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Waters (WAT) Q1 Earnings & Sales Beat Estimates, Fall Y/Y
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Waters Corporation (WAT - Free Report) has reported first-quarter 2024 non-GAAP earnings of $2.21 per share, beating the Zacks Consensus Estimate by 5.2%. However, the bottom line decreased 11.2% on a year-over-year basis.
Net sales of $636.84 million topped the Zacks Consensus Estimate of $634.35 million. The figure fell 7% on a reported basis and 9% at constant currency from the year-ago quarter’s readings.
Softness in the pharmaceutical, industrial, and government and academic markets was a major concern. The weakening momentum in Asia was another headwind.
Sluggishness in the Waters and TA segments was a negative.
Nevertheless, the growing momentum in Europe was a positive.
Waters Corporation Price, Consensus and EPS Surprise
Waters’ net sales figure can be categorized in four ways:
By Operating Segment: WAT operates under two organized segments, namely Waters and TA.
The Waters segment (88% of net sales) generated sales worth $561.9 million, down 7% year over year. Sales in the TA segment were $74.9 million (12%), reflecting a 9% year-over-year decline.
By Products & Services: The division comprises three segments, namely Instruments, Services and Chemistry.
Instruments sales (37%) were $241.9 million, declining 20% on a year-over-year basis.
Services registered sales (41%) worth $260.7 million, climbing 5% year over year.
Chemistry sales (22%) totaled $134.2 million, growing 1% year over year.
Moreover, the Services and Chemistry segments jointly generated recurring revenues of $394.9 million, up 3% year over year.
By Markets: Waters serves three end markets, such as Pharmaceutical, Industrial, and Governmental & Academic.
The Pharmaceutical market (58%) generated sales of $374.2 million, which decreased 3% on a year-over-year basis.
The Industrial market’s (31%) sales were $195.3 million, down 7% year over year.
The Governmental & Academic market (11%) generated $67.3 million in sales, which plunged 25% year over year.
By Geography: Waters’ operating regions include Asia, the Americas and Europe.
Asia (33%) generated $207.6 million in sales, down 18% on a year-over-year basis.
Sales in the Americas (37%) generated $241.2 million, decreasing 2% year over year. The United States registered a 12% year-over-year improvement in sales.
Europe (30%) generated $188.1 million in sales, up 2% year over year.
Operating Details
In the first quarter, non-GAAP selling and administrative expenses were $160.5 million, down 7.8% year over year. As a percentage of net sales, the figure contracted 20 basis points (bps) on a year-over-year basis.
Research and development spending of $44.6 million increased 4.6% year over year. As a percentage of net sales, the figure expanded 80 bps year over year.
The adjusted operating margin was 27%, which expanded 20 bps year over year.
Balance Sheet & Cash Flow
As of Dec 31, 2023, cash, cash equivalents and investments were $338.2 million, down from $395.97 million as of Dec 31, 2023.
Waters generated cash from operations of $262.9 million in the reported quarter, up from $230.12 million in the prior quarter.
WAT recorded a free cash flow of $233.8 million in the first quarter.
Guidance
For second-quarter 2024, Waters expects non-GAAP earnings of $2.50-$2.60 per share. The Zacks Consensus Estimate is pegged at $2.78.
Management anticipates organic sales to decline 6-4% on a constant-currency basis. WAT projects sales growth to dip 2% due to unfavorable foreign exchange fluctuations. Wyatt transaction is estimated to increase sales growth by 1.5%.
On a reported basis, total sales are predicted to decline 6.5-4.5%. The Zacks Consensus Estimate is pegged at $729.85 million.
For 2024, Waters anticipates non-GAAP earnings of $11.75-$12.05 per share. This includes a foreign exchange headwind of 2%. The Zacks Consensus Estimate is pegged at $11.89.
Waters projects 2024 organic sales growth between -0.5 and 1.5% on a constant-currency basis. Wyatt transaction is expected to increase sales growth by slightly more than 1%. WAT projects sales growth to be affected by less than 1% due to unfavorable foreign exchange fluctuations.
On a reported basis, total sales are suggested to grow 0-2%. The Zacks Consensus Estimate is pegged at $2.98 billion.
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Waters (WAT) Q1 Earnings & Sales Beat Estimates, Fall Y/Y
Waters Corporation (WAT - Free Report) has reported first-quarter 2024 non-GAAP earnings of $2.21 per share, beating the Zacks Consensus Estimate by 5.2%. However, the bottom line decreased 11.2% on a year-over-year basis.
Net sales of $636.84 million topped the Zacks Consensus Estimate of $634.35 million. The figure fell 7% on a reported basis and 9% at constant currency from the year-ago quarter’s readings.
