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Waters Corp (WAT) Q2 Earnings Beat, Revenues Lag Estimates
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Waters Corporation (WAT - Free Report) delivered second-quarter 2018 non-GAAP earnings of $1.95 per share, which surpassed the Zacks Consensus Estimate by 3 cents. The figure increased 11% on a year-over-year basis and 22.6% sequentially. This can be attributed to solid operational result during the quarter.
Net sales increased 7% year over year and 12.3% sequentially to $596.22 million. However, the figure missed the Zacks Consensus Estimate of $598.04 million.
Robust performance of Waters and TA product line drove year-over-year top-line growth. Moreover, the company witnessed strong sales growth in Asia and Europe. Further, solid year-over-year improvement in the Governmental & Academic market aided the results.
Moving forward, the company remains optimistic about growth opportunities from the pharmaceutical end market which also performed well in the reported quarter.
Coming to the price performance, shares of Waters have returned 1.7% on a year-to-date basis against the industry’s decline of 2.7%.
Top Line in Detail
Waters’ net sales figure can be categorized into four ways:
By Operating Segment: The company operates in two organized segments — Waters and TA.
Waters segment (88.4% of net sales) generated $527.3 million of sales, up 6% from the year-ago quarter. Sales in TA segment came in $68.9 million and accounted for 11.6% of the net sales. The figure reflected strong year-over-year growth of 14%.
By Products & Services: This division is comprises three segments — Instruments, Services and Chemistry.
Instruments sales (48.6% of sales) came in $289.7 million, up 3% on a year-over-year basis.
Service sales (34.8% of the sales) were $207.3 million. The figure increased 12% year over year.
Chemistry sales (16.6% of the sales) came in $99.1 million, increasing 9% from the year-ago quarter.
Moreover, service and chemistry sections together generated recurring revenues of $306.5 million, surging 11% year over year.
By Markets: The company serves three end markets — Pharmaceutical, Industrial and Governmental & Academic.
Pharmaceutical market (56.7% of net sales) generated sales of $338.3 million, up 6% on a year-over-year basis.
Industrial market (30.8% of sales) sales came in $183.7 million, increasing 5% from the year-ago quarter.
Governmental & Academic (12.5% of sales) generated $74.2 million of sales. The figure was up 16% year over year.
By Geography: This company’s operating regions include Asia, Americas and Europe.
Asia (39.7% of net sales) generated $236.9 million of sales for the company. The figure was up 10% on a year-over-year basis.
Americas (33.3% of sales) generated $198.1 million of sales, up 1% year over year.
Europe (27% of sales) generated $161.2 million of sales, advancing 10% from prior year quarter.
Waters Corporation Price, Consensus and EPS Surprise
Non-GAAP selling and administrative expenses were $135.4 million, reflecting an increase of 5.3% year over year and 5.1% from the previous quarter.
Research and development outlay for the quarter was $35.6 million, up 8.2% year over year and 3.2% sequentially.
Adjusted operating margin was 30.5%, expanded 60 basis points (bps) from the year-ago quarter and 300 bps sequentially.
Balance Sheet & Cash Flow
As of Jun 30, 2018, cash, cash equivalents and investments came in $2.24 billion, lower than $2.5 billion as of Mar 31, 2018.
Further, total liabilities were $2.18 billion which declined from $2.37 billion in the previous quarter.
Waters also generated free cash flow of $143.8 million in the second quarter.
Guidance
For third-quarter 2018, Waters expects non-GAAP earnings in the range of $1.58-$1.95 per share. The Zacks Consensus Estimate for earnings is pegged at $1.96.
The company anticipates net sales growth between 4% and 6% on a constant currency basis. The Zacks Consensus Estimate for sales is currently projected at $603.2 million.
For 2018, Waters revised guidance for non-GAAP earnings, which are now anticipated to lie in the range of $8.05-$8.20 per share, from the previously guided range of $8.10-$8.30 per share. The Zacks Consensus Estimate for 2018 earnings is pegged at $8.19 per share.
Further, the company expects net sales to reflect growth between 4-6%. The Zacks Consensus Estimate is pegged at $2.46 billion.
Long-term earnings growth rate for Analog Devices, AMETEK and Texas Instruments is pegged at 12.4%, 10.7% and 9.5%, respectively.
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Last year, it generated $8 billion in global revenues. By 2020, it's predicted to blast through the roof to $47 billion. Famed investor Mark Cuban says it will produce "the world's first trillionaires," but that should still leave plenty of money for regular investors who make the right trades early.
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Waters Corp (WAT) Q2 Earnings Beat, Revenues Lag Estimates
Waters Corporation (WAT - Free Report) delivered second-quarter 2018 non-GAAP earnings of $1.95 per share, which surpassed the Zacks Consensus Estimate by 3 cents. The figure increased 11% on a year-over-year basis and 22.6% sequentially. This can be attributed to solid operational result during the quarter.
