Trimble Reports Second Quarter 2018 Results

SUNNYVALE, Calif., Aug. 1, 2018 /PRNewswire/ -- Trimble Inc. (NASDAQ: TRMB) today announced financial results for the second quarter of 2018.

Second Quarter 2018 Financial Summary

Second quarter 2018 revenue of $785.5 million was up 19 percent as compared to the second quarter of 2017. Buildings and Infrastructure revenue was $274.3 million, up 24 percent. Geospatial revenue was $184.4 million, up 12 percent. Resources and Utilities revenue was $145.0 million, up 30 percent. Transportation revenue was $181.8 million, up 11 percent.

GAAP operating income was $89.5 million, up 52 percent as compared to the second quarter of 2017. GAAP operating margin was 11.4 percent of revenue as compared to 8.9 percent of revenue in the second quarter of 2017.

GAAP net income was $64.1 million, up 36 percent as compared to the second quarter of 2017. Diluted GAAP earnings per share were $0.25 as compared to diluted GAAP earnings per share of $0.18 in the second quarter of 2017.

Non-GAAP operating income of $159.9 million was up 36 percent as compared to the second quarter of 2017. Non-GAAP operating margin was 20.4 percent of revenue as compared to 17.8 percent of revenue in the second quarter of 2017.

Non-GAAP net income of $127.2 million was up 36 percent as compared to the second quarter of 2017. Diluted non-GAAP earnings per share were $0.50 as compared to diluted non-GAAP earnings per share of $0.36 in the second quarter of 2017.

The GAAP tax rate for the quarter was 19 percent as compared to 26 percent in the second quarter of 2017, and the non-GAAP tax rate was 19 percent as compared to 23 percent in the second quarter of 2017.

Operating cash flow for the first two quarters of 2018 was $267.8 million, up 6 percent as compared to the first two quarters of 2017. Deferred revenue for the second quarter of 2018 was $356.2 million, up 16 percent as compared to the second quarter of 2017.

"The second quarter revenue and income exceeded our expectations and continued the strong momentum that we have seen during the last year in all segments," said Steven W. Berglund, Trimble's president and chief executive officer. "The performance confirms the strength of our market position and the success of our strategy to transform those markets through technology."

Forward Looking Guidance

For the third quarter of 2018, Trimble expects to report non-GAAP revenue between $795 million and $825 million and non-GAAP earnings per share of $0.43 to $0.47. Because Trimble provided 2018 annual guidance at its investor day, Trimble is updating that guidance. Trimble now expects to report non-GAAP revenue of between $3.14 billion and $3.19 billion for the 2018 fiscal year with non-GAAP earnings per share between $1.81 and $1.89. Starting in the third quarter, Trimble's non-GAAP guidance excludes purchase accounting adjustments to acquired deferred revenue as well as the purchase accounting adjustments for commission expense, in addition to the adjustments described in the section on non-GAAP metrics located at the end of this press release. Trimble is unable to provide a quantitative reconciliation of these measures to GAAP with a reasonable degree of accuracy because Trimble has not estimated the fair value of the assets and liabilities, including intangible assets and related amortization expense, associated with the Viewpoint acquisition.

Investor Conference Call / Webcast Details

Trimble will hold a conference call on August 1 at 2:00 p.m. PT to review its second quarter 2018 results. An accompanying slide presentation will be made available on the "Investors" section of the Trimble website, www.trimble.com, under the subheading "Events & Presentations." The call will be broadcast live on the Web at http://investor.trimble.com. Investors without Internet access may dial into the call at (800) 528-9198 (U.S.) or (702) 928-6633 (international). The passcode is 6698397. The replay will also be available on the web at the address above.

Use of Non-GAAP Financial Information

To help investors understand Trimble's past financial performance and future results, as well as its performance relative to competitors, Trimble supplements the financial results that the Company provides in accordance with generally accepted accounting principles, or GAAP, with non-GAAP financial measures. These non-GAAP measures can be used to evaluate Trimble's historical and prospective financial performance, as well as its performance relative to competitors. The Company's management regularly uses supplemental non-GAAP financial measures internally to understand, manage and evaluate the business, and to make operating decisions. These non-GAAP measures are among the primary factors management uses in planning for and forecasting future periods. Trimble believes that these non-GAAP financial measures reflect an additional way of viewing aspects of the Company's operations that, when viewed with GAAP results, provide a more complete understanding of factors and trends affecting the business. Further, Trimble believes some of the Company's investors track "core operating performance" as a means of evaluating performance in the ordinary, ongoing, and customary course of the Company's operations. Core operating performance excludes items that are non-cash, not expected to recur or not reflective of ongoing financial results. Management also believes that looking at Trimble's core operating performance provides a supplemental way to provide consistency in period to period comparisons.

