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Unknown
Operator
first quarter of fiscal year 2024. With me are Mike McMullen, Agilent President and CEO, Porig McDonald, Agilent Chief Operating Officer and CEO-elect, and Bob McMahon, Agilent Senior Vice President and CFO and Acting President of the Diagnostics and Genomics Group. Joining in the Q&A will be Phil Binns, President of the Agilent Life Science and Applied Markets Group, and Angelica Reinman, our newly named President of the Agilent CrossLab Group. This presentation is being webcast live. The news release for our first 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 .agilent.com. Today's comments 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 forecasted exchange rates. As previously announced, beginning in the first quarter of fiscal 2024, we implemented certain changes to our segment reporting structure related to the move of our cell analysis business from LSAG into DGG. We have recashed our historical segment information to reflect these changes. These changes have no impact on our company's consolidated financial statements. During this call, 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 risks and other factors. And now, I'd like to turn the call over to Mike.
Mike McMullen
Agilent President and CEO
Thanks, Parmit, and thanks everyone for joining our call. Before I review our first quarter results, I want to first acknowledge our news last week that I'll be retiring at the end of the fiscal year and that Poorly McDonald is Agile's new Chief Operating Officer and will become CEO on May 1st. It was a difficult decision to retire. After almost 40 great years with this special company and in a role that I love, I will miss working with the one Agile team. However, I must say it's a great feeling and quite gratifying to be handing over the CEO reign to a tremendously capable successor in PORIG with Agile operating from a position of strength and with a very promising long-term outlook. I've known PORIG for more than 20 years. I've worked closely with him during that time. He has always been completely committed to our customers and Agile's success. He is a product of our culture, knows our company, team, and markets, and knows how to develop compelling business strategies, build winning teams, and deliver exceptional results. PORIG has a strong track record result at every position he has held during his 26-year career at Agile. I know he has the knowledge, leadership skills, and customer focus that will be key to Agile's success moving forward. I look forward to all of you seeing firsthand what a capable, resulctive leader we have in PORIG. PORIG, would you like to say a
Porig McDonald
Agilent Chief Operating Officer and CEO-elect
few words? Thank you, Mike. I'm honored to be able to follow you as Agile's next CEO, and I'm grateful for your support throughout my career and during this transition. You have made a significant impact on Agilent, our customers, and our team. I'd also like to welcome Angelica Ryman to this call. After leading our services division for the last two and a half years, I can tell you she has the experience and the skill set to continue evolving ACG to align with the growing opportunities that the business has demonstrated in supporting the broad install and our enterprise customers. Expect to see continued great things ahead from Angelica and ACG. I've had the pleasure of meeting some of you on this call, and I look forward to meeting and working with you all in the future. Agilent has a compelling story to tell, and I'm excited by the possibilities that lie in front of us as we help our customers bring great science to life.
Mike McMullen
Agilent President and CEO
Thanks, PORIG. For today's call, I will take Lee covering the overview of our financial results, while next quarter PORIG will take on these duties as the new CEO. Now, onto the Q1 results. We are pleased with the start of the year. The Agilent team continues its strong execution in a challenging market environment. The first quarter provided further evidence of our team's capabilities with revenue coming in better than expected at $1.66 billion. This represents a .4% growth in Q1 of last year. The better than expected top line results and disciplined cost management drove higher than expected earnings per share of $1.29, down 6% from Q1 last year. Given the solid Q1 results and our continued view of slow but steady recovery throughout the year, we are maintaining our full year outlook that we share with you in November. The key to our Q1 performance was the ongoing sequential stabilization we experienced in China and secular growth drivers in the applied markets globally. From an end market perspective, our total form of business is down 12%, which was in line with our expectations. This follows an 11% increase in the first quarter of last year. While declining overall against a very strong Q1 of last year, our applied end markets were more resilient than expected and showed sequential growth from the fourth quarter. In these markets, PFAS solutions and advanced materials including batteries and semiconductors were highlights for us. Geographically, both China and Europe finished Q1 better than expected while revenue for the Americas was in line with expectations. Those are the performance business units the life sciences applied markets group delivered revenues of $846 million and down 11%. This is against a difficult compare of 10% growth last year. While still too early to call an overall market recovery, results were better than expected. Our diversified portfolio and broad and market coverage helped drive the performance. We continue to experience a conservative environment for capital spending, but our better than expected Q1 results were driven by consumables which grew mid single digits, China and a better than expected performance in applied markets. During the quarter, we also completed expansion of our Shanghai manufacturing facility as we continue to take steps to ensure our long-term leadership in China. We also made our first customer shipments for Asus newly released LCMS offerings. Our latest highest sensitivity triple quad, the 6495D, enables expanded and enhanced workflows including for PFAS. This is in addition to Revenant, the first of a new generation of LCQTOL systems that combine a new architecture with enhanced instrument intelligence for maximized operation time and productivity. The Azen cross-dive group posted revenue of $405 million. This is up 5% of growth across all regions except China. Our contracts business led the way with double digit growth overall led by strength and enterprise service contracts. This performance highlights the continued strength and resiliency of our business. Connect rates for both services and consumables continue to improve. This is a result of our focused strategy to deliver -to-end customer value while also building a larger recurring revenue business. The Diagnostic Genomics Group delivered revenue of $407 million down 6% core. Our pathology related businesses and our NGSQC portfolio grew mid-single digits which was more than offset by declines in NGS chemistries and NASD. NASD declined low double digits as expected. This is against a very tough compare of 22% growth driven by significant volume last year from a single commercial program. We continue to be encouraged by our long-term prospects due to the increasing number of programs across a range of indications, many of them targeting large patient populations. The DGG team continues to innovate and deliver differentiated solutions for our customers. In the quarter, we introduced a new proteo analyzer system. The new platform simplifies and improves the efficiency of analyzing complex protein mixtures, a process central to analytical workflows across the pharma, biotech, food analysis, and academia sectors. From an overall Aslan perspective, we recently achieved World Economic Forum recognition for operations of Walbrunn, Germany. This site was named the Global Lighthouse for implementing innovation that boosts productivity, output, and quality. This marks the second Global Lighthouse award for us after receiving recognition for our Singapore facility two years ago. Aslan is the only life-size tools company to be recognized as a global lighthouse. Aslan recently achieved a top five ranking in the bank's list of 100 most sustainable companies. In addition, we are included in the Dow Jones Sustainability Index globally and in North America for the ninth year in a row. Looking ahead, we expect the current market environment to persist through the first half. We would expect a slow, instead of improving in the second half of the year. We will continue taking actions that will make us stronger and position us well for the future. We will maintain our approach to prioritize investing for growth with a focus on execution and driving productivity. Our better expected Q1 results and my confidence in the Agilent team reinforce our view for the full year. Bob will now provide the details on our results as well as our outlook for Q2. After Bob's comments, I will rejoin for some closing remarks. And now, Bob, over to you.
