10-Q

Large accelerated filer

Accelerated filer

Non-accelerated
filer

Smaller reporting company

Emerging growth company

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

Form 10-Q

☑	QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended March 30, 2024

☐	TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from

Commission File Number:

01-14010

Waters Corporation

(Exact name of registrant as specified in its charter)


Delaware		13-3668640
(State or other jurisdiction of incorporation or organization)		(I.R.S. Employer Identification No.)

34 Maple Street

Milford, Massachusetts 01757

(Address, including zip code, of principal executive offices)

(

508) 478-2000

(Registrant’s telephone number, including area code)

Securities registered pursuant to Section 12(b) of the Act:


Title of each class	Trading Symbol(s)	Name of each exchange on which registered
Common Stock, par value $0.01 per share	WAT	New York Stock Exchange , Inc.

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

S-T

(§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

non-accelerated

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

Rule 12b-2

of the Exchange Act.

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in

Rule 12b-2

of the Act). Yes ☐ No ☑

Indicate the number of shares outstanding of the registrant’s common stock as of

May 3

, 2024: 59,319,699

WATERS CORPORATION AND SUBSIDIARIES

QUARTERLY REPORT ON FORM 10-Q

INDEX


PART I	FINANCIAL INFORMATION	Page

Item 1.	Financial Statements

	Consolidated Balance Sheets (unaudited) as of March 30, 2024 and December 31, 2023		3

	Consolidated Statements of Operations (unaudited) for the three months ended March 30, 2024 and April 1, 2023		4

	Consolidated Statements of Comprehensive Income (unaudited) for the three months ended March 30, 2024 and April 1, 2023		5

	Consolidated Statements of Cash Flows (unaudited) for the three months ended March 30, 2024 and April 1, 2023		6

	Consolidated Statements of Stockholders’ Equity (unaudited) for the three months ended March 30, 2024 and April 1, 2023		7

	Condensed Notes to Consolidated Financial Statements (unaudited)		8

Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations		23

Item 3.	Quantitative and Qualitative Disclosures About Market Risk		31

Item 4.	Controls and Procedures		32

PART II	OTHER INFORMATION

Item 1.	Legal Proceedings		32

Item 1A.	Risk Factors		32

Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds		32

Item 5.	Other Information		33

Item 6.	Exhibits		34

	Signature		35

Item 1: Financial Statements

WATERS CORPORATION AND

BSIDIARIES

CONSOLIDATED BALANCE SHEETS

(unaudited)


	March 30, 2024			December 31, 2023

	(In thousands, except per share data)
ASSETS
Current assets:
Cash and cash equivalents	$	337,290		$	395,076
Investments		923			898
Accounts receivable, net		626,329			702,168
Inventories		538,634			516,236
Other current assets		139,782			138,489

Total current assets		1,642,958			1,752,867
Property, plant and equipment, net		633,594			639,073
Intangible assets, net		611,147			629,187
Goodwill		1,297,826			1,305,446
Operating lease assets		81,065			84,591
Other assets		242,374			215,690

Total assets	$	4,508,964		$	4,626,854

LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
Notes payable and debt	$	50,000		$	50,000
Accounts payable		86,219			84,705
Accrued employee compensation		65,098			69,391
Deferred revenue and customer advances		336,718			256,675
Current operating lease liabilities		26,879			27,825
Accrued income taxes		120,520			120,257
Accrued warranty		10,853			12,050
Other current liabilities		152,172			168,677

Total current liabilities		848,459			789,580
Long-term liabilities:
Long-term debt		2,005,761			2,305,513
Long-term portion of retirement benefits		48,977			47,559
Long-term income tax liabilities		137,439			137,123
Long-term operating lease liabilities		55,927			58,926
Other long-term liabilities		155,876			137,812

Total long-term liabilities		2,403,980			2,686,933

Total liabilities		3,252,439			3,476,513
Commitments and contingencies (Notes 6, 7 and 9)
Stockholders’ equity:
Preferred stock, par value $0.01 per share, 5,000 shares authorized, none issued at March 30, 2024 and December 31, 2023		—			—
Common stock, par value $0.01 per share, 400,000 shares authorized, 162,882 and 162,709 shares issued, 59,310 and 59,176 shares outstanding at March 30, 2024 and December 31, 2023, respectively		1,629			1,627
Additional paid-in capital		2,291,103			2,266,265
Retained earnings		9,253,017			9,150,821
Treasury stock, at cost, 103,572 and 103,533 shares at March 30, 2024 and December 31, 2023, respectively		(10,147,341	)		(10,134,252	)
Accumulated other comprehensive loss		(141,883	)		(134,120	)

Total stockholders’ equity		1,256,525			1,150,341

Total liabilities and stockholders’ equity	$	4,508,964		$	4,626,854

The accompanying notes are an integral part of the interim consolidated financial statements.

