Agilent at Jefferies Conference: Strategic Transformation in Focus

On Wednesday, 04 June 2025, Agilent Technologies (NYSE:A) presented at the Jefferies Global Healthcare Conference 2025, outlining a year of strategic transformation. The company’s leadership highlighted both achievements and challenges, such as a market-based approach and tariff management. The IGNITE program and acquisitions like BioVectra were emphasized as pivotal for long-term growth.

Key Takeaways

• Agilent’s IGNITE program aims to enhance efficiency and deliver long-term value.
• The company reported strong Q1 performance, exceeding both top and bottom-line expectations.
• Agilent’s PFAS business grew 70% in Q2, contributing significantly to overall growth.
• China market strategies focus on mitigating tariffs and leveraging local production.
• Agilent anticipates continued growth in its NASD business, with orders booked into 2026.

Financial Results

• Q1 performance exceeded expectations, with a book-to-bill ratio above one for the fifth consecutive quarter.
• PFAS business grew 70%, adding 80 basis points to the company’s growth.
• ACG business increased by 9%, with 70% of service business on contracts growing double digits.
• NASD business saw 9% growth, with commercial volume accounting for 60% of the business.
• China consumables experienced a minor pull forward of $15 million, which has stabilized.

Operational Updates

• IGNITE transformation has yielded $130 million in annualized cost savings, focusing on pricing and supply chain optimization.
• Innovation investments include new product launches like the ProIQ single quad mass spec and 8850 GC with GCMS.
• ACG reconfiguration now includes services, consumables, software, and automation, enhancing lab productivity.
• NASD capacity expansion includes new trains, with peak investment expected in 2025 and a reduction in CapEx by 2026.

Future Outlook

• NASD is expected to achieve double-digit growth, driven by existing orders and commercial project expansion.
• PFAS market is projected to grow into a billion-dollar opportunity by 2030.
• Academia is expected to decline by 20%, with strategies in place to mitigate this impact.
• M&A opportunities are prioritized, focusing on recurring revenue and faster-growing areas, with valuations becoming more favorable.
• Full tariff mitigation is anticipated by 2026, with a target of 50-100 basis points of operating margin expansion.

Q&A Highlights

• No significant evidence of pharma pull-forward, with a steady replacement cycle observed.
• Agilent is gaining market share in the LCMS sector through productivity enhancements and new product launches.
• Academic government funding pressures are acknowledged, with an expected decline in academia.
• Enterprise pricing strategies are being implemented to improve profitability and counter tariff challenges.
• Agilent is confident in the long-term potential of the Chinese market, particularly in PFAS and semiconductor sectors.

For further details, please refer to the full transcript below.

Full transcript - Jefferies Global Healthcare Conference 2025:

Tycho Peterson, Analyst, Life Science Team: We’re gonna go ahead and kick it off. I’m Tycho Peterson from the life science team. It’s my pleasure to introduce our next company, Agilent. Before we jump into q and a, maybe, Porgy, I wanna give you a chance to reflect back a little bit on your time as CEO.

Porgy, CEO, Agilent: Yeah. It’s been a busy year, but it’s been a very exciting year in Agilent. So we’ve really set out a new strategy, which is market based. We’ve new leadership team, which are working extremely well together, and we have a new market group structure on it as well. So we’re well set up in how we’re looking at strategy.

Then we set off on the IGNITE transformation. I’m sure we’ll get into that, Tycho, which is across the company in terms of how we’re making ourselves more effective as a company. And in this environment, it’s really important, as you see with tariffs, that’s a real engine that’s going to deliver value over time. We deployed $1,000,000,000 of capital by Vectra, which is going extremely well. I’m sure we get into that as well in it.

And I think we’re very well set up for the future, a lot of excitement. I would say the world around us is changing quite a bit. Our markets, we’re in a lot of really good secular drivers and growth markets, and we’ve had some really good standout businesses in our first quarter, we see that going through the second half, but that’s the year.

Tycho Peterson, Analyst, Life Science Team: Great. You know, maybe just to look back on, you know, last week’s results, you know, quarter was above expectations. Book to bill was above one. You know, orders up low single digits, everything seems to be fairly solid. No real evidence of pharma pull forward.

Maybe just talk about some of the gives and takes as we think about the back half of the year here.

