10-QPeriod: Q3 FY2014

AGILENT TECHNOLOGIES, INC. Quarterly Report for Q3 Ended Jul 31, 2014

Filed September 2, 2014For Securities:A

Summary

Agilent Technologies, Inc. reported its results for the third quarter and the first nine months of fiscal year 2014. For the three months ended July 31, 2014, net revenue increased by 7% to $1.766 billion compared to the prior year. Net income for the quarter was $147 million, a decrease from $168 million in the same period last year, resulting in diluted earnings per share of $0.43. For the nine months ended July 31, 2014, net revenue grew 2% to $5.176 billion, while net income decreased to $481 million from $513 million in the prior year, with diluted earnings per share of $1.42. A significant event impacting the company is the planned separation of its electronic measurement business into a new entity named Keysight Technologies, Inc. This separation was expected to be completed in early November 2014. The company incurred pre-separation expenses of $123 million in the first nine months of fiscal 2014 related to this transaction. Agilent's core businesses are now focused on life sciences, diagnostics, and chemical analysis.

Financial Highlights

57 data points
Beta

Revenue

$1.01B

49.8% Gross Margin

Net Income

$147.00M

14.6% Net Margin

EPS (Diluted)

$0.43

Total Assets

$10.38B

Cash & Equivalents

$2.39B

Free Cash Flow

-$36.00M

Financial Statements
Beta
Revenue$1.01B
Cost of Revenue$507.00M
Gross Profit$502.00M
R&D Expenses$86.00M
SG&A Expenses$285.00M
Operating Expenses$878.00M
Operating Income$131.00M
Interest Expense$28.00M
Net Income$147.00M
EPS (Basic)$0.44
EPS (Diluted)$0.43
Shares Outstanding (Basic)334.00M
Shares Outstanding (Diluted)338.00M

Key Highlights

  • 1Total net revenue for the three months ended July 31, 2014, increased 7% year-over-year to $1.766 billion.
  • 2Net income for the three months ended July 31, 2014, was $147 million, down from $168 million in the prior year, with diluted EPS of $0.43.
  • 3The company is in the process of separating its electronic measurement business into a new entity, Keysight Technologies, Inc., expected to be completed in early November 2014.
  • 4Pre-separation expenses of $123 million were incurred in the nine months ended July 31, 2014, related to the planned spin-off.
  • 5Cash flow from operating activities for the nine months ended July 31, 2014, was $547 million, a decrease from $775 million in the prior year.
  • 6The company repurchased $200 million of its shares in the nine months ended July 31, 2014, and paid $132 million in dividends.
  • 7Total orders increased by 9% and 5% for the three and nine months ended July 31, 2014, respectively, compared to the prior year, with growth across all segments.

Frequently Asked Questions

The most significant strategic event is the planned separation of Agilent's electronic measurement business into a new, independent company named Keysight Technologies, Inc. This separation was expected to be completed in early November 2014, shortly after the filing period. The company incurred substantial pre-separation expenses related to this transaction.

For the three months ended July 31, 2014, Agilent's total net revenue increased by 7% to $1.766 billion. However, net income decreased to $147 million from $168 million in the prior year, resulting in a slight decline in diluted earnings per share to $0.43 from $0.49.

Agilent generated $547 million in net cash from operating activities in the first nine months of fiscal year 2014, a decrease from $775 million in the same period last year. The company maintained a strong liquidity position with $2.391 billion in cash and cash equivalents as of July 31, 2014. They also continued to return capital to shareholders through $132 million in dividends and $200 million in share repurchases during the nine-month period. The company repaid its 2015 senior notes and had $2.095 billion in other senior notes outstanding.

All three segments showed growth in orders for the nine-month period: Life Sciences and Diagnostics (5%), Chemical Analysis (6%), and Electronic Measurement (4%). Revenue growth varied, with Life Sciences and Diagnostics up 4%, Chemical Analysis up 5%, and Electronic Measurement down 1% for the nine months. The Life Sciences and Diagnostics segment saw particular strength in pharmaceutical and biotechnology markets, while Chemical Analysis benefited from food safety and environmental markets. Electronic Measurement revenue was mixed, with some strength in aerospace and defense but weakness in other areas.