Earnings call transcript Q3 2023

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Operator

Ladies and gentlemen, welcome to the Agilent Technologies Q3 2023 Earnings Conference Call. My name is Bo and I will be coordinating your call today. [Operator Instructions]

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

Parmeet Ahuja

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

Mike after of our the and Sam live. Padraig Genomics Group. President discussion financial third Life Raha, www.investor.agilent.com. This of Q&A for the presentation available news of Agilent CrossLab at in and comments Agilent information Jacob along the Markets will today's our Applied and of Group; the McDonnell, Agilent Bob's are Science on President President recording quarter webcast investor supplement The and Thaysen, being a be Group; presentation this results, and Joining webcast website release is to Diagnostics with

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

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

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

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

Mike McMullen

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

for environment. what provide current I'll our seeing our through the ongoing full continues our context Agilent we're of and Bob the things as now brief and outlook. detail comments. execute the today's In for more in some I'll call, you to turn challenges navigate way to year QX revised over for market returning then results, outlook walk team through market closing before quarter well on The we share

$X.XX top billion was Our expectations. at QX of our end the revenue

decline a QX of basis a core a of is year. This on tough of XX% compare X% in last against

be model. our are and XXX major to QX of earnings X% margins and drive per steps The XX.X%, deliver earnings basis in is leveraged revenue China continue proactive $X.XX to are are on our Operating points. us expectations. business. up help above We Quarterly taking behind year-on-year decline share our our up

and better X%, difficult Agilent expected. Excluding a China, was QX. We guided for which lower revenues China rest compare in the had of China than against grew previously we're up knew in

challenging weaken had the translated in environment However, anticipated. into quarter, we to a economy China more market the continued during than

global for With the X%, growth down We from remainder market continued our year. the previous challenges, for we conditions year and be fiscal softer macroeconomic expectations of growth full the the in lower core expect now to have China guide. around

remain confident the view we're our Based long-term markets. on as this challenges transitory We, the of about time, in at prospects of the remainder near-term we're what and end year. the not any market China improvement for assuming however, we're the experiencing growth seeing

Before largest markets. end turning quarter results, now to I'd touch like our on our to third two

XX%. X%, grew is was driven Within the Our in pharma down while by being China molecule our down XX%. business small market total pharma down X%, business biopharma pharma,

a XX% increase The Chemical year. Advanced Materials market last declined X% versus

remained volumes concerns, space Advanced by compare of see function weighed growth being While steady a macro was the slowing Materials have down a as energy robust. and chemical we the did difficult in more

a million. This very of was performance XX% have our X% at of of by business The compare Markets decline Life of unit. revenues tough delivered growth. Science Looking and Applied a $XXX

the LSAG's by was growth performance environment market XXXX China shutdown. the in globally. from and end pharma affected Shanghai of by markets recovery helped QX all across be benefit the year's continues Last to

remain are making funnel to and remains deal up velocity customers as slow sales continues healthy capital but in purchases. cautious year-on-year, Our

At We rest expect incremental we budget this year. the any time, from in not are stimulus market environment assuming year-end benefit for new this to a continue instrument the flush purchases of or China. for

As said are in to continuing prioritize we invest we innovation. before,

and for These Agilent CrossLab two analysis, customers. new among data PFAS new Agilent's As to others. team posted ASMS an comprehensive were new include an solution systems, and Group revenues productivity The data example, at in software Conference. June, workflows on investment our LC/MS for full LSAG a $XXX enhance million. display innovation workflow the quality Annual and introduced The products AI of

with This XX% value is continue and as to customers markets, impressive end up our regions proposition. core an growth all in embrace

our demand for productivity and high We $XXX customers as to single strong Diagnostics lab. the delivered see continue continues grow. revenues X% in Group as drive our diagnostic of up Genomics services we test for help digits to core. grew million, Pathology demand The

teens. high grew business NASD Our

weakness offset market our Genomics Resolution partially are continuing we for businesses. to was growth This as see Bioscience and

resolution a to don't not path Regarding Furthermore, profitability. the kidded NGS-based see realistic we we market companion Bioscience, has expected. as diagnostics for developed

shut As we've the a a made result, difficult down decision to business.

in growth continue. investments future our However,

achieved investment generated example, we NASD during our important an Frederick, the Train For business the in first when from B revenues milestone our quarter Colorado.

remain this framework. ability growth, confident use earnings and continue we for the macroeconomic agile navigate the to environment, our company, in leverage driving Agilent team Now forward we our looking challenging as Agilent

challenges make well and We for that will before, taking us position now faced actions us we're stronger future. the and

to growth. we we solutions new enable as savings last efficiencies profitable future on can we additional for are we and cost continue As doubling increasing delivering support our is innovative customers goal and quarter, productivity. in The cost down generate invest stated so to

for second track achieve cost we've of year. the the on to are savings targeted We half this

long-term markets We are attractive in that will produce growth.

at will some the as Bob back remains year. closing execution. outstanding I on the outlook Agilent engine battle and to delivers our and for his the of will provide remainder innovation Our I well remarks. details is One our After be team strong test Bob the provide driving results as comments,

you. over Bob, now, And to

Robert McMahon

Thanks, Mike, everyone. and good afternoon,

full you my some the with through will details updated additional today, other quarter fourth X.X% and In statement financial as revenue non-GAAP our up guidance remarks and results. noted, $X.XX a the I'll well a our income reported revenue remarks on finish I outlook. on in core the focus QX metrics. otherwise decline Unless was year take quarter provide then down on billion, key as my will for X.X% and basis. of

Currency point was compares was growth XX.X% last with contribution while year. X.X minimal. headwind This M&A a core

shutdown revenue for core this, of you as a the ago. be year growth ramp the roughly China. our second QX As from flat we quarter up from in last would Accounting year QX may from recall, in million Shanghai roughly deferred $XX benefited versus back

Pharma, mentioned, declined Mike X%. market, end As our largest

out market off expectations reduced China, by tough is compare, was underperformance line better This X% our sequentially. Chemicals of XX% offset QX and performance in down dollar-wise the Advanced in The in world. with with a the Materials rest coming but of flat very was

market and The academia except X% growth was was government showing the flat. which all regions and Americas, with up

