National Instruments Reports Record Revenue for a Third Quarter of $321 Million
Net Income up 43% Year Over Year Through First Nine Months
Q3 2017 Highlights
-
Revenue of
$321 million , up 5 percent year over year - GAAP gross margin of 74 percent
- Non-GAAP gross margin of 75 percent
-
Fully diluted GAAP EPS of
$0.25 and fully diluted non-GAAP EPS of$0.32 -
GAAP net income of
$33 million -
Non-GAAP net income of
$42 million - GAAP net income up 43% year over year through first nine months
- Non-GAAP net income up 28% year over year through first nine months
-
EBITDA of
$57 million -
Cash and short-term investments of
$385 million as ofSeptember 30, 2017
In Q3 2017, NI received
GAAP net income for Q3 was
In Q3, GAAP gross margin was 74 percent and non-GAAP gross margin was 75
percent. Total GAAP operating expenses were
"I am pleased with our performance in the first nine months of the
year," 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. The company's definition of core revenue is GAAP revenue excluding the impact of NI's largest customer and the impact of foreign currency exchange.
Guidance
NI currently expects Q4 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 year-over-year change in core revenue growth, gross
margin, and operating margin 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 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 discloses the company's EBITDA for the three-month and
nine-month periods ending
Conference Call Information and Availability of Presentation Materials
Interested parties can listen to the Q3 2017 earnings conference call
with NI management today,
Forward-Looking Statements
This release contains "forward-looking statements" including statements
regarding significant progress toward our target business model, strong
alignment and focus throughout our organization, continued success in
the key focus areas of semiconductor test, 5G, the electric and
connected vehicle, and the Industrial Internet of Things, progress we
have made in improving our operating performance, that the midpoint of
our Q4 guidance would provide a 45 percent increase in our GAAP fully
diluted EPS year-over-year for 2017, commitment from our employees as we
all work toward alignment with our operational model, our belief that
this focus on growth and profitability will keep us on track to achieve
our goals this year and into 2018, expecting Q4 revenue to be in the
range of
The company directs readers to its Form 10-K for the year ended
About NI
NI (ni.com) empowers engineers and scientists with a software-centric platform that incorporates modular hardware and an expansive ecosystem. This proven approach puts users firmly in control of defining what they need to accelerate their system design within test, measurement and control. NI's solution helps build high-performance systems that exceed requirements, quickly adapt to change and ultimately improve the world.
(NATI-F)
|
|||||||||||
Condensed Consolidated Balance Sheets | |||||||||||
(in thousands) | |||||||||||
|
|
||||||||||
2017 | 2016 | ||||||||||
(unaudited) | |||||||||||
Assets | |||||||||||
Current assets: | |||||||||||
Cash and cash equivalents | $ | 294,194 | $ | 285,283 | |||||||
Short-term investments | 91,223 | 73,117 | |||||||||
Accounts receivable, net | 235,177 | 228,686 | |||||||||
Inventories, net | 184,641 | 193,608 | |||||||||
Prepaid expenses and other current assets | 50,325 | 53,953 | |||||||||
Total current assets | 855,560 | 834,647 | |||||||||
Property and equipment, net | 254,918 | 260,456 | |||||||||
|
265,091 | 253,197 | |||||||||
Intangible assets, net | 122,681 | 108,663 | |||||||||
Other long-term assets |
32,878 | 39,601 | |||||||||
Total assets | $ | 1,531,128 | $ | 1,496,564 | |||||||
Liabilities and Stockholders' Equity | |||||||||||
Current liabilities: | |||||||||||
