Agilent Technologies Inc. (NYSE:A) Q2 2019 Earnings Conference Call Transcript
May 14, 2019 • 07:30 pm ET
(Operator Instructions) Our first question comes from the line of Dan Leonard with Deutsche Bank. Your line is now open.
Thank you. So first question, in trying to...
Hi, Mike. So trying to make sure I understand the issues in small molecule pharma, is that an LC comment specifically, or more broadly, customers you're labeling as small molecule pharma? And can you comment on the trends between ethical pharma and generics?
Yes. So I'll make a few comments and then, Jacob, feel free to jump on this. I think it's primarily LC-related. And it's a situation we're seeing actually globally. I call out specifically the government initiative in China. But we also saw on our large pharma accounts in US and Europe, delays in purchasing. In fact, I remember talking with our European field manager, we had an order that was supposed to close in January, a big European pharma company. It was pushed out. We thought it was going to close at the end of March, and now it is closed in May. And, perhaps, you can add your thoughts here as well, Jacob.
No, you're absolutely right, Mike. That is primarily the LC business. However, many of those pharma companies also have investment into some other areas. And when they now see some chances in the generics, they might put back also in other areas. So LC is the prime focus, but it certainly also expands into the mass spec and all.
And I think just to close this off, Dan, I think the comments for China were specifically to generics. I think globally, we saw both in ethical and generic drugs in the small molecule side.
Okay. Thank you. And then my follow-up, can you elaborate just further on the actions you're taking to respond to the market softness? And I ask because the decrementals margins in LSAG were pretty high, so can you elaborate a bit on what you're doing to react? Thank you.
Yes. So as Bob mentioned in the -- in his call notes, we're actually quite pleased by the action team to really rapidly adjust the cost structure in a phenomena developed probably over the last four to six weeks of the quarter. And the actions are just double downing on the Agile Agilent programs that we had already in flight, but also really making sure that we looked at the expenses that weren't directly related to growth and all over the call to action that kind of pull back on things that really don't drive growth, like internal travel for example. So we pulled all the levers we could, but while maintaining intact our coverage model in the field as well as our NPI programs. And, Bob, I don't know if you add anything else.
Yeah, I would just add, Dan, while the LSAG business did show a decline year-over-year, I would remind you to look at the total company, which actually did improve margins for -- year-over-year and for the