- Earnings call transcript Q3 2022

Due to licensing restrictions, you must log in to view earnings call transcripts.

Operator

Good morning and welcome to the Waters Corporation Third Quarter 2022 Financial Results Conference Call. All participants will be in a listen-only mode until the question-and-answer session of today’s call. This conference call is being recorded. If anyone has objections, please disconnect at this time. It is now my pleasure to turn the call over to Caspar Tudor, Head of Investor Relations. sir. ahead, go Please

Caspar Tudor

and Good quarter and joined earnings Waters Officer. Executive Udit operator. President Senior Waters Chief and by to Corporation Batra, Financial Officer; Chief and third call. President Chaubal, morning, you, Waters welcome Vice everyone the Dr. Amol Thank Today, I'm

provide Before particular, performance forward-looking regarding commentary potential impact events actual and In our fourth future statements XXXX, and on guidance conference conditions we only market that events cover and XXXX we Waters quarter or of we and may results call, or full-year language. I XXXX. business are expectations cautionary the will These financial may the statements Corporation regarding In company. differ will will begin, over present future results future the this make possible various of materially.

more our in or lanaguage factors release. morning’s please most Form see XX-Qs press recent included and For the XX-K risk on cautionary the this Form report included details in annual

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

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

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

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

Udit Batra

good you, morning, Thank everyone. and Caspar,

was the in from outpaced more strong XX%. third product dedication growth end results across our excellent exceptional takes sales. colleagues. and our all deliver to by again portfolio, this Similar growth our quarters, result This like effort A very of quarter continue orders We led with instrument geographies. an previous and to than markets

proud We drivers continue have first, share, three Today, very business: of and consistently what are consistently of strength which deliver. our exciting teams delivering messages to the our key ongoing we we commercial reflect execution. strong are to

on become with excellence. has Our embedded relentless focus operate a transformation we in commercial how

see You can results. this in our

It's contributing across Second, growth. meaningfully and our Waters delivering innovation our back. portfolio is to at

answering refreshed impressive across new Adoption are have product our for been a applications. and variety Our is portfolio share gains. instruments needs market customers' driving rates unmet of

gaining Thirdly, traction. our growth initiatives are

make are confidence. to have progress us measurable high adjacencies continue giving points growth and on We that proof our

grew strong Mass mass Turning our and now XX% academic and grew from the by grew Recurring at mid-teens China TA revenues saw spec grew strength quarter regions digits. our service attachment. over to and XX% quarter which and XX%, with digits. X%. XX%. Each XX% industrial growth XX%. grew was end in as grew grew of each reported by spec demand constant Instruments customers. the our was robust across both XX% X% revenue grew and results, India XX%, supported on basis. almost government, portfolios led Europe over our initiatives U.S. a markets We broad our geographies double double growing grew growth grew over e-commerce LC, third and very and in with which and Growth our our currency pharma,

FX flat roughly share per was headwinds this QX despite is of Our $X.XX, earnings non-GAAP adjusted year-over-year XX%.

We're our performance. tough organization environment. despite macroeconomic throughout at the a executing well looking year-to-date Now

up are geographies has been our across of growth by the is is which almost Pharma is Instrument XX%. this year-to-date, up XX%. double-digits XX% the growing led very broad-based been has throughout government academic XX%, strength up and end U.S. at each and year. strong Our industrial up and year, markets, XX%

We to future our expect in recurring revenues. growth drive this

has deliver excellent allowed results. consistently transformation to Our us

Our momentum a three across currency Year-to-date, year growth stack X% the basis. we've CAGR delivered built overall underscores our business. three-year on we've constant

on as our key leader. second Moving Waters known innovation has been to message, long Innovation. an

in driving Our meaningfully investments of contributing growth. Premier columns in innovation HPLC, again and versus results Max previous Arc ACQUITY year. the Sales our doubled are to the Premier quarter and again

driving execution. Our matter routine analysis. new and customers customer fleets to that supported our while instrument is productivity, and HPLC for This upgrade accelerating are is the customers their to our LC replacement. cadence molecule advancing products lab Arc commercial solving by used of strength strong capabilities problems technical small

are proteins Our their sensitivity MaxPeak up when complex eliminating oligonucleotides all separates amplified of detection and molecules of of Demand with ramped pharma represents Premier and columns Omics the separating like clarity. discovery. This for mass also to XX within separation flight. ago. benefits market, significant in us Premier the XX the resulted compelling. the customers cyclic growth. The answers equivalent. very mobility high XX% for areas faster as example. pharmaceutical a account time well need than our just mobility non-premier By positioning of well iron growth which providing up XX% MassSpec, scientists passivation, MaxPeak metabolites, scientist an disease around times in over versus for R&D with shape, can for exciting separate Today, our future early give quarters, sharper cyclic due combination XX% for has molecule pipeline cyclic With ion is very the accounts as customer technology but Biologics molecules as now has short, revenues resolution by within IMS peaks resolution and large with can of research recent times biologics. for This lipids, to years get They few XX% for

