Ladies and gentlemen, thank you for joining us, and welcome to the Q1 2026 Agilent Technologies Inc. Earnings Conference Call. [Operator Instructions] I will now hand the conference over to Tejas Savant, Vice President, Investor Relations. Tejas, please go ahead.

Thank you, and welcome, everyone, to Agilent's conference call for the first quarter of fiscal year 2026. With me on the line are CEO, Padraig McDonnell; and CFO, Adam Elinoff. Joining for the Q&A will be Simon May, President of the Life Sciences and Diagnostics Markets Group; Angelica Riemann, President of the Agilent CrossLab Group, and Mike Zhang, President of the Applied Markets Group. This presentation is being webcast live. The press release for our first quarter financial results, investor presentation and information to supplement today's discussion, along with a recording of this webcast are available on our website at investor.agilent.com. Today's comments will refer to non-GAAP financial measures. Non-GAAP measures are supplemental and should not be considered a substitute for GAAP results. You'll find the most directly comparable GAAP financial metrics and reconciliations in the press release and on our website. Unless otherwise noted, all references to increases or decreases in financial metrics are year-over-year and references to revenue growth are on a core basis. All references to profitability metrics are on a non-GAAP basis. Core revenue growth is adjusted for the impact of currency exchange rates, and any acquisitions and divestitures completed within the past 12 months. Guidance is based on forecasted exchange rates. During this call, we will make forward-looking statements about the financial performance of the company. These statements are subject to risks and uncertainties and are only valid as of today. Agilent assumes no obligation to update them. Please refer to the company's recent SEC filings for a more detailed description of the risks and other factors that would cause our performance to differ from these forward-looking statements. And now I'd like to turn the call over to Padraig.

Thanks, Tejas, and welcome, everyone. It was a solid start to the year with the Agilent team executing well in a generally improving, albeit dynamic market environment. For the first quarter, Agilent reported $1.8 billion in revenue, growing 4.4% on a core basis within our November guidance range. End market conditions were largely consistent with our expectations with top line results affected by the winter storm in the U.S. during the last week of January. The storm drove roughly a $10 million revenue impact with the majority recovered at the beginning of February. The impact primarily came from our logistic providers not being able to ship products from our main Americas Logistics Center in Memphis, Tennessee for 3 days. This is typically the busiest shipping week of the quarter. Despite the weather, operating margins of 24.6% were in line with our expectations, setting a solid jumping off point for the remainder of the fiscal year. Moving forward, we anticipate benefiting from leverage on increasing volumes, and we expect to see tariff headwinds continuing to decrease, as well as incremental benefits from our Ignite Operating System that together will drive sequential margin improvement throughout the rest of the year. First quarter EPS of $1.36, also was within expectations. Adjusted for the impact of the storm, our first quarter revenue, operating margin and EPS all would have been above the midpoint of our November guidance ranges. A healthy underlying outcome. Throughout the quarter, the Agilent team remained as always committed to delivering for our customers. Before getting into the specifics of our first quarter results, I want to share my thoughts on 3 key business initiatives that are fueling our growth. These include our highly differentiated service organization that reinforces our customer intimacy, a theme you've heard me talk about frequently. An…

Thanks, Padraig, and good afternoon, everyone. In my comments today, I will provide additional details on revenue in the quarter, as well as walk through the income statement and cover other key financial metrics. I'll then cover our updated full year and second quarter guidance. Starting with Q1. Revenue was $1.8 billion. On a core basis, we posted growth of 4.4%, while reported growth was 7%. Currency had a favorable impact of 2.6%, in line with our November guidance. At a business segment level, ACG grew 6%. That's in line with expectations, driven by strong consumables growth in the high single digits, solid performance in services and balanced growth globally with all regions growing mid-single digits or better. AMG grew 4% ahead of expectations. Growth was led by double-digit performance in spectroscopy, fueled by the excellent results in the semiconductor space that Padraig mentioned earlier. LDG grew 3%, a bit below expectations. In addition to the weather impact, we saw softness in academia and government that challenged our cell analysis and genomics results. On a geographic basis, we saw our strongest growth in Asia, with China growing 6% and the rest of Asia growing a robust 13%. Europe was a bit slower than expected with 4% growth as transient discussions around higher tariffs caused some customers to slow purchasing decisions late in the quarter. Americas growth of 1% was directly impacted by the weather as well as pockets of softness in our smaller end markets. Q1 gross margins were 53.7%. On a year-over-year basis, they were down by 100 basis points, primarily due to tariff headwinds. Operating margin was 24.6%, in line with our expectations, and down 50 basis points year-over-year on increased tariff expenses and normalized performance-based pay in the current year. Now moving below the line. We had…

