WATERS CORP /DE/ NYSE false 0001000697 0001000697 2024-07-31 2024-07-31

 

 

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

 

 

FORM 8-K

 

 

CURRENT REPORT

Pursuant to Section 13 or 15(d)

of the Securities Exchange Act of 1934

Date of Report (Date of earliest event reported): July 31, 2024

 

 

Waters Corporation

(Exact Name of Registrant as Specified in its Charter)

 

 

 

Delaware   01-14010   13-3668640
(State or other jurisdiction
of incorporation)		   (Commission
File Number)		   (IRS Employer
Identification No.)

34 Maple Street

Milford, Massachusetts 01757

(Address of Principal Executive Offices) (Zip Code)

(508) 478-2000

(Registrant’s telephone number, including area code)

N/A

(Former name or former address, if changed since last report)

 

 

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:

 

☐

Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

 

☐

Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

 

☐

Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

 

☐

Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

Securities registered pursuant to Section 12(b) of the Act:

 

Title of each class

  

Trading
Symbol(s)

  

Name of each exchange
on which registered

Common stock, par value $0.01 per share   WAT   New York Stock Exchange, Inc.

Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter). Emerging growth company ☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

 

 

 

Item 2.02

Results of Operations and Financial Condition

On July 31, 2024, Waters Corporation (“Waters” or the “Company”) announced its results of operations for the quarter ended June 29, 2024. A copy of the related press release is attached hereto as Exhibit 99.1 to this Form 8-K and is incorporated herein by reference in its entirety.

The information contained in Item 2.02 of this Form 8-K (including Exhibit 99.1) shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934 (the “Exchange Act”) or otherwise subject to the liabilities of that section, nor shall it be deemed incorporated by reference in any filing under the Securities Act of 1933 or the Exchange Act, except as expressly set forth by specific reference in such a filing.

 

Item 9.01

Financial Statements and Exhibits

Exhibits

 

99.1    Waters Corporation press release dated July 31, 2024, for the quarter ended June 29, 2024.
104    Cover page Interactive Date File (embedded within the Inline XBRL document).

Signatures

Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

 

    WATERS CORPORATION
Dated: July 31, 2024     By:  

/s/ Amol Chaubal

    Name:   Amol Chaubal
    Title:   Senior Vice President and Chief Financial Officer
      (Principal Financial Officer and Principal Accounting Officer)

Exhibit 99.1

For Immediate Release

Contact: Caspar Tudor, Head of Investor Relations – (508) 482-2429

Waters Corporation (NYSE: WAT) Reports Second Quarter 2024 Financial Results

Highlights

 

  •  

Sales of $709 million exceeded guidance on a reported basis, declined 4% as reported and 4% in organic constant currency

 

  •  

GAAP EPS of $2.40; earnings exceeded guidance with non-GAAP EPS of $2.63, led by strong operational performance

 

  •  

Beat driven by better-than-expected performance in China, as well as higher-than-expected M&A contribution to overall sales from Wyatt

 

  •  

Ex-China organic constant currency sales growth as expected across Pharma, Industrial, and Academic & Government end markets

 

  •  

Full-year outlook reflects the potential for a more gradual market improvement in the second half of the year than previously anticipated

Second Quarter 2024

MILFORD, Mass., July 31, 2024 - Waters Corporation (NYSE: WAT) today announced its financial results for the second quarter of 2024.

Sales for the second quarter of 2024 were $709 million, a decrease of 4% as reported, compared to sales of $741 million for the second quarter of 2023. Currency translation decreased sales by 2%, while the impact of acquisitions increased sales by 2%.

On a GAAP basis, diluted earnings per share (EPS) for the second quarter of 2024 was $2.40, compared to $2.55 for the second quarter of 2023. On a non-GAAP basis, EPS was $2.63, compared to $2.80 for the second quarter of 2023. This includes a headwind of approximately 5% due to unfavorable foreign exchange.

“Our team executed well to deliver second quarter results that exceeded both our top-line and bottom-line reported guidance,” said Dr. Udit Batra, President & CEO, Waters Corporation. “Our margins remained resilient, thanks to our disciplined approach to operational management, which offset headwinds from volume, currency, and inflation.”

Dr. Batra added, “We continue to build positive momentum in our business and expect to return to growth in the second half of the year. Looking further ahead, our steady stream of innovative new products positions us well in our attractive end markets.”

