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National Instruments Reports Third Quarter Revenue of $340 Million

Company delivers record non-GAAP net margin for a first nine months

Q3 2019 Highlights

  • Revenue of $340 million, down 2 percent year over year and up 2 percent sequentially
  • GAAP gross margin of 75 percent
  • Non-GAAP gross margin of 77 percent
  • Fully diluted GAAP EPS of $0.39 and fully diluted non-GAAP EPS of $0.44
  • GAAP net income of $52 million, up 20 percent year over year
  • Non-GAAP net income of $58 million, down 3 percent year over year
  • GAAP net margin of 15 percent
  • Non-GAAP net margin of 17 percent
  • GAAP net income up 5 percent year over year through first nine months
  • Non-GAAP net income up 5 percent year over year through first nine months
  • EBITDA of $84 million for a third quarter
  • Cash and short-term investments of $432 million as of September 30, 2019

AUSTIN, Texas--(BUSINESS WIRE)--Oct. 29, 2019-- National Instruments (Nasdaq: NATI) today announced Q3 2019 revenue of $340 million, down 2 percent year over year and up 2 percent sequentially.

In Q3 2019, the value of the company's total orders was down 5 percent year over year; orders under $20,000 were down 6 percent year over year; and orders over $20,000 were down 4 percent year over year.

In Q3, GAAP gross margin was 75 percent and non-GAAP gross margin was 77 percent. Total GAAP operating expenses were $189 million, down 10 percent year over year. During Q3, the company recognized a gain of $27 million related to the sale of an office building in Austin, TX and incurred a $7 million expense related to donating a portion of the proceeds to a donor-advised fund to support our corporate social responsibility efforts. Total non-GAAP operating expenses were down 2 percent year over year at $195 million. GAAP operating margin was 19 percent in Q3, with GAAP operating income of $65 million, up 42 percent year over year. Non-GAAP operating margin was 20 percent in Q3, with non-GAAP operating income of $69 million, up 1 percent year over year. For the first nine months of 2019, GAAP operating expenses were $619 million, down 4 percent year over year, and non-GAAP operating expenses were $597 million, down 3 percent year over year. GAAP operating income for the first nine months of 2019 was $121 million, up 9 percent year over year, and non-GAAP operating income for the first nine months of 2019 was $168 million, up 4 percent year over year.

GAAP net income for Q3 was $52 million, with fully diluted earnings per share (EPS) of $0.39, and non-GAAP net income was $58 million, with non-GAAP fully diluted EPS of $0.44. EBITDA, or Earnings Before Interest, Taxes, Depreciation and Amortization, was $84 million for Q3.

“In this difficult business environment, we remain focused on our long-term growth strategy. We believe the differentiation and flexibility of our software-centric platform will enable us to increase market share as customers look for new options to meet market demands,” said Alex Davern, NI CEO. “We remain committed to our goal of delivering structurally higher profitability and believe we are on track to achieve our 18 percent non-GAAP operating margin goal in 2019. With our clear focus on industries coupled with our strong balance sheet, we believe we are in a position to accelerate growth when the market recovers.”

“I am pleased to see the significant impact our company realignment is having on our profitability. Our culture of operational excellence and increased scalability led to strong earnings performance in the third quarter,” said Karen Rapp, NI CFO. “Our ability to deliver record operating margin for a third quarter in a tough industrial economy is a testament to our confidence in achieving our 18 percent non-GAAP operating margin goal in 2019 and through the cycle.”

“Today, we also announced Eric Starkloff as CEO effective February 1, 2020. His leadership over the last 22 years at NI and his passion for innovation make him the right choice to take our business forward to become the leader in software-defined automated test and automated measurement,” said Alex Davern, NI CEO.

For more information on the leadership transition, please visit ni.com/nati/news

Geographic revenue in U.S. dollar terms for Q3 2019, compared with Q3 2018, was flat in the Americas, down 2 percent in APAC and down 4 percent in EMEIA. Excluding the impact of foreign currency exchange, revenue was flat in the Americas, flat in APAC and down 2 percent in EMEIA. Historical revenue from these three regions can be found on NI’s investor website at www.ni.com/nati.

