Trimble Reports First Quarter 2013 Results

SUNNYVALE, Calif., April 30, 2013 /PRNewswire/ -- Trimble (NASDAQ:   TRMB) today announced first quarter 2013 revenue of $556.1 million, up 11 percent as compared to the first quarter of 2012.

GAAP operating income for the first quarter of 2013 was $56.5 million, down 6 percent as compared to the first quarter of 2012. GAAP operating margin in the first quarter of 2013 was 10.2 percent of revenue as compared to 11.9 percent of revenue in the first quarter of 2012.

GAAP net income for the first quarter of 2013 was $49.8 million, down 2 percent as compared to the first quarter of 2012. Diluted earnings per share in the first quarter of 2013 were $0.19 as compared to diluted earnings per share of $0.20 in the first quarter of 2012. The tax rate was 10 percent for the first quarter of 2013 as compared to 17 percent in the first quarter of 2012. It should be noted that on March 21, 2013 the Company completed a 2:1 stock split.

First quarter 2013 non-GAAP operating income of $110.3 million was up 8 percent as compared to the first quarter of 2012. Non-GAAP operating margin was 19.8 percent of revenue as compared to 20.3 percent of revenue in the first quarter of 2012. 

Non-GAAP net income of $97.9 million for the first quarter of 2013 was up 12 percent as compared to the first quarter of 2012. Diluted non-GAAP earnings per share in the first quarter of 2013 were $0.38, as compared to diluted non-GAAP earnings per share of $0.34 in the first quarter of 2012. 

First quarter 2013 non-GAAP results are adjusted for the following:

  • Restructuring expense of $1.7 million as compared to $526 thousand in the first quarter of 2012;
  • Amortization of intangibles of $39.3 million as compared to $28.8 million in the first quarter of 2012;
  • Stock-based compensation expense of $8.8 million as compared to $7.8 million in the first quarter of 2012;
  • Acquisition-related inventory step-up charge of $603 thousand as compared to $8 thousand in the first quarter of 2012;
  • Acquisition and divestiture costs of $3.0 million as compared to $5.2 million in the first quarter of 2012;
  • No gain or loss on foreign currency exchange in the first quarter of 2013 as compared to $1.6 million loss on foreign currency exchange from a hedge associated with an acquisition in the first quarter of 2012;

"Our revenue growth in the quarter did not meet our expectation. While our original expectation anticipated conservative buying behavior by our users as a result of economic uncertainties, we were further impacted by the direct and indirect effects of the U.S. sequester and severe weather conditions in Europe and North America which delayed both the agricultural and construction seasons," said Steven W. Berglund, Trimble's president and chief executive officer. "In spite of the pressure on revenue, we maintained non-GAAP operating margins close to twenty percent and increased our non-GAAP gross margin compared to the first quarter of 2012. We do not believe the fundamentals of our markets have changed and our long term expectations remain unchanged.  While we are cautious about second quarter prospects, we currently anticipate improved organic growth in the second half of 2013."

Results by Segment

Segment operating income is revenue less cost of sales and operating expenses, excluding general corporate expenses, restructuring expenses, amortization of intangibles, amortization of acquisition-related inventory step-up charges and acquisition costs.  Non-GAAP segment operating income also excludes the impact of stock-based compensation expense.

Engineering and Construction (E&C)

First quarter 2013 E&C revenue was $266.9 million, up 7 percent as compared to the first quarter of 2012.  Growth in E&C revenue came primarily from global sales of building construction products and heavy and highway products in the U.S., offset by softer sales in Australia and Europe.

First quarter operating income in E&C was $43.0 million, or 16.1 percent of revenue as compared to $40.1 million, or 16.1 percent of revenue in the first quarter of 2012. Non-GAAP operating income was $45.8 million, or 17.2 percent of revenue, as compared to $ 42.8 million, or 17.2 percent of revenue, in the first quarter of 2012.

Field Solutions

First quarter 2013 Field Solutions revenue was $147.5 million, flat as compared to the first quarter of 2012. There was moderate growth in agricultural product sales, offset by a decline in sales of Geographical Information System (GIS) products.

First quarter 2013 Field Solutions operating income was $59.5 million, or 40.4 percent of revenue, as compared to $62.4 million, or 42.3 percent of revenue, in the first quarter of 2012. Non-GAAP operating income was $60.2 million, or 40.8 percent of revenue, as compared to $63.0 million, or 42.7 percent of revenue, in the first quarter of 2012. Non-GAAP operating margin was down primarily due to product mix in GIS sales. 

