Q1 2026 Agilent Technologies Inc Earnings Call

February 25, 2026

Speaker #1: Ladies and gentlemen, thank you for joining us, and welcome to the Q1 2026 Agilent Technologies, Inc. Earnings Conference Call. After today's prepared remarks, we will host a question-and-answer session.

Operator: Ladies and gentlemen, thank you for joining us, and welcome to the Q1 2026 Agilent Technologies Inc. Earnings Conference Call. After today's prepared remarks, we will host a question and answer session. If you would like to ask a question, please raise your hand. If you have dialed into today's call, please press star nine to raise your hand and star six to unmute. I will now hand the conference over to Tejas Savant, Vice President, Investor Relations. Tejas, please go ahead.

Speaker #1: If you would like to ask a question, please raise your hand. If you have dialed into today's call, please press *9 to raise your hand and *6 to unmute.

Speaker #1: I will now hand the conference over to Tejas Savant, Vice President, Investor Relations. Tejas, please go ahead.

Speaker #2: Thank you and welcome, everyone, to AGILENT's conference call for the first quarter of fiscal year 2026. With me on the line are CEO Park McDonnell and CFO Adam Malinoff, joining for the Q&A will be Simon May, President of the Life Sciences and Diagnostics Markets Group; Angelique Reimann, President of the AGILENT Cross Lab Group; and Mike Zhang, President of the Applied Markets Group.

Tejas Savant: Thank you, and welcome, everyone, to Agilent's conference call for the Q1 of fiscal year 2026. With me on the line are CEO, Parek McDonnell, and CFO, Adam Alanoff. Joining for the Q&A will be Simon May, President of the Life Sciences and Diagnostics Markets Group, Angelika Reimann, President of the Agilent CrossLab Group, and Mike Zheng, President of the Applied Markets Group. This presentation is being webcast live. The press release for our Q1 financial results, investor presentation, and information to supplement today's discussion, along with a recording of this webcast, are available on our website at investor.agilent.com. Today's comments will refer to non-GAAP financial measures. Non-GAAP measures are supplemental and should not be considered a substitute for GAAP results. You'll find the most directly comparable GAAP financial metrics and reconciliations in the press release and on our website.

Tejas Savant: Thank you, and welcome, everyone, to Agilent's conference call for the Q1 of fiscal year 2026. With me on the line are CEO, Padraig McDonnell, and CFO, Adam Alanoff. Joining for the Q&A will be Simon May, President of the Life Sciences and Diagnostics Markets Group, Angelika Reimann, President of the Agilent CrossLab Group, and Mike Zheng, President of the Applied Markets Group. This presentation is being webcast live. The press release for our Q1 financial results, investor presentation, and information to supplement today's discussion, along with a recording of this webcast, are available on our website at investor.agilent.com. Today's comments will refer to non-GAAP financial measures. Non-GAAP measures are supplemental and should not be considered a substitute for GAAP results. You'll find the most directly comparable GAAP financial metrics and reconciliations in the press release and on our website.

Speaker #2: This presentation is being webcast live. The press release for our first quarter financial results, investor presentation, and information to supplement today's discussion, along with a recording of this webcast, are available on our website at investor.agilent.com.

Speaker #2: Today's comments will refer to non-GAAP financial measures. Non-GAAP measures are supplemental and should not be considered a substitute for GAAP results. You’ll find the most directly comparable GAAP financial metrics in reconciliations in the press release and on our website.

Speaker #2: 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.

Tejas Savant: 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. All references to profitability metrics are on a non-GAAP basis. Core revenue growth is adjusted for the impact of currency exchange rates, and any acquisitions and divestitures completed within the past 12 months. Guidance is based on forecasted exchange rates. During this call, we will make forward-looking statements about the financial performance of the company. These statements are subject to risks and uncertainties and are only valid as of today. Agilent assumes no obligation to update them. Please refer to the company's recent SEC filings for a more detailed description of the risks and other factors that would cause our performance to differ from these forward-looking statements. Now, I'd like to turn the call over to Parek.

Speaker #2: All references to profitability metrics are on a non-GAAP basis. Core revenue growth is adjusted for the impact of currency exchange rates, and any acquisitions and divestitures completed within the past 12 months.

Speaker #2: Guidance is based on forecasted exchange rates. During this call, we will make forward-looking statements about the financial performance of the company. These statements are subject to risks and uncertainties and are only valid as of today.

Speaker #2: AGILENT assumes no obligation to update them. Please refer to the company's recent SEC filings for a more detailed description of the risks and other factors that would cause our performance to defer from these forward-looking statements.

Speaker #2: And now, I'd like to turn the call over to Park.

Speaker #3: Thanks, Tejas, and welcome, everyone. It was a solid start to the year with the AGILENT team executing well in a generally improving albeit dynamic market environment.

Padraig McDonnell: Thanks, Tejas. Welcome, everyone. It was a solid start to the year, with the Agilent team executing well in a generally improving, albeit dynamic, market environment. For Q1, Agilent reported $1.8 billion in revenue, growing 4.4% on a core basis within our November guidance range. End market conditions were largely consistent with our expectations, with top-line results affected by the winter storm in the US during the last week of January. The storm drove roughly a $10 million revenue impact, with the majority recovered at the beginning of February. The impact primarily came from our logistic providers not being able to ship products from our main American logistics center in Memphis, Tennessee, for 3 days. This is typically the busiest shipping week of the quarter.

Speaker #3: For the first quarter, AGILENT reported $1.8 billion in revenue, growing 4.4% on a core basis, within our November guidance range. End market conditions were largely consistent with our expectations, with top-line results affected by the winter storm in the US during the last week of January.

Speaker #3: The storm drove roughly a $10 million revenue impact, with the majority recovered at the beginning of February. The impact primarily came from our logistic providers not being able to ship products from our main America logistics center in Memphis, Tennessee, for three days.

Speaker #3: This is typically the busiest shipping week of the quarter. Despite the weather, operating margins of 24.6% were in line with our expectations, setting a solid jumping-off point for the remainder of the fiscal year.

Padraig McDonnell: Despite the weather, operating margins of 24.6% were in line with our expectations, setting a solid jumping off point for the remainder of the fiscal year. Moving forward, we anticipate benefiting from leverage on increasing volumes, and we expect to see tariff headwinds continuing to decrease, as well as incremental benefits from our Ignite operating system, that together will drive sequential margin improvements throughout the rest of the year. Q1 EPS of $1.36 also was within expectations. Adjusted for the impact of the storm, our Q1 revenue, operating margin, and EPS all would have been above the midpoint of our November guidance ranges, a healthy underlying outcome. Throughout the quarter, the Agilent team remained, as always, committed to delivering for our customers.

Speaker #3: Moving forward, we anticipate benefiting from leverage on increasing volumes, and we expect to see tariff headwinds continuing to decrease as well as incremental benefits from our Ignite operating system that together will drive sequential margin improvements throughout the rest of the year.

Speaker #3: First quarter EPS of $1.36 also was within expectations. Adjusted for the impact of the storm, our first quarter revenue operating margin and EPS all would have been above the midpoint of our November guidance ranges, a healthy underlying outcome.

Speaker #3: Throughout the quarter, the AGILENT team remained as always committed to delivering for our customers. Before getting into the specifics of our first quarter results, I want to share my thoughts on three key business initiatives that are fueling our growth.

Padraig McDonnell: Before getting into the specifics of our Q1 results, I want to share my thoughts on three key business initiatives that are fueling our growth. These include our highly differentiated service organization that reinforces our customer intimacy, a team you've heard me talk about frequently. An update on recent innovations, finally, how the Ignite operating system continues to drive Agilent's transformation. I want to start by talking about our differentiated customer intimacy. Last quarter, I highlighted our field service engineers' outsized contribution to our deal funnel and conversion rates. This time, I want to focus on our enterprise services business, where we had several marquee customer wins with major pharma accounts. Our enterprise services offerings allow us to cement our extraordinary customer intimacy and is a key strategic differentiator for Agilent that unlocks significant downstream value.

Speaker #3: These include our highly differentiated service organization that reinforces our customer intimacy, a team you've heard me talk about frequently, an update on recent innovations, and finally, how the Ignite operating system continues to drive AGILENT's transformation.

Speaker #3: I want to start by talking about our differentiated customer intimacy. Last quarter, I highlighted our field service engineers' outsized contribution to our deal funnel and conversion rates.

Speaker #3: This time, I want to focus on our enterprise services business, where we had several marquee customer wins with major pharma accounts. Our enterprise services offerings allow us to cement our extraordinary customer intimacy and is a key strategic differentiator for AGILENT that unlocks significant downstream value.

Speaker #3: This business represents roughly 10% of our total services revenue today and has grown nicely at a low double-digit CAGR. Beyond the direct revenue contribution, the relationship we build with our customer creates tremendous long-term value for AGILENT, and uniquely positions us to gain wallet share over time.

Padraig McDonnell: This business represents roughly 10% of our total services revenue today and has grown nicely at a low double-digit CAGR. Beyond the direct revenue contribution, the relationship we build with our customer creates tremendous long-term value for Agilent and uniquely positions us to gain wallet share over time. The offering includes embedding our expert on-site support technicians in customer sites and leveraging digital capabilities through CrossLab Connect that provide monitoring, alerting, and performance analytics. This allows us to gain unique insights and visibility into lab operations and, critically, deliver improved efficiency and economics for our customer labs. These successful outcomes position us as a trusted partner, one customers can count on to provide critical data and insights that inform their future technology needs and instrument purchasing decisions. We have agreements with nearly all of the top 20 biopharma companies.

Speaker #3: The offering includes embedding our expert onsite support technicians in customer sites and leveraging digital capabilities through CrossLab Connect that provide monitoring, alerting, and performance analytics.

Speaker #3: This allows us to gain unique insights and visibility into lab operations and critically, deliver improved efficiency and economics for our customer labs. These successful outcomes position us as a trusted partner one customers can count on to provide critical data and insights that inform their future technology needs and instrument purchasing decisions.

Speaker #3: We have agreements with nearly all of the top 20 biopharma companies. In addition, we've won 18 competitive displacements across our end markets over the past three years.

Padraig McDonnell: In addition, we've won 18 competitive displacements across our end markets over the past 3 years. Early customer feedback from a recent marquee win reinforces the value of having our specialists on site, including faster response times, improved parts availability, and better advice and consumable and system usage. The insights that we gain from our leading services team are a key success factor in driving customer-focused innovation that underpins durable long-term growth at above market rates. I want to highlight several recent examples that are resonating particularly well with our customers. Starting with our Altura ultra-inert column portfolio. In October, we launched our first Altura column to support biopharma workflows, including GLP-1s. Already, 50% of the top 20 biopharma companies have ordered these columns since we launched, and Altura has more than doubled our bio column growth to over 30%, a testament to Altura's compelling performance.

Speaker #3: Early customer feedback from our recent marquee win reinforces the value of having our specialists onsite, including faster response times, improved parts availability, and better advice on consumables and system usage.

Speaker #3: The insights that we gain from our leading services team are a key success factor in driving customer-focused innovation that underpins durable, long-term growth at above-market rates.

Speaker #3: I want to highlight several recent examples that are resonating particularly well with our customers. Starting with our Altura ultra inert column portfolio. In October, we launched our first Altura column to support biopharma workflows including GLP-1s.

Speaker #3: Already, 50% of the top 20 biopharma companies have ordered these columns since we launched. And Altura has more than doubled our bio column growth to over 30% a testament to Altura's competitive performance.

Speaker #3: Just last month, we launched our next column in the Altura family, focused on improving PFAS workflows. These columns are specifically developed to solve key workflow challenges and address new EU regulations.

Padraig McDonnell: Just last month, we launched our next column in the Altura family, focused on improving PFAS workflows. These columns are specifically developed to solve key workflow challenges and address new EU regulations. Plus, they double throughput for customers by enabling separation of both short and long-chain PFAS in a single workflow. The launch is off to an excellent start, with strong demand out of the gate and extremely positive customer feedback versus competitor offerings. You can expect continued expansion of the Altura family for new use cases later this year and beyond. Next, I want to highlight the Pro iQ LC-MS, which continues to build momentum since its mid-summer launch. We're seeing a robust uptake, with growth of our single quad family exceeding 40% in the quarter.

Speaker #3: Plus, they double throughput for customers by enabling separation of both short and long-chain PFAS in a single workflow. The launch is off to an excellent start with strong demand out of the gates and extremely positive customer feedback versus competitor offerings.

Speaker #3: You can expect continued expansion of the Altura family for new use cases later this year and beyond. Next, I want to highlight the Pro-IQ LCMS, which continues to build momentum since its midsummer launch.

Speaker #3: We're seeing robust uptake with growth of our single-quad family exceeding 40% in the quarter. The value proposition of an advanced single-quad LCMS would expanded mass range is resonating and is particularly compelling for pharma customers who are transitioning from small molecules to biologics and monoclonal antibodies.

Padraig McDonnell: The value proposition of an advanced single quad LC-MS with expanded mass range is resonating and is particularly compelling for pharma customers who are transitioning from small molecules to biologics and monoclonal antibodies. Our cancer diagnostics business also is innovating to meet customer needs. Last quarter, I talked about the expansion of our most advanced automated platform, Omnis, to a broader set of customers. This launch is off to a very strong start, offering medium throughput labs access to the latest technology with attractive economics. Also within cancer diagnostics is our new S540MD slide scanner system, which we announced in late January as part of our continued effort to enable the latest digital tools for our cancer diagnostic customers. Finally, early in the quarter, our market-leading spectroscopy business announced the release of our Raman Insight BRT Series alarm resolution system.

Speaker #3: Our cancer diagnostics business also is innovating to meet customer needs. Last quarter, I talked about the expansion of our most advanced automated platform, OMNIS.

Speaker #3: To a broader set of customers. This launch is off to a very strong start, offering medium throughput labs access to the latest technology with attractive economics.

Speaker #3: Also within cancer diagnostics is our new S540MD slide scanner system, which we announced in late January as part of our continued effort to enable the latest digital tools for our cancer diagnostic customers.

Speaker #3: Finally, early in the quarter, our market-leading spectroscopy business announced the release of our Raman Insight BRT series alarm resolution system. The new system offers next-generation throughput and sensitivity to enhance safety and streamline operations at airport security checkpoints.

Padraig McDonnell: The new system offers next-generation throughput and sensitivity to enhance safety and streamline operations at airport security checkpoints. This new instrument helped secure a $9 million TSA contract during the quarter. We are confident that we are well positioned to win larger aviation security tenders in the coming years. The last topic I want to focus on is our Ignite operating system. As you know, we launched Ignite at the beginning of 2025 to drive execution excellence, accelerate decision-making, and unlock the full value of Agilent as an integrated enterprise. Over the past year, Ignite has evolved into our enterprise operating system, a core differentiator that aligns strategy, resources, and accountability to drive sustainable growth, margin expansion, and long-term shareholder value. Ignite has already delivered clear financial results in its first 12 months, including doubling our pricing realization, generating substantial procurement savings,...

Speaker #3: This new instrument helps secure a $9 million TSA contract during the quarter, and we are confident that we are well positioned to win larger aviation security tenders in the coming years.

