Trimble Inc. TRMB reported first-quarter 2020 non-GAAP earnings of 49 cents per share, beating the Zacks Consensus Estimate by 19.5%. The bottom line also improved 8.9% year over year but declined 7.5% sequentially.
Per management, non-GAAP revenues decreased 1% year over year and 3.9% on a sequential basis to $794 million.
Further, the company’s GAAP revenues came in $792.3 million, which surpassed the Zacks Consensus Estimate of $783 million. However, the figure was down 1% from the year-ago quarter and 3.8% from the prior quarter.
The top line was impacted by weakness in the overall demand environment owing to the coronavirus pandemic. Further, sluggishness in the Geospatial and Transportation segments remained a headwind during the reported quarter.
Coming to price performance, Trimble has lost 11.3% on a year-to-date basis compared with the industry’s decline of 24.9%.
Nevertheless, the company witnessed strong performance by Resources and Utilities and Buildings and Infrastructure segments in the first quarter. Further, acquisition benefits remained tailwinds.
Product revenues (58.5% of GAAP revenues) totaled $463.8 million, down 5% on a year-over-year basis. Services revenues (20.5% of revenues) came in at $162.4 million, up 2% year over year. Subscription revenues (21% of revenues) improved 7.8% from the year-ago quarter to $166.1 million.
We note that share price of the company has surged 16.1% following the recent earnings release.
Trimble continues to anticipate persistent headwinds in the global economy owing to coronavirus pandemic. Consequently, the company has refrained from providing guidance for the remaining 2020.
Nevertheless, the company remains optimistic regarding cost control strategies, which are expected to aid profitability in the near term. Further, the company’s acquisition strategy remains a major positive and is likely to aid the stock rebound in the long haul.
Segments in Detail
Buildings and Infrastructure: This segment generated sales of $296.9 million, accounting for 37.4% of the company’s non-GAAP revenues, improving 1% on a year-over-year basis. Notably, strong performance by civil construction business drove year-over-year sales in this segment despite coronavirus-induced disruptions.
Geospatial: Sales from this segment were $146.2 million, accounting for 18.4% of total revenues. The figure decreased 9.3%, compared with the year-ago quarter primarily on account of weak demand due to decline in oil prices. Further, coronavirus induced shelter-in-place protocol remained a headwind. Additionally, decreasing dealers’ inventories were concerns.
Resources and Utilities: The segment generated sales of $180.3 million, accounting for 22.7% of total revenues. The figure improved 13% on a year-over-year basis. Although coronavirus outbreak impacted the company’s OEM business negatively, solid customer demand courtesy of the anticipation of shutdowns in distribution and manufacturing facilities drove the segment’s top line. Further, rising demand for aftermarket products and correction services in the agricultural sector was a positive.
Transportation: Sales from this segment went down 9.8% from the year-ago quarter to $170.6 million, accounting for 21.5% of total revenues. Coronavirus-induced crisis situation hurt the freight demand. Further, challenges associated with implementation of the ELD mandate in Trimble’s telematics business remained headwinds.
Trimble Inc Price, Consensus and EPS Surprise
Trimble Inc price-consensus-eps-surprise-chart | Trimble Inc Quote
In the first quarter, non-GAAP gross margin came in at 59.1%, expanding 110 basis points (bps) year over year.
Adjusted operating expenses accounted for 38.8% of non-GAAP revenues, expanding 10 bps compared with the year-ago quarter.
Further, non-GAAP operating margin came in at 20.3%, which expanded 90 bps year over year.
At the end of first-quarter 2020, cash and cash equivalents were $216.8 million, up from $189.2 million at the end of fourth-quarter 2019. Inventories were $327.2 million, up from $312.1 million in the previous quarter.
Long-term debt was $1.7 billion at the end of the first quarter, compared with $1.6 billion at the end of the fourth quarter.
Further, the company generated $155.7 million of cash from operations compared to $122 million in the previous quarter.
Zacks Rank & Key Picks
Trimble currently has a Zacks Rank #3 (Hold).
ASE Technology Holding Co., Ltd. ASX, Twilio Inc. TWLO and InterDigital, Inc. IDCC are some better-ranked stocks worth considering in the broader computer and technology sector, each flaunting a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
Long-term earnings growth rate for ASE Technology, Twilio and InterDigital is pegged at 26.63%, 26.61% and 15%, respectively.
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