National Instruments Reports Record Quarterly Revenue, Up 34 Percent Year-Over-Year
AUSTIN, Texas, Oct. 25, 2010 /PRNewswire via COMTEX News Network/ -- Q3 2010 Highlights
- Record quarterly revenue of $220 million, up 34 percent year-over-year
- Record operating income for a third quarter
- GAAP gross margin of 76.5 percent and non-GAAP gross margin of 77.0 percent
- Fully diluted GAAP EPS of $0.36 and fully diluted non-GAAP EPS of $0.41
- Record cash and short-term investments of $339 million as of Sept. 30
National Instruments (Nasdaq: NATI) reported quarterly revenue for Q3 2010 of $220 million, representing a 34 percent year-over-year increase and a 4 percent sequential increase. For the first nine months of 2010, the company reported a 31 percent year-over-year increase in revenue and a significant year-over-year increase in operating margins. Also during the quarter, backlog increased by $7 million.
Net income for Q3 2010 was $28.1 million, with GAAP fully diluted earnings per share (EPS) of $0.36. Non-GAAP net income was $32.3 million, with non-GAAP fully diluted EPS of $0.41. GAAP and non-GAAP operating income set a record for a third quarter, and operating margins improved significantly over Q3 2009. 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.
In Q3, GAAP gross margin increased 1.9 percentage points year-over-year to 76.5 percent. Non-GAAP gross margin increased by 1.7 percentage points year-over-year to 77.0 percent.
"I am extremely pleased with our Q3 performance and believe our long-term focus on innovation and operational excellence has helped differentiate NI from other players in the markets we serve," said Dr. James Truchard, co-founder, president and CEO. "I believe the many new opportunities created by our expanding product and services portfolio, together with the strong business momentum we saw in Q3, validate our strategy in the marketplace."
NI virtual instrumentation and graphical system design product sales were up 34 percent year-over-year. NI instrument control product sales were up 25 percent year-over-year but remain 11 percent below Q3 2008 levels. Product revenue was $203 million, up 34 percent year-over-year, and software maintenance revenue was $17 million, up 34 percent year-over-year. Geographically, revenue in U.S. dollar terms for Q3 2010 compared to Q3 2009 was up 29 percent in the Americas, up 28 percent in Europe and up 48 percent in Asia. In local currency terms, revenue was up 40 percent in Europe and up 45 percent in Asia.
As of Sept. 30, NI had a record $339 million in net cash and short-term investments, up $22 million from June 30. During the quarter, the company paid $10 million in dividends and used approximately $11 million to repurchase 379,000 shares of its common stock at an average price of $28.87 per share. National Instruments announced that its board of directors approved a dividend of $0.13 per share payable on Nov. 29 to shareholders of record on Nov. 8.
Outlook
In Q3, the global purchasing manager's index (PMI) averaged 53.5, down from a quarterly average of 56.7 in Q2. This moderation was in line with the company's expectation that the global PMI would move toward its long-term average of 51.7 in Q3 and Q4. The company currently expects that the global PMI will continue to trend toward its historical average during Q4. Given the relatively low levels of global inventory, the company believes the industrial economy is positioned to manage the moderation of the global PMI, and that NI is positioned to grow revenue through this moderating trend.
"We are confident that we will deliver record revenue and profitability in 2010 and I would like to thank all of our employees for their hard work and commitment during the recession," said Alex Davern, EVP, COO and CFO. "We have delivered a rapid recovery in our profitability, and assuming 2011 is a normal revenue growth year we will be targeting only a modest increase in operating margins. We will instead be making significant focused investments in key regions and applications to support sustained growth of the company."
NI expects strong Q4 year-over-year revenue growth, with revenue expected to be between $230 million and $244 million. The company expects fully diluted GAAP EPS between $0.38 and $0.48, with non-GAAP fully diluted EPS expected to be between $0.43 and $0.53.
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 (benefit from) income taxes, net income and basic and fully diluted EPS for the three- and nine-month periods ending Sept. 30, 2010 and 2009, 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 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 our earnings before interest, taxes, depreciation and amortization (EBITDA) and EBITDA diluted EPS for the three- and nine- month periods ended Sept. 30, 2010 and 2009. We also believe 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 Q3 2010 conference call today, Oct. 25, beginning at 4:00 p.m. CDT, at www.ni.com/call. Replay information is available by calling (888) 203-1112, confirmation code #8494302, from Oct. 25 at 7:00 p.m. CDT through Oct. 30 at 7:00 p.m. CDT.
