Press Release Details

National Instruments Reports Record First Quarter Revenue

AUSTIN, Texas, April 25, 2013 /PRNewswire/ -- National Instruments (Nasdaq: NATI) today announced Q1 revenue of $286 million, a new first quarter record and a 10 percent increase from Q1 2012. Orders were up 8 percent year-over-year in Q1, with the average order size reaching a new first quarter record of $4,975. In Q1, the company's orders under $20,000 declined 1 percent year-over-year; orders between $20,000 and $100,000 grew 6 percent year-over-year; and orders above $100,000 grew 43 percent year-over-year.

GAAP net income for Q1 was $19 million, with fully diluted earnings per share (EPS) of $0.15, and non-GAAP net income was $26 million, with non-GAAP fully diluted EPS of $0.21. The company's EPS was $0.03 below the midpoint of its guidance range due to a $0.01 per share loss on foreign exchange, primarily from the devaluation of the Japanese yen, and $0.02 per share as a result of expenses running ahead of plan. EBITDA, or Earnings Before Interest, Taxes, Depreciation and Amortization, was $35 million, or $0.28 per share for Q1.

In Q1, GAAP gross margin increased to 75.5 percent and non-GAAP gross margin reached 76.6 percent, up sequentially from 75.2 and 76.0 percent, respectively.

The company's non-GAAP results exclude the impact of stock-based compensation, amortization of acquisition-related intangibles, acquisition accounting for deferred revenue, acquisition-related adjustments and acquisition-related transaction costs. Reconciliations of the company's GAAP and non-GAAP results are included as part of this news release.

National Instruments continued to deliver value to its largest customer and secured orders from this customer related to three different applications that use LabVIEW and the NI PXI platform to rapidly develop a production test solution. In Q1 2013, National Instruments received approximately $17 million in orders from this customer and an additional $7 million in orders to date in Q2. The majority of these orders are related to a new application in a highly competitive space that NI has not served for this customer before.  As a result, gross margins for this application are significantly below company average. National Instruments recognized $4 million in revenue from this customer in Q1 and anticipates recognizing the remainder of the revenue from existing orders over the coming quarters. Due to a reduced forecast for this customer, National Instruments now believes the total value of orders from its largest customer may be less than the total value of orders received from this customer in 2012.

"We are disappointed we overspent in the first quarter, and are taking corrective actions to adjust our spending," said Dr. James Truchard, co-founder, president and CEO. "We are focusing our efforts on activities that have proven successful in growing our large order business."

Geographic revenue in U.S. dollar terms for Q1 2013 compared to Q1 2012 was up 12 percent in the Americas, up 4 percent in Europe, up 3 percent in East Asia and up 37 percent in Emerging Markets. In East Asia, the significant decline in the value of the Japanese yen negatively impacted the region's performance. In local currency terms, revenue was up 4 percent in Europe, up 2 percent in East Asia and up 35 percent in Emerging Markets.

As of March 31, NI had $327 million in cash and short-term investments. The National Instruments Board of Directors approved a quarterly dividend of $0.14 per share on the company's common stock payable on June 3 to stockholders of record on May 13.

Guidance for Q2 2013
"While we were very pleased with our revenue execution in Q1, we are very disappointed in our profit performance," said Alex Davern, NI COO and CFO. "We are taking corrective actions to control our spending through the rest of 2013."

National Instruments continues to be conservative in planning for Q2 due to the continued weakness of the PMI and the reduced forecast for its largest customer. As a result, NI expects revenue for Q2 2013 to be between $290 million and $320 million, an increase of 5 percent at the midpoint of guidance over Q2 2012. NI expects gross margins to decline significantly year-over-year in Q2 2013, due to customer mix and lowered production levels, and total non-GAAP operating expenses to be $193 million, plus or minus $2 million. The company expects fully diluted EPS will be in the range of $0.09 to $0.21 for Q2, with non-GAAP fully diluted EPS expected to be in the range of $0.16 to $0.28.

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 March 31, 2013 and 2012, on a GAAP and non-GAAP basis. NI is also providing guidance on its non-GAAP operating expenses and fully diluted EPS.

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 accounting for deferred revenue, acquisition-related adjustments and acquisition-related transaction costs 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 EBITDA and EBITDA diluted EPS for the three-month periods ending March 31, 2013 and 2012. 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 2013 conference call today, April 25, at 4:00 p.m. CT at ni.com/call. Replay information is available by calling (855) 859-2056, confirmation code #27646139, shortly after the call through April 30 at 11:00 p.m. CT.

