Full Press Release Details
Contact: Bryan Brokmeier, CFA, Senior
Director, Investor Relations, 508-482-3448
Corporation (NYSE: WAT) Reports Fourth Quarter and
Full Year 2018 Financial Results
Fourth Quarter 2018 Highlights
Milford, Mass., January 23, 2019 - Waters Corporation (NYSE: WAT) today announced fourth quarter 2018
sales of $715 million, a 4% increase as reported, compared to sales of $687 million for the fourth quarter of 2017. Foreign currency translation negatively impacted sales growth by approximately 1% for the quarter.
On a GAAP basis, diluted earnings per share (EPS) for the fourth quarter of 2018 increased to $2.46, compared to a diluted loss per share of $4.44 for the
fourth quarter of 2017, which included a $550 million income tax charge. On a non-GAAP basis, EPS increased 14% to $2.87, compared to $2.51 for the fourth quarter of 2017. A description and reconciliation
of GAAP to non-GAAP results appear in the table below and can be found on the Company s website at http://www.waters.com under the caption Investors.
On a GAAP basis, net cash provided by operating activities for the fourth quarter of 2018 was $182 million versus $192 million for the fourth
quarter of 2017. On a non-GAAP basis, adjusted free cash flow for the fourth quarter of 2018 was $160 million versus $162 million for the fourth quarter of 2017.
For fiscal year 2018, the Company s sales were $2,420 million, up 5% as reported, compared to sales of $2,309 million for fiscal year
2017. Foreign currency translation increased sales growth by approximately 1% during fiscal year 2018. On a GAAP basis, EPS for fiscal year 2018 was $7.65, compared to $0.25 for fiscal year 2017. On a non-GAAP
basis, and including adjustments in the reconciliation below, EPS increased 11% to $8.29, compared to $7.49 for fiscal year 2017.
On a GAAP basis, net
cash provided by operating activities for fiscal year 2018 was $604 million versus $698 million for fiscal year 2017. On a non-GAAP basis, adjusted free cash flow for fiscal year 2018 was
$600 million versus $612 million for fiscal year 2017.
Chris O Connell, Chairman and Chief Executive Officer of Waters
Corporation, commented, We were pleased to end 2018 on a high note, with improving performance in our key market categories, products, and geographies. This fourth quarter improvement was highlighted by strength in our pharmaceutical category,
TA product line, and China. We are looking forward to building on this momentum in 2019 and expect to benefit from our new product cycle, headlined by yesterday s BioAccord system launch.
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 below.
During the fourth quarter of 2018, sales into the pharmaceutical market
grew 6% as reported and 7% in constant currency, sales into the industrial market grew 1% as reported and 2% in constant currency, and sales into the governmental and academic markets grew 2% as reported and 3% in constant currency. During fiscal
year 2018, sales into the pharmaceutical market grew 5% as reported and 4% in constant currency, sales into the industrial market grew 2% as reported and 1% in constant currency, and sales into the governmental and academic markets grew 8% as
reported and 7% in constant currency.
During the fourth quarter, recurring revenues, which represent the combination of service and precision chemistries
revenues, grew 5% as reported and 6% in constant currency, while instrument system sales grew 3% as reported and 4% in constant currency. For fiscal year 2018, recurring revenues grew 8% as reported and 6% in constant currency, while instrument
system sales grew 2% as reported and 1% in constant currency.
Geographically, sales in Asia during the quarter grew 8% as reported and 9% in constant
currency, sales in the Americas grew 5% as reported and 6% in constant currency (with U.S. sales growing 5%), and sales in Europe declined 3% as reported and 1% in constant currency. For fiscal year 2018, sales in Asia grew 7% as reported and 6% in
constant currency, sales in the Americas grew 3% (with U.S. sales growing 2%), and sales in Europe grew 4% as reported and 1% in constant currency.
