Agilent Technologies, Inc. · NYSE:A
Agilent Technologies — UBS Global Life Sciences Conference 2011
46 slides from Agilent Technologies's conference presentation, Sep 19, 2011
Slide 1: Agilent Technologies UBS Global Life Sciences Conference 2011
AGILENT TECHNOLOGIES UBS G LOBAL L IFE S CIENCES C ONFERENCE 2011 NICK ROELOFS, PH.D. PRESIDENT SEPTEMBER 19, 2011 LIFE SCIENCES GROUP NEW YORK, NY
Slide 2: Safe Harbor
SAFE HARBOR This presentation contains forward-looking statements (including, without limitation, information and future guidance on our goals, priorities, revenues, demand, growth opportunities, customer service and innovation plans, new product introductions, financial condition, earnings, the con
Slide 3: The World's Premier Measurement Company
T H E W O R L D ’ S P R E M I E R M E A S U R E M E N T C O M PA N Y Electronic Chemical Life LTM Revenue* LTM Revenue* LTM Revenue* Measurement $2.7B Analysis $1.1B Sciences $1.0B Group Group Group FY10 Revenue: $2.8B FY10 Revenue: $1.2B FY10 Revenue: $1.5B FY10 Operating Margin* 16% FY10 Operating
Slide 4: FY 2011 Financial Highlights
F Y 2 0 1 1 F INANCIAL H IGHLIGHTS Q1 FY11 Q2 FY11 Q3 FY11 FY11 Actual Actual Actual Guidance** (Mid‐Point) Revenue* $1.52B $1.68B $1.69B $6.65B Organic Revenue Growth* 19% 21% 19% 17% Operating Margin* 17.7% 19.3% 20.2% EPS* $0.60 $0.74 $0.77 $2.91 ROIC* 21% 25% 25% Operating Cash Flow $120M $378M
Slide 5: Agilent's Strategy to Win
A GILENT ’ S S TRATEGY TO W IN Continue to focus on four point strategy • Market reach and customer trust • Sales, service, and support reach into over 100 countries • #1 customer loyalty ranking in every major product category* • 42% of employees based in Asia • Technology leadership • 10% Revenue
Slide 6: Q3'11 Segment Revenue Distribution by Geography
Q 3 ’ 1 1 S EG M E N T R E V E N U E D I ST R I B U T I O N BY G EO G R A P H Y • Q3’11 YoY organic revenue growth: Americas 18%, Europe 9%, Asia Pacific 27% • Q3’11 percentage of Agilent revenues: U.S. 29%, China 17%, Japan 9% • ~75% sales through direct channels, ~25% through indirect channels • B
Slide 7: Agilent Operating Model
A G I L E N T O P E R AT I N G M O D E L * FY11 Guidance** -1σ MOST +1 σ (Mid-Point) PROBABLE*** Organic Revenue 17% 4% 8% 12% Growth % OM % 18% 20% 21% YoY OM 20% 36% 43% Incremental % ROIC % 23% 25% 27% *Presented on a non-GAAP basis **FY11 guidance as of August 15, 2011 ***Not company guidance Pa
Slide 8: Agilent's Outlook & Growth in End Markets
A G I L E N T ’ S O U T LO O K & G R O W T H I N E N D M A R K E T S • Drivers: Emerging markets (China); high speed digital I/O demand driving Industrial, Comps & 21% of Agilent +31% 31% need for technology refresh Semi revenue growth growth • Market growth: Mid single digits • Drivers: 4G/LTE (Wir
Slide 9: Life Sciences Market Overview
