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Highlights:
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Agilent Technologies, Inc. (NYSE: A) today reported revenue of $1.27 billion for the third quarter ended July 31, 2019, up 6 percent year-over-year (and up 6 percent on a core basis(1)).
On a GAAP basis, third quarter net income was $191 million or $0.60 per share. This compares with $236 million or $0.73 per share in the third quarter of 2018. Non-GAAP net income(2) was $240 million or $0.76 per share during the quarter, compared with $217 million or $0.67 per share during the third quarter a year ago.
"The Agilent team delivered very strong results in the third quarter, exceeding both our top and bottom-line expectations," said Mike McMullen, Agilent president and CEO. "Building on this performance, we are increasing our guidance for the full year. In the quarter, we also announced the pending acquisition of BioTek, continuing our investments in high growth markets. BioTek will significantly expand our presence in the fast-growing field of cell analysis."
Financial Highlights
Life Sciences and Applied Markets Group
Third quarter revenue of $544 million from Agilent's Life Sciences and Applied Markets Group (LSAG) was up 1 percent year-over-year (and flat on a core basis(1)). Demand in the pharma, environmental and forensics markets was strong, offset by expected weakness in the food market. LSAG's operating margin for the quarter was 21.7 percent.
Agilent CrossLab Group
Third quarter revenue of $467 million from the Agilent CrossLab Group (ACG) grew 10 percent year-over-year (up 11 percent on a core basis(1)). Growth was broad-based across all regions and market segments. ACG's operating margin for the quarter was 26.2 percent.
Diagnostics and Genomics Group
Third quarter revenue of $263 million from Agilent's Diagnostics and Genomics Group (DGG) grew 11 percent year-over-year (up 13 percent on a core basis(1)). Growth in the company's Nucleic Acid Solutions Division (NASD), and in the diagnostics and clinical markets drove the strong results. DGG's operating margin for the quarter was 19.1 percent.
Full-Year and Fourth Quarter Outlook
For fiscal year 2019, the company is raising revenue guidance at the midpoint, to a range of $5.105 billion to $5.125 billion. Full-year non-GAAP earnings guidance is being increased to a range of $3.07 to $3.09 per share(3).
Agilent expects fourth quarter 2019 revenue in the range of $1.31 billion to $1.33 billion. Fourth quarter 2019 non-GAAP earnings are expected to be in the range of $0.84 to $0.86 per share(3).
Both the fiscal year and fourth quarter guidance excludes any impact of the pending BioTek acquisition. The acquisition is still expected to be completed in Agilent's fiscal fourth quarter, subject to regulatory approvals and customary closing conditions.
Conference Call
Agilent's management will present more details about its third 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 "Q3 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 financial information can be found at www.investor.agilent.com by selecting "Financial Results" in the "Financial Information" section.# # #
Financial Statements for Third Quarter Fiscal 2019
AGILENT TECHNOLOGIES, INC. CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS (In millions, except per share amounts) (Unaudited) PRELIMINARY |
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Three Months Ended |
Nine Months Ended |
|||||||||||||
July 31, |
July 31, |
|||||||||||||
2019 |
2018 (a) |
2019 |
2018 (a) |
|||||||||||
Net revenue | $ |
1,274 |
|
$ |
1,203 |
|
$3,796 |
|
$ |
3,620 |
|
|||
Costs and expenses: | ||||||||||||||
Cost of products and services |
