Waters' Sales Up, Net Income Dips Amid BD Acquisition Costs

TL;DR

Waters' revenue growth is overshadowed by a quarterly profit dip and the massive BD acquisition, making it a 'wait and see' for long-term value.

AI Summary

Waters Corporation reported total net sales of $799.887 million for the three months ended September 27, 2025, an increase of 8.05% from $740.305 million in the same period of 2024. Product sales grew to $499.964 million from $462.011 million, and service sales increased to $299.923 million from $278.294 million. However, net income decreased by 7.79% to $148.923 million for the three months ended September 27, 2025, compared to $161.503 million in the prior year, primarily due to a significant rise in selling and administrative expenses to $214.229 million from $169.097 million, and increased research and development expenses of $53.643 million versus $45.336 million. For the nine months ended September 27, 2025, total net sales rose to $2.232 billion, up from $2.085 billion in 2024, and net income increased to $417.415 million from $406.436 million. A major strategic development is the planned acquisition of Becton, Dickinson and Company's Biosciences and Diagnostic Solutions business, valued at approximately $17.5 billion, expected to close around Q1 2026. This transaction will involve SpinCo incurring $4 billion of new indebtedness, which Waters will assume. Key risks include global economic conditions, foreign currency fluctuations, and intense competition in the analytical instrument industry.

Why It Matters

This filing reveals Waters Corporation's continued revenue growth, particularly in product and service sales, indicating strong underlying demand for its analytical instruments. However, the dip in quarterly net income, driven by higher operating expenses, suggests potential integration costs or increased investment ahead of the significant $17.5 billion acquisition of BD's Biosciences and Diagnostic Solutions business. For investors, the successful integration of the BD assets is critical for future growth and market positioning against competitors like Thermo Fisher Scientific and Agilent Technologies. Employees and customers of both Waters and BD will be watching for how this merger impacts product roadmaps, service offerings, and organizational structure, potentially reshaping the competitive landscape in life sciences and diagnostics.

Risk Assessment

Risk Level: medium — The company faces medium risk due to a significant increase in current liabilities, specifically notes payable rising from $0 to $460 million, and a substantial $17.5 billion acquisition of BD's Biosciences and Diagnostic Solutions business, which will add $4 billion in new indebtedness. While net income for the nine months increased, the quarterly net income decreased by 7.79% to $148.923 million, indicating potential short-term pressures.

Analyst Insight

Investors should closely monitor the progress and financing details of the BD acquisition, as it represents a significant strategic shift and debt burden. Evaluate Waters' ability to integrate the new business effectively and realize synergies, as this will be crucial for long-term shareholder value. Consider the impact of increased operating expenses on future profitability.

Financial Highlights

debt To Equity

0.36

revenue

$799,887,000

operating Margin

N/A

total Assets

$4,862,564,000

total Debt

$1,407,206,000

net Income

$148,923,000

eps

$2.50

gross Margin

N/A

cash Position

$459,118,000

revenue Growth

+8.05%

Revenue Breakdown

Key Numbers

• $799.887M — Total Net Sales (Q3 2025) (Increased from $740.305M in Q3 2024, an 8.05% rise.)
• $148.923M — Net Income (Q3 2025) (Decreased from $161.503M in Q3 2024, a 7.79% decline.)
• $2.50 — Diluted EPS (Q3 2025) (Decreased from $2.71 in Q3 2024.)
• $2.232B — Total Net Sales (YTD 2025) (Increased from $2.085B in YTD 2024.)
• $417.415M — Net Income (YTD 2025) (Increased from $406.436M in YTD 2024.)
• $17.5B — BD Acquisition Value (Significant strategic transaction for Waters Corporation.)
• $460.000M — Notes Payable (Q3 2025) (Increased from $0 in Q4 2024, indicating new short-term debt.)
• $947.206M — Long-term Debt (Q3 2025) (Decreased from $1.626B in Q4 2024, showing debt restructuring or repayment.)
• 59,534,740 — Common Shares Outstanding (As of October 31, 2025.)
• $459.118M — Cash and Cash Equivalents (Q3 2025) (Increased from $325.355M in Q4 2024.)