Bob McMahon
Agilent Senior Vice President and CFO and Acting President of the Diagnostics and Genomics Group
Thanks, Mike, and good afternoon, everyone. In my remarks today, I will provide some additional details on revenue in the quarter as well as take you through the income statement and other key financial metrics. I will then finish up with our second quarter guidance. Q1 revenue was $1.66 billion, a decline of .4% core. On a reported basis, currency added 0.9 percentage points, while M&A had a negative impact of 0.1%, resulting in a reported decline of 5.6%. And overall, orders were greater than revenue in Q1 as expected. As Mike mentioned, pharma, our largest end market, declined 12%. Within pharma, bio-pharma declined low single digits but grew low single digits outside China, bolstered by strength in services and consumables. Small molecule was down high teens in the quarter with softness globally. The chemical and advanced materials market was down 4% off a very tough comparison of 14% growth last year. We saw broad resilience in advanced materials with a low single digit increase year on year as well as growth sequentially. Given the extremely tough compare of high 20s growth last year, these are impressive results. As expected, the chemical side saw a decline. The academia government market was up 2%. The growth in this market reflects the stability of academic funding and lab activity. Our business in the diagnosis and clinical market declined 5%. Mid single digit growth in pathology was more than offset by continued headwinds in genomics, cell analysis, and LC and LCMS. The environmental and forensics market declined 1% after growing 12% in Q1 of last year. We continue to see new regulations around the world driving PFAS testing. Europe grew mid single digits while China and the Americas were down low single digits. Americas faced a difficult compare of low 30s growth last year. The food market declined 3% but was up low single digits excluding China. On a geographic basis, as Mike mentioned, both China and Europe exceeded our expectations while the Americas were in line with our expectations. China was down 9% and showed a sequential increase over last quarter which was much better than expectations. China benefited from continued stabilization and a bigger than expected lunar new year impact as some customers pulled forward incremental demand from Q2. We estimate the pull forward impact to be roughly $15 million or 5% of China's revenue in the quarter. Even adjusting for this impact, China outperformed. Europe was down 4% year on year after growing 10% last year and was up mid single digits sequentially. This was driven by continued strong demand for our ACG services offset by muted demand in pharma and expected softness in chemicals. In the Americas, revenue was down 8% due to declines in pharma and the softness in NASD and NGS chemistries. Moving down the P&L, first quarter gross margin was 56.0%. Down 50 basis points from a year ago as productivity and cost savings were offset by lower demand and mix. Our operating margin of .8% was down year over year as expected. Our ongoing cost savings initiatives are delivering as planned. Below the line, we benefited from greater than expected interest income in the quarter driven by nice work from our treasury team coupled with very strong cash flow. Our tax rate was .5% and we had 294 million diluted shares outstanding. Putting it all together, Q1 earnings per share were $1.29, down 6% from a year ago and ahead of our expectations. Now let me turn to cash flow in the balance sheet. I continue to be very pleased our cash flow generation. Operating cash flow was $485 million in the quarter, significantly above last year. In Q1, we invested $90 million in capital expenditures as we continue our planned NASD expansion. And during the quarter, we returned $69 million to shareholders through dividends. Although no shares were repurchased during the quarter, we expect to catch up on our Q2. We expect a minimum of $180 million to be repurchased. All in all, we had a good start to the year and as Mike mentioned, it reinforces our confidence in the full year guide we provided in November. Now to our guidance for the second quarter. We expect Q2 revenue will be in the range of $1.56 to $1.59 billion. This represents a decline of 9.1 to .4% on a reported basis and a decline of 8.4 to .7% on a core basis against 9% growth last year. Currency and M&A combined are a headwind of 70 basis points. Our Q2 guidance also reflects the $15 million impact of the Q1 pull forward in China I mentioned earlier. Second quarter non-GAAP earnings per share expected to be between $1.17 and $1.20. Before turning back over to Mike, I just want to express my thanks to Mike and to congratulate Porig. Mike, it's been a real pleasure to work with you. While there have been many ups and downs in the markets these past few years, one thing I knew I could always count on is your steady leadership and strong partnership. And Porig, congratulations again. I'm really looking forward to working with you. And now I'll turn things back over to Mike.
Mike McMullen
Agilent President and CEO
Mike? Thanks, Bob. Today marks my 37th and final earnings call with all of you. Time does truly fly by. I want to first thank you for your support and engagement over the years. I have to say, it has been a tremendous honor to serve as Agilent CEO and represent the achievements of the One Agilent team to all of you in the broader investor community. In 2015, we launched the then-new Agilent with a goal to transform Agilent into a leading life science and diagnostics company. We had ambitious goals to drive long-term shareholder value creation with significantly stepped-up financial results delivered by an unmatched One Agilent team working together in a truly differentiated and compelling company culture. I couldn't be prouder of the Agilent team and what we've accomplished together over the last nine years. While current market conditions remain challenging, the long-term promise of growth remains with end markets power buying investments to improve the human condition. On the Agilent front, we've never been in a stronger position to continue to capitalize on opportunities to serve our customers, win in the market, and deliver differentiated financial results. It's been a pleasure working with all of you over the years. I will miss it. While at the same time, I know that you'll enjoy working with PORIC in the years ahead. Like me, I know you'll be impressed with PORIC's knowledge of our industry and our business. As I noted earlier, he knows how to develop compelling business strategies, build winning teams, and deliver exceptional results. His track record success during his Agilent leadership journey speaks for itself, and have no doubt, it will continue in his new role. While this is my last earnings call with you, I'm certain that the best is yet to come for you. Thank you. Now it's your turn, Parmeet, for the Q&A.
Unknown
Operator
Thanks, Mike. Regina, if you could please provide instructions for Q&A now.
Regina
Operator
Ladies and gentlemen, if you would like to ask a question, please press star followed by one on your telephone now. If you change your mind, please press star one again to withdraw your question. When preparing to ask your question, please ensure that your phone is unmuted locally. Our first question comes from the line of Derek De Bruyne with Bank of America. Please go ahead.
Derek De Bruyne
Bank of America
Hi, good afternoon.
Mike McMullen
Agilent President and CEO
Good
Derek De Bruyne
Bank of America
afternoon, Derek. Congratulations, Mike. It's been fun and good luck.
