Agilent Technologies (A) Q3 2026 earnings call transcript

Thank you and welcome everyone to Agilent's Conference Call for the third quarter of fiscal year 2026. With me on the line, our CEO, Park McDonald and CFO Adam Allenoff. Joining for the Q&A will be Simon May, President of the Life Sciences and Diagnostics Markets Group, Angelica Ryman, President of the Agilent Cross Lab Group and Mike Zeng, 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. angelent. com.

Today's comments will refer to non-gap financial measures. Non-gap measures are supplemental and should not be considered a substitute for gap results. You'll find the most directly comparable gap 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-gap 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 would cause our performance to differ from these forward-looking statements. And now, I'd like to turn the call over to Parek.

Thanks, Tages, and welcome everyone. We delivered an excellent third quarter with strong performance in both the top and bottom lines. Our results clearly demonstrate the same 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 the core bases and exceeding the high end of our guidance by 140 base 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 X-refund basis were 6 cents 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 Q-tree results are no accident, nor are the purely a function of improving end markets. Rather, they reflect the momentum created by our four key elements of our strategy.

First, we continue to build on our unparalleled costumerate intimacy and trust. This differentiation is increasingly translating into share gains across key workflows and geographies. Second, that costumer 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 organization capabilities continue to strengthen, we improving speed, agility, and operation discipline, resulting in a step function improvement in execution. And finally, the combining benefits of Agnite are now increasingly visible. I want to take a moment to reflect on our transformation journey.

We announced our Agnite transformation in late 2024. Our earliest efforts emphasize strategic pricing, procurement, and tire of mitigation. Since then, Agnite has broadened and now underpins every aspect of how Agnite operates. This includes reinvigorating our innovation engine, strengthening our supply chain agility and operation discipline, and streamlining our structure and unlocking greater value to our integrated business model, which drives meaningful cross-selling over LC and GC solutions across our pharma and applied customers.

The enterprise capabilities we have developed would 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 Turkwater results, I want to talk about Agnite'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 ignites compounding impacts 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 drives share game.

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 the sound folding, we are starting to see stronger funding environment translating to 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 bio-vectra speciality CDMO operations grew nearly 30%. ATD's performance reflect 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 a strength-over-install base positions us well to benefit from semiconductor investment and a broader AI infrastructure built 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 longstanding 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 your 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 win include two 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 tree emerging road drivers in the region.

First, biotech innovation in China, combined with investment from global pharma companies, is creating meaningful demand for 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 the CXOs.

Second, we are seeing an inflection in contract testing laboratory volumes, particularly testing activity related to food safety and materials exports. The demand for 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 built out of China plays directly into a transfer in GC, GCMS and spectroscopy. The recently launched 9500 TRIPACOT ICPMS is off to a strong start in the region with semiconductor supply chain customers already contributing to a 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're 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 Tree LC continue to drive our performance, we're looking forward to contributions from the next wave of innovations that will strengthen our install base and support recurring consumables and service pull true. Our recent product launches at the ASMS Conference in June are all off to a strong start. The 9500 ICBMS, the flagship GC systems and our other tour 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're 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 9500 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've also received excellent customer feedback on our new 8890B and 8860B flagship GCs. Customers are excited about the productivity and GC assists intelligence features on the systems which started to ship in July. Orders over the first two months exceeded expectations by more than two X with strong demand across all regions.

Turning to our consumer's portfolio, we further expanded the Altura family at ASMS by launching columns for analytical workflows and protein peptide therapeutics, large oligonucleotides, gene therapy and vaccines. We have seen fantastic customer response today since shipments began last month. The increasing set of high profile applications that are growing Altura portfolios 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 bio-pharmulaturo columns. In multiple bio-pharm accounts, we have seen the initial adoption of one Altura column for a single application translating to 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 ominous family continues to bring laboratory automation to an entirely new customer set. Moreover, with the recent close of the bio-care 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 be momentum with the Ramen 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 US. Both in new inside BRT and the inside 300 aviation security products have achieved major milestones this quarter and are now certified to variants of the latest US and European detection standards respectively.

Both systems contain truly first of its kind technology to enhance safety and streamline operations as security checkpoints. We continue to be optimistic that the opportunity could expand through further RFPs in the US 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 tree LC and the value customers are seeing and 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 booked a bill came in above one, marking the 10th consecutive quarter where instrument orders met for group faster than revenue. Our healthy booked a 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 experiences highly favorable in relation to purchasing decisions, onboarding, solution needs and support. I'm especially delighted that we saw our highest score ever for onboarding support with a satisfaction rate at or above 95%. Beyond the instrument replacement cycle, early gains from reassuring dynamics are now beginning to materialize.

Underpending a sustainable multi-year instrument growth opportunity ahead of us. In pharma, we booked our initial reshoring orders in Q3 ahead of our expectations and the phone will continue to build. The steady increase in number of active construction sites following the 17 pharmaceutical manufacturer agreements announced under the Trump's administration's MFN program reinforces our top stand view of the primary reshoring opportunity we laid out last year.

