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Waters Reports 8 Percent Spike in Q4 Revenues

NEW YORK (GenomeWeb News) – Waters today reported fourth-quarter 2011 results that beat analyst estimates on the top and bottom line.

For the period ended Dec. 31, the firm posted net sales of $521.4 million, up 8 percent from $483.6 million a year ago and surpassing Wall Street expectations of $516.9 million.

Organically, sales were up 8 percent for the quarter, President and CEO Douglas Berthiaum said during a conference call following the release of Waters' results.

For the quarter, Waters posted a profit of $137.1 million, or $1.51 per share. On a non-GAAP basis, EPS was $1.56, beating analyst estimates of $1.50 per share. In the year-ago period the company had a profit of $126.6 million, or $1.36 per share, and $1.38 per share on a non-GAAP basis.

The firm's R&D costs were up 3 percent year over year to $23.7 million from $22.9 million a year ago, while SG&A expenses rose 5 percent to $126.2 million from $120.5 million.

The SG&A costs for Q4 2011 includes $2 million related to cost reduction plans, asset impairments related to certain facilities, and costs related to a recent acquisition. It also includes $2 million in costs related to a non-income tax audit provision. Its SG&A costs from the year-ago period include costs of $1 million related to cost reduction plans and asset impairments to certain facilities.

On the conference call, Berthiaume said that in the Waters division, strongest growth occurred in the pharmaceutical and industrial chemical end markets. While sales to the company's largest pharma clients were flat year-over-year, sequentially, those accounts grew incrementally. Total pharma spending during the quarter grew at the corporate average, Berthiaume added.

Government and academic shipments held up "reasonably well," especially for the Synapt G2 mass spectrometers, he said. Moving forward, that end market is anticipated to be "less robust," however.

On the call, Waters CFO John Ornell said that government/academic sales were up in the low- to mid-single digits, but in 2012, they are expected to be "flattish."

"We're almost certain to see government budgets be more conservative going forward, not only in the United States but certainly in Western Europe and in Asia," said Berthiaume.

In the Waters division, both instrument sales and recurring revenues were up 7 percent year over year in the fourth quarter.

For full-year 2011, sales came in at $1.85 billion, up 13 percent from $1.64 billion in 2010, and matching Wall Street estimates.

The firm's R&D spending was up 9 percent to $92.3 million from $84.3 million, and its SG&A costs rose 10 percent to $490.0 million from $445.5 million.

The SG&A figures for 2010 include $4 million related to cost reduction plans and asset impairment related to certain facilities, as well as $3 million in costs associated with a non-income tax audit settlement.

Waters saw a profit of $433 million in 2011, or $4.69 per share, compared to $381.8 million, or $4.06 per share, in 2010. On a non-GAAP basis, EPS was $4.81 in 2011, up from $4.09 a year ago, and besting analyst estimates of $4.76.

The company ended 2011 with $1.28 billion in cash, cash equivalents, and short-term investments.

For the first quarter of 2012, Ornell gave guidance of 5 percent organic sales growth. Currency at today's rate would reduce growth by 2 percent, he said. The firm's EPS on a non-GAAP basis is expected to be between $1.05 and $1.10.

For full-year 2012, he said that sales are expected to increase between 6 percent and 8 percent before currency effects, which would reduce growth by 2 percent at today's currency levels. EPS on a non-GAAP basis for the year is expected to fall between $5.15 and $5.30.

In early Tuesday trading on the New York Stock Exchange, shares of Waters were up 7 percent at $84.45.

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