Trimble Reports Record Fourth Quarter and Fiscal 2005 Revenue and Earnings27 January 2006
Trimble (Nasdaq: TRMB) today announced results for its fourth quarter and fiscal year 2005, ended Dec. 30, 2005. Revenue for the fourth quarter of 2005 was $186.8 million, up approximately 15 percent from revenue of $162.7 million in the fourth quarter of 2004. Revenue for fiscal 2005 was $774.9 million, up approximately 16 percent from revenue of $668.8 million in fiscal 2004.
Operating income for the fourth quarter of 2005 was $23.0 million, up 44 percent over operating income of $15.9 million in the fourth quarter of 2004. Operating income for 2005 was $124.9 million, up 46 percent over operating income of $85.6 million in 2004. Net income for the fourth quarter of 2005 was $23.4 million, or $0.41 per share, up approximately 43 percent when compared to net income of $16.4 million, or $0.29 per share for the fourth quarter of 2004. Net income for 2005 was $84.9 million, or $1.49 per share, up 25 percent when compared to net income of $67.7 million, or $1.23 per share, in 2004.
Some factors should be considered in year-over-year comparisons. In 2005, Trimble's effective tax rate was 32 percent, as compared to an effective tax rate of 10 percent in fiscal 2004. The 2004 effective tax rate benefited from net operating loss carry-forwards, and other adjustments in the valuation of deferred tax assets. Additionally, net income in the fourth quarter of 2005 was favorably impacted by the recognition of a deferred gain related to Trimble's joint venture with Caterpillar, Inc., partially offset by in-process research and development charges due to new acquisitions.
"In 2005, Trimble continued to demonstrate consistent revenue growth and improvement in operating margins, as it has for the last six years," said Steven W. Berglund, Trimble's president and chief executive officer. "Additionally, during the year, we expanded our market presence, both in new markets, such as mobile solutions, and within the more established engineering and construction market."
"Looking to 2006, we feel that Trimble is well-positioned to continue to penetrate its served markets, many of which are just beginning to use technology as a productivity tool," Berglund continued. "The engineering and construction market is showing continuing signs of growth, and we expect our mobile solutions business, which is now profitable, to continue to grow rapidly."
Trimble Results by Business Segment
Engineering and Construction
Revenue for Engineering and Construction (E&C) was $129.0 million for the fourth quarter of 2005, up approximately 20 percent compared to revenue of $107.8 million in the fourth quarter of 2004. E&C revenue for 2005 was $524.5 million, up 19 percent year-over-year.
Operating margins in E&C were 19.4 percent in the fourth quarter of 2005, up 4.4 points from the fourth quarter of 2004. E&C operating margins for 2005 were 22.5 percent, compared to 18 percent in the prior year.
E&C experienced strong growth in all of its business areas driven by continued penetration of its markets, in part due to the successful introduction of new products such as the Trimble(R) S6 Total Station and machine control products.
Trimble Field Solutions
Revenue for Trimble Field Solutions (TFS) was $25.3 million in the fourth quarter of 2005, up 7 percent compared to $23.8 million in revenue in the fourth quarter of 2004. TFS revenue for 2005 was $127.8 million, up 21 percent over 2004. This growth was driven by strong first quarter sales of the AgGPS(R) EZ-Steer(TM) guidance product, as well as some recovery in agriculture spending in the fourth quarter.
TFS operating margins for the fourth quarter of 2005 were 19.5 percent, compared to 17.8 percent in the fourth quarter of 2004, due to higher revenues and operating leverage. TFS operating margins in 2005 were also up, coming in at 25.4 percent, compared to 23.8 percent in 2004.
Component Technologies
Component Technologies revenue for the fourth quarter of 2005 was $12.2 million, down from $15.6 million in the same period of 2004. CT revenue for 2005 was $53.9 million, down 18 percent from 2004. This decline was mainly due to reduced sales of in-vehicle navigation and timing products.
CT operating margins were 7.9 percent in the fourth quarter of 2005, compared to 20 percent in the fourth quarter of 2004. For 2005, CT margins were 14.9 percent, down from 21.2 percent in 2004. This decline is due to a reduced revenue base and product mix.
