Earnings call transcript Q2 2023

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Operator

Ladies and gentlemen, welcome to the Agilent Technologies' Q2 2023 Earnings Call. My name is Sarah, and I will be coordinating your call today. [Operator Instructions]

I will now hand you over to your host, Parmeet Ahuja, to begin. Please go ahead.

Parmeet Ahuja

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

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

for the our being presentation available webcast live. this www.investor.agilent.com. release at results, supplement The This webcast website quarter presentation investor second news and today's is financial discussion recording are to information our along on with of

refer comments non-GAAP financial Mike measures. Bob Today's by will to and

on or Unless to growth our all references find to in and core decreases noted, basis. website. GAAP will You most reconciliations directly otherwise increases the metrics on a revenue comparable references are financial are year-over-year and financial metrics

the past revenue impact the within of excludes any divestitures completed and currency XX Core growth acquisitions months. and

is based forecasted exchange rates. guidance Our currency on

call, assumes them. this the for valid performance forward-looking are recent statements statements These and other also we to obligation more The to a make at picture financial risks factors. company. the today. company of and risks subject complete are and of as uncertainties Please about only filings look our no update the will company's During SEC of

turn like I'd to call the over now And Mike. to

Mike McMullen

call. Thanks, and Parmeet, everyone, our joining for thanks,

translated like more before on to over seeing dynamics this some are today, some cover year. that closing I'd returning provide to market has comments. the insight results. half how quarter our expectations In lower Bob recent then I'll of outlook into turn the then this for and brief and second second the things detail call for first for our quarter into I'll we

growth the across above results In Revenues very with an markets and regions. X.X% our second all are up core Agilent market in environment, team billion challenging solid expectations increasingly $X.XX quarter. the delivered end of

and by driven Our Agilent outstanding execution results team. an portfolio, are broad innovative and experience the customer by differentiated a

for the pharma XX%. the end materials Highlights points. XX chemicals basis our largest well performing markets, per and $X.XX margin an Operating up very market advanced quarter. share quarter perspective are two of and XX.X%, include up from Earnings in

grew Our pharma business last top XX% X% of on growth year.

which two our small Pharma the small see the NASD and by molecule is was exceptional years calls, lab X%. previous in led rates consumables started biopharma, seen and cycle eventually In driven XX% replacement quarter. business, would we moderate, this that past we've grew while double-digit the services, talked declined which we by about to molecule growth what

a advanced On strong than chemicals more once digits. business The energy XX% advanced again segment XX% geographic our segment expectations. growth in and grew Our basis, results delivered China exceeded double materials and and grew chemical XX%. the high growing materials

While one, COVID the ago, a in compare lockdowns China. growth even adjusting for the we still was an double-digit easier Shanghai achieved year in

In compare ago. while albeit XX% core of addition, delivered Americas X%, Europe a year grew tough against X% growth, a

and Applied Sciences group $XXX up core. Looking Life million, Markets XX% unit. at revenues business by performance delivered our The of

results were strong Our our instrument conversion backlog platforms. aided by across

and with the across products way in quarter LC the continued with end growth lead Our XX% all LCMS strength markets. to

to led in consumables as lab well. business for demand Continued XX% growth that

our specifically focused including their biopharma our treating on Bravo allows for quickly During biotherapeutic market, enhancements products to enhancements product innovative in new researchers our the these acquiring Many automation, innovative the of UV-Vis technology products to we capture Cary develop customers NGS analysis LCMS market. NovoCyte line several and to serving cell Agilent's LSAG bring to strength to systems. additional are e-MSion by the and technology. added team electron quarter, disease. e-MSion continued more

strong by million. $XXX of core services. broad-based, driven revenues contracts. growth representing posted ongoing ACG's Group CrossLab our demand service Agilent resilient is XX% for revenues The from This was up

We see lab the future are benefits environment. relevant In in growth even for more as of services in particular, given our customers portfolio. today's our many they opportunities help challenging productivity continue drive to service offerings

drive quarter support Our customers. the customer partially Genomics high strong industry-wide drove new pathology weakness is and NASD XXs. up also Group another revenues and helping trusted NASD us genomics. and gains growth, Strength share in $XXX in million, general by our offset growing delivered and in to of posted Diagnostics The strong core. businesses acquire enterprise X%

of on Our track Train online on later quarter, has next manufacturing phase expansion. to come B the started expansion this construction already remains while

wrapped XXXX earnings and we core growth first fiscal in up half of per share. revenue double-digit with Overall, Agilent's both

However, coupled conservative system approach uncertainty, the from a have stresses continued more the across customers banking accelerated with our macroeconomic globe. in

back drove has challenges primarily are CapEx-related and Early revenues, end funding the stage most affected instrument biotech markets mainly across the This customers, markets spending liquidity purchases a in cash but as scaled U.S. centered in China. and part our small of dramatically conservation. pharma while

be orders. the these of biotechs, for it deal healthy, longer Outside has order order continues to slowing time velocity funnel approved, to a generation and be taken but early-stage of new

cautious constrained expect remain half course and throughout approach revised in to of this our environment place the these Because we taking year. our to forecast are We a have the factors, of downward. fiscal capital more second

faster X%. of core X% the range expect EPS X.X%, revenue growth at revenue now we result, growing be with X% in a than As to to to

margin and cost down Our drive efficiencies in to the year the increased productivity second first we're leveraged on earnings of operating half more delivering growth half. the doubling increasing and in

to we for additional we enable solutions customers and as As cost support done so can we future new profitable growth. will we've our in the innovative generate continue invest in past, savings

execute prepared unstoppable any at Agilent that team an face. level are consistently with extremely may is We They battle-tested. One they challenges have deal well high and to

remain success. back delivers to the provide comments, some keys on QX but convinced Bob execution will team the customer I'll full the our unmatched outlook for we closing be Agilent Bob focus, continued provide remain our remarks. the details and his overall, year, and our to strategic service of After