Porgy, CEO, Agilent: Yes, so we had some really standout results. Beat the bottom and top line in this environment, which I think is just fantastic. We were able to kind of look at our PFAS business, for example, that grew 70% in the quarter. We see that continuing. That’s a modality that’s continuing in different areas, different geographies driven by regulation and, of course, sometimes litigation, but a great business for us.

Our null Tree replacement cycle has well and truly kicked off. The system is out six months now. So we’re seeing that take off and we’ll see that continue through the second half. And our CDMO business, NASD, of course, we went through a reconfiguration with the IRA in terms of the business there, but high single digit growth, we expect double digit growth, and of course BioVectra. So those are the real momentums that we have in the second half.

Tycho Peterson, Analyst, Life Science Team: And, you know, innovation has obviously been a theme, you know, of late with null as as you touched on. You also have a new GC, the the eighty eight fifty. Maybe just you had ASMS this week.

Porgy, CEO, Agilent: Yep.

Tycho Peterson, Analyst, Life Science Team: Talk a little bit about, you know, some of the messaging around that.

Porgy, CEO, Agilent: Yeah. So first of all, at a high level, innovation is we’re turn turning our guns on innovation, looking at how we can improve and, of course, accelerate innovation. We just hired a CTO, a Chief Technology Officer, August Specht, who’s come from Thermo, but really exciting, and he will lead the innovation track in transformation. And what’s changing for the future is that we would we don’t want to be two inches deep across the company in innovation, but we want to be asymmetrically investing in key areas and, of course, looking at outside innovation. The ProIQ single quad mass spec was launched, great response from our customers, both small molecule and large molecule modalities, but using a lot of smart technologies that help productivity in the lab.

Sometimes people don’t think about LCMS as a productivity system versus LC, but now it’s becoming very prominent within labs. Of course, we have released the CR XF Flex, which is really important cell analysis over time, great response from that outside ASMS. And the 8,850 GC with our GCMS is a critical launch because the combination of that mass spec and our GC is actually going to be critical for new modalities in PFAS. Air testing, so currently in the PFAS market, 2% of that market is doing air testing. We expect in the next two to three quarters that’s going to move to 8% to 12%.

And GCMS is the technology that’s used in that, and we generally have a 50% win rate, so we’re very excited about that.

Tycho Peterson, Analyst, Life Science Team: You know, we touched a minute ago on the quarter you just reported. You know, book to bill was above one, You know, orders up low single digit, and Europe mid mid for the first half of the year. Maybe just talk about, you know, the key areas where you’re seeing strength in the order book, and and what gives you comfort you aren’t seeing pharma pull forward? I mean, that’s been a question I think every company has gotten throughout this earnings season.

Porgy, CEO, Agilent: Yes. So it’s our fifth consecutive quarter of book to bill greater than one, actually instrument book to bill greater than one. So it’s a continuation of what we’ve seen. And if you go back in terms of markets, three was a real low point in Pharma, Improvement in 2024 really improved in the second half, and it continues to improve. So we were very pleased with it across the board.

CDMO business doing extremely well. null Tree and really doing well on the replacement cycle. We did not see any pull forward. We did see a minor pull forward in consumables in China of $15,000,000 It would actually work has worked itself out almost immediately. So that’s been very good to see.

We did see a slight disruption in China around instruments, customs, in terms of delivery in April. But again, that’s back to a baseline, so no pull forward. And when we talk to our customers, you know, and you talk to them about their fleet and the improvement in pharma, They’re in a steady replacement cycle. They’re of course, you have reap the the possibility of reshoring in time that drives a lot of conversations about how we’re going to address that, but no pull pull forward pull forward.

Tycho Peterson, Analyst, Life Science Team: And you had the benefit of having April, you know, in your numbers relative to your peers. Was there any difference, you know, pre post Liberation Day?

Porgy, CEO, Agilent: No. Not really. I mean, you know, if you talk to our customer, we have a strategic account program where we’re at very high level in levels in pharma. Talked to our customers, we expected maybe some discussion around tariffs. And of course, pharma, we’re moving supply chain and inventory around, but that doesn’t really affect our testing.

It’s the same amount of testing, so that was really steady. The only anomaly we did see was around the instrument orders in China, giving the delivery times with our with the customs and the free trade zone that took time for people to process those orders.

