Waters Q4 2025 Waters Corp Earnings Call | AllMind AI Earnings | AllMind AI
Q4 2025 Waters Corp Earnings Call
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Good morning, good morning to the waters Corporation, the water quarter 2025 financial results Conference call. All participants will be in listen only mode until the question and answer session begins. This call is being recorded if anyone has any objections. Please disconnect. At this time. It is now my pleasure to turn the call over to Mr. <unk>.
Amol Chaubal: Good morning. Good morning. Welcome to the Waters Corporation Amol Chaubal 2025 Financial Results Conference Call. All participants will be in listen-only mode until the question-and-answer session begins. This call is being recorded. If anyone has any objections, please disconnect at this time. It is now my pleasure to turn the call over to Mr. Caspar Tudor, Head of Investor Relations. Please go ahead, sir.
Operator: Good morning. Good morning. Welcome to the Waters Corporation 2025 Financial Results Conference Call. All participants will be in listen-only mode until the question-and-answer session begins. This call is being recorded. If anyone has any objections, please disconnect at this time. It is now my pleasure to turn the call over to Mr. Caspar Tudor, Head of Investor Relations. Please go ahead, sir.
Spur tutor head of Investor Relations. Please go ahead Sir.
Caspar Tudor: Thank you, Leila, and good morning, everyone. Welcome to Waters Corporation's Q4 earnings call. Joining me today are Dr. Udit Batra, our President and Chief Executive Officer, and Amol Chaubal, our Senior Vice President and Chief Financial Officer. Before we begin, I will cover the cautionary language. In this conference call, we will make various forward-looking statements regarding future events or future financial performance of the company, including the expected financial and operational impact of Waters' combination with the biosciences and diagnostic solutions business of Becton, Dickinson, and Company. We will provide guidance regarding possible future results as well as commentary on potential market and business conditions that may impact Waters Corporation over the Q1 of 2026 and full year 2026. These statements are only our present expectations and are subject to risks and uncertainties.
Caspar Tudor: Thank you, Leila, and good morning, everyone. Welcome to Waters Corporation's Q4 earnings call. Joining me today are Dr. Udit Batra, our President and Chief Executive Officer, and Amol Chaubal, our Senior Vice President and Chief Financial Officer. Before we begin, I will cover the cautionary language. In this conference call, we will make various forward-looking statements regarding future events or future financial performance of the company, including the expected financial and operational impact of Waters' combination with the biosciences and diagnostic solutions business of Becton, Dickinson, and Company. We will provide guidance regarding possible future results as well as commentary on potential market and business conditions that may impact Waters Corporation over the Q1 of 2026 and full year 2026. These statements are only our present expectations and are subject to risks and uncertainties.
Thank you Leila and good morning, everyone welcome to waters Corporation's fourth quarter earnings call. Joining me today, a doctor who departure, our president and Chief Executive Officer, and a mall travel our senior Vice President and Chief Financial Officer before we begin I will cover the cautionary language in this conference call, we will make various <unk>.
Forward looking statements regarding future events or future financial performance of the company, including the expected financial and operational impacts of waters combination with the biosciences and diagnostic solutions business of Becton Dickinson and company, we will provide guidance regarding possible future results as well as commentary on potential market and business.
Conditions that May impact waters Corporation over the first quarter of 2026 and full year 2026.
These statements are only our present expectations and are subject to risks and uncertainties. Please see the risk factors included within our Form 10-K, our form 10, Qs or other SEC filings and the cautionary language included in this morning's earnings release.
Caspar Tudor: Please see the risk factors included within our Form 10-K, our Form 10-Qs, our other SEC filings, and the cautionary language included in this morning's earnings release. During today's call, we will refer to certain non-GAAP financial measures. Reconciliations to the most directly comparable GAAP measures are attached to our earnings release and in the appendix of the slide presentation accompanying today's call. Unless stated otherwise, references to quarterly results increasing or decreasing are in comparison to the fourth quarter of calendar year 2024. In addition, unless stated otherwise, all year-over-year revenue growth rates and ranges given on today's call are on a comparable constant currency basis, and all quarter-over-quarter revenue growth rates and ranges are on a comparable constant currency basis. Finally, we do not intend to update our guidance, predictions, or projections except as part of a regularly scheduled earnings release or as otherwise required by law.
Caspar Tudor: Please see the risk factors included within our Form 10-K, our Form 10-Qs, our other SEC filings, and the cautionary language included in this morning's earnings release. During today's call, we will refer to certain non-GAAP financial measures. Reconciliations to the most directly comparable GAAP measures are attached to our earnings release and in the appendix of the slide presentation accompanying today's call. Unless stated otherwise, references to quarterly results increasing or decreasing are in comparison to the fourth quarter of calendar year 2024. In addition, unless stated otherwise, all year-over-year revenue growth rates and ranges given on today's call are on a comparable constant currency basis, and all quarter-over-quarter revenue growth rates and ranges are on a comparable constant currency basis. Finally, we do not intend to update our guidance, predictions, or projections except as part of a regularly scheduled earnings release or as otherwise required by law.
During today's call, we will refer to certain non-GAAP financial measures.
Conciliations to the most directly comparable GAAP measures are attached to our earnings release and in the appendix of the slide presentation accompanying today's call.
Unless stated otherwise references to quarterly results, increasing or decreasing are in comparison to the fourth quarter of calendar year 2024. In addition, unless stated otherwise all year over year revenue growth rates and ranges given on today's call are on a comparable constant currency basis in all quarter over quarter revenue growth.
Rates and ranges on a comparable constant currency basis. Finally, we do not intend to update our guidance predictions or projections, except as part of our regularly scheduled earnings release or as otherwise required by law.
Caspar Tudor: I would now like to turn the call over to Udit to begin with our key messages for the quarter. Over to you, Udit.
Caspar Tudor: I would now like to turn the call over to Udit to begin with our key messages for the quarter. Over to you, Udit.
I would now like to turn the call over to <unk> to begin with our key messages for the quarter over to you with it.
Udit Batra: Thank you, Caspar, and good morning, everyone. We delivered a strong finish to the year, achieving high single-digit reported revenue growth and low double-digit adjusted EPS growth in Q4. This reflects yet another quarter of industry-leading sales growth. Today also marks a transformative step forward as we complete the acquisition of BD's biosciences and diagnostic solutions business. We're uniting world-class expertise across chemistry, physics, and biology into a scientific powerhouse with category-defining brands and a shared culture of pioneering innovation. We look forward to welcoming our new colleagues later this morning. It also marks the point at which we will have full operational control over the BD business. With months of rigorous integration planning behind us, we're now moving immediately into execution, applying the same focus and discipline that have driven exceptional results at Waters. We're entering this chapter from a position of strength.
Udit Batra: Thank you, Caspar, and good morning, everyone. We delivered a strong finish to the year, achieving high single-digit reported revenue growth and low double-digit adjusted EPS growth in Q4. This reflects yet another quarter of industry-leading sales growth. Today also marks a transformative step forward as we complete the acquisition of BD's biosciences and diagnostic solutions business. We're uniting world-class expertise across chemistry, physics, and biology into a scientific powerhouse with category-defining brands and a shared culture of pioneering innovation. We look forward to welcoming our new colleagues later this morning. It also marks the point at which we will have full operational control over the BD business. With months of rigorous integration planning behind us, we're now moving immediately into execution, applying the same focus and discipline that have driven exceptional results at Waters. We're entering this chapter from a position of strength.
You Kasper and good morning, everyone.
We delivered a strong finish to the year achieving high single digit reported revenue growth and low double digit adjusted EPS growth in the fourth quarter.
This reflects yet another quarter of industry, leading sales growth today.
Today also marks a transformation step forward as we complete the acquisition of Bd's Biosciences, and diagnostic solutions business there.
Uniting world class expertise across chemistry, physics, and biology into a scientific powerhouse with category defining brands and a shared culture of pioneering innovation, we look forward to welcoming our new colleagues later this morning.
It also marks the point at which we will have full operational control over the conveyor business.
With months of rigorous integration planning behind US we're now moving immediately into execution applying the same focus and discipline that have driven exceptional results at waters well.
We're entering this chapter from a position of strength throughout 2025, we have advanced the strategic roadmap that we laid out five years ago.
Udit Batra: Throughout 2025, we have advanced the strategic roadmap that we laid out five years ago. Commercial execution continues to strengthen with KPIs running ahead of the commitments we made at our March 2025 Investor Day. Innovation remains a powerful growth driver as we launch a new wave of pioneering innovation. Our unique exposure to high-volume testing opportunities across GLP-1s, PFAS, and India generics again outpaced expectations. We secured key wins in our transition to Empower as a subscription-based model, and we continued to expand deliberately into high-growth adjacencies like bioseparations and bioanalytical characterization. These outcomes reflect the strength and discipline of our simple, repeatable business model serving high-volume, regulated growth markets. They also reflect the dedication of our team, whose focus on customers, science, and operational excellence continues to differentiate Waters.
Udit Batra: Throughout 2025, we have advanced the strategic roadmap that we laid out five years ago. Commercial execution continues to strengthen with KPIs running ahead of the commitments we made at our March 2025 Investor Day. Innovation remains a powerful growth driver as we launch a new wave of pioneering innovation. Our unique exposure to high-volume testing opportunities across GLP-1s, PFAS, and India generics again outpaced expectations. We secured key wins in our transition to Empower as a subscription-based model, and we continued to expand deliberately into high-growth adjacencies like bioseparations and bioanalytical characterization. These outcomes reflect the strength and discipline of our simple, repeatable business model serving high-volume, regulated growth markets. They also reflect the dedication of our team, whose focus on customers, science, and operational excellence continues to differentiate Waters.
Marshall execution continues to strengthen with Kpis running ahead of the commitment we made at our March 2025 Investor day.
Innovation remains a powerful growth driver as we launched a new wave of pioneering innovation.
Our unique exposure to high volume testing opportunities across <unk> wont be fast and India genetics again outpaced expectations, we secured key wins in our transition to empower as a subscription based model and we continue to expand deliberately into a high growth adjacencies like bio separations.
And bio analytical characterization.
These outcomes reflect the strength and discipline of our simple repeatable business model, serving high volume regulated growth markets there.
They also reflect the dedication of our team will focus on customers' science and operational excellence continues to differentiate waters.
Udit Batra: Now turning to the quarter, as reported sales and adjusted EPS landed at the high end of our guidance range. Sales grew 7% on a reported basis and 6% in constant currency, driven by high single-digit growth across our pharma and industrial end markets. Adjusted EPS grew low double digits to $4.53. On a GAAP basis, EPS was $3.77. Recurring revenue grew 9%, led by chemistry growth. Instruments grew 3%, led by, yet again, high single-digit LCMS growth. TA instruments declined for the quarter due to cautious spending in the US and Europe. During the quarter, we achieved strong wins in our transition to a subscription-based model for Empower, with successful adoption across multiple large pharma customers. While this reduced our overall instrument growth rate by a low single-digit percentage for the quarter, it reflects a strategically attractive shift to a model with superior economics.
Udit Batra: Now turning to the quarter, as reported sales and adjusted EPS landed at the high end of our guidance range. Sales grew 7% on a reported basis and 6% in constant currency, driven by high single-digit growth across our pharma and industrial end markets. Adjusted EPS grew low double digits to $4.53. On a GAAP basis, EPS was $3.77. Recurring revenue grew 9%, led by chemistry growth. Instruments grew 3%, led by, yet again, high single-digit LCMS growth. TA instruments declined for the quarter due to cautious spending in the US and Europe. During the quarter, we achieved strong wins in our transition to a subscription-based model for Empower, with successful adoption across multiple large pharma customers. While this reduced our overall instrument growth rate by a low single-digit percentage for the quarter, it reflects a strategically attractive shift to a model with superior economics.
Now turning to the quarter.
As reported sales and adjusted EPS landed at the high end of our guidance range.
<unk> grew 7% on a reported basis and 6% in constant currency driven by high single digit growth across our pharma and industrial end markets.
Adjusted EPS grew low double digits to $4 53 on a GAAP basis EPS was $3.77.
Recurring revenue grew 9% led by chemistry growth instruments grew 3% led by yet again high single digit L. CMS growth Ta instruments declined for the quarter due to cautious spending in U S and Europe.
During the quarter, we achieved strong wins in our transition to a subscription based model for empower <unk>.
With successful adoption across multiple large pharma customers, while this reduced our overall instrument growth rate by a low single digit percentage for the quarter. It reflects a strategically attractive shift to a model with superior economics.
Udit Batra: Together with our new feature releases, this supports accretive tailwinds in 2027 with the incremental recurring revenue that it brings. For the full year, sales grew 7% on both a reported and constant currency basis. Recurring revenue grew 8%, driven by 12% growth in chemistry. Instrument revenue grew 5%, led by LCMS, which grew high single digits or better every quarter of the year. Adjusted EPS grew 11% to $13.13, supported by top-line strength, operational excellence, and effective tariff mitigation. GAAP EPS was $10.76. Let me now highlight the drivers behind our strong performance and why we expect the strong momentum to continue into 2026. Starting with commercial execution, our KPIs continue to run ahead of external commitments, and we're progressing well towards our long-term targets. Within instrument replacement, momentum continues to build.
Udit Batra: Together with our new feature releases, this supports accretive tailwinds in 2027 with the incremental recurring revenue that it brings. For the full year, sales grew 7% on both a reported and constant currency basis. Recurring revenue grew 8%, driven by 12% growth in chemistry. Instrument revenue grew 5%, led by LCMS, which grew high single digits or better every quarter of the year. Adjusted EPS grew 11% to $13.13, supported by top-line strength, operational excellence, and effective tariff mitigation. GAAP EPS was $10.76. Let me now highlight the drivers behind our strong performance and why we expect the strong momentum to continue into 2026. Starting with commercial execution, our KPIs continue to run ahead of external commitments, and we're progressing well towards our long-term targets. Within instrument replacement, momentum continues to build.
Together with a new feature releases this support accretive tailwind in 2027 with the incremental recurring revenue that it brings for the full year sales grew 7% on both a reported and constant currency basis.
Regarding revenue grew 8% driven by 12% growth in chemistry.
Instrument revenue grew 5% led by LTE M S, which grew high single digits or better every quarter of the year <unk>.
Adjusted EPS grew 11% to $13 13 supported.
Supported by top line strength operational excellence and effective tariff mitigation GAAP EPS was $10.76. Let me now highlight the drivers behind our strong performance and why we expect the strong momentum to continue into 2026.
Starting with commercial execution, our Kpis continue to run ahead of external commitments and we're progressing well towards our long term targets with an instrument replacement momentum continues to build instrument growth is now tracking at two 5% CAGR approximately versus 2019 up roughly 100 base.
Udit Batra: Instrument growth is now tracking at 2.5% CAGR approximately versus 2019, up roughly 100 basis points since the start of the replacement cycle. This reflects a steady mean reversion towards a long-term historical instrument growth rate of 5%. Service plan attachment increased to 54%, reflecting approximately 400 basis points of improvement in a single year. This is the strongest annual expansion we have ever delivered and sets us up for above-average service growth in 2026, supported by the associated revenue pull-through. E-commerce penetration reached approximately 45% of consumables revenue, driving a growth tailwind along with new products across our chemistry portfolio. Contract organizations now represent 27% of pharma sales, up from 15% five years ago, positioning us well among diversified sources of CapEx. Innovation is also augmenting our results.
