The Waters Corporation develops analytical instruments for use in the pharmaceutical, life science, biochemical, industrial, academic, and government industries. It develops primarily high performance liquid chromatography (“HPLC”), ultra performance liquid chromatography (“UPLC®” and together with HPLC, referred to as “LC”), mass spectrometry (“MS”), thermal analysis, rheometry and calorimetry instruments. The company markets its instruments in the United States, Europe, and Asia. Due to the large capital expenditure of its instruments Water's revenues experience seasonality and can fluctuate according to capital spending patterns of customers, tending to be larger in the fourth quarter of each year.
For 2010 the company reported product sales of $1,167 million and service sales of $477 million dollars; an increase from 2009 of 11% and 7%, respectively. The increase in product sales was due primarily to improved demand by customers as a result of improved economic conditions and an increase in sales from its newly introduced UPLC H-Class, SYNAPT G-2 and Xevo Q-Tof instrument systems. Service sales were up due to increased sales of service plans and billings because of a higher installed base of customers.
WAT's customers often stock up on lab consumables and equipment at the end of the year, when funding is abundant (for example, NIH funding is distributed to labs towards the end of the calendar year). WAT's revenues thus fluctuate throughout the year and are strongest in the last quarter of the calendar year. NIH funding is not completely stable, either - economic pressures may result in a stagnation of NIH funding, which has been growing at 2-3% in the past few years, but is not expected to increase in the near future. WAT's customers from academic and government research labs are directly affected by the limitations of NIH grant funding; a lack of funding results in fewer laboratory product and equipment purchases and adversely affects WAT's sales revenues.
The company competes globally primarily on the basis of instrument performance, reliability, service and, to a lesser extent, price. Some of these competitors include: