Highlights:
- Revenue of $1.36 billion represents 5.7% reported growth, up
2.4% on a core(1) basis
- GAAP net income of $197 million or 63 cents per share
- Non-GAAP(2) net income of $252 million, or 81 cents per
share
- Second-quarter revenue guidance in a range of $1.28 billion to
$1.32 billion, with non-GAAP earnings guidance of 72 cents to 76
cents per share
- Maintaining full-year 2020 revenue guidance of $5.50 billion to
$5.55 billion and non-GAAP earnings guidance of $3.38 to $3.43 per
share
Agilent Technologies Inc. (NYSE: A) today reported revenue of
$1.36 billion for the first quarter ended Jan. 31, 2020, up 5.7%
year over year (and up 2.4% on a core(1) basis).
On a GAAP basis, first-quarter net income was $197 million or 63
cents per share. This compares with $504 million or $1.57 per share
in the first quarter of fiscal year 2019. GAAP earnings per share
were down 60% year over year. Non-GAAP(2) net income was $252
million or 81 cents per share during the quarter compared with $244
million or 76 cents per share during the first quarter a year ago.
Non-GAAP earnings per share were up 7% year over year.
“The Agilent team delivered a strong start to 2020. Our revenues
were above expectations with growth across all regions and markets,
and earnings per share at the top end of our guidance,” said Mike
McMullen, Agilent president and CEO. “Our first-quarter results
provide clear evidence our growth strategy is working.”
Financial Highlights
Life Sciences and Applied Markets Group
First-quarter revenue of $638 million from Agilent’s Life
Sciences and Applied Markets Group (LSAG) was up 5% year over year
(and down 2% on a core(1) basis). LSAG’s operating margin was
24.8%.
Agilent CrossLab Group
First-quarter revenue of $470 million from the Agilent CrossLab
Group (ACG) grew 6% year over year (up 7% on a core(1) basis).
ACG’s operating margin was 25.4%.
Diagnostics and Genomics Group
First-quarter revenue of $249 million from Agilent’s Diagnostics
and Genomics Group (DGG) grew 6% year over year (up 7% on a core(1)
basis). DGG’s operating margin was 13.5%.
Second-Quarter and Full-Year Outlook
Agilent expects second-quarter 2020 revenue in the range of
$1.28 billion to $1.32 billion. Second-quarter 2020 non-GAAP(3)
earnings are expected to be in the range of 72 cents to 76 cents
per share after factoring in the potential impact of the
coronavirus disease 2019 (COVID-19).
The company is maintaining its previous outlook and expects
revenue of $5.50 billion to $5.55 billion for fiscal year 2020.
Fiscal year 2020 non-GAAP(3) earnings guidance also remains
unchanged in the range of $3.38 to $3.43 per share.
The outlook is based on Jan. 31, 2020, currency exchange
rates.
Conference Call
Agilent’s management will present additional details regarding
the company’s first-quarter 2020 financial results on a conference
call with investors today at 1:30 p.m. PST. This event will be
webcast live in listen-only mode. Listeners may log on at
www.investor.agilent.com and select “Q1 2020 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 financial information can be found at
www.investor.agilent.com by selecting “Financial Results” in the
“Financial Information” section.
About Agilent Technologies
Agilent Technologies Inc. (NYSE: A) is a global leader in life
sciences, diagnostics and applied chemical markets. Now in its 20th
year as an independent company delivering insight and innovation
toward improving the quality of life, Agilent instruments,
software, services, solutions and people provide trusted answers to
customers' most challenging questions. The company generated
revenue of $5.16 billion in fiscal 2019 and employs 16,300 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 second
quarter and full fiscal year 2020, the impact of coronavirus
disease 2019 (COVID-19) 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 Agilent’s 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 annual report on Form 10-K for
the year ended October 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 Q1 FY20
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
Q2 FY20 and full fiscal year 2020 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,
and Nucleic Acid Solutions Division (“NASD”) site 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 Q2 FY20 and
full fiscal year 2020 excludes primarily the impacts of non-cash
intangibles amortization, transformational initiatives, acquisition
and integration costs, Nucleic Acid Solutions Division (“NASD”)
site costs and mergers and acquisitions announced but not closed.
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 $46 million per quarter.
