Good morning. Welcome to the Waters Corporation Second Quarter 2023 Financial Results Conference Call. All participants will be in a listen-only mode until the question-and-answer session of today’s call. This conference is being recorded. If anyone has any objections, please disconnect at this time. It is now my pleasure to turn the call over to Caspar Tudor, Head of Investor Relations. Please go ahead, sir.

Thank you, Ivy. Good morning everyone and welcome to the Waters Corporation second quarter earnings call. Today, I’m joined by Dr. Udit Batra, Water’s President and Chief Executive Officer; and Amol Chaubal, Water’s Senior Vice President and Chief Financial Officer. Before we begin, I will cover the cautionary language. In this conference call, we will make various forward-looking statements regarding future events or future financial performance of the company. In particular, we will provide guidance regarding possible future results and commentary on potential market and business conditions that impacts Waters Corporation over the third quarter of 2023 and full year 2023. These statements are only our present expectations and actual events or results may differ materially. For more details, please see the risk factors included in our most recent annual report on Form 10-K, our Form 10-Qs, and the cautionary language included in this morning’s earnings release. During today’s call, we will refer to certain non-GAAP financial measures including in our discussions of the results of operations. Reconciliations of the non-GAAP financial measures to the most directly comparable GAAP measures are attached to our earnings release issued this morning and in the appendix of our presentation, which are available on the company’s website. Unless stated otherwise, references to quarterly results increasing or decreasing are in comparison to the second quarter of fiscal year 2022 in organic constant currency terms. In addition, unless stated otherwise, all year-over-year revenue growth rates and ranges given on today’s call, are given on a comparable organic constant currency basis. Finally, we do not intend to update our predictions or projections, except as part of a regularly scheduled quarterly earnings release or as otherwise required by law. Now, I’d like to turn the call over to Udit to deliver our key messages for the quarter. Then Amol will provide a more detailed look at our financial results. After, we will open up the phone lines to take questions. Udit?

Thank you, Caspar and good morning everyone. Before diving into the results, I would like to start by saying that I'm very proud of how our teams have executed this quarter. We delivered a solid performance across our end markets despite a challenging environment and a stronger-than-expected slowdown in China. Our revitalized portfolio is driving results in areas of high unmet need as our newly launched products continue to gain traction and we're well-positioned for future growth as we make meaningful progress and make further investment in our high-growth adjacencies. Turning to our results. In the second quarter, we delivered at the high end of our guidance with 3% organic constant currency growth. We also had a great start to the Wyatt acquisition, which performed ahead of expectations and contributed 2% growth for the quarter. Overall, constant currency growth was 5% and our as-reported growth was 4%. Our organic constant currency performance was led by strong growth in the Industrial segment, which grew low double-digits and the academic and government segment, which grew over 20%. In both of these end markets, mass spec grew over 40%, as our revitalized portfolio saw continued strong demand. In the pharma segment, which declined 4%, both the US and Europe grew high single-digits, showing initial signs of recovery in pharma spend. However, this was more than offset by significant worsening in the China pharma market as weakness broadened beyond CDMOs. The weakness in China also impacted our instrument growth, which declined 2% in the quarter. When excluding China, instrument growth was 8%, led by mid-teens instrument growth in the US and low double-digit growth in Europe. Meanwhile, our recurring revenue grew high single-digits, driven by increased service plan attachment and chemical e-commerce adoption. Our non-GAAP earnings per fully diluted share came in above our…

Thank you, Udit, and good morning, everyone. In the second quarter, sales grew 4% as reported. Organic constant currency sales grew 3% as Waters division grew 2% and TA grew 11%. We had a great start to the Wyatt acquisition, which exceeded our expectations and added 2% constant currency sales growth. FX was a 1% headwind in the quarter. In organic constant currency by end market, Pharma declined 4%, industrial grew 11% and academic and government grew over 20%. In pharma, high single-digit growth in the U.S. and Europe, was more than offset by a pronounced slowdown in China pharma, which declined over 40%. In industrial, Waters Division and TA both grew low double digits with broad strength across all regions. In our Water business, strength was led by food and environmental testing where we saw continued strong growth in global PFAS testing applications driven by our Xevo TQ Absolute mass spectrometer. In TA, growth was led by thermal analysis and microcalorimetry. We again saw strong demand in secular growth drivers such as batteries and electronics testing, which more than offset weakness in more cyclical revenues from materials and chemicals. In academic and government, there was continued strong demand in upstream applications from our refreshed mass spec portfolio supported by elevated funding levels across the globe. Mass spec sales more than doubled in the U.S., grew approximately 50% in Europe and grew 30% in Asia. By product, strength was led by our high-res mass spec portfolio with applications in metabolomics and spatial biology, resulting in strong growth for cyclic IMS and Select Series MRT. Now by geography, sales in Asia declined 5%, the Americas grew 7% and Europe grew 9%. In Asia, China declined high-teens. Excluding China, Asia grew 6%, with India growing high single digits and Japan growing mid…