Speaker #3: The last topic I want to focus on is our Ignite operating system. As you know, we launched Ignite at the beginning of 2025 to drive execution excellence, accelerate decision-making, and unlock the full value of Agilent as an integrated enterprise.

Speaker #3: Over the past year, Ignite has evolved into our enterprise operating system, a core differentiator that aligns strategy, resources, and accountability to drive sustainable growth, margin expansion, and long-term shareholder value.

Speaker #3: Ignite has already delivered clear financial results in its first 12 months, including doubling our pricing realization generating substantial procurement savings, simplifying our organizational structure, and launching our tariff mitigation program.

Padraig McDonnell: simplifying our organization structure and launching our tariff mitigation program. Ignite demonstrated its effectiveness in M&A execution through the successful BIOVECTRA integration, establishing a repeatable playbook to accelerate value capture in future transactions. In this Q4 alone, Ignite delivered nearly 200 basis points of pricing, continued tariff expense reductions, and a very successful launch of our new agilent.com website that helped drive growth in digital orders at more than 2 times of our overall order book. Looking ahead to the remainder of FY 2026, we are expanding Ignite into new value creation work streams and leveraging a portion of savings to reinvest in the business.

Speaker #3: Also, Ignite demonstrated its effectiveness in M&A execution through the successful bio vector integration establishing a repeatable playbook to accelerate value capture and future transactions.

Speaker #3: In this fourth quarter alone, Ignite delivered nearly 200 basis points of pricing, continued tariff expense reductions, and a very successful launch of our new AGILENT.COM website that helped drive growth in digital orders at more than two times of our overall order book.

Speaker #3: Looking ahead to the remainder of FY26, we're expanding Ignite into new value creation workstreams and leveraging a portion of savings to reinvest in the business.

Speaker #3: These workstreams include increasing returns and innovation investments by improving speed to market, advancing digital and e-commerce capability to enhance commercial productivity, and applying targeted artificial intelligence initiatives with clear ROI to enhance customer insights, automate routine work, and compress manufacturing cycle times.

Padraig McDonnell: These work streams include increasing returns and innovation investments by improving speed to market, advancing digital and e-commerce capability to enhance commercial productivity, and deploying targeted Artificial Intelligence initiatives with clear ROI to enhance customer insights, automate routine work, and compress manufacturing cycle times. We are also accelerating software development and enhancing our supply chain capabilities by executing no-regret investments that improve efficiency, resilience, and proximity to customers in an evolving geopolitical environment. Now let me share some additional details about our Q1 results, starting with our end markets. The improvement that we saw in our end markets across last year was generally maintained throughout the first quarter. Overall, we are seeing underlying momentum in our markets. Importantly, secular trends in our largest end markets remain on a strong footing. That includes reshoring of pharma and semiconductor manufacturing, GLP-1 uptake, and LC and GC instrument replacement cycles.

Speaker #3: We are also accelerating software development and enhancing our supply chain capabilities by executing no-regret investments that improve efficiency, resilience, and proximity to customers in an evolving geopolitical environment.

Speaker #3: Now let me share some additional details about our Q1 results. Starting with our end markets. The improvement that we saw in our end markets across last year was generally maintained throughout the first quarter.

Speaker #3: Overall, we are seeing underlying momentum in our markets. Importantly, secular trends in our largest end markets remain on a strong footing. That includes reshoring of pharma and semiconductor manufacturing, GLP-1 uptake, and LC/GC instrument replacement cycles.

Speaker #3: Pharma growth was 7% in line with our expectations, with double-digit growth in the biotech space supported by increased funding and M&A activity laid in the calendar year.

Padraig McDonnell: pharma growth was 7% in line with our expectations, with double-digit growth in the biotech space, supported by increased funding and M&A activity late in the calendar year. Mid-single digit small molecule growth was also solid, showing continued momentum from 2025. The quarter saw a modest benefit from continued normalization in the calendar year-end budget flush, in line with our expectations. We delivered excellent GLP-1 growth of 50%, with healthy contributions coming from our specialty CDMO as well as our analytical lab business. Our specialty CDMO business grew low double digits during the quarter, and we continue to expect mid-teens growth for the year. We saw continued strength in chemicals and advanced materials market. The 9% growth in CAM was above our expectations, with exceptional strength on the materials side of the business, with growth more than 20%.

Speaker #3: Mid-single-digit small molecule growth was also solid, showing continued momentum from 2025. The quarter saw a modest benefit from continued normalization in the calendar year-end budget flush in line with our expectations.

Speaker #3: We delivered excellent GLP-1 growth of 50% with healthy contributions coming from our specialty CDMO as well as our analytical lab business. Our specialty CDMO business grew low double digits during the quarter, and we continue to expect mid-teens growth for the year.

Speaker #3: We saw continued strength in the chemicals and advanced materials market. The 9% growth in CAM was above our expectations, with exceptional strength on the materials side of the business, with growth of more than 20%.

Speaker #3: This strong result in advanced materials demonstrates our leadership in providing solutions for the top semiconductor manufacturers globally. The current shortage of memory chips and the global effort to achieve semiconductor supply chain independence has driven investment by these firms in our leading atomic spectroscopy tools.

Padraig McDonnell: This strong result in advanced materials demonstrates our leadership in providing solutions for the top semiconductor manufacturers globally. The current shortage of memory chips and a global effort to achieve semiconductor supply chain independence has driven investment by these firms in our leading atomic spectroscopy tools. With support from the recent OMNIS family launch, the diagnostics and clinical business continued to perform well, growing at 7% again this quarter. Environmental and forensics was flat, with continued softness in government funding in the US and China, offset by growth in the rest of Asia and Europe. In Q1, the food business declined 4%, which outperformed our expectations with strong low double-digit growth ex-China. As a reminder, the food market was the primary beneficiary of the large China stimulus that boosted growth in Q1 of FY 2025.

Speaker #3: With support from the recent OMNIS family launch, the diagnostics and clinical business continue to perform well, growing at 7% again this quarter. Environmental and forensics was flat, with continued softness in government funding in the US and China offset by growth in the rest of Asia and Europe.

Speaker #3: In Q1, the food business declined 4%, which outperformed our expectations with strong low double-digit growth ex-China. As a reminder, the food market was the primary beneficiary of the largest China stimulus that boosted growth in the first quarter of FY25.

Speaker #3: And finally, academia and government are smallest market was down 8%, more than expected in the quarter. Academia and government conditions in the US continue to be soft, with customers using available funding to keep their labs running as opposed to investing in new capital equipment.

Padraig McDonnell: Finally, academia and government, our smallest market, was down 8%, more than expected in the quarter. Academia and government conditions in the US continue to be soft, with customers using available funding to keep their labs running as opposed to investing in new capital equipment. Excluding academia and government, our instruments grew at a healthy mid-single digit rate. Our instrument book-to-bill has now been at or above one for the eighth consecutive quarter. The Infinity III HPLC continues to delight our customers. The LC instrument replacement cycle momentum built by our differentiated Infinity III system during FY 2025 continued through Q1 of FY 2026. With LC growth in the high single digits, we are gaining share globally versus our competition.

Speaker #3: Excluding academia and government, our instruments grew at a healthy mid-single-digit rate. Our instrument book-to-bill has now been at or above 1 for the eighth consecutive quarter.

Speaker #3: The infinity tree HPLC continues to delight our customers. The LC instrument replacement cycle momentum built by our differentiated infinity tree system during FY25 continued through the first quarter of FY26, and with LC growth in the high single digits, we are gaining share globally versus our competition.

Speaker #3: On the DC side of the replacement cycle, we saw low single-digit growth, a strong result considering the tough year-over-year compare from significant volumes associated with last year's Chinese stimulus.

Padraig McDonnell: On the DC side of the replacement cycle, we saw low single-digit growth, a strong result considering the tough year-over-year compare from significant volumes associated with last year's Chinese stimulus. Ex-China, GC instrument growth was mid-single digits, in line with our expectations of around 100 basis points of lift during the GC replacement cycle. Even with these strong results, the upside from pharma reshoring has yet to impact our numbers. We're seeing increased activity in US-based pharmaceutical manufacturing as companies rethink resilience and capacity. Based on announced investments and recent customer activity, we estimate this will represent a billion-dollar addressable market opportunity through 2030. We continue to expect the first orders from reshoring to book late this year and the revenue impact from those orders to boost our top-line growth in FY 2027 and beyond.

Speaker #3: Ex-China GC instrument growth was mid-single digits in line with our expectations of around 100 basis points of lift during the GC replacement cycle. And even with these strong results, the upside from pharma reshoring has yet to impact our numbers.

Speaker #3: We're seeing increased activity in US-based pharmaceutical manufacturing as companies rethink resilience and capacity. Based on announced investments and recent customer activity, we estimate this will represent a $1 billion addressable market opportunity through 2030.

Speaker #3: We continue to expect the first orders from reshoring to book late this year, and the revenue impact from those orders to bolster top-line growth in FY27 and beyond.

Speaker #3: As we look to the rest of the year, our priorities remain unchanged. Advance our Ignite operating system, further enhanced commercial execution, and capture opportunities from improving end markets, innovative new products, and a multi-pronged replacement cycle.

Padraig McDonnell: As we look to the rest of the year, our priorities remain unchanged. Advance our Ignite operating system, further enhance commercial execution, and capture opportunities from improving end markets, innovative new products, and a multi-pronged replacement cycle. With a solid start to the year and the outlook for end markets broadly consistent with our original expectations, we are maintaining our expected core growth range of 4% to 6% for the full year. We now expect between $5.90 and 6.04 of earnings per share in FY 2026, with a $0.04 increase due to favorable currency impact. For Q2, early trends are encouraging, and we are expecting core growth of approximately 4% to 5.5%, which includes a majority of the $10 million storm impact from late in Q1.

Speaker #3: With a solid start to the year and the outlook for end markets broadly consistent with our original expectations, we are maintaining our expected core growth range of 4 to 6 percent for the full year.

Speaker #3: We now expect between $5.90 and $6.04 of earnings per share in FY26, with a 4 cent increase due to favorable currency impact. For Q2, early trends are encouraging.

Speaker #3: And we are expecting core growth of approximately 4 to 5.5 percent, which includes a majority of the $10 million storm impact from late in the first quarter.

Speaker #3: EPS is expected to be between $1.39 and $1.42, representing 7% growth at the midpoint of our range. We remain highly disciplined around capital deployment.

Padraig McDonnell: EPS is expected to be between $1.39 and 1.42, representing a 7% growth at the midpoint of our range. We remain highly disciplined around capital deployment, investing for organic growth through innovation and capacity expansion. Simultaneously, we are focused on M&A targets that are both a strategic fit and financially attractive. Now, let me hand it over to Adam, who will provide details on the quarter and our financial outlook.

Speaker #3: Investing for organic growth through innovation and capacity expansion. Simultaneously, we are focused on M&A targets that are both a strategic fit and financially attractive.

Speaker #3: Now, let me hand it over to Adam, who will provide details on the quarter and our financial outlook.

Speaker #2: Thanks, Padraig, and good afternoon, everyone. In my comments today, I will provide additional details on revenue in the quarter, as well as walk through the income statement and cover other key financial metrics.

Adam S. Elinoff: Thanks, Padraig. Good afternoon, everyone. In my comments today, I will provide additional details on revenue in the quarter, as well as walk through the income statement and cover other key financial metrics. I'll cover our updated full year and Q2 guidance. Starting with Q1, revenue was $1.8 billion. On a core basis, we posted growth of 4.4%, while reported growth was 7%. Currency had a favorable impact of 2.6%, in line with our November guidance. At a business segment level, ACG grew 6%. That's in line with expectations, driven by strong consumables growth in the high single digits, solid performance and services, and balanced growth globally, with all regions growing mid single digits or better. AMG grew 4%, ahead of expectations.

Adam Elinoff: Thanks, Padraig. Good afternoon, everyone. In my comments today, I will provide additional details on revenue in the quarter, as well as walk through the income statement and cover other key financial metrics. I'll cover our updated full year and Q2 guidance. Starting with Q1, revenue was $1.8 billion. On a core basis, we posted growth of 4.4%, while reported growth was 7%. Currency had a favorable impact of 2.6%, in line with our November guidance. At a business segment level, ACG grew 6%. That's in line with expectations, driven by strong consumables growth in the high single digits, solid performance and services, and balanced growth globally, with all regions growing mid single digits or better. AMG grew 4%, ahead of expectations.

Speaker #2: I'll then cover our updated full year and second quarter guidance. Starting with Q1, revenue was $1.8 billion. On a core basis, we posted growth of 4.4%, while reported growth was 7%.

Speaker #2: Currency had a favorable impact of 2.6%, in line with our November guidance. At a business segment level, ACG grew 6%. That's in line with expectations, driven by strong consumables growth in the high single digits, solid performance in services, and balanced growth globally with all regions growing mid-single digits or better.

Speaker #2: AMG grew 4%, ahead of expectations. Growth was led by double-digit performance in spectroscopy, fueled by the excellent results in the semiconductor space that Padraig mentioned earlier.

Adam S. Elinoff: Growth was led by double-digit performance in spectroscopy, fueled by the excellent results in the semiconductor space that Padraig mentioned earlier. LDG grew 3%, a bit below expectations. In addition to the weather impact, we saw softness in academia and government that challenged our cell analysis and genomics results. On a geographic basis, we saw our strongest growth in Asia, with China growing 6% and the rest of Asia growing a robust 13%. Europe was a bit slower than expected, with 4% growth, as transient discussions around higher tariffs caused some customers to slow purchasing decisions late in the quarter. Americas' growth of 1% was directly impacted by the weather, as well as pockets of softness in our smaller end markets. Q1 gross margins were 53.7%.

Adam Elinoff: Growth was led by double-digit performance in spectroscopy, fueled by the excellent results in the semiconductor space that Padraig mentioned earlier. LDG grew 3%, a bit below expectations. In addition to the weather impact, we saw softness in academia and government that challenged our cell analysis and genomics results. On a geographic basis, we saw our strongest growth in Asia, with China growing 6% and the rest of Asia growing a robust 13%. Europe was a bit slower than expected, with 4% growth, as transient discussions around higher tariffs caused some customers to slow purchasing decisions late in the quarter. Americas' growth of 1% was directly impacted by the weather, as well as pockets of softness in our smaller end markets. Q1 gross margins were 53.7%.

Speaker #2: LDG grew 3%, a bit below expectations, in addition to the weather impact. We saw softness in academia and government that challenged our cell analysis and genomics results.

Speaker #2: On a geographic basis, we saw our strongest growth in Asia, with China growing 6% and the rest of Asia growing a robust 13%. Europe was a bit slower than expected, with 4% growth as transient discussions around higher tariffs caused some customers to slow purchasing decisions late in the quarter.

Speaker #2: America's growth of 1% was directly impacted by the weather, as well as pockets of softness in our smaller end markets. Q1 gross margins were 53.7%.

Speaker #2: On a year-over-year basis, they were down by 100 basis points, primarily due to tariff headwinds. Operating margin was 24.6%, in line with our expectations, and down 50 basis points year over year on increased tariff expenses and normalized performance-based pay in the current year.

