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Waters Corporation (WAT - Free Report) has reported fourth-quarter 2020 non-GAAP earnings of $3.65 per share, which surpassed the Zacks Consensus Estimate by 27.2%. Further, the bottom line improved 68.9% sequentially and 14% on a year-over-year basis.
Net sales of $786.7 million beat the Zacks Consensus Estimate of $711.1 million. The top line was up 32.5% from the prior quarter. Further, the figure was up 10% from the year-ago quarter on a reported basis and 7% on a constant-currency basis.
Top-line growth was driven by strong performance in Asia, the Americas and Europe. Further, solid momentum across pharmaceutical and industrial end-markets contributed well. Additionally, the improved performance delivered by the Waters segment was a positive.
Moreover, favorable foreign currency fluctuations contributed 3% to sales growth in the reported quarter.
Although uncertainties related to the ongoing coronavirus pandemic remain headwinds for the company in the near term, solid commercial execution and efforts toward product development and innovation remain positives. Moreover, Waters’ new product pipelines remain tailwinds.
Waters Corporation Price, Consensus and EPS Surprise
The company’s net sales figure can be categorized in four ways:
By Operating Segment: It operates in two organized segments — Waters and TA.
The Waters segment (89.5% of net sales) generated $703.7 million of sales, up 11% from the year-ago quarter. Sales in the TA segment were $82.9 million (10.5% of net sales), which reflected year-over-year growth of 1%.
By Products & Services: This division comprises three segments — Instruments, Services and Chemistry.
Instruments sales (50.9% of sales) were $400.4 million, up6% on a year-over-year basis.
Service sales (32.4% of the sales) were $254.7 million, increasing 12% year over year.
Chemistry sales (16.7% of the sales) were $131.6 million, up 17% from the year-ago quarter.
Moreover, service and chemistry sections together generated recurring revenues of $386.2 million, up 14% from the year-ago quarter.
By Markets: The company serves three end markets — Pharmaceutical, Industrial, and Governmental & Academic.
The Pharmaceutical market (58% of net sales) generated sales of $460.4 million, which increased 17% on a year-over-year basis.
The Industrial market’s (30% of sales) sales were $233.2 million, up 8% from the year-ago quarter.
Governmental & Academic (12% of sales) generated $93.1million of sales. The figure declined 13% year over year.
By Geography: This company’s operating regions include Asia, the Americas and Europe.
Asia (37.6% of net sales) generated $295.7 million of sales, up 13% on a year-over-year basis.
The Americas (32% of sales) generated $251.4 million of sales, increasing 3% year over year. Notably, sales in the United States increased 4% year over year.
Europe (30.4% of sales) generated $239.5 million of sales, up 15% from the prior-year quarter.
Operating Details
In the fourth quarter, non-GAAP selling and administrative expenses were $150.9 million, reflecting an increase of 8.3% from the year-ago quarter. As a percentage of net sales, the figure contracted 30 basis points (bps) year over year.
Research and development spending was $39.7 million, indicating a rise of 6.9% from the year-ago reported figure. As a percentage of net sales, the figure contracted 20 bps year over year.
Adjusted operating margin was 35%, which contracted 140 basis points (bps) year over year.
Balance Sheet & Cash Flow
As of Dec 31, 2020, cash, cash equivalents and investments were $443.1 million, higher than $397.1 million as of Sep 26, 2020.
Further, accounts receivables stood at $573.3 million at the end of the fourth quarter, which was up from $494.4 million at the end of the last reported quarter.
Waters generated cash from operation of $267.5 million in the fourth quarter, up from $172.6 million in the prior quarter.
Further, it recorded free cash flow of $240 million in the reported quarter.
Guidance
For first-quarter 2021, Waters expects non-GAAP earnings of $1.50-$1.60 per share. The Zacks Consensus Estimate for earnings is pegged at $1.65.
The company anticipates net sales growth between 10% and 13% on a reported basis. The Zacks Consensus Estimate for sales is currently projected at $512.8 million.
For 2021, Waters anticipates non-GAAP earnings of $9.32-$9.57 per share. The Zacks Consensus Estimate for 2021 earnings is pegged at $9.26 per share.
Further, the company expects 2021 net sales growth of 6-10% on a reported basis. The Zacks Consensus Estimate for the same is pegged at $2.44 billion.
Long-term earnings growth rates of Microchip, Synaptics and Vishay are pegged at 14.92%, 10% and 1.56%, respectively.
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Waters (WAT) Q4 Earnings Beat Estimates, Revenues Rise Y/Y
Waters Corporation (WAT - Free Report) has reported fourth-quarter 2020 non-GAAP earnings of $3.65 per share, which surpassed the Zacks Consensus Estimate by 27.2%. Further, the bottom line improved 68.9% sequentially and 14% on a year-over-year basis.
Net sales of $786.7 million beat the Zacks Consensus Estimate of $711.1 million. The top line was up 32.5% from the prior quarter. Further, the figure was up 10% from the year-ago quarter on a reported basis and 7% on a constant-currency basis.
