Trimble(TRMB) - 2024 Q4 - Annual Report

Financial Performance - Total revenue for the first quarter of 2024 was $953.3 million, an increase of 4.3% compared to$ 915.4 million in the first quarter of 2023[14]. - Product revenue decreased to $367.1 million, down 15.4% from$ 434.4 million year-over-year, while subscription and services revenue increased to $586.2 million, up 21.9% from$ 481.0 million[14]. - Gross margin improved to $593.6 million, compared to$ 560.8 million in the same quarter last year[14]. - Operating income for the first quarter of 2024 was $109.2 million, a decrease of 20.3% from$ 137.0 million in the first quarter of 2023[14]. - Net income fell to $57.2 million, down 55.7% from$ 128.8 million year-over-year, resulting in earnings per share of $0.23[14]. - Cash flow from operating activities increased to$ 233.8 million in Q1 2024, compared to $208.7 million in Q1 2023[20]. - Basic and diluted earnings per share for Q1 2024 were both$ 0.23, down from $0.52 in Q1 2023, with net income decreasing to$ 57.2 million from $128.8 million[64]. Assets and Liabilities - Cash and cash equivalents increased to$ 255.1 million from $229.8 million at the end of 2023[12]. - Total assets decreased to$ 9,321.2 million from $9,539.3 million at the end of 2023[12]. - Total liabilities decreased to$ 4,972.1 million from $5,039.2 million at the end of 2023[12]. - The company’s cash and cash equivalents at the end of Q1 2024 were$ 261.6 million, down from $1,038.1 million at the end of Q1 2023[20]. - Total debt as of Q1 2024 was$ 3,030.3 million, slightly down from $3,066.6 million at year-end 2023[50]. - The company’s total liabilities held for sale decreased to$ 40.6 million in Q1 2024 from $48.3 million at year-end 2023, a decline of about 16.5%[42]. Investments and Acquisitions - The total purchase consideration for the acquisition of Transporeon GmbH was €1.9 billion ($ 2.1 billion), including the repayment of $339.6 million in outstanding debt[36]. - The company recorded$ 1,390.1 million of goodwill and $939.8 million of identifiable intangible assets from the Transporeon acquisition[36]. - The company completed the Ag divestiture on April 1, 2024, receiving$ 1.9 billion in cash proceeds, and recorded a pre-tax gain of $1.7 billion from this transaction[69][81]. - The company repaid$ 1.0 billion of its variable-rate debt using proceeds from the Ag divestiture, with an outstanding balance of $1.2 billion in variable-rate debt at the end of Q1 2024[71][85]. Revenue Segments - The AECO segment reported revenue of$ 339.1 million in Q1 2024, a 17.7% increase from $288.1 million in Q1 2023[49]. - The company’s North America segment generated$ 494.8 million in revenue for Q1 2024, compared to $481.8 million in Q1 2023, marking an increase of approximately 2.1%[49]. - T&L segment revenue grew by 32% to$ 195.0 million, driven by MAPS and Enterprise subscription revenue growth[107]. - Segment revenue for the first quarter of 2024 reached $953.3 million, up from$ 915.4 million in the first quarter of 2023, representing a growth of approximately 4.1%[47]. Recurring Revenue - The company is focused on increasing its mix of recurring revenue, which represented 73% of total revenue in Q1 2024, up from 66% in Q1 2023[76]. - Annualized recurring revenue (ARR) of $2,028.6 million, representing a year-over-year growth of 23% at the end of Q1 2024, with organic growth of 13% excluding foreign currency impacts, acquisitions, and divestitures[76]. - The ending balance of deferred revenue increased to$ 818.6 million in Q1 2024 from $760.8 million in Q1 2023, with billings net of revenue recognized at$ 356.4 million for Q1 2024[60]. Research and Development - The company plans to continue investing in research and development to introduce new products and enhance recurring revenue streams[5]. - Research and development expenses rose by 7% to $170.2 million, representing 17.9% of total revenue[94]. Tax and Interest - The effective income tax rate increased to 21.6% in Q1 2024 from 19.8% in Q1 2023, primarily due to a decreased tax benefit from foreign-derived intangible income[65]. - A hypothetical 50 basis point increase in interest rates on variable-rate debt would result in an increase of approximately$ 6.3 million in annual interest expense[136]. Operational Challenges - Macroeconomic conditions, including geopolitical tensions and inflationary pressures, are expected to continue impacting the company's results of operations[84]. - Material weaknesses in internal controls related to the business combination with Transporeon and IT general controls were identified, and remediation actions are currently being taken[142]. - The company is implementing a customer relationship management tool as a strategic initiative to replace legacy systems, which could materially affect internal control over financial reporting[145].