Accounts payable and accrued liabilities |
$ | 51,274 | $ | 48,800 | |||||||
Accrued compensation | 45,231 | 27,743 | |||||||||
Deferred revenue - current | 120,271 | 115,577 | |||||||||
Other current liabilities |
17,802 | 32,997 | |||||||||
Other taxes payable | 30,832 | 34,958 | |||||||||
Total current liabilities | 265,410 | 260,075 | |||||||||
Long-term debt | 15,000 | 25,000 | |||||||||
Deferred income taxes | 37,074 | 45,386 | |||||||||
Liability for uncertain tax positions | 9,284 | 11,719 | |||||||||
Deferred revenue - long-term | 31,405 | 29,752 | |||||||||
Other long-term liabilities | 9,156 | 10,413 | |||||||||
Total liabilities | 367,329 | 382,345 | |||||||||
Stockholders' equity: | |||||||||||
Preferred stock | — | — | |||||||||
Common stock | 1,307 | 1,292 | |||||||||
Additional paid-in capital | 816,152 | 771,346 | |||||||||
Retained earnings | 365,021 | 376,202 | |||||||||
Accumulated other comprehensive loss |
(18,681 |
) |
(34,621 |
) |
|||||||
Total stockholders' equity | 1,163,799 | 1,114,219 | |||||||||
Total liabilities and stockholders' equity | $ | 1,531,128 | $ | 1,496,564 | |||||||
|
|||||||||||||||||||||
Condensed Consolidated Statements of Income | |||||||||||||||||||||
(in thousands, except per share data, unaudited) | |||||||||||||||||||||
Three Months Ended | Nine Months Ended | ||||||||||||||||||||
|
|
||||||||||||||||||||
2017 | 2016 | 2017 | 2016 | ||||||||||||||||||
Net sales: | |||||||||||||||||||||
Product | $ | 291,891 | $ | 278,521 | $ | 853,219 | $ | 816,486 | |||||||||||||
Software maintenance | 29,030 | 27,843 | 86,416 | 83,161 | |||||||||||||||||
Total net sales | 320,921 | 306,364 | 939,635 | 899,647 | |||||||||||||||||
Cost of sales: | |||||||||||||||||||||
Product | 81,641 | 74,734 | 235,989 | 225,261 | |||||||||||||||||
Software maintenance | 2,110 | 1,998 | 6,744 | 5,126 | |||||||||||||||||
Total cost of sales | 83,751 | 76,732 | 242,733 | 230,387 | |||||||||||||||||
Gross profit | 237,170 | 229,632 | 696,902 | 669,260 | |||||||||||||||||
74 |
% |
75 |
% |
74 |
% |
74 |
% |
||||||||||||||
Operating expenses: | |||||||||||||||||||||
Sales and marketing | 116,661 | 116,662 | 358,335 | 346,230 | |||||||||||||||||
Research and development | 56,526 | 59,066 | 171,701 | 178,244 | |||||||||||||||||
General and administrative | 26,468 | 24,537 | 78,400 |
74,308 |
|||||||||||||||||
Total operating expenses | 199,655 | 200,265 | 608,436 | 598,782 | |||||||||||||||||
Operating income | 37,515 | 29,367 | 88,466 | 70,478 | |||||||||||||||||
12 |
% |
10 |
% |
9 |
% |
8 |
% |
||||||||||||||
Other income (expense): | |||||||||||||||||||||
Interest income | 657 | 276 | 1,509 | 787 | |||||||||||||||||
Net foreign exchange gain (loss) | 1,096 |
(760 |
) |
1,624 |
(1,471 |
) |
|||||||||||||||
Other (expense) income, net |
(1,153 |
) |
301 |
(957 |
) |
(2,052 |
) |
||||||||||||||
Income before income taxes | 38,115 | 29,184 | 90,642 | 67,742 | |||||||||||||||||
Provision for income taxes | 4,726 | 4,695 | 13,949 | 14,155 | |||||||||||||||||
Net income | $ | 33,389 | $ | 24,489 | $ | 76,693 | $ | 53,587 | |||||||||||||
Basic earnings per share | $ | 0.26 | $ | 0.19 | $ | 0.59 | $ | 0.42 | |||||||||||||
Diluted earnings per share | $ | 0.25 | $ | 0.19 | $ | 0.59 | $ | 0.42 | |||||||||||||
Weighted average shares outstanding - | |||||||||||||||||||||
basic | 130,660 | 128,815 | 130,103 | 128,233 | |||||||||||||||||
diluted | 131,617 | 129,047 | 131,050 | 128,738 | |||||||||||||||||
Dividends declared per share | $ | 0.21 | $ | 0.20 | $ | 0.63 | $ | 0.60 | |||||||||||||
|
|||||||||||
Condensed Consolidated Statements of Cash Flows | |||||||||||
(in thousands, unaudited) | |||||||||||
Nine Months Ended |
|||||||||||
2017 | 2016 | ||||||||||
Cash flow from operating activities: | |||||||||||
Net income | $ | 76,693 | $ | 53,587 | |||||||
