Agilent Technologies Stock

Please welcome from Agilent Technologies, Padraig McDonnell, Chief Executive Officer; and Adam Elinoff, Chief Financial Officer, interviewed by Casey Woodring at JPMorgan.

Thanks everybody for joining us today. I'm Casey Woodring, the life science tools and diagnostics analyst here at JPMorgan. Pleased to be joined by Agilent's management team, CEO, Padraig McDonnell; Adam Elinoff, CFO. Thank you guys for joining us here. I know it's a long trip away, away from home.

Maybe to kick it off, Padraig, we've seen strong results the last couple of quarters, leading to upwards guidance revisions on both the top and bottom line. Maybe could you just speak to the structural changes that you've instituted at Agilent since you announced the Ignite transformation in late 2024. And as you look at the momentum that you're seeing across the business here, how much of it is simply a function of better end market dynamics versus specific Agilent or dynamics specific to Agilent?

Yes. Thanks, Casey. Thanks for having us. So as you see markets steadily improving, what we've been doing over the last 2 years is really compounding our capability with Ignite, which has moved from a kind of a transformation to an overall operating system change. And that's how we're allocating resources within the company, how we're on all facets around our operational business and also how we're looking at innovation, and that is really showing through in the numbers. But I think if you go back and you look at the 2-year stack, if you look at our growth rates and 2 years ago, it was like literally flat, but now we're up to almost 10% growth, 11% growth. Our operating margin expansion is over 100 bps. And again, that's in the face of a lot of tariff headwinds. Again, that's driven by the capability we've driven.

EPS, again, if you go back 2 years ago, it was a 3% decline, '25 was 6% growth and now we're 10% on the EPS side. And again, we had a tax headwind on that side. So if you look at that and you see the progression over the 2 years, you see that we're compounding our capability in a very different way. And I would say that it's not only end market improving, but you're seeing -- we're seeing it through our share gains. You're seeing it through the innovation we're getting. And of course, you're seeing replacement cycles, et cetera, driving this growth. And in the next phase, as we built the company in the last 2 years with our capabilities, the next phase is where we bring this, right? And that's largely around this idea of what we think was going to be defining the next decade in our tool space around autonomous lab and scientific intelligence and how we're putting our capabilities to bear on that, and we have an extremely strong right to win and how we're putting our dollars on innovation on that side.

And then you look across our markets. Our markets have been really improving, continue to be very strong. We're in really good sections of our markets, whether it's pharma, CAM and our diagnostics is doing extremely well. So what I would say is we're extremely well set up for the next phase by the choices we made in the last 2 years.

No, that's helpful. A lot there to get into later on. But maybe just starting with fiscal third quarter results. You reported a strong quarter. One of the highlights for us was the performance in China, right, double-digit growth in pharma and food, high teens growth in Advanced Materials, all in the region there. Can you just expand on the strength you saw in China? Similar question to the opening, how much of that strength was really market-driven versus Agilent-specific dynamics, share gains? And then you noted we raised the guide for China in 4Q. So how much of this is really sustainable?

Yes. And just having come back from China a few months ago, it's great to talk about. It's perfect timing. We've had decades-long history in China. We have a huge installed base in China. We've had manufacturing in China for almost 3 decades. So we had a lot of capabilities. And I'm just back from China where I opened a new innovation center that's going to be really at the heart of where you see physical automation that's going to really help. And China for us, it was broad-based strength. You saw it across all our markets, small molecule, biopharma and also testing laboratories in food and environmental, which is core for us. And the things that, again, when you look back and why we're doing well in China with improving conditions, but we're not calling an inflection point yet.

Why we're doing so well in China? It's because of the capabilities we put in place. We haven't gone indirect. We've kept our technical teams there really close to our customers. So as budgets are released and so on, outside stimulus, we can take share, and that played out very well in the quarter. We're extremely excited about the future of China. I mean, China long term is going to be a mid- to high single-digit grower for us. Just the pace of innovation. And I'm sure you saw the announcement on the 15th 5-year plan as it relates to pharma. Just to put it into context, the pharma market in China or the pharma overall business in China for the macros is about $250 billion, and they expect to grow that by $2 billion over the next number of years. And how are they going to grow that? They're going to grow that through manufacturing, innovation, but also thinking about laboratories over those times.

So if you're a trusted partner in China with these type of macros going forward, it's really positive. And I think we're going to continue to invest there. And then you look at chemical and advanced materials, where there's a lot of investment, semiconductor and other areas, battery over time and then our testing areas. So we're very broad-based, but we're really excited about the future in China.

And then another highlight in the quarter was the continuation of the instrument replacement cycle, low double-digit growth in LC. I think it was the 10th consecutive quarter in a row of book-to-bill above 1. So can you just elaborate on what customer segments are driving strength in LC, which customer segments have seen replacements accelerate, which have yet to see the replacement cycle kind of really start to kick in? And then maybe just talk a little bit about how the order book has been shaping up there.

Yes. So it's another opportune time. We just arrived from Germany last night. We're in our R&D center for LC. We're everywhere. We're everywhere, yes. We were in our R&D center where the Infinity III was developed and where it was developed over a number of years. And of course, we have our -- some cell analysis products there. And what really struck me was how our innovations are resonating. And I'm talking to the teams about how the Infinity III was really around customer productivity. And if you see in the world of productivity and AI you need the tools that are highly productive around this. So the replacement cycle, I would say, if you can think we're less than halfway through that. You can see our quarters over the last number of quarters doing extremely well, double-digit growth in the last quarter on LC over a tough compare. So we're less than halfway through that.

And what I want people to really understand is our installed base is very large, but also we have a competitive installed base to go after for many different vendors. And we're seeing that we're able to be very successful in those -- in areas where particularly people are looking at productivity. So as the replacement cycle, it's going to be 200 to 300 basis points, it's going to add to the overall business. So we're going to see that continue on, but we're less than halfway through on it. And then what we're really looking at is as these new systems come in and as they're put into laboratories, it all doesn't happen at once, right? So it can be sequential over a number of quarters in one area.

You're seeing that we're looking at our consumables and our service connect rate over time about how that improves on those new systems. So it's an accelerant on connect rate, which is very important. Then what is not often talked about with us because our portfolio is much broader than just LC, the GC replacement cycle is really humming along. We're probably 1/4 of the way through that. We have a lot of room to grow on that around chemical and energy, lots of fleets of systems out there. So -- and again, that's about 100 basis points improvement on the overall business. So that's going to continue on it. And again, what underpins the replacement cycle is actually our service capability and our enterprise service capability. So one of the reasons customers switch is actually about your service provision. It's very simple when you think about it. But if you're not able to run sites very clearly on your service side, the replacement cycle can be very different, but it's one of our key strengths.

Got you. You mentioned AI in that answer there. It's been the topic du jour of all tools investors the last few months. Maybe just walk us through kind of where Agilent plays in the whole lab automation and wet lab validation exposure. Are you expected to see some of these volumes flow through into Agilent? Is this a near-term benefit, maybe longer term? Maybe just walk us through how you view AI build-outs.

Yes. So we're spending a huge amount of time in the company thinking about how do we consolidate our resources around autonomous lab and scientific intelligence. And of course, AI is a key enabler on that. One thing that will always be needed is trusted answers from a tool. So people can think of the analogy where the tool is like the eyes in the laboratory; the automation or the physical AI are like the hands and then the agentic layer is like the brain doing experiments on the systems. So the need for tools will only need to expand. As AI comes in from our customer point of view, there's more need for testing. There's more need for release of drugs. And you hear from large pharma companies how they're reducing clinical trial times, but also setting out very broad goals about transformative molecules that will be brought out in every year.

And I think the interplay between development discovery and QA/QC is going to shift a little bit. You're going to see development being more important actually, and then you're going to see QA/QC being more important even than that. So talking with our pharma partners, AI is certainly speeding up what they're doing. Now for our side, the first manifestation of that is the autonomous lab. And it is in the broader scientific area. And that's where customers are wanting to do more autonomously in their laboratories over time. And there's really a future and past with this. So if we talk to our number -- our top customers, they have Lighthouse autonomous labs. Organizations looking at how they're going to kit out labs in the future. And it's very much co-creation. It's not about like getting the specifications on an LC and I'm going to bring out a more sensitive LC. It's about how that productivity and workflow is going to increase.

So we're working with these companies, and we've created a group in the company under our CTO office, August office, where we have an autonomous lab group that is heavily linked with our AI group that we've built out. And these capabilities will be gradually brought into customers as we co-create them. Now you see it currently in the QA/QC labs where the Agentic layer will be used more and more, but you're going to see that actually speed up as you see physical AI being used on the systems. And it actually changes how you look at the future in some ways. You think about automation-ready instruments, not just instruments as they are, but also we're very, very focused on how we can grab value streams around the tool. So that scientific intelligence layer is really important. That physical automation layer is really important. And that will be done through partnerships, some M&A with capabilities we need to bring into the company, but it's something that we're very deliberately working on.

That's really interesting. I want to dig into Advanced Therapeutics, the specialty CDMO, strong growth in fiscal third quarter, 30%. I guess, how did that compare to expectations? Were there any sort of one-timers or pull forward in the quarter, given you do assume a step down in growth in fiscal fourth quarter here in the CDMO? And then just maybe along those lines and the fluctuations there in growth, can you just talk about the visibility over the kind of medium to longer term there? I understand that it could be on a quarter-to-quarter basis.

Yes. So I'll start off and hand over to you, Adam.

Sure.

So we grew 30% in the quarter. That was in line with expectations. In Q4, we're flat, but that's kind of in line with what we see with some regulatory filings, et cetera, but it was over a 40% compare in the previous year. We feel really good about mid-teens over the long term with this business, and we can see that through our pipeline with customers and how we see it. If you think about Train C that's coming online next year as a kind of an example. We have 75% of Train C booked out for next year. And the Train C lends itself to more commercial batches from clinical. And over the last number of years, we've moved from lower commercial batches, but 60-40 in commercial clinical batches, and we see that continuing to grow on it. And we're not beholden to a number of a few customers. We have a broad range of customers that would be filling this capacity over. So we feel really good about it in the short term and in the long term.

Yes. I mean I think Padraig covered it nicely. I think the only piece that I would add is we do have good visibility into our medium-term forecast. We have customers take time to develop their processes, et cetera, and then they put in their forecast. So it's not based on any 1 or 2 changes in a near-term period that impacts us. The second thing I would highlight, which I think is underappreciated is actually the cross-selling that happens between our CDMO business, so ATD and then our instrument business. And so there's -- it's similar customers and the same customers. And so we're often able to cross-sell, which is a nice feature of the business.

Okay. Yes. Maybe just sticking along those lines, you mentioned Train C coming online in the second half of next year. I think you guys have sized the peak revenue-generating potential there of around $300 million. Maybe just walk us through, I think you said 75% is booked already.

Yes.

But how should we think about the contribution from Train C in the back half of next year, understanding that there's some variability in the types of programs that come online and the timing of that.

Do you want to take that?

Sure, I'll take that. So I guess a couple of pieces. The first is Train C will come online in the spring of '27. And the way we've articulated the full growth of Train C and D, Train C will take about 6 to 8 quarters. Train D will come online a couple of quarters after. So -- and then take another 6 to 8 quarters to continue to reach full capacity. When both are running full capacity, we would roughly double, so about $300 million-ish what we're getting out of the site today. A couple of other pieces I would just add is that Padraig talked about the 75% line of sight. And then the thing you have to think about is the existing capacity will start to fill up in the beginning half of the year and then the second half of the year, the incremental revenue will become growth. So it was planned very nicely to come online almost at the perfect time. So I'm excited about that. And then the last piece is, as Padraig talked about, is the mid-teens growth that we expect over the near term for the business. So we feel very good about it.

Yes. Maybe one last one just on the confidence in that assumption. We've seen a couple of prominent negative late-stage clinical trials in the space over the last few weeks even. So I guess, how do you kind of risk adjust for those different programs that might be in your backlog or what have you? And just what underpins that confidence in the CDMO long-term growth rate because that's going up more.

Yes. So the way I think about it is this, and I think this is a helpful number. So in 2019, we had 3 customers that made up 80% of our demand. And now we have 3 customers make up less than 50%. So we're gaining diversification as we go. The second piece is we have a healthy mix of commercial and then clinical. In '25, we were 60%-40% commercial-clinical, and that's starting to ramp. The commercial side, you always want to maintain a certain amount of clinical because that's your pipeline into the future. A couple of other pieces is the recent news doesn't impact our forecast for 2027. We continue to love the siRNA space. I mean you look at the pipelines out there, they continue to grow, and there's a number of molecules ranging from that rare where they've been mostly today moving into larger indications across different therapeutic areas. So we're excited about the investment and the process and the progress of the site continues to go very well, right on plan and excited about going online next year.

Full steam ahead.

Yes, full steam ahead.

Last one on Train C, but just -- we haven't touched on the margin implications, right, of the build-out. I think you've previously talked about additional hiring in the first half of '27 to accommodate Train C coming online in the back half. How should we think about the CDMO margin profile in 2027 in the context of that kind of 50 to 100 basis points long-term guide of the total company?

Yes. So a couple of pieces. So as it's coming online now, no impact to '26. '27, it will be dilutive, of course, but we've committed to our 50 to 100 basis points that you have in the LRP, continuing to deliver that. And it goes back to Padraig's first comments about the Ignite operating system and what we've done is we've seen this coming. We've seen the dilution coming. So you have to hire, you have to start to depreciate the asset before you're getting full capacity, but we've been planning for that. That's something we can see. And through Ignite, we will offset that.

Yes, we're very confident on our 50 to 100 basis points plus.

Got it. Okay. Maybe circling back to the LC replacement cycle that we talked about a little bit earlier. I think this has been a multiyear cycle. You've talked about like a 3-year time frame. I guess, are there any broader geographies or customer segments that have really yet to engage at this point?

Yes. I wouldn't say -- I mean, all geographies, I think China probably is an area where the fleets are older and haven't been replaced post COVID. So that's an area where we expect to see continuation accelerate. But I think it's very broad-based. But I think it's important for people to kind of understand that we have such a very different age of systems in our installed base and competitors of a different varied age of systems. So it's more about that than the actual geography that makes any difference in it. And of course, when you have an opportunity in a replacement cycle, it is a competitive moment.

You have a situation where some people think sites are one company and another site is a separate company, but actually, it can be 50-50. The left-hand corridor can be one company, the right-hand corridor can be another company. And as that replacement cycle happens, then it's a highly competitive space where you have an advantage to take some share. So I would say it's really broad-based, and we're continuing to see it expand. The LC replacement cycle is roughly 7 to 8 years. We're less than halfway through it at the moment.

Okay. And then within the context of instrument growth, just putting the replacement cycle aside, you talked about share gains over a number of different quarters here. Maybe just dig into that a little bit. Where are these share gains coming from? Is it a technical aspect of the Infinity III? Is it commercial execution via Ignite? Something that we're missing kind of.

Yes. Look, it was our strongest -- what we saw in the [ proto ] Was our strongest share gain that we've ever seen. And again, people think that's just against maybe 1 competitor or 2 competitors. There's many competitors you can gain share of out there in the market. I would say what was really strong LC, LCMS. Spectroscopy was strong. We saw some amazing results in certain regions. But overall, it was very broad-based. And why is that -- like why is that happening? It's happening for a number of reasons. It's that commercial engine that we've built up over a number of years and went from strength to strength on it, but also that service capability that underpins it. It's the #1 switching reason, by the way, for any company is around your service capabilities.

And then we underpin that with our enterprise service business where we're running laboratories. So we run our systems and other vendor systems in an asset management way. So we have a very high-level conversation in those laboratories. Now think about that in a market share situation, you get area visibility into problem assets or assets that need to be replaced over time. So you're right at the heart of that decision-making, and that really helps with share gains, too.

In the LC business, but I guess just more broadly speaking, I would be curious to hear if there's any read-through from the Merck and Moderna data to your business with that data seemingly lifting sentiment on that entire drug class' potential.

Yes, it's very compelling for analytical tools. In Germany, again, I was looking at some of our cell analysis equipment, and it's really right in that space. So it's very, very positive. We do think it's going to be positive in our CDMO business. We have capability around that area on it. So I would say we have a dual tailwind around that. So we are -- and some of our innovation programs. Interestingly, when I was looking at them on our instruments during the week in Germany, a lot of these -- a lot of the innovations was around mRNA in some of those areas and some of those technical abilities. So I think we're going to continue to launch products that are going to help to fill that space.

Okay. Maybe shifting to GC. You talked a little bit about that replacement cycle as well. I'm curious, is this replacement cycle different in GC given all that we've seen around semi demand with these fab build-outs and so forth, reshoring. Is there anything different about this replacement cycle in GC related to that?

Yes. So it's -- again, we have probably the largest installed base of GC and GCMS globally. And it's broad-based around our chemical and energy customers. You can see it in our food and environmental, but we have an extremely strong presence in semiconductor fabs. And people think of a semiconductor fab as it's GC, GCMS and spectroscopy. But around those fabs, you have high-purity chemical companies that are actually need our tools and actually, they buy more tools in that case. So that replacement cycle is kind of dual in terms of new technologies on the spectroscopy side that is replacing our 9500 is replacing on the fab side. But on the GC and GCMS side, there's always a replacement cycle there that's slower. Generally, we see the opportunity 18 to 24 months before it. So it's a longer run in. But when it happens, it happens across the board.

We've talked a little bit about replacement dynamics fueling growth in LSD and AMG here, but you mentioned it service earlier, I think it does create a little bit of pressure the replacement cycle does on the service component given the 1-year service warranty that all these instruments are replaced with. So I guess how should we think about the push/pull here? We're assuming that replacements will be a growth vector in LSD and AMG, is it going to be a growth detractor in ACG? Kind of how should we think about that?

Yes. So the replacement cycle actually bodes extremely well for ACG, right? As instruments are placed and they come off those 1-year warranties, 70% of our business is on contractual services over 3 years. That's our monolithic business. So as they come off, then that fuels that ACG business as we go forward and including the consumable spend around those instruments. And I said that we expect improvement on that with new instrument placements.

So I think we see that as a real tailwind over the next coming years. And you saw our instrument growth rate in the last few quarters, and you can extrapolate out what that will mean for ACG coming forward. And again, the capabilities in ACG, it's way beyond break fix. So as the ACG business grows, we have a lot of emerging businesses within that.

The enterprise service one growing really well. It's becoming a very material business. And it's actually -- we're #1 on that from a -- for a large site of our customers. So you look at those businesses and even something as simple as relocation services, where we're relocating laboratories in regions. We're requalifying laboratories in those laboratories where we do relocation services, we actually see more new instrument placements as people don't want to replace all of those areas. So relocation services and compliance services, really important. But as these systems come off warranty, you're going to see those move on to contracts.

Maybe sticking on ACG, maybe just talk a little bit about the visibility into that business. You talked a little bit about it here. And then also just the margin profile between ACG and the kind of corporate average there.

Yes, I'll take the first, maybe the margin profile. So yes, so look, you can see that were high single digits on our consumables business, mid-single digits on services in the last quarter. You see our Altura columns, which is right in the space of GLP-1s, those launches really driving a lot of growth on that side. So we expect consumables and services to continue to grow. And it's a really critical engine around our instrument installed base. And you can think about it also in terms of the AI influence as more drugs come out, as more efficiencies come, more consumables are being used. Services is even more important.

And I want to go back a little bit about bringing to the future. You think about an autonomous lab. Having an enterprise capability on services is right in the space how autonomous labs will run from a service point of view. And uptime is not just about when an analyst is in a lab now, uptime is about 24/7 lights out services. So building this capability around enterprise services is really important for now, but also for the future.

Yes. And I can just quickly jump in on the margin. As you know, ACG is our highest margin business. And then the nice piece about the service ramp is once that ramps up, you have a lot of fixed costs there. And so as the margin -- as the business ramps up, the margin continues to improve. And so once again, over time, as the service business continues to ramp, we expect that margin to continue to improve. The other component is our consumable business has a nice margin as well. So overall, that's going to continue to be accretive to the overall corporate margin.

Okay. Maybe let's shift to reshoring, another popular topic. So during the most recent quarter, you reiterated prior reshoring expectations. I think the dynamic represents a $1 billion revenue opportunity for which you expect to capture 1/3 of that by 2030. I guess you guys were the first ones to really put those estimates out there, and that was during a period of time where we weren't really seeing any orders come through. Now I think fiscal third quarter was the first time we did start to see orders come through related to reshoring. I guess, like how much more confidence do you have in those estimates now? And is there any sort of upside bias to those numbers now? Kind of maybe walk us through your latest assumptions there.

Yes. So when we put out those numbers in the autumn fall, it was like 11 MFN deals. Now we're seeing 17. So implying that we're derisking our initial estimate. So we feel really good about that. We've laid out the $300 million that we see as an opportunity on it. So we booked our first onshoring orders -- reshoring orders, 5 out of the top 10 pharma companies have booked with us. And I've actually visited multiple of those sites around the East Coast, and we're moving those systems into forward stocking locations where they're getting ready to be deployed in those areas as we go forward. So I would say a few things that makes us a little bit different in this regard is that about a decade ago, we invested in a strategic account program, where we were working with pharma companies at the highest levels globally. And we thought that was really important for 2 reasons.

First of all, to get really good VOC in where dynamics were changing, and that's really important for Autonomous Lab. But secondly, when these type of things happen globally, you don't want it to be relationship-based. Well, I know my person in the U.S. can talk to the person in Europe or the person of how this is happening. You really want to have a higher level conversation with these companies. And that's why we were very explicit with that number because we were coming from the tops down and the bottoms up on that aggregate. So I think that is providing a big advantage. And I will say, when you look at the installed base and not only LCs are being reshored, GCs are being reshored, spectroscopy being reshored, and that's an opportunity for us that's broader. And of course, that services and consumables business around that reshoring. So we feel really good about it.

I mean I lived through some pharma reshoring in Ireland a few decades ago when it became the place, and it's actually a very similar motion. But you make yourself very different by understanding what the customers want, but you're also involved with laboratory design and setup. And you think about what that means for the future with autonomous labs, some of these labs are not autonomous labs, but they're thinking about what will it mean for them over the next decade in that regard. So we feel really good about it. We've been, I would say, prudent around that number, but we -- you can see from the number of signatories and where it's going, we feel really good about it.

Maybe just to double-click on the orders that came through the door last quarter. Maybe just talk a little bit about brownfield versus greenfield, the lead times on those orders when we could start to see those flow through into revenue and then ultimately kind of like where the funnel.

Yes. And I would say, first of all, it's not linear. So orders come in, in not a linear way. But what I will say is that we've seen the vast majority of our orders coming from greenfield sites from new builds. And then I would say procurement can really depend on like 6 to 18 months prelaunch of the site for our systems. I think you see bioprocess a little bit earlier on that. But that's what we've seen actually very consistent across all those sites. And we -- 75% of the MFN signatories have announced that CapEx. So we're kind of tracking that as it goes through. So I think you're going to see the benefit of that in Q1 and beyond.

Okay. We touched a little bit on China growth earlier in the conversation, but Asia growth ex China was also strong in the most recent quarter, and you're expecting double-digit growth in 2026 for the ex-China Asia exposure that you have. So maybe just walk us through what's contributing to that? Your exposure in India, for example, I'm sure, is playing a role. Maybe walk through your expectations in that region.

Yes. So we grew 9% in APAC, Asia, what we call our Asia area, and that was like against the low to mid-single-digit expectation on it. And again, when you think about Asia, people kind of gravitate towards India, but it's much bigger than that. You see semiconductor chemical and advanced materials really important to those geographies. Actually, India has invested quite a lot in fab manufacturing, sort of setting up the supply chains around that where we're really going to benefit on it. And we've done extremely well, I think, in the generics in India, but it's really broad-based what we saw. Testing labs have a very high momentum in APAC at the moment.

So think about big testing labs around PFAS, environmental and food testing. And this phenotype of the many different countries we have in Asia, the speed of regulation around PFAS, we're seeing is changing very, very quickly because of food exports, which is a really big benefit to us. And then, of course, you can think of Korea in -- with semiconductor fab. We saw really, really strong growth in Japan. And that is an area of where we have a long heritage, a long history there, and that was really broad-based as well. So it's a very dynamic, I would say, but very important area for us going forward.

And then in Europe, you did lower the guide for the year on Europe during the last quarter. Maybe unpack that a little bit for us. What drove the change there? How much of it is just conservatism around the Middle Eastern conflict? Or is there anything else that we should be paying attention to?

Yes. I think -- I mean, actually, you said it in your answer. Number one, we're happy with the performance we've seen in the region. And then when you look at our Q3 number, it's coming off of a pretty challenging compare, right? So we delivered low single-digit growth on a high single-digit compare. And then when you look at Q4, we have a low double-digit compare. So once again, it's just the challenging compares that we have. And then there is prudence in the guide based on what's going on in the Middle East.

Okay. And then the academic market, I know it's a smaller exposure for you guys, but a big focus for tools investors. Maybe just walk us through the latest and greatest on academic trends across the different geographies here. It appears that the U.S. is stabilizing, but that's probably off of a low base as well. So maybe just walk us through kind of what you're seeing across that market.

Yes, ex-China, A&G grown low single digits from our perspective. U.S. is a very low exposure for us it's about 3% to 4% overall in what we're seeing. And our direct NIH exposure is less than 1%. It's always important to put it into the context of where we are in the business on it. But I would say in America, the spending remains stable but muted is what I would say. And customers are really still cautious on spending in that area, waiting to see what happens. So the bright spot, I would say, is on the government side, we see good improvements in the government side. And that's one of the areas that is a little bit underappreciated is the government business that we see. So we've seen that kind of improve. Europe A&G has grown in the mid-single-digit range year-to-date, but we're seeing some crowding with research budgets, of course, with defense budgets and all those areas. And China A&G kind of to round it out, is a small business for us and it declined in Q3. But again, that was on a compare of 20% growth year-over-year, and we expect mid-single-digit growth over time there. So that's our A&G exposure.

Okay. Got it. That's helpful. I want to take a step back, and we talked a little bit about it during the Ignite answer. But looking at the portfolio now, your R&D investments, I guess, what areas of innovation have generated the highest return for Agilent over the last several years? Where are you putting new R&D dollars to work within the Ignite context? And looking ahead, what can we expect from a pipeline perspective over the next, call it, 12 to 18 months?

Yes. So maybe I can start off about how Ignite was at the start of this. So we simplified the organization where we went from an aggregate of 19 product lines, and we grouped them into 9 product line groupings with clear line of sight. And one of the issues in any company is how you allocate your innovation dollars that is not incremental across the board, but where you can asymmetrically invest. So we created a CTO office and the portfolio office is really thinking about those areas of what areas of science do we need to continue to invest in, but how the allocation happens in not an incremental way, but an area where we need it most. And you heard me talk about autonomous lab, you heard me talk about AI. These areas are really important. But if you look back over the last 2 years, as we're building on this, we've been extremely proud of our Infinity III LC innovation around productivity and how that's done. You see the expansion of our Omnis family and the pathology business doing extremely well.

The 9500 ICPMS, we have over $60 million in funnel in that. It's highly resonating with the customers. We have a very high market share in ICPMS, which is a highly technical tool. And of course, innovation in CDMO. We're a specialty CDMO company. So where we're working with these customers, we're working on a lot of innovations, which is really important. So looking ahead, I think you're not going to see it just in hardware and consumables, but where areas around physical AI and the autonomous lab where we can bring it to bear. But innovation is really our top priority, and you can see it through the numbers on it. And I think as the months and quarters go beyond, you're going to see a number of launches that are going to be very impactful and are going to be impactful in the right area to create that right customer outcome.

That's helpful. I wanted to touch on the model a little bit. Adam, this might be more your wheelhouse here. But just the question we'll get a lot is just exit rates 4Q. You're guiding to 5.2% to 6.2% growth. How should we think about this exit rate in the context of 2027 top line to the extent that you want to take a stab at giving some color around that?

Sure. So I think I'd start with just the high level of -- we're seeing really strong commercial and operational momentum in the business. and that's broad-based. The second piece is our end markets, right? So you're looking at pharma, CAM and our clinical and diagnostics business are all doing very, very well right now. So I feel very confident about that. And then even A&G, we're starting to see stabilize. So that's another good performance that we're having in the business. And then on a geographic basis, and so we had -- remember, we had started the year guiding China as flat. And now in the fourth quarter, we're saying it's going to be in the high single digits once again. So seeing that market reigniting, so to speak. And then if you look at the 5-year plan, we believe that, that helps the stability of that market and feel excited about that. So I'm not going to guide today.

We're in the middle of our planning process. But coming out of the year, we feel very good about our performance. And then the other note that I would highlight is we're one of the few companies that's actually maintained our LRP and continue to deliver on that. And that's on the top line, that's at the operating margin level and at the EPS level. So I feel very good about the performance of the company, feel very good about our ability to deliver on our commitments and excited about 2027.

Got you. That's helpful, the puts and takes. Maybe you touched on margins there. So I think given the CDMO Train C ramp impact we talked a little bit about earlier, is the lower end of the LRP range kind of fair game for next year or at least like a starting point? And I would be curious to hear what offsetting levers you have to that Train C ramp or at least the hiring that you're doing ahead of that are at your disposal really? And how much more can you really drive via Ignite on the margin line?

I mean I'd love to take this one. So I guess a number of pieces. So one, I'm not going to guide for this year, but we're confident in our LRP, where from a margin perspective, we talked about 50 to 100-plus basis points. And this year, we will be delivering 100-plus year-over-year expansion. So we feel good about that. And then as you think about the Train C ramp, as I said earlier, we've been anticipating this. And so as we've moved through the organization, we've really looked at where there are opportunities to continue to improve our performance. And I have to talk about our operations organization where they've really taken a hard look and using technology for how do we improve our quality, how do we improve our manufacturing performance and delivery, but at the same time, do it at a lower cost, and you can see that running through our margin profile.

And then do we have more to go? Absolutely. So we're implementing a number of different programs. And I think each time we see success, we learn from it and then we are able to take it to a different level in more complex areas of the business. The one piece I would just highlight is that as you think about the margin expansion for next year, I would -- we think about it and as I talk about it, ex tariff refunds, and that's why we've been so clear about the tariff refunds that we received this year.

Yes I bring it back to the way I opened, you can see we did 100 basis points in margin expansion, and that was navigating tariffs. That was navigating a tax headwind. So this compounding capability that we have, an example on our pricing, 200 bps of pricing this year, that's something that compounds over time. So we're very -- we feel really good that we can mitigate anything.

Okay. That's helpful. I wanted to spend the last few minutes we have here on capital allocation and M&A specifically or I guess, post Biocare deal, how you're thinking about both M&A and other capital allocation priorities. I think in the past, you've talked about using Biocare as a footprint for future -- blueprint, I should say, for future deals in terms of like the size and scope. Is that still the way that you're thinking about it? And then maybe weighing M&A versus other priorities?

I'll start and then -- absolutely, if that's okay. Yes. So what I will say, you can see the deals that we've done in the last 2 years. They've been a certain phenotype of a deal, but they've been really linked with our strategy, right? So that's the first thing. You can see Biocare creating over 300 antibodies creates a moat around our business, high recurring revenue, highly innovative and a plug-and-play with our commercial engine across the globe, right? So really effective. And what I will say is we have a very strong pipeline. And the way we're looking at that pipeline is where does it fill out gaps, right? Where can we continue to grow and particularly around recurring revenue. And there's a lot of exciting spaces, right, where we can continue to put a moat around our business and continue to expand. And the way I would look at M&A is not just from acquisitions.

You can think about partnerships and how do we build towards acquisitions in certain cases. But also this idea in this new world that we're in, we're clear that we will need to bring in some capabilities that the company doesn't have. And sometimes that comes through acquisitions, right, some in key technology bolt-ons. So what I say, it's very much strategy based, very high degree of discipline on how we look at it. And our integration engine with Ignite is really, I would say, performing extremely well of what we've seen in Biocare. So you put it all together. But in the broader capital allocation, maybe, Adam, you can speak about it.

Sure. And consistent with what we've said in the past, we believe that we want to invest our capital in growth. And as Padraig said, that can come through M&A in all its different forms. We will be investing in our internal innovation, as we've talked about. And then through CapEx, where there's strategic capacity opportunities, we'll also consider that. But we're going to maintain discipline, and we've talked about discipline a lot with our 4 principles related to M&A. So one, we want to make sure that it's on our strategy; two, that we have the right to buy it and we have the right to win. Biocare is a great example of that, and Padraig laid out nicely why.

The third piece is that we're paying the right price. And then the fourth is can we integrate and will it be a cultural match with us because we understand that from a strategic standpoint, things can look great, you can pay the right price. But if culturally, it's not going to fit, it's not going to work. So we're going to continue to stay disciplined. I think Biocare is a nice blueprint for what we're looking at. And we'll obviously continue to evaluate all the opportunities to deploy our capital in an efficient way.

And we won't be doing a transformative deal, I have to say it.

Had to get that on the transcript.

I've said many times, but...

Just quickly, last minute here, Padraig, you mentioned that there's a few kind of strategic areas where maybe inorganic investment won't be the right move. Can you be more specific what areas in the portfolio are you seeing?

Yes, for sure. And if you look at Biocare, how I put a moat around that pathology franchise, right, which is highly durable business, and it just increases our connection and our customers there. If you look at our broad platforms, in the analytical space and you look at our core technologies, there's areas where we can enhance that with outside capability, right? So that can be recurring revenue around it. It can be actually some software that can really enable things moving forward on this. So that's the way we're looking at it. And then the one thing is our lens is very wide. We've opened an innovation center in China, which is very unique, and we're going to continue. We have an innovation leader in China, in Shanghai. And part of that is really to tap into that innovation ecosystem, particularly around physical AI and companies. And I will give an insight to that.

We had a very large order, which we took from an autonomous lab company in China. and we fitted out the whole lab from the tool side. And what we wanted to make sure as we were doing that is how can we partner with this to actually move up the value stream as we go forward. That's what we see as innovation and partnering going forward will be very broad-based. And technology is moving very fast. But you look at some of the models that have come out from Anthropic on the connection there with instruments, that removes a real barrier for us to even move faster in certain cases. So again, having these, I would say, integrator view of how we're doing it, but also making sure that we're not just picking one bet going forward, but hedging our bets in a few areas to see how this autonomous lab is going to play out. And anybody that can say that the autonomous lab is defined and everybody knows what it's going to be, I can tell you from talking to our customers, it's not. We have to meet customers where they are and build from where they are, and that's going to be a question around some M&A and technologies, too.

Great. Well, it looks like we have leave it there. Thank you, everybody, for joining us and everybody on the webcast. Thanks, Padraig. Thanks Adam and enjoy the rest of the conference, everybody.

Thank you.

Ladies and gentlemen, thank you for joining us, and welcome to the Q3 2026 Agilent Technologies, Inc. Earnings Conference Call. [Operator Instructions]

I will now hand the call over to Tejas Savant, Head of Investor Relations. You may begin.

Thank you, and welcome, everyone, to Agilent's conference call for the third quarter of fiscal year 2026. With me on the line are CEO, Padraig McDonnell; and CFO, Adam Elinoff. Joining for the Q&A will be Simon May, President of the Life Sciences and Diagnostics Markets Group; Angelica Riemann, President of the Agilent CrossLab Group; and Mike Zhang, President of the Applied Markets Group.

This presentation is being webcast live. The press release for our third quarter financial results, investor presentation and information to supplement today's discussion, along with the recording of this webcast, are available on our website at investor.agilent.com.

Today's comments will refer to non-GAAP financial measures. Non-GAAP measures are supplemental and should not be considered a substitute for GAAP results. You'll find the most directly comparable GAAP financial metrics and reconciliations in the press release and on our website. Unless otherwise noted, all references to increases or decreases in financial metrics are year-over-year and references to revenue growth are on a core or organic constant currency basis. All references to profitability metrics are on a non-GAAP basis. Core or organic constant currency revenue growth is adjusted for the impact of currency exchange rates and any acquisitions and divestitures completed within the past 12 months. Guidance is based on forecasted exchange rates.

During this call, we will make forward-looking statements about the financial performance of the company. These statements are subject to risks and uncertainties and are only valid as of today. Agilent assumes no obligation to update them. Please refer to the company's recent SEC filings for a more detailed description of the risks and other factors that could cause our performance to differ from these forward-looking statements.

And now I'd like to turn the call over to Padraig.

Thanks, Tejas, and welcome, everyone. We delivered an excellent third quarter with strong performance on both the top and bottom lines. Our results clearly demonstrate the sustained momentum unlocked by our exceptional commercial and operational execution and the Ignite Operating System against the backdrop of steadily improving end markets.

For the third quarter, Agilent reported $1.88 billion in revenue, growing 7.3% on a core basis and exceeding the high end of our guidance by 140 basis points. Our operating margin of 27.2%, excluding the net benefit from tariff refunds, was 80 basis points ahead of our implied guidance of 26.4%, providing further evidence of the strong operating leverage and execution discipline embedded in the business.

Including the net benefit from tariff refunds of $20 million, our operating margin was 28.3%. Our earnings per share of $1.56 on an ex refund basis were $0.06 above the high end of our guidance range of $1.48 to $1.50, representing robust year-over-year growth of 14%. Including the net benefit from tariff refunds, our earnings per share were $1.62.

Make no mistake, our extraordinary Q3 results are no accident, nor are purely a function of improving end markets. Rather, they reflect the momentum created by our 4 key elements of our strategy.

First, we continue to build on our unparalleled customer intimacy and trust. This differentiation is increasingly translating into share gains across key workflows and geographies. Second, that customer intimacy informs our innovation engine, resulting in distinct solutions that drive success for our customers and Agilent. Third, at the core of our success is a deep and increasingly capable bench of talent. As our organizational capabilities continue to strengthen, we are improving speed, agility and operational discipline, resulting in a step function improvement in execution. And finally, the compounding benefits of Ignite are now increasingly visible.

I want to take a moment to reflect on our transformation journey. We announced our Ignite transformation in late 2024. Our earliest efforts emphasize strategic pricing, procurement and tariff mitigation. Since then, Ignite has broadened and now underpins every aspect of how Agilent operates. This includes reinvigorating our innovation engine, strengthening our supply chain agility and operational discipline and streamlining our structure and unlocking greater value through our integrated business model, which drives meaningful cross-selling of our LC and GC solutions across our pharma and applied customers.

The enterprise capabilities we have developed with Ignite across commercial execution, innovation, manufacturing, supply chain and digital have strengthened the business and created inherent resiliency throughout the organization. All this positions us to deliver superior performance and navigate uncertainty in any environment.

Before providing specifics on our third quarter results, I want to talk about Agilent's key growth drivers going forward. These include stronger commercial execution against improving conditions across our largest end markets, renewed momentum in China, innovation, the instrument replacement cycle, pharma and semiconductor reshoring and Ignite's compounding impact on our results.

Starting with our end markets. Our largest end markets continue to improve, and our teams are converting that improvement into results through strong commercial execution, while a differentiated portfolio and best-in-class service drive share gain. Pharma grew 12% in the quarter, well ahead of our high single-digit expectations and growth rates reported by our peers.

As our large customers remain on a sound footing, we are starting to see stronger funding environment translate into improved spending from our small and mid-cap biotech customers, which is reflected in our excellent results. Our advanced therapeutics division, which includes NASD and BIOVECTRA specialty CDMO operations grew nearly 30%. ATD's performance reflects strong demand and disciplined execution as we expand our capacity and prepare for the next phase of our growth. Like pharma, we saw particularly strong demand across our applied markets portfolio. Chemicals and advanced materials grew 7%, ahead of our mid-single-digit guide. Growth was led by an outstanding performance in advanced materials despite a low double-digit year-over-year compare.

Our leadership across the applied markets and the strength of our installed base positions us well to benefit from semiconductor investment and a broader AI infrastructure build-out over the near and medium term. Diagnostics and clinical grew at the high end of the mid-single-digit range, slightly below our high single-digit guide. However, underlying orders grew at a robust double-digit rate, giving us confidence in the durability of the business and its growth outlook.

The improving end market picture was complemented by a notable step-up in China, which grew 9%, well ahead of our flat expectation. Our long-standing presence and deep customer relationships in the country, along with localized manufacturing, go-to-market capabilities and exposure to attractive end markets underpinned our exceptional performance in the quarter. Importantly, we delivered this performance despite minimal China stimulus benefit and see the momentum continuing into year-end. The upside was driven by strong execution with commercial accounts, especially within the pharma and food end markets. We saw competitive wins in China that highlight the strength of our differentiated portfolio and services offering. Those wins include 2 leading CXOs and an enterprise service contract win with a marquee local pharma customer. In applied, a leading commercial testing lab chose us over the competition to serve their increasing PFAS testing needs.

As we look ahead, we are well positioned to benefit from 3 emerging growth drivers in the region. First, biotech innovation in China, combined with investment from global pharma companies is creating meaningful demand for our CXO customers. Our customer support and service infrastructure continues to differentiate Agilent and our unparalleled customer intimacy positions us as a trusted strategic partner for these CXOs.

Second, we are seeing an inflection in contract testing laboratory volumes, particularly testing activity related to food safety and materials exports. Demand for our differentiated PFAS testing solutions is strong. Our complete end-to-end workflows from sample preparation and analytical instrumentation to application and regulatory expertise is enabling us to win against the competition.

And finally, the AI capital investment build-out in China plays directly into our strengths in GC, GC/MS and spectroscopy. The recently launched 9500 Triple Quad ICP-MS is off to a strong start in the region with semiconductor supply chain customers already contributing to robust order funnel.

Last quarter, we announced the launch of our China Innovation Center and are now in the early phase of lab automation software co-development with a leading commercial testing customer ahead of building a fully automated lab. We are also partnering with a cutting-edge local biotech company that is leveraging AI to automate drug discovery workflows on our instrument platforms. These partnerships are generating positive momentum for us in the region while strengthening our R&D capabilities in AI and automation to better support our customers. Even as instruments such as the Infinity III LC continue to drive our performance, we're looking forward to contributions from the next wave of innovations that will strengthen our installed base and support recurring consumables and service pull-through.

Our recent product launches at the ASMS conference in June are all off to a strong start. The 9500 ICP-MS, the flagship GC systems and our Altura column family are tracking ahead of plan simultaneously. This shows our innovation engine working across the portfolio, reducing our reliance on any single star product. We are seeing strong demand across all regions for the 9500 and already have exceeded our ramp to volume target despite beginning shipments in late July. The funnel now exceeds $60 million. The 9500s value proposition, increased productivity, lower cost of ownership and ease of use is resonating strongly while supporting customer technology migration from single quad to triple quad systems.

We have also received excellent customer feedback on our new 8890B and 8860B flagship GCs. Customers are excited about the productivity and GC Assist intelligence features on the systems, which started to ship in July. Orders over the first 2 months exceeded expectations by more than 2x with strong demand across all regions.

