Highlights
- Sales of $712 million grew
less than 1% as reported and declined 4% in organic constant
currency
- Low single-digit organic constant currency growth outside of
China, led by mid-single-digit
pharma growth
- Wyatt acquisition continued its strong start, adding 4% to
sales
- On a GAAP basis, EPS was $2.27
and operating income margin was 25.2%
- Non-GAAP EPS grew 8% to $2.84,
as gross margin expanded 240 basis points and adjusted operating
income margin expanded 380 basis points, driven by
operational excellence
MILFORD,
Mass., Nov. 7, 2023 /PRNewswire/ -- Waters
Corporation (NYSE: WAT) today announced its financial
results for the third quarter of 2023.
Sales for the third quarter of 2023 were $712 million, which grew less than 1% as
reported, compared to sales of $709
million for the third quarter of 2022. In organic constant
currency, sales declined 4%, with better-than-expected growth for
pharmaceutical applications in the U.S. and Europe and weaker-than-expected overall
performance in China. The impact
of the Wyatt acquisition increased sales by 4%. Currency
translation had minimal impact on sales for the quarter, which was
adverse to our expectations.
On a GAAP basis, diluted earnings per share (EPS) for the third
quarter of 2023 was $2.27, compared
to $2.60 for the third quarter of
2022. On a non-GAAP basis, EPS was $2.84, compared to $2.64 for the third quarter of 2022. This
includes a headwind of approximately 1% due to unfavorable foreign
exchange.
"Our team has demonstrated its continued strength in execution
and excelled operationally, delivering strong results despite very
challenging market conditions," said Dr. Udit Batra, President & CEO, Waters
Corporation. "U.S. and Europe
pharma growth was again solid in the quarter and exceeded our
expectations. However, China fell
below our expectations as weakness moved beyond pharma into the
industrial and academic and government segments."
Dr. Batra continued, "We are thrilled with the continued strong
start to the Wyatt acquisition, which contributed 4% sales growth
in the quarter. We have also continued to launch innovative new
products, further differentiating our revitalized portfolio in the
attractive end-markets that we serve."
Third Quarter 2023
During the third quarter of 2023, sales into the pharmaceutical
market increased 4% as reported and decreased 2% in organic
constant currency, sales into the industrial market
decreased 6% as reported and 8% in organic constant currency, and
sales into the academic and government markets increased 3% as
reported and decreased 3% in organic constant currency.
During the quarter, instrument system sales decreased 5% as
reported and 13% in organic constant currency, while recurring
revenues, which represent the combination of service and precision
chemistries, increased 6% as reported and 4% in organic constant
currency.
Geographically, sales in Asia
during the quarter decreased 15% as reported and 12% in organic
constant currency (with China
sales declining double-digits). Sales in the Americas increased 7%
as reported and were flat in organic constant currency (with U.S.
sales growing 7% as reported and declining 2% in organic constant
currency). Sales in Europe
increased 15% as reported and 3% in organic constant currency.
Year-To-Date 2023
Sales for the first nine months of 2023 were $2,137 million, an increase of 1% as reported,
compared to sales of $2,113 million
for the first nine months of 2022. Currency translation decreased
sales by approximately 2% in the first nine months of 2023, while
the impact of the Wyatt acquisition increased sales by 2%,
resulting in flat organic constant currency sales growth.
On a GAAP basis, EPS for the first nine months of 2023 was
$7.19, compared to $7.94 for the first nine months of 2022. On a
non-GAAP basis, EPS was $8.13,
compared to $8.20 for the first nine
months of 2022. This includes a headwind of approximately 3% due to
unfavorable foreign exchange.
For the first nine months of 2023, sales into the pharmaceutical
market decreased 2% as reported and 3% in organic constant
currency, sales into the industrial market increased 1% as reported
and 2% in organic constant currency, and sales into the academic
and government markets increased 20% as reported and 19% in organic
constant currency.
For the first nine months of 2023, instrument system sales
decreased 4% as reported and 6% in organic constant currency, while
recurring revenues increased 5% as reported and 6% in organic
constant currency.
Geographically, sales in Asia
for the first nine months of 2023 decreased 8% as reported and 4%
in organic constant currency (with China sales declining double-digits). Sales in
the Americas increased 6% as reported and 2% in organic constant
currency (with U.S. sales growing 5% as reported and 1% in organic
constant currency). Sales in Europe increased 9% as reported and 5% in
organic constant currency.
Unless otherwise noted, sales growth and decline percentages are
presented on an as-reported basis. A description and reconciliation
of GAAP to non-GAAP results appear in the tables below and can be
found on the Company's website www.waters.com in the Investor
Relations section.
Full-Year and Fourth Quarter 2023 Financial Guidance
Full-Year 2023 Financial Guidance
The Company now expects full-year 2023 organic constant currency
sales growth to decline in the range of -2% to -1%. Currency
translation is expected to decrease full-year organic sales growth
by approximately 1.5%. The Wyatt transaction is expected to
increase full-year reported sales growth by approximately 2.5%. The
resulting full-year 2023 reported sales growth is expected in the
range of -1% to flat.
The Company is updating its full-year 2023 non-GAAP EPS guidance
to now be in the range of $11.65 to
$11.75, which includes an estimated
headwind of approximately 3.5% due to unfavorable foreign
exchange.