Mobile Solutions

First quarter 2013 Mobile Solutions revenue was $110.2 million, up 41 percent as compared to the first quarter of 2012 due primarily to higher service and subscription revenue and the impact of acquisitions.

First quarter 2013 Mobile Solutions operating income was $11.6 million, or 10.5 percent of revenue, as compared to $7.4 million, or 9.4 percent of revenue, in the first quarter of 2012. In the first quarter of 2013 non-GAAP operating income was $12.5 million, or 11.3 percent of revenue, as compared to $8.2 million, or 10.4 percent of revenue, in the first quarter of 2012. The increase in non-GAAP operating margins was primarily due to leverage from increased revenue and product mix, including higher subscription revenue.

Advanced Devices

First quarter 2013 Advanced Devices revenue was $31.6 million, up 15 percent as compared to the first quarter of 2012, primarily due to stronger sales of embedded devices and timing devices.

Operating income in Advanced Devices for the first quarter of 2013 was $6.5 million, or 20.5 percent of revenue, as compared to $3.3 million, or 12.1 percent of revenue, in the first quarter of 2012. Non-GAAP operating income in Advanced Devices was $7.3 million, or 23.2 percent of revenue, as compared to $4.0 million, or 14.4 percent of revenue, in the first quarter of 2012. The improvement in non-GAAP operating margin was due to leverage on higher revenue and product mix. 

Use of Non-GAAP Financial Information

To help our investors understand our past financial performance and our future results, as well as our performance relative to competitors, we supplement the financial results that we provide in accordance with generally accepted accounting principles, or GAAP, with non-GAAP financial measures. These non-GAAP measures can be used to evaluate our historical and prospective financial performance, as well as our performance relative to competitors. Our management regularly uses our supplemental non-GAAP financial measures internally to understand, manage and evaluate our business, and to make operating decisions. These non-GAAP measures are among the primary factors management uses in planning for and forecasting future periods. We believe that these non-GAAP financial measures reflect an additional way of viewing aspects of our operations that, when viewed with our GAAP results, provide a more complete understanding of factors and trends affecting our business. Further, we believe some of our investors track our "core operating performance" as a means of evaluating our performance in the ordinary, ongoing, and customary course of our operations.  Core operating performance excludes items that are non-cash, not expected to recur or not reflective of ongoing financial results. Management also believes that looking at our core operating performance provides a supplemental way to provide consistency in period to period comparisons. 

The specific non-GAAP measures which we use along with a reconciliation to the nearest comparable GAAP measures and the explanation for why these non-GAAP measures provide useful information to investors regarding our financial condition and results of operations and why management chose to exclude selected items can be found at the end of this release. The method we use to produce non-GAAP results is not computed according to GAAP and may differ from the methods used by other companies. Our non-GAAP results are not meant to be considered in isolation or as a substitute for comparable GAAP measures and should be read only in conjunction with our consolidated financial statements prepared in accordance with GAAP.  Investors are encouraged to review the reconciliation of our non-GAAP financial measures to the comparable GAAP results, which is attached to this earnings release.  Additional financial information about our use of non-GAAP results can be found on the investor relations page of our Web site at http://investor.trimble.com.

Forward Looking Guidance

For the second quarter of 2013 Trimble expects revenue between $570 million and $580 million with GAAP earnings per share of $0.18 to $0.20 and non-GAAP earnings per share of $0.36 to $0.38.  Non-GAAP guidance excludes the amortization of intangibles of $39.1 million related to previous acquisitions; anticipated acquisition costs of $4.0 million and the anticipated impact of stock-based compensation expense of $9.2 million. Both GAAP and non-GAAP earnings per share assume a 16 to 18 percent tax rate and 260 million shares outstanding.  

Investor Conference Call / Webcast Details

Trimble will hold a conference call on April 30, 2013 at 1:30 p.m. PT to review its first quarter 2013 results. It will be broadcast live on the Web at http://investor.trimble.com.  Investors without Internet access may dial into the call at (800) 528-9198 (U.S.) or (702) 928-6633 (international).  A replay of the call will be available for seven days at (855) 859-2056 (U.S.) or (404) 537-3406 (international). The pass code for all calls is 48324307.  The replay will also be available on the Web at the address above.

