Print News   |   Send Link
Trimble Navigation Limited
935 Stewart Drive
Post Office Box 3642
Sunnyvale, CA 94085
1.408.481.8000 phone
1.408.481.7781 fax

  NEWS RELEASE

 

Trimble Reports Second Quarter 2006 Revenue Growth of 20 Percent


SUNNYVALE, Calif., July 25, 2006 /PRNewswire-FirstCall via COMTEX News Network/ -- Trimble (Nasdaq: TRMB) today announced results for its second quarter 2006, ended June 30, 2006. Revenue for the second quarter of 2006 was $245.3 million, up 20 percent from revenue of $204.2 million in the second quarter of 2005.

Operating income for the second quarter of 2006 was $38.7 million, flat when compared to the second quarter of 2005. For year-over-year comparisons, it should be noted that second quarter 2006 operating income reflects the impact of stock-based compensation expense resulting from the adoption of FAS 123(R) of $3.3 million. Additionally, the net impact of transactions with the Caterpillar Trimble Control Technologies (CTCT) joint venture reduced operating results by $5.1 million; these transactions were included in non-operating results in 2005. In addition, expenses related to acquisitions, namely amortization of purchased intangibles and purchased in-process research and development expense increased by $2.6 million versus second quarter of 2005. Adjusting for the above factors, operating income in the second quarter of 2006 was up 27 percent compared to the second quarter of 2005.

Net income for the second quarter of 2006 was $28.5 million, up 20 percent when compared to net income of $23.8 million in the second quarter of 2005. Earnings per share for the second quarter of 2006 were $0.49, up approximately 17 percent compared to earnings per share of $0.42 in the second quarter of 2005. Earnings per share in the second quarter of 2006 were negatively impacted by $0.04 due to the adoption of FAS 123(R) and by $0.06 due to acquisition-related expenses.

Adjusting for the impact of FAS 123(R) and acquisition related expenses, non-GAAP net income for the second quarter of 2006 was $34.1 million, up 37 percent compared to non-GAAP net income of $24.9 million in the second quarter of fiscal 2005. Non-GAAP earnings per share for the second quarter of 2006 were $0.59 up approximately 34 percent from $0.44 per share in the second quarter of 2005. GAAP and non-GAAP earnings per share for the second quarter of 2006 were calculated on a diluted basis using approximately 58.1 million shares.

"Trimble's growth reflects the strong performance of its core segments. We anticipate this momentum to carry us into the second half of the year," said Steven W. Berglund, Trimble's president and chief executive officer. "Our strategic initiatives in the construction and mobile work place are beginning to contribute to Trimble's revenue and provide the foundation for continued growth."

Trimble Results by Business Segment

The impact of the adoption of FAS123(R) should be considered in all year-over-year segment comparisons as second quarter 2005 results did not include stock-based compensation expense.

Engineering and Construction

Revenue for Engineering and Construction (E&C) was $168.0 million for the second quarter of 2006, up approximately 19 percent compared to revenue of $141.1 million in the second quarter of 2005.

On a reported basis, operating margins in E&C were 23 percent in the second quarter of 2006, compared to 26 percent in the second quarter of 2005. Excluding the impact of FAS 123(R) adoption and the CTCT joint venture transactions, discussed above, E&C operating margins were up one point year-over-year.

E&C growth continues to be enabled by a steady market, strong sales of new products and aggressive marketing programs.

Field Solutions

Revenue for Field Solutions (TFS) was $36.3 million in the second quarter of 2006, up 13 percent compared to $32.2 million in revenue in the second quarter of 2005. Both the agriculture and geographical information system businesses experienced double-digit growth in the quarter.

TFS operating margins for the second quarter of 2006 were 31 percent, compared to 25 percent in the second quarter of 2005 due to strong operating leverage.

Mobile Solutions

Second quarter 2006 revenue for Mobile Solutions (TMS), was $14.9 million, up 133 percent from revenue of $6.4 million in the second quarter of 2005. Revenue growth resulted from strong growth in subscriptions and the impact of acquisitions.

TMS operating margins were 3 percent for the second quarter of 2006, compared to a negative 29 percent in the second quarter of 2005. Profitability continues to improve in this segment due to higher subscription revenue.

Advanced Devices

Advanced Devices revenue was $26.1 million, up 7 percent from revenue of $24.5 million in the second quarter of 2005.

Advanced Devices operating margins were 9 percent, compared to 19 percent in the second quarter of 2005. This decline is primarily driven by expenses related to the introduction of the TrimTrac(R) GSM version and product mix.

