GAAP operating income for the second quarter of 2012 was $58.9 million, up 14 percent as compared to the second quarter of 2011. GAAP operating margin in the second quarter of 2012 was 11.4 percent of revenue as compared to 12.7 percent of revenue in the second quarter of 2011, down due to expenses related to acquisitions.
GAAP net income for the second quarter of 2012 was $53.7 million, flat as compared to the second quarter of 2011. Diluted earnings per share in the second quarter of 2012 were $0.42 as compared to diluted earnings per share of $0.43 in the second quarter of 2011. The tax rate for both GAAP and non-GAAP results was 16 percent for the second quarter of 2012 as compared to 10 percent in the second quarter of 2011, due primarily to the geographical mix of revenue and the failure to date by the federal government to reinstate the federal R&D tax credit for 2012.
Second quarter 2012 non-GAAP operating income of $105.2 million was up 31 percent as compared to the second quarter of 2011. Non-GAAP operating margin was 20.3 percent of revenue as compared to 19.7 percent of revenue in the second quarter of 2011.
Non-GAAP net income of $92.1 million for the second quarter of 2012 was up 23 percent as compared to the second quarter of 2011. Diluted non-GAAP earnings per share in the second quarter of 2012 were $0.72 as compared to diluted non-GAAP earnings per share of $0.60 in the second quarter of 2011.
Second quarter 2012 non-GAAP results are adjusted for the following:
- Restructuring expense of $1.1 million as compared to $550 thousand in the second quarter of 2011;
- Amortization of intangibles of $29.1 million as compared to $16.6 million in the second quarter of 2011;
- Stock-based compensation expense of $8.2 million as compared to $7.1 million in the second quarter of 2011;
- Acquisition-related inventory step-up charge of $122 thousand as compared to $1.2 million in the second quarter of 2011;
- Acquisition-related costs of $7.3 million as compared to $3.7 million in the second quarter of 2011;
- In the second quarter of 2012 there was no write-off of debt issuance cost on a terminated credit facility as compared to $377 thousand in the second quarter of 2011 and;
- In the second quarter of 2012 there was no gain on foreign currency exchange from a hedge associated with an acquisition as compared to a gain of $5.6 million in the second quarter of 2011.
"Trimble continues to demonstrate strong growth despite European uncertainties, North American drought and unfavorable exchange rates. While year to year revenue growth was reinforced by acquisitions, underlying organic growth continues to be robust," said Steven W. Berglund, Trimble's president and chief executive officer. "We remain mindful of the ongoing exposure of the worldwide economy to European centered uncertainty. Nonetheless, we currently see growth opportunities in all other regions and in most elements of our product portfolio."
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)
Second quarter 2012 E&C revenue was $284.2 million, up 20 percent as compared to the second quarter of 2011. This growth was driven primarily by strong sales of machine control and building information modeling (BIM) products across most geographies and acquisitions, partially offset by the impact of foreign exchange.
Second quarter operating income in E&C was $59.5 million, or 20.9 percent of revenue as compared to $47.0 million, or 19.9 percent of revenue in the second quarter of 2011. Non-GAAP operating income was $62.8 million, or 22.1 percent of revenue, as compared to $49.4 million, or 20.9 percent of revenue, in the second quarter of 2011. The improvement in operating income was due to higher gross margins and operating leverage.
Field Solutions
Second quarter 2012 Field Solutions revenue was $123.4 million, up 19 percent as compared to the second quarter of 2011 due primarily to increased sales of agricultural products and acquisitions, partially offset by the impact of foreign exchange.
Second quarter 2012 Field Solutions operating income was $46.6 million, or 37.8 percent of revenue, as compared to $42.5 million, or 40.9 percent of revenue, in the second quarter of 2011. Non-GAAP operating income was $47.3 million, or 38.3 percent of revenue, as compared to $43.1 million, or 41.4 percent of revenue, in the second quarter of 2011, down primarily due to the impact of acquisitions.
Mobile Solutions
Second quarter 2012 Mobile Solutions revenue was $81.4 million, up 102 percent as compared to the second quarter of 2011, primarily due to the PeopleNet acquisition and double-digit growth in the base business.
Second quarter 2012 Mobile Solutions operating income was $5.6 million, or 6.9 percent of revenue, as compared to an operating loss of $2.7 million in the second quarter of 2011. Non-GAAP operating income was $5.9 million, or 7.2 percent of revenue, as compared to an operating loss of $1.9 million in the second quarter of 2011. The improvement in non-GAAP operating margin was due primarily to operating leverage on higher revenue.
Advanced Devices
Second quarter 2012 Advanced Devices revenue was $28.6 million, up 9 percent as compared to the second quarter of 2011, primarily due to strong sales of timing devices.
Operating income in Advanced Devices for the second quarter of 2012 was $3.9 million, or 13.7 percent of revenue, as compared to $2.6 million, or 9.9 percent of revenue, in the second quarter of 2011. Non-GAAP operating income in Advanced Devices was $4.5 million, or 15.6 percent of revenue, as compared to $3.3 million, or 12.5 percent of revenue, in the second quarter of 2011. The improvement in non-GAAP operating margins was due to product mix.
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 .