Thank you, Amol. Even through challenging times in the macroeconomic environment, we continue to come together as an organization to ensure we leave this world better than we found it. With our vibrant employee circles, we recently celebrated Pride Month as well as our Fantastic Women in Engineering. We also kicked off our third year of Water Student Academy, a summer program for high school students from underserved communities who are interested in exploring a career in science. We're also very proud recognized as one of US News & World Report Best Companies to Work For. So, with that, I'll turn the call back over to Caspar.

Thanks Udit. That concludes our formal comments, and we are now ready to open the phone line to questions.

Thank you. We would now open the lines for questions. [Operator Instructions] Our first question comes from Vijay Kumar from Evercore ISI. Please go ahead.

Hey guys. Thanks for taking my question and congrats on a pretty impressive second quarter print here. Udit, my first one for you, mass spec was the star 19%. What is the mass spec CAGR here on a pre-pandemic 2019 basis? Could you just comment on orders and backlog? Would it be presuming for instrumentation and outlook here as you look at the back half?

Thank you for your question Vijay and good morning. Firstly, on mass spec. Over the long-term, so over two years -- just to answer your question, over the two-year CAGR is in the high teens, the four-year CAGR is in the high single-digits to double-digits. The story with mass-spec, Vijay, is twofold. One is of execution and the other one is of the traction of our new products. On the new products, we launched the Xevo TQ Absolute, which meets significant unmet needs in the PFAS area where we're growing double the rate of the market. I think we've heard the market grows roughly 20%. We're growing double that rate. In that particular market, our mass spec instruments are seeing terrific, terrific traction in the high-risk space where there's additional funding that academic institutions have. And as you move to the biologics area and bioprocessing our LCMS tools like the BioAccord and the enhanced workflows that we've developed are gaining traction. So if you compare our 20% print in this quarter or year-to-date or even versus last year on stacked, it compares very favorably to some of the peers who -- some of the mass spec heavy peers who have already reported their results. So we feel very good that we're gaining share in this market. And mass spec goes from strength to strength. And to your question now on overall instruments, look, take a step back and when you look at the overall instrument performance for this quarter, it's roughly two -- roughly negative 2%. Now this is an illustration of two things: one, strong execution and traction of innovation in the US and Europe and, of course, additional weakness in China. Let me comment on both. Starting with US and Europe, instrument growth rate in the United States…

That's extremely helpful, Udit. Amol, one for you. When I look at the third quarter guidance versus fourth quarter implied there's a pretty big sequential step up in Q4, both on the organic and even more impressive on the EPS line. Maybe just talk about the fourth quarter implied assumptions here. What's driving the sequential strength?

Yes. So, a couple of things there, Vijay, right. I mean the step up on the growth is purely related to the baselining. So, if you look at it on a two-year or a four-year stacked basis, Q3 and Q4 guide is pretty consistent. So, on a four-year stack basis, both Q3 and Q4 are growing 6%. Two, if you sort of look at the ramp-up in dollar million sales. I mean we typically do 24% of our full year revenue in Q3 and about 30% in Q4. And so the guide is sort of consistent with that, with sort of tad caution on Q3. And so that's sort of consistent with the past. And it also sort of accounts for the fact that whatever we see in Q3 in terms of China slowdown and cautious spending with pharma will continue into Q4. And then as you look into Q4 EPS, you see a steep ramp versus last year of about 15% growth, but again, there are various factors that are contributing to it. I mean as Udit outlined, we've taken cost actions and a predominant portion of those cost action savings will show up in Q4. That, coupled with productivity gains that our teams have managed across pricing, across materials and freight, across other areas of procurement, those two things together, we get about 5% of that growth coming from the cost actions, another 3% to 4% of that growth coming out of productivity. So, that's the big portion of the 15% increase that you see in the EPS in Q4. The rest is there is 3% FX benefit. Wyatt is normal dilutive in Q4, so there is a net neutral impact there. And then there is the lower share count, about 1.5% underlying sales growth.

Next, we'll go to the line of Luke Sergott from Barclays. Please go ahead.

