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Share Name | Share Symbol | Market | Type |
---|---|---|---|
Keysight Technologies Inc | NYSE:KEYS | NYSE | Common Stock |
Price Change | % Change | Share Price | High Price | Low Price | Open Price | Shares Traded | Last Trade | |
---|---|---|---|---|---|---|---|---|
-0.585 | -0.37% | 158.115 | 159.70 | 157.16 | 157.95 | 359,740 | 20:17:37 |
Achieves above guidance results on strong execution; full-year outlook unchanged
Keysight Technologies, Inc. (NYSE: KEYS) today reported financial results for the second fiscal quarter ended April 30, 2024.
“Keysight executed well and delivered second quarter results above the high end of our guidance in a market environment that was consistent with the prior quarter,” said Satish Dhanasekaran, Keysight’s President and CEO. “We saw pockets of growth and stability across multiple end markets even as customer spending remained constrained. Our full-year outlook is unchanged and assumes modest order growth in the second half."
Second Quarter Financial Summary
Reporting Segments
Outlook
Keysight’s third fiscal quarter of 2024 revenue is expected to be in the range of $1.18 billion to $1.20 billion. Non-GAAP earnings per share for the third fiscal quarter of 2024 are expected to be in the range of $1.30 to $1.36, based on a weighted diluted share count of approximately 175 million shares. Certain items impacting the GAAP tax rate pertain to future events and are not currently estimable with a reasonable degree of accuracy; therefore, no reconciliation of GAAP earnings per share to non-GAAP has been provided. Further information is discussed in the section titled “Use of Non-GAAP Financial Measures” below.
Webcast
Keysight’s management will present more details about its second quarter FY2024 financial results and its third quarter FY2024 outlook on a conference call with investors today at 1:30 p.m. PT. This event will be webcast in listen-only mode. Listeners may log on to the call at www.investor.keysight.com under the “Upcoming Events” section and select “Q2 FY24 Keysight Technologies Inc. Earnings Conference Call” to participate. The call can also be accessed by dialing 1-404-975-4839 or 1-833-470-1428 toll-free (access code 996630). The webcast will remain on the company site for 90 days.
Forward-Looking Statements
This communication contains forward-looking statements as defined in the Securities Exchange Act of 1934 and is subject to the safe harbors created therein. The words "assume," “expect,” “intend,” “will,” “should,” and similar expressions, as they relate to the company, are intended to identify forward-looking statements. These forward-looking statements involve risks and uncertainties that could significantly affect the expected results and are based on certain key assumptions of Keysight’s management and on currently available information. Due to such uncertainties and risks, no assurances can be given that such expectations or assumptions will prove to have been correct, and readers are cautioned not to place undue reliance on such forward-looking statements, which speak only as of the date hereof. Keysight undertakes no responsibility to publicly update or revise any forward-looking statement. The forward-looking statements contained herein include, but are not limited to, predictions, future guidance, projections, beliefs, and expectations about the company’s goals, revenues, financial condition, earnings, and operations that involve risks and uncertainties that could cause Keysight’s results to differ materially from management’s current expectations. Such risks and uncertainties include, but are not limited to, impacts of global economic conditions such as inflation or recession, slowing demand for products or services, volatility in financial markets, reduced access to credit, increased interest rates; impacts of geopolitical tension and conflict outside of the U.S., export control regulations and compliance; net zero emissions commitments; customer purchasing decisions and timing; and order cancellations.
In addition to the risks above, other risks that Keysight faces include those detailed in Keysight’s filings with the Securities and Exchange Commission on Keysight’s yearly report on Form 10-K for the period ended October 31, 2023 and Keysight’s quarterly report on Form 10-Q for the period ended January 31, 2024.
Segment Data
Segment data reflect the results of our reportable segments under our management reporting system. Segment data are provided on page 5 of the attached tables.
