Waters Corporation

Company Overview

Business Model: Waters Corporation is a global leader in analytical instruments and software, specializing in high-performance liquid chromatography (HPLC), ultra-performance liquid chromatography (UPLC), and mass spectrometry (MS) technology systems. The Company designs, manufactures, sells, and services these instruments, along with complementary products such as chromatography columns, precision chemistry consumables, and comprehensive post-warranty service plans. Additionally, through its TA Instruments product line, Waters Corporation provides thermal analysis, rheometry, and calorimetry instruments. The Company also develops and supplies advanced software-based products that interface with its own and other manufacturers' instruments. Its products are primarily used in research and development, quality assurance, and other laboratory applications across pharmaceutical, clinical, biochemical, industrial, nutritional safety, environmental, academic, and governmental sectors.

Market Position: Waters Corporation holds a strong market position, believing itself to be one of the world's largest manufacturers and distributors of LC and LC-MS instrument systems, chromatography columns, other consumables, and related services, based on 2024 independent marketing research and competitor sales figures. The Company competes on product performance, reliability, and service, with a focus on innovation and new product development. Its ACQUITY UPLC Systems and ACQUITY UPLC Columns demonstrate high synergy, enhancing its chromatographic column business. The Company's direct sales and service organization is one of the largest exclusively focused on its analytical workflows.

Recent Strategic Developments:

• Acquisition of Wyatt Technology (May 2023): Expanded Waters Corporation's portfolio with innovative light scattering and field-flow fractionation instruments, software, accessories, and services, increasing exposure to large molecule applications.
• Acquisition of Halo Labs (May 2025): Acquired for $35 million, net of cash, adding specialized imaging technologies for detecting, identifying, and counting interfering materials in therapeutic products (e.g., cell, protein, gene therapies), complementing Wyatt Technology's particle analysis capabilities.
• Acquisition of BDS Business (February 2026 - Subsequent Event): Completed the acquisition of the Biosciences and Diagnostic Solutions businesses of Becton, Dickinson and Company for $16.8 billion, including assumed debt. This transformative combination aims to establish Waters Corporation as an innovative global leader in life sciences and diagnostics, broadening capabilities across infectious disease detection, immunology, cancer research, and multiomics tools. The transaction was structured as a Reverse Morris Trust.
• Product Launches (2023-2025): Introduced the DynaPro ZetaStar instrument for nanoparticle analysis (2023), HPLC CONNECT software for digital synchronization between LC systems and Wyatt Technology's MALS instruments (2024), Alliance iS HPLC System for reduced compliance risk and enhanced security (2023, expanded in 2025), Oasis WAX/GCB and GCB/WAX for PFAS Analysis Cartridges (2024), GTxResolve Premier Size Exclusion Chromatography 1000Å 3-micron Columns (2024), BioResolve Protein A Affinity Columns with MaxPeak Premier Technology for precise titer measurements (2025), Charged Aerosol Detector for sensitive analyte measurements (2025), next-generation Xevo TQ Absolute IVD Mass Spectrometer for clinical diagnostics (2023), targeted imaging mass spectrometer based on Xevo TQ Absolute Tandem Quadrupole Mass Spectrometer (2023), updates to SELECT SERIES MRT System for higher resolution and faster scan rates (2023), BioAccord LC-MS System and Waters Andrew+ Pipetting Robot integration for bioprocess solutions (2023), Xevo TQ Absolute XR Mass Spectrometer for high-throughput trace-level analyses (2025), and Waters Xevo Charge Detection Mass Spectrometer for mega-mass biomolecules (2025).
• ERP System Implementation: Approved a new worldwide ERP system in December 2024, a multi-year process expected to cost approximately $130 million in total.

Geographic Footprint: Waters Corporation operates globally with 20 United States facilities and 70 international facilities, including sales and field offices.

