Agilent Technologies Reports First-Quarter 2016 Results Highlights

The following excerpt is from the company's SEC filing.

GAAP income from continuing operations of $123 million, or $0.37

per share

Non-GAAP income from continuing operations of $153 million, or $0.46 per share

Revenue of $1.03 billion

Second-quarter fiscal year 2016 revenue guidance of $965 million to $985 million, and non-GAAP earnings guidance of $0.37 to $0.39 per share

Fiscal year 2016 revenue guidance of $4.10 billion to $4.12 billion, and non-GAAP earnings guidance of $1.81 to $1.87 per share

SANTA CLARA, Calif., Feb. 16, 2016 - Agilent Technologies Inc. (NYSE: A) today reported revenue of $1.03 billion, flat year over y ear (up 6 percent on a core basis

) for the first fiscal quarter ended Jan. 31, 2016.

First-quarter GAAP income from continuing operations was $123 million, or $0.37 per share. Last year’s first-quarter GAAP income from continuing operations was $93 million, or $0.28 per share.

During the first quarter, Agilent had intangible amortization of $43 million, transformation costs of $11 million, acquisition and integration costs of $5 million, a pension curtailment gain of $16 million, and $6 million of other costs. Excluding those items, and a tax benefit of $19 million, Agilent reported first-quarter adjusted income from continuing operations of $153 million, $0.46 per share

Agilent’s adjusted operating margin was 20.2%

for the first quarter, up 200 basis points over a year ago.

“Agilent delivered a strong start to the year,” said Mike McMullen, Agilent president and CEO. “Revenue and earnings per share exceeded our guidance range, reflecting the strength of Agilent’s products, services and relationships with customers in our markets.”

“We are building a business that can drive sustainable growth, expand operating margins and provide long-term value to our shareholders,” he added.

First-quarter revenue of $526

million from Agilent’s Life Sciences and Applied Markets Group (LSAG) declined 4 percent year over year (up 2 percent on a core basis

). Robust growth in pharma was offset by softness in the applied markets. LSAG’s Q1 operating margin was 21.7 percent.

First-quarter revenue of $344 million from the Agilent CrossLab Group (ACG) grew 4 percent year over year (up 10 percent on a core basis

). Both services and consumables continued to see solid growth worldwide. ACG’s operating margin was 22.1 percent for the quarter.

First-quarter revenue of $158 million from Agilent’s Diagnostics and Genomics Group (DGG) increased 7 percent year over year (up 12 percent on a core basis

), reflecting momentum across all of its businesses. DGG’s operating margin for the quarter was 9.6 percent.

Agilent expects second-quarter 2016 revenue in the range of $965 million to $985 million. Second-quarter non-GAAP earnings are expected to be in the range of $0.37

For fiscal year 2016, Agilent expects revenue of $4.10 billion to $4.12 billion and non-GAAP earnings of $1.81 to $1.87 per share

. The guidance is based on Jan. 29, 2016, exchange rates.

About Agilent Technologies

Agilent Technologies Inc. (NYSE: A), a global leader in life sciences, diagnostics and applied chemical markets, is the premier laboratory partner for a better world. Agilent works with customers in more than 100 countries, providing instruments, software, services and consumables for the entire laboratory workflow. Agilent generated revenue of $4.04 billion in fiscal 2015. The company employs about 12,000 people worldwide. Information about Agilent is available at

www.agilent.com

Agilent’s management will present more details about its first-quarter FY2016 financial results on a conference call with investors today at 1:30 p.m. PT. This event will be webcast live in listen-only mode. Listeners may log on at

www.investor.agilent.com

and select “Q1 2016 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

by selecting “Financial Results” in the “Financial Information” section.

A telephone replay of the conference call will be available at approximately 4:30 p.m. PT today through Feb. 23 by dialing +1 855 859 2056 (or +1 404 537 3406 from outside the United States) and entering passcode 24914313.

