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Waters Q3 Revenues Up 2 Percent, Fall Short of Expectations

NEW YORK (GenomeWeb) – Waters today reported that its revenues in the third quarter were up 2 percent year over year, with the strongest sales coming from the company's Asia-Pacific and academic and government customers.

The company posted revenues of $578 million, up from $565.6 million in Q3 2017, but falling short of the average Wall Street estimate of $587.8 million. Waters said that foreign currency translation decreased 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 cited "weaker than expected performance" in the company's TA instruments product line and the European pharma market as key factors that contributed to the lackluster Q3 earnings.

"Our European growth was challenged in the quarter by pressure within our pharmaceutical end market," he said. "Though we saw improvement in big pharma in the US during the quarter, spending among top pharma customers in Europe remains tempered, with uncertain dynamics heading into the end of 2018."

Further dampening sales was the fact that "the recovery of normalized growth in India is progressing slowly," O'Connell added.

Waters saw 1 percent growth from its pharma segment during the quarter, 2 percent sales growth from its industrial business, and 7 percent sales growth from its academic and government customers.

From a geographic perspective, Asia led the way with 6 percent sales growth in the quarter. Sales in the Americas grew by 2 percent, with flat US sales. Sales were down 3 percent in Europe.

O'Connell said that sales of Waters' "mass spec product line improved modestly compared to the first half of the year," with the company's core tandem quad mass spec portfolio the strongest performing segment of that business, "highlighted by the Xevo TQ-XS" triple quadrupole instrument. He added that the company "saw stabilization in our high-resolution mass spec portfolio" during the quarter.

While sales to clinical markets were down during the quarter, O'Connell highlighted the recently announced launch of Waters' RenataDx mass spec, which the company introduced earlier this month.

Calling it Waters' "next-generation screening system for high-throughput, general-use clinical diagnostics," he described it as a "fully integrated benchtop system" and "an open platform with proven, reliable, and robust performance."

The system is based on the Xevo TQD IVD mass spec and is intended for high-throughput analysis of dried blood spots and other human samples.

The Milford, Massachusetts-based company posted a profit of $141 million, or $1.83 per share, for the quarter compared to a profit of $136.1 million, or $1.69 per share, for Q3 2017. On a non-GAAP basis, Waters had EPS of $1.92, beating analysts' average estimate of $1.90.

The firm's R&D spending was up 4 percent year over year to $35.2 million from $33.8 million a year ago, while SG&A costs were down 6 percent to $127 million from $135.2 million.

The company ended the quarter with $2.08 billion in cash, cash equivalents, and investments.

For Q4 2018, Waters said it expects sales growth in the range of 3 to 4 percent and non-GAAP EPS in the range of $2.55 to $2.65.

For full-year 2018, the company said it expects non-GAAP EPS to be in the range of $8.00 to $8.10, below its previous guidance of $8.05 to $8.20.

In Tuesday morning trading on the New York Stock Exchange, shares of Waters were down around 7 percent at $173.33.