quantity drinking with sequencing Canada Cyclic been in provided the for to supporting informatics, of gives across PFAs areas testing new than rapid antibody the is has newly for large set sensitive, sized is for forefront troriomics Xevo funded is discovery. sand GX includes their growth lab strong testing Within year, every Per great a and Connect us workflows and space. quality at in in right instruments MassSpec analysis. PFAs recent of we're The water environmental oligonucleotide TQ interest. ability in large Cyclic Absolute, it months, Absolute's is stability, part these long-term a testing. facility like an testing polyfluonated beyond the exciting by Absolute. molecule scientific Since media data a recently one in given molecules swimming across using in that health in potential driven pool. impressed BioAccord. has market EPA cell launching novel Massspec, surveillance added a demand quality the see of example, downstream of four This parts is as of and than setting used There of announced In move QA, and testing the finer placement to Absolute lower biologics compounds Waters Qtof has June per growth of customer for peptide TQ mapping TQ compound quadrillion. new for that On measurement an increased advisories organization. these infant routine by at this is our methods This organization the Southeast opportunity. and and This As areas lot TQ this We They're this grain be molecules and global discovery. new Asia. largest water privately market QC can and Olympic U.S. It less to detect impurity launched has culture allows demand most in analytical region. for into routine their led the one it so bundles the applications can The characterization testing win food a of we seen within and for seen analysis. in Also seeing In enabling PFAs PFAs food notorious developing example, workflows. levels competitive is traction analysis, testing modalities compounds using anything and characterization. billion. or on multiyear won

next reduce vehicles optimal expected According performance, XX years, to sources, prevent failure grow and X,XXX expected batteries added we lithium to year Demand powder new by is by storage. anode free the to XXXX, growth This screen cathode manufacturing and in TA, battery seeing dry support better battery-related electrode solvent we're rheology capabilities have is the applications. in of to is per allowing critical ensures production hours to driven coatings gigawatt to to ion our and portfolio. defects producers strong at Additionally exceed are ten-fold. and industry electric energy helps cell rates. coatings Powders

analysis to set As within battery battery well of testing portfolio volume and instrument expanding is scale positioned safety an space. demands RTA the support development

manufacturing, Engineers, growing a progress our analytical not European I can BioAccord instruments biologics the which as test our only of use. customers, battery it to Bioprocess clone our compelling a of rheumators to year, company uses of capabilities while adjacencies its DA focus Through incoming Sartorius, reflecting for -- this and collaboration growth capabilities but the limited, share we've has shift offers This its only in electrode our our time is critical have One this BioAccord tripled being components. we area. as key materials fast a producer, for in proposition purchases in dramatically will shorten the towards Scandinavian growth, to to in easy own their Since recent have and now times. I selection made they operations. message. of on high Bioprocess confidence they paradigm third some quick support a technology expanded provides Characterization. with We our scale would value like

enabling reduce in and yields, We COGS. improvements are tighter which can also

manufacturing of Conference can BioAccord. you during raw BioAccord a online is early culture At used already materials highlighted they industry Janssen companies publicly are needs analysis personally, media. to I cell long-term in and Our few Culture components which of just in we and We're other streamline solve resonating Meanwhile, culture for Media are the the for By AstraZeneca value the Bioprocess analytical vital using insights pharmaceutical using the by BioAccord, Bioprocess Cell today Bioprocessing. technology have These opportunity the monitoring the substance Boston, unmet to and process. using in we points cell monitor fingerprinting in to benefits generating International proposition amongst with share process implementing encouraged recent Characterization. can proof drug that production it help attended monitor leaders. of components are

quarter and Amol? XXXX. of provide Now, over to third call financial I will continue the our to Amol remainder covering for the pass performance our guidance

Amol Chaubal

regions and delivering strong U.S. China XX%, regions. XX%, XX% grew chemical and large major We Udit, with In growth. In grew which food X%, end academic and QX of you, across morning, grew and delivered or sales, XX% and XX%. growing in industrial, LCMS XX%, also government, led XX% XX%. strength in molecule and XX%. across grew good By constant above TA quarter analysis, pharma each grew was saw division growth and Europe by growth regions. grew pharma, all Thank small industrial excellent with with and environmental growth. up instrument In currency both almost our over grew and market, was applications academic our segments, all with up strong everyone. mid-teens Growth government another businesses, we Waters

was grew U.S. which each industrial, across Asia lockdowns. markets. portfolios prior the products XX%. and classes, grew the the challenges posed quarter. XX%, led grew By Europe geography, grew Europe There all which versus growing Recurring chemistry LCMS grew quarter, pharma, services, by days was applications double-digits. XX% and grew instruments and the by with and number up over China in revenues and growth double-digits. trade with across we XX% of end led grew service in the grew and grew where the executed XX% XX% with our as change In low by X%. Americas, year's grew XX% sales up TA no Now growth well the in In sales despite XX% new Asia, Americas XX% by XX%

XX%. remained Finally, TA in strong with sales and growth had another with up rheology. regions analysis XX%, great TA all and products led across batteries sales Demand electronics, strong in thermal quarter by for had compared in MassSpec We margin instrument sales to was third to nearly of this quarter the XX.X%, for in quarter XXXX. Gross ramp. continuing quarter XX.X% incredible growth with growing the

on XXX While resulted adverse this in growth. quarter, accretive XX impact approximately FX basis mix quarter. to drive in margin dollar U.S. is for it the of resulted points The strong headwind basis gross points future expected recurring of the margin revenue in

in delivered the of our customers, with teams net have increases. over basis offset We with quarter. inflation Working pricing our to gains continued impact XXX of points pricing the

no compared had also calculation profit the inflation gross dynamics revenue difference margin no the our higher. the the affect includes on and While the investments as gross inflation or This Operating foreign gross drove have operating approximately I dollars foreign the of year-over-year XX been impact margin XXX it again, The in net basis points nurture were inflation exchange XXXX, points just have the in dynamics. higher earnings net of increases. the instrument and headwind. inflationary was to XX.X%, incremental driven growth discussed. dollars, as our margin dynamics the higher XX.X% per impact does margins before to making gross remaining margin of expansion XX base by of share third mix is the quarter adjacencies Year-to-date quarter impact the for of there was But headwinds quarter. basis pricing we and profit basis by includes exchange expanded for on primarily offset points costs