Moreover, our commercial teams are now engaging in meaningful dialogue with most of these customers, three quarters of whom happen to be part of our strategic customer program. In fact, we have secured reshoring orders from five 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 region supply chain capacity, which in combination with AI CapEx build out should underpin the robust growth in our advanced materials and 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. A 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 and 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 ability to rapidly flex supply across our instruments and consumers portfolio in lockstep or customer demand.

Rapid factory turnaround is also helping us respond to demand faster with the customer request of delivery data performance reaching a record 95%. As part of our global operations transformation, we've moved to more agile, region 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 headcounts and despite having to navigate rising material costs and supply chain headwinds.

As ignite strengthens our operations, we're 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 mobilize our partnership with OpenAI and BCGX, 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 to deliver a seamless and superior customer experience. Our use of AI is not simply about helping the developers code faster, but with shorting the software development lifecycle from planning and design through development, testing and deployment. Our targeted approach would accelerate the pace of which we bring differentiated software releases to market.

In parallel, we are focused on delivering near time value and 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 that are making excellent progress to our committed pledges.

To a form of structure, dedicated leadership within our global operations function and a thoughtful roadmap, we're seeing the impact of our efforts. Adjunct was named to Times World's Most Sustainable Companies and Newsweek's World's Greenest Companies in 2026. For 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 labs 2025 Sustainable Lab Product Innovation Award for our flagship Infinity Tree 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, farmer grew 12% this quarter within farmer biotech grew double digits and small molecule grew mid-signal digits.

A GOP one 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 forensics delivered 5% growth, both exceeding our expectations. Importantly, PFAS grew 20% despite a low double digit compare. Diagnosis and clinical grew 6% just shy of our expectations. Robost double digit order growth and 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 are smallest in the market, decline 3% modestly below our expectations. However, on an X-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 the two year stack basis, our revised guide implies the 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.

15 cents higher than our prior forecast at the midpoint. Excluding the net benefit of tariff refunds of approximately 6 cents 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 a 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, Porig, 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, falling 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 and 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 and 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 X China revenue also grew 9%, with robust double-digit growth in pharma and cam.

America's 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 in government.

Q3 gross margins were 56.4%, excluding in 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 in 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 6 cent 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 in approved collections, as well as the net benefit of tariff refunds. Our free cash flow of $439 million represents a non-gap 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 one 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 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 here to date in 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 restaurant 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 your end. We continue to expect mid single digit growth for ACG. Regionally, we're increasing our expectations for China and Asia X China.

We now expect China to grow at mid single digits, while Asia X 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 X 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 X tariff refund basis, fiscal year 26 earnings per share are now expected to be between $6.12 and $6.15, an increase of nine cents 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 for operating cash flow range of $1.6 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 to $2 billion. This represents growth in 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 two 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 eight to nine percent, 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 Poreg 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 trends 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 the trust and express my gratitude to the Agilent team. For commitment, customer focus and our exceptional execution made these results possible. And with that, I'll turn back the tages.

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

Yeah, thanks, Jack. I'll pass it over to Adam here in a second, but first of all, really pleased with 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, bargain, thanks, Jack. Effectively, as you think about the CDMO business over the longer term, you know, we've talked about 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'll start generating revenue in that period. And then over the next six to eight quarters, that's when we expect it to ramp up to full capacity. The other piece, and you asked about our confidence and 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 with our capacity in the base CDMO business, we'll start to hit full capacity. So then that incremental train C will allow us to grow again. So feel very confident going forward.

Yeah, 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 appreciating 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 agnite operating system.

Yeah, so I think we sized the opportunity at about 1 billion through 2030 and we expect at least when one part of that, we feel really good about that, Vijay, having visited a number of these sites over the last few months, it's being great to see the momentum and how we're moving with setting up getting ready to get it ready to put its systems in, et cetera. So one of the things that's kind of probably go to say is the broader benefit versus peers, we include LC, services and GC in these companies where we've seen 45 on-shoring sites that have been designated.

We see that we have about 15,000 instruments installed globally, so we have a large install base that reflects future going forward on the reshoring sites. And you know, it's gonna 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 gonna see the revenue start to come in in 27, it's gonna be not linear, you're gonna see differences in different quarters as we go forward.

But I think it's gonna 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 five 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 a 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.

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 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.

And I'll just give you some more color on the 2026 guide. So once again, 30% growth, we saw on 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, you know, for 2027 and I'll pass it 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. Yeah, just a couple of quick things to add. I'd say in terms of the FY27 ramp, we've continued to make good progress with the Endeavour mechanical completion and marching towards the next spring goal line. And we're focused there initially on a high volume commercialization process implementation in training. So of the available capacity that we're gonna have in FY27, 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 SIR&A is as a modality with these larger indications.

The pipeline's very strong. The demand signals that we see from our customers are very strong. And I think the timing of train C is really well timed.

Yeah, that's a great timing. Just one thing to remind everybody as well, Q426. We expect flat growth, but it's over a very challenging 40% year over year compared to year.

Yeah, so I'll take this one. Thanks, Tycho for the question. We're not gonna 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 that I feel very good about. But 2027 and beyond.

