National Instruments Reports Record Third Quarter Revenue
Q3 2011 Highlights
- Record quarterly GAAP revenue of
$255 million , up 16 percent year-over-year - Record quarterly Non-GAAP revenue of
$271 million , up 23 percent year-over-year - Strong revenue growth in academic, PXI Modular Instrumentation, Software, and NI CompactRIO products
- GAAP gross margin of 74.4 percent and non-GAAP gross margin of 77.0 percent
- Fully diluted GAAP EPS of
$0.11 - Fully diluted non-GAAP EPS of
$0.26 ,$0.01 below mid-point of guidance - EBITDA of
$22 million , or$0.18 per share for a third quarter - Cash and short-term investments of
$336 million as ofSeptember 30, 2011
For Q3, the Company had two adjustments between GAAP and non-GAAP revenue. The first is for
Net income for Q3 was
In Q3, GAAP gross margin decreased 210 basis points year-over-year to 74.4 percent. Non-GAAP gross margin remained flat at 77.0 percent.
The company's non-GAAP results exclude the impact of stock-based compensation, amortization of acquisition-related intangibles, acquisition accounting for deferred revenue, adjustments related to our contract dispute with the GSA and acquisition related transaction costs. Reconciliations of the company's GAAP and non-GAAP results are included as part of this news release.
"Over the last few years we have invested significantly in building out our capabilities to serve our larger customers, which enabled the significant progress we saw in Q3," said Dr.
NI graphical system design product sales were up 24 percent year-over-year, and NI instrument control product sales were up 1 percent year-over-year in Q3. Geographically, revenue in U.S. dollar terms for Q3 2011 compared to Q3 2010 was up 2 percent in the
As of
"We have exercised good discipline this year in matching expense growth to revenue growth, with non-GAAP revenue up 22% and non-GAAP operating expenses up by 23%, year to date, and delivering a record
Guidance for Q4 2011
With the Global PMI dipping below 50 in September, we did see the significant decline in Q3 that we had anticipated when giving guidance. Looking forward, we anticipate further weakness in the industrial economy in Q4 and as a result, we are taking a conservative approach to guidance for Q4, guiding to a midpoint of 8% sequential growth, below the historical seasonal average.
NI expects revenue for Q4 to be between
Given that we are closing out our 2011 investment plan, we expect to see a very modest increase in operating expenses in Q4. Looking out to 2012, our objective will be to grow revenues faster than expenses and we believe we will be able to achieve this goal if we are able to deliver year-over-year revenue growth in the high single digit range or better.
The company expects fully diluted EPS will 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 net sales, 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-month and nine-month periods ended
This news release also discloses the company's earnings before interest, taxes, depreciation and amortization (EBITDA) and EBITDA diluted EPS for the three-month and nine-month periods ended
Conference Call Information
Interested parties can listen to the Q3 2011 conference call today,
Forward-Looking Statements
This release contains "forward-looking statements," including statements related to the strength of our business model, commitments to long-term investments, the scale of the long-term opportunity open to us, being cautious about the direction of the industrial economy, being confident our investments will significantly advance our long-term position, very modest increase in non-GAAP operating expenses, growing revenues faster than expenses and being able to achieve such a goal and our Q4 guidance for GAAP and non-GAAP revenue (including our non-GAAP revenue adjustment) 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, component shortages, delays in the release of new products, fluctuations in customer demand for NI products, the company's ability to effectively