Thanks, Adam. As you've heard, FY '26 is off to a good start. Our unique growth drivers, including superior customer intimacy developed by our best-in-class services team, a healthy innovation pipeline to deliver products that solve real-world customer problems, and the Ignite Operating System that brings together our best attributes for the benefit of all stakeholders, combined to drive growth and operational leverage that fuels our success. As the year unfolds, we are well positioned to benefit from the instrument replacement cycle and continuing recovery across our largest end markets, to win share and deliver resilient above-peer growth and margin performance over the long term. I also wanted to take this opportunity to express my gratitude to the Agilent team for their exceptional efforts throughout the quarter. I especially want to recognize our global operations and logistics colleagues who worked tirelessly to meet the challenges presented by the weather and deliver for our customers. Thank you for your attention. I'll turn it back over to Tejas for Q&A. Tejas?

Thanks, Padraig. Nicole, can you please share the instructions for the Q&A?

[Operator Instructions] Your first question comes from the line of Tycho Peterson with Jefferies.

This is Jack on for Tycho. Just wanted to walk through the impact of the snowstorm and expectations for catch-up there. I appreciate you said $10 million in revenues. Just curious if that's already in hand for 2Q, or something that's still being recouped? And then any color on margin impact that would have had in the quarter gross margins and operating if it would have been without the snowstorm?

Yes. So I'll start off, and I'll hand it over to Adam. So first of all, a really solid finish overall with 4.4% growth in high single digits in our 3 markets. But Adam, can you give some color around the weather?

Yes. So thanks. And I'd first like to say I didn't think I'd be on this call talking about the weather. So it's always fun to do that. 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. There are some pieces of it that will take a little longer, and that's really related to services and things like that, that don't happen instantly. So we've already recovered the vast majority of it. Then to your second question related to margin, it would have been a very modest impact to margin. So what we delivered in the quarter was a reasonable proxy for what we actually -- the actual performance.

Okay. That's helpful. And then sticking on margin. I appreciate you're still guiding to 75 bps for the year. Can you just give a little bit more color on the cadence from here in the bridge to that improvement after being down a little bit in 1Q? I think you said slight second half weighting. I guess just what's baked in for 2Q versus the second half? And then what do you see as the biggest swing factors to that step-up?

Yes. So I'll take this one. So 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. And then that's offset by performance-based pay and once again, the tariffs. And as you know, the tariffs, or as we've talked about, the tariffs are fully mitigated by the second half of the year. Then when you move through the rest of the year, that's where you start to see the acceleration in our margin expansion. And then that's driven by continued volume and leverage -- volume leverage, pricing in Ignite. And then it's slightly offset by some of the people costs and growth in investments that we're making through the year.

Your next question comes from the line of Vijay Kumar with Evercore ISI.

Maybe, Padraig, my first one, high level. When I look at this cadence for the year, right, first half versus back half, your guidance for first half implies slightly less than 5 and the back half to hit the midpoint it needs to be above 5. Can you just talk about what drives the back half step up comps to get tougher? Is this some new product cycles? Or is there something else that's going on in the business that gives us this back half visibility?

Yes. I mean the underlying -- we see a really strong underlying momentum in our business in our key biggest markets. You can see that in pharma were driven by GLP-1s, but also the replacement cycle going extremely well. You see our Infinity III number growing in double digits, I think, and we're seeing from our latest market share report that we're taking oversized share in that area. And then, of course, you can go down through our CAM markets as well, where you can see a lot of secular drivers. We grew 20% in advanced materials from the semiconductor onshoring and so on. So underlying momentum in the markets, we have very good visibility in funnels. We're seeing very strong win loss rates. And of course, we're going to watch that as we go forward, but we see that continued momentum to improve.

