Trimble Announces Record 2018 Financial Results
SUNNYVALE, Calif., Feb. 6, 2019 /PRNewswire/ -- Trimble Inc. (NASDAQ: TRMB) today announced fourth quarter and fiscal year 2018 financial results.
Fourth Quarter 2018 Financial Summary
Fourth quarter 2018 GAAP revenue of $785.5 million was up 12 percent as compared to the fourth quarter of 2017. Fourth quarter 2018 non-GAAP revenue of $792.9 million was up 13 percent as compared to the fourth quarter of 2017.
Buildings and Infrastructure revenue was $287.0 million, up 40 percent. Geospatial revenue was $178.8 million, up 2 percent. Resources and Utilities revenue was $130.1 million, down 2 percent. Transportation revenue was $197.0 million, up 4 percent. Segment revenues reflect the results of Trimble's reportable segments under its management reporting system and are non-GAAP measures.
GAAP operating income was $89.6 million, up 61 percent as compared to the fourth quarter of 2017. GAAP operating margin was 11.4 percent of revenue as compared to 8.0 percent of revenue in the fourth quarter of 2017.
GAAP net income was $86.5 million, up 341 percent as compared to the fourth quarter of 2017. GAAP diluted earnings per share was $0.34 as compared to GAAP diluted loss per share of $(0.14) in the fourth quarter of 2017.
Non-GAAP operating income of $171.9 million was up 43 percent as compared to the fourth quarter of 2017. Non-GAAP operating margin was 21.7 percent of revenue as compared to 17.1 percent of revenue in the fourth quarter of 2017.
Non-GAAP net income of $122.3 million was up 31 percent as compared to the fourth quarter of 2017. Non-GAAP diluted earnings per share were $0.48 as compared to non-GAAP diluted earnings per share of $0.37 in the fourth quarter of 2017.
The GAAP tax rate for the quarter resulted in a benefit of 28 percent as compared to an expense of 174 percent in the fourth quarter of 2017, and the non-GAAP tax rate was 19 percent as compared to 23 percent in the fourth quarter of 2017. GAAP tax rates for the fourth quarter and full year of 2018 were impacted by substantial changes in tax laws on a year-over-year basis.
During the fourth quarter, Trimble repurchased approximately 1.1 million shares of its common stock for $40 million.
"Our robust quarterly results closed a record year for Trimble. Revenue growth was aided by the strong performance of recent acquisitions, which are outperforming expectations," said Steven W. Berglund, Trimble's president and chief executive officer. "Operating margins reflected notable expansion, driven by high operating leverage. Despite the potential effects of trade conflicts and some regional concerns, we remain confident about the potential for 2019 and beyond."
Fiscal 2018 Financial Summary
Fiscal 2018 GAAP revenue of $3,108.4 million was up 17 percent as compared to fiscal 2017. Fiscal 2018 non-GAAP revenue of $3,132.0 million was up 18 percent as compared to fiscal 2017.
Buildings and Infrastructure revenue was $1,087.7 million, up 31 percent. Geospatial revenue was $723.1 million, up 10 percent. Resources and Utilities revenue was $568.1 million, up 18 percent. Transportation revenue was $753.1 million, up 11 percent. Segment revenues reflect the results of Trimble's reportable segments under its management reporting system and are non-GAAP measures.
GAAP operating income was $320.7 million, up 36 percent as compared to fiscal 2017. GAAP operating margin was 10.3 percent of revenue as compared to 8.9 percent of revenue in fiscal 2017.
GAAP net income was $282.8 million, up 139 percent as compared to fiscal 2017. GAAP diluted earnings per share were $1.12 as compared to GAAP diluted earnings per share of $0.46 in fiscal 2017.
Non-GAAP operating income of $643.9 million was up 37 percent as compared to fiscal 2017. Non-GAAP operating margin was 20.6 percent of revenue as compared to 17.8 percent of revenue in fiscal 2017.
Non-GAAP net income of $491.7 million was up 32 percent as compared to fiscal 2017. Non-GAAP diluted earnings per share were $1.94 as compared to non-GAAP diluted earnings per share of $1.45 in fiscal 2017.
The GAAP tax rate for the year resulted in a benefit of 2 percent as compared to an expense of 52 percent in fiscal 2017, and the non-GAAP tax rate was 19 percent as compared to 23 percent in fiscal 2017.