Adam S. Elinoff: On a year-over-year basis, they were down by 100 basis points, primarily due to tariff headwinds. Operating margin was 24.6%, in line with our expectations, and down 50 basis points year-over-year on increased tariff expenses and normalized performance-based pay in the current year. Now moving below the line. We had $10 million of other income, while our tax rate was 14.5%, as expected. Finally, we had 284 million diluted shares outstanding in the quarter, slightly better than expected, with some incremental share repurchases during the quarter. Putting it all together, Q1 earnings per share were $1.36 and grew 4%. Adjusted for the weather, we would have been above the midpoint of our Q1 guidance range.

Adam Elinoff: On a year-over-year basis, they were down by 100 basis points, primarily due to tariff headwinds. Operating margin was 24.6%, in line with our expectations, and down 50 basis points year-over-year on increased tariff expenses and normalized performance-based pay in the current year. Now moving below the line. We had $10 million of other income, while our tax rate was 14.5%, as expected. Finally, we had 284 million diluted shares outstanding in the quarter, slightly better than expected, with some incremental share repurchases during the quarter. Putting it all together, Q1 earnings per share were $1.36 and grew 4%. Adjusted for the weather, we would have been above the midpoint of our Q1 guidance range.

Speaker #2: Now, moving below the line, we had $10 million of other income, while our tax rate was 14.5%, as expected. Finally, we had 284 million diluted shares outstanding in the quarter.

Speaker #2: Slightly better than expected, with some incremental share repurchases during the quarter. Putting it all together, Q1 earnings per share were $1.36 and grew 4%.

Speaker #2: Adjusted for the weather, we would have been above the midpoint of our first quarter guidance range. We are confident we will see improved earnings growth through the remainder of the year, driven by improving volumes and easier tariff and performance-based pay compares.

Adam S. Elinoff: We are confident we will see improved earnings growth through the remainder of the year, driven by improving volumes and easier tariff and performance-based pay compares. Now let me turn to cash flow and balance sheet. Operating cash flow was $268 million in the quarter, and we invested $93 million in capital expenditures. We purchased $152 million in shares and paid $72 million in dividends during the quarter. We ended the quarter with a net leverage ratio of 0.8 turns, maintaining our strong balance sheet. Now let me share some additional details on the updated outlook for the year and the guidance for our Q2. Because of changes in FX, we now expect fiscal year 2026 revenue to be in the range of $7.3 to 7.5 billion on a reported basis.

Adam Elinoff: We are confident we will see improved earnings growth through the remainder of the year, driven by improving volumes and easier tariff and performance-based pay compares. Now let me turn to cash flow and balance sheet. Operating cash flow was $268 million in the quarter, and we invested $93 million in capital expenditures. We purchased $152 million in shares and paid $72 million in dividends during the quarter. We ended the quarter with a net leverage ratio of 0.8 turns, maintaining our strong balance sheet. Now let me share some additional details on the updated outlook for the year and the guidance for our Q2. Because of changes in FX, we now expect fiscal year 2026 revenue to be in the range of $7.3 to 7.5 billion on a reported basis.

Speaker #2: Now let me turn to cash flow and balance sheet. Operating cash flow was $268 million in the quarter, and we invested $93 million in capital expenditures.

Speaker #2: We purchased $152 million in shares and paid $72 million in dividends during the quarter. And we ended the quarter with a net leverage ratio of 0.8 turns, maintaining our strong balance sheet.

Speaker #2: Now, let me share some additional details on the updated outlook for the year and the guidance for our second quarter. Because of changes in FX, we now expect fiscal year '26 revenue to be in the range of $7.3 to $7.5 billion on a reported basis.

Speaker #2: This continues to represent growth of 4 to 6 percent on a core basis, as currency is now expected to be a 1.5% tailwind during the year.

Adam S. Elinoff: This continues to represent growth of 4% to 6% on a core basis, as currency is now expected to be a 1.5% tailwind during the year. This revenue guidance embeds full-year business segment, end market, and geographic growth assumptions that are consistent with what we shared in November. Our largest end markets, pharma, chem, and diagnostics and clinical, are all off to a strong start. Across our smaller end markets, we saw some pockets of softness relative to our expectations in the Q1, especially in our cell analysis business, where academic customer budgets are most heavily indexed to government funding. Going forward, we continue to expect low single-digit full-year decline in academia and government, flat performance in food, and low single-digit growth in environmental and forensics, partially helped by easier comps for the remainder of the year.

Adam Elinoff: This continues to represent growth of 4% to 6% on a core basis, as currency is now expected to be a 1.5% tailwind during the year. This revenue guidance embeds full-year business segment, end market, and geographic growth assumptions that are consistent with what we shared in November. Our largest end markets, pharma, chem, and diagnostics and clinical, are all off to a strong start. Across our smaller end markets, we saw some pockets of softness relative to our expectations in the Q1, especially in our cell analysis business, where academic customer budgets are most heavily indexed to government funding. Going forward, we continue to expect low single-digit full-year decline in academia and government, flat performance in food, and low single-digit growth in environmental and forensics, partially helped by easier comps for the remainder of the year.

Speaker #2: This revenue guidance embeds full-year business segment and market and geographic growth assumptions that are consistent with what we shared in November. Our largest end markets, pharma, CAM, and diagnostics and clinical, are all off to a strong start.

Speaker #2: Across our smaller end markets, we saw some pockets of softness relative to our expectations in the first quarter, especially in our cell analysis business, where academic customer budgets are most heavily indexed to government funding.

Speaker #2: Going forward, we continue to expect low single-digit full-year decline in academia and government, flat performance in food, and low single-digit growth in environmental and forensics.

Speaker #2: Partially helped by easier comps for the remainder of the year. Moving down the P&L, we continue to expect to deliver 75 basis points of operating margin expansion at the midpoint, and while we continue to evaluate the evolving tariff situation in light of recent developments, this guide does not incorporate material changes in tariff rates relative to our view at the start of the year.

Adam S. Elinoff: Moving down the P&L, we continue to expect to deliver 75 basis points of operating margin expansion at the midpoint. While we continue to evaluate the evolving tariff situation in light of recent developments, this guide does not incorporate material changes in tariff rates relative to our view at the start of the year. While we still await the details, we do not expect a meaningful change to our outlook based on the high-level proposals that have been discussed. Our expected tax rate for fiscal year 2026 is unchanged at 14.5%. We also expect $22 million of other income and 283 million diluted shares outstanding for the year.

Adam Elinoff: Moving down the P&L, we continue to expect to deliver 75 basis points of operating margin expansion at the midpoint. While we continue to evaluate the evolving tariff situation in light of recent developments, this guide does not incorporate material changes in tariff rates relative to our view at the start of the year. While we still await the details, we do not expect a meaningful change to our outlook based on the high-level proposals that have been discussed. Our expected tax rate for fiscal year 2026 is unchanged at 14.5%. We also expect $22 million of other income and 283 million diluted shares outstanding for the year.

Speaker #2: While we still await the details, we do not expect a meaningful change to our outlook based on the high-level proposals that have been discussed.

Speaker #2: Our expected tax rate for fiscal year '26 is unchanged at 14.5%. We also expect $22 million of other income and 283 million diluted shares outstanding for the year.

Speaker #2: Fiscal year non-GAAP earnings per share are now expected to be between $5.90 and $6.04, representing earnings growth of 5.5% to 8%. This reflects a 4-cent increase due to a favorable currency outlook versus our original guide.

Adam S. Elinoff: Fiscal year non-GAAP earnings per share are now expected to be between $5.90 and $6.04, representing earnings growth of 5.5% to 8%, with the $0.04 increase due to a favorable currency outlook versus our original guide. For your modeling, let me share some additional expectations we have incorporated into our guidance for the year. We continue to expect pricing growth of at least 100 basis points, supported by Ignite. Although the tariff situation is evolving, we expect to fully offset tariff impact over the course of the year through a combination of cost saving and pricing actions. The tariff dynamics will drive a modestly more than typical sequential improvement in operating margin over the course of the year.

Adam Elinoff: Fiscal year non-GAAP earnings per share are now expected to be between $5.90 and $6.04, representing earnings growth of 5.5% to 8%, with the $0.04 increase due to a favorable currency outlook versus our original guide. For your modeling, let me share some additional expectations we have incorporated into our guidance for the year. We continue to expect pricing growth of at least 100 basis points, supported by Ignite. Although the tariff situation is evolving, we expect to fully offset tariff impact over the course of the year through a combination of cost saving and pricing actions. The tariff dynamics will drive a modestly more than typical sequential improvement in operating margin over the course of the year.

Speaker #2: For your modeling, let me share some additional expectations we have incorporated into our guidance for the year. We continue to expect pricing growth of at least 100 basis points, supported by Ignite.

Speaker #2: Although the tariff situation is evolving, we expect a fully offset tariff impact over the course of the year through a combination of cost savings and pricing actions.

Speaker #2: The tariff dynamics will drive a modestly more than typical sequential improvement in operating margin over the course of the year. As we have said before, this translates into a slight second-half weighting on operating profit and EPS versus what we typically see.

Adam S. Elinoff: As we have said before, this translates into a slight second half weighting on operating profit and EPS versus what we typically see. There is no change to our operating cash flow range of $1.6 to 1.7 billion, and we are still expecting to invest approximately $500 million in capital expenditures. Now moving to Q2. We expect our reported revenue to be in the range of $1.79 to 1.82 billion. This represents growth of roughly 4% to 5.5% on a core basis, while currency is expected to be approximately a 3% tailwind. This outlook includes weather-delayed revenue from Q1. It also assumes our academia and government end market declines in the mid-single digits in Q2.

Adam Elinoff: As we have said before, this translates into a slight second half weighting on operating profit and EPS versus what we typically see. There is no change to our operating cash flow range of $1.6 to 1.7 billion, and we are still expecting to invest approximately $500 million in capital expenditures. Now moving to Q2. We expect our reported revenue to be in the range of $1.79 to 1.82 billion. This represents growth of roughly 4% to 5.5% on a core basis, while currency is expected to be approximately a 3% tailwind. This outlook includes weather-delayed revenue from Q1. It also assumes our academia and government end market declines in the mid-single digits in Q2.

Speaker #2: There is no change to the operating cash flow range of $1.6 to $1.7 billion, and we are still expecting to invest approximately $500 million in capital expenditures.

Speaker #2: Now moving to the second quarter, we expect our reported revenue to be in the range of 1.79 to 1.82 billion dollars. This represents growth of roughly 4% to 5.5% on a core basis, while currency is expected to be approximately a 3% tailwind.

Speaker #2: This outlook includes weather-delayed revenue from Q1. It also assumes our academia and government end-market declines in the mid-single digits in Q2. We expect our operating margin to improve by approximately 100 basis points relative to the first quarter.

Adam S. Elinoff: We expect our operating margin to improve by approximately 100 basis points relative to Q1. Our guide assumes 283 million diluted shares outstanding in Q2. Q2 EPS guidance is $1.39 to $1.42, representing growth of 6% to 8%. With that, I'll turn the call back over to Padraig for closing comments.

Adam Elinoff: We expect our operating margin to improve by approximately 100 basis points relative to Q1. Our guide assumes 283 million diluted shares outstanding in Q2. Q2 EPS guidance is $1.39 to $1.42, representing growth of 6% to 8%. With that, I'll turn the call back over to Padraig for closing comments.

Speaker #2: Our guide assumes $283 million diluted shares outstanding in the second quarter, second quarter EPS guidance is $1.39 to $1.42, representing growth of 6% to 8%.

Speaker #2: With that, I'll turn the call back over to Porag for closing comments.

Speaker #1: Thanks, Adam. As you've heard, FY26 is off to a good start. Our unique growth drivers—including superior customer intimacy, developed by our best-in-class services team; a healthy innovation pipeline to deliver products that solve real-world customer problems; and the Ignite operating system, which brings together our best attributes for the benefit of all stakeholders—combined to drive growth and operating leverage that fuels our success.

Padraig McDonnell: Thanks, Adam. As you've heard, FY 2026 is off to a good start. Our unique growth drivers, including superior customer intimacy, developed by our best-in-class services team, a healthy innovation pipeline to deliver products that solve real-world customer problems, and the Ignite Operating System that brings together our best attributes for the benefit of all stakeholders, combined to drive growth and operation leverage that fuels our success. As the year unfolds, we are well positioned to benefit from the instrument replacement cycle and continuing recovery across our largest end markets, to win share and deliver resilient, above peer growth and margin performance over the long term. I also wanted to take this opportunity to express my gratitude to the Agilent team for their exceptional efforts throughout the quarter.

Speaker #1: As the year unfolds, we are well positioned to benefit from the instrument replacement cycle and continuing recovery across our largest end markets to win share and deliver resilient, above-peer growth and margin performance over the long term.

Speaker #1: I also wanted to take this opportunity to express my gratitude to the Agilent team for their exceptional efforts throughout the quarter. I especially want to recognize our global operations and logistics colleagues who worked tirelessly to meet the challenges presented by the weather and deliver for our customers.

Padraig McDonnell: I especially want to recognize our global operations and logistics colleagues, who worked tirelessly to meet the challenges presented by the weather and deliver for our customers. Thank you for your attention, and I'll turn it back over to Tejas for Q&A. Tejas?

Speaker #1: Thank you for your attention, and I'll turn it back over to Tejas for Q&A. Tejas?

Speaker #3: Thanks, Parag. Nicole, can you please share the instructions for the Q&A?

Tejas Savant: Thanks, Padraig. Nicole, can you please share the instructions for the Q&A?

Speaker #4: We will now begin the question and answer session. Please limit yourself to one question and one follow-up. If you would like to ask a question, please raise your hand now.

Operator: We will now begin the question-and-answer session. Please limit yourself to one question and one follow-up. If you would like to ask a question, please raise your hand now. If you have dialed into today's call, please press star 9 to raise your hand and star 6 to unmute. Please stand by while we compile the Q&A roster. Your first question comes from the line of Tycho Peterson with Jefferies. Your line is open. Please go ahead. Tycho, a reminder to please unmute yourself by pressing star 6.

Speaker #4: If you have dialed into today's call, please press star 9 to raise your hand and star 6 to unmute. Please stand by while we compile the Q&A roster.

Speaker #4: Your first question comes from the line of Tycho Petersen with Jefferies. Your line is open. Please go ahead. Tycho, a reminder to please unmute yourself by pressing star 6.

Speaker #3: Yep. Hi. Yeah. Hi. This is Jack on for Tycho. Thanks for the question. Just wanted to walk through the impact of the snowstorm and expectations for catch-up there.

[Analyst] (Jefferies): Yep. Yep. Hi. Yeah, hi, this is Jack on for Tycho. Thanks for the question. Just wanted to walk through the impact of the snowstorm and expectations for catch up there. Appreciate you said $10 million in revenues. Just curious if that's already in hand for Q2 or something that's still being recouped. You know, any color on margin impact that would have had in the quarter, you know, gross margins and operating, if it would have been without the snowstorm. Thanks.

