This article has been updated to include additional comments from the firm's conference call.
NEW YORK (GenomeWeb News) – Shares of Waters soared in Tuesday afternoon trading after the firm reported earlier today a 10 percent drop in its first-quarter revenues, but an increase in profits and earnings per share that surpassed Wall Street estimates.
The Milford, Mass.-based maker of mass spectrometers, chromatography, and thermal analysis products brought in revenues of $333.1 million for the three-month period ended April 4, compared to revenues of $371.7 million for the first quarter of 2008. It said that the negative impact of foreign currency translation contributed about 5 percent to the year-over-year decline.
"In the first quarter of 2009, the calendar treated our recurring revenues kindly, and we estimate that more selling days added about one to two points of growth to our corporate sales," said Waters Chairman, President, and CEO Douglas Berthiaume during a conference call following the release of the firm's earnings. "Instrument revenue saw our mid-teen decline in the quarter, as demand from industrial chemical accounts and from some developing countries was particularly weak."
However, the firm said that its consumables revenues grew 9 percent year over year.
"Among our larger pharmaceutical customers we saw some capital releases in the first quarter, while others are expected to begin spending later in the year," said Berhtiaume. "Overall, we enjoyed a slight growth in large account spending in the quarter, compared with last year."
The firm's Q1 profit grew to $73.3 million, or $.75 per share, up from $68.5 million, or $.67 per share, year over year.
Waters' revenues came in about $8 million below analysts' consensus estimate for the quarter, but its EPS beat estimates by $.15.
Investors reacted positively to the results, sending Waters' shares up nearly 17 percent at $43.92 on the New York Stock Exchange.
The company's R&D spending declined 8 percent to $18.3 million from $19.8 million, and its SG&A spending fell around 6 percent.
Berthiaume said during the call that the results reflected a tough economic environment and fell in line with expectations. He also added that with the stimulus packages from the US and elsewhere expected to trickle down to the vendor level later in the year and interest in the market in the company's new products, the balance of 2009 may turn out better than had been previously feared.
"I'm cautiously optimistic — emphasis [on] cautious — about the second half of the year," he said. "Someday we may look and determine that the past two quarters were the most difficult for us in this recessionary period …I am, however, encouraged by the potential for our new products in combination with higher research spending associated with various stimulus plans around the world."
In late January, during Waters' fourth-quarter conference call, company officials forecast sales to decline between 3 percent and 8 percent for full-year 2009 to between $1.53 billion and $1.45 billion. To control costs, the company has taken steps to "minimize the bottom line effects of anticipated lower sales," including limiting discretionary travel and freezing hiring and salaries, Berthiaume said at the time.
But today, Waters updated that guidance and company officials now expect sales for 2009 to be between down 4 percent and up 1 percent before, currency effects.
Waters finished the first quarter with $431.3 million in cash, cash equivalents, and short-term investments.