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import java.util.regex.Matcher; import java.util.regex.Pattern; public class Example { public static void main(String[] args) { final String regex = "^([^a-z]+):(.*(?:(?!\\n[^a-z]+:)[\\r\\n].*)*)"; final String string = " FD (Fair Disclosure) Wire\n\n" + " November 19, 2018 Monday\n\n" + "Q4 2018 Agilent Technologies Inc Earnings Call - Final\n\n" + "LENGTH: 11673 words\n\n\n" + "Corporate Participants\n\n" + "* Alicia Rodriguez\n\n" + "Agilent Technologies, Inc. - VP of IR\n\n" + "* Jacob Thaysen\n\n" + "Agilent Technologies, Inc. - Senior VP and President of Life Sciences & Applied\n" + "Markets Group\n\n" + "* Michael R. McMullen\n\n" + "Agilent Technologies, Inc. - CEO, President & Director\n\n" + "* Robert W. McMahon\n\n" + "Agilent Technologies, Inc. - Senior VP & CFO\n\n" + "* Samraat Raha\n\n" + "Agilent Technologies, Inc. - Senior VP and President of Diagnostics & Genomics\n" + "Group\n\n" + "Conference Call Participants\n\n" + "* Brandon Couillard\n\n" + "Jefferies LLC, Research Division - Equity Analyst\n\n" + "* Catherine Walden Ramsey Schulte\n\n" + "Robert W. Baird & Co. Incorporated, Research Division - Senior Research Analyst\n\n" + "* Daniel Anthony Arias\n\n" + "Citigroup Inc, Research Division - VP and Senior Analyst\n\n" + "* Daniel Louis Leonard\n\n" + "Deutsche Bank AG, Research Division - Research Analyst\n\n" + "* Derik De Bruin\n\n" + "BofA Merrill Lynch, Research Division - MD of Equity Research\n\n" + "* Doug Schenkel\n\n" + "Cowen and Company, LLC, Research Division - MD & Senior Research Analyst\n\n" + "* Jack Meehan\n\n" + "Barclays Bank PLC, Research Division - VP & Senior Research Analyst\n\n" + "* Patrick B. Donnelly\n\n" + "Goldman Sachs Group Inc., Research Division - Equity Analyst\n\n" + "* Paul Richard Knight\n\n" + "Janney Montgomery Scott LLC, Research Division - MD, Head of Healthcare Research\n" + "& Senior Equity Research Analyst\n\n" + "* Puneet Souda\n\n" + "Leerink Partners LLC, Research Division - Director, Life Science Tools and\n" + "Diagnostics\n\n" + "* Ross Jordan Muken\n\n" + "Evercore ISI Institutional Equities, Research Division - Senior MD and Head of\n" + "Healthcare Services & Technology\n\n" + "* Stephen Barr Willoughby\n\n" + "Cleveland Research Company - Senior Research Analyst\n\n" + "* Stephen Christopher Beuchaw\n\n" + "Morgan Stanley, Research Division - Equity Analyst\n\n" + "* Tycho W. Peterson\n\n" + "JP Morgan Chase & Co, Research Division - Senior Analyst\n\n" + "Presentation\n\n" + "OPERATOR: Good day, ladies and gentlemen, and welcome to Agilent Technologies\n" + "Fourth Quarter 2018 Earnings Conference Call. (Operator Instructions) And as a\n" + "reminder, this conference is being recorded for replay purposes. I would now\n" + "like to hand the conference over to Alicia Rodriguez, Vice President of Investor\n" + "Relations. Please go ahead.\n\n" + "ALICIA RODRIGUEZ, VP OF IR, AGILENT TECHNOLOGIES, INC.: Thank you, James, and\n" + "welcome, everyone, to Agilent's Fourth Quarter Conference Call for Fiscal Year\n" + "2018. With me are Mike McMullen, Agilent's President and CEO; and Bob McMahon,\n" + "Agilent's Senior Vice President and CFO. Joining in the Q&A after Bob's comments\n" + "will be Jacob Thaysen, President of Agilent's Life Science and Applied Markets\n" + "Group; Sam Raha, President of Agilent's Diagnostics and Genomics Group; and Mark\n" + "Doak, President of the Agilent CrossLab Group.\n\n" + "You can find the press release and information to supplement today's discussion\n" + "on our website at www.investor.agilent.com. While there, please click on the\n" + "link for Financial Results under the Financial Information tab. You will find an\n" + "investor presentation along with revenue breakouts and currency impacts,\n" + "business segment results and historical financials for Agilent's operations. We\n" + "will also post a copy of the prepared remarks following this call.\n\n" + "Today's comments by Mike and Bob will refer to non-GAAP financial measures. You\n" + "will find the most directly comparable GAAP financial metrics and\n" + "reconciliations on our website. Unless otherwise noted, all references to\n" + "increases or decreases in financial metrics are year-over-year. References to\n" + "revenue growth are on a core basis. Core revenue growth excludes the impact of\n" + "currency and acquisitions and divestitures within the past 12 months. Guidance\n" + "is based on exchange rates as of October 31. We will also make forward-looking\n" + "statements about the financial performance of the company. These statements are\n" + "subject to risks and uncertainties and are only valid as of today. The company\n" + "assumes no obligation to update them. Please look at the company's recent SEC\n" + "filings for a more complete picture of our risks and other factors.\n\n" + "Before I turn the call over to Mike, I would also like to share my plans to\n" + "retire at the end of January, making this my last conference call as Agilent's\n" + "Vice President of Investor Relations. I have enjoyed working with many of you\n" + "over the years, but as Mike says, the best is yet to come and so it is also true\n" + "for IR.\n\n" + "And now, I'd like to turn the call over to Mike.\n\n" + "MICHAEL R. MCMULLEN, CEO, PRESIDENT & DIRECTOR, AGILENT TECHNOLOGIES, INC.:\n" + "Well, thanks, Alicia, and hello, everyone. Thank you for joining us today.\n" + "Before I cover our financial results, I want to thank Alicia for her years of\n" + "service and wish her the best in her retirement. Alicia has superbly led\n" + "Agilent's IR team for the past 8 years. She has set a high standard for her\n" + "professionalism, integrity and transparency in her engagement with the\n" + "investment community. Thank you, Alicia. You are the best and you will be missed\n" + "by me. You can see, this has been an emotional day for all of us and our Agilent\n" + "team and I'm sure, by everyone that's on today's call.\n\n" + "This quarter, we reported our strongest quarterly results since the 2015 launch\n" + "of the new Agilent. We're ending the year with a terrific quarter. Our revenues,\n" + "profitability and earnings per share are significantly ahead of expectations.\n\n" + "Now, some of the specifics. Q4 revenues grew 9% on a core basis to $1.29\n" + "billion. This exceeded the high end of our guidance by more than $30 million.\n" + "Double-digit end-market growth in pharma, environmental and forensics along with\n" + "the continued strength of our Chemical & Energy business are driving results.\n\n" + "Geographically, our China business is up sharply, with 16% growth for the\n" + "quarter. For the year, the Agilent China team delivered double-digit growth and\n" + "achieved a major milestone, crossing over 1 billion in business for the first\n" + "time.\n\n" + "Q4 adjusted operating margin is 25.2%, up 190 basis points from last year. This\n" + "is our 15th consecutive quarter of the Agilent team improving year-over-year\n" + "operating margins.\n\n" + "Q4 adjusted EPS of $0.81 is $0.07 above the high end of our guidance. Compared\n" + "to last year, this is an increase of 21%. In addition, we took advantage of\n" + "marketing conditions to purchase $86 million in stock during the quarter. For\n" + "the full year, stock repurchases stand at $422 million, underscoring the\n" + "confidence we have in our future performance.\n\n" + "I am also pleased to report that the Agilent board has just approved a new $1.75\n" + "billion share repurchase plan. This quarter more than caps off an excellent\n" + "2018. Our strong quarterly performance translates in the full year core growth\n" + "of 7.1%, our highest annual growth rate since the launch of the new Agilent.\n" + "Total reported revenues grew to $4.9 billion. We continue to deliver improved\n" + "profitability while investing for growth. For the year, adjusted operating\n" + "margin is 23.1%, up 110 basis points over last year. Our earnings per share are\n" + "up 18% for the year to $2.79. The numbers tell the story, a strong team\n" + "delivering yet another stellar annual performance.\n\n" + "Let's now look at the quarter by business groups. Core revenue grew a healthy 9%\n" + "for LSAG, our Life Science and Applied Markets Group. Product strength is\n" + "broad-based, driven by mass spec, chromatography and cell analysis. We continue\n" + "to introduce innovative new products. We are strengthening our molecular\n" + "spectroscopy portfolio with the launch of the Agilent 8700 Laser Direct Infrared\n" + "Chemical Imaging System. This is a breakthrough in both chemical imaging and\n" + "spectral analysis.\n\n" + "We also introduced the Cary 3500 UV-Vis system, the first significant\n" + "advancement in UV-Vis architecture in decades. We continue to build out our cell\n" + "analysis business. We just closed the acquisition of ACEA Biosciences. ACEA is a\n" + "provider of cutting-edge cell analysis instruments and will expand our cell\n" + "analysis portfolio. The Agilent CrossLab Group delivered strong 9% core revenue\n" + "growth. Demand was excellent across both services and consumables. We continue\n" + "to invest in our portfolio and extend our customer reach. We completed the\n" + "acquisition of ProZyme, expanding our offering to the biopharma marketplace. We\n" + "also acquired our South Korean distributor. This acquisition expands our direct\n" + "customer engagement and it further builds out ACG's service business in the\n" + "market.