Ladies and gentlemen, welcome to the Agilent Technologies Q3 2023 earnings conference call. My name is Beau, I will be coordinating your call today. If you would like to ask a question following the presentation, you may do so by pressing star one on your telephone. I will now hand you over to your host, Parmeet Ahuja. Parmeet, please go ahead. Thank you, Beau. Welcome everyone to Agilent's conference call for the third quarter of fiscal year 2023. With me are Mike McMullen, Agilent President and CEO, and Bob McMahon, Agilent Senior Vice President and CFO. Joining in the Q&A after Mike and Bob's comments will be Jacob Thaysen, President of the Agilent Life Sciences and Applied Markets Group, Sam Raha, President of the Agilent Diagnostics and Genomics Group, and Padraig McDonnell, President of the Agilent CrossLab Group. This presentation is being webcast live. The news release for our third 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 www.investor.agilent.com. Today's comments by Mike and Bob will refer to non-GAAP financial measures. You will 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 excludes the impact of currency and any acquisitions and divestitures completed within the past 12 months. Guidance is based on forecasted currency exchange rates. During this call, we will also 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. The company 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. Now, I'd like to turn the call over to Mike. Thanks, Parmeet, and thanks everyone for joining our call. In today's call, I will walk you through our Q3 results, share what we're now seeing in the market, and provide context for our revised full year outlook. I'll then turn things over to Bob for more detail on the quarter and outlook before returning for some brief closing comments. The Agilent team continues to execute well as we navigate our way through the ongoing challenges of the current market environment. Our Q3 revenue is $1.67 billion, at the top end of our expectations. This is a decline of 2% on a core basis against a tough compare of 13% in Q3 of last year. We continue to be proactive and are taking steps to help us deliver on our leveraged earnings model. Operating margins are 29.3%, up 180 basis points. Quarterly earnings per share of $1.43 are up 7% and above our expectations. The major driver behind our Q3 year-on-year decline in revenue is our China business. Excluding China, the rest of Agilent grew 2%, which was better than expected. We knew we're up against a difficult compare in China and had previously guided for lower China revenues in Q3. However, the economy in China continued to weaken during the quarter, translating into a more challenging market environment than we had anticipated. With the softer market conditions in China and continued global macroeconomic challenges, we have lower growth expectations for the remainder of the fiscal year. We now expect core growth for the full year to be around 1%, down from our previous guide. Based on what we're seeing at this time, we're not assuming any improvement in the China market for the remainder of the year. We, however, view the near-term challenges we're experiencing as transitory and remain confident about the long-term growth prospects of our end markets. Returning now to our third quarter results, I'd like to touch on our two largest end markets. Our total pharma business is down 8%, driven by the pharma market in China being down 30%. Within pharma, our biopharma business grew 5%, while small molecule was down 16%. The chemical advanced materials market declined 3% versus a 22% increase last year. While we did see the chemical energy space being weighed down by macro concerns, slowing growth in advanced materials was more a function of a difficult compare, as volumes have remained steady and robust. Looking at performance by business unit, the Life Sciences and Applied Markets Group delivered revenues of $927 million. This was a decline of 9% of a very tough compare of 18% growth. Last year's growth was helped by the benefits of the recovery from the Q2 2022 Shanghai shutdown. LSAG's performance continues to be affected by the market environment in China across all end markets and pharma globally. Our sales funnel remains healthy and are up year-on-year. Deal velocity continues to slow as customers remain cautious in making capital purchases. We expect this market environment for new instrument purchases to continue for the rest of the year. At this time, we are not assuming any benefit from a year-end budget flush or incremental stimulus in China. We said before, we are continuing to prioritize investment in innovation. As an example, in June, Agilent's investment in innovation were on full display at the annual ASMS conference. The LSAG team introduced new products and comprehensive workflows to enhance data quality and productivity for our customers.... These include two new LC-MS systems, a new PFAS workflow solution, and an AI software for data analysis, among others. The Agilent CrossLab Group posted revenues of $396 million. This is up an impressive 11% core, with growth in all regions and end markets as customers continue to embrace our value proposition. We continue to see strong demand for our services as we help customers drive productivity in the lab. The Diagnostics and Genomics Group delivered revenues of $349 million, up 3% core. Pathology grew high single digits as demand for our diagnostic tests continues to grow. Our NASD business grew high teens. This growth was partially offset as we continue to see market weakness for our genomics and Resolution Bioscience businesses. Regarding Resolution Bioscience, the market for kitted NGS-based companion diagnostics has not developed as we expected. We don't see a realistic path to profitability. We've made the difficult decision to shut down the business. Our investments in future growth continue. For example, we achieved an important milestone during the quarter when our NASD business generated the first revenues for our Train B investment in Frederick, Colorado. Looking forward for the company, as we navigate this challenging macroeconomic environment, we remain confident in the Agilent team and our ability to continue driving leverage earnings growth using our Agile Agilent framework. We've faced challenges before, and we're taking actions now that will make us stronger and position us well for the future. As we said last quarter, we are doubling down on delivering cost efficiencies and increasing productivity. The goal is to generate additional cost savings so we can continue to invest in innovative new solutions and support for our customers as we enable future profitable growth. We are on track to achieve the cost savings we've targeted for the second half of this year. We are in attractive markets that will produce long-term growth. Our innovation engine remains strong, and the battle-tested One Agilent team is driving outstanding execution. Bob will now provide the details on our results, as well as our outlook for the remainder of the year. After Bob delivers his comments, I'll be back to provide some closing remarks. Now, Bob, over to you. Thanks, Mike, good afternoon, everyone. In my remarks today, I will provide some additional details on revenue in the quarter, as well as take you through the income statement and other key financial metrics. I'll then finish up with our updated guidance for the full year and our fourth quarter outlook. Unless otherwise noted, my remarks will focus on non-GAAP results. Q3 revenue was $1.67 billion, a decline of 2.3% core and down 2.7% on a reported basis. This compares with 13.2% core growth last year. Currency was a half point headwind, while M&A contribution was minimal. As you may recall, Q3 of last year benefited from roughly $35 million in revenue deferred from the second quarter as we ramped back up from the Shanghai shutdown in China. Accounting for this, our Q3 core growth would be roughly flat versus year-ago. As Mike mentioned, pharma, our largest end market, declined 8%. This is in line with our reduced expectations coming out of Q2, with underperformance in China offset by better performance in the rest of the world. The chemicals and advanced materials market was down 3% off a very tough 22% compare, but dollar-wise was flat sequentially. The academia and government market was up 5%, with all regions showing growth except the Americas, which was flat. Our business in the diagnostics and clinical market grew 3%, driven by high single-digit growth in pathology, partially offset by genomics weakness. The environmental and forensics business grew 2%, driven by double-digit growth in the Americas and Europe. The growth was generated by the build-out of water infrastructure projects and an expansion of funding for PFAS-related activities. The food market grew 1% based on strength in Asia, outside of China, and mid-single digit growth in Europe, driven by new food testing regulations. On a geographic basis, while China underperformed, the Americas and the rest of Asia were better than expected, while Europe was in line with our expectations. Moving down the P&L, third quarter gross margin was 56.3%, down 10 basis points from a year ago. Like last quarter, this was largely due to the product and services mix, and pricing was slightly better than our expectations. Below gross margin, the expense reduction actions we initiated in the second quarter helped strengthen operating margins. We also benefited from a reduction in variable pay expenses. As Mike mentioned, margins were 29.3%, up 180 basis points from last year. Below the line, our interest income was higher than planned, while our tax rate was 13.75%, and we had 295 million diluted shares outstanding. Putting it all together, Q3 earnings per share were $1.43, up 7% from a year ago. A very good result, given declining revenue. Now let me turn to cash flow and the balance sheet. I continue to be pleased with our cash flow generation this year. Cash flow from operations was $562 million in the quarter and is $1.3 billion year to date.... In Q3, we invested $81 million in capital expenditures, totaling $214 million year-to-date, effectively flat year-on-year as we continue to optimize our CapEx spending. Given the strong year-to-date results, we are increasing our free cash flow forecast for the year to $1.2 billion, comprised of operating cash flow of $1.5 billion and CapEx of $300 million. This is an increase of $250 million from the midpoint of our previous guidance. Despite the challenging macroeconomic conditions, our balanced capital allocation strategy is intact. During the quarter, we returned $401 million to shareholders, $66 million through dividends and repurchased shares worth $335 million. This ongoing, balanced approach to capital deployment is another example of the confidence we have in our team and our belief in the long-term strength of our markets. Before getting into the revised full-year outlook, I want to mention we have taken a $291 million pre-tax charge in Q3, associated with the decision to shut down the Resolution Bioscience business. This charge, which is excluded from non-GAAP results, includes an impairment write-down, along with charges associated with the wind down and exit of the business. We expect the wind down to continue through Q4 and into early FY24. To the revised outlook for the year in Q4. Given the more challenging macroeconomic environment we are seeing, particularly in China, we now expect full-year revenue to be in the range of $6.80 billion-$6.85 billion. This represents a decline of 0.7% to flat on a reported basis, and core growth of 0.8%-1.5%. This is a core growth reduction of 260 basis points from the midpoint of our last guide. Roughly 85% of the change is related to reduced expectations in China, while the remainder is due to some incremental cautiousness from our customers on CapEx spend, as well as softness in genomics and the shutdown of Resolution Bioscience. As Mike said earlier, we are not assuming any incremental stimulus in China or any material year-end budget flush in these revised projections. Given the large change in China, I wanted to provide some additional perspective on how we are forecasting the rest of the year, recognizing that the market continues to be very dynamic. To provide some context, in Q3 through June, our business in China was tracking to a mid-single-digit decline in revenue, which was in line with our expectations. However, in July, we saw a further deterioration in China, resulting in the 17% decline for the quarter. While the Q3 decline in China was centered in pharma, which was down 30%, we did see weakness in the other end markets as well. We expect the conditions we've seen in July to persist in China for Q4. In addition, we are facing our most difficult quarterly compare in China, where we grew 44% in Q4 of last year. We are now expecting Q4 to decline in the mid-30s year-on-year. For the full year, we are expecting China to decline mid-single digits versus growing mid-single digits. With the change in revenue, we now expect full-year fiscal 2023 non-GAAP earnings per share to be between $5.40 and $5.43, representing leveraged earnings growth of 3%-4% and roughly 6%-7% growth net of currency. The change in full-year guide results in Q4 revenue being in the range of $1.655 billion-$1.705 billion. This represents a decline of 8%-10.5% on a reported basis, and a decline of 9.5%-12% on a core basis. The recovery last year in Q4 of the remaining revenue deferred from the Shanghai Q2 shutdown, negatively impacts the year-on-year results by roughly 1 point. In fourth quarter, non-GAAP earnings per share are expected to be between $1.33 and $1.36. Thanks for being on the call. Now, I will turn things back over to Mike for some closing comments before taking your questions. Mike? Thanks, Bob. While today's macro environment is challenged for new instrument purchases, we remain confident in the long-term growth prospects of our end markets, the diversification of our business, and in our proven ability to grow faster than the market. I'd like to share a few examples on why my confidence remains intact despite near-term challenges. In pharma, our largest end market, innovation and advancing the medicines continue, with new therapeutics flowing into the market. The demographic drivers on this market are on our side. A growing global population expects access to healthcare and extending life expectancy to be key priorities from their governments. Our market-leading solutions are critical to innovation behind new therapeutics and ensuring the safety and quality of on-market drugs. In the applied markets, growing PFAS testing and the electrical vehicle transition are here to stay, ushering in new opportunities for growth. Everyone wants to have safer water to drink, food to eat, and air to breathe, and the search for and production of more sustainable materials and energy sources remains a global priority. Agilent is a diversified leader in a unique position to help our customers drive their solutions. We remain a trusted partner our customers know they can rely on in both good and challenging times. Our combination of leading instrumentation and world-class customer support is a long-term competitive advantage. At the heart of this long-term competitive advantage is the Agilent team and the One Agilent culture. You see this reflected in a recent recognition on Glassdoor, and in being named a great place to work in all 27 countries and territories around the world where we qualify for certification. We have a company