And then I would just jump in. The step-up between the first half and the second half isn't that big. It's really 49 in the first half and then 51 in the second half on revenue.

Understood. And then maybe one on tariffs, just given the Supreme Court ruling. How are you thinking about the tariff assumptions, right? Are you assuming now a global minimum of 15%? And how does that change versus your prior assumptions?

Adam, I'll give this one to you.

Sure. So I guess the first thing is, one, the situation continues to be dynamic. And we don't know that much information about what the 15% would look like and exactly how it's going to play out. 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. And it really comes down to a couple of things, is, one, we made a series of no regret moves. And that was really about leveraging our supply chain, bringing our manufacturing closest to the customer. So that wouldn't change. The second is we've been utilizing pricing and surcharges, really as appropriate and been very thoughtful about that. So that also helps us. And I guess the third piece I would add is in any dynamic market -- in any dynamic market conditions as you see and we're living in. What gives me a confidence is I look at how the Ignite Operating System has been able to allow us to react and be resilient as things change. So right now, we wouldn't change any of our guide based on what we know. That said, we're ready to react and we're ready to respond as things evolve.

Yes. I would just close it off by saying the actions we've taken to bring manufacturing close to our customers and strengthen supply chains are no regret moves. We have that planned for a long time now. And outside of surcharges, we would not expect to reverse them in any way.

Your next question comes from the line of Doug Schenkel with Wolfe Research.

Two topics I wanted to address. One is the capital equipment environment and then the second is M&A. So on the first topic, how would you describe demand month-by-month going back to, say, November and December and through the beginning of the calendar year? I ask because some of your peers have suggested that demand may have slowed a bit over the past several weeks. And I'm just trying to get at whether or not this is just, kind of, normal typical seasonality or if there's anything you're seeing from an environmental standpoint, meaning uncertainty related to things from a policy dynamics that are flaring up again and selling things down? Or again, whether this is just kind of normally what you would see going from calendar Q4 to calendar Q1? The second question is -- or second topic is really on M&A. And simply put, how would you describe the environment, your readiness and your appetite to do a multibillion dollar deal?

Thanks, Doug. I'll take the first one, and Adam can take the second one. So if you look at a proxy of pharma and you look at our replacement cycle, we had a very strong quarter. Biotech led that business. And of course, it was what we saw was a reasonable budget flush, it wasn't over the top budget flush, but a reasonable budget flush at the end of December. I think January, you saw -- we talked about some of the disruption we saw intra-quarter in Europe, for example, and the weather impact. But I would say it's been very, very steady. We've seen our funnels continue to be steady, in a lot of cases growing. And why is that? I think CapEx conditions continue to improve with the MFN deals reducing the tariff uncertainty. That's been very big for our pharma customers. You see the strong GLP-1 growth and our CDMO -- the base on CDMO growing extremely well. And I think we're very pleased to see how the trajectory of orders continue to go on the CapEx side. Now of course, we're watching our funnels as we go forward on it. So I wouldn't say there's anything that we see any deterioration in terms of CapEx. And on the capital allocation, which is a big question. I'm sure we get it a few times today. I'm going to get Adam to answer that one.

So thanks for the question. And I think it's important that we always start with our capital allocation priorities, which aren't changing. So one, we're prioritizing investments in growth, and that's through innovation -- internal innovation. Second thing is M&A. And the third is investments in strategic capacity expansion. And at the same time, we're going to continue to return excess capital to shareholders, and that's through growing dividend and share repurchases. The next thing I want to say is context is we like our organic business, and we like our plan. We don't need to do any transformative deals or any transformative transaction to achieve those growth ambitions. Now we don't have any arbitrary size filter in our deal funnel, but I want to be very, very, very deliberate about this. The bar is very high for a transformative deal, and there aren't that many of those out there. So we're really focused on making sure that any deal that we do is aligned to our enterprise pillars, that we're focused on opportunities where we have a right to win. We're able to integrate whatever asset we're buying, and that we pay the right price for it so that we're creating -- generating cash-on-cash returns above our hurdle rate. So we think the market out there, there's some nice opportunities, and we're continuing to evaluate those. But we're looking at them against the filter that I just said and once again, we like our organic business, and we don't need to do any kind of transformative transaction to achieve our ambitions.

Your next question comes from the line of Patrick Donnelly with Citi.