As of September 30, 2019, NI had $432 million in cash and short-term investments. During the third quarter, NI paid $33 million in dividends and repurchased 1.1 million shares of our common stock at an average price of $42.42. The NI Board of Directors approved a quarterly dividend of $0.25 per share, payable on December 2, 2019, to stockholders of record on November 11, 2019. In October 2019, the NI Board of Directors increased the number of shares authorized for repurchase by NI under its stock repurchase program by 3 million shares.

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, disposal gains on buildings and related charitable contributions, 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 Q4 revenue to be in the range of $345 million to $375 million. The company currently expects that GAAP fully diluted EPS will be in the range of $0.25 to $0.39 for Q4, with non-GAAP fully diluted EPS expected to be in the range of $0.43 to $0.57.

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 nine months ended September 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, disposal gains on buildings and related charitable contributions, 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 nine months ended September 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

Interested parties can listen to the Q3 2019 earnings conference call with NI management today, October 29, at 4:00 p.m. CT at ni.com/call or by dialing 855-212-2361 and entering confirmation code 9485738 ten minutes prior to the call start time. Replay information is available by calling (855) 859-2056 and entering confirmation code 9485738, shortly after the call through November 2 at 10:00 p.m. CT or by visiting the company’s website at ni.com/call.

Forward-Looking Statements

This release contains “forward-looking statements” including statements regarding remaining focused on our long-term growth strategy, believing the differentiation and flexibility of our software-centric platform will enable us to increase market share as customers look to new options to meet market demands, remaining committed to our goal of delivering structurally higher profitability, believing we are on track to achieve our 18 percent non-GAAP operating margin goal in 2019, believing we are in a position to accelerate growth when the market recovers, the significant impact our company realignment is having on our profitability, our confidence in achieving our 18 percent non-GAAP operating margin goal in 2019 and through the cycle, being the right choice to take our business forward to become the leader in software-defined automated test and automated measurement, expecting Q4 revenue to be in the range of $345 million to $375 million, and expecting that GAAP fully diluted EPS will be in the range of $0.25 to $0.39 for Q4, with non-GAAP fully diluted EPS expected to be in the range of $0.43 to $0.57. 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 June 30, 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.

National Instruments

Condensed Consolidated Balance Sheets

(in thousands)

 

 

 

 

September 30,

 

 

December 31,

 

 

 

2019

 

 

2018

 

 

 

(unaudited)

 

 

 

Assets

 

 

 

 

 

 

Current assets:

 

 

 

 

 

 

Cash and cash equivalents

 

$

222,773

 

 

$

259,386

 

Short-term investments

 

 

209,416

 

 

 

271,396

 

Accounts receivable, net

 

 

224,305

 

 

 

242,955

 

Inventories, net

 

 

206,727

 

 

 

194,146

 

Prepaid expenses and other current assets

 

 

66,313

 

 

 

54,337

 

Total current assets

 

 

929,534

 

 

 

1,022,220

 

 

 

 

 

 

 

 

Property and equipment, net

 

 

239,140

 

 

 

245,201

 

Goodwill

 

 

259,430

 

 

 

264,530

 

Intangible assets, net

 

 

91,162

 

 

 

110,783

 

Operating lease right-of-use assets

 

 

63,766

 

 

 

 

Other long-term assets

 

 

45,289

 

 

 

28,501

 

Total assets

 

$

1,628,321

 

 

$

1,671,235

 

 

 

 

 

 

 

 

Liabilities and Stockholders' Equity

 

 

 

 

 

 

Current liabilities:

 

 

 

 

 

 

Accounts payable and accrued expenses

 

$

56,839

 

 

$

48,388

 

Accrued compensation

 

 

43,109

 

 

 

45,821

 

Deferred revenue - current

 

 

124,386

 

 

 

127,288

 

Operating lease liabilities - current

 

 

14,038

 

 

 

 

Other current liabilities

 

 

22,761

 

 

 

25,913

 

Other taxes payable

 

 

31,958

 

 

 

35,574

 

Total current liabilities

 

 

293,091

 

 

 

282,984

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Deferred income taxes

 

 

25,949

 

 

 

25,457

 

Liability for uncertain tax positions

 

 

7,631

 

 

 

9,775

 

Income tax payable - non-current

 

 

67,046

 

 

 

74,546

 

