Trimble Reports Second Quarter 2007 Revenue Growth of 34 Percent

PRNewswire-FirstCall via COMTEX News Network/ -- Trimble (Nasdaq: TRMB) today announced results for its second quarter 2007, ended June 29, 2007. Revenue for the second quarter of 2007 was $327.7 million, up approximately 34 percent from revenue of $245.3 million in the second quarter of 2006.

Operating income for the second quarter of 2007 was $56.0 million, up 45 percent from the second quarter of 2006. Operating margins in the second quarter of 2007 were 17.1 percent, compared to 15.8 percent in the second quarter of 2006. It should be noted in year-over-year comparisons that amortization of intangibles increased from $3.7 million in the second quarter of 2006 to $10.4 million in the second quarter of 2007. Additionally, the impact of stock-based compensation expense was $3.8 million in the second quarter of 2007, compared to $3.3 million in the second quarter of 2006. In-process research and development expense was $1.0 million in the second quarter of 2006; there was no in-process research and development expense in the second quarter of 2007. Restructuring expense was $333 thousand in the second quarter of 2007; there was no restructuring expense in the second quarter of 2006. Excluding these impacts, non-GAAP operating income of $70.5 million grew by 51 percent compared to the second quarter of 2006. Non-GAAP operating income margins were 21.5 percent in the second quarter of 2007, up from 19.0 percent in the second quarter of 2006.

Net income for the second quarter of 2007 was up approximately 23 percent, to $35.0 million, compared to net income of $28.5 million in the second quarter of 2006. Diluted earnings per share for the second quarter of 2007 were $0.28, compared to diluted earnings per share of $0.25 in the second quarter of 2006. The tax rate for the second quarter of 2007 was 38 percent, compared to 31 percent in the second quarter of 2006. GAAP earnings per share in the second quarter of 2007 were negatively impacted by approximately $0.05 due to amortization of intangibles and by $0.02 due to stock-based compensation expense.

Adjusting for the amortization of intangibles, in-process research and development, restructuring, and the impact of stock-based compensation expenses, non-GAAP net income for the second quarter of 2007 was up 29 percent, to $44.1 million, compared to non-GAAP net income of $34.1 million in the second quarter of fiscal 2006. Non-GAAP earnings per share for the second quarter of 2007 were $0.35, up approximately 21 percent from non-GAAP earnings per share of $0.29 in the second quarter of 2006.

“Second quarter growth in revenue and profit was strong across all segments with some segments reflecting particularly strong international growth,” said Steven W. Berglund, Trimble’s president and chief executive officer. “The @Road transition continued as planned and produced meaningful earnings for the Mobile Solutions segment in the quarter. Overall market conditions continue to be positive.”

Trimble Results by Business Segment

Segment operating income is revenue less costs of goods sold and operating expenses, excluding general corporate expenses, amortization of intangibles, in-process research and development, and restructuring expenses. In addition, for each segment, non-GAAP operating income excludes the impact of stock-based compensation expense.

Engineering and Construction

Second quarter 2007 Engineering and Construction (E&C) revenue was $198.9 million, up approximately 18 percent when compared to revenue of $168.0 million in the second quarter of 2006. E&C revenue was driven by growth in most product categories and particularly strong international sales.

Operating income in E&C was $52.4 million, or 26.3 percent of revenue compared to $38.8 million, or 23.1 percent of revenue, in the second quarter of 2006.

Non-GAAP operating income in E&C was $53.2 million, or 26.7 percent of revenue, in the second quarter of 2007 compared to $39.9 million, or 23.7 percent of revenue, in the second quarter of 2006.

Field Solutions

Second quarter 2007 Field Solutions (TFS) revenue was $55.3 million, up 52 percent compared to $36.3 million in revenue in the second quarter of 2006. Revenue growth was driven by positive agricultural market conditions and robust new agriculture and GIS product sales.

Operating income in TFS was $18.4 million, or 33.3 percent of revenue, for the second quarter of 2007 compared to $11.3 million, or 31.1 percent of revenue, in the second quarter of 2006.

Non-GAAP operating income was $18.6 million, or 33.6 percent of revenue, for the second quarter of 2007 compared to $11.5 million, or 31.8 percent of revenue, in the second quarter of 2006.

Mobile Solutions

Second quarter 2007 Mobile Solutions revenue (TMS) was $40.9 million, up 176 percent from revenue of $14.9 million in the second quarter of 2006.

Operating income in TMS was $2.9 million, or 7.1 percent of revenue, for the second quarter of 2007 compared to $374 thousand, or 2.5 percent of revenue, in the second quarter of 2006.

Non-GAAP operating income in TMS was $4.4 million, or 10.8 percent of revenue, for the second quarter of 2007 compared to $538 thousand, or 3.6 percent of revenue, in the second quarter of 2006.

Advanced Devices

Second quarter 2007 Advanced Devices revenue was $32.7 million, up approximately 25 percent from revenue of $26.1 million in the second quarter of 2006 primarily due to strong sales of embedded products.

Operating income in Advanced Devices was $5.4 million, or 16.5 percent of revenue, for the second quarter of 2007 compared to $2.2 million, or 8.6 percent of revenue, in the second quarter of 2006.

Non-GAAP operating income in Advanced Devices was $5.7 million, or 17.4 percent of revenue, for the second quarter of 2007 compared to $2.7 million, or 10.4 percent of revenue, in the second quarter of 2006.

Use of Non-GAAP Financial Information

Our results of operations have undergone significant change primarily due to the impact of acquisitions and FAS 123(R). To help our readers understand our past financial performance and our future results, 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 and the explanation for why management chose to exclude selected items and the additional purposes for which these non-GAAP measures are used 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. Our management regularly uses our supplemental non-GAAP financial measures internally to understand, manage and evaluate our business and 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. Management generally compensates for the limitations in the use of non-GAAP financial measures by relying on comparable GAAP financial measures and providing investors with a reconciliation of the non- GAAP financial measure to the most directly comparable GAAP financial measure or measures. Investors are encouraged to review the reconciliation of our non-GAAP financial measures to the comparable GAAP results, which is attached to our quarterly earnings release and which can be found, along with other financial information, on the investor relations page of our Web site at http://www.investor.trimble.com.

Forward Looking Guidance

In the third quarter of 2007, Trimble expects revenue to grow 25 to 27 percent compared to the third quarter of 2006, with revenue between $294 million and $299 million. At a 38 percent tax rate, with approximately 125.1 million shares outstanding, Trimble expects third quarter 2007 GAAP earnings per share between $0.18 and $0.20.

Trimble expects third quarter 2007 non-GAAP earnings per share between $0.26 and $0.28, compared to actual split-adjusted non-GAAP earnings per share of $0.25 in the third quarter of 2006. Non-GAAP guidance for the third quarter of 2007 uses a 38 percent tax rate and excludes the amortization of intangibles of $10.5 million related to previous acquisitions, and the anticipated impact of stock-based compensation expense of $4.5 million.

Investor Conference Call / Webcast Details

Trimble will hold a conference call on July 31, 2007 at 1:30 p.m. PDT to review its second quarter 2007 results. It will be broadcast live on the Web at http://investor.trimble.com. Investors without Internet access may dial into the call at (800) 528-9198 (U.S.) or (706) 634-6089 (international). A replay of the call will be available for seven days at (800) 642-1687 (U.S.) or ((706) 645-9291 (international) and the passcode is 4917771. The replay will also be available on the Web at the address above.