Delivers Very Strong Results, Raising Full-Year
Guidance
Highlights:
- Revenue of $1.59 billion represents an increase of 26% reported
growth year-over-year, up 21% on a core(1) basis.
- GAAP diluted earnings per share (EPS) of 86 cents, up 34%.
- Non-GAAP(2) diluted EPS of $1.10 per share, up 41%.
- Full-year guidance raised with revenue now expected to be in
the range of $6.29 billion to $6.32 billion and non-GAAP(3) EPS of
$4.28 to $4.31.
- Fourth-quarter revenue expected to be in the range of $1.63
billion to $1.66 billion with non-GAAP(3) EPS of $1.15 to
$1.18.
Agilent Technologies Inc. (NYSE: A) today reported revenue of
$1.59 billion for the third quarter ended July 31, 2021, an
increase of 26% compared to the third quarter of 2020 and up 21% on
a core(1) basis.
Third-quarter GAAP net income was $264 million, or 86 cents per
share. This compares with $199 million, or 64 cents per share, in
the third quarter of fiscal year 2020. Non-GAAP(2) net income was
$337 million, or $1.10 per share compared with $243 million, or 78
cents per share, during the third quarter a year ago.
“The positive momentum in Agilent’s business continued in the
third quarter across all markets and regions as our performance
exceeded our expectations,” said Mike McMullen, Agilent president
and CEO. “Our focus on high-growth businesses and strong execution
has again led to another quarter of excellent results and we expect
this momentum to continue as we close out our fiscal year.”
Financial Highlights
Life Sciences and Applied Markets Group
Third-quarter revenue of $680 million from Agilent’s Life
Sciences and Applied Markets Group (LSAG) was up 22% year-over-year
and 18% on a core(1) basis. LSAG’s operating margin was 25.0%.
Agilent CrossLab Group
Third-quarter revenue of $560 million from the Agilent CrossLab
Group (ACG) increased 21% year-over-year and was up 15% on a
core(1) basis. ACG’s operating margin was 29.3%.
Diagnostics and Genomics Group
Third-quarter revenue of $346 million from Agilent’s Diagnostics
and Genomics Group (DGG) increased 44% year-over-year and was up
37% on a core(1) basis. DGG’s operating margin was 22.6%.
Full-Year and Fourth-Quarter Outlook
Agilent has increased its outlook and now expects revenue in the
range of $6.29 billion to $6.32 billion for fiscal year 2021.
Fiscal year 2021 non-GAAP(3) earnings guidance has also increased
to a range of $4.28 to $4.31 per share.
Agilent expects fourth-quarter 2021 revenue in the range of
$1.63 billion to $1.66 billion, with non-GAAP(3) earnings expected
to be in the range of $1.15 to $1.18 per share.
The outlook is based on currency-exchange rates as of July 31,
2021.
Conference Call
Agilent’s management will present additional details regarding
the company’s third-quarter 2021 financial results on a conference
call with investors today at 1:30 p.m. PDT. This event will be
broadcast live online in listen-only mode. To listen to the
webcast, select the “Q3 2021 Agilent Technologies Inc. Earnings
Conference Call” link in the “News & Events -- Events” portion
of the Investor Relations section of the Agilent website. The
webcast will remain on the company site for 90 days.
About Agilent Technologies
Agilent Technologies Inc. (NYSE: A) is a global leader in life
sciences, diagnostics, and applied chemical markets, 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 $5.34 billion in fiscal year 2020
and employs 16,400 people worldwide. Information about Agilent is
available at www.agilent.com. To receive the latest Agilent news,
please 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 growth prospects, business, financial results, revenue,
and non-GAAP earnings guidance for the fourth quarter and full
fiscal year 2021 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; the adverse
impacts of and risks posed by the COVID-19 pandemic and other risks
detailed in Agilent’s filings with the Securities and Exchange
Commission, including its quarterly report on Form 10-Q for the
quarter ended April 30, 2021. 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 Q3 FY21
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.
(2) Non-GAAP net income and non-GAAP earnings per share
primarily exclude the impacts of non-cash asset impairments,
intangibles amortization, transformational initiatives, acquisition
and integration costs, loss on extinguishment of debt and business
exit and divestiture 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. 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 Q4 FY21 and
full fiscal year 2021 exclude primarily the impacts of non-cash
intangibles amortization, transformational initiatives and
acquisition and integration costs. Agilent also excludes any tax
benefits or expenses that are not directly related to ongoing
operations and which are either isolated or are not expected to
occur again with any regularity or predictability. Most of these
excluded amounts pertain to events that have not yet occurred and
are not currently possible to estimate with a reasonable degree of
accuracy and could differ materially. Therefore, no reconciliation
to GAAP amounts has been provided. Future amortization of
intangibles is expected to be approximately $51 million per
quarter.
