Agilent Technologies Reports Fourth-Quarter 2012 Results
Agilent Technologies Reports Fourth-Quarter 2012 Results
Highlights:
* GAAP net income of $425 million, or $1.20 per share
* Non-GAAP net income of $303 million, or $0.86 per share^(1)
* Orders of $1.75 billion, flat with a year ago. Revenues of $1.77 billion,
up 2 percent from one year ago
* First-quarter fiscal year 2013 revenue guidance of $ 1.68 billion to $1.70
billion and non-GAAP earnings guidance of $0.65 to $0.67 per share^(2)
* Fiscal year 2013 revenue guidance of $7.0 billion to $7.2 billion.
Non-GAAP earnings guidance at $2.80 to $3.10 per share^(2)
Business Wire
SANTA CLARA, Calif. -- November 19, 2012
Agilent Technologies Inc. (NYSE: A) today reported revenues of $1.77 billion
for the fourth fiscal quarter ended Oct. 31, 2012, 2 percent above one year
ago. Fourth-quarter GAAP net income was $425 million, or $1.20 per share. Last
year’s fourth-quarter GAAP net income was $289 million, or $0.82 per share.
During the fourth quarter, Agilent had intangible amortization of $52 million;
acquisition, integration and transformation costs of $40 million; and a
donation to the Agilent Technologies Foundation of $10 million. The company
also recognized a tax benefit of $227 million. Excluding these items and $3
million of other net charges, Agilent reported fourth-quarter adjusted net
income of $303 million, or $0.86 per share^(1).
Agilent CEO Bill Sullivan said, “Agilent’s performance in the fiscal fourth
quarter met our revenue guidance and exceeded EPS guidance. Despite a very
challenging economic environment, the strength of our operating model was
evident, with operating margins for the quarter and the year at an all-time
high.”
Electronic Measurement fourth-quarter revenues declined 5 percent compared to
the prior year. Revenues declined across all key markets with the exception of
computer and semiconductor markets. Operating margins were 23 percent.
Chemical Analysis revenues were down 3 percent compared to a year ago.
Environmental and chemical markets were down, offset by growth in the food and
forensics markets. Operating margins were 25 percent.
Life Sciences revenues were flat with last year. Growth in the pharma and
environmental markets was offset by a decline in academia and government
markets. Operating margins were 18 percent.
Diagnostics and Genomics, which includes the Dako acquisition, had revenues of
$156 million, up 125 percent over last year or 1 percent excluding the effects
of the Dako acquisition. Operating margins were 17 percent.
Agilent generated $485 million of cash from operations in the quarter.
Fourth-quarter ROIC was 19 percent^(3).
Fiscal first-quarter 2013 revenues are expected to be in the range of $1.68
billion to $1.70 billion. Fiscal first-quarter non-GAAP earnings are expected
to be in the range of $0.65 to $0.67 per share^(2).
For the full fiscal year 2013, Agilent expects revenue of $7.0 billion to
$7.20 billion and non-GAAP earnings of $2.80 to $3.10 per share^(2).
About Agilent Technologies
Agilent Technologies Inc. (NYSE: 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 fourth-quarter FY2012
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 “Q4 2012 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 Nov. 26. The replay number is +1 888 286-8010; international
callers may dial (617) 801-6888. The passcode is 72627474.