L IFE S CIENCES M ARKET OVERVIEW Pharma/Biotech (For Profit) Market Size: $20B Growth: 3-6% Growth Drivers • Academic and government investment • Life Science applications – “omics” 14% of Agilent revenue • Growth in generics, developing Academic and Government (Not‐For‐Profit) economies • Therapeut
Slide 10: Technology-Leading Life Science Portfolio
T ECHNOLOGY‐ LEADING L IFE S CIENCE P ORTFOLIO Powerful Separation Sophisticated Sample Prep Solutions Lab 901 Capillary Electrophoresis & DNA, RNA and 708-DS Dissolution Multiple Affinity 1200 Infinity LC Electrophoresis BioAnalyzer Protein Bioreagents Apparatus Removal Kits Series SureSelect XT Ta
Slide 11: NMR: Transforming Our Portfolio
N M R : T RANSFORMING O UR P ORTFOLIO Agilent NMR portfolio delivers complete analytical solutions from research through production Channel – Immediate Impact • Rapidly staffing global service, support • Solid orders growth, long cycle products mean future revenue Technology – Changes in 2012 • New
Slide 12: Aggressive Expansion of Recurring Revenue Business
AGGRESSIVE E XPANSION OF R ECURRING R EVENUE B USINESS CAG + LSG Services & Consumables FY10: 22% growth (10% organic) CAG + LSG FY10 revenue Opportunity: Penetrate Agilent installed base; Services revenue* $520M extend to competitor installed base Consumables revenue* $556M Strategies: 19% Consumab
Slide 13: LSG Geographic Footprint
L S G G E O G R A P H I C F O OT P R I N T Q3FY11 Revenue Distribution Q3 Global Workforce Distribution • Rebalance manufacturing to drive cost and leverage Agilent’s global scale • Automation Instrumentation in Singapore – FY09 • LCMS 100% in Singapore - FY11 • NMR electronics 100% in Penang - FY11
Slide 14: LSG Emerging Markets Position
L S G E MERGING M ARKETS P OSITION China • Strong market growth in Academia and Pharma • LSG’s second largest country – 36% growth (28% organic) in FY11 YTD • Investing in dedicated life science sales, technical support and service teams India • Strong rebound in Pharma market • LSG sees 16% growth
Slide 15: Life Sciences: Strategy to Win
L I F E S C I E N C E S : S T R AT E G Y TO W I N Grow Market Share • Deliver leading-edge application solutions customers demand • Drive emerging application trends • Leverage strong global presence to expand in developing geographies Strengthen Technology Base • Develop breakthrough products and t
Slide 16: Appendix
APPENDIX “ff Agilent Technologies
Slide 17: Agilent Operating Model
A G I L E N T O P E R AT I N G M O D E L * -1σ Most +1 σ Probable** EMG Organic Rev. Growth % 2% 6% 11% Operating Margin % 19% 21% 23% YoY OM Incremental % -11% 40% 48% CAG Organic Rev. Growth % 5% 8% 11% Operating Margin % 22% 23% 24% YoY OM Incremental % 30% 40% 44% LSG Organic Rev. Growth % 8% 10
Slide 18: How to Manage in an Uncertain Environment?