Use of Non-GAAP Financial Measures
In addition to financial information prepared in accordance with U.S. GAAP (“GAAP”), this document also contains certain non-GAAP financial measures based on management’s view of performance, including:
Net Income per share is based on weighted average diluted share count. See the attached supplemental schedules for reconciliations of each non-GAAP financial measure to its most directly comparable GAAP financial measure for both the three and six months ended April 30, 2024. Following the reconciliations is a discussion of the items adjusted from our non-GAAP financial measures and the company’s reasons for including or excluding certain categories of income or expenses from our non-GAAP results.
About Keysight Technologies
At Keysight (NYSE: KEYS), we inspire and empower innovators to bring world-changing technologies to life. As an S&P 500 company, we’re delivering market-leading design, emulation, and test solutions to help engineers develop and deploy faster, with less risk, throughout the entire product lifecycle. We’re a global innovation partner enabling customers in communications, industrial automation, aerospace and defense, automotive, semiconductor, and general electronics markets to accelerate innovation to connect and secure the world. Learn more at Keysight Newsroom and www.keysight.com.
KEYSIGHT TECHNOLOGIES, INC. CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS (In millions, except per share data) (Unaudited) PRELIMINARYThree months ended
Six months ended
April 30,
April 30,
2024
2023
2024
2023
Orders
$
1,219
$
1,319
$
2,439
$
2,619
Revenue
$
1,216
$
1,390
$
2,475
$
2,771
Costs and expenses: Cost of products and services
453
481
899
979
Research and development
228
222
460
449
Selling, general and administrative
361
337
723
675
Other operating expense (income), net
(3
)
(4
)
(5
)
(8
)
Total costs and expenses
1,039
1,036
2,077
2,095
Income from operations
177
354
398
676
Interest income
18
22
41
41
Interest expense
(20
)
(20
)
(40
)
(39
)
Other income (expense), net
—
5
5
14
Income before taxes
175
361
404
692
Provision for income taxes
49
78
106
149
Net income
$
126
$
283
$
298
$
543
Net income per share: Basic
$
0.73
$
1.59
$
1.71
$
3.04
Diluted
$
0.72
$
1.58
$
1.70
$
3.02
Weighted average shares used in computing net income per share: Basic
174
178
175
178
Diluted
175
179
175
179
Page 1 KEYSIGHT TECHNOLOGIES, INC. CONDENSED CONSOLIDATED BALANCE SHEET (In millions, except par value and share data) (Unaudited) PRELIMINARY
April 30,
October 31,
2024
2023
ASSETS Current assets: Cash and cash equivalents
$
1,657
$
2,472
Accounts receivable, net
809
900
Inventory
1,020
985
Other current assets
482
452
Total current assets
3,968
4,809
Property, plant and equipment, net
769
761
Operating lease right-of-use assets
239
226
Goodwill
2,282
1,640
Other intangible assets, net
609
155
Long-term investments
102
81
Long-term deferred tax assets
668
671
Other assets
351
340
Total assets
$
8,988
$
8,683
LIABILITIES AND EQUITY Current liabilities: Current portion of long-term debt
$
600
$
599
Accounts payable
268
286
Employee compensation and benefits
309
304
Deferred revenue
578
541
Income and other taxes payable
62
90
Operating lease liabilities
43
40
Other accrued liabilities
134
189
Total current liabilities
1,994
2,049
Long-term debt
1,195
1,195
Retirement and post-retirement benefits
68
64
Long-term deferred revenue
211
216
Long-term operating lease liabilities
201
192
Other long-term liabilities
416
313
Total liabilities
4,085
4,029
Stockholders' Equity: Preferred stock; $0.01 par value; 100 million shares authorized; none issued and outstanding
—
—
Common stock; $0.01 par value; 1 billion shares authorized; issued and outstanding shares: 201 million and 200 million, respectively
2
2
Treasury stock, at cost; 26.4 million shares and 25.4 million shares, respectively
