What changed in this filing

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Item 7. Management’s Discussion and Analysis

2024-12-20 compared with 2023-12-20 · 358 added, 302 removed, 488 unchanged (57% of the section changed)

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The following discussion should be read in conjunction with the consolidated financial statements and notes thereto included elsewhere in this Annual Report on Form 10-K.

This report contains forward-looking statements including, without limitation, statements regarding growth opportunities, including for revenue and our end markets, strength and drivers of the markets into which we sell, sales funnels, our strategic direction, new product and service introductions and the position of our current products and services, market demand for and adoption of our products, the ability of our products and solutions to address customer needs and meet industry requirements, our focus on differentiating our product solutions, improving our customers’ experience and growing our earnings, future financial results, our operating margin, mix, our investments, including in manufacturing infrastructure, research and development and expanding and improving our applications and solutions portfolios, expanding our position in developing countries and emerging markets, our focus on balanced capital allocation, our contributions to our pension and other defined benefit plans, impairment and adjustments of goodwill and other intangible assets, the impact of foreign currency movements, our hedging programs and other actions to offset the effects of tariffs and foreign currency movements, our future effective tax rate, tax valuation allowance and unrecognized tax benefits, the impact of local government regulations on our ability to pay vendors or conduct operations, our ability to satisfy our liquidity requirements, including through cash generated from operations, the potential impact of adopting new accounting pronouncements, indemnification, source and supply of materials used in our products, our sales, our purchase commitments, our capital expenditures, the integration and effects of our acquisitions and other transactions, savings and headcount reduction recognized from our restructuring programs and other cost saving initiatives, our stock repurchase program and dividends, macroeconomic environment and geopolitical uncertainties, interest rate and inflationary pressures, that involve risks and uncertainties.

This report contains forward-looking statements including, without limitation, statements regarding growth opportunities, including for and in our end markets, new product and service introductions, the position and strength of our businesses, products and services, market demand for and adoption of our products and solutions, the ability of our products and solutions to address customer needs and meet industry requirements, our focus on enhancing our customers' experience, delivering differentiated product solutions and driving productivity improvements, our investments, including in manufacturing infrastructure, research and development and expanding and improving our applications and solutions portfolios, expanding our position in developing countries and emerging markets, our contributions to our defined benefit plans, our hedging programs and other actions to offset the effects of foreign currency and interest rate movements, our future effective tax rate, unrecognized tax benefits, reimbursement incentives, our ability to satisfy our liquidity requirements, including through cash generated from operations, the potential impact of adopting new accounting pronouncements, indemnification obligations, our sales, our purchase commitments, our capital expenditures, the integration, effects and timing of our acquisitions and other transactions, expense reduction and other results from our restructuring programs and other cost saving initiatives, our stock repurchase program and dividends, macroeconomic and market conditions, the recovery and health of our end markets, seasonality, mix, future financial results, our operating margin, our geographical diversification, interest rates, inflationary pressures and local regulations and restrictions, that involve risks and uncertainties.

Our actual results could differ materially from the results contemplated by these forward-looking statements due to various factors, including those discussed in Part I Item 1A and elsewhere in this Form 10-K.

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("we", "Agilent" or the "company"), incorporated in Delaware in May 1999, is a global leader in life sciences, diagnostics and applied chemical markets, providing application focused solutions that include instruments, software, services and consumables for the entire laboratory workflow.

Announced Exit and Subsequent Divestiture of Resolution Bioscience Business

During the third quarter of fiscal year 2023, we made the decision to exit the Resolution Bioscience business within our diagnostics and genomics segment and recorded a long-lived asset impairment charge of $270 million.

In the fourth quarter of fiscal year 2023, we received an unsolicited offer and entered into an agreement to divest the Resolution Bioscience business for $50 million.

As a result, we recorded a gain on the divestiture of $43 million in other income and expense, net in the statement of operations, which included an adjustment to goodwill of $13 million.

New Segment Structure

In the first quarter of fiscal year 2024, we announced a change in our operating segments to move our cell analysis business from our life sciences and applied markets segment to our diagnostics and genomics operating segment in order to further strengthen growth opportunities for both organizations.

Following this reorganization, we continue to have three business segments comprised of life sciences and applied markets, diagnostics and genomics and Agilent CrossLab, each of which continues to comprise a reportable segment.

We began reporting under this new structure with the Quarterly Report on Form 10-Q for the period ended January 31, 2024.

All historical financial segment information has been recast to conform to this new presentation in our consolidated financial statements and accompanying notes.

There was no change to our Agilent CrossLab business segment.

On September 20, 2024, we acquired 100 percent of the stock of BIOVECTRA for total consideration of $915 million in cash.

The acquisition expands our contract development and manufacturing organization.

As a result of the acquisition, BIOVECTRA became a wholly-owned subsidiary of Agilent.

The acquisition has been accounted for in accordance with the authoritative accounting guidance, and the results of BIOVECTRA are included in Agilent's consolidated financial statements from the date of acquisition.

2027 Senior Notes.

On September 9, 2024, we issued an aggregate principal amount of $600 million in senior notes ("2027 senior notes").

The 2027 senior notes were issued at 99.866% of their principal amount.

The notes will mature on September 9, 2027, and bear interest at a fixed rate of 4.20% per annum.

The interest is payable semi-annually on March 9th and September 9th of each year and payments will commence on March 9, 2025.

2034 Senior Notes.

On September 9, 2024, we issued an aggregate principal amount of $600 million in senior notes ("2034 senior notes").

The 2034 senior notes were issued at 99.638% of their principal amount.

The 2034 senior notes will mature on September 9, 2034, and bear interest at a fixed rate of 4.75% per annum.

The interest is payable semi-annually on March 9th and September 9th of each year and payments will commence on March 9, 2025.

Actual Results

Agilent's net revenue of $6,833 million in 2023 was slightly down when compared to 2022.

Foreign currency movements for 2023 had an overall unfavorable impact on revenue growth of 2 percentage points when compared to 2022.

Net revenue declined in our life sciences and applied markets segment, in the pharmaceutical market and in the Asia Pacific region primarily related to weaker demand in China and an overall pressure on our customers' capital expenditures compared to the same period last year.

The net revenue decline was partially offset by revenue growth from our other segments primarily in Agilent CrossLab.

Agilent's net revenue of $6,510 million in 2024 decreased 5 percent when compared to 2023.

Foreign currency movements for 2024 had no overall impact on revenue growth when compared to 2023.

Net revenue declined in our life sciences and applied markets and diagnostics and genomics segments, mostly in the pharmaceutical market, due primarily to the overall pressures on our customers' capital expenditure spending which continued in 2024.

Revenue declines were partially offset by revenue growth in our Agilent CrossLab segment.

Revenue in the life sciences and applied markets business decreased 8 percent in 2024 when compared to 2023.

Foreign currency movements had an overall unfavorable impact on revenue growth of 2 percentage points in 2023 when compared to 2022.

Revenue in the diagnostics and genomics business increased 1 percent in 2023 when compared to 2022.

Foreign currency movements had an overall unfavorable impact on revenue growth of 2 percentage points in 2023 when compared to 2022.

Foreign currency movements had no overall impact on revenue growth in 2024 when compared to 2023.

Revenue in the diagnostics and genomics business decreased 6 percent in 2024 when compared to 2023.

Foreign currency movements had no overall impact on revenue growth in 2024 when compared to 2023.

Revenue in the Agilent CrossLab business increased 5 percent in 2024 when compared to 2023.

Foreign currency movements had an overall unfavorable impact on revenue growth of 2 percentage points in 2023 when compared to 2022.

Agilent's net revenue of $6,848 million increased 8 percent in 2022 when compared to 2021.

Foreign currency movements had no overall impact on revenue growth in 2024 when compared to 2023.

Agilent's net revenue of $6,833 million was slightly down in 2023 when compared to 2022.

Foreign currency movements for 2023 had an overall unfavorable impact on revenue growth of 2 percentage points when compared to 2022.

Net revenue increased in all business segments, geographic regions and most key end markets compared to 2021.

Revenue in the life sciences and applied markets business increased 9 percent in 2022 when compared to 2021.

Foreign currency movements had an overall unfavorable impact on revenue growth of 4 percentage points in 2022 when compared to 2021.

Revenue in the diagnostics and genomics business increased 7 percent in 2022 when compared to 2021.

The net revenue decline was partially offset by revenue growth from our other segments primarily in Agilent CrossLab.

Revenue in the life sciences and applied markets business decreased 3 percent in 2023 when compared to 2022.

Foreign currency movements had an overall unfavorable impact on revenue growth of 2 percentage points in 2023 when compared to 2022.

Revenue in the diagnostics and genomics business decreased 1 percent in 2023 when compared to 2022.

Foreign currency movements had an

overall unfavorable impact on revenue growth of 2 percentage points in 2023 when compared to 2022.

Revenue in the Agilent CrossLab business increased 8 percent in 2023 when compared to 2022.

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Net income was $1,289 million in 2024 compared to net income of $1,240 million and $1,254 million in 2023 and 2022, respectively.

Net income in 2024 was impacted by cost-saving initiatives and higher interest income.

Net income in 2023 was impacted by the asset impairment charges primarily related to the exit of our Resolution Bioscience business and lower tax expense.

Net income in 2022 was impacted by higher sales volume partially offset by supply chain, logistics and inflationary pressures increasing our costs.

Net income in 2021 was impacted by higher sales volume and net gains on fair value of equity securities partially offset by significant expense increases from our variable pay, share-based compensation expense and sales commissions.

As of October 31, 2024 and 2023, we had cash and cash equivalents balances of $1,329 million and $1,590 million, respectively.

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During the year ended October 31, 2022, we repurchased and retired 8.4 million shares for $1,139 million under this authorization.

Effective February 18, 2021, the 2019 repurchase program was terminated and replaced by the 2021 repurchase program.

The remaining authorization under the 2019 repurchase plan of $193 million expired on February 18, 2021.

2021 Repurchase Program.

During the year ended October 31, 2021, we repurchased and retired 3.0 million shares for $423 million under this authorization.

During the year ended October 31, 2022, we repurchased and retired 8.4 million shares for $1,139 million under this authorization.

During the year ended October 31, 2023, we repurchased and retired 661,739 shares for $99 million, excluding excise taxes, under this authorization.

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During the year ended October 31, 2023, we repurchased and retired 3.9 million shares for $476 million, excluding excise taxes, under this authorization.

During the year ended October 31, 2024, we repurchased and retired 8.4 million shares for $1,150 million, excluding excise taxes, under this authorization.

As of October 31, 2024, we had remaining authorization to repurchase up to approximately $374 million of our common stock under the 2023 repurchase program.

On May 29, 2024, we announced that our board of directors had approved a new share repurchase program (the "2024 repurchase program") designed, among other things, to reduce or eliminate dilution resulting from issuance of stock under the company's employee equity incentive programs.

The 2024 repurchase program authorizes the purchase of up to $2.0 billion, excluding excise taxes, of our common stock at the company's discretion and has no fixed termination date.

The 2024 repurchase program does not require the company to acquire a specific number of shares and may be suspended, amended or discontinued at any time.

The 2024 repurchase program became effective on August 1, 2024 and will commence upon the termination of our 2023 repurchase program.

The Inflation Reduction Act of 2022, which was enacted into law on August 16, 2022, imposed a nondeductible 1% excise tax on the net value of certain stock repurchases made after December 31, 2022.

As a result, we recorded the applicable excise tax of $3.2 million during the year ended October 31, 2023, as an incremental cost of the shares repurchased and a corresponding liability for the excise tax payable in other accrued liabilities on our consolidated balance sheet.

During the year ended October 31, 2024, we recorded the applicable excise taxes payable of approximately $10 million as an incremental cost of the shares repurchased and a corresponding liability for the excise tax payable in other accrued liabilities on our consolidated balance sheet.

