Going forward, as subscription and software sales become a more material part of Trimble's total revenue, the company will break out its revenue in three categories – product, service and subscription. For the first quarter of 2012, Trimble's product revenue was $398.5 million, or 79 percent of total revenue; service revenue was $57.4 million, or 12 percent of total revenue; and subscription revenue was $46.3 million, or 9 percent of total revenue.
GAAP operating income for the first quarter of 2012 was $59.8 million, up 37 percent as compared to the first quarter of 2011. GAAP operating margin in the first quarter of 2012 was 11.9 percent as compared to 11.4 percent in the first quarter of 2011.
GAAP net income for the first quarter of 2012 was $50.8 million, up 28 percent as compared to the first quarter of 2011. Diluted earnings per share in the first quarter of 2012 were $0.40 as compared to diluted earnings per share of $0.32 in the first quarter of 2011.
First quarter 2012 non-GAAP operating income of $101.7 million was up 45 percent as compared to the first quarter of 2011. Non-GAAP operating margin was 20.3 percent as compared to 18.2 percent in the first quarter of 2011.
Non-GAAP net income of $87.3 million for the first quarter of 2012 was up 40 percent as compared to the first quarter of 2011. Diluted non-GAAP earnings per share in the first quarter of 2012 were $0.68 as compared to diluted non-GAAP earnings per share of $0.50 in the first quarter of 2011.
First quarter 2012 non-GAAP results exclude:
- Restructuring expense of $526 thousand as compared to $866 thousand in the first quarter of 2011;
- Amortization of intangibles of $28.8 million as compared to $16.1 million in the first quarter of 2011;
- Stock-based compensation expense of $7.8 million as compared to $6.8 million in the first quarter of 2011;
- Acquisition-related inventory step-up charge of $8 thousand as compared to $508 thousand in the first quarter of 2011;
- Acquisition-related costs of $5.2 million as compared to $3.0 million in the first quarter of 2011 and;
- Foreign exchange loss of $1.6 million from a hedge associated with an acquisition as compared to no loss in the first quarter of 2011.
"First quarter revenue and profits established new milestones for Trimble. We are particularly encouraged by the continuing improvement in margins," said Steven W. Berglund, Trimble's president and chief executive officer. "Market conditions were generally stable worldwide, although European markets remain uncertain and commercial and residential construction remains weak. Overall, the results for the first quarter reinforce our optimistic outlook for the year."
Segment operating income is revenue less cost of sales and operating expenses, excluding general corporate expenses, restructuring expenses, amortization of intangibles, amortization of acquisition-related inventory step-up charges and acquisition costs. Non-GAAP segment operating income also excludes the impact of stock-based compensation expense.
Engineering and Construction (E&C)
First quarter 2012 E&C revenue was $248.9 million, up 31 percent as compared to the first quarter of 2011. This growth was driven primarily by strong sales of machine control and survey products across North America, Europe and Asia Pacific and acquisitions.
First quarter operating income in E&C was $40.1 million, or 16.1 percent of revenue as compared to $22.8 million, or 12.0 percent of revenue in the first quarter of 2011. Non-GAAP operating income was $42.8 million, or 17.2 percent of revenue, as compared to $25.1 million, or 13.2 percent of revenue, in the first quarter of 2011. The improvement in operating income was due to operating leverage on higher revenue and acquisitions.
Field Solutions
First quarter 2012 Field Solutions revenue was $147.5 million, up 20 percent as compared to the first quarter of 2011 due primarily to increased sales of agricultural and Geographic Information System (GIS) products and acquisitions.
First quarter 2012 Field Solutions operating income was $62.4 million, or 42.3 percent of revenue, as compared to $52.5 million, or 42.7 percent of revenue, in the first quarter of 2011. Non-GAAP operating income was $63.0 million, or 42.7 percent of revenue, as compared to $53.0 million, or 43.1 percent of revenue, in the first quarter of 2011.
Mobile Solutions
First quarter 2012 Mobile Solutions revenue was $78.4 million, up 76 percent as compared to the first quarter of 2011, primarily due to the PeopleNet acquisition.
First quarter 2012 Mobile Solutions operating income was $7.4 million, or 9.4 percent of revenue, as compared to an operating loss of $1.3 million, or negative 3.0 percent of revenue, in the first quarter of 2011. Non-GAAP operating income was $8.2 million, or 10.4 percent of revenue, as compared to an operating loss of $338 thousand, or approximately break-even, in the first quarter of 2011. The improvement in non-GAAP operating margin was due to the PeopleNet acquisition and increased profitability from the base business.
Advanced Devices
First quarter 2012 Advanced Devices revenue was $27.5 million, up 3 percent as compared to the first quarter of 2011.
Operating income in Advanced Devices for the first quarter of 2012 was $3.3 million, or 12.1 percent of revenue, as compared to $3.9 million, or 14.4 percent of revenue, in the first quarter of 2011. Non-GAAP operating income in Advanced Devices was $4.0 million, or 14.4 percent of revenue, as compared to $4.5 million, or 16.9 percent of revenue, in the first quarter of 2011.
Use of Non-GAAP Financial Information
To help our investors understand our past financial performance and our future results, as well as our performance relative to competitors, we supplement the financial results that we provide in accordance with generally accepted accounting principles, or GAAP, with non-GAAP financial measures. These non-GAAP measures can be used to evaluate our historical and prospective financial performance, as well as our performance relative to competitors. Our management regularly uses our supplemental non-GAAP financial measures internally to understand, manage and evaluate our business, and to make operating decisions. These non-GAAP measures are among the primary factors management uses in planning for and forecasting future periods. We believe that these non-GAAP financial measures reflect an additional way of viewing aspects of our operations that, when viewed with our GAAP results, provide a more complete understanding of factors and trends affecting our business. Further, we believe some of our investors track our "core operating performance" as a means of evaluating our performance in the ordinary, ongoing, and customary course of our operations. Core operating performance excludes items that are non-cash, not expected to recur or not reflective of ongoing financial results. Management also believes that looking at our core operating performance provides a supplemental way to provide consistency in period to period comparisons.
The specific non-GAAP measures which we use along with a reconciliation to the nearest comparable GAAP measures and the explanation for why these non-GAAP measures provide useful information to investors regarding our financial condition and results of operations and why management chose to exclude selected items can be found at the end of this release. The method we use to produce non-GAAP results is not computed according to GAAP and may differ from the methods used by other companies. Our non-GAAP results are not meant to be considered in isolation or as a substitute for comparable GAAP measures and should be read only in conjunction with our consolidated financial statements prepared in accordance with GAAP. Investors are encouraged to review the reconciliation of our non-GAAP financial measures to the comparable GAAP results, which is attached to this 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 .
