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Waters' Q4 Revenues Flat; High-end Mass Spec Business Improving

NEW YORK (GenomeWeb News) – Waters today said that fourth-quarter revenues were essentially flat year over year as the firm missed analyst estimates on the top line but beat it on the bottom line.

For the three months ended Dec. 31, 2012 Waters posted $521.8 million in revenues compared to $521.4 million a year ago, missing the consensus Wall Street estimate of $522.2 million.

On a constant-currency basis, sales were up about 1.5 percent year over year, the company said. Demand trends in the quarter were consistent with those seen throughout the year, and recurring revenues and the firm's Asia business contributed to constant currency growth, Waters Chairman, President, and CEO Douglas Berthiaume said in a statement.

Berthiaume added on a conference call following the release of the results that academic and government business grew at a "solid" mid-single rate during the quarter as high-end mass spectrometry system sales increased. Among its recurring revenues, service and chromatography consumables rose at a high single-digit rate, with chromatography consumables the strongest in China and more modest in most other regions.

Within the Waters Division instrument system sales, "performance was comparable for LC-MS instruments and LC instruments in the quarter with moderate declines in sales in comparison to last year's results," Berthiaume said. "There are signs based on our recent ordering trends in the fourth quarter of 2012 and as we start 2013 that we are seeing improvements in our high end TOF-based demand."

He also said that the government/academic end market remains "a little better than we originally had thought," and the company sees no signs that the market is "reacting dramatically to the fear of major budget cuts."

During the quarter Waters' R&D spending increased 5 percent year over year to $25.0 million from $23.7 million, but SG&A costs were trimmed 3 percent to$122.1 million from $126.2 million.

Waters' net income increased to $175.9 million, or $2.00 per share, from $137.1 million, or $1.51 per share. On a non-GAAP basis, EPS was $1.59, just above analyst estimates of $1.58.

For full-year 2012, sales rose to $1.84 billion, matching analysts' estimates but down a fraction of 1 percent from $1.85 billion in 2011.

Its R&D costs for the year rose 4 percent to $96.0 million from $92.3 million, while SG&A costs slid 3 percent to $477.3 million from $490.0 million.

Waters posted a profit of $461.4 million, or $5.19 per share, up from $433.0 million, or $4.69 per share, a year ago. Its EPS of $4.93 on a non-GAAP basis matched Wall Street expectations and beat its 2011 EPS of $4.81.

The firm finished the year with $1.54 billion in cash, cash equivalents, and short-term investments.

Waters CFO John Ornell said on the conference call that for full-year 2013 EPS is anticipated to be in the range of $5.30 to $5.40. Organic sales are expected to rise 4 percent year over year during the first quarter, and non-GAAP EPS is expected to be between $1.07 and $1.12.

He added that Waters' service and chemistry revenues is anticipated to grow 7 percent year over year during 2013, while instruments are expected to see a 3 percent improvement.

In Tuesday morning trading on the New York Stock Exchange, shares of Waters were down 2 percent at $90.31.

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