10-QPeriod: Q3 FY2019

AGILENT TECHNOLOGIES, INC. Quarterly Report for Q3 Ended Jul 31, 2019

Filed August 30, 2019For Securities:A

Summary

Agilent Technologies reported solid top-line growth in the third quarter and first nine months of fiscal year 2019, with total net revenue increasing by 6% and 5% year-over-year, respectively. This growth was driven by strong performance in the Diagnostics and Genomics segment (up 11% and 9%) and Agilent CrossLab (up 10% and 8%), while the Life Sciences and Applied Markets segment showed more modest growth (up 1% and flat). Net income for the quarter was impacted by a significant discrete tax benefit related to Singapore tax incentives, leading to a substantial increase in year-to-date net income compared to the prior year, which was heavily impacted by the U.S. Tax Cuts and Jobs Act. The company also made strategic moves during the period, including entering a new $1 billion credit facility and completing the significant acquisition of BioTek for $1.165 billion shortly after the quarter's end. Agilent continued its commitment to shareholder returns through share repurchases and dividend payments, underscoring a focus on balanced capital allocation. Despite some gross margin pressure due to tariffs and increased wages, the company's operational execution, particularly in services and consumables, alongside strategic acquisitions, positions it for continued growth.

Financial Highlights

57 data points
Beta

Revenue

$1.27B

54.3% Gross Margin

Net Income

$191.00M

15.0% Net Margin

EPS (Diluted)

$0.60

Total Assets

$8.63B

Cash & Equivalents

$1.77B

Free Cash Flow

$195.00M

Financial Statements
Beta
Revenue$1.27B
Cost of Revenue$582.00M
Gross Profit$692.00M
R&D Expenses$101.00M
SG&A Expenses$366.00M
Operating Expenses$1.05B
Operating Income$225.00M
Interest Expense$18.00M
Net Income$191.00M
EPS (Basic)$0.61
EPS (Diluted)$0.60
Shares Outstanding (Basic)312.00M
Shares Outstanding (Diluted)316.00M

Key Highlights

  • 1Total net revenue increased by 6% to $1.274 billion for the three months ended July 31, 2019, and by 5% to $3.796 billion for the nine months ended July 31, 2019.
  • 2Diagnostics and Genomics segment revenue showed robust growth, up 11% for the quarter and 9% year-to-date.
  • 3Agilent CrossLab segment revenue also performed strongly, with a 10% increase for the quarter and 8% for the nine months.
  • 4Net income for the nine months ended July 31, 2019 was $877 million, significantly higher than the $121 million in the prior year, largely due to a $299 million discrete tax benefit related to Singapore incentives.
  • 5The company entered into a new $1 billion, five-year unsecured credit facility in March 2019.
  • 6Subsequent to the quarter, Agilent completed the acquisition of BioTek for $1.165 billion on August 23, 2019.
  • 7Agilent continued its share repurchase program, buying back approximately 8.0 million shares for $549 million in the quarter.

Frequently Asked Questions

The substantial increase in net income to $877 million for the nine months ended July 31, 2019, compared to $121 million in the prior year, was primarily driven by a discrete tax benefit of $299 million related to the restructuring and extension of Agilent's tax incentive in Singapore. The prior year's nine-month period was significantly impacted by a discrete tax charge of $533 million related to the U.S. Tax Cuts and Jobs Act.

Agilent Technologies saw varied revenue performance across its segments. The Diagnostics and Genomics segment led with strong growth of 11% in the third quarter and 9% year-to-date. The Agilent CrossLab segment also showed healthy growth, up 10% for the quarter and 8% year-to-date. The Life Sciences and Applied Markets segment experienced more modest growth, with a 1% increase in the quarter and flat performance year-to-date. Overall, total net revenue increased by 6% for the quarter and 5% year-to-date.

Agilent entered into a new $1 billion, five-year unsecured credit facility on March 13, 2019. Subsequent to the end of the fiscal third quarter on August 23, 2019, the company completed a significant acquisition of BioTek for $1.165 billion. Additionally, Agilent elected to call for the full redemption of its $500 million outstanding 2020 senior notes on August 16, 2019.

Agilent is actively returning capital to shareholders. During the third quarter of fiscal year 2019, the company repurchased approximately 8.0 million shares of common stock for $549 million under its new $1.75 billion repurchase program. The company also continued to pay cash dividends, distributing $51 million in the quarter and $155 million year-to-date, reflecting a balanced approach to capital allocation.