Waters Corporation has a market cap of $7.15 billion; its shares were traded at around $84.19 with a P/E ratio of 16.6 and P/S ratio of 3.9. Waters Corporation had an annual average earning growth of 13.1% over the past 10 years. GuruFocus rated Waters Corporation the business predictability rank of 5-star.
Highlight of Business Operations:Within cash flows used in investing activities, year-to-date capital expenditures related to property, plant, equipment and software capitalization were $73 million and $51 million in 2012 and 2011, respectively. The current years capital expenditures include $23 million of construction costs and the acquisition of a building in the United Kingdom associated with a multi-year project to consolidate certain existing primary MS research, manufacturing and distribution locations. In 2012, the Company acquired its Israeli sales and service distributor, Baehr Thermoanalyse GmbH and Blue Reference, Inc. for a total of $31 million, net of cash acquired and including the assumption of $1 million of debt. These acquisitions are expected to add approximately $10 million to annual sales and are not expected to have a material impact on earnings in 2012.
Waters instrument system sales (LC and MS) decreased 5% for both the quarter and year. The declines in instrument systems sales were primarily attributable to delays in capital spending by our customers as a result of the weakness in global economic conditions and the weakening of the Euro and Indian rupee. Chemistry consumables sales increased 1% in the quarter and were flat thus far this year. Waters Division service sales increased 4% and 5% in the quarter and year, respectively, due to increased sales of service plans and billings to a higher installed base of customers. Waters Division sales by product line for the current year were approximately 50% for instrument systems, 19% for chemistry consumables and 31% for service. Waters Division sales by product line for the prior year were approximately 52% for instrument systems, 18% for chemistry consumables and 30% for service.
Waters Division sales in the quarter decreased 7% in Europe and 5% in the U.S., while sales increased 7% in Asia and 8% in the rest of the world. Waters Division sales for the year increased 3% in Asia and 1% in the U.S., while sales decreased 7% in Europe and 2% in the rest of the world. The decline in Europes sales was due to a 10% and 8% negative effect of foreign currency translation in the quarter and year, respectively. The sales growth in Asia for both the quarter and the year occurred primarily in China and was across all markets. The increase in sales in the rest of the world in the quarter was due to the higher demand from governmental and academic customers.
TAs sales were 1% lower in the quarter and 5% higher in the year. Foreign currency translation decreased TAs sales by 2% for both the quarter and year across all product lines. Recent acquisitions added approximately 4% to TAs quarter and year-to-date sales. Instrument system sales decreased 4% in the quarter and increased 4% year-to-date. Instrument system sales represented approximately 74% of TAs sales in the current year and 75% in the prior year. TA service sales increased 6% and 10% in the quarter and year, respectively, primarily due to increased sales of service plans and billings to a higher installed base of customers. Geographically, TAs sales in the quarter grew 5% in Europe and declined in the U.S., Asia and the rest of the world. TAs sales year-to-date have increased in the U.S., Europe, and Asia, while sales to the rest of the world declined. TAs European sales benefited from additional sales from recent acquisitions, while the effect of foreign currency translation decreased Europes sales by 9% and 8% in the quarter and year, respectively.
The four principal jurisdictions the Company manufactures in are the U.S., Ireland, the United Kingdom and Singapore, where the marginal effective tax rates are approximately 37.5%, 12.5%, 24.5% and 0%, respectively. The Company has a contractual tax rate in Singapore of 0% through the end of 2016, while the current statutory tax rate in Singapore is 17%. The Companys effective tax rate is influenced by many significant factors, including, but not limited to, the wide range of income tax rates in jurisdictions in which the Company operates; sales volumes and profit levels in each tax jurisdiction, including shifts between these jurisdictions; changes in tax laws, tax rates and policies; the outcome of various ongoing tax audit examinations; and the impact of foreign currency transactions and translation. As a result of variability in these factors, the Companys effective tax rates in the future may not be similar to the effective tax rates for the current or prior year.
Read the The complete Report