|
|
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXHANGE ACT OF 1934
|
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TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
|
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(State or other jurisdiction of
incorporation or organization)
|
(I.R.S. Employer
Identification No.)
|
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|
Title of each class
|
|
Trading Symbol(s)
|
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Name of each exchange on which registered
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☒ | Accelerated filer | ☐ | |||
|
Non-accelerated
filer
|
☐ | Smaller reporting company |
|
|||
| Emerging growth company |
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|||||
WATERS CORPORATION AND SUBSIDIARIES
QUARTERLY REPORT ON FORM 10-Q
INDEX
| Page | ||||||||
|
PART I |
FINANCIAL INFORMATION | |||||||
|
|
Item 1. |
Financial Statements | 3 | |||||
| Consolidated Balance Sheets (unaudited) as of March 29, 2025 and December 31, 2024 | 3 | |||||||
| 4 | ||||||||
| 5 | ||||||||
| 6 | ||||||||
| 7 | ||||||||
| Condensed Notes to Consolidated Financial Statements (unaudited) | 8 | |||||||
|
Item 2. |
Management’s Discussion and Analysis of Financial Condition and Results of Operations | 22 | ||||||
|
Item 3. |
Quantitative and Qualitative Disclosures About Market Risk | 30 | ||||||
|
Item 4. |
Controls and Procedures | 31 | ||||||
|
PART II |
OTHER INFORMATION | |||||||
|
Item 1. |
Legal Proceedings | 31 | ||||||
|
Item 1A. |
Risk Factors | 31 | ||||||
|
Item 2. |
Unregistered Sales of Equity Securities and Use of Proceeds | 31 | ||||||
|
Item 5. |
Other Information | 32 | ||||||
|
Item 6. |
Exhibits | 33 | ||||||
| Signature | 34 | |||||||
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March 29, 2025
|
|
|
December 31, 2024
|
|
||
|
|
|
(In thousands, except per share data)
|
|
|||||
|
ASSETS
|
|
|
|
|
||||
|
Current assets:
|
|
|
|
|
|
|
|
|
|
Cash and cash equivalents
|
$ |
|
$ |
|
||||
|
Accounts receivable, net
|
|
|
||||||
|
Inventories
|
|
|
||||||
|
Other current assets
|
|
|
||||||
|
|
|
|
|
|||||
|
Total current assets
|
|
|
||||||
|
Property, plant and equipment, net
|
|
|
||||||
|
Intangible assets, net
|
|
|
||||||
|
Goodwill
|
|
|
||||||
|
Operating lease assets
|
|
|
||||||
|
Other assets
|
|
|
||||||
|
|
|
|
|
|||||
|
Total assets
|
$ |
|
$ |
|
||||
|
|
|
|
|
|||||
|
LIABILITIES AND STOCKHOLDERS’ EQUITY
|
||||||||
|
Current liabilities:
|
||||||||
|
Notes payable
|
$ |
|
$ |
|
||||
|
Accounts payable
|
|
|
||||||
|
Accrued employee compensation
|
|
|
||||||
|
Deferred revenue and customer advances
|
|
|
||||||
|
Current operating lease liabilities
|
|
|
||||||
|
Accrued income taxes
|
|
|
||||||
|
Accrued warranty
|
|
|
||||||
|
Other current liabilities
|
|
|
||||||
|
|
|
|
|
|||||
|
Total current liabilities
|
|
|
||||||
|
Long-term liabilities:
|
||||||||
|
Long-term debt
|
|
|
||||||
|
Long-term portion of retirement benefits
|
|
|
||||||
|
Long-term income tax liabilities
|
|
|
||||||
|
Long-term operating lease liabilities
|
|
|
||||||
|
Other long-term liabilities
|
|
|
||||||
|
|
|
|
|
|||||
|
Total long-term liabilities
|
|
|
||||||
|
|
|
|
|
|||||
|
Total liabilities
|
|
|
||||||
|
Commitments and contingencies (Notes
5
,
6
and
8
)
|
|
|
||||||
|
Stockholders’ equity:
|
||||||||
|
Preferred stock,
par
value $
|
|
|
||||||
|
Common stock, par value $
|
|
|
||||||
|
Additional
paid-in
capital
|
|
|
||||||
|
Retained earnings
|
|
|
||||||
|
Treasury stock, at cost,
|
(
|
)
|
(
|
) | ||||
|
Accumulated other comprehensive loss
|
(
|
) |
(
|
) | ||||
|
|
|
|
|
|||||
|
Total stockholders’ equity
|
|
|
||||||
|
|
|
|
|
|||||
|
Total liabilities and stockholders’ equity
|
$ |
|
$ |
|
||||
|
|
|
|
|
|||||
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended
|
|
|||||
|
|
|
March 29, 2025
|
|
|
March 30, 2024
|
|
||
|
|
|
(In thousands, except per share data)
|
|
|||||
|
Revenues:
|
|
|
|
|
|
|
|
|
|
Product sales
|
$ |
|
$ |
|
||||
|
Service sales
|
|
|
||||||
|
|
|
|
|
|||||
|
Total net sales
|
|
|
||||||
|
Costs and operating expenses:
|
||||||||
|
Cost of product sales
|
|
|
||||||
|
Cost of service sales
|
|
|
||||||
|
Selling and administrative expenses
|
|
|
||||||
|
Research and development expenses
|
|
|
||||||
|
Purchased intangibles amortization
|
|
|
||||||
|
Litigation provision
|
|
|
||||||
|
|
|
|
|
|||||
|
Total costs and operating expenses
|
|
|
||||||
|
|
|
|
|
|||||
|
Operating income
|
|
|
||||||
|
Other income, net
|
|
|
|
|
|
|
|
|
|
Interest expense
|
|
|
(
|
)
|
|
|
(
|
)
|
|
Interest income
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||
|
Income before income taxes
|
|
|
||||||
|
Provision for income taxes
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||
|
Net income
|
$ |
|
$ |
|
||||
|
|
|
|
|
|||||
|
Net income per basic common share
|
|
$
|
|
|
|
$
|
|
|
|
Weighted-average number of basic common shares
|
|
|
|
|
|
|
|
|
|
Net income per diluted common share
|
|
$
|
|
|
|
$
|
|
|
|
Weighted-average number of diluted common shares and equivalents
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended
|
|
|||||
|
|
|
March 29, 2025
|
|
|
March 30, 2024
|
|
||
|
|
|
(In thousands)
|
|
|||||
|
Net income
|
|
$
|
|
|
|
$
|
|
|
|
Other comprehensive income (loss):
|
|
|
||||||
|
Foreign currency translation
|
|
(
|
) | |||||
|
