Agilent Technologies, Inc.

Good afternoon. Thank you for attending today's Agilent Technologies Q3 2022 earnings call. My name is Hannah and I will be your moderator for today's call. 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 1 on your telephone keypad. I would now like to pass the conference over to our host, Parmeet Ahuja with Agilent. Please go ahead.

Thank you, Hannah, and welcome everyone to Agilent's conference call for the third 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 Porig MacDonald, president of the Agilent Cross Lab Group. This presentation is being webcast live. The news release for our third 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 July 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 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, everyone, for joining our call today. In the third quarter, we once again demonstrated the strength of our diversified business and the unstoppable One Agilent team. We delivered an excellent quarter, significantly exceeding our revenue and earnings expectations. Revenues of $1.72 billion are up 13% core. This is on top of 21% core growth in Q3 of 2021. Third quarter operating margins are 27.5%. Operating margins continue to expand and are up 150 basis points from last year. Earnings per share of $1.34 are up 22%. Our strong results in Q3 coupled with orders continuing to outpace revenues, highlight the ongoing strength of our diversified business. The momentum in our business continues, and we are once again raising our outlook for the year. Let's take a closer look at our Q3 results. From an end market perspective, our results were once again led by strength in our two largest markets, pharma and chemical energy. Our largest market, pharma, grew 16% versus 27% a year ago. Within pharma, Both the biopharma and small molecule segments grew double digits. The momentum in our C&E market segment continues, with Q3 growth of 22%. This is on top of 23% growth a year ago. The C&E market is being fueled by demand in chemicals, along with strong secular demand and ongoing investment within the advanced materials space. We're also very pleased to achieve double-digit growth in the food and environmental and forensic markets, with both markets growing 11%. In our last call, I shared our belief that the business impacts of the Shanghai COVID-19 lockdown would be transitory. I also expressed that we remain confident about the ongoing strength of our business in China. In Q3, the China team delivered 29% growth. These stellar results were driven by continued strong end market demand, coupled with the fast and expected recovery of production and shipment activity following the end of the Shanghai area lockdown. We are also very pleased with its results. which highlights the customer focus, drive, and outstanding execution of the Aslan China team. Strength in America has continued as we post another quarter of double-digit growth on top of 32% growth last year. Our European business grew 6% against a 23% last year, despite a two-point headwind for the curtailment of our operations in Russia. In terms of business unit performance, the life science has an applied revenues of $1.02 billion, up 18% on a core basis. Growth was broad-based, but continued strong demand for our LC and LC-MS offerings, where we posted high 20s growth. Our spectroscopy business grew to low 30s, driven by strength in the advanced materials market. Chemistries and consumables, cell analysis, and our GC business each delivered double-digit growth in the quarter. LSAG's end-market growth was broad-based, with particular strength in the pharma and chemical energy markets. Our farm results are driven by strength in the biopharma segment, which grew more than 20%. We had an excellent showing at the recent ASMS conference, introducing several important LCMS and GCMS instruments and biopharma workflow solutions. These innovative and intelligent LCMS and GCMS systems have been designed to make the lives of our customers easier. The building instrument intelligence and a higher level instrument diagnosis help maximize system uptime and improve lab productivity by allowing operators to focus on their analysis rather than on their instruments. In addition, we introduced an industry-first hydro-inert source for GC single-quad and GC triple-quad instruments, enabling customers to seamlessly migrate from helium as a supplier of gas to lower-cost hydrogen. And rounding out the list of new products announced at ASMS, we introduced the MassHunter BioConfirm 12.0 software, and integrated compliant workflow targeted at the fast-growing oligo-based therapeutic development market. These new products have already been well-received by customers and represent the latest addition to Agile's history of leadership in mass spectrometry. Our LSAG business also won some important awards during the quarter, including the 6560C iMobility LCQ12 system, winning the Scientist's Choice Award for Best New Spectroscopy Product. Earlier this month, we also strengthened and broadened our advanced materials and biopharma portfolio with the acquisition of PSS, Polymer Standard Service, a leader in polymer characterization. We're extremely pleased to welcome the PSS team and their technology to the Agilent family. The Agilent CrossFab Group posted services revenue $359 million. This is up 10% core. We grew 10% core even as lab activity continues to ramp in China. Growth in services was again broad-based across services, contracts, preventive maintenance, compliance, education, and informatic enterprise services. Strong instrument placement and increased connect rates continue to be a driver for our service business as customers continue to see value in our ACG offerings. Another critical important factor in our results is the scale and execution capability of Ashland's world-class global service delivery organization and serve our customers to meet their needs. as is seen as the trusted company to work with among our global customers. The Diagnostic Genomics Group delivered revenue of $340 million, up 3% core. This is the first I compare a 37% growth last year. The solid results in our clinical cancer testing and NGS businesses were partially offset by COVID testing headwinds in a QPCR portfolio. In addition, the DGD business in China continues to ramp from the COVID-related shutdowns there. NASD revenues rubbed modestly in line with expectations. As we noted last quarter, Q3 included the impact of a planned shutdown of our Albuquerque manufacturing line in Frederick, Colorado. The shutdown of Frederick was for both routine maintenance and development of key elements of our Train B, our new manufacturing line that will increase our capacity $150 million-plus when fully ramped. While we continue to make good progress on the construction of Train B, we have seen some supply chain-related delays, and are now targeted at mid-year 2023 go-live, a slight delay. We see continued strong demand for oligo-based therapies as the number of approved drugs continues to increase and the pipeline of drugs in development are targeting disease states with larger patient populations. We are more confident than ever in the long-term trajectory of the market and our business. In addition to these highlights, I'd like to also point at the recent release of Ashland's 2021 ESG report. While we've always published our progress in sustainability and addressing societal needs, this year we've taken our approach to the next level. We address these issues in a new format that, for the first time, that looks specifically at our progress in the areas of environmental, social, and governance issues. We hope you have a chance to review our progress in ESG by checking out the report on the ASLIN website, learning more about how we're executing our mission to advance the quality of life. ASLIN's Q3 results, again, point to the strength of our diversified business and the outstanding execution ability of the Ashland team. We continue to bring innovative, differentiated new offerings to the marketplace. Acceleration in digital orders growth continues, as well as new customer acquisition. In addition, as we started 2022, we undertook a bold move to create one Ashland commercial organization to further drive customer focus and growth. The strength of our portfolio and the continued strong execution by our one Agilent commercial organization make a powerful combination, and you see in the results we're delivering. Customer satisfaction is another all-time high this quarter. We continue to outgrow the market. As a result of our strong Q3 performance and continued momentum, we're once again raising our full-year revenue and EPS guidance. Bob will share more of the specifics. It's an exciting time at Agilent. with the best yet to come. Thank you for being on the call today, and now I will hand the call off to Bob. Bob?