Q4 2024 Earnings Summary
- 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.
- 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.
| Metric | YoY Change | Reason |
|---|---|---|
Total Revenue | +1% | Slight YoY increase driven by strong growth in the Diagnostics and CrossLab segments, which helped offset weaker Life Sciences and Applied Markets performance. The result also reflects moderate improvement in certain end markets versus a lower prior-year base. |
Life Sciences and Applied Markets | -10% | Decline primarily due to soft demand for capital equipment—especially in pharmaceutical and chemical end markets—exacerbated by cautious customer spending on high-value instruments in key geographies (including the Americas) compared with the prior year. |
Diagnostics and Genomics | +24% | Strong YoY growth fueled by robust demand in pathology and nucleic acid solutions, which more than offset minor weaknesses in other sub-businesses. This reflects improved orders from both clinical and biopharma customers relative to the previous period. |
Agilent CrossLab | +5% | Solid performance on the back of recurring service contracts and continued demand for consumables. The business also benefited from its vendor-neutral services offering, which helped maintain growth despite regional capital spending cuts. |
Americas | -90% | Significant drop driven by major reductions in key end-market investments—particularly pharma—along with a tougher prior-year comparison. Weakness in capital equipment sales hit results especially hard in this region, exacerbating the YoY decline. |
Europe | +5% | Modest YoY increase supported by strong small-molecule pharma and environmental testing demand. This region also benefited from new regulatory requirements spurring additional testing activity, partially offset by softer academia and government funding compared to last year. |
Net Income | -26% | Lower profit compared to the prior year driven by higher operating expenses and restructuring costs, despite some benefits from cost-management initiatives. The impact of lower Life Sciences revenue also weighed on overall profitability. |
Diluted EPS | -25% | Decrease in line with lower net income, reflecting reduced margins and a weaker product mix, partially offset by share buybacks improving the per-share metric versus the prior year. |
| Metric | Period | Previous Guidance | Current Guidance | Change |
|---|---|---|---|---|
Revenue range | Q1 2025 | no prior guidance | $1.65B – $1.68B | no prior guidance |
Reported growth | Q1 2025 | no prior guidance | -0.5% to +1.3% | no prior guidance |
Core growth | Q1 2025 | no prior guidance | -2% to 0% | no prior guidance |
Currency impact | Q1 2025 | no prior guidance | -0.3 percentage points | no prior guidance |
M&A contribution | Q1 2025 | no prior guidance | +1.8 percentage points | no prior guidance |
Non-GAAP EPS | Q1 2025 | no prior guidance | $1.25 – $1.28 | no prior guidance |
Lunar New Year impact | Q1 2025 | no prior guidance | -2.0 percentage points | no prior guidance |
Revenue range | FY 2025 | no prior guidance | $6.79B – $6.87B | no prior guidance |
Reported growth | FY 2025 | no prior guidance | 4.3% to 5.5% | no prior guidance |
Core growth | FY 2025 | no prior guidance | 2.5% to 3.5% | no prior guidance |
Currency impact | FY 2025 | no prior guidance | -0.2 percentage points | no prior guidance |
M&A contribution | FY 2025 | no prior guidance | 2.0% to 2.2% | no prior guidance |
Non-GAAP EPS | FY 2025 | no prior guidance | $5.54 – $5.61 | no prior guidance |
Operating margin expansion | FY 2025 | no prior guidance | +50 to +70 basis points | no prior guidance |
Net interest expense | FY 2025 | no prior guidance | $25M | no prior guidance |
Tax rate | FY 2025 | no prior guidance | 13% | no prior guidance |
Shares outstanding | FY 2025 | no prior guidance | 286M | no prior guidance |
Operating cash flow | FY 2025 | no prior guidance | $1.65B | no prior guidance |
Capital expenditures | FY 2025 | no prior guidance | $450M | no prior guidance |
| Metric | Period | Guidance | Actual | Performance |
|---|---|---|---|---|
Revenue | Q4 2024 | $1.641B to $1.691B | $1,701M | Beat |
Revenue | FY 2024 | $6.450B to $6.500B | $6,510M (sum of Q1: 1,658+ Q2: 1,573+ Q3: 1,578+ Q4: 1,701) | Beat |
| Topic | Previous Mentions | Current Period | Trend |
|---|---|---|---|
China Market Performance | Q3: -11% YoY, observed sequential improvement and expected mid-single-digit growth in Q4. Q2: -21%, revised to double-digit decline for FY24. Q1: -9% with stabilization. | Revenue of ~$310–312M, down 3% YoY but exceeded expectations. First stimulus orders arrived, expecting slight growth in FY25. | Slight improvement from prior declines, optimistic for 2025 |