Please refer to the tables below for a reconciliation of the
projected GAAP to non-GAAP financial outlook for the full-year.
Fourth Quarter 2023 Financial Guidance
The Company expects fourth quarter 2023 organic constant
currency sales growth to decline in the range of -8% to -5%.
Currency translation is expected to decrease fourth quarter
sales growth by approximately 1.5%. The Wyatt transaction is
expected to increase fourth quarter reported sales growth by
approximately 3.5%. The resulting fourth quarter 2023 reported
sales growth is expected in the range of -6% to -3%.
The Company expects fourth quarter 2023 non-GAAP EPS in the
range of $3.52 to $3.62, which includes an estimated headwind of
approximately 5% due to unfavorable foreign exchange.
Please refer to the tables below for a reconciliation of the
projected GAAP to non-GAAP financial outlook for the
fourth quarter.
Conference Call Details
Waters Corporation will webcast its third quarter 2023 financial
results conference call today, November 7,
2023, at 8:00 a.m. Eastern
Time. To listen to the call and see the accompanying slide
presentation, please visit www.waters.com, select "Investors" under
the "About Waters" section, navigate to "Events &
Presentations," and click on the "Webcast." A replay will be
available through November 21, 2023
on the same website by webcast and also by phone at (866)
407-9243.
About Waters Corporation
Waters Corporation (NYSE: WAT), a global leader in analytical
instruments and software, has pioneered chromatography, mass
spectrometry, and thermal analysis innovations serving the life,
materials, and food sciences for over 60 years. With approximately
8,000 employees worldwide, Waters operates directly in 35
countries, including 14 manufacturing facilities, and with products
available in more than 100 countries. For more information, visit
www.waters.com.
Non-GAAP Financial Measures
This press release contains financial measures, such as organic
constant currency growth rate, adjusted operating income, adjusted
net income, adjusted earnings per diluted share and adjusted free
cash flow, among others, which are considered "non-GAAP" financial
measures under applicable U.S. Securities and Exchange Commission
rules and regulations. These non-GAAP financial measures should be
considered supplemental to, and not a substitute for, financial
information prepared in accordance with U.S. generally accepted
accounting principles (GAAP). The Company's definitions of these
non-GAAP measures may differ from similarly titled measures used by
others. The non-GAAP financial measures used in this press release
adjust for specified items that can be highly variable or difficult
to predict. The Company generally uses these non-GAAP financial
measures to facilitate management's financial and operational
decision-making, including evaluation of the Company's historical
operating results, comparison to competitors' operating results and
determination of management incentive compensation. These non-GAAP
financial measures reflect an additional way of viewing aspects of
the Company's operations that, when viewed with GAAP results and
the reconciliations to corresponding GAAP financial measures, may
provide a more complete understanding of factors and trends
affecting the Company's business. Because non-GAAP financial
measures exclude the effect of items that will increase or decrease
the Company's reported results of operations, management strongly
encourages investors to review the Company's consolidated financial
statements and publicly filed reports in their entirety.
Reconciliations of the non-GAAP financial measures to the most
directly comparable GAAP financial measures are included in the
tables accompanying this release.
Cautionary Statement
This release contains "forward-looking" statements regarding
future results and events. For this purpose, any statements that
are not statements of historical fact may be deemed forward-looking
statements. Without limiting the foregoing, the words "feels",
"believes", "anticipates", "plans", "expects", "intends",
"suggests", "appears", "estimates", "projects" and similar
expressions, whether in the negative or affirmative, are intended
to identify forward-looking statements. The Company's actual future
results may differ significantly from the results discussed in the
forward-looking statements within this release for a variety of
reasons, including and without limitation, risks related to,
expectations or ability to realize commercial success subsequent to
the completion of the Wyatt transaction; the impact of this
transaction on the Company's business, anticipated progress on
Waters' research programs, development of new analytical
instruments and associated software or consumables, manufacturing
development and capabilities; the increased indebtedness of the
Company as a result of the Wyatt transaction, the repayment of
which could impact the Company's future results, market prospects
for its products and sales and earnings guidance; foreign currency
exchange rate fluctuations potentially affecting translation of the
Company's future non-U.S. operating results, particularly when a
foreign currency weakens against the U.S. dollar; current global
economic, sovereign and political conditions and uncertainties,
including the effect of new or proposed tariff or trade
regulations; changes in inflation and interest rates; the impacts
and costs of war, in particular as a result of the ongoing conflict
between Russia and Ukraine and in the Middle East, and the possibility of further
escalation resulting in new geopolitical and regulatory
instability; the United Kingdom's
exit from the European Union and the Chinese government's ongoing
tightening of restrictions on procurement by government-funded
customers; the Company's ability to access capital, maintain
liquidity and service the Company's debt in volatile market
conditions; risks related to the effects of the ongoing COVID-19
pandemic on our business, financial condition, results of
operations and prospects; changes in timing and demand for the
Company's products among the Company's customers and various market
sectors, particularly as a result of fluctuations in their
expenditures or ability to obtain funding; the ability to realize
the expected benefits related to the Company's various cost-saving
initiatives; the introduction of competing products by other
companies and loss of market share, as well as pressures on prices
from competitors and/or customers; changes in the competitive
landscape as a result of changes in ownership, mergers and
continued consolidation among the Company's competitors;
regulatory, economic and competitive obstacles to new product
introductions; lack of acceptance of new products and inability to
grow organically through innovation; rapidly changing technology
and product obsolescence; risks associated with previous or future
acquisitions, strategic investments, joint ventures and
divestitures, including risks associated with contingent purchase
price payments and expansion of our business into new or developing
markets; risks associated with unexpected disruptions in
operations; failure to adequately protect the Company's
intellectual property, infringement of intellectual property rights
of third parties and inability to obtain licenses on commercially
reasonable terms; the Company's ability to acquire adequate sources
of supply and its reliance on outside contractors for certain
components and modules, as well as disruptions to its supply chain;
risks associated with third-party sales intermediaries and
resellers; the impact and costs of changes in statutory or
contractual tax rates in jurisdictions in which the Company
operates as well as shifts in taxable income among jurisdictions
with different effective tax rates, the outcome of ongoing and
future tax examinations and changes in legislation affecting the
Company's effective tax rate; the Company's ability to attract and
retain qualified employees and management personnel; risks
associated with cybersecurity and technology, including attempts by
third parties to defeat the security measures of the Company and
its third-party partners; increased regulatory burdens as the
Company's business evolves, especially with respect to the U.S.
