Delivers excellent results; again raises
full-year guidance
Highlights:
- Revenue of $1.72 billion represents 8% reported growth
year-over-year; and up 13% on a core(1) basis.
- GAAP net income of $329 million with earnings per share (EPS)
of $1.10, up 28% from the third quarter of 2021.
- Non-GAAP(2) net income of $401 million with EPS of $1.34, up
22% from the third quarter of 2021.
- Full-year guidance raised with revenue now expected to be in
the range of $6.750 billion to $6.775 billion, representing
reported growth of 6.8% to 7.2% and core(1) growth of 9.9% to
10.3%. Full-year non-GAAP(3) EPS is also raised to an estimated
range of $5.06 to $5.08 per share.
- Fourth-quarter revenue expected to be in the range of $1.750
billion to $1.775 billion with non-GAAP(3) EPS of $1.38 to
$1.40.
Agilent Technologies Inc. (NYSE: A) today reported revenue of
$1.72 billion for the third quarter ended July 31, 2022, an
increase of 8% compared to the third quarter of 2021 and up 13% on
a core(1) basis.
Third-quarter GAAP net income was $329 million, or $1.10 per
share. This compares with $264 million, or 86 cents per share, in
the third quarter of fiscal year 2021. Non-GAAP(2) net income was
$401 million, or $1.34 per share during the quarter, compared with
$337 million or $1.10 per share during the third quarter a year
ago.
“The Agilent team delivered an excellent quarter,” said Agilent
President and CEO Mike McMullen. “The strong results in Q3, coupled
with orders continuing to outpace revenues, highlight the ongoing
strength and momentum of our diversified business. We are once
again raising our full-year revenue and earnings outlook.”
Financial Highlights
In the first quarter of 2022, 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 third-quarter revenue of $1.019 billion, a year over year
increase of 14% (up 18% on a core(1) basis). LSAG’s operating
margin for the quarter was 30.5%.
Agilent CrossLab Group
The Agilent CrossLab Group (ACG) reported third-quarter revenue
of $359 million, a year over year increase of 5% (up 10% on a
core(1) basis). ACG’s operating margin for the quarter was
24.6%.
Diagnostics and Genomics Group
The Diagnostics and Genomics Group (DGG) reported third-quarter
revenue of $340 million, a year over year decrease of 2% (up 3% on
a core(1) basis). DGG’s operating margin for the quarter was
21.5%.
Full Year and Fourth-Quarter Outlook
Agilent has increased its outlook and expects full-year revenue
to be in the range of $6.750 billion to $6.775 billion,
representing reported growth of 6.8% to 7.2% and core(1) growth of
9.9% to 10.3%. Agilent has also increased full-year non-GAAP(3) EPS
to an estimated range of $5.06 to $5.08 per share.
The outlook for fourth-quarter revenue is expected to be in a
range of $1.750 billion to $1.775 billion. Fourth-quarter
non-GAAP(3) earnings guidance is expected to be in the range of
$1.38 to $1.40 per share.
The outlook is based on July 31, 2022, currency exchange
rates.
Conference Call
Agilent’s management will present additional details regarding
the company’s third-quarter 2022 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 “Q3 2022 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 the
life sciences, diagnostics, and applied chemical markets,
delivering insight and innovation that advance the quality of 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 $6.32 billion in fiscal 2021 and employs 17,000 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, Twitter 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,
and non-GAAP earnings guidance for Q4 and fiscal year 2022 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; the adverse impacts of and risks posed
by the COVID-19 pandemic; 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 April
30, 2022. 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 Q3 fiscal year 2022 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 Q4 fiscal year 2022 and full fiscal year 2022 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 non-cash asset impairments,
intangibles amortization, transformational initiatives, acquisition
and integration costs, change in fair value of contingent
consideration, loss on extinguishment of debt, business exit and
divestiture costs and net loss (gain) 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 Q4 fiscal year
2022 and full fiscal year 2022 exclude primarily the 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 $41 million per
quarter.