Turning to our consumables portfolio. We further expanded the Altura family at ASMS by launching columns for analytical workflows in protein peptide therapeutics, large oligonucleotides, gene therapy and vaccines. We have seen fantastic customer response to date since shipments began last month. The increasing set of high-profile applications that our growing Altura portfolio is addressing has resulted in land-and-expand dynamic in customer accounts. We saw 28% quarter-over-quarter growth in the number of new accounts adopting biopharma Altura columns. In multiple biopharma accounts, we have seen the initial adoption of one Altura column for a single application translate into the customer purchasing multiple Altura column chemistries for different applications. And we're not done yet. Expect continued expansion of the Altura family for new use cases in the quarters ahead.

In pathology, expansion of the Omnis family continues to bring laboratory automation to an entirely new customer set. Moreover, the recent close of the Biocare transaction in late June builds on that momentum by expanding our clinically focused antibody menu and complementing our pathology offering. The business is off to a solid start and the integration is progressing well.

Turning to spectroscopy. We continue to build momentum with the Raman Insight series. Following the initial $9 million contract win with the TSA we mentioned earlier this year, we've seen use cases expand from airport security checkpoints at FIFA World Cup host cities to other cities in the U.S. Both the new Insight BRT and Insight300 aviation security products have achieved major milestones this quarter and are now certified to variants of the latest U.S. and European detection standards, respectively. Both systems contain truly first-of-its-kind technology to enhance safety and streamline operations at security checkpoints. We continue to be optimistic that the opportunity could expand through further RFPs in the U.S. and adoption in Europe and beyond.

Turning to the instrument performance in Q3. We had another very strong quarter of instrument revenue, delivering high single-digit growth against a high single-digit comparison as we continue to reap the dual benefit of our LC and GC replacement cycles. LC revenue grew low double digits despite a mid-teens comparison. This is a truly outstanding result, reflecting strong customer response to the Infinity III LC and the value customers are seeing in upgrading fleets to improve productivity, reliability and workflow efficiency.

On the GC side, we saw low single-digit growth, a strong result considering the high single-digit year-over-year compare. Q3 book-to-bill came in above 1, marking the 10th consecutive quarter where instrument orders met or grew faster than revenue. Our healthy book-to-bill supports near-term demand and our LC and GC replacement cycles come with an ample runway ahead.

The excellent momentum we are seeing across the portfolio is also reflected in our latest Agilent customer experience survey with more than 85% of our customers rated their experience as highly favorable in relation to purchasing decisions, onboarding solution use and support. I'm especially delighted that we saw our highest score ever for onboarding and support with a satisfaction rate at or above 95%. Beyond the instrument replacement cycle, early gains from reshoring dynamics are now beginning to materialize, underpinning a sustainable multiyear instrument growth opportunity ahead of us.

In pharma, we booked our initial reshoring orders in Q3 ahead of our expectations, and the funnel continues to build. The steady increase in the number of active construction sites following the 17 pharmaceutical manufacturer agreements announced under the Trump administration's MFN program reinforces our top-down view of the pharma reshoring opportunity we laid out last year. Moreover, our commercial teams are now engaging in meaningful dialogue with most of these customers, 3/4 of whom happen to be part of our strategic customer program. In fact, we have secured reshoring orders from 5 of the top 10 pharma companies in the world in the third quarter alone.

We continue to expect more meaningful order benefit from pharma reshoring around year-end, with revenue contributions building in fiscal 2027 and beyond. Further, the reshoring opportunity for Agilent extends beyond pharma to semiconductor, a key differentiator for us compared to our peers. Semiconductor customers continue to invest in regional supply chain capacity, which in combination with AI CapEx build-out should underpin the robust growth in our advanced materials end market over the medium term.

The Ignite Operating System is powering our commercial and operations organization as well as accelerating innovation momentum. The scope and impact of Ignite once again clearly visible in the third quarter. Our strategic pricing initiatives delivered approximately 200 basis points in Q3. We have now surpassed our initial full year target of more than 100 basis points. While strategic pricing supported the top line, our operating profit is growing faster than sales. Operating margin in the quarter, excluding the tariff refund net benefit of approximately 110 basis points, expanded by over 210 basis points year-over-year. We're generating more returns on every incremental revenue dollar, giving us financial flexibility.

This traces back to Ignite, the engine at the heart of our company-wide operating system. Another shining example of Ignite in action is our push for manufacturing excellence. There, we are being front-footed in building resilience across our business and setting up the organization to deliver durable long-term growth while nimbly navigating shifts in end markets, trade and geopolitical dynamics. And our internally developed AI-enabled supply chain control tower is improving prediction and enabling adaptive calibration of supply and demand plans.

During the quarter, our order to shipment conversion rate improved meaningfully year-over-year, reinforcing the agility we have built in operations. Enhanced shipment prediction and greater risk visibility ensure our ability to rapidly flex supply across our instruments and consumables portfolio in lockstep with customer demand. Rapid factory turnaround is also helping us respond to demand faster with the customer requested delivery date performance reaching a record 95%.

As part of our global operations transformation, we moved to a more agile, regionally led distributed manufacturing model. This structure enabled our regional hubs in Asia to respond quickly during the quarter to strong demand conditions. Importantly, we did so without adding headcount and despite having to navigate rising material costs and supply chain headwinds.

As Ignite strengthens our operations, we are applying the same disciplined approach to building our next-generation digital and AI capabilities. Our digital initiative continues to make it easier for customers to do business with Agilent while lowering our cost per transaction. Customers' overall experience on agilent.com continues to track ahead of our targets with new online orders growing in the low teens in Q3.

Starting last quarter, we have moved our enterprise AI strategy into execution. We mobilized our partnership with OpenAI and BCG X, advanced solutions focused on the commercial customer journey and continued building the Agilent AI center of excellence to help us move from individual initiatives to repeatable enterprise delivery. While AI capability is advancing quickly and becoming broadly available, our differentiation lies in how we apply it. Combining AI with Agilent's proprietary data, scientific knowledge and customer understanding enables us to redesign workflows, improving how decisions are made and how work gets done.

This is how we move beyond isolated productivity gains to create durable value that is difficult to replicate. We are leveraging AI to transform software development to create highly integrated enterprise solutions that deliver a seamless and superior customer experience. Our use of AI is not simply about helping the developers code faster, but will shorten the software development life cycle from planning and design through development, testing and deployment. Our targeted approach will accelerate the pace at which we bring differentiated software releases to market. In parallel, we are focused on delivering near-term value in priority workflows, including the commercial customer journey and our manufacturing operations. We continue to scale our AI investments with discipline based on our demonstrated customer outcome adoption and business value.

Before I turn to sharing financial details of our Q3 results, I want to highlight the marked progress we have made in the area that is important to our customers, employees and shareholders, sustainability.

This quarter, we continue to programmatically embed sustainability in everything we do, facility design, engineering projects and product design and are making excellent progress to our committed pledges. Through a formal structure, dedicated leadership within our global operations function and a thoughtful road map, we're seeing the impact of our efforts. Agilent was named as TIME's World's Most Sustainable Companies and Newsweek's World's Greenest Companies in 2026. Further, our latest MSCI ESG assessment resulted in an upgrade from AA to AAA. We also joined the United Nations Global Compact and received My Green Lab's 2025 Sustainable Lab Product Innovation Award for our flagship Infinity III LC. These achievements reflect the collective efforts of the teams across Agilent to strengthen our sustainability programs. I'm delighted to see that progress recognized externally.

Now let me share some additional details on our Q3 results, starting with our end markets. As I mentioned earlier, pharma grew 12% this quarter. Within pharma, biotech grew double digits and small molecule grew mid-single digits. Our GLP-1 momentum continues, delivering more than 70% year-over-year growth in the quarter with a robust contribution from both our CDMO and analytical lab businesses. CAM grew 7% and environmental and forensics delivered 5% growth, both exceeding our expectations. Importantly, PFAS grew 20% despite a low double-digit compare. Diagnostics and clinical grew 6%, just shy of our expectations. Robust double-digit order growth in pathology in the quarter gives us confidence in the underlying demand and health of this business.

Food was roughly flat in the quarter, ahead of our expectations for a low single-digit decline. Academic and government, our smallest end market, declined 3%, modestly below our expectations. However, on an ex-China basis, the end market was up low single digits. Most importantly, our customer-centric approach is working, and we continue to win against the competition in all major geographies.

Turning to updated guidance. Building on an excellent third quarter and with the outlook for our end markets broadly continuing to improve, we now expect core growth of 5.8% to 6% for the full year. At the midpoint, this represents an increase of 65 basis points versus our prior guide. Our full year growth is now poised to approach the midpoint of our long-range plan. Moreover, on a 2-year stack basis, our revised guide implies that core growth has now accelerated from flat in 2025 to almost 11%, an exceptional outcome separating us from our peers.

Importantly, our robust top line performance is translating into excellent operating leverage. We're increasing our EPS expectations to a range of $6.18 to $6.21 for the full year, $0.15 higher than our prior forecast at the midpoint. Excluding the net benefit of tariff refunds of approximately $0.06 in the third quarter, earnings per share of $6.12 to $6.15 are now expected to grow at 10% at the midpoint for the full year, in line with our long-range plan of double-digit EPS growth.

And with that, let me hand over to Adam, who will provide additional details on the quarter and our financial outlook for the remainder of the year.

Thanks, Padraig, and good afternoon, everyone. In my comments today, I will provide additional details on revenue in the quarter as well as walk through the income statement and cover other key financial metrics. I'll then cover our updated full year and fourth quarter guidance.

Starting with Q3. Revenue was $1.88 billion. On a core or organic constant currency basis, we posted growth of 7.3%, while reported growth was 8.1%. Currency had a favorable impact of 0.2%, a lower tailwind than our May guidance. LDG revenue grew 10% on a core basis, nicely ahead of expectations. Low double-digit growth in LC and nearly 30% growth in our specialty CDMO advanced therapeutic division drove performance. We expect flattish growth in ATD in the fourth quarter when the segment laps a tough year-over-year compare of over 40%. As you might recall, we achieved mechanical completion of our Train C build-out last quarter, positioning us well to begin revenue generation at the new facility next spring.

Our cancer diagnostics business was driven by strong growth in companion diagnostics and genomics. Biocare delivered $10 million in Q3 following close of the transaction. We are excited by the solid start and look forward to the impact of Biocare's clinically focused antibody menu on our pathology business.

AMG grew 7% in the quarter on a core basis, well ahead of our low single-digit expectations. Growth was led by high single-digit increase in spectroscopy in addition to double-digit performance in vacuum. Like last quarter, those businesses continue to see strong demand for their market-leading tools to support semiconductor production. ACG grew north of 5% in the quarter on a core basis, modestly ahead of our forecast, driven by strong performance in consumables. Looking ahead, our ongoing installed base expansion will fuel consumables uptake in addition to service revenue growth following the initial warranty period.

On a geographic basis, the biggest driver of upside in the quarter was China, where we grew 9%, well ahead of our flat expectations, driven by double-digit growth in pharma and food. Asia ex-China revenue also grew 9% with robust double-digit growth in pharma and CAM. Americas grew 10%. The growth was broad-based with low to mid-teens performance in pharma, diagnostics and clinical and environmental and forensics. Europe grew low single digits on a tough year-over-year compare with mid-single-digit growth in diagnostics and clinical, CAM and academic and government.

Q3 gross margins were 56.4%. Excluding an approximately 160 basis point net benefit from tariff refunds, gross margins were 54.9%. This represents a healthy 180 basis point improvement year-over-year from strong leverage on incremental volumes and Ignite momentum. Operating margin was 28.3% in the quarter. Excluding an approximately 110 basis point net benefit from tariff refunds, operating margin was 27.2%, an increase of 210 basis points year-over-year, driven by our healthy gross margin performance and compounding Ignite efficiencies. Moving below the line, we had $5 million of other income, while our tax rate of 14.5% was as expected. Finally, we had 283 million diluted shares outstanding in the quarter, in line with expectations.

Putting it all together, Q3 earnings per share were $1.62, which includes a $0.06 net benefit from tariff refunds. Excluding this impact, earnings per share of $1.56 grew 14% year-over-year, a reflection of our superior execution and Ignite-led structural improvement in our operations.

Now let me turn to the cash flow and balance sheet. Operating cash flow in the quarter was $519 million, and we invested $80 million in capital expenditures. The strong operating cash flow performance reflects operational excellence and improved collections as well as the net benefit of tariff refunds. Our free cash flow of $439 million represents a non-GAAP net income conversion ratio of 96%. We purchased $78 million in shares and paid $72 million in dividends in Q3. Finally, in conjunction with the Biocare acquisition, we successfully completed our $600 million senior notes offering in late June. We ended the quarter with a net leverage ratio of 1 turn, maintaining our strong balance sheet.

Now let me share some additional details on the updated outlook for the year and the guidance for the fourth quarter. Based on the strong performance, we now expect fiscal year '26 revenue to be in the range of $7.49 billion to $7.51 billion on a reported basis. This range represents growth of 5.8% to 6% on a core or organic constant currency basis, an increase of 65 basis points at the midpoint versus the prior guide. Currency is now expected to be a 1.6% tailwind during the year.

Turning to our end markets, business segment and geographic growth assumptions. Based on strong results year-to-date and our outlook for the fourth quarter, we are raising our full year expectations for CAM from mid- to high to high single-digit growth. Our growth assumptions across the rest of our end markets remain unchanged.

Turning to our segments. We now expect mid- to high single-digit growth for both AMG and LDG versus our prior mid-single-digit forecast to reflect our strong year-to-date performance and continuing momentum into year-end. We continue to expect mid-single-digit growth for ACG. Regionally, we are increasing our expectations for China and Asia ex China. We now expect China to grow at mid-single digits, while Asia ex China is expected to grow double digits. In Europe, we now expect low single-digit growth for the full year, while our growth assumption for the Americas remains unchanged at mid- to high single digit.

Moving down the P&L. On an ex tariff refund basis, we are increasing our full year operating margin expansion target to over 100 basis points at the midpoint of our revenue guidance versus our prior forecast of 85 basis points. Including the tariff refunds we received in the third quarter, this represents operating margin expansion of over 130 basis points. Our expected tax rate is unchanged at 14.5%. We continue to expect $31 million in other income and 283 million diluted shares outstanding for the year. On an ex tariff refund basis, fiscal year '26 earnings per share are now expected to be between $6.12 and $6.15, an increase of $0.09 at the midpoint, representing robust earnings growth of 10%. Including the net benefit of refunds received in Q3, earnings per share are expected to be between $6.18 and $6.21, representing growth of 11%.

For your modeling, let me share some additional expectations we have incorporated into our guidance for the year. While the Middle East conflict and demand for memory chips continue to pressure our costs, we are confident that the Ignite Operating System will deliver meaningful efficiencies and help absorb those inflationary impacts within our Q4 outlook. There is no change to our operating cash flow range of $1.6 billion to $1.7 billion and we expect to invest approximately $450 million in capital expenditures.

The updated full year guidance implies that reported revenue in the fourth quarter will be in the range of $1.98 billion to $2 billion. This represents growth of roughly 5.2% to 6.2% on a core or organic constant currency basis, while currency is expected to be a 10 basis point headwind. It is important to note that this growth represents continued structural acceleration on a 2-year stack basis, excluding ATD, which we expect will be flattish this quarter, as I stated earlier. Our fourth quarter guide also includes revenue contribution of approximately $23 million from Biocare. Together, EPS is expected to be in the range of $1.71 to $1.74, representing growth of 8% to 9%, assuming 283 million diluted shares outstanding.

And finally, I wanted to be clear that our fourth quarter guide does not include any future benefit from potential tariff refunds.

With that, I'll turn the call over to Padraig for closing comments.

Thanks, Adam. Our third quarter performance once again demonstrates the accelerating momentum of the business and the quality of Agilent's execution. We delivered excellent top and bottom line results while continuing to invest in capabilities that will drive profitable above-market growth in years ahead. Our value proposition remains highly differentiated, a broad and resilient portfolio across attractive end markets and geographies, leadership in essential analytic and clinical workflows, an innovation engine grounded in customer intimacy, commercial and operations excellence and best-in-class service. All underpinned by the Ignite Operating System, which is raising performance across every facet of Agilent.

Together, these strengths give us multiple avenues to succeed and position Agilent to sustainably outperform the competition. We are looking forward to finishing the year on a strong note and entering 2027 from a position of strength.

Before we close, I want to thank our customers for their trust and express my gratitude to the Agilent team. Their commitment, customer focus and our exceptional execution made these results possible.

And with that, I'll turn back to Tejas.

Thanks, Padraig. Operator, can you please share the instructions for the Q&A?

[Operator Instructions] Your first question comes from the line of Jack Meehan with Operon.

I wanted to focus on the specialty CDMO business. So strong growth, nearly 30% in the quarter. That was ahead of what I was expecting. Can you talk about the visibility on this business into 2027? Obviously, the GLP-1 demand has been very strong, but I get a lot of questions about some of your top customers in NASD as well. I was just wondering if you could talk about the outlook for this business.

Yes. Thanks, Jack. I'll pass it over to Adam here in a second. But first of all, really pleased with the performance of nearly 30% growth, which was really within our expectations and moving along nicely. But Adam, do you want to add some detail on that?

Sure. Thanks, Padraig, and thanks, Jack. Effectively, as you think about the CDMO business over the longer term, we've talked about a mid-teens growth over the LRP period, and we still feel very confident about that. The second piece is we have Train C coming online, and that's in the spring. And so as you think about that, that will start generating revenue in that period. And then over the next 6 to 8 quarters, that's when we expect it to ramp up to full capacity.

The other piece, and you asked about our confidence in how we're thinking about the business, our order book is really building very nicely, and we have the majority of our capacity available in Train C spoken for already. And then just as the last piece as you're thinking about the business, just recognize as we start to bring Train C online, we'll start -- our capacity in the base CDMO business will start to hit full capacity. So then that incremental Train C will allow us to grow again. So I feel very confident going forward.

Excellent. Okay. And then just to stick on this topic, I was wondering if you could talk about margin dynamics related to the specialty CDMO business. I was just trying to figure out, obviously, 27.2% strip out the tariff dynamics in the quarter, it was a very healthy result. I was wondering how much the CDMO business contributed to that because I know it can be healthy margins and what's contemplated in terms of the phasing into 4Q?

Yes. So in general terms, we don't break out the CDMO business. But in general terms, the way we think about it is it should be roughly aligned to our broader business when it's running at full capacity. Then if you think about next year, especially as we're bringing on Train C, we'll be hiring staff in advance, and we'll start depreciating the facility in the early part of the year and then starting to get revenue later part of the year. That said, any margin -- negative margin impact, we've committed to mitigating through our Ignite Operating System.

Your next question comes from the line of Vijay Kumar with Evercore.

Congratulations on a nice print here. Maybe, Padraig, my first one was on your comment on reshoring was interesting. You noted 5 customers. You received orders, and this is ahead of expectations, right? So is there any way to quantify what the order size is? Any change in your $1 billion expectations for the industry and how to think about contribution for fiscal '27?

Yes. So I think we're -- we sized the opportunity at about $1 billion through 2030, and we expect to at least win 1/3 of that. We feel really good about that, Vijay. Having visited a number of these sites over the last few months, it's been great to see the momentum and how we're moving with setting up and getting ready to get it ready to put its systems in, et cetera.

So one of the things that's kind of probably good to say is the broader benefit versus peers, we include LC services and GC in these companies where we've seen 45 onshoring sites that have been designated. We see that we have about 15,000 instruments installed globally. So we have a large installed base that reflects future going forward on the reshoring sites. And it's going to take a bit of time. We already have some orders coming in, which is great to see, and these are in forward stocking locations ready to go into sites. And of course, our teams are helping plan how the labs are set up, et cetera, on it. So I think we feel very good about it. We're going to see the revenue start to come in, in '27. It's going to be not linear. I think you're going to see differences in different quarters as we go forward, but I think it's going to be really important.

And one of the things that's been very compelling to us is that we -- out of the first onshore reshoring orders that we've done, it includes 5 out of the top 10 global pharma companies in Q3 alone. And what you will see going forward is that we expect that to continue. One of the things that we invested in, in the company a number of years ago, which is really playing dividends is our strategic customer program. And 75% of the MFN signatories are in that strategic customer program. So that's what means we have a global read on what's happening. So that's how we read it. So we feel really good about it.

That's helpful. And then maybe one more follow-up for. What gets -- when you think about fiscal '27, we're exiting Q4, 6% organic. High level, what gets better, what gets worse when you think about GLP-1s, PFAS, new products, China, et cetera, any high-level comments on what gets better versus worse?

Yes. I mean it's -- I knew you had to ask, Vijay, the question, but I think we're -- we'll wait until the next quarter to talk about '27 in detail. But what I can say is that we're going in Q4 with a lot of momentum. You see the progress in China was very, very positive, a step-up. We see that continuing. It might be linear through next year, but we see that continuing. So we're really feeling good about the momentum in Q3 going into Q4.

Your next question comes from the line of Tycho Peterson with Jefferies.

Maybe just starting with the CDMO guide here. So you're guiding 12% had been mid-teens. So how much of what you saw in this quarter was kind of a timing issue? And I appreciate, Adam, the comments on Train C. I'm just curious if you can quantify anything around bookings or how much of the expected growth is being driven by existing programs versus new demand? I know you've talked about multiple high-growth indications in the pipeline for Train C as we think about that next year.

Yes. So why don't I start, and I'll just give you some more color on the 2026 guide. So once again, 30% growth we saw in the quarter and then year-to-date, we're at about 16% growth. And where we're calling for flattish, that's really driven by the timing of some regulatory-related submissions of our customers. And so those are expected to have responses right toward the end of the quarter. So depending on where those come out, that's how the full year guide will play out.

And then specifically for 2027, and I'll pass over to Simon in a moment just to talk a little bit more about the longer-term view of the business. Like I said, we have more than a majority of the capacity filled with bookings from a variety of different customers. Importantly, though, these are some larger scale programs, and we're excited about where they'll go and the opportunity for the future. So with that, I'll pass it over to Simon.

Yes. Just a couple of quick things to add. I'd say in terms of the FY '27 ramp, we've continued to make good progress with the Endeavor mechanical completion and marching towards the next spring go-live. And we're focused there initially on a high-volume commercialization process implementation in train. So of the available capacity that we're going to have in FY '27, I'd say 75% of that is currently spoken for with POs. We've also had a couple of other notable process validations for larger indications in the last quarter alone. And I think this just really reinforces the medium, long-term view that we've got on this business and how well positioned siRNA is as a modality with these larger indications. The pipeline is very strong. The demand signals that we're seeing from our customers are very strong. And I think the timing of Train C is really well timed.

Yes, that's great, Simon. Just one thing to remind everybody as well, Q4 '26, we expect flat growth, but it's over a very challenging 40% year-over-year compare [indiscernible].

Okay. That's helpful. And then my follow-up just on margins. I understand you don't want to talk a lot about '27 at this point, but you'll do over 130 bps this year. You've made a lot of progress on Ignite. As we think about next year, you don't have the tariff or refund impact. You've been pretty clear on kind of the pricing strategy. So I guess, any color or comments you're willing to say on margins for next year? I mean the Street is at 80 bps. I mean it feels like you could do north of 100. How do you think about just the margin trajectory over the next year?

Yes. So I'll take this one. Thanks, Tycho, for the question. We're not going to be guiding for 2027, as you would expect. But I would say that we do feel very good about the momentum of the business, but also about our Ignite program, which we've talked about. And that gives us confidence in the long-range plan we have in place now. And as we work through the numbers here in preparation for our Q4 call, we're in a good position, and I feel very good about both 2027 and beyond.

Your next question comes from the line of Michael Ryskin with Bank of America.

Maybe I will start on China. You kind of called out the strength there, and you bumped the guide on that. And that's on China A&G being a little bit weaker. And as you called out, I think the stimulus was not having a big impact yet. So I just like to unpack that a little bit more. I mean I think you called out pharma and food. Maybe go into a little more detail on where you saw that, if that's more local customers, multinationals, biotech or more like the CDMO side. Just want to get a little bit better sense of how China turned around so much this quarter. I got a follow-up.

Yes. And just recently back as well, which was great to be there opening our innovation center and seeing the pace of the business there was great and also meeting the teams and customers. I think if you look at our pharma, strong double-digit growth, you see, first of all, our GLP-1 and peptide testing. We see continued adoption of innovative therapies and increased investment from biotech. Biotech grew double digits, and that was due to the influx of investment into China by pharma. Everybody can see that from the large pharma investments. But also, I would say you have R&D coming in, but also you have homegrown innovative drugs that are really taking shape now. And the momentum is really driven by that new R&D and new modalities.

One thing that we are very pleased about is our small molecule grew mid-teens, and that's growing investment in the R&D pipeline for novel first-in-class small molecule drugs. And that, of course, benefits us because we're downstream with our tools on that side. And you can see that China is becoming more and continuing important region for drug development.

And just moving along, if you look along the businesses, our CAM business grew high single digits, and that's over a really tough compare of low double digits year-over-year. And you see that driven by really a number of things. First of all, the AI infrastructure expansion and our advanced materials business in China grew high teens. Although we saw a little bit of a bit softer in C&E due to macroeconomic pressures, we're also seeing our spectroscopy and vacuum products growing double digit. Again, food, a really bright spot for us, robust mid-teens growth in food. And again, that's really great across the testing volumes that we're seeing.

So I think growth is driven by broad-based government contract labs, academia and research lab investments. And what we're seeing is a number of competitive wins in the quarter because of the strength of our portfolio. We see the Altura columns doing well and really strong, I would say, demand for PFAS, which continues to grow in that area. So I think we won a number of really key marquee wins with a competitive win with 2 leading CXOs and of course, winning in PFAS. So I think we're very bullish about China for the future. Again, we were stable at about $300 million a quarter. You see the inflection point now. Of course, there's a long way to go. But in Q4, we're guiding strongly as well. But we see strong momentum into China continuing to the year-end, and we're increasing our guide from high mid-single digits to -- from flat and our Q4 guidance is high single digits.

Okay. And my follow-up is on CAM. Actually, you touched on it a little bit in your comments right there. You talked about advanced materials being a little bit stronger, C&E being a little bit softer because of the macro. Would just love to unpack that a little bit more. I mean, expectations for that to continue? Do you see sort of a light at the end of the tunnel there? Or are you expecting more of the same going forward? And then that's on the C&E side. And then on the other side, on the advanced materials, just talk a little bit about the strength there. You called out some of the reshoring initiatives in semi there, too. Just would love to see how much traction, how many -- how much runway do you think you have there?

Yes. Thanks for the question. So CAM grew 7% in the quarter, and that was above our mid-single-digit guide and robust growth from advanced materials. We had double-digit growth in advanced materials, and that was really important across all geographies more or less. C&E grew low single digits, but that again was against a tough compare of low double digits. And across the C&E business on a regional basis, you see APAC, our Asia business led by refining and base chemical business. China benefited from specialty chemical business. So overall, pretty solid.

What I will say going forward in CAM, we see the semi opportunity a really, really important opportunity over the long term. Just to put it into context, the semi opportunity is about 3% to 4% of Agilent's revenue. We see fabs instrument demand 18 to 24 months after the fab. And there's really kind of a number of drivers. First of all, investment in the semiconductor space, you can see that across the globe and as you see tariff policies and, of course, geopolitical reshoring in a number of areas. And we typically see instrument demand 18 to 24 months after the fab. But again, you see after that, you see advanced technology nodes and production volumes. So what comes from this actually in these fabs, et cetera, is PFAS testing, which is going to be a long tail of growth for us. So overall, we're very pleased with the business, and we expect to continue to see it growing.

Your next question comes from the line of Dan Leonard with RBC.

I'm trying to think further on the sustainability of that double-digit growth rate in pharma. How dependent is double-digit growth in that end market on your CDMO business? In other words, what would you have grown without the advanced therapeutics business, 30% growth rate?

Yes. So look, we're really, really really pleased with our biopharma and pharma business. And biopharma, the end, we grew by 12% overall, 9% ex CDMO. And you can see the overhang from the MFN deals really, really help. And the biotech grew double digits. And of course, you see CDMO growing nearly 30%. So I think -- and again, you underpin that with a really strong GLP result of 70% growth.

So overall, we see a lot of reason to see this market continuing to grow. You think about a replacement cycle, which is crucial. It's a big part of this business continuing to hum along. Look at our instrument business on the LC side. And also, you see that you talked -- Simon and Adam talked about the demand on the CDMO side and what we're planning for Train C, et cetera, next year. And then you underpin that with reshoring. So you see that pharma, I think we feel really good about the future on that in Q4 and of course, going forward.

And then my follow-up question, Padraig, is on that reshoring point. So now that you're -- you have some early proof points and wins, do you have any sense for how much of the reshoring demand is incremental versus substitution? And really, what I'm trying to balance here is that low single-digit growth rate in Europe with all the positive reshoring commentary around your Americas business?

Yes, it's pretty straightforward. I would say instruments and services are all incremental. Consumables is a little bit different by the nature of it. But I would say you can take it that the instrument and service business is all incremental.

Your next question comes from the line of Puneet Souda with Leerink.

I just wanted to see if you could parse out a bit about the pharma versus SMID biotech versus small biotech. I think you talked about small biotech was still lagging last quarter. Could you talk about how did that fare in the quarter? And I'll just ask my second question here. The mRNA personalized cancer vaccine had quite a remarkable data. The category is expected to expand with further indication expansion. Just wondering how are you thinking about the opportunity there for Agilent? Obviously, you've gone into new modalities and in the expanded positions with CDMO. So just wondering how are you thinking about that?

Yes. I'll take the first part, and I'll hand over to Simon on the mRNA side. So we've seen -- we have a relatively small exposure, but I would say encouraging uptick in small to midsized biotech. And you can see that in general, if you look at the macros in H1 '26, the total biopharma financing rose to $60 billion, doubling from $30 billion. So there's a huge amount of money going into the space. And you have underpinned that with a looming patent cliff, which is heightened demand focus on M&A. You see a lot of the licensing deals that are going in.

So we're beginning to see the small and midsized biotech spending return. We continue to -- we expect that's going to continue over the next few quarters given the macros that we talked about. So we feel that's going to be an important part of it. But again, we have a relatively small exposure to that area. But Simon, maybe you can talk a little bit about the new drug modality.

Yes. Certainly, we saw a pretty pivotal clinical trial readout in the very recent past year around mRNA that very much caught our attention. I think we obviously view it as really positive news, but I'd say it's going to be delayed impacts. The mRNA modality has been in the trough for a number of years now for quite a few reasons that I think we probably understand quite well. But I think what this did is really validated real-world potential of mRNA as a modality in oncology applications. And we think that's ultimately going to mean good news both for analytical lab and for CDMO. We've got strong capabilities in both areas. But to be clear, I don't think we'll see any immediate material impact there, but something to look out for, for the future.

Your next question comes from the line of Dan Brennan with TD Cowen.

Great. Maybe just going back to China for my first one. So just China was substantially above what you guys expected 9% versus flat. So on 20% of your revenues, that's almost the whole level of the beat. Obviously, you guys are pointing to strength throughout the whole business. But I'm just wondering like outside of China, when you think about -- I know Europe was a bit weaker than expected in kind of North America. Like how would you characterize the trends outside of China, just given how strong China was?

Yes. I mean China was -- we're really pleased to see what happened there in the businesses. And Americas, growing at 10%, really exceeding our high single-digit expectations, really, really strong. And again, that's without any reshoring benefit yet, et cetera, on that side. In Americas, we saw high teens in biotech and mid-single digits in small molecule. So overall, I think, again, on Americas, A&G slightly declined, but a relatively small business for us.

In Europe, again, in Europe, I wouldn't read too much into that number. It grew 2%, but that was over a really tough compare. Diagnostics, clinical and CAM and academia and government all grew mid-single digits. And pharma grew low single digits, but that was against a low double-digit compare in the side of it. Of course, on the academia side and government, we see some funding going into defense, and that's normal to see. I think you can expect that to continue, but again, a relatively small part of the business. And then Asia doing extremely well as well as we go forward. So overall, we feel really good about it. I wouldn't read too much into Europe, and I think China was a real standout for us and a step up.

Terrific. And then maybe just a follow-up just on CAM. Just on the chemical and energy side of that business. I know last quarter was better than expected, and you talked about a conservative guide given the volatile macro. Like what do you -- just how would you characterize the outlook today? It's oil is off the highs, PMIs are still expansionary, but the 10-year is north of 5%. Just wondering, are those customers, is it stable? Is it a little weakening? Is a little strengthening? Any way to characterize the health of that kind of customer base? Obviously, you guys have a lot of idiosyncratic drivers there, but just overall from a demand perspective.

Yes. If you go -- if we kind of double-click on C&E, we grew low single digits on a tough compare. But looking at C&E on a regional basis, I talked a little bit about the Asia demand that we saw in refining and base chemical demand. China is benefiting from specialty chemical growth. APAC was flat, but in the downturn in specialty chemical and EMEA was down due to -- amid the geopolitical disruption and delayed CapEx. But the way to look at it, we're the beneficiary on the production side and a little bit of headwind on the refining side, but we haven't seen any change in that.

So we're actually pretty -- really pleased with 7% growth in Q3 and above our mid-single-digit guide. And we feel for Q4, despite the high single-digit compares that we have, we expect growth to continue in the high single-digit range overall for CAM and chemical and energy will be an important part of that, too.

[Operator Instructions] Your next question comes from the line of Kallum Titchmarsh with Morgan Stanley.

I wanted to dig a little more into some of the pricing initiatives that seem to be tracking ahead of the initial road map. Would love just a little more color on where you're perhaps being more proactive with taking price across the business. And then how you're just thinking about that price contribution across the midterm, particularly if we're looking -- if we're working through that period of end markets themselves improving?

Yes, I'll kick it off, and I'll hand it over to Adam on this one. I think strong pricing year-to-date. It's one of the amazing compounding factors of the Ignite Operating System that we've seen. We've already -- we've exceeded our initial full year guide of 100 bps plus for '26. And we expect pricing momentum to continue into the year-end. And if you look back on our quarters in FY '25, we're well north of 100 bps. That's 2x the pricing power over the previous year. Q1 was 200 bps of pricing. Q2 was 200 bps and Q3 was 200 bps. So we see that continuing to go forward. And of course, that's really important as we deal with inflationary pressure and Ignite is really helping on that response as well as we go forward. But anything to add, Adam?

The only piece I would add is that pricing isn't our only way that we're managing the inflationary pressures. We're also doing a lot around our supply chain management, looking at productivity across the business. And then the other piece is we're really focused on making sure that we're managing our inventory appropriately. So you'll see that our inventory went up a little bit, but that's just in response to some of the inflation that we're seeing and making sure that we have a resilient supply.

Your next question comes from the line of Luke Sergott with Barclays. Your next question comes from the line of Evie Koslosky with Goldman Sachs.

So I wanted to touch on Agilent CrossLab. You've obviously had several quarters of really impressive instrument growth. So how should we think about the lag time between when the instrument is placed and then when you would actually expect to see the service contract booked related to that placement?

Yes. So very pleased with our growth in Q3, modestly ahead of what we put out in our guide. We had service growing at mid-single digits and consumables growing at high single digits across all regions. But in terms of the lag time and what we see, maybe Angelica, you can add a little bit of color on this.

Yes. Thanks, Padraig, and thanks, Evie, for the question. We certainly see the increased demand for instruments translating to increased lab productivity. So it bodes well for ACG overall. As we look specifically at the instrument growth that's also new demand as well as tech refresh, there is a bit of a lag because the first 12 months are under warranty. So we really start to see the cumulative effect of the opportunities to turn that into recurring ACG revenue about 12 to 18 months. And that continues to roll, obviously, as more and more of those instruments are turning from warranty to fully functional and absolute connect rate opportunities to ACG as a whole.

Your next question comes from the line of Casey Woodring with JPMorgan.

So diagnostics grew 6% this quarter. You noted it was a little bit below your expectations. Obviously, diagnostics growth of 11% last quarter, surprised to the upside. So maybe just walk through some of the dynamics you're seeing there. You mentioned underlying orders grew double digits. So just where are you seeing that strength in orders? And would be curious also to hear how the Omnis platform contributed as I know you called that out last quarter as a strong growth contributor also.

Yes. So I'll start at a high level, and I'll bring Simon in. So 6% growth in the quarter. We saw robust double-digit growth in pathology, which gives us really confidence in the underlying health of the business. CDx grew mid-teens, and we have a really unique position in that business and genomics grew high single digits. And that's all underpinned by the expanded Dako Omnis family. But maybe you can provide more detail, Simon.

Yes. So I think overall for Q3, we continue to be really pleased with the momentum that we saw in pathology. We exited the quarter with a robust backlog in our core pathology business. We had very strong order entry in the third quarter, and we continue to see really strong adoption of the Omnis family. The installed base there that we're seeing is well on track, and we think that's a really good leading indicator as we go into fiscal year '27. At the same time, as Padraig mentioned, we also saw robust continuing growth in companion diagnostics with mid-teens. And I think we've just got really solid momentum there between the secular drivers that we see with modalities like ADCs, Agilent's capabilities, and the very strong installed base and underlying reputation that we've got. It was also nice to see return to growth in genomics there with high single-digit growth.

So you put it all together, we were a shade light on revenue for the quarter, driven, I'd say, primarily by that backlog that we carry into Q4, but the order entry was really strong, and we're very confident about the fourth quarter and the underlying momentum in the business.

This concludes the question-and-answer session. Mr. Tejas, I will turn the call back over to you.

Thank you, everyone, for joining us. We look forward to speaking with you soon.

This concludes today's call. Thank you for attending. You may now disconnect.

Okay. Great. We're going to kick it off. I'm Tycho Peterson from the Life Science team. It's my pleasure to introduce Agilent this morning.

All right. Maybe great quarter, why don't we start there? A lot of momentum, LDG, AMG, both nicely ahead, strong growth for CAM, diagnostics, forensics, semiconductors, pharma. I mean, you're kind of humming along on all fronts, nice margin expansion, too. So maybe with that in mind, just talk about some of the messages coming out of 2Q and what gets you excited about the remainder of the year.

Yes, no problem. Thanks, Tycho, and thanks. Great to be here. So great quarter, 6.3% growth. We had 130 bps year-over-year margin expansion, which was just great, and that was really fueled by our Ignite transformation, 14% EPS growth, which was well ahead of guidance. So clean beat across the board.

And if you look at the markets, we had high single digit in CAM, diagnostics, environmental and food, and pharma was in line, still really strong. And then broad CAM growth. Of course, we had a semicon part in there that was really great as well, that helped. And when you think about -- when you put it all together, it's really a number of things.

I think the replacement continues to grow. You see low double-digit growth in our LC and LCMS business that shows our replacement cycle is really humming along. Book-to-bill is greater than 1 for ninth consecutive quarter, so momentum continuing.

And innovation, this is all underpinned by innovation, and Infinity III, of course, driving that replacement cycle, Pro iQ and a number of launches at ASMS this week, 9500 ICP-MS which is right in that semicon space as well. And we talk -- I think every company talks about share gains, but we look at our objective share gain data from all, we had a really super strong share gains across our instrument portfolio.

And I think you look at our Ignite operating system now being able to mitigate tariffs, fully mitigated 200 bps of pricing. So our enterprise pricing model is really working. And I think you see digital going extremely well. Actually, digital would have grown 20% ex China, 9% growth in our digital orders. So that shows a flywheel. And of course, with integration playbook with BIOVECTRA done and now Biocare coming up. So you put it all together, I think it was an extremely good quarter.

And then you touched on the ASMS news, 9500 triple quad first big refresh, ICP-MS in a decade. Talk a little bit about how you're thinking about the opportunity? Is it new market unlock, share gains, replacement cycle?

Yes. So I would think about it as a tech refresh rather than replacement cycle. So if you think about ICP-MS, it's really we have about 80% market share in semicon and fabs and actually not only fabs but also high-purity chemical companies around the fabs. And it really is a technology jump.

There's 2 areas of the patented dual cell system that really helps with workflows. And also, we have this revolutionary Air Mode that helps on the analysis side. And with that 80% market share, I think customers with these new capabilities are now going to do a tech refresh with the 9500. So we're really, really excited about it.

When you think about companies like TSMC, where we have a huge installed base in Taiwan, we have a huge installed base in the U.S. where they've been reshoring in semis. And we've been working with those customers over the last number of years in those reshoring opportunities.

So people think it's just pharma, but actually, the semi reshoring has been happening quietly over time for a long time, and we're right in that space. So we had a great response at ASMS. We're taking a lot of orders now, so we're excited about it.

And I think if we think about ICP-MS being a $275 million business or so, how much does this tech refresh kind of impact that installed base? And how do you think about -- like you've talked about GC replacement cycle being a few percentage of the business? Could this be comparable?

Yes. I think, look, if you think about it, semis represents about a $400 million market opportunity for us. By the way, it's not just ICP-MS, it's GCMS products that are in those fabs as well. And our total semi exposure is about 3% to 4% of Agilent's revenue. So I think, overall, we grew double digits in that side of it, we expect that to continue. So I think it's going to be above that in terms of growth rates as we do this tech refresh.

And then on the column side, just kind of rounding out on ASMS, the Altura columns you launched last year, up 50% sequentially, now 75% penetrated in the top 20 pharma. Maybe talk about momentum, how much of this is allowing you to recapture share and then you're launching new products into the family of Altura columns. Maybe just talk about that?

Yes. No, it really is a family. So we launched GLP-1 column last year, we actually launched the PFAS column long and short chain this year as well. So we'll continue on building on this side. So we're early days, but we're in about 15 of the top 20 bio pharma companies growing extremely well.

And for context, that column is about 5% of ACG, at CrossLab Group. And we're seeing a lot of broad new applications around peptide therapeutics, large oligos and gene and cell therapy. So putting it all together, we're going to continue to launch, and we're seeing a really strong take-up in labs and companies that already have the family, and we're going to see that continue over time. And it helps, of course, with our instrument connect grid.

Maybe just focusing on CAM for a minute. Obviously, a lot going on, on the macro. Maybe just unpack what you saw and just talk a little bit about mix dynamics, how you're thinking about the rest of the year, comps get tougher, but a lot of positive underlying momentum?

Yes. So CAM's performance was high single digit for Q2, really strong and low double digits across the Advanced Materials and battery side. So if you think about it, chemical and Advanced Materials, about 2/3 of that is the chemical and energy side, 1/3 is the Advanced Materials side. That's how it breaks out.

And we see -- we've really seen strong momentum over a number of quarters. Again, we're going into tough compares. But again, batteries and semi is about $400 million opportunity. And we see in batteries, about $250 million opportunity, $400 million for semis. And on the chemical side, it is a very topical area with it. But it's an area -- if you think about the chemical business and chemical and energy, it really is our heartland of our installed base.

So we have a GC replacement cycle going on there that's going to about 100 bps on top of what we're seeing. And I would say, about 15% to 20% is related to exploration and production and about 50% is related to chemicals. And of course, people were saying, well, are we seeing just a slowdown on CapEx.

Actually, CapEx spending was very strong during the year in refinery and production side. And it depends if you're going to see that continue over time, you're going to see that -- you're going to see on the chemical side, of course, we get a good downstream effect from semiconductors. So it's used in a lot of the semiconductor workflows. So there's a reverse is true where declining prices help refiners while deepening demand on upstream production. So it's kind of give and take, but overall, we feel really good about that business.

