NI Reports Third Quarter Results

National Instruments (Nasdaq: NATI) today announced Q3 2020 revenue of $308 million, down 9 percent year over year, and up 2 percent sequentially.

In Q3 2020 the value of the company's orders was down 7 percent year over year; orders over $20,000 were down 4 percent year over year; and orders under $20,000 were down 11 percent year over year. For Q3, year over year orders in the Americas region were relatively flat, in EMEA orders were down 16 percent, and in APAC orders were down 7 percent during the quarter.

Before the second quarter of 2020 we included order value and net sales attributable to our operations in India within the EMEA region. In the second quarter of 2020, we began including these amounts within the APAC geographic region, to reflect recent changes within our organizational structure.

Geographic revenue in U.S. dollar terms for Q3 2020 compared with Q3 2019 was down 11 percent in the Americas, down 5 percent in APAC and down 12 percent in EMEA. Excluding the impact of foreign currency exchange, revenue was down 11 percent in the Americas, down 3 percent in APAC and down 13 percent in EMEA. Historical revenue from these three regions can be found on NI’s investor website at www.ni.com/nati.

In Q3, GAAP gross margin was 70 percent and non-GAAP gross margin was 74 percent. Total GAAP operating expenses were $218 million, up 1 percent year over year. Total non-GAAP operating expenses were down 3 percent year over year at $189 million. GAAP operating loss was $(2) million with non-GAAP operating income of $40 million. GAAP net loss for Q3 was $(5) million and non-GAAP net income was $30 million, with GAAP fully diluted EPS of ($0.04) and non-GAAP fully diluted EPS of $0.23, above the midpoint of our guidance. EBITDA, or Earnings Before Interest, Taxes, Depreciation and Amortization, was $19 million for Q3.

For the first nine months of 2020, GAAP revenue was $919 million, down 7 percent year over year, the value of the company's total orders was down 6 percent year over year, with GAAP net income of $139 million, up 34% year over year, and GAAP fully diluted EPS of $1.06.

“We have and will continue to take a broad range of actions to ignite growth. Building on our unique software position, we believe we have the opportunity to once again modernize and disrupt our industry,” said Eric Starkloff, NI CEO. “We remain focused on execution in the areas of our business that can drive our growth even within the constraints of an overall weaker spending environment. The actions we are taking, on both reductions and investments, are focused on achieving long-term growth.”

“We delivered third quarter revenue above the midpoint of guidance despite the current economic environment. While we have seen positive signs in our business, we remain cautious to the uncertainty that lies ahead,” said Karen Rapp, NI CFO. “We remain committed to the execution of our growth and profitability strategy in pursuit of our long-term financial targets. We believe our strong balance sheet and cash position provide us the capability to keep our capital allocation priorities unchanged as we stay committed to shareholder value."

As of September 30, 2020, NI had $290 million in cash and short-term investments. During the third quarter, NI paid $34 million in dividends and repurchased 446,502 shares of our common stock at an average price of $34.86 per share. The NI Board of Directors approved a quarterly dividend of $0.26 per share payable on December 7, 2020, to stockholders of record on November 16, 2020.

The company’s non-GAAP results exclude, as applicable, the impact of purchase accounting fair value adjustments, stock-based compensation, amortization of acquisition-related intangibles, acquisition-related transaction and integration costs, taxes levied on the transfer of acquired intellectual property, foreign exchange loss on acquisitions, restructuring charges, tax reform charges, disposal gains on buildings and related charitable contributions, tax effects related to businesses held for sale, gain on sale of businesses, and capitalization and amortization of internally developed software costs. Reconciliations of the company’s GAAP and non-GAAP results are included as part of this news release.

Guidance

NI currently expects Q4 GAAP revenue to be in the range of $333 million to $363 million and Q4 non-GAAP revenue, which adjusts for the impact of purchase price accounting related to OptimalPlus, to be in the range of $335 million to $365 million. The company currently expects that GAAP fully diluted EPS will be in the range of $(0.04) to $0.10 for Q4, with non-GAAP fully diluted EPS expected to be in the range of $0.32 to $0.46. Included in our EPS guidance is a restructuring charge of $0.13 which relates to a reduction in our global workforce of approximately 9%.

