Agilent Technologies Reports First-Quarter 2013 Results

Agilent Technologies Reports First-Quarter 2013 Results

Highlights:

  • GAAP net income of $179 million, or $0.51 per share

  • Non-GAAP net income of $222 million, or $0.63 per share(1)

  • Orders of $1.71 billion, up 5 percent over a year ago. Revenues of $1.68 billion, up 3 percent from one year ago

  • Second-quarter fiscal year 2013 revenue guidance of $1.74 billion to $1.77 billion and non-GAAP earnings guidance of $0.64 to $0.70 per share(2)

  • Fiscal year 2013 revenue guidance of $6.9 billion to $7.1 billion. Non-GAAP earnings guidance at $2.70 to $3.00 per share(2)

SANTA CLARA, Calif.--(BUSINESS WIRE)-- Agilent Technologies Inc. (NYS: A) today reported revenues of $1.68 billion for the first fiscal quarter ended Jan. 31, 2013, 3 percent above one year ago. First-quarter GAAP net income was $179 million, or $0.51 per share. Last year's first-quarter GAAP net income was $230 million, or $0.65 per share.


During the first quarter, Agilent had intangible amortization of $52 million and acquisition, integration and transformation costs of $13 million. The company also recognized a tax benefit of $27 million. Excluding these items and $5 million of other net charges, Agilent reported first-quarter adjusted net income of $222 million, or $0.63 per share(1).

Agilent CEO Bill Sullivan said, "While we currently face some volatility in our end-markets, we remain excited by our long-term prospects, including opportunities in emerging markets. Agilent will continue to invest in R&D to ensure that we maintain the cutting-edge products and technology leadership that our customers expect from us."

Electronic Measurement first-quarter revenues declined 7 percent compared with the prior year, primarily due to an anticipated decrease in the communications market. Operating margins were 17 percent.

Chemical Analysis revenues were down 1 percent compared with a year ago, driven by soft environmental markets. Operating margins were 21 percent.

Life Sciences revenues were up 2 percent over a year ago. Pharma saw modest growth, while academic/government markets were flat. Operating margins were 15 percent.

Diagnostics and Genomics grew 145 percent, 4 percent excluding the effects of the Dako acquisition. Operating margins were 13 percent.

Agilent generated $245 million of cash from operations in the quarter. First-quarter ROIC was 14 percent(3).

Second-quarter 2013 revenues are expected to be in the range of $1.74 billion to $1.77 billion. Second-quarter non-GAAP earnings are expected to be in the range of $0.64 to $0.70 per share(2).

For the full fiscal year 2013, Agilent now expects revenue of $6.9 billion to $7.1 billion and non-GAAP earnings of $2.70 to $3.00 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 first-quarter FY2013 financial results on a conference call with investors today at 1:30 p.m. PST. This event will be webcast live in listen-only mode. Listeners may log on at www.investor.agilent.com and select "Q1 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. PST today through Feb. 21. The replay number is +1 888 286-8010; international callers may dial (617) 801-6888. The passcode is 17893997.

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 second 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, 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 Annual Report on Form 10-K for the year ended October 31, 2012. 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 5 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 Q2FY13 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 7 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

January 31,

Percent

2013

2012

Inc/(Dec)

Orders

$

1,710

$

1,623

5

%

Net revenue

$

1,680

$

1,635

3

%

Costs and expenses:

Cost of products and services

800

761

5

%

Research and development

179

162

10

%

Selling, general and administrative

484

441

10

%

Total costs and expenses

1,463

1,364

7

%

Income from operations

217

271

(20

%)

Interest income

2

3

(33

%)

Interest expense

(25

)

(26

)

(4

%)

Other income (expense), net

1

8

(88

%)

Income before taxes

195

256

(24

%)

Provision for income taxes

16

26

(38

%)

Net income

$

179

$

230

(22

%)

Net income per share:

Basic

$

0.52

$

0.66

Diluted

$

0.51

$

0.65

Weighted average shares used in computing net income per share:

Basic

347

348

Diluted

352

352

Cash dividends declared per common share

$

0.22

$

0.10

The preliminary income statement is estimated based on our current information.

Page 1

AGILENT TECHNOLOGIES, INC.

CONDENSED CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME

(In millions)

(Unaudited)

PRELIMINARY

Three Months Ended

January 31,

2013

2012

Net Income

$

179

$

230

Other comprehensive income, net of tax:

Change in unrealized gain on investments

3

6

Change in unrealized gain on derivative instruments

6

4

Amounts reclassified into earnings related to derivative instruments

(1

)

(1

)

Foreign currency translation

56

(39

)

Net defined benefit pension cost and post retirement plan costs:

Change in actuarial net loss

18

12

Change in net prior service benefit

(12

)

(11

)

Other comprehensive income (loss)

70

(29

)

Total comprehensive income

$

249

$

201

The preliminary statement of comprehensive income is estimated based on our current information.

Page 2

AGILENT TECHNOLOGIES, INC.

CONDENSED CONSOLIDATED BALANCE SHEET

(In millions, except par value and share amounts)

(Unaudited)

PRELIMINARY

January 31,

October 31,

2013

2012

ASSETS

Current assets:

Cash and cash equivalents

$

2,450

$

2,351

Accounts receivable, net

874

923

Inventory

1,040

1,014

Other current assets

348

341

Total current assets

4,712

4,629

Property, plant and equipment, net

1,163

1,164

Goodwill

3,071

3,025

Other intangible assets, net

1,069

1,086

Long-term investments

128

109

Other assets

510

523

Total assets

$

10,653

$

10,536

LIABILITIES AND EQUITY

Current liabilities:

Accounts payable

$

454

$

461

Employee compensation and benefits

318

387

Deferred revenue

465

420

Short-term debt

250

250

Other accrued liabilities

359

375

Total current liabilities

1,846

1,893

Long-term debt

2,111

2,112

Retirement and post-retirement benefits

554

554

Other long-term liabilities

791

792

Total liabilities

5,302

5,351

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; 598million shares at January 31, 2013 and 595 million shares at October 31, 2012, issued

6

6

Treasury stock at cost; 251 million shares at January 31, 2013 and 249 million shares at October 31, 2012

(8,786

)

(8,707

)

Additional paid-in-capital

8,562

8,489

Retained earnings

5,607

5,505

Accumulated other comprehensive loss

(41

)

(111

)

Total stockholders' equity

5,348

5,182

Non-controlling interest

3

3

Total equity

5,351

5,185

Total liabilities and equity

$

10,653

$

10,536

The preliminary balance sheet is estimated based on our current information.

Page 3

AGILENT TECHNOLOGIES, INC.

CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS

(In millions)

(Unaudited)

PRELIMINARY

Three Months

Ended

January 31,

2013

Cash flows from operating activities:

Net income

$

179

Adjustments to reconcile net income to net cash provided by (used in) operating activities:

Depreciation and amortization

94

Share-based compensation

31

Excess tax benefit from share-based plans

(2

)

Excess and obsolete inventory and inventory related charges

10

Other non-cash expenses, net

2

Changes in assets and liabilities: