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Weakness in Proteomics and Life Science Research Contributes to Disappointing Q2 for Waters

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Funding cuts for government and academic researchers led to weakened demand for tools for "cutting-edge proteomics and life science research," said Waters CEO Douglas Berthiaume during a conference call discussing the company's second-quarter results.

That, along with orders delayed in anticipation of the launch of Waters' new Synapt G2-S mass spectrometer at the American Society for Mass Spectrometry annual meeting in June, led to slowing demand in Q2 for the company's existing Synapt machines, Berthiaume said.

He noted that the firm expects the government and academic markets will continue to be flat but that its "innovative new systems, especially in high-end mass spectrometry, will allow [Waters] to compete favorably within this more challenging funding environment."

"The second-half results will probably be most affected by the Synapt G2-S," Berthiaume said. "We're expecting significant shipments of that at the end of the third quarter into the fourth quarter."

For the quarter Waters posted $447.6 million in revenue, up 14 percent from $391.1 million a year ago, but short of Wall Street's consensus estimate of $451.1 million.

The company also fell short of Wall Street's earnings-per-share expectations as net income for the quarter came in at $100.1 million, or $1.07 per share. On an adjusted basis EPS was $1.08, below analysts' expectations of $1.14. The company's profit for the prior year's second quarter was $84.9 million, or $.90 per share.

Waters' R&D spending rose 11 percent to $23.0 million from $20.8 million a year ago.

It ended the second quarter with $1.12 billion in cash, cash equivalents, and short-term investments.

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