Waters Corporation (NYSE: WAT) today announced third quarter 2021 sales of $659 million, an 11% increase as reported, compared to sales of $594 million for the third quarter of 2020. Foreign currency translation benefited sales growth by less than 1% for the quarter.
On a GAAP basis, diluted earnings per share (EPS) for the third quarter of 2021 increased to $2.60, compared to $2.03 for the third quarter of 2020. On a non-GAAP basis, EPS increased to $2.66, compared to $2.16 for the third quarter of 2020. A description and reconciliation of GAAP to non-GAAP results appear in the tables below and can be found on the Company’s website www.waters.com in the Investor Relations section.
On a GAAP basis, net cash provided by operating activities was $168 million for the third quarter of 2021, compared to $173 million for the third quarter of 2020. On a non-GAAP basis, adjusted free cash flow for the third quarter of 2021 was $140 million versus $190 million for the third quarter of 2020.
For the first nine months of 2021, the Company’s sales were $1,949 million, an increase of 23% as reported, compared to sales of $1,579 million for the first nine months of 2020. Foreign currency translation benefited sales growth by approximately 2% for the first nine months of 2021.
On a GAAP basis, EPS for the first nine months of 2021 increased to $7.66, compared to $4.86 for the first nine months of 2020. On a non-GAAP basis, EPS increased to $7.54, compared to $5.41 in the first nine months of 2020.
On a GAAP basis, net cash provided by operating activities was $529 million for the first nine months of 2021, compared to $523 million for the first nine months of 2020. On a non-GAAP basis, adjusted free cash flow for the first nine months of 2021 was $488 million versus $486 million for the first nine months of 2020.
“I would like to thank our colleagues globally for their continued commitment and drive as we support our customers through the pandemic,” said Dr. Udit Batra, President and Chief Executive Officer of Waters Corporation. “We are very pleased with our third quarter results led by strong growth in our pharmaceutical and industrial end markets. We saw balanced double-digit growth in our instruments and recurring revenue portfolios which gives us confidence in the durability of our commercial momentum. We are excited to partner with both Sartorius and the University of Delaware, as we work to solve some of the complex problems facing bioprocessing customers.”
Unless otherwise noted, sales growth and decline percentages are presented on an as-reported basis and are the same as the sales growth and decline percentages presented on a constant-currency basis as compared with the same period in the prior year, each of which is detailed in the reconciliation of sales growth rates to constant-currency growth rates in the tables below.
During the third quarter of 2021, sales into the pharmaceutical market increased 16%, sales into the industrial market increased 9% and sales into the academic and government markets decreased 9% as reported and 11% in constant currency. For the first nine months of 2021, sales into the pharmaceutical market increased 27% as reported and 24% in constant currency, sales into the industrial market increased 23% as reported and 19% in constant currency and sales into the academic and government markets increased 8% as reported and 6% in constant currency.
During the third quarter, recurring revenues, which represent the combination of service and precision chemistries revenues, increased 11%, while instrument system sales increased 10%. For the first nine months of 2021, recurring revenues increased 18% as reported and 15% in constant currency, while instrument system sales increased 31% as reported and 29% in constant currency.
Geographically, sales in Asia during the quarter increased 8%, sales in the Americas increased 16% (with U.S. sales growing 13%) and sales in Europe increased 10% as reported and 8% in constant currency. For the first nine months of 2021, sales in Asia increased 25% as reported and 24% in constant currency, sales in the Americas increased 20% as reported and 19% in constant currency (with U.S. sales growing 17%) and sales in Europe increased 26% as reported and 19% in constant currency.
Fourth Quarter and Fiscal Year 2021 Financial Outlook
The Company expects full-year 2021 constant-currency sales growth in the range of 15% to 16%. Currency translation is expected to increase full-year sales growth by approximately one percentage point. The Company expects full-year 2021 non-GAAP EPS in the range of $10.94 to $11.04. Please refer to the tables below for a reconciliation of the projected GAAP to non-GAAP financial outlook for the full-year.
