Non-GAAP Operating Margins of 18.1 percent
SUNNYVALE, Calif., July 28 /PRNewswire-FirstCall/ -- Trimble (Nasdaq: TRMB) today announced revenue of $290.1 million for its second quarter ended July 3, 2009, down approximately 23 percent from revenue of $377.8 million in the second quarter of 2008.
Operating income for the second quarter of 2009 was $28.7 million, down approximately 54 percent from the second quarter of 2008. Operating margin in the second quarter of 2009 was 9.9 percent, compared to an operating margin of 16.7 percent in the second quarter of 2008. Amortization of intangibles was $13.0 million in the second quarter of 2009 compared to $10.9 million in the second quarter of 2008. The impact of stock-based compensation expense was $4.6 million compared to $3.8 million in the second quarter of 2008. There was also a $3.5 million restructuring expense, a $0.3 million acquisition-related inventory step-up charge and $2.0 million of non-recurring acquisition costs in the second quarter of 2009 compared to a $3.3 million restructuring expense, and no inventory step-up, or non-recurring acquisition costs in the second quarter of 2008. Excluding the above impacts, non-GAAP operating income of $52.4 million was down 35 percent compared to the second quarter of 2008. Non-GAAP operating margin was 18.1 percent in the second quarter of 2009, compared to 21.4 percent in the second quarter of 2008.
Second quarter 2009 net income was $20.9 million, down 57 percent compared to the second quarter of 2008. Diluted earnings per share for the second quarter of 2009 were $0.17 compared to diluted earnings per share of $0.39 in the second quarter of 2008.
Adjusting for the items noted above, non-GAAP net income of $37.4 million for the second quarter of 2009 was down 39 percent compared to the second quarter of 2008. Non-GAAP earnings per share for the second quarter of 2009 were $0.31 compared to non-GAAP earnings per share of $0.49 in the second quarter of 2008.
Cash flow from operations for the second quarter of 2009 was $65.5 million and cash flow from operations for the first half of 2009 was $108.7 million compared to $79.6 million in the second quarter of 2008 and $100.4 million in the first half of 2008.
"Although the engineering and construction segment continues to encounter severe recessionary conditions, the market demonstrated more stability in the second quarter than the prior two quarters," said Steven W. Berglund, Trimble's president and chief executive officer. "Field Solutions segment revenue was lower as a result of declines in both GIS and agriculture. The decline in agriculture reflected a slower market but also reflected the difficult comparison to an exceptional performance level in 2008. We expect the agricultural market to continue to be moderately slower than 2008 for the remainder of the year. Mobile Solutions orders have begun to reflect our generally strong sales pipeline which increases the probability of a significant performance improvement in 2010 for the segment," Berglund continued.
"Conditions continue to be uncertain and the second half of 2009 remains difficult to forecast. Even if overall economic conditions do not significantly improve, we believe we can return to year-over-year revenue growth in late 2009 or early 2010. Our focus remains on aligning costs and revenue while continuing to fund key strategic programs. This is reflected in the improvement of our non-GAAP operating margin in both the first and second quarters of 2009 compared to the fourth quarter of 2008," concluded Berglund.
Trimble Results by Business Segment
Segment operating income is revenue less cost of goods sold and operating expenses, excluding general corporate expenses, restructuring expenses, amortization of intangibles, amortization of acquisition-related inventory step-up charges, non-recurring acquisition costs and the impact of stock-based compensation expense.
Engineering and Construction (E&C)
Second quarter 2009 E&C revenue was $147.2 million, down approximately 31 percent when compared to the second quarter of 2008. The decline in demand continued to primarily be driven by recessionary conditions in the U.S. and Europe.
Operating income in E&C for the second quarter 2009 was $19.2 million, or 13.0 percent of revenue, compared to $45.2 million, or 21.2 percent of revenue, in the second quarter of 2008.
In the second quarter of 2009, non-GAAP operating income in E&C was $20.6 million, or 14.0 percent of revenue, compared to $46.2 million, or 21.7 percent of revenue, in the second quarter of 2008. The decline in operating margin was largely due to lower revenue.
Field Solutions
Second quarter 2009 Field Solutions revenue was $79.8 million, down 11 percent when compared to the second quarter of 2008. The revenue decline was driven by lower agriculture product sales. It should be noted that the year-over-year comparison was difficult because in the second quarter of 2008 Field Solutions demonstrated 63 percent year-over-year revenue growth due to an extended buying season in the quarter.
Operating income in Field Solutions for the second quarter 2009 was $30.1 million, or 37.8 percent of revenue, compared to $34.8 million, or 38.6 percent of revenue, in the second quarter of 2008.
In the second quarter of 2009, non-GAAP operating income in Field Solutions was $30.4 million, or 38.1 percent of revenue, compared to $35.0 million, or 38.9 percent of revenue in the second quarter of 2008.
