- Waters Corporation (NYSE:WAT) is an analytical laboratory instrument and software company that trades publicly throughout the world.
- Waters Corporation was founded in 1958, the headquarter of the company is in Milford, Massachusetts, U.S.
- The company organized as a Delaware corporation in 1991, is a holding company that owns all of the outstanding common stock of Waters Technologies Corporation, its operating subsidiary.
- During the fiscal ended December 31, 2022, Waters Corporation has reported net sales of $2,971 million which was $2,785 million a year earlier, an increase of 7%.
- Operating income was $873 million in 2022, an increase of 6% as compared to 2021.
Brief Company Overview
Waters Corporation (NYSE:WAT) is an analytical laboratory and software company that primarily designs, manufactures, sells and services chromatography and mass spectrometry (“MS”) technology systems and support products, including chromatography columns, other consumable products and comprehensive post-warranty service plans. The company serves the life, materials and food science industry for more than 60 years. Waters Corporation was founded in 1958, the headquarter of the company is in Milford, Massachusetts, U.S. Customer base of the company includes pharmaceutical accounts, other industrial accounts, universities and governmental agencies. The company operates in over 35 countries internationally including Germany, Japan, Singapore and in India. The Company’s products are used by pharmaceutical, clinical, biochemical, industrial, nutritional safety, environmental, academic and governmental customers working in research and development, quality assurance and other laboratory applications.
Waters Corporation was incorporated as a Delaware corporation in 1991. It is a holding company that owns all of the outstanding common stock of Waters Technologies Corporation, its operating subsidiary. Waters Corporation became a publicly traded company with its initial public offering (“IPO”) in November 1995. Since the IPO, the company has added two significant and complementary technologies to its range of products with the acquisitions of TA Instruments in May 1996 and Micromass Limited in September 1997. Dr. Udit Batra is the Chief Executive Officer, President and Director of Waters Corporation since September 2020. Waters Corporation reported 8,200 Employees for its fiscal year ending in December of 2022.
As on November 2023, 52-week range of the stock price of the company is $231.90 - $353.71. Training P/E ratio of the company as on November 2023 is 24.24 times, price to sales (ttm) is 5.28 times, price to book value (mrq) is 17.38, profit margin is 21.80%, operating margin (ttm) is 25.21%, return on assets (ttm) is 13.88%, return on equity (ttm) is 101.20%. As on November 2023, total shares outstanding of the company is 59.13 million.
- On May 16, 2023, the Company completed the acquisition of Wyatt Technology, LLC and its three operating subsidiaries, Wyatt Technology Europe GmbH, Wyatt Technology France and Wyatt Technology UK Ltd. (collectively, “Wyatt”), for a total purchase price of $1.3 billion in cash.
- Waters Corporation is investing USD 16 million to set up its global capability centre in Bengaluru.
Q3 2023 Performance overview Waters Corporation
For the third quarter ended September 30, 2023, the company's reported revenue was $711.69 million compared to $708.56 million a year earlier. Net income was $134.55 million compared to $156 million a year earlier. Basic earnings per share from continuing operations was $2.28 compared to $2.61 a year earlier. Operating income was $179.426 million, compared to $192 million in 2022 for the same quarter. On a GAAP basis, diluted earnings per share (ESP) for the third quarter was $2.27, compared to $2.60 for the third quarter of 2022. On a non-GAAP basis, ESP was $2.84, compared to $2.60 for the third quarter of 2022. Profit before income tax of the third quarter in 2023 was $153.192 million and $183.381 in the same quarter a year earlier, a 16% decrease.
During the third quarter of 2023, sales into the pharmaceutical market increased 4% as reported and decreased 2% in organic constant currency, sales into the industrial market decreased 6% as reported and 8% in organic constant currency, and sales into the academic and government markets increased 3% as reported and decreased 3% in organic constant currency. Geographically, sales in Asia during the quarter decreased 15% as reported and 12% in organic constant currency (with China sales declining double-digits). Sales in the Americas increased 7% as reported and were flat in organic constant currency (with U.S. sales growing 7% as reported and declining 2% in organic constant currency). Sales in Europe increased 15% as reported and 3% in organic constant currency.
Annual Performance Highlights
During the fiscal ended December 31, 2022, Waters Corporation has reported net sales of $2,971 million which was $2,785 million a year earlier, an increase of 7%. Operating income was $873 million in 2022, an increase of 6% as compared to 2021. This increase was primarily a result of the increase in sales volume and pricing increases, partially offset by higher electronic component and freight inflationary costs and the negative effect of foreign currency translation. The total operating expenses are $902 million for the year 2022 and $779 million for the year 2021. EBIT of Waters Corporation. 2022 was $873.39 million a 5.29% increase from 2021. The net profit of the company was $707 million in 2022. The company’s 2022 annual EPS increased to $11.73, compared to $11.17 for fiscal year 2021. Current asset of the company was $1,763.90 million in 2022 and $1,628.94 million a year earlier. The total asset of the company was $3,281.45 million in 2022 and $3,094.93 million a year earlier. Waters Corporation’s current liabilities was $785.74 million and $680.51 million a year earlier. In 2022, total liabilities of the company was $2,776 million and $2,727 million in 2021.