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

exchange in On issued appendix Our per non-GAAP EPS quarter earnings of a earnings to The of comparison was morning $X.XX to and earnings reconciliation fully the year. $X.XX. per release was earnings fully GAAP headwind in press diluted growth diluted foreign for attached GAAP A share to call XX%. the last this share presentation. our by non-GAAP our lowered third basis, non-GAAP the our is $X.XX our

flow volume. Turning Since moved third million cash free line as our after expenditures capital have was quarter, capital accounts historical cash flow, balance define of cash operations, back sales flow to less expenditures. last free the cash $XX quarter in excludes In pattern to relative and deployment funding with sheet. capital million XXXX, We $XXX receivable special from and free of our items.

and However, by proactive structured a and well supply us we to debt inventory to We balance given ability third build as build access growth, strong allows liquidity profile. and a quarter, continue In balance inventory safety secure our in shareholders. demand. sheet, the increased instrument stock a maintain prioritize including $XX to to million. the measure M&A returning maturity strength investing This to capital strong

that billion. thought creation our adjacent net of of opportunities well $XXX to the approximately growth end out net markets. about debt approximately M&A will attractive quarter, ratio evaluate was to we value debt In continue repurchased high million. shares We a billion At $X.X meaningfully for QX, accelerate with in EBITDA our position XXX,XXX of the $X.X common stock

year, look on the Now XXXX. ahead for context remainder as to updated some I we provide would of to thoughts our like the

We our this performance market have all by which driven end are seen continued driving across strong execution robust excellent geographies year, new product introductions, commercial and growth. demand,

sales our our that refreshed growth initiatives our performance. to will enhance portfolio and we continue the remain year, close expect to we momentum and As solid

XXX to to performance, these subtract not light currency chain this constant guide points XX.X% headwinds X.X% underlying nearly X.X% rates, worsen. up is and full-year XX.X%. to negative margin expansion basis resulting the XXX FX expect our year. and also be XXXX is assuming continued X are points which At is currency full-year prior growth from growth, points XXX percentage X.X%, to in basis of raising X%. prior points, includes offset for of translation In challenges of basis expected expected current reported of constraints we full-year guidance navigate to by Operating headwind. a sales to expected FX versus our a sales includes supply guidance do XX% margin margin pressures of strong We to Gross of XX% inflationary successfully to approximately be

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

a non-GAAP will share negative diluted appropriate. XXXX of be together the is last currency earnings the full-year previous underlying guide, X% EPS. offset year-over-year rest through basis, includes percentage to XX rates. to XXXX is is we’ll full-year these approximately to projected and current on half fully our of on year XXXX improved headwind share $XX.XX year, provide updated progress the of Rolling as we on range guidance by now to At versus higher $XX.XX, Our of expected rates, What we be and largely business the X% impact $X.XX the the impact on $X.XX FX X% repurchase at points. to of X% estimate X% program of performance headwind. all a in FX X% growth and a in are per current sales FX of concentrated first impact as to updates FX which adjusted continue despite

Looking X%. to to per higher negative sales to to flat currency growth points. currency expected are points $X.XX sales prior diluted of to be the estimated is constant expect minus fourth in year's the in fully fourth translation earnings approximately is reported percentage resulting percentage quarter X%. subtract to today's range be than XX quarter, to approximately X Fourth rates, impact of of XXXX, X% despite currency At a growth non-GAAP we $X.XX, to X% guidance quarter which quarter share of X%

I summary Now Difficulty] comments. to like [Technical Udit? would turn it

Udit Batra

to geographies. year summary, is we've been STEM strong results. that to have together live I We renewable Student allowing launched historically next better decreasing to portfolio performance. made across than our provide report to from now XXXX pleased and like and partnering black We At continued In Once XX.%, towards our the ESG a footprint we're our Thank This play three raising proud more our part are to widely an colleges be range we're X.X% to refreshed with to released week. has Demand Water closing, guidance have our or further us point approximately progress prior low Waters, all robust excellent from out in we're we be in. you, representative with and full-year would that will end XX.X% to sales resilient In to becoming Amol. of again, leader. with deliver markets very a we our consistently we of to recognized execution ESG commercial as sources. the opportunities. delivering our career found society XX% universities it carbon and world This our the environmental believe Academy and education goals, of electricity leading from XX%.

our We materiality broad also conducted comprehensive assessment. engagement in stakeholder

We new Building its manufacturing the Massachusetts facility Council in United in the lead number that States. are only U.S. Green by state-of-the-art of kind among the chemical in state Taunton, certified small the recognized proud our facility was as the and

work more always is to we've be I'm the in done proud progress there made. While ESG, of

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

Caspar Tudor

open our Thanks, we comments questions. for ready lines Udit. That concludes phone are the to formal and now

Operator

formal session. the We question Vijay first coming of Kumar is Evercore our are [Operator ready now Instructions] And from to begin question-and-answer ISI.