now, you. over And Bob, to

Robert McMahon

Thanks, everyone. good afternoon, Mike, and

through quarter well as as quarter revenue my noted, the some guidance I'll finish Unless outlook. take updated provide for third remarks statement otherwise In results. will on year details the I other remarks you our the today, and metrics. our and additional will financial my with key non-GAAP up then income in focus on

contribution revenue a exceeding backlog Currency the with up the leverage up minor expectations. and to our quarter headwind, at a reported $X.XX while X.X QX expected. level. was billion, core basis. we In Revenues X.X% X.X% and QX, normalized M&A were as exited was our on was continued backlog our point a

markets well in largest quarter. end Mike the two As performed mentioned, our

XX% the doing largest led molecule of the with biopharma, quarter materials well, the growth continued top our X% market of strong market, last to advanced continuing year. materials growth while during advanced Chemicals market end growth posted and Pharma, lead secular drive the energy small by declined of X% on The are slightly. chemical subsegments to and way.

are growth at the this rest an strong As And quarters, the the end very markets, the driven impressive XX% China. driving looking demand in semiconductors in during of past by batteries in food quarter space. and market grew

academia by continues constructive. the We also and results environment in XX%, funding be as China Americas Europe saw led market in government up The to Europe. and was the strong and

mid-single-digit year. in declined. partially And and for led grew Americas, offset us growth clinical China strong on Pathology but still Americas slowed environmental QX, delivered the the by again growth. X%, a diagnostics forensics the here, and after while business market X% by genomics. grew led and top Our Europe way last the business of very X% The

Shanghai. geographic a following the lockdowns in basis, On exceeded growth China expectations, our delivering team XX% year's COVID last

last from lockdowns quarters. As we fourth last into year, deferred roughly mentioned million in $XX third the COVID-related year and QX

will the tougher lockdown our in forward. So this very Taking results better out going effects of QX And than of so China grew high China while quarter, double have an the compare, solid is easier single expected. Asia by the estimate China grew rest we digits, team. digits, compares still much we

markets. see The unexpectedly effects and the while slowing and grew digits ACG expectations Europe with DGG environment. led the with both accelerated line single as low CAM. by growth we of all X%, perspective, a Americas group end in From to started grew grew, X% LSAG declined CapEx across pharma

the P&L. Now down moving

drove year we was down and product flow. Second SG&A, expected. line, good which income to from The points largely cost XX.X%, pricing quarter benefit was discipline mix. operating we benefited of XX.X%, from gross from margin the due cash our ago, unfavorable interest up as an higher XX to a basis in interest rates points XX strong year. basis Below to due had Below margin gross higher-than-planned last margin,

shares was million quarter outstanding, rate we tax and the XX.XX% both XXX Our had diluted as expected. for

with combined up $X.XX, year QX growth. good per a Now putting our topline result, very were it together, ago, earnings X.X% all XX% a from core share

payments in This During deferral result made generating by cash fourth in was affected to roughly designated part deferring winter the very flow U.S. our available to due strong, million. was California. counties in to fiscal This helped the the is tax by payment $XX of taxpayers relief by million IRS quarter. operating quarter, $XXX estimated the storms

$XX dividends balanced in investing our $XX $XX million, also $XXX CapEx, returned We repurchased million continuing while million million approach to capital successful through deployment. to shareholders, and worth shares

earlier of of our even environment leverage Moody's remains a quarter Our market recognition financial important the long-term corporate debt Agilent's we asset of ended rating healthy strong is on month, sheet more an ratio This this is BaaX. very an balance with Agilent's as in and strength. net action investment-grade upgraded And this to X.Xx.

to revised QX. year the Now for guidance the on and outlook for

billion. reported and of growth to the expected points growth. of year, will to the revenue range we be X% For now X.X%. $X.XX to M&A be X.X represents billion headwind while in contribute is to a of This of core of $X.XX growth X.X% X.X to points expect Currency X.X%

to second wider of the a possible range reflect our increased we've range for revising addition guidance, year the the half guidance to outcomes. In of

modeling encourage to our guide. use you I of For the midpoint purposes, would

our the updated an capital market most business. recurring instrument guidance revenue reflects outlook From more unchanged. perspective, impacted a market largely constrained remains our market, for The low impacting end businesses we primarily geographic down year U.S. China. perspective, we from from and see is pharma And a single growth where in high are expecting the full of impacts digits, now digits. focused single Our

With earnings be to $X.XX, in fiscal $X.XX expect XXXX X%. now the per to X% share year we non-GAAP of growth representing change between full and revenue,

at of the to I encourage midpoint revenue, model our with guidance. you As

Now turning QX. to

is in growth billion. of a revenue range core revenue. X.X% This expect reported $X.XXX X.X% of We both This and $X.XX of for billion decline of represents the a top to on decline to of compare basis reported XX% last and points quarter. both Adjusting the would add tough to the a growth of core China QX year for deferral in year. in roughly last XXX

other. and in minimal, expected offset Currency to are are and M&A QX impact each

X% to versus Third quarter prior non-GAAP $X.XX between to earnings year. per share $X.XX, the expected X.X% be growth are representing and of

with We customers. our the continue while environment to performance, pleased are confident will for deliver a estimating our we are and quarter more ago, difficult market I a facing than we that first half were am team

Thanks for on call. being we turn now for some take things Mike? your the Mike back questions. before closing comments to And over I'll

Mike McMullen

Bob. Thanks,

that shared remains unchanged. delivering Agilent in right and I right During growth to call November, culture with strong QX above-market the 'XX results. the you continue strategies, I team belief believe right has My

we reliable, and meet quick needs. know customers to extremely their Our are in resilient reacting

The continues hard work their to Agilent earn trust. team to

in outlook our near-term faster continue to market. to markets than the end the the in confident ability market, remain grow the points in our long-term prospects continuing growth and to we While challenges

environment, rely ability on, market a on in As partner can model. our the despite our value trusted creation they deliver remain shareholder our current that know to I customers confident

values Our approach and haven't changed. core

investing culture with great prowess a work formula being a for support, providing innovation They our place for to focus success. company long-term remain the are best our customer growth, Our here for stay. to and on differentiated industry's team Agilent's

now you, session. And Parmeet? lead the to you. Parmeet, Thank question-and-answer to

Parmeet Ahuja

for now. Thanks, could provide Mike. if instructions Sarah, you please the Q&A

Operator

comes question with Please of from ahead. Couillard Brandon first line go Your the Instructions] [Operator Jefferies.

