National Instruments Reports Record Annual Revenue for 2013

Company Continues Disciplined Expense Management and Improves Operating Margin in Q4

Q4 2013 Highlights

- Fourth quarter revenue of $301 million, flat year-over-year

- Continued revenue growth in LabVIEW, academic, CompactRIO and NI CompactDAQ products

- Fully diluted GAAP EPS of $0.25 and fully diluted non-GAAP EPS of $0.31

- EBITDA of $56 million or $0.44 per share

- Cash balance increased by $49 million to $393 million

- Dividend increased from $0.14 per share to $0.15 per share

30 Jan, 2014, 16:01 ET from National Instruments

AUSTIN, Texas, Jan. 30, 2014 /PRNewswire/ -- National Instruments (Nasdaq: NATI) today announced Q4 revenue of $301 million, flat year-over year. The company's orders under $20,000 grew approximately 3 percent year-over-year; orders between $20,000 and $100,000 increased approximately 1 percent year-over-year; and orders above $100,000 decreased about 9 percent year-over-year. In Q4 2013, NI recognized $4 million in revenue from its largest customer, compared with approximately $16 million recognized in Q4 2012.

GAAP net income for Q4 was $32 million, with fully diluted earnings per share (EPS) of $0.25, and non-GAAP net income was $39 million, with non-GAAP fully diluted EPS of $0.31. EBITDA, or Earnings Before Interest, Taxes, Depreciation and Amortization, was $56 million, or $0.44 per share for Q4.

In Q4, GAAP gross margin increased to 75 percent and non-GAAP gross margin was 76 percent, up 70 basis points from Q3 2013. Total GAAP operating expenses were down 4 percent sequentially and were down 6 percent year-over-year. Total non-GAAP operating expenses were down approximately 4 percent sequentially and were down 3 percent year-over-year.

GAAP operating margin was 13 percent in Q4, with GAAP operating income of $40 million, up 93 percent sequentially and up 42 percent year-over-year. Non-GAAP operating margin was 17 percent in Q4, with non-GAAP operating income of $51 million, up 56 percent sequentially and up 12 percent year-over-year.

The company's non-GAAP results exclude the impact of stock-based compensation, amortization of acquisition-related intangibles, acquisition accounting for deferred revenue, acquisition-related adjustments and acquisition-related transaction costs. Reconciliations of the company's GAAP and non-GAAP results are included as part of this news release.

"In 2013, NI continued to advance our software-based approach for test and measurement and deliver our 35th year of growth despite weakness in the industry," said Dr. James Truchard, NI president, CEO and co-founder. "I believe we have made the investments necessary to build on our highly differentiated platform and I am focused on developing our high-performance management team in our quest to reach our goal of $2 billion in annual revenue."  

Geographic revenue in U.S. dollar terms for Q4 2013 compared to Q4 2012 was up 6 percent in the Americas and up 14 percent in Europe. However, revenue declined 15 percent in East Asia because the majority of revenue from the company's largest customer is recognized in this region, and revenue was down 20 percent year-over-year in Emerging Markets primarily from a significant decline in orders over $100,000. In local currency terms, revenue was up 11 percent in Europe, down 13 percent in East Asia and down 14 percent in Emerging Markets.

As of Dec. 31, NI had $393 million in cash and short-term investments, up $49 million from Sept. 30, 2013. The NI Board of Directors also approved an increase in the quarterly dividend to $0.15 per share on the company's common stock payable on March 10 to stockholders of record on Feb. 18.

FY 2013 Highlights

  • Record revenue of $1.17 billion, up 3 percent year-over-year
  • Strong growth in RF and CompactRIO products
  • Fully diluted GAAP EPS of $0.64 and fully diluted non-GAAP EPS of $0.88
  • NI named to the Great Place to Work Institute's 25 Best Multinational Companies to Work For list for the third consecutive year and its 100 Best Companies to Work For list for the 15th consecutive year
  • EBITDA of $164 million, or $1.31 per share
  • Dividend of $0.56 per share

Full-year 2013 revenue was $1.17 billion, up 3 percent year-over-year. GAAP net income for 2013 was $81 million, with fully diluted GAAP EPS of $0.64, and non-GAAP net income was $110 million, with fully diluted EPS of $0.88.

