Waters (WAT) 7th Annual Evercore ISI HealthCONx Conference summary

Third quarter review and outlook

• Q3 saw 4% revenue growth with improvement across all customer segments and geographies; instruments returned to growth, especially LC after seven quarters of decline, driven by large pharma customers.

• Recurring revenues remained stable at mid to high single digits.

• Q4 guidance was raised to 6% constant currency revenue growth, maintaining a cautious approach with ramp assumptions similar to last year.

• Historical Q3 to Q4 ramp averages 22%, but last year was 15% due to a low budget flush; similar assumptions are used for this year.

Regional performance and stimulus impact

• China revenues showed sequential improvement: Q1 down 30%, Q2 down 14-15%, Q3 down mid-single digits, with orders stabilizing.

• Significant restructuring and localization in China position the company well for upcoming stimulus, with order activity already visible in some provinces.

• The current China stimulus is broader and longer in duration, targeting tier two/three academic and government institutions, and is about three times larger than previous programs.

• Expect low to mid-single digit growth in China without stimulus, with additional upside as stimulus is realized throughout fiscal 2025.

• India now represents 8% of sales, growing in the mid-20s, driven by generics for export and upcoming GLP-1 opportunities.

Tariffs, regulatory, and operational resilience

• NIH funding exposure is less than 1%, with minimal impact from U.S. election-related funding changes.

• China tariffs, even if increased, would have a low to mid-single digit million impact on EBIT, which can be offset; no significant impact from Canada or Mexico tariffs.

• Manufacturing flexibility in Europe allows for mitigation of potential tariff impacts by shifting production to the U.S. or Singapore.