• Net Sales Distribution (2025):
  • Asia: 32.9% ($1,040.4 million), with China representing 13.8% ($437.5 million) and Asia Other 19.1% ($602.9 million).
  • Americas: 36.7% ($1,161.5 million), with United States representing 30.5% ($965.8 million) and Americas Other 6.2% ($195.7 million).
  • Europe: 30.4% ($963.4 million).
• Approximately 69% of net sales in 2025 were generated outside the U.S.
• Key Manufacturing Locations: United States (Milford, Taunton, Golden, New Castle, Santa Barbara, Eden Prairie, Lindon), Ireland (Wexford), United Kingdom (Wilmslow, Birmingham), Germany (Hüllhorst), and Singapore (outsourced manufacturing).

Financial Performance

Revenue Analysis

Profitability Metrics (2025):

• Gross Margin: 59.3%
• Operating Margin: 25.4%
• Net Margin: 20.3%

Investment in Growth:

• R&D Expenditure: $195.7 million (6.2% of revenue) in 2025, up 7% from $183.0 million in 2024.
• Capital Expenditures: $112.7 million in 2025, down from $142.5 million in 2024.
• Strategic Investments:
  • Acquisition of Halo Labs for $35.1 million in cash (net of cash acquired) in May 2025.
  • Anticipated total spending of approximately $130 million for the new ERP system implementation, with $52 million spent through 2025.

Business Segment Analysis

Waters

Financial Performance:

• Revenue: $2.813 billion (+8.0% YoY) in 2025.
• Key Growth Drivers: Strong customer demand across most major geographies, end markets, and product lines. Double-digit chemistry sales growth driven by uptake in columns and application-specific testing kits for pharmaceutical customers. Higher service demand billing in most major regions.
• Product Sales: $1.733 billion (+8.5% YoY) in 2025.
  • Waters instrument systems: $1.102 billion (+6.7% YoY) in 2025, driven by higher customer demand.
  • Chemistry consumables: $0.631 billion (+11.7% YoY) in 2025, driven by continued demand in most major geographies.
• Service Sales: $1.080 billion (+7.3% YoY) in 2025.

Product Portfolio:

• High-performance liquid chromatography (HPLC) and ultra-performance liquid chromatography (UPLC) systems (e.g., ACQUITY UPLC System, Alliance iS HPLC System, Alliance iS Bio HPLC).
• Mass spectrometry (MS) technology systems (e.g., Xevo TQ Absolute IVD Mass Spectrometer, SYNAPT G2-SHD MS System, Xevo TQ Absolute XR Mass Spectrometer, Waters Xevo Charge Detection Mass Spectrometer).
• Light scattering and field-flow fractionation instruments (Wyatt Technology portfolio, e.g., DynaPro ZetaStar, MALS instruments).
• Precision chemistry consumables: Chromatography columns (e.g., ACQUITY UPLC Columns, Waters XBridge Premier GTx BEH size exclusion chromatography columns, BioResolve Protein A Affinity Columns), environmental and nutritional safety testing products (e.g., Certified Reference Materials, Proficiency Testing products, Oasis WAX/GCB and GCB/WAX for PFAS Analysis Cartridges).
• Software: Empower Software, waters_connect Software platform, HPLC CONNECT software, OneLab Software.
• Other: Halo Labs specialized imaging technologies for particle analysis.

Market Dynamics:

• Serves pharmaceutical, clinical, biochemical, industrial, nutritional safety, environmental, academic, and governmental customers.
• Significant end-use markets are pharmaceutical and life science industries.
• In-vitro diagnostic labeled products for clinical diagnostic applications (e.g., newborn screening, therapeutic drug management).
• Competitive positioning in LC and LC-MS instrument systems, chromatography columns, and related services.

TA Instruments

Financial Performance:

• Revenue: $0.352 billion (-0.6% YoY) in 2025.
• Key Growth Drivers: Double-digit sales growth in Asia, offset by weakness in the U.S., driven by strong customer demand for thermal analysis and rheology instrument systems and services.
• Product Sales: $0.244 billion (-1.0% YoY) in 2025.
• Service Sales: $0.108 billion (flat YoY) in 2025.

Product Portfolio:

• Thermal analysis, rheometry, and calorimetry instruments (e.g., Battery Cycler Microcalorimeter Solution, Rheo-IS accessory for Discovery Hybrid Rheometer, Rapid Screening-Differential Scanning Calorimeter, Discovery Core Rheometer, ElectroForce Apex 1 Mechanical Testing Instrument).

