Full-year outlook revised to reflect slower
market recovery Announces plan to repurchase $0.75 billion of its
common stock by end of fiscal year Board of directors authorizes
new $2.0 billion share repurchase program
Highlights
- Revenue of $1.57 billion, down 8.4% reported and 7.4% core(1)
from the second quarter of 2023.
- GAAP net income of $308 million; earnings per share (EPS) of
$1.05, up 3% from the second quarter of 2023.
- Non-GAAP(2) net income of $356 million; EPS of $1.22, down 4%
from the second quarter of 2023.
- Full-year revenue outlook revised at $6.420 billion to $6.500
billion, representing a range of down 6.0% to 4.9% on a reported
basis and down 5.4% to 4.3% core(1). Fiscal year 2024 non-GAAP(3)
earnings guidance also revised at a range of $5.15 to $5.25 per
share.
- Third-quarter revenue outlook expected at $1.535 billion to
$1.575 billion with non-GAAP(3) EPS of $1.25 to $1.28.
- The company plans to repurchase $0.75 billion of its common
stock by the end of the fiscal year, and the board recently
authorized a new $2.0 billion share repurchase program.
Agilent Technologies Inc. (NYSE: A) today
reported revenue of $1.57 billion for the second quarter ended
April 30, 2024, a decline of 8.4% reported and 7.4% core(1)
compared to the second quarter of 2023.
Second-quarter GAAP net income was $308 million, or $1.05 per
share. This compares with $302 million, or $1.02 per share, in the
second quarter of fiscal year 2023. Non-GAAP(2) net income was $356
million, or $1.22 per share during the quarter, compared with $377
million or $1.27 per share during the second quarter a year
ago.
“In Q2, we delivered on our expectations and showed the
resiliency of our diversified business. While we see the market
improving, it is improving at a slower pace than anticipated,” said
Padraig McDonnell, Agilent president and CEO. “We are taking
decisive action to streamline our cost structure and capture
incremental opportunities in the markets as they recover. I’m
confident about the future and extremely excited about the
opportunities that lie ahead for Agilent.”
Financial Highlights
In the first quarter of 2024, Agilent implemented certain
changes to its segment reporting structure. Prior period segment
information has been recast to reflect these changes. These changes
have no impact on Agilent’s consolidated financial statements.
Life Sciences and Applied Markets Group
Agilent’s Life Sciences and Applied Markets Group (LSAG)
reported second-quarter revenue of $754 million, a decline of 14%
reported and 13% core(1) year-over-year. LSAG’s operating margin
for the quarter was 24.7%.
Agilent CrossLab Group
The Agilent CrossLab Group (ACG) reported second-quarter revenue
of $402 million, an increase of 4% reported and 5% core(1)
year-over-year. ACG’s operating margin for the quarter was
30.5%.
Diagnostics and Genomics Group
The Diagnostics and Genomics Group (DGG) reported second-quarter
revenue of $417 million, a decrease of 9% reported and 8% core(1)
year-over-year. DGG’s operating margin for the quarter was
20.5%.
Full Year 2024 and Third-Quarter Outlook
Full-year revenue outlook is revised at $6.420 billion to $6.500
billion, representing a range of down 6.0% to 4.9% on a reported
basis and down 5.4% to 4.3% core(1). Fiscal year 2024 non-GAAP(3)
earnings guidance is revised at a range of $5.15 to $5.25 per
share.
The outlook for third-quarter revenue is expected in the range
of $1.535 billion to $1.575 billion, a decline of 8.2% to 5.8%
reported and 6.9% to 4.5% core(1). Third-quarter non-GAAP(3)
earnings guidance is expected in the range of $1.25 to $1.28 per
share.
The outlook is based on forecasted currency exchange rates.
Conference Call
Agilent’s management will present additional details regarding
the company’s second-quarter 2024 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 “Q2 2024 Agilent Technologies Inc. Earnings
Conference Call” link on the Agilent Investor Relations 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
analytical and clinical laboratory technologies, delivering
insights and innovation that help our customers bring great science
to life. Agilent’s full range of solutions includes instruments,
software, services, and expertise that provide trusted answers to
our customers' most challenging questions. The company generated
revenue of $6.83 billion in fiscal 2023 and employs approximately
18,000 people worldwide. Information about Agilent is available at
www.agilent.com. To receive the latest Agilent news, subscribe to
the Agilent Newsroom. Follow Agilent on LinkedIn 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,
non-GAAP earnings guidance for Q3 and fiscal year 2024, share
repurchase program, 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; and other
risks detailed in Agilent’s filings with the Securities and
Exchange Commission, including its quarterly report on Form 10-Q
for the fiscal quarter ended January 31, 2024. 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. Reconciliations between GAAP revenue
and core revenue for Q2 fiscal year 2024 are set forth on page 6 of
the attached tables along with additional information regarding the
use of this non-GAAP measure. Core revenue growth rate as projected
for Q3 fiscal year 2024 and full fiscal year 2024 excludes the
impact of currency and acquisitions and divestitures within the
past 12 months. Most of the 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 for
the projection.
