Highlights:
- Revenue of $1.24 billion represents 3
percent reported growth and 4 percent core revenue(1) growth
- GAAP net income of $182 million and EPS
of $0.57
- Non-GAAP net income of $228 million or
$0.71 per share(2), up 9 percent year-over-year
- Full-year revenue outlook revised to
$5.085 billion to $5.125 billion, with non-GAAP earnings guidance
for the year maintained at $3.03 to $3.07 per share(3)
Agilent Technologies, Inc. (NYSE: A) today reported revenue of
$1.24 billion for the second quarter ended April 30, 2019, up 3
percent year-over-year (up 4 percent on a core basis(1)).
On a GAAP basis, second-quarter net income was $182 million or
$0.57 per share. This compares with $205 million and $0.63 per
share in the second quarter of 2018. Non-GAAP net income(2) was
$228 million or $0.71 per share during the quarter, compared with
$212 million and $0.65 per share during the second quarter a year
ago.
“While overall revenues were below our expectations, the story
of our second quarter results is one where we demonstrated the
resilience of Agilent’s business model,” said Mike McMullen,
Agilent president and CEO. “Two of our three business units
continued to deliver strong growth while the third was affected by
soft market conditions. We generated EPS of $0.71, representing 9
percent growth, which was at the midpoint of our guidance.”
Financial Highlights
Life Sciences and Applied Markets Group
Second-quarter revenue of $529 million from
Agilent’s Life Sciences and Applied Markets Group (LSAG)
was down 1 percent year over year (down 1 percent on a core
basis(1)). Demand in the environmental and forensics markets was
strong, offset by weakness in the pharma and food markets. LSAG’s
operating margin for the quarter was 20.3 percent.
Agilent CrossLab Group
Second-quarter revenue of $455 million from the
Agilent CrossLab Group (ACG) grew 7 percent year over year (up
9 percent on a core basis(1)). Growth was broad-based across all
regions, led by China. ACG’s operating margin for the quarter was
25.2 percent.
Diagnostics and Genomics Group
Second-quarter revenue of $254 million from
Agilent’s Diagnostics and Genomics Group (DGG) grew 5
percent year over year (up 6 percent on a core basis(1)). Strength
in the company’s pathology-related businesses and NASD led the
group’s results. DGG’s operating margin for the quarter was 19.3
percent.
Third-Quarter and Full-Year Outlook
Agilent expects third-quarter 2019 revenue in the range
of $1.225 billion to $1.245 billion. Third-quarter 2019
non-GAAP earnings are expected to be in the range of $0.71 to
$0.73 per share(3).
For fiscal year 2019, the company is revising its full-year
revenue guidance to a range of $5.085 billion to $5.125
billion while maintaining non-GAAP earnings guidance in the
range of $3.03 to $3.07 per share(3).
Conference Call
Agilent’s management will present more details about its
second-quarter fiscal year 2019 financial results on a conference
call with investors today at 1:30 p.m. (Pacific Time). This
event will be webcast live in listen-only mode. Listeners may log
on at www.investor.agilent.com and select “Q2
2019 Agilent Technologies Inc. Earnings Conference Call”
in the “News & Events — Calendar of Events” section. The
webcast will remain available on the company’s website for 90
days.
Additional information regarding financial results can be found
at www.investor.agilent.com by selecting “Financial
Results” in the “Financial Information” section.
A telephone replay of the conference call will be available at
approximately 4:30 p.m. (Pacific Time) after the call on May 14 and
through May 21 by dialing (855) 859-2056 (or (404) 537-3406 from
outside the United States) and entering passcode 3086626.
About Agilent Technologies
Agilent Technologies Inc. (NYSE: A) is a global leader in
life sciences, diagnostics and applied chemical markets. With more
than 50 years of insight and
innovation, Agilent instruments, software, services,
solutions and people provide trusted answers to customers' most
challenging questions. The company generated revenues of $4.91
billion in fiscal 2018 and employs 15,550 people worldwide.
Information about Agilent is available
at www.agilent.com. To receive the
latest Agilent news, subscribe to the
Agilent Newsroom.
