WAT - Earnings call transcript Q3 2021

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Operator

Good morning, and welcome to the Waters Corporation Third Quarter 2021 financial results conference call. All participants will be on a listen-only mode until the question-and-answer session of the conference call. The conference call is being recorded, and if you have any objections, you may disconnect at this time. It is now my pleasure to turn the call over to Mr. Caspar Tudor, Manager of Investor Relations. sir. ahead, go Please

Caspar Tudor

Good Quarter and Earnings Operator. Waters to Corporation Third Conference morning, you, welcome everyone, the Thank Call.

Before the we cautionary cover language. begin, I will

We caution may make possible future present full-year potential XXXX. in conditions During forward-looking that events In performance commentary Waters particular, course XXXX such of on provide differ conference all indicated market of Company. the Corporation we the expectations guidance the will regarding and this of may forward-looking the from business materially actual our that quarter, fourth you statements statements results impact over that or or events only and results statements. will regarding the those we future future any financial and and call, various are and Company

webcast, The webcast February earnings currently earnings cautionary the our risks the scheduled not a reports during except of in Form risk some discussion cause morning's expectations caution this actual required release quarterly call on to by in projections, well file the XXst, for recent release that further Factors. law. performance contingencies or press with Risk our December regularly included in next ended predictions in COVID-XX and included these Risk as And under otherwise differ X, the to of conference Company factors related the the XA planned the caption of in [Indiscernible] our risks on present you language that significantly XX-K annual from XXXX. and effects for could respect Both We on to ended the fiscal year does including the most detailed XXXX SEC, For to of calls Part as under X of XX-Q as Factors. July on intend our quarter which any the quarterly business. or Xst, Form the reports are pandemic Part is and release, for update caption with XXXX, our the our

schedule we reconciliations operations of and of the non-GAAP are exclude to results referring impact included titled discussions this references of refer our GAAP those appendix call, are of available certain may our which to our directly our today's non-GAAP to the to results, presentation, in GAAP non-GAAP the year in Unless such our comparable of will of to results the we measures, and appendix During of outlined morning, on be issued presentation. Company's stated third release in non-GAAP comparison quarterly earnings release in measures items most the fiscal attached press morning's the website. or which of as Financials" otherwise, financial Adjusted quarter XXXX. in financial "Reconciliation this the decreasing, are increasing the to measures, And to

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

Now, CEO, over Batra, the Udit. I'd to to Udit like Dr. and Waters turn call President

Udit Batra

call morning's everyone. Caspar. Caspar, Officer. Vice and Financial joining Waters' President good Along Chief you, this on Amol is Thank with morning, And Chaubal, me Senior

spirit We first who our thank have strong, broad-based reported another momentum X,XXX colleagues portfolio around the across the quarter and geographies. over represent our of indomitable We Waters. globe of

effectively. talk is that would often it year about compete impact what like to a been. Our since the ability one is new of exciting our joined because to teams same, has first is marked the despite and what year pandemic. and asked what supporting products, the have remained delivering different. Xst, what focused developing and I September customers on giving Company, is more I'm I the continuing the us

the to urgency scientific focus stands these invest sense a What same. challenges, of have courage execution, our we is accountability. of on leadership our team This and stronger clear remains new understanding brand customers' and with a injected innovation. a expertise, for in Our game-changing

in We work but trend are a the progress, is positive.

Now where Slide journey. moving are X, we to on our which summarizes

with growth performance momentum with positioned commercial of HPLC plus and Premier through deliver quarter, strong our solid sustaining and Venn ailment. XXXX. commercial SPAC instruments business strong of growth showing sales new another X%, delivering minimum our and Meanwhile, we're Columns products were traction by to Firstly, initiatives market COVID Arc

technologies. higher we're growth comments on by geographies I as then our well now financial brief steps of in outlook, overview you Biologics commentary our problems we Manufacturing. are financial present taking building questions. your momentum updated decisive solving on will results as and provide adjacencies, phone operating third markets open this Finally, a key that lines results, like in our quarter on the to did up our Amol review then will take provide end guys will in

strength grew to and revenue our in Moving That in end markets. and now pharma the slide as for reflects currency basis, basis. has versus a our third cater currency revenue X, is instruments XXXX stack XX% XXXX, about continued on also increased quarter, a revenue X%. translates the our demand to constant-currency second Year-to-date, quarter on and industrial products. constant reported, with a XX% regarding stacked versus CAGR the X% This constant for the

$X.XX. year-over-year. of per non-GAAP XX% resulted share share to in growth earnings have Our QX grown $X.XX, XX% non-GAAP adjusted Year-to-date, earnings growing top-line adjusted per

Slide closely in top-line on for currency. the X quarter at results more Looking our constant

applications. and for sales small which division reasonably our academic strength business, X%, industrial mid-teens industrial, largest By First, Pharma, imagery quarter. XX%. customer broad. And next our by XX%, molecule broad-based growth In in category strong and while grew Calvin internal was beauty across Pharma, grew XX%. the grew government large globally both end-market, growth Realogy. declined segments, applications, while saw grew and operating which X%, market segment, by by was molecule saw we micro grew both in geographies and continued TA the in Spend Waters a

regions. continued our strength XX% in China performance Europe Turning offset to of and which business, is and was softer by government, academic other about in

on X%, grew China Asia the performance sales growing Moving constant X%, geography in sales U.S. with off a were by India grew in basis, in last Americas X%. XX%, down with over and sales XX%, currency Europe the sales XX%, year's grew

