Q1 2025 Agilent Technologies Inc Earnings Call

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 press star followed by the number one on your telephone keypad. If you would like to withdraw your question Press Star. One again. Thank you pardon me to who would you you may begin the conference.

Thank you Regina and welcome everyone to agile and conference call for the first quarter of fiscal year 2025.

Speaker Change: With me are boring Mcdonald, agile <unk>, president and CEO, and Bob Mcmahon Adjuvant, Senior Vice President and CFO.

Good afternoon, my name is Regina, and I will be your conference operator today. At this time, I would like to welcome everyone to the first quarter 2025 Agilent Technologies, Inc. earnings conference call. All lines have been placed on mute to prevent any background noise.

Speaker Change: Joining in the Q&A will be Simon named President of the life Sciences, and diagnostics market group Angie.

Speaker Change: Angelica Ryman President of the Adjuvant Cross Lab group and Mike Zhang President of the applied markets group.

Speaker Change: After the speaker's remarks, there will be a question and answer session. If you would like to ask a question during this time, simply press star followed by the number one on your telephone keypad. If you would like to withdraw your question, press star one again. Thank you. Parmeet Ahuja, you may begin the conference.

Speaker Change: This presentation is being webcast live.

Speaker Change: Press release for our first quarter financial results Investor presentation, and information to supplement today's discussion.

Speaker Change: Along with a recording of this webcast are available on our website at Investor <unk> Dot com.

Speaker Change: Thank you, Regina, and welcome everyone to Agilent's conference call for the first quarter of fiscal year 2025. With me are Padraig McDonnell, Agilent President and CEO, and Bob McMahon, Agilent Senior Vice President and CFO.

Speaker Change: Today's comments will refer to non-GAAP financial measures you will find the most directly comparable GAAP financial metrics and reconciliations on our website.

Speaker Change: 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.

Speaker Change: Joining in the Q&A will be Simon May, President of the Life Sciences and Diagnostics Markets Group.

Speaker Change: Angelica Riemann, President of the Agilent Crosslab Group, and Mike Zhang, President of the Applied Markets Group.

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

This presentation is being webcast live.

Speaker Change: Guidance is based on forecasted exchange rates.

Speaker Change: As a reminder, beginning in the first quarter of fiscal 2025, we implemented certain changes to our reporting structure related to reorganization of our three business segments.

Speaker Change: Today's comments will refer to non-GAAP financial measures. You'll find the most directly comparable GAAP financial metrics and reconciliations on our website.

Speaker Change: We have recast our historical segment information to reflect these changes and that provided the financial details on our website.

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

Speaker Change: 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.

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

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

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

Speaker Change: The company assumes no obligation to update them.

Guidance is based on forecasted exchange rates.

Speaker Change: Please look at the company's recent SEC filings for a more complete picture of our risks and other factors.

Speaker Change: As a reminder, beginning in the first quarter of fiscal 2025, we implemented certain changes to our reporting structure related to reorganization of our three business segments.

Speaker Change: And now I'd like to turn the call over reported.

Speaker Change: Thank you <unk> and thanks to all of you for joining today's call as.

Speaker Change: We have recast our historical segment information to reflect these changes and have provided the financial details on our website.

Speaker Change: As you saw in our press release, we had a very solid start to the year exceeding our expectations for core revenue growth and EPS.

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

Speaker Change: Before diving into the details I want to first follow up on conversations I've had with many of you starting at our analyst and Investor Day in December at the New York Stock Exchange and provide an update on progress I'll break my transformation.

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 risk and uncertainties and are only valid as of today.

Speaker Change: We've stated that ignite is for our customers employees and shareholders.

The company assumes no obligation to update them.

Speaker Change: Customers, we want to create a seamless experience across adjuvant products software and services.

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

Speaker Change: For our employees, we want to become nimbler and reduce complexity to enhance our ability to serve our customers.

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

Speaker Change: For shareholders, we want to deliver industry, leading shareholder value through differentiated growth.

Parekh: Thank you Parmeet and thanks to all of you for joining today's call. As you saw in our press release, we had a very solid start to the year, exceeding our expectations for core revenue growth and EPS.

Speaker Change: We have set targets to grow core revenues between 5% and 7% annually.

Speaker Change: And our operating margin by 50 to hundred close basis points per year and delivered double digit EPS growth.

Parekh: Before diving into the details, I want to first follow up on conversations I had with many of you starting at our Analyst and Investor Day in December at the New York Stock Exchange, and provide an update on progress over Ignite Transformation.

Speaker Change: Now I want to share three notable accomplishments from the ignite transformation will focus on setting new pricing mechanisms elevating our digital ecosystem identifying procurement opportunities.

Parekh: We've stated that IGNITE is for our customers, employees, and shareholders.

Speaker Change: First the creation of an enterprise strategic pricing organization that will focus on setting our standard approach for pricing across the entire solution set with the customer and not just out of tactical with bottoms up product level.

Parekh: For customers, we want to create a seamless experience across Agilent products, software, and services.

Parekh: For our employees, we want to become nimbler and reduce complexity to enhance our ability to serve our customers. And for shareholders, we want to deliver industry-leading shareholder value through differentiated growth.

Speaker Change: Second our digital ecosystem, a critical enabler in our evolved strategy, we unveiled at Investor day continues to be a key area of investment for US already we have made meaningful improvements to our websites upgrading the user experience on our e-commerce platform by making it easier to find and purchase the products our customers need helping driving topline growth.

Parekh: We have set targets to grow co-revenues between 5 and 7% annually, expand our operating margin by 50 to 100-plus basis points per year, and deliver double-digit EPS growth.

Parekh: Right now, I want to share three notable accomplishments from the IGNITE transformation that focus on setting new pricing mechanisms, elevating our digital ecosystem, and identifying procurement opportunities.

Speaker Change: In Q1, our progress continued with digital orders growing high single digits.

Speaker Change: Third our procurement teams have challenged our historical approach and are identifying significant cost saving opportunities in many of <unk> functions.

Parekh: First, the creation of an enterprise strategic pricing organization that will focus on setting our standard approach for pricing across the entire solution set with the customer and not just at a tactical bottoms-up product level.

Speaker Change: Also related to our ignite transformation, we're assessing our organizational health.

Speaker Change: On my first day as CEO, I promise or employees, we would become a nimbler organization to make decisions faster and accelerate innovation in service of our customers.

Parekh: Second, our digital ecosystem, a critical enabler in our evolved strategy we unveiled at Investor Day, continues to be a key area of investment for us.

As a result, we are removing some management layers and increasing spans of control.

Parekh: Already, we have made meaningful improvements to our website, upgrading the user experience on our e-commerce platform by making it easier to find and purchase the products our customers need, helping driving top-line growth. In Q1, our progress continued with digital orders growing high single digits.

Speaker Change: This is a continuation of our new organization structure, we announced in late November.

True that reorganization, we're seeing our business leaders and lock step on our strategy and transformation. This alignment enables us to make better decisions faster on priorities and trade offs.

Parekh: And third, our procurement teams have challenged our historical approach and are identifying significant cost-saving opportunities in many of Agilent's functions.

As my leadership team and I look forward, we are focused on growing Ashland.

Speaker Change: A foundational element of growth is innovation innovation that our customers want.

Thank you. Thank you. Thank you.

Parekh: Also related to our IGNITE transformation, we are assessing our organizational health.

Speaker Change: Every time I visit a customer in any part of the world.

Parekh: On my first day as CEO, I promised our employees we would become a nimbler organization to make decisions faster and accelerate innovation and service of our customers.

Speaker Change: The same thing they want to partner with agile and for better outcomes, that's what differentiates Iceland, the deep scientific knowledge of our customer facing team members that our competitors simply cannot duplicate.

Parekh: As a result, we are removing some management layers and increasing spans of control. This is a continuation of our new organizational structure we announced in late November.

Speaker Change: Customers want everything from the ability to parse massive amounts of data in seconds to automating more tasks. So they can focus on complex scientific challenges in.

Parekh: Through that reorganization, we're seeing our business leaders in lockstep on our strategy and transformation. This alignment enables us to make better decisions faster on priorities and tradeoffs.

Speaker Change: In essence, they want to increase their productivity.

Speaker Change: Thats why driving lab productivity is among our key priorities.

Speaker Change: You can see evidence of this in our collaborative agreement with Zurich based ABB robotics to produce automated laboratory solutions.

Parekh: As my leadership team and I look forward, we are focused on growing Agilent.

Parekh: A foundational element of growth is innovation, innovation that our customers want.

Speaker Change: Ones that will help our customers find new ways of improved workflows and make operations more efficient and flexible.

Parekh: Every time I visit a customer in any part of the world, they say the same thing. They want to partner with Agilent for better outcomes. That's what differentiates Agilent, the deep scientific knowledge of our customer-facing team members that our competitors simply can't duplicate.

Speaker Change: These are customers across multiple markets, including pharma biotech energy and food together with ABB agile and <unk> formed the customer lab operations by making workflow processes for research development and quality control faster and more efficient.

Parekh: Customers want everything from the ability to parse massive amounts of data in seconds, to automating more tasks so they can focus on complex scientific challenges. In essence, they want to increase their productivity. That's why driving lab productivity is among our key priorities.

Speaker Change: <unk> is for all instruments robots and software to be interoperable, which is crucial to significantly boosting productivity for our customers are.

Speaker Change: Our customers want to buy whole product solutions, not just a single instrument.

Speaker Change: To illustrate that our infinity three series that we introduced in October has seen great adoption from all of our customers.

Parekh: You can see evidence of this in our collaborative agreement with Zurich-based ABB Robotics to produce automated laboratory solutions.

Speaker Change: As a reminder, the infinity tree has advanced automation that simplifies our customers' daily routines and is compatible with previous generations, which allows for seamless upgrades and technology refreshes and that has become a differentiator.

Parekh: Ones that will help our customers find new ways of improved workflows and make operations more efficient and flexible.

Speaker Change: Customers are saying that the backward compatibility combined with the modularity of the agile systems allows them to decide how to upgrade and refreshed or instruments plus they are telling us that they're choosing adjuvant because of our longstanding quality and technology leadership, that's been further enforced with the infinity tree.

Parekh: The goal is for all instruments, robots, and software to be interoperable, which is crucial to significantly boosting productivity for our customers.

Speaker Change: The adjuvant Infinity lab LTE solutions are certified by migrating up these instruments optimized lab space and to reduce water solvent and energy consumption, while also minimizing waste.

Parekh: Our customers want to buy whole product solutions, not just a single instrument. To illustrate that, our Infinity Tree series that we introduced in October has seen great adoption from all our customers.

We continue to see strong momentum and growth in our sales funnel move pretty infinity tree because of its advanced automation that empowers our customers to be more productive and because of infinity lab assists. Our automation software to provides onboard intelligence. So our customers are not simply buying a platform put a whole product solution.

Parekh: As a reminder, the Infinity Tree has an advanced automation that simplifies our customers' daily routines and is compatible with previous generations, which allows for seamless upgrades and technology refreshes. And that has become a differentiator.

Parekh: Customers are saying that the backward compatibility combined with the modularity of the Agilent systems allows them to decide how to upgrade and refresh their instruments. Plus, they're telling us that they're choosing Agilent because of our long-standing quality and technology leadership that's been further enforced with the Infinity Tree.

Speaker Change: Just as exciting is that the great success of our Infinity tree provides agile as an incredible opportunity for us to upgrade our customers instruments.

Speaker Change: And it's already happening across our legacy SP platforms, representing an opportunity into hundreds of millions of dollars over the coming years.

Parekh: And the Agilent Infinity Lab LC solutions are certified by My Green Lab. These instruments optimize lab space and they reduce water, solvent, and energy consumption while also minimizing waste.

Speaker Change: Now I'd like to highlight some key aspects of our Q1 results.

Speaker Change: As you can see from our press release, we drove top line year over year growth, while macro market trends such as Capex spending continued to improve our revenue of $1 681 billion increased 1% over the same quarter in FY 'twenty for this results exceeded our expectations and was led by excellent growth in <unk> and capturing and outside.

