Waters Corp ((WAT)) has held its Q2 earnings call. Read on for the main highlights of the call.
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In the recent earnings call, Waters Corp delivered a positive sentiment, highlighting a strong quarter marked by significant growth in sales and recurring revenue. The company excelled particularly in the pharma segment and the China market, leading to an upward revision of its full-year guidance. Despite some challenges in the TA division and the academic and government segments, the overall performance was commendable, with the highlights significantly outweighing the lowlights.
Strong Overall Sales Growth
Waters Corp reported a robust sales growth of 9% as reported and 8% in constant currency. The instruments segment saw mid-single-digit growth, with the LC and mass spec portfolio experiencing high single-digit growth. This indicates a healthy demand for the company’s offerings across various markets.
Significant Growth in Recurring Revenue
The company achieved an impressive 11% growth in recurring revenue, driven by a 9% increase in service growth and double-digit growth in chemistry. This demonstrates Waters Corp’s ability to generate consistent income from its existing customer base, reinforcing its financial stability.
Pharma Segment Growth
The pharma segment showed low double-digit growth, propelled by strong instrument replacement activity and new product adoption. This was particularly evident among large pharma and CDMO customers, showcasing the company’s strong foothold in the pharmaceutical industry.
Positive Performance in China
China emerged as a significant growth driver, with double-digit growth across all end markets. The strength was particularly notable in CDMOs and battery testing within the industrial segment, highlighting the region’s strategic importance to Waters Corp.
Raising Full-Year Guidance
Waters Corp has raised its full-year 2025 guidance, projecting a constant currency sales growth of 5.5% to 7.5% and a non-GAAP EPS range of $12.95 to $13.05. This optimistic outlook reflects the company’s confidence in sustaining its growth momentum.
Decline in TA Division
The TA division experienced a 6% decline, attributed to softness in the Americas and Europe. This was particularly evident in macro-sensitive polymer and materials testing applications, indicating areas that may require strategic adjustments.
Challenges in Academic and Government Segment
The academic and government segment saw a 3% decline, primarily due to ongoing funding issues. This highlights the challenges faced in these segments, which may impact future growth prospects.
Weakness in Drug Discovery
The pharma drug discovery segment, accounting for about 5% of pharma revenue, remained sluggish with no significant replacement cycle activity. This suggests a need for innovation and investment to stimulate growth in this area.
Forward-Looking Guidance
Looking ahead, Waters Corp has revised its full-year 2025 guidance, raising its constant currency sales growth projection to 5.5%-7.5% and increasing its non-GAAP EPS guidance to a range of $12.95 to $13.05. This forward-looking guidance underscores the company’s strategic initiatives to maintain its growth trajectory amid market challenges.
In conclusion, Waters Corp’s recent earnings call painted a positive picture of its financial health, driven by strong sales and recurring revenue growth. While challenges persist in certain segments, the company’s strategic focus on the pharma segment and the China market positions it well for future success. Investors and stakeholders can remain optimistic about Waters Corp’s ability to navigate market dynamics and deliver sustained growth.