Waters Corp Reports Strong Q4, Optimistic for 2025

Waters Corp ((WAT)) has held its Q4 earnings call. Read on for the main highlights of the call.

In the recent earnings call, Waters Corporation reported a strong performance in the fourth quarter, highlighting considerable growth driven by new products and significant contributions from key segments like Pharma and Academic. However, challenges were also noted, particularly the impacts of foreign exchange and flat year-over-year sales. The overall sentiment during the call was optimistic, with expectations of continued growth into 2025 supported by strong fundamentals and anticipated market recovery.

Strong Fourth Quarter Performance

Waters Corporation achieved an impressive high single-digit constant currency revenue growth of 8% and a low teens adjusted EPS growth of 13% in Q4 2024. The non-GAAP EPS reached $4.10, marking a 13% growth, and an adjusted EPS growth of 22% when excluding foreign exchange impact.

Pharma and Academic Segments Lead Growth

The Pharma segment reported a 10% sales growth in Q4, driven by robust performances in Europe and Asia. The Academic and Government segment also saw significant growth at 16%, fueled by remarkable 35% growth in Asia and 20% in Europe.

New Product Success

Waters’ new products contributed notably to its revenue, with the Alliance iS comprising 20% of HPLC revenue in Q4, and the Xevo TQ Absolute system unit sales growing by 40% year-over-year, making up 50% of tandem quad revenue.

PFAS Testing Market Leadership

Waters maintained its leadership in the PFAS testing market, with revenue growing over 40% in Q4 and for the year, significantly outpacing the market’s estimated 20% annual growth.

Strong Full-Year Financials

Despite a 5% decline due to foreign exchange, the full-year non-GAAP EPS was $11.86, reflecting a 1% growth. Recurring revenue increased by 6% for the year, demonstrating the company’s resilience in challenging market conditions.

Growth in Europe and India

Europe experienced an 11% growth in Q4, while India maintained a high growth rate exceeding 25% for the year, contributing significantly to the company’s overall growth by 70 to 100 basis points.

Foreign Exchange Impact

The strengthening U.S. dollar posed a considerable foreign exchange headwind, impacting EPS by $0.23 more than anticipated in Q4 and is expected to affect 2025 earnings by approximately 4%.

Flat Full Year Sales

The company reported flat full-year sales both as reported and in organic constant currency terms, with a 7% decline in instrument sales overall for the year.

China Market Uncertainty

Sales in China returned to low single-digit growth in Q4, with modest contributions expected from stimulus in 2025. However, the long-term outlook for the Chinese market remains uncertain.

Forward-Looking Guidance

For the upcoming fiscal year, Waters Corporation projects a constant currency sales growth of 4.5% to 7%, with reported sales growth ranging from 2.5% to 5% due to anticipated foreign exchange headwinds. Instrument sales are expected to grow approximately 4% to 4.5%, supported by a recovery in customer capital expenditure and a revitalized product portfolio. The company forecasts non-GAAP earnings per fully diluted share to be between $12.70 and $13, representing a 7% to 10% growth despite a projected 4% negative impact from foreign exchange. Recurring revenues are expected to grow at a steady 6% to 7% rate, with strong momentum in the pharmaceutical segment and substantial opportunities in emerging markets like India.

In conclusion, Waters Corporation’s latest earnings call reflected a robust performance in Q4, driven by strong product offerings and key segment growth. While challenges such as foreign exchange impacts and flat sales persist, the company remains optimistic about its future, with positive growth projections for 2025. Investors can take confidence in Waters’ strategic focus on emerging markets and its strong fundamentals as it navigates the upcoming fiscal challenges.