Operating cash flow for fiscal 2018 was $486.7 million, up 13 percent as compared to fiscal 2017. Deferred revenue for fiscal 2018 was $387.2 million, up 40 percent as compared to fiscal 2017.
During fiscal 2018, Trimble repurchased approximately 2.4 million shares for $90.0 million. Approximately $352 million remains under the current share repurchase authorization as of the end of the fourth quarter.
Forward Looking Guidance
For the first quarter of 2019, Trimble expects to report GAAP revenue between $792 million and $817 million and GAAP earnings per share of $0.21 to $0.25, and non-GAAP revenue between $795 million and $820 million and non-GAAP earnings per share of $0.44 to $0.48. GAAP guidance assumes a tax rate of 18 percent and non-GAAP guidance assumes a tax rate of 20 percent. Both GAAP and non-GAAP earnings per share assume approximately 254 million shares outstanding. A reconciliation of the non-GAAP measures to the most directly comparable GAAP measures and other information relating to these non-GAAP measures are included in the supplemental reconciliation schedule attached.
Investor Conference Call / Webcast Details
Trimble will hold a conference call on February 6 at 2:00 p.m. PT to review its fourth quarter and full year 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 9386684. The replay will also be available on the web at the address above.
Segment Data
Segment data reflects the results of Trimble's reportable segments under its management reporting system. Segment revenue and operating income are consistent with the respective non-GAAP measures discussed below and in the attached supplemental schedules.
Use of Non-GAAP Financial Information
In addition to financial information prepared in accordance with GAAP, this press release also contains certain non-GAAP financial measures based upon management's view of performance, including:
-- Non-GAAP revenue
-- Non-GAAP operating income
-- Non-GAAP operating margin
-- Non-GAAP net income
-- Diluted non-GAAP earnings per share
-- Non-GAAP tax rate
Beginning in the third quarter of 2018, the Company started reporting a non-GAAP revenue measure. Trimble believes this measure helps investors understand the performance of the business as non-GAAP revenue excludes the effects of certain acquired deferred revenue that was written down to fair value in purchase accounting. Management believes that excluding fair value purchase accounting adjustments more closely correlates with the ordinary and ongoing course of the acquired company's operations and facilitates analysis of revenue growth and business trends. Prior periods have also been restated to reflect this non-GAAP measure.
Investors are encouraged to review 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, which can be found at the end of this press release. Additional financial information about Trimble's use of non-GAAP results can be found on the investor relations page of Trimble's 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 of 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 in 2019, the impact of acquisitions, the ability to achieve long-term business model targets, including the respect to organic growth, software growth and target net working capital and capex expectations for future R&D spend, the ability to deliver revenue, earnings per share and other financial projections that Trimble has guided for the first quarter of 2019 and beyond, 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, and our long-term growth targets and operating margins. These forward-looking statements are subject to change, and actual results may materially differ from those set forth in this press release due to certain risks and uncertainties. For example, Trimble's expected tax rate is based on current tax law, including current interpretations of the Tax Cuts and Jobs Act of 2017 ("TCJA"), and current expected income 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, or 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, especially in light of greater uncertainty than normal in the economy in general. These statements reflect the Company's position as of the date of this release. 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.