Mike McMullen
Agilent President and CEO
Thank you very
Derek De Bruyne
Bank of America
much. So, the first question, we've been getting a lot of incomings on the NASD business, and just because the growth trajectory is not doing what I think what people had thought it was going to do this year. I said a couple of questions. It's like, look, there's been some pushouts in some clinical readouts from like El Nylen with their Helios B trial. There's been some other sort of like developments in the market. I guess the question is like, are you still confident that that segment can grow this year, NASD can grow this year? And I just, is there any risk at all that there's like an overcapacity situation? Because is the market, is it just taking longer things to catch up? Just throw your thoughts on that, please.
Mike McMullen
Agilent President and CEO
Yeah, thanks for that, Derek. And it has been fun. And thank you again. I'll tag team with Bob on this. So, as you saw in our prepared remarks, Q1 came in as expected for the NASD business. And we are in a situation where we've had, I think, the broadest number of clinical programs and such. So, we're very active. The volume is less commercial this year, as we pointed out in the script as well, versus clinical. And Bob, I know we've been talking a lot with the team about the outlook for the year, particularly with some of our customers who are, you know, re-sequencing some of the clinical programs into 25.
Bob McMahon
Agilent Senior Vice President and CFO and Acting President of the Diagnostics and Genomics Group
So, yeah, good afternoon, Derek. And as you're talking about, you know, we remain very optimistic about the future of NASD. Our forecast for trained C&D remains intact in terms of building out the expansion. I would say that, you know, as we're talking about things, you mentioned one of the clinical trials. It's an important element of one of our customers. We are seeing some, you know, potential pushouts into FY25. And, you know, as they are looking at revisiting their clinical trial programs and timelines, and it's probably closer to flat this year based on that, although we're not giving up hope. But, you know, that's built into kind of keeping our guide the way it is. But I think if you look at the number of commercial programs, or excuse me, clinical programs who we have, you know, we're very excited about the future.
Mike McMullen
Agilent President and CEO
Hey, and Bob, I think it's also fair to say that this is not a byproduct of over capacity in the industry or significant change in insourcing. It's really how some of our customers are reacting to really the IRAC. That's right.
Derek De Bruyne
Bank of America
Well, that takes me, that's a great segue into my next question, which is what's sort of the latest on pharma? It doesn't sound like you're ready to call an election point, but it does sound like things would look, sounded a little bit better. Can you just sort of give your thoughts on what budget releases are, sort of timing around that, any sort of like notable developments? I mean, when do you, you know, are you seeing any sort of like signs of life that you sort of, the signs of budgets could start to be released in the second quarter?
Mike McMullen
Agilent President and CEO
Yeah, great, great question, Derek. Obviously, a top of mind within Ashland, you know, as we mentioned, the Q1 came in where we thought it would, but what's the outlook? And, Twerk, I know you've been spending a lot of time with your team and customers talking about this exact question.
Porig McDonald
Agilent Chief Operating Officer and CEO-elect
Yeah, thanks, Mike. And I think, you know, customers continue to be cautious globally. I think we're as stable, what we're seeing is stability, but no material improvement versus what we saw in the last half of last year. And in terms of the capital budget cycle in 24, this is the time we see it. It's pretty early in that cycle. But we've heard moving both in both directions, positive and negative, and what fewer customers expecting negative budgets. So, we're watching and seeing how that
Mike McMullen
Agilent President and CEO
goes. Yeah, I think what you were sharing with me earlier, Porek, was the tone was more negative at this time last year. It's still not super positive yet, and still a lot of caution. But, you know, we're not seeing anything to cause a change in our outlook for the year. Great. Thank you. Happy trails. I think, Bob, thanks. Thank you very much. I
Bob McMahon
Agilent Senior Vice President and CFO and Acting President of the Diagnostics and Genomics Group
was just going to say, you know, one of the things that we see is, you know, very strong performance in our services and consumables business in the pharma sector, which actually speaks to lab activity. And so while we've seen, you know, a depressed capital cycle here, we're optimistic about that, you know, turning around in the second half of the year.
Regina
Operator
Our next question will come from the line of Matt Sykes with Goldman Sachs. Please go ahead.
Matt Sykes
Goldman Sachs
Hi, good afternoon. Thanks for taking my questions. Congratulations, Mike, on the retirement and good luck. And, Porek, congratulations on the new role. I look forward to working with you more closely. Thanks, Matt. Maybe just to start out, maybe a bigger picture in China. It sounded like you made some comments about sequential improvement. It sounds like it's informing some of your confidence for back half. What are the risks that China just simply doesn't get worse and just kind of bounces on the bottom? And what kind of catalysts are you looking for in China for the back half for some level of improvement? I know it's not necessarily baked into your guide, but you did make some comments about some sort of nascent optimism there, potentially.
Mike McMullen
Agilent President and CEO
Yeah, sure. Thanks for the question, Matt. And, you know, as we had a really, I think, nice print to start off the year. A big part of that was performance in China. Yes, we had a bit of a pull in from Q2 from Lunar New Year, but the business overall was better than expected. And to answer your question, we now have several quarters of real orders, real revenue, and sequential growth. The numbers are real. So, you know, we're not seeing anything on the macro world that would also dramatically change what has continued to be a very challenging economic market in China. So, you know, what gives us confidence is the fact we've had a number of quarters now of predictability in the business. The numbers are coming in even slightly better than we had anticipated. But again, I think it's more just the fact that there's ongoing run rate of business that gives us confidence on the outlook. And, Bob, I know that you and, oh, you want to jump on those from Pork? Yeah.
Bob McMahon
Agilent Senior Vice President and CFO and Acting President of the Diagnostics and Genomics Group
Yeah. And I think if, Matt, as you just mentioned, we aren't assuming any inflection in our guide. That's been consistent. Actually, Q1 ended up being a little better than we anticipated. We're kind of putting that money in the bank, so to speak. And if you look at it, we'll have now four quarters of numbers that are relatively stable, which is a very positive sign. And I think, you know, when we look at our funnel, it's also stable as well as the order forecast is what Mike just talked about as well.
Matt Sykes
Goldman Sachs
So. Great. And then maybe just on ACG, which had a good quarter, you talked about the contract revenue and specifically enterprise services with that growth. Maybe could you just help kind of size that contract business within ACG and then maybe talk about what is driving that growth and, you know, what kind of contribution can that make to the ACG segment over the course of this year?
