Waters reports first quarter 2023 financial results
Growth in broader Asia and Europe offset by weakness in China and the U.S.
Waters Corporation announced its financial results for the first quarter of 2023. Sales for the first quarter of 2023 were $685 million, a decrease of 1% as reported and an increase of 3% in constant currency, compared to sales of $691 million for the first quarter of 2022.
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On a GAAP basis, diluted earnings per share (EPS) for the first quarter of 2023 decreased to $2.38, compared to $2.62 for the first quarter of 2022. On a non-GAAP basis, EPS was $2.49, compared to $2.80 for the first quarter of 2022. This includes a headwind of approximately 8% due to unfavorable foreign exchange.
"While the first quarter came in below our expectations, our results reflect a healthy two-year stacked growth rate of 9.4%, and our end-markets are resilient," said Dr. Udit Batra, President & CEO, Waters Corporation. "Our team continues to execute well, and our revitalized portfolio has been further strengthened with the launch of Alliance iS, which we believe is the most significant innovation to hit pharma QA/QC labs in the past decade."
Dr. Batra continued, "The acceleration of our growth strategy remains on track, with our pending acquisition of Wyatt Technology anticipated to close in the second quarter of this year. The transaction is expected to deliver immediate growth and adjusted operating margin accretion to Waters and will increase our exposure to large molecule applications."
Other Highlights
During the first quarter of 2023, sales into the pharmaceutical market decreased 7% as reported and 4% in constant currency, sales into the industrial market were flat as reported and increased 3% in constant currency and sales into the academic and government markets increased 38% as reported and 45% in constant currency.
During the quarter, instrument system sales decreased 7% as reported and 3% in constant currency, while recurring revenues, which represent the combination of service and precision chemistries, increased 4% as reported and 8% in constant currency.
Geographically, sales in Asia during the quarter were flat as reported and increased 6% in constant currency (with China sales declining 4%), sales in the Americas decreased 1% (with U.S. sales declining 3%) and sales in Europe decreased 1% as reported and increased 3% in constant currency.
Full-Year 2023 Financial Guidance
The Company now expects full-year 2023 organic constant currency sales growth in the range of 3% to 5%. Currency translation is expected to have minimal impact on full-year organic sales growth. The Wyatt transaction is expected to increase full-year reported sales growth by approximately 2.5%. The resulting full-year 2023 reported sales growth is expected in the range of 5.5% to 7.5%.
The Company continues to expect full-year 2023 non-GAAP EPS in the range of $12.55 to $12.75, which includes an estimated headwind of approximately 1% due to unfavorable foreign exchange. This also includes the impact of the Wyatt transaction, which is expected to temporarily decrease full-year 2023 non-GAAP EPS by approximately 1%. The Company expects the transaction to become accretive to non-GAAP EPS starting in the first quarter of 2024.
Second Quarter 2023 Financial Guidance
The Company expects second quarter 2023 organic constant currency sales growth in the range of 1% to 3%. Currency translation is expected to decrease second quarter sales growth by approximately 1%. Assuming a mid-May close, the Wyatt transaction is expected to increase second quarter reported sales growth by approximately 1.5%. The resulting second quarter 2023 reported sales growth is expected in the range of 1.5% to 3.5%.
The Company expects second quarter 2023 non-GAAP EPS in the range of $2.52 to $2.62, which includes an estimated headwind of approximately 3% due to unfavorable foreign exchange. This also includes the impact of the Wyatt transaction, which is expected to decrease second quarter 2023 non-GAAP EPS by approximately 3%.
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