(2) Non-GAAP net income and non-GAAP earnings per share primarily exclude the impacts of non-cash asset impairments, intangibles amortization, transformational initiatives, acquisition and integration costs, change in fair value of contingent consideration, loss on extinguishment of debt, business exit and divestiture costs and net loss (gain) on equity securities. Agilent also excludes any tax benefits or expenses that are not directly related to ongoing operations and which are either isolated or are not expected to occur again with any regularity or predictability. A reconciliation between non-GAAP net income and GAAP net income is set forth on page 4 of the attached tables along with additional information regarding the use of this non-GAAP measure.
(3) Non-GAAP earnings per share as projected for Q4 fiscal year 2022 and full fiscal year 2022 exclude primarily the impacts of non-cash intangibles amortization, transformational initiatives, and acquisition and integration costs. Agilent also excludes any tax benefits or expenses that are not directly related to ongoing operations and which are either isolated or are not expected to occur again with any regularity or predictability. Most of these excluded amounts pertain to events that have not yet occurred and are not currently possible to estimate with a reasonable degree of accuracy and could differ materially. Therefore, no reconciliation to GAAP amounts has been provided. Future amortization of intangibles is expected to be approximately $41 million per quarter.
| AGILENT TECHNOLOGIES, INC. | ||||||||||||||||
| CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS | ||||||||||||||||
| (In millions, except per share amounts) | ||||||||||||||||
| (Unaudited) | ||||||||||||||||
| PRELIMINARY | ||||||||||||||||
| Three Months Ended | Nine Months Ended | |||||||||||||||
| July 31, | July 31, | |||||||||||||||
|
2022 |
|
|
2021 |
|
|
2022 |
|
|
2021 |
|
|||||
| Net revenue | $ |
1,718 |
|
$ |
1,586 |
|
$ |
4,999 |
|
$ |
4,659 |
|
||||
| Costs and expenses: | ||||||||||||||||
| Cost of products and services |
|
779 |
|
|
734 |
|
|
2,289 |
|
|
2,152 |
|
||||
| Research and development |
|
116 |
|
|
113 |
|
|
348 |
|
|
325 |
|
||||
| Selling, general and administrative |
|
412 |
|
|
403 |
|
|
1,215 |
|
|
1,230 |
|
||||
| Total costs and expenses |
|
1,307 |
|
|
1,250 |
|
|
3,852 |
|
|
3,707 |
|
||||
| Income from operations |
|
411 |
|
|
336 |
|
|
1,147 |
|
|
952 |
|
||||
| Interest income |
|
2 |
|
|
— |
|
|
4 |
|
|
1 |
|
||||
| Interest expense |
|
(19 |
) |
|
(21 |
) |
|
(61 |
) |
|
(60 |
) |
||||
| Other income (expense), net |
|
3 |
|
|
12 |
|
|
(41 |
) |
|
19 |
|
||||
| Income before taxes |
|
397 |
|
|
327 |
|
|
1,049 |
|
|
912 |
|
||||
| Provision for income taxes |
|
68 |
|
|
63 |
|
|
163 |
|
|
144 |
|
||||
| Net income | $ |
329 |
|
$ |
264 |
|
$ |
886 |
|
$ |
768 |
|
||||
| Net income per share: | ||||||||||||||||
| Basic | $ |
1.10 |
|
$ |
0.87 |
|
$ |
2.95 |
|
$ |
2.52 |
|
||||
| Diluted | $ |
1.10 |
|
$ |
0.86 |
|
$ |
2.94 |
|
$ |
2.50 |
|
||||
| Weighted average shares used in computing net income per share: | ||||||||||||||||
| Basic |
|
298 |
|
|
303 |
|
|
300 |
|
|
305 |
|
||||
| Diluted |
|
299 |
|
|
306 |
|
|
301 |
|
|
307 |
|
||||
| The preliminary income statement is estimated based on our current information. | ||||||||||||||||
| Page 1 | ||||||||||||||||
| AGILENT TECHNOLOGIES, INC. | ||||||||
| CONDENSED CONSOLIDATED BALANCE SHEET | ||||||||
| (In millions, except par value and share amounts) | ||||||||
| (Unaudited) | ||||||||
| PRELIMINARY | ||||||||
| July 31, | October 31, | |||||||
|
|
2022 |
|
|
2021 |
|
|||
| ASSETS | ||||||||
| Current assets: | ||||||||
| Cash and cash equivalents | $ |
1,071 |
|
$ |
1,484 |
|
||
| Short-term investments |
|
6 |
|
|
91 |
|
||
| Accounts receivable, net |
|
1,345 |
|
|
1,172 |
|
||
| Inventory |
|
1,010 |
|
|
830 |
|
||
| Other current assets |
|
258 |
|
|
222 |
|
||
| Total current assets |
|
3,690 |
|
|
3,799 |
|
||