Forward-Looking Statements
This release contains "forward-looking statements," including statements related to taking corrective actions to adjust spending, recognizing the remainder of the revenue from existing orders from its largest customer over the coming quarters, belief the total value of orders from its largest customer may be less than the total value of orders received from this customer in 2012, focusing efforts on activities that have proven successful in growing its large order business, being conservative in planning, continued weakness in the Global PMI, the reduced forecast from its largest customer and the company's Q2 guidance for revenue, gross margins, non-GAAP operating expenses 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, foreign exchange fluctuations, component shortages, delays in the release of new products, fluctuations in customer demand for NI products including orders from NI's largest customer, fluctuations in average order size, the company's ability to effectively manage its operating expenses, manufacturing inefficiencies, adjustments to acquisition earn-out accruals and the impact of NI's recent and any future acquisitions. 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, 2012, and the other documents it files with the SEC for other risks associated with the company's future performance.

About National Instruments
Since 1976, National Instruments (www.ni.com) has equipped engineers and scientists with tools that accelerate productivity, innovation and discovery. NI's graphical system design approach to engineering provides an integrated software and hardware platform that speeds the development of any system needing measurement and control. The company's long-term vision and focus on improving society through its technology supports the success of its customers, employees, suppliers and shareholders. Readers can obtain investment information from the company's investor relations department by calling (512) 683-5090, emailing nati@ni.com or visiting www.ni.com/nati. (NATI-F)

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

Contact:     Caitlin Gursslin, Investor Relations, caitlin.gursslin@ni.com

 

 


National Instruments

Consolidated Balance Sheets

(in thousands)








March 31, 2013


Dec. 31,



(unaudited)


2012

Assets





Current assets:





Cash and cash equivalents

$

172,054

$

161,996

Short-term investments


155,251


173,166

Accounts receivable, net


172,123


187,060

Inventories, net


188,591


169,990

Prepaid expenses and other current assets


58,462


48,009

Deferred income taxes, net


28,361


27,479

Total current assets


774,842


767,700






Property and equipment, net


259,123


249,721

Goodwill


146,660


147,258

Intangible assets, net


89,247


93,913

Other long-term assets


28,358


26,177

Total assets

$

1,298,230

$

1,284,769






Liabilities and Stockholders' Equity





Current liabilities:





Accounts payable

$

66,821

$

65,080

Accrued compensation


26,202


29,978

Deferred revenue — current


94,992


90,714

Accrued expenses and other liabilities


31,977


34,373

Other taxes payable


21,856


24,811

Total current liabilities


241,848


244,956






Deferred income taxes


46,464


47,630

Liability for uncertain tax positions


21,657


20,920

Deferred revenue — long-term


19,944


20,446

Other long-term liabilities


10,556


11,689

Total liabilities

$

340,469

$

345,641






Stockholders' equity:





Preferred stock

$

-

$

-

Common stock


1,235


1,229

Additional paid-in capital


552,603


532,845

Retained earnings


405,529


404,210

Accumulated other comprehensive (loss) income


(1,606)


844

Total stockholders' equity

$

957,761

$

939,128

Total liabilities and stockholders' equity

$

1,298,230

$

1,284,769





National Instruments

Consolidated Statements of Income

(in thousands, except per share data)








Three Months Ended



March 31,



(unaudited)



2013


2012

Net sales:





Product

$

265,418

$

239,335

Software maintenance


21,070


21,798

Total net sales


286,488


261,133






Cost of sales:





Product

$

68,626

$

59,791

Software maintenance


1,614


1,557

Total cost of sales


70,240


61,348






Gross profit

$

216,248

$

199,785






Operating expenses:





Sales and marketing

$

114,070

$

100,052

Research and development


61,256


54,015

General and administrative


22,844


21,374

Acquisition-related adjustment


(1,316)


-

Total operating expenses

$

196,854

$

175,441






Operating income

$

19,394

$

24,344






Other income (expense):





Interest income

$

185

$

230

Net foreign exchange loss


(1,462)


(888)

Other income, net


24


104






Income before income taxes

$

18,141

$

23,790






(Benefit from) provision for income taxes


(459)


5,148






Net income

$

18,600

$

18,642






Basic earnings per share

$

0.15

$

0.15

Diluted earnings per share

$

0.15

$

0.15






Weighted average shares outstanding —





Basic


123,306


120,908

Diluted


124,365


121,972






Dividends declared per share

$

0.14

$

0.14





National Instruments

Consolidated Statements of Cash Flows

(in thousands)