Conference Call Information

Interested parties can listen to the Q3 2020 earnings conference call with NI management today, October 29, at 4:00 p.m. CT at ni.com/call or by dialing 855-212-2361 and entering confirmation code 7456239 ten minutes prior to the call start time. Replay information is available by calling (855) 859-2056 and entering confirmation code 7456239 , shortly after the call through November 1 at 10:00 p.m. CT or by visiting the company’s website at ni.com/call.

Non-GAAP Presentation

In addition to disclosing results determined in accordance with GAAP, NI discloses certain non-GAAP operating results and non-GAAP information that exclude certain charges. In this news release, the company has presented its revenue, gross profit, gross margin, operating expenses, operating income, operating margin, provision for income taxes, net income and fully diluted EPS for the three and nine months ended September 30, 2020 and 2019, on a GAAP and non-GAAP basis. NI is also providing guidance on its non-GAAP revenue and non-GAAP fully diluted EPS.

When presenting non-GAAP information, the company includes a reconciliation of the non-GAAP results to the GAAP results. Management believes that including the non-GAAP results assists investors in assessing the company’s operational performance and its performance relative to its competitors. The company presents these non-GAAP results as a complement to results provided in accordance with GAAP, and these results should not be regarded as a substitute for GAAP. Management uses these non-GAAP measures to manage and assess the profitability and performance of its business and does not consider purchase accounting fair value adjustments, stock-based compensation expense, amortization of acquisition-related intangibles, acquisition-related transaction and integration costs, taxes levied on the transfer of acquired intellectual property, foreign exchange loss on acquisitions, restructuring charges, tax reform charges, disposal gains on buildings and related charitable contributions, tax effects related to businesses held for sale, gain on sale of businesses, and capitalization and amortization of internally developed software costs in managing its operations. Specifically, management uses non-GAAP measures to plan and forecast future periods; to establish operational goals; to compare with its business plan and individual operating budgets; to measure management performance for the purposes of executive compensation, including payments to be made under bonus plans; to assist the public in measuring the company’s performance relative to the company’s long-term public performance goals; to allocate resources; and, relative to the company’s historical financial performance, to enable comparability between periods. Management also considers such non-GAAP results to be an important supplemental measure of its performance.

This news release discloses the company’s EBITDA for the three and nine months ended September 30, 2020 and 2019. The company believes that including the EBITDA results assists investors in assessing the company’s operational performance relative to its competitors. A reconciliation of EBITDA to GAAP net income is included with this news release.

Forward-Looking Statements

This release contains “forward-looking statements” including statements regarding we have and will continue to take a broad range of actions to ignite growth; building on our unique software position, we believe we have the opportunity to once again modernize and disrupt our industry; we remain focused on execution in the areas of our business that can drive our growth even within the constraints of an overall weaker spending environment; the actions we are taking, on both reductions and investments, are focused on achieving long-term growth; while we have seen positive signs in our business, we remain cautious to the uncertainty that lies ahead; we remain committed to the execution of our growth and profitability strategy in pursuit of our long-term financial targets; we believe our strong balance sheet and cash position provide us the capability to keep our capital allocation priorities unchanged as we stay committed to shareholder value; expecting Q4 GAAP revenue to be in the range of $333 million to $363 million, expecting Q4 non-GAAP revenue, which adjusts for the impact of purchase accounting fair value adjustments related to OptimalPlus, to be in the range of $335 million to $365 million, and expecting that GAAP fully diluted EPS will be in the range of $(0.04) to $0.10 for Q4, with non-GAAP fully diluted EPS expected to be in the range of $0.32 to $0.46; and included in our EPS guidance is a restructuring charge of $0.13 which relates to a reduction in our global workforce of approximately 9%. These statements are subject to a number of risks and uncertainties, including risks and uncertainties related to the COVID-19 virus and further economic and market disruptions resulting from COVID-19; further adverse changes or fluctuations in the global economy; further adverse fluctuations in our industry; foreign exchange fluctuations; changes in the current global trade regulatory environment; fluctuations in customer demands and markets; fluctuations in demand for NI products including orders from NI’s large customers; component shortages; delays in the release of new products; NI’s ability to effectively manage its operating expenses; manufacturing inefficiencies and the level of capacity utilization; the impact of any recent or future acquisitions or divestitures by NI (including the ability to successfully operate or integrate the acquired company’s business into NI, the ability to retain and integrate the acquired company’s employees into NI, and the ability to realize the expected benefits of the acquisition); NI’s ability to achieve the benefits of employee restructuring plans and possible changes in the size and timing of the related charges; expense overruns; and adverse effects of price changes or effective tax rates. Actual results may differ materially from the expected results. The company directs readers to its Form 10-K for the year ended Dec. 31, 2019, its Form 10-Q for the quarter ended June 30, 2020 and the other documents it files with the SEC for other risks associated with the company’s future performance. These documents contain and identify important factors that could cause our actual results to differ materially from those contained in our forward-looking statements.