Tycho Peterson, Analyst, Life Science Team: And I guess honing in on LCMS, how do we think about the back half of the year for that part of the business in particular? How much could you actually get from null three and those

Porgy, CEO, Agilent: Yes. So for LCMS, we’re largely in the QAQC or downstream environment. That’s an area where, of course, I think, in this environment, continues to be strong and will continue to be strong. The productivity that we’re hearing from our null Tree launch, which makes it 30% more productive in labs for customers, which is a real resonance. And linked with the ProIQ single quad, it really means that we’re going to continue to accelerate not only the replacement cycle, but also new labs that are being set up in different areas.

Tycho Peterson, Analyst, Life Science Team: So do you think this is the driver of share shift within your

Porgy, CEO, Agilent: Yeah. I mean, you know, share shifts generally don’t move a huge amount. In LC, you’ve seen it over the years, Tycho. It’s it’s pretty stable. You have the two main players, which we are one of, and then you have players on on that side.

But we have been extremely pleased with our market share gains. We look at our ALDA report, which is our market share report, it’s three months in arrears, but it showed across those product lines that we’re still gaining share. So I think as the pie grows and as this replacement cycle continues, we’ll continue to keep that position.

Tycho Peterson, Analyst, Life Science Team: Maybe just spend a minute on ACG, up 9% in the quarter. There are some timing related elements, think, two percent or so. So you’re up maybe seven backing that out. But just talk about the momentum you’re seeing on the ACG side. Obviously, S.

Academic and government is a smaller piece, but how

Porgy, CEO, Agilent: ACG, nine percent growth in the quarter, and we’ve of course reconfigured that group to now have services, consumables, software and automation, which is a really important enabler for the business on it. 70% of our contracts are of our service business is on contracts growing double digit, which is really sticky. The areas where we see immense runway going forward is around lab productivity. Our enterprise service business, which is now €150,000,000 which means we can service all competitors’ equipment and run their labs from a productivity standpoint, We see that resonating and actually accelerating through the year and continuing on. And the consumables business, as I said, there was a slight pull forward on us, but we were still high mid- high single digits even with that pull forward on it.

And as I said, we’ve seen that already stabilize out. So ACG is a really important growth driver going forward. And if you look at our long range plan, that 9% growth is higher, so it’s one of the areas that we can continue to expose.

Tycho Peterson, Analyst, Life Science Team: And the academic government, small piece, but it’s a doom and gloom for NIH, obviously, but how are you thinking about that?

Porgy, CEO, Agilent: Yeah, I mean, I’ve been out with two major institutes in the last few months, and it’s not nice out there in terms of funding. It’s 1% of our business. Academia in general for Agilent is 8%, three % for The Americas. I would say, let me talk about the market in general in normal times. It’s generally low to mid single digits.

You know, over time, I think it will go back to that. Clearly, U. S. Is very depressed where no big capital equipment is being really spent on. We’re less exposed because we’re not in the higher end research type of modalities, but we still see it in, you know, see a softness.

And we’re expecting to see that continue. You know, we’ve ring fenced that for the rest of the path. We’re expecting it for to decline 20%, and we’ve mitigated around I will say in the rest of the world, academia is doing just fine. We’ve seen growth across different areas and we continue to see that. What we’re, you know, of course, the NIH funding is going to have a knock on effect in innovation, particularly in biotechs and so on.

So I think over time, that for me is the broader concern, but I would say with pharma that wouldn’t have any big impact for a few years I would say.

Bob, Agilent: And Tycho, maybe to add to what Borg is saying, one of the benefits and beauties of the ACG business is it truly is across all of the end markets. So if you think about the end markets there, it’s really fifty fifty kind of life sciences and applied. So we have the ability to cover all the labs and we’re seeing strong connect rates to these new products that we’re offering and a big opportunity to continue to drive that growth.

Tycho Peterson, Analyst, Life Science Team: And just one question to follow-up on that. As we think about the academic kind of belt tightening budget pressures, I mean, people obviously think about instrument delays, but are you seeing switching to third party columns, switching to third party service providers? Anything beyond kind of just instrument pause?

Porgy, CEO, Agilent: Yeah. Look, the topology of a service business in academia is quite different. Right? So you get a lot of self maintainers, you know, PhD students that are there can help run the system. So there’s less contracts, I would say, more per incident.

Contracts are generally sold up front, so we still benefit from those contracts. But very little switching on the chemistry side, I would say, the supply side. Yeah.

