Keysight Technologies achieves record cash balance in FQ2

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Keysight Technology FQ2 cash balance strong despite COVID-19 impact
Image: Keysight Technologies

Keysight Technologies reported a record high cash balance of $1.8 billion for the fiscal second-quarter of 2020. However, due to the coronavirus pandemic’s impact on its supply chain, the firm’s revenue and profits fell from last year.

Nevertheless, with its production capacity recovering, the company expects improved results in the June period.

Keysight Technologies FQ2 Results

In the three months ending April 30, Keysight generated $895 million in revenue against $71 million in net income. As such, the company’s sales and profits declined by 18 and 54 percent, respectively, from the FQ2 2019. The firm also recorded $0.78 in adjusted earnings per share, down by 36 percent year-over-year.

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In a statement, CEO Ron Nersesian explained COVID-19 brought significant disruption to the Santa Rosa, California-based corporation’s supply chain. The outbreak forced it to temporarily shutter its component testing equipment production facilities in March and April. The firm also reported weakened demand from its general electronics, educational, and automotive clients, which drove its Electronic Industrial Solutions Group revenue down by 19 percent.

In mid-March, Keysight warned its investors the pandemic would likely cause it to miss the earning guidance it issued in February.

Despite encountering significant coronavirus related to operational headwinds, Keysight did have some positive outcomes last quarter. Most notably, the company increased its cash and equivalents to $1.8 billion, up 15.2 percent from FQ1. The manufacturer also reduced its cost of products and services by 14 percent and cut its selling, general, and administrative expenses by 16 percent from the same period in 2019.

Guarded Optimism for FQ3

Keysight did not offer detailed guidance for the fiscal third quarter, but it expects earnings “in line with, or better than,” its FQ2 results.

The company’s chief executive noted its production operations are ramping up, and it has a robust order backlog. The firm recently received a record number of 5G testing product orders due to demand from aerospace and military buyers. Now that the corporation’s manufacturing capability is no longer constrained, it should see an uptick in its communications solutions segment.

That said, Keysight warned its profits could be negatively affected if a second wave of COVID-19 arises and again disrupts its operations.

Although the pandemic’s ongoing impact cannot be forecast, Keysight is in a good position to mount a recovery in the second half. The firm’s strong balance sheet indicates it has the wherewithal to overcome its present challenges. Moreover, the semiconductor testing equipment maker’s robust portfolio and client list assure its long-term brand relevancy.

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