National Instruments Reports Record Revenue and Net Income for 2014
Company Delivered on Operating Leverage Target for 2014 and Increases Dividend
Q4 2014 Highlights
-
Record quarterly revenue of
$333 million - Revenue up 11 percent year-over-year in U.S. dollar terms and 13 percent in constant currency terms
- Strong revenue growth in LabVIEW, PXI, RF and CompactRIO products
- GAAP operating income up 39 percent year-over-year
- Non-GAAP operating income up 30 percent year-over-year
-
Fully diluted GAAP EPS of
$0.34 and fully diluted non-GAAP EPS of$0.40 -
EBITDA of
$73 million or$0.57 per share -
Cash and cash equivalents of
$471 million , up$78 million fromDec. 31, 2013
GAAP net income for Q4 was
In Q4, GAAP gross margin was 75 percent and non-GAAP gross margin was 76
percent, up 10 basis points from Q4 2013. Total GAAP operating expenses
were
GAAP operating margin was 17 percent in Q4, with GAAP operating income
of
The company's non-GAAP results exclude the impact of stock-based compensation, amortization of acquisition-related intangibles and acquisition transaction costs and restructuring charges. Reconciliations of the company's GAAP and non-GAAP results are included as part of this news release.
"We have built and continue to run our company for long-term,
sustainable growth," said Dr.
Geographic revenue in U.S. dollar terms for Q4 2014 compared with Q4
2013 was up 5 percent in the
As of
FY 2014 Highlights
-
Record revenue of
$1.24 billion , up 6 percent year-over-year - Record new product revenue
-
Record fully diluted GAAP EPS of
$0.99 , up 54 percent year-over-year -
Record non-GAAP fully diluted EPS of
$1.22 , up 39 percent year-over-year -
EBITDA of
$213 million , or$1.67 per share -
Dividends paid of
$76 million , or$0.60 per share
Full-year 2014 revenue was
Guidance for Q1 2015
"2014 was a year of great progress for NI. We delivered a strong finish
to the year with record revenue, record profit and record cash. Our
employees executed well, and the strength of our differentiated platform
continued to gain market share," said
The Company expects to see a significant headwind to our USD revenue growth due to the impact of the strengthening of the USD. Currently we expect this impact to reduce our YOY USD revenue growth by approximately 500 basis points in Q1, so that our constant currency growth would be 5 percentage points higher than our USD revenue growth. This estimate is based on current exchange rates and can change as exchange rates fluctuate over the rest of the quarter.
As a result, we currently expect revenue for Q1 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-
and 12-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 adjustments, acquisition-related transaction costs and restructuring 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 EBITDA and EBITDA diluted
EPS for the three- and 12-month periods ending
Conference Call Information and Availability of Presentation Materials
Interested parties can listen to the Q4 2014 conference call today,
Forward-Looking Statements
This release contains "forward-looking statements," including statements
regarding continuing to run our company for long-term, sustainable
growth, that we are prepared to navigate the near-term disruptions
resulting from currency fluctuations, that our differentiated platform