Padraig, I wanted to focus on the LDG segment. I understand the weather impact. It did come in light, even backing that out. It sounds like it's around the cell analysis and genomics piece, maybe some softer purchasing in Europe. It does sound like LC/MS and the CDMO overall held in well. Can you just expand on what you saw there? And then also staying in the LDG segment, just the profitability probably for Adam. What drove the softness there? Is that just mix with the cell analysis? I wanted to get a little more color there.

Yes. Thanks, Patrick. And I think LDG grew 3% in the quarter. It was a bit below our mid- to high-digit expectations. And I think in addition to the weather impact, we saw softness, I think, in academia and government that challenged our cell analysis and genomics business. But our larger end markets, pharma biotech and diagnostic grew high single digits. But Simon, do you want to give some more color on the LDG what you saw in the quarter, particularly on those businesses?

Yes. Thanks, Padraig. As Padraig already mentioned there, we were challenged by the weather situation and also the ongoing softness that we're seeing in academic research markets, most notably in the U.S. And in our cell analysis portfolio as well. We've got a relatively lower portion of recurring revenue mix than we have elsewhere in our portfolio. When we've got a bit more exposure on the smaller capital equipment side there. So as we think about the macro situation going forward, the exposure to academic and government is always going to be there. And we still see a lot of cautious spending. But we also think we've got reasons to believe we're at or near the bottom. U.S. academic science budgets appear to be plateauing. Europe is more stable. I think we're anticipating some modest incremental improvement in academia and government in Europe. And also the feedback I've been getting from the teams as I've been seeing customers and attending the sales meetings over the past few weeks is that there's a sense of optimism in the field. We've got a strong portfolio. We've got very strong conviction in the portfolio on a medium, long-term basis, and I think we'll see that improvement begin to unfold as time passes.

The only thing I'd add on margin is beyond the weather, the academic and government softness is there's the CDMO batch cadence that also impacts the margin in the first quarter. With CDMO, obviously, a batch is not a batch is not a batch. They're all a little bit different and have different revenue profiles and different timing. So just given the cadence we had in Q1 that also impacted the margin.

Okay. That's helpful. And then, Adam, I wanted to pick up right there in terms of CDMO. Can you guys just talk about NASD, BIOVECTRA, what you saw in the quarter? It sounded like overall, it was low double-digit growth for specialty CDMO. Can you just give a bit more color? And again, it sounds like the mid-teens, still very much on the table. So just the visibility and pacing of those businesses as we work our way forward.

Yes. So I'll start off and then I'll pass it over to Simon if he has anything to add. But yes, absolutely. So we saw low double-digit growth in the first quarter as expected. And once again, it really is about the batch cadence, and it's the normal kind of quarter-over-quarter revenue variance that you'd expect. We continue to expect mid-teens growth for the full year, and that's based on our production schedules and the demand dynamics we're currently seeing in the market. And I guess the only other thing I would add that may be helpful for you is our mix of business in NASD continues to skew towards larger commercial batches with about 60% coming from commercial programs. And then on the other hand, commercial programs represent about only 1/3 of the BIOVECTRA revenue. So they have a little bit different profile. But we expect, based on what we have now, that it will continue to ramp through the year.

I think Adam covered most of it there. Just to add a couple of points. We did see strong year-over-year order intake in the first quarter. As Adam said, NASD continues to skew favorably towards commercial programs. And as we look to the rest of the year, we've got good visibility to the pipeline, and we see revenue ramp in the second half of the year.

Your next question comes from the line of Dan Brennan with TD Cowen.

Maybe just to start off, I understand if you back out the $10 million, the growth would have been right in line with the 5% and you kind of walked through all the puts and takes. But just kind of stepping back, you guys have been on a pretty consistent pace of like coming in ahead of guidance, 5% growth is still solid in this environment. Just wondering how we might think about the rest of your guidance in terms of what would drive here to the higher end to lower end, given that trend of consistently beating numbers and now it looks like more in line this quarter?