Parekh: We continue to see strong momentum and growth in our sales funnel for the Infinity Tree because of its advanced automation that empowers our customers to be more productive and because of Infinity Lab Assist, our automation software that provides onboard intelligence. So, our customers are not simply buying a platform, but a whole product solution.

Speaker Change: Chair of the China stimulus awards.

Speaker Change: Our instrument book to Bill was greater than one in Q1, a quarter when it's typically less than one.

Parekh: Just as exciting is that the great success of our Infinity Tree provides Agilent an incredible opportunity for us to upgrade our customers' instruments, and it's already happening across our legacy LC platforms, representing an opportunity into hundreds of millions of dollars over the coming years.

Speaker Change: This is another sign of market recovery, but more importantly, it's a testament to our intense customer focus with products such as our highly successful infinity tree and our success driving our market leading position in China.

Parekh: Now, I'd like to highlight some key aspects of the Q1 results.

Speaker Change: Additionally, we exceeded expectation in all regions and end markets, except for academia and government.

Parekh: As you can see from our press release, we drove top-line year-over-year growth, while macro market trends such as cap expanding continue to improve.

Speaker Change: In our end markets revenue was led by food, which grew 9% driven by our success in capturing stimulus orders in China.

Parekh: Our revenue of $1.681 billion increased 1% over the same quarter in FY24. This result exceeded our expectations and was led by excellent growth in PFAS and capturing an outside share of the China Stimulus Awards.

Speaker Change: In China, our accelerating share gains were apparent in recording a win rate of more than 50% on stimulus related tenders with a long history in the region elevated by a local manufacturing capabilities, we are well positioned to expand our market leadership in China.

Parekh: Our instrument booked to bill was greater than 1 in Q1, a quarter when it's typically less than 1. This is another sign of market recovery, but more importantly, it's a testament to our intense customer focus with products such as a highly successful Infinity Tree and our success driving our market-leading position in China.

Speaker Change: Now, let me talk about our businesses and some growth vectors in each our life science and diagnostic markets group grew 1% in the quarter reporting $647 million.

Speaker Change: Performance was driven by a nice result in our LC and LC Ms instruments, which grew high single digits during the quarter on the heels of our Infinity tree launch within that LPG. We remained focused on the integration of bio vector and we are delighted by the response, we are hearing from our existing and potential customers who are interested in leveraging <unk> unique capability.

Parekh: Additionally, we exceeded expectations in all regions in Denmark except for academia and government.

Parekh: In our end markets, revenue was led by food, which grew 9% driven by our success in capturing stimulus orders in China.

Parekh: In China, our accelerating share gains were apparent in recording a win rate of more than 50% on stimulus-related tenders. With our long history in the region elevated by our local manufacturing capabilities, we are well positioned to expand our market leadership in China.

Speaker Change: <unk> and adjuvant expertise.

Speaker Change: It's clear that <unk> capabilities are in the sweet spot of tremendous markets with a terrific growth potential.

Speaker Change: Other than Crossline group grew 3% reporting $696 million, which.

Parekh: Now, let me talk about our businesses and some growth factors in each. Our Life Science and Diagnostics Markets Group grew 1% in the quarter, reporting $647 million.

Speaker Change: Which was in line with our expectations led by services, we are especially excited about the new ACG that note include services automation consumables and software and informatics.

Parekh: Performance was driven by a nice result in our LC and LC-MS instruments which grew high single digits during the quarter on the heels of our Infinity Tree launch.

Speaker Change: And informatics are among our key priorities and we've had an overwhelmingly positive response to both our Infinity lab assist automation software and are opening up CBS. The Infinity lab automation software offers remote notifications troubleshooting diagnostics and maintenance that paves the way for a fully automated digital lab and are opening.

Parekh: Within LGG, we remain focused on the integration of BioVector, and we are delighted by the response we're hearing from our existing and potential customers who are interested in leveraging BioVector's unique capabilities and Agilent's expertise.

Speaker Change: Cvs provides time saving steps and analysis interpretation and reporting workflows, while technical controls ensure war quality effective records management and enhanced data security in short software is an incredible area of opportunity for us that we are poised to capitalize upon.

Parekh: It's clear that biovectors capabilities are in the sweet spot of tremendous markets with a terrific growth potential.

Parekh: The Agilent Crosslab Group grew 3%, reporting $696 million, which was in line with our expectations led by services. We are especially excited about the new ACG that now includes services, automation, consumables, and software and informatics.

Speaker Change: Already customers are telling us that the infinity lab assist and the open lab offer differentiated functionality and solutions and high throughput environments.

Parekh: Software and informatics are among our key priorities, and we've had an overwhelmingly positive response to both our InfinityLab assist automation software and our OpenLab CDS.

Speaker Change: Our applied markets group reported $338 million in the quarter, a 2% decline better than expected related to our strong China's stimulus orders.

Parekh: The Infinity Lab automation software offers remote notifications, troubleshootings, diagnostics, and maintenance that paves the way for a fully automated digital lab.

Speaker Change: We are very pleased with our team's ability to compete and win in these tenders. We continued to invest in the applied markets for next generation technology innovation and as I said support our customers with lab productivity every customer. We meet has expressed the desire to partner with agile and to make better use of their instrument fleets to integrate with front end solutions.

Parekh: And our Open Lab CDS provides time-saving steps in analysis, interpretation, and reporting workflows while technical controls ensure work quality, effective records management, and enhanced data security. In short, software is an incredible area of opportunity for us that we are poised to capitalize upon.

Speaker Change: And we're happy to help them find ways to create customized solutions. So they can deliver products faster.

Parekh: Already, customers are telling us that the Infinity Lab Assist and the Open Lab offer differentiated functionality and solutions in high-throughput environments.

Speaker Change: Before I hand over to Bob I want to address topics that have been in the news of late regarding.

Bob: Regarding the recent use around tariffs, we have a diversified supply chain with a manufacturing presence in all major regions of the world. Our teams are already taken action to mitigate the impacts on our business.

Parekh: Our Applied Markets Group reported $338 million in the quarter, a 2% decline, better than expected related to a strong China stimulus orders.

Bob: In terms of potential reductions to NIH funding as we've shared with you before our exposure to NIH related programs is limited to around 1% or revenue. We currently believe the forecast of the impact is manageable and within our current guidance.

Parekh: We are very pleased with our team's ability to compete and win in these tenders.

Parekh: We continue to invest in the applied markets for next generation technology innovation and, as I said, support our customers with lab productivity. Every customer we meet has expressed a desire to partner with Agilent to make better use of their instrument fleets to integrate with front-end solutions.

Bob: Bob will now dive deeper on our Q1 results as well as our outlook for Q2.

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

Parekh: And we're happy to help them find ways to create customized solutions so they can deliver products faster.

Speaker Change: Thanks Port and good afternoon, everyone.

Speaker Change: My remarks today I will provide some additional details on revenue in the quarter as well as take you through the income statement and other key financial metrics.

Parekh: Before I hand over to Bob, I want to address topics that have been in the news of late. Regarding the recent news around tariffs, we have a diversified supply chain with a manufacturing presence in all major regions of the world. Our teams are already taking action to mitigate the impacts on our business.

Speaker Change: I will then cover our updated full year and second quarter guidance.

Paul: As Paul mentioned Q1 revenue was 168 billion.

Parekh: In terms of potential reductions to NIH funding, as we've shared with you before, our exposure to NIH-related programs is limited to around 1% of our revenue. We currently believe the forecasted impact is manageable and within our current guidance.

Paul: Just above the top end of guidance, despite the strengthening of the U S dollar during the quarter.

Paul: On a core basis, we posted growth of one 2% beating expectations.

Adjusting for the timing of the lunar new year impacts core growth is estimated to be just over 3%.

Parekh: Bob will now delve deeper on our Q1 results, as well as our outlook for Q2. After Bob delivers his comments, I will be back for some closing remarks. Bob.

Paul: On a reported basis growth was one 4%.

Paul: Currency had a negative impact of one four percentage points, which was over one percentage point higher.

Bob Mcmahon: Thanks, Parag, and good afternoon, everyone. In my remarks today, I will provide some additional details on revenue in the quarter, as well as take you through the income statement and other key financial metrics.

Paul: Estimated at the start of the quarter and.

Paul: And M&A contributed one 6%.

Parekh: I'll then cover our updated full year and second quarter guidance.

Paul: <unk> already discussed our business group results. So I'll focus on deeper details about our end markets.

Thank you.

Parekh: As Porik mentioned, Q1 revenue was $1.68 billion, just above the top end of guidance despite the strengthening of the U.S. dollar during the quarter.

Paul: We exceeded expectations in all of our end markets, except for our smallest one academia and government.

Paul: Our business in the food market grew 9% benefiting from our excellent performance in Chinas National stimulus program.

Parekh: On a core basis, we posted growth of 1.2%, beating expectations.

Parekh: Adjusting for the timing of Lunar New Year impacts, core growth is estimated to be just over 3%.

Paul: In environmental and forensics.

Paul: Grew 6% as we continue to leverage our best in class T fast workflow solutions to grow our market leading position.

Parekh: On a reported basis, growth was 1.4%. Currency had a negative impact of 1.4 percentage points, which was over 1 percentage point higher than estimated at the start of the quarter. And M&A contributed 1.6%.

Paul: We continue to capitalize on the strong demand for <unk> testing that we are seeing globally.

Paul: Our $64 95, Triple Quad L. CMS is the most complete instrument and the <unk> testing market with a specific performance edge and small and fragile molecules, where many of the emerging <unk> exist.

Thank you. Thank you. Thank you.

Speaker Change: Parag already discussed our business group results, so I'll focus on deeper details about our end markets.

Parekh: We exceeded expectations in all of our end markets, except for our smallest one, academia and government.

Paul: Along with our new offerings, and <unk> specific consumables and our workflow deployment services.

Parekh: Our business in the food market grew 9%, benefiting from our excellent performance in China's National Stimulus Program.

Paul: <unk> provides the fastest highest quality and most reliable way for customers to add or expand P pass testing capabilities in their labs.

Parekh: In Environmental and Forensics, we grew 6% as we continue to leverage our best-in-class PFAS workflow solutions to grow our market-leading position.

Paul: Now looking across all end markets P. Fast grew 70% in the quarter contributing 75 basis points of growth to the company.

Parekh: We continue to capitalize on the strong demand for PFAS testing that we are seeing globally.

Paul: Pharma was flat during the quarter with low single digit growth ex China offset by high single digit decline in China.

Parekh: Our 6495 triple-quad LC-MS is the most complete instrument in the PFAS testing market, with a specific performance edge and small and fragile molecules where many of the emerging PFAS exist.

Paul: Globally, Biopharma and small molecule performed roughly in line with the overall market.

Paul: In chemical and advanced materials revenue declined 2% with growth ex China offset by a high teens decline in China, which was mostly impacted by the timing of the lunar new year.

Parekh: Along with our new offerings in PFAS-specific consumables and our workflow deployment services, Agilent provides the fastest, highest quality, and most reliable way for customers to add or expand PFAS testing capabilities in their labs.

Paul: Our business in the diagnostics and clinical and market grew 7% led by strong results in the Americas and Europe.

Paul: Academia and government, our smallest market saw a decline of 7% with soft results around the globe.

Parekh: Now, looking across all end markets, PFAS grew 70% in the quarter, contributing 75 basis points of growth to the company.

Paul: Now moving on to our regional performance. The Americas grew 3% Europe grew 2% and Asia ex China grew 2% all slightly ahead of expectations.

Parekh: Pharma was flat during the quarter with low single-digit growth ex-China offset by a high single-digit decline in China.

Parekh: Globally, biopharma and small molecule perform roughly in line with the overall market.

Paul: China revenue declined 4% also better than expectations on the strength of our stimulus performance.

Parekh: In chemical and advanced materials, revenue declined 2%, with growth ex-China offset by a high-teams decline in China, which was mostly impacted by the timing of the Lunar New Year.

Paul: For your models, we estimate that lunar new year was a $10 million revenue headwind in the quarter, which.

Paul: Which we expect to come back in the second quarter. This compares to a $25 million favorable lunar new year impact in the first quarter of last year. So combined a two percentage point year on year impact.

