Q1 2024 Agilent Technologies Inc Earnings Call
Regina: Ladies and gentlemen, welcome to the Agilent Technologies Q1 2024 earnings call. My name is Regina, and I will be coordinating your call today.
Ladies and gentlemen, welcome to the agile and technologies Q1, 'twenty 'twenty four earnings call. My name is Regina and I will be coordinating your call. Today. If you would like to ask a question. Following the presentation you may do so by pressing star one on your telephone.
Regina: If you would like to ask a question following the presentation, you may do so by pressing star 1 on your telephone. I will now hand you over to your host, Parmeet Ahuja, to begin. Please go ahead. Thank you, Regina, and welcome everyone to Agilent's conference call for the first quarter of fiscal year 2024. With me are Mike McMullen, Agilent President and CEO, Porik McDonald, Agilent Chief Operating Officer and CEO-elect, and Bob McMahon, Agilent Senior Vice President and CFO and Acting President of the Diagnostics and Genomics Group. Also joining in the Q&A will be Phil Binns, President of the Agilent Life Science and Applied Markets Group, and Angelica Reinman, our newly This presentation is being webcast live.
I'll now hand, you over to your host Amit who jet you begin. Please go ahead.
Amit: Thank you Regina and welcome everyone to <unk> conference call for the first quarter of fiscal year 'twenty to 'twenty four.
Amit: With me are Mike Mcmillan, <unk>, President and CEO.
Amit: Mcdonald Adjuvant, Chief operating officer, and CEO elect and Bob Mcmahon, <unk>, Senior Vice President and CFO and acting president of the diagnostics and genomics group.
Amit: Joining in the Q&A will be Selbins president of the agile in life Science and applied markets Group, and then Geneka Rhineman, our newly named President of the Adjuvant Cross Lab group.
Amit: This presentation is being webcast live.
Parmeet Ahuja: The news release for our first quarter financial results, investor presentation, and information to supplement today's discussion, along with the recording of this webcast, are available on our website at www.investor.agilent.com. Today's comments will refer to non-GAAP financial measures. You will find the most directly comparable GAAP financial metrics and reconciliations on our website.
Amit: The news release for our first quarter financial results Investor presentation, and information to supplement today's discussion along with a recording of this webcast are available on our website at www Dot investor don't adjuvant Dot com.
Amit: Today's comments will refer to non-GAAP financial measures you will find the most directly comparable GAAP financial metrics and reconciliations on our website.
Parmeet Ahuja: Unless otherwise noted, all references to increases or decreases in financial metrics are year-over-year, and references to revenue growth are on a core basis. Core revenue growth excludes the impact of currency and any acquisitions and divestitures completed within the past 12 months; guidance is based on forecasted exchange rates. As previously announced, beginning in the first quarter of fiscal 2024, we implemented certain changes to our segment reporting structure related to the move of our cell analysis business from LSAG into DGG. We have recast our historical segment information to reflect these changes. These changes have no impact on our company's consolidated financial statements.
Amit: Unless otherwise noted all references to increases or decreases in financial metrics are year over year and references to revenue growth are on a core basis core revenue growth excludes the impact of currency.
And any acquisitions and divestitures completed within the past 12 months.
Amit: Guidance is based on forecasted exchange rates.
As previously announced beginning in the first quarter of fiscal 2024.
Amit: Implemented certain changes to our segment reporting structure related to the move of our cell analysis business from L. S. C. G into D. G G.
Amit: We have recast our historical segment information to reflect these changes these changes have no impact on our company's consolidated financial statements.
Parmeet Ahuja: During this call, we will also make forward-looking statements about the financial performance of the company. These statements are subject to risk and uncertainties and are only valid as of today. The company assumes no obligation to update them.
Amit: During this call. We will also make forward looking statements about the financial performance of the company.
Amit: These statements are subject to risks and uncertainties and are only valid as of today. The company assumes no obligation to update them. Please look at the company's recent SEC filings for a more complete picture of our risks and other factors and now I'd like to turn the call over to Mike.
Parmeet Ahuja: Please look at the company's recent SEC filings for a more complete picture of our risk and other factors. Now, I'd like to turn the call over to Mike. Thanks, Parmeet, and thanks, everyone, for joining our call. Before I review our first quarter results, I want to first acknowledge our news last week that I'll be retiring at the end of the fiscal year and that Porter McDonald is Agilent's new Chief Operating Officer and will become CEO on May 1st. It was a difficult decision to retire.
Michael R. McMullen: Thanks, Paul and thanks, everyone for joining our call.
Before I review, our first quarter results I want to first acknowledge our news last week that.
Michael R. McMullen: I'll be retiring at the end of the fiscal year.
Michael R. McMullen: Portland, Donald is agile as new Chief operating officer.
Michael R. McMullen: And will become CEO on may 1st.
Speaker Change: It was a difficult decision to retire.
Michael R. McMullen: After almost 40 great years with this special company and in a role that I love, I will miss working with the whole Agilent team. However, I must say it's a great feeling and quite gratifying to be handed over the CEO reins to a tremendously capable successor in Porex, with Agilent operating from a position of strength and with a very promising long-term outlook. I've known Quirk for more than 20 years and worked closely with him during that time. He has always been completely committed to our customers and Agilent's success. He is a product of our culture, knows our company, team, and market, and knows how to develop compelling business strategies, build winning teams, and deliver exceptional results. Quirk has a strong track record of success at every position he has held during his 26-year career at Agilent. I know he has the knowledge, leadership skills, and customer focus that will be key to Agilent's success moving forward. I look forward to all of you seeing firsthand what a capable, resourceful leader we have in PORG. Roger, would you like to say a few words?
Portland: After almost 40, great years with this special company and in a role that I Love I will Miss working with the one add on team.
Portland: However, I must say, it's a great feeling and quite gratifying to be handing over the CEO reins to a tremendously capable successor in pork.
Portland: With agile and operating from a position of strength and with a very promising long term outlook.
Portland: I have known for more than 20 years that work closely with him during that time.
Portland: He has always been completely committed to our customers and agile a success.
Portland: He is a product of our culture.
Portland: Those are company team and markets.
Portland: And those how to develop compelling business strategies build winning teams and deliver exceptional results.
Portland: <unk> has a strong track record results at every position. He has held during his 26 year career at Ashland.
Portland: I know he has the knowledge leadership skills and customer focus.
Portland: That will be key to our success moving forward.
Portland: I look forward to all of you seen firsthand what are capable.
Portland: I'll start a leader we have an import.
We'd like to say a few words.
Michael R. McMullen: Thank you, Mike. I'm honored to be able to follow you as Agilent's next CEO, and I'm grateful for your support throughout my career and during this transition. You have made a significant impact on Agilent, our customers, and our team. I'd also like to welcome Angelica Ryman to this call.
Speaker Change: Thank you, Mike I'm honored to be able to follow you as <unk> next CEO and I am grateful for your support throughout my career on during this transition.
Speaker Change: Made a significant impact on Netherlands, our customers and our team.
Speaker Change: I'd also like to welcome Angelica Raymond to this call after leading our services division for the last two and a half years I can tell you. She has the experience and skill set to continue evolving ACG to align with the growing opportunities that the business has demonstrated in supporting the broad installed base on our enterprise customers.
Bob Mcmahon: After leading our services division for the last two and a half years, I can tell you she has the experience and the skill set to continue evolving ACG to align with the growing opportunities that the business has demonstrated in supporting the broad install base and our enterprise customers. Expect to see continued great things from Angelica and ACG. I've had the pleasure of meeting some of you on this call, and I look forward to meeting and working with you all in the future. Agilent has a compelling story to tell, and I'm excited by the possibilities that lie in front of us as we help our customers bring great science to life. Thanks, Porik.
Speaker Change: Expect to see continued great things ahead for Angelica and ACG.
I've had the pleasure of meeting some of you on this call and I look forward to meeting and working with you all in the future.
Speaker Change: <unk> has a compelling story to tell and I am excited by the possibilities that lie in front of those as we help our customers bring great science to life.
Speaker Change: Thanks, Patrick for today's call I will take the lead cover the overview of our financial results, while next quarter pork will take on these duties as the new CEO.
Michael R. McMullen: For today's call, I will take the lead in covering the overview of our financial results, while next quarter, Porik will take on these duties as the new CEO. Now, on to the Q1 results. We are pleased with the start of the year. The Agilent team continues its strong execution in a challenging market environment. The first quarter provided further evidence of our team's capabilities with revenue coming in better than expected at $1.66 billion. This represents a decline of 6.4% against a tough compare of 10% growth in Q1 of last year. The better than expected top-line results and disciplined cost management drove higher than expected earnings per share of $1.29, down 6% from Q1 last year.
Speaker Change: Now on to the Q1 results.
Speaker Change: We are pleased with the start of the year.
Speaker Change: The agile team continues its strong execution in a challenging market environment.
Speaker Change: The first quarter provided further evidence of our team's capabilities with revenue coming in better than expected at $1 six 6 billion.
Speaker Change: This represents a decline of six 4% against a tough compare of 10% growth in Q1 of last year.
Speaker Change: The better than expected top line results and disciplined cost management drove higher than expected earnings per share of $1 29 down 6% from Q1 last year.
Michael R. McMullen: Given the solid Q1 results and our continued view of a slow but steady recovery throughout the year, we are maintaining our four-year outlook that we shared with you in November. Key to our Q1 performance was the ongoing sequential stabilization we experienced in China and secular growth drivers in implied markets globally. From an end market perspective, our total form of business was down 12%, which was in line with our expectations. This fell 11% from a 11% increase in the first quarter last year. While declining overall against a very strong Q1 of last year, our applied end markets were more resilient than expected and showed sequential growth from the fourth quarter. In these markets, PFAS solutions and advanced materials, including batteries and semiconductors, were highlights for us.
Speaker Change: Given the solid Q1 results and our continued view of slow but steady recovery throughout the year.
Speaker Change: We are maintaining our full year outlook, David shared with you in November.
Speaker Change: Key to our Q1 performance was the ongoing sequential stabilization we experienced in China.
Speaker Change: And the secular growth drivers in applied markets globally.
Speaker Change: From an end market perspective, our total pharma business down 12%.
Speaker Change: Which was in line with our expectations.
Speaker Change: This follows a 11% increase in the first quarter last year.
Speaker Change: While declining overall against a very strong Q1 of last year are applied end markets were more resilient than expected and.
Speaker Change: And showed sequential growth from the fourth quarter.
Speaker Change: In these markets P fast solutions and advanced materials, including batteries and semiconductors were highlights for us.
Michael R. McMullen: Geographically, both China and Europe finished Q1 better than expected, while revenue for the Americas was in line with expectations. Looking at that performance by business unit, the Life Science and Supply Markets Group delivered revenues of $846 million, down 11%. This, again, is a difficult comparison of 10% growth last year. However, while still too early to call an overall market recovery, results were better than expected. Our diversified portfolio and broad market coverage help drive the performance. However, we continue to experience a conservative environment for capital spending.
Speaker Change: Geographically, both China and Europe finished Q1 better than expected while revenue for the Americas was in line with expectations.
Speaker Change: Looking at performance by business unit, the life Science and applied markets group delivered revenues of $846 million down 11%.
Speaker Change: This is against a difficult compare of 10% growth last year.
Speaker Change: While still too early to call and overall market recovery results were better than expected.
Speaker Change: Our diversified portfolio and broad end market coverage helped drive their performance.
Speaker Change: We continue to experience a conservative environment for capital spending.
Michael R. McMullen: But our better-than-expected Q1 results were driven by consumables, which grew mid-single digits in China and a Better Than Expected Performance in Applied Markets. During the quarter, we also completed the expansion of our Shanghai manufacturing facility as we continue to take steps to ensure our long-term leadership in China. We also made our first customer shipments for Agilent's newly released LC-MS offerings. Our latest, highest-sensitivity triple quad, the 6495D, enables expanded and enhanced workflows, including for PFAS. This is in addition to Revenant, the first of a new generation of LC-QTOL systems that combine a new architecture with enhanced instrument intelligence for maximized operation time and productivity.
Speaker Change: But a better than expected Q1 results were driven by consumables, which grew mid single digits, China and a better than expected performance in applied markets.
Speaker Change: During the quarter. We also completed the expansion of our Shanghai manufacturing facility as we continue to take steps to ensure our long term leadership in China.
Speaker Change: We also made our first customer shipments for Atlas newly released <unk> offerings.
Speaker Change: Our latest highest sensitivity triple quad the $64 95, D enabled expanded and enhanced workflows, including for PFS.
Speaker Change: This is in addition to resident the first of a new generation of LC <unk> systems that combine a new architecture with enhanced instrument intelligence for maximize operation time and productivity.
Michael R. McMullen: The Agilent Cross-Site Group posted revenue of $405 million. This is up 5% with growth across all regions except China. Our contracts business led the way with double-digit growth overall, led by strength and enterprise service contracts. This performance highlights the continued strength and resiliency of our business. Connect rates for both services and consumers continue to improve. This is a result of our focused strategy to deliver end-to-end customer value while also building a larger recurring revenue business. The Diagnostic Genomics Group delivered revenue of $407 million, down 6% core, our pathology-related businesses, and our NGS QC portfolio, which is mid-single digits, which is more than offset by declines in NGS chemistries and NASD declined by low double digits, as expected.