Adjustments to reconcile net income to net cash provided by operating activities: | |||||||||||
Depreciation and amortization | 54,794 | 55,164 | |||||||||
Stock-based compensation | 21,272 | 19,635 | |||||||||
Tax expense/(benefit) expense from deferred income taxes |
(4,290 |
) |
(7,321 |
) |
|||||||
Net change in operating assets and liabilities |
(1,013 |
) |
28,951 | ||||||||
Net cash provided by operating activities | 147,456 | 150,016 | |||||||||
Cash flow from investing activities: | |||||||||||
Capital expenditures |
(24,084 |
) |
(34,408 |
) |
|||||||
Capitalization of internally developed software |
(34,406 |
) |
(24,048 |
) |
|||||||
Additions to other intangibles |
(1,379 |
) |
(1,969 |
) |
|||||||
Acquisitions, net of cash received | — |
(549 |
) |
||||||||
Purchases of short-term investments |
(62,845 |
) |
(9,054 |
) |
|||||||
Sales and maturities of short-term investments | 45,582 | 38,566 | |||||||||
Net cash used by investing activities |
(77,132 |
) |
(31,462 |
) |
|||||||
Cash flow from financing activities: | |||||||||||
Proceeds from revolving line of credit | — | 15,000 | |||||||||
Principal payments on revolving line of credit | (10,000 | ) | (27,000 | ) | |||||||
Proceeds from issuance of common stock | 22,870 | 22,157 | |||||||||
Repurchase of common stock | — | (5,635 | ) | ||||||||
Dividends paid | (82,051 | ) | (77,056 |
) |
|||||||
Net cash used by financing activities | (69,181 | ) | (72,534 | ) | |||||||
Impact of changes in exchange rates on cash | 7,768 | 3,503 | |||||||||
Net change in cash and cash equivalents | 8,911 | 49,523 | |||||||||
Cash and cash equivalents at beginning of period | 285,283 | 251,129 | |||||||||
Cash and cash equivalents at end of period | $ | 294,194 | $ | 300,652 | |||||||
The following tables provide details with respect to the amount of GAAP charges related to stock-based compensation, amortization of acquisition-related intangibles, acquisition-related transaction costs, restructuring charges, foreign exchange loss on acquisitions and taxes levied on the transfer of acquired intellectual property that were recorded in the line items indicated below (unaudited) (in thousands)
Three Months Ended | Nine Months Ended | ||||||||||||||||||||
|
|
||||||||||||||||||||
2017 | 2016 | 2017 | 2016 | ||||||||||||||||||
Stock-based compensation | |||||||||||||||||||||
Cost of sales | $ | 689 | $ | 556 | $ | 1,914 | $ | 1,643 | |||||||||||||
Sales and marketing | 3,014 | 2,635 | 8,523 | 8,422 | |||||||||||||||||
Research and development | 2,328 | 2,027 | 6,552 | 6,745 | |||||||||||||||||
General and administrative | 1,514 | 921 | 4,358 | 2,764 | |||||||||||||||||
Provision for income taxes | (2,369 | ) | (2,092 | ) | (7,388 | ) | (6,202 | ) | |||||||||||||
Total | $ | 5,176 | 4,047 | 13,959 | 13,372 | ||||||||||||||||
Amortization of acquisition intangibles | |||||||||||||||||||||
Cost of sales | $ | 1,502 | $ | 1,599 | $ | 4,648 | $ | 7,621 | |||||||||||||
Sales and marketing | 515 | 502 | 1,479 | 2,141 | |||||||||||||||||
Research and development | 283 | 276 | 813 | 815 | |||||||||||||||||
Other income, net | — | — | — | — | |||||||||||||||||
Provision for income taxes | (546 |
) |
854 | (1,656 |
) |
1,312 | |||||||||||||||
Total | $ | 1,754 | 3,231 | 5,284 | 11,889 | ||||||||||||||||
Acquisition transaction costs, restructuring charges, and other | |||||||||||||||||||||
Cost of sales | $ | 79 | $ | 74 | $ | 988 | $ | 253 | |||||||||||||
Sales and marketing | 1,618 | 42 | 8,018 | 141 | |||||||||||||||||
Research and development | 235 | 236 | 1,816 | 648 | |||||||||||||||||
General and administrative | 207 | 97 | 803 | 317 | |||||||||||||||||
Foreign exchange gain (loss) 1 | — | — | — | 94 | |||||||||||||||||
Other income (loss), net2 | — | — | — | 2,475 | |||||||||||||||||
Provision for income taxes | (720 | ) | (156 | ) | (3,655 | ) | (1,358 | ) | |||||||||||||
