EX-99.2 3 ex2.htm INVESTOR PRESENTATION ex2.htm
Agilent Technologies
Separating Into Two Industry-Leading
Public Companies
to Increase Strategic Flexibility
and Enhance Shareholder Value
September 19, 2013
Page *
Exhibit 99.2
 
 
 
Safe Harbor
This presentation contains forward-looking statements (including, without limitation, information and future
guidance on the company’s goals, priorities, the planned separation of our Electronic Management Group,
revenues, demand, growth opportunities, customer service and innovation plans, new product introductions,
financial condition, earnings, the company’s ability to pay dividends, ability to access capital markets, the
continued strengths and expected growth of the markets the company sells into, operations, operating earnings,
and tax rates) that involve risks and uncertainties that could cause results of Agilent to differ materially from
management’s current expectations. The words “anticipate,” “plan,” “estimate,” “expect,” “intend,” “will,” “should”
“forecast” “project” and similar expressions, as they relate to the company, are intended to identify forward-
looking statements.
In addition, other risks that the company faces in running its operations include the ability to execute successfully
through business cycles; the ability to successfully adapt its cost structures to continuing changes in business
conditions; ongoing competitive, pricing and gross margin pressures; the risk that our cost-cutting initiatives will
impair our ability to develop products and remain competitive and to operate effectively; the impact of
geopolitical uncertainties on our markets and our ability to conduct business; the ability to improve asset
performance to adapt to changes in demand; the ability to successfully introduce new products at the right time,
price and mix, and other risks detailed in the company's filings with the Securities and Exchange Commission,
including our quarterly report on Form 10-Q for the quarter ended July 31, 2013.
The company assumes no obligation to update the information in these presentations. These presentations and
the Q&A that follows include non-GAAP measures. Non-GAAP measures exclude primarily the impacts of
acquisition and integration costs, future restructuring costs, asset impairment charges, and non-cash intangibles
amortization. Also excluded are tax benefits that are not directly related to ongoing operations and which are
either isolated or cannot be expected to occur again with any regularity or predictability. Most of these excluded
amounts pertain to events that have not yet occurred and are not currently possible to estimate with a
reasonable degree of accuracy. Accordingly, no reconciliation to GAAP amounts has been provided.


Page 2
 
 
 
The World’s Premier Measurement Company
Agilent Labs
Order Fulfillment
Life
Sciences
Group
FY13 Revenue $1.6B
Operating Margin 16%
Chemical
Analysis
Group
FY13 Revenue $1.6B
Operating Margin 22%
Electronic
Measurement
Group
FY13 Revenue $2.9B
Operating Margin 19%
Diagnostics &
Genomics
Group
FY13 Revenue $0.7B
Operating Margin 15%
Finance, HR, Legal, IT, Workplace Services
FY13 Revenue $6.8B, Core Growth(2) -3%, Operating Margin 18.5%,
ROIC 16%, Free Cash Flow $900M, Debt/EBITDA 1.9x
EM Markets
LDA Markets FY13(1) Revenue $3.9B, Operating Margin 18%
(1) FY13 numbers are estimates based on the midpoint of Company guidance provided on August 14, 2013.
(2) Core growth is reported growth adjusted for the effects of M&A and FX.
Page 3
 
 
 
Agilent to Split into Two Companies
Strategic Rationale for Separation
• Capitalizing on EMG, Agilent has grown LDA to be a sizeable and
 highly competitive business
• Spin-off to create two companies with greater strategic and
 management focus, each well positioned for growth in its sector
 • Distinct industries and drivers
 • Greater strategic focus
 • Both businesses have the scope to stand on their own
• Two unique and compelling investment profiles
 • Positioned to attract a more focused shareholder base
 • Better aligned with research analyst coverage universe and peer
 comparisons
Move Designed to Increase Strategic Flexibility
and Enhance Shareholder Value
Page 4
 
 
 
Two Independent Publicly Traded Companies
LDA-Focused Company
(New Agilent)
EM-Focused Company
(To Be Named)
Revenue Mix
Financial
Metrics(1)
Key
Platforms
   
