Trimble Announces Record 2019 Financial Results

SUNNYVALE, Calif., Feb. 12, 2020 /PRNewswire/ -- Trimble Inc. (NASDAQ: TRMB) today announced fourth quarter and fiscal year 2019 financial results.

Fourth Quarter 2019 Financial Summary

Fourth quarter 2019 GAAP revenue of $824.0 million was up 5 percent as compared to the fourth quarter of 2018. Fourth quarter 2019 non-GAAP revenue of $826.7 million was up 4 percent as compared to the fourth quarter of 2018. Fourth quarter 2019 was a 14-week quarter and fourth quarter 2018 was a 13-week quarter.

Buildings and Infrastructure revenue was $313.8 million, up 9 percent. Geospatial revenue was $168.7 million, down 6 percent. Resources and Utilities revenue was $138.1 million, up 6 percent. Transportation revenue was $206.1 million, up 5 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 $88.2 million, down 2 percent as compared to the fourth quarter of 2018. GAAP operating margin was 10.7 percent of revenue as compared to 11.4 percent of revenue in the fourth quarter of 2018.

GAAP net income was $279.3 million, up 223 percent as compared to the fourth quarter of 2018. GAAP diluted earnings per share was $1.11 as compared to GAAP diluted income per share of $0.34 in the fourth quarter of 2018.

Non-GAAP operating income of $178.2 million was up 4 percent as compared to the fourth quarter of 2018. Non-GAAP operating margin was 21.6 percent of revenue as compared to 21.7 percent of revenue in the fourth quarter of 2018.

Non-GAAP net income of $134.1 million was up 10 percent as compared to the fourth quarter of 2018. Non-GAAP diluted earnings per share were $0.53 as compared to non-GAAP diluted earnings per share of $0.48 in the fourth quarter of 2018.

The GAAP tax rate benefit for the quarter was 271 percent as compared to a tax rate benefit of 28 percent in the fourth quarter of 2018, and the non-GAAP tax rate was 19 percent both in the fourth quarter of 2019 and 2018. Consistent with changes in tax laws and to align with our international business operations, a non-U.S. intercompany transfer of intellectual property, completed in the fourth quarter, resulted in a one-time tax benefit for the fourth quarter of 2019.

"Our quarterly results exceeded expectations and we closed the year with good performance," said Rob Painter, Trimble's president and chief executive officer. "Our strategy is more compelling than ever and cash flow and annualized recurring revenue reflected notable expansion."

Fiscal 2019 Financial Summary

Fiscal 2019 GAAP revenue of $3,264.3 million was up 5 percent as compared to fiscal 2018. Fiscal 2019 non-GAAP revenue of $3,271.3 million was up 4 percent as compared to fiscal 2018. Fiscal 2019 was a 53-week year and 2018 was a 52-week year.

Buildings and Infrastructure revenue was $1,258.2 million, up 16 percent. Geospatial revenue was $649.4 million, down 10 percent. Resources and Utilities revenue was $571.4 million, up 1 percent. Transportation revenue was $792.3 million, up 5 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 $375.9 million, up 17 percent as compared to fiscal 2018. GAAP operating margin was 11.5 percent of revenue as compared to 10.3 percent of revenue in fiscal 2018.

GAAP net income was $514.3 million, up 82 percent as compared to fiscal 2018. GAAP diluted earnings per share were $2.03 as compared to GAAP diluted earnings per share of $1.12 in fiscal 2018.

Non-GAAP operating income of $667.8 million was up 4 percent as compared to fiscal 2018. Non-GAAP operating margin was 20.4 percent of revenue as compared to 20.6 percent of revenue in fiscal 2018.

Non-GAAP net income of $502.6 million was up 2 percent as compared to fiscal 2018. Non-GAAP diluted earnings per share were $1.99 as compared to non-GAAP diluted earnings per share of $1.94 in fiscal 2018.