AGILENT TECHNOLOGIES,
INC.
CONDENSED CONSOLIDATED
STATEMENT OF OPERATIONS
(In millions, except per share
amounts)
(Unaudited)
PRELIMINARY
Three Months Ended
Nine Months Ended
July 31,
July 31,
2021
2020
2021
2020
Net revenue
$
1,586
$
1,261
$
4,659
$
3,856
Costs and expenses: Cost of products and services
734
592
2,152
1,807
Research and development
113
92
325
393
Selling, general and administrative
403
347
1,230
1,109
Total costs and expenses
1,250
1,031
3,707
3,309
Income from operations
336
230
952
547
Interest income
—
1
1
7
Interest expense
(21
)
(19
)
(60
)
(59
)
Other income (expense), net
12
7
19
64
Income before taxes
327
219
912
559
Provision for income taxes
63
20
144
62
Net income
$
264
$
199
$
768
$
497
Net income per share: Basic
$
0.87
$
0.64
$
2.52
$
1.61
Diluted
$
0.86
$
0.64
$
2.50
$
1.59
Weighted average shares used in computing net income per
share: Basic
303
309
305
309
Diluted
306
312
307
312
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 July 31,
October 31,
2021
2020
ASSETS Current assets: Cash and cash equivalents
$
1,428
$
1,441
Accounts receivable, net
1,122
1,038
Inventory
818
720
Other current assets
264
216
Total current assets
3,632
3,415
Property, plant and equipment, net
905
845
Goodwill and other intangible assets, net
5,008
4,433
Long-term investments
204
158
Other assets
742
776
Total assets
$
10,491
$
9,627
LIABILITIES AND EQUITY Current liabilities: Accounts
payable
$
416
$
354
Employee compensation and benefits
423
367
Deferred revenue
443
386
Short-term debt
130
75
Other accrued liabilities
312
285
Total current liabilities
1,724
1,467
Long-term debt
2,728
2,284
Retirement and post-retirement benefits
365
389
Other long-term liabilities
728
614
Total liabilities
5,545
4,754
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; 303
million shares at July 31, 2021 and 306 million shares at October
31, 2020, issued and outstanding
3
3
Additional paid-in-capital
5,307
5,311
Retained earnings
90
81
Accumulated other comprehensive loss
(454
)
(522
)
Total stockholders' equity
4,946
4,873
Total liabilities and stockholders' equity
$
10,491
$
9,627
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 Nine Months Ended July
31, July 31,
2021
2020
Cash flows from operating activities: Net income
$
768
$
497
Adjustments to reconcile net income to net cash provided by
operating activities: Depreciation and amortization
237
232
Share-based compensation
88
63
Excess and obsolete inventory related charges
21
18
Loss on extinguishment of debt
17
—
Asset impairment charges
2
99
Unrealized gain on equity securities, net
(19
)
(26
)
Other non-cash expenses, net
1
6
Changes in assets and liabilities: Accounts receivable, net
(69
)
1
Inventory
(115
)
(86
)
Accounts payable
46
(35
)
Employee compensation and benefits
38
(32
)
Other assets and liabilities
29
(193
)
Net cash provided by operating activities (a)
1,044
544
Cash flows from investing activities: Investments in
property, plant and equipment
(126
)
(92
)
Proceeds from sale of property, plant and equipment
—
1
Payment to acquire fair value investments
(15
)
(20
)
Payment to acquire intangible assets
(1
)
—
Payment in exchange for convertible note
(2
)
(9
)
Acquisition of businesses and intangible assets, net of cash
acquired
(546
)
—
Net cash used in investing activities
(690
)
(120
)
Cash flows from financing activities: Issuance of common
stock under employee stock plans
52
56
Payment of taxes related to net share settlement of equity awards
(74
)
(34
)
Issuance of senior notes
848
499
Debt issuance costs
(7
)
(4
)
Payment of dividends
(177
)
(167
)
Repayment of senior notes
(417
)
—
Proceeds from commercial paper
1,492
240
Repayment of commercial paper
(1,437
)
(200
)
Proceeds from credit facility
—
798
Repayment of credit facility and short-term loan
—
(1,413
)
Repayment of finance lease
—
(4
)
Treasury stock repurchases
(652
)
(219
)
Net cash used in financing activities
(372
)
(448
)
Effect of exchange rate movements
6
—
Net decrease in cash, cash equivalents and restricted cash
(12
)
(24
)
Cash, cash equivalents and restricted cash at beginning of
period
1,447
1,388
Cash, cash equivalents and restricted cash at end of period
$
1,435
$
1,364
Reconciliation of cash, cash equivalents and
