On this page of StockholderLetter.com we present the latest annual shareholder letter from WATERS CORP /DE/ — ticker symbol WAT. Reading current and past WAT letters to shareholders can bring important insights into the investment thesis.

 •  4/12/2024 Letter Continued (Full PDF)
 •  4/13/2023 WAT Stockholder Letter
 •  More "Biotechnology" Category Stockholder Letters
 •  WAT Benford's Law Stock Score = 98

WAT Shareholder/Stockholder Letter Transcript:

ANNUAL REPORT


Dear Shareholders, Customers, and Employees,
Over the long-term, Waters has proven to be a great business with an average annual revenue growth rate
of approximately 6% and industry-leading margins1. It is also a business that fluctuates over time, and the
last three years have been particularly volatile due to the pandemic.
In 2021 and 2022, we had a strong performance with double-digit revenue growth each year as our
transformation was well underway. We started 2023 with a lot of positive momentum; however, early in
the year, Biotech funding diminished, geopolitical tensions increased, and the economy in China weakened
at a historic pace     in less than a year, going from our fastest growing geography to our slowest. As the
year went on, capital spending continued to slow and market conditions remained challenging.
Despite the challenges we faced in 2023, we finished the year with a solid performance. I would like to
extend my sincere appreciation to our dedicated employees who strengthened the company with their
indomitable spirit and collaboration. We maintained strong commercial execution, introduced innovative
new products, and made substantial progress in our higher growth adjacent markets. In 2023, we completed
the largest acquisition in Waters history with Wyatt Technology LLC, which contributed 2.5% to our
revenues. Above all else, we continue to take pride in our commitment to leave the world better than we
found it by reducing our most significant environmental impacts, becoming more representative of the
society we live in, and enhancing long-term stakeholder value with effective oversight.
As we enter 2024, we remain confident in the strength of the long-term fundamentals of our business.
Our investments in areas such as early disease detection with LCMS in diagnostics, bioanalytical
characterization and bioseparations, battery testing, and perfluoroalkyl and polyfluoroalkyl substances
(PFAS) testing continue to position us well for future growth.
Thank you for being a part of our journey.
1
Financial performance representative of revenue growth over the past 20 years, from 2004   2023.
Unless otherwise noted, revenue growth percentages are presented on an organic constant currency basis. Adjusted operating income margin
percentages are presented on a Non-GAAP basis. See the Company   s website for the GAAP to Non-GAAP reconciliations for the year-over-year
organic constant currency revenue and the adjusted operating income margin percentage.
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Unlocking the Potential
of Science by Solving
Problems That Matter
4

FIRST THE FACTS:
In 2023, revenues declined 0.5% as reported and 2% in organic constant currency, with an adjusted operating
income margin of 30.9%. Despite headwinds from lower sales volumes and inflation, our continued focus on
operational excellence allowed us to deliver 70 basis points of adjusted operating income margin expansion over
the prior year.
A key challenge in 2023 was the abrupt turn we saw
Finally, M&A contributed positively to our results.
in China, in which revenues declined more than 20%,
Our acquisition of Wyatt Technology LLC successfully
resulting in a 5% headwind to our total overall revenue
delivered an on-target M&A contribution of 2.5%
growth. As China declined, our sales teams capitalized
to revenues.
on the available opportunities in the market to drive
revenue growth across all other regions: the Americas
While 2023 saw sales growth challenges for the life
grew 1%, Europe grew 2%, and Asia ex-China grew high-
science tools industry, Waters shareholders continued
single-digits. Excluding China, revenues grew 3% in 2023
to benefit from above-average total shareholder returns
and high-single-digits on a four-year compound annual
(TSR). Waters TSR decline of 4% for the year outpaced
growth rate (CAGR) basis in organic constant currency.
the peer average and was a leader among those with
higher instrument revenue mix. The company   s 2023
Our revitalized portfolio and commercial initiatives
TSR performance fits a pattern of delivering top quartile
helped drive customer spending in 2023. While
shareholder returns since our transformation within life
instruments declined 10% overall and low-single-digits
science tools. On a 3-year basis as of 12/31/23, Waters
excluding China, recurring revenues grew 6% overall
TSR is 33% (or 10% on an annualized basis) which reflects
and high-single-digits excluding China. Chemistry
a notable outperformance versus the peer group average.
revenue growth has been supported by strong customer
demand for MaxPeak    Premier Columns serving large
molecule workflows, and adoption of eCommerce.
Service revenue growth has been supported by
expansion of plan attachment.
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 4/12/2024 Letter Continued (Full PDF)