\n\n" + "The Diagnostics and Genomics Group grew 5% on a core basis. Strength in our NASD\n" + "and Genomics businesses drove the quarterly results. In a significant win,\n" + "Agilent has been selected by Unilab to be a preferred partner for their\n" + "pathology business. Unilab is one of the largest European diagnostic testing lab\n" + "providers. This announcement is another strong testament to the advantage of\n" + "Agilent's expanding workflow solutions.\n\n" + "Before I leave DGG, I want to provide an update on the construction of our new\n" + "NASD API production facility. We remain on track for the initial production of\n" + "GMP-grade APIs by the end of fiscal year 2019 with material revenue\n" + "contributions in FY '20. Overall, it was a great quarter, capping off an\n" + "excellent year delivered by the Agilent team.\n\n" + "A few final comments before I turn the call over to Bob.\n\n" + "Agilent's shareholder value-creation model is fully activated. First, we are\n" + "executing on an innovation-driven growth strategy that is delivering. Second, we\n" + "continue to focus on improving profitability with our Agile Agilent initiatives.\n" + "Finally, we are actively leveraging our balance sheet to drive acquisitions of\n" + "fast-growing, innovative companies while also returning cash directly to\n" + "shareholders. We have transformed Agilent into a growth company and are focused\n" + "on delivering superior earnings growth. We just delivered our highest growth and\n" + "profitability since the launch of the new Agilent. Since then, our adjusted CAGR\n" + "EPS is up 17%. Our business is also less cyclical today, with non-instrument\n" + "sales making up over 56% of our total company revenue. If economic challenges\n" + "would arise, our business is now less dependent on capital equipment purchases.\n\n" + "Looking ahead to 2019, while acknowledging current trade discussions, we are\n" + "expecting market conditions to remain solid. The Agilent team is laser-focused\n" + "on sustaining our strong growth into 2019 and beyond. We have momentum. I keep\n" + "telling the Agilent team: the best is yet to come. Thanks for being on the call\n" + "and we look forward to answering your questions. I'll now hand off the call to\n" + "Bob. Bob?\n\n" + "ROBERT W. MCMAHON, SENIOR VP & CFO, AGILENT TECHNOLOGIES, INC.: Thank you, Mike,\n" + "and good afternoon, everyone. I am very pleased to be talking with you today on\n" + "my first earnings call as Agilent's CFO.\n\n" + "Before I get started, I want to echo the comments Mike made and say thank you to\n" + "Alicia. In my time here, she has been a great partner to me, and I truly wish\n" + "her the best in retirement. She will be missed.\n\n" + "Now moving onto the financials. In my remarks, I'm going to provide some\n" + "additional detail on revenue, walk through the fourth quarter income statement,\n" + "touch on a few other key financial metrics and then I'll finish with our\n" + "financial guidance for 2019. Unless otherwise noted, my remarks will focus on\n" + "non-GAAP results, and percentage changes will be on a year-over-year basis.\n\n" + "As Mike mentioned, we delivered a very strong fourth quarter to finish an\n" + "excellent fiscal year. Revenue for the quarter was $1.29 billion, with core\n" + "revenue growth of 9%, exceeding both our guidance and expectations. For the full\n" + "fiscal year, our core revenue growth was 7.1%, a very strong performance.\n\n" + "As Mike spoke to the group's performance for the quarter, I will provide some\n" + "additional details around our end-market and regional performance. Overall, the\n" + "market environment is positive. And based on our channel reach and product\n" + "offerings, we saw broad strength across most end markets.\n\n" + "Pharma, our largest end market, was up 14%, with double digit contribution from\n" + "all business groups. Both the small molecule and biopharma segments performed\n" + "well. Traditional areas of strength as well as newer areas of strategic focus\n" + "such as cell analysis and a strong performance at NASD contributed to the\n" + "results.\n\n" + "Chemical & Energy grew an impressive 7% against a very strong comparison of 15%\n" + "core growth last year. We continue to see positive ongoing market investment in\n" + "this area. Balanced gains in both LSAG and ACG were driven by strength in\n" + "spectroscopy, LC/MS, supplies and services. Demand from materials\n" + "characterization applications continue to drive robust ICP-MS growth.\n\n" + "Environmental and forensics grew 17%, ahead of expectations with good demand\n" + "across major regions. Growth was balanced across both end markets. Forensics saw\n" + "a notable demand for cobalt Raman spectroscopy and environmental for LC/MS and\n" + "ICP-MS.\n\n" + "Academia and government reported 10% growth as funding environment stabilized\n" + "while diagnostics and clinical grew 1%, and food was flat as expected against a\n" + "tough 10% comparison.\n\n" + "Geographically, we also saw broad-based strength. China grew by 16%,\n" + "accelerating from the 10% core growth we saw in Q3, and as Mike mentioned,\n" + "passed the $1 billion mark in sales for the year in the fourth quarter.\n\n" + "Other Asia and Japan grew by 12%, and Europe and the Americas had solid\n" + "mid-single-digit growth.\n\n" + "In addition, we continue to be pleased with the revenue composition as\n" + "non-instrument revenue contributed 56% of the total in Q4. Looking forward, we\n" + "see non-instrument revenue growth outpacing instrumentation, driving in an\n" + "increasingly recurring revenue stream.\n\n" + "Now turning to the rest of the P&L. Q4 gross margin of 57.8% increased 170 basis\n" + "points compared to the prior year. This was due to product mix and volume as\n" + "well as our order fulfillment and supply chain organization continuing to do an\n" + "outstanding job driving cost savings using our Agile Agilent approach.\n\n" + "Operating margin, including adjusting for the key site billings, was 25.2%, up\n" + "190 basis points due to higher gross margins and top line leverage on operating\n" + "expenses, even as we invested more in R&D. This led to non-GAAP earnings per\n" + "share of $0.81 in the fourth quarter, an increase of 21% compared to the prior\n" + "year and more than double the rate of revenue growth.\n\n" + "Now before moving to FY '19 guidance, I want to touch on a few additional\n" + "financial metrics. We continue to generate very strong cash flow. This quarter,\n" + "free cash flow was $336 million, and for the year, we generated over $900\n" + "million in free cash, exceeding our commitment.\n\n" + "In Q4, we returned $133 million to shareholders, buying back 1.3 million shares\n" + "for $86 million and paying out $47 million in dividends. We also completed the\n" + "ProZyme and Young In acquisitions. With Young In, we expanded our direct sales\n" + "and service capabilities in South Korea. For the fiscal year, we returned $613\n" + "million to shareholders, buying back 6.4 million shares for $422 million and\n" + "paying out $191 million in dividends. As Mike mentioned, we closed a record\n" + "number of acquisitions in 2018, deploying $516 million.\n\n" + "We ended the year with $2.2 billion in cash and $1.8 billion in debt, and we\n" + "just closed on a ACEA Biosciences last week, so we're starting 2019 where we\n" + "left off in 2018. All in all, we entered 2019 with healthy end markets, good\n" + "momentum in the business and a very strong balance sheet.\n\n" + "Now let's turn to our non-GAAP financial results guidance for the full year and\n" + "first quarter of 2019, beginning with our full year guidance. We expect 2019 to\n" + "be a strong year overall. But before I get into the actual numbers, let me\n" + "mention a few important points.\n\n" + "First, we anticipate currency will be a headwind in 2019. Based on exchange\n" + "rates as of the end of October, we expect currency will reduce reported sales\n" + "growth in 2019 by roughly 220 basis points, translating into roughly a $110\n" + "million negative impact for the full year. For comparison, our 2018 reported\n" + "sales growth benefited by 210 basis points from currency. Now partially\n" + "offsetting the currency impact will be a larger contribution from recent M&A,\n" + "including the recently closed ACEA Biosciences acquisition. And in addition,\n" + "starting in fiscal 2019, we adopt a new accounting standard, which changes how\n" + "we present pension expenses and benefits on the income statement. In effect, we\n" + "are reclassifying certain amounts to other income and expense. While this has no\n" + "impact to net income, we do expect this will reduce forecasted operating margins\n" + "in FY '19 by roughly 40 basis points. As we move through the year, we will\n" + "provide a restated 2018 to provide an apples-to-apples comparison.\n\n" + "And lastly, we are taking a different approach in setting guidance ranges that\n" + "include both upsides and downsides, so I'd encourage you to model to the\n" + "midpoint of guidance at this stage.\n\n" + "Now for the full year, we are expecting revenue to range from $5.13 billion to\n" + "$5.17 billion in fiscal 2019, representing core growth of 5% to 5.5% and\n" + "associated reported growth of 4.4% to 5.2%. Currency is estimated to negatively\n" + "impact growth by 2.2 percentage points, with M&A contributing roughly 1.6 to 1.9\n" + "percentage points of growth for the full year.\n\n" + "Now onto our EPS guidance. For the full year, we are forecasting a range of $3\n" + "to $3.05 per share. Adjusting for the negative currency, this translates to 9%\n" + "to 11% growth in EPS and 7.5% to 9.3% on a reported basis. Included in this\n" + "guidance is roughly $4 million per quarter in tariffs. This is slightly higher\n" + "than the estimate we provided last quarter and is related to List 3.