Other Highlights

During the second quarter of 2024, sales into the pharmaceutical market decreased 3% as reported and 4% in organic constant currency. Sales into the industrial market decreased 4% as reported and in organic constant currency. Sales into the academic and government market decreased 15% as reported and 16% in organic constant currency. During the quarter, instrument system sales decreased 14% as reported and 17% in organic constant currency. Recurring revenues, which represent the combination of service and precision chemistries, increased 4% as reported and 5% in organic constant currency.

Geographically, sales in Asia during the quarter decreased 7% as reported and 3% in organic constant currency. Sales in the Americas decreased 3% as reported and 7% in organic constant currency. Sales in Europe decreased 3% as reported and 7% 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 Third Quarter 2024 Financial Guidance

Full-Year 2024 Financial Guidance

The Company now expects full-year 2024 organic constant currency sales growth to be in the range of -2.0% to -0.5%. Currency translation is expected to decrease full-year sales growth by approximately 1.5%. M&A contribution from the Wyatt transaction covering the first four-and-a-half months of the year has added 1.3% to full-year reported sales. The resulting full-year 2024 reported sales growth is expected in the range of -2.2% to -0.7%.

The Company expects full-year 2024 non-GAAP EPS to be in the range of $11.55 to $11.65, which includes an estimated headwind of approximately 3% 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.

Third Quarter 2024 Financial Guidance

The Company expects third quarter 2024 constant currency sales growth to be in the range of +1.0% to +3.0%. Currency translation is expected to decrease third quarter sales growth by approximately 1.5%. The resulting third quarter 2024 reported sales growth is expected in the range of -0.5% to +1.5%.

The Company expects third quarter 2024 non-GAAP EPS to be in the range of $2.60 to $2.70, which includes an estimated headwind of approximately 2% 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 third quarter.

Conference Call Details

Waters Corporation will webcast its second quarter 2024 financial results conference call today, July 31, 2024, at 8:00 a.m. Eastern Time. To listen to the call and see the accompanying slide presentation, please visit www.waters.com, select “Investor Relations” under the “About Waters” section, navigate to “Events & Presentations,” and click on the “Webcast.” A replay will be available through August 28, 2024 on the same website by webcast and also by phone at (800) 839-9317.

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, food, and environmental sciences for more than 65 years. With approximately 7,500 employees worldwide, Waters operates directly in 35 countries, including 15 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 rates, adjusted operating income, adjusted net income, adjusted earnings per diluted share and 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, and expectations or ability to realize commercial success 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 as well as other new or changed domestic and foreign laws, regulations and policies; changes in inflation and interest rates; the impacts and costs of war, in particular as a result of the ongoing conflicts between Russia and Ukraine and in the Middle East, and the possibility of further escalation resulting in new geopolitical and regulatory instability; 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 any 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, including workforce reductions and organizational restructurings; 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 achieving the anticipated financial results and operational synergies; 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, 2023, as well as in the sections entitled “Special Note Regarding Forward-Looking Statements” and “Risk Factors” of the Company’s quarterly report on Form 10-Q for the quarterly period ended March 30, 2024, 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     Six Months Ended  
     June 29, 2024     July 1, 2023     June 29, 2024     July 1, 2023  

Net sales

    $ 708,529     $ 740,576     $ 1,345,368     $ 1,425,250  

Costs and operating expenses:

         

Cost of sales

      288,244       301,076       550,030       585,456  

Selling and administrative expenses

      173,247       186,953       347,783       368,909  

Research and development expenses

      46,182       45,873       90,777       88,564  

Purchased intangibles amortization

      11,744       6,815       23,578       8,294  

Litigation provision

      —        —        10,242       —   
  

 

 

    

 

 

    

 

 

    

 

 

  

Operating income

      189,112       199,859       322,958       374,027  

Other (expense) income, net

      (302 )      (352 )      1,957       1,036  

Interest expense, net

      (19,398 )      (19,232 )      (40,647 )      (29,615 ) 
  

 

 

    

 

 

    

 

 

    

 

 

  

Income from operations before income taxes

      169,412       180,275       284,268       345,448  

Provision for income taxes

      26,675       29,721       39,335       53,971  
  

 

 

