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Waters Q3 Revenues Up 5 Percent

NEW YORK (GenomeWeb News) – Waters today reported that its revenues in the third quarter were up 5 percent year over year, driven by strong demand from pharma and biotech customers.

The company posted revenues of $526.8 million, up from $500.2 million in Q3 2015, but falling short of the average Wall Street estimate of $533.8 million.

On a conference call following release of the results, Waters President and CEO Christopher O'Connell said sales growth in the quarter was driven largely by broad-based growth in pharma markets, which rose 13 percent in the quarter. The company saw growth from "across all significant pharmaceutical workflows and in all major geographic regions," O'Connell said.

The strong pharma numbers made up for weak sales in industrial and academic and government markets. Industrial sales grew by 1 percent in the quarter, while academic and governmental sales dropped by 15 percent in the quarter.

Academic and governmental sales were particularly soft in Japan, Europe, and the US, O'Connell said. He attributed the results in part to delayed order shipments and added that the company expected "more stability in the fourth quarter."

"The patterns [in academic and government markets] tend to be quite lumpy," O'Connell said, explaining the weak quarter. "There is less recurring revenue in these segments, more oriented towards high-end mass spectrometry."

Academic and governmental sales rose by low-single digits in Asia, excluding Japan.

Instrument sales were up 4 percent in the quarter with particularly strong sales of LC systems with Waters' Acquity Arc module and benchtop tandem quadruple LC-MS systems, O'Connell said.

He added that the quarter saw "an acceleration of sales" for the company's Xevo TQ-S Micro and Xevo TQ-XS triple quadrupole instruments. The company has also seen uptake of its recently introduced Vion IMS QTOF system, he said.

Recurring revenue, the combination of Waters' service and consumables businesses, grew 7 percent in the quarter.

The Milford, Massachusetts-based company posted a profit of $124.9 million, or $1.53 per share, for the quarter compared to a profit of $116.3 million, or $1.40 per share, for Q3 2015. On a non-GAAP basis, Waters had EPS of $1.57, in line with the average analyst estimate.

The firm's R&D spending was down 1 percent year over year to $30.4 million from $30.7 million a year ago, while SG&A costs were down less than 1 percent to $123.9 million from $124.7 million.

The company ended the quarter with $2.71 billion in cash, cash equivalents, and investments.

For Q4 2016 Waters said it expects non-GAAP EPS in the range of $2.08 to $2.18.

For full-year 2016 the company said it expects sales growth of around 6 percent and non-GAAP EPS to be in the range of $6.48 to $6.58.

In Tuesday morning trading on the New York Stock Exchange, shares of Waters were down 8 percent at $144.36.