Forward-Looking Statements
This release contains "forward-looking statements," including statements related to our long-term focus on innovation and operational excellence differentiating NI from other players, the many new opportunities created by our expanding product and services portfolio, together with the strong business momentum validating our strategy, expecting that the global PMI will continue to trend toward its historical average during Q4, our belief that the industrial economy is well positioned to manage the moderation of the global PMI, that NI is positioned to grow revenue through this moderating trend, being confident that we will deliver record revenue and profitability in 2010, targeting a modest increase in operating margins, making significant focused investments in key regions and applications to support our sustained growth, expecting strong Q4 revenue growth and our outlook for Q4 revenue and Q4 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 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 December 31, 2009, its Form 10-Q for the quarter ended June 30, 2010, 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 no one customer representing more than 3 percent of revenue and no one industry representing more than 15 percent of revenue. Headquartered in Austin, Texas, NI has more than 5,000 employees and direct operations in more than 40 countries. For the past 11 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)
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)
December
September 31,
2010 2009
(unaudited)
-----------
Assets
Current assets:
Cash and cash
equivalents $226,844 $201,465
Short-term
investments 111,903 87,196
Accounts receivable,
net 121,503 103,957
Inventories, net 101,532 86,515
Prepaid expenses and
other current
assets 42,132 36,523
Deferred income
taxes, net 15,449 16,522
------ ------
Total current assets 619,363 532,178
Property and
equipment, net 151,667 153,265
Goodwill, net 69,383 64,779
Intangible assets,
net 52,553 43,390
Other long-term
assets 19,269 19,417
Total assets $912,235 $813,029
======== ========
Liabilities and
Stockholders'
Equity
Current liabilities:
Accounts payable $33,005 $23,502
Accrued compensation 39,075 14,934
Deferred revenue 63,940 57,242
Accrued expenses and
other liabilities 18,313 8,560
Other taxes payable 15,324 14,181
------ ------
Total current
liabilities 169,657 118,419
Deferred income
taxes 24,725 25,012
Liability for
uncertain tax
position 11,608 11,062
Other long-term
liabilities 5,225 4,116
----- -----
Total liabilities $211,215 $158,609
======== ========
Stockholders'
equity:
Preferred stock - -
Common stock 780 774
Additional paid-in
capital 388,502 336,446
Retained earnings 308,535 303,655
Accumulated other
comprehensive
income 3,203 13,545
----- ------
Total stockholders'
equity $701,020 $654,420
-------- --------
Total liabilities
and stockholders'
equity $912,235 $813,029
======== ========
National Instruments
Consolidated Statements of Income
(in thousands, except per share data)
Three Months Nine Months
Ended Ended
September September
30, 30,
(Unaudited) (Unaudited)
----------- -----------
2010 2009 2010 2009
Net sales:
Products $203,188 $152,106 $573,413 $435,348
Software
maintenance 17,261 12,929 49,844 39,649
------ ------ ------ ------
Total net sales 220,449 165,035 623,257 474,997
Cost of sales:
Cost of
products $50,380 $40,476 $139,818 $119,234
Cost of
software
maintenance 1,523 1,423 3,966 4,034
----- ----- ----- -----
Total cost of
sales 51,903 41,899 143,784 123,268
Gross profit $168,546 $123,136 $479,473 $351,729
-------- -------- -------- --------
Operating
expenses:
Sales and
marketing $79,494 $65,126 $233,166 $199,089
Research and
development 39,971 35,016 114,912 99,252
General and
administrative 17,392 12,306 49,701 42,838
Total operating
expenses $136,857 $112,448 $397,779 $341,179
-------- -------- -------- --------
Operating
income $31,689 $10,688 $81,694 $10,550
Other income
(expense):
Interest income $380 $339 $1,051 $1,335
Net foreign
exchange gain
(loss) 426 940 (2,475) 1,301
Other income,
net 160 482 970 979
--- --- --- ---
Income before
income taxes $32,655 $12,449 $81,240 $14,165
Provision for
(benefit from)
income taxes 4,522 2,518 10,152 (554)
Net income $28,133 $9,931 $71,088 $14,719
------- ------ ------- -------
Basic earnings
