Q2 2024 Agilent Technologies Inc Earnings Call

Regina: Ladies and gentlemen, welcome to the Agilent Technologies Q2 2024 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 1 on your telephone. I will now hand you over to your host, Parmeet Ahuja, to begin.

Ladies and gentlemen, welcome to the Adjuvant technologies Q2, '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.

Bermuda: I'll now hand, you over to your host Bermuda who'd yet to begin. Please go ahead. Thank you and welcome everyone to <unk> conference call for the second quarter of fiscal year 'twenty 'twenty four.

Parmeet Ahuja: Please go ahead. Thank you, and welcome everyone to Agilent's conference call for the second quarter of fiscal year 2024. With me are Padraig McDonnell, Agilent President and CEO, and Bob McMahon, Agilent's Senior Vice President and CFO. Also joining in the Q&A will be Phil Binns, President of the Agilent Life Sciences and Applied Markets Group. Simon May, the newly named president of the Agilent Diagnostics and Genomics Group, and Angelica Riemann, president of the Agilent Cross-Lab Group. This presentation is being webcast live.

Speaker Change: With me are importing Mcdonald, Hi, Julien, President and CEO, and Bob Mcmahon, <unk> Senior Vice President and CFO.

Joining in the Q&A will be Selbins president of the hydrogen in life Sciences and applied markets Group Simon My newly named President of the IGN and diagnostics and genomics group and Angelica Rhineman president of the adjuvant across that group.

Speaker Change: This presentation is being webcast slides.

Parmeet Ahuja: The news release for our second 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.

Speaker Change: The news release for our second quarter financial results.

Speaker Change: Yes, Joe presentation and information to supplement today's discussion along with a recording of this webcast are available on our website at www Dot in Master card.

Speaker Change: Dot com.

Speaker Change: Today's comments will refer to non-GAAP financial measures.

Speaker Change: 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. Co-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.

Speaker Change: Unless otherwise noted all references to increases or decreases in financial metrics are year over year.

Speaker Change: And references to revenue growth on a core basis.

Speaker Change: Core revenue growth excludes the impact of currency and any acquisitions and divestitures completed within the past 12 months.

Speaker Change: Guidance is based on forecasted exchange rates.

Parmeet Ahuja: 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.

Speaker Change: As previously announced beginning in the first quarter of fiscal 'twenty 'twenty four we implemented certain changes to our segment reporting structure related to the move of our cell analysis business from <unk> into <unk>.

Speaker Change: We have recast our historical segment information to reflect these changes.

Speaker Change: 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. Please look at the company's recent SEC filings for a more complete picture of its risk and other factors. Now, I'd like to turn the call over to Pari. Thanks, Parmeet. Good afternoon, everyone.

Speaker Change: During this call. We will also make forward looking statements about the financial performance of the company.

Speaker Change: These statements are subject to risks and uncertainties and are only about it as of today.

Speaker Change: <unk> assumes no obligation to update them.

Speaker Change: 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 Patrick.

Parmeet Ahuja: And thank you for joining today's call. I want to begin by saying I'm incredibly honored to serve as CEO of this great company, and I'm thankful for the opportunity to lead such a talented team.

Patrick: Thanks permit good afternoon, everyone and thank you for joining today's call I want to begin by saying I'm incredibly honored to serve as CEO of this great company and I am thankful for the opportunity to lead such a talented team <unk>.

Patrick: I truly believe the Ashland team is second to none and.

Patrick: Energized about the future possibilities that lie ahead of us.

Parmeet Ahuja: I truly believe the Agilent team is second to none, and I'm energized about the future possibilities that lie ahead of us. I also want to take this time to welcome our new DGG president, Simon May, to the Agilent team. Simon's diverse experience, strong technical skills, and growth mindset will be a key asset in this role. Since starting earlier this month, Simon has hit the ground running, and I am really looking forward to him helping move DGG and Agilent forward.

Patrick: I also want to take this time to welcome our new DDG President Simon may to the agile and team.

Patrick: Simon's diversified experience strong technical skills and growth mindset will be a key asset in this role.

Patrick: Since starting earlier this month Simon has hit the ground running and I am really looking forward to him, helping moved UGG and agile and forward.

Parmeet Ahuja: Before I talk about the quarterly results, I'd like to tell you how I've spent my time since the announcement in February that I would become Agilent's CEO. I've been meeting and connecting with employees, customers, and shareholders around the world to listen to their perspectives on how we should build on our strengths and evolve Agilent. What they have told me is clear, Agilent must become even more customer-focused and even more nimble to continue to win in the marketplace and add value to customers and shareholders. This has really resonated with our employees and customers.

Speaker Change: Before I talk about the quarterly results I'd like to tell you. How I spent my time since the announcement in February that I would become agile and CEO.

Speaker Change: It'd be meeting and connecting with employees customers and shareholders around the world to listen to their perspectives on how we should build on our strengths and evolve adjuvant.

Speaker Change: What they have told me is clear.

Speaker Change: <unk> must become even more customer focused and even more nimble to continue to win in the marketplace and add value to customers and shareholders.

Speaker Change: This has really resonated with our employees and customers.

Parmeet Ahuja: As an energized Agilent team, we will evolve our strategy, adapting quickly to market trends and changes while accelerating our pace of innovation in areas of greatest return for long-term growth. We will double down on our customer force culture, deepening our relationship to further enhance our market-leading customer experience that is already the best in the industry. Now let's talk about the Q2 results and outlook moving forward. In a challenging market environment, the Agilent team delivered on expectations. In the second quarter, we reported revenue of $1.573 billion, a 7.4% decline.

Speaker Change: As an energized agile and team we will evolve our strategy adapting quickly to market trends and changes while accelerating our pace of innovation in areas of greatest return for long term growth.

Speaker Change: We will double down on our customer first culture.

Speaker Change: Deepening our relationship to further enhance our market leading customer experience that is already the best in the industry.

Parmeet Ahuja: This was against the tough compare of 9.5% growth in Q2 of last year. While revenues declined in the quarter, our book to bill was greater than one, and orders grew year over year for the first time in seven quarters. Earnings per share of $1.22 beat our expectations and represented a 4% decline from the second quarter of 2023. Now looking forward.

Speaker Change: Now, let's talk about the Q2 results and outlook moving forward.

Speaker Change: In a challenging market environment, the aten team delivered on expectations.

Speaker Change: In the second quarter, we reported revenue of $1 57 3 billion.

Speaker Change: A seven 4% decline.

Speaker Change: This was against the tough compare of nine 5% growth Q2 of last year.

Speaker Change: While revenues declined in the quarter, our book to Bill was greater than one on orders grew year over year for the first time in seven quarters.

Speaker Change: Earnings per share of $1 22.

Speaker Change: Beat our expectations and represented a 4% decline from the second quarter of 2023.

Now looking forward at <unk>.

Parmeet Ahuja: The market environment continues to be challenging, but we are seeing early signs of recovery. However, as we announced in our press release, this market recovery is not at the pace we anticipated when we provided guidance earlier in the year. As a result, we are reducing our market growth expectations and revising our full-year core revenue to be in the range of $6.42 billion to $6.5 billion, and growth to decline between 4.3 and 5.4%. We now expect earnings per share to be between $5.15 and $5.25 for the year.

Speaker Change: Market environment continues to be challenging.

Speaker Change: But we are seeing early signs of recovery.

Speaker Change: However, as we announced in our press release this market recovery is not at the pace, we anticipated when we provided guidance earlier in the year.

Speaker Change: As a result, we are reducing our market growth expectations and revising our full year core revenue to be in the range of $6 four 2 billion.

Speaker Change: To $6 5 billion.

Speaker Change: And grow to decline between four three and five 4%.

Speaker Change: We now expect earnings per share to be between $5 15, and $5 25 for the year.

Parmeet Ahuja: We have responded quickly to lower market growth expectations and are taking difficult but necessary actions to streamline our cost structure. These actions will allow us to invest in our most promising growth opportunities while also delivering incremental annualized savings of $100 million by the end of the fiscal year. We are sharpening our focus on key growth vectors, such as biopharma, PFAS, and advanced materials, while also investing in our digital ecosystem and accelerating our innovation to drive even faster execution.

Speaker Change: We have responded quickly to the lower market growth expectations, and our taking difficult, but necessary actions to streamline our cost structure.

Speaker Change: These actions will allow us to invest in our most promising growth opportunities, while also delivering incremental annualized savings of $100 million.

Speaker Change: By the end of the fiscal year.

Speaker Change: We are sharpening our focus on key growth vectors, such as Biopharma <unk> and advanced materials, while also investing in our digital ecosystem and accelerating our innovation to drive even faster execution.

Parmeet Ahuja: And we are leveraging our strong balance sheet and plan to repurchase $750 million of our common stock across the third and four quarters, over and above our normal anti-dilutive repurchase. Bob will provide more details on our results and latest outlook in his remarks. Getting back to Q2 results, as expected, all end markets saw declining revenue in Q2. Geographically, the Americas and Europe came in slightly ahead of expectations, while China lagged.

Speaker Change: And we are leveraging our strong balance sheet and plan to repurchase $750 million of our common stock across the third and four quarters over and above our normal anti dilutive repurchases.

Speaker Change: Bob will provide more details on our results and latest outlook in his remarks.

Speaker Change: Getting back to Q2 results as expected all end markets saw declining revenue in Q2.

Speaker Change: Geographically the Americas and Europe came in slightly ahead of expectations, while China lagged.

Parmeet Ahuja: Despite the challenging market conditions, our Agilent team stayed close to our customers and continued to leverage our strong relationships with them to execute remarkably well while maintaining strong cost discipline. When we look at performance by business units, the Life Sciences and Applied Markets Group reported $754 million in revenue, down 13%. The group saw a decline across all markets and regions with consumables being a bright spot. Consumables grew into low single digits, driven by chemical and advanced materials, food, and environmental and forensics.

Speaker Change: Despite the challenging market conditions, our adjuvant team stayed close to our customers are continuing.

Speaker Change: To leverage our strong relationships with them to execute remarkably well, while maintaining strong cost discipline.

Speaker Change: When we look at our performance by business units, the life Sciences, and applied markets group reported $754 million in revenue down 13%.

Speaker Change: The group saw a decline across all end markets and regions with consumer groups being a bright spot.

Speaker Change: Consumables grew in the low single digits, driven by chemical and advanced materials, food and environmental and forensics.

Parmeet Ahuja: Also, while relatively small, we continue to see strong growth in our pre-owned instrument business. The LSAG team continues to innovate, introducing two new instruments this quarter that extend our applied markets leadership. First, our 7010D GC triple-quad instrument delivers exceptional sensitivity for customers in the environmental PFAS and advanced materials markets, designed for analysis that demands the lowest limits of detection. And second, our 8850GC, a distinguished new member of our market-leading GC portfolio.

Speaker Change: Also while relatively small we continue to see strong growth in our pre owned instrument business.

Speaker Change: The <unk> team continues to innovate introducing two new instruments this quarter that extend our applied markets leadership.

Speaker Change: First our 70, <unk> GC triple Quad instrument delivers exceptional sensitivity for customers in the environmental <unk> and advanced materials markets designed for.

Speaker Change: Analysis that demand the lowest limits of detection.

Speaker Change: And second is our 80 850, GC, a distinguished new member of our market, leading GC portfolio.

Parmeet Ahuja: The 8850 is ultrafast in separation and cruise speed, with design innovations that enable customers to run tests up to twice as fast as regular benchtop GCs, and it's the smallest high-performance benchtop GC on the market.

Speaker Change: The $80 50, as ultrafast and separation and crude on speeds with design innovations that enable customers to run tests up to twice as fast as regs, our bench top GC.

Speaker Change: And it's the smallest high performance bench top GC on the markets closely.

Parmeet Ahuja: Plus, it's sustainable, using up to 30% less electricity compared with a traditional benchtop GC. Now moving on to the Agilent Crosslab Group, which delivered revenue of $402 million for the quarter, up 5%. ACG grew across all end markets in every region except China.

Speaker Change: Closer to sustainable using up to 30% less electricity power compared with traditional bench top to UC.

Speaker Change: Now moving onto the Adjuvant Cross lab group, which delivered revenue of $402 million for the quarter up 5%.

Speaker Change: ACG grew across all end markets in every region, except China.

