Exhibit 99.1

For Immediate Release

Contact: Bryan Brokmeier, CFA, Senior Director, Investor Relations, 508-482-3448

Waters Corporation (NYSE: WAT) Reports Second Quarter 2018 Financial Results

 

   

Sales of $596 million grew 7% as reported and 5% in constant currency

 

   

Growth across all end markets with strong TA performance

 

   

Strong growth from China, partially offset by softness in the U.S.

 

   

GAAP EPS increased 21% to $1.98; non-GAAP EPS increased 11% to $1.95

Milford, Mass., July 24, 2018 - Waters Corporation (NYSE: WAT) today announced second quarter 2018 sales of $596 million, a 7% increase as reported, versus sales of $558 million for the second quarter of 2017. Foreign currency translation increased sales growth by approximately 2% for the quarter.

On a GAAP basis, diluted earnings per share (EPS) for the second quarter increased 21% to $1.98, compared to $1.63 for the second quarter of 2017. On a non-GAAP basis, EPS for the second quarter increased 11% to $1.95, compared to $1.76 for the second quarter of 2017. A description and reconciliation of GAAP to non-GAAP results appear in the table below and can be found on the Company’s website at http://www.waters.com under the caption “Investors.”

On a GAAP basis, net cash provided by operating activities for the second quarter of 2018 decreased to $101 million from $177 million for the second quarter of 2017. On a non-GAAP basis, adjusted free cash flow decreased to $144 million from $159 million for the second quarter of 2017.

For the first half of 2018, the Company’s sales were $1,127 million, up 7% as reported, compared with sales of $1,056 million in the first half of 2017. Foreign currency translation increased sales growth by approximately 4% during the first half of 2018. On a GAAP basis, EPS for the first half of 2018 was up 15% to $3.39, compared to $2.94 for the first half of 2017. On a non-GAAP basis and including adjustments in the attached reconciliation, EPS increased 10% to $3.54 in 2018 as compared to $3.22 for the first half of 2017. On a GAAP basis, net cash provided by operating activities for the first half of 2018 decreased to $277 million from $351 million for the first half of 2017. On a non-GAAP basis, adjusted free cash flow decreased to $304 million from $316 million for the first half of 2017.

Commenting on the Company’s performance, Chris O’Connell, Chairman and Chief Executive Officer, said, “We are pleased that we saw sequential improvement in our second quarter results, highlighted by strong growth in China, our TA product line, and our recurring revenues. In addition, we delivered meaningful operating leverage, which enabled us to achieve double-digit earnings per share growth. Our second quarter results give us confidence in the ongoing growth trajectory of our business.”


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 found below.

During the second quarter of 2018, sales into the pharmaceutical market grew 6% as reported and 4% in constant currency, sales into the industrial market grew 5% as reported and 3% in constant currency, and sales into the governmental and academic markets grew 16% as reported and 13% in constant currency. During the first half of 2018, sales into the pharmaceutical market grew 7% as reported and 4% in constant currency, sales into the industrial market grew 3% as reported and were flat in constant currency, and sales into the governmental and academic markets grew 13% as reported and 10% in constant currency.

During the second quarter, recurring revenues, which represent the combination of service and precision chemistries revenues, grew 11% as reported and 8% in constant currency, while instrument system sales grew 3% as reported and 2% in constant currency. For the first half of 2018, recurring revenues grew 11% as reported and 7% in constant currency, while instrument system sales grew 2% as reported and were flat in constant currency.

Geographically, sales in Asia during the quarter grew 10% as reported and 8% in constant currency, sales in Europe grew 10% as reported and 5% in constant currency, and sales in the Americas grew 1%, while U.S. sales declined 2%. For the first half of 2018, sales in Asia grew 6% as reported and 4% in constant currency, sales in Europe grew 13% as reported and 4% in constant currency, and sales in the Americas grew 2%, with U.S. sales also growing 2%.

Third Quarter and Fiscal Year 2018 Financial Outlook

Waters Corporation expects third quarter 2018 constant currency sales growth to be in a range of 4% to 6%, and, as of today, currency translation is expected to decrease third quarter sales growth by approximately 1% to 2%. The Company also expects third quarter 2018 non-GAAP earnings per fully diluted share to be in the range of $1.85 to $1.95. Please refer to the table below for a reconciliation of the projected GAAP to non-GAAP financial outlook for the third quarter.