FTRMB
CONDENSED CONSOLIDATED STATEMENTS OF INCOME (LOSS)
(In millions, except per share data)
(Unaudited)
Fourth Quarter of
Fiscal Years
2018 2017 2018 2017
* As Adjusted
* As Adjusted
Revenue:
Product $471.4 $459.4 $1,999.9 $1,763.8
Service 167.3 132.6 588.7 475.4
Subscription 146.8 107.8 519.8 407.3
Total revenue 785.5 699.8 3,108.4 2,646.5
Cost of sales:
Product 215.8 233.0 938.9 875.6
Service 63.5 53.3 247.3 194.4
Subscription 43.0 30.7 138.0 113.1
Amortization of purchased
intangible assets 28.0 23.3 103.2 85.8
Total cost of sales 350.3 340.3 1,427.4 1,268.9
Gross margin 435.2 359.5 1,681.0 1,377.6
Gross margin (%) 55.4 % 51.4 % 54.1 % 52.1 %
Operating expense:
Research and
development 112.6 98.1 446.1 370.2
Sales and
marketing 125.2 105.6 479.8 400.1
General and
administrative 87.2 83.3 349.8 301.7
Restructuring
charges 1.9 0.4 8.2 6.9
Amortization of
purchased
intangible
assets 18.7 16.4 76.4 63.0
Total operating expense 345.6 303.8 1,360.3 1,141.9
Operating income 89.6 55.7 320.7 235.7
Non-operating income (expense), net:
Interest
expense, net (22.4) (6.8) (73.2) (25.2)
Foreign currency
transaction
gain (loss),
net (0.1) 0.3 0.5 3.3
Income from
equity method
investments,
net 5.5 6.7 28.7 29.5
Other income
(loss), net (4.6) (7.3) 1.3 4.9
Total non-operating income
(expense), net (21.6) (7.1) (42.7) 12.5
Income before taxes 68.0 48.6 278.0 248.2
Income tax provision (benefit) (18.8) 84.4 (5.3) 129.7
Net income (loss) 86.8 (35.8) 283.3 118.5
Less: Net gain
attributable to
noncontrolling
interests 0.3 0.1 0.5 0.1
Net income (loss) attributable to
Trimble Inc. $86.5 $(35.9) $282.8 $118.4
===
Net income (loss) per share attributable to Trimble Inc.
Basic $0.34 $(0.14) $1.13 $0.47
Diluted $0.34 $(0.14) $1.12 $0.46
Shares used in calculating net income (loss) per share:
Basic 251.4 250.9 250.0 252.1
Diluted 254.6 250.9 253.4 256.7
* Prior-period information has
been restated for the adoption of
ASC 606, Revenue from Contracts
with Customers.
CONDENSED CONSOLIDATED BALANCE SHEETS
(In millions)
(Unaudited)
Fiscal Year End Fiscal Year End
2018 2017
As of
* As Adjusted
---
Assets
Current assets:
Cash and cash
equivalents $172.5 $358.5
Short term
investments 178.9
Accounts
receivable, net 512.6 427.7
Other
receivables 33.2 42.8
Inventories 298.0 264.6
Other current
assets 72.8 39.2
Total current assets 1,089.1 1,311.7
Property and equipment, net 212.9 174.0
Goodwill 3,540.0 2,287.1
Other purchased intangible assets, net 744.3 364.8
Deferred costs, non-current 41.3 35.0
Other non-current assets 148.8 143.7
Total assets $5,776.4 $4,316.3
Liabilities and Stockholders' Equity
Current liabilities:
Short-term debt $256.2 $128.4
Accounts payable 147.6 146.0
Accrued
compensation
and benefits 169.2 143.9
Deferred revenue 348.4 237.6
Accrued warranty
expense 15.3 18.3
Other current
liabilities 118.5 99.2
Total current liabilities 1,055.2 773.4
Long-term debt 1,712.3 785.5
Non-current deferred revenue 38.8 39.0
Deferred income tax liabilities 73.8 47.8
Income taxes payable 71.3 94.1
Other non-current liabilities 150.2 162.0
Total liabilities 3,101.6 1,901.8
Stockholders' equity:
Common stock 0.3 0.2
Additional paid-
in capital 1,591.9 1,461.1
Retained
earnings 1,268.3 1,084.6
Accumulated
other
comprehensive
loss (186.1) (131.4)
Total Trimble Inc. stockholders' equity 2,674.4 2,414.5