Now very clarification the healthy, to of in approximately execution our million delayed the China. of the an fourth few airport shipment of been remains quarter. of few has $XX shipping does quarter the to the at third-party as the a and issue days got days bit A Demand first of initiatives. on in delivered last due

quarter, year-over-year. at mid-teens, Looking, for orders therefore, was China this the up

strength by growth industrial-end strength our no challenge really pharma, demand saw led So, a was portfolios. in strength In across In continued perspective. Industrial, pharma, In we the academic, pharma both Europe, and U.S., In remains and saw all markets [Indiscernible] Waters robust instrument Galaxy businesses government. and and broad-based with and our from continued strong end markets. demand a industrial, our in growth. across

quarter, growth market, very common strong by fastest-growing instrument customers. the was our to driven sales For in our India

Caspar Tudor

for see execution, year, quarter, like released to Premier this an robust continued improved the continued in customer Arc grew strong products on India contribution, in especially when you Overall, indicative newly driven our instrument demand and ACQUITY, after Biologics for and LC, instruments, the uptake HPLC commercial novel XX% by growth remains to Arc of the product for replacement. and modalities new sales applications strong, and As also recurring is demand strength both global half know, In for mRNA small of generic instruments for molecule pharmaceutical solid. primarily export, instruments, remained a of services, invested growth. the and continued first and our and At molecule sustained see demand is dividends market small drugs.

Udit Batra

SERIES indicator positive and our delivered strong The seeing as used customers single-quads, remains in well led resolution fast for quality sustainable in MRT mass growth strength encouraged interest service. drug strength a with we're our In in by instrument in Oligo early our a development. purification, and our for We're demand for users from pharma, Time-of-flight Biologics portfolio which platform, at consumables strength spec, by as highest demand future late-stage speeds. LC also in continued Tandem-quads SELECT

well utilization making easier industrial our strength for for markets. pharma for sales Premier an business do driven as Now customers revenues with progressing our and our in in initiative XX% Chemistry our increase to our while end strong, remain recurring customers, is us. grew of Columns it as e-commerce by new Demand

compared Premier its Technology of our commercial year, execution, have consumables almost and year-to-date. various chemistry surfaces. our of this mRNA that in compared benefits grown to Service and plasmids two-year in quarter grew and provide molecules, have have comps service selected an X% this continuing our -- and given binding seen when become basis, By the reduce to last pleased to far to attachment grew double-digits is tougher. as to important on mRNA So year's [Indiscernible] unique ability rates quarter, and We're oligonucleotide service XXXX the certification constant separation our revenues. X% double-digits and for a fan proposition again focusing value On currency stack increase even we also in

Finally, stack driven instrument had its materials, up as analysis across a instruments strong on of academic regions. all customers. DA used with grown has great well as the at strong as XX% year, basis almost sales had advanced in X-year for quarter instrument by so demand our growth -- DA X% microperimetry sales a far rebounded for this demand and pharma with demand common have our

continue focus that let on will market now believe now Moving to to slide me X, growth. deliver why plus we we

compared an seeing XXX sales In three we to let these so our service land instruments our XX% is roughly and starting me XX% $XX XXXX, same we adoption XXXX. from Having In also XXXX. plan, side in our to The X% is become versus available. use the companies. expect used initiatives, frame, think Growth which year, to by over Fusion means XXXX, of e-commerce we think so of channels million remains a of I chemistry business saw strong, the initiatives points slide. the with adoption first you're approaching increased to further over quarters the positively e-commerce in this the left-hand XXXX. basis service impacting million, with XX incremental expansion investment far

year. continue by expect of We to XX% end next reaching this over the

grown So far, contract organizations has the from XX% comparable over versus XXXX. this in revenue period year,

us do low Next products that double-digits continue well. year, XXXX. year to And grow to the expect for new versus

drivers expected taking with and and strong to are and We year XXXX, expecting this illustrate HPLC to point in for Arc of in be continue this the sources example million to the here. total to Arc Both from $XX over unseparate are initiative. HPLC revenue over number replacement the these million. XX Premier we Premier separate just be

give growth So alone fast for X% approximately XXXX, all our growth in initiatives we beliefs should upon which over us market these our base in business rates.

happened critical problems healthy focus, operate we to capabilities. also problems. Moving strong expertise modalities. We understanding in years business in say platform solve strong a end side and we markets Biologics -- This both bring and like our in core allow now the chemistry believe would us that of a solving problems portfolio be a newer where purifying arena, these facing foundation reagents, to separations. to coupled end-markets. on our X, significant there will us operate expertise, separating product are bio high-growth scientific with the Slide to [Indiscernible] in X and our to of these which deeper industry for reagent Having our provides can we and solve I

in file. largest versus the process, wasn't in that with stuck the you you as got bioprocessing, molecule an defined in because master processing, challenge once a it, bioprocessing, engineer I it Second, was drug cited small

