Q3 2024 Agilent Technologies Inc Earnings Call

August 21, 2024

Operator: Ladies and gentlemen, welcome to the Agilent Technologies Q3 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 one on your telephone. I will now hand you over to your host, Parmeet Ahuja to begin. Please go ahead.

Operator: Ladies and gentlemen, welcome to the Agilent Technologies Q3 2024 Earnings Call. My name is Regina, and I will be coordinating your call today. [Operator Instructions.]

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

Parmeet Ahuja: Thank you and welcome everyone to Agilent's Conference Call for the Third Quarter of the Fiscal Year 2024. With me, are Padraig McDonnell, Agilent President and CEO; and Bob McMahon, Agilent Senior Vice President and CFO. Joining in the Q&A will be Phil Binns, President of the Agilent Life Sciences and Applied Markets Group; Simon May, President of the Agilent Diagnostics and Genomics Group; and Angelica Riemann, President of the Agilent Cross Lab Group. This presentation is being webcast live.

Parmeet Ahuja: This presentation is being webcast live. The news release for our third 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-gap financial measures. You will find the most directly comparable gap financial metrics and recommendations on our website. 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.

Parmeet Ahuja: The news release for our third 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.angilent.com. Today's comments will refer to non-gap financial measures. You will find the most directly comparable gap financial metrics and recommendations on our website. 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.

Parmeet Ahuja: 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. 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.

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.

Parmeet Ahuja: Core revenue growth excludes the impact of currency and any acquisitions and divestitures completed within the past 12 months. Guidance is based on forecasted exchange rates. As a reminder, beginning in the first quarter of fiscal 2024, we implemented certain changes to our segment recording structure related to the move of our cell analysis business from LSH 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.

Core revenue growth excludes the impact of currency and any acquisitions and divestitures completed within the past 12 months. Guidance is based on forecasted exchange rates.

As a reminder, beginning in the first quarter of fiscal 2024, we implemented certain changes to our segment recording 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.

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

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

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

Padraig McDonnell: Thanks, Parmees. Good afternoon everyone and thank you for joining today's call. The Agilent team executed well in the third quarter and posted solid results, delivering better-than-expected revenue and earnings. Revenue of $1.578 billion declined at 4.4% and improvements of 300 basis points from Q2, reflecting the steady improvement in the market. Operating margin of 27.4% improves sequentially as the actions we announced last quarter started to deliver. And we remain untracked to deliver the incremental annualized savings of $100 million by the end of the fiscal year.

Padraig McDonnell: Thanks, Parmeet. Good afternoon everyone and thank you for joining today's call. The Agilent team executed well in the third quarter and posted solid results, delivering better-than-expected revenue and earnings.

Padraig McDonnell: Revenue of $1.578 billion declined 4.4% an improvement of 300 basis points from Q2, reflecting the steady improvement in the market. Operating margin of 27.4% improved sequentially as the actions we announced last quarter started to deliver. And we remain untracked to deliver the incremental annualized savings of $100 million by the end of the fiscal year. Earnings per share of $1.32 is $0.04 above the high end of guidance.

Parmeet Ahuja: Our needs per share of $1.22 is 4 cents above the high end of guidance. As a result of our strong Q3 performance, we are raising our guidance at the midpoint for both revenue and EPS. And we continue to make investments in our most promising growth opportunities by a reference in our Q2 called. We are investing in our digital ecosystem to further enhance our differentiated customer experience. Plus, we are mobilizing the organization to accelerate value creation through strategic transformation initiatives, driving margin expansion and growth and increasing our execution capabilities.

Our needs per share of $1.22 is 4 cents above the high end of guidance.

As a result of our strong Q3 performance, we are raising our guidance at the midpoint for both revenue and EPS. And we continue to make investments in our most promising growth opportunities by a reference in our Q2 call. We are investing in our digital ecosystem to further enhance our differentiated customer experience, plus, we are mobilizing the organization to accelerate value creation through strategic transformation initiatives, driving margin expansion and growth and increasing our execution capabilities. Separately, in the quarter, we were excited to announce two acquisitions that demonstrate our focus on biopharma, and our digital ecosystem, which I'll talk about in a moment.

Parmeet Ahuja: Separately in the quarter, we were excited to announce two acquisitions that demonstrate our focus on biopharma, and our digital ecosystem, which I'll talk about in a moment. As you know well, the pace of change is faster than ever.

Separately in the quarter, we were excited to announce two acquisitions that demonstrate our focus on biopharma, and our digital ecosystem, which I'll talk about in a moment.

As you know well, the pace of change is faster than ever. Our markets, customers, and competitors, are not standing still, neither are we. We're accelerating our pace of innovation and execution so we can add to and capitalize on opportunities in front of us. We are sharply focused on key growth vectors, including biopharma, PFAS, and advanced materials. I continue to meet and connect with employees, customers, and shareholders around the globe to listen to their perspectives and how we should build on our strengths and move Agilent forward. The entire Agilent team is clear on what is vital to the company's future, becoming even more customer focused and even more nimble to continue to win in the marketplace and add value to customers and shareholders.

Parmeet Ahuja: Our markets, customers, and competitors, are not standing still, neither are we. We're accelerating our pace of innovation and execution so we can add to and capitalize on opportunities in front of us. We are sharply focused on key growth vectors, including buyer, pharma, PFAS, and advanced materials. By continuing to meet and connect with employees, customers, and shareholders around the globe to listen to their perspectives and how we should build on our strengths and move agile and forward. The entire agile and teams care on what is vital to the company's future, becoming even more customer focused and even more nimble to continue to win in the marketplace and add value to customers and shareholders.

materials. By continuing to meet and connect with employees, customers, and shareholders around the globe to listen to their perspectives and how we should build on our strengths and move agile and forward. The entire agile and teams care on what is vital to the company's future, becoming even more customer focused and even more nimble to continue to win in the marketplace and add value to customers and shareholders.

materials.

I continue to meet and connect with employees, customers, and shareholders around the globe to listen to their perspectives and how we should build on our strengths and move Agilent forward. The entire Agilent team is clear on what is vital to the company's future, becoming even more customer focused and even more nimble to continue to win in the marketplace and add value to customers and shareholders.

Parmeet Ahuja: We are evolving 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're excited to announce that you'll hear more about these topics and our transformation at our Investor Day we have planned in New York on December 17th. Now let's talk further about our Q3 results.

We are evolving 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're excited to announce that you'll hear more about these topics and our transformation at our Investor Day we have planned in New York on December 17th.

Now let's talk further about our Q3 results. All our end-markets accept Academia & Government, which is our smallest, ended the quarter better-than-expected. Our largest market pharma declined high single digits, slightly better than our expectations, and while biopharma continues to be pressured, we are seeing relatively better performance in small molecules. Our leadership and providing workflow solutions for PFAS continue to show strong performance in the environmental markets. Geographically, Europe exceeded expectations led by small molecule pharma, as well as continued strength in, environmentalism. Our other regions perform roughly in line with expectations.

Parmeet Ahuja: All our end markets accept academia and government, which is our smallest, end of the quarter better than expected. Our largest market pharma declined high single digits, slightly better than our expectations, and while buyer pharma continues to be pressured, we are seeing relatively better performance in small molecules. Our leadership and providing workflow solutions for PFAS continue to show strong performance in the environmental markets. Geographically, Europe exceeded expectations led by small molecule pharma, as well as continued strength in, environmentalism. Our other regions perform roughly in line with expectations.

Geographically, Europe exceeded expectations led by small molecule pharma, as well as continued strength in environmental. Our other regions perform roughly in line with expectations. While capital equipment budgets remain constrained, we continue to see good lab activity in Q3, with services plus consumers growing mid-single digits. When looking at our performance by business unit, the Life Sciences and Applied Markets Group reported $782 million in revenue, down 7%. While the instrument side of the business remains constrained, it was encouraging that our instrument book-to-bill was again greater than one. The group saw a decline across all regions and most end-markets with low single-digit growth in Environmental and Forensics.

Parmeet Ahuja: While capital equipment budgets remain constrained, we continue to see good lab activity in Q3, with services plus consumers growing mid-single digits. When looking at our performance by business unit, the life sciences and applied markets group reported $782 million in revenue, down 7%, while the instrument side of the business remains constrained, it was encouraging that our instrument book to build was again greater than one. The groups are the client across all regions and most end markets with low single-digit growth in environmental and forensics.

Parmeet Ahuja: Consumables continue to be a bright spot, growing by mid-single digits. The LSAG team also was busy innovating with the introduction of the 8850 GC that has customers reached their sustainability goals by delivering answers efficiently while using up to 30% less powered than other GCs and has a much smaller footprint. Moving on to the Agilent cross-lab group, the business delivered revenue of $411 million for the quarter up mid-single digits. ACG grew in every region except China, where we were down modestly year-on-year but showed, meaningful improvement versus last quarter. Once again, we drove double-digit growth in service contracts which represented nearly 70% of the total business. And beyond another quarter of solid revenue growth, ACG also delivered a record operating margin of 34%.

Consumables continue to be a bright spot, growing by mid-single digits. The LSAG team also was busy innovating with the introduction of the 8850 GC that has customers reached their sustainability goals by delivering answers efficiently while using up to 30% less powered than other GCs and has a much smaller footprint.

Moving on to the Agilent Cross-Lab Group, the business delivered revenue of $411 million for the quarter up mid-single digits. ACG grew in every region except China, where we were down modestly year-on-year but showed, meaningful improvement versus last quarter. Once again, we drove double-digit growth in service contracts which represented nearly 70% of the total business. And beyond another quarter of solid revenue growth, ACG also delivered a record operating margin of 34%. Demonstrating that the resiliency and strength of the recurring revenue business continues despite the constrained capital-equipment environment.

Parmeet Ahuja: Demonstrating that the resiliency and strength of the recurring revenue business continues despite the constrained capital-equipment environment. The continued strength of our business is a testament to our strategy of increasing the connect rates on our instruments and the ongoing value we are providing to our customers in helping them reach the productivity goals. The diagnostics and genomics growth close to $385 million in revenue representing an 8% decline. The Pology Group mid-single digits globally and was offset by declines in cell analysis, NESD and genomics.

Demonstrating that the resiliency and strength of the recurring revenue business continues despite the constrained capital-equipment environment.

The continued strength of our business is a testament to our strategy of increasing the connect rates on our instruments and the ongoing value we are providing to our customers in helping them reach the productivity goals. The Diagnostics and Genomics Group close to $385 million in revenue representing an 8% decline. The Pathology Group mid-single digits globally and was offset by declines in cell analysis, NASD and genomics. NASD's stepdown sequentially in Q3 as expected and we are on track for NASD's revenues to step up sequentially in Q4.

Parmeet Ahuja: NESD's stepdown sequentially in Q3 is expected and we are on track for NESD's revenues to step up sequentially in Q4. In the face of a constrained capital-equipment, the Agilent team has remained consistent, in putting our customers first and fostering deeper relationships with them. We continue to execute well and be disciplined while investing in high-growth opportunities. As I mentioned earlier, we were thrilled to announce two acquisitions that speak to our focus, on biopharma and increasing recurring revenue, as well as on strengthening the digital ecosystem for hydrogen customers.

NESD's stepdown sequentially in Q3 is expected and we are on track for NESD's revenues to step up sequentially in Q4.

In the face of a constrained CAPEX environment, the Agilent team has remained consistent, in putting our customers first and fostering deeper relationships with them. We continue to execute well and be disciplined while investing in high-growth opportunities. As I mentioned earlier, we were thrilled to announce two acquisitions that speak to our focus, on biopharma and increasing recurring revenue, as well as on strengthening the digital ecosystem for Agilent customers.

Parmeet Ahuja: In late July, we signed a definitive agreement to acquire BIOVECTRA, a leading specialized contract development and manufacturing organization. The Canada-based company builds on Agilent's capabilities in our legal nucleotides and CRISPR therapeutics by expanding our portfolio of services. BIOVECTRA adds rapidly growing modalities, microbial fermentation, antibody drug conjugates and high potency active pharmaceutical ingredients. It also brings world-class capabilities that when combined with NASD enables us to deliver customers a complete gene-editing solution. The company delivered more than $110 million in revenue during the calendar year of 2023 and expects double-digit revenue growth this year.

Parmeet Ahuja: The BIOVECTRA Acquisition remains on track to be closed by the end of the year, and we're looking forward to welcoming the BIOVECTRA team to Agilent. At the end of the quarter, we also announce the acquisition of California-based Sigsense, a startup that uses Artificial Intelligence and power monitoring to help customers optimize their lab operations. Sigsense technology already is available to our customers through CrossLab Connect, a suite of digital applications that improve lab performance. A hearty welcome to the Sigsense, team, who already is part of Agilent.

Parmeet Ahuja: A hearty welcome to the Sigsense, team, who already is part of Agilent. During the quarter, we released our annual ESG report, which showcases a large and growing portfolio of products that help our customers reach their sustainability goals. Instruments certified with the My Green Lab ACT label now accounts for 40% of all instrument revenue, and we continue to regularly release products like the new 8850GC with environmental benefits.

A hearty welcome to the Sigsense, team, who already is part of Agilent.

During the quarter, we released our annual ESG report, which showcases a large and growing portfolio of products that help our customers reach their sustainability goals. Instruments certified with the My Green Lab ACT label now accounts for 40% of all instrument revenue, and we continue to regularly release products like the new 8850 GC with environmental benefits. We are also proud that we have recently ranked in the top 20 of Time Magazine's 500 most Sustainable Companies in the world.

Bob Mcmahon: We are also proud that we have recently ranked in the top 20 of Time Magazine's 500 most sustainable companies in the world. Bob will now provide the 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. Over to you, Bob.

We are also proud that we have recently ranked in the top 20 of Time Magazine's 500 most sustainable companies in the world.

Bob will now provide the 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. Over to you, Bob.

Robert McMahon: Thanks, Padraig, and good afternoon everyone. In my remarks today, I'll 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 fourth quarter guidance. Q3 revenue was $1.578 billion, a decline of 4.4% core, but a 300 basis-point sequential improvement as Padraig noted. Excluding China, revenue declined low single digits in the quarter. On a reported basis, currency had a negative impact of 1.1 percentage points, while M&A had a negative impact of 10 basis points, resulting in a reported decline of 5.6%. Our largest end market pharma declined 8%. Biopharma was down low double digits, or down mid single digits excluding an NASD. Small molecule performed better, down mid single digits, and was led by growth in Europe.

Robert McMahon: Q3 revenue was $1.578 billion, a decline of 4.4% core, but a 300 basis-point sequential improvement as Padraig noted. Excluding China, revenue declined low single digits in the quarter. On a reported basis, currency had a negative impact of 1.1 percentage points, while M&A had a negative impact of 10 basis points, resulting in a reported decline of 5.6%. Our largest end market pharma declined 8%. Biopharma was down low double digits, or down mid single digits excluding an NASD. Small molecule performed better, down mid single digits, and was led by growth in Europe.

Bob Mcmahon: Bio pharma was down low double digits, or down mid single digits excluding an ASD. Small molecule performed better, down mid single digits, and was led by growth in Europe. Services in pharma continues to perform well, growing high single digits. In chemical and advanced materials, revenue declined 5% with growth in America's offset by softness in China, or advanced material sub segment performed better driven by our business in the semiconductor market. Academia and government are smallest market can be lumpy from quarter to quarter. We saw a decline of 11% as Europe and China both saw double digit declines, partially offset by better performance in the America's region.

Bio pharma was down low double digits, or down mid single digits excluding an ASD. Small molecule performed better, down mid single digits, and was led by growth in Europe.

Services and Pharma continues to perform well, growing high single digits. In Chemical and Advanced Materials, revenue declined 5% with growth in America's offset by softness in China. Our advanced material sub-segment performed better driven by our business in the semiconductor market. Academia & Government are smallest market can be lumpy from quarter-to-quarter. We saw a decline of 11% as Europe and China both saw double digit declines, partially offset by better performance in the America's region. Our business in the Diagnostics and Clinical end-market grew 2%, including continued mid single digit growth in Pathology offset by ongoing softness in Genomics.

Bob Mcmahon: Our business in the diagnostics and clinical and market grew 2%, including continued mid single digit growth and pathology offset by ongoing softness in genomics. In environmental and forensics, we grew 4% another great quarter for our PFAS testing business. We saw robust business in Europe led by the new EU water directive and in China due to the nationwide emerging pollutants program. Now wrapping up our end markets, food was down 3% versus last year, for grew sequentially and was led by Asia ex-China Moving on to our regional performance, Europe was flat overall beating our expectations while we declined 6% in the Americas and declined 1% in Asia ex-China China revenue declined 11% with quarterly revenue improving sequentially driven by growth in services and, consumables. This speaks to some increase in lab activity which is encouraging.

Our business in the diagnostics and clinical and market grew 2%, including continued mid single digit growth and pathology offset by ongoing softness in genomics.

In Environmental & Forensics, we grew 4% another great quarter for our PFAS testing business. We saw robust business in Europe led by the new EU Water Directive and in China due to the nationwide emerging pollutants program. Now wrapping up our end markets, food was down 3% versus last year, but grew sequentially and was led by Asia ex-China. Moving on to our regional performance, Europe was flat overall beating our expectations while we declined 6% in the Americas and declined 1% in Asia ex-China. China revenue declined 11% with quarterly revenue improving sequentially driven by growth in Services and Consumables. This speaks to some increase in lab activity which is encouraging.

Bob Mcmahon: Now, let's move on to the rest of the P&L. Growth margin was 56.0% in the quarter, down slightly versus a year ago but up 40 basis-points sequentially. Our operating margin of 27.4% improves sequentially and was better than expected. Despite the dampened demand we continue to make good progress in driving our productivity initiatives and continuing to manage the cost structure very well while investing for growth. As Padraig mentioned, we are on track to deliver the $100 million in incremental annualized cost savings by the end of the fiscal year.

Bob Mcmahon: Below the line, our net interest income was in line as was our tax rate of 13% and we had 291 million diluted shares outstanding in the quarter. Putting it all together, Q3 earnings per share were $1.32. That was ahead of our expectations but down 7.7% from a year ago as we went up against a difficult compare due to the variable pay reset and Q3 of last year. Now, let me turn to cash flow and the balance sheet.

Below the line, our net interest income was in line as was our tax rate of 13% and we had 291 million diluted shares outstanding in the quarter. Putting it all together, Q3 earnings per share were $1.32. That was ahead of our expectations but down 7.7% from a year ago as we went up against a difficult compare due to the variable pay reset and Q3 of last year.

Now, let me turn to cash flow and the balance sheet. We continue to enjoy a very strong balance sheet and healthy cash flows. Operating cash flow was $452 million in the quarter and we invested $92 million in capital expenditures. As we committed in Q2 we ramped up our share repurchases starting here in Q3. We purchased $585 million in shares and paid out $68 million through dividends for a total of $653 million return to shareholders in the quarter. This includes $500 million of the previously announced $750 million opportunistic share repurchase and we expect to complete the additional $250 million repurchase in Q4.

Bob Mcmahon: We continue to enjoy a very strong balance sheet and healthy cash flows. Operating cash flow was $452 million in the quarter and we invested $92 million in capital expenditures. As we committed in Q2 we ramped up our share repurchases starting here in Q3. We purchased $585 million in shares and paid out $68 million through dividends for a total of $653 million return to shareholders in the quarter. This includes $500 million of the previously announced $750 million opportunistic share repurchase and we expect to complete the additional $250 million repurchase in Q4.

Bob Mcmahon: We ended the quarter with a net leverage ratio of 0.6 and even with the upcoming BIOVECTRA acquisition our balance sheet and leverage ratios will still be in a very strong position. In summary, we performed well and continue to see a steady improvement in the market and expect that to continue into FY '25. Because of our Q3 results we are increasing the midpoint of our revenue and earnings per share guidance for the year.

We ended the quarter with a net leverage ratio of 0.6 and even with the upcoming BIOVECTRA acquisition our balance sheet and leverage ratios will still be in a very strong position. In summary, we performed well and continue to see a steady improvement in the market and expect that to continue into FY '25.

Because of our Q3 results we are increasing the midpoint of our revenue and earnings per share guidance for the year. We now expect full year revenue to be in the range of $6.450 billion to $6.500 billion. This represents a decline of 5.6% to 4.9% on a reported basis and a decline of 5.0% to 4.3% on a core basis. Currency and M&A combined or a headwind of 60 basis points. Full-year non-GAAP earnings per share are now expected to be between $5.21 and $5.25, representing a decline, of 4.2% to 3.5%. This assumes net interest income of $38 million, a 13% tax rate, and 292 million fully deluded shares outstanding.

Bob Mcmahon: We now expect full year revenue to be in the range of 6.450 to 6.500 billion dollars. This represents a decline of 5.6 to 4.9% on a reported basis and a decline of 5.0 to 4.3% on a poor basis. Currently an M&A combined or a headwind of 60 basis points. Full-year non-gap earnings per share are now expected to be between $5.21 in $5.25, representing a decline, of 4.2 to 3.5%. This assumes net interest income of $38 million, a 13% tax rate, and 292 million fully deluded shares outstanding.

Bob Mcmahon: We have not included any impact of the BIOVECTRA acquisition in our updated guidance, and $0.6 does not have a material financial impact to the year or Q4. This full-year guidance translates into Q4 revenue in the range of $1.641 billion to $1.691 billion. This represents a decline of 1.9% to 1.1% growth on a core basis and a decline of 2.8% to 0.2% growth, on a reported basis. Currency and M&A are a combined headwind of 90 basis points.

Bob Mcmahon: Fourth quarter non-GAAP earnings per share are expected to be between $1.38 and $1.42, marking a return to growth at the midpoint. We expect a 13% tax rate, a decrease in net interest income to $5 million due to the lower cash balance, and 287 million deluded shares outstanding for the quarter. Now I'd like to turn a call back to PORIC for some closing comments. PORIC?

Fourth quarter non-GAAP earnings per share are expected to be between $1.38 and $1.42, marking a return to growth at the midpoint. We expect a 13% tax rate, a decrease in net interest income to $5 million due to the lower cash balance, and 287 million deluded shares outstanding for the quarter.

Parmeet Ahuja: for the quarter. Now I'd like to turn a call back to PORIC for some closing comments. PORIC?

for the quarter.