|
582 |
|
|
544 |
|
1,728 |
|
|
1,648 |
|
|||
Research and development |
|
101 |
|
|
97 |
|
302 |
|
|
283 |
|
|||
Selling, general and administrative |
|
366 |
|
|
341 |
|
1,075 |
|
|
1,029 |
|
|||
Total costs and expenses |
|
1,049 |
|
|
982 |
|
3,105 |
|
|
2,960 |
|
|||
Income from operations |
|
225 |
|
|
221 |
|
691 |
|
|
660 |
|
|||
Interest income |
|
10 |
|
|
9 |
|
30 |
|
|
28 |
|
|||
Interest expense |
|
(18 |
) |
|
(18 |
) |
(53 |
) |
|
(57 |
) |
|||
Other income (expense), net |
|
5 |
|
|
30 |
|
20 |
|
|
71 |
|
|||
Income before taxes |
|
222 |
|
|
242 |
|
688 |
|
|
702 |
|
|||
Provision (benefit) for income taxes |
|
31 |
|
|
6 |
|
(189 |
) |
|
581 |
|
|||
Net income | $ |
191 |
|
$ |
236 |
|
$877 |
|
$ |
121 |
|
|||
Net income per share: | ||||||||||||||
Basic | $ |
0.61 |
|
$ |
0.74 |
|
$2.78 |
|
$ |
0.38 |
|
|||
Diluted | $ |
0.60 |
|
$ |
0.73 |
|
$2.74 |
|
$ |
0.37 |
|
|||
Weighted average shares used in computing net income per share: | ||||||||||||||
Basic |
|
312 |
|
|
320 |
|
316 |
|
|
322 |
|
|||
Diluted |
|
316 |
|
|
324 |
|
320 |
|
|
326 |
|
|||
(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 income or net income per share. |
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The preliminary income statement is estimated based on our current information. |
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Page 1 |
AGILENT TECHNOLOGIES, INC. | ||||||||
CONDENSED CONSOLIDATED BALANCE SHEET | ||||||||
(In millions, except par value and share amounts) | ||||||||
(Unaudited) | ||||||||
PRELIMINARY | ||||||||
July 31, |
October 31, |
|||||||
2019 |
2018 |
|||||||
ASSETS | ||||||||
Current assets: | ||||||||
Cash and cash equivalents | $ |
1,765 |
|
$ |
2,247 |
|
||
Accounts receivable, net |
|
856 |
|
|
776 |
|
||
Inventory |
|
660 |
|
|
638 |
|
||
Other current assets |
|
176 |
|
|
187 |
|
||
Total current assets |
|
3,457 |
|
|
3,848 |
|
||
Property, plant and equipment, net |
|
839 |
|
|
822 |
|
||
Goodwill and other intangible assets, net |
|
3,618 |
|
|
3,464 |
|
||
Long-term investments |
|
99 |
|
|
68 |
|
||
Other assets |
|
612 |
|
|
339 |
|
||
Total assets | $ |
8,625 |
|
$ |
8,541 |
|
||
LIABILITIES AND EQUITY | ||||||||
Current liabilities: | ||||||||
Accounts payable | $ |
316 |
|
$ |
340 |
|
||
Employee compensation and benefits |
|
270 |
|
|
304 |
|
||
Deferred revenue |
|
344 |
|
|
324 |
|
||
Short-term debt |
|
504 |
|
— | ||||
Other accrued liabilities |
|
188 |
|
|
203 |
|
||
Total current liabilities |
|
1,622 |
|
|
1,171 |
|
||
Long-term debt |
|
1,294 |
|
|
1,799 |
|
||
Retirement and post-retirement benefits |
|
225 |
|
|
239 |
|
||
Other long-term liabilities |
|
737 |
|
|
761 |
|
||
Total liabilities |
|
3,878 |
|
|
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; 310 million shares at July 31, 2019 and 318 million shares at October 31, 2018, issued |
|
3 |
|
|
3 |
|
||
Additional paid-in-capital |
|
5,270 |
|
|
5,308 |
|
||
Accumulated deficit |
|
(122 |
) |
|
(336 |
) |
||
Accumulated other comprehensive loss |
|
(404 |
) |
|
(408 |
) |
||
Total stockholders' equity |
|
4,747 |
|
|
4,567 |
|
||
Non-controlling interest | — |
|
4 |
|
||||
Total equity |
|
4,747 |
|
|
4,571 |
|
||
Total liabilities and equity | $ |
8,625 |
|
$ |
8,541 |
|
||
The preliminary balance sheet is estimated based on our current information. |
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Page 2 |
AGILENT TECHNOLOGIES, INC. | ||||||||
CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS | ||||||||
(In millions) | ||||||||
(Unaudited) | ||||||||
PRELIMINARY | ||||||||
Nine Months Ended |
||||||||
July 31, |
July 31, |
|||||||
2019 |
2018 |
|||||||
Cash flows from operating activities: | ||||||||
Net income | $ |
