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Trimble Navigation (TRMB) Earnings Beat Estimates in Q4

Trimble Navigation 's TRMB fourth-quarter 2016 earnings of 28 cents exceeded the Zacks Consensus Estimate by a couple of cents.

Over the past one year, shares of Trimble Navigation outperformed the Zacks categorized Electronic Products Miscellaneous industry. While the industry gained 31.36%, the stock returned 60.63%.

Revenues

Trimble's fourth-quarter revenues of $585.5 million were up 0.2% sequentially and 4.6% year over year. Revenues were above the Zacks Consensus Estimate of $578.0 million and within the company's guided range of $562-$592 million.

Revenues by Segment

Engineering and Construction (E&C), The Field Solutions (TFS), The Mobile Solutions (TMS) and Advanced Devices (AD) generated 55%, 14%, 25% and 6% of the total revenue, respectively.

The quarter's E&C unit revenues of $320.2 million were up 0.3% year over year. TFS revenues of $83.3 million showed little movement of 4.9% year over year. TMS revenues of $146.8 million were up 25.1% year over year. The AD segment increased 6% from the year-ago period to $35.2 million.

Margins

Trimble's pro-forma gross margin was 56.7%, down 2 basis points (bps) sequentially as well as year over year. The sequential decrease was due to an unfavorable mix of products in some businesses.

Trimble's adjusted operating expenses of $237.4 million increased 1.5% sequentially but decreased 0.8% year on year. Operating margin was 16.2%, down 54 bps sequentially but up 217 bps year over year.

Net Income

Pro forma net income was $71.2 million compared with $58.2 million in the year-ago quarter.

The pro forma estimate excludes restructuring charges, amortization of intangibles, gain on an equity sale, litigation charges, acquisition-related costs and other adjustments on a tax-adjusted basis, but includes stock-based compensation. Our pro forma estimate may not match management's calculation as we included or excluded certain items that were not considered by the company while presenting the results.

On a GAAP basis, Trimble recorded a net profit (for Trimble shareholders) of $37.7 million (15 cents per share) compared with $24.0 million (9 cents) a year ago.

Balance Sheet

Trimble exited the fourth quarter with cash and cash equivalents of approximately $327.2 million compared with $275.6 million in the prior quarter. Inventories were $218.8 million, down from $224.3 million last quarter. Accounts receivables were $354.8 million, down from $369.2 million in the previous quarter.

Cash flow from operations was $407.1 million versus $282 million in the prior quarter.

Share Repurchase

During the quarter, Trimble repurchased approximately 0.6 million shares for $17.0 million.

Guidance

Management expects first-quarter revenues in the range of $585-$615 million. The Zacks Consensus Estimate stands at $602.4 million.

Earnings per share are expected within 12-17 cents on a GAAP basis and within 27-32 cents on a non-GAAP basis. The Zacks Consensus Estimate is pegged at 27 cents.

The calculation of non-GAAP earnings per share excludes the amortization of intangibles worth $32 million that includes the effect of previous acquisitions, anticipated acquisition costs of $3 million, the anticipated impact of stock-based compensation expense of $14 million and restructuring charges worth $2 million. Both the GAAP guidance and the non-GAAP guidance assume a tax rate of 24%.

Summary

Trimble is an OEM of GPS-based products and control systems. The company reported strong fourth-quarter 2016 results with both the top and the bottom line surpassing the Zacks Consensus Estimate.

The company's Mobile Solutions segment will continue benefitting from growth in Transportation and Logistics in the near future.

Trimble is watching out for trends in the E&C market to improve from the building construction, and civil engineering and construction businesses. The company's initiatives toward lowering the cost structure to another framework and making strategic acquisitions, along with the increased adoption of technology in the agricultural market, product enhancements and international expansion should also see it through the current tough environment.

Trimble Navigation Ltd. Price, Consensus and EPS Surprise

Trimble Navigation Ltd. Price, Consensus and EPS Surprise | Trimble Navigation Ltd. Quote

Currently, Trimble has a Zacks Rank #3 (Hold). Stocks worth considering in the industry include Texas Instruments TXN , carrying a Zacks Rank #1 (Strong Buy) and FactSet Research Systems FDS and NVIDIA Corporation NVDA , both carrying a Zacks Rank #2 (Buy). You can see the complete list of today's Zacks #1 Rank stocks here .

Texas Instruments delivered a positive earnings surprise of 7.09%, on average, in the trailing four quarters.

FactSet Research Systems Inc. delivered a positive earnings surprise of 1.89%, on average, in the trailing four quarters.

NVIDIA delivered a positive earnings surprise of 24.93%, on average, in the trailing four quarters.

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.


The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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