Trimble Mobile Solutions
Revenue for Trimble Mobile Solutions (TMS) was $10.4 million, up 56 percent from revenue of $6.7 million in the fourth quarter of 2004. Revenue for 2005 was $31.5 million, up 34 percent compared to 2004. Revenue growth was due to higher recurring revenues and from the partial quarter effect of the MobileTech Solutions, Inc. acquisition.
As guided on the last conference call, TMS had an operating profit for the first time in the fourth quarter of 2005, with operating margins of 1.8 percent. TMS had a loss of $3.1 million in 2005, down from a loss of $6.0 million in 2004. The company expects TMS to continue to be profitable in 2006.
Portfolio Technologies
Portfolio Technologies revenue was $9.8 million, compared to revenue of $8.9 million in the fourth quarter of 2004. Portfolio Technologies revenue for 2005 was $37.2 million, up 10.5 percent from the prior year.
Portfolio Technologies operating margins were 15.5 percent in the quarter, compared to 11.6 percent in the fourth quarter of 2004, due to higher revenues and product mix. For 2005, operating margins were 13.9 percent, compared to 14.4 percent in 2004.
Non-GAAP Net Income and Earnings Per Share
Non-GAAP net income for the fourth quarter of fiscal 2005 was $16.2 million, up 56 percent compared to non-GAAP net income of $10.4 million in the fourth quarter of fiscal 2004. Non-GAAP net income for 2005 was $81.2 million, up 50 percent from non-GAAP net income of $54.1 million in the prior year.
Non-GAAP earnings per share for the fourth quarter of fiscal 2005 were $0.29 up approximately 52.8 percent from $0.19 per share in the fourth quarter of 2004. This excludes the $9.3 million deferred gain on the Caterpillar joint venture. Non-GAAP earnings per share for 2005 were $1.43, up 45 percent when compared to non-GAAP earnings per share of $0.98 in 2004.
GAAP and non-GAAP earnings per share for the fourth quarter of 2005 were calculated on a diluted basis using approximately 56.9 million shares. For the full year 2005, 56.8 million shares were used.
Forward Looking Guidance
In the first quarter of 2006 the Company expects revenue to grow 10 to 13 percent, with revenue between $215 and $221 million. At a 34 percent tax rate, with 57.5 million shares outstanding, the Company expects first quarter 2006 GAAP earnings per share between $0.32 and $0.35 cents.
The above GAAP guidance includes stock-based compensation, which the Company will begin accounting for in the first quarter of 2006 with the implementation of SFAS 123R. On a post-tax basis, the Company expects stock- based compensation for the first quarter of 2006 to be $2.1 million, or approximately $0.04 per share. For comparative purposes, in the first quarter of 2005 the pro forma stock-based compensation expense was $2.4 million, or $0.04 per share.
Using a 34 percent tax rate -- excluding the amortization of intangibles of $1.7 million and the impact of stock-based compensation -- the Company expects non-GAAP earnings per share between $0.38 and $0.41.
Going forward, the Company will be using the same tax rate for GAAP and non-GAAP guidance.
Non-GAAP vs. GAAP Financials
The Company provides non-GAAP financial measures called "non-GAAP net income" and "non-GAAP EPS" to supplement its consolidated financial statements presented in accordance with GAAP. These non-GAAP financial measures are intended to supplement the user's overall understanding of the Company's current financial performance and its prospects for the future. In many cases, non-GAAP financial measures are used by analysts and investors to evaluate the Company.
The Company excludes the recognition of the deferred gain from its Caterpillar joint venture, in-process research and development charges, amortization of purchased intangibles, restructuring charges, the amortization of acquisition related inventory step-up charges, and revaluation of minority investments in computing non-GAAP measures because the chief executive officer excludes these items when budgeting and evaluating the business. These non- GAAP financial measures are not intended to supersede or replace the Company's GAAP results. Please see the supplemental financial statements, attached to this press release, for a reconciliation of GAAP to non-GAAP results.