Udit Batra: Instrument growth is now tracking at 2.5% CAGR approximately versus 2019, up roughly 100 basis points since the start of the replacement cycle. This reflects a steady mean reversion towards a long-term historical instrument growth rate of 5%. Service plan attachment increased to 54%, reflecting approximately 400 basis points of improvement in a single year. This is the strongest annual expansion we have ever delivered and sets us up for above-average service growth in 2026, supported by the associated revenue pull-through. E-commerce penetration reached approximately 45% of consumables revenue, driving a growth tailwind along with new products across our chemistry portfolio. Contract organizations now represent 27% of pharma sales, up from 15% five years ago, positioning us well among diversified sources of CapEx. Innovation is also augmenting our results.
At this point since the start of the replacement cycle.
This reflects a steady mean reversion towards the long term historical instrument growth rate of 5%.
Service plan attachment increased to 54%, reflecting approximately 400 basis points of improvement in a single year. This is the strongest annual expansion, we have ever delivered and sets us up for above average service growth in 2026 supported by the associated revenue pull through.
E Commerce penetration reached approximately 45% of consumables revenue.
Driving a growth tailwind along with new products across our chemistry portfolio.
Contract organizations now represent 27% of farmer sales up from 15% five years ago positioning us well among diversified sources of Capex.
Innovation is also augmenting our results strong growth from new products launched over the past. Several years has continued to compound alongside a new wave of innovation launched throughout 2025.
Udit Batra: Strong growth from new products launched over the past several years has continued to compound alongside a new wave of innovation launched throughout 2025. For the full year, Alliance iS HPLC sales more than doubled, reflecting strong adoption of our flagship platform, which reduces errors by up to 40% in QC labs. Xevo TQ Absolute mass spec platforms grew over 30%, driven by PFAS demand and the launch of the Xevo TQ Absolute XR, which sets a new benchmark for robustness together with class-leading sensitivity. MaxPeak Premier chemistry grew over 35%, underscoring the significant impact our technology has brought to the industry for larger and more complex molecules. Our successful strategy of entering high-growth areas further enhanced our results in 2025. In bioanalytical characterization, adoption of light scattering and BioAccord continues to build in pharma process development and quality control applications.
Udit Batra: Strong growth from new products launched over the past several years has continued to compound alongside a new wave of innovation launched throughout 2025. For the full year, Alliance iS HPLC sales more than doubled, reflecting strong adoption of our flagship platform, which reduces errors by up to 40% in QC labs. Xevo TQ Absolute mass spec platforms grew over 30%, driven by PFAS demand and the launch of the Xevo TQ Absolute XR, which sets a new benchmark for robustness together with class-leading sensitivity. MaxPeak Premier chemistry grew over 35%, underscoring the significant impact our technology has brought to the industry for larger and more complex molecules. Our successful strategy of entering high-growth areas further enhanced our results in 2025. In bioanalytical characterization, adoption of light scattering and BioAccord continues to build in pharma process development and quality control applications.
For the full year Alliance Ias HBA LTE sales more than doubled reflecting strong adoption of our flagship platform, which reduces errors by up to 40% in QC labs.
But he bought EQ absolute mass spec platforms grew over 30% driven by beef as demand and the launch of the absolute XR, which sets a new benchmark for robustness together with class leading sensitivity.
<unk> Premier chemistry grew over 35%.
Underscoring the significant impact our technology has brought to the industry for larger and more complex molecules.
Our successful strategy of entering high growth areas further enhanced our results in 2025, and bioanalytical characterization adoption of light scattering and bio cohort continues to build in pharma process development and quality control applications with the launch of <unk>. We are now expanding this position to routine characterization.
Udit Batra: With the launch of Xevo CDMS, we are now expanding this position to routine characterization of mega-molecules such as ADCs and viral vectors. In bioseparations, we built on the success of MaxPeak Premier Inert Surfaces with a new generation of products designed to separate complex large molecules. These include SEC columns for viral vectors, slalom chromatography for large oligonucleotides, and affinity-based separations using specific antibodies. These new products have accelerated chemistry growth to double digits in 2025, meaningfully above our 7% historical average growth rate. For LCMS into diagnostics, we have continued to grow our assay menu, launching IVD products covering 12 new analytes in endocrinology and 4 new analytes in therapeutic drug monitoring over the past 2 years. Turning to our idiosyncratic growth drivers. In 2025, these drivers contributed more than 300 basis points of growth, all tracking ahead of our commitments.
Udit Batra: With the launch of Xevo CDMS, we are now expanding this position to routine characterization of mega-molecules such as ADCs and viral vectors. In bioseparations, we built on the success of MaxPeak Premier Inert Surfaces with a new generation of products designed to separate complex large molecules. These include SEC columns for viral vectors, slalom chromatography for large oligonucleotides, and affinity-based separations using specific antibodies. These new products have accelerated chemistry growth to double digits in 2025, meaningfully above our 7% historical average growth rate. For LCMS into diagnostics, we have continued to grow our assay menu, launching IVD products covering 12 new analytes in endocrinology and 4 new analytes in therapeutic drug monitoring over the past 2 years. Turning to our idiosyncratic growth drivers. In 2025, these drivers contributed more than 300 basis points of growth, all tracking ahead of our commitments.
Of Mega molecules, such as Adcs and viral vectors.
And bio separations, we built on the success of Max week Premier Inn at surfaces.
With a new generation of products designed to separate complex large molecules. These include FCC columns for viral vectors style in chromatography for large oligonucleotides and affinity based separations using specific antibodies.
These new products have accelerated chemistry growth to double digits in 2025 meaningfully above our 7% historical average growth rate.
For LC Ms into diagnostics, we have continued to grow our assay menu launching IBD products covering 12, new analytes in endocrinology.
And for new analytes, and therapeutic drug monitoring over the past two years.
Turning to our idiosyncratic growth drivers in.
In 2025. These drivers contributed more than 300 basis points of growth. All tracking ahead of our commitments <unk> testing related revenue more than doubled contributing approximately 100 basis points of year over year growth. This reflects continued wins in development in manufacturing across the globe.
Udit Batra: GLP-1 testing-related revenue more than doubled, contributing approximately 100 basis points of year-over-year growth. This reflects continued wins in development and manufacturing across the globe, supported by our SPE position for both oral and injection-based doses. PFAS testing growth remained robust, increasing more than 40% year-over-year and adding roughly 80 basis points of growth. Demand was broad-based, driven by an expanding regulatory landscape that is evolving towards food, materials, and consumer product testing. India, again, delivered strong performance. Ex-GLP-1 revenue grew low teens, increasing by approximately $40 million and contributing around 130 basis points of growth tied to the ongoing patent cliff of blockbuster drops. Taken together, we grew 7% in 2025 with all regions delivering mid-single-digit growth or better. Pharma revenue grew 9% with high single-digit growth across Americas and Europe, and low double-digit growth in Asia. In non-pharma end markets, industrial grew 6% while ANG declined 1%.
Udit Batra: GLP-1 testing-related revenue more than doubled, contributing approximately 100 basis points of year-over-year growth. This reflects continued wins in development and manufacturing across the globe, supported by our SPE position for both oral and injection-based doses. PFAS testing growth remained robust, increasing more than 40% year-over-year and adding roughly 80 basis points of growth. Demand was broad-based, driven by an expanding regulatory landscape that is evolving towards food, materials, and consumer product testing. India, again, delivered strong performance. Ex-GLP-1 revenue grew low teens, increasing by approximately $40 million and contributing around 130 basis points of growth tied to the ongoing patent cliff of blockbuster drops. Taken together, we grew 7% in 2025 with all regions delivering mid-single-digit growth or better. Pharma revenue grew 9% with high single-digit growth across Americas and Europe, and low double-digit growth in Asia. In non-pharma end markets, industrial grew 6% while ANG declined 1%.
Ordered by our spectrum position for both auto and injection based doses beef.
The fast testing growth remained robust.
Increasing more than 40% year over year, and adding roughly 80 basis points of growth.
<unk> was broad based driven by an expanding regulatory landscape that is evolving towards food materials and consumer product testing.
India again delivered strong performance ex <unk> revenue grew low teens, increasing by approximately $40 million in contributing around 130 130 basis points of growth tied to the ongoing patent cliff of blockbuster drugs taken together, we grew 7% in 2025.
With all regions, delivering mid single digit growth or better.
Pharma revenue grew 9% with high single digit growth across Americas, and Europe, and low double digit growth in Asia.
In pharma and in <unk>.
<unk> pharma end markets industrial grew 6%, while AMG declined 1%.
Udit Batra: In China, we grew 9% for the year. Our team delivered exceptional performance by capturing renewed momentum in biotech and CDMOs, executing well in food and environmental applications, and winning a series of academic and government stimulus send-offs. As we now move into 2026, we expect continued organic strength supported by the instrument replacement cycle and contribution from new product innovation. We're also expanding our idiosyncratic growth driver framework from three drivers to five. In addition to GLP-1s, PFAS, and India generics, we're adding biologics and informatics. Biologics reflects future growth linked to bioseparations and bioanalytical characterization from progress we've already made in our high-growth adjacencies before the closing of the transaction. In bioseparations, we anticipate sustained strength driven by new chemistry products already launched and in our near-term roadmap serving large molecule and novel modality applications.
Udit Batra: In China, we grew 9% for the year. Our team delivered exceptional performance by capturing renewed momentum in biotech and CDMOs, executing well in food and environmental applications, and winning a series of academic and government stimulus send-offs. As we now move into 2026, we expect continued organic strength supported by the instrument replacement cycle and contribution from new product innovation. We're also expanding our idiosyncratic growth driver framework from three drivers to five. In addition to GLP-1s, PFAS, and India generics, we're adding biologics and informatics. Biologics reflects future growth linked to bioseparations and bioanalytical characterization from progress we've already made in our high-growth adjacencies before the closing of the transaction. In bioseparations, we anticipate sustained strength driven by new chemistry products already launched and in our near-term roadmap serving large molecule and novel modality applications.
In China.
We grew 9% for the year, our team delivered exceptional performance by capturing renewed momentum in biotech and cmo's executing well in food and environmental applications and winning a series of academic and government stimulus centers.
As we now move into 2026, we expect continued organic strength supported by the instrument replacement cycle and contribution from new product innovation.
We're also expanding our idiosyncratic growth driver framework from three drivers two five in addition, but <unk> be fast in India genetics, we're adding biologics and informatics biologics reflects future growth linked to bio separations and bioanalytical characterization from progress we've already made in our high growth Adjacencies before.
The closing of the transaction.
And bio separations, we anticipate sustained strength driven by new chemistry products already launched.
And in our near term roadmap, serving large molecule and novel modality applications.
Udit Batra: In bioanalytical characterization, we anticipate continued placement of LC-MS, MALS, and CDMS in process development and in QA/QC. There is potential upside beyond our current assumptions, supported by the FDA's draft biosimilars guidance, which could drive incremental demand by shifting approvals towards comparative analytical assessment rather than clinical outcome studies. For informatics, this reflects the future expected incremental growth linked to the phased transition of Empower from our legacy license-based model to our subscription-based offering. As we have shared previously, we expect to take our informatics business from its present revenue base of approximately $300 million to approximately $500 million by 2030. The move towards subscription comes with a shift in revenue timing. Under this transition, revenue is recognized consistently over the life of the contract rather than upfront.
Udit Batra: In bioanalytical characterization, we anticipate continued placement of LC-MS, MALS, and CDMS in process development and in QA/QC. There is potential upside beyond our current assumptions, supported by the FDA's draft biosimilars guidance, which could drive incremental demand by shifting approvals towards comparative analytical assessment rather than clinical outcome studies. For informatics, this reflects the future expected incremental growth linked to the phased transition of Empower from our legacy license-based model to our subscription-based offering. As we have shared previously, we expect to take our informatics business from its present revenue base of approximately $300 million to approximately $500 million by 2030. The move towards subscription comes with a shift in revenue timing. Under this transition, revenue is recognized consistently over the life of the contract rather than upfront.
And bioanalytical characterization, we anticipate continued placement of LC, Ms malls, and CMS and process development and in QA QC.
That as potential upside beyond our current assumptions supported by the Fda's draft, Biosimilars guidance, which could drive incremental demand by shifting approvals towards comparative analytical assessment, rather than clinical outcome studies.
Our informatics this reflects the future expected incremental growth linked.
To the Fas transition of empower from our legacy license based model to a subscription based offering.
As we have shared previously we expect to take our informatics business from its present revenue base of approximately 300 million to approximately $500 million by 2030.
The move towards subscription comes with a shift in revenue timing under this transition revenues recognized consistently over the life of the contract rather than upfront.
Udit Batra: For a typical customer converting to subscription, the breakeven point where cumulative subscription revenue equals the prior license value is reached in approximately 18 months. From that point forward, it adds incremental high-quality recurring revenue with long-term visibility and margin benefits. We're executing this change gradually and expected to become a more positive structural driver in the years ahead, beginning in 2027. Taken together, these five drivers are expected to contribute over 200 basis points of annual revenue growth accretion on a standalone basis between now and 2030. Turning now to our integration of BD Biosciences and Diagnostic Solutions. This combination is a significant value creation opportunity that further adds to our attractive trajectory across two main dimensions. Firstly, it strengthens our position in high-growth adjacencies across bioseparations and bioanalytical characterization by adding critical technologies and expertise.
Udit Batra: For a typical customer converting to subscription, the breakeven point where cumulative subscription revenue equals the prior license value is reached in approximately 18 months. From that point forward, it adds incremental high-quality recurring revenue with long-term visibility and margin benefits. We're executing this change gradually and expected to become a more positive structural driver in the years ahead, beginning in 2027. Taken together, these five drivers are expected to contribute over 200 basis points of annual revenue growth accretion on a standalone basis between now and 2030. Turning now to our integration of BD Biosciences and Diagnostic Solutions. This combination is a significant value creation opportunity that further adds to our attractive trajectory across two main dimensions. Firstly, it strengthens our position in high-growth adjacencies across bioseparations and bioanalytical characterization by adding critical technologies and expertise.
For a typical customer converting to subscription the breakeven point, where cumulative subscription revenue equals. The prior license value is reached in approximately 18 months from that point forward. It adds incremental high quality recurring revenue with a long term visibility and margin benefits from.
We are executing this change gradually and expect it to become a more positive structural driver in the years ahead, beginning in 2027 taken together. These five drivers are expected to contribute over 200 basis points of annual revenue revenue growth accretion on a standalone basis between now and 2030.
Turning now to our integration of BD Biosciences, and diagnostic solutions. This combination is a significant value creation opportunity that further adds to our attractive trajectory across two main dimensions. Firstly it strengthens our position in high growth adjacencies across bio separations and bioanalytical characterization by adding.
Critical technologies and expertise it also adds to our L CMS diagnostics business with.
Udit Batra: It also adds to our LC-MS diagnostics business with day-one commercial scale, customer channel access, and automation capabilities. Secondly, it provides a meaningful execution uplift opportunity. By applying our operating discipline across instrument replacement, e-commerce adoption, and service attachment, we expect to replicate the same growth acceleration that we have successfully achieved in our existing businesses. Together, this positions Waters for sustainable, high single-digit growth over the long term and well beyond the current instrument replacement cycle. The transaction also yields attractive cost synergies. Our baseline plan represents less than 5% of the combined cost base with the potential to exceed that level, consistent with market benchmarks for deals this size and prior large-scale integrations that our leadership team has successfully executed. To ensure we capture this value quickly and consistently, we have aligned the organization around a new operating structure.
Udit Batra: It also adds to our LC-MS diagnostics business with day-one commercial scale, customer channel access, and automation capabilities. Secondly, it provides a meaningful execution uplift opportunity. By applying our operating discipline across instrument replacement, e-commerce adoption, and service attachment, we expect to replicate the same growth acceleration that we have successfully achieved in our existing businesses. Together, this positions Waters for sustainable, high single-digit growth over the long term and well beyond the current instrument replacement cycle. The transaction also yields attractive cost synergies. Our baseline plan represents less than 5% of the combined cost base with the potential to exceed that level, consistent with market benchmarks for deals this size and prior large-scale integrations that our leadership team has successfully executed. To ensure we capture this value quickly and consistently, we have aligned the organization around a new operating structure.
