Business Wire | Nov 2, 2021 06:50AM EDT

Waters Corporation (NYSE: WAT) Reports Third Quarter 2021 Financial Results

Nov. 02, 2021

MILFORD, Mass.--(BUSINESS WIRE)--Nov. 02, 2021--Waters Corporation (NYSE: WAT) today announced third quarter 2021 sales of $659 million, an 11% increase as reported, compared to sales of $594 million for the third quarter of 2020. Foreign currency translation benefited sales growth by less than 1% for the quarter.

On a GAAP basis, diluted earnings per share (EPS) for the third quarter of 2021 increased to $2.60, compared to $2.03 for the third quarter of 2020. On a non-GAAP basis, EPS increased to $2.66, compared to $2.16 for the third quarter of 2020. A description and reconciliation of GAAP to non-GAAP results appear in the tables below and can be found on the Company's website www.waters.com in the Investor Relations section.

On a GAAP basis, net cash provided by operating activities was $168 million for the third quarter of 2021, compared to $173 million for the third quarter of 2020. On a non-GAAP basis, adjusted free cash flow for the third quarter of 2021 was $140 million versus $190 million for the third quarter of 2020.

For the first nine months of 2021, the Company's sales were $1,949 million, an increase of 23% as reported, compared to sales of $1,579 million for the first nine months of 2020. Foreign currency translation benefited sales growth by approximately 2% for the first nine months of 2021.

On a GAAP basis, EPS for the first nine months of 2021 increased to $7.66, compared to $4.86 for the first nine months of 2020. On a non-GAAP basis, EPS increased to $7.54, compared to $5.41 in the first nine months of 2020.

On a GAAP basis, net cash provided by operating activities was $529 million for the first nine months of 2021, compared to $523 million for the first nine months of 2020. On a non-GAAP basis, adjusted free cash flow for the first nine months of 2021 was $488 million versus $486 million for the first nine months of 2020.

"I would like to thank our colleagues globally for their continued commitment and drive as we support our customers through the pandemic," said Dr. Udit Batra, President and Chief Executive Officer of Waters Corporation. "We are very pleased with our third quarter results led by strong growth in our pharmaceutical and industrial end markets. We saw balanced double-digit growth in our instruments and recurring revenue portfolios which gives us confidence in the durability of our commercial momentum. We are excited to partner with both Sartorius and the University of Delaware, as we work to solve some of the complex problems facing bioprocessing customers."

Unless otherwise noted, sales growth and decline percentages are presented on an as-reported basis and are the same as the sales growth and decline percentages presented on a constant-currency basis as compared with the same period in the prior year, each of which is detailed in the reconciliation of sales growth rates to constant-currency growth rates in the tables below.

During the third quarter of 2021, sales into the pharmaceutical market increased 16%, sales into the industrial market increased 9% and sales into the academic and government markets decreased 9% as reported and 11% in constant currency. For the first nine months of 2021, sales into the pharmaceutical market increased 27% as reported and 24% in constant currency, sales into the industrial market increased 23% as reported and 19% in constant currency and sales into the academic and government markets increased 8% as reported and 6% in constant currency.

During the third quarter, recurring revenues, which represent the combination of service and precision chemistries revenues, increased 11%, while instrument system sales increased 10%. For the first nine months of 2021, recurring revenues increased 18% as reported and 15% in constant currency, while instrument system sales increased 31% as reported and 29% in constant currency.

Geographically, sales in Asia during the quarter increased 8%, sales in the Americas increased 16% (with U.S. sales growing 13%) and sales in Europe increased 10% as reported and 8% in constant currency. For the first nine months of 2021, sales in Asia increased 25% as reported and 24% in constant currency, sales in the Americas increased 20% as reported and 19% in constant currency (with U.S. sales growing 17%) and sales in Europe increased 26% as reported and 19% in constant currency.

Fourth Quarter and Fiscal Year 2021 Financial Outlook

The Company expects full-year 2021 constant-currency sales growth in the range of 15% to 16%. Currency translation is expected to increase full-year sales growth by approximately one percentage point. The Company expects full-year 2021 non-GAAP EPS in the range of $10.94 to $11.04. Please refer to the tables below for a reconciliation of the projected GAAP to non-GAAP financial outlook for the full-year.

The Company expects fourth quarter 2021 constant-currency sales growth in the range of 5% to 7%. Currency translation is expected to decrease fourth quarter sales growth by approximately two percentage points. The Company expects fourth quarter 2021 non-GAAP EPS in the range of $3.40 to $3.50. Please refer to the tables below for a reconciliation of the projected GAAP to non-GAAP financial outlook for the fourth quarter.

