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    Agilent Technologies Inc (A)

    Business Description

    Agilent Technologies Inc. is a global leader in the life sciences, diagnostics, and applied chemical markets, providing application-focused solutions that encompass instruments, software, services, and consumables for the entire laboratory workflow . The company operates through three main business segments: Life Sciences and Applied Markets, Diagnostics and Genomics, and Agilent CrossLab . Agilent's offerings are designed to enhance laboratory efficiency and effectiveness, catering to a wide range of scientific and industrial applications .

    1. Agilent CrossLab - Focuses on services, software, informatics, and consumables, designed to improve customer outcomes and is vendor neutral, serving customers regardless of their instrument choices .
    2. Diagnostics and Genomics - Includes cell analysis, nucleic acid solutions, and pathology solutions, with growth in nucleic acid solutions and reagent partnership businesses .
    3. Life Sciences and Applied Markets - Provides solutions such as liquid chromatography, mass spectrometry, gas chromatography, and spectroscopy .

    Q4 2024 Summary

    Initial Price$140.39July 31, 2024
    Final Price$130.31October 31, 2024
    Price Change$-10.08
    % Change-7.18%

    What went well

    • Agilent's instrument orders grew year-on-year in Q4, with a total company book-to-bill ratio greater than one, indicating steady market improvement and positive demand outlook.
    • The launch of the Infinity III LC system and expected acceleration of the LC replacement cycle are anticipated to drive growth, particularly in the second half of fiscal year 2025. Agilent's large installed base is poised for replacement, which can boost instrument sales.
    • Strong growth prospects in the Diagnostics and Genomics Group (DGG), with high single-digit growth in pathology and improved performance in genomics, are expected to continue into fiscal year 2025, providing durable growth drivers for the company.

    What went wrong

    • Agilent faces potential risks from tariffs impacting their business in China and globally. While management believes the impact is currently manageable, they acknowledge that a more broad-based implementation of tariffs would be materially adverse.
    • Competitors are accelerating their liquid chromatography (LC) replacement cycles faster than Agilent, potentially putting Agilent at a disadvantage. This may affect Agilent's market share and pace of innovation in this key segment.
    • Agilent expects below-trend market growth, particularly in pharma and applied markets, for at least the first half of the year. This could negatively impact their revenue growth in the near term.

    Q&A Summary

    1. China Sales and Stimulus Impact
      Q: How did China perform, and what's the outlook?
      A: China revenue slightly exceeded expectations, ending the quarter at $312 million. Lab activity is improving, with stimulus orders already received and more expected in Q1. They are seeing dramatic share gains and expect steady improvement throughout FY '25, especially in PFAS, which was their fastest-growing business globally.

    2. Instrument Replacement Cycle and Infinity III Launch
      Q: What's the status of the instrument replacement cycle?
      A: They are seeing a steady recovery in instruments, with book-to-bill greater than 1. They launched the Infinity III and have seen tens of millions of dollars in orders. The replacement cycle is expected to be slow and steady but kicking off in Q1. LC and LCMS orders are improving, and there's significant customer excitement around Infinity III's productivity enhancements.

    3. Tariff Impact on Business
      Q: What is the risk from potential tariffs in China?
      A: The existing tariff impact is $10–$15 million, and future potential impact is manageable with mitigation activities. Approximately two-thirds of U.S. business comes from products sourced in the U.S.. They have diversified their supply chain since 2018–2019 to reduce exposure.

    4. Margin and Free Cash Flow Outlook
      Q: What's driving margin expansion and free cash flow in FY '25?
      A: They expect 50–70 bps margin expansion in FY '25. Free cash flow will slightly step down due to increased CapEx for NASD expansion. Margin expansion will be driven by price, cost efficiencies, and Ignite transformation initiatives rolling out in the second half of the year.

    5. Pharma Growth Expectations
      Q: How do you see Pharma performing in FY '25?
      A: Pharma is expected to return to growth, with low to mid-single-digit growth. Small molecule business was up 3%, while biotech was down but expected to recover. The GLP-1 segment grew 30% this year, with continued strong prospects.