Day, one commercial scale.
Customer channel access and automation capabilities secondly, it provides a meaningful execution uplift opportunity by.
By applying our operating discipline across instrument replacement e-commerce adoption and service attachment, we expect to replicate the same growth acceleration that we have successfully achieved in our existing businesses together this position waters for sustainable high single digit growth over the long term and well beyond.
The current instrument replacement cycle.
The transaction also yields attractive cost synergies, our baseline plan represents less than 5% of the combined cost base with the potential to exceed that level consistent with market benchmarks for deals of size and prior large scale integrations that our leadership team has successfully executed.
To ensure we capture this value quickly and consistently we have aligned the organization around a new operating structure.
Udit Batra: We have organized Waters into four divisions, where each follows our repeatable business model with simple yet sophisticated instruments, compliant software, customized consumables, and world-class service. This structure enhances accountability and will provide investors with a clear, transparent view into the performance of all our key segments across the company. First, Waters Analytical Sciences, formerly known as Waters Division, will continue to be led by Rob Carpio, who you all know well. The division comprises LC mass spec, light scattering, and particle analysis together with our Empower informatics platform, chemistry consumables, and our service team. Going forward, revenue from Waters' clinical business will be reported within our advanced diagnostics division. Waters Biosciences, formerly BD Biosciences, will be led by Steve Conly, who has led the business for the past three and a half years and has played a key role in the launch of its next-generation flow cytometry platforms.
Udit Batra: We have organized Waters into four divisions, where each follows our repeatable business model with simple yet sophisticated instruments, compliant software, customized consumables, and world-class service. This structure enhances accountability and will provide investors with a clear, transparent view into the performance of all our key segments across the company. First, Waters Analytical Sciences, formerly known as Waters Division, will continue to be led by Rob Carpio, who you all know well. The division comprises LC mass spec, light scattering, and particle analysis together with our Empower informatics platform, chemistry consumables, and our service team. Going forward, revenue from Waters' clinical business will be reported within our advanced diagnostics division. Waters Biosciences, formerly BD Biosciences, will be led by Steve Conly, who has led the business for the past three and a half years and has played a key role in the launch of its next-generation flow cytometry platforms.
The organized waters into four divisions, where each follows our repeatable business model with simple yet sophisticated instruments compliant software customized consumables and world class service.
This structure enhances accountability and will provide investors with a clear transparent view into the performance of all our key segments across the company.
First waters analytical sciences, formerly known as Waters' Division will continue to be led by Rob Carpool, who you all know well the.
The division comprises LC mass spec light scattering and political analysis together with our empower informatics platform chemistry consumables and our service team going forward revenue from waters clinical business will be reported within our advanced Diagnostics Division.
<unk> Biosciences, formerly BD Biosciences will be led by Steve Connelly, who has led the business for the past three and a half years and has played a key role in the launch of its next generation flow cytometry platforms. The waters Biosciences Division consists of leading flow cytometry bands like fax discover and fax lyric to.
Udit Batra: The Waters Biosciences division consists of leading flow cytometry brands like BD FACSDiscover and BD FACSLyric, the BD Horizon Real Dyes brand of fluorescent dyes and reagents, and FlowJo Software. Waters Advanced Diagnostics will be led by Jianqing Bennett, who has been running our clinical and TA business unit over the past several years and has transformed the top-line growth profile of these businesses. Jianqing has a strong background in diagnostics, having served as senior vice president of high-growth markets at Beckman Coulter Diagnostics before joining Waters. The Waters Advanced Diagnostics division consists of leading microbiology testing brands, including BD BACTEC, BD Phoenix, and BD Kiestra, as well as molecular diagnostics solutions with the BD MAX and BD COR platforms, LC-MS-based solutions, and point-of-care testing. Waters Material Sciences, formerly TA division, will be led by Dan Rush on an interim basis while we appoint a successor to Jianqing.
Udit Batra: The Waters Biosciences division consists of leading flow cytometry brands like BD FACSDiscover and BD FACSLyric, the BD Horizon Real Dyes brand of fluorescent dyes and reagents, and FlowJo Software. Waters Advanced Diagnostics will be led by Jianqing Bennett, who has been running our clinical and TA business unit over the past several years and has transformed the top-line growth profile of these businesses. Jianqing has a strong background in diagnostics, having served as senior vice president of high-growth markets at Beckman Coulter Diagnostics before joining Waters. The Waters Advanced Diagnostics division consists of leading microbiology testing brands, including BD BACTEC, BD Phoenix, and BD Kiestra, as well as molecular diagnostics solutions with the BD MAX and BD COR platforms, LC-MS-based solutions, and point-of-care testing. Waters Material Sciences, formerly TA division, will be led by Dan Rush on an interim basis while we appoint a successor to Jianqing.
The horizon realize brand of fluorescent dyes, and reagents and <unk> software.
Waters advanced diagnostics will be led by Genting Bennett, who has been running our clinical and Ta business unit over the past several years and has transformed the topline growth profile of these businesses Genting has a strong background in diagnostics, having served as senior Vice president of high growth markets at Beckman Coulter.
Coulter diagnostics before joining waters.
The waters that advanced Diagnostics division consists of leading microbiology testing brands, including backpack, Phoenix and <unk> as well as molecular diagnostic solutions with the Max and core platforms as CMS based solutions and point of care testing.
Waters material Sciences, formerly Ta Division will be led by Dan Rush on an interim basis, while we appoint a successor to <unk> that.
Udit Batra: Dan is our Senior Vice President of Strategy and Transformation and has a long history of leading commercial and strategy teams. He served as Vice President of Worldwide Commercialization Strategy and Innovation at Bristol-Myers Squibb before joining Waters in 2021. The Materials Sciences division consists of products, services, and informatics spanning a diverse range of materials characterization techniques, including thermal analysis, rheology, and microcalorimetry. These are used in a range of applications such as battery testing for electric vehicles, pharma, and medical devices. Together, these businesses bring leading scientific capabilities serving customers in high-volume regulated applications. They're anchored by a shared operating model that leverages category-defining brands and a universal culture of pioneering innovation. In parallel, we have aligned early execution priorities to hit the ground running now that we are gaining full operational control of the biosciences and diagnostic solutions business.
Udit Batra: Dan is our Senior Vice President of Strategy and Transformation and has a long history of leading commercial and strategy teams. He served as Vice President of Worldwide Commercialization Strategy and Innovation at Bristol-Myers Squibb before joining Waters in 2021. The Materials Sciences division consists of products, services, and informatics spanning a diverse range of materials characterization techniques, including thermal analysis, rheology, and microcalorimetry. These are used in a range of applications such as battery testing for electric vehicles, pharma, and medical devices. Together, these businesses bring leading scientific capabilities serving customers in high-volume regulated applications. They're anchored by a shared operating model that leverages category-defining brands and a universal culture of pioneering innovation. In parallel, we have aligned early execution priorities to hit the ground running now that we are gaining full operational control of the biosciences and diagnostic solutions business.
And as a senior vice president of strategy and transformation and has a long history of leading commercial and strategy teams. He served as vice president of worldwide commercialization strategy and innovation at Bristol Myers Squibb before joining waters in 2021. The material Sciences Division consists of products services and informatics spanning a diversity.
Ainge of materials characterization techniques, including thermal analysis, rheology and micro calorimetry.
These are used in a range of applications such as battery testing for electric vehicles pharma and medical devices together these businesses bring leading scientific capabilities serving customers in high volume regulated applications. The anchored by a shared operating model that leverages category defining brands and a universal culture refinery innovation.
In parallel we have aligned early execution priorities to hit the ground running now that.
And that we are gaining full operational control of the biosciences and diagnostic solutions business with.
Udit Batra: With several months of integration planning behind us, we have a clear line of sight to the initiatives that will drive the most value in the early innings of the integration. In the most recent quarter, BD Biosciences and Diagnostic Solutions results came in below expectations due to impacts that became apparent during the quarter. In China, demand weakened due to increased focus on reducing consumption in diagnostics testing, while the US government shutdown affected the biosciences business as export approvals got delayed. At the same time, the point-of-care business was impacted by a milder flu season compared to the previous year. As we look ahead, our cost and revenue synergies are firmly on track. In 2026, we will make swift and decisive progress towards achieving the objectives we've laid out.
Udit Batra: With several months of integration planning behind us, we have a clear line of sight to the initiatives that will drive the most value in the early innings of the integration. In the most recent quarter, BD Biosciences and Diagnostic Solutions results came in below expectations due to impacts that became apparent during the quarter. In China, demand weakened due to increased focus on reducing consumption in diagnostics testing, while the US government shutdown affected the biosciences business as export approvals got delayed. At the same time, the point-of-care business was impacted by a milder flu season compared to the previous year. As we look ahead, our cost and revenue synergies are firmly on track. In 2026, we will make swift and decisive progress towards achieving the objectives we've laid out.
With several months of integration planning behind US we have clear line of sight to the initiatives that will drive the most value in the early innings of the integration.
In the most recent quarter BD Biosciences, and diagnostic solutions results came in below expectations due to impacts that became apparent during the quarter and China demand weakened due to increased focused on reducing consumption in diagnostics testing, while the U S government shutdown affected the biosciences business as export approvals got delayed.
At the same time the point of care business was impacted by a milder flu season compared to the previous year.
As we look ahead.
Cost and revenue synergies are firmly on track in.
In 2026, we will make swift and decisive progress towards achieving the objectives, we've laid out.
Udit Batra: On cost synergies, restructuring, procurement savings, and network optimization are key vectors that we expect to begin realizing this year. As a prudent starting assumption, we expect to realize approximately $55 million of adjusted EBIT from cost synergies in 2026. On revenue synergies, while there is meaningful opportunity across each of our work streams over time, our first priority in 2026 is enhancing commercial execution and forecasting discipline. We will quickly begin to leverage untapped growth vectors in instrument replacement, in E-commerce, and service attachment, and will immediately establish a deal desk to manage pricing discipline. As a prudent starting assumption, we expect to realize approximately $50 million in revenue and $25 million in corresponding adjusted EBIT from revenue synergies in 2026. Let me now describe the first phase of revenue synergy realization in a little bit more detail.
Udit Batra: On cost synergies, restructuring, procurement savings, and network optimization are key vectors that we expect to begin realizing this year. As a prudent starting assumption, we expect to realize approximately $55 million of adjusted EBIT from cost synergies in 2026. On revenue synergies, while there is meaningful opportunity across each of our work streams over time, our first priority in 2026 is enhancing commercial execution and forecasting discipline. We will quickly begin to leverage untapped growth vectors in instrument replacement, in E-commerce, and service attachment, and will immediately establish a deal desk to manage pricing discipline. As a prudent starting assumption, we expect to realize approximately $50 million in revenue and $25 million in corresponding adjusted EBIT from revenue synergies in 2026. Let me now describe the first phase of revenue synergy realization in a little bit more detail.
On cost synergies restructuring procurement savings and network optimization are key vectors that we expect to begin realizing this year.
As a prudent starting assumption, we expect to realize approximately $55 million of adjusted EBIT from cost synergies in 2026 on.
On revenue synergies, while there is meaningful opportunity across each of our work streams over time, our first priority in 2026 is enhancing commercial execution and forecasting discipline.
We will quickly begin to leverage untapped growth vectors and instrument replacement and E Commerce and service attachment and will immediately establish a deal desk to manage pricing discipline as a prudent starting assumption, we expect to realize approximately $50 million in revenue and $25 million and corresponding adjusted EBIT from revenues.
<unk> in 2026.
Let me now describe the first phase of revenue synergy realization and a little bit more detail. These.
Udit Batra: These are the same levers you've seen us execute successfully at Waters over the past five years. Starting with instrument replacement, there are approximately 22,000 flow and BACTEC instruments that are ripe for replacement. At the same time, a meaningful wave of new products are being launched, such as FACSDiscover A8, S8, A7, and BACTEC FX. To achieve our revenue synergy target of $20 million by year five, we need to drive an incremental 100 instrument replacements per year. To put that into perspective, during our prior instrument replacement initiative at Waters, we delivered double that target in half the time. Our service plan attachment, our $20 million revenue synergy target can be achieved by increasing attachment by approximately 1 percentage point per year, a rate that is more than consistent with our historical performance of more than 2% annually over the past five years.
Udit Batra: These are the same levers you've seen us execute successfully at Waters over the past five years. Starting with instrument replacement, there are approximately 22,000 flow and BACTEC instruments that are ripe for replacement. At the same time, a meaningful wave of new products are being launched, such as FACSDiscover A8, S8, A7, and BACTEC FX. To achieve our revenue synergy target of $20 million by year five, we need to drive an incremental 100 instrument replacements per year. To put that into perspective, during our prior instrument replacement initiative at Waters, we delivered double that target in half the time. Our service plan attachment, our $20 million revenue synergy target can be achieved by increasing attachment by approximately 1 percentage point per year, a rate that is more than consistent with our historical performance of more than 2% annually over the past five years.
These are the same levers you've seen us execute successfully at waters over the past five years, starting with instrument replacement. There are approximately 22000 flow and backtick instruments that are ripe for replacement at the same time, a meaningful wave of new products are being launched.
Such as fastest cover eight seven and backpack FX XI to achieve our revenue synergy target of $20 million by year, five we need to drive an incremental 100 instrument replacement per year.
To put that into perspective.
During our prior indomitable replacement initiative at waters, we delivered double that target in half the time.
Our service plan attachment.
For service banner attachment are $20 million revenue synergy target can be achieved by increasing attachment by approximately one percentage point per year.
Read that as more than consistent with our historical performance of more than 2% annually over the past five years for E. Commerce, our target is to increase adoption by approximately 4% annually, which too is a more measured growth trajectory compared to our historical performance I will now cover our 2000.
Udit Batra: For e-commerce, our target is to increase adoption by approximately 4% annually, which, too, is a more measured growth trajectory compared to our historical performance. I will now cover our 2026 guidance. Across our existing businesses, the team is executing well with a revitalized portfolio, leveraging instrument replacement and realizing benefits from our idiosyncratic growth drivers. As a prudent starting point, these dynamics support organic constant currency revenue growth of 5.5% to 7%. Turning to the acquired business contribution, following today's expected close of the transaction, we expect the biosciences and diagnostic solutions businesses to contribute $3 billion of revenue in 2026. While the majority of headwinds that impacted the business in 2025 are already in the baseline, we have further risk-adjusted our outlook to ensure a prudent starting point.
Udit Batra: For e-commerce, our target is to increase adoption by approximately 4% annually, which, too, is a more measured growth trajectory compared to our historical performance. I will now cover our 2026 guidance. Across our existing businesses, the team is executing well with a revitalized portfolio, leveraging instrument replacement and realizing benefits from our idiosyncratic growth drivers. As a prudent starting point, these dynamics support organic constant currency revenue growth of 5.5% to 7%. Turning to the acquired business contribution, following today's expected close of the transaction, we expect the biosciences and diagnostic solutions businesses to contribute $3 billion of revenue in 2026. While the majority of headwinds that impacted the business in 2025 are already in the baseline, we have further risk-adjusted our outlook to ensure a prudent starting point.
In 2006 guidance across our existing businesses. The team is executing well with a revitalized portfolio leveraging instrument replacement and realizing benefits from our idiosyncratic growth drivers.
Boolean starting point these dynamics support organic constant currency revenue growth of five 5%.
Two 7%.
Turning to the acquired business contribution following today's expected close of the transaction, we expect the biosciences and diagnostic solutions businesses to contribute $3 billion of revenue in 2026.
