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. We will provide guidance regarding possible future results as well as commentary on potential market and business conditions that may impact Waters Corporation over the third quarter of 2024 and full year 2024. These statements are only our present expectations and actual events or results may differ materially. Please see the risk factors included within our 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. Reconciliations to the most directly comparable GAAP measures are attached to our earnings release and in the appendix of the slide presentation accompanying today's call. Both are available on the Investor Relations section of our website. Unless stated otherwise, references to quarterly results increasing or decreasing are in comparison to the second quarter of fiscal year 2023. In addition, unless stated otherwise, all year-over-year revenue growth rates and ranges given on today's call are on a comparable organic constant currency basis. Finally, we do not intend to update our guidance predictions or projections, except as part of a regularly scheduled earnings release or as otherwise required by law. Now I'll hand over to Udit to deliver our key remarks. Following that, Amol will present a more detailed view of our results and guidance after we'll open up the phone lines for questions. Over to you, Udit.

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. We will provide guidance regarding possible future results as well as commentary on potential market and business conditions that may impact Waters Corporation over the third quarter of 2024 and full year 2024. These statements are only our present expectations and actual events or results may differ materially. Please see the risk factors included within our 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. Reconciliations to the most directly comparable GAAP measures are attached to our earnings release and in the appendix of the slide presentation accompanying today's call. Both are available on the Investor Relations section of our website. Unless stated otherwise, references to quarterly results increasing or decreasing are in comparison to the second quarter of fiscal year 2023. In addition, unless stated otherwise, all year-over-year revenue growth rates and ranges given on today's call are on a comparable organic constant currency basis. Finally, we do not intend to update our guidance predictions or projections, except as part of a regularly scheduled earnings release or as otherwise required by law. Now I'll hand over to Udit to deliver our key remarks. Following that, Amol will present a more detailed view of our results and guidance after we'll open up the phone lines for questions. Over to you, Udit.

Thank you, Caspar, and good morning, everyone. We achieved strong results in the second quarter that exceeded both our top-line and bottom-line reported guidance. I want to begin today's call by thanking my colleagues for their dedication to commercial execution, operational management, and innovation. This enables us to deliver differentiated performance and accelerate the benefits of pioneering science. In the quarter, year-over-year organic constant currency sales were 500 basis points better than Q1 levels. We saw a steady improvement in customer spending throughout the quarter with a strong finish in June. Orders outpaced sales for the quarter as we built good momentum for the second half of the year. We again delivered resilient operational results with earnings surpassing our expectations. This reflects the strength of our downstream business model, progress on our strategic and operational initiatives, and our indomitable spirit. We also continued our steady stream of new product launches, releasing further innovations that address key customer needs. operator: Turning now to our results. In the second quarter, sales declined 4% as reported and 4% in organic constant currency. Our non-GAAP earnings per share was $2.63. On a GAAP basis, EPS was $2.40. Excluding China, sales declined in low single digits. Growth was consistent with our expectations across each of our end markets. Customer CapEx spending is showing early signs of improvement. In China, sales declined in the low teens, which was better than expected. Growth rates improved in all end markets compared to the previous quarter, especially in pharma and in industrial. While the stimulus measures announced by the Chinese government this year are still in the early stages of implementation, we are having active conversations with customers who stand to benefit from these initiatives. So far, this has led to improved quoting and funnel trends in the region.…

Thank you, Udit, and good morning, everyone. In the second quarter, sales exceeded our guidance range on a reported basis, declining 4%. Organic constant currency sales also declined 4%, which was a 5% improvement in growth compared with Q1 levels. We saw a steady improvement in customer spending throughout the quarter with orders outpacing sales. M&A contributed 2% to sales covering -- results in the first 1.5 months of the quarter. This was better than expected as we were able to accelerate revenue synergies as part of our integration. We are pleased that within the first year of the acquisition -- it is already EPS and margin accretive and our M&A execution remains well on track. Overall, FX was a 2% headwind to the second quarter sales. In organic constant currency terms, by end market, Pharma declined 4%, Industrial declined 4%, and Academic and Government declined 16%. In Pharma, sales excluding China declined low single digits, while in China, sales declined low double digits. In both cases, this reflects an improvement in growth rates compared to the previous quarter. In Industrial, sales declined 1% outside of China, led by low single-digit growth in the Americas. We again saw strong growth globally for PFAS-related applications, which has been a consistent tailwind for environmental testing. In China, sales declined low double digits, which was also an improvement in growth rates compared to the previous quarter. For our TA division, sales were flat, driven by improvement in segments such as electronics, advanced materials, and chemicals. In Academic and Government, growth remained weak as stimulus in China and elevated global funding drove lumpy spending patterns and a tough 21% comparison in the prior year's quarter. By geography, sales in Asia declined 3%, while sales in Americas and Europe both declined 7%. By products and…