Net sales increased 7% year over year and 12.3% sequentially to $596.22 million. However, the figure missed the Zacks Consensus Estimate of $598.04 million.
Robust performance of Waters and TA product line drove year-over-year top-line growth. Moreover, the company witnessed strong sales growth in Asia and Europe. Further, solid year-over-year improvement in the Governmental & Academic market aided the results.
Moving forward, the company remains optimistic about growth opportunities from the pharmaceutical end market which also performed well in the reported quarter.
Coming to the price performance, shares of Waters have returned 1.7% on a year-to-date basis against the industry’s decline of 2.7%.
Top Line in Detail
Waters’ net sales figure can be categorized into four ways:
By Operating Segment: The company operates in two organized segments — Waters and TA.
Waters segment (88.4% of net sales) generated $527.3 million of sales, up 6% from the year-ago quarter. Sales in TA segment came in $68.9 million and accounted for 11.6% of the net sales. The figure reflected strong year-over-year growth of 14%.
By Products & Services: This division is comprises three segments — Instruments, Services and Chemistry.
Instruments sales (48.6% of sales) came in $289.7 million, up 3% on a year-over-year basis.
Service sales (34.8% of the sales) were $207.3 million. The figure increased 12% year over year.
Chemistry sales (16.6% of the sales) came in $99.1 million, increasing 9% from the year-ago quarter.
Moreover, service and chemistry sections together generated recurring revenues of $306.5 million, surging 11% year over year.
By Markets: The company serves three end markets — Pharmaceutical, Industrial and Governmental & Academic.
Pharmaceutical market (56.7% of net sales) generated sales of $338.3 million, up 6% on a year-over-year basis.
Industrial market (30.8% of sales) sales came in $183.7 million, increasing 5% from the year-ago quarter.
Governmental & Academic (12.5% of sales) generated $74.2 million of sales. The figure was up 16% year over year.
By Geography: This company’s operating regions include Asia, Americas and Europe.
Asia (39.7% of net sales) generated $236.9 million of sales for the company. The figure was up 10% on a year-over-year basis.
Americas (33.3% of sales) generated $198.1 million of sales, up 1% year over year.
Europe (27% of sales) generated $161.2 million of sales, advancing 10% from prior year quarter.
Waters Corporation Price, Consensus and EPS Surprise
Waters Corporation Price, Consensus and EPS Surprise | Waters Corporation Quote
Operating Details
Non-GAAP selling and administrative expenses were $135.4 million, reflecting an increase of 5.3% year over year and 5.1% from the previous quarter.
Research and development outlay for the quarter was $35.6 million, up 8.2% year over year and 3.2% sequentially.
Adjusted operating margin was 30.5%, expanded 60 basis points (bps) from the year-ago quarter and 300 bps sequentially.
Balance Sheet & Cash Flow
As of Jun 30, 2018, cash, cash equivalents and investments came in $2.24 billion, lower than $2.5 billion as of Mar 31, 2018.
Further, total liabilities were $2.18 billion which declined from $2.37 billion in the previous quarter.
Waters also generated free cash flow of $143.8 million in the second quarter.
Guidance
For third-quarter 2018, Waters expects non-GAAP earnings in the range of $1.58-$1.95 per share. The Zacks Consensus Estimate for earnings is pegged at $1.96.
The company anticipates net sales growth between 4% and 6% on a constant currency basis. The Zacks Consensus Estimate for sales is currently projected at $603.2 million.
For 2018, Waters revised guidance for non-GAAP earnings, which are now anticipated to lie in the range of $8.05-$8.20 per share, from the previously guided range of $8.10-$8.30 per share. The Zacks Consensus Estimate for 2018 earnings is pegged at $8.19 per share.
Further, the company expects net sales to reflect growth between 4-6%. The Zacks Consensus Estimate is pegged at $2.46 billion.
Zacks Rank & Other Stocks to Consider
Waters carries a Zacks Rank #3 (Hold).
A few better-ranked stocks in the broader technology sector are Analog Devices (ADI - Free Report) , AMETEK (AME - Free Report) and Texas Instruments (TXN - Free Report) . All the three stocks carry a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Long-term earnings growth rate for Analog Devices, AMETEK and Texas Instruments is pegged at 12.4%, 10.7% and 9.5%, respectively.
The Hottest Tech Mega-Trend of All
Last year, it generated $8 billion in global revenues. By 2020, it's predicted to blast through the roof to $47 billion. Famed investor Mark Cuban says it will produce "the world's first trillionaires," but that should still leave plenty of money for regular investors who make the right trades early.
See Zacks' 3 Best Stocks to Play This Trend >>