Highlights
- Sales of $691 million grew 13% as reported and 16% in constant
currency
- Transformation on track with strong commercial momentum,
operational performance, and innovation
- Instrument sales grew 26% in constant currency, with strong
growth across LC, MS and TA product lines
- All end-markets grew, with pharmaceutical and industrial both
up high-teens
- Broad-based sales growth across all geographies, led by U.S.
which grew 28% and China grew 17% in constant currency
- GAAP EPS of $2.62; non-GAAP EPS of $2.80, a 22% increase from
prior year
Waters Corporation (NYSE: WAT) today announced its financial
results for the first quarter of 2022.
“Our teams continue to deliver excellent results despite the
challenging environment. This was a record first quarter for
Waters’ sales, led by instruments which grew 26% in constant
currency, while our recurring revenues grew 9% in constant
currency, reflecting continued demand across our geographies and
end-markets,” said Dr. Udit Batra, President and Chief Executive
Officer of Waters Corporation. “Our non-GAAP operating income
margin expanded by 170 basis points, demonstrating our team’s
continued operational excellence and relentless focus on delivering
innovative products to our customers.”
Dr. Batra continued, “Our portfolio rejuvenation is focused on
large and small molecules, with ArcTM HPLC, ACQUITYTM Premier, and
MaxPeakTM Premier columns all providing a strong contribution to
growth in the quarter. Customer response to the launches of our new
mass spec products - SELECT SERIESTM MRT, XevoTM TQ Absolute, and
waters_connectTM has been extremely positive as well.”
First Quarter 2022
Sales for the quarter were $691 million, an increase of 13% as
reported and 16% in constant currency, compared to sales of $609
million for the first quarter of 2021.
On a GAAP basis, operating income margin for the first quarter
of 2022 improved to 28.3% compared to 28.1% for the first quarter
of 2021. On a non-GAAP basis, operating income margin improved to
30.3% compared to 28.6% for the first quarter of 2021.
On a GAAP basis, diluted earnings per share (EPS) for the first
quarter of 2022 increased to $2.62, compared to $2.37 for the first
quarter of 2021. On a non-GAAP basis, EPS increased to $2.80,
compared to $2.29 for the first quarter of 2021. 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.
Other Highlights
During the first quarter of 2022, sales into the pharmaceutical
market increased 15% as reported and 19% in constant currency,
sales into the industrial market increased 14% as reported and 17%
in constant currency and sales into the academic and government
markets were flat as reported and increased 4% in constant
currency.
Recurring revenues, which represent the combination of service
and precision chemistries, increased 6% as reported and 9% in
constant currency, while instrument system sales increased 24% as
reported and 26% in constant currency.
Geographically, sales in Asia during the quarter increased 11%
as reported and 14% in constant currency, sales in the Americas
increased 26% (with U.S. sales growing 28%), and sales in Europe
increased 3% as reported and 9% in constant currency. Sales in
China increased 18% as reported and 17% in constant currency.
Unless otherwise noted, sales growth and decline percentages are
presented on an as-reported basis and are the same as the sales
growth and decline percentages presented on a constant currency
basis as compared with the same period in the prior year, each of
which is detailed in the reconciliation of sales growth rates to
constant currency growth rates in the tables below.
Full-Year and Second Quarter 2022 Financial Guidance
The Company is raising its full-year 2022 guidance, and now
expects constant currency sales growth in the range of 7.5% to 9%.
Currency translation is expected to decrease full-year sales growth
by approximately three percentage points. The Company is also
raising its full-year 2022 non-GAAP EPS guidance to the range of
$11.90 to $12.10. Please refer to the tables below for a
reconciliation of the projected GAAP to non-GAAP financial outlook
for the full-year.
The Company expects second quarter 2022 constant currency sales
growth in the range of 6% to 8%. Currency translation is expected
to decrease second quarter sales growth by approximately four
percentage points. The Company expects second quarter 2022 non-GAAP
EPS in the range of $2.55 to $2.65. Please refer to the tables
below for a reconciliation of the projected GAAP to non-GAAP
financial outlook for the second quarter.