manage its operating expenses, manufacturing inefficiencies, foreign exchange fluctuations, the outcome of our dispute with the U.S. government on our GSA contract, and the impact of our 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
About
CompactRIO, LabVIEW,
Contact | ||
Investor Relations | ||
(512) 683-8456 | ||
Consolidated Balance Sheets | |||||
(in thousands) | |||||
| December 31, | ||||
2011 | 2010 | ||||
(unaudited) | |||||
Assets | |||||
Current assets: | |||||
Cash and cash equivalents | $ | 196,511 | $ | 219,447 | |
Short-term investments | 139,372 | 131,215 | |||
Accounts receivable, net | 158,608 | 127,214 | |||
Inventories, net | 132,554 | 117,765 | |||
Prepaid expenses and other current assets | 46,068 | 36,239 | |||
Deferred income taxes, net | 16,122 | 18,838 | |||
Total current assets | 689,235 | 650,718 | |||
Property and equipment, net | 182,300 | 160,410 | |||
Goodwill | 131,353 | 70,278 | |||
Intangible assets, net | 90,142 | 52,816 | |||
Other long-term assets | 22,649 | 25,460 | |||
Total assets | $ | 1,115,679 | $ | 959,682 | |
Liabilities and Stockholders' Equity | |||||
Current liabilities: | |||||
Accounts payable | $ | 39,650 | $ | 33,544 | |
Accrued compensation | 38,444 | 27,734 | |||
Deferred revenue | 83,336 | 71,650 | |||
Accrued expenses and other liabilities | 35,290 | 16,538 | |||
Other taxes payable | 22,117 | 16,846 | |||
Total current liabilities | 218,837 | 166,312 | |||
Deferred income taxes | 36,413 | 29,477 | |||
Liability for uncertain tax positions | 15,376 | 14,953 | |||
Other long-term liabilities | 18,255 | 4,395 | |||
Total liabilities | $ | 288,881 | $ | 215,137 | |
Stockholders' equity: | |||||
Preferred stock | - | - | |||
Common stock | 1,204 | 1,179 | |||
Additional paid-in capital | 459,486 | 407,713 | |||
Retained earnings | 370,211 | 336,363 | |||
Accumulated other comprehensive (loss) | (4,103) | (710) | |||
Total stockholders' equity | $ | 826,798 | $ | 744,545 | |
Total liabilities and stockholders' equity | $ | 1,115,679 | $ | 959,682 | |
Consolidated Statements of Income | |||||||||
(in thousands, except per share data) | |||||||||
Three Months Ended | Nine Months Ended | ||||||||
(Unaudited) | (Unaudited) | ||||||||
2011 | 2010 | 2011 | 2010 | ||||||
Net sales: | |||||||||
Product | $ | 247,256 | $ | 203,188 | $ | 699,007 | $ | 573,413 | |
Software maintenance | 20,839 | 17,261 | 60,222 | 49,844 | |||||
GSA Accrual | (13,107) | - | (13,107) | - | |||||
Total net sales | 254,988 | 220,449 | 746,122 | 623,257 | |||||
Cost of sales: | |||||||||
Product | $ | 63,579 | $ | 50,380 | $ | 169,340 | $ | 139,818 | |
Software maintenance | 1,636 | 1,523 | 4,237 | 3,966 | |||||
Total cost of sales | 65,215 | 51,903 | 173,577 | 143,784 | |||||
Gross profit | $ | 189,773 | $ | 168,546 | $ | 572,545 | $ | 479,473 | |
Operating expenses: | |||||||||
Sales and marketing | $ | 103,195 | $ | 79,494 | $ | 286,547 | $ | 233,166 | |
Research and development | 54,674 | 39,971 | 144,569 | 114,912 | |||||
General and administrative | 21,148 | 17,392 | 61,219 | 49,701 | |||||
Total operating expenses | $ | 179,017 | $ | 136,857 | $ | 492,335 | $ | 397,779 | |
Operating income | $ | 10,756 | $ | 31,689 | $ | 80,210 | $ | 81,694 | |
Other income (expense): | |||||||||
Interest income | $ | 354 | $ | 380 | $ | 1,039 | $ | 1,051 | |
Net foreign exchange gain (loss) | (708) | 426 | (1,417) | (2,475) | |||||
Other income (expense), net | (95) | 160 | (220) | 970 | |||||
Income before income taxes | $ | 10,307 | $ | 32,655 | $ | 79,612 | $ | 81,240 | |
Provision for (benefit from) income taxes | (2,429) | 4,522 | 9,867 | 10,152 | |||||
Net income | $ | 12,736 | $ | 28,133 | $ | 69,745 | $ | 71,088 | |
Basic earnings per share | $ | 0.11 | $ | 0.24 | $ | 0.58 | $ | 0.61 | |