Speaker Change: It Hasnt crossed that group posted revenue of $405 million.
Speaker Change: This is up 5% with growth across all regions, except China.
Speaker Change: Our contracts business led the way with double digit growth overall led by strength in enterprise service contracts.
Speaker Change: This performance highlights the continued strength and resiliency of our business.
Speaker Change: Connect rates for both services and consumables continued to improve.
Speaker Change: This will result of our focused strategy to deliver end to end customer value. While also building a larger recurring revenue business.
Speaker Change: The diagnostic genomics group delivered revenue of $407 million down 6% core.
Speaker Change: Our pathology related businesses and our NGL QC portfolio grew mid single digits.
Speaker Change: Which was more than offset by declines in Ngls Chemistries and NASD.
Speaker Change: NASD declined low double digits as expected this was against a very tough compare of 22% growth driven by significant volume last year from a single commercial program. We continue to be encouraged about our long term prospects due to the increasing number of programs across a range of indications many of them.
Michael R. McMullen: This is a very tough compare of 22% growth driven by a significant volume last year from a single commercial program. However, we continue to be encouraged by our long-term prospects due to the increasing number of programs across a range of indications, many of them targeting large patient populations. The DGG team continues to innovate and deliver differentiated solutions for our customers. In the quarter, we introduced a new proteoanalyzer system. The new platform simplifies and improves the efficiency of analyzing complex protein mixtures, a process central to analytic workflows across the pharma, biotech, food analysis, and academia sectors.
Speaker Change: Turning to large patient populations.
Speaker Change: The <unk> team continues to innovate and deliver differentiated solutions for our customers in the quarter, we introduced a new <unk> analyzer system.
Speaker Change: The new platform simplifies and improves the efficiency of analyzing complex protein mixtures <unk>.
Speaker Change: The process central to analytic workflows across the pharma biotech food analysis and academia sectors.
Michael R. McMullen: From an overall Agilent perspective, we recently achieved World Economic Forum recognition for operations in Warlbronn, Germany. This site was named a global lighthouse for implementing innovations that boost productivity, output, and quality. This marks the second Global Lighthouse Award for us after receiving the recognition for our Singapore facility two years ago. Agilent is the only life science tools company to be recognized as a global lighthouse.
Speaker Change: From an overall Ashland perspective, we recently achieved world Economic Forum recognition for operations of Barbara in Germany.
This site was named a global lighthouse for implementing innovation that boost productivity output and quality.
Speaker Change: This marks our second Global Lighthouse award for US after seeing the recognition for our Singapore facility two years ago.
Speaker Change: As well as the only life science tools company to be recognized as a global lighthouse.
Michael R. McMullen: Agilent recently achieved a top five ranking in the Barron's list of 100 most sustainable companies. In addition, we are included on the Dow Jones Sustainability Index globally and in North America for the ninth year in a row. Looking ahead, we expect the current market environment to persist through the first half of the year, and we'd expect a slow and steady improvement in the second half of the year. We will continue taking actions that will make us stronger and position us well for the future.
Speaker Change: Ashland recently achieved a top five ranking in the Barron's list of 100, most sustainable companies.
Speaker Change: In addition, we have included in the Dow Jones Sustainable index globally, and in North America, the ninth year in a row.
Speaker Change: Looking ahead, we expect the current market environment to persist through the first half with.
Speaker Change: We would expect a slow and steady improvement in the second half of the year.
Speaker Change: We will continue taking actions that will make us stronger and position us well for the future.
Bob Mcmahon: We will maintain our approach to prioritize investing for growth with a focus on execution and driving productivity. The better-than-expected Q1 results and my confidence that the Agilent team reinforced our view for the full year. Bob will now provide the details and our results, as well as our outlook for Q2. After Bob's comments, I will rejoin for some closing remarks. And now, Bob, over to you. Thanks, Mike. And good afternoon, everyone.
Speaker Change: We will maintain our approach to prioritize investing for growth with a focus on execution and driving productivity.
Speaker Change: Our better than expected Q1 results and my confidence in the agile team reinforce our view for the full year.
Speaker Change: Bob will now provide the details on our results as well as our outlook for Q2. After Bob's comments I will be joined for some closing remarks and now Bob over to you. Thanks.
Bob Mcmahon: Thanks, Mike and good afternoon, everyone. In my remarks today I will provide some additional details on revenue in the quarter.
Bob Mcmahon: In my remarks today, I will provide some additional details on revenue in the quarter, as well as take you through the income statement and other key financial metrics. I'll then finish up with our second quarter guidance. Q1 revenue was $1.66 billion, a decline of 6.4% core.
Bob Mcmahon: As well as take you through the income statement and other key financial metrics.
Bob Mcmahon: I'll, then finish up with our second quarter guidance.
Bob Mcmahon: Q1 revenue was $1 66 billion.
Bob Mcmahon: A decline of six 4% core.
Bob Mcmahon: On a reported basis, currency added 0.9 percentage points, while M&A had a negative impact of 0.1%, resulting in a reported decline of 5.6%. And overall, orders were greater than revenue in Q1, as expected. As Mike mentioned, pharma, our largest end market, declined 12%. Within pharma, biopharma declined low single digits, but it grew low single digits outside China, bolstered by strength in services and consumables. Small Molecule was down high teens in the quarter with softness globally. The chemical and advanced materials market was down 4% off a very tough comparison of 14% growth last year.
Bob Mcmahon: On a reported basis currency added <unk> nine percentage points, while M&A had a negative impact of 0.1%, resulting in a reported decline of five 6%.
Bob Mcmahon: And overall orders were greater than revenue in Q1 as expected.
Bob Mcmahon: As Mike mentioned.
Bob Mcmahon: <unk>, our largest end market declined 12%.
Bob Mcmahon: <unk> pharma Biopharma declined low single digits, but grew low single digits outside China bolstered by strength in services and consumables.
Bob Mcmahon: Small molecule was down high teens in the quarter with softness globally.
Bob Mcmahon: The chemical and advanced materials market was down 4% off a very tough comparison, a 14% growth last year.
Bob Mcmahon: We saw broad resilience in advanced materials with a low single-digit increase year on year as well as growth sequentially. Given the extremely tough comparison of high 20s growth last year, these are impressive results. As expected, the chemical side saw a decline.
Bob Mcmahon: We saw broad resilience in advanced materials with a low single digit increase year on year as well as growth sequentially.
Bob Mcmahon: Given the extremely tough compare of high Twenty's growth last year. These are impressive results.
Bob Mcmahon: As expected the chemical side saw a decline.
Bob Mcmahon: The academia and government market was up 2%. The growth in this market reflects the stability of academic funding and lab activity. Our business in the diagnostics and clinical market declined 5%. Mid-single-digit growth in pathology was more than offset by continued headwinds in genomics, cell analysis, and LC and LC-MS. The environmental and forensics market declined 1% after growing 12% in Q1 of last year.
Bob Mcmahon: The academia and government market was up 2% the growth in this market reflects the stability of academic funding in lab activity.
Bob Mcmahon: Our business in the diagnostics and clinical market declined 5% mid.
Bob Mcmahon: Mid single digit growth in pathology was more than offset by continued headwinds in genomics cell analysis, and LC and LC Ms.
Bob Mcmahon: The environmental and forensics market declined 1% after growing 12% in Q1 of last year.
Bob Mcmahon: We continue to see new regulations around the world driving PFAS testing. Europe grew mid-single digits while China and the Americas were down low single digits. America faced a difficult compare of low-30s growth last year. The food market declined 3% but was up low single digits, excluding China.
Bob Mcmahon: We continue to see new regulations around the world driving PFS testing.
Bob Mcmahon: Europe grew mid single digits, while China, and the Americas were down low single digits Americas faced a difficult compare of low <unk> growth last year.
Bob Mcmahon: The food market declined 3%, but was up low single digits, excluding China.
Bob Mcmahon: On a geographic basis, as Mike mentioned, both China and Europe exceeded our expectations, while the Americas were in line with our expectations. China was down 9% and showed a sequential increase over last quarter, which was much better than expectations. China benefited from continued stabilization and a bigger-than-expected Lunar New Year impact as some customers pulled forward incremental demand from Q2.
Bob Mcmahon: On a geographic basis, as Mike mentioned, both China, and Europe exceeded our expectations, while the Americas were in line with our expectations.
Bob Mcmahon: China was down 9% and showed a sequential increase over last quarter, which was much better than expectations.
Bob Mcmahon: China benefited from continued stabilization and a bigger than expected lunar new year impact as some customers pulled forward incremental demand from Q2.
Bob Mcmahon: We estimate the pull-forward impact to be roughly $15 million, or 5% of China's revenue in the quarter. Even adjusting for this impact, China outperformed. Europe was down 4% year-on-year after growing 10% last year and was up mid-single digits sequentially. This was driven by continued strong demand for our ACG services offset by muted demand in pharma and expected softness in chemicals. In the Americas, revenue was down 8% due to declines in pharma and softness in NASD and NGS chemistry.
Bob Mcmahon: We estimate the pull forward impact to be roughly $15 million or 5%.
Percent of China's revenue in the quarter.
Bob Mcmahon: Even adjusting for this impact China outperformed.
Bob Mcmahon: Europe was down 4% year on year after growing 10% last year and was up mid single digits sequentially. This was driven by continued strong demand for our ACG services offset by muted demand in pharma and expected softness in chemicals and.
Bob Mcmahon: In the Americas revenue was down 8% due to declines in pharma and the softness in NASD and Lgs Chemistries.
Bob Mcmahon: Moving down the P&L, our first quarter gross margin was 56.0%, down 50 basis points from a year ago as productivity and cost savings were offset by lower demand and mix. Our operating margin of 25.8% was down year-over-year, as expected. Our ongoing cost savings initiatives are delivering as planned. Below the line, we benefited from greater-than-expected interest income in the quarter, driven by good work from our Treasury team, coupled with very strong cash flow. Our tax rate was 13.5%, and we had 294 million diluted shares outstanding.
Bob Mcmahon: Moving down the P&L.
Bob Mcmahon: First quarter gross margin was 56.0%.
Bob Mcmahon: 50 basis points from a year ago as productivity and cost savings were offset by lower demand and mix.
Bob Mcmahon: Our operating margin of 25, 8% was down year over year as expected our ongoing cost savings initiatives are delivering as planned.
Bob Mcmahon: Below the line, we benefited from greater than expected interest income in the quarter driven by nice work from our treasury team, coupled with very strong cash flow.
Bob Mcmahon: Tax rate was 13, 5% and we had 294 million diluted shares outstanding.
Bob Mcmahon: Putting it all together, Q1 earnings per share were $1.29, down 6% from a year ago and ahead of our expectations. Now, let me turn to cash flow and the balance sheet. I continue to be very pleased with our cash flow generation. Operating cash flow was $485 million in the quarter, significantly above last year.
Bob Mcmahon: Putting it altogether Q1 earnings per share were $1 29 down 6% from a year ago and ahead of our expectations.
Speaker Change: Now, let me turn to cash flow and the balance sheet.
Speaker Change: I continue to be very pleased with our cash flow generation opt.
Speaker Change: Operating cash flow was $485 million in the quarter significantly above last year.
Bob Mcmahon: In Q1, we invested $90 million in capital expenditures as we continue our planned NASD expansion, and during the quarter, we returned $69 million to shareholders through dividends. Although no shares were repurchased during the quarter, we expect to catch up on our anti-dilutive share repurchasing for the remainder of the year. In Q2, we expect a minimum of $180 million to be repurchased.
Speaker Change: In Q1, we invested $90 million in capital expenditures as we continue our planned NASD expansion and.
Speaker Change: And during the quarter, we returned $69 million to shareholders through dividends.
Speaker Change: Although no shares were repurchased during the quarter.
Speaker Change: We expect to catch up on our anti dilutive share repurchases for the remainder of the year in.
Speaker Change: In Q2, we expect a minimum of $180 million to be repurchased.
Bob Mcmahon: All in all, we had a good start to the year, and as Mike mentioned, it reinforces our confidence in the full year guidance we provided in November. Now to our guidance for the second quarter. We expect Q2 revenue to be in the range of $1.56 to $1.59 billion.
Speaker Change: All in all we had a good start to the year and as Mike mentioned it reinforces our confidence in the full year guide we provided in November.
Speaker Change: Now to our guidance for the second quarter.
We expect Q2 revenue will be in the range of $1 56 to $1 $5 9 billion.
Bob Mcmahon: This represents a decline of 9.1% to 7.4% on a reported basis and a decline of 8.4% to 6.7% on a core basis against 9% growth last year. Currency and M&A combined are a headwind of 70 basis points. Our Q2 guidance also reflects the $15 million impact of the Q1 pull forward in China I mentioned earlier. Second quarter non-GAAP earnings per share are expected to be between $1.17 and $1.20.
Speaker Change: This represents a decline of nine 1% to seven 4% on a reported basis and a decline of eight four to six 7% on a core basis against 9% growth last year.
Speaker Change: Currency and M&A combined are a headwind of 70 basis points.
Speaker Change: Our Q2 guidance also reflects the $15 million impact of the Q1 pull forward in China I mentioned earlier.
Second quarter non-GAAP earnings per share expected to be between $1 17, and $1 20.