We is the solution. measure. a to can small robust attributes right We the can timescale, tool a have molecule, complexity BioAccord number the decouple LC-MS was our that that the tool this is the simple of challenge. begin address to absolutes process development you that to sheer given A and potential Separately, measure multiple product. process need believe from the

multiple fast of play Third area believe, to detection. disease early here. We enable biomarkers need a role again, where mass a significant diagnostics, is we has unbiased to spec detection

partnership leader now some in week, Moving in with sharing key of a Cytori's, illustrate we me solve we're problems onto slide what doing the by Last a to what I mean bioprocessing. X, let bioprocessing. announced

the will also be characterization system testing expect weeks you X and development lays offering to timelines X using analyze If both engineers and we of down It already across analyzer as our to information. a our some the making a what operation as days. easy-to-use, analyzer for bioprocess bioprocess X able have X that BioAccord its Scientists that takes and most only for in control customers faster waters and and future. is within combine process foundation direct BIOX and bioreactors, of shown quantity weeks. product giving to access Waters, the the considerably, versatile both to at-line Cytori's their BioAccord launch quality will shorten currently Cytori's, master to could scientist combined with our

our and to summer of gave In years, it was will expand the to sampling, customers fact, simple been Resulting center improvements, out Delaware use cell-culture analyzed. control. just with data to also researchers multi-year identify Novel has intern for media configuration use. modalities. of characterization had and I improvements of is partnerships, processes would develop XXX Delaware of can deals, University an efficiency, year the develop This on media better our makes Waters reviews capabilities very been That quality, able learn also one analysis I'm in aseptic lab the [Indiscernible] help biological a and cell-culture has order manufacturing a and far, Biologics analytical solutions. control. quickly. analytical and summary, the and rough XXXX, how Waters. many direct for both BioAccord engineer raving who and over drive university with of Separately, collaboration from characterize and targeting instrument not technology substance, announced process partnership develop our while us we for to of to successful processes analytics in process and so manufacturing provide In for

Amol us the lies growth We towards on by extending of portfolio our product a healthy deeper review convinced in solve value outlook in Operator our expertise remainder from that are are for I'd complex problems our markets With state that, to third rebounded ahead opportunity loss. scientific customers regions our dynamic higher The and the geographic we to like Amol? helping and the have for of financials deliver impact execution. in the most laser-focused a and of and adjacencies industry. Meanwhile, XXXX. of pass quarter our call solidly I'm commercial great serve

Amol Chaubal

morning, And good Thank everyone. you, Udit.

XX%. of sales As the we Quarter, sales outlined, also Third currency. recorded constant Udit an Reported XX% in increase of net $XXX was million in growth

recurring of the XX% product increased by Looking and quarter. line combination at revenue, growth, our service for represents which revenue, chemistry the

[Indiscernible] XX%. revenues were While up and up instrument sales increased XX%. XX% were service revenues

recurring noted revenues we impacted this As our last in days a that not earnings quarter. were calendar in call, difference by

year compared are that to of fewer quarter days ahead, XXXX. Looking X in fourth this

the some the due on discrete and compensation comment well on Gross the last to prior-year. Now, the Acquired tax performance in to a items. inevitable quarter compared variable the on XX.X%, benefit due quarter operating primarily decrease higher I or increased basis. our XXXX. of from would The constant-currency quarter to XX% normalization a third as higher to basis operating was was inbound effective cost by the to and XX.X% rate driven attributable about year was costs In labor by reported non-GAAP Improvement approximately expenses volume. on to increase actions, as of a on revenues. third was XX.X% financial like prior-year sales our the higher X%. in versus quarter specific primarily margin More quarter for P&L, was leverage one exchange

is items, Excluding tax year. the year-to-date our impact of consistent the with discrete these rate prior

count average shares year. at or third XXX thousand coming last Our in million share less quarter about of than XX.X the

As program. a repurchase share result of our

$X.XX this last fully-diluted in XX% is to morning share reconciliation release presentation. $X.XX, and for year. A to $X.XX the comparison our of issued to the GAAP earnings in basis, non-GAAP Our share diluted a $X.XX fully press the appendix GAAP earnings increased to third per to per of last our quarter earnings attached non-GAAP year. compared On increased this

free of to In free million the cash flow after cash expenditures, operations. the special $XX million, capital decreased our the precision XX free converted days as cash funding relating operations, cash was expenditures. compared of $XX investment at to [Indiscernible] flow days last $XXX of from Turning flow capital in balance sheet. exclude quarter And flow, into and last and third our We capital free Year-to-date, quarter million by cash of items. million in Excluded has was from receivable content cash third down the less days X to define flow chemistry deployment approximately compared of quarter of [Indiscernible] free down accounts third DIO flow. came days, and quarter, each third X to the to dollar year. In last $X.XX to cash compared quarter XX year. sales DSO, increased the free XXXX,

in profile. well-structured maintain to a balance sales sheet, prior year. increased measures higher maturity proactive supply debt by the million to and Given $XX secure strong We volume in our to liquidity, a access comparison monthly the

In repurchased net million, our debt our for At position shares net common returning about the we shareholders, EBITDA to QX. million quarter, of stock the in XXX,XXX was terms XXX of of capital XXX with ratio to approximately one. end debt

deployment growth, strength priority flexibility, attractive and in return capital shareholders, and thought growth maintain out, capital adjacent Our and opportunities. to capital to [Indiscernible] well deploy to to invest balance sheet

remainder of initiatives Throughout good this momentum with commercial we and expect on driven the parts contribute As will you near-term to believe We XXXX to to growth update forward for would our our performance. slide continue year, to to the our this year, I that provide look like on seen demand meaningfully strong by and robust, continue XX. execution. we've momentum end-market some

at Looking is quarter, fourth the comparison more the challenging.

