Trimble Navigation's ( TRMB ) first-quarter
2013 earnings were in line with the Zacks Consensus Estimate of 35
Trimble's first-quarter revenues of $556.1 million were up 7.9%
sequentially and 10.7% year over year, missing the guided range of
$575-$580 million in the quarter.
Strengthening in the U.S. commercial and residential
construction markets helped Trimble's business in the last quarter.
Trimble has also made a number of acquisitions in the recent
months, which are helping it to build a strong product portfolio
and position itself 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 48%, 27%, 20% and 6% of the total revenue,
E&C unit revenues of $266.9 million were
down 0.8% sequentially but up 7.2% year over year. The
year-over-year increase was attributable to higher sales of heavy
and highway and building construction products due to a revival in
the residential and commercial market. The most important markets
within E&C are heavy and highway, large-scale commercial,
smaller-scale commercial and housing. Of these, the survey
instruments business is currently under pressure due to unfavorable
weather and economic uncertainties in Europe, political conditions
in China and a mining recession in Australia, as well as increased
caution regarding government purchases in the U.S.
TFS revenues of $147.5 million were up 36.4%
sequentially and were flat year over year. The sequential increase
stems from typical seasonality, which is based on the advent of
spring. Unfavorable weather and government sequestration-related
uncertainties impacted revenues in this segment as well. Government
spending has a significant impact on GIS sales. Therefore, the
decline from last year was largely on account of uncertainties
here. The agricultural business outside North America was up strong
double-digits from the year-ago quarter. But the late spring
delayed the sowing season, impacting sales in North America and
also in Europe.
TMS revenues of $110.2 million were up 5.4%
sequentially and 40.5% from the comparable quarter of 2012. 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 AD segment was down 6.4% sequentially but
up 14.9% from the year-ago quarter. The improved performance was on
account of stronger sales of embedded and timing devices.
Revenues by Geography
North America remains the largest segment for Trimble, with a
55% revenue share. Revenues from the region were up 7.9%
sequentially and 14.9% from the year-ago quarter, reflecting
continued recovery in the market.
Approximately 24% of revenues came from Europe, which was up
17.7% sequentially and 10.7% from last year.
The Asia/Pacific region accounted for 14% of Trimble's revenues
in the first quarter, down 5.6% sequentially but up 3.3% year over
year attributable to the success of targeted programs in China and
India, as well as acquisitions over the last few months.
The rest of the world contributed 7% of the total revenue, down
5.6% sequentially and 3.1% year over year.
Trimble's gross margin for the quarter was 51.6%, up 184 basis
points (bps) sequentially but flat year over year. However,
excluding one-time items, it was flattish compared to the year-ago
Trimble reported operating expenses of $230.5 million, up 1.9%
sequentially and 15.6% from the year-ago quarter. The operating
margin was 10.2%, up 427 bps sequentially but down 176 bps year
over year. All expenses (R&D, S&M and G&A) decreased
sequentially as a percentage of sales. However, R&D increased
significantly from last year although other expenses were
Pro forma net income was $90.0 million, or a 16.2% net income
margin compared to $65.9 million, or 12.8% in the previous quarter
and $80.8 million, or 16.1% net income margin in the year-ago
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 GAAP basis, the company recorded a net profit (for Trimble
shareholders) of $49.8 million ( 19 cents per share) compared to
$33.2 million ( 26 cents per share) in the previous quarter and a
net profit of $50.8 million ( 20 cents per share) in the comparable
Inventories were up 8.3% sequentially to $260.6 million. Days
sales outstanding (DSOs) were up from around 57 to 64.
Trimble generated $37.4 million of cash from operations. The
company spent $65.2 million on acquisitions, $14.9 million on capex
and did not repurchase any shares in the last quarter. The cash
position at quarter-end decreased $14.2 million to $143.6 million.
Long-term debt at quarter-end stood at $829.3 million, down from
$873.1 million in the fourth quarter.
Management expects second-quarter revenues of $575-$580 million.
Earnings on a GAAP basis are expected to be 18 cents-20 cents per
share and on a non GAAP basis 36 cents-38 cents per share. The
one-time charges excluded for the calculation of non-GAAP EPS are
intangibles amortization and acquisition expenses of $39.1 million
and stock-based compensation of $9.2 million. The tax rate is
expected to be in the range of 16%-18% while share count is likely
to be 260.0 million.
Trimble is seeing much stronger construction 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. However, quite a significant
amount of its business, whether directly or indirectly, is
dependent on government spending in the U.S., which has become
uncertain, at least in the near term. This could weigh on the
Trimble has a Zacks Rank #3 (Hold).
Other investments to consider at this point could be the
following technology stocks with positive Zacks Rank and a positive
Earnings Expected Surprise Prediction or ESP (Read: Zacks Earnings ESP: A Better Method ):
Aol Inc. ( AOL ) with an ESP of
+3.03% and a Zacks Rank #2 (Buy)
Facebook ( FB ) with an ESP of
+12.50% and a Zacks Rank #2 (Buy)
Applied Materials Inc. ( AMAT ) with an ESP of
+7.69% and a Zacks Rank #2 (Buy)APPLD MATLS INC (AMAT): Free Stock Analysis
ReportAOL INC (AOL): Free Stock Analysis ReportFACEBOOK INC-A (FB): Free Stock Analysis ReportTRIMBLE NAVIGAT (TRMB): Free Stock Analysis
ReportTo read this article on Zacks.com click here.Zacks Investment