Agilent Technologies Reports Third-Quarter 2013 Results

Agilent Technologies Reports Third-Quarter 2013 Results

Highlights:

  • GAAP net income of $168 million, or $0.49 per share
  • Non-GAAP net income of $233 million, or $0.68 per share(1)
  • Orders of $1.60 billion and revenues of $1.65 billion
  • Fourth-quarter fiscal year 2013 revenue guidance of $1.7 billion to $1.72 billion, and non-GAAP earnings guidance of $0.75 to $0.77 per share(2)
  • Fiscal year 2013 revenue guidance of $6.76 billion to $6.78 billion. Non-GAAP earnings guidance at $2.83 to $2.85 per share(2)

SANTA CLARA, Calif.--(BUSINESS WIRE)-- Agilent Technologies Inc. (NYS: A) today reported orders of $1.60 billion, down 4 percent compared with one year ago, and revenues of $1.65 billion for the third fiscal quarter ended July 31, 2013, down 4 percent over one year ago. Third-quarter GAAP net income was $168 million, or $0.49 per share. Last year's third-quarter GAAP net income was $243 million, or $0.69 per share.


During the third quarter, Agilent had intangible amortization of $48 million and integration and transformation costs of $14 million. Excluding these items and $3 million of other net charges, Agilent reported third-quarter adjusted net income of $233 million, or $0.68 per share(1).

Agilent CEO Bill Sullivan said, "Although we are operating in a very challenging economic environment, we are pleased with our operational performance, as we continue to make progress improving our manufacturing efficiency and streamlining our expense structure. The result has been better than forecasted operating margins."

Electronic Measurement third-quarter revenues were down 17 percent compared with the prior year, with continuing weakness in wireless manufacturing. Operating margins were 18 percent.

Chemical Analysis revenues were up 1 percent compared with a year ago, led by growth in food and energy markets. Operating margins were 22 percent.

Life Sciences revenues were up 3 percent over a year ago, with strength in pharmaceutical end-markets. Operating margins were 17 percent.

Diagnostics and Genomics revenues grew 54 percent, up 6 percent adjusting for the effects of the Dako acquisition. Operating margins were 15 percent.

Agilent generated $215 million of cash from operations in the quarter. Third-quarter ROIC was 15 percent(3).

Fourth-quarter 2013 revenues are expected to be in the range of $1.7 billion to $1.72 billion. Fourth-quarter non-GAAP earnings are expected to be in the range of $0.75 to $0.77 per share(2).

For the full fiscal year 2013, Agilent expects revenue of $6.76 billion to $6. 78 billion and non-GAAP earnings of $2.83 to $2.85 per share(2).

About Agilent Technologies

Agilent Technologies Inc. (NYS: A) is the world's premier measurement company and a technology leader in chemical analysis, life sciences, diagnostics, electronics and communications. The company's 20,500 employees serve customers in more than 100 countries. Agilent had revenues of $6.9 billion in fiscal 2012. Information about Agilent is available at www.agilent.com.

Agilent's management will present more details about its third-quarter FY2013 financial results on a conference call with investors today at 1:30 p.m. PDT. This event will be webcast live in listen-only mode. Listeners may log on at www.investor.agilent.com and select "Q3 2013 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 4:30 p.m. (Pacific Time) after the call through Aug. 21. The replay number is: (888) 286-8010, or for international, dial (617) 801-6888; enter passcode 87350915.

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 revenues, earnings and profitability; 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 2013. 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; 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; 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, 2013. 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 net income per share exclude primarily the impacts of acquisition and integration costs, transformation initiatives and restructuring 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 net income and GAAP net income 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 earnings per share as projected for Q4FY13 and full fiscal year 2013 excludes primarily the impacts of acquisition and integration costs, future restructuring costs, asset impairment charges, 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 $50 million per quarter.

(3) Return on invested capital (ROIC) is a non-GAAP measure and is defined as income from operations less other (income) expense and taxes, annualized, divided by the average of the two most recent quarter-end balances of assets less net current liabilities. The reconciliation of ROIC can be found on page 8 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
  2013     2012   Inc/(Dec)
 
Orders $ 1,600 $ 1,662 (4 %)
 
Net revenue $ 1,652 $ 1,723 (4 %)
 
Costs and expenses:
Cost of products and services 796 833 (4 %)
Research and development 171 162 6 %
Selling, general and administrative   449     458   (2 %)
Total costs and expenses   1,416     1,453   (3 %)
 
Income from operations 236 270 (13 %)
 
Interest income 2 2 -
Interest expense (27 ) (24 ) 13 %
Other income (expense), net   1     (10 ) (110 %)
 
Income before taxes 212 238 (11 %)
 
Provision (benefit) for income taxes   44     (5 ) (980 %)
 
Net income $ 168   $ 243   (31 %)
 
 
 
Net income per share:
Basic $ 0.50 $ 0.70
Diluted $ 0.49 $ 0.69
 
Weighted average shares used in computing net income per share:
Basic 339 348
Diluted 343 353
 
Cash dividends declared per common share $ 0.12 $ 0.10
 
 
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
  2013     2012   Inc/(Dec)
 
Orders $ 4,998 $ 5,126 (2 %)
 
Net revenue $ 5,064 $ 5,091 (1 %)
 
Costs and expenses:
Cost of products and services 2,437 2,409 1 %
Research and development 531 490 8 %
Selling, general and administrative   1,430     1,351   6 %
Total costs and expenses   4,398     4,250   3 %
 
Income from operations 666 841 (21 %)
 
Interest income 5 7 (29 %)
Interest expense (77 ) (75 ) 3 %
Other income (expense), net   11     14   (21 %)
 
Income before taxes 605 787 (23 %)
 
Provision for income taxes   92     59   56 %
 
Net income $ 513   $ 728   (30 %)
 
 
 
Net income per share:
Basic $ 1.49 $ 2.09
Diluted $ 1.47 $ 2.06
 
Weighted average shares used in computing net income per share:
Basic 344 348
Diluted 348 353
 
Cash dividends declared per common share $ 0.34 $ 0.20
 
 
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,
  2013     2012     2013     2012  
 
Net income $ 168 $ 243 $ 513 $ 728
 
Other comprehensive income (loss), net of tax:
 
Change in unrealized gain on investments 4 - 5 6
Change in unrealized gain on derivative instruments (4 ) (2 ) 7 2
Amounts reclassified into earnings related to derivative instruments (3 ) - (8 ) (4 )
Foreign currency translation (32 ) (102 ) (87 ) (160 )
Net defined benefit pension cost and post retirement plan costs:
Change in actuarial net loss 15 13 45 41
Change in net prior service benefit   (8 )   (12 )   (24 )   (36 )
Other comprehensive loss   (28 )   (103 )   (62 )   (151 )
 
Total comprehensive income $ 140   $ 140   $ 451   $ 577  
 
 
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,
  2013 ?

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