Mike McMullen
Agilent President and CEO
Hey, Matt, thanks for your support of the ACG business over the years. And I want to use this opportunity to introduce our new ACG group president. But first, I'd like to maybe have a two-part response. I mean, and Bob, I think it's roughly about 65 percent, just to make sure. So roughly about 65 percent of our total services business is in this contracts arena. And Angelica, maybe you could share your thoughts on really what's been driving the growth we're seeing in that contracts business.
Angelica Reinman
President of the Agilent CrossLab Group
Yeah, thanks, Mike. You know, as you mentioned, it's about 65 percent of total business. And a part of that demand has really been driven by the lab-wide enterprise services offerings where we're able to help customers as they're navigating their own economic situation, really helping them optimize their entire lab operation. And our portfolio offerings in this space have allowed us to really facilitate that improvement in lab operations, lab efficiencies, and that's particularly important to those enterprise customers.
Mike McMullen
Agilent President and CEO
Yeah, thanks, Angelica. And in times of tough economic times and market times, the productivity help and driving productivity in the lab is a well-received offering we have.
Bob McMahon
Agilent Senior Vice President and CFO and Acting President of the Diagnostics and Genomics Group
Hey, Matt, just one other quick thing on that. You know, one of the great things that Angelica and team have been doing, and you hear us talk about this a lot, is about the increasing of the and that continues to grow at roughly a point again year on year this year. And that kind of locks in that resiliency and that stability in that business. And if you think about a 62 thirds of that business growing double digits, you know, it really helps power the business. And when we see the inevitable turnaround of the instrument business, that'll be a nice tailwind as well. Absolutely, Bob. Thanks,
Matt Sykes
Goldman Sachs
guys. Appreciate it.
Regina
Operator
Your next question comes from the line of Brandon Cuyart with the Jefferies. Please go ahead.
Brandon Cuyart
Jefferies
Thanks. Good afternoon, Mike. It's been a great run and a pleasure working with you. Thank you, Brandon. The chemical and advanced materials business actually performed a little better than we were expecting. You know, obviously you still see some headwinds in the chemical side. Just give us your state of the union there, what you're seeing from a macro perspective, and kind of outlook for that business moving into the second half. Mike.
Mike McMullen
Agilent President and CEO
Yeah, so I'll do a tag team on this with Porg. So as you may recall, we've talked earlier this year about these secular growth drivers in the applied markets. And we saw that in pretty much across the globe. And I think what we're seeing again is the investments being made in advanced materials relative to the semiconductor supply chain and also the fab driving productivity. We're seeing continued investment relative to battery, battery development, QAQC. And I think we continue to see some real nice growth in the PFAS side of our environmental business. Started in the US. I think all those applied market secular drivers that we've been pointing to for some time delivered in Q1. And I think our outlook remains the same that we're expecting there'll be source of positivity for us in the overall CAM market space, albeit the chemical market is expected to remain subdued.
Porig McDonald
Agilent Chief Operating Officer and CEO-elect
Yeah, that's right, Mike. I think it's really a tale of two sub markets. We saw broad resilience in the advanced materials with sequential growth. And given the extremely tough compare in high 20s we had last year, it was truly a very impressive result from the teams. The chemical energy side was, we saw decline, but on a very tough compare of 10 percent. But we did see sequential improvement versus Q4-23. Overall, I think our portfolio is extremely strong in this area. We have ability to cross and upsell across that. And of course, our strong services offerings have that value proposition.
Brandon Cuyart
Jefferies
Okay, and then Bob, in terms of the guide for the year, I mean, you're sticking with the organic growth range for the year. You beat the first quarter. The China full forward doesn't explain all of the upside in the first quarter. And what the NASD outlooks lower, what other moving parts by end market or geography kind of get you to the same midpoint?
Bob McMahon
Agilent Senior Vice President and CFO and Acting President of the Diagnostics and Genomics Group
Yeah, that's a great question, Brandon. And you talked about a couple of them. We feel really good about where we started the year. It's still at the beginning of the year, though. So we're kind of banking some of that. What I would say is if you looked across the moving pieces with the NASD being slightly lower, that would be offset by a little better results in the LSAG side of the business. And really, that chemical and advanced materials and academia are two areas that are probably slightly better than what we've forecasted. But overall, we're maintaining the guide and as we are looking here, felt good about really at the start of the year. Thank you.
Regina
Operator
Your next question comes from the line of Puneet Suda with Learing Partners. Please go ahead.
Puneet Suda
Learning Partners
Yeah, thanks, Mike. And really great working with you. And Poreg, welcome to the seat. Thanks, Puneet. So my first question is really around, you know, I think Bob, you talked a little bit about the book to Bill, orders growing faster than revenue. But maybe could you elaborate a bit more on the instrumentation side, what you're seeing and what you're seeing with the respect to book to Bill in China? And a quick question, clarifying question on the 2Q guide, it does look a slight step down versus Q1. And I just want to make sure beyond the Lunar New Year, what else are you baking in there?
Bob McMahon
Agilent Senior Vice President and CFO and Acting President of the Diagnostics and Genomics Group
Yeah, I'll take that. There are a lot of questions in that one question. But so true to form Puneet. And one of the things I'll start with last one, I mean, we typically do have seasonality, there is that $15 million that gets pushed from one quarter to another. That's strictly timing in China because of the Lunar New Year. But Q2 is typically a lower revenue number. So we're building in that normal seasonality. In terms of book to Bill in China, actually book to Bill was greater than one in China. So continued stabilization. And in terms of book to Bill for instruments, it was below one, kind of expected. Now some of that was a result of the China pull forward where the orders came in. And we were expecting that revenue to be shipped in Q2. So there's some element of timing there. But all in all, a positive start to
Mike McMullen
Agilent President and CEO
the year. Hey, Bob, I have a couple of headlines on that too. I just say that Q2 seasonality is as normal and the Q1 book to Bill results are as our normal pattern. So again, we've been talking a lot about normalization of business flow. And I think we're seeing that in terms of the seasonality of patterns and book to revenue situations.
Puneet Suda
Learning Partners
Got it. That's super helpful. And then just a high level question, a simple question. Could you maybe elaborate a bit on the pharma side where you're seeing more traction, more growth? Is it the large pharma, small biotech, CRO, CDMOs? Maybe just talk a little bit about that. Thank you.
Bob McMahon
Agilent Senior Vice President and CFO and Acting President of the Diagnostics and Genomics Group
Yeah, I'll take that Punit. If we look at across our business, the relative strength was actually in our biopharma. So large molecule and our business is skewed to the larger midsize and large cap companies. The standout has been the ACG business and our consumables on that. So it actually speaks to activity in the labs. We are starting to see, I don't want to call it a trend, but certainly a stabilization on the emerging biotech side of it. The instruments were still down, but that is where we're starting to see the relative strength in the pharma business. And that speaks to kind of the long-term growth drivers, I think, in that market. And I would expect that to continue throughout the course of the year as our business gets stronger and the markets get stronger. And quite honestly, we have more favorable calls.