The Company generated $612 million, $747 million and $791 million of net cash flows provided by operating activities in 2022, 2021 and 2020, respectively. The decrease in 2022 operating cash flow was primarily a result of higher inventory levels, slower cash collections and higher incentive compensation payments in 2022 compared to 2021.
Net cash used in investing activities included capital expenditures related to property, plant, equipment and software capitalization of $176 million, $161 million and $172 million in 2022, 2021 and 2020, respectively. The cash flows used in investing activities in 2022, 2021 and 2020 included $32 million, $49 million and $70 million, respectively, of capital expenditures related to the major expansion of the Company’s precision chemistry consumable operations in the United States.
Waters Corporation provides high-performance liquid chromatography products and services. The Company distributes its products worldwide to a wide range of industries such as pharmaceuticals, chemicals, and environmental testing. Waters also designs, manufactures, sells, and services thermal analysis, rheometry, calorimetry instruments, and related software products.The Company has two operating segments: Waters and TA. The Waters operating segment is primarily in the business of designing, manufacturing, selling and servicing LC and MS instrument systems, columns and other precision chemistry consumables that can be integrated and used along with other analytical instruments. The TA operating segment is primarily in the business of designing, manufacturing, selling and servicing thermal analysis, rheometry and calorimetry instruments. The Company’s two operating segments have similar economic characteristics; product processes; products and services; types and classes of customers; methods of distribution; and regulatory environments. Because of these similarities, the two segments have been aggregated into one reporting segment for financial statement purposes. Information concerning revenues and long-lived assets attributable to each of the Company’s products, services and geographic areas is set forth in Note 18 in the Notes to the Consolidated Financial Statements, which is incorporated herein by reference.
Waters services enable customers to maximize technology productivity, support customer compliance activities and provide transparency into enterprise resource management efficiencies. The customer benefits from improved budget control, data-driven technology adoption and accelerated workflow at a site or on a global perspective. The Company considers its service offerings to be highly differentiated from its competition, as evidenced by a consistent increase in annual service revenues. The Company’s principal competitors in the service market include PerkinElmer, Inc., Agilent Technologies, Inc. and Thermo Fisher Scientific Inc. These competitors can provide certain services on Waters instruments to varying degrees and always present competitive risk. The servicing and support of instruments, software and accessories is an important source of revenue and represented over 35% of sales for Waters in 2022. These revenues are derived primarily through the sale of support plans, demand services, spare parts, customer performance validation services and customer training. Support plans typically involve scheduled instrument maintenance and an agreement to promptly repair a non-functioning instrument in return for a fee described in a contract that is priced according to the configuration of the instrument.
Similar to Waters, the servicing and support of TA’s instruments is an important source of revenue and represented more than 25% of sales for TA in 2022. TA operates independently from the Waters operating segment, though many of its overseas offices are jointly occupied with Waters to achieve operational efficiencies. TA has dedicated field sales and service operations. Service sales are primarily derived from the sale of support plans, replacement parts and billed labor fees associated with the repair, maintenance and upgrade of installed systems.
Other Business Information
The Company typic ally has a broad and diversified customer base that includes pharmaceutical accounts, other industrial accounts, universities and governmental agencies. Purchase of the Company’s instrument systems is often dependent on its customers’ capital spending, or funding as in the cases of academic, governmental and research institutions, which often fluctuate from year to year. The pharmaceutical segment represents the Company’s largest sector and includes multinational pharmaceutical companies, generic drug manufacturers, contract research organizations (“CRO”s) and biotechnology companies. The Company’s other industrial customers include chemical manufacturers, polymer manufacturers, food and beverage companies and environmental testing laboratories. The Company also sells to universities and governmental agencies worldwide. The Company’s technical sales and support staff members work closely with its customers in developing and implementing applications that meet their full range of analytical requirements. During 2022, 59% of the Company’s net sales were to pharmaceutical accounts, 31% to other industrial accounts and 10% to academic institutions and governmental agencies. Although the Company transacts business with various government agencies, no government contract is of such magnitude that a renegotiation of profits or termination of the contract at the election of the government agency would have a material adverse effect on the Company’s financial results. The Company typically experiences an increase in sales in the fourth quarter, as a result of purchasing habits for capital goods of many customers who tend to exhaust their spending budgets by calendar year-end. The Company does not rely on any single customer for a material portion of its sales. During fiscal years 2022, 2021 and 2020, no single customer accounted for more than 2% of the Company’s net sales.
