Agilent Technologies, Inc. · NYSE:A
Agilent Technologies — Morgan Stanley Global Healthcare Conference 2013
36 slides from Agilent Technologies's conference presentation, Sep 10, 2013
Slide 1: Agilent Technologies Morgan Stanley Global Healthcare Conference
Agilent Technologies Morgan Stanley Global Healthcare Conference Mike McMullen President September 10, 2013 Chemical Analysis 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
The World’s Premier Measurement Company EM Markets LDA Markets FY12 Revenue $3.6B, Operating Margin 18% Electronic Life Diagnostics & Chemical Measurement Sciences Genomics Analysis Group Group Group Group FY12 Revenue $3.3B FY12 Revenue $1.6B FY12 Revenue $0.4B FY12 Revenue $1.6B Operating Margin 2
Slide 4: Financial Highlights – Q3 FY13
Financial Highlights – Q3 FY13 Q1 FY13 Q2 FY13 Q3 FY13 Q4 FY13 FY13 Actual Actual Actual Guidance Guidance Midpoint(1) Midpoint(1) Revenue $1.68B $1.73B $1.65B $1.71B $6.77B Core Revenue Growth(2) -2% -4% -6% -1% -3% Operating Margin(3) 17% 19% 18% 19% 19% EPS(3) $0.63 $0.77 $0.68 $0.76 $2.84 ROIC(3
Slide 5: Life Sciences Group Overview
Life Sciences Group Overview Market Size(1): $21B Q3’13 Performance Long Term Market Growth(1): 4-5% • Orders: $376M, +1% y/y (+2% core(2)) Global Trends • Revenues: $401M, +3% y/y (+4% core(2)) • Pharma shift from new chemical entities (NCEs) to new biological entities (NBEs) and biosimilars • Oper
Slide 6: Diagnostics and Genomics Group Overview
Diagnostics and Genomics Group Overview Market Size(1): $7B Q3’13 Performance Long Term Market Growth(1): 8-10% • Orders: $160M, +52% y/y (+6% core(2)) Global Trends • Revenues: $163M, +54% y/y (+7% core(2)) • Increasing patient population (aging, lifestyle impacts) • Increasing understanding of can
Slide 7: Chemical Analysis Group Overview
Chemical Analysis Group Overview Market Size(1): $13B Q3’13 Performance Long Term Market Growth(1): 4-5% • Orders: $390M, +5% y/y (+7% core(2)) New Global Trends • Revenues: $387M, +1% y/y (+3% core(2)) • Operating Margin: 21.5% of revenue, +70 • Global food supply basis points y/y • New environment
Slide 8: Summary
Summary Agilent is well positioned in an environment of global uncertainty • Strong balance sheet and cash flow • Gross margin improvements underway as part of multi-year effort to reduce manufacturing and logistics costs by almost $200M • Implemented restructuring and discretionary cost savings pro
Slide 9: Appendix
Appendix
Slide 10: Q3'13 Revenue Distribution
Q3’13 Revenue Distribution Q3’13 Revenue: $1.65B Page 10
Slide 11: Agilent End Market Performance – Q3'13
Agilent End Market Performance – Q3’13 Mixed results: Market % of Agilent Agilent Results End Markets Size(2) Up: Aerospace & Defense, Pharma & Revenue(1) Q3’13 vs. Q3’12 $54B Biotech, Diagnostics & Clinical, Food, Chemical & Energy Down 31% on softness in Communications 15% $4B handset manufacturin