Mike McMullen
Agilent President and CEO
Hey, Bob, when I think of a call correctly, outside of China, our biopharma business actually grew in the quarter. That's right.
Puneet Suda
Learning Partners
Got it. Super. Thanks, yes.
Regina
Operator
Your next question comes from the of Rachel Badenstahl with JP Morgan. Please go ahead. Hi, thanks for taking the
Rachel Badenstahl
JP Morgan
question. So first up, I just want to follow up there on the comments around book to bill. So you mentioned that book to bill for instrumentation was below one for the quarter. And some of that was really timing related. So I guess, can you just break that down for us a little bit further? What trends are you seeing in liquid chromatography versus mass specs, for example? And then is there any dynamics or trends to call out from geography and the instrumentation business as well?
Mike McMullen
Agilent President and CEO
I don't think there's any new trends here. I think, without going into the details of our product line, the small molecule side has really been an area where we've talked about the -to-year challenges there from the LC side. But Phil, I don't know if you want to jump in with any thoughts here. But I don't think there's any real outstanding new trends here with perhaps the better than expected trends we saw in the applied markets, particularly on advanced materials. But maybe have something else you want to add?
Phil Binns
President of the Agilent Life Science and Applied Markets Group
Yeah, sure, Mike. I think that's pretty much the case, similar to Q1, around how the markets are performing. We're seeing some bright spots around some of the secular areas in the applied markets in the instrumentation, which is driving the business forward. But I just support your comments here.
Bob McMahon
Agilent Senior Vice President and CFO and Acting President of the Diagnostics and Genomics Group
Hey, Rachel, just one other thing to build on what Mike and Phil were just talking about. When we look at our LSAG business, it was down 11 percent, which was better than what we expected. The piece that's really been driving that down is the pharma market, which is what we've been expecting. If we looked at the rest of the markets, they were much better than those down 11 percent, with the exception of the diagnostic and clinical, which is a small
Mike McMullen
Agilent President and CEO
number. Right. And to your question, Rachel, I know that dynamic in the pharma really speaks to pressure on the LC business.
Rachel Badenstahl
JP Morgan
helpful. And then I just want to ask about monthly trends. Some of your peers have talked about how spending has been a little bit slow out of the gate in January and then into early February. So I guess since you guys have a few more weeks of visibility here, can you walk us through, were you seeing similar trends on just slower spending to start the year? And has any of that started to come back? Any color there as we enter physical 2Q would be helpful. Thanks.
Mike McMullen
Agilent President and CEO
Well, I've been in, you know, I've been in this business for a while and it's always slow in January. And that's why we have the seasonality we talked about relative to Q2. So I don't think we're seeing any, any, any, any significantly different trends that we've seen historically. Borg, I know that you're, you're closer than I am, but. Yeah,
Porig McDonald
Agilent Chief Operating Officer and CEO-elect
no, I think, I think that's right. That's right, Mike. I think on the ACG side, we see a number of service, our service contract business comes in strong on the ACG side, but on the, on the capital side, we're, we're, we're, not seeing much.
Bob McMahon
Agilent Senior Vice President and CFO and Acting President of the Diagnostics and Genomics Group
Yeah, to build just a final, put a finer point on that, January came in as we expected.
Regina
Operator
Our next question will come from the line of Vijay Kumar with Evercore ISI. Please go ahead.
Jordan
Evercore ISI (on behalf of Vijay Kumar)
Hey, this is Jordan on for Vijay. Okay. Hey, Mike, it's, this is Jordan. Thanks for taking my question. Sure. Maybe, maybe one follow up on the China side. Have you seen any hints of stimulus to start the year? And if we do see a stimulus, do you have any foresight to what implications that will have on Agilent?
Mike McMullen
Agilent President and CEO
I have both Borg and I are in the conference room shaking our head. No, we've not heard anything about any potential stimulus. And what I can tell you is if it does upside to our outlook.
Jordan
Evercore ISI (on behalf of Vijay Kumar)
Understood. And then maybe one more from me. Can you talk about how pricing has trended in the quarter and any updates to your expectations for the remainder of the year?
Bob McMahon
Agilent Senior Vice President and CFO and Acting President of the Diagnostics and Genomics Group
Bob, do you want to, you want to take that one? Yeah, we were, we were, we were pleased with the results was between one and 2%. So, but in, in line with kind of the seasonality and the mix that we saw, we would expect to see in Q1. So, you know, right now it's on, on, on track. As, as we've talked about, you know, our, our consumables business and ACG business have the, the greatest price realization followed by, generally speaking, actually, we had a very good result in, in diagnostics and genomics in the, in the quarter. And then we did see some mix, but not, not anything out of the ordinary instrumentation side. So all, all in, we're, on track for what we expected for the full year. Understood. Thank you.
Regina
Operator
Your next question comes from the line of Patrick Donnelly with Citi. Please go ahead.
Patrick Donnelly
Citi
Hey guys, thanks for taking the questions. And yeah, like I'll second the, the congratulations on the retirement. Bob, maybe one for you first, just in terms of the EPS guide, it looks like you got an additional 20 million on the kind of net interest, other income. Can you just kind of flag, you know, if that's rolling through, you know, did that core earnings number move a little lower? Is there any moving pieces there? And then secondarily, just on the margin piece, you guys have that cost savings plan. Can you just talk about how that paces as the year goes? It'd be helpful.
Bob McMahon
Agilent Senior Vice President and CFO and Acting President of the Diagnostics and Genomics Group
Yeah, thanks, Patrick. Great question. And what I would say is a couple of things. Yeah, we are on track to have more interest income than what we anticipated at the beginning of the year, that $20 million. And so some of that in the first quarter as well. And that's really a result of actually having better than expected cash flow in the first quarter and great work by that treasury team. I would say that on, you know, the savings, we're on track for the savings targets for the, for the full year. And, you know, as I think about the year, it's still very early in the year. And, this provides us what I would say is more confidence in the guide.
Patrick Donnelly
Citi
Okay, that's helpful. And then maybe just on kind of the book to bill, how are you guys thinking about, I think last quarter you said the book to bill for the year would be above one, but you'd have quarters kind of in and out on the instrument side, which obviously we're seeing this quarter. How are you thinking about just the order trends and the book to bill trends on the instrument side as we work our way through the year, given what you're seeing today?
