Waters(US:WAT)2023-11-07 12:10Financial Performance - For the three months ended September 30, 2023, total net sales were $711.7 million, a slight increase of 1% compared to $708.6 million for the same period in 2022[123]. - Product sales decreased by 4% to $448.1 million, while service sales increased by 8% to $263.6 million in the third quarter of 2023[123]. - The Wyatt acquisition contributed 4% to sales growth in the third quarter and 2% for the first nine months of 2023[124]. - Sales to pharmaceutical customers increased by 4% in the third quarter of 2023, while sales to industrial customers decreased by 6%[135]. - Waters' total net sales increased by 1% to $629.3 million in Q3 2023, compared to $623.4 million in Q3 2022[138]. - TA's total net sales declined by 3% to $82.3 million in Q3 2023, with instrument systems sales down 8%[142]. Operating Income and Expenses - Operating income decreased by 7% to $179.4 million in the third quarter of 2023, primarily due to higher salary expenses and severance-related costs[128]. - Selling and administrative expenses rose by 14% in Q3 2023, driven by severance-related costs and acquisition expenses[144]. - Research and development expenses decreased by 3% in Q3 2023, influenced by lower incentive compensation costs[146]. Cash Flow and Debt - The company generated $373 million in net cash from operating activities in the first nine months of 2023, compared to $413 million in the same period of 2022[129]. - Net cash provided by operating activities was $372.7 million in the first nine months of 2023, down from $412.9 million in 2022[157]. - Net cash used in investing activities totaled $1.4 billion in the first nine months of 2023, significantly higher than $46 million in 2022[158]. - The company's outstanding debt increased to $2.5 billion as of September 30, 2023, following the $1.3 billion acquisition of Wyatt Technology[130]. - The Company's net debt borrowings increased by $0.9 billion during the first nine months of 2023, primarily to fund the Wyatt acquisition[164]. - As of September 30, 2023, the Company had cash, cash equivalents, and investments totaling $337 million, with $307 million held by foreign subsidiaries[168]. Acquisitions and Investments - The Company completed the acquisition of Wyatt for a total purchase price of $1.3 billion in cash, expanding its portfolio and increasing exposure to large molecule applications[163]. - The Company received $10 million in proceeds from equity investments and made $1 million of investments in equity investments during the first nine months of 2022[163]. Tax and Interest - The effective tax rate for Q3 2023 was 12.2%, a decrease from 14.9% in Q3 2022, attributed to discrete tax benefits[153]. - The Company lowered net interest expense by approximately $8 million during the first nine months of 2023 due to interest rate cross-currency swap derivative agreements[165]. Future Expectations - The Company expects to contribute approximately $3 million to $6 million to its defined benefit plans during fiscal year 2023[171]. - The Company has no plans to pay dividends in the future[172]. Stock Repurchase - The Company repurchased $58 million of its outstanding common stock during the first nine months of 2023, compared to $467 million during the same period in 2022[166]. Currency Impact - A hypothetical adverse change of 10% in year-end exchange rates would decrease the fair market value of the Company's cash held in currencies other than the U.S. dollar by approximately $19 million[183].