Softness in the pharmaceutical, industrial, and government and academic markets was a major concern. The weakening momentum in Asia was another headwind.
Sluggishness in the Waters and TA segments was a negative.
Nevertheless, the growing momentum in Europe was a positive.
Waters Corporation Price, Consensus and EPS Surprise
Waters Corporation price-consensus-eps-surprise-chart | Waters Corporation Quote
Top Line in Detail
Waters’ net sales figure can be categorized in four ways:
By Operating Segment: WAT operates under two organized segments, namely Waters and TA.
The Waters segment (88% of net sales) generated sales worth $561.9 million, down 7% year over year. Sales in the TA segment were $74.9 million (12%), reflecting a 9% year-over-year decline.
By Products & Services: The division comprises three segments, namely Instruments, Services and Chemistry.
Instruments sales (37%) were $241.9 million, declining 20% on a year-over-year basis.
Services registered sales (41%) worth $260.7 million, climbing 5% year over year.
Chemistry sales (22%) totaled $134.2 million, growing 1% year over year.
Moreover, the Services and Chemistry segments jointly generated recurring revenues of $394.9 million, up 3% year over year.
By Markets: Waters serves three end markets, such as Pharmaceutical, Industrial, and Governmental & Academic.
The Pharmaceutical market (58%) generated sales of $374.2 million, which decreased 3% on a year-over-year basis.
The Industrial market’s (31%) sales were $195.3 million, down 7% year over year.
The Governmental & Academic market (11%) generated $67.3 million in sales, which plunged 25% year over year.
By Geography: Waters’ operating regions include Asia, the Americas and Europe.
Asia (33%) generated $207.6 million in sales, down 18% on a year-over-year basis.
Sales in the Americas (37%) generated $241.2 million, decreasing 2% year over year. The United States registered a 12% year-over-year improvement in sales.
Europe (30%) generated $188.1 million in sales, up 2% year over year.
Operating Details
In the first quarter, non-GAAP selling and administrative expenses were $160.5 million, down 7.8% year over year. As a percentage of net sales, the figure contracted 20 basis points (bps) on a year-over-year basis.
Research and development spending of $44.6 million increased 4.6% year over year. As a percentage of net sales, the figure expanded 80 bps year over year.
The adjusted operating margin was 27%, which expanded 20 bps year over year.
Balance Sheet & Cash Flow
As of Dec 31, 2023, cash, cash equivalents and investments were $338.2 million, down from $395.97 million as of Dec 31, 2023.
Waters generated cash from operations of $262.9 million in the reported quarter, up from $230.12 million in the prior quarter.
WAT recorded a free cash flow of $233.8 million in the first quarter.
Guidance
For second-quarter 2024, Waters expects non-GAAP earnings of $2.50-$2.60 per share. The Zacks Consensus Estimate is pegged at $2.78.
Management anticipates organic sales to decline 6-4% on a constant-currency basis. WAT projects sales growth to dip 2% due to unfavorable foreign exchange fluctuations. Wyatt transaction is estimated to increase sales growth by 1.5%.
On a reported basis, total sales are predicted to decline 6.5-4.5%. The Zacks Consensus Estimate is pegged at $729.85 million.
For 2024, Waters anticipates non-GAAP earnings of $11.75-$12.05 per share. This includes a foreign exchange headwind of 2%. The Zacks Consensus Estimate is pegged at $11.89.
Waters projects 2024 organic sales growth between -0.5 and 1.5% on a constant-currency basis. Wyatt transaction is expected to increase sales growth by slightly more than 1%. WAT projects sales growth to be affected by less than 1% due to unfavorable foreign exchange fluctuations.
On a reported basis, total sales are suggested to grow 0-2%. The Zacks Consensus Estimate is pegged at $2.98 billion.
Zacks Rank & Other Key Picks
Currently, Waters has a Zacks Rank #2 (Buy).
Some other top-ranked stocks in the broader technology sector are Alphabet (GOOGL - Free Report) , Badger Meter (BMI - Free Report) and Arista Networks (ANET - Free Report) . While Alphabet and Badger Meter sport a Zacks Rank #1 (Strong Buy), Arista Networks carries a Zacks Rank #2 at present. You can see the complete list of today’s Zacks #1 Rank stocks here.
Shares of Alphabet have gained 16.5% in the year-to-date period. The long-term earnings growth rate for GOOGL is currently projected at 22.4%.
Shares of Badger Meter have gained 18.7% in the year-to-date period. The long-term earnings growth rate for BMI is 15.57%.
Shares of Arista Networks have gained 8.9% in the year-to-date period. The long-term earnings growth rate for ANET is 17.48%.