Now I'd like to turn a call back to PORIC for some closing comments. PORIC?

Now I'd like to turn a call back to Padraig for some closing comments. Padraig?

Padraig McDonnell: These are exciting times at Agilent. With a team that is second to known, we are doubling down on our customer-force culture and deepening our relationships to further enhance our market-leading customer experience that is already the best in the industry. We are evolving our strategy to aggressively pursue our ambition to grow in markets where we have a right to win trough both organic and inorganic growth, and we will continue to accelerate value creation through strategic transformation initiatives. We remain a leader across key platforms and we're in great long-term growth markets that are beginning to show evidence of recovery. And best of all, our team is engaged, leading to Newsweek including Agilent on its America's greatest workplaces, 2024 list.

Parmeet Ahuja: We remain a leader across key platforms and we're in great long-term growth markets that are beginning to show evidence of recovery. And best of all, our team is engaged, leading to Newsweek including Agilent on its America's greatest workplaces, 2024 list. Again, thank you for joining today's call. I am energized by how we are evolving Agilent. Each data team gains momentum in building an enduring company that sends the standard for excellence with our customers and creates value for shareholders. We are fueled by the future possibilities and I look forward to continuing to share our

We remain a leader across key platforms and we're in great long-term growth markets that are beginning to show evidence of recovery. And best of all, our team is engaged, leading to Newsweek including Agilent on its America's greatest workplaces, 2024 list.

Again, thank you for joining today's call. I am energized by how we are evolving Agilent. Each day the team gains momentum in building an enduring company that sets the standard for excellence with our customers and creates value for our shareholders. We are fueled by the future possibilities and I look forward to continuing to share our progress.

Parmeet Ahuja: progress. Permis, over to you for Q&A. Thanks, PORIC.

progress.

Parmeet, over to you for Q&A. Thanks, PORIC.

Parmeet, over to you for Q&A.

Thanks, Padraig. Regina, if you could please provide instructions for Q&A now. [Operator Instructions.] Our first question will come from the line of Matt Sykes with Goldman Sachs. Please go ahead. I get afternoon.

Thanks, Padraig. Regina, if you could please provide instructions for Q&A now. [Operator Instructions.] Our first question will come from the line of Matt Sykes with Goldman Sachs. Please go ahead.

Parmeet Ahuja: Thanks, Padraig. Regina, if you could please provide instructions for Q&A now.

Regina: Regina, if you could please provide instructions for Q&A now. 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 your phone is

Operator: Our first question will come from the line of Matt Sykes with Goldman Sachs. Please go ahead.

Matthew Sykes: unmuted locally. Our first question will come from the line of math spikes with Goldman Sachs. Please go ahead. I get afternoon.

Hey, good afternoon. Thanks, for taking my questions. Maybe the first one, just digging in a little bit on the LSAG where you had a pretty solid beat. It looks like that was driven primarily by consumables and services. So, I'm curious if you can give any more color on what instruments did. I know you had a book-to-bill above 1. But just how does that inform your view as we go into '25, on the replacement cycle, specifically large Biopharma demand and how that might impact your view on when that replacement cycle starts kicking in? Yeah, thanks a lot, Matt. Maybe I'll kick it off whenever it's Bob.

Matt Sykes: Hey, good afternoon. Thanks, for taking my questions. Maybe the first one, just digging in a little bit on the LSAG where you had a pretty solid beat. It looks like that was driven primarily by consumables and services. So, I'm curious if you can give any more color on what instruments did. I know you had a book-to-bill above 1. But just how does that inform your view as we go into '25, on the replacement cycle, specifically large Biopharma demand and how that might impact your view on when that replacement cycle starts kicking in?

Parmeet Ahuja: Thanks, Jake, my questions. Maybe the first one, just digging in, a little bit on the LSAG where you had a pretty solid beat. It looks like that was driven primarily by consumables and services. I'm curious if you can give any more color on what instruments did.

Bob Mcmahon: I know you had a book to build above one, but just how does that inform your view as we go into 25, on the replacement cycle, specifically large biopharmate demand and how that might impact your view on why that replacement cycle starts kicking in. Yeah, thanks a lot, Matt. Maybe I'll kick it off whenever it's Bob.

Padraig McDonnell: Yeah, thanks a lot, Matt. Maybe I'll kick it off and give it to Bob. I think, first of all, you're correct. We saw very, very promising growth in both consumers and services, which shows lab activity is actually improving or is very stable. We're still very challenged on the instrument side, but what we're seeing is, we're seeing a lot of activity around conversations with lab managers. Our funnel is extremely stable. We haven't seen any cancellations.

Bob Mcmahon: I think, you know, first of all, you're correct. We saw very, very promising growth in both consumers and services, which shows lab activity is actually improving or is is is very stable. We're still very challenged on the instrument side, but but what we're seeing is we're seeing a lot of activity around conversations with lab managers. Our funnel is extremely stable.

Bob Mcmahon: We haven't seen any cancellations. But what I would say is that deep closure times are still elevated. So, we're not at this point seeing any budget approach toward the end of the year, and which of course for us ends at the end of October, but we're watching that close. I don't know if you want to add anything, Bob.

We haven't seen any cancellations.

But what I would say is that deep closure times are still elevated. So, we're not at this point seeing any budget approach toward the end of the year, and which of course for us ends at the end of October, but we're watching that close. I don't know if you want to add anything, Bob.

Robert McMahon: Yeah, thanks, Matt for that question and maybe just to fill in and add some additional commentary to what Padraig was saying. When we looked at the quarter, we're very pleased. Actually, both our consumables business as well as our instrument business before better, than expected in the quarter. We were down down 7% in total. Our consumables business was actually up mid single digits towards the high end there, and our instrument business was down low double digits, but that was better than what we expected. And as Padraig mentioned, we had a book-to-bill that was greater than one on the instrument side. Again, this quarter, which was very encouraging.

Parmeet Ahuja: That was greater than one on the instrument side. Again, this quarter, which was very encouraging. Thanks for that very helpful. And then just on academic and government, I know you talked about it, you talked about it for a while, how volatile that can be, but just given sort of the, quarters and a row of sort of negative performance there, and you called out Europe and China specifically, are there any kind of durable trends you're seeing either in funding or in demand that you think might be more persistent in that specific end market as we go through Q4 and then as we look into 2025.

That was greater than one on the instrument side. Again, this quarter, which was very encouraging.

Matt Sykes: Got it. Thanks for that, very helpful. And then just on Academic & Government, I know you talked about it, you talked about it for a while, how volatile that can be, but just given sort of the-- two quarters in a row of sort of negative performance there, and you called out Europe and China specifically, are there any kind of durable trends you're seeing either in funding or in demand that you think might be more persistent in that specific end-market as we go through Q4 and then as we look into 2025?

Padraig McDonnell: No, I think, look, we saw a decline of about 11% and that was really against the comparative feature, the stimulus in EMEA and strong results in APAC and China. So, it was a really tough compare. And I think quite what we're seeing as funding remains stable in most regions. And except I would say Europe where we're seeing a reallocation of funding towards defense. But I would say no major changes in that market.

Matt Sykes: Got it. Thank you very much.

Rachel Olson: Our next question will come from the line of a Rachel Vatnsdal with JP Morgan. Please go ahead. Perfect. Good afternoon.

Operator: Our next question will come from the line of a Rachel Vatnsdal with JP Morgan. Please go ahead.

Perfect. Good afternoon. Thanks for taking the questions, you guys. I wanted to dig into NASD a little bit. Obviously, we had some positive announcements intra-quarter with the HELIOS-B read out. You mentioned that NASD stepped on sequentially as expected, and then you said you're expecting that to then step up into fiscal 4Q. So, could you unpack all that for us a little bit? How should we think about the magnitude of the step up into 4Q and then given some of the updated data readouts that we got intra-quarter. How does that underpin your assumptions on NASD next year, and then also long-term? Yeah, look at I'll start off a maybe I'll hand it over to Simon who's on the call here as well. You know, we've seen.

Rachel Vatnsdal: Perfect. Good afternoon. Thanks for taking the questions, you guys. I wanted to dig into NASD a little bit. Obviously, we had some positive announcements intra-quarter with the HELIOS-B read out. You mentioned that NASD stepped on sequentially as expected, and then you said you're expecting that to then step up into fiscal 4Q. So, could you unpack all that for us a little bit? How should we think about the magnitude of the step up into 4Q and then given some of the updated data readouts that we got intra-quarter. How does that underpin your assumptions on NASD next year, and then also long-term?

Rachel Olson: Thanks for taking the questions you guys. I wanted to dig into NASD a little bit. Obviously, we had some positive announcements in recorder with the helios be read out. You mentioned that NASD stepped on sequentially as expected, and then you said you're expecting that to then step up into fiscal 4 queue. So could you unpack all that for us a little bit?

Parmeet Ahuja: How should we think about the magnitude of the step up into 4 queue and then given some of the updated data readouts that we got in recorder. How does that underpin your assumptions on NASD next year and then also long term. Yeah, look at I'll start off a maybe I'll hand it over to Simon who's on the call here as well. You know, we've seen.

Yeah, look, at I'll start off and maybe I'll hand it over to Simon who's on the call here as well. We've seen with clinical batches, of course, there can be changes with customer's progress on those patches. We're not seeing any changes in what we're saying for Q4. So, we're fairly certain of Q4 on that. What we're seeing as well is that we've grown our clinical business over 50% this year, which is very promising. And the long range view of the market is very strong with the drugs and the modalities that are being used. But I think what you're seeing is a normal kind of open down between quarters with that business. But I don't know if you want to add any more color, Simon? Yeah, I just echo what Horig said.

Padraig McDonnell: Yeah, look, at I'll start off and maybe I'll hand it over to Simon who's on the call here as well. We've seen with clinical batches, of course, there can be changes with customer's progress on those patches. We're not seeing any changes in what we're saying for Q4. So, we're fairly certain of Q4 on that. What we're seeing as well is that we've grown our clinical business over 50% this year, which is very promising. And the long range view of the market is very strong with the drugs and the modalities that are being used. But I think what you're seeing is a normal kind of open down between quarters with that business. But I don't know if you want to add any more color, Simon?

Simon May: You know, with clinical batches, of course, there can be changes with customers, you know, progress and those patches. We're not we're not seeing any changes in what we're saying for Q for so we're fairly we're fairly and certain of Q for on that. What we're seeing as well is that we're we've grown our clinical business over 50% this year, which is very promising. And you know the long range view of the market is very strong with the with the drugs and the modalities that are that are being used. But I think what you're seeing is a normal kind of open down between quarters with that business, but I don't want any any more color. Yeah, I just echo what Horig said.

Simon May: Yeah, I'll just echo what Padraig said. I think the Q3 performance that we saw in NASD was largely in line with expectations. And in that business, we always see a natural lag between all the booking activity and revenue recognition because of the length of time that these programs take. And towards the end of last year, we were really seeing the effects of the IRA impacts and that's still not completely waned, but what we saw in Q3 was pretty, strong bookings activity. So, as we look to Q4 and into 2025, I think we're cautiously optimistic about seeing a return to growth there.

Bob Mcmahon: I think the Q3 performance that we saw in an ASD was largely in line with expectations and in that business, we always see a natural lag between all the booking activity and revenue recognition because of the length of time that these programs take. And towards the end of last year, we were really seeing the effects of the IRA impacts and that's still not completely waned, but what we saw in Q3 was pretty, strong bookings activity, so as we looked to Q4 and into 2025, I think we're cautiously optimistic about seeing a return to growth there.

Bob Mcmahon: So, I'd really just characterized Q3 is in line with expectations and part and parcel of the lumpiness you see in this business. You also mentioned HELIO, so I think it's just worth mentioning that we were very happy to see that development, but still very early days in terms of how that's going to ramp up and play out and too soon to say where that's concerned. But certainly no impacts in the remainder of '24 and unlikely in '25 as well.

Bob Mcmahon: Yeah, hey Rachel, this is Bob. Just to add on a little more to answer your last part of your question in terms of the sequential step-up. We had talked as Simon and Padraig had get said, we'd done a little better actually in Q3 than we expected and we're expecting roughly $20 million step-up from Q3 to Q4. Those orders are all in house and we're still on track for the long--the full year estimate for NASD. And that's incorporated into our guidance. Great, that's helpful.

Robert McMahon: Yeah, hey Rachel, this is Bob. Just to add on a little more to answer your last part of your question in terms of the sequential step-up. We had talked as Simon and Padraig had get said, we'd done a little better actually in Q3 than we expected and we're expecting roughly $20 million step-up from Q3 to Q4. Those orders are all in house and we're still on track for the long--the full year estimate for NASD. And that's incorporated into our guidance.

Rachel Vatnsdal: Great, that's helpful. Then for my follow-up, I just wanted to dig a little bit more into 4Q guidance and what that means in terms of exit rate into 2025. So, I appreciate some of your comments earlier. You highlighted in that question, and you're not really assuming a budget flash for your fiscal year ends in October. But I guess how should investors look at this 4Q number on an organic growth basis of that down 2% up 1% on the range. And how do we look at that translating into 2025. If I look at consensus right now, consensus is just shy of 5% organic on 2025, 3 is also nearing that double digit EPS growth.

Rachel Olson: Then for my follow up, I just wanted to dig a little bit more into 4Q guidance and what that means in terms of exit rate into 2025. So appreciate some of your comments earlier. You highlighted in that question, and you're not really assuming a budget flash for your fiscal year ends in October. But I guess how should investors look at this 4Q number on an organic growth basis of that, you know, down 2% up 1% on the range. And how do we look at that translating into 2025. If I look at consensus right now, consensus is just shy of 5% organic on 2025. 3 is also nearing that double digit EPS group.

Rachel Vatnsdal: But I guess how should investors look at this 4Q number on an organic growth basis of that down 2% up 1% on the range. And how do we look at that translating into 2025. If I look at consensus right now, consensus is just shy of 5% organic on 2025, 3 is also nearing that double digit EPS growth. So, I appreciate it is still a little bit early for you guys to formally give us 2025 expectations. But what do you think about exit rate and where sell-side numbers are right now? Yeah, you were you were reading my mind, Rachel.

Bob Mcmahon: So, I appreciate it is still a little bit early for you guys to formally give us 2025 expectations. But what do you think about exit rate and where sell-side numbers are right now? Yeah, you were you were reading my mind, Rachel.

Robert McMahon: Yeah, you were reading my mind, Rachel. This is Bob and it is a little too early to talk about FY '25. But what I think what it does show is our expectation of this continued steady improvement. But we improved here in Q3 300 basis points, sequentially, we're expecting another improvement here going into Q4. And I would expect that improvement to continue into FY '25. So, and we do expect while it's too early to give you a specific number, we do expect to grow next year.

Bob Mcmahon: This is Bob and it is a little too early to talk about FY 25. But what I think what it does show is our expectation of this continued steady improvement. But we we improved here in Q three 300 basis points, sequentially, we're expecting another improvement here going into Q4. And I would expect that improvement to continue into FY 25. So and we do expect while it's too early to give you a specific number, we do expect to grow next year.

Robert McMahon: So, and we do expect while it's too early to give you a specific number, we do expect to grow next year. These markets will return and we've been below the long-term trend, but there's nothing to suggest that the--or the long-term growth rates of these markets, there's nothing to suggest that these markets have changed. And so, we're optimistic about continued recovery going into FY '25.

Bob Mcmahon: These markets will will return and you know we've been below the long term trend, but there's nothing to suggest that the. Or the long term growth rates of these markets, there's nothing to suggest that these markets have changed.

Rachel Olson: And and so we're optimistic about continued recovery going into FY 25. Understood. Thanks guys.

And and so we're optimistic about continued recovery going into FY 25.

Rachel Vatnsdal: Understood. Thanks, guys.

Operator: Our next question comes from a line of Patrick Donnelly with Citi. Please go ahead.

Patrick Donnelly: Hey guys, thank you for taking the questions. Bob, maybe one for you. Just on China, how you guys are thinking about the region there. It's not like it's down 11% like I'm a little bit better on the revenue side sequentially. It sounds like you got lab activity maybe looking a little bit better. Can you talk about expectations into your end? Some of your peers have suggested you could see a bit of a pause on the capital side into calendar year end as we wait for a little clarity on the stimulus. Just how you guys are thinking about China. Again, not only into your fiscal year, but just into the year end on the calendar side. And what's your view in terms of you really see a little bit of air pocket here until the stimulus college that's armed up.

Bob Mcmahon: Can you talk about expectations into your end? Some of your peers have suggested you could see a bit of a pause on the capital side into calendar year end as we wait for a little clarity on the stimulus. Just how you guys are thinking about China.

Some of your peers have suggested you could see a bit of a pause on the capital side into calendar year end as we wait for a little clarity on the stimulus. Just how you guys are thinking about China. Again, not only into your fiscal year, but just into the year-end on the calendar side. And what's your view in terms of you really see a little bit of air pocket here until the stimulus dollars get firmed up?

Bob Mcmahon: Again, not only into your fiscal year, but just into the year end on the calendar side. And what's your view in terms of you really see a little bit of air pocket here until the stimulus college that's armed up. Patrick is a great question.

Again, not only into your fiscal year, but just into the year end on the calendar side. And what's your view in terms of you really see a little bit of air pocket here until the stimulus college that's armed up.

Robert McMahon: Yes. Patrick, is a great question. We had actually seen a little of that in our Q2 of last--just a quarter ago here, really on the bid activity primarily for instrumentation. We are optimistic about the midterm here in terms of the stimulus. That's probably more FY '25 event probably, but what we are seeing is more activity there. I think it's encouraging and maybe I can turn it over to Angelica as well. Our services business has seen an increase in a pickup in an activity and certainly we saw consumables as well. So, it's still dampened demand, and we did see that impact in Academia and Government. That was the biggest impact in China. But we are seeing some pockets of green shoot in terms of recovery.

Angelica Riemann: We had actually seen a little of that in our Q2 of last just a quarter ago here, really on the bid activity primarily for instrumentation. We are optimistic about the midterm here in terms of the stimulus. That's probably more FY25 event probably, but what we are seeing is more activity there. I think it's encouraging and maybe I can turn it over to Angelica as well.

Angelica Riemann: Our services business has seen an increase in a pickup in an activity and certainly we saw consumables as well. So, it's still dampened demand, and we did see that impact in Academia and Government. That was the biggest impact in China. But we are seeing some pockets of green shoot in terms of recovery. Yeah, Bob, I'll just add, you know, in China, we are encouraged from a services perspective on the nice sequential growth that we saw from Q2 to Q3, which is indicative of continued and somewhat increasing lab activity in China. Okay, that's encouraging.

Our services business has seen an increase in a pickup in an activity and certainly we saw consumables as well. So, it's still dampened demand, and we did see that impact in Academia and Government. That was the biggest impact in China. But we are seeing some pockets of green shoot in terms of recovery.

Yeah, Bob, I'll just add, in China, we are encouraged from a services perspective on the nice sequential growth that we saw from Q2 to Q3, which is indicative of continued and somewhat increasing lab activity in China. Okay, that's encouraging.

Angelica Riemann: Yeah, Bob, I'll just add, in China, we are encouraged from a services perspective on the nice sequential growth that we saw from Q2 to Q3, which is indicative of continued and somewhat increasing lab activity in China.

Okay, that's encouraging. And then maybe another one for you, Bob. As you think about the margin construct as we work our way into year-end into '25, maybe just remind us some of the moving pieces to think about high level as we look ahead to next year. Obviously, the cost out program seems to be progressing well to a point where the margins came in nicely here in 3Q. Yeah, maybe just the moving pieces we go ahead to next year without you know talking too much about the top line on the value matters there, but just kind of down the PNL how to think about you know some of the margin I'll go for next year to be helpful.

Patrick Donnelly: Okay, that's encouraging. And then maybe another one for you, Bob. As you think about the margin construct as we work our way into year-end into '25, maybe just remind us some of the moving pieces to think about high level as we look ahead to next year. Obviously, the cost out program seems to be progressing well to a point where the margins came in nicely here in 3Q. Yes, maybe just the moving pieces as we go ahead to next year without talking too much about the top-line, obviously, the volume matters there. But just kind of down the P&L how to think about some of the margin outlook for next year would be helpful.

Bob Mcmahon: And then maybe maybe another one for you, Bob, as you think about the margin construct as we work away into year and these 25 maybe to remind us some of the moving pieces to think about high level as we look ahead to next year, obviously the cost out program seems to be progressing well to a point where the margins came in nicely here in 3Q. Yeah, maybe just the moving pieces we go ahead to next year without you know talking too much about the top line on the value matters there, but just kind of down the PNL how to think about you know some of the margin I'll go for next year to be helpful.

Yes, maybe just the moving pieces as we go ahead to next year without talking too much about the top-line, obviously, the volume matters there. But just kind of down the P&L how to think about some of the margin outlook for next year would be helpful.

Robert McMahon: Yeah, I think as we talked about--Patrick, is a great question and we're committed to continuing to drive efficiencies across all of the P&L line items. And I think you've seen that across the actions that we've taken. And we're on track to delivering that $100 million of incremental analyze savings that by the end of '24. So, there will still be a tailwind obviously going into '25 for that benefit offsetting that will be some resets of our variable pay and activities like that, but we are committed to covering that.

Bob Mcmahon: If I think about it at the highest level what I would expect us to continue to be able to do is drive leverage earnings next year. And I think you're seeing that the scale benefit that we're seeing and certainly our ACG business here this last quarter just phenomenal profit contribution. And I think with volume coming back into the instrument business as well, that'll set us up nicely for next year. So, think about a nice incremental tailwind associated with the continued actions or the annualization of that actions that come in in FY '25, partially offset by merit and some of the activities, and then we'll have our ongoing productivity measures. And so, we'll actually share some of the more detail around this probably in our Analyst Day in December. So, stay tuned on that as well. Okay that's great thank you.

If I think about it at the highest level what I would expect us to continue to be able to do is drive leverage earnings next year. And I think you're seeing that the scale benefit that we're seeing and certainly our ACG business here this last quarter just phenomenal profit contribution. And I think with volume coming back into the instrument business as well, that'll set us up nicely for next year. So, think about a nice incremental tailwind associated with the continued actions or the annualization of that actions that come in in FY '25, partially offset by merit and some of the activities, and then we'll have our ongoing productivity measures. And so, we'll actually share some of the more detail around this probably in our Analyst Day in December. So, stay tuned on that as well.