    6. Segment Guidance for FY '25
      Q: What's the outlook for your business segments in FY '25?
      A: LSAG is expected to grow low single digits, with consumables mid-single digits. ACG continues to be strong with mid to high single-digit growth, and services in double digits. DGG is projected to have low to mid-single-digit growth, driven by pathology and genomics, and a return to growth for NASD.

    7. DGG Performance and Sustainability
      Q: Is growth in DGG sustainable, especially in genomics?
      A: DGG showed noticeable strength, with pathology growing high single digits. Genomics posted low single-digit growth, the first growth in a while. Growth is driven by Magnis NGS library prep and strong pipeline for Avida NGS chemistry. They believe these trends are durable given macro conditions.

    8. Resegmentation and R&D Acceleration
      Q: Will resegmentation accelerate new product introductions?
      A: Yes, resegmentation allows them to focus on key growth areas, accelerate R&D, and invest more effectively. They aim to be closer to customers and accelerate innovation in key areas.

    9. Chemical & Advanced Materials Growth
      Q: What are the trends in Chemical & Advanced Materials?
      A: CAM grew 1%, with 4% growth in materials driven by battery and semiconductor businesses. Slight decline in chemical and energy, but CAM is returning to positive year-on-year growth for the first time since Q2 2023.

    10. GLP-1 Contribution and BIOVECTRA Synergies
      Q: How significant is GLP-1, and what's the impact of BIOVECTRA?
      A: They grew 30% in GLP-1 this year, involved in new site build-outs and production systems. The acquisition of BIOVECTRA brings synergies, with a healthy pipeline of GLP-1 and synthetic peptides in their CDMO capabilities.

    Key Metrics

    View all financials →
    Revenue by Segment - in Millions of USDQ1 2014Q2 2014Q3 2014Q4 2014FY 2014Q1 2015Q2 2015Q3 2015Q4 2015FY 2015Q1 2016Q2 2016Q3 2016Q4 2016FY 2016Q1 2017Q2 2017Q3 2017Q4 2017FY 2017Q1 2018Q2 2018Q3 2018Q4 2018FY 2018Q1 2019Q2 2019Q3 2019Q4 2019FY 2019Q1 2020Q2 2020Q3 2020Q4 2020FY 2020Q1 2021Q2 2021Q3 2021Q4 2021FY 2021Q1 2022Q2 2022Q3 2022Q4 2022FY 2022Q1 2023Q2 2023Q3 2023Q4 2023FY 2023Q1 2024Q2 2024Q3 2024Q4 2024FY 2024
    Life Sciences and Applied Markets9279283,8568467547828333,215
    Diagnostics and Genomics3493561,4094074173854421,651
    Agilent CrossLab3964041,5684054024114261,644
    - Products1,2221,2325,0511,2091,1251,1211,2174,672
    - Services and Other4504561,7824494484574841,838
    - Analytical Lab Consumables--------
    - Diagnostics and Genomics Solutions--------
    - Informatics and Other--------
    Total Revenue1,6721,6886,8331,6581,5731,5781,7016,510
    Revenue by Geography - in Millions of USDQ1 2014Q2 2014Q3 2014Q4 2014FY 2014Q1 2015Q2 2015Q3 2015Q4 2015FY 2015Q1 2016Q2 2016Q3 2016Q4 2016FY 2016Q1 2017Q2 2017Q3 2017Q4 2017FY 2017Q1 2018Q2 2018Q3 2018Q4 2018FY 2018Q1 2019Q2 2019Q3 2019Q4 2019FY 2019Q1 2020Q2 2020Q3 2020Q4 2020FY 2020Q1 2021Q2 2021Q3 2021Q4 2021FY 2021Q1 2022Q2 2022Q3 2022Q4 2022FY 2022Q1 2023Q2 2023Q3 2023Q4 2023FY 2023Q1 2024Q2 2024Q3 2024Q4 2024FY 2024
    Americas6677022,732630637626682,573
    Europe4324331,7544584264324541,770
    Asia Pacific5735532,3475705105205672,167
    - United States--2,410----2,246
    - China including Hong Kong--1,383----1,217
    - Rest of the World--3,040----3,047
    Total Revenue1,6721,6886,8331,6581,5731,5781,7016,510

