Agilent Delivers Strong FY Close

Fiscal fourth quarter sales for Agilent Technologies ending October 31 climbed 7.3%, 6.3% organically, to $1.11 billion. Currency and acquisitions, net of divestments, added 0.4% and 0.6% to sales, respectively. Organic revenue growth propelled past company expectations due to continued demand in the biopharmaceutical, food and diagnostics markets, as well as stronger-than-projected sales of analytical instrumentation. Strong service revenue also contributed to organic growth. Furthermore, academia and government sales declined at a more moderate pace than anticipated due to stabilized spending in Europe.

All sales figures below are based on organic growth. Despite a strong comparison of 19% growth in the previous year, biopharmaceutical sales jumped 16%, as a result of new products, technology upgrades and greater demand for Agilent’s enterprise service offering. Applied markets were also healthy, especially in China, as food sales advanced 10%, and environmental and forensics revenue improved 3%. Diagnostics and clinical sales grew 8%. However, academia and government sales declined 2%. In spite of higher service and consumables sales, chemical and energy sales fell 3% due to weakness in oil markets.

Life Sciences and Applied Markets Group sales grew 5% organically. This represents the segment’s strongest quarterly organic sales growth in fiscal 2016 when normalized for timing of orders in the fiscal second quarter. Sales of LC, LC/MS and ICP-MS were particularly strong from biopharmaceutical, food and forensics customers, but were partially offset by lower instrument demand from chemical and energy markets.

CrossLab Group sales expanded 8%, led by demand from food and environmental markets, especially in Asia. By product, sales were strong for LC columns, lab supplies and contract services.

Diagnostics and Genomics Group sales expanded 8%, including double-digit sales growth for the Nucleic Acid Solutions business. The Pathology business also performed well, driven by demand for reagents and companion diagnostics.

Geographically, company sales in Asia Pacific (excluding Japan) and Europe grew above expectations, climbing 19% and 4%, to account for 31% and 36% of revenues, respectively. Sales in China grew more than 25%. Sales in both the Americas and Japan were roughly flat to represent 36% and 6%, respectively. Adjusted operating margin expanded 60 basis points to 22.5%.

For fiscal 2016, Agilent sales grew 4.1%, 5.9% organically, to $4.20 billion. Currency and divestment headwinds reduced sales growth by 0.1% and 2.0%, respectively. All sales figures below are based on organic growth. Biopharmaceutical and food sales climbed 15% and 11% to account for roughly 29% and 11% of revenues, respectively. Environmental and forensics revenue advanced 3%, and diagnostics and clinical sales grew 7% to make up 12% and 15%, respectively. Accounting for 9% of revenue, academia and government sales improved 1%. Chemical and energy sales contracted 3% to account for 23%.

Asia Pacific delivered the strongest growth, with sales climbing 13% to make up 37% of revenues. Within this region, sales in China jumped 21% but declined 3% in Japan. Sales to the Americas and Europe grew 2% each to make up 35% and 29%, respectively. Adjusted operating margin improved 110 basis points to 20.7%.

In view of uncertain industrial demand, as well as US and European government spending, Agilent initiated a conservative fiscal 2017 organic sales growth outlook of 4.0%-4.5% to $4.35–$4.37 billion. Biopharmaceutical sales growth is expected to moderate to the mid- to high single-digit range as a result of the strong comparison. Academia and government sales are projected to grow in the low single digits, with strength in China partially offset by weakness in Europe and the US. Chemical and energy sales are expected to be flat.

Fiscal first quarter 2017 sales are expected to grow 2.2% organically at the midpoint to $1.04­–$1.06 billion as timing of the Chinese Lunar New Year is projected to shift $15 million in sales from the fiscal first quarter to the fiscal second quarter.

Bio-Rad LS Sales Surge

Third quarter sales for Bio-Rad Laboratories’ Life Science (LS) segment soared 18.4%, 19.3% excluding currency, to $178.1 million to account for 35% of revenues. However, sales growth was inflated by supply chain and production challenges in the previous year, which impacted revenues by roughly $5–$10 million. Assuming the maximum impact of $10 million, third quarter sales would have climbed more than 6% excluding currency. Demand was strong across all product lines, especially for Droplet Digital PCR products, which continued to benefit from liquid biopsy applications. The company also noted healthy growth for process media, qPCR, western blotting and electrophoresis products. Geographically, LS sales were strong in North America, China and certain Pacific Rim regions, such as China and Southeast Asia. The company also reported sales growth in Eastern Europe, while Japanese sales were roughly flat. Reported operating loss narrowed 64.2% to $4.4 million.

Bruker Prunes Outlook Yet Again

For the second consecutive quarter, sales for Bruker’s Scientific Instruments (BSI) segment missed company guidance due to continued weakness in industrial markets and constrained spending by European academic customers. As such, third quarter BSI sales declined 2.4% organically to account for 92% of sales. System and aftermarket revenues declined roughly 4% and less than 1% organically to account for 74% and 26% of BSI sales, respectively.

Bruker BioSpin sales grew in the mid-single digits organically, driven by higher pricing and sales of NMR products, including NMR FoodScreeners and NMR clinical research systems. Following a sharp decline in the previous year, Preclinical Imaging sales stabilized and orders improved. Segment growth further benefited from strong aftermarket sales within the LabScape business.

Sales for Bruker CALID contracted roughly 5% organically due to lower European academic demand and a strong comparison for the Daltonics business. In addition, MS sales were primarily impacted by lower MALDI BioTyper orders in China and the Americas due to distribution issues and slow demand, respectively, in the first half of the year. These declines were partially offset by higher sales in the Optics Division.

