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Trimble (TRMB) Q2 Earnings, Revenues Outpace Estimates

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Trimble Inc. (TRMB - Free Report) reported second-quarter 2022 non-GAAP earnings of 64 cents per share, which beat the Zacks Consensus Estimate by 4.9%. The bottom line declined 11.1% year over year and 12.3% sequentially.

TRMB’s revenues of $941.2 million surpassed the Zacks Consensus Estimate by 2%. Also, the figure was down 0.4% year over year and 5.3% sequentially.

The top-line decrease was attributed to declining product and services revenues. Also, weak momentum across geospatial and transportation segments negatively impacted the quarterly performance.

In the second quarter, Trimble exited the Russia business due to the Russian invasion of Ukraine. This also acted as a headwind.

However, strong momentum across building and infrastructure, and resources and utilities segments drove the quarterly revenues.

TRMB generated annualized recurring revenues of $1.51 billion in the second quarter, which increased 12% on a year-over-year basis.

Trimble Inc. Price, Consensus and EPS Surprise

Trimble Inc. Price, Consensus and EPS Surprise

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

Top Line in Detail

Product revenues (accounting for 60% of total revenues) summed $564.5 million, down 5.1% on a year-over-year basis. Subscription revenues (23%) increased 16.2% from the year-ago quarter’s level to $218.7 million. Services revenues (17%) of $158 million dipped 2.5% from the year-ago reported figure.

Trimble reports revenues based on the following four types:

Hardware revenues (accounting for 44% of total revenues) amounted to $410.3 million, down 7.1% year over year. Software revenues (16%) were $154.2 million, reflecting an increase of 0.7% from the year-ago period’s figure. Recurring revenues (36%) increased 10% from the year-ago quarter’s level to $342.1 million. Professional Service and Other revenues (4%) totaled $34.6 million, down 11.7% year over year.

Trimble operates under the following four organized segments:

Buildings and Infrastructure: The segment generated revenues of $382.6 million (accounting for 41% of total revenues), which increased 4.9% on a year-over-year basis. The rise in revenues was driven by strong growth in all major businesses. Also, an increase in bookings and solid net retention across software offerings aided the segment.

Geospatial: This segment generated revenues of $193.7 million (21% of total revenues), which fell 11.8% from the prior-year quarter’s level. The segment was affected by reduced hardware sales and supply-chain constraints.

Resources and Utilities: This segment generated revenues of $214.8 million (23% of total revenues), up 8.8% from the prior-year quarter’s level. Higher revenues were attributed to healthy agricultural markets. Also, strong growth in positioning services remained positive.

Transportation: The segment generated revenues of $150.1 million (accounting for 16% of total revenues), which dropped 8.1% on a year-over-year basis. The segment’s revenues were down due to reduced hardware sales in North America.

Operating Details

For the second quarter, non-GAAP gross margin came in at 59.7%, expanding 150 basis points (bps) year over year.

On a non-GAAP basis, operating expenses accounted for 37.3% of revenues and expanded 330 bps from the year-ago quarter’s figure.

Non-GAAP operating margin came in at 22.4%, which contracted 180 bps year over year.

Balance Sheet & Cash Flow

At the end of second-quarter 2022, cash and cash equivalents were $350.1 million, down from $357.2 million at the end of first-quarter 2022.

Accounts receivables were $589.3 million in the reported quarter, decreasing from $655.7 million in the prior quarter.

Total debt was $1.294 billion at the second-quarter-end compared with $1.293 billion at the first-quarter-end.

TRMB generated $48.8 million of cash from operations compared with $153 million in the previous quarter.

In the reported quarter, Trimble generated a free cash flow of $34.8 million and repurchased shares worth $200 million.

Guidance

For 2022, Trimble lowered its guidance for revenues from $3.80-$3.88 billion to $3.76-$3.82 billion. The Zacks Consensus Estimate for full-year revenues is pegged at $3.85 billion.

Trimble also decreased 2022 non-GAAP earnings per share from $2.71-$2.86 to $2.70-$2.80. The Zacks Consensus Estimate for current-year earnings per share is pegged at $2.87.

Management expects its non-GAAP tax rate of 18.5% for 2022.

Zacks Rank & Stocks to Consider

Currently, Trimble has a Zacks Rank #4 (Sell).

Investors interested in the broader Zacks Computer & Technology sector can consider some better-ranked stocks like Keysight Technologies (KEYS - Free Report) , ASE Technology (ASX - Free Report) and Asure Software (ASUR - Free Report) , each carrying a Zacks Rank #2 (Buy) at present. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Keysight Technologies has lost 19.9% in the year-to-date period. KEYS’ long-term earnings growth rate is currently projected at 9.1%.

ASE technology has lost 23.2% in the year-to-date period. The long-term earnings growth rate for ASX is currently projected at 23.1%.

Asure Software has lost 32.1% in the year-to-date period. The long-term earnings growth rate for ASUR is currently projected at 14%.