Tycho Peterson, Analyst, Life Science Team: And then maybe talk about the organizational changes you just, you know, mentioned, you know, within the ACG business, you know, centralizing automation and software. What was the rationale were you hoping to accomplish?

Porgy, CEO, Agilent: Yes, it really started with strategy, Tycho, and as we laid out on our Investor Day in December, the four pillars of our strategy are really clear going forward. It’s market driven. First of all, it’s increasing innovation that’s external and internal. Secondly, it’s attaching to high growth markets. Third pillar is really automation and productivity.

It doesn’t matter what lab you are in the world and what market. Automation and productivity is right at the top of the agenda, and that’s why we elevated it up to that area. And the fourth area is software. So those two last pillars, really felt to have an enterprise group that’s working across all product lines in all areas to really help with that was the right thing to do. And I have to say, it’s allowing us to make much faster allocation decisions both in innovation, but also it’s honing our ability and looking potentially outside for opportunities.

Tycho Peterson, Analyst, Life Science Team: Maybe just shifting over to NASD, you’ve got, you know, real real momentum here. Think you’re even taking orders for 2026 at, you know, at this point. Talk about visibility and demand, confidence that you could potentially move numbers higher. I think easier comps in the back half of the year implies something like 20% growth to hit the 10% for the full year. And then on clinical versus commercial, you’re now sixtyforty.

I to make sure that’s commercial outgrowing as opposed to clinical slowing.

Porgy, CEO, Agilent: Yes, yes. So I’ll start off and I’m maybe going hand over to Bob on this one. We grew 9% in NASD. We’re expecting double digit growth, high single double digit growth for the year. We’re booking into 26.

We’re booking out that capacity. We’re seeing a lot demand. In terms of the clinical versus commercial shift, that’s not an eitheror. We’re just very pleased with projects that we have in commercial, and that’s going to, of course, move on through the different years. So overall, we’re well poised.

We went through a very difficult phase, of course, with the IRA rebalancing, but the energy around our customers and the partnership with our customers going forward is very strong. But Bob, I don’t know if want add.

Bob, Agilent: Yes, just to build on that, Boric. When we look at the second half of the year, we feel very confident because we have the orders in house. So we have the ability to do that. And as you said, we’re already booking orders into into ’26 and beyond. And when we think about the the commercial volume, it’s it’s really what that allows us to do is actually have diversification across the the programs.

We have basically, you know, a little over 50 programs both in in in clinical as well as commercial. And, you know, our our our client base continues to expand as well. And and so you add those two things on and then you look at the therapeutic areas that we’re actually going our clients are going after. It’s actually larger patient population. So that’s why we’re being able to see the skew towards commercial and that helps diversify our business and actually gives us confidence about why we continue to invest in capacity expansion in NASD.

And then you have the benefit, and and I’m sure we’ll talk about this, of being able to leverage the capabilities that BioVectra has combined. And so we’re very excited about the NASD facility. You’re right. Your math is right as usual. It would be 20%.

Do have a benefit of an easier comp in Q3. That’s when but we’re actually seeing strong momentum and expect actually sequential growth Q3 to Q4 based on the production plans that we currently have in place and would expect that momentum to continue into ’26 and beyond.

Tycho Peterson, Analyst, Life Science Team: Are there margin implications that we should be thinking about as commercial outpaces clinical?

Bob, Agilent: Yeah. It’s a really good question. If if you think about the facility, this is one of the areas where we do have high level of fixed costs. So the more production you can actually run through that plant, the incrementals are are are quite quite accretive to the company. And so commercial allows you to do two things.

One is you have a a more steady volume, but also the batches are larger and you can actually campaign those batches lots at a time, so which is very efficient in in the factory. So we expect this it’s already an an accretive business to the overall company at the operating profit. It’s lower gross margin just because of the different business model. But as we think about more more commercial filling that plant, the more efficient that plant becomes, the higher the the operating the incremental operating profit is. That’s one of the reasons we feel confident about, you know, continuing to drive margin expansion into ’26 and beyond.

Tycho Peterson, Analyst, Life Science Team: And maybe just thinking about CapEx a little bit, know, 450,000,000 and assume about half that’s NASD. I mean, do we think about run rate CapEx?

Bob, Agilent: Yeah. Yeah, it’s a good question. So this year is kind of our peak year of investment as we’re building out that the facility train C and D. We will have some capacity. It will step down in ’26 and then become more of a maintenance CapEx.

