Waters (WAT) Q3 2024 earnings summary

Executive summary

• Q3 2024 sales reached $740 million, up 4% year-over-year, surpassing guidance with growth across all regions and end markets, led by Pharma and Industrial sectors.

• GAAP EPS was $2.71 and non-GAAP EPS was $2.93, both significantly above guidance, driven by strong operational performance and favorable market conditions.

• Instruments returned to growth after several quarters of decline, with recurring revenue growing 7% in constant currency and new product launches supporting future positioning.

• The Wyatt acquisition contributed to sales growth and expanded the product portfolio in large molecule applications.

• Operating income rose 18% in Q3 2024, primarily due to higher sales volume and cost savings from workforce reductions.

Financial highlights

• Q3 2024 revenues were $740.3 million, up 4% year-over-year; non-GAAP EPS was $2.93, GAAP EPS was $2.71, and net income was $161.5 million, up 20% year-over-year.

• Gross margin improved to 59.3% in Q3 2024; adjusted operating margin was 30.8%.

• Free cash flow for Q3 was $179 million; year-to-date free cash flow was $556 million, 27% of sales.

• Cash, cash equivalents, and investments totaled $331 million as of September 28, 2024.

• Weighted-average diluted shares outstanding: 59.5 million in Q3 2024.

Outlook and guidance

• Full-year 2024 organic constant currency sales growth expected between -0.9% and -0.3%; reported sales growth between -0.8% and -0.2% due to FX and M&A impacts.

• Full-year 2024 non-GAAP EPS guidance raised to $11.67–$11.87; Q4 2024 non-GAAP EPS guidance is $3.90–$4.10.

• Q4 2024 constant currency sales growth expected at 5–7%, with reported growth of 3.3–5.3%.

• Gross margin for the full year expected at 59.8%, a 20 basis point expansion.

• Foreign currency translation is expected to negatively impact sales and gross profit for the remainder of 2024.