A - Earnings call transcript Q1 2019 | Agilent Technologies, Inc.

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Operator

Good day, ladies and gentlemen, and welcome to Agilent Technologies First Quarter 2019 Earnings Conference Call. At this time all lines are in a listen-only mode. Later, we will conduct a question-and-answer session and instructions will be provided at that time. [Operator Instructions] And as a reminder, today's conference is being recorded. And now I'll hand the conference over to Ankur Dhingra, Vice President of Investor Relations. ahead. go Please

Ankur Dhingra

Vice welcome, for and McMullen, Agilent's quarter Agilent’s first President Thank year everyone XXXX. call Senior McMahon Bob fiscal CEO; Mike and With conference CFO. and you, and to President me Agilent's are

Bob’s the Markets of Jacob Applied Thaysen, will in Group; President Raha, Sam Agilent President Agilent's Joining CrossLab Diagnostics comments Science and and Doak, of Genomics Life be the Group. after Q&A and Group; President of Agilent's Mark

presentation and comments can to the Bob find release, investor website measures. Today's You discussion today's www.investor.agilent.com. will financial our by information on non-GAAP press supplement and refer at to Mike

You January a based will metrics Core References to otherwise GAAP Unless basis. and months. noted, acquisitions metrics find all and revenue references impact growth growth are and past year-on-year. are exchange or completed the comparable on financial Guidance rates financial reconciliations the excludes XX to core on on the in of website. most within the our XX. divestitures increases is of directly currency revenue as decreases

turn no of the The will These and performance forward-looking as the make call update risks complete only statements to picture I over financial for also and now them. of to obligation uncertainties are about to and valid subject of other Please statements the assumes to We Company risks filings are Company. the today. at SEC Company's like would our look Mike. recent a more factors. And

Mike McMullen

Relations. Vice on his Investor earnings to by to start joining of Ankur first Thanks like and our as welcoming for our call I'd us today. thanks call Ankur President

investment community. but years, relation senior Excelling sharing, reiterate case roles in over the you to on We Ankur. excellence not, for level not is call such pleased successor of team IR met but are committed new Ankur I have a to While many we believe finance is maintaining strong he Ankur, role, to already he to Alicia, have leader I remain with want very this and sustaining you theme in new Agilent. is have to in this key capable you our in a miss XX

the to Agilent results represents revenues a to compare. revenues our This excellent results, tough guidance. off against with start. continues and team on QX totaled to XXXX $X.XX The XXXX deliver earnings strong growth both a X.X% Now, exceeding is QX QX core billion.

Genomics Pharma, and Our performance by is growth led Group. an the CrossLab diagnostics, in highlighted market our by end clinical forensics our and and and environmental markets. the both in growth double-digit Agilent results perspective, Diagnostics From double-digit

is year. Our XX.X% XXX basis QX operating margin points an last increase of from

we Our process and continue agile improvements margins. while This team Agilent for our improving XXth Agilent are year-over-year driving the operating consecutive invest quarter also productivity future. the of programs to is

above is $X.XX high growth increased our of EPS driving end This EPS. is adjusted margins our QX $X.XX strong topline The of guidance. Our the continued and XX%. growth up in double-digit combination is of

growth Markets core a results last touch at pharma compare and year. markets. businesses, across environmental Life a Group Applied looking XX% on remained grew Sciences against the & Now of basis our in very strong Demand X% forensics our

replacing chromatography instruments, We our Japan of midrange and GC continue in leadership XXXX offering we month our XXXX strengthened an innovative new the fuel launch XXXX future in Earlier position innovative new growth. offerings all-new two flagship bringing to to market gas our the GC. this new with GC global

provide performance, avoid for the examples allowing level of strategy managers portfolio digital offer provide of Customers intelligent we a now performance, instrument customers our action. can leading unscheduled busy these remote laboratory These technology, monitoring our In perform reliability remotely compelling compelling and just and control connected smart lab Complimenting we can maximize connectivity. tests, downtime also status With with lab new complete predictive health including most and addition convenience have of capabilities, and the instrument, them the in chromatography several to two and new system in robustness, analytic digital monitor chemists. instruments introduction gas productivity. industry. great autonomous GC to our Intovo of alerts the are now XXXX, or in diagnostic

early is the launch global While two response positive. new customer in of offerings, these very

year growing Building to business. acquisition cell beachhead in Luxcel continue We Seahorse Biosciences strengthen cell our we capability. of Bioscience assay [ph] our last analysis from adding acquired new XXXX fast

invest We space. development market in Earlier Ireland. continue assay a this cell we Cork, fast analysis in cell to facility state-of-the-art growing quarter, the opened

ACEA cell innovation. share instrumentation greater adding acquired with highly in decisions increases to These approach also have XXXX impact spectroscopy. a ranked spectroscopy new Scientist clarity as increased enabling and our the top could our we space. customers products molecular products new The from the drive complementary The Analytical further for quickly for system food and delivers acquisition chemical Agilent this to leadership an QX received and of ACEA Biosciences impressive speed Biosciences LSAG more as We biomedical, evolving a market in takes of innovation our again LSAG's recognition pharmaceutical, we external in portfolio. imaging new software. XXXX team analysis The relevance in strengthened faster, science our markets. the already system customers groundbreaking imaging system line This customers. material of LDIR informed

very well for are We market continued positioned gains. share

Group of based speaks excellent to Demand core value across CrossLab base markets results XX% strength regions which the the and a was of customer Agilent growing on broad QX. delivered end our all proposition. Our

convenience the repeated and for lot recurring to e-subscriptions set customers provides up lab our introduced and of expand a place This consumable Our orders online. customer of the customer ease team ACG to and improve capabilities having to continues We experience. not digital orders.

alert maintenance sample with launched base installed actual based instrument a We on provide lab to volume. also on managers service applications GC smart the alerts for needs subscription and

portfolio our of of outcome solutions building Over the expanse enabling and our has past business. worked several the diligently years ACG oriented on online

to Group delivered the today exceptionally to and core work all The capabilities continued strong us this growth. market are Genomics and growth Our future. bring XX% team businesses the and well Demand ACG strong set up revenue results in Diagnostics quarter regions. all reflective with across was for these QX results of

Our business us businesses half comprise which Genomics in for second] pathology related [excuse low one double-digits grew and Diagnostics roughly the quarter. the

we Importantly, cancer. in with fight continue to our efforts customers to partner

This quarter the In we testing. high-volume expanded our cancer on pharmDx platform. kit the diagnostic first OMNIS we portfolio PD-LX automated in launched Dako Europe,

working on this other also and assay the U.S. OMNIS PD-LX are We markets. to and bringing

related also Our grew again is The business strong. NASD business very NGS this double-digits quarter.

on GMP grade APIs second to initial the the of contributions track. with is to plan online end XXXX. facility revenue production anticipate bring FY Our the We fiscal by in XXXX production of expand remain material

led with single-digit Looking a in at low growth Europe basis the geographic performance single-digit with Agilent's China. and high growth Americas and on

extremely full As expectations is last an we growth expected, growth. owing than lower China's to for year compare a QX This growth XX% our rate core versus tough is year.