Europe. grew growth in business by driven The and weakness. X%, growth in Americas Our and pathology, forensics single-digit diagnostics the and double-digit the environmental genomics clinical driven in by X%, business grew by offset partially market high

outside was food of China growth market for generated and based China growth basis, the were Europe an new than The regulations. funding food Europe, driven rest and activities. of of geographic Americas line PFAS-related underperformed, in expected, of was infrastructure expansion testing X% better our expectations. the by On while and in while in Asia a by on The water mid-single-digit the Asia grew projects build-out strength with

the down P&L. Moving

quarter Third XX XX.X%, points gross year margin a was from down basis ago.

the the to strengthen than and was Like margins. services our Below operating quarter due helped the slightly last reduction quarter, in initiated pricing expense this we was mix, actions second gross and product largely margin, expectations. better

We pay expenses. variable from a benefited also reduction in

As than our margins Below last XXX was were points basis while planned, was diluted XXX rate outstanding. tax Mike XX.X%, mentioned, XX.XX% million interest and our had line, from higher income year. we shares the up

Putting share QX very $X.XX, given X% together, year a per revenue. ago, from a result up good declining it all were earnings

our the billion to In be we expenditures, year-to-date, flow spending. Cash as effectively $XXX this pleased and in million year-on-year flow continue operations flat with million $X.X sheet. Now invested me quarter, and balance the year-to-date. capital turn we flow to generation QX, I totaling $XXX let million cash cash to our $XX in was is continue CapEx from year. optimize

are increase from the CapEx of macroeconomic results, strong we the previous flow allocation strategy year-to-date comprised is forecast our million. billion, of is our conditions, $X.X the operating challenging increasing free Despite for our This billion year Given capital balanced flow cash intact. million of the an of $XXX $XXX cash guidance. to $X.X midpoint of and

dividends worth million the to During $XXX shares million. we and repurchase shareholders. through quarter, $XXX million returned $XX

long-term belief another example is team This to markets. we of strength ongoing in our our the approach deployment the our and have capital balanced of confidence in

getting revised mention full charge in to have Bioscience taken shut Before the QX down the decision with into $XXX we to outlook, Resolution want the year a business. million I associated pretax

charge, business. associated an charges with of the non-GAAP write-down exit with is This wind-down which from results, along excluded impairment includes the and

the QX and to We early down into wind expect continue FY through 'XX.

the Now QX. to for the outlook year revised in

the now are decline expect we growth to X.X% be to XXX $X.XX more $X.XX we our revenue of of This represents midpoint reduction in basis in seeing, the Given growth last a range macroeconomic to a from a China, of full on X.X% challenging is of reported flat and the points core billion. core This year particularly environment of billion guide. to basis X.X%.

some of CapEx in change Bioscience. while on the the to shutdown due Resolution reduced our of and the incremental Roughly as remainder well China in is cautiousness from as to XX% softness customers expectations genomics spend is related

these not any Mike budget material assuming or As are revised we year-end China stimulus projections. said incremental flush any in in earlier,

change was revenue, in China line Given market are the the additional the expectations. to mid-single-digit that on some our in some we forecasting be of in I decline the wanted To provide year, QX our was to in June, large provide tracking through how with very in a continues dynamic. business which context, recognizing perspective to rest China,

for in the And a well. which quarter. other markets was China we down July, we centered was QX in as resulting XX% in China, in XX%, in the end the However, while decline see saw the further pharma, weakness deterioration in did decline

seen conditions we've persist July for in the in to QX. China expect We

XX% difficult in In year. of addition, where grew QX last we China, compare our facing most we are in quarterly

expecting QX We now year-on-year. to in the decline are mid-XXs

year, are digits. full growing the mid-single digits expecting we decline China versus mid-single to For

per change to QX year earnings fiscal revenue $X.XX X% With expect leveraged representing being full we X% earnings in of $X.XXX net between change full XXXX billion. revenue, and to to of billion X% year in the in roughly X% non-GAAP of $X.XXX The the in share to growth growth be currency. results now $X.XX, guide and range

impacts a on basis. in basis and roughly $X.XX. XX.X% QX per This the expected a The represents between last earnings by fourth Shanghai deferred $X.XX of reported In being for negatively on call. recovery to a remaining non-GAAP X point. quarter, decline the on revenue XX% to to the of core the decline a of results X% X.X% shutdown and from be share year-on-year year are QX Thanks

I before will over taking now for Mike? your questions. to comments back things closing turn And some Mike

Mike McMullen

Thanks, Bob.

remain While in than we few remains ability end in grow my our to purchases, examples why like today's macroenvironment I'd the and a of of despite share our is intact business near-term our prospects long-term the faster challenges. challenged the markets, confidence growth for market. instrument diversification new proven to confident

from new advance and life of therapeutics that our expectancy growing care and demographic Pharma, extending innovation are In side, health market, to of flowing to on a with our into their market The be medicines drivers expects the population global end access this continue governments. priorities market. key largest

are stay, critical are and In to for of and vehicle solutions and action new transition the drugs. electrical the innovation applied growing to new ensuring the PFAS opportunities in market-leading Our on-market growth. safety markets, behind therapeutics quality testing here

remains sustainable breathe Everyone solutions. their air to on leader priority. and in wants diversified safer a water to and sources and position Agilent production food of partner, search and a have energy eat materials can drive and more rely challenging global our a both a trusted is remain they the to to drink, to help our a We good customers times. though unique in for customers

advantage leading long-term of One combination customer culture. and Agilent is Our team heart competitive the a Agilent instrumentation the advantage. the competitive support world-class of this and At is long-term

to see Work recent recognition in named qualify XX You countries the Glassdoor world Place A and on a for where reflected all in we certification. territories around Great this being in and

of encourage more have I month. ESG would the to you on latest issued life. company last advancing quality We a review the mission the of addition To we focused report about this, learn that

always customers through have term, an We in proactively the towards long managed eye term. short the and our with company the

and our business Yes, success. the proactive have right growth. the been the joining of drive deliver at the these expense challenging not us in leveraged long-term we earnings We have times, managing strategy to Thank and satisfaction but future would for culture you team, today. customer but that are