Parmeet Ahuja: The business delivered double-digit growth in services contracts, which now represent almost 70% of the total business, offset by declines in new instrument installation revenues. The ongoing strength in our contracted business speaks to our strategy of increasing the connection rates on our instruments and the ongoing value we are providing to our customers. The Diagnostics and Genomics Group posted $417 million in revenue, representing an 8% decline.

Speaker Change: The business delivered double digit growth in services contracts, which now represent almost 70% of the total business offset by declines in new instrument installation revenues.

Speaker Change: The ongoing strength in our contracted business speaks to our strategy of increasing to connect rates on our instruments.

Speaker Change: The ongoing value, we are providing to our customers.

Speaker Change: The diagnostics and genomics group posted $417 million in revenue, representing an 8% decline.

Parmeet Ahuja: Pathology was up mid-single digits globally and was more than offset by declines in the mid-twenties in cell analysis due to the constrained capital environment for instrumentation. NASD declined in the low teens, as expected, driven by more clinical products being produced this year versus Q2 of last year. Europe was a bright spot for DGG, growing low single digits in the quarter, while America and China declined. Despite this subdued market environment, we continue to innovate in our sell analysis business. We recently introduced the Agilent Spectral Flow Cytometer, which allows our customers to perform sophisticated experiments that expand the range of research on the same easy-to-use NovaSci platform.

Speaker Change: Pathology was up mid single digits globally and was more than offset by declines in the mid twenties and cell analysis due to the constrained capital environment for instrumentation.

NASD declined low teens as expected driven by more clinical products being produced this year versus Q2 of last year.

Speaker Change: Europe was a bright spot for DDG growing low single digits in the quarter, while Americas and China declines.

Speaker Change: Despite the subdued market environment, we continue to innovate on our cell analysis business.

Speaker Change: We recently introduced the adjuvant spectrum flow Cytometer.

Speaker Change: Which allows our customers perform sophisticated experiments that expand the range of the research on the same easy to use Novus site platform.

Bob: Bob will now provide details on our results as well as our outlook for the remainder of the year. After Bob delivers his comments, I will be back for some closing remarks. Thank you, Parag. And good afternoon, everyone.

Speaker Change: Bob will now provide details on our results as well as our outlook for the remainder of the year.

Speaker Change: After Bob delivers his comments I will be back for some closing remarks.

Speaker Change: Over to you Bob.

Robert W. McMahon: Thanks, Patrick and good afternoon, everyone.

Bob: 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 cover our updated full year and third quarter guidance. Q2 revenue was $1.573 billion.

Robert W. 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 will then cover our updated full year and third quarter guidance.

Robert W. McMahon: Q2 revenue was $1 $5 $73 billion.

Bob: A decline of 7.4% core. On a reported basis, Currency had a negative impact of 0.8 percentage points, while M&A had a negative impact of 0.2%, resulting in a reported decline of 8.4 percent. As Parag mentioned, pharma, our largest end market, declined 11%, with both biopharma and small molecule declining roughly the same percentage. Instrument demand continues to be constrained, while services delivered mid-single-digit growth

Decline of seven 4% core.

Robert W. McMahon: On a reported basis currency had a negative impact of 0.8 percentage points, while M&A had a negative impact of <unk>, 2%.

Resulting in a reported decline of eight 4%.

Speaker Change: As Paul mentioned pharma, our largest end market declined 11% with both Biopharma and small molecule declining roughly the same percentage.

Speaker Change: Instrument demand continues to be constrained while services delivered mid single digit growth.

Bob: Looking forward, while we have seen sentiment improve, instrument purchases are still constrained, and we are expecting that to continue for the rest of the year. In addition, we have reduced our expectations for NASD, as several clinical programs have pushed out into next year, and some commercial products have not ramped up the pace as expected. As a result, we have reduced our full-year growth outlook for the pharma end market from roughly flat to down low double digits, similar to our Q2 performance.

Speaker Change: Looking forward, while we have seen sentiment improve instrument purchases are still constrained and we're expecting that to continue for the rest of the year.

Speaker Change: In addition, we have reduced our expectations for NASD as several clinical programs have pushed out into next year and some commercial products have not ramped at the pace as expected.

Speaker Change: As a result, we have reduced our full year growth outlook for the pharma end market from roughly flat to down low double digits similar to our Q2 performance.

Bob: Our revised expectation for the pharma end market is the largest change in our outlook. The chemical and advanced materials market was better than expected, declining 3% after coming off a very tough comparison of 16% growth last year. The academia and government market declined 12% against a tough comparison of 11% growth last year.

Speaker Change: Our revised expectations for the pharma end market is the largest change in our outlook.

Speaker Change: The chemical and advanced materials market was better than expected declining 3% after coming off a very tough comparison of 16% growth last year.

Speaker Change: The academia and government market declined 12% against a tough compare of 11% growth last year.

Bob: While soft globally, the decline was driven by China, which was down mid-30s. Our business in the diagnostics and clinical market declined 2%. Our pathology business continues to show resilience in this market, growing mid-single digits while our NGSQC instrumentation business also grew slightly. However, this was offset by softness in our NGS chemistries business. The environmental and forensics market declined 2%, but the business grew mid-single digits ex-China, highlighted by continued strength in serving the rapidly expanding PFAS opportunity. The food market declined 13% on a very tough comparison of 21% growth last year, heavily impacted by the low-30s decline in China. On a geographic basis, all regions declined.

Speaker Change: While soft globally, the decline was driven by China, which was down mid thirties.

Speaker Change: Our business in the diagnostics and clinical market declined 2%.

Speaker Change: Our pathology business continues to show resilience in this market growing mid single digits, while our NGL QC instrumentation business also grew slightly.

Speaker Change: These were offset by softness in our NGL Chemistries business.

Speaker Change: The environmental and forensics market declined 2%.

Speaker Change: The business grew mid single digits ex China highlighted by continued strength in serving the rapidly expanding <unk> opportunity.

Speaker Change: The food market declined 13% on a very tough compare of 21% growth last year heavily impacted by the low $30 decline in China.

Speaker Change: On a geographic basis all regions declined.

Bob: The Americas region was down 5%, Europe was down 3%, while Asia Pacific ex-China was down slightly. China was down 21%, missing our expectations of a mid-teens decline. We saw demand weakness expand beyond pharma. As a result, we have revised our full-year expectations for China from a mid-single-digit decline to a double-digit decline. We have seen funnel activity increase because of the recently announced stimulus program, but we are not assuming any revenue impact in our fiscal year.

Speaker Change: The Americas region was down 5% Europe was down 3%, while Asia Pacific ex China was down slightly.

Speaker Change: China was down 21% missing our expectations of a mid teens decline we.

Speaker Change: We saw demand weakness expand beyond pharma.

Speaker Change: As a result, we have revised our full year expectations for China from a mid single digit decline to a double digit decline.

Speaker Change: We are seeing funnel activity increase because of the recently announced stimulus program, but we are not assuming any revenue impact in our fiscal year.

Bob: Moving down the P&L, our second quarter gross margin was 55.6%, up 30 basis points from a year ago, as productivity and cost savings were offset by lower demand and mix. Our operating margin of 25.1% was down year over year, as expected. Below the line, we benefited from greater than expected interest income and a lower tax rate. Our tax rate was 12.5%, and we had 293 million diluted shares outstanding.

Speaker Change: Moving down the P&L.

Speaker Change: Our second quarter gross margin was 55, 6%.

Speaker Change: 30 basis points from a year ago as productivity and cost savings were offset by lower demand and mix.

Speaker Change: Our operating margin of 25, 1% was down year over year as expected.

Speaker Change: Below the line, we benefited from greater than expected interest income and a lower tax rate.

Speaker Change: Our tax rate was 12, 5% and we had 293 million diluted shares outstanding.

Bob: Putting it all together, Q2 earnings per share were $1.22, down 4% from a year ago, but less than the decline in revenue and ahead of our expectations. Now, let me turn to cash flow on the balance sheet. Operating cash flow was $333 million in the quarter.

Speaker Change: Putting it altogether Q2 earnings per share were $1 22 down 4% from a year ago, let's.

Speaker Change: Less than the decline in revenue and ahead of our expectations.

Speaker Change: Now, let me turn to cash flow and the balance sheet.

Speaker Change: Operating cash flow was $333 million in the quarter and.

Speaker Change: And we invested $103 million and capital expenditures as we continue our planned NASD expansion.

Speaker Change: We returned $299 million to shareholders in the quarter.

Speaker Change: $69 million through dividends and $230 million through repurchase shares catching up on our anti dilutive buying year to date.

Bob: And we invested $103 million in capital expenditures as we continue our planned NASD expansion. We returned $299 million to shareholders in the quarter. $69 million through dividends and $230 million through repurchase shares. We are catching up on our anti-dilutive buying year to date. In summary, we met our expectations for the quarter, and our markets are recovering, but at a slower pace than we anticipated. We are directing our energy towards high growth opportunities and are committed to delivering value to our customers and our shareholders. Now on to our revised outlook for the year and our third quarter guidance. We now expect full-year revenue to be in the range of $6.42 to $6.50 billion.

Speaker Change: In summary, we met our expectations for the quarter and our markets are recovering, but at a slower pace than we anticipated.

Speaker Change: We are directing our energy towards high growth opportunities and are committed to delivering value to our customers and our shareholders.

Speaker Change: Now on to our revised outlook for the year and our third quarter guidance.

Speaker Change: We now expect full year revenue to be in the range of $6 four two to $6 $501 billion.

Bob: This represents a decline of 6.0 to 4.9% on a reported basis and a decline of 5.4 to 4.3 on a core basis. Currency and M&A combined are a headwind of 60 basis points. This is a $300 million reduction at the midpoint and is primarily related to changes in two areas.

Speaker Change: This represents a decline of 6.0 to four 9% on a reported basis and a decline of five four to $4 three on a core basis.

Speaker Change: Currency and M&A combined are a headwind of 60 basis points.

Speaker Change: This is a $300 million reduction at the midpoint and is primarily related to changes in two areas.

Bob: China overall and the pharma and market outside of China. For China, we have reduced our expectations to a double-digit decline from mid-single digits, with all end markets being reduced. This represents roughly $70 million of the guidance reduction.

Speaker Change: China overall in the pharma end market outside of China.

Speaker Change: For China, we have reduced our expectations to a double digit decline from mid single digits with all end markets being reduced.

Speaker Change: This represents roughly $70 million of the guidance reduction.

Bob: The remainder of the change in the pharma end market globally outside of China is due to two factors. The first and largest factor is continued caution in budget releases and extended approval times for instrumentation purchases in both small and large molecules. This is roughly $175 million of the chain.

Speaker Change: The remainder of the change in the pharma end market globally outside of China is due to two factors.

Speaker Change: The first and largest factor is continued caution and budget releases and extended approval times for instrumentation purchases in both small and large molecule.

Speaker Change: This is roughly a $175 million of the change.

Bob: The second factor is related to NASD due to the reasons I mentioned earlier and represents the remaining $55 million reduction. Down from our previous guidance, we are expecting growth in the second half of the year to be roughly 400 basis points better than in the first half of the year and plan to exit the year roughly flat year on year at the midpoint of the new guidance. Full-year non-GAAP earnings per share are now expected to be between $5.15 and $5.25, representing a decline of 5.3 to 3.5 percent.

Speaker Change: The second factor is related to NASD due to the reasons I mentioned earlier and represents the remaining $55 million reduction.

Speaker Change: While down from our previous guidance, we are expecting growth in the second half of the year to be roughly 400 basis points better than the first half of the year and.

Speaker Change: And plan to exit the year roughly flat year on year at the midpoint of the new guidance.

Full year non-GAAP earnings per share are now expected to be between $5 15, and $5 25.

Speaker Change: Representing a decline of five 3% to three 5%.

Bob: This incorporates a roughly $35 million expense reduction due to the actions Parag mentioned, with the majority hitting Q4 in order to help mitigate the bottom line impact of the change to our revenue guide. It also assumes a 13% tax rate and 292 million fully diluted shares outstanding.

Speaker Change: This incorporates a roughly $35 million expense reduction due to the actions pork mentioned.

Speaker Change: The majority hitting Q4 in order to help mitigate the bottom line impact of the change to our revenue guidance.

Speaker Change: It also assumes a 13% tax rate and 292 million fully diluted shares outstanding.

Bob: We will leverage our strong balance sheet and plan to repurchase $750 million of our shares in the second half of the year, in addition to our anti-dilutive repurchase. We expect these repurchases to be weighted towards Q3. All told, we expect to return roughly $1.4 billion to shareholders this year between dividends and share repurchase. In addition, the board authorized a new $2 billion share repurchase program that will go into effect on August 1st and replace the existing authorization.

