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Waters Q2 Revenues Grow 8 Percent

NEW YORK (GenomeWeb) – Waters today reported that its second quarter revenues were up 8 percent, driven by broad-based growth in instrument and consumables sales and solid demand from the pharmaceutical market.

The company posted Q2 revenues of $536.6 million, up from $494.7 million in Q2 2015 and beating the average Wall Street estimate of $523.4 million. Foreign currency translation did not have a significant impact on revenues, the company said.

Waters reported a profit of $128.2 million, or $1.57 per share, during the quarter, compared to a profit of $105.7 million, or $1.27 per share, a year ago. On a non-GAAP basis, the company had EPS of $1.58, beating the average analyst estimate of $1.45.

On a conference call following release of the company's Q2 earnings, Waters Chairman, President, and CEO Christopher O'Connell said that the firm saw strong demand from its pharma customers, with sales up 12 percent in the quarter. He added that while smaller and specialty pharma firms were the main drivers of growth, the company also saw a mid-single digit rise in sales to its largest pharma customers.

Instrument sales were also solid, growing at a 7 percent clip. In particular, demand was strong for the company's core LC and benchtop LC-MS systems, said O'Connell.

He added that, "on the research mass spec side, interest for our newest benchtop systems including the Xevo QTOF G2-XS… and our newly launched Xevo TQ-XS for demanding quantification applications is increasing as we move into the second half of the year."

However, the company saw some weakness in academic and government markets, which is typically a prime source of demand for high-end research mass spec instrumentation. In the US, governmental and academic spending fell, though this was offset by strong pharmaceutical demand. Academic and government spending also fell significantly in Japan.

Recurring revenues, the combination of the company's services and consumables business, were up 10 percent on the quarter.

Geographically, sales were up in the mid single digits in North America. European sales grew at a low double-digit rate. Sales in Asia grew at a high single-digit rate. Revenues in China were up double-digits in the quarter driven by strong pharma demand and strengthening recurring sales.

Water's R&D spending in Q2 was up 6 percent to $32.6 million from $30.6 million a year ago, while SG&A costs rose 6 percent to $129.6 million from $122.7 million.

The company ended the quarter with $2.6 billion in cash, cash equivalents, and investments.

For the third quarter of 2016 the company anticipates sales growth of around 6 percent, with currency translation boosting this by around 1 percent. It predicted non-GAAP EPS in the range of $1.52 to $1.62.

For full-year 2016 Waters predicted non-GAAP EPS in the range of $6.45 to $6.60.

In morning trading on the New York Stock Exchange, shares of Waters were up 6 percent at $154.20.