The specific non-GAAP measures, which Trimble uses along with a reconciliation to the nearest comparable GAAP measures and the explanation for why these non-GAAP measures provide useful information to investors regarding the financial condition and results of operations and why management chose to exclude selected items can be found at the end of this release. The method the Company uses to produce non-GAAP results is not computed according to GAAP and may differ from the methods used by other companies. Trimble's non-GAAP results are not meant to be considered in isolation or as a substitute for comparable GAAP measures and should be read only in conjunction with Trimble's consolidated financial statements prepared in accordance with GAAP. Investors are encouraged to review the reconciliation of non-GAAP financial measures to the comparable GAAP results, which is attached to this earnings release. Additional financial information about Trimble's use of non-GAAP results can be found on the investor relations page of our website at: http://investor.trimble.com.

About Trimble

Trimble is transforming the way the world works by delivering products and services that connect the physical and digital worlds. Core technologies in positioning, modeling, connectivity and data analytics enable customers to improve productivity, quality, safety and sustainability. From purpose built products to enterprise lifecycle solutions, Trimble software, hardware and services are transforming industries such as agriculture, construction, geospatial and transportation and logistics. For more information about Trimble (NASDAQ:TRMB), visit: www.trimble.com.

Safe Harbor

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 expectations for future financial market and economic conditions, whether the positive trend in financial results will continue through 2018, the impact of acquisitions, including e-Builder and Viewpoint, the ability to deliver revenue, earnings per share and other financial projections that Trimble has guided for the third quarter of 2018, and fiscal 2018, including the expected tax rate, anticipated impact of stock-based compensation expense, amortization of intangibles related to previous acquisitions, anticipated acquisition costs, restructuring charges, the anticipated number of diluted shares outstanding, our long-term growth targets and operating margins. These forward-looking statements are subject to change, and actual results may materially differ due to certain risks and uncertainties. Trimble's expected tax rate and current expected income are based on current tax law, including current interpretations of the Tax Cuts and Jobs Act of 2017 ("TCJA"), and may be affected by evolving interpretations of TCJA, the jurisdictions in which profits are determined to be earned and taxed, changes in the estimates of credits, benefits and deductions, the resolution of issues arising from tax audits with various tax authorities, including payment of interest and penalties, and the ability to realize deferred tax assets. The Company's results may be adversely affected if the company is unable to market, manufacture and ship new products, obtain new customers, or effectively integrate new acquisitions, including our recent acquisition of Viewpoint. The Company's results would also be negatively impacted by adverse geopolitical developments, weakening in the macro environment, foreign exchange fluctuations, critical part supply chain shortages, and the imposition of barriers to international trade. Any failure to achieve predicted results could negatively impact the Company's revenues, cash flow from operations, and other financial results. The Company's financial results will also depend on a number of other factors and 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 presentation. 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.

To help our investors understand our past financial performance and our future results, as well as our performance relative to competitors, we supplement the financial results that we provide in accordance with generally accepted accounting principles, or GAAP, with non-GAAP financial measures. The specific non-GAAP measures, which we use along with a reconciliation to the nearest comparable GAAP measures can be found on our website at http://investor.trimble.com.

FTRMB

                                                                                                   CONDENSED CONSOLIDATED STATEMENTS OF INCOME

                                                                                                       (In millions, except per share data)

                                                                                                                   (Unaudited)


                                                                     Second Quarter of                              First Two Quarters of
                                                                     -----------------                              ---------------------

                                                                                        2018                                                 2017       2018                      2017

                                                                                                                        * As Adjusted                        * As Adjusted
                                                                                                                        -------------                        -------------


    Revenue:

                            Product                                                   $531.0                                               $445.4   $1,028.8                    $855.0

                            Service                                                    136.1                                                111.9      264.9                     218.5

                            Subscription                                               118.4                                                102.6      234.0                     197.0
                                                                                                                                           -----

    Total revenue                                                                    785.5                                                659.9    1,527.7                   1,270.5
                                                                                     -----                                                -----    -------                   -------


    Cost of sales:

                            Product                                                    250.2                                                222.4      485.6                     415.8

                            Service                                                     59.6                                                 47.2      119.2                      94.2

                            Subscription                                                29.1                                                 27.2       57.0                      54.1

                             Amortization of purchased
                             intangible assets                                          23.9                                                 20.5       47.0                      39.5
                                                                                                                                            ----

    Total cost of sales                                                              362.8                                                317.3      708.8                     603.6
                                                                                     -----                                                -----      -----                     -----


    Gross margin                                                                     422.7                                                342.6      818.9                     666.9
                                                                                     -----                                                -----      -----                     -----

    Gross margin (%)                                                                53.8 %                                              51.9 %    53.6 %                   52.5 %


    Operating expense:

                             Research and
                             development                                               110.1                                                 90.8      219.4                     179.5

                             Sales and
                             marketing                                                 112.8                                                100.1      234.9                     194.5

                             General and
                             administrative                                             89.4                                                 75.1      171.0                     144.4

                             Restructuring
                             charges                                                     2.2                                                  2.3        3.8                       5.2

                             Amortization of
                             purchased
                             intangible
                             assets                                                     18.7                                                 15.3       36.1                      29.6


                            Total operating expense                                    333.2                                                283.6      665.2                     553.2
                                                                                       -----                                                -----      -----                     -----



    Operating income                                                                  89.5                                                 59.0      153.7                     113.7


    Non-operating income (expense), net:

