Full Press Release Details
Contact: Bryan Brokmeier, CFA, Senior
Director, Investor Relations, 508-482-3448
Corporation (NYSE: WAT) Reports First Quarter 2021 Financial Results
Milford, Mass., May 5, 2021 - Waters Corporation (NYSE: WAT) today announced first quarter 2021 sales of $609 million, a
31% increase as reported, compared to sales of $465 million for the first quarter of 2020. Foreign currency translation benefited sales growth by approximately 4% for the quarter.
On a GAAP basis, diluted earnings per share (EPS) for the first quarter of 2021 increased to $2.37, compared to $0.86 for the first quarter of 2020. On a non-GAAP basis, EPS increased to $2.29, compared to $1.15 for the first quarter of 2020. 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.
On a GAAP basis, net cash provided by
operating activities was $218 million for the first quarter of 2021, compared to $152 million for the first quarter of 2020. On a non-GAAP basis, adjusted free cash flow for the first quarter of 2021 was $193 million
versus $121 million for the first quarter of 2020.
I remain grateful to our colleagues for their continued hard work and commitment,
especially to those who are experiencing the devastating effects of the pandemic, said Dr. Udit Batra, President and Chief Executive Officer of Waters Corporation. There is much to be pleased about with our first quarter results,
driven by strong growth across each of our major end markets, with pharma leading the way. Thanks to solid execution and instrument sales growing in double-digits, we saw revenue increases across every region, with China s sales more
than doubling. Our transformation plan is well underway, with commercial momentum and a strong leadership team in place, we now turn towards developing a new strategy as we work to more closely align our portfolio with higher growth areas of the
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.
During the first quarter of 2021, sales into the pharmaceutical market increased 32% as reported and 28% in constant currency, sales into the industrial
market increased 28% as reported and 24% in constant currency and sales into the academic and government markets increased 33% as reported and 29% in constant currency.
During the first quarter, recurring revenues, which represent the combination of service and precision
chemistries revenues, increased 20% as reported and 15% in constant currency, while instrument system sales increased 49% as reported and 45% in constant currency.
Geographically, sales in Asia during the quarter increased 44% as reported and 41% in constant currency, sales in the Americas increased 15% as reported and
14% in constant currency (with U.S. sales growing 13%) and sales in Europe increased 36% as reported and 25% in constant currency.
Fiscal Year 2021 Financial Outlook
The Company expects full-year 2021 constant-currency sales growth in the range of 8% to 11%. Currency translation
is expected to increase full-year sales growth by one to two percentage points. The Company also expects full-year 2021 non-GAAP EPS in the range of $9.85 to $10.05. 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 2021 constant-currency sales growth in the range of 14% to 16%. Currency translation is expected to increase second quarter sales growth by approximately three percentage points. The Company also expects second quarter 2021 non-GAAP EPS in the range of $2.15 to $2.25. Please refer to the tables below for a reconciliation of the projected GAAP to non-GAAP financial outlook for the second quarter.
Waters Corporation will webcast its
first quarter 2021 financial results conference call today, May 5, 2021 at 8:00 a.m. Eastern Time. To listen to the call, please visit www.waters.com, select Investors under the About Waters section, and click
on the Live Webcast. A replay will be available through May 12, 2021 at midnight Eastern Time on the same website by webcast and also by phone at 866-485-4163.