(3,119
)
(2,980
)
Additional paid-in-capital
2,580
2,487
Retained earnings
5,909
5,611
Accumulated other comprehensive loss
(469
)
(466
)
Total stockholders' equity
4,903
4,654
Total liabilities and equity
$
8,988
$
8,683
Page 2 KEYSIGHT TECHNOLOGIES, INC. CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS (In millions) (Unaudited) PRELIMINARY
Six months ended
April 30,
2024
2023
Cash flows from operating activities: Net income
$
298
$
543
Adjustments to reconcile net income to net cash provided by operating activities: Depreciation
62
59
Amortization
76
49
Share-based compensation
82
84
Deferred tax expense (benefit)
(9
)
(2
)
Excess and obsolete inventory-related charges
18
13
Other non-cash expense (income), net
(5
)
(4
)
Changes in assets and liabilities, net of effects of businesses acquired: Accounts receivable
121
61
Inventory
(50
)
(93
)
Accounts payable
(11
)
(41
)
Employee compensation and benefits
(26
)
(35
)
Deferred revenue
14
81
Income taxes payable
(35
)
(32
)
Interest rate swap agreement termination proceeds
—
107
Prepaid assets
(19
)
(27
)
Other assets and liabilities
(78
)
26
Net cash provided by operating activities(a)
438
789
Cash flows from investing activities: Investments in property, plant and equipment
(83
)
(113
)
Acquisition of businesses and intangible assets, net of cash acquired
(556
)
(85
)
Other investing activities
8
(7
)
Net cash used in investing activities
(631
)
(205
)
Cash flows from financing activities: Proceeds from issuance of common stock under employee stock plans
33
33
Payment of taxes related to net share settlement of equity awards
(28
)
(47
)
Acquisition of non-controlling interests
(458
)
—
Treasury stock repurchases
(139
)
(125
)
Repayment of debt
(24
)
—
Other financing activities
(5
)
(1
)
Net cash used in financing activities
(621
)
(140
)
Effect of exchange rate movements
—
13
Net increase (decrease) in cash, cash equivalents, and restricted cash
(814
)
457
Cash, cash equivalents, and restricted cash at beginning of period
2,488
2,057
Cash, cash equivalents, and restricted cash at end of period
$
1,674
$
2,514
(a) Cash payments included in operating activities: Interest payments
$
38
$
37
Income tax paid, net
$
146
$
180
Page 3 KEYSIGHT TECHNOLOGIES, INC. NET INCOME AND DILUTED EPS RECONCILIATION (In millions, except per share data) (Unaudited) PRELIMINARY
Three months ended
Six months ended
April 30,
April 30,
2024
2023
2024
2023
Net Income
Diluted EPS
Net Income
Diluted EPS
Net Income
Diluted EPS
Net Income
Diluted EPS
GAAP Net income$
126
$
0.72
$
283
$
1.58
$
298
$
1.70
$
543
$
3.02
Non-GAAP adjustments: Amortization of acquisition-related balances
37
0.21
25
0.14
75
0.43
48
0.27
Share-based compensation
36
0.21
29
0.16
86
0.49
84
0.47
Acquisition and integration costs
27
0.15
3
0.02
40
0.23
5
0.03
Restructuring and others
23
0.14
14
0.07
38
0.22
15
0.08
Adjustment for taxes(a)
(2
)
(0.02
)
26
0.15
(4
)
(0.03
)
48
0.27
Non-GAAP Net income$
247
$
1.41
$
380
$
2.12
$
533
$
3.04
$
743
$
4.14
Weighted average shares outstanding - diluted
175
179
175
179
(a) For the three and six months ended April 30, 2024, management uses a non-GAAP effective tax rate of 17% and for the three and six months ended April 30, 2023, management uses a non-GAAP effective tax rate of 12%. Please refer last page for details on the use of non-GAAP financial measures. Page 4 KEYSIGHT TECHNOLOGIES, INC. SEGMENT RESULTS INFORMATION (In millions, except where noted) (Unaudited) PRELIMINARY Communications Solutions Group Percent Q2'24 Q2'23 Inc/(Dec) Revenue$ 840
$ 937
(10)%
Gross margin, %68%
68%
Income from operations$ 223
$ 266
Operating margin, %27%
28%
Electronic Industrial Solutions Group Percent Q2'24 Q2'23 Inc/(Dec) Revenue$ 376
$ 453
(17)%
Gross margin, %58%
64%
Income from operations$ 71
$ 157
Operating margin, %19%
35%