Unrealized (losses) gains on derivative instruments before reclassifications
|
(
|
) |
|
|||||
|
Amounts reclassified to interest income
|
(
|
) |
(
|
) | ||||
|
|
|
|
|
|||||
|
Unrealized (losses) gains on derivative instruments before income taxes
|
(
|
) |
|
|||||
|
Income tax benefit (expense)
|
|
(
|
) | |||||
|
|
|
|
|
|||||
|
Unrealized (losses) gains on derivative instruments, net of tax
|
(
|
) |
|
|||||
|
Retirement liability adjustment before reclassifications
|
|
|
||||||
|
Amounts reclassified to other income, net
|
|
(
|
) | |||||
|
|
|
|
|
|||||
|
Retirement liability adjustment before income taxes
|
|
|
||||||
|
Income tax expense
|
(
|
)
|
(
|
) | ||||
|
|
|
|
|
|||||
|
Retirement liability adjustment, net of tax
|
|
|
||||||
|
Other comprehensive income (loss)
|
|
(
|
) | |||||
|
|
|
|
|
|||||
|
Comprehensive income
|
|
$
|
|
|
|
$
|
|
|
|
|
|
|
|
|||||
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended
|
|
|||||
|
|
|
March 29, 2025
|
|
|
March 30, 2024
|
|
||
|
|
|
(In thousands)
|
|
|||||
|
Cash flows from operating activities:
|
|
|
|
|
||||
|
Net income
|
$ |
|
$ |
|
||||
|
Adjustments to reconcile net income to net cash provided by operating activities:
|
||||||||
|
Stock-based compensation
|
|
|
||||||
|
Deferred income taxes
|
|
|
||||||
|
Depreciation
|
|
|
||||||
|
Amortization of intangibles
|
|
|
||||||
|
Change in operating assets and liabilities:
|
||||||||
|
Decrease in accounts receivable
|
|
|
||||||
|
Increase in inventories
|
(
|
) |
(
|
) | ||||
|
Increase in other current assets
|
(
|
) |
(
|
) | ||||
|
Decrease in other assets
|
|
|
||||||
|
Decrease in accounts payable and other current liabilities
|
(
|
) |
(
|
) | ||||
|
Increase in deferred revenue and customer advances
|
|
|
||||||
|
Increase (decrease) in other liabilities
|
|
(
|
) | |||||
|
|
|
|
|
|||||
|
Net cash provided by operating activities
|
|
|
||||||
|
Cash flows from investing activities:
|
||||||||
|
Additions to property, plant, equipment and software capitalization
|
(
|
) |
(
|
) | ||||
|
Investments in unaffiliated companies, net
|
(
|
) |
(
|
) | ||||
|
Purchases of investments
|
|
(
|
) | |||||
|
Maturities and sales of investments
|
|
|
||||||
|
|
|
|
|
|||||
|
Net cash used in investing activities
|
(
|
) |
(
|
) | ||||
|
Cash flows from financing activities:
|
||||||||
|
Payments on debt
|
(
|
) |
(
|
) | ||||
|
Proceeds from stock plans
|
|
|
||||||
|
Purchases of treasury shares
|
(
|
) |
(
|
) | ||||
|
Proceeds from derivative contracts
|
|
|
||||||
|
|
|
|
|
|||||
|
Net cash used in financing activities
|
(
|
)
|
(
|
) | ||||
|
Effect of exchange rate changes on cash and cash equivalents
|
|
|
(
|
)
|
|
|
|
|
|
|
|
|
|
|||||
|
Increase (decrease) in cash and cash equivalents
|
|
(
|
) | |||||
|
Cash and cash equivalents at beginning of period
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||
|
Cash and cash equivalents at end of period
|
$ |
|
$ |
|
||||
|
|
|
|
|
|||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Number
of Common Shares |
|
|
Common
Stock |
|
|
Additional
Paid-In
Capital |
|
|
Retained
Earnings |
|
|
Treasury
Stock
|
|
|
Accumulated
Other Comprehensive Loss |
|
|
Total
Stockholders’ Equity |
|
|||||||
|
Balance December 31, 2023
|
|
$ |
|
$ |
|
$ |
|
$ |
(
|
) | $ |
(
|
) | $ |
|
|||||||||||||
|
Net income
|
— | — | — |
|
— | — |
|
|||||||||||||||||||||
|
Other comprehensive loss
|
— | — | — | — | — |
(
|
) |
(
|
) | |||||||||||||||||||
|
Issuance of common stock for employees:
|
||||||||||||||||||||||||||||
|
Employee Stock Purchase Plan
|
|
— |
|
— | — | — |
|
|||||||||||||||||||||
|
Stock options exercised
|
|
|
|
— | — | — |
|
|||||||||||||||||||||
|
Treasury stock
|
— | — | — | — |
(
|
) | — |
(
|
) | |||||||||||||||||||
|
Stock-based compensation
|
|
|
|
— | — | — |
|
|||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||
|
Balance March 30, 2024
|
|
$ |
|
$ |
|
$ |
|
$ |
(
|
) | $ |
(
|
) | $ |
|
|||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||
|
Number
of Common Shares |
Common
Stock |
Additional
Paid-In
Capital |
Retained
Earnings |
Treasury
Stock
|
Accumulated
Other Comprehensive Loss |
Total
Stockholders’ Equity |
||||||||||||||||||||||
|
Balance December 31, 2024
|
|
$ |
|
$ |
|
$ |
|
$ |
(
|
) | $ |
(
|
) | $ |
|
|||||||||||||
|
Net income
|
— | — | — |
|
— | — |
|
|||||||||||||||||||||
|
Other comprehensive income
|
— | — | — | — | — |
|
|
|||||||||||||||||||||
|
Issuance of common stock for employees:
|
||||||||||||||||||||||||||||
|
Employee Stock Purchase Plan
|
|
— |
|
— | — | — |
|
|||||||||||||||||||||
|
Stock options exercised
|
|
|
|
— | — | — |
|
|||||||||||||||||||||
|
Treasury stock
|
— | — | — | — |
(
|
) | — |
(
|
) | |||||||||||||||||||
|
Stock-based compensation
|
|
|
|
— | — | — |
|
|||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||
|
Balance March 29, 2025
|
|
$ |
|
$ |
|
$ |
|
$ |
(
|
) | $ |
(
|
) | $ |
|
|||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance at
Beginning of Period |
|
|
Additions
|
|
|
Deductions
and Other |
|
|
Balance at End
of Period |
|
||||
|
Allowance for Credit Losses
|
||||||||||||||||
|
March 29, 2025
|
$ |
|
$ |
|
$ |
(
|
) | $ |
|
|||||||
|
March 30, 2024
|
$ |
|
$ |
|
$ |
(
|
) | $ |
|
|||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total at
March 29, 2025 |
|
|
Quoted Prices
in Active Markets for Identical Assets (Level 1) |
|
|
Significant
Other Observable Inputs (Level 2) |
|
|
Significant