As you about conversation know, a there China of the been lot has market.

are takes is our within demand there puts that serve, we the the and view markets While some market remains overall solid.

deliver market current coupled the execution our set our strong company QX outlook, results with turning Now total up company and capabilities a conditions Agilent's to of us the view outlook, XXXX. strong to

let Bob share to full summary year have me specifics, with our I guidance. over the comments. before few but a the close hand As result, will Bob, increased a we call

ACG end overall conversations and see and cautiously our strengthen of the China trade geographies commitments continue U.S.-China team markets software on remain growth, drive observe business questions to as I to ahead, optimistic, European cautious both as about earnings DGG and its high we macro about continue and the LSAG ongoing revenue successfully demand we the in a build and recurring and and across superior optimistic we solid to and the our instrument high we Looking as and is revenue growth. discussion Groups, expand health as The economies Agilent delivering continue margin portfolio. to

never The of I Our of to guidance call being the hand for increase in Thank Bob. our stronger. indulgence the you will call reflects today. the confidence Thank forward the for look our the off your Agilent on our now addressing in strength later been and transmission difficulties business company team. to I you One call. questions Bob? the Agilent has

Robert McMahon

good and guidance and year-over-year some first through and full QX will with today the otherwise for income I remarks year. will the finish be and I'll revenue my our on walk non-GAAP provide afternoon on some percentage my changes In updated other results basis. noted, Unless statement up key Mike focus you, then Thank remarks will financial quarter detail, everyone. and metrics a

Mike impacted provide some market growth Reported start was As XX% QX, for the XXX group's core exceeding strong XXX our across markets spoke groups. will we with all growth. the offset largest to points additional around Mike so X% basis the growth core our our was Pharma, the year. billion basis business by broad to also delivered mentioned, end $X.XX revenue X.X% guidance. a negatively for regional a M&A performance. Revenue Growth details end currently was growth. as growth of contributing points quarter good business based delivered and I was by quarter, and of so performance fiscal

strength focus but newer in as areas also cell traditional strategic in biopharma We analysis. are seeing such

addition in fast ACEA portfolio the We Biosciences, market. segment of are which the our excited growing about of expands this

low year a and energy comparison in team effectively as was mid-single-digit in atomic consumables LSAG even mentioned, markets. and last very contributed and X% XX% results. diagnostics double line both flat GC, core growth services. comparison and commercial government and high X% The expectations. a China by and delivered region a top grew while growth sales single-digit saw at respectively. in Geographically last to Asia Americas Chemical addition, strength our as high GCMS, digits. low performance was growth. strong all consumables difficult Instrument Europe NASD in low year. In were XX% Environmental driven to as up clinical gains teens grew Both we end China we XX% mid-teen core the our and high grew level against and spectroscopy, food wrapping services versus of was single-digits markets, at forensics execute flat. revenue continues academia outside were while growth growth a solid effectively of up and strong with against of core compare and And last Mike single-digit faced while growth XX% Double-digit delivered were ACG year and

revenue revenue, this be year. X contributed of higher non-instrument growth Now I QX the contribution than XX% leave This sales point quarter to cyclical revenue last mix Its before quarter. than more revenue. and total pleased is in to mention higher of we less evolving want with our I percentage been as historically has revenue continue

growing trend customers. and expect services base our and for We solutions large installed provide our we this leverage value-added to continue as and

XX.X% was margin turn increased points let's gross prior and Now the P&L. rest year. of the the to XX to basis QX compared

even Our topline mainly tariffs able on cost offset to improvements. was XX.X% higher teams we more due been Operating basis leverage have R&D. operating up to expenses the as margin of with points XXX invested in productivity

I standard and fiscal adopted before margins, leave remind Now want have restated purposes. for I you accounting the comparison year operating we pension years this new to prior

impact XX%, a down a As guidance, Consistent a no is average were XXX our there per and tax our net our point earnings versus share. ago with was to QX year diluted reminder, shares million. non-GAAP rate

quarter, led to this non-GAAP prior an the of share first $X.XX the of to compared increase XX% earnings of year. in All per

balance on sheet. a few 'XX on metrics guidance, I want to touch Now the flow on to cash additional before FY and moving

$XXX last dividends capital with $XX to free flow for $XX in deployed shares the in up million and ACEA million associated M&A million X.X in $XXX million. XX% with million Our million shareholders was quarter returned We $XXX cash from purchased for year. we million $XXX

the with ended cash $X.X we billion debt. in billion Lastly, quarter $X.X and in

for quarter Now let's non-GAAP guidance financial our the turn of XXXX. to second

representing headwind QX to X.X% expecting of range XXX X%. basis of are of roughly to growth points core partially estimated contributing points be to offset X.X% a by billion Currency For from to and M&A of to we XXX billion growth. is $X.XXX X% growth to XXX $X.XX revenue reported basis

$.XX full-year XX.X% the And in our range to both updated reported non-GAAP X.X% per Second $X.XX and exchange we expected rates strong quarter is and EPS. growth. to updating on earnings quarter revenue of a are be share in guidance XXXX based are which to also

reflects headwind of billion year. to our We and million point are X.X% well the with our up reported $X.XX full-year as of This revenue updating prior to a to high-end $XX range and basis representing low-end both it $X.XX for benefit our billion the although range X.X% roughly is performance on from as the still guidance guidance associated XXX currency QX growth.

core expecting to still growth As line a result, revenue we're X.X%. in with X%

QX and representing our roughly of $X.XX tax of full share $X.XX a previous and year XX% is point year addition, this to growth currency up raising In range rate growth average on XX% full per of Consistent the for shares a with diluted to based to are XX% from we full-year excluding earnings guidance. to full of a guidance X.X% reported $XXX XX% million.

