Agilent Technologies, Inc. (NYSE:A) Q3 2023 Earnings Call Transcript

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Mike McMullen: Yes. We still have a few more months so we finish off the fiscal year, and we’ll give you our guide in November. And I think we’ll know a lot more by then. But I do think we know that we’ll be able to grow this company in ’24. That said, I was very careful in my comments to make sure that there’s a full year growth rate. We do expect the first half of the year to be a challenging year just from a comp standpoint to begin with, but also some of the things that we’ve been talking about today in the call, we don’t expect a quick snapback to be occurring in the next quarter or 2.

Patrick Donnelly: Okay. That’s helpful. And then I know you mentioned budget flush is still a little bit away from that at the calendar year event for pharma and other areas. Do you have any view at this point? It sounds like you guys are expecting to be a more subdued budget flush, but whatever you’re hearing from customers would be helpful just to pull back a little bit more on that.

Mike McMullen: Yes, sure, Patrick, happy to do so, and then I’ll invite Padraig to this conversation. I know he’s been talking a lot to his team about this. But as I mentioned earlier, we’re not really seeing any kind of indication of customers saying, hey, listen, I’m going to have money. I’m planning to spend it this way. In fact, we’ve seen the opposite where sometimes orders that we thought were closed to actually keep deferring and require more purchases. In fact, I think one story we heard was we probably 3x. Fondo CFO, approved it on the third go-around and the CEO overruled it. So we know eventually going to get that business. But this is kind of dynamics ever seen. So 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 going to indication of that. And I don’t if you have something to add there.

Padraig McDonnell: What we’re hearing from the customers is that we’re not planning on a budget flow through the end of the year, but we’re – we will take the upside of corsa.com. I think I think one thing is really clear that the funnels are very strong, and it’s there, but we’re not seeing them to be released through a big push at the end of the year.

Mike McMullen: I think this comment, Patrick, on the funnel being strong and these funnels are actually growing is really important because this is one of the reasons why we think about full year outlook in ’24. We know the business is there. It’s just a question of when it’s going to get –

Padraig McDonnell: Yes. We watch very closely our win loss rates. And we haven’t – we’ve seen them very, very stable — we had a strong funnel, which is very positive over time.

Patrick Donnelly: Understood. Thank you, guys.

Operator: We’ll go next now to Derik De Bruin at Bank of America.

Derik De Bruin: Hi. Good afternoon.

Mike McMullen: Good afternoon, Derik.

Derik De Bruin: 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 in consumables growth or number for 3Q and then sort of your all-in number for this year, what you’re expecting?

Robert McMahon: Yes. We didn’t. LSAG for Q3 was down roughly 9% core. Consumables was up slightly.

Derik De Bruin: Got it. Thank you. So what’s the revenue contribution for Res Bio in 4Q? And what do we need to pull out for 2024?

Robert McMahon: Yes. So 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 to the headwind to DGG going forward in FY ’24.

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