H OW TO M ANAGE IN AN U NCERTAIN E NVIRONMENT ? • Grow expenses slower than targeted organic revenue growth G Targeted Maximum Resulting Revenue Expense Incremental Growth Growth Operating Margin EMG 6% 3.6% 40% CAG 8% 5.6% 40% LSG 10% 7.0% 30% Agilent 8% 4.8% 36% GIO* 2.5% • Default rule: productiv
Slide 19: Cash and Capital Structure Update
C A S H A N D C A P I TA L S T R U C T U R E U P D AT E • Net cash & short term investments of $1.0B* as of July 31, 2011. Most cash held outside of the United States. • Priority use of cash: Reserve for organic, inorganic investments meeting strategic & return criteria. Increasing pipeline. • Use a
Slide 20: Life Sciences Group: Key Platforms
L I F E S C I E N C E S G R O U P : K E Y P L AT F O R M S Platforms Applications Markets Competitors • Preparative and Analytical LC in • Pharma and Biopharma • Waters R&D /QC • Shimadzu HPLC • Molecular biology, cancer research • Life Science Research • Thermo/Dionex • Education & Research / Routi
Slide 21: Chemical Analysis Group: Key Platforms
C H E M I C A L A N A LY S I S G R O U P : K E Y P L AT F O R M S Applications Markets Competitors • Shimadzu Major uses are for • Perkin Elmer research and quality Used to separate a • Thermo Fisher GC Gas chromatography liquid or gas sample into its individual control in the chemical and petroleum
Slide 22: CAG Advantage: Portfolio Transformation
C A G A D VA N TA G E : P O R T F O L I O T R A N S F O R M AT I O N Expand Chemistries and Expand leadership in Atomic Supplies offering and Molecular Spectroscopy MS Analyzed Vials GC Columns HPLC Columns Exoscan ICP-MS with MassHunter Workstation Polymeric Consumables Solid Phase Extraction Colum
Slide 23: CAG Varian Cost Synergy Opportunities
C A G VARIAN C OST S YNERGY O PPORTUNITIES Leverage Agilent Asia supply chain. Shift manufacturing and material sourcing to lower- cost countries; leverage existing capability. Reduce vertical integration. Outsource internal sub-assemblies. Streamline distribution and commercial centers. Eliminate r
Slide 24: Chemical Analysis: Our Winning Formula
C H E M I C A L A N A LY S I S : O U R W I N N I N G F O R M U L A Focus on Growth Geographies. Strong foundation, Agilent core competency. Leading Technology. Innovative products, emerging applications, investment model. Superior Customer Experience. Proven Sales and Services model. M&A Synergy-Cap
Slide 25: Key EMG Platforms
4 K E Y E M G P L AT F O R M S Applications Markets Competitors •General Purpose •Rohde & Schwarz •Aerospace Defense •Anritsu Tests components for cell •Wireless phones and base stations •Computers, Semiconductors, Industrial •Computers, •Danaher (Tek) Semiconductors, Industrial •LeCroy Verifies new
Slide 26: Post-Recession Wireless Opportunity With LTE
P OST ‐R ECESSION W IRELESS O PPORTUNITY WITH LTE 1,800 Handset Test represents $1.8 1,600 approximately 25% of the $1.6 Communications Test market Millions of Handsets Shipped Each Year 1,400 $1.4 Handset T&M Market ($B) 1,200 $1.2 1,000 $1.0 800 $0.8 600 $0.6 400 $0.4 200 $0.2 0 $0.0 1G 2G 3G 4G H
Slide 27: Electronic Measurement: How We Win