mission focused on advancing the quality of life. To learn more about this, I would encourage you to review the latest edition of the ESG report that we issued last month. We are proactively managing the company through the short term, always with an eye towards our customers and in the long term. We have been proactive in managing our business to drive leveraged earnings, but not at the expense of customer satisfaction and future growth. Yes, these are challenging times, but we have the team, the strategy, and the right culture that will deliver long-term success. Thank you for joining us today, now over to you, Parmeet, to lead the question and answer session. Parmeet? Thanks, Mike. Beau, if you could please provide instructions for the Q&A now. Thank you, Parmeet. Ladies and gentlemen, if you would like to ask a question, please press star followed by one on your telephone now. If you do change your mind, please press star one again to withdraw your question. When preparing to ask your question, please ensure your phone is unmuted locally. We'll go first this afternoon to Matt Sykes at Goldman Sachs. Good afternoon. Thanks for taking my questions. Sure, Matt. I, I thought maybe I'd start just with China, sort of a high-level question. You, you guys talked about sort of the transitory impacts of the current environment. You mentioned pharma. Could you kind of extend those comments to China? Do you think it's more cyclical versus structural? Are there competitive issues that you're facing, or just your outlook on that region? Thanks. Yeah, Matt, thanks for the question. Let me start with the last part of your question. This is a macro story, not a competitive story, so, market shares continue to be very, very strong. I know there's a lot of discussion about increased local competition, but we've moved pretty aggressively on our Made in China strategy, so we don't see it at all as a competitive issue. Transitory, the comment there is really about the fact that the China market is not going away. It's going to be a big market for years to come. It clearly is challenged right now. We're not. We're taking it sort of one quarter at a time, actually month by month. As Bob mentioned in his comments, I think, July, we actually saw the weakest performance within the quarter. We're still seeing weakness in the pharmaceutical industry, for example. The level of manufacturing declined, pretty specifically in, in the month of July. We think the market's gonna be there, but it's gonna take a while for it to get back to, back to growth. I think the other thing- Bob, may I? Probably the other thing, the point here is, you know, again, I'm talking specifically around the instrument side of the China market. As you know, we have a very large, in fact, the largest installed base of instrumentation in the marketplace, so very positive on the ability to grow the aftermarket in our diagnostics business. Bob, anything else you add to that? Because. Nope. Okay. Maybe just for my follow-up, just on ACG. Sure ... pretty good quarter, in that business. I know you guys talked about, a year or two ago, about sort of a goal of 30% plus margins, obviously achieved that this quarter. Can you talk about sort of where you see the durability of that growth is sort of high single to double, 30% plus margins, how we should be thinking about the business? Were there some one-offs in the quarter that you'd want to call out, to kind of measure expectations there? Yeah, you know, we've, we've, we've consistently communicated that we think this is a high single-digit, low double-digit kind of growth business for us. It's been that way since pretty much most of my tenure as CEO, and we don't see that changing as we go forward. Of course, there'll be puts and takes by quarter, but we're, we're, we're continuing to see good growth in our connect rates, which we've talked a lot about, and we're also doing very well on winning the enterprise business as well to complement the other aspects of our portfolio offerings. I, I would say that the profitability was probably a little bit higher, in Q3 than the. we do think that the high double-digit number you quote about is pretty manageable for that business, but not at the level we saw in, in Q3, right, Bob? Yeah. Hey, Matt, this is Bob. Just maybe to further what Mike is saying, when we think about the components of that business, the fastest growing component is actually the contracted business, which is that connect rate. It was in the mid-teens this last quarter and continues to be faster growing than the overall business. As long as we continue to be able to drive that increased attach rate, we feel very good about that. That comes with, with that growth comes scale and being able to leverage our team with the work that the digital initiatives that we've had as well. As Mike said, don't book, I think it was 32% going forward, because there were some, you know, variable pay true-ups. Certainly what you've seen, quarter in, quarter out is a nice, steady cadence of margin improvement there. Got it. Thanks, guys. Mm-hmm. Thank you. We go next now to Jack Meehan at Nephron Research. Thank you. Good afternoon. Good afternoon, Jack. Mike, was hoping you could talk a little bit more about some of the more cyclical areas of the business and in the CAM segment. Just what are you seeing from some of your chemicals customers? We've heard some conversation of budget cuts there. Are you starting to see that? Just how's your visibility into some of these cyclical areas? Yeah. As, as we've talked earlier, thanks for the question, Jack. I'll, I'll provide some comments and then have Jacob jump in on this one as well. We look across the CAM, I'd say the advanced materials segment of that market, which we've been communicating, is more driven by secular trends and cyclical trends, continues to hold up quite, quite, quite well. By the way, also, I just want to point out we had a really tough compare. I think we grew 22% last year in Q3 and CAM. If we look at the chemicals and energy side of it, the energy cycle action side actually popped up a bit, particularly driven by the U.S. We are-- where we are seeing some weakness is in the chemical side, where, you know, customers are looking at the macroeconomic environment and are slowing their, their capital investment there. I'd say that it kind of puts, puts and takes, but I think as in terms of the quarter, Bob, I think we came in right about where we thought we'd be, in, in CAM, and I'd say it's a, it's a mixed story in terms of, different segments growing at different rates. Yeah, before, Jacob, maybe I'll jump in. I think the one thing that I think is important is you really have a, a story in China, which is its own, and then the rest of the business. So if you think about where Americas and, and Europe is, it's performed extremely well. If you actually look, we mentioned this in the call, sequentially, the dollars actually were very stable. So we are expecting a, a challenging Q4, mainly because we grew 70% in China, Up from 43% in Q3, right? Yeah. So it's a compare situation, but they, they-- this business continues to be very strong. Do you want to make any comments on the advanced materials side of the, the house there, Jacob? Yeah, I can say that. Mike, I think you also started with that, saying that, that we continue to see a lot of activities in that space, especially in the battery space, where, where of course, there are also compares we're up against, but there's still a lot of interest in that space, we are doing very, very well. Semiconductor is, is also cycling down right now, but we continue to see business in that space, but not as strong as we did last year. Thanks, Jacob. Great. Yeah, my follow-up, wanted to ask about margins. You know, just how you're thinking about