IBO’s 11th “company of the year” award, which recognizes an analytical and life science instrument maker that has accomplished technical, operational and financial achievements, goes to Waters. The firm, whose core products include LC, MS and thermal analysis systems, completed 2015 with strong underlying growth, led by biopharmaceutical demand and new products. The company also executed several strategic initiatives, expanding into adjacent markets such as applied applications and bioprocess, while driving LC/MS into the clinical diagnostics space. This was all undertaken while transitioning to newly appointed CEO Chris O’Connell (see IBO 6/30/15).

In the first nine months of 2015, Waters sales climbed 3.6%, 10.6% organically, with similar organic growth across instruments, consumables and service revenues. Biopharmaceutical sales, which comprised 58% of revenues, advanced roughly 12% organically for the period. This growth was driven by upgrades and strong demand from smaller and mid-sized specialty biopharmaceutical customers, and CROs, especially in China and India. During the same period, organic sales to industrial chemical, nutritional safety and environmental markets grew 10%, while academic and government revenue expanded 5%.

Slower fourth quarter 2015 revenue growth compared to the first nine months is expected, as a result of fewer selling days and a stronger year-over-year comparison. Nevertheless, 2015 organic sales are estimated to grow 9%, Waters’s strongest organic growth since 2011.

Waters experienced stronger-than-average recurring revenues in 2015, led by UPLC column demand and services. The company highlighted service demand in India. Globally, instrument demand was equally strong due to accelerated capital spending by biopharmaceutical customer and continued adoption of new products. The QDa detector maintained double-digit revenue growth in 2015 and is expected to add roughly 1% to sales growth for the year.

Aside from adding detection capabilities, Waters revitalized its core HPLC user-base by modernizing its systems in 2015. It introduced the ACQUITY Arc, which allows customers to switch between HPLC and UPLC and further strengthens Waters’s product offering for QA/QC applications in bioprocess. Other product innovations included the Vion IMS QTof MS, introduced in the fourth quarter of 2015. Moreover, Waters previewed the REIMS research system with iKnife sampling, which eliminates the need for sample preparation. This system may also have a significant impact in diagnostics for surgical applications.

Waters maintained its industry leading operating margins in spite of significant currency headwinds, and weakness in Japan and industrial-related markets. Adjusted operating margins expanded to over 27% of sales in the first nine months of 2015 due to recurring revenues and operational efficiency.

Adjusted EPS expanded 12.2%. Including a slight EPS decline projected for the fourth quarter 2015, 2015 EPS are expected to climb 7%, or roughly 17% excluding currency.