Market Dynamics:

• Instruments used in material testing laboratories for predicting suitability and stability of fine chemicals, pharmaceuticals, water, polymers, metals, and viscous liquids.
• Applications in plastics, chemicals, automobiles, pharmaceuticals, and electronics industries.

Subsequent Segment Reorganization: Following the BDS Business Acquisition in February 2026, Waters Corporation has reorganized its existing and new business units into four segments: Waters Analytical Sciences, Waters Biosciences, Waters Advanced Diagnostics, and Waters Materials Sciences. The Company will evaluate its business activities as currently organized to determine its operating and reporting segments for future reporting periods.

Capital Allocation Strategy

Shareholder Returns:

• Share Repurchases: $14.7 million in 2025 (related to the vesting of restricted stock units), $13.5 million in 2024, and $70.3 million in 2023. The Company did not make any open market share repurchases in 2024 or 2025.
• Dividend Payments: Waters Corporation has not declared or paid any dividends on its common stock in its past three fiscal years and does not intend to pay cash dividends in the foreseeable future.
• Future Capital Return Commitments: The Board of Directors authorized the extension of the existing share repurchase program through January 21, 2028, with a remaining authorization of $1.0 billion as of December 31, 2025.

Balance Sheet Position (as of December 31, 2025):

• Cash and Equivalents: $587.8 million
• Total Debt: $1.407 billion
• Net Cash Position: -$819.6 million (Net Debt)
• Credit Rating: Not explicitly disclosed, but debt covenants refer to public debt ratings by certain credit rating agencies.
• Debt Maturity Profile (as of December 31, 2025, in millions):
  • 2026: $460
  • 2027: $0
  • 2028: $50
  • 2029: $300
  • 2030: $200
  • 2031 and thereafter: $400
  • Total: $1,410

Cash Flow Generation:

• Operating Cash Flow: $652.6 million in 2025, a decrease from $762.1 million in 2024. The decrease was driven by additional tax payments, ERP system implementation costs, and transaction/integration costs related to the BDS Business Acquisition.
• Free Cash Flow: $539.8 million in 2025 ($652.6 million Operating Cash Flow - $112.7 million Capital Expenditures).
• Cash Conversion Metrics: Not explicitly detailed in the provided text.

Operational Excellence

Production & Service Model: Waters Corporation maintains high product quality by overseeing each stage of production for its instruments, columns, and chemical reagents. Manufacturing involves a mix of in-house machining, assembly, and testing (e.g., Milford, Massachusetts) and outsourcing of certain electronic components and LC instrument systems/components to contract manufacturing firms (e.g., Singapore). Final assembly, calibrations, and quality control are performed by the Company's engineers. Service offerings are a significant source of revenue, derived from support plans, demand services, spare parts, customer performance validation, and training.

Supply Chain Architecture:

• Key Suppliers & Partners: The Company purchases raw materials (high temperature alloy sheet metal, castings, forgings, pre-plated metals, electrical components) from various vendors. While most are available from multiple sources, some specialized products are from limited or single sources. Outsourced manufacturing partners include well-established contract manufacturing firms in Singapore for LC instrument systems and components.
• Manufacturing Partners: Contract manufacturing firms in Singapore for LC instrument systems and components.
• Technology Partners: Not explicitly detailed beyond general mentions of collaborations.

Facility Network (as of December 31, 2025):