So, think about a nice incremental tailwind associated with the continued actions or the annualization of that actions that come in in FY '25, partially offset by merit and some of the activities, and then we'll have our ongoing productivity measures. And so, we'll actually share some of the more detail around this probably in our Analyst Day in December. So, stay tuned on that as well.

Patrick Donnelly: Okay, that's great. Thank you.

Jack Meehan: Our next question comes from the line of Jack Meehan with Nephron Research. Please go ahead. Thank you. Good afternoon.

Operator: Our next question comes from the line of Jack Meehan with Nephron Research. Please go ahead.

Thank you. Good afternoon. Wanted to dig into some of these instrument trends a little bit more. I was wondering if you could talk about just what you were seeing across some of the big categories like LC, LC/MS, GC spectroscopy, any color on how those performed? Yes, I mean, in general terms, Jack, I think customers are very, very cautious. But what I will say is that lab manager remain very engaged, with our sales teams about future projects, that is true. So, we see a lot of stability in that. So so it's still very challenged and I would say that, you know, our deal close race is still elevated, but our formulas are very stable with with with low cancellations. So I think that goes across most of the markets and and as you see going forward, you know, our results and FST and services going mid single digits and both both very, very well. In terms of lab activity, increasing, so we're seeing slow, but steady improvement.

Jack Meehan: Thank you. Good afternoon. Wanted to dig into some of these instrument trends a little bit more. I was wondering if you could talk about just what you were seeing across some of the big categories like LC, LC/MS, GC spectroscopy, any color on how those performed?

Jack Meehan: Wanted to dig into some of these instrument trends a little bit more. Was wondering if you could talk about just what you were seeing across some of the big categories like LC, LCMS, GC spectroscopy, any color on how those performed? Yeah, I mean, general terms, Jack, I think, you know, customers are very, very cautious, but what I will say is that lab manager remain very engaged. With our sales teams about future projects, that is true. You know, we so we see a lot of stability in that.

Padraig McDonnell: Yes, I mean, in general terms, Jack, I think customers are very, very cautious. But what I will say is that lab manager remain very engaged, with our sales teams about future projects, that is true. So, we see a lot of stability in that. So, it's still very challenged. And I would say that our deal close rate is still elevated, but our funnels are very stable with low cancellations. So, I think that goes across most of the markets and as you see going forward our results and CST & Services going mid single digits and both both very, very well in terms of lab activity increasing. So, we're seeing slow, but steady improvement.

Bob Mcmahon: So so it's still very challenged and I would say that, you know, our deal close race is still elevated, but our formulas are very stable with with with low cancellations. So I think that goes across most of the markets and and as you see going forward, you know, our results and FST and services going mid single digits and both both very, very well. In terms of lab activity, increasing, so we're seeing slow, but steady improvement. Yeah, hey, hey, just to follow on to that.

So so it's still very challenged and I would say that, you know, our deal close race is still elevated, but our formulas are very stable with with with low cancellations. So I think that goes across most of the markets and and as you see going forward, you know, our results and FST and services going mid single digits and both both very, very well. In terms of lab activity, increasing, so we're seeing slow, but steady improvement.

Yeah, hey, just to follow on to that. I think one of the things, as we mentioned in the call, the book-to-bill being at one for instance is a positive sign. It was slightly better than what we expected, overall LSAG instruments were down low double digit. Yeah, we're all the categories kind of right around there.

Robert McMahon: Yeah, hey, just to follow on to that. I think one of the things, as we mentioned in the call, the book-to-bill being at one for instance is a positive sign. It was slightly better than what we expected, overall LSAG instruments were down low double digit.

Bob Mcmahon: I think one of the things, as we mentioned in the call, the book, the bill being, you know, at one for instance is a positive sign. It was slightly better than what we expected, you know, overall LSEG instruments were down low double digit. Yeah, we're all the categories kind of right around there.

Jack Meehan: Yes. Were all the categories kind of right around there?

Bob Mcmahon: I would say if you looked at the LC and LC/MS business, they were in the mid-teens, our spectroscopy business better than that. Okay, and then just as one and market follow up was curious in cam in the third quarter. So it was down 5%. It was a little bit below what I was thinking. Is there anything just within the different categories within that and market that softened a little bit relative to what you were thinking a few months ago.

Robert McMahon: I would say if you looked at the LC and LC/MS business, they were in the mid-teens, our spectroscopy business better than that.

Jack Meehan: Okay. And then just as one end-market follow-up. I was curious in CAM in the third quarter. So, it was down 5%. It was a little bit below what I was thinking. Is there anything just within the different categories within that end-market that softened a little bit relative to what you were thinking a few months ago?

Bob Mcmahon: Yeah, so, you're correct. It was declined by 5% and it was really due to the impact of over production in China, which negatively impacted market investments globally. But we did see increases in Service and Consumers both combined at 7% increase. But there was a decrease of about 14% in instruments. And I think CAPEX spending remains slightly challenged there. That makes sense. Thank you guys.

Padraig McDonnell: Yeah, so, you're correct. It was declined by 5% and it was really due to the impact of over production in China, which negatively impacted market investments globally. But we did see increases in Service and Consumers both combined at 7% increase. But there was a decrease of about 14% in instruments. And I think CAPEX spending remains slightly challenged there.

Jack Meehan: That makes sense. Thank you, guys.

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

Vijay Kumar: Hey guys, thanks for taking my question. One, I guess for Bob, if you look at the guidance change or the last three months, NASD China biopharma, those have been the big categories. I think the guide assumes NASD double down double digits in fiscal '24, China down high single double digits in a biopharma down. Which of these is expected to get better next year? What is getting better or worse? And is there a first half versus second half dynamics that we should be aware of? Yeah, thanks for the question.

Padraig McDonnell: Yes, Vijay, thanks for the question. I think in terms of what we expect getting better, we expect all of them to improve next year. And, we raised the midpoint of guidance $15 million on revenue and $0.03 EPS. And we see across all those areas, markets improving slowly. And that's reflected in the sequential increase that we're guiding in Q4. So, while we had a kind of a solid Q3, the end-market environment for capital remains constrained and visibility while improving, is still difficult. Understood.

Bob Mcmahon: I think in terms of what we expect getting better, we expect all of them to improve next year. And you know, we raised the midpoint of guidance 15 million on revenue and three cents an EPS. And we see across all those areas, markets improving slowly. And that's reflected in the sequential increase that we're guiding in Q4. So while we we had a kind of a solid Q3, the end market environment for capital remains constrained and visibility while improving is still there. Understood.

Vijay Kumar: Understood. And maybe on that Q4 commentary for guidance implies, I think up 6% or 7%, which seems generally in line with your historical sequential step up from 3Q. Is the booking trends that we saw, and NASD trends we saw, does it support that historical, I guess, seasonality? Because I think where the Street is debating on is, that historical seasonality doesn't bake in some year-end budget flush or what is baked into that sequential step-up?

Bob Mcmahon: And maybe on that cue for commentary, for guidance implies I think up six or seven percent, which seems generally in line with your historical sequential step up from three cue. And is the booking strings that you saw, and NAFC trends we saw, does it support that historical, I guess, these nowadays. Because I think we're distributed is debating on is that historical humility doesn't bake in some year and budget flush or what is baked into that sequential step up.

Bob Mcmahon: Yes. So, I think what we're seeing is that it's--we normally see the step-up, that's what we're expecting this time. We're not including the budget flush in that. We see a budget flush. It's on top, and that would be in our Q1 numbers as we go forward. Yeah, hey, VJ, this Bob and just to build on what Paul is saying. I mean, you're absolutely right. When we look at the sequential, it is, it is a in line with our historical in our order book based on what we've seen today. Obviously, we have to book orders in Q4, but our order book trends would support that.

Padraig McDonnell: Yes. So, I think what we're seeing is that it's--we normally see the step-up, that's what we're expecting this time. We're not including the budget flush in that. We see a budget flush, it's on top, and that would be in our Q1 numbers as we go forward.

Robert McMahon: Yeah, hey, Vijay, this is Bob and just to build on what Padraig is saying, I mean, you're absolutely right. When we look at the sequential, it is in line with our historical in our order book based on what we've seen today. Obviously, we have to book orders in Q4, but our order book trends would support that.

Tycho Peterson: Fantastic. Thank you guys. Our next question will come from the line of Tyco Peterson with Jeffries. Please go ahead.

Vijay Kumar: Fantastic. Thank you, guys.

Operator: Our next question will come from the line of Tycho Peterson with Jefferies. Please go ahead.

Tycho Peterson: Hey guys, question on BIOVECTRA and maybe just synergies with the rest of the NASD business. How do you think about--does that change views on capacity and maybe just talk a little bit about how much of their BIOVECTRA business is clinical versus commercial? And any kind of emerging modalities that you're adding here? Yeah, I'll start Tyco and I'll bring in Simon in a minute.

Yeah, I'll start Tycho and I'll bring in Simon in a minute. So, we are absolutely delighted with BIOVECTRA. We think it's a great fit that enhances our offerings and it really allows us to deepen our relationships with our key pharma customers. And what we're really excited about is that it builds on our capabilities on current NASD modalities around anti-sense, and particularly gene editing with microbial fermentation and ADC capability. And so, we're very happy with that. So, there's a lot of synergies as we bring that forward. So, I'll hand over to Simon to talk maybe about capacity in the main business. Yeah, I think Pore hit many of the high notes already in terms of the synergies.

Padraig McDonnell: Yeah, I'll start Tycho and I'll bring in Simon in a minute. So, we are absolutely delighted with BIOVECTRA. We think it's a great fit that enhances our offerings and it really allows us to deepen our relationships with our key pharma customers. And what we're really excited about is that it builds on our capabilities on current NASD modalities around anti-sense, and particularly gene editing with microbial fermentation and ADC capability. And so, we're very happy with that. So, there's a lot of synergies as we bring that forward. So, I'll hand over to Simon to talk maybe about capacity in the main business.

Parmeet Ahuja: So we are absolutely delighted with BioVectra. We think it's a great fit that enhances our offerings and it really allows us to deepen our relationships with our key farmer customers. And what we're really excited about is that it builds on our capabilities on current NASD modalities around anti-sense, and particularly gene editing with with microbial fermentation and ADC capability. And so we're very happy with that. So there's a lot of synergies as we bring that forward. So I'll hand over to Simon to talk maybe about capacity. Yeah, I think Pore hit many of the high notes already in terms of the synergies.

Simon May: Yeah, I think Padraig hit many of the high notes already in terms of the synergies. We already mentioned the complete solution offering in gene editing, which we see as a really significant competitive advantage going forward. So, Steriles & Fill/Finish is another synergy that we're excited about. We've had a lot of requests from our customers over the past few years for that capability and from the diligence we've done with BIOVECTRA, we think they've got truly world-class capabilities there. And as Padraig also mentioned with microbial fermentation, high-potency APIs. There's an existing footprint there in GLP-1 manufacturing.

Simon May: We already mentioned the complete solution offering in gene editing, which we see as a really significant competitive advantage going forward. So I'll finish is another synergy that we're excited about. We've had a lot of requests from our customers over the past few years for that capability and from the diligence we've done with bioVectra, we think they've got truly world class capabilities there. And as Pore also mentioned with microbial fermentation, hypotency APIs, there's an existing footprint there in GLP1 manufacturing.

Parmeet Ahuja: So, I think we've got a slightly higher clinical mix in BIOVECTRA than we have in NASD. So, I think we're just killing several birds with one stone with this acquisition. From a capacity perspective, I'd say BIOVECTRA has been ahead of the curve with capacity CAPEX and we've got some skin to grow into there over the next few years.

Tycho Peterson: Okay, that's helpful. And then a follow-up on China. You had the pull-forward dynamic in the first quarter, $15 million, if that were back in 2Q, I think you were effectively flat, maybe down a little bit. First, is that the right assumption? What are you actually embedding in 4Q for China in guidance? And then how do you think about the return to growth in '25? Could you see that in the first half of the year? Yeah, hey, hey, Tycho, that's your recollection is correct.

Robert McMahon: Yeah, hey, Tycho, your recollection is correct. And as we think about implied fourth quarter down mid single digits in China, we're going up quite honestly against some easier compares in full disclosure. And we would expect a slight sequential step-up from a revenue perspective as well. And so, that reflects this steady improvement. We do expect, again, not a lot of that stimulus to come in our Q4 basically none, but more into Q5. But the bidding activity that we're seeing has ramped up, and then I think the activity that we're seeing in Services and Consumables, we're expecting that to continue.

Bob Mcmahon: And as we think about implied fourth quarter down mid single digits in China, we're going up quite honestly against the media compares in full disclosure, and we would expect a slight sequential step up from a revenue perspective as well. And so, you know, that reflects this steady improvement. We do expect, again, not a lot of that stimulus to come in our Q4 basically none, but more into Q5. But the bidding activity that we're seeing has ramped up, and then I think the activity that we're seeing in services and consumables, we're expecting that to continue.

Bob Mcmahon: It's probably too early to tell next year for China. But I would expect it to continue to improve and not be down the way it is, we're expecting a low double digit decline this year, we would expect to improve from that. And it will probably be improvement throughout the year as opposed to an immediate improvement. Certainly, the stimulus will help us with that, but again, that'll be in our first and second quarters most likely. But we're not expecting a huge step up right there, it'll be over time because this stimulus is over a three year period. I understand. Thanks.

It's probably too early to tell next year for China. But I would expect it to continue to improve and not be down the way it is, we're expecting a low double digit decline this year, we would expect to improve from that. And it will probably be improvement throughout the year as opposed to an immediate improvement.

Certainly, the stimulus will help us with that. But again, that'll be in our first and second quarters most likely. But we're not expecting a huge step-up right there. It'll be over time because this stimulus is over a three-year period. I understand. Thanks.

Tycho Peterson: I understand. Thanks.

Operator: Our next question comes from the line of Puneet Souda with Leerink Partners. Please go ahead.

Puneet Souda: Yeah, hi, guys. Thanks for the questions here. Instrumentation growth, obviously an important question. Last quarter you lowered expectations, meaningfully, but again, book-to-bill was strong more than one. Again, this quarter it is more than 1. And I think you said that last quarter was the first time you saw growth in the market after seven quarters. So, that looks like it's continued again into the quarter.

Parmeet Ahuja: And I think you said that last quarter was the first time you saw growth in the market after seven quarters. So, that looks like it's continued again into the quarter. So, just maybe help us understand instrument where we sit on instrumentation? And what sort of recovery are you seeing here in August? And what gives you sort of confidence that the instrumentation should continue to bounce back into 2025 as well?

And I think you said that last quarter was the first time you saw growth in the market after seven quarters. So, that looks like it's continued again into the quarter.

So, just maybe help us understand instrument where we sit on instrumentation? And what sort of recovery are you seeing here in August? And what gives you sort of confidence that the instrumentation should continue to bounce back into 2025 as well?

Padraig McDonnell: Yeah, look, at the indications from the team, we have a strategic account team that does a lot of citations with our major accounts, there's--we're seeing that more positive than negatives in terms of customer sentiment, which is a very good sign. We see a lot of activity in our testing labs as well as focusing on PFAS and so on. So, there is drivers within the markets that are positive.

Bob Mcmahon: There is drivers within the markets that are that are positive, but overall, I would say it's slow and steady, you know, and we're treating it as that. And the teams have really good visibility, you know, our commercial teams, which we've transformed in the last few years are really, really close to our customers. We have really good visibility into that. So it's slow, but steady. I don't know if you want to add on info up to that.

There is drivers within the markets that are that are positive,

But overall, I would say it's slow and steady, and we're treating it as that. And the teams have really good visibility. Our commercial teams, which we've transformed in the last few years are really, really close to our customers. We have really good visibility into that. So it's slow, but steady. I don't know if you want to add anything, Bob, to that.

Robert McMahon: No, I think you're spot on. And we're not building any budget flush into our Q4, Puneet. So, if that does in fact happen, that would be a benefit to our current estimates.

Bob Mcmahon: Estimates. Okay, thanks, and you know recent drug pricing negotiation and Medicare on the first drugs are out, obviously IRAs having an impact, but over the next three years, annually, 15 drugs will be negotiated and that probably leads to another set of impacts. So what are you hearing from your large pharma customers and oral? How are they thinking about the R&D spend and the spend that they're, that they, currently have on Agilent?

Estimates.

Puneet Souda: Okay, thanks. And recent drug pricing negotiation with Medicare on the first drugs are out. Obviously, IRA is having an impact. But over the next three years, annually, 15 drugs will be negotiated and that probably leads to another set of impacts. So, what are you hearing from your large pharma customers? And overall, how are they thinking about the R&D spend, and the spend that they currently have on Agilent?

Padraig McDonnell: Yeah, look, I think in general, they're very cautious, of course, with some of the impacts, the macro impacts that are facing. There's a lot of M&A activity going on within pharma, a lot of consolidation, which of course takes time and energy for these companies to focus on. And I think what you're going to see over time is it probably even out in terms of impact. What isn't going down, by the way, is the number of R&D programs, we see that increasing in a number of

Padraig McDonnell: What isn't going down, by the way, is the number of R&D programs, we see that increasing in a number of key modality areas, particularly around GLP-1, et cetera. So, we need to wait and see. But having said that, people kind of forget in the last few years, the enormous amount of spend that has happened, and we're seeing that normalized now, of course, in the installed base and coming out of that in '25. Okay, sir, okay, thank you.

Bob Mcmahon: key modality areas, particularly around GLP1, et cetera. So, so we need to wait and see, but, but, but having said that people kind of forget in the last few years, the enormous amount of spend that has happened, and we're seeing that normalized now, of course, in the install base and coming out of that in 25. Okay, sir, okay, thank you.

Puneet Souda: Okay, sir. Okay, thank you.

Michael Ryskin: Our next question comes from the line of Michael Riskin with Bank of America, please go ahead. Hey guys, thanks for taking a question. I want to follow up on maybe this is what we're putting, we were just getting that, but you called out in your prepare remarks a couple of times that, with, by a pharma, small molecule held up a little bit better, small molecule did a little bit better, then large molecule, I assume, just wondering if you could delve into that a little bit, or with that, in particular, you know, instrument cluster, modality, petrol, that, with that, that does have to do with budget cycles. So, what you're seeing there, and why is such a difference in, in molecule play. Yeah, hey, hey, Mike, this Bob, you're right.

Operator: Our next question comes from the line of Michael Ryskin with Bank of America. Please go ahead.

Hey, guys. Thanks for taking my question. I want to follow-up on--maybe this is what Puneet was just getting at, but you called out in your prepare remarks a couple of times that with biopharma, small molecule held up a little bit better, or small molecule did a little bit better than large molecule, I assume. Just wondering if you could delve into that a little bit more. Was that a particular instrument class or modality that drove that? Does that have to do with budget cycles? Just what you're seeing there, and why is such a difference in the molecule side. Yeah, hey, hey, Mike, this Bob, you're right.

Michael Ryskin: Hey, guys. Thanks for taking my question. I want to follow-up on--maybe this is what Puneet was just getting at, but you called out in your prepare remarks a couple of times that with biopharma, small molecule held up a little bit better, or small molecule did a little bit better than large molecule, I assume. Just wondering if you could delve into that a little bit more. Was that a particular instrument class or modality that drove that? Does that have to do with budget cycles? Just what you're seeing there, and why is such a difference in the molecule side.

Robert McMahon: Yes. Hey, Mike, this is Bob. You're right. I mean, our small molecule business was down mid-single-digits in the quarter, which was better than expected. Actually, and in Europe it grew, which was a very positive sign. And this does speak to--you can only hold on to your old instruments for so long before the replacements need to happen. We're not calling replacement, cycle inflection just yet. But every quarter of these instruments get older. And one of the things that I think is important here is, pill counts and volumes continue to grow. And back to the question around the IRA and the pricing, I think it was generally, not the worst case scenario, maybe a little better than people expected. And where our strength is, is in the development moving into production, and that continues to be long-term positive trend.

Bob Mcmahon: I mean, our small molecule business was down mid single digits in the quarter, which was, which was better than expected, actually, and in Europe, a group, which was a very positive sign. And this does speak to, you know, you can only hold on to your old instruments for so long before the replacements need to happen. We're not calling replacement, you know, cycle and flexion just yet, but every quarter of these instruments get older, and, you know, one of the things that I think is important here is, pill counts and volumes continue to grow.

Bob Mcmahon: And back to the question around the IRA and the pricing, I think it was generally, not the worst case scenario, maybe a little better than people expected. And where our strength is, is in the development moving into production, and that continues to be long-term positive trend. So, that would be our core LC franchise, and then the biopharma, you know, some of that was impacted by our NASD business, which was kind of the air pocket.

And back to the question around the IRA and the pricing, I think it was generally, not the worst case scenario, maybe a little better than people expected. And where our strength is, is in the development moving into production, and that continues to be long-term positive trend.

So, that would be our core LC franchise. And then the biopharma, some of that was impacted by our NASD business, which was kind of the air pocket. Actually, if you take our biopharma business, which was down double digits, and you take NASD out, we're at mid-single-digits as well, not as--it was down a little more than small molecule, but generally still in that same range. So, both of them are actually, when you take out the kind of the one time unique aspect of NASD, performing better quarter-on-quarter, which is a positive sign. Also, I would say, just adding to that, Bob, we saw services growing double digits in biopharma and mid-single digits in small molecules, so that's a big component of what we see in those different modalities.

Bob Mcmahon: And actually, if you take our biopharma business, which was down double digits, and you take NASD out, we're at mid single digits as well, not as, not as it was down a little more than small molecule, but generally still in that same range. So, both of them are actually, when you take out the kind of the one time unique aspect of NASD, performing better quarter on quarter, which is a positive sign, of Science, Salto, I would say, just adding to that, Bob, you know, we saw services growing double digits in buyer firma and mid-single digits in small molecules, so that's a big component of what we see in those different modalities. Okay, both of the answers are really helpful.

And actually, if you take our biopharma business, which was down double digits, and you take NASD out, we're at mid single digits as well, not as, not as it was down a little more than small molecule, but generally still in that same range. So, both of them are actually, when you take out the kind of the one time unique aspect of NASD, performing better quarter on quarter, which is a positive sign, of Science, Salto, I would say, just adding to that, Bob, you know, we saw services growing double digits in buyer firma and mid-single digits in small molecules, so that's a big component of what we see in those different modalities.