In fiscal year 2023, we recorded excise taxes payable of approximately $3 million related to shares repurchased in 2023 and paid the tax in 2024.

During the year ended October 31, 2024, cash dividends of $0.944 per share, or $274 million were declared and paid on the company's outstanding common stock.

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During the year ended October 31, 2022, cash dividends of $0.840 per share, or $250 million were declared and paid on the company's outstanding common stock.

On November 15, 2023, we declared a quarterly dividend of $0.236 per share of common stock, or approximately $69 million which will be paid on January 24, 2024, to shareholders of record as of the close of business on January 2, 2024.

On November 20, 2024, we declared a quarterly dividend of $0.248 per share of common stock, or approximately $71 million which will be paid on January 22, 2025, to shareholders of record as of the close of business on December 31, 2024.

The timing and amounts of any future dividends are subject to determination and approval by our board of directors.

Looking forward, we continue to be focused on improving our customers’ experience, differentiating product solutions and productivity.

While we anticipate a challenging macroeconomic environment, particularly in China, and an overall pressure on our customers' capital expenditures in the near-term, we remain optimistic about our long-term growth opportunities in all of our key end markets.

We expect to continue to face inflationary pressures which we will continue to mitigate through targeted pricing and various other cost savings strategies.

Looking forward, our primary focus remains on enhancing our customers’ experience, delivering differentiated product solutions and driving productivity improvements.

While customer capital budgets continue to be constrained, we anticipate a gradual and steady recovery in the short-term.

We also remain optimistic about the long-term health of our key end markets.

Although inflationary pressures are uncertain, we will continue to mitigate their impact through targeted pricing strategies and various other cost-saving initiatives.

Critical Accounting Policies and Estimates

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Where acceptance is not a formality, the customer must have documented their acceptance of the product or service.

For products that include installation, if the installation meets the criteria to be considered a separate performance obligation,

product revenue is recognized when control has passed to the customer, and recognition of installation revenue occurs once completed.

For products that include installation, if the installation meets the criteria to be considered a separate performance obligation, product revenue is recognized when control has passed to the customer, and recognition of installation revenue occurs once completed.

Product revenue, including sales to resellers and distributors is reduced for provisions for warranties, returns, and other adjustments in the period the related sales are recorded.

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For contracts with multiple performance obligations, we allocate the consideration to which we expect to be entitled to each performance obligation based on relative standalone selling prices and recognize the related revenue when or as control of each individual performance obligation is transferred to customers.

We estimate the standalone selling price by calculating the average historical selling price of our products and services per geographic region for each performance obligation.

We estimate the standalone selling price by calculating the

average historical selling price of our products and services per geographic region for each performance obligation.

Stand-alone selling prices are determined for each distinct good or service in the contract, and then we allocate the transaction price in proportion to those standalone selling prices by performance obligations.

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Each of these contracts is evaluated as a lease arrangement, either as an operating lease or a sales-type finance lease using the current lease classification guidance.

In a lease arrangement that is a multiple-element arrangement that contains equipment leases and the supply of consumables, the revenue associated with the instrument rental is treated under the lease accounting standard ASC 842, whereas the revenue associated with the consumables, the non-lease component, is recognized in accordance with the ASC 606 revenue standard.

In a lease arrangement that is a multiple-element arrangement, the revenue associated with the lease component is treated under the lease accounting standard ASC 842, whereas the revenue associated with the non-lease component is recognized in accordance with the ASC 606 revenue standard.

Inventory Valuation.

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Two critical assumptions are the discount rate and the expected long-term return on plan assets.

Other important assumptions include

expected future salary increases, expected future increases to benefit payments, expected retirement dates, employee turnover, retiree mortality rates, and portfolio composition.

Other important assumptions include expected future salary increases, expected future increases to benefit payments, expected retirement dates, employee turnover, retiree mortality rates, and portfolio composition.

We evaluate these assumptions at least annually.

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In 2024, discount rates for the U.S.

pension and retiree medical plans increased compared to the previous year due to the increase in the corporate bond rates.

defined benefit plans and post-retirement benefit plans decreased compared to the previous year due to the decrease in the corporate bond rates.

For 2024 and 2023, the discount rates for non-U.S.

plans were generally based on published rates for high quality corporate bonds and in 2023, mostly increased compared to the previous year.

defined benefit plans were generally based on published rates for high quality corporate bonds and in 2024, mostly decreased compared to the previous year.

If we had changed our discount rate by 1 percent, the impact would have been approximately $1 million on U.S.

pension expense and $11 million on non-U.S.

pension expense for the year ended October 31, 2023.

defined benefit plans and post-retirement benefit plans expense and $11 million on non-U.S.

defined benefit plans expense for the year ended October 31, 2024.

Lower discount rates usually increase present values of the pension benefit obligation and subsequent year pension expense;

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The company uses alternate methods of amortization as allowed by the authoritative guidance which amortizes the actuarial gains and losses on a consistent basis for the years presented.

Plans, gains and losses are amortized over the average future lifetime of participants using the corridor method.

defined benefit plans, gains and losses are amortized over the average future lifetime of participants using the corridor method.

For most non-U.S.

Plans and U.S.

defined benefit plans and U.S.

post-retirement benefit plans, gains and losses are amortized over the average remaining future service period or remaining lifetime of participants depending upon the plan, using a separate layer for each year's gains and losses.

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Fixed income securities include a global portfolio of corporate bonds of companies from diversified industries, government securities, mortgage-backed securities, asset-backed securities, derivative instruments and other.

The annuity contract is an insurance buy-in contract issued by a third-party insurance company for a portion of benefit obligations of listed pensioners under the U.K.

defined benefit plan, and is funded with existing pension plan assets with no adjustment made to the benefit obligations.

The annuity contracts are insurance buy-in contracts issued by a third-party insurance company to cover the benefit obligations of all participants under the U.K.

defined benefit plan and are funded with existing pension plan assets with no adjustment made to the benefit obligations.

Real estate securities include holdings of managed investment funds which invest primarily in the equity instruments of real estate investment trusts and other similar real estate investments.

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If we had changed our estimated return on assets by 1 percent, the impact would have been $4 million on U.S.

pension and post-retirement benefit plan expense and $8 million on non-U.S.

pension expense for the year ended October 31, 2023.

The total periodic pension and post-retirement benefit costs recorded were a $6 million expense in 2023, $2 million benefit in 2022 and $24 million expense in 2021.

defined benefit plans and post-retirement benefit plans expense and $8 million on non-U.S.

defined benefit plans expense for the year ended October 31, 2024.

The total net periodic pension and post-retirement benefit costs recorded were a $9 million benefit in 2024, $6 million expense in 2023 and $2 million benefit in 2022.

These costs included a loss on settlement of $2 million, $4 million and $4 million, for the years ended October 31, 2024, 2023 and 2022, respectively.

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We aggregate components of an operating segment that have similar economic characteristics into our reporting units.

In fiscal year 2023, we assessed goodwill impairment for our three reporting units which consisted of our three segments:

At the beginning of fiscal year 2024, in connection with the change in our segment reporting, we assessed goodwill impairment for our three reporting units which consisted of our three segments:

life sciences and applied markets, diagnostics and genomics and Agilent CrossLab.

We performed a quantitative test for goodwill impairment of the three reporting units, as of September 30, 2023, our annual impairment test date.

Based on the results of our quantitative testing, there was no impairment of goodwill as of September 30, 2023.

We performed a quantitative test for goodwill impairment of the three reporting units as of November 1, 2023, due to the change in our segment structure.

As of November 1, 2023, there was no impairment of goodwill.

In fiscal year 2024, we again assessed goodwill impairment for our three reporting units which consisted of our three segments:

life sciences and applied markets, diagnostics and genomics and Agilent CrossLab.

We performed a qualitative test for goodwill impairment of the three reporting units as of September 30, 2024, our annual impairment test date.

Based on the results of our qualitative testing, there was no impairment of goodwill as of September 30, 2024.

Each quarter we review the events and circumstances to determine if goodwill impairment is indicated.

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Our determination of the fair value of customer relationships acquired involves significant estimates and assumptions related to revenue growth rates, discount rates, and customer attrition rates.

Our determination of the fair value of the tradename acquired involves the use of significant estimates and assumptions related to revenue growth rates, royalty rates and discount rates.

The company believes that the fair value assigned to the assets acquired and liabilities assumed are based on reasonable assumptions and estimates that marketplace participants would use.

Our determination of the fair value of the trade name acquired involves the

use of significant estimates and assumptions related to revenue growth rates, royalty rates and discount rates.

We value backlog using the discounted cash flows based on the estimated revenue from pending orders.

We value license agreements based on the expected future cash receipts from license agreements, discounted to present value over the term of the agreement.

We believe that the fair value assigned to the assets acquired and liabilities assumed are based on reasonable assumptions and estimates that marketplace participants would use.

Actual results could differ materially from these estimates.

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An organization may choose to bypass the qualitative assessment for any indefinite-lived intangible asset in any period and proceed directly to calculating its fair value.

We performed a qualitative test for impairment of indefinite-lived intangible assets as of September 30, 2023.

Based on the results of our qualitative testing, we believe that it is more-likely-than-not that the fair values of these indefinite-lived intangible assets are greater than their respective carrying values.

Each quarter we review the events and circumstances to determine if impairment of indefinite-lived intangible assets is indicated.

During the year ended October 31, 2023, 2022 and 2021, there were no impairments of indefinite-lived intangible assets.

As of October 31, 2024, we do not have any indefinite-lived intangible assets.

During fiscal year 2024, we recorded an impairment of in-process research and development of $6 million in research and development in the consolidated statement of operations related to a project in our life sciences and applied markets segment.

There were no impairments of indefinite-lived intangible assets during fiscal years 2023 and 2022.

Restructuring.

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If the amounts and timing of cash flows from restructuring activities are significantly different from what we have estimated, the actual amounts of restructuring and other related charges could be materially different, either higher or lower, than those we have recorded.

"Restructuring and Other Related Costs" for additional information.

"Restructuring and Other Related Costs" to the consolidated financial statements for additional information.

Accounting for Income Taxes.

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Although the guidance on the accounting for uncertainty in income taxes prescribes the use of a recognition and measurement model, the determination of whether an uncertain tax position has met those thresholds will continue to require significant judgment by management.

In accordance with the guidance on the accounting for uncertainty in income taxes, for all U.S.

In accordance with the guidance on the accounting for

uncertainty in income taxes, for all U.S.

and other tax jurisdictions, we recognize potential liabilities for anticipated tax audit issues based on our estimate of whether, and the extent to which, additional taxes and interest will be due.

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Restructuring and Other Related Costs

In the fourth quarter of fiscal year 2023, we initiated a new restructuring plan ("FY23 Plan") designed to reduce costs and expenses in response to the current macroeconomic conditions.

The plan includes a reduction of our total headcount by approximately 400 regular employees, representing approximately 2 percent of our global workforce, and the consolidation of our excess facilities, including some site closures.

In connection with this plan, we have recorded approximately $ 46 million in restructuring and other related costs in fiscal year 2023.

These costs include severance and other personnel costs associated with the workforce reduction.

The consolidation of excess facilities includes accelerated depreciation expenses of right-of-use ("ROU") and machinery and equipment assets and other facilities-related costs.

The timing and scope of the workforce reductions will vary based on local legal requirements.

Summary of Restructuring Plans.

In fiscal years 2024 and 2023, we announced restructuring plans that were both designed to reduce costs and expenses in response to macroeconomic conditions.

These actions impact all three of our business segments.

The costs associated with this restructuring plan have not been allocated to our business segments' results;

however, each business segment will benefit from the future costs savings from these actions.

When completed, the restructuring program is expected to result in a reduction of $80 million in annual cost of sales and operating expenses over the three business segments.

While the majority of the workforce reduction will be completed in the first quarter of 2024, we expect to substantially complete the remaining restructuring activities by the end of fiscal year 2024.

