Robert W. McMahon
Senior Vice President, Chief Financial Officer at Agilent Technologies
Thanks, Mike, and good afternoon, everyone. In my remarks today, I will provide some additional details on revenue in the quarter as well as take you through the income statement and other key financial metrics. I'll then finish up with our updated full-year guidance and initial guidance for the second-quarter. Unless otherwise noted, my remarks will focus on non-GAAP results. We are extremely pleased with our Q1 performance with a very solid start to the year. Q1 revenue was $1.76 billion, exceeding our expectations. Revenues were up 10% core and 5% on a reported basis. Currency was a five point headwind, which was an improvement from the beginning of the quarter, while the M&A contribution was as we expected. Pricing for the quarter was higher than the full-year forecast. Also, as we expected.
Now I'd like to share some additional detail on our end-markets. Results in our largest market pharma were again very strong. Pharma grew 11% following 17% growth of last year. Performance was solid across both small and large molecule. Small molecule grew 12%, while large molecule grew 9%. And as Mike mentioned, Chemicals and Advanced Materials also continue to be very strong, growing 14% during the quarter, on-top of 15% growth last year. The Chemical and Energy sub-segments of the market are doing well while the Advanced Materials market continues to deliver outsized growth. Semiconductors and batteries are driving demand, helped by government investment in this area. The food market grew 8% during the quarter, driven by double-digit growth in China. The environmental and forensics business grew 12%, led by the Americas as increased testing for PFAS chemicals drives customer investment in this area, and recently approved US legislation leads to broad spending in the environmental market.
Our business in the diagnostics and clinical market grew 4% versus 11% growth last year. Pathology led the way for us here, partially offset by industry-wide challenges in the genomics market. And the academia and government market was up 8%, led by LCs and services. Regionally, Europe and Asia, showed strong results. On a geographic basis, the China team delivered 13% growth and Europe grew 10%, both exceeding expectations. The Americas had another solid quarter coming in at 8%, in line with our expectations.
Now let's turn to the rest of the P&L. First quarter gross margin was 56.5%, up 40 basis points from a year ago. The gross margin performance coupled with good cost discipline and SG&A helped drive our operating margins to 27.1%, up 80 basis points from last year. Below the line, our tax rate was 13.75% for the quarter and we had 297 million diluted shares outstanding, both as expected. Putting it all together earnings per share were $1.37 up 13% from a year ago. In summary, Q1 ended with 10% core top line growth and 13% earnings per share growth. A very good start to the year.
Now some metrics on cash flow and our balance sheet. In Q1, we generated $296 million in operating cash flow, up 16% versus last year while investing $76 million in capex. Capex spending continues to be driven by our scale-up of our Train B manufacturing line and other capacity expansion projects. In the quarter we returned $142 million to shareholders through $67 million in dividends and by repurchasing shares worth $75 million. We also announced, we're increasing our dividend by 7% along with a new $2 billion share repurchase authorization, continuing our successful balanced approach to capital deployment. Our balance sheet continues to remain healthy as we ended the quarter with a net leverage ratio of 0.8.
Now let's move to our revised outlook for the year and the upcoming quarter. The macroeconomic environment remains dynamic and interest rates and currencies continue to be volatile. However, given the good start to the year, we are increasing our full-year revenue to a range of $7.03 billion to $7.10 billion. This increase update our full year core revenue guidance to a range of 5.5% to 6.5%, increasing the midpoint of our guidance to 6%. We've also seen the dollar weaken against major currencies in the first-quarter, although it has rebounded somewhat in February, and as a result, the full year guide reflects a $100 million of favorable currency movements since our initial guide in November. And for the full year we still expect currency to be an almost 300 basis point headwind to reported growth.
In addition, we're also raising our full year EPS guidance to a new range of $5.65 to $5.70 per share. And lastly, given the recently announced NASD expansion to double our oligo manufacturing capacity, we are updating our forecasted capital spending for the year to $500 million up $200 million from our guidance at the beginning of the year.
Now turning to Q2, we expect revenue in the range of $1.655 billion to $1.680 billion. This represents core growth of 6% to 7.5% and reported growth of 3% to 4.5%. Currency is expected to be a headwind of 3.1 points while M&A will contribute 0.1 points of growth in Q2, which is consistent with Q1. Second quarter non-GAAP earnings per share are expected to be between $1.24 and $1.27, representing growth of 10% to 12% versus the prior year.
I'm pleased with how the team has delivered in the first quarter. We are focused on the things we can control. Our team is driving strong execution in the marketplace. And coupled with our broad portfolio of products and services, we expect to continue to grow faster than the market as we go through the year.
Thanks for being on the call. And now I will turn over things back to Parmeet as we take your questions. Parmeet?