The Company expects fourth quarter 2021 constant-currency sales growth in the range of 5% to 7%. Currency translation is expected to decrease fourth quarter sales growth by approximately two percentage points. The Company expects fourth quarter 2021 non-GAAP EPS in the range of $3.40 to $3.50. Please refer to the tables below for a reconciliation of the projected GAAP to non-GAAP financial outlook for the fourth quarter.
Conference Call
Waters Corporation will webcast its third quarter 2021 financial results conference call today, November 2, 2021 at 8:00 a.m. Eastern Time. To listen to the call and see the accompanying slide presentation, please visit www.waters.com, select “Investors” under the “About Waters” section, navigate to “Events & Presentations,” and click on the “Webcast.” A replay will be available through November 9, 2021 at midnight Eastern Time on the same website by webcast and also by phone at (888) 566-0450.
About Waters Corporation
Waters Corporation (NYSE: WAT), the world's leading specialty measurement company, has pioneered chromatography, mass spectrometry and thermal analysis innovations serving the life, materials and food sciences for more than 60 years. With more than 7,400 employees worldwide, Waters operates directly in 35 countries, including 14 manufacturing facilities, and with products available in more than 100 countries. For more information, visit www.waters.com.
Non-GAAP Financial Measures
This press release contains financial measures, such as constant-currency growth rate, adjusted operating income, adjusted net income, adjusted earnings per diluted share and adjusted free cash flow, among others, which are considered “non-GAAP” financial measures under applicable U.S. Securities and Exchange Commission rules and regulations. These non-GAAP financial measures should be considered supplemental to, and not a substitute for, financial information prepared in accordance with U.S. generally accepted accounting principles (GAAP). The Company’s definitions of these non-GAAP measures may differ from similarly titled measures used by others. The non-GAAP financial measures used in this press release adjust for specified items that can be highly variable or difficult to predict. The Company generally uses these non-GAAP financial measures to facilitate management’s financial and operational decision-making, including evaluation of the Company’s historical operating results, comparison to competitors’ operating results and determination of management incentive compensation. These non-GAAP financial measures reflect an additional way of viewing aspects of the Company’s operations that, when viewed with GAAP results and the reconciliations to corresponding GAAP financial measures, may provide a more complete understanding of factors and trends affecting the Company’s business. Because non-GAAP financial measures exclude the effect of items that will increase or decrease the Company’s reported results of operations, management strongly encourages investors to review the Company’s consolidated financial statements and publicly filed reports in their entirety. Reconciliations of the non-GAAP financial measures to the most directly comparable GAAP financial measures are included in the tables accompanying this release.
Cautionary Statement
This release contains “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 “feels”, “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, risks related to the effects of the ongoing COVID-19 pandemic on our business, financial condition, results of operations and prospects, including: portions of our global workforce being unable to work fully and/or effectively due to working remotely, illness, quarantines, government actions, facility closures or other reasons related to the pandemic, increased risks of cyber-attacks resulting from our temporary remote working model, disruptions in our manufacturing capabilities or to our supply chain and distribution network, volatility and uncertainty in global capital markets limiting our ability to access capital, customers being unable to make timely payments for purchases and volatility in demand for our products; foreign exchange rate fluctuations potentially affecting translation of the Company’s future non-U.S. operating results; the impact on demand for the Company’s products, including delays or disruptions to our distribution network, among the Company’s various market sectors or geographies from economic, sovereign and political uncertainties, particularly regarding the effect of new or proposed tariff or trade regulations or changes in the interpretation or enforcement of existing regulations; the effect on the Company’s financial results from the United Kingdom exiting the European Union; 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 for the Company’s products from the effect of mergers and acquisitions by the Company’s customers; 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 effect of the adoption of new accounting standards; the ability to access capital, maintain liquidity and service the Company’s debt in volatile market conditions, including any potential impact on the Company’s operations stemming from sustained inflation, 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.; environmental and logistical obstacles affecting the distribution of products and risks associated with lawsuits and other legal actions, particularly involving claims for infringement of patents and other intellectual property rights. Such factors and others are discussed more fully in the sections entitled “Forward-Looking Statements” and “Risk Factors” of the Company’s annual report on Form 10-K for the year ended December 31, 2020, as well as in the sections entitled “Special Note Regarding Forward-Looking Statements” and “Risk Factors” of the Company’s quarterly reports on Form 10-Q for the quarterly periods ended April 3, 2021, July 3, 2021, and October 2, 2021, each as filed with the Securities and Exchange Commission (“SEC”), which discussions are incorporated by reference in this release, as updated by the Company’s future filings with the SEC. The forward-looking statements included in this release represent the Company’s estimates or views as of the date of this release 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. Except as required by law, the Company does not assume any obligation to update any forward-looking statements.
