Trimble Navigation Limited
935 Stewart Drive
Post Office Box 3642
Sunnyvale, CA 94085
Trimble Second Quarter 2008 Revenue $377.8 Million, Up 15 PercentAAP Earnings Per Share $0.39; Non-GAAP Earnings Per Share $0.49
SUNNYVALE, Calif., July 24, 2008 -- Trimble (Nasdaq: TRMB) today announced revenue of $377.8 million for its second quarter of 2008 ended June 27, 2008. Revenue was up approximately 15 percent from revenue of $327.7 million in the second quarter of 2007.
Operating income for the second quarter of 2008 was $62.9 million, up 12 percent from operating income of $56.0 million in the second quarter of 2007. Operating margins in the second quarter of 2008 were 16.7 percent, down slightly from operating margins of 17.1 percent in the second quarter of 2007. Amortization of intangibles increased from $10.4 million in the second quarter of 2007 to $10.9 million in the second quarter of 2008. The impact of stock-based compensation expense was flat year-over-year at $3.8 million. There was a $3.3 million restructuring expense in the second quarter of 2008 and a $333 thousand restructuring expense in the second quarter of 2007. Excluding these impacts, non-GAAP operating income of $81.0 million was up 15 percent compared to the second quarter of 2007. Non-GAAP operating margins were 21.4 percent in the second quarter of 2008, approximately flat compared to 21.5 percent in the second quarter of 2007.
Net income for the second quarter of 2008 was $48.6 million, up 39 percent compared to net income of $35.0 million in the second quarter of 2007. Diluted earnings per share for the second quarter of 2008 were $0.39, up 39 percent from diluted earnings per share of $0.28 in the second quarter of 2007.
The tax rate for the second quarter of 2008 was 28 percent, compared to 38 percent in the second quarter of 2007. The lower tax rate is due to the previously announced implementation of a global supply chain structure. Trimble now expects the full-year tax rate to be 31 percent versus previous guidance of 33 percent.
Adjusting for the amortization of intangibles and the impact of stock-based compensation and restructuring expenses, non-GAAP net income of $61.7 million for the second quarter of 2008 was up 40 percent compared to non-GAAP net income of $44.1 million in the second quarter of 2007. Non-GAAP earnings per share for the second quarter of 2008 were $0.49, up 40 percent from non-GAAP earnings per share of $0.35 in the second quarter of 2007.
"The Field Solutions segment continued its strong growth trend in the second quarter and we expect a robust agricultural environment for the remainder of the year. The environment for the Engineering and Construction segment remains uncertain in the U.S. and European markets, with continued strength outside those regions," said Steven W. Berglund, Trimble's chief executive officer.
"Although the Mobile Solutions segment has not yet reached our financial goals, potential large customers are showing significant, increased interest in our mobile products. This interest is driven by higher fuel prices, which are putting pressure on operating costs. We believe this improving sales pipeline has the potential to generate significant growth in revenue and profitability in 2009 in the segment. We continue to invest aggressively in anticipation of this growth," Berglund continued.
"While recognizing the potential impact of economic uncertainties we are reiterating the total company revenue guidance and increasing the earnings per share guidance for the year."
Trimble Results by Business Segment
Segment operating income is revenue less cost of goods sold and operating expenses, excluding general corporate expenses, restructuring expenses, amortization of intangibles, in-process research and development and the impact of stock-based compensation expense.
Engineering and Construction
Second quarter 2008 Engineering and Construction (E&C) revenue was $213.0 million, up approximately 7 percent when compared to revenue of $198.9 million in the second quarter of 2007. E&C growth was driven by strong international sales partially offset by slower conditions in the U.S.
Second quarter 2008 operating income in E&C was $45.2 million, or 21.2 percent of revenue, compared to $52.4 million, or 26.3 percent of revenue, in the second quarter of 2007.
Non-GAAP operating income in E&C was $46.2 million, or 21.7 percent of revenue, in the second quarter of 2008 compared to $53.2 million, or 26.7 percent of revenue, in the second quarter of 2007. As in the first quarter of 2008, the decline in operating margins resulted from the impact of foreign exchange rates, the impact of recent acquisitions which have not yet fully contributed to profitability, higher marketing and product development costs, and product mix.
Second quarter 2008 Field Solutions revenue was $90.1 million, up approximately 63 percent compared to revenue of $55.3 million in the second quarter of 2007. Revenue growth was driven primarily by strong demand for agricultural products.
Second quarter 2008 operating income in Field Solutions was $34.8 million, or 38.6 percent of revenue compared to $18.4 million, or 33.3 percent of revenue, in the second quarter of 2007.