E L E C T R O N I C M E A S U R E M E N T: H O W W E W I N Market reach & Technology Scale and customer trust leadership leverage • Largest and strongest • Investment in core • World’s largest T&M portfolio in industry technologies supply chain centered in • Exceptional direct sales • Introductions
Slide 28: Reconciliations
RECONCILIATIONS “os Agilent Technologies
Slide 29: Electronic Measurement Segment
AGILENT TECHNOLOGIES, INC. ELECTRONIC MEASUREMENT SEGMENT (Unaudited) PRELIMINARY (In millions, except margins and ROIC data) FY 2011 Q1 Q2 Q3 Q4 Total Orders $ 797 $ 844 $ 842 $ 2,483 Net revenue $ 771 $ 834 $ 856 $ 2,461 Gross margin % 58.1% 59.5% 57.7% 58.5% Income from operations $ 156 $ 191 $ 2
Slide 30: Chemical Analysis Segment
AGILENT TECHNOLOGIES, INC. CHEMICAL ANALYSIS SEGMENT (Unaudited) PRELIMINARY (In millions, except margins and ROIC data) FY 2011 Q1 Q2 Q3 Q4 Total Orders $ 388 $ 380 $ 400 $ 1,168 Net revenue $ 349 $ 381 $ 383 $ 1,113 Gross margin % 51.1% 50.3% 50.7% 50.7% Income from operations $ 65 $ 72 $ 79 $ 216
Slide 31: Life Sciences Segment
AGILENT TECHNOLOGIES, INC. LIFE SCIENCES SEGMENT (Unaudited) PRELIMINARY (In millions, except margins and ROIC data) FY 2011 Q1 Q2 Q3 Q4 Total Orders $ 442 $ 479 $ 445 $ 1,366 Net revenue $ 404 $ 464 $ 453 $ 1,321 Gross margin % 53.3% 52.2% 51.3% 52.2% Income from operations $ 48 $ 61 $ 60 $ 169 Ope
Slide 32: Reconciliation From GAAP to Non-GAAP
AGILENT TECHNOLOGIES, INC RECONCILIATION FROM GAAP TO NON-GAAP TWELVE MONTHS ENDED OCTOBER 31, 2009 (Unaudited) Non-GAAP Adjustments Acceleration of Share-Based Restructuring Compensation Patent and Other Asset Business Expense Related to Intangible Pension Litigation Litigation Adjustment for (In m
Slide 33: Reconciliation From GAAP to Non-GAAP
AGILENT TECHNOLOGIES, INC RECONCILIATION FROM GAAP TO NON-GAAP TWELVE MONTHS ENDED October 31, 2010 (Unaudited) Non-GAAP Adjustments Varian Acceleration of Varian Acquisition Share-Based Restructuring Acquisition & Related Fair Compensation Tax and Other Related Asset Intangible Transformational Lit
Slide 34: Reconciliation From GAAP to Non-GAAP
AGILENT TECHNOLOGIES, INC RECONCILIATION FROM GAAP TO NON-GAAP THREE MONTHS ENDED July 31, 2010 (Unaudited) Non-GAAP Adjustments Varian Acceleration of Restructuring Varian Acquisition Share-Based and Other Acquisition & Related Fair Compensation Related Costs Asset Intangible Transformational Litig
Slide 35: Reconciliation From GAAP to Non-GAAP
AGILENT TECHNOLOGIES, INC RECONCILIATION FROM GAAP TO NON-GAAP THREE MONTHS ENDED January 31, 2011 (Unaudited) Non-GAAP Adjustments Varian Varian Acquisition Restructuring Acquisition & Related Fair and Other Intangible Transformation Integration Value Adjustment for (In millions, except per share a
Slide 36: Reconciliation From GAAP to Non-GAAP
AGILENT TECHNOLOGIES, INC RECONCILIATION FROM GAAP TO NON-GAAP THREE MONTHS ENDED April 30, 2011 (Unaudited) PRELIMINARY Non-GAAP Adjustments Varian Acquisition Restructuring Acquisition & Related Fair and Other Asset Intangible Transformation Integration Value Adjustment for (In millions, except pe
Slide 37: Reconciliation From GAAP to Non-GAAP
AGILENT TECHNOLOGIES, INC RECONCILIATION FROM GAAP TO NON-GAAP THREE MONTHS ENDED July 31, 2011 (Unaudited) PRELIMINARY NON-GAAP ADJUSTMENTS Restructuring Varian and Other Acquisition & Acquisition Agilent Related Costs- Asset Intangible Transformation Integration Fair Value Foundation Adjustment (I