§ Revenue: $3.9B
§ Operating Margin: 18%
§ ROIC: 11%
§ Revenue: $2.9B
§ Operating Margin: 19%
§ ROIC: 31%
§ Liquid & Gas Chromatography
§ Mass Spectrometry
§ Spectroscopy
§ Nuclear Magnetic Resonance
§ Genomics & Diagnostics (Dako)
§ Consumables, Services, Software
§ Source & Signal Analyzers
§ Network Analyzers
§ One-box Testers
§ Oscilloscopes
§ Modular & Handheld
§ Services & Software
(1) FY13 numbers are estimates based on the midpoint of Company guidance provided on August 14, 2013.
Page 5
 
 
 
Management Teams
New Agilent
EM Company
Bill Sullivan, President
and CEO
Ron Nersesian, President
and CEO designate
Didier Hirsch, Chief
Financial Officer
Neil Dougherty, Chief
Financial Officer designate
(formerly VP and Treasurer
of Agilent Technologies)
Page 6
 
 
 
New Agilent: Life Sciences,
Diagnostics, and Applied
Markets
Page *
 
 
 
New Agilent Overview
• Global leader in Life Sciences, Diagnostics, and
 Applied markets
• Attractive recurring revenue base
• Balanced geographic revenue profile
• Growth opportunities in emerging markets, molecular
 diagnostics and clinical
• Significant margin expansion opportunities
• Revenues: $3.9B, +9% y/y (+5% core(2))
• Operating Margin: 18% of revenue
• ROIC: 11%
FY13(1) Financial Metrics
(1) FY13 numbers are estimates based on the midpoint of Company guidance provided on August 14, 2013.
(2) Core growth is reported growth adjusted for the effects of M&A and FX.
Geography
Type
Genomics &
Diagnostics
17%
Life
Sciences
42%
Chemical
Analysis
41%
Non-
Recurring
59%
Recurring
41%
Americas
Europe
Asia Pacific
Page 8
 
 
 
New Agilent: Market Profile
End Markets
Market
Size(1)
Long Term
Market
Growth(1)
Market
Position(1)
Growth Drivers
 
$11B
4-6%
#3
• Shift to new biological
 entities
• Emerging markets
 
$10B
3-5%
#4
• Global investments in
 Life Science research
 
$7B
8-10%
#2 &
emerging
• Increasing patient
 population
• Companion
 diagnostics
 
$4B
5-7%
#1
• Global food supply
• Government
 regulations
 
$5B
2-4%
#1 & #2
• New environmental
 contaminants
• Designer drugs
 
$4B
4-6%
#1
• Rising energy
 demands
• Alternative energy
Market Size(1): $41B
Long Term Market Growth(1): 4-
6%
Revenue Mix(2)
by End Market
(1) Market size, growth, and position per Company estimates
(2) Percentage of LDA revenue based on Q4’12-Q3’13
Page 9
 
 
 
Growth through technology leadership,
customer intimacy, workflow solutions
Higher recurring revenue mix (from 29% to
41%(1))
Continued strategic push from lab to the
clinic. Ensuring the success of Dako
Focused on similar markets with higher
growth rates and lower cyclicality
Leadership in Life Sciences, Diagnostics,
and Applied markets
Pure play Life Sciences, Diagnostics, and
Analytical Company
Same
Different
Margin improvement through reduced
manufacturing, logistics costs, and sales
channel leverage
Allows management to focus exclusively
on running LDA business
Business model better aligned with
shareholder base and peer group
What’s Different for New Agilent?
Scale and financial strength to stand on its
own
Attracting and retaining top talent in the
industry
Continuing to build on strong foundation in
emerging markets
(1) Percentage of recurring revenue based on Q4’12-Q3’13
Page 10
 
 
 