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

Parmeet Ahuja

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

Operator

Instructions] Goldman afternoon Sachs. Matt Parmeet. first [Operator at this you, go We'll Thank to Sykes

Matt Sykes

Hi. Good my China, high-level sort taking maybe start thought afternoon. Thanks a I'd I with for questions. question. of just

of transitory environment. current impact the You the guys talked of about sort

region? mentioned Thanks. that think structural? cyclical extend it's you're you more of there outlook or China? your Could pharma. Do You those facing just kind you issues to competitive that comments versus on Are

Mike McMullen

for the Yes, Matt, thanks question.

a your question. story. is a not start me story, of This with let part macro the competitive last So

So lot of in aggressively there's on I about local China shares moved to strategy. but very continue very, increased we've a be know our discussion competition, market strong. pretty made

don't as we all So a that see issue. competitive

a I month. the of quarter, clearly a the month market his big and really Transitory, one think there -- the It now. industry, manufacturing right for Bob we're month come. specifically of challenged in comment years going we're in of July. is the comments, at in for China within by the weakness level about taking still market we not declined is And that to pharmaceutical seeing away. the quarter going actually saw And It's actually time, not the fact weakest pretty we're mentioned be a to is example, as performance the July, sort

So while but we to market a is there, think for to be get going the take to going back it's it growth. to

is I'm instrument And guess the the I and talking again, specifically China to the point around market. of probably other - thing side here

large, As in largest you the very of base fact, instrumentation know, we the have in a installed marketplace.

to diagnostics the ability So grow the our very aftermarket in positive on business.

Okay. Probably anything that? to you add

Matt Sykes

Maybe ACG. just just on my for follow-up,

high want year you quarter So measure of about of the the to good that quarter. of you about goal see or XX% XX%-plus two a single, guys durability of growth call thinking in were how maybe out plus sort one-offs business. in know achieved obviously business? where a quarter double, Can about low about margins the talk that I this And you that ago of some is be a talked of should sort Or you'd to we there? margins, kind there expectations sort

Mike McMullen

a communicated go been business digit, consistently kind growth We've single Yes. high of that and we see think pretty this us. It's that CEO, as tenure as forward. don't that since we is low most changing we my for of way double-digit much

talked connect But Of about. quarter. growth course, there'll be we've see puts we're continuing by our in and to good rates, which a takes lot

we little was And aspects enterprise the the we're say probably well also on manageable about would doing that QX, in the portfolio but offerings. double-digit not level a for that I pretty the that other very high saw quote we profitability to higher QX bit Bob? at complement winning of well is business think in than do number as - our right, the you business, but

Robert McMahon

that. the good was increased overall to to rate, And is and which Matt, further connect it rate. to as that in just what about fastest-growing the is very growing continues business, saying, business. Bob. continue is about that of Yes. the And actually mid-teens to this long drive be this we is when attach the we Mike be contracted last component components that we faster business, maybe quarter as feel the think able than And

leverage well. with initiatives had And with with our that - digital that work we've the being that the able team as to scale comes and growth that comes

think there what And XX% because in, margin Mike cadence certainly, quarter don't variable were so quarter seen said, book, nice, pay some is out as I it there. was a of going But forward steady improvement you've true-ups.

Matt Sykes

guys. Got it. Thanks

Operator

at Meehan to next now go you. We'll Research. Thank Jack Nephron

Jack Meehan

Thank afternoon. you. Good

Mike McMullen

Jack. Good afternoon,

Jack Meehan

I in some could areas more segment. more a of about bit the business was of Mike, cyclical the little CAM you hoping the talk

customers. you of are some seeing chemicals what your from Just

budget starting of visibility there. see Are Just is these conversation some that? You've cuts heard of your cyclical you into how areas? some to

Mike McMullen

Yes.

and by point year just the more say one grew we've we in I then I is think CAM. trends want CAM, Jack and that we across on So talked for the and secular continues well. driven way, by last look as which have quite communicated the well. a question hold as Advanced And to earlier in XX% I'd tough really comments up trends we've out had jump QX But also, we - cyclical this thanks the Jacob in to Materials compare, of segment and market,

at actually environment U.S. driven where are If side we the it, of we popped by seeing side some slowing there. and in are macroeconomic up the looking are weakness and chemical chemicals capital look particularly their energy side is investment customers bit, the at the a energy the where

think and say But Bob, segments in and we'd think about that at thought CAM in right rates. we in of a story terms where kind of terms in the growing I I'd of puts mixed came I say be I'd So takes. different quarter, different it's we

Robert McMahon

Yes.

you maybe can jump Before Jacob, in.

of think is story have the and is in you which that is business. the really its think thing China, then I I important own the one rest

if it's the stable. - if call, very so look And actually Americas where we and actually performed were the think extremely mentioned about you sequentially, Europe And in well. you is, this dollars

in grew a challenging And QX, so are we expecting we because China. mainly XX%

Mike McMullen

QX. in XX%

Robert McMahon

Yes.

business compare So very this continues But to a be strong. situation. it's

Mike McMullen

you the on there, Materials comments the to the make Advanced of Jacob? want house Do side

Jacob Thaysen

that lot with especially cycling space, still see in to business in space, as also a doing started there are and see in continue also are activities also saying in you very we interest compares battery strong did are we think we - I last Semicon down is Mike, but against, right And course, of the lot of very, but of are that. there's that year. space, continue we where, a say can to that that I we not space, but now, as well. we that Yes,

Jack Meehan

to my about And follow-up, I Jacob. margins. Thanks wanted ask

you're for the and some XXXX. puts thinking how takes about Just of

these of But comes some get year, NASD. performance of some I think same you've talked savings to comp should top I some would the next should as about relative next how the just some margins of and pressures of you out for leverage the about thinking extend back year? at maybe to the talk LRP, know, think can time, line don't well. extend you're about cost

Mike McMullen

do Bob, to add so By Jack, decision us terms next in Yes. for year the the expansion. to specifics, business one the that you Resolution that part way, I'd the want Bioscience of before lead thing our is of story Bob's, one? on margin as

So Bob?