A summary of total restructuring activity is shown in the table below:

The costs associated with these restructuring plans were not allocated to our business segments' results;

however, each business segment will benefit from the future cost savings from these actions.

When completed, the restructuring programs are expected to result in the reduction in annual cost of sales and operating expenses over the three business segments.

A summary of our aggregate liability related to both restructuring plans and the total restructuring expense since inception of those plans are shown in the table below:

Reduction Consolidation of Excess Facilities Total

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Income statement expense 33 13 46

Accelerated share-based compensation expense ( 1 ) — ( 1 )

Accelerated depreciation expenses of ROU and machinery and equipment — ( 8 ) ( 8 )

Non-cash settlements ( 1 ) ( 8 ) ( 9 )

Cash payments ( 1 ) — ( 1 )

Balance at October 31, 2023 $ 31 $ 5 $ 36

The restructuring and other related costs, which totaled $ 36 million at October 31, 2023, are recorded in other accrued liabilities on the consolidated balance sheet and reflect estimated future cash outlays.

A summary of the charges in the consolidated statement of operations resulting from the restructuring plan is shown below:

Income statement expense 75 1 76

Non-cash settlements ( 7 ) ( 1 ) ( 8 )

Cash payments ( 86 ) ( 5 ) ( 91 )

Balance at October 31, 2024 $ 13 $ — $ 13

Total restructuring expense since inception of all plans $ 122

Non-cash settlements include accelerated share-based compensation expense related to workforce reductions and accelerated depreciation expense of right-of-use and machinery and equipment assets related to the consolidation of excess facilities.

The aggregate restructuring liability of $ 13 million at October 31, 2024, was recorded in other accrued liabilities on the consolidated balance sheet and reflects estimated future cash outlays.

A summary of the charges in the consolidated statement of operations resulting from the restructuring plans are shown below:

(in millions)

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Total restructuring costs $ 76 $ 46

Fiscal Year 2024 Plan ("FY24 Plan")

In the third quarter of fiscal year 2024, we initiated a new restructuring plan designed to further reduce costs and expenses in response to current macroeconomic conditions.

The plan includes a reduction of our total headcount by approximately 500 regular employees, representing approximately 3 percent of our global workforce.

In connection with the FY24 Plan, we have recorded restructuring expenses of $ 72 million in fiscal year 2024.

The costs associated with this workforce reduction include severance, accelerated share-based compensation expense and other personnel-related costs.

The timing and scope of the workforce reductions will vary based on local legal requirements.

While the majority of the workforce reduction was completed in fiscal year 2024, we expect to substantially complete the remaining restructuring activities by the end of the second quarter of fiscal year 2025.

When completed, the restructuring program is expected to result in the reduction of approximately $100 million in annual cost of sales and operating expenses over our three business segments.

A summary of the FY24 Plan activity is shown in the table below:

Workforce Reduction

(in millions)

Balance at October 31, 2023 $ —

Income statement expense 72

Non-cash settlements ( 7 )

Cash payments ( 54 )

Balance at October 31, 2024 $ 11

Total restructuring expense since inception of FY24 Plan $ 72

Non-cash settlements include accelerated share-based compensation expense related to workforce reductions.

Fiscal Year 2023 Plan ("FY23 Plan")

In the fourth quarter of fiscal year 2023, we initiated the restructuring plan designed to reduce costs and expenses in response to the macroeconomic conditions.

The plan included a reduction of our total headcount by approximately 400 regular employees, representing approximately 2 percent of our global workforce, and the consolidation of our excess facilities, including some site closures.

In connection with the FY23 Plan, we recorded restructuring expenses of $ 4 million in 2024 and $ 46 million, in 2023.

The restructuring plan expenses include severance, accelerated share-based compensation expense and other personnel costs associated with the workforce reduction.

The consolidation of excess facilities includes accelerated depreciation expenses of right-of-use and machinery and equipment assets, and other facilities-related costs.

The timing and scope of the workforce reductions will vary based on local legal requirements.

While the majority of the workforce reduction was completed in 2024, we expect to substantially complete the remaining restructuring activities by the end of the first quarter of fiscal year 2025.

When completed, the restructuring program is expected to result in the reduction of approximately $80 million in annual cost of sales and operating expenses over our three business segments.

A summary of the FY23 Plan activity is shown in the table below:

Reduction Consolidation of Excess Facilities Total

(in millions)

Balance at October 31, 2022 $ — $ — $ —

Income statement expense 33 13 46

Non-cash settlements ( 1 ) ( 8 ) ( 9 )

Cash payments ( 1 ) — ( 1 )

Balance at October 31, 2023 $ 31 $ 5 $ 36

Income statement expense 3 1 4

Non-cash settlements — ( 1 ) ( 1 )

Cash payments ( 32 ) ( 5 ) ( 37 )

Balance at October 31, 2024 $ 2 $ — $ 2

Total restructuring expense since inception of the FY23 Plan $ 50

Foreign Currency

Our revenues, costs and expenses, and monetary assets and liabilities and equity are exposed to changes in foreign currency exchange rates as a result of our global operating and financing activities.

Foreign currency movements for the year ended October 31, 2023, had an overall unfavorable impact on revenue of 2 percentage points when compared to the same period last year.

Foreign currency movements had no overall impact on revenue growth in the year ended October 31, 2024 when compared to the same period last year.

Foreign currency movements for the year ended October 31, 2023, had an overall unfavorable impact on revenue of 2 percentage points when compared to 2022.

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We do experience some fluctuations within individual lines of the consolidated statement of operations and balance sheet because our hedging program is not designed to offset the currency movements in each category of revenues, expenses, monetary assets and liabilities.

Our hedging program is designed to hedge currency movements on a relatively short-term basis (up to a rolling thirteen-month period).

Our hedging program is designed to hedge currency movements on a relatively short-term basis (up to a rolling twelve-month period).

We may also hedge equity balances denominated in foreign currency on a long-term basis.

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Total 100 % 100 % 100 %

Agilent's net revenue of $6,833 million for the year ended October 31, 2023, was slightly down when compared to 2022.

Agilent's net revenue of $6,510 million for the year ended October 31, 2024, decreased 5 percent when compared to 2023.

Foreign currency movements had no overall impact on revenue growth in 2024 when compared to 2023.

For the year ended October 31, 2024, net revenue declined in our life sciences and applied markets and diagnostics and genomics segments, mostly in the pharmaceutical market, due primarily to the overall pressures on our customers' capital expenditure spending which continued in 2024.

Revenue declines were partially offset by revenue growth in our Agilent CrossLab segment.

Agilent's net revenue of $6,833 million was slightly down in 2023 when compared to 2022.

Foreign currency movements had an overall unfavorable impact on revenue growth of 2 percentage points in 2023 when compared to 2022.

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The net revenue decline was partially offset by revenue growth from our other segments primarily in Agilent CrossLab.

Agilent's net revenue of $6,848 million increased 8 percent in 2022 when compared to 2021.

Foreign currency movements had an overall unfavorable impact on revenue growth of 4 percentage points in 2022 when compared to 2021.

Product revenue includes revenue generated from the sales of our analytical instrumentation, software and consumables.

Revenue from products decreased 7 percent for the year ended October 31, 2024, when compared to 2023.

The product revenue decline was primarily driven by decreases in our liquid chromatography, mass spectrometry, cell analysis and nucleic acid solutions businesses partially offset by increases in our consumables and pathology businesses when compared to 2023.

Overall, product revenue declined due to our customers' continued capital expenditure pressures and mostly impacted the pharmaceutical market within our life sciences and applied markets and diagnostics and genomics segments.

Revenue from products decreased 3 percent for the year ended October 31, 2023, when compared to 2022.

The decrease in product revenue in the year ended October 31, 2023, was primarily due to significant declines in our mass spectrometry, genomics, gas chromatography and cell analysis businesses partially offset by strong growth in our nucleic acid solutions and pathology businesses, and modest growth in our spectroscopy business.

Overall, product revenue declined due to our customers' capital expenditure pressures and mostly impacted the pharmaceutical market within our life sciences and applied market segment.

Revenue from products increased 9 percent for the year ended October 31, 2022, when compared to 2021.

The growth in product revenue was driven by increased sales within our liquid chromatography, spectroscopy, nucleic acid solutions and consumables businesses.

Services and other revenue consist of contract repair, preventative maintenance, compliance services, repair and maintenance, installation services, and consulting services related to the companion diagnostics and nucleic acid solutions businesses.

Overall, product revenue declined due to our customers' capital expenditure pressures and mostly impacted the pharmaceutical market within our life sciences and applied markets segment.

Services and other revenue consist of contract repair, preventative maintenance, compliance services, relocation services, installation services, and consulting services related to the companion diagnostics and nucleic acid solutions businesses.

Services and other revenue increased 3 percent in 2024 as compared to 2023.

Services and other revenue increases reflected strong growth from contract repair services, consultative services, per incident repair and maintenance services, and relocation services in all key end markets.

Services and other revenue reflected strong growth from contract repair and preventative maintenance services partly offset by declines in installation services related to the decline of the product revenues.

Services and other revenue increased 7 percent in 2023 as compared to 2022.

Service revenue increases reflected strong growth from contract repair services, compliance services, installation services, consultative services and relocation services in all key end markets except the academia and government markets.

Service revenue increases reflected strong growth from contract repair services, consultative services, per incident repair and maintenance services, and relocation services in all key end markets.

Net Revenue By Segment

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Revenue in the life sciences and applied markets business decreased 8 percent in 2024 when compared to 2023.

Foreign currency movements had an overall unfavorable impact on revenue growth of 2 percentage points in 2023 when compared to 2022.

For the year ended October 31, 2023, we saw a significant decline in revenue in the pharmaceutical market and a moderate decline in revenue in the diagnostics and genomics market partially offset by strong growth in the academia and government market and modest growth in the food market when compared to 2022.

Revenue in the life sciences and applied markets business increased 9 percent in 2022 when compared to 2021.

Foreign currency movements had an overall unfavorable impact on revenue growth of 4 percentage points in 2022 when compared to 2021.

For the year ended October 31, 2022, revenue growth was strong within the chemicals and advanced materials markets driven by demand for our spectroscopy, gas chromatography and consumable products.

Revenue growth was strong within the pharmaceutical market driven by demand for our liquid chromatography, cell analysis and liquid chromatography mass spectrometry products.

Revenue in the diagnostics and genomics business increased 1 percent in 2023 when compared to 2022.

Foreign currency movements had no overall impact on revenue growth in 2024 when compared to 2023.

For the year ended October 31, 2024, revenue declined in all of our end markets.

We saw a significant decline in revenue in the pharmaceutical, chemical and advanced materials, food and academia and government markets when compared to 2023.

Revenue in the life sciences and applied markets business decreased 3 percent in 2023 when compared to 2022.

Foreign currency movements had an overall unfavorable impact on revenue growth of 2 percentage points in 2023 when compared to 2022.

Revenue growth in the pharmaceutical market was strong led by our nucleic acid solutions business which was partially offset by a decline in the academia and government markets when compared to 2022.

Revenue in the diagnostics and genomics business increased 7 percent in 2022 when compared to 2021.

For the year ended October 31, 2023, we saw a significant decline in revenue in the pharmaceutical and the diagnostics and clinical markets partially offset by strong growth in the academia and government market when compared to 2022.

Revenue in the diagnostics and genomics business decreased 6 percent in 2024 when compared to 2023.

Foreign currency movements had no overall impact on revenue growth in 2024 when compared to 2023.

In 2024, we saw a significant decline in revenue in the pharmaceutical market due to lower sales in our nucleic acid solutions, cell analysis and genomics businesses when compared to 2023.

Revenue in the diagnostics and genomics business decreased 1 percent in 2023 when compared to 2022.

Foreign currency movements had an overall unfavorable impact on revenue growth of 2 percentage points in 2023 when compared to 2022.

Revenue growth was strong within the pharmaceutical market led by performance from our nucleic acid solutions business.