First Quarter and Fiscal Year 2019 Financial Outlook
Company expects full-year 2019 constant currency sales growth in the range of 4% to 6%. As of today, currency translation is expected to decrease full-year sales growth by 1% to 2%. The Company also expects full-year 2019 non-GAAP earnings per fully diluted share in the range of $9.20 to $9.45. Please refer to the table below for a reconciliation of the projected GAAP to non-GAAP financial
outlook for the full year.
The Company expects first quarter 2019 constant currency sales growth in the range of 4% to 6%. As of today, currency
translation is expected to decrease first quarter sales growth by approximately 2% to 3%. The Company also expects first quarter 2019 non-GAAP earnings per fully diluted share in the range of $1.65 to $1.75.
Please refer to the table below for a reconciliation of the projected GAAP to non-GAAP financial outlook for the first quarter.
New $4 Billion Share Repurchase Authorization
Corporation also announced today that its Board of Directors authorized a new share repurchase program. This new program authorizes the purchase of up to $4 billion of the Company s common stock over a
two-year period and replaces the pre-existing program.
Waters Corporation will webcast its fourth quarter 2018 financial results conference call today, January 23, 2019 at 8:00 a.m. Eastern Time. To listen to
the call, please visit www.waters.com, choose Investors, and click on the Live Webcast. A replay will be available through January 30, 2019 at midnight Eastern Time on the same website by webcast and also by phone at 402-220-0191.
About Waters Corporation
Waters Corporation (NYSE: WAT), the world s leading specialty measurement company, has pioneered chromatography, mass spectrometry and thermal analysis
innovations serving the life, materials and food sciences for more than 60 years. With approximately 7,000 employees worldwide, Waters operates directly in 31 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 constant currency growth rate, 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 generally accepted accounting principles (GAAP). The Company s
definition 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 Waters Corporation 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 Waters Corporation 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 may contain 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, 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 among the Company s various market sectors from economic, sovereign and political uncertainties,
particularly regarding the effect of new or proposed tariff or trade regulations; the effect on the Company s financial results from the United Kingdom voting to exit 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; impact of the newly enacted tax reform legislation in the U.S.; 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, 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, 2017 as filed with the Securities and Exchange
Commission, which Forward-Looking Statements and Risk Factors discussions are incorporated by reference in this release. 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.
