Amol Chaubal
SVP, Chief Financial Officer at Waters
Thank you, Udit, and good morning, everyone. It's been great to work with Jeff, Cliff, and the entire team at Wyatt Technology. Like Udit, I am very thankful to the Wyatt family for considering us as the rightful stewards of their mission and legacy, and for providing us this opportunity to create value for our customers and for our shareholders.
Now to the transaction highlights. This $1.36 billion investment will result in immediate accretion of our revenue growth and our adjusted operating margin percentage. The synergies that Udit just described along with Wyatt's highly-attractive financials are expected to result in accretive non-GAAP EPS impact as early as first quarter of 2024. Altogether, as Udit mentioned, this combination is expected to deliver high-single-digit plus return on invested capital by year five. We will fund this investment through cash on our balance sheet and existing debt capacity that is available on our revolver.
On day one, our net-debt to EBITDA ratio will be around 2.3. We will temporarily suspend our share buyback program for the remainder of 2023, and will utilize our free cash flow to pay-down the debt through the rest of the year.
We expect our net-debt to EBITDA ratio to land at around 1.7 by year end 2023. The transaction is expected to close in the second quarter of this year subject to regulatory approval and customary closing conditions.
Now to our fourth quarter financial results. We delivered an excellent close to a very strong year for Waters, with constant currency growth of 9%. Waters division grew 8% and TA grew 15%. By end-market, pharma grew 6%, industrial grew 14% and academic and government grew 8%, which Udit already covered.
By geography, sales in Asia grew 7%, Americas grew 8% and Europe grew 11%. In Asia, growth in the region overall was strong. Japan grew 25% and India grew 15%. China declined low-single digits for the quarter as a sharp increase in COVID infections at year end resulted in delayed spending due to customer site closures. We expect these headwinds from the post 0 COVID reopening to continue into the first quarter of 2023, before catching up throughout the remainder of the year. In other regions, the U.S. grew 8% and Europe grew 11% with broad strength across end-markets.
By products and services, instruments grew 10% led by mass spec, which grew over 30%. Recurring revenues grew 7% with chemistry up 8% and service up 7%.
Finally, TA grew 15% with double-digit growth across our major geographies. Growth was led by sales in electronics and battery applications, as well as strong growth in advanced materials and chemical testing.
Looking now at our full-year results, by end-market pharma grew 10%, industrial grew 15% and academics and government grew 13%. In pharma, growth was led by large molecule applications, which grew mid-teens, whilst small-molecule grew high-single digits.
By geography, sales in Asia grew 12%, Americas grew 14% and Europe grew 10%.
By products and services, instruments grew 16% for the full-year with liquid chromatography, mass spec and TA system sales all-up double digits. In our recurring revenues, chemistry grew 9% supported by our strong launch of MaxPeak Premier columns in large molecule applications and further expansion in digital commerce adoption. Service grew 8% with continued expansion in attachment rates, which increased 150 basis-points in 2022 and have increased 350 basis-points since 2019.
Now, I would like to comment on our fourth quarter and full-year non-GAAP financial performance versus the prior year. Gross margin for the quarter was 59.4%, up 140 basis-points versus prior year, driven by sales volume and pricing, partially offset by inflationary costs. For the full year, gross margin came in as expected at 58%. Operating margin for the quarter was 33.7%, growth of 110 basis-points versus prior year driven by gross margin dynamics.
For the full year, operating margin was approximately 30.2%, which was flat with last year. On an underlying basis, we expanded our operating margins by approximately 100 basis-points versus our guide of 20 to 30 basis-points at the beginning of the year. This is net of our investments in higher-growth adjacencies and despite the higher instrument mix in our revenue.
On an as-reported basis, our expansion was offset by 80 basis-points of FX headwinds and 20 basis-points of additional compensation to help our colleagues with the temporary impacts of inflation. In the quarter, our effective operating tax rate was 17.6%, and for the full year it was 15.6%.
For the full year, as anticipated, our effective tax rate increased by 180 basis-points, primarily due to change regarding the capitalization of R&D costs.
Average share count came in at 59.6 million shares, which is about 1.8 million less than the fourth quarter of last year. Our non-GAAP earnings per fully diluted share for the fourth quarter increased 5% to $3.84 compared to $3.67 last year. Foreign-exchange headwinds lowered our non-GAAP EPS growth by 8%.