Follow Agilent on LinkedIn, Twitter,
and Facebook.
Forward-Looking Statements
This news release contains forward-looking statements as defined
in the Securities Exchange Act of 1934 and is subject to the safe
harbors created therein. The forward-looking statements contained
herein include, but are not limited to, information regarding
Agilent’s revenue and non-GAAP earnings guidance for the third
quarter and full fiscal year 2019 and future amortization of
intangibles. These forward-looking statements involve risks and
uncertainties that could cause Agilent’s results to differ
materially from management’s current expectations. Such risks and
uncertainties include, but are not limited to, unforeseen changes
in the strength of its customers’ businesses; unforeseen changes in
the demand for current and new products, technologies, and
services; unforeseen changes in the currency markets; customer
purchasing decisions and timing, and the risk that Agilent is not
able to realize the savings expected from integration and
restructuring activities. In addition, other risks that Agilent
faces in running its operations include the ability to execute
successfully through business cycles; the ability to meet and
achieve the benefits of its cost-reduction goals and otherwise
successfully adapt its cost structures to continuing changes in
business conditions; ongoing competitive, pricing and gross-margin
pressures; the risk that its cost-cutting initiatives will impair
its ability to develop products and remain competitive and to
operate effectively; the impact of geopolitical uncertainties and
global economic conditions on its operations, its markets and its
ability to conduct business; the ability to improve asset
performance to adapt to changes in demand; the ability of its
supply chain to adapt to changes in demand; the ability to
successfully introduce new products at the right time, price and
mix; the ability of Agilent to successfully integrate recent
acquisitions; the ability of Agilent to successfully comply with
certain complex regulations; and other risks detailed in Agilent’s
filings with the Securities and Exchange Commission, including its
quarterly report on Form 10-Q for the quarter ended January 31,
2019. Forward-looking statements are based on the beliefs and
assumptions of Agilent’s management and on currently available
information. Agilent undertakes no responsibility to publicly
update or revise any forward-looking statement.
(1) Core revenue growth excludes the impact of currency and
acquisitions and divestitures within the past 12 months. Core
revenue is a non-GAAP measure. A reconciliation between Q2 FY19
GAAP revenue and core revenue is set forth on page 6 of the
attached tables along with additional information regarding the use
of this non-GAAP measure. Core revenue growth rate as projected for
Q3 FY19 and full fiscal year 2019 excludes the impact of currency
and acquisitions and divestitures within the past 12 months. Most
of the excluded amounts pertain to events that have not yet
occurred and are not currently possible to estimate with a
reasonable degree of accuracy and could differ materially.
Therefore, no reconciliation to GAAP amounts has been provided for
the projection.
(2) Non-GAAP net income and non-GAAP earnings per share
primarily exclude the impacts of non-cash intangibles amortization,
transformational initiatives, acquisition and integration costs,
pension settlement gain, Nucleic Acid Solutions Division (“NASD”)
site costs and special compliance costs. Agilent also excludes any
tax benefits or expenses that are not directly related to ongoing
operations and which are either isolated or are not expected to
occur again with any regularity or predictability including the
impact of the 2017 Tax Act. A reconciliation between non-GAAP net
income and GAAP net income is set forth on page 4 of the attached
tables along with additional information regarding the use of this
non-GAAP measure.
(3) Non-GAAP earnings per share as projected for Q3 FY19 and
full fiscal year 2019 excludes primarily the impacts of non-cash
intangibles amortization, transformational initiatives, acquisition
and integration costs, pension settlement gain, Nucleic Acid
Solutions Division (“NASD”) site costs and special compliance
costs. Agilent also excludes any tax benefits or expenses that are
not directly related to ongoing operations and which are either
isolated or are not expected to occur again with any regularity or
predictability. Most of these excluded amounts pertain to events
that have not yet occurred and are not currently possible to
estimate with a reasonable degree of accuracy and could differ
materially. Therefore, no reconciliation to GAAP amounts has been
provided. Future amortization of intangibles is expected to be
approximately $26 million per quarter.