All information in this release is as of the date above. The company undertakes no duty to update any forward-looking statement to conform the statement to actual results or changes in the company’s expectations.

About NI

At NI, we bring together the people, ideas and technology so forward thinkers and creative problem solvers can take on humanity’s biggest challenges. From data and automation to research and validation, we provide the tailored, software-connected systems engineers and enterprises need to Engineer Ambitiously™ every day. (NATI-F)

LabVIEW, National Instruments, NI and ni.com are trademarks of National Instruments. Other product and company names listed are trademarks or trade names of their respective companies.

 

National Instruments

Condensed Consolidated Balance Sheets

(in thousands)

 

 

September 30,

 

December 31,

 

 

2020

 

2019

 

 

(unaudited)

 

 

Assets

 

 

Current assets:

 

 

Cash and cash equivalents

$

197,319

 

 

$

194,616

 

 

Short-term investments

92,853

 

 

237,983

 

 

Accounts receivable, net

214,620

 

 

248,872

 

 

Inventories, net

209,558

 

 

200,410

 

 

Prepaid expenses and other current assets

72,956

 

 

65,477

 

 

Total current assets

787,306

 

 

947,358

 

 

 

 

 

Property and equipment, net

253,073

 

 

243,717

 

 

Goodwill

487,101

 

 

262,242

 

 

Intangible assets, net

183,067

 

 

84,083

 

 

Operating lease right-of-use assets

69,395

 

 

70,407

 

 

Other long-term assets

63,930

 

 

44,082

 

 

Total assets

$

1,843,872

 

 

$

1,651,889

 

 

 

 

 

Liabilities and Stockholders' Equity

 

 

Current liabilities:

 

 

Accounts payable and accrued expenses

$

48,886

 

 

$

52,192

 

 

Accrued compensation

53,496

 

 

47,732

 

 

Deferred revenue - current

116,871

 

 

131,445

 

 

Operating lease liabilities - current

16,177

 

 

13,431

 

 

Other taxes payable

41,604

 

 

40,607

 

 

Debt, current

3,500

 

 

 

 

Other current liabilities

50,259

 

 

20,716

 

 

Total current liabilities

330,793

 

 

306,123

 

 

 

 

 

Deferred income taxes

41,514

 

 

14,065

 

 

Liability for uncertain tax positions

6,867

 

 

6,652

 

 

Income tax payable - non-current

61,628

 

 

69,151

 

 

Deferred revenue - non-current

34,210

 

 

33,480

 

 

Operating lease liabilities - non-current

37,767

 

 

40,650

 

 

Debt, noncurrent

84,289

 

 

 

 

Other long-term liabilities

7,606

 

 

5,418

 

 

Total liabilities

$

604,674

 

 

$

475,539

 

 

 

 

 

Stockholders' equity:

 

 

Common stock

1,312

 

 

1,305

 

 

Additional paid-in capital

1,012,656

 

 

953,578

 

 

Retained earnings

247,970

 

 

242,537

 

 

Accumulated other comprehensive loss

(22,740

)