Conference Call

Waters Corporation will webcast its third quarter 2021 financial results conference call today, November 2, 2021 at 8:00 a.m. Eastern Time. To listen to the call and see the accompanying slide presentation, please visit www.waters.com, select "Investors" under the "About Waters" section, navigate to "Events & Presentations," and click on the "Webcast." A replay will be available through November 9, 2021 at midnight Eastern Time on the same website by webcast and also by phone at (888) 566-0450.

About Waters Corporation

Waters Corporation (NYSE: WAT), the world's leading specialty measurement company, has pioneered chromatography, mass spectrometry and thermal analysis innovations serving the life, materials and food sciences for more than 60 years. With more than 7,400 employees worldwide, Waters operates directly in 35 countries, including 14 manufacturing facilities, and with products available in more than 100 countries. For more information, visit www.waters.com.

Non-GAAP Financial Measures

This press release contains financial measures, such as constant-currency growth rate, adjusted operating income, adjusted net income, adjusted earnings per diluted share and adjusted free cash flow, among others, which are considered "non-GAAP" financial measures under applicable U.S. Securities and Exchange Commission rules and regulations. These non-GAAP financial measures should be considered supplemental to, and not a substitute for, financial information prepared in accordance with U.S. generally accepted accounting principles (GAAP). The Company's definitions of these non-GAAP measures may differ from similarly titled measures used by others. The non-GAAP financial measures used in this press release adjust for specified items that can be highly variable or difficult to predict. The Company generally uses these non-GAAP financial measures to facilitate management's financial and operational decision-making, including evaluation of the Company's historical operating results, comparison to competitors' operating results and determination of management incentive compensation. These non-GAAP financial measures reflect an additional way of viewing aspects of the Company's operations that, when viewed with GAAP results and the reconciliations to corresponding GAAP financial measures, may provide a more complete understanding of factors and trends affecting the Company's business. Because non-GAAP financial measures exclude the effect of items that will increase or decrease the Company's reported results of operations, management strongly encourages investors to review the Company's consolidated financial statements and publicly filed reports in their entirety. Reconciliations of the non-GAAP financial measures to the most directly comparable GAAP financial measures are included in the tables accompanying this release.

Cautionary Statement

This release contains "forward-looking" statements regarding future results and events. For this purpose, any statements that are not statements of historical fact may be deemed forward-looking statements. Without limiting the foregoing, the words "feels", "believes", "anticipates", "plans", "expects", "intends", "suggests", "appears", "estimates", "projects" and similar expressions, whether in the negative or affirmative, are intended to identify forward-looking statements. The Company's actual future results may differ significantly from the results discussed in the forward-looking statements within this release for a variety of reasons, including and without limitation, risks related to the effects of the ongoing COVID-19 pandemic on our business, financial condition, results of operations and prospects, including: portions of our global workforce being unable to work fully and/or effectively due to working remotely, illness, quarantines, government actions, facility closures or other reasons related to the pandemic, increased risks of cyber-attacks resulting from our temporary remote working model, disruptions in our manufacturing capabilities or to our supply chain and distribution network, volatility and uncertainty in global capital markets limiting our ability to access capital, customers being unable to make timely payments for purchases and volatility in demand for our products; foreign exchange rate fluctuations potentially affecting translation of the Company's future non-U.S. operating results; the impact on demand for the Company's products, including delays or disruptions to our distribution network, among the Company's various market sectors or geographies from economic, sovereign and political uncertainties, particularly regarding the effect of new or proposed tariff or trade regulations or changes in the interpretation or enforcement of existing regulations; the effect on the Company's financial results from the United Kingdom exiting the European Union; fluctuations in expenditures by the Company's customers, in particular large pharmaceutical companies; introduction of competing products by other companies and loss of market share; pressures on prices from competitors and/or customers; regulatory, economic and competitive obstacles to new product introductions; other changes in demand for the Company's products from the effect of mergers and acquisitions by the Company's customers; increased regulatory burdens as the Company's business evolves, especially with respect to the U.S. Food and Drug Administration and U.S. Environmental Protection Agency, among others; shifts in taxable income in jurisdictions with different effective tax rates; the outcome of tax examinations or changes in respective country legislation affecting the Company's effective tax rate; the effect of the adoption of new accounting standards; the ability to access capital, maintain liquidity and service the Company's debt in volatile market conditions, including any potential impact on the Company's operations stemming from sustained inflation, particularly in the U.S., as a large portion of the Company's cash is held and operating cash flows are generated outside the U.S.; environmental and logistical obstacles affecting the distribution of products and risks associated with lawsuits and other legal actions, particularly involving claims for infringement of patents and other intellectual property rights. Such factors and others are discussed more fully in the sections entitled "Forward-Looking Statements" and "Risk Factors" of the Company's annual report on Form 10-K for the year ended December 31, 2020, as well as in the sections entitled "Special Note Regarding Forward-Looking Statements" and "Risk Factors" of the Company's quarterly reports on Form 10-Q for the quarterly periods ended April 3, 2021, July 3, 2021, and October 2, 2021, each as filed with the Securities and Exchange Commission ("SEC"), which discussions are incorporated by reference in this release, as updated by the Company's future filings with the SEC. The forward-looking statements included in this release represent the Company's estimates or views as of the date of this release and should not be relied upon as representing the Company's estimates or views as of any date subsequent to the date of this release. Except as required by law, the Company does not assume any obligation to update any forward-looking statements.

