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Waters Corporation (WAT - Free Report) reported fourth-quarter 2022 non-GAAP earnings of $3.84 per share, which surpassed the Zacks Consensus Estimate by 2.7%. Further, the bottom line increased 4.6% on a year-over-year basis. The figure includes an 8% unfavorable foreign exchange headwind.
Net sales of $858.5 million beat the Zacks Consensus Estimate of $831.3 million. The figure rose 3% and 9% on a reported and constant-currency basis, respectively, from the comparable year-ago quarter’s readings.
The top-line growth was driven by solid momentum across the industrial end market. Strong performances in the Americas contributed well. Strength across the Waters and TA segments was a positive.
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, namely Waters and TA.
The Waters segment (88% of net sales) generated sales worth $754.75 million, up 2% from the year-ago quarter’s level. Sales in the TA segment were $103.76 million (12% of net sales), reflecting 10% year-over-year growth.
By Products & Services: The division comprises three segments, namely Instruments, Services and Chemistry.
Instruments sales (54% of sales) were $463.04 million, rising 5% on a year-over-year basis.
Service sales (30% of sales) were $255.7 million, decreasing 0.3% year over year.
Chemistry sales (16% of sales) were $139.74 million, growing 1% from the year-ago quarter’s level.
Moreover, the service and chemistry segments jointly generated recurring revenues of $395.5 million, increasing 0.1% from the year-ago quarter’s reported figure.
By Markets: Waters serves three end markets, such as Pharmaceutical, Industrial and Governmental & Academic.
The Pharmaceutical market (58% of net sales) generated sales of $492.76 million, which increased 0.2% on a year-over-year basis.
The Industrial market’s (31% of sales) sales were $267.9 million, up 8% from the year-ago quarter’s level.
Academic & Government (11% of sales) generated $97.8 million of the total sales. The figure increased 1% year over year.
By Geography: Waters’ operating regions include Asia, the Americas and Europe.
Asia (37% of net sales) generated $319.5 million in sales, down 1% on a year-over-year basis. Sales in China fell 6% from the prior-year quarter’s level.
The Americas (34% of net sales) generated $293.12 million in sales, increasing 8% year over year. Sales in the United States increased 11% year over year.
Europe (29% of net sales) generated $245.93 million in sales, up 1% from the prior-year quarter’s level.
Operating Details
In the fourth quarter, non-GAAP selling and administrative expenses were $172.9 million, up 2.1% from the year-ago quarter’s level. As a percentage of net sales, the figure expanded by 30 basis points (bps) on a year-over-year basis.
Research and development spending was $48.3 million, up 11.4% from the year-ago period’s reported figure. As a percentage of net sales, the figure expanded by 40 bps year over year.
The adjusted operating margin was 33.7%, which expanded by 110 bps year over year.
Balance Sheet & Cash Flow
As of Dec 31, 2022, cash, cash equivalents and investments were $481.4 million, up from $444.5 million as of Oct 1, 2022.
Accounts receivables stood at $722.9 million at the end of the fourth quarter, up from $600.9 million in the last reported quarter.
Waters generated cash from operations of $198.7 million in the reported quarter, up from $158.1 million in the prior quarter.
WAT recorded a free cash flow of $144.6 million in the fourth quarter.
Guidance
For first-quarter 2023, Waters expects non-GAAP earnings of $2.55-$2.65 per share, which includes a foreign exchange headwind of 6%. The Zacks Consensus Estimate for earnings is pegged at $2.70 per share.
Waters anticipates net sales growth of 4-6% on a constant-currency basis. WAT expects sales growth to decline 4% due to unfavorable foreign exchange fluctuations. The Zacks Consensus Estimate for sales is pegged at $683.8 million.
For 2023, Waters anticipates non-GAAP earnings in the band of $12.55-$12.75 per share. This includes a foreign exchange headwind of 3%. The Zacks Consensus Estimate for 2022 earnings is pegged at $12.74 per share.
Waters expects 2023 net sales growth of 5-6.5% on a constant-currency basis. The Zacks Consensus Estimate for sales is pegged at $3.05 billion.
Image: Bigstock
Waters (WAT) Q4 Earnings Surpass Estimates, Sales Rise Y/Y
Waters Corporation (WAT - Free Report) reported fourth-quarter 2022 non-GAAP earnings of $3.84 per share, which surpassed the Zacks Consensus Estimate by 2.7%. Further, the bottom line increased 4.6% on a year-over-year basis. The figure includes an 8% unfavorable foreign exchange headwind.