• Manufacturing:
  • Milford, Massachusetts (LC instruments, VICAM products)
  • Taunton, Massachusetts (LC columns, silica/polymeric media; expanded in 2024 with $251 million investment)
  • Wexford, Ireland (LC columns, data/instruments/software components for LC, MS, TA product lines, ERA products, MS products)
  • Golden, Colorado (Analytical Standards & Reagents, ERA product lines)
  • Wilmslow, England (MS products)
  • Birmingham, England (new in 2024, increased capacity for MS instrument components)
  • New Castle, Delaware (TA products)
  • Eden Prairie, Minnesota (TA products)
  • Lindon, Utah (TA products)
  • Hüllhorst, Germany (TA products)
  • Santa Barbara, California (Wyatt products)
  • Singapore (manages Asian outsourced manufacturing and product distribution)
• Research & Development: Milford, Massachusetts (LC products), England (MS products), New Castle, Delaware (materials characterization products), Cambridge, MA, and University of Delaware (strategic, collaborative space).
• Distribution: Milford, Massachusetts; Taunton, Massachusetts; Wexford, Ireland; Golden, Colorado; Wilmslow, England; New Castle, Delaware; Eden Prairie, Minnesota; Lindon, Utah; Hüllhorst, Germany; Santa Barbara, California; Singapore. Also, 82 sales offices and 67 field offices globally.

Operational Metrics:

• Service revenues represented over 35% of Waters sales and more than 25% of TA sales in 2025.
• The Company maintains ISO 9001:2015, ISO 13485:2016, ISO 45001:2018, ISO 14001:2015, ISO/IEC 17025:2017, ISO/IEC 17034:16, and ISO/IEC 17043:2010 certifications across various facilities.

Market Access & Customer Relationships

Go-to-Market Strategy:

• Direct Sales: Waters Corporation maintains one of the largest direct sales and service organizations focused exclusively on its analytical workflows, with 82 sales offices and approximately 4,300 field representatives globally in 2025. Sales representatives manage account relationships, while service representatives handle installation, training, and minimizing instrument downtime.
• Channel Partners: Not explicitly detailed beyond general mentions of third-party sales intermediaries and value-added resellers.
• Digital Platforms: The Company provides comprehensive information through corporate and geographic-specific internet websites and product literature. Consumable products are available through electronic ordering facilities and a dedicated catalog.

Customer Portfolio:

• Enterprise Customers: Includes multinational pharmaceutical companies, generic drug manufacturers, contract research organizations (CROs), biotechnology companies, chemical manufacturers, polymer manufacturers, food and beverage companies, and environmental testing laboratories.
• Customer Concentration: No single customer accounted for more than 2% of the Company's net sales in 2025, 2024, or 2023, indicating a diversified customer base.
• Customer Mix (2025 Net Sales):
  • Pharmaceutical accounts: 59%
  • Other industrial accounts: 30%
  • Academic institutions and governmental agencies: 11%

Geographic Revenue Distribution (2025):

• Asia: $1,040.4 million (32.9% of total revenue)
  • China: $437.5 million (13.8% of total revenue)
  • Asia Other: $602.9 million (19.1% of total revenue)
• Americas: $1,161.5 million (36.7% of total revenue)
  • United States: $965.8 million (30.5% of total revenue)
  • Americas Other: $195.7 million (6.2% of total revenue)
• Europe: $963.4 million (30.4% of total revenue)

Competitive Intelligence

Market Structure & Dynamics

Industry Characteristics: The analytical instrument systems, supplies, and services market is highly competitive and subject to rapid technological change, discovery, and frequent product introductions. The market for consumable LC products is highly competitive and generally more fragmented than the analytical instruments market. Competitive Positioning Matrix:

Direct Competitors

Primary Competitors:

• Waters Segment: Agilent Technologies, Inc., Shimadzu Corporation, Bruker Corporation, Danaher Corporation, Thermo Fisher Scientific Inc.
• TA Instruments Segment: PerkinElmer, Inc., NETZSCH-Geraetebau GmbH, Malvern PANalytical Ltd., Spectris plc, Anton-Paar GmbH.
• Consumable LC Products: Danaher Corporation, Merck KGaA, Agilent Technologies, Inc., General Electric Company, Thermo Fisher Scientific Inc.
• BDS Business (post-acquisition): Danaher Corporation, Revvity, Inc., Cytek Biosciences, Inc., bioMérieux S.A.

Emerging Competitive Threats: New entrants, disruptive technologies, and alternative solutions are continuous threats in this rapidly changing industry. Competitors continuously introduce new products, and some have greater financial resources and broader distribution.