877 |
|
$ |
121 |
|
||
Adjustments to reconcile net income to net cash provided by (used in) operating activities: | ||||||||
Depreciation and amortization |
|
162 |
|
|
154 |
|
||
Share-based compensation |
|
57 |
|
|
56 |
|
||
Excess and obsolete inventory related charges |
|
12 |
|
|
22 |
|
||
Other non-cash (income) expenses, net |
|
4 |
|
|
(13 |
) |
||
Changes in assets and liabilities: | ||||||||
Accounts receivable, net |
|
(58 |
) |
|
(9 |
) |
||
Inventory |
|
(31 |
) |
|
(66 |
) |
||
Accounts payable | — |
|
(9 |
) |
||||
Employee compensation and benefits |
|
(35 |
) |
|
(24 |
) |
||
Change in assets and liabilities due to Tax Act | — |
|
533 |
|
||||
Other assets and liabilities |
|
(281 |
) |
|
(50 |
) |
||
Net cash provided by operating activities (a) |
|
707 |
|
|
715 |
|
||
Cash flows from investing activities: | ||||||||
Investments in property, plant and equipment |
|
(125 |
) |
|
(141 |
) |
||
Payment to acquire fair value investments |
|
(21 |
) |
|
(11 |
) |
||
Payment in exchange for convertible note |
|
(2 |
) |
|
(2 |
) |
||
Payment to acquire intangible assets |
|
(1 |
) |
— | ||||
Acquisition of businesses and intangible assets, net of cash acquired |
|
(248 |
) |
|
(437 |
) |
||
Net cash used in investing activities |
|
(397 |
) |
|
(591 |
) |
||
Cash flows from financing activities: | ||||||||
Issuance of common stock under employee stock plans |
|
52 |
|
|
53 |
|
||
Payment of taxes related to net share settlement of equity awards |
|
(15 |
) |
|
(29 |
) |
||
Payment of dividends |
|
(155 |
) |
|
(144 |
) |
||
Proceeds from revolving credit facility | — |
|
483 |
|
||||
Repayment of revolving credit facility | — |
|
(593 |
) |
||||
Repayment of debt | — |
|
(100 |
) |
||||
Purchase of non-controlling interest |
|
(4 |
) |
— | ||||
Treasury stock repurchases |
|
(674 |
) |
|
(336 |
) |
||
Net cash used in financing activities |
|
(796 |
) |
|
(666 |
) |
||
Effect of exchange rate movements |
|
3 |
|
|
(5 |
) |
||
Net decrease in cash, cash equivalents and restricted cash |
|
(483 |
) |
|
(547 |
) |
||
Cash, cash equivalents and restricted cash at beginning of period |
|
2,254 |
|
|
2,686 |
|
||
Cash, cash equivalents and restricted cash at end of period | $ |
1,771 |
|
$ |
2,139 |
|
||
Reconciliation of cash, cash equivalents and restricted cash to the condensed consolidated balance sheet: | ||||||||
Cash and cash equivalents | $ |
1,765 |
|
$ |
2,131 |
|
||
Restricted cash, included in other assets |
|
6 |
|
|
8 |
|
||
Total cash, cash equivalents and restricted cash | $ |
1,771 |
|
$ |
2,139 |
|
||
(a) Cash payments included in operating activities: | ||||||||
Income tax payments (refunds), net | $ |
108 |
|
$ |
86 |
|
||
Interest payments | $ |
61 |
|
$ |
68 |
|
||
The preliminary cash flow is estimated based on our current information. |
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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, | ||||||||||||||||||||||||||||||||
2019 |
Diluted EPS | 2018 |
Diluted EPS | 2019 |
Diluted EPS | 2018 |
Diluted EPS | ||||||||||||||||||||||||||
GAAP net income | $ |
191 |
|
$ |
0.60 |
|
$ |
236 |
|
$ |
0.73 |
|
$ |
877 |
|
$ |
2.74 |
|
$ |
121 |
|
$ |
0.37 |
|
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Non-GAAP adjustments: | |||||||||||||||||||||||||||||||||
Intangible amortization |
|
25 |
|
|
0.08 |
|
|
26 |
|
|
0.08 |
|
|
79 |
|
|
0.25 |
|
|
76 |
|
|
0.23 |
|
|||||||||
Business exit and divestiture costs | — | — |
|
1 |
|
— | — | — |
|
9 |
|
|
0.03 |
|
|||||||||||||||||||
Transformational initiatives |
|
11 |
|
|
0.03 |
|
|
5 |
|
|
0.02 |
|
|
25 |
|
|
0.08 |
|
|
14 |
|
|
0.04 |
|
|||||||||
Acquisition and integration costs |
|
12 |
|
|
0.04 |
|
|
7 |
|
|
0.02 |
|
|
32 |
|
|