Speaker Change: We will leverage our strong balance sheet and plan to repurchase $750 million of our shares in the second half of the year. In addition to our anti dilutive repurchases. We expect these repurchases to be weighted towards Q3.

Speaker Change: All told we expect to return roughly $1 $4 billion to shareholders this year between dividends and share repurchases.

Speaker Change: In addition, the board authorized a new $2 billion share repurchase program that will go into effect August one.

Speaker Change: And replace the existing authorization.

Bob: Now for our Q3 guidance. We expect revenue to be in the range of $1.535 to $1.575 billion. This represents a decline of 8.2 to 5.8% on a reported basis and a decline of 6.9 to 4.5 on a core basis. Currency and M&A combined for a headwind of 130 basis points. Third quarter non-GAAP earnings per share are expected to be between $1.25 and $1.28, representing a decline of 12.6 to 10.5 percent.

Speaker Change: Now for our Q3 guidance.

Speaker Change: We expect revenue will be in the range of 1535 to $1 $5 $75 billion.

Speaker Change: This represents a decline of eight 2% to five 8% on a reported basis and a decline of $6 nine to $4 five on a core basis.

Speaker Change: Currency and M&A combined for a headwind of 130 basis points.

Speaker Change: Third quarter non-GAAP earnings per share are expected to be between $1 25, and $1 28.

Speaker Change: Representing a decline of 12, 6% to 10, 5%.

Bob: Looking forward, we remain disciplined. We're focusing on what we can control and driving strong execution in a challenging market, and we are optimistic about the long-term future. Now, back to Corey.

Speaker Change: Looking forward, we remain disciplined with.

Speaker Change: We're focusing on what we can control and driving strong execution in a challenging market.

Speaker Change: And we are optimistic about the long term future.

Speaker Change: Now back to Corey.

Parmeet Ahuja: When I joined you last quarter as CEO-elect, I said Agilent has a compelling story to tell, and I was excited by the possibilities that lie before us as we help our customers bring great science to life. That excitement has only grown. I have spent 26 years at Agilent, first starting as a field employee before moving to sales and then leading some of our business. I know Agilent's strengths and its opportunities very well.

Corey: When I joined you last quarter as CEO elect I said Agila has a compelling story to tell and I was excited by the possibilities that lie before us as we help our customers bring great time to life.

Corey: That excitement has only grown.

Corey: I spent 26 years at adjuvant.

Corey: Before starting as a feed employee before moving to sales and then leading some of our businesses.

Corey: I know agile and strength.

Corey: It's opportunities very well.

Parmeet Ahuja: We are in great long-term growth markets, and while the markets are recovering slower than anticipated, they are recovering. This company is a leader across key platforms, making us uniquely qualified to support our customers in their mission to solve some of the world's most important problems. And our customers value their relationships with us because we offer them an unparalleled experience.

Corey: We are in great long term growth markets.

Corey: While the markets are recovering slower than anticipated.

Corey: Our recovery.

Corey: This company is the leader across key platforms, making us uniquely qualified to support our customers' intermissions to solve some of the world's most important problems.

Corey: And our customers value their relationships with us because we offer them an unparalleled experience.

Parmeet Ahuja: And as I said earlier, that is a competitive differentiator in the market. The actions we are now taking, while difficult, will enable us to quickly capitalise on growth opportunities as the markets fully recover. I know the future is bright, and we will forge an enduring company that sets the standard for excellence with our customers and creates value for our shareholders. Thank you again for joining us on today's call. I look forward to continued dialogue with all of you.

Corey: As I said earlier that as a competitive differentiator in the market.

Corey: The actions we are now taking while difficult will enable us to quickly capitalize on growth opportunities as the markets fully recover.

Corey: I know the future is bright and we will forge an enduring company that sets the standard for excellence with our customers and create value for our shareholders.

Corey: Thank you again for joining today's call and I look forward to continued dialogue with all of you.

Parmeet Ahuja: Parmeet, over to you for the Q&A. Thanks, Parag. Regina, if you could please provide instructions for the 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: Hermes over to you for Q&A.

Hermes: Thanks, Barry Regina if you could please provide instructions for the Q&A now.

Regina: Ladies and gentlemen, if you would like to ask a question. Please press 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 on mute and locally. Our first question will come from the line of Matt <unk> with Goldman Sachs. Please go ahead.

Regina: Our first question will come from the line of Matt Sykes with Goldman Sachs. Please go ahead. Good afternoon, thanks for taking my questions. Maybe just the first one is more of a timing question about China. I mean, we've been through a lot of quarterly results this season, and the stabilization theme in China has been pretty consistent. And you guys have talked about sequential stabilization over the last number of quarters. So was this really an April impact that you saw in China? And if so, what was the sort of steep deceleration that you saw there?

Parmeet Ahuja: And what were some of the causes of it? Yeah, thanks, Matt. I think, you know, while Q2 was relatively soft compared to guidance, we adjusted the H2 outlook. What we're seeing in China is that we saw a lot of stability over a number of quarters. What we really believe is that this is not a material deterioration from that. But what we've seen is that we've seen the stimulus have some effect, and the stimulus has been much larger than previous stimuli.

Matthew Carlisle Sykes: Hi, good afternoon, Thanks for taking my questions maybe.

Matthew Carlisle Sykes: And maybe just the first one is more of a timing question on China I mean, we've been through a lot of quarterly results.

Speaker Change: This season and the stabilization team in China has been pretty consistent that you guys have talked about sequential stabilization over the last number of quarters.

Speaker Change: So was this really in April impact that you saw in China, and if so what was sort of the deceleration that you saw there and what were some of the causes of it.

Speaker Change: Yes, Thanks, Mike.

Speaker Change: Pink.

Speaker Change: While Q2 was relatively soft.

Speaker Change: The guidance, we adjusted the hedge to outlook, what we're seeing in China as we saw a number as stability over a number of quarters.

Speaker Change: What we really believe is that this is not a material deterioration from that but what we've seen is that we've seen the stimulus have some effect on the stimulus has been much larger than previous stimulus. It's over multi years and of course customers are looking about I have what is the components of that and we're looking at some of the areas.

Parmeet Ahuja: It's been over for many years. And of course, customers are looking at what the components of that are, and they're looking at some of the areas where it's going to help them. So that has had a material effect. We don't, we don't see the stimulus having an impact in H2. But we do think it's going to have an impact in, in 25. I think there's a kind of direct and indirect side to the stimulus. I think on the direct side, you see this delay, which is normal.

Speaker Change: And where it's going to have them. So that has had a material effect. We don't we don't see the stimulus having an impact in <unk>, but we do think it's going to have an impact in that.

Speaker Change: In 25, I think theres, a kind of a direct and indirect side of the stimulus I think on the direct side you see this delay and which is normal but you see also the indirect side, where the government is investing in technology and science is going forward, which creates a lot of I would say future momentum.

Parmeet Ahuja: But you also see the indirect side where the government is investing in technology and science is going forward, which creates a lot of, I would say, future momentum. And I'm just wondering, just given some of the comments you made around biopharma, given this important customer segment for that, have you kind of changed those views in terms of what the LC replacement cycle will look like and what the potential recovery in the replacement cycle will look like?

Speaker Change: Got it thanks for that Park and then just for my follow up you guys have often talked about sort of the 18 to 24 months down cycle in the LC replacement cycle and I'm. Just wondering just given some of the comments you made around biopharma given us important customer segment for that have you kind of changed those views in terms of what the LC replacement cycle will look like and what the potential recovery.

Speaker Change: And the replacement cycle will look like I think.

Parmeet Ahuja: I think, you know, some were thinking sort of towards the end of this year, but is this more now into 2025? And has that replacement cycle been extended in terms of recovery? Yeah, we don't we don't see any material change. But Bob, I don't know if you want to add some color on that.

Speaker Change: Some were thinking sort of towards the end of this year, but is this more now into 2025% of that replacement cycle been extended in terms of recovery.

Speaker Change: We don't we don't see any material change with Bob I don't know if you want some color on that yes, I think Matt as you say no we're still expecting improvement in the back half of this year just not at the pace that we had expected and so we're not seeing any material extension of kind of the use case for LCR and <unk> in the marketplace and are still expecting recovery in 'twenty five.

Bob: Yeah, I think Matt, as you're saying, we're still expecting improvement in the back half of this year, just not at the pace that we had expected. And so we're not seeing any material extension of the use case for LC or an LC-MS in the marketplace and are still expecting recovery in 2025. Thanks very much.

Speaker Change: Thanks very much.

Jack Meehan: Our next question will come from Jack Meehan with Nefron Research. Please go ahead. Thank you. Good afternoon, guys. I was wondering what the new sales outlook for NASD is this year. And can you talk about, like, bridging from kind of the second half to some of the longer-term targets you've had previously? Like, what are you assuming in terms of kind of progression after this year?

Speaker Change: Our next question will come from the line of Jack Meehan with Nephron Research. Please go ahead.

Jack Meehan: Thank you good afternoon guys.

Jack Meehan: I was wondering if you could share what's the new sales outlook for NASD are this year and can you talk about like bridging from kind of a second half some of the longer term targets. You had previously like what are you assuming in terms of kind of progression. After this year.

Jack Meehan: Yeah, I mean, the NASD business, you know, we talked before about the business being about 50% commercial and 50% clinical. That's changed a bit to be more like 75% clinical and 25% commercial. We've seen the IRA Inflation Reduction Act having an impact on price provisioning. So what you see with farmer partners, they're looking for larger indications instead of smaller indications. So what we've seen is what I would call an air pocket in Q3.

Jack Meehan: Yes.

Speaker Change: The NASD business, we talked before about the business being about 50% commercial and 50% Tenneco's, that's changed a bit to be more more like 75% chemical and 25% commercial we've seen the inflation reduction not having an impact.

Speaker Change: On the price provisioning. So what you see with pharma partners, who are looking for larger indications instead of smaller smaller indications. So what we've seen is I would call. It an air pocket in Q3.

Parmeet Ahuja: Our clinical business is actually growing; orders are growing about 50%. So we have a good order book on that side. So it's a readjustment, and we see that readjustment go through H2 and beyond. I don't know if you want to add anything to that, Bob.

Our our clinical business is actually growing orders are growing about 50, 50%. So we are we have a good order book on that side. So it's a readjustment and we see that a readjustment go through <unk> and beyond I don't know if you want to add on <unk> I think Jack too.

Bob: Yeah, I think, Jack, to add some numbers to what Parag was saying here, you know, originally, we were expecting it to be roughly flat, which would have said roughly a $350 million business. We're now saying roughly $300 million this year. As Parag is mentioning, we're expecting to build back from there as these clinical programs move through the clinical pathway and are expecting to have more volume in 2025. And I would say, you know, our long-term perspective on NASD remains unchanged.

Speaker Change: To add some numbers to what Paul was saying here.

Speaker Change: Originally we were expecting it to be roughly flat.

Speaker Change: Would have set a roughly a $350 million business, we're now, saying roughly $300 million side this year.

Speaker Change: As <unk> was mentioning.

Speaker Change: We're expecting to build back from there as these clinical programs.

Speaker Change: <unk> through that.

Speaker Change: The clinical pathway and are expecting to have more more volume into in 'twenty, five and I would say are.

Speaker Change: Long term perspective on NASD remains unchanged, we're still very excited about that opportunity.

Bob: We're still very excited about that opportunity and are still building, you know, building out the capacity of our Colorado site. Yeah, I think the second question, I think the second part of the question was about 25.

Speaker Change: And are still building.

Speaker Change: Building out the capacity.

Speaker Change: And in our Colorado site.

Yes, I think the second question I think the second part of the question was about 25, yes.

Bob: Yep. You know, we'll grow next year. And as you can see in our guidance that we're anticipating, we really are anticipating improving conditions across the second half. But it's too early to talk about specific ranges for next year. And we want to wait to see how pacing and improvement pans out in the second half. Okay, thank you.

Speaker Change: We will grow next year and as you can see in our guidance that were anticipated, we really are anticipating improving conditions across the second half, but it's too early to talk about specific ranges for next year, and we want to wait to see how a pacing and improvement plans out in the second half.

Jack Meehan: And then on the cost savings program, I think I heard talk about $100 million. I just wanted to clarify, is that incremental to the $175 million you previously talked about? And where are those, you know, any color on where the savings is coming from? Thank you.