Waters Corporation and SubsidiariesConsolidated Statements of Operations(In thousands, except per share data)(Unaudited) Three Months Ended Nine Months Ended October 2, September October 2, September 26, 2021 26, 2020 2021 2020 Net sales $ 659,233 $ 593,784 $ 1,949,425 $ 1,578,707

Costs and operatingexpenses:Cost of sales 271,128 262,342 805,529 686,120

Selling and administrative 152,545 135,430 453,954 400,614 expensesResearch and development 41,986 34,971 125,027 101,115 expensesPurchased intangibles 1,759 2,657 5,408 7,900 amortizationLitigation provision - - - 1,180

Operating income 191,815 158,384 559,507 381,778

Other income (expense), net (607 ) (1,039 ) 18,073 (2,149 )^(a)Interest expense, net (8,533 ) (6,908 ) (23,707 ) (25,966 )

Income from operations 182,675 150,437 553,873 353,663 before income taxes Provision for income taxes 21,490 23,668 77,269 50,403

Net income $ 161,185 $ 126,769 $ 476,604 $ 303,260

Net income per basic common $ 2.63 $ 2.04 $ 7.72 $ 4.89 share Weighted-average number of 61,359 62,002 61,771 62,057 basic common shares Net income per diluted $ 2.60 $ 2.03 $ 7.66 $ 4.86 common share Weighted-average number of 61,888 62,303 62,244 62,371 diluted common shares andequivalents (a) During the nine months ended October 2, 2021, the Company executed asettlement agreement to resolve patent infringement litigation with BrukerCorporation and Bruker Daltronik GmbH regarding their timsTOF product line. Inconnection with the settlement, the Company is entitled to receive $10 millionin guaranteed payments, including minimum royalty payments, which wasrecognized within Other income (expense), net in our consolidated statement ofoperations. During the nine months ended October 2, 2021, the Company recordedan unrealized gain of $10 million due to an observable change in the fair valueof an existing investment the Company does not have the ability to exercisesignificant influence over.Waters Corporation and SubsidiariesReconciliation of GAAP to Adjusted Non-GAAPNet Sales by Operating Segments, Products & Services, Geography and MarketsThree Months Ended October 2, 2021 and September 26, 2020(In thousands)CurrentPeriodConstantThree Months EndedPercentCurrencyCurrencyOctober 2, 2021September 26, 2020ChangeImpactGrowth Rate (a)NET SALES - OPERATING SEGMENTSWaters$581,811

$533,466

9%

$1,927

9%

TA77,422

60,318

28%

956

27%

Total$659,233

$593,784

11%

$2,883

11%

NET SALES - PRODUCTS & SERVICESInstruments$296,088

$268,064

10%

$759

10%

Service240,100

217,545

10%

994

10%

Chemistry123,045

108,175

14%

1,130

13%

Total Recurring363,145

325,720

11%

2,124

11%

Total$659,233

$593,784

11%

$2,883

11%

NET SALES - GEOGRAPHYAsia$254,602

$236,182

8%

$38

8%

Americas231,001

199,447

16%

595

16%

Europe173,630

158,155

10%

2,250

8%

Total$659,233

$593,784

11%

$2,883

11%

NET SALES - MARKETSPharmaceutical$398,338

$343,001

16%

$248

16%

Industrial196,032

179,128

9%

1,606

9%

Academic & Government64,863

71,655

(9%)

1,029

(11%)

Total$659,233

$593,784

11%

$2,883

11%

NET SALES - EXCLUDING CHINATotal Net Sales$659,233

$593,784

11%

$2,883

11%

China Net Sales115,886

115,666

0%

3,604

(3%)

Total Net Sales Excluding China$543,347

$478,118

14%

$(721)

14%

Waters Corporation and SubsidiariesReconciliation of GAAP to Adjusted Non-GAAPNet Sales by Operating Segments, Products & Services, Geography and MarketsThree Months Ended October 2, 2021 and September 26, 2020(In thousands) Current Period Constant Three Months Ended Percent Currency Currency October 2, September Change Impact Growth Rate 2021 26, 2020 ^(a) NET SALES - OPERATINGSEGMENTS Waters $ 581,811 $ 533,466 9% $ 1,927 9%

