Waters (WAT) Q1 2012 Earnings Call April 24, 2012 8:30 am ET Executives Douglas A. Berthiaume - Chairman, Chief Executive Officer and President John A. Ornell - Chief Financial Officer and Vice President of Finance & Administration Analysts Nandita Koshal - Barclays Capital, Research Division Jonathan P. Groberg - Macquarie Research Daniel L. Leonard - Leerink Swann LLC, Research Division Daniel Brennan - Morgan Stanley, Research Division Paul R. Knight - Credit Agricole Securities (USA) Inc., Research Division Quintin J. Lai - Robert W. Baird & Co. Incorporated, Research Division Tycho W. Peterson - JP Morgan Chase & Co, Research Division Doug Schenkel - Cowen and Company, LLC, Research Division Amit Bhalla - Citigroup Inc, Research Division Jon Davis Wood - Jefferies & Company, Inc., Research Division Isaac Ro - Goldman Sachs Group Inc., Research Division Presentation Operator
John A. OrnellOn this call, we may make forward-looking statements regarding future events, including statements regarding customer acceptance of our new products, international expansion of our business, spending by certain end markets that involve a number of risks and uncertainties. For this purpose, any statements that are not statements of historical fact may be deemed forward-looking statements. The company's actual future results may differ significantly from the results discussed in the forward-looking statements on this call for a variety of reasons, including and without limitation, the impact of demand among the company's various market sectors from economic, sovereign and political uncertainties; increased regulatory burdens from the company's business as the company's business evolves, especially with respect to the U.S. Securities and Exchange Commission, U.S. Food and Drug Administration and the Environmental Protection Agency, among others; shifts in taxable income in jurisdictions with different tax rates; the outcome of tax examinations or changes in respective country legislations affecting the company's effective tax rate; the ability to access capital and maintain liquidity in volatile financial market conditions; the timing of fluctuations in capital expenditures by the company's customers spanning multiple quarters or years, in particular, pharmaceutical companies, governments and universities; the ability to sustain and enhance service and consumable demand by the company's installed base of instruments; introduction of competing products by other companies and loss of market share; pressures on prices from competitors and customers; regulatory, economic and competitive obstacles from product introductions; and other changes in demand from the effect of mergers and acquisitions by the company's customers; environmental and logistical obstacles affecting the distribution of products; risks associated with laysuits and other legal options, particularly involving claims for infringement of patents and intellectual property; foreign exchange fluctuations potentially affection translation of the company's future non-U.S. operating results. Such factors and others are discussed more fully in the section entitled Risk Factors of the company's Annual Report on Form 10-K for the year ended December 31, 2011, as filed with the Securities and Exchange Commission, which Risk Factors discussion is incorporated by reference on this call. The forward-looking statements included in this call 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 call.
Doug?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. Read the rest of this transcript for free on seekingalpha.com