\n\n" + "A few other metrics as you build your models. Embedded in our forecast is modest\n" + "operating leverage after accounting for the pension adjustment. We are also\n" + "expecting the total of interest income, interest expense and OI&E to be $10\n" + "million to $15 million in net expense, inclusive of pension and key site\n" + "billings. Guidance is based on a full year tax rate of 17%, down 1 point from\n" + "2018, and diluted shares outstanding were approximately $322 million, flat to Q4\n" + "of this year.\n\n" + "We expect operating cash flow of between $1.1 billion to $1.15 billion and\n" + "capital expenditures of roughly $175 million. As previously mentioned, the\n" + "Agilent board has authorized a $1.75 billion repurchase program, and we plan at\n" + "a minimum, to offset dilution throughout the year. We will also continue to look\n" + "for M&A like ACEA and other recent tuck-ins and have the financial flexibility\n" + "to be opportunistic in share buybacks as well.\n\n" + "And finally, we have announced raising our dividend by 10%, continuing a streak\n" + "of double-digit increases, providing another source of value to our\n" + "shareholders.\n\n" + "Now turning to Q1 guidance. For Q1, we're expecting revenue to range from $1.265\n" + "billion to $1.28 billion, representing reported growth of 4.4% to 5.7% and core\n" + "growth of 4.5% to 5.5%. Please remember that we are going up against a very\n" + "tough Q1 comp last year where we grew 10% core.\n\n" + "First quarter 2019 non-GAAP earnings are expected to be in the range of $0.71 to\n" + "$0.73 per share, which is roughly 9% to 12% x currency and 7.6% to 10.6%\n" + "reported growth.\n\n" + "Now before opening the call for questions, let me conclude by saying we are very\n" + "pleased with the financial results and the continued hard work and focus of the\n" + "Agilent team laying the groundwork for future growth and as we enter 2019 with\n" + "strong momentum.\n\n" + "With that, I will turn it back to Alicia for Q&A.\n\n" + "ALICIA RODRIGUEZ: Thank you, Bob. James, will you now open the phone lines for\n" + "the Q&A and provide the instructions?\n\n" + "Questions and Answers\n\n" + "OPERATOR: (Operator Instructions) Our first question comes from Tycho Peterson\n" + "with JPMorgan.\n\n" + "TYCHO W. PETERSON, SENIOR ANALYST, JP MORGAN CHASE & CO, RESEARCH DIVISION: I'll\n" + "be the first to congratulate Alicia. It's been great working with you. I guess\n" + "for either Mike or Bob, I'm wondering if you can maybe help us put some\n" + "parameters around the guidance for next year, either by end market or segment.\n" + "Can you maybe just talk to whether like, for example, Food can get back to\n" + "growth post the China restructuring? And how should we think about C&E? It\n" + "moderated a bit against tougher comps, but how do you think about the setup for\n" + "that next year?\n\n" + "MICHAEL R. MCMULLEN: Tycho, I'm in the room. This is Mike, and Alicia really\n" + "appreciates your remarks. And Bob, I think maybe you can provide a little bit of\n" + "color on Tycho's question.\n\n" + "ROBERT W. MCMAHON: Yes. Thanks, Tycho, and a pleasure to speak with you. In\n" + "terms of the end markets, I think we still see nice end market growth across all\n" + "the markets. When we think about the various markets, pharma, we would expect,\n" + "leads the way, probably faster than the overall company growth. But we are\n" + "expecting growth throughout all of the end markets. So we expect a return to\n" + "growth in Food for sure, but also continued performance across all of the\n" + "businesses or all the end markets. And really, we expect kind of broad-based\n" + "growth across the end markets as well as our divisions.\n\n" + "TYCHO W. PETERSON: And is there any implications on your lab deal on DGG for\n" + "next year? Or how did that flow through?\n\n" + "MICHAEL R. MCMULLEN: Yes, Tycho. I think there's just one more proof point that\n" + "we think we can continue to grow the business, both in terms of winning some big\n" + "deals but also as the PD-L1 expands in terms of various cancer states being able\n" + "to be treated by the KEYTRUDAs and OPDIVOs of the world. So it was just more of\n" + "a proof point. This is why we have confidence we can continue that growth\n" + "trajectory.\n\n" + "TYCHO W. PETERSON: Okay. And then just lastly, can you comment on the cell\n" + "analysis portfolio today with the CNT course? I'm just wondering whether there\n" + "are kind of revenue synergy opportunities here? Or how do we think about the\n" + "portfolio and the ability to kind of penetrate the single cell market a little\n" + "bit further?\n\n" + "MICHAEL R. MCMULLEN: Yes. Tycho, I'm going to make a few opening comments here\n" + "and then pass it over to Jacob. But as you know, we made our first foray into\n" + "cell analysis with the Seahorse acquisition, and we really were attracted by the\n" + "growth in this space as well as what Agilent can bring to really accelerate the\n" + "growth of acquired assets in this space. And we're super pleased to have ACEA\n" + "and the ACEA team as part of Agilent, but I'm going to turn it over to Jacob and\n" + "you can share your perspective as well.\n\n" + "JACOB THAYSEN, SENIOR VP AND PRESIDENT OF LIFE SCIENCES & APPLIED MARKETS GROUP,\n" + "AGILENT TECHNOLOGIES, INC.: Yes. Absolutely, Mike, and I'm as excited as you\n" + "are, perhaps even more even since this is in my business. So as you say, we\n" + "started into the cell analysis business with the Seahorse acquisition followed\n" + "by Luxcel and now here recently with ACEA. And all acquisitions gives us a very\n" + "differentiated position in the cell analysis business, where Seahorse is really\n" + "a technology that allows for measuring the up and down regulation of metabolism\n" + "based on oxygen consumption. We now have ACEA flow, the flow cytometry, which is\n" + "a great way and a very easy way of doing cell characterization, identification\n" + "based on the genotype and what -- where this will position the market is that is\n" + "very ease-of-use and re-allow many different labs that today feel it's very\n" + "difficult to work with flow cytometry to really start to get their hands around\n" + "that. And finally, the ACEA has the xCELLigence platform, which is a great way\n" + "of measuring cell survival viability through impedance measurement. So those 3\n" + "different modalities really gives us a strong position, especially in the\n" + "immuno-oncology and CAR-T where basically bring the ability to measure live\n" + "cells and how they operate under different conditions is going to be key to --\n" + "for the entire CAR-T and immuno-oncology. So you will see us continue to invest\n" + "into this business, but I'm very pleased where we are today.\n\n" + "MICHAEL R. MCMULLEN: And Tycho, you can see the excitement we have on these\n" + "products playing out in the cell analysis business. And I think this is a\n" + "perfect example of how a company coming into Agilent with this great innovative\n" + "new product can really benefit via the scale of Agilent.\n\n" + "OPERATOR: Our next question comes from Ross Muken with Evercore.\n\n" + "ROSS JORDAN MUKEN, SENIOR MD AND HEAD OF HEALTHCARE SERVICES & TECHNOLOGY,\n" + "EVERCORE ISI INSTITUTIONAL EQUITIES, RESEARCH DIVISION: Congrats, guys, and\n" + "Alicia, it's always been a pleasure. Maybe let's talk China. So if I look at\n" + "some of the color you gave on a segment basis, it seems like not only did the\n" + "segment outperform, but it was pretty broad-based. I mean, you called that, I\n" + "think, in the presentation, academic as well as some of the more traditional\n" + "pieces of when we think about your China business being. So maybe just give us a\n" + "feel for the cadence in that business for next year and sort of the underlying\n" + "assumptions, and how you're thinking through some of the macro noise in whether\n" + "or not tariff or anything else will impact the sort of demand curve on maybe the\n" + "nonlife science business next year.\n\n" + "MICHAEL R. MCMULLEN: Yes, happy to do so, Ross. I think you anticipated some of\n" + "my response, which really was broad-based. I mean, we are delighted with the\n" + "numbers, 16% double digit for the entire year, but we saw strong growth in\n" + "pharma, academia, which is really, the China government's really focused on\n" + "doubling the number of their -- what they call the first class universities, so\n" + "a very robust funding environment. You saw the overall numbers for environmental\n" + "forensics. I mean, a lot of those being driven by investments in the\n" + "environmental space by the Chinese government. We're seeing a strong growth in\n" + "the aftermarket, continued strength in chemical energy and finds a return to\n" + "growth in the Food segment. So the overall view of China was very positive for\n" + "the quarter. And as we look at next year, I think Bob and I were talking about\n" + "this earlier, we're guiding -- embedded in our guidance assumptions is high\n" + "single-digit growth in China for next year. And despite all the noise that's out\n" + "there, what's really happening on the ground is a lot different. Chinese\n" + "customers want to buy the most innovative tools for their work. They want to\n" + "support the government-led initiatives, and areas such as investments relative\n" + "to healthcare for the citizens are getting funding, and we are one of the\n" + "preferred choices for those customers. So despite the noise in the environment,\n" + "the environment remains solid.