In the midst of reporting a 6.2 percent rise in revenues this week, Agilent’s CEO reported demand for its newest mass spectrometry systems were “greater than we expected,” resulting in a backlog for the instruments that he called “a good problem to have.”
This week, the Palo Alto-based company said revenue rose to $1.33 billion from $1.24 billion a year ago. Profit, meanwhile, rose to $152 million from $25 million a year ago, a 508 percent spike. Last year’s figures, however, included restructuring charges that drove down profits. Excluding those restructuring charges, profits from the year-ago period would have been $193 million.
Separately, the company also announced it has opened a Life Sciences and Chemical Analysis Center for Excellence in India, and said that its 1200 Series Rapid Resolution liquid chromatographer is now fully compatible with the Applied Biosystems/MDS Sciex line of mass spectrometers.
Agilent did not break out sales figures for its mass specs, but as the company took several steps in 2006 to create a deeper footprint in the proteomics space, comments made by Agilent officials during an analyst conference call suggested that its proteomics-related products may be gaining importance in Agilent’s portfolio.
However, an analyst said this week that the segment that contains Agilent’s proteomics instruments, the Bio-Analytical Measurement segment, needs to have a greater share of the company’s overall sales for a “more exciting growth story.”
Agilent’s Bio-Analytical Measurement segment houses the company’s mass spectrometry and liquid chromatography instruments and comprises about 31 percent of the company’s total revenues. During the fourth quarter, revenues jumped 9.4 percent to $418 million. Orders rose 14.9 percent to $462 million.
Within that segment, broad acceptance of Agilent’s new 1200 series liquid chromatographers helped life science revenues climb 12 percent to $182 million compared to year-ago figures.
“In life science, we continue to see a positive impact from our recent product introductions in LC/MS instruments and microarrays,” said William Sullivan, president and CEO of Agilent.
Projecting into the first quarter of its fiscal 2007, he added that revenues for the Bio-Analytical segment would be supported “by record backlog in calendar year-end customer deliveries.”
Throughout 2006 Agilent launched several new mass spec systems. In May, during the American Society for Mass Spectrometry conference, the company introduced its 6100 series of single quadrupole LC/MS instruments with four models [See PM 06/01/06].
Earlier in the year, the company launched its 6210 TOF MS; 6300 series ion trap MS; 6410 triple quadrupole LC/MS; and 6510 quadrupole time-of-flight LC/MS [See PM 03/16/06].
The company started 2006 by prefacing the launch of its new and upgraded mass spec instruments, saying in a press release that its “entire portfolio of chromatography-based mass spectrometry systems … is expected to nearly double its LC/MS market share by 2008,” adding that the new instruments would allow Agilent to “address nearly 70 percent of the estimated $1.3 billion LC/MS instrument market — more than double its current market opportunity.”
During this week’s conference call, Sullivan characterized customer response to its new products as “very, very good. In fact we’re shipping as fast as we can manufacture the new mass specs.”
Speaking about the 6410 and 6510 instruments, Sullivan further said, “I wish we could double the [manufacturing] capacity overnight. … The orders are greater than what we expected. It’s a good problem to have.”
The company’s deferred revenue rose 9.8 percent during the quarter to $225 million. It’s unclear how much of that is from the backlog of mass specs.
Company officials also alluded to strong sales in other proteomic products but declined to offer specifics. Adrian Dillon, Agilent’s executive vice president of finance and administration and CFO, said, “We’re also seeing broad and rapid acceptance of our new 1200 rapid resolution liquid chromatographs and our new LC columns.”
This week, Agilent also announced that with the release of ABI/MDS Sciex’s Analyst 1.4.2 LC/MS control software, their line of mass spectrometers are now compatible with Agilent’s 1200 Series RRLC system. Agilent’s liquid chromatographer was launched in January. Under an OEM agreement, ABI/MDS Sciex, is reselling the Agilent instruments.
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“I wish we could double the [manufacturing] capacity overnight…The orders are greater than what we expected. It’s a good problem to have.” |
Agilent said that life science sales were strong in Europe and Asia, particularly in India and China. In China, Dillon said, the government is “raising both their biotech and proteomics research budgets significantly.”
Revenues for chemical analysis, the other part of Agilent’s Bio-Analytical segment, rose 8 percent to $236 million.
In a research note, Mark FitzGerald, an analyst at Bank of America Securities, noted the importance of the Bio-Analytical segment and suggested the company might do well by focusing greater energy on that segment.
“To build a more exciting growth story, Bio-Analytical segment needs to increase as a percent of the [sales] mix,” he said.
He added later, “We think the Bio-Analytical segment is higher growth and more profitable but is still too small to support a stock multiple comparable to pure plays like Waters.”
The company’s other segment, Electronic Measurement, saw revenues rise 5 percent to $909 million.
Overall, Agilent spent $155 million on R&D for the quarter, down 8 percent from a year ago. The company said it had $2.3 billion in cash and cash equivalents as of Oct. 31.
For the fiscal first quarter of 2007, Agilent officials project revenues of $1.25 billion to $1.29 billion, up 7 to 10 percent over last year.
Also this week, Agilent opened a Life Sciences and Chemical Analysis Center of Excellence in Bangalore, India. The center, one of eight such centers Agilent created worldwide, will serve all of the company’s customers in India. The center will house Agilent’s core products, including liquid chromatographs and mass specs.