01—Abstract
Summary
Summary of the 10-Q filed November 1, 2024. Cited figures are marked; the original filing is the authoritative source.
Waters Corporation's Form 10-Q for the quarter ended September 28, 2024 shows a quarter of higher sales and profit, with a tougher nine-month picture.
Third-quarter total net sales were $740.3 milliona, up from $711.7 million a year earlier, and net income rose to $161.5 million from $134.6 million. Diluted EPS was $2.71 versus $2.27. For the first nine months, net sales declined to $2.09 billion from $2.14 billion, and net income fell to $406.4 million from $426.0 million.
The filing attributes the nine-month weakness to customers delaying instrument system purchases in the first half of 2024, with instrument system sales down 11% and mass spectrometry particularly affected, partly offset by growth in chemistry consumables and services. The balance sheet improved on the debt side. Long-term debt fell to $1.83 billionb from $2.31 billion, the Credit Facility balance dropped to $570 million from $1.05 billion, and $50 million of notes matured in June 2024.
Total stockholders' equity rose to $1.60 billionc from $1.15 billion. Cash and cash equivalents were $330.5 million at quarter end. Operating cash flow for the nine months was $522.0 million, compared with $372.7 million in the prior-year period, and the company made no open-market share repurchases in 2024.
The filing also reports a $1.3 milliond litigation provision in the quarter and $11.6 million year to date, primarily related to a patent litigation settlement. Management cited higher third-quarter sales volume and workforce-reduction savings for the operating income increase, and noted that foreign currency translation is expected to weigh on sales and gross profit for the remainder of 2024. The company also established a private $200 million Master Note Facility in July 2024, but had not issued any notes under it as of the filing date.
02—Key points
Key Highlights
- Q3 2024 total net sales were $740.3 million, up from $711.7 million; net income was $161.5 million versus $134.6 million, and diluted EPS was $2.71 versus $2.27.
- Nine-month net sales declined to $2.09 billion from $2.14 billion, and nine-month net income fell to $406.4 million from $426.0 million.
- Instrument system sales fell 11% for the first nine months of 2024, led by mass spectrometry, while recurring revenues (consumables and services) rose 5%.
- Long-term debt decreased to $1.83 billion from $2.31 billion, and the Credit Facility balance fell to $570 million from $1.05 billion.
- Operating cash flow was $521.984 million for the nine months, compared with $372.687 million a year earlier.
- Stockholders' equity increased to $1.60 billion from $1.15 billion, and no open-market share repurchases were made in 2024; $1.0 billion remained authorized.
- Management expects foreign currency translation to negatively affect sales and gross profit for the rest of 2024.
03—One dollar
Follow one dollar
Of each $1.00 of revenue in Q3 FY2024, Waters kept $0.22.
- Revenue$740.3M100.0%
- Cost of revenue−$301.7M40.7%
- Gross profit$438.6M59.3%
- Operating costs−$227.5M30.7%
- Operating income$211.1M28.5%
- Interest, other & tax−$49.6M6.7%
- Net income$161.5M21.8%
04—Financials
Financial Highlights
Figures from 10-QQ3 FY2024filed November 1, 2024Financial Statements
Q3 FY2024 against Q3 FY2023
| Line item | Q3 FY2024Q3 FY2023 | Change |
|---|---|---|
| Revenue | $740.30M$711.69M | +4.0% |
| Cost of Revenue | $301.65M$291.41M | +3.5% |
| Gross Profit | $438.65M$420.29M | +4.4% |
| R&D Expenses | $45.34M$41.99M | +8.0% |
| SG&A Expenses | $169.10M$186.75M | −9.5% |
| Operating Expenses | $529.17M$532.27M | −0.6% |
| Operating Income | $211.13M$179.43M | +17.7% |
| Interest Expense | $21.43M$30.44M | −29.6% |
| Net Income | $161.50M$134.55M | +20.0% |
| EPS (Basic) | $2.72$2.28 | +19.3% |
| EPS (Diluted) | $2.71$2.27 | +19.4% |
| Shares Outstanding (Basic) | 59.37M59.09M | +0.5% |
| Shares Outstanding (Diluted) | 59.50M59.23M | +0.5% |
05—Questions
Frequently Asked Questions
How did Waters perform in the third quarter of 2024?
Total net sales were $740.3 million, up from $711.7 million, and operating income was $211.1 million, compared with $179.4 million. Net income was $161.5 million, or $2.71 per diluted share, versus $134.6 million, or $2.27, a year earlier. The filing says the sales growth was driven by strong customer demand across most major geographies, end markets, and product categories.
Why were nine-month results weaker than the third quarter?
The filing states that customers delayed instrument system purchases in the first half of 2024 because they remained cautious about capital spending. Nine-month net sales decreased 2%, and instrument system sales fell 11%. Academic and government sales declined 13%, and China sales fell 14%. Operating income decreased 3% for the period, reflecting lower volume, higher incentive compensation, and Wyatt-related amortization, among other items.
How did the company's debt and balance sheet change?
Long-term debt was $1.83 billion at September 28, 2024, down from $2.31 billion at December 31, 2023. The Credit Facility balance decreased to $570 million from $1.05 billion, and the $50 million Series G notes matured in June 2024. Total stockholders' equity increased to $1.60 billion from $1.15 billion. The company was in compliance with all debt covenants.
What is the company's outlook regarding currency and costs?
At current exchange rates, the company expects foreign currency translation to negatively affect sales for the remainder of 2024 and to decrease gross profit during 2024. The company also expects to contribute approximately $3 million to $6 million to its defined benefit plans in fiscal 2024.
Did Waters return capital to shareholders this period?
The company made no open-market share repurchases in 2024. It repurchased $13 million of common stock related to restricted stock unit vesting during the nine months, and $1.0 billion remained authorized under its repurchase program through January 21, 2025. The filing states the company has not paid dividends and has no current plans to do so.
06—Continue