Food and Drug Administration and U.S. Environmental Protection
Agency, among others, and in connection with government contracts;
regulatory, environmental, and logistical obstacles affecting the
distribution of the Company's products, completion of purchase
order documentation and the ability of customers to obtain letters
of credit or other financing alternatives; risks associated with
litigation and other legal and regulatory proceedings; and the
impact and costs incurred from changes in accounting principles and
practices. Such factors and others are discussed more fully in the
sections entitled "Forward-Looking Statements" and "Risk Factors"
of the Company's annual report on Form 10-K for the year ended
December 31, 2022, as well as in the
sections entitled "Special Note Regarding Forward-Looking
Statements" and "Risk Factors" of the Company's quarterly reports
on Form 10-Q for the quarterly periods ended April 1, 2023 and July 1,
2023, as filed with the Securities and Exchange Commission
("SEC"), which discussions are incorporated by reference in this
release, as updated by the Company's future filings with the SEC.
The forward-looking statements included in this release represent
the Company's estimates or views as of the date of this release and
should not be relied upon as representing the Company's estimates
or views as of any date subsequent to the date of this release.
Except as required by law, the Company does not assume any
obligation to update any forward-looking statements.
Waters Corporation
and Subsidiaries
|
Consolidated
Statements of Operations
|
(In thousands,
except per share data)
|
(Unaudited)
|
|
|
|
|
|
|
|
Three Months
Ended
|
|
Nine Months
Ended
|
|
September 30,
2023
|
|
October 1,
2022
|
|
September 30,
2023
|
|
October 1,
2022
|
|
|
|
|
|
|
|
|
Net sales
|
$
711,692
|
|
$
708,555
|
|
$
2,136,942
|
|
$
2,113,446
|
|
|
|
|
|
|
|
|
Costs and operating
expenses:
|
|
|
|
|
|
|
|
Cost of
sales
|
291,407
|
|
307,101
|
|
876,863
|
|
899,992
|
Selling and
administrative expenses
|
186,748
|
|
164,417
|
|
555,657
|
|
483,769
|
Research and
development expenses
|
41,995
|
|
43,435
|
|
130,559
|
|
127,913
|
Purchased intangibles
amortization
|
12,116
|
|
1,592
|
|
20,410
|
|
4,863
|
Acquired in-process
research and development
|
-
|
|
-
|
|
-
|
|
9,797
|
|
|
|
|
|
|
|
|
Operating
income
|
179,426
|
|
192,010
|
|
553,453
|
|
587,112
|
|
|
|
|
|
|
|
|
Other income,
net
|
328
|
|
895
|
|
1,364
|
|
2,600
|
Interest expense,
net
|
(26,559)
|
|
(9,524)
|
|
(56,174)
|
|
(27,362)
|
|
|
|
|
|
|
|
|
Income from operations
before income taxes
|
153,195
|
|
183,381
|
|
498,643
|
|
562,350
|
|
|
|
|
|
|
|
|
Provision for income
taxes
|
18,643
|
|
27,383
|
|
72,614
|
|
81,657
|
|
|
|
|
|
|
|
|
Net income
|
$
134,552
|
|
$
155,998
|
|
$
426,029
|
|
$
480,693
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income per basic
common share
|
$
2.28
|
|
$
2.61
|
|
$
7.21
|
|
$
7.98
|
|
|
|
|
|
|
|
|
Weighted-average number
of basic common shares
|
59,093
|
|
59,801
|
|
59,061
|
|
60,200
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income per diluted
common share
|
$
2.27
|
|
$
2.60
|
|
$
7.19
|
|
$
7.94
|
|
|
|
|
|
|
|
|
Weighted-average number
of diluted common shares and equivalents
|
59,255
|
|
60,081
|
|
59,262
|
|
60,521
|
Waters Corporation
and Subsidiaries
|
Reconciliation of
GAAP to Adjusted Non-GAAP
|
Net Sales by
Operating Segments, Products & Services, Geography and
Markets
|
Three Months Ended
September 30, 2023 and October 1, 2022
|
(In
thousands)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Organic
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Constant
|
|
|
|
|
|
Three Months
Ended
|
|
Percent
|
|
Impact
of
|
|
Impact
of
|
|
Currency
|
|
|
|
|
|
September 30,
2023
|
|
October 1,
2022
|
|
Change
|
|
Currency
|
|
Acquisitions
