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Waters' Q3 Revenues Climb 13 Percent

NEW YORK (GenomeWeb News) – Waters today reported a 13 percent spike in third-quarter revenues, but reduced its earnings guidance for full-year 2011.

For the three months ended Oct. 1, the company saw revenues climb to $454.5 million, up from $401 million a year ago, driven by new instrument systems, including the Acquity H-Class UPLC, UPLC-mass spectrometer solutions, as well as strong TA Instruments product shipments, Douglas Berthiaume, president and CEO of Waters, said in a statement.

Revenues for the quarter beat consensus Wall estimates of $451.6 million.

By geography sales grew fastest in Europe, 13 percent year over year before factoring in the effects of currency, CFO John Ornell said on a conference call following the release of the results. In the US, revenues were up 8 percent, Japan was up 6 percent, and the rest of Asia grew 8 percent.

On a constant currency basis within the Waters division, instrument sales rose 10 percent, while recurring revenues grew 8 percent, he added.

On the conference call Berthiaume said that within the Waters division the pharmaceutical end market grew at about the same rate as the overall company on a constant currency basis.

Applications within pharma that are driving growing include regulated bio-analysis, biological pharmaceutical development and QC testing, he said. CRO business during the quarter was "robust" while sales to Waters' largest pharma accounts increased over second-quarter results and year-ago results.

Regarding the academic/government end market, Berthiaume said that growth in the quarter improved sequentially and shipments of the firm's new research products, such as the Synapt G2S mass spec system, "should benefit university revenues as we close the year."

He added that Waters is not seeing any "dramatic change" currently in spending in the academic/government space. Looking out into the future, the picture remains unclear as Congress continues to wrangle over the budget, but the "academic environment is not a tremendously large piece of our worldwide business. We're not seeing direct impact of drawn out grant times so far," Berthiaume said.

Waters' R&D costs in the third quarter increased to $23.4 million, up 14 percent year over year from $20.5 million a year ago, while SG&A expenses rose 9 percent to $121.2 million from $111.3 million a year ago.

Net income for the quarter was $101.3 million, or $1.10 per share, a 7 percent increase from $94.7 million, or $1.02 per share a year ago. On a non-GAAP basis, EPS was $1.14, beating Wall Street estimates of $1.13 per share.

Waters ended the quarter with $1.19 billion in cash, cash equivalents, and short-term investments.

For the fourth quarter, Ornell said that revenues are expected to grow at about 7 percent organically, and he gave adjusted EPS guidance of between $1.49 and $1.54.

For full-year 2011 he said that sales are expected to grow 13 percent year over year. EPS guidance for the year was reduced to a range of between $4.75 and $4.80 from a guidance of $4.80 to $4.90 given during the second quarter, due primarily to currency effects, Ornell said.

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