A expenses climbed 9.5 percent to $111.9 million from $102.2 million.
The firm finished the quarter with $830.7 million in cash, cash equivalents, and short-term investments.
Waters expects full-year 2008 sales growth of 6 percent to 8 percent, excluding currency effects, CFO John Ornell said during the conference call, while currency translation is expected to add another 5 percent growth. Company officials expect the firm to report earnings per share of between $3.25 and $3.35 for the year.

However, Berthiaume sounded a cautionary note regarding spending by Waters' pharmaceutical customers.

“We’re not expecting a robust improvement in the pharmaceutical world [in the second half of 2008],” said Berthiaume. “I would tell you that some of the pharmaceutical accounts are talking about a better second half, that they have delayed investments … [but] we’re not taking a significant amount of that to the bank in our forecast.”
In Tuesday afternoon trade on the New York Stock Exchange, shares of Waters were up 10.3 percent at $68.74.

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