Parekh: Our business in the diagnostics and clinical end market grew 7%, led by strong results in the Americas and Europe.

Parekh: Academia and government, our smallest market, saw a decline of 7% with soft results around the globe.

Paul: Now, let's move on to the rest of the P&L.

Paul: Gross margin was 54, 7% in the quarter.

Parekh: Now, moving on to our regional performance, the Americas grew 3%, Europe grew 2%, and Asia ex-China grew 2%, all slightly ahead of expectations.

Paul: Down versus last year, primarily due to mix currency and the lunar new year timing.

Paul: We drove operating margins of 25, 1% roughly in line with our expectations despite currency headwinds.

While down versus last year, we expect improvement throughout the year as the results of our ignite transformation continued to deliver.

Parekh: For your models, we estimate that Lunar New Year was a $10 million revenue headwind in the quarter, which we expect to come back in the second quarter. This compares to a $25 million favorable Lunar New Year impact in the first quarter of last year. So, combined, a two-percentage point year-on-year impact.

Paul: And below the line.

Paul: Our net interest expense was better than expected as was our tax rate of 12, 5%.

Paul: So we had 287 million diluted shares outstanding in the quarter.

Paul: Putting it altogether Q1 earnings per share were $1 31.

Now let's move on to the rest of the P&L.

Gross margin was 54.7% in the quarter.

Paul: That was ahead of our expectations and up 2% from a year ago growing slightly faster than revenue.

Parekh: Down versus last year, primarily due to mix, currency, and the Lunar New Year timing.

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

Parekh: We drove operating margins of 25.1%, roughly in line with our expectations, despite currency headwinds.

Paul: We continue to enjoy a very strong balance sheet and healthy cash flows.

Paul: Operating cash flow was $431 million in the quarter, and we invested $97 million in capital expenditures.

Parekh: While down versus last year, we expect improvement throughout the year as the results of our IGNITE transformation continue to deliver.

Paul: We purchased $90 million in shares and paid out $71 million through dividends during the quarter.

And below the line...

Parekh: Our net interest expense was better than expected, as was our tax rate of 12.5%, and we had 287 million diluted shares outstanding in the quarter.

Paul: And we ended the quarter with a net leverage ratio of 1.0.

Paul: In summary, we had a good start to the year and expect continued steady improvement in the market through the year.

Parekh: Putting it all together, Q1 earnings per share were $1.31. That was ahead of our expectations and up 2% from a year ago, growing slightly faster than revenue.

Paul: Now, let's move on to our outlook for the fiscal year in the second quarter.

Paul: While we exceeded core growth expectations for Q1, we're maintaining our core growth guidance of two five to three 5% for the year.

Parekh: Now let me turn to cash flow and the balance sheet.

Parekh: We continue to enjoy a very strong balance sheet and healthy cash flows.

Paul: This guidance incorporates an element of prudence, reflecting the uncertainty over the U S. Federal funding environment, even though it is a small part of our business.

Parekh: Operating cash flow was $431 million in the quarter, and we invested $97 million in capital expenditures.

Paul: However, we are adjusting our full year reported revenue to be in the range of $6 68 to $6 76 billion.

Parekh: We purchased $90 million in shares and paid out $71 million through dividends during the quarter.

Parekh: And we ended the quarter with a net leverage ratio of 1.0.

Paul: To reflect the strengthening of the U S dollar.

Paul: If you recall our initial guidance back in November incorporated only a very modest FX headwind.

Parekh: In summary, we had a good start to the year and expect continued steady improvement in the market through the year.

Paul: Since then the <unk>.

Parekh: Now let's move on to our outlook for the fiscal year and the second quarter.

Paul: US dollar has appreciated and based on current exchange rates, we are now projecting an incremental $110 million in currency headwinds relative to our prior guidance.

Parekh: While we exceeded core growth expectations for Q1, we're maintaining our core growth guidance of 2.5 to 3.5% for the year.

Paul: Currency is now expected to represent a one 9% headwind for the year versus our prior 20 basis point headwind.

Parekh: This guidance incorporates an element of prudence reflecting the uncertainty over the U.S. federal funding environment, even though it is a small part of our business.

Paul: We are also left our M&A guidance unchanged at.

Paul: At plus two to two 2% revenue impact for the year.

Parekh: However, we are adjusting our full-year reported revenue to be in the range of $6.68 to $6.76 billion to reflect the strengthening of the U.S. dollar.

Paul: Full year non-GAAP earnings per share are unchanged at $5 54 to $5 61.

Paul: Representing an increase of $4, 7% to 6%.

Parekh: If you recall, our initial guidance back in November incorporated only a very modest FX headwind.

Paul: Relative to our prior guide currency net of hedging is an estimated additional <unk> <unk> headwind for the year, which we are covering.

Parekh: Since then, the U.S. dollar has appreciated, and based on current exchange rates, we are now projecting an incremental $110 million in currency headwinds relative to our prior guidance.

This assumes flat other income and expense of 12, 5% tax rate and 286 million diluted shares outstanding.

Parekh: Currency is now expected to represent a 1.9% headwind for the year versus a prior 20 basis point headwind.

Paul: Now for the second quarter, we are guiding to revenue of $1 61 to $1 $65 billion.

Parekh: We have also left our M&A guidance unchanged at plus 2 to 2.2% revenue impact for the year.

Paul: This range is a bit wider than we typically use for the upcoming quarter, reflecting the uncertainty around U S federal government spending.

Parekh: Full year non-GAAP earnings per share are unchanged at $5.54 to $5.61.

Paul: This range represents an increase of two 5% to 5% growth on a core basis.

representing an increase of 4.7 to 6 percent.

Paul: And an increase of two four to four 9% growth on a reported basis.

Parekh: Relative to our prior guide, currency net of hedging is an estimated additional 9 cent headwind for the year which we are covering.

Paul: Currency is a two 1% headwind and M&A impact is expected to be at 2% benefit for the quarter.

Parekh: This assumes flat other income and expense, a 12.5% tax rate, and 286 million diluted shares outstanding.

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

Paul: Representing growth of two five to four 9%.

Parekh: Now, for the second quarter, we are guiding to revenue of $1.61 to $1.65 billion.

Paul: Year on year currency net of hedging is expected to be a <unk> <unk> headwind to EPS.

Speaker Change: Now I'd like to turn the call over back to <unk> for some closing comments.

Parekh: This range is a bit wider than we typically use for the upcoming quarter, reflecting the uncertainty around U.S. federal government spending.

Speaker Change: Thanks, Bob before we end the call I want to take this opportunity to highlight more of the arguments teams tremendous work.

Parekh: This range represents an increase of two and a half to five percent growth on a core basis and an increase of 2.4 to 4.9 percent growth on a reported basis.

Speaker Change: This quarter the World Economic Forum named our factories in Shanghai, China in Penang, Malaysia of Global Lighthouse networks. This.

Speaker Change: This recognizes <unk> for its breakthroughs and scaling AI treaty printing robotics, big data analytics and industrial Internet of things I was delighted to be able to accept those award in person. This year at the forum in Davos, Switzerland, Shanghai Penang are two of our four manufacturing sites that have earned the prestigious distinction in 2000.

Parekh: Currency is a 2.1% headwind and M&A impact is expected to be a 2% benefit for the quarter.

Parekh: Second quarter non-GAAP earnings per share are expected to be between $1.25 and $1.28, representing growth of 2.5 to 4.9 percent.

Parekh: Year-on-year currency, net of hedging is expected to be a two-cent headwind to EPS.

Speaker Change: <unk> 22 to form named our Singapore, and Ballroom, Germany site lighthouses state.

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

Speaker Change: Still today adjuvant is the only analytical and clinical laboratory technology company in the world to be recognized by the World Economic Forum.

Parag: Thanks, Bob. Before we end the call, I want to take this opportunity to highlight more of the Agilent team's tremendous work. This quarter, the World Economic Forum named their factories in Shanghai, China, and Penang, Malaysia as global lighthouse networks.

Speaker Change: Also during the quarter Newsweek ranked adjuvant number 10 out of 600 on its 2025 list of America's most responsible companies.

Speaker Change: Up seven places from 2024. This is our sixth consecutive year on the prestigious list and is a recognition of adjuvant being a leading sustainable lab partner to our customers.

Parag: This recognizes Agilent for its breakthroughs in scaling AI, 3D printing, robotics, big data analytics, and industrial Internet of Things.

Speaker Change: We are proud to be among the U S based companies, who are making a positive global impact.

Parag: I was delighted to be able to accept those awards in person this year at the Forum in Davos, Switzerland. Shanghai and Penang are two of our four Agilent manufacturing sites that have earned us prestigious distinction. In 2022, the Forum named our Signapore and Valbrunnen Germany sites as lighthouses.

Speaker Change: We're only at the start of our ignite transformation journey and already were seeing early benefits like the ones I described at the start of this call and.

Speaker Change: In less than nine months, we've made incredible changes that are improving our customer's productivity in an era when the pace of signings of sponsored never.

Parag: Still today, Agilent is the only analytical and clinic laboratory technology company in the world to be recognized by the World Economic Forum.

We're also becoming nimbler for employees to better serve our customers. The outcome, we're enabling us faster decision, making so that we can accelerate innovation and create differentiated growth and that in turn leads to industry leading shareholder value.

Parag: Also during the quarter, Newsweek ranked Agilent number 10 out of 600 on its 2025 list of America's most responsible companies, up seven places from 2024. This is our sixth consecutive year on the prestigious list and is a recognition of Agilent being a leading sustainable lab partner to our customers.

Speaker Change: What we are doing at adjuvant is turning a gold company into a great. One we are committed to continuous improvement and adapting to changing market dynamics. Thank you for joining today's call.

Parag: We are proud to be among the U.S.-based companies who are making a positive global impact.

Speaker Change: Let's move to Q&A permit.

Parag: At Agilent, we're only at the start of our Ignite transformation journey, and already we're seeing early benefits like the ones I described at the start of this call.

Speaker Change: Thanks, Barak Regina if you could please provide instructions for Q&A now.

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.

Parag: In less than nine months, we've made incredible changes that are improving our customers' productivity in an era when the pace of science is faster than ever. We're also becoming nimbler for our employees to better serve our customers.

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

Rachel: Good afternoon, and thanks, so much for taking the question.

Speaker Change: Firstly, if I just kind of wondering.

Speaker Change: You mentioned in the guide obviously talking you have some of the progress that you guys are all set.

Parag: What we are doing at Agilent is turning a good company into a great one. We are committed to continuous improvements and adapting to changing market dynamics. Thank you for joining today's call. Let's move to Q&A. Parmeet?

Speaker Change: Some of that headline risk that we've seen on the funding side, the last month and a half or so so could you quantify what level of headline record really embedded into not only the <unk> guidance at the full year guide at this point and then have you seen any impact so far from customers and what are you really seeing from your sales team that our boots on the ground.

Parmeet Ahuja: Thanks, Parag. Regina, 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. We'll pause for just a moment to compile the Q&A roster.

ratios: Yes. So thanks for the question ratios. Our guide is a prudent one is we see a lot of changes happening I would say from our customer base and particularly in our pharma base activity has increased.

Speaker Change: The first question will come from the line of Rachel Vatnsdal with J.P. Morgan. Please go ahead.

ratios: The sentiment is increasing as we as we talk to our customers of course things are on the macro side are changing with NIH funding, which we're that's 1%.

Rachel Vatnsdal: Great, good afternoon and thanks so much for taking the questions.

Rachel Vatnsdal: So, first up, I just kind of wanted to dig into some of this prudence that you mentioned in the guide. Obviously, you're talking up some of the progress that you guys have seen on your order book, but you're also acknowledging some of that headline risk that we've seen on the funding side the last month and a half or so. So, could you quantify for us what level of headline risk have you really embedded into not only the fiscal 2Q guide, but the full year guide at this point?

ratios: <unk> tariffs, which we can mitigate so I would say our guidance is a prudent one.

ratios: But we'll be able to monitor that as we go through the next quarters, but Bob I don't know if you want more detail, Yeah, Hey, Rachel good afternoon and to your point around the Prudence, we did raise.

