Delivers Another Strong Quarter, Reaffirms
Full-Year Guidance
Highlights:
- GAAP income from continuing operations
of $124 million, or $0.38 per share
- Non-GAAP income from continuing
operations of $160 million, or $0.49 per share(1) versus midpoint
guidance of $0.46 per share
- Revenue of $1.04 billion; core revenue
growth of 3.0 percent(2) versus midpoint guidance of 1.3
percent
- Fiscal year 2016 revenue guidance of
$4.14 billion to $4.16 billion. Core revenue growth guidance
maintained at 4.5 percent(2). Non-GAAP earnings guidance of $1.89
to $1.91 per share(3). Midpoint from previous guidance
unchanged.
Agilent Technologies Inc. (NYSE:A) today reported revenue of
$1.04 billion, up 3 percent year over year (also up 3 percent on a
core basis(2)) for the third fiscal quarter ended July 31,
2016.
Third-quarter GAAP income from continuing operations was $124
million, or $0.38 per share. Last year’s third-quarter GAAP income
from continuing operations was $113 million, or $0.34 per
share.
During the third quarter, Agilent had intangible amortization of
$37 million, transformation costs of $11 million, acquisition and
integration costs of $11 million, asset impairment costs of $4
million, and $3 million of other costs. Excluding those items, and
a tax benefit of $30 million, Agilent reported third-quarter
adjusted income from continuing operations of $160 million, $0.49
per share(1).
Agilent’s adjusted operating margin was 20.6 percent(4) for the
third quarter, up 70 basis points over a year ago.
“Agilent delivered another quarter above expectations,” said
Mike McMullen, Agilent president and CEO. “Despite currency
headwinds, revenue came in above the midpoint of guidance, and
earnings per share exceeded our guidance range. These results, in a
challenging global economic environment, reflect the strength of
Agilent’s scale and broad differentiated portfolio of products and
services.”
“We continue to deliver on our strategy to drive sustainable
growth, expand operating margins and provide long-term value to our
shareholders,” he added.
Third-quarter revenue of $504 million from Agilent’s Life
Sciences and Applied Markets Group (LSAG) decreased 1 percent year
over year (down 2 percent on a core basis(2)), in line with
expectations. LSAG’s Q3 operating margin was 19.1 percent.
Third-quarter revenue of $360 million from the Agilent CrossLab
Group (ACG) grew 7 percent year over year (up 8 percent on a core
basis(2)). Both services and consumables continued to see solid
growth worldwide and across key markets. ACG’s operating margin was
22.7 percent for the quarter.
Third-quarter revenue of $180 million from Agilent’s Diagnostics
and Genomics Group (DGG) increased 8 percent year over year (also
up 8 percent on a core basis(2)), reflecting growth across all
businesses. DGG’s operating margin for the quarter was 18.8
percent.
Agilent expects fourth-quarter 2016 revenue in the range of
$1.05 billion to $1.07 billion. Fourth-quarter non-GAAP earnings
are expected to be in the range of $0.50 to $0.52 per share(3).
For fiscal year 2016, Agilent expects revenue of $4.14 billion
to $4.16 billion and non-GAAP earnings of $1.89 to $1.91 per
share(3). Guidance is based on July 29, 2016 exchange rates. Core
revenue growth and earnings per share midpoint are the same as
prior guidance.
About Agilent Technologies
Agilent Technologies Inc. (NYSE: A), a global leader in life
sciences, diagnostics and applied chemical markets, is the premier
laboratory partner for a better world. Agilent works with customers
in more than 100 countries, providing instruments, software,
services and consumables for the entire laboratory workflow.
Agilent generated revenue of $4.04 billion in fiscal 2015. The
company employs about 12,000 people worldwide. Information about
Agilent is available at www.agilent.com.
Agilent’s management will present more details about its
third-quarter FY2016 financial results on a conference call with
investors today at 1:30 p.m. PT. This event will be webcast live in
listen-only mode. Listeners may log on at www.investor.agilent.com
and select “Q3 2016 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. PT today through Aug. 24 by dialing +1 855
859 2056 (or +1 404 537 3406 from outside the United States) and
entering passcode 40719853.