Thank you, Amol. So now to summarize, with our strong commercial execution and continued resilient operational performance, our second quarter results demonstrate Waters' ability to deliver solid results in various market conditions. We're positioned well for the future with a long-term outlook that is above our historical growth rate of 6% as global testing volume growth remains on track and customer CapEx spending continues to recover. I am also proud of what our team has continued to accomplish on ESG and sustainability. Last month, we announced that Waters has become the first liquid chromatography column provider to receive the ACT Ecolabel certification from My Green Lab. This designation applies to more than 40 of our LC columns and makes it easier for scientists and procurement professionals to choose more sustainable lab products. So with that, I will now turn the call back over to Caspar.

Thanks, Udit. And that concludes our formal comments. We are now ready to open the phone lines for questions.

One maybe high level on your comments about the progression in the quarter, a strong finish to June, orders above revenues. Help us square what the guidance change, right? I don't think the guide change was a surprise. Is this just a conservatism in light of the strong June finish order momentum commentary? Or how should we inputting of the guide change?

First, thank you for the question. I think you sort of answered your own question. We just sort of taking first just a step back and a 10,000-foot view. I mean our approach to guidance, Vijay has not changed as we progressed through quarter-on-quarter, right? So we look at 3 different things. We, of course, look at the facts from the funnel, how the quarter is progressing, how it's ending, then we spend a lot of time looking at history. I mean, there's not that many businesses that have 20 years of data on instruments quarter-on-quarter. So we look at that and the third thing we do is we talk to our customers and see what the sentiment is, how the orders are progressing, how the sales are progressing. So just to take you through that, and sorry for the long answer, but it will give you context on our philosophy and the guide. So on the fact, you're totally right. We saw -- we've seen progressive improvement from Q1 to Q2. Sales have declined less in Q2 versus Q1 and as Q2 progressed, I mean, as you will know, June is a big month for us. We saw significant momentum in June. You'll remember, in March, we talked about orders and quality of orders and we said we'll start to see them convert into sales towards the end of Q2. Exactly, that's exactly what happened. Lot of sales momentum at the end of the quarter in June and equally, orders growing even faster than sales. So we feel very good about where we see the funnels and what we see with the facts. Now historically, when you look at Waters' business, we have the benefit of, as I said, 20 years of data, especially LC, if you just look…

No, that's helpful. And if I understand you, what you're saying is, look, we're not seeing anything in the quarter. It's positive trends in the right direction. But from a guidance perspective, you're just derisking it. And it's more from the perspective of being conservative versus having seen anything in the quarter. Is that a fair summary?

Yes.

Revenues, I think, were cut maybe 3% below street the implied Q4 dollar revenues. -- EPS roughly in line with -- the Street. So what changed is the implied operating margins coming in better? Is there any below-the-line contribution that's driving Q4 EPS?

Yes. Look, I mean, as you've seen us through last year and this year also back in '22 against inflationary pressures. Our team is super resilient, and we are able to defend margin and even during down volume cycles, we're able to expand margin. As we've discussed before, we have a set of productivity initiatives that have a very long runway, and we are able to accelerate some of them and that reflects in sort of how we've been able to expand margin even last year. If you look at the embedded implied margin profile in our guide. Our second half margin is relatively flat versus last year. So there is not any meaningful step-up in the second half versus prior year. The only thing is as we've sort of taken a more cautionary view on the guide, we will see some of the actions that we've put in place already show up in Q4, and that will help us a little bit in Q4. But other than that second half is relatively flat versus last year.

The next question will come from Dan Brennan of TD Cowen.

Maybe just on instruments. Q2 was about in line, right, with what your guide expected down in '17. I think you were down mid-teens. Can you just flush out a little bit LC versus MS? And how are we thinking about the updated instrument outlook for the back half of the year and kind of what's the math to support that.

