Agilent Technologies Inc. (NYSE:A) Q2 2019 Earnings Conference Call Transcript

May 14, 2019 • 07:30 pm ET

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Agilent Technologies Inc. (NYSE:A) Q2 2019 Earnings Conference Call Transcript

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Presentation
Executive
Robert McMahon

half is tempered by softening market conditions in certain segments on the Instruments side of the business. The developments in China coupled with their continued uncertainty on trade is creating a more challenging macro environment. As a result, we are updating our full year revenue guidance to a range of $5.085 billion to $5.125 billion , representing 3.5% to 4.3% reported growth. Currency is expected to be a headwind of 210 basis points, partially offset by M&A. And, as a result, we are now expecting core revenue growth in the range of roughly 4% to 5%.

Now despite reducing revenue guidance, we feel confident in holding to our full year earnings per share guidance range of $3.03 to $3.07, representing growth excluding currency of roughly 10% to 11% and reported growth of 8.6% to 10%. As Mike mentioned, our EPS guidance reflects confidence in the strength of Agilent's business and our ability to drive earnings through multiple levers. These include disciplined expense management and the use of our balance sheet. Based on deploying the additional $500 million towards share repurchase, we are updating our average diluted share count down to 319 million for the year.

Now, finally, turning to the third quarter, we're expecting revenue in the range of $1.225 billion to $1.245 billion , representing reported growth of 1.8% to 3.5% and core growth of 2.7% to 4.1%. Currency is estimated to be a headwind of 210 basis points, partially offset by M&A, contributing roughly 120 to 150 basis points of growth.

Third quarter 2019 non-GAAP earnings are expected to be in the range of $0.71 to $0.73 a share, which is 6% to 9% reported growth versus a year ago. The share count for Q3 is expected to be 317 million.

Let me conclude by saying, we are pleased with the team's ability to preserve earnings performance despite shifting market conditions. We are confident in the strength of Agilent's business and our ability to navigate softness in certain markets.

With that, before opening it up for questions, I will turn it back to Mike for some closing comments.

Executive
Michael McMullen

Thanks, Bob. I just want to add a few closing words before we move into Q&A. Great companies do not just react to market conditions, they see market opportunity. At Agilent, we will continue to drive productivity and double down our efforts to be a more Agile company. We have multiple levers to drive earnings, including disciplined expense management and use of our balance sheet. However, we are not going to expense cut our way to growth. We will continue to bring innovative new products to market and aggressively compete for market share.

Now, Ankur, back to you for the Q&A.

Executive
Ankur Dhingra

Thank you, Mike. Liz, if you can please provide instructions for the Q&A.