| Waters Corporation and Subsidiaries | |||||||||||||||
| Consolidated Statements of Operations | |||||||||||||||
| (In thousands, except per share data) | |||||||||||||||
| (Unaudited) | |||||||||||||||
| Three Months Ended | Nine Months Ended | ||||||||||||||
| October 2, 2021 | September 26, 2020 | October 2, 2021 | September 26, 2020 | ||||||||||||
| Net sales | $ | 659,233 | $ | 593,784 | $ | 1,949,425 | $ | 1,578,707 | |||||||
| Costs and operating expenses: | |||||||||||||||
| Cost of sales | 271,128 | 262,342 | 805,529 | 686,120 | |||||||||||
| Selling and administrative expenses | 152,545 | 135,430 | 453,954 | 400,614 | |||||||||||
| Research and development expenses | 41,986 | 34,971 | 125,027 | 101,115 | |||||||||||
| Purchased intangibles amortization | 1,759 | 2,657 | 5,408 | 7,900 | |||||||||||
| Litigation provision | - | - | - | 1,180 | |||||||||||
| Operating income | 191,815 | 158,384 | 559,507 | 381,778 | |||||||||||
| Other income (expense), net (a) | (607 | ) | (1,039 | ) | 18,073 | (2,149 | ) | ||||||||
| Interest expense, net | (8,533 | ) | (6,908 | ) | (23,707 | ) | (25,966 | ) | |||||||
| Income from operations before income taxes | 182,675 | 150,437 | 553,873 | 353,663 | |||||||||||
| Provision for income taxes | 21,490 | 23,668 | 77,269 | 50,403 | |||||||||||
| Net income | $ | 161,185 | $ | 126,769 | $ | 476,604 | $ | 303,260 | |||||||
| Net income per basic common share | $ | 2.63 | $ | 2.04 | $ | 7.72 | $ | 4.89 | |||||||
| Weighted-average number of basic common shares | 61,359 | 62,002 | 61,771 | 62,057 | |||||||||||
| Net income per diluted common share | $ | 2.60 | $ | 2.03 | $ | 7.66 | $ | 4.86 | |||||||
| Weighted-average number of diluted common shares and equivalents | 61,888 | 62,303 | 62,244 | 62,371 | |||||||||||
| (a) During the nine months ended October 2, 2021, the Company executed a settlement agreement to resolve patent infringement litigation with Bruker Corporation and Bruker Daltronik GmbH regarding their timsTOF product line. In connection with the settlement, the Company is entitled to receive $10 million in guaranteed payments, including minimum royalty payments, which was recognized within Other income (expense), net in our consolidated statement of operations. During the nine months ended October 2, 2021, the Company recorded an unrealized gain of $10 million due to an observable change in the fair value of an existing investment the Company does not have the ability to exercise significant influence over. | |||||||||||||||
| Waters Corporation and Subsidiaries | ||||||||||||||||||
| Reconciliation of GAAP to Adjusted Non-GAAP | ||||||||||||||||||
| Net Sales by Operating Segments, Products & Services, Geography and Markets | ||||||||||||||||||
| Three Months Ended October 2, 2021 and September 26, 2020 | ||||||||||||||||||
| (In thousands) | ||||||||||||||||||
| Current | ||||||||||||||||||
| Period | Constant | |||||||||||||||||
| Three Months Ended | Percent | Currency | Currency | |||||||||||||||
| October 2, 2021 | September 26, 2020 | Change | Impact | Growth Rate (a) | ||||||||||||||
| NET SALES - OPERATING SEGMENTS | ||||||||||||||||||
| Waters | $ | 581,811 | $ | 533,466 | 9% | $ | 1,927 | 9% | ||||||||||
| TA | 77,422 | 60,318 | 28% | 956 | 27% | |||||||||||||
