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Waters Q4 Revenues Improve 8 Percent

NEW YORK (GenomeWeb News) – Waters today reported an 8 percent spike year over year in its fourth quarter revenues as the firm beat the average Wall Street analyst estimates on the top and bottom lines.

For the three months ended Dec. 31, 2013, Waters' total revenues increased to $565.4 million from $521.8 million in the prior-year period, besting the consensus analyst estimate of $535.7 million.

On the company's conference call following the release of its financial results, outgoing CFO John Ornell said that on a constant currency basis, revenues were up 10 percent year over year in the quarter. Instrument sales and recurring revenues each increased 9 percent.

CEO Douglas Berthiaum added on the call that that "weak public sector demand" in the US as well as restructuring in the pharmaceutical sector remained headwinds in the quarter, but global strength in the public segments and continued improvements in industrial demand contributed to growth.

In the US, sales grew 10 percent year over year in Q4 before currency effects, as pharmaceutical spending saw "meaningful improvement," while the industrial, chemical, and food analysis businesses experienced "very strong" sales, Berthiaume said.

Europe was up 5 percent year over year as academic spending there grew in the double digits. Japan grew 3 percent primarily due to government funded spending for research applications, Berthiaume said, and Asia outside Japan grew 15 percent on strength in China.

Net income for the quarter was down to $141.6 million, or $1.65 per share, compared to a profit of $175.9 million, or $2.00 per share in Q4 2012. On an adjusted basis, EPS was $1.70, beating the consensus Wall Street estimate of $1.61.

R&D spending rose 8 percent year over year to $27.0 million from $25.0 million, while SG&A costs increased 7 percent to $130.7 million from $122.1 million.

Revenues for full-year 2013 increased 3 percent year over year to $1.90 billion from $1.84 billion. Before the effects of currency, revenues were up 5 percent, Ornell said.

Profits for the year were $450.0 million, or $5.20 per share, compared to $461.4 million, or $5.19 per share, in 2012. Adjusted EPS was $5.04, above the consensus analyst estimate of $4.95.

R&D costs were up 5 percent to $100.5 million from $96.0 million. SG&A spending rose to $493.0 million, up 3 percent from $477.3 million.

Waters ended the year with $1.80 billion in cash, cash equivalents, and investments.

For Q1 2014, Waters estimates adjusted EPS to be in the range of $1.05 to $1.15, incoming CFO Gene Cassis said on the call. Revenues are expected to grow at a "slightly lower" rate than for the full year, he said, due to a tougher comparison with Q1 2013.

For full-year 2014, he said that market conditions seen in 2013 are anticipated to continue in this year. Stable increases in recurring revenues and modest growth in instrument shipments are anticipated, Cassis said, adding that overall sales for 2014 are expected to increase in the mid-single digits.

Adjusted EPS for 2014 is anticipated to be between $5.35 and $5.55, he said.

"US public research spending is likely to improve with the issuance of an NIH budget," Berthiaume said. "The gradual global economic recovery will hopefully continue and China will continue to invest in scientific infrastructure. In addition India may return to more reasonable growth."

Shares of Waters on the New York Stock Exchange were up 7 percent at $110.12 Tuesday morning.

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