Agilent Technologies (NYSE:A) Q1 2026 Earnings call February 25, 2026 04:30 PM ET Speaker9Ladies and gentlemen, thank you for joining us, and welcome to the Q1 2026 Agilent Technologies Inc. earnings conference call. After today's prepared remarks, we will host a question and answer session. If you would like to ask a question, please raise your hand. If you have dialed into today's call, please press star nine to raise your hand and star six to unmute. I will now hand the conference over to Tejas Savant, V ...

Core Insights - Waters Corporation has launched next-generation 1 mm I.D. liquid chromatography (LC) columns featuring MaxPeak Premier Technology, which enhances sensitivity while reducing sample and solvent usage significantly [1][2] Group 1: Product Features - The new microflow LC columns reduce solvent consumption by up to 4 times compared to 2.1 mm I.D. columns, aiding laboratories in achieving sustainability goals and lowering operating costs [1] - These columns utilize up to 75% less sample than 2.1 mm I.D. columns, conserving valuable materials in fields like cell and gene therapy [1] - The sensitivity of the new columns is up to 2 times higher than that of stainless steel microflow columns, improving detection and quantitation limits across various applications [1] Group 2: Technological Advancements - The MaxPeak High Performance Surface (HPS) Technology minimizes nonspecific adsorption and enhances recovery for small molecules, peptides, and oligonucleotides [1] - The new columns provide sharper peaks, enhanced peak capacity, and reduced peak tailing, ensuring highly reproducible performance from the first injection [1] - Transitioning from 2.1 mm I.D. analytical-scale LC columns to these microflow formats allows for equivalent or improved sensitivity while using only one-quarter of the solvent and sample [1] Group 3: Market Impact - The introduction of these columns is expected to accelerate and simplify the development of life-changing therapies in high-throughput pharmaceutical and biopharmaceutical laboratories [1] - The new product will be available globally starting February 17, 2026, with immediate shipment [1]

Core Viewpoint - Waters Corporation's stock is trading lower following the release of its fourth-quarter 2025 financial results and fiscal 2026 guidance [1] Fourth Quarter Earnings Snapshot - The company reported quarterly sales of $932.36 million, a 7% increase as reported and 6% in constant currency, surpassing the consensus estimate of $928.09 million [2] - Sales in the academic and government market decreased by 2% as reported and 3% in constant currency [2] - Adjusted earnings were $4.53 per share, exceeding the consensus of $4.51 [2] Sales Performance - Instrument system sales increased by 3% as reported and in constant currency [3] - Recurring revenues, which include service and precision chemistries, rose by 10% as reported and 9% in constant currency [3] - Geographically, sales in Asia increased by 4% as reported and 11% in constant currency, while sales in the Americas rose by 4% as reported and in constant currency, and sales in Europe increased by 13% as reported and 4% in constant currency [3] Fiscal 2026 Guidance - The company anticipates continued momentum into 2026, driven by a multi-year instrument replacement cycle and innovation [4] - Initial guidance for 2026 indicates a combined company sales growth of 5.3% at the midpoint, with potential for outperformance [5] - Expected adjusted earnings for Q1 2026 are projected at $2.25-$2.35 per share, compared to the consensus of $2.52, with sales between $1.198-$1.211 billion [5] - For fiscal 2026, adjusted earnings are expected to be $14.30-$14.50 per share versus the consensus of $14.29, with sales projected at $6.41 billion-$6.46 billion [6] Analyst View - Analysts note that Waters' leadership in the QA/QC market benefits from multiple sector-level and idiosyncratic tailwinds, indicating the company is in the early to middle stages of a long-overdue replacement cycle [7] - The acquisition of BD Bio/Dx is expected to significantly expand the company's total addressable market (TAM) with conservative cost synergies and achievable revenue synergies [7] - Analysts expect "New Waters" to maintain above-group growth, margins, and return on invested capital (ROIC), suggesting the company will sustain a premium multiple [8]

