Agilent Technologies Reports Second-Quarter 2013 Results, Increases Stock Repurchase Program to $1 B

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Agilent Technologies Reports Second-Quarter 2013 Results, Increases Stock Repurchase Program to $1 Billion

Highlights:

  • GAAP net income of $166 million, or $0.48 per share
  • Non-GAAP net income of $269 million, or $0.77 per share(1)
  • Orders of $1.69 billion and revenues of $1.73 billion
  • Third-quarter fiscal year 2013 revenue guidance of $1.63 billion to $1.66 billion and non-GAAP earnings guidance of $0.60 to $0.64 per share(2)
  • Fiscal year 2013 revenue guidance of $6.75 billion to $6.85 billion. Non-GAAP earnings guidance at $2.70 to $2.85 per share(2)
  • Increased stock repurchase program by $500 million to $1 billion

SANTA CLARA, Calif.--(BUSINESS WIRE)-- Agilent Technologies Inc. (NYS: A) today reported orders of $1.69 billion, down 8 percent compared with one year ago, and revenues of $1.73 billion for the second fiscal quarter ended April 30, 2013, flat with one year ago. Second-quarter GAAP net income was $166 million, or $0.48 per share. Last year's second-quarter GAAP net income was $255 million, or $0.72 per share.

During the second quarter, Agilent had restructuring costs of $55 million, intangible amortization of $51 million, and acquisition, integration and transformation costs of $9 million. The company also recognized a tax benefit of $18 million. Excluding these items and $6 million of other net charges, Agilent reported second-quarter adjusted net income of $269 million, or $0.77 per share(1).

Agilent CEO Bill Sullivan said, "We were pleased to have exceeded EPS guidance for the quarter, reflecting our focus on cost control and profitability in the face of the worldwide economic slowdown and the impact of U.S. sequestration. We expect the macroeconomic environment to remain challenging throughout the second half of 2013 and are taking additional actions to strengthen our operating performance."

Electronic Measurement second-quarter revenues were down 13 percent compared with the prior year, with particular weakness in wireless manufacturing. Operating margins were 21 percent.

Chemical Analysis revenues were up 3 percent compared with a year ago, led by growth in food markets. Operating margins were 22 percent.

Life Sciences revenues were up 2 percent over a year ago, with continued strength in pharmaceutical markets. Operating margins were 15 percent.

Diagnostics and Genomics revenues grew 124 percent, down 3 percent excluding the effects of the Dako acquisition. Operating margins were 17 percent.

Agilent generated $315 million of cash from operations in the quarter. Second-quarter ROIC was 17 percent(3).

Third-quarter 2013 revenues are expected to be in the range of $1.63 billion to $1.66 billion. Third-quarter non-GAAP earnings are expected to be in the range of $0.60 to $0.64 per share(2).

For the full fiscal year 2013, Agilent now expects revenue of $6.75 billion to $6.85 billion and non-GAAP earnings of $2.70 to $2.85 per share(2).

Stock Repurchase Program

Agilent announced today that its board of directors has authorized an increase of $500 million to its existing stock repurchase program. Under the increased program, the company is authorized to repurchase up to $1 billion of its common stock, inclusive of amounts repurchased since Nov. 1, 2012. Agilent expects the program to be completed by the end of calendar year 2013.

During the first quarter of 2013, Agilent purchased 2 million shares of common stock, and in the second quarter, 3.3 million shares were purchased. Under the increased program, approximately $781 million of stock remains to be repurchased.

Targeted Restructuring Program

Agilent also announced today that it has initiated a targeted restructuring program that is expected to reduce Agilent's total headcount by approximately 450 regular employees, representing approximately 2 percent of its global workforce. The timing and scope of workforce reductions will vary based on local legal requirements. When completed, the restructuring program is expected to result in an approximately $50 million reduction in annual operating expenses.

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 second-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 "Q2 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 3:30 p.m. (Pacific Time) after the call through May 21. The replay number is: (888) 286-8010, or for international, dial (617) 801-6888; enter passcode 37487808.

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; Agilent's plans regarding its stock repurchase program; and revenue and non-GAAP earnings guidance for the third 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; the risk that we are not able to realize the savings expected from integration and restructuring activities; and stock price, economic and market conditions, and corporate and regulatory requirements, which could cause the actual amount of shares repurchased to be less than currently anticipated.

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 January 31, 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, acquisition fair value adjustments, 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 Q3FY13 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 $54 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
April 30,Percent
20132012Inc/(Dec)
 
Orders$1,688$1,841(8%)
 
Net revenue$1,732$1,733
 
Costs and expenses:
Cost of products and services8418153%
Research and development1811669%
Selling, general and administrative 497  452 10%
Total costs and expenses 1,519  1,433 6%
 
Income from operations213300(29%)
 
Interest income12(50%)
Interest expense(25)(25)
Other income (expense), net 9  16 (44%)
 
Income before taxes198293(32%)
 
Provision for income taxes 32  38 (16%)
 
Net income$166 $255 (35%)
 
 
 
Net income per share:
Basic$0.48$0.73
Diluted$0.48$0.72
 
Weighted average shares used in computing net income per share:
Basic345348
Diluted349354
 
Cash dividends declared per common share$-$-

 

 
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
 
   
Six Months Ended
April 30,Percent
20132012Inc/(Dec)
 
Orders$3,398$3,464(2%)
 
Net revenue$3,412$3,3681%
 
Costs and expenses:
Cost of products and services1,6411,5764%
Research and development36032810%
Selling, general and administrative 981  893 10%
Total costs and expenses 2,982  2,797 7%
 
Income from operations430571(25%)
 
Interest income35(40%)
Interest expense(50)(51)(2%)
Other income (expense), net 10  24 (58%)
 
Income before taxes393549(28%)
 
Provision for income taxes 48  64 (25%)
 
Net income$345 $485 (29%)
 
 
 
Net income per share:
Basic$1.00$1.39
Diluted$0.98$1.37
 
Weighted average shares used in computing net income per share:
Basic346348
Diluted351353
 
Cash dividends declared per common share$0.22$0.10

 

 
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 EndedSix Months Ended
April 30,

 

April 30,
2013201220132012
 
Net Income$166$255$345$485
 

Other comprehensive income (loss), net of tax:

 
Change in unrealized gain on investments(2)16
Change in unrealized gain on derivative instruments5115
Amounts reclassified into earnings related to derivative instruments(4)(3)(5)(5)
Foreign currency translation(111)(19)(55)(58)
Net defined benefit pension cost and post retirement plan costs:
Change in actuarial net loss16163028
Change in net prior service benefit (8) (13) (16) (24)
Other comprehensive loss (104) (19) (34) (48)
 
Total comprehensive income$62 $236 $311 $437 

 

 
The preliminary statement of comprehensive income is estimated based on our current information.
 
 
Page 3
 
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AGILENT TECHNOLOGIES, INC.
CONDENSED CONSOLIDATED BALANCE SHEET
(In millions, except par value and share amounts)
(Unaudited)
PRELIMINARY