Padraig McDonnell: Also, I would say, just adding to that, Bob, we saw services growing double digits in biopharma and mid-single digits in small molecules, so that's a big component of what we see in those different modalities.

Michael Ryskin: Okay, both of the answers are really helpful. And then from my follow-up, I want to lean a little bit more on BIOVECTRA. I mean, everything to kind of wait out there for the rationale, and the financial deal certainly makes sense. But I'm just curious, you've had a presence in some some CDMO-Type capabilities in the past. Just wondering, how far are you going to lean into this?

Bob Mcmahon: And then from my Bob, I want to lean a little bit more on biobactra. I mean, everything to kind of wait out there for the rationale, and the financial deal certainly makes sense. But I'm just curious, you know, you've had a presence in some some CDMOTEP capabilities in the past. Just wondering, how far are you going to lean into this?

Parmeet Ahuja: And what I'm alluding to is obviously one of your large traditional tools vendors has a CDMO business has been in that business for a number of years now. And there's a lot of talk of the benefits of having both the instruments, the consumables and the services business on tail end. Is this something you're going to continue to grow over time? It's BIOVECTRA like a beachhead acquisition, and we should expect more investment down the road?

Padraig McDonnell: Yeah, I'll start and maybe hand it over to Simon. When we look at our M&A ambition, first of all, it's going to be really centered around where strategy is, what's the strategic fit in faster-growing markets, and of course, value creation. BIOVECTRA ticks all of those boxes. And it's an area of where we're building out more capabilities for customers. So, we see that continuing.

Parmeet Ahuja: And so, we're really excited about it. But we do see that this business has a lot of runway. It's a business that's growing well, very well-run, of course, and it's had a lot of capital investments over a number of years. And I think this is only the start of our ambition in continuing to grow BIOVECTRA and NASD. But, Simon? Not much to add, really, only beyond that. We've got a very strong existing position in the R&A, modality.

And so, we're really excited about it. But we do see that this business has a lot of runway. It's a business that's growing well, very well-run, of course, and it's had a lot of capital investments over a number of years. And I think this is only the start of our ambition in continuing to grow BIOVECTRA and NASD. But, Simon?

Simon May: Not much to add, really, only beyond that, we've got a very strong existing position in the R&A, modality. I'd say up until this point, it's been a relatively narrow capability position and BIOVECTRA builds on that quite nicely. As we look at future optionality around complementary capabilities and modalities, we think it's a rich space. And that's probably all we can say at this point.

Parmeet Ahuja: I'd say up until this point, it's been a relatively narrow capability position and biobactra builds on that quite nicely. As we look at future optionality around complementary capabilities and modalities, we think it's a rich space. And that's probably all we can say at this

Dan Brennan: point. Great. Thank you. Our next question comes from the line of Dan Brennan with TD Cowan. Please go ahead. Great. Thanks.

point.

Great. Thank you. Our next question comes from the line of Dan Brennan with TD Cowan. Please go ahead. Great. Thanks.

Michael Ryskin: Great. Thank you.

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

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

Great. Thanks. Thanks for taking the questions. Maybe just back to China, the down 11% was a bit better than we were looking for. Can you just unpack what specifically got better in the quarter, given the guidance cut that you made last quarter, maybe either by customer type or by product type? And then just to clear up, like, so, your guidance for China, I know it was down double digits, has that changed at all? Have you improved that? So, that's my first question. Yeah, hey, Dan.

Dan Brennan: Great. Thanks. Thanks for taking the questions. Maybe just back to China, the down 11% was a bit better than we were looking for. Can you just unpack what specifically got better in the quarter, given the guidance cut that you made last quarter, maybe either by customer type or by product type? And then just to clear up, like, so, your guidance for China, I know it was down double digits, has that changed at all? Have you improved that? So, that's my first question.

Parmeet Ahuja: Thanks to the questions. Maybe just back to China, you know, can you just unpack what specifically got better in the quarter, given the guidance that the EMA last quarter, you know, maybe out of my customer type or my product type, and then just to clear, up like, so your guidance for China and it was down double digits, has that changed at all? Have you improved that? So that's my first question. Yeah, hey, Dan.

Yes. Hey, Dan. Thanks for the question. China is still in line with our full year and guidance, down low double digits. If I look at where we actually performed slightly better than what we anticipated, it was actually in pharma. And it gets back to what we were talking about before the activity, both on the services side, performing sequentially better, as well as our consumables business actually growing. And so, when we were down, close to 30% in Q2 of last year, we were down low double digits in pharma year-on-year. And so that was the big sequential improvement in Q3. And I would expect that to continue into Q4. [inaudible] you know, Europe ahead, but everywhere else table you know, Europe ahead, but everywhere else

Robert McMahon: Yes. Hey, Dan. Thanks for the question. China is still in line with our full year and guidance, down low double digits. If I look at where we actually performed slightly better than what we anticipated, it was actually in pharma. And it gets back to what we were talking about before the activity, both on the services side, performing sequentially better, as well as our consumables business actually growing. And so, when we were down, close to 30% in Q2 of last year, we were down low double digits in pharma year-on-year. And so that was the big sequential improvement in Q3. And I would expect that to continue into Q4.

Bob Mcmahon: Thanks for the question. China is still in line with our full year and guidance, you know, down low double digits. If I look at where we actually performed slightly better than what we anticipated, actually in pharma. And it gets back to what we were talking about before the activity, both on the services side, performing sequentially better, as well as our consumables business actually growing. And so when we were down, you know, close to 30% in Q2 of last year, we were down low double digits in pharma year on year. And so that was the big, sequential improvement in Q3. And I would expect, you know, that to continue into Q4. [inaudible] you know, Europe ahead, but everywhere else table you know, Europe ahead, but everywhere else

And then, sorry to go back to NASD, but there just been a lot of questions from investors after the turn of events here today, in terms of that business really slowing a lot. Can you--did you say what it did actually in the quarter? I didn't hear the number. Kind of year-over-year, what did NASD do in the quarter? And then kind of if we take your guidance full year, I know you said step-up, could you just give us some clarity on the quarter? And then any additional color on clinical versus commercial? It sounds like your bookings are improving so that portends well for the outlook. But just trying to unpack like what's going on right now in the quarter. Europe ahead, but everywhere else table you know, Europe ahead, but everywhere else

Dan Brennan: And then, sorry to go back to NASD, but there just been a lot of questions from investors after the turn of events here today, in terms of that business really slowing a lot. Can you--did you say what it did actually in the quarter? I didn't hear the number. Kind of year-over-year, what did NASD do in the quarter? And then kind of if we take your guidance full year, I know you said step-up, could you just give us some clarity on the quarter? And then any additional color on clinical versus commercial? It sounds like your bookings are improving so that portends well for the outlook. But just trying to unpack like what's going on right now in the quarter. Thank you.

Dan Brennan: And then kind of if we take your guidance full year, I know you said step-up, could you just give us some clarity on the quarter? And then any additional color on clinical versus commercial? It sounds like your bookings are improving so that portends well for the outlook. But just trying to unpack like what's going on right now in the quarter. Thank you. Dan, what I would say is we typically don't giver

Robert McMahon: Dan, what I would say is we typically don't give a specific number for NASD, but it actually performed in line or slightly better than what we expected. So, we had been signaling a step-down in Q3, and we actually did better than we were expecting there. The full year is still in line with where we were, which is roughly a $300 million business. As Simon was saying, the bookings continue to be positive. In terms of activity, and we're starting to see some of our costumers, the read outs of some activities, which is more a harbinger of long term opportunity, versus short term, but if anything, it was a little better than we expected. So, I don't want anyone to take away that it wasn't--even though it was down in the quarter we expected that and communicated that as part of our guidance. And we're still on track for the full year estimate that we we had coming into the quarter.

Robert McMahon: As Simon was saying, the bookings continue to be positive. In terms of activity, and we're starting to see some of our costumers, the read outs of some activities, which is more a harbinger of long term opportunity, versus short term, but if anything, it was a little better than we expected.

Robert McMahon: So, I don't want anyone to take away that it wasn't--even though it was down in the quarter we expected that and communicated that as part of our guidance. And we're still on track for the full year estimate that we we had coming into the quarter.

Our next question will come from the line of Catherine Schulte Europe ahead, but everywhere else table you know, Europe ahead, but everywhere else Yeah, what, and so we were down mid single digits, and as Paul said, if you, if you took China out, we were down low single digits everywhere else so. Our next question will come from the line of Josh Waldman with Cleveland research please go ahead. Good afternoon, thanks for taking my question so a couple for you. Port or Bob, maybe first to follow up on your assumption for no budget flushing impact on farm instrumentation, is that just a function of the timing of your quarter relative to calendar year in buying from these customers or are there other things you're seeing that are leaving you on the sidelines as a relates to end of your farm is spending.

Our next question will come from the line of Catherine Schulte Europe ahead, but everywhere

Operator: Our next question will come from the line of Catherine Schulte with Baird. Please go ahead. Hey, guys, thanks for the questions.

Operator: Our next question will come from the line of Catherine Schulte with Baird. Please go ahead.

else table you know, Europe ahead, but everywhere else Yeah, what, and so we were down mid single digits, and as Paul said, if you, if you took China out, we were down low single digits everywhere else so. Our next question will come from the line of Josh Waldman with Cleveland research please go ahead. Good afternoon, thanks for taking my question so a couple for you. Port or Bob, maybe first to follow up on your assumption for no budget flushing impact on farm instrumentation, is that just a function of the timing of your quarter relative to calendar year in buying from these customers or are there other things you're seeing that are leaving you on the sidelines as a relates to end of your farm is spending.

Catherine Schulte: Hey, guys, thanks for the questions. Maybe first, just could talk about growth rates by segment for the fiscal fourth quarter and maybe your assumptions for instrumentation versus consumables and services in the fourth quarter?

Bob Mcmahon: Yeah, what, and so we were down mid single digits, and as Paul said, if you, if you took China out, we were down low single digits everywhere else so. Our next question will come from the line of Josh Waldman with Cleveland research please go ahead. Good afternoon, thanks for taking my question so a couple for you. Port or Bob, maybe first to follow up on your assumption for no budget flushing impact on farm instrumentation, is that just a function of the timing of your quarter relative to calendar year in buying from these customers or are there other things you're seeing that are leaving you on the sidelines as a relates to end of your farm is spending.

Yes. Catherine, this is Bob. What I would say is, if I look at our Q4 Europe ahead, but everywhere

Robert McMahon: Yes. Catherine, this is Bob. What I would say is, if I look at our Q4, all groups we would expect to do better. And if I went by group, LSAG would be--we're expecting kind of low single digits off of a down 7% this year. Consumables being better than that overall, and with the instrument side still probably down slightly, or would be down slightly. DGG down mid single digits, and ACG up mid-single digits, towards the high end. That's what we've embedded in our guidance. So, all three of those actually performing better than we were in Q3. Perfect. And then maybe going back to small molecule. Nice to see the improvement there. What was just small molecule performance excluding China? I know you said Europe grew, but just curious to get more color on what you're seeing elsewhere.

Catherine Schulte: Perfect. And then maybe going back to small molecule. Nice to see the improvement there. What was just small molecule performance excluding China? I know you said Europe grew, but just curious to get more color on what you're seeing elsewhere.

Padraig McDonnell: Yes. I think what we're seeing is Europe was a stand out in small molecule, a lot of activity there, but probably stable across the different markets on it. And what we did see from the small molecule side, we did see pretty good growth and services as well as has had that number. But I think overall, Europe ahead, but everywhere else stable.

else table you know, Europe ahead, but everywhere else

Yes. So, we were down mid single digits, and as Padraig said, if you took China out, we were down low single digits everywhere else so. Our next question will come from the line of Josh Waldman with Cleveland research please go ahead. Good afternoon, thanks for taking my question so a couple for you. Port or Bob, maybe first to follow up on your assumption for no budget flushing impact on farm instrumentation, is that just a function of the timing of your quarter relative to calendar year in buying from these customers or are there other things you're seeing that are leaving you on the sidelines as a relates to end of your farm is spending.

Robert McMahon: Yes. So, we were down mid single digits, and as Padraig said, if you took China out, we were down low single digits everywhere else so.

Our next question will come from the line of Josh Waldman with Cleveland research please go ahead. Good afternoon, thanks for taking my question so a couple for you. Port or Bob, maybe first to follow up on your assumption for no budget flushing impact on farm instrumentation, is that just a function of the timing of your quarter relative to calendar year in buying from these customers or are there other things you're seeing that are leaving you on the sidelines as a relates to end of your farm is spending.

Operator: Our next question will come from the line of Josh Waldman with Cleveland Research. Please go ahead.

Josh Waldman: Good afternoon, thanks for taking my question. So, a couple for you, Padraig or Bob, maybe first to follow up on your assumption for no budget flushing impact on pharm instrumentation, is that just a function of the timing of your quarter relative to calendar year-end buying from these customers or are there other things you're seeing that are leaving you on the sidelines as a relates to end of your pharma spending?

Bob Mcmahon: And then a related question was curious any high level thoughts you had on '25 based on planning conversations you're having with pharma accounts. Are you thinking next year should be a return to normal growth type year and pharma instrument budgets, as budgets are reset or is it more of a gradual recovery or return to normal over a couple of year period? Any feedback that you're getting from accounts on that? Yeah, I'll take the first one and maybe hand off to Bob for the second one, I think, you know, it's a year ago, and we were people were talking about budget flushes, we didn't expect it and we didn't see it, we saw a little bit but not much we're expecting the same. At this time, of course, our year ends at the end of October, so if we do see any activity will be in queue on 25.

And then a related question was curious any high level thoughts you had on '25 based on planning conversations you're having with pharma accounts. Are you thinking next year should be a return to normal growth type year and pharma instrument budgets, as budgets are reset or is it more of a gradual recovery or return to normal over a couple of year period? Any feedback that you're getting from accounts on that?

Padraig McDonnell: Yeah, I'll take the first one and maybe hand off to Bob for the second one. I think, it's a year ago, and we were--people were talking about budget flushes, we didn't expect it, and we didn't see it. We saw a little bit, but not much. We're expecting the same at this time. Of course, our year ends at the end of October, so if we do see any activity will be in Q1 '25.

Parmeet Ahuja: Why do we see this? Is because we're very close to our customers, we know exactly where the funnel is, where the deals are and where installed base, we have a lot of installed base information. So, we're not expecting of anything substantial at the end of the year. But what we are seeing is a lot more conversations about next year slow steady recovery and we're hearing that across the board. I don't know if you want to take a second question, Bob?

Robert McMahon: Yes. Josh, on '25 as we were saying, it's probably too early to say, but what our current indication is that it's not going to snap back November 1st to be back to normal. I do think that you'll continue to see a recovery throughout FY '25, and get back to that long-term growth rate sometime in '25. That's the way we kind of think about it. But I don't think it's another two-to three-year estimate either, based on our conversations with our customers right now. So, it's probably in between.

Bob Mcmahon: You know, based on our conversations with our customers right now, so it's probably in between. Got it. Okay. And then just to follow up on ACG was curious if you could provide a bit more context on the dynamics you're seeing there, especially interested in what you're seeing from an RFP and win rate. Dynamic and the contract of business and then you mentioned, I think in the slide decks, benefiting from mix was wondering if you could flush that out a bit. Yeah, I take the first part of that question and hand it over to Angelique.

You know, based on our conversations with our customers right now, so it's probably in between.

Got it. Okay. And then just to follow-up on ACG, I was curious if you could provide a bit more context on the dynamics you're seeing there, especially interested in what you're seeing from an RFP and win rate dynamic in the contract of business. And then you mentioned, I think in the slide decks, benefiting from mix. I was wondering if you could flush that out a bit. Yeah, I take the first part of that question and hand it over to Angelique.

Josh Waldman: Got it. Okay. And then just to follow-up on ACG, I was curious if you could provide a bit more context on the dynamics you're seeing there, especially interested in what you're seeing from an RFP and win rate dynamic in the contract of business. And then you mentioned, I think in the slide decks, benefiting from mix. I was wondering if you could flush that out a bit.

Yeah, I take the first part of that question and hand it over to Angelique. Extremely pleased with ACG's performance and that's years of investment and abroad product offerings and key markets that are really being received by customers in this environment where they want to get more productivity out of the systems, they want to use their assets in different ways. And we've seen the flow true to our results in spite of the CAPEX challenges all year. So the business performs extremely well and you know the margins are extremely good.

Padraig McDonnell: Yeah, I take the first part of that question and hand it over to Angelique. Extremely pleased with ACG's performance and that's years of investment and abroad product offerings and key markets that are really being received by customers in this environment where they want to get more productivity out of the systems, they want to use their assets in different ways. And we've seen the flow true to our results in spite of the CAPEX challenges all year.

Angelica Riemann: You know, extremely pleased with ACG's performance and that's. Years of investment and abroad product offerings and key markets that are really being received by customers in this environment where. They want to get more productivity out of the systems to want to use their assets. In different ways and we've seen the flow true to our results in spite of the capex challenges all year. So the business performs extremely well and you know the margins are extremely good.

So, the business performs extremely well and the margins are extremely good. So, I'll ask Angelica to provide more color on the contract business. But I think what's really interesting is our enterprise service business as well. Angelica?

Angelica Riemann: So I last can to legal to provide more color on the contract business, but I think what's really interesting is our service or enterprise service business as well. Yeah, so to really dive in on the contracts, right? It's nearly 70% of our business in Q3 and it's continuing to grow double digits. As we continue to see that strong demand in our enterprise service offerings, which are, you know, the high, the mid teens, it's really about being there to help customers optimize their lab operations, improve their productivity and our offers really facilitate, our customers improving the lab operations, the efficiencies and their waste reduction.

So I last can to legal to provide more color on the contract business, but I think what's really interesting is our service or enterprise service business as well.

Angelica Riemann: Yes. So, to really dive in on the contracts, right? It's nearly 70% of our business in Q3 and it's continuing to grow double digits. As we continue to see that strong demand in our enterprise service offerings, which are the mid teens, it's really about being there to help customers optimize their lab operations, improve their productivity and our offers really facilitate our customers improving the lab operations, the efficiencies and their waste reduction. So, we're continuing to see some very strong and sticky behavior within our contracts franchise.

Angelica Riemann: So we're continuing to see some very strong and sticky behavior within our contracts franchise. Yeah, and Josh just on the comment on mixes, you know, when we have business on contract, that generally is good for us and good for our customers as well. Got it. Okay. Appreciate all the details.

So we're continuing to see some very strong and sticky behavior within our contracts franchise.

Yes. And Josh just on the comment on mix is when we have business on contract, that generally is good for us and good for our customers as well. Got it. Okay. Appreciate all the details.

Robert McMahon: Yes. And Josh just on the comment on mix is when we have business on contract, that generally is good for us and good for our customers as well.

Josh Waldman: Got it. Okay. Appreciate all the details.

Doug Schenkel: Our final question will come from the line of Doug Schinkle with Wolf Research. Please go ahead. Hey guys, thanks for fitting me in. I know it's late in the call.

Operator: Our final question will come from the line of Doug Schenkel with Wolfe Research. Please go ahead.

Doug Schenkel: Hey guys, thanks for fitting me in. I know it's late in the call. That being said, I got three lightning round questions, which I'm going to rattle through and then listen to the answers. The first is on MAP. It's recurring revenue growth was up mid single digits in the quarter. It seems like instruments have to be down around 20% maybe more based on the numbers you reported in the 10-Q and Q3 of last year. Bob, I think you said in response to Matt Sykes' question, it was down low double digits. What are we missing? It's just not trying to be too picky here, but it just seems important in the context of assessing trends and what weight to put on your book-to-bill commentary. So, that's the first question.

Doug Schenkel: That being said, I got three lightning round questions which I'm going to rattle through and then listen to the answers. The first is on map. It's recurring revenue growth was up mid single digits in the quarter. It seems like instruments have to be down around 20% maybe more based on the numbers you reported the 10 Q and Q3 of last year. Bob, I think you said in response to Matt psych's question, it was down low double digits. What are we missing? It's just not trying to be too picky here, but it just seems important in the context of assessing trends and what way to put on your book to build commentary.

Bob Mcmahon: So that's the first question. The second is on China stimulus. Any change in dynamics regarding stalling either, you know, in terms of conversions or even cancellations, there's some skull but that there's been some recent changes as the shape of stimulus becomes a bit more clear. And then the third question is on 2025. If you exit 2024 with flatish core growth in Q4, that would obviously be a positive trend relative to what we've seen over the last few quarters.

So that's the first question.

The second is on China stimulus. Any change in dynamics regarding stalling either in terms of conversions or even cancellations. There's some scuttlebutt that there's been some recent changes as the shape of stimulus becomes a bit more clear. And then the third question is on 2025. If you exit 2024 with flattish core growth in Q4, that would obviously be a positive trend relative to what we've seen over the last few quarters.

Bob Mcmahon: That said, it would seem like if you draw a straight line that you'd be on track to exit 2025 at around call it 5% maybe 6% growth rather than growing mid single digits for the year. So, I think you need a fundamental improvement in overall market conditions and/or a real impact from China stimulus to get to mid singles for the year. I just want to see if any of my logic is flawed there. Thank you, and have a good night.

Parmeet Ahuja: That's certainly a lightning round, Doug, but we'll try and we'll answer it. I think Bob, you can take the first and the last one, I'll take China. Yeah, the comment that I had on instruments was specifically related to LSAG instruments and they were down low double digits, consumables was up mid single digits for the total being down minus seven. So that is we do have some instrumentation in DGG as well that was that was down roughly the same as where LSAG was so down 20 is way to way to, I'll turn it over to Pauline for the second one and then I can jump back into the last one.

Padraig McDonnell: That's certainly a lightning round, Doug, but we'll try and we'll answer it. I think Bob, you can take the first and the last one, I'll take China.

Yeah, the comment that I had on instruments was specifically related to LSAG instruments and they were down low double digits, consumables was up mid single digits for the total being down minus 7. So, that is--we do have some instrumentation in DGG as well that was down roughly the same as where LSAG was. So, down 20 is way too negative. I'll turn it over to Padraig for the second one and then I can jump back into the last one.