| Property, plant and equipment, net |
|
1,054 |
|
|
945 |
|
||
| Goodwill and other intangible assets, net |
|
4,797 |
|
|
4,956 |
|
||
| Long-term investments |
|
194 |
|
|
185 |
|
||
| Other assets |
|
749 |
|
|
820 |
|
||
| Total assets | $ |
10,484 |
|
$ |
10,705 |
|
||
| LIABILITIES AND EQUITY | ||||||||
| Current liabilities: | ||||||||
| Accounts payable | $ |
558 |
|
$ |
446 |
|
||
| Employee compensation and benefits |
|
389 |
|
|
493 |
|
||
| Deferred revenue |
|
498 |
|
|
441 |
|
||
| Short-term debt |
|
180 |
|
|
— |
|
||
| Other accrued liabilities |
|
277 |
|
|
328 |
|
||
| Total current liabilities |
|
1,902 |
|
|
1,708 |
|
||
| Long-term debt |
|
2,732 |
|
|
2,729 |
|
||
| Retirement and post-retirement benefits |
|
176 |
|
|
220 |
|
||
| Other long-term liabilities |
|
583 |
|
|
659 |
|
||
| Total liabilities |
|
5,393 |
|
|
5,316 |
|
||
| Total Equity: | ||||||||
| Stockholders' equity: | ||||||||
| Preferred stock; $0.01 par value; 125 million shares authorized; none issued and outstanding |
|
— |
|
|
— |
|
||
| Common stock; $0.01 par value, 2 billion shares authorized; 296 million shares at July 31, 2022 and 302 million shares at October 31, 2021, issued and outstanding |
|
3 |
|
|
3 |
|
||
| Additional paid-in-capital |
|
5,311 |
|
|
5,320 |
|
||
| Retained earnings |
|
139 |
|
|
348 |
|
||
| Accumulated other comprehensive loss |
|
(362 |
) |
|
(282 |
) |
||
| Total stockholders' equity |
|
5,091 |
|
|
5,389 |
|
||
| Total liabilities and stockholders' equity | $ |
10,484 |
|
$ |
10,705 |
|
||
| The preliminary balance sheet is estimated based on our current information. | ||||||||
| Page 2 |
||||||||
| AGILENT TECHNOLOGIES, INC. | |||||||||
| CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS | |||||||||
| (In millions) | |||||||||
| (Unaudited) | |||||||||
| PRELIMINARY | |||||||||
| Nine Months Ended | |||||||||
| July 31, | July 31, | ||||||||
|
|
2022 |
|
|
2021 |
|
||||
| Cash flows from operating activities: | |||||||||
| Net income | $ |
886 |
|
$ |
768 |
|
|||
| Adjustments to reconcile net income to net cash provided by operating activities: | |||||||||
| Depreciation and amortization |
|
244 |
|
|
237 |
|
|||
| Share-based compensation |
|
99 |
|
|
88 |
|
|||
| Excess and obsolete inventory related charges |
|
16 |
|
|
21 |
|
|||
| Loss on extinguishment of debt |
|
9 |
|
|
17 |
|
|||
| Asset impairment charges |
|
— |
|
|
2 |
|
|||
| Net loss (gain) on equity securities |
|
60 |
|
|
(24 |
) |
|||
| Change in fair value of contingent consideration |
|
(25 |
) |
|
— |
|
|||
| Other non-cash expenses, net |
|
10 |
|
|
1 |
|
|||
| Changes in assets and liabilities: | |||||||||
| Accounts receivable, net |
|
(233 |
) |
|
(69 |
) |
|||
| Inventory |
|
(206 |
) |
|
(115 |
) |
|||
| Accounts payable |
|
110 |
|
|
46 |
|
|||
| Employee compensation and benefits |
|
(98 |
) |
|
38 |
|
|||
| Other assets and liabilities |
|
(8 |
) |
|
34 |
|
|||
| Net cash provided by operating activities (a) |
|
864 |
|
|
1,044 |
|
|||
| Cash flows from investing activities: | |||||||||
| Investments in property, plant and equipment |
|
(221 |
) |
|
(126 |
) |
|||
| Payment to acquire equity securities |
|
(10 |
) |
|
(15 |
) |
|||
| Proceeds from sale of equity securities |
|
22 |
|
|
— |
|
|||
| Payment in exchange for convertible note |
|
(1 |
) |
|
(2 |
) |
|||
| Acquisition of businesses and intangible assets, net of cash acquired |
|
(18 |
) |
|
(547 |
) |
|||
| Net cash used in investing activities |
|
(228 |
) |
|
(690 |
) |
|||
| Cash flows from financing activities: | |||||||||
| Issuance of common stock under employee stock plans |
|
55 |
|
|
52 |
|
|||
| Payment of taxes related to net share settlement of equity awards |
|
(65 |
) |
|
(74 |
) |
|||
| Issuance of senior notes and long-term loan |
|
600 |
|
|
848 |
|
|||
| Debt issuance costs |
|
— |
|
|
(7 |
) |
|||
| Payment of dividends |
|
(188 |
) |
|
(177 |
) |
|||
| Repayment of senior notes |
|
(609 |
) |
|
(417 |
) |
|||
| Proceeds from commercial paper |
|
940 |
|
|
1,492 |
|
|||