Bob Mcmahon: Before turning back over to Mike, I just want to express my thanks to Mike and to congratulate Quirk. Mike, it's been a real pleasure to work with you. While there have been many ups and downs in the markets these past few years, one thing I knew I could always count on was your steady leadership and strong partnership. And to Porik. Congratulations again.
Speaker Change: Before turning back over to Mike I, just wanted to express my thanks to Mike and to congratulate port.
Speaker Change: Mike has been a real pleasure to work with you.
Speaker Change: While there have been many ups and downs in the markets. These past few years. The one thing I knew I could always count on is your steady leadership his strong partnership.
Speaker Change: <unk>, Congratulations again, I'm really looking forward to working with you.
Bob Mcmahon: I'm really looking forward to working with you. And now I'll turn things back over to Mike. Mike, thanks, Bob. Today marks my 37th and final earnings call with all of you. Time does truly fly by.
Speaker Change: And now I'll turn things back over to Mike.
Speaker Change: Mike.
Michael R. McMullen: Thanks, Bob Today marks my 37th and final earnings call with all of your time does truly fly by.
Michael R. McMullen: I want to first thank you for your support and engagement over the years. I have to say, it has been a tremendous honor to serve as Agilent CEO and represent the achievements of the One Agilent team to all of you and the broader investor community. In 2015, we launched the then new Agilent with a goal to transform Agilent into a leading life science and diagnostics company. We had an ambitious goal to drive long-term shareholder value creation, with significantly stepped-up financial results delivered by an unmatched one Agilent team working together in a truly differentiated and compelling company culture. I couldn't be prouder of the Agilent team and what we've accomplished together over the last nine years. While current market conditions remain challenging, the long-term promise of growth remains with end markets powering investments to improve the human condition.
Michael R. McMullen: On our first thank you for your support and engagement over the years.
Michael R. McMullen: To say it has been a tremendous honor to serve.
Michael R. McMullen: And as agile as CEO and represent the achievement of the one agile team to all of you and the broader investor community.
Michael R. McMullen: In 2015, we launched even new Ashland with the goal to transform <unk> into a leading life science and diagnostics company.
Michael R. McMullen: We had ambitious goals to drive long term shareholder value creation.
Michael R. McMullen: Significantly stepped up financial results delivered by an unmatched one agile team working together in a truly differentiated and compelling company culture.
Michael R. McMullen: I couldnt be proud of the Ashland team and what we've accomplished together over the last nine years.
Michael R. McMullen: While current market conditions remained challenging the long term promise of growth remains with end markets powered by investments to improve the human condition.
Michael R. McMullen: On the Agilent front, we've never been in a stronger position to continue to capitalize on opportunities to serve our customers, win in the market, and deliver differentiated financial results. It's been a pleasure working with all of you over the years. I will miss it, while at the same time, I know that you will enjoy working with PARC in the years ahead. Like me, I know you'll be impressed with Quirk's knowledge of our industry and our business. As I noted earlier, he knows how to develop compelling business strategies, build winning teams, and deliver exceptional results.
On the Ashland upfront, we've never been in a stronger position to continue to capitalize on opportunities to serve our customers within the market and deliver differentiated financial results.
Speaker Change: It's been a pleasure to work with all of you over the years.
Speaker Change: I will miss it while at the same time I know that you will enjoy working with toric in the years ahead.
Speaker Change: Like me.
Speaker Change: I know you'll be impressed with the <unk> knowledge of our industry and our business.
Speaker Change: As I noted earlier, he knows how to develop compelling business strategies Bill.
Speaker Change: Build winning teams and deliver exceptional results. His track record of success join us as our leadership journey speaks for itself and have no doubt they will continue in his new role.
Michael R. McMullen: His track record of success during his Agile leadership journey speaks for itself, and I have no doubt it will continue in his new role. While this is my last earnings call with you, I'm certain that the best is yet to come for Agilent. Thank you, and now it's over to you, Parmeet, for the Q&A. Thanks, Mike. Regina, if you could please provide instructions for Q&A now. Ladies and gentlemen, if you would like to ask a question, please press the star followed by one on your telephone now. If you change your mind, please press star one again to withdraw your question. When preparing to ask your question, please ensure that your phone is unmuted locally.
Speaker Change: While this is my last earnings call with you I am certain that the best is yet to come for Ashland.
Speaker Change: And now <unk> for the Q&A.
Speaker Change: Thanks, Mike Regina if you could please provide instructions for Q&A now.
Regina: Ladies and gentlemen, if you would like you ask a question. Please press star followed by one on your telephone now have you changed your mind. Please press star one again to withdraw your question when preparing to ask a question. Please ensure that your phone is unlimited locally. Our first question comes from the line of Derik de Bruin with Bank of America.
Derik de Bruin: Our first question comes from the line of Derik Bruin with Bank of America. Please go ahead. Hi, good afternoon.
Speaker Change: Please go ahead.
Speaker Change: Hi, good afternoon.
Michael R. McMullen: Good afternoon, Derik. Congratulations, Mike. It's been fun, and good luck. Thank you very much.
Speaker Change: Good afternoon Derik.
Speaker Change: Congratulations Mike it's been fun.
Speaker Change: And good luck.
Speaker Change: Thank you very much.
Derik de Bruin: So the first question, we've been getting a lot of incomings on the NASD business and just because the growth trajectory is not doing what I think people had thought it was going to do this year. I said a couple of questions. It's like, look, there's been some pushouts in some clinical readouts from like nylon with their Helios B trial.
Speaker Change: So the first question.
Speaker Change: <unk>, we've been getting a lot of of incoming on the NASD business and just because the growth trajectories not doing well I think what people had thought it was going to do this year.
Speaker Change: I just have a couple of questions just like look theres been some push outs and some clinical readouts from like an island with the Helios B trial.
Derik de Bruin: There's been some other sort of developments in the market. I guess the question is like, are you still confident that that segment can grow this year, and NASD can grow this year? And I just wondered if there is any risk at all that there is like an overcapacity situation because, as the markets, it's just taking longer for things to catch up? Just sort of your thoughts on that. Yeah, thanks for that, Derik. And it has been fun. And thank you again. I'll tag team with Bob on this.
Speaker Change: There has been some other sort of like a developments in the market I guess the question is like are you still confident that that segment can grow this year in ASD can grow this year.
Speaker Change: And I just is there any risk at all that there is like an overcapacity situation because as the markets is it just taking longer for things to catch up just sort of what are your thoughts on that please.
Speaker Change: Yeah, Thanks for that Derek and it has been fun and thank you again.
Speaker Change: Tag team with Bob on this so as you saw in our prepared remarks Q1 came in as expected for the NASD business.
Michael R. McMullen: So, as you saw in our prepared remarks, Q1 came in as expected for the NASD business. And we are in a situation where we have, I think, the broadest number of clinical programs and such. So we're very active. The volume is less commercial this year, as we pointed out in the script as well versus clinical. And Bob, I know we've been talking a lot with the team about the outlook for the year, particularly with some of our customers who are, you know, resequencing some of the clinical programs into 25. So yeah, good afternoon, Derik. And as you're talking about, we remain very optimistic about the future of NASD. Our forecast for trained C&D remains intact in terms of building out the expansion.
Speaker Change: And we are in a situation, where we've had I think the broadest number of clinical programs and such so we're very active.
Speaker Change: Volume is less commercial this year as we pointed out in the script as well versus clinical and Bob I know, we've been talking a lot with the team about the outlook for the year, particularly with some of our customers who are.
Speaker Change: Re sequencing some of the clinical programs.
Speaker Change: And the 25.
Bob Mcmahon: Good afternoon, Derik and as Youre talking about we remain very optimistic about the future of NASD are.
Bob Mcmahon: Our forecast for train CND remains intact in terms of building out the expansion I would say that.
Bob Mcmahon: I would say that, you know, as we're talking about things, you mentioned one of the clinical trials, it's an important element in one of our customers, and we are seeing some, you know, potential pushouts into FY 25. And you know, as they are looking at revisiting their clinical trial programs and timelines, and it's probably closer to flat this year, based on that, although we're not giving up hope. But, you know, that's built into kind of keeping our guide the way it is.
Bob Mcmahon: As we're talking about things you mentioned one of the clinical trials, it's important to element of one of our customers. We are seeing some potential push outs into FY 'twenty five.
Bob Mcmahon: And.
Bob Mcmahon: As they are looking at.
Bob Mcmahon: Revisiting, our clinical trial programs and timelines and it's probably closer to flat.
Bob Mcmahon: This year based on that although we're not giving up hope but.
Bob Mcmahon: It's built into kind of keeping our guide the way it is but.
Bob Mcmahon: But I think if you look at the number of commercial programs, or, excuse me, clinical programs that we have, you know, we're very excited about the future. Hey, and Bob, I think it's also fair to say that this is not a byproduct of overcapacity in the industry or a significant change in insourcing. It's really how some of our customers are reacting to the IRA. Well, that takes me, that's a great segue into my next question, which is what's sort of the latest on pharma? It doesn't sound like you're ready to call an inflection point, but it does sound like things are a little bit better.
Bob Mcmahon: But I think if you look at the number of commercial programs or excuse me clinical programs that we have.
We're very excited about the future and Bob I think it's also fair to say that this is not a byproduct of over.
Bob Mcmahon: Capacity in the industry or significant changes in sourcing is really how some of our customers are reacting to really the Iraq that's right.
Bob Mcmahon: Well that takes me that's a great segue into my next question, which is what's sort of the latest on pharma.
Bob Mcmahon: It doesn't feel like you're ready to call an inflection point, but it does sound like things that sounded a little bit better can you just sort of give your thoughts on what budget releases are sort of timing around that any sort of like notable developments I mean, when do you are you seeing any sort of like signs of life that the size of budgets could start to be released in the second quarter.
Derik de Bruin: Can you just sort of give your thoughts on what budget releases are, sort of timing around that, any sort of like notable developments? I mean, when do you, you know, are you seeing any sort of signs of life that the budgets could start to be released in the second quarter? Yeah, great, great question, Derek.
Speaker Change: Yes, great Great question, Derrick, obviously, a top of mind within the Ashland as we mentioned in Q1 came in where we thought it would but what's the outlook in pork I know you've been spending a lot of time with your team and customers talking about this exact question, yes, thanks, Mike and I think customers continue to be cautious globally I think we're as stable.
Derik de Bruin: Obviously, top of mind within Agilent, you know, as we mentioned, Q1 came in where we thought it would, but what's the outlook? And Quirk, I know you've been spending a lot of time with your team and customers talking about this exact question. Yeah, thanks, Mike.
Bob Mcmahon: And I think, you know, customers continue to be cautious globally. I think we're stable. What we're seeing is stability, but no material improvement versus what we saw in the last half of last year. And in terms of the capital budget cycle in 24, this is the time we see it. It's pretty early in that cycle.
Derrick: Seeing as stability, but no material improvement versus what we saw in the last half.
Speaker Change: Last year.
Derrick: In terms of the capital budget cycle and 24. This is the time, we see it it's pretty early in that cycle.
Bob Mcmahon: But we've heard movement in both directions, positive and negative. But fewer customers are expecting negative budgets. So we're watching and seeing how that goes. Yeah, I think that you were sharing with me earlier, Quirk, that the tone was more negative at this time last year. It's still not super positive yet, and there is still a lot of caution. But, you know, we're not seeing anything to cause us to change our outlook for the year. Great. Thank you. Happy trails. I think, Bob, thanks. Thank you very much. Bob, you had one.
Derrick: But we've heard moving in both directions positive or negative and what fewer customers expecting negative budgets.
Derrick: So we're watching and seeing.
Speaker Change: Yes, I think what Youre sharing with me earlier pork was the tone was more negative at this time last year is still not super positive, yet and still a lot of caution.
Speaker Change: But we're not seeing anything to causes to change our outlook for the year.
Speaker Change: Great. Thank you happy trails.
Speaker Change: Bob. Thanks. Thanks. Thank you very much I think Bob you had one I was just going to say you know one of the things that we see as very strong performance in our services and consumables business in the pharma sector, which actually speaks to lab activity.
Michael R. McMullen: Yeah, I was just going to say, one of the things that we see is, you know, very strong performance in our services and consumables business in the pharma sector, which actually speaks to lab activity. And so while we've seen a depressed capital cycle here, we're optimistic about that turning around in the second half of the year. Our next question will come from the line of Matt Sykes with Goldman Sachs. Please go ahead. Hi, good afternoon.
Speaker Change: While we've seen.
Speaker Change: The depressed capital cycle here and we're optimistic about that.
Speaker Change: Turning around in the second half of the year.
Speaker Change: Our next question will come from the line of Matt <unk> with Goldman Sachs. Please go ahead.
Matt: Hi, good afternoon. Thanks for taking my questions Congratulations Mike on the retirement and good luck in part congratulations on the new role look forward to working with you more closely.
Matt Sykes: Thanks for taking my questions. Congratulations, Mike, on the retirement, and good luck, and Parg, congratulations on the new role. I look forward to working with you more closely. Thanks, Matt.
Matt: Thanks, Matt.
Matt Sykes: Maybe just to start out, maybe a bigger picture in China, you sounded like you made some comments about sequential improvement. It sounds like it's informing some of your confidence for the second half. What are the risks that China just simply doesn't get worse and just kind of bounces along the bottom?