I mean, I think you called out farm and food. Maybe going to 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 better sense of how China turned around so much this quarter. I got to follow up, thanks. Yeah, 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 farmers strong double digit growth, you see first of all our GLP1 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 momentum is really driven by that new R&D and new modalities.

One thing that we were very pleased about is our small molecule group meetings. 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 and that side. And you can see that China is becoming more and a continuing important region for drug development.

And just moving along, if you look along the businesses, our camp business grew high single digits. And that's over really tough compared 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 CNE due to macroeconomic pressures, we're also seeing our spectroscopy and vacuum products growing double digits.

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 Alturo 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 two 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 with the China continuing to the year and then we're increasing our guide from high-mid single digits to from flat and our Q4 guidance is high single digits.

So CAM grew 7% on 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. CNE grew low single digits, but that again was against a tough compare of low-double digits. And across the CNE business on a regional basis, you see AEGPAC or 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 that 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 Agilence 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 semi-conductor space. You can see that across the globe, and as you see, you know, 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, very, we're very pleased with the business, and we expect to continue to see it growing at the.

Yeah, so look, we're really, really pleased with our with our buyer pharma and pharma business. And you know, by our firm, the end, we grew by 12% overall, 9% ex-CDMO. And you can see the overhang from the MFN, is really, really helped. And the biotech grew double digits, and of course, you see CDMO growing nearly 30%. So I think, and again, you underpin that with an un really strong GLP result of 70% growth.

So overall, we see a lot of, a lot of reasons to see that this market continuing to grow. You think about a replacement cycle, which is crucial. It's a big part of this business. Continue to home along. Look at our instrument business on the LC side. And also, you see that you talk to 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 and not in Q4 and of course, going forward.

And really what I'm trying to balance here is that that low single digit growth rate in Europe with all the positive reshoring commentary around your America's business.

Yeah, it's pretty straightforward. I would say instrument and services are all incremental. Consumers 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. Okay.

Yeah, I'll take the first part on that hand over to Simon on the mRNA side. So we've seen relatively small exposure, but I would say encouraging uptick in small to mid-size biotech. And you can see that in general, if you look at the macros in H-126, the total biopharm of 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 height and demand focus in the M&A. You see a lot of the licensing deals that are going in. So we're beginning to see the small and mid-size biotech spending return. 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 about 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. Yeah, certainly we saw a pretty pivotal clinical trial read out 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 in part there, but something's still look helpful for the future.

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

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, you know? Academia and government all grew mid-single digits. And Farmer grew low single digits, but that was, again, a low double digit compare in the side of it. Of course, on the academia side in government, we see some funding going into the fence.

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. It wouldn't read too much into Europe. And I think China was a real standout for us in a step up.

Yeah, if you go, if we kind of double click and see any, see any, we grew low single digits on a tough compare, but looking at CNE on a regional basis, you know, I talked a little bit about the Asia demand that we saw in refining and base chemical demand, China's benefiting from specialty chemical growth. If I was flat, but in the downtornance, specialty chemical, and me it was down, you know, due to the amid the geopolitical disruption and delayed CAPEX, but the way to look at it, you know, 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 our 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 the high-single-digit rate overall for CAM and chemical energy will be an important part of that too.

Great, thank you.

Yeah, I'll kick it off, and I'll hand it over to Adam on this one. I think, you know, strong pricing year to date, it's one of the amazing compounding factors of the Ignite operating system that we've seen. We've exceeded our initial full year guide of 100 BIPs plus for 26, and we expect price momentum to continue into the year end, you know. And if you look back on our quarters in FY 25, we're well north of 100 BIPs. And that's 2x the pricing power over the previous year. Q1 was 200 BIPs of pricing. Q2 was 200 BIPs and Q3 was 200 BIPs. So we see that continuing to go forward. And of course, that's really important as we deal with inflation of your pressure, and Ignite is really helping them that response as well as we go forward ending to add Adam.

The only piece I would add is that pricing is in 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.

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?

Yeah, so very pleased with our growth and cutery, modestly ahead of what we put out in our guide. We had service growing amidst single digits and consumers growing at high single digits across all regions. But in terms of the lag time and what we see, maybe Angela, you can add a little bit of color on this. Yeah, thanks, Morgan.

Thanks, Eevee, 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 warranties. 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.

So maybe just walk through some of the dynamics you're seeing there. You mentioned underlying orders through double digits. So just where are you seeing that strength in orders? And I would be curious also to hear how the omnis platform contributed, as I know you called that out last quarter, is a strong growth contributor also. Thank you. Yeah, so I'll start at the 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. There's some CDX crew meetings, and we have a really unique position in that business. And genomics grew high single digits. And that's all under pin by the expanded Daco almas family.

But maybe you can provide more detail, Simon. Yes, 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 install 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 probably 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 circular drivers that we see with modalities like ADCs, Agilent's capabilities, and the very strong install 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, insecure for the order entry was really strong. And we're very confident about the fourth quarter and the underlying momentum in the business.

Mr. Tages, I will turn the call back over to you. Thank you everyone for joining us. We look forward to speaking with you soon.