Unobservable Inputs (Level 3) |
|
||||
|
Assets:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Waters 401(k) Restoration Plan assets
|
$ |
|
$ |
|
$ | — | $ | — | ||||||||
|
Foreign currency exchange contracts
|
|
— |
|
— | ||||||||||||
|
Interest rate cross-currency swap agreements
|
|
— |
|
— | ||||||||||||
|
Interest rate swap cash flow hedge
|
|
— |
|
— | ||||||||||||
|
|
|
|
|
|
|
|
|
|||||||||
|
Total
|
$ |
|
$ |
|
$ |
|
$ |
|
||||||||
|
|
|
|
|
|
|
|
|
|||||||||
|
Liabilities:
|
||||||||||||||||
|
Foreign currency exchange contracts
|
$ |
|
$ | — | $ |
|
$ | — | ||||||||
|
Interest rate cross-currency swap agreements
|
|
— |
|
— | ||||||||||||
|
Interest rate swap cash flow hedge
|
|
— |
|
— | ||||||||||||
|
|
|
|
|
|
|
|
|
|||||||||
|
Total
|
$ |
|
$ |
|
$ |
|
$ |
|
||||||||
|
|
|
|
|
|
|
|
|
|||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total at
December 31, 2024 |
|
|
Quoted Prices
in Active Markets for Identical Assets
(Level 1)
|
|
|
Significant
Other Observable Inputs (Level 2) |
|
|
Significant
Unobservable Inputs
(Level 3)
|
|
||||
|
Assets:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Waters 401(k) Restoration Plan assets
|
$ |
|
$ |
|
$ | — | $ | — | ||||||||
|
Foreign currency exchange contracts
|
|
— |
|
— | ||||||||||||
|
Interest rate cross-currency swap agreements
|
|
— |
|
— | ||||||||||||
|
Interest rate swap cash flow hedge
|
|
— |
|
— | ||||||||||||
|
|
|
|
|
|
|
|
|
|||||||||
|
Total
|
$ |
|
$ |
|
$ |
|
$ |
|
||||||||
|
|
|
|
|
|
|
|
|
|||||||||
|
Liabilities:
|
||||||||||||||||
|
Foreign currency exchange contracts
|
$ |
|
$ | — | $ |
|
$ | — | ||||||||
|
Interest rate swap cash flow hedge
|
|
— |
|
— | ||||||||||||
|
|
|
|
|
|
|
|
|
|||||||||
|
Total
|
$ |
|
$ |
|
$ |
|
$ |
|
||||||||
|
|
|
|
|
|
|
|
|
|||||||||
|
March 29, 2025
|
December 31, 2024
|
|||||||||||||||
|
Notional Value
|
Fair Value
|
Notional Value
|
Fair Value
|
|||||||||||||
|
Foreign currency exchange contracts:
|
||||||||||||||||
|
Other current assets
|
$ |
|
$ |
|
$ |
|
$ |
|
||||||||
|
Other current liabilities
|
$ |
|
$ |
|
$ |
|
$ |
|
||||||||
|
Interest rate cross-currency swap agreements:
|
||||||||||||||||
|
Other assets
|
$ |
|
$ |
|
$ |
|
$ |
|
||||||||
|
Other liabilities
|
$ |
|
$ |
|
$ | — | $ | — | ||||||||
|
Accumulated other comprehensive income
|
$ |
|
$ |
|
||||||||||||
|
Interest rate swap cash flow hedges:
|
||||||||||||||||
|
Other assets
|
$ |
|
$ |
|
$ |
|
$ |
|
||||||||
|
Other liabilities
|
$ |
|
$ |
|
$ |
|
$ |
|
||||||||
|
Accumulated other comprehensive loss
|
$ |
(
|
)
|
$ |
(
|
) | ||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Financial
Statement
Classification
|
|
Three Months
Ended
|
|
|||||
|
|
|
March 29, 2025
|
|
|
March 30, 2024
|
|
||||
|
|
||||||||||
|
Foreign currency exchange contracts:
|
|
|
|
|
|
|
|
|
||
|
Realized (losses) gains on closed contracts
|
Cost of sales | $ |
(
|
) | $ |
|
||||
|
Unrealized losses on open contracts
|
Cost of sales |
(
|
) |
(
|
) | |||||
|
|
|
|
|
|||||||
|
Cumulative net
pre-tax
(losses) gains
|
Cost of sales | $ |
(
|
) | $ |
|
||||
|
|
|
|
|
|||||||
|
Interest rate cross-currency swap agreements:
|
||||||||||
|
Interest earned
|
Interest income | $ |
|
$ |
|
|||||
|
Unrealized (losses) gains on contracts, net
|
Accumulated other comprehensive loss | $ |
(
|
) | $ |
|
||||
|
Interest rate swap cash flow hedges:
|
||||||||||
|
Interest earned
|
Interest income | $ |
|
$ |
|
|||||
|
Unrealized (losses) gains on open contracts
|
Accumulated other comprehensive loss | $ |
(
|
) | $ |
|
||||
|
Balance at
Beginning of Period |
Accruals for
Warranties |
Settlements
Made |
Balance at
End of Period |
|||||||||||||
|
Accrued warranty liability:
|
||||||||||||||||
|
March 29, 2025
|
$ |
|
$ |
|
$ |
(
|
) | $ |
|
|||||||
|
March 30, 2024
|
$ |
|
$ |
|
$ |
(
|
) | $ |
|
|||||||
|
March 29, 2025
|
March 30, 2024
|
|||||||
|
Balance at the beginning of the period
|
$ |
|
$ |
|
||||
|
Recognition of revenue included in balance at beginning of the period
|
(
|
) |
(
|
) | ||||
|
Revenue deferred during the period, net of revenue recognized
|
|
|
||||||
|
|
|
|
|
|||||
|
Balance at the end of the period
|
$ |
|
$ |
|
||||
|
|
|
|
|
|||||
|
March 29, 2025
|
||||
|
Unfulfilled performance obligations expected to be recognized in:
|
||||
|
|
$ |
|
||
|
|
|
|||
|
|
|
|||
|
|
|
|||
|
Total
|
$ |
|
||
|
|
|
|||
|
March 29, 2025
|
December 31, 2024
|
|||||||
|
Raw materials
|
$ |
|
$ |
|
||||
|
Work in progress
|
|
|
||||||
|
Finished goods
|
|
|
||||||
|
|
|
|
|
|||||
|
Total inventories
|
$ |
|
$ |
|
||||
|
|
|
|
|
|||||
|
March 29, 2025
|
December 31, 2024
|
|||||||||||||||||||||||
|
Gross
Carrying Amount |
Accumulated
Amortization |
Weighted-
Average Amortization Period |
Gross
Carrying Amount |
Accumulated
Amortization |
Weighted-
Average Amortization Period |
|||||||||||||||||||
|
Capitalized software
|
$ |
|
$ |
|
|
$ |
|
$ |
|
|
||||||||||||||
|
Purchased intangibles
|
|
|
|
|
|
|
||||||||||||||||||
|
Trademarks
|
|
|
— |
|
|
— | ||||||||||||||||||
|
Licenses
|
|
|
|
|
|
|
||||||||||||||||||
|
Patents and other intangibles
|
|
|
|
|
|
|
||||||||||||||||||
|
|
|
|
|
|
|
|
|
|||||||||||||||||
|
Total
|
$ |
|
$ |
|
|
$ |
|
$ |
|
|
||||||||||||||
|
|
|
|
|
|
|
|
|
|||||||||||||||||
|
March 29, 2025
|
December 31, 2024
|
|||||||
|
Senior unsecured notes - Series N -
|
$ |
|
$ |
|
||||
|
|
|
|
|
|||||
|
Total notes payable and debt, current
