Waters (WAT) Q2 2024 earnings summary

Executive summary

• Q2 2024 sales were $709 million, down 4% year-over-year but above guidance, with strong operational execution and positive contributions from the Wyatt acquisition.

• Non-GAAP EPS was $2.63 and GAAP EPS was $2.40, both exceeding guidance despite FX and inflation headwinds.

• Recurring revenues grew 4-5%, while instrument system sales declined 14-17% due to weaker demand across all major regions.

• The Wyatt acquisition contributed 2% to Q2 sales, with synergies and integration progressing ahead of schedule.

• Management anticipates a gradual market improvement in the second half of 2024, with a return to growth expected.

Financial highlights

• Q2 2024 sales declined 4% year-over-year to $709 million; currency translation reduced sales by 2%, acquisitions added 2%.

• Non-GAAP EPS was $2.63; GAAP EPS was $2.40; gross margin was 59.3%; adjusted operating margin was 29.2%.

• Free cash flow for Q2 was $73.2 million, with H1 2024 free cash flow at $239.7 million.

• Net cash from operating activities increased to $317 million in H1 2024; net debt reduced by $350 million in H1 2024.

• Q2 2024 net income was $142.7 million, down 5% year-over-year.

Outlook and guidance

• Full-year 2024 organic constant currency sales growth expected between -2% and -0.5%; reported sales growth between -2.2% and -0.7%.

• Full-year 2024 non-GAAP EPS guidance is $11.55 to $11.65; Q3 2024 non-GAAP EPS guidance is $2.60 to $2.70.

• Q3 2024 constant currency sales growth expected between +1% and +3%; reported sales growth between -0.5% and +1.5%.

• Currency translation expected to negatively impact full-year sales by 1.5-3%.

• Customers remain cautious with capital spending, delaying instrument purchases.