further our was in it journey, lockdown, favorably and by As impacted spending. year-end plus quarter elevated was forced transformation the first budget

margin quarter currency calendar guidance of current to At supports have we translation XX%. exchange to the to XX%. These constant the XX% XX% sales be addition, this to dynamics the to operating fourth approximately reported expected full-year to rates, XX% approximately full positive be for year six is growth days growth. XX%, guidance XXXX year. Gross in is In resulting XX% decline, sales and expected margin XX% fewer in full-year X% to approximately is expected and add updated currency of

to million, be net expect XXXX be share rate million. XX% to be We our full-year to and expense count net full-year interest Average approximately is expected diluted $XX $XX XX%. to

This as $XX.XX quarterly program earnings fully are X% positive no of also into worse share the today's currency COVID. at in rate assumes [Indiscernible] XXXX Our and and provide from together a points of includes continue material at impact $XX.XX. projected updates appropriate share per on to will diluted will [Indiscernible] approximately basis impact purchase August QX supply non-GAAP range now a [Indiscernible]

are the X% sales to constant XXXX, impact expected today's fourth Fourth shares in is At quarter X% reported be $X.XX. to of had X%. material currency at diluted of to impact includes And currency non-GAAP approximately currency of assumes rate. points of be growth a no earnings at a for subtract range X% we in today's quarter quarter decline, fourth look guidance to to $X.XX negative expect the to from X%. Looking worse estimated resulting rates, fully This COVID. supply translation X% approximately sales

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

Udit Batra

Thank you, Amol.

to Before comments positive a innovation fuel society pack. efforts few would live long-term like that things and found to of our This make value effective footprint a I enhances representative it. a to reduce ESG than on we diverse impact. I environmental and principles part in better our make and we shareholder up, providing world core the leave doing wrap and our our includes Being governance

progress coming our later report of XXXX areas each in of more our month. sustainability these out see will You in this

new all by moved England, increase particularly of access recently to for XX. stem designed team to internship students I program developed Slide with Turning backgrounds. we the education was to New

gave In XX high-school showing strengthen sustaining core. forward well constant of efforts continue mentorship. X% look Over benefit experience students, our involved of mix that to crack six our commercial tax to is a a we CAGR to core Over science, be We a currency, our and with two-year the this our our in We're on momentum performance to give weeks,we we X% continuing employees future. hands-on with multi-year exposure these practical perform continue for with provide the They're two-year course summary, Waters were pleased which continuing and our who business, skills. a year. soft revenue as in CAGR should on a to initiatives continue strong. and learning

growth Q&A in we reaching accelerating Our to portfolio focus adjacent the Operator? now begin and innovation area Thank session. higher our markets. will these rate you. With that, on

Operator

you. Thank

question Our Dan first from is Alan. Brennan

line Your is open.

Dan Brennan Alan

Thanks how and some for -- questions Thanks Great. Maybe the think acceleration about would Udit, about with for look of the early going wondering ahead, think provided given first to of basis. just impact they're off, we to right the nice XXXX, on X%, if imply to you Thanks, here? for comp the for off organically a guys. drivers, the in here. you call, what's just some XXXX look pretty had X-year here XXXX, becoming the Consensus which a the had way come growing early stack on

Udit Batra

us year. for sort [Indiscernible] question this Thanks the for mean, plus I rate. we're [Indiscernible] just to -- Look of just growth stack to at X%

the and is hitting strike. doing base rather is business really nicely transformation the we seem So its would now that

track to continue should business base the along those So lines.

always channels, conviction we've us to it's in what the including that including new [Indiscernible] and of market plus penetration be products. additional initiatives had gives going better replacement, outlined, we've different Now, the launch market that and

we've believe close industrial I no doing there's Waters. over pharma and ahead basis. should And And right? are history expect end the saw the diversified, be we mean, be seen should They're are the in market at terms plus, plus. same X has you for should we given you tracking of As we the our of them applies, should well, So wherever expect of to on year-to-date slowdown. that four, for is, reason initiatives. what fighting, X, the markets logic we a the to market to XX% Black that year, two-year and should be All well what again, market super market next both be

have should good next and we the really be we that So we [Indiscernible] year initiatives us that going believe into concrete make

Dan Brennan Alan

plus at a year Great. right follow-up, as And a been then, you've now. helm maybe about the just

areas here, expect terms you executed new of improvement business? where done, customer in identification, which do we you evolution You've think on for XXXX, wondering some some through how leg execution, impact Should into your of fits at product, that? you've were you. related what how that the Thank of new to a Just possibly going And commercial for on as to initiatives? about outlined Waters. M&A point there's the you've we lagging, be just next enter wave the obviously, thinking that, is

