10-Q

Large accelerated filer

Accelerated filer

Non-accelerated
filer

Smaller reporting company

Emerging growth company

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

Form 10-Q

☒	QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXHANGE ACT OF 1934

For the quarterly period ended March 29, 2025

☐	TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from

Commission File Number:

001-14010

Waters Corporation

(Exact name of registrant as specified in its charter)


Delaware		13-3668640
(State or other jurisdiction of incorporation or organization)		(I.R.S. Employer Identification No.)

34 Maple Street

Milford, Massachusetts 01757

(Address, including zip code, of principal executive offices)

(

508)

478-2000

(Registrant’s telephone number, including area code)

Securities registered pursuant to Section 12(b) of the Act:


Title of each class	Trading Symbol(s)	Name of each exchange on which registered
Common Stock, par value $0.01 per share	WAT	New York Stock Exchange, Inc.

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.

Yes

☒ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation

S-T

(§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes

☒ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a

non-accelerated

filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer”, “accelerated filer”, “smaller reporting company”, and “emerging growth company” in

Rule 12b-2

of the Exchange Act.

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in

Rule 12b-2

of the Act). Yes ☐ No

☒

Indicate the number of shares outstanding of the registrant’s common stock as of May 2, 2025: 59,509,089

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
		Consolidated Statements of Operations (unaudited) for the three months ended March 29, 2025 and March 30, 2024		4
		Consolidated Statements of Comprehensive Income (unaudited) for the three months ended March 29, 2025 and March 30, 2024		5
		Consolidated Statements of Cash Flows (unaudited) for the three months ended March 29, 2025 and March 30, 2024		6
		Consolidated Statements of Stockholders’ Equity (unaudited) for the three months ended March 29, 2025 and March 30, 2024		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

Item 1: Financial Statements

WATERS CORPORATION AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS

(unaudited)


	March 29, 2025			December 31, 2024
	(In thousands, except per share data)
ASSETS
Current assets:
Cash and cash equivalents	$	382,872		$	325,355
Accounts receivable, net		713,278			733,365
Inventories		511,499			477,261
Other current assets		132,234			133,130

Total current assets		1,739,883			1,669,111
Property, plant and equipment, net		643,260			651,200
Intangible assets, net		560,754			567,906
Goodwill		1,300,020			1,295,720
Operating lease assets		77,783			74,193
Other assets		269,876			295,665

Total assets	$	4,591,576		$	4,553,795

LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
Notes payable	$	100,000		$	—
Accounts payable		102,055			99,931
Accrued employee compensation		60,875			93,969
Deferred revenue and customer advances		340,086			250,807
Current operating lease liabilities		27,304			25,537
Accrued income taxes		172,868			158,658
Accrued warranty		11,983			11,602
Other current liabilities		145,798			149,254

Total current liabilities		960,969			789,758
Long-term liabilities:
Long-term debt		1,356,727			1,626,488
Long-term portion of retirement benefits		44,380			44,611
Long-term income tax liabilities		32,729			30,318
Long-term operating lease liabilities		52,248			50,317
Other long-term liabilities		182,126			183,796

Total long-term liabilities		1,668,210			1,935,530

Total liabilities		2,629,179			2,725,288
Commitments and contingencies (Notes 5 , 6 and 8 )
Stockholders’ equity:
Preferred stock, par value $0.01 per share, 5,000 shares authorized, none issued at March 29, 2025 and December 31, 2024		—			—
Common stock, par value $0.01 per share, 400,000 shares authorized, 163,109 and 162,962 shares issued, 59,498 and 59,388 shares outstanding at March 29, 2025 and December 31, 2024, respectively		1,631			1,630
Additional paid-in capital		2,362,309			2,341,298
Retained earnings		9,910,036			9,788,655
Treasury stock, at cost, 103,611 and 103,574 shares at March 29, 2025 and December 31, 2024, respectively		(10,161,727	)		(10,147,793	)
Accumulated other comprehensive loss		(149,852	)		(155,283	)

Total stockholders’ equity		1,962,397			1,828,507

Total liabilities and stockholders’ equity	$	4,591,576		$	4,553,795

The accompanying notes are an integral part of the interim consolidated financial statements.