Bob: Increased the range for for our second quarter guide to roughly $40 million in between the low and the high it's typically anywhere from 25 to 30.

Rachel Vatnsdal: And then, have you seen any impact so far from customers, and what are you really seeing from your sales teams that are boots on the ground?

Speaker Change: Yeah, so thanks for the question, Rachel. You know, our guide is a prudent one, as we see a lot of changes happening, I will say, from our customer base and, you know, particularly in our pharma base, activity has increased. The sentiment is increasing as we talk to our customers.

Bob: As I mentioned in the prepared remarks, our NIH funding is roughly 1% at the maximum so.

Bob: And so given the strength that we had in the first quarter and the fact that we're not.

Bob: Raising guide, we feel that we're well comp.

Speaker Change: are changing with NIH funding, which were less than 1%, and of course, tariffs, which we can mitigate.

Bob: Compensating any potential downside into to <unk> point, we haven't seen any of that.

Bob: Really impact our business.

Bob Mcmahon: So, I would say our guide is a prudent one, but we'll be able to monitor that as we go through the next quarters. But, Bob, I don't know if you want to add more detail. Yeah. Hey, Rachel. Good afternoon. And to your point around the prudence, we did raise, you know, increase the range for our second quarter guide, you know, to roughly $40 million in between the low and the high. It's typically anywhere from $40 million to $40 million. So, I think that's a pretty good number.

Bob: And the activity in our customers.

Bob: Perfect and then just for my follow up.

Speaker Change: And hate to ask specifically on FX, but I think it is a question that a lot of us have on the line here can you just walk us through how much on.

Speaker Change: <unk> number in the fiscal <unk> number, especially impacted by that FX, given how much rates have really moved within the quarter and then it seemed like you had just on the margin front, especially around that can you answer that for you at all what would that look like without these FX impacts.

Speaker Change: Yes, that's a great. That's a great question Rachel So let me give you a little more data so.

Speaker Change: For the full year that incremental $110 million.

Speaker Change: As a <unk> <unk> impact for the full year as I mentioned before and that really is roughly a 50 basis point headwind to the overall company that we're that we're covering.

Bob Mcmahon: To PORG's point, we haven't seen any of that materially impact our business and the activity in our customers.

Perfect. And then just a mic follow-up.

Speaker Change: Look at it for second quarter.

Speaker Change: I hate to ask specifically on FX, but I think it's a question that a lot of us have on the line here. Can you just walk us through how much of the EPS number, in the fiscal 2Q number especially, is impacted by that FX given how much rates have really moved within the quarter? And then, you know, same idea just on the margin front, especially around that 2Q and for the full year at all. What would that look like without these FX impacts? Thanks. Yeah, that's a great question, Rachel. So let me give you a little more data.

Speaker Change: It's about a 30.

Speaker Change: <unk> 30 $32 million headwind in the quarter, roughly two 1% and it's two to three.

Speaker Change: In the quarter.

Speaker Change: And Britain, roughly the same kind of impact from a from a profitability standpoint.

Speaker Change: Yeah.

Matthew <unk>: Our next question will come from the line of Matthew <unk> with Goldman Sachs. Please go ahead.

for the full year that incremental, you know, $110 million.

Speaker Change: Hi, This is <unk> on for Matt. Thanks for taking my questions. So the first one can you talk to the opportunities and then PFS given the 70% growth you saw in the quarter how much of this demand is coming from Europe and from Europe. Following the packaging regulation and then also what do you think the growth contribution going forward. It could look like for this market.

Speaker Change: is a nine cent impact for the full year as I mentioned before and that really is roughly a 50 basis point headwind to the overall company that we're covering.

If I look at it for second quarter...

Speaker Change: It's about a $30-$32 million headwind in the quarter, roughly 2.1%, and it's $0.02-0.03 in the quarter, and roughly the same kind of impact from a profitability standpoint.

Speaker Change: Yes. Thanks for the question so demand for <unk> solutions remains extremely strong during Q1.

Speaker Change: Solutions growth accounted for 75 basis points at the company level.

Speaker Change: While most of the volume came on the environmental side, we're seeing actually exceptional growth in food and chemical materials as well.

Speaker Change: Our next question will come from the line of Matthew Sykes with Goldman Sachs. Please go ahead.

Speaker Change: The opportunity in Q1 grew 70%, but also as you look at that compared to Q4 was 50%. It was a big step up in growth rates and with the environmental market still accounts for the largest part of the <unk> revenues, we saw increased customer purchasing incomes in the <unk>.

Speaker Change: Hi, this is Yvonne for Matt. Thanks for taking my questions. So the first one, can you talk through the opportunities within PFAS, given the 70% growth you saw in the quarter? How much of this demand is coming from Europe following the packaging regulation? And then also, what do you think the growth contribution going forward could look like for this market?

Speaker Change: Americas.

Speaker Change: With water water discharge and some of those areas and really we see all regions doing well, we saw a little bit of a pause in China, which had a great sequential quarters of growth in P fast, but that's normal as labs.

Speaker Change: Yeah, thanks for the question. So the demand for PFAS solutions remains extremely strong during Q1.

Speaker Change: Two local on the equipment side Europe was very strong and we expect that to be very strong and this is a this is a this is a market and this is an area where it's going to continue to morph from grow depending on new regulations and expanding into new modalities and I will say.

Speaker Change: you know, solutions growth accounted for 75 basis points at a company level and while most of the volume came on the environmental side, we're seeing actually exceptional growth in food and chemical materials as well.

Speaker Change: And the opportunity in Q1 grew 70%, but also if you look at that, compared to Q4 was 50%, it was a big step up in growth rates.

Speaker Change: At the core of this is our $65 95, the triple Quad, which is the leading a sensitivity in the Americas, which helps with emerging <unk> bus.

Speaker Change: and with the environmental market still accounts for the largest part of the PFAS revenues.

Speaker Change: Our characterization and of course, our ability to offer consumables and workflow deployment services are really important as customers.

with water discharge in some of those areas and

Speaker Change: Get sort of quickie in their labs.

Speaker Change: Really, we see all regions doing well. We saw a little bit of a pause in China, which had a great sequential quarter of growth in PFAS, but that's normal as labs...

Speaker Change: Maybe just to build on what Paul was saying.

Paul: We ended last year approaching $100 million in revenue in the first quarter, we're well over that piece.

Speaker Change: apologised for the technical difficulties and thanks for the call. Thank you very much.

Speaker Change: As you can imagine so let's say.

Speaker Change: I think we're uniquely positioned given all the things that <unk>, just said and its becoming even bigger component of our growth story going forward.

Speaker Change: Okay, great. Thank you and then can you talk through how much of the growth in instruments is due to a true and lack of recovery versus replacement is being driven by the infinity three launch and then any updates on how that launch is impacting our overall win rate win rate.

Speaker Change: is our 6595D triple quad which is the leading sensitivity in the in the market which helps with emerging PFAS characterization and of course our ability to offer consumables and workflow deployment services are really important as customers get set up quickly in their labs.

Speaker Change: Yes, I mean, if you look at our if you look at our core on the <unk> site in pharma, which is.

Speaker Change: We grew high single digits globally ex China, we grew double digits actually on that and what we're seeing is a continued improvement in firm farmer's willingness on capex spending undertaking opportunities in P fast in GOP wounds.

Speaker Change: Yeah, and Evie, just to build on what Porag was saying, we ended last year, you know, approaching a hundred million dollars in revenue in the first quarter. We're well over that piece, as you can imagine. So, I'd say, you know, I think we're uniquely positioned given all the things that Porag just said, and it's becoming an even bigger component of our growth story going forward.

Speaker Change: As well Infinity tree has gone extremely well for us we're seeing significant rise in win rates.

Speaker Change: We're seeing of course that the productivity gains that this system gives out is resonating with customers extremely well and as we look at our refresh of our installed base, whether it's 1100 $12 six or 12 nineties theres a lot of opportunity. There. Some of that is actually supported by end of supports 1100 site in some areas. So we're seeing our tech.

Thank you. Thank you. Thank you.

Speaker Change: Okay, great. Thank you. And then, can you talk through how much of the growth in instruments is due to true and market recovery versus replacements being driven by the Infinity III launch? And then, any updates on how that launch is impacting your overall win rate?

Speaker Change: Yeah, I mean, if you look at our, you know, if you look at our core on the LC and LTMS side of pharma, which is, we grew high single digits globally, and ex-China, we grew double digits, actually, on that. And what we're seeing is a continued improvement in pharma's willingness on CapEx spending.

Speaker Change: Refresh momentum has really started around your infinity tree so.

Speaker Change: Really good momentum.

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

Speaker Change: and they're taking opportunities in PFAS and GLP-1s as well. Infinity Tree has gone extremely well for us. We're seeing significant rise in win rates.

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

Patrick Donnelly: Maybe just on on China, I know you talked about seeing an outsized share from China, and Europe kind of woman chatted a month ago, you guys were pretty positive on that piece as well.

Speaker Change: We're seeing of course that the productivity gains that this system gives out is resonating with customers extremely well and as we look at our refresh of our install base whether it's 1100s, 1260s or 1290s

Patrick Donnelly: We're getting more than your fair share given where those dollars are going I felt like a little more G fees and industrial.

Speaker Change: There's a lot of opportunity there, some of that is actually spurred by end of support on the 1100 side in some areas, so we're seeing our tech refresh momentum has really started around the Infinity Tree, so really good momentum.

Patrick Donnelly: You just talk about what youre seeing there the traction.

Patrick Donnelly: It feels like there could be some nice upside there I know, there's more tenders coming as well. So it will be helpful to talk to China stimulus and the impact around Gpus and the industrial piece.

Patrick Donnelly: Yeah, no. Thanks, Patrick and we did a really nice uplift to our excellent performance in winning outside share of the tenders in the nationals as stimulus program.

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

Hey guys, thanks for taking the questions.

Patrick Donnelly: The stimulus demand for Q1.

Speaker Change: Poorig, maybe just on China, you know, I know you talked about...

Patrick Donnelly: <unk> was around $35 million and we recognized all of that in the quarter. We won 50% of those stimulus orders and witness round. Our China team is now expecting the next round of stimulus to come later in the year, that's yet to be quantified. It is going to be broad and I think it's going to be slightly more fragmented in the type of.

Speaker Change: and seeing an outsized share from the China Stimulus and when we chatted.

Speaker Change: you know a month ago you guys were pretty positive on that piece as well felt like you were getting more than your fair share given where those dollars are going it felt like a little more you know gc's and industrial uh can you talk about what you're seeing there the traction um it feels like there could be some nice upside there i know there's more tenders coming as well so it would be helpful to talk through

Patrick Donnelly: Customers.

Patrick Donnelly: The size of that round is really not clear.

Patrick Donnelly: As of yet so, but I think.

Speaker Change: China Stimulus and the impact around GQs and the industrial piece.

Patrick Donnelly: At this point, we're not assuming that all of the stimulus we booked in Q1 will be fully incremental for the year I think that's important to say, we expect that some of that is likely pull forward on our thinking about 50% about is pull forwards.

Speaker Change: Yeah, no, thanks, Patrick. And, you know, we did saw a really nice uplift to our

Speaker Change: excellent performance and winning outside chair of the tenders and the National Stimulus Program. The total stimulus demand for Q1

Patrick Donnelly: And we did not see a meaningful improvement in the underlying business in Q1, I would say it was what I would say the China market is stable.

Speaker Change: was around $35 million, and we recognized all of that in the quarter. We won 50% of all stimulus orders.

Patrick Donnelly: Otherwise the otherwise maintaining our expectation on the base business.

Patrick Donnelly: Resulting in a modest increase for FY 'twenty five expectations.

Patrick Donnelly: And while we are increasing our expectations for the year.

Patrick Donnelly: Total remains within our low single digit guide range.

Speaker Change: But the size of that round is really not clear as of yet. So, but I think we're at this point, we're not assuming that all stimulus we booked in Q1 would be fully incremented for the year. I think that's important to say. We expect that.

Patrick Donnelly: And Bob are you rolling that second tender into the Guy who would that be upside.

