Q4 2024 Agilent Technologies Inc Earnings Call
Good afternoon, My name is Rob and I'll be your conference operator today at this time I would like to welcome everyone to the agile and technologies, Inc. Fourth quarter 2024 earnings conference call. All lines have been placed on mute to prevent any background noise. After the speakers' remarks, there will be a question and answer session. If you would like to ask a question. During this time simply.
Speaker Change: Press Star followed by the number one on your telephone keypad. If you would like to withdraw your question again Press Star one. Thank you for me Jeff You May begin your conference.
Jeff: Thank you and welcome everyone to <unk> conference call for the fourth quarter of fiscal year 2024.
Speaker Change: I'm sure you've seen our press release earlier today regarding our new market focused organizational structure, which we will talk about in more detail.
These changes have no impact on our company's consolidated financial statements.
Speaker Change: All financial metrics and guidance during this call will be shared under our historical structure.
Speaker Change: We will provide recast historical segment information to reflect these changes ahead of upcoming Investor day.
Now onto our quarterly results.
Speaker Change: With me are boarding Macdonald, president and CEO, and Bob Mcmahon, <unk> Senior Vice President and CFO.
Speaker Change: Joining in the Q&A will be filled bench transit into the pharma life Sciences and applied markets group.
Speaker Change: Simon May president of the newly formed life Sciences and diagnostic markets group.
Speaker Change: And Angelica Ryan President of the expanded at June Cross Lab group.
Speaker Change: Also joining the call is Mike Zhang President of the newly formed applied markets group.
Speaker Change: This presentation is being webcast live the news release for our fourth quarter financial results Investor presentation, and information to supplement today's discussion.
Speaker Change: Along with it according of this webcast.
Available on our website at Www Dot investor Dot agile in Dot com.
Speaker Change: Today's comments will refer to non-GAAP financial measures.
Speaker Change: You will find the most directly comparable GAAP financial metrics and reconciliations on our website.
Speaker Change: Unless otherwise noted all references to increases or decreases in financial metrics are year over year.
Speaker Change: And references to revenue growth are on a core basis.
Speaker Change: Core revenue growth excludes the impact of currency and any acquisitions and divestitures completed within the past 12 months.
Speaker Change: Guidance is based on forecasted exchange rates.
Speaker Change: During this call. We will also make forward looking statements about the financial performance of the company.
Speaker Change: These statements are subject to risks and uncertainties and are only valid as of today.
Company assumes no obligation to update them.
Speaker Change: Please look at the company's recent SEC filings for a more complete picture of our risks and other factors.
Patrick: And now I'd like to turn the call over to Patrick.
Patrick: Yeah.
Patrick: Great. Thank you <unk>.
Speaker Change: Hello, everyone and thank you for joining today's call before I begin I would like to welcome you AMG President Mike Chang, while Mike is new to this role he is not new to Iceland, Mike joined <unk> more than 20 years ago as a manufacturing engineer in China.
Speaker Change: Recently, he was vice President and general manager of the GC and GC Ms business within our former life Sciences and applied markets group, where.
Speaker Change: With his broad experience in both manufacturing and this is a business Mike will be an incredible asset in this role.
Speaker Change: Very much looking forward to him moving AMG and not doing forward.
Speaker Change: I also wanted to take a moment to wish Phil been a wonderful retirement in advance of them, leaving adjuvant.
Speaker Change: Phil joined Ashland with the Varian acquisition in 2010, all told filler celebrating just over 40 years of service without a variant.
Speaker Change: Although Phil is retiring from the business present role. He has graciously agreed to serve as a special adviser through April 2025.
Speaker Change: All of us at Hudson, we spend the very best and look forward to working with him during the last five months of adjuvant.
Speaker Change: Now onto our high level Q4 results I'm happy to share not only our solid fourth quarter results that point to continued steady market recovery, but.
Speaker Change: But also our outlook and drivers for 2025 fiscal year.
Speaker Change: I am, especially excited to talk about Atlanta customer first strategy evolution and.
Speaker Change: Our aggressive transformation ambition.
It led to the news you read ahead of the call the new market focused organizational structure to become a nimbler, even more customer centric company to accelerate our performance.
Speaker Change: In the fourth quarter. The adjuvant team delivered revenue of 170 1 billion, roughly 1% reported growth with flat core growth.
This represents a sequential improvement of over 400 basis points from Q3.
Speaker Change: In addition, our total company book to Bill was greater than one this points to a steady market improvement, we're seeing and we expect it to continue in 2025.
Speaker Change: We also gained share in all our geographies evidence that even in challenging capex environment customers Trust to Iceland.
Speaker Change: As we evolve we are confident this will only accelerate as.
Speaker Change: Bob will provide deeper details on our Q4 results and our outlook for Q1, and FY 'twenty fives now I'd like to spend some time talking about our new organization structure, we announced earlier today.
Our new market focused organization structure as a result of our customer centric market first strategy on.
Speaker Change: An important step in our organizational transformation work, which we have named ignite.
Speaker Change: This is a product of our enterprise focused strategy that drives our evolution to become a nimbler, even more customer centric company to accelerate our performance.
The new market focused organization structure is one of the most significant changes adjuvant has seen in a decade and continues to work we did creating our commercial organization three years ago.
The commercial organization double down on our customer first approach in the field and it's a critical competitive advantage in supporting our customers.
Speaker Change: At that time, we started by creating a singular commercial leadership structure. We then created a foundation and infrastructure and intensified our focus on digital capabilities accelerated and end to end customer experience uninsured sales channels, where customer and market centric.
Speaker Change: So the changes you see today are part of the successful journey, we started three years ago.
Speaker Change: With the new structure, we are aligning business units to our markets.
Militating close collaboration among the businesses like never before and enabling better execution across division customer first priorities.
Speaker Change: We are combining the strengths of our three businesses as well as our portfolios. So that we can offer end to end solutions and workflows revolve around our customers and markets.
Speaker Change: The life Sciences, and diagnostics markets groups are as D. G represents $2 $5 billion in annual revenue and is primarily focused on our pharma biopharma and clinical diagnostics and markets.
Speaker Change: LPG provides a comprehensive portfolio of leading technology platforms and solutions to serve <unk> customers value chain, including research and discovery development and scale up production of therapeutics and development of critical cancer diagnostics LTE.
Speaker Change: LPG includes LC and LC Ms cell analysis, as well as CMO capabilities, which include <unk> and <unk> the.
The business also includes pathology companion diagnostics and genomics.
Simon May will serve as president of L. D. G. Prior to joining adjuvant earlier. This year Simon was executive Vice President and President of Life Science Group at Bio Rad Laboratory.
Speaker Change: If you applied markets group, our AMG represents one $3 billion in annual revenue and is focused on food environmental forensics chemicals and advanced materials market.
Speaker Change: AMG includes gcmg, CMS spectroscopy vacuum technology platforms and certified pre owned business.
Speaker Change: AMG will focus on growing as agile and strong leadership in these markets and accelerating growth in new areas of the markets Mike.
