Waters (WAT) 7 Nov 232023 Q3 Earnings call transcript

Good morning. Welcome to the Waters Corporation Third Quarter 2023 Financial Results Conference Call. [Operator Instructions] This conference call is being recorded. If anyone has any objections, please disconnect at this time. It is now my pleasure to turn the call over to Mr. Investor of Head Tudor, Relations. Caspar sir. Please go ahead,

Executive welcome Thank Corporation Waters by President Udit and and and Senior Officer. Chaubal, Today, you, Good morning, Dr. Chief President Waters' Ivy. Chief to Batra, and Third Vice joined Amol Waters' the I'm everyone, Officer; . Quarter Financial Call. Earnings

market Investor to slide begin, our Corporation the year XXXX earnings we that quarter results statements I performance provide only cautionary may section and presentation future differ possible full guidance Before and the available over of expectations or out today's Relations that cover we are XXXX, language. These I various regarding or future regarding XXXX. website potential In our and results the our actual point the business impact will may the would present supplementing In call events financial we forward-looking first and conditions at like of conference fourth this of Waters release particular, are will statements will on future ir.waters.com. and on make company. materially. commentary call, events

XX-Qs included report factors For most the annual our the our on and in language Form more Form risk included cautionary this recent morning's XX-K, release. details, see please in earnings

we decreasing the constant XXXX of to measures quarterly GAAP release organic company's Reconciliations the comparable currency non-GAAP of year our to call, non-GAAP financial to of operations. are of most morning this or measures, and attached references Unless to directly are website. issued in today's terms. will the During stated certain presentation, available which our increasing to discussions fiscal financial refer results including in otherwise, third the comparison our in are the of appendix the earnings measures quarter in results on

call currency on on In addition, ranges rates basis. organic a comparable constant all comparable today's stated year-over-year otherwise, -- growth on given given revenue and unless organic

our law. required update part scheduled except not guidance otherwise as predictions regularly or intend earnings of Finally, by to the as we do quarterly or projections, release

Now, our we the I'd phone to detailed then a call open our turn take After, results. to up over for provide Amol remarks more the to will deliver to lines financial quarter, will the look questions. like Udit Udit? at key

capitalizing Caspar, environment, you, morning, opportunities to performance products and start customers through in call focused and Despite want available our strong colleagues good thanking our great today's for a Thank delivered my and I the everyone. teams solid other. job challenging did on supporting on macro commercial new execution. the developing each by remaining a

from headwinds growth greater, strong our the As we unmet China launched and innovative margin the expansion, in that quarter. serve. earnings portfolio and further customers of our our differentiate to needs FX that and indomitable gains the productivity revitalized for critical We resulting became markets new in products rallied end teams address drive adjusted attractive

We progress Wyatt, light also new launch first continued the to strong of our instrument. with including scattering make

Sales outside than constant as X%. China largely above sales to quarter, of results. now our In expectations. grew third Turning X% declined the or reported. sales were at Organic currency less by our

However, at lower the demand to in beyond ultimately which of our our guide. China led our sales end fell expectations, landing

GAAP at percentage basis On margin were diluted gross and increase. points per adjusted $X.XX, above by XXX quarter growth and earnings This challenges a margin continued its per was currency to Viet start dollar tailwind. Despite for of market With the the the earnings U.S. us X% our impact, adverse share diluted by $X.XX. expanded to points. allowed share, non-GAAP basis our expectations FX X% our expected. on impact as strengthening, the percentage sales expectations fully deliver X% operating fully quarter the XXX the versus basis, a strong an we flat contributing our

strong China quarter. environment pharma our academic impacted Looking velocity. quarter. results now our broadened slow weakness results grew organic market among the large X% currency with government U.S. we both Market progressed. as have saw XX% throughout and now a segment, the In Europe challenges beyond and deteriorated the performance as China, approximately pharma in continued China in in X% in and despite and the pharma the grew sales medium-sized more Overall, at quarter funnel customers In detail. end continuing industrial in demand Pharma constant declined our to further

tough was In teens. the China, XX%. year low Industrial X% in by comparison segment, a prior of Outside of over Industrial subdued quarter China declined growth the declined as

industrial While academic with the In strong battery and see globally, traction mid-single-digit applications new products Europe to continued government, in in double-digit Americas of the strong continued saw cyclical uptake we and low growth in testing we with growth. applications. slow most and have to continued in PFAS

commercial organic grew looking low digits year-over-year program that single to results currency stimulus third strength has outside year's and this concluded. related core in over is constant the and X-year [indiscernible] while continue market basis. offset now quarter on the However, our was last at pronounced more declined environment of healthy X- to sales than difficult, more business, we XX% by When our strong a a China, In results. deliver have shipments become X% which China, our weakening

