Agilent at TD Cowen Conference: Strategic Growth and Market Insights

On Tuesday, March 4, 2025, Agilent Technologies (NYSE: A) presented at the TD Cowen 45th Annual Healthcare Conference. CEO Porag McDonald and CFO Bob McMahon outlined the company’s strategic initiatives, financial performance, and future outlook. Agilent emphasized its commitment to innovation and market expansion, while addressing challenges such as academic sector slowdowns.

Key Takeaways

• Agilent’s four-pillar strategy focuses on innovation, automation, and informatics.
• The company deployed $1 billion in capital in the BayouVectra and CDMO business.
• A $35 million stimulus order in China boosted food testing market growth.
• Agilent’s PFAS testing market is projected to grow significantly, potentially reaching $1 billion.
• Margin expansion is expected, driven by the Ignite Transformation program.

Financial Results

• Agilent reported a Q1 price increase of 150 basis points, revising the target to 100 basis points.
• The China stimulus contributed $35 million, with a win rate exceeding 50%.
• PFAS growth was 70% in fiscal Q1, contributing 75 basis points to overall growth.
• Expected EBITDA margin expansion is 50 to 70 basis points.

Operational Updates

• The Ignite Transformation program aims to improve effectiveness and agility through pricing improvements and procurement optimization.
• The academic and government market saw a 7% decrease due to NIH funding uncertainties, expected to be temporary.
• The Pharma Biotech sector showed sequential improvements, driven by increased R&D spending.

Future Outlook

• Agilent is confident in mitigating tariff impacts through a diverse supply chain.
• The company expects steady improvement in China, supported by stimulus programs.
• PFAS market growth is anticipated at 15% to 20%, with Agilent poised to outpace the market.
• M&A strategy will focus on acquiring capabilities in faster-growing segments.

Q&A Highlights

• Agilent attributes academic and government slowdown to R&D budget reallocation.
• The company is optimistic about future stimulus opportunities in China.
• Sequential improvements in the Pharma/Biotech sector are noted, driven by portfolio reevaluations.

For a more detailed analysis, please refer to the full transcript below.

Full transcript - TD Cowen 45th Annual Healthcare Conference:

Dan Brennan, Analyst, TD Cowen: good. I guess we’ll start a minute or two early here. Great day two of the TD Cowen Global Healthcare Conference. I’m Dan Brennan and I follow tools and diagnostics here for the firm.

Really pleased to be joined with me on stage here, the senior management team of Agilent. At the far right, we have Bob McMahon, who’s chief financial officer, and to my immediate right, we have Poreg McDonald, who’s the chief executive officer. So gentlemen, welcome, and thank you for being here.

Porag McDonald, Chief Executive Officer, Agilent: Thanks a lot.

Bob McMahon, Chief Financial Officer, Agilent: Thank you.

Dan Brennan, Analyst, TD Cowen: Paul, I thought I’d start with some high level questions as you might imagine. You know, you’ve been here, took over for Mike McMullen. You’ve been in the seat, I think, about ten months or so. You previously were head of the ACG Group. We’d love to have you kind of reflect on your first ten months in the CEO seat.

Speak a little bit about, you know, how things have played out versus expectations, and then we can move from there.

Porag McDonald, Chief Executive Officer, Agilent: Yeah. So, thanks, Dan. And ten months, we’ve it’s been we’ve achieved a huge amount in that time. And, you know, when you look at the first thing that we really looked at was our strategy, our enterprise strategy, and that really laid us out in kind of four pillars around, you know, how we’re going to increase our pace of innovation, how we’re going to attach to faster growing segments, automation and productivity being really core to all our markets, and lastly, informatics. And underpinning that, you know, our commercial organization, our digital capabilities, Ignite transformation, and, of course, the team.

So that was one of the key things that we started on started off on. And, you know, as a company, we serve $80,000,000,000 markets. We have great position in those markets. We have this really incredible connection with our customers. And so we’re we’re we’re we have a lot of opportunity going forward on us.

And when you think about what are the next phase for Agilent and what we looked at was really looking at how we can reaccelerate or grow through innovation with that customer’s connection. So I think the first thing, getting the leadership team in place, new presidents, everybody has seen them. So really, really working well together on this new strategy, creating a new group structure because of the strategy. It wasn’t just pulled out of a hat. We’ve looked at the strategy, how do we get this new group structure.