The GAAP tax rate benefit for the year was 49 percent, driven by the intellectual property transfer as noted above. The tax rate benefit was 2 percent in fiscal 2018. The non-GAAP tax rate was 20 percent as compared to 19 percent in fiscal 2018.

Operating cash flow for fiscal 2019 was $585.0 million, up 20 percent as compared to fiscal 2018. Deferred revenue for fiscal 2019 was $541.9 million, up 40 percent as compared to fiscal 2018.

During fiscal 2019, Trimble repurchased approximately 4.7 million shares for $180 million. Approximately $172 million remains under the current share repurchase authorization as of the end of the fourth quarter.

Forward Looking Guidance

For the first quarter of 2020, Trimble expects to report GAAP revenue between $778 million and $808 million and GAAP earnings per share of $0.14 to $0.18, and non-GAAP revenue between $780 million and $810 million and non-GAAP earnings per share of $0.40 to $0.45. GAAP guidance assumes a tax rate of 21 to 22 percent and non-GAAP guidance assumes a tax rate of 17 to 18 percent. Both GAAP and non-GAAP earnings per share assume approximately 252 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 12 at 2:00 p.m. PT to review its fourth quarter 2019 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 2590949. The replay will also be available on the web at the address above.

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 recurring revenue
    --  Non-GAAP operating income
    --  Non-GAAP operating margin
    --  Non-GAAP net income
    --  Non-GAAP diluted earnings per share
    --  Non-GAAP tax rate

Trimble uses non-GAAP recurring revenue as a component of its performance measure annualized recurring revenue in order to provide investors with a supplementary indicator of the value of the Company's current recurring revenue contracts. For the fourth quarter of 2019, recurring revenue on a GAAP basis was $303.0 million, and non-GAAP recurring revenue was $303.8 million, which excluded $0.8 million related to the elimination of the deferred revenue adjustment in connection with acquisitions.

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. 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 section of Trimble's website at: http://investor.trimble.com.

Annualized recurring revenue

In addition to providing financial measures, Trimble provides an annualized recurring revenue (ARR) performance measure. Annualized recurring revenue is calculated by dividing non-GAAP recurring revenue for the current quarter by the number of days in the quarter, and multiplying by 365. Annualized recurring revenue should be viewed independently of revenue and deferred revenue as it is a performance measure and is not intended to be combined with or to replace either of those items.

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. 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, the ability to deliver revenue, earnings per share and other financial projections that Trimble has guided for the first quarter of 2020, and fiscal 2020, including the expected tax rate, anticipated impact of stock-based compensation expense, amortization of intangibles related to previous acquisitions, anticipated acquisition costs, debt issuance costs, restructuring charges, the anticipated number of diluted shares outstanding, the Company's 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 the Company's tax structure under current law, including where the Company's assets are deemed to reside for tax purposes, evolving interpretations of U.S. and other applicable tax laws, changes in the estimates of credits, benefits and deductions, the resolution of issues by various tax authorities, and other factors. 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. 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, the imposition of barriers to international trade, and a further softening in the agricultural sector. Any failure to achieve predicted results could negatively impact the Company's revenue, 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 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

                                                                                   
            (In millions, except per share data)

                                                                                               
            (Unaudited)




                                                       
          Fourth Quarter of                                  
            Fiscal Years


                                                        2019                     2018                         2019                              2018

                                                                                                                                              ---


     Revenue:



     Product                                                $
            466.5                                        $
            471.4                  $
           1,934.8  $
        1,999.9



     Service                                          184.4                                   167.3                                          686.2              588.7



     Subscription                                     173.1                                   146.8                                          643.3              519.8




     Total revenue                                    824.0                                   785.5                                        3,264.3            3,108.4




     Cost of sales:



     Product                                          220.9                                   215.8                                          939.4              938.9



     Service                                           61.7                                    63.5                                          253.9              247.3



     Subscription                                      58.6                                    43.0                                          196.0              138.0


