Waters Reports Fourth Quarter 2012 Financial Results Business Wire MILFORD, Mass. -- January 22, 2013 Waters Corporation (NYSE: WAT) reported fourth quarter 2012 sales of $522 million, slightly ahead of $521 million in the fourth quarter of 2011. In the quarter, constant currency sales growth was approximately 1.5%. On a GAAP basis, earnings per diluted share (E.P.S.) for the fourth quarter were $2.00 compared to $1.51 for the fourth quarter of 2011. On a non-GAAP basis, including the adjustments in the attached reconciliation, E.P.S. grew 2% to $1.59 from $1.56 in the fourth quarter of 2011. For the full year, sales for the Company were $1.84 billion, compared to sales of $1.85 billion in 2011, with foreign currency translation reducing sales growth by about 2%. E.P.S. for 2012 were $5.19 compared to $4.69 in 2011. On a non-GAAP basis, including adjustments in the attached reconciliation, E.P.S. grew 2% to $4.93 from $4.81 in 2011. Commenting on the Company’s 2012 performance, Douglas Berthiaume, Chairman, President and Chief Executive Officer said, “Demand trends in the fourth quarter were generally consistent with those observed throughout 2012. Our recurring revenues and business in Asia contributed to overall constant currency growth during a challenging period for the Company. For the full year, the combination of a stable pricing environment and prudent cost control allowed us to maintain our operating income level and grow our E.P.S. principally by reducing our share count through share repurchases.” As communicated in a prior press release, Waters Corporation will webcast its fourth quarter 2012 financial results conference call this morning, January 22, 2013 at 8:30 a.m. eastern time. To listen to the call, connect to www.waters.com, choose “Investor Relations” and click on the “Live Webcast”. A replay will be available through January 29 at midnight eastern time, similarly by webcast and also by phone at 402-220-9829. CAUTIONARY STATEMENT This release may contain “forward-looking” statements regarding future results and events. 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”, “suggests”, “appears”, “estimates”, “projects”, and similar expressions, whether in the negative or affirmative, 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 economic, sovereign and political uncertainties; increased regulatory burdens as the Company’s business evolves, especially with respect to the U.S. Food and Drug Administration and U.S. Environmental Protection Agency, among others; shifts in taxable income in jurisdictions with different effective tax rates; the outcome of tax examinations or changes in respective country legislation affecting the Company’s effective tax rate; the ability to access capital, maintain liquidity and service our debt in volatile market conditions, particularly in the U.S., as a large portion of the Company’s cash is held and operating cash flows are generated outside the U.S.; fluctuations in expenditures by the Company’s customers, in particular large pharmaceutical companies; introduction of competing products by other companies and loss of market share; pressures on prices from competitors and/or customers; regulatory, economic and competitive obstacles to new product introductions; other changes in demand from the effect of mergers and acquisitions by the Company’s customers; environmental and logistical obstacles affecting the distribution of 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 December31, 2011 and Form 10-Q for the period ended September 29, 2012 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) (Unaudited) Three Months Ended Twelve Months Ended December December December 31, December 31, 31, 2012 31, 2011 2012 2011 Net sales $ 521,766 $ 521,420 $ 1,843,641 $ 1,851,184 Cost of sales 208,363 204,243 737,614 730,493 Gross profit 313,403 317,177 1,106,027 1,120,691 Selling and administrative 122,147 126,237 477,270 490,011 expenses Research and development 24,958 23,707 96,004 92,347 expenses Purchased intangibles 2,459 2,359 13,829 9,733 amortization Litigation 4,434 - 7,434 - provisions Operating income 159,405 164,874 511,490 528,600 Interest (6,373 ) (6,193 ) (23,865 ) (19,348 ) expense, net Income from operations 153,032 158,681 487,625 509,252 before income taxes Provision for income tax (22,912 ) 21,534 26,182 76,284 (benefit) expense Net income $ 175,944 $ 137,147 $ 461,443 $ 432,968 Net income per basic common $ 2.03 $ 1.54 $ 5.25 $ 4.77 share Weighted-average number of basic 86,712 89,324 87,841 90,833 common shares Net income per diluted common $ 2.00 $ 1.51 $ 5.19 $ 4.69 share Weighted-average number of diluted common 87,851 90,566 88,979 92,325 shares and equivalents Waters Corporation and Subsidiaries Quarterly Reconciliation of GAAP to Adjusted Non-GAAP Financials (in thousands, except per share data) The 2012 and 2011 adjusted amounts presented below are used by the management of the Company to measure operating performance with prior periods and forecasts and are not in accordance with generally accepted accounting principles (GAAP). The Company believes that the use of Non-GAAP measures, such as Non-GAAP Earnings Per Share (E.P.S.) and Non-GAAP Operating Income, help management and investors