Three Months Ended



March 31,



(unaudited)



2013


2012

Cash flow from operating activities:





Net income

$

18,600

$

18,642

Adjustments to reconcile net income to net cash provided





by operating activities:





Depreciation and amortization


16,829


14,115

Stock-based compensation


7,134


6,303

Tax benefit from deferred income taxes


(1,902)


(1,567)

Tax benefit from stock option plans


(459)


(246)

Changes in operating assets and liabilities:





Accounts receivable


15,115


1,671

Inventories


(18,045)


(8,413)

Prepaid expenses and other assets


(12,969)


9,468

Accounts payable


1,603


518

Deferred revenue


3,775


5,374

Taxes and other liabilities


(9,199)


(12,361)

Net cash provided by operating activities

$

20,482

$

33,504






Cash flow from investing activities:





Capital expenditures


(19,094)


(9,054)

Capitalization of internally developed software


(2,803)


(3,740)

Additions to other intangibles


(1,418)


(333)

Purchases of short-term investments


(8,177)


-

Sales and maturities of short-term investments


26,092


84,608

Net cash (used in) provided by investing activities

$

(5,400)

$

71,481






Cash flow from financing activities:





Proceeds from issuance of common stock


11,798


7,605

Dividends paid


(17,281)


(16,934)

Tax benefit from stock option plans


459


246

Net cash used in financing activities

$

(5,024)

$

(9,083)






Net change in cash and cash equivalents


10,058


95,902

Cash and cash equivalents at beginning of period


161,996


142,608

Cash and cash equivalents at end of period

$

172,054

$

238,510





Detail of GAAP Charges Related to Revenue, Stock-Based Compensation,

Amortization of Acquisition Intangibles and Acquisition-Related Transaction Costs

(in thousands)

(unaudited)










Three Months Ended



March 31,



2013


2012

Revenue





Acquisition-related deferred revenue

$

-

$

1,269

Provision for income taxes


-


(444)

Total

$

-

$

825






Stock-based compensation





Cost of sales

$

421

$

415

Sales and marketing


3,073


2,640

Research and development


2,737


2,449

General and administrative


903


799

Provision for income taxes


(1,814)


(1,507)

Total

$

5,320

$

4,796











Amortization of acquisition intangibles





Cost of sales

$

2,760

$

2,410

Sales and marketing


518


447

Research and development


673


-

Other income, net


193


189

Provision for income taxes


(1,350)


(972)

Total

$

2,794

$

2,074






Acquisition-related transaction costs





Cost of sales

$

-

$

32

Sales and marketing


118


220

Research and development


144


106

General and administrative


106


47

Acquisition-related adjustment


(1,316)


-

Provision for income taxes


(106)


(142)

Total

$

(1,054)

$

263











National Instruments

Reconciliation of GAAP to Non-GAAP Measures

(in thousands, except per share data)

(unaudited)





Three Months Ended



March 31,



2013


2012

Reconciliation of Net Sales to Non-GAAP Net Sales

Net sales, as reported

$

286,488

$

261,133

Acquisition-related deferred revenue


-


1,269

Non-GAAP net sales

$

286,488

$

262,402






Reconciliation of Gross Profit to Non-GAAP Gross Profit

Gross profit, as reported

$

216,248

$

199,785

Acquisition-related deferred revenue


-


1,269

Stock-based compensation


421


415

Amortization of acquisition intangibles


2,760


2,410

Acquisition-related transaction costs


-


32

Non-GAAP gross profit

$

219,429

$

203,911

   Non-GAAP gross margin


77%


78%






Reconciliation of Operating Expenses to Non-GAAP Operating Expenses

Operating expenses, as reported

$

196,854

$

175,441

Stock-based compensation


(6,713)


(5,888)

Amortization of acquisition intangibles


(1,191)


(447)

Acquisition-related adjustment


1,316


-

Acquisition-related transaction costs


(368)


(373)

 Non-GAAP operating expenses

$

189,898

$

168,733






Reconciliation of Operating Income to Non-GAAP Operating Income

Operating income, as reported

$

19,394

$

24,344

Acquisition-related deferred revenue


-


1,269

Stock-based compensation


7,134


6,303

Amortization of acquisition intangibles


3,951


2,857

Acquisition-related adjustment


(1,316)