\n\n" + "ROSS JORDAN MUKEN: And maybe on the margin side. Obviously, all of the volume\n" + "absorption in the quarter, just given how much you beat the revenue piece by\n" + "obviously, health. But it feels like still underlying a lot of what you've been\n" + "doing across the business is flowing through on both the gross margin and OpEx\n" + "side. And so maybe give us a feel for how much you think of sort of the margin\n" + "outperformance kind of came from maybe just the underlying revenue streams\n" + "versus maybe some of the other actions you're doing in that in the context of\n" + "some of the investments obviously, that you'll be making next year into\n" + "Lasergen.\n\n" + "MICHAEL R. MCMULLEN: Yes, Ross, as you know, it's more than just volume that\n" + "drove the margin expansion as you noted. And just leaning over to Bob, my guess\n" + "is it's probably 2/3 volume, 1/3 OpEx and specific gross margin initiatives. So\n" + "as I noted in my call script, we have a whole series of what I call the Agile\n" + "Agilent initiative, which continues to drive efficiency and much more\n" + "effectiveness inside the company. A lot has been focused on the gross margins of\n" + "late, but also we're going to apply a lot this in -- we've been aligning this to\n" + "our OpEx as well. And again, I would underline just the importance of our\n" + "digital transformation on there really is going to continue to allow us to drive\n" + "improvements here. So when I came into the role a couple of years ago, I wanted\n" + "my margin expansion not to come just from volume, and that's been our mantra and\n" + "our formula since we started the new Agilent 4 years ago, and it will continue\n" + "to be our approach as we move forward. Bob, anything else you'd add? Maybe you\n" + "want to get your mic here.\n\n" + "ROBERT W. MCMAHON: Yes, I was going to say I think the other thing is if you\n" + "look at the various groups, each one of the groups actually improved their\n" + "profitability in the quarter, which is nice broad-based performance. And so,\n" + "it's not just 1 business or 1 product that's driving the profitability, it\n" + "really is across Agilent.\n\n" + "MICHAEL R. MCMULLEN: That's a great build, Bob. And one of the things that we\n" + "noted to our board last week when we had the board meeting was what we've been\n" + "doing on the gross margins of our service business as well, which is we often\n" + "think about the margins being relatively stable and flat there. Since it's such\n" + "a high labor content in terms of delivery, the marketing team has really been\n" + "driving efficiency with new tools and approaches. So it really is broad-based\n" + "improvement across all 3 groups.\n\n" + "OPERATOR: Our next question comes from Jack Meehan with Barclays.\n\n" + "JACK MEEHAN, VP & SENIOR RESEARCH ANALYST, BARCLAYS BANK PLC, RESEARCH DIVISION:\n" + "I'd reiterate as well, good luck, Alicia. I enjoyed working together. As the --\n" + "just as my first question, I want to dig in a little bit more on the LSAG\n" + "performance. I know one of the products that was flagged out was LC/MS. I was\n" + "curious if you can give as an update on the Ultivo launch there and just where\n" + "you think you're seeing that resonate in the market.\n\n" + "MICHAEL R. MCMULLEN: Jacob, I think I'll let you answer this question since it's\n" + "one of those good news answers. So why don't I pass it over to you, Jacob.\n\n" + "JACOB THAYSEN: Yes, absolutely. Thanks for that question. And I mean, it's kind\n" + "of a very straightforward story, is that Ultivo continues to outperform our\n" + "expectations. We see our customers, especially where we started out here by\n" + "building applications in the food and environmental, and they have been very\n" + "happy with what they see. In the end, you can actually -- with the size of it\n" + "and the performance, you can actually place 3 in the 3. Ultivo in the same place\n" + "as you previously could do with 1 mass spec, which gives a lot of opportunities\n" + "in many of the labs that actually are lacking space. But on top of that, we have\n" + "done a lot to simplify and improve the software and also the usability as such.\n" + "We start to see now also the pharma accounts are really interested in taking on\n" + "Ultivo. But the mass spec story and the performance is beyond Ultivo, and we see\n" + "a lot also in our 6545XT BioConfirm where we now see on the biopharma side, that\n" + "we start to see a very strong uptake on that. So it's really broad-based that we\n" + "see that our robust reliable instrumentation is picking up in the market, very\n" + "excited about the mass spec. But there's a lot of the elements into the overall\n" + "LSAG business. The ICP-MS is also doing strong. LC continues to come back with\n" + "great momentum. So overall, we are really right now firing on all cylinders.\n\n" + "JACK MEEHAN: Great. Appreciate all that feedback. Just as a follow up, I wanted\n" + "to get a status update on the Colorado facility. Just help if you could parse\n" + "out some of the language from the prepared remarks a little bit more. Are you\n" + "assuming the revenue would start more in fiscal '20 at this point? And then just\n" + "on the CapEx side, how much is within the $175 million guide is being attributed\n" + "to the facility there?\n\n" + "MICHAEL R. MCMULLEN: Yes. Jack, happy to answer the question. I'll take the\n" + "first one and then pass the second one to Bob. So the language in the script was\n" + "just to reaffirm to the audience that we're on track as planned, and the\n" + "construction is actually complete. We're now in the process of validation. We\n" + "just had a review late last week on the status. And we will get revenue in 2019,\n" + "but what we were just showing was the big pop-up when you get the full year is\n" + "going to be 2020.\n\n" + "ROBERT W. MCMAHON: Hey, Jack. This is Bob on the capital side and just to build\n" + "on what Mike was saying. Yes, that's -- we do expect some revenue contribution\n" + "here. But as we've said consistently, the big revenue uptick is in 2020. And in\n" + "terms of the capital, of the $175 million, most of the capital has been spent at\n" + "the Frederick site already. There is some additional but most of that has come\n" + "down and the $175 million is -- the majority of that is still actually the base\n" + "business. Now recall, that's higher than perhaps it would have been earlier\n" + "because of the acquisitions that we've acquired. So we've acquired some capital\n" + "associated in plans -- expansion plans there.\n\n" + "MICHAEL R. MCMULLEN: By the way, Bob, I probably also should mention the\n" + "specific to our second site or our original site, which is Boulder, we actually\n" + "have found some ways to work the efficiency of our efforts there and we're\n" + "actually planning to get more volume out of there in 2019 and in 2018.\n\n" + "ROBERT W. MCMAHON: That's right.\n\n" + "MICHAEL R. MCMULLEN: So our growth in NASD is not only -- is not solely\n" + "dependent on the Frederick site.\n\n" + "ROBERT W. MCMAHON: That's right.\n\n" + "OPERATOR: Our next question comes from Steve Willoughby with Cleveland Research.\n\n" + "STEPHEN BARR WILLOUGHBY, SENIOR RESEARCH ANALYST, CLEVELAND RESEARCH COMPANY: I\n" + "guess, a couple of things. First, just on tariffs, Mike. You made a comment\n" + "about $4 million a quarter, just being up slightly. I was just wondering, is\n" + "that including any impacts from pricing or supply chain that you're doing as a\n" + "potential offset? And then I have one follow-up.\n\n" + "MICHAEL R. MCMULLEN: Oh, yes, hey Steve, thanks for the clarifying question. And\n" + "Bob, I'm going to go ahead and take a shot at this. And if I -- if you need to\n" + "course correct me, please go ahead. But what we're trying to quantify was the\n" + "actual impact of incremental duties after all the mitigation efforts. That does\n" + "not include anything else we may be doing relative to pricing. So that's not a\n" + "complete drag on the P&L and it's all baked into the guide for next year. But\n" + "we've also instituted some other broad-based actions to mitigate that as well.\n" + "But that was just trying to isolate the specific amount of the net incremental\n" + "duties to the company.\n\n" + "ROBERT W. MCMAHON: You got it.\n\n" + "MICHAEL R. MCMULLEN: Did I get it right, Bob?\n\n" + "ROBERT W. MCMAHON: You got it right.\n\n" + "MICHAEL R. MCMULLEN: Okay, all right. Thanks.\n\n" + "STEPHEN BARR WILLOUGHBY: Sure. And then just, Bob, just a quick follow-up\n" + "question. I guess, just another clarification, I guess, 2 things really. Within\n" + "the 5% to 5.5% core growth guidance you're providing, what is your assumption\n" + "for the incremental revenue from the NASD business in Colorado? And then just\n" + "making sure I heard you correctly in terms of operating margins, including this\n" + "pension accounting change, what is your assumption for operating margin\n" + "expansion next year x this 40 basis point headwind?\n\n" + "ROBERT W. MCMAHON: Yes. So on the NASD, what I would look at -- what I would\n" + "think about that is looking at NASD in total and the total growth rate is still\n" + "there. So rather than looking at it discreet because we've actually found\n" + "incremental volume out of the existing plant, so we are expecting growth in NASD\n" + "next year, consistent with what we shared back in the summer. And in terms of\n" + "margins, what I would say...