Agilent Technologies, Inc.

Q4 2021 Earnings Conference Call


spk_0: good afternoon and welcome to the agilent technologies fourth quarter earnings conference call my name is bethany and i will be the operator for today's call or ones will be muted during the presentation portion of the call with an opportunity for questions and answers that the in if you will like to ask a question please or star one are your telephone keypad and now are like to introduce you to the hosts for today call her meet a loser vice president of investor relations so please go ahead
spk_1: thank you read me and welcome everyone to adjutant school quarter conference call for fiscal year twenty twenty one with me or my mcmullan adjutant president and ceo and bob mcmahon agile and senior vice president and ceo for joining in the queue and after mike inbox comments will be jacob tyson president imagine his life science and applied markets group samara president imagine it's diagnostics and genomics group and pouring mcdonnell president of the agile and 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 i made available on our website at www dot investor dot agile and dot com today's comments by mike i'm bob will refer to non gap financial measures you will find the most directly comparable gap financial metrics and reconciliations on our website unless otherwise noted all references to increases or decreases in financial metrics or year over year and references to revenue growth are on a core basis poor revenue growth and excludes the impact of currency and acquisitions and divestitures completed within the past twelve months guidance is based on exchange rates as of october thirty one 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 as you see filing for a more complete picture of high risk and other factors and now i like to turn the call over to mike
spk_2: thanks for me and thanks for joining our call today the as unseen delivered another excellent quarter to close out an outstanding record setting two thousand and twenty one at six point three two billion for fiscal choose to their twenty one revenues are almost a billion dollars fire them and last year full year core growth as up fifteen percent on top of growing my percent last year the strength as broad base with a three business units are growing more than ten percent core for the year our for your operating barger up two hundred basis points earnings per share a four thousand thirty four cents or up thirty two percent let's now take a closer look for strong finish the two thousand twenty one and we do que for results our momentum continues as orders increase faster and revenue queue for and at the same time we live in our four straight quarter of double digit revenue growth at one point six six billion revenues or up twelve percent on a reporter basis our core revenues to eleven percent exceeded our expectations this is on top of six percent poor girl last year or queue for operating margins twenty six point five percent this is up one hundred sixty basis points on last year e p s is one dollar twenty one sense up twenty three percent year over year our earnings growth also exceed our expectations we continue perform extremely well and farmer or largest market growing twenty one percent driven by a bio pharma business total pharma now represents thirty six percent or overall revenue this compared to thirty one percent of revenues just two years ago the strong growth and are chemical energy business continues as we delivered a lever cent growth and a quarter this is on top of groin three percent a queue for of last year pm my numbers are positive and we expect that chemical energy will continue it strong growth trajectory into fiscal two thousand and twenty two in die nazis and clinical rabbit to eleven percent on top of growing one percent last year as testing volume started to recover on a geographic basis or results led by a strong performance in america and china our business in america as go fifteen percent on top of five percent last year china go eight percent core on top of strong thirteen percent growth and queue for of last year china order growth outpace revenue go for the third quarter in a row now look at a performance by business unit the life sciences apply markets group generate revenue of seven hundred forty seven million ellis a of up eleven percent of both a report it and a core basis alice ages both as broad based and led by strength and liquid chromatography and sell analysis
spk_1: the farmer and chemical energy markets were politically strong for new is purchases
spk_2: or selling alice business crossed the one hundred million dollar revenue mark in the quarter for the first time during the quarter the alice eighty team announced a new i mobility lc cute up and a half minutes or be works automation software suite these new well received offerings are used improve the analysis of proteins and peptides to speed development of new protein based therapeutics the as across i aggro post a revenue of five hundred seventy two million this is up reported ten percent and nine percent core growth as broad based show my strength and service contracts and on demand services as well for chemistry than supplies our focus on increasing connect rate continues to pay off for us the strongest spansion of install base in two thousand and twenty one and increasing connect rates bodes well for can just as strengthen in our a cg business moving forward are built a drive growth and leverage i scale produce operating margins of roughly thirty percent not more than two hundred basis points from the prior year the dine out and you it's good live in revenue of three hundred forty one million up sixteen percent reported and up thirteen percent core or any as the all ago business lead the way with robust a double digit growth and a quarter and achieve for year revenues exceeding two hundred twenty five million we expect on a year of strong double digit growth as a team can his do a great job the increasing throughput with existing capacity the expansion of our train be algo manufacturing facility in frederick colorado is proceeding as plan we expect this additional capacity to come on line but the end of county or two thousand and twenty two who'd on from our other business group updates there are several other significant developments fragile on this quarter we announced our commitment to achieving that zero greenhouse gas emissions by two thousand and fifty we believe our approach live limit the same rigorous the same ability that be applied everything else we do we also believe these actions i don't have the right thing to do but fundamental to achieving long term success are sustainable leadership continue to be probably recognize as well he may have seen that investor's business daily weekly name as limb to it's top one hundred e s t companies list we're also company where diversity and inclusion represent a company priority as the core element of our culture during the quarter which he recognition by forbes as one the world's best employers and as the best were a place for women while the admin team has a strong track record oblivion above market growth and leading customer satisfaction we're always looking do more to further accelerate growth and strengthen our focus on customers we're implementing a new one as like commercialization combining for the first time orchestra customer facing activities under one leader the new what is a she brings together in strength as our sales marketing digital channel and services team the new enterprise level commercialization is led by pouring mcdonnell porical continually the advent was by group as business group president as well as serves as was first ever cheat commercial officer the way i like