Waters Corporation
WAT
has reported first-quarter 2022 non-GAAP earnings of $2.80 per share, which surpassed the Zacks Consensus Estimate by 20.7%. Further, the bottom line improved 22.3% on a year-over-year basis.
Net sales of $690.6 million beat the Zacks Consensus Estimate of $632.9 million. The figure rose 13% and 16% from the year-ago quarter’s numbers on a reported and constant-currency basis, respectively.
Top-line growth was driven by a solid momentum across pharmaceutical and industrial end markets. Strong performances in Asia, the Americas and Europe contributed well. Strong performances delivered by the Waters and TA segments were other positives.
Waters Corporation Price, Consensus and EPS Surprise
Waters Corporation price-consensus-eps-surprise-chart
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Waters Corporation Quote
Top Line in Detail
Waters’ net sales figure can be categorized in four ways:
By Operating Segment:
WAT operates two organized segments, Waters and TA.
The Waters segment (88.8% of net sales) generated $613.2 million of sales, up 13% from the year-ago quarter. Sales in the TA segment were $77.4 million (11.2% of net sales), reflecting 16% year-over-year growth.
By Products & Services:
The division comprises three segments — Instruments, Services and Chemistry.
Instruments sales (47.1% of sales) were $325.2 million, up 24% on a year-over-year basis.
Service sales (34.7% of the sales) were $239.7 million, increasing 6% year over year.
Chemistry sales (18.2% of the sales) were $125.6 million, up 6% from the year-ago quarter’s level.
Moreover, the service and chemistry segments generated recurring revenues of $365.3 million, up 6% from the year-ago quarter.
By Markets:
Waters serves three end markets — Pharmaceutical, Industrial and Governmental & Academic.
The Pharmaceutical market (60.2% of net sales) generated sales of $415.8 million, which increased 15% on a year-over-year basis.
The Industrial market’s (30.3% of sales) sales were $209.4 million, up 14% from the year-ago quarter.
Academic & Government (9.5% of sales) generated $65.4 million of the total sales. The figure increased 0.4% year over year.
By Geography:
Waters’ operating regions include Asia, the Americas and Europe.
Asia (37% of net sales) generated $254.3 million of sales, up 11% on a year-over-year basis. Sales in China grew 18% from the prior-year quarter.
The Americas (36% of sales) generated $248.8 million of sales, increasing 26% year over year. Sales in the United States increased 28% year over year.
Europe (27% of sales) generated $187.4 million of sales, up 3% from the prior-year quarter’s level.
Operating Details
In the first quarter, non-GAAP selling and administrative expenses were $155.1 million, reflecting an increase of 8.9% from the year-ago quarter’s level. As a percentage of net sales, the figure contracted 90 basis points (bps) year over year.
Research and development spending was $40.5 million, up 6.2% from the year-ago reported figure. As a percentage of net sales, the figure contracted 30 bps year over year.
The adjusted operating margin was 30.3%, which contracted 170 basis points (bps) year over year.
Balance Sheet & Cash Flow
As of Apr 2, 2022 cash, cash equivalents and investments were $503.1 million, lower than $569.3 million as of Dec 31, 2021.
Account receivables stood at $607.3 million at the end of the first quarter, down from $612.6 million in the last reported quarter.
Waters generated cash from operation of $197.9 million in the reported quarter, down from $217.9 million in the prior quarter.
Waters recorded a free cash flow of $175.6 million in the first quarter.
Guidance
For second-quarter 2022, Waters expects non-GAAP earnings of $2.55-$2.65 per share. The Zacks Consensus Estimate for earnings is pegged at $2.78 per share.
Waters anticipates net sales growth of 6-8% on a constant-currency basis. The Zacks Consensus Estimate for sales is pegged at $706.4 million.
For 2022, Waters revised the guidance for non-GAAP earnings upward from $11.75-$12.00 per share to $11.90-$12.10 per share. The Zacks Consensus Estimate for 2022 earnings is pegged at $11.86 per share.
Waters also increased its guidance for sales growth. It expects 2022 net sales growth of 7.5-9% on a constant-currency basis. The Zacks Consensus Estimate for sales is pegged at $2.92 billion. Previously, the company anticipated net sales growth of 5-7% on a constant-currency basis.
Zacks Rank & Other Stocks to Consider
Waters currently carries a Zacks Rank #2 (Buy).
Investors interested in the broader technology sector can consider some other top-ranked stocks like
Jabil
JBL
,
Jack Henry & Associates
JKHY
, and
Broadcom
AVGO
. While Jabil currently sports a Zacks Rank #1 (Strong Buy), Jack Henry & Associates and Broadcom carry a Zacks Rank #2. You can see
the complete list of today’s Zacks #1 Rank stocks here
.
Jabil has gained 5.5% over a year. The long-term earnings growth rate for JBL is currently projected at 12%.
Jack Henry & Associates has gained 16.9% over a year. The long-term earnings growth rate for JKHY is currently projected at 17%.
Broadcom has gained 20% over a year. The long-term earnings growth rate for AVGO is currently projected at 14.5%.
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