                             Interest
                             expense, net                                             (18.6)                                               (6.0)    (28.1)                   (12.1)

                             Foreign currency
                             transaction
                             gain (loss),
                             net                                                       (3.0)                                                   -       0.7                       1.4

                             Income from
                             equity method
                             investments,
                             net                                                         9.5                                                  9.9       14.4                      14.1

                             Other income,
                             net                                                         1.8                                                  1.1        5.2                      10.6


                             Total non-operating income
                             (expense), net                                           (10.3)                                                 5.0      (7.8)                     14.0
                                                                                       -----                                                  ---       ----                      ----


    Income before taxes                                                               79.2                                                 64.0      145.9                     127.7


    Income tax provision                                                              15.1                                                 16.7       23.1                      30.6


    Net income                                                                        64.1                                                 47.3      122.8                      97.1

                             Net gain
                             attributable to
                             noncontrolling
                             interests                                                     -                                                   -       0.2                         -
                            ----------------

    Net income attributable to Trimble
     Inc.                                                                            $64.1                                                $47.3     $122.6                     $97.1
                                                                                     =====                                                =====     ======                     =====


    Earnings per share attributable to Trimble Inc.:

                            Basic                                                      $0.26                                                $0.19      $0.49                     $0.38
                            -----

                            Diluted                                                    $0.25                                                $0.18      $0.49                     $0.38
                            -------


    Shares used in calculating earnings per share:

                            Basic                                                      249.5                                                253.0      249.1                     252.5
                            -----

                            Diluted                                                    252.2                                                257.1      252.7                     256.5
                            -------


    *  Prior-period information has been restated for the adoption of ASC 606, Revenue from Contracts with Customers.

                                                              CONDENSED CONSOLIDATED BALANCE SHEETS

                                                                          (In millions)

                                                                           (Unaudited)



                                                                                 Second Quarter of                           Fiscal Year End

                                                                                                        2018                                    2017
                                                                                                        ----

    As of                                                                                                      * As Adjusted
    -----                                                                                                      -------------

    Assets


    Current assets:

                        Cash and cash
                        equivalents                                                                      $571.0                                  $358.5

                        Short-term
                        investments                                                                           -                                  178.9

                        Accounts
                        receivable, net                                                                   446.2                                   427.7

                        Other
                        receivables                                                                        29.3                                    42.8

                       Inventories                                                                        282.4                                   264.6

                        Other current
                        assets                                                                             58.0                                    39.2


                       Total current assets                                                             1,386.9                                 1,311.7


    Property and equipment, net                                                                        192.6                                   174.0

    Goodwill                                                                                         2,682.1                                 2,287.1

    Other purchased intangible assets, net                                                             422.2                                   364.8

    Deferred costs, non-current                                                                         35.3                                    35.0

    Other non-current assets                                                                           139.2                                   143.7
                                                                                                       -----                                   -----


                       Total assets                                                                    $4,858.3                                $4,316.3
                                                                                                       ========                                ========


    Liabilities and Stockholders' Equity


    Current liabilities:

                       Short-term debt                                                                     $0.4                                  $128.4

                       Accounts payable                                                                   159.0                                   146.0

                        Accrued
                        compensation
                        and benefits                                                                      137.2                                   143.9

                       Deferred revenue                                                                   319.2                                   237.6

                        Accrued warranty
                        expense                                                                            16.2                                    18.3

                        Other current
                        liabilities                                                                        85.0                                    99.2


                       Total current liabilities                                                          717.0                                   773.4


    Long-term debt                                                                                   1,286.2                                   785.5

    Non-current deferred revenue                                                                        37.0                                    39.0

    Deferred income tax liabilities                                                                     40.5                                    47.8

    Income taxes payable                                                                                77.5                                    94.1

    Other non-current liabilities                                                                      182.5                                   162.0

                       Total liabilities                                                                2,340.7                                 1,901.8
                                                                                                        -------                                 -------



    Stockholders' equity:

                       Common stock                                                                         0.2                                     0.2

                        Additional paid-
                        in-capital                                                                      1,524.5                                 1,461.1

                        Retained
                        earnings                                                                        1,153.9                                 1,084.6

                        Accumulated
                        other
                        comprehensive
                        loss                                                                            (161.2)                                (131.4)


    Total Trimble Inc. stockholders' equity                                                          2,517.4                                 2,414.5

    Noncontrolling interests                                                                             0.2                                       -
                                                                                                         ---

                       Total stockholders' equity                                                       2,517.6                                 2,414.5
                                                                                                        -------                                 -------


                        Total liabilities and
                        stockholders' equity                                                           $4,858.3                                $4,316.3
                                                                                                       ========                                ========


    *  Prior-period information has been restated for the adoption of ASC 606, Revenue from Contracts with Customers.

