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Waters Corporation (WAT - Free Report) has reported second-quarter 2022 non-GAAP earnings of $2.75 per share, which surpassed the Zacks Consensus Estimate by 4.6%. Further, the bottom line improved 6% on a year-over-year basis.
Net sales of $714.3 million beat the Zacks Consensus Estimate of $705.6 million. The figure rose 5% and 10% from the year-ago quarter on a reported and constant-currency basis, respectively.
Top-line growth was driven by a solid momentum across pharmaceutical, industrial, and government and academic end markets. Strong performances in Asia and the Americas contributed well.
Waters Corporation Price, Consensus and EPS Surprise
Waters’ net sales figure can be categorized in four ways:
By Operating Segment: WAT operates under two organized segments, Waters and TA.
The Waters segment (89% of net sales) generated $635.1 million of sales, up 5% from the year-ago quarter. Sales in the TA segment were $79.2 million (11% of net sales), reflecting 7% year-over-year growth.
By Products & Services: The division comprises three segments — Instruments, Services and Chemistry.
Instruments sales (47% of sales) were $337.7 million, rising 7% on a year-over-year basis.
Service sales (34% of the sales) were $244.7 million, increasing 2% year over year.
Chemistry sales (19% of the sales) were $131.9 million, growing 4% from the year-ago quarter.
Moreover, the service and chemistry segments together generated recurring revenues of $376.6 million, increasing 3% from the year-ago quarter.
By Markets: Waters serves three end markets — Pharmaceutical, Industrial, and Governmental & Academic.
The Pharmaceutical market (61% of net sales) generated sales of $437.2 million, which increased 5% on a year-over-year basis.
The Industrial market’s (29% of sales) sales were $208.5 million, up 3% from the year-ago quarter.
Academic & Government (10% of sales) generated $68.6 million of the total sales. The figure increased 10% year over year.
By Geography: Waters’ operating regions include Asia, the Americas and Europe.
Asia (39% of net sales) generated $278.01 million of sales, up 3% on a year-over-year basis. Sales in China grew 9% from the prior-year quarter.
The Americas (36% of net sales) generated $257.3 million of sales, increasing 14% year over year. Sales in the United States increased 28% year over year.
Europe (25% of net sales) generated $179.04 million of sales, down 4% from the prior-year quarter’s level.
Operating Details
In the second quarter, non-GAAP selling and administrative expenses were $160.05 million, reflecting an increase of 1.6% from the year-ago quarter. As a percentage of net sales, the figure contracted 70 basis points (bps) year over year.
Research and development spending was $44.01 million, down 2.1% from the year-ago reported figure. As a percentage of net sales, the figure contracted 40 bps year over year.
The adjusted operating margin was 28.4%, which contracted 80 bps year over year.
Balance Sheet & Cash Flow
As of Jul 2, 2022, cash, cash equivalents and investments were $419.8 million, lower than $503.1 million as of Apr 2, 2022.
Account receivables stood at $639.4 million at the end of the second quarter, up from $607.3 million in the last reported quarter.
Waters generated cash from operation of $56.9 million in the reported quarter, down from $197.9 million in the prior quarter.
The company recorded a free cash flow of $67.3 million in the second quarter.
Guidance
For third-quarter 2022, Waters expects non-GAAP earnings of $2.50-$2.60 per share, which includes a foreign exchange headwind of 10%. The Zacks Consensus Estimate for earnings is pegged at $2.69 per share.
Waters anticipates net sales growth of 8-10% on a constant-currency basis. The company expects sales growth to decline six percentage points due to unfavorable foreign exchange fluctuations. The Zacks Consensus Estimate for sales is pegged at $683.4 million.
For 2022, Waters has revised the guidance for non-GAAP earnings upward from $11.90-$12.10 per share to $11.95-$12.05. This includes a foreign exchange headwind of 9%. The Zacks Consensus Estimate for 2022 earnings is pegged at $12.00.
Waters has also increased its guidance for sales growth. It expects 2022 net sales growth of 9.5-10.5% on a constant-currency basis. Sales growth is likely to decline five percentage points due to currency translation. The Zacks Consensus Estimate for sales is pegged at $2.94 billion. Previously, the company had anticipated net sales growth of 7.5-9% on a constant-currency basis.
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Waters (WAT) Q2 Earnings & Sales Surpass Estimates, Rise Y/Y
Waters Corporation (WAT - Free Report) has reported second-quarter 2022 non-GAAP earnings of $2.75 per share, which surpassed the Zacks Consensus Estimate by 4.6%. Further, the bottom line improved 6% on a year-over-year basis.
Net sales of $714.3 million beat the Zacks Consensus Estimate of $705.6 million. The figure rose 5% and 10% from the year-ago quarter on a reported and constant-currency basis, respectively.