Bob McMahon
Agilent Senior Vice President and CFO and Acting President of the Diagnostics and Genomics Group
Yeah, no change to what we said back in November. You know, Q1 is a proof point for what we said. All right, fair enough.
Patrick Donnelly
Citi
Thank you guys.
Regina
Operator
All right. Your next question comes from the line of Dan Vernon with TD Cowan. Please go ahead.
Dan Vernon
TD Cowan
Thank you, Mike. It's been great working with you over the last nine years. So congrats and for I look forward to working with you as well.
Mike McMullen
Agilent President and CEO
Thanks, Dan.
Dan Vernon
TD Cowan
Maybe just don't want to be the dead horse, but just for the instrument, did you guys say, I know in the queue you usually put out what the instrument number actually was. So what did actually instrument do in the quarter? And then given how much easier comps goes, we get through the year. Can you just kind of give us a sense of pacing? Like what, what should we expect on Q2 and instruments? And then we can, you know, kind of have at the back
Mike McMullen
Agilent President and CEO
half of the year. I know the team didn't do the calculation on that because the LSAG was down, down 11, but that includes our consumables business, which was up. Yeah, I would say,
Bob McMahon
Agilent Senior Vice President and CFO and Acting President of the Diagnostics and Genomics Group
or we typically don't give all that information, but it was down, you know, we were down 11%. It was down 20% in the quarter as, but that was better than expected offset by, you know, 6% growth in our, in our consumables business. If we look at the LSAG thinking for Q2, it's down low teams. So, so, and, and a lot of that has to do with some of the timing associated with that $15 million shift. That's almost all capital equipment from, from, from Q1 or from Q2 back into Q1. So if you look at it, it is in line with where we expect it to be. And then we go into more favorable comparison Q3 and Q4.
Dan Vernon
TD Cowan
Correct. Correct. Got it. Okay. And then I know there's been a handful of questions running around China, but can you just, would you mind spending a bit more color on kind of what maybe by segment, pharma applied, any, any color you can give us kind of what you're seeing within the different businesses in China and is, is down mid single still the expectation of China for the full year or is there a chance you can kind of see some upside to that number? Thank you.
Mike McMullen
Agilent President and CEO
I think we've, I think we've, we have raised it up a bit. It's still down, but.
Bob McMahon
Agilent Senior Vice President and CFO and Acting President of the Diagnostics and Genomics Group
Yeah. Yeah. I think, you know, we're, we're cautiously optimistic there. I'd say it's still within a range that we had before, so I don't want to call an inflection, but if you looked at the markets, you know, we were down, you know, that 9%, that was roughly down 20 ish percent in, in pharma. So, you know, that continues to be the area of really around the globe, but China's no different. The great thing is many of the other markets perform much better. So even when you think about like academia and government that grew, so did our chem and advanced material business. Now grew very low single digits. And then our, our forensics and environmental was down low single digits. So you're actually starting to see, you know, this stable, you know, continuous stabilization, and then you'll get into, you know, very much easier compares in the back half of the year in China, because, you know, that down 22 was down, you know, compared up 12 last year. We had another strong compare in Q2, and then we actually started seeing the pretty significant declines year on year. And so there's reasons to be optimistic about that continuous stabilization that Mike talked about, but we're not ready yet to call a, an inflection. And when, but when it happens, we'll take
Porig McDonald
Agilent Chief Operating Officer and CEO-elect
it.
Bob McMahon
Agilent Senior Vice President and CFO and Acting President of the Diagnostics and Genomics Group
And importantly, you want to jump in
Porig McDonald
Agilent Chief Operating Officer and CEO-elect
and yeah, and I think, you know, what we see is also concerned with consumers and services continue to outperform expectations in China. So that's going to affect that to continue.
Mike McMullen
Agilent President and CEO
And I think the instrument, the capex side of things, but we're, we're, we're, we're pleased with the start there.
Parmeet Ahuja
Closing Speaker
Great. Thank you.
Regina
Operator
Your next question comes from the line of Catherine Schulte with Baird. Please go ahead.
Catherine Schulte
Baird
Hey guys, thanks for the questions. Maybe first, then pharma was down 12% in the quarter. I think you said biopharma was up 2% ex China. What was small molecule performance ex China and maybe the outlook for biopharma versus small molecule for the rest of the year?
Bob McMahon
Agilent Senior Vice President and CFO and Acting President of the Diagnostics and Genomics Group
So, so small molecule on a, on a global basis was down, you know, roughly 18%. And it was ex China was down 20% and down, you know, roughly 14% for China. So pretty consistent across the globe. I would say in, China, the big area in China that has been impacted is, is on the small molecule side, where we'll start to see better comps going forward after Q2.
Catherine Schulte
Baird
Okay. And then maybe on consumables, great to see a return to growth there this quarter. Can you talk through what you saw outside of China on the consumable side?
Bob McMahon
Agilent Senior Vice President and CFO and Acting President of the Diagnostics and Genomics Group
Our consumables business was pretty consistent across, across the globe in terms of growth.
Mike McMullen
Agilent President and CEO
So I don't know if you have any, anything you want to add to that on what we've seen on consumables. I think we were really pleased to see that because it really speaks to lab activity being, being robust. So anything else you want to jump in on with?
Phil Binns
President of the Agilent Life Science and Applied Markets Group
Yeah, probably just one item there, Mike. I think we are seeing really good traction around our workflow development. So end to end solutions, which obviously is also drives our services business as well. But, but around the consumables, the, in most of our end markets, we've been pretty heavily focused on developing workflows and making our customers lives easier and more integrated in their labs. And that's showing some really good, really good traction. And that's reflected in solid connect and attach rates in the, in the consumable space.
Mike McMullen
Agilent President and CEO
Yeah, thanks for Phil. I'm really glad you closed with the comments about connect rates. We talked about that relative to our services business. We're also seeing a very strong positive trend on consumables as well, which bodes well to our future in terms of recurring revenue business growth.
Catherine Schulte
Baird
All right, great. Thanks and congrats on the retirement,
Mike McMullen
Agilent President and CEO
Mike. Thank you very much. Most appreciated.
Regina
Operator
Your next question comes from the line of Jack Meehan with Nefron Research. Please go ahead.
Jack Meehan
Nefron Research
Thank you. Good afternoon. And Mike, again, it's been a pleasure working with you. Just had a couple of follow ups. The first one was, just talk about what you're seeing in the genomics business within DGG. I know it's still been a bit of a drag. Just when do you think that's going to start to turn?