NOTE TO EDITORS: Further technology, corporate citizenship and
executive news is available on the Agilent news site at
www.agilent.com/go/news.
AGILENT TECHNOLOGIES, INC. CONDENSED
CONSOLIDATED STATEMENT OF OPERATIONS (In millions, except
per share amounts) (Unaudited) PRELIMINARY
Three Months Ended Six Months Ended April
30, April 30, 2019
2018(a)
2019
2018(a)
Net revenue $ 1,238 $ 1,206 $ 2,522 $ 2,417 Costs and
expenses: Cost of products and services 569 563 1,146 1,104
Research and development 99 92 201 186 Selling, general and
administrative 354 341 709
688 Total costs and expenses 1,022
996 2,056 1,978
Income from operations 216 210 466 439 Interest
income 10 10 20 19 Interest expense (17 ) (19 ) (35 ) (39 ) Other
income (expense), net 9 26 15
41 Income before taxes 218 227 466 460
Provision for (benefit from) income taxes 36 22 (220 ) 575
Net income (loss) $ 182 $ 205
$ 686 $ (115 ) Net income (loss)
per share: Basic $ 0.57 $ 0.64 $ 2.16 $ (0.36 ) Diluted $ 0.57 $
0.63 $ 2.13 $ (0.36 ) Weighted average shares used in
computing net income (loss) per share: Basic 317 322 318 323
Diluted 321 326 322 323 (a)
Adjusted to include the impact of the adoption of ASU 2017-07
(pension expense reclassification) as of 11/1/2018. There is no
impact to net income (loss) or net income (loss) per share.
The preliminary income statement is estimated based on our
current information. Page 1
AGILENT TECHNOLOGIES, INC. CONDENSED CONSOLIDATED BALANCE
SHEET (In millions, except par value and share amounts)
(Unaudited) PRELIMINARY April
30, October 31, 2019 2018 ASSETS
Current assets: Cash and cash equivalents $ 2,155 $ 2,247 Accounts
receivable, net 819 776 Inventory 657 638 Other current assets
181 187 Total current assets 3,812
3,848 Property, plant and equipment, net 827 822 Goodwill
and other intangible assets, net 3,650 3,464 Long-term investments
96 68 Other assets 637 339 Total assets
$ 9,022 $ 8,541 LIABILITIES AND EQUITY
Current liabilities: Accounts payable $ 314 $ 340 Employee
compensation and benefits 292 304 Deferred revenue 347 324 Other
accrued liabilities 165 203 Total
current liabilities 1,118 1,171 Long-term debt 1,798 1,799
Retirement and post-retirement benefits 229 239 Other long-term
liabilities 752 761 Total liabilities
3,897 3,970 Total Equity:
Stockholders' equity:
Preferred stock; $0.01 par value; 125
million shares authorized; none issued and outstanding
— —
Common stock; $0.01 par value, 2 billion
shares authorized; 317 million shares at April 30, 2019 and 318
million shares at October 31, 2018, issued
3 3
Treasury stock at cost; 9 thousand shares
at April 30, 2019 and zero shares at October 31, 2018
(1 ) — Additional paid-in-capital 5,343 5,308 Retained earnings
(accumulated deficit) 178 (336 ) Accumulated other comprehensive
loss (398 ) (408 ) Total stockholders' equity 5,125
4,567 Non-controlling interest — 4
Total equity 5,125 4,571 Total
liabilities and equity $ 9,022 $ 8,541
The preliminary balance sheet is estimated based on our
current information. Page 2
AGILENT
TECHNOLOGIES, INC. CONDENSED CONSOLIDATED STATEMENT OF CASH
FLOWS (In millions) (Unaudited)
PRELIMINARY Six Months Ended April
30, April 30, 2019 2018 Cash flows from
operating activities: Net income (loss) $ 686 $ (115 )
Adjustments to reconcile net income to net cash provided by (used
in) operating activities: Depreciation and amortization 107 101
Share-based compensation 40 43 Excess and obsolete inventory
related charges 7 17 Other non-cash expenses, net 2 2 Changes in
assets and liabilities: Accounts receivable, net (17 ) (21 )
Inventory (21 ) (34 ) Accounts payable (8 ) (14 ) Employee
compensation and benefits (13 ) (7 ) Change in assets and
liabilities due to Tax Act — 533 Other assets and liabilities
(318 ) 13 Net cash provided by operating
activities (a) 465 518 Cash flows from investing activities:
Investments in property, plant and equipment (78 ) (108 ) Payment