While the majority of headwinds that impacted the business in 2025 are already in the baseline we have further risk adjusted our outlook to ensure a prudent starting point, we're assuming approximately two 5% underlying growth in 2026 on an owned period basis before any benefit from execution and pricing improve.
Udit Batra: We're assuming approximately 2.5% underlying growth in 2026 on an owned period basis before any benefit from execution and pricing improvements or planned organizational simplification. Taken together with revenue synergies I just mentioned, this results in total 2026 reported revenue of approximately $6.405 billion to 6.455 billion. These starting assumptions imply a blended year-over-year revenue growth of approximately 5.3% at the midpoint of the combined company in 2026. This is an industry-leading growth guidance and carries clear opportunity for outperformance as the year progresses. From a profitability perspective, we expect to deliver a 2026 adjusted operating margin percentage of approximately 28.1%, which is already more than 100 basis points of margin expansion compared with our deal model in 2025. This translates to full-year 2026 adjusted EPS of $14.30 to $14.50, which is also an attractive starting point reflecting 8.9% to 10.4% growth.
Udit Batra: We're assuming approximately 2.5% underlying growth in 2026 on an owned period basis before any benefit from execution and pricing improvements or planned organizational simplification. Taken together with revenue synergies I just mentioned, this results in total 2026 reported revenue of approximately $6.405 billion to 6.455 billion. These starting assumptions imply a blended year-over-year revenue growth of approximately 5.3% at the midpoint of the combined company in 2026. This is an industry-leading growth guidance and carries clear opportunity for outperformance as the year progresses. From a profitability perspective, we expect to deliver a 2026 adjusted operating margin percentage of approximately 28.1%, which is already more than 100 basis points of margin expansion compared with our deal model in 2025. This translates to full-year 2026 adjusted EPS of $14.30 to $14.50, which is also an attractive starting point reflecting 8.9% to 10.4% growth.
<unk> are planned organizational simplification.
Taken together with revenue synergies I just mentioned this results in total 2026 reported revenue of approximately six.
<unk> zero 5 billion to 6.455 billion.
These starting assumptions imply a blended year over year revenue growth of approximately five 3% at the midpoint of the combined company. In 2026. This is an industry leading growth guidance and cat is clear opportunity for outperformance as the year progresses from a profitability perspective, we expect to deliver it.
<unk> 2000, <unk> adjusted operating margin percentage of approximately 28, 1%, which is already more than 100 basis points of margin expansion compared with our deal model in 2025.
This translates to full year 2026, adjusted EPS of $14 30.
$214 50.
Which is also an attractive starting point, reflecting eight 9% to 10, 4% growth.
Udit Batra: It includes $0.10 of accretion from the transaction versus Waters' Adjusted EPS on a standalone basis even before reaching a full year of ownership. With that, I will now turn the call over to Amol to review the financials and walk through our guidance in more detail.
Udit Batra: It includes $0.10 of accretion from the transaction versus Waters' Adjusted EPS on a standalone basis even before reaching a full year of ownership. With that, I will now turn the call over to Amol to review the financials and walk through our guidance in more detail.
It includes 10 cents of accretion from the transaction versus waters as adjusted EPS on a standalone basis, even before reaching a full year of ownership with that.
I will now turn the call over to a mall to review the financials and walk through our guidance in more detail.
Amol Chaubal: Thank you, Udit, and good morning, everyone. In Q4, we delivered a strong finish to the year with as-reported sales and adjusted EPS landing at the high end of our guidance. Sales of $932 million grew 7% as reported and 6% in constant currency. Orders growth outpaced sales growth in the quarter. By end market, pharma grew 7%, industrial grew 8%, while academic and government declined 3%. In pharma, growth was led by mid-teens performance in Asia, high single-digit growth in Europe, and low single-digit growth in Americas. Instrument replacement remained strong, along with new product adoption in both our instrument and chemistry portfolios. In industrial, Waters Division grew low teens with double-digit strength across chemical analysis, food, and environmental testing. Performance was supported by continued momentum in PFAS-related workflows led by the sensitivity and robustness of the Xevo TQ Absolute XR mass spec system.
Amol Chaubal: Thank you, Udit, and good morning, everyone. In Q4, we delivered a strong finish to the year with as-reported sales and adjusted EPS landing at the high end of our guidance. Sales of $932 million grew 7% as reported and 6% in constant currency. Orders growth outpaced sales growth in the quarter. By end market, pharma grew 7%, industrial grew 8%, while academic and government declined 3%. In pharma, growth was led by mid-teens performance in Asia, high single-digit growth in Europe, and low single-digit growth in Americas. Instrument replacement remained strong, along with new product adoption in both our instrument and chemistry portfolios. In industrial, Waters Division grew low teens with double-digit strength across chemical analysis, food, and environmental testing. Performance was supported by continued momentum in PFAS-related workflows led by the sensitivity and robustness of the Xevo TQ Absolute XR mass spec system.
Thank you <unk> and good morning, everyone in the fourth quarter, we delivered a strong finish to the year with as reported sales and adjusted EPS landing at the high end of our guidance.
Sales of $932 million grew 7% as reported.
<unk>, 6% in constant currency.
All of those growth outpaced sales growth in the corner.
End markets pharma grew 7% industrial grew 8%, while academic and government declined 3%.
Pharma growth was led by mid teens performance in Asia.
High single digit growth in Europe, and low single digit growth in Americas.
Instrument replacement remained strong along with new product adoption in both our instrument and chemistry portfolios.
In industrial water Division grew low teens.
Double digit strength across chemical analysis, food and environmental testing.
Performance was supported by continued momentum in beef costs diluted workflows led by the sensitivity and robustness of the zero TQ absolute XR mass spec system.
Ta Division was flat, reflecting an improvement versus the first half of the year and as customer spending plans continue to recover.
Amol Chaubal: TA Division was flat, reflecting an improvement versus the first half of the year as customer spending trends continued to recover. In academic and government, strong double-digit growth in Americas was offset by year-over-year spending declines in other regions. By region, Asia grew low double digits, while Americas and Europe grew mid-single digits. Within Asia, India grew high teens, reflecting continued strength in pharma generics. In China, sales grew 3% as strength in pharma and industrial was partially offset by timing of stimulus-related funding in academic and government. By product line, instrument sales grew 3%. High single-digit LCMS growth was partially offset by a low single-digit decline in TA system sales. We also incurred a low single-digit percentage growth impact from successful customer migration to Empower subscription agreements, which carry long-term recurring revenue benefits. Recurring revenues grew 9%, driven by 8% growth in service and 12% growth in chemistry.
Amol Chaubal: TA Division was flat, reflecting an improvement versus the first half of the year as customer spending trends continued to recover. In academic and government, strong double-digit growth in Americas was offset by year-over-year spending declines in other regions. By region, Asia grew low double digits, while Americas and Europe grew mid-single digits. Within Asia, India grew high teens, reflecting continued strength in pharma generics. In China, sales grew 3% as strength in pharma and industrial was partially offset by timing of stimulus-related funding in academic and government. By product line, instrument sales grew 3%. High single-digit LCMS growth was partially offset by a low single-digit decline in TA system sales. We also incurred a low single-digit percentage growth impact from successful customer migration to Empower subscription agreements, which carry long-term recurring revenue benefits. Recurring revenues grew 9%, driven by 8% growth in service and 12% growth in chemistry.
In academic and government strong double digit growth in Americas was offset by year over year of spending declines in other regions.
By region Asia grew low double digits, while Americas, and Europe grew mid single digits.
Within Asia, India grew high teens, reflecting continued strength in pharma genetics.
In China sales grew 3% on strength in pharma and industrial was partially offset by timing of stimulus related funding in academic and government.
By product line instrument sales grew 3%.
High single digit <unk> growth was partially offset by a low single digit decline in Ta system sales.
Also incurred a low single digit percentage growth impact from successful customer migration to empower subscription agreements, which Gary long term recurring revenue benefits.
Recurring revenues grew 9% driven by 8% growth in service and 12% growth in chemistry.
Amol Chaubal: We again saw fantastic customer adoption of our bioseparations columns, which have been a vertical success in the market. Adjusted earnings per share grew 10% to $4.53. GAAP earnings per share were $3.77. For the full year, sales grew 7% on both a reported and constant currency basis. By end market, pharma grew 9%, industrial grew 6%, while academic and government declined 1%. In pharma, all regions delivered high single-digit growth or better, led by Asia, which grew low double digits. In industrial, Waters Division grew low double digits with broad-based double-digit strength across chemical analysis, food, and environmental testing. This was partially offset by a 1% decline in TA Division. In academic and government, the Americas and China grew mid-single digits, while Europe declined 5%. By region, Asia grew low teens, while Americas and Europe grew mid-single digits. Within Asia, India grew high teens, and China grew 9%.
Amol Chaubal: We again saw fantastic customer adoption of our bioseparations columns, which have been a vertical success in the market. Adjusted earnings per share grew 10% to $4.53. GAAP earnings per share were $3.77. For the full year, sales grew 7% on both a reported and constant currency basis. By end market, pharma grew 9%, industrial grew 6%, while academic and government declined 1%. In pharma, all regions delivered high single-digit growth or better, led by Asia, which grew low double digits. In industrial, Waters Division grew low double digits with broad-based double-digit strength across chemical analysis, food, and environmental testing. This was partially offset by a 1% decline in TA Division. In academic and government, the Americas and China grew mid-single digits, while Europe declined 5%. By region, Asia grew low teens, while Americas and Europe grew mid-single digits. Within Asia, India grew high teens, and China grew 9%.
We again saw fantastic customer adoption of our bio separations columns, which had been a vertical success in the market.
Adjusted earnings per share grew 10% to $40 and 53, six GAAP earnings per share were $3.77.
For the full year sales grew 7% on both a reported and constant currency basis.
By end market pharma grew 9% industrial grew 6%, while academic and government declined 1%.
In pharma all regions delivered high single digit growth or better led by issue, which grew low double digits.
In industrial water Division grew low double digits with broad based double digit shrimp across chemical analysis.
And enrollment through testing.
This was partially offset by a 1% decline in Ta Division.
Academic and government the Americas, and China grew mid single digits, while Europe declined 5%.
By region Asia grew low teens, while Americas, and Europe grew mid single digits.
Within Asia, India grew high teens in China grew 9%.
Amol Chaubal: Our strength in China was driven by broad-based growth across pharma, industrial, and ANG. This was supported by share gains in biotech and CDMOs, chemical and environmental workflows, and ANG. By product line, instrument sales grew 5%, led by high single-digit LCMS growth. Recurring revenues grew 8%, with 7% service growth and 12% chemistry growth. For the full year, adjusted earnings per share grew 11% to $13.13. On a GAAP basis, EPS was $10.76. Within the P&L, gross margin was 61.1% for the quarter and 59.3% for the full year, which was better than expected. Adjusted operating margin was 35.2% for the quarter and 30.5% for the year. This reflects the deliberate acceleration of strategic R&D investments in chemistry and informatics, along with the impact of regional sales mix and tariff surcharges. Our operating tax rate came in at 15.7% for both the quarter and the year.
Amol Chaubal: Our strength in China was driven by broad-based growth across pharma, industrial, and ANG. This was supported by share gains in biotech and CDMOs, chemical and environmental workflows, and ANG. By product line, instrument sales grew 5%, led by high single-digit LCMS growth. Recurring revenues grew 8%, with 7% service growth and 12% chemistry growth. For the full year, adjusted earnings per share grew 11% to $13.13. On a GAAP basis, EPS was $10.76. Within the P&L, gross margin was 61.1% for the quarter and 59.3% for the full year, which was better than expected. Adjusted operating margin was 35.2% for the quarter and 30.5% for the year. This reflects the deliberate acceleration of strategic R&D investments in chemistry and informatics, along with the impact of regional sales mix and tariff surcharges. Our operating tax rate came in at 15.7% for both the quarter and the year.
Our strength in China was driven by broad based growth across pharma industrial and LNG.
This was supported by share gains in biotech and CBER, most chemical and Ron mental workflows and AMG.
By product line instrument sales grew 5% led by high single digit Lcm's growth.
Our recurring revenues grew 8% with 7% service growth and 12% chemistry growth.
For the full year adjusted earnings per share grew 11% to $13 in protein.
On a GAAP basis, EPS was $10 76 sites.
Remember P&L gross margin was 61, 1% for the quarter and 59, 3% for the full year, which was better than expected.
Adjusted operating margin was 35, 2% for the quarter.
And 35% for the year. This reflects the deliberate acceleration of strategic R&D investments and chemistry, and informatics, along with the impact of regional sales mix and tariff surcharges.
Our operating tax rate came in at 15, 7% for both the quarter and the year.
Amol Chaubal: The full year rate includes approximately 50 basis points of discrete benefit related to a change in US tax legislation enacted in 2025. Turning to cash generation and the balance sheet, free cash flow was $125 million in the quarter after funding $39 million of capital expenditures and $15 million of transaction-related costs. For the full year, free cash flow totaled $677 million after funding $113 million of capital expenditures, inclusive of tariff-related mitigation actions, and $29 million of transaction-related costs. Our net debt position at the end of the year was $820 million. Now, I will share further commentary on our 2026 outlook and provide our first quarter guidance. We are executing well with a revitalized portfolio, leveraging instrument replacement and benefiting from our idiosyncratic growth drivers. We expect this momentum to continue into 2026.
Amol Chaubal: The full year rate includes approximately 50 basis points of discrete benefit related to a change in US tax legislation enacted in 2025. Turning to cash generation and the balance sheet, free cash flow was $125 million in the quarter after funding $39 million of capital expenditures and $15 million of transaction-related costs. For the full year, free cash flow totaled $677 million after funding $113 million of capital expenditures, inclusive of tariff-related mitigation actions, and $29 million of transaction-related costs. Our net debt position at the end of the year was $820 million. Now, I will share further commentary on our 2026 outlook and provide our first quarter guidance. We are executing well with a revitalized portfolio, leveraging instrument replacement and benefiting from our idiosyncratic growth drivers. We expect this momentum to continue into 2026.
The full year.
Rate includes approximately 50 basis points of discrete benefit related to a change in U S tax legislation enacted in 2025.
Turning to cash generation and the balance sheet free cash flow was 125 million in the quarter after performing $39 million of capital expenditures and $15 million of transaction related costs.
For the full year free cash flow totaled $677 million after funding $130 million of capital expenditures inclusive of cloud related mitigation actions and $29 million of transaction related costs.
Our net debt position at the end of the year was $820 million.
Now I will share further commentary on our 2026 outlook and provide our first quarter guidance.
We are executing well with our revitalized portfolio leveraging instrument replacement and benefiting from our idiosyncratic growth drivers we.
We expect this momentum to continue into 2026 as a prudent starting point these dynamics support standalone full year 'twenty 'twenty six organic constant currency revenue growth of five 5% to 7%.
Amol Chaubal: As a prudent starting point, these dynamics support standalone full year 2026 organic constant currency revenue growth of 5.5% to 7%. We expect favorable foreign exchange translation to provide 0.5% tailwind to organic sales, which translates to organic reported revenue of $3.355 billion to 3.405 billion in 2026. Turning to the acquired business contribution, following today's expected closing of the transaction, we expect the acquired biosciences and diagnostic solutions businesses to contribute $3 billion of revenue in 2026. In setting this expectation, we have risk-adjusted the underlying growth assumptions, even though most of the headwinds that impacted the business in 2025 are already in the baseline as we enter 2026. Our guidance prudently assumes approximately 2.5% underlying constant currency growth for these businesses in 2026 on an owned period basis before any benefit from execution and pricing improvements or our organizational changes.