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 revenue, earnings and profitability; planned new products; market trends; the future demand for the company’s products and

services; customer expectations; and revenue and non-GAAP earnings guidance for the second quarter and full fiscal year 2016. 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; unforeseen changes in the currency markets; customer purchasing decisions and timing, 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; 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 our annual report on Form 10-K for the year ended Oct. 31, 2015. 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.

Non-GAAP income from continuing operations and non-GAAP income from continuing operations per share exclude primarily the impacts of acquisition and integration costs, transformation initiatives, pension curtailment gain, business exit and divestiture 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.

Non-GAAP earnings per share as projected for Q2 FY16 and full fiscal year 2016 excludes primarily the future impact of acquisition and integration costs, pension curtailment gain, business exit and divestiture 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. 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 $42 million per quarter.

Core revenue excludes the impact of currency, the NMR business and acquisitions and divestitures within the past 12 months. Core revenue is a non-GAAP measure. A reconciliation between GAAP revenue and core revenue is set forth on page 7 of the attached tables along with additional information regarding the use of this non-GAAP measure.

Adjusted operating margin is a non-GAAP measure and excludes primarily the impacts of acquisition and integration costs, transformation initiatives, pension curtailment gain, business exit and divestiture costs, and non-cash intangibles amortization in addition to the costs related to services Agilent is providing to Keysight post separation. A reconciliation is set forth on page 8 of the attached tables along with additional information regarding the use of this non-GAAP measure.

NOTE TO EDITORS: Further technology, corporate citizenship and executive news is available on the Agilent news site at

www.agilent.com/go/news

AGILENT TECHNOLOGIES, INC.

CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS

(In millions, except per share amounts)

(Unaudited)

PRELIMINARY

Three Months Ended

January 31,

Percent

(As Revised)

Inc/(Dec)

Net revenue

Costs and expenses:

Cost of products and services

Research and development

Selling, general and administrative

Total costs and expenses

Income from operations

Interest income

Interest expense

Other income (expense), net

Income from continuing operations before taxes

Provision for income taxes

Loss from discontinued operations, net of tax

Net income

Net income per share - Basic:

Net income per share - Diluted:

Weighted average shares used in computing net income per share:

Cash dividends declared per common share

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

CONDENSED CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME

(In millions)

Net Income

Other comprehensive income (loss), net of tax:

Unrealized gain on derivative instruments

Amounts reclassified into earnings related to derivative instruments

Foreign currency translation

Net defined benefit pension cost and post retirement plan costs:

Change in actuarial net loss

Change in net prior service benefit

Other comprehensive loss

Total comprehensive income (loss)

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

CONDENSED CONSOLIDATED BALANCE SHEET

(In millions, except par value and share amounts)

January 31,

October 31,

ASSETS

Current assets:

Cash and cash equivalents

Short-term restricted cash and cash equivalents

Accounts receivable, net

Inventory

Other current assets

Total current assets

Property, plant and equipment, net

Goodwill

Other intangible assets, net

Long-term investments

Other assets

Total assets

LIABILITIES AND EQUITY

Current liabilities:

Accounts payable

Employee compensation and benefits

Deferred revenue

Short-term debt

Other accrued liabilities

Total current liabilities

Long-term debt

Retirement and post-retirement benefits

Other long-term liabilities

Total liabilities

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; 612 million shares at January 31, 2016 and 611 million shares at October 31, 2015, issued

Treasury stock at cost; 284 million shares at January 31, 2016 and 279 million shares at October 31, 2015

(10,274

(10,074

Additional paid-in-capital

Retained earnings

Accumulated other comprehensive loss

Total stockholders' equity

Non-controlling interest

Total equity

Total liabilities and equity

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

CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS

Cash flows from operating activities:

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

Depreciation and amortization

Share-based compensation

Excess and obsolete inventory related charges

Other non-cash expenses, net

Changes in assets and liabilities:

Other assets and liabilities

Net cash provided by operating activities

Cash flows from investing activities:

Investments in property, plant and equipment

Proceeds from sale of investment securities

Change in restricted cash and cash equivalents, net

Payment in exchange for convertible note

Acquisition of businesses and intangible assets, net of cash acquired

Net cash used in investing activities

Cash flows from financing activities:

Issuance of common stock under employee stock plans

Treasury stock repurchases

Payment of dividends

Proceeds from revolving credit facility

Repayment of revolving credit facility

Net cash used in financing activities

Effect of exchange rate movements

Net decrease in cash and cash equivalents

Cash and cash equivalents at beginning of period

Cash and cash equivalents at end of period

Cash payments included in operating activities:

Severance payments

Income tax payments, net

The preliminary cash flow is estimated based on our current information.

