Trimble Third Quarter 2017 Results Summary

Transcription

1 Trimble Third Quarter 2017 Results Summary

2 Forward-looking statements Certain statements made in this presentation and any subsequent Q&A period 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 These statements include expectations for future financial market and economic cond itions, whether the positive trend in financial results will continue into 2018, the impact of acquisitions, the ability to deliver revenue, earnings per share and other financial projections that Trimble has guided for the fourth quarter of 2017, including the expected tax rate, anticipated impact of stock-based compensation expense, amortization of intangibles related to previous acquisitions, anticipated acquisition costs, restructuring charges, and the anticipated number of diluted shares outstanding. These forwardlooking statements are subject to change, and actual results may materially differ due to certain risks and uncertainties. The company's results may be adversely affected if the company is unable to market, manufacture and ship new products, obtain new customers, or integrate new acquisitions. The company's results would also be negatively impacted by adverse geopolitical developments, weakening in the macro environment, foreign exchange fluctuations, critical part supply chain shortages, or the imposition of barriers to international trade. 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 and 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. These statements reflect the Company s position as of the date of this presentation. The Company expressly disclaims any undertaking to release publicly any updates or revisions to any statements to reflect any change in the Company s expectations or any change of events, conditions, or circumstances on which any such statement is based. To help our investors understand our past financial performance and our future results, as well as our performance relative t o competitors, 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 can be found on our website at 2

3 Agenda CEO Overview CFO Review of Results Guidance Q&A 3

4 Third Quarter 2017 Overview Accelerating revenue growth, supporting ongoing investment in the businesses Growth in all reporting segments and major geographies Operating margin expansion on an organic basis, offset by acquisition effects Technological innovation and customer wins strengthening competitive position Two acquisitions (Müller and 10-4 Systems) closed in Q3. Total of eight acquisitions announced since January

5 Third Quarter Fiscal 2017 Financial Summary $M, Except Per Share Third Quarter of Revenue $584.1 $670.0 Non-GAAP Gross Margin % of Revenue 56.9% 56.1% Non-GAAP Operating Income $110.8 $123.6 Non-GAAP Operating Income % of Revenue 19.0% 18.4% Non-GAAP Net Income $84.0 $99.6 Revenue: +14.7% yr:yr Currency translation +1% Acquisitions/divestitures +3% Non-GAAP Gross Margin % down 80 bps yr:yr, driven by recent M&A; organic Gross Margins flat yr:yr Non-GAAP Operating Income % down 60 bps yr:yr, driven by recent M&A; organic margins expanded yr:yr Non-GAAP EPS of $0.39, up 18% yr:yr Non-GAAP Diluted Earnings Per Share $0.33 $0.39 Note: Investors are encouraged to review the reconciliation of our non-gaap financial measures to the comparable GAAP results, which is attached to the 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: 5

6 Financial Position $M Third Quarter of Balance Sheet Highlights: Cash and Short-Term Investments $275.6 $409.2 Total Assets $3,731.4 $4,180.7 Deferred Revenue $294.3 $326.7 Total Debt $669.8 $695.8 Stockholders Equity $2,319.7 $2,557.4 Diluted Shares Outstanding Cash Flow Highlights: Cash Flow from Operations $91.4 $61.3 Cash and Short-Term Investments up $134M yr:yr, with >90% held by non-u.s. subsidiaries Deferred Revenue up 11% yr:yr, driven by growth in software and recurring revenue streams Cash Flow from Operations down 33% yr:yr driven by inventory requirements associated with revenue growth; trailing twelve month cash flow from operations up 19% yr:yr 2.4 million shares repurchased for $91M [1] with $19M remaining capacity under existing program as of the end of Q3 17 Total Debt to TTM EBITDA [2] of 1.4x, providing flexibility Share Repurchases [1] $13.9 $ Includes $7 million associated with the repurchase of 0.2 million shares that were traded, but not settled, at the end of Q TTM EBITDA refers to the sum of trailing twelve months non-gaap operating income plus depreciation. 6

