Agilent Technologies, Inc.

and Bob McMahon, Agilent Senior Vice President and CFO. Joining in the Q&A will be Phil Binz, President of the Agilent Life Sciences and Applied Markets Group, Simon May, President of the Agilent Diagnostics and Genomics Group, and Angelica Ryman, President of the Agilent CrossLab 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 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 a reminder, 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 recast 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 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 Porek.

Thanks, Parmes. Good afternoon, everyone, and thank you for joining today's call. The Agilent team executed well in the third quarter and posted solid results, delivering better than expected revenue and earnings. Revenue of $1.578 billion declined 4.4% and improvement of 300 basis points from Q2, reflecting the steady improvement in the market. Operating margin of 27.4% improved sequentially as the actions we announced last quarter start to deliver. and we remain on track to deliver the incremental annualized savings of $100 million by the end of the fiscal year. Earnings per share of $1.32 is 4 cents above the high end of guidance. As a result of our strong Q3 performance, we are raising our guidance at the midpoint for both revenue and EPS, and we continue to make investments in our most promising growth opportunities by our reference in our Q2 call. We are investing in our digital ecosystem to further enhance our differentiated customer experience. Plus, we are mobilizing the organization to accelerate value creation through strategic transformation initiatives, driving margin expansion and growth, and increasing our execution capabilities. Separately in the quarter, we were excited to announce two acquisitions that demonstrate our focus on biopharma and our digital ecosystem, which I'll talk about in a moment. As you know well, the pace of change is faster than ever. Our markets, customers and competitors are not standing still. Neither are we. We're accelerating our pace of innovation and execution so we can add to and capitalize on opportunities in front of us. We are sharply focused on key growth factors, including biopharma, PFAS and advanced materials. I continue to meet and connect with employees, customers and shareholders around the globe to listen to their perspectives and how we should build on our strengths and move Agilent forward. The entire Agilent team is clear on what is vital to the company's future, becoming even more customer focused and even more nimble to continue to win in the marketplace and add value to customers and shareholders. We are evolving our strategy, adapting quickly to market trends and changes, while accelerating our pace of innovation in areas of greatest return for long-term growth. We're excited to announce that you'll hear more about these topics and our transformation at our investor day we have planned in New York on December 17th. Now let's talk further about our Q3 results. All our end markets except academia and government, which is our smallest, ended the quarter better than expected. Our largest market, pharma, declined high single digits slightly better than our expectations. And while biopharma continues to be pressured, we are seeing relatively better performance than small molecule. Our leadership in providing workflow solutions for PFAS continue to show strong performance in the environmental market. Geographically, Europe exceeded expectations led by small molecule pharma, as well as continued strength in environmental. Our other regions perform roughly in line with expectations. While capital equipment budgets remain constrained, we continue to see good lab activity in Q3, with services plus consumables growing mid-single digits. When looking at our performance by business unit, the Life Sciences and Applied Markets Group reported $782 million in revenue, down 7%. While the instrument side of the business remains constrained, it was encouraging that our instrument book to build was again greater than 1%. The group saw a decline across all regions and most end markets with low single digit growth in environmental and forensics. Consumables continue to be a bright spot, growing by mid single digits. The LSAG team also was busy innovating with the introduction of the 8850 GC that helps customers reach their sustainability goals by delivering answers efficiently while using up to 30% less power than other GCs and has a much smaller footprint. Moving on to the Agile and CrossLab group, the business delivered revenue of $411 million for the quarter, up mid single digits. ACG grew in every region except China, where we were down modestly year on year, but showed meaningful improvement versus last quarter. Once again, we drove double digit growth in service contracts, which represented nearly 70% of the total business. And beyond another quarter of solid revenue growth, ACG also delivered a record operating margin of 34%, demonstrating that the resiliency and strength of the recurring revenue business continues despite the constrained capital equipment environment. The continued strength of our business is a testament to our strategy of increasing the connect rates on our instruments and the ongoing value we are providing to our customers in helping them reach their productivity goals. The diagnostics and genomics group posted $385 million in revenue, representing an 8% decline. Pathology grew mid-single digits globally and was offset by declines in cell analysis, NASD, and genomics. NASD stepped down sequentially in Q3 as expected, and we were on track for NASD's revenues to step up sequentially in Q4. In the face of a constrained CapEx environment, the Agilent team has remained consistent in putting our customers first and fostering deeper relationships with them. We continue to execute well and be disciplined while investing in high growth opportunities. As I mentioned earlier, we were thrilled to announce two acquisitions that speak to our focus on biopharma and increasing recurring revenue, as well as on strengthening the digital ecosystem for Agilent customers. In late July, we signed a definitive agreement to acquire BioVectra, a leading specialized contract development and manufacturing organization. The Canada-based company builds on Agilent's capabilities in oligonucleotides and CRISPR therapeutics by expanding our portfolio of services. BioVectra adds rapidly growing modalities in microbial fermentation, antibody drug conjugates, and high-potency active pharmaceutical ingredients. It also brings world-class capabilities that, when combined with NASD, enables us to deliver customers a complete gene editing solution. The company delivered more than $110 million in revenue during the calendar year 2023 and expects double-digit revenue growth this year. The BioVector acquisition remains on track to be closed by the end of the year, and we're looking forward to welcoming the BioVector team to Agilent. At the end of the quarter, we also announced the acquisition of Californian-based Sixth Sense, a startup that uses artificial intelligence and power monitoring to help customers optimize their lab operations. Sixth Sense technology already is available to our customers through CrossLab Connect, a suite of digital applications that improve lab performance. A hearty welcome to the Sixth Sense team, who already is part of Agilent. During the quarter, we released our annual ESG report, which showcases a large and growing portfolio of products that help our customers reach their sustainability goals. Instruments certified with the My Green Lab ACT label now accounts for 40% of all instrument revenue and we continue to regularly release products like the new 8850GC with environmental benefits. We are also proud that we have recently ranked in the top 20 of Time Magazine's 500 most sustainable companies in the world. Bob will now provide the details on our results as well as our outlook for the remainder of the year. After Bob delivers his comments, I will be back for some closing remarks. Over to you, Bob.

