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Waters Q1 Revenues Down 3 Percent

NEW YORK (GenomeWeb) – Waters reported today that its first quarter revenues fell 3 percent year over year, as the company saw weak sales in China and Europe and within its TA instruments division.

Waters posted revenues of $513.9 million for the quarter compared to $530.7 million in Q1 2018, below the average Wall Street estimate of $545.3 million.

Currency translation decreased sales growth by around 3 percent, the company said.

On a conference call following the earnings release, Waters President and CEO Christopher O'Connell said the company's first quarter results were weaker than expected mainly due to slow sales in China and Europe as well as sluggish performance by the company's TA instruments division.

In China, O'Connell said restructuring of the company's food safety infrastructure as well as a slowdown in its generic pharma business impacted Waters' revenues, while in Europe the company suffered from a pullback in capital spending, particularly in industrial applications and among its small molecule pharma customers.

The company's TA instruments sales were down globally, with particular weakness in Europe, O'Connell said.

Waters' instrument sales were down 4 percent overall, with the company's mass spec business facing what O'Connell characterized as "modest pressure." He said that it has seen improved demand for its high-resolution mass spec products.

Waters' recurring revenues were up 4 percent.

From a geographic perspective, Asia-Pacific revenues were up 2 percent, with sales in China down 4 percent. The Americas were flat with US revenues up 2 percent. European sales were down 5 percent, with a drop in the company's industrial business driving much of that decline.

O'Connell said that looking forward he expected to see a rebound in the company's pharma business over the course of the year, noting that he expected it would return to "what might be more traditionally normal growth rates."

He also highlighted the recent launch of Waters' BioAccord LC-MS system for biopharma analysis and the forthcoming launch of its new cyclic ion mobility high-resolution mass spectrometer as potential growth drivers.

The Milford, Massachusetts-based company said Q1 net income fell to $109 million, or $1.51 per share, compared to $112 million, or $1.40 per share, a year ago. On a non-GAAP basis, Waters reported EPS of $1.60, below analysts' average estimate of $1.72.

The firm's R&D spending rose 2 percent year over year to $35.1 million from $34.5 million, while SG&A costs rose 3 percent to $134.3 million from $130.4 million.

CFO Sherry Buck said on the call that during the quarter the company repurchased 3.3 million shares of common stock for $745 million as part of a share buyback program authorized last year, under which it can purchase $3.53 billion of its common stock over a three-year period.

The company ended the quarter with $1.2 billion in cash, cash equivalents, and investments.

Waters gave Q2 2019 guidance of 2 percent to 4 percent sales growth and earnings per share of $2.05 to $2.15. For full-year 2019, it said it anticipates sales growth of between 2 and 4 percent and earnings per share in the $9.05 to $9.25 range, down from its prior guidance of 4 percent to 6 percent growth and EPS of $9.20 to $9.45. Wall Street analysts, on average, are expecting EPS of $9.34 for the year.

In Tuesday morning trade on the New York Stock Exchange, shares of Waters were down 17 percent to $200.96.