| Total | $ | 659,233 | $ | 593,784 | 11% | $ | 2,883 | 11% | ||||||||||
| NET SALES - PRODUCTS & SERVICES | ||||||||||||||||||
| Instruments | $ | 296,088 | $ | 268,064 | 10% | $ | 759 | 10% | ||||||||||
| Service | 240,100 | 217,545 | 10% | 994 | 10% | |||||||||||||
| Chemistry | 123,045 | 108,175 | 14% | 1,130 | 13% | |||||||||||||
| Total Recurring | 363,145 | 325,720 | 11% | 2,124 | 11% | |||||||||||||
| Total | $ | 659,233 | $ | 593,784 | 11% | $ | 2,883 | 11% | ||||||||||
| NET SALES - GEOGRAPHY | ||||||||||||||||||
| Asia | $ | 254,602 | $ | 236,182 | 8% | $ | 38 | 8% | ||||||||||
| Americas | 231,001 | 199,447 | 16% | 595 | 16% | |||||||||||||
| Europe | 173,630 | 158,155 | 10% | 2,250 | 8% | |||||||||||||
| Total | $ | 659,233 | $ | 593,784 | 11% | $ | 2,883 | 11% | ||||||||||
| NET SALES - MARKETS | ||||||||||||||||||
| Pharmaceutical | $ | 398,338 | $ | 343,001 | 16% | $ | 248 | 16% | ||||||||||
| Industrial | 196,032 | 179,128 | 9% | 1,606 | 9% | |||||||||||||
| Academic & Government | 64,863 | 71,655 | (9%) | 1,029 | (11%) | |||||||||||||
| Total | $ | 659,233 | $ | 593,784 | 11% | $ | 2,883 | 11% | ||||||||||
| NET SALES - EXCLUDING CHINA | ||||||||||||||||||
| Total Net Sales | $ | 659,233 | $ | 593,784 | 11% | $ | 2,883 | 11% | ||||||||||
| China Net Sales | 115,886 | 115,666 | 0% | 3,604 | (3%) | |||||||||||||
| Total Net Sales Excluding China | $ | 543,347 | $ | 478,118 | 14% | $ | (721) | 14% | ||||||||||
| (a) | The Company believes that referring to comparable constant-currency growth rates is a useful way to evaluate the underlying performance of Waters Corporation's net sales. Constant-currency growth rate, a non-GAAP financial measure, measures the change in net sales between current and prior year periods, ignoring the impact of foreign currency exchange rates during the current period. See description of non-GAAP financial measures contained in this release. | |||||||||||||||||
| Waters Corporation and Subsidiaries | ||||||||||||||||||
| Reconciliation of GAAP to Adjusted Non-GAAP | ||||||||||||||||||
| Net Sales by Operating Segments, Products & Services, Geography and Markets | ||||||||||||||||||
| Nine Months Ended October 2, 2021 and September 26, 2020 | ||||||||||||||||||
| (In thousands) | ||||||||||||||||||
| Current | ||||||||||||||||||
| Period | Constant | |||||||||||||||||
| Nine Months Ended | Percent | Currency | Currency | |||||||||||||||
| October 2, 2021 | September 26, 2020 | Change | Impact | Growth Rate (a) | ||||||||||||||
| NET SALES - OPERATING SEGMENTS | ||||||||||||||||||
| Waters | $ | 1,731,013 | $ | 1,413,386 | 22% | $ | 37,147 | 20% | ||||||||||
| TA | 218,412 | 165,321 | 32% | 5,213 | 29% | |||||||||||||
| Total | $ | 1,949,425 | $ | 1,578,707 | 23% | $ | 42,360 | 21% | ||||||||||
| NET SALES - PRODUCTS & SERVICES | ||||||||||||||||||
| Instruments | $ | 873,632 | $ | 664,817 | 31% | $ | 13,663 | 29% | ||||||||||
| Service | 707,315 | 613,365 | 15% | 18,628 | 12% | |||||||||||||
| Chemistry | 368,478 | 300,525 | 23% | 10,069 | 19% | |||||||||||||
| Total Recurring | 1,075,793 | 913,890 | 18% | 28,697 | 15% | |||||||||||||
| Total | $ | 1,949,425 | $ | 1,578,707 | 23% | $ | 42,360 | 21% | ||||||||||
| NET SALES - GEOGRAPHY | ||||||||||||||||||
| Asia | $ | 754,091 | $ | 603,471 | 25% | $ | 8,081 | 24% | ||||||||||