\n\n" + "MICHAEL R. MCMULLEN: Bob, I'd also say that's also been very customer-driven\n" + "because customers who have 1 batch at the 1 site would put us to kind of finish\n" + "the work there as opposed to going midterm into the other sites.\n\n" + "ROBERT W. MCMAHON: That's right. That's right. And then in terms of the\n" + "operating margin expansion, what I would say is after adjusting for the 40 basis\n" + "point reduction, we are still expecting some modest improvement in operating\n" + "margins. So what that would tell you is it's greater than 40 basis points.\n\n" + "OPERATOR: Our next question is from Paul Knight with Janney.\n\n" + "PAUL RICHARD KNIGHT, MD, HEAD OF HEALTHCARE RESEARCH & SENIOR EQUITY RESEARCH\n" + "ANALYST, JANNEY MONTGOMERY SCOTT LLC, RESEARCH DIVISION: Could you talk about as\n" + "we -- as you think about that January Lunar New Year and the -- with the effects\n" + "you expect out of the way holidays are rolling out, how we should think about\n" + "the first quarter specifically? I know there's usually been a little bit of\n" + "noise around how calendars lay out.\n\n" + "MICHAEL R. MCMULLEN: Paul, thanks for the question. So it's my hope 1 year as\n" + "CEO not to be talking about the Chinese Lunar New Year, and 2019 may actually be\n" + "that year. So as you know, in 2018, it caused a lot of seasonality swings\n" + "between quarters and also prior year compares. The way it's playing out this\n" + "year, it's happening at the same period of time as it happened in 2018. So Bob,\n" + "I think we're not really expecting anything unusual this year from the timing of\n" + "the Chinese Lunar New Year.\n\n" + "ROBERT W. MCMAHON: That is correct.\n\n" + "PAUL RICHARD KNIGHT: And then lastly, I don't know if this question was put in.\n" + "But how should we think about tax this year and also going forward even beyond\n" + "FY '19?\n\n" + "MICHAEL R. MCMULLEN: I think Bob's got a really good story here. So why don't\n" + "you talk to him about what's going to happen in '19?\n\n" + "ROBERT W. MCMAHON: Yes. Thanks, Paul. And so this year in FY '18, we ended the\n" + "year roughly at 18% effective tax rate. We're guiding to 17% in FY '19, and\n" + "we're working on plans to continue to improve that going forward.\n\n" + "OPERATOR: Our next question comes from Patrick Donnelly with Goldman Sachs.\n\n" + "PATRICK B. DONNELLY, EQUITY ANALYST, GOLDMAN SACHS GROUP INC., RESEARCH\n" + "DIVISION: Mike, maybe one for you. We've seen continued news flow on some of the\n" + "bigger buildouts from chemical companies in China. Can you just talk through the\n" + "market demand there? I know chemical and energy is an area you've been pretty\n" + "bullish on historically in that region. So where are we in the process of some\n" + "of those bigger projects building out capacity in GC, some of the other areas\n" + "you act as a supplier in?\n\n" + "MICHAEL R. MCMULLEN: Yes, Patrick, happy to share my insights here. So I have\n" + "been bullish on the growth prospects of China as it relates to the chemical and\n" + "energy market for, I think, good reason because we have some pretty good insight\n" + "in terms of the projects that are underway. And as I mentioned I think in a\n" + "prior call, a lot of this is not only to support their economic growth but also\n" + "as what they view as an element of national security to continue to invest in\n" + "the colder chemical plants to really reduce their dependency on natural --\n" + "imported natural gas, for example. So we've seen the project. They have a\n" + "multiyear program. I think we're probably in the third or fourth inning of what\n" + "looks to be a multiyear buildout of planned capacity. And this is really\n" + "important for our GC business as you mentioned, Patrick, because that actually\n" + "is the tool of choice. And Jacob, I know you just got back from a trip to China.\n" + "And are you hearing the same thing from the teams?\n\n" + "JACOB THAYSEN: Yes, certainly, Mike. It's really just a repeat that there are\n" + "plenty of opportunities in China right now with larger HPI installations coming\n" + "in here also in '19 and '20. So I think there are great opportunities in front\n" + "of us also in that place.\n\n" + "MICHAEL R. MCMULLEN: So I guess the message here, Patrick, is it's not over yet.\n" + "So we think we've got a few more years of really solid growth in this segment of\n" + "the market in China.\n\n" + "ROBERT W. MCMAHON: Yes, and I think -- Patrick, this is Bob. Maybe just to build\n" + "on that. Obviously, as Jacob and team laid the groundwork for putting in the\n" + "instrumentation, I think Mark and his team around the chemistries and the\n" + "supplies business also continue to drive very strong growth in China. So I think\n" + "it's a multi-phased opportunity for us as we go forward, and so we're really\n" + "excited about that.\n\n" + "PATRICK B. DONNELLY: Great. And then, Bob, maybe now that you've been on the\n" + "seat for a few months, can you just talk through kind of initial impressions,\n" + "maybe a particular focus on the margin side? Obviously came in to a nice, clean\n" + "balance sheet. We've seen some activity there between the dividend increase and\n" + "the bigger share repo than historical trend. But maybe just on the margin side,\n" + "given some cost saving initiatives have been in place for a few years, what\n" + "opportunities have you seen, confidence level and continued expansion\n" + "opportunities going years out?\n\n" + "ROBERT W. MCMAHON: Yes -- no. Thanks, Patrick. I think one of the things that\n" + "I've been pleasantly surprised with is the amount of rigor and discipline that\n" + "the organization actually comes through. We probably under market the Agilent\n" + "approach externally. But I think the teams are very operationally focused, not\n" + "just on cost savings at the gross margin line but really through increasing\n" + "productivity and efficiency across the organization. What I would say is there\n" + "are still several big opportunities as we go forward. Obviously, still focused\n" + "on gross margin. But Mike mentioned the digital aspect to this, and this has a\n" + "multifaceted approach. Not only does it enable us to actually do business easier\n" + "with our customers and actually drive some stickiness. It also is going to be\n" + "driving efficiencies in our customer -- cost per order dollar activities and so\n" + "forth. And so as we think about that driving, I'd see multiple layers -- levers\n" + "there. And I think there's opportunity to continue to do that as well as\n" + "continue to reinvest some of those proceeds in R&D. So very excited about the\n" + "things going forward.\n\n" + "OPERATOR: Our next question comes from Dan Arias with Citigroup.\n\n" + "DANIEL ANTHONY ARIAS, VP AND SENIOR ANALYST, CITIGROUP INC, RESEARCH DIVISION: I\n" + "just wanted to -- Mike, I wanted to follow up on the expectations for growth in\n" + "food this year. How far along are you at this point in working through the\n" + "government reorganization headwind in China? Have you fully come through on the\n" + "other side there? Or are you still working through some things?\n\n" + "MICHAEL R. MCMULLEN: I think you're talking specifically to China, yes. So by\n" + "the way, one of the things we know -- so when you look at our food numbers,\n" + "Europe was relatively flat against the double-digit compares. So I know we're\n" + "going to -- I know your question was focused on China, but that's -- we also saw\n" + "some smaller geographic dynamics in the fourth quarter. Albeit said, we think\n" + "the business will be growing again in 2019. We think -- you may recall, I think\n" + "it was the second quarter I talked about 2 sets of reorganizations. One we\n" + "thought would happen faster, which was the environmental one, which is done. And\n" + "you can see that popped in some of the growth rates we had. And relative to food\n" + "ministries, we expect that to take longer to get that side of the reorganization\n" + "done. I think it's still holding true to form, which is we're anticipating that\n" + "kind of taking through the rest of this calendar year. That being said, we also\n" + "know some of the money is starting to move to the Tier 3 and Tier 4 cities, and\n" + "we've been actively building up our channel there over the last several quarters\n" + "to ensure we can capture the growth. So I guess the message here is still\n" + "developing as we thought a few quarters ago, not done yet.\n\n" + "ROBERT W. MCMAHON: Yes, I would agree with that, Mike. And what I would also\n" + "point to is if you look at the performance of our China business, it's\n" + "accelerated quarter-on-quarter. So I don't want that to be lost after just\n" + "posting a 16% year-on-year growth rate for the total company.\n\n" + "MICHAEL R. MCMULLEN: Thanks for the reminder, Bob.\n\n" + "DANIEL ANTHONY ARIAS: Yes, that's helpful. Okay. And then if I could just go\n" + "back to the guidance range just to make sure that I have it correct. It looks\n" + "like you tightened things up relative to where you were at the Analyst Day. So\n" + "I'm curious if you can just sort of hone in where you feel like you're maybe 50\n" + "bps better at the low end and then it seems like things are going pretty well,\n" + "so I guess -- and you called 6% prudent at the Analyst Day, so why trim 50 bps\n" + "at the top of the range?\n\n" + "MICHAEL R. MCMULLEN: Just as a reminder, at the Analyst Day, we actually didn't\n" + "guide for '19. We're really just trying to illustrate really about what our\n" + "margin expansion might look like at different revenue levels. But I think\n" + "relative to our guide, Bob, I think we're actually feeling very, very positive\n" + "about it. I think we came out stronger this year than we did last year. So what\n" + "else could you add to that?