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Waters Posts Flat Q1 Revenues

NEW YORK (GenomeWeb News) – Waters today reported that its revenues in the first quarter were essentially flat year over year, due to slower than expected growth in Asia and delays in the release of capital budgets in the US.

The company posted revenues of $430.5 million, compared to $430.3 million in Q1 2013, short of the average Wall Street estimate of $447.5 million.

On a conference call following the release of the company's earnings, Waters Chairman, President, and CEO Douglas Berthiaume, said that the first quarter results were "significantly weaker than what we expected," and attributed this largely to spending delays at US pharmaceutical firms and ordering delays in China and Latin America, "primarily from governmentally funded programs."

UPCL-MS sales were weaker than expected across the board, he said, with the company posting a year-over-year decline in tandem quadrupole sales, as well as slow sales of its high-end QTOF mass spectrometers.

Berthiaume attributed the tandem quadrupole weakness to "lower demand for food analysis and environmental testing systems, especially in the Asian, Latin American, and European markets."

Berthiaume said he expects improved performance in coming quarters as "the release of capital budgets at larger pharmaceutical accounts will benefit the research instrument sales" and "academic and government spending in the US are expected to improve."

Berthiaume also noted an uptick in M&A interest at the company, saying that it saw "some encouraging opportunities to strengthen our portfolio and broaden our reach into medical research," including clinical diagnostics.

He also addressed his looming retirement, which Waters has said will occur sometime in the next two years.

"We are steadily progressing to identify and position my successor in a manner that ensures a smooth transition and a continuation of the core strategies that have accounted for our long-term success," he said.

The Milford, Mass-based company posted a profit of $70.3 million, or $.82 per share, for the quarter, compared to a profit of $121.1 million, or $1.39 per share, a year ago. On a non-GAAP basis, Waters had EPS of $.92, below the average analyst estimate of $1.12.

The firm's R&D spending was down 2 percent year over year to $24.7 million from $25.3 million a year ago, while SG&A costs rose 7 percent to $126.6 million from $118.7 million.

The company ended the quarter with $1.85 billion in cash, cash equivalents, and investments.

Waters said that it expects Q2 sales growth in the single-digit or higher range and earnings per share of between $1.15 and $1.27. For full year 2014, it provided guidance of mid-single-digit sales growth and earnings per share in the $5.25 to $5.50 range.

In Tuesday morning trade on the New York Stock Exchange, shares of Waters were down 8 percent at $100.37.