Speaker Change: <unk> Shang a 22 year veteran Nevada Islands has been promoted to president of AMG. Most recently, Mike was vice President and general manager of our GC and <unk> product lines.
Speaker Change: And the adjuvant Crosslight group, our ACG represents $2 $7 billion in annual revenue and is focused on supporting our customers in all our end markets.
Speaker Change: The group is uniquely positioned to leverage its comprehensive portfolio and capabilities to further enhance the installed base of instruments with targeted workflows and applications that drive critical outcomes and productivity in labs.
ACG include services software and informatics automation and consumables.
Speaker Change: This business will accelerate and strengthen customer relationships across all end markets.
Speaker Change: Angelica Ryman, a 25 year veteran of <unk> will continue to serve as president of ACG.
Speaker Change: Prior to recurrent role she served as vice President and general manager of the ACG services business.
Speaker Change: This change is one of the money that demonstrate how we're becoming nimbler and accelerating the pace of innovation.
Speaker Change: And you can see that with the Q4 launch of the exciting adjuvant Infinity tree LC series that harnesses are 50 years of LTE expertise and leadership team.
Speaker Change: The Infinity II series has advanced automation that simplifies our customers' daily routines and is comparable with the previous generations, which allows for seamless upgrades and technology refreshes.
Speaker Change: And adjuvant Infinity lab Etsy solutions are certified by Mike Green Lab. These instruments optimized lab space and to reduce water solvent and energy consumption, while also minimizing waste.
Speaker Change: While just launched in October early traction from customers has been very positive.
Speaker Change: Also in Q4, we closed our acquisition of bio vector demonstrating our commitment to providing customers. The most advanced capabilities to accelerate their therapeutic programs.
Speaker Change: With by a veteran now being part of <unk>, we expand our portfolio of <unk> services beyond our market, leading oligonucleotide production at NASD.
More rapidly growing therapeutic modalities like peptide synthesis, a market expected to continue to expand rapidly over the coming years.
Speaker Change: Im bringing world class capabilities support gene editing therapies.
Speaker Change: Just last month, my leadership team and I visited by a vector to welcome our new team members to Iceland, and we became even more accelerated by the capabilities, we would be able to harness.
Speaker Change: Plus both agile and <unk> focus on putting customers first and accelerating the pace of innovation. So we can add to and capitalize on opportunities was abundantly clear as I spoke to dozens of bio vector employees.
Speaker Change: Separately during the quarter, we hit another important milestone for the full year, we passed the $1 billion Mark in digital orders for the first time across the company. This is a result of our investment in our digital ecosystem to ensure our customers can do business with us in ways that meet their needs.
Speaker Change: To reinforce what I've stated in previous calls we're sharply focused on key growth factors, such as Biopharma, <unk> and advanced materials and the Ashland team has mobilized to accelerate value creation to our ignite transformation program.
Speaker Change: The objective of ignite is to drive revenue growth and margin expansion by increasing our execution capabilities. The world is moving faster than ever and so are we that's.
Speaker Change: That's exactly why we introduced our new market focused organization structure.
Speaker Change: We are laser focused on winning in the marketplace and adding value to our customers and shareholders. We will dive more deeply into these details, including a revolve strategy and ignite transformation that will help us execute on that strategy at.
Speaker Change: At our Investor Day on December 17th in New York.
Speaker Change: Bob will now provide the details of our results as well as our outlook for the fiscal year of 2025, and the first quarter. After Bob delivers his comments I will be back for some closing remarks over to you Bob.
Speaker Change: Yeah.
Thank you Paul and good afternoon, everyone. In my remarks today I will provide some additional details on fourth quarter revenue and take you through the income statement and other key financial metrics.
Speaker Change: I will then cover our guidance for fiscal year 2025, and the first quarter 2025.
Speaker Change: Otherwise noted my remarks will focus on non-GAAP results as.
As <unk> said, we are pleased with our Q4 results.
Speaker Change: Finished the fourth quarter with core growth in line with our expectations, while EPS exceeded our expectations as we executed well against the challenging, albeit improving market.
Speaker Change: Q4 revenue was $1 $701 billion of.
Speaker Change: A decline of 0.3% core.
Speaker Change: <unk> improvement of over 400 basis points.
Speaker Change: On a reported basis, our revenues were up <unk>, 8% as we benefited from 50 basis points of currency and biometric contributed 60 basis points.
Speaker Change: Looking at our Q4 performance by business unit, the life Sciences, and applied markets group reported $833 million in revenue that.
Speaker Change: That represents a 1% decline is instrument volumes continue to be constrained by conservative customer capex spending while consumables grew mid single digits.
Speaker Change: Having said that for our instruments business, our orders grew year on year and for the third consecutive quarter. Our book to Bill was once again greater than one.
Speaker Change: We see this as positive evidence of an ongoing steady instrument recovery.
Speaker Change: Moving on to Agile Cross lab group the business delivered revenue of $426 million for the quarter up 5%.
Speaker Change: ACG grew in every market in every region, except China, where it was flat year over year, but up sequentially.
Speaker Change: The contracts business, including our fast growing enterprise services business grew double digits again in Q4 as it has every quarter this year.
Speaker Change: Our largest customers continue to maximize utilization of their assets right size, our operations and leverage opex budgets to deliver on their productivity goals and outcomes.
Speaker Change: We recently received a top supplier award from one of our largest strategic customers in the applied markets as a recognition of our long standing and beneficial partnership throughout the years.
Speaker Change: The diagnostics and genomics group posted $442 million in revenue, representing a 3% decline that was slightly above expectations.
Speaker Change: <unk> saw solid growth globally, and it was offset by expected softness in NASD and cell analysis instruments.
Speaker Change: Now looking at our end markets and geographies, our largest end markets pharma declined 1% slightly better than what we expected.
Speaker Change: Within pharma Biopharma declined mid single digits, while small molecule grew low single digits encouragingly all regions, except for the Americas grew in the quarter.
Speaker Change: The Americas region was pressured by the expected decline of NASD.
Speaker Change: We expect both the Americas region at NASD to return to growth in fiscal year 2025.
Speaker Change: In chemicals and advanced materials revenue grew 1% with our advance materials sub market growing mid single digits, driven by our business in the semiconductor market.
Speaker Change: Our business into diagnostics and clinical and market performed strongly growing 7%.
Speaker Change: Given by pathology and improved performance in genomics.
Speaker Change: And environmental and forensics, we declined 6%, although dollars were roughly flat sequentially.
Speaker Change: All regions grew except for the U S related to timing of orders.
Speaker Change: That being said, we continue to see very strong growth in <unk> solutions with our business growing more than 40% in Q4 across multiple end markets.
Speaker Change: Now wrapping up our end markets food was down 3% versus last year.
Speaker Change: Academia and government market was down 1%.
Speaker Change: Geographically Asia ex China grew high single digits, and Europe grew low single digits in the quarter, while the Americas and China declined as expected.
China was down only 3% and exceeded our expectations.
Speaker Change: We also booked our first China stimulus orders in October and anticipate much more in fiscal year 2025.
