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National Instruments Reports Record First Quarter Revenue and Profit

Record Gross Margins Fuel Investments in Long-Term Growth

AUSTIN, Texas, April 28, 2011 /PRNewswire/ --

Q1 2011 Highlights


National Instruments (Nasdaq: NATI) today announced Q1 revenue of $238 million, a new first quarter record and a 24 percent increase from Q1 2010. This met the company's guidance of between $230 million and $244 million, which was provided on Jan. 25, 2011. In Q1, the company's orders greater than $20,000 grew 29 percent year-over-year, and the average order size reached a new first quarter record of approximately $4,000.

In Q1, GAAP and non-GAAP operating income reached all-time records for a first quarter, and non-GAAP operating margins were the highest for a first quarter since 2001. Net income for Q1 was $30.5 million, with fully diluted earnings per share (EPS) of $0.25, and non-GAAP net income was $33.9 million, with non-GAAP fully diluted EPS of $0.28. EBITDA, or Earnings Before Interest, Taxes, Depreciation and Amortization, was also a new Q1 record at $47.7 million, or $0.40 per share.

In Q1, GAAP gross margin increased 50 basis points year-over-year to 77.9 percent. Non-GAAP gross margin reached an all-time record of 78.5 percent, an increase of 60 basis points year-over-year.

The company's non-GAAP results exclude the impact of both stock-based compensation and the amortization of acquisition-related intangibles. Reconciliations of the company's GAAP and non-GAAP results are included as part of this news release.

"I was extremely pleased with our performance in Q1 as we delivered record revenue and profit for a first quarter, and I would like to thank all of our employees for the hard work they have contributed to this very strong result," said Dr. James Truchard, co-founder, president and CEO. "Our core platforms of LabVIEW, DAQ, PXI and CompactRIO drove our growth this quarter, and we believe that our commitment to innovation and growing relationships with our customers will continue to drive growth in these strategic platforms."

NI graphical system design product sales were up 25 percent year-over-year. NI instrument control product sales were up 18 percent year-over-year in Q1. During Q1, deferred revenue increased by $6 million, which is double the amount in Q1 last year, and backlog declined by $7 million.

Geographically, revenue in U.S. dollar terms for Q1 2011 compared to Q1 2010 was up 23 percent in the Americas, up 23 percent in Europe and up 29 percent in Asia. In local currency terms, revenue was up 26 percent in Europe and up 29 percent in Asia.

As of March 31, NI had $385 million in cash and short-term investments. The National Instruments Board of Directors approved a quarterly dividend of $0.10 per share on the company's common stock payable on May 31 to stockholders of record on May 9.

Guidance for Q2 2011

While the trends of the global Purchasing Managers Index (PMI) continued to be positive in Q1, the impact of the earthquake and tsunami that struck Japan, the spike in oil prices and U.S. federal budget issues all impacted global business conditions, especially in the automotive sector. These macroeconomic events have made the company incrementally more cautious regarding Q2.

"While we are pleased to see greater than 20 percent year-over-year order growth in April, we do see some reasons for caution as we look out to the rest of Q2," said Alex Davern, NI COO and CFO. "However, we are confident in our long-term opportunity and are successfully executing on our plan to aggressively increase our R&D and field sales personnel in 2011."

NI expects revenue for Q2 to be between $241 million and $255 million, an increase of between 14 and 20 percent over Q2 2010. The company expects fully diluted EPS will be in the range of $0.19 to $0.27 for Q1, with non-GAAP fully diluted EPS expected to be in the range of $0.23 to $0.31.