some of the puts and takes for 2024. You know, I think some of the cost savings you've talked about should extend to next year, should get some leverage out of NASD. At the same time, you know, some of the performance comes back and would think some of these top-line pressures extend as well. I don't know. Can you just talk about maybe relative to the LRP, how you're thinking about margins for next year? Bob, Bob, you want to lead that one? Sure. Yeah, yeah. By the way, one thing I'd add to that before, Bob, there's the specifics, Jack, is, you know, our, our decision on the Resolution Bioscience business. Mm activity also is part of the, part of the story for us next year in terms of, margin expansion. Bob? Yeah, I would say that our view of leveraged earnings growth continues into 2024. So while we do have some things coming back to us, you know, some of the actions that we've taken will continue to move into a full year for 2024. You know, quite honestly, that's kind of what we expect our job to be, is to be able to drive that leveraged earnings growth. Mm-hmm. Thank you, guys. Welcome. Thank you. We go next now to Vijay Kumar at Evercore ISI. Hey, guys. Thanks for taking my question. Sure ... good job on the margin execution here, Mike. Mike, Mike, maybe, I, I missed some of the comments here. Can you talk about the phasing in the quarter here, you know, China? I think I heard, you know, you started off down mid-singles and, and was July off, like -25%, -30%? Is that the exit rate? Yeah, Vijay, yeah. Yeah within the quarter. Yeah. Hey, hey, Vijay, this is Bob. Your, your math is in the ballpark. Yeah. We were, we were down mid-single digits through June, so May and June. Mm kind of tracking as we expected, then we saw incremental weakness in, in July, and we ended up for the full quarter, down 17%. What we're assuming going into Q4 is that, that performance will continue into Q4. You know, given the tough comp that we have, because I think we grew 44% in Q4 of last year, we're estimating roughly a 35%-ish drop in Q4 in China. Good. Sorry, yeah, that's helpful, Bob. Just sorry, where, where I was going with that question was, can you talk about capital versus recurring? I think when I look at your Americas and Europe, Americas is flattish. Did you see a similar sort of phasing in, in, you know, ex-China? Maybe talk about exit rates in July. Actually, if you think about the ACG business, actually, ACG grew in all regions and all end markets, inclusive of China, so there wasn't a change there. I would say both in Americas and Europe, we didn't see that same effect. Yep. Overall, outside of China, the geographic performance was better than expected. Correct. We saw no, we saw no trends like the China trend in our other geographies. That's helpful, Mike. Mike, maybe, one other thing you mentioned, Sure you know, a couple of times on transitory. I think that's a new term, that you're using. What have you heard on the ground on China? I think I moved away from prudent to transitory. Yes. Yes. What have you guys heard on the ground on China stimulus? You know, maybe some positive commentary, but nothing as concrete. And why, you know, use the word transitory? Is the implication here fiscal 2024 should be a more normalized year when we look at the comps? Yeah. You know, a couple of thoughts here. I think, you know, relative to the China, the China business, you know, we're, we're, we're hearing similar things, but nothing really significant. There's not enough to go on to assume it's going to have any kind of material impact on our outlook for the rest of the year. ... when we talk about transitory, we, we talk about the fact that these markets are driven by investments to improve the human condition, as I mentioned. They're not gonna go away. While we're not gonna get into specifics of, of an actual number, we actually see a path to growth next year for a full year, for Agilent. You know, and, you know, of course, we'd have the tough comparison, you know, the first half of next year, we did, you know, coming off a double-digit, print for the first half this year. But as we looked at our business, you know, keep in mind we're, what's behind my, my thought process here, which is, you know, we're an instrument company. Yeah, we have big instrument business, around 60%. We have a 40% of us in recurring revenue business. I don't know if you caught it in my call script, but our sales funnels for instruments are actually growing. That would say that at some point in time, you know, those budgets are gonna be released, and the orders will close. We're not seeing deals come out of the out of the funnel. We're not seeing order cancellations. We're not seeing changes to our won-loss ratio. We're encouraged by the growth we're seeing in biopharma on the small molecule side. We know there's different rates of, of replacements during the cycles, but, you know, we think this will follow historical cycle. I think the real wild card for us as we look forward into, to 2024, is really: What do we assume around the, the, the China market? We're not assuming any kind of major further degradation, but at the same point in time, you know, its path to return to kind of historic growth rates, you know, that, that's, that's the open question right now. Thanks, guys. We'll next now to Dan Leonard at Credit Suisse. Hey, Dan. Thank you. Hi, Mike. I wanted to follow up on that last thought. You've seen a lot of cycles in China over 30-plus years. What would you compare this to, and, and how do we get out of it? Well, I am, I am as old as dirt and have been working around in this marketplace since the mid-'90s. I haven't seen a cycle like this before. We've not seen a situation where there's really seems to be a lack of confidence right now in the macro economy outlook, and I'm not saying anything that the audience here doesn't fully understand already. The way, the way we get out of this, I think, is, you know, China, led by the government, will get back to focusing on its long-term goals of making China an innovation-driven economy, which is gonna require continuing investments in, in R&D. It's going to also get back to focusing on improving the health of its, of its, of the, of the population, addressing some of the environmental issues. We think it's getting back to fundamentals, and we think that eventually will occur, but there's a lot of issues that need to be worked through within, within, within China right now. It's a very large market. The market is not gonna disappear, and I think, you know, there'll be investments. I think there's also needs to be a level of confidence in the private sector in China, that it's a good time to, to, to reinvest, and maybe I shouldn't wait on the sidelines, hope for a stimulus, stimulus, but get back to work and get my business going. There's a lot of, lot of, dynamics. I, I really have to say, though, I don't know if I have a real comparable, situation that we've been through for, for this long. I think Bob and I were talking earlier today, you know, the, the, the change in the food industry a number of years ago is, was the biggest thing we'd seen, or 24 plus 7 are some of the biggest things we've seen the change. This is much more of a macroeconomic issue in China, which is different than what we've seen before. It obviously will have an impact on life sciences tools, but it's a much bigger macro story that's really driving the softness right now in our markets. Yeah. The only thing I would say, Dan, to build on what Mike is saying is, as, as, as he mentioned, the demographics are with us. When you think about the aging population, the need to actually access healthcare, more, more important therapeutics, and the, the importance of ensuring the, the, the water and the food supply, you know, they are the world's