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Waters (WAT) Q2 Earnings Beat Estimates, Revenues Down Y/Y
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Waters Corporation (WAT - Free Report) reported second-quarter 2020 non-GAAP earnings of $2.10 per share, which surpassed the Zacks Consensus Estimate by 37.2%. Further, the bottom line improved 82.6% sequentially but declined 2% on a year-over-year basis.
Net sales of $519.9 million beat the Zacks Consensus Estimate of $490 million. The top line was up 11.8% from the prior quarter. However, the figure was down 13% from the year-ago quarter on reported basis and 12% on constant currency basis.
The decline can be attributed to coronavirus-induced disruptions, which led to sluggish demand across all the geographies. Further, foreign currency headwinds hurt sales by 1%.
Further, softness in pharmaceutical, industrial, and academic and governmental markets remained a headwind. Further, the company encountered weakness in the Americas, Europe and Asia regions during the second quarter owing to the coronavirus pandemic.
Nevertheless, solid execution of the company’s cost-cutting strategies was a major positive during the reported quarter. Further, Waters’ new product pipelines remained a tailwind.
Waters Corporation Price, Consensus and EPS Surprise
Waters’ net sales figure can be categorized in four ways:
By Operating Segment: The company operates in two organized segments — Waters and TA.
Waters segment (89.6% of net sales) generated $465.7 million of sales, down 12% from the year-ago quarter. Sales in TA segment were $54.3 million, which accounted for 10.4% of net sales. The figure reflected year-over-year decline of 20%.
By Products & Services: This division comprises three segments — Instruments, Services and Chemistry.
Instruments sales (42.3% of sales) came in $219.8 million, down 23% on a year-over-year basis.
Service sales (39.4% of the sales) were $205.1 million, declining 3% year over year.
Chemistry sales (18.3% of the sales) were $95.1 million, down5% from the year-ago quarter.
Moreover, service and chemistry sections together generated recurring revenues of $300.2 million, down 4% from the year-ago quarter.
By Markets: The company serves three end markets — Pharmaceutical, Industrial and Governmental & Academic.
Pharmaceutical market (59.8% of net sales) generated sales of $311.02 million, down 11% on a year-over-year basis.
Industrial market (29.3% of sales) sales came in $152.1 million, down 14% from the year-ago quarter.
Governmental & Academic (10.9% of sales) generated $56.9million of sales. The figure declined 22% year over year.
By Geography: This company’s operating regions include Asia, Americas and Europe.
Asia (40% of net sales) generated $208.2 million of sales, down 13% on a year-over-year basis. This was primarily due to softness in China where sales declined 20% from the year-ago quarter.
Europe (26% of sales) generated $136.9 million of sales, decreasing 11% year over year.
Americas (34% of sales) generated $174.8 million of sales, down 15% from prior-year quarter. Sales in United States declined 14% year over year.
Operating Details
In the second quarter, non-GAAP selling and administrative expenses were $111.7million, reflecting a decrease of 14.4% from the year-ago quarter.
Research and development spending was $31.2 million, indicating a decline of 14.6% from the year-ago reported figure.
Adjusted operating margin was 31.5%, which expanded 100 basis points (bps) year over year.
Balance Sheet & Cash Flow
As of Jun 27, 2020, cash, cash equivalents and investments came in $355.8 million, lowerthan $393.9 million as of Mar 28, 2020.
Further, total liabilities were $2.8 billion, down from $3 billion in the prior quarter.
Waters generated cash from operation of $198.8 million in the second quarter, up from $151.6 million in the prior quarter.
Further, free cash flow of $175.4 million in the reported quarter.
The long-term earnings growth rate for Dropbox, Shopify and Etsy is currently pegged at 32.51%, 33.97% and 22.4%, respectively.
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Our research shows that 5 cutting-edge stocks could skyrocket from the exponential increase in demand for “stay at home” technologies. This could be one of the biggest buying opportunities of this decade, especially for those who get in early.
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Waters (WAT) Q2 Earnings Beat Estimates, Revenues Down Y/Y
Waters Corporation (WAT - Free Report) reported second-quarter 2020 non-GAAP earnings of $2.10 per share, which surpassed the Zacks Consensus Estimate by 37.2%. Further, the bottom line improved 82.6% sequentially but declined 2% on a year-over-year basis.