to characterized as moved to say we are doubling down on success we've achieved with a cj apply a holistic customer focused approach to all aspects of our business ross to move the chemistry those blogs division to ellis a jeep this close organizational line between instrument and chemistries development will further so it our progress on instrument connect rate for chemistry that consumers we believe that structure follow strategy and that this new orders a structure will further enhance our customer focused and the execution of aggro strategies looking ahead to the coming year we're in a strong position to consider deliver on our building by growth strategy as as business remain strong we enter the new year with a robust backlog and have multiple grow drivers coupled with the proven execute the excellence of the as been team a year ago to our as on investor day we raised our long term annual growth outlook to the five to seven percent range while reaffirming a commitment to annual operating margin improvement and double digit dps growth we are now one year in and well on our way to achieve these long term goals of vibe more details but for fiscal two thousand and twenty two our initial for your guide costs for a quarter growth in a range of five and a half to seven percent weeks back to continue our top mine growth as a lout launch market leading products and services invest in fast growing businesses and deliver outstanding customer service my carbon in the unstoppable one as on team and our ability to execute and deliver remains firmly attack this is our former for a living solid financial results outstanding shareholder returns and continue strong growth we are very pleased with our performance in two thousand and twenty one but not satisfied as i tell the ads on team the best is yet to come for our customers are team and our shareholders that can be on a call today i look for the a question i would our hand the call after bob bob
spk_3: thanks mike and good afternoon everyone in my remarks today i'll provide some additional details on revenue and take you through the income statement and some other key financial metrics or then finish up with our initial outlook for the upcoming year and for the first quarter unless otherwise noted my remarks will focus on non gap results as might match and we had very strong results in the fourth quarter revenue was one point six six billion reflecting reported growth of twelve percent and before i get into the details on acknowledge our supply chain team which has been doing a great job managing in a very challenging global environment cool revenue growth that eleven percent was a point above our top and guidance range currently accounted for zero point eight percent growth while emanate contributed half a point of growth during to for and as expected coburn nineteen related revenues were roughly flat sequentially in resulted in just over a point headwind to the quarterly revenue growth late in the quarter we did see transit times that were in certain cases greater than anticipated resulting in some revenues been deferred and to que one our results were driven by continuation of outstanding momentum and farmer and in bio pharma in particular or chemical energy and diagnostics and clinical also delivered strong results for us our largest market pharma grew twenty one percent during the quarter against a tough compare of twelve percent last year the small molecule segment delivered midpines growth while large molecule grew thirty one percent farmer was a standout all year growing twenty four percent for the full year after growing six percent and twenty twenty and in f y twenty two we expect our farm a business to grow in the high single digits
spk_1: chemical energy continue to so strength growing eleven percent with instrument growth in the mid teens during the quarter
spk_3: this impressive performance was against a three percent increase last year the see any business grew twelve percent for the year after declining three percent and twenty twenty growth was driven by continue momentum and chemicals and engineered materials
spk_1: and we expect our see any business to continue to grow solidly next year in the high single digits diagnostics in clinical grew eleven percent with all three groups growing nicely during the quarter for the largest dollar contributor to this market ddg driven by or pathology related businesses pls a g business continues to penetrate the clinical market and drive growth was strong performances by sell analysis and mass spec we saw mid teens growth in the americas and strong growth in china i'll be it up a small base
spk_3: for the year the diagnostics in clinical business group fifteen percent for the year after declining slightly by one percent in twenty twenty and we expect to continue to grow in the mid to high single digits and twenty twenty two academia and government which can be lumpy and represents less than ten percent of our business was up one percent to four versus a flat growth last year most research labs continue to remain open globally and increase capacity to pre pandemic clubs china came in at low single digits while the americas in europe were roughly flat for the year we grew seven percent after declining four percent last year
spk_1: we expect this market will continue to improve slightly and fiscal year twenty twenty two may expect growth of load amid single digits
spk_3: food was flat during the quarter against a very tough sixteen percent compare
spk_1: europe in the americas grew what china declined for the year food group thirteen percent after growing seven percent and twenty twenty looking forward weeks back food to return to historical growth rates in the low single digits
spk_3: and rounding out the markets environmental and forensics declined to present in the fourth quarter of a five percent decline last year as growth and environmental was overshadowed by a decline of forensics for the year we grew five percent off at two percent decline and twenty twenty and looking forward like food we expect
spk_1: environmental and forensics to grow in the low single digits in the coming year
spk_3: fragile it overall on a geographic basis all regions again grew into for led by america a fifteen percent sign grew a present and europe group four percent and for the year america's led away with twenty one percent growth followed by china at thirteen in europe at twelve percent now let's turn to the rest of the piano fourth quarter gross margin was fifty five point nine percent up ninety basis points from a year ago
spk_1: gross margin performance along with continued operating expense leverage resulted in an operating margin for the fourth quarter of twenty six and a half percent improving one hundred and sixty basis points over last year
spk_3: putting it all together we delivered ie ps of a dollar twenty one up twenty three percent versus last year and during the quarter we benefited from some additional tax savings resulting in a quarterly tax rate of thirteen percent and are for your tax rate was fourteen and quarter percent or share count was three hundred and five million shares as expected and for the year he ps came in at four dollars and thirty four cents an increase of thirty two percent from two
spk_4: twenty twenty
