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Waters Reports Flat Revenues for Q4, 1 Percent Decline for 2019

NEW YORK– Waters on Tuesday reported that its fourth quarter revenues were flat compared to the year-ago period, while full-year revenues declined 1 percent.

For the three months ended Dec. 31, 2019, Waters' total revenues were $716.3 million, up less than 1 percent from $715.0 million in Q4 2018, and above the consensus Wall Street estimate of $714.9 million.

The effect of foreign currency translation decreased Q4 revenues by 1 percent, the company said.

On a conference call following the earnings release, Waters Chairman and CEO Christopher O'Connell said that while the company saw growth in large molecule biopharma and biomedical research, this was offset by softness in its small molecule pharma business as well as sluggish growth in industrial markets and China.

Pharma sales were flat (in constant currency) in the quarter and up 2 percent in full year 2019. Government and academic sales were up 10 percent in Q4 and 3 percent in 2019. Sales to industrial markets were down 1 percent in the quarter and down 2 percent in 2018.

Instrument platform sales declined 3 percent in Q4 and 3 percent in full year 2019 with sales of the company's liquid chromatography instruments declining moderately, O'Connell said.

He said Waters saw growth in mass spec sales in Q4, driven by its recent new product releases.

"Momentum continues to build for the BioAccord as market development activities progressed well across all geographies, producing a strong fourth quarter and furthering our confidence in a multi-year revenue ramp," he said.

O'Connell added that Waters' new Cyclic IMS and SynatP XS "made meaningful contributions to the fourth quarter and were a key reason for the strong academic and government growth."

Waters' recurring revenues grew by 6 percent in Q4 and 5 percent in 2019.

Geographically, sales were flat in Asia during the quarter driven by softness in China and up 3 percent during 2019. In the Americas, revenues were down 1 percent in the quarter and flat for the year, with US sales flat and up 1 percent, respectively. European sales grew 5 percent during the quarter and were flat in 2019.

For q4, Waters posted a net income of $200.7 million, or $3.12 per share, compared to a net income of $185.2 million, or $2.46 per share, in Q4 2018. On an adjusted basis, the company reported EPS of $3.20, up from $2.87 in Q4 of 2018, and beating the consensus Wall Street estimate of $3.01.

R&D spending in the quarter was down 3 percent year over year to $37.1 million from $38.1 million, while SG&A costs fell 1 percent to $141.2 million from $142.9 million.

Revenues for full-year 2019 were down 1 percent year over year to $2.41 billion from $2.42 billion in 2018, meeting the Wall Street estimate.

The effect of foreign currency translation lowered full year 2018 revenues by 2 percent.

Profits for the year were $592.2 million, or $8.69 per share, compared to $593.8 million, or $7.65 per share, in 2018. Adjusted EPS was $8.99, up from $8.29 in 2018, and beating the consensus analyst estimate of $8.81.

For full year 2019, R&D spending was $143.0 million, down less than 1 percent from $143.4 million in 2018. SG&A spending was down less than 1 percent to $534.8 million from $536.9 million the year before.

Waters ended the year with $337.1 million in cash, cash equivalents, and investments.

For Q1 2020, Waters estimates constant current revenue growth of between 0 percent and 2 percent and adjusted EPS in the range of $1.55 to $1.65. Revenue growth for full-year 2020 is expected to be between 1 percent and 3 percent, with adjusted EPS for full-year 2020 anticipated to be between $9.15 and $9.40. Analysts are expecting Q1 earnings of $1.75 per share, and full-year 2019 earnings of $9.80 per share.

In Tuesday morning trading on the New York Stock Exchange, shares of Waters were down 4 percent to $217.71.

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