Revenue declined in the academia and government and pharmaceutical markets partially offset by revenue growth in the diagnostics and clinical market when compared to 2022.

Revenue in the Agilent CrossLab business increased 5 percent in 2024 when compared to 2023.

Foreign currency movements had an overall unfavorable impact on revenue growth of 2 percentage points in 2023 when compared to 2022.

For the year ended October 31, 2023, we saw revenue growth across all of our end markets led by strong revenue growth in the pharmaceutical, academia and government, diagnostics and clinical and chemical and advanced materials markets when compared to 2022.

Foreign currency movements had no overall impact on revenue growth in 2024 when compared to 2023.

For the year ended October 31, 2024, we saw revenue growth across all of our end markets led by strong revenue growth in the pharmaceutical, diagnostics and clinical and environmental and forensics markets when compared to 2023.

Revenue generated by Agilent CrossLab increased 8 percent in 2023 when compared to 2022.

Foreign currency movements had an overall unfavorable impact on revenue growth of 2 percentage points in 2023 when compared to 2022.

For the year ended October 31, 2022, we saw revenue growth across most of our end markets led by strong revenue growth from the pharmaceutical and chemicals and advanced materials markets when compared 2021.

Costs and Expenses

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Operating margin 22.9 % 19.8 % 23.6 % 3 ppts.

Total gross margin for the year ended October 31, 2024 increased 4 percentage points when compared to 2023.

Total gross margin as well as gross margin on products for 2024 improved from the prior year as 2023 had asset impairment charges of $253 million primarily related to the exit of our Resolution Bioscience business.

In addition, total gross margin was favorably impacted by targeted price increases, lower shipping costs and intangible amortization expense partially offset by lower sales volume, higher share-based compensation expense, higher wages and restructuring charges.

Total gross margin for the year ended October 31, 2023 decreased 4 percentage points when compared to 2022.

Total gross margin as well as gross margin on products, for the year ended October 31, 2023 was significantly impacted by asset impairment charges of $253 million primarily related to the exit of our Resolution Bioscience business.

Total gross margin as well as gross

margin on products for the year ended October 31, 2023 was significantly impacted by asset impairment charges of $253 million primarily related to the exit of our Resolution Bioscience business.

Excluding these asset impairment charges, total gross margin for the year ended October 31, 2023 was relatively flat when compared to 2022.

gross margin was also impacted by targeted price increases, lower shipping and logistics costs, variable pay expenses and intangible amortization expense offset by the unfavorable impact of currency movements, higher wages, restructuring and other related costs and inventory charges.

Total gross margin for the year ended October 31, 2022 increased 1 percentage point when compared to 2021.

Total gross margin was impacted by higher sales volume, targeted price increases and lower inventory charges which were offset by higher material costs, shipping and logistics costs, wages, transformational initiative costs and intangible amortization expense.

Total gross margin was also impacted by targeted price increases, lower shipping and logistics costs, variable pay expenses and intangible amortization expense offset by the unfavorable impact of currency movements, higher wages, restructuring and other related costs and inventory charges.

Gross inventory charges were $45 million in 2024, $40 million in 2023 and $24 million in 2022.

Sales of previously written down inventory were $16 million in 2024, $9 million in 2023 and $11 million in 2022.

Research and development expenses for the year ended October 31, 2024 were flat when compared to 2023.

Research and development expenses slightly decreased due to lower salary expense related to workforce reduction activities mostly offset by restructuring charges and an impairment of in-process research and development when compared to 2023.

Research and development expenses for the year ended October 31, 2023 increased 3 percent when compared to 2022.

Research and development expenses increased due to higher wages, program costs in our life sciences and applied markets and diagnostics and genomics businesses and restructuring and other related costs partially offset by the lower variable pay expenses and favorable impact of currency movements.

Research and development expenses for the year ended October 31, 2022 increased 6 percent when compared to 2021.

Research and development expenses increased due to higher wages and program investments in our diagnostics and genomics segment and in our mass spectrometry business within our life sciences and applied markets segment, and additional research and development expenses related to the Resolution Bioscience acquisition.

Selling, general and administrative expenses were flat in 2023 when compared to 2022.

Selling, general and administrative expenses decreased 4 percent in 2024 when compared to 2023.

Selling, general and administrative expenses decreased due to lower intangible amortization expenses, transformational initiatives, advertising expenses, variable pay and salary expense related to workforce reduction activities partially offset by higher restructuring charges and share-based compensation expense.

Selling, general and administrative expenses were flat in 2023 compared to 2022.

Selling, general and administrative expenses in 2022 included a decrease in expenses of $25 million related to the change in the fair value of contingent consideration.

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The decrease was due to lower variable pay, intangible amortization expense, sales commissions and the favorable impact of currency movements partially offset by higher wages, restructuring and other related costs and asset impairment charges primarily related to the exit of our Resolution Bioscience business.

Selling, general and administrative expenses increased 1 percent in 2022 compared to 2021.

The increase was due to higher wages, share-based compensation expense and inflationary pressures mostly offset by lower commissions, acquisition and integration costs, variable pay, transformational initiatives and a decrease related to the change in the fair value of contingent consideration.

Total operating margin for the year ended October 31, 2024 increased 3 percentage points when compared to 2023.

Total operating margin for the year ended October 31, 2024 increased mostly due to lower impairment charges in 2024 compared to 2023 partially offset by restructuring charges.

Total operating margin for the year ended October 31, 2023, decreased 4 percentage points when compared to 2022.

Total operating margin for the year ended October 31, 2023 decreased mainly due to asset impairment charges primarily related to the exit of our Resolution Bioscience business and restructuring and other related costs.Total operating margin for the year ended October 31, 2022, increased 2 percentage points when compared to 2021.

Operating margin increased due to higher sales volume, increased gross margin, lower commissions and variable pay partially offset by increases in wages, share-based compensation expense and inflationary pressures.

Interest income for the year ended October 31, 2023, 2022 and 2021 was $51 million, $9 million and $2 million, respectively.

The increase in interest income in 2023 was primarily due to higher cash balances and increases in interest rates related to our cash and cash equivalents.

Interest expense for the years ended October 31, 2023, 2022 and 2021 was $95 million, $84 million and $81 million, respectively, and relates to the interest charged on our senior notes, term loan, credit facilities, commercial paper and the amortization of the deferred loss recorded upon termination of the forward starting interest rate swap contracts partially offset by the amortization of deferred gains recorded upon termination of interest rate swap contracts.

The increase in interest expense is primarily related to higher interest rates on short-term commercial paper and the variable rate on the term loan facility.

Our headcount was approximately 18,100 at October 31, 2023 and 2022.

Interest income for the years ended October 31, 2024, 2023 and 2022 was $80 million, $51 million and $9 million, respectively.

The increase in interest income in 2024 and 2023 was primarily due to higher cash balances and increases in interest rates related to our cash and cash equivalents.

Interest expense for the years ended October 31, 2024, 2023 and 2022 was $96 million, $95 million and $84 million, respectively, and primarily relates to the interest charged on our senior notes, term loan, credit facilities, commercial paper and the amortization of the deferred loss recorded upon termination of the forward starting interest rate swap contracts partially offset by the amortization of deferred gains recorded upon termination of interest rate swap contracts.

The increase in interest expense from 2022 is primarily related to higher interest rates on short-term commercial paper and the variable rate on the term loan facility.

Our headcount was approximately 17,900 at October 31, 2024 and 18,100 at October 31, 2023.

Other income (expense), net

For the year ended October 31, 2023, other income (expense), net includes income of $43 million related to the net gain on the divestiture of our Resolution Bioscience business and $12 million income related to the provision of site service costs to, and lease income from, Keysight Technologies, Inc.

For the year ended October 31, 2024, other income (expense), net of $49 million income includes $8 million of income related to foreign currency translation reclassified out of accumulated comprehensive income (loss) and $12 million income related to the provision of site service costs to, and lease income from, Keysight Technologies, Inc.

("Keysight").

The costs associated with these services are reported within income from operations.

Other income (expense), net also includes $10 million income related to the defined benefit retirement and post-retirement benefit plans (interest cost, expected return on assets, amortization of net actuarial (gain) loss, prior service credits and settlement loss) partially offset by the net loss on the fair value of equity securities of approximately $41 million.

For the year ended October 31, 2022, other income (expense), net includes income of $11 million related to the provision of site service costs to, and lease income from, Keysight.

Other income (expense), net also includes $25 million income related to the defined benefit retirement and post-retirement benefit plans (interest cost, expected return on assets, amortization of net actuarial (gain) loss, prior service credits and settlement loss).

For the year ended October 31, 2023, other income (expense), net of $33 million income includes $43 million income related to the net gain on the divestiture of our Resolution Bioscience business and $12 million income related to the provision of site service costs to, and lease income from, Keysight.

The costs associated with these services are reported within income from operations.

Other income (expense), net includes $25 million income related to the defined benefit retirement and post-retirement benefit plans offset by the net loss on the fair value of equity securities of approximately $67 million and a $9 million loss on extinguishment of debt.

For the year ended October 31, 2021, other income (expense), net includes income of $7 million related to the provision of site service costs to, and lease income from, Keysight.

For the year ended October 31, 2022, other income (expense), net of $39 million expense includes the net loss on the fair value of equity securities of approximately $67 million and a $9 million loss on extinguishment of debt partially offset by income of $25 million income related to the defined benefit retirement and post-retirement benefit plans and $11 million related to the provision of site service costs to, and lease income from, Keysight.

The costs associated with these services are reported within income from operations.

Other income (expense), net includes a $17 million loss on extinguishment of debt and net gains on the fair value of equity securities of approximately $98 million.

Years Ended October 31,

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For 2024, our income tax expense was $232 million with an effective tax rate of 15.3 percent.

For the year ended October 31, 2024, our effective tax rate and the resulting provision for income taxes were impacted by the tax benefit of $47 million related to foreign-derived intangible income.

For 2023, our income tax expense was $99 million with an effective tax rate of 7.4 percent.

For the year ended October 31, 2023, our effective tax rate and the resulting provision for income taxes were impacted by the federal tax benefit of $104 million related to the realized loss on the divestiture of a business.

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For the year ended October 31, 2022, our effective tax rate and the resulting provision for income taxes were impacted by the tax benefit of $46 million related to foreign-derived intangible income.

For 2021, our income tax expense was $150 million with an effective tax rate of 11 percent.

For the year ended October 31, 2021, our effective tax rate and the resulting provision for income taxes were impacted by the discrete benefit of $93 million related to the release of tax reserves in various jurisdictions due to audit settlements and the expiration of statutes of limitations.

The income taxes for the year ended October 31, 2021, also include the excess tax benefits from stock-based compensation of $29 million.

We have negotiated a tax holiday in Singapore.

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Segment Overview

Through October 31, 2023, we have three business segments comprised of the life sciences and applied markets business, diagnostics and genomics business and the Agilent CrossLab business.

Following this reorganization, we continued to have three business segments comprised of life sciences and applied markets, diagnostics and genomics and Agilent CrossLab, each of which continued to comprise a reportable segment.

All historical financial segment information has been recast to conform to this new presentation in our consolidated financial statements and accompanying notes.

There was no change to our Agilent CrossLab business segment.

Life Sciences and Applied Markets

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raman spectroscopy;

cell analysis plate based assays;

flow cytometer;

real-time cell analyzer;

cell imaging systems;

microplate reader;

laboratory software for sample tracking;

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Net revenue $ 3,215 $ 3,510 $ 3,630 (8)% (3)%

Life science and applied markets business revenue in 2023 decreased 4 percent compared to 2022.

Foreign currency movements had an overall unfavorable impact on revenue growth of 2 percentage points in 2023 when compared to the same period last year.

Geographically, revenue decreased 4 percent in the Americas with a 1 percentage point unfavorable currency impact, increased 1 percent in Europe with a 2 percentage point unfavorable currency impact and decreased 7 percent in Asia Pacific with a 4 percentage point unfavorable currency impact.

