WATERS CORP DE

Previous wording

On May 16, 2023, the Company completed the acquisition of Wyatt Technology, LLC and its three operating subsidiaries, Wyatt Technology Europe GmbH, Wyatt Technology France and Wyatt Technology UK Ltd. (collectively, “Wyatt”), for a total purchase price of $1.3 billion in cash. Wyatt is a pioneer in innovative light scattering and field-flow fractionation instruments, software, accessories, and services. The acquisition expanded Waters’ portfolio and increase exposure to large molecule applications. The Company financed this transaction with a combination of cash on its balance sheet and borrowings under its revolving credit facility. The Company’s financial results for the three and six months ended June 29, 2024 include the financial results of Wyatt. The Company’s financial results for the three and six months ended July 1, 2023 only includeone-and-a-half months of Wyatt’s financial results as the closing of the acquisition occurred during the second quarter of 2023.

Current wording

On May 16, 2023, the Company completed the acquisition of Wyatt Technology, LLC and its three operating subsidiaries, Wyatt Technology Europe GmbH, Wyatt Technology France and Wyatt Technology UK Ltd. (collectively, “Wyatt”), for a total purchase price of $1.3 billion in cash. Wyatt is a pioneer in innovative light scattering and field-flow fractionation instruments, software, accessories, and services. The acquisition expanded Waters’ portfolio and increase exposure to large molecule applications. The Company financed this transaction with a combination of cash on its balance sheet and borrowings under its revolving credit facility. The Company’s financial results for the three and nine months ended September 28, 2024 include the financial results of Wyatt. The Company’s financial results for the first nine months of 2023 only include four-and-a-half months of Wyatt’s financial results as the closing of the acquisition occurred during the second quarter of 2023.

Previous wording

The Company’s operating results are as follows for the three and six months ended June 29, 2024 and July 1, 2023 (dollars in thousands, except per share data):

Current wording

The Company’s operating results are as follows for the three and nine months ended September 28, 2024 and September 30, 2023 (dollars in thousands, except per share data):

Previous wording

The Company’s net sales decreased 4% in the second quarter of 2024, as compared to the second quarter of 2023, with foreign currency translation decreasing total sales growth by 2%. For the first half of 2024, the Company’s net sales decreased 6% with the effect of foreign currency translation decreasing sales growth by 1% as compared to the first half of 2023. In both the second quarter and first half of 2024, the Company’s net sales were negatively impacted by our customers delaying the purchase of our instrument systems as they remained cautious with their capital spending during the first half of 2024. The Wyatt acquisition increased sales growth by 2% and 3% for the second quarter and first half of 2024, respectively. In addition, the Company’s first half of 2024 had one less calendar day than the first half of 2023. At current foreign currency exchange rates, the Company expects that foreign currency translation will have a negative impact on sales for the remainder of 2024.

Current wording

The Company’s net sales increased 4% in the third quarter of 2024, as compared to the third quarter of 2023, with foreign currency translation having minimal impact on total sales growth. For the first nine months of 2024, the Company’s net sales decreased 2%, with the effect of foreign currency translation decreasing sales growth by 1% as compared to the first nine months of 2023. The net sales growth in the third quarter of 2024 was driven by strong customer demand across most major geographies, end markets, and product categories. For the first nine months of 2024, the Company’s net sales were negatively impacted by our customers delaying purchases of our instrument systems as they remained cautious with their capital spending during the first half of 2024; except in India, where sales growth increased 15% for the first nine months of 2024. The Wyatt acquisition increased sales growth by 2% for the first nine months of 2024. In addition, the Company’s first nine months of 2024 had one less calendar day than the first nine months of 2023. At current foreign currency exchange rates, the Company expects that foreign currency translation will have a negative impact on sales for the remainder of 2024.

Previous wording

Instrument system sales decreased 14% and 17% for the second quarter and first half of 2024, respectively, primarily driven by weaker customer demand across all major regions. The decline in instrument system sales was broad-based across all of our instrument systems and was led by our mass spectrometry instrument systems, which are higher priced instruments that are significantly impacted by the timing and level of funding our academic and government customers receive. The Wyatt acquisition increased instrument system sales growth by 4% for both the second quarter and first half of 2024. Foreign currency translation decreased instrument system sales growth by 1% in the second quarter of 2024 but had no impact in the first half of 2024.