Yes. I think -- I'm just talking at a high level, we're really set up for success, Dan. You look at the innovative products really going extremely well, Infinity III and the replacement cycles, Pro iQ. The strong commercial team, good connection with customers and our enterprise service capabilities that I talked about in my prepared remarks. And I think it was a solid Q1, and excellent growth despite the weather. And the top line, we're confirming it. I think it's prudent but appropriate given the macro uncertainty that's around as always. And I think the operating profit growth of 10% and 75 bps margin expansion at the midpoint is really well. I have to say, we've had a number of sales kickoffs around the globe in the last month. Funnels are very robust. The thing we've seen almost our best market share report that we've seen to date. So everything is moving in the right direction. So that gives us positivity as we go through the year.

Sure. No, I can just give you a little bit more detail on what would be -- pushes to the upside versus pushes to the downside of the guide, if that's helpful. And it's really around 3 things. 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. The second is academia and growth if we start to see more stability there that can push us to the upside. And then the third, while China remains stable and we believe it will be stable about that $300 million per quarter run rate. If there was a stimulus, a bigger stimulus toward the end of the year, that would be an upside. What I will say is there was a small stimulus in the first quarter, which we did very well in that offering. And so that would give us confidence if there was a second SAMR stimulus that happened later in the year, we would perform well in that. So that's what pushed to the upside. The downside is just then the opposite. If small and mid-cap remain pressured, academia and government continues to get worse. And then China, we see a decline in the low single-digit range versus our flat assumption.

And maybe a second one, just on CAM. Obviously, super important business, really strong quarter. You gave some color, but just a little bit more there in terms of why it came in better. I know you addressed it in the prepared remarks, maybe a little bit more color on how you're thinking about that going forward for the rest of the year?

Yes, sometimes an underappreciated part of our business. It's our core business, our heritage is in the applied markets and CAM, 9% growth. And of course, the advanced materials subsegment, which grew at 20%. We saw really robust demand because of our leading position around semiconductor. And you see there's a lot of reshoring going on, on that. I think our spectroscopy and our GCMS tools are critical in that manufacturing supply chain and of course, for chemical plants that are around helping on that. So the ongoing reshoring really helps in that space. And I think also the increased clarity on tariff policies, if there is that and eased U.S.-China tensions and strong demand for memory chips. We're number 1 by a long way in the CAM market by far. Our leadership positions and our market shares are unmatched in that. So you put it all together, it's a very important secular driver for us, and we could see that continuing throughout the year.

Your next question comes from the line of Dan Leonard with UBS.

And I'll pick up right where you left off. Padraig, you talked about atomic spectroscopy upside in the quarter due to the memory shortage. It's not something you talk about a lot. So how are you framing that opportunity?

Yes. I mean it's not just memory shortage, but it's the reshoring of fabrication -- fabs that you see that globally. You even see in India where fabs are being set up also in Asia and the Americas. So I think that has been -- it's been really a mix of all that together and a lot of demand on that side. Also on the chemical side, you have downstream processes that are needed for AI that supports that in terms of it, and that really bolsters a lot of demand. And just to give a bit of color, our chemical business is about 2/3, advanced materials is about 1/3 of the CAM business. So we expect that to continue. Continue to see that growing. And of course, the energy business, where we're working on the battery side is naturally head against oil volatility as well. So we continue to see good strength in that. So it's a mixture of all of the above.

And just a follow-up on what you're seeing in pharma. You mentioned a mid-single-digit growth in small molecule. Is that all GLP-1s? And can you talk about the situation in pharma outside of GLP-1s?

Yes. So biotech kind of grew low double digit for us. That's really around our specialized CDMO core growth of low double digits. [ Utech ] what we see as the U.S. biotech recovery is starting in well-funded large caps. We see that continuing, small and mid-caps, improved funding, backdrop is really helping. And breaking it down, if you look at our -- if you look at our small molecule business, which is very solid at mid-single-digit growth, you kind of see Asia leading the way in small molecules with low double-digit growth. We see that continuing. And of course, we're very well hedged on the GLP-1 side both from our CDMO side, but also our analytical side, we are testing both on the orals and on the injectable side. And as we go forward on -- and GLP grew at 50% in the quarter and that was 7% for the analytical labs and on the CDMO side 120% growth. So I think you underpin all of that in the market conditions. And then you look at our replacement cycle moving forward, 40% growth in our single quad, which is right at the sweet spot of QA/QC. So it's a really, really strong momentum in that market as we -- and we see that continuing for the rest of the year.