Competitive Response Strategy: Waters Corporation's strategy involves continuous investment in innovation and new product development, focusing on extending, complementing, and updating its existing product offerings. The Company aims to leverage its integrated LC-MS systems and synergistic product lines (e.g., ACQUITY UPLC Instruments and Columns) to maintain and expand its market position.

Risk Assessment Framework

Strategic & Market Risks

• Market Dynamics: Demand for products is sensitive to customer capital spending, governmental regulations (drug, food, water testing, medical devices), funding for academic/governmental institutions, health policy, export controls, and general economic conditions. Unfavorable market conditions in the pharmaceutical sector (59% of 2025 net sales) or consolidations can adversely affect demand.
• Technology Disruption: The industry is subject to rapid technological change. Competitors may introduce new, disruptive technologies or more effective/less costly products, potentially rendering existing product lines obsolete. Failure to develop and introduce products in a timely manner could lead to declining sales.
• Customer Concentration: While no single customer accounts for more than 2% of sales, a significant portion of revenue comes from the pharmaceutical industry, making the Company susceptible to industry-specific downturns or policy changes.

Operational & Execution Risks

• Supply Chain Vulnerabilities: Reliance on limited or single sources for certain specialized raw materials and components. Disruptions due to supplier issues, transportation delays, inflation, geopolitical events, or regulatory actions could impact manufacturing and sales.
• Geographic Concentration: Manufacturing facilities are located in various countries, including the U.S., U.K., Ireland, Germany, and Singapore. Prolonged disruptions at these facilities due to labor difficulties, natural disasters, power interruptions, or cybersecurity incidents could harm operations.
• Capacity Constraints: Not explicitly detailed as a current constraint, but disruptions could lead to production bottlenecks.
• ERP System Implementation: The ongoing multi-year implementation of a new worldwide ERP system requires significant resources and carries risks of disruption, delays, cost overruns, and potential impact on business operations and financial reporting.

Financial & Regulatory Risks

• Demand Volatility: Sales are subject to seasonality, with an increase in the fourth quarter due to customer purchasing habits.
• Foreign Exchange: Approximately 69% of net sales in 2025 were outside the U.S. and primarily denominated in foreign currencies. Significant fluctuations in the U.S. dollar relative to currencies like the Canadian Dollar, Euro, Japanese yen, British pound, and Chinese renminbi can materially affect financial results.
• Credit & Liquidity: The Company assumed $4.0 billion of indebtedness in February 2026 related to the BDS Business Acquisition, significantly increasing its debt levels. This could reduce operational flexibility, increase borrowing costs, and limit investments if cash flow is insufficient or refinancing is not on commercially reasonable terms.
• Regulatory & Compliance Risks: Subject to extensive regulations by federal, state, and foreign governments (health and safety, antitrust, fraud, import/export, privacy, anti-bribery, environmental). Non-compliance can result in recalls, fines, operational restrictions, or cessation of operations. Changes in regulations (e.g., healthcare cost containment, trade policies, AI-related laws) can reduce demand, increase expenses, or impact financial position.
• Data Privacy: Subject to varying data privacy laws (U.S., EU, U.K.). Violations could lead to legal liability, regulatory action, or reputational harm.
• Tax Law Changes: Subject to changing tax laws and audit examinations in various jurisdictions. Changes in corporate income tax rates, transfer pricing, or repatriation rules, as well as the implementation of global minimum tax rules (Pillar Two), could adversely affect cash flow and profitability.

Geopolitical & External Risks

• Geopolitical Exposure: International operations (69% of 2025 net sales) are exposed to political events, wars, terrorism, economic conditions, and regulatory changes. Trade tensions (e.g., U.S. and China tariffs) and the invalidation of certain tariffs by the U.S. Supreme Court introduce uncertainty regarding cost structure and supply chain planning.
• Trade Relations: Trade protection measures, including embargoes, sanctions, and tariffs, can increase costs and reduce sales in affected markets. Increasing global protectionism may restrict access to public tenders in certain countries.
• Sanctions & Export Controls: Compliance requirements and business limitations due to trade restrictions.

Innovation & Technology Leadership

Research & Development Focus: Waters Corporation maintains an active R&D program focused on developing and commercializing products that extend, complement, and update its existing offerings.