Patrick Donnelly: Yes.

Speaker Change: That's a good question Patrick we have not.

Speaker Change: We're staying consistent with how we did it in the beginning of the year, which is.

Speaker Change: Some of that is likely pulled forward, and our thinking is about 50% of that is pulled forward.

Speaker Change: We have not rolled that any incremental into into the guidance. So that would be a source of upside Patrick once we understand more about what the.

Speaker Change: And we did not see, you know, a meaningful improvement in the underlying business in Q1. I'd say it was, what I would say, the China market is stable.

Speaker Change: Hope and timing of that will be we do believe that.

Speaker Change: and we're otherwise maintaining our expectation on the base business resulting in a modest increase for FY25 expectations and while we're increasing our expectations for the year, the total remains within our low single-digit guide range.

Speaker Change: Based on our folks.

Speaker Change: Our team on the ground that it will happen in the second quarter of <unk>.

Speaker Change: Second half of this year, whether that shows up in our second or third and fourth quarter.

Speaker Change: Or by the end of the calendar year is still still be.

Speaker Change: Determined but needless to say we are very optimistic given our strong performance in this first cycle and the fact that we have.

Parmeet Ahuja: And Bob, are you rolling that second tender into the guide or is that the upside?

Speaker Change: Strong ability to produce all of our products in China for China.

Speaker Change: Yeah, No. That's helpful. And then maybe just on the NASD business can you talk about what Youre seeing there I know last quarter, you talked about high single digit growth expectations, maybe some potential for double digits. So would love to hear the latest thoughts there any color commercial versus clinical would obviously be helpful as well.

Parmeet Ahuja: We have not rolled any incremental into the guide, so that would be a source of upside, Patrick, once we understand more about what the scope and timing of that will be. We do believe that...

Parmeet Ahuja: on the folks, our team on the ground, that it will happen in the second quarter of the

Speaker Change: Yes ill kick to kick it off and I'll hand, it over to Simon So very much as expected in Q1 demand continues to be very strong and no change in guidance for the year, which is guiding at high single digits and of course <unk>.

Parmeet Ahuja: in our, you know, second or third and fourth quarter or by the end of the calendar year is still to be determined, but needless to say, we are very optimistic given our strong performance in this first cycle and the fact that we have

Simon: To low double digit target with Simon do you want to add more color.

Simon: Yes, I think you said it well Paul rig demand very much in line with expectations revenue profile also in line with expectations. The full year outlook remains absolutely intact. I think we still have a dynamic in NASD, which bodes very well for the future where we've got a lot of process qualification work the molecules that are headed towards.

Parmeet Ahuja: a strong ability to produce all of our products in China, for China.

Speaker Change: Yeah, that's helpful. And then maybe just on the NASD business, can you talk about what you're seeing there? I know last quarter you talked about high single-digit growth expectations, maybe some potential for double-digits. So we'd love to hear the latest thoughts there. Any color, commercial versus clinical would obviously be helpful as well.

Simon: The commercial space.

Simon: That coupled with the order intake patents that we've been seeing for quite a while now make us very enthusiastic for the future.

Speaker Change: Yeah, I'll kick it off and I'll hand it over to Simon. So very much as expected in Q1, demand continues to be very strong. No change in guidance for the year, which is guiding at high single digits and of course nudging to low double digit target. But Simon, you want to add more colour?

Simon: So confident about the 25 guide ons, even more confident and enthusiastic about the longer term.

Simon: Okay. Thank you guys.

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

Simon May: Yeah, I think you said it well, Parag, demand very much in line with expectations, revenue profile also in line with expectations, the full year outlook remains absolutely intact. I think we still have a dynamic in NASD which bodes very well for the future where we've got a lot of process qualification work for molecules that are headed towards the commercial space.

Speaker Change: Yes, hi, good afternoon. This is Jack on for Tycho I. Appreciate you taking my question.

Speaker Change: I guess just one on the replacement cycle I appreciate the color on <unk> and kind of.

Speaker Change: Influence there I guess any other data points of spike out to help us understand where you sit today and kind of better understand the shape and pace of that replacement cycle, how it could play out over the next two to three years.

Simon May: and that coupled with the order intake patterns that we've been seeing for quite a while now make us very enthusiastic for the future, so confident about the 25 guide and even more confident and enthusiastic about the longer term.

Speaker Change: Yes, I mean.

Speaker Change: LC replacements and happens at different times within different installed bases and so on what I will say about us.

Speaker Change: In terms of Infinity treated really has kicked off.

Great. Thank you, guys.

Speaker Change: Dot replacement cycle.

Speaker Change: Our next question comes from the line of Tycho Peterson with Jeffries. Please go ahead.

Speaker Change: What we've seen is that typically the replacement cycle is about nine to 12 months and because of our installed base.

Speaker Change: Yeah, hi, good afternoon. This is Jack on for Tycho. Appreciate you taking our question. I guess there's one on the replacement cycle. Appreciate the color on Infinity III and kind of the

Speaker Change: A lot of 11 hundreds out there that have some of those are coming to end of support it really has created momentum around it. So we expect that to be a steady replacement cycle and we don't expect a super cycle in any particular quarter, but as we move forward our installed base would move with that.

Speaker Change: The influence there. I guess any other data points that spike out to help us understand where we sit today and kind of better understand the shape and pace of the replacement cycle and how it could play out over the next two to three years?

Speaker Change: We'll move with what I wouldn't say as well we have.

Speaker Change: Significant improvements in our lifecycle management process. So how we can look at where the installed base is how we can inform customers for better productivity and so on and the good news is infinity tree is all those capabilities.

Speaker Change: Yeah, I mean, LT replacement, it happens at different times within different install bases and so on. What I will say about us in terms of Infinity Tree, it really has kicked off that replacement cycle. And, you know, what we've seen is that typically the replacement cycle is about 9 to 12 months.

Speaker Change: Yeah, Hey, Jack maybe just to build on what <unk> is saying is.

Jack: I would say we're in the still in the early stages of that recovery.

Jack: We had a very strong performance in Q1 with the uptake of Infinity three the feedback continues to be very positive and I would also look at when we look at the average age of our installed base is still older than normal.

Speaker Change: And because of our install base and a lot of 1100s out there, some of those are coming to end of support, it really has created momentum around us.

Speaker Change: So, we expect that to be a steady replacement cycle. We don't expect a super cycle in any particular quarter, but as we move forward, our install base will move with it. What I will say as well, we've made significant improvements in our lifecycle management process.

Jack: And so.

Jack: We're very excited about this I would also say that order our order growth outpaced revenue growth in the quarter. So again, another positive incidence and thats on top of overcoming Chinese lunar new year, that's across the across the board. So.

Speaker Change: So how we can look at where the install base is, how we can inform customers for better productivity and so on. And the good news is Infinity Tree has all those capabilities.

Certainly.

Jack: Early days very positive for.

Jack: For all the same support was talking about in the call and I think there's a long runway here for us to be able to take advantage of not only our own installed base, but also competitive installed base as well.

Speaker Change: Yeah, hey Jack, maybe just to build on what Parag is saying is, you know, I would say we're in the, still in the early stages of that recovery. We had a very strong performance in Q1 with the uptake of Infinity III. The feedback continues to be very positive.

Jack: Yeah.

Jack: Appreciate it thank you.

Jack: Our next.

Speaker Change: And I would also look at, when we look at the average age of our installed base, it's still older than normal, and so we're very excited about this. I would also say that order growth outpaced revenue growth in the quarter. So again, another positive instance. And that's on top of overcoming...

Speaker Change: Comes from the line of Jack Meehan with Nephron Research. Please go ahead.

Jack: Yes.

Speaker Change: Thank you good afternoon.

Speaker Change: You mentioned I think earlier in the script some changes in the management layers with financial and is there any additional color you can share on what you're doing and then just is there any associated savings.

Speaker Change: Chinese Lunar New Year that's across the across the board so

Speaker Change: Touch to that that you would call out.

Speaker Change: Certainly, early day is very positive for all the things that Parag was talking about in the call, and I think there's a long runway here for us to be able to take advantage of not only our own installed base, but also competitive installed base as well.

Speaker Change: Yeah. Thanks, Jack So first of all we layer.

Jack Meehan: We talked about our new organization structure at the Investor Day, and J P. Morgan.

Jack Meehan: One of the key elements of our customer centric strategy. We introduced was becoming more nimble that's going to speed up decision, making and also increase innovation.

Thank you.

Appreciate it, thank you.

Jack Meehan: These these changes are absolutely critical to our strategy.

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

Jack Meehan: We know they're going to deliver money benefits to our customers. So what we're really doing is we're looking us layer.

Jack Meehan: Thank you. Good afternoon. Cora, you mentioned, I think, early in the script, some changes in the management layers within Agilent. Is there any additional call you can share on what you're doing? And then is there any associated savings attached to that that you would call out? Thanks.

Jack Meehan: Layers in the organization, where we can flatten a little bit and increase our span of control. So we can.

Jack Meehan: Improve our decision, making and also get get better coverage in our management layer.

Jack Meehan: And while I would say the focus of this is truly strategic it really is leading with our strategy there will be some cost reductions associated with these changes later in the year and that's where you have those baked into our guide.

Jack Meehan: Thanks, Jack. So first of all, we talked about our new organizational structure at the Investor Day at J.P. Morgan.

Speaker Change: One of the key elements of our customer-centric strategy we introduced was becoming more nimble. That's going to speed up decision-making and also increase innovation. And these changes are absolutely critical to our strategy, and we know they're going to deliver many benefits to our customers.

Jack Meehan: Yes, Hey, Jack just if you recall when we talked about the ignite savings at the beginning of the year, we talked about some being in the second half more and more in the second half. This is this was.

Jack Meehan:

Jack Meehan: Thats, where youll see the activities that we're going through right now.

Speaker Change: So, what we're really doing is we're looking at layers in the organisation where we can flatten a little bit, increase our span of control so we can, you know, improve our decision making and also get better coverage in our management layer.

Jack Meehan: Okay.

Jack Meehan: And then.

Jack Meehan: An.

An update on <unk> it looks like that M&A added 26 million of sales in the quarter.

Speaker Change: As your target for the year changed at all I think I had $145 million in the model and can you just talk about how things are going there. Thank you.

Speaker Change: And while I would say the focus of this is truly strategic, it really is leading with our strategy, there will be some cost reductions associated with these changes later in the year.

Simon: Yes, I'll pass this one to Simon <unk>.

Speaker Change: Yes, thanks for the question I'd say overall as well.

Speaker Change: And that's where you have those baked into our guide. Yeah. Hey, Jack, just if you recall, when we talked about the Ignite savings at the beginning of the year, we talked about some being in the second half, more in the second half. This was...

Speaker Change: We are going through the integration process, we buy about true we're increasingly excited about what we're seeing there I think the more we get under the Hood.

Speaker Change: The capabilities that we have that are resonating with our internal experts and also with our customers. We think it's still very early inning.

Thank you. Thank you.

Speaker Change: You know, that's where you'll see the activities that we're going through right now.

Speaker Change: Absolutely in the sweet spot.

Speaker Change: Okay. And then, great to get an update on BioVectra. It looks like that M&A added 26 million sales in the quarter. Has your target for the year changed at all? I think I had 145 million in the model. Can you just talk about how things are going there? Thank you.

Speaker Change: With those capabilities relative.

Speaker Change: Relative to where the puck is going with therapeutic modalities, we were slightly soft on revenue in the first quarter. The focus there is really very heavily on bringing certain aspects of the operation to the agile in NASD standards with process and quality and that's progressing really well, but then with Rick.

Yeah, I'll pass this one to Simon to take.

Simon May: Yeah, thanks for the question. I'd say overall, as we are going through the integration process with BioVenture, we're increasingly excited about what we're seeing there. I think the more we get under the hood.

Speaker Change: <unk> for the full year guide, we're holding to the previous guidance and no change there.

Speaker Change: Okay. Thank you Simon.

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

Simon May: The more the capabilities that we have there are resonating with our internal experts and also with our customers, we think it's still very early inning and we're absolutely in the sweet spot there with those capabilities and relative to where the puck is going with therapeutic modalities.