continues to deliver on our strategy of reducing the costs of our
customers' systems, while growing our business in the markets we serve,
the strength of our differentiated platform continued to gain market
share, being cautious of the current macroeconomic challenges, remaining
focused on leveraging previous investments to drive sustained revenue
growth, being confident in our ability to continue to make progress
towards our non-GAAP operating margin target of 18 percent, expecting
gross margins to be up sequentially in Q1, our guidance for Q1 revenue
and GAAP and Non-GAAP fully diluted EPS, expected loss on foreign
exchange of
The company directs readers to its Form 10-K for the fiscal 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)
CompactRIO,
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Condensed Consolidated Balance Sheets | ||||||||
(in thousands, unaudited) | ||||||||
|
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2014 | 2013 | |||||||
Assets | ||||||||
Current assets: | ||||||||
Cash and cash equivalents | $ | 274,030 | $ | 230,263 | ||||
Short-term investments | 197,163 | 163,149 | ||||||
Accounts receivable, net | 202,329 | 180,680 | ||||||
Inventories, net | 173,052 | 172,109 | ||||||
Prepaid expenses and other current assets | 70,075 | 49,001 | ||||||
Deferred income taxes, net | 31,171 | 33,393 | ||||||
Total current assets | 947,820 | 828,595 | ||||||
Property and equipment, net | 264,086 | 260,568 | ||||||
Goodwill | 144,325 | 146,520 | ||||||
Intangible assets, net | 78,282 | 82,310 | ||||||
Other long-term assets | 20,978 | 25,558 | ||||||
Total assets | $ | 1,455,491 | $ | 1,343,551 | ||||
Liabilities and Stockholders' Equity | ||||||||
Current liabilities: | ||||||||
Accounts payable | $ | 58,603 | $ | 56,614 | ||||
Accrued compensation | 33,774 | 25,189 | ||||||
Deferred revenue - current | 105,964 | 96,117 | ||||||
Accrued expenses and other liabilities | 14,714 | 17,627 | ||||||
Other taxes payable | 34,602 | 29,808 | ||||||
Total current liabilities | 247,657 | 225,355 | ||||||
Deferred income taxes | 47,406 | 44,620 | ||||||
Liability for uncertain tax positions | 10,127 | 23,572 | ||||||
Deferred revenue - long-term | 26,452 | 21,389 | ||||||
Other long-term liabilities | 6,353 | 5,531 | ||||||
Total liabilities | 337,995 | 320,467 | ||||||
Stockholders' equity: | ||||||||
Preferred stock | - | - | ||||||
Common stock | 1,278 | 1,257 | ||||||
Additional paid-in capital | 662,889 | 604,330 | ||||||
Retained earnings | 464,993 | 414,947 | ||||||
Accumulated other comprehensive (loss) income | (11,664 | ) | 2,550 | |||||
Total stockholders' equity | 1,117,496 | 1,023,084 | ||||||
Total liabilities and stockholders' equity | $ | 1,455,491 | $ | 1,343,551 |
|
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Condensed Consolidated Statements of Income | |||||||||||||||||
(in thousands, except per share data, unaudited) | |||||||||||||||||
Three Months Ended | Year Ended | ||||||||||||||||
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|
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2014 | 2013 | 2014 | 2013 | ||||||||||||||
Net sales: | |||||||||||||||||
Product | $ | 305,176 | $ | 280,523 | $ | 1,143,000 | $ | 1,091,186 | |||||||||
Software maintenance | 27,600 | 20,283 | 100,862 | 81,372 | |||||||||||||