Robert McMahon

'XX. Yes. of earnings view say our I into growth would that continues leveraged

we into And be things we've be so And that some that's back actions continue to able to is to growth. some do earnings taken to while our to kind a we the quite honestly, of have year coming full expect for job XXXX. will what that of leveraged us, move drive

Jack Meehan

Thank you, guys.

Mike McMullen

Welcome.

Operator

Thank you. ISI. Evercore Vijay at Kumar next to now We go

Vijay Kumar

minus the Hi, was and guys. down heard Good think I I you you the start when Mike, off minus Mike. my margin on China? XX%, here, I is maybe XX%, that the some talk Thanks the phasing in about exit July the quarter of off question. job execution like for rate? taking here. here in Can mid-singles comments missed

Mike McMullen

Yes. the We quarter. within take a change

Robert McMahon

is Yes, Vijay, Bob. this

in the Your Yes. math is ballpark.

were June. we through down mid-single digits So

I we XX%. incremental into percent down XX% ended expected, and kind the that, have going And given in what as and tough that year, of July, quarter assuming the that roughly saw for May grew QX we we're June And QX. in drop we we performance weakness up into XX-ish will QX comp in QX So is then and tracking full in think continue last we're estimating of we because a China.

Vijay Kumar

you in sorry, capital Bob. about talk at you where phasing going talk I your see just in was is Europe, I maybe America flattish. Do in with recurring? helpful, of look ex-China, just think -- a when similar was, Americas about And that And rates That's question sort versus exit July? I Sorry. can

Robert McMahon

in So actually, and ACG of end regions markets, business, all ACG actually if the you China. grew think all about inclusive

both wasn't in didn't see effect. a I So say we And the that change there Europe, Americas there. would and same

Mike McMullen

China, geographic the was Yes. And performance than overall, outside better expected. of

Robert McMahon

Correct.

Mike McMullen

the saw our in like China other no trends trend geographies. We

Vijay Kumar

one helpful, that That's mentioned times transitory. maybe Mike, Mike. a of on you And couple

what I have new firm - think you that's a that using -- heard you're

Mike McMullen

prudent transitory. move I think I away to from

Vijay Kumar

Yes. the year and on the 'XX the What heard commentary, a is the nothing maybe at be positive when implication transitory fiscal word why is ground some use more look but guys have China you we concrete on stimulus, normalized here should comps?

Robert McMahon

Yes.

couple They're on enough outlook hearing kind of So, driven the to transitory, I that things, to similar to are here, for relative we onto rest talk markets thoughts go go the of and we about really year. nothing a the these we're fact but When mentioned. the China our human not of as assume going condition material about there's significant improve think away. to by talked not I the impact we have business, investments

Agilent. here print is what's of did business going at full And have process path for of instrument for have neither specifics actually - XX%, off growth we're of keep as looked business. see next year in double-digit a for we're my the while number, year, the big XX% half the business next half recurring a we first tough first which have yes, a of behind our revenue but we company, we're into thought those we this we - course, And year, in instrument mind, an around actual we to get we coming year to not compare

if I sales growing. but you instruments caught our are in call for funnel Mike it know script, actually don't

to - point encouraged the the that we're when going say order orders We're be one our by close, changes we're in biopharma. will seeing seeing are not out would ratio. of And and time released that in the we're not some funnel. those seeing growth cancellations, to loss So seen budgets come I've at deals

know cycles, think historical we follow different side, molecule small we the that will rates of replacements during but this On the cycle.

into I the we further major for path 'XX, but point to think really to the kind growth degradation, the in assuming market. China That's any forward We're us, of around of the is the open right we do same at look return not it's what historic real kind rates. now. assume time, wildcard question

Vijay Kumar

Thanks, Understood. guys.

Operator

now We'll to Leonard Credit go at Suisse. next Dan

Mike McMullen

Dan. Hi,

Dan Leonard

Thank you. Hi, Mike. on part. follow-up I to last that wanted

years. compare get China You've seen cycles a of of to you out lot this over What would XX in it? plus and we how do

Mike McMullen

I been a before. am lack situation in this seen economy. the as be old we've the as right in since really the now macro haven't a dirt I there's the like seem - marketplace working confidence of to this and have mid-XXs. cycle a where seen And not

that - audience already. fully I'm not look sharing doesn't the anything here Now, understand

we way led out is this, the I get of So, China think by government. the

on we going China lot continued driven right but It's back health long-term of that will get the may population, we issues also within Yes, will now. which of in require the issue, some addressing China we of to get innovation think to the focusing fundamentals. think eventually through We'll so focusing making back to be getting work occur, an R&D. it's that of goals economy, there's environment investments on improving to back its - a

the market, large very a think be it's - to is going not there'll investments. disappear. I market And But

reinvest wait get get maybe hope sector the sidelines a shouldn't and work private in I be time think level my to needs back on the to good I its China, confidence in going. for it's there's stimulus, of and that but also business to a

if been comparable for we've this lot of dynamics. that So really a though, have don't say there's I to a through I have situation long. know I

I but a our a the more impact food XX - plus is in of seen in sciences were biggest on the is it's some a seven really is thing an I what economic before. of think and have we've was things life macro much China, The than today. Obviously, earlier now bigger but ago much macro softness in tool, Bob a years or seen is we've biggest driving change, we've seen change we which ministry, this the different issue right of markets. number story talking the

Robert McMahon

say, supply. thing are therapeutics, the he only you saying access as and hard I The and the of population, to would are demographics everyone with to about today the actually importance the clean the us Yes. what when Mike need in mentioned, on and They is, to important think the Dan believe healthcare more electric aging was energy. about world's food leaders ensuring water It's thinks that. when build

But have more than electric region. they and the are leader, other any they cars

key is that for And think but investment I think talking sciences going priorities, the their Mike I from so, be in changed that's benefit general. to as strategic they about life government, unless the

Dan Leonard

that perspective. you Bio. years a only a that company the by And given appreciate all Res hoping shut down I ago? I was surprised couple on I follow-up. acquired just that, was of you could elaborate your decision to

Mike McMullen

Happy so. Dan. do sure Yes, to

what very companion diagnostics distributed have will pharma market and as decision, have was had a I'll this on our differentiation obviously, around that be conversation, Sam? market our then partners, hasn't difficult So kitted anticipated. to belief on we in but the strategy really our jump a called fundamental we that for Sam developed all