• Core Technology Areas: Liquid chromatography (HPLC, UPLC), mass spectrometry, thermal analysis, rheometry, calorimetry, light scattering, field-flow fractionation, and specialized imaging technologies for particle analysis. Significant investment in new product development and existing product enhancements.
• Innovation Pipeline: Development of new microbiology products (expected to take 3-5 years to generate significant sales), new technologies requiring FDA clearance, and continued integration of artificial intelligence (AI) into business operations and products.
• R&D Centers: Milford, Massachusetts (LC products), England (MS products), New Castle, Delaware (materials characterization products), Cambridge, MA, and University of Delaware (strategic, collaborative space).

Intellectual Property Portfolio:

• Patent Strategy: Owns numerous U.S. and foreign patents and has pending applications. Certain technology and software are acquired or licensed from third parties. The Company believes no single patent or group of patents is essential to its business as a whole.
• Licensing Programs: Not explicitly detailed as a revenue generation or strategic partnership program.
• IP Litigation: The Company is subject to potential claims by third-party patent holders for infringement and defends its own IP. Recorded $12 million in patent litigation settlement provisions and related costs in 2024.

Technology Partnerships: Maintains research laboratories at the University of Delaware, serving as a strategic, collaborative space for partnering with academia, research, and industry to accelerate scientific advancements.

Leadership & Governance

Executive Leadership Team

Leadership Continuity: The Company's future success depends on attracting and retaining highly skilled employees, including its executive officers and key management/technical personnel. Management periodically assesses succession planning for key positions. Board Composition: The Board of Directors oversees the Company's information security risk management framework. Further details on independence, expertise areas, and committee structure are incorporated by reference from the 2026 Proxy Statement.

Human Capital Strategy

Workforce Composition:

• Total Employees: Approximately 7,900 employees as of December 31, 2025.
• Geographic Distribution: Approximately 39% of employees are located in the United States.
• Skill Mix: The Company's revenues are highly dependent on technological and product innovations, requiring specialized engineering and other talent (R&D, technical sales and support, field service, precision chemistry and instrument manufacturing, quality assurance, regulatory compliance, finance, and global marketing).

Talent Management:

• Acquisition & Retention: The Company invests in programs, digital platforms, and workshops to build professional and technical skills. It focuses on expanding the pipeline of strong candidates in recruitment processes, including partnerships with organizations that support inclusion.
• Retention Metrics: Not explicitly disclosed, but the Company acknowledges the competitive market for talent and the potential impact of macroeconomic conditions (e.g., wage inflation) on retention.
• Employee Value Proposition: The Company invests in initiatives and programs that support talent development and inclusion and enhance its Total Rewards programs.

Diversity & Development:

• Diversity Metrics: Not explicitly disclosed.
• Development Programs: Employee Circles and Employee Hubs (voluntary, employee-driven resource groups) foster an inclusive culture. Investments in various programs, digital platforms, and workshops for professional and technical skills. Management assesses succession planning and identifies high-potential employees for future growth.
• Culture & Engagement: Fosters a culture of inclusion, believing it maximizes employee performance. The health and safety of employees is a high priority, supported by online and in-person training programs.

Environmental & Social Impact

Environmental Commitments:

• Climate Strategy: Waters Corporation is sensitive to the global debate on climate change. An internal sustainability working group develops robust data on carbon-producing substances to continuously reduce the Company's carbon footprint.
• Emissions Targets: Not explicitly detailed, but the Company aims to continuously reduce its carbon footprint.
• Carbon Neutrality: Not explicitly detailed.
• Renewable Energy: Not explicitly detailed.
• Supply Chain Sustainability: The Company monitors environmental, health, and safety regulations (e.g., EU and China Restrictions on Hazardous Substances, EU Waste Electrical and Electronic Equipment directives). It is subject to SEC rules on conflict minerals and evaluates its supply chain for compliance.

Social Impact Initiatives:

• Community Investment: The Company publishes an annual ESG Report (renamed in 2022) detailing efforts to address environmental impact and uphold social responsibilities.
• Product Impact: Not explicitly detailed.

