Trimble First Quarter 2017 Results Summary Forward-looking - - PowerPoint PPT Presentation

Trimble First Quarter 2017 Results Summary

Certain statements made in this presentation and any subsequent Q&A period are forward -looking statements, within the meaning

• f Section 21E of the Securities Exchange Act of 1934, as amended, and are made pursuant to the safe harbor provisions of the

Securities Litigation Reform Act of 1995. These statements include expectations for future financial market and economic cond itions, the impact of acquisitions, the ability to deliver revenue, earnings per share and other financial projections. These forward -looking statements are subject to change, and actual results may materially differ from those set forth in this presentation due to c ertain risks and uncertainties. The Company’s results may be adversely affected if the Company is unable to market, manufacture and ship new products, obtain new customers, or integrate new acquisitions. The Company’s results could be negatively impacted by weakening in the macro economic environment, or foreign exchange fluctuations or the imposition of barriers to international trade. Any failure to achieve predicted results could negatively impact the Company’s revenues, cash flow from operations, and other financial results. The Company’s financial results will also depend on a number of other factors and risks detailed from time to time in reports filed with the SEC, including its quarterly reports on Form 10-Q and its annual report on Form 10- K, such as changes in economic conditions, further worsening in the geospatial market, critical part supply chain shortages, and possible write-offs of

• goodwill. Undue reliance should not be placed on any forward-looking statement contained herein, especially in light of greater

uncertainty than normal in the economy in general. These statements reflect the Company’s position as of the date of this

• presentation. The Company expressly disclaims any undertaking to release publicly any updates or revisions to any statements to

reflect any change in the Company’s expectations or any change of events, conditions, or circumstances on which any such statement is based. To help our investors understand our past financial performance and our future results, as well as our performance relative t o competitors, 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 can be found on our website at http://investor.trimble.com.

Forward-looking statements

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Agenda

▪ CEO Overview ▪ CFO Review of Results ▪ Guidance ▪ Q&A

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First Quarter 2017 Overview

▪ Accelerating revenue growth and continued operating margin expansion ▪ International market growth outpaced North American growth ▪ Operating margin expansion demonstrates benefits of cost reduction, gross margin expansion and portfolio initiatives ▪ Continue to see path for revenue growth and margin expansion in Q2’17 and remainder of 2017 ▪ Technological innovation and customer wins strengthening competitive position ▪ Completed re-segmentation

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First Quarter Fiscal 2017 Financial Summary

▪ Revenue: +5% yr:yr

– Currency translation ≈ -1% – Acquisitions/divestitures ≈ -0.5%

▪ Non-GAAP Operating Income % up 270 bps yr:yr ▪ Non-GAAP EPS of $0.33, up $0.08 yr:yr ▪ Deferred Revenue at $337M, up 5% yr:yr ▪ Operating Cash Flow of $102.9M, down 10% yr:yr ▪ Share repurchase of 0.5 million shares for $14M

$M, Except Per Share First Quarter of

2016 2017 Revenue $583.0 $613.9 Non-GAAP Gross Margin % of Revenue 55.9% 56.5% Non-GAAP Operating Income $88.5 $109.2 Non-GAAP Operating Income % of Revenue 15.1% 17.8% Non-GAAP Net Income $64.5 $84.8 Non-GAAP Diluted Earnings Per Share $0.25 $0.33

Note: Investors are encouraged to review the reconciliation of our non-GAAP financial measures to the comparable GAAP results, which is attached to the 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.

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Financial Position

▪ Cash at $423M, up $248M yr:yr, up $95M qtr:qtr ▪ Deferred Revenue up 5% yr:yr ▪ Cash Flow from Operations down 10% yr:yr driven by timing of working capital requirements ▪ 0.5 million shares repurchased for $14M during quarter with $116M remaining capacity under existing program as of the end of Q1’17

$M First Quarter of 2016 2017 Balance Sheet Highlights: Cash and Short-Term Investments $174.7 $422.6 Total Assets $3,749.9 $3,897.4 Deferred Revenue $319.5 $337.0 Total Debt $674.9 $648.1 Stockholders Equity $2,286.7 $2,420.9 Diluted Shares Outstanding 254.0 255.9 Cash Flow Highlights: Cash Flow from Operations $114.4 $102.9 Share Repurchases $12.2 $14.2

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Re-segmentation Overview

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Re-segmentation Overview (cont.)