Speaker Change: Maybe just.
Matt: To start out maybe bigger picture in China. It sounded like you made some comments about sequential improvement it sounds like it's informing some of your confidence for back half what are the risks the China, just simply doesn't get worse and just kind of bounce along the bottom and what kind of catalysts are you looking for in China for the back half for some level of improvement I know it is.
Matt Sykes: And what kind of catalysts are you looking for in China for the back half for some level of improvement? I know it's not necessarily baked into your guide, but you did make some comments about some sort of nascent optimism there. Yeah, sure. Thanks for the question, Matt. And, you know, as we had a really, I think, nice print to start off the year, a big part of that was performance in China.
Matt: Not necessarily baked into your guide, but you did make some comments about some sort of nascent optimism there potentially.
Speaker Change: Yes sure. Thanks for the question on that and.
Speaker Change: We had a really I think a nice print to start off the year, a big part of that was the performance in China, Yes, we had a bit of a pull in from Q2 from lunar new year, but the business overall was better than expected and answer your question. We now have several quarters.
Michael R. McMullen: Yes, we had a bit of a pull-in from Q2 due to the Lunar New Year, but the business overall was better than expected. And to answer your question, we now have several quarters of real orders, real revenue, and sequential growth. The numbers are real.
Speaker Change: Real orders real revenue and the sequential growth the numbers are real so.
Michael R. McMullen: So, you know, we're not seeing anything in the macro world that would also dramatically change what has continued to be a very challenging economic market in China. What gives us confidence is the fact that we've had a number of quarters now of predictability in the business. The numbers are coming in, you know, slightly better than we had anticipated. But again, I think it's more just the fact that there is an ongoing run rate of business that gives us confidence in the outlook. And, Bob, I know that you want to jump in on this one, Quirk?
Speaker Change: We're not seeing anything on the macro world there, but all sudden dramatically change what has continued to be a very challenging economic market.
Speaker Change: In China so.
Speaker Change: Or what gives us confidence is the fact that we've had a number of quarters now of predictability in the business. The numbers are coming in slightly better than we had anticipated.
Speaker Change: But again I think it's more just the fact of as ongoing run rate of business. It gives us confidence on the outlook and Bob I know that.
Bob Mcmahon: Are you on governance on pork.
Bob Mcmahon: Yes.
Think of it.
Michael R. McMullen: Yeah, and I think if, Matt, as you just mentioned, we aren't assuming any inflection in our guide, that's been consistent. Actually, Q1 ended up being a little better than we anticipated. We're kind of putting that money in the bank, so to speak. And if you look at it, we'll have now four quarters of numbers that are relatively stable, which is a very positive sign. And I think, you know, when we look at our funnel, it's also stable, as well as the order forecast, which Mike just talked about as well. Great.
Bob Mcmahon: Matt as you just mentioned we aren't assuming any.
Bob Mcmahon: Inflection in our guide Thats been consistent actually Q1 ended up being a little better than we anticipated, we kind of putting that money in the bank. So to speak and if you look at it we will have now four quarters of numbers that are relatively stable, which is which is a very positive sign and I think when we look at our funnel. It's also stable.
Bob Mcmahon: As well as the order funnel order forecast is what Mike just talked about as well so.
Matt Sykes: And then maybe just on ACG, which had a good quarter, you talked about contract revenue and specifically enterprise services. With that growth, maybe could you just help kind of size that contract business within ACG? And then maybe talk about what is driving that growth. And you know, what kind of contribution that could make to the ACG segment over the course of this year? Hey Matt, thanks for your support of the ACG business over the years. And I want to use this opportunity to introduce our new ACG group president. But first, I'd like to maybe have a two-part response. I mean, in volume, I think it's roughly about 60-65%, just to be sure.
Speaker Change: Great and then maybe just on ACG, which had a good quarter you talked about the contract revenue and specifically enterprise services.
Speaker Change: With that growth maybe could you just help kind of size that contract business within ACG and then maybe talk about what is driving that growth.
Speaker Change: What kind of contribution can that make to the ACG segment over the course of this year.
Speaker Change: Hey, Matt Thanks for your support of the ACG business over the years and I want to use this opportunity to introduce our new ACG group President, but first I'd like to maybe have a two part of the sponsor.
Matt: And Bob I think it's roughly about 60% 65%.
Matt: To make sure so roughly about 65% of our total services businesses in the in this context arena and Angelica, maybe you could share your thoughts on really what's been driving the growth were seeing in that contract business.
Michael R. McMullen: So roughly about 65% of our total services businesses are in this contracts arena. And Angelica, maybe you could share your thoughts on really what's been driving the growth we're seeing in that contracts business. Yeah, thanks, Mike.
Angelica Raymond: Yeah. Thanks, Mike.
Angelica Reinman: You know, as you mentioned, it's about 65% of the total business. And a part of that demand has really been driven by the lab-wide enterprise services offerings, where we're able to help customers as they're navigating their own economic situations, really helping them optimize their entire lab operation. And our portfolio offerings in this phase have allowed us to really facilitate that improvement in lab operations and lab efficiencies, and that's particularly important to those enterprise customers. Thanks, Angelica.
Angelica Raymond: Thank you mentioned is that 65% of this total business and a part of that demand is really being driven by the lab wide enterprise services offerings, where we're able to help customers as they are navigating their own economic situation really helping them optimize their entire lab.
Angelica Raymond: And our portfolio offerings in this space has allowed us to really facilitate that increase in lab operation lab efficiency, and that's particularly in partners as enterprise customers.
Speaker Change: Got it thanks, Angelica and in times of tough tough economic times, the market times, the productivity help in driving productivity in the labs as well well received offering we have.
Michael R. McMullen: And in times of tough, tough economic times and market times, productivity help and driving productivity in the labs is a well-received offering we have. Hey, Matt, just one other quick thing on that. You know, one of the great things that Angelique and her team have been doing, and you hear us talk about this a lot, is about the increase in the attach rate. And that continues to grow at roughly a point, again, year on year this year. And that kind of locks in that resilience and that stability in that business.
Speaker Change: Hey, Matt just one other quick thing on that one of the great things that Angelica and team have been doing and you heard US talk about this a lot is about the increasing of the attach rate and that continues to grow at roughly a point again year on year. This year and that kind of locks in that of resiliency and that stability in that business and if you think about.
Bob Mcmahon: And if you think about 62 percent of that business growing double digits, you know, it really helped power the business. And when we see the inevitable turnaround of the instrument business, that'll be a nice tailwind as well. Absolutely, Bob. Thanks, guys. Your next question comes from the line of Brandon Couillard with Jeffries.
Speaker Change: A 62 thirds of that business growing double digits. It really helped power the business and when we see the inevitable turnaround of the instrument business that'll be a nice tailwind as well so absolutely Bob got.
Speaker Change: Got it thanks, guys appreciate it.
Speaker Change: Your next question comes from the line of Brandon Couillard with Jefferies. Please go ahead.
Brandon Couillard: Please go ahead. Thanks. Good afternoon, Mike. It's been a great run and a pleasure working with you. Thank you, Brandon.
Brandon Couillard: Thanks, Good afternoon, Mike has been a great run and a.
Brandon Couillard: Pleasure working with you.
Brandon Couillard: Thank you Brian.
Brandon Couillard: Yes.
Michael R. McMullen: The chemical and advanced materials business actually performed a little better than we were expecting. You know, obviously, you still see some headwinds on the chemical side. Just get your state of the union there, what you're seeing from a macro perspective, and kind of outlook for that business moving into the second half. Yeah, so I'll do a tag team on this with Quirk. So, as you may recall, we talked earlier this year about these secular growth drivers in the applied markets. And we saw that pretty much across the globe.
Chemical and advanced materials business actually performed a little better than we were expecting.
Brandon Couillard: Obviously, you're still seeing some headwinds in the chemical side just interested in the union there what youre seeing from a macro perspective and outlook for that business moving into the second half.
Pork: Yeah. So I'll just tag team on this with pork. So as you may recall, we've talked earlier this year about these secular growth drivers in the applied markets and.
Speaker Change: We saw that.
Speaker Change: Pretty much across the globe and I think what we're seeing again is the investments being made in advanced materials relative to the semiconductor supply chain and also that the fab is driving productivity. We're seeing continued investment relative to battery battery development QA QC and I think we continue to.
Michael R. McMullen: And I think what we're seeing, again, is the investments being made in advanced materials relative to the semiconductor supply chain and also the fab drive and productivity. We're seeing continued investment relative to batteries, battery development, QA, and QC. And I think we continue to see some really nice growth in the PFAS side of our environmental business started in the U.S.
Speaker Change: C C. Some real nice growth in the <unk> side of our environmental business started in the U S. I think all of those applied.
Michael R. McMullen: I think all those applied market secular drivers that we've been pointing to for some time delivered in Q1. And I think our outlook remains the same, that we're expecting there'll be a source of positivity for us in the overall CAM market space, although, you know, the chemical market is expected to remain subdued.
Speaker Change: The market's secular drivers that we've been pointing to for for some time delivered in Q1 and I think our outlook remains the same that we're expecting there will be a source of <unk>.
Speaker Change: Positivity for us.
Speaker Change: And the overall can market space, albeit.
Speaker Change: The chemical market is expected to remain subdued.
Bob Mcmahon: Yeah, that's right, Mike. I think it's really a tale of two submarkets. We saw broad resilience in the advanced materials with sequential growth, and given the extremely tough compare in the high 20s we had last year, this was truly a very impressive result from the teams. On the chemical engineering side, we saw decline, but on a very tough compare of 10%, but we did see a sequential improvement versus Q4-23. Overall, I think our portfolio is extremely strong in this area, and we have the ability to cross and upsell across that. And of course, our strong services offerings have that value proposition. Okay, then, Bob, in terms of the guide for the year, I mean, you're sticking with the organic growth range for the year, you beat the first quarter, the China fall forward doesn't explain all of the upside in the first quarter, sounds like the NASD outlooks are lower, what other moving parts by end market or geography kind of gets you to the same midpoint. Yeah, it And you talked about a couple of them. We feel really good about where we started the year. It's still at the beginning of the year, though.
Speaker Change: Sorry, Mike I think it's really a tale of two submarkets, we saw broad resilience in the advanced materials would.
Speaker Change: With sequential growth and given the extremely tough compare in Hy 'twenty as we had last year. It was truly a very impressive results from the teams the chemical injury side.
Speaker Change: We saw a decline, but on a very tough compare of 10%, but we did see we did see sequential improvement versus Q4 'twenty tree overall I think our portfolio is extremely strong in this area, we have ability to cross and upsell across that and of course, our strong services offerings helped out our value proposition.
Speaker Change: Okay, and then Bob in terms of the guide for the year. I mean, you are sticking with the organic growth range for the year and beat the first quarter.
Bob Mcmahon: The China pull forward and explain all of the upside in the first quarter.
Bob Mcmahon: I asked the outlooks lower what other moving parts by end market or geography kind of gets you to the same midpoint.
Bob Mcmahon: Yes, it's a great question, Brandon and you talked about a couple of them, we feel really good about where we started the year. It's still at the beginning of the year, though so we're kind of banking some of that.
Bob Mcmahon: So we're kind of banking some of that. What I would say is, if you looked across the moving pieces, with the NASD being slightly lower, that'd be offset by slightly better results in the LSAG side of the business. And really, chemical and advanced materials and academia are two areas that are probably slightly better than what we forecasted. But overall, we're maintaining the guide, and as we are looking here, I felt good about it really at the start. Your next question comes from the line of Puneet Souda with Lear Inc. Partners. Please go ahead.
Speaker Change: What I would say is if you looked across the moving pieces.
With the NASD being slightly lower that would be offset by a little better results in the <unk> side of the business and.
Speaker Change: Really that chemical in advanced materials, and academia are two areas that are probably slightly better than what we forecasted but overall, we're maintaining the guide is.
Speaker Change: As.
Speaker Change: As we are looking here.
Speaker Change: Good about really at the start to the year.
Speaker Change: Thank you.
Speaker Change: Your next question comes from the line of Puneet <unk> with Leerink partners. Please go ahead.
Puneet Souda: Yeah, hi, thanks, Mike. And it's really great working with you. And Parag, welcome to the seat.
puneet: Yeah, Hi, Thanks, Mike.
puneet: Really great working with you.
puneet: <unk>.
Speaker Change: Welcome to the seat.
Puneet Souda: So my first question, thanks. So my first question is really around, you know, maybe I think Bob, you talked a little bit about the book to bill orders growing faster than revenue, but maybe could you elaborate a bit more on the instrumentation side, what you're seeing, and what you're seeing with respect to book to bill in China. And a quick question, clarifying question on the Q guide. It does look a slight step down versus Q1. And I just want to make sure beyond the Lunar New Year, what else are you baking in there?
puneet: Thanks, Mike So my first question. Thanks.
Speaker Change: So.
Speaker Change: First question is really around.
Speaker Change: Maybe I think Bob you talked a little bit about the book to Bill.
Speaker Change: Orders growing faster than revenue, but maybe could you elaborate a bit on more on the instrumentation side, what youre seeing.
Speaker Change: And what Youre seeing with respect to book to Bill in China.