spk_3: we continued our strong cash flow generation resulting in four hundred and forty one million dollars for the quarter an increase of seventeen percent versus last year for all of twenty twenty one we generated almost a billion and a half and operating cash and invested a one hundred and eighty eight million dollars in capital expenditures during the quarter we returned one hundred ninety five million dollars to our shareholders paying out fifty nine million dollars in dividends and repurchasing roughly eight hundred and thirty thousand shares for hundred and thirty six million dollars and for the year we returned over a billion dollars to shareholders in the form the dividends and share repurchases and we ended the year with one and a half billion dollars in cash and two point seven billion dollars and outstanding debt and annette leverage ratio of zero point seven times all in all a great end to an outstanding year now let's move on to the outlook for fiscal twenty twenty two while we're still dealing with a pandemic and we have the additional challenges around logistics and an inflationary pressures we enter the year with strong backlog and momentum for the full year were expecting revenue to range between six point six five and six point seven three billion dollars representing reported growth of five to six and a half percent and core growth of five and a half to seven percent consistent with our long range goes and this incorporates absorbing roughly half a point headwind associated with kobe related revenues with the majority of that impact coming and que one
spk_1: we're expecting all three of our businesses to grow led by ddg we expect de de de de de de de to grow hi single digits with the continued contribution of any sd and cancer diagnostics
spk_3: we expect a cg to grow and high single digits with both services and our chemistries and supplies businesses growing comparably while ellis age he is expected to grow in mid single digits we expect operating margin expansion of sixty to eighty basis points for the year as we absorb the build out costs of train be at our frederick colorado and a sd site and in helping you build out your models were planning for a tax rate of fourteen and quarter percent consistent with current tax policies and three hundred and five million fully deluded shares outstanding all this translates to a fiscal twenty twenty two non gap pps expected to be between four dollars and seventy six cents to four dollars and eighty six cents per share resulting in double digit growth and finally we expect operating cash flow been approximately one point four to one point five billion and capital expenditures of three hundred million dollars this capital investment represents an increase over twenty twenty one as we continue our focus on growth bringing our any as the train be expansion online and expanding similar build manufacturing capacity for a cell analysis and genomics businesses we've also announced raising our dividend by a percent continuing an important streak a dividend increases and providing another source of value to our shareholders now let's move on to our first quarter guidance but before i get into the specifics some a good additional context the new year is february first this year a shipped from last year when it was in mid february as a result we expect some to one revenue to shift to the second quarter this year as customer shut down ahead of the holiday in addition as i mentioned we do expect to see the largest impact a covert related revenue headwinds in the first quarter we estimate these two factors will impact are based business growth by two to three points and a roughly equal in impact for to one we are expecting revenue to range from one point six four to one point six six billion dollars representing reported and core growth of five point nine to seven point two percent adjusting for the timing of lunar new year and covered related headwinds core growth would be roughly eight to ten percent in the quarter first quarter twenty twenty two non gaap earnings are expected to be in the range of a dollar sixteen to a dollar eating and a couple additional points before opening the calls for questions in conjunction with the new one agile a commercial organization like talked about we will reveal be reporting under the new structure starting a q one in addition will be providing a recast of certain ellis a d and a cg historical financials to account for the segment changes after the filing of our annual report on form ten k in december i am extremely proud of what the ads on t achieved and twenty twenty one and look forward to another strong performance and twenty twenty two with that for me back to you for q and eight
spk_5: thanks bomb
spk_1: that's me if you could please provide instructions for the queue and a now
spk_0: suddenly if you like to ask a question please press star followed by one i a telephone keypad if for any reason you will like to move that question please post star followed by him again to ask a question please press star one as a reminder if you're using speaker phone please remember to pick up your handset before asking a question of here briefly to allow questions to generate and que the first question comes from line that bj kumar with evercore you may proceed
spk_6: hey guys are congrats on i'm a nice blanket or and takes for take my question but maybe alex my just one on now mike maybe my first one on the guidance here a lot of fun you know questions around supply chain inflationary environment then the guy to five and a half to seven percent court ruled for fiscal twenty two what is it assuming for i'm in uprising was a small leone and doesn't assume any contribution from are endless around
spk_3: i'm a bj this is bob i didn't get the last party a question maybe home and yeah so i'm on the on the price we do have built in roughly a point of price into our plan which was a higher than what we had this year or bj and i'm in terms of inclusion we won't get into individual customer products but but what i would say as any sd is expecting another group year year a very strong
spk_6: growth and the sun and that that last point bob a movie and might few the the after i think the end of the outlook had up in a as the you know ramping up but quite meaningfully has anything changed and any as the a did it this up in a couple ramp up by timing chain you're all are now i'm curious are not notice around know anything change posts a crl in a response letter at new orders
spk_2: that not at all what i would say the one big changes the businesses don't even better than we get it antibiotic communicate in december of last year so really really appreciate the question you know as you know i'm in my we've been talking about the new capacity come on line that's still going right by per schedule that review that earlier last week and that's due to come on online by the end of counter twenty two twenty two thousand and twenty two but i think the team at the sun a fabulous job which is whether we're going to be able to grow double digit in in twenty two he without a new capacity because they're able to get in a dry process improvements abroad a book a business and and larger batches so the businesses really on fire i mean we are very very happy with it yeah vj if if we looked at or order backlog were taking orders for twenty twenty three already i a night as i've met his body what a bj that a year ago we're talking about could fill up the factor could around and we we blow my through that
spk_6: yeah that's fantastic up my can just as i to clarify opposed to complete response lower to new ardusat no change in into around assumptions the you guys are correct
spk_7: no no
spk_6: fantastic think you guys
spk_8: you're welcome for said the be back
spk_9: thank you mr kumar
spk_0: the next question comes from the line of tyco peterson with jp morgan you may proceed
spk_10: i go
spk_0: like a regular you appear on
spk_3: you're mine is now open
spk_11: great
spk_12: when we come to the next the queue
spk_13: i read
spk_0: the next question
spk_14: come from line