The Company maintains its full-year 2018 guidance for constant currency sales growth in the range of 4% to 6%. As of today, currency translation is expected to increase 2018 sales growth by less than 1%. The Company is revising its guidance for full-year 2018 non-GAAP earnings per fully diluted share to the range of $8.05 to $8.20, from the prior guidance range of $8.10 to $8.30. Please refer to the table below for a reconciliation of the projected GAAP to non-GAAP financial outlook for the full year.

Conference Call

Waters Corporation will webcast its second quarter 2018 financial results conference call today, July 24, 2018 at 8:00 a.m. Eastern Time. To listen to the call, please visit www.waters.com, choose “Investors,” and click on the “Live Webcast.” A replay will be available through July 31, 2018 at midnight Eastern Time on the same website by webcast and also by phone at 402-661-5143.


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 nearly 60 years. With approximately 7,000 employees worldwide, Waters operates directly in 31 countries, including 15 manufacturing facilities, 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 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 generally accepted accounting principles (GAAP). The Company’s definition 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 Waters Corporation’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 Waters Corporation’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 may contain “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, 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 from economic, sovereign and political uncertainties; the effect on the Company’s financial results from the United Kingdom voting to exit 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; impact of the newly enacted tax reform legislation in the U.S.; 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, 2017 as filed with the Securities and Exchange Commission, which “Forward-Looking Statements” and “Risk Factors” discussions are incorporated by reference in this release. 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.


Waters Corporation and Subsidiaries

Consolidated Statements of Operations

(In thousands, except per share data)

(Unaudited)

 

     Three Months Ended     Six Months Ended  
     June 30, 2018     July 1, 2017     June 30, 2018     July 1, 2017  

Net sales

   $ 596,219     $ 558,250     $ 1,126,889     $  1,056,219  

Costs and operating expenses:

        

Cost of sales

     243,135       229,627       464,556       440,722  

Selling and administrative expenses

     136,645       130,093       267,052       260,766  

Research and development expenses

     35,644       32,937       70,124       63,689  

Litigation provision (settlement)

     —         10,018       (1,672     10,018  

Purchased intangibles amortization

     1,602       1,693       3,261       3,422  

Acquired in-process research and development

     —         —         —         5,000  

Operating income

     179,193       153,882       323,568       272,602  

Other (expense) income*

     (1,828     (97     (1,482     52  

Interest expense, net

     (2,804     (5,713     (6,976     (11,095

Income from operations before income taxes

     174,561       148,072       315,110       261,559  

Provision for income taxes**

     18,884       16,250       47,482       24,180  

Net income

   $ 155,677     $ 131,822     $ 267,628     $ 237,379  

Net income per basic common share

   $ 2.00     $ 1.65     $ 3.42     $ 2.97  

Weighted-average number of basic common shares

     77,833       79,979       78,330       80,029  

Net income per diluted common share

   $ 1.98     $ 1.63     $ 3.39     $ 2.94  

Weighted-average number of diluted common shares and equivalents

     78,438       80,756       79,041       80,769  

 

* The Company adopted new accounting guidance which requires that an employer disaggregate the service cost component from other components of net benefit cost. As a result of the adoption of this standard, the components of net periodic benefit cost other than the service cost component are included in other (expense) income in the consolidated statements of operations and all previous periods have been adjusted accordingly.
** The provision for income taxes for the three and six months ended June 30, 2018 includes a $9 million benefit and a $4 million expense, respectively, related to the tax on the change in foreign currency exchange rates on the earnings taxed on December 31, 2017 under the Tax Cuts and Jobs Act. The difference is due to the change from the foreign currency exchange rates required by the U.S. Department of the Treasury on December 31, 2017 to the foreign currency exchange rates on either the date of distribution of assets into the U.S. or the foreign currency exchange rates as of June 30, 2018.