Awesome. Thanks. I guess, can we just dig in here from the drivers of the guide for the full year and for the remaining back half? And if you guys have any further deterioration in any of the markets baked in?

So, I'll start, and then I'll let Amol comment, Luke. Thank you for the question. I mean just starting with the second quarter first and how that plays out for the balance of the year, right? I mean in the second quarter, you saw roughly 3% growth. And it's sort of different in the US, Europe and China, right? In US and Europe, we see roughly 7%-ish growth and in China, we see continued decline of close to mid-teens. And as you now look at the balance of the year, we are starting to see a bit of a recovery, both in US and Europe. And I commented earlier to Vijay's question also on what we saw on instruments. But where we sit right now, we feel China has deteriorated further and there's a bit of lack of visibility. What we saw with CDMOs has now permeated into the rest of the pharma industry. So, we've decreased our guide overall by 300 basis points, 200 basis points of that is additional China slowdown. And we -- while the orders are very strong, while the execution is extremely strong in -- across the globe, new products are gaining traction. We think the funnel velocity has been slower towards the end of Q2, and we've used that projection for the balance of the year. So we've taken down the guide an additional 100 basis. So that's a 300 basis point drop versus what we told you in Q1 on the top line. Amol?

Yes. And I mean if you sort of go through the individual components, right, China, as we said, is a low double-digit growth for the full year. It's slightly more elevated in the second half versus the first half in our guide assumptions. Rest of the world in the first half grew mid-single digits. The assumption for the second half is low single-digits. LC sort of grew mid-teens decline in the first half, and that's sort of also our second half assumption versus mass spec and TA. Just given the situation, and we've reduced it to sort of low to mid-single-digit growth for the second half of the year. So as you see, I mean, we've sort of risk-adjusted a big portion of our second half of the year given what's playing out in the market.

All right. And then you guys have been operating in China for a while. You have a lot of history there. Can you just give us a sense of the -- how quickly the various end markets can bounce back? Like what you've seen in the past? And what you're hearing from the boots on the street over there?

Luke, that's a good question. And I don't think you'll hear us saying a lot different than what you've heard from many of our peers, right? In the long-term, China is a terrific growth market, we all know, right? And you've seen that through the history. But we saw in the second quarter a mid-teens decline in China. CDMOs got worse and people are just cautious, super cautious in spending in our pharma customers, across the traditional Chinese medicine customers, you see that permeating across the board. And it's not clear when that opens up. So we've assumed that for the full year, China is going to decline low to mid-double digits. Now when you look at -- and we've also not assumed that another stimulus is coming to grow the ANG market, and we've seen pretty dynamic growth for the first half of the year, that was driven by the stimulus that came late last year, and we've assumed that there's no stimulus coming for the balance of the year until we have clear visibility. So you've seen we've been very careful and cautious, but there's not a heck of a lot of visibility. What I'd like to remind you, though, from a Waters-specific case from 2016 to 2020, whenever Waters grew and whenever Waters growth rate fell, it was all correlated to China. This is very different now. We see that the US and Europe 2020, 2021 and now also 2022 and 2023, we seen US and Europe grow and contribute to growth really, really well in addition to China. So we feel that the business is very nicely diversified, and we see that we have growth in other geographies. And I'll conclude by saying China remains a dynamic market. Our teams have visited four to five times. The global teams have visited four to five times since the last time we spoke. And on the ground, you see incredible, incredible collaboration with our customers. You see, especially in the batteries market, China is well advanced of US and Europe, and we think the adoption for our TA products is going to grow much faster in China. If you go to the specialty diagnostics arena, China again, has been a front runner in adoption of mass spec in the clinical space, and we are working with several collaborators there to introduce our high-end mass specs in that workflow. And it's a matter of time that China will recover. We feel we are very well positioned to capitalize on it when it does. But in the short-term, you will not hear us say anything different about the visibility for the balance of the year than what you've already heard.

Next, we'll go to the line of Dan Brennan from TD Cowen. Please go ahead.

Great. Thanks. Solid quarter. So, question would be on the guidance, I think. I think the question we'll probably get is after solid Q2 kind of is the guide derisked enough and it kind of makes it more difficult to parse out the super lead China and obviously, Europe and US doing better than I think we expected. So, can you just speak to a little bit again? I know you've given some color already and the comps make it difficult to kind of get a trend line here. But like how should we think about the extent of maybe a cushion that's kind of assumed in the back half of the year or just kind of the confidence in the back half of your guide?

