Waters' Q1 2025: Unraveling Key Contradictions in Growth Projections and Revenue Expectations

Instrument growth projections, PFAS testing growth, instrument growth expectations, pricing strategy and tariff impact, and U.S. academic revenue expectations are the key contradictions discussed in Waters' latest 2025Q1 earnings call.



Strong First Quarter Performance:
- Waters Corporation reported sales growth of 4% as reported and 7% in constant currency for the first quarter of 2025.
- Instrument sales grew by 11%, led by mid-teens growth in both liquid chromatography and mass spectrometry.
- This performance was driven by strong commercial execution, a resilient replacement cycle, and adoption of new products.

Tariff Mitigation and Financial Positioning:
- Waters implemented a cross-functional task force to mitigate the impact of newly announced tariffs, with an expected net impact of $10 million on the 2025 adjusted operating margin.
- The company has a strong balance sheet, with a net debt-to-EBITDA ratio of roughly 1x, supporting its ability to invest in growth and potentially resume share repurchases.

Product Innovation and Market Growth:
- The Alliance IS HPLC system saw more than triple the year-over-year sales growth, driven by replacement and greenfield opportunities.
- The Xevo TQ Absolute system achieved sales growth of over 50%, driven by high-volume testing applications.
- These innovations, along with strong performance in emerging high-volume testing drivers like GLP-1 and PFAS, contributed significantly to the company's growth.

Regional Performance and Stimulus Impact:
- Sales in China grew by 5%, led by double-digit growth in industrial and academic applications.
- China's growth benefited from stimulus-related opportunities in the academic and government segment.
- The company maintains a cautious outlook for China, assuming low single-digit growth for the rest of the year.