Speaker Change: Now, let's move to the rest of the P&L.
Speaker Change: Gross margin was 55, 1% in the quarter.
Speaker Change: Down 70 basis points versus last year, driven by lower volume and mix.
Our operating margin was 27, 4% as our productivity initiatives and the cost actions. We took earlier in the year for fully recognize this quarter.
Speaker Change: Annualized <unk> of these savings coupled with the market recovery and the initial returns from the ignite transformation gives us confidence in driving EPS growth in fiscal year 2025.
In addition, we continue to look for ways to drive EPS growth below the line.
Speaker Change: Our net interest income was in line, while we benefited from a lower tax rate in the quarter and our share count was 287 million diluted shares outstanding.
Speaker Change: Putting it altogether Q4 earnings per share was $1 46 that was ahead of our expectations and up 6% from a year ago.
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.
Speaker Change: Operating cash flow was $481 million in the quarter, and we invested $93 million in capital expenditures.
Speaker Change: For the year, we well exceeded our operating cash flow expectations with operating cash flow of $1 $75 billion.
Speaker Change: During the quarter, we returned over $400 million to shareholders, consisting of $335 million in share repurchases and $68 million in dividends.
Speaker Change: For the year, we returned over $1 4 billion to shareholders through repurchasing shares and dividends.
Speaker Change: Looking forward you may have also seen recently, we announced a 5% increase in our quarterly dividend, marking another year of increases and advancing our industry leading dividend yield.
Speaker Change: We ended the quarter with a net leverage ratio of one one a very strong number even as we acquired <unk> in the quarter.
Speaker Change: Our strong cash flow and healthy balance sheet provide us with plenty of opportunity to invest in the business going forward in summary.
Speaker Change: We performed well and saw steady market improvement in the quarter, we are executing well staying disciplined in investing in high growth opportunities.
Speaker Change: Now, let's move on to our outlook for the upcoming fiscal year and first quarter.
Speaker Change: We expect the recovery that we've seen the past few quarters to continue throughout fiscal 2025.
Speaker Change: While we expect the market to grow slower than historical rates for the full year, we expect improvement throughout the year with the second half of the year returning to more traditional levels of growth we expect.
Speaker Change: Our results to mirror that cadence of improvement on a core basis.
Speaker Change: As Port noted earlier we.
Speaker Change: We exited Q4 with a book to Bill ratio over one for the company and greater than one for instruments. In addition, Q4 was the first quarter in 2024 that instrument orders grew year on year.
Speaker Change: While one quarter does not a trend make it is certainly encouraging.
Speaker Change: For the full year guide, we expect revenue in the range of $6 79 to $6 87 billion.
Speaker Change: This represents a reported growth range of four 3% to five 5%.
Speaker Change: Currency was a slight headwind of 0.2 points, while M&A related to bio vector contributes 2% at the low end and two 2% at the high end.
Speaker Change: This translates to a core growth of two 5% to three 5%.
Speaker Change: To start the year. We think this is a prudent way to plan given the near term dynamics in the U S.
From a geographic perspective.
Speaker Change: We expect modest growth in the Americas and Europe.
Speaker Change: While we see funnel activity increasing in China, we're taking a conservative approach on the timing of revenue associated with the stimulus.
Speaker Change: We expect to see recovery over the course of the year in China, resulting in slightly positive growth for the full year.
Speaker Change: From a business group perspective, we expect to return to growth in all three groups led by ACG.
Speaker Change: As a note the statement is true under the new structure as well.
As Paul mentioned earlier, we will provide recast historical segment information to reflect these changes ahead of our upcoming Investor day.
Speaker Change: In terms of phasing, we expect improvement throughout the year with more normalized growth expected in the second half of the year.
We are projecting roughly 50 to 70 basis points of operating margin expansion for the year.
Speaker Change: Below the line, we expect net interest expense of $25 million due to the financing of buy a vector versus the net interest income this year.
In addition, we expect a tax rate of 13% to 286 million shares outstanding.
Speaker Change: Fiscal 2025, non-GAAP EPS is expected to be in the range of $5 54.
To $5 61.
Speaker Change: It incorporates the planned five year, one dilution from <unk>.
Speaker Change: This range represents a 5% to 6% growth rate and if excluding the biotech dilution a growth rate of 6% to 7% year on year.
Speaker Change: We expect cash flow to remain strong in fiscal year 2020, we are expecting roughly $1 65 billion in operating cash flow and $450 million. In Capex is 2025 is the peak spending year for the NASD expansion.
Speaker Change: Looking to Q1, we expect revenue in the range of $1 65 to $1 $6 billion to $8 billion.
Speaker Change: Our forecast assumes no significant budget flush during the end of this calendar year.
Speaker Change: This represents a reported decline of <unk>, 5% to growth of one 3% Currency's, a 30 basis point headwind, while M&A is expected to contribute one eight points of growth.
We are expecting core growth between a decline of 2% to flat at the upper end.
Speaker Change: It is important to note that we estimate our projected Q1 year over year results will be negatively impacted this year by roughly two percentage points due to timing of the lunar new year, which occurs in late January versus February of last year.
Speaker Change: This includes the additional $15 million in revenue pull forward, we communicated in Q1 of last year.
Adjusting for the lunar new year impact, we're expecting continued sequential growth improvement.
First quarter 2025, non-GAAP earnings per share are expected to be between $1 25, and $1 28, lower than our full year growth rate due to the lunar new year timing.
Speaker Change: Looking into 2025 and beyond we remain incredibly optimistic about the future of our markets and our long term prospects. We are confident in our new market focused approach and the ignite transformation will propel us to accelerated growth and we will become a stronger company.
Speaker Change: With that I'll turn it back over to <unk> for some closing tunnels org.
Speaker Change: I've said, it before and I want to say it again these are exciting times at agile and over the last several months, we've been focused on evolving our strategy transforming our processes and empowering our people while continuing to win in the marketplace.
Speaker Change: Already we've made bold moves that have created momentum.
Speaker Change: We've developed our future strategy.
Speaker Change: Kicked off our ignite transformation to help execute on that strategy and along the way we've made moves to create new growth vectors.
Speaker Change: We are making acquisitions that will contribute to our growth and we are strengthening our capability to efficiently and effectively integrate those acquisitions that will lay the foundation for future M&A.
Speaker Change: These initial actions position us well for the journey ahead.
Speaker Change: To ensure we are building the capability strength and speed to reinvigorate our culture and enable us to drive while delivering outstanding results for our customers and for our shareholders.
Speaker Change: And amid all this change Fortune magazine. This month named Adjuvant number 11, among the world's best workplaces 2020 for at least the only includes 25 companies.
Speaker Change: As yet another recognition of what we already know internally the adjuvant team is the best in the industry.
Speaker Change: This is not only a recognition of our outstanding company culture, but of the talented professionals we have.
Speaker Change: Ones, who are ambitious resilience on high performing.
Speaker Change: This is executive team, we need to evolve adjuvant to build an enduring company that sets the standard for excellence with our customers and creates value for our shareholders.