Segment revenue and income from operations are consistent with the respective non-GAAP financial measures as discussed on last page. Page 5 KEYSIGHT TECHNOLOGIES, INC. REVENUE BY END MARKET (In millions) (Unaudited) PRELIMINARY Percent Q2'24 Q2'23 Inc/(Dec) Aerospace, Defense and Government$ 277
$ 310
(11)%
Commercial Communications563
627
(10)%
Electronic Industrial376
453
(17)%
Total Revenue$ 1,216
$ 1,390
(13)%
Page 6 KEYSIGHT TECHNOLOGIES, INC. FREE CASH FLOW (In millions) (Unaudited) PRELIMINARYThree months ended
Six months ended
April 30,
April 30,
2024
2023
2024
2023
Net cash provided by operating activities
$
110
$
423
$
438
$
789
Less: Investments in property, plant and equipment
(36
)
(53
)
(83
)
(113
)
Free cash flow$
74
$
370
$
355
$
676
Please refer last page for details on the use of non-GAAP financial measures. Page 7
Non-GAAP Financial Measures
Management uses both GAAP and non-GAAP financial measures to analyze and assess the overall performance of the business, to make operating decisions and to forecast and plan for future periods. We believe that our investors benefit from seeing our results “through the eyes of management” in addition to seeing our GAAP results. This information enhances investors’ understanding of the continuing performance of our business and facilitates comparison of performance to our historical and future periods. Our non-GAAP financial measures may not be comparable to similarly titled measures used by other companies, including industry peer companies, limiting the usefulness of these measures for comparative purposes. These non-GAAP measures should be considered supplemental to and not a substitute for financial information prepared in accordance with GAAP. The discussion below presents information about each of the non-GAAP financial measures and the company’s reasons for including or excluding certain categories of income or expenses from our non-GAAP results. In future periods, we may exclude such items and may incur income and expenses similar to these excluded items. Accordingly, adjustments for these items and other similar items in our non-GAAP presentation should not be interpreted as implying that these items are non-recurring, infrequent or unusual. Non-GAAP Revenue generally relates to an acquisition and includes recognition of acquired deferred revenue that was written down to fair value in purchase accounting. Management believes that excluding fair value purchase accounting adjustments more closely correlates with the ordinary and ongoing course of the acquired company’s operations and facilitates analysis of revenue growth and business trends. We may not have non-GAAP revenue in all periods. Core Revenue is GAAP/non-GAAP revenue (as applicable) excluding the impact of foreign currency changes and revenue associated with material acquisitions or divestitures completed within the last twelve months. We exclude the impact of foreign currency changes as currency rates can fluctuate based on factors that are not within our control and can obscure revenue growth trends. As the nature, size and number of acquisitions can vary significantly from period to period and as compared to our peers, we exclude revenue associated with recently acquired businesses to facilitate comparisons of revenue growth and analysis of underlying business trends. Free cash flow includes net cash provided by operating activities adjusted for investments in property, plant & equipment. Non-GAAP Income from Operations, Non-GAAP Net Income and Non-GAAP Diluted EPS may include the following types of adjustments:Source: IR-KEYS
View source version on businesswire.com: https://www.businesswire.com/news/home/20240520584461/en/
INVESTOR CONTACT: Jason Kary +1 707-577-6916 jason.kary@keysight.com
MEDIA CONTACT: Andrea Mueller + 1 408-218-4754 andrea.mueller@keysight.com
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