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; and
revenue and non-GAAP earnings guidance for the first 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 Quarterly Report on Form
10-Q for the quarter ended July 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 Q1FY13 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
October 31, Percent
2012 2011 Inc/(Dec)
Orders $ 1,751 $ 1,752 ––
Net revenue $ 1,767 $ 1,728 2 %
Costs and expenses:
Cost of products and services 845 807 5 %
Research and development 178 163 9 %
Selling, general and administrative 466 445 5 %
Total costs and expenses 1,489 1,415 5 %
Income from operations 278 313 (11 %)
Interest income 2 4 (50 %)
Interest expense (26 ) (23 ) 13 %
Other income (expense), net 2 (1 ) ––
Income before taxes 256 293 (13 %)
Provision (benefit) for income taxes (169 ) 4 ––
Net income $ 425 $ 289 47 %
Net income per share:
Basic $ 1.22 $ 0.83
Diluted $ 1.20 $ 0.82
Weighted average shares used in computing
net income per share:
Basic 348 347
Diluted 353 351
Cash dividends declared per common share $ 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
Years Ended
October 31, Percent
2012 2011 Inc/(Dec)
Orders $ 6,877 $ 6,769 2 %
Net revenue $ 6,858 $ 6,615 4 %
Costs and expenses:
Cost of products and services 3,254 3,086 5 %
Research and development 668 649 3 %
Selling, general and administrative 1,817 1,809 ––
Total costs and expenses 5,739 5,544 4 %
Income from operations 1,119 1,071 4 %
Interest income 9 14 (36 %)
Interest expense (101 ) (86 ) 17 %
Other income (expense), net 16 33 (52 %)
Income before taxes 1,043 1,032 1 %
Provision (benefit) for income taxes (110 ) 20 ––
Net income $ 1,153 $ 1,012 14 %
Net income per share:
Basic $ 3.31 $ 2.92
Diluted $ 3.27 $ 2.85
Weighted average shares used in computing
net income per share:
Basic 348 347
Diluted 353 355
Cash dividends declared per common share $ 0.30 $ ––
.
The preliminary income statement 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
October 31, October 31,
2012 2011
ASSETS
Current assets:
Cash and cash equivalents $ 2,351 $ 3,527
Accounts receivable, net 923 860
Inventory 1,014 898
Other current assets 341 284
Total current assets 4,629 5,569
Property, plant and equipment, net 1,164 1,006
Goodwill 3,025 1,567
Other intangible assets, net 1,086 429
Long-term investments 109 117
Other assets 523 369
Total assets $ 10,536 $ 9,057
LIABILITIES AND EQUITY
Current liabilities:
Accounts payable $ 461 $ 472
Employee compensation and benefits 387 424
Deferred revenue 420 389
Short-term debt 250 253
Other accrued liabilities 375 299
Total current liabilities 1,893 1,837
Long-term debt 2,112 1,932
Retirement and post-retirement benefits 554 329
Other long-term liabilities 792 643
Total liabilities 5,351 4,741
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; 595 million shares at 6 6
October 31, 2012 and 591 million shares at
October 31, 2011, issued
Treasury stock at cost; 249 million shares at
October 31, 2012 and 244 million shares at (8,707 ) (8,535 )
October 31, 2011
Additional paid-in-capital 8,489 8,265
Retained earnings 5,505 4,456
Accumulated other comprehensive income (loss) (111 ) 116
Total stockholders' equity 5,182 4,308
Non-controlling interest 3 8
Total equity 5,185 4,316
Total liabilities and equity $ 10,536 $ 9,057
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 Year
Ended Ended
October 31, October 31,
2012 2012
Cash flows from operating activities:
Net income $ 425 $ 1,153
Adjustments to reconcile net income to net cash
provided by (used in) operating activities:
Depreciation and amortization 94 301
Share-based compensation 15 74
Excess and obsolete inventory and inventory 10 30
related charges
Other non-cash expenses, net 2 4
Changes in assets and liabilities:
Accounts receivable 41 19
Inventory 22 (52 )
Accounts payable (30 ) (31 )
Employee compensation and benefits 51 (54 )
Other assets and liabilities (145 ) (216 )
Net cash provided by operating activities ^(a) 485 1,228
Cash flows from investing activities:
Investments in property, plant and equipment (61 ) (193 )
Proceeds from lease receivable - 80
Proceeds from sale of investment securities - 5
Purchase of non-controlling interest - (6 )
Acquisition of businesses and intangible (30 ) (2,257 )
assets, net of cash acquired
Net cash used in investing activities (91 ) (2,371 )
Cash flows from financing activities:
Issuance of common stock under employee 10 100
stock plans
Payment of dividends (34 ) (104 )
Treasury stock repurchases (94 ) (172 )
Repayment of credit facility - (1 )
Issuance of senior notes 399 399
Debt issuance costs (4 ) (4 )
Repayment of senior notes (250 ) (250 )
Net cash provided by (used in) financing 27 (32 )
activities
Effect of exchange rate movements 7 (1 )
Net increase (decrease) in cash and cash 428 (1,176 )
equivalents
Cash and cash equivalents at beginning of period 1,923 3,527
Cash and cash equivalents at end of period $ 2,351 $ 2,351
^(a) Cash payments included in operating
activities:
Restructuring payments (5 ) (29 )
Income tax payments, net (13 ) (86 )
The preliminary cash flow is estimated based
on our current information.