Slide 38: Reconciliation of ROIC
AGILENT TECHNOLOGIES, INC. RECONCILIATION OF ROIC (In millions) (Unaudited) PRELIMINARY LSG CAG EMG Agilent LSG CAG EMG Agilent LSG CAG EMG Numerator: Q1'11 Q1'11 Q1'11 Q1'11 Q1'10 Q1'10 Q1'10 Q1'10 Q4'10 Q4'10 Q4'10 Non-GAAP income from operations $ 48 $ 65 $ 156 $ 270 $ 55 $ 67 $ 58 $ 181 $ 62 $ 8
Slide 39: Reconciliation of ROIC
AGILENT TECHNOLOGIES, INC. RECONCILIATION OF ROIC (In millions) (Unaudited) PRELIMINARY LSG CAG EMG Agilent LSG CAG EMG Agilent LSG CAG EMG Agilent Numerator: Q2'11 Q2'11 Q2'11 Q2'11 Q2'10 Q2'10 Q2'10 Q2'10 Q1'11 Q1'11 Q1'11 Q1'11 Non-GAAP income from operations $ 61 $ 72 $ 191 $ 324 $ 48 $ 57 $ 100
Slide 40: Reconciliation of ROIC
AGILENT TECHNOLOGIES, INC. RECONCILIATION OF ROIC (In millions) (Unaudited) PRELIMINARY LSG CAG EMG Agilent LSG CAG EMG Agilent LSG CAG EMG Agilent Numerator: Q3'11 Q3'11 Q3'11 Q3'11 Q3'10 Q3'10 Q3'10 Q3'10 Q2'11 Q2'11 Q2'11 Q2'11 Non-GAAP income from operations $ 60 $ 79 $ 204 $ 342 $ 56 $ 69 $ 127
Slide 41: Revenue Reconciliation
AGILENT TECHNOLOGIES, INC. REVENUE RECONCILIATION (In millions) (Unaudited) PRELIMINARY Percent FY'10 FY'09 Inc/(Dec) GAAP Revenue $ 5,444 $ 4,481 Varian acquisition fair value adjustments 19 - Non-GAAP Revenue $ 5,463 $ 4,481 Less revenue from acquisition and divestitures included in segment result
Slide 42: Revenue Reconciliation
AGILENT TECHNOLOGIES, INC. REVENUE RECONCILIATION (In millions) (Unaudited) PRELIMINARY Percent Q1'11 Q1'10 Inc/(Dec) GAAP Revenue $ 1,519 $ 1,213 25% Varian acquisition fair value adjustments 5 - Non-GAAP Revenue $ 1,524 $ 1,213 26% Less revenue from acquisition and divestitures included in segment
Slide 43: Reconciliation of Organic Revenue
AGILENT TECHNOLOGIES, INC. RECONCILIATION OF ORGANIC REVENUE (IN MILLIONS) PRELIMINARY Percent Q2'11 Q2'10 Inc/(Dec) GAAP Revenue $ 1,677 $ 1,271 Varian acquisition fair value adjustments 2 - Non-GAAP Revenue $ 1,679 $ 1,271 included in segment results (191) (41) Organic Non-GAAP Revenue $ 1,488 $ 1
Slide 44: Reconciliation of Organic Revenue
AGILENT TECHNOLOGIES, INC. RECONCILIATION OF ORGANIC REVENUE (IN MILLIONS) PRELIMINARY Percent Q3'11 Q3'10 Inc/(Dec) GAAP Revenue $ 1,691 $ 1,384 22% Varian acquisition fair value adjustments 1 11 Non-GAAP Revenue $ 1,692 $ 1,395 21% Less revenue from acquisition and divestitures included in segment
Slide 45: Reconciliation of Incremental Revenue Dollar to Bottom Line
AGILENT TECHNOLOGIES, INC. RECONCILIATION OF INCREMENTAL REVENUE DOLLAR TO BOTTOM LINE (IN MILLIONS) PRELIMINARY Year over Year Q3'11 Q3'10 $ Change Incremental AGILENT GAAP Revenue $ 1,691 $ 1,384 $ 307 Income from Operations $ 281 $ 115 $ 166 54% AGILENT Non-GAAP Revenue $ 1,692 $ 1,395 $ 297 Inco
Slide 46: Net Cash
AGILENT TECHNOLOGIES, INC. NET CASH (In millions) (Unaudited) PRELIMINARY Q3'11 Q3'10 Cash and cash equivalents $ 3,101 $ 2,317 Restricted cash and cash equivalents — 1,551 Short-term debt — (1,501) Senior notes, par value (2,100) (2,100) Total Net Cash $ 1,001 $ 267 The preliminary reconciliation o
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