And just to circle back on batteries and semis, I appreciate the TAM numbers you threw out. Should we continue to assume these are outsized drivers here, those 2 businesses?

Yes. And it's our market share position, those, and then when you put a new technology that leapfrogs the competition in that you're going to see that as an outsized driver for sure.

And then anything on chemicals by geography that might be helpful to share?

Yes. No, I think we saw broad strength across it. I think China was a little bit slow for us and we were expecting that, but we saw broad strength in the Americas, Europe and Asia outside China.

And then you are talking more about share gains overall, talked about having some of the best market share in 2Q. Was this specific to LCMS and GC or are you starting to see outside share gains?

Yes. The 3 areas -- so it's all our instrument product lines. So just for context, every company submits the units and dollars for each of their product lines. We saw outsized share gains in LC spectroscopy and GC were the key -- were the top drivers, but I would say broad-based across it. And I would say, if you look at regions outside share gains in North America and Japan.

Now Japan, we had a relatively low market share historically because we've had a local competitor there. We put a lot of focus in there and now we're seeing a lot of share gain advantage, but North America was extremely strong for us.

And obviously, we touched on innovation. I mean, are there things you're doing differently from a commercial execution standpoint, too, that are driving share gains?

Yes. So before I took over the role of CEO, as Chief Commercial Officer, and actually, we did a lot of transformation before I took the position. And we spent a lot of time looking at our digital connection with customers, and sometimes we want to have one central account manager, and we invested heavily in application support, application engineers and product specialization.

Why is that important? It's important in an area like semis where actually the application science means everything and the product support of that moving forward. So I think our investments back then are really paying off now. And we have one leader that controls our service, sales, marketing and digital. So it means we can move really quick on the deployment of AI and also our connection with customers.

And I think when you -- the one thing we've centralized, Tycho, which is kind of unique, we have a launch excellence team now that's central for every one of our product lines. So each product line isn't launching in a separate way. We have the same methodology, how we do prelaunch, how we do launch and then how do we make sure we get our ramps on our ramp to volume targets.

So overall, you put that flywheel together of improved innovation and a commercial engine, I think it's -- that is a key reason why we're gaining share.

Any way to quantify share gains like in any of the product categories or...

Yes. If you look at -- I mean, if you look at share gains, I'll give you an example in LC, you don't see that move huge amounts, but I mean 1% or 2% on the upside is a lot of business on that side. So I think we're -- we've seen that, and if you look at all our product lines, except for one, which was just stable, we saw outsized gains.

And then bio pharma, overall, fifth straight quarter of mid-single-digit growth. Obviously, some nuances there, biotech growing low double digits, large-cap fine, mid cap still soft, small molecule, up low single digit. Can you just talk on the exposures to these categories and talk about the barriers left for some of the lagging segments?

Yes. I mean, look, we've -- we're about 50-50 small molecule versus large molecule, both growing well. Small molecule is low single digits this time and biotech was low double digits. And again, when you look at the MFN deals that have happened, it's removed the big overhang from our customers with reshoring coming in '27. That's progressing very well. We're doing more quotes. We're getting closer on those numbers that what we put out, we feel really good about those numbers we put out.

So when you think about that, I think overall pharma spending, there's an aged installed base in pharma, particularly where we are downstream in QA/QC. So that replacement cycle momentum and the reshoring coming is a really great sweet spot for us. And then in the small mid tech -- small mid-cap size, it's been very muted for a number of years. But through April, you see the number of deals that have been done and the number of dollars that have been deployed, I think $40 billion being deployed in that area.

So we're expecting some benefit to put out in '27. We're not expecting it this year. But overall, we really believe that the kind of licensing and the M&A activity is going on is going to -- as we've seen in previous cycles, it's going to prove very, very important for us in terms of our cell analysis equipment, et cetera, we're going to see that.

But why do you think it hasn't converted yet? I mean, biotech funding has been strong here for a little while.

Yes. I mean it's kind of similar than the last time. I think there is just -- the funding generally takes probably 12 to 18 months to come true to our side. So I think we're getting to the midsize of that. So I think really, we're going to exceed that at the start of '27. I wouldn't say there's anything very different from this time. But there's been a large, I would say, air pocket in that market for a long time, so we need to see that work through.

Advanced Therapeutics, the old CDMO business, 2Q was up high single digit. You reiterated the guide for the year of mid-teens. Just talk about what's underpinning that acceleration going forward?

Sure. Yes. So I'll take that. So first of all, you saw a solid first half growth in our CDMO, which we're calling ATD now, which is Advanced Therapeutics Division. So we had solid growth in the first half. That's low double digit, as I said.

The nice thing is we have visibility into the second half growth and that acceleration. So we remain confident in our ability to deliver that mid-teens growth for the full year, which we've talked about.

The revenue for the year was always weighted to the second half of the year, and that's just based on our production schedules. And the nice part about CDMO is you do have visibility into the production schedules. The challenge with it is sometimes those production schedules are lumpy from a quarter-over-quarter perspective.

The nice thing going into the second half of the year and ATD Colorado in general is that, that mix, commercial and clinical, last year, we finished the year at about 60-40 commercial to clinical, and we're seeing that shift more toward commercial mix over time.

And then the last piece I would just highlight is in that second half acceleration implied underneath that, which you can't see, is a very, very strong Q3 with a flattish Q4, and that's once again based on comparison production schedules.

And how about margin lift as utilization improves?

Yes. So you can expect over time, as those ramp, the margin will continue to expand, and we've said the margin of our ATD business is accretive to our overall margin once they're fully up and running.

And then we've had the pleasure of going out and seeing the facility. Train C goes live in '27. Just talk a little bit about how much that adds once fully ramped. If you go back to Train B, it added $150 million. Can this be closer to $200 million with the yield improvements?

Yes. So I'm very excited about Train C. Let me start there. We're a leader in NASD, and it's always good when you can invest behind a leadership position. We also hit an important milestone earlier this year with the mechanical completion of Train C. So that happened in Q2. So that positions us then to start generating revenue sort of in the spring of next year.

And the way I would think about that is Train C over time and once it's fully ramped will double our revenue capacity once fully ramped. And the way I think about that is it's about $350 million in total. But once again, there'll be a variability from time to time based on just the general mix. It should start to skew more commercial than clinical as we've seen in our other lines, but really excited about it.

And so then the last piece I would just highlight on this, as you think about the ramp of Train C, it'll start -- the revenue will start in the spring. It will take about 6 to 8 quarters to get to that full revenue that I just talked about, that $350 million. But what excites me even more is we have visibility to the majority of the capacity we have available in 2027 now.

So we're in a really good position. You can see that our customers appreciate the service and the quality that we deliver. And so investing behind that leadership position before I guided it was a great move, and we're going to reap the benefits of it.

And I guess similar question on the margin trajectory for next year as you're kind of scaling Train C up.

Yes. And so what we've talked about is, of course, there's a margin implication as you turn the facility on, start depreciating, et cetera. But what we've said is we'll manage that within our broader profile. And once again, we have the Ignite operating system, which helps us think about those things, prioritize and find incremental efficiencies to offset.

Maybe we can go back to replacement cycle. We touched on it a little bit. LC, LCMS, both up low double digits in 2Q. Just talk about where we are in the cycle? It's been coming along for a couple of quarters here. And just where you think about '27, '28 as we think about the remainder of the cycle?

Yes. Look, I think the cycle probably I'd say we're 1/3 through the cycle, I would say that's where we are. I think it's -- you see our instrument numbers versus our peers in terms of delivery. So we're doing extremely well. We're -- and it's not only in our installed base, but on the competitive deal side, it's a very competitive landscape.

So being able to take competitive deals drives that. We expect it's going to add about 200 to 300 bps as we go forward on that replacement cycle. And it's kind of interesting. People think it's just one lab or one site, but we have lots of equipment, the 1100s, 1260s, 1290s that are installed, that are replacing at different times. So strong momentum and really good uptake with the Infinity III.

So we expect that to keep going. And then, of course, you've got reshoring coming along. So I think that's very important. I think on the GC replacement cycle again, you see that in our -- across all our markets, but you see that in our CAM markets, particularly, that's going at about 100 bps on top of where we are.

And the GC replacement cycle is longer. I would say we're very early on in that. We just launched a new GC platform in ASMS as well. So we have the 8850 and the new platform. So that really helps us as we're moving forward and replacing and even older installed base on the GC side. And again, our market share in GC is extremely high.

Any pockets lagging, whether it's CDMOs or China, like just on the replacement cycle specifically?

No, I would say it's pretty broad-based. I think once you see the -- I think our CDMO and our CRO segments where we look at that, I think it's pretty broad-based. I think the bolus of our business is QA/QC, development of QA/QC, and that's moving along. So I would say not really any laggards on that side.

And then China, that was one of the areas that was soft in the quarter, down 9%. Just unpack what you're seeing there, how you think about the remainder of the year? Obviously, some focus on stimulus and then bio pharma being a bright spot, up high teens, talk about the durability of...

Yes, yes. So look, I mean, it's the old Lunar New Year effect. And of course, we had tariffs last year, which pulled in a lot of orders in CSD that created a tough compare on that side. But we're extremely committed to China and what we see in the market is that our bio pharma, small bio pharma doing extremely well. And you see the investment that's happening in there in terms of the deployment of capital.

The one area that's really important for us is the speed of innovation in China in our sector. So we'll be announcing more investment in an innovation center in Shanghai, where our manufacturing is to tap into that innovation in China for China and beyond.

So overall, I think the market is humming along at $300 million a quarter. We expect that to continue. I do see that improving in '27. All the factors are there for it to improve.

And we think of China as the China business, and we think of stimulus separate, right, because it's something that -- it's got variable timing. It can happen. It can happen at different timings and so on. We were expecting the SAMR stimulus to happen in '26, it's going to happen in '27. We're actually quoting there now.

That's a $50 million opportunity. We expect about a 30% win there like we've seen in the past. So -- but that's not in our guide currently, but we'll see that coming through. So overall, I think we feel China is stable, we're going to see that improve in '27 to get up to the mid- to high single-digit growth rate again in time.

And last round of stimulus skewed food heavy. Is that kind of similar assumptions this time? Or how you...

Yes. It's a little bit more broad-based. I think it's -- there's 4 segments in SAMR, there's food, drug, industrial products and metrology. So it's a bit more broad-based. And again, when you think about those markets, that's a real sweet spot for us, Tycho. And so funding and bidding time line, funding is going to materialize in Q3, bidding time line in Q4, orders and revenue in Q1, and we've seen that happen in every previous stimulus in the same type of cadence.

One of the things I think you've focused on, which maybe doesn't get as much attention is software. And just be curious to talk about some of the AI deployment initiatives that you have underway?

Yes. So we saw -- we had an announcement today with OpenAI, and BCG is one of the deployment areas. But first of all, maybe you can break it down into a few parts. First of all, for our customer segments, we really believe that AI is going to drive a lot of efficiencies in pharma.

You see the numbers that are coming out from clinical to discovery clinical on to commercial, you're seeing 40% to 70% reductions in terms of molecules getting through that pipeline. Again, when you think about that, we would be the net beneficiary of that in terms of downstream testing, and it's going to be a tailwind over time. So that's the customer side.

We spent a huge amount of time thinking internally about AI and not just giving flashy headlines but thinking about how it's going to reshape our business going forward on it. And I think when I think about AI, the first bucket we think about is our product and customer connection, and that's with growth involved. So we're really looking about how it is going to help us with our software -- acceleration of our software products.

With the CrossLab Group, now we've put software into one place. We've done a lot of movements in the organization. So AI coming in at this time is a really important enabler for us go forward on it. And second, it's kind of reimagining our internal and end-user workflow. So how do we reshape what we do. I think some companies make a mistake by just layering AI over the top of existing process, you probably get a 5% to 10% incremental benefit.

But if you reshape process about how you're connecting with customers and how you connect inside, I think you get an oversized benefit. And that's going to be -- it's going to be self-funding as we go along and as we move forward. But I think what's going to be different at Agilent, when you see the headlines in different areas and sectors and different companies, first, we're going to have -- we create a huge amount of signal that's necessary for AI.

You think of our installed base. There is no AI without data and signals. Our analytical tools feeding into that create a lot of opportunity for us. I think second, building an owned enterprise-wide capability not just buying disjointed AI tools, but connecting operations, product and a customer experience in one area creates a really strong dynamic flywheel.

And we have really strong partnerships. It's one thing to announce partnership with a frontier model, which we're really excited working with the OpenAI team. But then having BCG help us with the deployment and the execution across the company is super important through the Ignite framework. And this is going to be very tops down. It's going to be all numbers driven, but we're leading with that growth area. So I think we're -- it couldn't be better timing for us.

I guess how do we think about the implications of the deal today then? I mean, is this something that's going to result in a definable revenue stream? Is it more touch points with customers...

You're going to see that over time, we're going to be announcing that. You're going to see revenue both on the product side and software side that we're going to be increasing over time. We expect our market share gains to improve on the customer connection side, and we're only beginning on that side. So we'll be able to release those numbers over time as we deliver those numbers, it's going to be really important.

And I think one thing we were very, very careful not to do was trying to just have a flashy announcement and just do a little -- because tokens are expensive. And you can see companies now are running into areas where tokens become prohibitive over time, but we want to be very clear with our key use cases that are driving growth so we can self-fund this amazing opportunity we have over time.

And Adam, from your perspective, AI, just on procurement supply chain, just margin levers, how are you thinking about that?

Yes. So it's obviously a great opportunity, and we're working to deploy it in the right spaces. And so there's some clear use cases and some very straightforward use cases. We're using them of the finance team. Procurement is part of -- was one of the initial Ignite transformation areas. And so part of coming out of that were some of AI opportunities as well.

And then the other area is pricing and supply chain where we're seeing good opportunity. And you've heard a little bit about our control tower that we're using on supply chain, which has been such a help, not just to the planning and reliability of the supply, but also as we start to think about driving efficiencies going forward, and it really helps us think about our network differently.

So in shocks to the network, things like that, when you have that forward-facing outlook, it's much easier to plan and actually think about how you're building out that footprint. So it's been a real win for us.

The one thing I would just add, I forgot to mention, Tycho, is that when we did an assessment of where companies fail or companies really are successful in this, we created an AI center of excellence. At the center, we have the Chief AI Officer. He's coming from Verily, Suki Singh, but the businesses are required to deliver it and deliver on the numbers.

But having that central operating system of how it's deployed when and the sequencing of things and making sure what we said we're going to do is going to -- that is going to happen is really important, and that's going be a very important central capability for us.

I want to make sure we spend a minute on diagnostics. It's a $1 billion business. You've done M&A there recently. Just talk a little bit about how you're thinking about market growth and some of the dynamics that's allowing you to put up healthy numbers there?

So number one, I think you saw the strong diagnostics and clinical in Q2, so 11%. And we believe that, that's been a great business for us over the last number of years. Unfortunately, demographics are in our favor in that business, aging population, greater incidence of cancer, things like that. So that really helps us.

The other piece is we're seeing strong traction with our technology. So the Dako Omnis family is really gaining traction. You see that in the numbers, and you'll see that continue to evolve. The other piece I would layer in here which is important is this Biocare acquisition. It's -- number one, it's a great template for the types of deals that we want to do.

And then you see how it layers into that business, complementary instruments. So where Dako is in the medium throughput, the Biocare instrument is in the low throughput. So complementary instruments, complementary geographies. So we're going to -- they're going to leverage our footprint in Europe, perfect.

And then expanding our menu, which you know that's the name of the game here is menu expansion, but it will also give us access to more tenders globally, things like that.

And then the last piece, which hasn't gotten as much attention, but I'm personally very excited about is the innovation engine that we're getting out of Biocare. They've been very efficient in creating new antibody tests and doing it efficiently. So big opportunity there. So really excited about Biocare, how that's going to roll through and it's just going to continue our long legacy of being kind of a diagnostics leader.

Maybe just in the last minute, we could hit on margins. If you go back pre-COVID, the framework was 30%, 40% core incrementals. As we look ahead, any reason that you couldn't be at the high end of that range or above given tariff headwinds abating some of the AI initiatives you talked about?

Yes. So I think it's fair to think of our incremental margins in that way. The one piece I would say is that we will be balancing that with investments in growth and innovation. And that's something we've been clear about all along.

I would also say if you want to think about how the ramp will happen over time, think about the LRP guide that we've given, which is 50 bps to 100-plus bps on a year-on-year basis margin expansion. And I feel very confident in our ability to deliver that and the confidence comes from 3 areas really.

So if you look at number one is the execution excellence. You've seen our ability to perform under a variety of different conditions over the last several years, several quarters, and it's only getting better so that we can execute.

The second is the Ignite operating system. So what started as a transformation is really now an operating system. So when we have a challenge or an opportunity, we can run it through and run it through the company very quickly in a cross-functional way. So it's very, very powerful. And you see that in our performance in the second quarter, top line margin and EPS.

And then the last piece, which is what gets me up in the morning is the customer-driven innovation. And so with those 3 elements, I feel very confident we're going to be able to expand our margins. As we've said, you see the innovation that we just launched at ASMS and I think we're in a good position to deliver. Really excited about the future.

And just last one, tariff refund is not embedded in the guide. How do we think about the impact? I think it was a $60 million gross impact when we went in? How do we think about it?

Yes. So as you know, people who pay tariffs, we have the right to file for a refund. We filed where appropriate, and we'll continue to file, so it doesn't happen all at once. We didn't include it in the guide, one, because we don't have any information about the approval and when it's coming. So we don't want to skew that. We'll be transparent about when we get those numbers.

The second piece is when we get the refund, we will include it in our adjusted non-GAAP earnings. We'll be transparent about it once again. The -- if you think about what we paid in '25, it's about $70 million.

And when we get that back, the last piece I would just highlight is that there will be some impact potentially on our variable pay, so it may not all drop to the bottom line. But when you look back in 2025, there was the same effect and so we want to make sure that we're treating our employees fairly.

Great. I think we'll leave it at that. Thank you.

Ladies and gentlemen, thank you for joining us, and welcome to the Q2 2026 Agilent Technologies Inc. Earnings Conference Call. [Operator Instructions] I will now hand the conference over to Tejas Savant, Vice President of Investor Relations. You may begin.

Thank you, Karina, and welcome, everyone, to Agilent's conference call for the second quarter of fiscal year 2026. The -- with me on the line are CEO, Park MacDonald; and CFO, Adam Ellenof. Joining for the Q&A will be Simon May, President of the Life Sciences and Diagnostics Markets Group, and Julia Ryman, President of the Agilent CrossLab Group; and Mike Zeng, President of the Applied Markets Group.

This presentation is being webcast live. The press release for our second quarter financial results, investor presentation and information to supplement today's discussion along with a recording of this webcast are available on our website at investor.agilent.com.

Today's comments will refer to non-GAAP financial measures. Non-GAAP measures are supplemental and should not be considered a substitute for GAAP results. You'll find the most directly comparable GAAP financial metrics and reconciliations in the press release and on our website.

Unless otherwise noted, all references to increases or decreases in financial metrics are year-over-year and references to revenue growth are on a core or organic constant currency basis.

All references to profitability metrics are on a non-GAAP basis. Core or organic constant currency revenue growth is adjusted for the impact of currency exchange rates and any acquisitions and divestitures completed within the past 12 months.

Guidance is based on forecasted exchange rates. During this call, we will make forward-looking statements about the financial performance of the company. These statements are subject to risks and uncertainties and are only valid as of today.

Agilent assumes no obligation to update them. Please refer to the company's recent SEC filings for a more detailed description of the risks and other factors that could cause our performance to differ from these forward-looking statements. And now I'd like to turn the call over to Padraig.

Thanks, Tejas, and welcome, everyone. We delivered an excellent second quarter with stronger-than-expected revenue growth, significant margin expansion and double-digit EPS growth. Importantly, the quarter demonstrates that the operational and P&L benefits from our Ignite operating system are increasingly becoming structurally embedded in the business. For the second quarter, Agent reported $1.83 billion in revenue, growing 6.3% on a core basis and exceeding the high end of our guidance by 80 basis points.

The strength was broad-based across our largest end markets and supported by continued replacement cycle momentum, innovation-led share gains and improving operational execution. Operating margin of 26.4% for the quarter represents a year-over-year improvement of 130 basis points and 180 basis points on a sequential basis, well above our guidance despite the macro and geopolitical environment.

Earnings per share of $1.49 represents 14% year-over-year growth, which also exceeded the top end of our guidance by $0.07. We delivered at or above our long-term plan on all metrics: revenue growth, margin expansion and EPS growth. As we enter the second half, I want to highlight the key dimensions of our strategy that are driving our performance.

First, we continue to build on the extraordinary level of customer intimacy and trust that we have worked hard to gain and differentiates us from the competition. This differentiation is increasingly translating into share gains across the key workflows and geographies.

Second, that trust translates into insights that inform our innovation flywheel leading to products and services that drive success for our customers and adjuvant. That includes the exciting launches coming up next week at the 74th American Society of Forma Bectrometry Annual Conference in San Diego.

Next, we have increased capabilities and the level of talent throughout the organization, improving speed, agility and operational discipline. This is driving a step function improvement in execution.

And finally, the significant benefits of Unite are increasing P&C. These include strategic pricing that is aiding our top line momentum, productivity initiatives such as simplifying our structure and generating greater value through strategic relationship management.

A centralized focus on project outcomes that drives business results and increasing supply chain agility and operational discipline that is strengthening margins and business resiliency while providing flexibility to fund our most critical innovation efforts.

With our diversified and geographically balanced portfolio and healthy momentum across key end markets, the strong foundation we have built to Ignite provides us with the resiliency to compound our success and deliver results in any environment.

Importantly, we expect these operational improvements to increasingly support higher quality and durable earnings growth. Before getting into the specifics of our second quarter results, I want to spend time on the key growth drivers going forward.

These include superior commercial execution combined with improvements we are seeing across our end markets, the instrument replacement cycle, our exciting slate of launches at ASMS, and our recent agreement to acquire Biocare, and how Ignite is fueling Agilent's performance.

We are seeing continued health in our key end markets, aligned with our expectations at the start of the year, combined with commercial execution, our differentiated portfolio and best-in-class service that helps us driving our results.

Pharma continues to deliver with 6% growth in the quarter. This includes another quarter of low double-digit growth in biotech led by large caps, while positive demand signals from small to mid caps begin to emerge. Chemical and Advanced Materials grew a robust 8%, it was fueled by strong semiconductor demand and healthy chemical CapEx investments in the Americas.

Diagnostics and Clinical grew 11%, driven by the strong performance of expanding transfer and diagnostics offerings. And finally, our unique technology is helping us win outside shares of forensics, where we delivered greater than 50% growth in the quarter.

That includes the TSA security contract we mentioned during the last call, as well as multiple competitive large tender wins in Asia and Europe. Regarding the TSA contract, we are delighted to be able to share more details as you might have seen in our recent press release.

The TSA would deploy our new bulk alarm resolution technology at airport security checkpoints at the FIFA World Cup host cities in the U.S. This unique technology provides the ability to screen larger quantities of liquids, powders and solids.

With the implementation going very well, we are excited about the opportunities to apply this technology more broadly. We also had another very strong quarter of instrument revenue, resulting in high single-digit growth -- this included market-leading low double-digit growth in LC and LC/MS and in GC.

Our replacement cycle momentum continued. That plus share gains driven by the customer-centric innovation that is embedded in our new Infinity tree LC and our 8850 GC are delivering exceptional growth as customers are looking to upgrade their fleets to see how new instruments solve their most challenging workflow problems while improving efficiencies.

Looking ahead, we see continued instrument strength. Our commercial excellence delivered a book-to-bill above 1 again this quarter, marking the ninth consecutive quarter where instrument orders met or exceeded revenue. Even as recent launches like the Infinity Tree LC, at Omnis family continue to drive growth.

We are looking forward to our next wave of innovations that will further support our durable growth, strengthen our installed base and support recurring consumables and services pull through. We will showcase these new launches at ASMS next week.

A statin spectroscopy with a revolutionary new 9,500 triple quad ICPMS. This launch brings advanced triple quad capabilities to a broader customer base by directly addressing key customer pain points around throughput, workflow complexity and operating costs.

The 9,500 solves these challenges with a paid into dual system that provides increased throughput and a revolutionary air mode that eliminates the need for dedicated oxygen gas, lowering operating costs and intelligent open lap ICPMS software that reduces complexity and automates method migration lowering the technical expertise required to operate the system.

This versatile instrument will be relevant across our customer base in advanced materials, mining, food and environmental labs. Importantly, the innovations embedded in the 9500 were a direct result of customer feedback about their most pressing problems and will serve as a differentiated architecture for ICPMS growth well into the future.

Moving to our gas-based business. We are launching the upgraded flagship GCs. These launches further strengthen our position in high productivity analytical workflows where our customers increasingly prioritize efficiency automation and total cost of ownership.

Highlights of our new GCs include improved performance with up to 30% faster open codon and higher throughput, built-in intelligence features to monitor performance track parameters and assist the proactive maintenance and the technology to conserve or eliminate helium gas with real-time gas and power usage tracking.

We have been a long-standing leader in providing helium alternatives for GCs in response to customer needs. In the current helium supply environment, these productivity and resource efficiency benefits are becoming increasingly valuable for our customers.

Turning to our consumables portfolio. Arturo, Ultra and at columns continue to see strong traction. They grew more than 50% sequentially, reaching 75% of the top 20 biopharma accounts. This rapid adoption reinforced to strengthen innovation engine and unified commercial organization.

We will continue to build on that strong initial momentum with additional waves of column launches. Our newest Altura columns debuting at ASMS are targeted to address workflows for protein and peptide therapeutics, large oligos, gene therapy and vaccines.

On the software front, we're also expanding our capabilities in Open Lab CDS with Version 3.0. This important release provides the unified platform to support analysis for chromatography, mass spec and spectroscopy systems across our portfolio. including, for the first time, our high-resolution mass spec.

The continued expansion of OpenLab order strength is workflow integration across our portfolio and enhances the strategic value of our installed base. We're also delighted to announce that we are building upon our long history in China with the launch of our China innovation center.

Leveraging the country's deep base of technical talent and a vibrant innovation ecosystem we intend to strengthen our R&D capabilities across multiple emerging areas, including digital, AI and automation to better support our customers.

We are particularly excited about automation, where we see excellent potential to build on our in-house capabilities with unique automation development expertise in China.

Turning to the 4 pillar of our strategy, I want to provide an update on the impact of our Ignite operating system that is building enterprise capabilities and driving a culture of accountability and execution excellence. Ignite had a significant impact on the business on both the top and bottom lines during the quarter and is poised to deliver compounding benefits in the years to come.

Our strategic pricing capability delivered approximately 200 basis points of pricing in Q2, putting us on a path to exceed our initial full year goal of 100 basis points.

We also reached an important milestone during Q2 and with the tariff task force achieving full mitigation of the incremental tariffs that began in late spring. The combination of strategic manufacturing moves and targeted price adjustments have now fully offset the operating profit impact of these tariffs.

This task over also helped us build a playbook for addressing trade and geopolitical challenges, which has been a critical resource in navigating the current Middle East conflict. Our digital initiative is driving accelerated growth of our e-commerce platform delivering ease of use for customers and lower cost per transaction for agent.

In Q2, new digital orders grew 9%, including more than 20% ex China. Ignite has transformed our supply chain capabilities, making it a competitive advantage. A recent example of this is our quick response to the logistic challenges and material shortages arising out of the conflict in the Middle East.

Ignite is providing incremental procurement savings and supply chain resilience that gives us confidence as we work to absorb inflationary cost pressures during the remainder of the year.

On the M&A front, we were excited to announce the Biocare acquisition in March. I am confident that the robust long-term growth, strong strategic fit and opportunities for synergy realization make the financial returns on this transaction highly attractive.

Ignite is driving our pre-closed preparations for the Biocare integration, ensuring we are ready to hit the ground running as soon as the transaction closes. I look forward to welcoming our new colleagues Agilent later this year.

While it's been tremendously satisfying to see Ignite's impact to date, there's a lot more to come. This includes our push for manufacturing excellence, where we are being front-footed in building resilience across our business and setting up the organization to deliver durable long-term growth.

We built our AI-enabled supply chain control tower to create greater prediction and adaptive calibration of our supply and demand plans, leading to inherent resiliency faster issue response times and much higher scheduled attainment.

After implementing this new capability, we have seen continued meaningful improvement in scheduled plan attainment, order conversion ratios and overall cycle times. We have also reconfigured our operations organization to a greater depth in planning, lean manufacturing and digital engineering.

All of this contributes to improved delivery, greater agility and optimize cost structure. That, in turn, reduced manufacturing overhead by more than 50 basis points versus last year.

The 9,500 ICPMS we are featuring at ASMS is a great demonstration of how our Ignite operating system is accelerating our innovation expediting the launch by a full quarter.

Our optimized approach to innovation, enabled faster decisions and more focused capital allocation. We clearly established the 9500 as the top priority and dynamically reallocated resources to accelerate time lines and outcomes.

We reinforced this through focused discipline, cross-functional execution across sales, R&D and manufacturing teams.

The teams work closely to accelerate technology transfer and improve yields pulling our production readiness forward. Last but not least, AI is a key FY '26 enterprise focus area for us. AI has the potential to be a tremendous growth driver for the life sciences industry.

Pharma customers are leaning into AI to accelerate drug development and reduce the odds of expensive late-stage failures. There is a growing need for a large-scale multimodal data sets to train AI models, which will require significant investments in the wet lab.

By moving the needle on drug development ROI, AI holds the promise of putting our largest customer constituency on a better footing and a higher number of approvals coming through the drug pipeline should be a strong tailwind for us, given our leading position in downstream manufacturing QA/QC workflows in light of the regulatory and patient safety aspects of commercial scale drug manufacturing, we believe this part of the value chain will meaningfully benefit from AIU's upstream.

Beyond being accretive to our top line in the medium term, we are also deploying AI within our own business. I look forward to sharing more details on our AI efforts very soon. Now let me share some additional details on our Q2 results, starting with our end markets.

As I mentioned earlier, pharma grew 6% this quarter, marking the fifth consecutive quarter of growth in the mid-single-digit to low double-digit range. Within pharma, biotech grew low double digits for the third consecutive quarter, while small molecule grew low single digits.

Our GLP-1 momentum continues delivering about 20% growth year-to-date with a robust contribution from the analytical lab business in the second quarter. We also remain engaged with our large pharma customers about their plans to restore operations to the U.S.

We continue to expect initial orders at the end of our fiscal year with revenue starting in FY '27. CAM grew 8% and diagnostics and clinical grew 11%, both exceeding expectations. Environmental forensics delivered 13% growth compared to low single-digit guide with the upside in forensics, as I mentioned earlier.

Environmental delivered low single-digit growth against a challenging double-digit year-over-year compare. Food, our second smallest end market declined 3% with softer-than-expected results in Asia due to falling delays in China and India.

Academia and government our smallest end market declined 5% in line with expectations. Most importantly, our customer-centric approach is working and we continue to win against the competition in all major geographies with share expansion, again, validated by industry market share data.

Turning to updated guidance. building on an excellent second quarter and with the outlook for end marks broadly consistent with our original expectations, we now expect core growth of 4.5% to 6% for the full year.

At the midpoint, this represents an increase of 30 basis points versus our prior guide. We are also increasing our expectations on the bottom line. with updated EPS guidance of $6 to $6.10 for the full year, an increase of $0.08 at the midpoint. And with that, let me hand it over to Adam, who will provide additional details on the quarter and our financial outlook for the remainder of the year.

Thanks, Tori, and good afternoon, everyone. In my comments today, I will provide additional details on revenue in the quarter as well as walk through the income statement and cover other key financial metrics. .

I'll then cover our updated full year and third quarter guidance. Starting with Q2. Revenue was $1.83 billion. On our core or organic constant currency basis, we posted growth of 6.3%, while reported growth was 10%. Currency had a favorable impact of 3.7% and a slightly larger tailwind than our February guidance.

At a business segment level, AMG revenue grew 11% in the quarter on a core basis, well ahead of expectations. Growth was again led by double-digit performance in spectroscopy. That business continues to see strong demand for its market-leading tools to support semiconductor production at the fabs and with their downstream supply chain.

During the quarter, AMG also benefited from the TSA airport security contract that Parag discussed earlier. LDG revenue grew 9% on a core basis, nicely ahead of expectations.

Low double-digit growth in LC and LC/MS and in our cancer diagnostics business drove the upside. We also saw high single-digit growth from specialty CDMO which we recently rebranded as our Therapeutics division.

We continue to expect our Advanced Therapeutics division to deliver mid-teens growth in fiscal year 2026. We with our production schedule set up to deliver a pickup in growth in the second half. Notably, we recently achieved mechanical completion of our Train C build-out, positioning us well to begin revenue generation at the new facility next spring.

Our cancer diagnostics business, including our clinical pathology products and companion diagnostic services grew low double digits this quarter.

This growth was led by the performance of our new Omnis family, which continues to gain traction. We also saw strong double-digit growth in pathology reagents, driven by our expanding instrument installed base.

This business is performing extremely well and will get even stronger with the addition of Biocare's clinically focused antibody menu.

ACG grew 2% in the quarter on a core basis, in line with guidance. Due to Lunar New Year timing and a challenging consumables compared driven by pre-tariff stocking in China last year.

Ex China, ACG grew at the high end of mid-single digits and consumables grew high single digits. On a geographic basis, we saw our strongest results in the Americas with 11% revenue growth.

We saw broad high single-digit plus results in all end markets, except academic and government. Europe, and Asia ex China revenue grew high single digits with excellent diagnostics momentum in Europe, while pharma and semiconductor investments were strong in Asia, ex China.

China declined 9%. And a bit more than we had expected. On a first half basis, China was roughly flat, very much in line with our full year guide.

Q2 gross margins were 55% and on a year-over-year basis, gross margins increased by 90 basis points from nice leverage on incremental volumes, ignite momentum and favorable regional mix.

Operating margin was 26.4%, an increase of 130 basis points year-over-year, well ahead of guidance, driven by our healthy gross margin performance and continued realization of Ignite operating system efficiencies.

Moving below the line, we had $11 million of other income, while our tax rate of 14.5% was as expected. Finally, we had 283 million diluted shares outstanding in the quarter, in line with expectations.

Putting it all together, Q2 earnings per share were $1.49 and grew 14% and a reflection of our superior execution and operational excellence.

Now let me turn to cash flow and the balance sheet. Operating cash flow was $277 million in the quarter and we invested $76 million in capital expenditures.

Q2 cash flow reflects a tax deposit that will largely be offset by a related refund anticipated around the end of the fiscal year. We purchased $65 million in shares and paid $72 million in dividends in Q2, and we ended the quarter with a net leverage ratio of 0.7 turns, maintaining our strong balance sheet.

Now let me share some additional details on the updated outlook for the year and the guidance for the third quarter. Based on the strong performance, we now expect fiscal year 2026 revenue to be in the range of $7.39 billion to $7.49 billion on a reported basis.

This range represents growth of 4.5% to 6% on a core or organic constant currency basis, an increase of 30 basis points at the midpoint versus the prior guide. Currency is now expected to be a 1.8% tailwind during the year.

Turning to our end markets, business segment and geographic growth assumptions. We continue to expect high single-digit growth in pharma in a low single-digit decline in academic and government.

Based on strong results in the first half and our outlook for the remainder of the year, we are raising our expectations for chemicals and advanced materials as well as diagnostics and clinical from mid-single-digit to mid- to high single-digit growth.

With our momentum in forensics providing upside, we are raising our guidance for environmental and forensics from low single digit to low to mid-single-digit growth.

In food, we are lowering our guide from roughly flat to a low single-digit decline due to delays in government funding in China and India and inflationary headwinds related to the Middle East conflict.

We now expect mid-single-digit growth for all 3 business segments, increasing AMG from low single digit to mid-single digit to reflect the strong Q2 performance.

Regionally, our only update to our prior full year guidance is in Asia ex China, where we are increasing our assumptions from mid-single digits to mid- to high single-digit growth.

Moving down the P&L. We are also raising our full year operating margin expansion target to 85 basis points at the midpoint of our revenue guidance, driven by continued operational momentum.

Our expected tax rate is unchanged at 14.5%, and we now expect $31 million in other income and 283 million diluted shares outstanding for the year. Fiscal year '26 earnings per share are now expected to be between $6 and $6.10, an increase of $0.08 at the midpoint, representing earnings growth of 7% to 9%.

For your modeling, let me share some additional expectations we have incorporated into our guidance for the year. While the Middle East conflict in the demand for memory chips, puts upward pressure on our costs.

We are confident that the Ignite operating system will deliver meaningful efficiencies and help absorb those inflationary impacts within our H2 outlook. There is no change to our operating cash flow range of $1.6 billion to $1.7 billion, and we are now expecting to invest approximately $450 million in capital expenditures, down $50 million versus our prior guidance.

Now moving to the third quarter. We expect our reported revenue to be in the range of $1.83 billion to $1.85 billion. This represents growth of roughly 4.4% to 5.9% on a core or organic constant currency basis, while currency is expected to be approximately a 0.6% tailwind.

And our guide assumes 283 million diluted shares outstanding in the third quarter. EPS guidance for the quarter is $1.48 to $1.50, representing growth of 8% to 9% while our second half core growth guidance is roughly similar to our first half performance, it comes against the backdrop of increasingly tougher comps.

The sequential quarterly 2-year stack growth implied by our guidance demonstrates our accelerating momentum through the year, as shown on Slide 10 of our presentation.

Finally, I wanted to be clear that our guide does not include the impact of Biocare nor any benefit from potential tariff refunds. With that, I'll turn the call back over to Port for closing comments.

Thanks, Adam. .I couldn't be prouder of the way our team executed in the second quarter, once again demonstrating our ability to perform in all market environments. In the near term, our improved full year outlook reflects healthy demand in our key end markets and stronger underlying operational performance across the business.

That includes pricing realization, productivity gains and replacement cycle momentum. Longer term, our broad and diverse portfolio across end markets and geographies provide differentiated resiliency and enables multiple bus to success.

We're a market-leading services team that cultivates unparalleled customer intimacy, a deep bench of talent, an impressive cadence of innovation launches and our Ignite operating system that has come into its own and is delivering compounding results.

Agilent will continue to sustainably outperform the competition. Before we close, I want to take a moment to thank our customers for their trust and express my gratitude to the adjuvant team for delivering a fantastic results. And with that, I'll turn the call back to Tejas for the Q&A. Tejas?

Thanks, Parag. Karina, can you please share the instructions for the Q&A? .

[Operator Instructions] Your first question comes from the line of Vijay Kumar with Evercore.

For Kraton on a fine print here. Maybe my first 1 on -- if you look at some of the moving pieces here in CAM was standout for us. .

On the instrument side, LC/MS, GC, double digits for a standout. But it looks like overall, instruments, high singles implies your cell analysis was still down. So maybe talk about is that ANG?

What are you seeing in A&G trends? And on the CAM side? I know with the Middle East situation, there's been some talks about end market concerns. Maybe talk about how can progress and your confidence in that CAM outlook.

Great. Thanks, Vijay. And first of all, we're delighted with the results of really strong results from the team where we're taking share across the board.

And Ignite really running on all cylinders. But CAM was 8% growth in Q2. That beat our mid-single-digit guide, plus mid-single-digit guide. We're mid-single digits in chemicals, high middle single digits and low double digits in Advanced Materials.

And we had actually low teens CAM growth ex China. So after a strong high single-digit growth in H1, we're going to see how it plays out with the Middle East going forward on it. And it's really driven by a number of things.

I think increased CapEx spending likely returns late in the calendar year, but we're seeing that continued investment in the semiconductor space. That continues to be a real sweet spot for us. And what we're seeing is also is substantial leadership in our key platforms.

Now when you look ahead and you look and see what are multiple factors. I think the chemical sector driven by demand from downstream material industries like semiconducers and batteries continued investment in semiconductor and investment in supply chains. So overall, really strong across the board.

And we don't read too much into the Middle East in terms of what's happening. We're going to see how that goes. But we're seeing good momentum in our funnels continue on the comp side.

And I think on the academia and government side, I think you had a question in there. We expected a decline. We have a decline of minus 5% in Q2. Americas was revenue was flat. Americas Instruments comps start to ease actually, and we see return to stability on that side.

And you see that the OMB requirement to fully redistribute appropriate funds is starting to happen. So overall, we see it continuing as a kind of a steady state and we see ongoing kind of, I would say, ongoing muted in ANG. But overall, I think, an extremely strong result.

That's helpful. And maybe Adam, 1 for you on the margins. Pretty impressive margin print here. It looks like volumes, volumes were slightly above the high end of your guidance, but the leverage was pretty impressive. How much was pricing? Maybe talk about what drove margins and how you're thinking about progression here? It looks like Q4 we're looking at a pretty big quarter for margins, maybe visibility into Q4 ramp?

Yes. So thanks, Vijay. A couple of points. So the margin beat this quarter was driven by a couple of things. One, Ignite, and I say that in the broadest sense of the word, so that includes the pricing. So you heard over 200 bps of pricing in there as well as execution excellence from the team and structural improvements we're seeing, we talked about in the script, specifically in operations as well as productivity from our procurement team.

So all of the Ignite savings you're really starting to see run through the P&L now. Then there's volume leverage. The other piece I would point out is the geographic mix as we had a larger skew in Q2 toward the Americas, which helps our margin.

And then if we look ahead, what you see is 2 things. One, you see a flat sequential Q2 to Q3, and that's really driven by a couple of pieces. One, you see the favorability that we have in IGNITE.

And once again, that's the broadest sense of the Ignite operating system there. And then that's partially offset by some inflationary pressures that we're seeing and geographic mix kind of returning back to a little bit more of a normalized mix. But then what you see is the expansion happening again from Q3 to Q4. And up about 220 bps, which is very normal from what we've seen in previous quarters.

And when I kind of look at it and take a step back, our H1 to H2 ramp is about [indiscernible] from an operating profit perspective. And this is very much normalized what we would normally see H1 to H2. So the ramp here is fully in line with historical norms. So we feel very confident about it and really excited about the second half of the year.

Your next question comes from the line of Patrick Donnelly with Citi.

Maybe 1 on the specialty CDMO, I guess it's advanced therapeutics now. It sounds like high single-digit growth in the quarter, pretty healthy there. Obviously, talking still about the mid-teens. I think you talked about the production schedule has this uptick in -- can you just talk about the visibility? Is that all kind of contracted and covered at this point? It sounds like Train C next spring, so maybe not this year.

But just talk about the visibility on the second half uptick of that business. What you saw in the quarter how much go-forward revenue is covered by some of the contracts that you have in place here?

Yes. Thanks, Patrick, and thanks for the question. So I'll start off and I'll hand it over to Simon for more detail. So just to kind of ground people, we're a specialty CDMO business focus on sRNA, peptides, GLP-1s and of course, high potency -- and the Q2 growth at the high end of high single digits was within expectations with batch cadence resulting in a normal quarter-to-quarter variance.

We see that over and over again. we continue to see -- expect to see mid-teens growth guide for FY '26 based on our production schedules and demand dynamics. But as Simon some more color on the trains, et cetera.