Slide 12: Q3'13 LDA Markets Highlights
Q3’13 LDA Markets Highlights Life Sciences, Diagnostics, and Applied Markets • Orders: $926M, +9% y/y (+4% core(1)) • Revenues: $951M, +8% y/y (+4% core(1)) • Operating Margin: 18.3% of revenue, +90 basis points y/y (1) Core growth is reported growth adjusted for the effects of M&A and FX Page 12
Slide 13: Electronic Measurement Group Overview
Electronic Measurement Group Overview Market Size(1): $13B Q3’13 Performance Long Term Market Growth(1): 3-4% • Orders: $674M, -17% y/y (-15% core(2)) Global Trends • Revenues: $701M, -17% y/y (-16% core(2)) • Mobile data traffic grows at high double-digit rates each year • Operating Margin: 18.5% o
Slide 14: Financial Goals
Financial Goals Base Scenario Low Growth Scenario 2014 2015 2016 2014 2015 2016 Revenue Growth – 7% 7% 7% 4% 4.5% 5% Core(1) Operating Margin(2) 20.2% 21.8% 23.0% 19.1% 19.5% 19.8% YOY Incremental – 41% 44% 39% 28% 28% 26% Organic(3) KEY ACTIONS TO SUPPORT MARGIN EXPANSION (including in “Low” Scenar
Slide 15: Financial Goals – By Segment
Financial Goals – By Segment Base Scenario Low Growth Scenario 2014 2015 2016 2014 2015 2016 Revenue Growth – Core(1) EMG 6% 6% 6% 3% 3% 4% CAG 7% 7% 7% 5% 5% 6% LSG 8% 8% 8% 5% 6% 5% DGG 9% 9% 10% 5% 6% 7% OM % EMG 21.2% 22.1% 22.9% 20.2% 19.8% 19.8% CAG 22.8% 24.3% 25.3% 22.3% 22.9% 23.4% LSG 18.2
Slide 16: Cash and Capital Structure Update
Cash and Capital Structure Update • Generated $215M cash from operations in Q3 FY13 • Bought back 20.5M shares for $900M fiscal YTD • Repurchase program is funded by cash repatriation and debt • $100M remains of the $1B share repurchase authorization • Issued debt of $600M and paid off $250M notes m
Slide 17: Reconciliations
Reconciliations
Slide 18: Electronic Measurement Segment
AGILENT TECHNOLOGIES, INC. ELECTRONIC MEASUREMENT SEGMENT (Unaudited) PRELIMINARY (In millions, except margins and ROIC data) FY 2013 Q1 Q2 Q3 Q4 Total Orders $ 749 $ 701 $ 674 $ 2,124 Net revenue $ 722 $ 760 $ 701 $ 2,183 Gross margin % 57.4% 57.1% 56.6% 57.0% Income from operations $ 125 $ 156 $ 1
Slide 19: Life Sciences, Diagnostics and Applied Markets (LDA)
AGILENT TECHNOLOGIES, INC. LIFE SCIENCES, DIAGNOSTICS AND APPLIED MARKETS ( LDA) (Unaudited) PRELIMINARY (In millions, except margins data) FY 2013 Q1 Q2 Q3 Q4 Total Orders $ 961 $ 987 $ 926 $ 2,874 Net revenue $ 958 $ 972 $ 951 $ 2,881 Gross margin % 53.1% 53.1% 52.5% 52.9% Income from operations $
Slide 20: Life Sciences Segment
AGILENT TECHNOLOGIES, INC. LIFE SCIENCES SEGMENT (Unaudited) PRELIMINARY (In millions, except margins and ROIC data) FY 2013 Q1 Q2 Q3 Q4 Total Orders $ 397 $ 416 $ 376 $ 1,189 Net revenue $ 401 $ 405 $ 401 $ 1,207 Gross margin % 51.9% 50.8% 51.2% 51.3% Income from operations $ 61 $ 61 $ 67 $ 189 Ope
Slide 21: Diagnostics and Genomics Segment
