Agilent Technologies, Inc. Annual Report

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Agilent Technologies, Inc. Annual Report 2017 Agilent Technologies, Inc. Annual Report Our Brand Promise Agilent delivers trusted answers to our customers’ critical questions and challenges – helping them achieve superior outcomes in their laboratories, clinics, organizations, and the world they seek to improve. Brand Promise Agilent Technologies, Inc. The Markets We Serve Agilent enables a deeper understanding of the world through measurement and analysis in life sciences, diagnostics and applied chemical markets. %KMPIRXTVSZMHIWPEFSVEXSVMIW[SVPH[MHI[MXLGSQTPIXI[SVOƽS[WSPYXMSRWWGMIRXMƼG instruments, software, services, consultancy, consumables, and teams with deep market ORS[PIHKIXSLIPTGYWXSQIVWEGLMIZIWGMIRXMƼGERHIGSRSQMGKSEPW Agilent focuses its expertise on six key markets: Pharma Environmental & Forensics Academia & Government Chemical & Energy Food Safety & Authentication Diagnostics & Clinical 2017 Annual Report Markets We Serve 1 Agilent at a Glance Our 13,500 employees serve customers in 110 countries around the world. = Major sites and logistics centers Headcount by Geography Revenue by Geography Americas Europe Americas Europe 36% 27% 34% 29% Asia Pacific Asia Pacific 37% 37% $4.47 billion in FY17 2 Overview Agilent Technologies, Inc. To Our Shareholders Three years ago, we spun off our electronics measurement business and I was named as Agilent’s CEO. Our intent was to transform the company into a leading life sciences and diagnostics company and drive shareholder value. At that time, I launched several transformative I am pleased to report, we have delivered on these initiatives to change how we worked inside the company measures of success and have substantially increased and with our customers, to accelerate our growth and shareholder value. And, I am particularly pleased to improve our operating results. report that 2017 was a Banner Year. ;IHIƼRIHETEXLXSGVIEXIWLEVILSPHIVZEPYIXLEX[EW Our 2017 revenues of $4.47B are up 6.7 percent on a JSGYWIHSRSYXKVS[MRKXLIQEVOIXI\TERHMRKSTIVEXMRK core basis, continuing a trend of outgrowing the market margins, and deploying capital in a balanced manner. over the past three years.This is our highest growth rate These are our measures of success and how we hold since the Keysight spin out in 2014 and the launch of the ourselves accountable. New Agilent in 2015. Transformational Results Core Revenue Growth* Adjusted Operating Margin Expansion* 410 22.0% bps 6.7% 6.4% 5.9% 20.7% 4.9% 19.6% 17.9% FY14 FY15 FY16 FY17 FY14 FY15 FY16 FY17 'SVIVIZIRYIKVS[XLEHNYWXIHSTIVEXMRKQEVKMRERHEHNYWXIHIEVRMRKWTIVWLEVIEVIRSR+%%4ƼRERGMEPQIEWYVIWXLEXI\GPYHIGIVXEMRMXIQW*SVVIGSRGMPMEXMSRWSJ XLIWIRSR+%%4ƼRERGMEPQIEWYVIWXSGSQTEVEFPI+%%4QIEWYVIWWIITEKIWSJXLMWERRYEPVITSVX 2017 Annual Report Shareholder Letter 3 To Our Shareholders Our focus on improving operating results led to an we formalized our belief into a brand promise based on EHNYWXIHSTIVEXMRKQEVKMRSJTIVGIRXJSVXLIƼWGEP trusted answers. Customers are responding favorably year, up 130 basis points over last year and up a total to our new, clearly stated brand promise. of 410 basis points over the last three years. In 2015, Committed to