) fourth quarter earnings beat the Zacks Consensus Estimate by a
penny, or 2.0%.
Despite softness in some markets, Trimble's solid portfolio
(enhanced by acquisitions), strong market position and strategic
partnerships are expected to drive both revenues and earnings
over the next few quarters.
Trimble's fourth quarter revenues of $515.5 million were up
2.1% sequentially and 18.5% year over year, exceeding the high
end of the guided range of $503-$508 million.
Despite the persisting weakness in the U.S. commercial and
residential construction markets, Trimble's business was not
unduly impacted in the last quarter. Trimble has also made a
number of acquisitions in recent months, which are helping to
build its product portfolio and position the company in markets
with better growth prospects.
Revenues by Segment
The Engineering and Construction (E&C), Field Solutions
(TFS), Mobile Solutions (TMS) and Advanced Devices (AD) segments
generated 52%, 21%, 20% and 7% of revenue, respectively.
unit revenues of $269.1 million were down 6.3% sequentially and
up 12.7% year over year. The year-over-year increase was
attributable to higher sales of heavy and highway and building
construction products, as well as the contribution from
acquisitions. The most important markets within E&C are heavy
and highway, large-scale commercial, smaller-scale commercial and
Of these, the survey instruments business is currently under
pressure due to the European slowdown as well as increased
caution at surveyors in the U.S. where economic uncertainty is
leading them to postpone purchases.
revenues of $108.1 million were up 5.0% sequentially and 13.2%
from last year. The segment, was largely driven by the
agricultural market and the rollout of the Connected Farm
strategy. The agricultural business benefited from new
value-added products and continued strength of the global
agricultural economy. A flat GIS business and a contribution from
acquisitions supported the strong growth from the year-ago
revenues of $104.5 million were up 24.7% sequentially and 37.9%
from the comparable quarter of 2011. While the core business
contributed to growth in the last quarter, most of the increase
was the impact of acquisitions. Trimble has been doing a lot of
work here, disposing off non-focus areas and building a desired
portfolio through successive acquisitions like TMW and ALK.
The company is now taking a more focused approach to target
industries, such as forestry, construction supply, transportation
and logistics, communications, environmental, field services and
segment was up 10.0% sequentially and 34.3% from a year ago. The
improved performance was on account of stronger sales of embedded
and timing devices.
Revenues by Geography
North Americaremains the largest segment for Trimble, with a
55% revenue share. Revenues from the region were up 8.0%
sequentially and 25.3% from the year-ago quarter, reflecting
continued recovery in the market.
Approximately 22% of revenues came from Europe, which was down
2.3% sequentially and up 13.3% from last year.
The Asia/Pacific region accounted for 16% of Trimble's
revenues in the fourth quarter, up 2.1% sequentially and 18.5%
year over year attributable to the success of targeted programs
in China and India, as well as acquisitions over the last few
The rest of the world contributed 8% of revenues, down 9.2%
sequentially but up 5.3% year over year.
Trimble's gross margin for the quarter was 49.8%, down 233
basis points (bps) sequentially and 29 bps year over year.
However, excluding one-time items, it was flattish compared to
the year-ago quarter.
Trimble reported operating expenses of $226.1 million, up
13.4% sequentially and 19.6% from the year-ago quarter. The
operating margin was 5.9%, down 669 bps sequentially and 72 bps
year over year. All expenses (R&D, S&M and G&A)
increased sequentially and year over year as a percentage of
GAAP operating margins by segment were: E&C 14.6% (down 78
bps year over year), TFS 34.4% (down 130 bps), TMS 10.8% (up 289
bps) and the AD segment 18.5% (up 473 bps). Both TMS & AD
segment margins saw significant expansion from the year-ago
The pro forma net income was $65.9 million, or a 12.8% net
income margin compared to $80.6 million, or 16.0% in the previous
quarter and 60.9 million, or 14.0% net income margin in the
prior-year quarter. The pro forma calculations in the last
quarter exclude restructuring charges, amortization of
intangibles and acquisition-related costs and other adjustments
on a tax-adjusted basis. Our pro forma estimate may not match
management's presentation due to the inclusion/exclusion of some
items that were not considered by management.
On a fully diluted GAAP basis, the company recorded a net
profit (for Trimble shareholders) of $33.2 million ($0.26 per
share) compared to $53.4 million ($0.42 per share) in the
previous quarter and a net profit of $29.4 million ($0.23 per
share) in the comparable prior-year quarter.
Inventories were up 2.7% sequentially to $240.5 million. Days
sales outstanding (DSOs) were down from around 58 to 57.
Trimble generated $96.8 million of cash from operations. The
company spent $728.1 million on acquisitions, $54.1 million on
capex and did not repurchase any shares in the last quarter. The
cash position at quarter-end increased $15.9 million to $157.8
million. Long-term debt at quarter end stood at $873.1 million,
up from $553.2 million in the third quarter.
Management expects first quarter revenues of $575-$580
million. Earnings on a GAAP basis are expected to be 41-43 cents
per share and on a non GAAP basis 74-76 cents per share. The
one-time charges excluded for the calculation of non-GAAP EPS are
intangibles amortization and acquisition expenses of $38.2
million and stock-based compensation of $9.2 million. The tax
rate is expected to be in the range of 14-16% while share count
is likely to be 130.0 million.
Trimble is seeing much stronger end markets and a few of its
businesses have started seeing normal seasonality. Additionally,
management initiatives, such as the lowering of the cost
structure, strategic acquisitions, product enhancements and
international expansion appear to be paying off. The softness in
certain areas of the business is related to macro concerns and
the nature of new business acquired and we are optimistic about
its results going forward.
Trimble has a Zacks Rank #2 (Buy). Other stocks that are
currently doing well include
Bel Fuse Inc.
Esco Tech. Inc.
). While Daktronics and Bel Fuse have a Zacks Rank #1 (Strong
Buy), Esco and
) carry a Zacks Rank #2 (Buy).
BEL FUSE INC-B (BELFB): Free Stock Analysis
ESCO TECH INC (ESE): Free Stock Analysis
SIEMENS AG-ADR (SI): Free Stock Analysis
TRIMBLE NAVIGAT (TRMB): Free Stock Analysis
To read this article on Zacks.com click here.