|
|
|
||||||
|
Senior unsecured notes - Series K -
|
|
|
||||||
|
Senior unsecured notes - Series L -
|
|
|
||||||
|
Senior unsecured notes - Series M -
|
|
|
||||||
|
Senior unsecured notes - Series N -
|
|
|
||||||
|
Senior unsecured notes - Series O -
|
|
|
||||||
|
Senior unsecured notes - Series P -
|
|
|
||||||
|
Senior unsecured notes - Series Q -
|
|
|
||||||
|
Credit agreement
|
|
|
||||||
|
Unamortized debt issuance costs
|
(
|
) |
(
|
) | ||||
|
|
|
|
|
|||||
|
Total long-term debt
|
|
|
||||||
|
|
|
|
|
|||||
|
Total debt
|
$ |
|
$ |
|
||||
|
|
|
|
|
|||||
|
Three Months Ended March 29, 2025
|
||||||||||||
|
Net Income
(Numerator) |
Weighted-
Average Shares (Denominator) |
Per Share
Amount |
||||||||||
|
Net income per basic common share
|
$ |
|
|
$ |
|
|||||||
|
Effect of dilutive stock option, restricted stock, performance stock unit and restricted stock unit securities
|
— |
|
(
|
) | ||||||||
|
|
|
|
|
|
|
|||||||
|
Net income per diluted common share
|
$ |
|
|
$ |
|
|||||||
|
|
|
|
|
|
|
|||||||
|
Three Months Ended March 30, 2024
|
||||||||||||
|
Net Income
(Numerator) |
Weighted-
Average Shares (Denominator) |
Per Share
Amount |
||||||||||
|
Net income per basic common share
|
$ |
|
|
$ |
|
|||||||
|
Effect of dilutive stock option, restricted stock, performance stock unit and restricted stock unit securities
|
— |
|
(
|
) | ||||||||
|
|
|
|
|
|
|
|||||||
|
Net income per diluted common share
|
$ |
|
|
$ |
|
|||||||
|
|
|
|
|
|
|
|||||||
|
Currency
Translation |
Unrealized
Loss on Retirement Plans |
Unrealized
Loss on Derivative Instruments |
Accumulated
Other Comprehensive Loss |
|||||||||||||
|
Balance at December 31, 2024
|
$ |
(
|
) | $ |
(
|
) | $ |
(
|
) | $ |
(
|
) | ||||
|
Other comprehensive income (loss), net of tax
|
|
|
(
|
) |
|
|||||||||||
|
|
|
|
|
|
|
|
|
|||||||||
|
Balance at March 29, 2025
|
$ |
(
|
) | $ |
(
|
) | $ |
(
|
) | $ |
(
|
) | ||||
|
|
|
|
|
|
|
|
|
|||||||||
|
Three Months Ended
|
||||||||
|
March 29, 2025
|
March 30, 2024
|
|||||||
|
Product net sales:
|
||||||||
|
Waters instrument systems
|
$ |
|
$ |
|
||||
|
Chemistry consumables
|
|
|
||||||
|
TA instrument systems
|
|
|
||||||
|
|
|
|
|
|||||
|
Total product sales
|
|
|
||||||
|
Service net sales:
|
||||||||
|
Waters service
|
|
|
||||||
|
TA service
|
|
|
||||||
|
|
|
|
|
|||||
|
Total service sales
|
|
|
||||||
|
|
|
|
|
|||||
|
Total net sales
|
$ |
|
$ |
|
||||
|
|
|
|
|
|||||
|
Three Months Ended
|
||||||||
|
March 29, 2025
|
March 30, 2024
|
|||||||
|
Net Sales:
|
||||||||
|
Asia:
|
||||||||
|
China
|
$ |
|
$ |
|
||||
|
Asia Other
|
|
|
||||||
|
|
|
|
|
|||||
|
Total Asia
|
|
|
||||||
|
Americas:
|
||||||||
|
United States
|
|
|
||||||
|
Americas Other
|
|
|
||||||
|
|
|
|
|
|||||
|
Total Americas
|
|
|
||||||
|
Europe
|
|
|
||||||
|
|
|
|
|
|||||
|
Total net sales
|
$ |
|
$ |
|
||||
|
|
|
|
|
|||||
|
Three Months Ended
|
||||||||
|
March 29, 2025
|
March 30, 2024
|
|||||||
|
Pharmaceutical
|
$ |
|
$ |
|
||||
|
Industrial
|
|
|
||||||
|
Academic and government
|
|
|
||||||
|
|
|
|
|
|||||
|
Total net sales
|
$ |
|
$ |
|
||||
|
|
|
|
|
|||||
|
Three Months Ended
|
||||||||
|
March 29, 2025
|
March 30, 2024
|
|||||||
|
Net sales recognized at a point in time:
|
||||||||
|
Instrument systems
|
$ |
|
$ |
|
||||
|
Chemistry consumables
|
|
|
||||||
|
Service sales recognized at a point in time (time & materials)
|
|
|
||||||
|
|
|
|
|
|||||
|
Total net sales recognized at a point in time
|
|
|
||||||
|
Net sales recognized over time:
|
||||||||
|
Service and software maintenance sales recognized over time (contracts)
|
|
|
||||||
|
|
|
|
|
|||||
|
Total net sales
|
$ |
|
$ |
|
||||
|
|
|
|
|
|||||
|
Three Months Ended
|
||||||||
|
March 29, 2025
|
March 30, 2024
|
|||||||
|
Total sales, net
|
$ |
|
$ |
|
||||
|
Less:
|
||||||||
|
Labor costs within selling and administrative and research and development expenses
|
(
|
) |
(
|
) | ||||
|
Material purchases
|
(
|
) |
(
|
) | ||||
|
Labor costs within product and service cost of sales
|
(
|
) |
(
|
) | ||||
|
Other segment expenses
|
(
|
) |
(
|
) | ||||
|
Interest expense and other income, net
|
(
|
) |
(
|
) | ||||
|
Provision for income taxes
|
(
|
) |
(
|
) | ||||
|
|
|
|
|
|||||
|
Net income
|
$ |
|
$ |
|
||||
|
|
|
|
|
|||||
Item 2: Management’s Discussion and Analysis of Financial Condition and Results of Operations
Business Overview
The Company has two operating segments: Waters TM and TA TM . Waters products and services primarily consist of high-performance liquid chromatography (“HPLC”), ultra-performance liquid chromatography (“UPLC TM ” and, together with HPLC, referred to as “LC”), mass spectrometry (“MS”), light scattering and field-flow fractionation instruments (Wyatt), and precision chemistry consumable products and related services. TA products and services primarily consist of thermal analysis, rheometry and calorimetry instrument systems and service sales. The Company’s products are used by pharmaceutical, biochemical, industrial, nutritional safety, environmental, academic and government customers. These customers use the Company’s products to detect, identify, monitor and measure the chemical, physical and biological composition of materials and to predict the suitability and stability of fine chemicals, pharmaceuticals, water, polymers, metals and viscous liquids in various industrial, consumer goods and healthcare products.