|
|
Growth Rate
(a)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
NET SALES - OPERATING
SEGMENTS
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Waters
|
|
|
$
|
629,348
|
|
$
|
623,401
|
|
1 %
|
|
0 %
|
|
5 %
|
|
(4 %)
|
TA
|
|
|
|
|
82,344
|
|
|
85,154
|
|
(3 %)
|
|
1 %
|
|
0 %
|
|
(4 %)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
|
|
$
|
711,692
|
|
$
|
708,555
|
|
0 %
|
|
0 %
|
|
4 %
|
|
(4 %)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
NET SALES - PRODUCTS
& SERVICES
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Instruments
|
|
|
$
|
319,431
|
|
$
|
336,827
|
|
(5 %)
|
|
1 %
|
|
7 %
|
|
(13 %)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Service
|
|
|
|
263,611
|
|
|
243,632
|
|
8 %
|
|
0 %
|
|
3 %
|
|
5 %
|
Chemistry
|
|
|
|
128,650
|
|
|
128,096
|
|
0 %
|
|
(1 %)
|
|
0 %
|
|
1 %
|
Total
Recurring
|
|
|
|
392,261
|
|
|
371,728
|
|
6 %
|
|
0 %
|
|
2 %
|
|
4 %
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
|
|
$
|
711,692
|
|
$
|
708,555
|
|
0 %
|
|
0 %
|
|
4 %
|
|
(4 %)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
NET SALES -
GEOGRAPHY
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Asia
|
|
|
|
$
|
238,228
|
|
$
|
279,934
|
|
(15 %)
|
|
(4 %)
|
|
1 %
|
|
(12 %)
|
Americas
|
|
|
|
275,479
|
|
|
256,409
|
|
7 %
|
|
0 %
|
|
7 %
|
|
(0 %)
|
Europe
|
|
|
|
197,985
|
|
|
172,212
|
|
15 %
|
|
7 %
|
|
5 %
|
|
3 %
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
|
|
$
|
711,692
|
|
$
|
708,555
|
|
0 %
|
|
0 %
|
|
4 %
|
|
(4 %)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
NET SALES -
MARKETS
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Pharmaceutical
|
|
|
$
|
421,535
|
|
$
|
405,959
|
|
4 %
|
|
1 %
|
|
6 %
|
|
(2 %)
|
Industrial
|
|
|
|
209,449
|
|
|
223,968
|
|
(6 %)
|
|
0 %
|
|
1 %
|
|
(8 %)
|
Academic &
Government
|
|
|
80,708
|
|
|
78,628
|
|
3 %
|
|
0 %
|
|
5 %
|
|
(3 %)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
|
|
$
|
711,692
|
|
$
|
708,555
|
|
0 %
|
|
0 %
|
|
4 %
|
|
(4 %)
|
|
|
|
|
|
|
|
|
(a)
|
The Company believes
that referring to comparable organic constant currency growth rates
is a useful way to evaluate the underlying performance of Waters
Corporation's net sales. Organic constant currency growth, a
non-GAAP financial measure, measures the change in net sales
between current and prior year periods, excluding the impact of
foreign currency exchange rates during the current period and
excluding the impact of acquisitions made within twelve months of
the acquisition close date. See description of non-GAAP financial
measures contained in this release.
|
Waters Corporation
and Subsidiaries
|
Reconciliation of
GAAP to Adjusted Non-GAAP
|
Net Sales by
Operating Segments, Products & Services, Geography and
Markets
|
Nine Months Ended
September 30, 2023 and October 1, 2022
|
(In
thousands)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Organic
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Constant
|
|
|
|
|
|
Nine Months
Ended
|
|
Percent
|
|
Impact
of
|
|
Impact
of
|
|
Currency
|
|
|
|
|
|
September 30,
2023
|
|
October 1,
2022
|
|
Change
|
|
Currency
|
|
Acquisitions
|
|
Growth Rate
(a)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
NET SALES - OPERATING
SEGMENTS
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Waters
|
|
|
$
|
1,884,658
|
|
$
|
1,871,709
|
|
1 %
|
|
(2 %)
|
|
2 %
|
|
(0 %)
|
TA
|
|
|
|
|
252,284
|
|
|
241,737
|
|
4 %
|
|
(1 %)
|
|
0 %
|
|
5 %
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
|
|
$
|
2,136,942
|
|
$
|
2,113,446
|
|
1 %
|
|
(2 %)
|
|
2 %
|
|
0 %
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
NET SALES - PRODUCTS
& SERVICES
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Instruments
|
|
|
$
|
964,380
|
|
$
|
999,732
|
|
(4 %)
|
|
(1 %)
|
|
3 %
|
|
(6 %)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Service