Net sales of $519.9 million beat the Zacks Consensus Estimate of $490 million. The top line was up 11.8% from the prior quarter. However, the figure was down 13% from the year-ago quarter on reported basis and 12% on constant currency basis.
The decline can be attributed to coronavirus-induced disruptions, which led to sluggish demand across all the geographies. Further, foreign currency headwinds hurt sales by 1%.
Further, softness in pharmaceutical, industrial, and academic and governmental markets remained a headwind. Further, the company encountered weakness in the Americas, Europe and Asia regions during the second quarter owing to the coronavirus pandemic.
Nevertheless, solid execution of the company’s cost-cutting strategies was a major positive during the reported quarter. Further, Waters’ new product pipelines remained a tailwind.
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: The company operates in two organized segments — Waters and TA.
Waters segment (89.6% of net sales) generated $465.7 million of sales, down 12% from the year-ago quarter. Sales in TA segment were $54.3 million, which accounted for 10.4% of net sales. The figure reflected year-over-year decline of 20%.
By Products & Services: This division comprises three segments — Instruments, Services and Chemistry.
Instruments sales (42.3% of sales) came in $219.8 million, down 23% on a year-over-year basis.
Service sales (39.4% of the sales) were $205.1 million, declining 3% year over year.
Chemistry sales (18.3% of the sales) were $95.1 million, down5% from the year-ago quarter.
Moreover, service and chemistry sections together generated recurring revenues of $300.2 million, down 4% from the year-ago quarter.
By Markets: The company serves three end markets — Pharmaceutical, Industrial and Governmental & Academic.
Pharmaceutical market (59.8% of net sales) generated sales of $311.02 million, down 11% on a year-over-year basis.
Industrial market (29.3% of sales) sales came in $152.1 million, down 14% from the year-ago quarter.
Governmental & Academic (10.9% of sales) generated $56.9million of sales. The figure declined 22% year over year.
By Geography: This company’s operating regions include Asia, Americas and Europe.
Asia (40% of net sales) generated $208.2 million of sales, down 13% on a year-over-year basis. This was primarily due to softness in China where sales declined 20% from the year-ago quarter.
Europe (26% of sales) generated $136.9 million of sales, decreasing 11% year over year.
Americas (34% of sales) generated $174.8 million of sales, down 15% from prior-year quarter. Sales in United States declined 14% year over year.
Operating Details
In the second quarter, non-GAAP selling and administrative expenses were $111.7million, reflecting a decrease of 14.4% from the year-ago quarter.
Research and development spending was $31.2 million, indicating a decline of 14.6% from the year-ago reported figure.
Adjusted operating margin was 31.5%, which expanded 100 basis points (bps) year over year.
Balance Sheet & Cash Flow
As of Jun 27, 2020, cash, cash equivalents and investments came in $355.8 million, lowerthan $393.9 million as of Mar 28, 2020.
Further, total liabilities were $2.8 billion, down from $3 billion in the prior quarter.
Waters generated cash from operation of $198.8 million in the second quarter, up from $151.6 million in the prior quarter.
Further, free cash flow of $175.4 million in the reported quarter.
Zacks Rank & Stocks to Consider
Currently, Waters carries a Zacks Rank #3 (Hold).
Some better-ranked stocks in the broader technology sector are Dropbox, Inc. (DBX - Free Report) , Shopify Inc. (SHOP - Free Report) and Etsy, Inc. (ETSY - Free Report) . While Dropbox sports a Zacks Rank #1 (Strong Buy), Shopify and Etsy carry a Zacks Rank #2 (Buy), at present. You can see the complete list of today’s Zacks #1 Rank stocks here.
The long-term earnings growth rate for Dropbox, Shopify and Etsy is currently pegged at 32.51%, 33.97% and 22.4%, respectively.
These Stocks Are Poised to Soar Past the Pandemic
The COVID-19 outbreak has shifted consumer behavior dramatically, and a handful of high-tech companies have stepped up to keep America running. Right now, investors in these companies have a shot at serious profits. For example, Zoom jumped 108.5% in less than 4 months while most other stocks were sinking.
Our research shows that 5 cutting-edge stocks could skyrocket from the exponential increase in demand for “stay at home” technologies. This could be one of the biggest buying opportunities of this decade, especially for those who get in early.
See the 5 high-tech stocks now>>