Deferred revenue - non-current

 

 

31,920

 

 

 

32,636

 

Operating lease liabilities - non-current

 

 

33,112

 

 

 

 

Other long-term liabilities

 

 

7,411

 

 

 

7,479

 

Total liabilities

 

 

466,160

 

 

 

432,877

 

 

 

 

 

 

 

 

Stockholders' equity:

 

 

 

 

 

 

Common stock

 

 

1,311

 

 

 

1,327

 

Additional paid-in capital

 

 

939,121

 

 

 

897,544

 

Retained earnings

 

 

245,465

 

 

 

356,418

 

Accumulated other comprehensive loss

 

 

(23,736

)

 

 

(16,931

)

Total stockholders' equity

 

 

1,162,161

 

 

 

1,238,358

 

Total liabilities and stockholders' equity

 

$

1,628,321

 

 

$

1,671,235

 

National Instruments

Condensed Consolidated Statements of Income

(in thousands, except per share data, unaudited)

 

 

 

 

 

 

 

 

 

 

 

 

 

Three Months Ended

 

 

Nine Months Ended

 

 

 

September 30,

 

 

September 30,

 

 

 

2019

 

 

2018

 

 

2019

 

 

2018

Net sales:

 

 

 

 

 

 

 

 

 

 

 

 

Product

 

$

305,247

 

 

$

310,216

 

 

$

882,747

 

 

$

897,355

 

Software maintenance

 

 

35,195

 

 

 

35,911

 

 

 

103,000

 

 

 

101,678

 

Total net sales

 

 

340,442

 

 

 

346,127

 

 

 

985,747

 

 

 

999,033

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Cost of sales:

 

 

 

 

 

 

 

 

 

 

 

 

Product

 

 

84,127

 

 

 

87,082

 

 

 

240,056

 

 

 

239,205

 

Software maintenance

 

 

1,788

 

 

 

1,933

 

 

 

5,700

 

 

 

6,493

 

Total cost of sales

 

 

85,915

 

 

 

89,015

 

 

 

245,756

 

 

 

245,698

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Gross profit

 

 

254,527

 

 

 

257,112

 

 

 

739,991

 

 

 

753,335

 

 

 

 

74.8%

 

 

74.3%

 

 

75.1%

 

 

75.4%

Operating expenses:

 

 

 

 

 

 

 

 

 

 

 

 

Sales and marketing

 

 

113,922

 

 

 

118,220

 

 

 

352,340

 

 

 

365,474

 

Research and development

 

 

66,558

 

 

 

66,170

 

 

 

200,981

 

 

 

194,921

 

General and administrative

 

 

35,711

 

 

 

26,712

 

 

 

92,639

 

 

 

81,882

 

Gain on sale of assets

 

 

(26,842

)

 

 

 

 

 

(26,842

)

 

 

 

Total operating expenses

 

 

189,349

 

 

 

211,102

 

 

 

619,118

 

 

 

642,277

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Operating income

 

 

65,178

 

 

 

46,010

 

 

 

120,873

 

 

 

111,058

 

 

 

 

19.1%

 

 

13.3%

 

 

12.3%

 

 

11.1%

Other income (expense):

 

 

 

 

 

 

 

 

 

 

 

 

Interest income

 

 

1,930

 

 

 

1,539

 

 

 

6,187

 

 

 

3,845

 

Net foreign exchange loss

 

 

(378

)

 

 

(956

)

 

 

(1,623

)

 

 

(2,082

)

Other gain, net

 

 

697

 

 

 

1,782

 

 

 

815

 

 

 

169

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Income before income taxes

 

 

67,427

 

 

 

48,375

 

 

 

126,252

 

 

 

112,990

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Provision for income taxes

 

 

15,783

 

 

 

5,181

 

 

 

22,697

 

 

 

14,474

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net income

 

$

51,644

 

 

$

43,194

 

 

$

103,555

 

 

$

98,516

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Basic earnings per share

 

$

0.39

 

 

$

0.33

 

 

$

0.79

 

 

$

0.75

 

Diluted earnings per share

 

$

0.39

 

 

$

0.32

 

 

$

0.78

 

 

$

0.74

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Weighted average shares outstanding -

 

 

 

 

 

 

 

 

 

