Back to top

Image: Bigstock

Trimble (TRMB) Q2 Earnings Beat Estimates, Revenues Fall Y/Y

Read MoreHide Full Article

Trimble Inc. (TRMB - Free Report) reported second-quarter 2020 non-GAAP earnings of 52 cents per share, beating the Zacks Consensus Estimate by 40.5%. Notably, the bottom line improved 6.1% sequentially but declined 1.9% year over year.

Per management, non-GAAP revenues decreased 14.1% year over year and 7.4% on a sequential basis to $735.2 million.

Further, the company’s GAAP revenues were $733.6 million, which surpassed the Zacks Consensus Estimate of $694.6 million. However, the figure was down 14.2% from the year-ago quarter and 7.4% from the prior quarter.

The top line was impacted by weakness in the overall demand environment on account of the coronavirus pandemic. Further, sluggishness in all the segments remained a major headwind.

Product revenues (56.2% of GAAP revenues) totalled $412.4 million, down 20.8% on a year-over-year basis. Services revenues (21.3% of revenues) were $156.6 million, down10.3% year over year. Subscription revenues (22.5% of revenues) improved 3.5% from the year-ago quarter to $164.6million.

Trimble continues to anticipate persistent headwinds in the global economy owing to coronavirus pandemic. Consequently, the company has refrained from providing guidance for the third quarter and the balance of 2020.

Nevertheless, the company’s cost control strategies are expected to drive profitability in the near term.

Coming to price performance, Trimble has gained 18.5% on a year-to-date basis against the industry’s decline of 4.8%.

Segments in Detail

Buildings and Infrastructure: This segment generated sales of $295.3 million, accounting for 40.2% of the company’s non-GAAP revenues. The figure also decreased 13.1% on a year-over-year basis. This was due to slowdown in hardware, perpetual software license and professional services revenues. Nevertheless, the company witnessed positive contributions from Viewpoint, e-Builder and SketchUp buyouts.

Geospatial: Sales from this segment were $145.2 million, accounting for 19.7% of total revenues. The figure decreased 11.6%compared with the year-ago quarter.

Resources and Utilities: The segment generated sales of $143.8 million, accounting for 19.6% of total revenues. The figure decreased5.8% on a year-over-year basis due to slowdown in agriculture revenues in the reported quarter. Nevertheless, the company experienced growth in its utilities business during the reported quarter, which was a positive.

Transportation: Sales from this segment went down 24.1% from the year-ago quarter to $150.9 million. Notably, the figure made up20.5% of total revenues. Sluggishness in the transportation sector was a concern.

Trimble Inc. Price, Consensus and EPS Surprise

Trimble Inc. Price, Consensus and EPS Surprise

Trimble Inc. price-consensus-eps-surprise-chart | Trimble Inc. Quote

Operating Details

In the second quarter, non-GAAP gross margin came in at 58.9%, expanding 200 basis points (bps) year over year.

Adjusted operating expenses accounted for 35.8% of non-GAAP revenues, contracting 60 bps compared with the year-ago quarter.

Consequently, non-GAAP operating margin came in at 23.1%, which expanded 260 bps year over year.

Balance Sheet

At the end of second-quarter 2020, cash and cash equivalents were $196.4 million, down from $216.8 million at the end of first-quarter 2020. Inventories were $338.6 million, up from $327.2 million in the previous quarter.

Long-term debt was $1.76 billion at the end of the second quarter, compared with $1.7 billion at the end of the first quarter.

Further, the company generated $147 million of cash from operations compared with$155.7 million in the previous quarter.

Trimble generated free cash flow of $135 million in the reported quarter.

Zacks Rank & Key Picks

Trimble currently has a Zacks Rank #4 (Sell).

Some better-ranked stocks in the broader technology sector are Asure Software (ASUR - Free Report) , Dropbox (DBX - Free Report) and Analog Devices (ADI - Free Report) . While Asure Software sports a Zacks Rank #1 (Strong Buy), Dropbox and Analog Devices carry a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

Long-term earnings growth rate of Dropbox, Asure Software, and Analog Devices is pegged at 16.83%, 14% and 13.33%, respectively.

More Stock News: This Is Bigger than the iPhone!

It could become the mother of all technological revolutions. Apple sold a mere 1 billion iPhones in 10 years but a new breakthrough is expected to generate more than 27 billion devices in just 3 years, creating a $1.7 trillion market.

Zacks has just released a Special Report that spotlights this fast-emerging phenomenon and 6 tickers for taking advantage of it. If you don't buy now, you may kick yourself in 2021.

Click here for the 6 trades >>

Published in