    

 

 

    

 

 

    

 

 

  

Net income

    $ 142,737     $ 150,554     $ 244,933     $ 291,477  

Net income per basic common share

    $ 2.41     $ 2.56     $ 4.13     $ 4.97  

Weighted-average number of basic common shares

      59,339       58,857       59,287       58,703  

Net income per diluted common share

    $ 2.40     $ 2.55     $ 4.12     $ 4.95  

Weighted-average number of diluted common shares and equivalents

      59,451       59,010       59,445       58,909  

Waters Corporation and Subsidiaries

Reconciliation of GAAP to Adjusted Non-GAAP

Net Sales by Operating Segments, Products & Services, Geography and Markets

Three Months Ended June 29, 2024 and July 1, 2023

(In thousands)

 

     Three Months Ended      Percent
Change		     Impact of
Currency		     Impact of
Acquisitions		     Organic
Constant
Currency
Growth Rate (a)		  
     June 29, 2024      July 1, 2023  

NET SALES - OPERATING SEGMENTS

               

Waters

    $ 622,561      $ 653,235        (5 %)      (2 %)      3 %      (6 %) 

TA

      85,968        87,341        (2 %)      (2 %)      0 %      0 % 
  

 

 

     

 

 

           

Total

    $ 708,529      $ 740,576        (4 %)      (2 %)      2 %      (4 %) 
  

 

 

     

 

 

           

NET SALES - PRODUCTS & SERVICES

               

Instruments

    $ 294,059      $ 342,007        (14 %)      (1 %)      4 %      (17 %) 

Service

      273,385        262,650        4 %      (2 %)      1 %      5 % 

Chemistry

      141,085        135,919        4 %      (1 %)      0 %      5 % 
  

 

 

     

 

 

           

Total Recurring

      414,470        398,569        4 %      (2 %)      1 %      5 % 
  

 

 

     

 

 

           

Total

    $ 708,529      $ 740,576        (4 %)      (2 %)      2 %      (4 %) 
  

 

 

     

 

 

           

NET SALES - GEOGRAPHY

               

Asia

    $ 237,431      $ 254,623        (7 %)      (5 %)      1 %      (3 %) 

Americas

      274,468        282,927        (3 %)      0 %      4 %      (7 %) 

Europe

      196,630        203,026        (3 %)      1 %      3 %      (7 %) 
  

 

 

     

 

 

           

Total

    $ 708,529      $ 740,576        (4 %)      (2 %)      2 %      (4 %) 
  

 

 

     

 

 

           

NET SALES - MARKETS

               

Pharmaceutical

    $ 415,747      $ 426,744        (3 %)      (2 %)      3 %      (4 %) 

Industrial

      221,385        229,655        (4 %)      (1 %)      1 %      (4 %) 

Academic & Government

      71,397        84,177        (15 %)      (1 %)      2 %      (16 %) 
  

 

 

     

 

 

           

Total

    $ 708,529      $ 740,576        (4 %)      (2 %)      2 %      (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

Six Months Ended June 29, 2024 and July 1, 2023

(In thousands)

 

     Six Months Ended      Percent
Change		     Impact of
Currency		     Impact of
Acquisitions		     Organic
Constant
Currency
Growth Rate (a)		  
     June 29, 2024      July 1, 2023  

NET SALES - OPERATING SEGMENTS

               

Waters

    $ 1,184,460      $ 1,255,310        (6 %)      (1 %)      3 %      (8 %) 

TA

      160,908        169,940        (5 %)      (2 %)      0 %      (3 %) 
  

 

 

     

 

 

           

Total

    $ 1,345,368      $ 1,425,250        (6 %)      (1 %)      3 %      (8 %) 
  

 

 

     

 

 

           

NET SALES - PRODUCTS & SERVICES

               

Instruments

    $ 536,003      $ 644,949        (17 %)      (0 %)      4 %      (21 %) 

Service

      534,073        510,867        5 %      (2 %)      2 %      5 % 

Chemistry

      275,292        269,434        2 %      (1 %)      0 %      3 % 
  

 

 

     

 

 

           

Total Recurring

      809,365        780,301        4 %      (2 %)      1 %      5 % 
  

 

 

     

 

 

           

Total

    $ 1,345,368      $ 1,425,250        (6 %)      (1 %)      3 %      (8 %) 
  

 

 

     

 

 

           

NET SALES - GEOGRAPHY

               

Asia

    $ 444,990      $ 507,704        (12 %)      (4 %)      1 %      (9 %) 

Americas

      515,639        529,348        (3 %)      0 %      5 %      (8 %) 

Europe

      384,739        388,198        (1 %)      2 %      3 %      (6 %) 
  

 

 

     

 

 

           

Total

    $ 1,345,368      $ 1,425,250        (6 %)      (1 %)      3 %      (8 %) 
  

 

 

     

 

 

           

NET SALES - MARKETS

               

Pharmaceutical

    $ 789,954      $ 811,642        (3 %)      (1 %)      4 %      (6 %) 

Industrial

      416,719        439,305        (5 %)      (1 %)      1 %      (5 %) 

Academic & Government

      138,695        174,303        (20 %)      0 %      3 %      (23 %) 
  

 

 

     

 

 

           

Total

    $ 1,345,368      $ 1,425,250        (6 %)      (1 %)      3 %      (8 %) 
  

 

 

     

 

 

           

 

(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 Six Months Ended June 29, 2024 and July 1, 2023

(In thousands, except per share data)

 

    Selling &
Administrative
Expenses(a)		     Research &
Development
Expenses		     Operating
Income		     Operating
Income
Percentage		     Other
(Expense)
Income		     Income from
Operations
before
Income
Taxes		     Provision for
Income
Taxes		     Net
Income		     Diluted
Earnings
per Share		  

Three Months Ended June 29, 2024

 

                

GAAP

   $ 184,991     $ 46,182     $ 189,112       26.7 %    $ (302 )    $ 169,412     $ 26,675     $ 142,737     $ 2.40  

Adjustments:

                  

Purchased intangibles amortization (b)

     (11,744 )      —        11,744       1.7 %      —        11,744       2,810       8,934       0.15  

Restructuring costs and certain other items (d)

     (1,139 )      —        1,139       0.2 %      —        1,139       280       859       0.01  

Retention bonus obligation (f)

     (3,817 )      (1,272 )      5,089       0.7 %      —        5,089       1,221       3,868       0.07  
 

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Adjusted Non-GAAP

   $ 168,291     $ 44,910     $ 207,084       29.2 %    $ (302 )    $ 187,384     $ 30,986     $ 156,398     $ 2.63  
 

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Three Months Ended July 1, 2023

 

                

GAAP

   $ 193,768     $ 45,873     $ 199,859       27.0 %    $ (352 )    $ 180,275     $ 29,721     $ 150,554     $ 2.55  

Adjustments:

                  

Purchased intangibles amortization (b)

     (6,815 )      —        6,815       0.9 %      —        6,815       1,616       5,199       0.09  

Restructuring costs and certain other items (d)

     (5,229 )      —        5,229       0.7 %      —        5,229       1,217       4,012       0.07  

Acquisition related costs (e)

     (3,693 )      —        3,693       0.5 %      —        3,693       886       2,807       0.05  

Retention bonus obligation (f)

     (2,643 )      (881 )      3,524       0.5 %      —        3,524       846       2,678       0.05  
 

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Adjusted Non-GAAP

   $ 175,388     $ 44,992     $ 219,120       29.6 %    $ (352 )    $ 199,536     $ 34,286     $ 165,250     $ 2.80  
 

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Six Months Ended June 29, 2024

 

                

GAAP

   $ 381,603     $ 90,777     $ 322,958       24.0 %    $ 1,957     $ 284,268     $ 39,335     $ 244,933     $ 4.12  

Adjustments:

                  

Purchased intangibles amortization (b)

     (23,578 )      —        23,578       1.8 %      —        23,578       5,642       17,936       0.30  

Litigation provision and settlement (c)

     (10,242 )      —        10,242       0.8 %      —        10,242       2,458       7,784       0.13  

Restructuring costs and certain other items (d)

     (9,486 )      —        9,486       0.7 %      —        9,486       2,335       7,151       0.12  

Retention bonus obligation (f)

     (9,542 )      (3,181 )      12,723       0.9 %      —        12,723       3,053       9,670       0.16  
 