Amol Chaubal: As a prudent starting point, these dynamics support standalone full year 2026 organic constant currency revenue growth of 5.5% to 7%. We expect favorable foreign exchange translation to provide 0.5% tailwind to organic sales, which translates to organic reported revenue of $3.355 billion to 3.405 billion in 2026. Turning to the acquired business contribution, following today's expected closing of the transaction, we expect the acquired biosciences and diagnostic solutions businesses to contribute $3 billion of revenue in 2026. In setting this expectation, we have risk-adjusted the underlying growth assumptions, even though most of the headwinds that impacted the business in 2025 are already in the baseline as we enter 2026. Our guidance prudently assumes approximately 2.5% underlying constant currency growth for these businesses in 2026 on an owned period basis before any benefit from execution and pricing improvements or our organizational changes.
We expect favorable foreign exchange translation to provide 0.5% tail room to organic sales, which translates to our Jeremy reported revenue of 3.355 billion to $3 405 billion in 2026.
Turning to the acquired business contribution following today's expected closing of the transaction, we expect the acquired Biosciences and diagnostics solutions businesses to contribute $3 billion of revenue in 2026.
In setting this expectation rehab risk adjusted underlying growth assumptions.
Even though most of the headwinds that impacted the business in 2025 are already in the baseline as we enter 2026.
Our guidance prudently assumes approximately two 5% underlying constant currency growth for these businesses in 2026 on an owned period basis before any benefit from execution and pricing improvements are our organizational changes.
In addition, we expect to realize approximately $50 million of revenue synergies in 2026, reflecting the initial contribution from the first wave of commercial excellence initiatives discussed earlier.
Amol Chaubal: In addition, we expect to realize approximately $50 million of revenue synergies in 2026, reflecting the initial contribution from the first wave of commercial excellence initiatives discussed earlier. Taken together, this results in a total reported 2026 revenue of $6.405 billion to 6.455 billion. These starting assumptions imply blended year-over-year constant currency growth of approximately 5.3% for the combined company in 2026. From a profitability perspective, we expect to deliver an adjusted EBIT margin of 28.1% in 2026, consistent with our deal model. This reflects approximately 80 basis points of adjusted operating margin expansion at Waters on a standalone basis, consistent with our investor day algorithm, to approximately 31.3%, an adjusted operating margin percentage of approximately 22.4% for biosciences and diagnostic solutions, a $25 million contribution from the $50 million anticipated revenue synergies, and $55 million contribution from anticipated cost synergies.
Amol Chaubal: In addition, we expect to realize approximately $50 million of revenue synergies in 2026, reflecting the initial contribution from the first wave of commercial excellence initiatives discussed earlier. Taken together, this results in a total reported 2026 revenue of $6.405 billion to 6.455 billion. These starting assumptions imply blended year-over-year constant currency growth of approximately 5.3% for the combined company in 2026. From a profitability perspective, we expect to deliver an adjusted EBIT margin of 28.1% in 2026, consistent with our deal model. This reflects approximately 80 basis points of adjusted operating margin expansion at Waters on a standalone basis, consistent with our investor day algorithm, to approximately 31.3%, an adjusted operating margin percentage of approximately 22.4% for biosciences and diagnostic solutions, a $25 million contribution from the $50 million anticipated revenue synergies, and $55 million contribution from anticipated cost synergies.
Taken together this results in a total reported 2026 revenue of 640 5 billion to $6 45 5 billion.
Be starting assumptions implied blended year over year constant currency growth of approximately five 3% for the combined company in 2026.
From a profitability perspective, we expect to deliver adjusted EBIT margin of 28, 1% in 226, consistent with our deal model.
This reflects approximately 80 basis points of adjusted operating margin expansion at waters on a standalone basis consistent with our in rest of the algorithm to approximately 31, 3%.
And adjusted operating margin percentage of approximately 22, 4% for Biosciences and diagnostic solutions.
A $25 million contribution from the $50 million under.
Anticipated revenue synergies and 55 million contribution from anticipated cost synergies.
Amol Chaubal: Below the line, net interest expense is expected to be approximately $179 million, and our full-year tax rate is expected to be approximately 16.6%. From a share count perspective, our updated capital structure results in approximately 94.3 million diluted shares outstanding on a full-year average basis in 2026. At closing, our new share count is 98.4 million shares. This translates to full-year 2026 adjusted earnings per fully diluted share of $14.30 to $14.50 and represents 8.9% to 10.4% growth. It includes $0.10 of adjusted EPS accretion versus Waters' standalone non-GAAP EPS profile due to the transaction already before a first full year of ownership. It is important to note that quarterly EPS figures are not additive to the full-year EPS due to a significant change in average shares outstanding between the first quarter and the remainder of the year.
Amol Chaubal: Below the line, net interest expense is expected to be approximately $179 million, and our full-year tax rate is expected to be approximately 16.6%. From a share count perspective, our updated capital structure results in approximately 94.3 million diluted shares outstanding on a full-year average basis in 2026. At closing, our new share count is 98.4 million shares. This translates to full-year 2026 adjusted earnings per fully diluted share of $14.30 to $14.50 and represents 8.9% to 10.4% growth. It includes $0.10 of adjusted EPS accretion versus Waters' standalone non-GAAP EPS profile due to the transaction already before a first full year of ownership. It is important to note that quarterly EPS figures are not additive to the full-year EPS due to a significant change in average shares outstanding between the first quarter and the remainder of the year.
Below the line net interest expense is expected to be approximately 179 million.
Full year tax rate is expected to be approximately 16, 6%.
From a share count perspective, our updated capital structure resulted in approximately $94 3 million diluted shares outstanding on a full year average basis in 2026.
At closing our new share count is 98 4 million shares.
This translates to full year 'twenty 'twenty six adjusted earnings per fully diluted share of $14 and therapies.
$14 50.
And represented eight 9% to 10, 4% growth at.
It includes 10 cents of adjusted EPS accretion once this water stand alone non-GAAP EPS profile due to the transaction already before the first full year of ownership.
It is important to note that quarterly EPS free goods are not additive to the full year EPS due to a significant change in average shares outstanding between the first quarter and the remainder of the year.
For the first quarter of 2026, we are at the beginning of the year with strong momentum across our core businesses, we expect standalone organic constant currency revenue growth of 7% to 9%.
Amol Chaubal: For Q1 2026, we are beginning the year with strong momentum across our core businesses. We expect standalone organic constant currency revenue growth of 7% to 9%. With tailwinds from favorable foreign exchange translation, reported standalone revenue is expected to be approximately $718 to 731 million. Turning to the acquired business contribution, we expect the biosciences and diagnostic solutions businesses to contribute $480 million of revenue in the partial Q1 2026. This calls for a low single-digit revenue decline. Quarter-to-date trends reinforce our confidence in this outlook. Taken together, this results in a total reported Q1 2026 revenue of $1.198 to 1.211 billion. For modeling purposes, Q1 average share count is expected to be 82 million, and tax rate is expected to be consistent with our full year outlook.
Amol Chaubal: For Q1 2026, we are beginning the year with strong momentum across our core businesses. We expect standalone organic constant currency revenue growth of 7% to 9%. With tailwinds from favorable foreign exchange translation, reported standalone revenue is expected to be approximately $718 to 731 million. Turning to the acquired business contribution, we expect the biosciences and diagnostic solutions businesses to contribute $480 million of revenue in the partial Q1 2026. This calls for a low single-digit revenue decline. Quarter-to-date trends reinforce our confidence in this outlook. Taken together, this results in a total reported Q1 2026 revenue of $1.198 to 1.211 billion. For modeling purposes, Q1 average share count is expected to be 82 million, and tax rate is expected to be consistent with our full year outlook.
Tailwind from favorable foreign exchange translation reported Standalone revenue was expected to be approximately $718 million to $731 million.
Turning to the acquired business contribution, we expect the biosciences and diagnostic solutions businesses to contribute $480 million of revenue in the partial first quarter of <unk> 26.
This calls for a low single digit revenue decline.
Prince.
Enforce our confidence in this outlook.
Taken together this resulted in a total reported first quarter 2026 revenue of 1.198 billion to one to one 1 billion.
For modeling for this first quarter average share count is expected to be $82 million in tax rate is expected to be consistent with our full year outlook.
Amol Chaubal: While the transaction is expected to be EPS accretive for the full year 2026, the first quarter will reflect the full burden of interest expense and the higher share count, with synergies beginning to ramp up in subsequent quarters. As a result, the first quarter adjusted earnings per fully diluted share is expected to be in the range of $2.25 to $2.35, which is flat to 4.4% growth. Embedded within this guide is standalone EPS of $2.50 or 10% growth versus prior year at midpoint. With that, I will now hand the call back to Udit. Thank you, Amol. So, to summarize, with a revitalized core portfolio, expanded high-growth adjacencies, and tangible synergy levers now underway, we are entering 2026 with strong momentum and a highly compelling growth outlook.
Amol Chaubal: While the transaction is expected to be EPS accretive for the full year 2026, the first quarter will reflect the full burden of interest expense and the higher share count, with synergies beginning to ramp up in subsequent quarters. As a result, the first quarter adjusted earnings per fully diluted share is expected to be in the range of $2.25 to $2.35, which is flat to 4.4% growth. Embedded within this guide is standalone EPS of $2.50 or 10% growth versus prior year at midpoint. With that, I will now hand the call back to Udit. Thank you, Amol. So, to summarize, with a revitalized core portfolio, expanded high-growth adjacencies, and tangible synergy levers now underway, we are entering 2026 with strong momentum and a highly compelling growth outlook.
The transaction is expected to be EPS accretive for the full year of 'twenty 'twenty six the fourth quarter will reflect the full burden of interest expense and the higher share count with synergies beginning to ramp up in subsequent quarters. As a result of the first quarter adjusted earnings per fully diluted share is expected to be in the range of.
$2.25 to $2 35, which is flat to four 4% growth.
Embedded within this guidance standalone EPS of $2, 50% or 10% growth versus prior year at midpoint.
With that I will now hand, the call back to <unk>.
Thank you I'm, all so to summarize with a revitalized core portfolio expanded high growth Adjacencies and tangible synergy levers now underway. We are entering 2026 with strong momentum and a highly compelling growth outlook.
Amol Chaubal: Our growth outlook of 5.3% at midpoint for the combined company is appropriately prudent, yet industry-leading even before factoring in the full benefits of upcoming execution improvements, which we will now work decisively to implement. Within the P&L, we are confident in our ability to accelerate value creation as the year progresses. We look forward to updating you on our progress as we move through the year. So, with that, I will now turn the call back to Caspar. Thanks, Udit. That concludes our prepared remarks. We are now happy to open the lines and take your questions. We will now begin Q&A. If you would like to ask a question, please use the raise your hand feature at the bottom of your screen. If you are dialed in by phone, press star 9 to raise your hand and star 6 to unmute.
Amol Chaubal: Our growth outlook of 5.3% at midpoint for the combined company is appropriately prudent, yet industry-leading even before factoring in the full benefits of upcoming execution improvements, which we will now work decisively to implement. Within the P&L, we are confident in our ability to accelerate value creation as the year progresses. We look forward to updating you on our progress as we move through the year. So, with that, I will now turn the call back to Caspar.
Our growth outlook of five 3% at midpoint for the combined company is appropriately prudent yet industry, leading even before factoring in the full benefits of upcoming execution improvements, which we will now work decisively to implement within the P&L. We are confident in our ability to accelerate value creation as the year progresses.
We look forward to updating you on our progress as we move through the year. So with that I will now turn the call back to Kasper.
Caspar Tudor: Thanks, Udit. That concludes our prepared remarks. We are now happy to open the lines and take your questions.
That concludes our prepared remarks, we are now happy to open the lines and take your questions.
Operator: We will now begin Q&A. If you would like to ask a question, please use the raise your hand feature at the bottom of your screen. If you are dialed in by phone, press star 9 to raise your hand and star 6 to unmute.
We will now begin Q&A, if you'd like to ask a question. Please use the rates enhanced feature at the bottom of your screen. If you are dialed in by phone.
Star nine to raise their hand, and fast X one minute. Please accept the prompt and Amit your audio when called upon as a reminder, we are allowing one question and one follow up we will wait a moment to allow us to keep the farm.
Amol Chaubal: Please accept the prompt and unmute your audio when called upon. As a reminder, we are allowing one question and one follow-up. We will wait a moment to allow the queue to form. Our first question will come from Tycho Peterson with Jefferies. Your line is now open. Please go ahead. Hey, thanks. Udit, I think that two things people really want to dig into here are obviously the BD results this morning and the numbers obviously have deteriorated relative to the original deal model. So, maybe just talk a little bit about your take on the numbers this morning, particularly for the lagging parts of the portfolio: US academic government, China, early-stage research on the BD side, and how do we think about the path to recovery there. And then the second thing is instruments and the Empower impact on that transition.
Operator: Please accept the prompt and unmute your audio when called upon. As a reminder, we are allowing one question and one follow-up. We will wait a moment to allow the queue to form. Our first question will come from Tycho Peterson with Jefferies. Your line is now open. Please go ahead.
Our first question will come from Tycho Peterson with Jefferies. Your line is now open. Please go ahead.
Tycho Peterson: Hey, thanks. Udit, I think that two things people really want to dig into here are obviously the BD results this morning and the numbers obviously have deteriorated relative to the original deal model. So, maybe just talk a little bit about your take on the numbers this morning, particularly for the lagging parts of the portfolio: US academic government, China, early-stage research on the BD side, and how do we think about the path to recovery there. And then the second thing is instruments and the Empower impact on that transition.
Hey, thanks.
Two things people really want to dig into here, obviously, the BD results. This morning, and the numbers, obviously have deteriorated relative to the original deal model. So maybe just talk a little bit about your take on the numbers. This morning, particularly from a lagging parts of the portfolio in the U S. Academic government China early stage research on the B East side, and how do we think about the path.
A recovery there and then the second thing is instruments rank in the empower impact on that transition understand it's call. It 250 basis point headwind this quarter, but how do we think about the go forward P&L impact on instruments from from this empower transition.
Amol Chaubal: Understand it's, call it, 250 basis points headwind this quarter, but how do we think about the go-forward P&L impact on instruments from this Empower transition? Thanks. Yeah. So, Taiko, thanks for the two questions. So, let me start with the BD diagnostic solutions and bioscience business first. Look, several issues emerged in Q4 that impacted the growth of both of those businesses that were not fully known in Q3, and I'll let Amol describe those in a few minutes. But what is important is that all of these will now be present in a lower baseline for us in 2026 to basically help us deliver the 2.5%, which we think has several upsides. Now, this reminds me of Waters almost five years ago.
Tycho Peterson: Understand it's, call it, 250 basis points headwind this quarter, but how do we think about the go-forward P&L impact on instruments from this Empower transition? Thanks.
Udit Batra: Yeah. So, Taiko, thanks for the two questions. So, let me start with the BD diagnostic solutions and bioscience business first. Look, several issues emerged in Q4 that impacted the growth of both of those businesses that were not fully known in Q3, and I'll let Amol describe those in a few minutes. But what is important is that all of these will now be present in a lower baseline for us in 2026 to basically help us deliver the 2.5%, which we think has several upsides. Now, this reminds me of Waters almost five years ago.
So tycho thanks for the for the two questions. So let me start with the BD.
Our diagnostic solutions and Bioscience business first look several issues emerged in Q4 that impacted the growth of both of those businesses that are not fully known in Q3 and I'll, let him all describe those in a few minutes, but what is important is that all of these will now be present in a lower baseline.
For us in 2026.
To basically help us deliver the two 5%, which we think has several upsides now this reminds me of waters almost five years ago.
