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Agilent Q4 Revenues Up 6 Percent

NEW YORK – Agilent Technologies reported after the close of the market on Monday that its fiscal fourth quarter revenues rose 6 percent year over year, thanks largely to an 8 percent increase in revenues for its crosslab unit and a 5 percent increase in revenues in its diagnostics and genomics business.

For the three months ended Oct. 31, the firm said revenues rose to $1.37 billion from $1.29 billion in Q4 2018, beating the average Wall Street estimate of $1.33 billion. The company said core revenues grew 4 percent year over year in Q4.

Revenues for the diagnostics and genomics group (DGG) rose to $269.0 million from $256.0 million in the year-ago quarter. The life sciences and applied markets group (LSAG) saw 4 percent revenue growth in Q4 to $622.0 million from $597.0 million. Revenues from the Agilent crosslab group (ACG) grew to $476.0 million from $441.0 million.

In a presentation to analysts following the release of the earnings, the company said that Q4 core revenues in LSAG reflected strength in the environmental and forensics markets but were slightly offset by expected weakness in the China food market, which slowed growth in the chemicals and energy market. ACG saw growth across services and consumables, with broad growth across the major geographical regions. And growth in DGG was driven by the company's pathology and companion diagnostics business, as well as ongoing demand in the pharmaceuticals end market for oligo manufacturing.

"Agilent's fourth-quarter results cap off a very solid 2019 and reflect the broad-based business we've built over the last five years," Agilent President and CEO Mike McMullen said in a statement. "Based on what we've been able to achieve in 2019, I'm convinced we're in an exceptionally strong position for the future."

On the conference call, McMullen said that the pharma, diagnostics and clinical, and environmental and forensics end markets had the highest growth in Q4 and for the full fiscal year 2019. Growth in the US was higher than expected, while growth in other regions was as expected.

He also noted that Agilent is investing internally to drive organic growth and will be investing in its larger biopharma business in the coming year. Further, he said that the firm is looking to capture market share in pathology, build its oligo business, and capture a larger share of the sequencing market.

Agilent CFO Robert McMahon said that the pharma end market saw 7 percent core growth in Q4, with the strongest growth in the US and China. The pharma end market in China grew in the double digits for the year, he added.

The environmental and forensics market grew 9 percent during the quarter, while the pathology and diagnostics markets grew 7 percent. The chemicals and energy market grew 1 percent, and the government and academia market fell 4 percent in Q4. Food revenues fell 5 percent because of weakness in the China food market, McMahon said.

Geographically, revenues from the Americas rose 9 percent in Q4, thanks largely to strength in the pharma, diagnostics, and environmental markets. Revenues in Europe rose 4 percent, thanks to broad-based growth across all markets. Revenues in China fell in the low-single digits, and the rest of Asia also fell in the low-single digits.

In Q4, Agilent's net income fell to $194.0 million from $195.0 million in Q4 2018. It's earnings per share rose, however, to $.62 based on 313 million shares of common stock outstanding from $.61 to 322 million shares a year ago. On an adjusted basis, the firm reported earnings of $.89 per share for the quarter, beating analysts' consensus estimate of $.85 per share.

The firm's Q4 R&D costs fell about 2 percent year over year to $102.0 million from $104.0 million, while SG&A expenses for the quarter rose 7 percent to $385.0 million from $360.0 million in the prior year.

For FY2019, the firm said revenues rose 5 percent to $5.16 billion from $4.91 billion in 2018, beating the average Wall Street estimate of $5.13 billion. The company said core revenues also grew 5 percent in 2019.

DGG revenues rose 8 percent to $1.02 billion from $943.0 million a year ago. LSAG saw 1 percent revenue growth in 2019 to $2.30 billion from $2.27 billion. ACG's revenues rose 8 percent year over year to $1.84 billion from $1.70 billion.

In fiscal 2019, Agilent's net income rose to $1.07 billion, or $3.37 per share, from $316.0 million, or $.97 per share, in 2018. On an adjusted basis, the firm reported earnings of $3.11 per share for the year, beating analysts' consensus estimate of $3.08 per share.

The firm's 2019 R&D costs rose 4 percent to $404.0 million from $387.0 million, while SG&A expenses for the year rose 5 percent to $1.46 billion from $1.39 billion in the prior year.

Agilent ended the year with $1.38 billion in cash and cash equivalents.

For fiscal year 2020, Agilent expects revenue of $5.50 billion to $5.55 billion, and adjusted earnings of $3.38 to $3.43 per share. For Q1 2020, the company is expecting revenues of $1.34 billion to $1.36 billion, and adjusted earnings of $.80 to $.81 per share. McMahon noted that Agilent expects the Chinese lunar new year to adversely affect growth in Q1, but that the company is expecting to see a "modest recovery" in China in 2020, with growth in the low- to mid-single digits.

Analysts expect revenues of $5.55 billion and earnings of $3.44 per share for the year, and revenues of $1.38 billion and earnings of $.84 per share for Q1.

Agilent's shares fell 2 percent to $78.44 in after-hours trading on the New York Stock Exchange.