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 more than 7,400 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, 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 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, 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, 2020, 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)
| Three Months Ended | ||||||||
| April 3, 2021 | March 28, 2020 | |||||||
| Net sales | $ | 608,545 | $ | 464,939 | ||||
| Costs and operating expenses: | ||||||||
| Cost of sales | 254,147 | 210,644 | ||||||
| Selling and administrative expenses | 143,196 | 147,735 | ||||||
| Research and development expenses | 38,092 | 34,989 | ||||||
| Purchased intangibles amortization | 1,840 | 2,625 | ||||||
| Litigation provision | 666 | |||||||
| Operating income | 171,270 | 68,280 | ||||||
| Other income (expense), net | 9,359 | (374 | ) | |||||
| Interest expense, net | (6,845 | ) | (10,043 | ) | ||||
| Income from operations before income taxes | 173,784 | 57,863 | ||||||
| Provision for income taxes | 25,657 | 4,301 | ||||||
| Net income | $ | 148,127 | $ | 53,562 | ||||
| Net income per basic common share | $ | 2.38 | $ | 0.86 | ||||
| Weighted-average number of basic common shares | 62,260 | 62,232 | ||||||
| Net income per diluted common share | $ | 2.37 | $ | 0.86 | ||||
| Weighted-average number of diluted common shares and equivalents | 62,632 | 62,626 |
Waters Corporation and Subsidiaries
Reconciliation of GAAP to Adjusted Non-GAAP
Net Sales by Operating Segment, Products & Services, Geography and Markets
Three Months Ended April 3, 2021 and March 28, 2020
| Current | ||||||||||||||||||||
| Period | Constant | |||||||||||||||||||
| Three Months Ended | Percent | Currency | Currency | |||||||||||||||||
| April 3, 2021 | March 28, 2020 | Change | Impact | Growth Rate (a) | ||||||||||||||||
| NET SALES - OPERATING SEGMENT | ||||||||||||||||||||
| Waters | $ | 541,878 | $ | 414,211 | 31 | % | $ | 18,021 | 26 | % | ||||||||||
| TA | 66,667 | 50,728 | 31 | % | 1,817 | 28 | % | |||||||||||||
| Total | $ | 608,545 | $ | 464,939 | 31 | % | $ | 19,838 | 27 | % | ||||||||||
| NET SALES - PRODUCTS & SERVICES | ||||||||||||||||||||
| Instruments | $ | 263,048 | $ | 176,938 | 49 | % | $ | 6,934 | 45 | % | ||||||||||
| Service | 226,523 | 190,756 | 19 | % | 8,724 | 14 | % | |||||||||||||
| Chemistry | 118,974 | 97,245 | 22 | % | 4,180 | 18 | % | |||||||||||||
| Total Recurring | 345,497 | 288,001 | 20 | % | 12,904 | 15 | % | |||||||||||||
| Total | $ | 608,545 | $ | 464,939 | 31 | % | $ | 19,838 | 27 | % | ||||||||||
| NET SALES - GEOGRAPHY | ||||||||||||||||||||
| Asia | $ | 229,542 | $ | 159,080 | 44 | % | $ | 5,097 | 41 | % | ||||||||||
| Americas | 197,357 | 172,176 | 15 | % | 457 | 14 | % | |||||||||||||
| Europe | 181,646 | 133,683 | 36 | % | 14,284 | 25 | % | |||||||||||||
| Total | $ | 608,545 | $ | 464,939 | 31 | % | $ | 19,838 | 27 | % | ||||||||||
| NET SALES - MARKETS | ||||||||||||||||||||
| Pharmaceutical | $ | 360,148 | $ | 272,563 | 32 | % | $ | 11,790 | 28 | % | ||||||||||
| Industrial | 183,273 | 143,354 | 28 | % | 5,976 | 24 | % | |||||||||||||
| Academic & Government | 65,124 | 49,022 | 33 | % | 2,072 | 29 | % | |||||||||||||
| Total | $ | 608,545 | $ | 464,939 | 31 | % | $ | 19,838 | 27 | % | ||||||||||