leaders today in, in electric and, and clean energy. It's hard to believe when everyone thinks about that, but they are the, the leader, and they have more electric cars than any other, region. So I, I think that investment is gonna be key, as Mike talking about, from the government. Unless they change their strategic priorities, I think that's the benefit for, for life sciences in general. Mm-hmm. Appreciate all that perspective. Just a follow-up, I was hoping you could elaborate on your decision to shut down ResBio. I was surprised by that, given that you've acquired the company only a couple of years ago. Yeah, sure. Sure, Dan. Happy to, happy to do so. Obviously, a very difficult decision, and I'll have Sam jump in on this conversation. Our fundamental belief was there, that our differentiation would be all around what we call the kitted strategy, to have a distributor, on market companion diagnostics for our, our pharma partners, and that market really hasn't developed as we had anticipated. Yeah, yeah, Mike, building on what you said, you know, while NGS and cancer diagnostics, you know, is here, and we serve that market in a number of ways, right? For, you know, just to be clear, too, we absolutely continue to, you know, serve cancer research, translational research, and diagnostic, you know, test developer customers. Our core to our thesis, our differentiation was really the ability to develop and distribute these kitted tests. The market, the pharma market and the testing market, just hasn't evolved that way. You know, we also looked at our recent analysis and concluded that even with, you know, more additional investment, this is gonna be a business that's gonna be, you know, undergoing significant losses for some foreseeable future. It was a difficult, as Mike said, but the right decision to make this move now. Again, to be clear, we continue to serve cancer research and diagnostics in a number of ways. Yeah, I think, you know, Sam, when we've talked about this in the past, we think we're still gonna be able to participate in what we believe the strong growth, the liquid biopsy market, but through really providing a lot of the, if you will, ingredients for the test developers themselves. Here, Mike, I'm gonna take this opportunity also just to say, you know, beyond our core SureSelect Target Enrichment portfolio, which is used- ... broadly for, you know, liquid biopsy testing today. You know, early next year, we'll be launching solutions from Avida, Avida Biomed, an acquisition that we announced earlier this year, which we think is really gonna be a differentiated way to look at methylation as well as classic mutation analysis. Yeah. Hey, hey, maybe just one, one add, Dan, is, you know, obviously a difficult decision for us, but I also think it also looks, you know, it, it shows the discipline that we have in terms of our, our portfolio rationalization, and, and we felt we had better returns in other places to, to, to invest in, so. Understood. Thanks for the time. You're welcome. We'll go next now to Brandon Couillard at Jefferies. Hey, thanks. Good afternoon. Good afternoon, Brandon. Mike, would you, would you mind unpacking, mass spectrometry versus LC trends in the quarter? Then based on your revised guide, what is the 4-year CAGR from 2019 for LC instruments exiting the year, and how does that compare to historical average over the cycle? Hey, Brandon, I'm gonna start with the response to your question and let Bob dig through his notes to, to find the, find the actual number. But, first of all, I just start to say is that, we believe what we're dealing with here, in our core instrument portfolio, inclusive of LC and LC/MS, continues to be a macro market story. Our market shares are holding up really well. We're seeing it in our one loss data. We're seeing it in the external reports from, from ALDA. And, I, I think, when we look at our performance in those core platforms versus our, our peers who are reporting some numbers and kind of adjust for, for the timing of when we report, I think we're putting up similar kind of numbers. Jacob, I know you looked at this thing pretty closely, and I'm trying to buy some time for Bob to check down the numbers. Yeah, we're trying to find the CAGR of last 3 years, which I don't have in front of me here, but you're right, Mark, Mike, we, we follow this very accurately, and, and we doing, we continue to do very well in this marketplace. We continue to innovate into it, and we have seen actually, we have taken share over the last period of time. If you actually compare our calendar, our calendar 2 versus competition, would actually see that we are approximately flat in the LC/LC-MS space, and, I think that stacks up very well versus competition actually. Yeah. Hey, Brandon, we can get that to you afterwards. Okay. I can tell you, though, if you looked at the LSAG business over the last three years, it's been averaging 5% CAGR. You know, despite being forecasted to be down this year. You know, obviously, those are two large businesses. Okay. I guess two housekeeping questions for you, Bob, did you talk about NASD growth in the third quarter? I imagine it might have been up sequentially with Train B coming online. Then on the CapEx line, you've pushed out $200 million of spend. Did that just roll into 2024, or are there some projects that maybe you've decided to defer for the time being, given the environment? Yeah, it's a great question. NASD, we continue to be very pleased with that. We had our, our first revenue in Q3 from Train B, the first of many more revenues to come from that standpoint. You know, expect it to continue, and we're still on track for the numbers that we've been talking about, you know, through 50+ for the full year. In terms of the CapEx, some of that will roll forward, but we're not going to spend that $200 million in 2024 as well. This would be... We have deferred projects, being very rational, really focused on revenue generating programs. I do expect some of that will, will flow into 2024, but I don't expect 2024 to have an incremental $200 million show up in the forecast. Okay. Thank you. We'll go next now to Puneet Souda at Leerink Partners. Hey, Mike, Bob, thanks for taking the questions. Sure. The first one, thanks. You know, maybe Bob, could you elaborate a bit on pricing here? I know pricing was a meaningful contributor initially this year. We're seeing China, obviously, you talked quite a bit about it, and we're seeing the headline for China deflation. Wondering if you are expecting pricing to maintain there, or do you expect pricing pressure in China continuing? We're seeing, you know, some of the peer sort of bioprocessing companies talking about local competition rising on the less high-tech product end. Wondering if you're seeing that on any of sort of your product product lines as well? Yeah, let me take the second question first. I know we, we, we compete against the Chinese local competitors each and every day, nothing has changed from that standpoint. We continue to feel very good about our portfolio and continue to drive that growth. In regards to pricing across the board, we were slightly better than what we had expected. It was roughly over, a little over 4% for the quarter. That was, that was driven across all 3 of the groups. We continue to drive positive price across not only our DGG and ACG business, but also our instrumentation, and that's globally. We, we expect to be able to continue to demonstrate the value of our instrumentation across the globe. Obviously, in a deflationary environment, that will put a little more pressure on the instrumentation business, particularly in China. We've incorporated that into our forecast and are still on track for, you know, positive price contributions for the full year in excess of 