Speaker Change: Thank you again for joining today's call.
Speaker Change: I couldnt be more energized by the momentum we have the opportunities we would see and the history we remake.
Speaker Change: Now I look forward to answering your questions permit.
Patrick: Thanks, Patrick operator, if you could please provide instructions for Q&A now.
Speaker Change: At this time I would like to remind everyone in order to ask a question Press Star then the number one on your telephone keypad well pause for just a moment to compile the Q&A roster.
Speaker Change: And your first question today comes from the line of Patrick Donnelly from Citi. Your line is open.
Patrick Donnelly: Hey, guys. Thanks, so much for taking the questions.
Patrick Donnelly: Good morning, maybe one for you just on the instrument side I know you guys touched on the book to Bill over one for three quarters now a little bit of instrument growth on the order side year over year can you just talk about where.
Patrick Donnelly: Where we are in the cycle what your expectations are as you guys know there's a debate in the market about what the cycle looks like over correct in the upside as we work our way through the next year or so how would you guys framing that up whats the right way to think about this replacement cycle, where we are and the size of it as we go forward here.
Speaker Change: Yeah. Thanks, Patrick Great question, So clearly, we're seeing a steady recovery in instruments and.
Speaker Change: Book to Bill was greater than one which is really great to see in terms of the replacement cycle.
Speaker Change: What you would see across the industry is that there is it's not uniform it's across different vendors that it's a different speeds and of course at different times.
Speaker Change: What we do see is that we have we're probably median where true true.
True to your expected timing on where we where we expect that a replacement cycle to be.
Speaker Change: We see competitors are probably benefiting from refresh of your own installed base with some new systems.
Speaker Change: What you would see from our side as her infinity tree that we announced last month last month, we expect to start seeing an increased demand for our solutions and we're seeing a lot of excitement with our customer base and we've already seen tens of millions of dollars in orders. There. So what we expect in that replacement cycle is to be slow and steady, but really kicking off in the in Q1.
Speaker Change: Okay. That's helpful.
Speaker Change: And then maybe on China always a focus with you guys. It sounded like flight growth for 25 is the right way to think about it can you just talk about what you guys are seeing there and hearing there Bob helpful to hear that you guys got it first when you are orders there in October.
The expectation as we move forward here it sounds like a steady recovery or are you still seeing I know you guys are kind of hovering around that $300 million revenue a quarter stability.
Speaker Change: Sounds like continued and maybe a little bit of improvement as we work our way through the year different.
Speaker Change: Different segments that are maybe picking up a little bit would be helpful to talk through that thank you guys. Yes. Thanks, Patrick So the performance was a bit better than expected and it was also.
Speaker Change: Really encouraging to see lab activity to continue to improve across our services the consumables.
Speaker Change: So we actually have seen quite quite dramatic share gains within China, which is also a really good point. So what I would say is steadily improving.
Speaker Change: Talking to the teams and I would say on the stimulus side, we talked to in the call about we've already have some stimulus orders and we expect much more in Q1 that will of course translate to revenue.
Speaker Change: This is this is a really really good sign as we see momentum both from the direct input of more confidence in the markets.
Speaker Change: Of course of course getting the dollars.
Getting it done.
Speaker Change: And so steadily important improving and we expect that through the year, Patrick we expect as we go through the stimulus orders and we go we go forward expect that improve one area that was a real standout for US was the P. Fast in China. It was the fastest growing business for us across the globe a region across the globe and that just goes to show that <unk>.
Speaker Change: Some of these growth growth.
Speaker Change: Growth factors that are happening, where you have the emergent pollution pollutants are moving and what we've seen in China is that our great technical expertise coupled with our great solutions already there to pick up pick up the business. So that was one real clear at <unk>.
Speaker Change: Hey, Patrick just want to add onto what Youre, saying Youre absolutely right. We ended the quarter with roughly $310 million 312 to be precise in China.
Which was a nice sequential increase.
Speaker Change: The increase from Q3 and was down 3% as I mentioned the.
Speaker Change: In addition to the PFS.
Speaker Change: Both chemical and advanced materials actually grew in the quarter.
Speaker Change: We have a leadership position in pharma was flat, which was actually a very nice thing and we're taking a kind of a conservative approach as I mentioned in terms of the stimulus orders, but we are seeing quite active.
Speaker Change: <unk> from the standpoint of bidding activity there.
Speaker Change: Here in the first half of <unk>.
Speaker Change: This quarter as well as and expect that to continue throughout the course of 'twenty five.
Speaker Change: Okay. That's helpful. Thanks, Bob I appreciate it.
Speaker Change: Thanks, Patrick.
Speaker Change: Your next question comes from the line of Matt <unk> from Goldman Sachs. Your line is open.
Speaker Change: Hi, good afternoon. Thanks for taking my questions maybe the first one just on <unk>, which has been sort of weighing on growth over the course of the year, but.
Speaker Change: Noticeably strong quarter.
Speaker Change: You had called out cancer Dx as well as genomics could you just provide a little bit more color on what's driving that growth and how sustainable do you think that growth is particularly in genomics as we move through 'twenty five.
Speaker Change: Yes, I'll just.
Speaker Change: Start off and I'll kick it over to Simon.
Speaker Change: We really are seeing nice growth in our pathology business, which grew high single digits in Q4, and slightly ahead of expectations of highly durable business in 90 markets.
Speaker Change: What we're seeing in genomics, while its a still challenging market, we posted low single digit growth, which was also ahead of expectations, but Simon I don't know if you want to add some color. Yes, just a quick couple of quick points to allow this Patrick mentioned, where you were pretty pleased with the high single digit growth that we saw in pathology in the quarter.
In particular, the blend and the mix between instruments and consumables that we continue to be really healthy with our instrument placements and we think that seizes up quite nicely going into 2025 on the genomics side. It was really notable because it's the first time that we've seen growth in genomics for quite a while now.
Speaker Change: I'd say, we've had a bit of a pivot in our strategy that is really double down on the growth drivers that we see in genomics, where we clearly differentiate that value propositions unimpaired particular, our Magnus automated Mgs Library prep continues to see fantastic traction. We're also very encouraged by that.
Speaker Change: One that we're seeing for our IV to NGF chemistry, and again this gives us a lot of hope going into FY 'twenty five and also think about both pathology and genomics and these growth vectors that we see here, we do believe that the jewelry, both given the macro conditions on the position that we enjoy.
Great. Thanks, and maybe just for my follow up high level question for you <unk>.
Speaker Change: On the re segmentation.
It makes sense from a go to market strategy for some of these segments.
Speaker Change: Put them together I'm wondering from an R&D development and new product innovation, how this might help I mean, you reference the LC replacement cycle accelerating faster for competitors as they refresh their installed base.
Speaker Change: Should we be should we start to see.
Foster cycle of new product introductions do the re segmentation or is it going to be similar to the pace that we've seen in the past and re segmentation really doesn't necessarily inform R&D direction.
Speaker Change: Yes, we will look at I think.
