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.
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.
SANTA CLARA, Calif.--(BUSINESS WIRE)-- 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 | Diluted EPS | Net Income | Diluted EPS | Net Income | Diluted EPS | Net Income | Diluted EPS | |||||||||||||||||||
| 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. | |||||||||||||