Non-GAAP vs. GAAP Financials

The Company provides non-GAAP financial measures called "non-GAAP net income" and "non-GAAP earnings per share" to supplement its consolidated financial statements presented in accordance with GAAP. These non-GAAP financial measures are intended to supplement the user's overall understanding of the Company's current financial performance and its prospects for the future. In many cases, non-GAAP financial measures are used by analysts and investors to evaluate the Company.

The Company excludes the amortization of purchased intangibles, in-process research and development, restructuring charges, the amortization of acquisition-related inventory step-up charges, and the impact of stock-based compensation in computing non-GAAP measures because the chief executive officer excludes these items when budgeting and evaluating the business. These non-GAAP financial measures are not intended to supersede or replace the Company's GAAP results. Please see the supplemental financial statements, attached to this press release, for a reconciliation of GAAP to non-GAAP results.

Forward Looking Guidance

In the third quarter of 2006 the Company expects revenue to grow 17 to 19 percent compared to the third quarter of 2005, with revenue between $220 million and $225 million. At a 35 percent tax rate, with approximately 59 million shares outstanding, the Company expects third quarter 2006 GAAP earnings per share between $0.36 and $0.39.

The above GAAP guidance includes stock-based compensation due to the adoption of FAS 123(R). On a post-tax basis, the Company expects stock-based compensation for the third quarter of 2006 to be approximately $.04 per share.

Using a 35 percent tax rate -- excluding the amortization of intangibles of $4.2 million and the impact of stock-based compensation expense of $3.3 million -- the Company expects non-GAAP earnings per share between $0.44 and $0.47 for the third quarter of 2006.

Investor Conference Call / Webcast Details

The Company will hold a conference call on July 25, 2006 at 1:30 p.m. PDT to review its second quarter 2006 results. It will be broadcast live on the Web at www.trimble.com/investors.shtml. A replay of the call will be available for thirty days beginning at 8:00 p.m. PDT on July 25, 2006. The replay number is (800) 642-1687 (U.S.), or (706) 645-9291 (international), and the pass code is 1480042.

About Trimble

Trimble is a leading innovator of Global Positioning System (GPS) technology. In addition to providing advanced GPS components, Trimble augments GPS with other positioning technologies as well as wireless communications and software to create complete customer solutions. Trimble's worldwide presence and unique capabilities position the Company for growth in emerging applications including surveying, agriculture, machine guidance, asset and fleet management, wireless platforms, and telecommunications infrastructure. Founded in 1978 and headquartered in Sunnyvale, California, Trimble has more than 2,400 employees in more than 18 countries worldwide.

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, amortization of purchased intangibles and earnings per share estimates for the third fiscal quarter of 2006 and the Company's outlook for the remainder of the year. 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. Fuel and other operating costs could remain high or increase, which could weaken sales into the agricultural market. 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. 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 fiscal quarter of 2006 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.


FTRMB



                      CONSOLIDATED STATEMENTS OF OPERATIONS
                      (In thousands, except per share data)
                                   (Unaudited)

                                       Three Months Ended   Six Months Ended

                                       Jun-30,   Jul-01,   Jun-30,   Jul-01,
                                         2006      2005      2006      2005

    Revenue                            $245,326  $204,225  $471,180  $399,608
    Cost of sales                       123,670   101,818   242,061   199,394
    Gross margin                        121,656   102,407   229,119   200,214
    Gross margin (%)                      49.6%     50.1%     48.6%     50.1%

    Operating expenses
        Research and development         27,607    20,865    52,053    42,693
        Sales and marketing              35,747    28,704    68,453    59,075
        General and administrative       16,205    11,924    31,966    24,756
        Restructuring charges                 -         -         -       278
        In-process research and
         development                      1,020         -     1,020         -
        Amortization of purchased
         intangible assets                2,408     2,177     3,893     4,475
           Total operating expenses      82,987    63,670   157,385   131,277


    Operating income                     38,669    38,737    71,734    68,937

    Non-operating income (expense), net
        Interest income (expense), net      598      (419)    1,032    (1,030)
        Foreign currency transaction
         gain, net                          334       163       927         6
        Income (Expense) for
         affiliated operations, net       1,575    (2,499)    3,191    (5,538)
        Other income, net                    18       138       182       168
           Total non-operating income
            (expense), net                2,525    (2,617)    5,332    (6,394)

    Income  before taxes                 41,194    36,120    77,066    62,543

    Income tax provision                 12,691    12,333    22,735    21,317
    Net income                          $28,503   $23,787   $54,331   $41,226


