National Instruments Reports Q1 2016 Revenue of $287 Million
Weakness Seen in Industrial Economy and Wireless Supply Chain
Q1 2016 Highlights
-
Revenue of
$287 million , down 1 percent year-over-year inU.S. dollar terms with core revenue up 3 percent year-over-year - GAAP gross margin of 73.5 percent
- Non-GAAP gross margin of 74.8 percent
-
Fully diluted GAAP EPS of
$0.07 and fully diluted non-GAAP EPS of$0.16 -
EBITDA of
$32 million or$0.25 per share -
Cash and short-term investments of
$329 million as ofMarch 31, 2016
In Q1 2016, NI received
"While it is clear that the industrial economy, especially in the
GAAP net income for Q1 was
In Q1, GAAP gross margin was 73.5 percent and non-GAAP gross margin was
74.8 percent. Total GAAP operating expenses were
"In light of the uncertain outlook for the industrial economy, we plan
to leverage the strategic investments we have already made while
managing expenses carefully," said
Geographic revenue in
As of
The company's non-GAAP results exclude the impact of stock-based compensation, amortization of acquisition-related intangibles, acquisition-related transaction costs, taxes levied on the transfer of acquired intellectual property, foreign exchange loss on acquisitions, and restructuring charges. Reconciliations of the company's GAAP and non-GAAP results are included as part of this news release.
Guidance for Q2 2016
NI currently expects Q2 revenue to be in the range of
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, gross margin, operating expenses, operating
income, operating margin, income before income taxes, provision for
income taxes, net income and basic and fully diluted EPS for the
three-month periods ending
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, amortization of acquisition-related intangibles, acquisition-related transaction costs, taxes levied on the transfer of acquired intellectual property, foreign exchange loss on acquisitions, and restructuring charges. 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 discloses the company's EBITDA and EBITDA diluted EPS
for the three-month periods ending
Conference Call Information and Availability of Presentation Materials
Interested parties can listen to the Q1 2016 earnings conference call
with NI management today,
Forward-Looking Statements
This release contains "forward-looking statements" including statements
regarding our belief that the diversity of our business and the solid
execution of our sales force allowed us to continue to gain market
share, our plan to be very disciplined in managing our expenses, while
working to ensure that our highly differentiated platform and broad
ecosystem continues to help engineers and scientists address their test,
measurement and control needs, our plan to leverage the strategic
investments we have already made, while managing expenses carefully,
being focused on driving operating leverage while gaining market share
through our differentiated platform, our guidance for Q2 revenue, that
the company expects that the impact of the strengthening of the
The company directs readers to its Form 10-K for the year ended
About NI
Since 1976, NI (www.ni.com) has made it possible for engineers and scientists to solve the world's greatest engineering challenges with powerful, flexible technology solutions that accelerate productivity and drive rapid innovation. Customers from a wide variety of industries - from healthcare to automotive and from consumer electronics to particle physics - use NI's integrated hardware and software platform to improve the world we live in. (NATI-F)
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Condensed Consolidated Balance Sheets | ||||||||
(in thousands, unaudited) | ||||||||
|
|
|||||||
2016 | 2015 | |||||||
Assets | ||||||||
Current assets: | ||||||||
Cash and cash equivalents | 265,400 | 251,129 | ||||||
Short-term investments | 63,208 | 81,789 | ||||||
Accounts receivable, net | 207,308 | 216,244 | ||||||
Inventories, net | 192,054 | 185,197 | ||||||
Prepaid expenses and other current assets | 65,523 | 65,381 | ||||||
Total current assets | 793,493 | 799,740 | ||||||
Property and equipment, net | 256,961 | 257,853 | ||||||
|
262,900 | 257,718 | ||||||
Intangible assets, net | 110,100 | 108,196 | ||||||
Other long-term assets | 32,826 | 30,349 | ||||||
