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Agilent Technologies : Prepared Remarks (opens in new window)

11/22/2021 | 07:49pm EST

Agilent Technologies Fourth Quarter Fiscal 2021

Conference Call Prepared Remarks

Parmeet Ahuja

Thank you, and welcome everyone to Agilent's fourth quarter Conference Call for Fiscal Year 2021. With me are Mike McMullen, Agilent's president and CEO, and Bob McMahon, Agilent's senior vice president and CFO.

Joining in the Q&A after Mike and Bob's comments will be Jacob Thaysen, president of Agilent's Life Science and Applied Markets Group; Sam Raha, president of Agilent's Diagnostics and Genomics Group; and Padraig McDonnell, president of the Agilent CrossLab Group.

This presentation is being webcast live. The news release, investor presentation and information to supplement today's discussion, along with a recording of this webcast, are made available on our website at www.investor.agilent.com.

Today's comments by Mike and Bob will refer to non-GAAP financial measures. You will find the most directly comparable GAAP financial metrics and reconciliations on our website. Unless otherwise noted, all references to increases or decreases in financial metrics are year-over-year and references to revenue growth are on a core basis. Core revenue growth excludes the impact of currency, and the acquisitions and divestitures completed within the past 12 months. Guidance is based on exchange rates as of October 31.

We will also make forward-looking statements about the financial performance of the company. These statements are subject to risks and uncertainties and are only valid as of today. The company


assumes no obligation to update them. Please look at the company's recent SEC filings for a more complete picture of our risks and other factors.

And now, I'd like to turn the call over to Mike.

Mike McMullen

Thanks, Parmeet. And, thanks to everyone for joining our call today. The Agilent team delivered another excellent quarter to close out an outstanding, record-setting 2021.

At $6.32 billion for fiscal 2021, revenues are almost a billion dollars higher than last year. Full-year, core growth is up 15 percent on top of growing 1 percent last year. The strength is broad-based with our three business units all growing more than 10 percent core for the year.

Our full-year operating margins are up 200 basis points. Earnings per share of $4.34 are up 32 percent.

Let's now take a closer look at our strong finish to 2021 and review Q4 results.

Our momentum continues as orders increased faster than revenue in Q4 and at the same time, we delivered our fourth straight quarter of double-digit revenue growth. At $1.66 billion, revenues are up 12 percent on a reported basis. Our core revenues grew 11 percent, exceeding our expectations. This is on top of 6 percent core growth last year.

Our Q4 operating margin is 26.5 percent. This is up 160 basis points from last year.

EPS is $1.21, up 23 percent year-over-year. Our earnings growth also exceeded our expectations.

We continue to perform extremely well in pharma, our largest market -- growing 21 percent, driven by our biopharma business. Total pharma now represents 36 percent of our overall revenue. This compares to 31 percent of our revenues just 2 years ago.


The strong growth in our chemical and energy business continues, as we delivered 11 percent growth in the quarter. This is on top of growing 3 percent in Q4 of last year. PMI numbers are positive and we expect that chemical and energy will continue its strong growth trajectory into fiscal 2022.

In diagnostics and clinical, revenues grew 11 percent on top of growing 1 percent last year as testing volumes started to recover.

On a geographic basis, our results were led by a strong performance in the Americas and China. Our business in the Americas grew 15 percent on top of 5 percent last year.

China grew 8 percent core on top of strong 13 percent growth in Q4 of last year. China order growth outpaced revenue growth for the third quarter in a row.

Now, looking at our performance by business unit, the Life Sciences and Applied Markets Group generated revenue of $747 million. LSAG is up 11 percent on both a reported and core basis. LSAG's growth was broad-based and led by strength in liquid chromatography and cell analysis. The pharma and chemical and energy markets were particularly strong for new instrument purchases. Our cell analysis business crossed the $100 million mark in the quarter for the first time.

During the quarter, the LSAG team announced a new Ion Mobility LC/Q-TOF and enhancements to our VWorks automation software suite. These new, well-received offerings are used to improve the analysis of proteins and peptides to speed development of new protein-based therapeutics.