Table of Contents

WATERS CORPORATION AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF OPERATIONS

(unaudited)


	Three Months Ended
	March 29, 2025			March 30, 2024
	(In thousands, except per share data)
Revenues:
Product sales	$	400,530		$	376,151
Service sales		261,175			260,688

Total net sales		661,705			636,839
Costs and operating expenses:
Cost of product sales		168,559			153,182
Cost of service sales		108,186			108,604
Selling and administrative expenses		174,881			174,536
Research and development expenses		46,622			44,595
Purchased intangibles amortization		11,712			11,834
Litigation provision		—			10,242

Total costs and operating expenses		509,960			502,993

Operating income		151,745			133,846
Other income, net		1,524			2,259
Interest expense		(14,270	)		(25,520	)
Interest income		3,889			4,271

Income before income taxes		142,888			114,856
Provision for income taxes		21,507			12,660

Net income	$	121,381		$	102,196

Net income per basic common share	$	2.04		$	1.73
Weighted-average number of basic common shares		59,439			59,232
Net income per diluted common share	$	2.03		$	1.72
Weighted-average number of diluted common shares and equivalents		59,711			59,431

The accompanying notes are an integral part of the interim consolidated financial statements.

Table of Contents

WATERS CORPORATION AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

(unaudited)


	Three Months Ended
	March 29, 2025			March 30, 2024
	(In thousands)
Net income	$	121,381		$	102,196
Other comprehensive income (loss):
Foreign currency translation		6,552			(9,540	)
Unrealized (losses) gains on derivative instruments before reclassifications		(1,324	)		2,405
Amounts reclassified to interest income		(175	)		(297	)

Unrealized (losses) gains on derivative instruments before income taxes		(1,499	)		2,108
Income tax benefit (expense)		360			(506	)

Unrealized (losses) gains on derivative instruments, net of tax		(1,139	)		1,602
Retirement liability adjustment before reclassifications		29			332
Amounts reclassified to other income, net		—			(117	)

Retirement liability adjustment before income taxes		29			215
Income tax expense		(11	)		(40	)

Retirement liability adjustment, net of tax		18			175
Other comprehensive income (loss)		5,431			(7,763	)

Comprehensive income	$	126,812		$	94,433

The accompanying notes are an integral part of the interim consolidated financial statements.

Table of Contents

WATERS CORPORATION AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS

(unaudited)


	Three Months Ended
	March 29, 2025			March 30, 2024
	(In thousands)
Cash flows from operating activities:
Net income	$	121,381		$	102,196
Adjustments to reconcile net income to net cash provided by operating activities:
Stock-based compensation		12,878			10,913
Deferred income taxes		2,305			4,453
Depreciation		21,723			22,129
Amortization of intangibles		27,646			26,385
Change in operating assets and liabilities:
Decrease in accounts receivable		33,058			62,592
Increase in inventories		(25,984	)		(28,309	)
Increase in other current assets		(479	)		(4,707	)
Decrease in other assets		12,537			7,369
Decrease in accounts payable and other current liabilities		(30,004	)		(18,418	)
Increase in deferred revenue and customer advances		83,015			85,901
Increase (decrease) in other liabilities		1,477			(7,634	)

Net cash provided by operating activities		259,553			262,870
Cash flows from investing activities:
Additions to property, plant, equipment and software capitalization		(25,742	)		(28,655	)
Investments in unaffiliated companies, net		(506	)		(1,064	)
Purchases of investments		—			(923	)
Maturities and sales of investments		—			898

Net cash used in investing activities		(26,248	)		(29,744	)
Cash flows from financing activities:
Payments on debt		(170,000	)		(300,000	)
Proceeds from stock plans		8,246			13,932
Purchases of treasury shares		(13,934	)		(13,089	)
Proceeds from derivative contracts		2,441			6,981

Net cash used in financing activities		(173,247	)		(292,176	)
Effect of exchange rate changes on cash and cash equivalents		(2,541	)		1,264

Increase (decrease) in cash and cash equivalents		57,517			(57,786	)
Cash and cash equivalents at beginning of period		325,355			395,076

Cash and cash equivalents at end of period	$	382,872		$	337,290

The accompanying notes are an integral part of the interim consolidated financial statements.