Investor Conference Call/Web cast Details
The Company will hold a conference call on January 24, 2006 at 1:30 p.m. PT to review its fourth quarter and year-end 2005 results. It will be broadcast live on the Web at http://www.trimble.com/investors.shtml. A replay of the call will be available for seven days beginning at 8:00 p.m., PT. The replay number is 800-642-1687 (U.S.), or 706-645-9291 (international), and the pass code is 4438758.
About Trimble
Trimble is a leading innovator of Global Positioning System (GPS) technology. In addition to providing advanced GPS components, Trimble augments GPS with other positioning technologies as well as wireless communications and software to create complete customer solutions. Trimble's worldwide presence and unique capabilities position the Company for growth in emerging applications including surveying, agriculture, machine guidance, asset and fleet management, wireless platforms, and telecommunications infrastructure. Founded in 1978 and headquartered in Sunnyvale, California, Trimble has more than 2,000 employees in more than 20 countries worldwide.
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 the revenue, operating margins, effective tax rate, stock based compensation, amortization of purchased intangibles and earnings per share estimates for the first fiscal quarter of 2006. These forward-looking statements are subject to change, and actual results may materially differ from those set forth in this press release due to certain risks and uncertainties. For example, strong demand for the Company's products may not continue because of a decline in the overall health of the economy and international markets, which may result in reduced capital spending. Fuel and other operating costs could remain high or increase, which could further weaken sales into the agricultural market. In addition, the Company's results may be adversely affected if the growth rates and profitability expectations for its mobile solutions segment are not achieved, or its joint ventures and recent acquisitions do not achieve anticipated results, or if the Company is unable to market, manufacture and ship new products. Any failure to achieve predicted results could negatively impact the Company's revenues, gross margin and other financial results. Whether the Company achieves its guidance for the first fiscal quarter of 2006 will also depend on a number of other factors, including the 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.
CONSOLIDATED STATEMENTS OF OPERATIONS
(In thousands, except per share data)
(Unaudited)
Three Months Ended Twelve Months Ended
Dec-30, Dec-31, Dec-30, Dec-31,
2005 2004 2005 2004
Revenue $186,821 $162,683 $774,913 $668,808
Cost of sales 94,522 85,324 $385,108 343,998
Gross margin 92,299 77,359 389,805 324,810
Gross margin (%) 49.4% 47.6% 50.3% 48.6%
Operating expenses
Research and development 20,944 19,596 84,276 77,558
Sales and marketing 31,827 27,816 120,215 108,054
General and administrative 13,933 11,556 52,137 44,694
Restructuring charges -- 225 278 552
In-process research and
development 1,100 -- 1,100 --
Amortization of purchased
intangible assets 1,515 2,249 6,855 8,327
Total operating expenses 69,319 61,442 264,861 239,185
Operating income 22,980 15,917 124,944 85,624
Non-operating income (expense),
net
Interest income (expense), net 185 (753) (1,495) (3,452)
Foreign currency transaction
gain (loss), net 955 (413) 1,022 (859)
Income (Expense) for