Yes. So, Dan, look, I mean we looked at how things have progressed through Q2. And if you look at the regions, even outside China, we have meaningfully reduce our outlook for those regions. As I said before, those regions grew mid-single-digits. Outside China, we are now estimating low single-digits. Instruments declined low single-digits. We are assuming for the second half, it will decline mid-single-digits as growth normalizes for mass spec and TA. Even recurring revenues, we've sort of stepped them down from mid to high single-digits to mid-single-digits for the second half. And we sort of assumed A&G and industrial normalize in the second half of the year. Now, based on those assumptions, we think it's reasonable given how things are playing out, I think the one wildcard still remains how out of China plays out in Q3 and Q4 because we know China goes down fast, but it also comes back fast. We haven't assumed any second half China stimulus in our number. So, if that comes, it will be an upside. But otherwise, we feel comfortable where our guide is for Q3 and for the second half.

Great. Thank you. And then maybe a I think US and EU pharma results here look really solid. I guess it's a little different in the early start of Q2 earnings season from peers that have kind of been talking now for the more. Just again, the business mix to currently make it difficult if you like direct read process. But do you think you guys are gaining share as related to maybe different business making comps? And then kind of what's assumed at the back half of the year for the US and European pharma? Thanks.

Yes. So, I mean, Dan, look, I mean our teams in US and Europe see an exceedingly great job in Q2. Our win rates were up. They positively surprised us with great outcomes with the level of growth that they manage, right? As we look into the second half for those teams, right now, we've sort of tapered the guidance down to low single-digit growth in those regions. But the way our teams are executing in these markets gives us great confidence that they will be able to do a great job in these markets as things start to come back.

Yes. And Dan, your line was breaking up a little bit. If I understand the question, you wanted a bit more color on pharma. And I guess you could ask, hey, you're seeing good trends in pharma or at least some recovery in both US and Europe. And recall that we talked about this in Q1, where we said we had conversations with large pharma players, and it was not a question of what, it was just a question of when they would place orders and some of those orders came through in Q2 and some fairly significant orders, right? I mentioned GLP-1 agonist. We are the UPLC of choice for a very large pharma manufacturer. In fact, both of them who are making GLP-1s columns replaced -- in our competitors' column, which is a rare, rare thing that happens in the industry because the customer said they wanted full end-to-end visibility on the supply chain. We are the only player in the industry who manufactures our own particles, our own columns, full end-to-end, and that gives us significant strength, right? So we saw share gain in pharma. We saw new products gaining traction in the bioprocessing arena. And you would have seen that we've just launched a column that is specifically targeted towards separating Adeno-Associated Virus. These are viral vectors used for set of gene therapy. And it brings me great pleasure to say that these are columns that are attached to our mouse [ph] instruments. So we are really executing well in pharma, wherever we have ability to access our customers and customers are purchasing. And new products are gaining traction. So for the second half of the year, we've just said, look, let's not just use one data point to extrapolate. We're looking for more data points, even in US and Europe, and we will gain even more confidence. But from where I sit today, I see excellent execution, excellent new product traction both in US and in Europe. And in China, like I said before, our visibility is just as much as others. And when China recovers, we'll execute like we're executing in U.S. and in Europe.

Next, we'll go to the line of Derik De Bruin of Bank of America. Please go ahead.

Hi, good morning. Thank you for taking my call. Just out of curiosity, how much backlog work down left over stimulus spending did you see in Q2? And just sort of like what were orders coming through and what was sort of like -- was anything worked down as you have any backlog that got pushed?

So Derik, thanks for the question. We saw very modest drawdown in backlog orders were largely in line with sales for the quarter, and we see the same thing happening for the full year. That's the same assumption. So again, an indicator that says, like to the previous question, indicator that says that, look, trends are improving, especially in the US and in Europe for our large pharma customers and other customers. But yes, in this quarter, basically very modest single digit -- low single-digit million drawdown of backlog and the same assumption for the balance of the year.

Got it. On the academic market, just out of curiosity, are you doing -- are you seeing any pull forward in spending? I mean, obviously, there's some worries about budgets and things. Are you seeing any sort of pull forward your customers they look?

