Agilent Technologies Conference Call Highlights

Agilent Technologies

reported its fourth quarter earnings on Friday. Shares of the company are down one percent. Below are some key highlights from its conference call: • Reported Q4 revenues of $1.81 billion, operating margin of 20.7%, and earnings per share of $0.88. • Keysight Technologies discussed their performance and outlook in a separate call earlier today. • Accordingly, the rest of the numbers we will share today deal exclusively with Agilent's performance in Life Sciences, Diagnostics and Applied Markets. • New Agilent reported record fourth quarter revenues and orders. • Revenue of $1.04 billion increased 3% versus last year. Orders of $1.15 billion were up 5% over a year ago. • Operating margin was 20.4%. Book-to-bill was 1.1. Three major Accomplishments: • First, we completed the separation of the company. • The Keysight and Agilent teams executed a flawless separation of the company without impacting the day-to-day business of either company. • We've created two companies with greater strategic and management focus with each company well positioned for growth. • Long-term shareholder value in their respective markets. • Second, during the quarter, Agilent retired an additional $500 million of debt to maintain our leverage at a level consistent with our current investment-grade rating. • We named a new CEO. • In September, we announced that Mike McMullen had been named Agilent's President, Chief Operating Officer, and CEO-elect. • Mike will become CEO on March 18, 2015, the day of the Annual Shareholders Meeting. • With the separation now complete, this is the perfect time to name the new CEO for the new Agilent. Financial Metrics: • LDA, our new Agilent's fourth quarter revenues came in at $1.04 billion, or 3% growth year-over-year. • Unfavorable currency, lower NMR revenues and late orders drove the difference from August guidance of $1.08 billion at the midpoint. • As reminder, in October, we announced our exit from the NMR instrument business. • We're no longer taking NMR instrument orders, and our current backlog will ship in 2015. • Excluding NMR and currency effects, each having a negative one-percentage point impact on reported growth, revenues grew 5% and orders grew 8% compared to a year ago. • Within the Life Sciences and Applied Markets, Pharma and Biotech was up 5%, driven by equipment refreshes from large and mid-sized pharma customers and continued specialty pharma demand. • Life Sciences Research or Academia and Government, was up 4% again this quarter, driven by improved government spending in the U.S. and China. • Government spending, particularly in the U.S. and China, contributed to growth in Forensics, up 6%; Food Testing, up 4%; and Environmental, up 2%. • Chemical and Energy revenues remained relatively flat, growing 1%. • Our Life Sciences team introduced a number of key new products in the past quarter. • The 1290 Infinity II LC System sets a new benchmark in analytical, instrument and laboratory efficiency. • We will deploy capital for long-term shareholder value with an expected return of $500 million to shareholders in fiscal year 2015. • We will focus on sustaining share growth within the core Analytical Lab. • We will continue to bring innovative new offerings to the marketplace and expand our lab-wide services and consumables with a truly differentiated customer experience. • We will leverage this strength in the Analytical Lab to drive growth in the fast-growing genomics, clinical research and diagnostic markets. Guidance: • Agilent's revenues for the fiscal first quarter of 2015 are expected to range from $1.02 billion to $1.04 billion, for 2.2% reported growth or 4.9% core growth at the midpoint. • We expect first quarter earnings per share from $0.39 to $0.43. For the full year. • We expect revenue in the range from $4.12 billion to $4.18 billion, and earnings per share from $1.68 to $1.78.