Waters Corporation and Subsidiaries

Reconciliation of GAAP to Adjusted Non-GAAP

Net Sales by Operating Segment, Products & Services, Geography and Markets

Three Months Ended June 30, 2018 and July 1, 2017

(In thousands)

 

     Three Months Ended      Percent     Current
Period
Currency
     Constant
Currency
 
     June 30, 2018      July 1, 2017      Change     Impact      Growth Rate (a)  

NET SALES - OPERATING SEGMENT

             

Waters

   $ 527,305      $ 497,780        6   $ 10,067        4

TA

     68,914        60,470        14     1,217        12
  

 

 

    

 

 

      

 

 

    

Total

   $ 596,219      $ 558,250        7   $ 11,284        5
  

 

 

    

 

 

      

 

 

    

NET SALES - PRODUCTS & SERVICES

             

Instruments

   $ 289,740      $ 282,014        3   $ 3,349        2

Service

     207,350        185,412        12     5,391        9

Chemistry

     99,129        90,824        9     2,544        6
  

 

 

    

 

 

      

 

 

    

Total Recurring

     306,479        276,236        11     7,935        8
  

 

 

    

 

 

      

 

 

    

Total

   $ 596,219      $ 558,250        7   $ 11,284        5
  

 

 

    

 

 

      

 

 

    

NET SALES - GEOGRAPHY

             

Asia

   $ 236,905      $ 215,703        10   $ 3,285        8

Americas

     198,126        196,586        1     299        1

Europe

     161,188        145,961        10     7,700        5
  

 

 

    

 

 

      

 

 

    

Total

   $ 596,219      $ 558,250        7   $ 11,284        5
  

 

 

    

 

 

      

 

 

    

NET SALES - MARKETS

             

Pharmaceutical

   $ 338,354      $ 319,650        6   $ 6,228        4

Industrial

     183,664        174,531        5     3,078        3

Governmental & Academic

     74,201        64,069        16     1,978        13
  

 

 

    

 

 

      

 

 

    

Total

   $ 596,219      $ 558,250        7   $ 11,284        5
  

 

 

    

 

 

      

 

 

    

 

(a) The Company believes that referring to comparable constant currency growth rates is a useful way to evaluate the underlying performance of Waters Corporation’s net sales. Constant currency growth rate, a non-GAAP financial measure, measures the change in net sales between current and prior year periods, ignoring the impact of foreign currency exchange rates during the current period. See description of non-GAAP financial measures contained in this release.


Waters Corporation and Subsidiaries

Reconciliation of GAAP to Adjusted Non-GAAP

Net Sales by Operating Segment, Products & Services, Geography and Markets

Six Months Ended June 30, 2018 and July 1, 2017

(In thousands)

 

     Six Months Ended      Percent     Current
Period
Currency
     Constant
Currency
 
     June 30, 2018      July 1, 2017      Change     Impact      Growth Rate (a)  

NET SALES - OPERATING SEGMENT

             

Waters

   $ 998,451      $ 941,206        6   $ 32,218        3

TA

     128,438        115,013        12     2,932        9
  

 

 

    

 

 

      

 

 

    

Total

   $ 1,126,889      $ 1,056,219        7   $ 35,150        3
  

 

 

    

 

 

      

 

 

    

NET SALES - PRODUCTS & SERVICES

             

Instruments

   $ 530,147      $ 518,407        2   $ 13,050        —    

Service

     398,903        359,085        11     14,755        7

Chemistry

     197,839        178,727        11     7,345        7
  

 

 

    

 

 

      

 

 

    

Total Recurring

     596,742        537,812        11     22,100        7
  

 

 

    

 

 

      

 

 

    

Total

   $ 1,126,889      $ 1,056,219        7   $ 35,150        3
  

 

 

    

 

 

      

 

 

    

NET SALES - GEOGRAPHY

             

Asia

   $ 437,185      $ 410,809        6   $ 9,374        4

Americas

     379,836        371,236        2     717        2

Europe

     309,868        274,174        13     25,059        4
  

 

 

    

 

 

      

 

 

    

Total

   $ 1,126,889      $ 1,056,219        7   $ 35,150        3
  

 

 

    

 

 

      

 

 

    

NET SALES - MARKETS

             

Pharmaceutical

   $ 643,682      $ 599,460        7   $ 22,013        4

Industrial

     345,994        335,834        3     9,198        —    

Governmental & Academic

     137,213        120,925        13     3,939        10
  

 

 

    

 

 

      

 

 

    

Total

   $ 1,126,889      $ 1,056,219        7   $ 35,150        3
  

 

 

    

 

 

      

 

 

    

 

(a) The Company believes that referring to comparable constant currency growth rates is a useful way to evaluate the underlying performance of Waters Corporation’s net sales. Constant currency growth rate, a non-GAAP financial measure, measures the change in net sales between current and prior year periods, ignoring the impact of foreign currency exchange rates during the current period. See description of non-GAAP financial measures contained in this release.