Your line is open.

Vijay Kumar

of CapEx Congrats Q, first picture outperformance share. you happening when change guys. of revenue for at for Hi, state end in print cycle and look big the my big you maybe on a one really strong on what's or whether markets, drivers the on Udit, this ‘XX? it's drivers Talk a here these replacement whether the know, any industrial, you perhaps macro should environment, situation. about pharma

Udit Batra

Sure.

is mean, pharma, So you thank right? And of XX% I'll I in I resilient perspective, operating are remind we markets, end Look, are mean, you. that firstly, a business. very which from we with starting stop our even downturn, stage if Vijay, development a I right? late place to don't be. So to is very is think medicines, believe and Pharma levered QA/QC. consuming and to people continues we there that a strong more grow demand

with focused on the is is for business, which especially as years TA battery and battery salient and the drivers. and and safe over Second increasingly PFAs our need our industrial food business testing is well heavily our has clean testing, transformed environmental the food, water, as on testing

business our say, of towards, levered resilient XX% is I would roughly end So markets.

markets, over end in initiatives, years those it I be out growing mean, So add commercial resilient are water which up few specific e-commerce, drivers I that now you from next over XX% our -- our business point the we're a continuing the XX% I'd with over has start stacked the that overall see just XX%. continued nicely a that basis gave increased it XX% couple consumables But value we there of we business, grown the right? if to years, almost be portion instrument three revenue. think rather north point CDMO starting is those next think the to end rate for in that, footprint has confidence of outperformance, simply last years. over Now of us replacement, to to on well like right? double the quite two over going of the

think initiatives commercial strong these we have one our in So markets. run way number

gives in customers mean, my grew pharma levered growth MassSpec HPLC, solving continue increasingly outperformance I you Second, Absolute business of a that quarter remarks, this told course towards increasingly large what our I innovation with about quantities will mean, strong drivers then folks we now launch pointed strong, starting two now molecules MassSpec in then And that but our with XX% about more I is in salient Over now of increased MassSpec contributing our mean, focus almost Xevo PFAs. Arc driver see really premier do is our focused problems remember later, I XX%, is with pharma. biologics, going of really the even well of me right? detecting the business. prepared low our is MaxPeak instruments for confidence on most that I joined, columns, when for touched to our growth. the contribute, right? business, of on of TQ years I XX% the And MassSpec is one as to me what out pharma, talk to is business.

for I is growth on innovation driver is the not I about nicely And third QA/QC, feel portfolio go have upstream the and finally, increased traction traction Waters lot clone in sort very customers. our MassSpec Europe, turbulent then simplified selection selection from detection adjacencies. standpoint. it shutdowns, a in stand environment, the through good there's and bioprocessing of in well. where business. contributing for China for the And I side, materials in in these in the, the but an to be to or very out but of geopolitical raw just BioAccord, challenges LCMS navigate the of pointed of, despite the of -- rolling we from our for due can we COVID finally, innovation to we've So specific been able extremely

confidence markets, it focusing really instrument on resilient I growth gives macro gives future well down, these we've end that of faster here. the in a our this this see consumables really, which lot. robust looks traction than looks see mean, from and that So mean, increased what we bodes strong by commercial me don't confidence perspective And even adjacencies innovation Look, been we'll Orders really does in our sales. supported for me and what were ask execution, business, I a performance. good, especially service a for more but now lot it me end in that really future, This higher good. I'll when slows in the again

raised we that well So currency confidence have you on I much the gives guidance, why as clarity full-year hope growth. on constant and we so

Vijay Kumar

think not mix look the a you, quick you know inflation should maybe to When mix? headwind of margin at helpful, on inflation, any that's impact margins expansion? at one FX FX how perhaps expect and the one the main And is for margin were when we some Udit. in sure ‘XX, I performance, three components. look and the you about Really

Amol Chaubal

Yes.

are instrument So, are playing higher Vijay, is are line exchange the times business will be pronounced then the played And of four vectors out there And mean, mean, that that right? new more out, has driving in product accretive launches, vectors mix, that there exchange I look, FX, of side, just margin sort inflation our expansion has the to on resilience is rallied these the There the going see the dynamics I to about is that each find much the I gross margin gross and feel pricing that XXXX when a in we of is there excited rates because normalize, on on in to the a you the impact impact the this fact rate. FX come. offset margin, numbers. already ways headwind, to of really discussed. despite

I mix, to instrument have. a great it's problem the On mean,

cycle While years. Waters products, margin this with the see will we matters gone drive that innovation through the Alliance. gone in the systems of the And going headwind more lot was pressure great coming recurring it and as providing piece the products in the driven, on on to And this in we've market, at go built And space. like We've margin the what these sort inflation from normalizes, today, the pricing also the typical there, and our is of than is pricing is gains through products the historically we And out service And they creating spot new But and a future. engineering they dynamics, growth buy gains of in muscle right? is launch to systemic, value to points sort somewhat gross as that you on which basis some buys. instrument away gross tailwind component electronic go margin growth can it new you understand, anytime of haven't accretive again chemistry play a of when we've from of, gross growth seen underscores that XX this have points. will drive are last hand, newer the processes margin. basis other then terms spot inflation pricing to of XX

those on still in XX will we reinvest about gains. in gains we have the track points are will margin mix adjacencies we of and of basis XXX we XX where mean, between productivity mean, points volume I look, the basis basis And I growth in overall, So our higher near-term. to business say, points nurturing leverage, expansion underlying