affiliated operations, net 7,223 (1,254) (291) (7,590)
Other income (expense), net 321 (351) 608 1,200
Total non-operating income
(expense), net 8,684 (2,771) (156) (10,701)
Income before taxes 31,664 13,146 124,788 74,924
Income tax provision (benefit) 8,271 (3,259) 39,933 7,244
Net income $23,393 $16,405 $84,855 $67,680
Earnings per share :
Basic $0.43 $0.32 $1.59 $1.32
Diluted $0.41 $0.29 $1.49 $1.23
Shares used in calculating
earnings per share :
Basic 53,814 52,004 53,216 51,163
Diluted 56,941 55,826 56,819 54,948
FULLY TAXED NON-GAAP RECONCILIATION
(Dollars in thousands, except per share data)
(Unaudited)
Three Months Ended Twelve Months Ended
Dec-30, Dec-31, Dec-30, Dec-31,
2005 2004 2005 2004
GAAP income before taxes $31,664 $13,146 $124,788 $74,924
Non-GAAP adjustments
Amortization of purchased
intangibles 1,515 2,249 6,855 8,327
Amortization of acquisition-
related inventory step-up -- -- 228 475
Restructuring charges -- 225 278 552
In-process research and
development 1,100 -- 1,100 --
Deferred gain on joint venture (9,304) -- (9,304) --
Write Off of Debt Issuance Cost -- -- 918 --
Investments revaluation, net -- 405 -- (1,039)
Total Non-GAAP adjustments (6,689) 2,879 75 8,315
Non-GAAP income before taxes 24,975 16,025 124,863 83,242
Income tax provision-35% 8,741 5,609 43,702 29,135
Non-GAAP net income $16,234 $10,416 $81,161 $54,107
Diluted Non-GAAP earnings per share $0.29 $0.19 $1.43 $0.98
Shares used in calculating diluted
non-GAAP earnings per share 56,941 55,826 56,819 54,948
EBITDA RECONCILIATION
(Dollars in thousands)
(Unaudited)
Three Months Ended Twelve Months Ended
Dec-30, Dec-31, Dec-30, Dec-31,
2005 2004 2005 2004
GAAP net income $23,393 $16,405 $84,855 $67,680
Add back :
Interest income
(expense), net (185) 753 1,495 3,452
Income tax provision
(benefit) 8,271 (3,259) 39,933 7,244
Depreciation expense 2,781 2,625 10,671 8,874
Amortization of
purchased intangibles 1,561 2,294 7,020 8,510
EBITDA $35,821 $18,818 $143,974 $95,760
CONSOLIDATED BALANCE SHEETS
(In thousands)
(Unaudited)
Dec-30, Dec-31,
2005 2004
Assets
Current assets:
Cash and cash equivalents 73,853 71,872
Accounts receivables, net 145,100 123,938
Other receivables 6,489 4,182
Inventories, net 107,851 87,745
Deferred income taxes 19,656 21,852
Other current assets 8,580 7,878
Total current assets 361,529 317,467
Property and equipment, net 42,664 30,991
Goodwill and other purchased
intangible assets, net 306,202 273,357
Deferred income taxes 10,333 8,019
Other assets 23,011 24,144
Total non-current assets 382,210 336,511
Total assets $743,739 $653,978
Liabilities and Shareholders' Equity
Current liabilities:
Current portion of long-term debt -- 12,500
Accounts payable 45,206 43,551
Accrued compensation and benefits 36,083 31,202
Accrued liabilities 24,614 17,935
Deferred revenues 13,184 9,317
Deferred income taxes 4,087 2,521
Income taxes payable 24,018 11,951
Total current liabilities 147,192 128,977
Non-current portion of long-term debt 649 26,496
Deferred gain on joint venture -- 9,179
Deferred income taxes 5,602 5,435
Other non-current liabilities 19,041 11,730
Total liabilities 172,484 181,817
Shareholders' equity:
Common stock 384,196 345,127
Retained earnings 167,525 82,670
Accumulated other comprehensive
income 19,534 44,364
Total shareholders' equity 571,255 472,161
Total liabilities and
shareholders' equity $743,739 $653,978
CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands)
(Unaudited)
Three Twelve
