Agilent Technologies, Inc.

Good afternoon and welcome to the Agilent Technologies third 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. And now, I'd like to introduce you to the host for today's conference, or meet Ahuja, Vice President of Universal Relations. Sir, please go ahead.

Thank you, Paul, and welcome everyone to Agilent's third 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 McDonald, 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 the recording of this webcast, are made available on our website at www.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 July 31. 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 risk and other factors. And now, I'd like to turn the call over to Mike.

Thanks, Parmeet, and welcome to your first AdSense earnings call as our new Vice President of Investor Relations. And thanks, everyone, for joining our call today. Before covering our third quarter financial results, I want to acknowledge the recent passing of Dr. Tachi Yamada, a giant in our industry and a former Agilent board member. Tachi was much more than a knowledgeable, deeply involved Agilent board member for nine years. As many of you on the call already know, Tachi lived a very full life as a doctor, a scientist, as a humanitarian who was driven to help others. I know that the Agilent team is not alone and recognize that Tachi Yamada will be greatly missed and we extend our deepest sympathies to Tachi's family. Now, on to the third quarter review and our updated outlook for the year. In Q3, the very strong broad-based momentum in our business continues. The Agilent team delivered another outstanding quarter, exceeding our expectations. Q3 revenue of $1.59 billion is up a reported 26% and is up 21% core. This is against a modest decline of 3% in Q3 of last year, So we are well above fiscal year 2019 pre-pandemic levels. In addition, as another positive sign of continued momentum, orders outpace revenue during the quarter. Our growth is broad-based across all business groups, markets, and geographies. The combination of strong top-line performance and execution translate into excellent growth in profitability and earnings per share. Our Q3 operating margin is 26%. This is up 230 basis points from last year. EPS is $1.10, up 41% year-over-year. Agile success continues to be driven by our build-and-buy growth strategy and execution prowess. We are developing market-leading products and services, investing in fast-growing businesses while delivering outstanding customer service and continuing to drive profitability. Since the onset of the pandemic, we have taken actions to ensure Agilent emerges even stronger as a company. While we have yet to leave COVID-19 in the rearview mirror, our Q3 results are another indicator our actions are delivering the intended results. Bob will provide more details on end markets and geographies, but I want to briefly highlight a performance in our two largest end markets, pharma and chemical energy. We continue to perform extremely well in pharma, our largest market, growing 27% with strength in both small and large molecule segments. Our large molecule business grew roughly 52% in the quarter and now represents 36% of our overall pharma revenue, up from the mid-20s just a few years ago. In chemical energy, our business is recovering faster than expected, expanding 23% in the quarter, This is an acceleration of the momentum we achieved in the first half, and our order funnel continues to strengthen. Looking at our performance by business unit, the Life Science and Applied Markets Group generated revenue of $680 million. LSAG is up 22% on a reported basis. This is up 18% core of just a 4% decline last year. LSAG's growth is broad-based across all end markets. Our performance was led by strength in pharma, which is up 22%, and chemical energy, up 31%. All businesses delivered strong growth, led by cell analysis at 38% growth, and our LC and LC-MS businesses, which grew 22%. We continue to strengthen our position in the fast-growing large molecule market segment. During the quarter, the LSAG team launched three Infinity Lab Bio-LC systems at the well-attended Infinity Lab LC virtual conference in June. These new products further extend our LC leadership position. In addition, building on our already strong pharma offerings, we launched new compliance-ready LC-QTOF and LC-TOF solutions to our portfolio in the quarter. The Ashland Cross Lab Group posted revenue of $560 million. This is up a reported 21% and up 15% on a core basis. These results are on top of 1% growth last year. The business is benefiting from increased activity in customer labs and instrument connect rates. This is leading to more contracted services, on-demand services, and consumers' consumption across all end markets. All end markets grew mid-teens or higher, with the exception of environmental forensics, which still grew 9%. The pandemic has shown ACG to be our most durable business, with ACG grown each quarter since COVID-19 first emerged. Our customer-focused approach and digital investments continue to pay dividends. Looking forward, instrument placements and demand bode well for continuing strong performance by ACG as we drive attachment rates and increase customer lifetime value. The Diagnostic Genomics Group produced revenue of $346 million up 44% reported and up 37% core, compared to an 8% decline last year. The growth was broad-based across product lines and regions and was led by our NASD GMP oligo business. The ramp of our facility in Frederick, Colorado continues to go very well. The quarterly results exceeded our expectations, easily surpassing the $50 million revenue milestone. While one quarter does not make a trend, our team has done a tremendous job increasing output in a high-quality manner. This gives us increased confidence in our ability to exceed the $200 million annual run rate in revenue with existing capacity. In addition, the train B manufacturing line expansion is well underway and on schedule. Our genomics instrumentation and consumables businesses rebounded strongly in the quarter, as did our pathology-related businesses. For the first time in several quarters, we saw diagnostic testing above pre-pandemic levels. While we are watching the Delta variant very closely, to date, we have not seen a meaningful negative impact in testing values. I also want to highlight our performance in China. While still less than 10% of DGG revenue, our China business grew 50% in the quarter. We continue to see tangible progress in building a stronger China market position. In Q3, we signed our first ever companion diagnostic development services agreement with a China-based biopharma company. Earlier this month, we also announced the initiation of in-country manufacturing for our Sure Select product line. We are very bullish about long-term growth prospects in China for our DGG product and services offerings. In addition, the integration of the Resolution Bioscience team is going well, and we are very pleased to enter and expand our participation in the fast-growing NGS-based cancer diagnostic market. It was a busy quarter at Ashland, so I have a few other achievements I'd like to share with you. Last month, we published Ashland's 21st Annual Corporate Social Responsibility Report. At a time when some are just starting to look at issues like sustainability and societal impact, this has always been a key part of who we are as a company. We've been addressing these issues since our founding more than two decades ago. I would encourage you to review our report on the Agilent website. We're also very pleased to receive recognition of the Great Place to Work in the United States by the Great Place to Work Institute. This result is just one more example of Agilent having a highly engaged and energized team And as you know, teams with high engagement win in the market. Looking ahead, building on another excellent quarter and the momentum we're seeing, we expect the business to continue to perform well as we close out what we believe will be an outstanding fiscal year of 2021. As a result, we are once again raising our full-year revenue and earnings guidance. Bob will share more details, but we're expecting a continuation of our excellent top-line growth and earnings generation. While the world has yet to fully emerge from the global pandemic, Agilent is well-positioned to deliver excellent results again in the fourth quarter. I remain very proud of the Agilent team's ability to consistently deliver for our customers and shareholders. Thank you for being on the call today and look forward to your questions. I will now hand the call off to Bob.