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Trimble (TRMB) Down 4.3% Since Earnings Report: Can It Rebound?
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It has been about a month since the last earnings report for Trimble Inc. (TRMB - Free Report) . Shares have lost about 4.3% in that time frame.
Will the recent negative trend continue leading up to its next earnings release, or is TRMB due for a breakout? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at the most recent earnings report in order to get a better handle on the important catalysts.
Recent Earnings
Trimble reported first-quarter 2018 non-GAAP earnings of 44 cents per share, which surpassed the Zacks Consensus Estimate by 4 cents. The figure increased 33.4% on a year-over-year basis and 12.8% sequentially.
Revenues increased 20.9% year over year and 4.8% on a sequential basis to $742.2 million, which came well ahead of the Zacks Consensus Estimate of $720 million. Top-line growth was driven by strong performance of segments, benefits from acquisitions and improved end-market results.
In the reported quarter, the company has restated its year-ago quarter figures with the adoption of new accounting standard, ASC 606.
Product revenues (67.1% of revenues) came in $497.8 million, up 21.5% on a year-over-year basis and 6.7% sequentially. Services revenues (17.3% of revenues) came in $128.8 million, up 20.8% year over year but down 0.8% on a sequential basis. Subscription revenues (15.6% of revenues) increased 22.4% from the year-ago quarter and 3.3% sequentially to $115.6 million.
In the first quarter, Trimble’s software portfolio expanded with the launch of Trimble 4D Go for Buildings that provides new workflow to building owners and structural engineers. Also, the company rolled out three new versions of its software —Tekla Structures 2018, Tekla Structural Designer 2018 and Tekla Tedds 2018.
Further, the company partnered with Aquarius Spectrum to expand its smart water management sensors and software solutions portfolio.
Segments in Detail
Trimble operates in four organized segments: Buildings and Infrastructure, Geospatial, Resources and Utilities and Transportation segments.
Buildings and Infrastructure: This segment generated $224.7 million sales, accounting for 30.3% of the total revenues, which grew 20% on a year-over-year basis out of which 5% was contributed by acquisitions. This was driven by the growing building and civil engineering construction business. Also, migration of SketchUp to a SaaS business model remained positive with growing monthly active users. Further, benefits from acquisitions of e-Builder accelerated sales.
Geospatial: Sales from this segment were $174.5 million, accounting for 23.5% of total revenues. The figure increased 17%, compared with the year-ago quarter. A strong performance of Applanix division which led to increased sales of inertial based technologies to automotive companies aided the top-line growth in this segment. Further, the company witnessed a strong organic revenue growth which was attributed to expanding product portfolio.
Resources and Utilities: The segment generated sales of $159.2 million, accounting for 21.5% of total revenues. The figure was up 32% on a year-over-year basis, out of which 23% was contributed by acquisitions. The segment performed well in agriculture market, especially outside of U.S. The company’s GFX-750 guidance system also exhibited sales which came ahead of its forecasted figure. Also, growing customer wins and well performing correction services business aided the top-line growth within this segment.
Transportation: Sales from this segment went up 19% to $183.8 million, accounting for 24.7% of total revenues. This quarter witnessed strong performance of fleet management solutions. Further, implementation of ELD regulations also benefited the company’s business by providing competitive wins. Moreover, acquisitions contributed 2% to the revenues in this segment.
Operating Details
In the first quarter, gross margin came in at 56.9%, which expanded 40 basis points (bps) year over year. The increase was attributed to favorable revenue mix.
Operating expenses were $282.7 million (38.1% of revenues), which went up 19.1%, compared to the year-ago quarter.
Operating margin came in at 18.8%, which also expanded 120 bps year-over-year, driven by strong segmental performance, especially geospatial and infrastructure segment.
Balance Sheet & Cash Flow
As of Mar 31, 2018, cash and cash equivalents were $274.5 million, compared with $358.5 million as of Dec 31, 2017. Inventories were $289.1 million, which increased from $264.6 million in the last quarter. Long-term debt was $691.8 million at the end of first quarter, compared to $785.5 million at the end fourth quarter.
Cash flow from operations was $82.9 million in the reported quarter, which declined 20.3% from the prior-year quarter. This fall was due to acquisition impacts and payment of incentive compensation.
In first quarter, Trimble repurchased 1.3 million shares worth $50 million. At the end of the reported quarter, there were shares worth $392 million under the share repurchase authorization.
Guidance
For second-quarter 2018, Trimble expects non-GAAP earnings between 42 cents and 46 cents per share.
The company expects revenues between $755 million and $785 million.
Non-GAAP operating margin for the next quarter is anticipated to lie in a range of 18-19%.
How Have Estimates Been Moving Since Then?
In the past month, investors have witnessed an upward trend in fresh estimates. There have been four revisions higher for the current quarter compared to two lower.
At this time, TRMB has an average Growth Score of C, however its Momentum is doing a lot better with an A. However, the stock was also allocated a grade of C on the value side, putting it in the middle 20% for this investment strategy.
Overall, the stock has an aggregate VGM Score of B. If you aren't focused on one strategy, this score is the one you should be interested in.
Based on our scores, the stock is more suitable for momentum investors than those looking for value and growth.
Outlook
Estimates have been broadly trending upward for the stock and the magnitude of these revisions looks promising. Notably, TRMB has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.
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Trimble (TRMB) Down 4.3% Since Earnings Report: Can It Rebound?