As mentioned to and of beginning so at the guidance includes stage. model the you this downsides, the we at both encourage year, would upsides the midpoint guidance I at this of

Before opening with me questions, let call conclude our we are the pleased QX saying, for results. by very

the achieve the that, our focus position strong in a will and Agilent it work of for the to Q&A. and With I goals team hard to year. Our puts continued year start to turn the Ankur us back our for

Ankur Dhingra

and instructions now will James, Q&A provide Bob. you, open the for the lines please? Thank you

Operator

question Of line Our course. first from Sachs. Donnelly of Instructions] Patrick the Goldman comes [Operator with

is open. Your line now

Patrick Donnelly

Maybe a I just on and understand XQ maybe just tough clearly to go tracked the LSAG the in quarter we the how where bit comp talk in us think from that to you relative the so go expectations little there? internal to came guys. comp easier quite year. the help growth, that thanks and in Can about your forward just certainly were segment, a below start it Great, also forward, expecting, the then last

Mike McMullen

difficulties on go the had question loud and earlier now before Yes just compare. phone extend the but clear, transmission call, bat the the hit and think it is Patrick, through understand to apologies my we questions on growth, throughout your will that LSAG the a address of you off answer make so all is and sure we to I want right to I weren’t great some I hopefully top I which to coming one all on we Yes, case we clear the in relative call. themes the

compare strong up So single hope only I good the and forensics. hard think quarter would underlying and versus impact which had some point digits low there the we new that that good of touch this shutdown were most probably I the the exactly comps would Pharma in in underlying moderate number revenue perhaps There get business easier with January growth expecting in second narrative, underway got probably some be very we're much. to is we tell trade environmental quarter. in thing strength noise of have rhetoric. demand expecting and growth in but will out to see to these interesting my is we look transitory the is U.S. launches to came because through of was business delivering say you've in demand. we I pockets and some particularly the launches a our this really rebound the scratching China was how and the this forward But exciting The rates not QX

Patrick Donnelly

just through X% that's and the eases just just on relative see the conservatism you only to uptick XQ I in on maybe can quarter-over-quarter think comp moving guide, maybe an Bob, pieces some of why staying we given XQ, there growth, helpful. XXX in calling X% shouldn’t growth, the for Okay, part? your the just baked some talk bps that And one then for guidance by to maybe

Robert McMahon

question. the for thanks Patrick, hey Yes,

midpoint mentioned at on we've we're I an reflected QX. you in relative had We to what think in guide as terms guided for QX kind have the and hit optimistic. QX easier head to a also do of the in the nail cautiously higher comp Mike we of

do some and about and are DGG. expecting as expect we QX ACG and being we like we're upside not going improve chemical have things QX but about think performance into QX to potentially and forecast bit in QX, the we those it, are As a cautious we of in on that areas but still well. LSAG only we think energy when

Mike McMullen

the we've QX we've historical is this given it history, be in our think I an quarterly of guided. Bob the this element ever to growth may conservatism is while Yes, highest highest guide so probably relative ever that

Robert McMahon

Yes.

Patrick Donnelly

guys. thanks helpful, That's

Operator

Thank you.

Our next from Muken of question the Ross line Evercore. with comes

line Your open. now is

Ross Muken

Mike. Hey

Mike McMullen

Hey Ross.

Ross Muken

little tone, your in the obviously you off a seems ticking lot not help sort it getting just general color, sort over you the they the business So of cap out I us maybe good a guess right in is to of that of it saw at there things on then like sort the remind of tease about sort parts still the commitments directions, in lastly, side environmental help tough region heading are is but your bit in non-traditional is so made of us quarter food business? trade of the a quarter maybe Thanks that where are of of of for see you next it because expecting is it exist what have sort of sort explain sort maybe the guys the China, sort foreshadowed. funny the on recovery comment this strength end with et and parts is hear voice what stake on the of what of side, later to in in sort deal and the January? cetera? then are a done you it in in maybe of against in underlying most seems we But business given thinking extrapolate. that And what they than equipment bit negativity could had and is more how understand

Mike McMullen

timing of recognition specific But Ross and glad maybe the great we're on and give your report others in then much question. relative to just I'll to through unusual and I'm you do absolutely an when we coming narrative overall the kind clearer Yes, and industry. kind of hear to China the question China of specific to a of appreciate more get

quarter our really to So a we XX% low see given demand digits we when we moderate the growth in really strong this growth were guiding for compares continue last environmental. year and and to expect Pharma tough and

to the I and year. in year case environment puts year that’s anticipated if results to slower demand think mentioned then around easing. China business like are look really last their was market, speaks to I a than you food, Relative business because QX this last which I in in long terms detail grew on to commentary a the move a we in of know just I food And I here QX but thinking really recall change can that the you year in think rebound seeing the that later you But priorities the would important your But C&E, as again cover think turned there. business narrative QX the say, exist expect last outlook if some about expecting relative return here not which I growth in double-digit C&E food stronger we to into the comp and as our all but is, think and of to the takes comps and our you is I one. funding the but my minute demand continued dig in narrative, XX% small growth one. think a this out of growth do some we around that more underlying kind really in got will within later our good you is we're may point our easily most QX over and a rate are in which China fundamental guide be

think might QX. of demand U.S. turn strong the drag of in is continued back product driven holding China, and more a launches part the might be discussions do got may to customers revenue have China of the out which will only the business relatively continued new have uncertainty we put that activity who underlying You've between I and perhaps be and you into if marketplace the in bit. level the tariff those that this export

still cloud China. uncertainty but that I certainly of – think help see in would really that, demand we eliminating good that despite

Robert McMahon

invest on on and think robust to to of side those DGG as about think remain businesses really China there. we that side, and of that think when leveraging the that total installed growth course in and ACG continuing I I add, so based Ross, as the is continue we company excess China expect in year. average I term just both the the think long think growth We're well the the over to certainly

Mike McMullen

long Yes, discussions as have and the hey exceptional jumping in were with in our so highlighted of you sort we've businesses recall through and in underrepresentation ACG the we've terms we growth really year have lot the answer flung, and may of view statistically they runway China some for of Bob, poised far. a this well, thanks that earlier to just on seen because of our DGG that long all