Jack Meehan: Yep. Yep. Hi. Yeah, hi, this is Jack on for Tycho. Thanks for the question. Just wanted to walk through the impact of the snowstorm and expectations for catch up there. Appreciate you said $10 million in revenues. Just curious if that's already in hand for Q2 or something that's still being recouped. You know, any color on margin impact that would have had in the quarter, you know, gross margins and operating, if it would have been without the snowstorm. Thanks.

Speaker #3: Appreciate you said $10 million in revenues. Just curious if that's already in hand for Q2 or something that's still being recouped, and then any color on margin impact that would have had in the quarter—gross margins and operating—if it would have been without the snowstorm.

Speaker #3: Thanks.

Speaker #1: Yeah. So I'll start off, and I'll hand it over to Adam. So first of all, a really solid finish overall with 4.4% growth and high single digits in our three markets.

Padraig McDonnell: Yeah. I'll start off, and I'll hand it over to Adam. First of all, you know, a really solid finish overall with 4.4% growth and high single digits in our key markets. Adam, can you give some color around the weather impact?

Speaker #1: But Adam, can you give some color around the weather?

Speaker #3: Yeah. So thanks. And I'd first like to say I didn't think I'd be on this call talking about the weather, so it's always fun to do that.

Adam S. Elinoff: Yeah. Thanks. I'd first like to say, I didn't think I'd be on this call talking about the weather, so it's always fun to do that. When you think about the impact of the weather, we said it was about $10 million. We've already seen that come back, or the majority of it. There's some pieces of it that will take a little longer, and that's really related to services and things like that don't happen instantly. We've already recovered the vast majority of it. To your second question related to margin, it would have been a very modest impact to margin. What we delivered in the quarter was a reasonable proxy for what we actually the actual performance.

Adam Elinoff: Yeah. Thanks. I'd first like to say, I didn't think I'd be on this call talking about the weather, so it's always fun to do that. When you think about the impact of the weather, we said it was about $10 million. We've already seen that come back, or the majority of it. There's some pieces of it that will take a little longer, and that's really related to services and things like that don't happen instantly. We've already recovered the vast majority of it. To your second question related to margin, it would have been a very modest impact to margin. What we delivered in the quarter was a reasonable proxy for what we actually the actual performance.

Speaker #3: So when you think about the impact of the weather, we said it was about $10 million. We've already seen that come back, or the majority of it.

Speaker #3: There's some pieces of it that will take a little longer, and that's really related to services and things like that that don't happen instantly.

Speaker #3: So we've already recovered the vast majority of it. Then to your second question related to margin, it would have been a very modest impact to margin.

Speaker #3: So what we delivered in the quarter was a reasonable proxy for what we actually the actual performance.

Speaker #1: Okay, that's helpful. And then sticking on margin, appreciate you still guiding the 75 bps for the year. Can you just give a little bit more color on the cadence from here, and the bridge to that improvement after being down a little bit in Q1?

[Analyst] (Jefferies): Okay, that's helpful. Sticking on margin, appreciate you're still guiding the 75 basis points for the year. Can you just give a little bit more color on the cadence from here in the bridge that improvement after being down a little bit in Q1? I think you said slight second half waiting. I guess, just what's baked in for Q2 versus the second half. What do you see as the biggest swing factors to that step up? Thanks.

Jack Meehan: Okay, that's helpful. Sticking on margin, appreciate you're still guiding the 75 basis points for the year. Can you just give a little bit more color on the cadence from here in the bridge that improvement after being down a little bit in Q1? I think you said slight second half waiting. I guess, just what's baked in for Q2 versus the second half. What do you see as the biggest swing factors to that step up? Thanks.

Speaker #1: I think you said slight second-half waiting. I guess there's what's baked in for 2Q versus the second-half. And then what do you see as the biggest swing factors to that step up?

Speaker #1: Thanks.

Speaker #3: Yeah, so I'll take this one. So, from a year-over-year basis, we expect the second quarter to be a 50 basis point improvement, and that's really driven by pricing, volume, and then Ignite savings.

Adam S. Elinoff: Yeah. I'll take this one. From a year-over-year basis, we expect Q2 to be a 50 basis point improvement, and that's really driven by pricing, volume, and Ignite savings. That's offset by performance-based pay and once again, the tariffs. As you know, the tariffs, or as we've talked about, the tariffs are fully mitigated by the second half of the year. When you move through the rest of the year, that's where you start to see the acceleration in our margin expansion. That's driven by continued volume and leverage, volume leverage, pricing, and Ignite. It's slightly offset by some of the people costs and growth investments that we're making through the year.

Adam Elinoff: Yeah. I'll take this one. From a year-over-year basis, we expect Q2 to be a 50 basis point improvement, and that's really driven by pricing, volume, and Ignite savings. That's offset by performance-based pay and once again, the tariffs. As you know, the tariffs, or as we've talked about, the tariffs are fully mitigated by the second half of the year. When you move through the rest of the year, that's where you start to see the acceleration in our margin expansion. That's driven by continued volume and leverage, volume leverage, pricing, and Ignite. It's slightly offset by some of the people costs and growth investments that we're making through the year.

Speaker #3: And then that's offset by performance-based pay. And once again, the tariffs. And as you know, the tariffs or as we've talked about, the tariffs are fully mitigated by the second half of the year.

Speaker #3: Then when you move through the rest of the year, that's where you start to see the acceleration in our margin expansion. And then that's driven by continued volume and leverage volume leverage, pricing, and Ignite.

Speaker #3: And then it’s slightly offset by some of the people costs and growth and investments that we’re making through the year.

Speaker #4: Your next question comes from the line of Vijay Kumar with Evercore ISI. Your line is open. Please go ahead.

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

Speaker #5: Hey, guys. Thank you for taking my question. Maybe, Parag, my first one—high level—when I look at this cadence for the year, right?

Vijay Kumar: Hey, guys. Thank you for taking my question. Maybe, Padraig, my first one, high level. When I look at, you know, this cadence for the year, right, first half versus back half, your guidance for first half implies, you know, slightly less than five, and back half, it hit the midpoint. You know, needs to be above five. Can you just talk about what drives the back half step up? Comps to get tougher. Is this some new product cycles, or is this something else that's going on in the business that gives us this back half visibility?

Speaker #5: First half versus back half, your guidance for first half implies slightly less than 5, and back half hit the midpoint needs to be above 5.

Speaker #5: Can you just talk about what drives the back half step up, comps to get tougher? Is there some new product cycles, or is there something else that's going on in the business that gives us this back half visibility?

Speaker #1: Yeah. I mean, the underlying—we see a really strong underlying momentum in our businesses and our key biggest markets. You can see that in Pharma, where it's driven by GLP-1s, but also the replacement cycle is going extremely well.

Padraig McDonnell: Yeah, I mean, the underlying, you will see a really strong underlying momentum in our businesses in our key, biggest markets. You can see that in pharma, where, you know, driven by GLP-1s, but also the replacement cycle going extremely well. You see our Infinity III number growing in double digits, I think. We're seeing from our latest market share report that we're taking oversized share in that area. Then, of course, you can go down through our CAM markets as well, where you can see, you know, a lot of secular drivers. We grew 20% in advanced materials from the semiconductor onshoring and so on. Underlying momentum in the markets, we have very good visibility in funnels.

Speaker #1: You see our Infinity Tree number growing in double digits, I think. And we're seeing from our latest market share report that we're taking oversized share in that area.

Speaker #1: And then, of course, you can go down through our CAM markets as well, where you can see a lot of secular drivers. We grew 20% in advanced materials from the semiconductor onshoring and so on.

Speaker #1: So underlying momentum in the markets, we have very good visibility in funnels. We're seeing very strong win-loss rates. And of course, we're going to watch that as we go forward.

Padraig McDonnell: We're seeing very strong win-loss rates, and of course, we're going to watch that as we go forward, but we see that continued momentum to improve.

Speaker #1: But we see that continued momentum to improve.

Speaker #3: And then I would just jump in. The step up between the first half and the second half isn't that big. It's really $49 million in the first half and then $51 million in the second half on revenue.

Adam S. Elinoff: I would just jump in. The step up between the first half and the second half isn't that big. It's really 49 in the first half and then 51 in the second half on revenue.

Adam Elinoff: I would just jump in. The step up between the first half and the second half isn't that big. It's really 49 in the first half and then 51 in the second half on revenue.

Speaker #5: Understood. And maybe one on tariffs, just given the Supreme Court ruling how are you thinking about the tariff assumptions, right? Are you assuming now the global minimum of 15%?

Patrick Donnelly: Understood. Maybe one on tariffs, just given the Supreme Court ruling. How are you thinking about the tariff assumptions rate? Are you assuming now a global minimum of 15%, and how does that change versus your prior assumptions?

Vijay Kumar: Understood. Maybe one on tariffs, just given the Supreme Court ruling. How are you thinking about the tariff assumptions rate? Are you assuming now a global minimum of 15%, and how does that change versus your prior assumptions?

Speaker #5: And how does that change versus your prior assumptions?

Speaker #1: Adam, I'll keep this one to you.

Padraig McDonnell: Adam, I'll give this one to you.

Speaker #3: Sure. So I guess the first thing is, one, the situation continues to be dynamic. And we don't know that much information about what the 15% would look like in exactly how it's going to play out.

Adam S. Elinoff: Sure. I guess the first thing is, one, the situation continues to be dynamic, and, you know, we don't know that much information about what the 15% was, would look like and exactly how it's going to play out. If you assume that the 15% is on the surface what it says across all different markets, what I would say is, we wouldn't change our guide on it. It really comes down to a couple of things: one, we made a series of no-regret moves, and that was really about leveraging our supply chain, bringing our manufacturing closest to the customer. That wouldn't change. The second is, we've been utilizing pricing and surcharges, you know, really as appropriate, and been very thoughtful about that. That also helps us.

Adam Elinoff: Sure. I guess the first thing is, one, the situation continues to be dynamic, and, you know, we don't know that much information about what the 15% was, would look like and exactly how it's going to play out. If you assume that the 15% is on the surface what it says across all different markets, what I would say is, we wouldn't change our guide on it. It really comes down to a couple of things: one, we made a series of no-regret moves, and that was really about leveraging our supply chain, bringing our manufacturing closest to the customer. That wouldn't change. The second is, we've been utilizing pricing and surcharges, you know, really as appropriate, and been very thoughtful about that. That also helps us.

Speaker #3: But if you assume that the 15% is on the surface, what it says across all different markets, what I would say is we wouldn't change our guide on it.

Speaker #3: And it really comes down to a couple of things. One, we made a series of no-regret moves, and that was really about leveraging our supply chain, bringing our manufacturing closest to the customer.

Speaker #3: So that wouldn't change. The second is we've been utilizing pricing and surcharges. Really, as appropriate and been very thoughtful about that. So that also helps us.

Speaker #3: And I guess the third piece I would add is in any dynamic market, in any dynamic market conditions, as you see in we're living in, what gives me a confidence is I look at how the Ignite operating system has been able to allow us to react and be resilient as things change.

Adam S. Elinoff: I guess the third piece I would add is, in any dynamic market, in any dynamic market conditions, as you see and we're living in, what gives me a confidence is I look at how the Ignite operating system has been able to allow us to react and be resilient as things change. Right now, we wouldn't change any of our guide based on what we know. That said, we're ready to react, and we're ready to respond as things evolve.

Adam Elinoff: I guess the third piece I would add is, in any dynamic market, in any dynamic market conditions, as you see and we're living in, what gives me a confidence is I look at how the Ignite operating system has been able to allow us to react and be resilient as things change. Right now, we wouldn't change any of our guide based on what we know. That said, we're ready to react, and we're ready to respond as things evolve.

Speaker #3: So right now, we wouldn't change any of our guide based on what we know. That said, we're ready to react, and we're ready to respond as things evolve.

Speaker #1: Yeah, and I would just close it off by saying the actions we've taken to bring manufacturing close to our customers and strengthen supply chains are no-regrets moves.

Padraig McDonnell: I would just close it off by saying the actions we've taken to bring manufacturing close to our customers and strengthen supply chains are no regrets moves. We have that planned for a long time now. Outside of surcharges, we would not expect to reverse them in any way.

Speaker #1: We have that plan for a long time now. And outside of surcharges, we would not expect a reverse them in any way.

Speaker #4: Your next question comes from the line of Doug Schenkel with Wolf Research. Your line is open. Please go ahead.

Operator: Your next question comes from the line of Doug Schenkel with Wolfe Research. Your line is open. Please go ahead.

Speaker #6: Good afternoon, guys. And thank you for taking my questions. Two topics I wanted to address. One is the capital equipment environment, and then the second is M&A.

Doug Schenkel: Good afternoon, guys. Thank you for taking my questions. Two topics I wanted to address. One is the capital equipment environment, and the second is M&A. On the first topic, how would you describe demand month-by-month, going back to, you know, say, November and December and through the beginning of the calendar year? I ask because some of your peers have suggested that demand may have slowed a bit over the past several weeks, and I'm just trying to get at whether or not this is just kind of normal, typical seasonality or if there's anything you're seeing from an environmental standpoint, meaning uncertainty related to things from a policy dynamics that are flaring up again and slowing things down, or again, whether this is just kind of normally what you would see going from calendar Q4 to calendar Q1.

Speaker #6: So on the first topic, how would you describe demand month by month going back to, say, November and December and through the beginning of the calendar year?

Speaker #6: I ask because some of your peers have suggested that demand may have slowed a bit over the past several weeks. I'm just trying to get at whether or not this is just kind of normal, typical seasonality, or if there's anything you're seeing from an environmental standpoint—meaning uncertainty related to things from a policy dynamics standpoint that are flaring up again and slowing things down—or again, whether this is just kind of normally what you would see going from calendar Q4 to calendar Q1.

Speaker #6: The second question or second topic is really on M&A. And simply put, how would you describe the environment, your readiness, and your appetite to do a multibillion-dollar deal?

Doug Schenkel: The second question is, or second topic is really on M&A, and simply put, how would you describe the environment, your readiness, and your appetite to do a multibillion-dollar deal? Thank you.

Speaker #6: Thank you.

Speaker #1: Thanks, Doug. I'll take the first one. And Adam can take the second one. So if you look at a proxy of pharma and you look at our replacement cycle, we had a very strong quarter biotech led that business.

Padraig McDonnell: Thanks, Doug. I'll take the first one, Adam can take the second one. If you look at a proxy of pharma and you look at our replacement cycle, you know, we had a very strong quarter. You know, biotech led that business. Of course, there was what we saw was a reasonable budget flush. It wasn't over the top budget flush, but a reasonable budget flush at the end of December. I think, January, you saw, we talked about some of the disruption we saw intra-quarter in Europe, for example, and the weather impact. I would say it's been very, very steady. You know, we've seen our funnels continuing to be steady, in a lot of cases growing. Why is that?

Speaker #1: And of course, there was what we saw was a reasonable budget flush. It wasn't over-the-top budget flush, but a reasonable budget flush at the end of December.

Speaker #1: I think January, you saw we talked about some of the disruption we saw intra-quarter in Europe, for example, and the weather impact. But I would say it's been very, very steady.

