Strong Start to Year as First-Quarter Revenue
and EPS Exceed Guidance; Raising Full Year Guidance
Highlights:
- Revenue of $1.28 billion, representing
reported growth of 6 percent with core revenue growth of 6
percent(1)
- GAAP net income of $504 million, or
$1.57 per share
- Non-GAAP net income of $244 million, or
$0.76 per share(2), an increase of 15 percent compared to 2018
- Second-quarter fiscal year revenue
guidance of $1.255 billion to $1.270 billion, and non-GAAP earnings
guidance of $0.70 to $0.72 per share(3)
- Raising fiscal year 2019 revenue
guidance to a range of $5.15 billion to $5.19 billion and non-GAAP
earnings guidance to a range of $3.03 to $3.07 per share(3)
Agilent Technologies, Inc. (NYSE: A) today reported revenue
of $1.28 billion for the first quarter ended January 31, 2019, up 6
percent year over year (up 6 percent on a core basis(1)).
On a GAAP basis, first-quarter net income was $504 million or
$1.57 per share, which included a discrete tax benefit of $299
million. This is compared to last year’s first-quarter net loss of
$320 million or $0.99 net loss per share, which included a tax
charge of $533 million related to U.S. Tax Reform legislation.
“We are pleased to start the year with a strong performance
driving excellent revenue and EPS growth and exceeding our
guidance,” said Mike McMullen, Agilent president and CEO. “The
Agilent team is delivering on our commitment to drive superior
revenue and earnings growth.”
“Our Agilent team continues to do a great job addressing
customer needs across our business groups,” continued McMullen. “We
kicked off 2019 strengthening our best-in-class portfolio bringing
new solutions and services to our customers to help them gain new
insights and achieve greater productivity in their labs.”
Financial Highlights
Life Sciences and Applied Markets Group
First-quarter revenue of $607 million from Agilent’s Life
Sciences and Applied Markets Group (LSAG) grew 2 percent year over
year (up 1 percent on a core basis(1)). Demand in the pharma,
environmental and forensics markets led the results. LSAG’s
operating margin for the quarter was 26.1 percent.
Agilent CrossLab Group
First-quarter revenue of $442 million from Agilent CrossLab
Group (ACG) grew 8 percent year over year (up 10 percent on a core
basis(1)). Growth was excellent across services and consumables,
regions and end-markets. ACG’s operating margin for the quarter was
23.9 percent.
Diagnostics and Genomics Group
First-quarter revenue of $235 million from Agilent’s Diagnostics
and Genomics Group (DGG) grew 13 percent year over year (up 12
percent on a core basis(1)). Strength in the pharma and clinical
and diagnostics end-markets led an excellent performance. DGG’s
operating margin for the quarter was 14.0 percent.
Second-Quarter and Full-Year Outlook
Agilent expects second-quarter 2019 revenue in the range of
$1.255 billion to $1.270 billion. Second-quarter 2019 non-GAAP
earnings are expected to be in the range of $0.70 to $0.72 per
share(3).
For fiscal year 2019, the company is raising full-year revenue
guidance to a range of $5.15 billion to $5.19 billion and non-GAAP
earnings guidance to a range of $3.03 to $3.07 per share(3).
Conference Call
Agilent’s management will present more details about its
first-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 “Q1 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 February 20, 2019 at 4:30 PM (Pacific Time) after the
call and through February 27 by dialing +1 855-859-2056 (or +1
404-537-3406 from outside the United States) and entering pass code
6738126.
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 15,300 people
worldwide. Information about Agilent is available at
www.agilent.com. To receive the latest Agilent news, subscribe to
our 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 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 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, 2018. 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 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 Q2 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. 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
including the impact of Tax Reform. 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 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. 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. 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 January 31, 2019
2018 (a)
Net revenue $ 1,284 $ 1,211 Costs and expenses: Cost
of products and services 577 541 Research and development 102 94
Selling, general and administrative 355 347
Total costs and expenses
1,034 982 Income from operations
250 229 Interest income 10 9 Interest expense (18 ) (20 )
Other income (expense), net 6 15
Income before taxes 248 233 Provision for (benefit from)
income taxes (256 ) 553 Net income (loss) $ 504
$ (320 ) Net income (loss) per share:
Basic $ 1.58 $ (0.99 ) Diluted $ 1.57 $ (0.99 ) Weighted
average shares used in computing net income (loss) per share: Basic
318 323 Diluted 322 323 Cash dividends declared per common
share $ 0.164 $ 0.149 (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 loss
or net 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
January 31, October 31, 2019
2018 ASSETS Current assets: Cash and cash equivalents
$ 2,057 $ 2,247 Accounts receivable, net 833 776 Inventory 653 638
Other current assets 169 187 Total
current assets 3,712 3,848 Property, plant and equipment,
net 829 822 Goodwill and other intangible assets, net 3,699 3,464
Long-term investments 77 68 Other assets 635