Non-GAAP Presentation

In addition to disclosing results determined in accordance with GAAP, NI discloses certain non-GAAP operating results and non-GAAP information that exclude certain charges. In this news release, the company has presented its gross profit, operating expenses, operating income, income before income taxes, provision for income taxes, net income and basic and fully diluted EPS for the three-month periods ending March 31, 2011 and 2010, on a GAAP and non-GAAP basis. When presenting non-GAAP information, the company includes a reconciliation of the non-GAAP results to the GAAP results. Management believes that including the non-GAAP results assists investors in assessing the company's operational performance and its performance relative to its competitors. The company presents these non-GAAP results as a complement to results provided in accordance with GAAP, and these results should not be regarded as a substitute for GAAP. Management uses these non-GAAP measures to manage and assess the profitability and performance of its business and does not consider stock-based compensation expense or amortization of acquired intangibles that are non-cash charges in managing its operations. Specifically, management uses non-GAAP measures to plan and forecast future periods, to establish operational goals, to compare with its business plan and individual operating budgets, to measure management performance for the purposes of executive compensation including payments to be made under bonus plans, to assist the public in measuring the company's performance relative to the company's long-term public performance goals, to allocate resources and, relative to the company's historical financial performance, to enable comparability between periods. Management also considers such non-GAAP results to be an important supplemental measure of its performance. This news release also discloses the company's earnings before interest, taxes, depreciation and amortization (EBITDA) and EBITDA diluted EPS for the three-month periods ended March 31, 2011 and 2010. The company also believes that including the EBITDA results assists investors in assessing the company's operational performance relative to its competitors. A reconciliation of EBITDA and EBITDA diluted EPS to GAAP net income and GAAP diluted EPS is included with this news release.

Conference Call Information

Interested parties can listen to the Q1 2011 conference call today, April 28, beginning at 4:00 p.m. CDT, at www.ni.com/call. Replay information is available by calling (888) 203-1112, confirmation code #8955082, shortly after the call through May 3 at 7:00 p.m. CDT.

Forward-Looking Statements

This release contains "forward-looking statements," including statements related to continuing to drive growth in strategic platforms, being confident in our long-term opportunity, plans to aggressively increase our R&D and field sales personnel in 2011 and our Q2 guidance for revenue and GAAP and non-GAAP EPS. These statements are subject to a number of risks and uncertainties, including the risk of adverse changes or fluctuations in the global economy, component shortages, delays in the release of new products, fluctuations in customer demand for NI products, the company's ability to continue to control its operating expenses, manufacturing inefficiencies, the outcome of events in Japan and foreign exchange fluctuations. Actual results may differ materially from the expected results. The company directs readers to its Form 10-K for the fiscal year ended Dec. 31, 2010, its Form 10-Q for the quarter ended March 31, 2011, and the other documents it files with the SEC for other risks associated with the company's future performance.

About National Instruments

National Instruments (www.ni.com) is transforming the way engineers and scientists design, prototype and deploy systems for measurement, automation and embedded applications. NI empowers customers with off-the-shelf software such as NI LabVIEW and modular cost-effective hardware, and sells to a broad base of more than 30,000 different companies worldwide, with its largest customer representing approximately 4 percent of revenue in 2010 and no one industry representing more than 15 percent of revenue. Headquartered in Austin, Texas, NI has approximately 5,500 employees and direct operations in more than 40 countries. For the past 12 years, FORTUNE magazine has named NI one of the 100 best companies to work for in America. Readers can obtain investment information from the company's investor relations department by calling (512) 683-5090, e-mailing nati@ni.com or visiting www.ni.com/nati. (NATI-F)

CompactRIO, LabVIEW, National Instruments, NI and ni.com are trademarks of National Instruments. Other product and company names listed are trademarks or trade names of their respective companies.

Contact:

Veronica Garza


Investor Relations


(512) 683-6873




National Instruments

Consolidated Balance Sheets

(in thousands)








March 31,


December 31,



2011


2010



(unaudited)








Assets





Current assets:





Cash and cash equivalents

$

254,594

$

219,447

Short-term investments


130,460


131,215

Accounts receivable, net


132,148


127,214

Inventories, net


134,408


117,765

Prepaid expenses and other current assets


25,459


36,239

Deferred income taxes, net


19,792


18,838

Total current assets


696,861


650,718






Property and equipment, net


164,288


160,410

Goodwill


70,768


70,278

Intangible assets, net


51,928


52,816

Other long-term assets


27,584


25,460

Total assets

$

1,011,429

$

959,682






Liabilities and Stockholders' Equity





Current liabilities:





Accounts payable

$

36,615

$

33,544

Accrued compensation


22,952


27,734

Deferred revenue


77,787


71,650

Accrued expenses and other liabilities


14,081


16,538

Other taxes payable


14,805


16,846

Total current liabilities


166,240


166,312






Deferred income taxes


29,697


29,477

Liability for uncertain tax positions


16,416


14,953

Other long-term liabilities


4,694


4,395

Total liabilities

$

217,047

$

215,137






Stockholders' equity:





