Waters Corporation's Q3 Success: A Closer Look at Key Drivers

Waters Corporation (WAT) delivered impressive third-quarter (Q3) results, with sales and earnings per share (EPS) significantly exceeding expectations. The company's strong performance was driven by a combination of factors, including new product adoption, improved customer spending trends, and a return to growth in the instruments business. This article explores the key contributors to Waters Corporation's Q3 success.

One of the primary drivers of Waters Corporation's Q3 performance was the launch of new products, such as the Alliance iS and Xevo TQ Absolute. These products contributed to growth in both the instruments and recurring revenue segments. The Alliance iS, in particular, gained traction among major pharma customers, signaling a potential replacement cycle in the liquid chromatography market. Additionally, the company's competitive product portfolio and excellent operational performance contributed to the exceptional results, with non-GAAP EPS growth over 10% higher than the midpoint of guidance.

Geographically, Waters Corporation's strong performance was driven by robust sales growth across all reported regions, led by the Pharma & Industrial end markets. In Asia, sales grew 5% as reported and 6% in constant currency, while in Europe, sales increased 6% as reported and 4% in constant currency. Instrument system sales increased 1% as reported and in constant currency, and recurring revenues grew 6% as reported and 7% in constant currency. The company's strong commercial execution, competitive product portfolio, and excellent operational performance contributed to the exceptional results.



The Wyatt acquisition also played a role in Waters Corporation's Q3 financial results. The acquisition, which covered the first four-and-a-half months of the year, contributed 1.3% to the company's full-year reported sales. This acquisition added to the company's top line and helped drive its reported sales growth.

Expansion of PFAS and GLP-1 testing also contributed to Waters Corporation's Q3 growth. PFAS testing is expanding into food and consumer products, while GLP-1's growth is driven by its increasing share of prescription volumes and CapEx in the pharma sector. These testing services contributed 30 to 40 basis points of accretive growth to Waters Corporation's Q3 performance.

Waters Corporation's strong Q3 performance was a result of a combination of factors, including new product launches, regional sales growth, the Wyatt acquisition, and the expansion of PFAS and GLP-1 testing. The company's ability to capitalize on these growth opportunities, along with its strong commercial execution and competitive product portfolio, contributed to its exceptional third-quarter results. As Waters Corporation continues to innovate and adapt to market trends, investors can expect the company to maintain its strong performance in the coming quarters.

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