About Trimble

Trimble applies technology to make field and mobile workers in businesses and government significantly more productive. Solutions are focused on applications requiring position or location—including surveying, construction, agriculture, fleet and asset management, public safety and mapping. In addition to utilizing positioning technologies, such as GPS, lasers and optics, Trimble solutions may include software content specific to the needs of the user. Wireless technologies are utilized to deliver the solution to the user and to ensure a tight coupling of the field and the back office. Founded in 1978, Trimble is headquartered in Sunnyvale, Calif.

For more information visit: www.trimble.com.

Safe Harbor 

Certain statements made in this press release are forward-looking statements within the meaning of Section 21E of the Securities Exchange Act of 1934, as amended, and are made pursuant to the safe harbor provisions of the Securities Litigation Reform Act of 1995. These statements include expectations for future financial market and economic conditions, the impact of acquisitions, and the ability to deliver revenue, earnings per share and other financial projections that Trimble has guided for the second quarter of 2013, the expected tax rate, the anticipated impact of stock-based compensation expense, the amortization of intangibles related to previous acquisitions and the anticipated number of shares outstanding and interest costs. These forward-looking statements are subject to change, and actual results may materially differ from those set forth in this press release due to certain risks and uncertainties. The Company's results may be adversely affected if the Company is unable to market, manufacture and ship new products or integrate new acquisitions. The Company's results would also be negatively impacted by further weakening in the macro environment in Europe and China or a softening of the market in North or South America, including government spending cuts. Any failure to achieve predicted results could negatively impact the Company's revenues, cash flow from operations, and other financial results. The Company's financial results will also depend on a number of other factors and risks detailed from time to time in reports filed with the SEC, including its quarterly reports on Form 10-Q and its annual report on Form 10- K, such as changes in economic conditions, critical part supply chain shortages, possible write-offs of goodwill, and regulatory proceedings affecting GPS. Undue reliance should not be placed on any forward-looking statement contained herein, especially in light of greater uncertainty than normal in the economy in general. These statements reflect the Company's position as of the date of this release. The Company expressly disclaims any undertaking to release publicly any updates or revisions to any statements to reflect any change in the Company's expectations or any change of events, conditions, or circumstances on which any such statement is based.

FTRMB

 

CONDENSED CONSOLIDATED STATEMENTS OF INCOME

(In thousands, except per share data)

(Unaudited)






First Quarter of






2013


2012





Revenues:




        Product

$412,787


$398,538

        Service

81,596


57,430

        Subscription

61,728


46,299

Total revenues

556,111


502,267





Cost of sales:




        Product

198,701


193,044

        Service

30,843


22,521

        Subscription

19,972


14,431

        Amortization of purchased intangible assets

19,681


13,121

Total cost of sales

269,197


243,117





Gross margin

286,914


259,150

Gross margin (%)

51.6%


51.6%





Operating expenses




    Research and development

73,608


60,235

    Sales and marketing

83,623


76,024

    General and administrative

51,970


46,886

    Restructuring

1,605


481

    Amortization of purchased intangible assets

19,651


15,676

       Total operating expenses

230,457


199,302









Operating income 

56,457


59,848





Non-operating income (expense), net




    Interest expense, net

(5,071)


(3,863)

    Foreign currency transaction loss, net

(1,569)


(2,213)

    Income from equity method investments, net

4,257


6,192

    Other income, net

295


363

       Total non-operating income (expense), net

(2,088)


479





Income before taxes

54,369


60,327





Income tax provision

5,437


10,255

Net income

48,932


50,072

Less: Net loss attributable to noncontrolling interests 

(876)


(746)

Net income attributable to Trimble Navigation Ltd.

$  49,808


$  50,818





Earnings per share attributable to Trimble Navigation Ltd.




     Basic

$     0.20


$     0.20

     Diluted

$     0.19


$     0.20





Shares used in calculating earnings per share:




    Basic

255,181


248,740

    Diluted

260,299


255,520

 

CONDENSED CONSOLIDATED BALANCE SHEETS

(In thousands)

(Unaudited)











First Quarter


Fiscal Year End

As of


2013


2012

Assets










Current assets:





   Cash and cash equivalents


$    143,552


$         157,771

   Accounts receivables, net


388,850


323,477

   Other receivables


14,168


17,327

   Inventories, net


260,596


240,529

   Deferred income taxes


43,198


43,473

   Other current assets


39,586


33,396

      Total current assets


889,950


815,973






Property and equipment, net


105,603


96,890

Goodwill


1,837,937


1,815,699

Other purchased intangible assets, net


636,696


644,419

Other non-current assets


95,535


96,123






      Total assets


$  3,565,721


$      3,469,104






Liabilities 










Current liabilities:





