First Quarter 2014 Revenue $604.7 Million, Up 9 Percent; GAAP Operating Margin 12.5 Percent; Non-GAAP Operating Margin 21.2 Percent; GAAP Diluted Earnings Per Share $0.26; Non-GAAP Diluted Earnings Per Share $0.39(PRNewswire) — Trimble (NASDAQ: TRMB) today announced financial results for the first quarter of 2014.
First Quarter 2014 Financial Highlights
- First quarter 2014 revenue of $604.7 million was up 9 percent as compared to the first quarter of 2013. Engineering and Construction revenue was $309.3 million, up 16 percent, with growth across all major product categories. Field Solutions revenue was $138.2 million, down 6 percent due primarily to weaker than expected sales of agriculture products, partially offset by an increase in Geographic Information System (GIS) sales. Mobile Solutions revenue was $118.6 million, up 8 percent due primarily to double-digit growth in sales of transportation and logistics solutions. Advanced Devices revenue was $38.7 million, up 22 percent. Revenue in all major regions grew despite a year-over-year drop in Russia.
- GAAP operating income was $75.7 million, up 34 percent as compared to the first quarter of 2013. GAAP operating margin was 12.5 percent of revenue as compared to 10.2 percent of revenue in the first quarter of 2013. Non-GAAP operating income of $128.2 million was up 16 percent as compared to the first quarter of 2013. Non-GAAP operating margin was 21.2 percent of revenue as compared to 19.8 percent of revenue in the first quarter of 2013, driven primarily by growth in non-GAAP gross margin to 57.7 percent of revenue. GAAP gross margin was 54.1 percent of revenue.
- GAAP net income was $68.6 million, up 38 percent as compared to the first quarter of 2013. Diluted GAAP earnings per share were $0.26 as compared to diluted GAAP earnings per share of $0.19 in the first quarter of 2013. First quarter GAAP results include a $15.1 million gain associated with a partial equity sale of a joint venture, which is excluded from non-GAAP results. Non-GAAP net income of $102.6 million was up 5 percent as compared to the first quarter of 2013. Diluted non-GAAP earnings per share were $0.39 as compared to diluted non-GAAP earnings per share of $0.38 in the first quarter of 2013. The GAAP tax rate was 23 percent. Excluding the impact of the equity sale gain, the non-GAAP tax rate was 20 percent.
- Operating cash flow was $83.4 million as compared to $37.4 million in the first quarter of 2013. First quarter 2013 operating cash flow was unusually low due to the timing of working capital requirements.
Forward Looking Guidance
For the second quarter of 2014 Trimble expects revenue to be between $605 million and $630 million with GAAP earnings per share of $0.22 to $0.26 and non-GAAP earnings per share of $0.38 to $0.42. Non-GAAP guidance excludes the amortization of intangibles of $37 million related to previous acquisitions, anticipated acquisition costs of $4 million and the anticipated impact of stock-based compensation expense of $11 million. Both GAAP and non-GAAP earnings per share assume a 20 to 22 percent tax rate and approximately 265 million shares outstanding.
"We did not meet our original expectations in the quarter," said Steven W. Berglund, Trimble's president and chief executive officer. "The shortfall to expectation was focused in the North American agriculture business, which was adversely affected by a number of factors including weather conditions. The rest of the company demonstrated double-digit revenue growth and a significant increase in profitability. In particular, we are seeing an improving environment in construction. In the short term, we anticipate some volatility in agriculture, but the long-term growth prospects are unchanged and we remain optimistic about the second half of the year."
Investor Conference Call / Webcast Details
Trimble will hold a conference call on May 6, 2014 at 1:30 p.m. PT to review its first quarter 2014 results. It will be broadcast live on the Web at http://investor.trimble.com. Investors without Internet access may dial into the call at (800) 528-9198 (U.S.) or (702) 928-6633 (international). The pass code is 6694146. The replay will also be available on the Web at the address above.
Use of Non-GAAP Financial Information
To help our investors understand our past financial performance and our future results, as well as our performance relative to competitors, we supplement the financial results that we provide in accordance with generally accepted accounting principles, or GAAP, with non-GAAP financial measures. These non-GAAP measures can be used to evaluate our historical and prospective financial performance, as well as our performance relative to competitors. Our management regularly uses our supplemental non-GAAP financial measures internally to understand, manage and evaluate our business, and to make operating decisions. These non-GAAP measures are among the primary factors management uses in planning for and forecasting future periods. We believe that these non-GAAP financial measures reflect an additional way of viewing aspects of our operations that, when viewed with our GAAP results, provide a more complete understanding of factors and trends affecting our business. Further, we believe some of our investors track our "core operating performance" as a means of evaluating our performance in the ordinary, ongoing, and customary course of our operations. Core operating performance excludes items that are non-cash, not expected to recur or not reflective of ongoing financial results. Management also believes that looking at our core operating performance provides a supplemental way to provide consistency in period to period comparisons.
The specific non-GAAP measures, which we use along with a reconciliation to the nearest comparable GAAP measures and the explanation for why these non-GAAP measures provide useful information to investors regarding our financial condition and results of operations and why management chose to exclude selected items can be found at the end of this release. The method we use to produce non-GAAP results is not computed according to GAAP and may differ from the methods used by other companies. Our non-GAAP results are not meant to be considered in isolation or as a substitute for comparable GAAP measures and should be read only in conjunction with our consolidated financial statements prepared in accordance with GAAP. Investors are encouraged to review the reconciliation of our non-GAAP financial measures to the comparable GAAP results, which is attached to this earnings release. Additional financial information about our use of non-GAAP results can be found on the investor relations page of our Web site at