Conference Call
Waters Corporation will webcast its first quarter 2022 financial
results conference call today, May 3, 2022 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 at least May 17, 2022 at midnight Eastern Time on
the same website by webcast and also by phone at (866)
363-1809.
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 more than 60 years. With more than
7,800 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 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 the
effects of the ongoing COVID-19 pandemic on our business, financial
condition, results of operations and prospects, including: portions
of our global workforce being unable to work fully and/or
effectively due to working remotely, illness, quarantines,
government actions, facility closures or other reasons related to
the pandemic, increased risks of cyber-attacks resulting from our
temporary remote working model, disruptions in our manufacturing
capabilities or to our supply chain and distribution network,
volatility and uncertainty in global capital markets limiting our
ability to access capital, customers being unable to make timely
payments for purchases and volatility in demand for our products;
foreign exchange rate fluctuations potentially affecting
translation of the Company’s future non-U.S. operating results; the
impact on demand for the Company’s products, including delays or
disruptions to our distribution network, among the Company’s
various market sectors or geographies from economic, sovereign and
political uncertainties, particularly regarding the effect of new
or proposed tariff or trade regulations or changes in the
interpretation or enforcement of existing regulations; the effect
on the Company’s financial results from the United Kingdom exiting
the European Union; fluctuations in expenditures by the Company’s
customers, in particular large pharmaceutical companies;
introduction of competing products by other companies and loss of
market share; pressures on prices from competitors and/or
customers; regulatory, economic and competitive obstacles to new
product introductions; other changes in demand for the Company’s
products from the effect of mergers and acquisitions by the
Company’s customers; 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; shifts in taxable income in jurisdictions with different
effective tax rates; the outcome of tax examinations or changes in
respective country legislation affecting the Company’s effective
tax rate; the effect of the adoption of new accounting standards;
the ability to access capital, maintain liquidity and service the
Company’s debt in volatile market conditions, including any
potential impact on the Company’s operations stemming from
sustained inflation, particularly in the U.S., as a large portion
of the Company’s cash is held and operating cash flows are
generated outside the U.S.; environmental and logistical obstacles
affecting the distribution of products and risks associated with
lawsuits and other legal actions, particularly involving claims for
infringement of patents and other intellectual property rights.
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, 2021, 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.
Arc, ACQUITY, MaxPeak, SELECT SERIES, Xevo, and waters_connect
are trademarks of Waters Corporation.
Waters Corporation and
Subsidiaries
Consolidated Statements of
Operations
(In thousands, except per
share data)
(Unaudited)
Three Months Ended
April 2, 2022
April 3, 2021
Net sales
$
690,572
$
608,545
Costs and operating expenses: Cost of sales
285,685
254,147
Selling and administrative expenses
157,475
143,196
Research and development expenses
40,472
38,092
Purchased intangibles amortization
1,673
1,840
Acquired in-process research and development
9,797
-
Operating income
195,470
171,270
Other income, net (a)
170
9,359
Interest expense, net
(8,945
)
(6,845
)
Income from operations before income taxes
186,695
173,784
Provision for income taxes
26,864
25,657
Net income
$
159,831
$
148,127
Net income per basic common share
$
2.64
$
2.38
Weighted-average number of basic common shares
60,580
62,260
Net income per diluted common share
$
2.62
$
2.37
Weighted-average number of diluted common shares and
equivalents
60,952
62,632
(a) During the three months ended April 3, 2021, the Company
recorded an unrealized gain of $10 million due to an observable
change in the fair value of an existing investment the Company does
not have the ability to exercise significant influence over.