Bruker Nano Group sales slumped roughly 7% organically and were particularly impacted by industrial markets, as well as academic and government spending in Europe. Sales contracted in the Bruker AXS and Nano Surfaces Divisions each, as well as for industrial-related analytical systems. The one area of positive demand was for fluorescence microscopy products for cell and neuroscience research. The semiconductor metrology business benefited from the Jordan Valley Semiconductors acquisition (see IBO 10/15/15).

BSI adjusted operating margin improved 194 basis points to 15.5% as a result of stronger NMR pricing and completed restructuring measures within the BioSpin Group. To help offset slower sales volume and maintain margin expansion, the company announced two additional factory consolidations within the CALID and Nano Groups during the quarter. These restructuring measures are projected to produce annualized cost savings of $10–$13 million, with contributions beginning in the second half of 2017.

Geographically, total sales declined roughly 18% in Europe, with particular weakness in Germany and Eastern Europe. Asia Pacific sales grew near double digits, including low teens and low single digit growth in China and Japan, respectively. The company reduced its 2016 organic revenue growth outlook by 100 basis points to negative 3%. Including acquisitions, reported 2016 sales are expected to slip 1%.

QIAGEN Growth Trending Up

Third quarter sales for QIAGEN advanced 7.7% to $ 338.7 million, including 1% headwinds from currency and 3% growth from acquisitions. The company maintained its trajectory of higher organic growth over the last consecutive four quarters, as third quarter organic sales climbed 6%, or 7% excluding US HPV test sales. Overall, sales of consumables and other related products, and instrument sales grew roughly 7% and 4% organically to account for 88% and 12% of revenues, respectively.

Organic Molecular Diagnostics sales grew roughly 9%, or 11% excluding US HPV sales. Demand for QIAsymphony consumables were particularly strong with sales growth in the double digits. QIAsymphony TB test sales remained on par with the company’s annual growth target of roughly 25%. In the personal healthcare business, sales of Ipsogen blood cancer tests increased, and revenues from codevelopment projects for companion diagnostics, which tend to be volatile, jumped 66% excluding currency.

Life sciences-related sales grew approximately 3% organically to account for 50% of revenues. Organic Pharma and Academia sales advanced roughly 3% and 2%, respectively. Applied Testing sales grew roughly 5% organically, driven by increased demand for new human ID and forensics products in the Americas and Asia Pacific.

Geographically, sales were particularly strong in the Asia-Pacific/Japan region, as they grew just under 20% organically to make up 21% of revenues. Specifically, sales in China, Japan, India and South Korea each grew in double digits. Accounting for 49% of revenue, sales in the Americas grew in the high single digits, or roughly 11% excluding HPV revenue, including double-digit growth in both Brazil and Mexico. Despite sales growth in France and the UK, total European sales declined organically due to weak spending in Germany. As such, sales in the Europe/Middle East/Africa region declined in the low single digits organically to make up 30% of revenues. However, sales increased in the Middle East, Russia and Nordic regions.

Total adjusted gross margin expanded 60 basis points to 71.3% due to product mix and restructuring measures. Adjusted operating margin advanced 75 basis points to 10.9% as a result of lower R&D investments. The company maintained its full-year currency-neutral sales growth forecast of 6%–7%, comprised of 4%–5% organic growth and 2% from acquisitions. Fourth quarter sales are projected to grow 6%. QIAGEN will also implement certain restructuring measures in the fourth quarter, including the closure of two facilities and consolidation of service centers, resulting in a $75 million pre-tax charge. Finally, the company initiated an organic revenue growth outlook of 5%-6% for 2017.

Shimadzu Gets Boost From Asia

Shimadzu Analytical and Measuring Instrument (AMI) fiscal 2017 second quarter sales declined 5.8% to ¥51.2 billion ($500 million = ¥102.38 = $1). However, excluding currency, AMI sales grew roughly 4%, led by LC and MS demand. Operating margin expanded 58 basis points to 18.0%.

For the first half of the year, AMI sales contracted 4.0% to ¥93.7 billion ($891 million = ¥105.16 = $1) to account for 61% of revenues. Excluding currency headwinds of 8.3%, AMI revenue improved 4.3%. In local currency, aftermarket and instruments sales grew roughly 7% and 3% to account for 28% and 72% of segment sales, respectively. Demand was strongest for LC and MS products, for which currency-neutral sales climbed 6% and 8% to account for 29% and 17% of AMI revenue, respectively.

The company reported sturdy regional demand, as Japanese sales improved 4.5%, including particular strength for LC and MS products from pharmaceutical and chemical customers. Higher sales of surface analyzers further contributed to regional growth. Sales in China climbed 8.5%, driven by demand for MS products from pharmaceutical and CRO firms, as well as from government markets for food testing applications. Sales in Other Asian countries were particularly strong, climbing 17.3% excluding currency. This growth was driven by strong MS demand in India, as well as higher LC sales and a large order for testing machines in Southeast Asia.

Conversely, currency-neutral sales in Europe and North America slipped 1.4% and 1.0%, respectively. Despite the declines, MS sales for environmental and clinical applications improved in Europe, as did sales of LC and other equipment in North America. Sales to Other regions contracted in the double digits, including weakness in South America.

AMI operating margin advanced 60 basis points to15.1%. Fiscal 2017 sales outlook for AMI was unchanged at ¥218.0 billion ($2.1 billion) for growth of 4.6%.