Ross Muken

us That's of versus the like of how business year could DGG it sort remain your helpful. exact feels quarter, the how the that your will not of some you've year, very there, kind the but because And very trend ramp, a of maybe going like feels every this given for of good underlying new that internal expectations help just did tease for of a like to out for in share but lot course elevated, for business just over plan, DGG understand the done at it is level acquisitions the folks? some in how did us year certainly about that trend given direction, late feels this and obviously maybe think kind LSAG

Mike McMullen

are Yes, on. spot Ross you and

and business and the pathology been business momentum continued the we the been our audience and piece, our three on the is highlighting in of good what's and business to could Your consistently momentum business building have which characterization I'd the our good got to across we've momentum then then think through pieces core organic part genomic latter then to continue NASD agreed in NGS in the we've in XXXX can plus see we're pretty some we Sam's fairly well growth strength And of about is think in feeling complement this dimensions we of good see going. seeing business. to acquisition wholeheartedly going anxious were business pathology also see and that have [indiscernible] investments continue why known we have in of our I but our that already, to business now where is the so bringing I and legitimate our and the to you we're story

I So anything perhaps missed?

Robert McMahon

nail I No on you Mike, hit think the head. the

We but Library that next momentum Analyst have Investor Magnus year's NGS in things going at DGG. think conference a unveiling number and good also Prep, and share there's happening be system that I the positive sample the inorganic last Day a prep of known, formally excited I week the parts are well would upcoming so we'll AGBT

Mike McMullen

that. are talking about So we

Robert McMahon

are that. Yes, well we about taking

Mike McMullen

question? did to Ross Okay, that your get

Ross Muken

also much. was you thank That got, so

Mike McMullen

All right, thanks.

Operator

you. Thank

Our question Tycho Peterson comes Morgan. from next with JP

Your line is now open.

Tycho Peterson

the C&E in C&E do on Hey, catch you you talked And expecting know from think you of year? the the while a for strength that you kind issues kind much ministry food of couple last up just are strength a for offset those the there, C&E quantify thanks. followup can this you've a about China softness? year then of of Maybe China, on how broader

Mike McMullen

question. address is you to Yes, and hear good Tycho to the it happy from

said C&E. just we're That What the very a XXXX the for so a product growth XX%. this business to of to And for Jacob, growth was XXXX the know in QX, referring last at share China energy the and have energy saw business waiting will a was comments in GC comps. GC being minute few space. about and chemical the year not hit of in I would is say targeted you prospects the as and you market, to primarily China contributor the that you very on the to just are chemical strong just but new rate and C&E QX bullish all the we that perhaps about actually as perhaps clarify, remain know a they in we strong we So

business So chemical we latter of going part be expect to really year in strong. fundamentally we this energy is China the the here [indiscernible] a think on and

actually of had take I of first So think nine which going I last during the the would one have a through think this story or single recall probably of talked consolidating we one is going comps. agencies may so system, quarter as was multiple the to you market, it And that reorganization about, we of the process story industry, part right they not months into kind to got reacted hey food we year in through from go were of agency. into set tough

– much to instrument is central if purchases that internal pretty complete a the happened taking has that's the essentially What is that slower you but So across of redundancies that's of new most think elimination segment with in government review the will little I our longer to in modern not place. all leaders of bit the market. so labs, leading really

and this is market the lab testing really central sector private the this grow lab continues piece throughout China affecting So be the food central the GC just again contract color bit just we growing the maybe XXXX of it year. the of lateral little on And expect entire a back it, while do the since to inclusive mentioned Jacob purchases launch? business or agencies to I

Jacob Thaysen

lot place and for see that chemical the Yes, absolutely programs on in – projects you Mike place China. we in and energy continue certainly, right to are in of and back to

smart is are But call course we've very also excited the XX as the have which So instrument connect also really us we last a put lab of start space digital the time. base only gives series, also and what a refresh about connected the in a XXXXs we throughout that a I there strategy. not for very in strong we smart with our what now installed huge forward going class and great installed opportunity is opportunities But lot new mentioned a of component of and key we the in new expect out base. have we is it

you new better of to XXXX, into the easily effects having lot in solution. even can added we really you allows all technology of remote you It processor is what the smart continues it a the processor there built over we which technology, understand the this. does is Now first to the yes, continuously your coming alerts features what's to really is everybody about, so full known going upfront an have happening. smart talked would one a is what now is like to Intuvo and to from understand have invested connect really dual monitor methods very we have can but All on, but have the XXXX you in what to so core the all upgrade allows to and it health instrument get monitoring, the you units transfer of can we well that really here

your for opportunity You huge out a there. can the reduce unscheduled and downtime this labs is

So at really lot as and demand we right is least we of as a it. we tell see are customer can you now, for our excited I excited are

Mike McMullen

the the the having been this a making. we're in company has is Yes, inside discussion and Tycho decade

in XXXX out truly the GM product was actually with market Yours the when came which XXXX. the hit we

time of So initial made you advancement the Intuvo made investments that leveraging the GC we're can see platform. since we in and amount how

Tycho Peterson

about provided our peers then one mentioned your heard on think you've if Chinese government impact impact and New impact any Lunar I the guidance, there? color business shutdown, appreciate then about we from you talk Okay Year? of ICP-MS quarter, And current the we've there, any the on

Mike McMullen

the a between call to result a business as And and also, nothing unusual around around the Sure, we're number it if happened of the about compare, I'd mention New dates talk the moved the the flow happy around two our so Government numbers some about to New unusual I will not Year for you quarters this for earnings year Year. happened mentioned obviously the so time talking relative moves relative U.S. in Chinese nothing to of noise Chinese things. shutdown. in first of years

an And I U.S. think Tycho, some out you a is all largest happen. of obviously collectively for didn't you so license pocket just products entirety reminder, the of they the pointing to were First basically all customer agencies, U.S. the require the U.S. what be months. from of that may with Government Government, of export look when and Government at our

We'll of really way export through That's that just find didn't transitory it the didn't the thing. its because company's results. some into China that a QX overall see And license. quarterly into is and to really, flow have product we immaterial

Tycho Peterson

I it. Thanks. Okay, appreciate

Operator

Thank you.