Financial Data and Key Metrics Changes - The company achieved high single-digit reported revenue growth and low double-digit adjusted EPS growth in the fourth quarter, with sales growing 7% on a reported basis and 6% in constant currency [6][9] - Adjusted EPS grew 10% to $4.53, while GAAP EPS was $3.77 [33][34] - For the full year, sales grew 7% on both a reported and constant currency basis, with adjusted EPS growing 11% to $13.13 [10][34] Business Line Data and Key Metrics Changes - Recurring revenue grew 9%, driven by chemistry growth, while instrument revenue grew 5%, led by high single-digit LCMS growth [9][10] - Chemistry revenue grew 12% for the full year, significantly above the historical average growth rate of 7% [12][34] - The transition to a subscription-based model for Empower reduced overall instrument growth by a low single-digit percentage for the quarter, but is expected to provide long-term recurring revenue benefits [9][10] Market Data and Key Metrics Changes - Pharma revenue grew 9%, with high single-digit growth across the Americas and Europe, and low double-digit growth in Asia [15][31] - Industrial revenue grew 6%, while academic and government declined 1% [33] - In China, the company grew 9% for the year, driven by strong performance in biotech and CDMOs [16][34] Company Strategy and Development Direction - The company completed the acquisition of BD's Biosciences and Diagnostic Solutions business, aiming to strengthen its position in high-growth adjacencies and enhance operational execution [6][19] - The strategic roadmap laid out five years ago continues to advance, with a focus on innovation and commercial execution [8][10] - The company plans to expand its idiosyncratic growth driver framework from three to five drivers, adding biologics and informatics to the existing drivers [16][17] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the ability to deliver strong growth in 2026, with a blended year-over-year revenue growth of approximately 5.3% at the midpoint of the combined company [29][38] - The company expects to realize approximately $50 million in revenue synergies in 2026, reflecting initial contributions from commercial excellence initiatives [38][39] - Management highlighted the importance of improving operational execution and pricing discipline to enhance revenue and profitability [48][58] Other Important Information - The company expects to achieve approximately $55 million of adjusted EBIT from cost synergies in 2026 [25][39] - Free cash flow totaled $677 million for the full year, with a net debt position of $820 million at the end of the year [36][39] Q&A Session Summary Question: Insights on BD results and path to recovery - Management acknowledged several issues that emerged in Q4 impacting growth, but emphasized that these will now be present in a lower baseline for 2026, allowing for potential upside [45][47] Question: Impact of Empower transition on instruments - Management noted that the transition to subscription has created a low single-digit headwind to overall instrument numbers, but expressed confidence in the strong performance of LCMS and the overall instrument funnel [46][52] Question: Full year guidance and deceleration - Management explained that the guidance reflects prudence and incorporates assumptions about various market segments, including academic and government, and the impact of the Empower transition [55][56] Question: Update on pro forma leverage and interest expense - Management indicated that net debt is expected to be around 2.4x net debt to EBITDA, with plans to reduce it below 2 times within 18 months [63][64] Question: Synergy targets and operational execution - Management confirmed that they are on track to deliver the commitments made during the deal announcement, with a focus on identifying opportunities for cost synergies [67][70]

Company Overview - Waters Corporation (NYSE:WAT) is a global leader in analytical instruments, separations technologies, and software, serving various sectors including life sciences, materials, food, and environmental sciences for over 65 years [2] - The company ensures the efficacy of medicines, safety of food, purity of water, and quality and sustainability of everyday products [2] - Waters Corporation operates in over 100 countries with a workforce of more than 7,600 employees who collaborate with customers in laboratories, manufacturing sites, and hospitals [2] Financial Results Announcement - Waters Corporation will hold its Q4 2025 financial results conference call on February 12, 2026, at 8:00 a.m. Eastern Time [1] - A live webcast of the presentation will be available on the Waters Investor Relations website, with a replay accessible until at least March 12, 2026 [1]

Group 1 - Waters Corporation will present at the 44th Annual J.P. Morgan Healthcare Conference on January 12th, 2026, at 2:15 PM Pacific Time [1] - A live webcast of the presentation will be available on the Waters Investor Relations website, with a replay accessible for 90 days [1] Group 2 - Waters Corporation is a global leader in analytical instruments, separations technologies, and software, serving various sectors for over 65 years [2] - The company focuses on ensuring the efficacy of medicines, safety of food, purity of water, and quality of everyday products [2] - Waters Corporation operates in over 100 countries with a workforce of more than 7,600 employees [2]

