Trimble Navigation (TRMB) Beats On Q1 Earnings And Revenues

Trimble Navigation’s (NASDAQ:TRMB) first-quarter 2017 earnings of 29 cents exceeded the Zacks Consensus Estimate by 3 cents. Earnings were also up 38.1% year over year

In the last one year, shares of Trimble Navigation outperformed the Zacks categorized Electronic Products Miscellaneous industry. While the industry gained 30.1%, the stock returned 52.5%.

Revenues

Trimble’s first-quarter revenues of $614 million were up 4.9% sequentially and 5.3% year over year. Revenues came in above the Zacks Consensus Estimate of $601 million and on the higher end of the company’s guided range of $585–$615 million.

Revenues by Segment

In the beginning of first-quarter 2017, the company changed its reporting segments. The results are based on these four new segments namely Buildings and Infrastructure, Geospatial, Resources and Utilities and Transportation segments.

The quarter’s Buildings and Infrastructure revenues of $188.1 million were up 8% year over year. Geospatial revenues of $149.8 million declined 2% year over year; Resources and Utilities segment revenues increased 5% from the year-ago period to $119.9 million, while Transportation revenues was $156.1 million, up 9% year over year.

Margins

Trimble’s pro-forma gross margin was 56.4%, down 31 basis points (bps) sequentially but up 65 bps year over year. The sequential decrease was due to an unfavorable mix of products in some businesses.

Trimble’s adjusted operating expenses of $250.7 million increased 5.6% sequentially and 0.2% year on year. Operating margin was 15.6%, down 60 bps sequentially but up 273 bps year over year.

Net Income

Pro forma net income was $74.2 million compared with $53.3 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 net profit (for Trimble shareholders) of $50.5 million (20 cents per share) compared with $19.8 million (8 cents) a year ago.

Balance Sheet

Trimble exited the first quarter with cash and cash equivalents of approximately $422.6 million compared with $327.2 million in the prior quarter. Inventories were $221.1 million, up from $218.8 million last quarter. Accounts receivables were $394.7 million, up from $354.8 million in the previous quarter.

Cash flow from operations was $102.9 million against $407.1 million in the prior quarter.

Share Repurchase

During the quarter, Trimble repurchased approximately 0.5 million shares for $14.2 million.

Guidance

Management expects second-quarter revenues in the range of $625–$655 million. The Zacks Consensus Estimate stands at $630.7 million.

Earnings per share are expected within 16–22 cents on a GAAP basis and within 33–38 cents on a non-GAAP basis. The Zacks Consensus Estimate is pegged at 30 cents.

The calculation of non-GAAP earnings per share excludes the amortization of intangibles worth $35 million that includes the effect of previous acquisitions, anticipated acquisition costs of $3 million, the anticipated impact of stock-based compensation expense of $15 million and restructuring charges worth $2 million. Both the GAAP guidance and the non-GAAP guidance assume a tax rate of 23%.

Summary

Trimble is an OEM of GPS-based products and control systems. The company reported strong first-quarter 2017 results with both the top and the bottom line surpassing the Zacks Consensus Estimate.

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 market environment.

Trimble Navigation Ltd. Price, Consensus and EPS Surprise

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

Zacks Rank and Stocks to Consider

Currently, Trimble has a Zacks Rank #3 (Hold). Some better-ranked stocks in the industry are Lam Research (NASDAQ:LRCX) and KLA-Tencor (NASDAQ:KLAC) , each carrying a Zacks Rank #1 (Strong Buy), while Applied Materials (NASDAQ:AMAT) , carrying a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

Lam Research delivered a positive earnings surprise of 6.14%, on average, in the trailing four quarters.

KLA-Tencor delivered a positive earnings surprise of 11.55%, on average, in the last four quarters.

Applied Materials delivered a positive earnings surprise of 3.92%, on average, in the trailing four quarters.

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