SUNNYVALE, Calif., Oct 24, 2006 /PRNewswire-FirstCall via COMTEX News Network/ -- Trimble (Nasdaq: TRMB) today announced results for its third quarter 2006, ended September 29, 2006. Revenue for the third quarter of 2006 was $234.9 million, up 25 percent from revenue of $188.5 million in the third quarter of 2005.
Operating income for the third quarter of 2006 was $36.3 million, up 10 percent from the third quarter of 2005. For year-over-year comparisons it should be noted that third quarter 2006 operating income reflects a $3.0 million impact from stock-based compensation expense resulting from the adoption of FAS 123R. Additionally, the net impact of transactions with the Caterpillar Trimble Control Technologies (CTCT) joint venture, which were included in non-operating results in 2005, reduced operating results by $4.7 million in the quarter. In addition, amortization of purchased intangibles and purchased in-process research and development expense increased by $2.1 million versus the third quarter of 2005 due to acquisitions. Adjusting for the above factors, operating income in the third quarter of 2006 was up 38 percent compared to the third quarter of 2005.
Net income for the third quarter of 2006 was $25.3 million, up 25 percent when compared to net income of $20.2 million in the third quarter of 2005. Earnings per share for the third quarter of 2006 were $0.43, up approximately 23 percent compared to earnings per share of $0.35 in the third quarter of 2005. Earnings per share in the third quarter of 2006 were negatively impacted by approximately $0.03 due to the adoption of FAS 123R and by approximately $0.03 due to higher amortization of intangibles.
Adjusting for the impact of FAS 123R and acquisition related expenses, non-GAAP net income for the third quarter of 2006 was $29.2 million, up 39 percent compared to non-GAAP net income of $21.0 million in the third quarter of fiscal 2005. Non-GAAP earnings per share for the third quarter of 2006 were $0.50, up approximately 36 percent from non-GAAP earnings per share of $0.37 in the third quarter of 2005. GAAP and non-GAAP earnings per share for the third quarter of 2006 were calculated on a diluted basis using approximately 58.5 million shares.
"Our continued success reflects the combination of a robust strategy combined with effective execution. All segments within Trimble contributed to the third quarter. In particular, the Mobile Solutions segment continues to demonstrate rapid development with accompanying improvements in financial performance," said Steven W. Berglund, Trimble's president and chief executive officer. "We believe Trimble should continue to exhibit solid performance in the fourth quarter of 2006 and into 2007."
Trimble Results by Business Segment
For year-over-year comparisons it should be noted that third quarter 2005 results did not include stock-based compensation expense because FAS 123R was not adopted until the first quarter of 2006.
Engineering and Construction
Revenue for Engineering and Construction (E&C) was $162.4 million for the third quarter of 2006, up approximately 21 percent compared to revenue of $134.2 million in the third quarter of 2005.
Operating margins in E&C were 24 percent in the third quarter of 2006, compared to 26 percent in the third quarter of 2005. Excluding the impact of FAS 123R adoption and the CTCT joint venture transactions discussed above, E&C operating margins were 27 percent.
Growth in E&C was driven by continued strength in end markets and strong sales across the E&C product line.
Field Solutions
Field Solutions (TFS) revenue was $29.2 million in the third quarter of 2006, up 18 percent compared to $24.9 million in revenue in the third quarter of 2005. Growth was driven both by increased agricultural product sales and GIS product sales.
TFS operating margins for the third quarter of 2006 were 19 percent, compared to 16 percent in the third quarter of 2005 due to strong operating leverage.
Mobile Solutions
Third quarter 2006 revenue for Mobile Solutions (TMS), was $16.4 million, up 128 percent from revenue of $7.2 million in the third quarter of 2005. Organic revenue growth was strong, while revenue from acquisitions began to contribute meaningfully to results.
TMS operating margins were 7 percent for the third quarter of 2006, compared to a 10 percent loss in the third quarter of 2005. Margin expansion came from increased operating leverage driven principally by higher subscription revenue.
Advanced Devices
Advanced Devices revenue was $26.8 million, up 21 percent from revenue of $22.2 million in the third quarter of 2005, due primarily to increased sales of embedded devices and Applanix products, and licensing revenue from Nokia.
Advanced Devices operating margins were 15 percent, compared to 13 percent in the third quarter of 2005.
