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

Trimble Third 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, whether the positive trend in financial results will continue into 2018, the impact of acquisitions, the ability to deliver revenue, earnings per share and other financial projections that Trimble has guided for the fourth quarter of 2017, including the expected tax rate, anticipated impact of stock-based compensation expense, amortization of intangibles related to previous acquisitions, anticipated acquisition costs, restructuring charges, and the anticipated number of diluted shares outstanding. These forward- looking statements are subject to change, and actual results may materially differ due to certain 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 would also be negatively impacted by adverse geopolitical developments, weakening in the macro environment, foreign exchange fluctuations, critical part supply chain shortages, 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

• ther 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. Undue reliance should not be placed on any forward-looking statement contained herein. 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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Third Quarter 2017 Overview

▪ Accelerating revenue growth, supporting ongoing investment in the businesses ▪ Growth in all reporting segments and major geographies ▪ Operating margin expansion on an organic basis, offset by acquisition effects ▪ Technological innovation and customer wins strengthening competitive position ▪ Two acquisitions (Müller and 10-4 Systems) closed in Q3. Total of eight acquisitions announced since January 2017

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Third Quarter Fiscal 2017 Financial Summary

▪ Revenue: +14.7% yr:yr

– Currency translation ≈ +1% – Acquisitions/divestitures ≈ +3%

▪ Non-GAAP Gross Margin % down 80 bps yr:yr, driven by recent M&A; organic Gross Margins flat yr:yr ▪ Non-GAAP Operating Income % down 60 bps yr:yr, driven by recent M&A; organic margins expanded yr:yr ▪ Non-GAAP EPS of $0.39, up 18% yr:yr

$M, Except Per Share Third Quarter of

2016 2017 Revenue $584.1 $670.0 Non-GAAP Gross Margin % of Revenue 56.9% 56.1% Non-GAAP Operating Income $110.8 $123.6 Non-GAAP Operating Income % of Revenue 19.0% 18.4% Non-GAAP Net Income $84.0 $99.6 Non-GAAP Diluted Earnings Per Share $0.33 $0.39

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 and Short-Term Investments up $134M yr:yr, with >90% held by non-U.S. subsidiaries ▪ Deferred Revenue up 11% yr:yr, driven by growth in software and recurring revenue streams ▪ Cash Flow from Operations down 33% yr:yr driven by inventory requirements associated with revenue growth; trailing twelve month cash flow from

• perations up 19% yr:yr

▪ 2.4 million shares repurchased for $91M[1] with $19M remaining capacity under existing program as of the end of Q3’17 ▪ Total Debt to TTM EBITDA[2] of 1.4x, providing flexibility

$M Third Quarter of 2016 2017 Balance Sheet Highlights: Cash and Short-Term Investments $275.6 $409.2 Total Assets $3,731.4 $4,180.7 Deferred Revenue $294.3 $326.7 Total Debt $669.8 $695.8 Stockholders Equity $2,319.7 $2,557.4 Diluted Shares Outstanding 253.2 257.9 Cash Flow Highlights: Cash Flow from Operations $91.4 $61.3 Share Repurchases[1] $13.9 $91.1

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1. Includes $7 million associated with the repurchase of 0.2 million shares that were traded, but not settled, at the end of Q2’17. 2. TTM EBITDA refers to the sum of trailing twelve months non-GAAP operating income plus depreciation.

Transportation Segment Results

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▪ Revenue: +16%

– Currency translation: ≈ +1%; acquisitions: ≈ +4% – Double digit growth in transportation and logistics business

▪ Operating income

– Operating income up 18%. Operating margins up ≈ 20 bps; driven by operating leverage,

• ffset by acquisitions

▪ Selected highlights

– Electronic Logging Device (ELD) mandate continues to provide growth tailwinds in mobility business – Between December 2017 and December 2019, ELD mandate enters next phase of conversions from Automatic On Board Recording Devices (AOBRD) to ELD compliant devices – Growth in Europe and adjacent opportunities such as OEMs and video contributed to top- line growth – Investing in innovation such as Trimble freight cloud and Blockchain – Connected Rail: investments and acquisitions in rail industry provide unique customer