      Amortization of purchased
       intangible assets                                22.8                                    28.0                                           94.1              103.2




     Total cost of sales                              364.0                                   350.3                                        1,483.4            1,427.4




     Gross margin                                     460.0                                   435.2                                        1,780.9            1,681.0




     Gross margin (%)                         55.8
          %                           55.4
          %                                  54.6
          %       54.1
         %



     Operating expense:


      Research and development                         119.6                                   112.6                                          469.7              446.1



     Sales and marketing                              128.3                                   125.2                                          504.2              479.8


      General and administrative                        90.7                                    87.2                                          330.6              349.8



     Restructuring charges                             16.8                                     1.9                                           26.8                8.2


      Amortization of purchased
       intangible assets                                16.4                                    18.7                                           73.7               76.4




     Total operating expense                          371.8                                   345.6                                        1,405.0            1,360.3




     Operating income                                  88.2                                    89.6                                          375.9              320.7



     Non-operating expense, net:



     Interest expense, net                           (20.2)                                 (22.4)                                        (82.4)            (73.2)


      Income from equity method
       investments, net                                  5.3                                     5.5                                           35.8               28.7


      Other income (expense), net                        2.0                                   (4.7)                                          15.5                1.8



      Total non-operating expense,
       net                                            (12.9)                                 (21.6)                                        (31.1)            (42.7)




     Income before taxes                               75.3                                    68.0                                          344.8              278.0



     Income tax benefit                             (204.1)                                 (18.8)                                       (169.7)             (5.3)




     Net income                                       279.4                                    86.8                                          514.5              283.3


      Net gain attributable to
       noncontrolling interests                          0.1                                     0.3                                            0.2                0.5



      Net income attributable to
       Trimble Inc.                                          $
            279.3                                         $
            86.5                    $
           514.3    $
        282.8



      Earnings per share attributable to Trimble Inc.:



     Basic                                                   $
            1.12                                         $
            0.34                     $
           2.05     $
        1.13




     Diluted                                                 $
            1.11                                         $
            0.34                     $
           2.03     $
        1.12



      Shares used in calculating diluted earnings per
       share:



     Basic                                            249.5                                   251.4                                          250.8              250.0




     Diluted                                          251.6                                   254.6                                          252.9              253.4


                                 
              
                CONDENSED CONSOLIDATED BALANCE SHEETS

                                                    
              (In millions)

                                                     
              (Unaudited)




                                                             
              Fiscal Years



       
                As of                                2019                               2018

    ---                                                                                      ---


       
                Assets



       Current assets:



       Cash and cash equivalents                                  $
              189.2                         $
       172.5



       Accounts receivable, net                         608.2                                       512.6



       Inventories                                      312.1                                       298.0



       Other current assets                             102.3                                       106.0




       Total current assets                           1,211.8                                     1,089.1


        Property and equipment, net                      241.4                                       212.9


        Operating lease right-of-use
         assets                                          140.3



       Goodwill                                       3,680.6                                     3,540.0


        Other purchased intangible assets,
         net                                             678.7                                       744.3


        Deferred income tax assets                       475.5                                        12.2



       Other non-current assets                         212.4                                       177.9




       Total assets                                             $
              6,640.7                       $
       5,776.4



                     Liabilities and Stockholders' Equity



       Current liabilities:



       Short-term debt                                            $
              219.0                         $
       256.2



       Accounts payable                                 159.3                                       147.6


        Accrued compensation and benefits                123.5                                       169.2



       Deferred revenue                                 490.4                                       348.4



       Other current liabilities                        198.1                                       133.8




       Total current liabilities                      1,190.3                                     1,055.2



       Long-term debt                                 1,624.2                                     1,712.3


        Deferred revenue, non-current                     51.5                                        38.8


        Deferred income tax liabilities                  318.2                                        73.8



       Income taxes payable                              69.1                                        71.3


        Operating lease liabilities                      114.1


        Other non-current liabilities                    152.9                                       150.2




