01—Abstract
Summary
Summary of the 10-Q filed September 7, 2011. Cited figures are marked; the original filing is the authoritative source.
Agilent Technologies, Inc. reported strong revenue growth for the third quarter and first nine months ended July 31, 2011, driven by its Life Sciences, Chemical Analysis, and Electronic Measurement segments.
Total net revenue increased by 22%a and 26% year-over-year for the respective periods, largely supported by the acquisition of Varian, Inc. Net income saw a significant rise, more than doubling for the nine-month period, reflecting improved operational performance and the impact of the Varian integration. The company generated substantial operating cash flow, demonstrating solid financial health and liquidity.
02—Key points
Key Highlights
- Total net revenue increased by 22% to $1.691 billion for the three months ended July 31, 2011, and by 26% to $4.887 billion for the nine months ended July 31, 2011, compared to the prior year periods.
- Net income rose significantly to $330 million ($0.92 per diluted share) for the third quarter and $723 million ($2.04 per diluted share) for the first nine months, compared to $205 million ($0.58 per diluted share) and $392 million ($1.11 per diluted share) respectively in the prior year.
- The acquisition of Varian, Inc. continues to be integrated, contributing to revenue growth and expected cost synergies of $100 million.
- All three business segments (Life Sciences, Chemical Analysis, and Electronic Measurement) showed order and revenue growth year-over-year.
- Operating cash flow for the nine months ended July 31, 2011, was $750 million, a substantial increase from $345 million in the same period last year.
- Agilent maintained a strong liquidity position with $3.101 billion in cash and cash equivalents as of July 31, 2011.
- The company repurchased approximately 10 million shares for $462 million during the first nine months of the fiscal year.
03—One dollar
Follow one dollar
Of each $1.00 of revenue in Q3 FY2011, Agilent Technologies, Inc. kept $0.20.
- Revenue$1.69B100.0%
- Cost of revenue−$799.0M47.3%
- Gross profit$892.0M52.7%
- Operating costs−$611.0M36.1%
- Operating income$281.0M16.6%
- Interest, other & tax$49.0M2.9%
- Net income$330.0M19.5%
04—Financials
Financial Highlights
Figures from 10-QQ3 FY2011filed September 7, 2011Financial Statements
Q3 FY2011 against Q3 FY2010
| Line item | Q3 FY2011Q3 FY2010 | Change |
|---|---|---|
| Revenue | $1.69B$1.38B | +22.2% |
| Cost of Revenue | $799.00M$659.00M | +21.2% |
| Gross Profit | $892.00M$725.00M | +23.0% |
| R&D Expenses | $162.00M$154.00M | +5.2% |
| SG&A Expenses | $449.00M$456.00M | −1.5% |
| Operating Expenses | $1.41B$1.27B | +11.1% |
| Operating Income | $281.00M$115.00M | +144.3% |
| Interest Expense | $20.00M$24.00M | −16.7% |
| Net Income | $330.00M$205.00M | +61.0% |
| EPS (Basic) | $0.95$0.59 | +61.0% |
| EPS (Diluted) | $0.92$0.58 | +58.6% |
| Shares Outstanding (Basic) | 348.00M347.00M | +0.3% |
| Shares Outstanding (Diluted) | 357.00M352.00M | +1.4% |
05—Questions
Frequently Asked Questions
What was the primary driver of Agilent's revenue growth in this quarter?
The primary driver of Agilent's revenue growth was the continued positive impact of the Varian, Inc. acquisition, which contributed to strong performance across all three of its business segments: Life Sciences, Chemical Analysis, and Electronic Measurement. Organic growth within these segments, particularly in pharmaceutical, biotechnology, and petrochemical markets, also played a significant role.
How did the Varian acquisition affect Agilent's financial performance?
The Varian acquisition, completed in May 2010, significantly boosted Agilent's revenue, contributing approximately 2-6 percentage points to revenue growth in the reported periods. Agilent is actively working on integrating Varian to realize expected cost savings of $100 million and achieve operational and cost synergies.
What is the outlook for Agilent's key business segments?
Agilent expects continued momentum in its Life Sciences segment driven by pharmaceutical and biotech markets. The Chemical Analysis segment is seeing strong demand in energy, chemical, and food markets. The Electronic Measurement segment anticipates continued growth in wireless manufacturing and digital test, though growth rates are expected to moderate due to stronger prior-year comparisons and some market softness.
How is Agilent managing its cash and debt?
Agilent reported strong operating cash flow of $750 million for the nine-month period and maintained a healthy cash balance of over $3.1 billion. The company has managed its debt effectively, including the settlement of the World Trade obligation and a well-managed senior notes structure, with active use of interest rate swaps for hedging purposes.
06—Continue