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 future revenue, earnings and profitability; planned new
products; market trends; the future demand for the company’s
products and services; customer expectations; and revenue and
non-GAAP earnings guidance for the fourth quarter and full fiscal
year 2016. 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 our 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 we are 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 our
cost-cutting initiatives will impair our ability to develop
products and remain competitive and to operate effectively; the
impact of geopolitical uncertainties and global economic conditions
on our operations, our markets and our ability to conduct business;
the ability to improve asset performance to adapt to changes in
demand; the ability of our 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 our quarterly report on Form 10-Q
for the quarter ended April 30, 2016. 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) Non-GAAP income from continuing operations
and non-GAAP income from continuing operations per share exclude
primarily the impacts of acquisition and integration costs,
transformation initiatives, business exit and divestiture costs,
and non-cash intangibles amortization. We also exclude any tax
benefits that are not directly related to ongoing operations and
which are either isolated or cannot be expected to occur again with
any regularity or predictability. A reconciliation between non-GAAP
income from continuing operations and GAAP income from continuing
operations is set forth on page 6 of the attached tables along with
additional information regarding the use of this non-GAAP measure.
(2) Core revenue growth excludes the impact of currency, the
NMR business and acquisitions and divestitures within the past 12
months. Core revenue is a non-GAAP measure. Core revenue growth as
projected for the full fiscal year 2016 excludes amounts pertaining
to events that have not yet occurred and are not currently possible
to estimate with a reasonable degree of accuracy. A reconciliation
between Q3 FY16 GAAP revenue and core revenue is set forth on page
8 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 Q4 FY16 and full fiscal year
2016 excludes primarily the future impact of acquisition and
integration costs, pension curtailment gain, business exit and
divestiture costs and non-cash intangibles amortization. We also
exclude any tax benefits that are not directly related to ongoing
operations and which are either isolated or cannot be 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. Therefore, no reconciliation to GAAP amounts has been
provided. Future amortization of intangibles is expected to be
approximately $32 million per quarter. (4) Adjusted non-GAAP
operating margin is a non-GAAP measure and excludes primarily the
impacts of acquisition and integration costs, transformation
initiatives, business exit and divestiture costs, and non-cash
intangibles amortization in addition to the costs related to
services that Agilent is providing to Keysight post separation. A
reconciliation for Q3 FY16 is set forth on page 9 of the attached
tables along with additional information regarding the use of this
non-GAAP measure.
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
July 31, Percent 2016
2015(As Revised)
Inc/(Dec) Net revenue $ 1,044 $ 1,014 3% Costs
and expenses: Cost of products and services 502 501 — Research and
development 86 79 9% Selling, general and administrative 310
290 7% Total costs and expenses 898
870 3% Income from operations 146 144
1% Interest income 3 2 50% Interest expense (17 ) (17 ) —
Other income (expense), net 2 (1 ) —
Income from continuing operations before taxes 134 128 5%
Provision for income taxes 10 15 (33%)
Income from continuing operations 124 113 10% Loss
from discontinued operations, net of tax - (2
) — Net income $ 124 $ 111 12%
Net income per share - Basic: Income from continuing
operations $ 0.38 $ 0.34 Loss from discontinued operations $ -
$ (0.01 ) Net income per share - Basic $ 0.38 $ 0.33
Net income per share - Diluted: Income from
continuing operations $ 0.38 $ 0.34 Loss from discontinued
operations $ - $ (0.01 ) Net income per share - Diluted $
0.38 $ 0.33 Weighted average shares
used in computing net income per share: Basic 325 332 Diluted 328
334 Cash dividends declared per common share $ 0.115 $ 0.100
The preliminary income statement is estimated based
on our current information.
Page 1
AGILENT TECHNOLOGIES, INC. CONDENSED CONSOLIDATED
STATEMENT OF OPERATIONS (In millions, except per share
amounts) (Unaudited) PRELIMINARY
Nine Months Ended July
31, Percent
2016 (a)
2015(As Revised)
Inc/(Dec) Net revenue $ 3,091 $ 3,003 3% Costs
and expenses: Cost of products and services 1,482 1,497 (1%)
Research and development 245 248 (1%) Selling, general and
administrative 932 892 4% Total costs
and expenses 2,659 2,637 1%
Income from operations 432 366 18% Interest income 8 6 33%
Interest expense (53 ) (50 ) 6% Other income (expense), net
6 15 (60%) Income from continuing
operations before taxes 393 337 17% Provision for income
taxes 57 39 46% Income from
continuing operations 336 298 13% Loss from discontinued
operations, net of tax - (37 ) — Net
income $ 336 $ 261 29% Net
income per share - Basic: Income from continuing operations $ 1.03
$ 0.89 Loss from discontinued operations $ - $ (0.11 ) Net
income per share - Basic $ 1.03 $ 0.78
Net income per share - Diluted: Income from continuing operations $
1.02 $ 0.89 Loss from discontinued operations $ - $ (0.11 )
Net income per share - Diluted $ 1.02 $ 0.78
Weighted average shares used in computing net income per
share: Basic 326 334 Diluted 329 336 Cash dividends declared
per common share $ 0.345 $ 0.300
(a) Includes the impact of the adoption of
ASU 2016-09 as of 11/1/2015.