gain a better understanding of our core operating results and future trends, and is consistent with how management measures compensation and forecasts the Company’s performance.The reconciliation identifies items management has excluded as non-operational transactions.Management has excluded the following items: *Purchased Intangibles Amortization and Step-Up Expenses were excluded to allow for comparisons of operating results that are consistent over periods of time. *Restructuring Costs, Asset Impairments, Acquisition-Related Costs and Other One-Time Costs were excluded as the Company believes that costs to consolidate operations, reduce overhead and complete acquisitions are infrequent or unusual and are not indicative of normal operating costs. *Litigation Provisions and Non‐Income Tax Audit Settlement Provisions were excluded as these costs are isolated, unpredictable and not expected to recur regularly. *Net Operating Loss Tax Benefit was excluded as this was a one-time tax benefit recognized in 2012 as a result of a refinancing of inter-company debt that allowed the recognition of certain previously reserved deferred tax assets. *One‐Time Income Tax Benefits were excluded as these costs and benefits are typically the result of audit examination settlements or updates in management's assessment of ongoing examinations and are not indicative of the Company’s normal or future income tax expense. (Unaudited) Three Months Ended Twelve Months Ended December 31, December 31, December 31, December 31, 2012 2011 2012 2011 GAAP Gross $ 313,403 $ 317,177 $ 1,106,027 $ 1,120,691 Profit Asset - - 1,903 - Impairments Adjusted Non-GAAP Gross $ 313,403 $ 317,177 $ 1,107,930 $ 1,120,691 Profit GAAP Selling and Administrative Expenses (including Purchased Intangibles Amortization $ (129,040 ) $ (128,596 ) $ (498,533 ) $ (499,744 ) and Litigation Provisions) Purchased Intangibles Amortization & 2,592 2,813 14,420 10,583 Step-Up Expenses Restructuring Costs, Asset Impairments, 1,582 1,651 5,843 6,291 Acquisitions & Other One-Time Costs Litigation 4,434 - 7,434 - Provisions Non-Income Tax Audit - 2,050 484 2,050 Settlement Provisions Adjusted Non-GAAP Selling & $ (120,432 ) $ (122,082 ) $ (470,352 ) $ (480,820 ) Administrative Expenses GAAP Operating $ 159,405 $ 164,874 $ 511,490 $ 528,600 Income Purchased Intangibles Amortization & 2,592 2,813 14,420 10,583 Step-Up Expenses Restructuring Costs, Asset Impairments, 1,582 1,651 7,746 6,291 Acquisitions & Other One-Time Costs Litigation 4,434 - 7,434 - Provisions Non-Income Tax Audit - 2,050 484 2,050 Settlement Provisions Adjusted Non-GAAP $ 168,013 $ 171,388 $ 541,574 $ 547,524 Operating Income GAAP Provision for Income Tax $ 22,912 $ (21,534 ) $ (26,182 ) $ (76,284 ) Benefit (Expense) Purchased Intangibles Amortization & (630 ) (910 ) (4,601 ) (3,409 ) Step-Up Expenses Restructuring Costs, Asset Impairments, (567 ) (567 ) (2,864 ) (1,984 ) Acquisitions & Other One-Time Costs Litigation (1,663 ) - (2,788 ) - Provisions Non-Income Tax Audit - (759 ) (182 ) (759 ) Settlement Provisions Net Operating Loss Tax (36,250 ) - (36,250 ) - Benefit One-Time Income Tax (6,035 ) - (6,035 ) (1,617 ) Benefits Adjusted Non-GAAP Provision for $ (22,233 ) $ (23,770 ) $ (78,902 ) $ (84,053 ) Income Tax Benefit (Expense) GAAP Net $ 175,944 $ 137,147 $ 461,443 $ 432,968 Income Purchased Intangibles Amortization & 1,962 1,903 9,819 7,174 Step-Up Expenses Restructuring Costs, Asset Impairments, 1,015 1,084 4,882 4,307 Acquisitions & Other One-Time Costs Litigation 2,771 - 4,646 - Provisions Non-Income Tax Audit - 1,291 302 1,291 Settlement Provisions Net Operating Loss Tax (36,250 ) - (36,250 ) - Benefit One-Time Income Tax (6,035 ) - (6,035 ) (1,617 ) Benefits Adjusted Non-GAAP Net $ 139,407 $ 141,425 $ 438,807 $ 444,123 Income GAAP E.P.S. $ 2.00 $ 1.51 $ 5.19 $ 4.69 Purchased Intangibles Amortization & 0.02 0.02 0.11 0.08 Step-Up Expenses Restructuring Costs, Asset Impairments, 0.01 0.01 0.05 0.05 Acquisitions & Other One-Time Costs Litigation 0.03 - 0.05 - Provisions Non-Income Tax Audit - 0.01 0.00 0.01 Settlement Provisions Net Operating Loss Tax (0.41 ) - (0.41 ) - Benefit One-Time Income Tax (0.07 ) - (0.07 ) (0.02 ) Benefits Adjusted Non-GAAP $ 1.59 $ 1.56 $ 4.93 $ 4.81 E.P.S. Waters Corporation and Subsidiaries Condensed Consolidated Balance Sheets (In thousands and unaudited) December 31, 2012 December 31, 2011 Cash, cash equivalents and 1,539,025 1,281,351 short-term investments Accounts receivable 404,556 367,085 Inventories 229,565 212,864 Other current assets 84,580 80,804 Total current assets 2,257,726 1,942,104 Property, plant and equipment, net 273,279 237,095 Other assets 637,145 544,035 Total assets 3,168,150 2,723,234 Notes payable and debt 132,781 290,832 Accounts payable and accrued 361,866 311,031 expenses Total current liabilities 494,647 601,863 Long-term debt 1,045,000 700,000 Other long-term liabilities 161,146 194,793 Total liabilities 1,700,793 1,496,656 Total equity 1,467,357 1,226,578 Total liabilities and equity 3,168,150 2,723,234 Contact: Waters Corporation Gene Cassis, 508-482-2349 Vice President of Investor Relations
Waters Reports Fourth Quarter 2012 Financial Results
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