And when we think about maintenance CapEx, it’s usually about 2.5% to 3% of sales for the company. So we’ve had a step up above that to take advantage of the capacity and the opportunities here in NASD. And we would expect us then to be able to fill that capacity over the, you know, the the end of the decade and and to be able to leverage that going forward.

Tycho Peterson, Analyst, Life Science Team: And just, I I guess, as we think about capacity expansion, you mentioned train c and d, but just in general, you know, how of this is build it and they will come versus kind of a bottoms up analysis where you’ve kind of got some of that already committed as you move forward?

Porgy, CEO, Agilent: Yeah, think, of course, we’re as you get into 2016, you get closer, we have very good line of sight. You’re always beholden in terms of some of the therapeutics moving ahead, but we’re in deep relationships with the customer. And that commercial, I would say, move up to 60% a really positive momentum on it. So we’re not just building it and waiting for them to come, We’re expecting to fill that out.

Bob, Agilent: Yeah. You can imagine that we’re having those long term conversations with our customers because they also want to ensure that they have capacity available when those products do in fact hit the market. So we do have a very robust funnel of of opportunity. Obviously, not all of those are gonna make it. But when we look at that, we actually discount it in order to to actually size the size the opportunity.

So that’s one of the benefits of actually being in the NASD business is actually a much deeper relationship with with our customers downstream. So we’ve got relationships already kind of planned out towards the end of the decade based on the opportunities that potentially come forward based on the discussions that we have today.

Tycho Peterson, Analyst, Life Science Team: I wanna pivot to China and maybe just spend a minute on what you saw in the quarter. You know, just unpack, you know, some of the some of the trends. How are you thinking about it for, you know, the rest of the year? We kind of assume 300,000,000, per quarter or so ex stimulus. Is that the right way to think about it, or is there a path to accelerate that?

Porgy, CEO, Agilent: Yeah, mean China is really interesting. I mean if you look at the pace of innovation there, everybody can see the number of clinical trials and molecules that are drugs that are coming out. Let’s talk about the longer term. That pace of innovation will need tools. Now the question is, of course, made in China and etcetera, we’ll get into that.

But we’ve seen this very stable business in China. The stimulus was highly successful for us in the first round of the GACC. We won 50% of €70,000,000 There’s a second stimulus coming on. But what’s really important in China during this tariff is being tariff situation is being really close to the customer, making sure that your manufacturing is on point and making sure you’re keeping very close to competitive moves in China. And our long history in China, our technical expertise and our met in China makes us very resilient in this environment.

Now it’s a very difficult market, so I don’t expect it to rebound in the second half. But over time, I think this market will become a high mid to high single digit grower, not back to where it was, but our capability there is very important. And the second stimulus is probably another area we’re getting good luck on, on that. We’re thinking it’s about $120,000,000 It’s broken into three areas. Its first area is the administration regulatory body.

The second area is the second GACC customs. And the third area is EPA. So our funnels are we’re looking at our funnels in that, and we’re we’re seeing that would probably be revenue in q one orders in q four, and that’s not in our guide.

Tycho Peterson, Analyst, Life Science Team: And you’re assuming similar win rate? Yes.

Porgy, CEO, Agilent: A little bit different because our win rate was very high than GACC because of the topology of the instruments. It was about 50%. This we expect lower probably about 30 just because of the topology between EPA and the AMR section, but still a very high win rate, much higher than our our normal win rates.

Tycho Peterson, Analyst, Life Science Team: And I think is it 10% of the first orders went to Chinese companies, is that about right?

Porgy, CEO, Agilent: Yeah, you’re correct. So when you do the tender, you see everybody’s performance, you see who submits, about 10% lower end equipment, I’m talking about molecular spectroscopy, GC, about 10%.

Tycho Peterson, Analyst, Life Science Team: Okay. And in general, is that where you do see local substitution?

Porgy, CEO, Agilent: Yeah. Mean, and by the way, that’s nothing new. We’ve seen that probably for the last five to seven years. I mean, we compete with local Chinese companies on the lower end, but we compete extremely well, and we watch it very closely from for competitive moves.

Bob, Agilent: And one one other thing I think is important, Tycho, on that is, you know, one of the requirements to be able to to bid is actually being able to produce the product in China. And and so we’ve got probably one of the most extensive in China for China opportunities on the on the platform side, which has enabled us to be very close to not only our customers but drive that that win rate as well.