Speaker Change: Okay. Thank you and then on the cost savings program I think I heard talk about 100 million I just wanted to clarify is that incremental to the 170 <unk> previously talked about.

There are those any color on where the savings is coming from thank you.

Bob: Yeah, it is incremental to the savings that we have already built into the plan. And we're expecting to get that annualized savings by the end of the year. It's primarily headcount related, Jack. Okay. Thank you, Bob. Our next question comes from the line of Patrick Donnelly with Citi. Please go ahead.

Speaker Change: Yes, it is incremental to the savings that we've already built into into the plan and we're expecting to get that annualized savings by the end of the year, It's primarily head count related.

Speaker Change: Jack.

Robert W. McMahon: Okay. Thank you Bob.

Speaker Change: Yes.

Speaker Change: Our next question comes from the line of Patrick Donnelly with Citi. Please go ahead.

Patrick Bernard Donnelly: Hey, guys, thanks for taking the questions. Maybe one on the instrument side, I guess it'd be China and just broadly, you know. I know a few quarters ago, you guys felt like your orders were picking up, and the funnel looked okay. But it was really that, I think, Bob, you said it was the velocity of conversion of those orders and that funnel to revenue. Is that what you're seeing is just that continuing to stretch out the visibility into that normalizing is just proving to be a little trickier. Yeah, I just want to talk through, I guess, that instrument piece because again, you sound okay on the orders, the funnel, and the conversation.

Patrick Bernard Donnelly: Hey, guys. Thanks for taking the questions.

Patrick Bernard Donnelly: Maybe one on the instrument side I guess, it would be China and just broadly.

Patrick Bernard Donnelly: I know a few quarters ago, you guys felt like orders are picking up the funnel look okay, but it was really that I think Bob you said it was the velocity of conversion of those orders in that funnel to revenue.

Speaker Change: Is that what you're seeing is just act continues to stretch out and the visibility into that normalizing, it's just proving to be a little trickier.

Speaker Change: Yes, I just want to talk to I guess that <unk> piece, because again you sound okay on the orders the funnel of the conversation.

Parmeet Ahuja: But that converting over to red, I guess that I just want to talk to you again about that conversion piece and the velocity of the conversion. Yeah, no. I think at an actual level, as we talked about, our book-to-bill was greater than one, which is a positive sign, and orders grew year over year. On the instrument side, the orders grew low single digits, excluding China, but declined low single digits overall

Speaker Change: Converting over to <unk> I guess I just want to talk to you again that conversion piece and the velocity of the conversion.

Speaker Change: Yes.

Yes, no I think at an absolute.

Speaker Change: Two level as we talk about our book to Bill was greater than one which is a positive sign and we're orders grew year over year on the on the instrument side.

Speaker Change: Orders grew low single digits, excluding China declined low single digits. Overall, so what we're really seeing is that our our formula is really stable.

Parmeet Ahuja: So what we're really seeing is that our funnel is really stable, but we're seeing those extended purchasing decisions continuing to extend out through the second half. Yeah, I think, Patrick, to build on what Parag is saying, you know, at the beginning of the year, we were expecting, when we were talking primarily to our pharma customers, budgets weren't being materially cut outside of a specific number of well-publicized customers. And we were expecting to see some of these budgets released by our second quarter. And what we're seeing now is still a very cautious environment. And so the funnel is still there.

Speaker Change: But we're seeing those extended.

Speaker Change: Purchasing decisions being continuing to extend out through the second half, yes, I think Patrick to to build on what <unk> is saying at the beginning of the year, we were expecting and when.

Speaker Change: We were talking primarily to our pharma customers budgets werent being materially cut outside of a specific number of well publicized customers and we were expecting to see by the our second quarter. Some of these budgets being released and what we're seeing now is still a very cautious environment and so the funnel is still there.

Corey: Our seeing our book to Bill as Corey mentioned to be greater than than one we just haven't seen that inflection, which we would've expected to see at least in our order book one of the things that we do see and it primarily happened late in the quarter as our teams are paid.

Bob: We are seeing, you know, our book-to-bill, as Parag mentioned, to be greater than one. We just haven't seen that inflection, which we would have expected to see at least in our order book. You know, one of the things that we do see, and this primarily happened late in the quarter, is that our teams are paid on a first half versus second half quota.

Corey: On.

Corey: First half versus second half quota and so our April numbers are usually.

Bob: And so our April numbers are usually quite large, which prepares us for Q3. And we just didn't see that inflection in late April, which we normally would see. Okay, and then maybe to follow up on Jack's question on NASD there, you know, understand the revenue change. How are you guys thinking about, you know, the capital investment on that front? Obviously, it's been sizable.

Corey: Quite large which prepares us for the.

Corey: For Q3, and we just didn't see that inflection and.

In late April, which we normally would see.

Corey: Yeah.

Bob: In the past years, you've often talked about, you know, the continued expansions of the trains. How do you think about, you know, the CapEx devoted to this over the next few years? Has there been any change in terms of the push out of that capital or how you're thinking about Yeah, no, absolutely not.

Speaker Change: Okay. That's helpful color and then maybe to follow up on Jack's question NASD there.

Speaker Change: I understand the revenue change how are you guys thinking about.

Speaker Change: The capital investment on that front, obviously, it's been sizable in the past years, you've often talked about.

Speaker Change: The continued expansion of the trains how do you think about that.

Speaker Change: Capex devoted to this over the next few years has there been any change in terms of the push out of that capital or how youre thinking about.

Speaker Change: Potential investment in the <unk>.

On this front just given the shifting revenue here. Thank you guys.

Parmeet Ahuja: I think despite some near-term headwinds that we have, the medium-long term story for NASD really holds firm. And as I said before, we're seeing our clinical business grow more than 50% this year, and we really remain excited about the expansion of customers. And, you know, getting back to the therapeutic class that we're involved in with SIRNAs and drugs, we're seeing those approvals for drugs increase substantially in 2023. And being an integral part of the manufacturers of several of these on-market therapeutics, the future is extremely bright in this area.

Speaker Change: Yes, no absolutely not I think despite some near term headwinds that we have the medium long term story for <unk>.

Speaker Change: Really holds firm and as I said before we're seeing our chemical business grow more than 50%. This year and we really remain excited about the expansion of customers.

Speaker Change: And getting back to the therapeutic class that we're involved in with <unk>.

Patrick Bernard Donnelly: <unk> drugs, we're seeing those approvals for drugs increased substantially in 2023 and being an integral part of the manufacturers of several of these on market therapeutics and futures extremely bright in this area. So no no change in our capital investment Yeah, Hey, Patrick just one other thing to add onto that as I'm sure you're aware.

Parmeet Ahuja: So no change in our capital investment. Yeah. Hey, Patrick, just one other thing to add to that is, as I'm sure you're aware, as part of that expansion, not only are we expanding capacity, but we're also expanding our therapeutic options. So not only SIRNA, but also Antisense and then also CRISPR opportunities.

Speaker Change: Part of that expansion not only already expanding capacity. We're also expanding our therapeutic options. So not only SA RNA, but also anti sense and then also CRISPR opportunity. So it also provides us with more capabilities to support our existing and new client base.

Speaker Change: Got it thank you guys.

Bob: So it also provides us with more capabilities to support our existing and new clients. Got it. Thank you, guys. Our next question will come from the line of Vijay Kumar with Evercore ISI. Please go ahead.

Speaker Change: Our next question will come from the line of Vijay Kumar with Evercore ISI. Please go ahead.

Vijay Muniyappa Kumar: Hey, guys, thanks for taking my question. I guess, Paul or Bob, yeah, thanks for laying out the changes in the guidance assumptions here, right? I think part of it was China, part of it was NASDA, but more than half, I think it's coming from pharma-cautiousness that's outside of China, ex-NASDA, which I think, you know, that's the market. I thought we were expecting

Speaker Change: Hey, guys. Thanks for taking my question.

Speaker Change: I guess up Florida are Bob Thanks for laying out the.

Speaker Change: Changes in the guidance assumptions here right.

Speaker Change: Part of it was China.

Speaker Change: Part of it with <unk> and more than half I think it's coming from from pharma cautiousness, that's outside of China.

Speaker Change: <unk>, which I think.

Speaker Change: Yes.

Speaker Change: So the market I thought we were expecting stabilization is this a funding and Lauren.

Vijay Muniyappa Kumar: Is this a funding environment, you know, kind of question, or is it elections or what changed? Because in the second quarter, it feels like revenues were roughly in line. Was it the exit trade?

Speaker Change: Question or elections are.

Speaker Change: What churn because second quarter. It feels like revenues were roughly in line.

Parmeet Ahuja: Can you just talk about what the exit trade trends were and what customers are telling you? Yeah, I mean, on the pharma instrumentation side, in terms of guidance, we see an impact of about $175 million. And it really is simply pharma's willingness to spend, and capital equipment remains challenged over time. And again, customers are focusing on lab efficiency and productivity. But based on what we're hearing from customers, these trends will continue to impact the second half. And that's why we're lowering our expectations around that instrument piece.

Speaker Change: Was it the exit Craig can you just talk about what the exit rate transfer and what customers are telling you.

Speaker Change: Yes.

Speaker Change: On the pharma instrumentation sides in terms of guidance, we see an impact of about $175 million and it really is simply farmer's willingness to spend in capital equipment remains challenged.

Speaker Change: Over time and again.

Speaker Change: Customers are focusing on lab efficiency and productivity, but based on what we're hearing from customers. These trends will continue.

Speaker Change: And to impact the second half and Thats, why we are lowering our expectations around us.

Vijay Muniyappa Kumar: Instrument piece, what I will say that the formula is helpful and those are holding very strong the conversations are very robust with customers. So we do expect it to improve going into next year, Yeah, Hey, Vijay to build on what.

Parmeet Ahuja: But I will say that the phone numbers are holding very strong, and the conversations are very robust with customers. So we do expect it to improve going into next year. Yeah, hey, Vijay, to build on what Parag is saying, the guidance that we're building out right now is based on what we're seeing today. It doesn't assume any meaningful inflection.

Speaker Change: Pork is saying.

Speaker Change: The guidance that we are building out right now is based on what we're seeing today it doesn't assume any meaningful inflection that certainly I would characterize this as a prudent guide given what we know today certainly we're not assuming any of that inflection.

Bob: Certainly, I'd characterize this as a prudent guide, you know, given what we know today; certainly, we're not assuming any of that inflection. You bring up a number of variables, which are hard to quantify around, you know, the upcoming election, and so forth. But we don't think it's a funding issue. We do feel like we are seeing more biotech funding coming up. Obviously, on the small molecule side, those are well-capitalized companies.

Speaker Change: You bring up a number of variables, which are hard to quantify around.

Speaker Change: The D a.

Speaker Change: Upcoming election, and so forth, but we don't think its a funding issue.

Speaker Change: We do feel like we are seeing buyout biotech funding coming up.

Speaker Change: Obviously on the small molecule side.

Bob: It's just very, it's still cautious in terms of them getting through their approval process. And maybe related to that, Oregon, Bob, I think, is this just a handful of customers or is this across the board?

Speaker Change: Those are what they are well capitalized companies it just.

Speaker Change: Three.

Speaker Change: It is still cautious in terms of them getting through their approval processes.

Speaker Change: And just maybe it relates to that path, Oregon Bob.

Speaker Change: <unk> com.

Speaker Change: Is this just a few handful of customer sources across the board.

Bob: Because obviously, the next question is, is this a share loss or is this more of what gives you the confidence that this is just a push out and not a share price increase? And on the savings here, cost savings, Bob, that 35 is in Q4, so the expectations of the incremental 65 are for fiscal 25. Let me answer the last question first.

Speaker Change: Because obviously the next question is is.

Is this a share loss or is this is this more of a what gives you the confidence that this is just a push out and not a share shift.

Speaker Change: On the savings cost savings Bob at 35 is in Q4 set the expectations that the incremental $65 for fiscal 'twenty five.

Bob: So that is a cumulative number for the second half of the year. We'll see some of that happen here in Q3 and roughly be at that $100 million run rate in Q4. So roughly about a $25 million run rate.

Speaker Change: So let me answer the last question first so that is a cumulative number for the second half of the year, we will see some of that happen here in Q3 and roughly be at that $100 million run rate in Q4, so roughly about a $25 million run rate and then we will get the full.

Speaker Change: Incrementals 65, obviously next year as we go into the into the business.

