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Waters Q2 Revenues Fall 13 Percent, Beat Wall Street Estimate

NEW YORK – Waters reported on Tuesday that its second quarter revenues were down 13 percent year over year.

For the three months ended June 29, the company posted revenues of $520.0 million, down 13 percent from $599.2 million in Q2 2019, but above the average Wall Street estimate of $496.9 million. Foreign currency translation depressed revenues by 1 percent, the company said.

By end market, pharma sales were down 3 percent to $311.0 from $350.1 million; government and academic sales fell 22 percent to $56.9 million from $72.9 million; and industrial sales fell 14 percent to $152.1 million from $176.1 million.

Waters' recurring revenues, which include its services and consumables businesses, fell 4 percent during the quarter to $300.2 million from $312.2 million, while instrument sales were down 23 percent to $219.8 million from $287.0 million .

Waters President and CEO Christopher O'Connell said on a conference call following release of the Q2 earnings that the results "reflected modestly better market conditions than we had anticipated" as well as an "increasing impact of new products." He highlighted the company's recently launched BioAccord and Cyclic IMS mass spectrometry instruments, which he said showed "increasing evidence of traction" in the market.

He added that while the SARS-CoV-2 pandemic would continue to impact the company's business, "we believe that our end markets and geographies will see modestly better conditions in the second half of 2020 than they did in the first half," though he noted that the company does not expect revenue growth to become positive until 2021.

O'Connell said that Waters' top global pharma accounts grew in the second quarter. He said that cXos and large-molecule pharma customers were leading the recovery while generic and specialty pharma customers were lagging. He said that industrial markets had been slower to recover than pharma and that academic and government customers were behind corporate customers in their recovery.

O'Connell said Waters considered all of its major geographies to be in the recovery phase with regard to the SARS-CoV-2 pandemic, though he noted that the speed of that recovery varied, with China, South Korea, and parts of Europe recovering more quickly than countries like the US, Japan, and India.

O'Connell also noted that Waters had now returned nearly all employees it had placed on furlough back to work and had restored full hours and salaries for its employees.

Waters' Q2 net income was $122.9 million, or $1.98 per share, compared to $144.4 million, or $2.08 per share, a year ago. On a non-GAAP basis, the company reported EPS of $2.10, beating the analysts' average estimate of $1.54.

During the call, Waters CFO Sherry Buck said the company is not providing full year 2020 guidance due to the uncertainty caused by the pandemic.

She also noted that the company's share buyback program remains on hold.

Water's R&D spending in Q2 was down 15 percent to $31.2 million from $36.5 million a year ago, while SG&A costs fell 12 percent to $117.4 million from $133.2 million.

The company ended the quarter with $355.8 million in cash, cash equivalents, and investments.

In morning trading on the New York Stock Exchange, shares of Waters were down 2 percent to $222.10.

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