Waters Corporation and Subsidiaries
Consolidated Statements of Operations
(In thousands, except per share data)
| Three Months Ended | Twelve Months Ended | |||||||||||||||
| December 31, 2018 | December 31, 2017 | December 31, 2018 | December 31, 2017 | |||||||||||||
| Net sales | $ | 715,019 | $ | 687,275 | $ | 2,419,929 | $ | 2,309,078 | ||||||||
| Costs and operating expenses: | ||||||||||||||||
| Cost of sales | 286,869 | 270,453 | 992,564 | 947,067 | ||||||||||||
| Selling and administrative expenses | 142,853 | 148,391 | 536,902 | 544,363 | ||||||||||||
| Research and development expenses | 38,106 | 35,122 | 143,403 | 132,593 | ||||||||||||
| Purchased intangibles amortization | 2,337 | 1,639 | 7,712 | 6,743 | ||||||||||||
| Litigation provision (settlement) | 322 | 1,096 | (426 | ) | 11,114 | |||||||||||
| Acquired in-process research and development | 5,000 | |||||||||||||||
| Operating income | 244,532 | 230,574 | 739,774 | 662,198 | ||||||||||||
| Other expense (1)(2) | (45,501 | ) | (404 | ) | (47,794 | ) | (340 | ) | ||||||||
| Interest expense, net | (1,225 | ) | (4,432 | ) | (9,834 | ) | (20,761 | ) | ||||||||
| Income from operations before income taxes | 197,806 | 225,738 | 682,146 | 641,097 | ||||||||||||
| Provision for income taxes (3) | 12,654 | 578,910 | 88,352 | 620,786 | ||||||||||||
| Net income (loss) | $ | 185,152 | $ | (353,172 | ) | $ | 593,794 | $ | 20,311 | |||||||
| Net income (loss) per basic common share | $ | 2.48 | $ | (4.44 | ) | $ | 7.71 | $ | 0.25 | |||||||
| Weighted-average number of basic common shares | 74,802 | 79,454 | 76,992 | 79,793 | ||||||||||||
| Net income (loss) per diluted common share | $ | 2.46 | $ | (4.44 | ) | $ | 7.65 | $ | 0.25 | |||||||
| Weighted-average number of diluted common shares and equivalents | 75,345 | 79,454 | 77,618 | 80,604 |
Waters Corporation and Subsidiaries
Reconciliation of GAAP to Adjusted Non-GAAP
Net Sales by Operating Segment, Products & Services, Geography and Markets
Three Months Ended December 31, 2018 and December 31, 2017
| Percent Change | Current Period Currency Impact | |||||||||||||||||||
| Constant Currency Growth Rate (a) | ||||||||||||||||||||
| Three Months Ended | ||||||||||||||||||||
| December 31, 2018 | December 31, 2017 | |||||||||||||||||||
| NET SALES OPERATING SEGMENT | ||||||||||||||||||||
| Waters | $ | 625,099 | $ | 602,453 | 4 | % | $ | (5,087 | ) | 5 | % | |||||||||
| TA | 89,920 | 84,822 | 6 | % | (807 | ) | 7 | % | ||||||||||||
| Total | $ | 715,019 | $ | 687,275 | 4 | % | $ | (5,894 | ) | 5 | % | |||||||||
| NET SALES PRODUCTS & SERVICES | ||||||||||||||||||||
| Instruments | $ | 392,016 | $ | 379,114 | 3 | % | $ | (1,457 | ) | 4 | % | |||||||||
| Service | 216,534 | 207,610 | 4 | % | (2,641 | ) | 6 | % | ||||||||||||
| Chemistry | 106,469 | 100,551 | 6 | % | (1,796 | ) | 8 | % | ||||||||||||
| Total Recurring | 323,003 | 308,161 | 5 | % | (4,437 | ) | 6 | % | ||||||||||||
| Total | $ | 715,019 | $ | 687,275 | 4 | % | $ | (5,894 | ) | 5 | % | |||||||||
| NET SALES GEOGRAPHY | ||||||||||||||||||||
| Asia | $ | 262,910 | $ | 242,469 | 8 | % | $ | (2,016 | ) | 9 | % | |||||||||
