Trimble (TRMB) Q4 Earnings and Revenues Outpace Estimates

Trimble Inc. TRMB reported fourth-quarter 2021 non-GAAP earnings of 62 cents per share, which beat the Zacks Consensus Estimate by 1.6%. The bottom line improved 1.6% year over year but declined 6.1% sequentially.

The company’s revenues were $926 million, which surpassed the Zacks Consensus Estimate by 4.1%. Also, the figure was up 11.6% year over year and 2.7% sequentially.

The top line was driven by an increase in product and subscription revenues. Further, solid momentum across buildings & infrastructure, geospatial, and resources & utilities segments aided the results. Additionally, the acquisition of AgileAssets added strength to Trimble’s portfolio of civil infrastructure software solutions. This remained a positive.

Yet, supply chain challenges remained a headwind for the company.

Trimble Inc. Price, Consensus and EPS Surprise

Trimble Inc. price-consensus-eps-surprise-chart | Trimble Inc. Quote

Top Line in Detail

Product revenues (accounting for 61% of revenues) totaled $562 million, up 14.6% on a year-over-year basis. Subscription revenues (21%) increased 14.2% from the year-ago quarter to $198.9 million. Services revenues (18%) of $165.1 million were in line with the year-ago reported figure.

Trimble reports revenues on the basis of four types —

Hardware revenues (accounting for 45% of revenues) amounted to $418.4 million, up 20.2% year over year. Software revenues (16%) were $143.7 million, reflecting an improvement of 0.9% from the year-ago period. Recurring revenues (35%) increased 7.4% from the year-ago quarter to $322.3 million. Professional Service and Other revenues (4%) totaled $41.6 million, up 6.4% year over year.

Trimble operates under the following four organized segments —

Buildings and Infrastructure: The segment generated revenues of $365.1 million (accounting for 39% of total revenues), which increased 13.6% on a year-over-year basis. Despite continued supply chain challenges, revenue growth in civil construction was strong in all regions served. Also, growth in recurring software bookings in the software business remained a tailwind.

Geospatial: This segment generated revenues of $222.1 million (24% of total revenues), which grew 14.8% from the prior-year quarter. The growth was driven by continued strong demand across all major regions and end markets, partially offset by supply chain challenges.

Resources and Utilities: This segment generated revenues of $183.8 million (20% of total revenues), which increased 18.4% from the prior-year quarter. The increase in revenues was attributed to healthy agricultural markets. Also, strong growth in positioning services remained a positive. Yet, the segment revenues were affected by supply chain constraints.

Transportation: The segment generated revenues of $155 million (accounting for 17% of total revenues), which declined 2.9% on a year-over-year basis. The segment was severely impacted by supply chain constraints. Nonetheless, subscription growth resulted in increasing enterprise revenues. This remained a positive for the segment.

Operating Details

For the fourth quarter, non-GAAP gross margin came in at 57.8%, contracting 160 basis points (bps) year over year.

As a percentage of revenues, adjusted EBITDA contracted 200 bps year over year to 24.1%.

On a non-GAAP basis, operating expenses accounted for 35.8% of revenues and expanded 10 bps from the year-ago quarter.

Consequently, non-GAAP operating margin came in at 22.1%, which contracted 160 bps year over year.

Balance Sheet & Cash Flow

At the end of fourth-quarter 2021, cash and cash equivalents were $325.7 million, down from $513.2 million at the end of third-quarter 2021.

Accounts receivables were reported at $624.8 million, which increased from $580.5 million in the third quarter.

Total debt was $1.29 billion at fourth quarter-end compared with $1.32 billion at third quarter-end.

The company generated $155.3 million of cash from operations compared with $166.4 million in the third quarter.

Trimble generated free cash flow of $140.6 million for the reported quarter.

Guidance

For full-year 2022, Trimble expects revenues between $3.95 billion and $4.05 billion.

Also, the company anticipates non-GAAP earnings per share for 2022 in the range of $2.75-$2.95. The Zacks Consensus Estimate for 2022 earnings per share is pegged at $2.88.

Zacks Rank & Stocks to Consider

Currently, Trimble has a Zacks Rank #4 (Sell).

Some better-ranked stocks in the broader technology sector include Bruker BRKR, Intuit INTU and Zscaler ZS, each carrying a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Bruker is scheduled to release fourth-quarter 2021 results on Feb 11. It has gained 21.9% over a year. The long-term earnings growth rate for BRKR is currently projected at 20.6%.

Intuit is slated to report second-quarter fiscal 2022 results on Feb 24. It has gained 41.7% over a year. The long-term earnings growth rate for INTU is currently projected at 15.7%.

Zscaler is slated to report second-quarter fiscal 2022 results on Feb 24. It has gained 26% over a year. The long-term earnings growth rate for ZS is currently projected at 37.1%.

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