| Americas | 653,252 | 546,405 | 20% | 2,071 | 19% | |||||||||||||
| Europe | 542,082 | 428,831 | 26% | 32,208 | 19% | |||||||||||||
| Total | $ | 1,949,425 | $ | 1,578,707 | 23% | $ | 42,360 | 21% | ||||||||||
| NET SALES - MARKETS | ||||||||||||||||||
| Pharmaceutical | $ | 1,175,191 | $ | 926,582 | 27% | $ | 22,610 | 24% | ||||||||||
| Industrial | 581,884 | 474,592 | 23% | 14,870 | 19% | |||||||||||||
| Academic & Government | 192,350 | 177,533 | 8% | 4,880 | 6% | |||||||||||||
| Total | $ | 1,949,425 | $ | 1,578,707 | 23% | $ | 42,360 | 21% | ||||||||||
| NET SALES - EXCLUDING CHINA | ||||||||||||||||||
| Total Net Sales | $ | 1,949,425 | $ | 1,578,707 | 23% | $ | 42,360 | 21% | ||||||||||
| China Net Sales | 346,030 | 252,713 | 37% | 11,699 | 32% | |||||||||||||
| Total Net Sales Excluding China | $ | 1,603,395 | $ | 1,325,994 | 21% | $ | 30,661 | 19% | ||||||||||
| (a) | The Company believes that referring to comparable constant-currency growth rates is a useful way to evaluate the underlying performance of Waters Corporation's net sales. Constant-currency growth rate, a non-GAAP financial measure, measures the change in net sales between current and prior year periods, ignoring the impact of foreign currency exchange rates during the current period. See description of non-GAAP financial measures contained in this release. | |||||||||||||||||
| Waters Corporation and Subsidiaries | ||||||||||||||||||||||||||
| Reconciliation of GAAP to Adjusted Non-GAAP Financials | ||||||||||||||||||||||||||
| Three and Nine Months Ended October 2, 2021 and September 26, 2020 | ||||||||||||||||||||||||||
| (In thousands, except per share data) | ||||||||||||||||||||||||||
| Income from | ||||||||||||||||||||||||||
| Operations | ||||||||||||||||||||||||||
| Selling & | Operating | Other | before | Provision for | Diluted | |||||||||||||||||||||
| Administrative | Operating | Income | Income | Income | Income | Net | Earnings | |||||||||||||||||||
| Expenses(a) | Income | Percentage | (Expense) | Taxes | Taxes | Income | per Share | |||||||||||||||||||
| Three Months Ended October 2, 2021 | ||||||||||||||||||||||||||
| GAAP | $ | 154,304 | $ | 191,815 | 29.1% | $ | (607) | $ | 182,675 | $ | 21,490 | $ | 161,185 | $ | 2.60 | |||||||||||
| Adjustments: | ||||||||||||||||||||||||||
| Purchased intangibles amortization (b) | (1,759) | 1,759 | 0.3% | - | 1,759 | 400 | 1,359 | 0.02 | ||||||||||||||||||
| Restructuring costs and certain other items (c) | (2,185) | 2,185 | 0.3% | (403) | 1,782 | 407 | 1,375 | 0.02 | ||||||||||||||||||
| Certain income tax items (d) | - | - | - | - | - | (544) | 544 | 0.01 | ||||||||||||||||||
| Adjusted Non-GAAP | $ | 150,360 | $ | 195,759 | 29.7% | $ | (1,010) | $ | 186,216 | $ | 21,753 | $ | 164,463 | $ | 2.66 | |||||||||||
| Three Months Ended September 26, 2020 | ||||||||||||||||||||||||||
| GAAP | $ | 138,087 | $ | 158,384 | 26.7% | $ | (1,039) | $ | 150,437 | $ | 23,668 | $ | 126,769 | $ | 2.03 | |||||||||||
| Adjustments: | ||||||||||||||||||||||||||
| Purchased intangibles amortization (b) | (2,657) | 2,657 | 0.4% | - | 2,657 | 524 | 2,133 | 0.03 | ||||||||||||||||||
| Restructuring costs and certain other items (c) | (6,771) | 6,771 | 1.1% | - | 6,771 | 1,692 | 5,079 | 0.08 | ||||||||||||||||||
