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| 8-K - 8-K - WATERS CORP /DE/ | d807001d8k.htm |
Exhibit 99.1
For Immediate Release
Contact: John Lynch, Vice President, Treasurer and Investor Relations, 508-482-2314
Waters Reports Third Quarter 2014 Financial Results
Milford, Massachusetts, October 21, 2014 - Waters Corporation (NYSE/WAT) reported today third quarter 2014 sales of $493 million, an increase of 8% versus sales of $457 million in the third quarter of 2013. In the quarter, the effect of foreign currency translation was neutral to sales growth. On a GAAP basis, earnings per diluted share (EPS) for the third quarter were $1.34 compared to $1.14 for the third quarter of 2013. On a non-GAAP basis, including the adjustments in the attached reconciliation, EPS increased 16% to $1.38 compared to $1.19 in the third quarter of 2013. A description and reconciliation of GAAP to non-GAAP EPS is attached and can be found on the Company’s website at http://www.waters.com under the caption Investors.
Through the first nine months of 2014, sales for the Company were $1.41 billion, up 5% compared with sales of $1.34 billion in the first nine months of 2013. The effect of foreign currency translation was neutral to sales growth for the first nine months. On a GAAP basis, EPS for the first nine months of 2014 were $3.29 compared to $3.56 for the comparable period in 2013. On a non-GAAP basis and including adjustments on the attached reconciliation, EPS were $3.51 in the first nine months of 2014 as compared to $3.34 in 2013.
Commenting on the quarter, Douglas A. Berthiaume, Chairman, President, and Chief Executive Officer, said, “Broad-based demand from pharmaceutical customers highlighted our strong organic revenue growth in the third quarter. In addition, improvements in margins contributed to solid mid-teens EPS growth.”
As communicated in a prior press release, Waters Corporation will webcast its third quarter 2014 financial results conference call this morning, October 21, 2014 at 8:30 a.m. eastern time. To listen to the call, connect to www.waters.com, choose “Investor Relations” and click on the “Live Webcast”. A replay will be available through October 28, 2014 at midnight eastern time, similarly by webcast and also by phone at 203-369-3045.
About Waters Corporation
For over 50 years, Waters Corporation (NYSE:WAT) has created business advantages for laboratory-dependent organizations by delivering practical and sustainable innovation to enable significant advancements in such areas as healthcare delivery, environmental management, food safety, and water quality worldwide.
Pioneering a connected portfolio of separations science, laboratory information management, mass spectrometry and thermal analysis, Waters technology breakthroughs and laboratory solutions provide an enduring platform for customer success.
With revenue of $1.9 billion in 2013, Waters is driving scientific discovery and operational excellence for customers worldwide.
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, uncertainties relating to organizational/leadership transition plans; the impact on demand among the Company’s various market sectors from economic, sovereign and political uncertainties; 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 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 ability to access capital, maintain liquidity and service our 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; risks associated with lawsuits and other legal actions, particularly involving claims for infringement of patents and other intellectual property rights; and foreign exchange rate fluctuations potentially affecting translation of the Company’s future non-U.S. operating results. 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, 2013 and Form 10-Q for the period ended June 28, 2014 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 report 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