AGILENT TECHNOLOGIES, INC. CONDENSED CONSOLIDATED
STATEMENT OF OPERATIONS (In millions, except per share
amounts) (Unaudited) PRELIMINARY
Three Months Ended Nine Months Ended July 31,
July 31,
2022
2021
2022
2021
Net revenue
$
1,718
$
1,586
$
4,999
$
4,659
Costs and expenses: Cost of products and services
779
734
2,289
2,152
Research and development
116
113
348
325
Selling, general and administrative
412
403
1,215
1,230
Total costs and expenses
1,307
1,250
3,852
3,707
Income from operations
411
336
1,147
952
Interest income
2
—
4
1
Interest expense
(19
)
(21
)
(61
)
(60
)
Other income (expense), net
3
12
(41
)
19
Income before taxes
397
327
1,049
912
Provision for income taxes
68
63
163
144
Net income
$
329
$
264
$
886
$
768
Net income per share: Basic
$
1.10
$
0.87
$
2.95
$
2.52
Diluted
$
1.10
$
0.86
$
2.94
$
2.50
Weighted average shares used in computing net income per
share: Basic
298
303
300
305
Diluted
299
306
301
307
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 amounts)
(Unaudited) PRELIMINARY July 31,
October 31,
2022
2021
ASSETS Current assets: Cash and cash equivalents
$
1,071
$
1,484
Short-term investments
6
91
Accounts receivable, net
1,345
1,172
Inventory
1,010
830
Other current assets
258
222
Total current assets
3,690
3,799
Property, plant and equipment, net
1,054
945
Goodwill and other intangible assets, net
4,797
4,956
Long-term investments
194
185
Other assets
749
820
Total assets
$
10,484
$
10,705
LIABILITIES AND EQUITY Current liabilities: Accounts
payable
$
558
$
446
Employee compensation and benefits
389
493
Deferred revenue
498
441
Short-term debt
180
—
Other accrued liabilities
277
328
Total current liabilities
1,902
1,708
Long-term debt
2,732
2,729
Retirement and post-retirement benefits
176
220
Other long-term liabilities
583
659
Total liabilities
5,393
5,316
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; 296
million shares at July 31, 2022 and 302 million shares at October
31, 2021, issued and outstanding
3
3
Additional paid-in-capital
5,311
5,320
Retained earnings
139
348
Accumulated other comprehensive loss
(362
)
(282
)
Total stockholders' equity
5,091
5,389
Total liabilities and stockholders' equity
$
10,484
$
10,705
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 Nine Months Ended July
31, July 31,
2022
2021
Cash flows from operating activities: Net income
$
886
$
768
Adjustments to reconcile net income to net cash provided by
operating activities: Depreciation and amortization
244
237
Share-based compensation
99
88
Excess and obsolete inventory related charges
16
21
Loss on extinguishment of debt
9
17
Asset impairment charges
—
2
Net loss (gain) on equity securities
60
(24
)
Change in fair value of contingent consideration
(25
)
—
Other non-cash expenses, net
10
1
Changes in assets and liabilities: Accounts receivable, net
(233
)
(69
)
Inventory
(206
)
(115
)
Accounts payable
110
46
Employee compensation and benefits
(98
)
38
Other assets and liabilities
(8
)
34
Net cash provided by operating activities (a)
864
1,044
Cash flows from investing activities: Investments in
property, plant and equipment
(221
)
(126
)
Payment to acquire equity securities
(10
)
(15
)
Proceeds from sale of equity securities
22
—
Payment in exchange for convertible note
(1
)
(2
)
Acquisition of businesses and intangible assets, net of cash
acquired
(18
)
(547
)
Net cash used in investing activities
(228
)
(690
)
Cash flows from financing activities: Issuance of common
stock under employee stock plans
55
52
Payment of taxes related to net share settlement of equity awards
(65
)
(74
)
Issuance of senior notes and long-term loan
600
848
Debt issuance costs
—
(7
)
Payment of dividends
(188
)
(177
)
Repayment of senior notes
(609
)
(417
)
Proceeds from commercial paper
940
1,492
Repayment of commercial paper
(760
)
(1,437
)
Treasury stock repurchases
(1,004
)
(652
)
Net cash used in financing activities
(1,031
)
(372
)
Effect of exchange rate movements
(22
)
6
Net decrease in cash, cash equivalents and restricted cash
(417
)
(12
)
Cash, cash equivalents and restricted cash at beginning of
period
1,490
1,447
Cash, cash equivalents and restricted cash at end of period
$
1,073
$
1,435
Reconciliation of cash, cash equivalents and
restricted cash to the condensed consolidated balance sheet:
Cash and cash equivalents
$
1,071
$
1,428
Restricted cash, included in other assets
2
7
Total cash, cash equivalents and restricted cash
$
1,073
$
1,435
(a) Cash payments included in operating activities:
Income tax payments, net
$
217
$
164
Interest payments