0.10 |
|
|
14 |
|
|
0.04 |
|
|||||||||
Pension settlement gain | — | — | — | — | — | — |
|
(5 |
) |
|
(0.02 |
) |
|||||||||||||||||||||
Gain on step acquisition of Lasergen | — | — |
|
(20 |
) |
|
(0.06 |
) |
— | — |
|
(20 |
) |
|
(0.06 |
) |
|||||||||||||||||
NASD site costs |
|
6 |
|
|
0.02 |
|
|
2 |
|
|
0.01 |
|
|
12 |
|
|
0.04 |
|
|
6 |
|
|
0.02 |
|
|||||||||
Special compliance costs |
|
1 |
|
— |
|
1 |
|
— |
|
2 |
|
|
0.01 |
|
|
3 |
|
|
0.01 |
|
|||||||||||||
Other |
|
11 |
|
|
0.03 |
|
|
1 |
|
— |
|
17 |
|
|
0.05 |
|
|
(12 |
) |
|
(0.03 |
) |
|||||||||||
Adjustment for Tax Reform | — | — | — | — | — | — |
|
533 |
|
|
1.63 |
|
|||||||||||||||||||||
Tax benefit on intra-entity asset transfer | — | — | — | — |
|
(299 |
) |
|
(0.93 |
) |
— | — | |||||||||||||||||||||
Adjustment for taxes (a) |
|
(17 |
) |
|
(0.04 |
) |
|
(42 |
) |
|
(0.13 |
) |
|
(33 |
) |
|
(0.11 |
) |
|
(94 |
) |
|
(0.28 |
) |
|||||||||
Non-GAAP net income | $ |
240 |
|
$ |
0.76 |
|
$ |
217 |
|
$ |
0.67 |
|
$ |
712 |
|
$ |
2.23 |
|
$ |
645 |
|
$ |
1.98 |
|
(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 and nine months ended July 31, 2019, management used a non-GAAP effective tax rate of 16.67% and 16.75%, respectively. In the same periods last year, management used a non-GAAP effective tax rate of 18%. |
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Page 4 |
AGILENT TECHNOLOGIES, INC. | ||||||
SEGMENT INFORMATION | ||||||
(In millions, except where noted) | ||||||
(Unaudited) | ||||||
PRELIMINARY | ||||||
Life Sciences and Applied Markets Group | ||||||
Q3'19 | Q3'18 | |||||
Revenue | $ |
544 |
$ |
540 |
||
Gross Margin, % |
|
60.5% |
|
61.3% |
||
Income from Operations | $ |
118 |
$ |
122 |
||
Operating margin, % |
|
21.7% |
|
22.7% |
||
Diagnostics and Genomics Group | ||||||
Q3'19 | Q3'18 | |||||
Revenue | $ |
263 |
$ |
237 |
||
Gross Margin, % |
|
55.7% |
|
56.8% |
||
Income from Operations | $ |
50 |
$ |
43 |
||
Operating margin, % |
|
19.1% |
|
18.0% |
||
Agilent CrossLab Group | ||||||
Q3'19 | Q3'18 | |||||
Revenue | $ |
467 |
$ |
426 |
||
Gross Margin, % |
|
52.1% |
|
50.1% |
||
Income from Operations | $ |
122 |
$ |
98 |
||
Operating margin, % |
|
26.2% |
|
23.1% |
||
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, gain on step acquisition of Lasergen, NASD site costs, and special compliance costs. |
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Page 5 |
AGILENT TECHNOLOGIES, INC. |
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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 | Q3'19 | Q3'18 | % Change | |||||||||
Life Sciences and Applied Markets Group | $ 544 |
$ 540 |
1% |
|||||||||
Diagnostics and Genomics Group | 263 |
237 |
11% |
|||||||||
Agilent CrossLab Group | 467 |
426 |
10% |
|||||||||
Agilent | $ 1,274 |
$ 1,203 |
6% |
|||||||||
|
||||||||||||
Non-GAAP (excluding Acquisitions & Divestitures) |
Year-over-Year at Constant Currency (a) |
|||||||||||
Year-over-Year | Year-over-Year | Percentage Point Impact from Currency |
Current Quarter Currency Impact (b) |
|||||||||
Non GAAP Revenue by Segment | Q3'19 | Q3'18 | % Change | % Change | ||||||||
Life Sciences and Applied Markets Group | $ 532 |
$ 540 |
(2%) |
— | -2 ppts | $ (7) |
||||||
Diagnostics and Genomics Group | 263 |
237 |
11% |
13% |
-2 ppts |
(4) |
||||||
Agilent CrossLab Group | 460 |
426 |
8% |
11% |
-3 ppts | (11) |
||||||
Agilent (Core) | $ 1,255 |
$ 1,203 |
4% |
6% |
-2 ppts | $ (22) |
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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. |
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Page 6 |
Download Financial Statements for Third Quarter Fiscal 2019
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