Speaker #1: We've seen our funnels continue to be steady—in a lot of cases, growing. And why is that? I think CapEx conditions continue to improve.

Padraig McDonnell: I think CapEx conditions continue to improve with the MFN deals, reducing the tariff uncertainty. That's been very big for our pharma customers. You see the strong GLP-1 growth and our CDMO, you know, the base in CDMO growing extremely well. I think, you know, we're very pleased to see how the trajectory of orders continue to go on the CapEx side. Now, of course, we're watching our funnels as we go forward on it, so I wouldn't say there's anything that we see any deterioration in terms of CapEx. On the capital allocation, which is a big question, I'm sure we get it a few times today. I'm going to get Adam to answer that one.

Speaker #1: With the MFN deals reducing the tariff uncertainty, that's been very big for our pharma customers. You see the strong GLP-1 growth. And our CDMO, the basis in CDMO growing extremely well.

Speaker #1: And I think we're very pleased to see how the trajectory of orders continue to go on the CapEx side. Now, of course, we're watching our funnels as we go forward on it.

Speaker #1: So I wouldn't say there's anything that we see any deterioration in terms of CapEx. And on the capital allocation, which is a big question, I'm sure we get it a few times today.

Speaker #1: I'm going to get Adam to answer that one.

Speaker #3: So, thanks for the question. And I think it's important that we always start with our capital allocation priorities, which aren't changing. So, one, we're prioritizing investments in growth.

Adam S. Elinoff: Thanks for the question, and I think it's important that we always start with our capital allocation priorities, which aren't changing. One, we're prioritizing investments in growth, and that's through innovation, internal innovation. Second thing is M&A, and the third is investments in strategic capacity expansion. At the same time, we're going to continue to return excess capital to shareholders, and that's through a growing dividend in share repurchases. The next thing I want to say as context is we like our organic business, and we like our plan. We don't need to do any transformative deals or any transformative transactions to achieve those growth ambitions. Now, we don't have any arbitrary size filter in our deal funnel, but I want to be very, very, very deliberate about this.

Adam Elinoff: Thanks for the question, and I think it's important that we always start with our capital allocation priorities, which aren't changing. One, we're prioritizing investments in growth, and that's through innovation, internal innovation. Second thing is M&A, and the third is investments in strategic capacity expansion. At the same time, we're going to continue to return excess capital to shareholders, and that's through a growing dividend in share repurchases. The next thing I want to say as context is we like our organic business, and we like our plan. We don't need to do any transformative deals or any transformative transactions to achieve those growth ambitions. Now, we don't have any arbitrary size filter in our deal funnel, but I want to be very, very, very deliberate about this.

Speaker #3: And that's through innovation, internal innovation. Second thing is M&A. And the third is investments in strategic capacity expansion. And at the same time, we're going to continue to return excess capital to shareholders.

Speaker #3: And that's through a growing dividend in share repurchases. The next thing I want to say as context is we like our organic business, and we like our plan.

Speaker #3: We don't need to do any transformative deals or any transformative transactions to achieve those growth ambitions. Now, we don't have any arbitrary size filter on our deal funnel.

Speaker #3: But I want to be very, very, very deliberate about this. The bar is very high for a transformative deal. And there aren't that many of those out there.

Adam S. Elinoff: The bar is very high for a transformative deal. There aren't that many of those out there. We're really focused on making sure that any deal that we do is aligned to our enterprise pillars, that we're focused on opportunities where we have a right to win, we're able to integrate whatever asset we're buying, and that we pay the right price for it so that we're creating, generating cash on cash returns above our hurdle rate. We think the market out there's some nice opportunities and we're continuing to evaluate those, but we're looking at them against the filter that I just said. Once again, we like our organic business, so we don't need to do any kind of transformative transaction to achieve our ambitions.

Adam Elinoff: The bar is very high for a transformative deal. There aren't that many of those out there. We're really focused on making sure that any deal that we do is aligned to our enterprise pillars, that we're focused on opportunities where we have a right to win, we're able to integrate whatever asset we're buying, and that we pay the right price for it so that we're creating, generating cash on cash returns above our hurdle rate. We think the market out there's some nice opportunities and we're continuing to evaluate those, but we're looking at them against the filter that I just said. Once again, we like our organic business, so we don't need to do any kind of transformative transaction to achieve our ambitions.

Speaker #3: So we're really focused on making sure that any deal that we do is aligned to our enterprise pillars, that we're focused on opportunities where we have a right to win, where we're able to integrate whatever asset we're buying.

Speaker #3: And that we pay the right price for it so that we're creating generating cash on cash returns above our hurdle rate. So we think the market out there, there's some nice opportunities.

Speaker #3: And we're continuing to evaluate those. But we're looking at them against the filter that I just said. And once again, we like our organic business, and we don't need to do any kind of transformative transaction to achieve our ambitions.

Speaker #6: Thank you again.

Doug Schenkel: Thank you again.

Speaker #4: Your next question comes from the line of Patrick Donnelly with Citi. Your line is open. Please go ahead.

Operator: Your next question comes from the line of Patrick Donnelly with Citi. Your line is open. Please go ahead.

Speaker #5: Hey, guys. Thank you for taking the questions. Porig, I wanted to focus on the LDG segment. I understand the weather impact. It did come in light even backing that out.

Patrick Donnelly: Hey, guys. Thank you for taking the questions. Padraig, I wanted to focus on the LSAG segment. You know, I understand the weather impact. It did come in light, even backing that out. It sounds like it's around the cell analysis and genomics piece, maybe some softer purchasing in Europe. It does sound like LC-MS and the CDMO overall held in well. Can you just expand on what you saw there? Also staying in the LSAG segment, just the profitability probably for Adam, what drove the softness there? Is that just mixed with the cell analysis? Want to get a little more color there.

Speaker #5: It sounds like it's around the cell analysis and genomics piece, maybe some softer purchasing in Europe. It does sound like LCMS and the CDMO overall held in well.

Speaker #5: Can you just expand on what you saw there? And then also staying in the LDG segment, just the profitability probably for Adam, what drove the softness there?

Speaker #5: Is that just mixed with the cell analysis? Want to get a little more color there.

Speaker #1: Yeah. Thanks, Patrick. And I think LDG grew 3% in the quarter. It was a bit below our mid to high-digit expectations. And I think in addition to the weather impact, we saw softness, I think, in academia and government that challenged our cell analysis and genomics business.

Dan Brennan: Yeah, thanks, Patrick Donnelly. I think, you know, LDG grew 3% of the quarter, was a bit below our mid to high digit expectations. I think in addition to the weather impact, we saw softness, I think, in academia and government that challenged our cell analysis and genomics business. Our larger end markets, you know, pharma, biotech, and diagnostics grew high single digits. Simon May, do you want to give some more color on the LDG, what you saw in the quarter, particularly on those businesses?

Speaker #1: But our larger-end markets, pharma, biotech, and diagnostics, grew high single digits. But Simon, do you want to give some more color on the LDG, what you saw in the quarter, particularly on those businesses?

Speaker #6: Yeah, yeah. Thanks, Padraig. As Padraig already mentioned, we were challenged by the weather situation and also the ongoing softness that we're seeing in academic research markets, most notably in the US.

Simon May: Yeah, I can. Yeah, thanks, Padraig. As Padraig already mentioned, that we were challenged by the weather situation and also the ongoing softness that we're seeing in academic research markets, most notably in the US. In our cell analysis portfolio as well, we've got a relatively lower portion of recurring revenue mix than we have elsewhere in our portfolio, and we've got a bit more exposure on the smaller capital equipment side there. As we think about the macro situation going forward, the exposure to academic and government is always gonna be there, and we still see a lot of cautious spending. We also think we've got reasons to believe we're at or near the bottom. US academic science budgets appear to be plateauing. Europe is more stable. I think we're anticipating some modest incremental improvement in academia and government in Europe.

Speaker #6: And in our cell analysis portfolio as well, we've got a relatively lower portion of recurring revenue mix than we have elsewhere. In our portfolio, and we've got a bit more exposure on the smaller capital equipment side there.

Speaker #6: So as we think about the macro situation going forward, the exposure to academic and government is always going to be there. And we still see a lot of cautious spending.

Speaker #6: But we also think we've got reasons to believe we're at or near the bottom. US academic science budgets appear to be plateauing. Europe is more stable.

Speaker #6: I think we're anticipating some modest incremental improvement in academia and government in Europe. And also, the feedback I've been getting from the teams as I've been seeing customers and attending the sales meetings over the past few weeks is that there's a sense of optimism in the field.

Simon May: Also the feedback I've been getting from the teams, as I've been seeing customers and attending the sales meetings over the past few weeks, is that there's a sense of optimism in the field. We've got a strong portfolio. We've got very strong conviction in the portfolio on a medium, long-term basis, and I think we'll see that improvement begin to unfold as time passes.

Speaker #6: We've got a strong portfolio. We've got very strong conviction in the portfolio on a medium-long-term basis. And I think we'll see that improvement begin to unfold as time passes.

Speaker #3: The only thing I'd add on margin is beyond the weather, the academic and government softness, is there's the CDMO batch cadence that also impacts the margin in the first quarter.

Adam S. Elinoff: The only thing I'd add on margin is, beyond the weather, the academic and government softness, is there's the CDMO batch cadence that also impacts the margin in Q1. With CDMO, obviously, a batch is not a batch is not a batch. They're all a little bit different and have different revenue profiles and different timing. Just given the cadence we had in Q1, that also impacted the margin. Okay, that's helpful. Adam, I wanted to pick up right there in terms of the CDMO. Can you guys just talk about, you know, NASD, BIOVECTRA, you know, what you saw in the quarter? It sounded like overall it was low double-digit growth for specialty CDMO. Can you just give a bit more color?

Adam Elinoff: The only thing I'd add on margin is, beyond the weather, the academic and government softness, is there's the CDMO batch cadence that also impacts the margin in Q1. With CDMO, obviously, a batch is not a batch is not a batch. They're all a little bit different and have different revenue profiles and different timing. Just given the cadence we had in Q1, that also impacted the margin. Okay, that's helpful. Adam, I wanted to pick up right there in terms of the CDMO. Can you guys just talk about, you know, NASD, BIOVECTRA, you know, what you saw in the quarter? It sounded like overall it was low double-digit growth for specialty CDMO. Can you just give a bit more color?

Speaker #3: With CDMO, obviously, a batch is not a batch is not a batch. They're all a little bit different and have different revenue profiles and different timing.

Speaker #3: So just given the cadence we had in Q1, that also impacted the margin.

Speaker #5: Okay. That's helpful. And then, Adam, I wanted to pick up right there in terms of the CDMO, can you guys just talk about NASD, BioVectra, what you saw in the quarter?

Speaker #5: It sounded like overall, it was low double-digit growth for the specialty CDMO. Can you just give a bit more color? And again, it sounds like the mid-teens still very much on the table.

Adam S. Elinoff: Again, it sounds like the mid-teens is still very much on the table, so just the visibility and pacing of those businesses as we work our way forward. Thank you, guys. Yeah. I'll start off, and then I'll pass it over to Simon if he has anything to add. Yeah, absolutely. We saw low double-digit growth in Q1 as expected, and once again, it really is about the batch cadence, and it's the normal kind of quarter-over-quarter revenue variance that you'd expect. We continue to expect mid-teens growth for the full year, and that's based on our production schedules and the demand dynamics we're currently seeing in the market.

Adam Elinoff: Again, it sounds like the mid-teens is still very much on the table, so just the visibility and pacing of those businesses as we work our way forward. Thank you, guys. Yeah. I'll start off, and then I'll pass it over to Simon if he has anything to add. Yeah, absolutely. We saw low double-digit growth in Q1 as expected, and once again, it really is about the batch cadence, and it's the normal kind of quarter-over-quarter revenue variance that you'd expect. We continue to expect mid-teens growth for the full year, and that's based on our production schedules and the demand dynamics we're currently seeing in the market.

Speaker #5: So just the visibility and pacing of those businesses as we work our way forward. Thank you, guys.

Speaker #3: Yeah. So I'll start off, and then I'll pass it over to Simon if he has anything to add. But yeah, absolutely. So we saw low double-digit growth in the first quarter, as expected.

Speaker #3: And once again, it really is about the batch cadence. And it's the normal kind of quarter-over-quarter revenue variance that you'd expect. We continue to expect mid-teens growth for the full year.

Speaker #3: And that's based on our production schedules and the demand dynamics we're currently seeing in the market. And I guess the only other thing I would add that may be helpful for you is our mix of business and NASD continues to skew toward larger commercial batches with about 60% coming from commercial programs.

Adam S. Elinoff: I guess the only other thing I would add that may be helpful for you is, our mix of business in NASD continues to skew toward larger commercial batches, with about 60% coming from commercial programs. On the other hand, commercial programs represent about only one-third of the BIOVECTRA revenue. They have a little bit different profile. You know, we expect, based on what we have now, that it'll continue to ramp through the year.

Adam Elinoff: I guess the only other thing I would add that may be helpful for you is, our mix of business in NASD continues to skew toward larger commercial batches, with about 60% coming from commercial programs. On the other hand, commercial programs represent about only one-third of the BIOVECTRA revenue. They have a little bit different profile. You know, we expect, based on what we have now, that it'll continue to ramp through the year.

Speaker #3: And then on the other hand, commercial programs represent about only one-third of the BioVectra revenue. So they have a little bit different profile. But we expect based on what we have now, that it'll continue to ramp through the year.

Speaker #7: I think Adam could with most of it there, just to add a couple of points. We did see strong year-over-year order intake in the first quarter.

Simon May: I think Adam covered most of it there. Just to add a couple of points, we did see strong year-over-year order intake in Q1. As Adam said, NASD continues to skew favorably towards commercial programs, and as we look to the rest of the year, we've got good visibility to the pipeline, and we see revenue ramp in the second half of the year.

Speaker #7: As Adam said, NASD continues to skew favorably towards commercial programs and as we look to the rest of the year, we've got good visibility to the pipeline.

Speaker #7: And we see revenue ramp in the second half of the year.

Speaker #5: Great. Thank you, guys.

Adam S. Elinoff: Great. Thank you, guys.

Adam Elinoff: Great. Thank you, guys.

Speaker #4: Your next question comes from the line of Dan Brennan with TD Cowen. Your line is open. Please go ahead.

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

Speaker #5: Okay, thank you. Maybe just to start off, I understand if you back out the $10 million, the growth would have been right in line with the 5%.

Dan Brennan: Great. Thank you. Maybe just to start off, you know, I understand if you, back out the $10 million, you know, the growth would have been right in line with the 5%, and you kind of walk through all the puts and takes. Just kind of stepping back, you guys have been on a pretty consistent pace of, like, coming in ahead of guidance. 5% growth is still solid in this environment. Just wondering, how we might think about the rest of your guidance in terms of, you know, what would drive you to the higher end, to lower end, you know, given that trend of, you know, consistently beating numbers and now it looks like more in line this quarter?

Speaker #5: And you kind of walked through all the puts and takes. But just kind of stepping back, you guys have been on a pretty consistent pace of coming in ahead of guidance. 5% growth is still solid in this environment.