Non-GAAP vs. GAAP Financials
The Company provides non-GAAP financial measures including "non-GAAP net income," "non-GAAP operating income," and "non-GAAP earnings per share" to supplement its consolidated financial statements presented in accordance with GAAP. These non-GAAP financial measures are intended to supplement the user's overall understanding of the Company's current financial performance and its prospects for the future. In many cases, non-GAAP financial measures are used by analysts and investors to evaluate the Company.
The Company excludes the amortization of purchased intangibles, in-process research and development, restructuring charges, and the impact of stock-based compensation in computing non-GAAP measures because the chief executive officer excludes these items when budgeting and evaluating the business. These non-GAAP financial measures are not intended to supersede or replace the Company's GAAP results. Please see the supplemental financial statements, attached to this press release, for a reconciliation of GAAP to non-GAAP results.
Forward Looking Guidance
In the fourth quarter of 2006 the Company expects revenue to grow 18 to 20 percent compared to the fourth quarter of 2005, with revenue between $220 million and $225 million. At a 36 percent tax rate, with approximately 59.0 million shares outstanding, the Company expects fourth quarter 2006 GAAP earnings per share between $0.31 and $0.34.
The above GAAP guidance includes stock-based compensation due to the adoption of FAS 123R. On a post-tax basis, the Company expects stock-based compensation for the fourth quarter of 2006 to be approximately $0.03 per share.
The Company expects non-GAAP earnings per share between $0.40 and $0.43, compared to actual non-GAAP earnings per share of $0.29 in the fourth quarter of 2005. Non-GAAP guidance for the fourth quarter of 2006 uses a 36 percent tax-rate and excludes the amortization of intangibles of $5.6 million in the quarter, as well as the anticipated impact of stock-based compensation expense of $2.7 million.
Investor Conference Call / Webcast Details
The Company will hold a conference call on Oct. 24, 2006 at 1:30 p.m. PDT to review its third quarter 2006 results. It will be broadcast live on the Web at www.trimble.com/investors.shtml. A replay of the call will be available for thirty days beginning at 8:00 p.m. PDT on Oct. 24, 2006. The replay number is (800) 642-1687 (U.S.), or (706) 645-9291 (international), and the pass code is 7257038.
About Trimble
Trimble is a leading innovator of Global Positioning System (GPS) technology. In addition to providing advanced GPS components, Trimble augments GPS with other positioning technologies as well as wireless communications and software to create complete customer solutions. Trimble's worldwide presence and unique capabilities position the Company for growth in emerging applications including surveying, agriculture, machine guidance, asset and fleet management, wireless platforms, and telecommunications infrastructure. Founded in 1978 and headquartered in Sunnyvale, California, Trimble has more than 2,400 employees in more than 18 countries worldwide.
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 the revenue, effective tax rate, stock-based compensation, amortization of purchased intangibles and earnings per share estimates for the fourth fiscal quarter of 2006 and the Company's belief that it will continue to exhibit solid performance in the fourth quarter and through 2007. 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. For example, strong demand for the Company's products may not continue because of a decline in the overall health of the economy and international markets, which may result in reduced capital spending. Fuel and other operating costs could remain high or increase, which could weaken sales into the agricultural market. In addition, the Company's results may be adversely affected if the growth rates and profitability expectations for each of its four segments are not achieved, or its joint ventures and recent acquisitions do not achieve anticipated results, or if the Company is unable to market, manufacture and ship new products. Any failure to achieve predicted results could negatively impact the Company's revenues, gross margin and other financial results. Whether the Company achieves its guidance for the fourth fiscal quarter of 2006 will also depend on a number of other factors, including the 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. Undue reliance should not be placed on any forward-looking statement, contained herein. 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