per share $0.36 $0.13 $0.91 $0.19
----- ----- ----- -----
Diluted
earnings per
share $0.36 $0.13 $0.90 $0.19
----- ----- ----- -----
Weighted
average shares
outstanding -
basic 78,176 77,653 77,832 77,497
diluted 78,862 78,103 78,848 77,842
Dividends
declared per
share $0.13 $0.12 $0.39 $0.36
National Instruments
Consolidated Statements of Cash Flows
(in thousands)
Nine Months
Ended
September
30,
(Unaudited)
-----------
2010 2009
Cash flow from operating
activities:
Net income $71,088 $14,719
Adjustments to reconcile
net income to net cash
provided
by operating activities:
Depreciation and
amortization 28,220 28,536
Stock-based compensation 14,194 15,238
Tax expense (benefit) from
deferred income taxes 1,174 (6,802)
Tax expense stock option
plans 599 1,445
Changes in operating assets
and liabilities:
Accounts receivable (17,298) 30,758
Inventories (14,712) 18,632
Prepaid expenses and other
assets (15,328) 3,920
Accounts payable 9,171 (5,444)
Deferred revenue 6,698 3,588
Taxes and other liabilities 33,938 (14,245)
Net cash provided by
operating activities $117,744 $90,345
-------- -------
Cash flow from investing
activities:
Capital expenditures (14,404) (12,331)
Capitalization of
internally developed
software (14,300) (10,611)
Additions to other
intangibles (2,253) (4,009)
Acquisition, net of cash
received (2,191) -
Purchases of short-term
and long-term investments (88,226) (38,876)
Sales and maturities of
short-term and long-term
investments 63,519 10,034
Net cash (used by) provided
by investing activities $(57,855) $(55,793)
-------- --------
Cash flow from financing
activities:
Proceeds from issuance of
common stock 38,368 16,351
Repurchase of common stock (41,862) (18,200)
Dividends paid (30,417) (27,958)
Tax (benefit) from stock
option plans (599) (1,445)
Net cash (used by)
financing activities $(34,510) $(31,252)
-------- --------
Net change in cash and cash
equivalents 25,379 3,300
Cash and cash equivalents
at beginning of period 201,465 229,400
Cash and cash equivalents
at end of period $226,844 $232,700
======== ========
Detail of GAAP charges related to stock-
based compensation and
amortization of acquisition intangibles
(Unaudited)
Three
Months Nine Months
Ended Ended
September September
30, 30,
2010 2009 2010 2009
---- ---- ---- ----
Stock-based
compensation
Cost of sales $332 $335 $1,014 $975
Sales and
marketing 1,960 2,210 6,060 6,626
Research and
development 1,771 1,929 5,129 5,349
General and
administrative 672 728 1,991 2,288
--- --- ----- -----
Provision for
income taxes (1,295) (409) (4,422) (5,288)
------ ---- ------ ------
Total $3,440 $4,793 $9,772 $9,950
------ ------ ------ ------
Amortization of
acquisition
intangibles
Cost of sales $921 $853 $2,565 $2,593
Sales and
marketing 89 125 311 377
Research and
development - - - -
General and
administrative - - - -
--- --- --- ---
Provision for
income taxes (324) (277) (904) (834)
---- ---- ---- ----
Total $686 $701 $1,972 $2,136
--- --- ------ ------
National Instruments
Reconciliation of GAAP to Non-GAAP
Measures
(in thousands, except per share data)
(unaudited)
Three Nine
Months Months
Ended Ended
September September
30, 30,
2010 2009 2010 2009
---- ---- ---- ----
Reconciliation of Gross Profit to Non-
GAAP Gross Profit
Gross profit, as
reported $168,546 $123,136 $479,473 $351,729
Stock-based
compensation 332 335 1,014 975
Amortization of
acquisition
intangibles 921 853 2,565 2,593
--- --- ----- -----
Non-GAAP gross
profit $169,799 $124,324 $483,052 $355,297
Reconciliation of Operating Expenses to
Non-GAAP Operating Expenses
Operating
expenses, as
reported $136,857 $112,448 $397,779 $341,179
Stock-based
compensation (4,403) (4,867) (13,180) (14,263)
Amortization of
acquisition
intangibles (89) (125) (311) (377)
--- ---- ---- ----
Non-GAAP
operating
expenses $132,365 $107,456 $384,288 $326,539
Reconciliation of Operating Income to
Non-GAAP Operating Income
Operating income,
as reported $31,689 $10,688 $81,694 $10,550
Stock-based
compensation 4,735 5,202 14,194 15,238
Amortization of
acquisition
intangibles 1,010 978 2,876 2,970
----- --- ----- -----
Non-GAAP
operating income $37,434 $16,868 $98,764 $28,758
Reconciliation of Income Before Income
Taxes to Non-GAAP Income Before Income
Taxes
Income before
income taxes, as
reported $32,655 $12,449 $81,240 $14,165
Stock-based
compensation 4,735 5,202 14,194 15,238