Non-GAAP operating income in Field Solutions was $35.0 million, or 38.9 percent of revenue, in the second quarter of 2008 compared to $18.6 million, or 33.6 percent of revenue, in the second quarter of 2007. Operating margin expansion resulted from operating leverage due to increased sales.
Second quarter 2008 Mobile Solutions revenue was $42.3 million, up approximately 3 percent when compared to revenue of $40.9 million in the second quarter of 2007.
Second quarter 2008 operating income in Mobile Solutions was $1.9 million, or 4.6 percent of revenue compared to $2.9 million, or 7.1 percent of revenue, in the second quarter of 2007.
Non-GAAP operating income in Mobile Solutions was $3.1 million, or 7.4 percent of revenue, in the second quarter of 2008 compared to $4.4 million, or 10.8 percent of revenue, in the second quarter of 2007. Operating income was impacted primarily by losses from the field service and direct store delivery products, which are expected to show improvement as a new product platform is rolled out.
Second quarter 2008 Advanced Devices revenue was $32.4 million, approximately flat when compared to revenue of $32.7 million in the second quarter of 2007.
Second quarter 2008 operating income in Advanced Devices was $6.6 million, or 20.3 percent of revenue compared to $5.4 million, or 16.5 percent of revenue, in the second quarter of 2007.
Non-GAAP operating income in Advanced Devices was $6.9 million, or 21.3 percent of revenue, in the second quarter of 2008 compared to $5.7 million, or 17.4 percent of revenue, in the second quarter of 2007. Improvements in operating margins were due to product mix.
Stock Repurchase Program
In January, Trimble announced a stock repurchase program for up to $250 million. As part of this program, in the first quarter of 2008, Trimble repurchased approximately 968 thousand shares of Trimble stock at an average purchase price of $26.71. In the second quarter of 2008, Trimble repurchased approximately 287 thousand shares of Trimble stock at an average purchase price of $36.25. Subsequent to the end of the second quarter, as of July 24, 2008, Trimble repurchased 741 thousand shares of Trimble stock at an average purchase price of $33.18.
Use of Non-GAAP Financial Information
To help our readers understand our past financial performance and our future results, we supplement the financial results that we provide in accordance with generally accepted accounting principles, or GAAP, with non-GAAP financial measures. The specific non-GAAP measures which we use along with a reconciliation to the nearest comparable GAAP measures and the explanation for why management chose to exclude selected items and the additional purposes for which these non-GAAP measures are used can be found at the end of this release. The method we use to produce non-GAAP results is not computed according to GAAP and may differ from the methods used by other companies. Our non-GAAP results are not meant to be considered in isolation or as a substitute for comparable GAAP measures and should be read only in conjunction with our consolidated financial statements prepared in accordance with GAAP. Our management regularly uses our supplemental non-GAAP financial measures internally to understand, manage and evaluate our business and to make operating decisions. These non-GAAP measures are among the primary factors management uses in planning for and forecasting future periods. We believe that these non-GAAP financial measures reflect an additional way of viewing aspects of our operations that, when viewed with our GAAP results, provide a more complete understanding of factors and trends affecting our business. Management generally compensates for the limitations in the use of non-GAAP financial measures by relying on comparable GAAP financial measures and providing investors with a reconciliation of the non-GAAP financial measure to the most directly comparable GAAP financial measure or measures. Investors are encouraged to review the reconciliation of our non-GAAP financial measures to the comparable GAAP results which is attached to this earnings release. Additional financial information about our use of non-GAAP results can be found on the investor relations page of our Web site at http://investor.trimble.com.
In the third quarter of 2008, Trimble expects revenue to grow 13 to 15 percent compared to the third quarter of 2007, with revenue between $335 million and $340 million. Trimble expects third quarter 2008 GAAP earnings per share between $0.26 and $0.28 and non-GAAP earnings per share between $0.34 and $0.36. Non-GAAP guidance for the third quarter of 2008 excludes the amortization of intangibles expected to be $10.9 million related to previous acquisitions, and the anticipated impact of stock-based compensation expense of $3.8 million. Both GAAP and non-GAAP guidance use a 31 percent tax rate and assume 125.7 million shares outstanding.
Trimble has modified its full-year 2008 guidance incorporating the lower tax rate of 31 percent. Revenue for the full year 2008 is expected to grow 15 to 17 percent. Full-year non-GAAP earnings per share are expected to be $1.54 to $1.59, versus previous guidance of $1.50 to $1.55.
