Waters Corp ((WAT)) has held its Q1 earnings call. Read on for the main highlights of the call.
Waters Corporation’s recent earnings call painted a picture of robust growth and strategic resilience, despite facing some external challenges. The company reported strong performance across key segments such as Pharma and PFAS testing, driven by high demand and innovative product offerings. While newly announced tariffs and a cautious outlook for the U.S. Academic & Government segment posed some challenges, Waters Corporation’s decision to raise its full-year guidance underscores its confidence in navigating the current market landscape.
Strong Instrument Growth
The earnings call revealed that Waters Corporation experienced an impressive 11% growth in its instruments segment. This growth was primarily fueled by mid-teens sales increases in liquid chromatography and mass spectrometry, with significant contributions from the Pharma and industrial end markets.
Pharma Sales Boost
Pharma sales saw an 8% increase, with particularly strong performance in Asia and the Americas. The growth was driven by robust demand from large pharmaceutical companies, generics, and contract development and manufacturing organizations (CDMOs).
PFAS Testing Surge
PFAS-related testing sales surged by over 90% in the first quarter, continuing a strong growth trend. The increasing adoption of liquid chromatography-mass spectrometry (LC-MS) for regulated analysis is a key driver of this growth.
India Growth
Waters Corporation’s India team delivered nearly 20% revenue growth in constant currency. This was largely due to strong demand from generics manufacturers and CDMOs, highlighting the region’s strategic importance.
Increased Full-Year Guidance
The company raised its full-year constant currency sales growth guidance to 5% to 7%, with adjusted EPS guidance increased to a range of $12.75 to $13.05. This reflects Waters Corporation’s confidence in its growth trajectory despite external pressures.
Tariff Challenges
Newly announced tariffs are expected to have a gross impact of $45 million. However, Waters Corporation plans to mitigate this, limiting the net impact on adjusted operating margin to $10 million through strategic measures.
U.S. Academic & Government Segment Reduction
The company has proactively adjusted its expectations for the U.S. Academic & Government segment, anticipating a 20% decline for the remainder of the year. This adjustment is expected to create a 50 basis points topline headwind.
Forward-Looking Guidance
Looking ahead, Waters Corporation has outlined a positive outlook for the second quarter and full-year 2025. The company projects a constant currency sales growth of 5% to 7% for the full year, driven by strong demand in the pharmaceutical and industrial sectors. Despite the challenges posed by new tariffs, Waters expects high single-digit earnings growth, supported by effective pricing strategies and operational efficiencies. The guidance also includes a constant currency EPS growth of 10% to 12%, with a raised full-year adjusted EPS guidance between $12.75 and $13.05.
In conclusion, Waters Corporation’s earnings call highlighted a strong performance across key segments, with significant growth in Pharma and PFAS testing. Despite facing challenges such as new tariffs and a cautious outlook for the U.S. Academic & Government segment, the company remains optimistic about its future prospects. The raised full-year guidance reflects Waters Corporation’s strategic resilience and confidence in its ability to navigate the evolving market landscape.