 

(21,070

)

 

Total stockholders' equity

1,239,198

 

 

1,176,350

 

 

Total liabilities and stockholders' equity

$

1,843,872

 

 

$

1,651,889

 

 

National Instruments

Condensed Consolidated Statements of Income

(in thousands, except per share data, unaudited)

 

 

 

 

 

Three Months Ended

 

Nine Months Ended

 

September 30,

 

September 30,

 

2020

 

2019

 

2020

 

 

 

2019

 

 

 

 

 

Net sales:

 

 

 

 

Product

$

269,651

 

 

$

305,247

 

$

809,890

 

 

$

882,747

 

Software maintenance

38,473

 

 

35,195

 

108,944

 

 

103,000

 

Total net sales

308,124

 

 

340,442

 

918,834

 

 

985,747

 

 

 

 

 

 

Cost of sales:

 

 

 

 

Product

88,370

 

 

84,127

 

254,236

 

 

240,056

 

Software maintenance

3,893

 

 

1,788

 

7,689

 

 

5,700

 

Total cost of sales

92,263

 

 

85,915

 

261,925

 

 

245,756

 

 

 

 

 

 

Gross profit

215,861

 

 

254,527

 

656,909

 

 

739,991

 

 

70.1

 

%

74.8

%

71.5

 

%

75.1

%

Operating expenses:

 

 

 

 

Sales and marketing

109,774

 

 

113,922

 

330,939

 

 

352,340

 

Research and development

70,802

 

 

66,558

 

206,648

 

 

200,981

 

General and administrative

37,431

 

 

35,711

 

92,980

 

 

92,639

 

Total operating expenses

218,007

 

 

216,191

 

630,567

 

 

645,960

 

Gain on sale of business/assets

 

 

26,842

 

159,753

 

 

26,842

 

Operating income

(2,146

)

 

65,178

 

186,095

 

 

120,873

 

Other (expense) income:

(2,001

)

 

2,249

 

(2,584

)

 

5,379

 

Income before income taxes

(4,147

)

 

67,427

 

183,511

 

 

126,252

 

Provision for income taxes

475

 

 

15,783

 

44,588

 

 

22,697

 

Net (loss) income

$

(4,622

)

 

$

51,644

 

$

138,923

 

 

$

103,555

 

 

 

 

 

 

Basic (loss) earnings per share

$

(0.04

)

 

$

0.39

 

$

1.06

 

 

$

0.79

 

Diluted (loss) earnings per share

$

(0.04

)

 

$

0.39

 

$

1.06

 

 

$

0.78

 

 

 

 

 

 

Weighted average shares outstanding -

 

 

 

 

Basic

131,419

 

 

131,385

 

131,017

 

 

131,896

 

Diluted

131,419

 

 

131,889

 

131,671

 

 

132,890

 

 

 

 

 

 

Dividends declared per share

$

0.26

 

 

$

0.25

 

$

0.78

 

 

$

0.75

 

 

Condensed Consolidated Statements of Cash Flows

(in thousands, unaudited)

 

Nine Months Ended September 30,

 

2020

 

2019

 

 

Cash flow from operating activities:

 

 

Net income

$

138,923

 

 

$

103,555

 

 

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

 

 

Disposal gains on sale of business/asset

(159,753

)

 

(26,842

)

 

Depreciation and amortization

61,228

 

 

54,546

 

 

Stock-based compensation

42,556

 

 

38,054

 

 

Deferred income taxes

(932

)

 

(1,461

)

 

Net change in operating assets and liabilities

26,762

 

 

(18,507

)

 

Net cash provided by operating activities

108,784

 

 

149,345

 

 

 

 

 

Cash flow from investing activities:

 

 

Acquisitions, net of cash received

(334,981

)

 

 

 

Capital expenditures

(36,573

)

 

(47,183

)

 

Proceeds from sale of business/assets, net of cash divested

160,266

 

 

32,492

 

 

Capitalization of internally developed software

(2,806

)

 

(7,179

)

 

Additions to other intangibles

(1,045

)

 

(1,132

)

 

