Agilent Technologies Inc. (NYSE:A) today reported revenues of $1.17 billion for the fourth fiscal quarter ended Oct. 31, 2009, 21 percent below one year ago. Fourth quarter GAAP net income was $25 million, or $0.07 per diluted share. Last year’s fourth quarter GAAP net income was $231 million, or $0.64 per share.
During the fourth quarter, Agilent had restructuring and asset impairment charges of $60 million and $10 million of non-cash amortization. Excluding these items and $16 million of other net charges, Agilent reported fourth quarter adjusted net income of $111 million, or $0.32 per share. On a comparable basis, the company earned $223 million, or $0.62 per share, one year ago.
“Agilent had a relatively strong finish to an extraordinarily difficult year,” said Bill Sullivan, Agilent president and chief executive. “Fourth quarter revenues of $1.17 billion were off 21 percent from one year ago but were above our expectations, and up 10 percent from the third quarter. Fourth quarter orders of $1.27 billion were off only 11 percent from last year and up 19 percent sequentially.”
“Non-GAAP earnings of $0.32 per share were well above our expectations, demonstrating the leverage we’re seeing from small improvements in volume. Our restructuring actions to lower Agilent’s revenue breakeven by over half a billion dollars contributed meaningfully to this quarter’s results.”
Electronic Measurement revenues were down 29 percent, with some signs of a turnaround in general products but continued weakness in communications products. Orders were down a less severe 18 percent from one year ago and were up a stronger than seasonal 18 percent from Q3. Bio-analytical segment revenues were 9 percent below last year, with applied markets down 10 percent and life science off 7 percent. Bio-analytical segment orders were off only 1 percent from last year and were up 20 percent sequentially.
Fourth quarter Return On Invested Capital(2) fell to 18 percent compared with 31 percent one year ago because of lower earnings. Inventory Days On Hand were off only six days from last year’s record lows, while Receivables Days Sales Outstanding improved by one day to a new fourth quarter low. The company generated $208 million of cash from operations during the fourth quarter. It also raised $750 million in three- and six-year notes, and ended the quarter with net cash of $1,215 million.
Looking ahead, Sullivan said, “While it seems clear that we are past the worst of the global downturn, the pace of recovery is expected to be slow and to vary considerably by market and geography. Our restructuring actions to achieve $525 million of annualized savings by mid-2010 are on track and, in recognition of the progress we are making, we have restored full pay around the world effective Nov. 1.
“We expect our fiscal first quarter revenues to be roughly flat with one year ago, while our Non-GAAP earnings(3) are expected to be in the range of $0.28 - $0.32, improved by $0.08 - $0.12 per share compared to last year.”
During the quarter, Agilent continued to work with U.S. and EU regulatory authorities on its proposed acquisition of Varian, Inc. for $1.5 billion. At this point, closing is anticipated early in calendar 2010.
Bio-analytical segment orders of $590 million were down only 1 percent from one year earlier, and were up 20 percent sequentially from the third quarter. Revenues of $544 million were off 9 percent from last year and up 10 percent sequentially. During the quarter, Chemical Analysis revenues were down 10 percent from last year, with continued strength in food markets and weakness in most other applied markets. Life Sciences revenues were off 7 percent from one year ago.
Geographically, weakness was most pronounced in the U.S. and Europe, which were off 12 percent and 11 percent, respectively, from one year ago. Asia was generally flat, with Japan up 2 percent and other Asia off 1 percent. China revenues were flat versus last year but only because of an extraordinary surge in volumes last year related to food safety issues; fourth quarter orders in China were 30 percent above one year ago.
Life Sciences revenues of $256 million were down 7 percent in the fourth quarter from one year ago, with spending by Pharma and Biotech customers down 8 percent, and sales to the academic and government markets off 4 percent from one year ago. There were some signs of thawing in the worldwide Pharma market, and interest for the new 1290 Infinity LC introduced in July has exceeded expectations.
Chemical Analysis revenues of $288 million were down 10 percent from last year. Food safety remained robust, with revenues up 19 percent from one year ago. Consumables and services were stable compared with one year ago, while weakness remained widespread in other applied markets. From a platform perspective, demand remained weak for GCs and relatively strong for high-end LC/MS systems.
Fourth quarter segment income from operations of $109 million was $27 million below last year’s results on a $50 million decline in revenues. Gross margins were off 1 point from last year, while operating margins, at 20 percent, were down 3 points from the prior year’s record performance. Segment Return On Invested Capital(2) declined 5 points to 31 percent.
Fourth quarter Electronic Measurement orders of $641 million were 18 percent below last year and were up a more than seasonal 18 percent sequentially from Q3. Reflecting earlier orders weakness, revenues of $582 million were 29 percent below one year ago. General Purpose markets showed clear signs of bottoming while Communications remained very weak. Geographically, Europe declined 31 percent, Japan was off 38 percent, other Asia dropped 24 percent and the Americas were 28 percent below last year.
General Purpose revenues of $373 million were down 17 percent from last year but were up 15 percent from Q3. Aerospace / defense held up best, unchanged compared to one year ago. Other general purpose markets were off 27 percent from last year due to continued weakness in electronics manufacturing and computer / semiconductor markets. Communications revenues of $209 million were down 43 percent from one year ago, with only investments in LTE, network monitoring, and China 3G infrastructure showing signs of stabilization.
Fourth quarter segment profit of $41 million was $95 million below last year on a $233 million decline in revenues – an impressive 41 percent decremental resulting from rapid actions to reduce structural costs in this severe downturn. Gross margins fell by less than 2 points from last year due to lower volume, while operating expenses were $50 million below last year. Operating margins fell 10 points to 7 percent. Segment ROIC(2) fell 22 points to 12 percent, driven by lower profitability and despite $209 million lower invested capital.
Results in the severely depressed Semiconductor & Board Test segment improved for the second consecutive quarter. Fourth quarter orders of $43 million remain 25 percent below one year ago but were 22 percent ahead of Q3 and nearly double the pace 6 months ago. Revenues of $41 million were off 43 percent from one year ago but up 10 percent from the third quarter.
Agilent Technologies Inc.