|
|
|
|
774,478
|
|
|
728,053
|
|
6 %
|
|
(2 %)
|
|
1 %
|
|
7 %
|
Chemistry
|
|
|
|
398,084
|
|
|
385,661
|
|
3 %
|
|
(2 %)
|
|
0 %
|
|
5 %
|
Total
Recurring
|
|
|
|
1,172,562
|
|
|
1,113,714
|
|
5 %
|
|
(2 %)
|
|
1 %
|
|
6 %
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
|
|
$
|
2,136,942
|
|
$
|
2,113,446
|
|
1 %
|
|
(2 %)
|
|
2 %
|
|
0 %
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
NET SALES -
GEOGRAPHY
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Asia
|
|
|
|
$
|
745,932
|
|
$
|
812,278
|
|
(8 %)
|
|
(4 %)
|
|
0 %
|
|
(4 %)
|
Americas
|
|
|
|
804,827
|
|
|
762,517
|
|
6 %
|
|
(0 %)
|
|
4 %
|
|
2 %
|
Europe
|
|
|
|
586,183
|
|
|
538,651
|
|
9 %
|
|
1 %
|
|
3 %
|
|
5 %
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
|
|
$
|
2,136,942
|
|
$
|
2,113,446
|
|
1 %
|
|
(2 %)
|
|
2 %
|
|
0 %
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
NET SALES -
MARKETS
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Pharmaceutical
|
|
|
$
|
1,233,177
|
|
$
|
1,258,902
|
|
(2 %)
|
|
(2 %)
|
|
3 %
|
|
(3 %)
|
Industrial
|
|
|
|
648,754
|
|
|
641,882
|
|
1 %
|
|
(1 %)
|
|
1 %
|
|
2 %
|
Academic &
Government
|
|
|
255,011
|
|
|
212,662
|
|
20 %
|
|
(2 %)
|
|
3 %
|
|
19 %
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
|
|
$
|
2,136,942
|
|
$
|
2,113,446
|
|
1 %
|
|
(2 %)
|
|
2 %
|
|
0 %
|
|
|
|
|
|
|
|
|
(a)
|
The Company believes
that referring to comparable organic constant currency growth rates
is a useful way to evaluate the underlying performance of Waters
Corporation's net sales. Organic constant currency growth, a
non-GAAP financial measure, measures the change in net sales
between current and prior year periods, excluding the impact of
foreign currency exchange rates during the current period and
excluding the impact of acquisitions made within twelve months of
the acquisition close date. See description of non-GAAP financial
measures contained in this release.
|
Waters Corporation
and Subsidiaries
|
Reconciliation of
GAAP to Adjusted Non-GAAP Financials
|
Three and Nine
Months Ended September 30, 2023 and October 1, 2022
|
(In thousands,
except per share data)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Acquired
|
|
|
|
|
|
|
|
|
|
|
|
Income
from
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
IPR&D
and
|
|
|
|
|
|
|
|
|
|
|
|
Operations
|
|
|
|
|
|
|
|
|
|
|
|
|
Selling
&
|
|
|
Research
&
|
|
|
|
|
|
Operating
|
|
|
Other
|
|
|
before
|
|
|
Provision
for
|
|
|
|
|
|
Diluted
|
|
|
|
Administrative
|
|
|
Development
|
|
|
Operating
|
|
|
Income
|
|
|
Income
|
|
|
Income
|
|
|
Income
|
|
|
Net
|
|
|
Earnings
|
|
|
|
Expenses(a)
|
|
|
Expenses
|
|
|
Income
|
|
|
Percentage
|
|
|
(Expense)
|
|
|
Taxes
|
|
|
Taxes
|
|
|
Income
|
|
|
per
Share
|
Three Months Ended
September 30, 2023
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
GAAP
|
|
$
|
198,864
|
|
$
|
41,995
|
|
$
|
179,426
|
|
|
25.2 %
|
|
$
|
328
|
|
$
|
153,195
|
|
$
|
18,643
|
|
$
|
134,552
|
|
$
|
2.27
|
Adjustments:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Purchased intangibles
amortization (b)
|
|
|
(12,116)
|
|
|
-
|
|
|
12,116
|
|
|
1.7 %
|
|
|
-
|
|
|
12,116
|
|
|
2,901
|
|
|
9,215
|
|
|
0.16
|
|
Restructuring costs and
certain other items (d)
|
|
|
(24,057)
|
|
|
-
|
|
|
24,057
|
|
|
3.4 %
|
|
|
(651)
|
|
|
23,406
|
|
|
5,387
|
|
|
18,019
|
|
|
0.30
|
|
Acquisition related
costs (e)
|
|
|
(1,263)
|
|
|
-
|
|
|
1,263
|
|
|
0.2 %
|
|
|
-
|
|
|
1,263
|
|
|
303
|
|
|
960
|
|
|
0.02
|
|
Retention bonus
obligation (g)
|
|
|
(5,725)
|
|
|
(1,909)
|
|
|
7,634
|
|
|
1.1 %
|
|
|
-
|
|
|
7,634
|
|
|
1,832
|
|
|
5,802
|
|
|
0.10
|
Adjusted
Non-GAAP
|
|
$
|
155,703
|
|
$
|
40,086
|
|
$
|
224,496
|
|
|
31.5 %
|
|
$
|
(323)
|
|
$
|
197,614
|
|
$
|
29,066
|
|
$
|
168,548
|
|
$
|
2.84
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended
