• Revenue Growth: 6.4% as reported and 8% in constant currency for Q4 2024.
• Adjusted EPS Growth: 13% to $4.10 in Q4 2024; 22% growth excluding FX impact.
• GAAP EPS: $3.88 for Q4 2024.
• Full-Year Non-GAAP EPS: $11.86, reflecting 1% growth with a 5% decline due to FX headwinds.
• Full-Year GAAP EPS: $10.71 per share.
• Operating Margin: 35.5% adjusted operating margin in Q4 2024, a 60 basis point increase.
• Free Cash Flow: $188 million in Q4 2024; $744 million for the full year.
• Net Debt Position: Approximately $1.3 billion, with a net debt-to-EBITDA ratio of about 1.3 times.
• Pharma Sales Growth: 10% in Q4 2024, with low double-digit growth in Europe and Asia.
• Instrument Sales Growth: 8% in Q4 2024, led by LC, Mass Spec, light scattering, and TA systems.
• Recurring Revenue Growth: 9% in Q4 2024, with chemistry and service both up high single digits.
• PFAS Revenue Growth: Over 40% in Q4 2024 and for the year.
• Max Premier Columns Sales Growth: Over 30% in Q4 2024 and over 40% for the year.
• 2025 Sales Growth Guidance: 4.5% to 7% in constant currency.
• 2025 EPS Guidance: $12.70 to $13 on a non-GAAP basis, reflecting 7% to 10% growth.

• Warning! GuruFocus has detected 6 Warning Signs with WAT.

Release Date: February 12, 2025

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

Positive Points

• Waters Corp (NYSE:WAT) achieved high single-digit constant currency revenue growth and low-teens adjusted EPS growth in Q4 2024.
• Pharma sales, the largest end market for Waters Corp (NYSE:WAT), grew in low double digits, indicating strong demand.
• Recurring revenues grew 9%, marking an improvement from the previous quarter, with chemistry and service both up high single digits.
• The Xevo TQ Absolute system, a key product, saw unit sales grow 40% year-over-year, contributing significantly to PFAS testing revenue growth.
• Waters Corp (NYSE:WAT) achieved a 60 basis point increase in adjusted operating margin to 35.5%, despite FX headwinds.

Negative Points

• Sales for the full year were flat as reported and in organic constant currency terms, indicating challenges in overall growth.
• The US dollar's strengthening introduced significant foreign exchange headwinds, impacting financial performance.
• The Academic and Government segment saw a decline of 7% for the full year, reflecting challenges in this market.
• China sales, while returning to positive growth, only increased by low single digits, indicating a slow recovery.
• The company faces ongoing margin challenges, including FX, inflation, and normalization of annual incentive compensation.

Q & A Highlights

Q: Can you elaborate on the budget flush dynamics and the replacement cycle within your pharma customer base? A: Udit Batra, President and CEO, explained that 2024 saw a typical budget flush with a high-teens ramp from Q3 to Q4, driven by strong sales momentum. The replacement cycle is progressing well, with large pharma initiating replacements, and the Alliance iS now constituting 20% of HPLC sales. The replacement cycle is widespread among large pharma and CDMOs, with strong funnels going into 2025.

Q: How are macroeconomic risks, such as tariffs and potential spending cuts, factored into your 2025 guidance? A: Udit Batra noted that the 2025 guidance of 4.5% to 7% sales growth incorporates these risks. The recurring revenue growth is expected to remain stable at 6% to 7%, while instruments need to grow 4% to 4.5% to reach the midpoint of the guidance. The company has built prudence into the lower end of the guidance to account for potential headwinds.

Q: What is the expected contribution from PFAS, GLP-1, and India to the 2025 growth? A: Udit Batra stated that both GLP-1 and PFAS are expected to contribute 30 basis points each to growth, while India is anticipated to add 70 to 100 basis points. India showed over 25% growth in 2024, and China is expected to maintain low single-digit growth with potential upside from stimulus.

Q: Can you discuss the strength in the academic and government segment and expectations for 2025? A: Amol Chaubal, CFO, mentioned that Q4 saw strong growth due to typical budget flush dynamics, especially in Europe, and initial orders from China's stimulus. For 2025, the company expects low single-digit growth in this segment, with limited direct exposure to NIH funding risks.

Q: How is the PFAS market evolving, and what drives Waters' growth in this area? A: Udit Batra highlighted that the PFAS market is expanding due to new applications in environmental, food, and academic testing. Waters is growing faster than the market, driven by the Xevo TQ Absolute's sensitivity and low environmental footprint, along with strong informatics and chemistry offerings.

For the complete transcript of the earnings call, please refer to the full earnings call transcript.