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Trimble Inc. (NASDAQ:TRMB)

Q4 2017 Earnings Conference Call

February 8, 2018 5:00 PM ET

Executives

Michael Leyba - Director Investor Relations

Steve Berglund - President and Chief Executive Officer

Robert Painter - Senior Vice President Chief Financial Officer

Analysts

Richard Eastman - Baird

Jonathan Ho - William Blair

Jerry Revich - Goldman Sachs

Yuuji Anderson - Morgan Stanley

Alexander Frankiewicz - Berenberg Capital Markets

Brett Wong - Piper Jaffray

Colin Rusch - Oppenheimer

Presentation

Operator

Good afternoon. My name is Justy, and I will be your conference operator today. At this time, I’d like to welcome everyone to the Trimble’s Fourth Quarter and Full Year 2017 Earnings Conference Call. All lines have been placed on mute to prevent any background noise. After the speakers’ remarks, there will be a question-and-answer session. [Operator Instructions] Thank you.

Michael Leyba, you may begin your conference.

Michael Leyba

Thanks, Justy. Good afternoon, everyone, and thanks for joining us on the call. I’m here today with Steve Berglund, our CEO; and Rob Painter, our CFO. I would like to point out that our earnings release and the slide presentation supplementing today’s call are available on our website at www.trimble.com, as well as within the webcast, and we will be referring to the presentation today.

Turning to Slide 2 of the presentation, I would like to remind you that the forward-looking statements made in today’s call and the subsequent question-and-answer period are subject to risks and uncertainties. Trimble’s actual results may differ materially from those currently anticipated due to a number of factors detailed in the Company’s Form 10-K and 10-Q or other documents filed with the Securities and Exchange Commission. The non-GAAP measures that we discuss in today’s call are fully reconciled to GAAP measures in the tables from our press release.

With that, please turn to Slide 3 for an agenda of the call today. First, Steve will start with an overview of the quarter and the year; after that, Rob will take us through the remainder of the slides, including an in-depth review of the quarter, the year and our guidance; and then we will go to Q&A.

With that, please turn to Slide 4 and I will turn the call over to Steve.

Steve Berglund

Good afternoon. Today I will let Rob provide the bulk of the narrative on the fourth quarter, as well as the commentary on tax reform and 606 effects. I will focus on interpreting the total year, the trends that are taking us into 2018, and our current strategic assessment with an emphasis on last week’s announcement of the acquisition of e-Builder.

We left the year having now delivered seven consecutive quarters of accelerating growth, although we overdelivered for the full year against our own original expectations, the results were consistent with the profile we anticipated at the beginning of 2017. That expectation was bifurcated with the first half of the year expected to demonstrate steady progression and the second half demonstrating a meaningful step-up in performance.

In reality, that was what happened. Reported revenue in the first half grew at a rate of 7% and in the second half at a rate of 18%. Excluding acquisition, divestiture and exchange rate effects, the growth was approximately 8% in the first half and 12% in the second half.

The second half of 2017 provides us with the most positive platform we have had in over ten years as we enter 2018. Every segment and every significant region grew during 2017 and all are anticipated to continue to grow into 2018. Although there is always the potential for significant negatives to cast acts perhaps most notably in U.S. trade policy there is also the possibility of significant positive surprises such as the U.S. Infrastructure bill.

Overall, we currently expect the second half of 2017 to provide the template for 2018 performance. In addition to the underlying support provided by the general macroeconomic environment, we are optimistic about strong multi-year secular trends that are specific to our markets. If these market trends are augmented in turn by our own targeted steps that enable us to capture and add bench position in these markets.

2017, where we were able to step-up these initiatives at the same time we were continuing to improve operational results. We anticipate maintaining the same balance of aggressive strategic initiatives, an improving financial performance into 2018. This intensified strategic focus is not a departure in a new direction, but more of a doubling down on our historical trajectory.

Tremble has throughout its history always been at the forefront of the digitization of mature industries. The speed of digitization has recently stepped up as a result of access to new enabling technologies including increased bandwidth availability, cloud ubiquity, and sensor proliferation. Trimble is positioned both because of its history and its innovation to provide a unique contribution through the digital transportation of the vertical markets we address.

Let me describe four characteristics that make us unique. First, we have chosen not to be constrained to simply providing individual point solutions. Instead, our emphasis has been on utilizing technology to integrate the individual elements of traditional workflows into more comprehensive solutions.

By holistically emerging – engaging the workflows, we can eliminate many of the historical points of process friction that destroy productivity and add cost. This creates network effect benefits and promotes strong C suite engagement with owners and contractors.

Second, our historical strengthened field and mobile applications has been augmented by growing enterprise-level capabilities. This has eliminated the historical distinction between field and back-office and enables seamless real-time enterprise-wide decision-making and actions.

Read the rest of this transcript for free on seekingalpha.com