Vijay Kumar: Hi, guys. Good afternoon, and thank you for taking my question.

I guess.

Vijay Kumar: Bob.

Vijay Kumar: Alright.

Vijay Kumar: Book to Bill commentary here being being about one where <unk> seen a seasonally being sub onex.

Simon May: We were slightly soft on revenue in the first quarter, the focus there is really very heavily on bringing certain aspects of the operation up to the Agilent NASD standards with process and quality, and that's progressing really well. But then with regard to the full year guide, we're holding to the previous guidance and no change there.

Is that.

Vijay Kumar: Being driven by stimulus or perhaps timing.

Vijay Kumar: Timing of the Chinese new year, maybe talk about the book to Bill trends and where does that signaling.

Vijay Kumar: Yeah, Hey, Vijay it's Bob.

Vijay Kumar: Yes, actually the lunar new year didn't have a big impact on that actually I would take that as a sign of continued recovery, particularly in the instrumentation market.

Okay. Thank you, Simon.

Simon May: Our next question comes from the line of B.J. Kumar with Evercore ISI. Please go ahead.

Vijay Kumar: We did have an impact or contribution from the lunar new year, but the real big area as both LC and LC Ms.

B.J. Kumar: Hi guys, good afternoon and thank you for taking my question.

Speaker Change: I guess, Bob, when we report again, on your book to build commentary here being, you know, about one versus, you know, seasonally being built, sub 1x.

Vijay Kumar: And.

Vijay Kumar: So.

Vijay Kumar: Typically what we see.

Vijay Kumar: Is just because of the way our fiscal year is that our first fiscal year. Because January is the last month of the quarter. The instrument book to Bill is typically lower than one and so the fact that it's above one is a very positive sign from our perspective that that recovery continues and as they were saying.

B.J. Kumar: Is that, you know, being driven by stimulus or, you know, perhaps, you know, timing of the Chinese New Year? May we talk about this book, Two Belted Friends, and what is that signaling?

Yeah, hey VJs, it's Bob.

Vijay Kumar: It's really being led by some of the new products and the unique attributes of.

Speaker Change: Yeah, actually, the Lunar New Year didn't have a big impact on that. Actually, I would take that as a sign of the continued recovery, particularly in the instrumentation market.

Vijay Kumar: Elsey, the Infinity II portfolio and has given us allowed us to.

Vijay Kumar: Have renewed conversations with customers and so forth.

B.J. Kumar: We did have an impact or a contribution from the Lunar New Year, but the real big area is both LC and LC-MS.

Vijay Kumar: Yes.

Vijay Kumar: Understood and maybe one for you on that.

And so...

Speaker Change: I think I heard you mentioned you've identified a few hundred million dollars worth of replacement.

B.J. Kumar: You know, typically what we see is, just because of the way our fiscal year is,

Vijay Kumar: Replacement opportunity.

Vijay Kumar: What is I guess, what is the average age of the fleet and when you do that math.

B.J. Kumar: that our first fiscal year, because January is the last month of the quarter.

Vijay Kumar: It is incremental off that $500 million versus a normal replacement cycle.

Vijay Kumar: And when you think about the attach rates on services and chemistry do you feel like.

And as we were saying...

B.J. Kumar: It's really been led by some of the new products in the unique attributes of our LCE, you know, the Infinity III portfolio and has given us, allowed us to, you know, have, you know, renewed conversations with customers and so forth.

Vijay Kumar: That part of the business is.

Vijay Kumar: Is growing mid to high singles or wherever you're on services and consumables.

Speaker Change: Yes, I'll take the first piece and I'll hand, it over to Angelica to give more color on the services and consumables, but were older than the median I would say.

Thank you.

Understood. And, Parag, maybe one for you on...

Vijay Kumar: The age of the installed base.

Speaker Change: I think I heard you mention you've identified a few hundred million dollars worth of replacement opportunity.

Vijay Kumar: So our base is very large very disparate a lot of different equipment in it. So we expect that we're going to see the pace of that change.

B.J. Kumar: What is, I guess, what is the average age of the fleet? And when you do that math...

Vijay Kumar: Change continually improve throughout the year.

Vijay Kumar: There is a huge opportunity there in terms of.

Speaker Change: What is incremental of that few hundred million versus a normal replacement cycle and when you think about their tax rates on services and chemistry, do you feel like that part of the business is growing mid to high singles or where are we on services and consumables?

Vijay Kumar: Opportunity for replacements and also when Dot Coms of course, we have attach rate with the new infinity tree vote on the services on the consumables side. So.

Vijay Kumar: I would say as well just mentioned that we did see an improvement at the year end of your orders if not back to pre Covid days, but there was a sequential improvement in terms of December orders in terms of budget flush versus the previous year, which again was.

Speaker Change: Yeah, I'll take the first piece and I'll hand it over to Angelica to give more colour on the services and consumables.

Speaker Change: older than the median, I would say, of the age of the install base, and, you know, the install base is very large, very disparate, a lot of different equipment in it, so we expect that we're going to see the pace of that.

Vijay Kumar: A large part about installed base.

Vijay Kumar: Installed base change and I would say when I talk to them.

Speaker Change: Lab managers out there and we talked to high level of procurement people.

Speaker Change: There's a lot of pent up demand for instrument changes lab managers are really pressing to us and we do see the purse strings loosening a bit within our pharma customers, but angelica in servicing consumers.

change continually improve throughout the year on it and it's

Speaker Change: There's a huge opportunity there in terms of opportunity for replacements and also when that comes, of course, we have a touch rate with the new Infinity Tree, both on the services

Speaker Change: Yeah, great. Thanks, Greg to add to what you've already said it is going to the replacement cycle is going to occur over a period of time, and it's probably going to be a mix of some incremental placements of new instruments as well as replacing the aging instruments on the lab bench and what that really allows us to do is.

on the consumable side.

Speaker Change: December orders in terms of budget flush versus the previous year, which again was a large part about install-based change. And I would say when I talk to lab managers out there and we talk to high-level procurement people,

Speaker Change: Continue our focus on increasing our ability to connect services and consumables as those new instruments are being put into service and we know that that.

Speaker Change: That motion.

Speaker Change: Allows for greater and longer customer lifetime value and how the customer is using that instrument, but also in terms of the continued revenue stream that that generates Brad your line. So there is upside and incremental opportunity for sure.

Speaker Change: You know, there's a lot of pent-up demand for instrument changes. Lab managers are really pressing that, and we do see the poor strings loosening a bit within our pharma customers. But Angelica, on services and consumers?

Understood.

Speaker Change: Our next question comes from the line of Brandon Couillard with Wells Fargo. Please go ahead.

Brandon Couillard: Hey, Thanks, good afternoon.

Brandon Couillard: Bob can you just help us understand what's going on with gross margins in Delaware.

Brandon Couillard: <unk> points in the first quarter was that in line with your expectations, how much did currency affect that.

Brandon Couillard: What are you expecting kind of the next few quarters.

Angelica Riemann: That motion allows for greater and longer customer lifetime value, both in how the customer is using that instrument, but also in terms of the continued revenue stream that that generates for Agilent. So there is upside and incremental opportunity for sure.

Speaker Change: Yes, Brian.

Brian: I would say is if we looked at the bottom line operating profit was in line gross margin was a little lower just because of some of the mix of our products it wasn't anything.

The material and I would expect that to improve throughout the course of the year. If you. So you can imagine.

And start.

Brian: With a large stimulus in China that did have some pressure on our margins at the gross margin level, but very profitable at the operating profit margin.

Speaker Change: Our next question comes from the line of Brandon Couillard with Wells Fargo. Please go ahead.

Brandon Couillard: Hey, thanks. Good afternoon. Bob, can you just help us understand what's going on with gross margins down over 130 basis points in the first quarter? Was that in line with your expectations? How much did currency affect that? And what are you expecting kind of the next few quarters?

Brian: And currency.

Brian: It did have an impact as well in Q1.

Brian: And.

Brian: That impact was.

Brian: Roughly.

Brian: 2030 basis points in the quarter for the total company and.

Bob Mcmahon: Yeah, Brennan, you know, what I would say is if we looked at the bottom line, you know, operating profit was in line.

Brian: I would expect some of that to continue throughout the course of the year, we did get some benefit because we do hedge but still the.

Bob Mcmahon: The gross margin was a little lower just because of some of the mix of products. It wasn't anything material, and I would expect that to improve throughout the course of the year. If you can imagine, with a large stimulus in China that did have some pressure on our margins at the gross margin level, but very profitable at the operating profit margin.

Brian: The drop through of that is greater on the gross margin. So.

Brandon Couillard: The one thing I would say Brandon.

Brian: Offsetting that is we were actually pleased.

Brian: Pleased with the pricing poor had mentioned about the pricing it actually was trending a bit higher than what we had expected in Q1 and are expecting that to continue through the course of the year.

Bob Mcmahon: and Currency did have an impact as well in Q1 and that impact...

Speaker Change: Okay. That's helpful and then it'd be great. If you can.

You know, roughly, you know, 20, 30 basis points.

Speaker Change: Get an update just on the otology genomics pieces and how those performed in the first quarter I think genomics is actually up.

in the quarter for the total company.

Speaker Change: In the fourth quarter.

Bob Mcmahon: You know, I'd expect some of that to continue throughout the course of the year. We do get some benefit because we do hedge.

Speaker Change: Fair enough. Thank you helpful. Thanks.

Simon: Yeah, I'm going to pass this on to Simon.

Bob Mcmahon: But still, the drop-through of that is greater on the gross margin.

Simon: Yes, sorry, genomics always puts and takes in the first quarter. We saw some negative impacts from the funding situation in the U S with academia and government and then on the flip side, we continue to see really strong traction with Magnus automated Mgs prep system, that's on a very strong.

Speaker Change: The one thing I would say, Brandon, to offset that is we were actually pleased with the pricing. Porig mentions about the pricing. It actually was trending a bit higher than what we had anticipated.

Bob Mcmahon: expected in Q1 and are expecting that to continue through the course of the year.

Simon: <unk> growth trajectory on the Aveda chemistry, as well as still.

Pretty small equaled the customer adoption that is looking pretty strong. So as we look to the full year I still think we see a path to return to growth in genomics, but again, the near term headwinds at least with academic and government funding slightly outweighed the positives from Magnus in the first quarter.

Bob Mcmahon: Okay, that's all. And then it'd be great if you could...

Speaker Change: Get an update just on the pathology and genomics pieces and how that's performed in the first quarter. I think genomics is actually up in the fourth quarter. Share an update. Be helpful. Thanks.

Yeah, I'm going to pass this one to Simon.

Speaker Change: Yeah, I'd say genomics was puts and takes in the first quarter. We saw some negative

Simon: Diagnostics and clinical overall grew 7% and <unk>.

Simon: <unk> was flat year over year, but let's.

impacts from the funding situation.

Simon: We see very steady growth rates as we go through the year on that side.

Speaker Change: in the U.S. with academia and government, and then on the flip side, we continue to see

Simon: Okay, great. Thanks.

Speaker Change: Our next question comes from the line of Puneet <unk> with Leerink partners. Please go ahead.

Speaker Change: really strong traction with our Magnus automated NGS prep system that's on a very strong growth trajectory and the Aveda chemistry as well still a pretty small acorn.

Simon: Yes.

puneet: Tim Thanks for taking my questions. The first one.

but the customer adoption there is looking pretty strong.

Speaker Change: If you could just elaborate a little bit on the China's stimulus.

puneet: We were expecting.

Speaker Change: So as we look to the full year I still think we see a path to return to growth in genomics but again the near-term headwinds at least with academic and government funding slightly outweighed the positives from Magnus in the first quarter.

puneet: More orders and maybe more continued orders and so I'm just trying to understand so why are you expecting in the second and the rest of the.

puneet: Instrumentation and growth from stimulus potentially in the second half.

Speaker Change: And the diagnostics and clinical overall grew 7% and pathology was flat year-over-year, but we see very steady growth rates as we go through the year on that side.

puneet: Maybe can you elaborate what you saw what are you hearing from the from the ground in China.

Steve: Yes, so Steve.