AGILENT TECHNOLOGIES, INC. DIAGNOSTICS AND GENOMICS SEGMENT (Unaudited) PRELIMINARY (In millions, except margins and ROIC data) FY 2013 Q1 Q2 Q3 Q4 Total Orders $ 165 $ 163 $ 160 $ 488 Net revenue $ 163 $ 166 $ 163 $ 492 Gross margin % 60.5% 62.6% 59.4% 60.8% Income from operations $ 21 $ 28 $ 24 $
Slide 22: Chemical Analysis Segment
AGILENT TECHNOLOGIES, INC. CHEMICAL ANALYSIS SEGMENT (Unaudited) PRELIMINARY (In millions, except margins and ROIC data) FY 2013 Q1 Q2 Q3 Q4 Total Orders $ 399 $ 408 $ 390 $ 1,197 Net revenue $ 394 $ 401 $ 387 $ 1,182 Gross margin % 51.2% 51.4% 51.0% 51.2% Income from operations $ 81 $ 89 $ 83 $ 253
Slide 23: Reconciliation of Organic Revenue Excluding Currency Adjustments
AGILENT TECHNOLOGIES, INC. RECONCILIATION OF ORGANIC REVENUE EXCLUDING THE IMPACT OF CURRENCY ADJUSTMENTS (In Millions) (Unaudited) PRELIMINARY Fiscal Year Percent 2012 2011 Inc/(Dec) GAAP Revenue $ 6,858 $ 6,615 Varian acquisition fair value adjustments - 11 Non-GAAP Revenue $ 6,858 $ 6,626 4% Less
Slide 24: Reconciliation from GAAP to Non-GAAP, Year Ended October 31, 2012
AGILENT TECHNOLOGIES, INC RECONCILIATION FROM GAAP TO NON-GAAP YEAR ENDED October 31, 2012 (Unaudited) PRELIMINARY NON-GAAP ADJUSTMENTS Acquisition & Agilent Asset Intangible Transformational Integration Foundation Adjustment (In millions, except per share amounts) GAAP Impairments Amortization Init
Slide 25: Reconciliation of Organic Revenue Q1'13
AGILENT TECHNOLOGIES, INC. RECONCILIATION OF ORGANIC REVENUE (In Millions) (Unaudited) PRELIMINARY Percent Q1'13 Q1'12 Inc/(Dec) GAAP Revenue $ 1,680 $ 1,635 Less revenue from acquisition and divestitures included in segment results (99) - Organic Revenue $ 1,581 $ 1,635 -3% Percent Organic Revenue
Slide 26: Organic Revenue by Segment and Region Q1'13
AGILENT TECHNOLOGIES, INC. RECONCILIATIONS OF ORGANIC REVENUE BY SEGMENT AND ORGANIC REVENUE BY REGION EXCLUDING THE IMPACT OF CURRENCY ADJUSTMENTS (In Millions) (Unaudited) PRELIMINARY Year-over-Year Currency (a) ORGANIC REVENUE Adjustments Currency-Adjusted Year-over-Year Year-over-Year Organic Re
Slide 27: Reconciliation of Organic Revenue Q2'13
AGILENT TECHNOLOGIES, INC. RECONCILIATION OF ORGANIC REVENUE (In Millions) (Unaudited) PRELIMINARY Percent Q2'13 Q2'12 Inc/(Dec) GAAP Revenue $ 1,732 $ 1,733 Less revenue from acquisition and divestitures included in segment results 98 - Organic Revenue $ 1,634 $ 1,733 (6%) Percent Organic Revenue b
Slide 28: Organic Revenue by Segment and Region Q2'13
AGILENT TECHNOLOGIES, INC. RECONCILIATIONS OF ORGANIC REVENUE BY SEGMENT AND ORGANIC REVENUE BY REGION EXCLUDING THE IMPACT OF CURRENCY ADJUSTMENTS (In Millions) (Unaudited) PRELIMINARY Year-over-Year Currency (a) ORGANIC REVENUE Adjustments Currency-Adjusted Year-over-Year Year-over-Year Organic Re
Slide 29: Reconciliation of Organic Revenue Q3'13
