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Waters Surpasses 4Q Earnings Ests

Zacks Equity Research

Waters Corporation (WAT) reported fourth-quarter non-GAAP earnings of $1.70 a share which was up 6.9% year over year from $1.59. The reported earnings also surpassed the Zacks Consensus Estimate of $1.61 by 5.6%.

Profits during the quarter were primarily driven by key product lines and business segments, along with improved pharmaceutical demand and continued strength in global, academic and industrial chemical end markets.

For fiscal 2013, the company reported non-GAAP earnings of $5.04 a share, reflecting a 2.2% increase year over year. Full-year earnings also exceeded the Zacks Consensus Estimate of $4.95 by 1.8%. 


Total revenue in the fourth quarter increased a strong 8.4% year on year to $565.4 million. Revenues also comprehensively surpassed the Zacks Consensus Estimate of $534 million by almost 5.9%. Unfavorable currency translation impacted the top line by 2%.

Revenues for 2013 grew 3.3% to $1.9 billion from $1.8 billion in 2012.


Gross profit for the quarter was $336.4 million, which was up 7.4% from $313.4 million reported in the prior-year quarter. However, gross margins for the quarter were down to 59.5% from 60.1% in the prior-year quarter. The decline was primarily attributable to unfavorable currency translation.

Operating income for the quarter was $176.2 million, increasing 10.5% from $159.4 million in the fourth quarter of 2012. The company incurred total SG&A expense of approximately $130.6 million in the quarter, an increase of almost 7.0% year over year. Research and Development (R&D) expense was around $26.9 million in the quarter versus $24.9 million in the prior-year quarter. Operating margin was up from 30.5% to 31.1% year over year.  

Balance Sheet

Exiting the year, cash, cash equivalents and investments reached approximately $1.8 billion compared with $1.5 billion last year. Long-term debt was $1.2 billion. Debt-to-capitalization ratio was 40.3% compared with 41.6% in the prior-year quarter.   

Moving Ahead

Waters Corporation continues to see considerable stability in its end markets and a healthy acceptance of new products. During the fourth quarter, the company delivered better-than-expected performance with both earnings and revenues exceeding its guidance range. In addition, fair pricing of products and its cost-control effort helped the company to deliver stable levels of profitability.

Waters Corporation currently carries a Zacks Rank #3 (Hold). Some other favorably ranked companies from the same industry include Newport Corp. (NEWP), Synaptics Inc. (SYNA) and Logitech International S.A.(LOGI). All three carry a Zacks Rank #1 (Strong Buy).

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