 

 

 

Basic

 

 

131,385

 

 

 

132,357

 

 

 

131,896

 

 

 

131,792

 

Diluted

 

 

131,889

 

 

 

133,197

 

 

 

132,890

 

 

 

133,067

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Dividends declared per share

 

$

0.25

 

 

 

0.23

 

 

 

0.75

 

 

 

0.69

 

National Instruments

Condensed Consolidated Statements of Cash Flows

(in thousands, unaudited)

 

 

 

Nine Months Ended September 30,

 

 

 

2019

 

 

2018

 

 

 

 

Cash flow from operating activities:

 

 

 

 

 

 

Net income

 

$

103,555

 

 

$

98,516

 

Adjustments to reconcile net income to net cash provided by operating activities:

 

 

 

 

 

 

Depreciation and amortization

 

 

54,546

 

 

 

53,735

 

Stock-based compensation

 

 

38,054

 

 

 

27,492

 

Gain on sale of assets

 

 

(26,842

)

 

 

 

Deferred income taxes

 

 

(1,461

)

 

 

732

 

Net change in operating assets and liabilities

 

 

(18,507

)

 

 

6,862

 

Net cash provided by operating activities

 

 

149,345

 

 

 

187,337

 

 

 

 

 

 

 

 

Cash flow from investing activities:

 

 

 

 

 

 

Capital expenditures

 

 

(47,183

)

 

 

(27,373

)

Proceeds from sale of building

 

 

32,492

 

 

 

 

Capitalization of internally developed software

 

 

(7,179

)

 

 

(13,152

)

Additions to other intangibles

 

 

(1,132

)

 

 

(5,165

)

Acquisitions of equity-method investments

 

 

(13,670

)

 

 

 

Purchases of short-term investments

 

 

(141,074

)

 

 

(172,462

)

Sales and maturities of short-term investments

 

 

204,046

 

 

 

122,726

 

Net cash provided by (used by) investing activities

 

 

26,300

 

 

 

(95,426

)

 

 

 

 

 

 

 

Cash flow from financing activities:

 

 

 

 

 

 

Proceeds from issuance of common stock

 

 

25,823

 

 

 

24,424

 

Repurchase of common stock

 

 

(137,171

)

 

 

 

Dividends paid

 

 

(99,083

)

 

 

(91,034

)

Net cash used by financing activities

 

 

(210,431

)

 

 

(66,610

)

 

 

 

 

 

 

 

Impact of changes in exchange rates on cash

 

 

(1,827

)

 

 

(4,084

)

 

 

 

 

 

 

 

Net change in cash and cash equivalents

 

 

(36,613

)

 

 

21,217

 

Cash and cash equivalents at beginning of period

 

 

259,386

 

 

 

290,164

 

Cash and cash equivalents at end of period

 

$

222,773

 

 

$

311,381

 

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, capitalization and amortization of internally developed software costs, restructuring charges, disposal gains on office buildings and related charitable contributions, and other that were recorded in the line items indicated below (unaudited) (in thousands)

 

 

 

Three Months Ended

 

 

Nine Months Ended

 

 

 

September 30,

 

 

September 30,

 

 

 

 

 

 

 

 

 

 

 

 

 

 

2019

 

 

2018

 

 

2019

 

 

2018

Stock-based compensation

 

 

 

 

 

 

 

 

 

 

 

 

Cost of sales

 

$

904

 

 

$

844

 

 

$

2,587

 

 

$

2,415

 

Sales and marketing

 

 

5,231

 

 

 

3,452

 

 

 

14,745

 

 

 

10,408

 

Research and development

 

 

4,099

 

 

 

3,318

 

 

 

12,029

 

 

 

9,091

 

General and administrative

 

 

3,158

 

 

 

1,942

 

 

 

8,693

 

 

 

5,578

 

Provision for income taxes

 

 

(2,128

)

 

 

(1,455

)

 

 

(7,904

)

 

 

(6,115

)

Total

 

$

11,264

 

 

 

8,101

 

 

 

30,150

 

 

 

21,377

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Amortization of acquisition intangibles

 

 

 

 

 

 

 

 

 

 

 

 

Cost of sales

 

$

833

 

 

$

701

 

 

$

2,525

 

 