On a GAAP basis, our earnings per fully-diluted share was $3.81. For the full-year, our non-GAAP earnings per fully-diluted share increased 7% to $12.02, versus $11.20 in the prior year. The foreign-exchange headwind lowered our non-GAAP EPS growth by 9%. On a GAAP basis, full-year earnings per share was $11.73.
Turning to free-cash flow, capital deployment and our balance sheet, we define free-cash flow as cash from operations, less capital expenditures and excludes special items. In the fourth quarter of 2022, free-cash flow was $145 million after funding $62 million of capital expenditures. Excluded from the free-cash flow was $8 million related to the investment in our Taunton precision chemistry operations.
In the quarter, we continued to build inventory to secure supply and build safety stock, given strong instrument demand. For the full year, free-cash flow was $506 million after funding $176 million of capital expenditures and includes approximately $100 million of additional inventory versus the prior year end. Excluded from the free-cash flow was $32 million related to the investment in our Taunton precision chemistry operations and a $38 million tax reform payment.
We maintain a strong balance sheet, access to liquidity and a well-structured debt maturity profile. This strength allows us the ability to prioritize investing in growth, including M&A which will meaningfully accelerate value creation in well thought out, attractive, adjacent markets. In Q4, we repurchased approximately 475,000 shares of our common stock for $149 million. At the end of the quarter, our net-debt position was approximately $1.1 billion with a net-debt to EBITDA ratio of about 1.1.
Now as we look towards the year ahead, I would like to provide you with our thoughts for 2023. We have seen strong performance throughout 2022 driven by robust end-market demand, excellent commercial execution across our geographies and new product introductions driving growth. As we enter 2023, we expect our sales momentum to remain solid in our durable end-markets, and that our refreshed portfolio and growth initiatives will continue to enhance our performance. These dynamic support of full-year 2023 guidance of organic constant-currency sales growth of 5% to 6.5% excluding Wyatt. At current rates, negative currency translation is expected to subtract approximately one percentage point resulting in-full year reported organic sales growth guidance of 4% to 5.5%.
We expect the Wyatt transaction to close in the second quarter of 2023, and depending on the timing, we expect it to add approximately 2% to 3% to our full-year 2023 revenue growth. Therefore, our total reported sales growth guidance is 6% to 8.5% versus 2022 including Wyatt.
For the full-year 2023, organic gross margin is expected to be approximately 58%, and organic operating margin is expected to be approximately 30%. Before FX, this includes 20 basis-points to 30 basis-points of net margin expansion after 70 basis-points to 80 basis-points of investment in high-growth adjacencies. FX is expected to be a headwind of 50 basis-points, particularly in the first-half of the year. The addition of Wyatt in Q2 is expected to be accretive to our full-year 2023 adjusted operating margin by 20 basis-points to 30 basis-points.
Excluding the transaction, we expect our full-year net interest expense to be approximately $42 million. The transaction is expected to add $27 million to $43 million of additional interest expense, depending on the timing of the close. The full-year tax rate is expected to remain at approximately 15.5%.
Since we will be temporarily suspending our share repurchase program for the remainder of the year and using free-cash flow to pay down debt, our average diluted 2023 share count is expected to be approximately 59.5 million. Rolling all this together, on a non-GAAP basis, our full-year 2023 earnings per fully-diluted share guidance excluding the transaction is projected in the range of $12.70 to $12.90. This represents 6% to 7% growth versus last year and includes a negative currency impact of approximately three percentage points at current FX rates.
The Wyatt transaction is expected to be accretive to EPS as early as in the first quarter of 2024, and this is even net of our shared buyback suspension for the remainder of 2023. Overall, we expect it to deliver a high-single digit plus adjusted return on invested capital net of tax by year five.
Due to interest expense incurred on higher debt balance and the suspension of share repurchase program this year, the transaction is expected to result in a 2023 EPS headwind of approximately $0.15, hence including Wyatt, non-GAAP full year 2023 earnings per fully diluted share is projected in the range of $12.55 to $12.75.
Looking to the first quarter of 2023, we expect constant-currency sales growth to be 4% to 6%, which is 10% to 11% on a two-year stacked growth. At today's rates, currency translation is expected to subtract approximately four percentage points, resulting in first-quarter reported sales growth guidance of flat to 2%. First quarter non-GAAP earnings per fully-diluted share are estimated to be in the range $2.55 to $2.65, with a negative currency impact of approximately six percentage points.
Now, I would like to turn it back to Udit for some summary comments. Udit?
