Agilent Technologies, Inc.

Good afternoon and thank you for attending today's Agilent Technologies Inc. Q2 2022 earnings conference call. My name is Selena and I will be your moderator. All lines will be muted during the presentation portion of the call with an opportunity for questions and answers at the end. If you would like to ask a question, please press star one on your telephone keypad. I would now like to pass the conference over to our host, Pramit Ahuja, Vice President of Investor Relations. Please go ahead.

Thank you, Selena, and welcome everyone to Agilent's conference call for the second 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 second quarter 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 April 30th. 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 risk 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. In Q2, the Agilent team again demonstrated the resilience and strength of our business model. We delivered core revenue growth in line with our forecast, expanded operating margins, and exceeded our EPS expectations. We did this while navigating a dynamic macro environment, including the conflict in Ukraine and COVID-related lockdowns in China. Our Q2 revenues are 1.61 billion. This is up 7% core and is on top of growing 19% in Q2 a year ago. Order performance was even stronger, growing double digits on a core basis. Second quarter operating margins at 25.3% continue to expand, up 140 basis points from last year. Earnings per share of $1.13 are up 16%. We achieved these results despite the COVID-related lockdowns that closed our operations in Shanghai starting in late March and continuing through the entire month of April. We estimate that this is roughly a 350 basis point headwind to our core revenue growth for the quarter. As Bob will indicate when he takes you through the details, this business is not lost and is expected to be recovered through the rest of the calendar year. Most importantly, our team in China is safe, and we restarted limited operations in May at our GC factory and logistics center in Shanghai. From an end market perspective, the pharma and chemical energy markets again led the way for us. Our pharma business, ASLA's largest market, grew 13% led by biopharma growing high 20s. This represents our seventh consecutive quarter of double-digit growth in the pharma market. It also builds on top of a stellar 29% growth rate last year. Momentum in our chemical energy business also continues this quarter, delivering 9% growth in line with expectations and overcoming the shutdown of our primary GC production facility in Shanghai and the conflict in Ukraine. Growth was driven by advanced materials and chemicals, On a geographic basis, the Americas again led the way with 13% growth, still on top of 27% growth a year ago. Europe also performed well with growth coming in at 7% following 16% growth last year. China revenues run track with expectations through March, but we exit the quarter down 3% given the COVID-related lockdowns. While revenues were affected by the temporary shutdowns in the quarter, overall demand in China remains very robust. In fact, China was the fastest growing region in Q2 from an order perspective, up about 20%. We remain very confident about the ongoing strength of our business in China. Looking at performance by business unit, the Life Science and Applied Markets Group generated revenue of $896 million, an increase of 4% on a core basis. Given our manufacturing footprint and relative strength in China, LSAG was disproportionately impacted by the COVID-related shutdowns there. Provides some additional perspective, all major product lines, excluding GC-related products, grew solidly in the quarter, led by strong performance in our cell analysis business growing in the mid-teens. Orders for LC and LC-MS continue to be strong. Orders grew mid-20s globally, with particularly high adoption of our two new bio-LC products. On the LC-MS front, we look forward to announcing several exciting new offerings at the upcoming ASMS conference that will expand our portfolio. our value proposition continues to resonate with our customers and lsag exit the quarter with record backlog the adjunct cross-site group posted services revenues of 353 million this is up 10 core growth and services again broad-based across services contracts preventive maintenance compliance education and informatic enterprise services the scale of our acg business And the breadth of the portfolio continues to drive growth and margin expansion, even in the face of inflationary pressures. Q2 marked the sixth straight quarter. We delivered growth across all markets and regions. The Diagnostic and Genomics Group delivered revenue of $358 million, up 15% quarter versus 16% last year. Our excellent growth was led by NASD and Genomics. The NASD team delivered yet another strong quarter, generating record revenue and profitability During the quarter, I had a chance to visit our team in Colorado and see firsthand the excellent progress that's being made, meeting current customer needs, and also the work underway and continue to build for future growth with our Train B expansion. We remain extremely bullish about NASD's future, and with Train B coming in line in 2023, we're adding yet another 150 million plus in capacity. Looking across the company, our one-agent approach and focus on our customers has never been stronger. During the quarter, we were ranked number one in our industry and number two overall in customer satisfaction in the management 250 ranking developed by the Drucker Institute. In addition, new Agilent commercial organization is already resonating well and delivering successfully for our customers. Agilent's Q2 results are yet another proof point for how we build a resilient company that can quickly adjust to a changing environment and still post strong results. Given our results to date, along with our backlog and continued order strength, we are again raising our full-year core revenue growth and EPS guidance. For the year, we are now expecting 8% to 9% core revenue growth and EPS of $4.86 to $4.93. Bob will provide more detail on our Q3 outlook along with more information and what we expect for the rest of the year. After Bob's comments and before we take your questions, I will be rejoining the call for some concluding remarks. Thank you for being on the call today, and now I will hand the call off to Bob.