       Total liabilities                              3,520.3                                     3,101.6




       Stockholders' equity:



       Common stock                                       0.2                                         0.3


        Additional paid-in-capital                     1,692.8                                     1,591.9



       Retained earnings                              1,602.8                                     1,268.3


        Accumulated other comprehensive loss           (176.8)                                    (186.1)



        Total Trimble Inc. stockholders'
         equity                                        3,119.0                                     2,674.4



       Noncontrolling interests                           1.4                                         0.4



        Total stockholders' equity                     3,120.4                                     2,674.8



        Total liabilities and stockholders'
         equity                                                  $
              6,640.7                       $
       5,776.4


                            
              
                CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

                                                   
              (In millions)

                                                    
              (Unaudited)




                                                                 
              Fiscal Years


                                                               2019                             2018

                                                                                                ---


     Cash flow from operating activities:



     Net income                                                      $
              514.5                         $
     283.3


      Adjustments to reconcile net income to net cash provided by
       operating activities:



     Depreciation expense                                     39.4                                        35.6



     Amortization expense                                    167.8                                       179.6



     Deferred income taxes                                 (220.2)                                     (47.6)



     Stock-based compensation                                 75.0                                        76.9


      Income (loss) from equity method
       investments, net of dividends                          (7.8)                                        1.9



     Other, net                                                5.5                                        21.3



     (Increase) decrease in assets:



     Accounts receivable, net                               (96.0)                                     (51.0)



     Inventories                                            (21.3)                                     (45.0)


      Other current and non-current assets                     11.0                                      (17.6)



     Increase (decrease) in liabilities:



     Accounts payable                                         14.5                                       (2.0)


      Accrued compensation and benefits                      (46.4)                                       18.6



     Deferred revenue                                        148.2                                        76.3


      Other current and non-current liabilities                 0.8                                      (43.6)



      Net cash provided by operating activities               585.0                                       486.7




     Cash flow from investing activities:


      Acquisitions of businesses, net of cash
       acquired                                             (220.8)                                  (1,763.5)


      Acquisitions of property and equipment                 (69.0)                                     (67.6)


      Purchases of short-term investments                         -                                     (24.0)


      Proceeds from maturities of short-term
       investments                                                -                                        6.2


      Proceeds from sales of short-term
       investments                                                -                                      196.8



     Other, net                                               14.5                                         2.5



      Net cash used in investing activities                 (275.3)                                  (1,649.6)




     Cash flow from financing activities:


      Issuance of common stock, net of tax
       withholdings                                            29.1                                        40.2



     Repurchases of common stock                           (179.8)                                     (93.0)


      Proceeds from debt and revolving credit
       lines                                                1,195.4                                     2,976.4


      Payments on debt and revolving credit lines         (1,322.9)                                  (1,925.1)



     Other, net                                             (14.4)                                      (9.1)



      Net cash provided by (used in) financing
       activities                                           (292.6)                                      989.4



      Effect of exchange rate changes on cash and
       cash equivalents                                       (0.4)                                     (12.5)



      Net increase (decrease) in cash and cash
       equivalents                                             16.7                                     (186.0)


      Cash and cash equivalents -beginning of
       period                                                 172.5                                       358.5



      Cash and cash equivalents -end of period                        $
              189.2                         $
     172.5


                                                                                           
              
                REPORTING SEGMENTS

                                                                                     
              
                GAAP TO NON-GAAP RECONCILIATION

                                                                                                    
              (In millions)

                                                                                                     
              (Unaudited)




                                                                                     
              Reporting Segments


                                                         Buildings and                 Geospatial                          Resources and              Transportation
                                                   Infrastructure                                                      Utilities



                   FOURTH QUARTER OF FISCAL 2019 :



     Revenue                                                            $
        313.6                                                        $
      168.7                         $
      135.6      $
      206.1


      Acquired deferred revenue
       adjustment                                        (A)                     0.2                                                                                      2.5




