Question-and-Answer SessionMinus the S. Obviously, 1 big topic that I want to get into, but let's start with the base business. You just reported another quarter high single digit instrumentation growth. TA was a little soft, but generally kind of better than expected across the board. What are some of the puts and takes out of the quarter in your view? And where are we in the instrument replacement cycle?Udit BatraPresident, CEO & Director I thought that was going to be somewhere down the line. But yes, we ...

Waters (WAT) FY 2025 Conference September 04, 2025 09:30 AM ET Company ParticipantsBrandon Couillard - Managing DirectorUdit Batra - President, CEO & DirectorBrandon CouillardGet started. Thanks, everybody, for sticking with us. Good morning. Welcome to the Wells Fargo Healthcare Conference. I'm Brandon Couillard, covering Life Science Tools and Diagnostics.It is a real treat to have Waters with us at the conference this year. Joining us for this conversation, CEO, Udi Batra. Udi, thanks for being here.Udit ...

Financial Data and Key Metrics Changes - In Q1 2025, sales grew 4% as reported and 7% in constant currency, reaching $662 million, at the high end of guidance [10][25][28] - Earnings per share (EPS) were $2.25 on a non-GAAP basis, reflecting low single-digit growth, and $2.03 on a GAAP basis [11][29] - Gross margin was 58.2%, and adjusted operating margin was 25.5% [29][36] Business Line Data and Key Metrics Changes - Instrument sales grew 11%, driven by mid-teens growth in liquid chromatography and mass spectrometry, particularly in pharma and industrial markets [11][27] - Recurring revenue increased mid-single digits, consistent with expectations for a quarter with two fewer days [11][28] - The chemistry consumables business saw MaxPeak Premier columns grow more than 30% [15] Market Data and Key Metrics Changes - Pharma sales grew 8%, industrial sales grew 6%, and academic and government sales grew 3% [25][26] - In China, sales grew 5%, with double-digit growth in industrial and academic/government applications [11][25] - India delivered revenue growth close to 20% in constant currency, driven by strong demand from generics manufacturers and CDMOs [18][61] Company Strategy and Development Direction - The company is focused on operational excellence, innovation, and maintaining close customer relationships to navigate a dynamic macro environment [8][21] - The strategy includes launching differentiated new products and investing in capabilities to enhance competitive positioning [8][21] - The company raised its full-year constant currency sales growth guidance to 5% to 7% due to better-than-expected Q1 performance [22][33] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in achieving 2025 objectives despite challenges from newly announced tariffs [9][38] - The company expects high single-digit earnings growth for the year, supported by strong sales volume and favorable foreign exchange movements [10][21] - Management noted that the pharma industry remains attractive, with strong innovation and customer spending [52][72] Other Important Information - The company established a cross-functional task force to assess tariff exposure and implement mitigation plans, limiting the net impact of tariffs to $10 million on adjusted operating margin for 2025 [24][36] - The company is actively evaluating M&A opportunities to enhance long-term shareholder value and may resume share repurchase programs in 2025 [31][99] Q&A Session Summary Question: Can you discuss the replacement cycle dynamics in pharma biotech? - Management noted strong double-digit growth in instruments, particularly in large pharma, with the replacement cycle well underway [45][46] Question: Have you seen any change in behavior related to tariffs from pharma customers? - Management indicated no significant change in behavior, with strong momentum continuing through the quarter [49][50] Question: What are your expectations for pricing this year? - Management expects 200 basis points of like-for-like pricing gains, with additional surcharges related to tariffs contributing another 50 basis points [56][57] Question: How do you view the growth in India? - Management expressed confidence in the sustainability of growth in India, driven by strong demand from generics manufacturers [60][61] Question: What is the impact of tariffs on your supply chain? - Management detailed actions taken to mitigate tariff impacts, including inventory adjustments and selective surcharges [64][66] Question: What are your expectations for China for the balance of the year? - Management anticipates low single-digit growth in China for the remainder of the year, despite a strong start [76][77] Question: What is the latest on the academic and government segment? - Management indicated that this segment is small, accounting for about 3% of total revenue, and has seen a significant decline forecasted for the rest of the year [86][89]