Yes. Thanks. This is Simon. Just to add a little bit more color there. The short answer to the question is we've got really strong visibility in the second half of the year. And the phasing of production schedules point towards very strong year-over-year growth in the third quarter. .

And in the fourth quarter, we've got a tough compare in the fourth quarter, but it all adds up still to mid-teens growth for the year is what we're projecting. And then as you heard already in the script, we had a major milestone here in the second quarter with the mechanical completion of Train C.

Very pleasing to see that, and we remain on schedule there. for go live in the spring of 2027. And we're a little further out there with demand into 2027, but some very encouraging signs already with Train C in particular, we've got strong line of sight to demand there for the bulk of FY '27. But as is always the case to further out you get in the timing, the production schedules and the bookings, they proceed accordingly.

Okay. That's really helpful. And then Port, maybe 1 of the instrument strengths, just following up there. Nice to see low double-digit growth in LC/LCMS, can you just talk about what markets you're seeing that strength in? I know you guys have the replacement cycle going. How much of it is replacement cycle, share gains -- what are you hearing from the field on the instruments? And how durable is this kind of low double digits for the LCS program.

Yes. So look, I think we continue to see strong momentum on the TMS and GC low double digits for both businesses. And we expect the LC replacement cycle to be a 200, 300 bps tailwind to the LC growth.

And we've seen that normal trajectory of the replacement cycle, but continued momentum and funnels look really strong. I will say it was actually the best market share data I've seen in what we're seeing. So not only are we replacing, but we're also taking share in competitive accounts, which, again, continues the momentum.

And if you kind of break it down I think it's really driven by 3 factors. I think underinvestment fleets of age, you see U.S. and Europe CapEx conditions are favorable. And of course, customer-focused innovations are compelling reasons to replace -- so we expect that to continue.

And we're seeing it across all markets. And I really want to call out our GC replacement cycle as well. It sometimes under talked about. But on our GC, we're low double-digit growth -- it's a longer-lived nature of the GC. You see a typical life span of 10 years, and we see relatively also replacement cycle will drive more moderate annual uplift over a longer period of time, but very, very compounding and we expect that to be 100 bps of the tailwind.

So instruments are really good funnel is really strong. The CapEx are being released and none of this will be possible without a commercial team that can really execute on these innovations.

Your next question comes from the line of Tycho Peterson with Jefferies.

Pat, I want to provide a little more on the Semi strength. This is something you haven't talked a ton about, but maybe just quantify the size of the semi business today, I think you're more levered to logic been memory, if that's right.

But just talk a little bit about sustainability of double-digit growth in spectroscopy, how we should think about new fab construction and pricing power, I think there seems to be a fair amount of pricing power in this market right now.

Yes. I mean there's a really strong pricing power. And of course, we have a new system being released at ASMS that's going to start its own replacement cycle in this area, which is driven by the technology with new capabilities. .

Our advanced materials market -- if you split it out on the chemical and Advanced Materials, semiconductor is about 30% of that market as we look at it. And we're seeing continued growth on it.

And we're seeing it in the fabs, but also in the high-purity chemical companies around fabs that need these systems as well to do it. So we're seeing it across the board. We've actually saw that over a number of years, Tycho, you see CapEx being deployed.

Our systems are being placed inside and then, of course, are qualified with the fabs going forward. So as that cycle continues to move, you're going to see that business continue to grow on it. So we're very optimistic.

And then on Chemical, you did kind of buck the trend here. I know Vijay kind of asked the question earlier, but are you kind of not seeing what others are on the chemical side because of the GC replacement cycle? Is that kind of the right way to think about it?

Yes. I think it's a mixture of both. I think we've seen strong CapEx demand. The GC replacement cycle is certainly a tailwind we're seeing. We're -- and very, very competitive with the new innovations that we bring across, but we haven't seen a slowdown in that area.

People are still have aging fleets to need them replaced and so on. And of course, it's kind of a bifurcation. So chemical sector is driven downstream on the materials on semiconductors batteries and advanced polymers. And of course, we continue to see that continue under replacement momentum after several years of underinvestment in CapEx. So we don't see that stopping anytime soon.

Your next question comes from the line of Puneet Souda with Leerink.

First one, just given the -- if I could continue to follow up on the semi side and the CAM side. Can you elaborate how CAM improved throughout the quarter your confidence here is this more semi-driven or instrumentation versus the overall improvement in chemical.

Obviously, there was a -- I mean, the start of the conflict, but then the conflict has eased a bit, maybe just talk about how the trend line has been and what gives you will continue more confidence in that core oil and gas business as well?

Yes. Look, our momentum has been really, really steady and increasing. And we are very, very pleased with the high single digits in Q2. And if you think about it, our differentiation in terms of the technologies are driving share gains in Advanced Materials, where we saw low double-digit growth.

And of course, inflationary pressures from the Middle East may affect capital spend but we expect a strong recovery to be even accelerated before that, but we're not seeing that in our numbers.

And just to kind of ground people, we're #1 in the can market by far. We have substantial leadership positions in GC and CMS and spectroscopy and we're pleased with the really strong performance. Now -- can customers tend to be more cautious in a dynamic macro environment. So we're watching closely on the inflationary pressures that may have on our customers -- but I would say, overall, if you pull it together, there's a degree of prudence embedded in our H2 outlook. We growth accelerating from high single digits to mid-single digits in H2, but still very robust.

Got it. And then a broader question for you on the Agilent differentiation. You're clearly outperforming versus rest of the broader tools market, the diversified market diversification beyond health care seems to be helping you.

But could you take a minute and provide a view into the pharma and the biotech business, how are you serving those customers from discovery versus more preclinical?

Are you positioned more into the later stages of drug development that is actually helping as capital funding is returning into the biotech -- and maybe if you could along those lines talk a little bit about the biotech follow-on and capital raises. How is that flowing into your business?

Yes. So I'll take the first 1 in general. I mean what's different? I think you see these numbers, and you see the 10 bps year-over-year operating margin expansion, 14% EPS growth. .

You're really seeing driven by a number of factors. -- replacement cycle continues to grow, but winning teams and being able to take market share in that environment. Innovations are really resonating infinity Pro IQ LCMS and the upcoming launches at AMS will only drive that forward.

And the share gains in this environment is really important, right? So that drives a lot of capacity as well. And I would say services remains a key differentiator for us.

Our scale around services is super important. But when you look at our kind of operating system at Ignite, and I do want to take a minute on this one, it's a compounding effect that you see in the numbers this quarter, all 3 metrics above. And this is not a coincidence.

And what happens when transformation is done right when capabilities are not just piloted or incubated but deeply embedded in the system. That's what you're going to see compound over time.

On the pharma side, I think what you're seeing is really strong replacement cycle. You're seeing, of course, we have a tailwind with GLP-1s in those areas.

And of course, the innovation is resonating and you look at the long-term drivers in pharma, you see distribution of supply chains, expansion of biologics, and of course, you see many other factors really helping. But what I would say is that we're very much downstream in QA/QC.

We're in development as well. So we're right in that sweet spot for reshoring replacement cycle and any capacity or supply chain resilience around. So feel really good about that.

Of course, midsized biotech is a little bit challenged. As you see, but you see the number of deals that are happening from an investment point of view, and we expect that to improve as well. So overall, really, really positive.

Your next question comes from the line of Dan Brennan with TD Cowen.

Congrats on the quarter. Maybe just on Diagnostics. I mean, super strong quarter. You highlighted the Omni and some other things. I know you bumped the guide a bit, but it does imply a decel versus what you just printed. Like was there anything unusual in this quarter on the Omni that's not going to repeat? Or just kind of walk us through a little bit because it was so exceptional. .

Yes, it was exceptional, Dan. Thanks for the question. We grew 11% in the quarter, well ahead of mid- to high-digit guidance on the side and very durable in that way. But I'm going to bring in Simon to give more color on what he's seeing on the Omnis, et cetera.

Thanks, Par. Simon again here. I think in diagnostics, we've got 2 or 3 dynamics going on. First and foremost, we've identified this as 1 of our enterprise growth opportunities. And we've been focusing and investing there accordingly over the past 12, 18 months now. the Omnis family continues to ramp very well.

We're very pleased with the trajectory that we're seeing there. across all regions. And we're also now starting to see similar growth in our assay attachments. It was a very pleasing quarter from that perspective because we saw double-digit growth in both instruments and assays. We also continue to do very well in companion diagnostics. We've got great capabilities there.

And we're seeing a lot of demand in modalities like antibody drug conjugates. So across the spectrum of our pathology and companion diagnostics business, I think we've got strong execution -- and as Farid mentioned, we've got durable market dynamics and a bit of a tailwind right now.

Perfect. And maybe as a follow-up, you highlighted that slide in the deck, maybe it's Slide 10 on the -- so you're bumping the guide, but you are saying, hey, comps get harder, but we're up against that, and we feel good.

Can you just elaborate a little bit on within the guide? Because people stare at that? Like where do you think, ideally, you've left a little cushion because the comps are getting more difficult in Wall Street and toxic cable on beats. So just walk us through a little bit more on the guide and how we should think about the back half of the year.

I'm going to start off and hand it over to Adam. When you see the top line strength, the confidence in Ignite drives incremental outlook for revenue growth and margin expansion and EPS. So increase on the core growth side, 10 bps increase on the year-over-year margin expansion and EPS up $0.08.

So I think the strong H2 results are really creating momentum out of it. But Adam, do you want to give some more detail about what we're seeing and what we're taking into account.

Yes. So thanks for the question. I would look at it a couple of ways. So first of all, One, as you said, the compares get more challenging in H2, but you do have -- so you do have to look at that stacked growth view.

But then when I think about it, the 4 kind of drivers that are going to -- that give me confidence going into it is one, the execution excellence. Two, you see we have market momentum; three, the structural improvements that we've embedded through Ignite, they're in place and they're going to continue to compound.

And then 4 is innovation, and you see that coming out shortly. And so those 4 are going to help kind of drive us through the second half of the year and what gives me confidence. And then when I think about the guide, I'll just give you kind of how I think about kind of potential upsides and downsides for the full year to guide.

Recall the last time we talked about it, there were kind of 3 -- the first being small and mid-cap, the second be academia and government and the third being a China stimulus.

Well, China stimulus is now looking like the orders will happen toward the end of the year, but the revenue will come in the first part of next year. So we're taking that as an upside or downside off the table.

And then where we would be left with is a small and mid-cap and what like Port talked about, is we're seeing all the green shoots there, and it just has to convert into revenue. Second is academia and government continued to stabilize. We saw it in the U.S. We see the right signs there.

So there's -- we're cautiously optimistic as well there. And then you see the Middle East start to normalize, that's a potential source for upside as well as tariff refunds. So they're not embedded in our guide right now, but if we get a tariff refund,

that can also help. So overall, I just want to say, we're confident going in the second half of the year and the stack comps kind of tell the story.

Your next question comes from the line of Michael Ryskin with Bank of America. [Operator Instructions]

Hopefully, you guys hear me. I want to follow up on China. I think you called out a 9% decline in the quarter. Maybe first half is in line, but just anything specific to call out, you talked about slower funding delays in funding in China. Anything more specific than that? Or is it really that focused. .

Yes. Thanks, Michael. So we -- first of all, I think we see the China market as stable doing around $300 million order. We saw larger-than-expected softness during to Lunar New Year, but H1 was flattish. .

We remain confident in our flattish guide. I think when you look at it, I think we are under-indexed to DX and Pharma and over-index to Applied as a company in China.

But I think biotech is still as overall is still a small car of the overall China pharma market with nicely growing in high teens, which was a really bright spot for us, which shows the innovation that's happening in pharma et cetera, on it.

And when you look at China overall, we're making investment in innovation. We're very highly committed to China. The speed of innovation there is really important. And of course, the stimulus will come in at the start of next year.

And I think, overall, I think we continue to be optimistic. We expect mid-single to high single-digit growth for the long term. And the reasons why we feel that actually is not just because what we're seeing currently, but we have the largest installed base, the pace of innovation, everybody can read the details on that, and we're fully aligned with the China 15, 5-year plan around AI, health care green and sustainable developments and, of course, new regulations around PFAS.

So overall, I would say, pretty muted in the quarter, but I would say very, very stable, and we're continuing to have a great team and really, really working with our customers there.

Okay. Okay. And maybe for my follow-up. I think on the last question, you kind of talked about U.S. academic. -- stabilizing, if I understood correctly, as 1 of the areas of upside for the year. If you could talk about AG a little bit more globally, including China, just sort of what you're seeing there and what the assumptions for the rest of the year are?

Yes. I mean China ANG is very soft in the quarter on tightened and delayed government spend leading to lower academia stimulus. So I think that's what we're seeing. As I said, Americas was roughly flat. I think everywhere else is reasonably muted. In Europe, actually recovering on key markets, we're seeing reasonable business at Germany, U.K., Spain.

And then I think the Ukraine war impact is now budgeted in. And I think overall, I think just to put it into context, U.S. is about 3% to 4% of sales. And there's a lot of uncertainty around multiyear grants and higher concentration of funding, but of course, you can see that we're working through that at the moment.

[Operator Instructions] Your next question comes from the line of Dan Leonard with RBC.

I'll keep it to one. I have a question on spectroscopy. What is the replacement cycle look like there, especially on the back of a double-digit growth rate. So you have a new product launching, you expect -- it's going to drive a replacement cycle. Is that going to accelerate the growth rate further? And what would be the -- just kind of the framing around that?

Yes, I'm going to bring in Mike Sang here to talk about that spectroscopy business.

Yes, ore. Again, thank you, Dan, for the great question. You've seen tremendous momentum. We're seeing the momentum from multiple fronts. First of all, obviously, the momentum in semiconductors and also data center. A lot of capacity build up. This is a global base. So very good excite.

There's also think about the very diverse upstream downstream applications, so a lot of pets. But there's also a lot of pent-up demand because we know in the last several years, the pace cycle is kind of muted.

But we see now because of the new demand, are we seeing acceleration I think this is just the beginning. I think we had a lot of momentum moving ahead. I think a lot of for us to expect.

And we also really want to highlight -- we're a very trusted partner by the customer. We are the absolute leader in the market -- so -- and also now with the new innovation product coming out of. So multiple funds, had exciting momentum, and I think this will continue on.

Our next question comes from the line of Luke Sergott from Barclays.

Great. This is pretty complicated there with that Star VI. Just a follow-up here on the margin commentary. Can you -- you guys had a really strong quarter like Doc was talking about on gross margin, you in the volume leverage, but then you're talking about some increased investment there, like pull forward on the ICPMS launch.

Like can you just talk about where -- how much is you're being pull forward on these investments and how that kind of shakes out? Just trying to think about from an exit rate margin opportunity and then as you kind of roll forward into a more normalized business environment through next year?

Yes. So let me take this one, Luke. So I think the pull forward in investment that you're talking about, is really was a pull forward in the innovation and how we focused our investment.

So it wasn't necessarily a pull forward in investment. The investments were always planned as we talked about at the beginning of the year, we were going to take some of our margin improvement and best in innovation.

So it really wasn't a timing issue around the investment itself. And then if you think about for the full year, we're guiding a full year increase of about 85 bps at the midpoint. And once again, that incorporates several things. It's the structural improvements from Ignite, the volume leverage that we expect to get offset by inflation, and that's inflation kind of in the broad sense as well as some of the logistical Middle East costs in the AI and chip costs that we're seeing as well as then those growth investments.

And so to your question, it was always incorporated into our initial guide, and we're raising our margin guide for the full year, up 10 bps at the midpoint.

Our next question comes from the line of Catherine Schulte with Baird.

On food, just given that was the 1 part of the guy that came down, you talked about delays in China and India. Can you just unpack a bit what you're seeing there and how you expect that to play out going forward?

Yes. So I think -- thanks for the question. The food market business declined minus 3% in Q2, and that was against the mid-single-digit guide really around delayed government spending in Asia was the primary driver of the shortfall versus expectations.

American Europe grew together in high single digits during the quarter. And for FY '26 to reduce guidance from flat to low single to negative low single digits. We're set up, I think, in FY '27 to see the China stimulus.

But the China stimulus from last year really set up a tough comp for us in FY '26 and slower government funding -- and of course, pressure from the Middle East conflict on food shipments and testing in Asia is an incremental challenge. But I would say, overall, what you're seeing driving this market for us is that we're ever-changing food safety regulations. They're not going to change.

You're going to see customer demand continue for healthier, sustainable alternative foods. And of course, contract lapsing increased sample volumes -- so I think that's where we're right in our sweet spot with verified workflows. Emerging PFAS in food is going to continue. It's actually a really strong growth area over time. and of course, protection of core food safety and quality testing. So overall, a challenging quarter, but I think the long term looks very strong.

Your next question comes from the line of Casey Woodring with JPMorgan.

Congrats on the quarter. Yes, I'll just ask my 2 upfront. First is just would be curious to hear how much that forensic TSA one-timer, you called out was in the quarter? And was that baked into the guide?

And then second, on chemical within CAM, not to beat a dead horse, but would also be curious to hear if the strong CapEx in chemical is limited to the U.S. or if that's more broad-based in Europe and Asia as well and maybe just unpack what you're seeing ex U.S. and that business and what your chemical exposure is ex-U.S.

Yes. So first of all, I'm going to bring Mike in to talk about the TSA business because it's something that is -- we're really, really excited about, and I'll come back and I'll talk about CAM.

Yes, definitely. TSA, the this solution is highly differentiated. And it provides unpresent positions, but also the efficient throughput. We have been successfully working with TSA and we have a deployed the first contractor ahead of the FIFA Cup 2026. .

The successful deployed the first contract and a continuous collaboration really position us in a very strong position to future tenders. So overall, I think this is exciting new opportunity for us.

Yes. And we called out a $9 million TSA win last quarter with forensics. We recognized $5 million of that this quarter. And we're really well positioned to continue to secure larger aviation security tenders as we go forward.

And it's important to also kind of continue -- that's going to have continued tech refresh in it as well. When you go back to CAM as well, it's not 1 region. We're seeing it across all regions. So I think we feel really strong about our funnels as well geographically, too.

This is all the time we have for questions today. I will turn the call back over to Mr. Tejas for closing remarks.

Thank you, everyone, for joining us. We look forward to speaking with many of you in the weeks ahead. .

This concludes today's call. Thank you for attending. You may now disconnect.

Good morning, everyone, and welcome to Agilent's 2026 Annual Stockholders Meeting. We're glad you can join us today. My name is Bret DiMarco, and I am the Senior Vice President, Chief Legal Officer and Secretary of the company. I will be the chairperson of today's meeting. I will also be acting as Secretary of today's meeting.

Also present at today's meeting today are members of the Board of Directors, Akinola Marinho of Computershare and the Inspector of Elections of today's meeting; and [ Lindsay Bazzali ] and [ Brittany Walrek ] from PricewaterhouseCoopers, the company's public registered accounting firm. Today's meeting is being webcast live and recorded. The recording will be available on Agilent's website following the meeting.

Let's get started by calling Agilent's Annual Stockholders Meeting to order. It is now 8:02 a.m. Pacific Time, we are conducting the meeting in accordance with the company's bylaws. We have four business items on the agenda. They are: one, to elect four directors to 3-year terms; two, to approve on a non-binding advisory basis, the compensation of Agilent's named executive officers for fiscal year 2025; three, to ratify the Audit and Finance Committee's appointment of PricewaterhouseCoopers as our independent registered public accounting firm for the 2026 fiscal year; and four, to approve an amendment to Agilent's third amended and restated certificate of incorporation to declassify the Board of Directors over a 3-year period.

Based on historical trends and as noted in the proxy statement, we have not set up a Q&A line for stockholders listening to the live webcast as it has not been used by stockholders in the past. As also noted in the proxy statement, Stockholders of record attending the annual meeting in person will have an opportunity to ask questions during the annual meeting. There are no stockholders in attendance in person at today's meeting, so we will not have a Q&A session. If you have a question that is not addressed at today's meeting, you can contact us by visiting the Investor Relations page on the Agilent website.

All right. Moving on to our agenda items. Agilent's Board of Directors has supported Akinola Marinho of Computershare to serve as our Inspector of Elections for this year's meeting. Akinola has taken and signed an oath as Inspector of Election. This document will be filed with the minutes of today's meeting. Computershare has certified that starting on February 6, 2026, the proxy materials or a notice of the availability of the proxy materials were mailed to all stockholders of record as of January 21, 2026.

Copies of these proxy materials and related certificates will be attached to the minutes of today's meeting. As the Secretary of the company, I have in my possession a certified list of stockholders as of record, as of January 21, 2026. January 21, 2026, is the record date set by the board for the determination of eligibility to vote at today's meeting. The Inspector of Election has informed me that as of January 21, 2026, there were 282,839,637 shares of common stock outstanding, each entitled to 1 vote. Akinola, would you please report on the shares represented at the meeting?

My examination of the proxies on file shows that they're present by proxy, 250,281,785 shares of common stock all of which are represented by Bret DiMarco. The shares present by proxy represent approximately 88% of the shares of common stock outstanding and entitled to vote.

Thank you, Akinola. Please prepare and file a written report on the final count of shares in attendance at the meeting. Since we have the majority of the outstanding shares represented at the meeting, I declare that there is a quorum present and that we may proceed with the business of the meeting.

Now I will review each of the items that stockholders have been asked to vote on then I will ask Akinola to report on the preliminary voting results.

There are no stockholders in attendance and in person and as noted in the proxy, stockholders listening to the live webcast cannot record votes. The preliminary voting results are based on proxies received in accordance with the instructions provided in the proxy materials or notice of the availability of the proxy materials mailed to stockholders.

The first item is the election of directors. This year, you have been asked to vote on the reelection of four incumbent directors to serve for a 3-year term expiring at the annual meeting in 2029. Judy Gawlik Brown; Sue H. Rataj; George A. Scangos, Ph.D.; and Dow R. Wilson. The biographical information on the nominees and their qualifications to serve as a director are contained in your proxy materials. As set forth in the proxy statement, the Board recommends that you vote your shares for each of the nominees to the Board.

The second item of business is an advisory vote of the stockholders to approve the compensation of Agilent's named executive officers for fiscal year 2026 (sic) [ 2025 ]. Their compensation is described in the proxy materials. This advisory vote is nonbinding on the company. However, the Board of Directors values your opinions and will consider the outcome of the vote in establishing compensation philosophy and making future compensation decisions for the company's executive officers. As set forth in the proxy statement, the Board recommends that you vote your shares for the approval of the compensation of Agilent's named executive officers.

The third item of business is to ratify the Audit and Finance Committee's appointment of PricewaterhouseCoopers as the company's independent registered public accounting firm for the 2026 fiscal year. As set forth in the proxy statement, the Board recommends that you vote your shares for the ratification of the Audit and Finance Committee's appointment of PricewaterhouseCoopers as Agilent's independent registered public accounting firm.

The fourth item of business is to approve an amendment to Agilent's third amended and restated Certificate of Corporation to declassify the Board of Directors over a 3-year period. As set forth in the proxy statement, the Board recommends that you vote your shares for the amendment of Agilent's third amended and restated Certificate of Incorporation.

Now I will ask Akinola to report on the results of the proposal to elect 4 directors to 3-year terms.

For the election of directors, each nominee received at least 196,677,563 shares, voted in favor of such nominee. This is 86% of the votes cast with respect to each director.

Thank you, Akinola. Based on these preliminary results, since each nominee has received at least a majority of the votes cast with respect to that nominee. I declare that the nominees have each been elected to serve a 3-year term.

Now I'll ask Akinola to report on the results of the advisory vote to approve the compensation of Agilent's named executive officers.

There were 208,587,202 shares voted in favor of the approval of the compensation of Agilent's named executive officers for fiscal year 2025, as described in the company's proxy statement. This is 92% of the shares present at the meeting and entitled to vote on this proposal.

Thank you. Based on these preliminary results, since the proposal received at least a majority of the shares present at the meeting and entitled to vote on the proposal, I declare that the compensation of Agilent's named executive officers for fiscal year 2025 has been approved.

Now I'll ask Akinola to report on the results of the vote to ratify the Audit and Finance Committee's appointment of PricewaterhouseCoopers as Agilent's independent registered public accounting firm for the 2026 fiscal year.

There were 220,739,641 shares voted in favor of the ratification of the Audit and Finance Committee's appointment of PricewaterhouseCoopers as the company's independent registered public accounting firm. This is 88% of the shares present at the meeting and entitled to vote on this proposal.

Sorry, I think my microphone may have cut out for 1 second. Akinola, I'm sorry, I was having some technical difficulties. Could you just repeat that last paragraph?

There were 220,739,641 shares voted in favor of the ratification of Audit and Finance companies appointment of PricewaterhouseCoopers as the company's independent registered public accounting firm. This is 80% of the shares present at the meeting and entitled to vote on this proposal.

Great. Thank you, and apologies for some technical difficulties. Based on these preliminary results, since the proposal received at least a majority of the shares present at the meeting and entitled to vote on the proposal, I declare that the Audit and Finance Committee's appointment of PricewaterhouseCoopers to serve as the company's independent registered public accounting firm for fiscal 2026 has been ratified.

Now I'll ask Akinola to report on the results of the vote to approve an amendment to Agilent's third amended and restated certificate of the corporation to declassify the Board of Directors over a 3-year period.

There were 227,305,896 shares voted in favor to approve an amendment to Agilent's third amended and restated Certificate of Incorporation to declassify the Board of Directors over a 3-year period. This is 99% of Agilent's outstanding shares of common stock.

Thank you. Based on these preliminary results, since the proposal received at least a majority of Agilent's outstanding shares of common stock, I declare that the amendment to Agilent's third amended and restated Certificate of Incorporation to declassify the Board of Directors over a 3-year period.

In the next few days, Agilent will publicly report the final official results of today's votes. You can review these results through our public SEC filings, which can be found through the Investor Relations page on the Agilent website.

This concludes the business of today's stockholder meeting. It is now 8:12 a.m. Pacific Time. I declare that today's meeting is hereby adjourned. Thank you.

Terrific. Great. Welcome, Day 2 of the TD Cowen Global Healthcare Conference, 46th Annual. I'm Dan Brennan. I follow Tools and Diagnostics. Pleased to be joined here on the stage with the management team of Agilent. To my immediate left, I have Adam Elinoff, who's the Chief Financial Officer; and to his left, Tejas Savant, who's VP of IR. Gentlemen, welcome. Thank you.

Great. I'm going to turn it over to Adam for a brief introduction, and then we'll dive into Q&A.

Sure. So first of all, thank you for having us. Really excited to be here. We had a solid start to the year with high single-digit growth in our three largest end markets, which translated to Q1 4.4% core growth, which unfortunately was impacted by winter weather in the U.S., and that was during the last week of the quarter. Adjusted for the weather, core revenue growth, operating margins and EPS all would have been above the midpoint of our guide.

And so as I mentioned, our three largest markets had strong growth, and that's Pharma, CAM and Clinical & Diagnostics, all with favorable secular tailwinds.

And so in Pharma, you have MFN Clarity, you have GLP-1s ramping, as everybody knows, siRNA modality taking off and then the reshoring, which we have coming in 2027.

Clinical & Diagnostics, we have an aging population and then unfortunately, increasing incidence of cancer, which drives test volumes.

And then on CAM, we see strength in the semis. And that's really driven by AI and memory shortage driving -- which is driving the current semi demand and then also there's reshoring happening there.

The next thing I talk about is our innovations, which are really resonating with our customers. That's the Infinity III, the Pro iQ LC/MS, Altura Bio-inert columns, and they're all driving share gains across our business. So per the ALDA data, Infinity III is driving gains in LC across all major geographies. The GC platform is a definitive leader, and that's just starting its replacement cycle. So that's exciting.

And then the Altura columns are getting a fantastic response from our customers. And then, of course, we're the market leaders in siRNA, and we have our unique capabilities at BIOVECTRA.

So all-in-all, I just want to highlight here is that we're really set up for success. We have our innovative products and services, which I've already mentioned, plus more to come this year. We have a superior commercial team with strong connections to customers, which is a unique advantage for us.

And then we have solid financial discipline, which persists. And lastly, the Ignite Operating System, which really brings it all together.

So I continue to be very confident, we're going to be able to deliver our full year guide, which is 4% to 6% core revenue growth, 75 bps margin expansion at the midpoint, 10% operating profit growth and then EPS growth of 6% to 8%, which would be 9% to 11%, excluding the tax-related changes that happened this year. So overall, we're in a good place and very excited.

Terrific. All right. Well, good intro. So maybe just kicking off with the growth outlook, 4% to 6%. I think, you've talked about on the fiscal 1Q call, excuse me, that you've got the same view of the end markets, but there is a kind of underlying growth acceleration, at least when you do like a stacked growth analysis in the back half. So what kind of drives that growth acceleration?

Yes, it's interesting that everyone called that on the call. And there's the positive business factors, which I just talked about in the preamble. But it's also very -- it's in line with our historical cadence through the year. So if you look at this year, we're about 49%, 51% first half, second half, and that's aligned with our historical bias. And that's really just a function of how fiscal calendars and the spend patterns of our customers.

In Wall Street and...

What I'd say there, Dan is, in the last 10 years, there's only been one occasion where the second half was lower than the first half for us. So this is really very typical sort of revenue split, if you will, between the first and the second half of the year.

Okay. So I was going to say Wall Street kind of intoxicated on beats, right, momentum, upside surprise, obviously. So when you think about the guide, which customer groups or product areas would offer the big swing factors to the guide, do you think?

Yes. So there's three. And we've been highlighting since the beginning of the year. One, improvement in spend on the SMID-cap biotech; two, our A&G customers; and then three, China. And so I'll just walk you through those on the dynamics we're seeing in the market right now.

So in small and mid-cap biotech, we have relatively small exposure, but we're encouraged by what we see in the marketplace. And now that has to translate into customers actually spending. But if you look at it, the total biopharma financings were $11 billion in January, which is a record. It's a 2-year high.

We have a looming patent cliff, which is driving M&A in large-cap pharma. And those factors should start to drive a ramp in SMID-cap spend. That said, that hasn't happened yet, but we have the green shoots there and the underlying drivers are there.

A&G growth could come in better than our low single-digit decline. And that's really going to be driven by a couple of things. And what gives me hope there is the NIH budgets. So if you look at that, that came in in-line with the Street expectations, which were flat. So that came in as expected. And then there was the NIH -- or excuse me, the court case with the 15% capital struck down. And so that should also help drive incremental spend in A&G.

What we're seeing in the marketplace is that has yet to filter through as the labs are continuing to be conservative in their spend, really focused on kind of continuing core operations before making incremental investments. That said, we anticipate that, that would change over time and that would drive some upside.

The last piece is China. And so we saw strong results in China in the first quarter. So that was 6% year-over-year growth. Part of that is driven by the Lunar New Year timing.

But the other piece that excites me is, there was a small GACC stimulus that happened, and we won an outsized share of that, and we're the leader in multinational companies. And so that factor there, is a good sign. But then if you think about the SAMR stimulus, if that comes later in the year, we believe we're well positioned to win more than our share.

Okay. Maybe moving over to capital deployment. Obviously, a question you got on the call, and I'm sure you get meetings. Your balance sheet is in great shape. Padraig and the management team have been focused on a willingness to go bigger and an interest in doing deals, right, automation, informatics, two of the areas of automation software. But this idea of a large transformative deal has caught certainly investors' attention just to understand kind of how big you guys would go and what the financial implications would be. I know, Adam, on the call, you talked about being very, very disciplined.

Yes.

Which there, there was a debate, great, that makes sense. They're really not going to take a big swing. But at the same time, you guys could be very, very, very disciplined and do a big deal and you think it's the right deal. So long way of saying, how do we think about M&A, the size of the deal and the financial discipline?

Sure. That's a great question, and we've been getting it a lot. So the first piece is, and I always start here because it's really important, is our capital allocation priorities aren't changing. So we're going to prioritize investments in growth through internal innovation, M&A and then strategic capacity expansion. And then, we're going to continue to return excess capital to shareholders, and that's in the form of a growing dividend as well as share repurchases.

So the other piece I called out in the call was we like our organic business, and we don't require a transformative deal to achieve our growth ambitions. That hasn't changed. We recognize that transformative deals come with their own unique complexities, including more challenging integrations, which drives an even higher bar.

So, while we have a wide aperture, transformative deals are very few and very far between, and we're not currently prioritizing that type of opportunity, okay?

And then what I would say, though, is as we look at M&A, we're going to continue to maintain our disciplined approach. We're going to make sure anything we do is aligned to our enterprise strategy. We're going to focus on growth opportunities where we have the right to win, where we can successfully integrate them and that we pay the right price, which what that means is we're delivering cash-on-cash returns above our hurdle rate and then it's adding incremental value to shareholders.

And then I can just go a little bit further, if you don't mind, the types of M&A targets we're looking at. So we're really focusing on increasing our services and our recurring revenue mix, so software, automation, specialty CDMO niches we're looking at as well as high-growth adjacencies.

And then we have a strong platform. And so this focus on M&A is not about just doing something to get bigger is we have that strong platform. We want to -- we know that we can leverage it to drive incremental growth for shareholders and add incremental value for customers if we use that platform.

And then I'd just conclude with we're also making incremental investments in our internal growth and innovation, driving productivity, and that's really around digital capabilities, AI, expanding our CDMO capacity. So we have Train C and D coming online next -- early next year in Colorado and then our consumables manufacturing capacity.

And then we continue with all of this to, in turn, return excess capital to shareholders. So it's not a must-do. It's, we believe we're the right buyer and we have the right platform to make acquisitions, but we're going to be very, very thoughtful about it.

Terrific. And maybe just one more was -- is the initial interest or kind of commentary around interest in a big deal or willingness to do a big deal like does that emanate from -- I know when I spent time with Padraig traveling Ignite, and he felt really good about what Ignite allowed Agilent to do. I mean, you guys are in a good position. A devil's advocate would say, "Oh, things are wrong with the base business or they're not feeling as confident about the next 5 years and they need to do a big deal." Just maybe just the genesis of the interest in a big deal, kind of how you would characterize that?

Yes. No, it's a great question. I'm really glad you asked that question. So one, I do think we feel confident in the abilities of the company, the ability to integrate through Ignite. But that said, we don't need to do a big deal, number one.

And number two, I think what we're doing and what we're saying is we're keeping a wide aperture, because we're looking. And I think as investors and shareholders, you'd want to make sure that we were looking when things came our way. But that said, we don't have a need to do it at all. And like I said, it's not a focus or it's not a priority right now. And so I think while it's been a hot topic, I think just having a wide aperture is what's causing the noise.

And Dan, the other thing I would add is like, look, we both know that it's a highly fragmented industry, and there's pure economies of scale over time, right? So it's really about balancing what makes sense for us at this point versus kind of like being able to be a consolidator in the space over the long term, right? And that's something we are very clear right about. Like Adam just mentioned, I mean, there's pros and cons with every asset that we look at. And so that's really how we want to, sort of, stay disciplined, stay focused with that sort of long-term theme of consolidation.

Okay. So maybe just on some of the segments, maybe Pharma, the LC replacement cycle, Adam, you called out a couple of the momentum that you're seeing with some of the products. still sounded like we're early in that. So how would you characterize the ability to continue to grow high single-digit growth for that LC?

Yes. I mean what I'd say, Dan, is a couple of things, right? So as you mentioned, really good momentum on the LC side, high single-digit growth, outperformed some of our peers out there as well in the quarter. And really, I mean, as we think about the replacement cycle, it's three things, right? I mean, there's an extended period of underinvestment, meaning you have a lot of older fleets out there.

The second piece is CapEx conditions are turning more and more favorable as time goes by and normalizing, if you will. And then innovation, right, that comes with our Infinity III. I mean that really kind of like pushes some customers over the edge as a compelling reason to upgrade.

And so as those three come together, that's really what drives the cycle for us. Now Padraig, he's not a baseball guy, so he likes to think in rugby terms. So he kind of talked about being in the first quarter. I mean, the baseball analogy would be probably like that third inning. That's kind of where we are.

And the way to frame it would be, think of this as 200 to 300 basis points of incremental LC instrument growth relative to that low to mid-single digit, but with an opportunity to be faster than that amount like in the near term here at this stage of the replacement cycle. So there's a long runway to go. And on that point, look, I mean, we also have a GC cycle, which is shallower slope, longer duration. So it's really a dual-pronged exposure to the replacement cycle dynamic here for us.

And maybe just on NASD, Adam, we talked about the upside drivers. You mentioned the three. NASD wasn't mentioned. Just we had a pegged around 10% growth in the first quarter. I know you're talking about mid-teens. Just like what was the number in 1Q? And what's the visibility on that mid-teens growth for this year?

Yes. So we don't split out our CDMO business, but the CDMO business as a whole was low double-digit growth. And then as we think about the year, one, the cadence of the different orders kind of roll through at different times. And so the nature of the two of the NASD facility, that's largely booked through the year, and we're really excited about that and keep getting incremental demand. So we're very excited about where that's going and with the new Train C and D coming online. It was a perfect investment at the perfect time. And then BIOVECTRA, which has more of a clinical SKU ramps through the year. And the cadence of those orders have a different pattern than NASD.

Okay. And then in terms of the sales funnel there, I know when I travel with management, it sounds like the extension of the therapeutic indications that are NASD is being -- or that modality being used for could actually drive a decent potential acceleration in growth in the coming years. How do you think about the sales funnel on NASD as we look out beyond this year?

We're very excited about it. I mean, look at it in the clinical world of the number of siRNAs out there, and we're clearly the leader in that modality. So we're very excited about that funnel. And because we have a leadership position, because we built the extra capacity, we're in a great place to capitalize on it.

Okay. And kind of risks, I know the day that there were some news, I know Tejas and management team sent out like a nice script on enzymatic ligation. But just how would you -- do you still get questions on that? Like how do investors get comfortable with the risk there?

Yes. I think as people sort of digested the news, Dan, like initially, there was a little bit of misunderstanding, if you will, around whether this is a threat for our NASD prospects longer term. Actually, I think it's quite the opposite.

Frankly, I mean, what enzymatic ligation does is that it allows Alnylam or other customers eventually to really tap into larger patient populations, right? So this is a good thing for the industry as a whole. And as Adam just mentioned, we are the primary, sort of, CDMO vendor of choice in siRNA. Now part of it is capacity, but part of it is our phenomenal track record in siRNA in terms of just the clinical stuff, but also being able to grow with our customers and help them commercialize successfully.

I mean, at this point, we are booking work in '27. I mean Train C will come online and we have a good line of sight to how we're going to fill that up over time as well.

In terms of how -- what role we'll play in that enzymatic ligation world, I mean, there's a couple of things to really sort of take into account, right? So the first thing is that for the current, sort of, crop of molecules out there that are already commercial, like enzymatic ligation is not going to supplant like solid-phase synthesis.

The second piece is, it's not going to affect any of the manufacturing protocols that Alnylam has in terms of their commercially launched drugs and is only applicable to their future clinical programs. And those are all -- essentially, this is a late '27 and into '28 dynamic.

And then probably the most important bit is even when they're doing it via enzymatic ligation, they still need block more manufacturing, which is something that we're going to help them with.

Now there have been certain questions over the past couple of months around, well, are the economics the same, right? And the answer to that is there's a couple of things that I would point to. It's still early days, but there is kind of like technical know-how around being able to reduce the cost structure in block more manufacturing. And then the other aspect is if you do it at scale, there is no sort of theoretical limit on how comparable the margins could be on that process. So we feel very confident in our role as a key supplier even in that sort of enzymatic ligation world.

Okay. Maybe just rounding out a couple of questions on Pharma. So GLP-1s, I forget like is that quantified? I know one of your key competitor quantifies the impact. So just remind us the size of that business. And how does the move to orals impact that? We did a big report on GLP-1s, and we would think that would be favorable to you guys.

Yes. I mean, so a couple of things. So just for context, Dan, I mean, GLP-1s last year were about $130 million in revenue for us. Again, dual-pronged exposure there, about half of it is on the analytical tool side. The other half of it is BIOVECTRA on the CDMO side of things.

GLP-1s, very solid 50% growth in the first quarter here. And really, I think the way we think about it on a sort of that -- your question on orals versus injectables, we are modality agnostic, right? I mean, if you think about sort of where we play there, I mean, essentially, on the injectable side of things, they rely on our tools for characterization, for QC, for lot release stuff.

And you think about sort of on the oral side of things, the impurity analysis, the solution, solid dose QC stability, automated analytics, all of those things play to our strengths.

Now I think it's a little bit early to put a finer point on what that steady-state mix will be between orals versus injectables. A little bit of it depends on who you ask. But from our perspective, we are actually well positioned for any combination of orals versus injectables as long as patient populations continue to ramp, right?

And I think people forget a little bit in all the noise around this that obesity sort of GLP-1 penetration rates in the obesity indication are still pretty low, right? And the other piece is the labels will also expand over time if the data holds up, right? And as those two things happen, whether it's orals or whether it's injectables, we'll stand to benefit in either scenario.

Okay. Maybe jumping over to the chemical side of the business. You had a solid first quarter, 9% growth. You talked about this Advanced Material 20% growth. And then, Adam, you alluded to the semiconductor business. Just kind of -- this came up on our marketing trip with you last year. A few investors called out. Just kind of walk through a little bit of -- I think this is spectroscopy. Like what are you serving in semis? How meaningful is that? And what kind of a growth driver could that be?

Yes. So just as I said at the beginning, one, we're very excited about it. We have a leadership position. Our spectroscopy and our GCMS tools are critical assets for the semiconductor industry. We're suppliers to ensure the quality of the raw materials, and that helps them drive yields. And then we analyze the fabrication process for chemical variants. So we're important in the manufacturing process. And obviously, as the demand expands and that pushes demand for our products.

And then there's the ongoing reshoring, which continues to help us. So as there's a push to localize manufacturing in semis and a push to -- and there's that continued shortage, that helps us, because there's a continued demand for our atomic spectroscopy tools.

Over time, we expect it to grow and be a continue -- an important part of our business. And we're the #1 in the CAM market. So once again, we don't guide to our semiconductor growth specifically, but we assume CAM will grow in the mid-single digits for the full year.

Right. So even connected to that, you grew 9% in the first quarter. Is it comps? Like what caused the deceleration in the mid-single?

I guess it would be -- there's a couple of things. So -- and I don't know that we're necessarily calling for a deceleration. I think we just had a very strong Q1. Some of that is also related to the Lunar New Year and the timing in China, right? The other piece is just the nature and the timing of when our customers do their buying. So we're going to continue to watch and see how it goes, but we continue to be excited about it.

Yes. I mean I'd say, Dan, a couple of other things, right, just to frame it a little bit for you. I mean, essentially, 2/3 is Chemicals, 1/3 is Advanced Materials. And out of that Advanced Materials, roughly about half is really our semiconductor and related exposure. So on a whole company basis, it's like 3 or 4 points, essentially, give or take. We're seeing a lot of strength there. We are by far the market share leader in that niche.

And you have this AI-driven sort of memory chip shortage dynamic. You have the reshoring dynamic helping as well, which we think will -- are durable trends. But then on the other side, to your point on comps, the back half of the year, it is high single digit, right, comps for CAM.