\n\n" + "ROBERT W. MCMAHON: No, I think that's right. I think when we think about core\n" + "growth of 5% to 5.5%, that's faster than what we are expecting the overall\n" + "market growth to be. So we're feeling bullish about our ability to continue to\n" + "gain share not only through launching new products that we talked a little bit\n" + "about but also continued market execution across our businesses. And as we\n" + "mentioned, this will probably be led by the pharma in China areas, but we're\n" + "expecting solid growth across all of our end markets as well as geographies.\n\n" + "OPERATOR: Our next question comes from Dan Leonard with Deutsche Bank.\n\n" + "DANIEL LOUIS LEONARD, RESEARCH ANALYST, DEUTSCHE BANK AG, RESEARCH DIVISION: So\n" + "first question, can you elaborate more on time line for the share repurchase and\n" + "any target capital structure you have in mind?\n\n" + "ROBERT W. MCMAHON: Dan, this is Bob. I'll take that. We are thinking about it in\n" + "2 ways. One is obviously, as I mentioned, doing something throughout the course\n" + "of the year to maintain our share count at roughly 322 million shares, and then\n" + "we'll be opportunistic, similar to what we had done in the first quarter. Still\n" + "a little early for me to actually come out and give a target in terms of capital\n" + "structure, but what I can tell you is I'd expect us to continue to be very\n" + "active in the M&A market. And I think we have an opportunity to optimize the\n" + "strong balance sheet more effectively going forward.\n\n" + "DANIEL LOUIS LEONARD: Okay. And then as a follow-up on your forward-looking\n" + "commentary on end markets. So how should we think about in regard to pharma\n" + "where you expect strength in 2019, how should we think about the sensitivity if\n" + "capital markets were to climb up here? Is it all -- would Agilent be sensitive\n" + "to that? Or just walk us through you're thinking on that front.\n\n" + "MICHAEL R. MCMULLEN: Yes, great question. My view is that what's powering the\n" + "investments in pharma, it's really all about investments to improve the human\n" + "condition. It's all about investing in new classes of drugs, new therapies,\n" + "whether it be the biopharma, whether it be cell therapies, various gene\n" + "approaches that are going on there. We see new class of drugs such as the\n" + "RNA-based therapeutics. So we think they're fairly resilient, if you will, to\n" + "those kinds of headwinds -- economic headwinds, the fact that they would occur.\n" + "But also I'd just remind you particularly in our pharma space how much of our\n" + "business is noninstrument related. So we have a very large recurring revenue\n" + "business, really centered around our ACG business.\n\n" + "OPERATOR: Our next question comes from Derik De Bruin with Bank of America.\n\n" + "DERIK DE BRUIN, MD OF EQUITY RESEARCH, BOFA MERRILL LYNCH, RESEARCH DIVISION:\n" + "Alicia, as one of the only other New Mexicans on Wall Street that I know, I'm\n" + "going to miss you. And so a couple of questions. So when you look at your\n" + "segments for 2019, the implied sort of organic core growth rate you're looking\n" + "for is something around 3% to 4% for LSA, mid-single digits for Diagnostics and\n" + "7% to 8% for ACG. Is that a good way to sort of look at it?\n\n" + "ROBERT W. MCMAHON: Yes, what I would say is you're in the ballpark.\n\n" + "DERIK DE BRUIN: Okay. And one of the key questions we're getting from a lot of\n" + "investors is obviously the macro has been choppy. There's a lot of angst about\n" + "how businesses performed during the downturn. I mean, obviously, you're a heck\n" + "of a lot less cyclical than you once were. But I guess, could you sort of think\n" + "about how the current portfolio performed during a steeper recession? Be sort of\n" + "like back as to what you've just announced or think about where we've grown in a\n" + "tougher time.\n\n" + "MICHAEL R. MCMULLEN: Yes. Sure, Derik. I think you pointed out -- made one very\n" + "good point, which is the portfolio of businesses is a lot different than it was\n" + "a few years ago. In fact, I sort of anticipated I might get this question,\n" + "that's why you saw a comment I made in my script, economic headwinds would\n" + "occur, it's a different company. By the way, we're not at all predicting that's\n" + "in fact going to be the case. And I would say that we'll probably follow a\n" + "fairly similar pattern than we saw a few years ago, mainly reflecting --\n" + "impacting the replacement cycle in certain industries, most likely the chemical\n" + "market. But a lot of the areas where there's money being spent on research, I\n" + "would think it would be fairly resilient. I don't remember the exact numbers,\n" + "but that would be kind of my top of mind thinking on that.\n\n" + "ROBERT W. MCMAHON: Yes. I think maybe to build on that point, Mike. As I look at\n" + "the business and the characterization, obviously, the product portfolio that we\n" + "have today is very different than what we had before, and I think it's actually\n" + "more focused on what customers need in terms of solving their problems. And so\n" + "whether that's be OpenLAB, where we're actually helping productivity and so\n" + "forth, or the CrossLab's group just in general, I actually -- you could envision\n" + "where you may have some impact on the instrumentation. But that potentially\n" + "could be offset because you'd actually have more consumable usage going through\n" + "as they're looking to keep their instruments longer and so forth or want them\n" + "serviced. And so I think we're in better position now than we've ever been. And\n" + "as we think about where our growth is coming from, it's coming from the fastest\n" + "part of our business -- or I should say is growing is in fast-growing markets\n" + "like cell analysis that we talked about before, which is going to be less\n" + "impacted, I think. And now, just because of research and the pace of innovation,\n" + "our ACG business and then obviously, our Diagnostics and Genomics Group as well.\n\n" + "DERIK DE BRUIN: Right. I mean just sort of when I was talking about the segment\n" + "growth, I'm just noticing that back in 2015 and '16, when oil was softer, you\n" + "basically were growing LSAG in the 3% to 4% range. So I'm just assuming that\n" + "you're already building some sort of -- some conservatism in the numbers, just\n" + "given just historically how that -- what the condition of the business at that\n" + "time, business growing at size.\n\n" + "MICHAEL R. MCMULLEN: I think the same. Don't you think, Bob?\n\n" + "ROBERT W. MCMAHON: Yes.\n\n" + "OPERATOR: Our next question comes from Steve Beuchaw with Morgan Stanley.\n\n" + "STEPHEN CHRISTOPHER BEUCHAW, EQUITY ANALYST, MORGAN STANLEY, RESEARCH DIVISION:\n" + "Just a couple of trends, to dig a little deeper on the points that were raised.\n" + "I think, first, maybe on margins. Bob, there have been some questions asked\n" + "about some of the specific points on the margin progression from '18 to '19. But\n" + "as I take a step back, there are actually a lot of moving parts when I think\n" + "about Lasergen spending, the impact of M&A, spending on NASD, the accounting\n" + "change you flagged in FX. Any chance you have a view on what core operating\n" + "margin expansion is next year to give people a sense for what a jumping off\n" + "point might be for fiscal '20 because, hey, it's never too soon to start\n" + "thinking about '20, right?\n\n" + "ROBERT W. MCMAHON: Yes. Gee, we haven't even finished the call for the initial\n" + "FY '19, but I'll give it a shot. What I would say is there are a number of\n" + "moving pieces. Obviously, we've got a full year of Lasergen built into the plan.\n" + "That being said, we're still guiding full year operating margins to grow despite\n" + "that important investment. And then we've got NASD as well and some of the\n" + "headwinds around the FX. But when I look at operating margin incremental, so\n" + "this is not necessarily core but this will be just looking at the incrementals.\n" + "In FY '19, they're very consistent with kind of how we exited FY '18. And what I\n" + "would say is we're focused on continuing to drive operating margins but also,\n" + "most importantly, earnings growth.\n\n" + "STEPHEN CHRISTOPHER BEUCHAW: Okay. And then the second thing I wanted to see if\n" + "I could get both of you, Mike and Bob, to talk a little bit about was guidance,\n" + "policy guidance, practice. You alluded in the prepared remarks to a hope that\n" + "people would model at the middle of the guidance range. And I got a sense from\n" + "the prepared remarks that you thought that there might have been a change or at\n" + "least a need for there to be a perception of change the way you guys went about\n" + "constructing the guidance for the year. It would be really helpful to hear you\n" + "talk about how you went through that? And why you think the middle of the range\n" + "is the right thing. And before I lose the podium here, I will echo the thanks\n" + "for Alicia. Thanks for being so helpful for us as we ramp up on the story of the\n" + "last few years.\n\n" + "MICHAEL R. MCMULLEN: Well, thanks, Steve. And I know Alicia has been enjoying\n" + "all the great feedback from you and others today. So -- and as you heard in my\n" + "opening comments, there's been mixed feelings about here moving on to her new\n" + "role, in terms of being a retired Mexican who used the work on Wall Street.