Amol Chaubal
Senior Vice President and Chief Financial Officer at Waters
Thank you, Udit, and good morning, everyone. In the first quarter, sales landed at the high end of our guidance range, declining 7% as reported and 9% in organic constant currency. As Udit mentioned, end-market dynamics were consistent with our expectations. Ex China declined mid-single digits as expected, while China declined close to 30% which was slightly better than expected. In organic constant currency by end market, pharma declined 6%, industrial declined 7% and academic and government declined 30%.
In pharma, sales outside of China declined low single digits as we executed well in this capex constrained environment. In China, sales declined almost 30% due to ongoing market challenges that are not reflected in our prior year baseline.
In industrial, food and environmental applications grew mid-single digits with continued strong growth in PFAS related workflows globally. We also saw strong growth in battery testing within our TA business, which has been a consistent growth team. However, this strength was more than offset by weakness in core industrial applications which are more cyclical. Our TA business declined high single digits overall while chemical analysis declined high teens.
In academic and government, growth was weak against a 45% comparison as stimulus in China and elevated global funding in the prior year quarter drove lumpy spending patterns. By geography, sales in Asia declined 16%, the Americas declined 8% and Europe declined 3%. By products and services, instruments declined 25% with LC growth slightly better than expected.
Within recurring revenues, chemistry grew low single digits and service grew mid-single digits, both of which were affected by low activity levels in China. The quarter had one fewer day versus first quarter of 2023, which translates to a growth headwind of approximately 1% for recurring revenues.
Now I will comment on our first quarter non-GAAP financial performance versus the prior year. Despite headwinds from lower sales volumes, FX and inflation, our team continued to respond to these challenges with resilience and commitment. Our focus on operational excellence with pricing, productivity and proactive cost alignment allowed us to deliver first quarter gross margin of 58.9%, an expansion of 40 basis points, and first quarter adjusted operating margin of 27%, an expansion of 20 basis points. Our effective operating tax rate for the quarter was 14.3% and our average share count was 59.4 million shares.
Our non-GAAP earnings per fully diluted share were $2.21. On a GAAP basis, earnings per fully diluted share were $1.72. A reconciliation of our GAAP to non-GAAP earnings is attached to this morning's press release and in the appendix of our earnings call presentation.
Turning now to free cash flow, capital deployment and our balance sheet, we define free cash flows as cash from operation, less capital expenditures and excludes special items. In the first quarter of 2024, free cash flow was $234 million. After funding $29 million of capital expenditures, which is approximately 37% of sales. We maintain a strong balance sheet, access to liquidity and well-structured debt maturity profile. This strength allows us to prioritize investing in growth, including M&A, and returning capital to shareholders.
We continue to evaluate M&A opportunities that will meaningfully accelerate value creation. At the end of the quarter, our net debt position further declined to $1.7 billion, which is a net debt to EBITDA ratio of about 1.8 times. This reflects a decrease of approximately $300 million as we delivered the Wyatt acquisition. As previously disclosed, our share buyback program has been temporarily suspended to enable us to pay down debt incurred as part of the Wyatt acquisition last year. We will evaluate the resumption of our share repurchase program throughout 2024 as part of our balanced capital deployment objective.
Now I would like to share further commentary on our full year outlook and provide you with our second quarter guidance. We expect to see an improvement in sales growth over the course of 2024 as prior year comparisons, particularly in China, become easier, and as improved funnel activity translates to orders. Our full year guidance is unchanged with 2024 organic constant currency sales growth expected between negative 0.5% and positive 1.5%. At current exchange rates currency translation is expected to result in a negative impact of just under 1% on a full year sales basis. We expect Wyatt transaction to add just over 1% M&A contribution to our full year 2024 revenue for inorganic sales incurred in the first four and half months of the year. Therefore, our total reported sales growth guidance is unchanged at approximately 0% to 2%.
Despite guiding to flattish sales, we expect to deliver a gross margin of 59.8% for the full year, which is a 20 basis points of expansion versus 2023. We also expect to deliver 20 basis points to 30 basis points of operating margin expansion versus 2023, resulting in an adjusted operating margin of slightly over 31%. We expect our full year net interest expense to be approximately $80 million. Our full year tax rate is expected to be 16.3% and our average diluted 2024 share count is expected to be approximately $59.7 million. Rolling all this together, on a non-GAAP basis, our full year 2024 earnings per fully diluted share guidance is also unchanged and projected in the range of $11.75 to $12.05. This is approximately 0 to 3% growth and includes an estimated headwind of approximately 2% due to unfavorable foreign exchange.
Looking to the second quarter of 2024, we anticipate that cautious customer spending will persist. In addition, while the China Q2 baseline reflects the onset of weakness, it does not fully reflect the weakness we observed in the second half of the year. As a result, we expect China to decline mid-teens in Q2 versus 28% decline we saw in Q1. Given these dynamics, we expect to see an improvement in year-over-year growth versus the first quarter, and our second quarter organic constant currency sales growth guidance is projected in the range of negative 6% to negative 4%.
At current rates, currency translation is expected to subtract approximately 2%. Wyatt is expected to add approximately 1.5% M&A contribution for sales incurred in the first one and a half month of the quarter. Therefore, our total second quarter reported sales growth guidance is negative 6.5% to negative 4.5%.
Based on these revenue expectations, second quarter non-GAAP earnings per fully diluted share are estimated to be in the range of $2.50 to $2.60, which includes a negative currency impact of approximately 4 percentage points at current FX rates.
Now I would like to turn the call back to Udit for some summary comments. Udit?
