10-QPeriod: Q3 FY2018

AGILENT TECHNOLOGIES, INC. Quarterly Report for Q3 Ended Jul 31, 2018

Filed August 30, 2018For Securities:A

Summary

Agilent Technologies, Inc. reported solid revenue growth in the third quarter and first nine months of fiscal year 2018, with total net revenue increasing by 8% and 10% respectively, year-over-year. This growth was driven by strong performance across all three segments: Life Sciences and Applied Markets, Diagnostics and Genomics, and Agilent CrossLab. The company also saw an increase in net income for the three-month period, though the nine-month period was significantly impacted by a $533 million discrete tax charge related to the U.S. Tax Cuts and Jobs Act. Strategically, Agilent made several acquisitions during the period, including Lasergen, Genohm SA, Advanced Analytical Technologies, Inc. (AATI), and Ultra Scientific, to expand its capabilities in life sciences and diagnostics. The company continues to focus on product innovation, customer experience, and capital allocation through dividends and share repurchases. Looking ahead, Agilent remains optimistic about growth opportunities and is focused on improving operating margins.

Financial Highlights

57 data points
Beta

Revenue

$1.20B

54.8% Gross Margin

Net Income

$236.00M

19.6% Net Margin

EPS (Diluted)

$0.73

Total Assets

$8.35B

Cash & Equivalents

$2.14B

Free Cash Flow

$164.00M

Financial Statements
Beta
Revenue$1.20B
Cost of Revenue$544.00M
Gross Profit$659.00M
R&D Expenses$97.00M
SG&A Expenses$341.00M
Operating Expenses$982.00M
Operating Income$221.00M
Interest Expense$18.00M
Net Income$236.00M
EPS (Basic)$0.74
EPS (Diluted)$0.73
Shares Outstanding (Basic)320.00M
Shares Outstanding (Diluted)324.00M

Key Highlights

  • 1Total net revenue increased by 8% to $1,203 million for the three months ended July 31, 2018, and by 10% to $3,620 million for the nine months ended July 31, 2018, compared to the prior year periods.
  • 2Net income for the three months ended July 31, 2018 was $236 million, an increase from $175 million in the prior year period.
  • 3Net income for the nine months ended July 31, 2018 was $121 million, significantly impacted by a $533 million discrete tax charge related to the Tax Cuts and Jobs Act.
  • 4Agilent completed several strategic acquisitions during the period, including Lasergen, Genohm SA, AATI, and Ultra Scientific, to bolster its offerings in life sciences and diagnostics.
  • 5Operating margin improved in the three-month period to 18.7% from 18.0% in the prior year, reflecting improved gross margins and lower acquisition costs.
  • 6The company returned $48 million in dividends to shareholders during the three months ended July 31, 2018, and repurchased $243 million of its stock.
  • 7Cash generated from operating activities was $715 million for the nine months ended July 31, 2018, an increase from $601 million in the prior year period.

Frequently Asked Questions

The U.S. Tax Cuts and Jobs Act enacted in December 2017 resulted in a significant one-time discrete tax charge of $533 million for Agilent during the nine months ended July 31, 2018. This charge included an estimated $480 million for the U.S. transition tax on deemed repatriated earnings of foreign subsidiaries and an estimated $53 million related to the decrease in the U.S. corporate tax rate. This charge substantially reduced net income for the nine-month period.

Agilent completed several acquisitions during the period, including Lasergen, Genohm SA, AATI, and Ultra Scientific, to strengthen its position in life sciences and diagnostics. While the financial statements reflect the inclusion of these acquired businesses from their respective close dates, the full impact and detailed performance of each acquisition would be further analyzed in subsequent filings. The company noted increased expenses related to recent acquisitions, particularly in R&D and SG&A, but these acquisitions are part of a strategy to drive future growth.

Agilent experienced growth across all three segments: Life Sciences and Applied Markets (6% revenue growth Q3 FY18), Diagnostics and Genomics (9% revenue growth Q3 FY18), and Agilent CrossLab (10% revenue growth Q3 FY18). Key growth drivers include strong performance in pharmaceutical and life science research markets, continued demand for genomics and diagnostics solutions, and growth in services and consumables from the Agilent CrossLab business. The company anticipates continued growth, focusing on product innovation and expanding its solutions portfolio.

Agilent continues to focus on a balanced capital allocation strategy. During the three months ended July 31, 2018, the company paid $48 million in cash dividends and repurchased $243 million of its common stock. The company has an ongoing share repurchase program with approximately $274 million remaining authorization as of July 31, 2018. Agilent remains committed to returning value to shareholders through dividends and share repurchases while investing in growth initiatives.