7 Transportation Segment Results Q3 16 Q3 17 Revenue $147.4 $171.4 % Growth +16% Operating Income $26.5 $31.2 % of Revenue 18.0% 18.2% Delta +20bps % Growth +18% Connected Rail Revenue: +16% Currency translation: +1%; acquisitions: +4% Double digit growth in transportation and logistics business Operating income Operating income up 18%. Operating margins up 20 bps; driven by operating leverage, offset by acquisitions Selected highlights Electronic Logging Device (ELD) mandate continues to provide growth tailwinds in mobility business Between December 2017 and December 2019, ELD mandate enters next phase of conversions from Automatic On Board Recording Devices (AOBRD) to ELD compliant devices Growth in Europe and adjacent opportunities such as OEMs and video contributed to topline growth Investing in innovation such as Trimble freight cloud and Blockchain Connected Rail: investments and acquisitions in rail industry provide unique customer offering 3 of 8 acquisitions announced in 2017 are in Transportation segment 10-4 Systems closed in Q3 7

8 Resources and Utilities Segment Results Q3 16 Q3 17 Revenue $87.5 $114.4 % Growth +31% Operating Income $25.2 $26.5 % of Revenue 28.8% 23.2% Delta -560bps % Growth +5% Connected Forest Revenue: +31% Currency translation: +2%; acquisitions/divestitures: +18% Revenue growth in agriculture, correction services, and forestry; M&A growth driven primarily by Müller Operating income Operating income up 5%. Operating margins down 560 bps, driven by recent acquisitions. Organic margins up Selected highlights Growth in North American agriculture business Agriculture markets outside of North American continue to provide attractive market penetration opportunities Growth in correction services business, which leverages unique Trimble IP to provide precision location services Connected Forest: investments and acquisitions in forestry industry provide unique customer offering 5 of 8 acquisitions announced in 2017 are in Resources & Utilities segment Müller closed in Q3 8

9 Geospatial Segment Results Q3 16 Q3 17 Revenue $159.9 $169.7 % Growth +6% Operating Income $35.3 $36.7 % of Revenue 22.1% 21.6% Delta -50bps % Growth +4% Revenue: +6% Currency translation: +1%; acquisitions/divestitures: -2% Revenue growth in numerous businesses across segment Operating income Operating income up 4%. Operating margins down 50 basis points yr:yr, revenue and gross margin expansion offset by product mix and trade show costs Selected highlights Strong backlog continues for SX10, which combines imaging, survey & 3D scanning into single unit for the geospatial market Launch of next generation mechanical total stations Improved North American revenue Component technologies for emerging 5G telecommunications infrastructure 9

10 Buildings and Infrastructure Segment Results Q3 16 Q3 17 Revenue $189.3 $214.5 % Growth +13% Operating Income $40.9 $52.2 % of Revenue 21.6% 24.3% Delta +270bps % Growth +28% Trimble Constructible Model Plates, bolts & welds Embeds Mechanical and electrical Rebar Bolts Layout points Revenue: +13% Currency translation: +1%; acquisitions: +1% Double digit growth in civil engineering & construction and building construction Operating income Operating income up 28%. Operating margins up 270 bps yr:yr, driven by revenue growth, gross margin expansion and operating leverage Selected highlights Revenue growth in all major regions Solutions highlights: Earthworks Excavator automatics driving demand in machine control and guidance Quarry operations management portal (SaaS) monitors material flows and equipment productivity to optimize performance site-wide (extraction, processing and load-out) Pre-cast concrete design and engineering software expanding coverage of structural trades in building construction Operating leverage based on revenue growth with targeted investment 10