-

Acquisition-related transaction costs


368


405

Non-GAAP operating income

$

29,531

$

35,178

   Non-GAAP operating margin


10%


13%






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

Income before income taxes, as reported

$

18,141

$

23,790

Acquisition-related deferred revenue


-


1,269

Stock-based compensation


7,134


6,303

Amortization of acquisition intangibles


4,144


3,046

Acquisition-related adjustment


(1,316)


-

Acquisition-related transaction costs


368


405

Non-GAAP income before income taxes

$

28,471

$

34,813






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

(Benefit from) provision for income taxes, as reported

$

(459)

$

5,148

Acquisition-related deferred revenue


-


444

Stock-based compensation


1,814


1,507

Amortization of acquisition intangibles


1,350


972

Acquisition-related transaction costs


106


142

Non-GAAP provision for income taxes

$

2,811

$

8,213











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

(in thousands, except per share data)

(unaudited)







Three Months Ended



March 31,



2013


2012

Net income, as reported

$

18,600

$

18,642

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





Acquisition-related deferred revenue, net of tax effect


-


825

 Stock-based compensation, net of tax effect


5,320


4,796

 Amortization of acquisition intangibles, net of tax effect


2,794


2,074

 Acquisition-related adjustment


(1,316)


-

 Acquisition-related transaction costs, net of tax effect


262


263

Non-GAAP net income

$

25,660

$

26,600






Basic EPS, as reported

$

0.15

$

0.15

Adjustment to reconcile basic EPS to non-GAAP basic EPS:





 Impact of acquisition-related deferred revenue, net of tax effect


-


0.01

 Impact of stock-based compensation, net of tax effect


0.05


0.04

 Impact of amortization of acquisition intangibles, net of tax effect


0.02


0.02

 Impact of acquisition-related adjustment


(0.01)


-

 Impact of acquisition-related transaction costs, net of tax effect


-


-

Non-GAAP basic EPS

$

0.21

$

0.22











Diluted EPS, as reported

$

0.15

$

0.15

Adjustment to reconcile diluted EPS to non-GAAP diluted EPS:





 Impact of acquisition-related deferred revenue, net of tax effect


-


0.01

 Impact of stock-based compensation, net of tax effect


0.05


0.04

 Impact of amortization of acquisition intangibles, net of tax effect


0.02


0.02

 Impact of acquisition-related adjustment


(0.01)


-

 Impact of acquisition-related transaction costs, net of tax effect


-


-

Non-GAAP diluted EPS

$

0.21

$

0.22






Weighted average shares outstanding —





Basic


123,306


120,908

Diluted


124,365


121,972





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

(in thousands, except per share data)

(unaudited)








Three Months Ended



March 31,



2013


2012

Net income, as reported

$

18,600

$

18,642

Adjustments to reconcile net income to EBITDA:





   Interest income


(185)


(230)

   Taxes


(459)


5,148

   Depreciation and amortization


16,829


14,115

EBITDA

$

34,785

$

37,675






Diluted EPS, as reported

$

0.15

$

0.15

Adjustment to reconcile diluted EPS to EBITDA:





   Interest income


(0.00)


-

   Taxes


(0.00)


0.04

   Depreciation and amortization


0.13


0.12

EBITDA diluted EPS

$

0.28

$

0.31






Weighted average shares outstanding — diluted


124,365


121,972





Reconciliation of GAAP to Non-GAAP Operating Expense Guidance

(in millions)

(unaudited)





Three Months Ended


June 30, 2013



Low


High

GAAP operating expense, guidance

$

199

$

203

Adjustment to reconcile operating expense to non-GAAP





operating expense:





  Impact of stock-based compensation

$

7

$

7

  Impact of amortization of acquisition intangibles

$

1

$

1






Non-GAAP operating expense, guidance

$

191

$

195


National Instruments

Reconciliation of GAAP to Non-GAAP EPS Guidance

(unaudited)



Three Months Ended


June 30, 2013



Low


High

GAAP fully diluted EPS, guidance

$

0.09

$

0.21

Adjustment to reconcile diluted EPS to non-GAAP diluted EPS:





 Impact of stock-based compensation, net of tax effect


0.05


0.05

 Impact of amortization of acquisition intangibles, net of tax effect


0.02


0.02






Non-GAAP diluted EPS, guidance

$

0.16

$

0.28






 

SOURCE National Instruments

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Contact Investor Relations

Marissa Vidaurri

Vice President of Investor Relations

marissa.vidaurri@ni.com

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