Waters Corporation (NYSE: WAT) Reports Second Quarter 2021 Financial Results

• Sales of $682 million grew 31% as reported and 27% in constant currency
• GAAP EPS of $2.69; non-GAAP EPS of $2.60, a 24% increase from prior year
• Broad-based commercial momentum in pharmaceutical and industrial end markets
• Continued strength in core and new product instrument and chemistry sales
• Strong and balanced customer demand across key regions and geographies

Waters Corporation (NYSE: WAT) today announced second quarter 2021 sales of $682 million, a 31% increase as reported, compared to sales of $520 million for the second quarter of 2020. Foreign currency translation benefited sales growth by approximately 4% for the quarter.

On a GAAP basis, diluted earnings per share (EPS) for the second quarter of 2021 increased to $2.69, compared to $1.98 for the second quarter of 2020. On a non-GAAP basis, EPS increased to $2.60, compared to $2.10 for the second 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 $143 million for the second quarter of 2021, compared to $199 million for the second quarter of 2020. On a non-GAAP basis, adjusted free cash flow for the second quarter of 2021 was $155 million versus $175 million for the second quarter of 2020.

For the first half of 2021, the Company’s sales were $1,290 million, an increase of 31% as reported, compared to sales of $985 million for the first half of 2020. Foreign currency translation benefited sales growth by approximately 4% for the first half of 2021.

On a GAAP basis, EPS for the first half of 2021 increased to $5.05, compared to $2.83 for the first half of 2020. On a non-GAAP basis, EPS increased to $4.89, compared to $3.25 in the first half of 2020.

On a GAAP basis, net cash provided by operating activities was $361 million for the first half of 2021, compared to $350 million for the first half of 2020. On a non-GAAP basis, adjusted free cash flow for the first half of 2021 was $348 million versus $296 million for the first half of 2020.

“We are very pleased with the commercial momentum we are building, thanks to the solid execution of the Waters team and accelerated progress against our transformation initiatives,” said Dr. Udit Batra, President and Chief Executive Officer of Waters Corporation. “Our second quarter results were led by strong growth in our pharma and industrial end markets. Continued market strength, combined with our solid execution, resulted in double-digit growth in instrument and chemistry sales, with total sales increasing across every region. We have built a strong team of proven leaders committed to a common vision and continued execution as we work to more closely align our portfolio with higher growth areas.”

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 second quarter of 2021, sales into the pharmaceutical market increased 34% as reported and 31% in constant currency, sales into the industrial market increased 33% as reported and 28% in constant currency and sales into the academic and government markets increased 10% as reported and 7% in constant currency. For the first half of 2021, sales into the pharmaceutical market increased 33% as reported and 29% in constant currency, sales into the industrial market increased 31% as reported and 26% in constant currency and sales into the academic and government markets increased 20% as reported and 17% in constant currency.

During the second quarter, recurring revenues, which represent the combination of service and precision chemistries revenues, increased 22% as reported and 18% in constant currency, while instrument system sales increased 43% as reported and 40% in constant currency. For the first half of 2021, recurring revenues increased 21% as reported and 17% in constant currency, while instrument system sales increased 46% as reported and 42% in constant currency.

Geographically, sales in Asia during the quarter increased 30% as reported and 28% in constant currency, sales in the Americas increased 29% as reported and 28% in constant currency (with U.S. sales growing 26%) and sales in Europe increased 36% as reported and 25% in constant currency. For the first half of 2021, sales in Asia increased 36% as reported and 34% in constant currency, sales in the Americas increased 22% as reported and 21% in constant currency (with U.S. sales growing 19%) and sales in Europe increased 36% as reported and 25% in constant currency.

Third Quarter and Fiscal Year 2021 Financial Outlook

The Company expects full-year 2021 constant-currency sales growth in the range of 13% to 15%. Currency translation is expected to increase full-year sales growth by one to two percentage points. The Company also expects full-year 2021 non-GAAP EPS in the range of $10.50 to $10.70. 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 third quarter 2021 constant-currency sales growth in the range of 7% to 9%. Currency translation is expected to increase third quarter sales growth by approximately one percentage point. The Company also expects third quarter 2021 non-GAAP EPS in the range of $2.25 to $2.35. Please refer to the tables below for a reconciliation of the projected GAAP to non-GAAP financial outlook for the third quarter.

Conference Call

Waters Corporation will webcast its second quarter 2021 financial results conference call today, August 3, 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 August 10, 2021 at midnight Eastern Time on the same website by webcast and also by phone at (888) 566-0486.

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, 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 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, 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 report on Form 10-Q for the quarterly period ended April 3, 2021, 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.

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