| Americas | 248,538 | 235,740 | 5 | % | (469 | ) | 6 | % | ||||||||||||
| Europe | 203,571 | 209,066 | (3 | %) | (3,409 | ) | (1 | %) | ||||||||||||
| Total | $ | 715,019 | $ | 687,275 | 4 | % | $ | (5,894 | ) | 5 | % | |||||||||
| NET SALES MARKETS | ||||||||||||||||||||
| Pharmaceutical | $ | 396,883 | $ | 373,245 | 6 | % | $ | (3,621 | ) | 7 | % | |||||||||
| Industrial | 219,165 | 216,905 | 1 | % | (1,013 | ) | 2 | % | ||||||||||||
| Governmental & Academic | 98,971 | 97,125 | 2 | % | (1,260 | ) | 3 | % | ||||||||||||
| Total | $ | 715,019 | $ | 687,275 | 4 | % | $ | (5,894 | ) | 5 | % |
Waters Corporation and Subsidiaries
Reconciliation of GAAP to Adjusted Non-GAAP
Net Sales by Operating Segment, Products & Services, Geography and Markets
Twelve Months Ended December 31, 2018 and December 31, 2017
| Percent Change | Current Period Currency Impact | Constant Currency Growth Rate (a) | ||||||||||||||||||
| Twelve Months Ended | ||||||||||||||||||||
| December 31, 2018 | December 31, 2017 | |||||||||||||||||||
| NET SALES OPERATING SEGMENT | ||||||||||||||||||||
| Waters | $ | 2,139,345 | $ | 2,047,563 | 4 | % | $ | 23,680 | 3 | % | ||||||||||
| TA | 280,584 | 261,515 | 7 | % | 1,831 | 7 | % | |||||||||||||
| Total | $ | 2,419,929 | $ | 2,309,078 | 5 | % | $ | 25,511 | 4 | % | ||||||||||
| NET SALES PRODUCTS & SERVICES | ||||||||||||||||||||
| Instruments | $ | 1,204,706 | $ | 1,180,192 | 2 | % | $ | 10,887 | 1 | % | ||||||||||
| Service | 814,936 | 756,729 | 8 | % | 9,631 | 6 | % | |||||||||||||
| Chemistry | 400,287 | 372,157 | 8 | % | 4,993 | 6 | % | |||||||||||||
| Total Recurring | 1,215,223 | 1,128,886 | 8 | % | 14,624 | 6 | % | |||||||||||||
| Total | $ | 2,419,929 | $ | 2,309,078 | 5 | % | $ | 25,511 | 4 | % | ||||||||||
| NET SALES GEOGRAPHY | ||||||||||||||||||||
| Asia | $ | 922,291 | $ | 862,617 | 7 | % | $ | 5,775 | 6 | % | ||||||||||
| Americas | 835,177 | 809,989 | 3 | % | (49 | ) | 3 | % | ||||||||||||
| Europe | 662,461 | 636,472 | 4 | % | 19,785 | 1 | % | |||||||||||||
| Total | $ | 2,419,929 | $ | 2,309,078 | 5 | % | $ | 25,511 | 4 | % | ||||||||||
| NET SALES MARKETS | ||||||||||||||||||||
| Pharmaceutical | $ | 1,365,731 | $ | 1,294,668 | 5 | % | $ | 15,340 | 4 | % | ||||||||||
| Industrial | 737,144 | 721,088 | 2 | % | 8,028 | 1 | % | |||||||||||||
| Governmental & Academic | 317,054 | 293,322 | 8 | % | 2,143 | 7 | % | |||||||||||||
| Total | $ | 2,419,929 | $ | 2,309,078 | 5 | % | $ | 25,511 | 4 | % |
| Waters Corporation and Subsidiaries |
| Reconciliation of GAAP to Adjusted Non-GAAP Financials |
| Three and Twelve Months Ended December 31, 2018 and December 31, 2017 |
| (In thousands, except per share data) |
| Selling & Administrative Expenses (a) | Research & Development Expenses (a) | Operating Income | Operating Income Percentage | Other (Expense) Income | Income from Operations before Income Taxes | Provision for Income Taxes | Net Income (Loss) | Diluted Earnings (Loss) per Share | ||||||||||||||||||||||||||||
| Quarter Ended December 31, 2018 | ||||||||||||||||||||||||||||||||||||
| GAAP | $ | 145,512 | $ | 38,106 | $ | 244,532 | 34.2 | % | $ | (45,501 | ) | $ | 197,806 | $ | 12,654 | $ | 185,152 | $ | 2.46 | |||||||||||||||||