Speaker Change: Emulous order was within the food area within the Chinese customs.

Thank you.

Speaker Change: Our next question comes from the line of Puneet Souda with Lear Inc. Partners. Please go ahead.

Steve: And government departments.

Steve: It was very broad based in terms of instruments is actually most of our platforms and as we won 50% of that in this order, which is around 45 million and was recognized essentially all of that was recognized in the quarter. That's a very extremely high.

Yeah, hi Parag and team. Thanks for taking my questions.

Speaker Change: If you could just elaborate a little bit on the China stimulus, we were expecting more orders and maybe more continued orders, and so I'm just trying to understand, so why are you expecting it in the second, in the rest of the...

Steve: When rates.

Steve: Of course, we think it's not all of that is incremental.

Steve: Believe about half of it is kind of run rate pull forwards half of that is incremental.

Speaker Change: You know, instrumentations and growth from stimulus potentially in the second half. Maybe can you elaborate what you saw, what are you hearing from the ground in China?

Steve: Put it shows when when these stimulus come in come in the adjuvant team can really when it's over oversized share of us and as I said before we are expecting more stimulus, which we haven't baked into the guide in the second half.

Steve: But rest assured when that arises.

Speaker Change: government departments and, you know, it was very broad-based in terms of instruments. It actually had most of our platforms in it. We won 50% of that stimulus order, which is around 35.

Steve: The team will be.

Speaker Change: There to help customers yes.

Speaker Change: Hey, puneet to build on what pork is saying I actually see this as a really positive that we were able to not only get that revenue in the orders in and actually deliver it.

Speaker Change: And it was recognised, essentially all of that was recognised in the quarter.

Speaker Change: That's a real testament to the agile team in and so it actually gives me increased confidence that that when when the orders come in we will get more than our fair share in the second half of the year. So.

That's a very extremely high win rate.

Speaker Change: And, of course, we think it's not all of that is incremental. We believe about half of it is kind of run rate, pull forward. Half of that is incremental. But it shows when these stimulus come in, the Agilent team can really win its oversized share of it. And as I said before, you know, we're expecting more stimulus, which we haven't baked into the guide in the second half.

Speaker Change: I think we still feel very optimistic about not just this year, but if you remember this is a multi year kind of stimulus program.

Speaker Change: <unk>.

So we feel very good about the momentum that we have I wouldn't look at it quarter to quarter I look at it year over year.

Speaker Change: But rest assured, when that arises, the Agilent team will be there to help customers.

Speaker Change: Maybe adding one point I mean, what is absolutely crucial for those orders come in is having met in China capabilities and having our ability our ability now to make all of our platforms within China for China is really a significant advantage for us.

Speaker Change: Yeah, hey, Puneet, to build on what Parag is saying, I actually see this as really positive that we were able to not only get that revenue and the orders in and actually deliver it.

It's a real testament to the Agilent team.

Got it.

Speaker Change: Thanks for clarifying that.

Speaker Change: And so it actually gives me increased confidence that when the orders come in, we will get more than our fair share in the second half of the year. So I think we still feel very optimistic about not just this year, but if you remember, this is a multi-year kind of stimulus program.

And then.

Speaker Change: Question on the margin side with ignite efforts can you elaborate the margin contribution you talked about pricing on one end.

Speaker Change: A number of cost efforts and also reducing management some of the management changes that you have in place. So just wondering if how.

Speaker Change: And so we feel very good about the momentum that we have. I wouldn't look at it quarter to quarter. I'd look at it, you know, year over year.

Speaker Change: How should we think about the margin contribution do you have a target.

<unk> from ignite thank you.

Speaker Change: I'll start off and then hand, it over to Bob So again of course, we have a very well.

Speaker Change: And just maybe adding one point, what is absolutely crucial for those orders to come in is having Made in China capabilities and having our ability now to make all our platforms within China for China is really a significant advantage for us.

Speaker Change: Defined program as we go through the year actually ignite is a three year program.

Speaker Change: And what we said is over three years 70 to 100 basis points plus in terms of margin expansion.

Got it. Thanks for clarifying that.

Speaker Change: And of course, all of this doesn't happen all at once right. So we've seen early.

Speaker Change: Parity benefits both from the procurement direct and indirect procurement side and from pricing in terms of what we're seeing but of course, we would see more in the second half and as we go into next year.

Speaker Change: Question on the margin side. With Ignite efforts, can you elaborate the margin contribution? You talked about pricing on one end.

Speaker Change: number of cost efforts and also reducing some of the management changes that you have in place.

Bob So: Bob I don't know you want to give more color yeah.

Bob So: I was going to say, we're on track with what we had talked about at the beginning of the year Puneet, which was 50 to 50 to 70 basis points. This year.

Speaker Change: So just wondering if you know how should we think about the margin contribution if you have a target.

this year from IGNITE. Thank you.

Bob So: We're going to have to work harder for that because of some of the.

Speaker Change: I'll start off and I'll hand it over to Bob so yeah no of course we we have a very well defined program as we go through the year actually Ignite is a three-year program

Bob So: Currency.

Bob So: But.

Bob So: Pricing has.

Bob So: Held up here in the quarter and we're on track as Paul had mentioned for some of the other areas.

Speaker Change: And, you know, what we said is over the three years, 70 to 100 basis points plus.

Bob So: Got it helpful. Thank you.

in terms of margin expansion.

Speaker Change: Our next question comes from the line of Doug Schenkel with Wolfe Research. Please go ahead.

Speaker Change: Early benefits both from the procurement direct and indirect procurement side and from pricing in terms of what we're seeing But of course, we'll see more in the second half and as we go into next year

Doug Schenkel: Good afternoon, guys. Thank you for taking my question.

Doug Schenkel: When we caught up with you guys.

Speaker Change: But Bob, I don't know if you want to give more color on that. Yeah, I was going to say, we're on track with what we had talked about at the beginning of the year, Puneet, which was, you know, 50 to 70 basis points this year.

Speaker Change: In January it sounded like similar to the rest of the peer group.

Speaker Change: <unk> had a strong December in terms of budget, plus especially on the pharma end market.

Speaker Change: We're going to have to work harder for that because of some of the currency.

Speaker Change: But, you know, pricing has held up here in the quarter and we're on track, as Parag mentioned, for some of the other areas.

Speaker Change: I guess I'm just wondering if if one I want to confirm that was the case at the end of the fiscal year, Kansas together strongly.

Speaker Change: And if so it would be interesting to hear if there was anything.

Got it. Helpful. Thank you.

Speaker Change: Our next question comes from the line of Doug Schenkel with Wolf Research. Please go ahead.

Speaker Change: Interesting that occurred in terms of a particular rebound in specific instrument category.

Speaker Change: Specific geographies specific end market, and then kind of building off of that.

Good afternoon, guys, and thank you for taking my questions.

Speaker Change: Whats January normal or did you kind of go into the second topic I wanted to cover given the change that fenestration.

Speaker Change: When we caught up with you guys in January, it sounded like similar to the rest of the peer group. You had a strong December in terms of the instrument budget flush, especially in the pharma and market.

Speaker Change: If December felt a little more normal.

January deal, maybe less normal given all the uncertainty in terms of the BARDA regs academic funding food and water testing.

Speaker Change: Any commentary on all of those things would be really helpful.

Speaker Change: Okay. Thanks, So I'll start off and then hand over to Bob. So it was certainly as we talked before December it did play out as we expect as we did have that strong.

Speaker Change: <unk> momentum.

Speaker Change: <unk>.

Speaker Change: What was driving that.

Speaker Change: Overall demand I would say, particularly around infinity tree, but also we talked about PFS test again, including <unk>.

Speaker Change: Also what we're seeing in the <unk> areas.

Speaker Change: In January a new administration comes in a lot of changes.

Speaker Change: Of course, we are mitigating those changes as we go through is the only area, where we've seen some softness is really in academia.

Speaker Change: It with NIH funding, where things have really slowed down a bit but of course, that's a very small parts of our business and that's not within the guide on us in pharma when we talk to our customers actually Theres a lot of questions you see a lot of discussions around IRA et cetera, what changes might happen about international pricing index et cetera, but I would say that hasnt impacted on the pharma.

Speaker Change: Any commentary on all of those things that they are really helpful.

Speaker Change: Okay. Thanks, So I'll start off and then hand over to Bob. So it was certainly as we talked before December it did play out as we expect as we did have that strong.

Speaker Change: <unk> momentum.

Speaker Change: <unk>.

Speaker Change: What was driving that overall demand I would say, particularly around infinity tree, but also we talked about <unk> testing and including <unk>.

Speaker Change: Side, we're seeing we're seeing.

Speaker Change: We're still seeing steady business coming out of that site, but everybody's really really watching that on the <unk> side.

Speaker Change: Also what we're seeing in the <unk> areas.

Speaker Change: Just going back to the pharma side as well as you know people were talking about FDA.

Speaker Change: In January New administration comes in a lot of changes.

Speaker Change: Changes within the FDA I think that hit more of the medical device companies areas within within that expertise, but we haven't seen anything on US, yes, I wouldn't <unk> that business continues to be strong we still see it in January but theres been no change in that as it happens. So it's an area we're going to continue to watch very very closely hugely.

Speaker Change: Of course, we are mitigating those changes as we go through is the only area, where we've seen some softness is really in academia.

Speaker Change: It with NIH funding, where things have really slowed down a bit but of course, that's a very small parts of our business and that's not within the guide on us in pharma when we talk to our customers actually theres a lot of questions, you'll see a lot of discussions around IRA et cetera, what changes might happen about international pricing index et cetera, but I would say that hasnt impacted on the pharma.

Speaker Change: Dynamic.

Speaker Change: But I would say January as is.

Speaker Change: Steady progression from December.

Speaker Change: Thank you very much.

Speaker Change: Side, we're seeing we're seeing.

Speaker Change: Our next.

Speaker Change: Comes from the line of Dan Leonard with UBS. Please go ahead.

Speaker Change: We're still seeing steady business coming out of that side, but everybody's really really watching that on the <unk> side.

Dan Leonard: Thank you you mentioned a couple of times that you saw an improvement in pharma Capex and what I'm curious about is how much of that improvement was narrowly relevant to QA QC versus broader and inclusive of R&D functions in pharma and other product categories in your portfolio like cell analysis.

Speaker Change: Just going back to the pharma side as well you know people were talking about FDA.

Speaker Change: Changes within the FDA I think got hit more of the medical device companies areas within within that expertise, but we haven't seen anything on US, yes, I would <unk> that business continues to be strong we still see it in January which has been no change in that as it happens. So it's an area we're going to continue to watch very very closely hugely.

Speaker Change: Yes.

I'll kick it off and maybe hand, it to Simon on this one so.

Speaker Change: Dynamic.

Speaker Change: Of course, we have heavy fleets and a lot of capabilities when QA QC and development for QA QC and so we saw it out across the board on that side I would say in R&D you see a lot of shifts in terms of where.

Speaker Change: But I would say January is.

Speaker Change: Steady progression from December.

Speaker Change: Thank you very much.

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

Speaker Change: Customers are spending money, so we did actually see.

Speaker Change: Thank you you mentioned a couple of times that you saw an improvement in pharma Capex and what I'm curious about is how much of that improvement was narrowly relevant to QA QC versus broader and inclusive of R&D functions in pharma and other product categories in your portfolio like cell analysis.

Speaker Change: Good continuation of positivity on that side, but in the pharma QA QC into development areas of labs, we've seen.

Speaker Change: Continued I would say a steadiness in incremental strengthening driven around a replacement of a fleet.

Speaker Change: And driven by the Infinity tree, but Simon I don't know if you want to enter into the very little Salado and there was a reference in the question to cell analysis tools in this outlook that overall I'd actually say on the academic and government side, we've had some impact there in cell analysis with our lower end instruments <unk> level.

Speaker Change: Yes.

Speaker Change: Yes.

Speaker Change: I'll kick it off and maybe hand, it to Simon on this one so.

Speaker Change: Of course, we have heavy fleets in a lot of capabilities when QA QC and development for QA QC and so we saw it out across the board on that side I would say in R&D you see a lot of shifts in terms of where.