Months Ended Months Ended
Dec-30, Dec-31, Dec-30, Dec-31,
2005 2004 2005 2004
Cash flow from operating activities:
Net Income $23,393 $16,405 $84,855 $67,680
Adjustments to reconcile net
income to net cash provided by
operating activities:
Depreciation expense 2,781 2,625 10,671 8,874
Amortization expense 1,561 2,294 7,020 8,510
Provision for doubtful
accounts 161 301 (502) 1,210
Amortization and write-off of
debt issuance cost 45 121 1,270 487
Deferred income taxes 5,832 (3,111) 14,242 (1,482)
In-process research and
development 1,100 -- 1,100 --
Deferred gain on joint venture (9,304) (309) (9,180) (665)
Other (312) 120 (466) (21)
Add decrease (increase) in assets:
Accounts receivables, net 3,657 11,689 (19,017) (17,245)
Other receivables (4,015) (755) (2,108) 2,231
Inventories (12,962) (5,449) (17,888) (15,529)
Other current and non-current
assets 1,505 3,587 (2,945) (69)
Effect of foreign currency
translation adjustment (171) (2,208) 1,426 (1,461)
Add increase (decrease) in
liabilities:
Accounts payable 5,452 (730) 1,078 14,668
Accrued compensation and
benefits 2,583 1,384 3,408 4,847
Accrued liabilities 1,667 1,061 7,190 (1,757)
Deferred revenue 1,325 (5,547) 3,002 1,619
Income taxes payable (1,700) (2,346) 11,150 1,218
Net cash provided by operating
activities 22,598 19,132 94,306 73,115
Cash flows from investing activities:
Acquisitions, net of cash
acquired (29,790) (723) (51,379) (12,888)
Acquisition of property and
equipment (9,036) (3,841) (23,436) (12,750)
Proceeds from disposal of
property and equipment -- (16) -- 546
Cost of capitalized patents (9) (1) (103) (41)
Net cash used in investing activities (38,835) (4,581) (74,918) (25,133)
Cash flow from financing activities:
Issuance of common stock 3,582 8,416 24,463 26,805
Collections of notes receivable (5) 53 385 271
Proceeds from long-term debt and
revolving credit lines -- -- 6,000 14,000
Payments on long-term debt and
revolving credit lines -- (13,125) (44,250) (65,235)
Net cash provided (used) in financing
activities 3,577 (4,656) (13,402) (24,159)
Effect of exchange rate changes on
cash and cash equivalents (780) 2,858 (4,005) 2,633
Net increase in cash and cash
equivalents (13,440) 12,753 1,981 26,456
Cash and cash equivalents - beginning
of period 87,293 59,119 71,872 45,416
Cash and cash equivalents - end of
period $73,853 $71,872 $73,853 $71,872
Supplemental disclosures of cash flow
information:
Cash paid during the period for:
Income taxes, net of refunds $4,787 $2,362 $8,938 $6,694
Q1'04 Q2'04 Q3'04 Q4'04 FY'04
Actual Actual Actual Actual Actual
Income Statement Metrics
Total Revenue $156,509 $179,451 $170,164 $162,684 $668,808
Engineering &
Construction 102,481 117,236 112,994 107,767 440,478
Trimble Field
Solutions 24,713 30,831 26,293 23,754 105,591
Component Technologies 16,415 18,616 14,872 15,619 65,522
Trimble Mobile
Solutions 5,262 5,225 6,353 6,691 23,531
Portfolio Technologies 7,638 7,543 9,652 8,853 33,686
Gross Margin 48.4% 49.2% 49.0% 47.6% 48.6%
Total Segment Income $25,737 $34,895 $32,775 $23,998 $117,405
Engineering &
Construction 16,498 22,836 24,002 16,169 79,505
Trimble Field
Solutions 6,054 9,026 5,850 4,221 25,151
Component Technologies 3,926 4,051 2,782 3,121 13,880
Trimble Mobile
Solutions (1,643) (1,754) (2,058) (542) (5,997)
Portfolio Technologies 902 736 2,199 1,029 4,866
Corporate and Other
Charges $(7,499) $(8,225) $(7,976) $(8,080) $(31,780)
Non-operating expense
and income taxes $(5,398) $(6,152) $(6,882) $487 $(17,945)
