Agilent (A) Q1 FY26 earnings call: guidance and Q&A

What was the exact revenue impact of the snowstorm, how much has been recouped, and what was the margin impact?

The revenue impact was about $10 million, with the vast majority already recouped. The margin impact was very modest, so the reported Q1 margin is a reasonable proxy for actual performance.

“So when you think about the impact of the weather, we said it was about $10 million. We've already seen that come back with the majority of it.”

asked by Jack Melick · answered by Adam Elinoff

Can you provide more color on the cadence of operating margin improvement for the rest of the year, especially given the 75 bps full-year guide and Q1 being down?

Q2 is expected to see a 50 bps improvement year-over-year driven by pricing, volume, and Ignite savings, offset by performance-based pay and tariffs. Acceleration in margin expansion is expected in the second half as tariffs are fully mitigated, driven by continued volume leverage, pricing, and Ignite, partially offset by people costs and growth investments.

“From a year-over-year basis, we expect the second quarter to be a 50 basis point improvement, and that's really driven by pricing, volume and then Ignite savings.”

asked by Jack Melick · answered by Adam Elinoff

Given the Supreme Court ruling, how are you thinking about tariff assumptions, specifically a global minimum of 15%, and how does this change prior assumptions?

The situation is dynamic, and details on the 15% tariff are unclear. However, Agilent would not change its guide, citing no-regret moves in supply chain, utilization of pricing/surcharges, and the resilience of the Ignite Operating System. They are ready to react as things evolve.

“But if you assume that the 15% is on the surface, what it says across all different markets, what I would say is we wouldn't change our guide on it.”

asked by Vijay Kumar · answered by Adam Elinoff

How would you describe demand month-by-month since November, and is any observed slowing typical seasonality or due to policy uncertainty?

The capital equipment environment has been very steady, with strong underlying momentum in key markets like pharma (driven by GLP-1s and replacement cycles) and CAM (semiconductor onshoring). Favorable CapEx conditions, including reduced tariff uncertainty, are contributing. No deterioration in CapEx is observed, and funnels remain robust.

“I think CapEx conditions continue to improve with the MFN deals reducing the tariff uncertainty. That's been very big for our pharma customers.”

asked by Douglas Schenkel · answered by Padraig McDonnell

How would you describe the M&A environment, Agilent's readiness, and appetite for a multi-billion dollar deal?

Agilent's capital allocation priorities are unchanged: internal growth, M&A, and strategic capacity. They like their organic business and don't need transformative deals. The bar for such deals is very high, focusing on alignment with enterprise pillars, right to win, integration capability, and appropriate pricing for cash-on-cash returns above hurdle rates. They are evaluating opportunities against these filters.

“The bar is very high for a transformative deal, and there aren't that many of those out there.”

asked by Douglas Schenkel · answered by Adam Elinoff

Can you elaborate on the softness in the LDG segment, specifically cell analysis and genomics, and what drove the profitability softness?

LDG grew 3%, below expectations, due to weather impact and softness in academia and government affecting cell analysis and genomics. Larger end markets like pharma, biotech, and diagnostics grew high single digits. Profitability was impacted by the weather and the batch cadence of the CDMO business, which has varying revenue and timing profiles.

“In addition to the weather impact, we saw softness in academia and government that challenged our cell analysis and genomics results.”

asked by Patrick Donnelly · answered by Padraig McDonnell

Given Agilent's history of beating guidance, what would drive the company to the higher or lower end of its full-year guidance range?

Upside drivers include a pickup in small and mid-cap biotech spending, more stability in academia and government, and a larger stimulus in China towards year-end. Downside risks are continued pressure in small/mid-cap biotech, worsening academia/government conditions, and a decline in China revenue.

“One is a pickup in the small and mid-cap biotech sector. All of the green shoots are still there, but then there's that time lag between how does all the incremental investment, IPOs and M&A convert into actual spending investment.”

asked by Daniel Brennan · answered by Adam Elinoff

What is the utilization outlook for the oligo and NASD side, particularly Train C, and how does this impact margins, considering commercial vs. early-stage pipeline work?

There is a strong order backlog, and the FY26 outlook is confident. Train C and D are coming online, and capacity is booked out for '26, with '27 bookings for larger commercial batches. At steady state, the specialty CDMO business will exceed corporate operating margins. While Train C and D ramping in 2027 will have a negative margin impact, it will be offset by other business activities, mainly through Ignite.

“At steady state, the specialty CDMO business will return above our operating margin -- above the corporate operating margin. So it's a good business to be in.”

asked by Puneet Souda · answered by Adam Elinoff

Was the 6% growth in China entirely stimulus-related, and are any end markets turning more positively there?

The 6% China growth was better than expected, with a slight pre-Lunar New Year spending and a small stimulus (Agilent won 30%). They expect China to be a $300 million per quarter business. While under-indexed in DX and pharma, they see continued strength in applied markets. Long-term growth is expected to be mid- to high single digits, driven by innovation, manufacturing presence, and alignment with China's 15th 5-year plan priorities.

“And that's -- there was a slight bit of more spending before Lunar New Year, but not too much. And I think we saw an outside -- last year, we saw a very strong [ GACC ] stimulus business. We saw a small one this year. We won about 30% of that.”

asked by Brandon Couillard · answered by Padraig McDonnell