Tycho Peterson, Analyst, Life Science Team: Got it. How about the drug industry in China, China generics? How are you thinking about that? I mean, exposure overall?

Porgy, CEO, Agilent: Yeah. I mean, we have a very good exposure in QAQC, I would say. That was a part of the market that grew extremely well over many years. I think it’s been challenged currently, of course, with some of the moves outside China and Asia, but we expect that to come back. About 80% of that is private, 20% kind of government owned, and see a lot of runway.

But you just need to look at the announcements with the partnerships with pharma, the co marketing agreements and so on, and our tools are really critical in all of that. I would say about China though, it’s not only about pharma, Tycho. PFAS, two quarters ago, was our fastest growing region. It continued the business has actually doubled in China. So if you look at the China strategic plan around safe water, food and now, of course, Abert PFAS is a really important business for us.

And of course, semiconductor and batteries in our CAM business, we had a little bit of, I would say, a subdued demand this half, but looking at the market and the equipment market for semicon and high purity chemical plants around semicon and actually batteries, China, we expect next year to be to have a real tailwind on that.

Tycho Peterson, Analyst, Life Science Team: And I guess just thinking about PFAS overall, like, there’s been, I think, you know, new new regulations around drinking water, you know, out of the EPA here. Do you see that, you know, business accelerating?

Bob, Agilent: You know?

Porgy, CEO, Agilent: Yeah. I mean, it’s it’s hard it’s it’s we’re working through that at the moment. First of all, there’s some discussion about less molecules being tested or less parts of PFAS, but the number of tests will be will be needed. But there’s no doubt about it. It’s gonna continue here through regulation and continue globally through regulation.

Actually, a bigger part, one big emerging part of the business here is litigation. Polluter pays. So litigation is driving a lot of testing. And a little known fact, every semiconductor fab, every high purity chemical company around those fabs are all testing now for PFAS on the inflow and the outflow, so we get a significant business around that. So as regulation changes, as it moves to air and as it moves to different modalities, we are very well positioned.

That’s why we really believe we’re in the early innings of PFAS on the curve and we believe it can grow to a billion dollar opportunity in the market in 2013.

Bob, Agilent: Yeah, yeah. I think one of the things that we’re really seeing and we’re really excited about is if you looked at our Q2, you said it grew 70%. It’s tracking to well over a hundred million dollars on an annual basis. It added 80 basis points to our growth. And if you look at it, half of the business now is actually outside of the environmental and forensic market.

And so it actually shows the expansion into food and chemical and advanced materials. And, you know, the the air opportunity that Porag mentioned, we’re uniquely positioned because that’s GC and GCMS. And and so we have an outsized share in that market. And so we’re very excited about the long term growth opportunities in in in PFAS.

Tycho Peterson, Analyst, Life Science Team: I want to touch on pricing quickly. I think you’d originally talked about 100 basis points. Maybe it’s a bit more now with tariff surcharges. Talk a little bit about traction with pricing initiatives. How do we think about gross margin lift in the back half of the year?

Porgy, CEO, Agilent: Yes. So in pricing, we did 100 basis points plus in the first half. We have an initiative in Ignite enterprise pricing. And to kind of bring into how that’s different, so before every individual product line would have set pricing, but now we’re looking at the enterprise level and we’re putting more tools in the hands of the sales force around profitability, not just on one product line, but a suite of offerings. So it allows us to really advance our price.

I mean, this year, we’ve taken more price already than the whole of last year. And we continue of course, there’s a headwind with tariffs and we continue to see it, but we expect our pricing initiative to really gain traction over the next three years in Ignite. It’s a new muscle that we’ve developed.

Bob, Agilent: Yes. And as you said on gross margin, the second half because of the tariff work that’s going on, gross margins are probably going to be flat sequentially. We were expecting an improvement. But going into 2026, we’re expecting full mitigation. And so we’re actually going to avoid the tariffs through the work.

We’re already starting to see that through the movement of the supply chain, but it will scale up through the second half of the year. And so that’s where you’ll actually start seeing re seeing some of the margin expansion into ’26. That coupled with the pricing and then some of the benefits around volume as well.