spk_2: excuse me a brandon call yet with jeffrey you may proceed i thanks good afternoon i'm a better might maybe just like maybe just starting off with the guide for for next you just a scalpel through some of the variable that side outside the considered when building the outlaw can be curious what you've been battered for china specifically as well it's what when i talk about the lobby see as the potential upside in in the guide and and bam maybe you can talk about the are china assumptions and by the way we're all became to a very happy with the momentum we have in china i think the the upside sits with the with are too large as and markets
spk_3: farmer and and chemical energy and as bob indicated his script we are assuming that high single sibley bad for the foreign markets have really come off this toward growth here in in in the and twenty twenty one
spk_1: that that i love a girl continue that would represent upside and in our biggest market and with allah really past things happen pharmasset big pharma as i see any as well right now so we've always
spk_3: i think this is the most bullish language i've had in a call for some time about the sunni so you can imagine there's been so even some caution about not over over over planet too much by say the to a to large than market represent the the highest the the where we think we make have some upside relative to our initial missile first the first guy for the year about with you i won't be but we had assumed for for china yeah brandon's good question on china and you know we continue to be very positive on china if some if we look at our but our backlog are order growth rate has has increased higher than our revenue for the last three quarters we exited twenty twenty one with our record backlog going into twenty twenty two for china and are or guy
spk_14: and comprehends hi single digit growth and in china so both being led by you know are from a geographic basis
spk_15: the growth will be led by america's and in china going forward
spk_2: okay and then mike in terms of the organizational structure of your life by need to see a oh well now and then correct me if i'm wrong are you planning to collapse a cg into the elysee do segment entirely on the art gallery owner yeah no yeah so ahead think for clarifying question so let me get know that they him a second part a question first which is the a cg group will be one hundred percent services in two thousand and twenty two and the one we're moving were moon over the sea as the porch and the chemistry and supplies portion of that business over to to take up for two reasons one is this the breath the responsibility that the poor would have we had made a change but we think that's gonna be a a h a driver grow them in law as take up to make a comment on that here and second because they think they have the team even closer together we're gonna be able to even further accelerate our connect rates on instruments for our chemistry products why the change hey it's best to make it when when things are going really well it's really time to put down the hammer really goes hard as you can and that's what we're doing here so as you may know when i first came in as ceo i had five cells forces that collapse those in the to this is next
spk_16: evolution of that overall transformation the company with this one agile and culture behind it the real belief is that the segmentation of our markets really costs are much more of a customer orientation as opposed to products centric view of how we want to sell and reach our customers and he think about the scale you get with a digital platforms digital infrastructure or services or as asian this makes sense to do this while you're on top of your game so all things are going well we thought of as late and kind of he saw her down even further and take a few in mind that is the come to what you're thinking about your new responsibilities
spk_2: yeah i pulled out my done and i'm excited i think that there were there when i'll that you see the consumer
spk_17: follow that he thought this was beaten to we both got into and solutions and that that will really piper customer expectations and i think of corrigan the team have over the there if you get acted shown that that that the find them consumer or that and completed by the tremendous neckwear topic that always shown the the up over an hour he completely him to allocate he he can relax that i like that
spk_18: and hey thanks for that jacob and buddhist to close off this that this line of the response a burglary and we thought thoughts about your dishonor responsibilities
spk_2: yeah thanks like care for support really excited about a new road and i think at unified commercial strategy and organization would really continue to strengthen adams costs more for i focus on helpless to align capabilities for the future where we're going to kind of maximize that connect rated customer lifetime value and also i think and accelerate execution of
spk_9: digital ambitions for to vote lad deliver near term growth and strategically that sort of future so very excited and they're already building on of what is a great capability him and company
spk_0: okay that's awful thanks
spk_19: expand present the question
spk_14: thank you miss a call yet the next question comes from a line of dead debruyne left bank of america you may proceed
spk_3: i get him it eric hey get to or next so couple of questions and i guess you can you talk about the margins man's and sixty eight point is it a disruptive else we've got an inflationary pressures gotten effects you gotten cody headwind coming off ttc like eat out once
spk_20: he underlined margins fancy normalized job obviously that the capacity to be on arrives i'm just now getting about the margins just be different pieces
spk_3: up your take that yeah yeah thanks eric today question and you know what we've been able to do you know even in this last quarter in the face of inflationary pressures is be able to drive pretty significant margin expansion across our businesses and and so as we think about that sixty days he eighty basis points to put kind of perspective we're we're anticipating roughly fifteen basis point head when associated with that train be the build up and that hiring the people in getting it does the product coming online and so forth and and so if we think about that that closer to you know seventy five too close to that one hundred basis points a lot of that's going to come through as she a operating leverage and the activities associated with are just not growing our our business expenses as fast as the top line and we are going to be covered looking to cover you know some of the inflationary pressures on the top line with that price so they talked about before which we we didn't really have and of us any significant price calm and twenty twenty one we have started see that we we took quick action earlier this year to to reflect that and so a common
spk_14: nation of that most of it being in our backs leverage but there will be as a some small i'm operating leverage up the top line as well if you take out the i'm a right has hit me at the gross margin if you take out the
spk_2: any as the expenses as a result of covering our costs to pricing increases saints and then just a couple of thoughts on any of that into smoking is now transportation spicy between on the consumable side and just enough to help prevent bio that looks like it's know
spk_21: glad he did it was under solicitations thank you a dare go soundness to question so of sam coming on under the second question so we've not seen any evidence of stock in on the consumers i think that's pretty birthday my bob graham and then
spk_22: what you can hear from us eminem in help final of them a color looming very very bullish about the long term prospects with as bio and an a level of work has been done to build new opportunities with our former partners