Total net sales | 332,776 | 300,806 | 1,243,862 | 1,172,558 | |||||||||||||
Cost of sales: | |||||||||||||||||
Product | 83,094 | 74,900 | 312,623 | 299,854 | |||||||||||||
Software maintenance | 1,066 | 1,082 | 5,509 | 5,389 | |||||||||||||
Total cost of sales | 84,160 | 75,982 | 318,132 | 305,243 | |||||||||||||
Gross profit | 248,616 | 224,824 | 925,730 | 867,315 | |||||||||||||
Operating expenses: | |||||||||||||||||
Sales and marketing | 113,819 | 109,916 | 461,845 | 447,800 | |||||||||||||
Research and development | 57,351 | 54,276 | 227,433 | 234,796 | |||||||||||||
General and administrative | 22,411 | 21,055 | 91,265 | 87,418 | |||||||||||||
Acquisition related adjustment | - | - | - | (1,316 | ) | ||||||||||||
Total operating expenses | 193,581 | 185,247 | 780,543 | 768,698 | |||||||||||||
Operating income | 55,035 | 39,577 | 145,187 | 98,617 | |||||||||||||
Other income (expense): | |||||||||||||||||
Interest income | 340 | 184 | 1,133 | 679 | |||||||||||||
Net foreign exchange loss | (1,245 | ) | (521 | ) | (2,250 | ) | (2,578 | ) | |||||||||
Other (loss) income, net | (352 | ) | (278 | ) | (69 | ) | 450 | ||||||||||
Income before income taxes | 53,778 | 38,962 | 144,001 | 97,168 | |||||||||||||
Provision for income taxes | 10,393 | 7,234 | 17,668 | 16,655 | |||||||||||||
Net income | $ | 43,385 | $ | 31,728 | $ | 126,333 | $ | 80,513 | |||||||||
Basic earnings per share | $ | 0.34 | $ | 0.25 | $ | 0.99 | $ | 0.65 | |||||||||
Diluted earnings per share | $ | 0.34 | $ | 0.25 | $ | 0.99 | $ | 0.64 | |||||||||
Weighted average shares outstanding - | |||||||||||||||||
basic | 127,755 | 125,489 | 127,030 | 124,558 | |||||||||||||
diluted | 128,233 | 126,217 | 127,799 | 125,571 | |||||||||||||
Dividends declared per share | $ | 0.15 | $ | 0.14 | $ | 0.60 | $ | 0.56 |
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Condensed Consolidated Statements of Cash Flows | |||||||||
(in thousands, unaudited) | |||||||||
Year Ended |
|||||||||
2014 | 2013 | ||||||||
Cash flow from operating activities: | |||||||||
Net income | $ | 126,333 | $ | 80,513 | |||||
Adjustments to reconcile net income to net cash provided | |||||||||
by operating activities: | |||||||||
Depreciation and amortization | 70,206 | 67,974 | |||||||
Stock-based compensation | 25,759 | 28,992 | |||||||
Tax expense/(benefit) from deferred income taxes | 5,886 | (4,353 | ) | ||||||
Tax benefit from stock option plans | (1,242 | ) | (2,407 | ) | |||||
Changes in operating assets and liabilities: | |||||||||
Accounts receivable | (21,649 | ) | 6,820 | ||||||
Inventories | (943 | ) | (1,563 | ) | |||||
Prepaid expenses and other assets | (25,046 | ) | (1,767 | ) | |||||
Accounts payable | 1,989 | (8,604 | ) | ||||||
Deferred revenue | 14,910 | 6,346 | |||||||
Taxes and other liabilities | (1,097 | ) | (2,472 | ) | |||||
Net cash provided by operating activities | 195,106 | 169,479 | |||||||
Cash flow from investing activities: | |||||||||
Capital expenditures | (44,944 | ) | (47,796 | ) | |||||
Capitalization of internally developed software | (25,781 | ) | (14,883 | ) | |||||
Additions to other intangibles | (2,834 | ) | (5,182 | ) | |||||
Purchases of short-term investments | (123,849 | ) | (70,354 | ) | |||||
Sales and maturities of short-term investments | 89,835 | 80,371 | |||||||
Net cash used in investing activities | (107,573 | ) | (57,844 | ) | |||||