Operator

is Cowen. from The coming Brennan next Dan of question

Your line open. is

Dan Brennan

like just of Udit, Investor we talked from just the a headwind we ahead, I'm feel kind has sit the just four of just point three related growth. off for about but what still about year, of still right wondering, zip kind question for FX good thanks would it really know addressed points, Thanks Great. is today, the as stack for Maybe the Day given questions. doing? then jumping at the little I prior to you next doesn't kind kind taking a imply the that of as talking single-digit you code drivers. top ’XX, sound would to plus. margin wondering mid of look a three-year modest bit changed, that here line acceleration imply as which you're about you're And anything

growth margin top to expand ability modest a in So line in that's ’XX the kind environment, if fair? of, what's

Udit Batra

double-digit I it's So on those I'll talked on context, mean, over of currency a Dan, The to firstly, you basis, know, a a shy So you I different mean, then we’ve constant I slightly thank we a currency to that, start X% Look, three-year right? you and to basis, question. see almost constant a been year-to-date, double-digit it mean, -- about X% close a your clocking from stack for growth, XX% of well growth I'll as in ahead pass right? Amol. growth.

to also also but markets, And of are year commercial the the finally, not initiatives. characterization still meaningfully growth starting with next but bioanalytical testing strong execution So And we're which improving to the this legs over that. also end to of just have our some -- contribute and years. really well course, our strong our couple of instrument footprint. of initiatives, adjacencies really contribute ahead innovation We're seeing next really starting biologics especially helping battery the then replacement, that's

So we feel we sit good about very today. where

you you before told In collected about XXXX, discuss feel past through good But there'll a our that be terms environment of will that market a we the there's imagine, our terms we we've here such the think take and in year-end, be QX in to of time turbulent bit is. ample want look what today, we to the expect data earnings more to as wherever in sitting what drivers, can in time very to like. for what

that execution of our on will assume top can add commercial it. You

is to are to batteries innovation adjacencies meeting and And contribute in Biologics market. third, our the especially the unmet really the part. starting Second, needs

feel come very sit where we about good Amol? more to So in QX.

Amol Chaubal

have covering pricing. working feel instrument And really this we that an good then strong are? Yes. leverage our on I volume the at stage, think margin, confidence accretive the right? of, each on I about for our implemented a margin impact lot and initiatives buys revenue, we've do that growth this of will year. in think we the see, of have and with is and where We recurring better sort gross slowing comfort next the level we year, mean, a mix profile So bringing processes gained spot of down systems

basis XXX which at with So that us in will expansion is to still to roughly Investor we points track outlined all stay XX adjacencies. growth enable XX the higher of underlying of reinvestment Day, basis margin points basis a points of our on that

Dan Brennan

the instruments. notable just on And expand, mean, the to the you. strong. of I really already, of but maybe then and Thank follow-up you XX% spent a love amount is just growth Obviously, very stack sort we'd a three-year fair XX% time is MassSpec Great. XX%, but

maybe of Waters? instrument look step ahead like kind you as Udit, on adjacency as all you of what's right look the opportunity, the could and back, new way growth the innovation for we at opportunity, just So durability

Udit Batra

a it to of customers Association conferences the that American Bioprocess to I heart. you I across AACR many this AAPS, International, point significant portfolio of fantastic a many and made is the technical Pharmaceutical It’s went where our the the question, talk recently of unmet to to is the go just and that, Look, conferences like the my Scientist, own dear near just to drink directly Cool fairly tell can Aid. solving And portfolio. I the needs not our MassSpec have

And you're from been molecules top have analyze from go biologics which and to the important our is is the customers. some We've you is a about HPLC attribute they shape launched able instrument early as ACQUITY testing? Arc and and that's as past, reflecting res what for portfolio our good very portfolio, Premier innings. consequence. MassSpec we especially our the Charge Detection its which and The in to On is MassSpec. for in ToF MRT, recently, Premier, the MaxPeak quite the cyclic license do of Premier side, High for across that looking multi has an can larger also our LC got size, the IRS very molecules only by at -- portfolio. doing IMS, do ACQUITY Cyclic well about direct feedback columns? talked What recently. we they And feel we've Now

testing already Connect is TQXS, Second, increasing challenges is of unmet Dan, is us all up. quartz, of food effort, that Waters the we the to very in and of start Xevo increasing and this the I build deliberate -- towards instruments the Black environment. something for just I the known right? sort on the level workhorse is which geographies I Connect food developed sensitivity for Waters with environmental amount testing of application which mean, all we TQ an -- across that the Xevo industry, need of it's software PFAs This sensitive, testing a seeing right? talked about in required tandem Absolute and our is that's are mean, the the

that very of next So we grow expect to over couple nicely the years.

quantitative want environment. platform, with be needs came then the faster deliberate QA/QC to launched side, the Connect MASK-X a look, said, on our about initially And with faster for and focus BioAccord, finally, the we application food customers. we've unmet to testing customers on speeds by especially in and testing to Waters the up talked us and which again, the Second, able do MASK-X, was our our XX% very process