Amol Chaubal: You couple this with a host of innovative new products in both diagnostic solutions and in bioscience across flow cytometry as well as across the microbiology business and the molecular diagnostics business. You start at a fresh portfolio. And so, we are now really squarely focused on first improving the operational execution, for instance, by implementing a deal desk for pricing discipline and discounting discipline, ensuring launch readiness of this fantastic portfolio just like we did with Alliance iS, and improving forecast accuracy to minimize surprises. And equally, after months of detailed integration planning, we're now ready to deliver the synergies, be it around instrument replacement, e-commerce, or service attach. And look, I mean, with service attach, we're starting at a 40% number, and you've seen what we've already done in 2025 alone. So, we're very confident to deliver the $50 million in revenue synergies and more.
Udit Batra: You couple this with a host of innovative new products in both diagnostic solutions and in bioscience across flow cytometry as well as across the microbiology business and the molecular diagnostics business. You start at a fresh portfolio. And so, we are now really squarely focused on first improving the operational execution, for instance, by implementing a deal desk for pricing discipline and discounting discipline, ensuring launch readiness of this fantastic portfolio just like we did with Alliance iS, and improving forecast accuracy to minimize surprises. And equally, after months of detailed integration planning, we're now ready to deliver the synergies, be it around instrument replacement, e-commerce, or service attach. And look, I mean, with service attach, we're starting at a 40% number, and you've seen what we've already done in 2025 alone. So, we're very confident to deliver the $50 million in revenue synergies and more.
Couple this with a host of innovative new products in both diagnostic solutions and in bioscience across flow cytometry.
As well as across the microbiology business and the molecular diagnostics business.
You start at a at a fresh portfolio and so we are now really squarely focused on first improving the operational execution for instance by implementing <unk>.
A deal desk for pricing discipline on discounting discipline, ensuring launch readiness of this fantastic portfolio. Just like we did with alliance is an improving forecast accuracy to minimize surprises and equally after months of detailed integration planning. We are now ready to deliver the synergies be it around instrument replacement e-commerce.
Our service attach and look I mean, the service attach we're starting at a 40% number and you've seen what we've already done in 2025 alone. So we're very confident.
To deliver the 50 $50 million in revenue synergies and more you add this to what water Standalone guidance is and you end up with over 5% close to five 3% in at the midpoint of the guide for the combined business. So we are feeling pretty good about that industry, leading growth rate as we head into 2026 I'm already you want to comment.
Amol Chaubal: You add this to what Waters' standalone guidance is, and you end up with over 5%, close to 5.3%, at the midpoint of the guide for the combined business. So, we're feeling pretty good about that industry-leading growth rate as we head into 2026. Amol, do you want to comment on the dynamics of the two businesses in 2025? Yeah. I mean, look, coming into Q4, we were starting to see the DRG headwind in China. And then we knew Q4 had a higher baseline from the prior year IP one-time revenue. But then a couple of other things sort of crept in, which is a weaker flu season coupled with challenges getting exemptions on shipments to China because of the government shutdown.
Udit Batra: You add this to what Waters' standalone guidance is, and you end up with over 5%, close to 5.3%, at the midpoint of the guide for the combined business. So, we're feeling pretty good about that industry-leading growth rate as we head into 2026. Amol, do you want to comment on the dynamics of the two businesses in 2025?
On the dynamics of the two businesses in 2025.
Amol Chaubal: Yeah. I mean, look, coming into Q4, we were starting to see the DRG headwind in China. And then we knew Q4 had a higher baseline from the prior year IP one-time revenue. But then a couple of other things sort of crept in, which is a weaker flu season coupled with challenges getting exemptions on shipments to China because of the government shutdown.
Coming into the group.
Fourth quarter rewards starting to see the DRG headwind in China.
And then we knew Q4 had a higher baseline from the prior year IP, one time revenue right, but then couple of other things sort of crept in which is a weaker flu season, coupled with challenges getting exemptions on shipments to China because of the government shutdown now as we get into Q1.
Amol Chaubal: Now, as we get into Q1, three out of the four are sort of behind us in terms of the baseline for the flu season, no IP issues in the baseline for the first quarter, as well as, remember, the China export ban started at the beginning of the first quarter last year. So, from a baseline point of view, it's pretty clean, except for the DRG issue, which will start to come in the baseline late Q3. And quarter-to-date trends give us a lot of confidence that where we are guiding, which is a low single-digit decline for Q1, is sort of a reasonable guide. So now, turning to your second question on instruments, really happy with instruments performance. LCMS grew high single digits again.
Amol Chaubal: Now, as we get into Q1, three out of the four are sort of behind us in terms of the baseline for the flu season, no IP issues in the baseline for the first quarter, as well as, remember, the China export ban started at the beginning of the first quarter last year. So, from a baseline point of view, it's pretty clean, except for the DRG issue, which will start to come in the baseline late Q3. And quarter-to-date trends give us a lot of confidence that where we are guiding, which is a low single-digit decline for Q1, is sort of a reasonable guide.
Three auto before are sort of behind us in terms of the baseline for the flu season.
No IP issues in the baseline for the first quarter as well as remember, but China export ban started at the beginning of the first quarter last year. So from a baseline point of view its pretty clean except for the DRG issue, which will start to come in the baseline late Q3 and quarterly great trends give us lot of.
Confidence that where we are guiding which is a low single digit decline for Q1.
A reasonable guide.
Udit Batra: So now, turning to your second question on instruments, really happy with instruments performance. LCMS grew high single digits again.
So now turning to your second question on instruments really happy with instruments performance.
CMS grew high single digits again.
Amol Chaubal: This is through the year. Every quarter has been high single digits to double digits for LC-MS with the same drivers, instrument replacement cycle still going strong, as well as the idiosyncratic growth drivers plus the new products. TA was a drag at a low single-digit percentage to the overall instrument number given the weakness in both the US and Europe. And what's great news is something that we've been telegraphing for a while is the transition of Empower from on-prem to subscription, where several large pharma customers transitioned in Q4, and that was about a low single-digit headwind to the overall instrument number. So overall, LC-MS, high single-digit growth, TA was a low single-digit percentage headwind just given the challenges in US and Europe. And Empower really a wonderful transition that we told you that we will talk about it.
Udit Batra: This is through the year. Every quarter has been high single digits to double digits for LC-MS with the same drivers, instrument replacement cycle still going strong, as well as the idiosyncratic growth drivers plus the new products. TA was a drag at a low single-digit percentage to the overall instrument number given the weakness in both the US and Europe. And what's great news is something that we've been telegraphing for a while is the transition of Empower from on-prem to subscription, where several large pharma customers transitioned in Q4, and that was about a low single-digit headwind to the overall instrument number. So overall, LC-MS, high single-digit growth, TA was a low single-digit percentage headwind just given the challenges in US and Europe. And Empower really a wonderful transition that we told you that we will talk about it.
And this is like through the year every quarter has been high single digits to double digits for the CMS with the same drivers instrument replacement cycle is still going strong.
As well as the idiosyncratic growth drivers plus the new products.
<unk> was a drag at a low single digit percentage to the overall instrument number given the weakness in both the U S. Both the U S and Europe.
And whats Great news is something that we've been Telegraphing for awhile is is the transition of empower from on Prem to subscription where several large pharma customers transitioned in Q4 and that was about a low single digit headwind to the overall instrument number so overall as CMS hiseq.
<unk> digit growth.
Hey.
Was a low single digit percentage headwind just given the challenges in U S and Europe and.
Empower really a wonderful transition that we told you that we will we will talk about it we would talk about it in the rearview mirror.
Amol Chaubal: We will talk about it in the rearview mirror. Now, as you look ahead into 2026, Q1 started off extremely well on the instrument side. The funnel is extremely strong. Orders grew faster than sales in Q4. So, we feel very good about where we're starting and the guide we have given for Q1 and the full year. And all the drivers are currently fully intact. And we've also accounted in the guidance that we've given for the Empower headwinds that we expect during the year as customers transition from the CapEx to recurring revenue models. So, all going according to plan and really happy with, especially the Empower transition that has happened. Yeah. I mean, it's a fantastic problem to have. Two of the top five pharmas converted. And I mean, Q1 funnel is strong, so we're not less. Thank you.
Udit Batra: We will talk about it in the rearview mirror. Now, as you look ahead into 2026, Q1 started off extremely well on the instrument side. The funnel is extremely strong. Orders grew faster than sales in Q4. So, we feel very good about where we're starting and the guide we have given for Q1 and the full year. And all the drivers are currently fully intact. And we've also accounted in the guidance that we've given for the Empower headwinds that we expect during the year as customers transition from the CapEx to recurring revenue models. So, all going according to plan and really happy with, especially the Empower transition that has happened.
Now as you look ahead into 2026.
Q1 started off extremely well on the instrument side of the funnel is extremely strong orders grew faster than sales and in Q4. So we feel very good about where we are starting in the guide we have given for Q1 and the full year and all the drivers are.
Our.
Currently fully intact and we have also accounted in the guidance that we've given.
For the empower headwinds that we expect.
As expected during the year as customers transition from.
The capex to recurring revenue models, so all going according to plan and really happy with especially the empower transition that economy. It's a fantastic problem to have right two of the top five pharma converted.
Amol Chaubal: Yeah. I mean, it's a fantastic problem to have. Two of the top five pharmas converted. And I mean, Q1 funnel is strong, so we're not less.
And I mean.
<unk> Q1 funnel is strong.
So we're not less.
Tycho Peterson: Thank you.
Thank you.
Your next question will come from Catherine Schulte with Baird.
Amol Chaubal: Your next question will come from Catherine Schulte with Baird. Hey, guys. Thanks for the questions. Maybe first, just for the full year guide of 5.5% to 7% after starting at 7% to 9% in Q1, implies some deceleration for the balance of the year. Is that just prudence to start the year? Is it comp-driven, or are there some other dynamics we should be aware of? So first, on the full year guide, the 5.5% to 7%, Catherine, look, our guidance philosophy is generally not changed. I mean, the lower end of the guide constitutes where we think instruments are going to end up. And I'd given a lot of detail to Tycho's question on that front already. So, we feel very good about where we're starting on the instrument side at 5.5%.
Operator: Your next question will come from Catherine Schulte with Baird.
Catherine Schulte: Hey, guys. Thanks for the questions. Maybe first, just for the full year guide of 5.5% to 7% after starting at 7% to 9% in Q1, implies some deceleration for the balance of the year. Is that just prudence to start the year? Is it comp-driven, or are there some other dynamics we should be aware of?
Thanks for the questions and maybe first one for the full year guidance.
Uh huh.
Tom back from starting coming from all of our first quarter Antifungal Foundation for the balance of that is prudent.
Hum.
Thank you Alexis.
Okay.
Udit Batra: So first, on the full year guide, the 5.5% to 7%, Catherine, look, our guidance philosophy is generally not changed. I mean, the lower end of the guide constitutes where we think instruments are going to end up. And I'd given a lot of detail to Tycho's question on that front already. So, we feel very good about where we're starting on the instrument side at 5.5%.
So first on the full year guide the 5.5% to 7% Catherine look.
Oh God.
Our guidance philosophy is generally not changed right I mean, the lower end of the guide constitutes where we think instruments are going to end up and I had given a lot of detailed tyco's question on that front already so we feel very good about where we're starting on the instrument side at five 5% and under 7% at the top end of the guide that as a recurring revenue sort of guidance for the year.
Amol Chaubal: And on the 7% at the top end of the guide, that is our recurring revenue sort of guidance for the year. This basically, again, constitutes several upsides that we've not baked into the guide itself. I mean, we've assumed that the academic and government drug discovery pharma research segments don't recover. In China, we've assumed a mid-single-digit growth versus what we've done this year, which is about 9%. I mean, a fantastic growth in China, but we've assumed mid-single-digit and not included any sort of stimulus revenue. We've incorporated already the Empower headwinds from converting from CapEx to a recurring revenue. This does not include reshoring revenues. And finally, for the full year, we've assumed that chemistry is roughly 6% in our guide while finishing the year at 12% in chemistry growth rate. So, several areas to basically have risk on the upside.
Udit Batra: And on the 7% at the top end of the guide, that is our recurring revenue sort of guidance for the year. This basically, again, constitutes several upsides that we've not baked into the guide itself. I mean, we've assumed that the academic and government drug discovery pharma research segments don't recover. In China, we've assumed a mid-single-digit growth versus what we've done this year, which is about 9%. I mean, a fantastic growth in China, but we've assumed mid-single-digit and not included any sort of stimulus revenue. We've incorporated already the Empower headwinds from converting from CapEx to a recurring revenue. This does not include reshoring revenues. And finally, for the full year, we've assumed that chemistry is roughly 6% in our guide while finishing the year at 12% in chemistry growth rate. So, several areas to basically have risk on the upside.
Year.
This basically again constitutes several upsides that we have not baked into into the guide itself.
Assume that the academic and government drug discovery pharma research segments don't recover.
In China, we've assumed a mid single digit growth versus what we've done this year, which is about 9% I mean, a fantastic growth in China, but we've assumed mid single digit and not included any sort of stimulus revenue we've incorporated already the empower.
Empower headwinds from converting from Capex to <unk>.
Capex to a recurring revenue.
This does not include re shoring revenues and finally for the full year, we've assumed that chemistry is roughly 6%.
Our guide, while while finishing the year at 12% and <unk> growth rates are several areas.
Two basically.
Have risk on the upside and so feel pretty good about where we're starting with the guide on Q1 or do you want to talk about the 7% to 9%.
Amol Chaubal: And so, we feel pretty good about where we're starting with the guide. On Q1, Amol, do you want to talk about the 7% to 9%? Yeah. I mean, look, in general, the momentum coming into Q1 is really strong. And that coupled with four extra working days sort of supports our guide. And that then sort of de-risks the remainder of the year. Okay. Got it. And apologies if I missed it in your response to Tycho's question. But for the outlook for the BD assets, any comment on pacing there and maybe what we should expect from a Q4 exit rate for BD on the path to recovery? Yeah.
Udit Batra: And so, we feel pretty good about where we're starting with the guide. On Q1, Amol, do you want to talk about the 7% to 9%?
Amol Chaubal: Yeah. I mean, look, in general, the momentum coming into Q1 is really strong. And that coupled with four extra working days sort of supports our guide. And that then sort of de-risks the remainder of the year.
In general the momentum coming into Q1 is really strong and that coupled with four extra working days sort of supports our guide and then sort of derisk the remainder of the year.
Catherine Schulte: Okay. Got it. And apologies if I missed it in your response to Tycho's question. But for the outlook for the BD assets, any comment on pacing there and maybe what we should expect from a Q4 exit rate for BD on the path to recovery?
Okay.
Consumer finance.
Okay. Good question.
The outlook.
Can you comment on maybe what we should expect hammer fourth quarter exit rate.
From a pass car company.
Amol Chaubal: Yeah.
Amol Chaubal: I mean, look, we expect sort of a low single-digit decline in Q1 and then growth sort of gradually starting to ramp up as we go through the remainder of the year as some of the headwind gets more and more rooted in the baseline, particularly as we enter Q3 and Q4 when the DRG headwind is in the baseline. Yeah. And Catherine, look, equally, you should know that we are squarely focused on improving the operational execution. And as I mentioned before, this is around ensuring that there is forecast accuracy in the business. There is a pricing discipline, not just on setting the price, but also on discounting, which impacts both the top and the bottom line. And we've done that successfully at Waters.
Amol Chaubal: I mean, look, we expect sort of a low single-digit decline in Q1 and then growth sort of gradually starting to ramp up as we go through the remainder of the year as some of the headwind gets more and more rooted in the baseline, particularly as we enter Q3 and Q4 when the DRG headwind is in the baseline.
Yes, I mean look.
No.
Sort of a low single digit decline in Q1.