Acquisitions of equity-method investments

(7,502

)

 

(13,670

)

 

Purchases of short-term investments

(206,330

)

 

(141,074

)

 

Sales and maturities of short-term investments

351,597

 

 

204,046

 

 

Net cash (used in) provided by investing activities

(77,374

)

 

26,300

 

 

 

 

 

Cash flow from financing activities:

 

 

Proceeds from revolving loan facility

20,000

 

 

 

 

Proceeds from term loan

70,000

 

 

 

 

Payments on term loan

(875

)

 

 

 

Debt issuance costs

(1,480

)

 

 

 

Proceeds from issuance of common stock

24,971

 

 

25,823

 

 

Repurchase of common stock

(39,244

)

 

(137,171

)

 

Dividends paid

(102,396

)

 

(99,083

)

 

Net cash used in financing activities

(29,024

)

 

(210,431

)

 

 

 

 

Impact of changes in exchange rates on cash

317

 

 

(1,827

)

 

 

 

 

Net change in cash and cash equivalents

2,703

 

 

(36,613

)

 

Cash and cash equivalents at beginning of period

194,616

 

 

259,386

 

 

Cash and cash equivalents at end of period

$

197,319

 

 

$

222,773

 

 

The following tables provide details with respect to the amount of GAAP charges related to stock-based compensation, amortization of acquisition-related intangibles and fair value adjustments, acquisition-related transaction and integration costs, capitalization and amortization of internally developed software costs, restructuring charges, gains on sale of business/assets, and other that were recorded in the line items indicated below (unaudited) (in thousands)

 

 

 

 

 

 

Three Months Ended

 

Nine Months Ended

 

September 30,

 

September 30,

 

 

 

 

 

 

 

 

 

2020

 

2019

 

2020

 

2019

Stock-based compensation

 

 

 

 

Cost of sales

$

1,051

 

 

$

 

904

 

 

$

 

2,787

 

 

$

2,587

 

 

Sales and marketing

5,184

 

 

 

5,231

 

 

 

16,826

 

 

14,745

 

 

Research and development

4,692

 

 

 

4,099

 

 

 

12,640

 

 

12,029

 

 

General and administrative

4,293

 

 

 

3,158

 

 

 

10,301

 

 

8,693

 

 

Provision for income taxes

(3,854

)

 

 

(2,128

)

 

 

(8,260

)

 

(7,904

)

 

Total

$

11,366

 

 

$

 

11,264

 

 

$

 

34,294

 

 

$

30,150

 

 

 

 

 

 

 

Amortization of acquisition-related intangibles and fair value adjustments

 

 

 

 

Net sales

$

1,299

 

 

$

 

 

$

1,299

 

 

$

 

 

Cost of sales

4,198

 

 

 

833

 

 

 

5,579

 

 

2,525

 

 

Sales and marketing

2,334

 

 

 

492

 

 

 

3,300

 

 

1,485

 

 

Research and development

28

 

 

 

28

 

 

 

84

 

 

84

 

 

Other expense (income)

121

 

 

 

124

 

 

 

363

 

 

285

 

 

Provision for income taxes

(1,658

)

 

 

(190

)

 

 

(1,948

)

 

(576

)

 

Total

$

6,322

 

 

$

 

1,287

 

 

$

 

8,677

 

 

$

3,803

 

 

 

 

 

 

 

Acquisition transaction and integration costs, restructuring charges, and other(1)(2)(3)

 

 

 

 

Cost of sales

$

(13

)

 

$

 

 

 

$

 

7

 

 

$

 

 

Sales and marketing

1,158

 

 

 

2,993

 

 

 

8,771

 

 

8,290

 

 

Research and development

374

 

 

 

244

 

 

 

5,190

 

 

899

 

 

General and administrative(1)(3)

10,210

 

 

 

7,998

 

 

 

12,595

 

 

9,525

 

 

Gain on sale of business/assets(1)(2)

 

 

 

(26,842

)

 

 

(159,753

)

 

(26,842

)

 

Other expense (income)

270

 

 

 

 

 

 

397

 

 

 

 

Provision for income taxes

(712

)

 

 

3,090

 

 

 

33,965

 

 

1,240

 

 

Total

$

11,287

 

 

$

 

(12,517

)

 

$

 

(98,828

)

 

$

(6,888

)

 

(1): During the third quarter of 2019, the company recognized a gain of $27 million related to the sale of an office building, presented within "Gain on sale of business/assets". The company also recognized a charitable contribution expense of $7 million related to an infrequent donation using a portion of the proceeds from the sale of the building, presented within "General and administrative".