Tariffs
The Company sells and services its customers in over 35 countries outside of the U.S. and we have manufacturing operations in the U.S., Ireland, U.K. and in Singapore where we utilize subcontractors with worldwide capabilities.
In 2025, the U.S. government issued varying levels of tariffs on all imported goods into the U.S. The effective date of these tariffs has been delayed until July 2025 for all countries except China, as the U.S. seeks to negotiate these tariffs with each of the respective countries. These tariffs, any resulting retaliatory tariffs and any related supply-chain disruptions could have a significant impact on the Company’s consolidated statement of operations and statement of cash flows. In response to the proposed tariffs (or, in the case of China, the tariffs as currently in effect), the Company is continuing to evaluate and implement a series of actions and policies that are intended to offset a portion of the impact of the tariffs on the Company’s financial position and results of operations. While the Company believes that these actions and policies will mitigate a substantial portion of the impact of the tariffs, the Company cannot provide any assurances that the tariffs or any resulting impediments to trade will not have a material effect on the Company’s consolidated statement of operations and statement of cash flows.
22
Financial Overview
The Company’s operating results are as follows for the three months ended March 29, 2025 and March 30, 2024 (dollars in thousands, except per share data):
| Three Months Ended | ||||||||||||
| March 29, 2025 | March 30, 2024 | % change | ||||||||||
|
Revenues: |
||||||||||||
|
Product sales |
$ | 400,530 | $ | 376,151 | 6 | % | ||||||
|
Service sales |
261,175 | 260,688 | — | |||||||||
|
|
|
|
|
|
|
|||||||
|
Total net sales |
661,705 | 636,839 | 4 | % | ||||||||
|
Costs and operating expenses: |
||||||||||||
|
Cost of sales |
276,745 | 261,786 | 6 | % | ||||||||
|
Selling and administrative expenses |
174,881 | 174,536 | — | |||||||||
|
Research and development expenses |
46,622 | 44,595 | 5 | % | ||||||||
|
Purchased intangibles amortization |
11,712 | 11,834 | (1 | %) | ||||||||
|
Litigation provision |
— | 10,242 | * | * | ||||||||
|
|
|
|
|
|
|
|||||||
|
Operating income |
151,745 | 133,846 | 13 | % | ||||||||
|
Operating income as a % of sales |
22.9 | % | 21.0 | % | ||||||||
|
Other income, net |
1,524 | 2,259 | (33 | %) | ||||||||
|
Interest expense, net |
(10,381 | ) | (21,249 | ) | (51 | %) | ||||||
|
|
|
|
|
|
|
|||||||
|
Income before income taxes |
142,888 | 114,856 | 24 | % | ||||||||
|
Provision for income taxes |
21,507 | 12,660 | 70 | % | ||||||||
|
|
|
|
|
|
|
|||||||
|
Net income |
$ | 121,381 | $ | 102,196 | 19 | % | ||||||
|
|
|
|
|
|
|
|||||||
|
Net income per diluted common share |
$ | 2.03 | $ | 1.72 | 18 | % | ||||||
| ** |
Percentage not meaningful |
The Company’s net sales increased 4% in the first quarter of 2025, as compared to the first quarter of 2024, with foreign currency translation decreasing total sales growth by 3%. The first quarter sales growth was broad-based across most major regions, primarily driven by the increase in customer demand for our LC, MS and LC & MS instrument systems.
Instrument system sales increased 9% in the first quarter of 2025 primarily driven by broad-based higher customer demand in all regions of the world, except for Europe, where instrument sales declined 3%. Foreign currency translation decreased instrument system sales growth by 3% in the first quarter of 2025.
Recurring revenues (combined sales of precision chemistry consumables and services) increased 1% in the first quarter of 2025, with foreign currency translation decreasing sales growth by 3%. In addition to this negative effect of foreign currency translation, recurring revenues were also negatively impacted by two fewer days in the first quarter of 2025 as compared to the first quarter of 2024, resulting in service revenue growth being flat and chemistry sales increasing 3% in the first quarter of 2025.
Operating income was $152 million in the first quarter of 2025, an increase of 13% as compared to $134 million in the first quarter of 2024. The increase in operating income was primarily attributed to the higher sales volume in the first quarter of 2025 and the absence of $8 million of restructuring expense and $10 million of patent litigation expense incurred in the first quarter of 2024.
The Company generated $260 million and $263 million of net cash from operating activities in the first three months of 2025 and 2024, respectively, with the slight decrease being attributable to the changes in the working capital balances. Net cash used in investing activities included capital expenditures related to property, plant, equipment and software capitalization of $26 million and $29 million in the first quarter of 2025 and 2024, respectively.
23
Results of Operations
Sales by Geography
Geographic sales information is presented below for the three months ended March 29, 2025 and March 30, 2024 (dollars in thousands):
| Three Months Ended | ||||||||||||
| March 29, 2025 | March 30, 2024 | % change | ||||||||||
|
Net Sales: |
||||||||||||
|
Asia: |
||||||||||||
|
China |
$ | 90,873 | $ | 85,745 | 6 | % | ||||||
|
Asia Other |
129,903 | 121,814 | 7 | % | ||||||||
|
|
|
|
|
|
|
|||||||
|
Total Asia |
220,776 | 207,559 | 6 | % | ||||||||
|
Americas: |
||||||||||||
|
United States |
215,259 | 202,839 | 6 | % | ||||||||
|
Americas Other |
40,278 | 38,332 | 5 | % | ||||||||
|
|
|
|
|
|
|
|||||||
|
Total Americas |
255,537 | 241,171 | 6 | % | ||||||||
|
Europe |
185,392 | 188,109 | (1 | %) | ||||||||
|
|
|
|
|
|
|
|||||||
|
Total net sales |
$ | 661,705 | $ | 636,839 | 4 | % | ||||||
|
|
|
|
|
|
|
|||||||
Geographically, the Company’s sales increase in the first quarter of 2025 was broad-based across most major regions except for Europe, which decreased 1%. Foreign currency translation decreased Europe’s sales by 2%. Asia’s sales increased 6% in the quarter, led by India where sales grew 9%. Foreign currency translation decreased Asia’s sales growth by 6%, primarily driven by the Japanese yen.