Robert McMahon: Yeah, the comment that I had on instruments was specifically related to LSAG instruments and they were down low double digits, consumables was up mid single digits for the total being down minus 7. So, that is--we do have some instrumentation in DGG as well that was down roughly the same as where LSAG was. So, down 20 is way too negative.

I'll turn it over to Padraig for the second one and then I can jump back into the last one.

Padraig McDonnell: Yeah, look at I think we're very close to our China team and the local team has seen an increased activity. We're seeing that improve from last quarter and for clarity, of course, we're not building any benefit from the stimulus into our Q4 guide. But what we're seeing in early days, we're hearing that the stimulus is broader in terms of its reach over a three-year period. Having said that, we are hearing that the first tranche will likely be focused on Academic & Government accounts. But again, it's early days. As it trickles down to provinces as the mechanism of the funding goes, we'll be sure to update as we know that.

Parmeet Ahuja: We want to likely be focused on academic and government accounts, but again, it's early, early days as the trick is down to provinces at the mechanism of the funding goals, we'll be sure to update as we know that. Yeah, and I think just the last one real quick, it's too early. We're not going to get into what we're looking at for FY 25 other than to say that we expect improvement throughout the year.

We want to likely be focused on academic and government accounts, but again, it's early, early days as the trick is down to provinces at the mechanism of the funding goals, we'll be sure to update as we know that.

Robert McMahon: Yes. And I think just the last one, real quick, it's too early. We're not going to get into what we're looking at for FY '25 other than to say that we expect improvement throughout the year.

Parmeet Ahuja: And I'll now turn the call back over to Parmeet Ahuja for any closing remarks. Thanks Regina and thanks everyone for joining the call today with that we'd like to end the call. Have a good rest of the day everyone.

Operator: And I'll now turn the call back over to Parmeet Ahuja for any closing remarks.

Parmeet Ahuja: Thanks Regina, and thanks everyone for joining the call today. With that, we'd like to end the call. Have a good rest of the day, everyone.

Operator: Ladies and gentlemen, this concludes today's call. Thank you for joining. You may now disconnect.

reggina: ladies and gentlemen welcome to the agadent technologies q three two thousand andtwenty four earnings call my name is reggina and i will be coordinating your call today

Thank you and welcome everyone to Agilent's conference call for the third quarter of fiscal year 2024.

formea hoj: if you would vlike to ask a question following the presentation you may do so by pressing star one on your telephone i will now hand you over to your host formea hoj to begin please go ahead

bomcman adudan: thank you and welcome everyone to adllin conference call for the third quarter of fiscal year two thousand and twenty fourwith me are porting mcdonalll angeilein president and ceo and bomcman adudan senavice president and cfo

Please go ahead.

With me are Padraig McDonnell, Agilent President and CEO, and Bob McMahon, Agilent Senior Vice, President and CFO.

Thank you.

Hey, good afternoon.

Good afternoon.

Thanks for taking my questions.

Joining in the Q&A will be Phil Binns, President of the Agilent Life Sciences and Applied Markets, Group, Simon May, President of the Agilent Diagnostics and Genomics Group, and Angelica

A couple for you.

ffell bin: joining in the q aname will be ffell bin president of the adjir l sciensces and applied markets group

Porag or Bob, maybe first a follow-up, on your assumption for no budget flushing impact, on pharma instrumentation, is that just a function of the timing of your quarter relative to calendar year-end buying from these customers, or are there other things you're seeing that are leaving you on the sidelines as it relates to end-of-year pharma spending?

Speaker Change: simon may president of the adilein diagnostics and genomics group in angeicariment president of the adin cross-lab group

Riemann, President of the Agilent Cross Lab Group.

And then a related question, was curious any high-level thoughts you had on 25 based on, planning conversations you're having with pharma accounts?

This presentation is being webcast live.

I wanted to dig into some of these instrument trends a little bit more.

Are you thinking next year should be a return to normal growth-type year in pharma instrument, budgets as budgets are reset, or is it more of a gradual recovery or return to normal over a couple-year period?

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

I was wondering if you could talk about just what you're seeing across some of the big, categories like LC, LC-MS, GC, spectroscopy, any color on how those performed?

Any feedback you're getting from accounts on that?

Speaker Change: this presentation is being webcast lights

Speaker Change: the news release for our third 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 w w dot inmaster dot agileent com

Yeah.

Yeah, I'll take the first one and maybe hand off to Bob for the second one.

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. Unless otherwise noted, all references to increases or decreases in financial metrics, are year-over-year, and references to revenue growth are on a core basis. Core revenue growth excludes the impact of currency and any acquisitions and divestitures, completed within the past 12 months.

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 reconcciiations on our website

Speaker Change: unless otherwise noted all references to increases or decreases in financial metrics a year-over-year and references to revenue growth are on a core basis

Speaker Change: core revenue growth excludes the impact of currency and any acquisitions and divestitatures completed within the past twelve months

Guidance is based on forecasted exchange rates.

As a reminder, 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.

Speaker Change: guidance is based on forecasted exchange rates

Speaker Change: as a reminder beginning in the first quarter of fiscal two thousand and twenty four we implemented certain changes to our segment reporting structure related to the move of our cell analysis business from lsag into dg

Speaker Change: we have recasted our historical segment information to reflect these changes

These changes have no impact on our company's consolidated financial statements.

Speaker Change: these changes have no impact on our company's consolidated financial statements

During this call, we will also make forward-looking statements about the financial performance, of the company.

Speaker Change: during this call we will also make forward-looking statements about the financial performance of the company

These statements are subject to risks and uncertainties and are only valid as of today. The company assumes no obligation to update them.

Speaker Change: these statements are subject to risks and uncertainties and are only valid as of today

Please look at the company's recent SEC filings for a more complete picture of our risk and, other factors.

Speaker Change: the company assumed no obligation to update them

Speaker Change: please look at the company's recent sec filings for a more complete picture of our risk and other factors

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

Thanks, Parikh.

porick: and now i'd like to turn the call over to porick

Good afternoon, everyone, and thank you for joining today's call.

I mean, in general terms, Jack, I think, you know, customers are very, very cautious.

I think, you know, it's a year ago, and people were talking about budget flushes.

We didn't expect it, and we didn't see it.

porick: thanks permmees good afternoon everyone and thank you for joining today's call the adentment team executed well in the third quarter and posts subtal results delivering better than expected revenue and earnings

The Atlin team executed well in the third quarter and posted solid results, delivering, better-than-expected revenue and earnings. Earnings per share of $1.32 is $0.04 above the high end of guidance. As a result of our strong Q3 performance, we are raising our guidance at the midpoint, for both revenue and EPS, and we continue to make investments in our most promising growth opportunities that are referenced in our Q2 calls.

But what I will say is that lab manager remain very engaged with our sales teams about future, projects.

We saw a little bit, but not much.

That is true.

We're expecting the same this time, of course.

porick: revenue of one point five seven eight billion dollars declined four point four percent an improvement of three hundred basis points from q two reflecting the steady improve in the market

porick: operating margin of twenty-seven point four percent improved sequentially as the actions we announced last quarter start to deliver and we remain on track to deliver the incremental annual savings of one hundred million dollars by the end of the fiscal year

Our year ends at the end of October, so if we do see any activity, we'll be in Q125.

porick: earnings per share of one dollar thirty-two cents its's four sensi ble the high end of guidance

Why do we see this?

porick: as a result of our strong q three performance we are raising our guidance at the midpoint for both revenue and eps and we continue to make investments in our most promising growro opportunities by a referenced in our q two cold

We are investing in our digital ecosystem to further enhance our differentiated customer, experience.

It's because we're very close to our customers.

porick: we are investing in our digital ecosystem to further enhance our differentiated customer experience plus we are mobilizing the organization to accelerate value creation throughue strategic transformation initiatives driving margin expansion and growth and increasing our execution capabilities

Plus, we are mobilizing the organization to accelerate value creation through strategic, transformation initiatives, driving margin expansion and growth, and increasing our execution capabilities.

Separately in the quarter, we were excited to announce two acquisitions that demonstrate, our focus on biopharma and our digital ecosystem, which I'll talk about in a moment.

porick: separately in the quarter we were excited to announce two acquisitions that demonstrate our focus on per pharma and our digital ealsystem which i'will talk about in a moment

As you know well, the pace of change is faster than ever.

We know exactly when, where the funnel is, where the deals are, and we're install-based.

Our markets, customers, and competitors are not standing still, neither are we. We're accelerating our pace of innovation and execution so we can add to and capitalize, on opportunities in front of us.

We have a lot of install-based information, so we're not expecting anything substantial, at the end of the year.

porick: as you know well the pace of change is posive never our markets customers and competitors are not standing still night arewe

But what we are seeing is a lot more conversations about next year, slow, steady recovery, and, Unknown Speaker Josh, on 25, as we were saying, it's probably too early to say, but what I, you know, our current indication is that it's not going to snap back November 1st to be back to normal.

porick: we're accelerating our pace of innovation and execution so we can add to and capitalize on opportunities in frontof us

We are sharply focused on key growth factors, including biopharma, PFAS, and advanced materials.

porick: we are sharply focused on key growth factors including biopharma pfas and advanced materials

I continue to meet and connect with employees, customers, and shareholders around the globe, to listen to their perspectives on how we should build on our strengths and move Agilent forward.

I do think that you'll continue to see a recovery throughout FY25 and get back to that long-term growth rate sometime in 25.

porick: i continue to meet and connect with employees customers and shareholders around a globe to listen to their perspectives and how we should build on our strength and move ad forward

The entire Agilent team is clear on what is vital to the company's future, becoming even, more customer-focused and even more nimble to continue to win in the marketplace and add value to customers and shareholders.

porick: the entire adent team is clecare and what is vital to the company's future becoming even more customer focused and even more nimble to continue to win in the marketplace and add valuue to customers and shareholders

We are evolving our strategy, adapting quickly to market trends and changes, while accelerating, our pace of innovation in areas of greatest return for long-term growth.

porick: we are evolving our strategy adopting quickly to market rendsand changes while accelerating our pace of innovation in areas of greatest return for long-term growth we're excited to the nounance that you hear more about these topics and our transformation at our investor day we have planned in new york on december seventeenth

We're excited to announce that you'll hear more about these topics and our transformation, at our Investor Day we have planned in New York on December 17th.

That's the way we kind of think about it.

Now let's talk further about our Q3 results.

You know, so we see a lot of stability in that.

But I don't think it's another two to three-year estimate either, you know, based on our conversations with our customers right now. So it's probably in between.

Speaker Change: now let's talk forter about our q three results

All our end markets accept academia and government, which is our smallest, end of the quarter, better than expected. Our largest market, pharma, declined high single digits, slightly better than our expectations. And while biopharma continues to be pressured, we are seeing relatively better performance, in small molecules.

So it's still very challenged.

Unknown Speaker Got it.

Speaker Change: order end markets except academian government which is our smallest and of the quarter better than expected

Got it.

And I would say that, you know, our deal close rate is still elevated, but our funnels are, very stable with low cancellations.

Okay.

Speaker Change: our largest market pharma declined high single digits slightly better than our expectations

So I think that goes across most of the markets.

And then just had a follow-up on ACG.

Speaker Change: and while biio pharmma continues to be pressured we are seeing relatively better performance and small molecule

Our leadership in providing workflow solutions for PFAS continues to show strong performance, in the environmental market.

Was curious, if you could provide a bit more context on the dynamics you're seeing there, especially interested in what you're seeing from an RFP and win rate dynamic in the contracted business.

And then you mentioned, I think in the slide decks, benefiting from mix.

Speaker Change: our leadership and providing workflow solutions for pf continue to show strong performance in the environmental marts

Was wondering, if you could flush that out a bit.

Unknown Speaker Yeah, I'll take the first part of that question, and hand it over to Angelica.

Geographically, Europe exceeded expectations, led by small molecule pharma, as well as continued, strength in environmental.

Speaker Change: geographically europe ceed expectations led by small molecule pharma as well as continued strengthen environmentalour auto regions performed rothy in line with expectations

Our other regions perform roughly in line with expectations. While capital equipment budgets remain constrained, we continue to see good lab activity in Q3, with services plus consumers growing mid-single digits.

And as you see going forward, you know, our results in CSD and services going mid-single, digits and both very, very well in terms of lab activity increasing.

Speaker Change: while capital equipment budget remained constrained we continue to see good lab activity in q three with services plus consumererswas growing mid-single digits

So we're seeing slow but steady improvement.

When looking at our performance by business unit, the Life Sciences and Applied Markets, group reported $782 million in revenue, down 7%.

Unknown Speaker Yeah.

Speaker Change: when looking at our performance by business units the life sciences and applied markets group reported seven hundred eighty two million dollars and revenue down seven percent while the instrument sside of the business remains constrained it was encouraging that our instrument book to bit was again greater than one

While the instrument side of the business remains constrained, it was encouraging that, our instrument book to build was again greater than one.

Hey, Jack, just to follow on to that, I think one of the things, as we mentioned in the call, the book, the bill being, you know, at one for instruments is a positive sign. It was slightly better than what we expected.

The group saw a decline across all regions and most end markets, with low single-digit, growth in environmental and forensics.

Speaker Change: the group are decline across all regions and most end markets with low single-digit growth in environmental and forenics

We've continued to be a bright spot, growing by mid-single digits.

Speaker Change: consumabers continue to be a bright spot grown by mid-single digits

The LSAG team also was busy innovating with the introduction of the 8850 GC that helps, customers reach their sustainability goals by delivering answers efficiently while using up to 30% less power than other GCs and has a much smaller footprint.

Speaker Change: p sag team also was busy innovating with the introduction of the ad fifty gc that has customers reached our sustainability goals by deliver answers efficiently while using up the thirty percent less par and auer gcs and have a a much smaller footprint

Moving on to the Agilent CrossLab group, the business delivered revenue of $411 million, for the quarter, up mid-single digits. ACG grew in every region except China, where we were down modestly year-on-year but showed, meaningful improvement versus last quarter.

Speaker Change: moving on to the adileent cross-bloab group the business delivered revenue four hundred and eleven million dollars for the quarter upmid-single digits

You know, extremely pleased with ACG's performance and that's years of investment in a broad product offerings in key markets that are really being received by customers in this environment where they want to get more productivity out of their to want to use their assets in different ways.

Speaker Change: afg grew in every region except china where we were down modestly year-on-year but showed meaningsful improvement the first last quarter once again we drove double-digit growth in service contracts which represented nearly seventy percent of the total business

Once again, we drove double-digit growth in service contracts, which represented nearly, 70% of the total business.

And beyond another quarter of solid revenue growth, ATG also delivered a record operating, margin of 34%, demonstrating that the resiliency and strength of the recurring revenue business continues despite the constrained capital equipment environment.

And we've seen the flow through to our results in spite of the CapEx challenges all year.

Speaker Change: and beyond the another quarter of solid revenue growthacg also delivered a record operating margin of thirty-four percent demonstrating that the resiliency and strength of the recurring revenue business continues despite the constrained capital liquid environment

So the business performs extremely well and you know, the margins are extremely good.

So I'll ask Angelica to provide more color on the contract business.

The continued strength of our business is a testament to our strategy of increasing, the connect rates on our instruments and the ongoing value we are providing to our customers in helping them reach their productivity goals.

But I think what's really interesting is our enterprise service business as well.

Speaker Change: the continued strenand of our business is a testament to our strategy of increasing to connect rates of other instruments and the ongoing value we are providing to our customers in h them reach a productivity goals

The Diagnostics and Genomics Group posted $385 million in revenue, representing an 8% decline.

Speaker Change: the diagnostics and genomeialous group close to threehundred eighty five million dollars in revenue representing an eight percent decline the pology group mid-single-digits globally and was offset by declines in sell analysis any sd and genyomics

Pathology grew mid-single digits globally and was offset by declines in cell analysis, NASD, and genomics.

NASD stepped down sequentially in Q3 as expected, and we were on track for NASD's revenues, to step up sequentially in Q4.

Speaker Change: anyd step-down sequentially in q three as expectctors and we are on track for n's revenues to step up sequentially in q four

In the face of a constrained CapEx environment, the Agilent team has remained consistent in, putting our customers first and fostering deeper relationships with them.

Angelica?

Speaker Change: in the face of the constrained capex environment the asmentma team has remain consistent in puting our customers forced and fostering deeper relationships with them

We continue to execute well and be disciplined while investing in high growth opportunities.

Speaker Change: we continue to execute well and be disciplined while investing in high-growth opportunities

As I mentioned earlier, we were thrilled to announce two acquisitions that speak to our, focus on biopharma and increasing recurring revenue, as well as on strengthening the digital ecosystem for Agilent customers. In late July, we signed a definitive agreement to acquire BioVectra, a leading specialized, contract development and manufacturing organization. The Canada-based company builds on Agilent's capabilities in oligonucleotides and CRISPR, therapeutics by expanding our portfolio of services. BioVectra adds rapidly growing modalities in microbial fermentation, antibody drug conjugates, and high-potency active pharmaceutical ingredients.

Speaker Change: as i mentioned earlier we were thrillateded to announ two acquisitions that speak to our focus on byerpharma and increasing recurring revenue as well as on strengthening the digital ecosystem forage and customers

Speaker Change: in latejulight we signeda definitive agreement to acquire biioveterctor a leading specialized contract development and manufacturing organization the canada-bed company builds on adagonance capabilities in the oligant nucle ties and crispbytherapeutics by expanding our portfolio of services

Speaker Change: b a vector adds rapidly grown modalities microbia fermutation antibody drug conjugates and highhypotency active pharmaceutical ingredients it also brings world-class capabilities that when combined with nasd enables us to deliver customers are complete ingin editing solution

It also brings world-class capabilities that, when combined with NASD, enables us to deliver, customers a complete gene editing solution.

The company delivered more than $110 million in revenue during the calendar year 2023 and, expects double-digit revenue growth this year.

Speaker Change: the company delivered more than one hundred and ten mion dollars in revenue during the calendar year two thousandand twenty three and expects double-digit revenue growth this year

The BioVectra acquisition remains on track to be closed by the end of the year, and we're, looking forward to welcoming the BioVectra team to Agilent.

Speaker Change: the biiobector acquisition remains on track to be cloed by the end of the year and we're looking forward to welcomeed biiobackterteam to julent

At the end of the quarter, we also announced the acquisition of Californian-based Sixth, Sense, a startup that uses artificial intelligence and power monitoring to help customers optimize their lab operations. Sixth Sense technology already is available to our customers through CrossLab Connect, a suite of digital applications that improve lab performance.

Speaker Change: at the end of the quarter we also announced the acquisition of californian bas sense i start up that us artificial intelligence and power monitoring to help customers optimize their lab operations

Speaker Change: six-ength technology already is available to our customers true cross-lab connect a suite of digital applications that improve l performmans a hardy welcome to the six-cent team who already is part of agllent

A hearty welcome to the Sixth Sense team, who already is part of Agilent.

During the quarter, we released our annual ESG report, which showcases a large and growing, portfolio of products that help our customers reach their sustainability goals. Agilent, certified with the MyGreenLab ACT label, now accounts for 40% of all instrument, revenue, and we continue to regularly release products like the new 8850GC with environmental benefits.

Speaker Change: during the quarter we released our annual esd report which showcases a large and growing portfolio products that help our customers reached their sustainability goals

Speaker Change: instruments certified with the miggreen lab aft levels now accounts for forty percent of all instrument revenue how we continue to regularly release products like a new eight fifty gc with environmental benefits

We are also proud that we have recently ranked in the top 20 of Time Magazine's 500 Most, Sustainable Companies in the World.

Speaker Change: we are also proud that we have recently ranked in the top twenty of time magazines five hundred most sustainable companies in the world

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

Speaker Change: allb will now provide the 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 over to you bub

After Bob delivers his comments, I will be back for some closing remarks.

Over to you, Bob.

Thanks, Parag, and good afternoon, everyone.

You know, overall LSEG instruments were down low double digit.

Bob: thanks porrig and good afternoon everyone in my remarks today i'll provide some additional details on revenue in the quarter as well take you through the income statement and other key financial metrics

In my remarks today, I'll provide some additional, details on revenue in the quarter, as well as take you through the income statement and other key financial metrics.

Unknown Speaker Yeah.

Were all the categories kind of right, around there?

Unknown Speaker You know, I would say if you looked at the, LC and LC-MS business, they were in the mid-teens, our spectroscopy business better than that.

I'll then cover our updated full year and fourth quarter guidance. Q3 revenue was $1.578 billion, a decline of 4.4% core, but a 300 basis point sequential, improvement, as Parag noted. Excluding China, revenue declined low single digits in the quarter. On a reported basis, currency had a negative impact of 1.1 percentage points, while M&A had a negative impact of 10 basis points, resulting in a reported decline of 5.6%. Our largest end market, pharma, declined 8%.

Unknown Speaker Okay.

Bob: i'llthen cover our updated full year and fourth quarter guidance

bub: q three revenue was one point five seven eight billion dollars a decline of four point four percent core but a three hundred basis popoint sequential improvement as poorig noted excluding china revenue declined low single digits in the quarter

bub: on a reported basis currency had a negative impact of one point one percentage points while ma had a negative impact of ten basis points resulting in a reported decline of five point six percent

bub: our largest end market pharma declin eight percent

Biopharma was down low double digits or, down mid-single digits, excluding NASD. Small Molecule performed better down mid-single digits and was led by growth in Europe.

bub: biopharma was down low double digits

bub: or down mid-single digits excluding andd

Services and pharma continues to perform well, growing high single digits.

bub: small molecule performed better down mid-single digits and was led by growth in europe

In chemical and advanced materials, revenue declined 5%, with growth in Americas offset by softness in China.

And then just as one, and Mark could follow up, I was curious, in, CAM in the third quarter, so it was down 5%.

bub: services and pharma continues to perform well growing high single digits

bub: and chemical and advanced materials revenue declined five percent with growth in americaas offset by softness in china

Our advanced materials subsegment performed better, driven by our business in the semiconductor market.

It was a little bit below what I was thinking.

Is there anything just within the different categories within that and market that softened, a little bit relative to what you were thinking a few months ago?

bub: or advanced material subsegment performed better driven by our business in the semiconductor market

Academia and government, our smallest market, can be lumpy from quarter to quarter. We saw a decline of 11%, as Europe and China both saw double digit declines, partially offset by better performance in the Americas region.