Speaker #5: But just wondering, how we might think about the rest of your guidance in terms of what would drive you to the higher end to lower end, given that trend of consistently beating numbers and now it looks like more in line this quarter?

Speaker #1: Yeah. I think I just talking at a high level, we're really set up for success, Dan. You look at the innovative products really going extremely well.

Padraig McDonnell: Yeah, I think, I just talking at a high level, we're really set up for success, Dan. You know, you look at the innovative products really going extremely well, 1290 Infinity III and the replacement cycles, InfinityLab Pro iQ. You know, the strong commercial team, you know, good connection with customers and our enterprise service capabilities that I talked about in my prepared remarks. I think it was a solid Q1, an excellent growth despite the weather, you know, and the top line, we're confirming it. I think it's prudent but appropriate, given the macro uncertainty that's around as always. I think the operating profit growth of 10% and 75 basis points margin expansion at the midpoint is really well. I have to say, you know, we've had a number of sales kickoffs around the globe in the last months.

Speaker #1: Infinity Tree and the replacement cycles Pro-IQ. The strong commercial team got connection with customers and our enterprise service capabilities that I talked about and my prepared remarks.

Speaker #1: And I think it was a solid Q1, an excellent growth despite the weather. And a top line—we're confirming it. I think it's prudent, but appropriate given the macro uncertainty that's around, as always.

Speaker #1: And I think the operating profit growth of 10% and 75 bips margin expansion at the midpoint is really well. I have to say, we've had a number of sales kickoffs around the globe in the last month.

Speaker #1: Funnels are very robust. The thing we've seen almost our best market share reports that that we've seen to date so everything is moving in the right direction.

Padraig McDonnell: Funnels are very robust. The thing we've seen, almost our best market share reports that we've seen, to date. Everything is moving in the right direction, so that gives us positivity as we go through the year.

Speaker #1: So that gives us positivity as we go through the year.

Speaker #7: Got it. Thank you. Oh, go ahead—sorry.

Dan Brennan: Got it. Thank you.

Adam S. Elinoff: And then the-

Adam Elinoff: And then the-

Dan Brennan: Oh, go ahead. Sorry.

Speaker #3: Sure. No, I can just give you a little bit more detail on what would be pushes to the upside versus pushes to the downside of the guide, if that's helpful.

Adam S. Elinoff: Sure. No, I can just give you a little bit more detail on what would be pushed us to the upside versus, pushed us to the downside of the guide, if that's helpful. It's really around three things. Is one is, a pickup in the small and midcap biotech sector. All of the green shoots are still there, There's that time lag between, you know, how does all the incremental investment, IPOs and M&A, convert into actual spending and investment? The second is academia and growth. If we start to see more stability there, that can push us to the upside.

Adam Elinoff: Sure. No, I can just give you a little bit more detail on what would be pushed us to the upside versus, pushed us to the downside of the guide, if that's helpful. It's really around three things. Is one is, a pickup in the small and midcap biotech sector. All of the green shoots are still there, There's that time lag between, you know, how does all the incremental investment, IPOs and M&A, convert into actual spending and investment? The second is academia and growth. If we start to see more stability there, that can push us to the upside.

Speaker #3: And it's really around three things. One is a pickup in the small and mid-cap biotech sector. All of the green shoots are still there, but then there's that time lag between how does all the incremental investment, IPOs, and M&A convert into actual spending and investment.

Speaker #3: The second is academia and growth. If we start to see more stability there, that can push us to the upside. And then the third, while China remains stable and we believe it'll be stable about that 300 million per quarter run rate, if there was a stimulus, a bigger stimulus toward the end of the year, that would be an upside.

Adam S. Elinoff: The third, while China, you know, remains stable, and we believe it'll be stable, about that $300 million per quarter runway, you know, if there was a stimulus, a bigger stimulus toward the end of the year, that would be an upside. What I will say is there was a small stimulus in the Q1, which we did very well in that offering. That would give us confidence if there was a second SAMR stimulus that happened later in the year, we would perform well in that. That's what pushes to the upside. The downside is just then the opposite. If small and mid-cap remain pressured, academia and government continues to get worse, and then China, we see decline in the low single-digit range versus our flat assumption.

Adam Elinoff: The third, while China, you know, remains stable, and we believe it'll be stable, about that $300 million per quarter runway, you know, if there was a stimulus, a bigger stimulus toward the end of the year, that would be an upside. What I will say is there was a small stimulus in the Q1, which we did very well in that offering. That would give us confidence if there was a second SAMR stimulus that happened later in the year, we would perform well in that. That's what pushes to the upside. The downside is just then the opposite. If small and mid-cap remain pressured, academia and government continues to get worse, and then China, we see decline in the low single-digit range versus our flat assumption.

Speaker #3: What I will say is there was a small stimulus in the first quarter, which we did very well in that offering. And so that would give us confidence if there was a second SAMR stimulus that happened later in the year, we would perform well in that.

Speaker #3: So that's what will push us to the upside. The downside is just then the opposite. If small and mid-cap remain pressured, academia and government continues to get worse.

Speaker #3: And then China we see decline in the low single-digit range versus our flat assumption.

Speaker #5: All right. And maybe second one, just on CAM. Obviously, super important business, really strong quarter. You gave some color, but just a little bit more there.

Derik De Bruin: All right. Maybe the second one, just on CAM, obviously super important business, really strong quarter. You gave some color, but just a little bit more there, in terms of, you know, why it came in better. I know you addressed it in the prepared remarks. Maybe a little bit more color on how you're thinking about that going forward for the rest of the year. Thank you.

Speaker #5: In terms of why it came in better, I know you addressed it in the prepared remarks maybe a little bit more color and how you're thinking about that going forward for the rest of the year.

Speaker #5: Thank you.

Speaker #1: Yeah. Sometimes an underappreciated part of our business, it's our core business or heritage is in the applied markets and CAM. 9% growth and, of course, the advanced materials subsegment, which grew at 20%.

Padraig McDonnell: Yeah, it's sometimes an underappreciated part of our business. You know, it's our core business. Our heritage is in the applied markets in CAM, you know, 9% growth. Of course, the advanced materials subsegment, which grew at 20%. We saw a really robust demand because of our leading position around semiconductor. You see there's a lot of reshoring going on on that. I think our spectroscopy and our GCMS tools are critical in that manufacturing supply chain and of course, for chemical plants that are around helping on that. The ongoing reshoring really helps in that space. I think, you know, also the increased clarity on tariff policies, you know, if there is that, and ease US China tensions and, you know, strong demand for memory chips.

Speaker #1: We saw really robust demand because of our leading position around semiconductor. You see, there's a lot of reshoring going on with that. I think our spectroscopy and our GCMS tools are critical in that manufacturing supply chain.

Speaker #1: And, of course, for chemical plants that are around helping on that. So the ongoing reshoring really helps in that space. And I think also the increased clarity on tariff policies.

Speaker #1: If there is that, and eased US-China tensions, and strong demand for memory chips. And we're number one by a long way in the CAM market, by far.

Padraig McDonnell: We're number one by a long way in the CAM market by far. You know, our leadership positions and our market shares are unmatched in that. You put it all together, it's a very important secular driver for us, and we could see that continuing throughout the year.

Speaker #1: Our leadership positions and our market shares are unmatched in that. So you put it all together, it's a very important secular driver for us.

Speaker #1: And we could see that continuing throughout the year.

Speaker #4: Your next question comes from the line of Dan Leonard with UBS. Your line is open. Please go ahead. Dan, a reminder to kindly unmute yourself.

Operator: Your next question comes from the line of Dan Leonard with UBS. Your line is open. Please go ahead. Dan, a reminder to kindly unmute yourself.

Speaker #8: Sorry about that. Thank you for taking the question. And I'll pick up right where you left off, Porig. Porig, you talked about atomic spectroscopy upside in the quarter due to the memory shortage.

Dan Leonard: Sorry about that. Thank you for taking the question. I'll pick up right where you left off, Padraig. Padraig, you talked about atomic spectroscopy upside in the quarter due to the memory shortage. Not something you talk about a lot. How are you framing that opportunity?

Speaker #8: Not something you talk about a lot. So how are you framing that opportunity?

Speaker #1: Yeah. I mean, it's not just the memory shortage, but it's the reshoring of fabrications fabs that you see that globally. You even see in India where fabs are being set up also in Asia.

Padraig McDonnell: Yeah, I mean, it's not just the memory shortage, but it's the reshoring of fabrications, fabs that you see that globally. You know, you even see in India, where fabs are being set up, also in Asia and the Americas. I think that has been really a mix of all that together, and a lot of demand on that side. On the chemical side, you know, you've downstream processes that are needed for AI that supports that in terms of it, and that really bolsters a lot of demand. Just to give a bit of color, our chemical business is about two-thirds advanced materials, about one third of the CAM business. We expect that to continue to see that growing.

Speaker #1: And the Americas. So I think that has been it's been really a mix of all that together. And a lot of demand on that side.

Speaker #1: Also on the chemical side, you have downstream processes that are needed for AI that supports that in terms of it. And that really bolsters a lot of demand.

Speaker #1: And just to give a bit of color, our chemical business is about two-thirds advanced materials, about one-third of the CAM business. So we expect that to continue to see that growing.

Speaker #1: And, of course, the energy business, where we're working on the battery side, is naturally hedged against oil volatility as well. So we continue to see good strength in that.

Padraig McDonnell: Of course, the energy business, where we're working on the battery side, is naturally hedged against oil volatility as well. We continue to see good strength in that. It's a mixture of all of the above.

Speaker #1: So it's a mixture of all of the above.

Speaker #8: Thank you. And just a follow-up on what you're seeing in pharma. You mentioned a mid-single-digit growth in small molecule. Is that all GLP-1s? And can you talk about the situation in pharma outside of GLP-1s?

Dan Leonard: Thank you. Just to follow up on what you're seeing in pharma, you mentioned a mid-single-digit growth in small molecule. Is that all GLP-1s? Can you talk about the situation in pharma outside of GLP-1s?

Speaker #1: Yeah. So biotech kind of grew low double-digit for us. That's really around our specialized CDMO core growth of low double digits. UTECH, what we see is the US biotech recovery is starting in well-funded large caps.

Padraig McDonnell: Yeah. you know, biotech kind of grew low double-digit for us. That's really around, you know, our specialized CDMO core growth of low double-digit. UTech, what we see is the US biotech recovery is starting in well-funded large caps. We see that continuing. Small and mid caps, improved funding backdrop is really helping. Breaking it down, you know, if you look at our small molecule business, which is very solid at mid-single-digit growth, you kind of see Asia leading the way in small molecules with low double-digit growth. We see that continuing, and of course, we're very well hedged on the GLP-1 side, both from our CDMO side, but also our analytical side.

Speaker #1: We see that continuing. Small and mid-caps improve funding backdrop is really, really helping. And breaking it down, if you look at our if you look at our small molecule business, which is very solid, at mid-single-digit growth, you kind of see Asia leading the way in small molecules, but low double-digit growth.

Speaker #1: We see that continuing. And, of course, we're very well hedged on the GLP-1 side, both from our CDMO side but also our analytical side.

Speaker #1: We were testing both on the orals and on the injectable side. And as we go forward on the GLP grew at 50% in the quarter.

Padraig McDonnell: We were testing both on the orals and on the injectable side as we go forward on it. GLP grew at 50% in the quarter, and that was 7% for the analytical labs, and on the CDMO side, 120% growth. I think, you know, you underpin all of that in the market conditions, then you look at our replacement cycle moving forward, 40% growth in our single quadrupole, which is right at the sweet spot of QA/QC. It's a really, really strong momentum in that market as we see that continuing for the rest of the year.

Speaker #1: And that was 7% for the analytical labs and on the CDMO side, 120% growth. So I think you underpin all of that in the market conditions.

Speaker #1: And then you look at our replacement cycle moving forward, 40% growth in our single quad, which is right at the sweet spot of QA, QC.

Speaker #1: So it's a really, really strong momentum in that market as we see that continuing for the rest of the year.

Speaker #4: Your next question comes from the line of Jack Meehan with Nephron Research. Your line is open. Please go ahead.

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

Speaker #5: Thank you. Good afternoon.

Adam S. Elinoff: Thank you. Good afternoon.

Jack Meehan: Thank you. Good afternoon.

Speaker #1: Sorry, Jack. I think you dropped off there. I'm on mute.

Padraig McDonnell: Sorry, Jack, I think you dropped off there on mute.

Speaker #5: Operator, can we go to the next question? And we'll circle back to Jack once he's back on.

Adam S. Elinoff: Operator, can we go to the next question, and we'll circle back to Jack once he's back on?

Adam Elinoff: Operator, can we go to the next question, and we'll circle back to Jack once he's back on?

Speaker #4: Absolutely. Your next question comes from the line of Michael Riskin with Bank of America. Your line is open. Please go ahead.

Operator: Absolutely. Your next question comes from the line of Derik De Bruin with Bank of America. Your line is open. Please go ahead.

Speaker #9: Hey, guys. Thanks for the question. Hope you can hear me. I want to follow up on your I want to follow up on what I think Patrick was asking about earlier about some of the moving pieces in the quarter.

Derik De Bruin: Hey, guys, thanks for the question. Hope you can hear me. I want to follow up.

Padraig McDonnell: Yep.

Derik De Bruin: I want to follow up on what I think Patrick was asking about earlier about some of the moving pieces in the quarter, you know, especially with the $10 million weather ship. Just want to make sure I'm understanding the dynamics correctly. My read of it is it sounds like you had a slightly slower start to the year than you anticipated in select markets, like cell analysis, like ANG specifically, maybe a little bit on food. I just want to make sure I'm understanding that correctly. You know, again, don't want to blow it out of proportion, but especially with the $10 million ship, just want to make sure we get that. A follow-up to that is, you know, obviously you're maintaining your full year core guide.

Speaker #9: Especially with the 10 million weather shift. Just want to make sure I'm understanding the dynamics correctly. My read of it is it sounds like you've had a slightly slower start to the year.

Speaker #9: Then you anticipated in select markets like cell analysis, like ANG specifically, maybe a little bit on food. I just want to make sure I'm understanding that correctly.

Speaker #9: Again, don't want to blow it out of proportion, but especially with the 10 million shift, I just want to make sure we get that.

Speaker #9: And then a follow-up to that is obviously, you're maintaining your full-year core guide. Is there something that's offsetting that where you talked about GLPs, you talked about CAM?

Derik De Bruin: Is there something that's offsetting that, where, you know, you talked about GLPs, you talked about CAM? Is the strength there offsetting it, or is this just sort of like you had buffer in the model built in and and you're absorbing some of these hits, you expect to recoup it later in the year? Maybe an easier way to ask all of this is, you know, you've give us an end market-

Speaker #9: Is the strength there offsetting it? Is this just sort of like you had buffer in the model built in and you're absorbing some of these hits?

Speaker #9: Do you expect to recoup it later in the year? Maybe an easier way to ask all of this is you've given us sort of you typically give us an end market breakout for the year in terms of core growth.

Puneet Souda: breakouts for the year in terms of core growth. If you could run through that compared to where you were a quarter ago, that might be helpful. Thanks.