Speaker Change: We're refocusing the groups really for a few reasons, we wanted to be closer to our customers, but also understanding where do we want to make her our biggest investment or most of the asymmetric investments that are going to accelerate innovation in key areas and when I talk about focus it's really three things.
The energy to time, but also the capital allocation and what you will see from this refocusing of our segments, we're going to be able to do that youre going to see programs accelerated but also we don't want to be two inches deep across the company, we want to be focused on our key growth growth factors and making sure. We reaccelerate, we have a huge amount of product lines.
And of course, we can have incremental additions to the product lines across the board.
Speaker Change: This new structure youre going to see an acceleration of R&D no doubt about it.
Speaker Change: Okay. Thank you.
Speaker Change: Our next question comes from the line of Rachel <unk> from Jpmorgan. Your line is open.
Speaker Change: Perfect. Thank you for taking the questions you guys and good afternoon.
Speaker Change: So wanted to follow up on Patrick's question on China I appreciate that it's early days, but how are you guys thinking about the rest of the potential tariff impact on the hotline.
Speaker Change: China and India.
Speaker Change: The World is there anything embedded in guidance currently from a tariff standpoint, and then can you remind us what was the tariff impact.
Speaker Change: Trump administration.
Speaker Change: Yeah, Hey, Rachel this is Bob I'll take that question as you can imagine there's been a fair amount of work that we've been doing.
Speaker Change: On this exact question what I would take it if I took it into two chunks actually we've been working on diversifying our supply chain, particularly within China China.
Speaker Change: Back.
In 2019, when the first tariffs came and then obviously double down on that.
Our resiliency.
Speaker Change: With Covid and so it is it is 10% to $15 million, you're seeing today, and we think that.
Speaker Change: The future opportunity and potential magnitude of this is certainly manageable with us with additional mitigation activities, obviously with something that would be more broad based than that.
Speaker Change: It would be more material, but to just give you a frame of reference roughly two thirds of our business in the U S comes from.
Speaker Change: Product that's sourced in the U S.
Speaker Change: Great. That's helpful. And then just for my follow up you mentioned that technical and advanced materials grew 1%. This quarter. I was wondering can you just break down some of the trends that you saw within that you mentioned that semiconductors drove some of the performance based on advanced materials side, you actually Im wondering here Karen calling some weakness this quarter. So just talk to us about.
Speaker Change: You are seeing from an underlying perspective on that side and then again just on the industrial business as well. Thanks.
Speaker Change: Yes, so in the in the chemical advanced materials, we grew 1% and we sold 4% materials and that's driven a lot by our battery battery business that we have in the core semiconductor.
Speaker Change: We saw a slight decline in chemical and energy, but overall, we're very happy with.
Speaker Change: The load growth that we've seen in Asia ex China by the way was driven and also low single digits in China. So the one thing that I would note about this industry is that we've got we've got the broadest platform of solutions around it and it's.
Speaker Change: Comments, returning to positive year on year growth for the first time since Q2, and 23, so that really bodes well for the future.
Yeah, Hey, Rachel and maybe just for the benefit of you and the rest of the folks on the call I talked about guidance. If you look at it by end market just to kind of give everyone a frame for.
Speaker Change: For the full year FY 'twenty five.
Speaker Change:
Speaker Change: We're expecting pharma to return to growth so low to mid single digit growth there academia government roughly flat.
Speaker Change: Do you expect the diagnostics and clinical that Simon just talked about to continue and be the highest growth.
And market at least to start off the year here in FY 'twenty five at mid single digits Cam also low to mid given the work and the discussion that.
Speaker Change: Corey just gave and then food and environmental both low single digits with pockets of very strong growth and really.
Speaker Change: Food, there is a potential where that actually could accelerate throughout the course of the year given some of the potential changes in the administration coming up.
Speaker Change: Yeah.
Speaker Change: Your next question comes from the line of Vijay Kumar from Evercore ISI. Your line is open.
Vijay Kumar: Hey, guys. Thanks for taking my question, maybe above off of the last question here on now.
The drivers of fiscal 'twenty five.
Vijay Kumar: When you look at the first half versus second half it doesn't assume a back half step up.
Speaker Change: I was just curious is that is that being driven by end markets normalizing, maybe if you could just walk us through from first half versus back half dynamics in our fiscal 'twenty five.
Vijay Kumar: Yes, Vijay that's exactly right. So obviously are our first quarter is what I would call.
Speaker Change: Artificially depressed just because of the way the nature of our timing of our fiscal year relative to lunar new year, but if you looked at first half versus second half. We're expecting this continued recovery throughout the course of the year.
Speaker Change: And with a more normalized growth in the back half of the year and so where does that show up it shows up in a couple of areas, obviously with the potential.
Speaker Change: For China getting better throughout the course of the year as Paul mentioned, certainly stimulus can help that we've taken a conservative approach on that and not fully baked in with all the activity that we've talked about.
Speaker Change: We'll see how that plays out but certainly early days are very positive from that standpoint, and then also from a pharma perspective, we're also expecting to see that recovery, particularly on the back of Infinity three is as Paul just mentioned.
That replacement cycle accelerating so youre actually seeing those that would be the two biggest and then continued biotech recovery on this on the small biotech side as well throughout the course of next year.
Understood and then one on maybe the margins free cash flow side pretty impressive free cash execution in fiscal 'twenty four.
Speaker Change: Just wanted to make sure I had the numbers right is the guidance assuming if we can't step down above is that a timing element in on the margin sort of similar cadence question.
Speaker Change: Q1, assuming and what drives the back half step up in margins. Thank you.
Yes.
Q1 <unk>.
Speaker Change: Answer to your question around free cash flow, yes, we are expecting a slight slip down really as a result of a step up in capex spending this year versus last year as we.
Speaker Change: Finished.
The heavy levels of spending for the NASD expansion for training Sandy I don't expect that to continue into 2026 and 27. So you would see that tend to step back down so that free cash flow is really a timing issue in terms of Q1.
Speaker Change: Profitability with the lower revenue.
Speaker Change: Typically have higher expenses in Q1 as some of the.
Speaker Change: The Merit resets, we've got our sales meetings and kickoff meetings, there and then you've got.
Speaker Change: Some some January typically is a very light month, but we have a full amount of road.
Of <unk>.
Speaker Change: Expenses in there and then you then also look at the ignite transformation that <unk> talked about many of those activities that we've been kicking off will come into play in the second half of the year, which will generate incremental savings both on the topline and bottomline.
Speaker Change: You'll hear more about that some of those details.
Speaker Change: The Investor day in mid December.
Speaker Change: Thank you.
Speaker Change: Yeah.
Speaker Change: Our next question comes from the line of Jack Meehan from Nephron Research. Your line is open.
Speaker Change: Thank you and good afternoon.
Speaker Change: Bob I was wondering if you could just walk us through for the 2025 guide what.
Speaker Change: What this assumes for each of the segments not sure. If you can provide it under the old method or just the new method, but any color would be great.
Speaker Change: Yes, I can do that so if you think about this it I'll call it.
