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As Expected, Waters' Q4 Revenues Drop 4 Percent

This article has been updated with comments from a company conference call.

NEW YORK (GenomeWeb News) – Waters this morning reported that its fourth-quarter 2008 revenues were $418 million, down 4 percent from revenues of $437 million in the fourth quarter of 2007. Excluding a negative foreign currency translation of 4 percent, its revenues were flat year over year.

The Milford, Mass.-based maker of mass spectrometers, chromatography, and thermal analysis products earlier this month warned that its fourth-quarter revenues would fall short of earlier expectations and within a range of $410 million and $420 million. At the time, Waters said the results were due to "anticipated sales volume resulting from weaker global economic conditions, constrained capital spending, and unfavorable foreign currency translation impacts."

Company officials said during a conference call today that instrument sales fell 5 percent during the fourth quarter due to a "tougher spending environment for large-ticket instruments," said Waters Chairman, President and CEO Doug Berthiaume. Looking ahead to full-year 2009, total instrument sales are expected to shrink in the mid- to high-single digits, company officials said.

The company's profit for the quarter was up less than 1 percent at $99.4 million, or $1.01 per share, from $98.9 million, or $.98 per share, in Q4 2007.

Waters' R&D spending dipped around 6 percent year over year to $19.6 million from $20.8 million, while its SG&A expenses were nearly flat at $101.5 million versus $102 million last year. This year's financials also includes a $6.5 million litigation provision related to an ongoing dispute with Agilent Technologies.

Berthiaume today reiterated comments that he made at the recent JPMorgan Healthcare Conference, saying in a company statement, "The challenges that we faced in the fourth quarter reflect the tougher economic environment that we are likely to continue to encounter in 2009."

For full-year 2008, Waters' revenues grew 7 percent to $1.58 billion from $1.47 billion, aided by a 2 percent benefit from currency translation. Its net income for the year jumped 17 percent to $322.5 million, or $3.25 per share, from $268.1 million, or $2.67 per share, in 2007. The firm's R&D expenses edged up 1 percent to $81.6 million from $80.6 million, while its SG&A expenses for the year increased 6 percent to $426.7 million from $403.7 million.

Waters finished the year with $428.5 million in cash, cash equivalents, and short-term investments.

Company officials forecast sales to decline between 3 percent and 8 percent for full-year 2009 to between $1.53 billion and $1.45 billion. To control costs, the company has taken steps to "minimize the bottom line effects of anticipated lower sales," including limiting discretionary travel and freezing hiring and salaries, Berthiaume said.

"We think right now, we’re on the prudent side of the spending," he said.

Tony Fong contributed reporting for this article.