Key Players & Entities

• Waters Corporation (company) — registrant
• Becton, Dickinson and Company (company) — acquisition target
• BD Biosciences and Diagnostic Solutions business (company) — business being acquired by Waters Corporation
• $17.5 billion (dollar_amount) — valuation of the BD acquisition
• $4 billion (dollar_amount) — new indebtedness to be incurred by SpinCo and assumed by Waters
• $799.887 million (dollar_amount) — total net sales for the three months ended September 27, 2025
• $148.923 million (dollar_amount) — net income for the three months ended September 27, 2025
• $214.229 million (dollar_amount) — selling and administrative expenses for the three months ended September 27, 2025
• New York Stock Exchange (regulator) — exchange where WAT is registered
• SEC (regulator) — U.S. Securities and Exchange Commission

FAQ

Risk Factors

• Global Economic Conditions [medium — market]: Downturns in global economic conditions could adversely affect the demand for Waters Corporation's products and services. This is a persistent risk for companies in the scientific instrumentation sector.
• Foreign Currency Fluctuations [medium — financial]: As a global company, Waters Corporation is exposed to foreign currency exchange rate fluctuations, which can impact reported financial results and the value of international sales and expenses.
• Intense Competition [medium — market]: The analytical instrument industry is highly competitive, with numerous players offering similar or alternative technologies. This competition can pressure pricing and market share.
• Integration of BD Acquisition [high — operational]: The successful integration of the acquired Becton, Dickinson and Company's Biosciences and Diagnostic Solutions business, valued at $17.5 billion, presents significant operational and integration challenges. Failure to integrate effectively could disrupt operations and impact financial performance.
• Increased Indebtedness [high — financial]: The planned acquisition will involve SpinCo incurring $4 billion of new indebtedness, which Waters will assume. Managing this increased debt load and its associated interest expense will be critical.

Industry Context

Waters Corporation operates in the highly competitive analytical instrument industry, serving life sciences, diagnostics, and industrial markets. Key trends include the increasing demand for advanced analytical technologies for drug discovery, diagnostics, and quality control, as well as the growing importance of integrated solutions and software. The industry is characterized by significant R&D investment and a need for continuous innovation to meet evolving customer needs.

Regulatory Implications

While no specific new regulatory risks were detailed in the provided excerpts, companies in the life sciences and diagnostics sectors are subject to stringent regulations from bodies like the FDA. Compliance with these regulations is critical for product approval, market access, and ongoing operations. The acquisition of BD's business segments may also introduce new regulatory considerations.

What Investors Should Do

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Key Dates

• 2025-09-27: End of Q3 2025 — Reported total net sales of $799.887 million and net income of $148.923 million.
• 2026-01-01: Expected Q1 2026 — Anticipated closing of the acquisition of Becton, Dickinson and Company's Biosciences and Diagnostic Solutions business.

Glossary

Goodwill

An intangible asset that arises when a company acquires another company for a price greater than the fair market value of its net identifiable assets. (Waters Corporation has $1,338,358,000 in goodwill as of September 27, 2025, indicating significant past acquisitions.)

Deferred revenue and customer advances

Revenue that has been received by the company but has not yet been earned, or payments received from customers for goods or services to be provided in the future. (This line item increased to $301,342,000 from $250,807,000, suggesting strong future sales commitments or pre-payments.)

Treasury stock

Stock that a company has repurchased from the open market. It is recorded at cost and reduces total stockholders' equity. (Waters Corporation holds $10,162,316,000 in treasury stock as of September 27, 2025, reflecting a history of share buybacks.)

Year-Over-Year Comparison

Compared to the prior year's comparable period, Waters Corporation demonstrated robust revenue growth, with total net sales increasing by 8.05% to $799.887 million in Q3 2025. However, net income saw a decline of 7.79% to $148.923 million, primarily driven by a substantial increase in selling and administrative expenses (up 26.7%) and higher research and development costs (up 18.3%). The balance sheet shows a significant increase in cash and cash equivalents to $459.118 million from $325.355 million, alongside a notable reduction in long-term debt from $1.626 billion to $947.206 million, offset by new short-term notes payable of $460 million.

Key Financial Figures

• $0.01 — ich registered Common Stock, par value $0.01 per share WAT New York Stock Exchan

Filing Documents

• d35664d10q.htm (10-Q) — 1464KB
• d35664dex311.htm (EX-31.1) — 10KB
• d35664dex312.htm (EX-31.2) — 10KB
• d35664dex321.htm (EX-32.1) — 4KB
• d35664dex322.htm (EX-32.2) — 4KB
• 0001193125-25-263533.txt ( ) — 8004KB
• wat-20250927.xsd (EX-101.SCH) — 1256KB
• d35664d10q_htm.xml (XML) — 1464KB

Financial Statements

Financial Statements Consolidated Balance Sheets (unaudited) as of September 27, 2025 and December 31, 2024 3 Consolidated Statements of Operations (unaudited) for the three months ended September 27, 2025 and September 28, 2024 4 Consolidated Statements of Operations (unaudited) for the nine months ended September 27, 2025 and September 28, 2024 5 Consolidated Statements of Comprehensive Income (unaudited) for the three and nine months ended September 27, 2025 and September 28, 2024 6 Consolidated Statements of Cash Flows (unaudited) for the nine months ended September 27, 2025 and September 28, 2024 7 Consolidated Statements of Stockholders' Equity (unaudited) for the three months ended September 27, 2025 and September 28, 2024 8 Consolidated Statements of Stockholders' Equity (unaudited) for the nine months ended September 27, 2025 and September 28, 2024 9 Condensed Notes to Consolidated Financial Statements (unaudited) 10 Item 2.

Management's Discussion and Analysis of Financial Condition and Results of Operations

Management's Discussion and Analysis of Financial Condition and Results of Operations 30 Item 3.

Quantitative and Qualitative Disclosures About Market Risk

Quantitative and Qualitative Disclosures About Market Risk 43 Item 4.

Controls and Procedures

Controls and Procedures 43 PART II OTHER INFORMATION Item 1.

Legal Proceedings

Legal Proceedings 44 Item 1A.

Risk Factors

Risk Factors 44 Item 2. Unregistered Sales of Equity Securities and Use of Proceeds 45 Item 5. Other Information 46 Item 6. Exhibits 47 Signature 48 Table of Contents

: Financial Statements

Item 1: Financial Statements WATERS CORPORATION AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS (unaudited) September 27, 2025 December 31, 2024 (In thousands, except per share data) ASSETS Current assets: Cash and cash equivalents $ 459,118 $ 325,355 Accounts receivable, net 748,519 733,365 Inventories 572,941 477,261 Other current assets 138,612 133,130 Total current assets 1,919,190 1,669,111 Property, plant and equipment, net 636,964 651,200 Intangible assets, net 570,773 567,906 Goodwill 1,338,358 1,295,720 Operating lease assets 76,426 74,193 Other assets 320,853 295,665 Total assets $ 4,862,564 $ 4,553,795 LIABILITIES AND STOCKHOLDERS' EQUITY Current liabilities: Notes payable $ 460,000 $ — Accounts payable 115,728 99,931 Accrued employee compensation 80,331 93,969 Deferred revenue and customer advances 301,342 250,807 Current operating lease liabilities 28,487 25,537 Accrued income taxes 56,370 158,658 Accrued warranty 11,569 11,602 Other current liabilities 197,468 149,254 Total current liabilities 1,251,295 789,758 Long-term liabilities: Long-term debt 947,206 1,626,488 Long-term portion of retirement benefits 47,744 44,611 Long-term income tax liabilities 30,880 30,318 Long-term operating lease liabilities 50,472 50,317 Other long-term liabilities 204,274 183,796 Total long-term liabilities 1,280,576 1,935,530 Total liabilities 2,531,871 2,725,288 Commitments and contingencies (Notes 6, 7 and 9) Stockholders' equity: Preferred stock, par value $ 0.01 per share, 5,000 shares authorized, no ne issued at September 27, 2025 and December 31, 2024 — — Common stock, par value $ 0.01 per share, 400,000 shares authorized, 163,138 and 162,962 shares issued, 59,525 and 59,388 shares outstanding at September 27, 2025 and December 31, 2024, respectively 1,631 1,630 Additional paid-in capital 2,396,477 2,3