China currency key our year is this constant excellence which been quarter, On with our where basis points. quarter the digits is mass flat growth performance and focus innovative new in strong share a expansion year-over-year we our mid-single In China. of organic drove driver XXX year-over-year, excluding managing of product our performance business margin year-to-date. an the our area our We're including spec, third operational a gained basis, overall, and effectively have gross also XX.X%, margin for year-to-date A was portfolio. that very P&L on has through

points adjusted to substantial basis margin basis points. to XXX XX%, our Year-to-date, margin expanding operating basis expansion XX also points margin our was margin XX.X%, gross our adjusted and operating XX.X%. Our up results with XXX up showed

drove about about what talk this. me Let

First, quarter. continued have achieve teams over points at results to levels strong were pricing that our for XXX basis commercial the

excellence productivity of that next the center focus will our and will of on the India, excited operational Second, to digitization celebrate opening further in benefits capability our accelerate global and operational I'm we're pursuit Bangalore, realize new month, Waters' which digitization. our of beginning excellence.

Third, through our proactive have rapidly aligned growth our long-term cost actions, resources we strategy. to

the the While challenging, excellent. is market current to environment be end markets our fundamentals continue long-term of

we historical quarter, last sales, prescription where profile X% we which vectors expect exceed incremental place mentioned for sustain drug to to in growth our includes pricing growth have basis are as expected a I As great rates improve in historical instrument versus as long-term global to our a are put result than that improvement XXX business. to This there levels. more growth historical well measures point growth

spec In instruments adoption growth growing in mass as such positions growth. for users raw new recurring quality as and strengthen process instruments find also in vector This a end light volume addition, of long-term of as to our competitive revitalized well development, applications instruments high portfolio in materials analytical process value the is expected portfolio. our is for for edge scattering us therapeutics development molecule and such these for large and only control. The testing

such our few the innovation is IS, needs launches with been pharma hit the customers. renewed in significant includes LC the most is believe portfolio which the as QA/QC new critical that innovation years labs decade. to This answering we last in the product Alliance has of Our unmet in significant past

environmental food columns molecule to In and customers' share Peak in the the allowed sensitivity has most market of our In for testing history, MAX been applications. premier large the our separation have more us labs. mass spec, in successful gain chemistry, industry-leading in Zevo of company's needs the launch related Absolute PFAS TQ serving complex our

solution prep, plus directly quarter, bioreactors even analysis accelerates upstream from a optimal biologic as more easier results providing clone use. data the launch upstream and robot, and lab handling that into more Viant. that automated help we for that selection announced bioanalytical engineers new achieved those and our such high-quality is a to system including BioAccord products product yields. characterization bioprocess first sample launches development new combines our offered product capture. Andrew this simple This other setup capture our X Together, in LC-MS During launched more X new Sartorius. liquid with by software We the automate new drugs these instrument LC-MS bioprocess maps drug of effective and It that via workflows and data titles walkup

designed precisely is to while sample material cover our compared life using cutting wire ZetaStar Second, X life measurement time volumes. analyze to measure in It by would nanoparticles now updated I techniques like other -- single instrument a biologics guidance. and up first used to to portfolio. XXXX device we low launched combines science extremely methods into measure our within scattering applications. downstream the to new XXx scattering and

continued progressed. the to as Growth year rates deteriorate in China has have

We our further constant the previous sequentially. expect year double to points prior The result digits. versus this now XX% in versus to the fourth an of full for XXX is guidance. headwind decline expect year expectations We currency basis low our approximately decline China approximately our incremental quarter to growth organic of

no our negative the expect revenue we sales to our change drive for manage expansion, performance As be the expected to to percentage Despite of in resulting full growth cost and proactively constant negative to lower previous result, revised a versus in X%. organic year productivity guide. guide now continuing currency X% margin our structure our range

which our full versus XXXX. points to operating of year XX.X%, margin is adjusted be expansion We basis expect XX

in EPS is updated $XX.XX. Our adjusted resulting full range $XX.XX year guidance of the to

pass third to additional detail commentary will our in Amol Amol? guidance. give Now, the to financial over our continue more and results I on call covering quarter