It has been about a month since the last earnings report for Trimble Inc. (TRMB - Free Report) . Shares have lost about 4.3% in that time frame.
Will the recent negative trend continue leading up to its next earnings release, or is TRMB due for a breakout? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at the most recent earnings report in order to get a better handle on the important catalysts.
Recent Earnings
Trimble reported first-quarter 2018 non-GAAP earnings of 44 cents per share, which surpassed the Zacks Consensus Estimate by 4 cents. The figure increased 33.4% on a year-over-year basis and 12.8% sequentially.
Revenues increased 20.9% year over year and 4.8% on a sequential basis to $742.2 million, which came well ahead of the Zacks Consensus Estimate of $720 million. Top-line growth was driven by strong performance of segments, benefits from acquisitions and improved end-market results.
In the reported quarter, the company has restated its year-ago quarter figures with the adoption of new accounting standard, ASC 606.
Product revenues (67.1% of revenues) came in $497.8 million, up 21.5% on a year-over-year basis and 6.7% sequentially. Services revenues (17.3% of revenues) came in $128.8 million, up 20.8% year over year but down 0.8% on a sequential basis. Subscription revenues (15.6% of revenues) increased 22.4% from the year-ago quarter and 3.3% sequentially to $115.6 million.
In the first quarter, Trimble’s software portfolio expanded with the launch of Trimble 4D Go for Buildings that provides new workflow to building owners and structural engineers. Also, the company rolled out three new versions of its software —Tekla Structures 2018, Tekla Structural Designer 2018 and Tekla Tedds 2018.
Further, the company partnered with Aquarius Spectrum to expand its smart water management sensors and software solutions portfolio.
Segments in Detail
Trimble operates in four organized segments: Buildings and Infrastructure, Geospatial, Resources and Utilities and Transportation segments.
Buildings and Infrastructure: This segment generated $224.7 million sales, accounting for 30.3% of the total revenues, which grew 20% on a year-over-year basis out of which 5% was contributed by acquisitions. This was driven by the growing building and civil engineering construction business. Also, migration of SketchUp to a SaaS business model remained positive with growing monthly active users. Further, benefits from acquisitions of e-Builder accelerated sales.
Geospatial: Sales from this segment were $174.5 million, accounting for 23.5% of total revenues. The figure increased 17%, compared with the year-ago quarter. A strong performance of Applanix division which led to increased sales of inertial based technologies to automotive companies aided the top-line growth in this segment. Further, the company witnessed a strong organic revenue growth which was attributed to expanding product portfolio.
Resources and Utilities: The segment generated sales of $159.2 million, accounting for 21.5% of total revenues. The figure was up 32% on a year-over-year basis, out of which 23% was contributed by acquisitions. The segment performed well in agriculture market, especially outside of U.S. The company’s GFX-750 guidance system also exhibited sales which came ahead of its forecasted figure. Also, growing customer wins and well performing correction services business aided the top-line growth within this segment.
Transportation: Sales from this segment went up 19% to $183.8 million, accounting for 24.7% of total revenues. This quarter witnessed strong performance of fleet management solutions. Further, implementation of ELD regulations also benefited the company’s business by providing competitive wins. Moreover, acquisitions contributed 2% to the revenues in this segment.
Operating Details
In the first quarter, gross margin came in at 56.9%, which expanded 40 basis points (bps) year over year. The increase was attributed to favorable revenue mix.
Operating expenses were $282.7 million (38.1% of revenues), which went up 19.1%, compared to the year-ago quarter.
Operating margin came in at 18.8%, which also expanded 120 bps year-over-year, driven by strong segmental performance, especially geospatial and infrastructure segment.
Balance Sheet & Cash Flow
As of Mar 31, 2018, cash and cash equivalents were $274.5 million, compared with $358.5 million as of Dec 31, 2017. Inventories were $289.1 million, which increased from $264.6 million in the last quarter. Long-term debt was $691.8 million at the end of first quarter, compared to $785.5 million at the end fourth quarter.
Cash flow from operations was $82.9 million in the reported quarter, which declined 20.3% from the prior-year quarter. This fall was due to acquisition impacts and payment of incentive compensation.
In first quarter, Trimble repurchased 1.3 million shares worth $50 million. At the end of the reported quarter, there were shares worth $392 million under the share repurchase authorization.
Guidance
For second-quarter 2018, Trimble expects non-GAAP earnings between 42 cents and 46 cents per share.
The company expects revenues between $755 million and $785 million.
Non-GAAP operating margin for the next quarter is anticipated to lie in a range of 18-19%.
How Have Estimates Been Moving Since Then?
In the past month, investors have witnessed an upward trend in fresh estimates. There have been four revisions higher for the current quarter compared to two lower.
Trimble Inc. Price and Consensus
Trimble Inc. Price and Consensus | Trimble Inc. Quote
VGM Scores
At this time, TRMB has an average Growth Score of C, however its Momentum is doing a lot better with an A. However, the stock was also allocated a grade of C on the value side, putting it in the middle 20% for this investment strategy.
Overall, the stock has an aggregate VGM Score of B. If you aren't focused on one strategy, this score is the one you should be interested in.
Based on our scores, the stock is more suitable for momentum investors than those looking for value and growth.
Outlook
Estimates have been broadly trending upward for the stock and the magnitude of these revisions looks promising. Notably, TRMB has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.