3%. Hey, Bob, maybe Bob, Padraig can also maybe comment on some discounting trends he may have been seeing. Yeah. Yeah, no, I think, no, I think it's mostly the, the, the pricing, holds. Our discounts has, has really, really held stable as well. We haven't seen any deter-- in, increase in that rate of it, and, we continue to monitor that, but it's been very stable, Mike. Thanks. Got it. Thanks for that. Then, if I could ask, you know, Academic and Government here, you know, smaller segment for you, but, you know, did solid in the quarter. Maybe could you talk a little bit about what you're seeing across the globe in different geographies, for Academic and Government, and your expectations here, you know, going forward? Thank you. Yeah, Bob, I think this is an end market that is holding up, reasonably well. I mean, we're seeing that, on a global basis, in most cases, with the exception being, being China, where the funding is there, the funding is stable. It's been a positive surprise, surprise for us, so far through this year. I don't- No, I, I, it, it's really across many of our instrument platforms as well as the service business. You know, from what we-we're seeing, Puneet, is funding continued to be available, and it's flowing from governments. I think they're seeing the strategic nature of many of the investments that they're making. Our expectation is that funding will continue. Got it. Super. Thank you. You're welcome. Thank you. We're next now to Rachel Vatnsdal at J.P. Morgan. Great. Good afternoon. Thanks for taking the questions. First off, one of your peers had flagged that they were actually seeing some early signs of pharma spending recovery. I appreciate that most of the incremental this quarter is really related to the China weakness, but maybe ex-China, can you walk us through if you're seeing any signs of recovery of spending with biopharma customers? Then you've previously flagged for us that historically, when pharma spending slows down, like we're seeing today, that it can take 12 to 24 months to recover. How are you thinking about that timing and recovery, given the incremental weakness this quarter? Sure, Rachel. You know, while, while we saw signs of stabilization, in, in the, in our, in our European and, and US business stabilization relative to expectations, we're not hearing anything along those lines yet in terms of, of recovery or desire to increase spending. In fact, we're hearing the exact opposite right now from our, our large mar-- major pharma companies. I hope, I hope that commentary from others in this space is correct, and there's gonna be a big, big recovery here from year-end, but we're not seeing any kind of indications of that. If it does happen, great! It would be upside relative to our current outlook, and we know we do well in these markets, but, you know, Padraig, I don't think we're seeing it-- hearing anything like along those lines. No, I think it's spot on, Mike. The only thing I would say, Rachel Vatnsdal, is if we look at our funnels, they continue to be growing. It's a question of when, not if, and particularly in pharma, and as Mike McMullen and Padraig McDonnell just mentioned, we're not assuming a budget flush, into, you know, our Q4. If it happens, that would likely happen in our Q1, in any event, from a revenue perspective. What we see, at least from our funnels, is they continue to be healthy. Let me just answer Brandon Couillard's question from a couple of times ago. If I look at LC and LC-MS on a 3-year CAGR, they're between 7% and 9%, so higher than the overall LSAG average. Great. Thanks for that. Okay. Rachel, I think you had a second question relative to, I think you're referring to the small molecule replacement cycle. As you know, you know, coming probably at least for the last 12-18 months, we had been indicating that we were expecting to see a slowdown in the rate of replacement. In fact, we've seen that occur this year, actually, given the weakness in China, even beyond our expectations, with a minus 16% number overall in the quarter. You know, that being said, we do stay with our view that these tend to be 18-24 months, 12-18 month cycles. We'd expect that to start to see movement back towards a higher growth rate, and that's one of the reasons as we look into 2024, you know, we're saying, you know, some of these markets will start to turn as the replacement cycle gets back to more of a growth phase in that cycle. As we've mentioned earlier, we see that particularly in the liquid chromatography, it's probably about a 5% kind of growth market long term. Great. Thank you for all that color. Maybe just following up on your small molecule comments there. Small mole declined 16% this quarter. Can you talk to us about how much of your China exposure is really tied to those small molecule workflows? What else is really driving incremental weakness on the small molecule side? You know, we've heard of IRA pressuring some of pharma's decisions and potentially leading to them reprioritizing the pipeline. Is there any risk that we won't see a recovery, or could the growth rate for small molecule really be resetting? What are your conversations with customers on that trend? Thank you. Okay. let me see. I got it. relative to China, Bob, I'd say it's probably the same ratios, as, as the global business, right? Mm-hmm. It's probably, what, 60, 65%? Yeah. Yes. Is probably related to small molecule. Relative to what's happened in, in large pharma, what we're seeing is, in medium-sized pharma is, again, a continuation of this cautiousness about deferring capital. I'm sure they're thinking through implications of IRA and also other expenses that are running hotter in their P&Ls, where they need to make some offsets with capital purchases. That being said. If you believe, and I know pharma believes, the importance of having safe, on-market drugs, you have to have the instrumentation and QA/QC environment to support that. That requires you to have modern liquid chromatography fleets. I don't think it's a question that they can that this market is going to go away and, and won't be an area that pharma will need to invest in. You can defer for a period of time, but that only, that only lasts for so long. Thank you. We'll go next now to Patrick Donnelly at Citi. Hey, guys. Thanks for, thanks for taking the questions. Sure. Mike, maybe just given that commentary around the instrument cycle, you know, not really seeing much improvement yet. Obviously, the China piece, transitory, but certainly seems like it's going to linger. You're only a couple of months into 2024 for you guys here. You know, how do you think about some of these impacts lingering? I think you said, you know, there's still, you know, plans for growth next year, but it certainly sounds like some of the headwinds at least will linger into the first half, given some of those comps. I just wanted to talk through that top-line setup, given, given some of these headwinds lingering into next year. Yeah, you know, we still have a few more months till we, till we finish off the fiscal year. We'll give you our guide in November, I think we'll know a lot, a lot more by then. I do think we know that we'll be able to grow this company in 2024. That said, I was very careful in my comments to make sure that it was a full-year growth rate. We do expect the first half of the year to be a, a challenging year, just from a comp standpoint to begin with, but also some of the things that we've been talking about today on the call, we don't expect quick snapbacks to be occurring in the next quarter or 2. Okay. That's helpful. Then I know you mentioned budget flush. You know, we're still a little bit away from that, you know, at the, at the calendar year end for, for pharma and other areas. Do you have any view at this point? It sounds like