And we are baking in a little bit of prudence there. I mean these end markets can be a little bit quick to change versus Pharma or Diagnostics & Clinical, for example. So there's a combination of prudence and tougher comps that sort of as part of our, give or take, like high end of mid-single-digit expectation for the rest of the year.

Okay. Maybe just on margins, just kind of walk through, you got the 75 basis points. You've had performance-based pay, you're have Ignite. Just kind of unpack that 75 basis points and kind of how confident are you in delivering that?

Yes. So we feel confident about delivering it through the year. And there's a couple of pieces. So it will ramp through the year. And the biggest factors in that are, one, the tariffs. So we mitigate the tariffs by the second half of the year, as we've talked about for a long time.

And the second thing is the price volume leverage that you see. And then the third is the Ignite savings. So you'll see that starting to roll through even more and increasing through the second half of the year. So we feel very confident about delivering and we're excited about all the pieces are actually in place.

Well, what happened if your guide 4 to 6, what happens did you come in like 6 or 7 or you beat, does that drop through? Do you reinvest the business? Like how much of that would accrete to earnings and upside?

Yes. So I mean, it's -- we're always balancing incremental investments, and we have a lot of great opportunities. But at the same time, we recognize that it's important to return capital to shareholders. So I would say it would be -- we take a balanced approach to that because we have so many great opportunities to invest in, and we're really taking a long-term view of investing in the right innovation.

So as you know, our business is driven by the right products, making sure that you have the right innovation, new NPIs coming out. So I want to make sure that we're focused there.

And then as Tejas mentioned, AI and digital, there's so much opportunity. We're taking advantage of it now, but you can always do more and go faster. And so that's where if the opportunity arises, we'll take it.

Maybe just zooming back out for a second. I mean, you kind of led off the opening comments, and you mentioned MFN and Pharma and then you highlighted Biotech as maybe an upside driver. But just broadly on Pharma, downstream is pretty stable, right? But you do have some more discovery businesses, too. Just not the part the preclinical business has been really weak. Just kind of MFN pharma, how much of -- like do you think that was a drag last year? How much could it help this year? I mean it's hard to put a finger on it, but you have a big sales force that's out meeting with these customers. Just wondering about Pharma's tone, if you will.

Yes. I mean I think the MFN clearing event was very important. So I think last year, that was a big holdover and everyone was waiting to see because that could have been devastating to the industry. And so as you know, any capital expenses, any expenses and investments pharma companies make or any company makes for that matter, depends on stability. So I think that was a big clearing event for pharma.

So -- and what we're seeing is that is actually translating into sales, and we saw in the performance of the first quarter that, that did translate. And so we would anticipate that, that should continue to translate through the year, and we're hearing from our customers that they're feeling good. Once again, where we keep watching is that small and mid-cap because that's another opportunity, and we're always looking to outperform, and that's a place where we can.

Maybe like on instruments, what -- like what have you guys assumed? I know you have the recurring business, consumable service and you have instruments, obviously, is a decent part of the business. Is there a number in kind of that you've laid out for instruments for the year? Or just help us think through because I assume that would be like an important lever of Pharma sort of to feel better, right?

Yes. So the -- so a couple of things on instruments. So one, it's -- we're in the instrument replacement cycle, which is helping. And that's -- Tejas laid that out in great detail. The other piece is as we think about kind of that reshoring opportunity, that presents another opportunity. And we see that starting to materialize into orders toward the end of the year. So that's another exciting opportunity.

And then, Tejas, have we laid out a direction?

I would say, Dan, I mean, we don't guide specifically to instruments. But in the context of this year's guide, there isn't much of a delta between instruments and the rest of the portfolio. They're both like mid-single digit-ish. And that's a little bit better on the instrumentation side because of the replacement cycle point that Adam mentioned. So that's how I would characterize it. Not really much to choose in terms of growth deltas between instruments and the rest of the portfolio [indiscernible]

And maybe just circling back to 1Q. Adam, you mentioned at the beginning, absent the weather, you guys would have come in above the midpoint. Like we just took the $10 million and divide it through by last year's revenue base, and it was basically 60 bps. So you grew 4.4%, would have been 4.4% plus 60 bps, 5%. Great. You hit the midpoint, it appeared, and that's good in quarter-to-quarter.

But again, as we started off, like investors the market gets intoxicated, you guide here, you're going to beat. And you've been beating 2 points, 2 points, 2 points every quarter, now it's like more in line. So it just raises , oh, is something change in the demand environment? I don't know. How would you characterize that weather is -- I mean, is that math right, 60 basis points? Or was there a bigger drag on the weather such that maybe the 5%, you guys would have come in above that?

What I would say is this is we've characterized kind of what you see from the weather as the $10 million. There's also services that didn't happen. There's orders that didn't happen, but it's hard to characterize those because you can't prove a negative. So there was more there because people couldn't get to their labs, service visits couldn't happen, be scheduled, things like that. So, there's likely more there.

And overall, what I would say is the performance was -- for the year was -- or excuse me, for the quarter was in line with where we guided. We see all of our large markets humming along. And so we continue to be optimistic. And we'll see how the rest of the year goes, but I'm optimistic and excited about where we're going to go.

Okay. And Dan, I mean, just to add a little bit of a finer point there, right? If you just do the math on even the 10% versus where we reported, you get to sort of above the midpoint of our guide. And then you look at sort of the A&G shortfall, if you will, we guided to down mid, we were down 8%. That gets you to essentially at or above the high end of our guide. So that's how I would think about it in terms of that high end versus where we ended up.

And maybe could -- we were chatting earlier, but maybe -- I mean the balance sheet is in great shape. Just speak to like free cash flow, like how you guys think about that right now? I mean, you've got a lot of investments that you're ongoing. But just when you think about your kind of cash flow dynamics this year and next year going forward, like what's the -- where are you guys in that investment cycle, if you will?

Yes. So a couple of things that are unique about this year and last year as well, but continue this year for our free cash flow and our free cash flow conversion is, one, our CapEx as we're investing in Train C and D, and that's our NASD investments. So that's hitting this year's CapEx, and that obviously weighs in on your free cash flow.

The second piece I'd point out is we've -- we're undertaking a significant transformation of the company, and that transformation is going to add substantial value, and we've talked about that for a long time. And so, what you're seeing is some of those investments in that transformation as well as some of the restructuring charges associated with generating those -- some of the efficiencies that you'll see in the margin.

So overall, the free cash flow is where we would have anticipated it to be. We're in an investment stage right now and transformation requires incremental investments. I want to assure you, we're paying very close attention to it. We're very thoughtful about it. And we're making sure that all of these investments and all of these activities ultimately generate incremental growth and incremental returns.

And Dan, I mean, just one quick point of clarification there. If you look at our typical free cash flow seasonality, 1Q actually was slightly better than expected. Look, I mean, our operating profit is also going to be slightly more back half weighted, very slightly, right? So that will probably be reflected in the free cash flow line as well in terms of a more back half weighting there. But 1Q itself, we actually came in a little bit better versus our typical free cash flow seasonality.

Terrific. Well, with that, we're out of time. But gentlemen, thank you for being here. Hope everyone in the audience benefit and have a great rest of the conference.

Thank you.

Thank you for having us.

Ladies and gentlemen, thank you for joining us, and welcome to the Q1 2026 Agilent Technologies Inc. Earnings Conference Call. [Operator Instructions]

I will now hand the conference over to Tejas Savant, Vice President, Investor Relations. Tejas, please go ahead.

Thank you, and welcome, everyone, to Agilent's conference call for the first quarter of fiscal year 2026. With me on the line are CEO, Padraig McDonnell; and CFO, Adam Elinoff. Joining for the Q&A will be Simon May, President of the Life Sciences and Diagnostics Markets Group; Angelica Riemann, President of the Agilent CrossLab Group, and Mike Zhang, President of the Applied Markets Group. This presentation is being webcast live. The press release for our first quarter financial results, investor presentation and information to supplement today's discussion, along with a recording of this webcast are available on our website at investor.agilent.com.

Today's comments will refer to non-GAAP financial measures. Non-GAAP measures are supplemental and should not be considered a substitute for GAAP results. You'll find the most directly comparable GAAP financial metrics and reconciliations in the press release and on our website. Unless otherwise noted, all references to increases or decreases in financial metrics are year-over-year and references to revenue growth are on a core basis. All references to profitability metrics are on a non-GAAP basis. Core revenue growth is adjusted for the impact of currency exchange rates, and any acquisitions and divestitures completed within the past 12 months. Guidance is based on forecasted exchange rates.

During this call, we will make forward-looking statements about the financial performance of the company. These statements are subject to risks and uncertainties and are only valid as of today. Agilent assumes no obligation to update them. Please refer to the company's recent SEC filings for a more detailed description of the risks and other factors that would cause our performance to differ from these forward-looking statements.

And now I'd like to turn the call over to Padraig.

Thanks, Tejas, and welcome, everyone. It was a solid start of year with the Agilent team executing well in a generally improving, albeit dynamic market environment. For the first quarter, Agilent reported $1.8 billion in revenue, growing 4.4% on a core basis within our November guidance range. End market conditions were largely consistent with our expectations with top line results affected by the winter storm in the U.S. during the last week of January. The storm drove roughly a $10 million revenue impact with the majority recovered at the beginning of February. The impact primarily came from our logistic providers not being able to ship products from our main America Logistics Center in Memphis, Tennessee for 3 days. This is typically the busiest shipping week of the quarter. Despite the weather, operating margins of 24.6% were in line with our expectations, setting a solid jumping off point for the remainder of the fiscal year.

Moving forward, we anticipate benefiting from leverage on increasing volumes, and we expect to see tariff headwinds continuing to decrease, as well as incremental benefits from our Ignite operating system that together will drive sequential margin improvement throughout the rest of the year. First quarter EPS of $1.36, also was within expectations. Adjusted for the impact of the storm, our first quarter revenue, operating margin and EPS all would have been above the midpoint of our November guidance ranges. A healthy underlying outcome. Throughout the quarter, the Agilent team remained as always committed to delivering for our customers.

Before getting into the specifics of our first quarter results, I would share my thoughts on 3 key business initiatives that are fueling our growth. These include our highly differentiated service organization that reinforces our customer intimacy, a theme you've heard me talk about frequently. An update on recent innovations. And finally, how the Ignite Operating System continues to drive Agilent's transformation.

I want to start by talking about our differentiated customer intimacy. Last quarter, I highlighted our field service engineers outsized contribution to our deal funnel and conversion rates. This time, I want to focus our enterprise services business where we had several marquee coaster wins with major pharma accounts. Our enterprise services offerings allow us to cement our extraordinary customer intimacy and is a key strategic differentiator for Agilent that unlocks significant downstream value. This business represents roughly [indiscernible] of our total services revenue today and has grown nicely at a low double-digit CAGR.

Beyond the direct revenue contribution, the relationship we build with our customer creates tremendous long-term value for Agilent and uniquely position us to gain wallet share over time. The offering includes embedding our expert on-site support technicians and customer sites and leveraging digital capabilities through CrossLab Connect that provide monitoring, alerting and performance analytics. This allows us to gain unique insights and visibility into lab operations and critically deliver improved efficiency and economics for our customer labs.

These successful outcomes position us as a trusted partner, one customer can count on to provide critical data and insights that inform their future technology needs and instrument purchasing decisions. We have agreements with nearly all of the top 20 biopharma companies. In addition, we won 18 competitive displacements across our end markets over the past 3 years. End customer feedback from a recent marquee win reinforces the value of having our specialists on site, including faster response times, improve parts availability and better advice and consumable and system usage. The insights that we gain from our leading services team are a key success factor in driving customer-focused innovation that underpins durable long-term growth at above market rates. I want to highlight several recent examples that are resonating particularly well with our customers.

Starting with our [indiscernible] inner column portfolio. In October, we launched our first [indiscernible] column to support biopharma workflows, including GLP-1s. Already, 50% of the top 20 biopharma companies have ordered these columns since we launched. And [ Altura ] has more than doubled our biocolumn growth to over 20%, a testament to [indiscernible] competing performance. Just last month, we launched our next column in the [indiscernible] family, focused on improving PFAS workflows. These columns are specifically developed to solve key workflow challenges and address new EU regulations. Plus the double throughput for customers by enabling separation of both short and long chain PFAS in a single workflow. The launch is off to an excellent start with strong demand out of the gate and extremely positive customer feedback versus competitor offerings. You can expect continued expansion of the [ Altura ] family for new use cases later this year and beyond.

Next, I want to highlight the [ Pro IQS CMS ], which continues to build momentum since its mid-summer launch. We're seeing a robust [indiscernible] growth of our single quad family exceeding 40% in the quarter. The value proposition of an advanced single-quad LCMS with expanded mass ranges resonating and is particularly compelling for pharma customers who are transitioning from small molecule to biologics and monoclonal antibodies.

Our counter diagnostics business also is innovating to meet customer needs. Last quarter, I talked about the expansion of our most advanced automated platform, Omnis to a broader set of customers. This launch is off to a very strong start, offering medium throughput labs access to the latest technology with attractive economics. Also within cancer diagnostics is a new [indiscernible] slide scanner system, which we announced in late January as part of our continued effort to enable the latest digital tools for our cancer diagnostic customers.

Finally, early in the quarter, our market-leading spectroscopy business announced the release of a rampant inside BRT Series alarm resolution system. The new system offers next-generation throughput and sensitivity to enhance safety and streamline operations at airport security checkpoints. This new instrument has secured a $9 million TSA contract during the quarter, and we are confident that we are well positioned to win larger aviation security tenders in the coming years.

The last topic I want to focus on is our Ignite operating system. As you know, we launched Ignite at the beginning of 2025 to drive execution excellence, accelerate decision-making and unlock the full value of Agilent as an integrated enterprise. Over the past year, Ignite has evolved into our enterprise operating system, a core differentiator that align strategy, resources and accountability to drive sustainable growth, margin expansion and long-term shareholder value. Ignite has already delivered [indiscernible] financial results in its [ first 12 ] months, including doubling our pricing realization, generating substantial procurement savings, simplifying our organization structure, and launching our tariff mitigation program.

Also Ignite demonstrated its effectiveness in M&A execution through the successful BIOVECTRA integration, establishing a repeatable playbook to accelerate value capture [indiscernible] transactions. In this fourth quarter alone, Ignite delivered nearly 200 basis points of pricing, continued tariff expense reductions, and a very successful launch of our new agilent.com website that help drive growth in digital orders at more than 2 times of our overall order book.

Looking ahead to the remainder of FY '26, we are expanding Ignite into new value creation work streams and leveraging a portion of savings to reinvest in the business. These work streams include increasing returns and innovation investments by improving speed to market, advancing digital and e-commerce capability to enhance commercial productivity, and deploying targeted artificial and intelligence initiatives with clear ROI to enhance customer insights, automate routine work and compress manufacturing cycle times. We are also accelerating software development and enhancing our supply chain capabilities by executing no regret investments that improve efficiency, resilience and proximity to customers in an evolving geopolitical environment.

Now let me share some additional details about our Q1 results, starting with our end markets. The improvement that we saw in our end markets across last year was generally maintained throughout the first quarter. Overall, we are seeing underlying momentum in our markets. Importantly, secular trends in our largest end markets remain on a strong footing. That includes reshoring of pharma and semiconductor manufacturing, GLP-1 uptake and LCN GC instrument replacement cycles. Pharma growth was 7% in line with expectations with double-digit growth in the biotech space supported by increased funding and M&A activity late in the calendar year.

Mid-single-digit small molecule growth was also solid showing continued momentum from 2025. The quarter saw a modest benefit from continued normalization in the calendar year-end budget flush in line with our expectations. We delivered excellent GLP-1 growth of 50%, with healthy contributions coming from our specialty CDMO as well as our analytical lab business. Our specialty CDMO business grew low double digits during the quarter, and we continue to expect mid-teens growth for the year.

We saw continued strength in Chemicals and Advanced Materials market. The 9% growth in CAM was above our expectations with exceptional strength on the material side of the business we grow at more than 20%. This strong result in Advanced Materials demonstrates our leadership in providing solutions for the top semiconductor manufacturers globally. The current shortage of memory chips and a global effort to achieve semiconductor supply chain [indiscernible], has driven investment by these firms in our leading atomic spectroscopy tools.

With support from the recent Omnis family launch, the Diagnostics and Chemical business continued to perform well, growing at 7% again this quarter. Environmental forensics was flat, with continued softness in government funding in the U.S. and China offset by growth in the rest of Asia and Europe. In Q1, the food business declined 4%, which outperformed our expectations with strong low double-digit growth ex China. As a reminder, the food market was the primary beneficiary of the large China stimulus that boost the growth in the first quarter of FY '25.

And finally, academia and government, our smallest market, was down 8%, more than expected in the quarter. Academia and government conditions in the U.S. continue to be soft, where customers using available funding to keep their labs running as opposed to investing in new capital equipment. Excluding academia and government, our instruments grew at a healthy mid-single-digit rate. Our instrument book-to-bill has now been at or above 1 for the eighth consecutive quarter.

The Infinity Tree HPLC continues to [indiscernible] our customers. The LC instrument replacement cycle momentum built by our differentiated Infinity tree system during FY '25 continued through the first quarter of FY '26. And with LC growth in the high single digits, we are gaining share globally versus our competition. On the GC side of the replacement cycle, we saw low single-digit growth, a strong result considering the tough year-over-year compare from significant volumes associated with last year's Chinese stimulus. Ex China, GC instrument growth was mid-single digits, in line with our expectations of around 100 basis points of lift during the GC replacement cycle. And even with these strong results, the upside from [indiscernible] has yet to impact our numbers.

We're seeing increased activity in U.S.-based pharmaceutical manufacturing as companies [indiscernible] resilience and capacity. Based on announced investments and recent customer activity, we estimate this will represent a $1 billion addressable market opportunity through 2030. We continue to expect the forced orders from reshoring to book late this year and the revenue impact from those orders to bolster top line growth in FY '27 and beyond.

As we look to the rest of the year, our priorities remain unchanged. Advance our Ignite operating system, further enhanced commercial execution, and capture opportunities from improving end markets, innovative new products and a multipronged replacement cycle. With a stellar start to the year and the outlook for end market is broadly consistent with our original expectations, we are maintaining our expected core growth range of 4% to 6% for the full year. We now [indiscernible] between $5.90 and $6.04 of earnings per share in FY '26, with a $0.04 increase due to favorable currency impact.

For Q2, early trends are encouraging, and we are expecting core growth of approximately 4% to 5.5%, which includes a majority of the $10 million storm impact from late in the first quarter. EPS is expected to be between $1.39 and $1.42, representing a 7% growth at the midpoint of our range. We remain highly disciplined around capital deployment, investing for organic growth through innovation and capacity expansion. Simultaneously, we are focused on M&A targets that are both a strategic fit and financially attractive.

Now let me hand it over to Adam, who will provide details on the quarter and our financial outlook.

Thanks, Padraig, and good afternoon, everyone. In my comments today, I will provide additional details on revenue in the quarter, as well as walk through the income statement and cover other key financial metrics. I'll then cover our updated full year and second quarter guidance.

Starting with Q1. Revenue was $1.8 billion. On a core basis, we posted growth of 4.4%, while reported growth was 7%. Currency had a favorable impact of 2.6%, in line with our November guidance. At a business segment level, ACG grew 6%. That's in line with expectations, driven by strong consumables growth in the high single digits, solid performance in services and balanced growth globally with all regions growing mid-single digits or better. [ AMG ] grew 4% ahead of expectations. Growth was led by double-digit performance in spectroscopy, fueled by the excellent results in the semiconductor space that Padraig mentioned earlier. LDG grew 3%, a bit below expectations. In addition to the weather impact, we saw softness in academia and government that challenged our cell analysis and genomics results.

On a geographic basis, we saw our strongest growth in Asia, with China growing 6% and the rest of Asia growing a robust 13%. Europe was a bit slower than expected with 4% growth as transient discussions around higher tariffs caused some customers to slow purchasing decisions late in the quarter. Americas growth 1% was directly impacted by the weather as well as pockets of softness in our smaller end markets.

Q1 gross margins were 53.7%. On a year-over-year basis, they were down by 100 basis points, primarily due to tariff headwinds. Operating margin was 24.6%, in line with our expectations, and down 50 basis points year-over-year on increased tariff expenses and normalized performance-based pay in the current year.

Now moving below the line. We had $10 million of other income, while our tax rate was 14.5% as expected. Finally, we had 284 million diluted shares outstanding in the quarter, slightly better than expected with some incremental share repurchases during the quarter.

Putting it all together, Q1 earnings per share were $1.36 and grew 4%. Adjusted for the weather, we would have been above the midpoint of our first quarter guidance range. We are confident we will see improved earnings growth through the remainder of the year, driven by improving volumes and easier tariff and performance-based pay compares.

Now let me turn to cash flow and balance sheet. Operating cash flow was $268 million in the quarter, and we invested $93 million in capital expenditures. We purchased $152 million in shares and paid $72 million in dividends during the quarter. And we ended the quarter with a net leverage ratio of 0.8 turns, maintaining our strong balance sheet.

Now let me share some additional details on the updated outlook for the year and the guidance for our second quarter. Because of changes in FX, we now expect fiscal year '26 revenue to be in the range of $7.3 billion to $7.5 billion on a reported basis. This continues to represent growth of 4% to 6% on a core basis, as currency is now expected to be a 1.5% tailwind during the year. This revenue guidance embeds full year business segment, end market and geographic growth assumptions that are consistent with what we shared in November. Our largest end markets, pharma, CAM and diagnostics and clinical are all off to a strong start. Across our smaller end markets, we saw some pockets of softness relative to our expectations in the first quarter, especially in our cell analysis business where academic customer budgets are most heavily indexed to government funding. Going forward, we continue to expect low single-digit full year decline in academia and government, flat performance in food, and low single-digit growth in environmental and forensics, partially helped by easier comps for the remainder of the year.

Moving down the P&L. We continue to expect to deliver 75 basis points of operating margin expansion at the midpoint. And while we continue to evaluate the evolving tariff situation in light of recent developments, this guide does not incorporate material changes in tariff rates relative to our view at the start of the year. While we still await the details, we do not expect a meaningful change to our outlook based on the high-level proposals that have been discussed.

Our expected tax rate for fiscal year '26 is unchanged at 14.5%. We also expect $22 million of other income and $283 million diluted shares outstanding for the year. Fiscal year non-GAAP earnings per share are now expected to be between $5.90 and $6.04, representing earnings growth of 5.5% to 8% with the $0.04 increase due to a favorable currency outlook versus our original guide. For your modeling, let me share some additional expectations we have incorporated into our guidance for the year.

We continue to expect pricing growth of at least 100 basis points, supported by Ignite. Although the tariff situation is evolving, we expect to fully offset tariff impact over the course of the year through a combination of cost savings and pricing actions. The tariff dynamics will drive a modestly more than typical sequential improvement in operating margin over the course of the year. As we have said before, this translates into a slight second half weighting on operating profit and EPS versus what we typically see. There is no change to our operating cash flow range of $1.6 billion to $1.7 billion, and we are still expecting to invest approximately $500 million in capital expenditures.

Now moving to the second quarter. We expect our reported revenue to be in the range of $1.79 billion to $1.82 billion. This represents growth of roughly 4% to 5.5% on a core basis, while currency is expected to be approximately a 3% tailwind. This outlook includes weather delayed revenue from Q1. It also assumes our academia and government end market declines in the mid-single digits in Q2. We expect our operating margin to improve by approximately 100 basis points relative to the first quarter. Our guide assumes 283 million diluted shares outstanding in the second quarter. Second quarter EPS guidance is $1.39 to $1.42, representing growth of 6% to 8%.

With that, I'll turn the call back over to Padraig for closing comments.

Thanks, Adam. As you've heard, FY '26 is off to a good start. Our unique growth drivers, including superior customer intimacy developed by our best-in-class services team, a healthy innovation pipeline to deliver products that solve real-world customer problems, and the Ignite operating system that brings together our best attributes for the benefit of all stakeholders, combined to drive growth and operational leverage that fuels our success. As the year falls, we are well positioned to benefit from the instrument replacement cycle and continuing recovery across our largest end markets, to win share and deliver resilient above-peer growth and margin performance over the long term.

I also wanted to take this opportunity to express my gratitude to the Agilent team for their exceptional efforts throughout the quarter. I especially want to recognize our global operations and logistics colleagues who worked tirelessly to meet the challenges presented by the weather and deliver for our customers.

Thank you for your attention. I'll turn it back over to Tejas for Q&A. Tejas?

Thanks, Padraig. Nicole, can you please share the instructions for the Q&A?

[Operator Instructions] Your first question comes from the line of Tycho Peterson with Jefferies.

This is Jack on for Tycho. Just wanted to walk through the impact of the snowstorm and expectations for catch-up there. I appreciate you said $10 million in revenues. Just curious if that's already in hand for 2Q, or something that's still being recouped?

And then any color on margin impact that would have had in the quarter gross margins and operating if it would have been without [indiscernible]?

Yes. So I'll start off, and I'll hand it over to Adam. So first of all, a really solid finish all with 4.4% growth in high single digits in our 3 markets. But Adam, can you give some color around the weather?

Yes. So thanks. And I'd first like to say I didn't think I'd be on this call talking about the weather. So it's always fun to do that.

So when you think about the impact of the weather, we said it was about $10 million. We've already seen that come back with the majority of it. There are some pieces of it that will take a little longer, and that's really related to services and things like that, that don't happen instantly. So we've already recovered the vast majority of it.

Then to your second question related to margin, it would have been a very [indiscernible] impact to margin. So what we delivered in the quarter was a reasonable proxy for what we actually -- the actual performance.

Okay. That's helpful. And then sticking on margin. I appreciate you're still guiding to 75 bps for the year. Can you just give a little bit more color on the cadence from here in the bridge to that improvement after being down a little bit in 1Q? I think you said slight second half weighting. I guess just what's baked in for 2Q versus the second half? And then what do you see as the biggest swing factors to that step-up?

Yes. So I'll take this one. So from a year-over-year basis, we expect the second quarter to be a 50 basis point improvement, and that's really driven by pricing volume and then Ignite savings. And then that's offset by performance-based pay [indiscernible] in the tariffs. And as you know, the tariffs, or as we've talked about, the tariffs are fully mitigated by the second half of the year. Then when you move through the rest of the year, that's where you start to see the acceleration in our margin expansion. And then that's driven by continued volume and leverage -- volume leverage, pricing in Ignite. And then it's slightly offset by some of the people costs and growth in investments that we're making through the year.

Your next question comes from the line of Vijay Kumar with Evercore ISI.

Maybe, Padraig, my first one, high level. When I look at the cadence of the year -- first half versus back half, you guys [indiscernible] first half implies slightly less than [ 5% ] in the back half. To hit the midpoint it needs to be about [ 5% ]. Can you just talk about what drives the back half step up comps to get tougher? Is this some new product cycles? Or is there something else that's going on in the business that gives us this back half visibility?

Yes. I mean the underlying -- we see a really strong underlying momentum in our business in our key biggest markets. You can see that in pharma were driven by GLP-1s, but also the replacement cycle going extremely well. You see our Infinity Tree number growing in double digits, I think, and we're seeing from our latest market share report that we're taking oversized share in that area.

And then, of course, you can go down through our CAM markets as well, where you can see a lot of secular drivers. We grew 20% Advanced Materials from the semiconductor onshoring and so on. So underlying momentum in the markets, we have very good visibility in funnels. We're seeing very strong win loss rates. And of course, we're going to watch that as we go forward, but we see that continued momentum to improve.

And then I would just jump in. The step-up between the first half and the second half isn't that big. It's really [ 49% ] in the first half and then [ 51% ] in the second half on revenue.

Understood. And then maybe one on tariffs, just given the Supreme Court ruling. How are you thinking about the tariff assumptions, right? Are you assuming now a global minimum of 15%? And how does that change versus your prior assumptions?

Adam, I'll give this one to you.

Sure. So I guess the first thing is, one, the situation continues to be dynamic. And we don't know that much information about what the 15% would look like and exactly how it's going to play out. But if you assume that the 15% is on the surface, what it says across all different markets, what I would say is we wouldn't change our guide on it. And it really comes down to a couple of things, is, one, we made a series of no regret moves. And that was really about leveraging our supply chain, bringing our manufacturing closest to the customer. So that wouldn't change.

The second is we've been utilizing pricing and surcharges, really [indiscernible] appropriate and be very thoughtful about that. So that also helps us. And I guess the third piece I would add is in any dynamic market -- in any dynamic market conditions as you see and we're living in. What gives me a confidence is I look at how the Ignite operating system is able to allow us to react and be resilient as things change. So right now, we wouldn't change any of our guide based on what we know. That said, we're ready to react and we're ready to respond as things evolve.

Yes. I would just close it off by saying the actions we've taken to bring manufacturing close to our customers and strengthen supply chains are no regret moves. We have that plan for a long time now. And outside of surcharges, we would not expect to reverse them in any way.

Your next question comes from the line of Doug Schenkel with Wolfe Research.

Two topics I wanted to address. One is the capital equipment environment and then the second is M&A. So on the first topic, how would you describe demand month-by-month going back to, say, November and December and through the beginning of the calendar year? I ask because some of your peers have suggested that demand may have slowed a bit over the past several weeks. And I'm just trying to get at whether or not this is just, kind of, normal typical seasonality or if there's anything you're seeing from an environmental standpoint, meaning uncertainty related to things from a policy dynamics that are flaring up again and selling things down? Or again, whether this is just kind of normally what you would see going from calendar Q4 to calendar Q1?

The second question is -- or second topic is really on M&A. And simply put, how would you describe the environment, your readiness and your appetite to do a multibillion dollar deal?

Thanks, Doug. I'll take the first one, and Adam can take the second one.

So if you look at a proxy [indiscernible] and you look at our replacement cycle, we had a very strong quarter. Biotech led that business. And of course, it was what we saw was a reasonable budget flush, it wasn't over the top [indiscernible] reasonable [indiscernible] at the end of December. I think January, you saw -- we talked about some of the disruption we saw intra-quarter in Europe, for example, and the weather impact. But I would say it's been very, very steady. We've seen our funnels continue to be stead in a lot of cases, growing. And why is that?

I think CapEx conditions continue to improve with the [indiscernible] reducing the tariff uncertainty. That's been very big for our pharma customers. You see the strong GLP-1 growth and our CDMO -- the basin CDMO growing extremely well. And I think we're very pleased to see how the trajectory of orders continue to go on the CapEx side. Now of course, we're watching our funnels as we go forward on it. So I wouldn't say there's anything that we see any deterioration in terms of CapEx.

And on the capital allocation, which is a big question. I'm sure we get it a few times today. I'm going to get Adam to answer that one.

So thanks for the question. And I think it's important that we always start with our capital allocation priorities, which aren't changing. So one, we're prioritizing investments in growth, and that's through innovation -- internal innovation. Second thing is M&A. And the third is investments in strategic capacity expansion. And at the same time, we're going to continue to return excess capital to shareholders, and that's through a growing dividend and share repurchases.

The next thing I want to say is context is we like our organic business, and we like our plan. We don't need to do any transformation -- any transformative transaction to achieve those growth ambitions. Now we don't have any arbitrary size filter in our deal funnel, but I want to be very, very, very liberated about this. The bar is very high for a transformative deal, and there aren't that many of those out there. So we're really focused on making sure that any deal that we do is aligned to our enterprise pillars, that we're focused on opportunities where we have a right to win. We're able to integrate whatever asset we're buying, and that we pay the right price for it so that we're creating -- generating cash-on-cash returns above our hurdle rate.

So we think the market out there, there's some nice opportunities, and we're continuing to evaluate those. But we're looking at them against the filter that [indiscernible] and once again, we like our organic business, and we don't need to do any kind of transformative transaction to achieve our ambitions.

Your next question comes from the line of Patrick Donnelly with Citi.

Padraig, I wanted to focus on the LDG segment. I understand the weather impact. It did come in light, even backing that out. It sounds like it's around the cell analysis and genomics piece, maybe some softer purchasing in Europe. It does sound like LC/MS and the CDMO overall held in well. Can you just expand on what you saw there?

And then also staying in the LDG segment, just the profitability probably for Adam. What drove the softness there? Is that just mix with the cell analysis? I wanted to get a little more color there.

Yes. Thanks, Patrick. And I think LDG grew 3% in the quarter. It was a bit below our mid- to high-digit expectations. And I think in addition to the weather impact, we saw softness, I think, in academia and government that challenged our cell analysis and genomics business. But our larger end markets, pharma biotech and [indiscernible] grew high single digits.

But Simon, do you want to give some more color on the LDT what you saw in the quarter, particularly on those businesses?

Yes. Thanks, Padraig. As Padraig already mentioned here, we were challenged by the weather situation and also the ongoing softness that we're seeing in academic research markets, most notably in the U.S. And in our cell analysis portfolio as well, we've got a relatively lower portion of recurring revenue mix than we have elsewhere in our portfolio when we've got a bit more exposure on the smaller capital equipment side there. So as we think about the macro situation going forward, the exposure to academic and government is always going to be there. And we still see a lot of cautious spending.

But we also think we've got reasons to believe we're at or near the bottom. U.S. academic science budgets are compared to the plateauing. Europe is more stable. I think we're anticipating some modest incremental improvement in academia and government in Europe. And also the feedback I've been getting from the teams is been seeing customers and attending the sales meetings over the past few weeks is that there's a sense of optimism in the field. We've got a strong portfolio. We've got very strong conviction in the portfolio on a medium, long-term basis, and I think we'll see that improvement begin to unfold as time passes.

The only thing I'd add on margin is beyond the weather, the academic and government softness is there's the CDMO batch cadence that also impacts the margin in the first quarter. With CDMO, obviously, a batch is not a batch is not a [indiscernible]. They're all a little bit different and have different revenue profiles and different timing. So just given the cadence we had in Q1 that also impacted the margin.

Okay. That's helpful. And then, Adam, I wanted to pick up right there in terms of CDMO. Can you guys just talk about NASD, BIOVECTRA, what you saw in the quarter? It sounded like overall, it was low double-digit growth for specialty CDMO. Can you just give a bit more color? And again, it sounds like the mid-teens, still very much on the table. So just the visibility and pacing of those businesses as we work our way forward.

Yes. So I'll start off and then I'll pass it over to Simon if he has anything to add.

But yes, absolutely. So we saw low double-digit growth in the first quarter as expected. And once again, it really is about the batch cadence, and it's the normal kind of quarter-over-quarter revenue variance that you'd expect. We continue to expect mid-teens growth for the full year, and that's based on our production schedules and the demand dynamics we're currently seeing in the market.

And I guess the only other thing I would add that may be helpful for you is our mix of business in NASD continues to skew towards larger commercial batches with about 60% coming from commercial programs. And then on the other hand, commercial programs represent about only 1/3 of the BIOVECTRA revenue. So they have a little bit different profile. But we expect, based on what we have now, that it will continue to ramp through the year.

I think Adam covered most of it there. Just to add a couple of points. We did see strong year-over-year order intake in the first quarter. As Adam said, an [ ASD ] continues to skew favorably towards commercial programs. And as we look to the rest of the year, we've got good visibility to the pipeline, and we see revenue ramp in the second half of the year.

Your next question comes from the line of Dan Brenn with TD Cowen.

Maybe just to start off, I understand if you back out the $10 million, the growth would have been right in line with the 5% and you kind of walked through all the puts and takes. But just kind of stepping back, you guys have been on a pretty consistent pace of like coming in ahead of guidance. 5% growth is still solid in this environment. Just wondering how we might think about the rest of your guidance in terms of what would drive here to the higher end to lower end, given that trend of consistently beating numbers and now it looks like in line this quarter?

Yes. I think -- I'm just talking at a high level, we're really set up for success, Dan. You look at the innovative products really going extremely well, Infinity [indiscernible] replacement cycles [indiscernible] The strong commercial team, good connection with customers and our enterprise service capabilities that I talked about in my prepared remarks. And I think it was a solid Q1, and excellent growth despite the weather. And the top line, we're confirming it, I think it's prudent but appropriate given the macro uncertainty that's around as always. And I think the operating profit growth of 10% and 75 bps margin expansion at the midpoint is really well.

I have to say, we've had a number of sales kickoffs around the globe in the last month. [indiscernible] are very robust. The thing we've seen almost our best market share report seeing today. So everything is moving in the right direction, so that gives us positivity as we go through the year.

Sure. No, I can just give you a little bit more detail on what would be -- push us to the upside versus -- pushes to the downside of the guide, if that's helpful. And it's really around 3 things.

One is a pickup in the small and mid-cap biotech sector. All of the green shoots are still there, but then there's that time lag between how does all the incremental investment, IPOs and M&A convert into actual spending investment. The second is academia and growth if we start to see more stability there that can push us to the upside. And then the third, while China remains stable and we believe it will be stable about that $300 million per quarter run rate. If there was a stimulus, a bigger stimulus toward the end of the year, that would be an upside.

What I will say is there was a small stimulus in the first quarter, which we did very well in that offering. And so that would give us confidence if there was a second [ SAMR ] stimulus that happened later in the year, we would perform well in that. So that's what pushed us to the upside. The downside is just then the opposite. If small and mid-cap remain pressured, academia government continues to get worse. And then China, we see a decline in the low single-digit range versus [indiscernible] assumption.

And maybe a second one, just on CAM. Obviously, super important business, really strong quarter. You gave some color, but just a little bit more there in terms of why it came in better. I know you addressed it in the prepared remarks, maybe a little bit more color on how you're thinking about that going forward for the rest of the year?

Yes, sometimes an underappreciated part of our business. It's our core business, our heritage is in the applied markets and CAM, 9% growth. And of course, the Advanced Materials subsegment, which grew at 20%. We saw really robust demand because of our leading position around semiconductor. And you see there's a lot of reshoring going on that.

I think our spectroscopy and our GCMS tools are critical manufacturing supply chain and of course, for chemical plants that are around helping on that. So the ongoing reshoring really helps in that space. And I think also the increased clarity on tariff policies, if there is that in East U.S.-China tensions and strong demand for memory chips. We're number 1 by a long way in the CAM market by far. Our leadership positions and our market shares are unmatched in that. So you put it all together, it's a very important secular driver for us, and we could see that continuing throughout the year.

Your next question comes from the line of Dan Leonard with UBS.

And I'll pick up right where you left off, Padraig. You talked about atomic spectroscopy upside in the quarter due to the memory shortage. Its not something you talk about a lot. So how are you framing that opportunity?

Yes. I mean it's not just memory shortage, but it's the reshoring of fabrication -- fabs that you see that globally. You can see in India where fabs are being set up also in Asia and the Americas. So I think that has been -- it's been really a mix of all that together and a lot of demand on the site.

Also on the chemical side, you have downstream processes that are needed for AI that supports that in terms of it, and that really bolsters a lot of demand. And just to give a bit of color our chemical business is about 2/3 Advanced Materials, about 1/3 of of the CAM business. So we expect that to continue to see that growing. And of course, the Energy business, where we're working on the battery side is naturally head against oil volatility as well. So we continue to see good strength in that. So it's a mixture of all of the above.

And just a follow-up on what you're seeing in pharma. You mentioned a mid-single-digit growth in small molecule. Is that all GLP-1s? And can you talk about the situation in pharma outside of GLP-1s?

Yes. So biotech kind of grew low double digit for us. That's really around our specialized CDMO core growth of low double digits. [indiscernible] what we see as the U.S. biotech recovery is starting in well-funded large caps. We see that continuing small and mid-caps. Improved funding backdrop is really helping.

And breaking it down, if you look at our -- if you look at our small molecule business, which is very solid at mid-single-digit growth, you kind of see Asia leading the way in small molecules with low double-digit growth. We see that continuing. And of course, we're very well hedged on the GLP-1 side both from our CDMO side, but also our [indiscernible] side, we are testing both on the orals and on the injectable side. And as we go forward on a GLP grew at 50% in the quarter and that was 7% for the analytical labs and on the CDMO side 120% growth.

So I think you underpin all of that in the market conditions. And then you look at our replacement cycle moving forward, 40% growth in our single quad, which is right at the sweet spot of QA/QC. So it's a really, really strong momentum in that market as we -- and we see that continuing for the rest of the year.

Your next question comes from the line of Jack Meehan with Nephron Research.

Operator, can we go to the next question, and we'll circle back to Jack once he's back on.

Absolutely. Your next question comes from the line of Michael Ryskin with Bank of America.

I want to follow up on what -- I think Patrick was asking about earlier about some of the moving pieces in the quarter, especially with the $10 million weather ship. I just want to make sure we're understanding the dynamics correctly.

My read of it is it sounds like you've had a slightly slower start to the year than you anticipated in select markets like cell analysis, like AMG specifically. Maybe a little bit on food. I just want to make sure I'm understanding that correctly. Again, I don't want to put out a proportion, especially with the [indiscernible]. [indiscernible] sure we got that.

And then a follow-up to that is obviously, you're maintaining your full year core guide. Is there something that's offsetting that where you're talking about GLPs, you talked about [indiscernible]. Is the strength there offsetting it? Is it just sort of like you had buffer in the model built in and you're absorbing some of these sites you expect to recoup it later in the year?

Maybe an easier way to ask all of this is you've [ given ] us sort of -- it's going to give us an end market breakout for the year in terms of core growth, if you can run through that compared to where you were a quarter ago, that might be helpful.

Adam, you want to take this one and I'll take the second part of that question?

Yes. So I think just in the dynamics of the quarter, there was minor differences in our small markets, but our key markets actually performed quite well. So if you think about pharma, CAM and then our Diagnostics business, they all performed very well. And then we had small pockets of slight differences from where we guided. And overall, we are actually doing well. And then the unfortunate was the storm hit in the last 3 days of the quarter, which are our biggest days in the quarter, and we weren't able to recognize the revenue, which we've since recognized the following actually Monday, so.

And then I'll pass it over to Padraig.

Yes. It's -- I don't want to kind of -- if you're looking at the academia and government side, it's the smallest part of our business. NIH is 1% of our funding. So it's slightly less than what we expected. But it is really the smallest part of our business.

And I think I described the real momentum we have in the key markets, continued improvement in pharma. We're seeing spend in biotechs. [indiscernible] business continues to be extremely strong. CDMO continues to move forward, CAM strength. And you put that all together with the funnels that we're seeing and our outsized growth on our Infinity Tree. If you look at that compared to our peers, we're almost 2x in terms of the quarter, and that's driving to replace that cycle. So all of those things moving together, we're very positive about the rest of the year.

And then I'd just remind you that for the full year, we're maintaining our end market guide. We expect them to land in roughly the same place.

Your next question comes from the line of Jack Meehan with Nephron Research.

Hopefully, you can hear me now?

Yes.

Excellent. Sorry about that. One follow up on the M&A question because this is the number one debate we've been fielding. You talked a lot about how [ Knight ] has improved your capabilities around M&A execution. I was just wondering if you could elaborate on that? That's number one.

And then number two is just from a product area. I was curious your take on diagnostic assets. You have a unique position with Dako that seems to be doing pretty well. Just where does that -- like the IVD market stack up on your pecking order as kind of an industry of interest?

Yes, Adam, maybe you can talk about Ignite on what we're seeing on the integration capability side, and I'll take the second one.