Unknown Speaker Yeah.

bub: academian government our smallest market can be lumpy from quarter-to-quarter we saw a decline of eleven percent as europe and china both saw double-digit declines partially offset by better performance in the americass region

So you're correct.

Our business in the diagnostics and clinical end market grew 2%, including continued mid-single digit growth in pathology, offset by ongoing softness in genomics.

bub: our business in the diagnostics and clinical end market grew two percent including continued mid-single-digit growth and pathology offset by ongoing softness in genomics

In environmental and forensics, we grew 4%, another great quarter for our PFAS testing business.

bub: in environmental in forensics we grew four percent another great quarter for our pfast testing business

We saw robust business in Europe, led by the new EU Water Directive, and in China, due to the, nationwide Emerging Pollutants Program.

bub: we saw robust business in europe led by the new eu water directive and in china due to the nationwide emerging pollutants' program

Now wrapping up our end markets, food was down 3% versus last year, but grew sequentially and was led by Asia ex-China.

bub: now wrapping up our end markets food was down three percent versus last year regrew sequentially and was led by asia x china

Moving on to our regional performance, Europe was flat overall, beating our expectations while we declined 6% in the Americas and declined 1% in Asia ex-China.

bub: moving on to our regional performance europe pl flat overall beating our expectations while we declinine six percent in the americas and declined one percent in asia ex china

China revenue declined 11%, with quarterly revenue improving sequentially, driven by growth in services and consumables. This speaks to some increase in lab activity, which is encouraging.

It was declined by 5%. And it was really due, to the impact of overproduction in China, which negatively impacted market investments globally.

bub: china revenue declined eleven percent with quarterly revenue improving sequentially driven by growth in services and consumables

But we did see increases in service and consumers both combined at 7% increase. But there was a, decrease of about 14% in instruments.

Now let's move on to the rest of the P&L. Growth margin was 56.0% in the quarter, down slightly versus a year ago, but up 40 basis points sequentially. Our operating margin of 27.4% improved sequentially and was better than expected.

And I think CAPEX spending remains slightly challenged there.

Speaker Change: this speaks to some increase in lab activity which is encouraging

Speaker Change: now let's move on to the rest of the piano

Speaker Change: gth' margin was fifty -six point zero percent in the quarter down slightly versus a year ago but up forty basis points sequentially

Unknown Speaker That makes sense.

Speaker Change: our operating margin of twenty-seven point four percent improves sequentially and was better than expected

Despite the dampened demand, we continue to make good progress in driving our productivity, initiatives and continuing to manage the cost structure very well while investing for growth.

Thank you guys.

poort: despite the damp in demand we continue to make good progress in driving our productivity initiatives in continuing to manage the cost structure bray well while investing for growth as poort mentioned we are on track to deliver the one hundred million dollars in incremental annualized cost savings by the end of the fiscal year

Coordinator Our next question comes from the line of DJ Kumar with Evercore ISI.

As Porik mentioned, we are on track to deliver the $100 million in incremental annualized cost, savings by the end of the fiscal year.

Please go ahead.

Below the line, our net interest income was in line, as was our tax rate of 13%, and we had 291 million diluted shares outstanding in the quarter. Putting it all together, Q3 earnings per share were $1.32.

DJ Kumar Hey guys, thanks for taking my question.

poort: below the line our net interest income waswithin line as was our tax rate of thirteen percent and we had two hundred ninety-one million diluted shares outstanding in the quarter

One, I guess, for either Bob, if you look at the guidance change over the last three months, NASD, China, Bioforma, those have been the big categories, right?

poort: putting it alltogether

That was ahead of our expectations, but down 7.7% from a year ago as we went up against a difficult compare due to the variable pay reset in Q3 of last year. Now let me turn to cash flow and the balance sheet. We continue to enjoy a very strong balance sheet and healthy cash flows. Operating cash flow was $452 million in the quarter, and we invested $92 million in capital expenditures.

I think the guide assumes, NASD down double digits in fiscal 24, China, down high singles, double digits, you know, Bioforma down.

Speaker Change: q three earnings per share were a dollar thirty-two that was ahead of our expectations but down seven point seven percent from a year ago as we went up against a difficult compare due to the variable pay bset and q three of last year

Which of these is expected to get better next year?

What is getting better or worse?

Speaker Change: now let me turn to cash flow and the balance sheet

Speaker Change: we continue to enjoy a very strong balance sheet and healthy cash flows

And is there a first half versus second half dynamics that we should be aware of?

Speaker Change: operating cash flow was four hundred and fifty-two million dollars in the quarter and we invested ninety-two million dollars in capital expenditures

As we committed in Q2, we ramped up our share repurchases starting here in Q3. We purchased $585 million in shares and paid out $68 million through dividends for a total of $653 million return to shareholders in the quarter. This includes $500 million of the previously announced $750 million opportunistic share repurchase, and we expect to complete the additional $250 million repurchase in Q4.

Unknown Speaker Yeah, thanks for the question.

Speaker Change: as we committed in q two we ramped up our share repurchases starting here in q three we purchased five hundred and eighty five million dollars and shares and paid out sixty-eight million dollars through dividends for a total of six hundred fifty three million dollars return to shareholders in the quarter

Speaker Change: this includes five hundred million dollars of the previously announced seven hundred fifty million dollars opportunistic share repurchase and we expect to complete the additional two hundred and fifty million dollars repurchase in q four

We ended the quarter with a net leverage ratio of 0.6, and even with the upcoming biovector acquisition, our balance sheet and leverage ratios will still be in a very strong position.

Speaker Change: we ended the quarter with a net leverage ratio of zero point six and even with the upcoming biovector acquisition our balance sheet and leverage ratios will still be in a very strong position

In summary, we performed well and continue to see a steady improvement in the market and expect that to continue into FY25. Because of our Q3 results, we are increasing the midpoint of our revenue and earnings per share guidance for the year. We now expect full-year revenue to be in the range of $6.450 to $6.500 billion. This represents a decline of 5.6% to 4.9% on a reported basis and a decline of 5.0% to 4.3% on a core basis.

Speaker Change: in summary we performed well and continue to see a steady improvement in the market may expect that to continue into fy twenty-five

I think, in terms of what we expect getting better, we expect all of them to improve next year. And, you know, we raised the midpoint of guidance 15 million on revenue and 3 cents in EPS.

Speaker Change: because of our q three results we are increasing the midpoint of our revenue and earnings per share guidance for the year

Speaker Change: we now expect full year revenue to be in the range of six point four five zero to six point five zero zero billion dollars

Speaker Change: this represents a decline of five point six to four point nine percent on a reported basis and a decline of five point zero to four point three percent on a core basis

Currency and M&A combined are a headwind of 60 basis points. Full-year non-GAAP earnings per share are now expected to be between $5.21 and $5.25, representing a decline of 4.2% to 3.5%. This assumes net interest income of $38 million, a 13% tax rate, and 292 million fully diluted shares outstanding.

Speaker Change: currency and ma combined or a headwind of sixty basis points

Speaker Change: full year non-gaap earnings per share are now expected to be between five dollars and twenty-one cents and five dollars in twenty-five cents

Speaker Change: representing a decline of four point two to three point five percent

Speaker Change: this assumes net interest income of thirty eight million dollars a thirteen percent tax rate and two hundred and ninety two million fully diluted shares outstanding

We have not included any impact of the biovector acquisition in our updated guidance, and 6 cents does not have a material financial impact to the year or Q4.

Speaker Change: we have not included any impact of the biovector acquisition in our updated guidance and six sense does not have a material financial impact to the year or q four

This full-year guidance translates into Q4 revenue in the range of $1.641 to $1.691 billion. This represents a decline of 1.9% to 1.1% growth on a core basis and a decline of 2.8% to 0.2% growth on a reported basis. Currency and M&A are a combined headwind of 90 basis points.

And we see across all those areas, markets improving slowly. And that's reflected in, the sequential increase that we're guiding in Q4.

Speaker Change: this full year guidance translates into q four revenue in the range of one point six four one to one point six nine one billion dollars

So while we had a kind of a solid Q3, the end market environment for capital remains constrained and visibility while improving is still difficult.

Speaker Change: this represents thedecline of one point nine to one point one percent growth on a core basis in a decline of two point eight to zero point two percent growth on a reported basis

Speaker Change: currency in ma or a combined headwind of ninety basis points

Speaker Change: fourth quarter non-gaap earnings per share are expected to be between a dollar thirty eight and a dollar forty-two

Speaker Change: marking a return to growth at the midpoint we expect a thirteen percent tax rate a decrease in net interest income for five million dollars due to the lower cash balance and two hundred eighty seven million diluted shares outstanding for the quarter

Now, I'd like to turn the call back to Parag for some closing comments.

Unknown Speaker Understood.

Speaker Change: now i'd like to turn a call back to porig for some closing comments corick

Parag?

Unknown Speaker Yeah.

Corick: these are exciting times at argument

Corick: with a team that a second to known we are doubling down on our customer force culture and deepening our relationships to further enhance our market-leading customer experience that has already di best in industry

Speaker Change: we are evolving our strategy to aggressively pursue our ambition to growin marketswhere we have right to win through both organic and inorganic growth and we will continue to accelerate value creation strategic transformation initiatives

Speaker Change: we remain a leader across key platforms and we're in great long-term growth markets that are beginning to show evidence of recovery

Speaker Change: and best of all our team is engaged leading to newually concluding adulent on its america's greatest workplace of two thousand and twenty fourfore list

These are exciting times at Agilent.

And maybe on that Q4 commentary for guidance implies a thing up six or 7%, which seems generally in line with your historical sequential step up from 3Q.

So to really dive in on the contracts, it's nearly 70% of our business in Q3 and it's continuing to grow double digits.

With a team that is second to none, we are doubling down on our customer-first culture and deepening our relationships to further enhance our market-leading customer experience that is already the best in the industry.

As we continue to see that strong demand in our enterprise service offerings, which are in the high, the mid-teens, it's really about being there to help customers optimize their lab operations, improve their productivity and our offers really facilitate our customers improving the lab operations, the efficiencies and their waste reduction.

Speaker Change: again thank you for joining today's calli energized by how we re evolving agellent each data team gained momentum in building an endjururing company that since the standard for excellenceent with our customers and creates value for our shareholders

So we're continuing to see some very strong and sticky behavior within our contract franchise.

We are evolving our strategy to aggressively pursue our ambition to grow in markets where we have a right to win through both organic and inorganic growth, and we will continue to accelerate value creation through strategic transformation initiatives.

Unknown Speaker Yeah.

Speaker Change: we are viefewed by the future possiofbilities and i look forward to continuing to share our progress

And is the booking trends that we saw and NASD trends we saw, does it support, that historical, I guess, seasonality?

We remain a leader across key platforms, and we're in great long-term growth markets that are beginning to show evidence of recovery.

And Josh, just on the comment on mix is, you know, when we have business on contract, that generally is good for us and good for our customers as well.

And best of all, our team is engaged, leading to Newsweek including Agilent on its America's Greatest Workplaces 2024 list.

Speaker Change: permes over to you for qa

barg reggini: thanks barg reggini you could please provide instructions for q nnanow

Again, thank you for joining today's call.

Because I think where the street is debating on is that historical seasonality doesn't bake in some year-end budget flush or, you know, what is baked into that sequential step up?

Unknown Speaker Got it.

I am energized by how we are evolving Agilent.

Each day the team gains momentum in building an enduring company that sets the standard for excellence with our customers and creates value for our shareholders.

We are fueled by the future possibilities, and I look forward to continuing to share our progress.

Speaker Change: ladies g gentlemen if you would like to ask a question please proress star followed by one on your telephone now if you change your mind please press star one again to withdra your question

Permise, over to you for Q&A.

Yeah, so I think what we're seeing is that it's, you know, we normally see the step up.

Okay.

Speaker Change: when preparing to ask your question please ensure your phone is unmuted locally our first question will come from the line of matap sites with goldman saacks please go ahead

Thanks, Borg.

That's what, we're expecting this time.

Appreciate all the detail.

Matap Sites: i good afternoon thanks ick my questions maybe the first one just digging in a little bit on the lsag where youhad a pretty solid beat it looks like that was

Matap Sites: driven time primarily by consumables and services some curious if you can give any more color on what instruments did i know you had a book to build above one but just how does that inform your view

Speaker Change: as we go into twenty five on the replacement cycle specifically large biofarmment demand and how that might impact your view and when that replacement cycle starts kicking in

Regina, if you could please provide instructions for Q&A now.

We're not including the budget flush in that.

Coordinator Our final question will come from the line, of Doug Schenkel with Wolf Research.

Please go ahead.

Speaker Change: yes thanks lot that maybeill kickit off eviceence bob i think you first of all to correct we saw very

Speaker Change: veryree promising growth in both consumers and services which shows lab activity is actually

Speaker Change: improving or is very stable we're still very challenged on the instrument side but but what we're seeing is we're seeing a lot of activity around conversations with lab managers

Speaker Change: our sponal is extremely stable

Speaker Change: we haven't seen any any cancellations but what i would say is that deal closure times are still elevated

If we see a budget flush, it's on top, and that would be in our Q1 numbers as we go forward.

por: so we're not at this point seeing any budget toward the end of the year and which of course for and at the end of october wewerere atch do s don't you yeah thanks my matap for for that question and maybe just to fill in add some additional commentary to what por was saying when we look at the quarter we were very pleasedto actually both our consumables business as well as our instrent business performed better than expected in the quarter we were down down seven percent in total consum ed business was actually mid single digits towards the high in there

Yeah.

Doug Schenkel Hey guys, thanks for fitting me in.

I know, it's late in the call.

That being said, I got three lightning round questions, which I'm going to rattle through and then listen to the answers.

poor: and our instruments business was dick was down low double digits but that was better than what we expected and as poor mentioned we had a book to bill that was greater than one on the instrument side again this quarter which was very encouraging

Speaker Change: kind of thanks for that very helpful and then just some academic government i know you talked about it you ked about a pr while volatile that can be but just given sort of the two quarters in a row of sort of negative performance there and you call itout europe and china specifically are there any kind of durable trends you're seeing either in funding or in demand that you think might be more persistent in that specific end market as we go through q four and then as we look into two thousand and twenty five

Speaker Change: now i think look at we saw adecline of about eleven percent and that was really against a comparative feature stimulus in ameia and strong results in aac in china and so it was a really tough comp and i think what what we're seeing as fing remain stable in most regions

Speaker Change: and except i would say erope were seeing in realallocation of funding towards defense but i would say note no major changes in the market

Ladies and gentlemen, if you would like to ask a question, please press star followed by 1 on your telephone now.

Hey, Vijay, this is Bob.

The first is on math.

Speaker Change: got thank you very muchand

Rachel Rothman: our next question will come from the line at a rachel bad install with j p morgan please go ahead

If you change your mind, please press star 1 again to withdraw your question.

And just to build on what Parag's saying, I mean, you're absolutely right.

If recurring revenue growth was up mid single digits in the quarter, it seems like instruments have to be down around 20%, maybe more based on the numbers you reported in the 10 Q and Q3 of last year.

When preparing to ask your question, please ensure your phone is unmuted locally.

Speaker Change: perfects good afternoon thankcase for yougetting the questions you guys i wanted to dig into any s d a little bit obviously we had some positive announcement porter with the helios b read out

Our first question will come from the line of Matt Sykes with Goldman Sachs.

When we look at the sequential, it is in line with our historical in our order book based on what we've seen today.

Bob, I think you said in response to Matt Sykes question, it was down low double digits.

Please go ahead.

Obviously, we have to book orders in Q4, but our order book trend would support that.

What are we missing?

Rachel Badstubner: you mentioned that n f d stepped down sequentially as expected and then you said you're expecting that to then step up into fcal for qyou so again pack all about for us a little bit how should we think about the magnitude the step up into four q and then given some of theupdated data read up what we got quter how does that underpne your assumption on n s d next year and and also long term

Hi, good afternoon.

Fantastic.

It's just not trying to be too picky here, but it just seems important in the context of assessing trends and what weight to put on your book to build commentary.

Thanks for taking my questions.

Thank you, guys.

So that's the first question.

Maybe the first one, just digging in a little bit on the LSAC where you had a pretty solid beat.

Our next question will come from the line of Tycho Peterson with Jefferies.

The second is on China stimulus.

It looks like that was driven primarily by consumables and services.

Please go ahead.

So I'm curious if you can give any more color on what instruments did.

I know you had a book to bill above one.

Rachel Badstubner: yeah look at i start off from be hand it over to simon and who's on the call here as well you know we've seen and

But just how does that inform your view as we go into 25 on the replacement cycle, specifically large biopharma demand and how that might impact your view on when that replacement cycle starts kicking in?

Yeah, thanks a lot, Matt.

Maybe I'll kick it off and give it to Bob.

Any change in dynamics regarding stalling either, you know, in terms of conversions or even cancellations, there's some scuttlebutt that there's been some recent changes as the shape of stimulus becomes a bit more clear.

Speaker Change: with clinical batches of course there can be changes with customers progress in those patches

Speaker Change: we're not we're not seeing any changes on what we're saying for q four were fairly 're fairly

Speaker Change: sent certain of q four on that

Speaker Change: what we're seeing as well is that we've grown our clinicical's business over fifty percent this year which is very promising

Speaker Change: andthe long range view of the market is very strong with with the drugs and the modities are d are being used but then i think what you're seeing is a normal kind of openand down between t quarters with our business but i don't wantthat anymore color

I think, you know, first of all, you're correct.

We saw very, very promising growth in both consumers and services, which shows lab activity is actually improving or is very stable.

We're still very challenged on the instrument side.

Speaker Change: yes i just co what or ex said i think the q three performance that we saw in nd was largely in line with expectations and in that business we always see a natural lag between or the booking activity and revenue recognition because of the length of time not these programs take

Speaker Change: and towards the end of last year we were really seeing the effects of the ira impacts

But what we're seeing is we're seeing a lot of activity around conversations with lab managers.

Speaker Change: and that's still not completely weied but what we saw in q three was pretty strong bookings activity

And then the third question is on 2025.

Speaker Change: so as we look to q four and into two thousand and twenty five i think we're cautiously optimistic about seeingor turn to growth there so what really just characterizede q three is in line with expectations and part and parcel of the lumpiness you see in this business

Speaker Change: you also mentioned thehely also i think it's just worth mentioning that we were very happy to see that development but still very ear days in terms of how that's going to ramp and play out and too soon to say where that's concer

Speaker Change: but certainly no impact in the remainder of twenty-four and unlikely in twenty- five as well

Hey, guys.

Bob: yeahhe rachel this is bob just add on a little more to answer your last part of your question in terms of the sequential step up where we had talked as simon por i said we've done a little better actually in q three than we expected and we're expecting a you know roughly twenty million dollars step up from q three to q four those orders are all in house and we're still on track for the long you know the full year estimate for n sd

Question on BioVectra and maybe just synergies with the, you know, rest of the NASD, business.

How do you think about, you know, does that change views on capacity?

And maybe just talk a little bit about how much of their BioVectra business is, you know, clinical versus commercial and any kind of, you know, emerging modalities that you're adding here?

If you exit 2024 with flattish core growth in Q4, that would obviously be a positive trend relative to what we've seen over the last few quarters.

Speaker Change: and that's incorporated into our guidance

Rachel: that's helpful then from my follow i just wanted to take a little bit more to stoour q guidance and what means in termsof an exit rate into two thousand and twenty five

Speaker Change: appreciate some your comments earlier you highlighted and thats they're not really asing a budget flash for your fcal yearend in october but i guess how should investor look at this four q number on an organic gth basis you know down two percent up one percent

Yeah, I'll start, Tycho, and I'll bring in Simon in a minute.

So we are absolutely, delighted with BioVectra.

That said, it would seem like if you draw a straight line that you'd be on track to exit 2025 at around, you know, call it five, maybe 6% growth rather than growing mid single digits for the year.

Speaker Change: on the range and how do look at that translating is the two thousand and twenty five if i look at consensus right now contentus is just sh of five percent organic on two thousand andtwenty five stre also meing that double-digit nps growth

Speaker Change: so appreciated a little bitearerif you guys theformly give us two thousandandtwentyfive expectations but what do you think about exit ate where assaal ite numbers are right now

We think it's a great fit that enhances our offerings.

So I think you need a fundamental improvement in overall market conditions and or a real impact, from China's stimulus to get to mid-singles for the year.

And it really allows us to deepen our relationships with our key pharma customers.

And what we're really excited about is that it builds on our capabilities on current NASD, modalities around antisense and particularly gene editing with microbial fermentation and ADC capability.

Bob: yes you were readingin my mind rachel this is bob and it is a little too early to talk about that y twenty-five but i think what it does show

And so we're very happy with that.

I just want to see if any of my logic is flawed there.

Thank you and have a good night.

Speaker Change: is our expectation of this continued steady improvement we improved here in q three three hundred basispointssequenti we're expecting another improvement here going into q four

So there's a lot of synergies as we, bring that forward.

So I'll hand over to Simon to talk maybe about capacity in the main business.

Yeah, I think Pori hit many of the high notes already in terms of the synergies.

Speaker Change: and i would expect that improvement to continue into fy twenty-five so and we do expect while it's too early to give you a specific number we do expect to grow next year

Speaker Change: these markets will return and know we've been below the long-term trend but there's nothing to suggest that the the longterm growth rates of these markets there's nothing to suggest that these markets have changed and so we're optimistic about continued recovery going into fy twenty- five

Our funnel is extremely stable. We haven't seen any cancellations.

We already mentioned the complete solution offering in gene editing, which we see as a, really significant competitive advantage going forward.

That's certainly a lightning round, Doug, but we'll try and we'll answer it.

Speaker Change: underthe things spent

patrick donley: our next question comes from the line of patrick donley od city please go ahead

But what I would say is that deal closure times are still elevated.

Sterile fill finish is another synergy that we're excited about.

I think, Bob, you can take the first and the last one, I'll take China.

Yeah, the comment that I had on instruments was specifically related to LSAG instruments and they were down low double digits, consumables was up mid-single digits for the total being down minus seven.

patrick donley: guys thank you for getting the questions

So that is, we do have some instrumentation in DGG as well that was down roughly the same as where LSAG was.

