Excellent Start to 2018; Raising Full Year
Guidance
Highlights:
- Revenue of $1.21 billion, representing
growth of 14 percent (core revenue growth of 10 percent(2)
versus midpoint guidance of 5.25 percent)
- GAAP net loss of $320 million, or $0.99
net loss per share. GAAP results include a one-time tax provision
of $533 million associated with the recent enactment of U.S. Tax
Reform legislation. (4)
- Non-GAAP net income of $216 million, or
$0.66 per share(1), $0.10 above midpoint guidance of $0.56
per share, increase of 25% from 2017
- Second-quarter fiscal year revenue
guidance of $1.20 billion to $1.22 billion, and non-GAAP earnings
guidance of $0.61 to $0.63 per share(3)
- Increasing fiscal year 2018 core
revenue growth guidance from a midpoint of 4.25 percent to a
midpoint of 5.5 percent(2). Increasing fiscal year 2018
non-GAAP earnings guidance from a midpoint of $2.53 to a midpoint
of $2.65 per share(3).
- Increasing fiscal year 2018 operating
cash flow guidance from $970 million to $1,050 million
Agilent Technologies, Inc. (NYSE:A) today reported revenue of
$1.21 billion for the first-quarter ended January 31, 2018, up 14
percent year over year (up 10 percent on a core
basis(2)).
On a GAAP basis, including the $533 million charge related to
U.S. Tax Reform legislation, first-quarter net loss was $320
million, or $0.99 net loss per share. Last year’s first-quarter
GAAP net income was $168 million, or $0.52 per share.
During the first quarter, Agilent had an adjustment related to
U.S. Tax Reform of $533 million, intangible amortization of $25
million, a pension settlement gain of $5 million, transformation
costs of $5 million, acquisition and integration costs of $3
million, and $3 million in other costs. Excluding these items and a
tax benefit of $28 million, Agilent reported first-quarter non-GAAP
net income of $216 million, or $0.66 per share(1).
“We are very pleased with our strong start to the year,” said
Mike McMullen, Agilent CEO and President. “The Agilent team
continued our positive momentum and delivered another excellent
quarter of operating results.”
“Looking forward, we will keep our focus on driving sustainable
above-market growth and delivering value to shareholders through
the execution of our proven strategy,” continued McMullen.
“Overall, we are well-positioned to continue delivering excellent
operating results.”
First-quarter revenue of $618 million from Agilent’s Life
Sciences and Applied Markets Group (LSAG) grew 14 percent year over
year (up 11 percent on a core basis(2)), with broad strength
across all major end markets. LSAG’s operating margin for the
quarter was 25.8 percent.
First-quarter revenue of $408 million from Agilent CrossLab
Group (ACG) grew 12 percent year over year (up 9 percent on a core
basis(2)). Growth was strong across services and
consumables. ACG’s operating margin for the quarter was 21.6
percent.
First-quarter revenue of $185 million from Agilent’s Diagnostics
and Genomics Group (DGG) grew 13 percent year over year (up 8
percent on a core basis(2)) led by strong demand for
pathology products and companion diagnostics services. DGG’s
operating margin for the quarter was 11.7 percent.
Agilent expects second-quarter 2018 revenue in the range of
$1.20 billion to $1.22 billion. Second-quarter 2018 non-GAAP
earnings are expected to be in the range of $0.61 to $0.63 per
share(3).
For fiscal year 2018, Agilent expects revenue of $4.885 billion
to $4.905 billion and non-GAAP earnings of $2.62 to $2.68 per
share(3). The guidance is based on January 31, 2018 currency
exchange rates.
Conference Call
Agilent’s management will present more details about its
first-quarter fiscal 2018 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 “Q1 2018 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 February 14, 2018 at 4:30 p.m. (Pacific Time) after
the call and through February 21 by dialing +1 855-859-2056 (or +1
404-537-3406 from outside the United States) and entering pass code
1482568.
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 its
customers’ most challenging questions. The company generated
revenues of $4.47 billion in fiscal 2017 and employs 13,800 people
worldwide. Information about Agilent is available at
www.agilent.com.