We deployed a billion dollars of capital with BayouVectra and CDMO business, so that was based on strategy as well. So very happy with how that’s going. And we’ve invested quite a bit back in digital. And last but not least, I think on the journey in the ten months is that we’ve really kicked off a really ambitious transformation agenda with Ignite Transformation, which is really looking at how we can become more effective as a company, how do we really become more nimble, and how do we have more investment into key areas. And I will talk about the four quick wins on that one.

First of all, pricing. We have an enterprise pricing capability now, and you might say, well, what’s different? I think it’s less bottoms up by every product line. Now it’s centrally managed, and we expect that’s going to provide a lot of value over time. Secondly, procurement in one area, so direct and indirect procurement, we see a lot of opportunity there.

And we’ve reinvested quite heavily back in digital in two areas, our website and also CRM and UCRM for the sales force. So that’s part of our reinvestment. And last but not least, organizational health, looking at management layers, looking at effectiveness across our product lines. So I would say a huge amount achieved, but the thing that I’m extremely proud of is how the Agilent team has embraced that change. You know, it’s a lot of

Dan Brennan, Analyst, TD Cowen: change, but I think the team are really, really embracing that. Just one point on Ignite. You talked about on the just the recent earnings call, I think you led off discussing the first initiative on pricing. Yeah. Seemed like you were really enthused on whether some of the early traction or just really the opportunity ahead.

Maybe if you could just elaborate a little bit on like what’s the pricing dynamic initiative within Ignite kind of what’s kind of the opportunity over the next few years?

Porag McDonald, Chief Executive Officer, Agilent: Yeah. So, you know, when you have 29 product lines each doing pricing from the bottoms up, sometimes you can miss that whole product solution about how products fit together. So looking centrally at that, we have an ability to say where we can move price for the value our products create. And we’ve really priced that out in terms of the next few years, and we see significant improvement that can be done. And I’ll give you a really good example.

If you look at some of the early wins that we’ve seen is that we have a number of product lines that were below pricing norms on it, so able to move those up, particularly when we’re selling bundled systems and a complete product workflow. So very excited about it. I think we’d be able to talk about the progression over the next few quarters.

Bob McMahon, Chief Financial Officer, Agilent: Yes. Hey, Dan. And maybe to put some numbers to that. Historically, we had had anywhere from 50 to 75 basis points of price per year. That was pre COVID.

Obviously, with the inflationary numbers that came in higher than that last year was about 50% or 50 basis points. Q1 was 150 basis points. So a real example of some of the benefits that Port was just talking about.

Dan Brennan, Analyst, TD Cowen: Since you brought that up, does the next three quarters imply 150 basis points or something more subtle than that?

Bob McMahon, Chief Financial Officer, Agilent: I think it probably will. Right now we’re not modeling that, that would be upside. We assume roughly 100 basis points or ahead of schedule. What I would say is that we’re on track and there’s nothing to suggest that it wouldn’t be that way. But right now we’ve still embedded 100 basis point guidance.

Dan Brennan, Analyst, TD Cowen: Great. Okay. So we’d love to start out on one of your smaller businesses, but one that gets a lot of attention right now, academic and government. You know, it’s less than 10% of sales. US, I believe, is about 4%, economic and government.

And then ZIP code, NAH is a smaller portion of that. And overall, that segment was down 7% in your most recent quarter. China was a worse factor given Chinese New Year timing, but I think The US was still down 6%. So even though a small part of the business, there’s obviously a lot of investor, interest and concern, if you will, given the, you know, uncertainty on any each funding. So could you just give us a sense of how the quarter played out, your quarter ends, you know, Jan thirty first?

So I think the potential freeze, it was only, looking to be enacted towards the January. So wondering, did you see a really sharp slowdown at the end of the quarter? But anything you can kind of unpack on that end market and kind of what happened in The US?

Porag McDonald, Chief Executive Officer, Agilent: Yeah. First of all, I’d say about the academia and government market, you know, it’s a low to mid single digit in normal times, right? Sometimes below that, sometimes above that. And clearly, we’ve we had the NIH situation, which, of course, created a lot of questions about indirect and direct funding. I will say about it at a macro level, we you know, from talking to customers and talking to, of course, areas is areas within the government is that this is a reallocation of r and d budgets.