Speaker Change: may one for you because on china youknow how doyou gu youre thinking about the region nates get down eleven percent but got a little bit better on therevenue side sequentially sound going to get l back maybe little little bit better

So we're not at this point seeing any budget push toward the end of the year, which, of course, for us ends at the end of October.

Speaker Change: can you on that expectations into euroand y appears and suggested and could a bit of a pause of a capital side into calendar yearend as we wa for requireity and the stulous

Speaker Change: just how you guys are thinking about china again not only for your fiscal year but it's into the yearend on the calendar side and what's your view in terms of do we see a little bit of a air pocket ear until with the no dollars would firmed up

We've had a lot of requests from our customers over the past few years for that capability.

So down 20 is way too negative.

I'll turn it over to Porat for the second one and then I can jump back at the last one.

Patrick: patrick is great question and we had actually seen a little of that in our q two of last just a quarter ago here really on the on the bid activity primarily for instrumentation we are optimistic about the you know the midterm here in terms of the stimulus that's probably more f y twenty five event probably but what we are seeing is more activity there i think it's encouraging and maybe i can turn it over to angea as well

And from the diligence we've done with BioVectra, we think they've got truly world-class capabilities there.

And as Pori also mentioned with microbial fermentation, high-potency APIs, there's an existing footprint there in GLP-1 manufacturing.

So I think we've got a slightly higher clinical mix in BioVectra than we have in NASD.

So I think we're just killing several birds with one stone with this acquisition.

From a capacity perspective, I'd say BioVectra has been ahead of the curve with capacity CapEx, and we've got some skin to, grow into there over the next few years.

Okay, that's helpful.

Angea: our services business has has seen an increase in a pickup in an activity and certainly we saw consumables as well

Angea: so it's still dampen demand and we did see that impact in academmy and government that was the biggest impact in china who we are seeing some pockets a green shoot in termsof recovery

And then a follow-up on China.

Yeah, look, I think we're very, close to our China team and the local team has seen an increased activity.

Bob: yeah bobuti'll just add know in china we are encouraged from a service es perspective on the nice sequential growth that we saw from q two to q three which is indicative of continued and somewhat increasing lab activity in china

You had the pull-forward dynamic in the first quarter, $15 million.

We're seeing that, you know, improve from last quarter.

If that were back, in 2Q, I think you were effectively flat, maybe down a little bit.

And for clarity, of course, we're not building any benefit from the stimulus into our Q4 guide.

But what we're seeing is we're seeing, you know, in early days, we're hearing that the stimulus is broader in terms of its reach over a three-year period.

Having said that, we are hearing that the first tranche will likely be focused on academic and government accounts.

But again, it's early days.

As it trickles down through provinces, as the mechanism of the funding goes, we'll be sure to update as we know that.

Yeah, and I think just the last one real quick, it's too early.

But we're watching that closely.

I don't know if you want to add anything, Bob.

Yeah, thanks, Matt, for that question.

We're not going to get into, to what we're looking at for FY25 other than to say that we expect, you know, improvement throughout the year.

Speaker Change: okay drg good encouraging

Speaker Change: and then maybe maybe another one for you boobbiously as we think about the margin construct as we work away into year end s twenty-five

And maybe just to fill in and add some additional commentary to what Porag was saying.

When we looked at the quarter, we were very pleased. Actually, both our consumables business as well as our instrument business performed better than expected in the quarter.

Speaker Change: may remind some of the moving pieces to think about high level as we look ahead to next year obviously the cost out program since be good progressing well to the point out the margins came in nicefely herear in three q

We were down 7% in total.

Our consumables business was actually up mid-single digits towards the high end there.

And our instrument business was down low double digits. But that was better than what we expected.

Speaker Change: but it is the movie people we go into next year about talking too much about them about the top line ' think thevolume matters there buts just kind of down the p nl how to think about some of the margin al go for for next of be helpful

And as Porag mentioned, we had a book to bill that was greater than one on the instrument side, again, this quarter, which was very encouraging.

And I'll now turn the call back over to Parmeet Ahuja for any closing remarks.

Thanks for that, very helpful.

Thanks, Regina.

Speaker Change: yeahi think as as we talked about a great question andyou know med to continue to dveyou know efficiencies across all of the p line i think you've seen that across the actions that weve taken we're on track to delivering that hundredmillion dollars of incremental and li savings that by the end of twenty four so there will still be a tail wind obviously going into twenty five for that benefit offsetting that will be you know some resets of our variable pay in activities like that but we are committed to covering that if i think about at the highest level what i would expect us to continue to be able to do is dve leverage jnenings next year and knowi think you're seeing that the scale benefit that we're seeing

And then just on academic and government, I know you've talked, about it, you've talked about it for a while, how volatile that can be, but just given sort of the two quarters in a row of sort of negative performance there, and you called out Europe and China specifically, are there any kind of durable trends you're seeing either in funding or in demand that you think might be more persistent in that specific end market as we go through Q4 and then as we look into 2025?

No, I think, look, we saw a decline of about 11%, and that was really against the compare, that featured a stimulus in EMEA and strong results in APAC in China.

So it was a really tough compare.

And thanks, everyone, for joining the call today.

With that, we'd like to end the call.

Thank you for joining.

Have a good rest of the day, everyone.

Ladies and gentlemen, this concludes today's call.

And I think quite what we're seeing is funding remains stable in most regions, and except I would say Europe, where we're seeing a reallocation of funding towards defence, but I would say no major changes in that market.

Got it.

Speaker Change: and certainly our our accg business here this last quarter just phenomenal profit contribution and i think with volume coming back into the instrument

Speaker Change: business as well that willll set us up nicely for for next year so

Speaker Change: think about you know a nice incremental tailwind associated with the continued actions or the annualization of that actions that come in in f y twenty five partially offset by you merit some of the the activities and then we'll have our ongoing productivity measures

Speaker Change: and so we'll actually share some of the more detail around this probably in our analyst day in december so stay tuned on that as well

First, is that the right assumption?

You may now disconnect.

Speaker Change: okay that's grgreat

What are you actually embedding in 4Q for China in guidance?

jack iehan: our next question comes from the line of jack iehan with neon research please go ahead

Thank you very much.

And then how do you think about the return to growth in 2025?

Our next question will come from the line of Rachel Badenstahl with J.P. Morgan.

Could you see that in the first half of the year?

Please go ahead.

jack iehan: thank you good afternoon wanted to dig into some of these instrument trends a little bit more was wondering if you could talk about just what you're seeing acrosssomeof the big categories like l c l c m s g c spectroscopy any color on how those performed

Perfect.

Good afternoon.

Thanks for taking the questions, you guys.

I wanted to dig into, NASD a little bit.

Jack: yeah i mean general terms jck i think youknow

Obviously, we had some positive announcements into a quarter with the Helios B readout.

Speaker Change: customers are very very cautious but what i will say is that manager remain very engaged t itter say it seems about future projects that is true you we so we see a lot of stability and that so

You mentioned that NASD stepped down sequentially as expected, and then you said you're expecting that to then step up into fiscal 4Q.

So could you unpack all that for us a little bit?

How should we think about the magnitude of the step up into 4Q?

And then given some of the updated data readouts that we got into quarter, how does, that underpin your assumptions on NASD next year and then also long term?

Speaker Change: so it's still very challengge and i would say that

Speaker Change: our deal close rates is still elevated but our phnelss are very stable with with low cancellations

Yeah, look, I'll start off and maybe I'll hand it over to Simon, who's on the call here, as well.

You know, we've seen, you know, with clinical batches, of course, there can be changes with customers, you know, progress in those batches.

We're not we're not seeing any changes of what we're saying for Q4.

Speaker Change: so i think that goes across most of the markets and and as you see going forward our results in cd and services going in single digits and boboth bodes very very well in terms of lab activity increasing sowe we're seeing slow what steady improvement

So we're fairly we're fairly certain of Q4 on that.

What we're seeing as well is that we're we we've grown our clinical business over 50, percent this year, which is very promising.

And, you know, the long range view of the market is very strong with the with the drugs, and the modalities that are being used.

But I think what you're seeing is a normal kind of up and down between quarters with, that business.

Yeah, hey, Taiko, your recollection is correct.

But I don't know if you want to add any more color, Simon.

Yeah, I just echo what I said.

I think the Q3 performance that we saw in NASD was largely in line with expectations. And in that business, we always see a natural lag between all the booking activity and, revenue recognition because of the length of time that these programs take.

And as we think about, implied fourth quarter down mid-single digits in China, we're going up, quite honestly, again, some easier compares, in full disclosure.

Speaker Change: yes hy h and that is to follow under that i think one of the things as we mentioned the call the book to bill being you know at one for instruments as a positive sign it was slightly better than what we expected you know overall l sc g instruments were down low double digit

And towards the end of last year, we were really seeing the effects of the IRA impacts. And that's still not completely waned.

But what we saw in Q3 was pretty strong bookings activity.

And we would expect a slight sequential step-up from a revenue perspective as well.

So as we look to Q4 and into 2025, I think we're cautiously optimistic about seeing a, return to growth there.

So I'd really just characterize Q3 as in line with expectations and part and parcel of the, lumpiness you see in this business.

Speaker Change: yeah we're all of the categories kind of right around there

Speaker Change: i would say if you looked at the lc n l cms business they were in the mid-teens our spectrosco be business better than that

Speaker Change: okay

Speaker Change: and then just as one end market followup was curious in cam in the third quarter

Speaker Change: so it was down five percent there'was a little bit below what i was thinking is there anything just within the different categories within that end market that softened a little bit relative to what you're thinking a few months ago

Speaker Change: yes so you're corrected was declined like five percent and it was really due tothe impact of overproduction in china which negatively impacted market investments globally but we did see increases in service and consumers both combined at seven percent increase

Speaker Change: but there was the decreases about fourty percent an instrument and i think capex spending remains slikely challenged there

You also mentioned Helios.

I think it's just worth mentioning that we were very happy to see that development, but, still very early days in terms of how that's going to ramp up and play out and too soon to say where that's concerned.

Speaker Change: that makes sen se and thank you guys

dj cumar: our next question comes from the line of dj cumar with ever core i please go ahead

But certainly no impact in the remainder of 2024 and unlikely in 2025, as well.

dj cumar: hey guys thanks for taking my question

Speaker Change: one i guess fligger bob if you look at the guidance change over the last three months fin to china biioformer those have been the big category rate at i think

Speaker Change: the guidanceassumes and ad doubleed down double digits in fiscal twenty-four china

Speaker Change: down high single double d its in a biofarmer down which of these is expected to get better next year what is getting better or worse and is there our first half or the second half dynamics that we should be aware of

Yeah.

Speaker Change: yes thanks for the question i think in terms of what we expect getting better we expect all of them to improve next year and we raed the midpoint of guidance fifteen million on revenue in ry centan eps

Speaker Change: and we see across all those areas markets improving slowly and that's reflected in the sequential in qu increase that we're guidingin q four so while we had a kind of a solid q three the end market environmental capital remains constrained and visibility while improving is still difficult

Speaker Change: understood maybe on that

Speaker Change: q four commentary for guidance implies i think up

Speaker Change: six or seven percent which seems generentally in line with your historical sequential step up from two q

Speaker Change: and is the booking trends that we saw an trends we saw doesn it support

Speaker Change: the historical i guess seasonality because i think we're just stre as is debating upon is that historical heseasonnow ity doesn't bak in some year in budgets lo or what is basak to that sequential step up

Speaker Change: yes so i think what we're seeing is that it we normally see step up that'swhat we're expecting this time we're not including the budget fush us and see a budgetof flush

Hey, Rachel, this is Bob.

Bob: it's on top and that would be in our q one numbers as we go forward yeah he j bob and just to build on what saying i mean if you're absolutely right when we look at this sequential it is

Bob: it is a in line with our historical in our order book based on what we've seen today obviously we have the big book orders in q four but our order book trend would support that

Speaker Change: fantastic thank you guys

Tyico Peterson: our next question will come from the line of tyicopeterson with jeffreys please go ahead

Tyco Peterson: ok guys question on biovector and maybe just synergies with the rest of the n aasd business how do you think about does that change views on capacity and maybe ' talk a little bit about how much of their biobackctctor businesses clinical versus commercial

Just to add on a little more to answer your last part of your question in terms of the sequential step-up, we had talked, as Simon and Poray had said, we'd done a little better actually in Q3 than we expected, and we're expecting a roughly $20 million step-up from Q3 to Q4.

Speaker Change: and any kind of emerging modalities that you're addinghere

Speaker Change: yes i'll start pe and i'll bring in simon and in a minute so we are absolutely delighted would b our factor we think it's a great that enhwers our offerings and it really allows us to deepen a ationships or our key pharmac customers

Those orders are all in-house, and we're still on track for the full year estimate for NASD.

Simon: and what we're really excited about is that it builds on our capabilities on current sesteem modalities around antisense

And that's incorporated into our guidance.

Simon: andm particularly genediting with with microbial fermentation and adc capability and so 're we're very we're very happy with that so there's a lot of synergies as we as we bring that forward so ill hand over to i'm going to talk maybe about capacity in the enders

Great.

That's helpful.

Then for my follow-up, I just wanted to dig a little bit more into 4Q, guidance and what that means in terms of an exit rate into 2025.

So I appreciate some of your comments earlier.

Po: yes i think po hit many of the high notes already in terms of the synergies we already mentioned the complete solution offering in ineedthing which we see

Speaker Change: there's a really significant competitive advantage going forward sterile fil finish there's another synergy that we're excited about we've had a lot of request from our customers over the past few years for that capability

Speaker Change: and from the diligence we're doing with bivuue we think they've got truly world-class capabilities there

Perig: and as perig also mentioned with microbial fermentation

Speaker Change: iypotten ciap there's an existing footprint there in glp one manufacturing so i think we' got a slightly ho clinical mix

Speaker Change: in biobackure then we have in an d so i think we're just killing several birds with one stone with this acquisition from a capacity perspective i'd say bifacture has been ahead of the curve with capacity capex and we've got some skin to grow into there of the next few years

Speaker Change: okay that's helpful and then follow up on china you knowyou hadthe pull forward dynamic in the quarter fifteen million you know that were back q i think you re effectively flat maybe down a little bit you first is that the right assumption what are you actually embedding in four q for for china and guidance and then how do you think about the return to growth in twenty five could you see that and in the first half of theyear

Taco: yes hey taco that's your recollection is correct and as we think about

Taco: implied fourth fourth quarter

Taco: down mid-single digits in china we're going up quite honestly against imeasier compares in full disclosure and we would expect a slight sequential step up from a revenue perspective as well

And so, you know, that reflects this steady improvement.

We do expect, again, not a lot of that stimulus to come in our Q4, basically none, but more into Q5.

Speaker Change #100: and so that reflectses steady improvement we do expect again

Speaker Change #100: not a lot of that stimulus to come in our q four basically none but more into q five but the biddingactivity that we're seeing has ramped up and then i think the activity that we're see services and consumables we're expecting that to continue probably too early to tell next year for china

But the bidding activity that we're seeing has ramped up.

And then I think the activity, that we're seeing in services and consumables, we're expecting that to continue.

It's probably too early to tell next year for China.

But I would expect it to continue to improve and not be down the way it is.

Speaker Change #100: but i would expect it to continue to improve and not be down the way it is we're expecting a low double digitdecline this year we would expect to improve

Speaker Change #100: from that

You know, we're expecting a low double-digit decline this year.

Speaker Change #100: and it will probablybe improvement throughout the year as opposed to you know an immediate approvement certainly the stimulus will help us with that but again that 'll be in our first and second quarters most likely but we're not expecting a huge step up right there it'll be over time because this stimulus is over a three year period

We would expect to improve from that. And it will probably be improvement throughout the year as opposed to, you know, an immediate improvement.

Certainly, the stimulus will help us with that.

But again, that will be in our first and second quarters, most likely.

But we're not expecting a huge step up right there. It'll be over time because this stimulus, is over a three-year period.

Tex: understood tex

penitsua: our next question comes from the line at penitsua with learering partners please go ahead

Understood.

Thanks.

penitsua: yesi guess thanks for the questions here instrumentation growth obviously an important question

Our next question comes from the line of Puneet Souda with Learing Partners.

Please go ahead.

Speaker Change #103: last quarter you lowered expectations meaningfully but again book to bill was a strong more than one again this quarter is is more than one and i think you said

Yeah.

Hi, guys.

Speaker Change #104: that was last quarter with the first time you saw you know growth in the market after seven quarter so that looks like it's continued again to the quarter so just maybe help us understand instrument where we sit on instrumentation and what sort of recovery are you seeing here in in august and what gives you sort of confidence that the instrument ation should

Speaker Change #104: balance continue to bounce back into two thousand andtwenty five as well

Speaker Change #105: yes i look at the indications from the team we have a strategic accountteam that those a lot of citations with our major accounts you knowers we're seeing that more positive than negatative in terms of customer sentiment which is a very good sign you know we see a lot of activity in our testing labs as well as's focusing on p fast and so on sort is

Speaker Change #105: it there is drivers within the markets that arethat are positive but overall i would say it's slow and steady you know and where're we're treadating at as that and a teams to have really good visibility you know our commercial teams

Speaker Change #105: which we've transformed in last are really really clo to our customers we have really good visibility into that so it'slow but steyi don't knowifyou to toadd any b that

You highlighted in Matt's question that you're not really assuming a budget flush for your fiscal year-end in October.

But I guess, how should investors look at this 4Q number on an organic growth basis of that down 2% to up 1% on the range, and how do we, look at that translating into 2025?

If I look at consensus right now, consensus is just shy of 5% organic on 2025, so it's also nearing that double-digit EPS growth.

Speaker Change #106: yes no i think you're spot on and then we're not building any budget flushh into our q four punit so if that if that doesn'in fact happen

So I appreciate it's still a little bit early for you guys to formally give us 2025 expectations, but what do you think of that exit rate and where sell-side numbers are right now?

Speaker Change #106: that would be a benefit to our current estimates

Yeah, you were reading my mind, Rachel.

Speaker Change #107: okay thanks and

Speaker Change #108: a recent drug pricing negotiation of medicare on the first drugs are out obviously irs having an impact

Speaker Change #108: but over the next three years to annually fifteen drus will be negotiated and that probably leads to an another set of impact so what are you hearing from your large pharmma customers and orall how are they thinking about darand d spend and to spend they current they have an agent

Speaker Change #110: yes look at i think in general they're very cautious of course with some of the impacts the macroimpacts that are facing

Speaker Change #111: they're not there's a lot of ma activity going on within phma a lot of consolidation which of course takes time and energy for

Speaker Change #112: for these companies to focus on and i think what you're going to see over time is it probably even out in terms of impact what isn't what isn't going down by the way the number of our d programs

Speaker Change #112: we see that increasing in a number of key modality the areas particularly around gfp want etc so so we need to wait and see having said that people kind of forget in the last few years the enormous amount of

Speaker Change #112: spend that has happened and we're seeing that normalized now of course in the installed base and coming out of that in twenty-five

Thanks for the questions here.

Speaker Change #113: okay sso okay thank you

Michael Riskin: our next question comes from the line at michael riskin with bank of america please go ahead

Instrumentation growth, obviously an important question.

You know, in the last quarter, you lowered expectations meaningfully.

But again, book-to-bill was a strong more than one.

Michael Riskin: hey guys thanks king the question

Speaker Change #115: on a boall upon maybe this is what we're preting was just get that but you called out in your prepared remarks a couple times that with a farm small molecle a little bit better smallmodu did a little bit better

Speaker Change #116: then large molecule assume just wonder ifyou could del into that a bit of with that a particular you know instrument classroomfrom moidality that drrove that was that does have to do with budget cycle is just what you're seeing there and why the soci ala difference in

This is Bob.

Again, this quarter, it is more than one.

And it is a little too early to talk about FY25, but I think what it does show, is our expectation of this continued steady improvement. We improved here in Q3 300 basis points sequentially. We're expecting another improvement here going into Q4.

And I think you said that last quarter was the first time you saw growth in the market after seven quarters. So that looks like it's continued again into the quarter.

Speaker Change #117: and mo le fo

Bob: yes hey y likeke this bobp you right i mean our ssmall mocof business

Speaker Change #118: was down mid-single digits in the quarter which was which was better than expected actually and and in europe in group which was a very positive sign and this does speak to you know you can only hold on to your old instruments for so long before the replacements need to happen we're not calling replacement you know cycle inflection just yet

And I would expect that improvement to continue into FY25.

So just maybe help us understand where we sit on instrumentation and what sort of recovery are you seeing here in August and what gives you sort of confidence that the instrumentation should continue to bounce back into 2025 as well?

And we do expect, while it's too early to give you a specific number, we do expect to grow next year.

Yeah.

These markets will return.

Look at the indications from the team.

And we've been below the long-term trend, but there's nothing to suggest that the long-term growth rates of these markets, there's nothing to suggest that these markets have changed. And so we're optimistic about continued recovery going into FY25.

Understood.

Thanks, guys.

Our next question comes from the line of Patrick Donnelly with Citi.

We have a strategic account team that does a lot of citations with our major accounts.

Please go ahead.

Speaker Change #118: but every quarter these instruments get older and one of the things that i think is

Hey, guys.

Thank you for taking the questions.

Bob, maybe one for you.

Speaker Change #119: important here is pill counts and volumes continue to grow and back to the question around the ira in the pricing i think it was generally

You know, we're seeing that more positive than negative in terms of customer sentiment, which is a very good sign.

Speaker Change #120: not the worst case scenario maybe a little better than that people expected and our strength is is in the development moving into a production

You know, we see a lot of activity in our testing labs as well as focusing on PFAS and so on.

So there is drivers within the markets that are positive.

But overall, I would say it's slow and steady, you know, and we're treating it as that.

And the teams have, really good visibility.

You know, our commercial teams, which we've transformed in the last few years, are really, really close to our customers.

We have really good visibility into that. So it's slow but steady.

Speaker Change #120: and that continues to be long-term positive trend so that would be our core lc franchise

Speaker Change #120: and then the biopharma some of that was impacted by our nd business which was kind of the air pocket it actually if you take our biopharma business which was down

Speaker Change #120: double digit to take an dout

Speaker Change #120: we are at mid-single digits as well not as not as it was down a little more than the small molecule

Speaker Change #120: but generally still in that same range so both of them are actually when you take out to kind of the onetime unique aspect of any sd performing better quarter on quarter which is a positive sign

I don't know if you want to add anything, Bob, to that.