CONSOLIDATED STATEMENTS OF OPERATIONS
(In thousands, except per share data)
(Unaudited)
Three Months Ended Nine Months Ended
Sep-29, Sep-30, Sep-29, Sep-30,
2006 2005 2006 2005
Revenue $234,851 $188,484 $706,030 $588,092
Cost of sales 118,660 91,192 360,721 290,586
Gross margin 116,191 97,292 345,309 297,506
Gross margin (%) 49.5% 51.6% 48.9% 50.6%
Operating expenses
Research and development 25,180 20,639 77,234 63,332
Sales and marketing 34,902 29,313 103,356 88,388
General and administrative 17,981 13,448 50,016 38,204
Restructuring charges - - - 278
In-process research and
development 50 - 1,000 -
Amortization of purchased
intangible assets 1,747 865 5,639 5,340
Total operating expenses 79,860 64,265 237,245 195,542
Operating income 36,331 33,027 108,064 101,964
Non-operating income (expense),
net
Interest income (expense), net 1,315 (650) 2,347 (1,680)
Foreign currency transaction
gain, net 67 61 995 67
Income (Expense) for
affiliated operations, net 1,047 (1,976) 4,238 (7,514)
Other income, net 228 119 409 287
Total non-operating income
(expense), net 2,657 (2,446) 7,989 (8,840)
Income before taxes 38,988 30,581 116,053 93,124
Income tax provision 13,646 10,345 36,380 31,662
Net income $25,342 $20,236 $79,673 $61,462
Earnings per share:
Basic $0.46 $0.38 $1.45 $1.16
Diluted $0.43 $0.35 $1.38 $1.08
Shares used in calculating
earnings per share:
Basic 55,339 53,592 54,809 53,017
Diluted 58,493 57,492 57,927 56,997
NON-GAAP RECONCILIATION
(Dollars in thousands, except per share data)
(Unaudited)
Three Months Ended Nine Months Ended
Sep-29, Sep-30, Sep-29, Sep-30,
2006 2005 2006 2005
GAAP income before taxes $38,988 $30,581 $116,053 $93,124
Non-GAAP adjustments
Amortization of purchased
intangibles 2,875 *(a) 865 8,955 5,340
In-process research and
development 50 - 1,000 -
Amortization of acquisition-
related inventory step-up - - - 228
Restructuring charges - - - 278
Write off of Debt Issuance
Costs - 918 - 918
Stock-based compensation 2,948 *(b) - 9,437 -
Total Non-GAAP adjustments 5,873 1,783 19,392 6,764
Non-GAAP income before taxes 44,861 32,364 135,445 99,888
Income tax provision 15,701 11,328 47,406 34,961
Non-GAAP net income $29,160 $21,036 $88,039 $64,927
Diluted Non-GAAP earnings per
share $0.50 $0.37 $1.52 $1.14
Shares used in calculating diluted
non-GAAP earnings per share 58,493 57,492 57,927 56,997
*(a) Amortization of purchased intangibles, includes $1,747K recorded in
operating expense and $1,128K recorded in cost of sales for the three
months ended September 29, 2006 and $3,316K recorded in operating expense
and $5,639K recorded in cost of sales for the nine months ended September
29, 2006.
*(b) Stock compensation expense by Segment and GAAP category (in $000's):
Three Months Ended September 29, 2006
('000s)
E&C TFS TMS Advanced Corporate Total
Devices
Cost of sales $79 24 17 37 129 $285
Research &
development $278 71 55 172 43 $620
Sales & marketing $277 59 11 132 183 $663
General &
administrative $271 79 88 117 825 $1,380
Total $906 $233 $171 $458 $1,180 $2,948
Nine Months Ended September 29, 2006
('000s)
E&C TFS TMS Advanced Corporate Total
Devices
Cost of sales $285 73 43 69 410 $881
Research &
development $832 225 161 570 138 $1,926
Sales &
marketing $936 179 76 351 572 $2,115
General &
administrative $947 249 230 438 2,651 $4,515
Total $3,001 $727 $510 $1,428 $3,771 $9,437
EBITDA RECONCILIATION
(Dollars in thousands)
(Unaudited)
Three Months Ended Nine Months Ended
Sep-29, Sep-30, Sep-29, Sep-30,
2006 2005 2006 2005
GAAP net income $25,342 $20,236 $79,673 $61,462
Add back :
Interest (income)
