Waters Corporation WAT has reported first-quarter 2024 non-GAAP earnings of $2.21 per share, beating the Zacks Consensus Estimate by 5.2%. However, the bottom line decreased 11.2% on a year-over-year basis.
Net sales of $636.84 million topped the Zacks Consensus Estimate of $634.35 million. The figure fell 7% on a reported basis and 9% at constant currency from the year-ago quarter’s readings.
Softness in the pharmaceutical, industrial, and government and academic markets was a major concern. The weakening momentum in Asia was another headwind.
Sluggishness in the Waters and TA segments was a negative.
Nevertheless, the growing momentum in Europe 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 $561.9 million, down 7% year over year. Sales in the TA segment were $74.9 million (12%), reflecting a 9% year-over-year decline.
By Products & Services: The division comprises three segments, namely Instruments, Services and Chemistry.
Instruments sales (37%) were $241.9 million, declining 20% on a year-over-year basis.
Services registered sales (41%) worth $260.7 million, climbing 5% year over year.
Chemistry sales (22%) totaled $134.2 million, growing 1% year over year.
Moreover, the Services and Chemistry segments jointly generated recurring revenues of $394.9 million, up 3% year over year.
By Markets: Waters serves three end markets, such as Pharmaceutical, Industrial, and Governmental & Academic.
The Pharmaceutical market (58%) generated sales of $374.2 million, which decreased 3% on a year-over-year basis.
The Industrial market’s (31%) sales were $195.3 million, down 7% year over year.
The Governmental & Academic market (11%) generated $67.3 million in sales, which plunged 25% year over year.
By Geography: Waters’ operating regions include Asia, the Americas and Europe.
Asia (33%) generated $207.6 million in sales, down 18% on a year-over-year basis.
Sales in the Americas (37%) generated $241.2 million, decreasing 2% year over year. The United States registered a 12% year-over-year improvement in sales.
Europe (30%) generated $188.1 million in sales, up 2% year over year.
Operating Details
In the first quarter, non-GAAP selling and administrative expenses were $160.5 million, down 7.8% year over year. As a percentage of net sales, the figure contracted 20 basis points (bps) on a year-over-year basis.
Research and development spending of $44.6 million increased 4.6% year over year. As a percentage of net sales, the figure expanded 80 bps year over year.
The adjusted operating margin was 27%, which expanded 20 bps year over year.
Balance Sheet & Cash Flow
As of Dec 31, 2023, cash, cash equivalents and investments were $338.2 million, down from $395.97 million as of Dec 31, 2023.
Waters generated cash from operations of $262.9 million in the reported quarter, up from $230.12 million in the prior quarter.
WAT recorded a free cash flow of $233.8 million in the first quarter.
Guidance
For second-quarter 2024, Waters expects non-GAAP earnings of $2.50-$2.60 per share. The Zacks Consensus Estimate is pegged at $2.78.
Management anticipates organic sales to decline 6-4% on a constant-currency basis. WAT projects sales growth to dip 2% due to unfavorable foreign exchange fluctuations. Wyatt transaction is estimated to increase sales growth by 1.5%.
On a reported basis, total sales are predicted to decline 6.5-4.5%. The Zacks Consensus Estimate is pegged at $729.85 million.
For 2024, Waters anticipates non-GAAP earnings of $11.75-$12.05 per share. This includes a foreign exchange headwind of 2%. The Zacks Consensus Estimate is pegged at $11.89.
Waters projects 2024 organic sales growth between -0.5 and 1.5% on a constant-currency basis. Wyatt transaction is expected to increase sales growth by slightly more than 1%. WAT projects sales growth to be affected by less than 1% due to unfavorable foreign exchange fluctuations.
On a reported basis, total sales are suggested to grow 0-2%. The Zacks Consensus Estimate is pegged at $2.98 billion.
Zacks Rank & Other Key Picks
Currently, Waters has a Zacks Rank #2 (Buy).
Some other top-ranked stocks in the broader technology sector are Alphabet GOOGL, Badger Meter BMI and Arista Networks ANET. While Alphabet and Badger Meter sport a Zacks Rank #1 (Strong Buy), Arista Networks carries a Zacks Rank #2 at present. You can see the complete list of today’s Zacks #1 Rank stocks here.
Shares of Alphabet have gained 16.5% in the year-to-date period. The long-term earnings growth rate for GOOGL is currently projected at 22.4%.
Shares of Badger Meter have gained 18.7% in the year-to-date period. The long-term earnings growth rate for BMI is 15.57%.
Shares of Arista Networks have gained 8.9% in the year-to-date period. The long-term earnings growth rate for ANET is 17.48%.
Where Will Stocks Go…
If Biden Wins? If Trump Wins?
The answers may surprise you.
Since 1950, even after negative midterm years, the market has never had a lower presidential election year. With voters energized and engaged, the market has been almost unrelentingly bullish no matter which party wins!
Now is the time to download Zacks’ free Special Report with 5 stocks that offer extreme upside for both Democrats and Republicans…
1. Medical manufacturer has gained +11,000% in the last 15 years.
2. Rental company is absolutely crushing its sector.
3. Energy powerhouse plans to grow its already large dividend by 25%.
4. Aerospace and defense standout just landed a potentially $80 billion contract.
5. Giant Chipmaker is building huge plants in the U.S.
Hurry, Download Special Report FREE >>
Badger Meter, Inc. (BMI) : Free Stock Analysis Report
Waters Corporation (WAT) : Free Stock Analysis Report
Alphabet Inc. (GOOGL) : Free Stock Analysis Report
Arista Networks, Inc. (ANET) : Free Stock Analysis Report
To read this article on Zacks.com click here.
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