                                                 CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

                                                                  (In millions)

                                                                   (Unaudited)

                                                                                                                            First Two Quarters of
                                                                                                                            ---------------------

                                                                                                                                 2018                          2017
                                                                                                                                 ----

                                                                                                                                        * As Adjusted
                                                                                                                                        -------------


    Cash flow from operating activities:

                                                 Net income                                                       $122.8                         $97.1


                                                  Adjustments to
                                                  reconcile net
                                                  income to net cash
                                                  provided by

                                                  operating
                                                  activities:

                                                                         Depreciation expense                                    17.2                          17.7

                                                                         Amortization expense                                    83.1                          69.1

                                                                         Stock-based compensation                                34.3                          28.9

                                                                          Income from equity method
                                                                          investments                                           (1.5)                        (9.0)

                                                                         Other non-cash items                                     9.2                         (9.5)


                                                  Decrease (increase)
                                                  in assets:

                                                                         Accounts receivable                                    (6.0)                       (29.9)

                                                                         Inventories                                           (21.8)                        (2.0)

                                                                          Other current and non-current
                                                                          assets                                               (16.8)                        (9.7)


                                                  Increase (decrease)
                                                  in liabilities:

                                                                         Accounts payable                                         9.6                          21.9

                                                                         Accrued compensation and benefits                      (6.6)                         14.1

                                                                         Deferred revenue                                        71.1                          54.5

                                                                         Other liabilities                                     (26.8)                         10.2

    Net cash provided by operating activities                                                                               267.8                         253.4
                                                                                                                            -----                         -----


    Cash flow from investing activities:

                                                  Acquisitions of
                                                  businesses, net of
                                                  cash acquired                                                  (532.9)                      (124.9)

                                                  Acquisitions of
                                                  property and
                                                  equipment                                                       (36.0)                       (15.6)

                                                  Purchases of short-
                                                  term investments                                                (24.0)                      (137.6)

                                                  Proceeds from
                                                  maturities of
                                                  short-term
                                                  investments                                                        6.2                          56.8

                                                  Proceeds from sales
                                                  of short-term
                                                  investments                                                      196.8                          90.6

                                                 Other                                                               5.1                          20.3

    Net cash used in investing activities                                                                                 (384.8)                      (110.4)
                                                                                                                           ------                        ------


    Cash flow from financing activities:

                                                  Issuance of common
                                                  stock, net of tax
                                                  withholdings                                                      21.7                          49.8

                                                  Repurchases of
                                                  common stock                                                    (53.0)                       (20.4)

                                                  Proceeds from debt
                                                  and revolving
                                                  credit lines                                                   1,527.8                         340.0

                                                  Payments on debt and
                                                  revolving credit
                                                  lines                                                        (1,157.1)                       (350.1)

                                                 Other                                                             (1.8)                        (4.6)


    Net cash provided by financing activities                                                                               337.6                          14.7
                                                                                                                            -----                          ----


    Effect of exchange rate changes on cash and cash
     equivalents                                                                                                            (8.1)                         11.1
                                                                                                                             ----                          ----


    Net increase in cash and cash equivalents                                                                               212.5                         168.8

    Cash and cash equivalents - beginning of period                                                                         358.5                         216.1
                                                                                                                            -----                         -----


    Cash and cash equivalents - end of period                   $571.0                                             $384.9
                                                                ======                                             ======


    *  Prior period information has been restated for the adoption of ASC 606, Revenue from Contracts with Customers, and
     ASU No. 2016-15, Statement of Cash Flows: Classification of Certain Cash Receipts and Cash Payments.

                                                                                                                  REPORTING SEGMENTS

                                                                                                                (Dollars in millions)

                                                                                                                     (Unaudited)



                                                                                          Reporting Segments
                                                                                          ------------------

                                                                                        Buildings                                                                Resources

                                                                                           and                                                                      and

                                                                                     Infrastructure                                   Geospatial                 Utilities                  Transportation
                                                                                     --------------                                   ----------                 ---------                  --------------


    SECOND QUARTER OF FISCAL 2018 :

                              Revenue                                                                  $274.3                                    $184.4                    $145.0                          $181.8


                               Operating
                               income before
                               corporate
                               allocations                         $67.4                                              $41.6                                $42.3                      $31.1

                              Operating
                               margin (%
                               of
                               segment
                               external
                               net
                               revenue)                           24.6 %                                            22.6 %                              29.2 %                    17.1 %


    SECOND QUARTER OF FISCAL 2017 as adjusted :

                              Revenue                                                                  $220.6                                    $164.6                    $111.6                          $163.1


                               Operating
                               income before
                               corporate
                               allocations                         $47.8                                              $29.8                                $35.0                      $25.4

                              Operating
                               margin (%
                               of
                               segment
                               external
                               net
                               revenue)                           21.7 %                                            18.1 %                              31.4 %                    15.6 %


    FIRST TWO QUARTERS OF 2018 :

                              Revenue                                                                  $499.0                                    $358.9                    $304.2                          $365.6


                               Operating
                               income before
                               corporate
                               allocations                        $110.9                                              $78.9                                $94.0                      $61.5

                              Operating
                               margin (%
                               of
                               segment
                               external
                               net
                               revenue)                           22.2 %                                            22.0 %                              30.9 %                    16.8 %


    FIRST TWO QUARTERS OF 2017 as adjusted :

                              Revenue                                                                  $407.1                                    $314.2                    $231.8                          $317.4


                               Operating
                               income before
                               corporate
                               allocations                         $79.5                                              $57.7                                $77.6                      $48.9

                              Operating
                               margin (%
                               of
                               segment
                               external
                               net
                               revenue)                           19.5 %                                            18.4 %                              33.5 %                    15.4 %


    Note: First quarter of fiscal 2017 information has been restated for the adoption of ASC 606, Revenue from Contracts with Customers.

                                                                                                                                                                                   GAAP TO NON-GAAP RECONCILIATION

                                                                                                                                                                             (Dollars in millions, except per share data)

                                                                                                                                                                                             (Unaudited)


                                                                                                                     Second Quarter of                                     First Two Quarters of
                                                                                                                     -----------------                                     ---------------------

                                                                                                                                       2018                              2017                                                            2018                   2017

                                                                                                                                                                                      * As Adjusted                                                                                        * As Adjusted
                                                                                                                                                                                      -------------                                                                                        -------------

                                                                                                                           Dollar               % of                                      Dollar                          % of                      Dollar             % of                              Dollar             % of

                                                                                                                           Amount              Revenue                                    Amount                         Revenue                    Amount            Revenue                            Amount            Revenue
                                                                                                                           ------              -------                                    ------                         -------                    ------            -------                            ------            -------

    GROSS MARGIN:

                            GAAP gross margin:                                                                                       $422.7                 53.8 %                                   $342.6                            51.9 %                $818.9                  53.6 %                        $666.9                  52.5 %

                            Restructuring charges                              ( A )                                                    0.6                  0.1 %                                      0.5                             0.1 %                   0.4                   0.1 %                           1.0                   0.1 %

                             Amortization of purchased
                             intangible assets                                 ( B )                                                   23.9                  3.0 %                                     20.5                             3.1 %                  47.0                   3.1 %                          39.5                   3.1 %

                            Stock-based compensation                           ( C )                                                    1.1                  0.2 %                                      0.9                             0.1 %                   2.2                   0.1 %                           1.7                   0.1 %

                             Amortization of acquisition-
                             related inventory step-up                         ( D )                                                      -                    -%                                     0.5                             0.1 %                     -                     -%                          0.6                   0.1 %

                            Acquisition / divestiture items                    ( E )                                                      -                    -%                                       -                               -%                  2.0                   0.1 %                             -                     -%
                                                                                                                                                                                                                                                              ---                                                                          ---

                             Non-GAAP gross
                             margin:                                                                                                 $448.3                 57.1 %                                   $365.0                            55.3 %                $870.5                  57.0 %                        $709.7                  55.9 %
                                                                                                                                     ------                                                          ------                                                  ------                                                ------


    OPERATING EXPENSES:

                             GAAP operating
                             expenses:                                                                                               $333.2                 42.4 %                                   $283.6                            43.0 %                $665.2                  43.5 %                        $553.2                  43.6 %

                            Restructuring charges                              ( A )                                                  (2.2)                (0.3)%                                    (2.3)                           (0.3)%                 (3.8)                 (0.2)%                         (5.2)                 (0.4)%

                             Amortization of purchased
                             intangible assets                                 ( B )                                                 (18.7)                (2.4)%                                   (15.3)                           (2.3)%                (36.1)                 (2.4)%                        (29.6)                 (2.3)%

                            Stock-based compensation                           ( C )                                                 (15.8)                (2.0)%                                   (14.3)                           (2.2)%                (32.1)                 (2.1)%                        (27.2)                 (2.2)%

                            Acquisition / divestiture items                    ( E )                                                  (8.1)                (1.0)%                                    (4.3)                           (0.7)%                (22.1)                 (1.4)%                         (6.4)                 (0.5)%

                             Non-GAAP
                             operating
                             expenses:                                                                                               $288.4                 36.7 %                                   $247.4                            37.5 %                $571.1                  37.4 %                        $484.8                  38.2 %
                                                                                                                                     ------                                                          ------                                                  ------                                                ------


    OPERATING INCOME:

                             GAAP operating
                             income:                                                                                                  $89.5                 11.4 %                                    $59.0                             8.9 %                $153.7                  10.1 %                        $113.7                   8.9 %

                            Restructuring charges                              ( A )                                                    2.8                  0.4 %                                      2.8                             0.4 %                   4.2                   0.3 %                           6.2                   0.5 %

                             Amortization of purchased
                             intangible assets                                 ( B )                                                   42.6                  5.4 %                                     35.8                             5.4 %                  83.1                   5.5 %                          69.1                   5.4 %

                            Stock-based compensation                           ( C )                                                   16.9                  2.2 %                                     15.2                             2.3 %                  34.3                   2.2 %                          28.9                   2.3 %

                             Amortization of acquisition-
                             related inventory step-up                         ( D )                                                      -                    -%                                     0.5                             0.1 %                     -                     -%                          0.6                   0.1 %

                            Acquisition / divestiture items                    ( E )                                                    8.1                  1.0 %                                      4.3                             0.7 %                  24.1                   1.5 %                           6.4                   0.5 %