And then growth sort of gradually starting to ramp up as we go through the remainder of the year as some of the headwind gets more and more rooted in the baseline, particularly as we enter Q3 and Q4 when the DRG headroom is in the baseline.
Udit Batra: Yeah. And Catherine, look, equally, you should know that we are squarely focused on improving the operational execution. And as I mentioned before, this is around ensuring that there is forecast accuracy in the business. There is a pricing discipline, not just on setting the price, but also on discounting, which impacts both the top and the bottom line. And we've done that successfully at Waters.
And Catherine look.
Equally you should know that we are squarely focused on improving the operational execution and as I mentioned before this is around ensuring that there is a <unk>.
Forecast accuracy and the business there is a pricing discipline not just on on setting the price, but also on discounting which impact both the top.
And the bottom line and we've done that successfully at waters and also ensuring that the launch launches for the new products that are coming to go extremely well and something we have done by targeting segmenting very precisely for other alliance ISN DQ absolute.
Amol Chaubal: Also ensuring that the launches for the new products that are coming through go extremely well and something we've done by targeting, segmenting very precisely for our Alliance iS and Xevo TQ Absolute products. Equally, we're squarely focused on taking all the work that's happened in integration planning and implementing that throughout the year to increase momentum on the revenue synergy side. Instrument replacement, service attach, and e-commerce should contribute immediately. So, feel very good about the starting point after a lot of planning. Our next question will come from Jack Meehan with Nephron. Thank you. Good morning. Udit, on BD, you talked a couple of times about setting up a deal desk for pricing. Can you talk about which product areas are in focus and how you think how you think that's been optimized in the past? Yeah.
Udit Batra: Also ensuring that the launches for the new products that are coming through go extremely well and something we've done by targeting, segmenting very precisely for our Alliance iS and Xevo TQ Absolute products. Equally, we're squarely focused on taking all the work that's happened in integration planning and implementing that throughout the year to increase momentum on the revenue synergy side. Instrument replacement, service attach, and e-commerce should contribute immediately. So, feel very good about the starting point after a lot of planning.
Products and equally we're squarely focused on taking all the work that's happened in integration planning and implementing that throughout the year to increase momentum on the revenue synergy side instrument replacement service attach and e-commerce should contribute immediately so.
So feel very good about the starting point after a lot of planning.
Our next question will come from Jack Meehan with Nephron.
Operator: Our next question will come from Jack Meehan with Nephron.
Thank you good morning.
Jack Meehan: Thank you. Good morning. Udit, on BD, you talked a couple of times about setting up a deal desk for pricing. Can you talk about which product areas are in focus and how you think how you think that's been optimized in the past?
Good it on BD, you talked a couple of times about setting up a deal desk for pricing can you talk about which product areas are.
Focus and how you think.
How do you think that's been optimized in the past.
Udit Batra: Yeah.
Yes, so look I mean.
Amol Chaubal: So look, I mean, almost five years ago, we set up the same process at Waters. And it has two, maybe three parts. The first is a centralized examination of what the list prices are as well as what the discounting is. And that escalates all the way up to me as discounting requests come from the different regions. So basically, we take away the ability for regions and sales teams to discount. So anytime there's a list price increase, the stick rate is much higher. This is especially relevant for products in the instrument category. Now, here, you have a couple of new products that have been launched across the biosciences and diagnostics businesses, the most of all being the BD FACSDiscover line, S8, A8, as well as now the S7 and A7 that are coming up.
Udit Batra: So look, I mean, almost five years ago, we set up the same process at Waters. And it has two, maybe three parts. The first is a centralized examination of what the list prices are as well as what the discounting is. And that escalates all the way up to me as discounting requests come from the different regions. So basically, we take away the ability for regions and sales teams to discount. So anytime there's a list price increase, the stick rate is much higher. This is especially relevant for products in the instrument category. Now, here, you have a couple of new products that have been launched across the biosciences and diagnostics businesses, the most of all being the BD FACSDiscover line, S8, A8, as well as now the S7 and A7 that are coming up.
Almost five years ago, we set up the same process at waters.
And it has two maybe three parts. The first is a centralized.
Examination of what the list price this places our as well as what the discounting is and that escalates all the way up to me.
As discounting.
Requests come from the different regions. So we've basically would take away the ability for regions and sales teams to discounts. So anytime there is a list price increase that take rate is much higher this is especially relevant for products in the instrument category. Now here you have a couple of new products that have been launched across the biosciences and diagnostics businesses.
The most of all being the fastest cover line.
At <unk> as well as now.
<unk> and <unk> that are coming up and for instruments, it's extremely important to not sort of lose the pricing discipline as you negotiate the deals it's pretty easy to sort of give away pricing on highly innovative products, if youre not disciplined and on the recurring revenue side, we see a benefit both on the service piece so that we have.
Amol Chaubal: And for instruments, it's extremely important to not sort of lose the pricing discipline as you negotiate the deals. It's pretty easy to sort of give away pricing on highly innovative products if you're not disciplined. And on the recurring revenue side, we see a benefit both on the service piece so that we are charging for installation, we're charging for spare parts in an appropriate way, but also on the reagent side where there is no reason for BD to not command the same sort of price premium that our chemistry revenue does. These are highly differentiated dyes and antibodies that only BD produces. And these are of the highest quality. So there's zero reason why there should be discounting there. So we expect those to immediately impact. And those impact both the top line and the bottom line, Jack. Great.
Udit Batra: And for instruments, it's extremely important to not sort of lose the pricing discipline as you negotiate the deals. It's pretty easy to sort of give away pricing on highly innovative products if you're not disciplined. And on the recurring revenue side, we see a benefit both on the service piece so that we are charging for installation, we're charging for spare parts in an appropriate way, but also on the reagent side where there is no reason for BD to not command the same sort of price premium that our chemistry revenue does. These are highly differentiated dyes and antibodies that only BD produces. And these are of the highest quality. So there's zero reason why there should be discounting there. So we expect those to immediately impact. And those impact both the top line and the bottom line, Jack.
<unk> four installation, we're charging for spare parts in an appropriate way, but also on the reagent side, where there is no reason for BD to not command the same sort of price premium that are that are chemistry revenue does need a highly differentiated values in antibodies that only when we believe produces and then these off.
The highest quality. So there was zero reason why there should be discounting there. So we expect those to immediately impact and those impact both the topline and bottom line Jack.
Jack Meehan: Great.
Mhm.
And then for a mall can you give us an update on the pro forma leverage for waters and how you expect that to evolve over the year and similarly, what does the guide for interest expense assume for any refinancing. Thank you.
Amol Chaubal: And then for Amol, can you give us an update on the pro forma leverage for Waters and how you expect that to evolve over the year? And kind of similarly, what does the guide for interest expense assume for any refinancing? Thank you. Yeah. So I mean, look, we will be roughly at a net debt of somewhere around $4.6 to 4.7 billion. And that would translate to roughly around 2.4x net debt to EBITDA, slightly more than what we announced because the deal closed earlier than what we had anticipated, which is great. And then we expect to be below 2x within sort of 18-month timeframe. And then interest expense on a pro forma basis is about $179 million for 2026. Our next question will come from Doug Schenkel with Wolfe. Good morning.
Jack Meehan: And then for Amol, can you give us an update on the pro forma leverage for Waters and how you expect that to evolve over the year? And kind of similarly, what does the guide for interest expense assume for any refinancing? Thank you.
Amol Chaubal: Yeah. So I mean, look, we will be roughly at a net debt of somewhere around $4.6 to 4.7 billion. And that would translate to roughly around 2.4x net debt to EBITDA, slightly more than what we announced because the deal closed earlier than what we had anticipated, which is great. And then we expect to be below 2x within sort of 18-month timeframe. And then interest expense on a pro forma basis is about $179 million for 2026.
So I mean look we will be roughly at unmet data somewhere around 464 7 billion right.
And that would translate to roughly around 2.4 times net debt to EBITDA slightly more than what we announced because the deal closed.
Other than what we had anticipated which is great and then we expect to be below two times, we've been sort of 18 months timeframe.
And then interest expense on a pro forma basis was about $179 million 2026.
Yeah.
Our next question will come from Doug Schenkel with Wolfe.
Operator: Our next question will come from Doug Schenkel with Wolfe.
Doug Schenkel: Good morning.
Good morning.
I actually just have one topic I'd like to cover just on the synergy targets.
Amol Chaubal: I actually just have one topic I'd like to cover just on the synergy targets. I think your initial year-one guidance assumes you cut 5% to 6% of the acquired businesses' OpEx, assuming I have that math right. So I guess one question would be, do I have that math right? And if so, recognizing this is on day one, and I think it's about twice what you previously outlined, what's driving this increase? And recognizing this is a pretty big number to start, I'm just wondering how you're thinking about potential upside to that year-one target given what seems to be strong momentum in identifying opportunities in the early going. Thank you. Hi, Doug. So look, I mean, our underwriting model assumed roughly 4%, 4.5% of the pro forma cost base of Waters standalone plus the acquired business.
Doug Schenkel: I actually just have one topic I'd like to cover just on the synergy targets. I think your initial year-one guidance assumes you cut 5% to 6% of the acquired businesses' OpEx, assuming I have that math right. So I guess one question would be, do I have that math right? And if so, recognizing this is on day one, and I think it's about twice what you previously outlined, what's driving this increase? And recognizing this is a pretty big number to start, I'm just wondering how you're thinking about potential upside to that year-one target given what seems to be strong momentum in identifying opportunities in the early going. Thank you.
Thank you our initial year, one guidance assumes you've got 5%, 6% of the acquired businesses Opex, assuming I have that math right. So.
So I guess one question with the joy of that math right and if so recognizing this is on day, one and I think it's about twice what you previously outlined what's driving this increase and recognizing this is a pretty big number to start I'm, just wondering how youre thinking about potential upside to that year one target.
Given what seems to be strong momentum and identifying opportunities and you're like all right. Thank.
Amol Chaubal: Hi, Doug. So look, I mean, our underwriting model assumed roughly 4%, 4.5% of the pro forma cost base of Waters standalone plus the acquired business.
Thank you.
Hi, Doug So look I mean, our underwriting model assume roughly 4% four four and half percent of pro forma cost space.
Water Standalone plus the acquired business.
And that.
Amol Chaubal: That had certain elements baked into it, like site consolidations, like sort of commercial and technology. And also, it did not include certain elements in the underwriting. When you compare and contrast it versus deals of this size, you typically see sort of 6% number. What Udit and Chris Ross achieved at MilliporeSigma was more like 8% number. We haven't baked in that level of targets in our underwriting because, one, we want to give ourselves some space. And two, for a deal of this size, there's always skeletons that you find, and it gives this room to cover for that. If you now look at our guide, we're pretty much on track to deliver exactly what we said in our deal announcement.
Amol Chaubal: That had certain elements baked into it, like site consolidations, like sort of commercial and technology. And also, it did not include certain elements in the underwriting. When you compare and contrast it versus deals of this size, you typically see sort of 6% number. What Udit and Chris Ross achieved at MilliporeSigma was more like 8% number. We haven't baked in that level of targets in our underwriting because, one, we want to give ourselves some space. And two, for a deal of this size, there's always skeletons that you find, and it gives this room to cover for that. If you now look at our guide, we're pretty much on track to deliver exactly what we said in our deal announcement.
Had certain elements baked into it.
Site consolidations like sort of commercial and technology.
And also did not include certain elements in the underwriting.
When you compare and contrast street towards this deals of this size.
Typically see sort of 6% number what would it increase would also achieved at Sigma millipore was more like 8% number.
We haven't baked in that level of targets in our underwriting because one we wanted to give ourselves some space.
And two you know.
For a deal of besides there's always skeletons that you're fine.
This room to cover for that.
If we now look at our guide we're pretty much on track to deliver exactly what we said in our deal announcement.
Amol Chaubal: We feel really good that after having done a lot of work over the last several months, we are well on track to deliver our deal announcement commitments. Your next question will come from Matt Larew with William Blair. Hi. Good morning. Sticking with BD and maybe thinking about the revenue synergy sides, the results from the most recent quarter called out a number of issues, but maybe even over the last couple of years might be suggestive of a business in need of commercial investment to improve execution. How do you think about the level of investment needed for the business long-term and how that perhaps works with the idea of the EBIT contribution you're hoping to get from revenue synergies? Matt, that's a really good question and something that we invested a lot of time in doing the integration planning.
Amol Chaubal: We feel really good that after having done a lot of work over the last several months, we are well on track to deliver our deal announcement commitments.
And we feel really good that after having done a lot of work over the last several months, we are well on track to deliver our deal announcements commitments.
Operator: Your next question will come from Matt Larew with William Blair.
Your next question will come from Matt <unk> with William Blair.
Matt Larew: Hi. Good morning. Sticking with BD and maybe thinking about the revenue synergy sides, the results from the most recent quarter called out a number of issues, but maybe even over the last couple of years might be suggestive of a business in need of commercial investment to improve execution. How do you think about the level of investment needed for the business long-term and how that perhaps works with the idea of the EBIT contribution you're hoping to get from revenue synergies?
Hi, good morning.
Sticking with BD, maybe thinking about the revenue synergy side.
The results from the most recent quarter you called out a number of issues, but even over the last couple of years might be suggestive of a business and we have commercial investment.
To improve execution.
How do you think about the level of investment needed for the business long term and how that.
Perhaps works with the idea of the EBIT contribution youre, hoping to get from revenue synergies.
Udit Batra: Matt, that's a really good question and something that we invested a lot of time in doing the integration planning.
That's a really good question and something that we invested a lot of time in.
Doing the integration planning now you take.
Amol Chaubal: Now, you take what I mentioned on the pricing discipline or launch readiness. We have central teams that we will now deploy into the businesses, into the acquired businesses, to implement this pricing discipline and train the teams locally and eventually leave a few of these people behind to manage that on a day-to-day basis, something we've done in the past as well. So the pricing discipline that we've seen at Waters or TA or clinical in the past will now be applied to the new divisions in the same way. So there will be commercial investment to ensure operational excellence, be it on launch readiness, be it on pricing. And equally, we've looked at separately the amount of resources that are going after the launches, be it the FX on the microbiology business, be it BD COR, where it is enhancing HPV testing across the overall population.
Udit Batra: Now, you take what I mentioned on the pricing discipline or launch readiness. We have central teams that we will now deploy into the businesses, into the acquired businesses, to implement this pricing discipline and train the teams locally and eventually leave a few of these people behind to manage that on a day-to-day basis, something we've done in the past as well. So the pricing discipline that we've seen at Waters or TA or clinical in the past will now be applied to the new divisions in the same way. So there will be commercial investment to ensure operational excellence, be it on launch readiness, be it on pricing. And equally, we've looked at separately the amount of resources that are going after the launches, be it the FX on the microbiology business, be it BD COR, where it is enhancing HPV testing across the overall population.
You take what I mentioned on the pricing discipline, our launch readiness, we have central teams that we will now deploy into the businesses into the acquired businesses.
To implement this pricing discipline and train the teams locally and eventually leave a few of these people behind to manage that on a day to day basis, something we've done in the past as well so the pricing discipline that we've seen at waters, our da or clinical and the boss will now be applied to the new divisions in the same way so that it will be commercial investment.
To ensure operational excellence be it on launch readiness be it on pricing and equally we've looked at separately.
The amount of resources that are going after the launches be it the FX Si on the microbiology business be it a BD cor, where it is enhancing HPV testing across our across the overall population or on the flow cytometry side, we've taken specialists and move them into the different.