Legacy <unk>.
Speaker Change: So, let's say Gee.
Speaker Change: Kind of low single digits.
Speaker Change: With.
Speaker Change: The consumables business being kind of mid single digits and slower instrument throughout the course of the year, that's probably our area, where we've taken a prudent approach as we go through the course of the year it could be more than that depending on the uptake of the replacement cycle for and if any of the three but low single digits there.
Speaker Change: <unk> continued to be very strong with mid to high single digits as the instrumentation recovery and then continued double digit on the on the.
Speaker Change: On the services business just continues to be a real stalwarts of growth and we still have a lot of opportunity there around connect rate and then for DDG kind of low to mid single digit growth going forward, which is a recovery. The continued performance of pathology and genomics businesses as Simon mentioned and then a return to growth really for NASD.
Speaker Change: Great. Okay, and then just one.
Speaker Change: Wondering if you could just talk a little bit more just what your expectations are for LCL CMS I think everybody is trying to benchmark expectations for next year and.
Speaker Change: One of your peers as it sounds a little bit more bullish as it pertains to the cycles I don't know if you have any thoughts as we try and compare and contrast, some of these results.
Speaker Change: Any color would be great.
Speaker Change: And maybe just off of that any comments you can share around DLP, one contribution I think that might be a factor, but any color would be great. Thank you.
Speaker Change: Yes. So there is a lot of dynamism in terms of replacement cycle. It doesn't happen at any time as I said before any one time, but it's across across the board in different industries in different times.
Speaker Change: From our perspective, our LTM CMS orders are improving there is no doubt about that and we have a huge amount of excitement around our infinity tree, we have a lot of focus programs.
Customers around that so what you will see next year is I think is a steady increase in cadence of that replacement cycle.
Speaker Change: It's a little bit too early to call will not be gradual over a number of quarters or a bolus in one quarter or maybe have been a slowdown in again on our next quarter, but we're really watching that as we go forward I think we're being very conservative.
Speaker Change: What we're seeing on that because of a lot of turbulence as everybody has seen in the last few years in the market, but I would say customer sentiment is.
Speaker Change: Is steadily improving on the <unk> side.
Speaker Change: We had a really fantastic year, we grew 30%.
Speaker Change: In <unk> this year.
Speaker Change: We're involved in a lot of new site build outs and QA QC departments, and actually getting closer to production as well with systems. So.
Speaker Change: Very very strong year and actually one thing that's really interesting is true to the acquisition of bio vector. We of course have have a healthy pipeline of GOP, one and conduct a synthetic product.
Speaker Change: Peptides within their <unk> capability, we're seeing a lot of requests from.
Speaker Change: <unk> sides of the business about how we can how we.
Speaker Change: We can help customers both on the analytical side and on the <unk> side. So we're seeing a huge amount of synergies. There. So this is a this is a market that's going to continue very strongly and we're going to be really there to take take the business.
Hey, Jack just to build on what Paul is saying on the LC replacement cycle I think one of the things is.
Speaker Change: <unk>.
Speaker Change: Okay.
Speaker Change: We're taking a more conservative approach as <unk> mentioned and I think if that happens we will get that business rest assured I would also say if we look at the age of our installed base is continuing to get all of it is it is probably it.
Speaker Change: Well beyond the media now and throughout the course of next year. So we would expect that to continue to be able to be replaced because when we look at the instrumentation through our consumables business and our services business. The activity continues to be there. So these instruments are being used and so it's only a matter of time to be.
Speaker Change: Able to to do that.
Replacement.
Speaker Change: Awesome. Thank you guys.
Speaker Change: Yeah.
Speaker Change: Our next question comes from the line of Dan Leonard from UBS. Your line is open.
Speaker Change: Hi, Thank you just to clarify on instruments. One last time is your expectation that instrument growth is flat in 2025.
Speaker Change: In aggregate across all platforms, our expectation that it will grow.
Speaker Change: Low single digits.
Speaker Change: Okay.
And then my follow up you mentioned I think something about the administration and changes in your food forecast are there any other areas, where you think the change in U S administration any other areas, but you were sensitive too when putting together your forecast for 25.
Speaker Change: Yes look at Theres a lot of changes that can happen at this time you know there's a lot of people expecting a lot of change we have yet to see what those changes would be of course, you can see maybe some changes in the NIH funding, which is very low for us as a percentage of the business we actually.
Speaker Change: We expect that <unk> spending will actually increase as it goes forward on it the area to watch I would say is of course tariffs, which Bob talked about we are ready for us.
Speaker Change: Ready for any scenario.
On that side, but also on Biopharma I think as you. IRA is also continues to move forward International pricing index seeing what happens on Biopharma is going to be really important. So that's why we're taking a kind of conservative prudent approach so lots going on but what I would say is from the strategy work with imagine we're ready for <unk>, we're ready for all outcomes.
Speaker Change: Okay. Thank you.
Speaker Change: Your next question comes from the line of Puneet sooner from Leerink Partners. Your line is open.
Speaker Change: Yes, Hi, Bob.
Thanks for taking my questions.
Speaker Change: The first one just wanted to clarify on the tariff side I mean, if there was there were any retaliatory tariffs could you elaborate on your manufacturing and final assembly positions.
Just globally. So we can understand sort of how much of the product is sort of China for China made in China versus made in other Asian countries and not coming from U S.
Speaker Change: Yes, maybe I can start off by talking about our U S supply chain and they're about 60% as Bob said is produced in the United States about 35% is the rest of the world. So it's actually a small percentage that are produced in China, but of course, we have mitigation step there we have many supply chain.
Speaker Change: Areas across the globe that we can move around and we've done that before since 2018.
Speaker Change: We expect the impact probably in the quarter of $4 million to $5 million.
Speaker Change: Probably mitigate that within.
Speaker Change: In a few months. So so I would say, we're waiting to see how that all plays out, but we're already taking steps across the potential tariffs. The big question for everybody is that will it beyond will it be beyond China I think everybody is waiting to see what that is but even in that case, where we're ready with mitigation, yeah, Hey, puneet to build on what <unk> is saying, particularly for <unk>.
Speaker Change: <unk> in China.
Speaker Change: Very little of our revenue now is produced in the U S that goes into China. We've spent a lot of time and effort building in China for China, and we have a full portfolio of capabilities, there, which is actually really important for us to be able to take full advantage of the stimulus product products today. So.
Speaker Change: Think that that number will be relatively small from the standpoint of retaliatory impact from China exports from the U S.
Speaker Change: That's helpful. Thanks, and then I have a question on Infinity II series, just wondering given the launch timing was there any pause that you saw on the instrumentation and the ordering side enough prior to October and what does the order book, telling you do you think this is what's driving it.
Speaker Change: Is that a major driver of instrumentation orders in the quarter being positive as you pointed out.
Speaker Change: Yes, we had a minimal effect to be honest, we really plan to round out and of course, we are very careful with our customers to make sure we bring them through the cycle of replacement so minimal impact we're very extremely excited about it.