Net sales of $858.5 million beat the Zacks Consensus Estimate of $831.3 million. The figure rose 3% and 9% on a reported and constant-currency basis, respectively, from the comparable year-ago quarter’s readings.
The top-line growth was driven by solid momentum across the industrial end market. Strong performances in the Americas contributed well. Strength across the Waters and TA segments was a positive.
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, namely Waters and TA.
The Waters segment (88% of net sales) generated sales worth $754.75 million, up 2% from the year-ago quarter’s level. Sales in the TA segment were $103.76 million (12% of net sales), reflecting 10% year-over-year growth.
By Products & Services: The division comprises three segments, namely Instruments, Services and Chemistry.
Instruments sales (54% of sales) were $463.04 million, rising 5% on a year-over-year basis.
Service sales (30% of sales) were $255.7 million, decreasing 0.3% year over year.
Chemistry sales (16% of sales) were $139.74 million, growing 1% from the year-ago quarter’s level.
Moreover, the service and chemistry segments jointly generated recurring revenues of $395.5 million, increasing 0.1% from the year-ago quarter’s reported figure.
By Markets: Waters serves three end markets, such as Pharmaceutical, Industrial and Governmental & Academic.
The Pharmaceutical market (58% of net sales) generated sales of $492.76 million, which increased 0.2% on a year-over-year basis.
The Industrial market’s (31% of sales) sales were $267.9 million, up 8% from the year-ago quarter’s level.
Academic & Government (11% of sales) generated $97.8 million of the total sales. The figure increased 1% year over year.
By Geography: Waters’ operating regions include Asia, the Americas and Europe.
Asia (37% of net sales) generated $319.5 million in sales, down 1% on a year-over-year basis. Sales in China fell 6% from the prior-year quarter’s level.
The Americas (34% of net sales) generated $293.12 million in sales, increasing 8% year over year. Sales in the United States increased 11% year over year.
Europe (29% of net sales) generated $245.93 million in sales, up 1% from the prior-year quarter’s level.
Operating Details
In the fourth quarter, non-GAAP selling and administrative expenses were $172.9 million, up 2.1% from the year-ago quarter’s level. As a percentage of net sales, the figure expanded by 30 basis points (bps) on a year-over-year basis.
Research and development spending was $48.3 million, up 11.4% from the year-ago period’s reported figure. As a percentage of net sales, the figure expanded by 40 bps year over year.
The adjusted operating margin was 33.7%, which expanded by 110 bps year over year.
Balance Sheet & Cash Flow
As of Dec 31, 2022, cash, cash equivalents and investments were $481.4 million, up from $444.5 million as of Oct 1, 2022.
Accounts receivables stood at $722.9 million at the end of the fourth quarter, up from $600.9 million in the last reported quarter.
Waters generated cash from operations of $198.7 million in the reported quarter, up from $158.1 million in the prior quarter.
WAT recorded a free cash flow of $144.6 million in the fourth quarter.
Guidance
For first-quarter 2023, Waters expects non-GAAP earnings of $2.55-$2.65 per share, which includes a foreign exchange headwind of 6%. The Zacks Consensus Estimate for earnings is pegged at $2.70 per share.
Waters anticipates net sales growth of 4-6% on a constant-currency basis. WAT expects sales growth to decline 4% due to unfavorable foreign exchange fluctuations. The Zacks Consensus Estimate for sales is pegged at $683.8 million.
For 2023, Waters anticipates non-GAAP earnings in the band of $12.55-$12.75 per share. This includes a foreign exchange headwind of 3%. The Zacks Consensus Estimate for 2022 earnings is pegged at $12.74 per share.
Waters expects 2023 net sales growth of 5-6.5% on a constant-currency basis. The Zacks Consensus Estimate for sales is pegged at $3.05 billion.
Zacks Rank & Stocks to Consider
Currently, Water has a Zacks Rank #3 (Hold).
Some better-ranked stocks in the broader Zacks Computer & Technology sector are Agilent Technologies (A - Free Report) , Arista Networks (ANET - Free Report) and Garmin (GRMN - Free Report) , all of which carry a Zacks Rank #2 (Buy) at present. You can see the complete list of today’s Zacks #1 Rank stocks here.
Agilent has gained 8.4% in the past year. A’s long-term earnings growth rate is currently projected at 10%.
Arista Networks has gained 6.1% in the past year. The long-term earnings growth rate for ANET is currently projected at 17.5%.
Garmin has lost 24.6% in the past year. The long-term earnings growth rate for GRMN is currently projected at 5.6%.