"We believe our ability to gain market share despite challenges in the test and measurement industry demonstrated the strength of our disruptive approach," said Alex Davern, NI COO and CFO. "Our goals for 2014 are to continue to leverage the investments we have already made to drive sustained revenue growth and to continue to drive toward our long-term target of 18 percent non-GAAP operating margin."

Guidance for Q1 2014 Though pleased to see the recent recovery in the Global PMI, NI continues to be conservative in planning for the first half of 2014 because it believes customers are being cautious about their capital spending. NI currently expects revenue for Q1 2014 to be between $272 million and $302 million. NI expects fully diluted EPS to be in the range of $0.09 to $0.21 for Q1, with non-GAAP fully diluted EPS expected to be in the range of $0.15 to $0.27. The company's non-GAAP tax rate in Q1 2013 was 10 percent as a result of the retroactive renewal of the R&D tax credit in January 2013. For 2014, the R&D tax credit has not yet been approved and as a result, NI expects its non-GAAP effective tax rate for Q1 2014 to be approximately 24 percent.

Non-GAAP Presentation In addition to disclosing results determined in accordance with GAAP, NI discloses certain non-GAAP operating results and non-GAAP information that exclude certain charges. In this news release, the company has presented its gross profit, gross margin, operating expenses, operating income, operating margin, income before income taxes, provision for income taxes, net income and basic and fully diluted EPS for the three- and 12-month periods ending Dec. 31, 2013 and 2012, on a GAAP and non-GAAP basis. NI is also providing guidance on its non-GAAP fully diluted EPS.

When presenting non-GAAP information, the company includes a reconciliation of the non-GAAP results to the GAAP results. Management believes that including the non-GAAP results assists investors in assessing the company's operational performance and its performance relative to its competitors. The company presents these non-GAAP results as a complement to results provided in accordance with GAAP, and these results should not be regarded as a substitute for GAAP. Management uses these non-GAAP measures to manage and assess the profitability and performance of its business and does not consider stock-based compensation expense, amortization of acquisition-related intangibles, acquisition accounting for deferred revenue, acquisition-related adjustments and acquisition-related transaction costs in managing its operations. Specifically, management uses non-GAAP measures to plan and forecast future periods, to establish operational goals, to compare with its business plan and individual operating budgets, to measure management performance for the purposes of executive compensation including payments to be made under bonus plans, to assist the public in measuring the company's performance relative to the company's long-term public performance goals, to allocate resources and, relative to the company's historical financial performance, to enable comparability between periods. Management also considers such non-GAAP results to be an important supplemental measure of its performance.

This news release also discloses the company's EBITDA and EBITDA diluted EPS for the three- and 12-month periods ending Dec. 31, 2013 and 2012. The company also believes that including the EBITDA results assists investors in assessing the company's operational performance relative to its competitors. A reconciliation of EBITDA and EBITDA diluted EPS to GAAP net income and GAAP diluted EPS is included with this news release.

Conference Call Information and Availability of Presentation Materials Interested parties can listen to the Q4 2013 conference call today, Jan. 30, at 4:00 p.m. CT at ni.com/call. Replay information is available by calling (855) 859-2056, confirmation code # 29987892, shortly after the call through Feb. 4 at 3:00 p.m. CT, or by visiting the company's website at ni.com/call. You may also view certain presentation materials that we may refer to on the conference call at ni.com/nati.

Forward-Looking Statements This release contains "forward-looking statements," including statements regarding NI making the investments necessary to build on its highly differentiated platform; the company's focus on developing its high-performance management team in its quest to reach its goal of $2 billion in annual revenue; the strength of the company's disruptive approach; goals to continue to leverage investments it already made to drive sustained revenue growth; NI's drive toward its long-term goal of 18 percent non-GAAP operating margin; the company being conservative in planning for the first half of 2014; customers being cautious in their capital spending; and NI's Q1 guidance for revenue, GAAP and non-GAAP EPS, and non-GAAP tax rate. These statements are subject to a number of risks and uncertainties, including the risk of adverse changes or fluctuations in the global economy, U.S. budgetary or debt issues, foreign exchange fluctuations, component shortages, delays in the release of new products, fluctuations in customer demand for NI products including orders from NI's largest customer, fluctuations in average order size and customer mix, the company's ability to effectively manage its operating expenses, manufacturing inefficiencies and the level of capacity utilization and the impact of any acquisitions by NI. Actual results may differ materially from the expected results.