In tailwind as mid-single-digit X% declined Pharma, challenging and good X% X%. positive sales. Wyatt comparison by saw sales below to came constant declined business and . In Udit, declined with a declined end In reported growth digits over X%. expectations mid-teens and by market, Industrial, constant performed declined in of over was results year. spilling quarter, X% third the pharma you, of expectations line currency environment. currency good Pharma, Organic segments. TA China last as which in constant China tough added to in was XX% government our again everyone. declined continued and from less China our with against the X% industrial quarter XX%. impact and declined growth both morning, flat We weakness in reported. a of offset outside the acquisition, and prior growth FX grew than X% despite in a In year organic than more single of sales high Waters' our which growth academic into X%, The the nonpharma slowdown comparison currency now quarter, which Division Thank due our

and testing testing PFAS We global applications. battery continue strong to see growth in

Outside completed This and X%. up was Academic by China, under in growth of mid-single-digit grew Europe we A&G growth By geography, double-digit led the the In declined. over growth X%. the X%. was was as overall Americas rapidly government stimulus Asia, broadly and after declined declined shipments and half the A&G of program XX% XX%. In declined demand Americas. The fell China year. in sales Europe China, flat in in Asia first

our Excluding exceeded well with and as grew India executed grew grew mid-pharma line government also to China, Asia large with which Academic Pharma and customers. our grew X%, Japan digits low In very X%, grew mid-teens. X%. double which our in Americas, was expectations we expectations.

offset quarter. these contraction for segments in by was X strength in However, the industrial

no academic which Pharma, number digits mid-single and revenues in of outside XX%. and high Industrial expectations single grew products prior mid-single instruments the overall our digits exceeded government, of year's and declined and segments, which change By while China. digits declined grew grew Recurring growth mid-single digits. Europe, in was XX%, versus days There In quarter.

Gross focus pricing, incentive proactive quarter on compensation to in of the XXX was XX.X%, basis with operational expansion. continued margin the productivity margin together continued an with excellence compared XXXX. XX.X% expansion cost lament approximately third and quarter points drove for Our lower of

points an third approximately basis compared XXXX. XX.X% operating of margin quarter for was of XX.X%, in XXX expansion Adjusted the to quarter the

XX.X% was XX.X at the to million than average Our came effective in discrete the quarter quarter. third about XXX,XXX items less quarter within year. which share count due is tax rate operating for shares, of the The last

diluted in share to $X.XX. GAAP fully earnings of fully increase an press per our despite X% of revenue. presentation. diluted call to appendix our reconciliation earnings $X.XX, On is attached a our this earnings basis, non-GAAP of were and flat GAAP morning's release were non-GAAP per Our A earnings share the

special We and now free excludes flow, from deployment Turning and items. cash flow balance expenditures capital cash as to capital operations, our less define sheet. cash free

$XXX to a was to million free This In access including the debt and funding of cash was returning after impacted maintain third higher us $XX shareholders. a allows in cash balances. to well-structured capital investing liquidity capital by We prioritize strong balance XXXX, of and Free inventory quarter expenditures. profile. M&A sheet, flow million strength growth, maturity flow

We of further we position third will the $XXX M&A during the ratio This opportunities quarter, meaningfully of Wyatt declined to that continue $X.X accelerate X.X. to million end quarter represents net net At evaluate billion, a creation. debt about decrease as acquisition. value of a our delivered the debt-to-EBITDA

As us debt of incurred our to temporarily previously Wyatt program as been share suspended the buyback enable disclosed, part pay the has down acquisition. to

into the the program evaluate repurchase of will next We year. first quarter and through resumption of our share the half

updated our for XXXX. provide thoughts to like would I Now

year has Udit growth As China rates continued have the in as progressed. deteriorate outlined, to

into academic end has in weakness and industrial addition, In markets. and pharma broadened government beyond and now China

expect now year China to This XX% XXX points for growth sequentially decline. the approximately rates to decline growth of quarter versus guide. a our low prior expect to We previous double-digit full the of basis further approximately in China full decline and our headwind year translates expectations fourth versus

are we currency year our between range guidance XXXX sales and result, growth full negative X%. updating negative X% constant the to a organic As

dollar At which to year Wyatt year XXXX now we our our approximately negative current the on has call, earnings Therefore, transaction XXX basis guide. negative against our a expected exchange have full growth guidance to sales, impact point full X% X.X% our U.S. our rates, last reported a major translation currency most to currencies total with is expect X.X% sales growth. headwind our is since prior prior versus revenue where flat. is now add to Consistent the strengthened expectations,

