You won't find the folks atTrimble Navigation (
) veering off course.
The maker of GPS and other advanced positioning systems for
industrial uses has mapped out a winning strategy to strengthen
its position in its field.
Acquisitions and a steady stream of new and improved offerings
have become standard fare at Trimble as it's moved to
broaden the focus and application of its technology.
Its efforts are bearing fruit. Over the past few years,
Trimble has evolved from a company offering basic GPS-based
positioning devices to a provider of advanced software and data
subscription products designed to improve equipment accuracy and
efficiency in farming, construction and other industries.
Trimble's ability to integrate technology focused on location
or position, such as GPS, with application software that boosts
productivity has worked to the company's advantage in a big way,
"Trimble Navigation is one of the most compelling growth
stories in our coverage because of the growth trajectory its
business is on," said Janney Montgomery Scott analyst Ryan
Connors. "That trajectory is not related to any short-term
cyclical factors, but it's driven by the long-term adoption of
technology in their end markets."
Trimble, he adds, brings technology to industries such as
agriculture and construction that historically were late
adopters. As a result, these industries are still in a growth
phase. That growth, he says, has been strong for years and should
remain so, he says.
And Trimble has been reaping the benefits. The company has
seen profits rise by at least 17% the past 11 quarters. The
company has also beat earnings forecasts by Thomson Reuters
analysts for at least the past eight quarters.
In the third quarter, earnings rose 31% to 68 cents a share.
Revenue climbed 21% to $504.8 million.
But analysts polled by Thomson Reuters see fourth-quarter
earnings growth slowing with only a 4% gain to 56 cents a share.
The reason for the slowdown: "They had an exceptionally strong
quarter a year ago, so the comparison is very challenging this
quarter," Connors said.
Still, Thomson Reuters analysts forecast a 22% rise to $2.63
for all of 2012. They see an 18% jump in 2013.
A major growth driver over the past two years has been a trend
in the agricultural sector called precision farming, which is the
use of GPS-enabled devices and software to improve the efficiency
and productivity of farming, says Piper Jaffray analyst Michael
Through its precision agriculture offerings, Trimble helps
farmers throughout every step of the farming process, starting
with land preparation and throughout the planting, nutrient and
pest management, and harvesting phases of a crop cycle.
It provides manual and automated navigation guidance for
tractors and other farm equipment used in spraying, planting,
cultivation and harvesting applications. The benefits to the
farmer include faster machine operation, higher yields and lower
consumption of chemicals than conventional equipment. Also in the
lineup are products to automate applications of pesticide and
To ensure better decision-making, Trimble also offers
integrated operations management with its so-called Connected
Farm, which provides information exchange across the entire farm.
Last August, it introduced a Connected Farm smartphone
application, which uses the smartphone's built-in GPS for
collecting in-field information to help with fast and accurate
decision-making. The application lets farmers and agronomists map
field boundaries, mark flags, take geo-referenced photos and
enter scouting information for pests.
Cox says Trimble's strengths in the area of precision farming
include accuracy, its broad offering and the compatibility of its
products with other devices.
Trimble has been reaping the benefits of the push on the part
of farmers to use more technology to enhance the level of
sophistication of how their farms are operated, says Cox. The
company's Field Solutions segment, which addresses the
agriculture and geographic information system markets, grew 13%
to $103.0 million in the third quarter, due mainly to increased
sales of agricultural products.
The fundamentals in agriculture remain "relatively steady,"
said Chief Executive Steven Berglund on the third-quarter
Trimble saw growth in all regions, including North America,
which grew by double digits, he added. New information and flow
control products continued to grow at a faster rate than the
mainline agricultural products.
Among its flow control devices is the Field-IQ system. It
prevents seed and fertilizer overlap, controls the rate of
material applications and monitors seed delivery and fertilizer
Trimble's Engineering and Construction segment also saw strong
growth in the third quarter. It enjoyed a 19% pop in sales to
This segment's software and information technology
capabilities include advanced civil engineering alignment, design
and data preparation software for advanced surveying and
geospatial data collection and analysis as well as an
application-specific field and office software component.
One example is the Connected Site, which is comprised of
offerings that integrate the construction process, including the
ability to track equipment and perform remote machine
To bolster the software offering it provides through its
Connected Site, Trimble formed a joint venture withCaterpillar (
) in 2008, called VirtualSite Solutions, which develops software
for fleet management.
Trimble continues to develop new products as it moves to
strengthen its position in new and existing markets. In the third
quarter, it launched a number of new products and enhancements in
the Engineering and Construction segment. Among them was the
Spectra Precision QM75 Quick Measure distance meter designed to
give contractors a distance measuring tool that is easy to use
and can withstand the rigors of the construction job site.
Also in the third quarter, it came out with new products for
farmers, including the GreenSeeker handheld crop sensor, which is
a measurement device designed to assess the health of a crop.
Readings taken with the Green-Seeker can be used to make
objective decisions regarding the amount of fertilizer to be
applied, resulting in a more efficient use of fertilizer.
It also continues to be aggressive on the acquisition front
with close to 20 deals in 2011 and 2012 combined. It made its
first buy of 2013 this month with the purchase of privately held
ALK Technologies for an undisclosed amount. ALK offers navigation
software for transportation, logistics and mobile workforces. ALK
software products include CoPilot Live, which offers onboard GPS
navigation for professional drivers.