     Non-GAAP revenue                                                   $
        313.8                                                        $
      168.7                         $
      138.1      $
      206.1





      Operating income before corporate
       allocations                                                        $
        92.4                                                         $
      41.1                          $
      35.5       $
      30.6


      Acquired deferred revenue
       adjustment                                        (A)                     0.2                                                                                      2.5


      Amortization of acquired
       capitalized commissions                           (G)                   (1.5)



      Non-GAAP operating income before
       allocations                                                        $
        91.1                                                         $
      41.1                          $
      38.0       $
      30.6





      Operating margin (% of segment external                     29.5                                    24.4                                                    26.2              14.8
       net revenue)                                                  %                                      %                                                      %                %


      Non-GAAP Operating margin (% of segment                     29.0                                    24.4                                                    27.5              14.8
       Non-GAAP external net revenue)                                %                                      %                                                      %                %




                   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
       allocations                                                        $
        72.5                                                         $
      40.1                          $
      35.3       $
      44.5





      Operating margin (% of segment external                     24.0                                    22.4                                                    27.0              22.5
       net revenue)                                                  %                                      %                                                      %                %


      Non-GAAP Operating margin (% of segment                     25.3                                    22.4                                                    27.1              22.6
       Non-GAAP external net revenue)                                %                                      %                                                      %                %






                                                                                     
              Reporting Segments


                                                         Buildings and                 Geospatial                          Resources and              Transportation
                                                   Infrastructure                                                      Utilities




     
                FISCAL YEAR 2019 :



     Revenue                                                          $
        1,254.2                                                        $
      649.4                         $
      568.4      $
      792.3


      Acquired deferred revenue
       adjustment                                        (A)                     4.0                                                                                      3.0




     Non-GAAP revenue                                                 $
        1,258.2                                                        $
      649.4                         $
      571.4      $
      792.3





      Operating income before corporate
       allocations                                                       $
        322.1                                                        $
      132.2                         $
      166.2      $
      125.9


      Acquired deferred revenue
       adjustment                                        (A)                     4.0                                                                                      3.0


      Amortization of acquired
       capitalized commissions                           (G)                   (6.2)                                                                                   (0.1)



      Non-GAAP operating income before
       allocations                                                       $
        319.9                                                        $
      132.2                         $
      169.1      $
      125.9





      Operating margin (% of segment external                     25.7                                    20.4                                                    29.2              15.9
       net revenue)                                                  %                                      %                                                      %                %


      Non-GAAP Operating margin (% of segment                     25.4                                    20.4                                                    29.6              15.9
       Non-GAAP external net revenue)                                %                                      %                                                      %                %





     
                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
       allocations                                                       $
        256.7                                                        $
      166.4                         $
      168.2      $
      143.3





      Operating margin (% of segment external                     22.4                                    23.0                                                    29.5              19.0
       net revenue)                                                  %                                      %                                                      %                %


      Non-GAAP Operating margin (% of segment                     23.6                                    23.0                                                    29.6              19.0
       Non-GAAP external net revenue)                                %                                      %                                                      %                %


                                                                                                                                         
            
                GAAP TO NON-GAAP RECONCILIATION

                                                                                                                                         
            (Dollars in millions, except per share data)

                                                                                                                                                       
              (Unaudited)




                                                                                             
          Fourth Quarter of                                                                                       
           Fiscal Years


                                                                                                    2019                                          2018                                                                2019                                                        2018


                                                                      Dollar      
              % of                        Dollar           % of               
              Dollar                 % of               
           Dollar           % of
                                                                 Amount               Revenue                       Amount          Revenue                        Amount               Revenue                     Amount           Revenue




     
        REVENUE:


           GAAP revenue:                                                          $
              824.0                                                            $
              785.5                                                                   $
         3,264.3                                            $
          3,108.4


           Acquired deferred revenue
            adjustment                           
         (A)                2.7                                                                 7.4                                                             7.0                                                       23.6