you guys are expecting maybe a more subdued budget flush, but whatever you're hearing from customers, it'd be helpful just to pull the curtain back a little more on that. Sure, Patrick. Happy to do so, and then I'll, I'll invite Torger in this conversation. I know he's been talking a lot to, to his team about this. As I mentioned earlier, we're not really seeing any kind of indication of customers saying, "Hey, listen, we're gonna-- I'm going to have money and I'm planning on spending it, just, just wait." In fact, we've seen the opposite, where sometimes orders that we thought were closed actually keep deferring and require more, more purchases. In fact, I think one story we heard was that we thought we won an order three times. Finally, the CFO approved it on the, the third go-round, then the CEO overruled it. We know we're eventually going to get that business, but this is the kind of dynamics that we're seeing. We're not seeing a lot of indications of a strong year-end budget flush. Again, we'd love to see the opposite happen, but we're not getting any indication of that. I don't know if you have some... Yeah, no, I think we- thoughts you'd like to add there? What we're hearing from the customers is that we're not planning on a budget flush at the end of the year, but we will take the upside, of course, if that comes. I think, you know, I think one, one thing is really, really clear, though, the funnels are very strong and it's there, but we're not seeing them to be released or a, a big flush. Yeah at the end of the year. I think this comment, Patrick, on the funnels being strong and that these funnels are actually growing, is really important because this is, this is one of the reasons why we think about, you know, full-year outlook in 2024. We, we, we know the business is there. It's just a question of when it, when it, when it's going to get really. Yeah, we, we watch very closely our win-loss rates, you know, and we haven't, you know, we've, we've seen them very, very stable. We had a strong funnel, which is very positive over time. Understood. Thank you, guys. We'll go next now to Derik de Bruin at Bank of America. Hi, good afternoon. Good afternoon, Derek. A lot of what I wanted to ask has been asked, so I've got some cleanups here. Just did you give a specific instrument core growth number and consumables growth core number for 3Q, and then sort of your, you know, all-in number for this year, what you're expecting? Yeah, we didn't. LSAG for Q3 was down roughly 9% core. Consumables was up slightly. Got it. Thank you. What's the revenue contribution for ResBio in 4Q, and what do we need to pull out for 2024? Yeah, we've got a minimal number in Q4 as we wind down the business, and I would say it was roughly 1 point to a little over 1 point headwind to DGG going forward in FY2024. Got it. Okay. So staying on the topic of M&A, I mean, you know, you've done a couple of genomics deals, which haven't gone your way, and I'm just sort of wondering what you're thinking about deployment going forward. I mean, valuations have obviously come in, you know, industry is consolidating, you were saying, but it's been relatively quiet across the space for the last 18 months. So, like, how are you sort of thinking about capital deployment, and at what point do you decide you maybe want to buy, you know, start maybe doing, getting rid of the share prices, maybe doing some share buybacks? Just sort of talk about your general capital deployment strategy at this moment. Yeah, I think Bob alluded to it a bit in, in his prepared remarks, but, you know, we still are staying with our, our balanced capital allocation strategy, and you saw us in the market opportunistically on share repurchases given where we saw the share price sitting at. In terms of our and appetite for M&A, it remains unchanged given the despite the Resolution Bioscience decision. We knew that was a higher risk acquisition for us, early-stage company in a hot area based on, on a really differentiating strategy that didn't, didn't really play out. We've had some success in other aspects of our genomics acquisitions, including the AAT acquisition on the, on the instrumentation side. We're still out there looking, but as Bob mentioned, we take a disciplined approach, not only to how we view our internal choices and our internal business performance in terms of what's in the portfolio, but we'll also take that same lens, if you will, on how we look at M&A. Really nothing has changed beyond the fact that this is more of a, of a buyer's, buyer's market. Companies with a strong balance sheet, like Agilent, I think are in a good, favorable position to work on opportunities. We're gonna stay disciplined, not get caught up in what once was a value of a company, either in the private or public space. Just one more follow-up, if I may. What are your orders in liquid chromatography? How is your order book? Are you seeing orders increasing? Our order book was down. Largely a function of China, but they were down year-on-year. Thanks. Thank you. We go next now to Josh Waldman at Cleveland Research. Hey, thanks for taking my questions. A couple for you. Sure. First, first, Bob, can you provide more context on the puts and takes within the fourth quarter core organic growth guide? I guess maybe the assumptions by business unit. Then curious what areas or end markets outside of China seem to be, like, slowing real time that you're trying to reflect in the guide versus, you know, areas that maybe have stabilized or are improving over the last days? Yeah. Josh, just real quick, when we think about kind of the Q4 implied guide, the big, the big driver is China. As I, as I mentioned, down, you know, roughly mid-thirties, and that really impacts, you know, a number of markets you can imagine, both pharma and chemical and energy, or chemical and advanced materials, which are the 2 largest markets in China. I would also say that, the diagnostics and clinical is also down. We, we've seen that softness in genomics, and then obviously the shutdown of ResBio also impacts that business, and that's primarily a US phenomenon. We did see a, an impact in, in U.S. on that side, and then there's some puts and takes in other places, but those are the two big pieces for Q4. If I was to recall, I think 85% of the, the change was, was really China driven and, and bleeds over into pharma and CAM. Got it. Okay. Mike, I guess staying on, on China and a follow-up there, can you unpack a bit more what you're seeing by end market? I mean, like, where demand is holding in versus, like, areas that you've seen come in lighter as the quarter progressed. Again, I, I guess outside of China. Yeah. Sorry, outside of pharma. Then, I guess, a follow-up on Dan's question, I believe it was earlier. What are the variables within China, Mike, that you're trying to account for as you forecast the, the medium term? I mean, maybe beyond just the next couple of months, and I guess any risk that we need to kind of rethink the underlying growth rate in the industry if, if China, it remains light here in the medium term? Yeah. Let me, let me start with the view by, by end market. You know, I think the academic and government market was a groove for us in the, in the, in the third quarter. Everything else was pretty much down. The big, the big chains really were, were in, in the pharma, the pharma space, and as Bob, Bob commented on earlier about how we exited the quarter with a live performance. We-- Some weakness in, in chemicals, but I'd say the, the down, down there was really just a by-product of, you know, we're going off a 43% compare last year, and we're looking at a 70% growth compare in, in the fourth quarter. I'd say the, the, the concerns or the cautiousness in the, in the China market place is really across the board, and, and, with