The preliminary income statement is estimated based
on our current information.
Page 2
AGILENT TECHNOLOGIES, INC. CONDENSED CONSOLIDATED
STATEMENT OF COMPREHENSIVE INCOME (In millions)
(Unaudited) PRELIMINARY
Three Months Ended Nine
Months Ended July 31, July 31, 2016
2015(As Revised)
2016 (a)
2015(As Revised)
Net income $ 124 $ 111 $ 336 $ 261 Other
comprehensive income (loss), net of tax: Unrealized gain
(loss) on derivative instruments (5 ) 1 (11 ) 7 Amounts
reclassified into earnings related to derivative instruments 1 (1 )
- (9 ) Foreign currency translation (48 ) (66 ) 41 (337 ) Net
defined benefit pension cost and post retirement plan costs: Change
in actuarial net loss 8 7 29 17 Change in net prior service benefit
(2 ) (3 ) (13 ) (8 ) Other
comprehensive income (loss) (46 ) (62 ) 46
(330 ) Total comprehensive income (loss) $ 78
$ 49 $ 382 $ (69 ) (a) Includes the
impact of the adoption of ASU 2016-09 as of 11/1/2015.
The preliminary statement of comprehensive income is
estimated based on our current information.
Page 3
AGILENT TECHNOLOGIES, INC. CONDENSED CONSOLIDATED
BALANCE SHEET (In millions, except par value and share
amounts) (Unaudited) PRELIMINARY
July 31, October 31,
2016 (a)
2015 ASSETS Current assets: Cash and cash equivalents
$ 2,199 $ 2,003 Short-term restricted cash and cash equivalents —
242 Accounts receivable, net 590 606 Inventory 543 541 Other
current assets 198 294 Total current
assets 3,530 3,686 Property, plant and equipment, net 623
604 Goodwill 2,525 2,366 Other intangible assets, net 442 445
Long-term investments 155 86 Other assets 459
292 Total assets $ 7,734 $ 7,479
LIABILITIES AND EQUITY Current liabilities: Accounts payable
$ 261 $ 279 Employee compensation and benefits 209 221 Deferred
revenue 279 258 Short-term debt 235 — Other accrued liabilities
167 218 Total current liabilities 1,151
976 Long-term debt 1,652 1,655 Retirement and
post-retirement benefits 229 264 Other long-term liabilities
356 414 Total liabilities 3,388
3,309 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; 613 million shares at July 31, 2016 and 611
million shares at October 31, 2015, issued
6 6
Treasury stock at cost; 289 million shares
at July 31, 2016 and 279 million shares at October 31, 2015
(10,462 ) (10,074 ) Additional paid-in-capital 9,144 9,045 Retained
earnings 6,000 5,581 Accumulated other comprehensive loss
(345 ) (391 ) Total stockholders' equity 4,343 4,167
Non-controlling interest 3 3 Total
equity 4,346 4,170 Total liabilities
and equity $ 7,734 $ 7,479 (a) Includes the
impact of the adoption of ASU 2016-09 as of 11/1/2015.
The preliminary balance sheet is estimated based on our
current information.