to acquire fair value investments (18 ) (1 ) Payment in exchange
for convertible note (2 ) (2 ) Acquisition of businesses and
intangible assets, net of cash acquired (248 ) (7 )
Net cash used in investing activities (346 ) (118 ) Cash
flows from financing activities: Issuance of common stock under
employee stock plans 33 36 Payment of taxes related to net share
settlement of equity awards (14 ) (29 ) Payment of dividends (104 )
(96 ) Proceeds from revolving credit facility — 356 Repayment of
debt and revolving credit facility — (251 ) Purchase of
non-controlling interest (4 ) — Treasury stock repurchases
(125 ) (93 ) Net cash used in financing activities (214 )
(77 ) Effect of exchange rate movements 2 9 Net
increase (decrease) in cash, cash equivalents and restricted cash
(93 ) 332 Cash, cash equivalents and restricted cash at
beginning of period 2,254 2,686
Cash, cash equivalents and restricted cash at end of period $ 2,161
$ 3,018 Reconciliation of cash, cash
equivalents and restricted cash to the condensed consolidated
balance sheet: Cash and cash equivalents $ 2,155 $ 3,011
Restricted cash, included in other assets 6 7
Total cash, cash equivalents and restricted cash $ 2,161
$ 3,018 (a) Cash payments included in
operating activities: Income tax payments (refunds), net $
104 $ 48 Interest payments $ 36 $ 43 The
preliminary cash flow is estimated based on our current
information. Page 3
AGILENT TECHNOLOGIES, INC.
NON-GAAP NET INCOME AND DILUTED EPS RECONCILIATIONS (In
millions, except per share amounts) (Unaudited)
PRELIMINARY Three Months Ended Six Months
Ended April 30, April 30, 2019
DilutedEPS
2018
DilutedEPS
2019
DilutedEPS
2018
DilutedEPS
GAAP net income (loss) $ 182 $ 0.57 $ 205 $ 0.63 $ 686 $
2.13 $ (115) $ (0.36) (b) Non-GAAP adjustments: Intangible
amortization 26 0.08 25 0.08 54 0.17 50 0.15 Business exit and
divestiture costs — — 8 0.02 — — 8 0.02 Transformational
initiatives 9 0.03 5 0.02 14 0.04 9 0.03 Acquisition and
integration costs 10 0.03 4 0.01 20 0.06 7 0.02 Pension settlement
gain — — — — — — (5) (0.02) NASD site costs 4 0.01 2 0.01 6 0.02 4
0.01 Special compliance costs 1 — 1 — 1 — 2 0.01 Other 5 0.02 (14)
(0.04) 6 0.02 (13) (0.04) Adjustment for Tax Reform — — — — — — 533
1.63 Tax benefit on intra-entity asset transfer — — — — (299)
(0.93) — — Adjustment for taxes (a) (9) (0.03) (24)
(0.08) (16) (0.04) (52) (0.14) Non-GAAP net income $
228 $ 0.71 $ 212 $ 0.65 $ 472 $ 1.47 $ 428
$ 1.31 (c) (a) The adjustment for taxes
excludes tax benefits that management believes are not directly
related to on-going operations and which are either isolated or
cannot be expected to occur again with any regularity or
predictability. For the three months ended April 30, 2019,
management used a non-GAAP effective tax rate of 16.48%. For the
six months ended April 30, 2019, management used a non-GAAP
effective tax rate of 16.75%. In the same periods last year,
management used a non-GAAP effective tax rate of 18%. (b)
GAAP diluted net loss per share was computed using 323 million
weighted average diluted shares which excludes from consideration
the anti-dilutive effects of all potential common shares
outstanding. (c) Non-GAAP diluted net income per share was
computed using 326 million weighted average diluted shares which
includes the dilutive effects of potential common shares
outstanding. We provide non-GAAP net income and non-GAAP net
income per share amounts in order to provide meaningful
supplemental information regarding our operational performance and
our prospects for the future. These supplemental measures exclude,
among other things, charges related to amortization of intangibles,
business exit and divestiture costs, transformational initiatives,
acquisition and integration costs, pension settlement gain, NASD
site costs, special compliance costs, adjustment for Tax Reform,
and tax benefit on intra-entity asset transfer.
