Waters Corporation · NYSE:WAT
Waters — J.P. Morgan 39th Annual Healthcare Conference (January 2021)
22 slides from Waters's conference presentation, Jan 12, 2021
Slide 1: J.P. Morgan 39th Annual Healthcare Conference
J.P. Morgan 39th Annual Healthcare Conference Udit Batra President & CEO
Slide 2: Cautionary Statements
Cautionary Statements This presentation may contain “forward-looking” statements regarding future results and events. For this purpose, any statements that are not statements of historical fact may be deemed forward-looking statements. Without limiting the foregoing, the words, “feels”, “believes”,
Slide 3: Key Messages
Key Messages Solid base in the highly attractive life science tools market Loss of momentum in recent years due to weak execution and portfolio disadvantage Transformation program underway with near-term commercial focus and priorities ©2021 Waters Corporation 3
Slide 4: Waters Operates in Large and Growing End Markets
Waters Operates in Large and Growing End Markets Biomedical Food & Materials Pharma Clinical Research Environment Science Market $22B $9B $8B $14B $14B size Growth MSD+ HSD MSD+ MSD MSD- ▪ Biologics ▪ Government ▪ Molecular ▪ Rising populations ▪ Micro-electronics Drivers ▪ Novel modalities funding
Slide 5: Waters has a Strong Foundation
Waters has a Strong Foundation Portfolio Customer Geography Large installed base with ~75% exposure to Diversified >50% recurring revenues growing markets (MSD+)2 geographic base Instruments Consumables Pharma Materials Science US Other 45% 17% 57% 17% 29% 5% Informatics1 APAC 2019 9% 2019 2019 (ex-
Slide 6: Industry-leading Margins and Strong Financial Flexibility
Industry-leading Margins and Strong Financial Flexibility OPERATING MARGIN (%), 2019 SELECT FINANCIAL METRICS 31% $2.4BN Peer 1 23% REVENUE1 Peer 2 23% ~22% 5-YEAR AVERAGE ROIC2 Peer 3 21% Peer 4 19% $576m FREE CASH FLOW 1 Peer 5 18% Note: 1. Based on 2019 data; 2. ROIC = (Non-GAAP EBIT *(1 – t))/in
Slide 7: Key Messages
Key Messages Solid base in the highly attractive life science tools market Loss of momentum in recent years due to weak execution and portfolio disadvantage Transformation program underway with near-term commercial focus and priorities ©2021 Waters Corporation 7
Slide 8: Loss of Momentum in Recent Years
Loss of Momentum in Recent Years REVENUE YEAR-ON-YEAR GROWTH1 MOMENTUM LOSS CAUSES Market growth range A Weak Execution 6% 4% 1% (6%) Waters Portfolio Not Aligned with Faster B Growth Segments and Opportunities 2017 2018 2019 2020 YTD2 C Performance Management Disconnect Waters revenue growth Note:
Slide 9: A Weak Execution
A Weak Execution UNDERLYING DRIVERS 1 Loss of Market Share Driven by Instruments 2 Low Attachment Rates for Recurring Streams 3 Lower Exposure to Faster Growing Contract Organizations 4 Weaker eCommerce Platform Relative to Peers 5 Slower Portfolio Renewal and Launch Excellence ©2021 Waters Corporat
Slide 10: Waters Portfolio Not Aligned with Faster Growth Segments and Opportunities
B Waters Portfolio Not Aligned with Faster Growth Segments and Opportunities PORTFOLIO BREAKDOWN % (TOP); COVID-19 SALES IMPACT (BOTTOM) 100 40 45 75 55 75 80 80 LSD to MSD (incl. SM Pharma, Industrial, Other) 50 60 55 25 45 25 MSD+ (incl. Clinical, LM 20 20 Pharma) 0 Peer 1 Peer 2 Peer 3 Peer 4 Pee
Slide 11: Performance Management Disconnect
C Performance Management Disconnect Established process with 90%+ …however, disconnect between employee employee participation… ratings and company performance PERFORMANCE MANAGEMENT EMPLOYEE RATINGS (% OF TOTAL) 100 Employees rated OBJECTIVE SETTING as: “Meets” or 75 “Above Expectations” REVIEWS AN
Slide 12: Key Messages
Key Messages Solid base in the highly attractive life science tools market Loss of momentum in recent years due to weak execution and portfolio disadvantage Transformation program underway with near-term commercial focus and priorities ©2021 Waters Corporation 12
Slide 13: Three Phase Renewal towards Growth
Three Phase Renewal towards Growth Focus for today Regain Commercial Momentum with Specific Initiatives Strengthen Performance Management Enhance Portfolio and Capabilities ©2021 Waters Corporation 13
Slide 14: Regain Commercial Momentum with Specific Initiatives
Regain Commercial Momentum with Specific Initiatives EXAMPLE INITIATIVES TO REGAIN COMMERCIAL MOMENTUM 1 Drive Replacement of Waters Instruments (LC, MS, TA) 2 Increase Attachment Rates and Value Proposition for Recurring Revenue 3 Strengthen and Expand Coverage of Contract Organizations 4 Improve F
Slide 15: Drive Replacement of Waters Instruments
1 Drive Replacement of Waters Instruments HIGH PERFORMANCE LC EXAMPLE CHALLENGE INITIATIVES UNDERTAKEN ▪ Loss of focus led to market share ▪ Drive trade-in of older Alliance LC with new decline in Waters’ LC business Waters High Performance LC with incremental ▪ Less frequent replacement; ~20% penet
Slide 16: Improve Focus on eCommerce
4 Improve Focus on eCommerce CONSUMABLE DIGITAL SALES (AS % OF TOTAL) INITIATIVES UNDERTAKEN 100 ▪ Improve search engine optimization to drive higher number of impressions 75 and conversion rate for Waters.com 50 – 60% ▪ Invest in paid search to increase 50 digital sales and traffic through Waters.c
Slide 17: Drive Launch Excellence
5 Drive Launch Excellence In 2019, Waters launched BioAccord, an integrated LC-MS solution that simplifies high performance LC-MS biopharma analysis From: Generalized Launch To: Focused Market Development Identifying ▪ Generic approach to known ▪ Targeted approach linked to the market customers on r
Slide 18: Our Ongoing Commitment to Deliver Benefit to Society
Our Ongoing Commitment to Deliver Benefit to Society Environmental Social Governance Actively reducing our Engaging our people to Strengthening processes; environmental footprint strengthen communities adding new perspectives ▪ Greenhouse gas reduction goal ▪ Our charitable donations supported ▪ Sep
Slide 19: Waters' Three Objectives Throughout the COVID-19 Pandemic
Throughout the COVID-19 pandemic, Waters has turned Our Scientific Understanding towards Three Objectives Ensuring safety and well-being Doing our part to help Maintaining of employees and families mitigate the public health crisis business continuity ▪ Site readiness plan including ▪ Innovation Res
Slide 20: Our Capital Deployment Priorities
Our Capital Deployment Priorities Financial ▪ Strong, flexible balance sheet Flexibility ▪ Optimal capital structure ▪ Organic innovation Investing for ▪ Capital expenditure Growth ▪ Acquisitions & external investments Return Capital to ▪ Share repurchase Shareholders ©2021 Waters Corporation 20
Slide 21: Key Messages
Key Messages Solid base in the highly attractive life science tools market Loss of momentum in recent years due to weak execution and portfolio disadvantage Transformation program underway with near-term commercial focus and priorities ©2021 Waters Corporation 21
Slide 22: Slide 22
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