Waters Corporation and Subsidiaries Reconciliation of
GAAP to Adjusted Non-GAAP Net Sales by Operating Segments,
Products & Services, Geography and Markets Three Months
Ended April 2, 2022 and April 3, 2021 (In thousands)
Current
Period
Constant
Three Months Ended
Percent
Currency
Currency
April 2, 2022
April 3, 2021
Change
Impact
Growth Rate (a)
NET SALES - OPERATING SEGMENTS Waters $
613,156
$
541,878
13
%
$
(15,856
)
16
%
TA
77,416
66,667
16
%
(1,581
)
18
%
Total $
690,572
$
608,545
13
%
$
(17,437
)
16
%
NET SALES - PRODUCTS & SERVICES
Instruments $
325,222
$
263,048
24
%
$
(6,288
)
26
%
Service
239,732
226,523
6
%
(8,163
)
9
%
Chemistry
125,618
118,974
6
%
(2,986
)
8
%
Total Recurring
365,350
345,497
6
%
(11,149
)
9
%
Total $
690,572
$
608,545
13
%
$
(17,437
)
16
%
NET SALES - GEOGRAPHY Asia $
254,334
$
229,542
11
%
$
(7,571
)
14
%
Americas
248,837
197,357
26
%
(1
)
26
%
Europe
187,401
181,646
3
%
(9,865
)
9
%
Total $
690,572
$
608,545
13
%
$
(17,437
)
16
%
NET SALES - MARKETS Pharmaceutical $
415,772
$
360,148
15
%
$
(11,158
)
19
%
Industrial
209,397
183,273
14
%
(4,153
)
17
%
Academic & Government
65,403
65,124
-
(2,126
)
4
%
Total $
690,572
$
608,545
13
%
$
(17,437
)
16
%
NET SALES - EXCLUDING CHINA Total Net Sales $
690,572
$
608,545
13
%
$
(17,437
)
16
%
China Net Sales
121,032
102,919
18
%
850
17
%
Total Net Sales Excluding China $
569,540
$
505,626
13
%
$
(18,287
)
16
%
(a)
The Company believes that
referring to comparable constant currency growth rates is a useful
way to evaluate the underlying performance of Waters Corporation's
net sales. Constant currency growth rate, a non-GAAP financial
measure, measures the change in net sales between current and prior
year periods, ignoring the impact of foreign currency exchange
rates during the current period. See description of non-GAAP
financial measures contained in this release.
Waters Corporation and Subsidiaries
Reconciliation of GAAP to
Adjusted Non-GAAP Financials
Three Months Ended April 2,
2022 and April 3, 2021
(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 April 2, 2022 GAAP $
159,148
$
50,269
$
195,470
28.3
%
$
170
$
186,695
$
26,864
$
159,831
$
2.62
Adjustments: Purchased intangibles amortization (b)
(1,673
)
-
1,673
0.2
%
-
1,673
383
1,290
0.02
Acquired in-process research and development(c)
-
(9,797
)
9,797
1.4
%
-
9,797
2,351
7,446
0.12
Restructuring costs and certain other items (d)
(2,375
)
-
2,375
0.3
%
(416
)
1,959
461
1,498
0.02
Certain income tax items (e)
-
-
-
-
-
-
(488
)
488
0.01
Adjusted Non-GAAP $
155,100
$
40,472
$
209,315
30.3
%
$
(246
)
$
200,124
$
29,571
$
170,553
$
2.80
Three Months Ended April 3, 2021 GAAP $
145,036
$
38,092
$
171,270
28.1
%
$
9,359
$
173,784
$
25,657
$
148,127
$
2.37
Adjustments: Purchased intangibles amortization (b)
(1,840
)
-
1,840
0.3
%
-
1,840
414
1,426
0.02
Restructuring costs and certain other items (d)
(870
)
-
870
0.1
%
(9,707
)
(8,837
)
(2,120
)
(6,717
)
(0.11
)
Certain income tax items (e)
-
-
-
-
-
-
(550
)
550
0.01
Adjusted Non-GAAP $
142,326
$
38,092
$
173,980
28.6
%
$
(348
)
$
166,787
$
23,401
$
143,386
$
2.29
(a)
Selling & administrative
expenses include purchased intangibles amortization, litigation
provisions and settlements and asset impairments.
(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, mergers and
acquisition costs and certain other items were excluded as the
Company believes that the cost to consolidate operations, reduce
overhead, acquire companies 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)
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.