AGILENT TECHNOLOGIES, INC. CONDENSED CONSOLIDATED
STATEMENT OF OPERATIONS (In millions, except per share
amounts) (Unaudited) PRELIMINARY
Three Months Ended January 31,
2020
2019
Net revenue
$
1,357
$
1,284
Costs and expenses: Cost of products and services
634
577
Research and development
104
102
Selling, general and administrative
404
355
Total costs and expenses
1,142
1,034
Income from operations
215
250
Interest income
3
10
Interest expense
(20
)
(18
)
Other income (expense), net
21
6
Income before taxes
219
248
Provision for (benefit from) income taxes
22
(256
)
Net income
$
197
$
504
Net income per share: Basic
$
0.64
$
1.58
Diluted
$
0.63
$
1.57
Weighted average shares used in computing net income per
share: Basic
310
318
Diluted
313
322
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
January 31,
October 31,
2020
2019
ASSETS Current assets: Cash and cash equivalents
$
1,226
$
1,382
Accounts receivable, net
966
930
Inventory
706
679
Other current assets
204
198
Total current assets
3,102
3,189
Property, plant and equipment, net
844
850
Goodwill and other intangible assets, net
4,648
4,700
Long-term investments
118
102
Other assets
789
611
Total assets
$
9,501
$
9,452
LIABILITIES AND EQUITY Current liabilities: Accounts
payable
$
329
$
354
Employee compensation and benefits
253
334
Deferred revenue
379
336
Short-term debt
675
616
Other accrued liabilities
256
440
Total current liabilities
1,892
2,080
Long-term debt
1,787
1,791
Retirement and post-retirement benefits
354
360
Other long-term liabilities
620
473
Total liabilities
4,653
4,704
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; 310
million shares at January 31, 2020 and 309 million shares at
October 31, 2019, issued
3
3
Additional paid-in capital
5,293
5,277
Accumulated earnings (deficit)
73
(18
)
Accumulated other comprehensive loss
(521
)
(514
)
Total stockholders' equity
4,848
4,748
Total liabilities and equity
$
9,501
$
9,452
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 Three Months Ended
January 31, January 31,
2020
2019
Cash flows from operating activities: Net income
$
197
$
504
Adjustments to reconcile net income to net cash provided by
(used in) operating activities: Depreciation and amortization
79
54
Share-based compensation
27
24
Excess and obsolete inventory related charges
4
4
Gain on fair value investment
(16
)
—
Other non-cash expenses, net
2
3
Changes in assets and liabilities: Accounts receivable, net
(40
)
(22
)
Inventory
(32
)
(12
)
Accounts payable
(15
)
(16
)
Employee compensation and benefits
(80
)
(71
)
Other assets and liabilities
(185
)
(255
)
Net cash provided by (used in) operating activities (a)
(59
)
213
Cash flows from investing activities: Investments in
property, plant and equipment
(34
)
(39
)
Payment to acquire fair value investments
(1
)
(2
)
Payment in exchange for convertible note
—
(1
)
Acquisition of businesses and intangible assets, net of cash
acquired
—
(248
)
Net cash used in investing activities
(35
)
(290
)
Cash flows from financing activities: Issuance of common
stock under employee stock plans
32
22
Payment of taxes related to net share settlement of equity awards
(33
)
(13
)
Payment of dividends
(56
)
(52
)
Proceeds from revolving credit facility
432
—
Repayment of revolving credit facility
(372
)
—
Repayment of finance lease
(4
)
—
Purchase of non-controlling interest
—
(4
)
Treasury stock repurchases
(60
)
(75
)
Net cash used in financing activities
(61
)
(122
)
Effect of exchange rate movements
(1
)
9
Net decrease in cash, cash equivalents and restricted cash
(156
)
(190
)
Cash, cash equivalents and restricted cash at beginning of
period
1,388
2,254
Cash, cash equivalents and restricted cash at end of period
$
1,232
$
2,064
Reconciliation of cash, cash equivalents and
restricted cash to the condensed consolidated balance sheet:
Cash and cash equivalents
$
1,226
$
2,057
Restricted cash, included in other assets
6
7
Total cash, cash equivalents and restricted cash
$
1,232
$
2,064
(a) Cash payments included in operating activities:
Income tax payments (refunds), net
$
241
$
21
Interest payments
$
17
$
25
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 January 31,
2020
Diluted EPS
2019
Diluted EPS
GAAP net income
$
197
$
0.63
$
504
$
1.57
Non-GAAP adjustments: Intangible amortization
48
0.15
28
0.09
Transformational initiatives
13
0.04
5
0.02
Acquisition and integration costs
13
0.04
10
0.03
NASD site costs
—
—
2
0.01
Other
6
0.02
1
—
Tax benefit on intra-entity asset transfer
—
—
(299
)
(0.93
)
Adjustment for taxes (a)
(25
)
(0.07
)
(7
)
(0.03
)
Non-GAAP net income
$
252
$
0.81
$
244
$
0.76
(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 January
31, 2020 and 2019, management used a non-GAAP effective tax rate of
15.5% and 17%, respectively. 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, transformational initiatives,
acquisition and integration costs, NASD site costs, and tax benefit
on intra-entity asset transfer.
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 investigate or 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.
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.
Other includes certain legal costs, settlements and
an unrealized gain related to our equity securities in addition to
other miscellaneous adjustments.
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
Q1'20
Q1'19
Revenue
$
638
$
607
Gross Margin, %
60.2
%
62.1
%
Income from Operations
$
158
$
159
Operating margin, %
24.8
%
26.1
%
Diagnostics and Genomics Group
Q1'20
Q1'19
Revenue
$
249
$
235
Gross Margin, %
51.7
%
54.0
%
Income from Operations
$
34
$
33
Operating margin, %
13.5
%
14.0
%
Agilent CrossLab Group
Q1'20
Q1'19
Revenue
$
470
$
442
Gross Margin, %
51.8
%
51.3
%
Income from Operations
$
119
$
105
Operating margin, %
25.4
%
23.9
%
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, transformational
initiatives, acquisition and integration costs, and NASD site
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 Q1'20
Q1'19 % Change Life Sciences and Applied
Markets Group
$
638
$
607
5
%
Diagnostics and Genomics Group
249
235
6
%
Agilent CrossLab Group
470
442
6
%
Agilent
$
1,357
$
1,284
6
%
Non-GAAP(excluding Acquisitions &
Divestitures) Year-over-Yearat Constant Currency (a)
Year-over-Year Year-over-Year
Percentage Point Impact from
Currency
Current QuarterCurrency Impact (b) Non GAAP Revenue by Segment Q1'20
Q1'19 % Change % Change Life Sciences
and Applied Markets Group
$
590
$
607
(3
%)
(2
%)
-1 ppt
$
(2
)
Diagnostics and Genomics Group
249
235
6
%
7
%
-1 ppt
(1
)
Agilent CrossLab Group
470
442
6
%
7
%
-1 ppt
(2
)
Agilent (Core)
$
1,309
$
1,284
2
%
2
%
—
$
(5
)
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
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INVESTOR CONTACT: Ankur Dhingra +1 408-345-8948
ankur_dhingra@agilent.com
MEDIA CONTACT: Tom Beermann +1 408-553-2914
tom.beermann@agilent.com
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