Noncontrolling interests 0.4
Total stockholders' equity 2,674.8 2,414.5
Total liabilities and
stockholders' equity $5,776.4 $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)
Fiscal Years
2018 2017
* As Adjusted
Cash flow from operating activities:
Net Income $283.3 $118.5
Adjustments to reconcile net income to net cash
provided by
operating activities:
Depreciation expense 35.6 34.6
Amortization expense 179.6 148.8
Stock-based compensation 76.9 64.8
Income (loss) from equity method investments 1.9 (11.4)
Other non-cash items 14.7 (1.3)
Decrease (increase) in assets:
Accounts receivable, net (51.0) (42.7)
Inventories (45.0) (37.3)
Other current and non-current assets (22.6) (10.0)
Increase (decrease) in liabilities:
Accounts payable (2.0) 25.7
Accrued compensation and benefits 18.6 34.0
Deferred revenue 76.3 19.3
Other liabilities (79.6) 86.7
Net cash provided by operating activities 486.7 429.7
Cash flow from investing activities:
Acquisitions of businesses, net of cash acquired (1,763.5) (280.2)
Acquisitions of property and equipment (67.6) (43.7)
Purchases of short-term investments (24.0) (288.0)
Proceeds from maturities of short-term investments 6.2 122.1
Proceeds from sales of short-term investments 196.8 97.7
Other 2.5 20.9
Net cash used in investing activities (1,649.6) (371.2)
Cash flow from financing activities:
Issuance of common stock, net of tax withholdings 40.2 73.8
Repurchases of common stock (93.0) (285.3)
Proceeds from debt and revolving credit lines 2,976.4 786.0
Payments on debt and revolving credit lines (1,925.1) (495.4)
Other (9.1) (12.6)
Net cash provided by financing activities 989.4 66.5
Effect of exchange rate changes on cash and cash equivalents (12.5) 17.4
Net increase (decrease) in cash and cash equivalents (186.0) 142.4
Cash and cash equivalents - beginning of period 358.5 216.1
Cash and cash equivalents - end of period $172.5 $358.5
* 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
GAAP TO NON-GAAP RECONCILIATION
(Dollars in millions)
(Unaudited)
Reporting Segments
Buildings
Resources
and
and
Infrastructure
Geospatial
Utilities
Transportation
FOURTH QUARTER OF FISCAL 2018 :
Revenue $279.9 $178.8 $129.9 $196.9
Acquired
deferred
revenue
adjustment ( A ) 7.1 0.2 0.1
Non-GAAP Revenue $287.0 $178.8 $130.1 $197.0
Operating income
before corporate
allocations $67.2 $40.1 $35.1 $44.4
Acquired
deferred
revenue
adjustment ( A ) 7.1 0.2 0.1
Amortization
of acquired
capitalized
commissions ( G ) (1.8)
Non-GAAP
Operating income
before corporate
allocations $72.5 $40.1 $35.3 $44.5
Operating
margin (% of
segment
external net
revenue) 24.0 % 22.4 % 27.0 % 22.5 %
Non-GAAP
Operating
margin (% of
segment Non-
GAAP
external net
revenue) 25.3 % 22.4 % 27.1 % 22.6 %
FOURTH QUARTER OF FISCAL 2017 as adjusted:
Revenue $204.4 $174.9 $132.0 $188.5
Acquired
deferred
revenue
adjustment ( A ) 0.7 0.4 0.2
Non-GAAP Revenue $205.1 $174.9 $132.4 $188.7
Operating income
before corporate
allocations $41.4 $35.4 $32.2 $35.2
Acquired
deferred
revenue
adjustment ( A ) 0.7 0.4 0.2
Amortization
of acquired
capitalized
commissions ( G ) (0.2) (0.2)
Non-GAAP
Operating income
before corporate
allocations $41.9 $35.4 $32.6 $35.2
Operating
margin (% of
segment
external net
revenue) 20.3 % 20.2 % 24.4 % 18.7 %
Non-GAAP
Operating
margin (% of
segment Non-
GAAP
external net
revenue) 20.4 % 20.2 % 24.6 % 18.7 %