System that not only would be best in class in terms of performance, but also in terms of productivity and that's what we're hearing loud and clear from our customers, it's about productivity and how it lends their labs to be more predictive productive going forward. We're extremely pleased with the order book that we've seen so far.
Speaker Change: And we expect that that will continue to ramp.
Speaker Change: Customers are really voting with their orders on that so we're excited about that ramp for next year.
Speaker Change: Yeah.
Speaker Change: Okay. Thank you look forward to the Investor day.
Speaker Change: Our next question comes from the line of Tycho Peterson from Jefferies. Your line is open.
Hey, Thanks, I wanted to probe in pharma a little bit are you able to delineate what LLC did and what mass spec did in the quarter and then just thinking a little bit about the new administration I know youre not guiding for any budget flush here, but is there any risk of kind of a pause in spending given all the moving pieces around pharma what are you hearing from customers at this point.
Yeah.
Speaker Change: Yes, maybe I can start with the second part.
Tycho: Tycho, we're not we're not seeing a pause from farmers auditing, we're actually seeing a little bit more activity and so we're not we're not seeing that across the board.
Tycho: About the U S and.
Tycho: And globally and of course, that's something we really want to watch with the with the new administration coming in.
Tycho: And what transpires over the next.
Speaker Change: The next few weeks, but in terms of the <unk>, Bob I don't know if you got any color on that.
Speaker Change: Just to give you a couple of different kind of pieces of data is if I look at.
Our pharma business overall, it was down low single digits pharma.
Speaker Change: Small molecule was actually up 3% overall with.
Speaker Change: Biotech or biopharma being down.
Speaker Change: If we look at specifically LCL CMS within pharma was up low single digits.
Speaker Change: Okay. That's helpful. And then a follow up on NASD I know I think youre talking about back to growth in 'twenty. Five can you maybe just talk a little bit about your ability to cross sell with viral vector and then how are you thinking about clinical versus commercial customers.
Speaker Change: Yes ill start off Tycho and I'll hand, it over to Simon first of all we are extremely pleased some of the cross selling ability between the two businesses one of the key source of value about why we did the buyer Vectra acquisition that customers were asking us for this capability a broader range of capability and we've seen that actually accelerated from both sides of the time and I don't know if you want to add.
Speaker Change: More color on an NFC, yes, just to build on what Paul said, we'd buy back and DNS. The cross pollination, that's been really strong engagement between the savings in fact I spent several days together.
Speaker Change: Our Boulder facility last week and upside I came away really energized.
Speaker Change: The portfolio complement sat ritzy fit between the businesses is exactly as we expected in fact, maybe a little bit more so.
Speaker Change: Then as we think about NASD going into FY 'twenty five I think as Bob mentioned earlier, we're projecting high single digit growth for the business. The order book looks really strong.
Speaker Change: NASD, but it's important to understand the nuances of the mix and other order book we have.
Speaker Change: Got a number of commercialization qualifications going on right now so in terms of FY 'twenty five revenue.
Speaker Change: A lot of energy going into that with relatively limited revenue upside and a lot of that's going to actually hit towards FY 'twenty six but again the overall the order book overall is very healthy and as we think about 12 18 24 months view.
Speaker Change: We're really bullish about what we're seeing but once again high single digit growth, maybe we'll notes double digit NASD in FY 'twenty.
Speaker Change: Thank you.
Speaker Change: Your next question comes from the line of Brandon <unk> from Wells Fargo. Your line is open.
Speaker Change: Hey, guys.
Speaker Change: Good afternoon.
On the Internet three launch can you remind us when the infinity too I think it was at 12 90 system rolled out and what's the is there an ASP.
Speaker Change: Premium is there in the ASC kicker.
Speaker Change: This replacement cycle this time as well.
Speaker Change: The three versus the legacy <unk> system.
Speaker Change: Yes.
Speaker Change: We don't talk about a difference in pricing on it but I think the we've.
Speaker Change: We've had a number of years of course, very very successful years with the Infinity II and this builds on the success I will say that the installed base for <unk> is way broader than the infinity too. We have 11 hundreds that are very very prominent out there. We have a lot of labs with 11, hundreds and those those are the labs forces I think that theyre going to be talking about replacement, but we are.
Speaker Change: <unk> seen significant interest from infinity to customers because the CD extra productivity capability is really going to help them in the lab. So I would say, it's not just that.
Speaker Change: One series to the Nexus abroad installed base, a replenishment cycle, we're going to see.
Yes, all I would say is pricing is has.
Speaker Change: <unk> has held up very nicely.
Speaker Change: Early days.
Speaker Change: Okay, and then Mike or excuse me, Mike Bob how much of the Capex.
Speaker Change: Next year is tied to the training D&C Buildout for NASD. When you expect those to come online and what is maintenance capex looks like in fiscal 'twenty six.
Speaker Change: That's a great question, so roughly half as NASD between.
Speaker Change: <unk> build out and the validation activities of that $4 50, if I look at kind of maintenance Capex think about it in.
Speaker Change: Two five to three times sales range.
Speaker Change: On a go forward basis.
Speaker Change: That's total company.
Speaker Change: Yep Okay.
Speaker Change: Your next question comes from the line of Doug Schenkel from Wolfe Research. Your line is open.
Speaker Change: Good afternoon.
Speaker Change: Afternoon, guys. Thanks for taking my questions.
Speaker Change: I wanted to start first with a question on guidance philosophy.
Speaker Change: Just to be clear it sounds like you are trying to factor in a degree of conservatism on.
Speaker Change: China.
Speaker Change: China stimulus the impact of uncertainty as it relates to the new administration.
Speaker Change: Conservatism on a perpetual LC replacement cycle.
I am not missing anything there but.
Speaker Change: Is it fair to say the error bars around your assumptions are wider than normal heading into a new fiscal year on your intent across the board was to make assumptions that we're consistently on the lower end of those error bars.
Speaker Change: I think you said it well you know we were very conservative in that because of those reasons.
What is the expected LC replacement cycle recovery a bit faster as it is.
Speaker Change: Is it a little bit less than that the China stimulus, which is very early days I think we want to make sure that we are continuing to monitor it.
Speaker Change: And of course, whether we see improved conditions are not in terms of sentiment in the U S. So all of these things are factoring into this so it is conservative.
And what we're guiding but also I'd failure, the borrowers are wider than normal.
Speaker Change: Okay. Thank you for that.
Speaker Change: Just as always correct me, if I'm wrong, but I believe in your prepared remarks.
Speaker Change: Indicated that small molecule was up low single digits, while biopharma was down mid singles.
Speaker Change: If I have that right is that comp effect or are you seeing more of a recovery in demand amongst small versus large molecule applications.
Speaker Change: I guess finally, if so why that seems to be a little contradictory to what we've heard from some others. So just just curious if you could give us a little more there.
Speaker Change: Yes, Doug No you heard it right our small molecule business was.
Speaker Change: Up low single digits across both instrument. It was the combination of instruments in.
Speaker Change: And services and.