\n\n" + "ALICIA RODRIGUEZ: You still have to answer the question.\n\n" + "MICHAEL R. MCMULLEN: I still have to answer the question. That's right. So\n" + "Steve, as you can see in our script, we were leading the witness a little bit. I\n" + "think you picked up on it. So I want to make some initial comments, and then\n" + "turn it over to Bob. So I think it's important to go back in time when we\n" + "started the new Agilent. And I would dare say, we really lacked credibility in\n" + "terms of a company that consistently delivered results relative to expectations.\n" + "So Didier and I really set forth a philosophy that really ensured that we are\n" + "being reasonable in terms of our outlook, but also that you could count on us to\n" + "deliver. And we now have a track record of almost 4 years of doing that. And I\n" + "would -- but we do think it's time for an evolution of approach because I think\n" + "that's what Bob has brought to Agilent and perhaps why don't you share your\n" + "thinking there, Bob?\n\n" + "ROBERT W. MCMAHON: Yes. Thanks, Mike, and I would agree. I mean, I think one of\n" + "the things that we want to do is obviously continue to be -- feel comfortable\n" + "about our forecast, but also recognize some of the potential upsides that we\n" + "have as well as acknowledge some potential downsides and try to shrink the gap.\n" + "And that's what we've attempted to do here, is to actually provide a little more\n" + "color in terms of where we think the business is going in terms of our\n" + "performance, particularly when we just come off of some very strong business,\n" + "and we're forecasting strong end markets. And so as Mike said, it's not a\n" + "revolution. It's more of an evolution of the guidance to help. And we've got a\n" + "track record that gives us more confidence in our ability to upgrade that.\n\n" + "OPERATOR: Our next question comes from Catherine Schulte with Baird.\n\n" + "CATHERINE WALDEN RAMSEY SCHULTE, SENIOR RESEARCH ANALYST, ROBERT W. BAIRD & CO.\n" + "INCORPORATED, RESEARCH DIVISION: Congratulations and thank you, Alicia. You'll\n" + "certainly be missed. First for Mike, and maybe Jacob can comment on this as\n" + "well. As you think about your innovation pipeline for fiscal '19, what gets you\n" + "most excited? Should we be expecting to see the technology used in Ultivo\n" + "applied to some of your other platforms as well?\n\n" + "MICHAEL R. MCMULLEN: So I think we're -- just like any parent would be, we're\n" + "excited by all of the members of our family. So we've got a lot of great new\n" + "things coming on. I made a few announcements already of things that are\n" + "happening on the molecular side, but I think we've got more coming, right?\n" + "Without sharing the specifics, what would you say there, Jacob?\n\n" + "JACOB THAYSEN: Yes, I think I will not go out and destroy Christmas by going out\n" + "and telling all the presents we have for you over the next year here. So I'm not\n" + "going to speak directly to what is coming out, but what I can say is that I'm\n" + "very proud and I'm very excited about '19 on the NPIs that will come out there.\n" + "I think we have already started strong with the 3 NPIs that came out the first\n" + "few weeks in the year here between the LDIR and the Cary 3500 and also the\n" + "ICP-MS water analysis system and the CSI, so that was at Q4, and there's much\n" + "more to come. So I'm pretty pleased, but I won't speak to the specifics yet. It\n" + "will be positively surprising to see it.\n\n" + "MICHAEL R. MCMULLEN: I would add, Catherine, to your comment about the\n" + "technology leverage across our platform. In fact, that is the intent both for\n" + "the Intuvo and the Ultivo. In fact, we haven't really had an Intuvo question\n" + "today, but I would just question that I think we posted 14% unit growth in the\n" + "Intuvo this past year as well.\n\n" + "CATHERINE WALDEN RAMSEY SCHULTE: Great. Very helpful. And then, Bob, you\n" + "mentioned remaining active on M&A front. So can you and Mike just comment on\n" + "your appetite for potentially a larger acquisition and then what your key areas\n" + "of focus would be?\n\n" + "MICHAEL R. MCMULLEN: Yes, Catherine, happy to. Just I don't think there's really\n" + "a new story here because what we've been saying for probably the better part of\n" + "last year or so is that have we developed our own internal capabilities, and\n" + "then I think we've just augmented our capability here with the addition of Eric\n" + "Gerber coming over to us from Danaher, we believe that we have the ability to\n" + "really deliver for our shareholders value on the M&A we do. And so I'm much more\n" + "confident in our ability to tackle M&A and really make it part of the Agilent\n" + "growth story. So we would be willing to take on larger acquisitions. Bob\n" + "mentioned in his comments, there's plenty of room in the balance sheet. I think\n" + "it really is more about having the right opportunities. And we will continue to\n" + "be -- remain very disciplined in terms of what we look at, but I think it's\n" + "really limited -- our actions will be limited by availability of active targets\n" + "as opposed to our willingness to engage.\n\n" + "ROBERT W. MCMAHON: Yes. And Catherine, what I would add to what Mike is saying\n" + "is when we think about M&A, I think we're focused mostly on the 3 groups, the\n" + "channels and the strength that we have to be able to leverage as opposed to\n" + "creating a new leg.\n\n" + "MICHAEL R. MCMULLEN: Yes, that's correct.\n\n" + "OPERATOR: Our next question comes from Brandon Couillard with Jefferies.\n\n" + "BRANDON COUILLARD, EQUITY ANALYST, JEFFERIES LLC, RESEARCH DIVISION: Alicia, I\n" + "echo the sentiments here. You'll be missed. Quick one for Samraat, if you can\n" + "give as an update as to whether you're finished with the Dako rollout quest yet,\n" + "whether those instruments have been fully transitioned and started scaling? And\n" + "then secondly, if there's a plan to port the PD-L1 assays over to the Omnis\n" + "platform any time soon.\n\n" + "MICHAEL R. MCMULLEN: I'm going to pass it right over to you, Sam.\n\n" + "SAMRAAT RAHA, SENIOR VP AND PRESIDENT OF DIAGNOSTICS & GENOMICS GROUP, AGILENT\n" + "TECHNOLOGIES, INC.: Yes. Thank you very much for the question. We are, as you\n" + "know, very pleased to have earned the business of Quest, and we're continuing to\n" + "ramp. We have a significant percentage of that business where we've made\n" + "conversions, but there's still work in progress, which is actually good news. It\n" + "means increased opportunity for us. And in terms of your second question,\n" + "absolutely, we are -- it is in our road map to continue expanding the menu on\n" + "this. And having PD-L1 available on this is absolutely something that's within\n" + "our plan. It's something that will happen in 2019.\n\n" + "BRANDON COUILLARD: Now 2 quick ones for Bob. The operating cash flow growth\n" + "implies only about 3% growth in fiscal '19. Anyone timers to point out there?\n" + "And then secondly, I think there was an asset impairment in the fourth quarter.\n" + "Could you elaborate on where that was?\n\n" + "ROBERT W. MCMAHON: Yes. Thank you. Thanks, Brandon. In terms of cash flow, yes,\n" + "I mean, I think it's prudent forecast right now at the beginning of the year.\n" + "There were no one timers really in the -- in FY '18 or the fourth quarter other\n" + "than tremendous performance that we had, not only on the revenue coming in early\n" + "in the early part of the quarter and then also which enabled us to generate\n" + "tremendous cash flows with our accounts receivable teams and so forth. So I\n" + "think it will evolve as we go forward. In terms of the asset impairment, that's\n" + "a small business within our DGG business, and we're still expecting it to grow\n" + "but not at the level that we had forecasted.\n\n" + "OPERATOR: Our next question comes from Doug Schenkel with Cowen.\n\n" + "DOUG SCHENKEL, MD & SENIOR RESEARCH ANALYST, COWEN AND COMPANY, LLC, RESEARCH\n" + "DIVISION: First off, I know it's been said a bunch of times already, but thanks\n" + "again to Alicia. We'll miss you. I want to start with a follow-up on an earlier\n" + "chemical and energy question. Broadly, not just in China, what are you seeing\n" + "amongst chemical and energy customers given the recent decline in oil prices and\n" + "a bit more of an uncertain macroeconomic backdrop? And relatedly, what are you\n" + "assuming for growth within fiscal '19 guidance across the chemical and energy\n" + "subsegments, meaning breaking it down by chemical, refining and E&P?\n\n" + "MICHAEL R. MCMULLEN: Doug, thanks. Happy to provide a perspective on that. And\n" + "as we've mentioned earlier, the oil price gets a lot of attention, but it really\n" + "is the view of global growth that often drives a lot of this market. But we're\n" + "seeing a couple of things going on here. First of all, we're not seeing any\n" + "change in customer buying behavior. In fact, we continue to see a lot of demand\n" + "for replacement products. So the new generation of equipment tied to our OpenLAB\n" + "informatics portfolio really drives productivity. So customers are seeing an\n" + "economic benefit of the investments. So even in situations where perhaps the --\n" + "there is some uncertainty about oil prices and economic growth, they want to\n" + "invest because it helps the P&L by taking costs out of the structure. So we see\n" + "no changes in buying behavior. And really, the growth in chemical and energy has\n" + "been really broad-based. We talked a bit about China already, but we saw -- and\n" + "again, I'm talking about the CapEx side of things, really broad-based across all\n" + "regions. And then again, I would just say that the -- our ACG business continues\n" + "to do quite well here as well. And Bob, anything else you'd add there?