           Non-GAAP
            revenue:                                                              $
              826.7                                                            $
              792.9                                                                   $
         3,271.3                                            $
          3,132.0






     
        GROSS MARGIN:


           GAAP gross                                                             $
              460.0                         55.8                                                      $
              435.2                        55.4                                            $
              1,780.9      54.6                    $
           1,681.0     54.1
            margin:                                                                                                           %                                                                                                %                                                                      %                                            %


           Acquired deferred revenue
            adjustment                           
         (A)                2.7                                                                 7.4                                                             7.0                                                       23.6


        
      Restructuring charges                 
         (B)                0.9                                                                                                                                1.1                                                        0.5


           Amortization of purchased
            intangible assets                    
         (C)               22.8                                                                28.0                                                            94.1                                                      103.2


        
      Stock-based compensation              
         (D)                1.4                                                                 1.2                                                             5.6                                                        4.5


           Amortization of acquisition-
            related inventory step-up            
         (E)                                                                                   0.2                                                                                                                       0.2


           Acquisition /divestiture items        
         (F)                                                                                                                                                                                                            2.0



           Non-GAAP gross                                                         $
              487.8                         59.0                                                      $
              472.0                        59.5                                            $
              1,888.7      57.7                    $
           1,815.0     58.0
            margin:                                                                                                           %                                                                                                %                                                                      %                                            %






     
        OPERATING EXPENSES:


           GAAP operating                                                         $
              371.8                         45.1                                                      $
              345.6                        44.0                                            $
              1,405.0      43.0                    $
           1,360.3     43.8
            expenses:                                                                                                         %                                                                                                %                                                                      %                                            %


        
      Restructuring charges                 
         (B)             (16.8)                                                              (1.9)                                                         (26.8)                                                     (8.2)


           Amortization of purchased
            intangible assets                    
         (C)             (16.4)                                                             (18.7)                                                         (73.7)                                                    (76.4)


        
      Stock-based compensation              
         (D)             (21.5)                                                             (22.6)                                                         (69.4)                                                    (72.4)


           Acquisition /divestiture items        
         (F)              (9.0)                                                              (4.1)                                                         (20.5)                                                    (36.9)


           Amortization of acquired
            capitalized commissions              
         (G)                1.5                                                                 1.8                                                             6.3                                                        4.7



           Non-GAAP
            operating                                                                                                         %                                                                                                %                                                                      %                                            %
            expenses:                                                             $
              309.6                         37.5                                                      $
              300.1                        37.8                                            $
              1,220.9      37.3                    $
           1,171.1     37.4






     
        OPERATING INCOME:


           GAAP operating                                                          $
              88.2                         10.7                                                       $
              89.6                        11.4                                              $
              375.9      11.5                      $
           320.7     10.3
            income:                                                                                                           %                                                                                                %                                                                      %                                            %


           Acquired deferred revenue
            adjustment                           
         (A)                2.7                                                                 7.4                                                             7.0                                                       23.6


        
      Restructuring charges                 
         (B)               17.7                                                                 1.9                                                            27.9                                                        8.7


           Amortization of purchased
            intangible assets                    
         (C)               39.2                                                                46.7                                                           167.8                                                      179.6


        
      Stock-based compensation              
         (D)               22.9                                                                23.8                                                            75.0                                                       76.9


           Amortization of acquisition-
            related inventory step-up            
         (E)                                                                                   0.2                                                                                                                       0.2


           Acquisition /divestiture items        
         (F)                9.0                                                                 4.1                                                            20.5                                                       38.9


           Amortization of acquired
            capitalized commissions              
         (G)              (1.5)                                                              (1.8)                                                          (6.3)                                                     (4.7)



           Non-GAAP
            operating                                                                                                         %                                                                                                %                                                                      %                                            %
            income:                                                               $
              178.2                         21.6                                                      $
              171.9                        21.7                                              $
              667.8      20.4                      $
           643.9     20.6