Speaker Change: And a quick question clarifying question on the <unk> guide it does look.
Speaker Change: Slight step downward since Q1, and I just wanted to make sure beyond the lunar new year, what else are you baking in there.
Bob Mcmahon: Yeah, I'll take that. There are a lot of questions in that one question. But, so true to form, Puneet.
Yeah, I'll take that there are a lot of questions in that one question, but so true to form puneet.
Bob Mcmahon: And one of the things, I'll start with the last one. I mean, we typically do have seasonality; there is that $15 million that gets pushed from one quarter to another. That's strictly timing in China because of the Lunar New Year, but Q2 is typically a lower revenue number. So we're building in that normal seasonality. In terms of book to bill in China, actually, book to bill was greater than one in China.
One of the things I'll start with the last one I mean, we typically do have seasonality there or is that $15 million. It gets pushed from one quarter to another that strictly timing in China because of the lunar new year, but Q2 is typically a lower.
Speaker Change: A lower revenue number so we're building in that normal seasonality in terms of book to Bill in China actually book to Bill was greater than one in China.
Bob Mcmahon: So continued stabilization. And in terms of book to bill, for our instruments, it was below one kind of expected. Now some of that was a result of the Chinese pull forward where the orders came in, and we were expecting that revenue to be shipped in Q2. So there's some element of timing there.
Speaker Change: So continued stabilization and in terms of book to Bill.
Speaker Change: For instruments. It was it was below one kind of expected now some of that was a result of the China pull forward, where the orders came in and we were expecting that revenue to be shipped in Q.
In Q2, so there is some element of timing there.
Bob Mcmahon: But all in all, a, you know, a positive start to the year. Hey, Bob, I've got a headline on that too. I just say that Q2 seasonality is as normal, and the Q1 book to bill results are as our normal pattern. So again, we've been talking a lot about, you know, normalization of business, business flow, and I think we're seeing in terms of the seasonality of patterns and the book to book to revenue situation. Got it. That's super helpful.
Speaker Change: But all in all.
Speaker Change: A positive start to the year, Hey, Bob will cover the headline on that to say that Q2 seasonality is as normal.
Speaker Change: Q1 book to Bill results are as our normal pattern. So again, we've been talking a lot about normalization of business business flow and I think we're seeing that in terms of the seasonality of patterns and book to book to revenue.
Speaker Change: The situations.
Speaker Change: Got it that's Super helpful. And then just a high level question a simple question.
Puneet Souda: And then just a high-level question, a simple question. Could you maybe elaborate a bit on the pharma side, where you're seeing more traction, more growth? Is it large pharma, small biotechs, CROs, CDMOs?
Speaker Change: Could you maybe elaborate a bit on the pharma side, where youre seeing more traction more growth is at the large pharma small biotechs.
Puneet Souda: Maybe we could talk a little bit about that. Thank you. Yeah, I'll take that, Puneet.
Speaker Change: <unk>, maybe just talk a little bit about that thank you.
Speaker Change: Yes, I'll take that puneet, if we look at across our business.
Bob Mcmahon: If we look across our business, you know, the relative strength was actually in our biopharma. So large, large, large molecule, and our business is skewed to the larger, you know, midsize, and large cap companies. The standout has been the ACG business and our consumables on that. So it actually speaks to activity in the labs. We are starting to see, you know, I don't want to call it a trend, but certainly a stabilization on the emerging biotech side of it. The instruments were, were, were still down.
puneet: The relative strength was actually in our Biopharma. So large large large molecule and are our business is skewed to the larger midsize and large cap companies. The standout has been the ACG business and our consumables.
puneet: And that so it actually speaks to activity in the labs, we are starting to see.
puneet: I don't want to call it a trend, but certainly a stabilization on the emerging biotech.
puneet: Side of it the instruments were were still down.
Bob Mcmahon: But that is where we're starting to see relative strength in the pharma business. And that speaks to kind of the long-term growth drivers, I think, in that market. And, you know, I would expect that to continue throughout the course of the year as our business gets stronger and the markets get stronger, and quite honestly, we have more favorable calls. Hey, Bob, and I think, if I recall correctly, outside of China, our biofarm business actually grew in the quarter. I got it.
puneet: But that is where we're starting to.
puneet: See the relative strength in the pharma pharma business and that speaks to kind of the long term growth drivers I think in that market.
puneet: I would expect that to continue throughout the course of the year as our as our.
puneet: <unk>.
puneet: As our.
puneet: Business gets stronger and the markets get stronger and quite honestly, we have a more favorable comps hey, Bhavan I think if I recall correctly outside of China. Our Biopharma business is actually grew in the quarter that's right.
Speaker Change: Got it Super Thanks, guys.
Puneet Souda: Super. Thanks, guys. Your next question comes from the line of Rachel Badenstahl with J.P. Morgan. Please go ahead.
Speaker Change: Your next question comes from the line of Rachel <unk> with J P. Morgan. Please go ahead.
Rachel Badenstahl: Hi, thanks for taking the question. And congratulations, Mike and Poreg, on your new roles as well. So first up, I just want to follow up on the comments around book to bill. You mentioned that book to bill for instrumentation was below one for the quarter. And some of that was really timing-related. So I guess, can you just break that down for us a little bit further? What trends were you seeing in liquid chromatography versus mass spec, for example?
Rachel: Hi, Thanks for taking the question wounds calculation.
Speaker Change: Yeah.
Rachel: So first off I just wanted to follow up there on the comments around book to Bill you mentioned that book to Bill for instrumentation below one for the quarter and some of that was really timing related and so I guess can you just break that down for us a little bit further and what trends are you seeing in liquid chromatography versus mass specs. For example, and then is there any any dynamics or trends to call out from here.
Rachel Badenstahl: And then is there any, any dynamics or trends to call out from geography in that instrumentation business as well? I don't think there are any new trends here. I think, without going into the details of our product line, the small molecule side has really been an area where we've talked about the year-on-year challenges there from the LC side. But, Phil, I don't know if you want to jump in with any thoughts here, but I don't think there's any real outstanding new trends here with perhaps the better-than-expected trends we saw in the applied markets, particularly in advanced materials. But maybe you have something else you want to add?
Rachel: Currently on the instrumentation business as well.
Rachel: I don't think theres any any any new trends here I think.
Rachel: Without going into the details of our product lines. The small molecule side has really.
Rachel: Sure.
Rachel: <unk> been an area, where we've talked about the year on year challenges there.
Rachel: LC side, but.
Speaker Change: I don't know if you want to jump in with any any thoughts here I don't think theres any real outstanding new trends here with the.
Speaker Change: The better than expected trends, we saw in the applied markets, particularly on advanced materials, but maybe have someone else you want to add.
Michael R. McMullen: Yeah, sure, Mike. I think that's pretty much the case, similar to Q1, around how the markets are performing. We're seeing some bright spots around some of the secular areas in the applied markets for the instrumentation, which is driving the business forward, but I just want to add one more thing to build on what Mike and Phil were just talking about. When we looked at our LSAG business, you know, it was down 11%, which was better than we expected. The piece that's really been driving that down is the pharma market, which is what we'd be expecting. If we looked at the rest of the markets, they were much better than those down 11%, with the exception of diagnostics and clinical, which is a small number.
Speaker Change: Yes, sure Mark I think.
Speaker Change: That's pretty much the case.
Speaker Change: Similar to Q1.
Speaker Change: Around around.
Speaker Change: The market is performing we are seeing some bright spots around.
Speaker Change: Some of the secular areas.
Speaker Change: Areas in the applied markets.
Speaker Change: In the instrumentation.
Speaker Change: Which is driving the business forward.
Just support your comments here.
Speaker Change: Hey, Rachel just one other thing to build on what Mike and Phil We're just talking about when we look at our LSA business. It was down 11%, which was better than what we expected. The piece, that's really been driving that down as the pharma market losses, which is what we've been expecting if we looked at the rest of the markets. They were they were much better than the down 11%.
Speaker Change: <unk> with the exception of the diagnostic and clinical which is a small number right and to your question Rachel.
Bob Mcmahon: Right. And to your question, Rachel, I know that dynamic in the pharma really speaks to, you know, pressure on the LC business.
Speaker Change: Dynamic into pharma really speaks to.
Speaker Change: Pressure on the LC business.
Rachel: Okay, and then I just wanted to ask about the monthly trends.
Rachel Badenstahl: And then I just want to ask about monthly trends. You know, some of your peers have talked about how spending was a little bit slow out of the gate in January and then into early February. So I guess since you guys have a few more weeks of visibility here, can you walk us through, were you seeing similar trends on just slower spending to start the year? And has any of that started to come back?
Rachel: Curious to talk about has been you've been a little bit slow in January and into early February.
Rachel: You guys haven't seen more of the visibility here can you walk us through what are you seeing similar trends and just slower spending to start the year and has any of that starting to come back.
Michael R. McMullen: Any color there as we enter fiscal 2k would be helpful. Thanks. Well, I've been in, as you know, I've been in this business for a while. And it's always slow in January.
Speaker Change: Any color there as we enter the question queue that'd be helpful. Thanks.
Speaker Change: And as you know I've been in this business for a while.
Speaker Change: And its always slow in January.
Bob Mcmahon: And that's why we have the seasonality we talked about relative to Q2. So I don't think we're seeing any, any, any, any, any significantly different trends that we've seen historically. Borg, I know that you're closer than I am, but yeah, no, I think I think that's right.
Speaker Change: And Thats why we have the seasonality you talked about relative to Q2. So I don't think were seeing any any any any significantly different trends have you seen historically pork I know that youre closer to than I am but yeah, no I think I think that's right.
Rachel Badenstahl: And that's right, Mike, I think on the ACG side, we see a number of service contracts; our service contract business comes in strong on the ACG side, but on the capital side, we're not, Yeah, to build to just a final put a finer point on that. January came in as we expected. Our next question will come from the line of Vijay Kumar with Evercore ISI. Please go ahead. Hey, this is Jordan on behalf of Vijay.
Speaker Change: That's right, Mike I think on the ACG side, we see a number of service our service contract business comes in strong into the ACG side, but on the capital side we are.
Speaker Change: Pretty much yes.
Speaker Change: Bill to just to final put a finer point on that January came in as we expected.
Speaker Change: Our next question will come from the line of Vijay Kumar with Evercore ISI. Please go ahead.
Speaker Change: Yeah.
Speaker Change: Yes.
Hey, Thanks, Jordan on for Vijay.
Jordan: Hey Mike, this is Jordan. Thanks for taking my questions. Sure. Maybe one follow-up on the China side. Have you seen any hints of stimulus to start the year? And if we do see a stimulus, do you have any idea what implications that will have on Agilent? Both Fork and I at the conference were shaking our heads no. We've not heard anything about any potential stimulus.
Vijay Muniyappa Kumar: Hey, Mike.
Vijay Muniyappa Kumar: Sort of.
Speaker Change: Thanks for taking my question sure.
Vijay Muniyappa Kumar: Sure.
Vijay Muniyappa Kumar: Maybe maybe one follow up on the China side.
Vijay Muniyappa Kumar: Have you seen any hints of stimulus to start the year and if we do see a stimulus do you have any foresight to what implications that will have on agila.
Vijay Muniyappa Kumar: Both the Oregon Iron The conference we were shaking our head no we've not heard anything about any potential stimulus and what I can tell you is if it does happen it's upside to our outlook.
Michael R. McMullen: And what I can tell you is if it does happen, it's an upside to our outlook. Understandable. And then, maybe one more from me.
Speaker Change: Understood and then maybe one more from me can you talk about how pricing has trended in the quarter and.
Jordan: Can you talk about how pricing has trended in the quarter and any updates to your expectations for the remainder of the year? Bob, do you want to take that one? Yeah, we were pleased with the results. It was between 1% and 2%. But in line with kind of the seasonality and the mix that we saw, we would expect to see in Q1. So right now, it's on track. As we've talked about, our consumables business and ACG business had the greatest price realization, followed by, generally speaking, actually, we had a very good result in diagnostics and genomics in the quarter. And then we did see some mix, but not anything out of the ordinary on the instrumentation side.
Speaker Change: Any updates to your expectations for the remainder of the year.
Speaker Change: Bob do you want to take that one yes. We were we were pleased with the results.
Bob Mcmahon: Between 1% and 2%.
Bob Mcmahon: But in line with kind of the seasonality and the mix that we saw we would expect to see in Q1. So.
Bob Mcmahon: Right now it's on track.
Bob Mcmahon: As we've talked about our consumables business and ACG business have the greatest price realization followed by generally speaking actually we had a very good result in diagnostics and genomics in the quarter and then we did see some mix, but not not anything out of the ordinary English instrumentation side. So.
Bob Mcmahon: So all in, we're on track for what we expected for the full year. Understand? Thank you. Your next question comes from the line of Patrick Donnelly with Citi. Please go ahead.
Bob Mcmahon: All in we're on track for what we expected for the full year.
Speaker Change: Understood. Thank you.
Speaker Change: Your next question comes from the line of Patrick Donnelly with Citi. Please go ahead.