Speaker Change #120: soalso i would say just adding to that bob you know we saw services growing double digits yer firm and mid-single digits and small molecules that are a big component of what we see in those different modalities

Speaker Change #121: okay bothil of the can is really helpful and then frommy call i want to wean a little of more on on biiova you know thing kind of wait out there for the rational now and the fincial deal certainly makes sebut i'mjust curious you know you've had a presence in some

Speaker Change #122: from cmotech capabilities in the past just wondering cal far 're going to lean this and what i'm allud is obvly one of your large

Speaker Change #123: traditional tools vendors had a cmo business has been in our business

Speaker Change #123: for a number of years now and there's a lot of talk but the benefitits of having both the instrument the consumables and the services business fun sale and is that something you're going to

Speaker Change #125: continueto grow over time it's bu backcttr like a bechat acquisition and we should expect more investment down the road

Yeah, no, I think you're spot on.

And we're, you know, not building any budget flush into our Q4, Puneet. So if that does, in fact, happen, that would be a benefit to our current estimates.

Simon: yes i'll start on maybe handed over to simon youknow when we look at our my ambition for of all we're it's going to be it's going to be really centered around where where strategy is was a strategic is in faster-growing markets and of course by ue creation b io veter ics all of those boxes

Okay, thanks.

And, you know, recent drug pricing negotiation with Medicare on the first drugs are out.

Obviously, IRA is having an impact.

But over the next three years, annually, 15 drugs will be negotiated.

Simon: and it's an area where we're building out more capabilities for customers so we see our continuing and

Simon: so we're really excited about it but we do see that this business has a lot of wrrun way

Simon: it's you know it's a business 's growing well

Simon: very well wrknown of course it's had a lot of capital investments over a number of years and i think this is only to start of our ambition and continu to grow bioa vectctor an nd but some

Speaker Change #126: not most to us really only beyond that we've got a very strong existing position in the ra modality i'd sayay up until this point it's been a relatively narrow capability

Speaker Change #126: position and bivetera builds on that quite nicely as we look at future optionality around complementary capabilities and modalities we think is a rich spaceand that's probably all we can say at this point

And, that probably leads to another set of impacts.

Speaker Change #127: rightthank you

So what are you hearing from your large pharma customers?

Dan Brennan: our next question comes from the line of danand brennan with td cowin please go ahead

Just on China, how you guys are thinking about the region there?

Dan Brennan: great thanks thanks ing the questions maybe just back to china the down eleven wasa bit better than wewere looking for

It sounds like it's down 11%. It got a little bit better on the revenue side sequentially.

Dan Brennan: can you just impact what specifically got better in the quarter given the guidance because that you made last quarter you maybe other by customer type or by product tyide and then just to clear up like so your guidance to china knowtewas down double digits has that change it all have you improved that so that's my first question

And overall, how are they thinking about the R&D spend and the spend that they currently have on Agilent?

Speaker Change #129: yes hey dan thanks for the question china is still in line with our full year and guidance you know down lowad double digits if i look at where we actually performed slightly better than what we anticipated actually in formma and it gets back to what we were talking about before the activity both on the services side performing sequentially better as well as our consumable business actually

Sounds like, again, lab activity may be looking a little bit better.

Yeah, look, I think in general, you know, they're very cautious, of course, with some of the impacts, the macro impacts that are facing, you know, they're not, there's a lot of M&A activity going on within pharma, a lot of consolidation, which, of course, takes time and energy for these companies to focus on.

And I think what you're going to see over time is it probably even out in terms of impact.

What isn't going down, by the way, is the number of R&D programs. We see that increasing in a number of key modality areas, particularly around GLP-1, et cetera.

So we need to wait and see. But having said that, people kind of forget in the, last few years the enormous amount of spend that has happened.

Can you talk about expectations into year-end?

Some of your peers have suggested you could see a bit of a pause on the capital side into calendar year-end as we wait for more clarity on the stimulus.

Just how you guys are thinking about China, again, not only into your fiscal year, but just into the year-end on the calendar side?

Speaker Change #129: actually growing and so when we were down close to thirty percent in q two of last year we re downloaddouble digits in forma year -on year and so that was the big sequential improvement in

And what's your view in terms of, do we see a little bit of an air pocket here until the stimulus dollars get firmed up?

Yeah, Patrick, that's a great question.

Speaker Change #129: in q three and i would expect that to continue into into q four

And we had actually seen a little of that in our Q2 of, just a quarter ago here really on the bid activity primarily for instrumentation.

And we're seeing that normalized now, of course, in the install base and coming out of that in 2025.

We are optimistic about the midterm here in terms of the stimulus.

That's probably more a FY25 event probably.

Okay, fair.

Speaker Change #130: thank part then

Speaker Change #131: aboutback to ending butthere's just been a lot of questions from investors after turn of interor today in terms of that as 's really sing a lot and you did you say what it did actually in the quter i didn't hearin the number

Speaker Change #132: kind of year overbeyear what did nd do with the quarter

Speaker Change #133: and then conof it teachred by the full year and they said step up you just give us some clarity on the quarter and then any any additional color on clinical verse commercial accounts like your bookings are improving so that for tens well for the outlook but just trying to unpack but what's going on right now in the quarter thank you

But what we are seeing is more activity there.

Okay, thank you.

And I think what's encouraging, and maybe I can turn it over to Angelica as well, our services business has seen an increase in a pickup in activity, and certainly we saw consumables as well.

Our next question comes from the line of Michael Ryskin with Bank of America.

So it's still damp in demand.

Dan Brennan: hey dan what i would say is we typically don't give a specific number for any d but it actually performed

And we did see that impact in academia and government.

Please go ahead.

That was the biggest impact in China.

Sim: inline it's lightly better than what we expect it so we had been signaling a step down in q three and we actually did better than what we were expecting there the full year is still in line with where we were which is roughly a three hundred million dollars business as sim was saying the bookings continue to be positive

But we are seeing some pockets of green shoot in terms of recovery.

Hey guys, thanks for taking the question.

Yeah, Bob, I'll just add, you know, in China, we are encouraged from a services perspective, on the nice sequential growth that we saw from Q2 to Q3, which is indicative of continued and somewhat increasing lab activity in China.

I want to follow up on, maybe this is what Puneet was just getting at, but you called out in your prepared remarks a couple times that with biopharma, small molecule held up a little bit better, or small molecule did a little bit better than large molecule, I assume.

Speaker Change #135: in terms of activity and we're starting to see some of our our customers you know the readouts of some of activities which is more harbing er of long term opportunity versus short term but know if anything it was a little better than we expected so i don't want anyoneto take away that it was't you know even though it was down in the quarter we expected that and communicated that as part of our our guidance

Speaker Change #135: and we're still on track for the full year estimate that we had coming into the quarter

Okay.

Just wondering if you could delve into that a little bit more.

Speaker Change #136: thank you

Speaker Change #137: our next question will come from the line of caatherine shele with beard please go ahead

Was that a particular instrument class or modality that drove that?

Catherine Shele: okay i think for the questions maybe first could you talk about growth rates by segment for the fiscal fourth quarter and maybe your assumptions for instrumentation versus consumables and services in the fourth quarter

That sounds encouraging.

Does that have to do with budget cycles?

And then maybe another one for you, Bob, as we think about the margin construct as we, work our way into year end and into 25, maybe just remind us some of the moving pieces to think about high level as we look ahead to next year, obviously, the cost out program seems to be progressing well to the point where the margins came in nicely here in 3Q.

Just what you're seeing there and why there's such a difference in molecule type.

Speaker Change #139: yeah a kevin bob you know what i would say is if i look at our q four all all groups we would expect to do better and if i went buy group l sag would be know we're expecting kind of low single digits

But yeah, maybe just the moving pieces as we go ahead to next year without, you know, talking too much about the top line, obviously, the volume matters there, but just kind of down to P&L, how to think about some of the margin algo for next year would be helpful.

Speaker Change #139: off of a down seven percent this year

Speaker Change #139: consumables being better than that overall and you know with with the instrument side still probably down slightly or would be down slightly dgd down mid single digits and a c g midsingle digits towards a high end

Speaker Change #139: that's what we've beenembeddedin ourguidance so all of all three of those actually performing better than where we were in q three

Speaker Change #140: itperfected and maybe going back to smallmoleduule nice to see the improvement there he' well itwas just small molecule performance excluding china and a said europe grew but just curious to to get more color on what you're seeing elsewhere

Yeah, I think as we talked about, Patrick, it's a great question.

Speaker Change #141: yes i think what we're seeing is europe was a standard and small molecule a lot of activity there but probably stable across the different markets on us

And, you know, we're committed to continuing to drive, you know, efficiencies across all, of the P&L line items.

And I think you've seen that across the actions that we've taken.

We're on track to delivering that $100 million of incremental annualized savings by the end, of 24.

Speaker Change #142: and what we did see from the small molecule side we did see pretty good growth in services that as well as has had that number but i think overall europe ahead whateverywhere else stable

porig: what and so we were down mid-single digits and as porig said if if you took china out we were down low singledigits everywhere elseso

So there will still be a tailwind, obviously, going into 25 for that benefit.

Yeah.

Hey, Mike, this is Bob.

Josh Waldman: our next question will come from the line of josh waldman with cleveland research please go ahead

And I think that will be, you know, some resets of our variable pay and activities like that.

You're right.

But we are committed to covering that.

Josh Waldman: did good afternoon thanks for taking my question so a couple for you

Bob: por bob maybe first a follow up on your assumption for no budget flushing impact on far instrumentation is that just a function of the timing of your quarter relative to calendar year in buying from these customers or are there other things you're seeing that are leaving you on the sidelines as it relates to of your fararm spending

Speaker Change #145: and then a related question was curious any high level thoughtlause you had on twenty five based on planning conversations you're having with pharmmaaccounts are you thinking next year should be a return to normal growth type year in farm an inument budgets

Speaker Change #146: as budget are set or or is it more of a gradual recovery or return to normal over acouple of year period any anything backthat you're getting from accounts on that

If I think about it at the highest level, what I would expect us to continue to be able, to do is drive leveraged earnings next year.

I mean, our small molecule business was down mid-single digits in the quarter, which was better than expected, actually.

And in Europe, it grew, which was a very positive sign.

And this does speak to, you can only hold on to your old instruments for so long before the replacements need to happen.

bub: yes i'll take the firstce one to maybe hand off to bub for the second one i think you know it's a yearago we were people were talking about both budget flushes we didn't expect that we didn't see it we saw a little bit but not much expecting the same at this time of course our year and at the end of october so we do see any activity will be in q on twenty five

We're not calling a replacement cycle inflection just yet, but every quarter these instruments get older.

And one of the things that I think is important here is pill counts and volumes continue to grow.

And back to the question around the IRA and the pricing, I think it was generally not the worst case scenario, maybe a little better than people expected.

So both of them are actually, when you take out the kind of the one-time unique aspect of NASD, performing better quarter on quarter, which is a positive sign.

And where our strength is is in the development moving into production, and that continues to be a long-term positive trend.

So also I would say, just adding to that, Bob, we saw services growing double digits in biopharma and mid-single digits in small molecules.

So that would be our core LC franchise.

And then the biopharma, some of that was impacted by our NASD business, which was kind of the air pocket.

Actually, if you take our biopharma business, which was down double digits, and you take NASD out, we're at mid-single digits as well.

Not as – it was down a little more than small molecule, but generally still in that same range.

So that's a big component of what we see in those different modalities.

Okay.

And then for my follow-up, I want to lean in a little bit more on BioVectra.

Both of those answers are really helpful.

I mean, everything you kind of laid out there for the rationale and the financials of the deal certainly makes sense.

Speaker Change #147: why do we see this is because we're very clo to our customers we know exactly when we're the fne is were to deal to her and where install base we have a lot of installed-basase information

But I'm just curious, you know, you've had a presence in some CDMO-type capabilities in the past.

Speaker Change #147: so we're not expecting as aniting substantial at the end of the year but what we are seeing is a lot more conversations about next year slow steady recovery and we're hearing acrosstheboard i don't go to take second question about

Just wondering how hard are you going to lean into this?

And what I'm alluding to is obviously one of your large traditional tools vendors has a CDMO business, has been in that business for a number of years now.

And there's a lot of talk of the benefits of having both the instruments, the consumables, and the services business on the tail end.

Is this something you're going to continue to grow over time as BioVectra, you know, like a beachhead acquisition?

And we should expect more investment down the road?

Yeah, I'll start and maybe hand it over to Simon.

Speaker Change #147: yeah

Speaker Change #148: just twentyfive we'werere saying it's probablytooearlyto say but what i you know our current our current indication is that it's not going to snap november first to be back to normal i do think that you'll continue to see a recovery throughout f y twenty five

You know, when we look at our M&A ambition, first of all, you know, we're, it's going to be, it's going to be really centred around where our strategy is, what's the strategic fit in faster growing markets, and of course, value creation by a vector ticks all of those boxes.

And it's an area of where we're building out more capabilities for customers.

So we see that continuing.

And so we're really excited about it.

But we do see that this business has a lot of runway.

Our next question comes from the line of Dan, Brennan with TD Cowen.

It's a, you know, it's a, it's a, it's a business that's growing well, very well run, of course, and it's had a lot of capital investment over a number of years.

And I think this is only the start of our ambition and continuing to grow by a vector and NASD.

But Simon?

Not much to add, really, only beyond that, we've got a very strong existing, position in the R&A modality.

I'd say up until this point, it's been a relatively narrow capability position and by vector builds on that quite nicely.

Please go ahead.

As we look at future optionality around complementary capabilities and modalities, we think it's a rich space.

And that's probably all we can say at this point.

Great, thank you.

Speaker Change #148: and get back to that long term growth rate some time in twenty-five that's the way we kind of think about it but i don't think it's another two to three -year estimate either based on conversations with our customers right now so it's probably in between

Great, thanks.

Thanks for the questions.

And, you know, I think you're seeing that the scale benefit that we're seeing in certainly, our ACG business here this last quarter, just phenomenal profit contribution.

Maybe just back to China, you know, the down 11 was a bit better than we were looking for.

Speaker Change #149: got it ok and then just set of follow up on ac c g was curious if you could provide a bit more context on the dynamics you're seeing thereespecially interested in what you're seeing from an rfp and win rate

Speaker Change #150: dynamic on the contractiof business and then you mentioned i think in the slide decks benefiting from mix was wondering if you could plush that out a bit

And I think with volume coming back into the instrument business as well, that'll set, us up nicely for next year.

Can you just unpack what specifically got better in the quarter, given the guidance cut that you, made last quarter, you know, maybe either by customer type or by product type?

So think about, you know, a nice incremental tailwind associated with the continued actions, or the annualization of that actions that come in FY25, partially offset by, you know, merit and some of the activities.

And then just to clear up, like, so your guidance for China, I know it was down double digits.

Has that changed at all?

And then we'll have our ongoing productivity measures.

Have you improved that?

And so we'll actually share some of the more detail around this probably in our Analyst, Day in December.

Angela: i take the first part of that question and hand it over to angela you know extremely pleased with accg'sperformance and that's

So stay tuned on that as well.

So that's my first question.

Okay.

Yeah, hey, Dan, thanks for the question.

China is still in line with our full year and guidance, you know, down low double digits.

Angela: and years of investment in a broad product offerings and key markets that are really being received by customers in this environment where they want to get more productivity out of your systems to want and used er assets

If I look at where we actually performed slightly better than what we anticipated, it was actually in pharma.

Speaker Change #152: in different ways and we've seen the flow trthrough to our results in spite of the capex challenges all year so the business air performs extremely well and margins are extremely good

And it gets back to what we were talking about before, the activity, both on the services side, performing sequentially better, as well as our consumables business actually growing.

Speaker Change #152: so i last leg to provide more color on the tract business but i think what'sreally interesting or serve our in enterprise service business as well and lua

Speaker Change #154: yeah so to really dive in on the contracts right it it's nearly seventy percent of our business in q three and it's continuing to grow double digits

Speaker Change #154: as we continue to see that strong demand in our enterprise service offerings which are in the mid-teens

Speaker Change #154: it's really about being therered to help customers optimize their lab operations improve their productivity and our offers really facilitate

Speaker Change #154: our customers improving the lab operations the efficiencies and their waste reductction so we're continuing to see some very strong and sticky behavior within our contract franchise

Speaker Change #155: yes in justice on the comment on mixes when we have business on contract that generally is good for us and good for our customers as well

Speaker Change #156: god okay forciate all the deil

Doug Shinkle: our final question will come from the line of duoug shinkle withwof research please go ahead

Doug Shinkle: hey guys thanks for fitting me in i know it's late in the call that being said i got three lighting around questions which im going to attle through and that lessonens the answers the first is on maapth bit for occurring revenue growth was up

Speaker Change #158: commmit single digits in the quarter it seems like instruments have to be down around twenty percent maybe more based on the numbers you reported the ten q and q three of last year bob i think you said in response to mat sitkes question it was down lolow double digits

And so when we were down, you know, close to 30% in Q2 of last year, we were down low double digits in pharma year on year. And so that was the big sequential improvement in Q3.

And I would expect, you know, that to continue into Q4.

Speaker Change #159: what are remissing it just not trying to be too picky here but it just seems important in the context of assessing trends and what wayit to put on your book to build commentary so that's the first question the second is on china stimulus

Okay.

Thanks, Bob.

And sorry to go back to NASD, but there's just been a lot of questions from, investors after the turn of events here today in terms of that business really slowing a lot.

Can you, did you say what it did actually in the quarter?

I didn't hear the number, kind of year over year, what did NASD do in the quarter?

And then kind of if we take your guidance full year, and they said step up, can you just give us some clarity on the quarter?

Speaker Change #160: any change in dynamics regarding stalling either in terms of conversions or even cancellations there's some sll but that there're spend

And then any additional color on clinical versus commercial, it sounds like your bookings are improving.

Speaker Change #161: some recent changes is the shape of stimulus becomes a bit more clear and then the third question is on two thousand and twenty-five

So that portends well for the outlook, but just trying to unpack what's going on right now in the quarter.

Speaker Change #162: if you exit two thousand and twenty four with flattish core growth in q four that would obviously be a positive trend relative to what we've seen over the last few quarters

Thank you.

Yeah.

Speaker Change #162: that said it would seem like if you draw streamight line that you'd be on track to exit two thousand and twenty- five at around call it five maybe six percent growth rather than growing mid-single digits for the year

Hey, Dan, what I would say is we typically don't give a specific number for NASD, but it actually performed in line or slightly better than what we expected. So we had been signaling a step down in Q3, and we actually did better than we expected. And so did better than what we were expecting there.

The full year is still in line with where we were, which was roughly a $300 million business.

As Simon was saying, the bookings continue to be positive in terms of activity.

Speaker Change #163: so i think you need a fundamental improvement in overall market conditions and or a real impact from china' stimus to get to mid singles for the year i just want to see if any of my logic is floted there thank you and have a good night

Speaker Change #164: that's certainly a lightking runroundthoughg but we will try and will involb you take to foreth in the last ute china the comment that i had on instruments was specifically related to lag instruments and they were down

Speaker Change #165: low double digits consu mobiles was up mid-single digits for the total being down minus seven

Speaker Change #165: so that is we do have some instrumentation in dg as well that was what that was down roughly the same as where l ssag was so down twentyie is way to way to negative

Speaker Change #166: i'll turn it to porit for the second one and then i canjp the

And we're starting to see some of our customers, you know, the readouts of some of the activities, which is more a harbinger of long-term opportunity versus short term.

But, you know, if anything, it was a little better than we expected.

So I don't want anyone to take away that it wasn't, you know, even though it was down in the quarter, we expected that and communicated that as part of our guidance.

Speaker Change #166: yes look at i think we're very close to our china team and the local team has seen an increased activity we're seeing that improved from last quarter and for

And we're still on track for the full year estimate that we had coming into the quarter.

Speaker Change #166: clarity of course we're not building any benefit from missing this into our qute four guide

Speaker Change #166: but what we're seeing is we're seeing in earydays we're hearing to the stim that s broader in terms of its reach

Speaker Change #166: over athree year period having said that we we are hearing that the fore strren we likely be focused on academic government

Speaker Change #167: accounts but again its early early days as a trick ersof downthrough provinces at the mechanism of the funding goals will be short up there we know that

Speaker Change #168: yes i think just the last one real quick it's too ear ate we're not going to get into what we're looking at for fy twenty-five other than to say that we expect improvement throughout the year

That's great.

Speaker Change #168: i

Speaker Change #168: andi'll now turn the call backover to pormea hujff for any closing remarks

Thank you, guys.

Our next question will come from the line of Catherine Schulte with Baird, please go, ahead.

Hey guys, thanks for the questions.

Maybe first, just could you talk about growth rates by segment for the fiscal fourth quarter, and maybe your assumptions for instrumentation versus consumables and services in the fourth quarter?

Yeah, I'll, hey Catherine, this is Bob.

You know, what I would say is if I look at our Q4, all groups we would expect to do better.

Pormea Hujff: thanks for jina and thanks everyone for joining the call today with that 'd like to end the call have a good rest of the day everyone

And if I went by group, LSAG would be, you know, we're expecting kind of low single digits, off of a, you know, down 7% this year, consumables being better than that overall.

And, you know, with the instrument side, still probably down slightly, or would be, down slightly, DGD down mid-single digits and ACG up mid-single digits towards the high end.

That's what we've embedded in our guidance.

Our next question comes from the line of Jack Meehan with Nifron Research.

Our next question will come from the line of Josh Waldman with Cleveland Research.

So all three of those actually performing better than where we were in Q3.

Perfect.

And then maybe going back to small molecule, nice to see the improvement there.

What was just small molecule performance, excluding China?

I know you said Europe grew, but just curious to get more color on what you're seeing elsewhere.

Speaker Change #170: ladies and gentlemen thisconcludes today's call thank you for joining you may now disconnect

Yeah, I think what we're seeing is Europe was a standout in small molecule, a lot of, activity there, but, you know, probably stable across the different markets on us.

And what we did see from the small molecule side, we did see, you know, pretty good growth, in services that as well as has had that number.

But I think overall, you know, Europe ahead, but everywhere else stable.

Yeah.

And so we were down mid-single digits.

And as Porag said, if you took China out, we were down low single digits everywhere, else.

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