Cash flow from financing activities: | |||||||||
Proceeds from issuance of common stock | 31,277 | 39,319 | |||||||
AWR earnout payment | - | (15,318 | ) | ||||||
Dividends paid | (76,285 | ) | (69,776 | ) | |||||
Tax benefit from stock option plans | 1,242 | 2,407 | |||||||
Net cash used in financing activities | (43,766 | ) | (43,368 | ) | |||||
Net change in cash and cash equivalents | 43,767 | 68,267 | |||||||
Cash and cash equivalents at beginning of period | 230,263 | 161,996 | |||||||
Cash and cash equivalents at end of period | $ | 274,030 | $ | 230,263 |
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Detail of GAAP charges related to revenue, stock-based compensation, amortization of acquisition intangibles and acquisition transaction costs and restructuring charges | |||||||||||||||||
(in thousands, unaudited) | |||||||||||||||||
Three Months Ended | Year Ended | ||||||||||||||||
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2014 | 2013 | 2014 | 2013 | ||||||||||||||
Stock-based compensation | |||||||||||||||||
Cost of sales | $ | 447 | $ | 439 | $ | 1,711 | $ | 1,658 | |||||||||
Sales and marketing | 2,597 | 2,882 | 10,931 | 11,789 | |||||||||||||
Research and development | 2,428 | 2,728 | 9,649 | 11,864 | |||||||||||||
General and administrative | 810 | 890 | 3,467 | 3,624 | |||||||||||||
Provision for income taxes | (1,497 | ) | (3,216 | ) | (7,414 | ) | (9,801 | ) | |||||||||
Total | $ | 4,785 | $ | 3,723 | $ | 18,344 | $ | 19,134 | |||||||||
Amortization of acquisition intangibles | |||||||||||||||||
Cost of sales | $ | 2,660 | $ | 2,673 | $ | 10,651 | $ | 10,718 | |||||||||
Sales and marketing | 433 | 482 | 1,784 | 1,988 | |||||||||||||
Research and development | 369 | 405 | 1,567 | 2,043 | |||||||||||||
Other income, net | 165 | 185 | 672 | 751 | |||||||||||||
Provision for income taxes | (1,199 | ) | (1,231 | ) | (4,846 | ) | (5,081 | ) | |||||||||
Total | $ | 2,428 | $ | 2,514 | $ | 9,828 | $ | 10,419 | |||||||||
Acquisition related transaction costs and restructuring charges | |||||||||||||||||
Cost of sales | $ | 742 | $ | 21 | $ | 1,289 | $ | 28 | |||||||||
Sales and marketing | 37 | 189 | 189 | 595 | |||||||||||||
Research and development | 178 | 410 | 442 | 1,101 | |||||||||||||
General and administrative | 96 | 80 | 241 | 326 | |||||||||||||
Acquisition related adjustment | - | - | - | (1,316 | ) | ||||||||||||
Provision for income taxes | (286 | ) | (133 | ) | (674 | ) | (545 | ) | |||||||||
Total | $ | 767 | $ | 567 | $ | 1,487 | $ | 189 |
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Reconciliation of GAAP to Non-GAAP Measures | |||||||||||||||||
(in thousands, unaudited) | |||||||||||||||||
Three Months Ended | Year Ended | ||||||||||||||||
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2014 | 2013 | 2014 | 2013 | ||||||||||||||
Reconciliation of Gross Profit to Non-GAAP Gross Profit | |||||||||||||||||
Gross profit, as reported | $ | 248,616 | $ | 224,824 | $ | 925,730 | $ | 867,315 | |||||||||
Stock-based compensation | 447 | 439 | 1,711 | 1,658 | |||||||||||||
Amortization of acquisition intangibles | 2,660 | 2,673 | 10,651 | 10,718 | |||||||||||||
Acquisition transaction costs and restructuring charges | 742 | 21 | 1,289 | 28 | |||||||||||||
Non-GAAP gross profit | $ | 252,465 | $ | 227,957 | $ | 939,381 | $ | 879,719 | |||||||||