Patrick Donnelly: Hey, guys, thanks for taking the questions. And yeah, Mike, I'll second the congratulations on the retirement. Bob, maybe one for you first, just in terms of the EPS guide, it looks like you guys got an additional $20 million in the kind of net interest and other income. Can you just kind of flag, you know, if that's rolling through, you know, did that core earnings number move a little lower? Is there any moving pieces there?
Patrick Donnelly: Hey, guys. Thanks for taking the questions in a.
Patrick Donnelly: Second the congratulations on the retirement.
Patrick Donnelly: Bob maybe one for you first just in terms of the EPS guide it looks like you guys got an additional $20 million on the kind of net interest other income can you just kind of flag.
That's rolling through that core earnings number move a little lower is there any moving pieces there and then secondarily just on the margin piece you guys have that.
Bob Mcmahon: And then secondarily, just on the margin piece, you guys have that cost savings plan. Can you just talk about how that paces as the year goes? Yeah. Yeah, thanks, Patrick. Great question.
Patrick Donnelly: Cost savings plan can you just talk about how that paces as the year ago is would be helpful.
Bob Mcmahon: Yes, Thanks, Patrick Great question, and what I would say is a couple of things.
Bob Mcmahon: And what I would say is a couple of things. Yeah, we are on track to have more interest income than we anticipated at the beginning of the year, that $20 million. And so some of that in the first quarter as well.
Speaker Change: We are on track to have more interest income than what we anticipated at the beginning of the year that $20 million and so some of that in the first quarter as well and that's really a result of actually having better than expected.
Bob Mcmahon: And that's really a result of actually having better than expected cash flow in the first quarter and great work by that Treasury team. I would say that on, you know, the savings. We're on track for the savings targets for the full year. And, you know, as I think about the year, it's still very early in the year.
Speaker Change: Cash flow in the first quarter and great work by that Treasury team I would say that.
Speaker Change: The savings we are on track for the savings targets for the for the full year and as I think about the year. It's still very early in the year end and this provides us what I would say is more confidence in the guide.
Patrick Donnelly: And this gives us what I would say is more confidence in the guy. Okay, that's helpful. And then maybe just on kind of the book to bill, how are you guys thinking about? I think it was last quarter that you said the book to bill for the year would be above one, but you'd have quarters kind of in and out on the instrument side, which obviously we're seeing this quarter. How are you thinking about just the order trends and the book to bill trends on the instrument side as we work our way through the year, given what you're seeing Yeah, no change to what we said back in November. You know, Q1 is a proof point for what we said. All right, fair enough. Thank you, guys. All right.
Speaker Change: Okay Thats helpful.
Speaker Change: And then maybe just on kind of the book to Bill. How are you guys thinking about I think last quarter. You said the book to Bill for the year would be above one, but you would have quarters kind of in and out on the instrument side, which obviously, we're seeing this quarter. How are you thinking about just the order trends in the book to Bill trends on the instrument side as we work our way through the year, given what youre seeing today.
Speaker Change: Yes, no change to what we said back in November Q.
Speaker Change: Q1 is a.
Speaker Change: Proof point for what we said.
Speaker Change: Alright fair enough. Thank you guys.
Speaker Change: Alright.
Dan Brennan: Your next question comes from the line of Dan Brennan with TD Cowen. Please go ahead. Thank you. Mike, it's been great working with you over the last nine years, so congratulations, and I look forward to working with you as well. Thanks, Dan, maybe just don't want to beat a dead horse but just for the instruments, did you guys say, I know in the queue you usually put out what the instrument number actually was, so what did the instruments do in the quarter, and then given how much easier comps go as we get through the year, can you just kind of give us a sense of pacing like what we should expect in q2 and instruments, and then we can you But that includes our consumables business, which was up. Yeah, I would say that, you know, we typically don't give out all that information.
Speaker Change: Your next question comes from the line of Dan Brennan with PD Cowen. Please go ahead.
Dan Brennan: Thank you, Mike and great working with you.
Dan Brennan: Over the last nine years, so congrats in park with photo working with as well.
Dan Brennan: Dan.
Dan Brennan: Maybe just don't want to beat a dead horse, but just for the instruments did you guys say I know in the Q you usually put out what the instrument number actually was.
Dan Brennan: It actually instrument due in the quarter.
Dan Brennan: And then given how much easier comps as we get through the year can you just kind of give us a sense of pacing like what what should we expect on Q2 and instruments and then we can kind of about the back half of the year.
Dan Brennan: I know the team didn't do the calculation on that because the LSA G was down down 11%, but that includes our consumables business, which was was up yeah I would say.
Speaker Change: We typically don't give all that information, but it was down we were down 11% it was down.
Dan Brennan: But it was down, you know, we were down 11%. It was down in the quarter, but that was better than expected, offset by, you know, 6% growth in our consumables business. If we look at the LSAG thinking for Q2, it's down low teens. And a lot of that has to do with some of the timing associated with that $15 million shift.
Speaker Change: It was 20% in.
Speaker Change: In the quarter, but that was better than expected offset by 6% growth in our in our consumables business. If we look at.
Speaker Change: The LSA G.
<unk>.
Speaker Change: Thinking for Q2, it's down low teens so so.
Speaker Change: And a lot of that has to do with some of the timing associated with that $15 million shift that's almost all capital equipment from from <unk>.
Bob Mcmahon: That's almost all capital equipment from Q1 or from Q2 back into Q1. So if you look at it, it is in line with where we expect it to be. And then we go into more favorable comparisons Q3 and Q4. Okay, and then I know there's been a handful of questions already on China, but can you just, would you mind spending a bit more color on kind of what, maybe by segment, pharma applied, any color you can give us on what you're seeing within the different businesses in China, and is down mid-single still the expectation for China for the full year, or is there Thank you.
Speaker Change: Q1.
Speaker Change: From Q2 back into Q1, so if you look at it.
In line with where we expect it to be and then we go into more favorable compares in Q3 Q4 correct.
Speaker Change: Okay, and then I know there's been a handful of questions on China, but can you just would you mind spending a bit more color on kind of what maybe by segment pharma applied any any color you can give us kind of what youre seeing within the different businesses in China and as is down mid singles still the expectation for China for the full year or is there a chance you can kind of see some upside to that number.
Michael R. McMullen: I think we've probably, I think we've, we have raised it up a bit, but it's still down. Yeah, yeah, I think, you know, we're cautiously optimistic there. I'd say it's still within a range that we had before, so I don't want to call it an inflection, but if you looked at the markets, you know, we were down, that 9% was roughly down 20-ish percent in pharma. So, you know, that continues to be the area around the globe. But China is no different.
Speaker Change: Thank you.
Speaker Change: I think we've.
Speaker Change: We have raised it up a bit it's still down.
Speaker Change: I think we're cautiously optimistic there I would say, it's still within our range that we had before so I don't want to.
Speaker Change: Collyn inflection, but if you looked at the markets.
Speaker Change: We were down that 9% that was roughly down 20 ish percent and pharma. So that continues to be the area of really around the globe, but China is no different the great thing is many of the other markets performed much better.
Bob Mcmahon: The great thing is, many of the other markets perform much better. So even when you think about like academia and government that grew, so did our chem and advanced material business now grew very low single digits. And then our forensics and environmental was down low single digits.
Speaker Change: So even when you think about the academia and government that grew so did our Kevin advanced material business now grew low very low single digits.
Speaker Change: And then our forensics and environmental was down low single digits, So youre actually starting to see.
Bob Mcmahon: So you're actually starting to see, you know, this stable, you know, continued stabilization, and then you'll get into, you know, much easier comparisons in the back half of the year in China because, you know, that down 22 was down, you know, compared to up 12 last year. We had another strong comparison in Q2. And then we actually started seeing pretty significant declines year on year. And so there's reasons to be optimistic about that continued stabilization that Mike talked about, but we're not ready yet to call it an inflection. But when it happens, we'll take it.
Speaker Change: This stable continued stabilization and then youll get into <unk>.
Very good.
Speaker Change: Much easier compares in the back half of the year in China because.
Speaker Change: That's down 22 was down compared to up 12 last year, we had another strong compare in Q2, and then we actually started seeing the pretty significant declines year on year and so.
Speaker Change: There's reasons to be.
Speaker Change: Optimistic about that continued stabilization that Mike talked about but we're not ready yet to call it an inflection.
Speaker Change: When it happens we'll take it important that you want to jump in on this and I think what we see is also confirm consumables and services.
Michael R. McMullen: And I think, you know, what we see is also consumers and services continue to outperform expectations in China. So that's going to affect that. And I think the story that great Bill Borg, and I think the story really was in pharma, you know, Q1, you know, the instrument, the CapEx side of things. But we're.
Speaker Change: Continued to outperform expectations in China, So that's going to affect ought to continue and I think the story, Greg build pork I think story really was in pharma Q1 instrument and the capex side of things.
Speaker Change: But.
Speaker Change: We were pleased with the start there.
Dan Brennan: We're pleased with the start there. Great, thank you. Your next question comes from the line of Catherine Schulte with Baird. Please go ahead. Hey guys, thanks for the question. Maybe first, when pharma was down 12% in the quarter, I think you said biopharma was up 2% ex-China. What was small molecule performance ex-China and maybe the outlook for biopharma versus small molecule for the rest of the year? So small molecule on a global basis was down, you know, roughly 18%, and X China was down 20%. And down, you know, roughly 14% for China. So pretty consistent across the globe.
Speaker Change: Okay.
Greg: Great. Thank you.
Your next question comes from the line of Catherine Schulte with Baird. Please go ahead.
Catherine Ramsey Schulte: Hey, guys. Thanks for the question, let me first spend pharma was down 12% in the quarter. I think you said biopharma with up to 2% ex China, what was small molecule performance ex China, and maybe the outlook for Biopharma and small molecule for the rest of the year.
Catherine Ramsey Schulte: So so small molecule on a global basis was down roughly 18% and it was.
Catherine Ramsey Schulte: Ex China was down 20%.
Catherine Ramsey Schulte: <unk> down roughly 14% for China, so pretty consistent across the globe I would say in China. The big area in China that has been impacted as is on the small molecule side, where we'll start to see better comps going forward.
Catherine Ramsey Schulte: I would say in China, the big area in China that has been impacted is on the small molecule side, where we'll start to see better comps going forward after Q2. Okay, and then maybe on consumables. Great to see a return to growth there this quarter. Can you talk through what you saw outside of China on the consumables side? Our consumables business was pretty consistent across the globe in terms of growth. So I don't know if you have anything to add to that on what we've seen in the consumables. I think we were really pleased to see that because it really speaks to lab activity being robust. So anything else you want to jump in on with?
Catherine Ramsey Schulte: After Q2.
Speaker Change: Okay, and then maybe on consumables.
Speaker Change: You see a return to growth there. This quarter can you talk to what you saw outside of China on the consumable side.
Speaker Change: Yeah.
Speaker Change: Our consumables business was <unk>.
Pretty consistent across.
Speaker Change: Across the globe in terms of growth.
Speaker Change: Yeah.
Speaker Change: I don't know if you have any anything you want to add to that on the what we're seeing in consumables. I think we were really pleased to see that because it really speaks to lab activity being in the robust so anything else you want to jump in on with.
Michael R. McMullen: Yeah, probably just one item there, Mike. I think we are seeing really good traction around our workflow development. So end-to-end solutions, which obviously also drives our services business as well. But around the consumer bulls, in most of our end markets, we've been pretty heavily focused on developing workflows and making our customers' lives easier and more integrated in their labs. And that's showing some really good traction, and that's reflected in solid connect and attach rights in the consumable slice.
Speaker Change: Yeah, probably just one item the market I think we are seeing really good traction around that workflow development. So end to end solutions that which obviously is also driving our services business as well, but but around the consumables.
Speaker Change: In most of our end markets, we have been pretty heavily focused on developing workflows and making customers' lives easier.
Speaker Change: <unk> integrated in their labs, and that's showing some really good.
Speaker Change: Really good traction and Thats reflected in solid connect and attach rates.
Phil Binns: Yeah, thanks, Phil. I'm really glad you closed with the comments about connect rates. We talked about that relative to our services business. We're also seeing a very strong positive trend on consumables as well, which bodes well for our future in terms of recurring revenue business growth. All right, great. Thanks, and congratulations on the retirement, Mike. Thank you very much.
Speaker Change: Spices.
Speaker Change: Yes, Thanks, Phil I'm really glad you're close with the comments about connect rates, we've talked about that relative to our services business. We're also seeing a very strong positive trend in consumables, as well, which bodes well to our future in terms of recurrent revenue business growth.
Speaker Change: Okay, great Thanks, and congrats on the retirement Mike.
Catherine Ramsey Schulte: I most appreciate it. Your next question comes from the line of Jack Meehan with Nefron Research. Please go ahead. Thank you. Good afternoon.
Speaker Change: Thank you very much much appreciate it.
Speaker Change: Your next question comes from the line of Jack Meehan with Nephron Research. Please go ahead.
Jack Meehan: Thank you good afternoon, and Mike again, it's been a pleasure working with you.
Jack Meehan: And Mike, again, it's been a pleasure working with you. I just had a couple of follow-ups. The first one was, can you just talk about what you're seeing in the genomics business within DGG? I know it's still been a bit of a drag.
Jack Meehan: Just had a couple of follow ups. The first one was.
Jack Meehan: Can you just talk about what youre seeing in the genomics business within <unk> I know, it's still been a bit of a drag.