Sam Raha

while Mike. kitted in translational develop core and research We just differentiation to these market market, and Yes, diagnostic, ability developer too. pharma and But as way. really of the and what test testing distribute diagnostics NGS tests right, market absolutely a we customers. our research cancer for market Building is the on clear, here the the thesis, our number to that our evolve you said, serve be that to continue to just cancer is serve ways, in and

difficult, this clear, recent be some our looked of to is said, to more and now. move make ways. diagnostics with right again losses going this analysis a we And But research future, additional to also that so. as a to even to be significant undergoing at that's be Mike number going a investment, decision business concluded we was and It that foreseeable for in the continue serve cancer

Mike McMullen

Yes.

talked we've about this when Sam, - think the I past. in

participate think But for for you strong we biopsy going a what to the developers believe growth the be lot ingredients we to we're the test will, market. able of really liquid - if providing still themselves. So, in of

Sam Raha

Mike. announced I'm to core and testing liquid next Early today. used Enrichment say year, be for Here biopsy going SureSelect this we'll which to Target our take to broadly also opportunity beyond is portfolio just solutions mutation going differentiated Avida to from BioMed, classic an really to think look we analysis. methylation, as is we be that launching well way year, which at this as acquisition a earlier

Robert McMahon

decision is us, also difficult in obviously felt places in better Yes. think we it it discipline had add, I a of in Maybe shows looks so. just but we invest our returns rationalization, portfolio other also for have that we to Dan, and one terms the -

Dan Leonard

for the time. Thanks Understood.

Mike McMullen

welcome. You're

Operator

We'll at go to Couillard Jefferies. now next Brandon

Brandon Couillard

Hi, afternoon. guys. Good

Mike McMullen

Brandon. afternoon, Good

Brandon Couillard

Mike then the spec what cycle? And find is packing compare trends CAGR LC How on from versus in historical the would the XXXX year? you based mass for exiting the your guide, LSAG that over average four-year just quarter? instruments revised to does

Mike McMullen

be we let going portfolio, instrument I dealing in response of question. actual just first with here to I'll through macro market Bob to number. But LC continues his notes our your we're started core to to LCMS say, Brandon, is and Hi to dig with what that the believe inclusive I'm the find story. all, start of a

are holding Our one seeing data. loss well. We're in our shares market up really

those external And of core the and performance timing reports from our versus we're platforms we for adjust numbers when in We're reporting of kind our when look at seeing report. order. it some think I peers, we the in

closely for to putting we're And think similar looked the... check to of down know thing you at up I pretty buy trying and this time I Jacob, kind I'm Bob some numbers.

Jacob Thaysen

the find which here, this follow last continue to And front you're three don't well right to - very very we trying have in CAGR we in the We're doing Mike, of we're but I marketplace. accurately. me do this years,

period up share We the actually LC, see actually And we the space. two would we we continue it. are have calendar if last - competition, LCMS well competition. I our compare And have to time. that approximately actually, into innovate very of seen in think flat you stacks that over And versus versus taken

Robert McMahon

to you that afterwards. get can we Brandon, hi Yes,

Brandon Couillard

Okay.

Robert McMahon

you three despite two be it's I businesses. though, you CAGR, forecasted are the averaging this large been can tell over obviously, looked last years, And being down at the LSAG year. X% to if those business

Brandon Couillard

housekeeping Okay. Bob. And for you, I two guess, then questions

have You might imagine up online NASD sequentially B and CapEx with the quarter? Train on third talked the line. about I it growth coming in been

spend You $XXX in pushed million out you that.

Just roll some environment? - projects you the being from time are defer There into decided 'XX? maybe the to

Robert McMahon

Yes, it's a great question.

expect it's about 'XX continue numbers NASD, of it pleased QX B, to our that continue, but $XXX Train So - be in to that from had the for talking in that we revenues We standpoint, forward, the and first still more track through revenue that of many in from million come for to year. we're XX-plus been on and with CapEx, as that. roll we're very will the not some well. of going we've the spend full And terms to not first

would we have on - revenue-generating really programs. be This being projects rational, focused deferred very

don't incremental I but flow $XXX will show that of some 'XX, million up expect do forecast. I into an to the expect have 'XX in so, And

Brandon Couillard

Got it. you. Thank

Operator

We'll Leerink go next Partners. at Puneet to now Souda

Puneet Souda

the for questions. Bob. Mike, Hi Thanks taking

Mike McMullen

Sure.

Puneet Souda

thanks. one, The first

quite on could bit you initially We're headline bit So meaningful here? a China, you maybe, year. I elaborate contributor about we're deflation. was a it, for and seeing pricing China seeing know obviously, a talked the Bob, pricing this

expect product. about are tech some also, China to So bioprocessing continuing? in do pricing competition the the pressure local companies less of wondering rising And maintain of on if high or you sort we're you pricing peer expecting seeing there, talking

of that you're well? any as product if sort your on wondering so - And lines seeing of

Robert McMahon

Yes.

compete me Let every first. nothing can second has question that take each the And from and competitors changed We Chinese day. local against standpoint. the

better our driven growth. across good over were that expected. quarter. we of board, In drive continue the that what for roughly all three was a to pricing groups. and regards had about continue to And across to very slightly portfolio, little feel than - the the It over We X% was we

also and of So be our not And the across we instrumentation of positive globe. we that's globally. business, our and but in excess only drive China able incorporated to the demonstrate are on deflationary little for to and our continue into, price on instrumentation - continue full will in track contributions, still value the that instrumentation particularly positive more our pressure price a to expect that Obviously, to but across ACG in business, forecast X%. environment, year for a put DGG we've the

Mike McMullen

discounting Bob also comment maybe have on Bob, been to Hi some seeing? and may Padraig going or he maybe trends

Padraig McDonnell

think - No, I holds discounts well. has Yes. pricing no, I it's stable think the really held as

- but Mike. and seen continue we that, rate that monitor it's any stable, very been of haven't We it, increase to in

Puneet Souda

And I government Maybe that. you. expectations it. government you did talk and forward? different you, bit about segment if going in seeing the what a academic the here for then solid but Thank globe ask your and academic Thanks it an geographies could could across here, you're for Got little smaller and in for quarter.