Business Cyclicality & Seasonality

Demand Patterns:

• Seasonal Trends: Waters Corporation typically experiences seasonality in its orders, reflected as an increase in sales in the fourth quarter. This is a result of purchasing habits for capital goods by many customers who tend to exhaust their spending budgets by calendar year-end.
• Economic Sensitivity: Demand for the Company's products is dependent on customers' capital spending, government funding policies, interest rates, and broader macroeconomic conditions. The analytical instrument market can experience low sales growth, and the pharmaceutical segment (59% of 2025 net sales) is periodically subject to unfavorable market conditions and consolidations.
• Industry Cycles: Certain businesses operate in industries that experience periodic, cyclical downturns.

Planning & Forecasting: The Company's quarterly sales and profits depend substantially on the volume and timing of orders, which are difficult to forecast. Effective forecasting of customer demand and appropriate allocation of R&D expenditures are crucial.

Regulatory Environment & Compliance

Regulatory Framework:

• Industry-Specific Regulations: Waters Corporation is subject to regulation by various federal, state, and foreign governments and agencies in areas such as health and safety, antitrust, fraud and abuse, import/export, privacy and data protection, anti-bribery, and environmental laws. A portion of operations is regulated by the FDA and similar foreign regulatory agencies, covering product design, development, labeling, manufacturing, promotion, sales, and distribution.
• International Compliance: Compliance with multi-jurisdictional requirements is necessary, including industrial standards bodies like the International Standards Organization and agencies like the United States Occupational Safety and Health Administration.
• Trade & Export Controls: Subject to export restrictions, licensing requirements, and sanctions compliance, which can limit business operations.
• Data Privacy: Subject to varying data privacy laws and regulations in the United States, European Union, and United Kingdom, with increasing emphasis on enforcement and compliance costs.

Legal Proceedings: Waters Corporation and its subsidiaries are involved in various lawsuits, claims, investigations, and proceedings in the ordinary course of business. The Company believes it has meritorious arguments in current litigation matters and does not anticipate any material adverse effect on its financial position or results of operations from these, individually or in aggregate. In 2024, the Company recorded $12 million in patent litigation settlement provisions and related costs. No litigation provisions were recorded in 2025.

Tax Strategy & Considerations

Tax Profile:

• Effective Tax Rate: 14.9% in 2025, 15.5% in 2024, and 12.8% in 2023. The 2025 rate differed from the 21% U.S. statutory rate primarily due to the jurisdictional mix of earnings, a discrete benefit of $14 million from the enactment of OBBBA, a $3 million provision related to GILTI tax, and a tax benefit of $3 million on stock-based compensation.
• Geographic Tax Planning: The Company manufactures in the U.S. (21% statutory rate), Ireland (12.5%), the U.K. (25%), and Singapore (17%). It benefits from a Development and Expansion Incentive in Singapore, providing a concessionary income tax rate of 5% on certain income from April 1, 2021, through March 31, 2026. This incentive increased net income by $4 million in 2025, though reduced by $14 million due to the global minimum tax under Pillar Two.
• Tax Reform Impact: The U.S. government enacted the One Big Beautiful Tax Bill Act (OBBBA) on July 4, 2025, which did not have a material impact on the Company's financial position, results of operations, and cash flows for 2025. Foreign jurisdictions began implementing Pillar Two global minimum tax rules in 2024, which also did not have a material impact in 2025.

Insurance & Risk Transfer

Risk Management Framework:

• Insurance Coverage: Waters Corporation maintains cyber insurance to provide financial protection against data breaches.
• Risk Transfer Mechanisms: The Company enters into foreign currency exchange contracts to offset market risk from foreign-currency-denominated sales, interest rate cross-currency swap agreements ($900 million notional value as of December 31, 2025) to hedge foreign currency exchange rate variability on euro-denominated and yen-denominated net asset investments, and interest rate swaps ($150 million notional value as of December 31, 2025) to hedge variable interest payments on its Credit Facility. The Company also enters into standard indemnification agreements in its ordinary course of business, primarily for intellectual property infringement claims and claims related to property damage or personal injury.