NEW YORK — Waters on Tuesday reported a 4 percent year-over-year rise in first quarter revenues, driven by strong sales in its pharma and industrial markets.
For the three-month period ended March 31, Waters' revenues rose to $661.7 million from $636.8 million the year before, beating the consensus Wall Street estimate of $654.6 million.
Instrument sales were $262.9 million during the quarter, up 11 percent from $241.9 million in Q1 2024. Recurring revenues were $398.8 million, up 4 percent from $394.9 million in Q1 2024.
Waters posted net income of $121.4 million, or $2.03 per share, compared to a profit of $102.2 million, or $1.72 per share, in Q1 2024. Non-GAAP earnings per share in Q1 2025 were $2.25, topping the consensus Wall Street estimate of $2.22 per share.
The company's solid quarter came amid a business environment challenged by the Trump administration's tariffs and disruptions to US academic funding. During a conference call following the release of Waters' Q1 results, President and CEO Udit Batra noted that the company has a "highly globalized" manufacturing footprint that includes "a strong US presence," which he said will allow it to mitigate the impact of US tariffs and tariffs implemented by other countries in response.
He added that the company also has little exposure to goods entering the US from China or vice versa. Additionally, he said that most of its ex-US manufacturing is done in countries subject only to the lower baseline tariffs.
Batra said that in response to the US tariffs, Waters launched a task force to assess its exposure and to come up with mitigation plans that included "supply chain adjustments, selective surcharges for tariffs, and limits to discretionary spending."
He said the company expects the Trump tariffs to negatively impact its 2025 adjusted operating margin by $10 million. Waters CFO Amol Chaubal said on the call that the gross impact to operating margin is expected to be around $45 million, with $15 million of that offset by surcharges, around $14 million mitigated by manufacturing cost actions, and around $6 million offset by management of discretionary spending.
Batra also suggested that Waters could benefit if its biopharma customers choose to change their manufacturing footprints and supply chain configurations in response to the tariffs as this could lead to the purchase of new instrumentation.
"We're in close conversation with all our customers," he said. "Nobody yet has detailed plans on exactly what they are going to do, and as they emerge, we expect to play a strong role."
Chaubal also addressed the disruptions to US academic funding, noting that US academic and government sales account for around 3 percent of Waters' revenues. He said the company is assuming a 20 percent year-over-year decline in US academic and government sales in 2025, with a mid-single-digit decline in its overall academic and government business.
China, meanwhile, came in ahead of the company's expectations at around 5 percent year-over-year growth in Q1, Batra said, attributing this to "strong performance in stimulus-related opportunities in the academic and government segment."
The Milford, Massachusetts-based company's R&D costs in the quarter increased 4 percent to $46.6 million from $44.6 million, while SG&A spending rose less than 1 percent to $174.9 million from $174.5 million.
Waters projected a rise in Q2 2025 revenues of between 5 percent and 7 percent and Q2 2025 non-GAAP EPS of between $2.88 and $2.98, in the range of the consensus Wall Street estimate of $2.93.
Waters raised its full-year 2025 guidance, projecting revenue growth of between 5 percent and 7 percent and full-year non-GAAP EPS in the range of $12.75 and $13.05. Analysts estimate full-year non-GAAP EPS of $12.87. Waters previously projected full-year 2025 revenue growth of between 4.5 percent and 7.0 percent and adjusted EPS between $12.70 and $13.00.
Waters finished the quarter with $382.9 million in cash, cash equivalents, and investments.
In Tuesday morning trading on the New York Stock Exchange, Waters stock was down 1 percent to $344.21.