Sure. So there's a couple of pieces to why Ignite gives us the confidence that we'll be able to integrate an asset effectively. If you look at what the Ignite program is, it's really about a management system and how do you bring a bunch of different functions together to execute on a project in an efficient way. And that's exactly what an integration is. As you -- and you think about managing tariffs, that's a cross-functional activity where you need people moving in coordination and to achieve an outcome, that's what an integration is. So that would be the first point I'd make is just running through the Ignite program and using the Ignite system that we've now implemented, it gives us confidence we can execute integration.

The other piece I'd point out is BIOVECTRA is we've leveraged that capability to integrate BIOVECTRA into our network. And so that's another proof point to our readiness to integrate the right asset.

Yes. I think Adam talked about our capital allocation philosophy. I won't go back over that one. But we're focused on increasing our service and recurring revenue mix. I think we've been very clear around that. When you see software and automation also content on systems, et cetera. And we have many high-growth adjacent markets where we would have examples in all of that. Specifically about diagnostics is one of our businesses. That's not excluded, of course, but it's a very durable market. We have a 7% growth in Q1 and pathologies mid-single-digit grower as we've seen over time with a lot of long-term growth drivers.

So it's an area where we will continue to look in all those spaces. But again, where do we have a right to win [indiscernible] linked with the strategy within that segment, does it increase our recurring revenue. That's very important to us as we go forward. And of course, then we have the Ignite operating system to allow us to integrate it very quickly as well.

Your next question comes from the line of Puneet Souda with Leerink Partners.

First one, again, GLP-1 growth there is strong, but my question is more on the utilization on the [ oligo ] side on the NASD side. Any update on -- to the full utilization of [ Train C ], which I think is anticipated in 2027. The question is really around the margin impact in light of this utilization, where it stands today, how it ramps up? And how should we think about the commercial batches versus the early-stage pipeline work that you're seeing?

Yes. I'll start off, and I'll hand it over to Adam for some more color. We have a very strong order backlog, and we're confident in the FY '26 outlook continuing to ramp. Of course, you have month-to-month variances, but we have trained C&D coming online. I have to say we're delighted to have that capacity coming online where it is because we're booked out for '26, and now we're booking into '27 with larger commercial batches. So it's at the right time.

But Adam, do you want to give more color on the cadence?

Yes. So thanks for the question. And I think at steady state, the specialty CDMO business will return above our operating margin -- above the corporate operating margin. So it's a good business to be in. Specific to 2027, Train C and Train D will be ramping through the year. And so there will be a negative margin impact. However, we'll offset that through other activities within the business. Mainly through Ignite.

I see. Okay. That's helpful. And then just a follow-up on -- you made a comment about the small biotech capital raises and capitalization is driving growth. Just as you see that across the business, just wondering maybe if you can double-click and where are you seeing that? Is that more on the LCMS instrumentation side cell analysis? Or is it more on the CDMO side of the business side, where you're seeing the uptick from the emerging [indiscernible]?

So let me -- I think I just need to clarify because it was said in the context of what would be the upside to the forecast. So it was really set around, hey, if we see a meaningful uptick in the small and mid-cap biotech when we would start to see upside to our forecast. So while we have seen the capital market profile improving, we have yet to see a meaningful uptick in the small and mid-cap investments.

Yes. If you look at small and medium-sized biotech, we have a relatively small exposure, but we're actually encouraged by improving biotech funding and increased M&A. You see that a lot. If you look at the macros in January, total biopharma financing rose about [ $11 billion ], that's a 2-year high. So we watch that. You have the [ patent cliff ] that's looming, of course, with heightened biopharma focus on M&A. And I think '25 is one of the strongest years in M&A for pharma, which, of course, I think about [indiscernible].

I think it's too early to call an inflection on it. And there's a lag, I think, between improving funding environment and customer spending. But we're extremely well placed with our tools. If you look at the [ Pro-IQL,/CMS ] on that side, also on our Infinity Tree. And of course, we'll see a recovery in our cell analysis business for those two as we go forward on it. So that's the way I would say that it's really a relatively small exposure for us, but we're really encouraged by the improvement forming environment.

Your next question comes from the line of Brandon Couillard with Wells Fargo.

The 6% growth in China, was that all stimulus related and would be helpful if you can just touch on a couple of the end markets there. Curious if you're seeing any of the term more positively or if it's really just still status quo?

Yes. I mean we were very pleased with our 6% growth. We're better than expected. If you look at them compared to peers also very expected. And that's -- there was a slight bit of more [indiscernible] before Lunar New Year, but not too much. And I think we saw an outside -- last year, we saw a very strong [ GSEC ] stimulus business. We saw a small one this year. We won about 30% of that. And I think as we go through the year, we expect it to be a $300 million quarter business on it.

But if you look at, I think, overall in the business, we're under-indexed, DX and pharma. We are over-indexed the [indiscernible] markets. and we see continued strength on that side. So we expect China to grow mid- to high single digits over the long term. Not the double-digit rates we saw 10 years ago, up mid- to high single digits. And our track record how our ability to manufacturing in China and our commercial teams [indiscernible] very close to the customers is really important.

And of course, Adam talked about the larger stimulus that's looming towards the end of the year. We're not counting that in our guide. But if that comes in, it's going to be significantly more than the [ GACC ] stimulus, and we expect an outside win in it. But to be honest, if you look at the -- we look at very -- we're optimistic about China. We have the largest installed base, look at the pace of innovation in life science and the applied markets supports demand for instruments and our solutions is very strong. And if you look at the China [ 15, 5-year plan ], whether it's rapid application on AI, health care, green sustainable developments and new regulations for pollutants like PFAS. We're right in the sweet spot in terms of those priorities. So we feel very good about China.

That's helpful. And then, Adam, it'd be great to get some color on the A&G markets by region. I think Simon said Europe was pretty solid. So just curious where you're seeing the weakness visits all in the Americas? Any color would be helpful by region.

Yes. So the softness we've been seeing is really primarily in the Americas. And I guess there's reason to be optimistic. The [ NIH ] budget came in, in line with flat to slightly up. The 15% cap on overhead research cost was blocked. That said, it goes back to what Simon talked about, which is we're still seeing a little bit of hesitancy in our customers to make bigger investments as they're really focused on operating their labs.

And just to clarify the Europe comment, that was a forward-looking comment that we envision more stability in Europe than in the Americas with academic and government, and cautious optimism around incremental improvement. That was a forward-looking statement.

Your next question comes from the line of Casey Woodring with JPMorgan.

I'll ask my two upfront. The first is just on LC and LC/MS pacing over the course of the year. LC grew high singles in 1Q. Can you just talk about what LC/MS grew in the quarter and walk through the growth phasing for LC and LC/MS over the course of the year?

And then secondly, Padraig, you called out the three marquee enterprise service wins in ACG, and you talked a little bit about it in your script. Can you maybe just elaborate on what the financial impact could look like from those contracts and how we should think about the impact to the model and how those ramp over time?

Yes. Let me talk about the Enterprise Services, and I'll comment [indiscernible] on the LC/MS. I think on the enterprise services side, it is a really important flywheel for the future because we're really -- fully working with customers under lab management and productivity. You can imagine the insights we get off replacement cycle through that and how do we move forward on it. So it's not just about the services. It's about the consumables and it's about the instrument replacements that we can go going forward on it.

We've had a significant placement in competitive accounts. We're kind of unique in how we're doing that in the market, and we're seeing that as a flywheel to continue going forward. And of course, we see in accounts where we do have enterprise service agreement, we have a higher consumables attach rate. We have a higher services attach rate. And actually, we have an early warning system around replacement cycles that we have early conversations about.

On the LC side of things, I think it's been a steady pace, really good quarter. And I think on the LC/MS side, I don't know if you [indiscernible]

Yes. Well, just to reiterate on LC, we saw high single-digit growth in the quarter, particular strength in China and APAC. And as we've mentioned already, very strong performance in [ Infinity 3 ]. Customers continue to love it, and I still think we're relatively early mid on the replacement cycle there. Win loss rates continue to be positive, notable share gains based on the industry data, and we're now seeing additional tailwind there with the [indiscernible] columns.

On the LCMS side, we were in line with expectations in the first quarter. So coming off so sequential and year-over-year compare, it has to be said. But again, we were very pleased with [ Pro IQ ] with a 40% growth, really exceptional adoption there. And then LC/MS, similar story with respect to win loss rates and the industry data, which signify some notable share gains. And then beyond the Pro IQ, which is off to a very strong start, we're also very encouraged by our broader LC/MS innovation pipeline.

Yes. Just going back to the Enterprise Services part. I just want to bring in Angelica because she's been very close to some of these marquee wins under the growth trajectory and what you're seeing with the cost move.

Thanks, Padraig, thanks for the question, Casey. I think we're very excited about the enterprise business and the opportunity that unlocks. I think Padraig used the word flywheel earlier. And when you think about it, it allows us to really embed our service into the accounts, and they're looking at managing assets across the laboratory. So not only does it give us the opportunity to help customers with their lab operations and keep their labs up and running and producing those scientific results. It gives us visibility and access more broadly in these laboratory environments so that we're not only looking at our own replacement cycles, but we're also looking at competitive [indiscernible]. We're looking for incremental wallet share opportunities.

And over the course of time, the relationships that we're building, the compound. They compound from a growth perspective, but they also compound from insights that we get from customers and how we bring that back into the innovation muscle that we have here at Agilent, and how we can continually grow, evolve and continue to serve our customers on all different levels, whether it's lab operations scientific outcomes or its ongoing value over time.

Your final question comes from the line of Evie Koslosky with Goldman Sachs. [Operator Instructions]

Operator, if Evie is not there, I think we can leave it there. It's all the time we have for this afternoon, and thank you to everyone for joining us. We look forward to speaking with you soon.

This concludes today's call. Thank you for attending. You may now disconnect.

All right. Great. Welcome, everybody, to the JPMorgan Healthcare Conference. I'm Casey Woodring from the Life Science Tools and Diagnostics team. Pleased to be joined by the management team of Agilent. Padraig will go through the corporate presentation here, then we'll leave time for Q&A afterwards. Floor is yours.

Thanks, Casey, and good morning, everybody. So welcome and thank you for joining. Delighted to be here to talk about Agilent. But first, before we get started, a quick important reminder from our legal department, a safe harbor statement. So getting into it. One, if you remember nothing else about the Agilent story, here are 5 key points that I want to take you through on how we're delivering growth, gaining market share and how that translates for all stakeholders.

First, we are in very large attractive markets with excellent growth potential and many secular drivers within those markets. Secondly, we have a very broad portfolio of industry-leading solutions and a unique focus on the entire organization, making our customer successful. One thing you're going to hear a lot in this presentation is our customer centricity. It drives everything we do, and it's critically important element of how we're driving our innovation also. We're laser-focused on delivering products and services to solve our customers' biggest challenges. Also critically to our success, something that makes us very unique and differentiated is our Ignite operating system. This foundational effort and resources helps the entire enterprise to drive transformation to benefit customers, employees and shareholders.

And finally, we are focused on disciplined deployment of our capital. We have a very strong balance sheet, and we will use that to invest both organically and inorganically and to drive shareholder value. We have a rigorous process that's going to identify M&A opportunities, and now we have Ignite that helps drive the integration to success.

So a little bit of overview -- a little bit of an overview on Agilent. We're a leading scientific partner for customers in both life science, diagnostics and applied markets with unsurpassed scale and capabilities. We're in over 285,000 laboratories globally, serve over 110 countries with a revenue of about nearly $7 billion and operating margins approaching 26%. We have a very balanced geographic footprint from revenue manufacturing and service standpoint. And our evolving market mix, organic and inorganic initiatives has allowed us over the last 5 years to substantially evolve our product mix to more recurring revenue. Now 2/3 of our revenue comes from consumables, services and software, and that represents a 700 bps increase since 2020. Also, our balanced geographic footprint and our increased -- increasing recurring revenue mix has made us more resilient, and we're ready to execute in any market environment.

A little high level in our markets. We participate in markets totaling $83 billion with a 4% to 6% growth. Our biggest market of pharma and biotech is our largest and fastest-growing end market. We see exciting opportunities here in GLP-1 and siRNA. Diagnostics and clinical is a very durable market, a high recurring revenue mix, and we have a strong presence in cancer diagnostics. Academia and government is our smallest end market by revenue, while recent growth has been muted, especially in the U.S., it's still a long-term low single-digit opportunity for the company. And on the right, you see our 3 applied markets, chemical and advanced materials, environmental forensics and food. This is where we are a clear leader and where we focus on growth drivers, which include semiconductor, battery testing and PFAS.

Now taking a look at our strategy. Our strategy is focused on leveraging our unique customer intimacy to understand and address the needs that are really going to drive growth. We're a very purpose-driven organization. So our mission and vision is very important to the company. Our mission has not changed to deliver trusted answers and insights to advance the quality of life. What has evolved is our vision to be even more customer-centric, to innovate and deliver seamless solutions to our customers that expands the frontier of science.

Our strategic priorities have remained relatively the same. First, I'm going to talk about our focus on enabling our customers across all functions of the organization, customer enablement and intimacy, something you're going to hear throughout the presentation. Secondly, innovation. It is something where we're accelerating. We've had a great year of innovation, but we're going to accelerate with asymmetric investments in key product areas, and we're shaping our portfolio to point to faster-growing parts of the market through both organic and inorganic means.

Lab productivity and digital solutions is a critical enterprise-wide priority to meet customers' evolving needs. We believe that the analytical lab will be defined in the next decade about productivity, automation and including software.

Finally, we're also on the lookout for high-growth opportunities in markets that are adjacent to where we already serve. We can capture these opportunities either through organic innovation, parking with others or value-creating M&A. And we will continue to leverage our critical enablers, our commercial teams, digital and AI, which is going to be a big focus for AI in '26. And we continue to develop and invest in our digital capabilities, our Ignite operating system and, of course, top talent in the organization.

So a little bit about our fundamentals. Our market-leading position of instrument Consumables as a Service paired with our customer-first mindset. It enables us to sustain growth. We are #1 across a number of exciting technology platforms. We have unparalleled customer support with over 90% satisfaction ratings, which is industry-leading, and gives us a great competitive advantage moving forward. We have a really strong connection with our customers with robust customer retention rates of 90%, which is industry-leading. That means when customers spend in any part of our portfolio, they come back over 90% of the time. This year, we had a record year in digital of $1.2 billion, making it easier for our customers to do business with us. We've always had a digital channel that serves smaller orders. We're seeing that migrating to larger orders and including services. And our digital channel continues to outpace our classic channel and we increased the number of orders that came from digital this year with 40% of all Agilent's total orders coming from our digital channel.

So when you put it together, our robust customer retention rates and our industry-leading customer support facilitates a degree of customer intimacy that is far greater that is enjoyed by our peers. One proof point of that, our field engineers that are embedded with customers around the globe now account for 30% of all sales leads. And these sales leads that come in have a 2x order conversion rate versus the rest of the funnel. Last but not least, our terrific culture. And you can see we were ranked on Forbes World Best Employers for the last 9 years.

So let's go through the segments, I'll do a brief overview of the segments. Life Sciences and Diagnostics Group, led by Simon May. Simon is with us almost 2 years now coming in from a President role with another company. Mike Zhang is with the company about 24 years, leading our Applied markets group. Angelica Riemann is with the company around 26 years, having led services, instruments, consumables. And underpinned, we have a very unique one commercial organization that has service, sales, marketing and digital enablement, all under one leader, Jonah Kirkwood, who's been with Agilent for 18 years.

So let's do a double click on LDG. And starting with this business, we are comprises of our liquid chromatography, our mass spec portfolio, specialty CDMO, pathology, genomics and cell analysis offerings. We're established in very high-growth markets in pharma biotech, clinical and diagnostics and the LDG business aligns over these business to capture opportunities.

As we look ahead, there's really 4 key drivers. First, the accelerating instrument replacement cycle, the ramp adoption of the Infinity III system and the Pro iQ LC/MS, continues to gain momentum through the year, and we expect that momentum to have a long runway. Customers are looking for productivity in these systems, and we're seeing over 30% in the Infinity III productivity improvements. What has happened in the replacement cycle, some customers, probably a year ago, about 1 or 2 systems, now coming back for tens of systems having seen the productivity they're gaining in their laboratories.

Second, regionalization of pharma supply chains. Reshoring of pharma capacity in the U.S. represents a really strong midterm opportunity for us. We're seeing increased investments from the U.S.-based pharmaceutical manufacturers as companies think about resilience and capacity. Based on the announcement, we estimate a $1 billion addressable market opportunity through 2030.

Third, increasing specialty CDMO outsourcing as biopharma's pipeline shifts towards more complex molecules, companies are turning to partners with deep technical expertise, which we have. And this tends to play directly into our strength that supports our continued growth of our CDMO businesses. And fourthly, our pharma and biotech customers are developing and manufacturing increasingly diverse menu of therapeutic modalities. Oligo therapeutics, ADC, cell and gene-based therapies, a wide range of modalities, increased manufacturing complexity. And what the challenge for customers and operators in labs is to make sure that we can deliver complete, easy-to-use solutions with a highly efficient outcomes for our customers. GLP-1 is in its early stages, both for obesity and potential new indications. Remember, we were primarily indexed to volume here rather than price or modality, and we have dual pronged exposure via analytical tunes and BIOVECTRA specialty CDMO.

Now clicking on AMG. The Applied Markets Group consists of our market-leading gas chromatography and our spectroscopy solution offerings. We have a very -- built a strong leadership in applied markets. And we have been a trusted partner for over 50 years with our customers. Our market share in the applied markets is twice that of our next nearest competitor and is driven by the strength of our gas chromatography and spectroscopy platforms. If you look at the key growth drivers, the GC replacement cycle, which is a little bit more idiosyncratic than the LC replacement cycle, a little bit longer. We're seeing that has really kicked off and we're seeing a lot of demand that has been unlocked in this replacement cycle in our GC installed base.

Our 8850 GC with a 50% reduction in footprint and 45% improvement in energy consumption makes it a very compelling offering for customers to replace.

Broadening demand in PFAS. We had a fantastic year in PFAS. We're expecting mid-teens this year. Our testing expands the food, chemical and advanced materials as well as into air quality. We're now seeing high priority chemical plants around semiconductor now testing for PFAS, and we're also seeing modalities like air becoming very important in the year -- in this year with GCMS being the critical analyzer.

And finally, increasing government regulation and compliance needs to buy local policies. Federal local governments are implementing regulations to increase compliance testing. And one example of that is in China where near-term growth remains muted, but where we also have seen the government with the [ anti-involution ] policy, which we see as a positive long-term driver for us since it rewards higher technology complexity and quality production in addition to local manufacturing, which we have a very strong base.

ACG business is -- which serves all markets and positions Agilent as a go-to trusted partner for our customers' laboratory operations. We provide comprehensive solutions. These solution spans consumables, services and technology-driven offerings that enable customers to improve the scientific and economic output of their labs. ACG is uniquely positioned with our customers to deliver really strong recurring revenue growth.

Four key drivers: Our extremely large installed base and our diverse technology set around LC/GC, LC/MS and GC/MS and spectroscopy to deepen customers' connectivity engagement. Also, we have a competitive installed base that we can address through our enterprise services and also through our consumables business.

Solution-based innovation, that's where we accelerate the adoption of innovative solutions to fuel stand-alone growth that can catalyze sales across the broader portfolio. One example of this is the recent launch of the Altura inert column, which is a very strong start, especially given our GLP-1 customers. Also, you can see in this business, the Oligo analysis accelerator and OpenLAB is reducing time from days to hours for QC workflows for profiling therapeutic oligonucleotides. And rest assured, in '26, we have a very rich vein of innovation coming out.

What makes us extremely differentiated is our enterprise service business. This is a key differentiator, and it allows us to engage with customers at a very strategic level. Particularly with large pharma and biotech, the business model provides unique insights in asset utilization, lab productivity, and also future needs for the lab about how they can move more efficiently. We have many engineers embedded on site. We also have vendor managed inventory on site for consumables, and we are now in 19 of the top 20 pharma companies embedded with Enterprise Solutions.

Digital and e-commerce is really important for this channel, as I mentioned before. Digital orders grew 20% year-over-year for $1.2 billion. And ACG, it's nearly 30% of ACG's recurring revenue. And engaging customers through this channel is really fundamental, and we're going to be leveraging AI to accelerate that recurring revenue.

Now to our commercial excellence. We have an excellent unified commercial organization under Jona, and that provides superior execution and it allows us to address our customers' most difficult needs. First of all, our customer intimacy is truly unparalleled. And they start with a unified organization. Importantly, it drives faster response times, you can see that with 90% customer satisfaction rates. And the approach also is an invaluable about how we can deliver maximum insights about how fleets of systems are being used, how productive they are and of course, how they're going to replace those systems. The diversity of our offering and our global reach means that we're able to support our customers wherever they are, and we aren't content with our performance. We've invested heavily in e-commerce, CRM and website upgrades. And this is going to continue to be an investment over this year and beyond.

Digital orders outpaced our top line. In fact, 10,000 customers placed their first digital order this year, which shows the flywheel we have in place. We're activating opportunities where AI can really enable this and our processes and the Agilent team. And I mentioned -- we've seen that with increased satisfaction rates.

The commercial capabilities comes together with a powerful flywheel, one where its unique access and access to our customers is fueled by 4,500 engineers. 20% of those engineers have advanced degrees to help customers with their most important workflows. We bring insights, but most importantly, it can fuel innovation with direct insights from the customers and get strong traction with future product launches.

Talked a lot about innovation, and we're extremely focused on solving our customers' most pressing needs. You can see on the LDG group, we had the Infinity III chromatography system that I talked about the Pro iQ. We see a long runway with the Infinity III ahead, LC replacement cycle. GLP-1 demand, improving capital budgets and along with reshoring of pharma in the coming years. The Pro iQ LC/MS is an important example of a really important technology, a single quad technology that is right in the sweet spot of quality and downstream pharma. We saw 50% growth in this line of LC/MS in '26, and we expect to see continued growth.

We expanded our specialty CDMO. So the siRNA modalities continues to see strength. We're seeing larger patient populations, and we stand ready to grow with our customers. We launched significantly expanded capacity in our NASD business in '27, and we have very good visibility into the customer programs that will fill that expansion. We are confident we remain a critical part of the siRNA supply chain, and we have technical leadership and quality scale that is second to none. And we have a proven track record of regulatory success and commercial scale-up.

The 8850 really resonating with a 5x higher throughput, energy saving and a smaller footprint. And we're seeing -- we're really seeing traction in PFAS for air and the front end of our GCMS systems as it moves to that modality, we are uniquely placed to capitalize.

And last but not least, Altura columns. I think it's a competitive differentiation on sensitivity for GLP-1 analysis and Oligo characterization. Within 1 month of launch of this column, the new column sold into half of the top 20 pharma companies and they expect beating our expectations at launch. We've also seen biocolumn accelerate growth over 30% since this launch. And that's really important to understand that you have a halo effect around new launches where it grows the wider portfolio. And new column launches are expected in '26 that are going to be focused on PFAS and new analytical techniques within biopharma.

All these launches are very exciting, but by no means are we done. And Ignite is the operating system to help us focus our investment, and we continue to have exciting news as we share launches into '26. So something that is extremely unique for Agilent, something that started as a transformation is now an operating system. We launched Ignite at the start of '25 to improve the pace of the quality of our execution and to develop a new mindset to leverage the power of the whole enterprise to maximize growth and shareholder value. Ignite is now becoming a significant differentiator for Agilent, and we leverage Ignite operating system to bring the whole capabilities of the company to benefit our customers, our employees and, of course, our shareholders.

The operating system has key principles. You can see them on the left, customer-focused growth, streamlined governance, dynamic resource deployment and execution. And some of the proof points. One of Ignite's early wins was pricing, which approach, which we doubled in '25. In '24, we did 50 bps of pricing. In '25, we did 100 bps of pricing. And in the last quarter, we did 150 bps of pricing. So it's double more than '24. And this comes to our ability to get this across the enterprise. We have best-in-class procurement processes that have been run through Ignite, tripling the cost reductions last year. We simplified the organization. We went from about 20 product lines to 9 groups of product lines. We removed 15% of managers delayering the organization so we can make faster decisions, get to our business cases quicker and, of course, improve cost efficiency.

We've also seen Ignite as a best-in-class engine to mitigate tariffs, which will fully mitigate in '26 with a cross-functional task force delivering record speed and actions over a number of weeks with the customer in mind. And finally, Ignite is going to be really important as we drive successful integration. That was demonstrated by BIOVECTRA, which is fully integrated, and it puts in place a playbook we can leverage going forward for M&A. And while we expect continued benefit in each of these areas, we will broaden the impact of Agilent through '26. We are stopping some projects and we're moving on to some new projects.

So just to give you a sense of what's coming. Innovation is a critical, one where we're identifying the right opportunities for asymmetric investment and leveraging the required resource for speed to market. We expect a big impact here. Digital and next Gen, we continue to invest in. Artificial Intelligence, we have a track in Ignite specifically around AI to help us identify and execute ROI investments. This is going to be very data-driven. It's going to be very metric and outcome driven. And the specific areas of AI we have underway is generating customer insights via predictive analytics, automating routine tasks to free up critical commercial resources and creating custom designs and reducing cycle times in our manufacturing processes.

Software development is a key area where we're going to be continuing to asymmetrically invest. And manufacturing will not only drive efficiency, but will help us evolve in the ever-changing geopolitical environment through a series of no regrets moves that brings world-class manufacturing capabilities close to our customers.

So between our best-in-class commercial team, exciting innovations and new focus areas of Ignite, there's already a lot to be excited about. Our laser-sharp focus on leveraging these initiatives to deliver against our key priorities to drive above-market growth rates is what makes Agilent a great investment today. In addition to what I've shared at the priorities to support our LC/GC replacement cycle, our capacity expansion in our specialty CDMO, I want to reinforce our focus of executing our strategy. We continue to innovate, accelerate product launches, bigger platform launches. We'll demonstrate the strength of our operating model with operating profit leverage as Ignite helps us to drive top line and efficiency. And we'll always remain highly disciplined around capital deployment.

Investing in organic opportunities via innovation, capacity expansion while staying focused on M&A targets that are both a strategic fit and financially attractive. Finally, we remain committed to growing dividend, and we'll continue to return excess capital to our shareholders. And while these are our priorities for '26, I want to walk you through what continues to give us confidence in our long-range financial targets.

If you look at our track record and revenue from '20 to '25, we had a 6% CAGR and our earnings per share between '20 and '25 was 11% CAGR. And over the time frame, we've grown EPS almost twice as fast as our top line.

A reminder of LRP slide, 5% to 7%, 50 to 100 basis points plus of operating margin expansion and double-digit earnings growth. We are very proud to be able to reiterate these targets at a time when some of our peers are revisiting long-range target growth expectations.

A quick -- before we wrap up, a quick reminder, this is the guidance we shared previously for FY '26 in our first quarter. And as is common practice, we won't get into Q1 specifics here, but we'll address that in our Q1 call. So pulling it all together, we feel really good about the markets. We think that we really have an improving situation in our markets that continues. We think it's a really unique time in the Agilent journey. End markets are improving. We're encouraged by our growth trajectory as we lean into those opportunities. Moreover, Ignite is driving company-wide transformation that has already helped us improve our execution significantly, and we'll continue to gain traction over the next few years.

And with that, I'll turn it back to Casey for Q&A.

Great. Thank you. That's a great overview. Maybe I start just a few on the fiscal '26 guidance and loop Adam here, too. So the guide assumes revenue growth -- core revenue growth of 4% to 6%, notably underpinned by high single-digit pharma growth. So maybe can you just walk through some of the puts and takes there on the top line guidance relative to your 5% to 7% long-term guide?

Sure. Thanks for the question. So as you said, our revenue guide was 4% to 6% core growth, and that was back in November. And the way I break down the components of that is, one is we assume a normalization of the pharma markets; two, normalization in our applied markets, that continued mid-single-digit growth in the clinical and diagnostic space. And at the time, we called our guide prudent, and that was because of three areas. So the first is China. Remember, we said we expected flat year-over-year growth. We didn't include any stimulus in that guide. The second is academic and government. We said that was going to be low single-digit decline. And then the third piece is small and mid-cap biotech. We assume that, that was going to continue to have slower growth than the broader pharma space.

But with that said, I think it's important I just want to express to you my continued excitement about the year ahead, number one. Number two, our confidence in our ability to deliver. And the third thing is that the secular trends are moving in the right direction. But that said, we recognize we're in a very volatile world, and I'm very confident in this team and this organization, our ability to react and respond as volatility rolls through if and when it does.

I'm curious to hear what you're assuming for underlying market growth this year. What factors do you think could drive top line to the high end of that range? What does a more pronounced pharma recovery from a broad-based end market perspective mean for growth given that strong initial end market framework you've provided here for '26?

Yes. So the items that could really push us to the high end are back to the 3 that we've kind of called that we're -- that made us call it a prudent guide. So once again, if China overdelivers, if we see a shift or an inflection in academic and government, and then the third thing I would point to, once again, is that you see the small and mid-caps reaccelerate. So it kind of goes back to those three, and that's kind of where the pivot is.

Okay. Last one on the guide. Just can you walk through the moving parts of that 75 basis point operating margin expansion that's assumed in there for 2026? Obviously, you had some incentive comp dynamics that were a factor in fiscal 4Q. You'll be working through tariff mitigation in fiscal '26 as well. So can you just touch on the puts and takes there on the margin expansion?

Sure. And so to remind you of the guide, we said 50 to 100-plus basis points, 75 at the midpoint, like you said. The tailwind side, I'll start there is annual labor increases, things like that, plus vendors passing on surplus charges related to tariffs. And then the incremental investments in innovation that we talked about and that Padraig talked about here, specifically related to digital, AI and software. On the positive side, we expect volume leverage will help expand the margin. The second thing is improved pricing, and that's continued from our work we've done with Ignite, and then further operational efficiencies and savings driven by Ignite.

Let me just comment quickly, though, on tariffs. And as you said, year-over-year, we expect tariffs to be neutral on the margin. The first half, second half dynamics are important though, because typically, our operating profit comes about 47% in the first half of the year, 53% in the second half of the year. But given that we expect to have some tariff impact in the first half of the year and then fully mitigating it in the second half of the year, we expect the expansion in the second half to outstrip what we would normally see.

Okay. And Padraig, I want to pull you in here because one of the key debates and tools right now is how the industry could benefit from pharma reshoring. You guys have notably estimated $1 billion TAM here by 2030 with Agilent positioned to capture roughly 1/3 of that in revenue over time. Could you just elaborate on your approach to sizing the opportunity? How you're thinking about the revenue opportunity for Agilent? What's truly incremental in some of these pharma capacity expansion announcements? Any sort of updated thoughts on reshoring would be helpful.

Yes. So we're -- where our sweet spot is downstream in manufacturing and quality and development. So it really is where our capability is. But it is a very compelling medium time tailwind. There has been over $350 billion to $400 billion announced. We expect $1 billion through 2030. Now that's not this year. We expect it from '27 to 2030. And the way that we kind of broke it then was when we looked at our addressable market, we assume we capture about 1/3 of the opportunity and that implies about $300 million that we expect from reshoring. And of course, bioprocessing setups are going to be seen first, and we expect to see maybe some orders at the end of '26.

Now how do we know this number? That's the important point. It's very tops down and bottoms up. So we have a strategic account program that makes us very unique where we're embedded in our large pharma customers. So we know at a strategic level where the spending is, but also where it's likely to happen and what's the time line. Then we have local teams that are consolidating that with the different sites. So we came up with a number of greenfield labs that we're expecting. So we were very able to kind of -- we were very able to get a really good lead on that because the tops down actually maps what the bottoms-up came from our customers.

What's unique about this, and I've seen this over the decades in different geographies on reshoring is that you come in and actually analytical tools companies, if you have a deep embedded relationship with customers, you help in lab design. You're helping how to make a lab efficient. It actually increases the customer confidence. And we see that normally early on in some of those constructions. So we're very bullish about it, and we should -- you should view this as largely incremental.

Okay. Maybe if you just touching on the instrument portfolio, particularly in LC/MS, grew mid-teens in 4Q. You mentioned you're in the early stages of a normalized replacement cycle. You talked about share gains against the competition, particularly with Infinity III. Can you just elaborate on the momentum you're seeing in LC? What's the duration and magnitude of this kind of above-average instrument growth that we've seen?

Yes. So you've seen it improving over the quarters, and that's exactly what we expected to see. And you see the three things that are really driving it first is an aged installed base that's helping in drive a replacement cycle, but our technology is pretty unique around productivity that people really are motivated to do it. We expect on the LC replacement cycle about 200, 300 bps growth uplift over the next 3 years and versus kind of mid-single digits, which is the normal LC growth rates. LC recent trends, our LC grew 11%. Our LC/MS grew 16% and double digits in Q4 and across a lot of H2. So we expect to see an extended period of investment, capital spending. And of course, this innovation is propelling it. And I think you can't really say what side at what time would you see that we have 1100s, we have 1260s, we have 1290s. We have a very diverse installed base that is all available to upgrade. So we expect this is going to be a meaningful contributor over the next few years.

And outside of LC/MS, last quarter, you highlighted the early stage of a GC replacement cycle, which typically has longer duration compared to LC albeit a shallower slope. So can you just provide more detail on where you currently stand in that replacement cycle in GC particularly?

Yes. GC, again, we have the largest installed base globally. We expect that cycle to be 3 to 5 years, and it's going to be about 100 bps uplift versus which is a low single -- mid-single-digit growth rate. And we saw strong momentum in Q4, which was very pleasing in our GC and GC/MS, which was high single-digit growth. And the basis of our GC replacement is around this productivity gain and value proposition with 8850s. And we expect it to be more moderate, a bit longer period of time than an LC replacement cycle, but it certainly has kicked off.

Okay. Maybe one just on China here. So you're embedding around $300 million of China revenue per quarter within the fiscal '26 guide, which nets out to around flat year-over-year growth on a full year basis. We know China revenue will be lumpy on a quarterly basis given the Lunar New Year dynamics that you guys have called out. But generally speaking, what's your visibility into China right now, that $300 million revenue run rate on average?

Yes. I mean we've navigated a huge amount of change over the last 18 months, and we're able to deliver $300 million a quarter, which is very stable. We have a very long history in China. We have a strong trusted partner with our customers there. So we continue to be optimistic about China for the long term, mid- to high single digits. We think this year is going to be flat. That's -- we're not taking into account any stimulus that may come along because you want to see how that unfolds. But if you look at the pace of innovation in life sciences in China and you look at some of the semiconductor businesses that are happening there in batteries. The market is expanding quite a lot over time. And it's fully aligned with what is the 15 Chinese 5-year plan, which is around innovation, AI, green and sustainable development and of course, new regulations, including PFAS, that drives quality of food, et cetera. So that's where we are in China, we're continuing to monitor it.

Maybe let's touch on the CDMO. While we have some time here. So in fiscal 4Q, CDMO core growth was over 40%, driven by capacity increases at BIOVECTRA. Strong GLP-1 activity. And you would expect this business to grow at a mid-teens rate in 2026. So could you just elaborate on the growth opportunity in this segment this year? What you're seeing in terms of GLP-1 activity and how you're positioned in 2026?

Yes. And the key word is specialty CDMO, right? So it's something we need to continue to remind people that we're involved in siRNA peptide GLP-1 in a lot of API -- high-potency APIs. We have very strong order momentum going into '26. And that said, it's always important month-to-month, it can be lumpy. But NASD -- our NASD capability are world leaders in siRNA and we have really differentiated capabilities in oligonucleotide manufacturing. And people will see many FDA approvals in this therapeutic, and we're engaged in very positive discussions with customers that have those approvals.

And when you kind of see BIOVECTRA, we're key partners in the GLP-1 space. We have that on the analytical side, and now we have it on our specialty CDMO side. And there's significant tailwinds there in GLP-1, really for the first recent price reductions, I think, has been very important. Direct-to-customer access, wider indications. And of course, emergence of pill formulations. We are actually linked to volume in the GLP-1 business and we -- not a drug price or modality. So we expect that the CDMO business will be really good on both those areas.

Okay. I wanted to touch on capital allocation and M&A specifically. So there's been a lot of recent activity in the industry. There's also been increased interest in your own approach to potential M&A. Are there specific areas within your portfolio that you would look to strengthen through acquisition, any gaps that you would look to fill? And then what's the ideal size of an acquisition for Agilent here that you'd be willing to pursue? And maybe touch on public versus private assets where you're seeing valuations currently.

I feel like we're going to get that question a lot today, I guess.

Yes, yes.

So I'll start about where and Adam can talk about size. So it's clear -- that's why we were very clear about our strategy -- having our strategy as our guiding principle on it. You can see software and productivity are areas of interest. You can see increasing our recurring revenue mix. We have a lot of ability to kind of expand our reach with customers with some technology. So we continue to use that, but we're highly disciplined about it. We look at a lot of deals, but we're very disciplined about looking at those deals, and we move along quickly when it doesn't meet the financial targets. But maybe you can describe on the price.

Sure. Happy to do it. So with regard to size and we get the question a lot. And I think we frame it like this because, number one, we don't limit what we're looking at based on size. We want to make sure it's the right strategy, number one. Number two, that we can uniquely add value to that asset or a place that we can have a right to win, as we say. The third thing, and I've lived this personally and take it very seriously. It's not just words as we can integrate it and integrate it effectively. And then the fourth thing is that we pay the right price for it. So we want to make sure we have cash-on-cash returns above our hurdle rates, maintaining a solid investment-grade credit rating is important to us. That said, we would be willing to flex it if we could return back to that credit rating for the right asset. So from a size perspective, we look at everything. We want to make sure we have an opinion on it, but that's not how we frame our lens.

Okay. And we haven't really hit on Ignite here, but maybe through a pricing lens, you've called out at least 100 basis points of pricing in fiscal '26 from Ignite. Maybe just walk through what the pricing ceiling could look like after you saw such success from Ignite price in '25.

Yes. I mean pricing is one of the big wins for '25. As we said, we doubled our pricing. And in fact, in the last quarter, we did 150 bps of pricing. We're guiding over 100 bps this year as we go forward on it, and we had surcharges, of course, from tariffs kick in, in the last quarter, which addressed it. So I think 100 bps plus of pricing, but it's a really unique mechanism and it's driving a lot of value within the company.

Okay. Maybe one here. So you launched Infinity III in October of 2024, and you've seen double-digit LC growth in the second half of '25, particularly due to strong demand in pharma. So can you just more broadly share more about the Infinity III adoption curve? Where we are in terms of the installed base penetration for customers and how you're thinking about that in '26 and beyond, really?

Yes. First of all, I think it's important to understand the topology of installed base, right? So installed bases can be your own installed base. It actually can be mixed insights, right? So you have an opportunity to replace competitive instruments. I would say market share is in general on your own installed base or those areas where it doesn't change quite a lot in LC. Well, we're expecting a 200 to 300 bps growth over the next 2 to 3 years on it. We're in the early aimings of that. And the reason we're seeing that is because not only because of aging fleets, but you're seeing supply chain consolidation in different regions. Capacity expansion around new GLP-1 modalities and ADCs as needing more instruments for testing. So I think it's really important that we don't miss that the innovation part of Infinity III is making that installed base replacement have continued to improve. That's better productivity, about 30% better productivity for sites. It means we have early warning for a system going down and also walk-ups that make it easier for analysts to do their business. So we're really excited that we're in the kind of early aiming of it, and we see that continue through '26 and beyond.

Okay. Well, less than a minute here. I just want to pose a question. We're early on in the year, what are you most excited for, for 2026 for Agilent?

Yes. Look, we have a lot -- we have built an amazing foundation in '25. You see the work that we put in with Ignite, our strategy is really clear. We have a fantastic team. The markets are improving, as everybody can see. We're very excited about '26. And we're also very excited about investing for the future as we go beyond that. And so looking forward to talking to you more, Casey.

Awesome. Well, I guess we will have to leave it at that. We're out of time. Thank you for the Agilent management team for joining us. Thank you for all of you for attending. Enjoy the rest of the conference, everybody.

Thank you.

All right, I think we can look to get started here. So thanks. Thanks, everyone, for being here. I'm Patrick Donnelly, the Tools and Diagnostics Analyst here at Citi. Happy to have the Agilent team. We have Tom Callihan, the Chief Transformation Officer and then Tejas and Mark from the IR team.

So maybe, Tom, just given your seat, maybe we can start with some of the Ignite pieces. [ Porex ], obviously, made a -- given us some detail on that piece. It's been a pretty big change for the company. I think we're about a year in at this point to some of the Ignite transition, some of the reorganization. Maybe just talk about what you've seen so far? What are some of the key things you're implementing and certainly have some specifics on it as well?

Yes. I think if we take a step back, as you indicated, it's been a year journey, but we've really, really been executing it for about 6 months, right? And so -- because the first 6 months were about planning, scoping and things like that. I think if you think about the broader change in the organization, I think the one thing that's materially changing the organization is really the need to change. And the fact that an enterprise approach -- the company has historically made a lot of its decision-making at a bottoms-up, start with the product lines and move up into the divisions.

But it was important with Ignite to start showing the benefit of actually taking an enterprise approach to decision-making, whether it's the pricing part about it, whether it's looking into the NPIs across the organization and -- which we have a very long tail of and start doubling down on the most material things to the customer that create the biggest value. Those have made big changes to the organization.

And one of the big mindsets is that we started out 10, 12 projects, and they're enterprise projects. They're work streams, whatever you want to call them. And then all of a sudden -- and it became -- it was a little bit of a push and prove it. But what's really happened over the course of the last 6 months, in particular, once we started executing things, getting results, people are seeing the differences in what they do.

Then now that people are coming to us, right? And so instead of the push out, it's more like, hey, we've got some ideas. We think enterprise approach will work good for this. That's how, as an example, we never started out with the tariff as a work stream, but that came in front of us. The AI opportunity has evolved over the course of the year. So what we're having is a situation is instead of us come up with the ideas, it's actually the organization really coming forward with us, and it's a good indication of how they've embraced it.

Yes. And to your point, I mean, it's -- I think you guys have talked about this 12-pronged approach, I think 6 are in motion. I guess, what are some of the biggest changes you've seen? And what are maybe some of the ones still to come that you have an eye on?

Well, the whole idea was to really have a balance, right? When we started out, this was interesting, the importance of Ignite and transformation wasn't going to be a 1-year journey. And it's really going to be an operating model going forward. And so what you didn't want to -- what you wanted to do is have a balance of, what I'll call, quick wins, funding the journey, however you want to call it, and then, work on fundamental investments, right?

And so the initial things we started out with where we've seen better value than I think in a lot of cases than we even expected is, as an example, in our -- because we wanted to start Ignite and transformation with the top line growing, the customer and then the operating margin and the operations improvement. And I think that's really important because I think when people start thinking about transformations, they usually go right to the cost line.

I think it was really important that this became driven by the customer, top-line growth, and then, obviously, there was operating margin improvement. And so we did have a focus initially on pricing as an opportunity. As I indicated, historically, we do some bottoms-up pricing, almost at a product code level, right? But that's not how the customer views us. The customer views us as a total solution, where they're buying the services, the consumables and the instrumentation and the software.

