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Waters Q1 Revenues Up 3 Percent

NEW YORK (GenomeWeb) – Waters reported today that its first quarter rose 3 percent year over year, driven by strong demand for the company's products from the pharmaceutical industry.

The company posted revenues of $475.2 million for the three months ended April 2, compared to $460.4 million in Q1 2014, beating the average Wall Street estimate of $472.2 million.

Currency translation reduced sales growth by around 2 percent, the company said.

On a conference call following the earnings release, Waters President and CEO Christopher O'Connell called the "highlight" of the quarter the 9 percent growth the company saw in sales to the pharmaceutical industry, where growth was most pronounced in regulated testing markets. Sales to the government and academia fell about 1 percent, O'Connell said, adding that "strong shipments of research LC-MS systems in China [were] offset by declines in US and European institutions." The company's industrial business was flat in the quarter.

Waters instrument sales grew 2 percent, driven by "workhorse chromatography systems used for routine pharmaceutical testing applications," O'Connell added. Recurring revenues, which consists of the company's service and consumables businesses, rose 8 percent.

Geographically, the company saw modest growth in developed markets and stronger growth in emerging markets, according to O'Connell. In the US, sales were up 2 percent with US pharma sales growing in the low teens. Europe also posted a 2 percent sales increase, with mid-single digit growth in the pharma and industrial markets offset by lower government and academic sales.

Asia posted an 11 percent growth rate driven by a mid-teens rise in China and a high-teens rise in India, thanks to strong sales into the generic drug segment.

The Milford, Mass.-based company said Q1 earnings fell slightly to $94.1 million, or $1.15 per share, compared to $96.1 million, or $1.15 per share, a year ago. On a non-GAAP basis, Waters reported EPS of $1.26, beating the average analyst estimate of $1.23.

The firm's R&D spending rose 2 percent year over year to $29.4 million from $29.0 million a year ago, while SG&A costs rose 8 percent to $129.4 million from $119.8 million.

The company ended the quarter with $2.5 billion in cash, cash equivalents, and investments.

For the second quarter, Waters said it expects sales growth of 5 percent to 7 percent, and earnings per share of between $1.38 and $1.48. For full-year 2016, it provided guidance of mid-single-digit sales growth before currency translation, and anticipates earnings per share in the $6.20 to $6.40 range. Wall Street analysts are expecting EPS of $1.43 for Q2 and $6.30 for the year.

In Tuesday morning trade on the New York Stock Exchange, shares of Waters fell more than 3 percent to $133.01.