WAT earnings analysis
What we found in WAT's 10-Q: the parts that mattered, the offsets in the same document, and what the company said about what comes next.
Our reading of the filing · Free to read, no account needed
Waters delivered substantial reported growth after acquiring BD’s BDS businesses, with second-quarter revenue up 113% to $1.645 billion and legacy revenue up 7%. However, acquisition-related amortization, purchase-accounting step-ups, restructuring, integration costs, and higher interest expense produced an $86 million operating loss and $1.39 GAAP diluted EPS loss. Cash generation remained positive, but operating cash flow fell to $198 million and debt increased to $5.086 billion, leaving the investment case dependent on integration, cost savings, and eventual normalization of acquisition accounting.
The parts that mattered.
Pulled out of the filing itself, with the figures the company reported.
- BDS acquisition drives strong revenue growth
- Second-quarter revenue was $1.645 billion, up 113% from $771 million. BDS contributed $817 million, while legacy revenue increased 7% excluding BDS.
- Legacy and acquired segments profitable
- Underlying segment performance remained profitable: Analytical & Materials Sciences generated $266 million of operating income on $756 million of revenue, while Biosciences generated $126 million on $368 million.
- Broad-based analytical demand recovered
- Analytical & Materials Sciences revenue increased 7% to $756 million, driven by higher demand for LC/MS systems, columns, application-specific testing kits, and services. Chemistry consumable revenue increased 10% excluding BDS.
- Positive free cash flow despite integration drag
- Operating cash flow was $198 million in the first half versus $301 million a year earlier, while capital expenditures and software capitalization rose to $87 million from $48 million. Implied first-half free cash flow was $111 million.
- Cost actions provide savings opportunity
- The workforce reduction affected approximately 3% of employees and is expected to generate approximately $120 million of annual salary-related savings; $14 million of savings had been achieved through the second quarter.
- Liquidity remains available
- The company held $539 million of cash at July 4, 2026 and had $1.5 billion available under its revolving credit facility after letters of credit.
And the other side of it.
The offsets in the same document — the things a summary that only listed the good news would have left out.
- Acquisition accounting overwhelms GAAP earnings
- GAAP operating income deteriorated to an $86 million loss from $188 million of operating income, driving a negative 5.2% operating margin versus 24.4%. Purchased-intangible amortization was $244 million and acquisition-related inventory and fixed-asset step-up expense was $154 million in the quarter.
- GAAP loss and higher interest burden
- Diluted EPS was a $1.39 loss versus $2.47 of income in the prior-year quarter. Net loss was $136 million, while interest expense increased to $60 million from $15 million.
- Leverage and upcoming maturities
- Total debt increased to $5.086 billion from $1.407 billion at December 31, 2025, while cash declined to $539 million from $588 million. The company also has $650 million of Senior Notes due in 2027 and $450 million outstanding under the SpinCo Term Loan due February 4, 2028.
- Working capital absorbs cash
- Accounts receivable increased to $1.987 billion from $829 million at year-end, including $673 million due from BD; days sales outstanding rose to 110 days from 86 days. Inventories increased to $1.377 billion from $572 million, partly because of higher tariffs and increased safety stock.
- Tariff and supply-chain exposure
- Management states that tariffs, retaliatory tariffs, and supply-chain disruptions could significantly affect the consolidated statements of operations and cash flows. The company had not recognized any material tariff refund as of July 4, 2026 because recoverability and timing remained uncertain.
- Integration risk remains unchanged but material
- The company states that there were no material changes to the risk factors in the prior 10-K. However, the filing highlights acquisition-integration risk, including a transition services agreement costing approximately $90 million annually for up to three years and $40 million incurred in the first half.
What they reported.
What the company itself reported, taken out of the document.
- Earnings per share
- $-1.39
- Gross margin
- 44.6%
- Operating margin
- -5.2%
- Segment
- Analytical & Materials Sciences: $756 million, up 7% year over year; segment operating income $266 million, 35.2% margin versus 39.4%.
- Segment
- Biosciences: $368 million; segment operating income $126 million, 34.2% margin. No prior-year comparable revenue because the business was acquired on February 9, 2026.
- Segment
- Advanced Diagnostics: $521 million, including $72 million from Waters Clinical; segment operating income $119 million, 22.8% margin versus $22 million and 35.2% in the prior-year quarter.
What they said about what is next.
The 10-Q does not provide explicit full-year revenue or EPS guidance, and does not state a change versus the outlook disclosed in the August 4, 2026 earnings release. Management expects foreign-currency translation to be neutral to 2026 gross profit, expects approximately $120 million of annual salary-related savings from the workforce reduction, and estimates approximately $67 million of savings in 2026. The company anticipates approximately $15 million of 2026 net-interest savings from cross-currency swaps and approximately $3 million-$6 million of 2026 defined-benefit-plan contributions.
The filing reads about the same as the one before it.
What came before.
- 10-Q · May 12, 2026
- Waters Corporation reported a Q1 2026 revenue of $1.267 billion, exceeding estimates by $56 million. The company posted a net loss of $72 million, translating to a loss per share of $0.87. The results were primarily…
- 10-K · February 23, 2026
- Waters positions itself as a global leader in analytical instruments and software (HPLC/UPLC and MS) with more than 65 years of history and complementary LC‑MS product and service offerings. In FY2025 the company grew…
- 10-Q · August 4, 2025
- Waters reported quarterly revenue of $771,332 (in thousands) versus $708,529 in Q2 2024, an increase of $62,803 (≈8.9%). Diluted EPS was $2.47 versus $2.40 a year ago (+$0.07); operating income was essentially flat at…
- 10-K · February 27, 2024
- Waters Corporation reported 2023 net sales of $2,956.4M (down from $2,972.0M in 2022) and net income of $642.2M (diluted EPS $10.84). The year included the May 16, 2023 acquisition of Wyatt Technology for $1.3B,…
This is our reading of a public filing, not the filing. Read the original on SEC.gov · Educational only. Nothing here is investment advice.
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