     
        NON-OPERATING EXPENSE, NET:


           GAAP non-
            operating
            expense, net:                                                        $
              (12.9)                                                          $
              (21.6)                                                                   $
         (31.1)                                            $
          (42.7)


           Acquisition /divestiture items        
         (F)                0.4                                                                 1.0                                                          (12.1)                                                     (0.3)


        
      Debt issuance costs                   
         (H)                                                                                                                                                                                                            6.7



           Non-GAAP non-
            operating
            expense, net:                                                        $
              (12.5)                                                          $
              (20.6)                                                                   $
         (43.2)                                            $
          (36.3)





                                                                                           GAAP and                                     GAAP and                                             GAAP and                                    GAAP and
                                                                                      Non-GAAP                                     Non-GAAP                                             Non-GAAP                                    Non-GAAP
                                                                                         Tax Rate %                                  Tax Rate %                                          Tax Rate %                                 Tax Rate %


                                                                                   
              (N)                                          (N)                                                  (N)                                         (N)




     
        INCOME TAX PROVISION (BENEFIT):


           GAAP income tax                                                      $
              (204.1)                       (271)                                                    $
              (18.8)                       (28)                                            $
             (169.7)     (49)                      $
          (5.3)       (2)
            benefit:                                                                                                          %                                                                                                %                                                                      %                                            %


           Non-GAAP items tax effected           
         (I)                7.1                                                                11.0                                                            41.1                                                       47.8


           Difference in GAAP and Non-GAAP
            tax rate                             
         (J)               22.2                                                                 9.3                                                            30.1                                                       27.3


        
      Tax reform impacts                    
         (K)                                                                                  17.7                                                                                                                      21.3


           Reserve release upon statute of
            limitations expiration               
         (L)                                                                                   9.5                                                            14.0                                                       24.3


        
      IP restructuring impacts              
         (M)              206.3                                                                                                                              206.3



           Non-GAAP income                                                         $
              31.5                           19                                                       $
              28.7                          19                                              $
              121.8        20                      $
           115.4       19
            tax provision:                                                                                                    %                                                                                                %                                                                      %                                            %






     
        NET INCOME:


           GAAP net income
            attributable to
            Trimble Inc.:                                                         $
              279.3                                                             $
              86.5                                                                     $
         514.3                                              $
          282.8


           Acquired deferred revenue
            adjustment                           
         (A)                2.7                                                                 7.4                                                             7.0                                                       23.6


        
      Restructuring charges                 
         (B)               17.7                                                                 1.9                                                            27.9                                                        8.7


           Amortization of purchased
            intangible assets                    
         (C)               39.2                                                                46.7                                                           167.8                                                      179.6


        
      Stock-based compensation              
         (D)               22.9                                                                23.8                                                            75.0                                                       76.9


           Amortization of acquisition-
            related inventory step-up            
         (E)                                                                                   0.2                                                                                                                       0.2


           Acquisition /divestiture items        
         (F)                9.4                                                                 5.1                                                             8.4                                                       38.6


           Amortization of acquired
            capitalized commissions              
         (G)              (1.5)                                                              (1.8)                                                          (6.3)                                                     (4.7)


        
      Debt issuance costs                   
         (H)                                                                                                                                                                                                            6.7


        
      Non-GAAP tax adjustments           
         (I) - (M)         (235.6)                                                             (47.5)                                                        (291.5)                                                   (120.7)



           Non-GAAP net
            income
            attributable to
            Trimble Inc.:                                                         $
              134.1                                                            $
              122.3                                                                     $
         502.6                                              $
          491.7






     
        DILUTED NET INCOME PER SHARE:


           GAAP diluted net
            income per share
            attributable to
            Trimble Inc.:                                                          $
              1.11                                                             $
              0.34                                                                      $
         2.03                                               $
          1.12


           Acquired deferred revenue
            adjustment                           
         (A)               0.01                                                                0.03                                                            0.03                                                       0.09