Condensed Consolidated Balance Sheets
(In thousands and unaudited)
| September 27, 2014 | December 31, 2013 | |||||||
| Cash, cash equivalents and investments |
1,946,357 | 1,803,670 | ||||||
| Accounts receivable |
393,169 | 430,985 | ||||||
| Inventories |
269,095 | 242,800 | ||||||
| Other current assets |
90,789 | 78,800 | ||||||
| Total current assets |
2,699,410 | 2,556,255 | ||||||
| Property, plant and equipment, net |
322,924 | 324,932 | ||||||
| Other assets |
729,342 | 701,442 | ||||||
| Total assets |
3,751,676 | 3,582,629 | ||||||
| Notes payable and debt |
225,006 | 133,346 | ||||||
| Accounts payable and accrued expenses |
349,473 | 354,186 | ||||||
| Total current liabilities |
574,479 | 487,532 | ||||||
| Long-term debt |
1,205,000 | 1,190,000 | ||||||
| Other long-term liabilities |
130,377 | 141,924 | ||||||
| Total liabilities |
1,909,856 | 1,819,456 | ||||||
| Total equity |
1,841,820 | 1,763,173 | ||||||
| Total liabilities and equity |
3,751,676 | 3,582,629 | ||||||
Waters Corporation and Subsidiaries
Consolidated Statements of Operations
(In thousands, except per share data)
(Unaudited)
| (Unaudited) | (Unaudited) | |||||||||||||||
| Three Months Ended | Nine Months Ended | |||||||||||||||
| September 27, 2014 | September 28, 2013 | September 27, 2014 | September 28, 2013 | |||||||||||||
| Net sales |
$ | 493,165 | $ | 457,317 | $ | 1,405,474 | $ | 1,338,770 | ||||||||
| Cost of sales |
202,222 | 191,568 | 591,794 | 554,465 | ||||||||||||
| Gross profit |
290,943 | 265,749 | 813,680 | 784,305 | ||||||||||||
| Selling and administrative expenses |
122,226 | 120,563 | 380,791 | 362,285 | ||||||||||||
| Research and development expenses |
27,279 | 23,599 | 79,002 | 73,561 | ||||||||||||
| Purchased intangibles amortization |
2,725 | 2,518 | 8,018 | 7,293 | ||||||||||||
| Operating income |
138,713 | 119,069 | 345,869 | 341,166 | ||||||||||||
| Other expense |
— | — | — | (1,575 | ) | |||||||||||
| Interest expense, net |
(7,300 | ) | (6,412 | ) | (19,602 | ) | (18,811 | ) | ||||||||
| Income from operations before income taxes |
131,413 | 112,657 | 326,267 | 320,780 | ||||||||||||
| Provision for income tax expense |
17,916 | 14,609 | 45,939 | 12,359 | ||||||||||||
| Net income |
$ | 113,497 | $ | 98,048 | $ | 280,328 | $ | 308,421 | ||||||||
| Net income per basic common share |
$ | 1.36 | $ | 1.15 | $ | 3.32 | $ | 3.60 | ||||||||
| Weighted-average number of basic common shares |
83,663 | 85,185 | 84,375 | 85,565 | ||||||||||||
| Net income per diluted common share |
$ | 1.34 | $ | 1.14 | $ | 3.29 | $ | 3.56 | ||||||||
| Weighted-average number of diluted common shares and equivalents |
84,401 | 86,364 | 85,162 | 86,719 | ||||||||||||
Waters Corporation and Subsidiaries
Quarterly Reconciliation of GAAP to Adjusted Non-GAAP Financials
(in thousands, except per share data)
The 2014 and 2013 adjusted amounts presented below are used by the management of the Company to measure operating performance with prior periods and forecasts and are not in accordance with generally accepted accounting principles (GAAP). The Company believes that the use of Non-GAAP measures, such as Non-GAAP Earnings Per Share (EPS) and Non-GAAP Operating Income, help management and investors gain a better understanding of our core operating results and future trends, and is consistent with how management measures performance for purposes of executive compensation and forecasts the Company’s performance. The reconciliation identifies items management has excluded as non-operational transactions. Management has excluded the following items:
| • | Purchased Intangibles Amortization was excluded to allow for comparisons of operating results that are consistent over periods of time. |
