Full Press Release Details
Contact: Caspar Tudor, Director,
Investor Relations (508) 482-2429
Waters Corporation (NYSE: WAT) Reports First Quarter
2022 Financial Results
Milford, Mass., May 3, 2022 - Waters Corporation (NYSE: WAT) today announced its financial results for the first quarter of
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.
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
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.
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
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
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.
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)
| 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 |
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
| Percent Change | Current Period Currency Impact | Constant Currency Growth Rate (a) | ||||||||||||||||||
| Three Months Ended | ||||||||||||||||||||
| April 2, 2022 | April 3, 2021 | |||||||||||||||||||
| 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 | % |
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)
| Selling & Administrative Expenses (a) | Acquired IPR&D and Research & Development Expenses | Operating Income | Operating Income Percentage | Other Income (Expense) | Income from Operations before Income Taxes | Provision for Income Taxes | Net Income | Diluted Earnings 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 |
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 |
Waters Corporation and Subsidiaries
Reconciliation of Projected GAAP to Adjusted Non-GAAP Financial Outlook
| Three Months Ended July 2, 2022 | Twelve Months Ended 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 | % | ||||||||||
| Range | Range | |||||||||||||||||||
| Projected Earnings Per Diluted Share | ||||||||||||||||||||
| 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 |
These forward-looking adjustment estimates do not reflect future gains and charges that are inherently difficult to predict and estimate due to their unknown