Udit Batra

thanks. right? Thanks of question. initiatives. further good the Pratt Dan, and sure have I more same, -- executing for [Indiscernible], we with even make do the first, and our that's John But mean, to really leadership about, we on of especially that the I really feel

see to about pipeline in. finally And come look, more interested good our outlined areas And growth the to I and of are MRT. Second, of we've feel We're that the interest really across think tremendous, different is The proteomics, products SERIES from very top the across both MRT a adding lot They there. very ability to segments. launched M&A, line. what HPLC, you Really there what the our we're and contributing and bring is other on solve. question significantly these meaning tremendous to in customers feeling will across your new SELECT hard has imaging, good about just are market. not key especially our thinking what to recently, Premier interested that the problems to Arc we is we areas. traction, we're the entering the about right, Columns, have in products many

freshly doing into my as engineer plant I where my bioprocessing, days after an manufacturing as PhD still using an new and finishing with manufacturing chicken [Indiscernible] were we was embryo I vaccines So actually eggs. example, job,

years not the two the a same announced we've case, One that's want indistinguishable excited that with MMR with I And Sartorius. the days. And enter in us much decades I Biologics. extremely designing that drug and in really people area The take in clone the is was BioAccord deepest manufacturer the want XXX to and believe a that. -- mean, that's will six of work collaboration small the the the the bioreactors file be with of [Indiscernible] super -- that process. And that today, I'm Sartorius by of about and reason were So so leader ago. manufacture with would otherwise we improve to that have able why the many a bioprocessing to takes customers, in vaccines penetration in well been better ago, as about that is the them this capabilities process scientists that that are collaboration And There we they direction. I selection. is the mean about are our and and Delaware fact filed excited process type able of benefits. collaboration are in technology used just will that's Sartorius process two to have probably what shown and to you we're good to eggs, as scientists, probably reason of some And entered. of on. master very And our help tell for several vaccine. the Amber you with culture early-stage down up, are weeks opening you feel many, initiatives. rest has -- [Indiscernible] conservatism about where that strides sort we University something that that products We that make to for we to how

M&A, it increasing second, we and jumping won't [Indiscernible] in us momentum, to remind sense. the continuing the faster I in third, you growth are disciplined through these you that that enter open for [Indiscernible] commercial so if M&A, looking areas So see something Company, makes But recharging innovation, partnerships, summary, into to financially and a

Operator

you. thank And

Peterson, Tycho from is question next Our JPMorgan.

Tycho Peterson

China. Thanks. Udit, maybe with I'll start

seeing You you're sound if elaborate you're flagging comments like $XX but I'm that noted doesn't what on a bit then it any little any on you million just in demand issues, and the supply? could market shipment curious delay,

Udit Batra

our year-to-date over unfortunately, low-teens in China Only to now. few of up in the And perspective, XX% demand customers got quarter to last growth. is the high shipment India China included days a into QX which stuck were the it that for the you second we mid-teens. From be will it to growth. single-digits organic made if for the quarter, numbers, And growth.

China to really, a from nothing perspective. So flat

In has say very well, been would initiatives fact, implementing who's I happy Arc really great leader our with in new HPLC really traction. China

in are really in We flag in right? question demand different else our in we fact is and really everybody momentum food challenges. to on good We systemic sporadic [Indiscernible]. your supply think constraints we so experiencing It's commercial shipping and unique in like extremely are it's China, about chain, boards look, have not don't seeing that like strong a perspective. nothing -- environmental those And we a even built issue, are from appear markets everybody where a we're else, issue. on in sporadically,

In of fact, industries changes colleagues is in week, with virtually, experiencing last different from sort a unpredictable everyone a bit supply and was chains. few I little of

price increases we inflation able being So are of labor. are and by are s other specifically we're U.S. immune as in our pieces chain we the And see they we're -- to two haven't that's the not talked somebody supply then with been are lot inflation; are a that not that I tells much. you if do that, to customers. But think why offset nothing shipping

we and on So with the supply really perspective. feels, these of gives our makes to sense color hopefully demand flag, what some Really a and are through perspective, Feeling China. nothing it all no issues everybody feel starting on our how customers. prices chain way from you from happy teams a at that where to else working enough to problem

Tycho Peterson

that you XX%. then seeing but there flush? the and for to Can with you the government this turn expect down is it do quarter what fourth follow-up, XX%, Okay. And only academic on touch was budget you're

Udit Batra

if growing AMG, And the tracking I we for up that's do year-to-date look consumables Tycho, mean, at then XX%. And revenue, you nicely.

So activity there's our customers. across

So double-digits, double-digit other so tracking with in revenues recurring growing end-market. are the still

point you at So systemically nothing out to the if market. look overall,

and are small as and have historically academic is One, extremely do huge out, But do I slower, and by performance [Indiscernible] bit pointed U.S. of Europe with is for not the a endowment is has doing has China portion focus business different to well. region. a a been Now, Waters. bit that our the

e-commerce pharma focus John we about part had well. depends our really relationships on of in out many with to this down if started And we've the And the we're return, activity you results well. progress And the that's see, the and segment, and as have, work as we We've the the arrival, China, the slowed business. the and the started that think in Europe, we'll business, well. that expect time And especially And on our on [Indiscernible] procurement. In reestablish give see in results the instruments gates I -- you I'm those you'll as optimistic increase to that [Indiscernible] 's in in and impact updates consumables relationships. I improving see come you on very markets. We along. go U.S. instruments over side, with and of customer year-to-date. on relationships. and to relationships