Net Income $12,840 $20,518 $17,917 $16,405 $67,680
GAAP operating margin% 11.7% 14.9% 14.6% 9.8% 12.8%
Non-GAAP operating
margin% 13.0% 16.4% 15.8% 11.3% 14.2%
GAAP EPS $0.24 $0.38 $0.33 $0.29 $1.23
Fully-taxed (35%) Non-
GAAP EPS $0.21 $0.32 $0.28 $0.19 $0.98
Balance Sheet Metrics
Cash & Cash Equivalents $40,201 $54,657 $59,119 $71,872
Accounts Receivables,
Net $126,718 $139,766 $132,194 $123,938
Inventories, Net $64,910 $69,836 $81,751 $87,745
Total Debt $84,645 $77,462 $52,271 $38,996
Short Term Debt 12,795 12,745 12,661 12,500
Long Term Debt 71,850 64,717 39,610 26,496
Equity $362,035 $385,572 $418,331 $472,161
Cashflow Metrics
Cash Flow from (used
in) Operations $8,685 $21,344 $23,954 $19,132 $73,115
Working Capital $140,575 $155,966 $158,950 $188,490
Capital Expenditures $2,544 $3,524 $2,841 $3,841 $12,750
EBITDA $20,309 $30,060 $26,573 $18,818 $95,760
Amortization of
Intangibles 2,035 2,115 2,066 2,294 8,510
Depreciation 2,191 1,981 2,077 2,625 8,874
Financial Ratios
Days Sales Outstanding 64 65 64 63
Inventory Turns
(trailing 12 months) 4.0 4.3 4.5 4.5
Current ratio 2.3 2.2 2.2 2.5
Debt to Equity 0.2 0.2 0.1 0.1
Other
Headcount 2,184 2,155 2,159 2,160
Q1'05 Q2'05 Q3'05 Q4'05 FY'05
Actual Actual Actual Actual Actual
Income Statement Metrics
Total Revenue $195,383 $204,225 $188,484 $186,821 $774,913
Engineering &
Construction 120,198 141,096 134,173 128,994 524,461
Trimble Field
Solutions 45,425 32,187 24,882 25,349 127,843
Component Technologies 14,197 14,830 12,630 12,245 53,902
Trimble Mobile
Solutions 7,401 6,437 7,214 10,429 31,481
Portfolio Technologies 8,162 9,675 9,585 9,804 37,226
Gross Margin 50.1% 50.1% 51.6% 49.4% 50.3%
Total Segment Income $39,663 $47,916 $40,492 $32,589 $160,660
Engineering &
Construction 21,490 37,173 34,360 24,970 117,993
Trimble Field
Solutions 15,577 8,044 3,962 4,944 32,527
Component Technologies 2,600 2,821 1,648 965 8,034
Trimble Mobile
Solutions (636) (1,879) (746) 189 (3,072)
Portfolio Technologies 632 1,757 1,268 1,521 5,178
Corporate and Other
Charges $(9,463) $(9,179) $(7,465) $(9,609) (35,716)
Non-operating expense
and income taxes $(12,761) $(14,950) $(12,791) $413 (40,089)
Net Income $17,439 $23,787 $20,236 $23,393 $84,855
GAAP operating margin% 15.5% 19.0% 17.5% 12.3% 16.1%
Non-GAAP operating
margin% 16.9% 20.0% 18.5% 13.7% 17.2%
GAAP EPS $0.31 $0.42 $0.35 $0.41 $1.49
Fully-taxed (35%) Non-
GAAP EPS $0.34 $0.44 $0.37 $0.29 $1.43
Balance Sheet Metrics
Cash & Cash Equivalents $50,193 $56,860 $87,293 $73,853
Accounts Receivables,
Net $154,540 $150,592 $146,792 $145,100
Inventories, Net $91,309 $89,853 $93,940 $107,851
Total Debt $28,836 $661 $659 $649
Short Term Debt 12,500 -- -- --
Long Term Debt 16,336 661 659 649
Equity $490,188 $513,817 $543,394 $571,255
Cashflow Metrics
Cash Flow from (used
in) Operations $(1,192) $39,613 $33,286 $22,598 $94,306
Working Capital $197,372 $208,410 $232,276 $214,337
Capital Expenditures $3,164 $4,570 $6,666 $9,036 $23,436
EBITDA $31,885 $41,126 $35,142 $35,821 $143,974
Amortization of
Intangibles 2,339 2,209 911 1,561 7,020
Depreciation 2,512 2,378 3,000 2,781 10,671
Financial Ratios
Days Sales Outstanding 62 60 60 66
Inventory Turns
(trailing 12 months) 4.3 4.1 4.0 3.9
Current ratio 2.5 2.7 2.8 2.5
Debt to Equity 0.1 0.0 0.0 0.0
Other
Headcount 2,231 2,308 2,347 2,462
Source: prnewswire
All trademarks and copyrighted information contained herein are the property of their respective owners.
Related Articles
|
