10-QPeriod: Q1 FY2014

AGILENT TECHNOLOGIES, INC. Quarterly Report for Q1 Ended Jan 31, 2014

Filed March 5, 2014For Securities:A

Summary

Agilent Technologies, Inc. reported relatively flat net revenue of $1.679 billion for the three months ended January 31, 2014, compared to $1.680 billion in the prior year's comparable period. Despite this, net income saw an increase to $195 million from $179 million year-over-year, driven by a significant discrete tax benefit related to an IRS audit settlement. The company is actively engaged in a strategic separation of its electronic measurement business into a new entity, Keysight Technologies, Inc., expected to be completed by November 2014. Operational performance varied across segments. The Life Sciences and Diagnostics business showed revenue growth of 5%, while the Chemical Analysis segment grew by 6%. Conversely, the Electronic Measurement segment experienced a 7% decline in revenue, largely due to weakness in aerospace and defense markets. The company continues to invest in Research and Development, maintaining its commitment to approximately 10% of revenues, with a focus on strategic opportunities. Agilent also repurchased $100 million of its stock during the quarter and paid $44 million in dividends, reflecting a commitment to returning value to shareholders.

Financial Highlights

56 data points
Beta

Revenue

$1.01B

50.6% Gross Margin

Net Income

$195.00M

19.3% Net Margin

EPS (Diluted)

$0.58

Total Assets

$10.64B

Cash & Equivalents

$2.74B

Free Cash Flow

$149.00M

Financial Statements
Beta
Revenue$1.01B
Cost of Revenue$498.00M
Gross Profit$510.00M
R&D Expenses$88.00M
SG&A Expenses$298.00M
Operating Expenses$884.00M
Operating Income$124.00M
Interest Expense$29.00M
Net Income$195.00M
EPS (Basic)$0.59
EPS (Diluted)$0.58
Shares Outstanding (Basic)333.00M
Shares Outstanding (Diluted)338.00M

Key Highlights

  • 1Net revenue remained stable at $1.679 billion, demonstrating resilience in a challenging market.
  • 2Net income increased by 8.9% to $195 million, significantly boosted by a $35 million discrete tax benefit from an IRS audit settlement.
  • 3The company is on track for the planned separation of its Electronic Measurement business into Keysight Technologies, Inc., expected in early November 2014.
  • 4Life Sciences & Diagnostics and Chemical Analysis segments showed positive revenue growth (5% and 6% respectively), indicating strength in core areas.
  • 5The Electronic Measurement segment faced headwinds, with revenue declining 7%, influenced by reduced demand in aerospace and defense.
  • 6Operating cash flow decreased to $194 million from $245 million in the prior year's quarter, warranting close monitoring.
  • 7Agilent repurchased $100 million of its common stock, underscoring a focus on shareholder returns and managing share count dilution.

Frequently Asked Questions

For the quarter ended January 31, 2014, Agilent Technologies reported net revenue of $1.679 billion, which was flat compared to the same period in the prior year. Net income increased to $195 million from $179 million year-over-year. This increase was largely attributed to a significant discrete tax benefit of $35 million resulting from the settlement of an IRS audit.

Agilent announced plans to separate its Electronic Measurement business into a new publicly traded company, Keysight Technologies, Inc. This separation is expected to be completed in early November 2014 through a tax-free pro rata distribution of Keysight shares to Agilent shareholders. The company is incurring pre-separation expenses, estimated at $140 million for fiscal year 2014.

Performance varied across segments. The Life Sciences and Diagnostics segment saw a 5% increase in revenue, driven by demand in pharmaceutical, biotechnology, and clinical markets. The Chemical Analysis segment also grew, with a 6% revenue increase, supported by strong performance in food safety and forensics. However, the Electronic Measurement segment experienced a 7% decline in revenue, primarily due to decreased demand in aerospace and defense markets.

Net cash provided by operating activities was $194 million for the quarter, down from $245 million in the prior year. Agilent repurchased $100 million of its common stock during the quarter under its share repurchase program. The company also paid $44 million in cash dividends to common shareholders. Agilent has a new share repurchase program in place, designed to mitigate dilution from employee equity programs.