Core Viewpoint - Morgan Stanley initiated coverage of Agilent Technologies with an Overweight rating and a $180 price target, highlighting the company's strategic initiatives and "Ignite" transformation program aimed at accelerating growth in key analytical and diagnostics markets [1] Group 1: Strategic Initiatives - Agilent's platform technologies, workflow automation, and services are increasingly aligned with customer needs in analytical labs, especially as tighter budgets and labor shortages drive demand for efficiency solutions [2] - The company's leadership in gas chromatography and spectroscopy, along with expanding opportunities in battery materials, semiconductors, and PFAS regulatory compliance, is expected to support long-term growth [2] Group 2: Revenue Generation - Agilent's CrossLab Group, which generated approximately 42% of FY24 revenue, is considered an underappreciated asset that enhances customer retention and recurring revenue [3] - The increased focus on biopharma and diagnostics, including the acquisition of BIOVECTRA and the expansion of the Dako Omnis pathology platform, presents additional growth opportunities as the sector continues to recover [3]

Core Insights - Waters Corporation is a leading analytical instruments and software company with a market cap of $22.4 billion, specializing in high-performance liquid chromatography, mass spectrometry, and laboratory informatics [1] Performance Overview - Over the past year, Waters shares have increased by 5.8%, underperforming the S&P 500 Index, which has risen by nearly 10.5% [2] - Year-to-date in 2025, WAT stock is up 2.1%, while the S&P 500 has seen an 11.2% rise [2] Sector Comparison - Waters has also underperformed compared to the Health Care Select Sector SPDR Fund, which gained 6% over the past year and 10.1% year-to-date [3] Recent Financial Performance - On November 4, Waters reported stronger-than-expected third-quarter results, with revenue of $800 million, an 8% year-over-year increase, driven by demand in pharmaceuticals and growth in recurring revenue streams [4] - Adjusted EPS surged to $3.40, reflecting a 16% increase from the previous year, aided by improved margins and accelerated instrument replacement cycles [4] Growth Drivers - Strength in LC-MS systems, double-digit growth in chemistry, and an 11% boost in pharmaceutical end-markets contributed to the company's momentum [5] - Waters raised its full-year sales and earnings guidance, indicating confidence in demand outlook [5] - Analysts expect WAT's EPS to grow by 10.5% to $13.10 on a diluted basis for the current fiscal year ending in December [5] Analyst Sentiment - Among 15 analysts covering WAT stock, the consensus rating is a "Moderate Buy," consisting of five "Strong Buy" ratings and ten "Holds" [6] - Rothschild & Co initiated coverage on Waters with a "Buy" rating and set a price target of $390, drawing renewed attention to the stock [7]

Group 1 - Cobalt is a strategic rare metal widely used in lithium battery cathode materials, high-temperature alloys, and hard tools, with mining facing challenges such as variable ore body shapes and low-grade mineralization [1] - The VantaMax and VantaCore handheld X-ray fluorescence analyzers by Evident enable rapid detection of cobalt, copper, and nickel in core samples, significantly improving cobalt recovery rates and concentrate grades [1] - The VantaMax and VantaCore analyzers provide qualitative and quantitative information within 20 seconds, with a detection limit for cobalt as low as 2 ppm, offering laboratory-level precision in a fraction of the time [2] Group 2 - The handheld analyzers are designed with ergonomic grips, meet IP54/IP55 standards, and have passed MIL-STD-810G drop tests, making them durable for harsh field conditions [1] - Evident offers a comprehensive range of products and solutions for the geoscience industry, helping users determine the characteristics of geological samples and providing cost-effective qualitative solutions [2]

Core Insights - Waters Corporation will have its President and CEO, Udit Batra, participate in a fireside chat at the Jefferies Global Healthcare Conference on November 18, 2025 [1] - A live webcast of the event will be available on Waters' Investor Relations website, with a replay accessible for 90 days [2] Company Overview - Waters Corporation is a global leader in analytical instruments, separations technologies, and software, serving various sectors including life sciences, materials, food, and environmental sciences for over 65 years [3] - The company focuses on ensuring the efficacy of medicines, safety of food, purity of water, and quality of everyday products, employing over 7,600 individuals across more than 100 countries [3]