Executive Summary

Waters delivered a high‑quality start to FY25: Q1 revenue $661.7M (+4% reported, +7% cc) and non‑GAAP EPS $2.25 landed at the high end of guidance, with double‑digit instrument growth and solid pharma/industrial demand .
Results modestly beat S&P Global consensus: EPS $2.25 vs $2.22* and revenue $661.7M vs $655.6M*, driven by mid‑teens LC/MS growth and PFAS testing strength; orders grew faster than sales, underscoring momentum .
Management raised FY25 guidance: cc sales growth to +5%–+7% and non‑GAAP EPS to $12.75–$13.05, with tariff headwinds ($45M gross) largely mitigated to ~$10M net via surcharges, cost actions, and FX tailwinds .
Catalysts: elevated instrument replacement cycle, PFAS testing tailwinds (PFAS +90% y/y), India generics demand (~20% cc growth), and Empower–Wyatt MALS integration expanding biologics QC workflows .

What Went Well and What Went Wrong

What Went Well

Double‑digit instrument growth; LC/MS grew mid‑teens, with Alliance iS HPLC sales more than tripling y/y and Xevo TQ Absolute sales up >50%: “Our first‑quarter results exceeded expectations, driven by double‑digit instrument growth” and “Alliance iS … more than tripled …; Xevo TQ Absolute … sales growth of over 50%” .
PFAS secular tailwind: PFAS‑related testing sales grew over 90%, with EPA regulation momentum; management stressed TQ Absolute’s sensitivity positioning Waters to capture rising demand .
Estimates beat and guidance raise: non‑GAAP EPS $2.25 (high end) and revenue at high end of range, with FY25 cc sales growth and non‑GAAP EPS ranges raised .

What Went Wrong

FX headwinds: non‑GAAP EPS growth of ~2% reported included ~5 ppts of FX headwind (company commentary in release) .
Europe flat to slightly down and TA Instruments soft on timing/lumpiness (TA −1% reported, +1% cc); mgmt cited US TA order timing .
U.S. Academic & Government derisked: proactively haircut ~$15M for rest of year (assumed −20%), a ~50 bps headwind to FY sales growth, albeit offset by ~50 bps tariff‑related pricing tailwind .

Financial Results

Key P&L vs Prior Quarters (oldest → newest)

Metric	Q3 2024	Q4 2024	Q1 2025
Revenue ($M)	$740.3	$872.7	$661.7
GAAP EPS	$2.71	$3.88	$2.03
Non‑GAAP EPS	$2.93	$4.10	$2.25
Gross Margin %	59.3% (calc from $740.3M, $301.7M COGS)	60.0% (calc from $872.7M, $348.5M COGS)	58.2% (management)
Adj. Operating Margin %	30.8%	35.5%	25.5%

Note: Gross margin for Q3/Q4 computed from reported net sales and cost of sales; Q1 gross margin cited by management .

Actual vs S&P Global Consensus – Q1 2025

Metric	Actual	Consensus	Surprise
Revenue ($M)	$661.7	$655.6*	+$6.1 (+0.9%); bold beat
Non‑GAAP EPS	$2.25	$2.22*	+$0.03 (+1.2%); bold beat

Values with asterisk (*) retrieved from S&P Global.

Product, Geography, and Market Mix – Q1 2025 (vs Q1 2024)

Category	Q1 2025 ($000s)	Q1 2024 ($000s)	Reported Growth	Const‑Currency Growth
Instruments	262,893	241,944	9%	11%
Service	261,175	260,688	0%	3%
Chemistry	137,637	134,207	3%	5%
Asia	220,776	207,559	6%	13%
Americas	255,537	241,171	6%	6%
Europe	185,392	188,109	−1%	1%
Pharma	391,051	374,207	5%	8%
Industrial	203,365	195,334	4%	6%
Academic & Government	67,289	67,298	0%	3%

KPIs and Balance Sheet/Cash Flow Highlights

Orders growth exceeded sales growth; non‑GAAP gross margin 58.2%; adjusted operating margin 25.5% .
Free cash flow $233.8M (non‑GAAP) on CFO $259.6M and capex/software $(25.7)M .
Net debt reduction ~$170M in Q1; net debt/EBITDA ~1x; strong liquidity to pursue M&A and potentially resume buybacks .
Cash and equivalents $382.9M; Notes payable and debt $1.457B as of Mar 29, 2025 .

Non‑GAAP Adjustments – Q1 2025

Adjustments include purchased intangibles amortization ($0.15 EPS), ERP implementation ($0.03), and Wyatt retention bonus ($0.03), among others .

Guidance Changes

Metric	Period	Previous Guidance (as of Q4’24 release)	Current Guidance (Q1’25)	Change
Sales Growth (cc)	FY 2025	+4.5% to +7.0%	+5.0% to +7.0%	Raised low end
Sales Growth (reported)	FY 2025	+2.5% to +5.0%	+4.0% to +6.0%	Raised
Non‑GAAP EPS	FY 2025	$12.70 to $13.00	$12.75 to $13.05	Raised
Gross Margin (approx)	FY 2025	N/A	~59% (approximate)	New detail
Adj. Operating Margin (approx)	FY 2025	~31% (implied 2024 level)	~31% (approximate)	Maintained
Net Interest Expense	FY 2025	N/A	~ $40M	New detail
Tax Rate	FY 2025	~16.5% (prior practice)	~16.5%	Maintained
Share Count (diluted avg)	FY 2025	~59.7M	~59.7M	Maintained
Sales Growth (cc)	Q2 2025	N/A	+5.0% to +7.0%	New
Non‑GAAP EPS	Q2 2025	N/A	$2.88 to $2.98	New

Tariffs and U.S. policy offset: ~$45M gross tariff exposure largely mitigated to ~$10M net via ~$15M selective surcharges, ~$14M manufacturing cost actions, and ~$6M discretionary spend; most gross impact in 2H25; FX tailwinds offset residual EPS impact .