Speaker Change: Our biotech or large molecule was down mid singles now if you took out NASD, which shows up in the large molecule was down low single digits, so better recovery than the mid single digits and it actually speaks to I think that continuation of our volume in small molecule. If you look at pill count continues to go up.
Speaker Change: And these are well capitalized companies they have probably the older.
Our fleet when you just think about kind of the replacement versus kind of the biotechs of the world and so.
We're expecting that to continue.
Speaker Change: And it was the first to kind of come down and.
Speaker Change: And so we are in the cycle and I think we're expecting it to be.
Speaker Change: The first.
Speaker Change: Moving moving positive now we think theres more upside in biotech than there is in small molecule, but it certainly is a nice leading indicator around the idea around this replacement cycle.
Speaker Change: Okay. Thank you very much.
Speaker Change: Your next question comes from the line of Michael <unk> from Bank of America. Your line is open.
Speaker Change: Great. Thanks for taking the question guys.
Speaker Change: First I want to ask a quick follow up on China stimulus I, just kind of touched on them in a couple of different questions, but early in the prepared remarks, you did make some comments of seeing some initial China stimulus orders come in I think China in the quarter exceeded your expectations.
Speaker Change: No theres not a lot of embedded.
Speaker Change: Directly into the guide, but could you just walk us through sort of what how China's stimulus could play out next year.
Speaker Change: And I'm asking this from a perspective of gradual ramp as you go through the year is it sort of going to be a trickle as it is.
Would it be very back end loaded as just im just trying to think through the various scenarios and what youre looking for there once these initial orders clear.
Speaker Change: Yeah look I think what we've seen is that it's much broader stimulus in terms of range. We spoke about that before we see it both on commercial and government accounts were first orders have actually come in from government accounts, we've been highly highly successful in those overall tenders and we're in the low millions range low single digit millions range of.
Speaker Change: Order through and we're expecting to close much more this quarter.
Speaker Change: And one thing that's really playing into our favor is our broad platform capabilities, including the technical capabilities of our teams up and running and you couple that with our met in China initiatives that we've really invested over the last year. It is a it puts us in a very very strong position to capitalize but it'll be interesting to see how that's launched.
Speaker Change: Past the fourth quarter, we don't have great visibility, yet but of course, a lot of deal activity with the fourth quarter is looking very strong in terms of orders, Yeah, Hey, Mike just to kind of frame and kind of how we're thinking about China to your point. If we took Q4 and just divided by our multiply by four that would get you to that low single digit growth now we're expecting a recovery.
Speaker Change: Through throughout the course of the year, but that kind of gives you a sense for what we put in the initial guide and we'll know lot more about the timing of the stimulus revenues.
Speaker Change: Going going forward.
Speaker Change: Once we actually get those awarded and then the delivery dates and so forth, but we do think that that will occur throughout the course of.
Speaker Change: The year.
Speaker Change: Okay. That's helpful and then Bob maybe for you just on the margin guide for next year of 50 to 70 bps.
Really impressive starting point honestly better than I think what expected, especially given still a little bit of a subdued topline environment. How much of that can you attribute to ignite and maybe some part of the transformation of our onetime cost savings. How much is just the underlying strength of the business needs of those types of price or some some mix shift next year.
Speaker Change: Just.
A little bit of what's going into that margin expansion for next year.
Yeah, what I would say Mike.
Speaker Change: It's a little of all of those things so maybe stay tuned and we'll give you a little more meat on the bones here come at.
Speaker Change: Mid December, but we certainly have some incremental opportunities both in price and.
Speaker Change: Cost efficiencies associated with the ignite transformation.
And those things will start to feather into.
Speaker Change: Into the second half of this year as I mentioned before if you recall the first half of this year also has the <unk> of the savings or the actions that we had to take in the June July timeframe as well. So we're benefiting from that in the first half that that.
Speaker Change: And that somewhat gets Anniversaried and then you also have the merit increases and so forth that gets reset and so youll actually see that throughout the course of the year through a series of initiatives that are already been kicked off so I would say just following on from that but we're very excited to meet everybody in December in New York to talk about a third of them.
Speaker Change: Extremely well thought out program.
Speaker Change: Across the board.
Ultimately going to help us to invest for growth in key areas as well as margin expansion so stay tune.
Speaker Change: Okay. Thanks, a lot guys.
Speaker Change #100: And your final question comes from the line of Dan Brennan from TD Cowen Your line is open.
Speaker Change #101: Great. Thanks for thanks for taking the questions here.
Speaker Change #102: Maybe the first one just on pharma in the Americas I think you called out in the prepared remarks Americas pharma ex NASD was kind of maybe a weaker spot can you just unpack a little bit what's happening in U S versus say Europe rest of world.
Speaker Change #102: Kind of what's what's kind of assumed from what happened in <unk> and 'twenty five.
Yes, I mean look what we saw we saw a lot of strength in Europe in terms of Afirma I wouldn't read too much into the American numbers, you know I think there is of course.
Speaker Change #102: Companies wondering about their capex budgets and that comes at different phases, but we expect we expect pharma to continue next year and to grow at rates that Bob laid out in terms of our guide.
Speaker Change #102: Okay.
Speaker Change #103: Okay. That's helpful and then maybe just one on <unk>.
Speaker Change #103: If I can just go into the broader market I know you talked about the parent remarks, Bob and a few times. It came up like Youre expecting a below trend market at least it sounds like for the first half of the year can you just remind us in terms of your kind of growth algorithm, maybe like what is what is your assumptions based upon for a market growth typically kind of what are you assuming and kind of specifically is it just <unk>.
Speaker Change #104: But thats weaker or are there other spots that you're pointing to that are below trend and any color on that would be helpful. Thank you, yes, Dan if we looked at the long term growth rates of our markets. We believe those are mid single digits four to six and when you look at the aggregate across we're obviously not expecting that.
Speaker Change #104: For the full year here, we are expecting that were doing better than the market. If you look at how we exited here roughly flat on a core basis.
Speaker Change #104: If you adjust for the timing of lunar new year at the midpoint, 1% and expect that kind of that debt.
Speaker Change #104: Performance to continue that cadence and so you would have the second half of the year at a more normalized kind of growth.
Speaker Change #104: Growth rates and so it's really across the board, we're seeing some of the industrial.
Speaker Change #104: Or applied markets things like Cam being a little ahead of the curve and certainly our diagnostics and clinical business continues to be strong. It has been throughout the course of this year exiting at a very healthy rate and I would expect that to continue the big ones are our pharma coming in and then some of the other applied market.
Speaker Change #105: As well so.
Speaker Change #105: Okay.
Yeah.
Speaker Change #106: And this concludes the question and answer session. Mr. <unk> I'll turn the call back over to you.
Speaker Change #107: Thanks, Rob and thanks, everyone for joining the call today before we sign off I'd like to wish everyone a happy Thanksgiving.
Speaker Change #107: Have a good rest of the day and week everyone.
Speaker Change #108: This concludes today's conference call you may now disconnect.
Speaker Change #108: Yeah.
Speaker Change #108: Yeah.
Okay.