Derik De Bruin: breakouts for the year in terms of core growth. If you could run through that compared to where you were a quarter ago, that might be helpful. Thanks.

Speaker #9: If you could run through that compared to where you were a quarter ago, that might be helpful. Thanks.

Speaker #1: Adam, you want to take this one? And I'll take the second part of that question.

Padraig McDonnell: Adam, you want to take this one, and I'll take the second part of that question?

Speaker #3: Yeah. So I think just in the dynamics of the quarter, there was minor differences in our small markets, but our key markets actually performed quite well.

Adam S. Elinoff: I think just in the dynamics of the quarter, there was minor differences in our small markets. Our key markets actually performed quite well. If you think about pharma, CAM, and then our diagnostics business, they all performed very well. We had small pockets of slight differences from where we guided. Overall, we were actually doing quite well. The unfortunate was the storm hit in the last 3 days of the quarter, which are our biggest days of the quarter. We weren't able to recognize the revenue, which we've since recognized, you know, the following, actually, Monday. I'll pass it over to Padraig.

Adam Elinoff: I think just in the dynamics of the quarter, there was minor differences in our small markets. Our key markets actually performed quite well. If you think about pharma, CAM, and then our diagnostics business, they all performed very well. We had small pockets of slight differences from where we guided. Overall, we were actually doing quite well. The unfortunate was the storm hit in the last 3 days of the quarter, which are our biggest days of the quarter. We weren't able to recognize the revenue, which we've since recognized, you know, the following, actually, Monday. I'll pass it over to Padraig.

Speaker #3: So if you think about pharma, CAM, and then our diagnostics business, they all performed very well. And then we had small pockets of slight differences from where we guided.

Speaker #3: And overall, we were actually doing quite well. And then the unfortunate was the storm hit in the last three days of the quarter, which are our biggest days of the quarter.

Speaker #3: And we weren't able to recognize the revenue, which we've since recognized the following actually Monday. So and then I'll pass it over to Porig.

Speaker #5: Yeah. And I don't want to kind of if you're looking at the academia and government side, it's the smallest part of our business. NIH is 1% of our funding.

Padraig McDonnell: Yeah, you know, it's, you know, I don't want to if you're looking at the academia and government side, you know, it's the smallest part of our business. You know, NIH is 1% of our funding, so it's slightly less than what we expected, but it is really the smallest part of our business. I think I described the real momentum we have in the key markets. You know, continued improvement in pharma. We're seeing spend in biotechs. GLP-1 business continues to be extremely strong. CDMO continues to move forward in CAM strength. You put that all together, you know, with the funnels that we're seeing and our outsized growth on our Infinity III.

Speaker #5: So it's slightly less than what we expected. But it is really the smallest part of our business. And I think I described the real momentum we have in the key markets continuing improvement in pharma.

Speaker #5: We're seeing spend in biotechs. GLP-1 business continues to be extremely strong. CDMO continues to move forward. And CAM strength. And you put that all together, with the funnels that we're seeing and our outsize growth on our infinity tree.

Speaker #5: If you look at that compared to our peers, we're almost 2X in terms of the quarter. And that's driving the replacement cycle. So a lot of those things moving together, we're very positive about the rest of the year.

Padraig McDonnell: If you look at that compared to our peers, we're almost 2x in terms of the quarter, and that's driving the replacement cycle. All of those things moving together, we're very positive about the rest of the year.

Speaker #3: And then I just remind you that for the full year, we're maintaining our end market guides. We expect them to land in roughly the same place.

Adam S. Elinoff: I'd just remind you that for the full year, we're maintaining our end market guides. We expect them to land in roughly the same place.

Adam Elinoff: I'd just remind you that for the full year, we're maintaining our end market guides. We expect them to land in roughly the same place.

Speaker #1: Okay. Okay. All right. Appreciate it. That was a long one. So I'll just leave it there. Thanks.

Puneet Souda: Okay. Okay. All right, appreciate it. I'll... That was a long one, so I'll just leave it there. Thanks.

Derik De Bruin: Okay. Okay. All right, appreciate it. I'll... That was a long one, so I'll just leave it there. Thanks.

Speaker #4: Your next question comes from the line of Jack Meehan with Nephron Research. Your line is open. Please go ahead.

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

Speaker #5: Thank you, Hopefully. You can hear me now?

Jack Meehan: Thank you. Hopefully, you can hear me now.

Speaker #1: Yes.

Padraig McDonnell: Yes.

Jack Meehan: Excellent. Sorry about that. I wanted to follow up on the M&A question, because this is the number one debate, you know, we've been fielding. You talked a lot about how Ignite has improved your capabilities around M&A execution. I was just wondering if you could elaborate on that as number one. Number two is just from a product area. I was curious your take on diagnostic assets. You have a unique position with Dako that seems to be doing pretty well. Just where does that, like the IVD market, stack up on your pecking order, you know, as kind of an industry of interest?

Speaker #5: Excellent. Sorry about that. I wanted to follow up on the M&A question because this is the number one debate we've been fielding. You talked a lot about how Ignite has improved your capabilities around M&A execution.

Speaker #5: I was just wondering if you could elaborate on that as number one. And then number two is just from a product area I was curious your take on diagnostic assets.

Speaker #5: You have a unique position with DACO that seems to be doing pretty well. Just where does that the IVD market stack up on your pecking order?

Speaker #5: It's kind of an industry of interest.

Speaker #1: Yeah. Adam, maybe you can talk about Ignite and what we're seeing on the integration capability side. And I'll take the second one.

Padraig McDonnell: Yeah, Adam, maybe you can talk about Ignite and what we're seeing on the integration, on the integration capability side, and I'll take the second one.

Speaker #3: Sure. So there's a couple of pieces to why Ignite gives us the confidence that we'll be able to integrate an asset effectively. If you look at what the Ignite program is, it's really about a management system and how do you bring a bunch of different functions together to execute on a project in an efficient way.

Adam S. Elinoff: Sure. There's a couple pieces to why Ignite gives us the confidence that we'll be able to integrate an asset effectively. If you look at what the Ignite program is, it's really about a management system, and how do you bring a bunch of different functions together to execute on a project in an efficient way? That's exactly what an integration is. You think about managing tariffs, that's a cross-functional activity where you need people moving in coordination and to achieve an outcome. That's what an integration is. That'd be the first point I'd make is just running through the Ignite program and using the Ignite system that we've now implemented. It gives us confidence we can execute an integration.

Adam Elinoff: Sure. There's a couple pieces to why Ignite gives us the confidence that we'll be able to integrate an asset effectively. If you look at what the Ignite program is, it's really about a management system, and how do you bring a bunch of different functions together to execute on a project in an efficient way? That's exactly what an integration is. You think about managing tariffs, that's a cross-functional activity where you need people moving in coordination and to achieve an outcome. That's what an integration is. That'd be the first point I'd make is just running through the Ignite program and using the Ignite system that we've now implemented. It gives us confidence we can execute an integration.

Speaker #3: And that's exactly what an integration is. As you and you think about managing tariffs, that's a cross-functional activity where you need people moving in coordination.

Speaker #3: And to achieve an outcome, that's when an integration is. So, that'd be the first point I'd make—just running through the Ignite program and using the Ignite system that we've now implemented.

Speaker #3: It gives us confidence we can execute an integration. The other piece I'd point out is BioVectra. We've leveraged that capability to integrate BioVectra into our network.

Adam S. Elinoff: The other piece I'd point out is BioVectra is, you know, we've leveraged that capability to integrate BioVectra into our network, and so that's another proof point to our readiness to integrate the right asset.

Adam Elinoff: The other piece I'd point out is BioVectra is, you know, we've leveraged that capability to integrate BioVectra into our network, and so that's another proof point to our readiness to integrate the right asset.

Speaker #3: And so that's another proof point to our readiness to integrate the right asset.

Speaker #1: Yeah. I think Adam talked about our capital allocation philosophy. I won't go back over that one. But we're focused on increasing our service and recurring revenue mix.

Padraig McDonnell: Yeah, I think Adam talked about our capital allocation philosophy. I won't go back over that one. You know, we're focused on increasing our service and recurring revenue mix. I think we've been very clear on that. We see software and automation, also content on systems, et cetera. We have many high-growth adjacent markets where we would have examples in all of that. Specifically about diagnostics as one of our businesses, that's not excluded, of course, but it's a very durable market. We have a 7% growth in Q1, pathology is a mid-single-digit grower, as we've seen over time, with a lot of long-term growth drivers. It's an area where we will continue to look in all those spaces. Again, where do we have a right to win?

Speaker #1: I think we've been very clear on that when you see software and automation. Also, content on systems, etc. And we have many high-growth adjacent markets where we would have examples in all of that.

Speaker #1: Specifically about diagnostics, it's one of our businesses. That's not excluded, of course. But it's a very durable market. We have a 7% growth in Q1 in pathologies amid single-digit grower as we've seen over time with a lot of long-term growth drivers.

Speaker #1: So, it’s an area where we will continue to look, and all those spaces. But again, where do we have a right to win? Does it link with the strategy within that segment?

Padraig McDonnell: Does it link with the strategy within that segment? Does it increase our recurring revenue? That's very important to us as we go forward. Of course, we have the Ignite operating system to allow us to integrate it very quickly as well.

Speaker #1: Does it increase our recurring revenue? That's very important to us as we go forward. And of course, then we have the Ignite operating system to allow us to integrate it very, very quickly as well.

Speaker #5: Excellent. Thank you, guys.

Jack Meehan: Thank you, guys.

Speaker #4: Your next question comes from the line of Puneet Suda with Levrank Partners. Your line is open. Please go ahead.

Operator: Your next question comes from the line of Puneet Souda with B. Riley Partners. Your line is open. Please go ahead.

Speaker #6: Yeah. Hi. Parag and Adam and team. Thanks for taking my question. First one, again, GLP-1 growth there is strong. But my question is more on the utilization on the oligo side on the NASD side.

Puneet Souda: Yeah, hi, Padraig and Adam and team. Thanks for taking my question. First one, again, you know, GLP-1 growth there is strong, but my question is more on the utilization on the, you know, the oligo side, on the NASD side. Any update on, you know, to the full utilization of Train C, which I think is anticipated in 2027? The question is really around the margin impact in light of this utilization, where it stands today, how it ramps up, and how should we think about the commercial batches versus the early stage, you know, pipeline work that you're seeing?

Speaker #6: Any update on to the full utilization of train C, which I think is anticipated in 2027? The question is really around the margin impact.

Speaker #6: In light of this utilization, where it stands today, how it ramps up, and how should we think about the commercial batches versus the early-stage pipeline work that you're seeing?

Speaker #1: Yeah. I'd start off and I'd hand it over to Adam for some more color. We have a very strong order backlog. And we're confident in the FY26 outlook.

Padraig McDonnell: Yeah. I'd start off, and I'll hand it over to Adam for some more color. You know, we have a very strong order backlog, and we're confident in the FY 2026 outlook, continuing to ramp. You know, of course, you have month-to-month variances, but we have Train C and D coming online. I have to say, we're delighted to have that capacity coming online where it is, because we're booked out for 2026, and now we're booking into 2027 with larger commercial batches. It's at the right time. Adam, do you want to give more color on that cadence?

Speaker #1: And continuing to ramp. Of course, you have month-to-month variances. But we have trained C&D coming online. I have to say we're delighted to have that capacity coming online where it is.

Speaker #1: Because we're booked out for '26. And now we're booking into '27 with larger commercial batches. So it's at the right time. But Adam, do you want to give more color on that cadence?

Speaker #3: Yeah. So thanks for the question. And I think at steady state, the specialty CDMO business will return above our operating margin above the corporate operating margin.

Adam S. Elinoff: Yeah. Thanks for the question. I think, you know, at steady state, the specialty CDMO business will, you know, return above our operating margin, above the corporate operating margin. It's a good business to be in. Specific to 2027, Train C and Train D will be ramping through the year, there will be a negative margin impact. However, we'll offset that through other activities within the business.

Adam Elinoff: Yeah. Thanks for the question. I think, you know, at steady state, the specialty CDMO business will, you know, return above our operating margin, above the corporate operating margin. It's a good business to be in. Specific to 2027, Train C and Train D will be ramping through the year, there will be a negative margin impact. However, we'll offset that through other activities within the business.

Speaker #3: So it's a good business to be in. Specific to 2027, Train C and Train D will be ramping through the year, and so there will be a negative margin impact. However, we'll offset that through other activities within the business.

Speaker #1: Got it. Okay.

Brandon Couillard: Got it. Okay.

Puneet Souda: Got it. Okay.

Speaker #3: Mainly through Ignite.

Adam S. Elinoff: Mainly through Ignite.

Adam Elinoff: Mainly through Ignite.

Speaker #1: I see. Okay, that's helpful. And then just a follow-up—you made a comment about the small biotech capital raises and capitalizations driving growth.

Brandon Couillard: I see. Okay, that's helpful. Just to follow up on, you made a comment about the small biotech capital raises and capitalizations driving growth. As you see that across the business, just wondering, if you can double-click and where are you seeing that? Is that more on the LC-MS instrumentation side, cell analysis, or is it more on the CDMO side of the business where you're seeing the uptick from the emerging and small biotechs?

Puneet Souda: I see. Okay, that's helpful. Just to follow up on, you made a comment about the small biotech capital raises and capitalizations driving growth. As you see that across the business, just wondering, if you can double-click and where are you seeing that? Is that more on the LC-MS instrumentation side, cell analysis, or is it more on the CDMO side of the business where you're seeing the uptick from the emerging and small biotechs?

Speaker #1: Just as you see that across the business, just wondering maybe if you can double-click and where are you seeing that? Is that more on the LCMS instrumentation side, cell analysis?

Speaker #1: Or is it more on the CDMO side of business side of the where you're seeing the uptick from the emerging and small biotechs?

Speaker #3: So let me I think I just need to clarify because it was said in the context of what would be the upsides to the forecast.

Adam S. Elinoff: So let me, I think I just need to clarify, because it was said in the context of what would be the upsides to the forecast. It was really set around, hey, if we see a meaningful uptick in the small and midcap biotech, then we would start to see upside to our forecast. While we have seen the capital market profile change, improving, we have yet to see a meaningful uptick in the small and midcap investments.

Adam Elinoff: So let me, I think I just need to clarify, because it was said in the context of what would be the upsides to the forecast. It was really set around, hey, if we see a meaningful uptick in the small and midcap biotech, then we would start to see upside to our forecast. While we have seen the capital market profile change, improving, we have yet to see a meaningful uptick in the small and midcap investments.

Speaker #3: So it was really set around, "Hey, if we see a meaningful uptick in the small and mid-cap biotech, then we would start to see upside to our forecast." So while we have seen the capital market profile improving, we have yet to see a meaningful uptick in the small and mid-cap investments.

Speaker #1: Yeah. If you look at small and medium-sized biotech, we have a relatively small exposure. But we're actually encouraged by the improving biotech funding and increased M&A.