Derik, as a former academic myself, I can tell you we spend when we get the money. And when you get money like we like the academician are getting now, my old professors, my own colleagues, they spend as soon as they get it, right? So it pull forward or is it catch up, you cannot tell. It's a very -- it's a very volatile market. It goes up dramatically. It goes down dramatically. And it is correlated to only one thing, stimulus. And it is correlated to only one thing, stimulus. And you see stimulus coming across the globe. And what we've seen is dynamic growth in the US and Europe. And again, our mass spec portfolio -- the high res mass spec portfolio, our UPLC, our columns have done extremely, extremely well in this market around the globe, and we've won competitive bids across the board. So, I feel very good about our portfolio in that market, although it's a volatile market, it correlates very heavily with funding. I don't think it is catch up or pull forward. It is just opportunistic. When it comes, professors have money, and they buy. And I've done that myself as a previous academician.

Next, we'll go to the line of Matt Sykes of Goldman Sachs. Please go ahead.

Hi, good morning. Thanks for taking my questions. Maybe just the first one on Wyatt, just the -- it's obviously outperforming your sort of initial expectations. Maybe talk about some of the drivers that you're seeing that's contributing to that outperformance? And you had mentioned when you had talked about the synergies at Wyatt that you would start shipping Waters columns with Wyatt. And I think previously, they were non-Waters column shipping. Is that part of the dynamic, or is it just too early? Is it more about further penetrating the markets and driving sort of organic growth with the instruments?

Matt, thank you for the question. You know that we closed the deal in this quarter. And really three drivers and we've talked about them in our previous discussions, and they're all contributing, right? The first one is column attachment to malls instruments, and this has gone as planned. Our columns are being shipped with the instruments as we speak. Second, in the column space itself, we've launched columns that are custom-made for solving problems for our customers, and in this case, our most recent X Bridge GTX column that we just launched and this is -- basically this was announced yesterday, but it's starting to ship now. There -- it speeds up measurements by over 50%, reduces sample size by 30% to a 100%. And that basically saves our customers a lot of samples. So, those -- that's already happening. Second, we have talked about lead generation. There are significant hundreds of leads that are -- that have been generated in -- especially in the US and in Europe, where there's a lot of access to our customers. And as emerging biotech and precommercial biotech starts to especially in the US, we're seeing the lead generation pick up quite dramatically and some of those leads have already been converted into sales. So, that's a contribution. And the third piece that you see, which our customers are extremely excited about is the software bridge. We've basically made a lot of progress in building a software bridge of our instruments to -- our LC instruments to our light scattering instruments or Wyatt light scattering instruments. So, progress on all of those fronts that we talked about, our teams are super excited, seeing quite a good traction from our customers, especially as we start to see recovery in pre-commercial biotech and we see this also in the Cambridge Mass area.

Great. Thanks for the color. And then Amol, just on gross margins, you've mentioned a couple of dynamics that are helping drive that gross margin expansion. I'm just curious, obviously, price is a driver. But on the cost side, you mentioned sort of lower input costs on freight and materials. Are you sort of seeing some kind of leverage as the inflation comes down input costs come down as you're still increasing price? And do you expect that dynamic to continue through the balance of this year?

Yes. So look, I mean, on both the sides, our commercial teams as well as operations teams have done a great job through Q2. The commercial teams have delivered fantastic outcomes on price, which is flowing to our gross margin. And then on the operation side, we've sort of laser-focused on managing raw material costs, managing freight costs, optimizing freight lanes, consolidating freight vendors. And we've also focused on value engineering where possible to sort of work through specifications and reduce the cost of the product. And all that is playing out through our gross margin line, which expanded 230 basis points. And we think this outperformance will carry forward in the second half, which is why full year gross margin is 100 basis points up versus a year ago. We started on this journey of operational excellence two years ago, and it's starting to bear fruit. And we are really proud of what our teams have achieved in this space.

Next, we'll go to the line of Josh Waldman from Cleveland Research. Please go ahead.

Good morning. Thanks for taking my question. Two for you. I guess, first, Udit, a follow-up on pharma. I mean it sounds like you're seeing signs of life from pharma outside of China, but it also sounds like you're seeing slower than normal funnel build from pharma broadly. I guess I wondered if you could unpack that a bit? And then, I wondered if you could provide context on what the guide assumes in regards to a budget flush, would you expect a typical seasonal ramp in the fourth quarter from pharma in the West. Is that -- I mean, is that the a driver, I guess, to the assumption for a pretty significant step-up in organic in the fourth quarter?