So let me start and Amol can jump in, Dan. So instruments declined about 17% in the quarter, LC was a bit modest than that, mid-teens. -- spec declined a bit more, and TA was around minus 2%, so minus 17% in the quarter. As I mentioned earlier, we're seeing steady improvement as we went through the quarter and the funnels look extremely strong, especially on the LC front. So for the back half of the year, we're assuming that the instrument growth rate would be flat versus the previous year. So overall, second half is flat. And just to sort of go a bit beyond the numbers, and now as I mentioned earlier, the LC replacement cycle now is in the seventh quarter of its decline, we're starting to see across the globe customers initiating their replacement cycle. So we expect that to -- we expect a little bit of decline or flat growth in Q3 for LC, but in Q4, we expect the replacement cycle start to kick in, which is consistent with what we see with the funnels. So quite an exciting time just given the renewed portfolio across all the instruments as a replacement cycle begins, we feel very good about where we are sitting today.

Great. And then just China, anything changed with the guide there you were down I think mid-teens kind of in the quarter around what the guide was. And now what are you assuming for the full year? And is the commentary that orders on the kind of stimulus will start in '25? Is that a bit of a push? Like I think I thought I heard you guys say previously maybe orders come back half and then it kind of kicks in '25. Any color on back at our China and then how we think about stimulus impact. .

Sure. Firstly, I mean, China came in ahead of expectations, right? I mean that's part of the driver for the beat. I mean just to give you a bit of the facts, I mean, Q1, China declined 26%, in Q2, it was around 10% decline. And I mean, in the largest end market pharma, we went again from about a 25%, 26% decline to what a 10% decline in Q2. So steady improvement in China in the second half of the year has a lower base, but we've kept the full year guide at a low double-digit decline for China, just to sort of watch and see more data. So good things happening in China. And again, when you compare LC growth rate, and this is sort of an interesting fact, -- for the first time in a very long time, China's LC decline was less than the rest of the world, right? So China declined in the high single digits, whereas the overall decline for LC was a bit higher than that. Now as you think of the stimulus, nothing has really changed versus previous commentary. We're spending a lot of time with customers, doing 3 things. One, helping them identify the age of instruments. You recall this particular stimulus is targeted towards instrument replacements, the age of their instruments, their visibility for the stimulus and helping them do the paperwork as they start to submit applications for funding. We think this is going to be -- this is going to impact growth only in 2025, maybe a modest impact towards the end of the year, but would not factor that in.

The next question will come from Tycho Peterson of Jefferies.

Maybe just diving in a little bit into the guidance in the back half of the year. So you're guiding to revenues up sequentially from 2Q that's kind of out of line with normal seasonality. So maybe just touch on visibility? And then -- for the fourth quarter, your -- I think in plant operating margins are mid- to high 30s to hit EPS guide. I know you said operating margins are flat in the back half of the year. But what drives that fourth quarter ramp in particular? That seems that in line with normal seasonality?

Yes. So I mean, look, Q-on-Q, Q2 to Q3 is relatively flat. If you look at last 10 years, it has sort of oscillated between plus and minus 3%, right? So it's sort of within the range. And what gives us comfort and confidence on that is what we have in our funnel and the activity that is progressing as well as the fact that we built some backlog in Q2. So that also helps. Going to your other question around second half margins. As I said, second half margins are relatively flat versus last year. There's a small difference between Q3 and Q4, one is the prudence in Q3, the second piece is, as we've sort of taken a more cautionary view on the guide, we've put in place certain cost measures that are already playing out particularly around outside services spend, particularly around how we resource certain growth initiatives and you will start to see some of that impact flow through more in Q4 than in Q3. So there is some plus/minus between Q3, Q4, but overall, second half operating margins are relatively flat versus last year.

Okay. And then the follow-up, academics is only 10% of the mix, I know, but it was down 16%. Can you maybe just talk on how much of that was U.S. versus Europe? And what are you thinking back half of the year as the comps ease there for academic.

I think no change in assumption on the academic side. It's such a small portion of our business, Tycho. So really no change from the previous assumptions.

Yes. And I mean you look at it this way, right, like first half of last year, was super well funded between the China stimulus and what was happening in U.S. and Europe. If you look at it on a 2-year stack basis, pretty much every quarter you will see is like 0.1% growth. .