Operator

you. Thank

Kumar, Our is Evercore? next question Vijay

Vijay Kumar

for delay how risk or I'm as one that curious you QX my in have. for What taking do thanks guys, curious XQ. segment Udit, any morning good impact? question. $XX instrument shipping that chain Hey supply you which million from Was academia. disruption, visibility bit I'm government, The the impact a did you. and

Udit Batra

to as spread -- as spread, the it customers. and instruments morning, not demand what from in Vijay, just across it good to to basically Tycho, million segments concerned I any to so that made A it's $XX a it's and nothing online, to the government. different the It's be consumables, academic it all First that bit really similar all have customers. made well said what and customer perspective industrial, bit is it's And a instruments. about China, the it's

pain. a one in of these how with terms more dealing supply nothing And we're department. have issues, and, look feeling superb segment, So chain

We extreme to have where shipments different timing and regions. transparency see we inventory in the we started order spikes of shipments. the on the And build the

And manage should seeing in the so feel are we we able different that to that you through be [Indiscernible]. volatility

Vijay Kumar

on on XQ one if gross is XQ, margin an at have That's Udit. but with gross I the line. gross margin did recall, you very we has FX margins. impact guys, helpful, consistent

XXX in as the any 'XX? look FX on headwind we margins comments through on Given points QX either gross fiscal basis QX, in or impact

Amol Chaubal

we've so do onto you seen QX our expect QX, And tell about margins margin. to in as gross far we -- XX%, So XX% we right? to X% cross be tailwind said, in we

than call QX sort our currencies the EPS accept strengthened where earnings $X.XX have that's in the dollar included EPS guidance. has on where to last of close we most are that, we to the do and we've you mean, I currency headwind see has that guide, in ahead, our other that's and versus and BDO operationally Looking we -- But bound are exposed.

Operator

you. Thank

Our Meehan next question Jack with is Research. Nephron from

Jack Meehan

little that get flagged morning. you. the Thank more Good color the million. China, on just a shipment you -- XX in I'm wondering bit

was to So more dynamic week. supply October. in seems be that incrementally Obviously, challenging chain getting each delivered the

-- and how do your are was curious going XXXX and could things contemplate as there, you'd well? guidance So any you -- orders XQ think from does what just slip

Udit Batra

that nothing Look, will from QX. QX have visibility we Jack. Morning, to on that go

we different there the seeing quarter. perspective, said, I end it throughout from that at just are in an the hinge shipping that promptly do the It's the extremely Doug Doug unfortunate on right? rather $XX the overall inventory of million As days going well. is the regions extremely, increased where QX, demand and in was And of the shipped

then improved and have that transparency processes me are finally, extreme increased last that over see So reason. on I the be you tell an chain, talk us QX. at much the or that point about we is visibility is in in would hands us don't gives much, earlier, would our inventory a within impact And supply this what of that that the they heard the different terms anything year,

we ambitious reasonably year. be comfortable the should So of a to that feel manage able end rather

Jack Meehan

about curious just was labor then, And trends. Great.

now levels. managing, fact curious recovering the maybe You labor, you called terms there just for out competition -pandemic you if in coming the above you and spend Was pre overall think just retention? how that -- from XQ your in of more are felt was like

Amol Chaubal

have model on in typically for partner -- in keep you QX QX, pressures, is continues cost we're of other look, why much a commission which as I and attrition lot with play payment measures what heavy reflected seeing U.S. inflationary in reduce results heavily that terms out mind where right? right? And put place to to into a operating is sustained in archives. revenue it's However, that's place as QX, to doesn't labor What that think QX. you be talent, especially in every expenses of a Yeah, a seen strong in G&A we've us. and expenses HR so function, accrued is QX. as And historically operating

Operator

And thank you.

question next Patrick Our Donnelly Citi. from with is

Your line is open.

Patrick Donnelly

Thanks, guys. on 'XX Udit. the maybe commentary. one

for of think You above look said opportunity could about as talked that When expecting you you it the last market. accelerants with feels that about rate or to XXXX up like to on you're an one front appreciate setting we when think I guys we continue what cycle, the you maybe grow continue to you there? into guys like was mainly the for look at quarter growth replacement XXXX, condensed

Udit Batra

in to talked the Patrick, revenue into me if was sense a baseball, thanks numbers. analogy question. talking for baseball learning have start using like Unfortunately, people and I

the together basement. product saw that extreme a which growth roughly to off XX-XX-XX%. increase save the two-year basis. for So Due slide on channel X% Contact And instruments from adoption XX% was we're [Indiscernible] that's not new initiatives X. basis. on a we grew, of contribution good. put just solid [Indiscernible] attachment [Indiscernible] a to e-commerce remarks. why and We stack We of X.X% aftermarket. initiatives grew that Brad new saw also extra did us, the to Look what slide

across-the-board benefits, base X.X%, robust sort and what of to I the or growth So would end markets. X% say

that's a the base think of market Next year, growth with X% versus we market base whatever roughly goes lease.

benefit. of we roughly XX this instrument So had for year, replacement, million or so

is $XX million incremental, which Next right. XX year be million, to

about So right. would it, think that's how I

points, So top. another service, basis points XXX on basis XXX for

So us e-commerce anything and the And then points charts. read next we XXX the already can goes, benefits basis year.

is Jianqing that for beyond, This of XXXX right. as what's think I would And is part and implementing, about that I and system. So our our are think beyond, about me execution this you CRM how John think of part happening Pratt is right? now

continue that going in So of UPLC, this our list as we reps as year, through now CRM the next full Tandem-quads step-by-step system replacing. have the the and are HPLC, well And will go go service are. year will where and after. to that rates. the know We're is into true after attachment database Same on attachment now We for it. the using our rates thing

lot doing will just accelerate DNA able new and as Premier I to we've me that products, part HPLC of a finally, talked to then become organization, very of very be next I pick year. has has doing of well. are the and the it think also we So that MRT well. interest, mentioned Arc gives started up confidence And about

X% over So sort feel good would of any really be about market we that incremental what growth.