Brandon Couillard

thanks. Hi, Good afternoon.

Mike McMullen

afternoon, Good Brandon.

Brandon Couillard

kind say, Mike, what to helpful it mid you to demand in let's seeing relative unpack large biotech. be pharma instrument you're if between, would of smaller of terms

year. coming back Some how talked pharma of customer delayed your in large the just peers bases? Curious kind those outlook maybe two in later of have what budget bringing you're embedding that your about you're being and

Mike McMullen

Happy Sure. so, do Brandon. to

IPO The with been as small venture there, financing pretty So seen capital I banking think much sectors. conservation dealing money limited less is market. there the access shut efforts cash down. are differences crises the two real biotech challenges the and they've on of out We've to between

But instruments. coming business companies, as see large level on in very capital actually, an increasing pharma our to a and the -- from of it medium-sized relates still we investments, new conservatism particularly

year-end And not assuming a can budget perhaps, we're You we case now if make there'll money flush, that not I can not the pharma We're customers that seen on handle companies think I remains today. to their instrument now. our their right larger try a indications any be really it's be is, that they're year We're situation giving relates will what side that about at business. again, because that full to comment spend going change. spending to budgets. they'll And a to our CEO/CFO primarily how what all be think to go seeing of is year-end that decision

As we demand remarks, continued to in consumables marketplaces. strong commented add prepared -- that? these else in and continued our quite to Anything services

Robert McMahon

Bob. Brandon, is this

roughly as Mike we're our single decline. digits, QX. of double which of we're represents saying, if rest of assuming double the was we of during business, capital. one low kind in, we kind is about projecting more about to Just emerging roughly the now digits. frame that has And this really the given business pharma at that XX% changed this conservative and were And course low think biotech, was the of and to expecting that That high businesses, these now digits,

say for standpoint velocity the are of orders. deal working It's them. just to that with also from translate healthy the taking longer into would I funnels them

Mike McMullen

we approval our as thing -- levels being well Bob the aren't we're here base. within as Bob, customer is at I and often are timeline, extended, the are often mention one well budgets mentioned, cut. of to higher as forgot hearing But

Brandon Couillard

helpful. That's

in what kind Europe. manufacturing pretty curious unpack just if seeing I weak you Overnight, could in more in industrial slowdown cyclical, let's see of you're odds was you any the got the if we Lastly, of PMIs. geography. terms say,

Mike McMullen

may to but a to you results as continue No, were have I it watch Western as point been Brandon. we area, earlier area, really particularly to this a Sure, Europe year, pleased date. pointing Yes. watch recall we Europe. say, the we've to with to

signs seeing there. to in And demand of base the We pleased chemical continues how business materials Europe, customer are increased now. right the is up of -- our holding on but advanced side we're cautiousness be with

Brandon Couillard

Thanks.

Operator

Your from Kumar Please go the Evercore ahead. next line Vijay ISI. with comes question of

Vijay Kumar

taking question. my for thanks guys, Hi

Mike McMullen

Sure.

Vijay Kumar

trends Mike, of can you may make April were? frame just to guidance. because How it sort sense of trying just the what I'm progress

to And low declines. You we went guys double did first double the from digits half. in single-digit digits

see there far, of this I'm last historical pace kinds things Just a slowdowns? assuming this end any quarters Do or only any we're of us not frame this of so market change slowdown. changes? other like these like Is you couple pharma, correct? analogies when these it's Like And reflecting is four guide quarters?

Mike McMullen

business. tag there. a of first maybe you lot team there's So on about unpack Bob, I let's the so But and can talk of all to pace this.

is double-digit So first expansion. how continued a as half, you're at it the mean, right, really cities. tale margin double-digit two Vijay, growth, of EPS performed core I for look growth, we

a in signaling customer second and quarters. of the about our about base, a uncertainty assumed we for talked been that we guide. that and been cautiousness But talking We've few -- have was we level our half saw in

we deals But would April, out, really push what were started further phenomena. for tell the from really to guide maybe caution really of I so see March, cycles the increased. We terms the customers level reason pushed for weren't started the it's that last a to get continuing the was second that little late in And downward week you centered Deal of a half. our closing. in of actually or bit where is and quarter

you are also far that What revised what I order mid-May tell was so towards is orders, you, your I will, today one of our tracking can expectation. questions, if think May, seeing through we're

are been We the But of it's cycles, before haven't kind when least -- terms because cycles we've at downturns. these to always in hard hard through These months. XX always cycle to exactly experience is of our predict to XX-month XX started. know

question that's few that think in I through quarters. need and work the next to the -- So really here we

at today comment said is a Bob here and deployment. we past, as And the we're take of we're marketplace, today to you I do in level to capital on it's again, what and seeing trying have cautiousness a one the And what in is time. increased quarter

Robert McMahon

Vijay, In backlog. revenue second couple maybe to our other we'd add orders, and greater what was talked quarter, just to say, a exceeding at still the normal Mike comments saying. came of And we was really towards about the -- that QX, back end. the into than we

would our mid-single to of took you QX. in impact able team OFS and we at -- backlog actually And our backlog that. was able for leverage down we numbers, out so the were have transparency drive our if And digits to been

we QX, refill going as of the our the that forecast. into had funnel as to into much resulted we built lower And the coming in for We some means were which a of half just year. we thought didn't expectation second

Vijay Kumar

That's extremely and Bob helpful, Mike.

ahead, Mike. Sorry, go

Mike McMullen

I looking Bob, relative just going say fair pharma at guide say to was assumptions, I to mainly the our think we're it's to too, market.

the cautiousness segments, level all we're this end centered but really Although -- of seeing across level really is of in market pharma. increased cautiousness

Robert McMahon

Yes.

