Agilent Technologies Reports Third Quarter 2007 Results
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SANTA CLARA , Calif., August 14, 2007
Agilent Technologies Inc. (NYSE: A) today reported orders of $1.31 billion for the third fiscal quarter ended July 31, 2007, 7 percent above one year ago. Revenues during the quarter were $1.37 billion, 11 percent above last year. Third quarter GAAP net income was $185 million, or $0.45 per diluted share. Last year's third quarter GAAP net income from continuing operations, which included a $65 million, or $0.15 per share, gain from the sale of assets, was $216 million.
Included in this quarter's GAAP income is $27 million of share-based compensation expense. Excluding this item and $18 million of tax and other net benefits, Agilent reported third quarter adjusted net income of $194 million, or $0.48 per share. On a comparable basis, the company earned $166 million, or $0.39 per share, one year
ago.(1)
"Agilent met its aggressive performance targets despite very divergent market trends during the third quarter," said Bill Sullivan, Agilent president and chief executive officer. "Bio-analytical markets were strong across the board, and the performance of our Segment was even more robust. Electronic measurement markets were solid in the Americas and Europe but surprisingly weak in Asia, particularly Japan.
"As a result, third quarter revenues were up 11 percent from last year to $1.37 billion, just shy of our revised expectations. Adjusted net income per share, at $0.48, was 23 percent above last year's results and in the middle of our guidance range."
Sullivan noted that, including the impact of the third quarter acquisition of Stratagene, Bio-Analytical segment orders were up 21 percent from last year, while revenues hit a record $500 million, up 19 percent from one year ago. "Initial integration activities are going well, and we are enthusiastic about the synergy between Stratagene's bio-reagents and Agilent's analytical instruments to better serve customers in both commercial and not-for-profit life sciences applications."
Third quarter Return on Invested Capital(2) reached 28 percent, 3 points better than last year's strong performance. Both Receivables Days-Sales-Outstanding and Inventory Days-On-Hand improved 3 days from one year ago. Cash generated from operating activities was $176 million in the third quarter. During the period, the company repurchased $677 million of its common stock. The company ended the quarter with net cash of $1.5 billion.
For the fiscal fourth quarter of 2007, Agilent expects a softer than normal seasonal increase in revenues because of weak Asian electronic measurement markets. Revenues are expected to be in the range of $1.39 billion to $1.43 billion, up 5 percent to 8 percent from last year. Adjusted net income is expected to be in the range of $0.50 to $0.54 per share, 9 percent to 17 percent above last year's comparable earnings.(3)
Sullivan said, "Near-term weakness in Asian electronic measurement markets does not dampen our expectations for Agilent's performance in fiscal 2008. We anticipate continued momentum in our Bio-Analytical markets and a return to more normal secular growth in Electronic Measurement markets next year. We continue to leverage our robust operating model, and will benefit from our investments in core products, growth initiatives and acquisitions."
Bio-Analytical Measurement orders were up 21 percent during the third quarter from one year ago, and up 16 percent excluding the impact of the acquisition of Stratagene. This marks the fifth consecutive quarter of double-digit orders growth. Revenues of $500 million were up 19 percent from last year, and up 15 percent excluding Stratagene. Life Sciences revenues of $209 million were up 22 percent from last year, and 12 percent higher excluding Stratagene. Sustained strength in the pharmaceutical and biotech markets fueled growth of our 1200 Series liquid chromatography, mass spectrometry and LC / MS platforms. Chemical Analysis revenues of $291 million were up 17 percent from last year, with approximately 20 percent rates of growth in food safety, environmental and petrochemical spending driving demand for the new gas chromatography and GC/MS platforms.
Segment income from operations of $92 million was $26 million above last year on an $80 million increase in revenues. Operating margins improved nearly 3 points to 18 percent. Segment Return On Invested Capital(2) improved 2 points to 29 percent despite a 4-point reduction in ROIC due to the addition of Stratagene.
Third quarter Electronic Measurement orders of $810 million were flat compared to last year, with steady 5 percent to 9 percent growth in the Americas and Europe offset by flat Asian orders and a 24 percent decline from Japan. Revenues of $874 million were up 7 percent, with Americas up 12 percent and Europe up 8 percent, while revenues from Asia were up 1 percent. General Purpose Test revenues were 9 percent ahead of last year, with strength in aerospace / defense. Communications Test revenues were up 3 percent, with particular strength in R&D markets. Handset manufacturing test was up 11 percent sequentially, but still down 7 percent from last year's third quarter.
Third quarter income from operations of $133 million was up $14 million from last year on a $55 million increase in revenues. Gross margins were flat with last year while operating margins improved less than a point due to increased acquisition-related spending. Segment ROIC(2) improved 2 points to 26 percent.
About Agilent Technologies
Agilent Technologies Inc. (NYSE: A) is the world's premier measurement company and a technology leader in communications, electronics, life sciences and chemical analysis. The company's 19,000 employees serve customers in more than 110 countries. Agilent had net revenues of $5.0 billion in fiscal 2006. Information about Agilent is available on the Web at www.agilent.com.