So we really feel it’s a transitory thing over over a quarter on it. And and, you know, people are wondering, are my existing grants going to be affected? You know, you have to put yourself in the professor’s shoes, you know. Are my existing grants going to be affected or my future grants going to be affected? And that creates a little bit of pause, I would say.

But overall, we’re holding guide for the year and I think, you know, certainly, we if you’re talking specifically about January, we did see a slight slowdown up to the build up to that announcement because people were expecting something, you know. It’s in the news every day, but we feel we can manage it throughout the year.

Dan Brennan, Analyst, TD Cowen: Okay. Right. And you just said your guidance for US academic implied in the overall academic, I guess, didn’t change after the first quarter you maintain that. Okay. Staying on the macro, if you don’t mind, before we get into the better parts of the things, you know, exposure to tariffs, you know, you talked about it on the recent earnings call that the risk is, you know, pretty immaterial the way you characterize it.

Just kind of remind us, just given the news today with, you know, the Mexico and and Canadian tariffs going into place and then, you know, the reciprocal tariffs from China being implemented, not specifically on tools, but more broadly. Just wondering if you can elaborate a bit on what’s what’s Agilent’s exposure to all these tariff, potential noise.

Porag McDonald, Chief Executive Officer, Agilent: Yeah. So I think from, from the Canadian and Mexican side, probably negligible, very little to mitigate on that. And on the China side, you know, you saw, of course, a 10% increase that’s going to come in April, probably five five million. We thought that’s probably 10 or 11,000,000 now. Mhmm.

But we think probably most of that is mitigatable. And why do we know that? Because in 2018, we had the same circumstance with tariffs. We have a very diverse supply chain with Singapore, America, so we’re we’re able to reconfigure that pretty quickly. So what I would say is that we feel we’re very well mitigated on the tariff story.

Dan Brennan, Analyst, TD Cowen: And in terms of China, they basically implemented some targeted tariffs on different products. I didn’t see life science tools implicated in that. But how do we think about if China were to come back and say we’re going to put it across the board tariff on imports from The U. S. What’s Agilent’s relative position there?

Bob McMahon, Chief Financial Officer, Agilent: Yes, it’s a good question. That would be that would affect all obviously all tools companies. I think given our supply chain, we have a pretty diverse supply chain. Not a lot of that actually comes out of The U. S.

Into China. Actually most of our products that are in China are either in China for China. That’s one of the big benefits that we had with stimulus program or sold through our businesses outside of The U. S. So I would say it would impact us but probably less so than maybe some others.

Okay. And

Dan Brennan, Analyst, TD Cowen: maybe just on the second quarter guide that you provided, I think, Bob and Porrig, the 2.5% to 5% was noted to be wider than normal to account for macro volatility. Just is there a variety of these things that you just kind of included in that guide or just wondering kind of what was the, you know, implicit wider range accounting for?

Porag McDonald, Chief Executive Officer, Agilent: Yeah. Look, I think, we’re holding guide for the year, you know, and we can we can walk through that. I think it was a case of a lot of things going on, so it was a case of being prudent around that. Not what not one not just one thing.

Dan Brennan, Analyst, TD Cowen: Okay. Just on China, obviously, in the quarter, you saw a really nice stimulus order, $35,000,000. You talked about a greater than 50% win rate. I guess I guess the question is, that was heavily related to the food testing market, and you said you expect maybe there could be more to come later in the year, but you’re not assuming, anything in the guide. Just kind of zoom out and kind of this opportunity for China stimulus since you have such a big presence there.

Kind of what’s, you know, what are the stimulus programs that you were kind of, exposed to and kind of what’s the future opportunity?

Porag McDonald, Chief Executive Officer, Agilent: Yeah. I think, you know, we’re super happy with our performance in the stimulus. It was about $70,000,000 we worked $135,000,000 Of that, probably half of that was run rate incremental business half of or sorry, run rate business, half of it was incremental. So if you looked at the list of equipment, it was actually most of our portfolio. So we did extremely well in that.

And of course, we shipped and we delivered and we installed in the quarter. So fantastic performance by the team. There’s actually a meeting in China today, tomorrow around future stimulus from this central par parliament inside. So we’re waiting to see what comes out of that. The initial the initial story that we’re hearing that it’s it’s actually bigger.