Bob: And then we'll get the full incremental 65, you know, obviously next year as we go into the business. Do you want to comment? Yeah. Yeah. No, look, when we look across our pharma customers, you know, we see that generally it's across the board. We do have some customers that are a little bit more positive than negative this year. But overall, I would say it's a market area, a market effect. What I would say on the other question is that this is definitely a macro story, not a market share story.

Speaker Change: Do you want to comment yes, yes, no look when we look across our pharma customers.

Speaker Change: C.

Speaker Change: Generally it's across the board, we do have some customers that are a little bit more positive than negative this year.

Speaker Change: But overall I would say, it's a market area market.

Speaker Change: Our market effect, what I would say.

Speaker Change: On the other question. This is definitely a macro story in other market market share story and in fact, when we look at our objective market share data, we are holding or even gaining in some areas.

Bob: And in fact, when we look at our objective market share data, we're holding or even gaining in some areas. And I will remind you, you know, not to comment on our peers in this area, but we have a month ahead of what we're seeing on it. But we're seeing very robust market share numbers coming in. However, uncertain. Thanks, guys. Our next question comes from the line of Dan Brennan with TD Cowen. Please go ahead.

Speaker Change: I will remind you know not to comment on our peers in this area, but we have a month ahead.

Speaker Change: And what we're seeing on it but we're seeing very robust market share numbers coming in.

Speaker Change: Thanks, guys.

Speaker Change: Yeah.

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

Daniel Gregory Brennan: Great. Thanks. Thanks for the questions. Maybe the first one is on China. You talked about, in response to an earlier question, how the stimulus is delaying demand this year. Could you just speak through that a little bit?

Speaker Change: Great. Thanks, Thanks for the questions maybe first one just on China you.

You talked about.

Speaker Change: In response to an earlier question about the stimulus is delaying demand. This year could you just speak to that a little bit like what's your visibility on that any any way to get a sense of how much of the weakness you're seeing in China as customers waiting.

Parmeet Ahuja: Like, what's your visibility on that? Any way to get a sense of how much weight you should be seeing in China as customers wait to see the final details of the stimulus? And I know you also alluded to, like, this could have a big impact in 2025. Can you just speak through that a little bit?

To see the final details of the stimulus and I know Youll also alluded to like this could be a big impact in 'twenty. Five can you just speak to that a little bit.

Parmeet Ahuja: Yeah, look, I think, having worked with China for many years, this is a multi-year program as opposed to the last one, which I think was a year program in the shorter term. And so it's very encouraging to see it. We've seen some proposals from customers, but they're still, quite frankly, trying to work out what the mechanisms for the funding are as we go forward. So we're seeing a lot of activity around that

Speaker Change: Yes look at I think having worked with China for many years.

Speaker Change: It's a multiyear program as opposed to the last one which I think was a year program in the shorter term and so it's very encouraging to see as we've seen some proposals from customers, but they're still quite frankly, we're trying to work out.

Speaker Change: What are the mechanisms for the funding as we go forward. So we're seeing a lot of activity around us.

Speaker Change: I would say in terms of the confidence boost we do really see that in 25, we're going to get some benefit from this but really too early to tell on us. So we're taking down our guidance in the second half primarily related to that.

Parmeet Ahuja: And I would say, you know, in terms of the confidence boost, we do really see that in 2025, we're going to get some benefit from this, but it's really too early to tell on us. So we're taking down our guidance in the second half, primarily related. Yeah, hey Dan, this is Bob.

Robert W. McMahon: Yeah, Hey, Dan This is Bob.

Speaker Change: To build on that I had mentioned in our prepared remarks that bid activity has actually improved and so we're seeing a number poses working with our customers to actually.

Bob: To build on that, I mentioned in our prepared remarks that bid activity is actually improved, and so we're seeing a number of proposals working with our customers to actually get a piece of the stimulus. What's not yet clear is the timing of the release of that budget, you know, because it goes from the provincial or from the state down to the provincial and then to the local governments. And so we've taken a, you know, what I would say is a conservative approach to assuming none of that stimulus money will actually come in the second half of the year. But it will come. It will come.

Speaker Change: Get a piece of the stimulus, but is not yet clear as the timing of the release of that budget comes it goes from the provincial or from the state down to the provincial and then to the local governments and so we've taken a what I would say, it's a conservative approach to assuming none of that stimulus money will actually.

Speaker Change: We'll see any of that in the second half of the year.

Speaker Change: But it will come it will come in.

Bob: And so, if it comes earlier, that would be a benefit to what we're forecasting right now. But what we did see, particularly in April, is a little slowing down of the normal bid process, waiting to get access to that money. And so we think that that's just a transitory change, not a structural change.

Speaker Change: If it comes earlier that would be a benefit to what we're forecasting right now, but what we did see.

Speaker Change: <unk> in April is a little slowing down of normal bid process waiting.

Speaker Change: To get access to that money and.

Speaker Change: So we think that that's just a transitory change not a structural change.

Daniel Gregory Brennan: And then maybe just one more on pharma, if you don't mind. So, you know, the instrument growth was so powerful for yourselves and some of your peers coming out of COVID. Is there any chance that the slowdown you're seeing now, maybe just a miscalculation, maybe there was such instrument demand and purchases done in the last couple years that customers are, you know, just kind of working through that, all those purchases versus, you know, an exceptional slowdown right now, given the macro? Just maybe speak a little bit to that, if you could, about the overhang for maybe the strength in the past couple of years Yeah, there is no doubt about that.

Speaker Change: Got it thanks, and then maybe just one more on the pharma if you don't mind.

Speaker Change: Instrument growth was so powerful for yourselves and some of your peers coming out of Covid.

Speaker Change: Is there any chance that like the slowdown youre seeing now maybe just some miscalculation, maybe there was such instrument demand and purchases done in the last couple of years that customers were just kind of you're kind of working through that all those purchases versus like an exceptional slowdown right now given the macro just maybe speak a little bit to that if you could about the overhang from maybe the strength in the past.

Speaker Change: The years versus what Youre seeing real time now.

Parmeet Ahuja: We've had tremendous growth rates during the post-COVID period, but we don't see anything fundamentally changing with the cycle on instruments, replacement cycles. We don't see it's a kind of a rundown of available instruments or anything like that, because lab activity is very, very high. We see that across the board.

Speaker Change: Yes, no doubt about it we have tremendous.

Speaker Change: Growth rates during the post COVID-19 period, but we don't see anything fundamentally changing with the cycle on instruments replacement cycles, we don't see it as a kind of a rundown of available instruments or anything like that because a lot of activity is very very high we see that across the board and we actually see activity on the sales side, but also support site.

Parmeet Ahuja: And we actually see activity on the sales side, but also on the support side, very, very high. So we think it's primarily the macro situation. Yeah, and Dan, just to kind of build on what Parag is saying, if we looked at, you know, ACG and our CSD, which is a consumables business outside of China, both of those grew mid to high single digits in the quarter. So, it does speak to lab activity.

Speaker Change: Very very high so.

Speaker Change: We think it is primarily <unk>.

Dan: And the macro micro situation, yes, Dan just to kind of build on what <unk> is saying if we looked at.

ACG and our CSD or a consumables business outside of China of both of those grew mid to high single digits in the quarter. So it does speak to lab activity theyre, not having instruments, just sitting idle and.

Bob: They're not having instruments just sitting idle, and, you know, in ACG, our contracted services business continues to perform extraordinarily well, up double digits. So the demand is there, outside of. Our next question will come from the line of Rachel Vadenstall with J.P. Morgan. Please go ahead.

Dan: And ACG, our contracted services business continues to perform extraordinarily well.

Dan: Up double digits.

Dan: The demand is there outside of China right now.

Speaker Change: Our next question will come from the line of Rachel <unk> with J P. Morgan. Please go ahead.

Dan: Yeah.

Rachel Marie Vatnsdal Olson: Hi, good afternoon, guys. Thanks for taking the questions. So first up, I just wanted to ask about China. We've seen some of the headlines around the Biosecure Act. So I was wondering if you could break down your exposure to large CDMOs in the region and if that contributed to any of the weakness there, just given we've seen some of the commentary from an RFP standpoint. And then just on the Chinese stimulus and some of the dynamics there, how should we think about local competition competing for some of these dollars in the stimulus dynamic? And you talked about some of these proposals that you're working on. So can you detail what sectors and what types of customers you are really seeing that proposal work done right now? Thanks.

Speaker Change: Thanks, Hey, good afternoon, guys. Thank you for your question first.

Speaker Change: First off I, just wanted to ask on China.

Speaker Change: <unk> financial breakdown your exposure to large CDMA within a week and that contributed to any of the weakness there just kind of any commentary from an RFP standpoint, and then just on China. Thank you.

Speaker Change: Some of the dynamics there how should we think about local competition.

Speaker Change: Yes.

Speaker Change: Alright, Thank you Nick.

Speaker Change: And you talked about things proposals that you're working on so can you detail what sectors. What types of customers are you really seeing although I think that right now.

Parmeet Ahuja: Yeah, look, I think the Biosecure Act is normal, you know, people are looking at their supply chains. And, you know, that's positives and negatives around the globe, as you see that one of the areas that we've seen from that is actually a benefit for our service business as we relocate laboratories in some cases and get them up and running quickly with our services on that one. So definitely, some exposure to CDMOs, but I would say not the overall macro side of it.

Speaker Change: Yes look I think on the bio secure act too we see normal people are looking at their supply chains.

Speaker Change: The positives and negatives around the globe.

Speaker Change: You see that one of the areas that we've seen from that is actually we see.

Speaker Change: A benefit on our service business as we relocate laboratory or in some cases, we get them up and running quickly.

Speaker Change: Our services on that one so definitely some exposure to CD Mo, but I would say not the overall.

Bob: And then I think the second part, Bob, I don't know if you want to take that one. Yeah, I would say just building on that point about our questions around CDMO. You know, most of our business in China is local. So it's not multinational and so wouldn't necessarily fall under the Biosecure Act.

Speaker Change: Macro site on US and then I think the second part Bob I don't know if you want to take that one yes.

Speaker Change: I would say just building on that on that.

Speaker Change: At that point on our questions around CD Moe.

Speaker Change: <unk> of our business in China is it.

Speaker Change: <unk> is local so its not multinational and so it wouldn't necessarily fall under the Biosecurity Act. There are certain large companies that are on that list that are customers of ours, but that as that business has been pretty.

Bob: There are certain large companies that are on that list that are customers of ours, but that business has been pretty quiet for a while, and that's not the cause of the incremental weakness here. I would say on the bid activity: it's across the board. It's not in, you know, one region of the country or one market or customer. And obviously, you know, Chinese local competitors are going to be buying into that business, like, like we are.

Speaker Change: Pretty muted for a while and that's not the cause of the incremental.

Speaker Change: Weakness here I would say on the on the on the bid.

Speaker Change: Activity is at.

Across the board.

Speaker Change: Not in.

Speaker Change: One.

Speaker Change: One region of the country or one end market or customers and obviously.

Speaker Change: Chinese local competitors are going to be vying for that business.

Speaker Change: Like we are.

Bob: But I think we've shown time and time again our ability to provide very strong and robust instrumentation coupled with very, very good service. And so I don't think that we're at any disadvantage from a local perspective from that.

Speaker Change: But I think we've shown time and time again, our ability to provide very strong and robust instrumentation coupled with.

Speaker Change: Very very good.

Speaker Change: Service and so I don't think that were any any.

Speaker Change: Uh huh.

Speaker Change #100: Disadvantage from a from a local perspective from that standpoint in fact, Bob I would say R. R.

Parmeet Ahuja: In fact, Bob, I would say our scale and service there really make it a differentiator where we can scale with customers and get them up and running very, very quickly. We take the competition very seriously, but we've always had competition in China, and we continue to keep focused. And then for my follow-up, just given some of the moving pieces in this fiscal 3Q guide, could you walk us through your expectations by segment for 3Q? Sure, I'll take that real quick.

Speaker Change #100: Our scale and service, they're really makes it a differentiator, where we can scale with customers and get them up and running very very quickly we take the competition very seriously and what we've always had competition in China and we continue to keep.

Speaker Change #100: Keep a focus on that.

Speaker Change #101: Great and then for my follow up and then okay.

Speaker Change #102: First of all thank you Guy will walk us through your expectations. Thank you.