Jack Meehan: Just when do you think that's going to start to turn? Yeah, thanks for your kind comments, Jack, and I think I'll invite Bob in on this one, but I think it's been sort of a tale of two cities. When we talk about our genomics business, there are really two pieces to it. The half of it's in QAQC activities for NGS workflows, and we're seeing, you know, really solid growth in the consumables and that side of things, as well as, you know, starting to see signs of life on the CapEx side. Not known to cause a call turn there yet, but it's in reasonably good shape.
Jack Meehan: Just when do you think thats going to start to turn.
Speaker Change #100: Yes, thanks for your kind comments that Jack and I think.
Speaker Change #101: By Bobbins on this one but I think it's been sort of a tale of two cities. When we talk about our our genomics business, there's really two pieces to it the half of it's in QA QC activities for Ngls workflows, and we're seeing really solid growth on the consumables and that side of things as well as starting to see signs of life on the Capex not noted the curve.
Speaker Change #101: I'll turn there yet, but that's in a reasonably good good good shape I think we've seen really in our U S. Based genomics business. Some some really market challenges have been in the us and Bob maybe you can elaborate on that.
Michael R. McMullen: I think we've seen, really, in our U.S.-based genomics business, some early market challenges have been hitting us, and Bob, maybe you can elaborate on that. Thanks, Mike. And as you said, our NGS QC portfolio, from an instrument and consumable side, actually grew mid-single digits in the quarter, which was very nice. The genomics chemistry side that we referenced in the prepared remarks was down.
Speaker Change #101: Yeah.
Bob Mcmahon: That's right Thanks, Mike and as you said, our NDS QC portfolio from an instrument and consumable side actually grew.
Bob Mcmahon: Mid single digits in the quarter, which was which was very nice to see the.
Bob Mcmahon: The genomics chemistry side that we referenced in the prepared remarks was down we faced some very difficult comps. We had a couple of companies that reorganized and exited some businesses. They had some lifetime buys at the end of Q1.
Bob Mcmahon: We faced some very difficult competitions. We had a couple of companies that reorganized and exited some businesses. They had some lifetime buys at the end of Q1. I would expect the performance of those to improve starting in the second half of the year. Great, and I also wanted to ask about the academic end market. I know that's been very stable for you guys, but just what you're seeing in the U.S. here with the continuing resolution for the NIH, just thoughts on its durability moving forward. Thank you. Yeah, Jack, thanks for noticing that. That was a real bright spot for us.
Bob Mcmahon: I would expect that the performance of that two to improve starting in the second half of the year.
Bob Mcmahon: Great.
Speaker Change #102: Also wanted to ask about the academic end market. That's been very stable for you guys, but just what youre seeing in the U S. Here with the continuing resolution for the NIH.
Speaker Change #102: Just thoughts on the durability moving forward. Thank you.
Speaker Change #103: Yes, Jack Thanks for noticing that that was a real bright spot for us we actually grew I think 2% in the quarter.
Jack Meehan: We actually grew, I think, 2% in the quarter. And, you know, this is what we've been working on for some time to really build out our portfolio and really change our market position in academic research. And I think it's starting to show up in the numbers. I think stabilization really is what we're seeing, which is that the funding is there. And, you know, NIH is a relatively really small part of Agilent's business, so it really is immaterial.
Speaker Change #104: And this is we've been working on this thing for some time to really build out our portfolio and really change our market position and academia research and I think it's starting to show up in the numbers I think stabilization really.
Speaker Change #104: Is what we're seeing which is the funding is there.
Speaker Change #104: And NIH is a relatively really small part of the animals business. So it really is immaterial, but we are seeing you know universities that have increasingly been funded through private sector. So the money money is there and even in this so we saw money in China as well. So it was really a nice global story for us and.
Michael R. McMullen: But we're seeing, you know, universities have increasingly been funded through the private sector. So the money is there, and even so, we see money in China as well.
Jack Meehan: So it was really a nice global story for us, and we're fairly optimistic that that kind of stabilization can be there for us for the rest of the year. Your next question will come from Doug Schenkel with Wolf Research. Please go ahead.
Speaker Change #104: We're fairly optimistic that that kind of stabilization can be there for us for the rest of the year.
Speaker Change #104: Your next question will come from the line of Doug Schenkel with Wolfe Research. Please go ahead.
Doug Schenkel: Well, Mike and Forough, congrats to both of you. And Mike, as everyone said, you'll be missed. I hope this means more time on the beach, but we'll miss you.
Doug Schenkel: Well, Mike and Barak Congrats to both of you and Mike as everyone said youll be missed I hope this means more time on the beach.
Michael R. McMullen: Absolutely. I'll be listening. Yeah, yeah. I hope not too much.
Speaker Change #104: Yes.
Doug Schenkel: Absolutely I'll be listening.
Doug Schenkel: Yes, I hope not too much but.
Doug Schenkel: But anyway, I want to ask a question on guidance and then a question on capital deployment. Sure, absolutely. Go ahead, Doug.
Doug Schenkel: Okay.
Speaker Change #106: I wanted to ask.
Speaker Change #106: A question on guidance and then a question on capital deployment and sure Doug.
Doug Schenkel: Yeah, so for the year on the one hand, around 48% of sales are in the first half, at least that's how you've guided it, I believe. Yeah, that's lower than last year, but it's not outside the norm for the last several years. On the other hand, you know, just giving some math, your guidance for the first half embeds the assumption that, you know, revenue declines around 7% organically and then improves, you know, 7 to 9, positive percent organic in the second half. Can you do that as a function of the comps, or do you actually really need to see improvement in, you know, certain geographies or certain end markets or categories? And then again, just a math question, does guidance assume Q4 revenue kind of exiting around like 1.8 billion dollars? Hey, Doug, this is Bob.
Speaker Change #106: Yes.
Doug Schenkel: The year on one hand around 48% of sales in the first half at least that's how you've guided I believe yes thats.
Doug Schenkel: That's lower than last year, but it's not outside the norm for the last several years.
Doug Schenkel: On the other hand, just doing some math your guidance for the first half and Thats the assumption that our revenue declines around 7% organically and that improves seven to nine positive percent organic in the second half.
Doug Schenkel: When you do that just as a function of the comps or do you actually really need to see improvement in <unk>.
Doug Schenkel: We're in geographies or certain end markets or categories.
Doug Schenkel: And then against the math question does guidance assume Q4 revenue kind of exiting around like one 8 billion.
Doug Schenkel: Okay.
Doug Schenkel: Hey, Doug This is Bob I'll take that last one we'll tell you when we get to Q4.
Bob Mcmahon: I'll take that last one. We'll tell you when we get to Q4. And, you know, what I would say, but your math is, in all seriousness, your math is spot-on as usual. I think one of the things that we look at is, we look at it a couple of different ways.
Doug Schenkel: And.
Bob Mcmahon: What I would say, but your math is in all seriousness. Your math is spot on as usual I think one of the things that we look at as we look at it a couple of different ways. So I think the way to look at it is is that first half second half kind of looking at seasonality, that's probably more instructive given kind of the changes in the growth rates.
Bob Mcmahon: I think the way to look at it is that, you know, first half, second half, kind of looking at seasonality, that's probably more instructive, given the kind of changes in growth rates. And when you look at it, as you notice, as you mentioned, it is in line with our historical seasonality. And when you look at the growth rates, you are right; we are expecting growth in the back half of the year. A lot of that is, in fact, the easier the comparison.
Bob Mcmahon: And when you look at it as you noticed as you mentioned it is in line with our historical seasonality.
Bob Mcmahon: And when you look at the growth rates. You are you are right. We are expecting growth in the back half of the year a lot of that is in fact the <unk>.
Bob Mcmahon: Easier there.
Bob Mcmahon: When we actually look at it, what I would ask you to take a look at also is a two-year stack basis relative to implied Q1 and Q2, or first half and second half. And what you would see there is a much smoother number that we also looked at as well. So, as usual, you're spot-on there. And, Bob, I think that's why, you know, we really emphasize in this script the word stabilization, because as things have continuous stabilization, you know, we're going to get a lift in the growth rate just by the comps as we go. That's super helpful.
Bob Mcmahon: Compares and when we actually look at what I would ask you to take a look at it also has a two year stack basis relative to implied Q1 and Q.
Bob Mcmahon: First half and second half any what you would see there is a much more smooth number.
Bob Mcmahon: Is that that we also looked at as well so as usual.
Speaker Change #107: You're spot on there, but I think thats why we really emphasize in the script.
Speaker Change #107: Words stabilization because as things.
Speaker Change #107: Continental stabilization.
Speaker Change #107: We're going to get a lift in the growth rate. Despite the comps as we go.
Speaker Change #108: That's super helpful.
Doug Schenkel: Yeah, I know there's a lot of focus on how much improvement is necessary to get there. So if a lot of this is stability and just math, that I think obviously makes people more comfortable. I know I've taken up a lot of your time already.
Speaker Change #108: There's a lot of focus on how much improvement is necessary to get there. So if a lot of stability.
Speaker Change #108: That that I think obviously it makes people more comfortable.
Speaker Change #108: I know I've taken up a lot of airtime already real quick capital deployment cash flow remains robust our balance sheet is super clean can you just talk about your thinking right now on capital deployment and what the environment looks like right now.
Doug Schenkel: Real quick, capital deployment. You know, the cash flow remains robust, and the balance sheet is super clean. Can you talk about your thinking right now on capital deployment and what the environment looks like right now? Yeah, I think we remain very interested in deploying capital in a balanced way, which is inclusive of investing in the business. And that speaks directly to our interest in M&A. It's our build and buy growth strategy. I just have to say that the funnel and pipeline are more robust than I've seen in a number of years. And, you know, nothing to obviously announce, but we're very much engaged. Great. Thanks again.
Speaker Change #109: Yes, I think we remain very interested in deploying capital in a balanced way, which is inclusive of investing in the business and that speaks directly to our interest in M&A is our build and buy growth Jonathon I'd have to say that the the funnel or pipeline is more robust than I've seen in a number of years.
Speaker Change #109: And nothing to nothing too, obviously announced but we're very much engaged.
Speaker Change #110: Great. Thanks again.
Doug Schenkel: Your next question comes from the line of Josh Waldman with Cleveland Research. Please go ahead. Hey, thanks for taking my questions and congratulations, Mike and Corey. Thank you. Yeah. Thank you. Yeah. Yeah. Just a couple on my end.
Speaker Change #110: Your next question comes from the line of Josh Waldman with Cleveland Research. Please go ahead.
Josh Waldman: Hey, Thanks for taking my questions and congratulations Mike and Mark.
Josh Waldman: Thank you.
Josh Waldman: Yes, yes, just a couple on my end, maybe Bob starting with you.
Josh Waldman: Maybe, Bob, starting with you. First, a follow-up on the guide. Can you comment a bit more on how Q2 guide moved versus the framework in the initial outlook? I assume the core outlook came down a bit, but just wanted to confirm the moving pieces there. And then does the guide, the core guide, reflect any changes in Q3 or 4, or is it really just reflecting an update on H1? Yeah, that's a good question. It's a little of both.
Josh Waldman: First a follow up on the guide can you comment a bit more on how Q2 guide need versus the framework and the initial outlook I assume core outlook came down a bit but just wanted to confirm the moving pieces there.
Bob Mcmahon: And then does the guide the core guide reflect any changes in Q3 or four or is it really just reflecting an update on each one.
Speaker Change #113: Yes, that's a good question, it's a little of both.
Bob Mcmahon: Josh, so Q2 is relatively intact for what we had originally thought, with the exception of that, you know, small movement of the China business. That's roughly a point of core growth from, you know, Q1 and Q2. What I would say is, you know, Q1 also had a beat in it.
Speaker Change #113: Josh. So Q1 Q2 is relatively intact for what we had originally thought with the exception of that small movement of.
Speaker Change #112: China business.
Speaker Change #114: Roughly a point.
Josh Waldman: Core growth from from Q1, and Q2 switching what I would say is Q1 also had had a beat into it and what we're taking is some of that out of the second half of the year.
Bob Mcmahon: And what we're taking is some of that out of the second half of the year. And so the Q, so the takeaway is Q2 is spot on from where we expected it to be absent, that kind of shifting the timing shift of China. And then the Q2, or the rest of Q1, kind of the beat really helps us on the second half. Okay.
Josh Waldman: So the.
Josh Waldman: So the takeaway is Q2 is spot on from where we expected it to be absent that kind of shifting the timing shift of China and then the Q2.
Josh Waldman: The rest of Q1 kind of the beat.
Josh Waldman: It really helps us on that in the second half of the year.
Speaker Change #116: Okay. Okay.
Michael R. McMullen: And then, Mike, can you talk about how visibility in the business has evolved over the last three months? Has there been any improvement in the ability of the funnel to predict near-term sales, or are we still seeing an elongation of, you know, the kind of opportunity and quoting, and flipping the orders? You have a curious total company and then also what you're seeing in pharma specifically. Yeah, no, I'll have a quick jump on this. Well, I think business remains the same. I don't think it's any better or any worse.
Josh Waldman: And then Mike can you talk about how visibility in the business has evolved over the last three months has there been any improvement in the ability of the funnel to predict near term sales are still seeing.