The company directs readers to its Form 10-K for the fiscal year ended Dec. 31, 2012; its Form 10-Q for the quarter ended Sept. 30, 2013; and the other documents it files with the SEC for other risks associated with the company's future performance.

About National Instruments Since 1976, National Instruments (www.ni.com) has equipped engineers and scientists with tools that accelerate productivity, innovation and discovery. NI's graphical system design approach to engineering provides an integrated software and hardware platform that speeds the development of any system needing measurement and control. The company's long-term vision and focus on improving society through its technology supports the success of its customers, employees, suppliers and shareholders. Readers can obtain investment information from the company's investor relations department by calling (512) 683-5090, emailing nati@ni.com or visiting www.ni.com/nati. (NATI-F)

CompactRIO, LabVIEW, National Instruments, NI, ni.com and NICompactDAQ are trademarks of National Instruments. Other product and company names listed are trademarks or trade names of their respective companies.

Contact:      Caitlin Gursslin, Investor Relations, caitlin.gursslin@ni.com

 

National Instruments

Condensed Consolidated Balance Sheets

(in thousands)

Dec. 31,

Dec. 31,

2013

2012

(unaudited)

Assets

Current assets:

Cash and cash equivalents

$

230,263

$

161,996

Short-term investments

163,149

173,166

Accounts receivable, net

180,680

187,060

Inventories, net

172,109

169,990

Prepaid expenses and other current assets

49,001

48,009

Deferred income taxes, net

33,393

27,479

Total current assets

828,595

767,700

Property and equipment, net

260,568

249,721

Goodwill

146,520

147,258

Intangible assets, net

82,310

93,913

Other long-term assets

25,558

26,177

Total assets

$

1,343,551

$

1,284,769

Liabilities and Stockholders' Equity

Current liabilities:

Accounts payable

$

56,614

$

65,080

Accrued compensation

25,189

29,978

Deferred revenue – current

96,117

90,714

Accrued expenses and other liabilities

17,627

34,373

Other taxes payable

29,808

24,811

Total current liabilities

225,355

244,956

Deferred income taxes

44,620

47,630

Liability for uncertain tax positions

23,572

20,920

Deferred revenue – long-term

21,389

20,446

Other long-term liabilities

5,531

11,689

Total liabilities

$

320,467

$

345,641

Stockholders' equity:

Preferred stock

-

-

Common stock

1,257

1,229

Additional paid-in capital

604,330

532,845

Retained earnings

414,947

404,210

Accumulated other comprehensive income

2,550

844

Total stockholders' equity

$

1,023,084

$

939,128

Total liabilities and stockholders' equity

$

1,343,551

$

1,284,769

 

 

National Instruments

Condensed Consolidated Statements of Income

(in thousands, except per share data)

Three Months Ended

12 Months Ended

Dec. 31,

Dec. 31,

2013

2012

2013

2012

(unaudited)

(unaudited)

Net sales:

Product

$

280,523

$

278,641

$

1,091,186

$

1,054,849

Software maintenance

20,283

21,685

81,372

87,494

GSA accrual

-

-

-

1,349

Total net sales

300,806

300,326

1,172,558

1,143,692

Cost of sales:

Product

74,900

73,465

299,854

274,839

Software maintenance

1,082

1,116

5,389

5,435

Total cost of sales

75,982

74,581

305,243

280,274

Gross profit

224,824

225,745

867,315

863,418

Operating expenses:

Sales and marketing

109,916

111,447

447,800

431,468

Research and development

54,276

58,066

234,796

222,994

General and administrative

21,055

21,649

87,418

85,239

Acquisition-related adjustment

-

6,783

(1,316)