Padraig McDonnell: Yeah, if you look at small and medium-sized biotech, we have a relatively small exposure, but we're actually encouraged by the improving biotech funding and increased M&A. You see that a lot. You know, if you look at the macros in January, total biopharma financing rose about $11 billion. That's a two-year high. We watch that. You have the patent cliff that's looming, of course, with heightened biopharma or pharma focus and M&A. I think 2025 is one of the strongest years in M&A for pharma, which of course, I think about $240 billion. I think it's too early to call an inflection on it. There's a lag, I think, between improving funding environment and customer spending. We're extremely well placed with our tools.

Speaker #1: You see that a lot if you look at the macros in January, total biopharma financing rose about $11 billion. That's a two-year high. So we watched that.

Speaker #1: You have the patent cliff that's looming, of course, with heightened biopharma focus and M&A. And I think '25 is one of the strongest years in M&A for pharma, which, of course, I think about $240 billion.

Speaker #1: But I think it's too early to cause an inflection on it. And there's a lag, I think, between improving funding environment and customer spending where we're extremely well-placed with our tools.

Speaker #1: If you look at the pro-IQ LCMS on that side, also on our Infinity Tree. And of course, we'll see recovery in our cell analysis business for those tools as we go forward on it.

Padraig McDonnell: You know, if you look at the InfinityLab Pro iQ LC-MS and that side, also on our 1290 Infinity III. Of course, we see a recovery in our cell analysis business for those two as we go forward on it. That's the way I would say it, but it's really a relatively small exposure for us, but we're really encouraged by the improving funding environment.

Speaker #1: So that's the way I would say it. But it's really a relatively small exposure for us. But we're really encouraged by the improvement funding environment.

Speaker #4: Your next question comes from the line of Brandon Coulard with Wells Fargo. Your line is open. Please go ahead.

Operator: Your next question comes from the line of Brandon Couillard with Wells Fargo. Your line is open. Please go ahead.

Speaker #5: Hey. Thanks, guys. Good afternoon. The 6% growth in China, was that all stimulus-related and the help of you just touch on a couple of the end markets there?

Brandon Couillard: Hey, thanks, guys. Good afternoon. The 6% growth in China was that all stimulus related? It'd be helpful if you just touch on a couple of the end markets there. Curious if you're seeing any of them turn more positively or if it's really just still status quo?

Speaker #5: Curious if you're seeing any of them turn more positively or if it's really just still status quo.

Speaker #1: Yeah. I mean, we were very pleased with our 6% growth. We're better than expected. If you look at them compared to peers, also very expected.

Padraig McDonnell: Yeah, I mean, we were very pleased with our 6% growth. We're better than expected. You know, if you look at them, compared to peers, also very expected. That's, you know, there was a slight bit of more spending before Lunar New Year, but not too much. I think we saw last year, we saw a very strong GACC stimulus business. We saw a small one this year. We won about 30% of that. I think, you know, as we go through the year, we expect it to be a $300 million quarter business on it. If you look at, I think overall in the business, we're under indexed Dx and pharma. We are over indexed the applied markets, and we see continued strength on that side.

Speaker #1: And there was a slight bit of more spending before Lunar New Year, but not too much. And I think we saw outside, last year, we saw a very strong GSEC stimulus business.

Speaker #1: We saw a small one this year. We won about 30% of that. And I think as we go through the year, we expect it to be a $300 million quarter business on it.

Speaker #1: But if you look at, I think, overall in the business, we're under-indexed DX in pharma. We are over-indexed the applied markets. And we see continued strength on that side.

Speaker #1: So we expect China to grow mid to high single digits over the long term. Not the double-digit rates. We saw 10 years ago. But mid to high single digits.

Padraig McDonnell: We expect China to grow mid to high single digits over the long term, not the double-digit rates we saw 10 years ago, but mid to high single digits. Our track record, how we're ability to manufacturing in China and our commercial teams, very, very close to the customers, is really important. Of course, Adam talked about the larger stimulus that's looming towards the end of the year. We're not counting that in our guide, but if that comes in, it's going to be significantly more than the GACC stimulus, and we expect an outside win in it. But to be honest, if you look at, we look at very... We're optimistic about China. We have the largest install base.

Speaker #1: And our track record, how we were able to manufacture in China, and our commercial teams being very close to the customers is really important. And of course, Adam talked about the larger stimulus.

Speaker #1: That's looming towards the end of the year. We're not counting that in our guide. But if that comes in, it's going to be significantly more than the GSEC stimulus.

Speaker #1: And we expect an outside win on it. But to be honest, if you look at the we look at very we're optimistic about China.

Speaker #1: You have the largest install base. Look at the pace of innovation and life science and the applied markets that supports demand for instruments and our solutions is very strong.

Padraig McDonnell: Look at the pace of innovation in life science and the applied markets, which supports demand for instruments, and our solutions is very strong. If you look at the Chinese, the China 15th Five-Year Plan, whether it's rapid application on AI, healthcare, green sustainable development, and new regulations for pollutants like PFAS, we're right in the sweet spot in terms of those priorities. We feel very good about China.

Speaker #1: And if you look at the Chinese 15 five-year plan, whether it's rapid application on AI, healthcare, green sustainable developments, and new regulations for pollutants like PFAS, we're right in the sweet spot in terms of those priorities.

Speaker #1: So we feel very good about China.

Speaker #5: That's helpful. And then, Adam, it'd be great to get some color on the ANG markets by region. I think Simon said Europe was pretty solid.

Brandon Couillard: That's helpful. Adam, it'd be great to get some color on the ANG markets by region. I think Simon said Europe was pretty solid, so just curious where you're seeing the weakness, if it's all in the Americas. Any color would be helpful by region. Thanks.

Speaker #5: So just curious where you're seeing the weakness visits all in the Americas? Any color would be helpful by region. Thanks.

Speaker #3: Yeah. So the softness we've been seeing is really primarily in the Americas. And I guess there's reason to be optimistic. The NIH budget came in in line with flat to slightly up.

Adam S. Elinoff: Yeah. The softness we've been seeing is really primarily in the Americas. I guess there's reason to be optimistic. You know, the NIH budget came in in line, with, you know, flat to slightly up. The 15% cap on overhead research costs was blocked. That said, it goes back to where Simon talked about, which is, you know, we're still seeing a little bit of hesitancy in our customers to make bigger investments as they're really focused on operating their labs.

Adam Elinoff: Yeah. The softness we've been seeing is really primarily in the Americas. I guess there's reason to be optimistic. You know, the NIH budget came in in line, with, you know, flat to slightly up. The 15% cap on overhead research costs was blocked. That said, it goes back to where Simon talked about, which is, you know, we're still seeing a little bit of hesitancy in our customers to make bigger investments as they're really focused on operating their labs.

Speaker #3: The 15% cap on overhead research costs was blocked. That said, it goes back to where Simon talked about, which is we're still seeing a little bit of hesitancy in our customers.

Speaker #3: To make bigger investments as they're really focused on operating their labs.

Speaker #1: And just to clarify, the Europe comment, that was a forward-looking comment that we envision more stability in Europe than in the Americas with academic and government and cautious optimism around incremental improvement.

Simon May: Just to clarify the Europe comment, that was a forward-looking comment, that we envision more stability in Europe than in the Americas with academic and government, and cautious optimism around incremental improvement. That was a forward-looking statement.

Speaker #1: That was a forward-looking statement.

Speaker #4: Your next question comes from the line of Casey Woodring with JPMorgan. Your line is open. Please go ahead.

Operator: Your next question comes from the line of Casey Woodring with JP Morgan. Your line is open. Please go ahead.

Speaker #5: Great. Thanks for fitting me in. I'll ask my two up front. The first is just on LC and LCMS pacing over the course of the year.

Casey Woodring: Great. Thanks for fitting me in. I'll ask my two up front. The first is just on LC and LC-MS pacing over the course of the year. You know, LC grew high singles in Q1. Can you just talk about what LC-MS grew in the quarter and walk through the growth phasing for LC and LC-MS over the course of the year? Secondly, Padraig, you know, you called out the three marquee enterprise service wins in ACG, and you talked a little bit about it in your script. Can you maybe just elaborate on what the financial impact could look like from those contracts and how we should think about the impact to the model and how those ramp over time? Thank you.

Speaker #5: LC grew high singles in Q1. Can you just talk about what LCMS grew in the quarter and walk through the growth phasing for LC and LCMS over the course of the year?

Speaker #5: And then secondly, Porig, you called out the three marquee enterprise service wins in ACG. And you talked a little bit about it in your script.

Speaker #5: Can you maybe just elaborate on what the financial impact could look like from those contracts? And how we should think about the impact to the model and how those ramp over time?

Speaker #5: Thank you.

Speaker #1: Yeah. Let me talk about the enterprise services and I'll comment then on the LCMS. I think on the enterprise services side, it is a really important flywheel for the future because we're really fully working with customers on their lab management and productivity.

Padraig McDonnell: Yeah. Let me talk about the enterprise services, and I'll comment then on the LC-MS. I think on the enterprise services side, it is a really important flywheel for the future because we're really fully working with customers on their lab management and productivity. You can imagine the insights we get off replacement cycle through that and how do we move forward on it. It's not just about the services, it's about the consumables, and it's about the instrument replacements that we can go going forward on it. We've had a significant displacement in competitive accounts. We're kind of unique in how we're doing that in the market, and we're seeing that as a flywheel to continue going forward.

Speaker #1: You can imagine the insights we get off replacement cycle through that. And how do we move forward on it? So it's not just about the services.

Speaker #1: It's about the consumables. And it's about the instrument replacements that we can go going forward on it. We've had a significant deplacement in competitive accounts.

Speaker #1: We're kind of unique in how we're doing that in the market. And we're seeing that as a flywheel to continue going forward. And of course, we see in accounts where we do have enterprise service agreement.

Padraig McDonnell: Of course, we see in accounts where we do have enterprise service agreement, we have a higher consumables attach rate, we have a higher services attach rate, and actually, we have an early warning system around replacement cycles that we have early conversations about. On the LC side of things, I think it's been a steady pace, really good quarter. I think on the LC-MS side, I don't know if you want to make any?

Speaker #1: We have a higher consumables attach rate. We have a higher services attach rate. And actually, we have an early warning system around replacement cycles that we have early conversations about.

Speaker #1: On the LC side of things, I think it's been a steady pace, really good quarter. And I think on the LCMS side, I don't know if you have any.

Speaker #3: Yeah. Well, just to reiterate on LC, we saw high single-digit growth in the quarter, particular strength in China and APAC. And as we've mentioned already, very strong performance in Infinity 3.

Simon May: Well, just to reiterate on LC, we saw high single-digit growth in the quarter, particular strength in China and APAC. As we've mentioned already, very strong performance in Infinity III. Customers continue to love it, and I still think we're relatively early mid on the replacement cycle there. Win-loss rates continue to be positive, notable share gains based on the industry data, and we're now seeing additional tailwind there with the Altura columns. On the LC-MS side, we were in line with expectations in the Q1, coming off a tough sequential and year-over-year compare, it has to be said. Again, we were very pleased with Pro iQ, with the 40% growth, really exceptional adoption there. In LC-MS, similar story with respect to win-loss rates and the industry data, which signifies some notable share gains.

Speaker #3: Customers continue to love it. And I still think we're relatively early, mid on the replacement cycle there. Win-loss rates continue to be positive, notable share gains based on the industry data.

Speaker #3: And we're now seeing additional tailwind there with the Altora columns. On the LCMS side, we were in line with expectations in the first quarter.

Speaker #3: Coming off a tough sequential and year-over-year compare, it has to be said. But again, we were very pleased with ProIQ, with the 40% growth, really exceptional adoption there.

Speaker #3: And in LCMS, similar story with respect to win-loss rates. And the industry data, which signifies some notable share gains. And then beyond the ProIQ, which is off to a very strong start, we're also very encouraged by our broader LCMS innovation pipeline.

Simon May: Beyond the Pro iQ, which is off to a very strong start, we're also very encouraged by our broader LC-MS innovation pipeline.

Speaker #1: Yeah. And just going back to the enterprise services part, I just want to bring in Angelica because she's been very close to some of these marquee wins under the growth trajectory and what you're seeing with the customers.

Padraig McDonnell: Yeah, just going back to the enterprise services part, I just want to bring in Angelique, because you've been very close to some of these marquee wins under the growth trajectory and what you're seeing, with the customers.

Speaker #6: Yeah. Thanks, Porig. And thanks for the question, Casey. I think we're very excited about the enterprise business and the opportunity that unlocks. I think Porig used the word flywheel earlier.

Angelica Riemann: Yeah, thanks, Padraig, and thanks for the question, Casey. You know, I think we're very excited about the enterprise business and the opportunity that unlocks. I think Padraig used the word flywheel earlier. When you think about it allows us to really embed our service experts into the accounts, and they're looking at managing assets across the laboratory. Not only does it give us the opportunity to help customers with their lab operations and keep their labs up and running and producing those scientific results, it gives us visibility and access more broadly in these laboratory environments, so that we're not only looking at our own replacement cycles, but we're also looking at competitive displacement opportunities. We're looking for incremental wallet share opportunities. Over the course of time, the relationships that we're building, they compound.

Speaker #6: And when you think about it, it allows us to really embed our service expert into the accounts. And they're looking at managing assets across the laboratory.

Speaker #6: So not only does it give us the opportunity to help customers with their lab operations and keep their labs up and running and producing those scientific results, it gives us visibility and access more broadly in these laboratory environments so that we're not only looking at our own replacement cycles, but we're also looking at competitive displacement opportunities.

Speaker #6: We're looking for incremental wallet share opportunities. And over the course of time, the relationships that we're building compound. They compound from a growth perspective, but they also compound from the insights that we get from customers and how we bring that back into the innovation muscle that we have here at Agilent and how we can continually grow, evolve, and continue to serve our customers on all different levels, whether it's lab operations, it's scientific outcomes, or it's ongoing value over time.

Angelica Riemann: They compound from a growth perspective, but they also compound from the insights that we get from customers and how we bring that back into the innovation muscle that we have here at Agilent, and how we can continually grow, evolve, and continue to serve our customers on all different levels, whether it's lab operations, it's scientific outcomes, or it's ongoing value, over time.

Speaker #1: Thanks, Angelica.

Padraig McDonnell: Thanks, Angelique.

Speaker #4: Your final question comes from the line of Evi Kozloski with Goldman Sachs. Evi, please limit yourself to one question. Your line is open. Please go ahead.

Operator: Your final question comes from the line of Elizabeth Koslosky with Goldman Sachs. Evie, please limit yourself to one question. Your line is open. Please go ahead. A reminder to please unmute yourself by pressing star six.

Speaker #4: A reminder to please unmute yourself by pressing *6.

Speaker #5: Operator, if Evi's not there, I think we can leave it there. It's all the time we have for this afternoon. And thank you to everyone for joining us.

Elizabeth Koslosky: Operator, if Evie's not there, I think we can leave it there. It's all the time we have for this afternoon, and thank you to everyone for joining us. We look forward to speaking with you soon.

Speaker #5: We look forward to speaking with you soon.

Operator: This concludes today's call. Thank you for attending. You may now disconnect.

Q1 2026 Agilent Technologies Inc Earnings Call

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