| Repayment of commercial paper |
|
(760 |
) |
|
(1,437 |
) |
|||
| Treasury stock repurchases |
|
(1,004 |
) |
|
(652 |
) |
|||
| Net cash used in financing activities |
|
(1,031 |
) |
|
(372 |
) |
|||
| Effect of exchange rate movements |
|
(22 |
) |
|
6 |
|
|||
| Net decrease in cash, cash equivalents and restricted cash |
|
(417 |
) |
|
(12 |
) |
|||
| Cash, cash equivalents and restricted cash at beginning of period |
|
1,490 |
|
|
1,447 |
|
|||
| Cash, cash equivalents and restricted cash at end of period | $ |
1,073 |
|
$ |
1,435 |
|
|||
| Reconciliation of cash, cash equivalents and restricted cash to the condensed consolidated balance sheet: | |||||||||
| Cash and cash equivalents | $ |
1,071 |
|
$ |
1,428 |
|
|||
| Restricted cash, included in other assets |
|
2 |
|
|
7 |
|
|||
| Total cash, cash equivalents and restricted cash | $ |
1,073 |
|
$ |
1,435 |
|
|||
| (a) Cash payments included in operating activities: | |||||||||
| Income tax payments, net | $ |
217 |
|
$ |
164 |
|
|||
| Interest payments | $ |
56 |
|
$ |
53 |
|
|||
| The preliminary cash flow is estimated based on our current information. | |||||||||
| Page 3 | |||||||||
| AGILENT TECHNOLOGIES, INC. | |||||||||||||
| NON-GAAP NET INCOME AND DILUTED EPS RECONCILIATIONS | |||||||||||||
| (In millions, except per share amounts) | |||||||||||||
| (Unaudited) | |||||||||||||
| PRELIMINARY | |||||||||||||
| Three Months Ended | Nine Months Ended | ||||||||||||
| July 31, | July 31, | ||||||||||||
| 2022 |
Diluted EPS |
2021 |
Diluted EPS |
2022 |
Diluted EPS |
2021 |
Diluted EPS |
||||||
| GAAP net income | $ 329 |
$ 1.10 |
$ 264 |
$ 0.86 |
$ 886 |
$ 2.94 |
$ 768 |
$ 2.50 |
|||||
| Non-GAAP adjustments: | |||||||||||||
| Asset impairments | — |
— |
— |
— |
— |
— |
2 |
0.01 |
|||||
| Intangible amortization | 48 |
0.16 |
53 |
0.17 |
149 |
0.50 |
143 |
0.47 |
|||||
| Transformational initiatives | 8 |
0.03 |
12 |
0.04 |
21 |
0.07 |
32 |
0.10 |
|||||
| Acquisition and integration costs | 4 |
0.01 |
10 |
0.03 |
19 |
0.06 |
32 |
0.10 |
|||||
| Change in fair value of contingent consideration | — |
— |
— |
— |
(25) |
(0.08) |
— |
— |
|||||
| Loss on extinguishment of debt | 9 |
0.03 |
— |
— |
9 |
0.03 |
17 |
0.06 |
|||||
| Business exit and divestiture costs | — |
— |
— |
— |
7 |
0.02 |
4 |
0.01 |
|||||
| Net loss (gain) on equity securities | (3) |
(0.01) |
(8) |
(0.03) |
58 |
0.19 |
(19) |
(0.07) |
|||||
| Other | 2 |
0.01 |
1 |
— |
2 |
0.01 |
7 |
0.02 |
|||||
| Adjustment for taxes (a) | 4 |
0.01 |
5 |
0.03 |
(17) |
(0.06) |
(22) |
(0.06) |
|||||
| Non-GAAP net income | $ 401 |
$ 1.34 |
$ 337 |
$ 1.10 |
$ 1,109 |
$ 3.68 |
$ 964 |
$ 3.14 |
|||||
| (a) The adjustment for taxes excludes tax expense (benefits) that management believes are not directly related to on-going operations and which are either isolated or cannot be expected to occur again with any regularity or predictability. For the three months ended July 31, 2022, management used a non-GAAP effective tax rate of 13.76%. For the nine months ended July 31, 2022, management used a non-GAAP effective tax rate of 14.00%. For the three and nine months ended July 31, 2021, management used a non-GAAP effective tax rate of 14.75%. |
| We provide non-GAAP net income and non-GAAP net income per share amounts in order to provide meaningful supplemental information regarding our operational performance and our prospects for the future. These supplemental measures exclude, among other things, charges related to asset impairments, amortization of intangibles, transformational initiatives, acquisition and integration costs, change in fair value of contingent consideration, loss on extinguishment of debt, business exit and divestiture costs and net loss (gain) on equity securities. |
| Asset impairments include assets that have been written down to their fair value. |