Bob: By business group, we're expecting LSAG to be down double digits, DGG down mid single digits, and ACG growing at mid single digits. If we looked at by end market, pharma, as I mentioned in the prepared remarks, would be down very similarly to Q2, so down double digits, and academia and Diagnostics Markets being roughly flat, Chemical and Advanced Materials being very similar to Q2's results, and then Food being down roughly the same, maybe a little better than where we saw Q2 as well, and then Environmental Forensics, a similar performance. Our next question will come from the line of Doug Schenkel with Wolf Research. Please go ahead. Hey guys, um... I want to start by I guess I have two high level but I think important questions.

Speaker Change #103: Sure I'll take that real quick.

Speaker Change #103: <unk>.

Speaker Change #104: By business group, we're expecting <unk> to be down double digits DDG down mid single and ACG growing at mid single digits. If we looked at by end market.

Speaker Change #104: Pharma as I mentioned in our prepared remarks would be down very similar to Q2, so down low.

Speaker Change #104: Double digits.

Speaker Change #104: And with Academia and <unk>.

Speaker Change #104: Diagnostics markets being roughly flat chemical and advanced materials being very similar to Q3, our Q2's results and then food.

Speaker Change #104: Being down roughly the same maybe a little better than where we saw Q2 as well and.

Speaker Change #104: And then environmental forensics similar similar performance as Q2.

Speaker Change #105: Our next question will come from the line of Doug Schenkel with Wolfe Research. Please go ahead.

Speaker Change #106: Hey, guys.

Speaker Change #106: Sure.

Douglas Anthony Schenkel: I want to start by I guess I have two high level, but I think important questions.

Speaker Change #108: One is yes.

Douglas Anthony Schenkel: One is, simply put, I want to get your thoughts as we sit here today about the company's long-term growth outlook and, you know, essentially, to what top line growth rate are you managing the business as you think about the next few years? In pharma and biotech, you have less exposure as a percentage of sales to some of the higher growth areas of that end market.

Speaker Change #108: Simply put I wanted to get your thoughts as we sit here today about.

Speaker Change #108: The company's long term growth outlook.

Speaker Change #108: Actually to what top line growth rate are you managing the business as you think about the next few years.

Speaker Change #108: In pharma and biotech you have less exposure as a percentage of sales to some of the higher growth areas of that end market.

Parmeet Ahuja: And, you know, the outlook for one of your higher growth areas, NASD, within biopharma, is certainly in question amongst investors, given how things have been going recently. And while there's hope that Chinese stimulants will help across many end markets, as we kind of think past that, ultimately, many believe the durable growth rate in China, where you're overexposed, will be materially lower than what we've seen in years past.

Speaker Change #108: Outlook for one of your higher growth areas NFC within Biopharma.

Speaker Change #109: It's certainly an question amongst investors given how things have been going recently.

Speaker Change #109: And while there is hope that China stimulus will help across many end markets.

Speaker Change #109: As we kind of past that ultimately many believe that durable growth rate in China, where you are overexposed will be materially lower than what we've seen in years past.

Parmeet Ahuja: And then as we think of, you know, other discrete differentiating growth drivers for the company, you know, when we look at Crosslabs and DGG, you know, the growth rates have moderated there, you know, in part because of the market, but also in part because, you know, you did have above average concentration with once high-growth diagnostic companies as an example. So, you know, there's a lot of bad guys here right now

Speaker Change #109: And then as we think other discrete differentiated growth drivers for the company.

We look at cross labs, and <unk> the growth rates have moderated there in part because of the market, but also in part because you did have above average concentration.

Speaker Change #109: With once high growth diagnostic companies as an example, so yes theres a lot of bad guys here right now obviously in the long term, yes, there's a lot of.

Parmeet Ahuja: Obviously, in the long term, you know, there's a lot of belief in Agilent and how you run the business. But I think there are a lot of questions when you kind of pull all this together about what is the inherent growth rate of this business. Can you share any thoughts on that? Maybe I'll kick it off at a high level.

Belief, then and absolutely than how you run the business, but I think there are a lot of questions. When you kind of pull all this together about what is the inherent growth rate of this business.

Speaker Change #110: Can you share any thoughts on that.

Parmeet Ahuja: I think, first of all, we participate in excellent markets with multiple long-term growth drivers. You look at the characterization that's going to be needed in biotherapeutics in time, improving human health, and the quality of our food is really going to be a continued growth driver for the company. I would say there are a lot of growth factors within the business, and that in adjacent markets where we continue to invest in those opportunities, you've seen parts of Biopharma and PFAS.

Speaker Change #111: Maybe I'll kick it off at the at a high level I think first of all we participate in excellent markets with multiple long term growth drivers you look at the characterization of that is going to be needed in biotherapeutics in time.

Speaker Change #111: Improving human health.

Speaker Change #111: Quality of our food is really.

Speaker Change #111: <unk> is really going to be.

Speaker Change #111: <unk> growth driver for the company I would say there is a lot of growth vectors within the business.

Speaker Change #111: And that in adjacent markets, where we continue to invest in those opportunities you've seen part the biopharma piece off.

Parmeet Ahuja: And I do believe NASD, long term, is going to continue to grow. You know, on our service business, we expect that to grow high single digits over the long term as we increase our attach rate, which is not a small point because every percentage increase in attach rate is about $30 million incremental on that side. So, overall, I think we're in, you know, extremely durable long-term markets.

Speaker Change #111: And I do believe in the long term is going to continue to grow.

Speaker Change #111: Our service business, we expect that to grow high single digits over the long term as we increase our attach rate, which is not a small point because every percentage increase in the attach rate is about $30 million incremental on that side. So so overall I think we're in we're in.

Parmeet Ahuja: On the China story, you know, we're probably going to see growth rates in China get down to more mature levels. But I would remind everybody that there are secular drivers in China that continue to come up, and the government continues to invest in science and technology, but also because the scale of the country being so large. We benefit tremendously from the aftermarket element, consumables and service around that, and being able to kind of drive attachment to some of the emerging workflows. But Bob, I don't know if you have anything to add to that.

Speaker Change #111: <unk>.

Speaker Change #111: Jewelry, but long term markets on the China story.

Speaker Change #111: We're going to see probably getting down to more mature level growth rates in China, but I would remind everybody that there are secular drivers in China that continue to come up and government continues to invest in science and technology, but also the scale of the country being so large we benefit tremendously from the aftermarket element consumables.

Speaker Change #112: On service around data and being able to kind of drive attachment to some of the emerging workflows, but Bob I don't know if youre running out on that.

Speaker Change #111: Okay.

Bob: I would just say, you know, if we think about kind of our long-term algorithm that we've been talking about, that five to seven percent, we're not ready to walk away from that. I think we still feel good about that. And I think while you talked about some of the bad guys, we still believe in biopharma and are continuing to invest there. In addition, you know, Porig mentioned a few things on the applied side where we are the undisputed leader.

Speaker Change #113: I would just say.

Speaker Change #113: As we think about kind of our long term algorithm that we've been talking about that 5% to 7%, we're not ready to to walk away from that.

Speaker Change #114: I think we still feel good about that and I think while you talked about some of the bad guys. We still believe in Biopharma.

Speaker Change #114: And are continuing to invest there.

Speaker Change #114: In addition.

Speaker Change #115: Paul mentioned a few.

Speaker Change #116: Things in the applied side, where we are the undisputed leader so things like P fast the electrification semiconductors.

Speaker Change #116: Those things Werent, there five years ago to the extent that they're going to be there in the next five years. So.

Bob: So things like PFAS, de-electrification, semiconductors, those things weren't there five years ago to the extent that they're going to be there in the next five years. So, you know, certainly the markets are a bit challenging right now, but we are seeing them recover, and we would expect to be able to get back to those rates in the future. Okay, thank you.

Speaker Change #116: Sure.

Speaker Change #116: Certainly the markets are a bit challenging right now, but we are seeing them recover.

Speaker Change #116: And we would expect to be able to get back to those rates in the near term.

Douglas Anthony Schenkel: And Bob, maybe sticking with you, if we go back to the beginning of the year when you set guidance for the fiscal year, you know, there, I think it's fair to say there were a number of questions from the investment community about how you were setting guidance for the year. Specifically, there was concern about the plausibility of what you assumed for the second half. In hindsight, obviously, these questions and concerns were well-founded. You know, what went wrong?

Speaker Change #117: Okay. Thank you for that and Bob maybe sticking with you if.

Speaker Change #118: If we go back to the beginning of the year when you set guidance for the fiscal year, Yes, I think it's fair to say there were a number of questions from the investment community about how you were setting guidance for the year, specifically there was concern about the possibility of what you're assuming for the second half in hindsight, obviously these questions and concerns.

Bob: You know, does this tell you something about, you know, visibility for the business? If so, is it a transitory issue? And if that's the case, can you help us explain why?

To be well founded.

Speaker Change #119: What went wrong.

Speaker Change #120: Does this tell you something about visibility for the business. If so is it a transitory issue.

Bob: And if it's not visibility, what do you need to do in terms of changing your guidance philosophy moving forward? Yeah, thanks, Doug. And I think it is some visibility. I think if you looked across the last seven years, the two most volatile years have been the last two. And so, based on the feedback that we got from our customers, we were expecting that they would be releasing budgets much more quickly than they have, or at least what we're seeing.

Speaker Change #121: If that's the case can you help us explain why and if it is not visibility what do you need to do in terms of changing your guidance philosophy moving forward.

Douglas Anthony Schenkel: Yes, Thanks, Doug.

Douglas Anthony Schenkel: It is.

Speaker Change #122: Visibility I think if you looked across the last several years seven years.

Speaker Change #123: Two most volatile years had been the last two and so I.

Speaker Change #123: I think we were expecting based on the feedback that we got from our customers that they would be releasing budgets much more quickly than what they have.

Speaker Change #123: Or at least what we're seeing.

Bob: And while we did have an expectation that we were going to see an inflection in the back half of this year, you know, when we were talking to our customers, it just hasn't happened. And so, you know, I think visibility is something that I think we will give back, particularly as we have more recurring revenue and continue to have a connect rate onto the services business. We're disappointed, like everyone else is, but you can rest assured that we're going to come out of this stronger going forward. Okay, thank you. Our next question comes from the line of Dan Leonard with UBS. Please go ahead. Dan, your line might be on mute.

Speaker Change #123: And while we did have a.

Speaker Change #123: Expectation that we were going to see an inflection in the back half of this year.

Speaker Change #123: When we're talking to our customers it just hasnt happened and so.

Speaker Change #123: I think.

Speaker Change #123: The the visibility.

Speaker Change #123: Is something that I think we will.

Speaker Change #123: We will we will get back, particularly as we have more recurring revenue and continue to have the connect rate onto the services business.

Speaker Change #123: And.

Speaker Change #123: Yes.

Speaker Change #123: Sure.

Speaker Change #123: We're disappointed as everyone else is but you can rest assured that.

Speaker Change #123: We're going to come out of the stronger going forward.

Speaker Change #124: Okay. Thank you.

Speaker Change #125: Our next question comes from the line of Dan Leonard with UBS. Please go ahead.

Speaker Change #125: Yeah.

Speaker Change #126: Dan your line might be on mute.

Speaker Change #125: Yeah.

Daniel Louis Leonard: Our next question will come from the line of Michael Riskin with Bank of America. Please go ahead. Great, thanks. I want to pick things up exactly where you just ended on the last answer with Doug about visibility. So I mean, you kind of talked about how you had a certain set of expectations going into the year based on conversations with customers that didn't play out. I mean, is there any reason to think that visibility is better now? I guess that is my question.

Speaker Change #125: Our next question will come from the line of Michael Raskin with Bank of America. Please go ahead.

Michael Leonidovich Ryskin: You know, if we look at the guy change and specifically focus on pharma, with or without an ASD, if you want to just talk about pharma, the CapEx of pharma and an ASD, it seems like visibility there is still really, really challenged. So, you know, on the one hand, a lot of your prepared remarks are markets are improving. But on the other hand, you're not expecting much in 3Q, because you just talked about double digits worldwide, doesn't seem like you're expecting this for the rest of the year. So just exiting the year, entering next year, how do we know we're not going to be having the same conversation again about another pushout and then another? Talk about that visibility going forward.

Michael Raskin: Great. Thanks, I wanted to kick things up exactly where you set it on the last answer with Doug on visibility. So I mean, you've kind of talked about how you had a certain set of expectations going into the year based on conversation with customers that didn't play out.

Michael Raskin: I mean is that is there any reason to think that visibility is better now I guess is my question. If we look at the guide change and specifically focusing on pharma.