Total assets | 1,456,280 | 1,453,856 | ||||||
Liabilities and Stockholders' Equity | ||||||||
Current liabilities: | ||||||||
Accounts payable | 54,347 | 50,970 | ||||||
Accrued compensation | 26,546 | 27,956 | ||||||
Deferred revenue - current | 116,656 | 112,283 | ||||||
Accrued expenses and other liabilities | 26,272 | 11,756 | ||||||
Other taxes payable | 31,264 | 37,250 | ||||||
Total current liabilities | 255,085 | 240,215 | ||||||
Long-term debt | 25,000 | 37,000 | ||||||
Deferred income taxes | 39,353 | 44,673 | ||||||
Liability for uncertain tax positions | 12,283 | 11,974 | ||||||
Deferred revenue - long-term | 27,359 | 27,708 | ||||||
Other long-term liabilities | 8,738 | 10,565 | ||||||
Total liabilities | 367,818 | 372,135 | ||||||
Stockholders' equity: | ||||||||
Preferred stock | - | - | ||||||
Common stock | 1,277 | 1,275 | ||||||
Additional paid-in capital | 730,970 | 717,705 | ||||||
Retained earnings | 380,896 | 400,831 | ||||||
Accumulated other comprehensive income (loss) | (24,681 | ) | (38,090 | ) | ||||
Total stockholders' equity | 1,088,462 | 1,081,721 | ||||||
Total liabilities and stockholders' equity | 1,456,280 | 1,453,856 | ||||||
|
||||||||||
Condensed Consolidated Statements of Income | ||||||||||
(in thousands, except per share data, unaudited) | ||||||||||
Three Months Ended |
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|
||||||||||
2016 | 2015 | |||||||||
Net sales: | ||||||||||
Product | $ | 259,434 | $ | 261,574 | ||||||
Software maintenance | 27,743 | 27,939 | ||||||||
Total net sales | 287,177 | 289,513 | ||||||||
Cost of sales: | ||||||||||
Product | 74,209 | 74,881 | ||||||||
Software maintenance | 1,937 | 1,455 | ||||||||
Total cost of sales | 76,146 | 76,336 | ||||||||
Gross profit | 211,031 | 213,177 | ||||||||
73.5 | % | 73.6 | % | |||||||
Operating expenses: | ||||||||||
Sales and marketing | 113,207 | 109,553 | ||||||||
Research and development | 59,340 | 60,520 | ||||||||
General and administrative | 24,640 | 22,971 | ||||||||
Total operating expenses | 197,187 | 193,044 | ||||||||
Operating income | 13,844 | 20,133 | ||||||||
Other income (expense): | ||||||||||
Interest income | 253 | 353 | ||||||||
Net foreign exchange loss | 574 | (1,674 | ) | |||||||
Other (expense) income, net | (2,406 | ) | 628 | |||||||
Income before income taxes | 12,265 | 19,440 | ||||||||
Provision for income taxes | 2,967 | 4,436 | ||||||||
Net income | $ | 9,298 | $ | 15,004 | ||||||
Basic earnings per share | $ | 0.07 | $ | 0.12 | ||||||
Diluted earnings per share | $ | 0.07 | $ | 0.12 | ||||||
Weighted average shares outstanding - | ||||||||||
basic | 127,595 | 128,040 | ||||||||
diluted | 128,103 | 128,676 | ||||||||
Dividends declared per share | $ | 0.20 | $ | 0.19 | ||||||
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||||||||||
Condensed Consolidated Statements of Cash Flows | ||||||||||
(in thousands, unaudited) | ||||||||||
Three Months Ended |
||||||||||
2016 | 2015 | |||||||||
Cash flow from operating activities: | ||||||||||
Net income | $ | 9,298 |
$ |
15,004 |
||||||
Adjustments to reconcile net income to net cash provided by operating activities: | ||||||||||
Depreciation and amortization | 19,432 | 17,924 | ||||||||
Stock-based compensation | 6,748 | 6,391 | ||||||||
Tax expense/(benefit) expense from deferred income taxes | (6,915 | ) | (2,238 | ) | ||||||
Tax benefit from stock option plans | (7 | ) | (16 | ) | ||||||
Net change in operating assets and liabilities | 20,062 | (10,654 | ) | |||||||
Net cash provided by operating activities | 48,618 | 26,411 | ||||||||
Cash flow from investing activities: | ||||||||||
Capital expenditures | (9,267 | ) | (10,263 | ) | ||||||
Capitalization of internally developed software | (8,003 | ) | (2,222 | ) | ||||||
Additions to other intangibles | (363 | ) | (399 | ) | ||||||
Acquisitions, net of cash received | (549 | ) | (24,523 | ) | ||||||
Purchases of short-term investments | (5,008 | ) | (22,332 | ) | ||||||
Sales and maturities of short-term investments | 23,589 | 15,774 | ||||||||
Net cash used by investing activities | 399 | (43,965 | ) | |||||||
Cash flow from financing activities: | ||||||||||
Principal payments on revolving line of credit | (12,000 | ) | - | |||||||
Proceeds from issuance of common stock | 7,445 | 7,402 | ||||||||
Repurchase of common stock | (4,642 | ) | - | |||||||
