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 and welcome everyone to Agilent's fourth quarter and full year conference call for fiscal year 2020. 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 Porek McDonald, President of Agilent CrossLab Group. This presentation is being webcast live. The news release, investor presentation, and information to supplement today's discussion, along with a recording of this webcast, are made available 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 and 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 31, 2020. 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. Also, as announced, we will hold our virtual investor day in a few weeks on December 9th. The event will include presentations from our CEO, CFO, and the three group presidents, followed by a Q&A. We look forward to having you join us on December 9th. And now, I would like to turn the call over to Mike.

Thanks, Ankur, and thanks to everyone for joining us on our call today. Today, I want to get straight to our quarterly results because they tell a very compelling story. The adjunct team delivered a very strong close to 2020. We posted revenues of $1.48 billion during the quarter. Revenues are up 8% on a reported basis and up 6% core. Operating margins are a healthy 24.9%. EPS of 98 cents is up 10% year over year. These numbers tell the story of a strong, resilient company that's built for continued growth. Our better-than-expected results are due to the strength of our core business, along with signs of recovery in our end markets. Geographically, China continues to lead the way with double-digit growth. From an end market view, both our pharmaceutical and food business has grew double digits. In addition, our chemical and energy business grew after two quarters of decline, exceeding our expectations. We also saw a rebound in U.S. sales during the quarter. Overall, COVID-19 tailwinds contributed just over two points of core growth. Achieving these results in the face of a global pandemic is a tribute to our team and the company we've built over the last five years. I couldn't be more pleased with the way the Agile team has performed over the last quarter and throughout 2020. They have again proven their ability to work together and step up to meet any challenge that comes their way. During the quarter, all three of our business groups grew high single digits on a reported basis. Our life science and applied markets group generated $671 million in revenue, up 8% on a reported basis and up 4% core. LSEG growth is broad-based. The cell analysis and mass spec businesses both grew at double-digit rates. In terms of end markets, chemical and energy returned to growth. Food grew double digits and pharma high single digits. LSAG remains extremely well positioned and is outperforming the market. The Aspen Cross Lab Group came in with revenues at $518 million. This is up a report of 9% and up 7% core. ACG's growth is also broad-based across end markets and geographies. Our focus on on-demand services is paying off as activities in our customer labs continue to increase. The ACG team continues to build on its already deep connections with our customers, helping them operate through the pandemic and continue to drive improved efficiencies in lab operations. For the diagnostic and genomics group, revenues were $294 million, up 9% reported, and up 7% core. Growth was broad-based, with NASD oligo manufacturing revenues up roughly 40%. The genomics and pathology businesses continue to improve during the quarter. I'm also very proud of our NASD team for successfully ramping production at our new Frederick site this year. We have built a very strong position in this attractive market with excellent long-term prospects for high growth. Let's now shift gears and look at our full year fiscal 2020 results. Despite the disruption, uncertainty, and economic turmoil dealing with a global pandemic, the Agilent team delivered solid results. We generated $5.34 billion in revenue, up 3% on a reported basis, and up nearly 1% core. To put this in perspective, it's helpful to recall the progression of our growth. In Q1, we delivered 2% core growth as we saw the first impact of COVID-19 in our business in China. Both Q2 and Q3 declined low single digits as the pandemic spread across the globe and governments instituted broad shutdowns. With 6% core growth, 8% reported in Q4, we're seeing business and economy start to recover. As a result, we are clearly exiting 2020 with solid momentum. Our recurring types of businesses represented by ACG and DDG proved resilient, growing low to mid-single digits for the year. In a very tough capex market, our LSAG instrument business declined only 2% for the year and returned to growth in the final quarter. China led the way for our recovery with accelerating growth as the year progressed. In our end markets, pharma remained the most resilient, and food markets recovered most quickly. Full-year earnings per share grew 5% during fiscal 2020 to $3.28. The full-year operating margin of 23.5% is up 20 basis points over fiscal 2019. As we head into 2021, we do so with tremendous advantage. The industry-leading product portfolio has never been stronger. Our building and buying growth strategy with the focus on high-growth markets continues to deliver. Our ability to respond quickly to rapidly changing conditions is also serving us well. The way our sales and service teams have been able to quickly pivot to meet customer requirements during the pandemic has been nothing short of remarkable. You know, last year at this time, I used this call to remind you of the Agile Shareholder Value Creation Model. Our approach is focused on delivering above-market growth while expanding operating margins along with a balanced deployment of capital. We prioritize the deployment of our capital both internally and externally on additional growth. A few proof points on our growth-oriented capital deployment strategy. A year ago, we spoke about recently closing the biotech acquisition and the promise of growth that biotech represented. Biotech is no longer a promise but a driver of growth. In total, the cell analysis business generated more than $300 million in revenue for us during the year, with double-digit growth in Q4 and continued strong growth prospects. Similarly, last year I was talking about ramping up our new Frederick site facility, a $185 million capital investment. In addition to successfully ramping Frederick as we planned, we did so with an expanding book of business. We also recently announced an additional $150 million investment to add future manufacturing capacity. We are aggressively adding capacity to capture future growth opportunities in this high growth market. Even in the face of a pandemic, we stayed true to our build and buy strategy. We have clearly seen the advantages of our approach. I'm confident our strategy will continue to produce strong results for us. The strength of our team and resilience of our business model has served us well. And as you can see from the numbers, our growth strategy is producing outstanding results for our customers, employees, and shareholders. While uncertainties remain as we begin fiscal 2021, we're operating from a position of strength. Because of this, we're cautiously optimistic about the future. We have built and will sustain our track record of delivering results. and working as a one-agilent team on behalf of our customers and shareholders. As I noted earlier, I couldn't be more pleased with the results of the agilent being delivered in the fourth quarter and throughout the year. Thank you for being on the call today, and I look forward to your questions. I will now hand the call off to Bob. Bob, you're up.