Top-line growth was driven by strong performance in Asia, the Americas and Europe. Further, solid momentum across pharmaceutical and industrial end-markets contributed well. Additionally, the improved performance delivered by the Waters segment was a positive.
Moreover, favorable foreign currency fluctuations contributed 3% to sales growth in the reported quarter.
Although uncertainties related to the ongoing coronavirus pandemic remain headwinds for the company in the near term, solid commercial execution and efforts toward product development and innovation remain positives. Moreover, Waters’ new product pipelines remain tailwinds.
Waters Corporation Price, Consensus and EPS Surprise
Waters Corporation price-consensus-eps-surprise-chart | Waters Corporation Quote
Top Line in Detail
The company’s net sales figure can be categorized in four ways:
By Operating Segment: It operates in two organized segments — Waters and TA.
The Waters segment (89.5% of net sales) generated $703.7 million of sales, up 11% from the year-ago quarter. Sales in the TA segment were $82.9 million (10.5% of net sales), which reflected year-over-year growth of 1%.
By Products & Services: This division comprises three segments — Instruments, Services and Chemistry.
Instruments sales (50.9% of sales) were $400.4 million, up6% on a year-over-year basis.
Service sales (32.4% of the sales) were $254.7 million, increasing 12% year over year.
Chemistry sales (16.7% of the sales) were $131.6 million, up 17% from the year-ago quarter.
Moreover, service and chemistry sections together generated recurring revenues of $386.2 million, up 14% from the year-ago quarter.
By Markets: The company serves three end markets — Pharmaceutical, Industrial, and Governmental & Academic.
The Pharmaceutical market (58% of net sales) generated sales of $460.4 million, which increased 17% on a year-over-year basis.
The Industrial market’s (30% of sales) sales were $233.2 million, up 8% from the year-ago quarter.
Governmental & Academic (12% of sales) generated $93.1million of sales. The figure declined 13% year over year.
By Geography: This company’s operating regions include Asia, the Americas and Europe.
Asia (37.6% of net sales) generated $295.7 million of sales, up 13% on a year-over-year basis.
The Americas (32% of sales) generated $251.4 million of sales, increasing 3% year over year. Notably, sales in the United States increased 4% year over year.
Europe (30.4% of sales) generated $239.5 million of sales, up 15% from the prior-year quarter.
Operating Details
In the fourth quarter, non-GAAP selling and administrative expenses were $150.9 million, reflecting an increase of 8.3% from the year-ago quarter. As a percentage of net sales, the figure contracted 30 basis points (bps) year over year.
Research and development spending was $39.7 million, indicating a rise of 6.9% from the year-ago reported figure. As a percentage of net sales, the figure contracted 20 bps year over year.
Adjusted operating margin was 35%, which contracted 140 basis points (bps) year over year.
Balance Sheet & Cash Flow
As of Dec 31, 2020, cash, cash equivalents and investments were $443.1 million, higher than $397.1 million as of Sep 26, 2020.
Further, accounts receivables stood at $573.3 million at the end of the fourth quarter, which was up from $494.4 million at the end of the last reported quarter.
Waters generated cash from operation of $267.5 million in the fourth quarter, up from $172.6 million in the prior quarter.
Further, it recorded free cash flow of $240 million in the reported quarter.
Guidance
For first-quarter 2021, Waters expects non-GAAP earnings of $1.50-$1.60 per share. The Zacks Consensus Estimate for earnings is pegged at $1.65.
The company anticipates net sales growth between 10% and 13% on a reported basis. The Zacks Consensus Estimate for sales is currently projected at $512.8 million.
For 2021, Waters anticipates non-GAAP earnings of $9.32-$9.57 per share. The Zacks Consensus Estimate for 2021 earnings is pegged at $9.26 per share.
Further, the company expects 2021 net sales growth of 6-10% on a reported basis. The Zacks Consensus Estimate for the same is pegged at $2.44 billion.
Zacks Rank & Stocks to Consider
Waters currently carries a Zacks Rank #3 (Hold).
Some better-ranked stocks in the broader technology sector are Microchip Technology Incorporated (MCHP - Free Report) , Synaptics Incorporated (SYNA - Free Report) , and Vishay Intertechnology (VSH - Free Report) . All three companies carry a Zacks Rank #2 (Buy) at present. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Long-term earnings growth rates of Microchip, Synaptics and Vishay are pegged at 14.92%, 10% and 1.56%, respectively.
Zacks Names “Single Best Pick to Double”
From thousands of stocks, 5 Zacks experts each have chosen their favorite to skyrocket +100% or more in months to come. From those 5, Director of Research SherazMian hand-picks one to have the most explosive upside of all.
You know this company from its past glory days, but few would expect that it’s poised for a monster turnaround. Fresh from a successful repositioning and flush with A-list celeb endorsements, it could rival or surpass other recent Zacks’ Stocks Set to Double like Boston Beer Company which shot up +143.0% in a little more than 9 months and Nvidia which boomed +175.9% in one year.
Free: See Our Top Stock and 4 Runners Up >>