Non-GAAP gross margin | 76 | % | 76 | % | 76 | % | 75 | % | |||||||||
Reconciliation of Operating Expenses to Non-GAAP Operating Expenses | |||||||||||||||||
Operating expenses, as reported | $ | 193,581 | $ | 185,247 | $ | 780,543 | $ | 768,698 | |||||||||
Stock-based compensation | (5,835 | ) | (6,500 | ) | (24,047 | ) | (27,277 | ) | |||||||||
Amortization of acquisition intangibles | (802 | ) | (887 | ) | (3,351 | ) | (4,031 | ) | |||||||||
Acquisition related adjustment | - | - | - | 1,316 | |||||||||||||
Acquisition transaction costs and restructuring charges | (311 | ) | (679 | ) | (872 | ) | (2,022 | ) | |||||||||
Non-GAAP operating expenses | $ | 186,633 | $ | 177,181 | $ | 752,273 | $ | 736,684 | |||||||||
Reconciliation of Operating Income to Non-GAAP Operating Income | |||||||||||||||||
Operating income, as reported | $ | 55,035 | $ | 39,577 | $ | 145,187 | $ | 98,617 | |||||||||
Stock-based compensation | 6,282 | 6,939 | 25,758 | 28,935 | |||||||||||||
Amortization of acquisition intangibles | 3,462 | 3,560 | 14,002 | 14,749 | |||||||||||||
Acquisition related adjustment | - | - | - | (1,316 | ) | ||||||||||||
Acquisition transaction costs and restructuring charges | 1,053 | 700 | 2,161 | 2,050 | |||||||||||||
Non-GAAP operating income | $ | 65,832 | $ | 50,776 | $ | 187,108 | $ | 143,035 | |||||||||
Non-GAAP operating margin | 20 | % | 17 | % | 15 | % | 12 | % | |||||||||
Reconciliation of Income before income taxes to Non-GAAP Income before income taxes | |||||||||||||||||
Income before income taxes, as reported | $ | 53,778 | $ | 38,962 | $ | 144,001 | $ | 97,168 | |||||||||
Stock-based compensation | 6,282 | 6,939 | 25,758 | 28,935 | |||||||||||||
Amortization of acquisition intangibles | 3,627 | 3,745 | 14,674 | 15,500 | |||||||||||||
Acquisition related adjustment | - | - | - | (1,316 | ) | ||||||||||||
Acquisition transaction costs and restructuring charges | 1,053 | 700 | 2,161 | 2,050 | |||||||||||||
Non-GAAP income before income taxes | $ | 64,740 | $ | 50,346 | $ | 186,594 | $ | 142,337 | |||||||||
Reconciliation of Provision for income taxes to Non-GAAP Provision for income taxes | |||||||||||||||||
Provision for income taxes, as reported | $ | 10,393 | $ | 7,234 | $ | 17,668 | $ | 16,655 | |||||||||
Stock-based compensation | 1,497 | 3,216 | 7,414 | 9,801 | |||||||||||||
Amortization of acquisition intangibles | 1,199 | 1,231 | 4,846 | 5,081 | |||||||||||||
Acquisition transaction costs and restructuring charges | 286 | 133 | 674 | 545 | |||||||||||||
Non-GAAP provision for income taxes | $ | 13,375 | $ | 11,814 | $ | 30,602 | $ | 32,082 |
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Reconciliation of GAAP Net Income, Basic EPS and Diluted EPS to Non-GAAP Net Income, Non-GAAP Basic EPS and Non-GAAP Diluted EPS | ||||||||||||||
(in thousands, except per share data, unaudited) | ||||||||||||||
Three Months Ended | Year Ended | |||||||||||||
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2014 | 2013 | 2014 | 2013 | |||||||||||
Net income, as reported | $ | 43,385 | $ | 31,728 | $ | 126,333 | $ | 80,513 | ||||||
Adjustments to reconcile net income to non-GAAP net income: | ||||||||||||||
Stock-based compensation, net of tax effect | 4,785 | 3,723 | 18,344 | 19,134 | ||||||||||
Amortization of acquisition intangibles, net of tax effect | 2,428 | 2,514 | 9,828 | 10,419 | ||||||||||