TA 77,422 60,318 28% 956 27%

Total $ 659,233 $ 593,784 11% $ 2,883 11%

NET SALES - PRODUCTS &SERVICES Instruments $ 296,088 $ 268,064 10% $ 759 10%

Service 240,100 217,545 10% 994 10%

Chemistry 123,045 108,175 14% 1,130 13%

Total Recurring 363,145 325,720 11% 2,124 11%

Total $ 659,233 $ 593,784 11% $ 2,883 11%

NET SALES - GEOGRAPHY Asia $ 254,602 $ 236,182 8% $ 38 8%

Americas 231,001 199,447 16% 595 16%

Europe 173,630 158,155 10% 2,250 8%

Total $ 659,233 $ 593,784 11% $ 2,883 11%

NET SALES - MARKETS Pharmaceutical $ 398,338 $ 343,001 16% $ 248 16%

Industrial 196,032 179,128 9% 1,606 9%

Academic & Government 64,863 71,655 (9%) 1,029 (11%)

Total $ 659,233 $ 593,784 11% $ 2,883 11%

NET SALES -EXCLUDING CHINA Total Net Sales $ 659,233 $ 593,784 11% $ 2,883 11%

China Net Sales 115,886 115,666 0% 3,604 (3%)

Total Net Sales $ 543,347 $ 478,118 14% $ (721) 14%Excluding China (a)The Company believes that referring to comparable constant-currency growth rates is a useful way to evaluate the underlying performance of Waters Corporation's net sales. Constant-currency growth rate, a non-GAAP financial measure, measures the change in net sales between current and prior year periods, ignoring the impact of foreign currency exchange rates during the current period. See description of non-GAAP financial measures contained in this release. The Company believes that referring to comparable constant-currency growth rates is a useful way to evaluate the underlying performance of Waters Corporation's net sales. Constant-currency growth rate, a non-GAAP financial(a) measure, measures the change in net sales between current and prior year periods, ignoring the impact of foreign currency exchange rates during the current period. See description of non-GAAP financial measures contained in this release.Waters Corporation and SubsidiariesReconciliation of GAAP to Adjusted Non-GAAPNet Sales by Operating Segments, Products & Services, Geography and MarketsNine Months Ended October 2, 2021 and September 26, 2020(In thousands)CurrentPeriodConstantNine Months EndedPercentCurrencyCurrencyOctober 2, 2021September 26, 2020ChangeImpactGrowth Rate (a)NET SALES - OPERATING SEGMENTSWaters$1,731,013

$1,413,386

22%

$37,147

20%

TA218,412

165,321

32%

5,213

29%

Total$1,949,425

$1,578,707

23%

$42,360

21%

NET SALES - PRODUCTS & SERVICESInstruments$873,632

$664,817

31%

$13,663

29%

Service707,315

613,365

15%

18,628

12%

Chemistry368,478

300,525

23%

10,069

19%

Total Recurring1,075,793

913,890

18%

28,697

15%

Total$1,949,425

$1,578,707

23%

$42,360

21%

NET SALES - GEOGRAPHYAsia$754,091

$603,471

25%

$8,081

24%

Americas653,252

546,405

20%

2,071

19%

Europe542,082

428,831

26%

32,208

19%

Total$1,949,425

$1,578,707

23%

$42,360

21%

NET SALES - MARKETSPharmaceutical$1,175,191

$926,582

27%

$22,610

24%

Industrial581,884

474,592

23%

14,870

19%

Academic & Government192,350

177,533

8%

4,880

6%

Total$1,949,425

$1,578,707

23%

$42,360

21%

NET SALES - EXCLUDING CHINATotal Net Sales$1,949,425

$1,578,707

23%

$42,360

21%

China Net Sales346,030

252,713

37%

11,699

32%

Total Net Sales Excluding China$1,603,395

$1,325,994

21%

$30,661

19%



Waters Corporation and SubsidiariesReconciliation of GAAP to Adjusted Non-GAAPNet Sales by Operating Segments, Products & Services, Geography and MarketsNine Months Ended October 2, 2021 and September 26, 2020(In thousands) Current Period Constant Nine Months Ended Percent Currency Currency October 2, September Change Impact Growth Rate 2021 26, 2020 ^(a) NET SALES - OPERATINGSEGMENTS Waters $ 1,731,013 $ 1,413,386 22% $ 37,147 20%