Preferred stock


-


-

Common stock


1,190


786

Additional paid-in capital


431,726


408,106

Retained earnings


354,956


336,363

Accumulated other comprehensive income (loss)


6,510


(710)

Total stockholders' equity

$

794,382

$

744,545

Total liabilities and stockholders' equity

$

1,011,429

$

959,682





National Instruments

Consolidated Statements of Income

(in thousands, except per share data)








Three Months Ended



March 31,



(unaudited)



2011


2010

Net sales:





Product

$

218,610

$

175,395

Software maintenance


19,240


15,696

Total net sales


237,850


191,091






Cost of sales:





Cost of product

$

50,958

$

42,262

Cost of software maintenance


1,518


980

Total cost of sales


52,476


43,242






Gross profit

$

185,374

$

147,849






Operating expenses:





Sales and marketing

$

87,155

$

74,441

Research and development


42,868


38,546

General and administrative


18,839


15,340

Total operating expenses

$

148,862

$

128,327






Operating income

$

36,512

$

19,522






Other income (expense):





Interest income

$

341

$

300

Net foreign exchange (loss)


(223)


(698)

Other income, net


446


348






Income before income taxes

$

37,076

$

19,472






Provision for income taxes


6,615


1,119






Net income

$

30,461

$

18,353






Basic earnings per share

$

0.26

$

0.16

Diluted earnings per share

$

0.25

$

0.16






Weighted average shares outstanding -





Basic


118,693


116,070

Diluted


120,443


117,652






Dividends declared per share

$

0.10

$

0.09





National Instruments

Consolidated Statements of Cash Flows

(in thousands)



Three Months Ended



March 31,



(unaudited)



2011


2010

Cash flow from operating activities:





Net income

$

30,461

$

18,353

Adjustments to reconcile net income to net cash provided





by operating activities:





Depreciation and amortization


10,973


9,442

Stock-based compensation


4,590


4,916

Tax expense (benefit) from deferred income taxes


(560)


1,709

Tax expense (benefit) from stock option plans


(1,327)


1,587

Changes in operating assets and liabilities:





Accounts receivable


(4,933)


(613)

Inventories


(16,643)


(3,006)

Prepaid expenses and other assets


14,995


(297)

Accounts payable


3,071


3,618

Deferred revenue


6,137


3,730

Taxes and other liabilities


(5,134)


2,162

Net cash provided by operating activities

$

41,630

$

41,601






Cash flow from investing activities:





Capital expenditures


(9,580)


(5,271)

Capitalization of internally developed software


(3,731)


(3,404)

Additions to other intangibles


(436)


(543)

Acquisition, net of cash received


-


(2,191)

Purchases of short-term investments


(27,176)


(35,823)

Sales and maturities of short-term investments


27,931


9,037

Net cash (used by) investing activities

$

(12,992)

$

(38,195)






Cash flow from financing activities:





Proceeds from issuance of common stock


17,050


22,341

Repurchase of common stock


-


(30,935)

Dividends paid


(11,868)


(10,072)

Tax (expense) benefit from stock option plans


1,327


(1,587)

Net cash provided (used) by financing activities

$

6,509

$

(20,253)






Net change in cash and cash equivalents


35,147


(16,847)

Cash and cash equivalents at beginning of period


219,447


201,465

Cash and cash equivalents at end of period

$

254,594

$

184,618





Detail of GAAP charges related to stock-based compensation and

amortization of acquisition intangibles

(unaudited)








Three Months Ended



March 31,








2011


2010

Stock-based compensation





Cost of sales

$

317

$

362

Sales and marketing


1,922


2,104

Research and development


1,686


1,765

General and administrative


665


685

Provision for income taxes


(1,840)


(1,545)

Total

$

2,750

$

3,371











Amortization of acquisition intangibles





Cost of sales

$

1,004

$

722

Sales and marketing


77


122

Research and development


-


-

General and administrative


-


-

Provision for income taxes


(350)


(253)

Total

$

731

$

591





National Instruments

Reconciliation of GAAP to Non-GAAP Measures

(in thousands, except per share data)

(unaudited)