Diluted earnings per share | $ | 0.11 | $ | 0.24 | $ | 0.58 | $ | 0.60 | |
Weighted average shares outstanding - | |||||||||
basic | 120,308 | 117,264 | 119,585 | 116,748 | |||||
diluted | 121,102 | 118,293 | 121,027 | 118,272 | |||||
Dividends declared per share | $ | 0.10 | $ | 0.09 | $ | 0.30 | $ | 0.26 | |
Consolidated Statements of Cash Flows | |||||
(in thousands) | |||||
Nine Months Ended | |||||
(Unaudited) | |||||
2011 | 2010 | ||||
Cash flow from operating activities: | |||||
Net income | $ | 69,745 | $ | 71,088 | |
Adjustments to reconcile net income to net cash provided | |||||
by operating activities: | |||||
Depreciation and amortization | 35,745 | 28,220 | |||
Stock-based compensation | 16,650 | 14,194 | |||
Tax (benefit) expense from deferred income taxes | (491) | 1,174 | |||
Tax (benefit) expense from stock option plans | (5,047) | 599 | |||
Changes in operating assets and liabilities: | |||||
Accounts receivable | (23,509) | (17,298) | |||
Inventories | (12,376) | (14,712) | |||
Prepaid expenses and other assets | (9,000) | (15,328) | |||
Accounts payable | 4,112 | 9,171 | |||
Deferred revenue | 10,215 | 6,698 | |||
Taxes and other liabilities | 30,456 | 33,938 | |||
Net cash provided by operating activities | $ | 116,500 | $ | 117,744 | |
Cash flow from investing activities: | |||||
Capital expenditures | (40,329) | (14,404) | |||
Capitalization of internally developed software | (11,412) | (14,300) | |||
Additions to other intangibles | (3,226) | (2,253) | |||
Acquisitions, net of cash received | (73,558) | (2,191) | |||
Purchases of short-term investments | (93,299) | (88,226) | |||
Sales and maturities of short-term investments | 86,086 | 63,519 | |||
Net cash (used by) investing activities | $ | (135,738) | $ | (57,855) | |
Cash flow from financing activities: | |||||
Proceeds from issuance of common stock | 27,152 | 38,368 | |||
Repurchase of common stock | - | (41,862) | |||
Dividends paid | (35,897) | (30,417) | |||
Tax benefit (expense) from stock option plans | 5,047 | (599) | |||
Net cash (used by) financing activities | $ | (3,698) | $ | (34,510) | |
Net change in cash and cash equivalents | (22,936) | 25,379 | |||
Cash and cash equivalents at beginning of period | 219,447 | 201,465 | |||
Cash and cash equivalents at end of period | $ | 196,511 | $ | 226,844 | |
Detail of GAAP charges related to revenue, stock-based compensation, | |||||||||
amortization of acquisition intangibles and acquisition related transaction costs | |||||||||
(Unaudited) | |||||||||
Three Months Ended | Nine Months Ended | ||||||||
September 30, | |||||||||
2011 | 2010 | 2011 | 2010 | ||||||
Revenue | |||||||||
Acquisition related deferred revenue | $ | 2,818 | $ | - | $ | 2,818 | $ | - | |
GSA accrual | 13,107 | - | 13,107 | - | |||||
Provision for (benefit from) income taxes | (5,573) | - | (5,573) | - | |||||
Total | $ | 10,352 | $ | - | $ | 10,352 | $ | - | |
Stock-based compensation | |||||||||
Cost of sales | $ | 401 | $ | 332 | $ | 1,116 | $ | 1,014 | |
Sales and marketing | 2,630 | 1,960 | 7,009 | 6,060 | |||||
Research and development | 2,489 | 1,771 | 6,245 | 5,129 | |||||
General and administrative | 834 | 672 | 2,280 | 1,991 | |||||
Provision for (benefit from) income taxes | (826) | (1,295) | (4,786) | (4,422) | |||||
Total | $ | 5,528 | $ | 3,440 | $ | 11,864 | $ | 9,772 | |
Amortization of acquisition intangibles | |||||||||
Cost of sales | $ | 2,586 | $ | 921 | $ | 4,595 | $ | 2,565 | |
Sales and marketing | 447 | 89 | 624 | 311 | |||||
Other income (expense), net | 198 | - | 765 | - | |||||
Provision for (benefit from) income taxes | (1,034) | (324) | (1,743) | (904) | |||||
Total | $ | 2,197 | $ | 686 | $ | 4,241 | $ | 1,972 | |
Acquisition related transaction costs | |||||||||
Cost of sales | $ | 22 | $ | - | $ | 22 | $ | - | |
Sales and marketing | 147 | - | 1,129 | - | |||||