The next question comes from Matt Sykes of Goldman Sachs.

Maybe just first, you guys have leaned into the CDMO channel in China over the past couple of years, and that's been an area of weakness recently due to overcapacity. Could you maybe kind of talk about what you're seeing in the CDMO channel in China? And is it part of sort of some of the inflection that you see maybe towards the back half of this year into next year or is that going to remain fairly subdued for the balance of this year and into '25?

Matt, thank you for the question. I think we were -- we gave a lot of details around this time and probably even earlier than that last year on CDMOs in China, in particular. Really no change from what we saw last quarter, steady improvement on the recurring side as activity starts to pick up a bit from a very low base, right? You'll recall, it's an extremely low base now. but CapEx is still subdued and we have not assumed any improvement in CapEx in the CDMO segment. Now overall, the generics market in pharma in China is starting to get a bit better. I mean this is why we exceeded our growth -- in our growth expectations in Q1 and now in Q2. So steady improvement in China as you go through the year, especially on the LC side, we're starting to see some replacement cycles get initiated there. So CDMO less, but generics a bit more starting to see life there.

Got it. And then Amol, just on margins, you discussed sort of back half and your expectations. I'm just wondering on a longer-term basis. You made some pretty positive commentary about some margin -- longer-term margin drivers going forward. How should we think about operating margin cadence over the longer term for the business? And where are some of the levers to kind of continue to expand those margins as we move through '25 or maybe on a longer-term framework?

Thanks, Matt, for the question. Look, I mean, there are sort of 3 to 4 broad levers here. One is, our business is structured such that if we grow more than 5%, it produces 50 basis points of volume leverage and that volume leverage largely shows up on the SG&A line versus on the gross margin line. Two, we have benefit from mix as we move to more recurring as well as with the discipline that we've put in pricing, we feel comfortable like we've seen even in these challenging market situations that we are able to do a little more than 100 basis points better than what we've historically done on pricing. And so mix and pricing sort of is accretive to our margin profile. And then a couple of years ago, we started various productivity and operational excellence initiatives that have started bearing fruit, right? Things like procurement excellence, operational excellence in manufacturing, setting up GCC in India, and these initiatives have a long runway, I mean, between these initiatives, we expect to cover approximately 300 basis points over a course of about 8 years, right? So they add up to the profile. So overall, our goal is between the 3 vectors to put about 100 basis points of margin expansion on the board and use about 70 to 80 basis points from these gains to fund higher growth adjacencies and then as we get into sixth, seventh, eighth year, when some of these productivity initiatives will start to saturate, we expect these higher growth adjacencies to start to produce one revenue growth and two, margin accretion, and that will then sort of take over the impact of that productivity initiatives have saturated. Now as we've gone through last couple of years where the volume leverage was not there, in fact, was a headwind, our teams were able to accelerate some of the benefits on these productivity initiatives as well as we took proactive cost actions and got benefit from pricing, which have allowed us to not just defend margin, but also expand margin during down volume cycles and that's where the difference lies, right because people look at it and say, last 10 years, Waters margin has been always sticky at 30% and so where was the volume leverage. And the answer to that is there was always a volume leverage, but we gave it up in a down cycle. And this time around, we like -- we're not giving it up in a down cycle so that we come out much more stronger when the up cycle comes across.

Amol has given a comprehensive answer. Just 2 points to summarize the whole thing. One, the teams have great muscle now to expand margins during a down cycle, number one. And number two, the pricing that we see is very resilient, and I'm excited about -- excited about the prospects as we come out of this down cycle given the product portfolio that we have. I mean, it's been totally renewed. We have leading products across the board that customers have had a chance to test during the down cycle. So very excited about what we're about to see.

The next question will come from Rachel Vatnsdal of JPMorgan.

I wanted to follow up on begin Brennan's question around China here. It sounds like LC was a little bit better than expected in the quarter, but can you unpack the performance by end market within China there? And then also on the China stimulus dynamic, we've heard from a few of your peers that they've called out an air pocket related to China stimulus as customers are really holding off and submitting orders -- so can you clarify for us, have you seen any pause in orders from customers in the region? And if not, why have you guys kind of been more immune to that scenario?