FISCAL YEAR 2018 :
Revenue $1,065.5 $723.1 $567.1 $752.7
Acquired
deferred
revenue
adjustment ( A ) 22.2 1.0 0.4
Non-GAAP Revenue $1,087.7 $723.1 $568.1 $753.1
Operating income
before corporate
allocations $239.0 $166.4 $167.4 $142.9
Acquired
deferred
revenue
adjustment ( A ) 22.2 1.0 0.4
Amortization
of acquired
capitalized
commissions ( G ) (4.5) (0.2)
Non-GAAP
Operating income
before corporate
allocations $256.7 $166.4 $168.2 $143.3
Operating
margin (% of
segment
external net
revenue) 22.4 % 23.0 % 29.5 % 19.0 %
Non-GAAP
Operating
margin (% of
segment Non-
GAAP
external net
revenue) 23.6 % 23.0 % 29.6 % 19.0 %
FISCAL YEAR 2017 as adjusted:
Revenue $829.4 $658.5 $481.0 $677.6
Acquired
deferred
revenue
adjustment ( A ) 1.1 1.0 0.7
Non-GAAP Revenue $830.5 $658.5 $482.0 $678.3
Operating income
before corporate
allocations $176.0 $129.4 $137.0 $114.4
Acquired
deferred
revenue
adjustment ( A ) 1.1 1.0 0.7
Amortization
of acquired
capitalized
commissions ( G ) (0.9) (0.1) (0.3)
Non-GAAP
Operating income
before corporate
allocations $176.2 $129.4 $137.9 $114.8
Operating
margin (% of
segment
external net
revenue) 21.2 % 19.7 % 28.5 % 16.9 %
Non-GAAP
Operating
margin (% of
segment Non-
GAAP
external net
revenue) 21.2 % 19.7 % 28.6 % 16.9 %
Note: Fourth quarter and 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)
Fourth Quarter of
Fiscal Years
2018 2017 2018 2017
* As Adjusted
* As Adjusted
Dollar
% of
Dollar
% of
Dollar
% of
Dollar
% of
Amount
Revenue
Amount
Revenue
Amount
Revenue
Amount
Revenue
REVENUE:
GAAP revenue: $785.5 $699.8 $3,108.4 $2,646.5
Acquired deferred revenue
adjustment
( A ) 7.4 1.3 23.6 2.8
Non-GAAP Revenue: $792.9 $701.1 $3,132.0 $2,649.3
GROSS MARGIN:
GAAP gross margin: $435.2 55.4 % $359.5 51.4 % $1,681.0 54.1 % $1,377.6 52.1 %
Acquired deferred revenue
adjustment
( A ) 7.4 1.3 23.6 2.8
Restructuring charges
( B ) 2.3 0.5 3.6
Amortization of purchased
intangible assets
( C ) 28.0 23.3 103.2 85.8
Stock-based compensation
( D ) 1.2 1.1 4.5 3.9
Amortization of acquisition-
related inventory step-up
( E ) 0.2 0.2 2.8
Acquisition /divestiture items
( F ) 2.0
Non-GAAP gross
margin: $472.0 59.5 % $387.5 55.3 % $1,815.0 58.0 % $1,476.5 55.7 %
OPERATING EXPENSES:
GAAP operating
expenses: $345.6 44.0 % $303.8 43.4 % $1,360.3 43.8 % $1,141.9 43.1 %
Restructuring charges
( B ) (1.9) (0.4) (8.2) (6.9)
Amortization of purchased
intangible assets
( C ) (18.7) (16.4) (76.4) (63.0)
Stock-based compensation
( D ) (22.6) (18.7) (72.4) (60.9)
Acquisition /divestiture items
( F ) (4.1) (1.3) (36.9) (7.4)
Amortization of acquired
capitalized commissions
( G ) 1.8 0.4 4.7 1.3
Non-GAAP
operating
expenses: $300.1 37.8 % $267.4 38.1 % $1,171.1 37.4 % $1,005.0 37.9 %
OPERATING INCOME:
GAAP operating
income: $89.6 11.4 % $55.7 8.0 % $320.7 10.3 % $235.7 8.9 %
Acquired deferred revenue
adjustment
( A ) 7.4 1.3 23.6 2.8
Restructuring charges
( B ) 1.9 2.7 8.7 10.5
Amortization of purchased
intangible assets
( C ) 46.7 39.7 179.6 148.8
Stock-based compensation
( D ) 23.8 19.8 76.9 64.8
Amortization of acquisition-
related inventory step-up
( E ) 0.2 0.2 2.8
Acquisition /divestiture items
( F ) 4.1 1.3 38.9 7.4
Amortization of acquired
capitalized commissions
( G ) (1.8) (0.4) (4.7) (1.3)
Non-GAAP
operating income: $171.9 21.7 % $120.1 17.1 % $643.9 20.6 % $471.5 17.8 %