Vijay Kumar

expansion? rough us That's up, helpful, What coming that? back operating margins Mike. back think basis walk and through up math XQ you what and EPS XXX suggests just gets that down, can levels. margins missed need be XQ operating margins drives quick half This just With to revenues margin And to points one. just us here from half I one

Robert McMahon

lower-than-expected higher than mix resulted Yes, a did we In And revenues that expected. we did right. in we negative QX, -- effect had you're margin. some have

year down guidance, lower as Now we a we so Mike we've of expand anticipated. to our much to drive talked streamline second expansion in in had the just taken cost the half efficiencies, expand. didn't as order a to as the greater doubling second about EPS. We profile the spending actions half on result drive the as margin in of did number of And

Mike McMullen

level out pay point tied variability assumed also I'd company's a in for our in is the our plans guide adjust half. Vijay, to And second for performance that of there directly are

Vijay Kumar

Thanks guys.

Robert McMahon

All right.

Operator

from comes question with next Securities. Please Your SVB Souda ahead. line Puneet of the go

Puneet Souda

Yes, hi Mike, for Bob, Thanks thanks question. Mike. taking the

about So quarter? obviously, on are of quarter. really obviously, one China, very expecting stimulus happened Can elaborate in is that the a to you your talk and into -- baked if full if relevant just in that's strong for this there. first second you're emerging expectations the you the wave what guide bit you year? that on, And half. the could you're contribution new something for Is anything moderation seeing COVID Also, overall the China sort

Mike McMullen

COVID our that. as waves half into I'll Yes. I pretty experienced because then we we've the Bob, second Why guide -- we've you, assumptions. don't -- the last I mentioned out but new can through the don't we throughout to we think with answering guide, quarter, significant to COVID considered shown that wave, and we can very not years. first, easily, believe in and probably each I terms you would start easily mention have of navigate question our And But not

that was that storyboard a of In fact, from this you may year. recall QX

compete. as that and research space, from to the Relative been more closed where of products understand impact the February. understanding high-end such at we which, was in stimulus, China or SEMs, on don't end an the remains stimulus And fact, offering seen NMRs no really story in our initial the on and things stimulus, record on focused off as material we've -- program was we've from same we have

So our front to happening all we're relative stimulus. not seeing on at much

is we're our marketplace some to one that year would that discussion If Now occur, maybe would there the year? And in in for there's coming. really assuming current no is forecast we've no the stimulus the some change guide. and half made as the that assumed the upside Bob, our be know another I China adjustments to for outlook in second environment for

Robert McMahon

we be what was facing roughly for perspective, were Yes. $XX QX, and prepared much will in very QX remarks, up you we assumed we six in of year, and at strong, given a That QX went give to million last that tougher revenue down talked XX% minus of QX, roughly going Puneet, year, our then deferred weeks. look if $XX shut X% easier to to always that's now we where XX% in a million on Shanghai was that showing QX growth. comp, growth last about an comps. make it and which And we

expecting back of always we're the half that moderated growth in just given So the comp. tough expectations year

in what maintain of second marketplace, we're see elimination we've the which out the Now were current after of the zero the coming assuming through first of year. particularly of in And seen pickup is kind quarter COVID. in going we half pharma, will not the the a the expecting a not recovery. to that this performance performance We're

Puneet Souda

provided And super That's the Can for there? customers. overall then remind what's us early-stage if helpful. know company, the I it. But for the you could just I mix on Got pharma. company, biotech touch you the overall

we as And cycle -- last impact the do get business of a Mike, years, at high just think And that? offerings instrumentation, last When NASD that over there one instrumentation just back the number we cell you over a a of remarkable getting the instrumentation? any of pattern few you then for in we're of is sort normalized have to level, given here, questions therapy seen of saw very result or expect your decades. that the placements also, there strong two the order

Mike McMullen

So maybe first. we start with questions business and the NASD biotech

NASD our no business. in impact at So all

pretty can Sam, we right? think, I say that equivocally,

Robert McMahon

for to of a -- to perspective, X% full it's company. the Puneet, in terms revenue. less you company And X% total roughly give the It's is biotech, roughly emerging of than closer

Mike McMullen

still your ball always We've seen and XX-month will, very this talked that the is We're that which your calling of piece. yet when around kind mid-single-digit cycles historically. this we've if a have to past, And healthy XX- typically Jacob for service the year. market instruments, Bob the crystal I rate and kind you of and of at question. as to consumables particularly which occur question, end not growth And more with and for is last build growth -- sort in of, is market for question felt you is, toughest

other So We've about thing would a time talked time that is the for instrument business our large I only majority is a again. replacement and I cycle. of think say it

will these The is to so They in replaced. are be base. question have when. And products the installed

interest and high. again, demand And remains is our mean, I strong. backlog

we emphasized As backlog. just and Quality remains -- mentioned today. in as high, say, calls, fresh likes we significant cancellations prior that to Padraig we're again adding I no and backlog order the funnel to

So indications it points when we're future are but behaviors to change. demand, to buying of not their just seeing going

Puneet Souda

All I right, thanks. Thanks it. guys. appreciate

Operator

the comes go question Sykes next Your from Goldman Matt line Please of with Sachs. ahead.

Matt Sykes

is market? growth you're Mike mean impact both is and year changing of afternoon, with materials pharma My of taking large small. full kind Good durability strength the what XX% demand chemical we is But some seeing that level relative of concentrated my expect I that it be of the growth, what of end year, over to the pharma, seems could resilience which the just help in questions. offset guide the you're space of in clearly course outside? Bob. question seeing seen given the in advanced in for this should and your and on outlook to certainly a Hi. you've largely in the first delta -- the in Thanks sort

Mike McMullen

our in It's a great guide. what year Bob, think full question. assumed And we've actually I that's

some want maybe share So of specifics? to the you

Robert McMahon

we at built Matt. changes if and the beginning were where at of the mentioned, single single into largest going I Yes, the were pharma, you low -- looked in as to the digits, digits. we've where we high year, at What

year. high mid- growth we advanced single-digit are be kind semicon of loaded given are a in -- fundamental challenges seeing see with But we materials, comps secular front-end of the that still assuming the resilient terms of the and full more chemical we drivers Our batteries. some expecting to given of and we're to for China. that the Certainly

the half in are to to strong of stay second So it and strong continues year expected be well. as the

Matt Sykes

It's Got for Padraig. just then a guys, you it. second really And helpful. maybe question

given of the this over talked the sort growth offset to But Just warranties on relative increasing in I whether wondering some portion in services if double, sort about those cycle, might is side, in the terms purchases or you've you past equipment just smaller to sort XX-month extended to ACG helping LSAG. acceleration services capital a by of ability services course kind XX- the if on just revenues. of have some see could single-digit low to revenue high ACG, of do of realize the of we least sort or in cycle, for others extending it's XX- I'm weakness of you of of or of time see this a the durable at XX-month level ACG that period? it's

Padraig McDonnell

as -- big helping we're so management And service operations. of asset demand services platforms on. is demand Yes. efficiency, we're for add offerings, all in extremely our particular, to with we're of strong their happens. their Look, the utilization customer of a and I And types lab-wide seeing seeing enables for enterprise where installed base hardware think that customers customer types the of the all breadth product of offerings many us across what

going it's it's So that time I business, I and durable to think to a continue very over think frame. durable be

Mike McMullen

Yes.

as I and purchases. life the part story these than of about think a deferring durability are replacement recurring is I think of here instrument people the Padraig word to is even talked this Padraig, Matt. right We've bigger, And businesses. revenue company's portfolio. extension here, is our And use resilient

and really been up on believe share the been we've nicely We doing also picking job particularly enterprise level.

Padraig McDonnell

to this service to contracts a through attach course, onto our the I would cycle, also we as have go And say, big business. that. we accelerate Mike, opportunity still we of continue

Matt Sykes

Great. Thanks much. very

Operator

question line JPMorgan. the from Please Vatnsdal comes Your go Rachel ahead. of with next

Rachel Vatnsdal

you for the Okay, taking thank questions.

maybe questions just first, backlog. some So on

this noted that on You quarter. backlog worked your you

revenues. you tell can on you for quarter, do you'd of could business, worked but the portfolio, portfolio today? than just months instrument the then that have And the on backlog that instrument total grew us backlog So many orders on how faster last you noted

you as rest of as trends of give kind can and of well some that versus in order the instruments backlog business So book context terms between of the us well?

Mike McMullen

Rachel, question. thanks for the

to report quarter. As the normalized don't is know, how the book-to-bill, use in I the you elevated we have describe levels think can backlog qualitatively the we but word from on we seen we what backlog used and

at backlog we're of level So normal supply. month a in terms of

towards So there we've now. -- been talking we're backlog, the and movement Yes. this and terms of in about normalization

Robert McMahon

And Rachel, you're right.

it did greater than in I And than side revenue orders. QX, earlier and and grew instrument And mentioned supply. eat QX. the we orders QX call, into reversed in in backlog both Our the where in as was greater QX revenue

thought the we that to healthy normalized times As delivery a back well was that a as normalized times backlog. we're at delivery as And thing. declined,

Mike McMullen

some continued Bob, did quarter. compares order think year But think and growth. pretty we terms ACG our -- prior and I to in tough DGG in I of have grow the

Robert McMahon

Yes. That's right.

Rachel Vatnsdal

question then the Great. here. market And LC a on

grew guys in You XX% quarter. the

this we've So comments some on heard market. varying

you just us walk can are you So through what exactly seeing?

do about what expect comments said year for full share today then LC And some And you for you've finally, gains. growth? the

or that well. about some recent as months weeks well talked in recent You as

LC? wise, whether of gains So can that you what just talk and market, you're to or in the us about geographic basis parts doing customer that's segment kind of share

Mike McMullen

to instrument the macro cautious Yes, an is Jacob to customers relative think LC opportunity the join call, described, set but overall very of for made into an has increasingly had new going to purchases. conversation. is the we I by being environment consistent I'm here pull he in this decisions which storyboard with But

would about this to what on that the been that about we've small we the we to occur. quarters, saw know, throughout perhaps, in start share talking then of been expect you actually And moderation a we for quarter, and rates see recent as the XX-plus number see this year. a you LC market well, your would industry molecule as were of of that's some add question well. continue And as moderation level some and see here expecting And to quarters placements, thoughts the have in seeing Jacob, to take that for growth want

Jacob Thaysen

and LC the see last really business. for and absolutely, Mike good over the And we all, mean, LC growth Bob fueled continue pharma, markets. Mike seen And talking are molecules. Obviously, we also, in gain changing that, markets mentioning market as significantly about, high business was end these share see have first a over year, right of Yes, now. as many and was small thanks our in the the the we in I both to large both question. of being

is in while market on from strategy thereby of and pretty and reliable place dynamics portfolio much will workflows that in instruments robust change the LCMS see the So have been growth the we the has build some to in rates, based whole been continue a these also what market solution-oriented. and also really will are and gain while that business our this we hence, see expect markets are expecting we the And we see is to customers that and business. down, the for. And LCMS in this looking I'm share

Operator

Your line next go from Please question Suisse. the ahead. Dan Credit comes of with Leonard

Dan Leonard

thank Hi, you.

not XX% the Bank deal the that back of sense your Mike, so more why base think large Valley for Do and pharma customer customer wouldn't Silicon be theory it business that the, pharma, gotten has material within mid that and have you set. reported lengthened? I PMI-tethered is think you would the have cycles be on team your I GDP, cautious to field Going wouldn't or would what or why emerging segment. from that any any very biotech on comment pharma, have and your large

Mike McMullen

their point Yes. companies cautious. They're to Silicon they're to deploying pharma I to it's... can And relative really capital. you P&Ls, don't think new about that you cautious Valley, the pressure the point but and can run

Padraig McDonnell

add, would going we're capital are making accounts purchase. decisions levels the I pharma seeing highest the and And up levels are and that Yes. on up at within Mike, approval

of is a that. around lot caution So

Mike McMullen

little have the I all right, more be out, say markets in we bit it's to transparency, hard a Dan, And Yes. had which was to resilient. similar thesis, a figure because would

obviously, -- have we last to we've had increased Although more was GDP. some weeks. guide, in moved of more level quickly slowing second with our have something the face costs we anticipated. of in things of expect level But in as six half this seen assumed a And things resilient little pressure we probably than the four

We standpoint section know difficult obvious we're it's the out there's catalyst. it a base. of across to figure external from customer just no seeing our broad is And

Dan Leonard

Do bit your comment Appreciate the on all when there's business? would related? think going you could Can a any market more that in happen? share pressure DGG a separate you genomics market that. on question. And what's And Is within that shift the it is you expect improve?

Mike McMullen

Yes.

market So the that's about share not CapEx think from a I I'm of you'll going hear side issue. feeling to is And that him invite bit it's well. is there U.S.-centric that level phenomenon, there he'll a instrument this, you we're a Sam to as but to on on talk what

Sam Raha

And genomics making, Absolutely, in found Mike. research, consumables testing about become talked here it's thank the but usage we've and on Yes. used the about in when the already even you too. instruments, instruments. a slowness in pharma not we that also diagnostic just of decision What question. particularly There's for think you is as in only translational

quarter, backlog NGS grown. I have will for and QC our our that's orders tell you that actually the even QC, to within NGS consumables grown related

in there. has we're being that we're about orders So at lengthened. And what which China in you've broad-based. slowness is in to the orders seeing It the answer losing that to not a particular, we're doing we're we about Similar question time don't heard And instrument, your share. it's well placed. bit But are that's the impact. seeing there share, been believe little being the losing we're where a just in is U.S. that

Mike McMullen

second in in improvement assuming guidance of I'll but our Bob, a in are half We our not business genomics level recall, recovery, improvement. full the and

Robert McMahon

sites, QX, customers time continued our have had down of in that shut some Dan, that it and saw QX. challenging volumes. and into say, has a end would I really affected We and our Yes.

Mike, the year we and those some are the anniversary-ing half some As saying, of of But back to customer-specific. you're in start better. perform of those it expect

Dan Leonard

Thank all for color. the you

Operator

America. ahead. next line Bruin question De the Bank Derik comes go of Please with of from Your

Mike Ryskin

Hi, Mike Derik. Ryskin thanks This on the for question. for is taking

on -- big previous on pharma down. pharma slowing up the following point Just

velocity You used a deals, lot not year? catalyst. you're going you as et of comments you're in through a see slower an deal to velocity said, go as elsewhere just risk there taking the obvious longer you deal Is any slower the to But cetera. seeing close

materials, and the in growth also that sectors are I had, fiscal first these above in academic applied would trend government, and mean, say, recent half. I years

not building in any conservatism rest areas the but the So of -- for those in you're year.

So turned? how would you characterize quickly the risk there how just pharma given

Mike McMullen

And midpoint. level markets I think had a already of Sure. the realistic end assumed here. previous asking investment our those in in and slower to some guide. capital we've Bob guidance that's we're forecast in We think about why got

So there really that. is no change to

had And outside one that of chemical other our end expectations. think Mike, previous gain to when the team wanted is always things side And we've up We markets hold maybe of to experience earlier market the we to is I cycles the even of low. guide was, will know in a mention these markets. down further. question the when before. in listen, CAM, those Agilent relative share shines caller's actually market We This

thing absolutely So that stronger. in going prepared convinced come I'm to my this we're remarks you of out heard

going how long only debate the be. cycle is is to the think I

Mike Ryskin

but I core that Right, for implies growth to a in second growth, flat right. then in pointing mean, X.X% XQ. Yes. core then fiscal decline to it sales kind roughly point, half, you're XQ, And of the

China absolute and it even pretty comps at You dollar look quarter of sequentially, still touched the in But around on bit a reacceleration regardless terms. moving a fourth like in you at that's little big things that. how

Are orders? XQ assuming reaccel that that's happening -- in really indication is fiscal here? I you any it being just any you of hammered are of the guess, So why in terms XQ?

Robert McMahon

results. I Yes. built seasonality into typically have we our mean, do some

but If typical you QX a does ramp-up QX. not historically, at just from And looked our last it. looking year, at have we're

kind it we're historically we of how If looking at how you in. built of kind look that's the seasonality,

based performance, and to today. expecting both are relative stronger we QX, know on order We what QX revenue

Mike Ryskin

Okay, all thanks. right,

Operator

Your the Brennan go Please with next Dan Cowen. ahead. line from TD question comes of

Dan Brennan

Great, just thanks. that What and questions. the caught said of know, do Mike the kind as I emerging did going I numbers here question guidance. to maybe in don't it's Bob, Bob, think decline guys on that. Thanks for of your I you part a the clarifying biopharma. of just itself? quarter some business

of the you're what assuming do of flush like And you're what in biopharma? the guys for you what emerging just imply well for out Like the about the I LSAG. rest talk the does for you expecting back as then didn't LSAG hear year year? commercial kind for half did any and So of if biopharma that to

Robert McMahon

one last Yes, I would first. say -- let me take the

for we're front-end it we low assuming where growth the year now just of full above single expecting loaded, were X. digits, with business, kind LSAG Our mid-single-digit

-- small quarter a decline for the and biotech part expecting second So fourth molecule. in actually driven the emerging both quarter we're LSAG in the and third by

In grew in biopharma biopharma, terms and that QX benefited actually results, the from in of XX% total the obviously NASD. was

it out, NASD took XX%. you If was

assuming saw the in So change the we're in of this what we pretty change the was stay consistent quarter, will and half that back year.

Dan Brennan

it. Got

on And up. Okay. brought one -- you it and since maybe just NASD then

level Can kind Another you Is -- you're beyond kind on year-end? the that out the kind what's of Train, there? like on on quarter. looks working same a of half? new And second growth of funnel little persist unpack the that the of now you just of terrific bit look growth in as what kind bringing the of durability

Mike McMullen

Of one. course, take that will you

Robert McMahon

And kind customers long extremely with would of from fill look that excited to performance tuned conversations standpoint. and to we up. the would we're NASD. Train we're are as But half the second with this. term, about is B we good out the that we year, Train of say pleased online. performance I about about feel stay what coming super Yes, say having as look of excited what And I the And

C and investing in Train another well. we're adding $XXX million D That's why as

as in we're here siRNA-based discovery terms that the therapies and early indications those of in move through stage think RNA, we just of larger the more there therapeutic So be will clinic.

Mike McMullen

Absolutely.

Dan Brennan

thanks Great, guys.

Mike McMullen

welcome. You're

Operator

Meehan of go Please line Your Jack next question from Nephron. with comes the ahead.

Jack Meehan

Good you. afternoon. Thank

about So the exclude I quarter talking even Can incremental what if have about you're region the you're customers in one great more you China caution question you seeing. comps. like Obviously, But here. on talk China. some

Just incremental region of specific is any CDMOs of customers would be on great. this caution, Some in color one the those?

Mike McMullen

one. this Padraig, you, I'll Maybe with on team sure. tag Yes,

year, shutdown XX% So core the as China adjusting for even mentioned, Bob did we Shanghai in last QX. in

is XX%, are QX really reflective if pretty QX. as hefty say correctly, seeing I and and comparisons, I in of market that up United for well. bumping remember what We the China numbers some would the we're But the XX% States

customers It's the customers of our China market our the pharma materials advanced in it's So China, quite chemical up nicely. in piece to hold China. albeit continues

are hearing you I from know with in conversations sales What leader. them? China been Padraig, you've And our

Padraig McDonnell

China think and what which Yes. No, said and quite have on, rest Mike. you simply dynamics is budgets from seeing of think EV It's to in more Yes. world, continue strength we're to become I see. the But we're going similar the a markets very so customers on that's particular a the decisions, well, it I conservative that CapEx what albeit seeing. that's spending we're in

Jack Meehan

terms dynamics if Great. the of market one testing. there's call and was just didn't could was a you PFAS And then out wondering CAM that been if an in -- I on there? give how market you're change you update the in us

Mike McMullen

remain I positive right? think on we very that, Jacob,

Jacob Thaysen

Yes, absolutely.

in early I baseball think that the innings. we the -- still the to term, use are

Mike McMullen

terms. baseball American Yes,

Jacob Thaysen

here. am, we are certainly I I think but innings early

you very seen our the long we new there's funding we seeing we're And -- also growth into opportunity year, this lot it it. Obviously, if right for of the through LCMS also we've position and for But last been and a at now, see a areas the since of strong DCMS here. bit have a huge to us, business little look have lot horizon, a it's continue is government, We a expanding with with business. lumpy.

we still So a bullish continue here. very and of that, see on lot business to I'm

Mike McMullen

a ranks to the road also got and to really deployed bit global China European phenomena. implemented source think Japan, basis. being a a growth little U.S. in fair could a new We've which and I see on of primarily it's Jack, down and it's And say continued be

Jacob Thaysen

on Mike. regulation lot been a by it's there's certain there's right, now, mean you're and I absolutely of U.S., regulation. in right things Yes, driven but in going here states

see online regulations different step-up in when go a onboard that. and countries, you So in

there's here. definitely come to more So

Jack Meehan

Thank it. you, guys. Got

Operator

go the next ahead. Donnelly with Please comes of line Your Citi. from question Patrick

Patrick Donnelly

for one. thanks the guys, quick a Hi taking question. Mike, just

know Getting the that level in was and up little look visibility the maybe you on what terms down were on talk Can helpful. I piece. following adding here, down us could Bob, quarter. XQ of this bit back to like LSAG the know focus they digits? of just that. backlog, a normal. book-to-bill, to mentioned I Mike, don't It amount the about like sense on the to be And LSAG a decline you double you it Just of but the given a orders? mean, give seemed inbounds that revs the just in want magnitude would good of I

Mike McMullen

got Yes, sure. insights, Bob, some to think We some? want so give you additional you've I

Robert McMahon

Yes.

So if you looked overall digits. at single our were orders, they down low

And for to contemplates digits I in was our a decline Mike grew single mentioned QX. and quarter. QX ACG in and and before, guide DDG down mid- LSAG LSAG As the mentioned, high both as

Patrick Donnelly

just second know be, think savings you just aggressive well. the little bit talked and can maybe Mike, Okay. nimble I flagged some you are you And some guys guess, pulling Mike, the want to half. additional then obviously about, term. you on And as where piece. costs margin in a maybe I half. talk the about you I from? a How cost be second Got Can it. how you good long you sound

transitory. here. pullback this with You're dealing it's kind of Looks like

term think and So how margin near the expense do second management about the ramp? in you half that just

Mike McMullen

question. I'm glad the this head for to on. really Thanks address Yes.