Mike McMullen

Yes, basis, end this the with And China, seeing reasonably that exception is And think there, it's through is in market I far an most I is year. being well. positive so cases, that a mean for the surprise is holding stable. global Bob, up I funding we're where don't... the this funding a us on been

Robert McMahon

it's as instrument of we're And seeing, as and continue to many from platforms across funding really it's governments. service available, business. be from well is No, what the Puneet, flowing our

investments will making. think that seeing strategic many I of funding our of nature the that, the is And continue. expectation they're they're that

Puneet Souda

it. Super. Got you. Thank

Mike McMullen

You're welcome.

Operator

to next now go We'll at Vatnsdal JPMorgan. Rachel

Rachel Vatnsdal

you Good for And question. afternoon. thank taking the

pharma the quarter, seeing to that of this spending So they flagged China the actually early that I incremental your recovery weakness. signs peers of really off, is of appreciate have most first one some related were

that maybe of then customers. to for spending pharma today spending we're us you And seeing So recovery that down, recover. signs ex-China, seeing previously walk you've biopharma can with flagged XX if it like XX take any historically, months through us slows to can you're of when

the timing, and how are about incremental thinking you So recovery the quarter? this weakness given

Mike McMullen

Sure, Rachel.

in in from spending, recovery we the our U.S. of stabilization hearing expectations. fact major relative the desire increase European lines not exact while to business we're hearing those pharma So to companies. anything our and of terms or saw yet We're now large signs along stabilization opposite right

correct. from space hope that I this commentary others So, is in

And relative to we be does of markets. current think anything year-end, we're do that. it there's like our be here and know don't great. indications seeing along and from these but not happen, I would big we If But hearing upside well Padraig, going outlook, kind recovery a in of any seeing to It we're lines. those

Padraig McDonnell

I think No, Mike. on, spot it's

Robert McMahon

at I would is thing if look continue only to say, The our they we be growing. funnels, Rachel,

and see a So QX mentioned, just be But helping. if, not they event, what happen flush revenue pharma. into when, to is in from least particularly as question we our of Padraig at in assuming our perspective. if we're Mike not budget funnels, And that And a QX. in happens, and any it's a likely our would it from continue

just so LCMS from CAGR, ago. I me a If And a on between X% X%, average. they're look let answer three-year question LSAG overall times LC the of than and couple Brandon's at higher and

Mike McMullen

we've know, China see to minus a we Right. last least the and second our the replacement Bob. And fact, number of given the this the small rate you're in we occur seen Thanks coming for even the as Rachel, indicating in probably had think months, I - you at to replacement. weakness Actually, been in quarter. molecule the XX with beyond XX XX% expectations And that cycle. that to a that in year. think question overall to expecting slowdown were relative for referring I And

that look be they'll we'd our towards reasons we months, growth these view chromatography a And we're cycle. back that to 'XX, said, of a kind and particularly we've And growth as market of of is long-term. XX higher probably to these mentioned in expect cycle that's to with percentage that one back XX to see a as will turn growth we about being movement rate. we some to start XX-month earlier, that That the markets do - more see start as liquid base tend five saying XX into the gets phase stay to of in cycles,

Rachel Vatnsdal

for molecule comments Great. there. on just Maybe that all up Thank following you color. small your

quarter. small So declined molecule XX% this

molecule those to on about the of side? small And heard to So what molecule else China much can small you leading some pipeline. to the and how tied potentially weakness exposure workflows? really IRA them your of is decisions talk reprioritizing us pharma is pressuring We've incremental really driving then

you trend? So is you. risk your could there small growth What with rate that for customers won't Thank a that reset be in? really Or conversations are molecule recovery? see the any on

Mike McMullen

Okay.

you it. got So

global right? XX%, say the business, That's So China, relative to probably as the would I probably it's same what XX%? ratio

Robert McMahon

Yes.

Mike McMullen

believe, is, in deferring relative of of happened related continuation again, drugs. running some molecule. about capital expenses And implications probably cautious hotter I'm iRNA other what's to capital. what small P&Ls of are large pharma make Is they we're where they're and the believes is in purchases. need I also pharma, know sure seeing pharma if a That medium-sized to through their on-market offsets importance being with having in to a safe this thinking said, you

to the have that. have environment to QA/QC instrumentation You support

you have requires That liquid chromatography to fleets. modern

that the - think need and a pharma So, an invest be area they I is in. to go that this question don't that can away will won't it's market to going

can a then for last only so period for You long. but defer time, of

Operator

go We'll now next you. Citi. at Donnelly Thank to Patrick

Patrick Donnelly

commentary seeing yet. really linger. maybe the not for Thanks cycle, the guys. improvement that like transitory, seems China the but around taking given to Obviously, questions. Hi piece you're certainly just Mike, it's instrument much going

of still for of next talk that top the a sounds into only into some I these you couple How to here. months year, least headwinds linger 'XX given lingering in wanted costs. it you of about some just I impacts guys for in? headwinds growth given like some you those through these of there's first plans of will think You year? but said think next lingering do line setup half, at some certainly the

Mike McMullen

And and we'll November. off But a year, We fiscal we'll think then. still months in this that was give we we Yes. the know rate. a 'XX. I to my growth more guide our very I be I by there's do so in have said, think grow to you more able a company That finish comments we'll that full know careful make few year lot sure in

talking a next the be snapback comp but we year today begin expect about to to the the just things expect some of to quick from with, that we've call, year half challenging of don't do standpoint or occurring quarter X. the a first the a in in We be been also

Patrick Donnelly

helpful. That's at a pull Okay. budget but back flush, from this would event be and still from whatever bit other sounds expecting little guys a helpful know view bit are pharma a subdued any calendar areas. you just And more Do mentioned you're be year you flush to It that. little on is have like for the hearing away point? that to more then I at budget you customers