    Earnings per share:
         Basic                            $0.52     $0.45     $1.00     $0.78
         Diluted                          $0.49     $0.42     $0.94     $0.73

    Shares used in calculating
     earnings per share:
        Basic                            54,847    52,959    54,544    52,729
        Diluted                          58,128    57,057    57,761    56,780



                             NON-GAAP RECONCILIATION
                 (Dollars in  thousands, except per share data)
                                   (Unaudited)


                                        Three Months Ended   Six Months Ended
                                        Jun-30,     Jul-01,  Jun-30,  Jul-01,
                                         2006        2005     2006     2005

    GAAP income before taxes            $41,194     $36,120  $77,066  $62,543

    Non-GAAP adjustments
        Amortization of purchased
         intangibles                      3,742  *(a) 2,177    6,082    4,475
        In-process research and
         development                      1,020           -    1,020        -
        Amortization of acquisition-
         related inventory step-up            -           -        -      228
        Restructuring charges                 -           -        -      278
        Stock-based compensation          3,259  *(b)     -    6,489        -
           Total Non-GAAP adjustments     8,021       2,177   13,591    4,981

    Non-GAAP income before taxes         49,215      38,297   90,657   67,524

    Income tax provision                 15,140      13,404   26,723   23,633

    Non-GAAP net income                 $34,075     $24,893  $63,934  $43,891

    Diluted Non-GAAP earnings per share   $0.59       $0.44    $1.11    $0.77

    Shares used in calculating diluted
     non-GAAP earnings per share         58,128      57,057   57,761   56,780


    *(a) Amortization of purchased intangibles, includes $2,408K recorded in
    operating expense and $1,334K recorded in cost of sales.
    *(b) Stock compensation expense by Segment and GAAP category (in $000's):


    Three Months Ended June 30, 2006
    ('000s)
                                                     Advanced
                               E&C      TFS     TMS  Devices Corporate Total
    Cost of sales             $110      25      17      16      141    $309

    Research & development    $293      79      52     196       48    $668

    Sales & marketing         $313      61      21     124      193    $712

    General & administrative  $346      85      75     147      917  $1,570

         Total              $1,062    $250    $165    $483   $1,299  $3,259


    Six Months Ended June 30, 2006
    ('000s)
                                                    Advanced
                               E&C     TFS     TMS   Devices Corporate Total
    Cost of sales             $207      49      26      33      281    $596

    Research & development    $553     154     106     397       95  $1,305

    Sales & marketing         $659     120      65     219      389  $1,452

    General & administrative  $676     170     142     320     1828  $3,136

         Total              $2,095    $493    $339    $969   $2,593  $6,489


                              EBITDA RECONCILIATION
                             (Dollars in  thousands)
                                   (Unaudited)


                                     Three Months Ended      Six Months Ended

                                     Jun-30,     Jul-01,     Jun-30,  Jul-01,
                                      2006        2005        2006     2005

    GAAP net income                  $28,503 $-  $23,787 $-  $54,331  $41,226

       Add back :
            Interest (income)
             expense, net               (598)        419      (1,032)   1,030
            Income tax provision      12,691      12,333      22,735   21,317
            Depreciation expense       3,386       2,378       6,489    4,890
            Amortization of
             intangibles               3,766       2,209       6,145    4,548

     EBITDA                          $47,748     $41,126     $88,668  $73,011


                           CONSOLIDATED BALANCE SHEETS
                                 (In thousands)
                                   (Unaudited)
                                                   Jun-30,           Dec-30,
                                                     2006              2005
    Assets

    Current assets:
       Cash and cash equivalents                   107,726            73,853
       Accounts receivables, net                   171,942           145,100
       Other receivables                             9,336             6,489
       Inventories, net                            113,925           107,851
       Deferred income taxes                        19,015            18,504
       Other current assets                          9,587             8,580
          Total current assets                     431,531           360,377

    Property and equipment, net                     47,278            42,664
    Goodwill and other purchased
     intangible assets, net                        370,946           313,456
    Deferred income taxes                            6,483             3,580
    Other assets                                    24,166            23,011
          Total non-current assets                 448,873           382,711

          Total assets                            $880,404          $743,088

    Liabilities and Shareholders' Equity

    Current liabilities:
       Current portion of long-term loan               431               216
       Accounts payable                             47,984            45,206
       Accrued compensation and benefits            38,152            36,083
       Accrued liabilities                          22,686            16,189
       Deferred revenue                             24,502            12,588
       Accrued warranty expenses                     7,475             7,466
       Deferred income taxes                         3,996             4,087
       Income taxes payable                         28,497            24,922
          Total current liabilities                173,723           146,757