New Agilent: Strategy to Win
Creating Shareholder Value
§ Increase organic growth rate
 ü Leverage large and growing installed base to expand recurring revenues and
 core instrument sales
 ü Take advantage of greenfield opportunities in developed markets (clinical
 instrumentation, integrated biology, sample preparation)
 ü Leverage presence in emerging markets
 ü Ensure success of Dako and Varian acquisitions
§ Grow earnings faster than revenues
 ü Continued improvement in gross margins
 ü Drive operating margin expansion and increase ROIC
§ Deliver complete workflow solutions for our customers
 ü Core data system platform to easily enable application development in the lab
 and correlate data from research to the clinic, allowing for deeper insight
 ü Bolt-on acquisitions that help complete the workflow. Focused on sequencing
 and related technologies, molecular diagnostics, and consumables
Page 11
 
 
 
Electronic Measurement
Focused Company
Page *
 
 
 
• Leading position in major markets
• Global electronic measurement technology
 and market leader
• Growth opportunity in emerging markets
• Strong cash flow generation and ROIC
• Industry leading gross and operating
 margins
• $450M of recurring services & support
 revenue. $300M of software sales
 
(1) FY13 numbers are estimates based on the midpoint of Company guidance provided on August 14, 2013.
(2) Core growth is reported growth adjusted for the effects of M&A and FX.
Q3’13 Revenue Mix
by Geography
Asia Pacific
Americas
Europe
FY13(1) Financial Metrics
Communications
#1
Industrial,
Computers,
Semiconductors
#1
Aerospace
Defense
#1
EM Company Overview
The World’s Premier Electronic Measurement Company
Page 13
 
 
 
EM Company: Market Profile
(2) Percentage of EM revenue based on Q4’12-Q3’13
(3) Excludes network assurance
End Markets
Market
Size(1)
Long
Term
Market
Growth(1
)
Growth Drivers
Market
Position
Communications(3
)
$4B
4-6%
• Mobile data traffic growth
• Complex components and
 chipsets
• Subscriber growth in
 China, India, Brazil
#1
Aerospace &
Defense
$3B
Flat
• Satellites and radar
 modernization outside
 U.S.
• Intelligence, surveillance,
 reconnaissance (ISR)
#1
Industrial,
Computer &
Semiconductor
$6B
3-5%
• Electronic content
 proliferation
• Mobile computing
• High performance cloud
 infrastructure
• Education and research in
 emerging markets
#1
Communications
34%
Industrial,
Computer &
Semiconductor
43%
Aerospace &
Defense
23%
Market Size(1): $13B
Long Term Market Growth(1): 3-
4%
Revenue Mix(2)
by End Market
Page 14
 
 
 
Electronic measurement top opportunities
are company’s top opportunities
Same customers and global footprint
New name
Top talent
Strong position in emerging markets
Organic growth, tuck-in acquisitions
Whole company 100% focused on EM and
customer success
Focus: profit and cash generation
#1 in key markets
Business model completely aligned with
shareholders and analysts
Same
Different
Corporate headquarters in Santa Rosa
What’s Different for EM Company?
Technology leadership
Alignment between incentive compensation
and EM value creation
Page 15
 
 
 
EM Company Strategy to Win
§ World’s premier electronic test and measurement provider in Communications,
 Aerospace/Defense, and Industrial markets
§ First to market with leading edge customer-valued technology solutions
ü Take share in core platforms
ü Top opportunities in electronic measurement industry are now
 the company’s top opportunities
ü Transform the measurement experience
 
§ World’s best customer satisfaction with lowest cost of ownership
 
§ Manage market volatility by continuing to generate strong cash flow, ROIC, and
 solid earnings throughout the cycle
§ Management team with deep EM experience and track record of delivering on
 tough financial commitments
Page 16
 
 
 
Goal
Actions taken since 2009 downturn
EM Company Strong Profitability Throughout the
Cycle
Restructured Operations to Maintain Strong Profitability
During Periods of Market Volatility
Lower Costs
Shift Fixed Costs
to Variable
Focus on Core
n Reduced headcount by 2700 people
n Focused on continuous GM improvement - value engineering
n Increased use of Contract Manufacturing
n Increased indirect channel for variable selling cost
n Increased use of external resources
n Maintained R&D investment for technology leadership and application solutions
n Leveraged technology investment throughout product portfolio
n Owns critical enabling technology in ASICS, microcircuits, and gallium arsenide
Page 17
 
