Agilent (A) Q2 Earnings Match Estimates, Revenues Rise Y/Y
Agilent Technologies A reported second-quarter fiscal 2023 earnings of $1.27 per share, which came in line with the Zacks Consensus Estimate. The bottom line increased by 12.4% from the year-ago fiscal quarter’s level.
Revenues of $1.72 billion surpassed the Zacks Consensus Estimate of $1.67 billion. The top line was up 6.8% on a reported basis and 9.5% on a core basis from the respective year-ago fiscal quarter’s levels.
Top-line growth was driven by strong momentum across Food, Academia & Gov’t and Chemistry & Advanced Materials markets. A strong performance in China also contributed well.
Segmental Top Line Details
Agilent has three reporting segments, namely, Life Sciences & Applied Markets Group (LSAG), Agilent Cross Lab Group (ACG) and Diagnostics and Genomics Group (DGG).
LSAG: The segment accounted for $968 million or 56% of its total revenues, up 8% on a reported basis and 10% on a core basis from the respective prior-year fiscal quarter’s levels. This was driven by strong performance in the Chemical & Advanced Materials, Food and Academic & Gov’t markets. Strength in LC and LCMS and lab consumables also aided results.
ACG: Revenues from the segment were $387 million, accounting for 23% of total revenues. Also, the top line improved by 10% from the prior-year fiscal quarter’s reading on a reported basis and 13% on a core basis, driven by strength in services attached to new instrument installations as well as expanding service offerings for the existing instrument base.
DGG: Revenues increased 1% from the prior-year fiscal quarter’s figure on a reported basis and 3% on a core basis to $362 million, accounting for the remaining 21% of total revenues. Segmental growth was attributed to strength in the NASD and pathology businesses. Also, solid momentum in companion diagnostics pharma services contributed well.
Agilent Technologies, Inc. Price, Consensus and EPS Surprise
Agilent Technologies, Inc. price-consensus-eps-surprise-chart | Agilent Technologies, Inc. Quote
Operating Results
For the fiscal second quarter, gross margin in the LSAG segment expanded by 90 basis points (bps) to 59.9% from the prior-year fiscal quarter’s number. ACG’s gross margin contracted 10 bps to 47%. DGG’s gross margin contracted 420 bps from the year-ago fiscal quarter’s actuals to 51.8%.
Research & development (R&D) costs were $126 million, up 9.6% from the prior-year fiscal quarter’s number. Selling, general & administrative (SG&A) expenses were $415 million, up 7.5% from the year-earlier fiscal quarter’s figure. As a percentage of revenues, R&D expenses expanded 10 bps year over year to 7.3%. Meanwhile, SG&A expenses expanded 20 bps year over year to 24.2%.
Operating margin for the fiscal first quarter was 22.3%, which contracted 10 bps from the year-earlier fiscal quarter’s figure.
Segment-wise, the operating margin for LSAG was up 180 bps from the year-earlier fiscal quarter’s level of 27.3%. ACG’s operating margin was 26.6%, up 200 bps from the year-ago fiscal quarter’s level. DGG segment’s operating margin contracted 530 bps to 20.2% from the year-ago fiscal quarter’s figure.
Balance Sheet & Cash Flow
As of Apr 30, 2023, Agilent’s cash and cash equivalents were $1.18 billion, down from $1.25 billion on Jan 31, 2023.
Accounts receivables were $1.4 billion at the end of second-quarter fiscal 2023, down from $1.5 billion at the end of first-quarter fiscal 2023.
Long-term debt was $2.733 billion for the reported quarter, which remained flat as compared with the prior fiscal quarter.
Agilent generated $398 million in cash from operations during the reported quarter, up from $296 million generated in the previous quarter.
Further, it returned $151 million to shareholders, out of which dividend payments accounted for $66 million and share repurchases accounted for the remaining $85 million.
Guidance
For the fiscal third quarter of 2023, management expects revenues of $1.640-$1.675 billion, suggesting growth between 4.5% and 2.5% on a core basis from the year-ago fiscal quarter’s actuals. The Zacks Consensus Estimate for the same is pegged at $1.76 billion.
Non-GAAP earnings per share are expected to be $1.36-$1.38. The consensus mark for fiscal third-quarter earnings stands at $1.43 per share.
For fiscal 2023, management lowered its revenue guidance from the band of $7.03-$7.1 billion to $6.93-7.03 billion, implying a growth of 1.2-2.7% on a reported basis and 3-4.5% on a core basis from the respective fiscal 2022 figures. The Zacks Consensus Estimate for the same is pegged at $7.07 billion.
Management also updated the guidance for fiscal 2023 non-GAAP earnings per share downward from $5.65-$5.70 to $5.60-$5.65. The consensus mark for fiscal 2023 earnings is pegged at $5.68 per share.
Zacks Rank & Other Stocks to Consider
Currently, Agilent carries a Zacks Rank #3 (Hold).
Investors interested in the broader technology sector can consider some better-ranked stocks like Ciena CIEN, CrowdStrike CRWD and AMETEK AME. Ciena, CrowdStrike and AMETEK each carry a Zacks Rank #2 at present. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Ciena shares have lost 14.9% in the year-to-date time frame. The Zacks Consensus Estimate for CIEN’s fiscal year 2023 earnings is pegged at $2.81 per share, suggesting an increase of 47.9% from the prior year’s reported figure.
CrowdStrike shares have risen 27% in the year-to-date period. The Zacks Consensus Estimate for CRWD’s 2023 earnings is pegged at $2.30 per share, suggesting growth of 49.4% from the prior year’s reported figure.
AMETEK shares have rallied 3.4% year to date. The Zacks Consensus Estimate for AME’s 2023 earnings is pegged at $6.11 per share, suggesting an increase of 7.57% from the prior year’s reported figure.
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