Page 4
AGILENT TECHNOLOGIES, INC. CONDENSED CONSOLIDATED
STATEMENT OF CASH FLOWS (In millions) (Unaudited)
PRELIMINARY
Three Months Nine Months Ended Ended
July 31, July 31, 2016
2016 (c)
Cash flows from operating activities: Net income $ 124 $ 336
Adjustments to reconcile net income to net cash provided by (used
in) operating activities: Depreciation and amortization 60 190
Share-based compensation 11 47 Excess and obsolete inventory
related charges 4 16 Other non-cash expenses, net 8 16 Changes in
assets and liabilities: Accounts receivable — 19 Inventory 2 (11 )
Accounts payable 26 (27 ) Employee compensation and benefits (1 )
(14 ) Other assets and liabilities (b) (40 ) (13 )
Net cash provided by operating activities (a) 194 559 Cash
flows from investing activities: Investments in property, plant and
equipment (24 ) (87 ) Proceeds from sale of investment securities —
1 Payment to acquire cost method investment — (80 ) Loan to equity
method investment — (3 ) Change in restricted cash and cash
equivalents, net — 245 Payment in exchange for convertible loan —
(1 ) Acquisition of businesses and intangible assets, net of cash
acquired — (235 ) Net cash used in investing
activities (24 ) (160 ) Cash flows from financing
activities: Issuance of common stock under employee stock plans 27
59 Cash paid to tax authorities for withheld shares from employees
(b) (1 ) (6 ) Treasury stock repurchases (94 ) (388 ) Payment of
dividends (37 ) (112 ) Proceeds from revolving credit facility —
255 Repayment of revolving credit facility —
(20 ) Net cash used in financing activities (105 ) (212 )
Effect of exchange rate movements (5 ) 9 Net increase in
cash and cash equivalents 60 196 Cash and cash equivalents
at beginning of period 2,139 2,003
Cash and cash equivalents at end of period $ 2,199 $
2,199 (a) Cash payments included in operating
activities: Severance payments 2 5 Income tax payments, net 33 54
Interest payments 29 66
(b) YTD decrease to financing activities
and a corresponding increase to operating cash of $6 million upon
adoption of ASU 2016-09 of which $5 million was related to
Q1'16.
(c) Includes the impact of the adoption of
ASU 2016-09 as of 11/1/2015.
The preliminary cash flow is estimated based on our
current information.
Page 5
AGILENT TECHNOLOGIES, INC. NON-GAAP INCOME FROM
CONTINUING OPERATIONS AND DILUTED EPS RECONCILIATIONS (In
millions, except per share amounts) (Unaudited)
PRELIMINARY
Three Months Ended
Nine Months Ended July 31, July 31,
2016
DilutedEPS
2015
DilutedEPS
2016
DilutedEPS
2015
DilutedEPS
(As Revised) (As Revised) GAAP Income from continuing
operations $ 124 $ 0.38 $ 113 0.34 $ 336
(b)
$ 1.02 (b) $ 298 0.89 Non-GAAP adjustments: Acceleration of
share-based compensation related to workforce reduction — — — — — —
2 0.01 Asset impairments 4 0.01 — — 4 0.01 — — Intangible
amortization 37 0.11 38 0.11 120 0.36 119 0.35 Business exit and
divestiture costs 1 — — — 6 0.02 13 0.04 Transformational
initiatives 11 0.03 12 0.04 32 0.10 41 0.12 Acquisition and
integration costs 11 0.03 4 0.01 28 0.09 6 0.02 Pension curtailment
gain — — — — (16 ) (0.05 ) — — Other 2 0.01 2 0.01 5 0.02 1 —
Adjustment for taxes (a) (30 ) (0.08 ) (22 )
(0.07 ) (57 ) (0.18 ) (65 )
(0.19 ) Non-GAAP Income from continuing operations $ 160
$ 0.49 $ 147 $ 0.44 $ 458
$ 1.39 $ 415 $ 1.24
(a) The adjustment for taxes excludes tax
benefits that management believes are not directly related to
ongoing operations and which are either isolated or cannot be
expected to occur again with any regularity or predictability. For
the three and nine months ended July 31, 2016 and 2015, management
uses a non-GAAP effective tax rate of 20% for both periods, that we
believe to be indicative of on-going operations.
(b) Includes the impact of the adoption of ASU 2016-09 as of
11/1/2015. Historical amounts are reclassified to conform
with current presentation. We provide non-GAAP income from
continuing operations and non-GAAP income from continuing
operations 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 asset impairments,
amortization of intangibles, pension curtailment, transformational
initiatives, acquisition and integration costs and business exit
and divestiture costs.
Asset impairments include
assets that have been written-down to their fair value.
Business
exit and divestiture costs include costs associated with the
exit of the NMR business and the divestiture of the XRD business.
Transformational initiatives include expenses associated
with targeted cost reduction activities such as manufacturing
transfers, small site consolidations, 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 the post-separation resizing of the IT
infrastructure and streamlining of IT systems as well as the
expenses incurred primarily in fiscal year 2015 to effect the Agile
Agilent reengineering.
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, information
technology systems and infrastructure and other employee-related
costs.
Pension curtailment gain resulted from certain
retirement plans benefit reductions.