 
 
Transaction Details
Transaction
Structure
Timing
Financial
Details
n Agilent shareholders will receive a pro rata distribution of shares in EM Company via a tax
 -free spin-off
n Expected to be completed by end of calendar year 2014, subject to the satisfaction of
 customary closing conditions, including:
— Final approval by the Agilent Board of Directors
— Receipt of favorable rulings from the IRS
— Effectiveness of a Form 10 filing with the SEC
— Receipt of regulatory approvals in all major jurisdictions
n Both companies to be well capitalized, have strong balance sheets and expected
 investment grade profiles with target debt to EBITDA ratios below 2.0x
n LDA-focused company is expected to continue to pay a dividend at least equal to the
 current yield
n Not anticipated to impact Agilent’s guidance for fiscal year 2013. Plan to provide fiscal
 year 2014 guidance at next earnings announcement in mid November
n Expected to incur one-time charges related to the transaction during the periods
 preceding the separation, to be quantified at a later date
n Expect to retire a portion of current Agilent long-term debt outstanding, utilizing EM
 Company capital
n During the transition Agilent expects to continue its dividend and repurchase shares to at
 least maintain current share count
Page 18
 
 
 
§  Leverage prior experience
ü Agilent has completed four major spin-offs/divestitures since 2005
§ Dis-synergies of ~ $100M cumulative over three year period
ü Little real estate overlap outside of sales offices
ü Clean ERP separation
ü Most dis-synergies in shared infrastructure organization
 • Replicate current Colorado Springs Data Center to provide IT infrastructure
 for both companies
 • New Agilent to provide infrastructure services, such as payroll, IT, financial
 services until EM Company can operate independently (~1 year after spin)
ü Both companies to develop specific action plans to minimize dis-synergies over time
Spin-off Execution Plan
Page 19
 
 
 
Appendix
Page *
 
 
 
New Agilent Historical Consolidated Income
Statement(1)
Page 21
$M
FY 2010
FY 2011
FY 2012
Revenue
2,679
3,310
3,543
% YoY
30%
24%
7%
COGS
1,245
1,603
1,685
Gross Margin %
54%
52%
52%
Operating Expenses
936
1,157
1,225
% Revenue
35%
35%
35%
Operating Profit
498
550
633
% Revenue
19%
17%
18%
(1) Presented on a non-GAAP basis; reconciliations to closest GAAP equivalent provided
 
 
 
EM Company Historical Consolidated Income
Statement(1)
Page 22
$M
FY 2010
FY 2011
FY 2012
Revenue
2,784
3,316
3,315
% YoY
15%
19%
0%
COGS
1,158
1,378
1,428
Gross Margin %
58%
58%
57%
Operating Expenses
1,188
1,178
1,136
% Revenue
43%
36%
34%
Operating Profit
438
760
751
% Revenue
16%
23%
23%
(1) Presented on a non-GAAP basis; reconciliations to closest GAAP equivalent provided
 
 
 
Broadest range of solutions across ecosystem, including
•Components and chipsets - Simulation tools, network analyzers
Market Reach, Customer Trust
•Global footprint with R&D in US, Europe and Asia
•Recognized leader in electronic test and measurement
•Leadership in standards bodies
• Handsets - One-box testers for R&D and manufacturing
• Base Stations - Signal analyzers, sources
• Wireline / Optical - Optical modulation analyzers
Key Drivers
How We Win
Key New Products
•Combination of bench-top and modular to deliver best solutions
•Highly differentiated platforms for mobile device R&D and manufacturing to launch in
H1’14
• Mobile data traffic grows at double-digit rates each year
• Components and chipsets increase in complexity
• Subscriber growth in China, India, Brazil
EM Company in Communications
Market Size(1): $4B
Long Term Market
Growth(1): 4-6%
Market Position(1):
#1
Page 23
(1) Market size, growth, and position per Company estimates
 
 
 
