Waters Earnings 2020-06-27

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.    Yes       No  

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).    Yes       No  

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer”, “accelerated filer”, “smaller reporting company”, and “emerging growth company” in of the Exchange Act.

Large accelerated filer		☒		Accelerated filer		☐
Non-accelerated filer		☐		Smaller reporting company		☐
				Emerging growth company		☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule of the Act).    Yes       No  

 

		June 27, 2020				December 31, 2019
		(In thousands, except per share data)
ASSETS
Current assets:
Cash and cash equivalents		$	339,036			$	335,715
Investments			16,720				1,429
Accounts receivable, net			496,276				587,734
Inventories			344,009				320,551
Other current assets			73,386				67,062
Total current assets			1,269,427				1,312,491
Property, plant and equipment, net			459,173				417,342
Intangible assets, net			248,993				240,203
Goodwill			427,492				356,128
Operating lease assets			88,619				93,358
Other assets			154,598				137,533
Total assets		$	2,648,302			$	2,557,055
LIABILITIES AND STOCKHOLDERS’ DEFICIT
Current liabilities:
Notes payable and debt		$	150,000			$	100,366
Accounts payable			50,325				49,001
Accrued employee compensation			33,329				43,467
Deferred revenue and customer advances			213,402				176,360
Current operating lease liabilities			26,862				27,125
Accrued income taxes			87,841				45,967
Accrued warranty			10,113				11,964
Other current liabilities			125,448				137,084
Total current liabilities			697,320				591,334
Long-term liabilities:
Long-term debt			1,546,159				1,580,797
Long-term portion of retirement benefits			62,499				59,159
Long-term income tax liabilities			356,607				394,562
Long-term operating lease liabilities			63,828				66,881
Other long-term liabilities			113,631				80,603
Total long-term liabilities			2,142,724				2,182,002
Total liabilities			2,840,044				2,773,336
Commitments and contingencies (Notes 7, 8 and 12)
Stockholders’ deficit:
Preferred stock, par value $0.01 per share, 5,000 shares authorized, none issued at June 27, 2020 and December 31, 2019			—				—
Common stock, par value $0.01 per share, 400,000 shares authorized, 161,273 and 161,030 shares issued, 61,916 and 62,587 shares outstanding at June 27, 2020 and December 31, 2019, respectively			1,613				1,610
Additional paid-in capital			1,959,498				1,926,753
Retained earnings			6,762,909				6,587,403
Treasury stock, at cost, 99,357 and 98,443 shares at June 27, 2020 and December 31, 2019, respectively			(8,788,872	)			(8,612,576	)
Accumulated other comprehensive loss			(126,890	)			(119,471	)
Total stockholders’ deficit			(191,742	)			(216,281	)
Total liabilities and stockholders’ deficit		$	2,648,302			$	2,557,055
The accompanying notes are an integral part of the interim consolidated financial statements.

		Three Months Ended
		June 27, 2020				June 29, 2019
		(In thousands, except per share data)
Revenues:
Product sales		$	314,920			$	387,265
Service sales			205,064				211,897
Total net sales			519,984				599,162
Costs and operating expenses:
Cost of product sales			134,802				156,975
Cost of service sales			78,332				92,571
Selling and administrative expenses			117,449				133,208
Research and development expenses			31,155				36,490
Purchased intangibles amortization			2,618				2,264
Litigation provision			514				—
Total costs and operating expenses			364,870				421,508
Operating income			155,114				177,654
Other expense			(736	)			(342	)
Interest expense			(13,018	)			(11,448	)
Interest income			4,003				5,871
Income before income taxes			145,363				171,735
Provision for income taxes			22,434				27,325
Net income		$	122,929			$	144,410
Net income per basic common share		$	1.98			$	2.09
Weighted-average number of basic common shares			61,944				68,989
Net income per diluted common share		$	1.98			$	2.08
Weighted-average number of diluted common shares and equivalents			62,184				69,494

		Three Months Ended								Six Months Ended
		June 27, 2020				June 29, 2019				June 27, 2020				June 29, 2019
		(In thousands)								(In thousands)
Net income		$	122,929			$	144,410			$	176,491			$	253,396
Other comprehensive income (loss):
Foreign currency translation			11,587				(7,031	)			(7,757	)			491
Unrealized gains on investments before income taxes			—				710				—				3,054
Income tax expense			—				(157	)			—				(704	)
Unrealized gains on investments, net of tax			—				553				—				2,350
Retirement liability adjustment before reclassifications			(522	)			(41	)			(226	)			(102	)
Amounts reclassified to other income			336				90				676				183
Retirement liability adjustment before income taxes			(186	)			49				450				81
Income tax benefit ( expense )			126				(23	)			(112	)			(47	)
Retirement liability adjustment, net of tax			(60	)			26				338				34
Other comprehensive income (loss)			11,527				(6,452	)			(7,419	)			2,875
Comprehensive income		$	134,456			$	137,958			$	169,072			$	256,271

		Six Months Ended
		June 27, 2020				June 29, 2019
		(In thousands)
Cash flows from operating activities:
Net income		$	176,491			$	253,396
Adjustments to reconcile net income to net cash provided by operating activities:
Stock-based compensation			18,122				19,255
Deferred income taxes			(777	)			1,632
Depreciation			33,220				28,704
Amortization of intangibles			26,983				24,911
Change in operating assets and liabilities:
Decrease in accounts receivable			86,978				52,508
Increase in inventories			(27,089	)			(62,200	)
Increase in other current assets			(14,699	)			(11,627	)
Decrease (increase) in other assets			8,238				(15,060	)
Increase (decrease) in accounts payable and other current liabilities			34,714				(10,439	)
Increase in deferred revenue and customer advances			37,558				54,672
Effect of the 2017 Tax Cuts & Jobs Act			—				(3,229	)
Decrease in other liabilities			(29,293	)			(29,720	)
Net cash provided by operating activities			350,446				302,803
Cash flows from investing activities:
Additions to property, plant, equipment and software capitalization			(97,029	)			(65,188	)
Business acquisitions, net of cash acquired			(76,664	)			—
Investment in unaffiliated companies			(3,350	)			(4,750	)
Purchases of investments			(16,828	)			(35,523	)
Maturities and sales of investments			1,536				890,524
Net cash (used in) provided by investing activities			(192,335	)			785,063
Cash flows from financing activities:
Proceeds from debt issuances			315,000				363
Payments on debt			(300,366	)			(245	)
Proceeds from stock plans			14,739				30,129
Purchases of treasury shares			(196,297	)			(1,329,635	)
Proceeds from derivative contracts			7,558				4,654
Net cash used in financing activities			(159,366	)			(1,294,734	)
Effect of exchange rate changes on cash and cash equivalents			4,576				(1,414	)
Increase (decrease) in cash and cash equivalents			3,321				(208,282	)
Cash and cash equivalents at beginning of period			335,715				796,280
Cash and cash equivalents at end of period		$	339,036			$	587,998