October 1, 2022
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
GAAP
|
|
$
|
166,009
|
|
$
|
43,435
|
|
$
|
192,010
|
|
|
27.1 %
|
|
$
|
895
|
|
$
|
183,381
|
|
$
|
27,383
|
|
$
|
155,998
|
|
$
|
2.60
|
Adjustments:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Purchased intangibles
amortization (b)
|
|
|
(1,592)
|
|
|
-
|
|
|
1,592
|
|
|
0.2 %
|
|
|
-
|
|
|
1,592
|
|
|
366
|
|
|
1,226
|
|
|
0.02
|
|
Restructuring costs and
certain other items (d)
|
|
|
(2,982)
|
|
|
-
|
|
|
2,982
|
|
|
0.4 %
|
|
|
(919)
|
|
|
2,063
|
|
|
452
|
|
|
1,611
|
|
|
0.03
|
Adjusted
Non-GAAP
|
|
$
|
161,435
|
|
$
|
43,435
|
|
$
|
196,584
|
|
|
27.7 %
|
|
$
|
(24)
|
|
$
|
187,036
|
|
$
|
28,201
|
|
$
|
158,835
|
|
$
|
2.64
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Nine Months Ended
September 30, 2023
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
GAAP
|
|
$
|
576,067
|
|
$
|
130,559
|
|
$
|
553,453
|
|
|
25.9 %
|
|
$
|
1,364
|
|
$
|
498,643
|
|
$
|
72,614
|
|
$
|
426,029
|
|
$
|
7.19
|
Adjustments:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Purchased intangibles
amortization (b)
|
|
|
(20,410)
|
|
|
-
|
|
|
20,410
|
|
|
1.0 %
|
|
|
-
|
|
|
20,410
|
|
|
4,852
|
|
|
15,558
|
|
|
0.26
|
|
Restructuring costs and
certain other items (d)
|
|
|
(28,881)
|
|
|
-
|
|
|
28,881
|
|
|
1.4 %
|
|
|
(651)
|
|
|
28,230
|
|
|
6,860
|
|
|
21,370
|
|
|
0.36
|
|
Acquisition related
costs (e)
|
|
|
(13,298)
|
|
|
-
|
|
|
13,298
|
|
|
0.6 %
|
|
|
-
|
|
|
13,298
|
|
|
3,191
|
|
|
10,107
|
|
|
0.17
|
|
Retention bonus
obligation (g)
|
|
|
(8,368)
|
|
|
(2,790)
|
|
|
11,158
|
|
|
0.5 %
|
|
|
-
|
|
|
11,158
|
|
|
2,678
|
|
|
8,480
|
|
|
0.14
|
Adjusted
Non-GAAP
|
|
$
|
505,110
|
|
$
|
127,769
|
|
$
|
627,200
|
|
|
29.4 %
|
|
$
|
713
|
|
$
|
571,739
|
|
$
|
90,195
|
|
$
|
481,544
|
|
$
|
8.13
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Nine Months Ended
October 1, 2022
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
GAAP
|
|
$
|
488,632
|
|
$
|
137,710
|
|
$
|
587,112
|
|
|
27.8 %
|
|
$
|
2,600
|
|
$
|
562,350
|
|
$
|
81,657
|
|
$
|
480,693
|
|
$
|
7.94
|
Adjustments:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Purchased intangibles
amortization (b)
|
|
|
(4,863)
|
|
|
-
|
|
|
4,863
|
|
|
0.2 %
|
|
|
-
|
|
|
4,863
|
|
|
1,115
|
|
|
3,748
|
|
|
0.06
|
|
Acquired in-process
research and development (c)
|
|
|
-
|
|
|
(9,797)
|
|
|
9,797
|
|
|
0.5 %
|
|
|
-
|
|
|
9,797
|
|
|
2,351
|
|
|
7,446
|
|
|
0.12
|
|
Restructuring costs and
certain other items (d)
|
|
|
(7,187)
|
|
|
-
|
|
|
7,187
|
|
|
0.3 %
|
|
|
(3,153)
|
|
|
4,034
|
|
|
908
|
|
|
3,126
|
|
|
0.05
|
|
Certain income tax
items (f)
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
(994)
|
|
|
994
|
|
|
0.02
|
Adjusted
Non-GAAP
|
|
$
|
476,582
|
|
$
|
127,913
|
|
$
|
608,959
|
|
|
28.8 %
|
|
$
|
(553)
|
|
$
|
581,044
|
|
$
|
85,037
|
|
$
|
496,007
|
|
$
|
8.20
|
|
|
|
|
|
|
|
|
(a)
|
Selling &
administrative expenses include purchased intangibles
amortization.
|
(b)
|
The purchased
intangibles amortization, a non-cash expense, was excluded to be
consistent with how management evaluates the performance of its
core business against historical operating results and the
operating results of competitors over periods of time.
|
(c)
|
Acquired in-process
research and development was excluded as it relates to the cost of
a licensing arrangement for charge detection mass spectrometry that
the Company believes is unusual and not indicative of its normal
business operations.
|
(d)
|
Restructuring costs and
certain other items were excluded as the Company believes that the
cost to consolidate operations, reduce overhead, and certain other
income or expense items are not normal and do not represent future
ongoing business expenses of a specific function or geographic
location of the Company.
