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Waters Posts 8 Percent Jump in Q4 Revenues, Notes Growing Interest in Clinical Mass Spec

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This story originally ran on Jan. 30.

Waters this week reported Q4 2011 revenues of $521 million, up eight percent from $484 million in Q4 2010, and beating Wall Street estimates of $516.9 million.

For the quarter, the company posted a profit of $137.1 million, or $1.51 per share. On a non-GAAP basis, EPS was $1.56, beating analyst estimates of $1.50 per share. In the year-ago period the company had a profit of $126.6 million, or $1.36 per share, and $1.38 per share on a non-GAAP basis.

In a break with recent trends (PM 1/13/2012), Waters posted solid academic and government sales during the quarter. This segment “held up reasonably well," CEO Douglas Berthiaume said on a call after the release of the company’s earnings, specifically citing shipments of its new Synapt G2-S mass spectrometer.

Berthiaume noted, however, that the company anticipates weak government and academic sales globally in 2012, saying that he expects the segment “is going to grow below average.”

Berthiaume also discussed the company’s clinical mass spec ambitions, saying he expects to see “that area of [Waters’] business grow faster than average over the next five years.”

“I think clinical applications are an interesting area,” he said. “I’d say in the last several years, we have devoted more time and attention to clinical applications than we have historically.”

One example of that attention was Waters’ agreement – announced last week at the Association for Mass Spectrometry's fourth annual Applications to the Clinical Lab meeting – with automation firm Tecan to combine Tecan's Freedom EVO liquid handling platform with its Acquity TQD LC/MS-MS system for running clinical assays (PM 1/20/2012).

The collaboration is aimed primarily at providing a solution for existing clinical applications like immunosuppresant testing, Pat Martell, Waters clinical marketing director, told ProteoMonitor last week. However, an automated LC-MS/MS workflow could also prove useful down the line for protein quantitation purposes such as protein biomarker validation.

“We’ve looked at more opportunities to utilize particularly the power and broad-spectrum capabilities of mass spectrometry to penetrate it to areas that more traditionally use other diagnostic tests,” Berthiaume said this week. “So I would say we’re investing [proportionally] more in that area.”

Among the company’s triple quadrupole mass specs – a variety of instrument commonly used for clinical work – the Xevo TQ-S had the highest sales growth in the quarter, he said.

Waters’ Q4 R&D costs were $23.7 million, up 3 percent from $22.9 million a year ago.

For full-year 2011, revenues were $1.85 billion, up 13 percent from $1.64 billion in 2010, and matching Wall Street estimates.

Profit for the year was $433 million, or $4.69 per share, compared to $381.8 million, or $4.06 per share, in 2010. On a non-GAAP basis, EPS was $4.81 in 2011, up from $4.09 a year ago, and besting analyst estimates of $4.76.

R&D spending for the year was up 9 percent to $92.3 million from $84.3 million.

The company ended 2011 with $1.28 billion in cash, cash equivalents, and short-term investments.

For the first quarter of 2012, Water’s chief financial officer John Ornell gave guidance of 5 percent organic sales growth, adding that currency at today's rate would reduce growth by 2 percent. The firm's EPS on a non-GAAP basis is expected to be between $1.05 and $1.10.

For full-year 2012, Ornell said that sales are expected to increase between 6 percent and 8 percent before currency effects, which would reduce growth by 2 percent at today's currency levels. EPS on a non-GAAP basis for the year is expected to fall to between $5.15 and $5.30.

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