Waters Corporation and Subsidiaries

Reconciliation of GAAP to Adjusted Non-GAAP Financials

Quarters and Six Months Ended June 30, 2018 and July 1, 2017

(In thousands, except per share data)

 

    Selling &
Administrative
Expenses(a)
    Research &
Development
Expenses(a)
    Operating
Income
    Operating
Income
Percentage
    Other
(Expense)
Income
    Income from
Operations
before
Income
Taxes
    Provision for
Income
Taxes
    Net
Income
    Diluted
Earnings
per Share
 

Quarter Ended June 30, 2018

                                                     

GAAP

  $ 138,247     $ 35,644     $ 179,193       30.1   $ (1,828   $ 174,561     $ 18,884     $ 155,677     $ 1.98  

Adjustments:

                 

Purchased intangibles amortization (b)

    (1,602     —         1,602       0.3     —         1,602       304       1,298       0.02  

Restructuring costs and certain other items (c)

    (1,189     —         1,189       0.2     —         1,189       260       929       0.01  

Pension termination (d)

    —         —         —         —         2,165       2,165       520       1,645       0.02  

Tax reform (h)

    —         —         —         —         —         —         8,573       (8,573     (0.11

Certain income tax items (e)

    —         —         —         —         —         —         (1,993     1,993       0.03  
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Adjusted Non-GAAP

  $ 135,456     $ 35,644     $ 181,984       30.5   $ 337     $ 179,517     $ 26,548     $ 152,969     $ 1.95  
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Quarter Ended July 1, 2017

                                                     

GAAP

  $ 141,804     $ 32,937     $ 153,882       27.6   $ (97   $ 148,072     $ 16,250     $ 131,822     $ 1.63  

Adjustments:

                 

Purchased intangibles amortization (b)

    (1,693     —         1,693       0.3     —         1,693       449       1,244       0.02  

Restructuring costs and certain other items (c)

    (1,663     —         1,663       0.3     —         1,663       735       928       0.01  

Litigation provisions (f)

    (10,018     —         10,018       1.8       10,018       3,757       6,261       0.08  

Certain income tax items (e)

    —         —         —         —         —         —         (1,972     1,972       0.02  
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Adjusted Non-GAAP

  $ 128,430     $ 32,937     $ 167,256       30.0   $ (97   $ 161,446     $ 19,219     $ 142,227     $ 1.76  
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Six Months Ended June 30, 2018

                                                     

GAAP

  $ 268,641     $ 70,124     $ 323,568       28.7   $ (1,482   $ 315,110     $ 47,482     $ 267,628     $ 3.39  

Adjustments:

                 

Purchased intangibles amortization (b)

    (3,261     —         3,261       0.3     —         3,261       506       2,755       0.03  

Restructuring costs and certain other items (c)

    (1,757     —         1,757       0.2     —         1,757       392       1,365       0.02  

Pension termination (d)

    —         —         —         —         2,165       2,165       520       1,645       0.02  

Litigation settlement (f)

    1,672       —         (1,672     (0.1 %)      —         (1,672     (401     (1,271     (0.02

Stock award modification (g)

    (1,014     —         1,014       0.1     —         1,014       243       771       0.01  

Tax reform (h)

    —         —         —         —         —         —         (3,877     3,877       0.05  

Certain income tax items (e)

    —         —         —         —         —         —         (2,685     2,685       0.03  
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Adjusted Non-GAAP

  $ 264,281     $ 70,124     $ 327,928       29.1   $ 683     $ 321,635     $ 42,180     $ 279,455     $ 3.54  
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Six Months Ended July 1, 2017

                                                     

GAAP

  $ 274,206     $ 68,689     $ 272,602       25.8   $ 52     $ 261,559     $ 24,180     $ 237,379     $ 2.94  

Adjustments:

                 

Purchased intangibles amortization (b)

    (3,422     —         3,422       0.3     —         3,422       922       2,500       0.03  

Restructuring costs and certain other items (c)

    (11,011     —         11,011       1.0     —         11,011       3,794       7,217       0.09  

Litigation provisions (f)

    (10,018     —         10,018       0.9     —         10,018       3,757       6,261       0.08  

Acquired in-process research and development (i)

    —         (5,000     5,000       0.5     —         5,000       962       4,038       0.05  

Certain income tax items (e)

    —         —         —         —         —         —         (2,447     2,447       0.03  
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Adjusted Non-GAAP