Dividends paid | (25,556 | ) | (24,346 | ) | ||||||
Tax benefit from stock option plans | 7 | 16 | ||||||||
Net cash used by financing activities | (34,746 | ) | (16,928 | ) | ||||||
Net change in cash and cash equivalents | 14,271 | (34,482 | ) | |||||||
Cash and cash equivalents at beginning of period | 251,129 | 274,030 | ||||||||
Cash and cash equivalents at end of period | $ | 265,400 |
$ |
239,548 |
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Detail of GAAP charges related to stock-based compensation, amortization of acquisition intangibles, acquisition related transaction costs, restructuring charges, foreign exchange loss on acquisitions and taxes levied on the transfer of acquired intellectual property (unaudited)
Three Months Ended | ||||||||||
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2016 | 2015 | |||||||||
Stock-based compensation | ||||||||||
Cost of sales | $ | 548 | $ | 456 | ||||||
Sales and marketing | 2,937 | 2,643 | ||||||||
Research and development | 2,349 | 2,461 | ||||||||
General and administrative | 908 | 831 | ||||||||
Provision for income taxes | (2,093 | ) | (1,566 | ) | ||||||
Total | $ | 4,649 | $ | 4,825 | ||||||
Amortization of acquisition intangibles | ||||||||||
Cost of sales | $ | 3,042 | $ | 2,575 | ||||||
Sales and marketing | 819 | 438 | ||||||||
Research and development | 261 | 344 | ||||||||
Other income, net | - | 154 | ||||||||
Provision for income taxes | 221 | (1,162 | ) | |||||||
Total | $ | 4,343 | $ | 2,349 | ||||||
Acquisition transaction costs, restructuring charges, and other | ||||||||||
Cost of sales | $ | 106 | $ | 573 | ||||||
Sales and marketing | 57 | - | ||||||||
Research and development | 258 | - | ||||||||
General and administrative | 30 | 201 | ||||||||
Foreign exchange loss on acquisition | 94 | - | ||||||||
Taxes levied on transfer of acquired intellectual property | 2,474 | - | ||||||||
Provision for income taxes | (1,041 | ) | (249 | ) | ||||||
Total | $ | 1,978 | $ | 525 | ||||||
Reconciliation of Gross Profit to Non-GAAP Gross Profit | ||||||||||
Three Months Ended | ||||||||||
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2016 | 2015 | |||||||||
Gross profit, as reported | $ | 211,031 | $ | 213,177 | ||||||
Stock-based compensation | 548 | 456 | ||||||||
Amortization of acquisition intangibles | 3,042 | 2,575 | ||||||||
Acquisition transaction costs, restructuring charges and other | 106 | 573 | ||||||||
Non-GAAP gross profit | $ | 214,727 | $ | 216,781 | ||||||
Non-GAAP gross margin | 75 | % | 75 | % | ||||||
Reconciliation of Operating Expenses to Non-GAAP Operating Expenses | ||||||||||
Three Months Ended | ||||||||||
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2016 | 2015 | |||||||||
Operating expenses, as reported | $ | 197,187 | $ | 193,044 | ||||||
Stock-based compensation | (6,194 | ) | (5,935 | ) | ||||||
Amortization of acquisition intangibles | (1,080 | ) | (782 | ) | ||||||
Acquisition transaction costs, restructuring charges and other | (345 | ) | (201 | ) | ||||||
Non-GAAP operating expenses | $ | 189,568 | $ | 186,126 | ||||||
Reconciliation of Operating Income to Non-GAAP Operating Income | ||||||||||
Three Months Ended | ||||||||||
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2016 | 2015 | |||||||||
Operating income, as reported | $ | 13,844 | $ | 20,133 | ||||||
Stock-based compensation | 6,742 | 6,391 | ||||||||
Amortization of acquisition intangibles | 4,122 | 3,357 | ||||||||
Acquisition transaction costs, restructuring charges and other | 451 | 774 | ||||||||
Non-GAAP operating income | $ | 25,159 | $ | 30,655 | ||||||
Non-GAAP operating margin | 9 | % | 11 | % |
Reconciliation of Income before income taxes to Non-GAAP Income before income taxes |
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Three Months Ended | |||||||||
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2016 | 2015 | ||||||||
Income before income taxes, as reported | $ | 12,265 | $ | 19,440 | |||||
Stock-based compensation | 6,742 | 6,391 | |||||||
Amortization of acquisition intangibles | 4,122 | 3,511 | |||||||
Acquisition transaction costs, restructuring charges and other | 3,019 | 774 | |||||||
Non-GAAP income before income taxes | $ | 26,148 | $ | 30,116 | |||||
Reconciliation of Provision for income taxes to Non-GAAP Provision for income taxes | |||||||||