| Adjustments: | ||||||||||||||||||||||||||||||||||||
| Purchased intangibles amortization (b) | (2,337 | ) | 2,337 | 0.3 | % | 2,337 | 674 | 1,663 | 0.02 | |||||||||||||||||||||||||||
| Restructuring costs and certain other items (c) | 194 | (194 | ) | (194 | ) | 1 | (195 | ) | ||||||||||||||||||||||||||||
| Pension termination (d) | 45,891 | 45,891 | 15,879 | 30,012 | 0.40 | |||||||||||||||||||||||||||||||
| Litigation provisions (e) | (322 | ) | 322 | 322 | 77 | 245 | ||||||||||||||||||||||||||||||
| Tax reform (f) | 1,073 | (1,073 | ) | (0.01 | ) | |||||||||||||||||||||||||||||||
| Certain income tax items (g) | (726 | ) | 726 | 0.01 | ||||||||||||||||||||||||||||||||
| Adjusted Non-GAAP | $ | 143,047 | $ | 38,106 | $ | 246,997 | 34.5 | % | $ | 390 | $ | 246,162 | $ | 29,632 | $ | 216,530 | $ | 2.87 | ||||||||||||||||||
| Quarter Ended December 31, 2017 | ||||||||||||||||||||||||||||||||||||
| GAAP | $ | 151,126 | $ | 35,122 | $ | 230,574 | 33.5 | % | $ | (404 | ) | $ | 225,738 | $ | 578,910 | $ | (353,172 | ) | $ | (4.44 | ) | |||||||||||||||
| Adjustments: | ||||||||||||||||||||||||||||||||||||
| Purchased intangibles amortization (b) | (1,639 | ) | 1,639 | 0.2 | % | 1,639 | 424 | 1,215 | 0.02 | |||||||||||||||||||||||||||
| Restructuring costs and certain other items (c) | (2,452 | ) | 2,452 | 0.4 | % | 2,452 | 791 | 1,661 | 0.02 | |||||||||||||||||||||||||||
| Litigation provisions (e) | (1,096 | ) | 1,096 | 0.2 | % | 1,096 | 411 | 685 | 0.01 | |||||||||||||||||||||||||||
| Stock award modification (h) | (379 | ) | 379 | 0.1 | % | 379 | 142 | 237 | ||||||||||||||||||||||||||||
| Tax reform (f) | (550,000 | ) | 550,000 | 6.89 | ||||||||||||||||||||||||||||||||
| Certain income tax items (g) | (1,012 | ) | 1,012 | 0.01 | ||||||||||||||||||||||||||||||||
| Adjusted Non-GAAP | $ | 145,560 | $ | 35,122 | $ | 236,140 | 34.4 | % | $ | (404 | ) | $ | 231,304 | $ | 29,666 | $ | 201,638 | $ | 2.51 | |||||||||||||||||
| Twelve Months Ended December 31, 2018 | ||||||||||||||||||||||||||||||||||||
| GAAP | $ | 544,188 | $ | 143,403 | $ | 739,774 | 30.6 | % | $ | (47,794 | ) | $ | 682,146 | $ | 88,352 | $ | 593,794 | $ | 7.65 | |||||||||||||||||
| Adjustments: | ||||||||||||||||||||||||||||||||||||
| Purchased intangibles amortization (b) | (7,712 | ) | 7,712 | 0.3 | % | 7,712 | 1,609 | 6,103 | 0.08 | |||||||||||||||||||||||||||
| Restructuring costs and certain other items (c) | (2,244 | ) | 2,244 | 0.1 | % | 2,244 | 550 | 1,694 | 0.02 | |||||||||||||||||||||||||||
| Pension termination (d) | 49,138 | 49,138 | 16,659 | 32,479 | 0.42 | |||||||||||||||||||||||||||||||
| Litigation settlement (e) | 426 | (426 | ) | (426 | ) | (102 | ) | (324 | ) | |||||||||||||||||||||||||||
| Stock award modification (h) | (1,014 | ) | 1,014 | 1,014 | 243 | 771 | 0.01 | |||||||||||||||||||||||||||||
| Tax reform (f) | (5,157 | ) | 5,157 | 0.07 | ||||||||||||||||||||||||||||||||
| Certain income tax items (g) | (4,111 | ) | 4,111 | 0.05 | ||||||||||||||||||||||||||||||||
| Adjusted Non-GAAP | $ | 533,644 | $ | 143,403 | $ | 750,318 | 31.0 | % | $ | 1,344 | $ | 741,828 | $ | 98,043 | $ | 643,785 | $ | 8.29 | ||||||||||||||||||
