Agilent Technologies, Inc.

Good afternoon and welcome to the Agilent Technologies fourth quarter earnings conference call. All lines have been placed on mute to prevent any background noise. After the speaker's remarks, there will be a question and answer session. If you would like to ask a question during this time, simply press star followed by the number one on your telephone keypad. If you would like to withdraw your question, press the pound key. Thank you, and now I'd like to introduce you to the host for today's conference, Ankur Dhingra, Vice President of Investor Relations. Sir, please go ahead.

Thank you, Mike, and welcome everyone to Agilent's fourth quarter and full year conference call for fiscal year 2019. With me are Mike McMullen, Agilent's President and CEO, and Bob McMahon, Agilent's Senior Vice President and CFO. Joining in the Q&A after Bob's comments will be Jacob Tyson, President of Agilent's Life Science and Applied Markets Group, Sam Raha, President of Agilent's Diagnostics and Genomics Group, and Mark Doak, President of the Agilent CrossLab Group. You can find the press release, investor presentation, and information to supplement today's discussion on our website at investor.agilent.com. Today's comments by Mike and Bob will refer to non-GAAP financial measures. you will find the most directly comparable GAAP financial metrics and reconciliations on our website. Unless otherwise noted, all references to increases or decreases in financial metrics are year-over-year. References to revenue growth are on a core basis. Core revenue growth excludes the impact of currency and the acquisitions and divestitures completed within the past 12 months. Guidance is based on exchange rates as of October 31st. We will also make forward-looking statements about the financial performance of the company. These statements are subject to risks and uncertainties and are only valid as of today. The company assumes no obligation to update them. Please look at the company's recent SEC filings for a more complete picture of our risks and other factors. And now I would like to turn the call over to Mike.

