• Sales of $566 million grew 7% (6% in constant currency)
• Balanced growth across key end markets and major product categories
• Consistent strength in Asia and Europe
• GAAP EPS increased 10% to $1.69 and non-GAAP EPS grew 13% to $1.77

Waters Corporation (NYSE:WAT) reported third quarter 2017 sales of $566 million, a 7% increase versus sales of $527 million in the third quarter of 2016. Foreign currency translation increased sales growth by approximately 1% in the quarter. On a GAAP basis, diluted earnings per share (EPS) for the third quarter was up 10% to $1.69 compared to $1.53 for the third quarter of 2016. On a non-GAAP basis, including the adjustments in the attached reconciliation, EPS increased 13% to $1.77 from $1.57 in the third quarter of 2016. On a GAAP basis, net cash provided by operating activities for the third quarter increased 4% to $154 million from $149 million in the third quarter of 2016. On a non-GAAP basis, including the adjustments in the attached reconciliation, adjusted free cash flow increased 5% to $134 million from $128 million in the third quarter of 2016. A description and reconciliation of GAAP to non-GAAP results is attached and can be found on the Company's website at http://www.waters.com under the caption "Investors."

Through the first nine months of 2017, sales for the Company were $1,622 million, up 5% compared with sales of $1,539 million in the first nine months of 2016. Foreign currency translation reduced sales growth by less than 1% during the first nine months of 2017. On a GAAP basis, EPS for the first nine months of 2017 was up 9% to $4.63 compared to $4.26 for the first nine months of 2016. On a non-GAAP basis, including adjustments in the attached reconciliation, EPS for the first nine months of 2017 increased 13% to $4.98 as compared to $4.41 for the first nine months of 2016. On a GAAP basis, net cash provided by operating activities for the first nine months of 2017 increased 8% to $505 million from $469 million in the first nine months of 2016. On a non-GAAP basis, including the adjustments in the attached reconciliation, adjusted free cash flow increased 11% to $450 million from $404 million in the first nine months of 2016.

Commenting on the Company's performance, Chris O'Connell, Chief Executive Officer said, "We are pleased with our third quarter results, featuring another quarter of strong overall constant currency sales and earnings per share growth. The quarter was highlighted by solid revenue growth from each of our major customer-defined end markets, balanced product growth between instrument systems and recurring revenue, operating leverage and strong free cash flow generation."

Results from the Company's markets in the quarter were highlighted by 7% sales growth (5% in constant currency) from the broadly defined pharmaceutical market, 6% sales growth (5% in constant currency) from the industrial market and 15% sales growth (13% in constant currency) from governmental and academic markets. For the first nine months of 2017, sales to the pharmaceutical market grew 6%, sales to the industrial market grew 5% (7% in constant currency), and sales to the governmental and academic markets grew 4% (2% in constant currency).

As communicated in a prior press release, Waters Corporation will webcast its third quarter 2017 financial results conference call this morning, October 24, 2017 at 8:00 a.m. eastern time. To listen to the call, connect to www.waters.com, choose "Investors" and click on the "Live Webcast." A replay will be available through October 31, 2017 at midnight eastern time, similarly by webcast and also by phone at 203-369-1093.

Waters Corporation (NYSE:WAT), the world's leading specialty measurement company, has pioneered chromatography, mass spectrometry and thermal analysis innovations serving the life, materials and food sciences for nearly 60 years. With approximately 7,000 employees worldwide, Waters operates directly in 31 countries, including 15 manufacturing facilities, with products available in more than 100 countries.

This press release contains financial measures, such as constant currency growth rate, adjusted operating income, adjusted net income, adjusted earnings per diluted share and free cash flow, among others, which are considered "non-GAAP" financial measures under applicable U.S. Securities and Exchange Commission rules and regulations. These non-GAAP financial measures should be considered supplemental to and not a substitute for financial information prepared in accordance with generally accepted accounting principles (GAAP). The Company's definition of these non-GAAP measures may differ from similarly titled measures used by others. The non-GAAP financial measures used in this press release adjust for specified items that can be highly variable or difficult to predict. The Company generally uses these non-GAAP financial measures to facilitate management's financial and operational decision-making, including evaluation of Waters Corporation's historical operating results, comparison to competitors' operating results and determination of management incentive compensation. These non-GAAP financial measures reflect an additional way of viewing aspects of the Company's operations that, when viewed with GAAP results and the reconciliations to corresponding GAAP financial measures, may provide a more complete understanding of factors and trends affecting Waters Corporation's business. Because non-GAAP financial measures exclude the effect of items that will increase or decrease the Company's reported results of operations, management strongly encourages investors to review the Company's consolidated financial statements and publicly filed reports in their entirety. Reconciliations of the non-GAAP financial measures to the most directly comparable GAAP financial measures are included in the tables accompanying this release.