EM Company in Aerospace & Defense
Market Size(1): $3B
Long Term Market
Growth(1): Flat
Market Position(1): #1
Key Drivers
How We Win
• Growth comes from outside US (Russia, China, India, Middle East) driven by new
 satellites and radar technologies
• Growth of intelligence, surveillance, and reconnaissance
Leading Technology, Application Solutions, including
•Direct wideband radar - 90000 X-Series oscilloscopes
•Wideband radar simulation -- Arbitrary waveform generator
•Lowest phase noise for radar - Performance signal generators
•Best amplifier characterization for satellite communications - PNA-X
•Mission-critical network surveillance - unique contribution
Market Reach, Customer Trust
•Largest installed base
•World-class, long-term service and support
•Network of system integrators and in-house capabilities
Key New Products
•Leading high-performance oscilloscopes with proprietary technology
•RF and microwave modular products with lab-quality measurements
•Industry’s highest performing handhelds
Page 24
(1) Market size, growth, and position per Company estimates
 
 
 
EM Company in Industrial, Computer &
Semiconductors
Market Size(1): $6B
Long Term Market
Growth(1): 3-5%
Market Position(1): #1
Key Drivers
How We Win
• Electronic content in industrial segment continues to proliferate
• Mobile computing driven by smartphones, tablets, and notebook PCs
• Cloud computing requires high-performance infrastructure
• Semiconductor R&D-driven innovation
• Strategic investments in education and research in emerging countries
Leading Technology, Application Solutions, including
•Industry-leading PCI-Express Gen3 - Oscilloscopes, bit error rate testers (BERTs),
protocol analyzers
•Premier battery drain characterization - Source measure units (SMUs)
•First THz materials research solution - Performance network analyzers
Market Reach, Customer Trust
•Award-winning products plus expanded indirect channel
•Leadership in high-speed digital standards: PCI Express, USB, HDMI
Key New Products
•Differentiated oscilloscope offering with ongoing ease-of-use innovation and value
integration
Page 25
(1) Market size, growth, and position per Company estimates
 
 
 
 
Applications
Market
Position (1)
Markets
Competitors
 
Designs, simulates, & optimizes
electronic circuit performance
prior to building the prototype
#1
Communications,
Aerospace/Defense,
Industrial/Computer/S
emi (ICS)
•Cadence
•National Instruments
 
For wireless
devices—measures
performance at chip, module or
device level prior to deploying in
network
#3
Communications
•Anritsu
•Rohde & Schwarz
•Teradyne (LitePoint)
 
Characterizes responses of
devices & components in an
electrical network
#1
Communications,
Aerospace/Defense,
ICS
•Anritsu
•Rohde & Schwarz
 
Measures changing electrical
signals at different points in a
circuit or system
#2
Communications,
Aerospace/Defense,
ICS
•Danaher (Tektronix)
•LeCroy (Teledyne)
 
Measures magnitude or power
of signal versus frequency
#1
Communications,
Aerospace/Defense
•Anritsu
•Rohde & Schwarz
 
Applies signals to circuits under
development in order to predict
device behavior
#1
Communications,
Aerospace/Defense
•Rohde & Schwarz
•Aeroflex
 
 
 
 
 
HP/Agilent
Introduced
1983
1967
1956
1964
1939
1985
EM Company: Key Product Platforms
Key platforms account for >50% of revenue
Page 26
(1) Source: Prime Data
 
 
 
New Agilent: Life Sciences Overview
Pharma & Biotech
Academia &
Government Research
Markets & Market Position
#3
#4
Market Size(1): $21B
#1 in Liquid Chromatography (LC)
#3 in Mass Spectrometry (MS)
#2 in Nuclear Magnetic Resonance (NMR)
Q3’13 Revenue Mix
by Geography
Asia Pacific
Americas
Europe
LSG also sells into the applied markets
• Revenues: $1.6B, +3% y/y (+4% core(3))
• Operating Margin: 16% of revenue
FY13(2) Financial Metrics
(1) Market size, growth, and position per Company estimates
(2) FY13 numbers are estimates based on the midpoint of Company guidance provided on August 14, 2013
(3) Core growth is reported growth adjusted for the effects of M&A and FX
• Pharma shift from new chemical entities (NCEs) to new
 biological entities (NBEs) and biosimilars
•  Significant potential for our platforms in emerging markets
 • Relocation, decentralization of pharma infrastructure
 • Investments in world-class academic base
Global Trends
Page 27
 