6,783

Total operating expenses

185,247

197,945

768,698

746,484

Operating income

39,577

27,800

98,617

116,934

Other income (expense):

Interest income

184

221

679

716

Net foreign exchange loss

(521)

(107)

(2,578)

(2,246)

Other income (expense), net

(278)

77

450

(567)

Income before income taxes

38,962

27,991

97,168

114,837

Provision for income taxes

7,234

7,278

16,655

24,700

Net income

$

31,728

$

20,713

$

80,513

$

90,137

Basic earnings per share

$

0.25

$

0.17

$

0.65

$

0.74

Diluted earnings per share

$

0.25

$

0.17

$

0.64

$

0.73

Weighted average shares outstanding –

Basic

125,489

122,754

124,558

121,973

Diluted

126,217

123,375

125,571

122,977

Dividends declared per share

$

0.14

$

$       0.14

$

0.56

$

$        0.56

 

National Instruments

Condensed Consolidated Statements of Cash Flows

(in thousands)

12 months ended

Dec. 31,

2013

2012

(unaudited)

Cash flow from operating activities:

Net income

$

80,513

$

90,137

Adjustments to reconcile net income to net cash provided

by operating activities:

Depreciation and amortization

67,974

58,686

Stock-based compensation

28,992

27,796

Tax (benefit) expense from deferred income taxes

(4,353)

1,853

Tax benefit from stock option plans

(2,407)

(2,198)

Changes in operating assets and liabilities:

Accounts receivable

6,820

(26,007)

Inventories

(1,563)

(36,154)

Prepaid expenses and other assets

(1,767)

(7,037)

Accounts payable

(8,604)

23,419

Deferred revenue

6,346

21,050

Taxes and other liabilities

(2,427)

(19,029)

Net cash provided by operating activities

169,524

132,516

Cash flow from investing activities:

Capital expenditures

(47,796)

(89,073)

Capitalization of internally developed software

(14,883)

(11,721)

Additions to other intangibles

(5,182)

(1,890)

Acquisitions, net of cash received

-

(25,481)

Purchases of short-term investments

(70,354)

(188,098)

Sales and maturities of short-term investments

80,371

238,436

Net cash used by investing activities

(57,844)

(77,827)

Cash flow from financing activities:

Proceeds from issuance of common stock

39,319

30,902

Deferred acquisition payments

(15,318)

-

Dividends paid

(69,821)

(68,401)

Tax benefit from stock option plans

2,407

2,198

Net cash used by financing activities

(43,413)

(35,301)

Net change in cash and cash equivalents

68,267

19,388

Cash and cash equivalents at beginning of period

161,996

142,608

Cash and cash equivalents at end of period

$

230,263

$

161,996

 

 

National Instruments

Detail of GAAP Charges Related to Revenue, Stock-Based Compensation,

Amortization of Acquisition Intangibles and Acquisition-Related Transaction Costs

(in thousands)

(unaudited)

Three Months Ended

12 Months Ended

Dec. 31,

Dec. 31,

2013

2012

2013

2012

Revenue

Acquisition-related deferred revenue

$

-

$

-

$

-

$

2,156

GSA accrual

-

-

-

(1,349)

Provision for income taxes

-

-

-

(282)

Total

$

-

$

-

$

-

$

525

Stock-Based Compensation

Cost of sales

$

439

$

430

$

1,658

$

1,719

Sales and marketing

2,882

3,033

11,789

11,612

Research and development

2,728

2,919

11,864

10,909

General and administrative

890

908

3,624

3,556

Provision for income taxes

(3,216)

(2,193)

(9,801)

(7,579)

Total

$

3,723

$

5,097

$

19,134

$

20,217

Amortization of Acquisition Intangibles

Cost of sales

$

2,673

$

2,165

$

10,718

$

8,926

Sales and marketing

482

476

1,988

1,819

Research and development

405

217

2,043

217

Other income, net

185

194

751

765

Provision for income taxes

(1,231)

(964)

(5,081)

(3,717)

