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National Instruments Corporation (NATI)

Q4 2012 Business Update Conference Transcript

December 10, 2012 5:00 PM ET


David Hugley - General Counsel

Alex Davern - Chief Operating Officer

Dr. James Truchard - President and CEO


Zach Larkin - Stephens

Richard Eastman - Robert W. Baird

Stephen Stone - Sidoti & Company

Anthony Luscri - JPMorgan



Good day, ladies and gentlemen. And welcome to National Instruments Conference Call. At this time, all participants are in a listen-only mode. Later, we will conduct a question-and-answer session, instructions following at that time. (Operator Instructions)

And as a reminder, this conference is being recorded. Now, I’ll turn the conference over to your host, David Hugley, General Counsel. Please begin.

David Hugley

Good afternoon. During the course of this conference call, we shall make forward-looking statements, including statements regarding our guidance for our Q4 revenue and earnings per share, and our future business prospects. We wish to caution you that such statements are just predictions and that actual events or results may differ materially.

We refer you to the documents the company files regularly with the Securities and Exchange Commission including the company's most recent quarterly report on Form 10-Q filed November 6, 2012. These documents contain and identify important factors that could cause our actual results to differ materially from those contained in our forward-looking statements.

With that, I will now turn it over to the Chief Operating Officer of National Instruments Corporation, Alex Davern.

Alex Davern

Good afternoon. In our earnings call on October 25th we anticipated continued weakness in the Global PMI into early 2013. Since then there has been continued contraction in the global industrial economy, especially in Europe and Japan.

We’ve also seen further evidence from other companies at this time as restraining revenue growth in the broad test and measurement industry. However, our product differentiation and the successful execution of our world-class sales and support teams have continued to drive new value in the market. We’ve now better visibility into business for the quarter.

As a result, we are tightening our guidance for Q4 and currently expect revenue for Q4 to be in the range of $270 million to $290 million. We currently expect the GAAP fully diluted earnings per share within a range of $0.13 to $0.23 for the Q4 with non-GAAP fully diluted earnings per share are expected to be in the range of $0.19 to $0.29.

As these are forward-looking statements, I must caution you that actual revenues and earnings could be negatively affected by numerous factors such as any further decline into global economy, delays in new product releases, rescheduling of customer orders, expense overruns, manufacturing inefficiencies, foreign exchange fluctuations and tax rate changes.

Moving forward, we will continue to drive towards our goal of $2 billion in revenue in 2016 by leveraging our R&D investments and deepening our customer relationships, with the goal of driving solid profitability and gaining market share. We’ll also continue to optimize our operating expense cost structure to drive long-term, sustainable and profitable growth for NI.

I believe we’ve been both strategic and prudent in our business planning and our reaction and execution in this economic climate once again demonstrates that our business model is solid. I’d also like to mention that I’ll be presenting at the Needham Conference in New York on January 15th.

With that, I’ll turn it over to the CEO and President, Dr. Truchard.

Dr. James Truchard

Thank you, Alex. With the global manufacturing PMI remaining below 50 we are still operating in a very challenging economic environment. It is important as ever that we continue to balance the short-term demands of the business and the long-term objectives of building a company build to last. As the economics slowdown persist, it is clear that we have continued to weather the storm well and continued to set ourselves apart for the highly differentiated platform.

Our graphical system design approach has allowed us to disrupt traditional instrument-based systems. We have continued to develop products that lower costs, reduce risks and shortened design cycles, which is a great benefit to our customers facing budget constraints.

In addition to our highly differentiated platform, the expertise of our sales force and our alliance partner network help us our customers find ways to lower their costs, improve their productivity and help them bring their own innovative products to market quickly.

One area that NI has continued its commitment innovation is RF system design and test. NI has rapidly expanded to this large application area, which leverages our technology, expertise and competitive position.

Today, NI announced the acquisition of Signalion, a company with strong track record of developing products and solutions for wireless communications base station test and LTE user equipment simulation.

Key reasons for Signalion acquisition include, Signalion adds key technical talent in complex RF and communications algorithm, wireless infrastructure and base station test. Signalion collaborates with top researchers and developers at TU-Dresden on the latest wireless standards such as LTE, LTE-advanced and even fifth-generation wireless research.

Signalion expertise and IP can evolve the capabilities of LabVIEW and PXI to create products for our user equipment, emulation base station testing and signaling for mobile device production test. I look forward to integrating Signalion’s technology and expertise into NI, the NI portfolio.

In closing, I believe that our ability to effectively utilize our investments in R&D and our field sales force will enable us to successfully navigate the uncertain macro economy. We have consistently chosen to run the business in the way that we believe best aligns with the long-term interest of our stakeholders by providing a great place to work for our employees, maintaining the long-term profitability for our shareholders, producing high-quality innovative products for our customers and deepening our relationships with our partners.

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