Geopolitical Risks | Q3: No explicit mention beyond dampened demand. | Reiterated tariff mitigation strategies with supply chain diversification, potential $4–5M quarterly impact from retaliatory tariffs. | Consistent tariff focus, mitigation in place |
Instrument Orders and Demand Trajectory | Q3: Book-to-bill >1, instruments down low double digits. Q2: First YoY order growth in seven quarters. Q1: Book-to-bill below 1 for instruments, but overall above 1. | Book-to-bill >1 for third straight quarter; instrument orders grew YoY. Infinity III expected to boost demand. | Steady recovery visible |
Guidance for FY 2025 and Beyond | Q3: Only general optimism for FY25. Q2: No specifics, but expected improvements. Q1: Not discussed [No reference]. | FY25 revenue $6.79–6.87B, core growth +2.5–3.5%, EPS $5.54–5.61, 50–70 bps margin expansion. | Formal guidance introduced in Q4 |
Ignite Transformation and Cost-Saving Measures | Q3: $100M annualized savings by FY24-end. Q2: Added $100M in costs cuts on top of $175M planned. Q1: Cost measures on track, not named “Ignite”. | Key driver of revenue growth and margin expansion; savings to materialize in 2H FY25. | Accelerating transformation efforts |
Infinity III LC System and LC Replacement Cycle | Q3 & Q2: No direct mention of Infinity III; cautious on LC replacement cycle. Q1: No mention. | Launched in Oct 2024, strong early demand in tens of millions. Expected to accelerate LC replacement. | New product driving replacement |
Diagnostics and Genomics Group (DGG) | Q3: $385M, -8%; mid-single-digit growth in pathology offset by NASD/genomics decline. Q2: $417M, -8%. Q1: $407M, -6%. | $442M, down 3%; pathology strong (HSD growth), genomics low single-digit growth, NASD/cell analysis soft. | Gradual recovery, pathology solid |
Services, Consumables, and Recurring Revenue | Q3: ACG $411M, mid-single-digit growth; strong services and consumables. Q2: ACG $402M, +5%. Q1: ACG +5%, services/consumables strong. | Agilent CrossLab Group (ACG) $426M, +5%; double-digit growth in service contracts; consumables mid-single digits. | Consistent expansion of recurring |
PFAS Detection and Environmental Testing | Q3: PFAS fueling 4% environmental growth. Q2: Emphasized PFAS instruments; env/forensics -2%. Q1: PFAS a bright spot in environmental. | PFAS business up 40% YoY; fastest-growing segment in China from Emerging Pollutants Act. | Continued high growth momentum |
NASD Business Outlook | Q3: Q4 step-up after Q3 dip, aiming for $300M in FY24. Q2: Revised FY24 from $350M to $300M, but optimistic for 2025. Q1: Flat for 2024, optimistic long term. | Expects high single-digit FY25 growth, with more upside in FY26; $450M CapEx peak in 2025. | Gradual rebound into 2025–2026 |
Margin Expansion Plans | Q3: Seeing sequential OM improvement, $100M savings as tailwind. Q2: No specific blueprint, GM was 55.6%. Q1: Cost savings to lift margins in 2H. | 50–70 bps expansion in FY25, aided by Ignite and cost efficiencies. | Steady progress targeted |
Tariff Impacts | Q3/Q2/Q1: No mention [No references]. | Estimated $10–15M total impact; $4–5M per quarter if new retaliatory measures arise. | Reemerged as a concern in Q4 |
Capital Spending and Budgeting Constraints | Q3: Constrained but improving environment. Q2: Cautious budgets, big factor in guidance reductions. Q1: Conservative environment. | Customers’ CapEx caution affecting instrument demand; Agilent’s own CapEx at $450M for NASD. | Ongoing caution with some improvement |
Overproduction in China | Q3: Referenced overproduction impacting a 5% TAM decline. | No mention in Q4 2024. | Topic dropped this period |
Japan Semiconductor Investments | Q1: Expected strength in Japan’s semiconductor segment. | No mention in Q4 2024. | Not repeated in later calls |
Europe Supply Chain Shifts | Q1: Anticipated growth from supply chain moves. | No mention in Q4 2024. | No further updates |
Biopharma and Pharma End-Market Trends | Q3: Pharma -8%, biopharma down double digits. Q2: Pharma -11%, guidance cut to low DD decline. Q1: Pharma -12%, with biopharma LSD growth. | Pharma -1% (small molecule LSD up, biopharma MSD down), expect FY25 recovery. | Gradual improvement heading into FY25 |
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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. -
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. -
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. -
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. -
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. -
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. -
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. -
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. -
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. -
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.