Business
exit and divestiture costs include costs associated with
business divestitures.
Transformational initiatives
include expenses associated with targeted cost reduction activities
such as manufacturing transfers including costs to move
manufacturing due to new tariffs and tariff remediation actions,
small site consolidations, legal entity and other business
reorganizations, insourcing or outsourcing of activities. Such
costs may include move and relocation costs, one-time termination
benefits and other one-time reorganization costs. Included in this
category are also expenses associated with company programs to
transform our product lifecycle management (PLM) system, human
resources and financial systems.
Acquisition and
Integration costs include all incremental expenses incurred to
effect a business combination. Such acquisition costs may include
advisory, legal, accounting, valuation, and other professional or
consulting fees. Such integration costs may include expenses
directly related to integration of business and facility
operations, the transfer of assets and intellectual property,
information technology systems and infrastructure and other
employee-related costs.
Pension settlement gain
resulted from transfer of the substitutional portion of our
Japanese pension plan to the government.
NASD site
costs include all the costs related to the expansion of our
manufacturing of nucleic acid active pharmaceutical ingredients
incurred prior to the commencement of commercial manufacturing.
Special compliance costs include costs associated
with transforming our processes to implement new regulations such
as the EU's General Data Protection Regulation (GDPR), revenue
recognition and certain tax reporting requirements.
Other includes certain legal costs and settlements in
addition to other miscellaneous adjustments.
Adjustment
for Tax Reform primarily consists of an estimated provision of
$480 million for U.S. transition tax and correlative items on
deemed repatriated earnings of non-U.S. subsidiaries and an
estimated provision of $53 million associated with the decrease in
the U.S. corporate tax rate from 35% to 21% and its impact on our
U.S. deferred tax assets and liabilities. The taxes payable
associated with the transition tax, net of tax attributes, on
deemed repatriation of foreign earnings is approximately $440
million, payable over 8 years.
Tax benefit on
intra-entity asset transfer relates to our operations in
Singapore along with our application of the new accounting rules
for income tax consequences of intra-entity transfer of assets as
adopted on November 1, 2018. Our management uses non-GAAP
measures to evaluate the performance of our core businesses, to
estimate future core performance and to compensate employees. Since
management finds this measure to be useful, we believe that our
investors benefit from seeing our results “through the eyes” of
management in addition to seeing our GAAP results. This information
facilitates our management’s internal comparisons to our historical
operating results as well as to the operating results of our
competitors. Our management recognizes that items such as
amortization of intangibles can have a material impact on our cash
flows and/or our net income. Our GAAP financial statements
including our statement of cash flows portray those effects.
