Company delivers strong cash flow from operations of $264 million for trailing twelve months Q2 2019 Highlights

• Revenue of $334 million, down 2 percent year over year and up 7 percent sequentially
• GAAP gross margin of 75 percent
• Non-GAAP gross margin of 77 percent
• Fully diluted GAAP EPS of $0.22 and fully diluted non-GAAP EPS of $0.35
• GAAP net income of $29 million, down 8 percent year over year
• Non-GAAP net income of $46 million, up 3 percent year over year
• GAAP net income down 6 percent year over year through first six months
• Non-GAAP net income up 11 percent year over year through first six months
• EBITDA of $49 million
• Cash and short-term investments of $440 million as of June 30, 2019
• Cash flow from operating activities of $264 million for the twelve months ended June 30, 2019, up 11 percent year over year
• 1.1 million shares of common stock repurchased at an average price of $41 per share

AUSTIN, Texas--(BUSINESS WIRE)--Jul. 30, 2019-- National Instruments (Nasdaq: NATI) today announced Q2 2019 revenue of $334 million, down 2 percent year over year and up 7 percent sequentially from Q1 2019.

In Q2 2019 the value of the company's total orders was down 4 percent year over year; orders under $20,000 were down 6 percent year over year; and orders over $20,000 were down 2 percent year over year.

In Q2, GAAP gross margin was 75 percent and non-GAAP gross margin was 77 percent. Total GAAP operating expenses were $218 million, down 2 percent year over year. Total non-GAAP operating expenses were down 4 percent year over year at $203 million. GAAP operating margin was 10 percent in Q2, with GAAP operating income of $32 million, down 13 percent year over year. Non-GAAP operating margin was 17 percent in Q2, with non-GAAP operating income of $56 million, up 1 percent year over year. For the first half of 2019, GAAP operating expenses were $430 million, flat year over year, and non-GAAP operating expenses were $403 million, down 4 percent year over year. GAAP operating income for the first half of 2019 was $56 million, down 14 percent year over year, and non-GAAP operating income for the first half of 2019 was $99 million, up 6 percent year over year.

GAAP net income for Q2 was $29 million, with fully diluted earnings per share (EPS) of $0.22, and non-GAAP net income was $46 million, with non-GAAP fully diluted EPS of $0.35. EBITDA, or Earnings Before Interest, Taxes, Depreciation and Amortization, was $49 million for Q2.

“I am pleased with our execution this quarter despite external disruptions in our industry. Revenue came in at 98 percent of the midpoint of our guidance and we delivered an all-time record non-GAAP net income for a second quarter,” said Alex Davern, NI CEO. “We are on a journey to position NI for long-term growth and I believe we have an opportunity to deliver significant operating leverage when the market dynamics recover. I remain optimistic about our opportunity for growth and delivering 18 percent non-GAAP operating margin through the cycle.”

“In Q2, we delivered record non-GAAP net income for a second quarter, due to our increased scalability and strong culture of operational efficiency. In addition, we returned $80 million to shareholders through dividends and share repurchases,” said Karen Rapp, NI CFO. “Our commitment to delivering long-term shareholder value remains a priority.”

Geographic revenue in U.S. dollar terms for Q2 2019 compared with Q2 2018 was down 1 percent in the Americas, up 5 percent in APAC and down 10 percent in EMEIA. Excluding the impact of foreign currency exchange, revenue was flat in the Americas, up 8 percent in APAC and down 6 percent in EMEIA. Historical revenue from these three regions can be found on NI’s investor website at www.ni.com/nati.

As of June 30, 2019, NI had $440 million in cash and short-term investments. During the second quarter, NI paid $33 million in dividends and repurchased 1.1 million shares of our common stock at an average price of $41. The NI Board of Directors approved a quarterly dividend of $0.25 per share payable on September 3, 2019, to stockholders of record on August 12, 2019.

The company’s non-GAAP results exclude, as applicable, 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, restructuring charges, tax reform charges, and capitalization and amortization of internally developed software costs. Reconciliations of the company’s GAAP and non-GAAP results are included as part of this news release.

Guidance

NI currently expects Q3 revenue to be in the range of $325 million to $355 million. The company currently expects that GAAP fully diluted EPS will be in the range of $0.30 to $0.44 for Q3, with non-GAAP fully diluted EPS expected to be in the range of $0.36 to $0.50. Included in the company’s Q3 2019 GAAP EPS guidance is approximately $0.03 of restructuring charges and approximately $0.12 related to disposal gains from the pending sale of an office building less a charitable contribution using a portion of the sale proceeds.

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 six months ended June 30, 2019 and 2018, on a GAAP and non-GAAP basis. NI is also providing guidance on its non-GAAP 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-related transaction costs, taxes levied on the transfer of acquired intellectual property, foreign exchange loss on acquisitions, restructuring charges, tax reform charges, and capitalization and amortization of internally developed software 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 discloses the company’s EBITDA for the three and six months ended June 30, 2019 and 2018. The company believes that including the EBITDA results assists investors in assessing the company’s operational performance relative to its competitors. A reconciliation of EBITDA to GAAP net income is included with this news release.

Conference Call Information and Availability of Presentation Materials

Interested parties can listen to the Q2 2019 earnings conference call with NI management today, July 30, at 4:00 p.m. CT at www.ni.com/call or by dialing (855) 212-2361 and entering confirmation code 7489827 ten minutes prior to the call start time. Replay information is available by calling (855) 859-2056, confirmation code 7489827, shortly after the call through August 2 at 10:00 p.m. CT or by visiting the company’s website at www.ni.com/call. Presentation materials referred to on the conference call can be found at www.ni.com/nati.

Forward-Looking Statements

This release contains “forward-looking statements” including statements regarding our journey to position NI for long-term growth, believing we have an opportunity to deliver significant operating leverage when the market dynamics recover, remaining optimistic about our opportunity for growth and delivering 18 percent non-GAAP operating margin through the cycle, increased scalability and strong culture of operational efficiency, that our commitment to delivering long-term shareholder value remains a priority, expecting Q3 revenue to be in the range of $325 million to $355 million, expecting that GAAP fully diluted EPS will be in the range of $0.30 to $0.44 for Q3, with non-GAAP fully diluted EPS expected to be in the range of $0.36 to $0.50, and including in our Q3 EPS guidance approximately $0.03 of restructuring charges and approximately $0.12 of disposal gains from the pending sale of an office building and a charitable contribution using a portion of the sale proceeds. These statements are subject to a number of risks and uncertainties, including the risk of adverse changes or fluctuations in the global economy, further adverse fluctuations in our industry, foreign exchange fluctuations, fluctuations in demand for NI products including orders from NI’s large customers, component shortages, delays in the release of new products, the company’s ability to effectively manage its operating expenses, manufacturing inefficiencies and the level of capacity utilization, the impact of any recent or future acquisitions by NI, expense overruns, and adverse effects of price changes or effective tax rates. Actual results may differ materially from the expected results.

The company directs readers to its Form 10-K for the year ended Dec. 31, 2018, its Form 10-Q for the quarter ended March 31, 2019 and the other documents it files with the SEC for other risks associated with the company’s future performance.

About NI

NI (ni.com) develops high-performance automated test and automated measurement systems to help you solve your engineering challenges now and into the future. Our open, software-defined platform uses modular hardware and an expansive ecosystem to help you turn powerful possibilities into real solutions. (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.

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Source: National Instruments

Marissa Vidaurri
Head of Investor Relations
(512) 683-5215