Michael Raskin:

Speaker Change #128: With or without an ASC. If you wanted to talk about pharma capex of pharma and in ASD.

Speaker Change #128: Seems like visibility there is still really really challenged so.

Speaker Change #128: On the one hand, a lot of your prepared remarks, our markets are improving but on the other hand.

Speaker Change #129: Youre not expecting in <unk>, because you just talked about will double digits doesn't seem like you're expecting to for the rest of the year. So just exiting the year entering next year.

Speaker Change #130: Do we know we're not going to be having the same conversation again about another pushout in another pushout.

Speaker Change #131: Just talk about that visibility going forward.

Bob: Yeah, I think if we look at, you know, just the first half and the second half, and look at where our core guidance is, it's not assuming any inflection in the back half. I mean, you could make an argument that, typically, we have a higher weighting towards the back half of the year, just part of normal seasonality, and we're not assuming that in our guide. And so if you look at pharma, we're assuming it's down roughly the same as it was in the first half of the year, but we'll get easier comparisons.

Speaker Change #132: Yes, I think if we look at just.

Just first half second half and look at where our core guidance is not assuming any inflection in the back half I mean.

Speaker Change #132: You could make an argument that typically we have a higher weighting towards the back half of the year, just part of normal seasonality and we're not assuming that in our guide. So if you look at also pharma or assuming it's down roughly the same as it's been in the first half of the year, but we will get easier compares.

Bob: And so we're not expecting, you know, quote, unquote, you know, a big inflection in the back half of the year. I would also say on NASD, which we are assuming a reduction in the second half of the year relative to the first half of the year, we have all those orders in house. And so we've got a plan, a production plan, for both Q3 and Q4. And while something could happen, it's not like we're looking for orders to guide us on those.

Speaker Change #132: And so we're not expecting a quote unquote.

Speaker Change #132: A big inflection.

Speaker Change #132: In the back half of the year.

Speaker Change #132: I would say also on NASD, which we are assuming a reduction in the second half of the year relative to the first half of the year. We have all those orders in house and so we've got to plan our production plan.

Speaker Change #132: And both for Q3 and Q4.

Speaker Change #132: And while something could happen, it's not like we're looking for orders to guide us on those and those are the two big areas.

Michael Leonidovich Ryskin: And those are the two big areas that, you know, made the biggest change when I think about where we were back in November, giving guidance to where we are today. And Bob, since you touched on the 3Q, 4Q ramp, I'm going to follow up on that as well, actually. Yeah, I mean, you normally do see some seasonality, third quarter, fourth quarter, depending on the year, depending on the comp, let's call it about $100 million, maybe $100 million plus.

Speaker Change #132: That.

Speaker Change #132: Made.

Speaker Change #132: The biggest change when I think about where we were back in November.

Speaker Change #132: Giving guidance to.

Where we are today.

Speaker Change #133: Okay, and Bob since you touched on <unk> ramp I'm going to follow up on that as well actually.

Speaker Change #134: Normally do you see some seasonality third quarter, the fourth quarter, depending on the year, depending on the comp let's call. It about $100 million, maybe $100 million plus yourself, then that you guide for <unk> in fiscal year implies about $120 million.

Michael Leonidovich Ryskin: You know, your guy for 3Q and fiscal year implies about $120 million, 3Q to 4Q this year. So again, not excessive, but still some step up, and it seems like... [inaudible] Yeah, the biggest change there is our NASD business, which we will see a low water point here in Q3 if we, you know, what we ended up seeing is some of these clinical programs getting pushed out.

Speaker Change #135: Ricky to 40 this year, so again, not excessive but still some step up and it seems like <unk>.

Speaker Change #136: <unk> and <unk> certainly are below trend.

Speaker Change #137: So is there any risk to that 40 number I mean is there anything else, we should be thinking about in terms of what.

Speaker Change #138: What makes that achievable, besides just comp and seasonality.

Speaker Change #139: Yes, the biggest the biggest change there is our NASD business, which we will see.

Speaker Change #140: No water point here in Q3.

Speaker Change #140: What we ended up seeing is.

Speaker Change #140: Some of these clinical programs getting pushed out.

Michael Leonidovich Ryskin: They've got pushed out from Q3 into Q4, and so there's a 30 million dollar incremental step up from Q3 to Q4. So, if you took that out, we did get back to a more historical kind of level. Okay, that's helpful. Our next question will come from the line at Dan Arias with Stiepel. Please go ahead.

Speaker Change #140: They've got pushed out from Q3 into Q4.

Speaker Change #140: And so there's a $30 million incremental step up from Q3 to Q4. So if you took that out.

Speaker Change #140: We did get back to a more historical kind of level.

Speaker Change #141: Okay. That's helpful. Thanks.

Speaker Change #142: Our next question will come from the line of Dan Arias with Stifel. Please go ahead.

Daniel Gregory Brennan: Good afternoon, guys. Thanks for the questions. Bob or Parag, on the capital equipment portfolio and the order book and the sales funnel that you have there, maybe just in simple terms, how would you describe the average time to deal close that it feels like you're going to be working with in the back half of the year versus what you've seen as a historical average? And embedded in that is just this question on instrument demand that you have a line of sight on via the sales funnel, but that just has Yet, and then how the outlook change reflects those two things. Yeah, look at it.

Afternoon, guys. Thanks for the questions Bob repaired on the on the capital.

Speaker Change #143: <unk> portfolio in the order book in the sales funnel that you have there.

Daniel Gregory Brennan: Maybe just in simplistic terms, how would you describe the average time to deal closed that it feels like youre going to be working with in the back half of the year versus what you've seen.

Daniel Gregory Brennan: As a historical average and embedded in that is just a question on <unk>.

Daniel Gregory Brennan: Instrument demand that you have a line of sight on via the sales funnel, but that just hasn't been booked yet versus what's not materialize at all yet and then how the outlook change reflects those two things.

Parmeet Ahuja: I think it's hard to put a number on the extended deal time. It depends, actually, on the platform and portfolio. So there's quite a big difference between, for example, GC and LCMS on that. But what I would say, in general, the deal time is prolonged. The win rates, of course, haven't changed.

Speaker Change #145: Yeah look at it I think it's hard to put a number on the extended deal time, it depends actually on the platform and portfolio. So it was quite a big difference between for example, <unk> CMS on that but what I would say in general the deal time is prolonged.

Parmeet Ahuja: They're still very, very strong, but the deal time is prolonged. And I think, you know, if you look at it in the second half, when we're looking at the visibility of what we're seeing in the fund, the best thing we're doing is staying close to the customers on this one, making sure we're there to help them, of course, with their decisions and help them get up and running when they make the decision to purchase it.

The win rates of course haven't changed we're still very very strong with that two times is prolonged and I think if you look at it in the second half when we're looking at the visibility of what we're seeing in the phone. The best thing. We're doing is staying closer to customers on this one making sure we're there to.

Speaker Change #145: To help them of course with their decisions and help them get to open running when they make the decision to purchase on us. So we're going to see this continued extended deal time I think through the end of our true the second half.

Parmeet Ahuja: So we're going to see this continued extended deal time, I think, through the end or through the second half. Yeah, and Dan, you know, I wish I could say we have all of the orders in-house for the second half for instruments. It just doesn't work that way.

Dan: Yes, Dan.

Speaker Change #146: I wish I could say, we have all the orders in house for the second half for instruments that just doesn't work that way. So we have much better visibility into Q3, but we will need.

Bob: So we have much better visibility into Q3, but we will need, you know, a continued performance in Q3. Now, we've had several quarters here of book-to-bills being greater than one in our instrumentation portfolio, which is a positive thing. That would say, hey, we're building some backlog.

Speaker Change #146: Our continued performance in Q3 now.

Speaker Change #146: Several quarters here of book to bills being greater than one.

Speaker Change #146: Yes.

Speaker Change #146: In our instrumentation portfolio, which is which is a positive thing that would say hey, we're building some backlog.

Bob: And as Parag mentioned earlier in the call, you know, particularly in LSAG, LSAG orders grew ex-China, and that is the first time that that's happened in several quarters. So we are seeing some positives, and if you look at the second half of the year, our performance relative to last year should improve just because of, you know, the benefit of easier comparisons. And so we're not, again, looking for that huge inflection, and we're not expecting, also, as Parag was saying, a constriction, so to speak, or an acceleration of those deal funnels. We're expecting them to stay very similar to the way they are right now.

And.

Speaker Change #147: As Paul mentioned earlier in the call.

Speaker Change #147: Particularly in LSA LSA.

Speaker Change #147: Orders grew ex China.

Speaker Change #147: And that is.

Speaker Change #147: Is the first time that's happened in several quarters. So we are seeing some <unk>.

Speaker Change #147: Some positives and if you look at the second half of the year.

Speaker Change #147: Our performance relative to last year should improve just because of.

Speaker Change #147: The benefit of easier compares and so.

Speaker Change #147: We're not again looking for that that huge inflection.

Paul: And we're not expecting also as Paul was saying.

Speaker Change #149: A constriction so to speak or an acceleration of those deal deal funnels, we're expecting him to say some very similar to the way. They are right now, yes, I think just to close off Bob I think the deal.

Parmeet Ahuja: Yeah, I think just to close off, Bob, I think the deal closure timelines remain at an elevated but very stable level. They're not deteriorating further, which I think is a really good sign. And in terms of the funnel, the funnel is stable, with no cancellations within that, which, of course, is very important. Okay, and then, maybe, as a follow-up on BioPharma, I'm just curious about the extent to which the IRA is part of the conversation there these days.

Speaker Change #149: The deal closure time lines remain at an elevated put very stable level, they're not deteriorating further which I think is a really good sign.

Speaker Change #149: And in terms of of the funnel formula stable no cancellations within that which of course is very important to see.

Speaker Change #149: Yeah.

Speaker Change #150: Okay, and then maybe as a follow up on Biopharma I'm, just curious about the extent to which the IRA as part of the conversation. There. These days it sounded like last year the industry kind of contemplated an adjustment is the ideal is coming into the picture. So do you think spending expectations got right size for a period of time are you finding thats.

Parmeet Ahuja: It sounded like last year, the industry kind of contemplated an adjustment as the idea was coming into the picture. So do you think spending expectations got the right size for a period of time? Are you finding that's sort of a continual, evolving conversation?

Speaker Change #151: Sort of a continual evolving conversation thanks.

Parmeet Ahuja: Yeah, I would say it's a continuing and evolving conversation. You know, clearly on the NASAD side, we've seen an impact, you know, from the IRA, something we're watching closely, but I think this will evolve over time. What we're seeing, you know, in terms of programs based around pricing provisions, there's definitely been an impact on that side. Our next question will come from the line of Joshua Waldman with Cleveland Research. Please go ahead. Thanks for taking my questions. A couple for you.

Speaker Change #152: Yes, I would say, it's a continuing evolving conversational clearly on the NSA D E and F side, we've seen an impact.

Speaker Change #153: From from the IRA it's something we're watching closely but I think this will evolve over time, what we're seeing in terms of programs based around pricing provisions. There's definitely has been an impact on that side.

Speaker Change #154: Our next question will come from the line of Josh <unk> with Cleveland Research. Please go ahead.

Joshua Paul Waldman: Parag or Bob, I wondered if you could talk a bit more about how instrument orders progress sequentially. I mean, did orders deteriorate over the last 90 days, or was it really just a function of orders not improving as you expected, and then wondered if you could comment on what you're seeing from new orders, a new order perspective across the key product categories within LSAG, you know, categories like LC-MS, GC, ICP, I guess, is it fair to assume LC-MS is driving the majority of the softness, I don't know if you want to take this one, Bob.

Joshua Paul Waldman: Okay. Thanks for taking my questions a couple for you.

Pork or Bob I wondered if you could talk a bit more on how instrument orders progressed sequentially.

Orders deteriorate over the last 90 days are really just a function of orders not improving as you expected and then wondered if you could comment on what youre seeing from new orders and new order perspective across the key product categories within al Sag categories like <unk> ICP.

Joshua Paul Waldman: Yeah.

Speaker Change #156: Is it fair to assume Lcs is driving the majority of the softness just given the comments on pharma.

Joshua Paul Waldman: Yeah.

Bob: Yeah, yeah, I'll take it. So I wouldn't characterize it, Josh, as a deterioration. It actually just wasn't the inflection or the acceleration that we were expecting.

Speaker Change #157: I don't know if you can take that one.

Josh: Take it so I wouldn't characterize it Josh is a deterioration.