\n\n" + "ROBERT W. MCMAHON: Yes. The only thing I would add, Doug, is in terms of your\n" + "question around FY '19, we're not going to get to that level of specificity into\n" + "the submarkets within the chemical and energy market. But what I would tell you\n" + "is if we look at chemical and energy, we're expecting that business to grow\n" + "slightly lower than what our core guide is.\n\n" + "DOUG SCHENKEL: Okay. That's great. And Bob, maybe if I can, just as a follow-up,\n" + "sneak in a couple of guidance clarification questions. First, on the buybacks,\n" + "which have come up a couple of times. Your stock seems pretty depressed relative\n" + "to your strong operational performance and relative to peers on a valuation\n" + "basis, and your balance sheet is very pristine. Your guidance assumes a flat\n" + "share count in spite of the fact that you have plenty of cash on the balance\n" + "sheet to get more aggressive with buybacks and still have room to do more and\n" + "bigger M&A. I guess it's still unclear to me why you're not getting more\n" + "aggressive with the pace and size of buybacks. Is this really a function of it\n" + "just being pretty early in your tenure? And then, I guess, the second guidance\n" + "clarification question would be on just regarding the tax rate. Your cash tax\n" + "rate is still a lot lower than 17%. I'm just wondering if there's any\n" + "opportunity or chance that ultimately the tax rate goes a lot lower than what\n" + "your guidance incorporates.\n\n" + "ROBERT W. MCMAHON: Yes. Thanks, Doug. You hit the nail on the head. I mean, it's\n" + "still relatively early in my tenure as I'm trying to figure out all the various\n" + "pieces. But what I would tell you is I think there's opportunity. Now our\n" + "primary use of cash is actually to do M&A after investing in the business and\n" + "grow. And I think we've seen that starting with the work that we did in FY '18\n" + "and then just starting here in FY '19 with closing of C&E and so forth. But I do\n" + "think we were opportunistic in Q4, and I think that there will be opportunities\n" + "that we will -- if there are opportunities, I should say, we will capitalize on\n" + "them in FY '19. And then in regards to -- what was the second one?\n\n" + "MICHAEL R. MCMULLEN: The second one is cash rate. I love this one, which is,\n" + "yes, Doug, there sure is a difference between our cash tax rate and our non-GAAP\n" + "tax rate. And I think Bob and team have brought it down a point so far, but I\n" + "think you're still looking at some things, and we're not...\n\n" + "ROBERT W. MCMAHON: Yes, stay tuned. I'll tell you, stay tuned on that.\n\n" + "MICHAEL R. MCMULLEN: We're not ready to commit, but -- we're not done on our\n" + "work yet.\n\n" + "OPERATOR: Our next question comes from Puneet Souda with Leerink Partners.\n\n" + "PUNEET SOUDA, DIRECTOR, LIFE SCIENCE TOOLS AND DIAGNOSTICS, LEERINK PARTNERS\n" + "LLC, RESEARCH DIVISION: Obviously, Alicia, thanks for all the help, and really\n" + "good -- great working with you. So if I could touch, first on just wanted to\n" + "clarify how much of a contribution was USP regulation and LSAG? If you could\n" + "quantify that. It seemed like in past quarters, we'd seen some significant\n" + "contribution from ICP-MS. I just wanted to make sure we have that number for\n" + "this quarter, too.\n\n" + "MICHAEL R. MCMULLEN: Yes. I don't think we have that level of granularity in\n" + "terms of specific numbers. What I can tell you is that it's been part of the\n" + "story of our pharma growth, and I think that ICP-MS has double digit kind of\n" + "growth.\n\n" + "ROBERT W. MCMAHON: Yes, it was well in excess of -- it was greater than 20%.\n\n" + "JACOB THAYSEN: Yes. We've gotten a tailwind from that regulation. So yes, that\n" + "was good.\n\n" + "PUNEET SOUDA: And then what's your expectation there of how long of a tail that\n" + "could be for USP longer term? Could you give us a sense of how many quarters or\n" + "maybe years that this could last?\n\n" + "MICHAEL R. MCMULLEN: Yes. This would be just my guess, but I think it's probably\n" + "1 year, we're not done yet. I think we expect it to continue into '19.\n\n" + "JACOB THAYSEN: Yes. I think we saw a lot of great performance base on that\n" + "regulation in '18, and we will also see a tail into '19. But we have a lot of\n" + "other things going on in ICP-MS, and we really see that technology being applied\n" + "in most spaces now with the water regulations coming out where we have really\n" + "made a nice workflow. I think that we can see a lot of opportunities there. But\n" + "generally speaking, ICP-MS is just being a tool that will be picked up from many\n" + "other opportunities. So I don't think that we are dependent on one path and one\n" + "workflow, but we will see these great opportunities in '19.\n\n" + "PUNEET SOUDA: Got it. And then, Mike, on Intuvo, you pointed out the 14% growth,\n" + "unit growth here. I just wanted to get a sense of do you want to address broader\n" + "applications here? My question is would Intuvo evolve into another set of\n" + "product? Or should we expect maybe potentially a next-gen 7890 here, along the\n" + "lines that -- what you have produced in the past to address the full market\n" + "compared to the GCs that you've had in the past?\n\n" + "MICHAEL R. MCMULLEN: Puneet, thanks for the question. So I was trying to preempt\n" + "the audience about it because we're really quite pleased with the pick up or\n" + "really the double-digit growth, if you will, of the Intuvo products because as\n" + "we said for -- since launch, we knew it'd be a measured adoption by customers\n" + "because they really want to put the equipment through the phases, really be\n" + "convinced that it actually does work as advertised. And guess what? It does. And\n" + "now we're starting to see some really nice multiple unit orders coming in,\n" + "particularly as it relates to mass spec and at the risk of being Santa Claus or\n" + "destroying Christmas, whatever Jacob said earlier, what I can tell you is that\n" + "our plan is to leverage a lot of the core technologies that were developed in\n" + "the Intuvo product group, potential new versions of gas chromatographs and work\n" + "really hard to keep the overall complete portfolio as competitive as possible.\n" + "And as you know, the Intuvo covers only about 60% of the application space, so\n" + "there's work to do on the rest of the portfolio as well.\n\n" + "OPERATOR: I show no further questions in queue, so I'd like to turn the\n" + "conference back over to Ms. Rodriguez for closing remarks.\n\n" + "ALICIA RODRIGUEZ: Thank you, James, and on behalf of myself and the management\n" + "team, I'd like to thank everybody for joining us today. If you have any\n" + "questions, feel free to give us a call in IR. Thanks a lot. Bye-bye.\n\n" + "OPERATOR: Thank you. Ladies and gentlemen, that does conclude today's\n" + "conference. Thank you very much for your participation. You may all disconnect.\n" + "Have a wonderful day.\n\n" + "[Thomson Financial reserves the right to make changes to documents, content, or\n" + "other information on this web site without obligation to notify any person of\n" + "such changes.\n\n" + "In the conference calls upon which Event Transcripts are based, companies may\n" + "make projections or other forward-looking statements regarding a variety of\n" + "items. Such forward-looking statements are based upon current expectations and\n" + "involve risks and uncertainties. Actual results may differ materially from those\n" + "stated in any forward-looking statement based on a number of important factors\n" + "and risks, which are more specifically identified in the companies' most recent\n" + "SEC filings. Although the companies may indicate and believe that the\n" + "assumptions underlying the forward-looking statements are reasonable, any of the\n" + "assumptions could prove inaccurate or incorrect and, therefore, there can be no\n" + "assurance that the results contemplated in the forward-looking statements will\n" + "be realized.\n\n" + "THE INFORMATION CONTAINED IN EVENT TRANSCRIPTS IS A TEXTUAL REPRESENTATION OF\n" + "THE APPLICABLE COMPANY'S CONFERENCE CALL AND WHILE EFFORTS ARE MADE TO PROVIDE\n" + "AN ACCURATE TRANSCRIPTION, THERE MAY BE MATERIAL ERRORS, OMISSIONS, OR\n" + "INACCURACIES IN THE REPORTING OF THE SUBSTANCE OF THE CONFERENCE CALLS. IN NO\n" + "WAY DOES THOMSON FINANCIAL OR THE APPLICABLE COMPANY OR THE APPLICABLE COMPANY\n" + "ASSUME ANY RESPONSIBILITY FOR ANY INVESTMENT OR OTHER DECISIONS MADE BASED UPON\n" + "THE INFORMATION PROVIDED ON THIS WEB SITE OR IN ANY EVENT TRANSCRIPT. USERS ARE\n" + "ADVISED TO REVIEW THE APPLICABLE COMPANY'S CONFERENCE CALL ITSELF AND THE\n" + "APPLICABLE COMPANY'S SEC FILINGS BEFORE MAKING ANY INVESTMENT OR OTHER\n" + "DECISIONS.]\n\n" + "LOAD-DATE: December 1, 2018\n\n" + "LANGUAGE: ENGLISH\n\n" + "TRANSCRIPT: 111918a12115535.735\n\n" + "PUBLICATION-TYPE: Transcript\n"; final Pattern pattern = Pattern.compile(regex, Pattern.MULTILINE); final Matcher matcher = pattern.matcher(string); while (matcher.find()) { System.out.println("Full match: " + matcher.group(0)); for (int i = 1; i <= matcher.groupCount(); i++) { System.out.println("Group " + i + ": " + matcher.group(i)); } } } }

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