Trimble Third Quarter 2017 Results Summary
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 1995. 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 forward- looking 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 http://investor.trimble.com. 2
Agenda ▪ CEO Overview ▪ CFO Review of Results ▪ Guidance ▪ Q&A 3
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 2017 4
Third Quarter Fiscal 2017 Financial Summary $M, Except Per Share Third Quarter of ▪ Revenue: +14.7% yr:yr 2016 2017 – Currency translation ≈ +1% – A cquisitions/divestitures ≈ +3% Revenue $584.1 $670.0 ▪ Non-GAAP Gross Margin % down 80 bps yr:yr, driven by Non-GAAP Gross Margin % of Revenue 56.9% 56.1% recent M&A; organic Gross Margins flat yr:yr Non-GAAP Operating Income $110.8 $123.6 ▪ Non-GAAP Operating Income % down 60 bps yr:yr, driven by recent M&A; organic margins expanded yr:yr Non-GAAP Operating Income % of Revenue 19.0% 18.4% ▪ Non-GAAP EPS of $0.39, up 18% yr:yr Non-GAAP Net Income $84.0 $99.6 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: http://investor.trimble.com. 5
Financial Position $M Third Quarter of ▪ Cash and Short-Term Investments up $134M yr:yr, with >90% held by non-U.S. subsidiaries 2016 2017 ▪ Deferred Revenue up 11% yr:yr, driven by growth in Balance Sheet Highlights: software and recurring revenue streams Cash and Short-Term Investments $275.6 $409.2 ▪ Cash Flow from Operations down 33% yr:yr driven by Total Assets $3,731.4 $4,180.7 inventory requirements associated with revenue Deferred Revenue $294.3 $326.7 growth; trailing twelve month cash flow from Total Debt $669.8 $695.8 operations up 19% yr:yr ▪ 2.4 million shares repurchased for $91M [1] with $19M Stockholders Equity $2,319.7 $2,557.4 remaining capacity under existing program as of the Diluted Shares Outstanding 253.2 257.9 end of Q3’17 Cash Flow Highlights: ▪ Total Debt to TTM EBITDA [2] of 1.4x, providing flexibility Cash Flow from Operations $91.4 $61.3 Share Repurchases [1] $13.9 $91.1 1. Includes $7 million associated with the repurchase of 0.2 million shares that were traded, but not settled, at the end of Q2’ 17. 2. TTM EBITDA refers to the sum of trailing twelve months non-GAAP operating income plus depreciation. 6
Transportation Segment Results Q3’16 Q3’17 ▪ Revenue: +16% Revenue $147.4 $171.4 – Currency translation: ≈ +1 %; acquisitions: ≈ +4 % % Growth +16% – Double digit growth in transportation and logistics business ▪ Operating income Operating Income $26.5 $31.2 – Operating income up 18%. Operating margins up ≈ 20 bps; driven by operating leverage, % of Revenue 18.0% 18.2% offset by acquisitions Delta +20bps ▪ Selected highlights % Growth +18% – Electronic Logging Device (ELD) mandate continues to provide growth tailwinds in mobility Connected Rail 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 top- line 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
Resources and Utilities Segment Results Q3’16 Q3’17 ▪ Revenue: +31% Revenue $87.5 $114.4 – Currency translation: ≈ +2 %; acquisitions/divestitures: ≈ +18 % % Growth +31% – Revenue growth in agriculture, correction services, and forestry; M&A growth driven primarily by Müller Operating Income $25.2 $26.5 ▪ Operating income % of Revenue 28.8% 23.2% – Operating income up 5%. Operating margins down ≈ 560 bps, driven by recent Delta -560bps acquisitions. Organic margins up % Growth +5% ▪ Selected highlights – Growth in North American agriculture business Connected Forest – 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
Geospatial Segment Results Q3’16 Q3’17 ▪ Revenue: +6% Revenue $159.9 $169.7 – Currency translation: ≈ +1 %; acquisitions/divestitures: ≈ -2% % Growth +6% – Revenue growth in numerous businesses across segment Operating Income $35.3 $36.7 ▪ Operating income % of Revenue 22.1% 21.6% – Operating income up 4%. Operating margins down ≈ 50 basis points yr:yr, revenue and Delta -50bps gross margin expansion offset by product mix and trade show costs % Growth +4% ▪ 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
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