Q3 2023 Earnings Summary
Reported on Jan 4, 2025 (Before Market Open)
Pre-Earnings Price$252.15Last close (Nov 6, 2023)
Post-Earnings Price$241.95Open (Nov 7, 2023)
Price Change
$-10.20(-4.05%)
- Waters Corporation achieved a strong adjusted operating margin of 31.5% in Q3 2023, expanding by 380 basis points year-over-year, demonstrating resilience amid challenging macroeconomic conditions through effective cost management and productivity gains.
- The successful integration and performance of Wyatt Technology exceeded expectations, contributing 4% growth in Q3 and accelerating expansion into high-growth adjacencies, enhancing Waters' growth prospects.
- Significant customer adoption of innovative new products, especially in the pharma segment, is driving growth outside of China, with mid-single-digit increases. Products like the Alliance iS HPLC system and MaxPeak Premier Columns are gaining traction, supporting future growth prospects.
- Significant decline in China sales: Waters Corporation expects sales in China to decline approximately 25% for the full year, worse than prior expectations of a low double-digit decline . This is due to factors such as overcapacity in CDMOs, geopolitical tensions, and an anti-corruption campaign affecting branded generics . Consequently, China's contribution to overall sales is expected to decrease from 19–20% to about 12–13% .
- Decrease in global instrument sales: Instrument sales dropped low teens globally, with similar declines across liquid chromatography (LC), mass spectrometry (MS), and thermal analysis (TA) instruments . Even excluding China, LC sales were flat, and MS sales declined about 10% . This indicates a potential slowdown in demand for Waters' key product lines.
- Workforce reduction due to lower volumes: Waters implemented a workforce reduction of about 5%, resulting in $27 million in severance expenses . While this is expected to yield annualized savings of $40 million, it reflects challenges in maintaining revenue levels and may impact future growth .