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Waters Corporation Reports Increased First Quarter 2009 Earnings

MILFORD, Mass.--(BUSINESS WIRE)--Apr. 28, 2009-- Waters Corporation (NYSE/WAT) reported today first quarter 2009 sales of $333 million, a decrease of 10% versus sales of $372 million in the first quarter of 2008. These quarterly sales include an adverse foreign currency translation impact of approximately 5%. On a GAAP basis, earnings per diluted share (E.P.S.) for the first quarter were $0.75, compared to $0.67 for the first quarter in 2008. On a non-GAAP basis, E.P.S. were up 7% to $0.74 in the first quarter of 2009 from $0.69 in the first quarter of 2008. A reconciliation of GAAP to non-GAAP E.P.S. is attached.

Commenting on the quarter, Douglas Berthiaume, Chairman, President and Chief Executive Officer said, “Our sales volume in the quarter was largely in line with our expectations and reflects the tough economic environment. However, strong demand for our recurring revenue product lines combined with our ability to carefully control our costs contributed to earnings growth and strong cash generation.”

As communicated in a prior press release, Waters Corporation will webcast its first quarter 2009 financial results conference call this morning, April 28, 2009 at 8:30 a.m. eastern time. To listen to the call, connect to www.waters.com, choose “Investor” and click on the Live Webcast. A replay of the call will be available through May 5, 2009, similarly by webcast and also by phone at 203-369-3590.

About Waters Corporation:

Waters Corporation creates business advantage 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 $1.58 billion in 2008 and 5,000 employees, 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, including statements regarding expected financial results, future growth and customer demand that involve a number of risks and uncertainties. For this purpose, any statements that are not statements of historical fact may be deemed forward-looking statements. Without limiting the foregoing, the words, “believes”, “anticipates”, “plans”, “expects”, “intends”, “appears”, “estimates”, “projects”, and similar expressions 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, the impact on demand among the Company’s various market sectors from current economic difficulties and possible recession; the impact of changes in accounting principles and practices or tax rates, including the effect of recently restructuring certain legal entities; the ability to access capital in volatile market conditions; the ability to successfully integrate acquired businesses; fluctuations in capital expenditures by the Company’s customers, in particular large pharmaceutical companies, regulatory and/or administrative obstacles to the timely completion of purchase order documentation; introduction of competing products by other companies and loss of market share; pressures on prices from competitors and/or customers; regulatory obstacles to new product introductions; lack of acceptance of new products; other changes in the demands of the Company’s healthcare and pharmaceutical company customers; changes in distribution of the Company’s 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 section entitled “Risk Factors” of the Company’s annual report on Form 10-K for the year ended December 31, 2008 as filed with the Securities and Exchange Commission, which “Risk Factors” discussion is 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
Consolidated Statements of Operations
(In thousands, except per share data)
(Unaudited)
       
(Unaudited)
Three Months Ended
April 4, 2009 March 29, 2008
 
Net sales $ 333,052 $ 371,712
Cost of sales 127,454 155,451
 
Gross profit 205,598 216,261
 
Selling and administrative expenses (1) (2) 99,159 105,837
Research and development expenses 18,332 19,786
Purchased intangibles amortization 2,616 2,272
 
Operating income 85,491 88,366
 
Interest expense, net (2,222 ) (4,244 )
 
Income from operations before income taxes 83,269 84,122
 
Provision for income taxes (3) 9,922 15,647
 
Net income $ 73,347 $ 68,475
 
 
Net income per basic common share $ 0.75 $ 0.68
 
Weighted-average number of basic common shares 97,304 100,401
 
 
Net income per diluted common share $ 0.75 $ 0.67
 
Weighted-average number of diluted common shares and equivalents 97,927 101,983
 
 
(1) Included in selling and administrative expenses for the three months ended April 4, 2009 are restructuring and other incremental costs of $1.0 million related to cost reduction plans.
 
(2) Included in selling and administrative expenses for the three months ended April 4, 2009 are acquisition and other incremental related costs of $1.3 million related to recent acquisitions.
 
(3) Included in the provision for income taxes for the three months ended April 4, 2009 is a reversal of a $4.6 million charge related to the restructuring of certain legal entities that had been expensed in the third quarter of 2008.
 
Waters Corporation and Subsidiaries
Consolidated Statements of Operations
(In thousands, except per share data)
(Unaudited)
 
(Unaudited)
Three Months Ended
April 4, 2009 March 29, 2008

Reconciliation of net income per diluted share, in accordance with
generally accepted accounting principles, with adjusted results:

 
Net income per diluted share $ 0.75   $ 0.67  
 
Adjustment for purchased intangibles amortization, net of tax 1,819 1,603
Net income per diluted share effect   0.02     0.02  
 
Adjustment for restructuring, net of tax 643 -
Net income per diluted share effect   0.01     -  
 
Adjustment for acquisition related costs, net of tax 1,078 -
Net income per diluted share effect   0.01     -  
 
 
Adjustment for tax impact of restructuring certain legal entities (4,555 ) -
Net income per diluted share effect   (0.05 )   -  
 
Adjusted net income per diluted share $ 0.74   $ 0.69  
 
The adjusted net income per diluted share presented above is used by the management of the Company to measure operating performance with prior periods and is not in accordance with generally accepted accounting principles (GAAP). The above reconciliation identifies items management has excluded as non-operational transactions. Management has excluded the purchased intangibles amortization, the restructuring charges, the acquisition related costs and the reversal of the tax impact of restructuring certain legal entities from its non-GAAP adjusted amounts since management believes that these items are not directly related to ongoing operations, thereby providing investors with information that helps to compare ongoing operating performance.
Waters Corporation and Subsidiaries
Condensed Consolidated Balance Sheets
(In thousands and unaudited)
             
 
 
April 4, 2009 December 31, 2008
 
 
Cash, cash equivalents and short-term investments 431,272 428,522
Accounts receivable 279,345 291,763
Inventories 190,927 173,051
Other current assets 61,443 62,966
Total current assets 962,987 956,302
 
Property, plant and equipment, net 183,823 171,588
Other assets 527,725 495,008
Total assets 1,674,535 1,622,898
 
 
Notes payable and debt 88,059 36,120
Accounts payable and accrued expenses 255,476 253,386
Total current liabilities 343,535 289,506
 
Long-term debt 500,000 500,000
Other long-term liabilities 165,287 172,387
Total liabilities 1,008,822 961,893
 
Total equity 665,713 661,005
Total liabilities and equity 1,674,535 1,622,898

Source: Waters Corporation

Waters Corporation
Gene Cassis, 508-482-2349
Vice President of Investor Relations