Total | $ | 1,419 | $ | 293 | $ | 7,970 | $ | 2,570 | |||||||||||||
(1) Foreign exchange losses on acquisitions were |
|||||||||||||||||||||
(2) Taxes levied on the transfer of acquired intellectual property
were |
|||||||||||||||||||||
|
||||||||||||||||||
Reconciliation of GAAP to Non-GAAP Measures | ||||||||||||||||||
(in thousands, unaudited) | ||||||||||||||||||
Three Months Ended | Nine Months Ended | |||||||||||||||||
|
|
|||||||||||||||||
2017 | 2016 | 2017 | 2016 | |||||||||||||||
Reconciliation of Gross Profit to Non-GAAP Gross Profit | ||||||||||||||||||
Gross profit, as reported | $ | 237,170 | 229,632 | 696,902 | 669,260 | |||||||||||||
Stock-based compensation | 689 | 556 | 1,914 | 1,643 | ||||||||||||||
Amortization of acquisition intangibles | 1,502 | 1,599 | 4,648 | 7,621 | ||||||||||||||
Acquisition transaction costs and restructuring charges | 79 | 74 | 988 | 253 | ||||||||||||||
Non-GAAP gross profit | $ | 239,440 | 231,861 | 704,452 | 678,777 | |||||||||||||
Non-GAAP gross margin | 75 | % | 76 | % | 75 | % | 75 | % | ||||||||||
Reconciliation of Operating Expenses to Non-GAAP Operating Expenses | ||||||||||||||||||
Operating expenses, as reported | $ | 199,655 | 200,265 | 608,436 | 598,782 | |||||||||||||
Stock-based compensation | (6,856 | ) | (5,583 | ) | (19,433 | ) | (17,931 | ) | ||||||||||
Amortization of acquisition intangibles | (798 | ) | (778 | ) | (2,292 | ) | (2,956 | ) | ||||||||||
Acquisition transaction costs and restructuring charges | (2,060 | ) | (375 | ) | (10,637 | ) | (1,106 | ) | ||||||||||
Non-GAAP operating expenses | $ | 189,941 | 193,529 | 576,074 | 576,789 | |||||||||||||
Reconciliation of Operating Income to Non-GAAP Operating Income | ||||||||||||||||||
Operating income, as reported | $ | 37,515 | 29,367 | 88,466 | 70,478 | |||||||||||||
Stock-based compensation | 7,545 | 6,139 | 21,347 | 19,574 | ||||||||||||||
Amortization of acquisition intangibles | 2,300 | 2,377 | 6,940 | 10,577 | ||||||||||||||
Acquisition transaction costs and restructuring charges | 2,139 | 449 | 11,625 | 1,359 | ||||||||||||||
Non-GAAP operating income | $ | 49,499 | 38,332 | 128,378 | 101,988 | |||||||||||||
Non-GAAP operating margin | 15 | % | 13 | % | 14 | % | 11 | % | ||||||||||
Reconciliation of Income before income taxes to Non-GAAP Income before income taxes | ||||||||||||||||||
Income before income taxes, as reported | $ | 38,115 | 29,184 | 90,642 | 67,742 | |||||||||||||
Stock-based compensation | 7,545 | 6,139 | 21,347 | 19,574 | ||||||||||||||
Amortization of acquisition intangibles | 2,300 | 2,377 | 6,940 | 10,577 | ||||||||||||||
Acquisition transaction costs and restructuring charges | 2,139 | 449 | 11,625 | 1,359 | ||||||||||||||
Foreign exchange loss on acquisitions | — | — | — | 94 | ||||||||||||||
Taxes levied on transfer of acquired intellectual property | — | — | — | 2,475 | ||||||||||||||
Non-GAAP income before income taxes | $ | 50,099 | 38,149 | 130,554 | 101,821 | |||||||||||||
Reconciliation of Provision for income taxes to Non-GAAP Provision for income taxes | ||||||||||||||||||
Provision for income taxes, as reported | $ | 4,726 | 4,695 | 13,949 | 14,155 | |||||||||||||
Stock-based compensation | 2,369 | 2,092 | 7,388 | 6,202 | ||||||||||||||
Amortization of acquisition intangibles | 546 | (854 | ) | 1,656 | (1,312 | ) | ||||||||||||
Acquisition transaction costs, restructuring charges, and other | 720 | 156 | 3,655 | 1,358 | ||||||||||||||
Non-GAAP provision for income taxes | $ | 8,361 | 6,089 | 26,648 | 20,403 | |||||||||||||
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 | Nine Months Ended | ||||||||||||||||
|
|
||||||||||||||||
2017 | 2016 | 2017 | 2016 | ||||||||||||||
Net income, as reported | $ | 33,389 | $ | 24,489 | $ | 76,693 | $ | 53,587 | |||||||||
Adjustments to reconcile net income to non-GAAP net income: | |||||||||||||||||