Thank you, Rachel. Look, I mean, China, overall, as I said earlier, declined less than what we had thought it for this quarter. So it went from 26% decline in Q1 to about 10% in Q2. Across the different end markets, there was improvement across the board, Pharma went from about 26% decline in Q1 to 10% decline. Same thing with Industrial, which was a 20-ish% decline, again, 11% decline in Q2, and Academic and Government, which had -- which still has very high comps went from over 40% decline to slightly less than 30% decline. I mean, the most interesting thing here is that the replacement cycle is starting to show life in China already. We went from over a 40% decline in Q1 in LC, over 40% to now less than 10%, which was better than the rest of the world, right? So we're starting to see customer activity pick up in China. It's still negative growth versus previous years, but it's starting to get better quarter-on-quarter. And on your question on the stimulus, look, I mean, we are having a ton of conversations with our customers as the activity level remains consistent, right? So the activity level has remained consistent. It's actually improving quarter-on-quarter. From a stimulus perspective, as I said earlier, it's a broader stimulus, it's over a longer period of time, and it specifically targets instrument replacement. So we've been spending a lot of time with our customers, identifying the age of their instruments, defining eligibility versus what the government has targeted, and helping them do the paperwork to submit proposals for funding that becomes available. We don't expect that to impact revenue this year. But surely, it will impact what we see in 2025. So overall, improving conditions across all end markets, especially in Pharma, especially in LC, no real sign of what you're calling an air pocket. Activity is continuing at a baseline level, getting better and customers are getting prepared to get funding from the stimulus.

Great. And then I did want to follow up on 2025 quickly. So can you walk us through your exit rates at 4Q? You've kind of talked about some of this replacement cycle starting to heat up in the back half. If we learn some of the weaker comps on the China dynamics that you talked about as well, how are you really thinking about that exit rate underpinning 2025? It looks like the Street is currently just shy of a 6% organic growth rate. So just at an early starting point, how comfortable are you with that?

Yes. Look, I mean, if we sort of extrapolate our guide and say, where will Q4 and our '24 exit rates will be a good -- even for ex China for LC and MS will be a good couple of hundred basis points below the historic average. And this is ex-China, right? So that gives us a lot of hope and comfort that we are at the bottom of this whole slowdown in the replacement cycle and the fleet out there has aged meaningfully beyond its life needing replacement, particularly for LC. And then China is a twofold equation of when the fleet is aged far more than that but then the question is, when does these generic companies feel comfortable with their status and when do they start replacing and we're seeing signs of that, right? We've had a few generic companies in China already starting to replace their fleet, and we think others will follow over the course of next few quarters.

I just want to embellish a little bit on what we're seeing at the end of Q2 that starts to give us confidence, right? June is 1 of the largest months of the year for us. And it has surpassed our expectations, right, both in sales and in orders. So there's a lot of momentum that we've built going into Q3. So that gives us confidence in its a lot in the areas that we've just discussed, right? So it's consistent with an improving trend in the industry. Second, as I said, I spent a fair amount of time with customers, both in Europe and the U.S. in this last quarter, especially in large pharma, customers are now used to the additional steps in the procurement process. In fact, one of the largest pharma companies had introduced several steps in the process, which their internal teams were also learning and we were also learning about, and that sort of -- that gave a little bit of pause to how fast the orders were converting to sales. This time around, when we said in March, order quality is high, like clockwork, we've seen them convert into sales towards the end of June. So now the funnel predictability is way better than we've seen, especially in large pharma and the funnel -- the order quality and the funnel strength is pretty good as we sit looking into the back half of the year.

The next question will come from Dan Arias of Stifel.

Can you maybe just refresh us on the picking around the upgrades within this replacement cycle that we're talking about taking place here? And what I mean by this is, obviously, things are still shaky out there on the CapEx side. So when these LCE customers come back into the market, should we assume that there's maybe less HPLC to UPLC transitioning and what you see during historical periods or do you think these upsell dynamics and the conversion to UPLC could be fairly typical.