Innovation: Most of the world’s I set a goal to achieve an adjusted operating margin analytical labs use Agilent solutions, which provides an of 22 percent by 2017. I am happy to report that we enormous opportunity for us to deepen our customer accomplished this milestone, and we will continue to relationships by offering a broader portfolio of products focus on making improvements in our operating results. and solutions. Agilent invests in R&D at levels above The momentum in our business combined with strong SYVTIIVW3ZIVXLIRI\XXLVII]IEVW[II\TIGXXSMRZIWX operations resulted in a 19 percent increase in adjusted more than $1 billion on R&D. We innovate with a purpose IEVRMRKWTIVWLEVI )47 JSVXLITEWXƼWGEP]IEVXS – to deliver to customers what matters most to them. We per share. Adjusted EPS is up an average of 16.5% over help them do great science in their labs while providing the past three years. robust, reliable and easy to use solutions to lower their operating costs. We deployed our capital in a balanced manner. Over the past year, we distributed $170 million in cash dividends; Innovation has always been at the heart of the company. repurchased $194 million of our shares; and invested In 2017, we launched several new breakthrough products, $304 million directly into the business through M&A, including the Agilent Ultivo LC/MS triple quad. This new WXVEXIKMGXVERWEGXMSRWERHGETMXEPI\TIRHMXYVIW offering is 70 percent smaller than its predecessor, but delivers equal or better performance as much larger We attribute our success to our relentless customer instruments. Customers appreciate the cost and space focus and commitment to innovation. We are devoted to savings in their laboratories. We also launched new providing our customers with what they want the most [SVOƽS[WSPYXMSRWMRTEXLSPSK]ERHKIRSQMGW%RH from us: trusted answers. It is so important, that in 2017, we took a big step forward in making the customer I\TIVMIRGIIEWMIV[MXLRI[STXMSRWPMOIIVIRI[EPWSJ Adjusted Earnings Per Share* contracts and online purchasing. 16.5% annual EPS growth FY15–17 Agilent’s R&D programs go beyond just looking ahead $2.36 a year or two. Through our centralized research labs, for I\EQTPI[IEVIGSQQMXXIHXSPSRKIVXIVQVIWIEVGL $1.98 TVSKVEQWERHI\XIVREPGSPPEFSVEXMSRWMRLMKLMQTEGX $1.74 MRRSZEXMSRMRƼIPHWWYGLEWGIPPYPEVVITVSKVEQQMRK intelligent systems, cellular imaging and analysis, among others, that will play important roles in the future needs of our customers. Expanding Our Solutions Through Complementary M&A: We also target acquisitions and new partnerships XSI\TERHSYVGETEFMPMXMIWERHLIPTSYVGYWXSQIVWKVS[ ERHXSƼPPXIGLRSPSK]KETW*SVI\EQTPI[IEHHIHRI[ FY15 FY16 FY17 capabilities and opportunities with the acquisition of 'SVIVIZIRYIKVS[XLEHNYWXIHSTIVEXMRKQEVKMRERHEHNYWXIHIEVRMRKWTIVWLEVIEVIRSR+%%4ƼRERGMEPQIEWYVIWXLEXI\GPYHIGIVXEMRMXIQW*SVVIGSRGMPMEXMSRWSJ XLIWIRSR+%%4ƼRERGMEPQIEWYVIWXSGSQTEVEFPI+%%4QIEWYVIWWIITEKIWSJXLMWERRYEPVITSVX 4 Shareholder Letter Agilent Technologies, Inc. 