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 second quarter and full fiscal
year 2018. 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 annual report on Form 10-K for
the fiscal year ended October 31, 2017. 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 net income and non-GAAP earnings
per share primarily exclude the impacts of non-cash intangibles
amortization, transformation initiatives, acquisition and
integration costs, pension settlement gain, and Nucleic Acid
Solutions Division (“NASD”) site costs. We also exclude 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. For Q1 FY18, the
impact of Tax Reform is also excluded. A reconciliation between
non-GAAP net income and GAAP net loss is set forth on page 5 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 and acquisitions and divestitures within the past 12
months. Core revenue is a non-GAAP measure. A reconciliation
between Q1 FY18 GAAP revenue and core revenue is set forth on page
7 of the attached tables along with additional information
regarding the use of this non-GAAP measure. Core revenue growth
rate as projected for full fiscal year 2018 excludes the impact of
currency, acquisitions and divestitures within the past 12 months.
Most of these exclude amounts that 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.
(3) Non-GAAP earnings per share as projected
for Q2 FY18 and full fiscal year 2018 excludes primarily the
impacts of non-cash intangibles amortization, transformation
initiatives, acquisition and integration costs, pension settlement
gain, and Nucleic Acid Solutions Division (“NASD”) site costs. We
also exclude any tax benefits 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 Tax Reform. Most of these excluded amounts
that 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 $25 million per quarter.
(4) For the three months ended January 31,
2018, our preliminary provision for income taxes is $553 million.
This includes a $533 provision charge for the impact of the U.S.
Tax Cuts and Jobs Act (Tax Reform) enactment. This charge
primarily consists of: 1) an estimated provision of $480 million
for U.S. transition tax and correlative items on deemed repatriated
earnings of non-U.S. subsidiaries; and 2) an estimated provision of
$53 million associated with the decrease in the US corporate tax
rate from 35% to 21% and its impact on the Company’s US 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. The final impact of Tax Reform may differ materially from
these estimates, due to, among other things, changes in
interpretations, analysis and assumptions made by the Company,
additional guidance that may be issued, and actions that the
Company may undertake.
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 January 31,
Percent 2018 2017 Inc/(Dec) Net
revenue $ 1,211 $ 1,067 14 % Costs and expenses: Cost of
products and services 538 493 9 % Research and development 93 79 18
% Selling, general and administrative 341 289
18 % Total costs and expenses 972 861
13 % Income from operations 239 206 16 %
Interest income 9 4 125 % Interest expense (20 ) (20 ) — Other
income (expense), net 5 3 67 %
Income before taxes 233 193 21 % Provision for income taxes
553 25 — Net income (loss) $ (320 ) $ 168 —
Net income (loss) per share: Basic $ (0.99 ) $
0.52 Diluted $ (0.99 ) $ 0.52 Weighted average shares used
in computing net income (loss) per share: Basic 323 322 Diluted 323
326 Cash dividends declared per common share $ 0.149 $ 0.132
The
preliminary income statement is estimated based on our current
information. Page 1
AGILENT TECHNOLOGIES,
INC.CONDENSED CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
(LOSS)(In millions)(Unaudited)PRELIMINARY
Three Months Ended January
31, 2018 2017 Net income (loss) $ (320 ) $
168 Other comprehensive income (loss), net of tax:
Unrealized gain (loss) on derivative instruments (7 ) 1 Foreign
currency translation 79 (3 ) Net defined benefit pension cost and
post retirement plan costs: Change in actuarial net loss 6 17
Change in net prior service benefit (1 ) (1 ) Other
comprehensive income 77 14 Total
comprehensive income (loss) $ (243 ) $ 182
The preliminary statement of comprehensive income is
estimated based on our current information.