Page 4
AGILENT TECHNOLOGIES, INC.
NON-GAAP NET INCOME AND DILUTED EPS RECONCILIATIONS
(In millions, except per share amounts)
(Unaudited)
PRELIMINARY
Three Months Ended Years Ended
October 31, October 31,
2012 Diluted 2011 Diluted 2012 Diluted 2011 Diluted
EPS EPS EPS EPS
GAAP Net income $ 425 $ 1.20 $ 289 $ 0.82 $ 1,153 $ 3.27 $ 1,012 $ 2.85
Non-GAAP
adjustments:
Restructuring
and other — — — — — — 2 0.01
related costs -
FY2009 Plan
Asset
impairments and 1 — — — 16 0.05 9 0.02
write-downs
Intangible 52 0.15 28 0.08 137 0.39 113 0.32
amortization
Transformational 6 0.02 18 0.05 25 0.07 51 0.14
initiatives
Acquisition and
integration 34 0.10 15 0.04 88 0.25 55 0.16
costs
Varian
acquisition fair — — 1 — — — 9 0.03
value
adjustments
Agilent
Foundation 10 0.03 — — 10 0.03 6 0.01
donation
Other 2 0.01 2 0.01 (9 ) (0.03 ) (18 ) (0.04 )
Adjustment for (227 ) (0.65 ) (57 ) (0.16 ) (320 ) (0.91 ) (194 ) (0.55 )
taxes ^ (a)
Non-GAAP Net Income $ 303 $ 0.86 $ 296 $ 0.84 $ 1,100 $ 3.12 $ 1,045 $ 2.95
(a) The adjustment for taxes excludes tax benefits that management believes are not directly related to
ongoing operations and which are either isolated or cannot be expected to occur again with any
regularity or predictability. For the year ended October 31, 2012, management uses a non-GAAP effective
tax rate of 16% that we believe to be indicative of on-going operations.
Historical amounts are reclassified to conform with current period presentation.
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 the amortization of intangibles,
the impact of restructuring charges and acquisition and integration costs. Some of the exclusions, such
as impairments, may be beyond the control of management. Further, some may be less predictable than
revenue derived from our core businesses (the day to day business of selling our products and
services). These reasons provide the basis for management's belief that the measures are useful.
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 and restructuring charges 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 5
AGILENT TECHNOLOGIES, INC.
SEGMENT INFORMATION
(In millions, except where noted)
(Unaudited)
PRELIMINARY
Life Sciences
Q4'12 Q4'11 Q3'12
Orders $ 417 $ 433 $ 373
Revenues $ 401 $ 402 $ 391
Gross Margin, % 53 % 49 % 51 %
Income from $ 71 $ 57 $ 57
Operations
Segment Assets $ 1,477 $ 1,479 $ 1,462
Return On
Invested Capital 21 % 16 % 17 %
^(a), %
Chemical Analysis
Q4'12 Q4'11 Q3'12
Orders $ 421 $ 421 $ 372
Revenues $ 394 $ 405 $ 381
Gross Margin, % 53 % 52 % 50 %
Income from $ 97 $ 97 $ 80
Operations
Segment Assets $ 1,768 $ 1,772 $ 1,739
Return On
Invested Capital 22 % 22 % 18 %
^(a), %
Electronic
Measurement
Q4'12 Q4'11 Q3'12
Orders $ 755 $ 822 $ 811
Revenues $ 816 $ 855 $ 845
Gross Margin, % 57 % 58 % 56 %
Income from $ 189 $ 209 $ 197
Operations
Segment Assets $ 2,157 $ 2,156 $ 2,184
Return On
Invested Capital 41 % 45 % 43 %
^(a), %
Diagnostics and
Genomics
Q4'12 Q4'11 Q3'12
Orders $ 158 $ 76 $ 106
Revenues $ 156 $ 69 $ 106
Gross Margin, % 63 % 63 % 61 %
Income from $ 26 $ 11 $ 16
Operations
Segment Assets $ 2,595 $ 358 $ 2,645
Return On
Invested Capital 3 % 11 % 2 %
^(a), %
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 the amortization of
intangibles, the impact of restructuring charges, acquisition and integration
costs.
