Waters (WAT) Q1 FY26 earnings call: guidance and Q&A

Clarification on the components of the raised guidance, specifically the $35 million in revenue synergies and the impact of pricing actions.

Management explained that the $35 million in revenue synergies are tied to instrument replacement, service plan attachment, and e-commerce. Pricing actions, tariff mitigation, and reagent rental contract compliance are additional opportunities not yet embedded in the guidance, with the 180-day plan already showing early impact on funnel reviews and commercial activity.

“What's not really incorporated is the 180-day plan, which is having quite an early impact.”

asked by Tycho Peterson · answered by Udit Batra

Confidence in turning around the microbiology business, given its 10% growth and the upcoming BACTEC FXI launch.

Udit Batra expressed high confidence, stating that Waters focuses on high-volume regulated applications and applies its successful playbook to microbiology, which has leading brands and significant unmet needs. He highlighted the 5-6% growth despite DRG headwinds and the anticipated positive impact of the BACTEC FXI launch and underlying business improvements.

“Microbiology has the same characteristics, high-volume regulated applications with significant unmet needs. Really great start, about 5% to 6% growth in spite of the DRG headwinds.”

asked by Tycho Peterson · answered by Udit Batra

Details on the performance of the legacy Waters LCMS business, particularly in biopharma and academic/government sectors.

Udit Batra reported high single-digit LCMS growth, driven by the replacement cycle, new products like Alliance iS and Xevo MRT, and idiosyncratic growth drivers such as GLP-1 testing and biologics. Pharma grew mid-teens overall, with strong performance in Americas and Europe, and over 50% growth in China from biotech and CDMOs.

“Pharma for us in China grew over 50%, right behind these trends and strong, strong execution.”

asked by Patrick Donnelly · answered by Udit Batra

Assessing whether BD's Q4 underperformance was an 'air pocket' due to transition and the extent of execution improvement versus market improvement in Q1.

Udit Batra attributed the Q1 improvement to diligent integration planning, strong collaboration between teams, and the effective implementation of the 180-day plan. He emphasized that the focus on high-quality funnels, improved forecast accuracy, pricing initiatives, and China localization were key drivers, leveraging the strong brands and relevance of Waters' playbook.

“it's very difficult to judge such things. I mean it was a declining business. But you see an advantage of just giving it focus.”

asked by Patrick Donnelly · answered by Udit Batra

Inquiring about the delta between BD's full-quarter and owned-period growth, and the underlying organic growth for core Waters excluding extra days, as well as the rationale for a lower H2 guidance.

Amol Chaubal stated that the $40 million beat in BD's revenue was due to strong execution of the 180-day plan, which derisked H2 guidance. For core Waters, extra working days contributed about 2% to total revenue, but chemistry (13%) and service (14%) still showed elevated growth. H1 legacy growth is ~9%, and H2 is prudently guided at 6% due to fewer working days and macro conditions, despite strong funnel.

“The way the teams executed makes us feel really proud that things are working, the 180-day growth revitalization plan is starting to bear fruit, and that's what sort of resulted in this significant $40 million beat, right?”

asked by Vijay Kumar · answered by Amol Chaubal

Questioned competitive responses to Waters' new discipline and how competing with private equity-owned businesses differs, particularly in microbiology.

Udit Batra reiterated Waters' focus on high-volume regulated settings with leading brands. He expects rational pricing from PE competitors, as Waters leads with innovation. He expressed confidence in the acquired brands and the application of Waters' execution discipline, stating that the team is more focused on unmet needs and commercial execution.

“we are now in a position where, as a team, we're more focused on unmet needs on proof of principle of our new products, commercial execution than anything else.”

asked by Douglas Schenkel · answered by Udit Batra

Inquired about the durability of mid-teens chemistry growth and the decision to localize manufacturing in flow cytometry in China, including investment and competition.

Udit Batra expressed excitement about chemistry's growth, driven by R&D focus on bioseparations and new products, expecting it to be a 9-10% grower long-term. For China, he highlighted the strong pharma market and the intent to localize Biosciences manufacturing in Suzhou by Q3, mirroring the successful strategy used for Analytical Sciences, to address market access and export complexities.

“roughly 1/3 of all biotech molecules that are unlicensed by large pharma now come from China.”

asked by Elizabeth Koslosky · answered by Udit Batra