Investor Conference Call / Webcast Details
Trimble will hold a conference call on July 24, 2008 at 1:30 p.m. PT to review its second quarter 2008 results. It will be broadcast live on the Web at http://investor.trimble.com. Investors without Internet access may dial into the call at (800) 528-9198 (U.S.) or (706) 634-6089 (international). A replay of the call will be available for seven days at (800) 642-1687 (U.S.) or ((706) 645-9291 (international) and the pass code is 54071517. The replay will also be available on the Web at the address above.
Trimble applies technology to make field and mobile workers in businesses and government significantly more productive. Solutions are focused on applications requiring position or location-including surveying, construction, agriculture, fleet and asset management, public safety and mapping. In addition to utilizing positioning technologies such as GPS, lasers and optics, Trimble solutions may include software content specific to the needs of the user. Wireless technologies are utilized to deliver the solution to the user and to ensure a tight coupling of the field and the back office. Founded in 1978 and headquartered in Sunnyvale, Calif., Trimble has a worldwide presence with more than 3,600 employees in over 18 countries.
For more information visit Trimble's Web site at http://www.trimble.com.
Certain statements made in this press release are forward-looking statements within the meaning of Section 21E of the Securities Exchange Act of 1934, as amended, and are made pursuant to the safe harbor provisions of the Securities Litigation Reform Act of 1995. These statements include the revenue, effective tax rate, stock-based compensation, the impact from in-process research and development expense, amortization of purchased intangibles, gross margin and earnings per share estimates for the third quarter and full-year 2008, the impact on operating income for the Company's mobile solutions segment as a new product platform is rolled out, and the potential for the mobile solutions segment to generate significant revenue and profitability in 2009. These forward-looking statements are subject to change, and actual results may materially differ from those set forth in this press release due to certain risks and uncertainties. For example, strong demand for the Company's products may not continue because of a decline in the overall health of the economy and international markets, which may result in reduced capital spending. In addition, the Company's results may be adversely affected if the growth rates and profitability expectations for each of its four segments are not achieved, or its joint ventures and recent acquisitions do not achieve anticipated results, or if the Company is unable to market, manufacture and ship new products. The potential impact of our new mobile solutions product platform and the ability of that segment to generate significant revenue and profitability in 2009 could be adversely affected by any delays in the roll out of the new platform or reduction in capital spending in its target customer base. Any failure to achieve predicted results could negatively impact the Company's revenues, gross margin and other financial results. Whether the Company achieves its guidance for the third quarter and full year 2008 will also depend on a number of other factors, including the risks detailed from time to time in reports filed with the SEC, including its quarterly reports on Form 10-Q and its annual report on Form 10- K. Undue reliance should not be placed on any forward-looking statement contained herein. These statements reflect the Company's position as of the date of this release. The Company expressly disclaims any undertaking to release publicly any updates or revisions to any statements to reflect any change in the Company's expectations or any change of events, conditions, or circumstances on which any such statement is based.
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
Three Months Ended Six Months Ended
Jun-27, Jun-29, Jun-27, Jun-29,
Revenue $377,767 $327,732 $733,063 $613,464
Non-operating income, net
Income before taxes 67,043 56,221 126,854 98,346
Income tax provision 18,444 21,195 38,188 34,637
Earnings per share:
Shares used in calculating
CONDENSED CONSOLIDATED BALANCE SHEETS
Property and equipment, net 51,615 51,444
Total assets $1,583,832 $1,539,359
Liabilities and Shareholders' Equity
Non-current portion of long-term debt 432 60,564
Total liabilities 374,909 430,333
Commitments and contingencies
Total liabilities and
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
Cash flow from operating activities:
Adjustments to reconcile net income
Add decrease (increase) in
Add increase (decrease) in
Cash flows from investing
Cash flow from financing activities:
Effect of exchange rate changes on
Net decrease in cash and cash
Cash and cash equivalents - end of
REVENUE: $377,767 $327,732 $733,063 $613,464
DILUTED NET INCOME PER SHARE:
SHARES USED TO COMPUTE DILUTED NET
(A) Restructuring. The amounts recorded are for employee compensation
(B) Amortization of purchased intangibles. The amounts recorded as
(C) In-process research and development. The amounts recorded as
(D) Stock-based Compensation. The amounts consist of expenses for employee
Three Months Ended Six Months Ended
(E) Amortization of acquisition-related inventory step-up. The purchase
(F) Income tax effect on non-GAAP adjustments. This amounts adjusts the
THREE MONTHS ENDED JUNE 27, 2008:
GAAP operating income before
THREE MONTHS ENDED JUNE 29, 2007:
GAAP operating income before
SIX MONTHS ENDED JUNE 27, 2008:
GAAP operating income before
SIX MONTHS ENDED JUNE 29, 2007:
GAAP operating income before
(G) Stock-based Compensation. The amounts consist of expenses for employee