Sartorius, case a of pharmaceuticals as large And I I just my not already roughly this there's simplified seed be QA/QC, high great we clone out pretty workflows going placed conversion many traction there pointed the of customers pharmaceutical in number is the our very come. seen something for has for in molecules. remarks. is create increasingly with something towards test a and it use a years seeds course, with to prepared but with again, and large Of expect selection, instruments LCMS that pipeline several to method to selection clone use for XX% materials have now the large against Wwe've of out we is raw many, mentioned prepared collaboration And it my in companies, in several with remarks, to and we think contribute to

segments. I you an can question, portfolio environmental get about space here of but could focused go biologics, -- you on so hope on we're now, and what for academic doing. the I the stop what and Thank I I'm more good that extremely, pharma in elaborating So some past. engineer, LC being the We across it's I forever, this I'll into think food a MassSpec is I really on in revive confident the extremely we're details, and towards for mean, about how lot why flavor gives also in about the talked helping us the we've feel doing growth but and it's

Operator

coming next question from Sachs. Goldman Matt The Sykes, is

Your open. line is

Matt Sykes

change you my than maybe on the impactful question taking congrats around Thanks been Could on China, first morning. previously. seems occurring? changed and Udit there that Hi, this the for lockdowns lockdowns maybe to expect over less the others have for quarter. China forward? that and environment? less managing you that should in type questions it time just maybe that of So good adjust China Or talk there? where about way what volatility just you the going that are you're it to business Is we has if

Udit Batra

excellent question. Matt, it's an

there we China have we our previously, very we last said, few even That mistake well. now. on in this that about and have leadership no we've And couple we of as talk years. change as the a think not -- really Look, going lockdowns across navigate mentioned think a I China are going about managed Something and I brought hope in strong these next make lot team. to over rolling that lockdowns I the to continues. in over that's And quarters

now XX% So mean, was this replacement just has very quarter Now about growth has specific is commercial pharma. the growth roughly the where at been driven markets, end -- I now going I I execution, is looking revival again, on HPLC. XX%, contributed driven doubled and industrial right? what year-to-date, just more in doing mean, as factors. is what And business good to of across our by mean, the the the I by strong facts, the almost instrument the not segment and China and MassSpec the Arc our roughly we're focus segment academic well,

these will ups as then to electronics that as extremely in we extremely navigate and the fact there. accelerate again MassSpec everywhere growth Our ease in China. manufacturer, quad to continue started contract China a able has we through with done And biologics ahead, been things in grow environmental market. well The look well. The we've we tandem confidence and strong manufacturing Innovation lot like been commercial China. up testing we downs and food initiative finally, has of biologics execution else contract us manufacturer that the that geographically. feel And us with has helped a is going contributing the portfolio gives

for the that growth the market a volatility seen us. had the feel we've we've that with leadership very So execution far. strong manage we had China remains good we've and so We can

Amol Chaubal

good the because they of to the benefited QX, so did And baseline, For right? with growth. shipment But at same about a that, add to Matt, really XX year, has for lockdowns, have team that's a time, you China some lower million growth one that in for to delay percentage the us, last headwind year. and well $XX of keep the towards outlined, of as is profile know, the executing mind. And from mid-teens working a points so Udit newer

Matt Sykes

you, one for for thanks Amol. And just quick then Great. one that, and

uncertain there's can as visibility a about think focus about more Just still a supply be environment go as solve But but the on exist, the building side are lot demand on demand in thinking it still inventories. your for you inventories maybe own also for somewhat uncertain? of potential about you of could obviously your chain to inventory, that think inventory, constraints How and we into ’XX you ‘XX? own customer the

Amol Chaubal

Yes.

and alternative we've through we've especially is of component than longer gone deep build pretty gone times, through for supplies materials that where diversification. quantities we chain possible And gone the bill secured done built with geographical us usual certain supply have where at for product we've there, what for is looked primary chains will right? secondary also product and and and in profile identified we a possible of And mean, shortage. and last sort have where build to will we've travels supplier components the our relationships I that every So sort and tertiary through supply much of hotspots electronic

a So lockdown in of or where China you're sole you place in not sort a stuck in a source. have

of we where sort COVID we've items. been Now and point, of yellow on inventory, and green disruptions chain progressively are the accumulated for feel we in instrument other at that a that things this are by between right, the lot inventory macroeconomic has of may of sort seeing stands, because supply or supply sort events. the that good But yellows the put be have pressure resolved for caused and on demand side some this of potential on in most preparation preparation really

Operator

next is is And The open. Sergott Luke coming of question from Barclays. your line

Luke Sergott

how you -- in what market lot guys coming in dig and give questions, on Hey, sense guys. the for you that mixed you're from us your CDMO been Thanks next you're peers that of shake start themselves. for planning of just you and Can a you how also seeing CDMOs there's side, here can are the a seeing factoring question as year? what or out signals