Table of Contents

WATERS CORPORATION AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY

(unaudited, in thousands)


	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		162,709	$	1,627	$	2,266,265	$	9,150,821	$	(10,134,252	)	$	(134,120	)	$	1,150,341
Net income		—		—		—		102,196		—			—			102,196
Other comprehensive loss		—		—		—		—		—			(7,763	)		(7,763	)
Issuance of common stock for employees:
Employee Stock Purchase Plan		8		—		1,996		—		—			—			1,996
Stock options exercised		51		1		12,551		—		—			—			12,552
Treasury stock		—		—		—		—		(13,089	)		—			(13,089	)
Stock-based compensation		114		1		10,291		—		—			—			10,292

Balance March 30, 2024		162,882	$	1,629	$	2,291,103	$	9,253,017	$	(10,147,341	)	$	(141,883	)	$	1,256,525


	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		162,962	$	1,630	$	2,341,298	$	9,788,655	$	(10,147,793	)	$	(155,283	)	$	1,828,507
Net income		—		—		—		121,381		—			—			121,381
Other comprehensive income		—		—		—		—		—			5,431			5,431
Issuance of common stock for employees:
Employee Stock Purchase Plan		7		—		2,305		—		—			—			2,305
Stock options exercised		33		—		6,600		—		—			—			6,600
Treasury stock		—		—		—		—		(13,934	)		—			(13,934	)
Stock-based compensation		107		1		12,106		—		—			—			12,107

Balance March 29, 2025		163,109	$	1,631	$	2,362,309	$	9,910,036	$	(10,161,727	)	$	(149,852	)	$	1,962,397

The accompanying notes are an integral part of the consolidated financial statements.

Table of Contents

CONDENSED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(unaudited)

1 Basis of Presentation and Summary of Significant Accounting Policies

Waters Corporation (the “Company,” “we,” “our,” or “us”), a global leader in analytical instruments and software, has pioneered innovations in chromatography, mass spectrometry and thermal analysis serving life, materials and food sciences for more than 65 years. The Company primarily designs, manufactures, sells and services high-performance liquid chromatography (“HPLC”), ultra-performance liquid chromatography (“UPLC” and together with HPLC, referred to as “LC”) and mass spectrometry (“MS”) technology systems and support products, including chromatography columns, other consumable products and comprehensive post-warranty service plans. These systems are complementary products that are frequently employed together

(“LC-MS”)

and sold as integrated instrument systems using common software platforms. LC is a standard technique and is utilized in a broad range of industries to detect, identify, monitor and measure the chemical, physical and biological composition of materials, and to purify a full range of compounds. MS technology, principally in conjunction with chromatography, is employed in drug discovery and development, including clinical trial testing, the analysis of proteins in disease processes (known as “proteomics”), nutritional safety analysis and environmental testing.

LC-MS

instruments combine a liquid phase sample introduction and separation system with mass spectrometric compound identification and quantification. In addition, the Company designs, manufactures, sells and services thermal analysis, rheometry and calorimetry instruments through its TA Instruments product line. These instruments are used in predicting the suitability and stability of fine chemicals, pharmaceuticals, water, polymers, metals and viscous liquids for various industrial, consumer goods and healthcare products, as well as for life science research. The Company is also a developer and supplier of advanced software-based products that interface with the Company’s instruments, as well as other manufacturers’ instruments.

The Company’s interim fiscal quarter typically ends on the thirteenth Saturday of each quarter. Since the Company’s fiscal year end is December 31, the first and fourth fiscal quarters may have more or less than thirteen complete weeks. The Company’s first fiscal quarters for 2025 and 2024 ended on March 29, 2025 and March 30, 2024, respectively.

The accompanying unaudited interim consolidated financial statements have been prepared in accordance with the instructions in Form

10-Q

and do not include all of the information and footnote disclosures required for annual financial statements prepared in accordance with generally accepted accounting principles (“U.S. GAAP”) in the United States of America. The consolidated financial statements include the accounts of the Company and its subsidiaries, all of which are wholly owned. All intercompany balances and transactions have been eliminated.

The preparation of consolidated financial statements in conformity with U.S. GAAP requires the Company to make estimates and judgments that affect the reported amounts of assets, liabilities, revenues and expenses, and related disclosure of contingent liabilities at the dates of the financial statements. Actual amounts may differ from these estimates under different assumptions or conditions.