restricted cash to the condensed consolidated balance sheet:
Cash and cash equivalents
$
1,428
$
1,358
Restricted cash, included in other assets
7
6
Total cash, cash equivalents and restricted cash
$
1,435
$
1,364
(a) Cash payments included in operating activities:
Income tax paid, net
$
164
$
325
Interest payments
$
53
$
53
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
Nine Months Ended
July 31,
July 31,
2021
Diluted EPS
2020
Diluted EPS
2021
Diluted EPS
2020
Diluted EPS
GAAP net income
$
264
$
0.86
$
199
$
0.64
$
768
$
2.50
$
497
$
1.59
Non-GAAP adjustments: Asset impairments
—
—
—
—
2
0.01
99
0.32
Intangible amortization
53
0.17
45
0.15
143
0.47
139
0.45
Transformational initiatives
12
0.04
13
0.04
32
0.10
41
0.13
Acquisition and integration costs
10
0.03
9
0.03
32
0.10
33
0.11
Loss on extinguishment of debt
—
—
—
—
17
0.06
—
—
Business exit and divestiture costs
—
—
—
—
4
0.01
—
—
Other
(7
)
(0.03
)
2
—
(12
)
(0.05
)
(21
)
(0.07
)
Adjustment for taxes (a)
5
0.03
(25
)
(0.08
)
(22
)
(0.06
)
(70
)
(0.23
)
Non-GAAP net income
$
337
$
1.10
$
243
$
0.78
$
964
$
3.14
$
718
$
2.30
(a) The adjustment for taxes excludes tax expense
(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 and nine months ended July 31, 2021, management used a
non-GAAP effective tax rate of 14.75%. For the three and nine
months ended July 31, 2020, management used a non-GAAP effective
tax rate of 15.50%. 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 asset
impairments, amortization of intangibles, transformational
initiatives, acquisition and integration costs, loss on
extinguishment of debt and business exit and divestiture costs.
Asset impairments include assets that have been written down
to their fair value.
Transformational initiatives include
expenses associated with targeted cost reduction activities such as
manufacturing transfers including costs to move manufacturing,
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.
Loss on
extinguishment of debt relates to the net loss recorded on the
redemption of $100 million of the $400 million outstanding 3.2%
2022 senior notes due on October 1, 2022, called on December 22,
2020 and settled on January 21, 2021 and the net loss recorded on
the redemption of the remaining $300 million called on March 5,
2021 and settled on April 5, 2021.
Business exit and divestiture
costs include costs associated with business divestitures.
Other includes certain legal costs and settlements, net
unrealized gains related to our equity securities and acceleration
of share-based compensation expense 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 4
AGILENT
TECHNOLOGIES, INC. SEGMENT INFORMATION (In millions,
except where noted) (Unaudited) PRELIMINARY
Quarter-over-Quarter Life Sciences
and Applied Markets Group Q3'21 Q3'20 Revenue
$
680
$
557
Gross Margin, %
60.0
%
59.3
%
Income from Operations
$
170
$
126
Operating margin, %
25.0
%
22.6
%
Diagnostics and Genomics Group Q3'21
Q3'20 Revenue
$
346
$
241
Gross Margin, %
53.5
%
49.8
%
Income from Operations
$
78
$
41
Operating margin, %
22.6
%
17.2
%
Agilent CrossLab Group Q3'21
Q3'20 Revenue
$
560
$
463
Gross Margin, %
52.5
%
52.6
%
Income from Operations
$
164
$
132
Operating margin, %
29.3
%
28.4
%
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 and acquisition and integration 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
Q3'21 Q3'20
% Change
Life Sciences and Applied Markets Group
$ 680
$ 557
22%
Diagnostics and Genomics Group
346
241
44%
Agilent CrossLab Group
560
463
21%
Agilent
$ 1,586
$ 1,261
26%
Non-GAAP (excluding
Acquisitions & Divestitures)
Year-over-Yearat Constant Currency (a)
Year-over-Year
Year-over-Year Percentage Point Impact from Currency
Current Quarter Currency Impact (b) Non GAAP Revenue by Segment Q3'21
Q3'20
% Change
% Change
Life Sciences and Applied Markets Group
$ 680
$ 557
22%
18%
4 ppts
$ 21
Diagnostics and Genomics Group
340
241
41%
37%
4 ppts
10
Agilent CrossLab Group
560
463
21%
15%
6 ppts
26
Agilent (Core)
$ 1,580
$ 1,261
25%
21%
4 ppts
$ 57
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: Parmeet Ahuja +1 408-345-8948
parmeet_ahuja@agilent.com
Media Contact: Tom Beermann +1 408-553-2914
tom.beermann@agilent.com
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