spk_21: but the where where where where are we on short term as well damn
spk_22: yeah thanks mike you know in terms of to for our as the revenue came a little bit below expectations and and that you know driven in part by cook nineteen related delays in clinical trial enrollment in overall the the interest that were seen both of our existing customers on the
spk_23: on the side that that we build i see work with as was new customers
spk_0: yeah that that's very very real in fact we've we've now signed an agreement you know it's the our first where with the large existing customer giving evidence to the interest that there are in terms of the work that we're doing on the pm a that these are approvals related the existing agreements
spk_24: we're gonna lie that was about side fitness were making good progress than that
spk_25: and so you a lot of momentum and and and number various other very pleased to have happened that's part of a business to to really bring together the strategy we've had which is to be the company diagnostic your development the commercialization partner you leveraging multiple medallion including a minute the chemistry a next generation sequencing
spk_0: like them
spk_26: thank you mister deborah
spk_27: the next question comes from the line
spk_3: need a psycho pete peterson do apologize
spk_1: like question comes from line of gone along with wells fargo you may proceed
spk_3: hi good afternoon reverend in a day my it's a my first question relate to that tweet tweet to guide what are some of the factors that my poor performance back down to them and single digit range specifically something that would start with the five handle yeah i think i'm what i would say his first by i think our or guidance is prudent a given the beginning of the year if we saw continued in a greater than expected disruptions in the supply chain that may impact you know demand a particularly and in some of the applied markets that could do it although we haven't seen that to be very clear dan boy we feel very good about where we are given our our forecast in and backlog so where where i would say are we have bias towards the upside and our forecast as opposed to bias towards the downside pressure that and then a follow up on the shifting chemicals and supplies from a cg to l sag if the logic behind the movies is to increase the connect ray can you remind me where is the connect rate today and where you want to be over some period of time
spk_2: yeah a great question and dumb you know the team continues to do a great job or under poor leadership period to to do that both at the purchase and the and then on the going after market what i would say is right now to look at the overall attach rated probably in the mid twenties right now and if you look at the attach rates
spk_14: year on year we saw very nice growth on the on the new placements arm so all the new instruments that dad jacob in team have been able to sell you know that's why we feel very good about the a cg business going forward so we we still have a long way to go there in terms of opportunity
spk_28: the across both the the services as well as the consumable
spk_29: some of our competitors are higher than that and so we we got aspirations that are well above that mid twenties
spk_30: get down as like may shows clears we're not making this changed because we were dissatisfied with improve the that connect rate this definitely no icing on topic a to further accelerated have you looked balance hispanic control and business responsibilities with the real driver was the one commercial crazed on the one commercialization and i think this is a a nice
spk_0: secondary benefit the reaction to get we think even more focus and said on lima between our product development groups on the cst side an instrument side
spk_1: helpful clarification might think it
spk_31: you're welcome
spk_3: okay local level
spk_2: the not club
spk_32: the line
spk_2: canete soda with as v be a link you may proceed yeah i make thanks for taking the question europe and lot
spk_1: thanks so of first one and on environmental of you have a leading position there were a number of products across the outside outage product line
spk_2: maybe just could you elaborate a bit for more for us what's going on there specifically related to china the timing and china is that just lunar new year is there something more that we need to consider
spk_31: yeah i think this out missed our bomb you can jump in on this i think when we talked about we talk about environment environment and friend's ex i think as a sort of a tale of two cities so so buried in in in that number is is a decline in in forensics i think gets probably tied to governments prioritize other investments that in this business coburn ninety in rome
spk_2: you know them their demands does not there i think relative to to china it's been more about priorities you know right now they're shifting some other priorities urge the the farmer and other coburn nineteen related type the bomb investments so i think that's probably the media the only thing i would add on that my kids are there is some ship but it's also timing yeah yeah there are some of the my for the yeah there there there is some but did that we've seen the that has shifted into you know into our fiscal first quarter and in the into f y twenty two by in particular in china i think long term we still see the the importance of the environmental testing in in china around the world remains to be seen or is still intact puneet it's more a function of dogs of timing than anything i think for jumping on on that power because we still a very very accomplished about a believe it to grow and violin those it in china i think is well known you know the the government's real emphasis on continued to have to make improvements in the color wipers citizens got it and then just on the l and on the liquid chromatography the staying on that point in i really appreciate your comment on on the chemistry columns and consume both now being part of l a edgy but you know of when we look at the a business or world today you obviously have a strong twelve hundred series offering
spk_16: world to seeing pick up from another the competitor and market space that a had lost and share the last few years in there seems like they're they're gaining some back but just wondering what you are seeing in the field and in terms of further competition and and this side of the market appreciate any thoughts thank you yeah i juggle have i lead off on here
spk_33: and mean i forgot to say is ill the key competitors in the lc market remain remain unchanged a new in the market and what i can tell you is that there were very very happy with where we are liquid chromatography so we're not playing any kind of catch up game and all here
spk_34: we delivered high teens growth in a quarter an accident
spk_0: the year with record backlog
spk_14: with the and our growth rate and orders was significantly higher than our revenue growth rate them and i think jake it's fair to say that the strength as both on the large and small molecule size with the with a real stand out of the china geographically i think you exit the year with but we see his record backlog so we're we're really bullish and i'll see business and and want to have some additional comments
spk_3: yeah thank my get something caught product and and i'm actually really good area right now as you said we are vehicle very strongly as i can see when i look into the market we are we in about competition versatile competition also and it's reminder yep you twat the go we did announced that we have expanded alibi of the portfolio substance julie and so we will have to pull rank up up by wealthy a biopsy the top of your had to the outfits and also online out the to to really drive growth and that the area so when you know about the weekend can be with all investment that coffins last month us right now so i truly believe we have momentum of continue with that l the next time great think they'll take him