| Certain income tax items (d) | - | - | - | - | - | (685) | 685 | 0.01 | ||||||||||||||||||
| Adjusted Non-GAAP | $ | 128,659 | $ | 167,812 | 28.3% | $ | (1,039) | $ | 159,865 | $ | 25,199 | $ | 134,666 | $ | 2.16 | |||||||||||
| Nine Months Ended October 2, 2021 | ||||||||||||||||||||||||||
| GAAP | $ | 459,362 | $ | 559,507 | 28.7% | $ | 18,073 | $ | 553,873 | $ | 77,269 | $ | 476,604 | $ | 7.66 | |||||||||||
| Adjustments: | ||||||||||||||||||||||||||
| Purchased intangibles amortization (b) | (5,408) | 5,408 | 0.3% | - | 5,408 | 1,225 | 4,183 | 0.07 | ||||||||||||||||||
| Restructuring costs and certain other items (c) | (3,669) | 3,669 | 0.2% | (10,110) | (6,441) | (1,669) | (4,772) | (0.08) | ||||||||||||||||||
| Litigation settlement (e) | - | - | - | (10,083) | (10,083) | (1,916) | (8,167) | (0.13) | ||||||||||||||||||
| Certain income tax items (d) | - | - | - | - | - | (1,688) | 1,688 | 0.03 | ||||||||||||||||||
| Adjusted Non-GAAP | $ | 450,285 | $ | 568,584 | 29.2% | $ | (2,120) | $ | 542,757 | $ | 73,221 | $ | 469,536 | $ | 7.54 | |||||||||||
| Nine Months Ended September 26, 2020 | ||||||||||||||||||||||||||
| GAAP | $ | 409,694 | $ | 381,778 | 24.2% | $ | (2,149) | $ | 353,663 | $ | 50,403 | $ | 303,260 | $ | 4.86 | |||||||||||
| Adjustments: | ||||||||||||||||||||||||||
| Purchased intangibles amortization (b) | (7,900) | 7,900 | 0.5% | - | 7,900 | 1,561 | 6,339 | 0.10 | ||||||||||||||||||
| Restructuring costs and certain other items (c) | (33,054) | 33,054 | 2.1% | (461) | 32,593 | 7,373 | 25,220 | 0.40 | ||||||||||||||||||
| Litigation provision (e) | (1,180) | 1,180 | 0.1% | - | 1,180 | 283 | 897 | 0.01 | ||||||||||||||||||
| Certain income tax items (d) | - | - | - | - | - | (1,567) | 1,567 | 0.03 | ||||||||||||||||||
| Adjusted Non-GAAP | $ | 367,560 | $ | 423,912 | 26.9% | $ | (2,610) | $ | 395,336 | $ | 58,053 | $ | 337,283 | $ | 5.41 | |||||||||||
| (a) | Selling & administrative expenses include purchased intangibles amortization, litigation provisions and settlements and asset impairments. | |||||||||||||||||||||||||
| (b) | The purchased intangibles amortization, a non-cash expense, was excluded to be consistent with how management evaluates the performance of its core business against historical operating results and the operating results of competitors over periods of time. | |||||||||||||||||||||||||
| (c) | Restructuring costs, mergers and acquisition costs and certain other items were excluded as the Company believes that the cost to consolidate operations, reduce overhead, acquire companies and certain other income or expense items are not normal and do not represent future ongoing business expenses of a specific function or geographic location of the Company. | |||||||||||||||||||||||||
| (d) | Certain income tax items were excluded as these non-cash expenses and benefits represent updates in management's assessment of ongoing examinations or other tax items that are not indicative of the Company’s normal or future income tax expense. | |||||||||||||||||||||||||
| (e) | Litigation settlement gains and provisions were excluded as these items are isolated, unpredictable and not expected to recur regularly. | |||||||||||||||||||||||||
| Waters Corporation and Subsidiaries | |||||||