I think it's a great question, Dan, right? And I would look at it 2 ways. One, the HPLC-to-HPLC conversion, right? And that's a robust trend and we have a line of sight on what the fleet is. And there, we offer our customers 2 options, go to the ARC HPLC, which is done really, really well, even during the downturn. And then the Alliance iS, which is now also available for biologics with our premier technology, right? And that has been received extremely well. In a way, the slowdown in the market allowed many of our customers to sample the benefits of Alliance iS, which reduces errors in the QC environment by 40%, which is a significant advance probably the most important advance in the last decade in the HPLC segment itself. So we feel very good on the like-for-like replacement already. Second, when you think of HPLC to UPLC transitions, we are seeing that as well and GLP-1s are a case in point where we see that transition happening. And now on that, let me make 2 comments. One, you've seen that our Biologics revenue as a fraction of overall pharma has gone from roughly 20% to over 35% in the last 3 to 4 years, right? So that has been a very deliberate effort, not just on the UPLC side, HPLC to UPLC side but also in introducing what we call the premier technology, which is tailor-made for large molecules. That is now also available on the UPLC segment, which allows customers to transition the larger part of the pipeline, which is Biologics from HPLC to UPLC very comfortably where now the experimental time is reduced dramatically with the premier technology. So we're seeing both and we are well prepared if the customer decides to remain with HPLC. And equally, we are seeing the trend continue as more and more large molecules and novel modalities come through the pipeline from people transitioning to HPLC to UPLC but there, again, on the receiving end, our UPLCs now have the premier technology, which basically reduce experimental time dramatically. I hope that gives you color into the transition.

And just to add to that, right, I mean, if you look at our historical instrument growth pattern, the 5% instrument growth has roughly about 50 to 70 basis points of price and 3% of volume, the remaining 1.5 or so really comes from upsell, right? And when we quote our price numbers, their like-for-like SKU and like-for-like geography. So that doesn't include when a customer chooses say, ARC HPLC or Alliance or Alliance iS or ARC UPLC. And in order to achieve that 1.5%, we only need about 7% of these customers to choose an upgrade given the current innovation and the pricing that is out there. And 7%, we feel super comfortable with huge unmet needs that some of our newer launches are directly addressing, which customers are appreciating. .

The next question is from Puneet Souda of Leerink Partners.

Udit, for you, if I could ask, the June order growth improvement, the significant momentum you talked about in June, has that continued into July as well? And could you elaborate if this momentum is in mostly in pharma, North America and Europe, it seems like there's some -- still some caution on China that's improving. But just wanted to get some more details there. .

Great question. And as you know, and I think we've been through this before, we won't comment on July trends but you can assume that June was very robust. Customer activity has been very, very good and that gives us confidence on what we're seeing in -- what we've guided for in Q3. So June has a lot to do with the confidence that we built in the replacement cycle, the confidence that we've built in Q3, the confidence we've also built in the ramp towards -- ramp in Q4.

Got it. And then an Asia question for you. Just thinking about China, first of all, and then I want to cover just Japan and India. China, just wanted to understand in terms of retaliatory risks for tariffs. If you could elaborate where is your manufacturing position? How much of the business is China for China in case if there are tariffs and sort of retaliatory tariffs in 2025? And then on Japan, I believe you grew -- sorry, in Japan, you were down 11%. In India, you grew about 11% in the quarter. Could you talk a little bit about what happened in those geographies?

Sure. So 3 questions, right? First, on China. I think we used -- in an interesting way we used the downturn to improve our manufacturing footprint in China, and that is going to help us as the stimulus comes through. We also increased our commercial presence across China. So we feel very good about what the future holds for China, both in terms of local manufacturing, where bulk of our instrument portfolio now is either finished or manufactured in China, and on the commercial side, equally good. Now on your question on India, India has been a star performer for us for many, many quarters. This quarter was no different. We grew in excess of 20% largely on the back of pharma. And there in pharma, LC grew close to 50%, right? And you heard that right, close to 50%. And so that India goes from strength to strength and the Indian government is giving stimulus to like many other countries to their academic and government segments. And there, too, we're benefiting a lot. That segment grew quite rapidly where the funding is captured. And then on Japan, it was a 1% constant currency growth.

Yes. I mean, look, Japan unit likely are looking at the reported number, right? And you know where Japanese yen has been over the last year, that's like close to 11% headwind so at constant currency we're more or less flat, and that's also sort of the reason why the currency impact for us is somewhat higher and we had to increase it to 1.5% driven by Japan because we have a reasonable Japan footprint. And our team is doing relatively well coming out of the March year-end. So what you see progressing in Q2 and onwards we see healthy demand, and we see good funnel activity in Japan. .