It’s probably 90% applied, 10% pharma and in applied consumer products, you know, applied materials markets, etcetera. So we expect that we’ll know more about that in the coming months and for for a summertime kind of process, and then we’ll bid on that. And, you know, why were we so successful on the initial stimulus and why do we think we’re going to be successful going forward? As Bob said, met in China for China, the ability to manufacturing everything in China is is the tick where you you can actually, you know, you can actually tender for the business. And secondly, just having such a strong technical team to get the products up and running on it.

So we’re very excited about that. And I will say on the China business, though, it’s pretty stable. If you look at outside stimulus, it’s a very stable business. I wouldn’t see there’s any huge portion of improvement, but the stimulus definitely creates momentum for us when it comes out.

Dan Brennan, Analyst, TD Cowen: Got it. And then maybe just zooming in on China for a minute, the business was down or the country was down low teens for you last year. Then you had a 4% decline in fiscal first quarter, but that was heavily influenced by, I believe, the timing of Chinese New Year. So actually, it was better than you initially expected, as you discussed on the call. Just could you walk through how the different customer groups did in first quarter for you?

And kind of what is the guide imply for the trends? You just mentioned stability, just being sure to get more color there.

Bob McMahon, Chief Financial Officer, Agilent: Yes. So we’re certainly pleased with the performance that we had in China. One of the things that we have in China for Q1 is the impact of the Lunar New Year. So some of the numbers look a little off, but that would cover in Q2. The big outperformance was in fact the stimulus that showed up in food.

Food actually grew 33% in Q1, so a very strong performance. I would say, also kind of where we expected was was formal, which was down high single digit. Again, some of that is impacted by the timing of the Lunar New Year. Academia and government was down mid teens also affected because a lot of it. So I would say if you looked at it, generally speaking, it was at or above our expectations relative to the beginning of the quarter.

Underlying is that stability that Porag talked about. We’re actually expecting better performance here in Q2 with the benefit of that timing of Lunar New Year helping us here in our February, March, April timeframe. So all said, good progress to date and still on track for steady improvement throughout the course of the rest of the year in China.

Dan Brennan, Analyst, TD Cowen: Okay. So maybe just switching over kind of customer group. So Pharma Biotech, a third of your revenues, plus or minus actually a little higher than that. I think it was flat in the first quarter, which as you articulated was a bit better than you expected. You were pretty constructive, thought in commentary, particularly for LC Instruments.

Maybe just high level, how is this group, you know, how did demand there fare in the fiscal first quarter? You know, how do we think about the outlook this year? And, you know, are the drags, as I think you mentioned on the call from the IRA and pipeline reprioritization, are those really behind us now?

Porag McDonald, Chief Executive Officer, Agilent: Yeah. So look, we’ve seen the sequential improvements, particularly in pharma biotech over the last few quarters, and that’s what we predicted. So ’24 was a year of improvement, and that really played out as we expected on us. You know, if you look at what we’re hearing from customers starting at the end of your question, I do think it’s behind us. I think the portfolio reevaluations have been done.

R and D spend is kind of up here. If there’s molecules in, there’s a lot of really good molecules in it. So overall, I think we’re past it and it’s in a better position. In the biotech side, you know, if you have funding and you have a molecule, you’re in good shape. If you you’re at the very height where you don’t have a molecule, you don’t have the funding, you’re not in good shape.

So it’s kind of a tale of two cities on that, but overall improving on it. And what we really saw was that, you know, the null Tree system, which is a really litmus test for us, you know, where customers are going to release budgets for it to start our to start our installed base refresh. And, you know, we’ve had over $100,000,000 of orders in the null Tree, so customers were releasing funds to do it. And I think that just goes to show that pharma is going to continually, steadily improve. And so we’re expecting this year to continue that improvement.

Bob McMahon, Chief Financial Officer, Agilent: Okay. Yes. Hey, Dan, another area where when we talk about having the end of the pipeline reprioritization behind us, we have that we work directly with customers in our NASD business. And so we know that extremely well and NASD is on that track to recover and hit our expectations. But more importantly in Q1, more importantly the order growth actually exceeded our expectations in Q1 for NAST.

And so we’re increasingly optimistic about that and certainly that high single digit strive for low double digits that we talked about on the call is certainly within reach and then accelerated growth into ’26.