spk_1: he must assume that
spk_3: the next question concerning on a pattern donnelly with city you may proceed
spk_1: he got less particular questions are magic bob and one wants the what not on for you to start to some the margin saturday talk about six or eight cups of expansion peace yeah sound again as a d facility might be a little bit of hedwig use talk through the moving pieces there any called up price a little bit as well can you stop the
spk_3: every your how much of an offset the facility is we can and about the underlying numbers well
spk_35: yeah so i would say maybe up on any as d
spk_36: if i look at and i you break it into two components if i look at it with existing capacity that team not only has driven topline growth but if we looked at the margin it actually is a creative to the overall as a lot margin so that team isn't a fabulous job ramping up your write a creative yeah right
spk_6: i'm very very nicely so and so we're making the investment on train be it's it's roughly fifteen basis points at ubs inconclusive of that sixty to eighty so to roughly ten ten to fifteen million dollars of incremental costs associated with the training and investment arm as well as lines come on
spk_16: board and so we're seeing that i'm take that to aside to those are packed kind of discrete and if i look at the business what what we're seeing is the fastest growing areas we actually are seeing benefit of mix and so we talked a little bit about so analysis but also sell analysis in l a c g ah is been very creative both on the gross margin
spk_2: and as well as the operating profit side and so we've got these faster growing businesses that are helping with with mix and then we're adding on the incremental price to cover the inflationary pressures that we are seeing and so forth but we've also got productivity and measures in place and this is where i think the one agile an approach to our systems and i'm our our infrastructure really pays dividends because we're able to leverage those those costs across a larger base and because a lot of that is internal we don't have that same level of pressure acosta i'm as as we are seeing and some other areas and and so it's a combination of product mix that price i talked about one percent price and then leverage in the operating spent side it's helpful x bob
spk_37: and then make me want for you on on see any
spk_2: in a you got called out and a maybe having the most part of town japan and a little while here on that segment on the obviously the and market else seems pretty high from from the customers and can use talk about i guess the conversations you're having their visibility again got into high single for next year off of a pretty strong twenty one is encouraging just your confidence and i got something maybe those upside to that number
spk_38: yeah sir patrick so i yeah so we're seeing really good and and market demand for and i think bob highly a lot of those like the advanced material the chemicals it really speaks to the overall recover economically and on a global basis and the fact that this in particular this customer base
spk_28: and deferred a lot of investments for for for some period of time so they're in a in a in a reinvestment mode
spk_39: and
spk_0: and we're pretty good visibility to to the final so i think the propaganda least a six month lead you on what's coming down an instrument purchases so
spk_14: we're feeling really really good about the seen a be business as well as others that a fiji story here as well where where
spk_2: in a world where we continue to increase or services in the segment which is this historic with more of a self maintain are kind of market as well as that the the the chemistry the consumer side so i think we are pretty good pretty good visibility you know given that are cognizant be able to put this kind number out there in in a for your got to this point i'm of anything else you'd add to that and we and we spend our time talking about this i think you got him he said well great thanks mike
spk_3: you're quite welcome
spk_14: thank you mr donnelly
spk_3: the next question comes to mind as does lot man with cleveland presets you may proceed
spk_14: hi thanks for taking my questions wanting to started or our on supply chain yeah a a a buck what to start with a quick follow up on supply chain wondered if you could give us the magnitude of of the push out you referenced in his it's all hours a month well lemme up on the path of the bob yours second but let's be real with them he wrote clearance or from our language when i used supply chain that means material constraints and then we have logistics
spk_2: i think of the issue the bob you were high them the chance at times was really logistics issue with and terms are believed to get product to customers and in and get raw materials we feel pretty good about what's been going on there so yeah a exactly so it was more just longer delivery time some and josh it was in the l a g business as you would expect
spk_16: and was a it was roughly a point in the in the in the quarter him again and given that ran through the nature it sounds like you're assuming this all it's in the first quarter is bizarre kind of with him about it in your died we're we're assuming that it will get better over the course of the first half of next year or first half of the fiscal year so not all of that will come back and one
spk_2: got it okay they wanted to follow up on your comments within the lcs range i've i believe in you're prepared remarks yeah i like a stronger install rates and this franchise in the fourth quarter just just wondered if you could provide any additional color on bad maybe what's driving it is it
spk_40: is it
spk_28: a higher faster kind of accelerated refresh levels
spk_39: it at at legacy accounts or or maybe seen gonna increased when rate that new accounts
spk_0: i'm going up great question on i'm past that to our expert on this topic jacob i would talk about gone on the lcs run
spk_41: yeah pretty mike and and as you mentioned we we had great success with our new on mobility the fifty five fifty ti or that lafayette yet i met and we had that up and kept daycare worker or and i use a meeting also los angeles striped airport as your to speak to we we had tremendous that section on our travel quite often caught
spk_42: pitt and that and particular in the bio pharma face to see a lot of smaller account of becoming a lot more mid mid sized account that that a body to
spk_41: build up cable them within that the ended up about my business so we see a lot of a tremendous momentum there are opting out that the pick it up and minor before smoke and
spk_2: yes i think i think part of storage ashes new new customers right on particular on the bio pharma side and also doing very well on the riverside with existing customers
spk_1: got it yeah really pursued ago
spk_17: you're quite welcome thank you mister waxman
spk_2: again if you will like to ask a question please press dog one or your telephone keypad
spk_3: or next question from for more and of michael go okay with keeping capital markets you may proceed a your for my god
spk_43: got a boy don't drive up
spk_44: good good are only of and here are our agreement
spk_0: is there any way yeah you can talk about the that give you another five percent of the dreadful market what are your thoughts around that deal
spk_45: yeah hey thanks thanks for noticing that we had work with michael team and and have the will and grima really excited about and election a pass it over to angeles new commercial officer to his is you on that question
