Slide 1: Agilent Technologies Investor Presentation August 2011
AGILENT TECHNOLOGIES INVESTOR PRESENTATION AUGUST 2011
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 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 6: Market Outlook
M ARKET O UTLOOK Macro-Economic Environment • Growth in EU, Japan and US less than 2% • Emerging markets remain healthy, but slowing Measurement Markets • “Easy compares” are gone; growth of $41B market in the 3-5% range • End markets are mixed; Agilent’s growth tracking to forecast; shifting resour
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 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 9: 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 10: Appendix
APPENDIX “ff Agilent Technologies
Slide 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 12: 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 13: 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 14: 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 15: Reconciliations
RECONCILIATIONS “os Agilent Technologies
Slide 16: 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 17: 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 18: 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 19: Reconciliation from GAAP to Non-GAAP, Twelve Months Ended October 31, 2009
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 20: Reconciliation from GAAP to Non-GAAP, Twelve Months Ended October 31, 2010
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 21: Reconciliation from GAAP to Non-GAAP, Three Months Ended July 31, 2010
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 22: Reconciliation from GAAP to Non-GAAP, Three Months Ended January 31, 2011
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 23: Reconciliation from GAAP to Non-GAAP, Three Months Ended April 30, 2011
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 24: Reconciliation from GAAP to Non-GAAP, Three Months Ended July 31, 2011
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 25: 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 26: 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 27: 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 28: 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 29: 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 30: 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 31: 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 32: 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 33: 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