incremental As Udit have pricing from China gains. teams and and headwinds drive FX, rallied despite productivity covered, our to

funding line margin versus last our year, will of guidance the expect year. previous this an us which us last deliver XX.X% Together is will with also is proactive line for expansion to in adjacencies, points with points with operating versus approximately XX% for previous a guide alignment, high-growth year. allow investments expansion XX in XXX deliver basis gross and after We our of and year, allow basis of we margin expect adjusted which is in this to the cost approximately is of

is The full expect interest year year remain tax our expected approximately We approximately to million. net full expense at be to XX.X%. rate $XX

be shares. share approximately million XXXX count diluted average Our is expected to XX.X

range non-GAAP rolling a percentage our includes at basis, FX year fully which this $XX.XX full all guidance earnings to is Now impact on per a rates. current negative share XXXX together X.X of diluted of projected in currency approximately $XX.XX, the points

total sales negative growth. our range while growth guidance fourth throughout we growth the today's At add spending rates, negative the weakness Therefore, Hence, constant X%. fourth to sales subtract revenue is approximately of our further cautious to X%. quarter. our we quarter currency currency negative to X% X.X%, XXXX, China to is expect to we X% in quarter quarter quarter in fourth X.X% approximately fourth Looking expect from customers translation of expect expected to Wyatt negative and organic the reported

be diluted Fourth estimated $X.XX, $X.XX quarter which are from current to percentage at includes currency share non-GAAP earnings a of in negative approximately rates. range FX the fully points X impact per to of

to like it back summary Udit? would to comments. I Now Udit for turn some

Thank Amol. you,

solid has that despite progressively through a we deliver execution. weakened So have macro environment to performance year, continued to summarize, a this our

despite operating performance our from volume also are adjusted are and year margin We margin FX. full headwinds in our maintaining outcomes and margin strong driving gross earnings incremental guidance and and

to product with make Wyatt. while our even our progress strong innovation of continuing We further strengthened acquisition have portfolio through

our a our way forward better report world commitment leave issuing transparent to year XXXX show progress is to ESG look than found which we Later this active on month, our each we to the it.

initiating environmental expect to emissions, of female in relate the roles energy key report. increase as as continued disclosures highlights our use, TCFD-related of increased well we're reduction year's Some representation to this management in renewable

I'll over back to So call Caspar. with that, the turn

Thanks, concludes Udit. comments. formal our That

ready open We the questions. lines for to are phone now .

[Operator Instructions]

Vijay comes ISI. question Evercore first Our from . Kumar from

quarter sequential year-on-year, on right? What the here. just the progressed the Because one implying, I how QX. Street think growth And think looking QX the at when were is exit Udit, But I dollar rates? your sequential guidance the think what is instrumentation ride you the QX step on -- versus I look at numbers up a mid-teens. is basis, rates maybe growth

streets sequential. it's And I guided look the sequential So just and I think versus I -- your to some year-on-year the basis. a trying look make have comparison think we peers have way dollar versus on at companies think the

third your quarter about QX rates talk what for assuming exit just and instrumentation. in maybe So is

Includes to our thank the at And with as from you exit When group will let we ramp a relatively years in from Amol summary what some detailed from QX. QX look that QX, we to on at we last ramp rates on lot you of comments at give the segments. the little we've we, ramp of question seen to and QX exit the your as look we XX correct. over look QX, our you. across QX This different to bit conversations if I'll go course, customers. statistically. a And and Vijay, see and I'll analytics comment QX Look, strength understand talk to pharma, especially customer velocities the of versus of So And continue speaking, funnel includes course, more I China. about the up. performance peer outside sequential

QX. QX to to XX% And ramp, is mean, you to ramp XX% to at years, from XX% roughly from last roughly is averaged QX. X QX QX guide where the on we've Vijay, look QX Look, our I ramp if a our

if been have levels. the there the years, those years you barely bottom in last at of years, towards muted our of compared XX just have in clearly, So to look it's a couple Also, come which historic guidance. end

in feel the is throughout day QX from year muted sort QX baseline, the in previous ramp of the And there's versus we've QX why playing been one in I great pain then a decent pharma to doing are on there that's that, Europe, pharma, is, and But we point. slower the year. it's that yes, this teams then large in in based So look year. generally, piece the out approval Japan, cycles job is have mean, this there we at which the when with in at U.S., about this extra China ramp the fact QX. our last Also, reflects India, outcomes. especially in And the driving

