Agilent Technologies, Inc.

Hello and welcome to the Q1 2022 Agilent Technologies Earnings Conference Call. My name is Emily and I will be coordinating the call today. During the presentation, you will have the opportunity to ask a question by pressing star followed by one on your telephone keypads. I now have the pleasure of handing the call over to our host, Parmi Ahuja, Vice President, Investor Relations at Agilent Technologies. Please go ahead.

Thank you, Emily, and welcome everyone to Agilent's conference call for the first quarter of fiscal year 2022. With me are Mike McMullen, Agilent President and CEO, and Bob McMahon, Agilent Senior Vice President and CFO. Joining in the Q&A after Mike and Bob's comments will be Jacob Tyson, President of the Agilent Life Science and Applied Markets Group, Sam Raha, President of the Agilent Diagnostics and Genomics Group, and Poring McDonald, President of the Agilent Cross Lab Group. This presentation is being webcast live. The news release for our Q1 financial results, investor presentation, and information to supplement today's discussion, along with the recording of this webcast, are 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 any acquisitions and divestitures completed within the past 12 months. Guidance is based on exchange rates as of January 31. As previously announced, beginning in the first quarter of fiscal 2022, We implemented certain changes to our segment reporting structure. We have recast our historical segment information to reflect these changes. These changes have no impact on our company's consolidated financial statements. 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 thanks to everyone for joining our call today. Our momentum continues. The AdSense team delivered a strong start to 2022 in Q1, exceeding expectations of both the top and bottom line. Our Q1 revenues are $1.67 billion, This is up 9% core and up 8% reported. This is on top of growing 11% core in Q1 a year ago. Excluding COVID-19 related revenues, our core growth is even better at 10% this quarter. We continue to see strength in our order book with robust order intake throughout the quarter. In fact, Q1 orders grew roughly twice as fast as revenues. Q1 operating margins are healthy 26.3%, up 80 basis points from last year. Earnings per share of $1.21 are up 14%. The EPS increases versus a tough comparison of 31% growth in the first quarter of 2021. These strong results have been achieved in a very dynamic environment. I could not be more proud of the Agilent team's ability to execute and deliver. Let's take a closer look at some of what's driving our strong results. Bob will go into more details later in the call, but our two largest markets continued strong double-digit growth. Our pharma business, Agilent's largest market, continues to lead the way for us, growing 17%. Global end market demand for our products and services remains very strong. Biopharma grew 32%. while small molecule growth came in at a robust 9%. The momentum in our chemical and energy business also continues, delivering 15% growth in the quarter. This was driven by mid-teens revenue increases in chemicals and advanced materials. PMIs remain positive, along with their overall outlook in the chemicals, energy, and advanced materials markets. On a geographic basis, our results led by 13% growth in the Americas. This is on top of 13% growth in Q1 a year ago. China grew 3% on top of 25% growth in Q1 of last year and was impacted by the timing of Lunar New Year as noted in our November call. Demand in China remained strong as orders grew high teens in the first quarter. We continue to invest in China for China to further strengthen our ability to serve our customers. We recently announced a $20 million expansion of our Shanghai Manufacturing Center to meet growing demand for our locally made liquid chromatography, spectroscopy, and mass spec systems. Looking at performance by business unit, the Life Science and Applied Markets Group generated revenue of $976 million, an increase of 7% on a core basis. This is versus a 10% core growth in Q1 of 2021. LSAG's growth is led by strength in the pharma and chemical and energy markets. From a platform perspective, customer interest and purchases of our chromatography systems and mass spec offerings are very robust. Our chemistries and supplies business, which moved over from ACG this year, continues to do very well, delivering double-digit growth. We also continue to invest and strategically partner for future growth. Late last week, we announced the acquisition of very exciting artificial intelligence technology that will be integrated into our industry-leading chromatography businesses. This technology has the potential to significantly improve lab productivity and accuracy by automating manual interpretation of chromatography data. We believe that this capability will be very well received by the high throughput labs Agilent serves around the world. This acquisition is an example of our build and buy growth strategy. As a covalence to work, our internal R&D teams are going to develop these types of capabilities for other Agilent platforms. During the quarter, we also announced a partnership with Lonza to integrate Agilent's analytics technologies and techniques into Lonza's Cocoon platform cell therapy manufacturing workflow. The collaboration has the potential to transform the way personalized cell therapies are manufactured. In addition, to ensure we can meet the strong and growing demand for our cell analysis offerings, we also recently announced plans to invest more than $30 million for the construction of a new manufacturing site in Chicopee, Massachusetts. The Agilent Cross Lab Group posted services revenues of $359 million. This is up 10% core against 11% Q1 2021 core growth compare. This growth is broad-based with strength in service contracts, preventative maintenance, compliance, education, and informatic enterprise services. Our focus on providing a differentiated customer experience that leverages our large-scale and talented customer support team continues to pay off. Our connect rate continues to improve, and our install base continues to expand, both voting well for continued strength in our services business. The Diagnostic and Genomics Group delivered revenue of $339 million, up 14% core, versus Q1 2021 core growth of 15%. Our excellent growth is broad-based across pathology, genomics, and NASD. Our pathology business grew roughly 10% with strength across all regions. Our core genomics business grew low teens with strength in target enrichment and our genomics quality control product lines. The NASD team continues to deliver, driving 45 percent plus growth in the quarter. Meanwhile, the additional capacity expansion at our Frederick GMP oligo manufacturing facility continues to proceed as planned. We continue to expect this capacity to come in line by the end of calendar year 2022. Our resolution bioscience team achieved a major milestone in the first quarter by completing the pre-market approval submission for the resolution CTDX first liquid biopsy as a companion, assay as a companion diagnostic. This was done in conjunction with Mirati Therapeutics for non-small cell lung cancer and is currently under review by the FDA. It is the first we hope will be several indications for liquid biopsy assays. I am pleased with how we have started the year. Building our Q1 results, continued order strength, and execution prowess, we are increasing our full-year financial guidance. We are raising our core growth guidance to a range of 7%, 8%, up 125 basis points at the midpoint from our prior guidance. fiscal year 2022 non-GAAP EPS guidance has increased to a range of $4.80 to $4.90 per share, going 11% to 13% over last year. Bob will provide the Q2 outlook along with more detail on our improved full-year guidance. We're very pleased with our Q1 results and are looking forward to another strong quarter and year ahead. I'm also very confident in our team and our ability to execute and deliver for our customers and shareholders, no matter what the challenge. Thank you for being on the call today, and I look forward to taking your questions later. However, for right now, I will now hand the call off to Bob.