(2): During the first quarter of 2020, the company recognized a gain of $160 million related to the divestiture of AWR, presented within "Gain on sale of business/assets".

(3): During the third quarter of 2020, we recognized $5 million of compensation expense related to the replacement of unvested options acquired from OptimalPlus. These amounts were accounted for as post-combination expense and will be recognized over the required service period.

 

 

 

 

 

Capitalization and amortization of internally developed software costs

 

 

 

 

Cost of sales

$

6,769

 

 

$

 

6,954

 

 

$

 

20,995

 

 

$

20,073

 

 

Research and development

302

 

 

 

(2,682

)

 

 

(2,794

)

 

(7,179

)

 

Provision for income taxes

(1,485

)

 

 

(897

)

 

 

(3,822

)

 

(2,708

)

 

Total

$

5,586

 

 

$

 

3,375

 

 

$

 

14,379

 

 

$

10,186

 

 

National Instruments

Reconciliation of GAAP to Non-GAAP Measures

(in thousands, unaudited)

 

 

 

 

 

 

 

 

 

 

 

Three Months Ended

 

Nine Months Ended

 

 

September 30,

 

September 30,

 

 

2020

 

2019

 

2020

 

2019

 

 

 

 

 

Reconciliation of Net sales to Non-GAAP Net sales

 

 

 

 

Net sales, as reported

$

308,124

 

 

340,442

 

 

918,834

 

 

$

985,747

 

 

plus: Impact of purchase accounting fair value adjustments

1,299

 

 

 

 

1,299

 

 

 

 

Non-GAAP net sales

$

309,423

 

 

340,442

 

 

920,133

 

 

$

985,747

 

 

 

 

 

 

 

Reconciliation of Gross Profit to Non-GAAP Gross Profit

 

 

Gross profit, as reported

$

215,861

 

 

$

254,527

 

 

$

656,909

 

 

$

739,991

 

 

Stock-based compensation

1,051

 

 

904

 

 

2,787

 

 

2,587

 

 

Amortization of acquisition-related intangibles and fair value adjustments

5,497

 

 

833

 

 

6,878

 

 

2,525

 

 

Acquisition transaction and integration costs, restructuring charges and other

(13

)

 

 

 

7

 

 

 

 

Amortization of internally developed software costs

6,769

 

 

6,954

 

 

20,995

 

 

20,073

 

 

Non-GAAP gross profit

$

229,165

 

 

$

263,218

 

 

$

687,576

 

 

$

765,176

 

 

Non-GAAP gross margin

74.1

 

%

77.3

 

%

74.7

 

%

77.6

 

%

 

 

 

 

 

Reconciliation of Operating Expenses to Non-GAAP Operating Expenses

 

 

Operating expenses, as reported

$

218,007

 

 

$

216,191

 

 

$

630,567

 

 

$

645,960

 

 

Stock-based compensation

(14,169

)

 

(12,488

)

 

(39,767

)

 

(35,467

)

 

Amortization of acquisition-related intangibles and fair value adjustments

(2,362

)

 

(520

)

 

(3,384

)

 

(1,569

)

 

Acquisition transaction and integration costs, restructuring charges and other

(11,742

)

 

(11,235

)

 

(26,556

)

 

(18,714

)

 

Capitalization of internally developed software costs

(302

)

 

2,682

 

 

2,794

 

 

7,179

 

 

Non-GAAP operating expenses

$

189,432

 

 

$

194,630

 

 

$

563,654

 

 

$

597,389

 

 

 

 

 

 

 

Reconciliation of Operating Income to Non-GAAP Operating Income

 

