Waters Earnings Call Nuggets: Improving Demand Trends and the Weaker Indian Rupee

Waters Corporation (NYSE:WAT) recently reported its fourth quarter earnings and discussed the following topics in its earnings conference call.

Improving Demand Trends

Daniel Brennan – Morgan Stanley: Doug and John, you have discussed throughout the call, an increasing kind of tone of business possibly as I guess we exited the quarter. I think Doug you talked about an ordering trend in high-end mass spec. Maybe you can just flush out a little bit kind of the pacing throughout the quarter that you saw and maybe some of this kind of forward visibility on improving demand trends.

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Douglas A. Berthiaume – Chairman, President and CEO: Yes, Dan, I think most of its qualitative and I caution everybody to say that it doesn’t necessarily reflect longer term trends. We definitely saw an improvement in the fourth quarter in both the drop rate of high-end mass spec and more qualitative things, like demo requests and quotes. So that, we see as positive. We see that continuing in the early part of 2013. We’re also hearing what I call murmurings of improvement coming from our customer base. What makes it remarkable or notable is that it’s different from what we were seeing at this time last year, which was much more cautious. So, it’s pretty much across the board that we are seeing those qualitative comments as being is leading to more optimism than pessimism. Does that cover your question, Dan?

The Weaker Indian Rupee

Amit Bhalla – Citi: Just two quick questions, I guess number one. Doug, can you just talk a little bit about the outlook by regions and end markets for 2013, what’s the underlying assumptions within the guidance you laid out? Then I have a follow-up question on India.

Douglas A. Berthiaume – Chairman, President and CEO: Sure. I’ll ask John to lay it out. He’s got the data right here.

John Ornell – VP, Finance and Administration and CFO: Yeah. I think as we think about the full year and look at the geographies around the world, the expectation is that a developing economies largely Asia, outside of Japan, portions of Eastern Europe, South America and Central America areas that we typically bring into about the 30% that we talk about is being our emerging market exposure. We are looking for that to continue at kind of a high-single digit rate. We’ve seen that be better generally than that in actual results. But we tend to target something that’s in the high-single digits for those regions of the world. And then in areas such as U.S. and Europe, given the base of comparison that we have we’re looking for low-single digit growth this year in those parts of the world, maybe starting off closer to 2% and then closer to 3.5% perhaps. Then Japan, we’re looking for a bit more of a difficult slog there maybe 1% or 2% growth in that region. So, that’s kind of the outlook by geography.

Amit Bhalla – Citi: The end markets and then I guess, I’d just throw my India question. You had some pretty easy fourth quarter comps in the prior year. You’re talking about some CRO issues. Can you flush India out a little bit more in terms of the details of what’s really happening there?

Douglas A. Berthiaume – Chairman, President and CEO: Yeah. I think what we’ve talked continuously about in India is that these customers are facing weaker rupee issues, wherein they are challenged by both the capital requests, as well as financing issues that most of their debts denominated in stronger currencies and that challenges their ability to aggressively spend new capital. They’ve also have regulatory issues that have made them cautious in certain areas. We can pretty much look at almost every item that comes into India in terms of the market share dynamics and we’re convinced that there’s no significant market share erosion going on in our business in India. So, I know this is getting to be a little bit of a broken record. We’re pretty confident that it’s going to change. We’re not happy that it’s taken longer than we expected. But we think, we’ll see a change in 2013 and we’ll see positive results in India.

Amit Bhalla – Citi: The question on the end markets?

Douglas A. Berthiaume – Chairman, President and CEO: I’m sorry what was that question?

Amit Bhalla – Citi: The original question was your underlying assumptions on geographies and end-markets. I didn’t hear anything on end-markets.

Douglas A. Berthiaume – Chairman, President and CEO: We’re looking at pharma to grow kind of the in the mid-single digit range, it could be maybe closer 65, government academic, kind of flat maybe up modest amount of growth as we exit the year, but starting up slow and then the applied markets including food, environmental, industrial somewhere in kind of the 3% to 4% range.