Total

2,514

$

2,088

$

10,419

$

8,010

Acquisition-Related Adjustment and Transaction Costs

Cost of sales

$

21

$

(56)

$

28

$

(24)

Sales and marketing

189

177

595

606

Research and development

410

165

1,101

360

General and administrative

80

355

326

393

Acquisition-related adjustment

-

6,783

(1,316)

6,783

Provision for income taxes

(133)

(105)

(545)

(348)

Total

$

567

$

7,319

$

189

$

7,770

 

 

National Instruments

Reconciliation of GAAP to Non-GAAP Measures

(in thousands, except per share data)

(unaudited)

Three Months Ended

12 Months Ended

Dec. 31,

Dec. 31,

2013

2012

2013

2012

Reconciliation of Net Sales to Non-GAAP Net Sales

Net sales, as reported

$

300,806

$

300,326

$

1,172,558

$

1,143,692

Acquisition-related deferred revenue

-

-

-

2,156

GSA accrual

-

-

-

(1,349)

Non-GAAP net sales

$

300,806

$

300,326

$

1,172,558

$

1,144,499

Reconciliation of Gross Profit to Non-GAAP Gross Profit

Gross profit, as reported

$

224,824

$

225,745

$

867,315

$

863,418

Acquisition-related deferred revenue

-

-

-

807

Stock-based compensation

439

430

1,658

1,719

Amortization of acquisition intangibles

2,673

2,165

10,718

8,926

Acquisition-related transaction costs

21

(56)

28

(24)

Non-GAAP gross profit

$

227,957

$

228,284

$

879,719

$

874,846

Non-GAAP gross margin

76%

76%

75%

76%

Reconciliation of Operating Expenses to Non-GAAP Operating Expenses

Operating expenses, as reported

$

185,247

$

197,945

$

768,698

$

746,484

Stock-based compensation

(6,500)

(6,860)

(27,277)

(26,077)

Amortization of acquisition intangibles

(887)

(693)

(4,031)

(2,036)

Acquisition-related adjustment

-

(6,783)

1,316

(6,783)

Acquisition-related transaction costs

(679)

(697)

(2,022)

(1,359)

Non-GAAP operating expenses

$

177,181

$

182,912

$

736,684

$

710,229

Reconciliation of Operating Income to Non-GAAP Operating Income

Operating income, as reported

$

39,577

$

27,800

$

98,617

$

116,934

Acquisition-related deferred revenue

-

-

-

807

Stock-based compensation

6,939

7,290

28,935

27,796

Amortization of acquisition intangibles

3,560

2,858

14,749

10,962

Acquisition-related adjustment

-

6,783

(1,316)

6,783

Acquisition-related transaction costs

700

641

2,050

1,335

Non-GAAP operating income

$

50,776

$

45,372

$

143,035

$

164,617

Non-GAAP operating margin

17%

15%

12%

14%

Reconciliation of Income Before Income Taxes to Non-GAAP Income Before Income Taxes

Income before income taxes, as reported

$

38,962

$

27,991

$

97,168

$

114,837

Acquisition-related deferred revenue

-

-

-

807

Stock-based compensation

6,939

7,290

28,935

27,796

Amortization of acquisition intangibles

3,745

3,052

15,500

11,727

Acquisition-related adjustment

-

6,783

(1,316)

6,783

Acquisition-related transaction costs

700

641

2,050

1,335

Non-GAAP income before income taxes

$

50,346

$

45,757

$

142,337

$

163,285

Reconciliation of Provision for Income Taxes to Non-GAAP Provision for Income Taxes

Provision for income taxes, as reported

$

7,234

$

7,278

$

16,655

$

24,700

Acquisition-related deferred revenue

-

-

-

282

Stock-based compensation

3,216

2,193

9,801

7,579

Amortization of acquisition intangibles

1,231

964

5,081

3,717

Acquisition-related adjustment and transaction costs

133

105

545

348

Non-GAAP provision for income taxes

$

11,814

$

10,540

$

32,082

$

36,626

 

 