Udit Batra

process -- the of worked as pharma transformation segments mean, some say, context I answer this you and the is, for mnea, less our than question, would CDMOs when for one our your started right? thanks with and I most then were, I'll business. I start let Luke, of Look, dynamic And me know, the just we business. XX% question. pharma we

after been Over customers to processes and years the technical two very build of has market not systems, recognized couple And one the meaning tools, that the the widely. customer over And in are growth it's is giving value double that and more that worked a we close go year CDMO demand and of proposition, last about hard segment our value has complex extremely that you almost if proposition our been segment. for value years, proposition us transferred last see in growth of you So I'll has just from double-digit, it's as hand right? you X%. the in hand pricing three to better So number, working to scientists and actually the overall stacked XX% and growth help remind terms, molecules are growth the dynamic it's world. the been pharma right? into CDMO, the lease with our from CDMO and AstraZeneca’s others them the Merck’s those our transfer processes see, Pfizer

volatility is the value in CDMO recognized, far. well the market. done extremely we're the following yes, proposition And So so we've

customers any Now give CDMO in or diversify what And first. if their starting no to coming CDMOs to any global facility, I'm no the us saying, diversifying going I'm United for they're to diversify right? example, is longer to China geopolitical in to States, Singapore is in right? other our China an there going is or we to footprints have multi-national I'll instance, as at come a going or of actually either hey, in and now, like to footprint, an my driven do look it us if you U.S., they longer the to expand Ireland seeing volatility, are So customers, example, global

customers occurring. And for space, challenges a for diversifying. very find right? in that that are deep with of relationships all we a And given our top our the customers strong us. growth might overall geographically our not us, the lot has CDMO So demand fluctuated, segment geopolitical the repatriation, to shift It just CDMO given are be so with

geographies. so said, up back slowdown. might So confident to We the want and of individual still clarifies in customers have pick our that geographies large, bit. while we little hope hey, why come volume other And by a suffer none remain we that far and

Luke Sergott

a bit. you've strong of update little great. continue installed And talked you about lot can guys on a how growth, you Okay, expanded as to base? your much instrument drive you service us talk about it then Is And service revenue new then service rates? growth? driving instrument? of And that placing driving Or your is about per part strong boxes? just also the incremental service attach more it And what's

Udit Batra

Yes.

and let then hand So it me over Amol. I'll start to

and basis automated attach our percentage increasing industry and won't the or runway point We attachment it's wanted long year tactics, already our this far renewal, a points, and already the of expand at XX We right? I rates We've had So so. service points extremely any that Luke half a we and different about in several other have. to openly increasing through X,XXX points. discuss rates reasons. feel last of to increasing many leading. rates having the with that still tactics it competitive for XXX meaning due is the started basis so sale, So aspiration, see done by of We attach we good quoting about base installed by

with see that with your this this you've double-digit gets we I'll about and XX% a teams should stack says, our enthusiastic flow over Amol We the your MassSpec year-to-date, mean little for LC, base XX% through Now with year-to-date, much, comment growth analytical soorry a XX% feel next is very very the should super know in few years. let terrific that service I business go much. instrument bit. the him such up I quarter. over this he and basis, grown good service with on

Amol Chaubal

say, an get a at question. by mean, XX% or XX%, on Yes. let's the Because installed to instruments base installed replacements. all if and is, is, it a way placements. say, you base seven right? Luke, bump XX% them you when close by And But the your so grow great it's look are were these doesn't X% I instruments we new XX% grow average let's years, of

utilization sort ones on chemistry. replace, not on base, So the to that of you expect also they you new higher But are adding ones least installed the at are. the

what did points on. points XXX we've revenue and been not very is in basis pointed recurring And to can incremental successful plants. XXX your you customers we to XXX of the points one available of outside and all we already already half parts basis become out has do these buying year. as spare on the think these drive first this And last there all service, the we've we year, year So of it from us said would of again, revenue, are because basis

much revenue recurring is we revenue as But on service come. excited what sort a both So can the instrument incremental we would the of on in as fraction drive feel of years well with chemistry, attachment rate overall, this really bring. growth, the to great how

Udit Batra

just into these increased us service to to that confidence the And XXX de way gives attachment coming the consumables added replace service revenue, benefit. especially going base, XX, sort Luke, simplest the of XX summarize, are XX days is years. over about ones new users, revenue, convert we installed rates right? service add novo the And think And on top with an and better to increased closer add if newer will then it Yes. to new instruments, growth course, is to to service are incrementally they customers of performance attachment

Operator

coming is question Vatnsdal next of The from Rachel JPMorgan.

Your line open. is

Rachel Vatnsdal

thanks. Thanks questions. the for taking Okay,

in So of here, a customers end markets. throughout mean, changing patterns from ordering few about peers I talk various had off first just we've your

Just down, patterns. so to you're as ordering constraints supply normalized slowed seeing returning back chain have customers

so in seen your those across customers of ordering anything shift that with in far? you've no markets, your a if wondering just end So any earning line patterns from

Udit Batra

again than the orders ratio, sales sales on have our orders quarter. more to grown Rachel, So this particular the right?

sales. say, year. very this resilient. significant mean, change not order again, I XX% far orders markets -- volatile So higher patterns highly, pipeline, we so any we're to Close mean, you, have a and robust were than of with it's highly markets. in end our sort Again not very end are dealing of I'll seen, remind I we're I would

unmet than meeting don't are in need for stop needs testing get. or to ACQUITY PFAs. the to customers because our Absolute, right? ordering it's We they We it's ordering faster Waters our ordering So are expect the of the Xevo don't in sensitive we stop Second, and space with expect XS given terms to HPLC them TQ the right? now any expect competitive analysis. customers, because they benefits Premier we XX% instrument most that instrument I it for very products don't innovative, Xevo Arc customers mean, Connect, TQ stop

you segments in innovative be seem products So pointing what demand impacted are to resilient by out. don't

are we mean, think mentioned also especially I overall as is not which could be doing the things, a some from are specific earlier, it any think I our with water our So And good, demand I that. thing. but seeing deliberately of customers, an we standpoint. specific improving innovation we traction are