Your next question comes from the line of Jack Meehan with Nephron Research.

Operator, can we go to the next question, and we'll circle back to Jack once he's back on.

Absolutely. Your next question comes from the line of Michael Ryskin with Bank of America.

I want to follow up on what -- I think Patrick was asking about earlier about some of the moving pieces in the quarter, especially with the $10 million weather shift. I just want to make sure we're understanding the dynamics correctly. My read of it is it sounds like you've had a slightly slower start to the year than you anticipated in select markets like cell analysis, like AMG specifically. Maybe a little bit on food. I just want to make sure I'm understanding that correctly. Again, I don't want to blow it out of proportion, but especially with the $10 million shift, especially with the $10 million shift. Just want to make sure we get that. And then a follow-up to that is, obviously, you're maintaining your full year core guide. Is there something that's offsetting that where you talked about GLPs, you talked about CAM. Is the strength there offsetting it? Is it just sort of like you had buffer in the model built in and you're absorbing some of these hits you expect to recoup it later in the year? Maybe the easier way to ask all of this is you've given us sort of -- you typically give us an end market breakout for the year in terms of core growth. If you could run through that compared to where you were a quarter ago, that might be helpful.

Adam, you want to take this one and I'll take the second part of that question?

Yes. So I think just in the dynamics of the quarter, there was minor differences in our small markets, but our key markets actually performed quite well. So if you think about pharma, CAM and then our diagnostics business, they all performed very well. And then we had small pockets of slight differences from where we guided. And overall, we are actually doing well. And then the unfortunate was the storm hit in the last 3 days of the quarter, which are our biggest days in the quarter, and we weren't able to recognize the revenue, which we've since recognized the following actually Monday, so. And then I'll pass it over to Padraig.

Yes. It's -- I don't want to kind of -- if you're looking at the academia and government side, it's the smallest part of our business. NIH is 1% of our funding. So it's slightly less than what we expected. But it is really the smallest part of our business. And I think I described the real momentum we have in the key markets, continued improvement in pharma. We're seeing spend in biotechs. GLP-1 business continues to be extremely strong. CDMO continues to move forward, and CAM strength. And you put that all together with the funnels that we're seeing and our outsized growth on our Infinity III. If you look at that compared to our peers, we're almost 2x in terms of the quarter, and that's driving to replace that cycle. So all of those things moving together, we're very positive about the rest of the year.

And then I'd just remind you that for the full year, we're maintaining our end market guide. We expect them to land in roughly the same place.

Your next question comes from the line of Jack Meehan with Nephron Research.

Hopefully, you can hear me now?

Yes.

Excellent. Sorry about that. One follow up on the M&A question because this is the number one debate we've been fielding. You talked a lot about how Ignite has improved your capabilities around M&A execution. I was just wondering if you could elaborate on that? That's number one. And then number two is just from a product area. I was curious your take on diagnostic assets. You have a unique position with Dako that seems to be doing pretty well. Just where does that -- like the IVD market stack up on your pecking order as kind of an industry of interest?

Yes, Adam, maybe you can talk about Ignite and what we're seeing on the integration capability side, and I'll take the second one.

Sure. So there's a couple of pieces to why Ignite gives us the confidence that we'll be able to integrate an asset effectively. If you look at what the Ignite program is, it's really about a management system and how do you bring a bunch of different functions together to execute on a project in an efficient way. And that's exactly what an integration is. As you -- and you think about managing tariffs, that's a cross-functional activity where you need people moving in coordination and to achieve an outcome, that's what an integration is. So that would be the first point I'd make is just running through the Ignite program and using the Ignite system that we've now implemented, it gives us confidence we can execute integration. The other piece I'd point out is BIOVECTRA is we've leveraged that capability to integrate BIOVECTRA into our network. And so that's another proof point to our readiness to integrate the right asset.

Yes. I think Adam talked about our capital allocation philosophy. I won't go back over that one. But we're focused on increasing our service and recurring revenue mix. I think we've been very clear around that. When you see software and automation also content on systems, et cetera. And we have many high-growth adjacent markets where we would have examples in all of that. Specifically about diagnostics is one of our businesses. That's not excluded, of course, but it's a very durable market. We have a 7% growth in Q1 and pathology is a mid-single-digit grower as we've seen over time with a lot of long-term growth drivers. So it's an area where we will continue to look in all those spaces. But again, where do we have a right to win. Those are linked with the strategy within that segment. Does it increase our recurring revenue? That's very important to us as we go forward. And of course, then we have the Ignite Operating System to allow us to integrate it very quickly as well.