Josh: It actually just wasn't inflection or the acceleration that we were expecting we did.

Bob: You know, we did, as we were saying here, we did have a positive book-to-bill and, ex-China, orders grew. They just didn't grow to the extent that we expected them to, particularly in April, which we would typically have a higher acceleration, just kind of given the end of the quarter. In terms of The platform, what you're seeing is the platforms that are more focused on pharma being the areas that are the weakest.

Speaker Change #159: As we are saying here, we did have a positive book to Bill and ex China orders grew and they just didn't grow day to the extent that we expected them to particularly in April which we would typically have.

Speaker Change #159: Higher.

Speaker Change #159: Acceleration just kind of given the end of the ended the quarter.

Speaker Change #159: In terms of.

Speaker Change #159:

Speaker Change #159: <unk>.

Speaker Change #159: The platform what Youre seeing is.

Speaker Change #159: The platforms that are more.

Speaker Change #159: Focused on pharma being the areas that are the weakest. So LCL CMS are weaker than the applied markets.

Bob: So LC and LC-MS are weaker than the applied markets, and you can kind of see that in our end markets as well. And so we were expecting those to kind of perform better this year. And we're just still seeing that, I'd say, lower than expected performance from the standpoint of order of loss.

Speaker Change #159: And you can kind of see that in our end markets as well and so we were expecting those to.

Speaker Change #159: To kind of perform better this year and we're just still seeing that.

Speaker Change #159: I would say lower than expected.

Speaker Change #159: Performance from the from the standpoint of order order velocity.

Joshua Paul Waldman: Got it. Okay, then a follow-up on China. I wondered if you could comment a bit more on where all this came from. I would say, sorry, just one, one, one quick.

Speaker Change #160: Got it Okay, and then a follow up on China wondering if you could comment a bit more Josh I would say sorry, just one one quick.

Parmeet Ahuja: So one thing I would say, though, is if I looked at the performance, the revenue performance versus the order performance, the order performance was significantly better in Q2 on those two main platforms than the revenue. So, again, these are points that say we are getting out of it, maybe not at the pace that we were expecting. So those are some positive points that would suggest that we're gonna continue to, it's not gonna deteriorate coming out in Q2, or excuse me, in the second half. Sorry. And what were the two platforms? LC and LC-MS.

Speaker Change #160: So one thing I would say, though is if I looked at the performance the revenue performance versus the order performance. The order performance was significantly better in Q2 on those two main platforms than the than the revenue. So again these are.

Speaker Change #160: Points that says we are getting out of it maybe not at the pace that we were expecting so.

Speaker Change #160: And so those are some some some positive.

Speaker Change #160: Points that would suggest that we're going to continue.

Speaker Change #160: Continue to it's not going to deteriorate coming out in Q2 or excuse me in the second half sorry.

Speaker Change #161: And what were the two platforms.

Bob: So, you know, are, yep, yep. Okay. Okay. Got it. Got it.

Speaker Change #162: LC and LC Ms. So yes they are.

Speaker Change #163: Yep Yep.

Parmeet Ahuja: And then a follow-up on China. Just wondered if you could comment a bit more on where you're seeing demand come in softer than expected from a new bookings perspective, and then a bit more detail on how you're contemplating the stimulus. I mean, it sounds like you saw improved bidding and funnel activity on the prospects of stimulus, but just, you know, wondered if you could provide some context for what's giving you the confidence that that, you know, stimulus-related funnel ends up converting to, you know, orders and sales at some point. Yeah, maybe maybe starting on the stimulus. This is, you know, it's an extremely large program, multi-year program. It's very real.

Speaker Change #164: Okay got it got it.

Speaker Change #165: And then a follow up on China, just wondered if you could comment a bit more on where all youre seeing demand come in softer than expected from a new bookings perspective, and then a bit more detail on how you are contemplating.

Speaker Change #165: Stimulus I mean, it sounds like you saw improved bidding and funnel activity on the prospects of stimulus, but just wondering if you could provide whats, giving you the confidence of that stimulus related funnel ends up converting to orders and sales at some point in the future.

Speaker Change #166: Yes, maybe starting on the stimulus you know this is.

Speaker Change #167: It's an extremely large program multiyear program.

Speaker Change #167: Very real we've seen some of the customers.

Speaker Change #167: Activity is asking us to bid on some of the things, even though theyre not sure exactly yet how to mechanisms would work. So that gives us great confidence for 25, just from that but I said earlier also the indirect impact of confidence in science and technology in China, It's a real photo confidence by the government and making sure we.

Parmeet Ahuja: We've seen some of the customers, you know, with activities asking us to bid on some of the things, even though they're not sure exactly yet how the mechanisms would work. So that gives us great confidence for 25, just from that. But I said earlier, also the indirect impact of confidence in science and technology in China. It's a real vote of confidence by the government in making sure we make sure to get the markets going again. So I think in Q2, we saw meaningful softness extend to all markets because remember, the stimulus is not only academia and government; it's across all markets. And that really came at once.

Making sure they get the markets going again, so so I think in Q2, we saw meaningful softness extend to all markets because remember the stimulus is not only academia and government is across all markets.

Parmeet Ahuja: And we did see at the end of the quarter, we also started to see customers postpone purchasing decisions. They've told us, right, sort of said, we're going to postpone. And they try to gauge if there's any benefit of the stimulus-related funding. And that's normal.

Speaker Change #167: That has really come at once and we did see at the at the end of the quarter. We also start to see customers postpone purchasing decisions have told US right sort of said, we're going to postpone and tried to gauge if there's any benefit of the stimulus related funding and that's normal I think that's expected if you didn't see it at the end of the stimulus would would have different questions.

Parmeet Ahuja: I think that's expected. If you didn't see that, then the stimulus would have different questions. And why do we believe that a stimulus program will ultimately be long-term positive. We really don't see any benefit in H2.

Speaker Change #167: And while we believe that a stimulus program will ultimately be long term positive.

Parmeet Ahuja: And that's why we're roughly reducing by 70. Got it. Did you see stimulus-related postponing and pharma and CDMO as well, or more just government? Yeah, it was both government and non-government accounts across the board.

Speaker Change #167: We really don't see any benefit in H, two and Thats why were roughly reducing by $70 million.

Speaker Change #168: Got it did you see stimulus related postponing and pharma and <unk> as well or government accounts.

Speaker Change #169: Yes, it was both government and nongovernment accounts across the board.

So I would say it was.

Speaker Change #169: Pretty pretty broad beyond pharma.

Speaker Change #170: Okay got.

Speaker Change #170: Got it thanks guys.

Joshua Paul Waldman: So I would say it was pretty broad beyond pharma. Okay, got it. Thanks. Our next question comes from the line of Catherine Schulte with Baird. Please go ahead. Hey guys, thanks for the questions. Maybe just stick with some kind of stimulus to start off.

Speaker Change #172: Our next question comes from the line of Catherine Schulte with Baird. Please go ahead.

Catherine Walden Ramsey Schulte: Is there any way to quantify the increase in funnel activity that you've seen there, just as we try to think about potential opportunity in future years? Yeah, what we're seeing is a delay. And I think it's really too early to tell on the funnel side if the customers are still working out the mechanisms about how it works. We're still waiting to see the impact on the funnel, particularly for 25. It's too early to tell.

Catherine Walden Ramsey Schulte: Hey, guys. Thanks for the question, maybe just sticking on China stimulus to start off is there any way to quantify the increase in funnel activity that you've seen there just as we try to think about the potential opportunity in future years.

Speaker Change #174: Yes, what we're seeing is a postponement and I think it's really too early to tell on the funding side.

Speaker Change #174: If the customers are still working out the mechanisms about how it works, we're still waiting to see on the impact on the phone, particularly for 25 is too early to tell.

Catherine Walden Ramsey Schulte: Okay, and then on LSAG, what was the performance in the quarter excluding China? And then any commentary on the pharma and market specifically for that business outside of China in the quarter? Paul, do you want to take this one?

Speaker Change #175: Okay, and then on Outback.

Speaker Change #176: Performance in the quarter, excluding China, and then any commentary on the pharma end market end market, specifically for that business outside of China in the quarter.

Robert W. McMahon: Bob you want to take this one yes.

Paul: Yeah, so our LSAG business declined 13% globally, and ex-China, it was down 8%. Our next question will come from Paul Knight with KeyBank. Please go ahead.

Robert W. McMahon: Yes so.

Robert W. McMahon: Our <unk> business declined 13% globally ex China, It was down 8%.

Speaker Change #177: Our next question will come from the line of Paul Knight with Keybanc. Please go ahead.

Paul Richard Knight: Hi, thanks for the time. Then, within the 34% of business that's Pharma, what portion is BioPharma or Large Molecule Bob? It's roughly 45%. And what's the overall growth rate of that piece? Do you think? long term or in the quarter, and the corner in the long term. Yeah, so if we looked at our biopharma business, it was down roughly 12%. Small Molecule was down roughly 10%, and total Pharma was down 11%.

Paul Richard Knight: Hi, Thanks for the time.

Speaker Change #179: Within the 34% of our business that's.

Paul Richard Knight: Pharma what portion is.

Speaker Change #180: Biopharma, our large molecule Bob.

It's 40 roughly 45%.

Speaker Change #181: And what's the overall growth rate of that piece do you think.

Speaker Change #182: Long term or in the quarter.

Speaker Change #183: In the quarter and long term yes.

Speaker Change #184: Yes, so if we looked at our Biopharma.

Speaker Change #185: Business It was down roughly 12% small molecule is down roughly 10% total pharma was down 11%. So kind of gives you a sense.

Bob: So, kind of gives you a sense, I think. Yeah, I would say, before we get on to the long term, Bob, for biopharma, really tough to compare was mid-teens plus mid-teens last year on that side. But what we're seeing is that the long-term prospects for this market are very strong. Yeah, and then I know that you've always been very in or aggressive and innovative in your M&A for biologics. Are you seeing that market open up on the M&A side of that marketplace? Do you mean in the space itself?

Speaker Change #186: Yes, I would say I would say before we get onto long term Bob for Biopharma.

Speaker Change #186: Really tough compare was mid teens, plus mid teens last year on that side, but what we're seeing is the long term.

Speaker Change #186: For this market is very strong.

Speaker Change #186: Yeah.

Speaker Change #187: Yes, and then I know that you've got you have always been very aggressive and innovative on your M&A for biologics are you seeing that market open up on the M&A side of that marketplace.

Speaker Change #188: You mean into in the space.

Parmeet Ahuja: Or is pricing becoming more realistic as you think about your acquisition strategy? Yeah, well, I think there are long memories, you know, so people don't forget the elevated price for assets, but we're going to remain very disciplined, you know; it's going to become an increasingly bigger part of the puzzle for us M&A. But we're going to make sure that we do it in a very disciplined way, linked to strategy, and, of course, looking at areas where we can double down on growth factors. So we're very focused on that going forward. But I would say, while pricing maybe has come down in some areas across the board, people have long memories.

Speaker Change #189: Pricing, becoming more realistic as you think about your acquisition strategy.

Speaker Change #190: Yes, well I think theres long memories, so people don't forget the elevated.

Speaker Change #191: Pricing for assets, but we're going to remain very disciplined do you know what is going to become an increasingly bigger part of proposal four with M&A.

Speaker Change #191: But we're going to make sure that we do it in a very disciplined way linked to strategy and of course looking at areas, where we can we can double down in growth factors. So.

Speaker Change #191: We're very.

Focus on that going forwards, but I would say, while pricing and maybe has come down a little areas across the across the board people have long memories.

Speaker Change #192: Okay. Thank you.

Parmeet Ahuja: Okay, thank you. I will now turn the call back over to Parmeet Ahuja for her closing remarks. Thanks, Regina, and thanks, everyone, for joining the call today. With that, we would like to end the call. Have a good rest of the day, everyone. Ladies and gentlemen, this concludes today's call. Thank you for joining. You may now disconnect, www.microsoft.com.ca

Speaker Change #191: Okay.

Speaker Change #193: I will now turn the call back over key pardon me to Jeff for closing remarks.

Speaker Change #191: Yeah.

Jeff: Thanks, Regina and thanks, everyone for joining the call today with that we would like to hand, the call have a good rest of the day everyone.

Speaker Change #195: Ladies and gentlemen, this concludes today's call. Thank you for joining you may now disconnect.

Speaker Change #195: Yeah.

Speaker Change #195: Hum.

Speaker Change #195: Yeah.