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Waters Q3 Revenues Up 3 Percent

NEW YORK – Waters reported on Tuesday that its revenues in the third quarter were up 3 percent.

Waters posted revenues of $593.8 million in Q3 compared to $577.3 million in Q3 2019 and beating the average Wall Street estimate of $546.5 million. Waters said that foreign currency translation boosted sales growth by around 1 percent in the quarter.

On a conference call following release of the results, Waters President and CEO Udit Batra said that the company benefited in the third quarter from "catch-up of revenues" that were delayed in the first half of the year. He added that "while customer activity and access are improving, we remain cautious," noting that COVID-19 continued to cause uncertainty in many of the company's end markets and that it was uncertain about levels of capital spending in Q4.

Globally, results were mixed, with sales in Asia down 1 percent during the quarter, European sales up 11 percent, and sales in the Americas up 2 percent with US sales up 5 percent.

Waters saw 5 percent growth from its pharma segment during the quarter, 5 percent growth from its industrial business, and an 8 percent decline in sales from its academic and government customers.

The company's instrument sales were down 1 percent in the quarter. Recurring revenues were up 6 percent.

Batra, who was previously CEO of MilliporeSigma, the life sciences arm of Merck, took over on Sept. 1, 2020, succeeding former Waters CEO Christopher O'Connell. During the call he gave his thoughts on factors he thought had contributed to the company's struggles in recent years including a failure to respond to changes in China's food testing business, as well as slow uptake of recent LC and mass spec releases like its BioAccord system, and a failure to "to keep up with emerging trends like bioprocessing, contract manufacturing, and testing or diagnostics."

He cited Waters' limited participation in SARS-CoV-2 testing as an example of its lack of investment in diagnostics.

Batra said that in the near-term he was focused on regaining Waters' position in LC instrumentation. Additionally, he said the company planned to put in more effort and work with customers on method development for its BioAccord system in hopes of driving sales of that platform.

The Milford, Massachusetts-based company posted a Q3 profit of $126.8 million, or $2.03 per share, compared to a profit of $138.1 million, or $2.07 per share, for Q3 2019. On a non-GAAP basis, Waters had EPS of $2.16, beating analysts' average estimate of $1.93.

The firm's R&D spending was up 2 percent year over year to $35.0 million from $34.3 million, while SG&A costs were up 7 percent to $135.4 million from $126.0 million.

The company ended the quarter with $397.1 million in cash, cash equivalents, and investments.

During the call, Waters CFO Sherry Buck said the company was not providing detailed guidance due to uncertainty from the COVID-19 pandemic, but she said that it anticipated Q4 revenues would decline by low to mid-single digits year over year.

In Tuesday morning trading on the New York Stock Exchange, shares of Waters were up around 4 percent to $228.93.

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