Sales by Trade Class
Net sales by customer class are presented below for the three months ended March 29, 2025 and March 30, 2024 (dollars in thousands):
| Three Months Ended | ||||||||||||
| March 29, 2025 | March 30, 2024 | % change | ||||||||||
|
Pharmaceutical |
$ | 391,051 | $ | 374,207 | 5 | % | ||||||
|
Industrial |
203,365 | 195,334 | 4 | % | ||||||||
|
Academic and government |
67,289 | 67,298 | — | |||||||||
|
|
|
|
|
|
|
|||||||
|
Total net sales |
$ | 661,705 | $ | 636,839 | 4 | % | ||||||
|
|
|
|
|
|
|
|||||||
During the first quarter of 2025, sales to pharmaceutical customers increased 5%, with all regions growing except for China, where sales to pharmaceutical customers declined 9%. Foreign currency translation decreased pharmaceutical sales growth by 3%. Combined sales to industrial customers, which include material characterization, food, environmental and fine chemical markets, increased 4% in the first quarter of 2025, with foreign currency translation decreasing sales growth by 2%.
Our combined sales to academic and government customers were flat in the first quarter of 2025, with foreign currency translation decreasing sales growth by 3%. Sales to our academic and government customers are highly dependent on when institutions receive funding to purchase our instrument systems and, as such, sales can vary significantly from period to period.
24
Waters Products and Services Net Sales
Net sales for Waters products and services were as follows for the three months ended March 29, 2025 and March 30, 2024 (dollars in thousands):
| Three Months Ended | ||||||||||||||||||||
| March 29, 2025 |
% of
Total |
March 30, 2024 |
% of
Total |
% change | ||||||||||||||||
|
Waters instrument systems |
$ | 212,395 | 36 | % | $ | 191,259 | 34 | % | 11 | % | ||||||||||
|
Chemistry consumables |
137,637 | 24 | % | 134,207 | 24 | % | 3 | % | ||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|||||||||||
|
Total Waters product sales |
350,032 | 60 | % | 325,466 | 58 | % | 8 | % | ||||||||||||
|
Waters service |
237,265 | 40 | % | 236,433 | 42 | % | — | |||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|||||||||||
|
Total Waters net sales |
$ | 587,297 | 100 | % | $ | 561,899 | 100 | % | 5 | % | ||||||||||
|
|
|
|
|
|
|
|
|
|
|
|||||||||||
Waters products and service sales increased 5% in the first quarter of 2025, with the effect of foreign currency translation decreasing sales growth by 3%. Waters instrument system sales increased 11% in the first quarter of 2025 due to stronger customer demand for our Acquity and Xevo TQ-S instrument systems. Waters service sales growth was flat in the first quarter of 2025 due to the negative impact from foreign currency translation which decreased service sales growth by 3% and the two fewer days in the first quarter of 2025 as compared to the first quarter of 2024.
TA Product and Services Net Sales
Net sales for TA products and services were as follows for the three months ended March 29, 2025 and March 30, 2024 (dollars in thousands):
| Three Months Ended | ||||||||||||||||||||
| March 29, 2025 |
% of
Total |
March 30, 2024 |
% of
Total |
% change | ||||||||||||||||
|
TA instrument systems |
$ | 50,498 | 68 | % | $ | 50,685 | 68 | % | — | |||||||||||
|
TA service |
23,910 | 32 | % | 24,255 | 32 | % | (1 | %) | ||||||||||||
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Total TA net sales |
$ | 74,408 | 100 | % | $ | 74,940 | 100 | % | (1 | %) | ||||||||||
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TA sales declined 1% in the first quarter of 2025 due to lower customer demand for TA products in most major regions except for Asia, where sales increased 15%. Foreign currency translation decreased TA sales growth by 1% in the quarter.
Cost of Sales
Cost of sales increased by 6% in the first quarter 2025, primarily due to higher sales volume and changes in the sales mix. Cost of sales is affected by many factors, including, but not limited to, foreign currency translation, product mix, product costs of instrument systems and amortization of software platforms.
Selling and Administrative Expenses
Selling and administrative expenses were flat in the first quarter of 2025 compared to the first quarter of 2024. The effect of foreign currency translation decreased selling and administrative expenses by 2% in the first quarter of 2025.
As a percentage of net sales, selling and administrative expenses were 26.4% and 27.4% for the first quarter of 2025 and 2024, respectively.
Research and Development Expenses
Research and development expenses increased 5% in the first quarter of 2025, primarily driven by merit compensation and costs associated with the development of new product and technology initiatives. The impact of foreign currency exchange did not have a significant impact in the first quarter of 2025.
25
Litigation Provisions
The Company recorded $10 million of patent litigation settlement provisions and related costs in the first quarter of 2024. No litigation provisions were recorded by the Company in the first quarter of 2025.
Interest Expense, net
Interest expense, net, decreased $11 million in the first quarter of 2025, which can be primarily attributed to the repayment of outstanding debt.
Provision for Income Taxes
The four principal jurisdictions in which the Company manufactures are the U.S., Ireland, the U.K. and Singapore, where the statutory tax rates were 21%, 12.5%, 25% and 17%, respectively, as of March 29, 2025. The Company has a Development and Expansion Incentive in Singapore that provides a concessionary income tax rate of 5% on certain types of income for the period April 1, 2021 through March 31, 2026. The effect of applying the concessionary income tax rate rather than the statutory tax rate to income from qualifying activities in Singapore increased the Company’s net income by $0.5 million and $2 million and increased the Company’s net income per diluted share by $0.01 and $0.03 for the first quarter of 2025 and 2024, respectively.
The Company’s effective tax rate for the first quarter of 2025 and 2024 was 15.1% and 11.0%, respectively. The income tax provision includes a $2 million and a $1 million income tax benefit related to stock-based compensation for the first quarter of 2025 and 2024, respectively. The remaining differences between the effective tax rates can primarily be attributed the impact of discrete tax benefits in the prior year and to differences in the proportionate amounts of pre-tax income recognized in jurisdictions with different effective tax rates.