This release 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", "anticipates", "plans", "expects", "intends", "suggests", "appears", "estimates", "projects", and similar expressions, whether in the negative or affirmative, are intended to identify forward-looking statements. The Company's actual future results may differ significantly from the results discussed in the forward-looking statements within this release for a variety of reasons, including and without limitation, foreign exchange rate fluctuations potentially affecting translation of the Company's future non-U.S. operating results; the impact on demand among the Company's various market sectors from economic, sovereign and political uncertainties; the effect on the Company's financial results from the United Kingdom voting to exit the European Union; fluctuations in expenditures by the Company's customers, in particular large pharmaceutical companies; introduction of competing products by other companies and loss of market share; pressures on prices from competitors and/or customers; regulatory, economic and competitive obstacles to new product introductions; other changes in demand from the effect of mergers and acquisitions by the Company's customers; increased regulatory burdens as the Company's business evolves, especially with respect to the U.S. Food and Drug Administration and U.S. Environmental Protection Agency, among others; shifts in taxable income in jurisdictions with different effective tax rates; the outcome of tax examinations or changes in respective country legislation affecting the Company's effective tax rate; the effect of the adoption of new accounting standards; the ability to access capital, maintain liquidity and service our debt in volatile market conditions, particularly in the U.S., as a large portion of the Company's cash is held and operating cash flows are generated outside the U.S.; environmental and logistical obstacles affecting the distribution of products and risks associated with lawsuits and other legal actions, particularly involving claims for infringement of patents and other intellectual property rights. Such factors and others are discussed more fully in the sections entitled "Forward-Looking Statements" and "Risk Factors" of the Company's annual report on Form 10-K for the year ended December 31, 2016 as filed with the Securities and Exchange Commission, which "Forward-Looking Statements" and "Risk Factors" discussions are incorporated by reference in this release. The forward-looking statements included in this release represent the Company's estimates or views as of the date of this release and should not be relied upon as representing the Company's estimates or views as of any date subsequent to the date of this release.

(a) In the first quarter of 2017, the Company adopted Accounting Standards Update No. 2016-09 (ASU 2016-09) "Compensation—Stock Compensation (Topic 718): Improvements to Employee Share-Based Payment Accounting." Starting in the first quarter of 2017, the excess tax benefits or deficiencies related to stock-based compensation are reflected in the Consolidated Statements of Operations as a component of the provision for income taxes, whereas they were previously recognized in equity. ASU 2016-09 is required to be adopted on a prospective basis for the statement of operations and retroactive restatement is not permitted. For the three and nine months ended September 30, 2017, the Company recognized an excess tax benefit, which decreased income tax expense by $3 million and $14 million, respectively, and added $0.03 and $0.18, respectively, to net income per diluted share. Additionally, the Company's Consolidated Statements of Cash Flows will present excess tax benefits as an operating activity, with the prior periods presented adjusted accordingly.

(a) The Company believes that referring to comparable constant currency growth rates is a useful way to evaluate the underlying performance of Waters Corporation's net sales. Constant currency growth rate, a non-GAAP financial measure, measures the change in net sales between current and prior year periods, ignoring the impact of foreign currency exchange rates during the current period. See description of non-GAAP financial measures contained in this release.

(a) The Company believes that referring to comparable constant currency growth rates is a useful way to evaluate the underlying performance of Waters Corporation's net sales. Constant currency growth rate, a non-GAAP financial measure, measures the change in net sales between current and prior year periods, ignoring the impact of foreign currency exchange rates during the current period. See description of non-GAAP financial measures contained in this release.

(a) Selling & administrative expenses include purchased intangibles amortization and litigation provisions. Research & development expenses include acquired in-process research and development.
(b) The purchased intangibles amortization, a non-cash expense, was excluded to be consistent with how management evaluates the performance of its core business against historical operating results and the operating results of competitors over periods of time.
(c) Restructuring costs, asset impairments, acquisition-related costs and certain other items were excluded as the Company believes that the cost to consolidate operations and reduce overhead; the cost to complete acquisitions; the non-cash expense to record asset impairments and certain other income or expense items are not normal and do not represent future ongoing business expenses of a specific function or geographic location of the Company.
(d) The non-cash expense associated with accelerating the vesting of certain stock awards was excluded as the Company believes these expenses are not indicative of normal operating costs.
(e) Certain income tax items were excluded as these non-cash expenses and benefits represent updates in management's assessment of ongoing examinations or other tax items that are not indicative of the Company's normal or future income tax expense.
(f) Litigation Provisions were excluded as these costs are isolated, unpredictable and not expected to recur regularly.
(g) Acquired In-Process Research and Development was excluded as it relates to milestone payments associated with a licensing arrangement for mass spectrometry that the Company believes is unusual and not indicative of its normal business operations.

(a) In the first quarter of 2017, the Company adopted Accounting Standards Update No. 2016-09 (ASU 2016-09) "Compensation—Stock Compensation (Topic 718): Improvements to Employee Share-Based Payment Accounting." Starting in the first quarter of 2017, the excess tax benefits or deficiencies related to stock-based compensation are reflected as an operating activity, with the prior periods presented adjusted accordingly.