|
(e)
|
Acquisition related
costs include all incremental expenses incurred, such as advisory,
legal, accounting, tax, valuation, and other professional fees. The
Company believes that these costs are not normal and do not
represent future ongoing business expenses.
|
(f)
|
Certain income tax
items were excluded as these non-cash expenses and benefits
represent updates in management's assessment of ongoing
examinations or other tax items that are not indicative of the
Company's normal or future income tax expense.
|
(g)
|
In connection with the
Wyatt acquisition, the Company started to recognize a two-year
retention bonus obligation that is contingent upon the employee's
providing future service and continued employment with Waters. The
Company believes that these costs are not normal and do not
represent future ongoing business expenses.
|
Waters Corporation
and Subsidiaries
|
Preliminary
Condensed Unclassified Consolidated Balance Sheets
|
(In thousands and
unaudited)
|
|
|
|
|
|
September 30,
2023
|
|
December 31,
2022
|
|
|
|
|
Cash, cash equivalents
and investments
|
$
337,312
|
|
$
481,391
|
Accounts
receivable
|
631,284
|
|
722,892
|
Inventories
|
544,402
|
|
455,710
|
Property, plant and
equipment, net
|
616,846
|
|
582,217
|
Intangible assets,
net
|
631,209
|
|
227,399
|
Goodwill
|
1,308,027
|
|
430,328
|
Other assets
|
428,100
|
|
381,516
|
Total
assets
|
$
4,497,180
|
|
$
3,281,453
|
|
|
|
|
|
|
|
|
Notes payable and
debt
|
$
2,505,265
|
|
$
1,574,878
|
Other
liabilities
|
1,086,393
|
|
1,202,087
|
Total
liabilities
|
3,591,658
|
|
2,776,965
|
|
|
|
|
Total stockholders'
equity
|
905,522
|
|
504,488
|
Total
liabilities and stockholders' equity
|
$
4,497,180
|
|
$
3,281,453
|
Waters Corporation
and Subsidiaries
|
Preliminary
Condensed Consolidated Statements of Cash Flows
|
Three and Nine
Months Ended September 30, 2023 and October 1, 2022
|
(In thousands and
unaudited)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months
Ended
|
|
Nine Months
Ended
|
|
|
|
September 30,
2023
|
|
October 1,
2022
|
|
|
September 30,
2023
|
|
October 1,
2022
|
|
|
|
|
|
|
|
Cash flows from
operating activities:
|
|
|
|
|
|
|
|
|
|
Net income
|
$
134,552
|
|
$
155,998
|
|
|
$
426,029
|
|
$
480,693
|
|
Adjustments to
reconcile net income to net
|
|
|
|
|
|
|
|
|
|
|
|
cash provided by
operating activities:
|
|
|
|
|
|
|
|
|
|
|
Stock-based
compensation
|
8,490
|
|
10,207
|
|
|
32,224
|
|
30,929
|
|
|
Depreciation and
amortization
|
47,807
|
|
32,214
|
|
|
117,845
|
|
99,105
|
|
|
Change in operating
assets and liabilities and other, net
|
(33,031)
|
|
(40,330)
|
|
|
(203,411)
|
|
(197,775)
|
|
|
|
Net cash provided by
operating activities
|
157,818
|
|
158,089
|
|
|
372,687
|
|
412,952
|
|
|
|
|
|
|
|
|
|
|
|
Cash flows from
investing activities:
|
|
|
|
|
|
|
|
|
|
Additions to property,
plant, equipment
|
|
|
|
|
|
|
|
|
|
|
|
and software
capitalization
|
(38,047)
|
|
(38,991)
|
|
|
(119,044)
|
|
(113,737)
|
|
Business acquisitions,
net of cash acquired
|
-
|
|
-
|
|
|
(1,285,907)
|
|
-
|
|
Proceeds from equity
investments, net
|
651
|
|
3,257
|
|
|
651
|
|
8,903
|
|
Payments for
intellectual property licenses
|
-
|
|
(2,638)
|
|
|
-
|
|
(7,535)
|
|
Net change in
investments
|
(5)
|
|
(8)
|
|
|
(21)
|
|
66,586
|
|
|
|
Net cash used in
investing activities
|
(37,401)
|
|
(38,380)
|
|
|
(1,404,321)
|
|
(45,783)
|
|
|
|
|
|
|
|
|
|
|
|
Cash flows from
financing activities:
|
|
|
|
|
|
|
|
|
|
Net change in
debt
|
(125,181)
|
|
60,000
|
|
|
929,601
|
|
30,000
|
|
Proceeds from stock
plans
|
9,464
|
|
5,222
|
|
|
18,092
|
|
36,136
|
|
Purchases of treasury
shares
|
(692)
|
|
(155,223)
|
|
|
(70,433)
|
|
(477,167)
|
|
Other cash flow from
financing activities, net
|
2,884
|
|
1,995
|
|
|
8,178
|
|
12,844
|
|
|
|
Net cash (used in)
provided by financing activities
|
(113,525)
|
|
(88,006)
|
|
|
885,438
|
|
(398,187)
|
|
|
|
|
|
|
|
|
|
|
|
Effect of exchange rate
changes on cash and cash equivalents
|
(171)
|
|
(6,963)
|
|
|
2,081
|
|
(26,579)
|
|
|
|
Increase (decrease) in
cash and cash equivalents
|
6,721
|
|
24,740
|
|
|
(144,115)
|
|
(57,597)
|
|
|
|