Rachel Vatnsdal

then just that heard things to high? a in be and flagged? And have a for talk And follow-up those private about you on Great. of that from the private right for we've side looking? deal you remained what you latest the pipeline still of here? growth of type leverage valuations you is adjacent M&A, think then the would maybe any those when done on of seen And high could get reach how size just can have then you timeline here range finally, So willing the what's that that deal what kind markets you anecdotally,

Udit Batra

to regularly, but our you is about remind mean, I M&A seeing XX the good that and right? organic growth remains in I ambitions. environment Sure, right? mean, invest of Amol capital that. about basis we'll thinking something about Rachel. OpEx We earlier I one growth we're I’ll the just number support priorities, tremendous feel sort mentioned we're even mean, points this CapEx overall as our allocation imperative, priority. and mean growth I extremely in quite is

the are richer support the can it. if course the that very to imagine comment in In will opportunities find reasonable I we're as specifically just is past. robust, the in than pipeline of sensible, more And you M&A something But and don't course, adjacencies, remains we've coal. looking growth, can't at and done the to of Second, continue the on also financially areas we some but in growth others, they priority. do not is buybacks

you want as the to concerned, rearview do far always Amol, timing in about ratios? leverage the As to that's comment better talk is mirror.

Amol Chaubal

to be much as as our of we then financing, terms Yes. I that investment make is, of all, want we shareholders. our mean, a grade disciplined creates And basis general, and in or absolutely sure to value on any stay possible for want thinking even financially risk lower. in first adjusted transaction

So we the as of can and within to up that the needle. dilutive long a interest investment thread able rates have on are gone create should accretion. sort we that EPS grade, as be But impact

Operator

Bruin, next coming The question America. is De from of Bank Derik

open. Your is line

Mike Ryskin

but the on me I to taking on, Derik. you, hear impressive you some Thanks one I markets, of the you sort this of go when think there are innovation, ask out first. still I for Can Udit, one Great. for have robust question. we hear is still mean, to Mike the results the is components we specifically you going slowdown, I want on maybe parse growth? try Ryskin the really to This of, but you asked quarter-after-quarter. kind for of said these to

So where how going and will a -- the more forward? and that us you as up durable in share you this lot a end more hopefully clarity cycle ordering, becoming clarity rank maybe, biggest seeing contributors and or just about much how growth? be new get to more maybe going the gains versus saying additional any versus to and step of time construction give of, You are replacement prominent? So little that's kind new through how is lab will spent markets? talking PFAs what And

Udit Batra

I'm these. I'm and each you on give very algorithm, disappoint going the you deep to of give can I Michael, specifics So you very, to not going that

to just review markets mean, are right? robust these markets. end about the So end robust, I pretty you we we good serve talked as First, XX% of know, the I've as resiliency and resilient So right? drivers, the that are and feel repeatedly

it's XXXX and that into had but should it we felt I’ve very have which durability growth. -- is the better much really, from CDMO, X, took was market how that some Premier than this this can pricing, commercial there guys the launching in since right? so nicely and about and some asked probably driven driven of is initiatives, they’ve given all and Day second well I I XXX still had And are some year. basis take contributing you number I think as Analyst seeing really expect of as said contributors. launch of questions in debate of been we've historically right? and launched. standpoint, X XXX Innovation plus points, now necessary our a contributing you big that it specific service, dovetailed significantly, whatever increased a independent replacement, three a at from also in of particular a one's elaborate, different we this done and fastest is Waters' starting hundred right? definitely volume that time X we're the by some it today e-commerce, And columns. been and is basis So Then on as What year columns driver, We the innovation, delta now bit higher are by anything internally MaxPeak Now them point. already Water history terms handsomely of of those instrument our quite definitely north are points

extraction. in testing in MassSpec and need testing definitely of for is the instrument class. a significant the we're portfolio and is totally Second, PFAs best the water innings have revived early we

So right? with really about didn't into has coating, for and talk anodes But go feel cathodes that that good TA battery also TA powders rheology and about our innovation test instrument we that powder much testing. today, revitalized

is contribution was this in contributing won't BioAccord, I there's with took detection mean, about American space. QX, number, good talk we see question at that I a you AACR, team again, to been a our the We're and looking strong spec but backwards likely innovation good you've in innovation, time see early of extremely Research give several LCMS, the the I the Clinical comment can some thing clinical has on how batteries. asked, a adjacencies now, starting attraction? feel Association I disease today think it, of to the handsomely. from the So I Chicago about what demand mean, The from is same we I for with with is in

said of adjacencies we meaningfully explains see And remember, we again, think again, more starting beyond they And contribute. will contribute. two to But stacked on market changes them short-term the stack look already you to a overall it on growth So the the XXXX, because are performance. we're sort basis, contribute that different if but beyond dilute time three-year year give took significantly I outperformance. we're that rate, think, quarter-on-quarter to group. three starting And I peer outperforming you at can to some the I quite the a mean basis,

I the helps you and years. that clarity how you think is hope gives up shape demand for to So through coming the going

Operator

for This call. will conclude today's session question-and-answer our

Udit Batra

Thank you.

Operator

today. our disconnect conclude conference parties will this this time. All may And for at

Waters (WAT) 1 Nov 222022 Q3 Earnings call transcript