NON-OPERATING INCOME (EXPENSE), NET:
GAAP non-
operating income
(expense), net: $(21.6) $(7.1) $(42.7) $12.5
Acquisition /divestiture items
( F ) 1.0 8.6 (0.3) (0.3)
Debt issuance costs
( H ) 6.7
Non-GAAP non-
operating income
(expense), net: $(20.6) $1.5 $(36.3) $12.2
GAAP and
GAAP and
GAAP and
GAAP and
Non-GAAP
Non-GAAP
Non-GAAP
Non-GAAP
Tax Rate % ( M ) Tax Rate % ( M ) Tax Rate %
( M ) Tax Rate %
( M )
INCOME TAX PROVISION (BENEFIT):
GAAP income tax
provision
(benefit): $(18.8) (28)% $84.4 174 % $(5.3) (2)% $129.7 52 %
Non-GAAP items tax effected
( I ) 11.0 10.1 47.8 46.9
Difference in GAAP and Non-GAAP
tax rate
( J ) 9.3 13.6 27.3 14.8
Tax reform impacts
( K ) 17.7 (80.2) 21.3 (80.2)
Reserve release upon statute of
limitations expiration
( L ) 9.5 24.3
Non-GAAP income
tax provision: $28.7 19 % $27.9 23 % $115.4 19 % $111.2 23 %
NET INCOME (LOSS):
GAAP net income
(loss)
attributable to
Trimble Inc.: $86.5 $(35.9) $282.8 $118.4
Acquired deferred revenue
adjustment
( A ) 7.4 1.3 23.6 2.8
Restructuring charges
( B ) 1.9 2.7 8.7 10.5
Amortization of purchased
intangible assets
( C ) 46.7 39.7 179.6 148.8
Stock-based compensation
( D ) 23.8 19.8 76.9 64.8
Amortization of acquisition-
related inventory step-up
( E ) 0.2 0.2 2.8
Acquisition /divestiture items
( F ) 5.1 9.9 38.6 7.1
Amortization of acquired
capitalized commissions
( G ) (1.8) (0.4) (4.7) (1.3)
Debt issuance costs
( H ) 6.7
Non-GAAP tax adjustments
( I ) + ( J ) + ( K ) + ( L ) (47.5) 56.5 (120.7) 18.5
Non-GAAP net
income
attributable to
Trimble Inc.: $122.3 $93.6 $491.7 $372.4
DILUTED NET INCOME (LOSS) PER SHARE:
GAAP diluted net
income (loss) per
share
attributable to
Trimble Inc.: $0.34 $(0.14) $1.12 $0.46
Acquired deferred revenue
adjustment
( A ) 0.03 0.01 0.09 0.01
Restructuring charges
( B ) 0.01 0.01 0.04 0.04
Amortization of purchased
intangible assets
( C ) 0.18 0.15 0.71 0.58
Stock-based compensation
( D ) 0.10 0.08 0.30 0.25
Amortization of acquisition-
related inventory step-up
( E ) 0.01
Acquisition /divestiture items
( F ) 0.02 0.04 0.15 0.03
Amortization of acquired
capitalized commissions
( G ) (0.01) (0.02)
Debt issuance costs
( H ) 0.03
Non-GAAP tax adjustments
( I ) + ( J )+ ( K ) + ( L ) (0.19) 0.22 (0.48) 0.07
Non-GAAP diluted
net income per
share
attributable to
Trimble Inc.: $0.48 $0.37 $1.94 $1.45
* Prior-period information
has been restated for the
adoption of ASC 606, Revenue
from Contracts with
Customers.
First Quarter of 2019
Low End
High End
FORECASTED DILUTED NET INCOME PER
SHARE:
Forecasted GAAP
diluted net
income per share
attributable to
Trimble Inc.: $0.21 $0.25
Acquired deferred revenue
adjustment
( A ) 0.01 0.01
Restructuring charges
( B ) 0.01 0.01
Amortization of purchased
intangible assets
( C ) 0.18 0.18
Stock-based compensation
( D ) 0.09 0.09
Acquisition /divestiture items
( F ) 0.01 0.01
Amortization of acquired
capitalized commissions
( G ) (0.01) (0.01)
Non-GAAP tax adjustments
( I ) + ( J )+ ( K ) + ( L ) (0.06) (0.06)
Forecasted non-
GAAP diluted net
income per share
attributable to
Trimble Inc.: $0.44 $0.48
FOOTNOTES TO GAAP TO NON-GAAP RECONCILIATION
(Unaudited)
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 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 including industry peer companies, limiting the usefulness of these measures for comparative purposes.