Earnings Call Themes & Trends

Topic	Previous Mentions (Q3’24, Q4’24)	Current Period (Q1’25)	Trend
Instrument replacement cycle	Q3: “Instruments returned to growth” ; Q4: Instruments +8% cc	Instruments +11% (cc); LC/MS mid‑teens; orders > sales	Improving
PFAS testing	Q3: Industrial +7% cc; LC/MS momentum	PFAS testing +90% y/y; EPA actions boost demand; TQ Absolute sensitivity advantage	Accelerating
China/stimulus	Q3 Asia +6% cc ; Q4 Asia +9% cc	China +5%; A&G double‑digit on stimulus; prudently assume low‑single‑digit for rest of year	Stable/modestly positive with caution
Pricing & tariff surcharges	Not highlighted in prior PRs	~200 bps like‑for‑like pricing plus ~50 bps surcharge from tariffs; 80–90% customer acceptance	New positive lever
India generics	Not highlighted in prior PRs	~20% cc growth; adds ~70–100 bps annual growth over time	Strong/consistent
TA Instruments	Q3 TA +3% ; Q4 TA +7%	TA −1% reported (+1% cc); battery testing strong; noted lumpiness	Mixed/lumpy
Wyatt/Empower biologics QC	Wyatt accretion noted in FY24	Empower now supports Wyatt MALS/RI for QC; saves validation time; expands CQAs	Strategic expansion

Management Commentary

“Double‑digit instrument growth drove our performance … mid‑teens sales growth in both liquid chromatography and mass spectrometry” .
“PFAS‑related testing sales grew over 90% in the first quarter … LC‑MS has become the dominant workhorse technique for regulated analysis of these compounds” .
“We are raising our full year … adjusted EPS guidance to a range of $12.75 to $13.05 … even after accounting for newly announced tariffs” .
“Orders growth exceeded sales growth … Gross margin 58.2% and adjusted operating margin 25.5%” .
“Net tariff impact … limited to a modest $10 million on our adjusted operating margin … roughly $15 million surcharges, $14 million manufacturing cost actions, $6 million discretionary spend” .

Q&A Highlights

Replacement cycle and pharma mix: Large pharma, generics, and CDMOs (~75% of pharma) all grew double digits; no evidence of tariff‑related order pull‑forward .
Pricing and surcharge acceptance: ~200 bps like‑for‑like pricing plus ~~50 bps tariff surcharges (~~$15M); 80–90% customer acceptance; minimal pushback .
Academic & Government derisking: U.S. A&G ~3% of revenue; assuming −20% for rest of year (−$15M) to prudently derisk .
Supply chain/tariff mitigation: $45M gross impact concentrated in 2H25; stockpiling raised Q2 COGS mix; cost actions “landing” to offset in H2 and beyond .
TA Instruments/services: TA lumpiness; battery testing strong; service growth impacted by two fewer days and lower third‑party parts purchases .

Estimates Context

Q1 2025 vs S&P Global consensus: EPS $2.25 vs $2.22*; revenue $661.7M vs $655.6M* — modest beats on both metrics . Values with asterisk (*) retrieved from S&P Global.
Street trajectory: Management’s raised FY25 guide (sales and EPS) suggests upward estimate revisions, aided by pricing, PFAS/India drivers, and tariff mitigation .

Key Takeaways for Investors

Cycle‑ and secular‑driven instrument strength: Replacement cycle plus PFAS/GLP‑1/India catalysts underpin high‑quality order momentum (orders > sales) and support sustained instrument outperformance .
Pricing power intact: ~200 bps like‑for‑like pricing plus ~50 bps surcharge acceptance provides a durable lever against FX/tariffs, supporting margin resilience .
Tariff risk largely neutralized for EPS: ~$45M gross impact mitigated to ~$10M net; FX tailwinds and surcharges offset EPS — reduces a key macro overhang .
Recurring revenue steady despite fewer days; service initiatives (plan attachment, e‑commerce) and new consumables (bioseparations columns) buttress base .
Biologics QC expansion: Empower–Wyatt MALS integration broadens CQAs and compresses validation cycles — a strategic wedge into regulated biologics QC .
Balance sheet optionality: FCF $233.8M in Q1 and net leverage ~1x reopen capacity for targeted M&A and potential buyback resumption in 2025 .
Near‑term watch items: Europe softness and TA lumpiness; U.S. A&G derisking; monitor Q2 gross margin mix (inventory/tariff timing) and the stick rate of surcharges .

Citations

Q1’25 8‑K and press release details: revenue/EPS, guidance, segment/geography mix, non‑GAAP reconciliations, cash flow and balance sheet .
Q1’25 call commentary: orders > sales, margins, pricing/surcharges, PFAS +90%, India ~20%, tariff mitigation, services/TA color .
Prior quarters for trend: Q3’24 and Q4’24 press releases (revenue/EPS, segment trends) .
Strategic press releases: Empower–Wyatt MALS integration (biologics QC) and TA launches (Apex 1; Smart‑Seal Pans) .

S&P Global estimate data marked with asterisk (*). Values retrieved from S&P Global.

WATERS CORP /DE/ (WAT)·Q1 2025 Earnings Summary