Great questions, Josh, and thanks for the opportunity to comment on pharma more. Look, as we discussed in Q1, we are -- we see very high-quality funnels. We see customers who are really using our products to solve significant challenges. I mean the Alliance iS has gained a lot of traction on the small molecule side. On the large molecule side, we're seeing the BioAccord being used increasingly in bioprocessing applications. Our columns are doing very well. Our recurring revenues overall high single-digit for a very long time and pharma is no exception to that. You see all those trends playing out in both US and in Europe. That said, we have been cautious and we've said, look, we want to see more than one data point before we assume that the funnel velocities are increasing back to normal. They are slower across all market segments. We are seeing some green shoots in pharma for sure. We're seeing green shoots in biotech. Remember, precommercial biotech went cold both in US and in China altogether, in the US, we're starting to see that recover rather nicely. But I would like to wait for at least one more data point before I call it a complete recovery even in Europe and in the US So we are being a bit cautious with how we're seeing the funnel velocity. It's improved, but I'm not saying at this point that it's gone back to normal. But the quality of the discussions, the quality of the leads is really, really excellent across recurring revenues, meaning service, columns as well as instruments. And it's not just a mass spec story. LC is also doing pretty good and it's starting to do well in some of our pharma customers, as I mentioned, with the GLP-1 agonist where we won a competitive bid for UPLCs as well as our volumes. I'll let Amol comment on the guiding piece.

Yes. So I mean, Josh, if you look at our Q2 results and then look at Q3 and Q4 on a four-year stacked basis, they're all 6%. So what it essentially assumes is the dynamics that we saw in Q2, which was a demand slowdown in China and capital approval cycles becoming longer, we expect that to continue through Q3 and Q4. And hence, Q4 will sort of perform at the levels of Q2 on a stacked basis versus four years ago. Even on a two-year stack basis, the assumption there is our Q2 was roughly 6.5%, steps down to 5.5% in Q3 and further steps down to 5% in Q4.

So, when you -- so Josh, when you compare to previous years based on stacked and two years and four years stacked growth rates, Q3 or Q4 doesn't look any different than one another. And I think the question of budget flush, I mean both Amol and I have been on the receiving end of this when we were in pharma. The way it usually works is as you go through Q4, you see the CFO coming in and saying, hey, now I think I have visibility to my Q4 landing, go ahead and spend. And that's the dynamic that we've observed through and through all across our career. Even if it's a lower base, we expect that to modestly persist. But when you look at our competitors versus stacked two-year and four-year stacked growth rate, you don't see an acceleration in our assumptions.

Got it. And then I guess, as you think about the current environment and where you position the near and medium term guide back at the Analyst Day, I mean, do you think Waters is still positioned to grow 100 bps plus above the market? And maybe more important, what do you think is the right way to think about market growth in the medium term in an environment where pharma is a bit more -- pharma a bit more cautious?

Crystal ball. Look, when I look at my crystal ball, I see tremendous unmet need in pharma. I see tremendous unmet need in the environmental segment with PFAS testing with battery testing in the industrial segment. And in pharma, in particular, I feel Waters is super, super well-positioned. Let me give you a couple of examples, right? We had the opportunity to comment on mass spec. There's a direct comparator when you just compare us to our peer group, we've grown 20% again this quarter, right, and you compare us to the ones we've already reported with my spec portfolios, they're a bit lower than this. So, we think we're gaining share with our new products. You think about our columns, right? I believe we have the best chemistry team in the industry that has really turned decisively towards solving problems for large molecules. And we've just introduced a column that's going to separate AAV and reduce sample size in that area dramatically, right? So, across the board, our innovation is targeted towards large unmet needs and we are gaining traction with our strong focus on execution. So, I think overall, we feel very good about how Waters is positioned. We feel we are already out-executing head-to-head many of our competitors in spaces where we're all together. And I expect that to be no different as the recovery accelerates. We're starting to see early signs of recovery in US and Europe. And again, as I said before, I'm not ready to call it yet until I have more than one data point. And as China recovers, we feel very well-positioned. So, yes, what we said on the Analyst Day still holds. Our core is very strong with strong new products with like Alliance iS, our adjacencies that we picked. We are already gaining traction across the board. And more on that as we go forward and we have more proof points in the other adjacencies as well, but feel extremely good about what we said. And finally, a comment on the margin. You've seen what we've done in Q2 and also the fact that we expect margin expansion both on the operating margin, 30 basis points on the operating margin for the full year despite the challenging environment, I think that should give you some confidence on the execution that we are seeing.

And that was the last question we have time for.

Thank you. Thank you all for your questions and your participation today. And on behalf of our entire Waters team, I'd like to thank you for your support and your interest in Waters. Thank you, and have a wonderful day.

Thank you all for participating in today's conference. You may disconnect your line, and enjoy the rest of your day.