Mike McMullen

his going as kind so, Patrick, to sure, then hey, happy conversation. do talking been to he's customers I'm this to mentioned money. I listen, a team know I indication and I'm of to earlier, seeing to planning really any spend of Padraig not way. invite about lot I'll Yes, this. have it saying, But this we're

purchases. more closed seen to where actually we've opposite that deferring we the keep were fact, thought and orders In sometimes require

was In fact, I we Xx. heard probably think we one story

it third approved CFO, on overruled Fondo the the it. and go-around CEO

eventually is seen. know going ever kind of business. that dynamics this we But to So get

we'd of year-end flush. happen, opposite of Again, to to but not going indication a we're strong So the see budget a love lot seeing not that. we're indications of

if don't I to add something you there. And have

Padraig McDonnell

the the upside through What but flow budget we're we're we not the will the hearing a end take year, from - of we're corsa.com. customers that is of planning on

it's thing think the that be seeing them but think at released the and very there, through are strong, I the year. funnels of really big not is clear I one a we're end push to

Mike McMullen

question funnels a full are to this year in get We is think is these business we is know just 'XX. growing when the it's comment, reasons being going think outlook strong and there. of one important I because this why funnel on really It's of about Patrick, the actually - the

Padraig McDonnell

stable we've a had we them Yes. loss And seen very very closely is We -- win very, watch positive funnel, very haven't which our time. strong - over we rates.

Patrick Donnelly

guys. you, Thank Understood.

Operator

go We'll now Derik to next at America. of Bank De Bruin

Derik De Bruin

afternoon. Good Hi.

Mike McMullen

Good afternoon, Derik.

Derik De Bruin

cleanups so A ask has been I some to here. I've what lot asked, wanted of got

of number you're your you instrument number growth growth in then expecting? sort for for number or did core all-in and what specific Just give consumables year, a XQ this

Robert McMahon

slightly. for We Consumables QX LSAG didn't. was down roughly was core. Yes. X% up

Derik De Bruin

you. Thank it. Got

for revenue do what's out So Bio XXXX? in what for need XQ? contribution the pull And Res to we

Robert McMahon

Yes.

a X it as little roughly over in wind to X forward say point got DGG the was 'XX. I business. a would QX to going to FY headwind we've we point down minimal in number So And the

Derik De Bruin

Got it.

Okay.

couple And space thinking obviously quiet come your of in, of deployment mean, going I'm last done the so industry valuations it's we your staying forward? have have consolidating, across which been for on about a relatively sort the I topic I haven't gone what's but you've XX deals, genomics of the mean M&A. is And would -- wondering you way. say, just months.

of want even And so sort doing about buybacks. maybe prices, share buy capital the share -- like decide you thinking how are some maybe And to doing start point you maybe you deployment? with at what do

capital your deployment at talk of sort general about strategy this You moment?

Mike McMullen

Yes.

remarks, Bob think opportunistically saw balanced capital his are given where in a strategy, on you we setting our but allocation share the staying still we I the and market repurchases with prepared to saw that. alluded price us share bit it in

despite given unchanged acquisitions, a genomics acquisition of We to based other play including that was this knew our remains But terms the didn't had it early-stage out. hot on - AAT aspects a area in higher Resolution strategy really instrumentation Bioscience our success we've want differentiating acquisition an some side. on company of decision. - the in appetite that for In M&A, risk for us, the

to So internal terms and that still same if lens, internal the looking. But a but business in portfolio, how how what's will, we as on in our choices performance our at of we'll there only Bob you out not view we disciplined to mentioned, M&A. approach look take also take we're we

a going value in I to caught public private company, a this think buyer's a in nothing that good fact really, beyond has a of was like changed but strong space. to work they're disciplined in favorable not up of a So companies the and the is get sheet or we're on more Agilent, either balance once with And position what opportunities, stay market.

Derik De Bruin

What your you Are are Just How follow-up, I one chromatography? increasing? book? order may. orders liquid in is seeing your if more orders

Robert McMahon

of Our function largely but down were order down, China, was year-on-year. they book a

Derik De Bruin

Thanks.

Operator

go Josh next now Waldman Thank you. We'll to Research. Cleveland at

Josh Waldman

Hi. Thanks for taking you. A couple my for questions.

context versus over the to I in the curious fourth areas core slowing of like guide the by to can you areas time Bob, days. be you're the few or unit. quarter guide? growth assumptions maybe last on outside reflect markets provide trying stabilized organic that or business the have that and real takes maybe improving more within China seem guess then puts First, what And in

Robert McMahon

Yes.

of implied big So we think guide, just the When China. the quick. real QX kind driver Josh, about is

- you which and imagine, that both As of a the largest advanced I markets and two energy, in mentioned, and are down chemical roughly can materials, China. chemical markets or which impacts really number AR and are mid-XXs

the also then and would that business, genomics. in is U.S. a say that's primarily I of diagnostics softness and Bio that that also obviously, seen clinical And impacts down. We've phenomenon. the shutdown Res also

those did puts So on some pieces places, are then side. there's for U.S. we that see but And in QX. and impact in the other big two an takes

Mike McMullen

of really recall, I driven think change China But CAM. bleeds XX% was pharma I over and in the into as

Josh Waldman

it. Got

I any that What of in medium you the believe account for as mean, risk China the end rate on quarter follow-up progressed I guess you're earlier. industry underlying is it and China kind that variables a sorry, the as maybe are term? rethink, here staying China Can months. then you're trying medium you couple I need demand Mike, seeing the to the was just I in on growth remains if I that question. of I in And unpack the like mean, areas versus light come guess, Then follow-up again. I Okay. like in guess, where more outside bit by outside pharma. a lighter there. a market? - you've what within term? to Dan's next beyond the we holding China, of of And Mike guess, of seen forecast

Mike McMullen

Yes.

start the So market. view let by with me end

But quarter. in much Bob in market And for was July as down. government pharma the grew about and performance. academia were - everything The pretty us third change how commented the space. big think exited earlier we else quarter, the really was the I the

of say in compared there last but XX% was of down just going year. - chemicals, I'd off byproduct really a Some we're weakness the

XX% compare the is And growth reflected really cost in we're looking this really with And most But varying I'd in pharma degrees, a the or but board. the the the in quarter. say the at marketplace across China it's concerns fourth think I of outlook.