    Non-current portion of long-term loan              459               433
    Deferred income taxes                           14,373             5,602
    Other non-current liabilities                   27,110            19,041
          Total liabilities                        215,665           171,833

    Shareholders' equity:
       Common stock                                413,619           384,196
       Retained earnings                           221,857           167,525
       Accumulated other comprehensive
        income                                      29,263            19,534
          Total shareholders' equity               664,739           571,255

          Total liabilities and
           shareholders' equity                   $880,404          $743,088



                      CONSOLIDATED STATEMENTS OF CASH FLOWS
                                 (In  thousands)
                                   (Unaudited)
                                                      Six Months Ended
                                                    Jun-30,           Jul-01,
                                                     2006               2005

    Cash flow from operating activities:
        Net Income                                  $54,331           $41,226

        Adjustments to reconcile net
         income  to net cash provided by
           operating activities:
             Depreciation expense                     6,489             4,890
             Amortization expense                     6,145             4,548
             Provision for doubtful
              accounts                                   95              (678)
             Amortization of debt
              issuance cost                              90               244
             Deferred income taxes                    4,804             3,846
             Stock-based compensation                 6,489                 -
             In-process research and
              development                             1,020                 -
             Excess tax benefit for
              stock-based compensation               (4,770)                -
             Other                                      262               (48)

        Add decrease (increase) in
         assets:
             Accounts receivables, net              (19,417)          (26,986)
             Other receivables                       (2,649)            1,709
             Inventories                             (2,860)           (4,061)
             Other current and non-
              current assets                        (27,771)           (1,452)

        Add increase (decrease) in
         liabilities:
             Accounts payable                         1,386            (1,997)
             Accrued compensation and
              benefits                                1,185               158
             Accrued liabilities                     15,695               300
             Deferred gain on joint
              venture                                     -               124
             Deferred revenue                         9,862             2,210
             Income taxes payable                     8,983            12,537
     Net cash provided by operating
      activities                                     59,369            36,570

     Cash flows from investing
      activities:
          Acquisitions, net of cash
           acquired                                 (38,137)          (20,233)
          Acquisition of property and
           equipment                                (10,943)           (7,734)
          Dividends received                              -               515
          Cost of capitalized patents                     -               (89)
     Net cash used in investing
      activities                                    (49,080)          (27,541)

     Cash flow from financing activities:
          Issuance of common stock                   17,162            15,453
          Excess tax benefit for stock-
           based compensation                         4,770                 -
          Proceeds from long-term debt
           and revolving credit lines                     -             6,000
          Payments on long-term debt and
           revolving credit lines                         -           (44,250)
          Other                                        (777)              307
     Net cash provided (used) in
      financing activities                           21,155           (22,490)

     Effect of exchange rate changes on
      cash and cash equivalents                       2,429            (1,551)

     Net increase (decrease)  in cash and
      cash equivalents                               33,873           (15,012)
     Cash and cash equivalents -
      beginning of period                            73,853            71,872

     Cash and cash equivalents - end of
      period                                       $107,726           $56,860





                                        Q1'05     Q2'05     Q3'05     Q4'05
                                        Actual    Actual    Actual    Actual

    Income Statement Metrics
     Total Revenue                     $195,383  $204,225  $188,483  $186,821
      Engineering & Construction        120,198   141,096   134,172   128,994
      Trimble Field Solutions            45,425    32,187    24,882    25,349
      Advanced Devices                   22,359    24,505    22,215    22,049
      Trimble Mobile Solutions            7,401     6,437     7,214    10,429

     Gross Margin                         50.1%     50.1%     51.6%     49.4%

     Total Segment Income               $39,663   $47,916   $40,492   $32,589
      Engineering & Construction         21,490    37,173    34,360    24,970
      Trimble Field Solutions            15,577     8,044     3,962     4,944
      Advanced Devices                    3,232     4,578     2,916     2,486
      Trimble Mobile Solutions             (636)   (1,879)     (746)      189

     Corporate and Other Charges        $(9,463)  $(9,179)  $(7,464)  $(9,609)

     Non-operating income (expense)    $(12,761) $(14,951) $(12,792)     $413
     and income taxes
     Net Income                         $17,439   $23,786   $20,236   $23,393

     GAAP operating margin%               15.5%     19.0%     17.5%     12.3%
     Non-GAAP operating margin%           16.9%     20.0%     18.5%     13.7%