   Current portion of long-term debt


$      91,117


$           38,092

   Accounts payable


120,838


124,532

   Accrued compensation and benefits


75,621


86,064

   Deferred revenue


187,551


138,920

   Accrued warranty expense


17,476


17,066

   Other accrued liabilities


63,851


63,996

      Total current liabilities


556,454


468,670






Non-current portion of long-term debt


829,322


873,066

Non-current deferred revenue


10,927


7,262

Deferred income taxes


136,308


148,260

Other non-current liabilities


66,842


58,322

      Total liabilities


1,599,853


1,555,580






Commitments and contingencies










Equity










Shareholders' equity:





   Common stock


1,036,779


1,006,818

   Retained earnings


916,158


868,026

   Accumulated other comprehensive income (loss)


(3,144)


22,611

Total Trimble Navigation Ltd. shareholders' equity


1,949,793


1,897,455

Noncontrolling interests 


16,075


16,069

      Total equity


1,965,868


1,913,524






      Total liabilities and equity


$  3,565,721


$      3,469,104

 

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS 

(In thousands)

(Unaudited)



First Quarter of



2013


2012






Cash flow from operating activities:





    Net Income


$         48,932


$          50,072






    Adjustments to reconcile net income to net cash provided by





       operating activities:





         Depreciation expense


6,193


5,562

         Amortization expense


39,332


28,797

         Provision for doubtful accounts


65


587

         Deferred income taxes


(11,809)


146

         Stock-based compensation


8,818


7,789

         Income from equity method investments


(4,257)


(6,192)

         Excess tax benefit for stock-based compensation


(4,784)


(7,580)

         Provision for excess and obsolete inventories


584


3,111

         Other non-cash items


104


(977)






    Add decrease (increase) in assets:





         Accounts receivables


(61,956)


(46,425)

         Other receivables


5,027


2,211

         Inventories


(20,218)


5,928

         Other current and non-current assets


(10,867)


(7,972)






    Add increase (decrease) in liabilities:





         Accounts payable


(6,081)


4,205

         Accrued compensation and benefits


(12,037)


(1,895)

         Deferred revenue


51,964


29,569

         Accrued warranty expense


439


(728)

         Other current and non-current liabilities


7,939


1,450

 Net cash provided by operating activities 


37,388


67,658






 Cash flow from investing activities: 





      Acquisitions of businesses, net of cash acquired 


(65,192)


(101,392)

      Acquisitions of property and equipment 


(14,927)


(7,644)

      Acquisitions of intangible assets 


-


(755)

      Sales of equity method investments 


2,430


-

      Dividends received 


1,284


-

      Other 


-


251

 Net cash used in investing activities 


(76,405)


(109,540)






 Cash flow from financing activities: 





      Issuance of common stock, net 


14,437


26,682

      Excess tax benefit for stock-based compensation 


4,784


7,580

      Proceeds from long-term debt and revolving credit lines 


113,000


181,500

      Payments on short-term and long-term debt  


(103,981)


(122,850)

 Net cash provided by financing activities 


28,240


92,912






 Effect of exchange rate changes on cash and cash equivalents 


(3,442)


3,495






 Net increase (decrease) in cash and cash equivalents 


(14,219)


54,525

 Cash and cash equivalents - beginning of period 


157,771


154,621






 Cash and cash equivalents - end of period 


$        143,552


$         209,146

 

REPORTING SEGMENTS

(Dollars in thousands)

(Unaudited)


























Reporting Segments




Engineering











and


Field


Mobile


Advanced





Construction


Solutions


Solutions


Devices













FIRST QUARTER OF FISCAL 2013 :










Revenues

$    266,871


$  147,481


$  110,164


$    31,595














Operating income before corporate allocations:

$      42,973


$    59,526


$    11,573


$     6,485




Operating margin (% of segment external net revenues)

16.1%


40.4%


10.5%


20.5%













FIRST QUARTER OF FISCAL 2012 :










Revenues

$    248,885


$  147,499


$    78,383


$    27,500














Operating income before corporate allocations:

$      40,077


$    62,361


$     7,358


$     3,339




Operating margin (% of segment external net revenues)

16.1%


42.3%


9.4%


12.1%