11 Trimble Construction: Utilizing Trimble Technology on the Trimble Colorado, USA Building Expansion Building Construction Solutions Architecture, Logistics, & Detailing: Trimble SketchUp Structural Engineering and Construction Models: Trimble Tekla Structures General Contractors & Trade Partners Trimble GC Estimating Solutions Trimble ProjectSight Trimble CrewSight Trimble LeanSight Trimble Field Link & Tablets Trimble Robotic Positioning MEP Trade Partners Trimble AutoBid Mechanical & Sheet Metal Trimble Accubid Electrical Estimating Trimble Live Count Cloud & Trade Service Trimble Robotic Total Stations & GNSS Trimble Field Link & Tablets Trimble SysQue Real Estate & Workplace Solutions Trimble Manhattan Space Management Trimble Mixed Reality Platforms GeoSpatial Solutions Trimble Business Center Trimble Access on TSC3 Controllers Trimble GNSS Base & Rover Systems Trimble S5 & S7 Robotic Total Stations Trimble SX10 Scanning Total Stations Trimble TX8 Laser Scanners Trimble RealWorks Spectra Lasers Civil Engineering & Construction Solutions Trimble Business Center - HCE Trimble Connected Community Trimble VisionLink Trimble GNSS Systems Trimble Grade Control Systems Trimble Compaction Control Systems Trimble Paving Control Systems Trimble UAV Imaging & Photogrammetry 11

12 Revenue by Region % of Total Q3 16 Q3 17 Yr:Yr Quarterly % Change North America 55% 54% 13% Europe 22% 24% 27% Asia-Pacific 15% 15% 7% Rest of World 8% 7% 6% Total 100% 100% 15% Note: Figures may vary due to rounding. 12

13 Software/Recurring Revenue Mix Software/Services/Recurring % of Total Recurring Revenue % of Total 47% 47% 28% 28% TTM Q3'16 TTM Q3'17 TTM Q3'16 TTM Q3'17 Software/services/recurring revenue approximately $1.2B over trailing twelve months Steady revenue mix percentages reflect growth in both hardware and software/services/recurring revenues Recurring revenues grew at high single digit rate on a trailing twelve month year over year basis Subscription revenue grew at 16.3% in Q3 17, reflecting an ongoing evolution toward SaaS offerings TTM refers to trailing twelve months Note: Recurring revenue includes subscription, maintenance, and support revenue 13

14 Recent Acquisitions Company Date Segment Description Rationale Sep-17 Transportation Provides multimodal shipment visibility solutions and related technologies for shippers and transportation providers Build upon strategy to transform the way the world moves freight by providing innovative transactional, visibility, decision support and optimization solutions Jul-17 Resources & Utilities Provides implement control and precision farming solutions, including electronic control units that enable variable-rate technology in precision agriculture Build upon strategy to expand our role in the growing market for variable rate applications and precision agriculture Jun-17 Transportation Provides ELD as a service technology to end users and partners Capture smaller-end of trucking fleet market and add domain rich developers to transportation franchise May-17 Resources & Utilities Provides data capture, modeling, engineering and analytical services and 3D visualization solutions provider for electricity network operators Expands Trimble's energy solutions portfolio to provide highvalue data modeling and 3D visualization services for the utilities industry Apr-17 Resources & Utilities Provides collaboration, harvesting, production and lumber sale solutions for small- and medium-sized forestry companies Build upon strategy to provide global customers with complete end-to-end ecosystem for forest management, traceability and timber processing Feb-17 Resources & Utilities Provides cloud-based data, collaboration & workflow automation services to small- and medium-sized forestry companies for lifecycle enterprise management Build upon strategy to provide global customers with complete end-to-end ecosystem for forest management, traceability and timber processing Mar-17 Resources & Utilities Provides information and online process diagnostic solutions for forestry processing and production planning Build upon strategy to provide global customers with complete end-to-end ecosystem for forest management, traceability and timber processing Feb-17 Transportation Manufactures vision-based automatic wayside inspection systems for railroad industry, providing detailed condition assessment of train components Extends ability to deliver more powerful and robust rail solutions as well as leverage Trimble's technology portfolio to strengthen solutions 14

15 Q4 17 Guidance and Outlook Q4 17 guidance: Revenue: $655M to $685M Non-GAAP EPS: $0.34 to $0.38 Non-GAAP EPS guidance excludes the following estimates: $40M of intangibles amortization related to prior acquisitions $3M of estimated acquisition costs $21M of estimated stock-based compensation $2M of estimated restructuring expenses Non-GAAP EPS guidance assumes: 258M shares outstanding 23% non-gaap tax rate Note: Investors are encouraged to review the reconciliation of our non-gaap financial measures to the comparable GAAP results, which is attached to the 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: 15

16 Q&A