    Executive Team

    NamePositionStart DateShort Bio
    Henrik Ancher-JensenSenior Vice President, Agilent and President, Order Fulfillment and Supply ChainSeptember 2013Henrik Ancher-Jensen, 58 years old, has served in his current role since September 2013. He previously held senior management roles at companies like Chr. Hansen and Deloitte Consulting .
    Phil BinnsSenior Vice President, Agilent and President, Life Sciences and Applied Markets GroupSeptember 2023Phil Binns, 62, has been in his current role since September 2023. He was previously Vice President and General Manager for the Spectroscopy and Vacuum Products Division at Agilent .
    Rodney GonsalvesVice President, Corporate Controllership and Chief Accounting OfficerMay 2015Rodney Gonsalves, 58, has served as Vice President, Corporate Controllership and Chief Accounting Officer since May 2015. He has held various roles at Agilent, including operational CFO for business groups .
    Dominique P. GrauSenior Vice President, Human Resources and Global CommunicationsNovember 2018Dominique P. Grau, 64, has been in his current role since November 2018. He previously served as Senior Vice President, Human Resources from August 2014 to October 2018 .
    Padraig McDonnellChief Commercial Officer and President, Agilent CrossLab GroupNovember 2021Padraig McDonnell, aged 52, has served as Chief Commercial Officer and President of the Agilent CrossLab Group since November 2021. He has been with Agilent since 1998 .
    Robert W. McMahonSenior Vice President, Agilent and Chief Financial OfficerSeptember 2018Robert W. McMahon, 55, has served as Senior Vice President since August 2018 and as Chief Financial Officer since September 2018. He previously worked at Hologic, Inc. and Johnson & Johnson .
    Michael R. McMullenChief Executive Officer and PresidentMarch 2015Michael R. McMullen, 62, has been CEO since March 2015 and President since September 2014. He retired as President and CEO on May 1, 2024, transitioning to Senior Advisor until October 31, 2024 .
    Michael TangSenior Vice President, General Counsel and SecretaryJanuary 2016Michael Tang, 49, has served as Senior Vice President, General Counsel, and Secretary since January 2016. He previously worked at Wilson Sonsini Goodrich & Rosati and Fenwick & West LLP .
    Padraig McDonnellCEO-elect and Chief Operating Officer; President and CEOMay 1, 2024Padraig McDonnell was appointed as COO and CEO-elect on February 20, 2024, and became President and CEO on May 1, 2024. He has been with Agilent since 1998 .
    Angelica RiemannPresident of the Agilent CrossLab Group (ACG)N/AAngelica Riemann is a 25-year veteran of Agilent and currently serves as President of the Agilent CrossLab Group. She previously served as Vice President and General Manager of ACG's Services Division .
    Jonah KirkwoodVice President of Global Sales; Chief Commercial OfficerN/AThe documents do not provide information about Jonah Kirkwood serving as Vice President of Global Sales or Chief Commercial Officer at Agilent Technologies .

    Questions to Ask Management

    1. Given that the Applied Markets Group (AMG) represents $1.3 billion in annual revenue compared to the Agilent CrossLab Group (ACG) at $2.7 billion and Life Sciences and Diagnostics Group (LDG) at $2.5 billion, what are your plans to accelerate growth in AMG, and how do you plan to address potential market saturation in these applied markets?

    2. You mentioned that your pathology business grew high single digits in Q4 and that genomics posted low single-digit growth after a period of declines. Given the challenging genomics market and your recent strategy pivot, how sustainable is this growth, and what are the key risks that could impact your performance in genomics moving forward?