Patrick Donnelly

maybe pretty you're fuse there has then forward? expectations one across about Appreciate the a seeing a mixed could and you helpful. been what That's there. results a that. on quick talk market And just industrial good going It's [Indiscernible] the more sector, little

Udit Batra

you'd all X%. that's I X% pharma to across look look markets, mean, Historically, Industrial. roughly and been stack growth, to X.X% you right? at mean, right? I X% end all at it's Industrial,

[Indiscernible] seeing business. I extremely TA bigger seeing out of even speaking must the relatively you we're [Indiscernible] versus extremely, So acceleration, Industrial And we're good pharma. performance in say,

be why tell teens, we customer So it's batteries. going where our the segments, in materials, batteries, business renewable that's also studies these nice be Life for test Science it you important high the the Electronics I of performance across And days. don't in to it growing different nicely. advance TA part is need double-digits, that's

so So the of a really, on in TA, business momentum, overall good even or X% the and outpacing growth. we're really basis, again seeing stack

to feel found the we despite industrial, way work think I our that customers pandemic. So have a

TA to and increasingly employees. our teams And also, our many many virtually, of engineers engineers are and physically, many Our more actually service side. welcome but these in own our of have customer their Waters many access across initially -- regions, customers, our sales both at of service

rest we're direction. that's TA across picked pointed U.S., like -- has of that China a So to also of area Europe, well. nice, well. business have lucky industrial doing is true It's strengthened. That's all is Asia up quite in the the doing real really strength, geographies. and

Operator

you. thank And

from Bruin of De America. Derik Bank from is question next Our

Michael Ryskin

This And saw the different academic performance Thanks that I'm introductions the to how SPAC side I Derik. it see playing going mass could the do quarter question some taking LC instrument quarter. break want the on of terms in new government was little wondering of for wondering saw up more I if product was for SPAC. of question. and you it's you my sort in a sort forward? on follow back tying anything out question. on mass bit this me, my those generally to is you out and versus if you of of the

Udit Batra

well and growth, again, estimated I of XX% terms year stack is for doing the Actually, in the roughly mass XX% as SPAC and extremely -- mass more even growth than psyche talked overall spect Shiloh's XX%. higher

fuel sort talk two of So between sort makes it product nothing platforms. stack growth to But basis. a X%. Waters historically, X%. sense is between And steadily the X% I steadily of you about more now will on on year-to-date it that instrument We've stack have and seen think

the nice differentiate as can And really of sort nothing momentum. mass is this So as through both of really two. well and specs course,

driven particular. spec, single used portfolios demand in is across And as In our I across also in food Tandem-quads us, spec across development, and mass I all and our users the asked yields IVAS bioprocessing the of as for masks interest intact are our mean, by which in -- you for of about Now, Tandem-quads, then the bioprocessing mass in arena. used mass environmental. a with as are spec that momentum mentioned, lot well and quarter the used course, both

to as HPLC the HPLC, as pointed in XXXX, technology, plus I strength unique anticipate prepared that -- columns, in focusing sort or as mass as in in That's question the up on Arc the includes the application which the So million products, as of the minute. incremental. expect on March premier go SPAC. a that new instruments remarks million $XX so sales of to million, $XX on on $XX to we well to as is second roughly to just for spec going right -- strength. well this Coming part our from of out on technology to your

customers, is lot BioAccord, it proteomics from of I our interest new the for of that in used MRT already want from in applications prepared And Again, mentioned DESI remarks. game-changing products. space especially use quite has unique. conditions ones How many New introducing is products, which be ambient a that? to our which who imaging under and technology, what new with the can HQ, the

just we're is I launch is differently these sure think making just what collection products. doing [Indiscernible]. that we of once not there And they're lot a

Michael Ryskin

wondering Quick follow-up I on model. better our expected little we probably the came well was if there's OpEx a played know I tailwind. being less role side of that that just a any [Indiscernible] both in onetime than effect there. of a as

benefit you if XQ trends wondering to that that $X.XX in model? XQ China, the should a through could to the got Just $X.XX how comment about Is the on EPS? any shipment of flow that there. weight And million XX

Amol Chaubal

Yeah.

activity So the no SG&A. first in or R&D on one-time questions, two one, the there's

it's straightforward. So pretty

got XX instruments that and shipment you largely could margin. and mean, that million delayed instrument modeling I assume the in On it's gross

Operator

you. Thank

with your Puneet is SVB Our next Souda question from open. Leerink, is line

Puneet Souda

for hi. Yeah, my question. Thanks taking

the in strong you instrumentation Waters a QA/QC sort could some So vaccines, million this And sale? any is published maybe would that. of well, applications, just first I cap order -- terms instrumentation bit, there of And you this maybe little elaborate last structure, if of since was around wanted application-wise, what is is the pull $XX analysis mRNA Obviously, by there driving teams it's just of was to into there if wanted as quarter. just quarter notes to clarify. back that were strong if if in one be XQ, understand

that just if driving the side what you're that working understand the I Vaccines, mRNA to few last growth or or are the wanted over the here on quarters? we've of QA/QC proteins applications does So seen instrumentation