(2) Non-GAAP net income and non-GAAP earnings per share
primarily exclude the impacts of restructuring and other related
costs, intangibles amortization, transformational initiatives,
acquisition and integration costs and net (gain) loss on equity
securities. 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 Q3 fiscal year
2024 and full fiscal year 2024 exclude primarily the estimated
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
$25 million per quarter.
AGILENT TECHNOLOGIES, INC. CONDENSED CONSOLIDATED
STATEMENT OF OPERATIONS (In millions, except per share
data) (Unaudited) PRELIMINARY
Three Months Ended Six Months Ended April 30,
April 30,
2024
2023
2024
2023
Net revenue
$
1,573
$
1,717
$
3,231
$
3,473
Costs and expenses: Cost of products and services
717
793
1,467
1,581
Research and development
113
126
241
249
Selling, general and administrative
380
415
776
834
Total costs and expenses
1,210
1,334
2,484
2,664
Income from operations
363
383
747
809
Interest income
19
12
37
21
Interest expense
(20
)
(24
)
(42
)
(49
)
Other income (expense), net
12
6
35
6
Income before taxes
374
377
777
787
Provision for income taxes
66
75
121
133
Net income
$
308
$
302
$
656
$
654
Net income per share: Basic
$
1.05
$
1.02
$
2.24
$
2.21
Diluted
$
1.05
$
1.02
$
2.23
$
2.20
Weighted average shares used in computing net income per
share: Basic
293
296
293
296
Diluted
293
297
294
297
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 data) (Unaudited)
PRELIMINARY
April 30, October 31,
2024
2023
ASSETS Current assets:
Cash and cash equivalents
$
1,671
$
1,590
Accounts receivable, net
1,249
1,291
Inventory
1,000
1,031
Other current assets
283
274
Total current assets
4,203
4,186
Property, plant and equipment, net
1,371
1,270
Goodwill
3,963
3,960
Other intangible assets, net
417
475
Long-term investments
177
164
Other assets
725
708
Total assets
$
10,856
$
10,763
LIABILITIES AND EQUITY
Current liabilities: Accounts payable
$
461
$
418
Employee compensation and benefits
326
371
Deferred revenue
533
505
Short-term debt
420
—
Other accrued liabilities
218
309
Total current liabilities
1,958
1,603
Long-term debt
2,136
2,735
Retirement and post-retirement benefits
99
103
Other long-term liabilities
449
477
Total liabilities
4,642
4,918
Total Equity: Stockholders'
equity: Preferred stock; $0.01 par value; 125,000,000
shares authorized; none issued and outstanding at April 30, 2024
and October 31, 2023
—
—
Common stock; $0.01 par value, 2,000,000,000 shares authorized;
291,587,707 shares at April 30, 2024 and 292,123,241 shares at
October 31, 2023, issued and outstanding
3
3
Additional paid-in-capital
5,458
5,387
Retained earnings
1,090
782
Accumulated other comprehensive loss
(337
)
(327
)
Total stockholders' equity
6,214
5,845
Total liabilities and stockholders' equity
$
10,856
$
10,763
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
Six Months Ended April 30, April
30,
2024
2023
Cash flows from operating activities: Net income
$
656
$
654
Adjustments to reconcile net income to net
cash provided by operating activities: Depreciation
and amortization
125
138
Share-based compensation
75
68
Deferred taxes
(7
)
(1
)
Excess and obsolete inventory related charges
23
15
Net (gain) loss on equity securities
(4
)
14
Asset impairment charges
8
—
Change in fair value of contingent consideration
—
1
Other non-cash (income) expense, net
(4
)
2
Changes in assets and liabilities: Accounts
receivable, net
44
49
Inventory
3
(71
)
Accounts payable
64
(101
)
Employee compensation and benefits
(47
)
(110
)
Other assets and liabilities
(118
)
36
Net cash provided by operating activities (a)
818
694
Cash flows from investing activities:
Payments to acquire property, plant and equipment
(193
)
(133
)
Proceeds from sale of equity securities
—
5
Payments to acquire equity securities
(3
)
(1
)
Proceeds from convertible note
—
4
Payments in exchange for convertible note
(8
)
(5
)
Payments to acquire businesses and intangible assets, net of cash
acquired
—
(51
)
Net cash used in investing activities
(204
)
(181
)
Cash flows from financing activities:
Proceeds from issuance of common stock under employee stock
plans
43
35
Payment of taxes related to net share settlement of equity awards
(26
)
(52
)
Payments for repurchase of common stock
(230
)
(160
)
Payments of dividends
(138
)
(133
)
Repayments of long-term debt
(180
)
—
Net proceeds from (repayment of) short-term debt
—
(35
)
Payment for contingent consideration
—
(62
)
Net cash used in financing activities
(531
)
(407
)
Effect of exchange rate movements
(2
)
16
Net increase in cash, cash equivalents and
restricted cash
81
122
Cash, cash equivalents and restricted cash at
beginning of period
1,593
1,056
