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Trimble (TRMB) Beats Q2 Earnings by a Penny, Lags Sales
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Trimble Navigation’s (TRMB - Free Report) second-quarter 2016 earnings of 26 cents exceeded the Zacks Consensus Estimate by a penny.
Revenues
Trimble’s second-quarter revenues of $609.6 million were up 4.6% sequentially and 4.1% year over year. Revenues were negligibly below the Zacks Consensus Estimate of $610.6 million though well within the company’s guided range of $595–$625million.
Revenues by Segment
The segments successively of Engineering and Construction (E&C), The Field Solutions (TFS), The Mobile Solutions (TMS) and Advanced Devices (AD) generated 58%, 14%, 23% and 5% of total revenue, respectively.
The quarter’s E&C unit revenues of $351.2 million were up 3.8% year over year. TFS revenues of $87.1 million showed little movement and were flat year over year. TMS revenues of $138.1 million were up 7.6% year over year. The AD segment's revenues increased 4.1% from the year-ago period to $33.2 million.
Margins
Trimble’s pro-forma gross margin was 55.8%, up 3 basis points (bps) sequentially but down 8 bps year over year. The sequential increase was due to higher revenues and a favorable mix of products in some businesses.
Trimble’s adjusted operating expenses of $254.0 million increased 1.5% sequentially and 4.9% year on year. Operating margin was 14.1%, up 128 bps sequentially but down 42 bps year over year. The year-over-year decrease was due to headwinds related to unprofitable acquisitions and unfavorable foreign exchange.
Net Income
Pro-forma net income was $66.0 million compared with $65.4 million in the year-ago quarter. The pro-forma estimate excludes restructuring charges, amortization of intangibles, gain on an equity sale, litigation charges, acquisition-related costs and other adjustments on a tax-adjusted basis, but includes stock-based compensation. Our pro-forma estimate may not match management’s calculations as we included/excluded of some items that were not considered by the company while presenting the results.
On a GAAP basis, Trimble recorded a net profit (for Trimble shareholders) of $35.7 million (14 cents per share) compared with $25.9 million (10 cents) a year ago.
Balance Sheet
Trimble exited the second quarter with cash and cash equivalents of approximately $231.9 million compared with $174.7 million in the prior quarter. Inventories were $241.7 million, down from $255.5 million in the last quarter. Accounts receivables were $377.5 million, slightly down from $377.8 million in the earlier quarter.
Cash flow from operations was $192.5 million versus $113.2 million in the prior quarter.
Share repurchase
During the quarter, Trimble repurchased approximately $80 million of its common stock, while $158 million still remains under the current share repurchase authorization.
Guidance
Management expects third-quarter revenues in the range of $587–$617 million. The Zacks Consensus Estimate stands at $597.6 million.
Earnings per share are expected within 11–16 cents on a GAAP basis and within 28–33 cents on a non-GAAP basis. The Zacks Consensus Estimate is pegged at 28 cents.
The calculation of non-GAAP earnings per share excludes the amortization of intangibles worth $37 million that includes the effect of previous acquisitions, anticipated acquisition costs of $1 million, the anticipated impact of stock-based compensation expense of $14 million, and restructuring charges worth $5 million. The GAAP guidance assumes a tax rate of 26% while non-GAAP guidance assumes a tax rate of 24%.
Trimble is an OEM of GPS-based products and control systems. The company reported decent second-quarter results with the bottom line surpassing the Zacks Consensus Estimate while the top line missing the same.
The company’s Mobile Solutions segment will continue to benefit from growth in Transportation and Logistics, and is likely to improve further in 2016.
Trimble is watching out for trends in the E&C market to improve from the building construction, and civil engineering and construction businesses tending to move up. The company’s initiatives to move down the cost structure to another framework and make strategic acquisitions, combined with the increased adoption of technology in the agricultural market, product enhancements and international expansion should also see it through the current tough environment.
Currently, Trimble has a Zacks Rank #3 (Hold). Investors may consider stocks such as Ambarella, Inc. (AMBA - Free Report) , Cirrus Logic, Inc. (CRUS - Free Report) and Silicon Motion Technology Corp. (SIMO - Free Report) , each of which carries a Zacks Rank #1 (Strong Buy).