Page 2
AGILENT TECHNOLOGIES,
INC.CONDENSED CONSOLIDATED BALANCE SHEET(In millions,
except par value and share
amounts)(Unaudited)PRELIMINARY
January 31, October 31, 2018
2017 ASSETS Current assets: Cash and cash equivalents
$ 2,887 $ 2,678 Accounts receivable, net 751 724 Inventory 608 575
Other current assets 151 192 Total
current assets 4,397 4,169 Property, plant and equipment,
net 792 757 Goodwill 2,633 2,607 Other intangible assets, net 341
361 Long-term investments 140 138 Other assets 395
394 Total assets $ 8,698 $ 8,426
LIABILITIES AND EQUITY Current liabilities: Accounts payable
$ 292 $ 305 Employee compensation and benefits 221 276 Deferred
revenue 321 291 Short-term debt 345 210 Other accrued liabilities
182 181 Total current liabilities 1,361
1,263 Long-term debt 1,800 1,801 Retirement and
post-retirement benefits 241 234 Other long-term liabilities
770 293 Total liabilities 4,172
3,591 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; 323 million shares at January 31, 2018 and 322
million shares at October 31, 2017, issued
3 3
Treasury stock at cost; 37 thousand shares
at January 31, 2018 and zero shares at October 31, 2017
(3 ) — Additional paid-in-capital 5,320 5,300 Accumulated deficit
(529 ) (126 ) Accumulated other comprehensive loss (269 )
(346 ) Total stockholders' equity 4,522 4,831
Non-controlling interest 4 4 Total
equity 4,526 4,835 Total liabilities
and equity $ 8,698 $ 8,426 The
preliminary balance sheet is estimated based on our current
information. Page 3
AGILENT
TECHNOLOGIES, INC.CONDENSED CONSOLIDATED STATEMENT OF CASH
FLOWS(In millions)(Unaudited)PRELIMINARY
Three Months Ended January 31,
January 31, 2018 2017 Cash flows from
operating activities: Net income (loss) $ (320 ) $ 168
Adjustments to reconcile net income (loss) to net cash provided by
(used in) operating activities: Depreciation and amortization 51 55
Share-based compensation 31 20 Excess and obsolete inventory
related charges 5 7 Other non-cash expenses, net 1 2 Changes in
assets and liabilities: Accounts receivable, net (5 ) (31 )
Inventory (34 ) (26 ) Accounts payable (3 ) 9 Employee compensation
and benefits (62 ) (43 ) Change in assets and liabilities due to
Tax Reform 533 — Other assets and liabilities 18
(45 ) Net cash provided by operating activities (a) 215 116
Cash flows from investing activities: Investments in
property, plant and equipment (60 ) (32 ) Payment to acquire cost
method investments (1 ) — Proceeds from divestitures — 1
Acquisition of businesses and intangible assets, net of cash
acquired (6 ) (70 ) Net cash used in investing
activities (67 ) (101 ) Cash flows from financing
activities: Issuance of common stock under employee stock plans 25
18 Payment of taxes related to net share settlement of equity
awards (28 ) (12 ) Payment of dividends (48 ) (42 ) Proceeds from
debt and revolving credit facility 274 131 Repayment of debt and
revolving credit facility (139 ) (42 ) Treasury stock repurchases
(47 ) (111 ) Net cash provided by (used in) financing
activities 37 (58 ) Effect of exchange rate movements 24 (5
) Net increase (decrease) in cash and cash equivalents 209
(48 ) Cash and cash equivalents at beginning of period
2,678 2,289 Cash and cash
equivalents at end of period $ 2,887 $ 2,241
(a) Cash payments included in operating activities: Income tax
payments, net $ 32 $ 27 Interest payments $ 29 $ 29
The preliminary cash flow is estimated based on our current
information.