Three Months Ended



March 31,



2011


2010






Reconciliation of Gross Profit to Non-GAAP Gross Profit






Gross profit, as reported

$

185,374

$

147,849

Stock-based compensation


317


362

Amortization of acquisition intangibles


1,004


722

Non-GAAP gross profit

$

186,695

$

148,933






Reconciliation of Operating Expenses to Non-GAAP Operating Expenses






Operating expenses, as reported

$

148,862

$

128,327

Stock-based compensation


(4,273)


(4,554)

Amortization of acquisition intangibles


(77)


(122)

Non-GAAP operating expenses

$

144,512

$

123,651






Reconciliation of Operating Income to Non-GAAP Operating Income






Operating income, as reported

$

36,512

$

19,522

Stock-based compensation


4,590


4,916

Amortization of acquisition intangibles


1,081


844

Non-GAAP operating income

$

42,183

$

25,282






Reconciliation of Income before Income Taxes to Non-GAAP Income before Income Taxes






Income before income taxes, as reported

$

37,076

$

19,472

Stock-based compensation


4,590


4,916

Amortization of acquisition intangibles


1,081


844

Non-GAAP income before income taxes

$

42,747

$

25,232






Reconciliation of Provision for Income Taxes to Non-GAAP Provision For Income Taxes











Provision for  income taxes, as reported

$

6,615

$

1,119

Stock-based compensation


1,840


1,545

Amortization of acquisition intangibles


350


253

Non-GAAP provision for income taxes

$

8,805

$

2,917





Reconciliation of GAAP Net Income, Basic EPS and Diluted EPS to Non-GAAP Net Income, Basic EPS and Diluted EPS

(unaudited)








Three Months Ended



March 31,



2011


2010

Net income, as reported

$

30,461

$

18,353

Adjustments to reconcile net income to non-GAAP net income:





   Stock-based compensation, net of tax effect


2,750


3,371

   Amortization of acquisition intangibles, net of tax effect


731


591

Non-GAAP net income

$

33,942

$

22,315






Basic EPS, as reported

$

0.26

$

0.16

Adjustment to reconcile basic EPS to non-GAAP





basic EPS:





   Impact of stock-based compensation, net of tax effect

$

0.02

$

0.03

   Impact of amortization of acquisition intangibles, net of tax effect

$

0.01

$

0.00

Non-GAAP basic EPS

$

0.29

$

0.19











Diluted EPS, as reported

$

0.25

$

0.16

Adjustment to reconcile diluted EPS to non-GAAP





diluted EPS:





   Impact of stock-based compensation, net of tax effect

$

0.02

$

0.03

   Impact of amortization of acquisition intangibles, net of tax effect

$

0.01

$

0.00

Non-GAAP diluted EPS

$

0.28

$

0.19






Weighted average shares outstanding -





Basic


118,693


116,070

Diluted


120,443


117,652








Reconciliation of Net Income and Diluted EPS to EBITDA and EBITDA Diluted EPS

(unaudited)








Three Months Ended



March 31,



2011


2010

Net income, as reported

$

30,461

$

18,353

Adjustments to reconcile net income to EBITDA:





    Interest income


(341)


(300)

    Taxes


6,615


1,119

    Depreciation and amortization


10,973


9,442

EBITDA

$

47,708

$

28,614






Diluted EPS, as reported

$

0.25

$

0.16

Adjustment to reconcile diluted EPS to EBITDA





    Interest income

$

(0.00)

$

(0.00)

    Taxes

$

0.06

$

0.00

    Depreciation and amortization

$

0.09

$

0.08

EBITDA diluted EPS

$

0.40

$

0.24






Weighted average shares outstanding - Diluted


120,443


117,652





National Instruments

Reconciliation of GAAP to Non-GAAP EPS Guidance

(unaudited)










Three months ended




June 30, 2011










Low


High

GAAP Fully Diluted EPS, guidance

$

0.19

$

0.27

Adjustment to reconcile diluted EPS to non-GAAP





diluted EPS:





   Impact of stock-based compensation, net of tax effect

$

0.03

$

0.03

   Impact of amortization of acquisition intangibles, net of tax effect

$

0.01

$

0.01







Non-GAAP diluted EPS, guidance

$

0.23

$

0.31




SOURCE National Instruments

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