spk_46: god i think get just tanks like yeah thanks like i think what we see that it's oh really me too bad beneficial arrangement ever going to see yeah
spk_47: not only are different customers but i'd different airspace different spaces where customers and it also helps with overall the address the market and in coverage so the ultimate team at the event or team will be able to share leaves and so once would be able to convert a market better will also be able to use or digital capabilities to be able to it as a find your customers and also increased to
spk_14: eric hosmer sites all around a very positive development
spk_3: and impulse hard to put an exact percentage on on the question but are we wouldn't be doing of it was on the margin yeah i was gonna say i'm paul this bob just that to add damage that we didn't really see any any revenue that's all future opportunity for us and i think one of the areas that the banter is is a strong is any in the research area academia government in this will help us even you know cover that market yeah even broader than we do today yeah
spk_2: absolutely
spk_14: thank you
spk_3: the next question consumer line of that down and brennan with kaolin you may proceed hey mike about how ya doing
spk_1: are at an average up
spk_40: thank you thank you well my arm
spk_3: maybe for question any the maybe i missed it did you guys given number for twenty two what's implied
spk_45: we did not we eat but what we did say is we would expect strong double digit growth
spk_2: the that a day with roughly what i can tell you as we let we exited we exited at a at a run rate that was higher than the if you if you took our a to twenty five that we talked about and divided by the by for or run rate was higher the right so we continue to ramp up and thanks to that question we were we was hard to explain it in a calm narratives but the above mentioned argue for extra rate is higher than the the for your number and maybe maybe could you give a little i think bob mentioned in the prepared remarks or and in impunity think in order to twenty three could you to give it isn't that what the utilization is today your capacity that's available and and he any color about the man friends book a business end of that nature yeah in short were run and twenty four seven i both are frederick facility as well as our our boulder facility which was a legacy facility and up we are
spk_45: feel very good about our ability to continue to that expand capacity and was crying on team have been able to do his increase both throughput as well as yield and and so that's really helped us drive additional capacity with the existing footprint her the existing i'm manufacturing facility and you know that train be as as we talked about has the opportunity to add me
spk_2: more than one hundred million dollars of incremental you know volume coming online need a starting at the end of this site or our fiscal or calendar twenty twenty two got it and and then maybe on the one agile and i'm like market could produce give us a little on my son you got their your you made changes to the sale for the made of your predecessor now you going further so how should we see this manifests from the outside of the next on a new one a key or does it this way two stronger growth italy the more feel better margin more durable growth of the to the customer live in a see something but how will that manifests in reporter resulted
spk_48: i think is it as a check for each one of the things you listed there but the number one reason why would join his to describe more growth and it is a natural evolution of of the transformation the sales force i started a number of years ago and it really points to fact that we have this broad base portfolio the someone into the same customer base
spk_14: and
spk_1: why have to separate out sell forces have to go to a coordinated between a glass else horses and then a big push to be made or less of year and term the digital this allows i believed even go faster on realize our digital ambitions and then and and you've got the voice the customer will be right right in the see your staff and on on pork
spk_9: dabbled the head of the service liberalisation so everything relative the customer facing the that we do and in his company will be under one leader we just think it's gonna find ways to accelerate growth increase our customer satisfaction and the thing is we've pushed more more a of our business because custard want to buy that way through digital the have haven't
spk_0: national a knock on effect of of efficiency gains in the piano
spk_14: great and then and hundred and one more of our he doubted in great shape
spk_3: so the proverbial question that and then just wondering you know what is the funnel look like and the update on the strategy and a you'd been pretty cognitive not wanting to go to be here in canada not disrupt what you dealt average just give us a sense of you know what the needs are today and i you know what of the outlook for for and the main twenty two yeah sure sure damn so up you have used as been used as were less of a years of the the build and and by a gross energy so we're still very and still on the by element of of of of fuel in future growth and of for example in this past year and we did the best bio acquisition really got us into liquid biopsy and really allows us to you know played our strengths we already have from our our cdx lightsey see business so where to look for getting up to new such as those were you're in a hot in high higher growth markets and that the total company average where
spk_1: they can really benefit by being part of ashland and when they have differentiate technology indifferent to the differentiated the teams
spk_2: we'd we'd we will stay in our lane so to speak on and on valuations out that say that the and you you know this but an id rather than the market is still very robust were very active and we just want to make sure that the deal works were up for our shareholders but dumped you're deploying campbell for emanate and is part of our story
spk_16: going forward and it's all up granted that exact excellent they thank you
spk_2: thank you mr brennan
spk_49: the next question comes on the line as jack me on with nephron research you may proceed
spk_14: thanks good afternoon is at one that hype one that they get a little bit more on sell analysis so heard clear to one hundred million in the quarter was the twenty twenty one contribution and somewhere to the line of questioning on a sd what's the target there for twenty twenty you grow yeah so i'll i'll start with a as the the saw analysis business and all my bring in jacob yorkers a it is just done a fantastic job and is really continue the momentum that we saw to begin you know throughout our you know twenty so it ended just just short of four hundred million dollars for the full year
spk_1: and i grew in in the mid twenties and i would expect us to ah looking forward if we think about where the market is headed in the you know fundamental demand there that will be
spk_3: he know growing double digits for sure going forward and dumb as i mentioned before the beauty of that businesses it it's right in grain with with where the research and and technologies are going in were a lot of money is being put in ah but it's also an extremely well run and profitable business force and jacob maybe even give some insight a terms of where the and marcus if you think
spk_50: an hour drive and been driving the grow the where we think it's gonna come from in the future