Research and development | 70 | - | 70 | - | |||||
General and administrative | 31 | - | 458 | - | |||||
Provision for (benefit from) income taxes | (95) | - | (146) | - | |||||
Total | $ | 175 | $ | - | $ | 1,533 | $ | - | |
Reconciliation of GAAP to Non-GAAP Measures | |||||||||
(in thousands, except per share data) | |||||||||
(unaudited) | |||||||||
Three Months Ended | Nine Months Ended | ||||||||
September 30, | |||||||||
2011 | 2010 | 2011 | 2010 | ||||||
Reconciliation of Net Sales to Non-GAAP Net Sales | |||||||||
Net sales, as reported | $ | 254,988 | $ | 220,449 | $ | 746,122 | $ | 623,257 | |
Acquisition related deferred revenue | 2,818 | - | 2,818 | - | |||||
GSA Accrual | 13,107 | - | 13,107 | - | |||||
Non-GAAP Net sales | $ | 270,913 | $ | 220,449 | $ | 762,047 | $ | 623,257 | |
Reconciliation of Gross Profit to Non-GAAP Gross Profit | |||||||||
Gross profit, as reported | $ | 189,773 | $ | 168,546 | $ | 572,545 | $ | 479,473 | |
Acquisition related deferred revenue and GSA accrual | 15,925 | - | 15,925 | - | |||||
Stock-based compensation | 401 | 332 | 1,116 | 1,014 | |||||
Amortization of acquisition intangibles | 2,586 | 921 | 4,595 | 2,565 | |||||
Acquisition related transaction costs | 22 | - | 22 | - | |||||
Non-GAAP gross profit | $ | 208,707 | $ | 169,799 | $ | 594,203 | $ | 483,052 | |
Reconciliation of Operating Expenses to Non-GAAP Operating Expenses | |||||||||
Operating expenses, as reported | $ | 179,017 | $ | 136,857 | $ | 492,335 | $ | 397,779 | |
Stock-based compensation | (5,953) | (4,403) | (15,534) | (13,180) | |||||
Amortization of acquisition intangibles | (447) | (89) | (624) | (311) | |||||
Acquisition related transaction costs | (248) | - | (1,657) | - | |||||
Non-GAAP operating expenses | $ | 172,369 | $ | 132,365 | $ | 474,520 | $ | 384,288 | |
Reconciliation of Operating Income to Non-GAAP Operating Income | |||||||||
Operating income, as reported | $ | 10,756 | $ | 31,689 | $ | 80,210 | $ | 81,694 | |
Acquisition related deferred revenue and GSA accrual | 15,925 | - | 15,925 | - | |||||
Stock-based compensation | 6,354 | 4,735 | 16,650 | 14,194 | |||||
Amortization of acquisition intangibles | 3,033 | 1,010 | 5,219 | 2,876 | |||||
Acquisition related transaction costs | 270 | - | 1,679 | - | |||||
Non-GAAP operating income | $ | 36,338 | $ | 37,434 | $ | 119,683 | $ | 98,764 | |
Reconciliation of Income before income taxes to Non-GAAP Income before income taxes | |||||||||
Income before income taxes, as reported | $ | 10,307 | $ | 32,655 | $ | 79,612 | $ | 81,240 | |
Acquisition related deferred revenue and GSA accrual | 15,925 | - | 15,925 | - | |||||
Stock-based compensation | 6,354 | 4,735 | 16,650 | 14,194 | |||||
Amortization of acquisition intangibles | 3,231 | 1,010 | 5,984 | 2,876 | |||||
Acquisition related transaction costs | 270 | - | 1,679 | - | |||||
Non-GAAP income before provision for (benefit from) income taxes | $ | 36,087 | $ | 38,400 | $ | 119,850 | $ | 98,310 | |
Reconciliation of Provision For (Benefit From) Income Taxes to Non-GAAP Provision For (Benefit From) Income Taxes | |||||||||
Provision for (benefit from) income taxes, as reported | $ | (2,429) | $ | 4,522 | $ | 9,867 | $ | 10,152 | |
Acquisition related deferred revenue and GSA accrual | 5,573 | - | 5,573 | - | |||||
Stock-based compensation | 826 | 1,295 | 4,786 | 4,422 | |||||
Amortization of acquisition intangibles | 1,034 | 324 | 1,743 | 904 | |||||
Acquisition related transaction costs | 95 | - | 146 | - | |||||
Non-GAAP provision for (benefit from) income taxes | $ | 5,099 | $ | 6,141 | $ | 22,115 | $ | 15,478 | |
Reconciliation of GAAP Net Income, Basic EPS and Diluted EPS to Non-GAAP Net Income, Basic EPS and Diluted EPS | |||||||||
(unaudited) | |||||||||
Three Months Ended | Nine Months Ended | ||||||||
September 30, | |||||||||
2011 | 2010 | 2011 | 2010 | ||||||
Net income, as reported | $ | 12,736 | $ | 28,133 | $ | 69,745 | $ | 71,088 | |