| • | Restructuring Costs, Asset Impairments, Acquisition-Related Costs and Other One-Time Costs were excluded as the Company believes that costs to consolidate operations, reduce overhead and complete acquisitions are infrequent or unusual and are not indicative of normal operating costs. |
| • | Infrequent Income Tax Items were excluded as these costs and benefits are typically the result of audit examination settlements, updates in management’s assessment of ongoing examinations or other unusual tax items and are not indicative of the Company’s normal or future income tax expense. |
| (Unaudited) | ||||||||||||||||
| Three Months Ended |
Nine Months Ended | |||||||||||||||
| September 27, 2014 |
September 28, 2013 |
September 27, 2014 |
September 28, 2013 |
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| GAAP Selling and Administrative Expenses (including Purchased Intangibles Amortization) |
$ | (124,951 | ) | $ | (123,081 | ) | $ | (388,809 | ) | $ | (369,578 | ) | ||||
| Purchased Intangibles Amortization |
2,725 | 2,518 | 8,018 | 7,339 | ||||||||||||
| Restructuring Costs, Asset Impairments, Acquisitions & Other One-Time Costs |
191 | 2,848 | 14,557 | 6,786 | ||||||||||||
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| Adjusted Non-GAAP Selling & Administrative Expenses (including Purchased Intangibles Amortization) |
$ | (122,035 | ) | $ | (117,715 | ) | $ | (366,234 | ) | $ | (355,453 | ) | ||||
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| GAAP Operating Income |
$ | 138,713 | $ | 119,069 | $ | 345,869 | $ | 341,166 | ||||||||
| Purchased Intangibles Amortization |
2,725 | 2,518 | 8,018 | 7,339 | ||||||||||||
| Restructuring Costs, Asset Impairments, Acquisitions & Other One-Time Costs |
191 | 2,848 | 14,557 | 6,786 | ||||||||||||
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| Adjusted Non-GAAP Operating Income |
$ | 141,629 | $ | 124,435 | $ | 368,444 | $ | 355,291 | ||||||||
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| GAAP Provision for Income Tax Expense |
$ | (17,916 | ) | $ | (14,609 | ) | $ | (45,939 | ) | $ | (12,359 | ) | ||||
| Purchased Intangibles Amortization |
(804 | ) | (719 | ) | (2,306 | ) | (2,111 | ) | ||||||||
| Restructuring Costs, Asset Impairments, Acquisitions & Other One-Time Costs |
150 | (896 | ) | (4,054 | ) | (2,293 | ) | |||||||||
| Infrequent Income Tax Items |
1,033 | 999 | 2,740 | (28,382 | ) | |||||||||||
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| Adjusted Non-GAAP Provision for Income Tax Expense |
$ | (17,537 | ) | $ | (15,225 | ) | $ | (49,559 | ) | $ | (45,145 | ) | ||||
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| GAAP Net Income |
$ | 113,497 | $ | 98,048 | $ | 280,328 | $ | 308,421 | ||||||||
| Purchased Intangibles Amortization |
1,921 | 1,799 | 5,712 | 5,228 | ||||||||||||
| Restructuring Costs, Asset Impairments, Acquisitions & Other One-Time Costs |
341 | 1,952 | 10,503 | 4,493 | ||||||||||||
| Infrequent Income Tax Items |
1,033 | 999 | 2,740 | (28,382 | ) | |||||||||||
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| Adjusted Non-GAAP Net Income |
$ | 116,792 | $ | 102,798 | $ | 299,283 | $ | 289,760 | ||||||||
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| GAAP EPS |
$ | 1.34 | $ | 1.14 | $ | 3.29 | $ | 3.56 | ||||||||
| Purchased Intangibles Amortization |
0.02 | 0.02 | 0.07 | 0.06 | ||||||||||||
| Restructuring Costs, Asset Impairments, Acquisitions & Other One-Time Costs |
0.00 | 0.02 | 0.12 | 0.05 | ||||||||||||
| Infrequent Income Tax Items |
0.01 | 0.01 | 0.03 | (0.33 | ) | |||||||||||
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| Adjusted Non-GAAP EPS |
$ | 1.38 | $ | 1.19 | $ | 3.51 | $ | 3.34 | ||||||||
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