spk_3: yeah think clouded by it but a really good question obsolete something up be like to talk about that that them up at that has been to a successful the past year and the our focus on the moon on called faith has really paid off we continue to see opportunities there and be continued to see that our portfolio of of the exhumation lie
spk_51: i'd sell it is they're required to really drive the yet at the beach at all whatsoever he will be to fit in that a dream pipe bomb and onto to the academic market that that's where the to the biggest there and a big momentum going forward why we have seen here the popular time also that the diagnostic business particularly without
spk_0: our a lotta cometary it is is picking up goodspeed speed thought i would say the main opportunities it's in there and the by obama space
spk_52: integrated you ask a question about any as the i have now and again a while i continued an outline just you're on the comparison of cats are am i your i bought my about my follow up was gonna be yeah a lot of discussion obviously around driving growth
spk_1: was hoping just get your philosophy and cap backs so your i think the game from by about four and a half percent sales for twenty twenty two
spk_3: be higher than know you've done the last few years do you expect this is gonna remain elevated more you can in the medium turner more is this your just kind of some the near term opportunities coming through yet
spk_52: jack has a good question and what i would say is if we look at where are have that they're different kind of part cat backs and not all it's not are created equal but at the reason that is being increased is really define that growth and capacity expansion whether that be trained be in any as deal with a capacity expansions in places like genomics and in and and sell an hour
spk_2: says and i would say given our growth trajectory in in those areas i would expect us to continue as you know probably an elevated level to to incorporate that growth you know as as my said we got this by and build strategy and as part of the build strategy and in it has paid off in spades with a nasty and what i would say is you know we're not and you know there's more letters in the alphabet didn't be it doesn't end at be butter
spk_53: you know what i would say is there's there's more going be prudent about it but also be aggressive about going forward
spk_28: thank you
spk_39: thinking athenian
spk_0: last question is some line at catherine salt with bad you may proceed
spk_54: hey guys thanks to the questions first time
spk_3: at first and on the outside died from a single digits i think on the last call you talked about energy theater replacement cycle climb back on maybe being in the midst of an see replacements monk cycle on small molecule and you'll know have chemistry isn't there a small so sweet think about this has been more towards the upper end of that meant single digit range for
spk_14: twenty two are are there some sort of catch up spending and twenty one that that may be at the headland as he get under twenty two yeah i think you're you're spot on catherine it's it's the former not the latter a think about it as a higher end and that that's where i would say if we think about where where are opportunities for upside are are in the instrumentation business and continue their strong momentum that we see now we're we're also going up against a you know if i pick up fifteen percent core growth
spk_2: right yeah yeah year on year but we feel very good about the momentum in that business particularly in the areas that you just talked about in in chemical energy and in and pharma we continue to believe that the the form business coming out a kuwait is structurally are a higher growth market and as we continue the police are focus on the by a farmer the large molecule if you look at that throughout you know twenty twenty one that was tom much growing much faster than the overall form business and so we would expect that dumb and we feel very good about that business going forward
spk_21: i am and then maybe one mars if had a lot of success on on a nasty and you have any interest in entering other areas of manufacturing components or bio pharma it's gmp reagents are in a plasma or other areas and and is that something that that you might get into and twenty two
spk_14: well as governor we're always looking for new drivers a growth that that would make sense for ads want to be directly involved in
spk_55: nothing to report for two thousand and twenty two
spk_22: we better than a handful adding an indifferent additional of them letters if you will to the alberta be serving in any as the but the never say never to to the fetus of your question a great thank you quite welcome thinking result and the last question and some line of no on balance with jp morgan you may proceed
spk_2: eight the guy fieri
spk_22: yes
spk_3: i think i go a day in like a psycho sign up on issues i'm no can happen only about an hour so sure so so dark go on appreciated that china colorado see people focused on china tenders at the moment doesn't sound like you're flying in the issues there specifically for taco but we talk about what you're gonna stay on the ground there for china and then think is the cdx business suit you mentioned that earlier mike and yeah she had a bunch of press releases during the quarter about your do approvals hurt for cdx
spk_14: yeah so salmon oh this is something you been talking to your team about relative specifically about what may be happening in the china you know diagnostics market and and what's going on there so we think we got a pretty good protect position but the on july be a bit more
spk_2: yeah happy to my tyco think so the question
spk_56: we we that another to sober offer or pathology business that the former doc obesity well a really good quarter including china and you know you may be referring to go to you know the by china requirements that know we're all aware of that that that are happening specifically to our our former dakota
spk_16: note that you will
spk_57: you know the relative unique position particularly with pdl one and and adding
spk_58: minimal number of local competitors you know really differentiates us so we have itself
spk_59: really pressure from from the by china impacting a business
spk_16: how about we we have continued to see really get into us now me an imperial one any diagnostics that lot more broadly speaking in in china for or diagnostic got it
spk_3: didn't itself i recall arm you got your pdl one a registered in china right
spk_60: yes we do i mean what what we register that almost exactly two years ago come in the first ever companion diagnostic in china and it's it's doing well for us there in china with actually no train over four hundred different apologist throughout china to to utilize our company like nothing
spk_2: yeah hey hey and tyco maybe just a follow up if i looked at our business in china for dg for the year it grew in the thirties and it was actually in excess of that for que for so it you know it at da very positive momentum and cdx is roughly hundred million dollars
spk_61: x and x the red bile accident
spk_14: right on and then i'll analysis michael i know where the prior to he talked about his movie that portfolio downstream
spk_2: you talk about you know their efforts how you're you'll hear kind of personality into you see and and further downstream
spk_62: yeah so ticket one too
spk_2: follow up with some dogs here
spk_63: but i'd when you take downstream and can you can do it
spk_0: fellow more
spk_1: i'm i'm more about that
spk_64: increases are you know already yeah
spk_0: founded by putting out a yet we we see a big opportunity in in the in the by parking space and both fall fall gone out of business but also follow all power and influence my business so

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