| Twelve Months Ended December 31, 2017 | ||||||||||||||||||||||||||||||||||||
| GAAP | $ | 562,220 | $ | 137,593 | $ | 662,198 | 28.7 | % | $ | (340 | ) | $ | 641,097 | $ | 620,786 | $ | 20,311 | $ | 0.25 | |||||||||||||||||
| Adjustments: | ||||||||||||||||||||||||||||||||||||
| Purchased intangibles amortization (b) | (6,743 | ) | 6,743 | 0.3 | % | 6,743 | 1,782 | 4,961 | 0.06 | |||||||||||||||||||||||||||
| Restructuring costs and certain other items (c) | (15,993 | ) | 15,993 | 0.7 | % | 15,993 | 5,516 | 10,477 | 0.13 | |||||||||||||||||||||||||||
| Litigation provisions (e) | (11,114 | ) | 11,114 | 0.5 | % | 11,114 | 4,168 | 6,946 | 0.09 | |||||||||||||||||||||||||||
| Stock award modification (h) | (4,234 | ) | 4,234 | 0.2 | % | 4,234 | 1,588 | 2,646 | 0.03 | |||||||||||||||||||||||||||
| Acquired in-process research and development (i) | (5,000 | ) | 5,000 | 0.2 | % | 5,000 | 962 | 4,038 | 0.05 | |||||||||||||||||||||||||||
| Tax reform (f) | (550,000 | ) | 550,000 | 6.82 | ||||||||||||||||||||||||||||||||
| Certain income tax items (g) | (4,296 | ) | 4,296 | 0.05 | ||||||||||||||||||||||||||||||||
| Adjusted Non-GAAP | $ | 524,136 | $ | 132,593 | $ | 705,282 | 30.5 | % | $ | (340 | ) | $ | 684,181 | $ | 80,506 | $ | 603,675 | $ | 7.49 |
Waters Corporation and Subsidiaries
Preliminary Condensed Unclassified Consolidated Balance Sheets
(In thousands and unaudited)
| December 31, 2018 | December 31, 2017 | |||||||
| Cash, cash equivalents and investments | $ | 1,735,224 | $ | 3,393,701 | ||||
| Accounts receivable | 568,316 | 533,825 | ||||||
| Inventories | 291,569 | 270,294 | ||||||
| Property, plant and equipment, net | 343,083 | 349,278 | ||||||
| Intangible assets, net | 246,902 | 228,395 | ||||||
| Goodwill | 355,614 | 359,819 | ||||||
| Other assets | 186,718 | 189,042 | ||||||
| Total assets | $ | 3,727,426 | $ | 5,324,354 | ||||
| Notes payable and debt | $ | 1,148,350 | $ | 1,997,774 | ||||
| Other liabilities | 1,011,818 | 1,092,792 | ||||||
| Total liabilities | 2,160,168 | 3,090,566 | ||||||
| Total equity | 1,567,258 | 2,233,788 | ||||||
| Total liabilities and equity | $ | 3,727,426 | $ | 5,324,354 |
| Waters Corporation and Subsidiaries |
| Preliminary Condensed Consolidated Statements of Cash Flows |
| Three and Twelve Months Ended December 31, 2018 and December 31, 2017 |
| (In thousands and unaudited) |
| Three Months Ended | Twelve Months Ended | |||||||||||||||
| December 31, 2018 | December 31, 2017 | December 31, 2018 | December 31, 2017 | |||||||||||||
| Cash flows from operating activities: | ||||||||||||||||
| Net income (loss) | $ | 185,152 | $ | (353,172 | ) | $ | 593,794 | $ | 20,311 | |||||||
| Adjustments to reconcile net income (loss) to net cash provided by operating activities: | ||||||||||||||||
| Stock-based compensation | 9,357 | 9,368 | 37,541 | 39,436 | ||||||||||||
| Depreciation and amortization | 25,597 | 27,753 | 108,408 | 106,002 | ||||||||||||
| Effect of the 2017 Tax Act (a) | 530,383 | 530,383 | ||||||||||||||
| Change in operating assets and liabilities, net | (38,557 | ) | (22,148 | ) | (135,297 | ) | 1,508 | |||||||||