And be next 'XX feel on Anything up. here, that year? That's comments. singles I jump 'XX one tick the at to operating Or question, this I maybe high minus a XX% year? organic. did the QX I done that year? into will implications minus obviously, leverage? any the either going that Is and look comp for Waters' China but spill over the when like on for leverage in saw restructuring fiscal off is margins is Is helpful cost through for

when QX So any only comment China. comment on -- we will we generally about when that's XXXX Vijay, into I'll next mean And year mean, right? And get we been we talk just talk policy. our about I earnings, I details, on before

As year, especially now know, until a lot evolve end business. the has the our you in of to from

the the on declined and comment development. that's pressure. its business in flushing Pharma just look, which was which in with about, there funded the one not also of sort we in year, under the campaign saw issued. being tail at with tensions. that's XX%, learned think in segment, to of seen on particular, come end high-quality then the China. with think China. in the segment about what in biotech the also overcapacity We government that this here, Generics that We of tail the was we China, will sales of right, the in of our given anticorruption responding pressure And an Branded -- had towards And third of is excess pharma the its But We is that beginning piece at declining So are molecules roughly pressure Chinese out geopolitical CDMOs the additional quarter XXXX. Pharma, line we quarter, XX% the end

to our value-based new headwind. customers value So responding a to pricing are while was cuts, used -- this

So progress. is that still in

The macro in of segments, one last but third new X other when sensitive switching to the Then is in the vectors Industrial subside quarter, So food visited see learned which over enough over not in China, are all was environmental growth China. over months pharma, something this -- to that offset that and the great the batteries starting X is and I segment, quarter. of we in to I out dropped further this segments. couple

segment, commented as will And of Amol then numbers sort Academic from seeing from finally, we're end year. now. the the in tail the the that benefit the and prepared come Government last the of remarks, stimulus of And out

from Now if put started coming current China. Waters' perspective, it in XX% guide, XX% our and of our sales. with all that it overall about be expect sales XX%, you With the we to about XX% to we put year of together

business future, become while So of expect about optimistic in it proportion a remain smaller China the it the year. much than beginning what has of our a at and -- much in the we become has we super

Next, from Cowen. Dan Brennan we'll TD of the go to line

you fourth a ex what of Maybe discussed just lot on of the for obviously, we've kind comments are quarter. China, heard of positive quarter, the you and in but pharma, guys quarter the in mixed trends kind expecting

know you're us flavor detail ex little be So a gave maybe, how you kind about specifically color versus how the Waters' fourth you just you China? trends? think can trends on in of just but pharma quarter, fourth we the on quarter should Amol, a and maybe broader And I some signal instrument more doing, give again, thinking maybe for

at Japan. expected, large the rest this One, digits. I a we X the we declined Europe, you to Look, ex a And pharma is funnel almost and so our our would and mid-single look significant this is roughly bit XX% growing . behind as that we numbers in question. mean we thank of India saw Dan, levels velocities is China, that less APAC, probably mean, exit factors. really, product So lot overall, under biotech And across -- China, of where the pharma across at of saw we right? pressured to If group, amongst the just that despite growth I see X came beginning fact new China, the strength for single slow we've the I and decline traction in low I is pressure printed, additional portfolio in peer see or gaining little Americas mid- the say, in the tale most quarter-quarter on. stories, approval it's positive in despite commented across and become the starting a year, it's to year. as starting of digit,

XX% of MaxPeak the its Column in And walk-up recent into year developed growing still applications, saw year. BioAccord, biologics Premier biologics which pressures, have IS, So real make And faster. we has orders. been placed portfolio the have mentioned, I [indiscernible] range. on in large with the should LC, staying for a even healthy. IS start process the new the significant has the the Alliance The well macro had Alliance funnel and third we for looks in really done pharma, for you is theme have and pharma, product as of star well. specifically super customers solution launch the despite our development orders and

towards So many, been recently for the many in we and and introduced gene targeted another for years. And launch AV is strongest column that therapy. us columns cell

feel environment seen difficult year what a So this pharma really about excited in share. we're like gaining despite and we've

pharma strength. We of term, expect long the over a remains -- digits. And mid-single source don't grow to is

single into to future. expect high as the we digits grow We digits double and look

the pipelines super mean, see well in very excited what in customers. about the I GLP-Xs and I'm from are our compounds. we the Alzheimer's we specced So

macro So would future challenging and really optimistic the I say, about execution a proud the Amol. in team's environment, of