| Preliminary Condensed Unclassified Consolidated Balance Sheets | |||||||
| (In thousands and unaudited) | |||||||
| October 2, 2021 | December 31, 2020 | ||||||
| Cash, cash equivalents and investments | $ 655,192 | $ 443,146 | |||||
| Accounts receivable | 532,957 | 573,316 | |||||
| Inventories | 388,756 | 304,281 | |||||
| Property, plant and equipment, net | 530,061 | 494,003 | |||||
| Intangible assets, net | 246,080 | 258,645 | |||||
| Goodwill | 436,754 | 444,362 | |||||
| Other assets | 326,115 | 322,167 | |||||
| Total assets | $ 3,115,915 | $ 2,839,920 | |||||
| Notes payable and debt | $ 1,613,618 | $ 1,356,515 | |||||
| Other liabilities | 1,207,075 | 1,251,261 | |||||
| Total liabilities | 2,820,693 | 2,607,776 | |||||
| Total stockholders' equity | 295,222 | 232,144 | |||||
| Total liabilities and stockholders' equity | $ 3,115,915 | $ 2,839,920 | |||||
| Waters Corporation and Subsidiaries | |||||||||||
| Preliminary Condensed Consolidated Statements of Cash Flows | |||||||||||
| Three and Nine Months Ended October 2, 2021 and September 26, 2020 | |||||||||||
| (In thousands and unaudited) | |||||||||||
| Three Months Ended | Nine Months Ended | ||||||||||
| October 2, 2021 | September 26, 2020 | October 2, 2021 | September 26, 2020 | ||||||||
| Cash flows from operating activities: | |||||||||||
| Net income | $ 161,185 | $ 126,769 | $ 476,604 | $ 303,260 | |||||||
| Adjustments to reconcile net income to net | |||||||||||
| cash provided by operating activities: | |||||||||||
| Stock-based compensation | 6,353 | 9,593 | 21,949 | 27,715 | |||||||
| Depreciation and amortization | 33,183 | 30,888 | 97,926 | 91,091 | |||||||
| Change in operating assets and liabilities, net | (32,829) | 5,329 | (67,143) | 100,959 | |||||||
| Net cash provided by operating activities | 167,892 | 172,579 | 529,336 | 523,025 | |||||||
| Cash flows from investing activities: | |||||||||||
| Additions to property, plant, equipment | |||||||||||
| and software capitalization | (39,725) | (28,311) | (116,614) | (125,340) | |||||||
| Business acquisitions, net of cash acquired | - | - | - | (76,664) | |||||||
| Investment in unaffiliated companies | (867) | (500) | (867) | (3,850) | |||||||
| Payments for intellectual property licenses | - | - | (7,000) | - | |||||||
| Net change in investments | 73,270 | (5,415) | (123,947) | (20,707) | |||||||
| Net cash provided by (used) in investing activities | 32,678 | (34,226) | (248,428) | (226,561) | |||||||
| Cash flows from financing activities: | |||||||||||
| Net change in debt | 5,100 | (125,000) | 251,463 | (110,366) | |||||||
| Proceeds from stock plans | 9,964 | 13,682 | 55,000 | 28,421 | |||||||
| Purchases of treasury shares | (151,188) | (56) | (492,695) | (196,353) | |||||||
| Other cash flow from financing activities, net | 408 | 2,772 | 2,325 | 10,330 | |||||||
| Net cash used in financing activities | (135,716) | (108,602) | (183,907) | (267,968) | |||||||
| Effect of exchange rate changes on cash and cash equivalents | (208) | 6,147 | (8,994) | 10,723 | |||||||
| Increase in cash and cash equivalents | 64,646 | 35,898 | 88,007 | 39,219 | |||||||
| Cash and cash equivalents at beginning of period | 460,056 | 339,036 | 436,695 | 335,715 | |||||||
| Cash and cash equivalents at end of period | $ 524,702 | $ 374,934 | $ 524,702 | $ 374,934 | |||||||