The Agilent CrossLab Group posted revenue of $572 million. This is up a reported 10 percent and 9 percent core. Growth is broad-based driven by strength in service contracts and on-demand services, as well as for chemistries and supplies. Our focus on increasing connect rates continues to pay off for us. The strong expansion of our installed base in 2021 and increasing connect rates bodes well for continued strength in our ACG business moving forward. Our ability to drive growth and leverage our scale produced operating margins of roughly 30 percent, up more than 200 basis points from the prior year.

The Diagnostics and Genomics Group delivered revenue of $341 million, up 16 percent reported and up 13 percent core.


Our NASD oligo business led the way with robust double-digit growth in the quarter and achieved full-year revenues exceeding $225 million. We expect another year of strong double-digit growth as the team continues to do a great job of increasing throughput with the existing capacity.

The additional expansion of our "Train B" oligo manufacturing facility in Frederick, Colorado is proceeding as planned. We expect this additional capacity to come online by the end of calendar year 2022.

Moving on from our business group updates, there are several other significant developments for Agilent this quarter. We announced our commitment to achieving net zero greenhouse gas emissions by 2050. We believe our approach delivers the same rigor to sustainability that we apply to everything else we do. We also believe these actions are not only the right thing to do, but fundamental to achieving long-term success.

Our sustainability leadership continues to be prominently recognized, as well. . You may have seen that Investors' Business Daily recently named Agilent to its Top 100 ESG Companies list.

We are also a company where diversity and inclusion represent a company priority and is a core element of our culture. During the quarter, we achieved recognition by Forbes as one of the World's Best Employers, and as a Best Workplace for Women.

While the Agilent team has a strong track record of delivering above market growth and leading customer satisfaction - we're always looking to do more. To further accelerate growth and strengthen our focus on customers, we are implementing a new One Agilent Commercial organization -- combining, for the first-time, all customer-facing activities under one leader. The new organization brings together and strengthens our sales, marketing, digital channel, and services team.

The new enterprise-level commercial organization is led by Padraig McDonnell. Padraig will continue to lead the Agilent CrossLab Group as business group president, as well as serve as Agilent's first-ever Chief Commercial Officer.

The way I like to characterize this move is to say we are "doubling-down" on the success we've achieved with ACG - applying a holistic, customer-focused approach to all aspects of our business.


We are also moving the Chemistries and Supplies Division to LSAG. This closer organizational alignment between instrument and chemistries development will further accelerate our progress on instrument connect rates for chemistries and consumables. We believe that "structure follows strategy" and that this new organizational structure will further enhance our customer focus and the execution of our growth strategies.

Looking ahead to the coming year, we are in a strong position to continue to deliver on our "build and buy" strategy. Agilent's business remains strong. We enter the new year with a robust backlog and have multiple growth drivers coupled with the proven execution excellence of the Agilent team.

A year ago, during our Agilent Investor Day, we raised our long-term annual growth outlook to the 5- 7 percent range, while reaffirming our commitment to annual operating margin improvement and double-digit EPS growth. We are now one year in and well on our way to achieving these long-term goals.

Bob will provide more details, but for fiscal 2022 our initial full-year guide calls for core growth in a range of 5.5 to 7 percent. We expect to continue our top-line growth as we launch market leading products and services, invest in fast growing businesses, and deliver outstanding customer service. My confidence in the unstoppable One Agilent team and our ability to execute and deliver remains firmly intact. This is our formula for delivering solid financial results, outstanding shareholder returns and continued strong growth.

We are very pleased with our performance in 2021, but not satisfied. As I tell the Agilent team: The best is yet to come -- for our customers, our team, and our shareholders.

Thank you for being on the call today and I look forward to your questions. I will now hand the call off to Bob. Bob?

Bob McMahon

Thanks Mike, and good afternoon everyone. In my remarks today, I will provide some additional details on revenue and take you through the income statement and some other key financial metrics.


This is an excerpt of the original content. To continue reading it, access the original document here.


Agilent Technologies Inc. published this content on 23 November 2021 and is solely responsible for the information contained therein. Distributed by Public, unedited and unaltered, on 23 November 2021 00:48:06 UTC.

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