Agilent Technologies, Inc.

Good afternoon and welcome to the Agilent Technologies second 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'd like to ask a question during this time, simply press star followed by one on your telephone keypad. If you'd like to withdraw your question, press the pound key. And now I'd like to introduce you to the host for today's conference, Ruben Dorado, Director of Investor Relations, please go ahead, sir.

Thank you, Gabriel, and welcome, everyone, to Agilent's second quarter conference call for fiscal year 2021. 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 and Mike'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 Porig McDonnell, President of the Agilent Cross Lab 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 April 30th. 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'd like to turn the call over to Mike. Mike?

Thanks, Reuben, and thanks, everyone, for joining our call today. Before I get into the quarterly details, I want to start by recognizing our Agilent India team. Despite the challenging COVID-19 situation, our India team is working closely with our customers to do what we can to help in this time of extreme need. In addition, our Agile India customer support, finance, and IT teams have worked tirelessly to help us close out the second quarter and keep us moving forward. I could not be more proud of how the team has worked together in true One Agile fashion. Our thoughts go out to the entire Agile India team and their families during this difficult time. In Q2, the strong momentum in our business continues against the backdrop of a recovering market. The Agilent team delivered another outstanding quarter, exceeding our expectations. Both revenue and earnings are up sharply versus a solid Q2 last year when revenue and earnings per share were relatively flat. Our growth is broad-based across all business groups, markets, and geographies. We also expanded margins, driving faster earnings per share growth. Revenues for the quarter are $1.525 billion. This is up 23% on a reported basis and up 19% core. COVID-19-related revenues accounted for roughly 2% of overall revenues as expected, and contributes about a point to our overall growth. Our revenue growth is not a one-quarter or easy-to-compare story, but one of sustained above-market growth. For example, our Q2 revenues are up more than 17 percent core from two years ago. Q2 operating margins are 23.9 percent. This is up 150 basis points. EPS of $0.97 is up 37% year-over-year. Late in the quarter, we also welcomed the Resolution Bioscience team to Agilent, continuing our investments in high-growth markets and bringing outstanding talent into Agilent. Like our recent acquisitions in cell analysis, Resolution Bioscience is an example of our build-and-buy growth strategy in action. The Agile story remains the same. It is a story of one team outpacing the market to deliver strong, broad-based growth in an environment of continuing market recovery. Moving on to our end market highlights, we do strongly in all markets. Our growth is led by 29% growth in pharma and 22% in food. We are seeing improving growth in the chemical and energy market with 14% growth. We also posted low teens growth in diagnostics and over 20% growth in academia and government. Lastly, environmental forensics grew 8%. Bob will provide more in-market detail later in his comments. Geographically, the Americas led the way with 27% growth. Strength in China, Europe, and the rest of Asia continues with all growing in the mid-teens. The 13% growth in China is on top of a 4% growth last year when the business started to recover from the pandemic. As we look at our performance by business group, the Life Sciences Applied Markets Group generated revenues of $674 million during the quarter. LSAG is up 28% on a reported basis and up 25% core, off a 7% decline last year. LSAG's growth is broad-based across all in markets and geographies. Our focus in investments in fast-growing end markets continues to pay off. The LSAG pharma business is very strong, growing 41% with strength in both biopharma and small molecule. From a product perspective, we saw strength in liquid chromatography and LC-MS along with continued growth in cell analysis. During the quarter, cell analysis grew 34%, with our biotech business growing close to 40%. During the quarter, the LSAG team also contributed to our long-term company-wide focus on sustainability in advancing important ESG initiatives. LSAG announced several new products that have earned the highly respected Accountability, Consistency, and Transparency Act label from My Green Lab. My Green Lab is a nonprofit organization dedicated to improving the sustainability of scientific research. LS-AG products will also receive two Scientist Choice Awards announced at the Select Science Virtual Analytical Summit. In our cell analysis business during the quarter, we launched our Citation 10 confocal imaging reader, a multifunctional automated system focused on research labs and core facilities looking for increased productivity. This product builds on the biotech cell imaging leadership with a citation multi-mode reader and expands our reach in the strategic business. While still early, customer feedback has been extremely positive. We are also very pleased with the progress and trajectory of our cell analysis business overall and see a very positive future for this space. The Aspen Cross Lab Group posted revenues of $536 million. This is up a reported 19% and up 15% on a core basis versus a 1% increase last year. ACG's growth is driven by demand for consumables and services across the portfolio as lab activity continues to increase for our customers. This is leading to more on-demand services and parts consumption. Revenues from our contract business continue to drive strong growth due to the high level of contract renewals seen in the previous quarter. Our strong instrument placements and the increasing install base will benefit the ACG business going forward. At the same time, our digital investments continue to pay off with continued strong customer uptake in consumables and our digitally-enabled services offerings. Our LSAG and ACG businesses come together in the analytical lab. This is where we believe we are well-positioned to continue driving above-market growth. as we build on our market-leading portfolio, strong service organization, and outstanding customer service. For the diagnosing genomics groups, revenues were $315 million, up 20% reported, and up 16% core, versus a 5% increase last year. Growth is broad-based, led by our NASD oligo and genomics businesses. Demand for our NASD offerings remains strong, and our capacity expansion plans for our high-growth NASD business remain on track. We're very pleased with our acquisition of Resolution Bioscience during the quarter. With their liquid biopsy technology, Resolution Bioscience is a key player in the very exciting area of cancer diagnostics. We are very glad to have them on the Agilent team. I'm confident that as time goes on, you'll be hearing more and more from us on this business and its contributions. I would now like to recap the second quarter and take a look forward. The strong momentum in our business continues. This is being driven by our relentless customer focus, the strength of our portfolio, and the execution capability of the one Agilent team. Our build and buy growth strategy is delivering as intended with above market growth. Over the last year, I've often said that Agilent is focused on coming out of the pandemic even stronger as a company. I believe you've seen the impact of this approach on our current results. As we look ahead, we do so with a sense of both optimism and confidence. We are optimistic because of the continued market recovery and the strength of our portfolio. We are confident because we have the right team, customer-focused, operationally excellent, and driven to win. As a result, we are once again raising our full-year revenue and earnings guidance. Bob will share more details, but we are expecting a continuation of excellent top line growth. We also expect to convert this strong top line into excellent earnings growth and cash generation. During our investor event in December, we discussed our shareholder value creation model and our goals for increasing long-term growth and expanding margins. Six months into fiscal 2021, we are well on our way to achieving those objectives. Our build and buy growth strategy is delivering. The One Agile team continues to demonstrate its execution prowess and strong drive to win. We raise the bar on customer service and continue to exceed customer expectations in providing industry-leading products and services. While we have yet to fully emerge from the global pandemic, we are looking forward to the future with both optimism and confidence. Thank you for being on the call today, and I look forward to your questions. I'll now hand the call off to Bob. Bob?