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Waters' Q2 Revenues Rise 8 Percent

By a GenomeWeb staff reporter

NEW YORK (GenomeWeb News) – Waters reported today an 8 percent increase in second-quarter revenues, which the firm partially attributed to "significantly improved" sales to pharmaceutical customers.

For the three months ended July 3, Waters said that revenues rose to $391.1 million, compared to $362.8 million in the year-ago period. Its net income increased 21 percent to $84.9 million, or $0.90 per share, from $70 million, $0.72 per share, in Q2 2009.

Wall Street had estimated revenues of $389.5 million and EPS of $0.90.

Waters' R&D costs rose to $20.8 million from $19.7 million a year ago, the company said, and SG&A spending receded to $106.9 million from $109.6 million in Q2 2009.

The company reported cash, cash equivalents, and short-term investments of $754.5 million as of July 3.

In the Waters division, instrument sales were up 8 percent year-over-year and recurring revenue sales rose 7 percent year-over-year excluding the effects of foreign exchange, said Waters CFO John Ornell in a conference call following the company's earnings release.

During the call, Waters President and CEO Douglas Berthiaume said, "From many perspectives, we're pleased with our second-quarter performance," and cited sales of newly introduced instrument systems and a "broad-based improvement in customer demand" as notable contributors to the company's performance in the quarter.

While US stimulus-related spending continued to be slow — similar to what Waters reported in the first quarter — pharmaceutical sales "significantly improved." The Waters division's total pharma business grew in the double-digits, according to Berthiaume.

Sales to its pharma customers is particularly important to Waters because they make up more than half of total sales in the Waters division, and the improvement in the business contributed "most meaningfully to the division's growth in the second quarter," Berthiaume said.

The company's largest pharmaceutical accounts continued to struggle with acquisitions and restructuring within the industry, he said, and compared to year-ago figures were down. But Waters' CRO, specialty biopharma, and generic business "much more than offset" softness in its large pharma business, he added.

The Synapt high-end mass spectrometer platform and Acquity UPLC system continued to be Waters' "star performers" during the quarter, and the Acquity UPLC H-Class instrument, introduced in January, "has made significant inroads in opening the pharmaceutical QC market to UPLC technology, and we are confident that this trend will continue in the second half of 2010 and beyond," Berthiaume said.

For the second half of the year, Ornell said that sales are anticipated to grow at an average of 7 percent on a currency-neutral basis, with third-quarter growth faster than fourth-quarter growth.

On a non-GAAP basis, the firm's third-quarter EPS is projected to be between $0.93 and $0.97, Ornell said.

For full-year 2010, organic sales growth is projected at between 7 percent and 8 percent, with currency translation tamping down sales by about 1 percent. On a non-GAAP basis, full-year EPS is projected at between $3.92 and $4.02.

A quarter ago, the company had issued guidance for full-year 2010 of sales growth between 5 percent and 7 percent on a currency-neutral basis.

In early morning trade Wednesday on the New York Stock Exchange, shares of Waters were up 5 percent at $66.15.

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