Tycho Peterson, Analyst, Life Science Team: And I guess as tariffs have kind of gotten dialed back, are you kind of recalibrating any of those moves or

Porgy, CEO, Agilent: Yeah, I mean we went into this with a very strategic view about what were the no regrets moves. Actually, we started nine months before the tariffs were announced at optimizing our supply chains. Like, for example, we were already had plans to move our LC production or have similar LC production in Delaware in The U. S. I think in the long term, if you think strategically, we want to be close to our customer with manufacturing.

We want to be in regions. So there is no, I would say, movement different moves if tariffs go up and down. Of course, the edges, we’ll have to see if there’s a big difference between one country and another, but I have to say I’m extremely proud of the team. Our previous record for moving supply chains was three months, and under the Ignite transformation, we moved six weeks for one supply chain. So we’re we’ve built a lot of capabilities around that.

Tycho Peterson, Analyst, Life Science Team: And I guess, Bob, how do we think about that flowing through into operating margins next year? I mean, at the Analyst Day you talked about 50 to 100 basis points kind of longer term. Could next year you overshoot on the back of pricing and

Bob, Agilent: Yes, certainly not giving guidance yet, but that there certainly is an opportunity when we think about the momentum that we have on pricing as well as some of these supply chains. Now you could ask well by duplicating supply chains does that actually increase your cost? That’s actually where Ignite actually comes in and really helps us. Cause one of the other areas that we’ve been looking at is how do we look at our supply chain in very rigorous process around manufacturing excellence. So we’ve redoubled down in a continuous improvement opportunities on a plant by plant basis.

We’ve done three plants to date. We’re we’re expecting to go through many of the other plants going forward. And that’s actually gonna drive cost down. So anything that you would say, hey, maybe there’s some incremental costs associated with this. We’re gonna be able to offset that and then some going into ’26 to this manufacturing supply excellence activity.

And so, know, we do have some mix dynamics there with NASD and the services being lower. But if you took that out and looked at it on an apples to apples basis, we do expect margin improvement on a go forward basis more so in ’26 and then even potentially even more in ’27 as these things get fully ramped and annualized.

Porgy, CEO, Agilent: Yeah. Maybe just to add quickly, Tycho, we’ve taken out a 130,000,000 in annualized costs with True IGNITE this year, 80,000,000 through organization health and about 50,000,000 through procurement. They are only two tracks of a 13 track. Not all of them are margin. Some of them are, of course, based around growth.

So we’ve got that priced out for the next three years and also incentives in the company based on that. So we have a high degree of certainty.

Tycho Peterson, Analyst, Life Science Team: Maybe in the closing minutes, we’ll hit on capital deployment. We were chatting before this about how investors think there’s going to be consolidation in the space. I mean, how how are you thinking about m and a? And are there areas you’re you’re prioritizing?

Porgy, CEO, Agilent: Yes. So I kind of laid out the four pillars of our strategy. It’s going to be based on strategy. It’s not going to be what company is available in any particular time. If you came into our discussions in Agilent, you would see a small list of very high quality assets that are linked with our strategy.

We have a leverage of one. Our balance sheet is very strong and we are going to be doing more allocation towards M and A going forward. But it will have the, of course, the financial hurdles that we would have to do, but it will be really driving us into faster growing areas and expanding our recurring revenue. So lots to come in that space.

Tycho Peterson, Analyst, Life Science Team: Has the volatility brought stuff into your kind of field of view that may have been out of range, out of scope before from a

Porgy, CEO, Agilent: valuation Yes. Mean valuations in general have come down quite a bit. There is a lot of talk around consolidation around the mid cap. We’re not reacting to any of that talk. We’re very focused on our strategy, but definitely the valuations are helpful.

Tycho Peterson, Analyst, Life Science Team: And any view on kind of products versus services from a high level?

Porgy, CEO, Agilent: Yes. I mean, if you were to kind of if you look at our strategy, what we’re really interested in is upping our recurring revenue. So it doesn’t mean we won’t look at key products that are going to help drive the pace of innovation, but clearly more content and areas about recurring revenue around services are important to us. Because we already have a really significant engine in services and also a really significant commercial engine that we need to put more things into.

Tycho Peterson, Analyst, Life Science Team: Great. We’re out of time, so I think we’ll leave it at that.

Porgy, CEO, Agilent: Thank you. Thanks a

Bob, Agilent: lot, Tycho. Thanks,

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