The Company purchases a variety of raw materials, primarily consisting of high temperature alloy sheet metal and castings, forgings, pre-plated metals and electrical components from various vendors. The materials used by the Company’s operations are generally available from a number of sources and in sufficient quantities to meet current requirements subject to normal lead times; however, during 2022, the Company experienced shortages in certain electronic components resulting from the disruption in its supply chain caused by COVID-19 pandemic and related response measures. See Item 1A, Risk Factors – Public health crises, epidemics or pandemics, such as the continuing COVID-19 pandemic have had, and could in the future have, a negative impact on the Company’s business and operations. The Company is subject to rules of the Securities and Exchange Commission (“SEC”) under the Dodd-Frank Wall Street Reform and Consumer Protection Act, which requires disclosure as to whether certain materials (tantalum, tin, gold and tungsten), known as conflict minerals, which may be contained in the Company’s products, are mined from the Democratic Republic of the Congo and adjoining countries. In 2021, the Company was not able to determine with certainty the country of origin of some of the conflict minerals in its manufactured products. However, the Company does not have knowledge that any of its conflict minerals originated from the Democratic Republic of the Congo or adjoining countries. The Company is in the process of evaluating its 2022 supply chain, and the Company plans to file its 2022 Form SD with the SEC in May 2023. The results of this and future evaluations may impose additional costs and may introduce new risks related to the Company’s ability to verify the origin of any conflict minerals contained in its products. In addition, the Company continues to monitor environmental, health and safety regulations in countries in which it operates throughout the world, in particular, European Union and China Restrictions on the use of certain Hazardous Substances in electrical and electronic equipment and European Union Waste Electrical and Electronic Equipment directives. Further information regarding these regulations is available on the Company’s website, www.waters.com, under the caption “About Waters / Corporate Governance”.
Waters Corporation was founded in 1958 and is headquartered in Milford, MA. The business was started by James Logan Waters as Waters Associates in an office in the basement of a police station in Framingham, Massachusetts, in 1958. In 1961, the company’s first major breakthrough occurred when Jhon Moor, a chemist at Dow Chemical Company, called for help. In 1961 Waters Associates is incorporated. By 1963, Waters and his team had built and sold five prototypes of the GPC- 100--- in the first commercial high-pressure liquid chromatography (HPLC) system. In 1964, Dow Chemical invests $400,000 in Waters Associates. In 1967, the ALC 100, the first Waters LC system, was brought to market. The LC system was formally introduced at the 1968 Pittsburgh Conference. In 1969, Dimitri D’Arbeloff, then president of Millipore Corporation, joined the corporation’s board of directors. In 1972, Waters next big break came when Doctor Helmut Hamberger, chief post-doc for Noble Laureate Doctor Robert Woodward of Harvard University, sought Jim Waters’ help to the first synthesis of vitamin B12. By the same year, Waters Association appointed Frank Zenie president. In 1973, A publicity photo for Waters Associates organic synthesis marketing program taken in Robert Burns Woodward’s chromatography lab. By the same year WA moves its Headquarters from Framingham to Milford, Massachusetts and made an initial public stock offering on NASDAQ. The first 6000-psi compatible septum-less high-pressure injector for HPLC, the Model U6K, with its novel valve and fluid circuit technology, soon followed. The U6K and the M6000 had been developed in parallel with another landmark chemistry project, led by Richard Vivilecchia, to create the first commercial small-particle (10-µm) packing materials for HPLC. These were µPorasil silica and the first monofunctionally bonded silica, µBondapak C18, developed by using a unique, proprietary homemade silane. Columns packed with the latter, introduced in its present form in 1974, became the best-selling columns in history. WA designed equipment modules for each of LC’s separate stage and in 1977 began to equip the modules with microprocessors. In 1977, the company introduces the first variable-volume autosampler: WISP.
The company also developed the first solid-phase extraction (SPE) cartridge and new integrated high-temperature GPC system, known as the waters 1540C. Waters became chairman and continued in that role until the company merged with Millipore in 1980, and was rechristened the Waters Chromatograph Division. In 1997, Waters entered mass spectrometry market with acquisition of Micromass for $176 million. Waters acquired Vicam, provider of bioseparaion and rapid dedection products for improving food safety and quality in 2006. On June 2012, Waters India celebrated its silver jubilee anniversary in India. In January 2020, Waters acquired Andrew Alliance an innovator company in specialty laboratory automation technology, including software and robotics. Watters agreed to acquire Wyatt Technology for $136 million in cash in February 2023. The target was fulfilled in May 2023.
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