Mike McMullen
Agilent President and CEO
Yeah, thanks for your kind comments, Jack. And I think I'll invite Bob in on this one, but I think it's been sort of a tale of two cities when we talk about our genomics business. There's really two pieces to it. Half of it's in QAQC activities for NGS workflows, and we're seeing really solid growth in the consumables and that side of things, as well as starting to see signs of life on the capex. Not yet to cause a call turn there yet, but that's in reasonably good shape. I think we've seen really in our US-based genomics business some early market challenges have been hitting us. And Bob, maybe you can elaborate on
Bob McMahon
Agilent Senior Vice President and CFO and Acting President of the Diagnostics and Genomics Group
that. Yeah, that's right. Thanks, Mike. And as you said, our NGS QC portfolio from an instrumented consumable side actually grew mid single digits in the quarter, which was very nice. The genomics chemistry side that we referenced in the prepared remarks was down. We faced some very difficult comps. We had a couple of companies that reorganized and exited some businesses. They had some lifetime buys at the end of Q1. I would expect the performance of that to improve starting in the second half of the year.
Jack Meehan
Nefron Research
Great. And also wanted to ask about the academic end market. I know that's been very stable for you guys, but just what you're seeing in the US here with the continuing resolution for the NIH, just thoughts on the durability moving forward. Thank
Mike McMullen
Agilent President and CEO
you, Jack. Thanks for noticing that. That was a real bright spot for us. We actually grew, I think, 2% in the quarter. And we've been working on this thing for some time to really build out our portfolio and really change our market position in academic research. And I think it's starting to show up in the numbers. I think stabilization really is what we're seeing, which is the funding is there. And NIH is a relatively really small part of Agilent's business. So it really is material. But we're seeing universities have increasingly been funded through private sector. So the money is there. And even so, we saw money in China as well. So it was really a nice global story for us. And we're fairly optimistic that that kind of stabilization can be there for us for the rest of the year.
Regina
Operator
Your next question will come from the line of Doug Schenkel with Please go ahead.
Doug Schenkel
Unknown
Well, Mike and Forug, congrats to both of you. And Mike, as everyone said, you'll be missed. I hope this means more time on the beach, but we'll miss you. Absolutely.
Mike McMullen
Agilent President and CEO
I'll be listening.
Doug Schenkel
Unknown
Yeah, yeah. I hope not too much. But anyway, I want to ask a question on guidance and then a question on capital deployment. Sure, absolutely. Doug. Yeah, so for the year on one hand, around 48% of sales is in the first half, at least that's how you've guided, I believe. Yeah, that's lower than last year, but it's not outside the norm for the last several years. On the other hand, just doing some math, your guidance for the first half embeds the assumption that revenue declines around 7% organically and then improves 7 to 9 positive percent organic in the second half. Can you do that just as a function of the comps or do you actually really need to see improvement in certain geographies or certain end markets or categories? And then again, just a math question, does guidance assume Q4 revenue kind of exiting around like $1.8 billion?
Bob McMahon
Agilent Senior Vice President and CFO and Acting President of the Diagnostics and Genomics Group
Hey, Doug, this is Bob. I'll take that last one. We'll tell you when we get to Q4. And what I would say, but your math is, in all seriousness, your math is spot on as usual. I think one of the things that we look at is we look at it a couple of different ways. I think the way to look at it is that first half, second half, kind of looking at seasonality, that's probably more instructive given kind of the changes in the growth rates. And when you look at it, as you noticed, as you mentioned, it is in line with our historical seasonality. And when you look at the growth rates, you're right, we are expecting growth in the back half of the year. A lot of that is, in fact, the easier the compares. And when we actually look at what I would ask you to take a look at also is a two-year stack basis relative to implied Q1 and Q, or first half and second half. And what you would see there is a much more smooth number that we also looked at as well. So, as usual, I'm going to get you spot on there.
Mike McMullen
Agilent President and CEO
And Bob, I think that's why we really emphasize in the script the word stabilization, because as we have cognitive stabilization, we're going to get a lift in the growth rate just by the comps as we go.
Doug Schenkel
Unknown
That's super helpful. Yeah, I know there's a lot of focus on how much improvement is necessary to get there. So, if a lot of this is stability and just math, that I think obviously makes people more comfortable. I know I've taken up a lot of air time already. Real quick, capital deployment, the capital remained robust, the balance sheet is super clean. Can you talk about your thinking right now on capital deployment and what the environment looks like right now?
Mike McMullen
Agilent President and CEO
Yeah, I think we remain very interested in deploying capital in a balanced way, which is inclusive of investing in the business. And that speaks directly to our M&A, our building by growth strategy. I just have to say that the funnel pipeline is more robust than I've seen in a number of years. And nothing to obviously announce, but we're very much engaged. Great. Thanks again.
Regina
Operator
Your next question comes from the line of Josh Waldman with Cleveland Research. Please go ahead.
Josh Waldman
Cleveland Research
Hey, thanks for taking my questions and congratulations, Mike and Ford. Thank you. Yeah, just a couple on my end, and maybe Bob, starting with you, first a follow-up on the guide. Can you comment a bit more on how Q2 guide moved versus the framework in the initial outlook? I assume core outlook came down a bit, but just wanted to confirm the moving pieces there. And then does the guide, the core guide, reflect any changes in Q3 or Q4, or is it really just reflecting an update on H1?
Bob McMahon
Agilent Senior Vice President and CFO and Acting President of the Diagnostics and Genomics Group
Yeah, that's a good question. It's a little of both, Josh. So Q2 is relatively intact for what we had originally thought, with the exception of that small movement of the China business. That's roughly a point of core growth from Q1 and Q2 switching. What I would say is Q1 also had a beat into it, and what we're taking is some of that out of the second half of the year. And so the takeaway is Q2 is spot on from where we expected it to be, absent that kind of shifting the timing shift of China. And then the Q2 or the rest of Q1 kind of the beat really helps us in the second half of the year.
Josh Waldman
Cleveland Research
Okay.
Bob McMahon
Agilent Senior Vice President and CFO and Acting President of the Diagnostics and Genomics Group
Okay.
Josh Waldman
Cleveland Research
And then Mike, can you talk about how visibility in the business has evolved over the last three months? Has there been any improvement in the ability of the funnel to predict near-term sales or still seeing an elongation of kind of opportunity and quoting, flipping the orders? If you're a total company and then also what you're seeing in pharma specifically.
