The acquisition of Wyatt Technology in May 2023 for $1.3 billion expands Waters' portfolio into large molecule applications. However, the amortization of purchased intangibles and retention agreement costs associated with Wyatt negatively impacted operating income in 2023 and 2024.

Sales in China decreased by 30% from $565 million in 2022 to $397 million in 2024, attributed to economic conditions, trade tensions, and increased competition. This decline necessitated workforce reductions in China.

The company entered into a private Master Note Facility Agreement with NYL Investors LLC, which allows the company to issue senior promissory notes up to an aggregate principal amount of $200 million. This agreement increases the company's borrowing capacity for general corporate purposes.

The company implemented workforce reductions impacting approximately 5% of employees in 2023 and 2% in 2024, primarily in China, to better align resources with growth and innovation strategies. This action is expected to generate cost savings.

The company's board of directors approved the implementation of a new worldwide ERP system, which is expected to provide enhanced operating efficiencies, process alignment, information sharing, and scalability. The transition is expected to be a multi-year process requiring significant investment.

The company has a longstanding information security risk management framework structured according to the National Institute of Standards and Technology Cybersecurity Framework, industry best practices, privacy legislation, and other global and local standards and regulations.

The company's international operations may be negatively affected by political events, wars or terrorism, economic conditions and regulatory changes. Approximately 68% of the company's net sales in 2024 were outside of the United States.

The company generated $397 million of total net sales from China in 2024, down from $565 million in 2022. This significant reduction in sales from China resulted from lower customer demand for our products across all customer classes, driven by various factors.

The company's systems and those of its partners remain potentially vulnerable to cybersecurity threats, any of which could have a material adverse effect on the company's business.

The analytical instrument systems, supplies and services market is highly competitive. Competitors continuously introduce new products and have instrument businesses that are generally more diversified than the company's business.

Competitors may introduce more effective or less expensive products than the company's, which could result in decreased sales. The competitive landscape may transform as a result of potential changes in ownership, mergers and continued consolidations among the company's competitors.

Strategies for organic growth require developing new technologies and bringing these new technologies to market, which could negatively impact the company's financial results.

Cost of sales were flat in 2024 as compared to 2023, primarily due to the change in sales mix and the impact of foreign exchange. In 2023, cost of sales decreased 4% as compared to 2022, primarily due to the change in sales mix and the lower material and freight costs.

Selling and administrative expenses decreased 6% and increased 12% in 2024 and 2023, respectively, as the cost savings from the recent workforce reductions and the absence of costs incurred in the prior year relating to severance charges in connection with the 2023 workforce reduction and the Wyatt acquisition-related due diligence costs were partially offset by an increase in annual incentive compensation expenses.

The decrease in inventory can primarily be attributed to better inventory management and higher sales volume in the second half of 2024.

Research and development expenses increased 5% and decreased 1% in 2024 and 2023, respectively. The increase in research and development expenses in 2024 can be attributed to increases from merit compensation and costs associated with new products and the development of new technology initiatives, being partially offset by lower incentive compensation costs.

The company's products are subject to rapid changes in technology. Rapidly changing technology could make some or all of our product lines obsolete unless the company is able to continually improve our existing products and develop new products.

The Company is beginning to integrate artificial intelligence (“AI”) into its business operations and products and continues to research further uses and opportunities for AI development. As AI is a rapidly developing technology that is still in the early stages of being researched and understood, the development, deployment and use of AI presents novel risks and challenges that have the potential to adversely impact the Company's business.

In December 2024, the company's board of directors authorized the extension of the existing share repurchase program through January 21, 2028. The company's remaining authorization is $1.0 billion.

Net cash used in investing activities included capital expenditures related to property, plant, equipment and software capitalization of $142 million, $161 million and $176 million in 2024, 2023 and 2022, respectively. The decline in 2024 is primarily due to the completion of the Company's new manufacturing facilities.

In July 2024, the Company entered into a private Master Note Facility Agreement (the "Shelf Agreement") with NYL Investors LLC ("NYL") pursuant to which the Company may, at its option, authorize the issuance and sale of senior promissory notes (the "Shelf Notes") up to an aggregate principal amount of $200 million.

The company is subject to foreign and U.S. federal, state and local laws, regulations and ordinances that (i) govern activities or operations that may have adverse environmental effects, such as discharges to air and water as well as handling and disposal practices for solid and hazardous wastes, and (ii) impose liability for the costs of cleaning up and certain damages resulting from sites of past spills, disposals or other releases of hazardous substances.

The company has continued to publish a sustainability report (which was renamed the ESG Report in 2022) on an annual basis. In November 2024, the company published its 2024 ESG Report, detailing the company's efforts to address its environmental impact and uphold its social responsibilities in 2024.

The Company is sensitive to the growing global debate with respect to climate change. An internal sustainability working group develops increasingly robust data with respect to the Company's utilization of carbon producing substances in an effort to continuously reduce the Company's carbon footprint.

The company is subject to risks and uncertainties, including, but not limited to, the following: Risks related to macroeconomic conditions, risks related to our business, risks related to human capital management, risks related to cybersecurity and data privacy, risks related to compliance, regulatory or legal matters, environmental, social and corporate governance (“ESG”) issues, including those related to climate change and sustainability, may have an adverse effect on our business, financial condition and results of operations and damage our reputation.

Policy, regulatory and enforcement changes introduced by the new presidential administration and regulatory leadership in the United States may impact the business and capital expenditure strategies of the Company's customers, which in turn could adversely impact the Company's results of operations or financial condition.

The analytical instrument market may also, from time to time, experience low sales growth. Approximately 58% and 57% of the Company's net sales in 2024 and 2023, respectively, were to worldwide pharmaceutical accounts, which are periodically subject to unfavorable market conditions and consolidations.