| NET SALES - EXCLUDING CHINA | ||||||||||||||||||||
| Total Net Sales | $ | 608,545 | $ | 464,939 | 31 | % | $ | 19,838 | 27 | % | ||||||||||
| China Net Sales | 102,919 | 47,231 | 118 | % | 4,026 | 109 | % | |||||||||||||
| Total Net Sales Excluding China | $ | 505,626 | $ | 417,708 | 21 | % | $ | 15,812 | 17 | % |
Waters Corporation and Subsidiaries
Reconciliation of GAAP to Adjusted Non-GAAP Financials
Three Months Ended April 3, 2021 and March 28, 2020
(In thousands, except per share data)
| Income from | ||||||||||||||||||||||||||||||||
| Operations | ||||||||||||||||||||||||||||||||
| Selling & | Operating | Other | before | Provision for | Diluted | |||||||||||||||||||||||||||
| Administrative | Operating | Income | Income | Income | Income | Net | Earnings | |||||||||||||||||||||||||
| Expenses (a) | Income | Percentage | (Expense) | Taxes | Taxes | Income | per Share | |||||||||||||||||||||||||
| Three Months Ended April 3, 2021 | ||||||||||||||||||||||||||||||||
| GAAP | $ | 145,036 | $ | 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 (c) | (870 | ) | 870 | 0.1 | % | (9,707 | ) | (8,837 | ) | (2,120 | ) | (6,717 | ) | (0.11 | ) | |||||||||||||||||
| Certain income tax items (d) | (550 | ) | 550 | 0.01 | ||||||||||||||||||||||||||||
| Adjusted Non-GAAP | $ | 142,326 | $ | 173,980 | 28.6 | % | $ | (348) | $ | 166,787 | $ | 23,401 | $ | 143,386 | $ | 2.29 | ||||||||||||||||
| Three Months Ended March 28, 2020 | ||||||||||||||||||||||||||||||||
| GAAP | $ | 151,026 | $ | 68,280 | 14.7 | % | $ | (374) | $ | 57,863 | $ | 4,301 | $ | 53,562 | $ | 0.86 | ||||||||||||||||
| Adjustments: | ||||||||||||||||||||||||||||||||
| Purchased intangibles amortization (b) | (2,625 | ) | 2,625 | 0.6 | % | 2,625 | 522 | 2,103 | 0.03 | |||||||||||||||||||||||
| Restructuring costs and certain other items (c) | (20,520 | ) | 20,520 | 4.4 | % | (309 | ) | 20,211 | 4,597 | 15,614 | 0.25 | |||||||||||||||||||||
| Litigation provision (e) | (666 | ) | 666 | 0.1 | % | 666 | 160 | 506 | 0.01 | |||||||||||||||||||||||
| Certain income tax items (d) | (375 | ) | 375 | 0.01 | ||||||||||||||||||||||||||||
| Adjusted Non-GAAP | $ | 127,215 | $ | 92,091 | 19.8 | % | $ | (683) | $ | 81,365 | $ | 9,205 | $ | 72,160 | $ | 1.15 |
Waters Corporation and Subsidiaries
Preliminary Condensed Unclassified Consolidated Balance Sheets
(In thousands and unaudited)
| April 3, 2021 | December 31, 2020 | |||||||
| Cash, cash equivalents and investments | $ | 809,769 | $ | 443,146 | ||||
| Accounts receivable | 550,677 | 573,316 | ||||||
| Inventories | 327,967 | 304,281 | ||||||
| Property, plant and equipment, net | 513,719 | 494,003 | ||||||
| Intangible assets, net | 240,853 | 258,645 | ||||||
| Goodwill | 438,139 | 444,362 | ||||||
| Other assets | 330,439 | 322,167 | ||||||
| Total assets | $ | 3,211,563 | $ | 2,839,920 | ||||
| Notes payable and debt | $ | 1,703,090 | $ | 1,356,515 | ||||
| Other liabilities | 1,277,511 | 1,251,261 | ||||||
| Total liabilities | 2,980,601 | 2,607,776 | ||||||
| Total stockholders equity | 230,962 | 232,144 | ||||||
| Total liabilities and stockholders equity | $ | 3,211,563 | $ | 2,839,920 |
Waters Corporation and Subsidiaries
Preliminary Condensed Consolidated Statements of Cash Flows
Three Months Ended April 3, 2021 and March 28, 2020
(In thousands and unaudited)
| Three Months Ended | ||||||||
| April 3, 2021 | March 28, 2020 | |||||||
| Cash flows from operating activities: | ||||||||
| Net income | $ | 148,127 | $ | 53,562 | ||||
| Adjustments to reconcile net income to net cash provided by operating activities: | ||||||||
| Stock-based compensation | 8,305 | 9,196 | ||||||
| Depreciation and amortization | 31,356 | 29,188 | ||||||
| Change in operating assets and liabilities, net | 30,616 | 59,689 | ||||||
| Net cash provided by operating activities | 218,404 | 151,635 | ||||||
| Cash flows from investing activities: | ||||||||
| Additions to property, plant, equipment and software capitalization | (39,503 | ) | (51,130 | ) | ||||
| Business acquisitions, net of cash acquired | (76,664 | ) | ||||||
| Net change in investments | (119,501 | ) | (2,381 | ) | ||||
| Net cash used in investing activities | (159,004 | ) | (130,175 | ) | ||||
| Cash flows from financing activities: | ||||||||
| Net change in debt | 346,363 | 214,634 | ||||||
| Proceeds from stock plans | 16,295 | 11,743 | ||||||
| Purchases of treasury shares | (173,305 | ) | (196,226 | ) | ||||
| Other cash flow from financing activities, net | (578 | ) | 2,767 | |||||
| Net cash provided by financing activities | 188,775 | 32,918 | ||||||
| Effect of exchange rate changes on cash and cash equivalents | (1,087 | ) | (32 | ) | ||||
| Increase in cash and cash equivalents | 247,088 | 54,346 | ||||||
| Cash and cash equivalents at beginning of period | 436,695 | 335,715 | ||||||
| Cash and cash equivalents at end of period | $ | 683,783 | $ | 390,061 |
Reconciliation of GAAP Cash Flows from Operating Activities to Free
| Net cash provided by operating activities - GAAP | $ | 218,404 | $ | 151,635 | ||||
| Adjustments: | ||||||||
| Additions to property, plant, equipment and software capitalization | (39,503 | ) | (51,130 | ) | ||||
| Major facility renovations | 14,490 | 20,543 | ||||||
| Free Cash Flow - Adjusted Non-GAAP | $ | 193,391 | $ | 121,048 |
Waters Corporation and Subsidiaries
Reconciliation of Projected GAAP to Adjusted Non-GAAP Financial Outlook
| Three Months Ended | Twelve Months Ended | |||||||||||||||||||
| July 3, 2021 | December 31, 2021 | |||||||||||||||||||
| Range | Range | |||||||||||||||||||
| Projected Sales | ||||||||||||||||||||
| Projected constant-currency sales growth rate (a) | 14 | % | - | 16 | % | 8 | % | - | 11 | % | ||||||||||
| Projected currency impact | 2 | % | - | 4 | % | 1 | % | - | 2 | % | ||||||||||
| Projected sales growth rate as reported | 16 | % | - | 20 | % | 9 | % | - | 13 | % | ||||||||||
| Range | Range | |||||||||||||||||||
| Projected Earnings Per Diluted Share | ||||||||||||||||||||
| Projected GAAP earnings per diluted share | $ | 2.10 | - | $ | 2.20 | $ | 9.65 | - | $ | 9.85 | ||||||||||
| Adjustments: | ||||||||||||||||||||
| Purchased intangibles amortization | $ | 0.04 | - | $ | 0.04 | $ | 0.16 | - | $ | 0.16 | ||||||||||
| Certain income tax items | $ | 0.01 | - | $ | 0.01 | $ | 0.04 | - | $ | 0.04 | ||||||||||
| Projected adjusted non-GAAP earnings per diluted share | $ | 2.15 | - | $ | 2.25 | $ | 9.85 | - | $ | 10.05 |
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.