|
|
|
|
|
|
|
|
Cash and cash
equivalents at beginning of period
|
329,693
|
|
418,897
|
|
|
480,529
|
|
501,234
|
|
|
|
Cash and cash
equivalents at end of period
|
$
336,414
|
|
$
443,637
|
|
|
$
336,414
|
|
$
443,637
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Reconciliation of
GAAP Cash Flows from Operating Activities to Free Cash Flow
(a)
|
|
|
|
|
|
|
|
|
|
|
|
Net cash provided by
operating activities - GAAP
|
$
157,818
|
|
$
158,089
|
|
|
$
372,687
|
|
$
412,952
|
|
|
|
|
|
|
|
|
|
|
|
|
Adjustments:
|
|
|
|
|
|
|
|
|
|
|
Additions to property,
plant, equipment
|
|
|
|
|
|
|
|
|
|
|
|
and software
capitalization
|
(38,047)
|
|
(38,991)
|
|
|
(119,044)
|
|
(113,737)
|
|
|
Tax reform
payments
|
-
|
|
-
|
|
|
72,101
|
|
38,454
|
|
|
Litigation settlements
paid, net
|
(375)
|
|
-
|
|
|
(1,125)
|
|
(584)
|
|
|
Major facility
renovations
|
3,291
|
|
6,927
|
|
|
12,151
|
|
23,966
|
|
|
Payment of acquired
Wyatt liabilities (b)
|
-
|
|
-
|
|
|
25,617
|
|
-
|
Free Cash Flow -
Adjusted Non-GAAP
|
$
122,687
|
|
$
126,025
|
|
|
$
362,387
|
|
$
361,051
|
|
|
|
|
|
|
|
|
(a)
|
The Company defines
free cash flow as net cash flow from operations accounted for under
GAAP less capital expenditures and software capitalizations plus or
minus any unusual and non recurring items. Free cash flow is not a
GAAP measurement and may not be comparable to free cash flow
reported by other companies.
|
(b)
|
In connection with the
Wyatt acquisition, the Company assumed certain obligations of Wyatt
and paid those obligations immediately upon closing the
transaction. The Company believes that the assumed obligations do
not represent future ongoing business expenses.
|
Waters Corporation
and Subsidiaries
|
Reconciliation of
Projected GAAP to Adjusted Non-GAAP Financial
Outlook
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months
Ended
|
|
Twelve Months
Ended
|
|
|
|
December 31,
2023
|
|
December 31,
2023
|
|
|
|
|
Range
|
|
|
|
Range
|
|
Projected
Sales
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Organic constant
currency sales growth rate (a)
|
(8.0 %)
|
-
|
(5.0 %)
|
|
(2.0 %)
|
-
|
(1.0 %)
|
Impact of:
|
|
|
|
|
|
|
|
|
|
Currency
translation
|
(1.5 %)
|
-
|
(1.5 %)
|
|
(1.5 %)
|
-
|
(1.5 %)
|
|
Acquisitions
|
3.5 %
|
-
|
3.5 %
|
|
2.5 %
|
-
|
2.5 %
|
Sales growth rate as
reported
|
(6.0 %)
|
-
|
(3.0 %)
|
|
(1.0 %)
|
-
|
0.0 %
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Range
|
|
|
|
Range
|
|
Projected Earnings
Per Diluted Share
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
GAAP earnings per
diluted share
|
$ 3.26
|
-
|
$ 3.36
|
|
$
10.45
|
-
|
$
10.55
|
Adjustments:
|
|
|
|
|
|
|
|
|
|
Purchased intangibles
amortization
|
$ 0.15
|
-
|
$ 0.15
|
|
$ 0.42
|
-
|
$ 0.42
|
|
Restructuring costs and
certain other items
|
$ 0.01
|
-
|
$ 0.01
|
|
$ 0.37
|
-
|
$ 0.37
|
|
Acquisition related
costs
|
$
-
|
-
|
$
-
|
|
$ 0.17
|
-
|
$ 0.17
|
|
Retention bonus
obligation
|
$ 0.10
|
-
|
$ 0.10
|
|
$ 0.24
|
-
|
$ 0.24
|
Adjusted non-GAAP
earnings per diluted share
|
$ 3.52
|
-
|
$ 3.62
|
|
$
11.65
|
-
|
$
11.75
|
|
|
|
|
|
|
|
|
(a)
|
Organic constant
currency growth rates are a non-GAAP financial measure that
measures the change in net sales between current and prior year
periods, excluding the impact of foreign currency exchange rates
during the current period and excluding the impact of acquisitions
made within twelve months of the acquisition close date. These
amounts are estimated at the current foreign currency exchange
rates and based on the forecasted geographical sales in local
currency, as well as an assessment of market conditions as of
today, and may differ significantly from actual results.
|
|
|
|
These forward-looking
adjustment estimates do not reflect future gains and charges that
are inherently difficult to predict and estimate due to their
unknown timing, effect and/or significance.
|
Contact: Caspar
Tudor, Head of Investor Relations – (508) 482-2429
View original
content:https://www.prnewswire.com/news-releases/waters-corporation-nyse-wat-reports-third-quarter-2023-financial-results-301979096.html
SOURCE Waters Corporation