Amol Chaubal: Or on the flow cytometry side, we've taken specialists and moved them into the different businesses, equally investing further in commercial readiness. So we feel pretty good about the resources we've put against improving the execution rhythm, but also getting a stronger uptake of the new products. Thank you. Your next question will come from Casey Woodring with J.P. Morgan. Great. Thank you for taking my questions. So another strong quarter of chemistry performance. Curious if you could just unpack that for us. How much of that was price? How much was new product contribution and bioseparations? And as a follow-up on pricing, can you just elaborate? You had talked about, I think it was 100 to 200 basis points, a pricing improvement with a high stick rate in that business. So how do you see pricing evolving here in chemistry within that 6% 2026 guidance framework? Thank you.
Udit Batra: Or on the flow cytometry side, we've taken specialists and moved them into the different businesses, equally investing further in commercial readiness. So we feel pretty good about the resources we've put against improving the execution rhythm, but also getting a stronger uptake of the new products.
Business is equally investing further in commercial readiness. So we feel pretty good about the resources we have.
<unk> put against.
Improving the execution rhythm, but also getting a stronger uptake of the new products.
Thank you.
Matt Larew: Thank you.
Operator: Your next question will come from Casey Woodring with J.P. Morgan.
Your next question will come from Casey Woodring with J P. Morgan.
Casey Woodring: Great. Thank you for taking my questions. So another strong quarter of chemistry performance. Curious if you could just unpack that for us. How much of that was price? How much was new product contribution and bioseparations? And as a follow-up on pricing, can you just elaborate? You had talked about, I think it was 100 to 200 basis points, a pricing improvement with a high stick rate in that business. So how do you see pricing evolving here in chemistry within that 6% 2026 guidance framework? Thank you.
Great. Thank you for taking my questions. So another strong quarter of chemistry performance. Just curious if you could just unpack that for us how much of that was price how much was new product contribution in <unk> as a follow up.
On pricing can you just elaborate you talked about I think it was 100 to 200 basis points of pricing improvement with a high stick rate in that business. So how do you see pricing evolving here in chemistry within that 6% 226 guidance framework. Thank you.
Amol Chaubal: Let me start with this, Casey, and Amol will elaborate. Look, very happy with what we're seeing on chemistry, 12% growth for the year, seeing really nice momentum already in Q1 with the innovation. And I mean, basically, it's a mix of what you just mentioned earlier. These are highly innovative products that command a price premium. From a pipeline and product perspective, as I mentioned in the prepared remarks, we've built on the MaxPeak Premier technology, which is bioinert, which sort of targets bioinert surfaces of all types with SEC columns, with oligonucleotides, with slalom chromatography. And sort of the newest kid on the block is the affinity chromatography where we're attaching antibodies to particles. And here, super excited about what's going to come from BD with the capability in biology and antibody preparation so we can prepare specific antibodies to conjugate to our particles.
Udit Batra: Let me start with this, Casey, and Amol will elaborate. Look, very happy with what we're seeing on chemistry, 12% growth for the year, seeing really nice momentum already in Q1 with the innovation. And I mean, basically, it's a mix of what you just mentioned earlier. These are highly innovative products that command a price premium. From a pipeline and product perspective, as I mentioned in the prepared remarks, we've built on the MaxPeak Premier technology, which is bioinert, which sort of targets bioinert surfaces of all types with SEC columns, with oligonucleotides, with slalom chromatography. And sort of the newest kid on the block is the affinity chromatography where we're attaching antibodies to particles. And here, super excited about what's going to come from BD with the capability in biology and antibody preparation so we can prepare specific antibodies to conjugate to our particles.
Let me start with this case, Ian Mohr will elaborate look very happy with what we're seeing on chemistry at 12% growth for the year.
Seeing really nice momentum already in Q1 with the innovation and I mean, basically it's a mix of what you. Just mentioned earlier. These are highly innovative products that command a price premium.
From a pipeline and product perspective, as I mentioned in the prepared remarks, we built on the Max peak Premier technology, which is <unk>, which sort of targets <unk> surfaces of all of all types.
With SEC columns are with.
Oligonucleotides with slalom chromatography, and the and sort of the newest kid on the block is the affinity chromatography, where we're attaching antibodies to particles and here are super excited about what's going to come from BD with capability in biology, and antibody preparation. So we can prepare specific antibodies to conjugate to our political so.
Amol Chaubal: So feel very good about what's been happening and a nice momentum already at the start of the year. Amol, do you want to talk about pricing? Yeah. I mean, on chemistry alone, Casey, as we had outlined, chemistry, we are able to get an amazing stick rate on our list price increases. So for like-for-like SKU, like-for-like geography, we are generating close to 400, 450 basis points on chemistry. On the overall portfolio basis, we are generating about 200 basis points of like-for-like SKU, like-for-like geography that doesn't include upsell. And that's sort of running ahead of what we outlined at our investor day. But more critically, that's a significant opportunity that lies ahead of us for BD, remember, because Waters back pre-COVID was 50-ish basis points of year-over-year price. And now we are consistently delivering 200 basis points plus. And BD is exactly that, right?
Udit Batra: So feel very good about what's been happening and a nice momentum already at the start of the year. Amol, do you want to talk about pricing?
I feel very good about what's been happening and a nice momentum already at the start of the year I am all you want to talk about pricing Jeremy on chemistry alone Casey.
Amol Chaubal: Yeah. I mean, on chemistry alone, Casey, as we had outlined, chemistry, we are able to get an amazing stick rate on our list price increases. So for like-for-like SKU, like-for-like geography, we are generating close to 400, 450 basis points on chemistry. On the overall portfolio basis, we are generating about 200 basis points of like-for-like SKU, like-for-like geography that doesn't include upsell. And that's sort of running ahead of what we outlined at our investor day. But more critically, that's a significant opportunity that lies ahead of us for BD, remember, because Waters back pre-COVID was 50-ish basis points of year-over-year price. And now we are consistently delivering 200 basis points plus. And BD is exactly that, right?
Our client in chemistry, we are able to get an amazing speculated on our list price increase or a shop or like for like SKU like for like geography, we're generating close to 440 or 50 basis points on chemistry.
On the overall portfolio basis, we're generating about 200 basis points of like for like SKU like for like geography, but it doesn't include upsell.
And that's sort of running ahead of what we outlined at our Investor day, but more critically that's a significant opportunity that lies ahead of us for BD remember because.
Waters back pre Covid was 50 ish basis points of your audio price and now we are consistently delivering 200 basis points, plus and BD is exactly that clients like historically, they have done somewhere between 40 to 50 basis points and a meaningful opportunity ahead of us.
Amol Chaubal: Historically, they've done somewhere between 40 to 50 basis points and a meaningful opportunity ahead of us to reapply our blueprint that has been so successful. Great. Thank you. Your next question will come from Puneet Souda with Leerink. Yeah. Hi. Udit, Amol, and Caspar, thanks for taking my question. If I could circle back to an earlier question around the conservatism you were taking in the acquired assets growth. Obviously, those numbers are lower versus the expectations you had earlier. Understand that you're baking in pricing and KPI discipline that you're going to bring about. But you are in markets that are different to what pharma, QA/QC, have been. So maybe just I would love to understand, if you could, how much of a cushion there is in these numbers? How adjusted are they?
Amol Chaubal: Historically, they've done somewhere between 40 to 50 basis points and a meaningful opportunity ahead of us to reapply our blueprint that has been so successful.
To reapply, our blueprint that has been so successful.
Great. Thank you.
Casey Woodring: Great. Thank you.
Operator: Your next question will come from Puneet Souda with Leerink.
Your next question will come from Puneet <unk> with Leerink.
Puneet Souda: Yeah. Hi. Udit, Amol, and Caspar, thanks for taking my question. If I could circle back to an earlier question around the conservatism you were taking in the acquired assets growth. Obviously, those numbers are lower versus the expectations you had earlier. Understand that you're baking in pricing and KPI discipline that you're going to bring about. But you are in markets that are different to what pharma, QA/QC, have been. So maybe just I would love to understand, if you could, how much of a cushion there is in these numbers? How adjusted are they?
Yes, hi.
All in cost for thanks for taking my question.
If I could circle back to an earlier question around the.
Conservatism you were taking in.
In the acquired assets growth, obviously, those numbers are lower versus the expectations you had earlier I understand you.
Are you baking in pricing and Kpis discipline that youre going to bring about but you are end markets that are <unk>.
Different to what pharma QA QC have been so maybe just I would love to understand if you could.
How much.
Offer cushion there is in these numbers.
Adjusted or they could if you could give us a sense because I think that's the number one question, we're getting from investors as to the Prudence you are baking in for the acquired portfolio.
Amol Chaubal: If you could give us a sense because I think that's the number one question we're getting from investors as to the prudence you're baking in for the acquired portfolio. Yeah. So let me start, and then Amol will give you the parts. Look, I mean, we're not baking in just to sort of correct the question itself. We're not baking in the pricing improvements or the deal desk and the launch readiness into the numbers. Amol, do you want to describe the details? Yeah. I mean, look, we are baking in primarily the headwind from China DRG. And at this point, it's only prudent to sort of bake that in. And we are also baking in some continued slowness coming out of other elements that are associated with China or the academic and government market.
Puneet Souda: If you could give us a sense because I think that's the number one question we're getting from investors as to the prudence you're baking in for the acquired portfolio.
Udit Batra: Yeah. So let me start, and then Amol will give you the parts. Look, I mean, we're not baking in just to sort of correct the question itself. We're not baking in the pricing improvements or the deal desk and the launch readiness into the numbers. Amol, do you want to describe the details?
So let me start and minimal will give you the parts look I mean, we're not baking in just to sort of correct. The question itself, we're not baking in the pricing improvements are the.
Are the deal desk and the launch readiness into the into the numbers I am already wanted to describe.
The details.
Amol Chaubal: Yeah. I mean, look, we are baking in primarily the headwind from China DRG. And at this point, it's only prudent to sort of bake that in. And we are also baking in some continued slowness coming out of other elements that are associated with China or the academic and government market.
Breaking in primarily the headwind from China Dr. Shree.
At this point, it's only prudent to sort of baked in.
And we are also baking in some continued snow slowness coming out of other elements that are associated with China, all the academic and government market, but again when you look at our own water Standalone U S AMG performance.
Amol Chaubal: But again, when you look at our own Waters standalone US ANG performance, it's a tale of two worlds, right? So there is a clear, meaningful upside if we can reapply our success to some of these parts, like what we've done in China, like what we've done with US ANG. But at the beginning of the year, right out of the gate, we want to be prudent. Got it. That's helpful. And then was there any contribution from extra selling days in Q1 that you're contemplating? So I mean, our Q1 guide reflects 4 extra working days. Your next question will come from Subbu Nambi with Guggenheim. Hey, guys. Thank you for taking my question. Amol, what does operating margin progression look like this year with the addition to BD? What prudence is in those risk-adjusted assumptions given it's a cleaner base? Yeah.
Amol Chaubal: But again, when you look at our own Waters standalone US ANG performance, it's a tale of two worlds, right? So there is a clear, meaningful upside if we can reapply our success to some of these parts, like what we've done in China, like what we've done with US ANG. But at the beginning of the year, right out of the gate, we want to be prudent.
Tale of two worlds right. So there is a clear meaningful upside if we can reapply our success to some of these parts like what we've done in China like what we've done with U S. LNG.
At the beginning of the year right out of the gate, we wanted to be prudent.
Got it that's helpful. And then was there any contribution from extra selling days in Q1 that youre contemplating.
Puneet Souda: Got it. That's helpful. And then was there any contribution from extra selling days in Q1 that you're contemplating?
Amol Chaubal: So I mean, our Q1 guide reflects 4 extra working days.
I mean, our Q1 guide reflects four extra working days.
Operator: Your next question will come from Subbu Nambi with Guggenheim.
Hum.
Your next question will come from <unk> with Guggenheim.
Subbu Nambi: Hey, guys. Thank you for taking my question. Amol, what does operating margin progression look like this year with the addition to BD? What prudence is in those risk-adjusted assumptions given it's a cleaner base?
Thank you for taking my question.
Our water operating margin progression look like this year the division to be more prudent.
In those risk adjusted assumptions given ethylene obi.
Yeah look I mean.
Udit Batra: Yeah.
Amol Chaubal: Look, I mean, as we came into Q4, we said we have few strategic R&D investments that could accelerate growth, particularly in bioseparations and informatics. And you're seeing the results of that growth on our top line. So we took the opportunity to accelerate some of those investments without changing our long-term margin algorithm, right? So coming into 2026, we're back to 31.3%, which we feel really good about. And the BD Biosciences and Diagnostics Solutions business is coming in at 22.4%.
Udit Batra: Look, I mean, as we came into Q4, we said we have few strategic R&D investments that could accelerate growth, particularly in bioseparations and informatics. And you're seeing the results of that growth on our top line. So we took the opportunity to accelerate some of those investments without changing our long-term margin algorithm, right? So coming into 2026, we're back to 31.3%, which we feel really good about. And the BD Biosciences and Diagnostics Solutions business is coming in at 22.4%.
As we came into fourth quarter, we said we have few.
Strategic R&D investments that could accelerate growth, particularly in bio separations and informatics and youre seeing the results on Tac growth on our top line. So we took the opportunity.
Accelerates some of those investments without changing our long term margin on galata, Rachel packet, so coming into 2026 year back to 31, 3%, which we feel really good about and the BD Biosciences and diagnostic solutions business is coming in at 22, 4% so narrow for.
Amol Chaubal: So net of revenue and cost synergies, that allows us to deliver 28.1% margin, which is perfectly in line with how we announced the deal where we said, "Look, we'll expand the margin of the pro forma company from 27% to 32% over five years." And where we are coming in on 2026 is exactly in line with a little over 100 basis points in the first year. Thank you so much. This concludes the Q&A portion of the call. I will now hand it back to Udit. Thank you. Look, I mean, guys, thank you very much for your attention today.
Udit Batra: So net of revenue and cost synergies, that allows us to deliver 28.1% margin, which is perfectly in line with how we announced the deal where we said, "Look, we'll expand the margin of the pro forma company from 27% to 32% over five years." And where we are coming in on 2026 is exactly in line with a little over 100 basis points in the first year.
Revenue and cost synergies that allows us to deliver 28, 1% margin, which is perfectly in line with how we announced the deal where we said look we will expand the margin of the pro forma company from 27% to 32% over five years and where we are coming in on 2026. He was exactly in line with.
Below 100 basis points in the first year.
Subbu Nambi: Thank you so much.
Thank you so much.
Operator: This concludes the Q&A portion of the call. I will now hand it back to Udit.
Yeah.
This concludes the Q&A portion of the call I will now hand, it back to you with it.
Udit Batra: Thank you. Look, I mean, guys, thank you very much for your attention today.
Thank you look I mean, guys. Thank you very much for your attention today as we get into the new chapter for waters, we're starting our guidance for 2026 with again, an industry leading growth for the pro forma business.
Amol Chaubal: As we get into the new chapter for Waters, we're starting our guidance for 2026 with, again, an industry-leading growth for the pro forma business, really coming out of the gate strong on operational execution and synergies with $55 million on cost and $50 million on revenue side, which yields 100 basis points of margin expansion already in year one and almost a 1% accretion in less than a year. So feel very good about where we're starting. Thank you very much for your support, and look forward to talking to you again.
Udit Batra: As we get into the new chapter for Waters, we're starting our guidance for 2026 with, again, an industry-leading growth for the pro forma business, really coming out of the gate strong on operational execution and synergies with $55 million on cost and $50 million on revenue side, which yields 100 basis points of margin expansion already in year one and almost a 1% accretion in less than a year. So feel very good about where we're starting. Thank you very much for your support, and look forward to talking to you again.
Really coming out of the gate strong on operational execution and synergies with $55 million on cost and $50 million on revenue side.
Which you needed a 100 basis points of margin expansion already in year, one and almost a 1% accretion.
In in less than a year or so feel very good about where we're starting thank you very much for your support and look forward to talking to you again.