Other includes certain
legal costs and settlements in addition to other miscellaneous
adjustments. 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 6
AGILENT TECHNOLOGIES, INC. SEGMENT
INFORMATION (In millions, except where noted)
(Unaudited) PRELIMINARY
Life Sciences and Applied Markets Group Q3'16
Q3'15 Revenue $ 504 $ 511 Gross Margin, % 57.8 % 55.6 %
Income from Operations $ 96 $ 95 Operating margin, % 19.1 % 18.7 %
Diagnostics and Genomics Group Q3'16
Q3'15 Revenue $ 180 $ 167 Gross Margin, % 55.8 % 57.0 %
Income from Operations $ 34 $ 28 Operating margin, % 18.8 % 16.8 %
Agilent CrossLab Group Q3'16
Q3'15 Revenue $ 360 $ 336 Gross Margin, % 48.7 % 48.5 %
Income from Operations $ 82 $ 76 Operating margin, % 22.7 % 22.6 %
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 asset impairments, amortization of
intangibles,transformational initiatives, acquisition and
integration costs and business exit and divestiture 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 7
AGILENT TECHNOLOGIES,
INC. RECONCILIATIONS OF REVENUE BY SEGMENT EXCLUDING THE NMR
BUSINESS, ACQUISITIONS, DIVESTITURES AND THE IMPACT OF
CURRENCY ADJUSTMENTS (CORE) (in millions)
(Unaudited) PRELIMINARY
Year-over-Year GAAP Year-over-Year
GAAP Revenue by
Segment
Q3'16 Q3'15 % Change Life
Sciences and Applied Markets Group $ 504 $ 511 (1 %)
Diagnostics and Genomics Group 180 167 8 % Agilent CrossLab
Group 360 336 7 % Agilent $ 1,044 $
1,014 3 %
Non-GAAP
CurrencyAdjustments
Currency-Adjusted (a) Year-over-Year
Year-over-Year
Non GAAP Revenue
by Segment
Q3'16 Q3'15 % Change
Q3'16 Q3'16 Q3'15 %
Change Life Sciences and Applied Markets Group excluding
acquisition and NMR $ 490 $ 503 (3 %) $ (3 ) $ 493 $ 503 (2 %)
Diagnostics and Genomics Group excluding acquisition 179 166
8 % - 179 166 8 % Agilent CrossLab Group 360 336 7 % (5 )
365 336 8 %
Agilent Revenue (Core) $ 1,029 $ 1,005 2 % $ (8 ) $ 1,037
$ 1,005 3 % (a) We compare the year-over-year change
in revenue excluding the effect of the NMR business, recent
acquisitions and divestitures and foreign currency rate
fluctuations to assess the performance of our underlying business.
To determine the impact of currency fluctuations, current period
results for entities reporting in currencies other than United
States dollars are converted into United States dollars at the
actual exchange rate in effect during the respective prior periods.
The preliminary reconciliation of GAAP revenue
adjusted for the NMR business, recent acquisitions and divestitures
and impact of currency is estimated based on our current
information. Page 8
AGILENT TECHNOLOGIES, INC.
RECONCILIATION OF ADJUSTED NON-GAAP INCOME FROM OPERATIONS AND
OPERATING MARGINS (In millions, except margin data)
(Unaudited) PRELIMINARY
Year Over Year Operating
Operating Percent Q3'16 Margin %
Q3'15 Margin % Inc/(Dec)
Revenue: $ 1,044 $ 1,014
Income from operations: GAAP Income from operations
$ 146
14.0
%
$ 144 14.2 % Add: Asset impairments $ 4 $ -
Intangible amortization 37 38 Transformational initiatives 11 12
Acquisition and integration costs 11 4 Business exit and
divestiture costs 1 - Other 2 1
Non-GAAP income
from operations $ 212 20.3 %
$ 199
19.7 % Reimbursement from Keysight for services (a) 3
4
Adjusted non-GAAP income from operations $
215 20.6 %
$ 203 19.9 % 0.7 %
(a) Post separation, Agilent is providing
Keysight Technologies, Inc. certain site services. These site
services are included in our operating expenses. The amounts billed
to Keysight for these services are recorded in other income.
We provide non-GAAP income from operations 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 asset impairments, amortization of intangibles, transformational
initiatives, acquisition and integration costs and business exit
and divestiture costs. 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
reconciliation of income from operations and operating margins is
estimated based on our current information. Page 9
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version on businesswire.com: http://www.businesswire.com/news/home/20160817006057/en/
Agilent Technologies Inc.EDITORIAL CONTACT:Rekha Parthasarathy,
+1 408-345-8396rekha.parthasarathy@agilent.comINVESTOR
CONTACT:Alicia Rodriguez, +1
408-345-8948alicia_rodriguez@agilent.com
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