TA 218,412 165,321 32% 5,213 29%

Total $ 1,949,425 $ 1,578,707 23% $ 42,360 21%

NET SALES - PRODUCTS &SERVICES Instruments $ 873,632 $ 664,817 31% $ 13,663 29%

Service 707,315 613,365 15% 18,628 12%

Chemistry 368,478 300,525 23% 10,069 19%

Total Recurring 1,075,793 913,890 18% 28,697 15%

Total $ 1,949,425 $ 1,578,707 23% $ 42,360 21%

NET SALES - GEOGRAPHY Asia $ 754,091 $ 603,471 25% $ 8,081 24%

Americas 653,252 546,405 20% 2,071 19%

Europe 542,082 428,831 26% 32,208 19%

Total $ 1,949,425 $ 1,578,707 23% $ 42,360 21%

NET SALES - MARKETS Pharmaceutical $ 1,175,191 $ 926,582 27% $ 22,610 24%

Industrial 581,884 474,592 23% 14,870 19%

Academic & Government 192,350 177,533 8% 4,880 6%

Total $ 1,949,425 $ 1,578,707 23% $ 42,360 21%

NET SALES -EXCLUDING CHINA Total Net Sales $ 1,949,425 $ 1,578,707 23% $ 42,360 21%

China Net Sales 346,030 252,713 37% 11,699 32%

Total Net Sales $ 1,603,395 $ 1,325,994 21% $ 30,661 19%Excluding China (a)The Company believes that referring to comparable constant-currency growth rates is a useful way to evaluate the underlying performance of Waters Corporation's net sales. Constant-currency growth rate, a non-GAAP financial measure, measures the change in net sales between current and prior year periods, ignoring the impact of foreign currency exchange rates during the current period. See description of non-GAAP financial measures contained in this release. The Company believes that referring to comparable constant-currency growth rates is a useful way to evaluate the underlying performance of Waters Corporation's net sales. Constant-currency growth rate, a non-GAAP financial(a) measure, measures the change in net sales between current and prior year periods, ignoring the impact of foreign currency exchange rates during the current period. See description of non-GAAP financial measures contained in this release.Waters Corporation and SubsidiariesReconciliation of GAAP to Adjusted Non-GAAP FinancialsThree and Nine Months Ended October 2, 2021 and September 26, 2020(In thousands, except per share data)Income fromOperationsSelling &OperatingOtherbeforeProvision forDilutedAdministrativeOperatingIncomeIncomeIncomeIncomeNetEarningsExpenses(a)IncomePercentage(Expense)TaxesTaxesIncomeper ShareThree Months Ended October 2, 2021GAAP$

154,304

$

191,815

29.1%

$

(607)

$

182,675

$

21,490

$

161,185

$

2.60

Adjustments:Purchased intangibles amortization (b)(1,759)

1,759

0.3%

-

1,759

400

1,359

0.02

Restructuring costs and certain other items (c)(2,185)

2,185

0.3%

(403)

1,782

407

1,375

0.02

Certain income tax items (d)-

-

-

-

-

(544)

544

0.01

Adjusted Non-GAAP$

150,360

$

195,759

29.7%

$

(1,010)

$

186,216

$

21,753

$

164,463

$

2.66

Three Months Ended September 26, 2020GAAP$

138,087

$

158,384

26.7%

$

(1,039)

$

150,437

$

23,668

$

126,769

$

2.03

Adjustments:Purchased intangibles amortization (b)(2,657)

2,657

0.4%

-

2,657

524

2,133

0.03

Restructuring costs and certain other items (c)(6,771)

6,771

1.1%

-

6,771

1,692

5,079

0.08

Certain income tax items (d)-

-

-

-

-

(685)

685

0.01

Adjusted Non-GAAP$

128,659

$

167,812

28.3%

$

(1,039)

$

159,865

$

25,199

$

134,666

$

2.16

Nine Months Ended October 2, 2021GAAP$

459,362

$

559,507

28.7%

$

18,073

$

553,873

$

77,269

$

476,604

$

7.66

Adjustments:Purchased intangibles amortization (b)(5,408)

5,408

0.3%

-

5,408

1,225

4,183

0.07

Restructuring costs and certain other items (c)(3,669)

3,669

0.2%

(10,110)

(6,441)

(1,669)

(4,772)

(0.08)

Litigation settlement (e)-

-

-

(10,083)

(10,083)

(1,916)

(8,167)

(0.13)

Certain income tax items (d)-

-

-

-

-

(1,688)

1,688

0.03

Adjusted Non-GAAP$

450,285

$

568,584

29.2%

$

(2,120)

$

542,757

$

73,221

$

469,536

$

7.54

Nine Months Ended September 26, 2020GAAP$

409,694

$

381,778

24.2%

$

(2,149)

$

353,663

$

50,403

$

303,260

$

4.86

Adjustments:Purchased intangibles amortization (b)(7,900)

7,900

0.5%

-

7,900

1,561

6,339

0.10

Restructuring costs and certain other items (c)(33,054)

33,054

2.1%

(461)

32,593

7,373

25,220

0.40

Litigation provision (e)(1,180)

1,180

0.1%

-

1,180

283

897

0.01

Certain income tax items (d)-

-

-

-

-

(1,567)