Dan Brennan, Analyst, TD Cowen: Okay. Maybe just digging a little on LC cycle and spending. I guess, could you speak to what’s first question would be just what’s so unique or different or kind of what gets customer excited about that null three line?

Porag McDonald, Chief Executive Officer, Agilent: First of all, we have a huge installed base. We have 1100s, 1260s, null two, 1290s. You’ve heard those names over the years. Forces the INFINITI3 is backwards compatible with all of those, so it can get really up and running quickly. I would say if you talk about the value proposition, what we’ve measured and what we’re seeing with customers is a 10% to 20% productivity improvement in labs using INFINITI3.

And you remember I talked about our strategy with productivity right up there. No matter what market you’re in, and particularly in pharma, productivity is key. Also, the null Assist where people can walk away from the system, make sure it’s all set up and predict when failures may come is really resonating with customers. So I think it’s one of those products where it’s really resonating at the right time and with our installed base, it’s just hitting it in the right areas.

Dan Brennan, Analyst, TD Cowen: And you just talked about the installed base and you talked about it on the call, the potential upgrade cycle. Just typically upgrade cycles in LCs, I think, are over maybe like five or seven years. Is there something unique now that you’re seeing these orders uptake the customer just delayed too long? Is it the timing of when Infiniti three came to market? Just speak to the pace of this upgrade cycle and kind of what that can mean for this business.

Porag McDonald, Chief Executive Officer, Agilent: Yeah. It’s a mix of all those things. First of all, you look at our older systems, the 1,100, you know, we have thousands of those and they’re out for over a decade. A Lot of those systems are coming to end of support, so we we can’t support them because of electronics, etcetera. So there are obvious upgrades.

And the rest of it is people, you know, with pent up demand on budgets saying, well, we need to refresh our lab. This is the time to do it, and we’re going to vote for the null Tree. And it’s easier for them to, I think, position that internally in pharma companies when you have these productivity gains and people are looking at that. So I think those are the two key areas on it. And also, you know, again, just the general sentiments in pharma is just generally more positive.

So budgets that were restricted before are now being released.

Dan Brennan, Analyst, TD Cowen: And is it possible to like within your pharma guide and we’ll get the instruments at the end, but like what is the LC business expected to grow at given this momentum that you have null three as a possibility that out?

Bob McMahon, Chief Financial Officer, Agilent: Yes, we haven’t spoken about that directly, but what I would say is we’re cautiously optimistic about certainly the Q1 uptake. Our instruments were roughly flat, but LC LC MS, which is what we’re talking about here was high single digit and exceeded our expectations and actually order growth exceeded our revenue growth. And so it actually speaks to a positive momentum continuing to go. And so I think that there’s a bias towards the upside in our guide for the instrumentation, particularly on the refresh cycle for LC and LCMS. You know, we mentioned in the call that our book to bill ratio for instruments in Q1 was greater than one.

Historically, our seasonality would suggest that it’s usually below one. So again, that’s another proof point that, you know, it’s really resonating with customers. And we’re well beyond kind of the normal ebbs and flows of the refresh cycle here. I mean our instruments, when we look at the median age of our instruments, they’re much older than they would normally be. And you would kind of expect that given the last two years of dampened demand.

But if you look at these instruments are still being used in the lab. And so it’s only a matter of time before they get refreshed. And to point the productivity message as well as a new instrumentation and having it to be backward compatible is really resonating with the customers.

Dan Brennan, Analyst, TD Cowen: Great. Maybe just one more on pharma. So Biovector, you mentioned and it came up on the call, it was a bit below plan in the first quarter, but there was a lot of confidence that the integration, however, that occurred in the first quarter, you guys feel really good about maintaining the full year guide. Can you just speak again to the outlook for BioVector, kind of why you’re excited about that and kind of, you know, what was the issue in the first quarter?

Porag McDonald, Chief Executive Officer, Agilent: Yeah. So look at when you when you acquire a new company and you have a a CDMO capability with NIST, you have to bring it up to the same standard. So there was a lot of work there in the in the first quarter, which really, I think, you know, created a little bit of a softness. But I have to say for the full year, we’re absolutely clear on the guide. We’re gonna hit the guide.