Effective in 2024, various foreign jurisdictions began implementing aspects of the guidance issued by the Organization for Economic Co-operation and Development related to the new Pillar Two system of global minimum tax rules. These changes in tax law did not have a material impact on the Company’s financial position, results of operations and cash flows for the first quarter of 2025. The Company continues to monitor the adoption of the Pillar Two rules in additional jurisdictions.
26
Liquidity and Capital Resources
Condensed Consolidated Statements of Cash Flows (in thousands):
| Three Months Ended | ||||||||
| March 29, 2025 | March 30, 2024 | |||||||
|
Net income |
$ | 121,381 | $ | 102,196 | ||||
|
Depreciation and amortization |
49,369 | 48,514 | ||||||
|
Stock-based compensation |
12,878 | 10,913 | ||||||
|
Deferred income taxes |
2,305 | 4,453 | ||||||
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Change in accounts receivable |
33,058 | 62,592 | ||||||
|
Change in inventories |
(25,984 | ) | (28,309 | ) | ||||
|
Change in accounts payable and other current liabilities |
(30,004 | ) | (18,418 | ) | ||||
|
Change in deferred revenue and customer advances |
83,015 | 85,901 | ||||||
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Other changes |
13,535 | (4,972 | ) | |||||
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Net cash provided by operating activities |
259,553 | 262,870 | ||||||
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Net cash used in investing activities |
(26,248 | ) | (29,744 | ) | ||||
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Net cash used in financing activities |
(173,247 | ) | (292,176 | ) | ||||
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Effect of exchange rate changes on cash and cash equivalents |
(2,541 | ) | 1,264 | |||||
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Increase (decrease) in cash and cash equivalents |
$ | 57,517 | $ | (57,786 | ) | |||
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Cash Flow from Operating Activities
Net cash provided by operating activities was $260 million and $263 million during the first quarter of 2025 and 2024, respectively. The decrease in 2025 operating cash flow was primarily the result of higher net income being offset by higher accounts receivable due to an increase in sales volume and the higher annual incentive bonus payments in 2025 compared to 2024. The changes within net cash provided by operating activities include the following significant changes in the sources and uses of net cash provided by operating activities, aside from the changes in net income:
| • |
The changes in accounts receivable were primarily attributable to the timing of payments made by customers and the timing of sales. Days sales outstanding was 95 days at March 29, 2025 and 89 days at March 30, 2024. |
| • |
The decrease in inventory can be primarily attributed to higher sales volumes in the first quarter of 2025 as compared to the first quarter of 2024. |
| • |
Net cash provided from deferred revenue and customer advances results from annual increases in new service contracts as a higher installed base of customers renew annual service contracts. |
| • |
Other changes were attributable to variation in the timing of various provisions, expenditures, prepaid income taxes and accruals in other current assets, other assets and other liabilities. |
Cash Flow from Investing Activities
Net cash used in investing activities totaled $26 million and $30 million in the first quarter of 2025 and 2024, respectively. Additions to fixed assets and capitalized software were $26 million and $29 million in the first three months of 2025 and 2024, respectively.
Cash Flow from Financing Activities
The Company has a credit agreement with an aggregate borrowing capacity of $2.0 billion. As of March 29, 2025, the Company had a total of $1.5 billion in outstanding debt, which consisted of $1.3 billion in outstanding senior unsecured notes and $200 million borrowed under its credit agreement. The Company’s net debt borrowings decreased by $170 million and $300 million during the three months ended March 29, 2025 and March 30, 2024, respectively.
27
As of March 29, 2025, the Company has entered into interest rate cross-currency swap derivative agreements with durations up to three years with a notional value of $705 million to hedge the variability in the movement of foreign currency exchange rates on a portion of its euro-denominated and yen-denominated net asset investments. As a result of entering into these agreements, the Company lowered net interest expense by approximately $2 million and $3 million in the first quarter of 2025 and 2024, respectively. The Company anticipates that these swap agreements will lower net interest expense by approximately $10 million in 2025.
In December 2024, the Company’s Board of Directors authorized the extension of its existing share repurchase program through January 21, 2028. The Company’s remaining authorization is $1.0 billion. The Company did not make any open market share repurchases in 2025 or 2024. The Company repurchased $14 million and $13 million of common stock related to the vesting of restricted stock units during the three months ended March 29, 2025 and March 30, 2024, respectively.
The Company received $8 million and $14 million of proceeds from the exercise of stock options and the purchase of shares pursuant to the Company’s employee stock purchase plan during the first three months of 2025 and 2024, respectively.
The Company had cash and cash equivalents $383 million as of March 29, 2025. The majority of the Company’s cash and cash equivalents are generated from foreign operations, with $287 million held by foreign subsidiaries at March 29, 2025, of which $226 million was held in currencies other than U.S. dollars.
Contractual Obligations, Commercial Commitments, Contingent Liabilities and Dividends
A summary of the Company’s contractual obligations and commercial commitments is included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2024, as filed with the SEC on February 25, 2025. The Company reviewed its contractual obligations and commercial commitments as of March 29, 2025 and determined that there were no material changes outside the ordinary course of business from the information set forth in the Annual Report on Form 10-K.
From time to time, the Company and its subsidiaries are involved in various litigation matters arising in the ordinary course of business. The Company believes that it has meritorious arguments in its current litigation matters and that any outcome, either individually or in the aggregate, will not be material to the Company’s financial position or results of operations.
During fiscal year 2025, the Company expects to contribute a total of approximately $3 million to $6 million to its defined benefit plans.
The Company has not paid any dividends and has no plans, at this time, to pay any dividends in the future.
Critical Accounting Policies and Estimates
In the Company’s Annual Report on Form 10-K for the year ended December 31, 2024, as filed with the SEC on February 25, 2025, the Company’s most critical accounting policies and estimates upon which its financial status depends were identified as those relating to revenue recognition, valuation of long-lived assets, intangible assets and goodwill, income taxes, uncertain tax positions and business combinations and asset acquisitions. The Company reviewed its policies and determined that those policies remain the Company’s most critical accounting policies for the three months ended March 29, 2025. The Company did not make any changes in those policies during the three months ended March 29, 2025.
New Accounting Pronouncements
Please refer to Note 12, Recent Accounting Standard Changes and Developments, in the Condensed Notes to Consolidated Financial Statements.