expense, net (1,315) 650 (2,347) 1,680
Income tax provision 13,646 10,345 36,380 31,662
Depreciation expense 3,450 3,000 9,939 7,890
Amortization of
intangibles 2,937 911 9,082 5,459
EBITDA $44,060 $35,142 $132,727 $108,153
CONSOLIDATED BALANCE SHEETS
(In thousands)
(Unaudited)
Sep-29, Dec-30,
2006 2005
Assets
Current assets:
Cash and cash equivalents 136,402 73,853
Accounts receivables, net 173,318 145,100
Other receivables 7,423 6,489
Inventories, net 114,875 107,851
Deferred income taxes 21,834 18,504
Other current assets 10,275 8,580
Total current assets 464,127 360,377
Property and equipment, net 47,389 42,664
Goodwill and other purchased
intangible assets, net 373,155 313,456
Deferred income taxes 3,809 3,580
Other assets 24,556 23,011
Total non-current assets 448,909 382,711
Total assets $913,036 $743,088
Liabilities and Shareholders' Equity
Current liabilities:
Current portion of long-term loan 290 216
Accounts payable 40,529 45,206
Accrued compensation and benefits 39,387 36,083
Accrued liabilities 22,398 16,189
Deferred revenue 24,302 12,588
Accrued warranty expenses 7,737 7,466
Deferred income taxes 5,462 4,087
Income taxes payable 21,977 24,922
Total current liabilities 162,082 146,757
Non-current portion of long-term loan 467 433
Deferred income taxes 14,031 5,602
Other non-current liabilities 27,532 19,041
Total liabilities 204,112 171,833
Shareholders' equity:
Common stock 428,730 384,196
Retained earnings 247,199 167,525
Accumulated other comprehensive
income 32,995 19,534
Total shareholders' equity 708,924 571,255
Total liabilities and
shareholders' equity $913,036 $743,088
CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands)
(Unaudited)
Nine Months Ended
Sep-29, Sep-30,
2006 2005
Cash flow from operating activities:
Net Income $79,673 $61,462
Adjustments to reconcile net
income to net cash provided by
operating activities:
Depreciation expense 9,939 7,890
Amortization expense 9,082 5,459
Provision for doubtful
accounts 181 (663)
Amortization of debt
issuance cost 135 1,225
Deferred income taxes (355) 8,410
Stock-based compensation 9,437 -
In-process research and
development 1,000 -
Excess tax benefit for
stock-based compensation (8,088) -
Other 131 (670)
Add decrease (increase) in
assets:
Accounts receivables, net (19,829) (22,673)
Other receivables (623) 1,907
Inventories (3,442) (4,926)
Other current and non-
current assets (7,127) (4,450)
Add increase (decrease) in
liabilities:
Accounts payable (6,250) (4,374)
Accrued compensation and
benefits 2,188 825
Accrued liabilities 2,734 5,523
Deferred gain on joint
venture - 124
Deferred revenue 9,499 1,677
Income taxes payable 7,482 12,850
Net cash provided by operating
activities 85,767 69,596
Cash flows from investing
activities:
Acquisitions, net of cash
acquired (43,167) (21,589)
Acquisition of property and
equipment (13,966) (14,400)
Dividends received - 515
Cost of capitalized patents (16) (94)
Net cash used in investing
activities (57,149) (35,568)
Cash flow from financing activities:
Issuance of common stock 24,134 20,881
Excess tax benefit for stock-
based compensation 8,088 -
Proceeds from long-term debt
and revolving credit lines - 6,000
Payments on long-term debt and
revolving credit lines - (44,250)
Other (911) 390
Net cash provided (used) in
financing activities 31,311 (16,979)
Effect of exchange rate changes on
cash and cash equivalents 2,620 (1,628)
Net increase (decrease) in cash and
cash equivalents 62,549 15,421
Cash and cash equivalents -
beginning of period 73,853 71,872
Cash and cash equivalents - end of
period $136,402 $87,293
Q1'05 Q2'05 Q3'05 Q4'05 FY'05
Actual Actual Actual Actual Actual
Income Statement Metrics
Total Revenue $195,383 $204,225 $188,484 $186,821 $774,913
Engineering &
Construction 120,198 141,096 134,173 128,994 524,461
Trimble Field
Solutions 45,425 32,187 24,882 25,349 127,843
Advanced Devices 22,359 24,505 22,215 22,049 91,128
Trimble Mobile
Solutions 7,401 6,437 7,214 10,429 31,481
Gross Margin 50.1% 50.1% 51.6% 49.4% 50.3%
Total Segment Income $39,663 $47,916 $40,492 $32,589 $160,660
Engineering &
Construction 21,490 37,173 34,360 24,970 117,993