• ffering

– 3 of 8 acquisitions announced in 2017 are in Transportation segment

▪ 10-4 Systems closed in Q3 Q3’16 Q3’17 Revenue $147.4 $171.4 % Growth +16% Operating Income $26.5 $31.2 % of Revenue 18.0% 18.2% Delta +20bps % Growth +18%

Connected Rail

Resources and Utilities Segment Results

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▪ Revenue: +31%

– Currency translation: ≈ +2%; acquisitions/divestitures: ≈ +18% – Revenue growth in agriculture, correction services, and forestry; M&A growth driven primarily by Müller

▪ Operating income

– Operating income up 5%. Operating margins down ≈ 560 bps, driven by recent

• acquisitions. Organic margins up

▪ Selected highlights

– Growth in North American agriculture business – Agriculture markets outside of North American continue to provide attractive market penetration opportunities – Growth in correction services business, which leverages unique Trimble IP to provide precision location services – Connected Forest: investments and acquisitions in forestry industry provide unique customer offering – 5 of 8 acquisitions announced in 2017 are in Resources & Utilities segment

▪ Müller closed in Q3

Q3’16 Q3’17 Revenue $87.5 $114.4 % Growth +31% Operating Income $25.2 $26.5 % of Revenue 28.8% 23.2% Delta

• 560bps

% Growth +5%

Connected Forest

Geospatial Segment Results

Q3’16 Q3’17 Revenue $159.9 $169.7 % Growth +6% Operating Income $35.3 $36.7 % of Revenue 22.1% 21.6% Delta

• 50bps

% Growth +4%

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▪ Revenue: +6%

– Currency translation: ≈ +1%; acquisitions/divestitures: ≈ -2% – Revenue growth in numerous businesses across segment

▪ Operating income

– Operating income up 4%. Operating margins down ≈ 50 basis points yr:yr, revenue and gross margin expansion offset by product mix and trade show costs

▪ Selected highlights

– Strong backlog continues for SX10, which combines imaging, survey & 3D scanning into single unit for the geospatial market – Launch of next generation mechanical total stations – Improved North American revenue – Component technologies for emerging 5G telecommunications infrastructure

Buildings and Infrastructure Segment Results

Q3’16 Q3’17 Revenue $189.3 $214.5 % Growth +13% Operating Income $40.9 $52.2 % of Revenue 21.6% 24.3% Delta +270bps % Growth +28%

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▪ Revenue: +13%

– Currency translation: ≈ +1%; acquisitions: ≈ +1% – Double digit growth in civil engineering & construction and building construction

▪ Operating income

– Operating income up 28%. Operating margins up ≈270 bps yr:yr, driven by revenue growth, gross margin expansion and operating leverage

▪ Selected highlights

– Revenue growth in all major regions – Solutions highlights:

▪ Earthworks Excavator automatics driving demand in machine control and guidance ▪ Quarry operations management portal (SaaS) monitors material flows and equipment productivity to optimize performance site-wide (extraction, processing and load-out) ▪ Pre-cast concrete design and engineering software expanding coverage of structural trades in building construction

– Operating leverage based on revenue growth with targeted investment

Trimble Constructible Model

Plates, bolts & welds Layout points Bolts Rebar Mechanical and electrical Embeds

Trimble Construction: Utilizing Trimble Technology on the Trimble Colorado, USA Building Expansion

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Building Construction Solutions GeoSpatial Solutions Civil Engineering & Construction Solutions

• Trimble Business Center - HCE
• Trimble Connected Community
• Trimble VisionLink
• Trimble GNSS Systems
• Trimble Grade Control Systems
• Trimble Compaction Control Systems
• Trimble Paving Control Systems
• Trimble UAV Imaging & Photogrammetry

Architecture, Logistics, & Detailing:

• Trimble SketchUp

Structural Engineering and Construction Models:

• Trimble Tekla Structures

General Contractors & Trade Partners

• Trimble GC Estimating Solutions
• Trimble ProjectSight
• Trimble CrewSight
• Trimble LeanSight
• Trimble Field Link & Tablets
• Trimble Robotic Positioning