  $ 249,755     $ 63,689     $ 302,053       28.6   $ 52     $ 291,010     $ 31,168     $ 259,842     $ 3.22  
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

 

(a) Selling & administrative expenses include purchased intangibles amortization and litigation provisions. Research & development expenses include acquired in-process research and development.
(b) The purchased intangibles amortization, a non-cash expense, was excluded to be consistent with how management evaluates the performance of its core business against historical operating results and the operating results of competitors over periods of time.
(c) Restructuring costs and certain other items were excluded as the Company believes that the cost to consolidate operations and reduce overhead and certain other income or expense items are not normal and do not represent future ongoing business expenses of a specific function or geographic location of the Company.
(d) The pension expense associated with terminating a frozen defined benefit pension plan was excluded as the Company believes these expenses are not indicative of normal operating costs.
(e) Certain income tax items were excluded as these non-cash expenses and benefits represent updates in management’s assessment of ongoing examinations or other tax items that are not indicative of the Company’s normal or future income tax expense.
(f) Litigation provisions and settlement gain were excluded as these costs are isolated, unpredictable and not expected to recur regularly.
(g) The non-cash expense associated with accelerating the vesting of certain stock awards was excluded as the Company believes these expenses are not indicative of normal operating costs.
(h) The provision for income taxes for the three and six months ended June 30, 2018 includes a $9 million benefit and a $4 million expense, respectively, related to the tax on the change in foreign currency exchange rates on the earnings taxed on December 31, 2017 under the Tax Cuts and Jobs Act. The difference is due to the change from the foreign currency exchange rates required by the U.S. Department of the Treasury on December 31, 2017 to the foreign currency exchange rates on either the date of distribution of assets into the U.S. or the foreign currency exchange rates as of June 30, 2018. The impact of the tax on the change in foreign currency exchange rates was excluded as the Company believes this expense is not indicative of the Company’s normal or future income tax expense.
(i) Acquired In-Process Research and Development was excluded as it relates to milestone payments associated with a licensing arrangement for mass spectrometry that the Company believes is unusual and not indicative of its normal business operations.


Waters Corporation and Subsidiaries

Preliminary Condensed Unclassified Consolidated Balance Sheets

(In thousands and unaudited)

 

     June 30, 2018      December 31, 2017  

Cash, cash equivalents and investments

   $ 2,248,493      $ 3,393,701  

Accounts receivable

     492,826        533,825  

Inventories

     299,595        270,294  

Property, plant and equipment, net

     335,709        349,278  

Intangible assets, net

     218,175        228,395  

Goodwill

     357,507        359,819  

Other assets

     205,439        189,042  

Total assets

   $ 4,157,744      $ 5,324,354  

Notes payable and debt

   $ 1,148,450      $ 1,997,774  

Other liabilities

     1,034,200        1,092,792  

Total liabilities

     2,182,650        3,090,566  

Total equity

     1,975,094        2,233,788  

Total liabilities and equity

   $ 4,157,744      $ 5,324,354  


Waters Corporation and Subsidiaries

Preliminary Condensed Consolidated Statements of Cash Flows

Three and Six Months Ended June 30, 2018 and July 1, 2017

(In thousands and unaudited)

 

     Three Months Ended     Six Months Ended  
     June 30, 2018     July 1, 2017     June 30, 2018     July 1, 2017  

Cash flows from operating activities:

        

Net income

   $ 155,677     $ 131,822     $ 267,628     $ 237,379  

Adjustments to reconcile net income to net cash provided by operating activities:

        

Stock-based compensation

     9,079       9,139       18,971       17,794  

Depreciation and amortization

     27,196       29,455       55,836       52,405  

Change in operating assets and liabilities, net

     (91,236     6,635       (65,878     43,682  
  

 

 

   

 

 

   

 

 

   

 

 

 

Net cash provided by operating activities

     100,716       177,051       276,557       351,260  

Cash flows from investing activities:

        

Additions to property, plant, equipment and software capitalization

     (20,839     (17,647     (36,831     (35,358

Investment in unaffiliated company

     —         —         (3,215     (7,000

Payments for intellectual property licenses

     —         (5,000     —         (5,000

Net change in investments

     331,382       (174,156     1,246,428       (246,494
  

 

 

   

 

 

   

 

 

   

 

 

 

Net cash provided by (used in) investing activities

     310,543       (196,803     1,206,382       (293,852

Cash flows from financing activities:

