WAT — Waters Corporation

Summary of Waters Corporation Q4 2025 Earnings Call

1. Key Financial Results and Metrics

• Q4 2025 Results:
  • Reported sales of $932 million, up 7% year-over-year (6% in constant currency).
  • Adjusted EPS of $4.53, reflecting 10% growth; GAAP EPS was $3.77.
  • Full-year sales grew 7% (reported and constant currency), with adjusted EPS increasing 11% to $13.13.
  • Recurring revenue rose 9% in Q4, driven by 12% growth in chemistry.
  • Instrument revenue grew 5%, led by high single-digit growth in LC-MS.

2. Strategic Updates and Business Highlights

• Waters completed the acquisition of BD's Biosciences and Diagnostic Solutions, aiming to leverage combined expertise in chemistry, physics, and biology.
• The company is transitioning to a subscription-based model for its Empower platform, which is expected to enhance recurring revenue despite initially impacting instrument growth.
• Strong performance in high-volume testing areas, particularly GLP-1 and PFAS, contributed significantly to overall growth.
• The company reported a successful integration plan for the acquired BD assets, with a focus on improving operational execution and pricing discipline.

3. Forward Guidance and Outlook

• For 2026, Waters expects organic constant currency revenue growth of 5.5% to 7%.
• Total reported revenue is projected to be approximately $6.405 billion to $6.455 billion, including contributions from the acquired BD business.
• Adjusted EPS guidance for 2026 is set at $14.30 to $14.50, reflecting 8.9% to 10.4% growth.
• The company anticipates achieving $55 million in cost synergies and $50 million in revenue synergies in 2026.

4. Bad News, Challenges, or Points of Concern

• The BD business faced challenges in Q4, including a weaker flu season and delays in export approvals due to a U.S. government shutdown, leading to a lower baseline for growth in 2026.
• The transition to the Empower subscription model is expected to create a low single-digit percentage headwind on instrument revenue in the near term.
• The company has adopted a conservative outlook for the BD assets, factoring in ongoing headwinds from the China DRG and academic/government market slowdowns.

5. Notable Q&A Insights

• Management acknowledged that several unforeseen issues impacted BD's performance in Q4, but they are optimistic about a clean baseline for 2026.
• The company is focused on improving operational execution and pricing discipline, drawing from successful strategies implemented in its existing businesses.
• There was a discussion on the expected contribution from the BD assets, with management indicating a gradual recovery and growth ramping up through the year.
• The Q&A highlighted the importance of maintaining pricing discipline, especially for new product launches in the BD portfolio, to enhance revenue and margin growth.

Overall, Waters Corporation is entering 2026 with a strong foundation, despite facing some challenges with the integration of BD's assets and the transition to a subscription model. The company remains committed to driving growth through innovation and operational excellence.