Amortization of
acquisition
intangibles 1,010 978 2,876 2,970
----- --- ----- -----
Non-GAAP income
before income
taxes $38,400 $18,629 $98,310 $32,373
Reconciliation of Provision for (Benefit
From) Income Taxes to Non-GAAP
Provision for Income Taxes
Provision for
(benefit from)
income taxes, as
reported $4,522 $2,518 $10,152 $(554)
Stock-based
compensation 1,295 409 4,422 5,288
Amortization of
acquisition
intangibles 324 277 904 834
--- --- --- ---
Non-GAAP
provision for
income taxes $6,141 $3,204 $15,478 $5,568
Reconciliation of GAAP Net Income, Basic EPS and Diluted EPS to Non-
GAAP Net Income, Basic EPS and Diluted EPS
(unaudited)
Three Months
Ended
September 30,
2010 2009
---- ----
Net income, as reported $28,133 $9,931
Adjustments to reconcile net income to
non-GAAP net income:
Stock-based compensation, net of tax
effect 3,440 4,793
Amortization of acquisition intangibles,
net of tax effect 686 701
--- ---
Non-GAAP net income $32,259 $15,425
======= =======
Basic EPS, as reported $0.36 $0.13
Adjustment to reconcile basic EPS to non-
GAAP
basic EPS:
Impact of stock-based compensation, net
of tax effect $0.04 $0.06
Impact of amortization of acquisition
intangibles, net of tax effect $0.01 $0.01
----- -----
Non-GAAP basic EPS $0.41 $0.20
===== =====
Diluted EPS, as reported $0.36 $0.13
Adjustment to reconcile diluted EPS to
non-GAAP
diluted EPS:
Impact of stock-based compensation, net
of tax effect $0.04 $0.06
Impact of amortization of acquisition
intangibles, net of tax effect $0.01 $0.01
----- -----
Non-GAAP diluted EPS $0.41 $0.20
===== =====
Weighted average shares outstanding -
Basic 78,176 77,653
------ ------
Diluted 78,862 78,103
------ ------
Nine Months
Ended
September 30,
2010 2009
---- ----
Net income, as reported $71,088 $14,719
Adjustments to reconcile net income to
non-GAAP net income:
Stock-based compensation, net of tax
effect 9,772 9,950
Amortization of acquisition intangibles,
net of tax effect 1,972 2,136
----- -----
Non-GAAP net income $82,832 $26,805
======= =======
Basic EPS, as reported $0.91 $0.19
Adjustment to reconcile basic EPS to non-
GAAP
basic EPS:
Impact of stock-based compensation, net
of tax effect $0.12 $0.13
Impact of amortization of acquisition
intangibles, net of tax effect $0.03 $0.03
----- -----
Non-GAAP basic EPS $1.06 $0.35
===== =====
Diluted EPS, as reported $0.90 $0.19
Adjustment to reconcile diluted EPS to
non-GAAP
diluted EPS:
Impact of stock-based compensation, net
of tax effect $0.12 $0.13
Impact of amortization of acquisition
intangibles, net of tax effect $0.03 $0.03
----- -----
Non-GAAP diluted EPS $1.05 $0.35
===== =====
Weighted average shares outstanding -
Basic 77,832 77,497
------ ------
Diluted 78,848 77,842
------ ------
Reconciliation of Net Income and Diluted EPS to EBITDA and EBITDA
Diluted EPS
(unaudited)
Three Months
Ended
September 30,
2010 2009
---- ----
Net income, as reported $28,133 $9,931
Adjustments to reconcile net
income to EBITDA:
Interest income (380) (339)
Taxes 4,522 2,518
Depreciation and amortization 9,232 9,513
EBITDA $41,507 $21,623
======= =======
Diluted EPS, as reported $0.36 $0.13
Adjustment to reconcile diluted
EPS to EBITDA
Interest income $(0.01) $(0.00)
Taxes $0.06 $0.03
Depreciation and amortization $0.12 $0.12
EBITDA diluted EPS $0.53 $0.28
===== =====
Weighted average shares
outstanding -Diluted 78,862 78,103
------ ------
Nine Months
Ended
September 30,
2010 2009
---- ----
Net income, as reported $71,088 $14,719
Adjustments to reconcile net
income to EBITDA:
Interest income (1,051) (1,335)
Taxes 10,152 (554)
Depreciation and amortization 28,220 28,536
EBITDA $108,409 $41,366
======== =======
Diluted EPS, as reported $0.90 $0.19
Adjustment to reconcile diluted
EPS to EBITDA
Interest income $(0.01) $(0.02)
Taxes $0.13 $(0.01)
Depreciation and amortization $0.35 $0.37
EBITDA diluted EPS $1.37 $0.53
===== =====
Weighted average shares
outstanding -Diluted 78,848 77,842
------ ------
National Instruments
Reconciliation of GAAP Diluted EPS Guidance to Non-GAAP
Diluted EPS Guidance
(unaudited)
Three months
ended
December 31, 2010
-----------------
Low High
GAAP Diluted EPS, guidance $0.38 $0.48
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 $0.01 $0.01
Non-GAAP Diluted EPS, guidance $0.43 $0.53
===== =====
SOURCE National Instruments
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