AGILENT TECHNOLOGIES, INC. (A)·Q4 2024 Earnings Summary

Executive Summary

• Q4 FY24 revenue $1.701B grew 0.8% reported (core -0.3%) and non-GAAP EPS $1.46 rose 6% YoY; both revenue and EPS exceeded the company’s prior Q4 guidance high end ($1.691B; $1.42), driven by continued stabilization and execution amid a gradual recovery .
• Segment mix: CrossLab services remained the growth engine (+5% YoY revenue; 32.6% op margin), while LSAG (-1%) and DGG (-1% reported, -3% core) were roughly flat; company book-to-bill >1 again, including instruments, signaling ongoing demand recovery into FY25 .
• FY25 outlook: revenue $6.79–$6.87B (core +2.5%–3.5%), non-GAAP EPS $5.54–$5.61; management expects 50–70 bps operating margin expansion, modest 1H and normalization in 2H; Q1 FY25 guided to $1.65–$1.68B and $1.25–$1.28 EPS, with Lunar New Year timing a ~2pt YoY headwind .
• Strategic catalysts: new market-focused organizational structure announced, launch of Infinity III LC series to catalyze the LC replacement cycle, BIOVECTRA acquisition broadens CDMO exposure; dividend raised 5% to $0.248 per share .

What Went Well and What Went Wrong

• What Went Well

  • CrossLab outperformed: revenue +5% YoY to $426M with 32.6% op margin; contracts grew double digits and ACG grew in all regions except flat in China, underscoring resilience of recurring revenue and services attach rates .
  • Demand indicators improved: total company and instruments book-to-bill >1; instrument orders grew YoY for the first time in 2024, suggesting steady recovery into FY25 .
  • Diagnostics strength pockets: pathology grew high single digits in Q4; genomics returned to low single-digit growth with Magnis automated NGS traction, improving DGG’s mix quality .
  • Strategic actions: organizational realignment to market-focused groups intended to accelerate innovation and customer closeness; Infinity III LC launched with strong early orders; BIOVECTRA closed, expanding CDMO modalities (peptides, gene-editing support) .

• What Went Wrong

  • Instruments still constrained: LSAG revenue fell 1% YoY as conservative CapEx weighed; gross margin fell 70 bps YoY to 55.1% on lower volume/mix .
  • DGG softness areas: despite pathology strength, expected NASD and cell analysis instrument softness pressured DGG; DGG -3% core in Q4 .
  • Americas and China mixed: China revenue down 3% YoY (but sequentially improved) and Americas pressured by NASD; stimulus timing still uncertain in FY25 phasing .

Financial Results

Segment revenue and margins

KPIs and cash/returns

Notes:

• GAAP tax swing YoY: Q4’23 had a tax benefit (-$55M) vs Q4’24 tax expense (+$50M), a headwind to GAAP EPS YoY .

Guidance Changes

Earnings Call Themes & Trends

Management Commentary

• “The Agilent team again executed well and delivered solid results in the fourth quarter as the markets continued to recover… [our] new organizational structure… will position us to capture even more growth opportunities as the market improves.” — CEO Padraig McDonnell .
• “Q4 revenue was $1.701 billion… core down 0.3% with a sequential improvement of over 400 basis points… book-to-bill was greater than 1.” — CFO Bob McMahon .
• “We passed the $1 billion mark in digital orders for the first time across the company.” — CEO McDonnell .
• On Infinity III: “We’ve already seen tens of millions of dollars in orders… we expect the replacement cycle to be slow and steady, but really kicking off in Q1.” — CEO McDonnell .

Q&A Highlights

• Instruments cycle: Management is “conservative” near term but expects steady LC/LCMS replacement to accelerate with Infinity III; installed base age supports replacements; pricing holding up early .
• China: Q4 ~$312M revenue; first stimulus orders in October; broader program across government and commercial; FY25 modeled conservatively on timing .
• Segment outlook FY25: ACG mid-to-high single digit; DGG low-to-mid single digit with NASD returning to growth; LSAG low single digit with consumables mid-single digit and instruments slower .
• Margins/FCF: FY25 OM +50–70 bps; ~13% tax; ~$1.65B OCF; capex $450M (NASD peak spend) .
• Tariffs: Current impact ~$10–$15M; diversified manufacturing footprint; “China for China” reduces retaliatory risk .

Estimates Context

• Wall Street consensus comparisons (S&P Global) were unavailable via our estimates tool at this time due to request limits. As a benchmark versus company guidance: Q4 revenue ($1.701B) and non-GAAP EPS ($1.46) finished above the Q3-issued Q4 guidance ranges ($1.641–$1.691B; $1.38–$1.42), indicating strong execution against internal targets .

Key Takeaways for Investors

• CrossLab’s durable growth and high margins continue to buffer instruments cyclicality; sustained contract growth and attach rates are a positive for earnings quality .
• Early Infinity III traction plus aging installed base underpin a gradual but building LC replacement cycle into FY25, potentially accelerating 2H as budgets normalize .
• China is turning from a drag to a contributor: sequential improvement, initial stimulus orders, and broad tenders support a steady FY25 recovery, albeit conservatively modeled .
• FY25 guide embeds conservatism (tariffs, U.S. macro, stimulus timing), yet targets 50–70 bps OM expansion and 5–6% EPS growth, setting up for upside if cycle and China cadence improve .
• NASD/BIOVECTRA strengthens long-term CDMO optionality across oligos, peptides, and gene editing; near-term revenue cadence skews to FY26 as clinical programs advance .
• Dividend raised 5%; balance sheet remains strong (net leverage ~1.1x), supporting ongoing buybacks and investment .
• Watch list: instrument order momentum (book-to-bill), China stimulus conversions, tariff policy developments, and path to higher genomics growth and sustained pathology strength .