I think $XX,XXX that's question. a

a I market think that It's a there's snapback get will get going a of case longer-term not XX growth to to be in period be there. made to it to this rates, months. take its will but years back

economy see to the But bleeding looking think here life China to happen everybody into is the a again, again. The at, else factors macro what's that's are which get story Storyboard and staring factors science moving I be is is work we're but same to that going need to at, China. done. the macro in over we is tools, that

We see We need back. to need back China. consumer is coming to coming confidence in investment commerce see

that things time. there they'll happen. are the make snapback government, But those a take calling But we're quick not to for think I some find think either. and of do will a way I here priorities

Josh Waldman

Got it. Appreciate guys.

Operator

to go We'll Dan at you. now TD Thank next Brennan Cowen.

Dan Brennan

to out instrument know the break for what you Derik's Great I there's one we've L Maybe segment, on consumables got you maybe the question Could instruments, I you just questions. guys. I the taking gave that. just but talked I number Bob, earlier, on think is? think within Thanks the know Q.

ahead, how we of key but you asked I about think given a it I Just fourth the as wondering your a quarter, kind times go know to instrument, various been question, whether just how there's instrument to want always throughout, be for it's further? instrument if outlook out look did would think and we little point exposure,

Robert McMahon

Yes.

flavor clarity well. So answer previously, to maybe in down core. down add was to was and LSAG more instruments X% a X% It little as my

business consumables basically the up was point. a So

Dan Brennan

to a that 'XX look get guys X% - funnel depends sounds back we going it you're would you as as point going that discussed, of LSAG out the I'm like which you towards guess me already optimistic you wondering. starting on product, upon I that LCMS growth see to fiscal the just for excuse in given type guess, back it's is really growth. there, today? I is to what assume And get instruments

Mike McMullen

Based today, on what we yes. see

Dan Brennan

on mean I more, - just Got it. yes… quick one one

Robert McMahon

There's we areas areas testing, they to And the of our of no new as the Discovery about was of no fundamentally when there Mike instrumentation. has Markets, think talking we kind therapeutic that in Applied reason level reason the instruments investment of to think believe about think there's new or over-time. about don't that importance changed, around these is food something need

going so, comp And on our our business driver I for growth do Yes, No, feel the good we market-share very competitiveness and our completely. our LSAG think no our and is this be after to making… a basis, market-share, and more us good about about forward. just expect

Dan Brennan

how year the the you're chemical through. That segment? the were - bit chemical a during maybe sounds one, across on different the Can the buckets weakening more just but one applied we how you powering quarter, mentioned your and just chemical, great. within quick unpack that obviously some little versus concerned about Bob just exit applied you applied thinking just like and the

Robert McMahon

Yes. it will if QX, at I look impact I be an you think of really China. mean,

last have in impact. that and materials XX% a that chemical double-digits. bigger across-the-board. looking down the the I that advanced advanced probably actually because of And at or declining of mentioned was down high will increase materials Mike much be chemical side, we're That say QX year. So stronger would than QX, will we in

some centered market, If of the materials chemical where that's impact products. you GC because shutdown and Shanghai those Workhorse was our in recall, the that's was for a manufacturing and advanced

it So, the for see we full-year. down but do QX, in up

understand. to sure I really a think that important make people that's

Dan Brennan

Great, thank you.

Operator

afternoon, you. take from we'll time Barclays. question that now have Luke for more And one at we Thank Sergott this

Luke Sergott

Great. squeezing Thanks in. me for

Mike McMullen

Hi Luke.

Luke Sergott

quick - Just on the real thanks.

any lastly So do market, additionally, you CapEx additional the seeing real pressure year? you is the Novartis with kind that guys down. are about well. there some that the talked But with as on from know of NASD. the for guys Are to seeing anything doing then this And is with from on has any investing pause in-sourcing I quick still Or CapEx market? of down? that in that stepped lines really have guide

Mike McMullen

direction. material from in in book head we Let of into me And in we this leave it more moves 'XX. standpoint. there. of jump-in customers go have And we any we're our 'XX, customers terms seeing Sam in-sourcing well, continue as not and No, of overhead to into then to business Bob as have and fact we're but going broaden as breadth

And yes, Endeavor. it's Project called

what So And our we antisense. other code-named. to expansion Train on a like we siRNA B we that's front, which forward plans had with on went front, to live, the side do as the continue move well along live, CRISPR we but with And different

So, we're going to broaden that.

So our stated investment plans remain unchanged.

Robert McMahon

all. in opposed trimmed down projects another to we what Mike revenue-generating. of of investment kind highest Luke, Yes, that slowing That we've the add is of to spending infrastructure not kind more clear, priorities, back one very oriented to as are be at less said,

because think in that seen I places. coming actually what and probably better-than-expected, better-than-expected in other actually is pricing is seeing the you it's you're have

availability And so, planned had key of we parts the and better initially the well. is materials what than as

Sam Raha

we're you going Yes, contracted NASD. to that diversified in year more be next having of Mike guys actually customers, to and than what more I set only history the of said we're to programs do add customers with along more

ahead. So it's full-speed all a yes,

Luke Sergott

margin, the there, of I saw there went they and is - any what kind lack jump-off that it, - ACG is Got how had step-up can about but Got asked think in talk of And QX, about on incentive just comp where the there, about guys break-out, a then anybody point? maybe you missed that you. really you. you there a material did I we and Mike didn't benefit should really from drivers as that you hear

Mike McMullen

comp, it's big obviously, growth business. a of in Yes, we reflection scale pay we We didn't outsized pleased kind the variable believe going-forward. - and But Luke, component say QX continue a Because take it of benefit, and point. that's continued did that I book for the and of that of was was as it, mention the people to there got also a in XX% margin but growth. be it that had of starting new expect expansion ACG continued that

Luke Sergott

great. right, All Thank you.

Operator

time at turn any Thank you. Ladies back Parmeet and gentlemen, this things closing to I comments. would for like to Ahuja

Parmeet Ahuja

call. to Thanks Bo, call for With joining good that, everyone the like we'd a the end thanks today. day everyone. and Have

Operator

Ladies wish you day. you, gentlemen, and Thank this joining. a all We call. does great today's conclude Parmeet. Thank you for Goodbye.

Agilent (A) 15 Aug 232023 Q3 Earnings call transcript