                             Non-GAAP
                             operating income:                                                                                       $159.9                 20.4 %                                   $117.6                            17.8 %                $299.4                  19.6 %                        $224.9                  17.7 %
                                                                                                                                     ------                                                          ------                                                  ------                                                ------


    NON-OPERATING INCOME (EXPENSE), NET:

                             GAAP non-
                             operating income
                             (expense), net:                                                                                        $(10.3)                                                           $5.0                                                  $(7.8)                                                $14.0

                            Acquisition / divestiture items                    ( E )                                                    0.7                                                           (0.8)                                                  (2.1)                                                (8.9)

                            Debt issuance costs                                ( F )                                                    6.7                                                               -                                                    6.7                                                     -
                                                                                                                                        ---                                                                                                                    ---

                             Non-GAAP non-
                             operating income
                             (expense), net:                                                                                         $(2.9)                                                           $4.2                                                  $(3.2)                                                 $5.1



                                                                                                                                              GAAP and                                                                  GAAP and                                     GAAP and                                             GAAP and

                                                                                                                                              Non-GAAP                                                                  Non-GAAP                                     Non-GAAP                                             Non-GAAP

                                                                                                                                                       Tax Rate %  ( I )                                                        Tax Rate %    ( I )                         Tax Rate %      ( I )                               Tax Rate %      ( I )
                                                                                                                                                        ---------                                                                 ---------                                    ---------                                            ---------

    INCOME TAX PROVISION:

                             GAAP income tax
                             provision:                                                                                               $15.1                   19 %                                    $16.7                              26 %                 $23.1                    16 %                         $30.6                    24 %

                            Non-GAAP items tax effected                        ( G )                                                   14.8                                                            15.0                                                    23.5                                                  24.8

                             Difference in GAAP and Non-GAAP
                             tax rate                                          ( H )                                                  (0.1)                                                          (3.7)                                                    9.7                                                 (2.5)
                                                                                                                                                                                                      ----

                             Non-GAAP income
                             tax provision:                                                                                           $29.8                   19 %                                    $28.0                              23 %                 $56.3                    19 %                         $52.9                    23 %
                                                                                                                                      -----                                                           -----                                                   -----                                                 -----


    NET INCOME:

                             GAAP net income
                             attributable to
                             Trimble Inc.:                                                                                            $64.1                                                           $47.3                                                  $122.6                                                 $97.1

                            Restructuring charges                              ( A )                                                    2.8                                                             2.8                                                     4.2                                                   6.2

                             Amortization of purchased
                             intangible assets                                 ( B )                                                   42.6                                                            35.8                                                    83.1                                                  69.1

                            Stock-based compensation                           ( C )                                                   16.9                                                            15.2                                                    34.3                                                  28.9

                             Amortization of acquisition-
                             related inventory step-up                         ( D )                                                      -                                                            0.5                                                       -                                                  0.6

                            Acquisition / divestiture items                    ( E )                                                    8.8                                                             3.5                                                    22.0                                                 (2.5)

                            Debt issuance costs                                ( F )                                                    6.7                                                               -                                                    6.7                                                     -

                            Non-GAAP tax adjustments                       ( G ) + ( H )                                             (14.7)                                                         (11.3)                                                 (33.2)                                               (22.3)

                             Non-GAAP net
                             income
                             attributable to
                             Trimble Inc.:                                                                                           $127.2                                                           $93.8                                                  $239.7                                                $177.1



    DILUTED NET INCOME PER SHARE:

                             GAAP diluted net
                             income per share
                             attributable to
                             Trimble Inc.:                                                                                            $0.25                                                           $0.18                                                   $0.49                                                 $0.38

                            Restructuring charges                              ( A )                                                   0.01                                                            0.01                                                    0.02                                                  0.03

                             Amortization of purchased
                             intangible assets                                 ( B )                                                   0.17                                                            0.14                                                    0.33                                                  0.27

                            Stock-based compensation                           ( C )                                                   0.07                                                            0.06                                                    0.13                                                  0.11

                             Amortization of acquisition-
                             related inventory step-up                         ( D )                                                      -                                                              -                                                      -                                                    -

                            Acquisition / divestiture items                    ( E )                                                   0.03                                                            0.01                                                    0.09                                                (0.01)

                            Debt issuance costs                                ( F )                                                   0.03                                                               -                                                   0.02                                                     -

                            Non-GAAP tax adjustments                       ( G ) + ( H )                                             (0.06)                                                         (0.04)                                                 (0.13)                                               (0.09)

                            Non-GAAP diluted
                             net income per
                             share
                             attributable to
                             Trimble Inc.:                                                                                            $0.50                                                           $0.36                                                   $0.95                                                 $0.69



                            *  Prior-period information has been restated for the adoption of ASC 606, Revenue from Contracts with Customers.