'SFEPX0MKLX7]WXIQWMR3\JSVH9/'SFEPXMWVIRS[RIH QIRXMSRIHEFSZIMWXLI9PXMZS0'17XVMTPIUYEH[MXLMXW for its Ramen spectroscopy, which will add another level 70 percent reduced footprint. We also introduced a new of offerings, particularly in the growing global security LMKLVIWSPYXMSREGGYVEXIQEWWW]WXIQEHHIHWIZIVEP applications market. We closed the acquisition of RI[TVSHYGXWXSI\TERHSYV-RƼRMX]0EF0'WIVMIWERH Multiplicom, a leading European diagnostics company, PEYRGLIHERI[LMKLVIWSPYXMSREGGYVEXIQEWWW]WXIQ [MXLWXEXISJXLIEVXKIRIXMGXIWXMRKXIGLRSPSK]ERH +'583*XLEXIREFPIWWGMIRXMWXWXSTIVJSVQEREP]XMGEP products. Multiplicom’s solutions enable clinical labs to techniques that were not previously possible. identify DNA variants associated with genetic disease Agilent CrossLab Group (ACG), a key strategic initiative and could help direct cancer therapy. We also acquired of the New Agilent continues to pay off, capturing new the molecular and sample barcoding patent portfolios of services and solutions opportunities. Through ACG, we Population Genetics Technologies that improve accuracy LEZIVIHIƼRIH[LEXSYVGYWXSQIVWI\TIGXJVSQWIVZMGI ERHWIRWMXMZMX]SJRI\XKIRIVEXMSRWIUYIRGMRKHIXIGXMSR and support and have taken a leadership position in our 8LIWIJIEXYVIWEVIMHIEPJSVXLIHIXIGXMSRSJVEVIZEVMERXW industry in the process. Our CrossLab Service and in cancer and reproductive genetics, including liquid biopsies. These acquisitions, along with the Cartagenia 7YTTSVXSVKERM^EXMSRLMXEWMKRMƼGERXQMPIWXSRI VIEGLMRKFMPPMSRMRERRYEPWIVZMGISVHIVWJSVXLIƼVWX EGUYMWMXMSRMREVII\EQTPIWSJI\IGYXMRKSRSYV time in a single year. Our chemistries business in ACG WXVEXIK]XSI\TERHSYVKIRSQMGWTPEXJSVQERHSYV also achieved success through technical innovation, commitment to helping our customers improve the such as the AdvancedBio column portfolio. ACG is quality of life. core to our customer strategy, allowing us to deepen Well Positioned with A Strong Organization: An relationships with our customers and deliver integrated important element of our growth is our strong leadership [SVOƽS[WSPYXMSRW team and business organizations, each supportive of Our Diagnostics and Genomics Group (DGG) achieved the other – driving both the science and economics of several milestones this year. We introduced GenetiSure the lab. (\4SWXREXEP%WWE]MR)YVSTIERHXLI978LMWMWSYV • Our Life Sciences and Applied Markets business ƼVWXGSQTEVEXMZIKIRSQMGL]FVMHM^EXMSREWWE]ETTVSZIH group is focused on delivering the most innovative and by the FDA for diagnostic use and marks a major success GYWXSQIVJSGYWIHMRWXVYQIRXEXMSRERHWSJX[EVI JSVSYVQSZIMRXSQSPIGYPEVHMEKRSWXMGW;II\TERHIH solutions for the analytical lab. XLIKPSFEPJSSXTVMRXSJSYV4(0HMEKRSWXMGXIWXWIREFPMRK immunotherapy treatment to cancer patients. Other • Our Agilent CrossLab GroupTVSZMHIWIRXIVTVMWI[MHI product launches included: Agilent SureSelectXT HS, services and consumables across the entire lab. ERI\XKIRIVEXMSRWIUYIRGMRK 2+7 XEVKIXIRVMGLQIRX • Our Diagnostics and Genomics business provides WSPYXMSRXLEXWXVIEQPMRIWXLI2+7[SVOƽS[ERHER leading solutions and tools for clinical and clinical I\TERWMSRSJXLI7YVI+YMHITSSPIH'6-746PMFVEVMIWJSV research laboratories. functional genomics, which accelerates research into GSQTPI\HMWIEWIWERHHVYKHMWGSZIV] Let me provide the FY17 update on each of these important businesses. (++ƅWWXVEXIK]XSƼKLXGERGIVMQTVSZIXLIUYEPMX] of life, enable new discoveries, and partner for new Our Life Sciences and Applied Market Group continued
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