Trimble(TRMB) - 2024 Q3 - Quarterly Results

Financial & Operational Highlights Trimble reported a Q3 2024 revenue decline but achieved organic growth, record recurring revenue, and record gross margin, reflecting strategic transformation Q3 2024 Key Financial Metrics (in millions) | Metric | Value | Change (YoY) | | :--- | :--- | :--- | | Revenue | $875.8 | -9% | | Organic Revenue | N/A | +3% | | Annualized Recurring Revenue (ARR) | $2.19 billion | +13% | | Organic ARR | N/A | +14% | | GAAP Operating Income | $116.4 | -4.0% | | Non-GAAP Operating Income | $224.8 | -10.4% | | GAAP Diluted EPS | $0.16 | -46.7% | | Non-GAAP Diluted EPS | $0.70 | +2.9% | | Adjusted EBITDA | $237.4 | -11.5% | - The company achieved record annualized recurring revenue (ARR) and record gross margin, demonstrating progress in its business transformation and a favorable mix shift[1][3] - Trimble continues to simplify and focus its business through its Connect & Scale strategy, highlighted by the recently announced divestiture of the Mobility division[1][3] Business Outlook Trimble has raised its full-year 2024 guidance and provided specific revenue and earnings per share targets for the fourth quarter, reflecting the impact of the AGCO joint venture Full-Year 2024 Guidance (in millions) | Metric | Low End | High End | | :--- | :--- | :--- | | Revenue | $3,625 | $3,665 | | GAAP EPS | $6.25 | $6.32 | | Non-GAAP EPS | $2.79 | $2.87 | Fourth Quarter 2024 Guidance (in millions) | Metric | Low End | High End | | :--- | :--- | :--- | | Revenue | $925 | $965 | | GAAP EPS | $0.52 | $0.61 | | Non-GAAP EPS | $0.83 | $0.91 | Consolidated Financial Statements This section provides the unaudited consolidated financial statements for Q3 and the first nine months of 2024, highlighting revenue trends, divestiture gains, and changes in cash and debt positions Condensed Consolidated Statements of Income The income statement highlights a decrease in quarterly revenue and a significant increase in nine-month net income due to divestiture gains Q3 2024 vs Q3 2023 Income Statement Highlights (in millions) | Metric | Q3 2024 | Q3 2023 | | :--- | :--- | :--- | | Total Revenue | $875.8 | $957.3 | | Gross Margin | $575.6 | $590.2 | | Operating Income | $116.4 | $121.3 | | Net Income | $40.6 | $74.9 | | Diluted EPS | $0.16 | $0.30 | - The decline in total revenue was driven by a decrease in Product revenue ($307.6 million vs $444.0 million YoY), which was partially offset by growth in Subscription and services revenue ($568.2 million vs $513.3 million YoY)[8] - For the first three quarters of 2024, net income surged to $1,414.2 million from $248.3 million in the prior year, primarily due to a $1,695.0 million net gain on divestitures[8] Condensed Consolidated Balance Sheets The balance sheet reflects a substantial improvement in cash position and a significant reduction in total debt compared to year-end 2023 Balance Sheet Highlights (in millions) | Account | Q3 2024 | Year-End 2023 | | :--- | :--- | :--- | | Cash and cash equivalents | $1,036.9 | $229.8 | | Total Assets | $9,866.7 | $9,539.3 | | Total Debt (Short & Long-term) | $1,790.2 | $3,066.6 | | Total Liabilities | $3,991.6 | $5,039.2 | | Total Stockholders' Equity | $5,875.1 | $4,500.1 | - The company's cash position significantly improved, while total debt was substantially reduced compared to the end of 2023[9] Condensed Consolidated Statements of Cash Flows The cash flow statement details cash movements from operating, investing, and financing activities, highlighting the impact of divestiture proceeds and debt repayments Cash Flow Summary - First Three Quarters (in millions) | Activity | 2024 | 2023 | | :--- | :--- | :--- | | Net cash provided by operating activities | $416.3 | $498.2 | | Net cash provided by (used in) investing activities | $1,860.0 | $(2,064.4) | | Net cash (used in) provided by financing activities | $(1,463.7) | $1,520.7 | - Cash from investing activities was strongly positive in the first nine months of 2024 due to $1.92 billion in proceeds from divestitures[10] - Financing activities used $1.46 billion in cash, primarily for payments on debt ($1.80 billion) and stock repurchases ($175.0 million)[10] Segment Performance In Q3 2024, AECO and T&L segments reported revenue growth, while the Field Systems segment experienced a significant revenue decline, impacting overall results Q3 Segment Revenue and Operating Income (in millions) | Segment | Revenue Q3 2024 | Revenue Q3 2023 | Operating Income Q3 2024 | Operating Income Q3 2023 | | :--- | :--- | :--- | :--- | :--- | | AECO | $306.0 | $269.6 | $89.0 | $77.8 | | Field Systems | $374.6 | $495.4 | $123.7 | $165.0 | | T&L | $195.2 | $192.3 | $41.0 | $33.6 | - The Field Systems segment saw a substantial decrease in revenue by 24.4% year-over-year[11] - The AECO segment demonstrated strong performance with a 13.5% increase in revenue and a 14.4% increase in operating income year-over-year[11] Reconciliation of GAAP to Non-GAAP Financial Measures This section details adjustments to derive non-GAAP figures from GAAP, including amortization, stock-based compensation, and acquisition/divestiture items, resulting in adjusted operating income and EPS Q3 2024 GAAP to Non-GAAP Reconciliation Highlights (in millions) | Metric | GAAP | Adjustments | Non-GAAP | | :--- | :--- | :--- | :--- | | Gross Margin | $575.6 | $24.0 | $599.6 | | Operating Income | $116.4 | $108.4 | $224.8 | | Net Income | $40.6 | $131.3 | $171.9 | Q3 2024 GAAP to Non-GAAP Diluted EPS Reconciliation | Metric | Value | | :--- | :--- | | GAAP Diluted EPS | $0.16 | | Adjustments | $0.54 | | Non-GAAP Diluted EPS | $0.70 | Q3 2024 Adjusted EBITDA Calculation (in millions) | Metric | Value | | :--- | :--- | | GAAP Operating Income | $116.4 | | Non-GAAP Adjustments | $108.4 | | Depreciation & Amortization | $11.8 | | Income from equity investments, net | $0.8 | | Adjusted EBITDA | $237.4 | Definitions of Non-GAAP Measures and Other Key Metrics Trimble defines non-GAAP measures to reflect core operating performance by excluding non-cash and non-recurring items, alongside key metrics like ARR and Organic Revenue for clearer business trends - Non-GAAP measures exclude items such as amortization of purchased intangibles, acquisition/divestiture costs, stock-based compensation, and restructuring costs to better reflect ongoing financial results[16][25] - Adjusted EBITDA is defined as non-GAAP operating income plus depreciation, cloud computing amortization, and income from equity method investments, providing a view of operational performance without the impact of capital structure and certain non-cash expenses[24] - Annualized Recurring Revenue (ARR) is a key performance indicator representing the estimated annualized value of current recurring revenue contracts from subscriptions, maintenance, and term licenses[27] - Organic Revenue and Organic ARR are metrics that exclude the impacts of foreign currency translation and acquisitions/divestitures from the prior 12 months to show underlying business growth[28][29]