Trimble (TRMB) Q1 Earnings and Revenues Outpace Estimates
Trimble Inc. TRMB reported first-quarter 2022 non-GAAP earnings of 73 cents per share, which beat the Zacks Consensus Estimate by 9%. The bottom line improved 10.6% year over year and 17.7% sequentially.
TRMB’s revenues of $993.7 million surpassed the Zacks Consensus Estimate by 2.9%. Also, the figure was up 12.1% year over year and 7.3% sequentially.
The top line was driven by an increase in product and subscription revenues. Further, solid momentum across buildings & infrastructure, geospatial, and resources & utilities segments aided the results. Yet, supply-chain challenges remained a headwind for Trimble.
In 2022, Trimble is expected to witness strong demand across the end markets. However, the grim supply-chain bottleneck is expected to persist.
In April, Trimble signed an agreement to divest its Time and Frequency, LOADRITE, Spectra Precision Tools and SECO accessories businesses to Precisional LLC, an affiliate of The Jordan Company. The transaction is likely to be completed in the second quarter of 2022. This divestiture is expected to negatively impact the current-year revenues.
Trimble Inc. Price, Consensus and EPS Surprise
Trimble Inc. price-consensus-eps-surprise-chart | Trimble Inc. Quote
Top Line in Detail
Product revenues (accounting for 63% of total revenues) summed $621.6 million, up 15.2% on a year-over-year basis. Subscription revenues (21%) increased 14.2% from the year-ago quarter’s level to $211 million. Services revenues (16%) of $161.1 million dipped 0.7% from the year-ago reported figure.
Trimble reports revenues on the basis of four types as follows:
Hardware revenues (accounting for 44% of total revenues) amounted to $435.1 million, up 11.3% year over year. Software revenues (19%) were $186.5 million, reflecting an increase of 25.8% from the year-ago period’s figure. Recurring revenues (34%) increased 9.3% from the year-ago quarter’s level to $334.1 million. Professional Service and Other revenues (4%) totaled $38 million, down 8.2% year over year.
Trimble operates under the following four organized segments:
Buildings and Infrastructure: The segment generated revenues of $397.6 million (accounting for 40% of total revenues), which increased 15.9% on a year-over-year basis. Despite continued supply-chain bottlenecks, revenue growth was strong in all major software and hardware centric businesses. Also, strong growth in subscription revenues remained a tailwind.
Geospatial: This segment generated revenues of $207.5 million (21% of total revenues), which grew 14.2% from the prior-year quarter’s level. Growth was driven by continued strong demand across all major regions and end markets and growth in core survey and mapping business, partially offset by supply-chain woes.
Resources and Utilities: This segment generated revenues of $229.9 million (23% of total revenues), up 12% from the prior-year quarter’s level. Higher revenues were attributed to healthy agricultural markets. Also, strong growth in positioning services remained a positive. Yet, the segmental revenues were affected by supply-chain constraints.
Transportation: The segment generated revenues of $158.7 million (accounting for 16% of total revenues), which improved 1.3% on a year-over-year basis. The segment was driven by revenue growth of enterprise subscription and maps business.
Operating Details
For the first quarter, non-GAAP gross margin came in at 57.9%, contracting 50 basis points (bps) year over year.
As a percentage of revenues, adjusted EBITDA contracted 60 bps year over year to 25.5%.
On a non-GAAP basis, operating expenses accounted for 34.4% of revenues and contracted 40 bps from the year-ago quarter’s figure.
Non-GAAP operating margin came in at 23.5%, which contracted 10 bps year over year.
Balance Sheet & Cash Flow
At the end of first-quarter 2022, cash and cash equivalents were $357.2 million, up from $325.7 million at the end of fourth-quarter 2021.
Accounts receivables were $655.7 million in the reported quarter, increasing from $624.8 million in the prior quarter.
Total debt was $1.294 billion at the first-quarter-end compared with $1.293 billion at the fourth-quarter-end.
TRMB generated $153 million of cash from operations compared with $155.3 million in the previous quarter.
In the reported quarter, Trimble generated a free cash flow of $138.5 million and repurchased shares worth $104.7 million.
Guidance
For 2022, Trimble decreased its guidance for revenues of $3.95-$4.05 billion to $3.80-$3.88 billion by considering its recently announced divestitures. The Zacks Consensus Estimate for full-year revenues is pegged at $4 billion.
Trimble also reduced 2022 non-GAAP earnings per share from $2.75-$2.95 to $2.71-$2.86. The Zacks Consensus Estimate for current-year earnings per share is pegged at $2.87.
Management expects its non-GAAP operating margin to be 23-23.5% for 2022.
Zacks Rank & Stocks to Consider
Currently, Trimble has a Zacks Rank #3 (Hold). Investors interested in the broader technology sector can consider stocks like Jabil JBL, Jack Henry & Associates JKHY, and Broadcom AVGO. While Jabil currently sports a Zacks Rank #1 (Strong Buy), Jack Henry & Associates and Broadcom carry a Zacks Rank #2 (Buy) at present. You can see the complete list of today’s Zacks #1 Rank stocks here.
Jabil has gained 6.9% over a year. The long-term earnings growth rate for JBL is currently projected at 12%.
Jack Henry & Associates has gained 18.6% over a year. The long-term earnings growth rate for JKHY is currently projected at 17%.
Broadcom has gained 28.9% over a year. The long-term earnings growth rate for AVGO is currently projected at 15.6%.
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