| Transformational initiatives include expenses associated with targeted cost reduction activities such as manufacturing transfers including costs to move manufacturing, small site consolidations, legal entity and other business reorganizations, insourcing or outsourcing of activities. Such costs may include move and relocation costs, one-time termination benefits and other one-time reorganization costs. Included in this category are also expenses associated with company programs to transform our product lifecycle management (PLM) system, human resources and financial systems |
| Acquisition and integration costs include all incremental expenses incurred to effect a business combination. Such acquisition costs may include advisory, legal, accounting, valuation, and other professional or consulting fees. Such integration costs may include expenses directly related to integration of business and facility operations, the transfer of assets and intellectual property, information technology systems and infrastructure and other employee-related costs. |
| Change in fair value of contingent consideration represents changes in the fair value estimate of acquisition-related contingent consideration. |
| Loss on extinguishment of debt for the three and nine months ended July 31, 2022 relates to the net loss recorded on the redemption of the $600 million outstanding 3.875% 2023 senior notes due on July 15, 2023, called on April 4, 2022 and settled on May 4, 2022. For the nine months ended July 31, 2021, it relates to the net loss recorded on the redemption of the $100 million of the $400 million outstanding 3.2% 2022 senior notes due on October 1, 2022, called on December 22, 2020 and settled on January 21, 2021 and the net loss recorded on the redemption of the remaining $300 million called on March 5, 2021 and settled on April 5, 2021. |
| Business exit and divestiture costs include costs associated with business divestitures. |
| Net loss (gain) on equity securities relates to the realized and unrealized mark-to-market adjustments for our marketable and non-marketable equity securities. |
| Other includes certain legal costs and settlements, special compliance costs and acceleration of share-based compensation expense in addition to other miscellaneous adjustments. |
| Our management uses non-GAAP measures to evaluate the performance of our core businesses, to estimate future core performance and to compensate employees. Since management finds this measure to be useful, we believe that our investors benefit from seeing our results “through the eyes” of management in addition to seeing our GAAP results. This information facilitates our management’s internal comparisons to our historical operating results as well as to the operating results of our competitors. |
| Our management recognizes that items such as amortization of intangibles can have a material impact on our cash flows and/or our net income. Our GAAP financial statements including our statement of cash flows portray those effects. Although we believe it is useful for investors to see core performance free of special items, investors should understand that the excluded items are actual expenses that may impact the cash available to us for other uses. To gain a complete picture of all effects on the company’s profit and loss from any and all events, management does (and investors should) rely upon the GAAP income statement. The non-GAAP numbers focus instead upon the core business of the company, which is only a subset, albeit a critical one, of the company’s performance. |
| Readers are reminded that non-GAAP numbers are merely a supplement to, and not a replacement for, GAAP financial measures. They should be read in conjunction with the GAAP financial measures. It should be noted as well that our non-GAAP information may be different from the non-GAAP information provided by other companies. |
| The preliminary non-GAAP net income and diluted EPS reconciliation is estimated based on our current information. |
| Page 4 |
| AGILENT TECHNOLOGIES, INC. |
|||||||
| SEGMENT INFORMATION | |||||||
| (In millions, except where noted) | |||||||
| (Unaudited) | |||||||
| PRELIMINARY | |||||||