Stock-based compensation, net of tax effect | 5,176 | 4,047 | 13,959 | 13,372 | |||||||||||||
Amortization of acquisition intangibles, net of tax effect | 1,754 | 3,231 | 5,284 | 11,889 | |||||||||||||
Acquisition transaction costs, restructuring, and other, net of tax effect | 1,419 |
|
293 | 7,970 | 2,570 | ||||||||||||
Non-GAAP net income | $ | 41,738 | $ | 32,060 | $ | 103,906 | $ | 81,418 | |||||||||
Basic EPS, as reported | $ | 0.26 | $ | 0.19 | $ | 0.59 | $ | 0.42 | |||||||||
Adjustment to reconcile basic EPS to non-GAAP | |||||||||||||||||
basic EPS: | |||||||||||||||||
Impact of stock-based compensation, net of tax effect | 0.04 | 0.03 | 0.11 | 0.10 | |||||||||||||
Impact of amortization of acquisition intangibles, net of tax effect | 0.01 | 0.03 | 0.04 | 0.09 | |||||||||||||
Impact of acquisition transaction costs, restructuring, and other, net of tax effect | 0.01 | — | 0.05 | 0.02 | |||||||||||||
Non-GAAP basic EPS | $ | 0.32 | $ | 0.25 | $ | 0.79 | $ | 0.63 | |||||||||
Diluted EPS, as reported | $ | 0.25 | $ | 0.19 | $ | 0.59 | $ | 0.42 | |||||||||
Adjustment to reconcile diluted EPS to non-GAAP diluted EPS | |||||||||||||||||
Impact of stock-based compensation, net of tax effect | 0.04 | 0.03 | 0.11 | 0.10 | |||||||||||||
Impact of amortization of acquisition intangibles, net of tax effect | 0.02 | 0.03 | 0.04 | 0.09 | |||||||||||||
Impact of acquisition transaction costs, restructuring, and other, net of tax effect | 0.01 | — | 0.05 | 0.02 | |||||||||||||
Non-GAAP diluted EPS | $ | 0.32 | $ | 0.25 | $ | 0.79 | $ | 0.63 | |||||||||
Weighted average shares outstanding - | |||||||||||||||||
Basic | 130,660 | 128,815 | 130,103 | 128,233 | |||||||||||||
Diluted | 131,617 | 129,047 | 131,050 | 128,738 | |||||||||||||
|
|||||||||||||||||||||
Reconciliation of Net Income to EBITDA | |||||||||||||||||||||
(in thousands, unaudited) | |||||||||||||||||||||
Three Months Ended | Nine Months Ended | ||||||||||||||||||||
|
|
||||||||||||||||||||
2017 | 2016 | 2017 | 2016 | ||||||||||||||||||
Net income, as reported | $ | 33,389 | $ | 24,489 | $ | 76,693 | $ | 53,587 | |||||||||||||
Adjustments to reconcile net income to EBITDA: | |||||||||||||||||||||
Interest income | (464 | ) | (53 | ) | (863 | ) | (194 | ) | |||||||||||||
Tax expense | 4,726 | 4,695 | 13,949 | 14,155 | |||||||||||||||||
Depreciation and amortization | 18,879 | 16,947 | 54,794 | 55,164 | |||||||||||||||||
EBITDA | $ | 56,530 | $ | 46,078 | $ | 144,573 | $ | 122,712 | |||||||||||||
Weighted average shares outstanding - Diluted | 131,617 | 129,047 | 131,050 | 128,738 | |||||||||||||||||
Reconciliation of GAAP to Non-GAAP EPS Guidance | |||||||||||||||||||||
(unaudited) | |||||||||||||||||||||
Three Months Ended | |||||||||||||||||||||
|
|||||||||||||||||||||
Low | High | ||||||||||||||||||||
GAAP Fully Diluted EPS, guidance | $ | 0.27 | $ | 0.41 | |||||||||||||||||
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 and acquisition accounting adjustments, net of tax effect | 0.02 | 0.02 | |||||||||||||||||||
Impact of acquisition transaction costs, restructuring, and other, net of tax effect | 0.01 | 0.01 | |||||||||||||||||||
Non-GAAP diluted EPS, guidance | $ | 0.34 | $ | 0.48 | |||||||||||||||||
|
|||||
Reconciliation of GAAP Revenue Growth to Core Revenue Growth | |||||
(unaudited) | |||||
Three Months Ended | |||||
|
|||||
2017 | |||||
YoY GAAP revenue growth, as reported | 4.8 | % | |||
Effect of excluding our current largest customer | 0.1 | % | |||
YoY GAAP revenue growth, excluding our largest customer | 4.9 | % | |||
Effect of excluding the impact of foreign currency exchange | 0.1 | % | |||
YoY Core revenue growth | 5.0 | % |
View source version on businesswire.com: http://www.businesswire.com/news/home/20171026006436/en/
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