a for touch When is pharma Obviously, on single the sort And you to question. us mid-single-digit becoming your decline. digits embedded at of the digits the low QX, of sort a rest China the the a and is declined still what China. in of what then are QX. the grew [indiscernible] than in markets strip under in they QX, includes them just little then in to same bit Yes, other mid-single QX. less of guide for expecting overall QX that level out for little not markets, grow, QX, rest we but in

it. on Got maybe just revenue. then And instrument recurring the

about in outlook just complicate maybe Obviously, there. Just for but XQ? of flavor kind you wondering you of of seeing can kind seeing you're trying overview a little any what went the of there? seeing an kind you're us bit are revenue? steadiness things, to recurring give that Like the any just how changes the quarter Just of and of what

and then on instruments. I recurring start let's with comment So

mid-single X%. X%, low single service at came So X%, recurring this this in around digits globally. digits Chemistry, revenue quarter is

the X-plus range. revenues strip digits, mid-single-digit the in you close high service percent. out, in With recurring high China if are Now single to again range, single-digit chemistry

China impacted the for flat, LC, we it But hovering outside minus activity saw it XX%, TA, less and customers. growth similar mass Generics the given really in portfolio. saw quarters. low So minus the declines, was and and right? instruments I so really right? here, around, we then And turn, then China take if XX%, to China, outside across like single-digit significant that right? just LC, So the flattish drops as chemistry want switch whole I to you low growth with instruments, piece saw in this again, spec strip across say, And I each quarter, really growth the Branded this which teens healthy quarter, of globally, were our last dropped something X would out last if of China,

quarters as see about when we starting have and some that with Just and customers. ago fleets happen a had to large we in decline few LC saw pharma we're will mid-teens their talked replace customers to

growth. LC hovering is So low you of single-digit around sort see to flattish

in about came XX% at ex-China spec, decline. Mass

spec Now time compete that I virtually that the Super XX%. spec almost XX%, last and we mass its what portfolio seen account will about you go with every almost quarter, same the excited in adoption we mass remind absolute win. with we've grew and ZevoTQ,

If see Xevo you there. bio GX with QTof. and seeding now, especially adoption with significant We our portfolio go BioAccord,

high has of And strength gone continuing. XX%. a on TA, from strength, declined but about mass and So digits, again that comp again, to see we spec also single

mean growth. you So X-year, you mass teens back with I at go spec, look mass spec again CAGRs, we're to if X-year well if the high into

excited as about we new molecules We we've And X% adoption product new over roughly grown X%, grew and what again, we [indiscernible] So And term. portfolio see over points basis you about forward, with instruments. XXX increased coming seeing are across go new longer-term have through a driving long PFAS. seen our just, if like instruments quite higher segments with trends, rates prescription pricing. of cost

we future -- growth So excited about the the to what what execution with past. seen better are what seeing we in expect are be we've are what the instruments seeing and board the we than we across also with in

Sachs. Next, from Sykes to go we'll Matt the Goldman line of

just pricing. first Maybe on

do we tailwind. a to peers how of towards a Can then what of this for believe expectations from saw continue is as are of in back basis XXX of trend in QX? And probably you 'XX, be you? Just you starting on price, into given pricing quarter gains your just heard that for tailwind you levels, points sort your pricing maybe margin about to go will comment the much less normalized price we've comment

Yes.

history, last through pricing. opportunity processes So Look, that mean, around and And basis Matt, good put went our And and different. on systems I XX us for done if at year points question. have last we've ever you pathway. since to cycle of the gave very thanks your that look was execute year, to sort Waters' to and traditionally, inflationary XX teams process continued we system

a as with sort that's little of only QX, the similar we thing basis margin stronger basis expect over little quarter. So which driving X/X we the be we then the with came points. XXX our for we over started points. XXX basis of full some XXX points, year operating got a expansion And little in And QX and will it's for into a about then year, over

just We've look, dependent on said, dependent good execution, pricing it's from differentiated processes, across it's receptivity and got Amol full systems, very renewed this, as Matt, think to portfolio our I a but is And conclude instruments, good portfolio. customers. on equally upon, high good

amongst So right? peer MaxPeak customers the on column new the with innovation AV columns also highly instruments, differentiated with group. are Premier are to the responding I I side good introduced stick applications, we where mean, rates mean the for tremendous, but are across

do stick we high pricing So to reasonably levels. at expect

just Great. China, zeroing just in on as the And then, follow-up, side. a specifically industrial on

for are sort relatively quarter. the You I that's you to environmental talked think mean but And the the new understand talk China expectations batteries, been within of maybe your food I weakness? about of and believe about in weakened strength Could to and what dynamics industrial in I we've that dynamics relative demand hearing. duration information the there? just what inside wanted