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Trimble (TRMB) Beats Q2 Earnings by a Penny, Lags Sales
Trimble Navigation’s (TRMB - Free Report) second-quarter 2016 earnings of 26 cents exceeded the Zacks Consensus Estimate by a penny.
Revenues
Trimble’s second-quarter revenues of $609.6 million were up 4.6% sequentially and 4.1% year over year. Revenues were negligibly below the Zacks Consensus Estimate of $610.6 million though well within the company’s guided range of $595–$625million.
Revenues by Segment
The segments successively of Engineering and Construction (E&C), The Field Solutions (TFS), The Mobile Solutions (TMS) and Advanced Devices (AD) generated 58%, 14%, 23% and 5% of total revenue, respectively.
The quarter’s E&C unit revenues of $351.2 million were up 3.8% year over year. TFS revenues of $87.1 million showed little movement and were flat year over year. TMS revenues of $138.1 million were up 7.6% year over year. The AD segment's revenues increased 4.1% from the year-ago period to $33.2 million.
Margins
Trimble’s pro-forma gross margin was 55.8%, up 3 basis points (bps) sequentially but down 8 bps year over year. The sequential increase was due to higher revenues and a favorable mix of products in some businesses.
Trimble’s adjusted operating expenses of $254.0 million increased 1.5% sequentially and 4.9% year on year. Operating margin was 14.1%, up 128 bps sequentially but down 42 bps year over year. The year-over-year decrease was due to headwinds related to unprofitable acquisitions and unfavorable foreign exchange.
Net Income
Pro-forma net income was $66.0 million compared with $65.4 million in the year-ago quarter. The pro-forma estimate excludes restructuring charges, amortization of intangibles, gain on an equity sale, litigation charges, acquisition-related costs and other adjustments on a tax-adjusted basis, but includes stock-based compensation. Our pro-forma estimate may not match management’s calculations as we included/excluded of some items that were not considered by the company while presenting the results.
On a GAAP basis, Trimble recorded a net profit (for Trimble shareholders) of $35.7 million (14 cents per share) compared with $25.9 million (10 cents) a year ago.
Balance Sheet
Trimble exited the second quarter with cash and cash equivalents of approximately $231.9 million compared with $174.7 million in the prior quarter. Inventories were $241.7 million, down from $255.5 million in the last quarter. Accounts receivables were $377.5 million, slightly down from $377.8 million in the earlier quarter.
Cash flow from operations was $192.5 million versus $113.2 million in the prior quarter.
Share repurchase
During the quarter, Trimble repurchased approximately $80 million of its common stock, while $158 million still remains under the current share repurchase authorization.
Guidance
Management expects third-quarter revenues in the range of $587–$617 million. The Zacks Consensus Estimate stands at $597.6 million.
Earnings per share are expected within 11–16 cents on a GAAP basis and within 28–33 cents on a non-GAAP basis. The Zacks Consensus Estimate is pegged at 28 cents.
The calculation of non-GAAP earnings per share excludes the amortization of intangibles worth $37 million that includes the effect of previous acquisitions, anticipated acquisition costs of $1 million, the anticipated impact of stock-based compensation expense of $14 million, and restructuring charges worth $5 million. The GAAP guidance assumes a tax rate of 26% while non-GAAP guidance assumes a tax rate of 24%.
TRIMBLE NAVIGAT Price, Consensus and EPS Surprise
TRIMBLE NAVIGAT Price, Consensus and EPS Surprise | TRIMBLE NAVIGAT Quote
Summary
Trimble is an OEM of GPS-based products and control systems. The company reported decent second-quarter results with the bottom line surpassing the Zacks Consensus Estimate while the top line missing the same.
The company’s Mobile Solutions segment will continue to benefit from growth in Transportation and Logistics, and is likely to improve further in 2016.
Trimble is watching out for trends in the E&C market to improve from the building construction, and civil engineering and construction businesses tending to move up. The company’s initiatives to move down the cost structure to another framework and make strategic acquisitions, combined with the increased adoption of technology in the agricultural market, product enhancements and international expansion should also see it through the current tough environment.
Currently, Trimble has a Zacks Rank #3 (Hold). Investors may consider stocks such as Ambarella, Inc. (AMBA - Free Report) , Cirrus Logic, Inc. (CRUS - Free Report) and Silicon Motion Technology Corp. (SIMO - Free Report) , each of which carries a Zacks Rank #1 (Strong Buy).
Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report >>