Speaker Change: Although our company level. The exposure is very minimal within the cell analysis is a little higher but generally speaking the <unk>.

Speaker Change: Customers are spending money, so we did actually see.

Speaker Change: <unk> robust and biopharma across the entire continuum, we see really nice adoption of our <unk> platform the spectral flow cytometer.

Speaker Change: Good continuation of positivity on that side, but in the pharma QA QC into development areas of labs, we have seen.

Speaker Change: Continued I would say a steadiness in incremental strengthening driven around a replacement of a fleet.

Speaker Change: Right.

Speaker Change: Citation seats is also performing really well so a few puts and takes in cell analysis.

Simon May: And driven by the Infinity tree, but Simon I don't know if you want to add.

Speaker Change: Okay. That's really helpful. And then a follow up question I think <unk> you mentioned in your prepared remarks that you've taken specific actions in response to the tariff talk can you elaborate on that.

Simon May: Very little Salado, and there was a reference in the question to cell analysis tools in this outlook.

Simon May: Overall, I would actually say on the academic and government side, we've had some impact there and cell analysis with our lower end instruments, our issue level, though at company level. The exposure is very minimal within the cell analysis is a little higher but generally speaking the funnels are robust and biopharma across.

Speaker Change: Yeah, no problem. So we have a very diverse.

Speaker Change: Manufacturing capability around and you talk about the three areas, where tariffs were talked about in Mexico.

Speaker Change: Manufacturing in Canada, we do have manufacturing with bio vector, but it's about 40% I think.

Simon May: The entire continuum, we see really nice adoption of our <unk> platform the spectral flow cytometer on the site.

Speaker Change: Put into the U S.

Speaker Change: And of course in China, we have in China for China on it. So we believe the overall impact is about $5 million.

Simon May: Citation <unk> is also performing really well so a few puts and takes in cell analysis.

Speaker Change: And we actually believe that's very mitigate mitigated was down too much less than that and we're working on is just to give you a sense of it we were able to shift our supply chain pretty quickly in areas from say, China back into the U S.

Speaker Change: Okay. That's really helpful. And then a follow up question I think Paul you mentioned in your prepared remarks that you've taken specific actions in response to the tariff talk can you elaborate on that.

Speaker Change: <unk>.

Speaker Change: Into Singapore, as well, which really is very mitigated.

Simon May: Yeah, no problem. So we have a very diverse.

Speaker Change: Thank you.

Speaker Change: Our next question comes from the line of Michael Raskin with Bofa. Please go ahead.

Simon May: Manufacturing capability around and you talk about the three areas, where tariffs were talked about in Mexico. We have no manufacturing in Canada, we do have manufacturing with <unk>, but it's about 40% I think.

Speaker Change: Thanks, guys, maybe a little bit of cleanup.

Speaker Change: Touched on this a couple of times in terms of the academic and government I, just kind of want make sure I understand the timing of it.

Simon May: <unk> put into the U S.

Speaker Change: If I go back to the slide deck.

Simon May: And of course in China, we have in China for China on it. So we believe the overall impact is about $5 million.

Speaker Change: The negative seven in the quarter.

Speaker Change: You called out softness globally, an anticipated slowdown in government spending.

Simon May: We actually believe that's very mitigate mitigated was down much less than that and we're working on is just to give you a sense of it we were able to shift their supply chain pretty quickly in areas from say, China back into the U S.

Speaker Change: In fact, some customers to spend so is this things you start seeing back in November December is this I'm just trying to think of the timing of what was happening in the quarter as it relates to election.

Simon May: <unk>.

Simon May: In Singapore, as well, which really is very mitigated.

Speaker Change: All of that.

Speaker Change: Any clarity there Paul.

Simon May: Thank you.

Bob So: Hey, Mike This is Bob what we saw actually was.

Michael Raskin: Our next question comes from the line of Michael Raskin with Bofa. Please go ahead.

Bob So: A pretty consistent performance across all of the all of the regions. So they were all down. So that's what we were talking about when we did see globally.

Michael Raskin: Thanks, guys, maybe a little bit of cleanup.

Michael Raskin: Just a couple of times in terms of the academic and government I, just kind of want make sure I understand the timing of it.

Bob So: We did see maybe a slight more in January incremental softness towards the end as people were trying to figure out the NIH activity I wouldn't say that that necessarily is.

Michael Raskin: If I just go back to the slide deck.

Michael Raskin: Negative seven in the quarter.

Michael Raskin: You call out softness globally anticipated slowdown in government spending.

Bob So: As a super material for us.

Michael Raskin: Some customers will spend so is this things you start seeing back in November December is this I'm sorry.

And as you know the academia and government can be kind of lumpy at times. So the one area that I would say got disproportionate impact actually was China and a lot of that is some of the impact of the.

Michael Raskin: Think of the timing of what was happening in the quarter as it relates to election inauguration of all of that.

Bob So: Timing of the lunar new year and so.

Speaker Change: Any clarity there Paul.

Speaker Change: I think that they were the most negative.

Michael Raskin: Hey, Mike This is Bob what we saw actually was.

Speaker Change: For the full Q1 and that is we have a slightly larger exposure in academia and government in China than we do relative to the rest of the world. So.

Speaker Change: Pretty consistent performance across all of the all of the regions. So they were all down. So that's what we were talking about when we did see globally.

Speaker Change: We did see maybe a slight more in January incremental softness towards the end as people were trying to figure out the NIH activity I wouldn't say that that necessarily is.

Speaker Change: I wouldn't read too much into it hopefully that clarifies.

Speaker Change: Kind of what we're seeing.

Speaker Change: Yes, it does.

Speaker Change: And I think I mean, just right now in response to <unk> question Youre talking about cell analysis specifically.

Speaker Change: As a super material for us.

Speaker Change: Is that right.

Speaker Change: And as you know the academia and government can be kind of lumpy at times. So the one area that I would say got disproportionate impact actually was China and a lot of that is some of the impact of the.

Speaker Change: Another area, where you have overlap where it's at.

Speaker Change: Concentrated in a handful of different.

Speaker Change: Parts of the portfolio I imagine, there's a lot of gcs going into academic and government labs.

Speaker Change: Yes, that's a true statement and again in cell analysis, the way I'd characterize it is that we began to see hesitancy in academia and government in the run up to the election last year people were kind of in wait and see mode to see what will happen with the election now what we're starting to see of course is not the impacts are real.

Speaker Change: Timing of the lunar new year and so.

Speaker Change: I think that they were the the most negative.

Speaker Change: For the full Q1 and that is we have a slightly larger exposure in academia and government in China than we do relative to the rest of the world. So.

Speaker Change: I wouldn't read too much into it hopefully that clarifies.

Speaker Change: Just to say it again and cell analysis, we've got proportionally higher exposure there in academia and government do many if not all other parts of our portfolio. So your statement there about the relative impacts as a true one and we don't see that elsewhere.

Speaker Change: Kind of what we're seeing.

Speaker Change: Yes, It does and I think I mean, just right now in response to <unk> question Youre talking about cell analysis specifically.

Speaker Change: Is that.

Speaker Change: Another area, where you have overlap where it's at.

Speaker Change: Concentrated in a handful of different.

Alright, thanks, guys.

Speaker Change: Parts of the portfolio.

Speaker Change: Yeah.

Speaker Change: Imagine that that a lot of gcs going into academic and government labs.

Speaker Change: Our final question will come from the line of EEP Burstein with Bernstein Research. Please go ahead.

Speaker Change: Yes, that's a true statement and again in cell analysis, the way I'd characterize it is that we began to see hesitancy in academia and government in the run up to the election last year people were kind of in wait and see mode to see what happened with the election now what we're starting to see of course is not the impacts are real.

Thanks, a lot for taking my question.

Speaker Change: This has been asked a couple of ways that maybe just to follow up on Mike's question for academic and government.

Speaker Change: You were starting to see a little bit of softness at the end of January how is that trending and Larry can you just give us a take out where you stand today.

Speaker Change: Just to say that getting cell analysis, we've got proportionally higher exposure there in academia and government do many if not all of the parts of our portfolio. So your statement there about the relative impacts as a true one and we don't see that elsewhere.

Speaker Change: Yes, what I would say is that's why we have.

Speaker Change: A little wider guidance.

Speaker Change: And in the Q2 guide between the low and the high.

Speaker Change: And.

Speaker Change: Alright Thats helpful.

Speaker Change: We have.

Speaker Change: Yes.

Speaker Change: I wouldn't say, it's any materially different than what we saw in January from a trends perspective, it hasnt deteriorated.

Speaker Change: Okay.

Speaker Change: Our final question will come from the line of EEP Burstein with Bernstein Research. Please go ahead.

Speaker Change: Where.

Speaker Change: Thanks, a lot for taking my question.

Speaker Change: We're just being prudent there from a standpoint of.

Speaker Change: This has been asked a couple of ways, but maybe just to follow up on Mike's question for academic and government is that you.

Speaker Change: What potentially would be there and then.

Speaker Change: For the full year, we're not changing our guidance.

Speaker Change: We're starting to see a little bit of softness at the end of January how is that trending and Larry can you just give us a take out where you stand today.

Speaker Change: Okay fair enough. Thank you.

Speaker Change: We've talked quite a bit about the LC replacement cycle.

Speaker Change: Yes, what I would say is that's why we have okay.

Speaker Change: Within GEC is there opportunity for upside Paul here as well you've mentioned several times that.

Speaker Change: A little wider guidance.

Speaker Change: And in the in the Q2 guide between the low and the high.

Speaker Change: <unk> LLC different customers different applications are going to improve at different times, but how do you anticipate GEC playing out.

Speaker Change: And.

Speaker Change: We have.

Speaker Change: I wouldn't say, it's any materially different than what we saw in January from a trends perspective, it hasnt deteriorated, but.

Speaker Change: The rest of the year in terms of pace.

Speaker Change: <unk> timing can you just give a little color.

Speaker Change: Where.

Speaker Change: Yes, no thats a great question and of course, GC replacement has a different timing done overseas.

Speaker Change: We're just being prudent there from a standpoint of.

Speaker Change: What potentially would be there and then.

Speaker Change: Because of the technology, but I'm going to ask Mike Zhang to give some color here, yes. Thank you Paul.

Speaker Change: For the full year, we're not changing our guidance.

Speaker Change: Obviously, we have.

Speaker Change: Okay fair enough. Thank you.

Mike Zhang: Our leadership in the D C market and it was very very strong installed base and we actually have introduced a new <unk> to the market and we're seeing very strong response from customers. So, yes, very with very optimistic about the opportunities, but certainly it will be again.

Speaker Change: And then we've talked quite a bit about the LC replacement cycle.

Speaker Change: Within GEC is there opportunity for fair enough to say Paul here as well you've mentioned several times that.

Speaker Change: LLC different customers different applications are going to improve at different times, but how do you anticipate GEC playing out through the rest of the year in terms of pace.

Mike Zhang: Thomas long long term opportunities that we're very excited about that.

Mike Zhang: Thanks.

Speaker Change: And Mr. <unk> I turn the call back over to you.

Speaker Change: Pes timing can you just give a little color there.

Speaker Change: Thanks, Regina and thanks, everyone for joining the call today.

Speaker Change: Yes, no thats a great question and of course, the GC replacement has a different timing Dino sees.

Speaker Change: With that we would like to hand, the call have a good rest of the day everyone.

Michael Raskin: Because of the technology, but I'm going to ask Mike to give some color here, yes. Thank you Paul.

Speaker Change: This concludes today's conference call you may now disconnect.

Speaker Change: Obviously, we have.

Speaker Change: Strong leadership in the D C market and it was very very strong installed base and we actually have introduced <unk> to the market and we're seeing very strong response from our customers. So yes, Barry with very optimistic about the opportunities, but certainly it will be again all the time, it's in your long long term opportunity that we're very excited about that.

Speaker Change: Yeah.

Speaker Change: Thanks.

Speaker Change: And Mr. <unk> I turn the call back over to you.

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

Speaker Change: This concludes today's conference call you may now disconnect.

Speaker Change: Okay.

Speaker Change: Yeah.