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Trimble (TRMB) Q4 Earnings Beat Estimates, Revenues Up Y/Y

Zacks Equity Research

Trimble Inc. TRMB delivered fourth-quarter 2018 non-GAAP earnings of 48 cents per share, surpassing the Zacks Consensus Estimate by 2 cents. The figure also increased 29.7% on a year-over-year basis but decreased 2% sequentially.

Per the company, non-GAAP revenues increased 13% year over year but declined 1.5% on a sequential basis to $792.9 million. Moreover, the company’s GAAP revenues came in $785.5 million, up 12% from the prior year quarter but down 1.2% from the previous quarter.

Well-performing segments drove year-over-year top-line growth in the reported quarter. Further, positive contributions from acquisitions of e-Builder and Viewpoint contributed well throughout the reported quarter.

Product revenues (60% of GAAP revenues) came in $471.4million, up 2.6% on a year-over-year basis. Services revenues (21.3% of revenues) came in $167.3 million, up 26.2% year over year. Subscription revenues (18.7% of revenues) increased 36.2% from the year-ago quarter to $146.8 million.

Coming to price performance, the shares of Trimble have lost 1.2% in a year, compared with the industry’s decline of 0.7%.

We note that the company’s acquisition strength remains a major positive and is likely to help the stock to rebound in the long haul.



Segments in Detail

Buildings and Infrastructure:
This segment generated $287 million sales, accounting for 36.2% of the company’s non-GAAP revenues, growing 39.9% on a year-over-year basis. The company witnessed organic growth of 7% within this segment. Notably, strengthening BIM-centric building construction businesses drove year-over-year sales. Further, robust distribution network and expanding product portfolio are major positives.

Geospatial: Sales from this segment were $178.8 million, accounting for 22.6% of total revenues. The figure increased 2.2%, compared with the year-ago quarter. This can be attributed to strong end-user demand. Further, the segment witnessed organic growth of 3% in the reported quarter.

Resources and Utilities: The segment generated sales of $130.1 million, accounting for 16.4% of total revenues. The figure was down 1.7% on a year-over-year basis which was primarily owing to sluggish end-user business. This segment also remained flat organically. However, the company experienced strong performance of its OEM-based business.

Transportation: Sales from this segment went up 4.4% to $197 million, accounting for 24.8% of total revenues. Strong subscription revenues drove the sales within this segment. Further, this segment witnessed organic growth of 4% in the quarter under review.

Trimble Inc. Price, Consensus and EPS Surprise

 

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

Operating Details

In the fourth quarter, non-GAAP gross margin came in at 59.5%, expanding 420 basis points (bps) year over year. The increase can be attributed to favorable product mix and strong cost control strategies.

Adjusted operating expenses accounted for 37.8% of non-GAAP revenues, contracting 30 bps compared with the year-ago quarter.

Non-GAAP operating margin came in at 21.7%, expanding 460 bps year over year, driven by effective operating expense management across all the segments.

Balance Sheet & Cash Flow

As of Dec 31, 2018, cash and cash equivalents were $172.5 million, down from $205.4 million as of Sep 30, 2018. Inventories were $298 million, increasing from $286.3 million in the previous quarter.

Long-term debt was $1.71 billion at the end of fourth quarter, compared with $1.79 billion at the end of the third quarter.

Cash flow from operations was $102 million in the reported quarter, declining from $117 million in the last reported quarter.

Additionally, the company repurchased 1.1 million shares worth $40 million.

Guidance

For first-quarter 2018, Trimble expects non-GAAP earnings between 44 cents and 48 cents per share. The Zacks Consensus Estimate for earnings is pegged at 47 cents per share.

The company expects non-GAAP revenues between $795 million and $820 million. Further, GAAP revenues are anticipated to lie within the range of $792 million to $817 million. The Zacks Consensus Estimate for revenues is projected at $836.4 million.

Zacks Rank and Stocks to Consider

Trimble carries a Zacks Rank #3 (Hold).

Some better-ranked stocks in the broader technology sector are TripAdvisor TRIP, Upland Software UPLD and RingCentral RNG. While TripAdvisor sports a Zacks Rank #1 (Strong Buy), Upland Software and RingCentral carry a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

Long-term earnings growth rate for TripAdvisor, Upland Software and RingCentral is currently pegged at 14.05%, 20% and 35%, respectively.

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