Page 4
AGILENT TECHNOLOGIES, INC.NON-GAAP NET
INCOME AND DILUTED EPS RECONCILIATIONS(In millions, except
per share amounts)(Unaudited)PRELIMINARY
Three Months
Ended January 31, 2018
DilutedEPS
2017
DilutedEPS
GAAP net (loss) income $ (320 ) $ (0.99 ) (b) $ 168 $ 0.52
Non-GAAP adjustments: Intangible amortization 25 0.08 31 0.10
Transformational initiatives 5 0.02 2 0.01 Acquisition and
integration costs 3 0.01 16 0.05 Pension settlement gain (5 ) (0.02
) (32 ) (0.11 ) NASD site costs 2 0.01 — — Special compliance costs
1 — — — Other — — 2 0.01
Adjustment for Tax Reform
533 1.63 — — Adjustment for taxes (a) (28 )
(0.08 ) (15 ) (0.05 ) Non-GAAP net income $
216 $ 0.66 (c) $ 172 $ 0.53
(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, 2018, management uses a non-GAAP
effective tax rate of 18.0%. In the same periods last year,
management used a non-GAAP effective tax rate of 19.0%. (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 327 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,
transformational initiatives, acquisition and integration costs,
pension settlement gain, NASD site costs, special compliance costs,
and adjustment for Tax Reform.
Transformational
initiatives include expenses associated with targeted cost
reduction activities such as manufacturing transfers, 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 the post-separation resizing of the IT
infrastructure and streamlining of IT system as well as company
programs to transform our product lifecycle management (PLM) system
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. The final
impact of Tax Reform may differ materially from these estimates,
due to, among other things, changes in interpretations, analysis
and assumptions made, additional guidance that may be issued, and
actions that we may undertake. 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 5
AGILENT TECHNOLOGIES,
INC.SEGMENT INFORMATION(In millions, except where
noted)(Unaudited)
PRELIMINARY
Life Sciences and Applied Markets Group
Q1'18 Q1'17 Revenue $ 618 $ 540 Gross Margin, % 61.8
% 59.6 % Income from Operations $ 159 $ 126 Operating margin, %
25.8 % 23.4 %
Diagnostics and Genomics Group
Q1'18 Q1'17 Revenue $ 185 $ 164 Gross Margin, % 54.4
% 54.8 % Income from Operations $ 22 $ 23 Operating margin, % 11.7
% 14.3 %
Agilent CrossLab Group Q1'18
Q1'17 Revenue $ 408 $ 363 Gross Margin, % 50.6 % 48.5 %
Income from Operations $ 88 $ 74 Operating margin, % 21.6 % 20.3 %
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 6
AGILENT TECHNOLOGIES,
INC.RECONCILIATIONS OF REVENUE BY SEGMENT
EXCLUDINGACQUISITIONS, DIVESTITURES AND THE IMPACT OF
CURRENCY ADJUSTMENTS (CORE)(in
millions)(Unaudited)PRELIMINARY
Year-over-Year
GAAP Year-over-Year
GAAP Revenue by
Segment
Q1'18 Q1'17 % Change Life
Sciences and Applied Markets Group $ 618 $ 540 14 %
Diagnostics and Genomics Group 185 164 13 % Agilent CrossLab
Group 408 363 12 % Agilent $ 1,211 $
1,067 14 %
Non-GAAP
(excluding Acquisitions &
Divestitures)
CurrencyAdjustments
CurrencyAdjustments
Currency-Adjusted (a) Year-over-Year
Year-over-Year
Non GAAP Revenue
by Segment
Q1'18 Q1'17 % Change
Q1'18 Q1'17 Q1'18 Q1'17 % Change
Life Sciences and Applied Markets Group $ 616 $ 539 14 % $
(3 ) $ (17 ) $ 619 $ 556 11 % Diagnostics and Genomics Group
182 163 12 % (1 ) (7 ) 183 170 8 % Agilent CrossLab Group
408 363 12 % (3 ) (15 ) 411 378 9 %
Agilent (Core) $ 1,206 $ 1,065
13 % $ (7 ) $ (39 ) $ 1,213 $ 1,104 10 %
(a) 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. To determine the impact of currency
fluctuations, current and prior year 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 last month of the current period.
The preliminary reconciliation of GAAP revenue adjusted for recent
acquisitions and divestitures and impact of currency is estimated
based on our current information. Page 7
View source
version on businesswire.com: http://www.businesswire.com/news/home/20180214006237/en/
Agilent Technologies, Inc.INVESTOR CONTACT:Alicia Rodriguez, +1
408-345-8948alicia_rodriguez@agilent.comorEDITORIAL
CONTACT:Stefanie Notaney, +1
408-345-8955stefanie.notaney@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