        

Net change in debt

     (99,855     44,948       (849,774     84,936  

Proceeds from stock plans

     10,558       19,923       34,845       58,182  

Purchases of treasury shares

     (270,774     (76,661     (553,144     (165,834

Other cash flow from financing activities, net

     (4,095     1,868       (2,158     430  
  

 

 

   

 

 

   

 

 

   

 

 

 

Net cash used in financing activities

     (364,166     (9,922     (1,370,231     (22,286

Effect of exchange rate changes on cash and cash equivalents

     (21,411     12,485       (12,823     26,502  
  

 

 

   

 

 

   

 

 

   

 

 

 

Increase in cash and cash equivalents

     25,682       (17,189     99,885       61,624  

Cash and cash equivalents at beginning of period

     716,522       584,444       642,319       505,631  
  

 

 

   

 

 

   

 

 

   

 

 

 

Cash and cash equivalents at end of period

   $ 742,204     $ 567,255     $ 742,204     $ 567,255  
  

 

 

   

 

 

   

 

 

   

 

 

 

Reconciliation of GAAP Cash Flows from Operating Activities to Free Cash Flow (a)

 

 

Net cash provided by operating activities - GAAP

   $ 100,716     $ 177,051     $ 276,557     $ 351,260  

Adjustments:

        

Additions to property, plant, equipment and software capitalization

     (20,839     (17,647     (36,831     (35,358

Tax reform payments

     46,700       —         46,700       —    

Litigation settlement payment

     15,400       —         15,400       —    

Major facility renovations

     1,801       —         1,801       —    
  

 

 

   

 

 

   

 

 

   

 

 

 

Free Cash Flow - Adjusted Non-GAAP

   $ 143,778     $ 159,404     $ 303,627     $ 315,902  
  

 

 

   

 

 

   

 

 

   

 

 

 

 

(a) The Company defines free cash flow as net cash flow from operations accounted for under GAAP less capital expenditures and software capitalizations plus or minus any unusual and non recurring items. Free cash flow is not a GAAP measurement and may not be comparable to free cash flow reported by other companies.


Waters Corporation and Subsidiaries

Reconciliation of Projected GAAP to Adjusted Non-GAAP Financial Outlook

(In thousands, except per share data)

 

     Three Months Ended
September 29, 2018
    Twelve Months Ended
December 31, 2018
 
     Range     Range  
Projected Sales                                   

Projected constant currency sales growth rate

     4   -          6     4   -          6

Projected currency impact

     (2 %)    -          (1 %)      0   -          1
  

 

 

      

 

 

   

 

 

      

 

 

 

Projected sales growth rate as reported

     2   -          5     4   -          7
  

 

 

      

 

 

   

 

 

      

 

 

 
Projected Earnings Per Diluted Share    Range     Range  

Projected GAAP earnings per diluted share

   $ 1.81     -        $ 1.91     $ 7.81     -        $ 7.96  

Adjustments:

              

Purchased intangibles amortization

   $ 0.02     -        $ 0.02     $ 0.07     -        $ 0.07  

Restructuring costs and certain other items

   $ —       -        $ —       $ 0.02     -        $ 0.02  

Pension termination

   $ 0.01     -        $ 0.01     $ 0.04     -        $ 0.04  

Litigation provision

   $ —       -        $ —       $ (0.02   -        $ (0.02

Stock award modification

   $ —       -        $ —       $ 0.01     -        $ 0.01  

Tax reform

   $ —       -        $ —       $ 0.05     -        $ 0.05  

Certain income tax items

   $ 0.01     -        $ 0.01     $ 0.07     -        $ 0.07  
  

 

 

      

 

 

   

 

 

      

 

 

 

Projected adjusted non-GAAP earnings per diluted share

   $ 1.85     -        $ 1.95     $ 8.05     -        $ 8.20  
  

 

 

      

 

 

   

 

 

      

 

 

 

Constant currency growth rates are a non-GAAP financial measure that measures the change in net sales between current and prior year periods, ignoring the impact of foreign currency exchange rates during the current period. These amounts are estimated at the current foreign currency exchange rates and based on the forecasted geographical sales in local currency as well as an assessment of market conditions as of today and may differ significantly from actual results.

These forward-looking adjustment estimates do not reflect future gains and charges that are inherently difficult to predict and estimate due to their unknown timing, effect and/or significance.

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