simply the more by expect look China. ahead, that's at the are in that which proportion weakness food, Yes, we're model macro I like industrial China, dependent And X the government the mean good funded as recovery quarter you globe. China, seeing testing is materials PFAS the how into would very in one, challenge the in in the And right batteries, well as -- there it parts. we mean uptake. like segments And also it. so Look, are to expectations segments like economy. our across in below by resilient especially came I slow that you're looking drove and slowdown where impacted to were economic as the divide would those we're I for Matt. The the good of

of China, we're to for this, of China, growth I in in a sure, of you I outside ask term strong food comps, materials largely sensitive mid-single-digit industry. of bit But expect a Now a of for a long there mid- the course, and mean, segments and again, very we like China, the the long-term basis, was . in growth weakness saw additional right? industrial. single-digit like. China, against macro outside On related mean should high didn't seeing to you very, slowdown outside but

line De from go Bruin to we'll Derik the of America. Next, Bank of

Can comp QX we XXXX. QX much step-down back? next to to much So can us the just on some thoughts into move how at the give think should of you into the incentive QX year? look going that as about of come sort as sustained in just one how expenses, How we operating expenses and we is first that that looking was to operating is of be

Yes.

but of And decisions $XX And right, had earnings about workforce QX our for our in call, resulted of did to in as savings tough million in and thanks Derek, -- we QX reduce last make X%. our in your beginning So I QX that at mean, discussed the necessary that that we results. approximately is had by to some we we question.

XXXX we in out We EUR roughly next will annualized would some about it's QX. which may of $XX before of annualized, million. incurred invest expect And impact, for is another adjacencies. GAAP for non-GAAP expenses year our which million, be to severance in And play $XX . Again, to the about million so million. associated it we this adjustment. $XX high-growth fund But with $XX some restructuring, the million XX that

out had is mind, in sort of QX, organic we our it volume keep the Now on way lower in business. played

some volume So we lost leverage.

and underlying the cost XXX freight productivity I the factors are the essentially, and X/X basis volume accretion procurement capability and contributed and of the about actions or the the the which center, just business plus then from roughly reduction offset playing they so points. these leverage X of initiatives out less And AIP talked that for Wyatt more on each the lack then pricing, in underlying

responsible mean said, when we this to really companies to as X Derek, I cost of exit we take of need FX come. was mean actions when for basis conclude, went a the colleagues fact I'm point. being your we on, of XX.X%, So the volume that costs qualitatively years also assumed highest for and maxed DNA I difficult I what the super margin right? with in mean, extremely when you're careful is Waters', points expansion against And And wanted had despite quarter-on-quarter, expand focus had I I So grateful is make and extremely, putting pricing the to is headwind, my margin are the volume margins, to which didn't heads right? people year continue of that Amol rapidly, in just peer management, down mentioned, their we you rather full to ago, mean back out. joined I right? can't XX all and the one sort we them. to respond And and rather around group. the

growth. up. China. has bit follow appreciate to bit market incremental conditions. probably haven't little against products, normal giving we're new surprised of a you your of these wanted guidance are more These you're Waters I I'm a -- just mean, but seeing. I those swings Just that And not and put but outside this and conservatism, like are a I lot seen markets some that I know little before, of But

bit more clarity there aggressively just that. And a like quarter why as wondering and you've flush budget on you was confidence it China. a feels of that's as because you little in outside just bit got guided a for of just the fourth I So little did your

into at the funnel is I over mean So order it. with. high, new buying, with new we first how baseline if just is conversion The are orders velocities Like just growth products with do of Customers in a orders actually to -- think, very innovation, started a what place from all longer all mid-single-digit for right? -- minute, past, input the products -- who right? the stay the And the responding a especially quality it's I and Derek, is the to Customers you the right? lot this is saw right? they the have pharma look QX, I'm I are. quarter. that pharma, just bit than sales bought they're to been this the in are just and goes

calculations. into our goes that So

okay, I'm lowest, of a which to XX the is And talking clear And spending us -- XX% seeing, in these this in Second, look our of execution QX, many, been have So them. we That appreciate we've of last in unprecedented we lot So -- like and and that sort long times, confidence would lowest into in ramp looked as U.S. we is uncertainty, well, sort And question, rates, ramp conversations, have lowest historical both past. facts execution are right? And the the we appreciate, ramps context. historical at we gives the one the to I else I with the at have than the is pharma. ramp said, doing past, great historical of when QX good look, us to end years, of that I a we've many years. is the anything guide it's right? took from customer the of the we of going wider in guiding because QX be have customers, time one that's your appreciate say, I third then time, I projected. but a And the the account guide? are asynchronous ranged lower seen right? and hand this you lot largely to especially is for say, products, I have Amol, the why outside And we're we're we We the the on rates. the with in in to guide, add extremely of wider think new I QX mean, have industry than of that extremely, we've