NON-GAAP INCOME FROM CONTINUING OPERATIONS AND DILUTED EPS RECONCILIATIONS

GAAP Income from continuing operations

Non-GAAP adjustments:

Acceleration of share-based compensation related to workforce reduction

Intangible amortization

Transformational initiatives

Acquisition and integration costs

Business exit and divestiture costs

Pension curtailment gain

Adjustment for taxes

Non-GAAP Income from continuing operations

(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 three months ended January 31, 2016 and 2015 , management uses a non-GAAP effective tax rate of 20% for both periods, that we believe to be indicative of on-going operations.

Historical amounts are reclassified to conform with current presentation.

We provide non-GAAP income from continuing operations and non-GAAP income from continuing operations 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, pension curtailment, transformational initiatives, acquisition and integration costs and business exit and divestiture costs.

include expenses associated with targeted cost reduction activities such as manufacturing transfers, small site consolidations, 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 the post-separation resizing of the IT infrastructure and streamlining of IT systems as well as the expenses incurred primarily in fiscal year 2015 to effect the Agile Agilent reengineering.

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, information technology systems and infrastructure and other employee-related costs.

include costs associated with the exit of the NMR business and the divestiture of the XRD business.

resulted from certain retirement plans benefit reductions.

includes certain legal costs and settlements 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.

SEGMENT INFORMATION

(In millions, except where noted)

Revenues

Gross Margin, %

Income from Operations

Operating margin, %

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, pension curtailment gain, transformational initiatives, acquisition and integration costs and business exit and divestiture 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.

RECONCILIATION OF REVENUE BY SEGMENT EXCLUDING THE NMR BUSINESS,

ACQUISITIONS, DIVESTITURES AND THE IMPACT OF CURRENCY ADJUSTMENTS (CORE)

Year-over-Year

GAAP Revenue by Segment

Year-over-Year

% change

Currency

Currency-Adjusted

Non-GAAP Revenue by Segment

Life Sciences and Applied Markets Group excluding NMR

Diagnostics and Genomics Group excluding acquisition

Agilent Revenue (Core)

(a) We compare the year-over-year change in revenue excluding the effect of the NMR business, recent acquisitions and divestitures and foreign currency rate fluctuations to assess the performance of our underlying business. To determine the impact of currency fluctuations, current period results for entities reporting in currencies other than United States dollars are converted into United States dollars at the actual exchange rate in effect during the respective prior periods.

The preliminary reconciliation of GAAP revenue adjusted for the NMR business, recent acquisitions and divestitures and impact of currency is estimated based on our current information.

RECONCILIATION OF ADJUSTED NON-GAAP INCOME FROM OPERATIONS AND OPERATING MARGINS

(In millions, except margin data)

 Margin %

Revenue:

Income from operations:

GAAP Income from operations

Amortization of intangible assets

Non-GAAP income from operations

Reimbursement from Keysight for services

Adjusted non-GAAP income from operations

(a) Post separation, Agilent is providing Keysight Technologies, Inc. certain IT and site services. These IT and site services are included in our operating expenses. The amounts billed to Keysight for these services are recorded in other income.

We provide non-GAAP income from operations 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, transformational initiatives, acquisition and integration costs and business exit and divestiture 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 reconciliation of income from operations and operating margins is estimated based on our current information.

The above information was disclosed in a filing to the SEC. To see the filing, click here. Agilent Technologies next reports earnings on February 16, 2016.

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V.P. of Agilent Technologies just disposed of 1,000 shares - Sept. 24, 2018

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