Waters Corporation Reports Strong Q3 2024 Results

Waters Corporation (NYSE:WAT) reported robust financial results for the third quarter of 2024 that surpassed market expectations, especially in the Pharma and Industrial sectors. The earnings call on October 25, 2024, highlighted significant growth in revenue, margins, and earnings per share (EPS), driven by strong performance in liquid chromatography (LC) and mass spectrometry (MS). Revenue increased by 4% year-over-year to $740 million, and non-GAAP EPS rose to $2.93, marking a 3% increase. The company raised its full-year guidance for 2024, citing improved market conditions.

Key Takeaways

• Revenue grew by 4% YoY to $740 million.
• Non-GAAP EPS increased to $2.93, with GAAP EPS at $2.71.
• Recurring revenue rose by 7%, and chemistry consumables grew by 8%.
• LC segment saw positive growth, with Xevo TQ Absolute sales surging over 70%.
• New product launches include a rapid scan calorimeter and a compact Discovery Rheometer.
• Full-year 2024 organic sales growth guidance updated to between -0.9% and -0.3%.
• Adjusted EPS guidance for 2024 set at $11.67 to $11.87.
• Free cash flow for the quarter was $179 million, with priorities on debt reduction and potential M&A.

Company Outlook

• Expecting 5% to 7% growth in Q4 2024.
• Anticipated full-year sales growth for 2024 between -0.8% and -0.2%.
• Gross margin expected at 59.8%, adjusted operating margin around 31%.

Bearish Highlights

• Slight sales decline of 5% in China due to shipment delays.
• Conservative outlook with low single-digit growth in China and instrument sales decline.

Bullish Highlights

• Focus on bioseparations and investments in R&D.
• Optimism for growth driven by new testing capacity and recovering customer spending.

Q&A Highlights

• Strong product portfolio and improved execution lead to more wins than losses.
• PFAS and GLP-1 markets expected to contribute 30 to 40 basis points growth.
• Recovery for Instruments segment may vary from 0.5% to 11%.

Waters Corporation's Q3 earnings call underscored solid performance exceeding revenue and EPS expectations. Management is confident in strategic growth areas and their ability to capitalize on market recovery.

InvestingPro Insights

• Market cap of $22.45 billion.
• P/E ratio of 37.89, aligning with a high earnings multiple.
• Liquid assets exceed short-term obligations, supporting R&D investments.
• Last twelve months revenue was $2.88 billion with consistent margins.

Full Transcript Summary

The earnings call discussed Waters Corporation's exceptional Q3 2024 results, with strong growth attributed to various sectors, investment in R&D, new product launches, and strategic guidance updates. CEO Udit Batra and CFO Amol Chaubal provided insights into market conditions, performance across sectors and regions, and future growth opportunities, while also emphasizing the importance of operational excellence.