Vatnsdal to Rachel we'll Next, JPMorgan. from go

some of Derek's that answer First, follow I just to around to question the on rates. want order up

pharma, quality well order then any and how rates from the as into at it's sales just ex ex-China that and of is but that's pharma XQ. taking versus that's give you us that conversion have kind orders stats to mentioned world bit been whether of a high, You Can book-to-bills, looking trending longer. little total

funnel especially velocity QX. see the mean, look, at through gone all of has how did year you sort We if is has we've of I stayed Yes. funnel QX, sort QX and in across the slowdown higher pharma where played it And as then see the velocity level. a trade out. pluses

in current we industrial sales place one these hand not canceled terms opportunity orders. the changed more pharma, in have for in emerge particularly drawing of land. available haven't somewhat are is seen mean, it's backlog QX. QX. through going has or are of is they're in the that And which seen continue there, taking lead to that of and canceled. and where slowed people to haven't the And the with conversion, China, time in trade we QX we And [indiscernible] the not orders, the trajectory for seen they so projects getting in is down lack And I of in seen meaningfully confuse But CRM velocity orders. system in orders. quarter we all are we when from are QX, progressively levels canceling taking class. customers saw while the just And again, No is and about. of in of sort funding getting outside testing [indiscernible] is haven't So seeing projects versus QX are any year, don't getting it's that to funnel what we elevated this What in has time good opportunities and prove talking more I'm is And opportunities sort this canceled any to we expect funding we labs. landing,

in different QX has mean, went into for sort we've as funding done especially Tier the which over sort drive, progressively investor anticorruption and before, X. that That which industrial with And a and the covered ANG, is X Tier then and generics yet. And I in story, CDMOs then played CDMOs of China, branded painful. into and of then VBP is built ANG. out with biotechs more with bottomed money then in haven't stimulus Tier X, and much started

I comment the persist they'll with one pharma especially the in mass LC and what exactly we trends seeing thing spec saw last that QX, as QX us are in same then with the on confidence, just to Rachel, ramp And QX. and we mean, QX. gives in

we out. we're discussion the the same why probably I sort think reasoning, had peer are than Why feedback. seeing of flatten the same It's customer the group. same pharma seeing seeing we better and are LCs we in performance

it's So QX. that project reasonable I . to into think

go we'll to from Research. Yves Bernstein Next, Berstein

One, adjacency high related. questions. growth Two both

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you going it's to well, Wyatt that. So opportunity extremely expound on and the thank for

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So the adjacencies delivering. high-growth are

and the it continue to year. the invest adjacencies next as we beginning how high-growth Now the we give at how about in we and of will lands, will as full going look talk to year at at the look we're net guidance picture and we invest

to of go Baird. the we'll line Catherine Schulte Next, from

Maybe rates comments attachment tracking service your of Any how on relative on here. and and those are to first, e-commerce to touch initiatives commercial just some trends expectations? your

Yes.

So so of ahead are for thank target. attachment Service rates attachment you rates, Catherine, well question. service the

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to XX% jumping think year, moving off XX.X% quarter there? somewhere just quarter. we pieces through to seasonally full margins high, and Or in in for the that XX.X% are the saw point for the XX% fourth the implies 'XX? as but get between I fourth the often a third I quarter that know of walk your should think we

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situations. about feel in really how good So teams our we responded have these

X you mean, our want how next a outlined, the as out. months year. are it's early part XXXX, right, because big -- Now look They little play a we at Udit I to as of see

to and talk of review we want before We are up of also about sort bottoms-up sort that just our we rolling AOP, XXXX.

our for and details call, we guidance do always So like we earnings QX at will XXXX. provide more

is And for that all questions. you. we Thank the have time

This us your of the our call, support A our Investor Relations in for we seeing joining and look today conferences. for forward will call section concludes future Waters. be and you interest of at replay Thank this events and and in available to continued website. you

Third XXXX Thank Conference the Call. Quarter you That Financial all concludes for Corporation joining. Waters Results

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