MEP Trade Partners

• Trimble AutoBid Mechanical & Sheet Metal
• Trimble Accubid Electrical Estimating
• Trimble Live Count Cloud & Trade Service
• Trimble Robotic Total Stations & GNSS
• Trimble Field Link & Tablets
• Trimble SysQue

Real Estate & Workplace Solutions

• Trimble Manhattan Space Management
• Trimble Mixed Reality Platforms
• Trimble Business Center
• Trimble Access on TSC3 Controllers
• Trimble GNSS Base & Rover Systems
• Trimble S5 & S7 Robotic Total Stations
• Trimble SX10 Scanning Total Stations
• Trimble TX8 Laser Scanners
• Trimble RealWorks
• Spectra Lasers

Revenue by Region

% of Total Q3’16 Q3’17 Yr:Yr Quarterly % Change North America 55% 54% 13% Europe 22% 24% 27% Asia-Pacific 15% 15% 7% Rest of World 8% 7% 6% Total 100% 100% 15%

Note: Figures may vary due to rounding.

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Software/Recurring Revenue Mix

▪ Software/services/recurring revenue approximately $1.2B over trailing twelve months ▪ Steady revenue mix percentages reflect growth in both hardware and software/services/recurring revenues ▪ Recurring revenues grew at high single digit rate on a trailing twelve month year over year basis ▪ Subscription revenue grew at 16.3% in Q3’17, reflecting an ongoing evolution toward SaaS offerings

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

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≈47% ≈47% TTM Q3'16 TTM Q3'17

Software/Services/Recurring % of Total

≈28% ≈28% TTM Q3'16 TTM Q3'17

Recurring Revenue % of Total

Recent Acquisitions

Description Rationale Company Date Segment

• Manufactures vision-based automatic wayside inspection systems

for railroad industry, providing detailed condition assessment of train components

• Extends ability to deliver more powerful and robust rail

solutions as well as leverage Trimble's technology portfolio to strengthen solutions Feb-17

Transportation

• Provides information and online process diagnostic solutions for

forestry processing and production planning

• Build upon strategy to provide global customers with

complete end-to-end ecosystem for forest management, traceability and timber processing Mar-17

Resources & Utilities

• Provides cloud-based data, collaboration & workflow automation

services to small- and medium-sized forestry companies for lifecycle enterprise management

• Build upon strategy to provide global customers with

complete end-to-end ecosystem for forest management, traceability and timber processing Feb-17

Resources & Utilities

• Provides collaboration, harvesting, production and lumber sale

solutions for small- and medium-sized forestry companies

• Build upon strategy to provide global customers with

complete end-to-end ecosystem for forest management, traceability and timber processing Apr-17

Resources & Utilities

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• Provides data capture, modeling, engineering and analytical

services and 3D visualization solutions provider for electricity network operators

• Expands Trimble's energy solutions portfolio to provide high-

value data modeling and 3D visualization services for the utilities industry May-17

Resources & Utilities

• Provides implement control and precision farming solutions,

including electronic control units that enable variable-rate technology in precision agriculture

• Build upon strategy to expand our role in the growing market

for variable rate applications and precision agriculture Jul-17

Resources & Utilities

• Provides ELD as a service technology to end users and partners
• Capture smaller-end of trucking fleet market and add domain

rich developers to transportation franchise Jun-17

Transportation

• Provides multimodal shipment visibility solutions and related

technologies for shippers and transportation providers

• Build upon strategy to transform the way the world moves

freight by providing innovative transactional, visibility, decision support and optimization solutions Sep-17

Transportation

Q4’17 Guidance and Outlook

▪ Q4’17 guidance:

– Revenue: $655M to $685M – Non-GAAP EPS: $0.34 to $0.38

▪ Non-GAAP EPS guidance excludes the following estimates:

– $40M of intangibles amortization related to prior acquisitions – $3M of estimated acquisition costs – $21M of estimated stock-based compensation – $2M of estimated restructuring expenses

▪ Non-GAAP EPS guidance assumes:

– ≈258M 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