Waters Corporation (NYSE:WAT) Q4 2014 Earnings Conference Call - Final Transcript

Jan 27, 2015 • 08:30 am ET


Waters Corporation (NYSE:WAT) Q4 2014 Earnings Conference Call - Final Transcript


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Douglas Berthiaume

very encouraging and as the division saw a similar growth in the fourth quarter 2013. So that made for a tough base of comparison. Our TA Instrument Division sales declined at 5% in the fourth quarter. And I will describe the contributing dynamics shortly.

Currency and translation reduced our sales growth by 5% in the quarter as a result of the U.S. dollar strengthening against all major currencies. Geographically and for the Waters Division sales in the U.S. were up 12%. In the quarter we saw a continued strength in pharmaceutical spending and healthy government and academic growth.

Douglas Berthiaume

Industrial chemical growth declined against a very strong result in the prior year. For the full year sales in the U.S. were up 8%. Sales growth in Europe for the Waters Division and at constant currency was up 10%, similarly to the U.S. we saw a strong pharmaceutical, government and academic spending. For the full year Waters Division European sales were up 6% and benefited from stronger pharmaceutical sales growth throughout most of the year.We came into the year with some concern that general economic conditions would limit our growth in Europe.

However, the large proportion of our sales to pharmaceutical end markets in combination with very positive uptake of our advanced mass spectrometry instruments by academic and government labs allowed us to deliver a very solid full year performance. In Asia, China is our largest market and I am pleased to report that shipment volume increased nicely in the fourth quarter and revenues grew 13% for the Waters Division. Consistent with Europe and the U.S., sales to pharma and government supported research labs drove the overall sales growth in China.

Though I feel it's premature on the basis of one quarter to believe that business conditions in China will allow us to grow at a much accelerated rate in future quarters, we are encouraged by the fourth quarter's improvement. Waters Division constant currency sales in Japan were up moderately in the quarter with stronger pharmaceutical and chemical industry demand offsetting a decline in public sector spending. In the quarter Waters Division sales in India were up over 20%. The 2014 growth in India was primarily associated with higher instrument, software and service sales from the generic drug industry.

Top line growth strengthened across the year and we believe that last year's business momentum will sustain into 2015 as drug firms continue to expand their manufacturing capacity and make needed investments to ensure regulatory compliance. Our sales in Asian markets outside of Japan, China and India grew moderately in the quarter.

Our TA Instruments Division saw a mid-single digit decline in sales in the quarter admittedly against a strong result delivered in the prior year's quarter. Geographically TA shipments in China were weaker than expected as the conversion of orders to sales proceeded at a slower pace. Globally sales growth for the division was affected by a generally slower industrial, chemical climate.Now I would like to discuss some product line dynamics that