Three Months Ended | |||||||||
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2016 | 2015 | ||||||||
Provision for income taxes, as reported | $ | 2,967 | $ | 4,436 | |||||
Stock-based compensation | 2,093 | 1,566 | |||||||
Amortization of acquisition intangibles | (221 | ) | 1,162 | ||||||
Acquisition transaction costs, restructuring charges and other | 1,041 | 249 | |||||||
Non-GAAP provision for income taxes | $ | 5,880 | $ | 7,413 | |||||
Reconciliation of GAAP Net Income, Basic EPS and Diluted EPS to Non-GAAP Net Income, Non-GAAP Basic EPS and Non-GAAP Diluted EPS (unaudited) | ||||||||
Three Months Ended | ||||||||
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2016 | 2015 | |||||||
Net income, as reported | $ | 9,298 | $ | 15,004 | ||||
Adjustments to reconcile net income to non-GAAP net income: | ||||||||
Stock-based compensation, net of tax effect | 4,649 | 4,825 | ||||||
Amortization of acquisition intangibles, net of tax effect | 4,343 | 2,349 | ||||||
Acquisition transaction costs, restructuring charges and other, net of tax effect | 1,978 | 525 | ||||||
Non-GAAP net income | $ | 20,268 | $ | 22,703 | ||||
Basic EPS, as reported | $ |
0.07 |
$ | 0.12 | ||||
Adjustment to reconcile basic EPS to non-GAAP basis EPS: | ||||||||
Impact of stock-based compensation, net of tax effect | 0.04 | 0.04 | ||||||
Impact of amortization of acquisition intangibles, net of tax effect | 0.03 | 0.02 | ||||||
Impact of acquisition transaction costs, restructuring charges and other, net of tax effect | 0.02 | - | ||||||
Non-GAAP basic EPS | $ | 0.16 | $ | 0.18 | ||||
Diluted EPS, as reported | $ | 0.07 | $ | 0.12 | ||||
Adjustment to reconcile diluted EPS to non-GAAP diluted EPS: | ||||||||
Impact of stock-based compensation, net of tax effect | 0.04 | 0.04 | ||||||
Impact of amortization of acquisition intangibles, net of tax effect | 0.03 | 0.02 | ||||||
Impact of acquisition transaction costs, restructuring charges and other, net of tax effect | 0.02 | - | ||||||
Non-GAAP diluted EPS | $ | 0.16 | $ | 0.18 | ||||
Weighted average shares outstanding - | ||||||||
Basic | 127,595 | 128,040 | ||||||
Diluted | 128,103 | 128,676 | ||||||
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Reconciliation of Net Income and Diluted EPS to EBITDA and EBITDA Diluted EPS | ||||||||||
(in thousands, except per share data, unaudited) | ||||||||||
Three Months Ended | ||||||||||
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2016 | 2015 | |||||||||
Net income, as reported | $ | 9,298 | $ | 15,004 | ||||||
Adjustments to reconcile net income to EBITDA: | ||||||||||
Interest income, net of interest expense | (62 | ) | (353 | ) | ||||||
Tax expense | 2,967 | 4,436 | ||||||||
Depreciation and amortization | 19,432 | 17,924 | ||||||||
EBITDA | $ | 31,635 | $ | 37,011 | ||||||
Diluted EPS, as reported | $ | 0.07 | $ | 0.12 | ||||||
Adjustment to reconcile diluted EPS to EBITDA | ||||||||||
Interest income, net of interest expense | - | - | ||||||||
Taxes | 0.03 | 0.03 | ||||||||
Depreciation and amortization | 0.15 | 0.14 | ||||||||
EBITDA diluted EPS | $ | 0.25 | $ | 0.29 | ||||||
Weighted average shares outstanding - Diluted | 128,103 | 128,676 | ||||||||
Reconciliation of GAAP to Non-GAAP EPS Guidance | ||||||||
(unaudited) | ||||||||
Three Months Ended | ||||||||
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Low | High | |||||||
GAAP Fully Diluted EPS, guidance | $ | 0.08 | $ | 0.24 | ||||
Adjustment to reconcile diluted EPS to non-GAAP diluted EPS: | ||||||||
Impact of stock-based compensation, net of tax effect | 0.04 | 0.04 | ||||||
Impact of amortization of acquisition intangibles, net of tax effect | 0.04 | 0.04 | ||||||
Non-GAAP diluted EPS, guidance | $ | 0.16 | $ | 0.32 | ||||
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Reconciliation of GAAP Revenue to Core Revenue | |||||
(unaudited) | |||||
Three Months Ended | |||||
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2016 | |||||
YoY GAAP revenue growth, as reported | $ | (0.8 | )% | ||
Effect of excluding our current largest customer | (1.4 | )% | |||
YoY GAAP revenue growth, excluding our largest customer | (2.2 | )% | |||
Effect of excluding the impact of foreign currency exchange | 5.6 | % | |||
YoY Core revenue growth | $ | 3.4 | % |
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