Current wording

Instrument system sales increased 1% for the third quarter of 2024 primarily driven by the increase in customer demand across our existing and newly introduced LC, LC-MS and Thermal Analysis instrument system sales. Instrument system sales decreased 11% for the first nine months of 2024 primarily driven by weaker customer demand across all major regions during the first half of 2024 caused by delayed capital spending. This decline in instrument system sales was broad-based across all of our instrument systems and was led by our mass spectrometry instrument systems, which are higher priced instruments that are significantly impacted by the timing and level of funding our academic and government customers receive. The Wyatt acquisition increased instrument system sales growth by 3% for the first nine months of 2024. Foreign currency translation had minimal impact on instrument system sales growth for both the third quarter and first nine months of 2024.

Previous wording

Recurring revenues (combined sales of precision chemistry consumables and services) increased 4% for both the second quarter and first half of 2024, with foreign currency translation decreasing sales growth by 2% in both the second quarter and first half of 2024. Service revenues increased 4% and 5% for the second quarter and first half of 2024, respectively. Wyatt contributed 1% and 2% to service revenue growth for the second quarter and first half of 2024, respectively. Chemistry sales growth increased 4% and 2% for the second quarter and first half of 2024, respectively, and was impacted by the lower customer demand in China for our products.

Current wording

Recurring revenues (combined sales of precision chemistry consumables and services) increased 6% and 5% for the third quarter and first nine months of 2024, respectively, with foreign currency translation decreasing sales growth by 1% for both the third quarter and first nine months of 2024. Service revenues increased 6% and 5% for the third quarter and first nine months of 2024, respectively. Wyatt contributed 1% to service revenue growth for the first nine months of 2024. Chemistry sales growth increased 8% and 4% for the third quarter and first nine months of 2024, respectively.

Previous wording

Operating income decreased for the second quarter and first half of 2024, primarily due to lower sales volume as well as the Wyatt acquisition-related retention expenses and purchased intangibles amortization, which collectively decreased operating income by 8% and 10%, respectively. In addition, operating income for the first half of 2024 was impacted by first quarter of 2024 severance-related costs associated with a workforce reduction primarily in China and a litigation settlement, which collectively decreased operating income by 5%. These costs were partially offset by cost savings from recent workforce reductions and the absence of transaction costs related to the Wyatt acquisition. The negative effect of foreign currency translation lowered operating income by approximately $9 million and $16 million for the second quarter and first half of 2024, respectively.

Current wording

Operating income decreased 3% for the first nine months of 2024, due to lower sales volume and the increases in annual incentive compensation expense, purchased intangibles amortization associated with the Wyatt acquisition, severance-related costs associated with a workforce reduction in China in the first quarter of 2024 and certain litigation settlements. In addition, the change in operating income was also impacted by the cost savings from the workforce reductions and the costs incurred in the first nine months of 2023, which included $13 million of transaction costs related to the Wyatt acquisition and $27 million of severance-related costs in connection with a worldwide reduction in the Company’s workforce in 2023. The negative effect of foreign currency translation lowered operating income by approximately $3 million and $19 million for the third quarter and first nine months of 2024, respectively.

Previous wording

The Company generated $317 million and $215 million of net cash from operating activities in the first half of 2024 and 2023, respectively, with the $102 million increase being attributable to lower annual incentive bonus payments and an improvement in working capital in the current year. Net cash used in investing activities included capital expenditures related to property, plant, equipment and software capitalization of $65 million and $81 million in the first half of 2024 and 2023, respectively.

Current wording

The Company generated $522 million and $373 million of net cash from operating activities in the first nine months of 2024 and 2023, respectively, driven by lower annual incentive bonus payments and an improvement in working capital in the current year. Net cash used in investing activities included capital expenditures related to property, plant, equipment and software capitalization of $90 million and $119 million in the first nine months of 2024 and 2023, respectively, primarily due to the completion of the Company’s new manufacturing facilities.