01—Abstract
Summary
Summary of the 10-Q filed November 4, 2025. Cited figures are marked; the original filing is the authoritative source.
Waters Corporation reported third-quarter 2025 total net sales of $799.9 milliona, up 8% from $740.3 million a year earlier, and nine-month net sales of $2.23 billion, up 7%.
Growth was driven by strong customer demand for Waters Division products and services across most geographies, end markets and product lines. Chemistry consumables sales rose 14% in the quarter and Waters instrument systems rose 6%. Operating income fell 9% to $192.1 millionb in the quarter, reflecting approximately $31 million of transaction and integration costs tied to the Merger, $6 million of ERP implementation expenses and higher selling and administrative costs.
Net income was $148.9 millionc, or $2.50 per diluted share, versus $161.5 million, or $2.71, a year earlier. For the nine months, net income rose to $417.4 million, or $7.00 per diluted share, from $406.4 million, or $6.83. The pending Reverse Morris Trust transaction to combine Becton, Dickinson and Company's Biosciences & Diagnostic Solutions business dominates the balance sheet outlook.
The transaction is valued at approximately $17.5 billiond, with BD shareholders expected to own about 39.2% and existing Waters shareholders about 60.8% of the combined company. It is expected to close around the end of the first quarter of 2026. SpinCo is expected to incur $4 billion of new debt that Waters would assume, and Waters has a $1.8 billion 364-day bridge facility commitment.
The Company must pay a $733 million termination fee in certain circumstances, and transaction-related expenses and financing fees are estimated at about $140 million in total. Total debt was $1.41 billion at September 27, 2025, down from $1.63 billion at December 31, 2024, and cash and cash equivalents rose to $459.1 million. Net cash provided by operating activities was $488.0 million for the nine months, compared with $522.0 million a year earlier.
Investors should note that the filing flags tariff exposure, the U.S. government shutdown that began in October 2025 as a potential source of merger-approval delays, and a possible Waters Special Dividend of zero to approximately $1.8 billion depending on the share count issued in the merger. The Company has not paid dividends and has no current plans to do so.
02—Key points
Key Highlights
- Third-quarter 2025 total net sales of $799.9 million, up 8% from $740.3 million; nine-month net sales of $2.23 billion, up 7%.
- Third-quarter operating income of $192.1 million, down 9% from $211.1 million, including about $31 million of Merger transaction and integration costs.
- Third-quarter diluted EPS of $2.50 versus $2.71 a year earlier; nine-month diluted EPS of $7.00 versus $6.83.
- Pending Merger with BD's Biosciences & Diagnostic Solutions business, valued at about $17.5 billion, expected to close around the end of Q1 2026, with a $733 million termination fee payable in certain circumstances.
- Total debt declined to $1.41 billion at September 27, 2025 from $1.63 billion at December 31, 2024, while cash and cash equivalents increased to $459.1 million.
- Nine-month operating cash flow of $488.0 million versus $522.0 million a year earlier, reflecting a $24 million increase in tax payments and $34 million of ERP-related costs.
- Chemistry consumables sales grew 14% in the third quarter, driven by column and application-specific testing kit demand from pharmaceutical customers.
03—One dollar
Follow one dollar
Of each $1.00 of revenue in Q3 FY2025, Waters kept $0.19.
- Revenue$799.9M100.0%
- Cost of revenue−$327.8M41.0%
- Gross profit$472.1M59.0%
- Operating costs−$280.0M35.0%
- Operating income$192.1M24.0%
- Interest, other & tax−$43.2M5.4%
- Net income$148.9M18.6%
04—Financials
Financial Highlights
Figures from 10-QQ3 FY2025filed November 4, 2025Financial Statements
Q3 FY2025 against Q3 FY2024
| Line item | Q3 FY2025Q3 FY2024 | Change |
|---|---|---|
| Revenue | $799.89M$740.30M | +8.0% |
| Cost of Revenue | $327.81M$301.65M | +8.7% |
| Gross Profit | $472.08M$438.65M | +7.6% |
| R&D Expenses | $53.64M$45.34M | +18.3% |
| SG&A Expenses | $214.23M$169.10M | +26.7% |
| Operating Expenses | $607.77M$529.17M | +14.9% |
| Operating Income | $192.11M$211.13M | −9.0% |
| Interest Expense | $26.64M$21.43M | +24.3% |
| Net Income | $148.92M$161.50M | −7.8% |
| EPS (Basic) | $2.50$2.72 | −8.1% |
| EPS (Diluted) | $2.50$2.71 | −7.7% |
| Shares Outstanding (Basic) | 59.53M59.37M | +0.3% |
| Shares Outstanding (Diluted) | 59.62M59.50M | +0.2% |
05—Questions
Frequently Asked Questions
What is driving the Merger-related cost and balance sheet changes investors should watch?
The filing estimates about $140 million in total transaction-related expenses and financing fees if the Merger closes, with roughly $50 million incurred through September 27, 2025. SpinCo is expected to incur $4 billion of new debt to fund a cash distribution to BD, which Waters would assume at closing. Waters also has a $1.8 billion 364-day bridge facility commitment, and a Waters Special Dividend of zero to about $1.8 billion may be required depending on the share issuance.
How much could Waters owe if the Merger is terminated?
The Merger Agreement requires Waters to pay BD a termination fee of $733 million if the agreement is terminated under certain circumstances. The agreement also allows either party to terminate if the Merger is not consummated by July 13, 2026, which may be extended to October 13, 2026 if required regulatory approvals are pending.
Which product lines drove third-quarter growth?
Waters chemistry consumables sales increased 14% and Waters instrument system sales increased 6%, with Waters service sales up 9%. TA instrument systems rose 3%, while U.S. TA sales declined 9% in the quarter on lower demand. The filing attributes the chemistry growth to columns and application-specific testing kits for pharmaceutical customers.
Why did operating income decline despite higher sales?
Operating income fell 9% in the third quarter, primarily because the higher sales volume was offset by sales mix changes, merit increases and approximately $31 million of Merger transaction and integration costs. Selling and administrative expenses rose 27% in the quarter, and $6 million of ERP implementation expenses were also included.
Does Waters pay dividends, and are tariffs a material risk?
The Company has not paid any dividends and has no plans at this time to pay them in the future. The filing states that tariffs could have a significant impact on the statements of operations and cash flows, and that Waters expects actions and policies to offset a substantial portion of that impact, but it cannot assure that tariffs will not have a material effect.
06—Continue