Adjustments to reconcile net income to non-GAAP net income: | |||||||||
Acquisition related deferred revenue and GSA accrual, net of tax effect | 10,352 | - | 10,352 | - | |||||
Stock-based compensation, net of tax effect | 5,528 | 3,440 | 11,864 | 9,772 | |||||
Amortization of acquisition intangibles, net of tax effect | 2,197 | 686 | 4,241 | 1,972 | |||||
Acquisition related transaction costs | 175 | - | 1,533 | - | |||||
Non-GAAP net income | $ | 30,988 | $ | 32,259 | $ | 97,735 | $ | 82,832 | |
Basic EPS, as reported | $ | 0.11 | $ | 0.24 | $ | 0.58 | $ | 0.61 | |
Adjustment to reconcile basic EPS to non-GAAP | |||||||||
basic EPS: | |||||||||
Revenue, net of tax effect | $ | 0.09 | $ | - | $ | 0.09 | $ | - | |
Impact of stock-based compensation, net of tax effect | $ | 0.04 | $ | 0.03 | $ | 0.10 | $ | 0.08 | |
Impact of amortization of acquisition intangibles, net of tax effect | $ | 0.02 | $ | 0.01 | $ | 0.04 | $ | 0.02 | |
Impact of acquisition related transaction costs | $ | 0.00 | $ | - | $ | 0.01 | $ | - | |
Non-GAAP basic EPS | $ | 0.26 | $ | 0.28 | $ | 0.82 | $ | 0.71 | |
Diluted EPS, as reported | $ | 0.11 | $ | 0.24 | $ | 0.58 | $ | 0.60 | |
Adjustment to reconcile diluted EPS to non-GAAP | |||||||||
diluted EPS: | |||||||||
Acquisition related deferred revenue and GSA accrual, net of tax effect | $ | 0.08 | $ | - | $ | 0.09 | $ | - | |
Impact of stock-based compensation, net of tax effect | $ | 0.05 | $ | 0.03 | $ | 0.10 | $ | 0.08 | |
Impact of amortization of acquisition intangibles, net of tax effect | $ | 0.02 | $ | 0.00 | $ | 0.03 | $ | 0.02 | |
Impact of acquisition related transaction costs | $ | 0.00 | $ | - | $ | 0.01 | $ | - | |
Non-GAAP diluted EPS | $ | 0.26 | $ | 0.27 | $ | 0.81 | $ | 0.70 | |
Weighted average shares outstanding - | |||||||||
Basic | 120,308 | 117,264 | 119,585 | 116,748 | |||||
Diluted | 121,102 | 118,293 | 121,027 | 118,272 | |||||
Reconciliation of Net Income and Diluted EPS to EBITDA and EBITDA Diluted EPS | |||||||||
(unaudited) | |||||||||
Three Months Ended | Nine Months Ended | ||||||||
September 30, | |||||||||
2011 | 2010 | 2011 | 2010 | ||||||
Net income, as reported | $ | 12,736 | $ | 28,133 | $ | 69,745 | $ | 71,088 | |
Adjustments to reconcile net income to EBITDA: | |||||||||
Interest income | (354) | (380) | (1,039) | (1,051) | |||||
Taxes | (2,429) | 4,522 | 9,867 | 10,152 | |||||
Depreciation and amortization | 12,355 | 9,232 | 35,745 | 28,220 | |||||
EBITDA | $ | 22,308 | $ | 41,507 | $ | 114,318 | $ | 108,409 | |
Diluted EPS, as reported | $ | 0.11 | $ | 0.24 | $ | 0.58 | $ | 0.60 | |
Adjustment to reconcile diluted EPS to EBITDA | |||||||||
Interest income | $ | (0.01) | $ | (0.00) | $ | (0.01) | $ | (0.01) | |
Taxes | $ | (0.02) | $ | 0.03 | $ | 0.08 | $ | 0.09 | |
Depreciation and amortization | $ | 0.10 | $ | 0.08 | $ | 0.29 | $ | 0.24 | |
EBITDA diluted EPS | $ | 0.18 | $ | 0.35 | $ | 0.94 | $ | 0.92 | |
Weighted average shares outstanding - Diluted | 121,102 | 118,293 | 121,027 | 118,272 | |||||
Reconciliation of GAAP to Non-GAAP Guidance | ||||||
(unaudited) | ||||||
Three months ended | ||||||
(Millions) | ||||||
Low | High | |||||
GAAP revenue, guidance | $ | 280 | $ | 300 | ||
Adjustment to reconcile revenue to non-GAAP revenue; | ||||||
Impact of acquisition deferred revenue write down | $ | 2 | $ | 2 | ||
Non-GAAP revenue, guidance | $ | 282 | $ | 302 | ||
Reconciliation of GAAP to Non-GAAP EPS Guidance | ||||||
(unaudited) | ||||||
Three months ended | ||||||
Low | High | |||||
GAAP Fully Diluted EPS, guidance | $ | 0.22 | $ | 0.30 | ||
Adjustment to reconcile diluted EPS to non-GAAP | ||||||
diluted EPS: | ||||||
Impact of acquisition deferred revenue write-off | $ | 0.01 | $ | 0.01 | ||
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 | $ | 0.29 | $ | 0.37 | ||
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