Cash, cash equivalents and restricted cash at
end of period
$
1,674
$
1,178
Reconciliation of cash,
cash equivalents and restricted cash to the condensed consolidated
balance sheet: Cash and cash
equivalents
$
1,671
$
1,175
Restricted cash, included in other assets
3
3
Total cash, cash equivalents and restricted cash
$
1,674
$
1,178
(a) Cash payments
included in operating activities:
Income tax payments, net of refunds received
$
224
$
128
Interest payments, net of capitalized interest
$
40
$
44
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 data) (Unaudited) PRELIMINARY
Three Months Ended Six Months Ended
April 30, April 30,
2024
2023
2024
2023
Net Income DilutedEPS Net
Income DilutedEPS Net Income
DilutedEPS Net Income DilutedEPS
GAAP net
income
$
308
$
1.05
$
302
$
1.02
$
656
$
2.23
$
654
$
2.20
Non-GAAP adjustments:
Restructuring and other related costs
1
—
—
—
4
0.01
—
—
Asset impairments
—
—
—
—
8
0.03
—
—
Intangible amortization
26
0.09
38
0.12
52
0.18
74
0.25
Transformational initiatives
1
—
5
0.02
4
0.01
12
0.04
Acquisition and integration costs
(1
)
—
5
0.02
1
—
7
0.02
Net (gain) loss on equity securities
(1
)
—
4
0.01
(1
)
—
16
0.06
Change in fair value of contingent consideration
—
—
—
—
—
—
1
—
Other
7
0.02
8
0.03
1
—
11
0.04
Adjustment for taxes (a)
15
0.06
15
0.05
11
0.04
8
0.03
Non-GAAP net income
$
356
$
1.22
$
377
$
1.27
$
736
$
2.50
$
783
$
2.64
(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, temporary or cannot be expected to
occur again with any regularity or predictability such as the
realized gain/loss due to sale of a business, windfall benefits on
stock compensation, and the impact of R&D capitalization under
section 174 of the Tax Cuts and Jobs Act of 2017. For the three
months ended April 30, 2024, management used a non-GAAP effective
tax rate of 12.46%. For the six months ended April 30, 2024,
management used a non-GAAP effective tax rate of 13.00%. For the
three and six months ended April 30, 2023, management used a
non-GAAP effective tax rate of 13.75%. 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 restructuring and other related costs, asset impairments,
amortization of intangibles, transformational initiatives,
acquisition and integration costs, net (gain) loss on equity
securities and change in fair value of contingent consideration.
Restructuring and other related costs include
incremental expenses incurred in the period associated with
restructuring programs, usually aimed at changes in business and/or
cost structure. Such costs may include one-time termination
benefits, facility-related costs and contract termination fees.
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, 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 and 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, tax, 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.
Net
(gain) loss on equity securities relates to the realized and
unrealized mark-to-market adjustments for our marketable and
non-marketable equity securities. Change in fair
value of contingent consideration represents changes in the
fair value estimate of acquisition-related contingent
consideration.
Other includes certain legal costs and
settlements, special compliance costs, acceleration of stock-based
compensation expense and 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 Q2'24 Q2'23 Revenue
$
754
$
874
Gross Margin, %
59.4
%
59.8
%
Income from Operations
$
186
$
244
Operating margin, %
24.7
%
27.9
%
Diagnostics and Genomics Group Q2'24
Q2'23 Revenue
$
417
$
456
Gross Margin, %
53.7
%
53.7
%
Income from Operations
$
86
$
93
Operating margin, %
20.5
%
20.5
%
Agilent CrossLab Group Q2'24
Q2'23 Revenue
$
402
$
387
Gross Margin, %
50.2
%
47.0
%
Income from Operations
$
123
$
103
Operating margin, %
30.5
%
26.6
%
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 restructuring and other related costs,
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 Q2'24 Q2'23 % Change
Life Sciences and Applied Markets Group
$
754
$
874
(14%)
Diagnostics and Genomics Group
417
456
(9%)
Agilent CrossLab Group
402
387
4%
Agilent
$
1,573
$
1,717
(8%)
Non-GAAP(excluding Acquisitions
& Divestitures) Year-over-Yearat Constant Currency
(a) Year-over-Year Year-over-Year Percentage
PointImpact fromCurrency Current QuarterCurrency
Impact(b) Non GAAP Revenue by
Segment Q2'24 Q2'23 % Change %
Change Life Sciences and Applied Markets Group
$
754
$
874
(14%)
(13%)
-1 ppt
$
(8)
Diagnostics and Genomics Group
417
453
(8%)
(8%)
—
(2)
Agilent CrossLab Group
402
387
4%
5%
-1 ppt
(4)
Agilent (Core)
$
1,573
$
1,714
(8%)
(7%)
-1 ppt
$
(14)
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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