Leonard Our with Bank. Deutsche comes Dan next from question

line is Your open. now

Dan Leonard

Thank you.

Another expectations? versus the your can arrived on how Europe on comment internal results question you in geography,

Mike McMullen

to and be we hear you, we we thought Yes, right digit Dan. was pace I in It as that year good were to really low think it in growth where from came this would been expecting well. Europe single as it's on

Obviously, think I but some on basically numbers uncertainty, of to as we'd don't anything see the think I love unusual came there. in resolution really Bob? So political the some planned.

Robert McMahon

that's low that's we That's It Well expecting. right. what was of digit kind right. single were and stand

Dan Leonard

us chromatography Intuvo more understand very can launches, Thank then for could curve I Is something or And it's slow of you we Okay. the scope new and impact shaped where a adoption immediate to is the see steady at help there? color this XXXX? curve gas something within the on outset this bell anticipated similar you. the where my followup, the all appreciate the

Mike McMullen

I'm question. glad so you that Dan, asked

orders this in we're expect quicker a I and fact to actually So We right? scenario. actually think Jacob but much here ship is starting can a different ramp of

Jacob Thaysen

here, it's was so we mentioned have as you our it's and based week easy sponsorship anything, Actually probably pretty on to so see months, this Yes, that customers, actually maybe We, don't did is is transfer production this so very are to do a a customers technology some that happening. over most do you XX. We wait before few move but proven would for that to I looking to want XX conservative quickly XX, expect methods. that this…

Mike McMullen

ramp game still and new XXXX of lot Intuvo the GC, rate because really a on do direct changer adoption we a Yes there's offerings. Intuvo capabilities more but and XXXX conviction much be the here our quickly we for see have the than with replacement to

Dan Leonard

the color. appreciate I

Mike McMullen

you. Thank

Operator

Thank you.

Our Brandon Jefferies. from with next Couillard question comes

now is line Your open.

Brandon Couillard

afternoon. of you multi services Thanks. services China? the be can quarter the in might vendor Mike, perhaps in seeing growth speak the and some Good with you the to tractions first

Mike McMullen

bow to in make community. the few to a join call front going to Mark I'm so a of to on comments investment here, invite going in then Yes, I'm take of the sort

we're in particular. in in business great So services traction ICG China overall seeing and the and

So portfolio. the and I across think it is entire all regions

them great been the this running has over to pretty that just the we've here. of provide last this the science our with We So work momentum. lab wasn't and of results the set a offerings and one of lot doing, we really positive a their also think operations they're think is of the really several outlook years got marketplace helps quarter to phenomena so a with

So that? Mark, add anything you'd to else

Mark Doak

I'll and add a of Thanks things. Mike couple

talked maybe we've double-digit in enterprise this the vendor but a suggested our bit in strong about Both just nuanced instrument particular our arena, seen you growers in services quarter we've about not were business. multi them or what As growth in portfolio and expansion. of

the services. that end talked now are business portfolio Connect monitoring expanding Mike more in we're the talked particular aide terms introduce actually and CrossLab specific utilization an how we a So around in to in and capabilities lot the and going markets to as services asset value-added extension of formulated an of our of Jacobs around

extremely far is As still. I'm China as bullish about concerned, China

global things of of with space. sense accounts know we're it. and now in we're seen same that really the scale and we've the innings in you'd in across the I size assets they're to to which our they looking for the in think things think many we're - the ripe the do talk early still have I lab the like innings I enterprise And it's China in, about in

the see China there. be encouraging very think So in in strong we'll foreseeable I growth will future and

Mike McMullen

Thanks Mark.

Brandon Couillard

just core Thank quick for incremental FX, quarter And of the the then us on a can bridge you. up Bob, first impact year-over-year tariffs M&A, incremental the follow help you the in year-over-year? of in terms margin operating

Robert McMahon

Yes.

points me of let you data couple there. yes So give a

were we margin the what quarter tariffs with the expense. expansion operating expected. through The in had operating So our was was the of majority about in roughly line $X which million

actually or a the then million the as was by we're year-over spent And and $X more offset $X include And productivity that. to in were you savings million that productivity reduction enhancements programs. you offset the able So about also in we our well. tariffs and and through Agilent a kind R&D, all gross saw SG&A that's but margin million headwind. $X if then of year-over-year R&D through M&A, Lasergen -year our

more improvement. on businesses that core and really able was we're of top investments strength operating expenses as R&D the the of you for sense driving and basis hopefully the gives It to well new - the driving on points being kind that the efficiencies G&A tariffs as offset line in our the XXX so, top in areas. a really And that making leverage in

Brandon Couillard

thank Super, you.

Operator

you. Thank

comes Our question Derik with of Bruin from next de Bank America.

is now open. Your line

Derik de Bruin

Hey, afternoon. good

Mike McMullen

Good afternoon, Derik.

Derik de Bruin

did little in quarter. you of Bob, a share Hey activity the bit buyback

Just sort on little position time? a that strong cash on more this given just general bit of some commentary at aggressive capital your thoughts maybe on sort deployment some in being and moment of

Robert McMahon

to cash is we of which we between know in XX six the M&A the and probably balance assets months, see with of not to of the for that strong active. as the be you year primary over about continuing not into a and/or balance. hold focus expect built in we guide I as about our Derik. I see been have quarter. can would I've now M&A more do cash of repurchase were months company back we ourselves did I and that but to utilization us the That's growth little between the use last on We think a prefer us capital half the so that Yes, the active share significant course sheet

Derik de Bruin

a your space. asked when deals you've I've recently and any the activity? of version there are like of mean the you just academic mean some I if I other lines, at ask those in genomic I'll along cell biology relatively another the wondering a versus peers in your this market I underweight question in that's guess the portfolio and you of government it, primary M&A past guess things of number done and target areas, focus are it's in but the look I space or And

Mike McMullen

Derik, I'll Yes, one. in on jump this

have actually really Seahorse iLab. be deals academic, been targeted the So some of we've it the done whether Biosciences,

So but a view. market, like that from end more it's space, collective market say I'd we

And cell Cell we're the interested on so, I the is a an of for of analysis. you hit area areas engineering interest that couple in, think genomics and us.

things we ACG as well. very portfolio in do the on informatics also is interested also can We consumables and remain there think

our that Agilent So the that be, lot of part we a space think luster fits in culture. out kind primarily really the there's being companies of that to there are model of private welcome would

Robert McMahon

add real Let something quick me there. just

Lasergen. opportunities leveraging been either groups, is, we said I really three across of the think all the on beauty portfolio side look think funnel as at it guess question business or as I think is places. strength of through able and do focused really we've to what of Agilent of our next not the it's I around seen And just other of our your you've you that I genomic

Derik de Bruin

coming can going space Yes, about while you can at up give and AGBT when an with expect we first just data? I on thinking see update say Lasergen to some got and sequencing what's to us the on

Mike McMullen

Yes sure. to Lasergen I a with it's important is within Agilent DGG. but one within mean start just reminder I'll many even of R&D us both programs

track. on meeting are the our pleased progress with the that team We making. expectations. internal We're really is We're

we'll We're and anything hear talk come won't You course in to specific about years. the more tracking at the AGBT. coming that along of

Derik de Bruin

Thank much. you very

Mike McMullen

Thanks Derik.

Operator

question from Our with comes Barclays. next Jack Meehan

open. is line now Your

Jack Meehan

Hi. Good afternoon.

Mike McMullen

Hey, Jack.

Jack Meehan

there it growth on quarter which in to keep the the is great. DGG want I going

contributor. the that was was factor The NASD out year-over-year largest first you laid

at where the to finding on the curious site and timing capacity the capacity update site? us related the I'm new new So just old you're of incremental

Mike McMullen

brought this of of new can how of at agile we ahead aspects our you really changing so but the ago manager XX existing hey a handle Agilent it, opportunities from probably general really our can there might conducted came we on saw and we call looked by but garner we and facility one, and just manufacture. from process the more some out of is in go we said, in growth and months in I the program, Yes, jump facility existing our in that improvement terms about

thought. actually status on been more same online for to we're existing And the then think will track sites the think the on bringing the relative out still we've terms this is we here, which which of we've you but of if to good. now than quite able in of this a producing by site fiscal I had squeeze I We're constructed scale of task really finished. given The of the validation year what construction essentially in end midst grade doing is the GMP material. is still

Robert McMahon

second progress all. full We, and in think we're and good was making of in Mike it order said facility. really opening our operational QX for I excellence you Yes,

Jack Meehan

Great. that to stand seems factor environment quarter? just And the instruments you just the the a seeing to on double you're and growth finally, followup talk there. second utilization what was about, in like field the and the competitive on the you digit business I maybe guess nice with acceleration that Can do in the of which question are around you think all the where out help pathology

Mike McMullen

Sam. to to is you, I'm directed pass, this going

Sam Raha

this that a pathology businesses, aware companion PD-L through is BMS. core systems Quest, our it, business have a along are to diagnostics, altogether that seen go are seeing that with our consumables at You the is which And our you're including we're Mike. systems we combination partnership Overall related partnership, have including increased got on similar call we pull it of utilization in you seeing we related we staining some at have answer as and effect we that goodness seeing number there's that doing we X a very, continue really growing To the other with portfolio. our of know and good your the adoption very a our and also And to see more and to of you to partners but core indicated that lot we're major from including well. had. and we strong X Merck pharma you quarter performance platform specifics, are of centers that reagent advanced alluded

our just it's So we're thing but general one with. there's that pleased strength across pathology not business

Jack Meehan

Great.

Robert McMahon

one DGG. wasn't thing was driven that that really across gratifying, really business a most nice was was it of all was performance. think I just the of lines it across, within or the it being It was handful, a Jack, probably one by the

Jack Meehan

Thank you, Bob.

Operator

Thank you.

question Baird. Schulte from with next Catherine Our comes

open. now is line Your

Catherine Schulte

Thanks for questions. the guys. Hey

excluding what for grow food growth the expecting of curious China and then for what did China you Just the the rest headwinds are year?

Robert McMahon

high China So single corporate at was I probably outlook the is overall digits for as think - I looking average which for it think the was the at. growth we've same total the beginning above the is been year what

Mike McMullen

but I get been and it food. say exact number you the will ex would would mid Yes have single digits

Catherine Schulte

and and Brexit quarter second Okay exit? of by could that and the your the as exposure the of we in that be given approach any uniquely a timeline impacted of your business if deadline to Can us areas remind just you then your month have impact the UK holds. you

Mike McMullen

UK I actually UK in executing to for Brexit. year my I it Bob, into a about a getting total through the main last the flow actually businesses think which impact and we're major in product from UK discussed into the I'll recall of getting hard customers our main I already would is be be have series product plans, - contingency of assumes we the and on our X% based

transforming with customers in of making which things for potential worst product in case have in Malaysia. scenario our that through relatively the the business, have in factory means spectroscopy to UK getting a So Raman other we into sure small midst our customs. but and we're we're for planning country stocks do We product help challenges

be think the right side things of not Jacob? would a outbound good from export I start So probably

Jacob Thaysen

right, you are yes. Yes,

Mike McMullen

think I bottom got material We're plans is, in place. the think have to not a So good the line in I that impact we've quarter. expecting there

Catherine Schulte

Okay. Thanks.

Operator

you. Thank

Research. Cleveland comes from question next Our Steve with Willoughby

Your line is now open.

Steve Willoughby

Hi, good you. Two questions afternoon. for

say now you saw to then the some the what your up a there in impact in have guidance $X tariffs And XX% question about just I million the as over quarter. thinking initial year? relates was I to right of if are related assuming I step as guess were to a tariffs, you or tariff remainder products. just wondering the followup of to heard First it you I you

Mike McMullen

I'll it up Bob. to you, pass Yes Steven

Robert McMahon

of are Yes, then and of it the Steve. assuming will at great, Yes, year. rest thanks the up we so that March back the to end XX% for ramp

built we into to so, our that guidance. And

happens us. something this upside delayed, if that trade potential gets So a either - such there would be for

and tariffs in with I less we'll the looks be market removing that the the we're free with forward. what it's importantly to dollars associated probably about of just about more I what going general of path associated the think like kind think more just going and clarity just uncertainty

Steve Willoughby

the kind then these versus Sure. products, Intuvo provide could kind then with Magnus portfolio just on this a newer the secondly color and And offsets more That's new these where genomic of And product and how GC little maybe portfolio that that your existing systems fits your system on with helpful. also you now XX what of new just of year? into out rest you're systems. expecting the over of bit

Mike McMullen

don’t so. Sure, take GC Steve, why Sam, and happy you Jacob, to question the do Magnus?