So taking a more strategic approach to pricing and valuing what really matters to the customer and having it market driven is -- instead of doing kind of these peanut butter spread pricing changes that we've done historically, I think, has made not only an impact on how we actually price it, but it's actually really connected with the sales teams and the commercial teams because that's how the customer views it, and our pricing opportunities are really in the areas, in particular, where the customer were driving the most value and productivity for the customer. So it works out very well.

Yes. And you mentioned the tariff piece, and that was, I think, where Ignite really kind of showed some promise is a very quick reaction to the tariffs, the mitigation side. Maybe talk about how you guys approach that? What advantages you had because of where Ignite was? And how you're mitigating the tariffs overall?

Yes. But what we did -- what we realized when we first started out with the tariffs is one benefit we had is that we had large manufacturing areas and sites where our largest customer bases are. So whether it was the U.S. or Europe or China or Asia outside of China, we had a big advantage we thought to at least having locations closest to our largest customer base. So it allowed us to kind of quickly understand that if you focus on your major products, your large instrumentation, your LCs, your GCs, your columns, you'll focus those and move those around the world, and we really obviously developed capability around the world to kind of manufacture the same products in different locations around the world.

And what we did is -- what we didn't realize is it -- because it wasn't quite as incremental as you would think an additive work, we actually leveraged a lot of what was going on at Ignite because Ignite had already been going through the process of regionalizing our -- we used to be plant by plant all around the world. We started getting into a much more regional structure. So that very, very easily fit into what we needed to do for tariffs on the procurement side. We started doing and started just doing localized procurement opportunities.

We actually took the power and the benefit of the total Agilent volume and started doing global RFPs. And so we're able to quickly leverage that as well as the pricing opportunity we talked about. So the nice thing about the tariff situation is we had active work streams that we could quickly leverage. And that's where we're able to kind of mitigate things as quickly as we did.

Yes. And did you guys -- in terms of, obviously, some folks moved different production areas around, what was your guys' approach in terms of the footprint, reacting to -- obviously, there are some headlines, then they changed and they changed again? How did you guys react to the various headlines? Were you moving production?

Well, I think the first thing we have to do is we wanted to make no regret moves, right? So regardless of what the tariff rates are today versus tomorrow and how that plays out, we wanted to make -- we think there's a fundamental move where we're going to be manufacturing closer to our largest customer bases, right? And so when we make those moves, we don't make those with -- it helps to mitigate the tariff situation, obviously. If you're not making something in Europe, you decide to make it in the United States, as an example, to avoid 50% tariffs. But at the same time, what you're also doing though is -- we really think these are fundamental moves and are making our major products in various locations around the world is something we'll just -- regardless of the tariff rate, I think that's there to stay.

Okay. That's helpful. Yes. Go ahead, Tejas.

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It's a perfect example. If you make that no regret move to kind of move to be able to start manufacturing different things, as an example, in China for the tariffs and then you have that situation occur and you just continue to double down on it.

Yes. Okay. Makes sense. So I have some more on Ignite, but we'll circle back on that in a minute. Tejas, maybe on a high level, you guys just reported, I think it was just last week, and yes, you put out the '26 guide, 4% to 6%. I guess, when you think about that range, maybe just give us some quick hits in terms of what went into the range, maybe some variables, low end to the high end? We would love just some context around how you guys approached it.

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Okay. That's helpful. And then China, always a topic with you guys, just given the size of the revenue base, you mentioned $300 million a quarter, probably reasonable that you guys have been stable there for some time. How are you thinking about China? What did you see in fiscal 4Q? And then again, to your point, you guys pulled the stimulus out of the number for '26? How are you thinking about just the setup in China as you move into next year?

Yes. I mean, look, I would say that underlying growth on an ex stimulus basis is a little bit better than flattish, right? And we weren't ready to really call for a more robust sort of broadening out of the recovery because you look at the different end markets for us there. Essentially, we are a little bit over-indexed to applied. We're under-indexed to pharma and clinical in the region. Outside of academic and government, which grew mid-single digit for us, all the other end markets were down in the quarter.

On the other hand, it's like you do get these quarterly swings, right? So in the first quarter of next year, for example, in the guide, we think China will actually grow reasonably. But then, in the second quarter, we've got tougher comps, and that comes down to the Lunar New Year timing, plus the consumables benefit that we saw the pull forward we saw in the second quarter of fiscal '25. So you're going to see sort of China growth look good, then it's probably going to swing the other way a little bit. But for the full year, we still think flat is a reasonable sort of assumption.

Now, to your second part of the question on the stim, we could sort of see that come through late in the year. We just didn't want to assume that at this stage. If we -- if you look at the process, the tender process last time on the first round of stimulus, we think we can deliver pretty quickly in terms of the revenue conversion there once we win that tender. So it could come through late this year, just not something we were prepared to assume.

It might get the orders this year, but it might not generate revenue and volume. I think the other thing just to emphasize on China is to -- that gives us some comfort level, at least in the forecast being stable is the share. Our share remains very stable along with that $300 million a quarter.

Yes. And then, Tejas, to your point, there are certain markets in China that are maybe taking a little bit longer to come back. Obviously, you guys play in some different areas over there. How are you seeing that market? Are there verticals where you feel better or verticals that are maybe lagging a little bit over there?

Yes, I can take that, Patrick. I mean, I think as we look, I would say there's some dynamics going on in the pharma space where probably a little bit better outlook for the biotech part of pharma. We've seen obviously a lot of funding this year around molecule license -- out-licensing and things like that. Some of the changes that are being made around this anti-involution basically the -- looking towards more advanced kind of development. The government is encouraging like more advanced modalities. We think it's probably going to be a good longer-term trend for biotech. We'll see how that plays out this year. But I mean, I would say that would be a stronger area.

I think the ones where -- yes, I mean the applied markets probably expect to be pretty subdued for the year. I mean, that's where some of the broader economic issues probably play a little bit more into the results. And then AMG is just -- I think it tends to be very stimulus-based, right? And like when is the government going to provide funding? There's been -- in the last few years, we've seen some regular funding there. It remains to be seen what's going to go on. We kind of think of that as separate than the stimulus that we've talked about, the larger stimulus and kind of broader stimulus.

Sure. And you mentioned the anti-involution. It came up a little bit as the quarter went. You guys flagged it. I think you said you haven't seen anything, but it just raised a flag of caution. Maybe just frame that up for us and for the folks who aren't aware of what it is, maybe just give some quick background.

Yes. I mean, I think generally, it is a -- our sense that we've gotten from teams there is that it's a push by the government to move in all areas really of the economy. I talked about pharma, but we do see this beyond away from this kind of race to the bottom, lowest price is the only thing. And that's -- they feel that I think that's -- they've sort of encouraged that with their tender processes and their public tenders in terms of just seeking out the absolute lowest price. And so that's what I think that they've sort of signaled a shift away from and that they want to start -- taking into account things like complexity and benefits to a consumer or whatever, things beyond just price essentially.

And our team sees that as, hey, that's them sort of shifting away and moving -- being able to encourage more advanced technologies and development of those and make those investments worthwhile because at the back end, there's an expectation that, that's going to be rewarded rather than just the absolute lowest dollar. So I think we've talked about it in the context of pharma, but I mean it's also in the context of, I think, in -- even in the industrial parts of the space, the applied markets, things like solar, semiconductor stuff, where there will be sort of encouragement for more advanced technologies and not just...

A thing that, Patrick, that is also worth noting is the timeline to implementation, right? I mean, it's sort of 3- to 5-year sort of time period. Local governments at the province level could go faster. So we are keeping a very close eye on that. And the local team is already sort of being proactive about this. And as I mentioned earlier, as part of the Ignite sort of program, we can certainly flex manufacturing or local manufacturing content as needed to position us better.

Yes. And so I mean, as the way you guys would frame it, you're aware of it, haven't really seen an impact, but a reason just given how variable China has been, let's call it, a reason to just kind of hang at this $300 million a quarter for now and just see how it plays out.

Yes.

Okay. Fair enough. And then, yes, maybe some other pieces, Tejas. You touched a little bit on the margins, right? You guys are talking about 75 bps. I think you said if you hit 6%, maybe there's another 15 bps or so there. The margins have been an area of focus for investors, let's say, in terms of the past few quarters. Again, the revenue beats have been big, earnings beats may be a little less so. Maybe just talk about the flow-through of these revenue beats to the margins, why have the margins maybe been a little lacking in the last couple of quarters and the right way to think about the go-forward? Obviously, there's a lot going in there, right, tariffs, things like Ignite with you, Tom. So yes, maybe just frame up the margin framework for us.

Yes. So maybe I'll actually hand it to Tom because he's looked at that sort of very closely and certainly the Ignite piece...

I think the thing that impacts the second half of the year, as you indicate, even with the higher revenue and maybe not as much margin pull-through is really 2 factors that we call out. Number one, it is the tariff compare, right? And we'll have that compare -- we'll mitigate tariffs, but we're going to lower tariffs and offset it by pricing and some other things, but tariffs will not go away. So the comp that we have for the second half of the year, because the tariffs really started kicking in, in April, and that was the beginning of our third quarter, that really is a second half of the year compare.

At the same time, we clearly over-delivered the year, so the variable comp component of that is taking -- took place, which is great news. And the third thing is the Ignite stuff is just starting to kick in, right? And so that's just -- and so are the mitigations. And so we're kind of in an upswing on that.

And then we'll continue -- so if you look at '26, you'll still have the tariff impact year-on-year, right, for the first half, not the second half, right, because they would have fully been in the second half. The variable comp component will be a lot more comparable '25 to '26. It will go up a little bit because of inflation. But other than that, it's a much better comparison. And so we wouldn't expect big fluctuations in that unless we will over-deliver the 6 some way.

And then finally then, the Ignite stuff continues to kick in and ramp up. So that's why we feel as though we'll -- as the revenue gets generated, we'll be in more of an accretive growth on the operating margin side.

And the other thing I would add there, Patrick, is starting the year, we're probably going to be down like about 40 basis points year-over-year. That is almost entirely driven by the tariff dynamic because there is no tariffs in the comp, right? And then, through the year, we are expecting very robust sequential margin improvement. I mean, a lot of that is largely driven by seasonality that we see through the year. But then, in addition to that, you'll get the tariff and the variable comp stuff, which again, at the annual level, they roughly net out. But on the year-over-year compared to the quarterly level, you got to think about those dynamics.

Yes. Yes. No, that's helpful. And then, I guess, another part of the margin piece is the pricing side. We certainly get questions there. Tom, I know it's an initiative for you guys as well. How do you guys think about the pricing piece? What's the contribution as we work our way into '26? Any changes in terms of the pricing environment from your perspective?

Well, we -- in '24, before Ignite, we did about 0.5 point improvement. We doubled that, a little over doubled that in '25. So our jump-off point as we view it going into '26 is really at least a point, if not more, because I think we have good jump-off point and good momentum, especially as the things we're implementing in Ignite are continually being adopted globally, right? We're -- again, I'll just reiterate with Ignite, all the things we're doing are really starting to kick that in, in the second half of '25. So now you're going to start to get more annualized basis to the opportunity, and it gets adopted more throughout the company.

Sure. And another piece of the margins is obviously the specialty CDMO. I think you guys are characterizing now with NASD and BIOVECTRA combined. I know that's a gross margin drag, and that's been something the models have taken a little bit to get cleaned up. Maybe just contextualize what the margin structure there is? I think it's $450 million, $500 million of revs. Obviously, we'll dive into that in a bit. But just the margin piece, is that dilutive on the gross margins? I believe NASD, positive op margins, accretive op margins; BIOVECTRA, obviously not yet. But yes, maybe just talk through what the specialty CDMO does to the margins? And how to think about that?

Yes. I mean, it's a good business, right? I mean, that's one of the reasons we want to -- it is a specialized CDMO with specialized modalities. Customers value what we're doing, right? If we look at '25, the combined businesses were accretive to Agilent's overall margin at an operating margin level, not as you said, at a gross margin level. Obviously, there -- it's just a different profile, a different structure of the business, higher COGS, lower OpEx, but at an Agilent level, they were accretive combined.

As you mentioned, I think there's definitely a difference. I mean, NASD is at a higher level. We think there's good opportunity. Obviously, we talked about that when we did the acquisition. I think we kind of delivered what we thought with expectations as far as BIOVECTRA, but do see nice upside there going forward. So we think that, that could come up to Agilent margin levels. But even as a combined business already, it is above Agilent overall. So we're really excited about the potential there. And with growth, we -- growth really helps the margins in that business, as it does with any business, but that's something we're pretty excited about.

Yes. Yes, maybe we can dive into that piece now that the specialty CDMO. Maybe we can start with NASD. Again, obviously, some really nice trends there. It had a couple of challenging years with the clinical commercial piece, and now, it seems very squarely back on track, opening up some new lines, I think, end of this year into '27, but maybe talk about the visibility.

I believe you guys talked about orders kind of covering all of '26. I think track C and D will open up late this year into next. So maybe just what you're seeing there? How to think about the growth rate? I think you talked mid-teens for the entire specialized CDMO. But maybe on the NASD piece, how do we think about that business and the trends you're seeing? It certainly feels like it's a pretty healthy backdrop here for you guys.

Yes. I mean, we're really excited about both businesses. I would say NASD, really, it's hard to sort of -- it's like picking a child, right? I guess, they're both doing very well. We're really managing them together. I think we've seen a lot of benefits. Some of the synergies that we've seen really have been around operational, using and leveraging what we've learned and what we've implemented at NASD into BIOVECTRA in kind of getting that discipline and being able to deliver, and so that's been a really, really nice to see.

I think, as we look into next year, right, I mean, I think demand for the modalities that they serve is really strong. We're really optimistic and encouraged. I think we do have real -- more demand, frankly. I think we have to manage our capacity carefully. And we -- part of being a good partner to our pharma customers and something that we think is a big success of the business is that we are always available when they need to do something. And that means that we don't over-schedule capacity.

We schedule to be as full as we can be, and that's -- but we're not committing to new customers that, hey, we'll do this for you even though we don't really have space in the plan, right? So it's a big part of the success. But I mean, I think as we see the siRNA, GLP-1 capabilities at BIOVECTRA, siRNA, obviously, at NASD, I think we're seeing continued momentum on approvals there. I believe there was 1 or 2 weeks ago. We're -- the demand for those modalities is just really strong in pharma. As you mentioned, I mean, we have really -- '26, really good line of sight to what we're going to be doing there, excited. Early '27 -- 2027 is when we expect to open sort of the Train C element, the first part of that new expansion. So that's really the largest part of that expansion in terms of the volume capacity. And so...

And what I'd say there, Patrick, is also like that expansion for C and D, it's quite well timed in terms of coinciding with our customers' regulatory timelines, which should help, right, with the capacity utilization and what happens to margins, et cetera, there. The other piece, which I think is worth emphasizing here, is that the commercial versus clinical mix, right? So it's 60-40 now, and we think it only gets more skewed towards commercial through 2026. And that's always a good thing, right? It's good to have anchor tenants, but it's also good to have a healthy sort of commercial SKU to make sure you have good line of sight on near-term revenue generation.

It's not only a good line of sight, but production batches, it's just a more efficient process and a more predictable process. So the big pivot for us to what you indicated is really nice is the skew towards the commercial versus the clinical over the last 18 months has been pretty encouraging and not depending upon a single product as an example for the volume.

Yes. And when you guys look at the business, as you talked about, maybe a little bit capacity constrained. I mean, is there potential upside to numbers? Or is it really you're kind of maxed out until -- and I think Train C is more siRNA, are you just kind of constrained a little bit? Or do you save a little bit of capacity to say, all right, just in case these customers need it, maybe those numbers move up a little bit as the year goes? How do we think about that?

I would say, like, look, we always hope there will be upside to that mid-teens number. To Mark's earlier point, I mean, NASD is also much larger than BIOVECTRA. So you got to think about that as you factor in the growth rates there. Lots of small numbers probably helps BIOVECTRA a little bit more at this stage. But the pipelines are really good. We feel pretty good about how that business is shaping up, not just into '26, but even beyond. And so...

Sure.

And then mid-teens...

Sorry, go ahead.

No, and the -- as you wouldn't forget to add capacity in terms of the efficiency of the manufacturing process itself. We continue to get better and better refined. The yields continue to get better for us. And so that helps even with the current footprint to add capacity over time.

Is that mid-teens growth rate? Is it reasonable to think of NASD and BIOVECTRA similar in that mid-teens? Is that about right?

Similar-ish.

Similar-ish. Okay. That's fair enough. And I guess with BIOVECTRA, you guys came out -- obviously, I think a lot of people feel that there's some reasonable GLP exposure there. You guys talked about the overall GLP business. I believe, it was $130 million, which was higher than a lot of folks I talked to were expecting. Maybe talk about the GLP exposure, the part in BIOVECTRA, the part that's not, and the tailwinds you're seeing there? Obviously, the oral piece, I think, has a lot of eyeballs on it. You guys do have some exposure there, I believe. So maybe just talk about the GLP side? And again, what to make of that business as we go forward?

Yes. So, as you suggested, Patrick, $130 million in '25, it is roughly evenly split between BIOVECTRA when you get the synthetic peptide stuff, and then, on the analytical tools piece. I mean, we are very optimistic about the opportunity. I mean, the key takeaway really is that we are indexed to volume here rather than price or modality, right? And let's sort of -- I think it's worth sort of double-clicking into each of those dynamics a little bit.

So on the recent deals with the GLP-1 manufacturers have signed with the Trump administration, really, I mean, the key takeaway there is that we have these price reductions for the Medicare and Medicaid patient populations, you have direct-to-consumer access. And then, ultimately, you potentially have label expansion coming down the road as well, right? And so all of that stuff is sort of good for us in terms of greater volume. And then, frankly, we have seen meaningful sort of recent RFP activity there related to greenfield expansion. So we feel pretty good about how that piece is shaping up.

And then, on the second point on sort of the oral launches coming up, et cetera, frankly, we are modality agnostic. And the idea here is that you've got on the injectable side, as those continue to scale, the demand for chrome and mass spec tools used in cauterization, release testing, some of the regulated QC stuff is only going to increase.

And then on the pill form, the idea here is you should see accelerating demand for small molecule analytics, right? And then whether that's impurity profiling, the solution testing, solid dose method development, stability assessments, et cetera, those are all sort of areas where we have differentiation and pretty deep penetration. So pretty optimistic about that GLP-1 piece on a go-forward basis.

I think one of the questions that people have asked in the post-earnings is a little bit sort of maturing of the analytical tools piece of the puzzle there. I think it's still very early. Again, like just the indexation to volumes plays in our favor there. And the pill launches, again, are at least in our minds, more of an expansion of the GLP-1 opportunity for us rather than any sort of cannibalization dynamic or what have you.

Yes. No, that's really helpful. And I guess on BIOVECTRA specifically, I know there was some confusion in the quarter about the acquisition contribution versus what BIOVECTRA actually was. I guess, there was 2 months inorganic, then it flipped to organic. October was bigger. Maybe just a quick context around that. I know you guys might not give the exact numbers, but yes, maybe just help us frame that up a little bit.

Yes. I mean, just the linearity in the quarter, right? The first couple of months were relatively light versus our expectations and October was pretty strong. I mean, I would say that it's one of those situations where October is actually a little bit larger than the first 2 months combined. Now, look, I mean, the CDMO businesses, I mean, you and I lived through enough of those, Patrick, where lumpiness is just the nature of the game. Certainly, on a month-to-month basis, if not across quarters, right? And then that's important to keep in mind.

I think really the important thing to understand there is that there's no pull forward of demand that happened here. We had that question as well, so -- is there going to be some sort of an air pocket after this huge October? So I would certainly sort of -- I'm in the camp of no sort of weird one-offs. This is just lumpiness that comes through.

And if you kind of keep in mind, as we talked about in the third quarter, we had the shutdown deliberately to build the capacity, and that was going to play out not right away in the fourth quarter. It was going to play out throughout the fourth quarter.

Yes. And Tom, maybe to that point, one of the questions we got was, obviously, you guys did the shutdown in 3Q. I think there were some questions, were you transitioning capacity from some other modality into GLPs? Or were you expanding it and now the pie is bigger? What's the right way to think about that?

Yes, it was expansion, right? It was taking a process that we had modifying it, increasing basically the throughput of that process to be able to deliver more. And so it was an existing customer with an expansion.

Okay. Okay. That's helpful. And then, maybe just flipping over to the instrument side of the portfolio. Obviously, some nice tailwinds there as well. You guys are in the midst of a bit of a replacement cycle at the moment. Maybe talk about where we are in that, and then, would love to kind of get into the year-end budget flush and expectations there as well.

Yes. So look, I mean, I don't want to sort of overemphasize the budget flush dynamic. That's not certainly something that we are counting on in any particularly material way. I'll turn it over to Mark for which inning in the replacement cycle we are on. It's not mid for sure, but it's not the first inning either. And then Mark, double-click on that on the GC piece.

Yes. No, I mean, I think as we look at the replacement cycle, Patrick, I mean, for those baseball averse, maybe we're offering first quartile of the replacement cycle maybe as a way to think about it and certainly on the LC side. And I think as we think that's -- we're in that space. These typically 2- to 3-year kind of replacement cycles is kind of the norm historically, and we think it could be within our LC business, probably 200 to 300 basis points of incremental growth relative to kind of long-term growth rates for that space or for that business. So really optimistic.

And obviously, with Infinity III, I think we have a reason -- we're giving customers a good reason to go back and replace. It's not just, hey, your stuff is old, but also, hey, we got some exciting productivity improvements, some exciting improvements in the platform, and customers are really liking it. So, I mean, I think that, that's -- it's kind of just doubling down on that and really helping to drive that decision within the customer base.

And that plays out a little differently on GC.

Yes. On the GC side, it's -- that is a longer life instrument. And I think that has implications on how the replacement cycle works. I would say that -- it's a longer cycle with probably a shallower slope. So instead of 2 to 3 years, probably more like 3 to 4 to maybe even 5 years of kind of increase and a smaller amount, probably more like 100 basis points on the kind of the overall GC business versus long-term rate. So still a nice driver, but it's a bit smoother just given that those instruments kind of have a longer lifespan.

Sure. Yes, it makes a lot of sense. And I guess on that piece, Tejas, you touched a little bit on the budget flush side. Pharma, I think you guys are talking about high single-digit type growth for '26. There's been a lot of focus on pharma just given the policy removal of the overhang, hopefully, a couple of months ago. What have those conversations been like? It was an interesting timing. Obviously, we were out with you guys the day or 2 after that, and things were moving quick. But I guess, what's your perspective? Have the conversations changed? Has the tone changed? Obviously, the reshoring piece we can get into. But even more near term, are those budgets loosening up? And are those purse strings finally loosening up from the pharma side?

Yes, for sure. I mean, I think it's important to sort of differentiate between the larger cap sort of customers and then mid-cap biotech, right? So larger cap, both on the pharma and biotech side continue to saw the conversations get better. I mean, we talked about decentralized decision-making a quarter ago, and that certainly has continued as well.

I mean, in the context of the MFN tariff stuff, the turning over of that card is really a positive onto itself, right? Because now people have guardrails in place as they frame what's coming next down the pipe. And frankly, for a lot of these companies, the LOEs that they are facing over the next 5 years or so, that's certainly top of mind as well, and that becomes the priority now. And you've seen that manifest in -- not just in terms of the flow of dollars for -- on equipment and consumables and all the rest of it, but even on M&A, right? There's been a big pickup in biotech M&A over the last sort of 6 months or so.

And that helps on the mid-cap side as well to my earlier point about the fact that there are those sort of happy outcomes in play. And the expectation is for interest rates to come down as well. So you're starting to see the dollars flow there as well. It's still early on this mid-cap biotech piece. I mean, that's like low single digit of total revenue for us, so not a hugely meaningful driver of volatility in a sense. But certainly, on the large cap side of things, I would say that things look to be steadily improving.

Yes. We got the clarity, whether it's the tariffs or the MFN. That clarity for big pharma has helped and gives us a comfort level that we're into more normalized, whether you call it a replacement cycle or a normalized kind of budget flash at year-end that gives us a bit more comfort level.

Sure. And then, the out-year carrot was the reshoring piece. You guys threw out -- you were brave enough to put a number out there. I don't know if anyone else did. But you guys talked about the $1 billion opportunity, maybe 30% of that could be yours. I guess, what went into that number? I think, it's through 2030. Maybe just talk about where that came from, how you're thinking about it and what that opportunity looks like.

Sure. I mean, look, so we looked at it both on a top-down and bottom-up basis, right? And so if you look at sort of the announced sort of CapEx investments in that $350 billion to $400 billion range, we assumed about 2.5% of that is going to be lab instrument spend. And then, about 10% of that is what we serve, right? So that's how you get to that sort of approaching $1 billion sort of ZIP code opportunity. And again, we think we can capture about 1/3 of that over the course of, let's say, 3 or 4 years, right?

Now, the other lens that we took in it was to look at it on a bottom-up basis, right? So we took it. We looked at each individual sort of company that has announced a capacity investment here, and then, we made certain assumptions around the number of greenfield sites and the number of labs per site. And from there, you can sort of -- just based on our extensive experience dealing with these customers, you can make assumptions around instrument spend, and then, the consumables and the services piece layering on probably 1 year, 1.5 years later after that instrument investment, right?

And so we did that sort of bottom-up build at a pretty detailed level. And the good news here, Patrick, is that a lot of these pharma companies that have announced these investments, they map quite nicely to our strategic customer program, which is obviously a very high priority for our commercial teams. And we are in sort of almost biweekly conversations with those customers. So we have a very good lens now.

Look, I don't want to kind of like paint a picture of false precision, right? So this is not about like, oh, let's take $75 million to $100 million and throw it into the model for '27 to '30. That's not the point of this exercise. I think it's still early. We've got to make some sort of -- we will find out more about sort of how much of this is incremental, how much of this is sort of investments that were going to happen outside the states are now happening here, et cetera. But directionally, we feel pretty good about that number.

Because we are at least starting -- we're in conversations now, surely gives us something. Again, we're not at the order-taking standpoint. But to the point that Tejas was making, we feel like there'll be more and more -- activity will grow throughout the year, become more definitive and more of a revenue play for '27 from a material...

And to be clear on that point, Patrick, there's nothing in revenue in '26 for reshoring. Maybe a little bit of order benefit late in the year, but that's about it.

Okay. And then, Tom, maybe back on the Ignite side. I know AI has been one tool you guys have talked about just improving productivity measures. What businesses are you planning on kind of layering AI in on? What's the right way to think about where you guys are? And this is obviously a big, big theme out there.

No, no. I think the first thing we did is the importance of bringing it into Ignite and particularly because it's the nice shiny tool. But what happens is you got to get deliberate results out of it, right? Otherwise, people just keep playing with it and experimenting with it. We see it in a couple of different ways.

Obviously, the digital customer-facing experience in AI and helping customers purchase the consumables, in particular, online, we see a big benefit. But we have a lot of customer-facing activities that involve very technical information, whether it's with our service teams, whether it's with our pre or post sales teams, whether it's our call centers, right?

And so there is a lot of technical detailed information and getting that information efficiently, and we're having one single source of truth. And to get it very quickly and accurately to the customer, we think, is a huge benefit to it. Even outside of the other opportunities we see in the more product development side, whether it's our software side or it's in the actual development cycles within our instrumentation and our consumables and other critical products. We see it from a couple of different ways, and Ignite is kind of the perfect way to actually take an enterprise approach and really prioritize and get deliberate results out of it.

Yes. And maybe one last one on Ignite. I mean, the capital allocation piece for Agilent -- I mean, the deal side has never been maybe one of the big strengths of the company. I know, Ignite, you're kind of using that to maybe look at assets in a different way on the potential deal side, the integration piece, maybe just quickly compare kind of the pre-Ignite, post-Ignite approach on capital allocation. And how you guys are looking at deals?

So I'll start, then -- yes, yes, yes, exactly. So what I'd say, Patrick, is I think it's -- there's a couple of things here, right? So if you think about capital deployment, internal innovation, the capacity expansion, both at CDMO and for consumables, and then, of course, M&A are sort of the top tier of priority. And then, in terms of the excess capital, we are certainly committed to anti-dilutive share repurchases at a minimum and the dividends, right?

Now, I think when it comes to M&A, like we -- the idea here is we don't need a transformational deal to support our growth ambitions, but we remain open to looking at deals of all sizes, right? And there are certain areas, there's software, there's automation, there's specialty CDMO niches, there's high-growth adjacent technologies. All of that is within sort of the purview of how we are thinking about it. But I think that second part, which Tom can lean in on is that we have turned the page in terms of our ability to integrate these assets versus what came before.

Tom, I'll hand it to you.

Yes. I think the Ignite enterprise approach on the transformation is a perfect and operating model to really -- and we were able to test this with BIOVECTRA by the way, right? And so learned from that and saw some real success with that. We did it a couple of different ways. First of all, we viewed integration more strategically. Quite frankly, historically, it used to be a bit of an afterthought to the company. Now, it's a very intentional part of the deal thesis, right, because in order to do that, how are you going to resource it, how quickly you're going to be able to get your sources of value through that and how you're going to be able to do it efficiently, so it doesn't carry on for years and years.

And so we are very careful, that's part of the upfront work we do. At the same time, as opposed to the kind of the bottoms-up approach that we did before, this is a much more holistic approach driving to the same set of numbers, one source of truth and coordinating across the functions, along with the business because at times, we would have maybe historical differences between what the integration team would do versus actually what the business was driving towards. But ultimately, the business has to drive it and own it. And so we've made major changes on that.

And then finally, we're able to leverage many of the work streams, whether it's in the pricing, the procurement, a regional approach to manufacturing versus a site-by-site type of approach to it. We think all of those added together really put us in a good operating model for taking on whatever size of opportunity is in front of us.

Okay. And last 30-second one, the tax rate, we got some questions when you guys guided a lot of questions, like is this tax rate real? Maybe just quickly, why is the tax rate higher? Is it -- do we see -- as the year goes, could that come down? Maybe just a quick hit on the tax side.

Yes, Patrick, I would say -- I mean, we do think it's a real number, right? I mean -- and it's related to Pillar 2 OBBBA regulations, right, and how those have been implemented. And looking across our model and our portfolio, global entities, what we think the result will be -- I mean, it is a one-time step-up. I don't think -- obviously, we'll continue to seek to optimize as things go forward and do what we can. But we think we understand this pretty well and that will be -- going forward, and we'll continue to work our best. I think, if we look around the industry, there's not tons that are below 15%. And I know the one other peer that does have a lot of other M&A and other things that can kind of -- they can use.

Yes. I think an important aspect of our tax rate when you see it, it's very close to our cash tax right? So it's pretty clean, right? And so we don't have a lot of maybe historical M&A and other things kind of flowing through. So you have a pretty clear look for that. Obviously, we're going to continue to look for opportunities to drive that down. But I think we have a good start -- a fair starting point given the regulations out there. But at the same time, we're also -- you can see our operating profit year-on-year that's high single digits growth. So we're going to continue to use Ignite and other factors in order to help mitigate that also.

Okay. Great. Thank you, guys, so much. Really appreciate it.

Good stuff, Patrick. Thank you.

Good afternoon. My name is Regina, and I will be your conference operator today. At this time, I would like to welcome everyone to the Agilent Technologies, Inc. Fourth Quarter 2025 Earnings Conference Call. [Operator Instructions] Thank you, Tejas; you may begin the conference. .

Thank you, and welcome, everyone, to Agilent's conference call for the fourth quarter of fiscal year 2025. As many of you know, I recently joined Agilent after after a fun 15-year on Wall Street and I'd just like to say how excited I am to be joining the team at such a pivotal time in our journey.

With me on the line are President and CEO, Padraig McDonnell; CFO, Adam Ellenof; and Rodney Gonzalve. Vice President, Controller and Principal Accounting Officer, who served as interim CFO until Adam arrival. Joining the Q&A will be Simon May, President of the Life Sciences and Diagnostics Markets Group; Angelica Riemann, President of Agilent CrossLab Group; and Mike Zhang, President of the Applied Markets Group.

This presentation is being webcast live. The press release for our fourth quarter financial results, investor presentation and information to supplement today's discussion along with a recording of this webcast are available on our website at investor.agilent.com. Today's comments will refer to non-GAAP financial measures. You'll find the most directly comparable GAAP financial metrics and reconciliations on our website.

Unless otherwise noted, all references to increases or decreases in financial metrics are year-over-year and references to revenue growth are on a core basis. Core revenue growth is adjusted for the impact of currency exchange rates and any acquisitions and divestitures completed within the past 12 months. Guidance is based on forecasted exchange rates. During this call, we will make forward-looking statements about the financial performance of the company. These statements are subject to risks and uncertainties and are only valid as of today.

Agilent assumes no obligation to update them. Please look at the company's recent SEC filings for a more complete picture of our risks and other factors. And now I'd like to turn the call over to Padraig.

Thanks, Tejas, and hello, everyone. Thank you for joining today's call. Before I talk about our results, I want to start by introducing Adam Elinoff, our new CFO, who officially joined Agilent last week. Adam joins us after a distinguished tenure at Amgen where he advanced through a series of finance, strategy and transformation leadership roles over a total of 19 years, most recently serving as Vice President of Investor Relations and Treasurer. I'm looking forward to leveraging Adam's expertise and strategic planning and M&A and its commitment to cross-function collaboration will be invaluable to Agilent in the years ahead. Adam, would you like to say a few words?

Thanks, Padraig.

I'm thrilled to join Agilent at such an exciting time. My interactions with the leadership team over the past few weeks, both within the finance function as we contemplated the guide and with the broader team have only reinforced my optimism for what lies ahead. I'm looking forward to working with the team to drive growth and innovation, advanced operational excellence and preserve Agilent's history of financial discipline.

Great to have you on board, Adam.

I also want to take a moment to express my sincere appreciation for [ Rodney ] stepping in as Interim CFO over the past 4 months. His long distinguished career at Agilent demonstrated he was more than capable of helping us bridge this important transition. Now let me talk about the Q4 results.

It was another strong quarter. The Agilent team executed exceptionally well, delivering the solutions our customers need in a market that is showing continuing signs of normalization. In the fourth quarter, Agilent reported $1.86 billion in revenue, growing 7.2% on a core basis, our sixth consecutive quarter of core growth acceleration. This performance came in above the high end of our guidance.

Our customer force approach is paying dividends with excellent top line results that compare very favorably with our peers. Momentum remains broad-based across the portfolio, supported by strong LC/MS demand and share gains. CDMO upside, solid double-digit contributions in key regions and a replacement cycle that continues to accelerate. These trends reflect our structurally resilient portfolio and performance that tracks above the broader market.

At the same time, our Ignite operating system continues to improve the effectiveness and efficiency of our organization. Ignite helped delivered more than 200 basis points of sequential margin improvement compared with last quarter, while [ funding ] incremental performance-driven variable pay. The bottom line result was 4 quarter earnings per share of $1.59, above the midpoint of our guidance.

Simply stated, in a dynamic environment that continues to evolve, the Agilent team delivered for our customers and our shareholders. As we close the 2025 fiscal year, I want to highlight 4 key dimensions where we made exciting progress this year and that will drive our growth for the future. First, the innovative products and services that we develop with a customer lens to create differentiated value. Second, the extraordinary customer intimacy and trust our unified sales and service organization creates that unlocks high-quality lead generation and fund conversion. Third, the increased capabilities and level of talent throughout Agilent. Fourth, the Ignite operating system that enables us to effectively combine these elements to drive long-term growth and maximize value for customers, shareholders and employees.

Let's start with innovative products and services. The success of our customer-focused innovation was on display throughout the year with products and services that differentiate us from the competition and drive our growth by solving real customer problems. This includes our next-generation Infinity III that is delivering as much as 30% improvement in productivity for our customers. Infinity III drove double-digit LC growth in the second half of the year that is underpinned by customers returning to buy large volumes of additional units because of their great experiences.

Our Pro iQ LC/MS also has seen an amazing ramp. Its unique value proposition for [indiscernible] Biotech is driving strong customer interest as well as sales that are well ahead of our already robust expectations. The summer launch of our Pro iQ drove overall [ single quarter ] LCMS growth of more than 50% in the first full quarter. And last month, we introduced our Altura bio-inert LC column. Customers are rapidly adopting the Altura column and the columns is an order of magnitude greater than past column launches. This is a clear indication of just how important increased sensitivity and resolution are in key applications that support oligos and GLP-1s.

These results also highlight new product launch excellence across the organization. When it comes to artificial intelligence, we are actively using AI to accelerate our innovation engine and drive operational excellence. For example, AI generates 80% of our engineering drawings based on product specifications and customer needs, thereby increasing design productivity and reducing cost and design cycle times by 75% for our GC products.

In our operations, our order fulfillment team is leveraging agentic AI for testing, inspection and control to eliminate redundant shifts, reduce downtime and improve quality. Our second key dimension, extraordinary customer intimacy centers on a cornerstone of continued success, leveraging our unified sales and service model to maintain lasting customer relationships. Our commercial team members are uniquely positioned as trusted customer partners. Agilent's commercial model is a unified end-to-end organization to provide presales consultation, a modern and easy-to-use e-commerce platform and a highly experienced deep technical post-sales service and support that ensures customer success.

Our field service engineers build long-term relationships with our customers by partnering with them to solve their most critical problems. Those relationships provide highly valuable insights that fuel a vital and growing portion of our demand generation programs. Insights from our service team now accounts for 30% of all sales leads. And these leads come with an order conversion rate that is more than double that associated with the rest of the sales funnel. Because of our uniquely deep connection with our customers, it will come as no surprise that they consistently rate Agilent services as best-in-class.

We don't take this privileged position for granted. That's why we continuously implement new ways to enhance customer intimacy. In terms of AI and customer intimacy, we are working to deploy AI within our CRM to support our sales team with predictive insights, automating tasks and proposing personalized content in service of our customers.

We're also using virtual agents to complement on-site support in select markets to resolve customer issues more quickly. The third dimension is our increased capabilities and level of talent throughout Agilent. We've leveraged our deep bench of in-house talent and complemented it with external hires that bring fresh perspective and domain expertise.

At an executive level, in addition, Adam, we brought on [ Megan Hansen ] to lead our HR team to help us build on our strong culture. August Specht joined us from Thermo Fisher as our Chief Technology Officer, brings deep scientific knowledge and analytical technologies and a proven ability to lead innovative R&D teams. And most recently, Joydeep Ganguly from Gilead to drive world-class manufacturing while leveraging our global scale to realize increased efficiencies. While these individuals are important and visible additions to our leadership team, all Agilent employees are focused on accelerating the pace of innovation driving superior execution and most importantly, delighting our customers.

Finally, we are bringing together these foundational strengths through our Ignite operating system, our fourth key dimension. We launched Ignite at the start of the year to improve the pace and quality of our execution and to offer in a new mindset that leverages the power of the enterprise to maximize both growth and stakeholder value. Some examples of Ignite's early success include enhanced top line growth through the creation and implementation of an enterprise pricing program that drove performance across the year, more than doubling our price growth compared to FY '24. Faster decision-making and improved efficiency by reducing layers of bureaucracy, meaningful procurement cost savings through globalization of vendor contracts that leverage increased scale for additional negotiating power. And we saw the power of Ignite in real time this year as it enabled the immediate creation of our tariff task force to drive a rapid and coordinated response to global tariff changes.

The cross-functional task force rapidly developed a unified strategy and executed a suite of interconnected projects that greatly accelerated our tariff mitigation efforts. As a result, we are highly confident that we will fully mitigate current tariffs in FY '26. Also Ignite has already delivered well over $150 million in annualized savings. The Ignite operating system is able to quickly assemble knowledge from across the organization, develop a thorough and actionable enterprise plan and actively drive implementation and quantify outcomes. This is critical as Agilent continues to evolve.

Finally, and this is important, Ignite has strengthened our organization readiness to identify, acquire and integrate attractive assets. Our integration of BIOVECTRA is one example. It's been a highly productive year for Agilent. We've laid a robust foundation upon which we can drive long-term differentiated growth and value. Now let me share some additional details of our Q4 results, starting with our end markets.

We continue to see signs of improvement in the Pharma market. The Agilent team was able to leverage those conditions and our customer-centric solutions into an excellent 12% growth during the quarter. We also saw a nice pickup in spending among our biotech customers. That spending grew in the low 20s during the quarter, a low double digits ex CDMO, which was led by our large accounts.

Our customer-focused solutions for oligo therapeutic developments, peptide like GLP-1, an Infinity III drove our performance in Pharma contributing to low double-digit growth in LC and mid-teens growth in LC/MS platforms. That performance is above that of our peers and plans to share gains across the replacement and greenfield opportunities. Our specialty CDMO business continues to be a differentiated growth driver. It represents nearly 20% of LDG revenue and grew more than 40% on a core basis during Q4.

During the quarter, commercial programs drove 60% of our NASD revenue, the capacity increases we implemented at BIOVECTRA in the third quarter enabled a record 4 quarter that was in line with our elevated expectations even as the intra-quarter cadence shifted revenue to October. Chemical and Advanced Materials grew 7% as we continue to see strong demand in Americas and Europe. Chemicals customers continue to invest in capital equipment to meet the demand driven by reshoring of downstream customers in the semiconductor market, increasing global competition for critical resources and enhanced focus on regional supply chain security. Diagnostics and Chemical continues to be a durable mid- to high single-digit performer with 7% growth in the quarter.

We're excited about the upside potential here as our new Dako Omnis family penetrates medium and low throughput labs. Environmental and Forensics grew 9% as the approaching implementation of a revised EU drinking water directive drives investment in new capabilities. Also, commercial labs and forensic customers in the Americas are moving quickly to spend the capital budgets before year-end even as U.S. government spending in this end market remains muted.

Our market-leading PFAS business grew high single digits in Q4 and almost 40% for the year. Despite meaningfully tougher comps and the U.S. EPA headwinds we mentioned last quarter. Environmental use cases remained a bulk of our PFAS revenue though growth is increasingly coming for our end markets such as food and CAM.

Our business in the food market finished strong year with a growth of 7% in the quarter. Finally, Academia and government, our smallest end market, at 7% to 8% of annual revenue declined 10% in the quarter. To no one surprise, federal spending reductions had an increased impact on instrument spending in the U.S.

In summary, our growth across major end markets continues to run ahead of our peers, supported by stronger LC/MS adoption, healthy contributions from specialty CDMO platforms and solid traction in applied workflows. We continue to see nice momentum in our instrument portfolio with instrument book-to-bill exceeding 1 for the seventh consecutive quarter. We are in the early stages of a normalized replacement cycle and gaining share against the competition, plus the growth of our installed base enables robust attach rates for consumables and service offerings to lend meaningful durability to our top line strong recurring revenue.

As we look to FY '26, our priorities remain clear: advance our Ignite operating system, sharpen commercial execution, capture opportunities from improving end markets, innovative new products and a multipronged replacement cycle. In our end markets, we expect continuation of positive trends in Pharma. This will be enabled by improved visibility around pricing and a stabilizing tariff environment as well as the very early stages of pharma reshoring that we anticipate could start to materialize in orders towards the end of the year.