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Adjusted Non-GAAP

   $ 328,755     $ 87,596     $ 378,987       28.2 %    $ 1,957     $ 340,297     $ 52,823     $ 287,474     $ 4.84  
 

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Six Months Ended July 1, 2023

 

                

GAAP

   $ 377,203     $ 88,564     $ 374,027       26.2 %    $ 1,036     $ 345,448     $ 53,971     $ 291,477     $ 4.95  

Adjustments:

                  

Purchased intangibles amortization (b)

     (8,294 )      —        8,294       0.6 %      —        8,294       1,951       6,343       0.11  

Restructuring costs and certain other items (d)

     (4,824 )      —        4,824       0.3 %      —        4,824       1,473       3,351       0.06  

Acquisition related costs (e)

     (12,035 )      —        12,035       0.8 %      —        12,035       2,888       9,147       0.16  

Retention bonus obligation (f)

     (2,643 )      (881 )      3,524       0.2 %      —        3,524       846       2,678       0.05  
 

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Adjusted Non-GAAP

   $ 349,407     $ 87,683     $ 402,704       28.3 %    $ 1,036     $ 374,125     $ 61,129     $ 312,996     $ 5.31  
 

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

 

(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)

Litigation provisions and settlement gains were excluded as these items are isolated, unpredictable and not expected to recur regularly.

(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)

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)

 

     June 29, 2024      December 31, 2023  

Cash, cash equivalents and investments

    $ 327,361      $ 395,974  

Accounts receivable

      610,088        702,168  

Inventories

      522,927        516,236  

Property, plant and equipment, net

      636,110        639,073  

Intangible assets, net

      596,398        629,187  

Goodwill

      1,297,796        1,305,446  

Other assets

      458,367        438,770  

Total assets

    $ 4,449,047      $ 4,626,854  

Notes payable and debt

    $ 2,006,009      $ 2,355,513  

Other liabilities

      1,031,071        1,121,000  

Total liabilities

      3,037,080        3,476,513  

Total stockholders’ equity

      1,411,967        1,150,341  

Total liabilities and stockholders’ equity

    $ 4,449,047      $ 4,626,854  

Waters Corporation and Subsidiaries

Preliminary Condensed Consolidated Statements of Cash Flows

Three and Six Months Ended June 29, 2024 and July 1, 2023

(In thousands and unaudited)

 

     Three Months Ended     Six Months Ended  
     June 29, 2024     July 1, 2023     June 29, 2024     July 1, 2023  

Cash flows from operating activities:

         

Net income

    $ 142,737     $ 150,554     $ 244,933     $ 291,477  

Adjustments to reconcile net income to net cash provided by operating activities:

         

Stock-based compensation

      11,433       10,929       22,346       23,734  

Depreciation and amortization

      47,229       38,884       95,743       70,038  

Change in operating assets and liabilities and other, net

      (146,865 )      (182,249 )      (45,618 )      (170,380 ) 
  

 

 

    

 

 

    

 

 

    

 

 

  

Net cash provided by operating activities

      54,534       18,118       317,404       214,869  

Cash flows from investing activities:

         

Additions to property, plant, equipment and software capitalization

      (36,104 )      (46,607 )      (64,759 )      (80,997 ) 

Business acquisitions, net of cash acquired

      —        (1,285,907 )      —        (1,285,907 ) 

Investments in unaffiliated companies

      —        —        (1,064 )      —   

Net change in investments

      (11 )      —        (36 )      (16 ) 
  

 

 

    

 

 

    

 

 

    

 

 

  

Net cash used in investing activities

      (36,115 )      (1,332,514 )      (65,859 )      (1,366,920 ) 

Cash flows from financing activities:

         

Net change in debt

      (50,000 )      1,149,742       (350,000 )      1,054,782  

Proceeds from stock plans

      7,904       6,250       21,836       8,628  

Purchases of treasury shares

      (245 )      (236 )      (13,334 )      (69,741 ) 

Other cash flow from financing activities, net

      8,304       2,418       15,285       5,294  
  

 

 

    

 

 

    

 

 

    

 

 

  

Net cash used in financing activities

      (34,037 )      1,158,174       (326,213 )      998,963  

Effect of exchange rate changes on cash and cash equivalents

      4,755       (155 )      6,019       2,252  
  

 

 

    

 

 

    

 

 

    

 

 

  