 

Operating income, as reported

$

(2,146

)

 

$

65,178

 

 

$

186,095

 

 

$

120,873

 

 

Stock-based compensation

15,220

 

 

13,392

 

 

42,554

 

 

38,054

 

 

Amortization of acquisition-related intangibles and fair value adjustments

7,859

 

 

1,353

 

 

10,262

 

 

4,094

 

 

Acquisition transaction and integration costs, restructuring charges and other

11,729

 

 

11,235

 

 

26,563

 

 

18,714

 

 

Net amortization of internally developed software costs

7,071

 

 

4,272

 

 

18,201

 

 

12,894

 

 

Gain on sale of business/assets

 

 

(26,842

)

 

(159,753

)

 

(26,842

)

 

Non-GAAP operating income

$

39,733

 

 

$

68,588

 

 

$

123,922

 

 

$

167,787

 

 

Non-GAAP operating margin

12.8

 

%

20.1

 

%

13.5

 

%

17.0

 

%

 

 

 

 

 

Reconciliation of Provision for income taxes to Non-GAAP Provision for income taxes(1)

 

 

Provision for income taxes, as reported

$

475

 

 

$

15,783

 

 

$

44,588

 

 

$

22,697

 

 

Stock-based compensation

3,854

 

 

2,128

 

 

8,260

 

 

7,904

 

 

Amortization of acquisition-related intangibles and fair value adjustments

1,658

 

 

190

 

 

1,948

 

 

576

 

 

Acquisition transaction and integration costs, restructuring charges and other

712

 

 

2,587

 

 

2,794

 

 

4,437

 

 

Net amortization of internally developed software costs

1,485

 

 

897

 

 

3,822

 

 

2,708

 

 

Gain on sale of business/assets

 

 

(5,677

)

 

(36,759

)

 

(5,677

)

 

Tax reform charge

 

 

(2,774

)

 

 

 

(2,774

)

 

Non-GAAP provision for income taxes(1)

$

8,184

 

 

$

13,134

 

 

$

24,653

 

 

$

29,871

 

 

(1): The income tax effect related to each non-GAAP item is calculated based on the tax laws and statutory income tax rates applicable in the tax jurisdiction(s) of the underlying non-GAAP adjustment, and considers the current and deferred tax impact of those adjustments.

Reconciliation of GAAP Net (Loss) Income and Diluted EPS to Non-GAAP Net Income, Non-GAAP Diluted EPS, and EBITDA

(in thousands, except per share data, unaudited)

 

 

 

 

 

 

Three Months Ended

 

Nine Months Ended

 

September 30,

 

September 30,

 

2020

 

2019

 

2020

 

2019

 

 

 

 

 

Net (loss) income, as reported

$

(4,622

)

 

$

51,644

 

 

$

138,923

 

 

$

103,555

 

 

Adjustments to reconcile net (loss) income to non-GAAP net income:

 

 

 

 

Stock-based compensation

15,220

 

 

13,392

 

 

42,554

 

 

38,054

 

 

Amortization of acquisition-related intangibles and fair value adjustments

7,980

 

 

1,477

 

 

10,625

 

 

4,379

 

 

Acquisition transaction and integration costs, restructuring charges and other

11,999

 

 

11,235

 

 

26,960

 

 

18,714

 

 

Net amortization of internally developed software costs

7,071

 

 

4,272

 

 

18,201

 

 

12,894

 

 

Gain on sale of business/assets

 

 

(26,842

)

 

(159,753

)

 

(26,842

)

 

Income tax effects and adjustments(1)

(7,709

)

 

2,649

 

 

19,935

 

 

(7,174

)

 

Non-GAAP net income

$

29,939

 

 

$

57,827

 

 

$

97,445

 

 

$

143,580

 

 

Non-GAAP net margin

9.7

 

%

17.0

 

%

10.6

 

%

14.6

 

%

 

Diluted EPS, as reported

$

(0.04

)

 

$

0.39

 

 

$

1.06

 

 

$

0.78

 

 

Adjustment to reconcile diluted EPS to non-GAAP diluted EPS

 