 
 
New Agilent: Diagnostics and Genomics Overview
Anatomic Pathology
Molecular Diagnostics
Market Size(1): $7B
Markets & Market Position
#2
Emerging
Q3’13 Revenue Mix
by Geography
Asia Pacific
Americas
Europe
DGG also sells into the pharmaceutical
and research markets
• Revenues: $0.7B, +65% y/y (+9% core(3))
• Operating Margin: 14.5% of revenue
• Increasing patient population (aging, lifestyle impacts)
• Increasing understanding of cancer markers and pathways
• Greater access to healthcare in emerging markets
• Companion diagnostics bring diagnostic and treatment
 solutions together to enable personalized medicine
• Improved molecular diagnostic approaches
 
Global Trends
FY13(2) Financial Metrics
Page 28
(1) Market size, growth, and position per Company estimates
(2) FY13 numbers are estimates based on the midpoint of Company guidance provided on August 14, 2013
(3) Core growth is reported growth adjusted for the effects of M&A and FX
 
 
 
New Agilent: Chemical Analysis Group Overview
Market Size(1): $13B
Q3’13 Revenue Mix
by Geography
Asia Pacific
Americas
Europe
Food
#1
Environmental
and Forensics
#1 and #2
Chemical
and Energy
#1
Markets and Market Position
New Global Trends
•Global food supply
•New environmental contaminants
•Designer drugs
•Rising energy demands
• Revenues: $1.6B, +2% y/y (+4% core(3))
• Operating Margin: 22% of revenue
FY13(2) Financial Metrics
Page 29
(1) Market size, growth, and position per Company estimates
(2) FY13 numbers are estimates based on the midpoint of Company guidance provided on August 14, 2013
(3) Core growth is reported growth adjusted for the effects of M&A and FX
 
 
 
New Agilent: Key Product Platforms
Key platforms account for >50% of revenue
Platform
Applications
Markets
Market
Position(1)
Competitors
LC
Pharma R&D and QC
Molecular biology, cancer research
Education & Research / Routine testing
Pharma & Biotech
Academia & Government
#1
Waters, Shimadzu,
Thermo
LC-MS
Discovery and Development
Differential Expression and Pathway Analysis
Protein ID, Protein Quantitation
Pharma & Biotech
Applied Markets
#3
Waters, Danaher
Thermo, Bruker,
Shimadzu
GC
Separate a liquid or gas sample into its individual
components
Chemical & Energy
Forensics
#1
Shimadzu,
PerkinElmer,
Thermo, Bruker
GC-MS
Identify known and unknown components or
contaminants
Environmental/Forensics
Food Safety
Chemical & Energy
#1
Thermo, Shimadzu,
Bruker,
Perkin Elmer
Spectroscopy
ATOMIC: Identify and measure the concentrations
of elements in a solid or liquid sample
MOLECULAR: Measure the amount, presence or
distribution of molecular material in a sample
Environmental
Chemical & Energy
Pharma & Biotech
#3
Thermo,
PerkinElmer,
Thermo, Bruker,
Shimadzu
 
Genomics
Sample prep for next-gen sequencing
Microarrays for research and cytogenetic testing
FISH for research and clinical applications
Academia & Government
Pharma & Biotech
Diagnostics & Clinical
#2 in Target
Enrichment and
Microarray
Thermo (Life),
Illumina, Affymetrix
NMR
Structure elucidation, molecular dynamics and in
vivo imaging for broad range of small molecules,
nucleic acids, proteins
Academia & Government
Pharma & Biotech
#2
Bruker, JEOL
Dako
Cancer diagnostics within anatomic pathology
Diagnostics & Clinical
#2
Roche (Ventana)
Danaher (Leica)
Page 30
(1) Market position per Company estimates