Decrease in cash and cash equivalents

      (10,863 )      (156,377 )      (68,649 )      (150,836 ) 

Cash and cash equivalents at beginning of period

      337,290       486,070       395,076       480,529  
  

 

 

    

 

 

    

 

 

    

 

 

  

Cash and cash equivalents at end of period

    $ 326,427     $ 329,693     $ 326,427     $ 329,693  
  

 

 

    

 

 

    

 

 

    

 

 

  
Reconciliation of GAAP Cash Flows from Operating Activities to Free Cash Flow (a)  

Net cash provided by operating activities - GAAP

    $ 54,534     $ 18,118     $ 317,404     $ 214,869  

Adjustments:

         

Additions to property, plant, equipment and software capitalization

      (36,104 )      (46,607 )      (64,759 )      (80,997 ) 

Tax reform payments

      95,645       72,101       95,645       72,101  

Litigation settlements paid (received), net

      9,625       (375 )      9,250       (750 ) 

Major facility renovations

      —        4,394       —        8,860  

Payment of acquired Wyatt liabilities (b)

      —        25,617       —        25,617  

Payment of Wyatt retention bonus obligation (c)

      19,770       —        19,770       —   
  

 

 

    

 

 

    

 

 

    

 

 

  

Free Cash Flow - Adjusted Non-GAAP

    $ 143,470     $ 73,248     $ 377,310     $ 239,700  
  

 

 

    

 

 

    

 

 

    

 

 

  

 

(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.

(c)

During the three months ended June 29, 2024, the Company made its first retention payment under the Wyatt retention bonus program. The Company believes that these payments are not normal and do not represent future ongoing business expenses.

Waters Corporation and Subsidiaries

Reconciliation of Projected GAAP to Adjusted Non-GAAP Financial Outlook

 

     Twelve Months Ended      Three Months Ended  
     December 31, 2024      September 28, 2024  
     Range      Range  

Projected Sales

                  

Organic constant currency sales growth rate (a)

      (2.0%)      -       (0.5%)        1.0%      -       3.0%  

Impact of:

                  

Currency translation

      (1.5%)      -       (1.5%)        (1.5%)      -       (1.5%)  

Acquisitions

      1.3%      -       1.3%        —       -       —   
  

 

 

        

 

 

     

 

 

        

 

 

  

Sales growth rate as reported

      (2.2%)      -       (0.7%)        (0.5%)      -       1.5%  
  

 

 

        

 

 

     

 

 

        

 

 

  
     Range      Range  

Projected Earnings Per Diluted Share

                  

GAAP earnings per diluted share

    $ 10.47      -     $ 10.57      $ 2.42      -     $ 2.52  

Adjustments:

                  

Purchased intangibles amortization

    $ 0.60      -     $ 0.60      $ 0.15      -     $ 0.15  

Litigation settlement

    $ 0.13      -     $ 0.13      $ —       -     $ —   

Restructuring costs and certain other items

    $ 0.12      -     $ 0.12      $ —       -     $ —   

Retention bonus obligation

    $ 0.23      -     $ 0.23      $ 0.03      -     $ 0.03  
  

 

 

        

 

 

     

 

 

        

 

 

  

Adjusted non-GAAP earnings per diluted share

    $ 11.55      -     $ 11.65      $ 2.60      -     $ 2.70  
  

 

 

        

 

 

     

 

 

        

 

 

  

 

(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.

v3.24.2
Document and Entity Information
Jul. 31, 2024
Cover [Abstract]  
Entity Registrant Name WATERS CORP /DE/
Security Exchange Name NYSE
Amendment Flag false
Entity Central Index Key 0001000697
Document Type 8-K
Document Period End Date Jul. 31, 2024
Entity Incorporation State Country Code DE
Entity File Number 01-14010
Entity Tax Identification Number 13-3668640
Entity Address, Address Line One 34 Maple Street
Entity Address, City or Town Milford
Entity Address, State or Province MA
Entity Address, Postal Zip Code 01757
City Area Code (508)
Local Phone Number 478-2000
Written Communications false
Soliciting Material false
Pre Commencement Tender Offer false
Pre Commencement Issuer Tender Offer false
Security 12b Title Common stock, par value $0.01 per share
Trading Symbol WAT
Entity Emerging Growth Company false
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