Table of Contents

WATERS CORPORATION AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF OPERATIONS

(unaudited)


	Three Months Ended
	March 30, 2024			April 1, 2023

	(In thousands, except per share data)
Revenues:
Product sales	$	376,151		$	436,457
Service sales		260,688			248,217

Total net sales		636,839			684,674
Costs and operating expenses:
Cost of product sales		153,182			180,354
Cost of service sales		108,604			104,026
Selling and administrative expenses		174,536			181,956
Research and development expenses		44,595			42,691
Purchased intangibles amortization		11,834			1,479
Litigation provision		10,242			—

Total costs and operating expenses		502,993			510,506

Operating income		133,846			174,168
Other income, net		2,259			1,388
Interest expense		(25,520	)		(14,444	)
Interest income		4,271			4,061

Income before income taxes		114,856			165,173
Provision for income taxes		12,660			24,250

Net income	$	102,196		$	140,923

Net income per basic common share	$	1.73		$	2.39
Weighted-average number of basic common shares		59,232			59,023
Net income per diluted common share	$	1.72		$	2.38
Weighted-average number of diluted common shares and equivalents		59,431			59,317

The accompanying notes are an integral part of the interim consolidated financial statements.

Table of Contents

WATERS CORPORATION AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

(unaudited)


	Three Months Ended
	March 30, 2024			April 1, 2023
	(In thousands)
Net income	$	102,196		$	140,923
Other comprehensive (loss) income:
Foreign currency translation		(9,540	)		8,783
Unrealized gains on derivative instruments before reclassifications		2,405			—
Amounts reclassified to interest income		(297	)		—

Unrealized gains on derivative instruments before income taxes		2,108			—
Income tax expense		(506	)		—

Unrealized gains on derivative instruments, net of tax		1,602			—
Retirement liability adjustment before reclassifications		332			80
Amounts reclassified to other income		(117	)		(83	)

Retirement liability adjustment before income taxes		215			(3	)
Income tax expense		(40	)		(4	)

Retirement liability adjustment, net of tax		175			(7	)
Other comprehensive (loss) income		(7,763	)		8,776

Comprehensive income	$	94,433		$	149,699

The accompanying notes are an integral part of the

interim

consolidated financial statements.

Table of Contents

WATERS CORPORATION AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS

(unaudited)


	Three Months Ended
	March 30, 2024			April 1, 2023
Cash flows from operating activities:	(In thousands)
Net income	$	102,196		$	140,923
Adjustments to reconcile net income to net cash provided by operating activities:
Stock-based compensation		10,913			12,805
Deferred income taxes		4,453			(5,078	)
Depreciation		22,129			19,411
Amortization of intangibles		26,385			11,743
Change in operating assets and liabilities:
Decrease in accounts receivable		62,592			44,047
Increase in inventories		(28,309	)		(42,621	)
Increase in other current assets		(4,707	)		(2,123	)
D ecrease in other assets		7,369			6,662
Decrease in accounts payable and other current liabilities		(18,418	)		(71,257	)
Increase in deferred revenue and customer advances		85,901			77,206
(Decrease) i ncrease in other liabilities		(7,634	)		5,033

Net cash provided by operating activities		262,870			196,751
Cash flows from investing activities:
Additions to property, plant, equipment and software capitalization		(28,655	)		(34,390	)
Investments in unaffiliated companies		(1,064	)		—
Purchases of investments		(923	)		(893	)
Maturities and sales of investments		898			877

Net cash used in investing activities		(29,744	)		(34,406	)
Cash flows from financing activities:
Proceeds from debt issuances		—			50,040
Payments on debt		(300,000	)		(145,000	)
Proceeds from stock plans		13,932			2,378
Purchases of treasury shares		(13,089	)		(69,505	)
Proceeds from derivative contracts		6,981			2,876

Net cash used in financing activities		(292,176	)		(159,211	)
Effect of exchange rate changes on cash and cash equivalents		1,264			2,407

(Decrease) increase in cash and cash equivalents		(57,786	)		5,541
Cash and cash equivalents at beginning of period		395,076			480,529

Cash and cash equivalents at end of period	$	337,290		$	486,070

The accompanying notes are an integral part of the interim consolidated financial statements.

Table of Contents

WATERS CORPORATION AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY

(unaudited, in thousands)


	Number of Common Shares		Common Stock		Additional Paid-In Capital		Retained Earnings		Treasury Stock			Accumulated Other Comprehensive Loss			Total Stockholders’ Equity
Balance December 31, 2022		162,425	$	1,624	$	2,199,824	$	8,508,587	$	(10,063,975	)	$	(141,572	)	$	504,488
Net income		—		—		—		140,923		—			—			140,923
Other comprehensive income		—		—		—		—		—			8,776			8,776
Issuance of common stock for employees:
Employee Stock Purchase Plan		8		—		2,000		—		—			—			2,000
Stock options exercised		6		—		969		—		—			—			969
Treasury stock		—		—		—		—		(69,505	)		—			(69,505	)
Stock-based compensation		111		2		12,170

SEC Form 10-Q filed by Waters Corporation