        
      Restructuring charges                 
         (B)               0.07                                                                0.01                                                            0.11                                                       0.04


           Amortization of purchased
            intangible assets                    
         (C)               0.16                                                                0.18                                                            0.66                                                       0.71


        
      Stock-based compensation              
         (D)               0.09                                                                0.10                                                            0.30                                                       0.30


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


           Acquisition /divestiture items        
         (F)               0.04                                                                0.02                                                            0.03                                                       0.15


           Amortization of acquired
            capitalized commissions              
         (G)             (0.01)                                                             (0.01)                                                         (0.02)                                                    (0.02)


        
      Debt issuance costs                   
         (H)                                                                                                                                                                                                           0.03


        
      Non-GAAP tax adjustments           
         (I) - (M)          (0.94)                                                             (0.19)                                                         (1.15)                                                    (0.48)



          Non-GAAP diluted
            net income per
            share
            attributable to
            Trimble Inc.:                                                          $
              0.53                                                             $
              0.48                                                                      $
         1.99                                               $
          1.94





                                                                              First Quarter of 2020


                                                                      Low End              High End




     
        FORECASTED DILUTED NET INCOME PER SHARE:


          Forecasted GAAP
            diluted net
            income per share
            attributable to
            Trimble Inc.:                                                          $
              0.14                              $
              0.18


           Acquired deferred revenue
            adjustment                           
         (A)               0.01                           0.01


        
      Restructuring charges                 
         (B)               0.06                           0.06


           Amortization of purchased
            intangible assets                    
         (C)               0.15                           0.15


        
      Stock-based compensation              
         (D)               0.10                           0.10


           Acquisition /divestiture items        
         (F)               0.01                           0.01


           Amortization of acquired
            capitalized commissions              
         (G)             (0.01)                        (0.01)


        
      Non-GAAP tax adjustments           
         (I) - (M)          (0.06)                        (0.05)



           Forecasted non-GAAP
            diluted net income per
            share attributable to
            Trimble Inc.:                                     $
             0.40                                   $
              0.45

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, and 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, adjustment to the fair value of earn-out liabilities, and the effects of certain acquired capitalized commissions that were 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 expense, net

We believe this measure helps investors evaluate our non-operating income trends. Non-GAAP non-operating 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, that 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 costs, 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.


     (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, this 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 2019 and
          2018, stock-based compensation was
          allocated as follows:

                              
            Fourth Quarter of           
          Fiscal Years


                  (Dollars in
                   millions)    2019                     2018        2019                   2018



     Cost of sales                    $
              1.4                      $
              1.2        $
      5.6   $
      4.5


     Research and
      development                5.0                           4.8                         16.7       15.0


     Sales and marketing         3.4                           2.8                         13.0       10.0


     General and
      administrative            13.1                          15.0                         39.7       47.4



     Total stock-based
      compensation
      expense                        $
              22.9                     $
              23.8       $
      75.0  $
      76.9





     (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 and
          adjustments to the fair value of earn-out
          liabilities.  Included in our GAAP presentation of
          non-operating expense, net, acquisition/
          divestiture items include 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 expense, net this amount represents
          incurred costs in connection with a bridge
          facility we put in place for the Viewpoint
          acquisition, costs associated with the issuance
          of new credit facilities and our senior notes
          issued in 2018 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 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 tax
          benefit from the policy election to establish
          deferred taxes in relation to GILTI as created by
          the Tax Act.  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 tax
          benefit resulting from a reserve release due to
          the expiration of statute of limitations for
          certain years.  We excluded this because it is
          non-recurring and is not indicative of our core
          operating performance.




     (M) IP restructuring impacts.  These amounts represent
          net deferred tax impacts resulting from a non-
          U.S. intercompany transfer of intellectual
          property, consistent with changes in tax laws and
          our international business operations.  We
          excluded this because it is not indicative of our
          core operating performance.




     (N) 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.