    3. With the launch of the Infinity III LC series and your expectations for increased demand starting in Q1, how confident are you in capturing market share given that competitors may have already benefited from a refresh of their installed base? What strategies do you have in place to differentiate Agilent's offerings in a potentially saturated market?

    4. Regarding your guidance for fiscal year 2025, you mentioned that the "error bars" around your assumptions are wider than normal due to uncertainties such as the LC replacement cycle recovery, China stimulus, and U.S. market sentiment. Could you elaborate on the specific scenarios that could impact your guidance, and how you are preparing to mitigate potential downside risks?

    5. With the acquisition of BIOVECTRA to expand your CDMO services, how do you plan to integrate this new business to drive growth, and what challenges do you anticipate in scaling up capabilities in rapidly growing therapeutic modalities like peptide synthesis and gene editing therapies? Additionally, how significant is the competitive landscape in these areas, and how will you differentiate your services?

    Share Repurchase Program

    Program DetailsProgram 1Program 2Program 3
    Approval DateFebruary 16, 2021 January 9, 2023 May 29, 2024
    End Date/DurationTerminated on March 1, 2023 No fixed termination date No fixed termination date
    Total additional amount$2.0 billion $2.0 billion $2.0 billion
    Remaining authorization amount$0 million $374 million $2.0 billion
    DetailsExpired with $339 million remaining Will terminate upon the commencement of the 2024 program Has not yet commenced

    Past Guidance

    Q4 2024 Earnings Call

    • Issued Period: Q4 2024
    • Guided Period: FY 2025 and Q1 2025

    FY 2025 Guidance:

    • Revenue: $6.79 billion to $6.87 billion (4.3% to 5.5% growth) .
    • Non-GAAP EPS: $5.54 to $5.61 .
    • Operating Margin Expansion: 50 to 70 basis points .
    • Net Interest Expense: $25 million .
    • Tax Rate: 13% .
    • Shares Outstanding: 286 million .
    • Operating Cash Flow: $1.65 billion .
    • Capital Expenditures (CapEx): $450 million .

    Q1 2025 Guidance:

    • Revenue: $1.65 billion to $1.68 billion (-0.5% to 1.3% growth) .
    • Non-GAAP EPS: $1.25 to $1.28 .

    Q3 2024 Earnings Call

    • Issued Period: Q3 2024
    • Guided Period: FY 2024 and Q4 2024

    FY 2024 Guidance:

    • Revenue: $6.450 billion to $6.500 billion (-5.6% to -4.9%) .
    • Non-GAAP EPS: $5.21 to $5.25 (-4.2% to -3.5%) .

    Q4 2024 Guidance:

    • Revenue: $1.641 billion to $1.691 billion (-2.8% to 0.2% growth) .
    • Non-GAAP EPS: $1.38 to $1.42 .

    Q2 2024 Earnings Call

    • Issued Period: Q2 2024
    • Guided Period: Q3 2024 and FY 2024

    FY 2024 Guidance:

    • Revenue: $6.42 billion to $6.50 billion (-6.0% to -4.9%) .
    • Non-GAAP EPS: $5.15 to $5.25 (-5.3% to -3.5%) .
    • Tax Rate: 13% .
    • Fully Diluted Shares Outstanding: 292 million .
    • Share Repurchases: $750 million in the second half .

    Q3 2024 Guidance:

    • Revenue: $1.535 billion to $1.575 billion (-8.2% to -5.8%) .
    • Non-GAAP EPS: $1.25 to $1.28 (-12.6% to -10.5%) .

    Q1 2024 Earnings Call

    • Issued Period: Q1 2024
    • Guided Period: Q2 2024

    Q2 2024 Guidance:

    • Revenue: $1.56 billion to $1.59 billion (-9.1% to -7.4%) .
    • Non-GAAP EPS: $1.17 to $1.20 .
    • Share Repurchase: Minimum $180 million .