Waters Corporation and
Subsidiaries
Preliminary Condensed
Unclassified Consolidated Balance Sheets
(In thousands and
unaudited)
April 2, 2022
December 31, 2021
Cash, cash equivalents and investments
$
503,095
$
569,285
Accounts receivable
607,262
612,648
Inventories
381,902
356,095
Property, plant and equipment, net
547,199
547,913
Intangible assets, net
236,408
242,401
Goodwill
435,807
437,865
Other assets
329,596
328,725
Total assets
$
3,041,269
$
3,094,932
Notes payable and debt
$
1,444,122
$
1,513,870
Other liabilities
1,222,210
1,213,508
Total liabilities
2,666,332
2,727,378
Total stockholders' equity
374,937
367,554
Total liabilities and stockholders' equity
$
3,041,269
$
3,094,932
Waters Corporation and
Subsidiaries
Preliminary Condensed
Consolidated Statements of Cash Flows
Three Months Ended April 2,
2022 and April 3, 2021
(In thousands and
unaudited)
Three Months Ended
April 2, 2022
April 3, 2021
Cash flows from operating activities: Net income
$
159,831
$
148,127
Adjustments to reconcile net income to net cash provided by
operating activities: Stock-based compensation
10,933
8,305
Depreciation and amortization
32,664
31,356
Change in operating assets and liabilities and other, net
(5,468
)
30,616
Net cash provided by operating activities
197,960
218,404
Cash flows from investing activities: Additions to property,
plant, equipment and software capitalization
(27,751
)
(39,503
)
Proceeds from sale of equity investment
6,785
-
Payments for intellectual property licenses
(4,897
)
-
Net change in investments
44,855
(119,501
)
Net cash provided by (used in) investing activities
18,992
(159,004
)
Cash flows from financing activities: Net change in debt
(70,000
)
346,363
Proceeds from stock plans
12,832
16,295
Purchases of treasury shares
(170,136
)
(173,305
)
Other cash flow from financing activities, net
(107
)
(578
)
Net cash (used in) provided by financing activities
(227,411
)
188,775
Effect of exchange rate changes on cash and cash equivalents
(10,705
)
(1,087
)
(Decrease) increase in cash and cash equivalents
(21,164
)
247,088
Cash and cash equivalents at beginning of period
501,234
436,695
Cash and cash equivalents at end of period
$
480,070
$
683,783
Reconciliation of GAAP Cash Flows
from Operating Activities to Free Cash Flow (a)
Net cash provided by operating activities - GAAP
$
197,960
$
218,404
Adjustments: Additions to property, plant, equipment and
software capitalization
(27,751
)
(39,503
)
Litigation settlements paid, net
(584
)
-
Major facility renovations
5,927
14,490
Free Cash Flow - Adjusted Non-GAAP
$
175,552
$
193,391
(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.
Waters Corporation and
Subsidiaries
Reconciliation of Projected
GAAP to Adjusted Non-GAAP Financial Outlook
Three Months Ended
Twelve Months Ended
July 2, 2022
December 31, 2022
Range
Range
Projected Sales Projected constant currency sales
growth rate (a)
6.0%
-
8.0%
7.5%
-
9.0%
Projected currency impact
(4.0%)
-
(4.0%)
(3.0%)
-
(3.0%)
Projected sales growth rate as reported
2.0%
-
4.0%
4.5%
-
6.0%
Projected Earnings Per Diluted Share
Range
Range
Projected GAAP earnings per diluted share
$
2.52
-
$
2.62
$
11.68
-
$
11.88
Adjustments: Purchased intangibles amortization
$
0.02
-
$
0.02
$
0.08
-
$
0.08
Acquired in-process research and development
$
-
$
-
$
0.12
$
0.12
Certain income tax items
$
0.01
-
$
0.01
$
0.02
-
$
0.02
Projected adjusted non-GAAP earnings per diluted share
$
2.55
-
$
2.65
$
11.90
-
$
12.10
(a) Constant currency growth rates are a non-GAAP financial measure
that measures the change in net sales between current and prior
year periods, ignoring the impact of foreign currency exchange
rates during the current period. 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.
View source
version on businesswire.com: https://www.businesswire.com/news/home/20220502005753/en/
Caspar Tudor, Director, Investor Relations – (508) 482-2429
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