Press release·03/03/2025 23:21:02

Agilent’s Solid Performance Amid Macroeconomic Challenges

Agilent Technologies, a leading provider of analytical instruments, software, and services, has reported its financial results for the three months ended January 31, 2025. Despite facing some macroeconomic headwinds, the company has demonstrated resilience and continued to deliver solid performance across its business segments.

Revenue Growth and Profitability

Agilent’s total net revenue for the three months ended January 31, 2025 increased by 1% to $1,681 million, compared to the same period last year. This growth was driven by a 7% increase in services and other revenue, which offset a 1% decline in product revenue. The company’s Agilent CrossLab and Life Sciences and Diagnostics Markets segments both reported revenue growth, while the Applied Markets segment saw a 4% decline.

Geographically, Agilent saw revenue growth of 10% in the Americas, 3% in Europe, and a 5% decline in Asia Pacific. The unfavorable impact of foreign currency movements was a 2 percentage point headwind on overall revenue growth.

Despite the revenue growth, Agilent’s net income for the three months ended January 31, 2025 decreased by 9% to $318 million, compared to the same period last year. This was primarily due to a 1 percentage point decrease in gross margin, which was impacted by unfavorable business mix, currency movements, and higher wages. The company’s operating margin also declined by 1 percentage point to 22.4%.

Segment Performance

Agilent’s Life Sciences and Diagnostics Markets segment reported a 4% increase in revenue, driven by strong growth in the pharmaceutical, diagnostics and clinical, and environmental and forensics markets. This was partially offset by a decline in the academia and government market. Gross margin for this segment decreased by 2 percentage points, primarily due to unfavorable business mix and currency impacts.

The Agilent CrossLab segment saw a 1% increase in revenue, with growth across most end markets, including environmental and forensics, diagnostics and clinical, and food, partially offset by a decline in the academia and government market. Gross margin for this segment decreased by 1 percentage point, impacted by product and service mix.

The Applied Markets segment reported a 4% decline in revenue, driven by significant decreases in the chemicals and advanced materials and academia and government markets, partially offset by strong growth in the food market. Gross margin for this segment decreased by 1 percentage point, mainly due to lower sales volume, currency impacts, and higher logistics costs.

Cost Management and Restructuring

Agilent has continued to focus on cost management and operational efficiency. The company’s research and development expenses decreased by 12% in the three months ended January 31, 2025, primarily due to lower salary expenses related to prior year workforce reduction activities and lower variable pay.

Selling, general, and administrative expenses increased by 3%, mainly due to higher corporate infrastructure and intangible amortization expenses, partially offset by lower salary expenses and the favorable impact of currency movements.

In fiscal years 2024 and 2023, Agilent announced restructuring plans designed to reduce costs and expenses in response to macroeconomic conditions. These actions impacted all three business segments, and the company has recorded a total of $123 million in restructuring expenses since the inception of these plans. The remaining restructuring liability of $5 million as of January 31, 2025 is expected to be substantially completed by the second quarter of fiscal year 2025.

Capital Allocation and Shareholder Returns

Agilent continues to prioritize returning capital to shareholders. During the three months ended January 31, 2025, the company paid cash dividends of $0.248 per common share, or $71 million, on its common stock. The board of directors has also declared a quarterly dividend of $0.248 per share, to be paid on April 23, 2025.

In addition, Agilent has an active share repurchase program. During the three months ended January 31, 2025, the company repurchased and retired 649,857 shares for $90 million under the 2023 repurchase program. As of January 31, 2025, Agilent had remaining authorization to repurchase up to approximately $284 million of its common stock.

Liquidity and Cash Flows

Agilent’s financial position remains strong, with cash and cash equivalents of $1,467 million as of January 31, 2025, compared to $1,329 million as of October 31, 2024. The company generated $431 million in cash from operating activities during the three months ended January 31, 2025, compared to $485 million in the same period last year.

Agilent’s net cash used in investing activities was $94 million, primarily for investments in property, plant, and equipment. The company expects total capital expenditures for the current fiscal year to be approximately $450 million, primarily due to the planned expansion of its manufacturing capacity for the production of nucleic acid-based therapeutics.

Net cash used in financing activities was $180 million, which included $71 million in dividend payments and $90 million in share repurchases. Agilent maintains a strong balance sheet and ample liquidity to support its operations and strategic initiatives.

Outlook and Challenges

Looking ahead, Agilent remains cautiously optimistic about the near-term recovery in its key end markets, despite continued uncertainty around inflationary pressures. The company is focused on enhancing the customer experience, delivering differentiated product solutions, and driving productivity improvements.

While customer capital budgets remain constrained, Agilent is confident in the long-term health of its markets. The company will continue to mitigate the impact of inflationary pressures through targeted pricing strategies and various cost-saving initiatives.

One of the key challenges facing Agilent is the unfavorable impact of foreign currency movements, which had a 2 percentage point headwind on revenue growth in the three months ended January 31, 2025. The company’s hedging program is designed to manage currency risks on a relatively short-term basis, and it may continue to experience some fluctuations within individual lines of the financial statements.

Conclusion

Agilent has demonstrated its resilience and ability to navigate the current macroeconomic environment. While facing headwinds such as unfavorable currency movements and inflationary pressures, the company has maintained its focus on operational efficiency, cost management, and delivering value to its customers.

The company’s diversified business segments, strong liquidity position, and commitment to shareholder returns position Agilent well for the future. As the company continues to invest in research and development, expand its product and service offerings, and optimize its operations, it remains cautiously optimistic about its long-term growth prospects in the life sciences, diagnostics, and applied markets.