     GAAP EPS                             $0.31     $0.42     $0.35     $0.41
     Fully-taxed (35%) Non-GAAP EPS       $0.34     $0.44     $0.37     $0.29

    Balance Sheet Metrics
     Cash & Cash Equivalents            $50,193   $56,860   $87,293   $73,853

     Accounts Receivables, Net         $154,540  $150,590  $146,792  $145,100

     Inventories, Net                   $91,309   $89,853   $93,940  $107,851

     Total Debt                         $28,836      $661      $659      $649
      Short Term Debt                    12,500         -         -         -
      Long Term Debt                     16,336       661       659       649

     Equity                            $490,188  $513,817  $543,394  $571,255

    Cashflow Metrics

     Cash Flow from (used in)
      Operations                        $(1,192)  $37,762   $33,541   $22,769

     Working Capital                   $197,372  $208,410  $232,985  $213,620

     Capital Expenditures                $3,164    $4,570    $6,666    $9,036

     EBITDA                             $31,885   $41,126   $35,142   $35,822
      Amortization of Intangibles         2,339     2,209       910     1,561
      Depreciation                        2,512     2,378     3,000     2,781

    Financial Ratios
     Days Sales Outstanding                  62        60        60        66
     Inventory Turns (trailing 12
      months)                               4.3       4.1       4.0       3.9
     Current ratio                          2.5       2.7       2.8       2.5
     Debt to Equity                         0.1       0.0       0.0       0.0

    Other
     Headcount                            2,231     2,308     2,347     2,462


      (a) Impact of moving joint venture transactions from non-operating to
      operating income - reduced gross margin by 2.5 points and operating
      income by 2.2 points in Q2'06.
      In addition, operating margins were impacted by 1.3 points due to
      stock-based compensation expense. (For details, please refer to the
      Non-GAAP Reconciliation).



                                           FY'05     Q1'06     Q2'06
                                           Actual    Actual    Actual

    Income Statement Metrics
     Total Revenue                        $774,912  $225,854  $245,326
      Engineering & Construction           524,460   146,734   168,041
      Trimble Field Solutions              127,843    43,043    36,320
      Advanced Devices                      91,128    23,470    26,114
      Trimble Mobile Solutions              31,481    12,607    14,851

     Gross Margin                            50.3%     47.6%     49.6% (a)

     Total Segment Income                 $160,660   $42,833   $52,719
      Engineering & Construction           117,993    26,378    38,803
      Trimble Field Solutions               32,527    13,909    11,299
      Advanced Devices                      13,212     2,323     2,243
      Trimble Mobile Solutions              (3,072)      223       374

     Corporate and Other Charges           (35,715)  $(9,768) $(14,049)

     Non-operating income (expense)        (40,091)  $(7,237) $(10,167)
     and income taxes
     Net Income                            $84,854   $25,828   $28,503

     GAAP operating margin%                  16.1%     14.6%     15.8% (a)
     Non-GAAP operating margin%              17.2%     17.1%     19.0%

     GAAP EPS                                $1.49     $0.45     $0.49
     Fully-taxed (35%) Non-GAAP EPS          $1.43     $0.52     $0.59

    Balance Sheet Metrics
     Cash & Cash Equivalents                         $97,648  $107,726

     Accounts Receivables, Net                      $171,392  $171,942

     Inventories, Net                               $101,552  $113,925

     Total Debt                                         $603      $890
      Short Term Debt                                    166       431
      Long Term Debt                                     437       459

     Equity                                         $611,860  $664,739

    Cashflow Metrics

     Cash Flow from (used in) Operations   $92,880   $18,298   $41,071

     Working Capital                                $249,302  $257,808

     Capital Expenditures                  $23,436    $4,972    $5,971

     EBITDA                               $143,974   $40,882   $47,748
      Amortization of Intangibles            7,019     2,380     3,766
      Depreciation                          10,671     3,104     3,386

    Financial Ratios
     Days Sales Outstanding                               57        55
     Inventory Turns (trailing 12 months)                4.0       4.0
     Current ratio                                       2.6       2.5
     Debt to Equity                                      0.0       0.0

    Other
     Headcount                                         2,543     2,627


      (a) Impact of moving joint venture transactions from non-operating to
      operating income - reduced gross margin by 2.5 points and operating
      income by 2.2 points in Q2'06.
      In addition, operating margins were impacted by 1.3 points due to
      stock-based compensation expense. (For details, please refer to the
      Non-GAAP Reconciliation).





Print News   |   Send Link