$1.4 billion is now sitting in Waters’ inventory. That is the oddest number in a six-month report where revenue more than doubled, but profit and cash generation moved the other way.
Sales rose 113.4%, from $771.0 million to $1.6 billion, mostly because the BDS Business contributed $1.3 billion since its closing. Operating income fell from $188.0 million to negative $86.0 million. The business got much larger on paper, then absorbed the accounting bill for getting larger.
Waters recorded $253 million of acquisition-related inventory and fixed-asset fair-value step-up expense, plus $372 million of purchased-intangible amortization tied to BDS during the first half. Those items reduced reported profit.
Management put the accounting mechanics plainly:
"These decreases were primarily due to the impact of the higher sales volume from the legacy business and the BDS Business revenue since the Closing Date, being offset by $253 million of acquisition-related inventory and fixed asset fair value step-up expense in the first half of 2026 and $232 million and $372 million of purchased intangibles amortization related to the BDS Business in the second quarter and first half of 2026, respectively."
10-Q 2026-08-11
That leaves two readings of the same six months. The reported operating margin went from 24.4% to negative 5.2%, and the filing attributes the change in part to purchase-accounting expenses tied to the acquisition. The filing does not provide a clean adjusted profit measure that removes every acquisition effect.
Cash, unlike amortization, does leave the building. Operating cash flow fell 34.2%, from $301.0 million to $198.0 million. Waters said the decline included $105 million of payments tied to the BDS closing, integration and transformation costs, lower net income, and higher receivables.
"This decrease in operating cash flow can be attributed to the $105 million of payments made in connection with BDS Business acquisition transaction closing; integration and transformation cost as well as the lower net income, higher accounts receivables balances due to an increase in sales volume and the timing of the BDS Business initial net cash settlement for activity since the Closing Date."
10-Q 2026-08-11
The cash-flow explanation contains the filing’s harder-to-ignore operating detail. Accounts receivable rose 172.2% to $2.0 billion, while inventory climbed 154.6% to $1.4 billion. Waters attributes the receivables increase to higher sales volume and settlement timing; the cause of the inventory build beyond the disclosed acquisition accounting is not stated.
The acquired business supplied most of the headline growth, but the old Waters business was not flat. Excluding BDS, legacy revenue increased 10% in the first half, with the company citing broad-based growth across product lines and regions. Instrument-system revenue also rose 6%, driven primarily by demand for Acquity and Xevo TQ-S systems.
That operating backdrop matters because Waters entered this report with a history of strong profitability. Its 2025 annual operating margin was 25.4%, after revenue grew 7.0%, while the latest close was $412.02, up 48.2% over 12 months. The market is looking at a bigger company, but the filing is measuring it through acquisition costs, working capital, and a much wider share count.
Waters’ next report leaves one factual question open: how much of the enlarged revenue base remains tied up in receivables and inventory after the BDS closing and settlement effects pass through.
Waters’ 10-Q reports BDS-related fair-value step-up expense, purchased-intangible amortization, integration costs, and higher sales-related receivables in the six months ended July 4, 2026.