And in BioVector, you know, it really is in the sweet spot of capacity constraints. You know, you think about GLP-one peptides, you’re thinking about ADCs and some of our microbial fermentation capability. We’re right in a constrained environment. And, you know, we have a lot of significant customers working on commercial product inside that will or sorry, in clinical that will move to commercial. And so we’re very, very bullish about it not only this year but the years beyond and what we’re seeing on the demand.

So demand is extremely strong. Coupled with the capability in NASD and the ability to cross sell and have customers do both on both sides is also another multiplier that we’re seeing.

Dan Brennan, Analyst, TD Cowen: Yeah. I was going to jump into PFAS, but since you brought up GLP ones, is are you all see specked in any of the GLP ones? What’s the opportunity there? Is that part of the growth initiative?

Porag McDonald, Chief Executive Officer, Agilent: Yes. So we have two sides of our GLP-one business. First, we have it in the analytical side where we’re in a lot of the sites around some of the key companies, and we continue to be very successful there. And then on the BioVectra side, we’re actually involved in two of the biggest GLP-one precursors and also next generation GLP-one. So on that side, we see a lot of runway on both sides of our business.

Dan Brennan, Analyst, TD Cowen: Exciting. So PFAS, that was one of the certainly the stars. It’s been a star for you over the last few quarters and certainly in fiscal Q1 up 70% after I think being up 50 in 4Q. I think it added 75 basis points of the total company growth rate. So where are we?

I mean, we size that I think somewhere $120,000,000 1 hundred and 20 5 million dollars runway. You’ve talked about it, I think a $300,000,000 or $350,000,000 revenue opportunity. What kind of growth like what are you seeing in PFAS testing? Why are you winning and what kind of growth could continue for the rest of the year?

Porag McDonald, Chief Executive Officer, Agilent: Yes. I’ll turn it over to Bob. I think, you know, if you look into the dynamics, there’s really three things going on. You see the long and short chain PFAS analytes are changing so that what we’re testing is changing through regulations. You also have a lot of written litigation out there in PFAS that is that is driving testing and public concern with that, right?

So it’s a huge topic of public concern. And the third area is the geographic expansion. You know, last quarter, Europe was number one, AFO beside behind it, and then you had China Third. And the previous quarter, China was first. So you have this kind of multiple vectors of a market that’s growing over time.

And, you know, why are we so successful in it? I think two reasons. First of all, the sixty four-ninety five D is a critically important platform that’s highly sensitive, has the right detection limits. And now as PFAS moves into food, our GC triple quads are coming into play. So having that portfolio allows us to test on both sides.

By the way, testing labs need need our platforms to do it, to do it on both sides of it. So, all in all and and then what I talked about in our strategy to wrap around our customer service, getting our technical capabilities up and running with our customers is is really, really resonating as these modalities change. So all in all, it’s a really exciting market. I don’t

Dan Brennan, Analyst, TD Cowen: know if

Porag McDonald, Chief Executive Officer, Agilent: you want to talk about it?

Bob McMahon, Chief Financial Officer, Agilent: Yes. Just we are super excited about this. We think we’re in the very early innings still of testing. You know, PFAS chemicals, there’s thousands of these and right now we’re only characterizing maybe less than 10. And so not to say that all thousand are going to be tested for ongoing, but it certainly speaks to the opportunity here started in environmental and that has spread to food.

It’s even in pharma right now, there’s some requirements from FDA actually detailing out how much PFAS would be in some of the products and so forth. So you’re actually seeing it expand to all the end markets. And so we think that this could be a it’s $350,000,000 market here within five years could be a $1,000,000,000 market opportunity and we are the market leader there. So very excited about that. I wouldn’t put 70% for the rest of the year.

We think the market’s growing 15% to 20% and our expectation is certainly that will grow faster than that given the strength of our product portfolio and their technical expertise as Port just mentioned. Great.

Dan Brennan, Analyst, TD Cowen: So chemical and advanced materials, I think last year declined 3% or so after growing 3% in fiscal twenty three. We’ve got this year is low single, mid low single, mid single. First quarter was down a bit. Just kind of wondering if coming off that first quarter being down a bit is low single, mid single the right zip code or help us think about what the outlook is here? And then maybe could you separate it into like the applied versus more cyclical side of the business?

Yeah.