Acquisition related adjustment | - | - | - | (1,316 | ) | |||||||||
Acquisition transaction costs and restructuring charges, net of tax effect | 767 | 567 | 1,487 | 1,505 | ||||||||||
Non-GAAP net income | $ | 51,365 | $ | 38,532 | $ | 155,992 | $ | 110,255 | ||||||
Basic EPS, as reported | $ | 0.34 | $ | 0.25 | $ | 0.99 | $ | 0.65 | ||||||
Adjustment to reconcile basic EPS to non-GAAP basic EPS | ||||||||||||||
Impact of stock-based compensation, net of tax effect | 0.04 | 0.03 | 0.15 | 0.16 | ||||||||||
Impact of amortization of acquisition intangibles, net of tax effect | 0.02 | 0.02 | 0.08 | 0.08 | ||||||||||
Acquisition related adjustment | - | - | - | (0.01 | ) | |||||||||
Impact of acquisition transaction costs and restructuring charges, net of tax effect | - | 0.01 | 0.01 | 0.01 | ||||||||||
Non-GAAP basic EPS | $ | 0.40 | $ | 0.31 | $ | 1.23 | $ | 0.89 | ||||||
Diluted EPS, as reported | $ | 0.34 | $ | 0.25 | $ | 0.99 | $ | 0.64 | ||||||
Adjustment to reconcile diluted EPS to non-GAAP diluted EPS | ||||||||||||||
Impact of stock-based compensation, net of tax effect | 0.04 | 0.03 | 0.14 | 0.16 | ||||||||||
Impact of amortization of acquisition intangibles, net of tax effect | 0.02 | 0.02 | 0.08 | 0.08 | ||||||||||
Acquisition related adjustment | - | - | - | (0.01 | ) | |||||||||
Impact of acquisition transaction costs and restructuring charges, net of tax effect | - | 0.01 | 0.01 | 0.01 | ||||||||||
Non-GAAP diluted EPS | $ | 0.40 | $ | 0.31 | $ | 1.22 | $ | 0.88 | ||||||
Weighted average shares outstanding - | ||||||||||||||
Basic | 127,755 | 125,489 | 127,030 | 124,558 | ||||||||||
Diluted | 128,233 | 126,217 | 127,799 | 125,571 |
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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 | Year Ended | ||||||||||||||||
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2014 | 2013 | 2014 | 2013 | ||||||||||||||
Net income, as reported | $ | 43,385 | $ | 31,728 | $ | 126,333 | $ | 80,513 | |||||||||
Adjustments to reconcile net income to EBITDA: | |||||||||||||||||
Interest income | (340 | ) | (184 | ) | (1,133 | ) | (679 | ) | |||||||||
Tax expense | 10,393 | 7,234 | 17,668 | 16,655 | |||||||||||||
Depreciation and amortization | 19,195 | 17,077 | 70,206 | 67,974 | |||||||||||||
EBITDA | $ | 72,633 | $ | 55,855 | $ | 213,074 | $ | 164,463 | |||||||||
Diluted EPS, as reported | $ | 0.34 | $ | 0.25 | $ | 0.99 | $ | 0.64 | |||||||||
Adjustment to reconcile diluted EPS to EBITDA | |||||||||||||||||
Interest income | - | - | (0.01 | ) | - | ||||||||||||
Taxes | 0.08 | 0.05 | 0.14 | 0.13 | |||||||||||||
Depreciation and amortization | 0.15 | 0.14 | 0.55 | 0.54 | |||||||||||||
EBITDA diluted EPS | $ | 0.57 | $ | 0.44 | $ | 1.67 | $ | 1.31 | |||||||||
Weighted average shares outstanding - Diluted | 128,233 | 126,217 | 127,799 | 125,571 |
Reconciliation of GAAP to Non-GAAP EPS Guidance | |||||||
(unaudited) | |||||||
Three months ended | |||||||
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Low | High | ||||||
GAAP Fully Diluted EPS, guidance | $ |
0.11 |
$ |
0.23 |
|||
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 | 0.02 | 0.02 | |||||
Non-GAAP diluted EPS, guidance | $ |
0.17 |
$ |
0.29 |
Investor
Relations
marissa.vidaurri@ni.com
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