Yes. And then just coming back to India. Very excited about the prospects there. As with China, during a downturn, we've sort of figured out where to increase our commercial presence in India, we go from strength to strength. The commercial presence has been increased across the board. We've decreased our collaborations on the ground. And India has gone in the last 2 to 3 years from less than 6% of our sales to close to 8% of our sales. right? So it's becoming a more significant part of our business, and it's growing really, really well.

The next question will come from Jack Meehan of Nephron Research.

So I wanted to ask about kind of the dynamic of instruments starting to recover, but more looking at it from a margin perspective, Amol, I was curious, like just how a changing mix dynamic in the second half of the year and into 2025, what that actually -- what that means for gross margin progression?

Yes. Great question, Jack, as always. Look, I mean, there is going to be some negative mix impact from more instruments when instruments start to come back. But as you look at our guide, that's sort of factored in the gross margin, 20 basis points of expansion that we've outlined for the year. And as we go into next year, if the mix sort of returns back to, call it, say, 2019 levels there will be 10-ish basis points adverse impact, but that's largely covered with the productivity initiatives we have in place so the marginal have got to 20 to 30 basis points still remains intact.

Got it. Okay. And then 2 just housekeeping ones. The first is any updated thoughts on buyback returning to that. And second, can you just remind us any selling day changes throughout the year in the third and the fourth quarter?

Yes. So on the first one, right, I mean we continue to pay down debt from the Wyatt acquisition. We are at 1.7 now. So we are at a point where we are actively considering the switch between paying down debt versus buying back shares. I mean, the intention is to gain strategic flexibility as much as possible. So we continue to review options. And on the number of days, I mean, the key thing to note is on Q4 this year, we have 3 more days than Q3 of this year and that partly helps about 1.5% in the ramp from Q3 to Q4. And then other than that, I mean, there are 2 more days in Q4 of this year versus Q4 of last year. Q3 is roughly the same.

The next question will come from Catherine Schulte of Baird.

First, just maybe on Wyatt, it's great to see that coming in ahead of expectations. Are you seeing any different trends in terms of market improvement in that business, just given the exposure to large molecule in cell and gene therapy?

Yes. Catherine, thank you for the question. Look, we're very happy with the way the integration has progressed. The synergies are being delivered well ahead of target. That's why you saw growth higher than what we had guided for wyatt itself. And it's, as you know, focused on large molecule applications, which are growing faster than the small molecule applications, be it RNA therapy, be it mAbs, be it viral vectors. We're working closely with customers on increasing applications. What's most exciting is that now the teams are working to take multi-angle light scattering that is the wire technology into QA/QC with basically our Empower software, right and this is really exciting. Now you can imagine that large molecules don't have many different analytical techniques that are in QA/QC. It already has liquid chomatography, to some extent capillary electrophoresis, and now multi-angle light -- all of these now if they are on -- and now the QDA gives us mass analysis. If all of these now, if they talk to Empower allow our customers to submit data to regulators, some very exciting, really good progress on that front, even in a down market, we're seeing good demand for multi-angle light scattering.

Great. And then maybe just going back to the guidance update. Can you just elaborate on if there are any specific areas of that conservatism that you added to your assumptions? Was it around China, pharma or is it really broader than that? Any further color would be appreciated.

No. Look, I mean, most of our guidance caution that we've put in place is around our ex-China business. we just caution for a slower-than-anticipated pace of recovery. China, if anything, if you look at last 2 quarters, we've exceeded our expectations. We haven't just been bold enough to sort of then improve the guidance for the rest of the year, but we remain cautiously optimistic that our team will continue to positively surprise us like they have done in the first 2 quarters.

It's a great setup for exceeding expectations as we go through the year and it's just the guidance philosophy we talked about at the beginning of the call that Vijay started with, and it's a great place to sort of end the call. I mean it's basically what we've done all along. We look at a lot of data from customers, from funnels. Second, we spend a lot of time looking at history of LC replacement, in particular, which bodes well. And third, talk to a lot of customers on how they're receiving our new products, how their spending and growing and all three point towards a more positive second half of the year than we've seen. So that's all been factored in Catherine. Thank you for that question. Caspar?

Thank you for joining us today and for your support and interest in Waters. A replay of this call will be available in the Investor Relations section of our website. This concludes our call, and we look forward to seeing you. Thanks. Have a great day.

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