                                                                                                                                         FOOTNOTES TO GAAP TO NON-GAAP RECONCILIATION


                                                                                                                                                          (Unaudited)


    Our non-GAAP measures are not meant to be considered in isolation or as a substitute for comparable GAAP measures. The non-GAAP financial measures included in the previous table as well as detailed explanations to the adjustments to comparable GAAP measures, are set forth
     below:


    Non-GAAP gross margin

    We believe our investors benefit by understanding our non-GAAP gross margin as a way of understanding how product mix, pricing decisions and manufacturing costs influence our business.  Non-GAAP gross margin excludes restructuring charges, amortization of purchased
     intangible assets, stock-based compensation, amortization of acquisition-related inventory step-up, and acquisition/divestiture items associated with the acceleration of acquisition stock options from GAAP gross margin. We believe that these exclusions offer investors
     additional information that may be useful to view trends in our gross margin performance.


    Non-GAAP operating expenses

    We believe this measure is important to investors evaluating our non-GAAP spending in relation to revenue. Non-GAAP operating expenses exclude restructuring charges, amortization of purchased intangible assets, stock-based compensation, acquisition/divestiture items
     associated with external and incremental costs resulting directly from merger and acquisition activities such as legal, due diligence, integration, and other required closing costs including the acceleration of acquisition stock options from GAAP operating expenses. We
     believe that these exclusions offer investors supplemental information to facilitate comparison of our operating expenses to our prior results.


    Non-GAAP operating income

    We believe our investors benefit by understanding our non-GAAP operating income trends which are driven by revenue, gross margin, and spending. Non-GAAP operating income excludes restructuring charges, amortization of purchased intangible assets, stock-based compensation,
     amortization of acquisition-related inventory step-up, acquisition/divestiture items associated with external and incremental costs resulting directly from merger and acquisition activities such as legal, due diligence, integration, and other required closing costs
     including the acceleration of acquisition stock options. We believe that these exclusions offer an alternative means for our investors to evaluate current operating performance compared to results of other periods.


    Non-GAAP non-operating income (expense), net

    We believe this measure helps investors evaluate our non-operating income trends. Non-GAAP non-operating income (expense), net excludes acquisition/divestiture gains/losses associated with unusual acquisition related items such as intangible asset impairment charges,
     gains or losses related to the acquisitions, or sale of certain businesses and investments, and debt issuance costs. We believe that these exclusions provide investors with a supplemental view of our ongoing financial results.


    Non-GAAP income tax provision

    We believe that providing investors with the non-GAAP income tax provision is beneficial because it provides for consistent treatment of the excluded items in our non-GAAP presentation.


    Non-GAAP net income

    This measure provides a supplemental view of net income trends which are driven by non-GAAP income before taxes and our non-GAAP tax rate. Non-GAAP net income excludes restructuring charges, amortization of purchased intangible assets, stock-based compensation,
     amortization of acquisition-related inventory step-up, acquisition/divestiture items, debt issuance costs, and non-GAAP tax adjustments from GAAP net income. We believe our investors benefit from understanding these exclusions and from an alternative view of our net
     income performance as compared to our past net income performance.


    Non-GAAP diluted net income per share

    We believe our investors benefit by understanding our non-GAAP operating performance as reflected in a per share calculation as a way of measuring non-GAAP operating performance by ownership in the company. Non-GAAP diluted net income per share excludes restructuring
     charges, amortization of purchased intangible assets, stock-based compensation, amortization of acquisition-related inventory step-up, acquisition/divestiture items, debt issuance cost, and non-GAAP tax adjustments from GAAP diluted net income per share. We believe
     that these exclusions offer investors a useful view of our diluted net income per share as compared to our past diluted net income per share.


    These non-GAAP measures can be used to evaluate our historical and prospective financial performance, as well as our performance relative to competitors. We believe some of our investors track our "core operating performance" as a means of evaluating our performance in the
     ordinary, ongoing, and customary course of our operations. Core operating performance excludes items that are non-cash, not expected to recur or not reflective of ongoing financial results.  Management also believes that looking at our core operating performance provides a
     supplemental way to provide consistency in period to period comparisons.  Accordingly, management excludes from non-GAAP those items relating to restructuring charges, amortization of purchased intangible assets, stock-based compensation, amortization of acquisition-
     related inventory step-up, acquisition/divestiture items, debt issuance costs, and non-GAAP tax adjustments.  For detailed explanations of the adjustments made to comparable GAAP measures, see items (A) - ( I ) below.


    ( A )               Restructuring charges.Included in our GAAP presentation of cost of sales and operating expenses, restructuring
                        charges recorded are primarily for employee compensation resulting from reductions in employee headcount in
                        connection with our company restructurings.  We exclude restructuring charges from our non-GAAP measures
                        because we believe they do not reflect expected future operating expenses, they are not indicative of our
                        core operating performance, and they are not meaningful in comparisons to our past operating performance.  We
                        have incurred restructuring expense in each of the periods presented.  However the amount incurred can vary
                        significantly based on whether a restructuring has occurred in the period and the timing of headcount
                        reductions.


