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Waters' Q1 Revenues Slide 2 Percent

NEW YORK (GenomeWeb News) – Waters today reported a 2 percent decline year over year in revenues for the first quarter, missing Wall Street estimates on the top and bottom line.

For the three months ended March 31, the company posted $420.5 million in total revenues, down from $427.6 million a year ago, and short of consensus analyst estimates of $441.8 million. Foreign currency translation reduced sales growth by 2 percent, Waters said.

In a statement, Waters President, Chairman, and CEO Doug Berthiaume said that top-line results were hurt by weaker sales in certain developing markets as well as reluctance by several larger pharmaceutical firms to release their capital budgets.

"In Western Europe and North America delays in the release of capital budgets by larger multinational drug firms resulted in a slower sales growth rates," Berthiaume said on a conference call following the release of the results. "The effect of these delays was most meaningful to our business in the US."

"Europe and the US overall had similar dynamics, similar disappointments in the output of large pharma," he added.

In addition, Berthiaume said the firm had anticipated soft governmental spending. "The weakness in the government-academic segment affects the high-end mass spec and we certainly saw that," he said. "We are not anticipating that to change too much, [but] we do think the pharma segment should improve as we go through the year."

Berthiaume also noted that Waters' instrument sales in India "declined rather sharply due to the residual budgetary effects of a weaker rupee and deferments in capital spending at both generic drug makers and CROs." He said, however, that the firm is "encouraged by an improving trend that we've begun to see early in the second quarter."

Offsetting those difficulties, Berthiuame noted that the company saw strong growth in applied markets including clinical diagnostics.

Waters' R&D costs for the quarter rose 4 percent year over year to $23.3 million from $22.3 million, while SG&A spending was flat at $117.1 million.

Waters recorded a profit of $88.7 million, or $.98 per share, for the first quarter, down from $94.5 million, or $1.01 per share, a year ago. Non-GAAP EPS was $1, missing Wall estimates of $1.09.

The Milford, Mass.-based firm ended the quarter with $1.35 billion in cash, cash equivalents, and short-term investments.

Waters CFO John Ornell said on the call that the firm expects sales growth of between 5 percent and 7 percent for the rest of the year. He expects sales in Europe to grow in the low-single digits and sales in the US to grow in the in the mid-single digits for the remainder of the year.

In early morning trading today on the New York Stock Exchange, shares of Waters were down 8 percent at $81.24.

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