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Trimble (TRMB) Q3 Earnings and Revenues Trump Estimates

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Zacks Equity Research
·4 min read
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Trimble Inc. TRMB reported third-quarter 2020 non-GAAP earnings of 60 cents per share, which beat the Zacks Consensus Estimate by 39.5%. Notably, the bottom line improved 15.4% sequentially and 25% year over year.

Per management, non-GAAP revenues increased 1% year over year to $792.8 million.

Further, the company’s GAAP revenues were $792.1 million, which surpassed the Zacks Consensus Estimate by 10.1%. Also, the figure was up 1% year over year and 7.9% from the prior quarter.

The top line was driven by strength in overall demand environment. Further, strong segmental performance aided the results.

Product revenues (58.3% of GAAP revenues) totaled $461.4 million, up 0.6% on a year-over-year basis. Services revenues (20.3% of revenues) were $160.7 million, down 4.3% year over year. Subscription revenues (21.5% of revenues) improved 8.2% from the year-ago quarter to $170 million.

Trimble continues to anticipate persistent headwinds in the global economy owing to the coronavirus pandemic. Consequently, the company has refrained from providing its guidance for the fourth quarter and the balance of 2020.

Nevertheless, its cost-control strategies are expected to drive profitability in the near term. Further, the company’s acquisition strategy remains a major positive and is likely to aid in the stock rebound in the long haul.

Trimble Inc. Price, Consensus and EPS Surprise

Trimble Inc. Price, Consensus and EPS Surprise
Trimble Inc. Price, Consensus and EPS Surprise

Trimble Inc. price-consensus-eps-surprise-chart | Trimble Inc. Quote

Segments in Detail

Buildings and Infrastructure: This segment generated sales of $317.4 million, accounting for 40.1% of the company’s non-GAAP revenues. The figure increased 2.5% on a year-over-year basis.

Geospatial: Sales from this segment were $165.6 million, accounting for 20.9% of total revenues. The figure increased 6.8% from the year-ago quarter, primarily driven by higher sales to OEM customers.

Resources and Utilities: The segment generated sales of $150.6 million, accounting for 19% of total revenues. The figure increased 24.4% on a year-over-year basis. The company experienced growth in the utilities business for the reported quarter, which was a positive.

Transportation: Sales from this segment were down 19.7% from the year-ago quarter to $159.2 million. Notably, the figure made up 20.1% of total revenues. Sluggishness in the transportation sector was a concern.

Metrics Details

For the third quarter, the company’s deferred revenues were up 20% on a year-over-year, driven by organic and acquisition-related growth. Also, backlog was $1.2 billion, up more than 10% from the year-ago period.

Operating Details

For the third quarter, non-GAAP gross margin came in at 58.8%, expanding 180 basis points (bps) year over year.

Adjusted operating expenses accounted for 34.6% of non-GAAP revenues, contracting 180 bps from the year-ago quarter. The decrease was due to structural actions and temporary factors related to the COVID-19 pandemic.

Consequently, non-GAAP operating margin came in at 24.2%, which expanded 360 bps year over year.

Balance Sheet

At the end of third-quarter 2020, cash and cash equivalents were $184 million, down from $196.4 million at the end of second-quarter 2020. Inventories were $318.5 million, down from $338.6 million in the previous quarter.

Long-term debt was $1.39 billion at third quarter-end compared with $1.76 billion at second quarter-end.

Further, the company generated $181 million of cash from operations compared with $147 million in the previous quarter.

Trimble generated free cash flow of $165 million for the reported quarter.

Zacks Rank & Key Picks

Trimble currently has a Zacks Rank #3 (Hold). Some better-ranked stocks in the broader technology sector include Marchex, Inc. MCHX, Overstock.com, Inc. OSTK and Revolve Group, Inc. RVLV, each carrying a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Long-term earnings growth for Marchex, Overstock.com, and Revolve Group is currently projected at 15%, 20% and 17.3%, respectively.

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