Mobile Solutions
Second quarter 2009 Mobile Solutions revenue was $39.1 million, down approximately 8 percent when compared to the second quarter of 2008. The decline in revenue was primarily attributable to a decline in sales of ready mix products as well as the fact that the second quarter of 2008 benefited from the recognition of two large non-recurring revenue items.
Operating income in Mobile Solutions for the second quarter 2009 was $3.6 million, or 9.3 percent of revenue, compared to $1.9 million, or 4.6 percent of revenue in the second quarter of 2008.
In the second quarter of 2009, non-GAAP operating income in Mobile Solutions was $4.8 million, or 12.2 percent of revenue, up from 7.4 percent of revenue in the second quarter of 2008. The improvement is primarily due to reduced cost of sales overhead and operating expenses from restructuring.
Advanced Devices
Second quarter 2009 Advanced Devices revenue was $24.0 million, down approximately 26 percent when compared to the second quarter of 2008. The decline in second quarter revenue was due to slower sales of embedded products.
Operating income in Advanced Devices for the second quarter 2009 was $4.8 million, or 20.2 percent of revenue, compared to $6.6 million, or 20.3 percent of revenue, in the second quarter of 2008.
In the second quarter of 2009, non-GAAP operating income in Advanced Devices was $5.2 million, or 21.6 percent of revenue, compared to 21.3 percent of revenue in the second quarter of 2008.
Use of Non-GAAP Financial Information
To help our readers understand our past financial performance and our future results, we supplement the financial results that we provide in accordance with generally accepted accounting principles, or GAAP, with non-GAAP financial measures. The specific non-GAAP measures which we use along with a reconciliation to the nearest comparable GAAP measures and the explanation for why management chose to exclude selected items and the additional purposes for which these non-GAAP measures are used 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. 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. Management generally compensates for the limitations in the use of non-GAAP financial measures by relying on comparable GAAP financial measures and providing investors with a reconciliation of the non-GAAP financial measure to the most directly comparable GAAP financial measure or measures. 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 http://investor.trimble.com.
Forward Looking Guidance
For the third quarter of 2009 Trimble expects revenue in the range of $275 million plus or minus five percent. At a point estimate of $275 million in revenue, Trimble expects third quarter 2009 GAAP earnings per share of $0.13 and non-GAAP earnings per share of $0.25. Non-GAAP guidance for the third quarter of 2009 excludes the amortization of intangibles of $13.3 million related to previous acquisitions, the anticipated impact of stock-based compensation expense of $4.5 million and $1.3 million in anticipated restructuring charges. Both GAAP and non-GAAP earnings per share assume a 28 percent tax rate and 122.5 million shares outstanding.
Investor Conference Call / Webcast Details
Trimble will hold a conference call on July 28, 2009 at 1:30 p.m. PT to review its second quarter 2009 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 (706) 634-6089 (international). A replay of the call will be available for seven days at (800) 642-1687 (U.S.) or (706) 645-9291 (international) and the pass code is 20081931. The replay will also be available on the Web at the address above.
About Trimble
Trimble applies technology to make field and mobile workers in businesses and government significantly more productive. Solutions are focused on applications requiring position or location--including surveying, construction, agriculture, fleet and asset management, public safety and mapping. In addition to utilizing positioning technologies, such as GPS, lasers and optics, Trimble solutions may include software content specific to the needs of the user. Wireless technologies are utilized to deliver the solution to the user and to ensure a tight coupling of the field and the back office. Founded in 1978, Trimble is headquartered in Sunnyvale, Calif.
For more information visit Trimble's Web site at www.trimble.com.
Safe Harbor
Certain statements made in this press release are forward-looking statements within the meaning of Section 21E of the Securities Exchange Act of 1934, as amended, and are made pursuant to the safe harbor provisions of the Securities Litigation Reform Act of 1995. These statements include expectations for future financial market and economic conditions, our ability to maintain operating margins, revenue and earnings per share that Trimble expects to report in the third quarter 2009, changes in tax-rate, estimated restructuring costs and when we can return to year-over-year revenue growth. These forward-looking statements are subject to change, and actual results may materially differ from those set forth in this press release due to certain risks and uncertainties. If the current global economic crisis and recessionary conditions in the U.S. and Europe worsen or do not improve it may negatively impact our customers' purchasing decisions worldwide, including in emerging markets. In addition, the Company's results may be adversely affected if the Company is unable to market, manufacture and ship new products. Any weakening of our accounts receivable or write-off of goodwill could also impair our financial results. Any failure to achieve predicted results could negatively impact the Company's revenues, cash flow from operations and other financial results. The Company's financial results will also depend on a number of other factors, including the risks detailed from time to time in reports filed with the SEC, including its quarterly reports on Form 10-Q and its annual report on Form 10- K. Undue reliance should not be placed on any forward-looking statement contained herein, especially in light of greater uncertainty than normal in the economy in general. These statements reflect the Company's position as of the date of this release.