In general, recorded orders represent firm purchase commitments from our
customers with established terms and conditions for products and services that
will be delivered within six months.
^(a) Return On Invested Capital 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
these tables, along with additional information regarding the use of this
non-GAAP measure.
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 6
AGILENT TECHNOLOGIES, INC.
RECONCILIATION OF ROIC
(In millions)
(Unaudited)
PRELIMINARY
LSG CAG EMG DGG Agilent LSG CAG EMG DGG Agilent LSG CAG EMG DGG
Numerator: Q4'12 Q4'12 Q4'12 Q4'12 Q4'12 Q4'11 Q4'11 Q4'11 Q4'11 Q4'11 Q3'12 Q3'12 Q3'12 Q3'12
Non-GAAP income $ 71 $ 97 $ 189 $ 26 $ 383 $ 57 $ 97 $ 209 $ 11 $ 373 $ 57 $ 80 $ 197 $ 16
from operations
Less:
Taxes and Other 11 15 28 5 59 9 16 35 2 60 8 12 30 3
(income)/expense
Segment return 60 82 161 21 324 ^(a) 48 81 174 9 313 ^(a) 49 68 167 13
Segment return $ 240 $ 328 $ 644 $ 84 $ 1,296 $ 192 $ 324 $ 696 $ 36 $ 1,252 $ 196 $ 272 $ 668 $ 52
annualized
Denominator:
Segment assets $ 1,477 $ 1,768 $ 2,157 $ 2,595 $ 7,999 $ 1,479 $ 1,772 $ 2,156 $ 358 $ 5,767 $ 1,462 $ 1,739 $ 2,184 $ 2,645
^(b)
Less:
Net current 312 246 584 91 1,234 320 262 616 44 1,243 299 235 600 77
liabilities ^(c)
Invested capital $ 1,165 $ 1,522 $ 1,573 $ 2,504 $ 6,765 $ 1,159 $ 1,510 $ 1,540 $ 314 $ 4,524 $ 1,163 $ 1,504 $ 1,584 $ 2,568
Average invested $ 1,164 $ 1,513 $ 1,579 $ 2,536 $ 6,790 $ 1,176 $ 1,505 $ 1,557 $ 314 $ 4,554 $ 1,149 $ 1,488 $ 1,555 $ 2,551
capital
ROIC 21 % 22 % 41 % 3 % 19 % 16 % 22 % 45 % 11 % 27 % 17 % 18 % 43 % 2 %
ROIC calculation:(annualized current quarter segment return)/(average of the two most recent quarter-end balances of Segment Invested Capital)
^(a) Agilent return is equal to non-GAAP net income of $303 million plus net interest expense after tax of $21 million for Q4'12, and $296 million plus net interest
expense after tax of $17 million for Q4'11. Please see "Non-GAAP Net Income and Diluted EPS Reconciliations" for a reconciliation of non-GAAP net income to GAAP net
income.
^(b) Segment assets consist of inventory, accounts receivable, property plant and equipment, gross goodwill and other intangibles, deferred taxes and allocated
corporate assets.
^(c) Includes accounts payable, employee compensation and benefits, deferred revenue, certain other accrued liabilities and allocated corporate liabilities.
Return on Invested Capital (ROIC) is a non-GAAP measure that management believes provides useful supplemental information for management and the investor. ROIC is a
tool by which we track how much value we are creating for our shareholders. Management uses ROIC as a performance measure for our businesses, and our senior managers'
compensation is linked to ROIC improvements as well as other performance criteria. We believe that ROIC provides our management with a means to analyze and improve
their business, measuring segment profitability in relation to net asset investments. We acknowledge that ROIC may not be calculated the same way by every company.
When we complete major acquisitions, we may adjust invested capital for the relevant segment in the quarter when the acquisition occurred. We compensate for this
limitation by monitoring and providing to the reader a full GAAP income statement and balance sheet.
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 reconciliation of ROIC is estimated based on our current information.
Page 7
Contact:
Agilent Technologies Inc.
EDITORIAL CONTACT:
Amy Flores, +1 408-345-8194
amy_flores@agilent.com
or
INVESTOR CONTACT:
Alicia Rodriguez, +1 408-345-8948
alicia_rodriguez@agilent.com
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