| Quarter-over-Quarter | |||||||
| Life Sciences and Applied Markets Group | |||||||
| Q3'22 | Q3'21 | ||||||
| Revenue | $ |
1,019 |
|
$ |
897 |
|
|
| Gross Margin, % |
|
60.5 |
% |
|
60.4 |
% |
|
| Income from Operations | $ |
311 |
|
$ |
250 |
|
|
| Operating margin, % |
|
30.5 |
% |
|
27.9 |
% |
|
| Diagnostics and Genomics Group | |||||||
| Q3'22 | Q3'21 | ||||||
| Revenue | $ |
340 |
|
$ |
346 |
|
|
| Gross Margin, % |
|
54.0 |
% |
|
53.5 |
% |
|
| Income from Operations | $ |
73 |
|
$ |
78 |
|
|
| Operating margin, % |
|
21.5 |
% |
|
22.6 |
% |
|
| Agilent CrossLab Group | |||||||
| Q3'22 | Q3'21 | ||||||
| Revenue | $ |
359 |
|
$ |
343 |
|
|
| Gross Margin, % |
|
47.0 |
% |
|
46.6 |
% |
|
| Income from Operations | $ |
88 |
|
$ |
84 |
|
|
| Operating margin, % |
|
24.6 |
% |
|
24.4 |
% |
|
| Income from operations reflect the results of our reportable segments under Agilent's management reporting system which are not necessarily in conformity with GAAP financial measures. Income from operations of our reporting segments exclude, among other things, charges related to amortization of intangibles, transformational initiatives and acquisition and integration costs. | |||||||
| Readers are reminded that non-GAAP numbers are merely a supplement to, and not a replacement for, GAAP financial measures. They should be read in conjunction with the GAAP financial measures. It should be noted as well that our non-GAAP information may be different from the non-GAAP information provided by other companies. | |||||||
| The preliminary segment information is estimated based on our current information. | |||||||
| Page 5 | |||||||
| AGILENT TECHNOLOGIES, INC. | ||||||||||||||
| RECONCILIATIONS OF REVENUE BY SEGMENT | ||||||||||||||
| EXCLUDING ACQUISITIONS, DIVESTITURES AND THE IMPACT OF CURRENCY ADJUSTMENTS (CORE) | ||||||||||||||
| (in millions) | ||||||||||||||
| (Unaudited) | ||||||||||||||
| PRELIMINARY | ||||||||||||||
| Year-over-Year | ||||||||||||||
| GAAP | ||||||||||||||
| Year-over-Year | ||||||||||||||
| GAAP Revenue by Segment | Q3'22 | Q3'21 | % Change | |||||||||||
| Life Sciences and Applied Markets Group | $ |
1,019 |
$ |
897 |
14 |
% |
||||||||
| Diagnostics and Genomics Group |
|
340 |
|
346 |
(2 |
%) |
||||||||
| Agilent CrossLab Group |
|
359 |
|
343 |
5 |
% |
||||||||
| Agilent | $ |
1,718 |
$ |
1,586 |
8 |
% |
||||||||
| Non-GAAP
(excluding Acquisitions & Divestitures) |
Year-over-Year
at Constant Currency (a) |
|||||||||||||
| Year-over-Year | Year-over-Year | Percentage Point | Current Quarter | |||||||||||
| Non GAAP Revenue by Segment | Q3'22 | Q3'21 | % Change | % Change | Impact from
Currency |
Currency Impact (b) | ||||||||
| Life Sciences and Applied Markets Group | $ |
1,019 |
$ |
897 |
14 |
% |
18 |
% |
-4 ppts | $ |
(43 |
) |
||
| Diagnostics and Genomics Group |
|
340 |
|
346 |
(2 |
%) |
3 |
% |
-5 ppts |
|
(14 |
) |
||
| Agilent CrossLab Group |
|
359 |
|
343 |
5 |
% |
10 |
% |
-5 ppts |
|
(19 |
) |
||
| Agilent (Core) | $ |
1,718 |
$ |
1,586 |
8 |
% |
13 |
% |
-5 ppts | $ |
(76 |
) |
||
| We compare the year-over-year change in revenue excluding the effect of recent acquisitions and divestitures and foreign currency rate fluctuations to assess the performance of our underlying business. | ||||||||||||||
| (a) The constant currency year-over-year growth percentage is calculated by recalculating all periods in the comparison period at the foreign currency exchange rates used for accounting during the last month of the current quarter and then using those revised values to calculate the year-over-year percentage change. | ||||||||||||||
| (b) The dollar impact from the current quarter currency impact is equal to the total year-over-year dollar change less the constant currency year-over-year change. | ||||||||||||||
| The preliminary reconciliation of GAAP revenue adjusted for recent acquisitions and divestitures and impact of currency is estimated based on our current information. | ||||||||||||||
| Page 6 | ||||||||||||||
