01—Abstract
Summary
Summary of the 10-K filed February 24, 2012. Cited figures are marked; the original filing is the authoritative source.
Waters Corporation (NYSE: WAT) reported net sales of $1.85 billiona for 2011, up from $1.64 billion in 2010 and $1.50 billion in 2009, with net income of $432,968 thousand, or $4.69 per diluted share, compared with $4.06 in 2010.
Sales increased 13% in 2011, driven by instrument systems (up 14%) and combined chemistry consumables and services (up 11%), with growth across all major regions and new products such as the ACQUITY UPLC H-Class, Xevo Q-Tof, Xevo TQ-S and SYNAPT G2-S systems. Gross margin rose to 60.5% from 60.2%, and operating income reached $529 millionb. Foreign currency translation added 3% to 2011 sales and $0.24 to diluted EPS, and the company expects a slightly negative impact on 2012 sales from currency translation.
The balance sheet remains strong, with $1,281 millionc in cash, cash equivalents and short-term investments and $991 million in total debt at December 31, 2011. Of the cash, $1.2 billion was held by foreign subsidiaries, which the filing identifies as a key consideration for funding U.S. operations, debt service and share repurchases. The company repurchased $364 million of stock in 2011 and has $186 million remaining under its February 2011 authorization.
It refinanced in July 2011 with a $700 milliond revolving facility and a $300 million term loan maturing in 2016, and it issued $200 million of senior unsecured notes in March 2011. Waters paid no dividends and does not plan to pay any in the foreseeable future.
Risk factors highlighted by the filing include dependence on pharmaceutical customers (52% of 2011 sales), international exposure (71% of net sales outside the United States), single-source suppliers, outside contract manufacturers in Singapore, and competition, including Agilent's UHPLC system. Management also noted that government and academic customers may lag due to austerity programs in 2012, and it expects a slight decline in gross margin from new software platform amortization beginning in 2012.
02—Key points
Key Highlights
- Net sales rose to $1,851,184 thousand in 2011 from $1,643,371 thousand in 2010, an increase of 13% as stated in the filing.
- Diluted net income per share was $4.69 in 2011, compared with $4.06 in 2010 and $3.34 in 2009.
- Gross profit margin increased to 60.5% in 2011 from 60.2% in 2010, aided by volume leverage and favorable currency translation.
- Cash, cash equivalents and short-term investments totaled $1,281 million at year-end 2011, against $991 million of total debt.
- About $1.2 billion of the company's cash was held by foreign subsidiaries, a factor the filing cites in managing U.S. cash requirements.
- The company repurchased $364 million of its common stock in 2011 and has $186 million remaining under its February 2011 authorization.
- Pharmaceutical customers accounted for 52% of 2011 sales, and 71% of net sales came from outside the United States.
03—One dollar
Where FY2011 revenue went
$1.85B- Cost of revenue: $730.5M, 39% of revenue
- Operating income: $528.6M, 29% of revenue
- SG&A: $490.0M, 26% of revenue
- R&D: $92.3M, 5.0% of revenue
- Other operating costs: $9.7M, 0.5% of revenue
Kept 29% as operating incomeOther operating costs $9.7M · 0.5%
Full revenue history →04—Financials
Financial Highlights
Figures from 10-KFY2011filed February 24, 2012Financial Statements
FY2011 against FY2010
| Line item | FY2011FY2010 | Change |
|---|---|---|
| Revenue | $1.85B$1.64B | +12.6% |
| Cost of Revenue | $730.49M$653.30M | +11.8% |
| Gross Profit | $1.12B$990.07M | +13.2% |
| R&D Expenses | $92.35M$84.27M | +9.6% |
| SG&A Expenses | $490.01M$445.46M | +10.0% |
| Operating Income | $528.60M$449.93M | +17.5% |
| Interest Expense | $21.97M$13.92M | +57.8% |
| EPS (Basic) | $4.77$4.13 | +15.5% |
| EPS (Diluted) | $4.69$4.06 | +15.5% |
| Shares Outstanding (Basic) | 90.83M92.39M | −1.7% |
| Shares Outstanding (Diluted) | 92.33M94.06M | −1.8% |
05—Questions
Frequently Asked Questions
How did Waters perform financially in 2011?
Net sales grew 13% to $1,851,184 thousand, operating income rose to $529 million from $450 million, and net income reached $432,968 thousand, or $4.69 per diluted share. Growth was attributed to higher demand for instrument systems and to new product launches such as the ACQUITY UPLC H-Class and Xevo systems.
Does Waters pay dividends or buy back shares?
Waters has not declared or paid dividends in the past three fiscal years and does not plan to pay them in the foreseeable future. It repurchased $364 million of common stock during 2011 under its share repurchase authorizations, with $186 million remaining under the February 2011 program.
What debt does Waters carry and how was it refinanced?
Total debt was $991 million at December 31, 2011. In July 2011 the company entered into a credit agreement with a $700 million revolving facility and a $300 million term loan, both maturing July 28, 2016. It also issued $200 million of senior unsecured notes in March 2011, and it was in compliance with all debt covenants at year-end.
What are the main risks to Waters' business according to the filing?
Key risks include dependence on pharmaceutical customers (52% of 2011 sales), exposure to foreign currency and political conditions (71% of sales outside the U.S.), reliance on single-source suppliers and outside contract manufacturers in Singapore, competition from products such as Agilent's UHPLC system, and possible reduced spending by government and academic customers under austerity programs.
06—Continue