The revenue decline in Asia Pacific was driven by China with declines in liquid chromatography and gas chromatography mass spectrometry when compared to 2022.

End market revenue performance in 2023 was mixed as the pharmaceutical market declined significantly, chemicals and advance materials market and environmental and forensics markets remained relatively flat, food market delivered modest growth while academia and government market delivered strong growth when compared to 2022.

Revenue decline in the pharmaceutical market was driven by weakness in our liquid chromatography, cell analysis and liquid chromatography mass spectrometry businesses when compared to 2022.

Revenue growth in the chemicals and advanced materials market was relatively flat with strength in our spectroscopy, cell analysis and consumables businesses offset by declines in gas chromatography and liquid chromatography mass spectrometry when compared to 2022.

Revenue growth in the environmental and forensics market was relatively flat with strength in our cell analysis, liquid chromatography and liquid chromatography mass spectrometry businesses offset by declines in spectroscopy, gas chromatography and gas chromatography mass spectrometry businesses when compared to 2022.

Revenue growth in the food market was primarily driven by strength in our spectroscopy, cell analysis and liquid chromatography businesses compared to 2022.

Revenue growth in the academia and government end market was mainly driven by strength in the liquid chromatography, spectroscopy, gas chromatography and the liquid chromatography mass spectrometry businesses when compared to 2022.

Life science and applied markets business revenue in 2022 increased 9 percent compared to 2021.

Life sciences and applied markets business revenue in 2024 decreased 8 percent compared to 2023.

Foreign currency movements had no overall impact on revenue growth in 2024 when compared to the same period last year.

Geographically, revenue decreased 9 percent in the Americas with no currency impact, decreased 5 percent in Europe with a 1 percentage point favorable currency impact and decreased 10 percent in Asia Pacific with a 1 percentage point unfavorable currency impact.

The revenue decline in the Americas was driven by weakness in our liquid chromatography, liquid chromatography mass spectrometry, gas chromatography mass spectrometry and gas chromatography businesses partially offset by strength in the consumables business when compared to 2023.

The revenue decline in Europe was driven by weakness in our liquid chromatography, gas chromatography, automation and gas chromatography mass spectrometry businesses partially offset by strength in the consumables business when compared to 2023.

The revenue decline in Asia Pacific was driven by lower demand in China within our liquid chromatography, liquid chromatography mass spectrometry, gas chromatography mass spectrometry and spectroscopy businesses when compared to 2023.

All end market revenue declined in 2024.

Revenue in the pharmaceutical market declined significantly due to weakness in our liquid chromatography, liquid chromatography mass spectrometry and gas chromatography businesses when compared to 2023.

Revenue in the chemicals and advanced materials market declined significantly due to weakness in our liquid chromatography, gas chromatography and liquid chromatography mass spectrometry businesses partially offset by strength in our consumables business when compared to 2023.

Revenue in the food market declined significantly due to weakness in our liquid chromatography, gas chromatography mass spectrometry and spectroscopy businesses partially offset by strength in our consumables business when compared to 2023.

Revenue in the academia and government market declined significantly due to weakness in our liquid chromatography and liquid chromatography mass spectrometry businesses when compared to 2023.

Life sciences and applied markets business revenue in 2023 decreased 3 percent compared to 2022.

Foreign currency movements for 2023 had an overall unfavorable impact on revenue growth of 2 percentage points when compared to 2022.

Geographically, revenue increased 11 percent in the Americas with no currency impact, increased 2 percent in Europe with a 7

percentage point unfavorable currency impact and increased 13 percent in Asia Pacific with a 3 percentage point unfavorable currency impact.

The increase in Asia Pacific was led by strong demand in liquid chromatography systems in China.

In 2022, revenue growth was driven by strong growth in liquid chromatography, spectroscopy products and consumables portfolio when compared to 2021.

End market revenue performance in 2022 was mixed with pharmaceutical, chemicals and advanced materials markets and diagnostics and clinical market delivering strong revenue growth, food and environmental and forensics delivering modest revenue growth while academia and government remained relatively flat when compared to 2021.

Revenue growth in the pharmaceutical market was primarily driven by our liquid chromatography, cell analysis and consumables businesses.

Revenue growth in the chemicals and advanced materials market was mainly driven by strength in our gas chromatography and spectroscopy portfolio as compared to 2021.

The academia and government market revenue growth was relatively flat with strength in our liquid chromatography and gas chromatography mass spectrometry businesses offset by other product categories when compared to 2021.

Looking forward, despite the challenging macroeconomic environment, our customers' capital expenditure pressures and geopolitical uncertainties, we are optimistic about our long-term growth opportunities in the life sciences and applied markets as our broad portfolio of products and solutions are well suited to address customer needs.

While we anticipate continued volatility in our markets, we expect long term growth across most end markets as we continue to invest in expanding and improving our applications and solutions portfolio.

Geographically, revenue decreased 1 percent in the Americas with no currency impact, increased 1 percent in Europe with a 1 percentage point unfavorable currency impact and decreased 7 percent in Asia Pacific with a 3 percentage point unfavorable currency impact.

The revenue decline in the Americas was driven by weakness in our liquid chromatography mass spectrometry and liquid chromatography businesses partially offset by strength in the consumables business when compared to 2022.

The revenue growth in Europe was driven by strength in our liquid chromatography business partially offset by weakness in the liquid chromatography mass spectrometry business when compared to 2022.

The revenue decline in Asia Pacific was driven by China with weakness in our liquid chromatography, gas chromatography and gas chromatography mass spectrometry businesses partially offset by strength in the spectroscopy business when compared to 2022.

End market revenue performance in 2023 was mixed as the pharmaceutical and diagnostics and clinical markets declined significantly, environmental and forensics market declined modestly, chemicals and advance materials and food markets remained relatively flat while the academia and government market delivered strong growth when compared to 2022.

Revenue decline in the pharmaceutical market was driven by weakness in our liquid chromatography, liquid chromatography mass spectrometry and gas chromatography businesses when compared to 2022.

Revenue decline in the diagnostics and clinical market was driven by weakness in our liquid chromatography mass spectrometry business partially offset by strength in our consumables business when compared to 2022.

Revenue decline in the environmental and forensics market was driven by weakness in our gas chromatography and spectroscopy businesses partially offset by strength in our liquid chromatography business when compared to 2022.

Revenue growth in the academia and government end market was mainly driven by strength in the liquid chromatography, spectroscopy, gas chromatography and liquid chromatography mass spectrometry businesses when compared to 2022.

Looking forward, we anticipate continued and steady market recovery and are optimistic about our long-term growth opportunities in the life sciences and applied markets as our broad portfolio of products and solutions are well suited to address customer needs.

We will continue to invest in expanding and improving our applications and solutions portfolio.

Gross Margin and Operating Margin

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(in millions, except margin data)

Total gross margin 60.2 % 60.2 % 60.2 % — —

Total gross margin 59.7 % 60.3 % 60.1 % (1) ppt.

Research and development $ 255 $ 262 $ 257 (3)% 2%

Selling, general and administrative $ 788 $ 805 $ 829 (2)% (3)%

Operating margin 28.9 % 29.6 % 27.8 % (1) ppt.

Operating margin 27.3 % 29.9 % 30.2 % (3) ppts.

Income from operations $ 877 $ 1,049 $ 1,097 (16)% (4)%

Gross margin decreased 1 percentage point in 2024 compared to 2023.

Gross margin was impacted by lower sales volume, unfavorable impact of currency movements and higher warranty costs which were partially offset by lower salary expense related to workforce reduction activities and shipping costs when compared to 2023.

Gross margin was flat in 2023 compared to 2022.

Gross margin was impacted by lower revenue, the unfavorable impact of currency movements, higher wages and warranty costs which were fully offset by targeted price increases, lower variable pay, logistics and materials cost.

Gross margin was flat in 2022 compared to 2021.

Gross margin was impacted by higher materials and logistics costs which were fully offset by price increases, higher sales volume and favorable cash flow hedging gains.

Research and development expenses decreased 3 percent in 2024 when compared to 2023.

Research and development expenses decreased due to lower salary expense related to workforce reduction activities, lower consumables costs and depreciation expenses partially offset by the unfavorable impact of currency movements when compared to 2023.

Research and development expenses increased 2 percent in 2023 when compared to 2022.

Research and development expenses increased due to higher wages and program investments in our software and informatics business partially offset by lower variable pay.

Research and development expenses increased 8 percent in 2022 when compared to 2021.

Research and development expenses increased due to higher wages and program investments in our mass spectrometry and cell analysis businesses.

Selling, general and administrative expenses decreased 2 percent in 2024 compared to 2023.

Selling, general and administrative expenses decreased due to lower variable pay, sales commissions, and marketing expenses, and the favorable impact of currency movements partially offset by higher wages when compared to 2022.

Selling, general and administrative expenses increased 2 percent in 2022 compared to 2021.

Selling, general and administrative expenses increased due to higher wages and marketing expenses partially offset by lower sales commissions, variable pay and the favorable impact of currency movements when compared to 2021.

Operating margin decreased 1 percentage point in 2023 compared to 2022.

Operating margin was impacted by lower sales volume and the unfavorable impact of currency movements partially offset by lower variable pay and logistics costs.

Operating margin increased 2 percentage points in 2022 compared to 2021.

Operating margin was impacted by higher sales volume and favorable currency movements on expenses partially offset by higher wages, material and logistics costs.

Selling, general and administrative expenses decreased due to lower salary expense related to workforce reduction activities, variable pay and

marketing costs when compared to 2023.

Selling, general and administrative expenses decreased 3 percent in 2023 compared to 2022.

Selling, general and administrative expenses decreased due to lower variable pay, sales commissions, and marketing expenses, and the favorable impact of currency movements when compared to 2022.

Operating margin decreased 3 percentage points in 2024 compared to 2023.

Operating margin was impacted by lower sales volume and the unfavorable impact of currency movements partially offset by lower salary expense related to workforce reduction activities, and shipping costs when compared to 2023.

Operating margin was flat in 2023 compared to 2022.

Operating margin was impacted by lower sales volume and the unfavorable impact of currency movements offset by lower variable pay and logistics costs.

Income from Operations

Income from operations in 2024 decreased by $172 million or 16 percent when compared to 2023 on a revenue decrease of $295 million.

The decrease in income from operations was primarily due to lower sales volume and unfavorable currency impact when compared to 2022.

Income from operations in 2022 increased by $169 million or 17 percent when compared to 2021 on a revenue increase of $344 million.

The increase in income from operations was primarily due to higher sales volume.

Income from operations in 2023 decreased by $48 million or 4 percent when compared to 2022 on a revenue decrease of $120 million.

Diagnostics and Genomics

Our diagnostics and genomics business includes the genomics, nucleic acid contract manufacturing and research and development, pathology, companion diagnostics, reagent partnership and biomolecular analysis businesses.

Our diagnostics and genomics business is comprised of six areas of activity providing active pharmaceutical ingredients ("APIs") for oligo-based therapeutics as well as solutions that include reagents, instruments, software and consumables, which enable customers in the clinical and life sciences research areas to interrogate samples at the cellular and molecular level.

First, our genomics business includes arrays for DNA mutation detection, genotyping, gene copy number determination, identification of gene rearrangements, DNA methylation profiling, gene expression profiling, as well as next generation sequencing ("NGS") target enrichment and genetic data management and interpretation support software.

This business also includes solutions that enable clinical labs to identify DNA variants associated with genetic disease and help direct cancer therapy.

Second, our nucleic acid solutions business is a contract and development manufacturing organization that provides services related to and the production of synthesized oligonucleotides under pharmaceutical good manufacturing practices ("GMP") conditions for use as API in a class of drugs that utilize nucleic acid molecules for disease therapy.