Jacob Thaysen

have that's we three main - space. the we Yes, and GC good in question a really solutions now have

the Intuvo that the of that's demands a XXXX focusing after great routine ones, Intuvo. And to and application needs ease we especially more that really with standard which are ultimate of customers have XXXX and the which We flexibility and ease which with that's the the is the the elements some allow type us which performance really mass so also requiring of in space. its use performance on have more spec, for area of HPI very with which in where use complex. more space but we then use space - goes is where high routine high play combined Then high the have and the also requirements midrange is other hyperactivity

really the monitoring those use ease these and smart health well based the it's access remote the areas capabilities, three And same technology So of now with very are core fits all built-in it play connectivity together. we platform. all on and same so

Mike McMullen

Sam?

Sam Raha

on we're what have the solutions first Magnus, other DNA very ready they is fully can the be few put system going get what question. with actually our to and Yes, prepared on is the system to with shared don't you going is providing they and start that's Well, all and that they into be the able like to there's end something respect specifically a it market prep the library to go that's automated customer of what we for that the a to thank load.

preparation is formally launch taking expect. both And specifically conference care automated starting immediately mentioned But going of shipments doing June, they our so, customers deliberate we're timeframe, making our we'll means we're would library system. get before, the to and the the orders the then enrichment we of expect be our first what set really fashion a will ensure success lot in in a July that to thereafter. that the for sure next we'd at fully and this AGBT Like fashion that start week target an in I in Magnus

labs this clinical by impact of labs I really NDS bigger targeted but testing is other the it we'll to So definitely see of end installs and and XXXX. year, a some think in impact

Steve Willoughby

much. Okay, thanks very

Mike McMullen

No problem, Steve.

Operator

you. Thank

question from comes Leerink. Souda SVB next with Our Puneet

open. now line Your is

Puneet Souda

and Mike. Thanks for me hi Yes, in so… squeezing

Mike McMullen

Sure problem. Puneet, no

Puneet Souda

about margins, just also then get having a I strong I XXXX holding impact you I on have have those you. And sense, and saw if but I'm purchases the impact question and from Bob thank quarter? The is, back followup the wondering XXXX get any energy, in for to I compare knowing chemical and any wanted waiting customers and on a

Mike McMullen

to I slight, coming very Puneet, comments, carefully listening is the So think you the must through. been have scratching my

was to quantitative and think a was XX new years things I XXXX. the still there want may in alluded put but Jacob this mentioned, a think clear is uptake like course been to knew because which are product, kind I is, that decade XXXX say with it's our to So product has now choose, it, some on to quick go we to it that but in happened the making, of of see hard they there customers a number coming the which right I'd and that in we they as and making

about the saw can't is I beyond the some we part chemical So [ph] that back in may, one but the that ability QX. to of energy also good why story, growth to reasons our optimistic what quantitate we growth of were it, think and again get in

compares. to the So tough think there's story than I more the

Robert McMahon

And it just it. respect our for XX for build to years team R&D didn't take

Mike McMullen

Yes.

Puneet Souda

shipping this Thanks, should come into come, the this so you're that to we now quarter out? next mean expect I in

Mike McMullen

Yes, fact week. yes, note yes, dropped that and a Jacob this other we the day me shipping just in started

Puneet Souda

And great. a commented from what's view a and level Bob, I corporate just you. they sort at improving the time are, to I expectations in high of recurring up have you look XX% that the gross there. had and to get new longer obviously so get sort products Okay and improvement margin margin and a a Intuvos sort just gross gross sort point trying to of seeing on, sense profiles, term, being you're moving XXXXs longer wanted margin have margin and wanted about these term? some by Thank portfolio understand, of your contribution now some you overall then you that consumables to of I'm

Robert McMahon

And to mix. I commercial as that years course work the drive. been to that great as operations through discipline mean have I Yes, couple look improvement margin significant able then we've well also the of over think the has pricing able do teams had of positive really the the the if last team been you gross

good saw you really think very would've and gross for because that tariffs quarter weren't tariffs I This we improvement. the margin some of if had moderate it

have. the be the anniversary line. margin which in and a operational operating see that driving gross the a this We to we I tariffs margins in and XX XX we I the XX gross going But bps margin things margin. had the think QX, us tariffs ongoing an full that In points for improvement, on improvement call the of modest, probably of would once ahead margin for well focus we on restated year a both us of gross about call expense the go up start lot would margins as would that talked back operating which of stronger really to guided growth combination basis as you'll QX improvements year expenses, back it on evenly expense range anniversary the we basis operating were year. just to probably you a gross gross operating expect forward, expansion it to as little about margin, of through but the to the news between I in this being be and game see split is that half and good be came kind XX

Puneet Souda

so Thanks Got guys. much, it.

Mike McMullen

You're quite welcome.

Operator

Thank you.

with Our comes next Cowen. question from Schenkel Doug

line now is Your open.

Doug Schenkel

Ryan is out for taking questions. my this Thanks Hi, Doug. for

to within seeing that Pharma. remind a small recent Pharma is proportion revenues now slowing premature? growth bit what Can about the your quarters you molecule within you of or growth a segment down talk you're from are those and finally didn't call Pharma us what to little out customers large healthy you great is small And Another molecule Can quarter. molecule customers? contrary

Mike McMullen

so observation. Yes, great Ryan

over ratios the last somewhat So have three years. changed

analysis on a demand not and with for been not It's demand we talking side. of LCs driven portfolio speaks it small the the happened, share. XX% the thought and only we how been strength XXXX it's strong double to it's as that saw the our a the answer lot molecule growth the digit up XX/XX has biopharma question, of XX% about the think slowdown your you in I but space breadth how for But is LC of but mix not our picking we've that's biopharma the spec about to know, already we've mass space, in while and moved.

we the year prior last year of when we blow QX one after LC/MS. in was the why finish such that strong recall may You a had reasons a had

the as think in the on So is a right? as by business way growth I our Jacob enterprise of the well new I well where in of NASD the solutions have as the space portfolio of coming And interim think you in this some lot up. breadth what's going business shows also ACG terms in our out this

