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Trimble Third Quarter Revenue of $504.8 Million Up 21 Percent and Non-GAAP Earnings Per Share of $0.68 Up 31 Percent Versus Prior Year

SUNNYVALE, Calif., Nov. 1, 2012 /PRNewswire/ -- Trimble (NASDAQ: TRMB) today announced third quarter revenue of $504.8 million, up 21 percent as compared to the third quarter of 2011. 

GAAP operating income for the third quarter of 2012 was $63.5 million, up 96 percent as compared to the third quarter of 2011.  GAAP operating margin in the third quarter of 2012 was 12.6 percent of revenue as compared to 7.8 percent of revenue in the third quarter of 2011.

GAAP net income for the third quarter of 2012 was $53.4 million, up 91 percent as compared to the third quarter of 2011.  Diluted earnings per share in the third quarter of 2012 were $0.42 as compared to diluted earnings per share of $0.22 in the third quarter of 2011.  The tax rate for both GAAP and non-GAAP results was 19 percent for the third quarter of 2012 as compared to 9 percent in the third quarter of 2011, primarily due to the geographical mix of pre-tax income and the absence of research and development tax credits.

Third quarter 2012 non-GAAP operating income of $105.3 million was up 44 percent as compared to the third quarter of 2011.  Non-GAAP operating margin was 20.9 percent of revenue as compared to 17.5 percent of revenue in the third quarter of 2011. 

Non-GAAP net income of $86.8 million for the third quarter of 2012 was up 32 percent as compared to the third quarter of 2011.  Diluted non-GAAP earnings per share in the third quarter of 2012 were $0.68 as compared to diluted non-GAAP earnings per share of $0.52 in the third quarter of 2011.

Third quarter 2012 non-GAAP results are adjusted for the following:

  • Restructuring expense of $361 thousand as compared to $694 thousand in the third quarter of 2011;
  • Amortization of intangibles of $31.4 million as compared to $24.1 million in the third quarter of 2011;
  • Stock-based compensation expense of $7.7 million as compared to $7.1 million in the third quarter of 2011;
  • Acquisition-related inventory step-up charge of $547 thousand as compared to $1.4 million in the third quarter of 2011;
  • Acquisition-related costs of $1.5 million as compared to $6.1 million in the third quarter of 2011;
  • In the third quarter of 2012 there was no gain or loss on foreign currency exchange from a hedge associated with an acquisition as compared to a loss of $2.2 million in the third quarter of 2011.

"Third quarter results demonstrated both significant year-to-year organic revenue growth as well as non-GAAP operating margin expansion.   It is particularly encouraging that all reporting segments participated in this progression," said Steven W. Berglund, Trimble's president and chief executive officer.  "While current macro-economic uncertainties require us to remain cautious about near-term prospects, the quarter's results reinforce our expectation of sustainable market and financial success."

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)

Third quarter 2012 E&C revenue was $287.2 million, up 19 percent as compared to the third quarter of 2011.  Growth in E&C came primarily from the sales of heavy and highway and vertical construction products, and acquisitions, partially offset by the impact of foreign exchange.  Geographically, there was growth across all major regions.

Third quarter operating income in E&C was $68.5 million, or 23.8 percent of revenue as compared to $42.6 million, or 1 7.7 percent of revenue in the third quarter of 2011.  Non-GAAP operating income was $71.1 million, or 24.8 percent of revenue, as compared to $45.2 million, or 18.8 percent of revenue, in the third quarter of 2011.  The improvement in operating income was due to higher gross margins as a result of product mix and improved operating expense leverage.

Field Solutions

Third quarter 2012 Field Solutions revenue was $103.0 million, up 13 percent as compared to the third quarter of 2011 due primarily to increased sales of agricultural products.

Third quarter 2012 Field Solutions operating income was $36.0 million, or 35.0 percent of revenue, as compared to $31.0 million, or 34.1 percent of revenue, in the third quarter of 2011.  Non-GAAP operating income was $36.6 million, or 35.6 percent of revenue, as compared to $31.6 million, or 34.7 percent of revenue, in the third quarter of 2011 due primarily to improvements in agricultural product margins. 

Mobile Solutions

Third quarter 2012 Mobile Solutions revenue was $83.8 million, up 44 percent as compared to the third quarter of 2011 due to higher subscription revenue and the impact of acquisitions.

Third quarter 2012 Mobile Solutions operating income was $8.2 million, or 9.8 percent of revenue, as compared to $2.5 million, or 4.3 percent of revenue, in the third quarter of 2011.  Non-GAAP operating income was $8.9 million, or 10.6 percent of revenue, as compared to $3.2 million, or 5.5 percent of revenue, in the third quarter of 2011.  The improvement in non-GAAP operating margin was due primarily to growth in subscription revenue and the impact of acquisitions.

Advanced Devices

Third quarter 2012 Advanced Devices revenue was $30.7 million, up 13 percent as compared to the third quarter of 2011, primarily due to strong sales of timing devices.

Operating income in Advanced Devices for the third quarter of 2012 was $5.7 million, or 18.5 percent of revenue, as compared to $4.0 million, or 14.6 percent of revenue, in the third quarter of 2011.  Non-GAAP operating income in Advanced Devices was $6.2 million, or 20.3 percent of revenue, as compared to $4.6 million, or 17.0 percent of revenue, in the third quarter of 2011.  The improvement in non-GAAP operating margin was due to 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 fourth quarter of 2012 Trimble expects revenue between $503 million and $508 million with GAAP earnings per share of $0.24 to $0.26 and non-GAAP earnings per share of $0.54 to $0.56.  Non-GAAP guidance excludes the amortization of intangibles of $31.6 million related to previous acquisitions; anticipated acquisition costs of $8.0 million; and the anticipated impact of stock-based compensation expense of $8.1 million. Both GAAP and non-GAAP earnings per share assume a 15 to 17 percent tax rate and 129.8 million shares outstanding.  The above guidance includes the impact of the TMW System acquisition which closed Oct. 2, 2012.  TMW System is expected to be slightly dilutive to Trimble's fourth quarter non-GAAP earnings per share by $0.01 to $0.03 per share, due to the impact of a one-time, non-cash write-down on a portion of TMW System's deferred revenue. Trimble expects the acquisition to be accretive to its 2013 non-GAAP earnings per share by $0.12 to $0.14 per share.  

Investor Conference Call / Webcast Details

Trimble will hold a conference call on Nov. 1, 2012 at 1:30 p.m. PT to review its third quarter 2012 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 (706) 902-3611 (international).  A replay of the call will be available for seven days at (855) 859-2056 (U.S.) or (404) 537-3406 (international) and the pass code is 37450164.  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 fourth quarter and full year 2012, the impact of the TMW Systems acquisition in 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 obtain new customers for its Mobile Solutions segment 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.  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)












Third Quarter of


First Three Quarters of












2012


2011


2012


2011










Revenues:









        Product


$ 386,902


$ 333,262


$1,187,638


$1,004,378

        Service


64,237


44,517


185,262


112,288

        Subscription


53,624


39,654


151,690


92,229

Total revenues


504,763


417,433


1,524,590


1,208,895










Cost of sales:









        Product


185,102


163,774


577,281


494,899

        Service


23,615


19,823


67,591


50,525

        Subscription


17,451


11,956


47,860


27,730

        Amortization of purchased intangible assets


15,728


10,321


42,145


23,918

Total cost of sales


241,896


205,874


734,877


597,072










Gross margin


262,867


211,559


789,713


611,823

Gross margin (%)


52.1%


50.7%


51.8%


50.6%










Operating expenses









    Research and development


61,181

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