Our diagnostics and genomics business includes the cell analysis, advanced manufacturing partnerships contract manufacturing and research and development, pathology, companion diagnostics, reagent partnership, genomics and biomolecular analysis businesses.

Our diagnostics and genomics business is comprised of seven areas of activity providing active pharmaceutical ingredients ("APIs") for oligo-based therapeutics as well as solutions that include reagents, instruments, software and consumables, which enable customers in the clinical and life sciences research areas to interrogate samples at the cellular and molecular level.

First, our cell analysis business includes instruments, reagents, software, and labware associated with unique live-cell analysis platforms in addition to mainstream flow cytometers, plate-readers, and plate washers/dispensers which are used across a broad range of applications.

Second, our advanced manufacturing partnerships business is a contract and development manufacturing organization that provides services related to and the production of synthesized oligonucleotides under pharmaceutical good manufacturing practices ("GMP") conditions for use as API in a class of drugs that utilize nucleic acid molecules for disease therapy.

Together, our BIOVECTRA and nucleic acid solutions businesses offer a broad range of contract and development manufacturing services to our customers.

They provide clinical-to-commercial scale production capabilities focused mainly on mRNA manufacturing.

Third, our pathology solutions business is focused on product offerings for cancer diagnostics and anatomic pathology workflows.

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Fifth, the reagent partnership business provides clinical flow cytometry reagents for routine cancer diagnostics.

This business also provides bulk antibodies as raw materials and associated assay development services to IVD manufacturers, biotechnology and pharmaceutical companies.

This business also provides bulk antibodies as raw materials and associated assay development services to in vitro diagnostics ("IVD") manufacturers, biotechnology and pharmaceutical companies.

Sixth, our genomics business includes arrays and next generation sequencing ("NGS").

This business also includes solutions that enable clinical labs to identify DNA variants associated with genetic disease and help direct cancer therapy.

Finally, our biomolecular analysis business provides complete workflow solutions, including instruments, consumables and software, for quality control analysis of nucleic acid samples.

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Net revenue $ 1,651 $ 1,755 $ 1,766 (6)% (1)%

Diagnostics and genomics business revenue increased 1 percent in 2023 compared to 2022.

Foreign currency movements for 2023 had an overall unfavorable impact on revenue growth of 2 percentage points when compared to the same period last year.

Geographically, revenue increased 4 percent in the Americas with no currency impact, increased 2 percent in Europe with a 1 percentage point unfavorable currency impact and decreased 9 percent in Asia Pacific with a 6 percentage point unfavorable currency impact.

The increase in the Americas was driven by strong growth in our nucleic acid solutions and reagent partnership businesses and growth in our pathology business, which was partially offset by a decline in our biomolecular analysis and genomics businesses.

The increase in Europe was driven by growth in our pathology and reagent partnership businesses and was somewhat offset by a decline in our biomolecular analysis business.

The revenue decline in Asia Pacific was driven by our biomolecular analysis and genomics businesses and an overall weakness in China.

In 2023, revenue performance in the pharmaceutical market was led by strong revenue growth in our nucleic acid solutions business.

We also saw moderate revenue growth in diagnostics and clinical markets led by our pathology and reagent partnership businesses when compared to 2022.

Revenue in the academia and government markets declined due to softness in our biomolecular analysis and genomics businesses.

Diagnostics and genomics business revenue in 2022 increased 7 percent compared to 2021.

Diagnostics and genomics business revenue decreased 6 percent in 2024 compared to 2023.

Foreign currency movements for 2024 had no overall impact on revenue growth when compared to the same period last year.

Geographically, revenue decreased 10 percent in the Americas with no currency impact, increased 4 percent in Europe with a 1 percentage point favorable currency impact and decreased 11 percent in Asia Pacific with a 2 percentage point unfavorable currency impact.

revenue decline in the Americas was primarily driven by our cell analysis, genomics and nucleic acid solutions businesses.

Revenue increased in Europe due to strong performance in our pathology, genomics and biomolecular analysis businesses partially offset by a decline in our cell analysis business.

The revenue decline in Asia Pacific was driven by our cell analysis business partially offset by increased revenue in our pathology business.

In 2024, revenue performance in the pharmaceutical market declined significantly due to our cell analysis business which was impacted by the continuing slow availability of the customer capital budgets and by unfavorable mix in our nucleic acid solutions business when compared to the same period last year.

We also saw a modest revenue increase in the diagnostics and clinical markets primarily from our pathology business which was partially offset by a decline in our genomics business.

Revenue in the academia and government markets declined due to our cell analysis business.

Diagnostics and genomics business revenue in 2023 decreased 1 percent compared to 2022.

Foreign currency movements had an overall unfavorable impact on revenue growth of 2 percentage points in 2023 when compared to 2022.

Geographically, revenue increased 13 percent in the Americas with no currency impact, decreased 1 percent in Europe with a 7 percentage point unfavorable currency impact and increased 6 percent in Asia Pacific with a 7 percentage point unfavorable currency impact.

The increase in the Americas was driven by strong performance in our nucleic acid solutions, biomolecular analysis, reagent partnership and genomics portfolios.

In Europe, the 7 percentage point unfavorable impact of currency on revenue was partially offset by revenue growth in our reagent partnership, pathology and companion diagnostics businesses.

Revenue growth in Asia Pacific was primarily driven by an increase in China as well as a strong performance across our entire portfolio.

In 2022, revenue performance in the pharmaceutical market was led by strong revenue growth in our nucleic acid solutions and moderate revenue growth in our biomolecular analysis and genomics businesses.

We also saw moderate revenue growth in diagnostics and clinical and academia and government markets led by our biomolecular analysis, pathology, genomics and reagent partnership businesses when compared to 2021.

Looking forward, despite the challenging macroeconomic environment, geopolitical uncertainties and the short-term unfavorable market conditions affecting our genomics business, we are optimistic about our long-term growth opportunities in our end markets and continue to invest in expanding and improving our applications and solutions portfolio.

Geographically, revenue decreased 1 percent in the Americas with no currency impact, increased 3 percent in Europe with a 1 percentage point unfavorable currency impact and decreased 6 percent in Asia Pacific with a 5 percentage point unfavorable currency impact.

The decrease in the Americas was driven by a decline in our genomics and cell analysis businesses which was partially offset by strong growth in our nucleic acid solutions, reagent partnership and pathology businesses.

The increase in Europe was driven by growth in our pathology, reagent partnership and cell analysis businesses.

The revenue decline in Asia Pacific was driven by our biomolecular analysis and genomics businesses and an overall weakness in China.

In 2023, the decline in revenue in the pharmaceutical market was led by our cell analysis, biomolecular analysis and genomics businesses which was partially offset by strong revenue growth in our nucleic acid solutions business.

We saw moderate revenue growth in the diagnostics and clinical markets led by our pathology, reagent partnership and cell analysis businesses when compared to 2022.

Revenue in the academia and government markets declined due to softness in our cell analysis and genomics businesses.

Looking forward, despite the challenging market conditions, we are optimistic about our long-term growth opportunities in our end markets and continue to invest in expanding and improving our applications and solutions portfolio.

We remain positive about our growth in our end markets as our product portfolio around OMNIS and PD-L1 assays continues to gain strength with our customers in clinical oncology applications, and our next generation sequencing related solutions continue to be adopted.

Market demand in the nucleic acid solutions business related to therapeutic oligo programs continues, and with the expansion of our nucleic acid solutions production facility in Frederick, Colorado, we are well positioned to serve more of the market demand.

We will continue to invest in research and development and seek to expand our position in developing countries and emerging markets.

Market demand in the advanced manufacturing partnerships business related to therapeutic oligo programs continues, and we are well positioned to serve more of the market demand.

We will also continue to invest in research and development and seek to expand our position in developing countries and emerging markets.

Gross Margin and Operating Margin

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(in millions, except margin data)

Total gross margin 51.8 % 53.5 % 52.8 % (2) ppts.

Total gross margin 52.4 % 53.4 % 55.0 % (1) ppt.

Research and development $ 161 $ 177 $ 174 (9)% 2%

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Income from operations $ 320 $ 363 $ 390 (12)% (7)%

Gross margin decreased 1 percentage point in 2024 when compared to 2023.

Gross margin was impacted by lower sales volume and higher infrastructure costs which were partially offset by lower salary expense related to workforce reduction activities and expenses attributed to business exit activities.

Gross margin decreased 2 percentage points in 2023 when compared to 2022.

Gross margin decreased due to volume decline in our genomics business resulting in unfavorable business mix.

Gross margin decreased due to volume decline in our cell analysis and genomics businesses resulting in unfavorable business mix.

Gross margin was also impacted by the unfavorable impact of currency movements, higher wages and infrastructure costs partially offset by lower variable pay.

Gross margin increased 1 percentage point in 2022 when compared to 2021.

Gross margin increased due to higher sales volume offsetting the higher wages and logistics costs.

Research and development expenses decreased 9 percent in 2024 when compared to 2023.

Research and development expenses decreased primarily due to lower expenses attributed to business exit activities and salary expenses related to workforce reduction activities.

Research and development expenses increased 2 percent in 2023 when compared to 2022.

Research and development expenses increased due to higher wages, additional expenses related to a recent acquisition and higher infrastructure costs.

Research and development expenses increased 8 percent in 2022 when compared to 2021.

Research and development expenses increased primarily due to higher wages and additional expenses related to the Resolution Bioscience acquisition and higher program investments related to satisfying regulatory requirements such as the EU IVDR guidelines.

Selling, general and administrative expenses decreased 3 percent in 2024 when compared to 2023.

Selling, general and administrative expenses decreased due to lower expenses attributed to business exit activities and lower salary expense related to workforce reduction activities partially offset by higher infrastructure costs.

Selling, general and administrative expenses decreased 3 percent in 2023 when compared to 2022.

Selling, general and administrative expenses decreased due to lower variable pay, the favorable impact of currency movements and lower infrastructure costs.

Selling, general and administrative expenses increased 7 percent in 2022 when compared to 2021.

Selling general and administrative expenses increased due to higher wages and additional expenses related to the Resolution Bioscience acquisition and inflationary pressures partially offset by lower commissions and favorable currency movements.

Operating margin decreased 1 percentage point in 2024 when compared to 2023.

Operating margin decreased due to lower revenue, higher infrastructure costs and higher wages partially offset by lower salary expense related to workforce reduction activities and expenses attributed to business exit activities.

Operating margin decreased 1 percentage point in 2023 when compared to 2022.

The decrease in operating margin resulted from lower gross margins, the unfavorable impact of currency movements and additional costs related to a recent acquisition partially offset by lower variable pay.

Operating margin increased 1 percentage point in 2022 when compared to 2021.

The increase in operating margin resulted from higher revenue growth and gross margins, which offset the increase in wages, inflationary pressures, logistics costs and program investments.

Income from Operations

Income from operations in 2023 decreased by $5 million or 2 percent when compared to 2022 on a revenue increase of $20 million.

Income from operations in 2022 increased by $28 million or 10 percent when compared to 2021 on a revenue increase of $93 million.

Income from operations increased due to higher revenue and gross margin improvement partially offset by higher wages, logistics costs and program investments.

Income from operations in 2024 decreased by $43 million or 12 percent when compared to 2023 on a revenue decrease of $104 million.

Income from operations in 2023 decreased by $27 million or 7 percent when compared to 2022 on a revenue decrease of $11 million.

Agilent CrossLab

The Agilent CrossLab business spans the entire lab with its extensive services portfolio, which is designed to improve customer outcomes.

The majority of the portfolio is vendor neutral, meaning we can serve and supply customers regardless of their instrument purchase choices.

The Agilent CrossLab business spans the entire lab with its extensive services portfolio, which is designed to improve customer outcomes and represents a broad range of offerings designed to serve customer needs across end-markets and regardless of instrument manufacturer.

The services portfolio includes repairs, parts, maintenance, installations, training, compliance support, software as a service, asset management, consulting and various other custom services to support the customers' laboratory operations.