1,567

0.03

Adjusted Non-GAAP$

367,560

$

423,912

26.9%

$

(2,610)

$

395,336

$

58,053

$

337,283

$

5.41

(a)Selling & administrative expenses include purchased intangibles amortization, litigation provisions and settlements and asset impairments.(b)The purchased intangibles amortization, a non-cash expense, was excluded to be consistent with how management evaluates the performance of its core business against historical operating results and the operating results of competitors over periods of time.(c)Restructuring costs, mergers and acquisition costs and certain other items were excluded as the Company believes that the cost to consolidate operations, reduce overhead, acquire companies and certain other income or expense items are not normal and do not represent future ongoing business expenses of a specific function or geographic location of the Company.(d)Certain income tax items were excluded as these non-cash expenses and benefits represent updates in management's assessment of ongoing examinations or other tax items that are not indicative of the Company's normal or future income tax expense.(e)Litigation settlement gains and provisions were excluded as these items are isolated, unpredictable and not expected to recur regularly. Waters Corporation and SubsidiariesReconciliation of GAAP to Adjusted Non-GAAP FinancialsThree and Nine Months Ended October 2, 2021 and September 26, 2020(In thousands, except per share data) Income from Operations Selling & Operating Other before Provision Diluted for Administrative Operating Income Income Income Income Net Earnings Expenses^(a) Income Percentage (Expense) Taxes Taxes Income per ShareThree Months Ended October 2, 2021GAAP $ 154,304 $ 191,815 29.1% $ (607) $ 182,675 $ 21,490 $ 161,185 $ 2.60

Adjustments:

Purchased intangibles (1,759) 1,759 0.3% - 1,759 400 1,359 0.02 amortization ^(b) Restructuring costs and (2,185) 2,185 0.3% (403) 1,782 407 1,375 0.02 certain other items ^(c) Certain - - - - - (544) 544 0.01 income tax items ^(d)Adjusted Non-GAAP $ 150,360 $ 195,759 29.7% $ (1,010) $ 186,216 $ 21,753 $ 164,463 $ 2.66



Three Months Ended September 26, 2020GAAP $ 138,087 $ 158,384 26.7% $ (1,039) $ 150,437 $ 23,668 $ 126,769 $ 2.03

Adjustments:

Purchased intangibles (2,657) 2,657 0.4% - 2,657 524 2,133 0.03 amortization ^(b) Restructuring costs and (6,771) 6,771 1.1% - 6,771 1,692 5,079 0.08 certain other items ^(c) Certain - - - - - (685) 685 0.01 income tax items ^(d)Adjusted Non-GAAP $ 128,659 $ 167,812 28.3% $ (1,039) $ 159,865 $ 25,199 $ 134,666 $ 2.16



Nine Months Ended October 2, 2021GAAP $ 459,362 $ 559,507 28.7% $ 18,073 $ 553,873 $ 77,269 $ 476,604 $ 7.66

Adjustments:

Purchased intangibles (5,408) 5,408 0.3% - 5,408 1,225 4,183 0.07 amortization ^(b) Restructuring costs and (3,669) 3,669 0.2% (10,110) (6,441) (1,669) (4,772) (0.08) certain other items ^(c) Litigation - - - (10,083) (10,083) (1,916) (8,167) (0.13) settlement ^ (e) Certain - - - - - (1,688) 1,688 0.03 income tax items ^(d)Adjusted Non-GAAP $ 450,285 $ 568,584 29.2% $ (2,120) $ 542,757 $ 73,221 $ 469,536 $ 7.54



Nine Months Ended September 26, 2020GAAP $ 409,694 $ 381,778 24.2% $ (2,149) $ 353,663 $ 50,403 $ 303,260 $ 4.86

Adjustments:

Purchased intangibles (7,900) 7,900 0.5% - 7,900 1,561 6,339 0.10 amortization ^(b) Restructuring costs and (33,054) 33,054 2.1% (461) 32,593 7,373 25,220 0.40 certain other items ^(c) Litigation (1,180) 1,180 0.1% - 1,180 283 897 0.01 provision ^ (e) Certain - - - - - (1,567) 1,567 0.03 income tax items ^(d)Adjusted Non-GAAP $ 367,560 $ 423,912 26.9% $ (2,610) $ 395,336 $ 58,053 $ 337,283 $ 5.41