    ( B )               Amortization of purchased intangible assets.Included in our GAAP presentation of gross margin and operating
                        expenses is amortization of purchased intangible assets. U.S. GAAP accounting requires that intangible assets
                        are recorded at fair value and amortized over their useful lives. Consequently, the timing and size of our
                        acquisitions will cause our operating results to vary from period to period, making a comparison to past
                        performance difficult for investors. This accounting treatment may cause differences when comparing our
                        results to companies that grow internally because the fair value assigned to the intangible assets acquired
                        through acquisition may significantly exceed the equivalent expenses that a company may incur for similar
                        efforts when performed internally. Furthermore, the useful life that we use to amortize our intangible assets
                        over may be substantially different from the time period that an internal growth company incurs and
                        recognizes such expenses. We believe that by excluding the amortization of purchased intangible assets, which
                        primarily represents technology and/or customer relationships already developed, it provides an alternative
                        way for investors to compare our operations pre-acquisition to those post-acquisitions and to those of our
                        competitors that have pursued internal growth strategies. However, we note that companies that grow
                        internally will incur costs to develop intangible assets that will be expensed in the period incurred, which
                        may make a direct comparison more difficult.


    ( C )               Stock-based compensation. Included in our GAAP presentation of cost of sales and operating expenses, stock-
                        based compensation consists of expenses for employee stock options and awards and purchase rights under our
                        employee stock purchase plan. We exclude stock-based compensation expense from our non-GAAP measures
                        because some investors may view it as not reflective of our core operating performance as it is a non-cash
                        expense.   For the second quarter and first two quarters of fiscal years 2018 and 2017, stock-based
                        compensation was allocated as follows:


                                                                                                Second Quarter of                                           First Two Quarters of
                                                                                                -----------------                                           ---------------------

                       (Dollars in millions)                                                                                 2018                                                           2017                                                           2018                         2017
                                                                                                                             ----                                                           ----                                                           ----                         ----

                       Cost of sales                                                                                         $1.1                                                           $0.9                                                           $2.2                         $1.7

                       Research and development                                                                               3.2                                                            2.6                                                            6.3                          5.0

                       Sales and marketing                                                                                    2.4                                                            2.4                                                            4.7                          4.6

                       General and administrative                                                                            10.2                                                            9.3                                                           21.1                         17.6
                                                                                                                             ----                                                                                                                         ----

                       Total stock-based compensation                                                                       $16.9                                                          $15.2                                                          $34.3                        $28.9
                                                                                                                            -----                                                          -----                                                          -----                        -----


    ( D )               Amortization of acquisition-related inventory step-up.  The purchase accounting entries associated with our
                        business acquisitions require us to record inventory at its fair value, which is sometimes greater than the
                        previous book value of the inventory. Included in our GAAP presentation, the increase in inventory value is
                        amortized to cost of sales over the period that the related product is sold. We exclude inventory step-up
                        amortization from our non-GAAP measures because it is a non-cash expense that we do not believe is
                        indicative of our ongoing operating results. We further believe that excluding this item from our non-GAAP
                        results is useful to investors in that it allows for period-over-period comparability.


    ( E )               Acquisition / divestiture items.  Included in our GAAP presentation of cost of sales and operating expenses,
                        acquisition costs consist of external and incremental costs resulting directly from merger and acquisition
                        and strategic investment activities such as legal, due diligence, integration, and other closing costs,
                        including the acceleration of acquisition stock options, as well as adjustments to the fair value of earn-
                        out liabilities.  Included in our GAAP presentation of non-operating income (expense), net, acquisition/
                        divestiture items includes unusual acquisition, investment, and/or divestiture gains/losses. Although we do
                        numerous acquisitions, the costs that have been excluded from the non-GAAP measures are costs specific to
                        particular acquisitions. These are one-time costs that vary significantly in amount and timing and are not
                        indicative of our core operating performance.


    ( F )               Debt issuance costs.Included in our non-operating income (loss), net this amount represents incurred costs in
                        connection with the Bridge Facility, costs associated with the issuance of new credit facilities and Senior
                        Notes that were not capitalized as debt issuance costs, and a write-off of debt issuance costs for
                        terminated and/or modified credit facilities. We excluded the debt issuance cost write-off from our non-
                        GAAP measures. We believe that investors benefit from excluding this item from our non-operating income to
                        facilitate an evaluation of our non-operating income trends.


    ( G )               Non-GAAP items tax effected.  This amount adjusts the provision for income taxes to reflect the effect of the
                        non-GAAP items ( A ) - ( F ) on non-GAAP net income.  We believe this information is useful to investors
                        because it provides for consistent treatment of the excluded items in this non-GAAP presentation.


    ( H )               Difference in GAAP and Non-GAAP tax rate.  This amount represents the difference between the GAAP and Non-
                        GAAP tax rates applied to the Non-GAAP operating income plus the Non-GAAP non-operating income (expense),
                        net. We believe that investors benefit from excluding this amount from our non-GAAP income tax provision
                        because it facilitates a comparison of the non-GAAP tax provision in the current and prior periods.


    ( I )               GAAP and non-GAAP tax rate percentages.  These percentages are defined as GAAP income tax provision as a
                        percentage of GAAP income before taxes and non-GAAP income tax provision as a percentage of non-GAAP income
                        before taxes.  We believe that investors benefit from a presentation of non-GAAP tax rate percentage as a
                        way of facilitating a comparison to non-GAAP tax rates in prior periods.

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SOURCE Trimble Inc.