 

 

 

Stock-based compensation

0.12

 

 

0.10

 

 

0.32

 

 

0.28

 

 

Amortization of acquisition-related intangibles and fair value adjustments

0.06

 

 

0.01

 

 

0.08

 

 

0.03

 

 

Acquisition transaction and integration costs, restructuring charges and other

0.10

 

 

0.09

 

 

0.20

 

 

0.14

 

 

Net amortization of internally developed software costs

0.05

 

 

0.03

 

 

0.14

 

 

0.10

 

 

Gain on sale of business/assets

 

 

(0.20

)

 

(1.21

)

 

(0.20

)

 

Income tax effects and adjustments(1)

(0.06

)

 

0.02

 

 

0.15

 

 

(0.05

)

 

Non-GAAP diluted EPS

$

0.23

 

 

$

0.44

 

 

$

0.74

 

 

$

1.08

 

 

(1): The income tax effect related to each non-GAAP item is calculated based on the tax laws and statutory income tax rates applicable in the tax jurisdiction(s) of the underlying non-GAAP adjustment, and considers the current and deferred tax impact of those adjustments.

 

 

 

 

 

Weighted average shares outstanding - Diluted

131,419

 

 

131,889

 

 

131,671

 

 

132,890

 

 

 

 

 

Three Months Ended

 

Nine Months Ended

 

 

September 30,

 

September 30,

 

 

2020

 

2019

 

2020

 

2019

Net income, as reported

 

$

(4,622

)

 

 

$

51,644

 

 

 

$

138,923

 

 

 

$

103,555

 

 

Adjustments to reconcile net income to EBITDA:

 

 

 

 

 

 

 

 

Interest expense (income), net

 

560

 

 

 

(1,923

)

 

 

(2,608

)

 

 

(6,155

)

 

Tax expense

 

475

 

 

 

15,783

 

 

 

44,588

 

 

 

22,697

 

 

Depreciation and amortization

 

22,887

 

 

 

18,562

 

 

 

61,228

 

 

 

54,546

 

 

EBITDA

 

$

19,300

 

 

 

$

84,066

 

 

 

$

242,131

 

 

 

$

174,643

 

 

Weighted average shares outstanding - Diluted

 

131,419

 

 

 

131,889

 

 

 

131,671

 

 

 

132,890

 

 

 

 

 

 

 

 

 

 

 

Reconciliation of GAAP Diluted EPS to Non-GAAP Diluted EPS Guidance

(unaudited)

 

 

Three Months Ended

 

 

December 31, 2020

 

 

 

 

 

 

 

Low

 

High

GAAP Diluted EPS, guidance

$

(0.04)

 

$

0.10

 

Adjustment to reconcile diluted EPS to non-GAAP diluted EPS:

 

 

Stock-based compensation

0.12

 

0.12

 

Amortization of acquisition-related intangibles and fair value adjustments

0.06

 

0.06

 

Acquisition transaction and integration costs, restructuring charges, and other

0.20

 

0.20

 

Net amortization of software development costs

0.04

 

0.04

 

Income tax effects and adjustments(1)

(0.06)

 

(0.06)

 

Non-GAAP Diluted EPS, guidance

$

0.32

 

$

0.46

 

(1): The income tax effect related to each non-GAAP item is calculated based on the tax laws and statutory income tax rates applicable in the tax jurisdiction(s) of the underlying non-GAAP adjustment, and considers the current and deferred tax impact of those adjustments.

Reconciliation of GAAP Revenue to Non-GAAP Revenue, Guidance

(unaudited)

 

Three Months Ended

 

 

 

 

December 31,

 

 

 

 

 

2020

 

 

2019

 

 

Percent Inc/(Dec)

 

 

(midpoint)

 

 

 

 

 

GAAP Revenue, guidance

 

$

348,000

 

 

$

367,468

 

 

(5

)%

plus: Impact of purchase accounting fair value adjustments

 

2,000

 

 

 

Non-GAAP Revenue, guidance

 

$

350,000

 

 

$

367,468

 

 

(5

)%