Thanks, Ankur, and thanks, everyone, for joining us on our call today. You know, when I became CEO, I knew we had the opportunity to become a growth company. We would do this by investing in fast-growing markets with a building and buying approach. We also set out to create a more resilient company business model capable of delivering strong earnings in a variety of market conditions. To accomplish this, we developed a broader base of growth and more flexible and efficient cost structure. As you know, transforming a decades-old company is not an easy task, but I believe in the strength and determination of the Agilent team. The fourth quarter and full-year results I will share today are a testament to the commitment of the Agilent team and their ability to step up to meet this challenge. We strongly close our fiscal 2019 with fourth quarter results exceeding our expectations. Agilent's Q4 revenue of $1.37 billion is up 4% on a core basis against a 9% compare. And we have momentum going into 2020 as orders outpace revenue. EPS of $0.89 is up 10% for the quarter. Both our top line revenue and EPS are above the high end of our fourth quarter guidance. Operating margin of 25.1% is up 50 basis points over last year. Q4 marks the 19th consecutive quarter of adjusted operating margin expansion delivered by the Agilent team. Our higher than expected top line is led by 10% core growth from our Agilent cross lab group. Business is also strong for our diagnosing genomics group, delivering 7% core growth. Our life sciences and applied markets revenues are in line with expectations down 2% against a 9% growth compare. The pharma, diagnostics and clinical, and the environmental and forensics markets continue to lead our growth. High single-digit U.S. growth is stronger than forecasted, with other regions coming in as expected. Growth in China declined low single digits as expected. Ashland's growth strategy of building and buying in fast-growing markets is on full display in Q4. During the quarter, we closed the acquisition of Biotech. This is our largest acquisition since the launch of the new Agilent 2015. Biotech brings a superb team and an excellent high-growth, highly profitable business to Agilent. The acquisition of Biotech complements our earlier acquisition this year of ASEO Biosciences. Both acquisitions are part of our growing cell analysis business, serving biopharma and academic research customers. Agilent's selling out business now generates more than $250 million in annual revenue, about 5% of company revenues, and is growing at a double-digit rate. We are also continuing to invest internally to drive new organic growth. In Q4, we recognized the first revenue from a new Alago API manufacturing site in Frederick, Colorado. The high-quality GMP-grade oligos produced at this site are key to a new class of drugs being developed by biopharma customers. Investing in this facility is part of our overall strategy to build a larger biopharma business. We are expecting continued strong growth in this business as we ramp volume throughout the coming year. Finally, in October, I traveled to the UK to open a new state-of-the-art facility at the Harwell Science Innovation Campus. The site will be a major R&D hub for laser spectroscopy and will also incorporate Agilent's Raman spectroscopy business. Our recent acquisitions and these capital investments in Colorado and the U.K. are very visible examples of our continued and relentless focus on investing for growth. Hey, let's now shift gears and look at our full year of fiscal 2019 results. We had a very solid year, generating $5.2 billion in revenue, representing 5% core growth. Strength in the pharma, clinical and diagnostics, and the environmental forensics markets led the way. Recently, the U.S. set the pace, growing in the highest single digits. The U.S. was followed by mid-single-digit growth in Asia outside of China. Europe and China grew at low single digits for the year. Full-year earnings per share grew 11% to $3.11. The result is another year of double-digit earnings per share growth. The full-year operating margin of 23.3% is up 80 basis points over 2018, despite a full year of tariff-related duties. Our investments to ACG continue to yield dividends. ACG grew a stellar 10% for the year. We are helping customers transform their analytical lab operations by anticipating and meeting their evolving needs. DGD is also delivering very strong results with 9% core growth for the year. We're capturing market share in our pathology business, expanding our presence in next-gen sequencing, and further building our oligo API business. During the year, DGD crossed the billion-dollar revenue threshold and now represents approximately 20% of Agilent's business. LSAG revenues declined 1% on a core basis as we faced some market headwinds. We remain committed to investing for future LSAG growth and market share gains. Our new product development pipeline remains full. During the year, we introduced a number of innovative new products, including the launch of a new family of groundbreaking gas chromatographs and molecular spectroscopy instruments. At this year's ASMS conference, we introduced several new differentiated LCMS offerings, including the 6546 LC QTOF and 6495C LC Triple Quad systems. As we head into 2020, our LSHG product portfolio and go-to-customer field team have never been stronger. As it continues to operate from a position of strength, we are well-positioned to capture market share. Before I turn the call over to Bob, I want to remind you of the Agilent Shareholder Value Creation Model. Deliver above-market growth, while expanding operating margins along with a balanced deployment of capital with a priority on investing for growth. The result, delivery of superior earnings per share growth. In driving value creation, we built a broader base of growth and a more resilient business model. You know, we were attested to this year with economic and political uncertainties, leading to subdued demand for new instrument purchases. Yet, we delivered 5% core growth, operating margins that improved 80 basis points, and deliver another year of double-digit EPS growth. We deployed more than $1.5 billion in M&A and growth-focused capital investments. On the M&A front, we're very pleased with the performance to date of biotech and the CEO of bioscience. We remain on the hunt for similar types of growth opportunities. I'm increasingly confident in the Agilent team's ability to pursue larger-scale acquisitions and deliver on value creation synergies. we continue to view potential acquisitions as part of our building and buying growth strategy. Now, more than ever, I'm convinced we're in an exceptionally strong position for the future. This is particularly relevant as we move into 2020, a milestone for us at Agilent, as we celebrate 20 years as an independent company. While uncertainty is persistent, some end markets, if we start fiscal year 2020, we're operating from a position of strength. We have built and will sustain our track and record of delivering results working as one Agilent on behalf of our customers and shareholders. I'm very proud of the results the Agilent team delivered in the fourth quarter and throughout the year. I know you've heard me say this before, but I truly believe the best is yet to come for Agilent, our customers, and our investors. Thank you for being on the call today, and I look forward to your questions. I will now hand the call off to Bill. That was a Freudian flip. I'll now hand the call off to Bob. We don't have a new CEO, CFO.