Jacob Thaysen

Mike recently more molecule, small for what here Yes, and out the came Q-TOF. was

that small So that within of market a also what in advanced and full with address we molecule, coming had the a a we've had was the within specifically that Q-TOF came out environmental into out the for year now success with we ago academia lot research. to last focused and bio solution. taking molecules, technology food have We're the but also

movers biopharma continue the and also we going of we So first we one particularly in the space discovery the the forward. on focused biopharma biopharma where had of started We now, and the will into early course R&D. to success invest into out space,

Mike McMullen

of in in of more the overall small perhaps oversight growth Right. [indiscernible] calling an And narrative healthy. a was was terms that also pharma, molecule XX% out with

Doug Schenkel

to don't Thank how over you Yes, when your to the means, for the excess a more balance expect that we Can significant Bob on significant do And you. deploy very about think a minimum Thank current you. call cash business in hear to for plans balance time. what cash? sense give and the your should expect cash you you maintain you earlier helpful. us noted

Robert McMahon

to better as I that. year we're as we in this cash quarter, through don't I is continue Yes, QX. using of in would now say over it growth What feel the oriented will a later than time. generated for continue net We say rhythms a position. our I right but would I of cash one actually all expect would deploy we in that to get kind the of terms in see business used in I on capital we a get us more way.

with drive in to strong growing dividend to continue buybacks. portfolio as faster just areas and We and that think I couple our then augment more growth, share importantly probably importantly already investments but

Doug Schenkel

Okay.

Operator

you. Thank

with Our Janney. Paul next from Knight comes question

Your now line open. is

Paul Knight

Hey, you. are Mike how

Mike McMullen

All Paul, right are how yourself?

Paul Knight

What's Good, in activity? it Is a this Is you change perceiving? that seem behind are philosophy? to M&A. be doing more markets in a you that change

Mike McMullen

Yes. Thanks for the question.

was we've got way the really in and to made continuing this and with but get And and this got laying coming or conscious the we we we've We've So it control, under our role this established acquire roadmaps into to got what Sam of I have you've when Bob as core I this new this running whole seen into use foundation our decision growth company also first Eric this a the sort in years we hire redone. balance of operations of the had assets. with And view Gerber. early that the think a terms to, it have great we role pipelines, new to foundation I I opportunity operating came R&D described company sheet my results a started delivered, is our in company. now

position also from continue and company we the have building is in believe terms this standpoint to making better be more at acquisitions the in work in the think I that foundational I we the So company. to get work a market. are the And for muscles been of very actually to acquisitive. active the

the our start require impact we that can into we're nice rate. material differential leverage of of think Agilent assets adder. acquire where model segments We have and to are just as a on team in where paying model And overall to but you this, market did and One where and to faster a businesses acquired available difference off growing a number and the is grow. something go of nature, in see last really markets can of we the record of and a companies Again opportunities doesn't to it's company. are acquisitions I year than in I'll terms they our mentioned, a looking the re-emphasize M&A, path growth Bob that have passed innovation see didn't the were

want type of and We the company we that's to growth that assets are acquire. a

the a in So I on think plan we to be and market. it conscious active decision was continuing

Paul Knight

you diagnostics give market, could lastly, the questions. will much position? what And us after be so Lasergen. the for Thanks Is refresh a their going on that

Mike McMullen

is million. here go competitors I component Yes, this our the business into strategy that handle sort now I our a one but one, workflows have ahead built this right $XXX major a of and excess NGS of and some we're know supplier of in think of

Our you use to turnkey a to have where market to a that going easy need we you is view ultimately that routine see need workflow solution. view are

Sam's a have a The back that of may was recall already components you the to of at Day that from and last year. our lot piece Analyst overview We sequencer. missing have actually

to sequencer diagnostics build for So best to our workflow business, really cancer but marketplace. the thoughts box-to-box try the are that compete not in

Paul Knight

very you Thank much.

Mike McMullen

welcome. quite You’re

Operator

you. Thank

comes Our Dan question last Citigroup. with from Arias

Your now line is open.

Daniel Arias

Good afternoon guys, thanks.

Mike McMullen

Dan. Hi

Daniel Arias

instrumentation, at Intuvo chemical or on replacement honing business? energy, the level segment for contribution curious willing, in you would be think the at or do just for where point the Mike. put and you'd on Hey your what I'm the either overall On be and could this penetration comments if you

Mike McMullen

about because Yes, so market, after marketplace. Intuvo be think energy transmission in the this this was to I to and chemical the our is really right gas only a market for I you chemical to my energy that and geared want mainstream energy think but which and is portfolio, think the labs is the length narrative and more market to XXXX and really where hear primarily that when kind around really the tends chemical the why probably able routine great GC went high think analysis really we product spec market I volume target and nobody of mass based because in XXXX that's those towards environmental difficulties, of food

give the low So believe for a year. which we've Bob chemical outlook number, you say product. and the won't some single the but of digit proof to one why we're is I on there our I believe, is upside current really can believe this perhaps I excited points about energy I got we specific think a

Robert McMahon

Dan going being of question, LSAG, these is think, value across in are to us feel growth collectively that market the your our helping are I proposition move introduced, going only but products the that sustain that above of new portfolio company, what's and total is the the to individually these in really and none levels on portfolio continue because is marketplace. to just not Yes, the provide able our of but needle to confident

Daniel Arias

Yes.

year targeted think on Bob, NASD build I out. the then in margin $XX the for forecast, if XXXX so out Thank on investment could million you. the curious I'm just it sounds last as like operationally you're spend you the you've Okay. track holds? if or that And

Robert McMahon

forecast had In the with, consistent beginning - we Yes. said changed haven't that what general of there year. that's we at is the to the relative

Daniel Arias

bunch. a Thanks Okay.

Robert McMahon

Thanks Dan.

Operator

call our final like to I'd closing back question, Thank remarks. you. That's so turn the for

Ankur Dhingra

wraps That up joining. today. All right. for Thank the for you call

because something or transmission out the in Investor us to much. any get Relations. the If Thanks you of have couldn't issues please to reach of questions, very

Operator

you. much and Thank conclude participation. Thank Ladies for gentlemen your today's conference. does you that very

may all You Everyone a day. disconnect. wonderful have

Agilent (A) 20 Feb 192019 Q1 Earnings call transcript