Udit Batra

oligonucleotide what products increased driven replacement initiatives, mRNA. execution. your and applications. by end parts. is of our seen question Again, robust the age And One, would Look, it growth into markets at the in break your our I two had is, is application increased indeed technology our it's via strong, commercial instrument we

and basically molecules by themselves. said, to with the So the with companies, us, help huge mRNA elucidate claims these aggregation to LC-MS the using they sign Cambridge recently solve of leading look, Premier them that problems to problems by using somebody plasmics [Indiscernible] and [Indiscernible] from

there. discovery. being a increasingly So in lot good of application them in hopefully development, And in And QA/QC.

that give experiments development the has comment launched, that focused relevant our now really application which that Second But, X fast, QA/QC with we're still area is that labs really weeks recall, – within LC-MS this faster I turned product Biologics. that have has in value around good the you'll on replicated in simple, place seeing days. complex we LC-MS, results. would and in strong provided, labs. same labs, application proposition is demonstrated robust, we early and can been the And Sartorius if two believe We some you still stage initially take QA/QC, And that you was ' in equally of instrument wider of is a BioAccord and be in customer there. Sartorius several on

of results, the of range wide a cell-culture than media on substance. are on a the even you can any not As used ton applications, but today, provides it me instrument, just is results And that you unique excitement here, use rather And can also imagine, a it. of the is It's it sort fast. simple-to-use there's where on somebody application wider drug much BioAccord like front.

the LC-MS simplicity [Indiscernible]. with going seeing technologies, excited our BioAccord I'm about So -- its development and of early application stage [Indiscernible] is of wider really especially robustness, where

Operator

you. Thank

Our Waldman is Cleveland Josh with from next Research. question

Josh Waldman

than business questions. timing-related taking growth any I provide those I thanks drove guess for more can And it my in the and instrument Waters don't additional largely maybe numbers. broadly, could morning of quarter? LC you you it a mean, orders? in lighter helpful reflection if was think I you what here separately, Wondering was on in possibly Good a provided them or the expected. this a be breakout of did. if it would color I MS like missed bit seems provide normalization is you and

Udit Batra

instrument -- quite double-digit XX%, know instruments [Indiscernible] already. roughly growth, QX, we nice good year I QX is saw a year-to-date on In again last question, second about The with growth don't comps [Indiscernible] on that in for

pieces across X the lines [Indiscernible]. -- instruments growth X we of as double-digit So of

same, is excess an and in the I basis mid As of the mentioned on spec quarter a XX% LC grew year-to-date XXs. mass earlier, the

to instrument and at it both the less sense to given nothing that trajectory. between LC Mass quarter-by-quarter, nothing really choose So field, in But look two backlogs, between the to makes year-to-date. again, instrument the significant have QX X choose Spec and momentum

are. So, feeling and where QX, we're also very about going really we good into

Operator

you. Thank

question is Catherine from Baird. next with Our Schulte

Your is open. line

Catherine Schulte

Hey, you curious do those point, you there's or recaptured. of three across allocate is just just be or won't think some there that makeup, some instrument the that that last thanks think questions. about this side X% constant I revenue revenue you've guess you business, just currency Do the the year. for at still was recaptured on first down of revenue the is guys, Will be buckets. how largely would

Udit Batra

question. the Thanks afternoon. for Good

I at side, all we very very, given stack look think really if on on just impact a that basis. they've the a good XXXX instrument right, the averages, mean, feel confound multiple you on mean, historical track. I I we're can

for of cases, So X% X%. the average to mostly in some historically and that close instrument X%, nicely industries between in and excess our across for Waters business,

they comparable how and data the rates, really you us rather -- market that growth well ahead stacks we're clawing operating the that's -- the were rest they -- move just performance nicely in back instrument feel sort think we of our So very with where that's on makes of back, when floored good And products, averages. nicely. of have of looking at points, that three industry comparing one, the consumables plus that historical well in much year first point of terms we fee are the that market, data

been [Indiscernible] ahead internally. are as our pretty the market last have of doing reports well are available tracking the are ratio quarters. finally, idiosyncratic they the which public averages definitions And we of measure also Second, lot are for because loss X we on that share. either change there have historical Those that

more very A are a better good good how but far, more we're applications footage?. our about work penetration instruments, that [Indiscernible] reversing our [Indiscernible] lot -- for lot do, really a lot a we're we be to well. of to rates a so progress, opportunity as lot in And lot had. of we more there's we So [Indiscernible]

Operator

questions the concludes call. That you. of session Thank today's

Udit Batra

look I'd your which you entire for progress management continued team, on much call, interest and February participation our quarter We our during behalf to fourth XXXX. Xst, questions and on thank going be very on updating you in support forward your you you. Waters. Thank to Thank and of like our for is XXXX to

Operator

And thank call. you. This does conclude today's

You participation. you your may and lines for disconnect your thank

Waters (WAT) 2 Nov 212021 Q3 Earnings call transcript