Your next question comes from the line of Puneet Souda with Leerink Partners.

First one, again, GLP-1 growth there is strong, but my question is more on the utilization on the oligo side and the NASD side. Any update on -- to the full utilization of Train C, which I think is anticipated in 2027. The question is really around the margin impact in light of this utilization, where it stands today, how it ramps up? And how should we think about the commercial batches versus the early-stage pipeline work that you're seeing?

Yes. I'll start off, and I'll hand it over to Adam for some more color. We have a very strong order backlog, and we're confident in the FY '26 outlook continuing to ramp. Of course, you have month-to-month variances, but we have Train C and D coming online. I have to say we're delighted to have that capacity coming online where it is because we're booked out for '26, and now we're booking into '27 with larger commercial batches. So it's at the right time. But Adam, do you want to give more color on the cadence?

Yes. So thanks for the question. And I think 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. Specific to 2027, Train C and Train D will be ramping through the year. And so there will be a negative margin impact. However, we'll offset that through other activities within the business. Mainly through Ignite.

I see. Okay. That's helpful. And then just a follow-up on -- you made a comment about the small biotech capital raises and capitalization is driving growth. Just as you see that across the business, just wondering maybe if you can double-click and where are you seeing that? Is that more on the LC/MS instrumentation side cell analysis? Or is it more on the CDMO side of the business, where you're seeing the uptick from the emerging and small biotechs?

So let me -- I think I just need to clarify because it was said in the context of what would be the upside to the forecast. So it was really set around, hey, if we see a meaningful uptick in the small and mid-cap biotech when we would start to see upside to our forecast. So while we have seen the capital market profile improving, we have yet to see a meaningful uptick in the small and mid-cap investments.

Yes. If you look at small and medium-sized biotech, we have a relatively small exposure, but we're actually encouraged by improving biotech funding and increased M&A. You see that a lot. If you look at the macros in January, total biopharma financing rose about $11 billion, that's a 2-year high. So we watch that. You have the patent cliff that's looming, of course, with heightened biopharma focus on M&A. And I think '25 is one of the strongest years in M&A for pharma, which, of course, I think about $240 billion. I think it's too early to cause an inflection on it. And there's a lag, I think, between improving funding environment and customer spending. But we're extremely well placed with our tools. If you look at the Pro iQ LC/MS on that side, also on our Infinity III. And of course, we'll see a recovery in our cell analysis business for those two as we go forward on it. So that's the way I would say that it's really a relatively small exposure for us, but we're really encouraged by the improving funding environment.

Your next question comes from the line of Brandon Couillard with Wells Fargo.

The 6% growth in China, was that all stimulus related and would be helpful if you can just touch on a couple of the end markets there. Curious if you're seeing any of them turn more positively or if it's really just still status quo?

Yes. I mean we were very pleased with our 6% growth. We're better than expected. If you look at them compared to peers also very expected. 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. And I think as we go through the year, we expect it to be a $300 million quarter business on it. But if you look at, I think, overall in the business, we're under-indexed, DX and pharma. We are over-indexed to the applied markets and we see continued strength on that side. So we expect China to grow mid- to high single digits over the long term. Not the double-digit rates we saw 10 years ago, but mid- to high single digits. And our track record, how our ability to manufacturing in China and our commercial teams is very close to the customers is really important. And of course, Adam talked about the larger stimulus that's looming towards the end of the year. We're not counting that in our guide. But if that comes in, it's going to be significantly more than the [ GACC ] stimulus, and we expect an outside win in it. But to be honest, if you look at the -- we look at very -- we're optimistic about China. We have the largest installed base, look at the pace of innovation in life science and the applied markets that supports demand for instruments and our solutions is very strong. And if you look at the China 15th, 5-year plan, whether it's rapid application on AI, health care, green sustainable developments and new regulations for pollutants like PFAS. We're right in the sweet spot in terms of those priorities. So we feel very good about China.