28
Special Note Regarding Forward-Looking Statements
This Quarterly Report on Form 10-Q, including the information incorporated by reference herein, contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended (the “Securities Act”), and Section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”). Statements that are not statements of historical fact may be deemed forward-looking statements. You can identify these forward-looking statements by the use of the words “feels”, “believes”, “anticipates”, “plans”, “expects”, “may”, “will”, “would”, “intends”, “suggests”, “appears”, “estimates”, “projects”, “should” and similar expressions, whether in the negative or affirmative. These forward-looking statements are subject to various risks and uncertainties, many of which are outside the control of the Company, including, and without limitation:
| • |
foreign currency exchange rate fluctuations potentially affecting translation of the Company’s future non-U.S. operating results, particularly when a foreign currency weakens against the U.S. dollar; |
| • |
current global economic, sovereign and political conditions and uncertainties, including the effect of new or proposed tariff or trade regulations, as well as other new or changed domestic and foreign laws, regulations and policies (or new interpretations thereof), inflation and interest rates, the impacts and costs of war, in particular as a result of the ongoing conflicts between Russia and Ukraine and in the Middle East, and the possibility of further escalation resulting in new geopolitical and regulatory instability; |
| • |
economic conditions in China, trade tensions and tariffs between the U.S. and China and their impact on our business, increased competition from local and international competitors in China, the Chinese government’s ongoing tightening of restrictions on procurement by government-funded customers and other regulatory and other challenges and uncertainties in the Chinese market; |
| • |
the Company’s ability to access capital, maintain liquidity and service the Company’s debt in volatile market conditions; |
| • |
changes in timing and demand for the Company’s products among the Company’s customers and various market sectors, particularly as a result of fluctuations in their expenditures or ability to obtain funding; |
| • |
the ability to realize the expected benefits related to the Company’s various cost-saving initiatives, including workforce reductions and organizational restructurings; |
| • |
the introduction of competing products by other companies and loss of market share, as well as pressures on prices from competitors and/or customers; |
| • |
changes in the competitive landscape as a result of changes in ownership, mergers and continued consolidation among the Company’s competitors; |
| • |
regulatory, economic and competitive obstacles to new product introductions, lack of acceptance of new products and inability to grow organically through innovation; |
| • |
rapidly changing technology and product obsolescence; |
| • |
the risks related to the development, deployment and use of artificial intelligence (“AI”); |
| • |
a failure to timely and effectively use AI and embed it into new product offerings and services that negatively impacts our competitiveness; |
| • |
risks associated with previous or future acquisitions, strategic investments, joint ventures and divestitures, including risks associated with achieving the anticipated financial results and operational synergies, contingent purchase price payments and expansion of our business into new or developing markets; |
| • |
risks associated with unexpected disruptions in operations, including risks associated with our transition to a new ERP system; |
| • |
risks related to any public health crisis or pandemic, climate change, severe weather and geological conditions or events or other events beyond our control; |
| • |
failure to adequately protect the Company’s intellectual property, infringement of intellectual property rights of third parties and inability to obtain licenses on commercially reasonable terms; |
29
| • |
the Company’s ability to acquire adequate sources of supply and its reliance on outside contractors for certain components and modules, as well as disruptions to its supply chain; |
| • |
risks associated with third-party sales intermediaries and resellers; |
| • |
the impact and costs of changes in statutory or contractual tax rates in jurisdictions in which the Company operates as well as shifts in taxable income among jurisdictions with different effective tax rates, the outcome of ongoing and future tax examinations and changes in legislation affecting the Company’s effective tax rate; |
| • |
the Company’s ability to attract and retain qualified employees and management personnel; |
| • |
risks associated with cybersecurity and our information technology infrastructure, including attempts by third parties, both private and state-sponsored, to defeat the information security measures of the Company or its third-party partners and gain unauthorized access to sensitive and proprietary Company products, services, systems, or data; |
| • |
risks associated with compliance with data privacy and information security laws and regulations regarding the collection, transmission, storage and use of personally identifying information; |
| • |
increased regulatory burdens as the Company’s business evolves, especially with respect to the U.S. Food and Drug Administration and U.S. Environmental Protection Agency, among others, and in connection with government contracts; |
| • |
regulatory, environmental and logistical obstacles affecting the distribution of the Company’s products, completion of purchase order documentation and the ability of customers to obtain letters of credit or other financing alternatives; |
| • |
risks associated with litigation and other legal and regulatory proceedings; and |
| • |
the impact and costs incurred from changes in accounting principles and practices. |
Certain of these and other factors are discussed under the heading “Risk Factors” under Part I, Item 1A of the Company’s Annual Report on Form 10-K for the year ended December 31, 2024, as filed with the SEC on February 25, 2025. Actual results or events could differ materially from the plans, intentions and expectations disclosed in the forward-looking statements, whether because of these factors or for other reasons. All forward-looking statements speak only as of the date of this Quarterly Report on Form 10-Q and are expressly qualified in their entirety by the cautionary statements included in this report. Except as required by law, the Company does not assume any obligation to update any forward-looking statements.
Item 3: Quantitative and Qualitative Disclosures About Market Risk
The Company is also exposed to the risk of exchange rate fluctuations. The Company maintains cash balances in various operating accounts in excess of federally insured limits, and in foreign subsidiary accounts in currencies other than the U.S. dollar. As of March 29, 2025 and December 31, 2024, $287 million out of $383 million and $275 million out of $325 million, respectively, of the Company’s total cash and cash equivalents were held by foreign subsidiaries. In addition, $226 million out of $383 million and $226 million out of $325 million of cash and cash equivalents were held in currencies other than the U.S. dollar at March 29, 2025 and December 31, 2024, respectively. As of March 29, 2025, the Company had no holdings in auction rate securities or commercial paper issued by structured investment vehicles.
30
|
Period
|
Total Number
of Shares Purchased (1) |
Average
Price Paid per Share |
Total Number of
Shares Purchased as Part of Publicly Announced Programs |
Maximum Dollar
Value of Shares That May Yet Be Purchased Under the Programs |
||||||||||||
|
January 1, 2025 to January 25, 2025
|
— | $ | — | — | $ | 961,207 | ||||||||||
|
January 26, 2025 to February 22, 2025
|
16 | $ | 377.77 | — | $ | 961,207 | ||||||||||
|
February 23, 2025 to March 29, 2025
|
21 | $ | 374.33 | — | $ | 961,207 | ||||||||||
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|
Total
|
37 | $ | 375.82 | — | $ | 961,207 | ||||||||||
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| (1) |
The Company repurchased approximately 37,000 shares of common stock at a cost of $14 million related to the vesting of restricted stock during the three months ended March 29, 2025.
|
Item 6: Exhibits
| + |
Indicates a management contract or compensatory plan. |
| * |
This exhibit shall not be deemed “filed” for purposes of Section 18 of the Exchange Act, or otherwise subject to the liability of that section, nor shall it be deemed incorporated by reference into any filing under the Securities Act or the Exchange Act, whether made before or after the date hereof and irrespective of any general incorporation language in any filing, except to the extent the Company specifically incorporates it by reference. |
33
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
| W ATERS C ORPORATION |
| /s/ Amol Chaubal |
| Amol Chaubal |
| Senior Vice President and Chief Financial Officer |
| (Principal Financial Officer) |
| (Principal Accounting Officer) |
Date: May 6, 2025
34