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Waters' CEO Discusses Q1 2012 Results - Earnings Call Transcript


Douglas A. Berthiaume

Thank you, John. Well, obviously, our sales in the first quarter fell short of our expectations as we encountered weaknesses in some developing markets and delays in capital releases from many of our larger pharmaceutical customers. However, as we look at the various pushes and pulls that resulted in the quarter's sales performance, I believe that the underlying demand for our product and services remains intact and that we will see improvements as we go through the rest of the year.

When you look at the first quarter, our sales were flat organically, and our adjusted earnings per share declined 4%. For the Waters division, a geographical situation of the business is useful in understanding the quarter's sales trend. In the quarter, sales growth from the approximately 1/3 of the business that we derived from the developing regions, including non-Japan Asia, Latin America and Eastern Europe, did not provide the growth that we've seen in recent quarters.

Our instrument sales in India declined rather sharply due to the residual budgetary effects of a weaker rupee and deferments in capital spending at both generic drug makers and CROs. At the start of a new fiscal year, as we enter the second quarter and more favorable quarterly comparisons, we're anticipating a return to growth in India and are encouraged by an improving trend that we've begun to see earlier in the second quarter.

In China, sales in the first quarter were up double digits based on strong industrial and governmental spending. Sales growth rates in the Middle East and Eastern Europe were weak in this quarter, and this weakness can be attributed to a tough base of comparison as well as the great amount of political instability in the region.

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