Led by strong growth in its Bio-Analytical division, Agilent reported a 10.9 percent increase in revenues for its fiscal third quarter this week even as the company’s overall results disappointed Wall Street.
For the three months ended July 31, the company posted receipts of $1.37 billion compared to $1.24 billion a year ago. Excluding the acquisition of Stratagene, completed during the third quarter, revenues grew 10 percent, the company said. Orders for the period grew 6.8 percent to $1.31 billion from $1.23 billion.
Geographically, revenues grew by 18 percent in Europe during the quarter, 12 percent in the Americas, and 5 percent in Asia-Pacific, said Adrian Dillon, Agilent’s CFO.
Meanwhile, Agilent’s profits slid 18.5 percent to $185 million from $227 million a year ago. The year-ago figure includes a gain of $65 million on the sale of the company’s Palo Alto, Calif., facility.
Pacing the revenue growth was Agilent’s Bio-Analytical division, which houses Agilent’s mass spectrometers, liquid chromatographers, and other tools and technologies with proteomics applications. During the quarter, the division posted receipts of $500 million, a 19 percent increase from $420 million a year ago. Organically, revenues grew 15 percent.
Orders for the division grew 20.6 percent to $498 million from $413 million during the year-ago period, marking the fifth consecutive quarter of double-digit growth.
“Our Bio-Analytical Measurement business delivered excellent quarterly results,” Agilent’s CEO and President Bill Sullivan said during the earnings call accompanying the release of the company’s financial results.
Within Bio-Analytical, life sciences revenues rose 22 percent to $209 million for the quarter, with 12 percent of that growth organic. The performance of its proteomics instruments was again cited as a prime revenue driver. The company began moving deeper into the proteomics market last year with the launch of its 1200 Series LC system [See PM 01/26/06] and several new mass specs [See PM 03/16/06 and 06/01/06]. More recently, at the American Society for Mass Spectrometry Conference on Mass Spectrometry, Agilent introduced upgrades to its 6100 Series mass specs and said it was working to expand the mass range on its 6410 triple-quadrupole instrument [See PM 06/07/07].
Sullivan this week said that the strength of the company’s Bio-Analytical business continues to be its instrumentation, and called its LC and gas chromatography systems “our workhorse. We have very strong market positions.
“Coupled with that, we made the announcement last year that we were going to enter into the high-performance mass spectrometry market. We have done that with our triple-quad and time-of-flight, and we continue to get very, very good leverage inside of that market,” Sullivan said.
At ASMS, Nick Roelofs, Agilent’s vice president and general manager of life sciences, reiterated the company’s commitment to keep investing in its mass spec technology.
“We’re really focusing right now on the time-of-flight and quadrupolar sectors and really trying to push the limits of those,” he said at the time.
While Sullivan this week attributed Agilent’s increase in hardware sales partially to an industry-wide improvement in the business environment for proteomics instruments [See PM 08/09/07], he added “I am very pleased with the progress we’re making in our core instrumentation.”
The company did not break out sales for its mass specs or liquid chromatographers, but Adrian Dillon, Agilent’s CFO,said they helped spur a rebound in sales to the pharma and biotech markets, which saw a 15 percent climb year-over-year within Bio-Analytical. The uptick, he said, was “fueled by the 1200 Series Liquid Chromatography platform, HPLC columns, GC and LC/MS platforms, including recent new product introductions in triple-quad and Q-TOF mass specs.”
“In Bio-Analytical Measurement, our major focus continues to be life science tools and mass spec instrumentation.”
The recovery in large pharma spending, Dillon said, is focused on new applications and new technologies to expedite new drugs to the market.
Revenues for chemical analysis, Bio-Analytical’s other segment, grew 17 percent to $291 million during the quarter. Geographically, total Bio-Analytical revenues grew 27 percent in Europe, 16 percent in Asia-Pacific, and 12 percent in the Americas.
“Going forward, our strategic intent remains the same, to leverage current technologies and existing platforms to create custom-oriented workflow solutions,” Sullivan said. “At a company level we continue to invest in a set of strategic growth initiatives. In Bio-Analytical Measurement, our major focus continues to be life science tools and mass spec instrumentation.”
R&D spending rose to $170 million during the quarter from $162 million a year ago. The company said it had $1.5 billion in cash and cash equivalents as of July 31.
The company’s other division, Electronic Measurement, saw “mixed” results, company officials said. Revenues of $874 million were up 6.7 percent, but orders slipped to $810 million from $812 million.
For the fourth quarter, Agilent said it anticipates “a softer than normal increase in revenue” due to a weak Asian electronic measurement market. Revenues are expected to be in the range of $1.39 billion to $1.43 billion, the company said, lower than the $1.47 billion anticipated by analysts polled by Thomson Financial.
In a statement accompanying the release of Agilent’s earnings, Sullivan said that the weakness in the Asian electronic measurement market “does not dampen our expectations for Agilent’s performance for fiscal 2008. We anticipate continued momentum in our Bio-Analytical markets” and more normal growth trends for its Electronic Measurement division.
Wall Street, however, was not as optimistic. At the close of market on Wednesday, the day after Agilent released its earnings results, the company’s stock dropped about 11 percent on concern about the company’s Electronic Measurement business.