Porag McDonald, Chief Executive Officer, Agilent: So it is the right zip code. So we’re confident on that through the year. And of course, you had a Lunar New Year effect with that market in the first quarter. And if you think about the CAM market, it’s really broken down into two areas. It’s the chemical business that’s used in refineries, etcetera, where there are GC platforms.

And you can see with some of the changes, you can imagine that The US, we’re we’re feeling very strong about some of that. And and if you think about our customer base in the chemical side, about 20% are large companies. The rest is a long tail. And, of course, these have huge fleets of GCs that over time need to be replaced. So we’re going to see that over time.

On the other side of the on the on the applied side, you have, you know, semiconductor, you have materials, and you have, example, battery technology. And again, you can see with the shifts, people have to really create their own, you know, you can see with the tariffs in Mexican China, there’s gonna be a lot of capital expenditure in those areas. And you can see, for example, even in China with, you know, the EV modalities that are happening, a lot of potential there. So overall, we feel really strong about the market. And, and of course, in this in all these macro changes going on, we think it’s going to be net positive for us.

Dan Brennan, Analyst, TD Cowen: Yes. Okay. So on instruments, you discussed LC MS of high single. Just wondering kind of the delta, kind of walk through the other parts of the instrument portfolio, like how are those trending, are things, you know, the positive momentum, are there headwinds there? Just give us a little flavor.

Bob McMahon, Chief Financial Officer, Agilent: Yeah, I think they’re all recovering. They’re recovering at different rates certainly with the new products, with LC and LCMS that’s leading, as we talked about before. Our business in our GC and GC mass spec businesses also got some new products that are coming down the pipe that are performing well. The life cycle there is a little longer, so that recovery slope is a little less steep. But feel good about that.

That also had a bigger impact given kind of the business in China. So feel really good there. I’d say the area that’s probably the slowest to recover is our cell analysis instrumentation, which is focused on kind of the emerging biotech and so forth. It’s recovering, but it’s still negative in Q1 and we’re expecting it to improve throughout the course of the year. So I feel very good.

The fact that we had over one book to bill ratio in Q1 speaks to some confidence returning to the marketplace, really behind some of these new products and performance that we have in our commercial teams.

Dan Brennan, Analyst, TD Cowen: Great. So the guide, I believe on the EBITDA margin expansions was 50 to 70 basis points, despite reported top line is about 3%. So really healthy margin expansion. We talked about Ignite early in the discussion. Kind of what drives that level of kind of margin expansion and, just give us a sense of revenues coming better or worse, like how much of that margin expansion change?

Porag McDonald, Chief Executive Officer, Agilent: Yeah. Maybe I can start. I think, you know, Ignite is a three year program and, you know, we’re going to see the benefits probably in the back half of the year starting to come in. But of course, we see that in ’twenty six and ’twenty seven. I only mentioned four parts of it, but we actually have probably five more streams that are going to be coming on.

And so I think that really, really helps. And of course, we expect the improvement in the market to come in. So if anything happens on the revenue side, we’ll appreciate on the margin side, but I don’t know if you want to add.

Bob McMahon, Chief Financial Officer, Agilent: Yes. No, I think you hit the nail on the head in terms of kind of where we’re seeing certainly if revenues come in better, we have a very nice incremental. So it has an opportunity to exceed that. Maybe last one then for Porag.

Dan Brennan, Analyst, TD Cowen: I guess, maybe two parter cap kind of M and A, how critical or not is that to the kind of multiyear outlook that you’re looking to deploy for Agile and then be, what would you say is maybe most misunderstood or unappreciated?

Porag McDonald, Chief Executive Officer, Agilent: Yes. So M and A is going to be a bigger part of the puzzle for us. You heard me talk about the strategy about attaching to faster growing segments. We can do innovation inside, but also, of course, we need capabilities from the outside. But the one thing you will see is completely wedded in strategy.

And actually, Bayer Vectra was that, so we had that clearly in the strategy. And of course, we’ll continue to look at that. You know, I think what is underappreciated about Agilent, I just think it’s it’s just the opportunity we have ahead of us both with the strategy and Ignite with the new team and, you know, using our, you know, absolute best in class customer connection. A lot of companies say that. We know it for a fact through our scores and also how we look after it after customers and our investment back into digital.

I think we’re going to have a significant flywheel over the next few years.

Dan Brennan, Analyst, TD Cowen: Terrific. Well, thank you both indeed. Thanks everyone in the audience.

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