339 Total assets $ 8,952 $ 8,541
LIABILITIES AND EQUITY Current liabilities: Accounts payable
$ 315 $ 340 Employee compensation and benefits 237 304 Deferred
revenue 346 324 Other accrued liabilities 197
203 Total current liabilities 1,095 1,171 Long-term
debt 1,798 1,799 Retirement and post-retirement benefits 238 239
Other long-term liabilities 785 761
Total liabilities 3,916 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; 318
million shares at January 31, 2019 and 318 million shares at
October 31, 2018, issued 3 3 Additional paid-in-capital 5,324 5,308
Retained earnings (accumulated deficit) 90 (336 ) Accumulated other
comprehensive loss (381 ) (408 ) Total stockholders'
equity 5,036 4,567 Non-controlling interest —
4 Total equity 5,036 4,571 Total
liabilities and equity $ 8,952 $ 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
Three Months Ended January 31, January 31,
2019 2018 Cash flows from operating activities: Net
income (loss) $ 504 $ (320 ) Adjustments to reconcile net
income to net cash provided by (used in) operating activities:
Depreciation and amortization 54 51 Share-based compensation 24 31
Excess and obsolete inventory related charges 4 5 Other non-cash
expenses, net 3 1 Changes in assets and liabilities: Accounts
receivable, net (22 ) (5 ) Inventory (12 ) (34 ) Accounts payable
(16 ) (3 ) Employee compensation and benefits (71 ) (62 ) Change in
assets and liabilities due to Tax Act — 533 Other assets and
liabilities (255 ) 18 Net cash provided by
operating activities (a) 213 215 Cash flows from investing
activities: Investments in property, plant and equipment (39 ) (60
) Payment to acquire fair value investments (2 ) (1 ) Payment in
exchange for convertible note (1 ) — Acquisition of businesses and
intangible assets, net of cash acquired (248 ) (6 )
Net cash used in investing activities (290 ) (67 ) Cash
flows from financing activities: Issuance of common stock under
employee stock plans 22 25 Payment of taxes related to net share
settlement of equity awards (13 ) (28 ) Payment of dividends (52 )
(48 ) Proceeds from revolving credit facility — 274 Repayment of
debt and revolving credit facility — (139 ) Purchase of
non-controlling interest (4 ) — Treasury stock repurchases
(75 ) (47 ) Net cash provided by (used in) financing
activities (122 ) 37 Effect of exchange rate movements 9 25
Net increase (decrease) in cash, cash equivalents and
restricted cash (190 ) 210 Cash, cash equivalents and
restricted cash at beginning of period 2,254
2,686 Cash, cash equivalents and restricted cash at
end of period $ 2,064 $ 2,896
Reconciliation of cash, cash equivalents and restricted cash to the
condensed consolidated balance sheet: Cash and cash
equivalents $ 2,057 $ 2,887 Restricted cash, included in other
assets 7 9 Total cash, cash equivalents
and restricted cash $ 2,064 $ 2,896 (a)
Cash payments included in operating activities: Income tax
payments (refunds), net $ 21 $ 32 Interest payments $ 25 $ 29
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, 2019
Diluted EPS
2018
Diluted EPS
GAAP net income (loss) $ 504 $ 1.57 $ (320 ) $ (0.99
(b)
Non-GAAP adjustments: Intangible amortization 28 0.09 25 0.08
Transformational initiatives 5 0.02 4 0.01 Acquisition and
integration costs 10 0.03 3 0.01 Pension settlement gain — — (5 )
(0.01 ) NASD site costs 2 0.01 2 0.01 Special compliance costs — —
1 — Other 1 — 1 — Adjustment for Tax Reform — — 533 1.63 Tax
benefit on intra-entity asset transfer (299 ) (0.93 ) — —
Adjustment for taxes (a) (7 ) (0.03 ) (28 )
(0.08 ) Non-GAAP net income $ 244 $ 0.76 $ 216
$
0.66
(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 January 31, 2019 and 2018, management used a non-GAAP
effective tax rate of 17% and 18%, respectively. (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, adjustment for Tax
Reform, 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 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 Q1'19 Q1'18 Revenue $ 607 $ 596
Gross Margin, % 62.1 % 62.1 % Income from Operations $ 159 $ 154
Operating margin, % 26.1 % 25.9 %
Diagnostics and
Genomics Group Q1'19 Q1'18 Revenue $ 235 $ 207
Gross Margin, % 54.0 % 54.2 % Income from Operations $ 33 $ 24
Operating margin, % 14.0 % 11.7 %
Agilent CrossLab
Group Q1'19 Q1'18 Revenue $ 442 $ 408 Gross
Margin, % 51.3 % 50.4 % Income from Operations $ 105 $ 87 Operating
margin, % 23.9 % 21.2 %
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, 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
Q1'19 Q1'18 % Change Life Sciences and
Applied Markets Group $ 607 $ 596 2 % Diagnostics and
Genomics Group 235 207 13 % Agilent CrossLab Group 442 408 8
% Agilent $ 1,284 $ 1,211 6 %
Non-GAAP
(excluding Acquisitions &
Divestitures)
Year-over-Year
at Constant Currency (a)
Non GAAP Revenue
by Segment
Q1'19 Q1'18
Year-over-Year
% Change
Year-over-Year
% Change
Percentage PointImpact from
Currency
Current QuarterCurrency
Impact (b)
Life Sciences and Applied Markets Group $ 593 $ 596 — 1 % -1
ppt $ (11 ) Diagnostics and Genomics Group 229 207 10 % 12 %
-2 ppts (4 ) Agilent CrossLab Group 436 408 7 % 10 % -3 ppts
(12 ) Agilent (Core) $ 1,258 $ 1,211 4 % 6 %
-2 ppts $ (27 ) 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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version on businesswire.com: https://www.businesswire.com/news/home/20190220005822/en/
INVESTOR CONTACT:Ankur Dhingra+1 408 345
8948ankur_dhingra@agilent.com
EDITORIAL CONTACT:Stefanie Notaney+1 408 345
8955stefanie.notaney@agilent.com
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