That's helpful. And then, Adam, it'd be great to get some color on the AMG markets by region. I think Simon said Europe was pretty solid. So just curious where you're seeing the weakness visits all in the Americas? Any color would be helpful by region.

Yes. So the softness we've been seeing is really primarily in the Americas. And I guess there's reason to be optimistic. The NIH budget came in, in line with flat to slightly up. The 15% cap on overhead research cost was blocked. That said, it goes back to what Simon talked about, which is we're still seeing a little bit of hesitancy in our customers to make bigger investments as they're really focused on operating their labs.

And just to clarify the Europe comment, that was a forward-looking comment that we envision more stability in Europe than in the Americas with academic and government, and cautious optimism around incremental improvement. That was a forward-looking statement.

Your next question comes from the line of Casey Woodring with JPMorgan.

I'll ask my two upfront. The first is just on LC and LC/MS pacing over the course of the year. LC grew high singles in 1Q. Can you just talk about what LC/MS grew in the quarter and walk through the growth phasing for LC and LC/MS over the course of the year? And then secondly, Padraig, you called out the three marquee enterprise service wins in ACG, and you talked a little bit about it in your script. Can you maybe just elaborate on what the financial impact could look like from those contracts and how we should think about the impact to the model and how those ramp over time?

Yes. Let me talk about the enterprise services, and I'll comment then on the LC/MS. I think on the enterprise services side, it is a really important flywheel for the future because we're really -- fully working with customers under lab management and productivity. You can imagine the insights we get off replacement cycle through that and how do we move forward on it. So it's not just about the services. It's about the consumables and it's about the instrument replacements that we can go going forward on it. We've had a significant placement in competitive accounts. We're kind of unique in how we're doing that in the market, and we're seeing that as a flywheel to continue going forward. And of course, we see in accounts where we do have enterprise service agreement, we have a higher consumables attach rate. We have a higher services attach rate. And actually, we have an early warning system around replacement cycles that we have early conversations about. On the LC side of things, I think, it's been a steady pace, really good quarter. And I think on the LC/MS side, I don't know if you...

Yes. Well, just to reiterate on LC, we saw high single-digit growth in the quarter, particular strength in China and APAC. And as we've mentioned already, very strong performance in Infinity III. Customers continue to love it, and I still think we're relatively early mid on the replacement cycle there. Win loss rates continue to be positive, notable share gains based on the industry data, and we're now seeing additional tailwind there with the Altura columns. On the LC/MS side, we were in line with expectations in the first quarter. Coming off a tough sequential and year-over-year compare, it has to be said. But again, we were very pleased with Pro iQ with the 40% growth, really exceptional adoption there. And in LC/MS, similar story with respect to win loss rates and the industry data, which signifies some notable share gains. And then beyond the Pro iQ, which is off to a very strong start, we're also very encouraged by our broader LC/MS innovation pipeline.

Yes. Just going back to the enterprise services part. I just want to bring in Angelica because she's been very close to some of these marquee wins under the growth trajectory and what you're seeing with the customers.

Thanks, Padraig, and thanks for the question, Casey. I think we're very excited about the enterprise business and the opportunity that unlocks. I think Padraig used the word flywheel earlier. And when you think about it, it allows us to really embed our service experts into the accounts, and they're looking at managing assets across the laboratory. So not only does it give us the opportunity to help customers with their lab operations and keep their labs up and running and producing those scientific results. It gives us visibility and access more broadly in these laboratory environments. So that we're not only looking at our own replacement cycles, but we're also looking at competitive displacement opportunities. We're looking for incremental wallet share opportunities. And over the course of time, the relationships that we're building, they compound. They compound from a growth perspective, but they also compound from insights that we get from customers and how we bring that back into the innovation muscle that we have here at Agilent, and how we can continually grow, evolve and continue to serve our customers on all different levels, whether it's lab operations, it's scientific outcomes or its ongoing value over time.

Your final question comes from the line of Evie Koslosky with Goldman Sachs. [Operator Instructions]

Operator, if Evie is not there, I think we can leave it there. It's all the time we have for this afternoon, and thank you to everyone for joining us. We look forward to speaking with you soon.

This concludes today's call. Thank you for attending. You may now disconnect.