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Agilent CrossLab business revenue increased 5 percent in 2024 when compared to 2023.

Foreign currency movements for 2023 had an overall unfavorable impact on revenue growth of 2 percentage points when compared to 2022.

Geographically, revenue increased 12 percent in the Americas with a 1 percentage point favorable currency impact, increased 10 percent in Europe with no currency impact and increased 3 percent in Asia Pacific with a 5 percentage point unfavorable currency impact.

During the year ended October 31, 2023, revenue growth in all three regions was driven by contract repair services, per-incident repair services and consultative services, with installation related service in China partially offsetting the overall growth in Asia Pacific.

Foreign currency movements for 2024 had no overall impact on revenue growth when compared to 2023.

Geographically, revenue increased 6 percent in the Americas with no currency impact, increased 8 percent in Europe with a 2 percentage point favorable currency impact and was flat in Asia Pacific with a 2 percentage point unfavorable currency impact.

During the year ended October 31, 2024 , revenue in all three regions reflected consistent high demand for repair and maintenance services across the entire portfolio.

In Americas and Europe, revenue growth was partially offset by weakness in installation revenue.

In the Asia Pacific region the weakness in installation revenue offset the revenue growth seen from repair and maintenance services.

Agilent CrossLab business revenue increased 8 percent in 2023 when compared to 2022.

Foreign currency movements had an overall unfavorable impact on revenue growth of 2 percentage points in 2023 when compared to 2022.

Geographically, revenue increased 11 percent in the Americas with no currency impact, increased 1 percent in Europe with a 9 percentage point unfavorable currency impact and increased 7 percent in Asia Pacific with a 5 percentage point unfavorable currency impact.

During the year ended October 31, 2022, revenue growth in all three regions was driven by contract repair services, compliance services, installation services and consultative services.

In 2024, we saw strong revenue growth in the environmental and forensics, diagnostics and clinical and pharmaceutical markets, mainly driven by our spectroscopy, gas chromatography and liquid chromatography businesses, when compared to the same period last year.

In 2023, we saw strong revenue growth in the pharmaceutical, academia and government, diagnostics and clinical and chemical and advanced materials markets, mainly driven by our spectroscopy, liquid and gas chromatography mass spectrometry and liquid chromatography businesses when compared to the same period the previous year.

Looking forward, Agilent CrossLab services are well positioned to continue their success in our key end markets by supporting a growing installed base of instruments.

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Gross margin increased 2 percentage points in 2024 when compared to 2023.

Gross margin was impacted by targeted price increases and well-controlled variable service delivery costs, offset by higher wages.

Gross margin increased 2 percentage points in 2023 when compared to 2022.

Gross margin was impacted by higher sales volume, targeted price increases and lower variable pay that improved margins, which were partially offset by higher wages, service delivery costs for logistics and parts and the unfavorable impact of currency movements.

Gross margin increased 1 percentage point in 2022 when compared to 2021.

Gross margin was impacted by higher sales volume and targeted price increases that improved margins, which were partially offset by higher wages and service delivery costs for logistics and parts.

Research and development expenses decreased 1 percent in 2024 when compared to 2023.

Research and development expenses decreased due to lower salary expense related to workforce reduction activities.

Research and development expenses increased 2 percent in 2023 when compared to 2022.

Research and development expenses increased due to higher wages, partially offset by lower variable pay and the favorable impact of currency movements.

Research and development expenses decreased 5 percent in 2022 when compared to 2021.

Research and development expenses decreased mainly due to cost efficiencies in certain research and development projects which led to lower expenditures.

Selling, general and administrative expenses increased 2 percent in 2024 when compared to 2023.

Selling, general and administrative expenses increased due to higher commissions partially offset by lower travel expenses and other discretionary spending and salary expense related to workforce reduction activities.

Selling, general and administrative expenses decreased 4 percent in 2023 when compared to 2022.

The decrease was primarily due to lower variable pay and a favorable impact of currency movements partially offset by higher wages.

Selling, general and administrative expenses increased 3 percent in 2022 when compared to 2021.

Selling, general and administrative expenses increased due to higher wages, share-based compensation expense and inflationary pressures mostly offset by lower commissions, variable pay, and favorable impact of currency movements.

Operating margin increased 2 percentage points in 2024 when compared to 2023.

Operating margin increased mostly due to higher sales volume, targeted price increases and lower variable pay that improved margins in addition to a reduction in expenses.

Operating margin i ncreased mostly driven by targeted price increases, lower service delivery costs and salary expense related to workforce reduction activities.

Operating margin increased 4 percentage points in 2023 when compared to 2022.

Operating margin increased mostly driven by higher sales volume with improved gross margins and higher cash flow hedging gains.

Operating margin increased mostly due to higher sales volume, targeted price increases and lower variable pay that improved margins in addition to a reduction in expenses.

Income from Operations

Income from operations in 2024 increased by $61 million or 13 percent when compared to 2023 on a revenue increase of $76 million.

Income from operations increased primarily due to higher sales volume and targeted price increases.

Income from operations in 2023 increased by $93 million or 25 percent when compared to 2022 on a revenue increase of $116 million.

Income from operations increased primarily due to higher sales volume.

Financial Condition

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Net Cash Provided by Operating Activities

Net cash provided by operating activities was $1,772 million in 2023 as compared to $1,312 million provided in 2022 and $1,485 million provided in 2021.

Net cash provided by operating activities was $1,751 million in 2024 compared to net cash provided of $1,772 million in 2023 and net cash provided of $1,312 million in 2022.

Net cash paid for income taxes was approximately $314 million in 2024 compared to income taxes paid of $199 million in 2023 and $279 million, in 2022.

For the years ended October 31, 2023, 2022 and 2021, other assets and liabilities provided cash of $47 million, used cash of $8 million and $14 million, respectively.

In 2023, accounts receivable provided cash of $132 million, compared to cash used of $321 million in 2022, and $128 million in 2021.

For the years ended October 31, 2024, 2023 and 2022, other assets and liabilities used cash of $49 million, provided cash of $47 million and used cash of $8 million, respectively.

In 2024, accounts receivable provided cash of $7 million, compared to cash provided of $132 million in 2023, and cash used of $321 million in 2022.

Days' sales outstanding as of October 31, were 70 days in 2024, 69 days in 2023 and 68 days in 2022.

In 2024, the decrease in cash provided by accounts receivable was primarily due to lower collectible sales compared to 2023.

In 2023 cash provided in accounts receivable was driven by stronger collections compared to 2022.

The increase in cash used in accounts receivable in 2022 compared to 2021 related to the transitory impacts of shutdowns in China.

In addition, we had a change in the mix of unbilled receivables primarily due to our nucleic acid solutions business, which has a longer cash conversion cycle.

The change in accounts payable used cash of $171 million in 2023, provided cash of $121 million in 2022 and $64 million in 2021.

The change in accounts payable in 2023 compared to 2022 was due to less expenditures for direct materials as we optimized our inventory level in 2023.

Cash used in inventory was $33 million in 2023, $248 million in 2022 and $136 million in 2021.

Inventory days on-hand increased to 120 days in 2023 compared to 112 days in 2022 and increased compared to 98 days in 2021.

The employee compensation and benefits liability used cash of $91 million for the year ended October 31, 2023, compared to cash used of $22 million in 2022 and cash provided of $112 million in 2021.

The change in accounts payable provided cash of $103 million in 2024, used cash of $171 million in 2023 and provided cash of $121 million in 2022.

In 2024 the change was mainly due to less expenditures for direct materials as we continued optimizing our inventory levels and to timing of payments.

Cash provided by inventory was $34 million in 2024 compared to cash used of $33 million in 2023 and cash used of $248 million in 2022.

Inventory days on-hand decreased to 111 days in 2024 compared to 120 days in 2023 and 112 days in 2022.

The employee compensation and benefits liability used cash of $12 million in 2024 compared to cash used of $91 million in 2023 and cash used of $22 million in 2022.

In 2024, the change was largely due to a decrease in variable and incentive pay compared to 2023.

In 2023, the change was largely due to a lower accrual for variable pay compared to 2022.

In 2022, the change was primarily due to higher variable and incentive payments and a reduction in the employee vacation liability compared to 2021.

We paid approximately $105 million in 2024 under our variable and incentive pay programs compared to $185 million in 2023 and $201 million in 2022.

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Net Cash Used in Investing Activities

Net cash used in investing activities in 2023 was $310 million and in 2022 was $338 million as compared to net cash used of $749 million in 2021.

Net cash used in investing activities was $1,258 million in 2024 compared to net cash used of $310 million in 2023 and net cash used of $338 million in 2022.

Investments in property, plant and equipment were $378 million in 2024, $298 million in 2023 and $291 million in 2022.

Our anticipated capital expenditures for fiscal year 2025 will be approximately $450 million.

These continued investments in property plant and equipment are primarily due to the planned expansion of our nucleic acid solutions production facility in Frederick, Colorado.

In January 2023, we announced that we will be investing approximately $725 million to further expand our manufacturing capacity for production of nucleic acid based therapeutics in Frederick, Colorado.

Some of our investment may qualify for reimbursement incentives, which will not fully be known until the expansion is substantially complete.

These continued investments in property plant and equipment are primarily due to the planned expansion of our manufacturing capacity for production of nucleic acid based therapeutics in Frederick, Colorado.

Some of our investment may be eligible to qualify for reimbursement incentives, which will not fully be known until the expansion is substantially complete.

In 2024, we invested $862 million primarily for our acquisition of BIOVECTRA and one other acquisition compared to $51 million for two acquisitions in 2023 and $52 million for our acquisition of Polymer Standards Service and advanced artificial intelligence technology in 2022.

In 2023, proceeds from the divestiture of our Resolution Bioscience business were $50 million.

In 2023, we invested $51 million for two acquisitions compared to $52 million for our acquisition of Polymer Standards Service and advanced artificial intelligence technology in 2022 and $547 million primarily related to the acquisition of Resolution Bioscience in 2021.

Net Cash Used in Financing Activities

Net cash used in financing activities in 2023 was $930 million compared to $1,372 million in 2022 and $696 million in 2021.

Net cash used in financing activities was $752 million in 2024 compared to net cash used of $930 million in 2023 and net cash used of $1,372 million in 2022.

Net cash from financing activities consisted primarily of cash flows associated with the issuances and repurchases of common stock, payments of cash dividends, borrowings and repayments under credit facilities and commercial paper, issuances and repayments of long term debt and payments of contingent consideration.

Treasury Stock Repurchases.

In 2024, we repurchased and retired 8.4 million shares for $1,150 million, excluding excise tax liability of approximately $10 million compared to repurchases in 2023 of 4.6 million shares for $575 million, excluding excise tax liability of approximately $3 million which was paid in 2024 and 8.4 million shares for $1,139 million, in 2022.

The activity of our repurchases and remaining authorization by repurchase program follows:

2024 2023 2022 Remaining

Shares Cost Shares Cost Shares Cost Authorization

Repurchase Program (in millions)

2021 Repurchase program — $ — 0.7 $ 99 8.4 $ 1,139 $ —

During the year ended October 31, 2021, we repurchased and retired 3.1 million shares for $365 million under this authorization.

Effective February 18, 2021, the 2019 repurchase program was terminated and replaced by the 2021 repurchase program.

The remaining authorization under the 2019 repurchase plan of $193 million expired on February 18, 2021.

2023 Repurchase program 8.4 1,150 3.9 476 — — $ 374

During the year ended October 31, 2021, we repurchased and retired 3.0 million shares for $423 million under this authorization.

During the year ended October 31, 2022, we repurchased and retired 8.4 million shares for $1,139 million under this authorization.

During the year ended October 31, 2023 we repurchased and retired 661,739 shares for $99 million, excluding excise taxes, under this authorization.

On March 1, 2023, the 2021 repurchase program was terminated and the remaining authorization of $339 million expired.