Josh Waldman: Any elongation kind.
Mike: The opportunity in quoting flipping to orders.
Josh Waldman: Total company and then also what Youre seeing in pharma specifically.
Mike: I'll have a poor jump on this one I think the visibility remains the same I don't think it's any better or any worse.
Bob Mcmahon: And so I think it's the normal kind of cadence of business. And that's why, as Bob just mentioned, you know, we're talking about the second half. We banked some of the beat to, you know, put against the second half, because we've yet to see the second half materialize in terms of the order book, which is typical at this time of year. Yeah, no, I think I think that's right, Mike. And I think as far as the quality of orders remains, that remain in our backlog, nothing has changed. We've not seen any increase in cancellations.
Speaker Change #115: And so I think it's.
Speaker Change #115: Normal kind of cadence cadence of business and Thats why as Bob just mentioned when we're talking about the second half we bank some of the beat.
Speaker Change #115: Two two.
Speaker Change #115: But against the second half because we've yet to see the second half materialize in terms of the order book, which is typical at this time of year.
Bob Mcmahon: I think that's right, Mike and I think.
Bob Mcmahon: As far as the quantity of orders remains.
Bob Mcmahon: That remain in our backlog nothing has changed.
Bob Mcmahon: We've not seen any increase in cancellations.
Josh Waldman: And ex-China, the funnel continues to grow, and that's led by the aftermarket business. I will say, you know, as a continuing team, the deal closure times remain at an elevated level, but it's definitely stable, and deal win rates have been consistent. I think it's an important point made here, elevated, but we're not seeing the elongation. So, you know, they're stable, but they're longer than they have been.
Bob Mcmahon: Ex China pharma continues to grow and that is led by the aftermarket business I will say.
Bob Mcmahon: As a continuing theme to deal closure times remain at an elevated levels, but it's definitely stable and deal win rates have been consistent I think is really important point made here elevated but we're not seeing the elongation. So.
Bob Mcmahon: It's sort of stable, but the longer they have in the past.
Josh Waldman: Okay, thanks guys. Sure. Your next question comes from the line of Dan Leonard with UBS. Please go ahead.
Speaker Change #118: Okay. Thanks, guys.
Bob Mcmahon: Sure.
Bob Mcmahon: Your next question comes from the line of Dan Leonard with UBS. Please go ahead.
Dan Leonard: My first question, just a bit more on China, is you expecting sequential growth in Q2 in China similar to Q1? No, if you look at the sequential numbers, it's going to be roughly the same as what we had in Q1. Thank you. All right.
Dan Leonard: Thank you my first question just a bit more on China are you expecting sequential growth in Q2 in China similar to Q1.
Dan Leonard: No. If you looked at the sequential number it's going to be roughly the same as what we had in Q in Q1.
Michael R. McMullen: Thank you for that. And Mike, congrats on your retirement. I was wondering if you could elaborate on the timing. You know, I was surprised; others were surprised. I've gotten the question a number of times and would just love to hear your thoughts.
Bob Mcmahon: Okay.
Speaker Change #119: Alright, thank you for that.
Speaker Change #122: Mike Congrats on your retirement I was wondering if you could elaborate on timing I was surprised others were surprised I've gotten the question a number of times and we just love to hear your thoughts.
Michael R. McMullen: Yeah, thanks for that. So, you know, while it's maybe a surprise to many on the call, and it was a surprise when I shared the news across the company, because, you know, the Agilent team just knows how much I love working for this company and working with them. And it really was a hard, it was a really difficult decision for me.
Mike: Yeah, Thanks for that so no wireless.
Speaker Change #121: Maybe a surprise to.
Mike: <unk> on the call and it was a surprise when I share the news.
Mike: The company because.
Mike: The Ashland team this knows how much I love working for this company and work with them and it really was a heart. It was a really difficult decision for me, but I have been contemplating this for a while.
Michael R. McMullen: But I've been contemplating this for a while. And, you know, I pulled the board into the discussion, started communicating with them, because I really wanted to make sure that they had enough time to really run a thorough and thoughtful selection process, which they were able to do. And, in my mind, they made the best possible choice in selecting Quirk.
Mike: And I pulled the board into the discussion started communicating with them because we really wanted to make sure that they had enough time to.
Mike: <unk> really run a thorough and thoughtful selection process and what you're able to do in my mind. They came out with the best possible choice in selecting pork, but yes, but this is something that I have been contemplating for a while and engaged.
Michael R. McMullen: But yeah, but this is something that I've been contemplating for a while and then starting to engage the board about my timing, and then really want to make sure they had enough time to, you know, really pick the right successor. And that's what they did. Well, you always seem to be having a lot of fun, so congrats again, and it's been good. Thank you. It's going to be hard to step away, but I have to say the Polo family was just too strong. We have a six-month-old and 18-month-old grandson, and he will soon have a brother and sister.
Mike: Engage in the board.
Mike: About my timing and then really want to make sure. They have enough time to really pick the right successor and Thats what they did.
Speaker Change #124: You always seem to be having a lot of fun. So congrats Scott and just try again.
Scott: Thank you it can be hard to step away, but I have to say the pull of family was this too strong we have a six month old Grant 18 months grandson and he will soon have a brother and sister so there's a lot going on the family side and there's only one way I can make more time. So again, it's been a real pleasure working with all of you on the call.
Michael R. McMullen: So there's a lot going on on the family side, and there's only one way I can make more time. So again, it's been a real pleasure working with all of you on the call. All right, thanks. Your next question comes from the line of Luke Zergod with Barclays. Please go ahead.
Speaker Change #126: Alright. Thanks.
Speaker Change #126: Your next question comes from the line of Luke with regard with Barclays. Please go ahead.
Luke Zergod: Great, thanks guys for squeezing me in. I just want to talk about the margins on the quarter and kind of the step down between DGG and LSAG. And I assume, you know, obviously, it's probably driven by the volume declines there on the instrument side. But, you know, how you guys view the recovery in the margins between DGG and LSAG throughout the year to hit your targets. I hate your guys. Yeah, hey, Luke, this is Bob, just real quick.
Luke: Great. Thanks, guys for squeezing me in I'm.
Luke: Sure ill talk about the.
Luke: The margins on the quarter and kind of the step down in <unk> and <unk> and I assume obviously, it's probably driven by the volume declines there and the instrument side, but.
Luke: How you guys view the recovery in the margins between <unk> and <unk> throughout the year to hit your <unk>.
Luke: Your guide.
Speaker Change #133: Yes, Hey, Lucas, Bob just real quick Youre right if.
Bob Mcmahon: You're right. If I look at DGG, it actually was an improvement year over year, but it was down, and it was really a result of that margin or the volume. I would also say there was an element of mix in LSAG, and I would expect that to continue to improve. You know, the cost actions that we took weren't fully actualized as expected in Q1, so we'll have the full impact of those as well in Q2. So I would expect an improvement over the course of the year as volumes grow in both LSAG and DH. That's what I thought. I just want to clean up.
Speaker Change #127: If I look at <unk>, it actually was improvement year over year.
Speaker Change #128: But it was down and it was really a result of that margin or the volume I would say also there was an element of mix in <unk> and I would expect that to continue to improve the.
Speaker Change #128: The cost actions that we took were fully actualized all in as expected in Q1. So we will have the full impact of those as well in Q2 throughout so I would expect.
Speaker Change #128: An improvement over the course of the year as volumes go up.
Speaker Change #128: And both our <unk> and <unk>.
Speaker Change #129: So I thought I just want a claim.
Luke Zergod: And then just for follow up here from the QQ guide, can you just help frame what you guys are embedded in there by the different segments? Yeah, if I look at the Q2 guide, you know, we're still expecting, pharma down double digits, academia and government down low single digits, really, as a result of some of that timing shift, diagnostics and clinical down mid singles, chemical and advanced materials down high single digits, and food about the same. Both of those are, you know, as a result of some of the shift also in the China business Great, thanks.
Speaker Change #131: And then just for a follow up here from from the <unk> Guide can you just help us frame. What you guys are embedded there by the different segments.
Speaker Change #130: Yes, if I look at Q2 guide.
Speaker Change #134: Still expecting if I looked at the end market.
Speaker Change #130: Pharma down.
Speaker Change #132: Double digits, academia and government download single digits.
Speaker Change #132: Really as a result of some of that timing shift diagnostics and clinical down mid singles and.
Speaker Change #132: Chemical and advanced materials down high single digits and.
Speaker Change #132: Food about the same both of those are.
Speaker Change #132: As a result of some of the shift also in the China business from Q2 back into Q1 and in environmental and forensics kind of mid single digit decline.
Bob Mcmahon: Yep. Our final question will come from the line of Paul Knight with KeyBank. Please go ahead.
Speaker Change #136: Great. Thanks.
Speaker Change #136: Our final question will come from the line of Paul Knight with Keybanc. Please go ahead.
Paul Richard Knight: Hey, Mike, really great to see you doing what you're doing. And I knew you, I don't know, 15 years before you became CEO. So I guess the concluding question I would have, at least professionally, would be, what do you see in terms of two things? Number one, what do you think the kind of market growth rate is for the markets that Agilent participates in? And then geographically, where do you see the surprise over the next five years? Like, will Japan reinvigorate its growth? Will Europe see more insourcing? I would love to have your perspective on those things. Yeah, hey, thanks, Paul. Yeah, we do go way back, don't we?
Paul Richard Knight: Hey, Mike really Super.
Paul Richard Knight: Doing what youre doing and I knew you.
Paul Richard Knight: I don't know 15 years before you became CEO.
Paul Richard Knight: So I guess the concluding question I would have at least professionally would be what do you see in terms of two things number one why do you think the kind of market growth rate is for the markets that adjuvant participates in and then geographically.
Paul Richard Knight: Where do you see the surprise over the next five years like will Japan reinvigorated grow will Europe see more in sourcing.
Paul Richard Knight: Would love to have your perspective on those things.
Speaker Change #138: Yeah, Hey, Thanks, Paul Yes, we do go way back to <unk> and it's been great too.
Michael R. McMullen: And it's been great to work with you over those years, going way back to the CAG days in our prior role. You know, I think we think this is a, you know, four to 6% kind of growth market, you know, mid signals. So we think that the kind of market growth that we're not experiencing as an industry right now is an anomaly, and this will be back to that, you know, four to 6% kind of long-term growth rate. Obviously, certain segments within that overall macro number, that big TAM, will be growing faster than that. And that's always a challenge to make sure that you pick those segments, so you can actually beat that number.
Speaker Change #137: The work with you over those years going way back to the days in my prior role I think we think this is a 4% to 6% kind of growth market.
Paul Richard Knight: Mid singles.
Paul Richard Knight: So we think that that kind of market growth that we're not experiencing the industry right. Now is is an anomaly and this will be back to that.
Paul Richard Knight: 4% to 6% kind of long term growth rate, obviously certain segments within that overall macro number a big Tam will be growing faster than that and that's always a challenge to make sure that you pick those segments. So you can actually beat that number I think theres going to be some geographic mix I mean, we've.
Michael R. McMullen: I think there's going to be some geographic mix. I mean, we've, you know, evolved our view of long-term growth into China because we actually expect, you know, some of the supply chain moves and other things that have been going on that you'll see growth, more growth in Europe, which has been, you know, been more of a slower grower for us geographically. But we've continued to be surprised how well our team does in Europe. I think you're going to expect to see Japan rejuvenated, particularly I can, I think you can make the case for the semi-industry, which is going to return to some strength in Japan. But that's the beauty of this business, the diversified nature of both the end markets and geographies.
Paul Richard Knight: Evolved our view of long term growth in the China, because we actually expect some.
Paul Richard Knight: Some of the supply chain moves and other things that have been going on that youll see a growth more growth in Europe, which has been more of a slower grower for us geographically.
Paul Richard Knight: But we've been continue to be surprised how well we do our team does in Europe, I think youre going to spec to see.
Paul Richard Knight: Japan and.
Paul Richard Knight: And rejuvenate and particularly I think you can make the case that the semi industry, which is going to going to return to some strength in Japan.
Paul Richard Knight: But that's the beauty of this business is just the diversified nature of both the end markets and geographies. So.
Michael R. McMullen: So that would be my last, I guess, my final prediction of long-term growth for the market in this role. But thanks, Paul, appreciate the comments, and look forward to staying in touch. I'll now turn the call back over to Parmeet Ahuja for a closing remark. Thank you, Regina, and thanks, everyone, for being on the call today. With that, we'd like to close the call. Have a good day, everyone. Ladies and gentlemen, this concludes today's call. Thank you all for joining us. www.microsoft.com
Paul Richard Knight: That would be my my last one I guess my final projection of long term growth.
Speaker Change #139: For the market in this role, but thanks, Paul I appreciate the comments.
Speaker Change #140: Looking forward to staying in touch.
Speaker Change #141: I will now turn the call back over to you pardon me I Lucia for closing remarks.
Lucia: Thank you Regina and thanks, everyone for being on the call today with that we'd like to close the call have a good day everyone.
Speaker Change #143: Ladies and gentlemen, this concludes today's call. Thank you all for joining.
Speaker Change #143: Okay.
Speaker Change #141:
Speaker Change #141: Yes.
Speaker Change #141: Yeah.
Speaker Change #141: Yeah.