Mike McMullen
Agilent President and CEO
Yeah, no, I'll have a port jumping this one. I think the visibility remains the same. I don't think it's any better or any worse. And so I think it's the normal kind of cadence of business. And that's why, as Bob just mentioned, when we're talking about the second half, we bank some of the beat to put against the second half because we've yet to see the second half materialize in terms of the order book, which is typical at this time of year. I
Porig McDonald
Agilent Chief Operating Officer and CEO-elect
think that's right, Mike. And I think as far as the quality of orders that remain in our backlog, nothing has changed. We've not seen any increase in cancellations and ex-China, the funnel continues to grow and that's led by the aftermarket business. I will say, as a continuing theme, the deal closure times remain at an elevated levels, but it's definitely stable and deal win rates have been consistent.
Mike McMullen
Agilent President and CEO
Yeah. I think it's an important point made here. Elevated, but we're not seeing the elongation. So, you know, they're stable, but they're longer than they have in the past.
Parmeet Ahuja
Closing Speaker
Okay. Thanks, guys.
Mike McMullen
Agilent President and CEO
Sure.
Regina
Operator
Your next question comes from the line of Dan Leonard with UBS. Please go ahead.
Dan Vernon
TD Cowan
Thank you. My first question, just a bit more on China, are you expecting sequential growth in Q2 in China, similar to Q1?
Bob McMahon
Agilent Senior Vice President and CFO and Acting President of the Diagnostics and Genomics Group
No, if you looked at the sequential number, it's going to be roughly the same as what we had in Q1.
Dan Vernon
TD Cowan
All right. Thank you for that. And Mike, congrats on your retirement. I was wondering if you could elaborate on timing. You know, I was surprised, others were surprised, I've gotten the question a number of times and we'd just love to hear your thoughts.
Mike McMullen
Agilent President and CEO
Yeah, thanks for that. So, you know, maybe a surprise to many on the call, and it was a surprise when I shared the news across the company because, you know, the Agilent team just knows how much I love working for this company and work with them. And it really was a hard, it was a really difficult decision for me, but I've been contemplating this for a while. And, you know, I pulled the board into the discussion, started communicating with them, because I really wanted to make sure that they had enough time to really run a thorough and thoughtful selection process, which they were able to do. And in my mind, they came out with the best possible choice in selecting PORG. But yeah, but this is something that I've been contemplating for a while and then engaged, start engaging the board about my timing and then really want to make sure they had enough time to, you know, really pick the right successor. And that's what they did.
Dan Vernon
TD Cowan
You always seem to be having a lot of fun. So congrats again, and it's been good.
Mike McMullen
Agilent President and CEO
Thank you. It's gonna be hard to step away, but I have to say the Polo family was just too strong. We have a -month-old, -month-old grandson, and he will soon have a brother and sister. So there's a lot going on on the family side, and there's only one way I could make more time. So again, it's been a real pleasure working with all of you on the call. All right, thank
Regina
Operator
you. Your next question comes from the line of Luke Sergod with Barclays. Please go ahead.
Luke Sergod
Barclays
Great. Thanks, guys, for squeezing me in. I just want to talk about the margins on the quarter and kind of the step down in DGG and LSag. And I assume, you know, obviously it's probably driven by the volume declines there on the instrument side. But, you know, how you guys view the recovery and the margins between DGG and LSag throughout the year to hit your guide?
Bob McMahon
Agilent Senior Vice President and CFO and Acting President of the Diagnostics and Genomics Group
Yeah. Hey, Luke, Bob, just real quick. You're right. If I look at DGG, it actually was improvement year over year, but it was down, and it was really a result of that margin or the volume. I would say also there was an element of mix in LSag, and I would expect that to continue to improve. You know, the cost actions that we took weren't fully actualized all and as expected in Q1, so we'll have the full impact of those as well in Q2 throughout. So I would expect an improvement over the course of the year as volumes grow up in both LSag and DGG.
Luke Sergod
Barclays
That's what I thought. I just want to clean up. And then just for follow up here from the Q2 guide, can you just help frame what you guys are embedded there by the different segments?
Bob McMahon
Agilent Senior Vice President and CFO and Acting President of the Diagnostics and Genomics Group
Yeah, if I look at Q2 guide, you know, we're still down double digits, academia and government down low single digits really as a result of some of that timing shift, diagnostics and clinical down mid singles and chemical and advanced materials down high single digits and food about the same. Both of those are, you know, as a result of some of the shift also in the China business from Q2 back into Q1 and then environmental and forensics, kind of mid single digit decline. Great, thanks. Yep.
Regina
Operator
Our final question will come from the line of Paul Knight with KeyBank. Please go ahead.
Paul Knight
KeyBank
Hey Mike, really super to see you doing what you're doing and I knew you, I don't know, 15 years before you became CEO. So I guess the concluding question I would have at least professionally would be what do you see in terms of two things? Number one, what do you think the kind of market growth rate is for the markets that Agilent participates in? And then geographically, where do you see the surprise over the next five years? Like will Japan reinvigorate its growth? Will Europe see more insourcing? I would love to have your perspective on those things.
Mike McMullen
Agilent President and CEO
Yeah, hey, thanks Paul. Yeah, we do go way back, don't we? And it's been great to work with you over those years going way back to the CAG days in our prior role. You know, I think we think this is a, you know, four to six percent kind of growth market, you know, mid singles. So we think that the kind of market growth that we're not experiencing as industry right now is an anomaly and this will be back to that, you know, four to six percent kind of long-term growth rate. Obviously certain segments within that overall macro number, that big TAM will be growing faster than that and that's always a challenge to make sure that you pick those segments so you can actually beat that number. I think there's going to be some geographic mix. I mean, we've, you know, evolved our view of long-term growth into China because we actually expect, you know, with some of the supply chain moves and other things that have been going on that you'll see a growth, more growth in Europe, which has been, you know, been more of a slower grower for us geographically, but we've been continuing to be surprised how well we do, our team does in Europe. I think you're going to expect to see Japan rejuvenated, particularly I can, I think you can make the case of the semi-industry, which is going to return with some strength in Japan, but that's the beauty of this business is just the diversified nature of both the end markets and geographies. So that would be my, my last, I guess, my final projection of long-term growth for the market in this role. But thanks, Paul. Appreciate the comments and looking forward to staying in touch.
Regina
Operator
I'll now turn the call back over to Parmeet Ahuja for closing remarks.
Parmeet Ahuja
Closing Speaker
Thank you, Regina, and thanks everyone for being on the call today. With that, we'd like to close the call. Have a good day,
Regina
Operator
everyone. Ladies and gentlemen, this concludes today's call. Thank you all for joining.
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