(a) Selling & administrative expenses include purchased intangibles amortization, litigation provisions and settlements and asset impairments. The purchased intangibles amortization, a non-cash expense, was excluded to be(b) consistent with how management evaluates the performance of its core business against historical operating results and the operating results of competitors over periods of time. Restructuring costs, mergers and acquisition costs and certain other items were excluded as the Company believes that the cost to consolidate operations,(c) reduce overhead, acquire companies and certain other income or expense items are not normal and do not represent future ongoing business expenses of a specific function or geographic location of the Company. Certain income tax items were excluded as these non-cash expenses and benefits(d) represent updates in management's assessment of ongoing examinations or other tax items that are not indicative of the Company's normal or future income tax expense.(e) Litigation settlement gains and provisions were excluded as these items are isolated, unpredictable and not expected to recur regularly.Waters Corporation and SubsidiariesPreliminary Condensed Unclassified Consolidated Balance Sheets(In thousands and unaudited)October 2, 2021December 31, 2020Cash, cash equivalents and investments$ 655,192

$ 443,146

Accounts receivable532,957

573,316

Inventories388,756

304,281

Property, plant and equipment, net530,061

494,003

Intangible assets, net246,080

258,645

Goodwill436,754

444,362

Other assets326,115

322,167

Total assets$ 3,115,915

$ 2,839,920

Notes payable and debt$ 1,613,618

$ 1,356,515

Other liabilities1,207,075

1,251,261

Total liabilities2,820,693

2,607,776

Total stockholders' equity295,222

232,144

Total liabilities and stockholders' equity$ 3,115,915

$ 2,839,920

Waters Corporation and SubsidiariesPreliminary Condensed Unclassified Consolidated Balance Sheets(In thousands and unaudited) October 2, 2021 December 31, 2020 Cash, cash equivalents and investments $ 655,192 $ 443,146

Accounts receivable 532,957 573,316

Inventories 388,756 304,281

Property, plant and equipment, net 530,061 494,003

Intangible assets, net 246,080 258,645

Goodwill 436,754 444,362

Other assets 326,115 322,167

Total assets $ 3,115,915 $ 2,839,920

Notes payable and debt $ 1,613,618 $ 1,356,515

Other liabilities 1,207,075 1,251,261

Total liabilities 2,820,693 2,607,776

Total stockholders' equity 295,222 232,144

Total liabilities and stockholders' $ 3,115,915 $ 2,839,920equityWaters Corporation and SubsidiariesPreliminary Condensed Consolidated Statements of Cash FlowsThree and Nine Months Ended October 2, 2021 and September 26, 2020(In thousands and unaudited)Three Months EndedNine Months EndedOctober 2, 2021September 26, 2020October 2, 2021September 26, 2020Cash flows from operating activities:Net income$ 161,185

$ 126,769

$ 476,604

$ 303,260

Adjustments to reconcile net income to netcash provided by operating activities:Stock-based compensation6,353

9,593

21,949

27,715

Depreciation and amortization33,183

30,888

97,926

91,091

Change in operating assets and liabilities, net(32,829)

5,329

(67,143)

100,959

Net cash provided by operating activities167,892

172,579

529,336

523,025

Cash flows from investing activities:Additions to property, plant, equipmentand software capitalization(39,725)

(28,311)

(116,614)

(125,340)

Business acquisitions, net of cash acquired-

-

-

(76,664)

Investment in unaffiliated companies(867)

(500)

(867)

(3,850)

Payments for intellectual property licenses-

-

(7,000)

-

Net change in investments73,270

(5,415)

(123,947)

(20,707)

Net cash provided by (used) in investing activities32,678

(34,226)

(248,428)

(226,561)

Cash flows from financing activities:Net change in debt5,100

(125,000)

251,463

(110,366)

Proceeds from stock plans9,964

13,682

55,000

28,421

Purchases of treasury shares(151,188)

(56)

(492,695)

(196,353)

Other cash flow from financing activities, net408

2,772

2,325

10,330

Net cash used in financing activities(135,716)

(108,602)

(183,907)

(267,968)

Effect of exchange rate changes on cash and cash equivalents(208)

6,147

(8,994)

10,723

Increase in cash and cash equivalents64,646

35,898

88,007

39,219

Cash and cash equivalents at beginning of period460,056

339,036

436,695

335,715

Cash and cash equivalents at end of period$ 524,702

$ 374,934

$ 524,702

$ 374,934

Reconciliation of GAAP Cash Flows from Operating Activities to Free Cash Flow (a)Net cash provided by operating activities - GAAP$ 167,892

$ 172,579

$ 529,336

$ 523,025

Adjustments:Additions to property, plant, equipmentand software capitalization(39,725)

(28,311)

(116,614)

(125,340)

Tax reform payments-

38,454

38,454

38,454

Litigation settlement received-

-

(3,367)

