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Waters' Q1 Revenues Rise 12 Percent

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 first-quarter revenues increased 12 percent, aided by a 6 percent contribution from foreign currency translation, while profits climbed 22.5 percent.
The Milford, Mass.-based manufacturer of mass spectrometers and chromatography instruments brought in revenues of $371.7 million for the three-month period ended March 29 versus $330.8 million in the first quarter of 2007. It noted that foreign currency translation contributed 6 percent to the sales growth rate.
Waters posted a first-quarter profit of $68.5 million, or $.67 per share, compared to a profit of $55.9 million, or $.54 per share, for the first quarter of 2007.
The firm’s R&D expenses increased 5.9 percent year over year to $19.8 million from $18.7 million. Its SG&A costs rose 12.7 percent to $105.8 million from $93.9 million.
“Despite challenging economic conditions, our global sales performance in combination with improvements in operational efficiency delivered impressive earnings growth and strong cash generation,” Doug Berthiaume, chairman, president, and CEO of Waters, said in a statement.
Berthiaume said during the firm’s conference call today that Waters’ organic growth rate was “lighter than we expected” due to delays in spending among some of its pharmaceutical customers and continued weakness in the Japanese market.

Berthiaume said spending among pharmaceutical customers in Europe was lower than expected, and the firm had flat revenue growth among North American pharma firms. He said Waters expects sales to both European and North American drug firms will pick up as the year progresses.

“We are cautiously optimistic our pharma business will improve,” said Berthiaume, adding that the firm has seen an increase in order activity in the first few weeks of the second quarter. "There continues to be high-quote activity, and there continues to be late-blossoming real business out of those accounts.”

Berthiaume stressed that he believes the lower organic growth is due to spending delays and not from competitors taking business from Waters. “Overwhelmingly, it’s delays versus lost business," he said.
"We’re not seeing any competitive thrust particularly against things like Acquity, particularly in things like the high-end research-grade mass spectrometers,” said Berthiaume. “I’m not seeing any significant penetration [by competitors] in our traditional dominant accounts.”
Waters is predicting 6 percent to 8 percent organic sales growth for 2008, and currency will add another roughly 4 percent to that growth, said CFO John Ornell. The firm expects second-quarter sales growth of 11 percent to 13 percent, while its earnings per share is expected to be between $.69 and $.73, he said.
Waters finished the quarter with $758.5 million in cash, cash equivalents, and short-term investments.
Its shares were up 5.9 percent at $57.75 in mid-afternoon trade on the New York Stock Exchange.

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