2024 Repurchase program — — — — — — $ 2,000

On January 9, 2023, we announced that our board of directors had approved a share repurchase program (the "2023 repurchase program") designed, among other things, to reduce or eliminate dilution resulting from issuance of stock under the company's employee equity incentive programs.

Total 8.4 $ 1,150 4.6 $ 575 8.4 $ 1,139

The 2024 repurchase program authorizes the purchase of up to $2.0 billion, excluding excise taxes, of our common stock at the company's discretion and has no fixed termination date.

The 2024 repurchase program does not require the company to acquire a specific number of shares and may be suspended, amended or discontinued at any time.

The 2023 repurchase program commenced on March 1, 2023, and also terminated and replaced the 2021 repurchase program.

During the year ended October 31, 2023 we repurchased and retired 3.9 million shares for $476 million, excluding excise taxes, under this authorization.

As of October 31, 2023, we had remaining authorization to repurchase up to approximately $1,524 million of our common stock under the 2023 repurchase program.

The Inflation Reduction Act of 2022, which was enacted into law on August 16, 2022, imposed a nondeductible 1% excise tax on the net value of certain stock repurchases made after December 31, 2022.

The 2024 repurchase program became effective on August 1, 2024 and will commence upon the termination of our 2023 repurchase program.

For the years ended October 31, 2024, 2023 and 2022, cash dividends of $274 million, $265 million and $250 million were paid on the company's outstanding common stock, respectively.

On November 15, 2023, we declared a quarterly dividend of $0.236 per share of common stock, or approximately $69 million which will be paid on January 24, 2024 to shareholders of record as of the close of business on January 2, 2024.

On November 20, 2024, we declared a quarterly dividend of $0.248 per share of common stock, or approximately $71 million which will be paid on January 22, 2025 to shareholders of record as of the close of business on December 31, 2024.

The timing and amounts of any future dividends are subject to determination and approval by our board of directors.

Contingent Consideration Payment

During the year ended October 31, 2023, we paid a total of $72 million in contingent consideration payments, of which $4 million is included as an outflow in cash from operations.

We paid $65 million related to the achievement of a certain technical milestone associated with our acquisition of Resolution Bioscience and $7 million related to other acquisitions.

Short-term Debt

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On June 7, 2023, we entered into a new credit agreement with a group of financial institutions which provides for a $1.5 billion five-year unsecured credit facility that will expire on June 7, 2028, and an incremental revolving credit facility in an aggregate amount of up to $750 million.

The credit facility replaced the existing credit facility which was terminated on the closing date of the new facility.

During the year ended October 31, 2023, we borrowed and repaid $360 million under the credit facility.

As of both October 31, 2023 and 2022, we had no borrowings outstanding under both the credit facility and the incremental revolving credit facility.

We were in compliance with the covenants for the credit facility during the year ended October 31, 2023.

During 2024, we made no borrowings or repayments under these credit facilities compared to $360 million borrowed and repaid in 2023 and no borrowings or repayments in 2022.

On June 2, 2023, we entered into an Uncommitted Money Market Line Credit agreement with Societe Generale which provides for an aggregate borrowing capacity of $300 million.

The credit facility is an uncommitted short-term cash advance

facility where each request must be at least $1 million.

The credit facility is an uncommitted short-term cash advance facility where each request must be at least $1 million.

The interest rate is set by the lender at the time of the borrowing and is fixed for the duration of the advance.

During the year ended October 31, 2023, we borrowed and repaid $61 million.

During 2024, we borrowed and repaid $215 million under this credit facility compared to $61 million borrowed and repaid in 2023.

As of October 31, 2024, we had no borrowings outstanding under the credit facility.

We were in compliance with the covenants for the credit facilities during the year ended October 31, 2024.

Commercial Paper.

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The proceeds from issuances under the program may be used for general corporate purposes.

During the year ended October 31, 2023, we borrowed $1.67 billion and repaid $1.70 billion.

As of October 31, 2023 , we had no borrowings outstanding under our U.S.

commercial paper program.

As of October 31, 2022, w e had borrowings of $35 million outstanding under the U.S.

During 2024, we borrowed $1.19 billion and repaid $1.15 billion compared to $1.67 billion borrowed and $1.70 billion repaid in 2023, and $1.29 billion borrowed and $1.26 billion repaid in 2022.

As of October 31, 2024, we had $40 million borrowings outstanding under our U.S.

commercial paper program and had a weighted average annual interest rate of 4.92 percent.

Other Loans .

In September 2024, we completed the BIOVECTRA acquisition and assumed two interest-free loans from the Strategic Innovation Fund ("SIF") in the amount of $20 million with $2 million recorded at fair value in short-term debt.

The loans are repayable in quarterly and yearly installments at a weighted average imputed interest rate of 4.7 percent.

In addition, we assumed two interest-free loans with the Atlantic Canada Opportunities Agency (“ACOA”) in the amount of $4 million with $3 million recorded at fair value in short-term debt.

The loans are repayable in monthly installments at a weighted average imputed interest rate of 4.5 percent.

Long-term Debt

In 2024, proceeds from the issuance of long-term debt of $1,197 million related to the issuance of our 2027 and 2034 senior notes.

Repayments of long-term debt of $600 million related to the full payment of the outstanding principal amount of our term loan.

In 2022, we used the proceeds of $600 million from the term loan facility and repaid the $600 million outstanding aggregate principal amount of our 3.875% 2023 senior notes.

The total redemption price of approximately $609 million was computed in accordance with the terms of the 2023 senior notes as the present value of the remaining scheduled payments of principal and unpaid interest on the notes being redeemed.

In addition, $7 million of accrued interest, up to but not including the applicable redemption date, was paid.

Term Loan Facility.

On April 15, 2022, we entered into a term loan agreement with a group of financial institutions, which provided for a $600 million delayed draw term loan that will mature on April 15, 2025.

As of October 31, 2023 and 2022, we had $600 million borrowings outstanding under the term loan facility and had weighted average interest rates of 6.22 percent and 3.98 percent, respectively.

Loans under the term loan agreement bear interest, at our option, either at:

(i) the alternate base rate, as defined in the term loan agreement, plus the applicable margin for such loans or (ii) adjusted term SOFR, as defined in the term loan agreement, plus the applicable margin for such loans.

The term loan agreement contains customary representations and warranties as well as customary affirmative and negative covenants.

We were in compliance with the covenants for the term loan during the year ended October 31, 2023.

On May 4, 2022, we used the proceeds from the term loan facility and repaid the $600 million outstanding aggregate principal amount of our 3.875% 2023 senior notes.

In May 2022, we recorded a loss on extinguishment of debt of $9 million in other income (expense), net in the consolidated statement of operations.

In addition, $7 million of accrued interest, up to but not including the applicable redemption date, was paid.

O n December 14, 2023, we prepaid $120 million of our outstanding $600 million term loan.

2026 Senior Notes.

On September 22, 2016, the company issued aggregate principal amount of $300 million in senior notes ("2026 senior notes").

The 2026 senior notes were issued at 99.624% of their principal amount.

The notes will mature on September 22, 2026 and bear interest at a fixed rate of 3.05% per annum.

The interest is payable semi-annually on March 22nd and September 22nd of each year and payments commenced March 22, 2017.

In February 2016, Agilent executed three forward-starting pay fixed/receive variable interest rate swaps for the notional amount of $300 million in connection with future interest payments to be made on our 2026 senior notes issued on September 15, 2016.

The swap arrangements were terminated on September 15, 2016 with a payment of $10 million, and we recognized this as a deferred loss in accumulated other comprehensive income (loss) which is being amortized to interest expense over the life of the 2026 senior notes.

The remaining loss to be amortized related to the interest rate swap agreements at October 31, 2023 was $(3) million.

2029 Senior Notes.

On September 16, 2019, the company issued an aggregate principal amount of $500 million in senior notes ("2029 senior notes").

The 2029 senior notes were issued at 99.316% of their principal amount.

The notes will mature on September 15, 2029, and bear interest at a fixed rate of 2.75% per annum.

The interest is payable semi-annually on March 15th and September 15th of each year and payments commenced on March 15, 2020.

In August 2019, Agilent executed treasury lock agreements for $250 million in connection with future interest payments to be made on our 2029 senior notes issued on September 16, 2019.

We designated the treasury lock as a cash flow hedge.

The treasury lock contracts were terminated on September 6, 2019 and we recognized a deferred loss of $6 million in accumulated other comprehensive income (loss) which is being amortized to interest expense over the life of the 2029 senior notes.

The remaining loss to be amortized related to the treasury lock agreements at October 31, 2023 was $(3) million.

2030 Senior Notes.

On June 4, 2020, we issued an aggregate principal amount of $500 million in senior notes ("2030 senior notes").

The 2030 senior notes were issued at 99.812% of their principal amount.

The 2030 senior notes will mature on

June 4, 2030, and bear interest at a fixed rate of 2.10% per annum.

The interest is payable semi-annually on June 4th and December 4th of each year and payments commenced on December 4, 2020.

As of October 31, 2024, the term loan facility was terminated.

In September 2024, we completed the BIOVECTRA acquisition and assumed two interest-free loans from the Strategic Innovation Fund ("SIF") in the amount of $20 million with $18 million recorded at fair value in long-term debt.

The loans are repayable in quarterly and yearly installments through 2040 at a weighted average imputed interest rate of 4.7 percent.

In addition, we assumed two interest-free loans with the Atlantic Canada Opportunities Agency (“ACOA”) in the amount of $4 million with $1 million recorded at fair value in long-term debt.

The loans are repayable in monthly installments through 2029 at a weighted average imputed interest rate of 4.5 percent.

Senior Notes .

On March 12, 2021, we issued an aggregate principal amount of $850 million in senior notes ("2031 senior notes").

The 2031 senior notes were issued at 99.822% of their principal amount.

The 2031 senior notes will mature on March 12, 2031, and bear interest at a fixed rate of 2.30% per annum.

The interest is payable semi-annually on March 12th and September 12th of each year and payments commenced on September 12, 2021.

All outstanding senior notes listed below are unsecured and rank equally in right of payment with all of our other senior unsecured indebtedness.

Senior Notes Year Issued Principal Amount ($M) Interest Rate Interest payable Maturity Date

2026 Senior Notes 2016 $300 3.05% semi-annually

September, 2026

2027 Senior Notes 2024 $600 4.20% semi-annually

September, 2027

2029 Senior Notes 2019 $500 2.75% semi-annually

September, 2029

2030 Senior Notes 2020 $500 2.10% semi-annually

2031 Senior Notes 2021 $850 2.30% semi-annually

2034 Senior Notes 2024 $600 4.75% semi-annually

September, 2034

Contingent Consideration Payment.

During the year ended October 31, 2023, we paid a total of $72 million in contingent consideration payments, of which $4 million is included as an outflow in cash from operations.

We paid $65 million related to the achievement of a certain technical milestone associated with our acquisition of Resolution Bioscience and $7 million related to other acquisitions.

Off Balance Sheet Arrangements and Other

29 unchanged sentences

Senior notes $ — $ 900 $ 500 $ 1,950

Term Loan — 600 — —

Other loans - BIOVECTRA 5 8 4 7

Commercial paper 40 — — —

Interest expense 107 276 131 124

4 unchanged sentences

Of these amounts, $64 million and $68 million related to uncertain tax positions as of October 31, 2024 and October 31, 2023, respectively.

We are unable to accurately predict when these amounts will be realized or released.

We are unable to accurately predict when these amounts

will be realized or released.

However, it is reasonably possible that there could be significant changes to our unrecognized tax benefits in the next twelve months due to either the expiration of a statute of limitations or a tax audit settlement.

As of October 31, 2024, the remaining $51 million included in other long-term liabilities relates to the U.S.

transition tax payment which is due in installments over the next three years.

transition tax payment which is due within the next two years.

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-K

Item 7. Management’s Discussion and Analysis