on the pause because remain end opportunities very So on bullish long-term think growth these we We long-term serve. segments key positive a in messages, certain our very market, hit of still markets the in in you the are we're markets. we but we one of

that point about to But get shareholder cut run trick long-term way our here are and in the talked the the that's business same in leveraged time, going value things in to thing in in being to doing right deliver you're for the growth. have sure And our the able creation why we that sure to we is off make short make the don't shareholders, at of I our model. confidence earnings manage growth the of terms

We've to do And variable this how got before. pay We've done we programs. know this. some

are things we'll look at travel prioritize. revenue sustaining now. do we're the relative then generating. things ability the other that aren't focusing sure these expense, near-term businesses, a what are to which with immediately our of growing we that necessarily lot realize associated We'll growth right and make And in on opportunities We have that is we'll things to

yet challenges we're is the today out well, growing NSE consumables. came Agilent. multiple growing right pathology in near-term a services, some story across now that is it's growth is instrumentation business, Clearly, thing One analytical well. drivers of having

of will our is we've to rigorous I to program. think what So we to growth. ability believe a areas be pretty And can don't reductions we we in sustain in the got the what way that assure get out you make continue market will that

And we've you a put but of Bob, know I the already activating already. thought on a lot this, and been time lot of software

call So know we there's to didn't this, us. wait get that started here but forward for to the earnings I path we think a on

Robert McMahon

Yes.

marketing looking Just level at what on we've not is as to Mike going related. also of spend, same there's an travel we're the funds discretionary drive If demand demand, got saying. example. things like productivity. been continue to And to -- spend but build not we really Obviously, we've

business. ourselves that we year very sure that, workforce, to we'll our the of of at in get to productivity the continue don't terms that around making about do more relative talked people ahead of beginning in adding We the and

Patrick Donnelly

guys. Thank you, Understood.

Robert McMahon

Sure.

Operator

comes go of the Cleveland next Your Please from line Josh Research. ahead. Waldman question with

Josh Waldman

the orders confidence just taking what on you conversations capital can are and And point Were based key purchasing the kind other anything that range? budgets mass Mike, mentioned in remains LC down but you of tighter the to recently, more instrument orders guess orders then the large of within to to there the outside just think longer that accounts healthy, LCMS? maybe here maybe spec? it's slower opposed and reprioritize process mid-teens as with delays categories, gives you reflecting deals. I were curious in I year-over-year close in pharma, to funnel lapse

Mike McMullen

with back and month And three -- in what the so of to be order or question happened budgets. demo booked then mean, Bob. I I solutions. our I to But a to their at customers interest this, for lot want yes, lot on Vauban, tag to Padraig of cutting next last Germany. we're I I'll Yes, I fully team the directly months. hearing heard go in is facility mean in Agilent It's there's interest, aren't a Europe

reflective their get can't through their PEOs the the inside of just and second transitory, why approval what for guide although we're process we companies. We have the it's And seeing that's today, we to that's half. revised acknowledge think

Padraig McDonnell

Mike. Look, right, No. I think Yes. you're

customer high. I remains think the activity

one whatsoever. think that really intact. funnel in actually, we're remain I cases. is we've in certain cancellations uptick seen no Funnels And thing fresh adding

it's of think case slower I So really velocity. deal a

Robert McMahon

the than high, mid higher greater disclose Josh, orders, we for won't than were they product was growth order And lines. average. the on I The mentioned, individual as was But LSAG down to decline that. and

Josh Waldman

a than follow-up, China or has any softer on you Jack's just why think, then question. been pulling has And more Okay. context few -- if then on softness examples Any back? customers large And pharma examples been it's in there that I systemic? Can customers expected? have what provide of accounts been if pocketed within curious a they're the provided on fairly within

Mike McMullen

pharma obvious one earlier, just like important we of was But I uncertainty what it hard catalysts there's to and economic is a no that this. think we a -- call sentiment and Padraig, deal the -- and seeing, external because I'm wrong, real is And the the there's It's I market. being difference significant I overall on just -- said me thought because correct today. think if segments this no between cautious. to the directly we're it's initially think overall share it's some figure with out I

Robert McMahon

Yes.

that see, we we portfolio was compete the about in. instrumentation the I have product at this at applications necessarily that stimulus. and was lot targeted think, and year of one there talked thing don't beginning higher-end the Josh, stimulus That a or of did the the because we talk about

that as some so that don't for budgets, think not it maybe the has stimulus moved other exposed but we're a created players potentially as areas marketplace. to And I in

Josh Waldman

Okay. I appreciate all the detail.

Mike McMullen

You're quite welcome.

Operator

from go question Garcia of ahead. Please final Liza comes the Your with UBS. line

Liza Garcia

ramping, in. accretive potential. of be about train margin for and you've back just just it think of on -- the NAV, back talked Really I appreciate how and all Thanks the But be it. coming kind But ramping progression kind its squeezing that some line overall guess to I the in and me appreciate about give coming kind impact I -- also cost line on to the should margins. to just about know can train with accretive think guidance you the of clarity those second in us the context as line we the how should that about to half? train thinking

Mike McMullen

to Bob, . take do that? you want

Robert McMahon

Yes, sure.

a there. opportunity compression, in into good if to Liza, that's because there got at that the and We we've guide, spend initial money B isolation, But money. that So of we've taken that you given That's is had account. actually, Train startup. in looked our lot margin

parts And It's talking so not in that that the cost really business. the been the area. in is savings we've of other about

Liza Garcia

of just think in guidance? assuming still this, is I but I'm thinking is kind should don't I -- pricing the caught still what bps XXX we to And about Great. be tracking

Robert McMahon

a correct. actually That's was QX. for little correct. It over That's X%

Liza Garcia

so you Thank much Great. guys.

Robert McMahon

You're quite welcome.

Parmeet Ahuja

day, like Have With joining. we for call everyone, thanks, end the and that, would the great a today. Sarah, Thanks, of everyone. for to rest

Operator

call. this Ladies today's for and you joining. concludes Thank gentlemen,

your now lines. disconnect You may

Agilent (A) 23 May 232023 Q2 Earnings call transcript