AGILENT TECHNOLOGIES, INC. RECONCILIATION OF ORGANIC REVENUE (In Millions) (Unaudited) PRELIMINARY Percent Q3'13 Q3'12 Inc/(Dec) GAAP Revenue $ 1,652 $ 1,723 Less revenue from acquisition and divestitures included in segment results 55 - Organic Revenue $ 1,597 $ 1,723 (7%) . Percent Organic Revenue
Slide 30: Organic Revenue by Segment and Region Q3'13
AGILENT TECHNOLOGIES, INC. RECONCILIATIONS OF ORGANIC REVENUE BY SEGMENT AND ORGANIC REVENUE BY REGION EXCLUDING THE IMPACT OF CURRENCY ADJUSTMENTS (In Millions) (Unaudited) PRELIMINARY Year-over-Year Currency (a) ORGANIC REVENUE Adjustments Currency-Adjusted Year-over-Year Year-over-Year Organic Re
Slide 31: Reconciliation from GAAP to Non-GAAP, Three Months Ended January 31, 2013
AGILENT TECHNOLOGIES, INC RECONCILIATION FROM GAAP TO NON-GAAP THREE MONTHS ENDED JANUARY 31, 2013 (Unaudited) PRELIMINARY NON-GAAP ADJUSTMENTS Asset Acquisition & Impairments Intangible Transformational Integration Adjustment (In millions, except per share amounts) GAAP and write-downs Amortization
Slide 32: Reconciliation from GAAP to Non-GAAP, Three Months Ended April 30, 2013
AGILENT TECHNOLOGIES, INC RECONCILIATION FROM GAAP TO NON-GAAP THREE MONTHS ENDED APRIL 30, 2013 (Unaudited) NON-GAAP ADJUSTMENTS PRELIMINARY Restructuring Acquisition & and Other Asset Intangible Transformation Integration Adjustment for (In millions, except per share amounts) GAAP Related Costs Im
Slide 33: Reconciliation from GAAP to Non-GAAP, Three Months Ended July 31, 2013
AGILENT TECHNOLOGIES, INC RECONCILIATION FROM GAAP TO NON-GAAP THREE MONTHS ENDED JULY 31, 2013 (Unaudited) NON-GAAP ADJUSTMENTS PRELIMINARY Restructuring Acquisition & and Other Asset Intangible Transformational Integration Adjustment for (In millions, except per share amounts) GAAP Related Costs I
Slide 34: Reconciliation of ROIC
AGILENT TECHNOLOGIES, INC. RECONCILIATION OF ROIC (In millions) (Unaudited) PRELIMINARY LSG CAG EMG DGG AGILENT LSG CAG EMG DGG Agilent LSG CAG EMG DGG AGILENT Numerator: Q3'13 Q3'13 Q3'13 Q3'13 Q3'13 Q3'12 Q3'12 Q3'12 Q3'12 Q3'12 Q2'13 Q2'13 Q2'13 Q2'13 Q2'13 Non-GAAP income from operations $ 67 $
Slide 35: Non-GAAP Net Income and Diluted EPS Reconciliations
AGILENT TECHNOLOGIES, INC. NON-GAAP NET INCOME AND DILUTED EPS RECONCILIATIONS (In millions, except per share amounts) (Unaudited) PRELIMINARY Q3 2012 Q4 2012 Q1 2013 Q2 2013 Q3 2013 FY2012 Net Diluted Net Diluted Net Diluted Net Diluted Net Diluted Net Diluted Income EPS Income EPS Income EPS Incom
Slide 36: Net Cash (Debt)
AGILENT TECHNOLOGIES, INC. NET CASH (DEBT) (In millions) (Unaudited) PRELIMINARY Q3'13 Q3'12 Q2'13 Cash and cash equivalents $ 2,330 $ 1,923 $ 2,519 Short-term debt, par value — (500) (250) Senior notes, par value (2,600) (1,600) (2,000) Other debt (45) (42) (44) Total Net Cash (Debt) $ (315) $ (219
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