Credit: Shutterstock photoTrimble Inc.TRMB delivered fourth-quarter 2018 non-GAAP earnings of 48 cents per share, surpassing the Zacks Consensus Estimate by 2 cents. The figure also increased 29.7% on a year-over-year basis but decreased 2% sequentially.
Per the company, non-GAAP revenues increased 13% year over year but declined 1.5% on a sequential basis to $792.9 million. Moreover, the company's GAAP revenues came in $785.5 million, up 12% from the prior year quarter but down 1.2% from the previous quarter.
Well-performing segments drove year-over-year top-line growth in the reported quarter. Further, positive contributions from acquisitions of e-Builder and Viewpoint contributed well throughout the reported quarter.
Product revenues (60% of GAAP revenues) came in $471.4million, up 2.6% on a year-over-year basis. Services revenues (21.3% of revenues) came in $167.3 million, up 26.2% year over year. Subscription revenues (18.7% of revenues) increased 36.2% from the year-ago quarter to $146.8 million.
Coming to price performance, the shares of Trimble have lost 1.2% in a year, compared with the industry 's decline of 0.7%.
We note that the company's acquisition strength remains a major positive and is likely to help the stock to rebound in the long haul.
Segments in Detail
Buildings and Infrastructure: This segment generated $287 million sales, accounting for 36.2% of the company's non-GAAP revenues, growing 39.9% on a year-over-year basis. The company witnessed organic growth of 7% within this segment. Notably, strengthening BIM-centric building construction businesses drove year-over-year sales. Further, robust distribution network and expanding product portfolio are major positives.
Geospatial: Sales from this segment were $178.8 million, accounting for 22.6% of total revenues. The figure increased 2.2%, compared with the year-ago quarter. This can be attributed to strong end-user demand. Further, the segment witnessed organic growth of 3% in the reported quarter.
Resources and Utilities: The segment generated sales of $130.1 million, accounting for 16.4% of total revenues. The figure was down 1.7% on a year-over-year basis which was primarily owing to sluggish end-user business. This segment also remained flat organically. However, the company experienced strong performance of its OEM-based business.
Transportation: Sales from this segment went up 4.4% to $197 million, accounting for 24.8% of total revenues. Strong subscription revenues drove the sales within this segment. Further, this segment witnessed organic growth of 4% in the quarter under review.
Trimble Inc. Price, Consensus and EPS Surprise
Trimble Inc. Price, Consensus and EPS Surprise | Trimble Inc. Quote
Operating Details
In the fourth quarter, non-GAAP gross margin came in at 59.5%, expanding 420 basis points (bps) year over year. The increase can be attributed to favorable product mix and strong cost control strategies.
Adjusted operating expenses accounted for 37.8% of non-GAAP revenues, contracting 30 bps compared with the year-ago quarter.
Non-GAAP operating margin came in at 21.7%, expanding 460 bps year over year, driven by effective operating expense management across all the segments.
Balance Sheet & Cash Flow
As of Dec 31, 2018, cash and cash equivalents were $172.5 million, down from $205.4 million as of Sep 30, 2018. Inventories were $298 million, increasing from $286.3 million in the previous quarter.
Long-term debt was $1.71 billion at the end of fourth quarter, compared with $1.79 billion at the end of the third quarter.
Cash flow from operations was $102 million in the reported quarter, declining from $117 million in the las t report ed quarter.
Additionally, the company repurchased 1.1 million shares worth $40 million.
Guidance
For first-quarter 2018, Trimble expects non-GAAP earnings between 44 cents and 48 cents per share. The Zacks Consensus Estimate for earnings is pegged at 47 cents per share.
The company expects non-GAAP revenues between $795 million and $820 million. Further, GAAP revenues are anticipated to lie within the range of $792 million to $817 million. The Zacks Consensus Estimate for revenues is projected at $836.4 million.
Zacks Rank and Stocks to Consider
Trimble carries a Zacks Rank #3 (Hold).
Some better-ranked stocks in the broader technology sector are TripAdvisor TRIP , Upland Software UPLD and RingCentral RNG . While TripAdvisor sports a Zacks Rank #1 (Strong Buy), Upland Software and RingCentral carry a Zacks Rank #2 (Buy). You can see the complete list of today's Zacks #1 Rank stocks here.
Long-term earnings growth rate for TripAdvisor, Upland Software and RingCentral is currently pegged at 14.05%, 20% and 35%, respectively.
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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
