Agilent Tops Wall Street in Q2, Comes Up Shy on 2013 Guidance

Andrew Klips |

Scientific measuring equipment maker Agilent Technologies Inc. (A) reported results from its fiscal second quarter showing an expected decline in net income that beat analysts. The Santa Clara, California-based company also said that it is planning to streamline its staff and boost it stock repurchasing program.

For the quarter ended April 30, Agilent recorded revenue of $1.732 billion, essentially flat with $1.733 billion in the year prior quarter. Net income decreased to $166 million, or 48 cents per share, compared to $255 million, or 72 cents per share, in the second quarter of fiscal 2012. Excluding charges related to restructuring, intangible amortization and other costs that were partially offset by a one-time tax benefit, the company reported adjusted net income of $269 million, or 77 cents per share, versus $275 million, or 78 cents per share, in last year’s quarter.

Wall Street analysts forecast the Agilent to report earnings of 68 cents per share on revenue of $1.74 billion.

A decline in sales in the company’s electronic measurement business, the largest segment at Agilent, from $876 million in Q2 2012 to $760 million this year was offset by improvement in revenue in Agilent’s diagnostics and genomics division (up from $74 million to $166 million). Chemical analysis sales were up $13 million to $401 million while life science sales rose $10 million to $405 million.

"We were pleased to have exceeded EPS guidance for the quarter, reflecting our focus on cost control and profitability in the face of the worldwide economic slowdown and the impact of U.S. sequestration. We expect the macroeconomic environment to remain challenging throughout the second half of 2013 and are taking additional actions to strengthen our operating performance," said Bill Sullivan, chief executive at Agilent.

Some of those actions include skinnying the company’s workforce by 450 workers, or about 2 percent of its staff, that is expected to save approximately $50 million annually in operating expenses.

Meanwhile, Agilent said that its board has approved increasing its current stock repurchase program by $500 million to $1 billion, inclusive of what has already been bought-back in the program. The company repurchased an aggregate of 5.3 million shares for about $219 million. The plan is to complete the total program by the end of the calendar year.

Looking ahead, Agilent sees third-quarter revenue in the range of $1.63 billion to $1.66 billion. Profits on an adjusted basis are guided to be between 60 cents and 64 cents. For all of fiscal 2013, the company is projecting earnings between $2.70 and $2.85 on revenue of $6.75 billion to $6.85 billion.

One the whole, the outlook is shy of analyst expectations on all fronts. For the quarter, the expectation was EPS of 74 cents on revenue of $1.75 billion. For 2013, EPS was expected at $2.88 on revenue of $7.00 billion.

Shares had a strong regular session on Tuesday, closing up by more than 2 percent at $43.97 ahead of the report. Extended trading is seeing shares edge higher to $44.62 as investors appear more focused on the quarterly earnings beat than the less-than-expected outlook. Shares are up about 9 percent so far in 2013.

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Companies

Symbol Name Price Change % Volume
A Agilent Technologies Inc. 44.28 -0.25 -0.56 45,835
CXW Corrections Corporation of America 23.30 0.10 0.43 69,015

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