Our 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. 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 revenue
We believe this measure helps investors understand the performance of our business, as non-GAAP revenue excludes the effects of certain acquired deferred revenue that was written down to fair value in purchase accounting. Management believes that
excluding fair value purchase accounting adjustments more closely correlates with the ordinary and ongoing course of the acquired company's operations and facilitates analysis of revenue growth and business trends.
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 the effects of acquired deferred
revenue that was written down to fair value in purchase accounting, 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 adjustments 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 costs including the acceleration of acquisition stock options, as well as
adjustment to the fair value of earn-out liabilities, and the effects of certain acquired capitalized commissions that was eliminated in purchase accounting from GAAP operating expenses. We believe that these adjustments 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 the effects of purchase accounting adjustments to certain acquired
deferred revenue and acquired capitalized commissions, restructuring charges, amortization of purchased intangible assets, stock-based compensation, amortization of acquisition-related inventory step-up, and acquisition/divestiture items from GAAP
operating income. We believe that these adjustments 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 the effects of purchase accounting adjustments to certain acquired deferred
revenue and acquired capitalized commissions, 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 adjustments 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 the effects of purchase accounting adjustments to certain acquired deferred revenue and acquired capitalized commissions, 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 adjustments 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 the effects of purchase accounting adjustments to certain
acquired deferred revenue and acquired capitalized commissions, 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) - ( M ) below.
( A ) Acquired deferred revenue adjustment. Purchase accounting generally requires us to write-down
acquired deferred revenue to fair value. Our GAAP revenue includes the fair value impact from
purchase accounting for post contract support and subscriptions contracts assumed in connection
with our acquisitions. The non-GAAP adjustment to our revenue is intended to reflect the full
amount of such revenue. We believe this adjustment is useful to investors as a measure of the
ongoing performance of our business and facilitates analysis of revenue growth and business
trends.
( B ) 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.
( C ) 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-acquisition 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.
( D ) 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 fourth quarter and fiscal
years 2018 and 2017, stock-based compensation was allocated as follows:
Fourth Quarter of
Fiscal Years
(Dollars in millions) 2018 2017 2018 2017
Cost of sales $1.2 $1.1 $4.5 $3.9
Research and development 4.8 2.7 15.0 10.4
Sales and Marketing 2.8 2.3 10.0 9.3
General and administrative 15.0 13.7 47.4 41.2
Total stock-based compensation $23.8 $19.8 $76.9 $64.8
( E ) 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.
( F ) 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.
( G ) Amortization of acquired capitalized commissions. Purchase accounting generally requires us to
eliminate capitalized sales commissions balances as of the acquisition date. Our GAAP sales and
marketing expenses generally do not reflect the amortization of these capitalized sales
commissions balances. The non-GAAP adjustment to increase our sales and marketing expenses is
intended to reflect the full amount of amortization related to such balances as though the
acquired companies operated independently in the periods presented. We believe this adjustment to
sales and marketing expenses is useful to investors as a measure of the ongoing performance of
our business.
( H ) 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.
( I ) Non-GAAP items tax effected. This amount adjusts the provision for income taxes to reflect the
effect of the non-GAAP items ( A ) - ( H ) 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.
( J ) 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.
( K ) Tax reform impacts. This amount represents the provision for income taxes recorded as a result of
the Tax Act enacted in December 22, 2017. The provision primarily includes a one-time
transition tax on accumulated foreign earnings and related adjustments to deferred taxes and
reserves, and revaluation of deferred taxes due to the reduction of U.S. income tax rate. We are
required to recognize the effect of the tax law changes in the period of enactment. We excluded
this item as it is a non-recurring expense. We believe that investors benefit from excluding
this item from our non-GAAP income tax provision because it allows for period-over-period
comparability.
( L ) Reserve release upon statute of limitations expiration.This amount represents a one time benefit
totaling $24.3 million in fiscal 2018 resulting from a reserve release due to the expiration of
year 2010, 2013, and 2014 statute of limitations. We excluded this because it is non-recurring
and is not indicative of our core operating performance.
( M ) 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.
View original content:http://www.prnewswire.com/news-releases/trimble-announces-record-2018-financial-results-300791167.html
SOURCE Trimble Inc.