varying degrees, but I think it's really, most, most reflected in, in the, in the pharma outlook. I think that's the, that's the $64,000 question. I, I think there's a case to be made, that this, this markets will, will, will get back to its longer term growth rates, but it'll take a period of, of years to get there. It's not gonna be a snapback in, in, in 12 months. Again, that's, that's, that's work to, work to be done. You know, the factors that we're looking at, I think, are the same factors everybody else is staring at, which is what's gonna happen to the macro in China? You know, the storyboard here is a macro story, and it's bleeding over into life sciences tools, but, you know, we need to see the China economy get moving again. We need to see consumer confidence coming back. We need to see, you know, investment confidence coming back in China. I think those things will take some time, but I do think they are priorities of, of the government, and they'll find a way to, to make that happen. We're not calling for a quick snapback here either. Got it. Appreciate it, guys. Mm-hmm. Thank you. We go next now to Dan Brennan at TD Cowen. Great, guys. Thanks for taking the questions. Maybe just one on instruments. Bob, I think you talked earlier, I think to Derek's question, maybe, you gave the LSEG number, but I know there's consumables within that. Could you just break out what the instrument number is? I know we'll get it on the queue, just wondering how instruments did. You know, as we look ahead, I think given your instrument exposure, I mean, it's always a key question I know has been various times asked throughout, but just how would we think about kind of the outlook for instruments? You know, whether it be fourth quarter, if you wanna, you know, point the scope out a little further. Yeah. to, to, to maybe add a little more flavor and clarity to the, to my answer previously, LSAG was down 9% core. It was down 9% in instruments as well. the consumables business was up basically one point. As we look out there, I'm just wondering, I guess it really depends upon the, the type of product which you guys already discussed. It sounds like you're optimistic on LSEG, given the funnel, is gonna get back towards excuse me, that LC-MS is gonna get back to that 5% growth. I guess, would you assume instruments as a starting point grows in fiscal 2024 from what you see today? Based on what we see today, yes. Got it. Maybe one more quick one, just one like that. There's, there's no reason to believe when we think about kind of the, the, the level of investment over time, and the, the importance of our instruments in the discovery of new therapeutic areas or, you know, food testing. We think about as, as Mike was talking about, these new areas around applied markets. There's no reason to think that there's something fundamentally has changed, that they don't need instrumentation. So I think we, we feel very good about our market share and our competitiveness, and do expect our LSAG business to, to be a growth driver for us going forward. Yeah, no, completely. It was just more just on the comp basis after, you know, making- That sounds great, Bob. Then just one quick one, just on the, you know, on the applied versus the chemical, you mentioned some chemical weakening, just there were concerns into the quarter, but the applied is obviously powering through. Can you just maybe unpack a little bit more how you're thinking about, like, how we exit the year across, you know, your different buckets, you know, within the chemical and applied segment? Yeah. I mean, I think if you look at Q4, it'll be really an impact of China. We're actually looking at chemical and advanced materials declining in Q4 because of that 70% increase that Mike mentioned in Q4 of last year. That was across the board. I would say the advanced materials will be much stronger than that, down high or down double digits. The chemical side probably will have a bigger impact. If you recall, the Shanghai shutdown impact was centered in the chemical and advanced materials market because that's where our GC manufacturing was, and that's a workhorse for some of those products. You know, we do see it down in Q4, but up for the full year. I think that's a really important thing to, to make sure that people understand. Great. Thank you. Thank you. We have time for one more question this afternoon. We'll take that now from Luke Sergott at Barclays. Great. Thanks for squeezing me in. Just real quick on the- Sure. Thank you. Real quick on the NASD, are you guys seeing any pressure from the market, seeing any insourcing from the market? I know Novartis has talked about doing some of this as well. And then lastly, additionally with that, with the, with the CapEx guide down, are you guys still investing in additional lines there for the year, or, or is that really on pause? Does that have anything to do with that kind of CapEx step down? You know, let me lead with this and then have Bob jump in on this, and Sam as well. From a insourcing standpoint, no, we're not seeing any material moves in this direction. In fact, as we head into 2024, we're gonna continue to broaden our book of business, and we're gonna have more customers than we've ever had in terms of breadth of customers as we go into 2024. Yes, it's called Project Endeavor. Train B, we went live, which was a different code name, and that's live. We continue to move forward with our expansion plans on the oligo front, the siRNA front, along with what we like to do on the CRISPR side as well, and antisense. We're gonna broaden that for... Our stated investment plans remain, remain unchanged. Yeah, to be very clear, Luke, to add what Mike said, we are not slowing that down at all. Mm-hmm. That, that investment is, is one of the highest priorities. We've, we've trimmed back spending in another less, you know, more infrastructure kind of oriented projects as opposed to kind of revenue generating. I think what you're seeing actually is it's actually coming in better than expected because the pricing is better than expected. Mm-hmm. You probably have seen that in other places. So the availability of parts and the, the key materials is, is, is better than what we had initially had planned as well. Yeah. I'll only add to what you guys said, that, you know, Mike, along with having, you know, more customers and actually a more diversified set of customers, we're gonna be, you know, we're, we're contracted to do more programs next year than in the history of NASD. It's, yeah, all full speed ahead. Gotcha. Gotcha. I didn't hear anybody ask you about the ACG margin. Maybe they did, I missed it. You guys had a material step up there. Can you talk about really what went on there? Is that, Is any benefit that you saw from like, lack of incentive comp? Just kind of break out where, you know, the drivers there and really how we should think about that in Q4 and as a jump-off point. Yeah, we did mention that there was a benefit, Luke, of the variable pay comp. Obviously, that's got a big component of people in it, but it's also a reflection of the scale and continued growth of that business. We didn't say, you know, take that 32%, I believe it was, in Q3, and kind of book that as the new starting point. Mm-hmm ... 'cause it had outsized growth. We continue to be pleased and expect continued margin expansion for ACG going forward. All right, great. Thank you. Mm-hmm. Thank you. Ladies and gentlemen, at this time, I would like to turn things back to Parmeet Ahuja for any closing comments. Thanks, Bob, and thanks everyone for joining the call today. With that, we'd like to end the call. Have a good day, everyone. Thank you, Parmeet. Ladies and gentlemen, this does conclude today's call. Thank you for joining. We wish you all a great day. Bye-bye