And while it's too soon to call an inflection, the accelerating pace of M&A and improving funding environment into October bodes well for small and midsized biotech customers in FY '26. We remain bullish on demand outlook for a specialty CDMO pharma services with strong market momentum in our key modalities, like siRNA and GLP-1s. We expect to drive mid-teens growth in the coming year as we get ready for opening new capacity in 2027.

We expect Applied Markets will continue to grow as customers adapt to shifting macro conditions and structural drivers like the expansion of PFAS testing and semiconductor reshoring support durable long-term demand. In diagnostics and clinical, we see continued strength as testing demand growth and our expanded Dako Omnis offerings enables new placement opportunities. In our smallest end market, Academia and Government, we are not expecting a meaningful recovery in FY '26 as ongoing U.S. federal spending headwinds seem to be unlikely to abate soon. Putting it all together, incorporating the stronger baseline comparison for FY '26, we're starting the year with an expectation of 4% to 6% core growth.

We believe this range is a prudent initial guide that takes into account secular growth drivers. This includes instrument replacement cycles, demand for our specialty CDMO services [indiscernible] specific needs in GLP-1 and PFAS and Pharma and semiconductor reshoring. This allows for an evenness in ongoing recovery dynamics across our markets. We anticipate these growth drivers reinforced by Ignite to provide continued momentum.

We also expect to deliver 75 basis points of operating margin expansion in FY '26 at the midpoint. This target allows us to make critical investments to drive innovation, expand our digital commercial capabilities and prepare for opening of our new CDMO capacity in 2027, all while absorbing incremental material costs driven by tariffs and assumptions for a steady end market recovery.

This margin expansion translates into 9% operating profit growth at the midpoint, demonstrating the strong operating leverage inherent to our model. For FY '26 earnings per share, we're guiding 5% to 7% that includes an EPS growth headwind of 3 percentage points from the onetime step-up in tax rate reflecting the new global minimum tax regulations. Adjusted for this tax dynamic, underlying EPS growth would have been in the high single to low double-digit range. Our financial discipline remains unchanged. We are deploying capital where it delivers the highest long-term value balancing investments in innovation, M&A opportunities as well as strategic capacity expansion while returning capital to shareholders.

Now let me turn it over to Rodney who will provide additional details on the fourth quarter results and our guidance for next year.

Thanks, Padraig, and good afternoon, everyone. In my comments today, I'll provide additional detail on revenue in the quarter as well as walk through the income statement and cover other key financial metrics. I'll then cover our new full year and first quarter guidance. Q4 revenue was $1.86 billion, above the high end of our guidance. On a core basis, we posted growth of 7.2%, while reported growth was 9.4%. Currency had a favorable impact of 0.9% while M&A contributed 1.3%, the BIOVECTRA acquisition is reflected in core growth starting in October.

At a business segment level, LDG grew 11%, well ahead of guidance, bolstered by the strong performance in our LC and LC/MS instruments and robust CDMO results. [ AMG ] grew 3% as expected, led by high single-digit growth in GC and GCMS as we see increasing benefit from the instrument replacement cycle in those platforms as well. ACG grew 6%, in line with our guidance with high single-digit growth in the rest of the world offset by mid-single-digit declines in China. On a geographical basis, both the Americas and Europe saw a healthy 11% growth with broad end-market strength outside Academia and Government.

China declined 4%, and the rest of Asia, ex China, grew 4%. Results in China were below our low single-digit growth expectations, though revenue contributions remained stable around $300 million per quarter. India grew in the high teens in Q4 with double-digit growth in pharma and greater than 20% growth in each of our applied markets. This balanced strength across our geographies which saw us deliver double-digit growth ex China remains a key differentiator of our performance profile.

Gross margins in Q4 improved sequentially by 100 basis points and came in at 54.1%. On a year-over-year basis, they were down 100 basis points due to tariff headwinds. Operating margin was 27.2%, up more than 200 basis points sequentially, driven by leverage on volume, strong pricing and tariff mitigation. We delivered this result despite absorbing an incremental 60 basis points sequential headwind from performance-driven variable pay.

Absent the variable pay dynamics that reflect better business conditions and our strong execution, operating margins would have expanded by 270 basis points over the prior quarter, well above our guide of 230 basis points of sequential expansion. On a year-over-year basis, operating margins were down only slightly due to tariffs.

Now moving below the line. We had $10 million in other income, while our tax rate of 12% was as expected. Finally, we had 284 million diluted shares outstanding in the quarter. Putting it all together, Q4 earnings per share was $1.59. That was above the midpoint of our guidance and grew 9% from a year ago.

Now let me turn to cash flow and the balance sheet. Operating cash flow was $545 million in the quarter, and we invested $93 million in capital expenditures. We purchased $85 million in shares and paid $70 million in dividends during the quarter. But recently, we increased our industry-leading dividend by 3%, and we ended the quarter with a net leverage ratio of 0.8 pointing to our robust balance sheet that leaves ample room for capital deployment optionality.

Now let me share some additional details on the outlook for next year and the guidance for our first quarter. We expect revenue to be in the range of $7.3 billion to $7.4 billion on a reported basis. This represents an increase of 4% to 6% on a core basis as currency is expected to be a 1% tailwind during the year. To help with your models, I want to provide you with additional details on expectations for growth in our end markets during the year.

Starting with pharma, we anticipate high single-digit growth, improving market conditions and the strength of our offerings in key high demand applications create a favorable environment. In the applied markets, we expect mid-single-digit growth in Chemical and Advanced Materials, low single-digit growth in Environmental and forensics and flat growth from food where we have especially difficult year-on-year compare against a strong China stimulus tailwind in FY '25.

In Diagnostics and Clinical, we anticipate mid-single-digit growth. In Academia and Government, we are guiding to a low single-digit decline as we don't foresee meaningful recovery in the U.S.

By business segment, we are guiding both the Life Science and Diagnostics Markets Group and the Agilent CrossLabs Group to grow mid-single digit and the Applied Markets Group to grow low single digit in FY '26. Finally, by geography, we expect the Americas to lead the way with mid- to high single-digit growth, while Europe and Asia ex China grow mid-single digits, building on the momentum we saw in the back half of the year.

In China, we are incorporating a flat assumption for FY '26, consistent with what we saw in China this year. Based on our latest expectations around stimulus timing, we are taking a prudent approach and substantially moving stimulus benefits from our FY '26 revenue guidance.

Moving down the P&L. We expect to deliver 75 basis points of operating margin expansion in FY '26 at the midpoint. We anticipate a more gradual start given typical seasonality and the lack of tariff headwinds in the first half of FY '25 with momentum building through the year. Reflecting the latest global tax regulations, we see our tax rate increasing to 14.5%, a 2.5% increase compared with last year. We also expect $30 million in other income, and [ we are planning any ] dilutive repurchases to maintain 284 million diluted shares outstanding for the year.

Putting this all together, FY '26 non-GAAP earnings per share are expected to be between $5.86 and $6, representing earnings growth of 5% to 7%. For your P&L modeling, let me share some additional expectations we have incorporated into our guidance for the year. Because of Ignite, we expect pricing to continue to improve with an opportunity to grow well above 100 basis points. This guidance also incorporates achieving full mitigation of existing tariffs over the course of the year using cost savings and pricing actions. As is typical, we expect to see substantial sequential improvement in operating margins over the course of the year.

Finally, we anticipate operating cash flow will be in the range of $1.6 billion to $1.7 billion and expect to invest $500 million in capital expenditures. To help with phasing, we are expecting revenue seasonality similar to FY '25. Meanwhile, earnings will be slightly more biased towards the second half given the tariff impact on the P&L in the first half.

Now moving to the first quarter. we expect our reported revenue to be in the range of $1.79 billion to $1.82 billion. This represents an increase of 4% to 6% on a core basis, while currency is expected to be a 2.5% tailwind. First quarter EPS guidance is $1.35 to $1.38 with 285 million diluted shares outstanding. Now I'd like to turn the call back to Padraig for closing comments. Padraig?

Thanks, Rodney. As you've heard, we've built excellent momentum across FY '25 in a dynamic environment. Our distinct growth drivers under Ignite operating system are fueled for success. We are poised to benefit from a broadening end market recovery, win share and deliver resilient above peer growth and margin performance over the long term.

With our innovation engine accelerating, our focus on customers intensifying and our best-in-class commercial team executing, we are entering FY '26 from a position of strength. Thank you all for your attention. I'll turn it back over to Tejas for Q&A. Tejas?

Thanks, Padraig.

Operator, can you please share the instructions for the Q&A? .

[Operator Instructions] Our first question will come from the line of Tycho Peterson with Jefferies.

Padraig, I'm wondering if you can comment on BIOVECTRA. You guys had guided, I think, closer to $35 million and came in around $22 million. So maybe just talk about dynamics there. And then you're taking CapEx up $100 million. Is that all CDMO?

Yes. So we're very pleased with BIOVECTRA came in strong for the year, driven by GLP business. So Q4 was a good -- was an easy comparable, pleasing nevertheless. So we came in against what we [ talked ] for the year. We have key molecules planned for '26. We're very, very happy about the book of business we have for BIOVECTRA. It was an outstanding integration from our side, which bodes well for future M&A as well. On the CapEx side, Adam, do you want to give some color? .

Sure. Thanks. So the incremental $100 million investment is really around incremental NASD capacity as well as incremental consumable expansion. .

Okay. And then follow-up on margins. Obviously, a focal point, especially coming out of last quarter. Maybe to talk on the 75 basis points you're guiding to, the gives and takes there. And if the top line ends up at the high end, could you do better?

Yes. So on margin, I think we have a prudent margin for '26 set in, and we're going to go through some of the the differences on the call. But Adam, do you want to go through some of the ideas you have on margin?

Sure. So if you think about the margin for '26, at the midpoint, we're guiding 75 bps improvement on a year-over-year basis. And that's really driven by Ignite pricing optimization, some operational efficiencies that you see in the number, and that includes some of the tariff mitigations and then volume growth. The other piece, which I think is important, which I want to highlight is this more than offsets inflationary impact, and we're making incremental investments in growth and innovation as well as adding strategic capacity. So let me just quickly talk about those incremental investments in growth because I think it's something that Padraig talked about with our capital allocation strategy.

So one, we're making digital advancements for our commercial teams and customers. The second, adding AI across the enterprise, and we're really being focused there on a number of projects. And then importantly, we're continuing to invest in our core R&D portfolio for our products and with August coming on, we're trying to make sure that we're investing in the most high-impact projects.

Our next question will come from the line of Patrick Donnelly with Citi.

Padraig, maybe just on the general tone from biopharma customers in recent months? Obviously, there were some big announcements. It sounds like things picked up a little bit, both on pharma and biotech. Can you talk about maybe specifically on the instrument side, what you've been seeing? Again, it does sound like biotech is loosening up a little bit for you guys. It sounds like pharma is maybe a little more constructive. Maybe just talk about what you're seeing there. And then even if you get into year-end here, is there already signs of what the budget flush could look like? What are you guys seeing there? Could that be a little more normal than past years? What do the conversations look like there?

Yes. Thanks, Patrick. So pharma, our largest market, grew 12% overall in the quarter. And what we're seeing is the [ MFN ] tariff deals have really reduced uncertainty for our customers. Our biotech grew in the low 20s or I would say, low double digits ex CDMO and the U.S. biotech recovery is starting in well-funded large caps, releasing capital spend. I think what you're seeing in the small to mid biotech, you're seeing improved funding backdrop. And you're seeing that with like a recent M&A exits, although it really is too early to call an inflection point on that side.

But what's driving this is really, I would say, our strong momentum and our innovation around Infinity III is coming in extremely well. And Pro IQ LCMS resonating extremely well. We had 50% growth for the single quad in Q4. And all of these things lead -- bode well for the future, and that was backed up with our Altura bio inert columns. So I would say on the -- in terms of the [indiscernible], we have good visibility and it's more of a typical calendar year-end in [ budget flush ]. So we're expecting that to be more normalized.

Okay. That's helpful. And then maybe on the NASD business, it sounds like that's doing well, double-digit growth [ pretty safe ] for '26, I guess, given what you're seeing. Can you just talk about the visibility there? Is that fully booked out through '26. And then you talked about the expansion, the capacity expansion plans as the year goes. Can you talk about, I think it's Train C and Train B, when those come online, where those are leading towards in terms of market need, market indication. Is there an impact to margins as those ramp? I know NASD is accretive on the op margin side. But as those trains open up, does that change anything? I know there's a few questions [indiscernible] that in there, but that color would be great.

Yes. Thanks, Patrick. So I'm going to start off and hand it over to Simon. So we're really pleased with our CDMO results in FY '25, and we're excited how the book of business is building for '26 with recent wins and we're seeing movements towards commercial programs. But Simon, do you want to give some more color on that? .

Yes. Again, I think we've had a very strong year in FY '25. We've been very pleased with the execution, very pleased with the way that the order book has been developing. We've seen a lot of further reasons to validate the siRNA modality. Just in the last couple of weeks, there was another FDA approval. So we think that we are really well positioned here in coinciding the strength of the modality, the future outlook of the modality and our competitive position in the market.

So as we look ahead to FY '26, I'd say we've got a very robust order book as we enter the year for pretty much the full year. So I think it's mainly a case of execution on existing capacity in FY '26. But then as the question indicated, we've got the capacity expansion starting to see the finish line coming [ to side ] there towards the end of '26 and we're looking to go live in early mid-part of '27 with Train C. And as is always the case with the capacity expansion, there will be dynamics there around amortization and growing into the skin. And I think we've got the basis pretty well covered there in '26 and we're well ahead in our thinking where that's in that respect in '27.

Our next question will come from the line of Dan Leonard with UBS.

My first question is on China. Can you talk about the downside variance on China in the quarter? What were the drivers of that in performance by end market perhaps?

Yes. Thanks, Dan. So Q4 in China was -- we were down 4% and that was below our low single-digit August guide. But all markets were down low to mid-singles except A&G, which was up 5%, benefiting for some academic stimulus. [indiscernible], I think, was -- were in line with our key peers. But mix, I think, is an important factor, Dan. So first of all, we saw growth in biopharma and CAM, but we saw declines in food and environmental. And I would say, Pharma, small molecule was stable. .

But overall, it's a very stable business. You're going to have quarters, some swings or variance between quarters, but we're seeing sustainable $300 million per quarter as we go forward. And we expect FY '26 to be flat like -- FY '25 was flat. I will say, though, if you look at our business, given our long-standing customer relationships, our recent win rates and our scale and our visibility into our direct channel, we're very confident in terms of what our market share being stable in '25. And of course, we're going to continue with that in '26.

Appreciate that. And then a follow-up, org. I think you mentioned that there were some pharma reshoring assumption in your guidance for 2026. How important is that to your forecast? Any way to put some context or dimensions around that.

Yes. So we're in a lot of conversations with some key pharma companies around reshoring and talking about what it means for their R&D and tech investments. They're focusing on [ shovels ] in the ground under lab equipment needs, and we expect by the end of '26 that we'll get some orders in that area. So we're estimating the opportunity of about $1 billion by 2030. But we're limited in seeing the order benefit at the end of '26. We see an overall $1 billion addressable market opportunity for Agilent about in -- by 2030, and we expect about 1/3 of that. But overall, I think there's upside in the forecast around reshoring.

Our next question comes from the line of Doug Schenkel with Wolfe Research. .

I just wanted to start on GLP-1s, how big is this business? I'm thinking it's probably around $100 million coming out of last year. And then I guess, if that's right, how much of it is LC versus services. What's your positioning with generics coming online in different geographies like in India and China, Canada, just to name a few. And how should we think about the growth outlook for '26?

Yes. Thanks, Doug, so Agilent's GLP benefit really comes for 2 forms: our CDMO business, largely around BIOVECTRA, where we're working on synthetic peptide manufacturing and our analytical tools like our LCMS and Altura columns, supporting QA, QC solutions. So we're actively involved with many of the GLP-1 manufacturers. And of course, on the analytical tool side, Infinity III is a really key component. If you look at Q4, revenue was about $40 million for GLP-1. That's split about 60% for BIOVECTRA, 40% for the analytical lab. And I would say, we saw about a 20% growth rate in the analytical lab in Q4 and BIOVECTRA added about $25 million.

If you look overall in '25, I think the GLP-1 revenue is about $130 million, split evenly between both the BIOVECTRA and the analytical lab. And if you think about the analytical lab, we grew 40% in the analytical lab and GLP-1. Altura columns really helping towards the end and of course, the Infinity III. So overall, it's a really important business for us, and we're seeing a long runway into '26 on both sides of the business. India is a particularly interesting part of where you see the GLP-1, where you see the patent cliffs coming, and we've been doing a lot of investment in India around our experience center for customers, workflow help for our customers. So we expect in India we're going to take a lot of share as it goes into '26.

All right. Super helpful, Padraig. One more on a completely unrelated topic. The academic and government end market, I think you guys were down 10% constant currency in the quarter, if I updated the model, right? I think this is a little bit surprising given seasonality and the fact that there was a little more certainty about the funding environment, maybe the offset was the government shutdown. I'm just curious if you could tell us a little bit about what you saw over the course of the quarter and heading into calendar year-end. And happy Thanksgiving, everyone.

Yes. Thanks, Doug. So academia and government declined about 10% for Q4. That was a slightly bigger decline that we put out in guidance. I would say ex U.S. very stable sequentially. However, we -- I think we faced tougher year-over-year comps with Americas down mid-teens. And I would say the rest of the world was down mid-single digits. U.S. federal spending reductions was really the material impact. The instruments were down mid-20s for the Americas. While I would say chemistries and services were resilient at low single digits for the Americas, so we're seeing a reasonable lab usage. I would say on the U.S. government shutdown that you described or Doug, we saw no material impact from that. And we're expecting continued softness in FY '26 in Americas as U.S. federal spending reductions continue as we go forward. But I will say it's our smallest market, and it's about 1% of our overall business in the U.S. and the NIH spending.

Our next question will come from the line of Brandon Couillard with Wells Fargo.

I mean if you look at the [ ACG ] business, you said all reasons that ex China grew high single digits in the fourth quarter. But I think you only talked about mid-single-digit growth in '26. Do you expect to see a little bit a bit as the instrument cycle continues to escalate next year? Or are you just sort of being conservative here to kind of unpack how you're thinking about AcG in '26

Yes. Yes. Thanks for the question. I'm going to kick it off, and I'm going to hand it over to Angelica like. So we saw healthy high single-digit growth ex China in ACG. We continue to grow in our installed base and ramping attachment rates, and we're confident that ACG is well positioned to really sustain the long-term recurring revenue ramp. It was really a solid quarter and we saw 6% growth in Q4 at the high end of our guidance, and that was 8% ex China. But Angelica, do you want to give some more color?

Yes. Sure. Brandon, so we're very excited by the continued growth that we're seeing in ACG, largely driven by the size of our installed base, but also the customers' utilization of assets in their laboratory. We've -- we've seen some great adoption of our recent chemistries launch, the Altura column. We also launched recently a Remote Plus services offering, which allows us to support customers and build stronger relationships with customers that may have capabilities in-house, but want to leverage the capabilities and the know-how of the Agilent field service engineers to be able to get them back up and running when they have unplanned or unexpected downtime.

And we're still seeing a great amount of interest in improving lab productivity. So we're seeing continued adoption of our Open Lab chromatography data system and our enterprise content management capabilities as customers are looking to better manage the data coming out of their instruments, and we're seeing some good growth in our automation. So when you look across the portfolio, we have a lot of things to take as momentum going into FY '26.

And certainly, as we see tech refresh and we see replacements of instruments in the laboratory, those provide long-term growth as those insurance continue to be used and we'll be connecting to those with our recurring revenue streams accordingly.

That's great. And then I'm not sure if this is better for Rodney or Adam. Just a clarification, what was net pricing in the fourth quarter? I think you talked about 100 basis points in fiscal '26 but there could be upside to that maybe from some of the AI tools. Can you just clarify what you're penciling in for pricing next year?

North of 100 basis points.

And in the fourth quarter, Rodney?

In the fourth quarter, we were closer to 150 basis points. .

Our next question will come from the line of Vijay Kumar with Evercore ISI.

Congrats on the nice print here. My first 1 on order commentary here in the quarter, hybrid orders and backlog, I'm curious. I know last quarter, you were speaking about stimulus -- China-related stimulus, maybe some pharmacopia updates out there. Some curious if any of that is showing up in orders?

Yes. So I can talk, our book-to-bill was greater than 1. Orders continue to, I would say, continue to be positive as we go through the quarter. It's been very stable through the quarter in terms of our order rate and, of course, a win-loss ratio, et cetera. I would talk a little bit about stimulus. The first one, the [ SAM ] tender. It shifted, I would say, from Q1 to later in the year in '26. And we're expecting roughly about 10 million [ GACC ] orders in Q1 of '26, which was smaller than expected. But that is excluded from our '26 guide adding on the -- I think, in the abundance of caution, we're excluding it from the '26 guide. So if anything comes in on that side, it will be upside.

And I will say that we have a very strong track record and a win rate with stimulus in China, winning 50% of the [ port round ] tenders. So we're seeing how the year plans out and staying very close to our customers on that.

That's helpful. Then maybe my follow-up on margins. Gross margins were a little light in Q4. What do you assume in for gross margins in fiscal '26? Should we see gross margin expansion. Could you just quantify what is tariff versus FX dynamics on gross margins?

Rodney, do you want to take this one?

Yes, I'll take this one. So we're not guiding gross margins, but we should see gross margin expansion. Again, from a tariff standpoint, we do think we'll be fully mitigated on tariffs in the second half, and that will be a mix of both pricing and cost reduction activities. So that in itself will be helping help the margin picture along with pricing and leverage.

The other thing that was impact for this year has been BIOVECTRA, now that, that's been annualized. It won't be necessarily the impact -- a drag to the gross margin line.

Our next question will come from the line of Jack Meehan with Nephron Research.

I had a couple of questions. I just wanted to unpack some of the competitive dynamics going on in the LC business. So the first one is in LDG. There were a few stats thrown around. I think I heard double-digit growth in the second half for LC, LC/MS instruments. What was the fourth quarter number? Was it also double digit? And I heard the Pharma data point. Can you just talk about how that business is doing in some of the other end markets?

Yes. So in the fourth quarter, we saw low double-digit growth in LC and actually mid-teens growth in LC/MS. So a very strong performance. And as we talked about the replacement cycle before, we're in the early innings of a replacement cycle, and that's accelerating with a lot of adoption of the Infinity III, some initial purchases a number of quarters ago and customers coming back for more on that one. I would say, when you look at the independent market share data, we're gaining share in both those areas. So that's very good to see as we go forward on it.

And I would say, overall, it's the new innovation but execution by the team, but also an improving pharma sentiment, particularly with having reducing certainty around the MFN and tariffs. The other thing that we're really seeing in pharma across the globe is reshoring is not just happening in the U.S., but supply chains are being consolidated in different geographies. People are looking for capacity expansion, we're the benefactor of that in QA/QC downstream testing. And that will continue, I think, throughout the year. And of course, as reshoring comes on online in '27. But I don't know if you want to add any more color on that, Simon.

Yes. I think you covered pharma really well, Padraig. A few other key end markets, mid-single-digit growth in food. We saw declines in academia and government, consistent with what we've been seeing elsewhere. Environmental and Forensics was growth in the 20s. And again, in terms of the growth drivers, all the key things that we thought about already the continuing traction we see with Infinity III is just phenomenal.

Likewise, the Pro IQ market acceptance is really terrific. And in terms of replacement cycle, we still see that we're kind of early to mid innings here. I think we've knocked off the lowest hanging fruit. But as we continue to iterate the productivity features of our lab assist software. We see that the Infinity 3 value proposition will continue to be very strong, and we think there's still plenty more legs left in that.

Our next question will come from the line of Dan Brennan with TD Cowen.

Congrats on the quarter. Maybe, Padraig, just when you think about the guide, for '26 at a high level, the 4% to 6%, you've given a lot of color on segments and customers. But if you zoom out, I think our [ synergies ] here around 5%, the guide next year incorporates that at the midpoint again, and you've discussed a lot of momentum building. So do you feel like the guide balances, the puts and takes around the globe? Or do you think there's some conservatism more so baked in? Just can you give a sense on kind of the overall kind of [ 4 to 6 ] side?

Yes. So I think, first of all, we're set up for success really by innovative products coming online and the ones that have come online are unified sales and service connection with the customers a winning team and Ignite wrapping it together. So as you said, we have good momentum coming out of the year. Key markets are improving. The top line 4% to 6% is prudent, but I think is appropriate given macro uncertainty. And of course, we're coming into some tougher compares.

And I would say, if you look at the high end of our guide, if you see the expecting of biopharma recovery to continue and broaden, that's going to be positive. As I said before, the China stimulus is not in the guide. So that would be that would be positive as well. And we're making investments in the business, right? So we've invested a lot in the business, and we're going to continue to do that, particularly in innovation and digital, as Adam talked about. So but we want to see a small to midsize cap biotech to continue to improve. We're seeing the early shoots on that one. And of course, A&G, academia and government is an area that we're watching. We want to see that stabilize and relative to our current expectations of a low single-digit decline. So overall, when you put it together, strong momentum coming out of '25 and in '26, we're watching the different portions of it.

Great. And then maybe just 1 on the GC upgrade cycle. Just you 10% growth in the quarter overall, which was solid. I think you said mid-single digit for '26, can you gave some color. Just any more color on the upgrade cycle as they're progressing versus expectations? Is it ratable in '26? Just what's kind of assumed on that front?

Yes. No, thanks. I'm going to start off and hand over to Mike here in the room. So first of all, I think we had high single-digit growth in GC, which was really great. We talked in the last quarter about the start of a GC replacement cycle, which is generally a longer replacement cycle than the LC. But Mike, do you want to give some color on the replacement cycle? .

Yes, Padraig McDonnell. First of all, thank you, Dan, for your question. The replacement cycle for the GC and [ GCMS ] is very important for us. And here is what we've seen. The first of fall, I think the cycle is being normalized. It was under pressure for the last few years because of the global challenges, uncertainties, but we're seeing the pace is coming back and normalized. That's number one.

Number two, I just wanted to know, we are the master leader. We have got a very large installed base. And as you can imagine, it's actually aging, and we have a lot of tenant demand, which will create a sustainable tailwind for us in the coming year. Last thing I want to highlight, now under [indiscernible] transformation, we accelerate our innovation. So very excited about the new product coming out, and that will further sustain this revenue cycle. So -- in short, I think there are big opportunities and the cycles to be normalized, and we have tremendous innovation on our way to sustain it.

Our next question will come from the line of Michael Ryskin with BofA.

Great. Maybe first one on tax rate. You talked about the higher tax rate for 2026, talking about global tax. Just curious, we've been talking about tax rate potentially drifting higher for a while, it seems like it's a pretty big jump this year. Is this something new that's developed recently? Or is this just sort of the same global tax because we've been talking about for a while? And then just any potential to offset that as you go through the year? Just how do we think about that going forward?

Yes. Thanks, Michael, for the question. I'm going to hand this one over to Adam for some commentary.

Sure, thanks. So our tax rate is increasing 250 basis points, and it's really driven by a combination of things that they take time to come together and now they have. One of them is Pillar 2, the other is [ OB3 ] and then there's other jurisdictional changes. And so as we've kind of put them together, in our tax provision, we've now solidified on this 250 basis point increase. I would -- as you think about it going forward, we have no information that this would change meaningfully going forward.

But the thing I want to highlight and point out is that we're more than offsetting this incremental tax burden, and that's really through operating performance above the line. And so we'll continue to seek ways to further mitigate the P&L impact. Ignite in our global network strategy. So if you think about the business being able to offset such an impact below the line, above the line is really something that gives me a lot of confidence in this organization and shows the agility of the organization to navigate uncertainty.

Okay. And then for the follow-up, I want to touch on M&A and capital deployment. Padraig, you talked about the health of balance sheet and maybe looking to do a couple of more deals, [indiscernible] from the portfolio. Could you just talk about what the deal funnel looks like now, appetite for deploying cash next year, sort of what kind of deals you're looking at in terms of size and any specific areas you're focused on?

Yes. So we -- I'm going to start off and then hand over to Adam here. So our capital allocation priorities are not changing. And if you think about M&A, we have capacity to do M&A, but we're going to remain very disciplined, linked with our strategy. And we don't talk really about size, we talk about fit and shareholder return on M&A about how it's going to drive us forward. What I.

Will say about our M&A target list, it's very -- it's a shorter, very high-quality list that we continue to develop. And of course, we continue to keep everybody updated as we go through the year, and we're looking for growth opportunities where we have a right to win. And of course, the BIOVECTRA integration having been such a great integration this year bodes extremely well for the future. But Adam, do you want to give some broader capital allocation color?

Sure. Thank you. So our capital allocation priorities aren't changing as Padraig said, and I think that's very important. We're going to continue to invest in innovation, as you hear on our guide. We're going to use our balance sheet to invest in M&A and then make strategic capacity expansion. The other piece I'd highlight is we're going to continue to return excess capital to shareholders as you see in our guide as well. And then the one note I would highlight in addition to what Padraig said about remaining disciplined, it's about the right opportunity. It's about making sure we understand the value drivers and how we can maximize on those. Then it comes down to making sure that we pay the right price so that we're disciplined about price and then focusing on integration upfront.

In my experience, I've lived through integrations and the best are those that you plan for upfront, and it's not an afterthought, and I can assure you it won't be here. the Ignite operating system, as I've dug into it gives me a lot of confidence. And then as Padraig said, the recent experience with BIOVECTRA gives me more confidence. So I think we're ready to go and you should expect to see consistency with what we've said on our capital allocation priorities.

Regina, to help us get to as many analysts as possible could we please limit it to 1 question per analyst for the remainder of the call.

Our next question will come from the line of Dan Arias with Stifel.

Padraig, you mentioned upside potential for the Omni franchise. Is that more of a placement comment or a pull-through comment? Where do you think the opportunity is strong as there?

omnis, yes, So I'm going to hand it over to Simon for some color on the Omnis franchise. .

Yes, it's a bit of both. We've recently launched the Omnis family, and we've been very happy with the uptake from those systems. And if we look year-over-year across the entire on this instruments franchise. We've seen double-digit growth in instrument placements. We're also focused on new expansion. That's a key product development initiative here over the next 12 to 24 months. And I think we're going to see momentum from both of those.

We see momentum already on the instrument placements. So I think it bodes well for the future. We've talked a few times about this franchise now how we see really durable mid-high single-digit growth through a combination of these portfolio investments but also the very strong macros that underpin this business with aging populations, cancer incidents and so on, not to mention the emerging therapeutics to supporting diagnosis and therapy guidance. So we put all that together and we're bullish about the future.

Our next question will come from the line of Casey Woodring with JPMorgan.

I guess within Pharma in the quarter, excluding the CDMO, could you break down the large molecule versus small molecule growth? Last quarter, you talked about you did biopharma spend ex NASD. It sounds like that got a lot better this quarter, specifically in biotech. And then maybe what's factored into the guide for large molecule versus small molecule in 2026, excluding the CDMO?

Yes. So I think we saw growth on both sides. I would say we're equally placed both large large molecule was about 10% growth, a small molecule in around the same growth rate. It's roughly a 50% split for we saw that in the quarter, and we expect that to continue.

Our next question will come from the line of Catherine Schulte with Baird.

I guess I'll ask the annual Lunar New Year timing question. I think that was a 2-point headwind in the first quarter last year, but it's back to falling in February this year. So if we think about the 4% to 6% guide for 1Q does that mean like 2 to 4 ex Lunar New Year? And if so, what's kind of driving that sequential slowdown there?

Yes. So I think if you look at our Q1 guide, we're assuming low single digits growth for China on reduced [indiscernible] volume. That's about a negative 700 basis point year-over-year impact and that's offset by the favorable lunar year timing, which is about 800 basis points. But the Q2 will be, I would say, meaningfully impacted by Lunar New Year timing and I would say, a tougher comp. But overall, I think it balances out over those quarters.

Our next question comes from the line of Luke Sergott with Barclays.

Great. I just wanted to follow up on [indiscernible] question earlier in the call about and you guys were talking about keeping the flywheel going and investing in back into R&D as the top line continues to accelerate or be strong. So after you're pretty much done, you guys had a pretty big launch here across many different platforms. So give us an -- where are you looking to deploy that R&D? What are the new high-growth areas that you guys would like to be bigger in? Or is this just kind of updating parts of the portfolio that have been underinvested?

Yes. What I would say is that we have a very key innovation focus with our new CTO, August. And what we're looking at is really looking at our portfolio of innovation across the company. We simplified the company structure where we went from about 20 product lines to 9. So ability to get the right innovation dollars into the right place is much clearer and faster now. So what you're going to see is that you're going to see that in a number of platform launches over the next year -- next coming years, but also areas where we need to accelerate in certain areas like oligos, GLP-1s and workflows around that side. And I would say software is a key area for us. It's an area where we have a lot of focus across the company in the ACG group, we're going to be asymmetrically investing in our software products and also making sure we have the right software for particular workflow. So overall, I would say it's refocusing, but very agile refocusing of our R&D dollars.

I'll turn the call back to you, Tejas.

Thank you. Thanks, everyone, for joining us, and happy holidays and happy Thanksgiving.

This concludes today's conference call. You may now disconnect.

I'm Mike Ryskin. I'm on the Bank of America Life Science Tools and Diagnostics team based in New York. And for our next fireside chat, we're excited to host Agilent, joined by CEO, Padraig McDonnell. Padraig, thanks so much for being here.

Thank you, Mike.

Format will be same as usual. It will be a fireside chat. But if you've got questions, feel free to raise your hand, and we'll call on you.

Maybe just to kick things off here, sort of our standard opening question is, you reported fiscal 3Q a little over a month ago. You're most of the way through the year. Can you give us a high-level overview of sort of how you've seen the year played out so far relative to your expectations? What surprised you to the upside versus maybe what's kind of a little bit softer?

Yes. I would say at a high level, we're very pleased with the execution of the team through the year and in Q3, I think underpinned by some really important product launches, the Pro iQ single-quad, the 8850 really resonating, and of course, the Infinity III replacement cycle. So I think overall, I think very, very happy with that.

Again, our services business being really critical. Our connection with customers around services or satisfaction around services helping to underpin the performance. But really kind of 4 key areas, I would say, the CDMO business really back on track. The pharma replacement cycle, GC replacement cycle, I think, going well. India doing well as a geography. But overall, I would say, the start of a replacement cycle across our installed base, good execution around that and sentiment improving.

I would say, if you look at the quarter, where I thought was a very positive result was in the Chemical and Advanced Materials, where we grew 10% on both sides. It shows the diversity of our business, right? So pharma is 50% of our business, both Chemical and Advanced Materials, and the Applied Markets, where there's a lot of secular growth drivers is very important. And we saw a really excellent execution on that business.

And just to kind of level up, our new group structure kind of -- it really mimics the market view of what we're doing on it. So the AMG group is overlapped with our applied businesses. So that focus is really paying off given the drivers in those markets.

All right. That's great. You touched on a lot of points there I wanted to hop on. Maybe first, let's just start with that replacement cycle. You've talked about it a number of quarters now. I feel you really picked it up starting in the Analyst Day and in the quarters since then. Can you talk about how Infinity III is doing and how that's sort of maybe helping drive the replacement cycle a little bit, especially we'll start on the pharma side.

Yes. So the Infinity III is out a number of quarters now. And again, we talked about a steady replacement cycle starting, and I think that's what we're seeing play out. The Infinity III, we did see a lot of deals early on where 2 or 3 systems were purchased. Now customers are coming back for multiple systems, 10 to 20 and above. And it's really playing out because of the productivity gains with the system, we can say a 20% improvement in productivity, and it's really resonating with customers.

In the quarter, LC grew mid-teens, and that was driven by the Infinity III. So we're very pleased with how it's doing. I wouldn't be expecting every quarter is going to be exactly the same, but the order book is looking strong. And I would say the velocity of how pharma are approving orders has improved, right? So before, in some cases, you used to have a CEO approving -- CEO level approval for CapEx. Now we're seeing client level approval or even lab level approval, which really helps. So I think overall, very pleased with it.

And then LC, of course, is the critical component around replacement cycle, but we're seeing the start of a replacement cycle in our chemical business, particularly around the 8850 GC. And then -- yes, so I think you're going to see that play out over the next few years as well.

Okay. Sticking with that pharma comment, how broad-based is it? You mentioned a couple of customers really scaling up. Is it concentrated in a handful of players? Are you seeing it across the spectrum? Just because we've seen still relatively mixed data out of pharma more broadly in terms of spending levels and decisions this year?

Yes, it is a tale of 2 cities. I mean our biopharma number was -- we were ex NASD flat in biopharma. And that's the small- to medium-sized biotech. It's very constrained. If you have a molecule and you have funding, you're in good shape. But if you're looking for more funding, it's a constrained area.

But where our sweet spot is in pharma, QA/QC downstream, that's where we're seeing the largest replacements, which it should be, right? That's where our largest installed base is. So that's where we see the installed base being replaced at the moment. And we continue to see that with a number of drivers. Of course, reshoring in a few years, we expect new business from that, incremental business from it.

But the pharma dynamic, if you think about small molecule or you think about manufacturing QA/QC, what's driving this business at a macro level is that you're seeing consolidation of supply chains in region for regions. For example, last quarter, in Europe, we grew 15% in small molecule. And that's kind of consolidation of the supply chain, but also capacity around some key therapeutics, ADCs, oligos, GLP-1s, there's capacity constraints. So people not only are replacing their fleets, but also expanding in a number of areas. And we think of greenfield sites just not as a new site, but also an expansion of the site that can happen. And that's happening as well, which is driving the pharma business.

Can you put this replacement cycle in context with prior ones just in terms of the duration you anticipate it could take? How much could it really boost the top line? Just talk about how far into it are we?

Yes. I would say we're very much in the early stages. We expect that replacement cycle to continue over the next 2 to 3 years. 3 years, I would say, is the average. And of course, it continues beyond that, but the ramp-up through that, I think, the next 2 to 3 years.

And if you think we're mid-single digits generally in pharma, you grow a bolt-on in the instrument side when there's a replacement cycle because the opportunity is there. And what's kind of very interesting for us is that you have 1,100 LCs out there in some cases, 1,260 is Infinity II, Infinity III is backward compatible from a method perspective with all of those. So it means the friction of change is low, right? So the method development on it is lower. The regulatory requirements are lower. So I think you expect that over the next 3 years, you're going to see that.

Okay. And then your comment on moving away from sort of CEO or C-suite level approval more down to the plant managers. Again, is that pharma getting more comfortable with MFN risk and tariff risk current environment? Is that something about maybe age of fleet is getting a little bit older and they're kind of -- they're desperate, they can't wait anymore. Sort of what's driving that change?

Yes, it's all of the above. I mean tariffs -- pharma were past tariffs way quicker than you would think. I think they had it assumed in their models. They're making a lot of no regret moves being in region for region. You see that with the announcements on the reshoring. So I think that carries.

The MFN, I think, was a big topic, but again, it's pretty muted at the moment. We don't hear about it from our customer side to have it fairly well baked in and an aging fleet. You put it all together, at some stage, you're going to have to release the budgets. And downstream is important to pharma. Having productivity in your labs, having your capability and manufacturing to deliver is really, really important, and that's why we're in the sweet spot where we can really have.

Okay. I want to come back to CAM and the GC replacement cycle later, but maybe on the topic of biopharma, can you talk about BIOVECTRA and how that's done? You're a little over a year, ownership. Just the progress you've made in that business, looking back on the first year, how has it gone?

Yes. We're really pleased. I was there 3 weeks ago in Canada with the teams. And of course, it takes a few months when you acquire a company to get up the standards to be crossed, but really complementary capabilities from NASD. They have strong microbial fermentation capacity, which is very important for new modalities. Sterile fill finish, which is another area that's important. And of course, they're right in the sweet spot of GLP-1 production.

And so we reviewed it with the team last week. We're very happy with the year and how it's gone. We had a delay in Q3 because of a reconstitution of our production line that was very welcome, because it ups our capacity for '26. So we're very -- I think the pumps are prime for '26. We have a very strong order book. And I think we're right in the right area. So we're very pleased with BIOVECTRA.

And on the topic of capacity expansion, you've seen a number of pharma companies make commitments to capacity expansions in the U.S. in the last couple just days and weeks, literally had an announcement about API manufacturing in Houston. There are others in North Carolina. So yes, what's your involvement at those stages? And when we think about reshoring, can you talk about how that impacts Agilent and where you would stand to benefit from that for pharma specifically?

Yes. I mean I've seen this 15 years ago in Ireland, when I was in Europe, where you see reshoring in Ireland pharmaceutical production. Generally, the topology of how this works is you have greenfield sites that people break ground on. You're working with the construction companies. The project management companies are engaged. Generally, from the announcement from the start, it's probably 2 years before we see the orders. It could be 18 months, but 2 years is probably the median.

So what happens is labs are planned in these sites. Then we're brought into how you set up a lab, how do you make it an effective lab with your equipment. Vendors are brought in. Then you have an opportunity to talk about why you're different with your services and enterprise services going forward. So we expect to see that within 18 months to 2 years, and that will be a significant tailwind to us because we're in downstream.

One thing we've really struggled and had a number of debates with investors on is whether these announcements are truly incremental, or whether it's, a, things that we're going to get done anyway and now are just getting a bigger press release; or maybe they would have been done in Ireland or the U.K. or India and are now being moved to the U.S. and net-net, the dollar amount is the same. What's your take on that? What do you see from the pharma...

Yes. My feel is that it is incremental. It's not a replacement per se of, say, we're going to take down in Europe and we're going to move it to the U.S., but it's going to be both. Of course, you're going to get maybe a different dynamic with CapEx in some areas in different geographies.

But I would say it is incremental by the very nature of it. And talking to some pharma CEOs, they want to be in region for region and they want to be close to our customers. So tariffs or no tariffs, these are no regret moves. And of course, bioprocessing, you probably see the CapEx on that a bit earlier, because it's more upstream in the manufacturing case on around biologics. But I think we're going to see a net benefit from it.

And again, for you, the benefit will primarily be HPLC...

HPLC, a number of our other platforms, spectroscopy platforms, molecular spectroscopy. Then, of course, we have our services capability. Like one thing that's probably not well appreciated from our service business is that we have lab-wide enterprise services where we run labs where we actually look at the productivity of labs. That's super important as you're setting up these new sites.

And I think also we have a lot of relocation capability, so we can move systems as needed, requalify them, get labs up and running, and that provides a lot of benefit to our customers. But we have a strategic account program within Agilent. It's pretty unique. So we have a high-level team that works directly at high levels with our global companies, and they're really critical in this moment of looking at where the investment is going, what are the modalities going in and then how do we follow those modalities with our workflows.

So putting that together, are you at all surprised that you're seeing such a significant upgrade or replacement cycle in HPLC ahead of the reshoring. So there's going to be a replacement cycle for 2 years and then a reshoring cycle?

Yes. No, look, I mean, I don't think I'm surprised by it. It's a normal start of a standard replacement cycle. So you would expect that because if you have labs with aging fleets in Asia or in Europe, they have to be replaced and they have to -- and I don't think it's predicated on this reshoring that anything would change with that replacement cycle.