-

Major facility renovations11,893

7,253

40,178

50,320

Free Cash Flow - Adjusted Non-GAAP$ 140,060

$ 189,975

$ 487,987

$ 486,459

(a) The Company defines free cash flow as net cash flow from operations accounted for under GAAP less capital expenditures and software capitalizations plus or minus any unusual and non recurring items. Free cash flow is not a GAAP measurement and may not be comparable to free cash flow reported by other companies.Waters Corporation and SubsidiariesPreliminary Condensed Consolidated Statements of Cash FlowsThree and Nine Months Ended October 2, 2021 and September 26, 2020(In thousands and unaudited) Three Months Ended Nine Months Ended October September October September 2, 2021 26, 2020 2, 2021 26, 2020 Cash flows from operatingactivities: Net income $ 161,185 $ 126,769 $ 476,604 $ 303,260

Adjustments to reconcile net income to net cash provided by operating activities: Stock-based compensation 6,353 9,593 21,949 27,715

Depreciation and amortization 33,183 30,888 97,926 91,091

Change in operating assets (32,829) 5,329 (67,143) 100,959 and liabilities, net Net cash provided by 167,892 172,579 529,336 523,025 operating activities Cash flows from investingactivities: Additions to property, plant, equipment and software capitalization (39,725) (28,311) (116,614) (125,340)

Business acquisitions, net of - - - (76,664) cash acquired Investment in unaffiliated (867) (500) (867) (3,850) companies Payments for intellectual - - (7,000) - property licenses Net change in investments 73,270 (5,415) (123,947) (20,707)

Net cash provided by (used) 32,678 (34,226) (248,428) (226,561) in investing activities Cash flows from financingactivities: Net change in debt 5,100 (125,000) 251,463 (110,366)

Proceeds from stock plans 9,964 13,682 55,000 28,421

Purchases of treasury shares (151,188) (56) (492,695) (196,353)

Other cash flow from financing 408 2,772 2,325 10,330 activities, net Net cash used in financing (135,716) (108,602) (183,907) (267,968) activities Effect of exchange rate changes (208) 6,147 (8,994) 10,723on cash and cash equivalents Increase in cash and cash 64,646 35,898 88,007 39,219 equivalents Cash and cash equivalents at 460,056 339,036 436,695 335,715beginning of period Cash and cash equivalents at $ 524,702 $ 374,934 $ 524,702 $ 374,934 end of period Reconciliation of GAAP Cash Flows from Operating Activities to Free Cash Flow ^(a) Net cash provided by operating $ 167,892 $ 172,579 $ 529,336 $ 523,025activities - GAAP Adjustments: Additions to property, plant, equipment and software capitalization (39,725) (28,311) (116,614) (125,340)

Tax reform payments - 38,454 38,454 38,454

Litigation settlement - - (3,367) - received Major facility renovations 11,893 7,253 40,178 50,320

Free Cash Flow - Adjusted $ 140,060 $ 189,975 $ 487,987 $ 486,459Non-GAAP (a) The Company defines free cash flow as net cash flow from operationsaccounted for under GAAP less capital expenditures and software capitalizationsplus or minus any unusual and non recurring items. Free cash flow is not a GAAPmeasurement and may not be comparable to free cash flow reported by othercompanies.Waters Corporation and SubsidiariesReconciliation of Projected GAAP to Adjusted Non-GAAP Financial OutlookThree Months EndedTwelve Months EndedDecember 31, 2021December 31, 2021RangeRangeProjected SalesProjected constant-currency sales growth rate (a)5

%

-

7

%

15

%

-

16

%

Projected currency impact(2

%)

-

(2

%)

1

%

-

1

%

Projected sales growth rate as reported3

%

-

5

%

16

%

-

17

%

Projected Earnings Per Diluted ShareRange

Range

Projected GAAP earnings per diluted share$

3.37

-

$

3.47

$

11.02

-

$

11.12

Adjustments:Purchased intangibles amortization$

0.02

-

$

0.02

$

0.09

-

$

0.09

Restructuring costs and certain other items$

-

-

$

-

$

(0.08

)

-

$

(0.08

)

Litigation settlement$

-

-

$

-

$

(0.13

)

-

$

(0.13

)

Certain income tax items$

0.01

-

$

0.01

$

0.04

-

$

0.04

Projected adjusted non-GAAP earnings per diluted share$

3.40

-

$

3.50

$

10.94

-

$

11.04

(a) Constant-currency growth rates are a non-GAAP financial measure that measures the change in net sales between current and prior year periods, ignoring the impact of foreign currency exchange rates during the current period. These amounts are estimated at the current foreign currency exchange rates and based on the forecasted geographical sales in local currency, as well as an assessment of market conditions as of today, and may differ significantly from actual results.These forward-looking adjustment estimates do not reflect future gains and charges that are inherently difficult to predict and estimate due to their unknown timing, effect and/or significance. View source version on businesswire.com: https://www.businesswire.com/news/home/20211102005188/en/

CONTACT: John Lynch, Vice President, Treasurer - (508) 482-2314 Caspar Tudor, Manager, Investor Relations - (508) 482-2429