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Waters Q3 Revenues Up 7 Percent

NEW YORK (GenomeWeb) – Waters today reported that its revenues in the third quarter were up 7 percent year over year, driven by solid demand across the company's end markets including particularly strong sales to government and academic customers.

The company posted revenues of $565.6 million, up from $526.8 million in Q3 2016, and beating the average Wall Street estimate of $553.2 million. Waters said that foreign currency translation boosted sales growth by around 1 percent in the quarter.

On a conference call following release of the results, Waters President and CEO Christopher O'Connell said sales growth in the quarter was driven largely by broad-based growth across all the company's end markets with "balanced product growth between instrument systems and recurring revenue."

Waters saw 7 percent growth from its pharma segment during the quarter, 6 percent sales growth from its industrial business, and 15 percent sales growth from its academic and government customers.

From a geographic perspective, Europe led the way with 20 percent sales growth in the quarter. Asia grew by 8 percent, with China and Japan leading the way. Sales were flat in the Americas, with US sales up 1 percent in the quarter.

O'Connell attributed some of the US market's sluggishness to "macroeconomic and governmental policy uncertainties." He noted that particularly in terms of the company's pharma business it had seen a shift towards Europe.

"The pharma business is a very global business and clearly in our experience in the short term we are seeing the larger multinational pharma companies favoring the more friendly operating environment in Europe," he said. "That's obviously driven by a more certain environment on tax and regulation and trade. And so, the US does feel like it has been in a little bit of a wait and see mode."

O'Connell added, however, that in the US Waters was "seeing steady sequential improvement in line with our expectations" and expected to see "continued improvement in US growth trends."

Instrument sales were up 6 percent in the quarter while recurring revenue, the combination of Waters' service and consumables businesses, grew 8 percent in the quarter.

O'Connell said the company had seen both a strong year and quarter for its mass spec business. Demand for higher-end discovery platforms "has been robust," he said, adding that the company was also seeing solid demand from applied markets for instruments in its tandem quadrupole portfolio including its Xevo TQ-S and Xevo TQ-S micro mass specs.

The Milford, Massachusetts-based company posted a profit of $136.1 million, or $1.69 per share, for the quarter compared to a profit of $124.9 million, or $1.53 per share, for Q3 2016. On a non-GAAP basis, Waters had EPS of $1.77, beating analysts' average estimate of $1.74.

The firm's R&D spending was up 11 percent year over year to $33.8 million from $30.4 million a year ago, while SG&A costs were up 9 percent to $135.2 million from $123.9 million.

The company ended the quarter with $3.25 billion in cash, cash equivalents, and investments.

For Q4 2017, Waters said it expects sales growth in the range of 3 to 5 percent and non-GAAP EPS in the range of $2.38 to $2.48.

For full-year 2017, the company said it expects non-GAAP EPS to be in the range of $7.38 to $7.48.

In Tuesday morning trading on the New York Stock Exchange, shares of Waters were down around 2 percent at $183.07.