    These summaries provide a comprehensive view of Agilent's guidance over the last four earnings calls.

    Latest news

    Recent developments and announcements about A.

    Financial Reporting

      Earnings Call

      ·
      Nov 26, 2024, 4:58 AM

      Agilent Technologies recently held its earnings call for the fourth quarter of fiscal year 2024, where they discussed several key points regarding their financial performance and strategic initiatives. The company reported a Q4 revenue of $1.701 billion, which represents a slight increase of 0.8% on a reported basis, despite a core revenue decline of 0.3% . The gross margin for the quarter was 55.1%, and the operating margin was 27.4% . Earnings per share (EPS) for Q4 was $1.46, exceeding expectations and marking a 6% increase from the previous year .

      Agilent's management provided forward guidance for fiscal year 2025, projecting revenue between $6.79 billion and $6.87 billion, with a core growth expectation of 2.5% to 3.5% . They anticipate a recovery in market conditions, particularly in the second half of the year, and expect operating margin expansion of 50 to 70 basis points .

      The company has undergone a significant organizational restructuring to align its business units more closely with market demands, which is expected to enhance customer focus and accelerate innovation . This restructuring includes the formation of new market-focused groups such as the Life Sciences and Diagnostics Markets Group and the Applied Markets Group .

      During the Q&A session, analysts inquired about various topics, including the sustainability of growth in the genomics sector and the impact of the new organizational structure on R&D and product innovation . Management expressed optimism about the durability of growth in genomics and pathology, citing strategic pivots and strong product pipelines as key drivers . They also indicated that the resegmentation would lead to accelerated R&D efforts and more focused investments in key growth areas .

      Agilent's management also addressed questions about the potential impact of geopolitical factors, such as tariffs and changes in U.S. administration policies, on their business operations . They have taken steps to mitigate risks associated with tariffs by diversifying their supply chain and are prepared for various scenarios that might arise from policy changes .

      Overall, Agilent is positioning itself for continued growth through strategic restructuring, focused investments in high-growth areas, and maintaining strong financial health, as evidenced by their robust cash flow and shareholder returns .

      Earnings Report

      ·
      Nov 25, 2024, 9:31 PM

      Agilent Technologies, Inc. has released its financial results for the fourth fiscal quarter ended October 31, 2024. Here are the key highlights:

      • Fourth-Quarter Fiscal Year 2024 Results:

        • Revenue: $1.70 billion, which is a 0.8% increase on a reported basis but a 0.3% decline on a core basis compared to the same quarter last year.
        • GAAP Net Income: $351 million, with earnings per share (EPS) of $1.22, marking a 25% decrease from the fourth quarter of 2023.
        • Non-GAAP Net Income: $418 million, with EPS of $1.46, reflecting a 6% increase from the fourth quarter of 2023.

      • Full Fiscal Year 2024 Results:

        • Revenue: $6.51 billion, a decrease of 4.7% on both reported and core bases year-over-year.
        • GAAP Net Income: $1.289 billion, with EPS of $4.43, up 6% year-over-year.
        • Non-GAAP Net Income: $1.539 billion, with EPS of $5.29, down 3% year-over-year.

      • Fiscal Year 2025 and First-Quarter Outlook:

        • Fiscal Year Revenue: Expected to be between $6.790 billion and $6.870 billion, representing an increase of 4.3% to 5.5% on a reported basis and 2.5% to 3.5% on a core basis.
        • Non-GAAP EPS: Expected to range from $5.54 to $5.61 per share.
        • First-Quarter Revenue Guidance: Anticipated to be between $1.650 billion and $1.680 billion, with a potential decline of 0.5% to an increase of 1.3% on a reported basis and a decline of 2.0% to 0.2% on a core basis.
        • Non-GAAP EPS for Q1: Expected to be between $1.25 and $1.28 per share.

      Agilent's management has highlighted the company's new market-based, customer-first strategy and organizational transformation as key factors positioning it for future growth opportunities .