Although we believe it is useful for investors to see core
performance free of special items, investors should understand that
the excluded items are actual expenses that may impact the cash
available to us for other uses. To gain a complete picture of all
effects on the company’s profit and loss from any and all events,
management does (and investors should) rely upon the GAAP income
statement. The non-GAAP numbers focus instead upon the core
business of the company, which is only a subset, albeit a critical
one, of the company’s performance. Readers are reminded that
non-GAAP numbers are merely a supplement to, and not a replacement
for, GAAP financial measures. They should be read in conjunction
with the GAAP financial measures. It should be noted as well that
our non-GAAP information may be different from the non-GAAP
information provided by other companies. The preliminary
non-GAAP net income and diluted EPS reconciliation is estimated
based on our current information. Page 4
AGILENT TECHNOLOGIES, INC. SEGMENT
INFORMATION (In millions, except where noted)
(Unaudited) PRELIMINARY Life Sciences and
Applied Markets Group Q2'19 Q2'18 Revenue $ 529 $
537 Gross Margin, % 60.6 % 59.7 % Income from Operations $ 107 $
113 Operating margin, % 20.3 % 21.0 %
Diagnostics
and Genomics Group Q2'19 Q2'18 Revenue $ 254 $
243 Gross Margin, % 54.8 % 54.8 % Income from Operations $ 49 $ 48
Operating margin, % 19.3 % 19.9 %
Agilent CrossLab
Group Q2'19 Q2'18 Revenue $ 455 $ 426 Gross
Margin, % 51.3 % 50.0 % Income from Operations $ 115 $ 96 Operating
margin, % 25.2 % 22.5 %
Income from operations reflect the results of our reportable
segments under Agilent's management reporting system which are not
necessarily in conformity with GAAP financial measures. Income from
operations of our reporting segments exclude, among other things,
charges related to amortization of intangibles, business exit and
divestiture costs, transformational initiatives, acquisition and
integration costs, pension settlement gain, NASD site costs, and
special compliance costs. Readers are reminded that non-GAAP
numbers are merely a supplement to, and not a replacement for, GAAP
financial measures. They should be read in conjunction with the
GAAP financial measures. It should be noted as well that our
non-GAAP information may be different from the non-GAAP information
provided by other companies. The preliminary segment
information is estimated based on our current information.
Page 5
AGILENT TECHNOLOGIES, INC. RECONCILIATIONS OF REVENUE BY
SEGMENT EXCLUDING ACQUISITIONS, DIVESTITURES AND THE IMPACT
OF CURRENCY ADJUSTMENTS (CORE) (in millions)
(Unaudited) PRELIMINARY Year-over-Year
GAAP Year-over-Year
GAAP Revenue by
Segment
Q2'19 Q2'18 % Change Life
Sciences and Applied Markets Group $ 529 $ 537 (1%)
Diagnostics and Genomics Group 254 243 5% Agilent CrossLab
Group 455 426 7% Agilent $ 1,238 $
1,206 3%
Non-GAAP
(excluding Acquisitions &
Divestitures)
Year-over-Year
at Constant Currency (a)
Year-over-Year Year-over-Year
PercentagePoint Impact
Current QuarterCurrency
Non GAAP Revenue
by Segment
Q2'19 Q2'18 % Change %
Change
from Currency
Impact (b)
Life Sciences and Applied Markets Group $ 519 $ 537 (3%)
(1%) -2 ppts $ (12) Diagnostics and Genomics Group 248 243
2% 6% -4 ppts (8) Agilent CrossLab Group 448 426 5% 9% -4
ppts (18) Agilent (Core) $ 1,215
$ 1,206 1% 4% -3 ppts $ (38) We compare the
year-over-year change in revenue excluding the effect of recent
acquisitions and divestitures and foreign currency rate
fluctuations to assess the performance of our underlying business.
(a) The constant currency year-over-year growth percentage
is calculated by recalculating all periods in the comparison period
at the foreign currency exchange rates used for accounting during
the last month of the current quarter, and then using those revised
values to calculate the year-over-year percentage change.
(b) The dollar impact from the current quarter currency impact is
equal to the total year-over-year dollar change less the constant
currency year-over-year change. The preliminary
reconciliation of GAAP revenue adjusted for recent acquisitions and
divestitures and impact of currency is estimated based on our
current information. Page 6
View source
version on businesswire.com: https://www.businesswire.com/news/home/20190514005940/en/
INVESTOR CONTACT:Ankur Dhingra+1
408-345-8948ankur_dhingra@agilent.com
MEDIA CONTACT:Tom Beermann+1
408-553-2914tom.beermann@agilent.com
Agilent Technologies (NYSE:A)
Historical Stock Chart
From Aug 2024 to Sep 2024
Agilent Technologies (NYSE:A)
Historical Stock Chart
From Sep 2023 to Sep 2024