Trimble Inc. TRMB reported fourth-quarter 2019 non-GAAP earnings of 53 cents per share, beating the Zacks Consensus Estimate by 12.8%. The bottom line also improved 10.4% year over year and sequentially.
Per management, non-GAAP revenues increased 4.3% year over year and 5.4% on a sequential basis to $826.7 million.
Further, the company’s GAAP revenues came in $824 million, up 4.9% from the prior-year quarter and 5.1% from the prior quarter. Moreover, figure surpassed the Zacks Consensus Estimate of $785.6 million.
The top line was driven by solid momentum across Buildings and Infrastructure, Resources and Utilities and Transportation segments.
Additionally, the reported quarter was a 14-week one compared to the year-ago quarter, which was a 13-week one. Thereby, this acted as a tailwind for the company.
Product revenues (56.6% of GAAP revenues) totaled $466.5 million, down 1% on a year-over-year basis. Services revenues (22.4% of revenues) came in at $184.4 million, up 10.2% year over year. Subscription revenues (21% of revenues) improved 17.9% from the year-ago quarter to $173.1 million.
Coming to price performance, shares of Trimble have gained 13.7% over a year, underperforming the industry’s rally of 31.6%.
Trimble continues to anticipate persistent headwinds in its agriculture business due to tariff imposition. Further, the company expects to face delays in China-based supply chain, and its momentum across Chinese customers is likely to weaken in first-quarter 2020 owing to the outbreak of coronavirus.
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 near term.
Segments in Detail
Buildings and Infrastructure: This segment generated sales of $313.8 million, accounting for 38% of the company’s non-GAAP revenues, improving 9.3% on a year-over-year basis. Notably, strong performance by civil construction and building businesses drove year-over-year sales in this segment. Further, positive contributions from e-Builder and Viewpoint buyouts contributed to the segment’s top line. Moreover, the company witnessed the positive impact of a 14-week quarter.
Geospatial: Sales from this segment were $168.7 million, accounting for 20.4% of total revenues. The figure decreased 5.6%, compared with the year-ago quarter primarily owing to the U.S.-China trade war. Further, macro-economic headwinds in China led to slowdown in OEM demand, which affected the segment’s top line in the reported quarter.
Resources and Utilities: The segment generated sales of $138.1 million, accounting for 16.7% of total revenues. The figure increased 6.1% on a year-over-year basis. Positive contributions from Cityworks buyout drove the segment’s fourth-quarter top line.
Transportation: Sales from this segment went up 4.6% from the year-ago quarter to $206.1 million, accounting for 24.9% of total revenues. Advantages of 14-week quarter contributed 4% to the segment’s top line.
Trimble Inc. Price, Consensus and EPS Surprise
Trimble Inc. price-consensus-eps-surprise-chart | Trimble Inc. Quote
In the fourth quarter, non-GAAP gross margin came in at 59%, contracting 50 basis points (bps) year over year.
Adjusted operating expenses accounted for 37.5% of non-GAAP revenues, contracting 30 bps compared with the year-ago quarter.
Further, non-GAAP operating margin came in at 21.6%, which contracted 10 bps year over year.
At the end of fourth-quarter 2019, cash and cash equivalents were $189.2 million, up from $184.6 million at the end of prior quarter. Inventories were $312.1 million, up from $290.1 million in the previous quarter.
Long-term debt was $1.6 billion at the end of the fourth quarter, compared with $1.5 billion at the end of the third quarter.
Further, the company generated $122 million of cash from operations and $108 million of free cash flow during the reported quarter.
For first-quarter 2020, Trimble anticipates non-GAAP earnings between 40 cents and 45 cents per share. The Zacks Consensus Estimate for earnings is pegged at 50 cents per share.
The company expects GAAP revenues between $778 million and $808 million. The Zacks Consensus Estimate for revenues is projected at $821.69 million.
Further, the company anticipates non-GAAP revenues between $780 million and $810 million.
Zacks Rank & Key Picks
Trimble currently has a Zacks Rank #3 (Hold).
Alteryx AYX, Cirrus Logic CRUS and Garmin GRMN 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 Alteryx, Cirrus Logic and Garmin is pegged at 39.85%, 15.27% and 7.35%, respectively.
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