| Reconciliation of GAAP Cash Flows from Operating Activities to Free Cash Flow (a) | |||||||||||
| Net cash provided by operating activities - GAAP | $ 167,892 | $ 172,579 | $ 529,336 | $ 523,025 | |||||||
| Adjustments: | |||||||||||
| Additions to property, plant, equipment | |||||||||||
| and software capitalization | (39,725) | (28,311) | (116,614) | (125,340) | |||||||
| Tax reform payments | - | 38,454 | 38,454 | 38,454 | |||||||
| Litigation settlement received | - | - | (3,367) | - | |||||||
| Major facility renovations | 11,893 | 7,253 | 40,178 | 50,320 | |||||||
| Free Cash Flow - Adjusted Non-GAAP | $ 140,060 | $ 189,975 | $ 487,987 | $ 486,459 | |||||||
| (a) The Company defines free cash flow as net cash flow from operations accounted for under GAAP less capital expenditures and software capitalizations plus or minus any unusual and non recurring items. Free cash flow is not a GAAP measurement and may not be comparable to free cash flow reported by other companies. | |||||||||||
| Waters Corporation and Subsidiaries | ||||||||||||||||||
| Reconciliation of Projected GAAP to Adjusted Non-GAAP Financial Outlook | ||||||||||||||||||
| Three Months Ended | Twelve Months Ended | |||||||||||||||||
| December 31, 2021 | December 31, 2021 | |||||||||||||||||
| Range | Range | |||||||||||||||||
| Projected Sales | ||||||||||||||||||
| Projected constant-currency sales growth rate (a) | 5 | % | - | 7 | % | 15 | % | - | 16 | % | ||||||||
| Projected currency impact | (2 | %) | - | (2 | %) | 1 | % | - | 1 | % | ||||||||
| Projected sales growth rate as reported | 3 | % | - | 5 | % | 16 | % | - | 17 | % | ||||||||
| Projected Earnings Per Diluted Share | Range | Range | ||||||||||||||||
| Projected GAAP earnings per diluted share | $ | 3.37 | - | $ | 3.47 | $ | 11.02 | - | $ | 11.12 | ||||||||
| Adjustments: | ||||||||||||||||||
| Purchased intangibles amortization | $ | 0.02 | - | $ | 0.02 | $ | 0.09 | - | $ | 0.09 | ||||||||
| Restructuring costs and certain other items | $ | - | - | $ | - | $ | (0.08 | ) | - | $ | (0.08 | ) | ||||||
| Litigation settlement | $ | - | - | $ | - | $ | (0.13 | ) | - | $ | (0.13 | ) | ||||||
| Certain income tax items | $ | 0.01 | - | $ | 0.01 | $ | 0.04 | - | $ | 0.04 | ||||||||
| Projected adjusted non-GAAP earnings per diluted share | $ | 3.40 | - | $ | 3.50 | $ | 10.94 | - | $ | 11.04 | ||||||||
| (a) Constant-currency growth rates are a non-GAAP financial measure that measures the change in net sales between current and prior year periods, ignoring the impact of foreign currency exchange rates during the current period. These amounts are estimated at the current foreign currency exchange rates and based on the forecasted geographical sales in local currency, as well as an assessment of market conditions as of today, and may differ significantly from actual results. | ||||||||||||||||||
| These forward-looking adjustment estimates do not reflect future gains and charges that are inherently difficult to predict and estimate due to their unknown timing, effect and/or significance. | ||||||||||||||||||
View source version on businesswire.com: https://www.businesswire.com/news/home/20211102005188/en/
Contacts:
Caspar Tudor, Manager, Investor Relations – (508) 482-2429