It is management’s opinion that the accompanying interim consolidated financial statements reflect all adjustments (which are normal and recurring) that are necessary for a fair statement of the results for the interim periods. The interim consolidated financial statements should be read in conjunction with the consolidated financial statements included in the Company’s Annual Report on Form

10-K

for the year ended December 31, 2024, as filed with the U.S. Securities and Exchange Commission (“SEC”) on February 25, 2025.

Risks and Uncertainties

The Company is subject to risks common to companies in the analytical instrument industry, including, but not limited to, global economic and financial market conditions, fluctuations in foreign currency exchange rates, fluctuations in customer demand, development by its competitors of new technological innovations, costs of developing new technologies, levels of debt and debt service requirements, risk of disruption, dependence on key personnel, protection and litigation of proprietary technology, shifts in taxable income between tax jurisdictions and compliance with new tariff rules and regulations of the U.S. Food and Drug Administration and similar foreign regulatory authorities and agencies.

Translation of Foreign Currencies

The functional currency of each of the Company’s foreign operating subsidiaries is the local currency of its country of domicile, except for the Company’s subsidiaries in Hong Kong and Singapore, where the underlying transactional cash flows are denominated in currencies other than the respective local currency of domicile. The functional currency of the Hong Kong and Singapore subsidiaries is the U.S. dollar, based on the respective entity’s cash flows.

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CONDENSED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (unaudited) – (Continued)

For the Company’s foreign operations, assets and liabilities are translated into U.S. dollars at exchange rates prevailing on the balance sheet date, while revenues and expenses are translated at average exchange rates prevailing during the respective period. Any resulting translation gains or losses are included in accumulated

other

comprehensive loss in the consolidated balance sheets.

Cash and Cash Equivalents

Cash equivalents represent highly liquid investments, with original maturities of 90 days or less, while investments with longer maturities are classified as investments. 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.

Accounts Receivable and Allowance for Credit Losses

Trade accounts receivable are recorded at the invoiced amount and do not bear interest. The Company has very limited use of rebates and other cash considerations payable to customers and, as a result, the transaction price determination does not have any material variable consideration. The Company does not consider there to be significant concentrations of credit risk with respect to trade receivables due to the short-term nature of the balances, the Company having a large and diverse customer base, and the Company having a strong historical experience of collecting receivables with minimal defaults. As a result, credit risk is considered low across territories and trade receivables are considered to be a single class of financial asset. The allowance for credit losses is based on a number of factors and is calculated by applying a historical loss rate to trade receivable aging balances to estimate a general reserve balance along with an additional adjustment for any specific receivables with known or anticipated issues affecting the likelihood of recovery. Past due balances with a probability of default based on historical data as well as relevant available forward-looking information are included in the specific adjustment. The historical loss rate is reviewed on at least an annual basis and the allowance for credit losses is reviewed quarterly for any required adjustments. The Company does not have any

off-balance

sheet credit exposure related to its customers.

Trade receivables related to instrument sales are collateralized by the instrument that is sold. If there is a risk of default related to a receivable that is collateralized, then the fair value of the collateral is calculated and adjusted for the cost to

re-possess,

refurbish and

re-sell

the instrument. This adjusted fair value is compared to the receivable balance and the difference would be recorded as the expected credit loss.

The following is a summary of the activity of the Company’s allowance for credit losses for the three months ended March 29, 2025 and March 30, 2024 (in thousands):


	Balance at Beginning of Period		Additions		Deductions and Other			Balance at End of Period
Allowance for Credit Losses
March 29, 2025	$	14,269	$	1,036	$	(1,598	)	$	13,707
March 30, 2024	$	19,335	$	991	$	(5,461	)	$	14,865

Fair Value Measurements

In accordance with the accounting standards for fair value measurements and disclosures, certain of the Company’s assets and liabilities are measured at fair value on a recurring basis as of March 29, 2025 and December 31, 2024. Fair values determined by Level 1 inputs utilize observable data, such as quoted prices in active markets. Fair values determined by Level 2 inputs utilize data points other than quoted prices in active markets that are observable either directly or indirectly. Fair values determined by Level 3 inputs utilize unobservable data points for which there is little or no market data, which require the reporting entity to develop its own assumptions.

Table of Contents

CONDENSED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (unaudited) – (Continued)

The following table represents the Company’s assets and liabilities measured at fair value on a recurring basis at March 29, 2025 (in thousands):

SEC Form 10-Q filed by Waters Corporation