Top-line growth was driven by a solid momentum across pharmaceutical, industrial, and government and academic end markets. Strong performances in Asia and the Americas contributed well.
Waters Corporation Price, Consensus and EPS Surprise
Waters Corporation price-consensus-eps-surprise-chart | Waters Corporation Quote
Top Line in Detail
Waters’ net sales figure can be categorized in four ways:
By Operating Segment: WAT operates under two organized segments, Waters and TA.
The Waters segment (89% of net sales) generated $635.1 million of sales, up 5% from the year-ago quarter. Sales in the TA segment were $79.2 million (11% of net sales), reflecting 7% year-over-year growth.
By Products & Services: The division comprises three segments — Instruments, Services and Chemistry.
Instruments sales (47% of sales) were $337.7 million, rising 7% on a year-over-year basis.
Service sales (34% of the sales) were $244.7 million, increasing 2% year over year.
Chemistry sales (19% of the sales) were $131.9 million, growing 4% from the year-ago quarter.
Moreover, the service and chemistry segments together generated recurring revenues of $376.6 million, increasing 3% from the year-ago quarter.
By Markets: Waters serves three end markets — Pharmaceutical, Industrial, and Governmental & Academic.
The Pharmaceutical market (61% of net sales) generated sales of $437.2 million, which increased 5% on a year-over-year basis.
The Industrial market’s (29% of sales) sales were $208.5 million, up 3% from the year-ago quarter.
Academic & Government (10% of sales) generated $68.6 million of the total sales. The figure increased 10% year over year.
By Geography: Waters’ operating regions include Asia, the Americas and Europe.
Asia (39% of net sales) generated $278.01 million of sales, up 3% on a year-over-year basis. Sales in China grew 9% from the prior-year quarter.
The Americas (36% of net sales) generated $257.3 million of sales, increasing 14% year over year. Sales in the United States increased 28% year over year.
Europe (25% of net sales) generated $179.04 million of sales, down 4% from the prior-year quarter’s level.
Operating Details
In the second quarter, non-GAAP selling and administrative expenses were $160.05 million, reflecting an increase of 1.6% from the year-ago quarter. As a percentage of net sales, the figure contracted 70 basis points (bps) year over year.
Research and development spending was $44.01 million, down 2.1% from the year-ago reported figure. As a percentage of net sales, the figure contracted 40 bps year over year.
The adjusted operating margin was 28.4%, which contracted 80 bps year over year.
Balance Sheet & Cash Flow
As of Jul 2, 2022, cash, cash equivalents and investments were $419.8 million, lower than $503.1 million as of Apr 2, 2022.
Account receivables stood at $639.4 million at the end of the second quarter, up from $607.3 million in the last reported quarter.
Waters generated cash from operation of $56.9 million in the reported quarter, down from $197.9 million in the prior quarter.
The company recorded a free cash flow of $67.3 million in the second quarter.
Guidance
For third-quarter 2022, Waters expects non-GAAP earnings of $2.50-$2.60 per share, which includes a foreign exchange headwind of 10%. The Zacks Consensus Estimate for earnings is pegged at $2.69 per share.
Waters anticipates net sales growth of 8-10% on a constant-currency basis. The company expects sales growth to decline six percentage points due to unfavorable foreign exchange fluctuations. The Zacks Consensus Estimate for sales is pegged at $683.4 million.
For 2022, Waters has revised the guidance for non-GAAP earnings upward from $11.90-$12.10 per share to $11.95-$12.05. This includes a foreign exchange headwind of 9%. The Zacks Consensus Estimate for 2022 earnings is pegged at $12.00.
Waters has also increased its guidance for sales growth. It expects 2022 net sales growth of 9.5-10.5% on a constant-currency basis. Sales growth is likely to decline five percentage points due to currency translation. The Zacks Consensus Estimate for sales is pegged at $2.94 billion. Previously, the company had anticipated net sales growth of 7.5-9% on a constant-currency basis.
Zacks Rank & Stocks to Consider
Waters currently carries a Zacks Rank #3 (Hold).
Investors interested in the broader Zacks Computer & Technology sector can consider some better-ranked stocks like MACOM Technology Solutions (MTSI - Free Report) , Keysight Technologies (KEYS - Free Report) and Asure Software (ASUR - Free Report) , each carrying a Zacks Rank #2 (Buy) at present. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
MACOM has lost 26% in the year-to-date period. The long-term earnings growth rate for MTSI is currently projected at 16.2%.
Keysight Technologies has lost 20.9% in the year-to-date period. KEYS’ long-term earnings growth rate is currently projected at 9.1%.
Asure Software has lost 29.6% in the year-to-date period. The long-term earnings growth rate for ASUR is currently projected at 14%.