Trimble Inc. (TRMB - Free Report) reported second-quarter 2019 non-GAAP earnings of 53 cents per share, missing the Zacks Consensus Estimate by 1 cent. However, the figure improved 3.9% year over year and 17.8% sequentially.
Per management, non-GAAP revenues increased 8.4% year over year and 6.4% on a sequential basis to $855.8 million. Moreover, the company’s GAAP revenues came in $854.8 million, up 8.8% from the prior-year quarter and 6.6% from the previous quarter.
This was primarily driven by strong performance of transportation, and buildings and infrastructures segments during the reported quarter. Additionally, strategic acquisitions contributed 7% to the top line.
Product revenues (61% of GAAP revenues) totaled $521.1 million, down 1.9% on a year-over-year basis. Services revenues (20.4% of revenues) came in at $174.6 million, up 28.3% year over year. Subscription revenues (18.6% of revenues) increased 34.4% from the year-ago quarter to $159.1 million.
We note that shares of the company have plunged 10% since its earnings release, which can be attributed to weak outlook for third-quarter 2019 and full year.
During second quarter, the U.S.-China trade tensions affected U.S. farmers’ investment, which in turn impacted the company’s agriculture business, part of its resources and utilities segment. Further, Brexit continued to hinder new investments in European plant and infrastructure.
All these macro headwinds are expected to prevail in the second half of the year, which compelled the company to provide weak guidance.
Coming to price performance, the shares of Trimble have gained 14% on a year-to-date basis, underperforming the industry’s rally of 31.9%.
We note that the company’s acquisition strength remains a major positive and is likely to aid the stock to rebound in the long haul.
Segments in Detail
Buildings and Infrastructure: This segment generated $339.9 million sales, accounting for 39.7% of the company’s non-GAAP revenues, improving 22.4% on a year-over-year basis. Notably, strong performance by building and civil construction businesses of the company drove year-over-year sales in this segment. Further, continued benefits from e-Builder and Viewpoint buyouts contributed to the result. Moreover, the segment experienced solid momentum in North America and Europe during the second quarter.
Geospatial: Sales from this segment were $164.4 million, accounting for 19.2% of total revenues. The figure decreased 10.8%, compared with the year-ago quarter primarily owing to trade tensions between the United States and China. Further, macro-economic headwinds in China led to slowdown in OEM demand, which affected the segment’s top line.
Resources and Utilities: The segment generated sales of $152.7 million, accounting for 17.8% of total revenues. The figure improved 5.1% on a year-over-year basis. This segment witnessed strong growth in agriculture in Europe during the reported quarter. However, ongoing trade dispute between the United States and China resulted in sluggish spending by U.S. farmers, which in turn led to a weakened U.S. agriculture market. Further, adverse effects of drought in Brazil and Australia negatively impacted the company’s agriculture business.
Transportation: Sales from this segment went up 9.3% from the year-ago quarter to $198.8 million, accounting for 23.3% of total revenues. Robust performance by Trimble’s transportation portfolio remained positive. Further, strong momentum of the segment across North America and Europe contributed to the result.