▪ Engineering & Construction

– Includes: surveying & geospatial, civil engineering & construction, building construction, mining, rail

▪ Field Solutions

– Includes: agriculture, geographic information systems (GIS), water and electric utilities

▪ Mobile Solutions

– Includes: transportation and logistics, field service management, forestry

▪ Advanced Devices

– Includes: embedded technologies, timing, Applanix (inertial), military

Prior Reporting Segments New Reporting Segments ▪ Buildings & Infrastructure

– Includes: building construction, civil engineering & construction

▪ Geospatial

– Includes: surveying & geospatial, geographic information systems (GIS), timing, Applanix (inertial)

▪ Resources & Utilities

– Includes: agriculture, water and electric utilities, forestry, mining

▪ Transportation

– Includes: transportation and logistics, field service management, embedded technologies, rail, military

31% 27% 17% 25% Buildings and Infrastructure Geospatial Resources and Utilities Transportation 55% 24% 15% 6%

Engineering & Construction Mobile Solutions Field Solutions Advanced Devices

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FY 2016 Revenue FY 2016 Revenue

Buildings and Infrastructure Segment Results

Q1’16 Q1’17 Revenue $174 $188 % Growth 8% Operating Income $22 $33 % of Revenue 12.9% 17.4% Delta +450bps % Growth 46%

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Q1’17 commentary

▪ Revenue: +8%

– Currency translation: ≈ -2%; acquisitions/divestitures: ≈ 0% – Revenue growth in both buildings and civil engineering & construction

▪ Operating margins

– Up ≈450 bps yr:yr, due to gross margin improvement and strong cost control

▪ Selected highlights

– Growth in architecture and design business, as well as in BIM software for structural and MEP trades – Growth in real estate and space (Manhattan Software) – Conexpo 2017 highlighted new product introductions in our civil engineering and construction business; including next generation Trimble Earthworks platform – Continued expansion of OEM relationships with Hitachi, Kobelco, Sumitomo, K-tec and Yutong – Divestment of non-core crane lifting system business

Geospatial Segment Results

Q1’16 Q1’17 Revenue $152 $150 % Growth

• 2%

Operating Income $26 $28 % of Revenue 17.1% 18.6% Delta +150bps % Growth 7%

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Q1’17 commentary

▪ Revenue: -2%

– Currency translation: ≈ -1%; acquisitions/divestitures: ≈ -3% – Revenue growth in Trimble branded survey and geospatial (excluding impact of divestitures). Revenue growth in inertial and OEM businesses. Revenue decline in GIS.

▪ Operating margins

– Up ≈150 basis points yr:yr, driven by improved gross margins and cost control

▪ Selected highlights

– Strong backlog for SX10, which combines imaging, survey & 3D scanning into single unit for the geospatial market – Growth in North American market revenue (excluding impact of divestitures) – Growth in inertial technologies used in georeferencing applications such as autonomy – Divestment of ThingMagic, Advanced Public Safety and Gatewing contributed to revenue decline

Resources and Utilities Segment Results

Q1’16 Q1’17 Revenue $114 $120 % Growth 5% Operating Income $35 $42 % of Revenue 30.7% 35.2% Delta +450bps % Growth 21%

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Q1’17 commentary

▪ Revenue: +5%

– Currency translation: ≈ -1%; acquisitions/divestitures: ≈ 0% – Revenue growth in agriculture, correction services, forestry

▪ Operating margins

– Up ≈450 bps, driven primarily by gross margin expansion as well as cost control

▪ Selected highlights

– Growth in North American agriculture business – Growth outside of North American agriculture markets continues to provide attractive market penetration opportunity – Growth with OEM partners in agriculture – New market opportunity with Valley Irrigation for pivot irrigation – Correction services business leverages unique Trimble IP to provide precision location services – Forestry business completed three acquisitions since January to extend Connected Forest solution capabilities across the forestry continuum

Transportation Segment Results

Q1’16 Q1’17 Revenue $143 $156 % Growth 9% Operating Income $24 $25 % of Revenue 16.6% 15.9% Delta