| Net cash provided by operating activities | 181,549 | 192,184 | 604,446 | 697,640 | ||||||||||||
| Cash flows from investing activities: | ||||||||||||||||
| Additions to property, plant, equipment and software capitalization | (31,864 | ) | (30,216 | ) | (96,079 | ) | (85,473 | ) | ||||||||
| Asset acquisitions, net of cash acquired | (31,486 | ) | ||||||||||||||
| Investment in unaffiliated company | (7,615 | ) | (7,000 | ) | ||||||||||||
| Payments for intellectual property licenses | (5,000 | ) | ||||||||||||||
| Net change in investments | 457,448 | (101,548 | ) | 1,818,482 | (438,279 | ) | ||||||||||
| Net cash provided by (used in) investing activities | 425,584 | (131,764 | ) | 1,683,302 | (535,752 | ) | ||||||||||
| Cash flows from financing activities: | ||||||||||||||||
| Net change in debt | (171 | ) | 39,850 | (850,161 | ) | 169,976 | ||||||||||
| Payments of debt issuance costs | (2,984 | ) | (2,984 | ) | ||||||||||||
| Proceeds from stock plans | 10,052 | 24,968 | 52,429 | 97,789 | ||||||||||||
| Purchases of treasury shares | (498,457 | ) | (86,802 | ) | (1,315,106 | ) | (332,544 | ) | ||||||||
| Other cash flow from financing activities, net | (4,503 | ) | 593 | (6,684 | ) | 3,894 | ||||||||||
| Net cash used in financing activities | (493,079 | ) | (24,375 | ) | (2,119,522 | ) | (63,869 | ) | ||||||||
| Effect of exchange rate changes on cash and cash equivalents | (7,147 | ) | 2,467 | (14,265 | ) | 38,669 | ||||||||||
| Increase in cash and cash equivalents | 106,907 | 38,512 | 153,961 | 136,688 | ||||||||||||
| Cash and cash equivalents at beginning of period | 689,373 | 603,807 | 642,319 | 505,631 | ||||||||||||
| Cash and cash equivalents at end of period | $ | 796,280 | $ | 642,319 | $ | 796,280 | $ | 642,319 | ||||||||
| Reconciliation of GAAP Cash Flows from Operating Activities to Free Cash Flow (b) | ||||||||||||||||
| Net cash provided by operating activities GAAP | $ | 181,549 | $ | 192,184 | $ | 604,446 | $ | 697,640 | ||||||||
| Adjustments: | ||||||||||||||||
| Additions to property, plant, equipment and software capitalization | (31,864 | ) | (30,216 | ) | (96,079 | ) | (85,473 | ) | ||||||||
| Tax reform payments | (783 | ) | 53,716 | |||||||||||||
| Litigation settlement payment | 15,400 | |||||||||||||||
| Major facility renovations | 5,059 | 10,505 | ||||||||||||||
| One-time pension contributions | 6,307 | 11,552 | ||||||||||||||
| Free Cash Flow Adjusted Non-GAAP | $ | 160,268 | $ | 161,968 | $ | 599,540 | $ | 612,167 |
| (a) In the fourth quarter of 2017, the Company recorded a $550 million income tax provision for an estimate of the impact of the enactment of the Tax Cuts and Jobs Act (2017 Tax Act), which was signed into law on December 22, 2017. The $550 million income tax provision primarily consists of an estimated U.S. transition tax as well as estimated income tax provisions for state and withholding taxes and a charge associated with the remeasurement of the Company s deferred tax assets and liabilities from 35% to the new U.S. corporate income tax rate of 21%. |
| (b) 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
(In thousands, except per share data)