Trimble Field
Solutions 15,577 8,044 3,962 4,944 32,527
Advanced Devices 3,232 4,578 2,916 2,486 13,212
Trimble Mobile
Solutions (636) (1,879) (746) 189 (3,072)
Corporate and Other
Charges $(9,463) $(9,179) $(7,465) $(9,609) (35,716)
Non-operating income
(expense) $(12,761) $(14,950) $(12,791) $413 (40,089)
and income taxes
Net Income $17,439 $23,787 $20,236 $23,393 $84,855
GAAP operating margin% 15.5% 19.0% 17.5% 12.3% 16.1%
Non-GAAP operating
margin% 16.9% 20.0% 18.5% 13.7% 17.2%
GAAP EPS $0.31 $0.42 $0.35 $0.41 $1.49
Non-GAAP EPS $0.34 $0.44 $0.37 $0.29 $1.44
Balance Sheet Metrics
Cash & Cash Equivalents $50,193 $56,860 $87,293 $73,853
Accounts Receivables,
Net $154,540 $150,590 $146,792 $145,100
Inventories, Net $91,309 $89,853 $93,940 $107,851
Total Debt $28,836 $661 $659 $649
Short Term Debt 12,500 - - -
Long Term Debt 16,336 661 659 649
Equity $490,188 $513,817 $543,394 $571,255
Cashflow Metrics
Cash Flow from (used
in) Operations $(1,192) $37,762 $33,541 $22,769 $92,880
Working Capital $197,372 $208,410 $232,985 $213,620
Capital Expenditures $3,164 $4,570 $6,666 $9,036 $23,436
EBITDA $31,885 $41,126 $35,142 $35,822 $143,975
Amortization of
Intangibles 2,339 2,209 911 1,561 $7,020
Depreciation 2,512 2,378 3,000 2,781 $10,671
Financial Ratios
Days Sales Outstanding 62 60 60 66
Inventory Turns
(trailing 12 months) 4.3 4.1 4.0 3.9
Current ratio 2.5 2.7 2.8 2.5
Debt to Equity 0.1 - - -
Other
Headcount 2,231 2,308 2,347 2,462
(a) Impact of moving joint venture transactions from non-operating to
operating income - reduced gross margin by 2.4 points and operating
income by 2.0 points in Q3'06. In addition, operating margins were
impacted by 1.3 points due to stock-based compensation expense.
(For details, please refer to the Non-GAAP Reconciliation).
(b) Impact of moving joint venture transactions from non-operating to
operating income - reduced operating income by 2.0 points in Q3'06.
Q1'06 Q2'06 Q3'06
Actual Actual Actual
Income Statement Metrics
Total Revenue $225,854 $245,326 $234,851
Engineering & Construction 146,734 168,041 162,370
Trimble Field Solutions 43,043 36,320 29,236
Advanced Devices 23,470 26,114 26,819
Trimble Mobile Solutions 12,607 14,851 16,426
Gross Margin 47.6% 49.6% 49.5% (a)
Total Segment Income $42,833 $52,719 $49,209
Engineering & Construction 26,378 38,803 38,337
Trimble Field Solutions 13,909 11,299 5,634
Advanced Devices 2,323 2,243 4,113
Trimble Mobile Solutions 223 374 1,125
Corporate and Other Charges $(9,768) $(14,049) $(12,878)
Non-operating income (expense) $(7,237) $(10,167) $(10,989)
and income taxes
Net Income $25,828 $28,503 $25,342
GAAP operating margin% 14.6% 15.8% 15.5% (a)
Non-GAAP operating margin% 17.1% 19.0% 18.0% (b)
GAAP EPS $0.45 $0.49 $0.43
Non-GAAP EPS $0.52 $0.59 $0.50
Balance Sheet Metrics
Cash & Cash Equivalents $97,648 $107,726 $136,402
Accounts Receivables, Net $171,392 $171,942 $173,318
Inventories, Net $101,552 $113,925 $114,875
Total Debt $603 $890 $757
Short Term Debt 166 431 290
Long Term Debt 437 459 467
Equity $611,860 $664,739 $708,924
Cashflow Metrics
Cash Flow from (used in) Operations $18,298 $41,071 $26,398
Working Capital $249,302 $257,808 $302,045
Capital Expenditures $4,972 $5,971 $3,023
EBITDA $40,882 $47,748 $44,060
Amortization of Intangibles 2,380 3,766 2,937
Depreciation 3,104 3,386 3,450
Financial Ratios
Days Sales Outstanding 57 55 59
Inventory Turns (trailing 12
months) 4.0 4.0 4.0
Current ratio 2.6 2.5 2.9
Debt to Equity - - -
Other
Headcount 2,543 2,627 2,665
(a) Impact of moving joint venture transactions from non-operating to
operating income -- reduced gross margin by 2.4 points and operating
income by 2.0 points in Q3'06. In addition, operating margins were
impacted by 1.3 points due to stock-based compensation expense.
(For details, please refer to the Non-GAAP Reconciliation).
(b) Impact of moving joint venture transactions from non-operating to
operating income -- reduced operating income by 2.0 points in Q3'06.
SOURCE Trimble
Willa McManmon of Trimble, +1-408-481-7838
http://www.trimble.com
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