Thanks, Poreg, and good afternoon, everyone. In my remarks today, I'll provide some additional details on revenue in the quarter, as well as take you through the income statement and other key financial metrics. I'll then cover our updated full year and fourth quarter guidance. Q3 revenue was $1.578 billion, a decline of 4.4% core, but a 300 basis point sequential improvement as Poreg noted. Excluding China, revenue declined low single digits in the quarter. On a reported basis, currency had a negative impact of 1.1 percentage points, while M&A had a negative impact of 10 basis points, resulting in a reported decline of 5.6%. Our largest end market, pharma, declined 8%. Biopharma was down low double digits, or down mid-single digits, excluding NASD. Small molecule performed better down mid-single digits and was led by growth in Europe. Services in pharma continues to perform well, growing high single digits. In chemical and advanced materials, revenue declined 5%, with growth in Americas offset by softness in China. Our advanced materials subsegment performed better, driven by our business in the semiconductor market. Academia and government, our smallest market, can be lumpy from quarter to quarter. We saw a decline of 11% as Europe and China both saw double-digit declines, partially offset by better performance in the Americas region. Our business in the diagnostics and clinical end market grew 2%. including continued mid-single-digit growth in pathology, offset by ongoing softness in genomics. In environmental and forensics, we grew 4%, another great quarter for our PFAS testing business. We saw robust business in Europe, led by the new EU Water Directive, and in China, due to the nationwide Emerging Pollutants Program. Now, wrapping up our end markets, food was down 3% versus last year, but grew sequentially and was led by Asia ex-China. Moving on to our regional performance, Europe was flat overall, beating our expectations while we declined 6% in the Americas and declined 1% in Asia ex-China. China revenue declined 11%, with quarterly revenue improving sequentially, driven by growth in services and consumables. This speaks to some increase in lab activity, which is encouraging. Now let's move on to the rest of the P&L. Growth margin was 56.0% in the quarter, down slightly versus a year ago, but up 40 basis points sequentially. Our operating margin of 27.4% improved sequentially and was better than expected. Despite the dampened demand, we continue to make good progress in driving our productivity initiatives, and continuing to manage the cost structure very well while investing for growth. As Porek mentioned, we are on track to deliver the $100 million in incremental annualized cost savings by the end of the fiscal year. Below the line, our net interest income was in line, as was our tax rate of 13%, and we had 291 million diluted shares outstanding in the quarter. Putting it all together, Q3 earnings per share were $1.32. That was ahead of our expectations, but down 7.7% from a year ago as we went up against a difficult compare due to the variable pay reset in Q3 of last year. Now let me turn to cash flow and the balance sheet. We continue to enjoy a very strong balance sheet and healthy cash flows. Operating cash flow was $452 million in the quarter, and we invested $92 million in capital expenditures. As we committed in Q2, we ramped up our share repurchases starting here in Q3. We purchased $585 million in shares and paid out $68 million through dividends for a total of $653 million returned to shareholders in the quarter. This includes $500 million of the previously announced $750 million opportunistic share repurchase and we expect to complete the additional $250 million repurchase in Q4. We ended the quarter with a net leverage ratio of 0.6, and even with the upcoming BioVector acquisition, our balance sheet and leverage ratios will still be in a very strong position. In summary, we performed well and continue to see a steady improvement in the market and expect that to continue into FY25. Because of our Q3 results, We are increasing the midpoint of our revenue and earnings per share guidance for the year. We now expect full-year revenue to be in the range of $6.450 to $6.500 billion. This represents a decline of 5.6% to 4.9% on a reported basis and a decline of 5.0% to 4.3% on a core basis. Currency and M&A combined are a headwind of 60 basis points. Full-year non-GAAP earnings per share are now expected to be between $5.21 and $5.25, representing a decline of 4.2% to 3.5%. This assumes net interest income of $38 million, a 13% tax rate, and 292 million fully diluted shares outstanding. We have not included any impact of the BioVector acquisition in our updated guidance, and six cents does not have a material financial impact to the year or Q4. This full year of guidance translates into Q4 revenue in the range of 1.641 to $1.691 billion. This represents a decline of 1.9 to 1.1% growth on a core basis and a decline of 2.8 to 0.2% growth on a reported basis. Currency and M&A are a combined headwind of 90 basis points. Fourth quarter non-GAAP earnings per share are expected to be between $1.38 and $1.42, marking a return to growth at the midpoint. We expect a 13% tax rate, a decrease in net interest income to $5 million due to the lower cash balance, and 287 million diluted shares outstanding for the quarter. Now I'd like to turn the call back to Poreg for some closing comments. Poreg?