$
56
$
53
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 amounts) (Unaudited)
PRELIMINARY Three Months Ended Nine Months
Ended July 31, July 31,
2022
Diluted EPS
2021
Diluted EPS
2022
Diluted EPS
2021
Diluted EPS
GAAP net income
$ 329
$ 1.10
$ 264
$ 0.86
$ 886
$ 2.94
$ 768
$ 2.50
Non-GAAP adjustments: Asset impairments
—
—
—
—
—
—
2
0.01
Intangible amortization
48
0.16
53
0.17
149
0.50
143
0.47
Transformational initiatives
8
0.03
12
0.04
21
0.07
32
0.10
Acquisition and integration costs
4
0.01
10
0.03
19
0.06
32
0.10
Change in fair value of contingent consideration
—
—
—
—
(25)
(0.08)
—
—
Loss on extinguishment of debt
9
0.03
—
—
9
0.03
17
0.06
Business exit and divestiture costs
—
—
—
—
7
0.02
4
0.01
Net loss (gain) on equity securities
(3)
(0.01)
(8)
(0.03)
58
0.19
(19)
(0.07)
Other
2
0.01
1
—
2
0.01
7
0.02
Adjustment for taxes (a)
4
0.01
5
0.03
(17)
(0.06)
(22)
(0.06)
Non-GAAP net income
$ 401
$ 1.34
$ 337
$ 1.10
$ 1,109
$ 3.68
$ 964
$ 3.14
(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 or cannot be expected to occur again
with any regularity or predictability. For the three months ended
July 31, 2022, management used a non-GAAP effective tax rate of
13.76%. For the nine months ended July 31, 2022, management used a
non-GAAP effective tax rate of 14.00%. For the three and nine
months ended July 31, 2021, management used a non-GAAP effective
tax rate of 14.75%. 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 asset
impairments, amortization of intangibles, transformational
initiatives, acquisition and integration costs, change in fair
value of contingent consideration, loss on extinguishment of debt,
business exit and divestiture costs and net loss (gain) on equity
securities.
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, small 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, 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, 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.
Change in
fair value of contingent consideration represents changes in
the fair value estimate of acquisition-related contingent
consideration.
Loss on extinguishment of debt for the three
and nine months ended July 31, 2022 relates to the net loss
recorded on the redemption of the $600 million outstanding 3.875%
2023 senior notes due on July 15, 2023, called on April 4, 2022 and
settled on May 4, 2022. For the nine months ended July 31, 2021, it
relates to the net loss recorded on the redemption of the $100
million of the $400 million outstanding 3.2% 2022 senior notes due
on October 1, 2022, called on December 22, 2020 and settled on
January 21, 2021 and the net loss recorded on the redemption of the
remaining $300 million called on March 5, 2021 and settled on April
5, 2021.
Business exit and divestiture costs include costs
associated with business divestitures.
Net loss (gain) on equity
securities relates to the realized and unrealized
mark-to-market adjustments for our marketable and non-marketable
equity securities.
Other includes certain legal costs and
settlements, special compliance costs and acceleration of
share-based compensation expense in addition to 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 Q3'22 Q3'21 Revenue
$
1,019
$
897
Gross Margin, %
60.5
%
60.4
%
Income from Operations
$
311
$
250
Operating margin, %
30.5
%
27.9
%
Diagnostics and Genomics Group Q3'22
Q3'21 Revenue
$
340
$
346
Gross Margin, %
54.0
%
53.5
%
Income from Operations
$
73
$
78
Operating margin, %
21.5
%
22.6
%
Agilent CrossLab Group Q3'22
Q3'21 Revenue
$
359
$
343
Gross Margin, %
47.0
%
46.6
%
Income from Operations
$
88
$
84
Operating margin, %
24.6
%
24.4
%
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 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 Q3'22 Q3'21 % Change
Life Sciences and Applied Markets Group
$
1,019
$
897
14
%
Diagnostics and Genomics Group
340
346
(2
%)
Agilent CrossLab Group
359
343
5
%
Agilent
$
1,718
$
1,586
8
%
Non-GAAP(excluding Acquisitions
& Divestitures) Year-over-Yearat Constant Currency
(a) Year-over-Year Year-over-Year Percentage
Point Current Quarter Non GAAP
Revenue by Segment Q3'22 Q3'21 %
Change % Change Impact fromCurrency Currency
Impact (b) Life Sciences and Applied Markets Group
$
1,019
$
897
14
%
18
%
-4 ppts
$
(43
)
Diagnostics and Genomics Group
340
346
(2
%)
3
%
-5 ppts
(14
)
Agilent CrossLab Group
359
343
5
%
10
%
-5 ppts
(19
)
Agilent (Core)
$
1,718
$
1,586
8
%
13
%
-5 ppts
$
(76
)
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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