Udit Batra: Go ahead — Let’s Amol start, and then I’ll jump in.
Amol Chaubal: Yes. Look, I mean, where we stand at this point, one may say, look, your Q2 guidance is conservative given there was some delay in budget releases in Q1. And we’ve been prudent there just to stay with our historical norm, right? Q3, Q4, we have some visibility in CRM. But the sales cycle, as you know, is 6, 9 months, so you don’t have all the visibility, but it’s still in line with the historical pattern, and we are seeing increased activity at early stages in our pipeline, which we think will convert into orders as the year progresses, right? If you look at ex-China pretty much across these quarters, it is on a 5-year stack basis, a little lower, mid-single digits. So again, as Udit said, there is no noise ex-China.
And really what plays out in the growth guide is how progressively the decline in China translates to a modest increase in the second half of the year, and that’s what we are modeling. There could be upside on China, if China performs well. And we did some of that in our guide where we saw a little bit better China, and we derisk the remainder of the guide. On your second question on the margin, I mean, as I said earlier, right, a lot of the cost work we did last year is in the second half baseline. So you’re going to see very modest, if any, margin expansion in the second half, but we would have covered most of the ground on the 20 to 30 basis points of full year margin expansion in the first half. And China, I mean, stimulus is not in our guide.
We expect very little towards the end of the year, if any, because a lot of things need to be worked out there. But we are super encouraged by what the government is doing, both in terms of the size and the tenure of the stimulus and the secondary effect it will have on the local mentality and purchase patterns.
Udit Batra: Yes. And then just to sort of, again, embellish just a little bit, Doug, and summarize. First, yes, I mean, the discussions with customers are increasingly positive, but we felt we want to see that land first before we start assuming that it has come, right? So you can imagine, given how difficult it is to predict instrument businesses year-on-year, quarter-on-quarter is even trickier — a trickier exercise. So yes, the conversations are positive, but we want to see it land and then we’ll have — hopefully, you’re right, and then we can have another discussion at the end of Q2 that looks a little bit different. Second, on China, it’s a pure math issue, right? I mean the year has started better than we expected, but the second half of the year is when all the weakness was plugged in — into the overall numbers.
So you see second half being slightly — basically flattish to slight growth. But if you put it all together, I mean, there is no drama ex-China. It’s low single-digit growth prediction for the full year across the different customer segments, especially pharma and academia. And in China, it’s a low double-digit decline after a very significant decline in the previous year. So really, there’s not a lot of risk, as I look at it after the conversations that we’ve recently had with customers, the visibility we currently have.
Operator: And our final question comes from Catherine Schulte from Baird.
Catherine Schulte: Maybe just on pharma. I think you said down low single digits ex-China. And you talked about budgets opening up throughout the quarter. So can you just talk through the health of that end market outside of China exiting the quarter and your expectations for the second quarter for that end market?
Udit Batra: So Catherine, thank you for the question. Look, pharma overall even last year grew low single digits for us for the full year. And the full year guide again is low single-digit growth. Q1 was sort of a low single-digit decliner, but the conversations with customers make us even more confident that the full year guide is very much intact for a low single-digit growth in pharma. And as I said before, look, first, the orders look much more firm than they did a year ago across biotech and across pharma. Second, when I look at what traction our products have especially the products that are meant to solve problems for large molecules, be it in columns. And I talked about that in the prepared remarks, be it in analysis using light scattering or using mass spec and LC the products have an extremely, extremely good traction.
And as far as phasing is concerned, it’s the same commentary that I provided overall. Look, Q1 came in as we expected for pharma and as we roll through the year, basically, the comps get a little bit easier. And so you see us landing at the full — landing the full year with a low single-digit growth for pharma.
Caspar Tudor: Thank you for joining us today and for your continued 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 at future events and conferences.
Operator: Thank you all for joining. That concludes the Waters Corporation First Quarter 2024 Financial Results Conference Call. You may disconnect at this time, and have a great rest of your day.