National Instruments

Reconciliation of GAAP Net Income, Basic EPS and Diluted EPS to Non-GAAP Net Income, Basic EPS and Diluted EPS

(in thousands, except per share data)

(unaudited)

Three Months Ended

12 Months Ended

Dec. 31,

Dec. 31,

2013

2012

2013

2012

Net income, as reported

$

31,728

$

20,713

$

80,513

$

90,137

Adjustments to reconcile net income to non-GAAP net income:

Acquisition-related deferred revenue, net of tax effect

-

-

-

525

Stock-based compensation, net of tax effect

3,723

5,097

19,134

20,217

Amortization of acquisition intangibles, net of tax effect

2,514

2,088

10,419

8,010

Acquisition-related adjustment

-

6,783

(1,316)

6,783

Acquisition-related transaction costs, net of tax effect

567

536

1,505

987

Non-GAAP net income

$

38,532

$

35,217

$

110,255

$

126,659

Basic EPS, as reported

$

0.25

$

0.17

$

0.65

$

0.74

Adjustment to reconcile basic EPS to non-GAAP basic EPS:

Impact of acquisition-related deferred revenue, net of tax effect

$

-

$

-

$

-

$

-

Impact of stock-based compensation, net of tax effect

0.03

0.04

0.16

0.16

Impact of amortization of acquisition intangibles, net of tax effect

0.02

0.02

0.08

0.07

Acquisition-related adjustment

-

0.06

(0.01)

0.06

Impact of acquisition-related transaction costs, net of tax effect

0.01

-

0.01

0.01

Non-GAAP basic EPS

$

0.31

$

0.29

$

0.89

$

1.04

Diluted EPS, as reported

$

0.25

$

0.17

$

0.64

$

0.73

Adjustment to reconcile diluted EPS to non-GAAP diluted EPS

Impact of acquisition-related deferred revenue, net of tax effect

$

-

$

-

$

-

$

-

Impact of stock-based compensation, net of tax effect

0.03

0.04

0.16

0.16

Impact of amortization of acquisition intangibles, net of tax effect

0.02

0.02

0.08

0.07

Acquisition-related adjustment

-

0.06

(0.01)

0.06

Impact of acquisition-related transaction costs, net of tax effect

0.01

-

0.01

0.01

Non-GAAP diluted EPS

$

0.31

$

0.29

$

0.88

$

1.03

Weighted average shares outstanding –

Basic

125,489

122,754

124,558

121,973

Diluted

126,217

123,375

125,571

122,977

 

 

National Instruments

Reconciliation of Net Income and Diluted EPS to EBITDA and EBITDA Diluted EPS

(unaudited)

Three Months Ended

12 Months Ended

Dec. 31,

Dec. 31,

2013

2012

2013

2012

Net income, as reported

$

31,728

$

20,713

$

80,513

$

90,137

Adjustments to reconcile net income to EBITDA:

Interest income

(184)

(221)

(679)

(716)

Tax expense

7,234

7,278

16,655

24,700

Depreciation and amortization

17,077

17,657

67,974

58,686

EBITDA

$

55,855

$

45,427

$

164,463

$

172,807

Diluted EPS, as reported

$

0.25

$

0.17

$

0.64

$

0.73

Adjustment to reconcile diluted EPS to EBITDA

Interest income

-

-

-

-

Taxes

0.05

0.06

0.13

0.20

Depreciation and amortization

0.14

0.14

0.54

0.48

EBITDA diluted EPS

$

0.44

$

0.37

$

1.31

$

1.41

Weighted average shares outstanding – diluted

126,217

123,375

125,571

122,977

 

Reconciliation of GAAP to Non-GAAP EPS Guidance

(unaudited)

Three Months Ended

March 31, 2014

Low

High

GAAP fully diluted EPS, guidance

$

0.09

$

0.21

Adjustment to reconcile diluted EPS to non-GAAP

diluted EPS:

Impact of stock-based compensation, net of tax effect

0.04

0.04

Impact of amortization of acquisition intangibles, net of tax effect

0.02

0.02

Non-GAAP diluted EPS, guidance

$

0.15

$

0.27

 

SOURCE National Instruments



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