• 70bps

% Growth 4%

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Q1’17 commentary

▪ Revenue: +9%

– Currency translation: ≈ -1%; acquisitions/divestitures: ≈ +1% – Double digit growth in core transportation and logistics business, offset by revenue decline in field services management (FSM)

▪ Operating margins

– Down ≈70bps, driven by customer and product mix as well as slightly higher operating expenses

▪ Selected highlights

– Electronic Logging Device (ELD) mandate continues to provide growth tailwinds – Adjacent opportunities such as video continue to contribute to top-line growth – Growth in Europe and India telematics businesses – Mapping and navigation software business (ALK) continues multi-year growth trajectory – Conversion to SaaS in transportation management software business (TMW) impacting revenue growth

Revenue by Region

% of Total Q1’16 Q1’17 Yr:Yr Quarterly % Change North America 54% 53% 3% Europe 26% 26% 5% Asia-Pacific 14% 14% 6% Rest of World 6% 7% 27% Total 100% 100% 5%

Note: Figures may vary due to rounding.

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Software/Recurring Revenue Mix

▪ Software/services/recurring revenue greater than $1.1B over trailing twelve months ▪ Recurring revenues grew at twice the rate of overall company revenue growth over trailing twelve months ▪ Subscription revenue grew at 16% in Q1’17, reflecting an ongoing evolution toward SaaS offerings

TTM refers to trailing twelve months Note: Recurring revenue includes subscription, maintenance, and support revenue

≈48% ≈48% TTM Q1'16 TTM Q1'17

Software/Services/Recurring % of Total

≈27% ≈29% TTM Q1'16 TTM Q1'17

Recurring Revenue % of Total

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Trimble Forestry: Building the Connected Forest

• Savcor: Provider of forestry solutions for performance optimization

and enterprise management. Worldwide operations with headquarters in Finland and offices in Germany and Brazil.

• Silvadata: Producer of cloud-based data, collaboration and workflow

automation services for small to medium sized forestry companies. Headquarters in Finland.

• BOS Forestry: Innovative digital log trade platform and wood supply

software applications. Headquarters in British Columbia, Canada. Acquisition Overview Trimble Forestry Capabilities Strategic Rationale Solutions Overview

• Combined solutions allow Trimble Forestry to deploy and support a forest fiber

ecosystem, with an integrated offering and end-to-end visibility across the entire supply chain.

• Expanded Trimble Connected Forest portfolio to mills, processing, and finished

goods technology solutions.

• Increased Trimble Forestry market reach across Europe and Latin America.
• Enhanced small/medium business and enterprise SaaS offerings.
• With the acquisitions, Trimble provides the most comprehensive solution

available to address a complete end-to-end ecosystem for forest management, traceability and timber processing.

• Trimble’s Connected Forest portfolio manages the lifecycle of the

forestry supply chain. * Denotes Acquisition Additions Supply chain visibility, load ticket sharing and reconciliation, and supply chain monitoring. Procurement and forest management plus process diagnostics and

• perational efficiency.

Planning, managing, and contracting through the lifecycle of the forest. * SAAS * TRADE PORTAL

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Q2’17 Guidance and Outlook

▪ Q2’17 guidance:

– Revenue: $625M to $655M – Non-GAAP EPS: $0.33 to $0.38

▪ Non-GAAP EPS guidance excludes the following estimates:

– $35M of intangibles amortization related to prior acquisitions – $3M of estimated acquisition costs – $15M of estimated stock-based compensation – $2M of estimated restructuring expenses

▪ Non-GAAP EPS guidance assumes:

– Approx. 257M shares outstanding – 23% non-GAAP tax rate

Note: Investors are encouraged to review the reconciliation of our non-GAAP financial measures to the comparable GAAP results, which is attached to the 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.

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Q&A

Appendix

Revenue by Prior Reporting Segments

$M First Quarter of 2016 2017 % Change Engineering and Construction $309.8 $327.3 5.6% Field Solutions $106.0 $106.9 0.8% Mobile Solutions $136.3 $145.4 6.7% Advanced Devices $30.9 $34.3 11.0%

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