$

2,448

 

Sales and marketing

 

 

492

 

 

 

510

 

 

 

1,485

 

 

 

1,580

 

Research and development

 

 

28

 

 

 

28

 

 

 

84

 

 

 

84

 

Other loss, net

 

 

124

 

 

 

 

 

 

285

 

 

 

 

Provision for income taxes

 

 

(190

)

 

 

(149

)

 

 

(576

)

 

 

(518

)

Total

 

$

1,287

 

 

$

1,090

 

 

$

3,803

 

 

$

3,594

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Acquisition transaction costs, restructuring charges, and other

 

 

 

 

 

 

 

 

 

 

 

 

Cost of sales

 

$

 

 

$

1,784

 

 

$

 

 

$

1,813

 

Sales and marketing

 

 

2,993

 

 

 

3,676

 

 

 

8,290

 

 

 

8,354

 

Research and development

 

 

244

 

 

 

692

 

 

 

899

 

 

 

1,794

 

General and administrative (1)

 

 

7,998

 

 

 

373

 

 

 

9,525

 

 

 

1,538

 

Gain on sale of assets (1)

 

 

(26,842

)

 

 

 

 

 

(26,842

)

 

 

 

Other loss, net

 

 

 

 

 

 

 

 

 

 

 

709

 

Provision for income taxes

 

 

3,090

 

 

 

(1,800

)

 

 

1,240

 

 

 

(3,983

)

Total

 

$

(12,517

)

 

$

4,725

 

 

$

(6,888

)

 

$

10,225

 

(1): During the third quarter of 2019, the company recognized a gain of $27 million related to the sale of an office building, presented within "Gain on sale of assets". The company also recognized a charitable contribution expense of $7 million related to a donation using a portion of the proceeds from the sale of the building, presented within "General and administrative".

 

 

 

 

 

Capitalization and amortization of internally developed software costs

 

 

 

 

 

 

 

 

 

 

 

 

Cost of sales

 

$

6,954

 

 

$

6,412

 

 

$

20,073

 

 

$

18,736

 

Research and development

 

 

(2,682

)

 

 

(1,808

)

 

 

(7,179

)

 

 

(13,152

)

Provision for income taxes

 

 

(897

)

 

 

(967

)

 

 

(2,708

)

 

 

(1,173

)

Total

 

$

3,375

 

 

$

3,637

 

 

$

10,186

 

 

$

4,411

 

National Instruments

Reconciliation of GAAP to Non-GAAP Measures

(in thousands, unaudited)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Three Months Ended

 

 

Nine Months Ended

 

 

 

September 30,

 

 

September 30,

 

 

 

2019

 

 

2018

 

 

2019

 

 

2018

 

 

 

 

 

 

 

 

 

 

 

 

 

Reconciliation of Gross Profit to Non-GAAP Gross Profit

Gross profit, as reported

 

$

254,527

 

 

$

257,112

 

 

$

739,991

 

 

$

753,335

 

Stock-based compensation

 

 

904

 

 

 

844

 

 

 

2,587

 

 

 

2,415

 

Amortization of acquisition intangibles

 

 

833

 

 

 

701

 

 

 

2,525

 

 

 

2,448

 

Acquisition transaction costs and restructuring charges

 

 

 

 

 

1,784

 

 

 

 

 

 

1,813

 

Amortization of internally developed software costs

 

 

6,954

 

 

 

6,412

 

 

 

20,073

 

 

 

18,736

 

Non-GAAP gross profit

 

$

263,218

 

 

$

266,853

 

 

$

765,176

 

 

$

778,747

 

Non-GAAP gross margin

 

 

77.3

%

 

 

77.1

%

 

 

77.6

%

 

 

78.0

%

 

 

 

 

 

 

 

 

 

 

 

 

 

Reconciliation of Operating Expenses to Non-GAAP Operating Expenses

Operating expenses, as reported

 

$

189,349

 

 

$

211,102

 

 

$

619,118

 

 

$

642,277

 

Stock-based compensation

 

 

(12,488

)

 

 

(8,712

)

 

 

(35,467

)

 

 

(25,077

)

Amortization of acquisition intangibles

 

 

(520

)

 

 

(538

)

 

 

(1,569

)

 

 

(1,664

)

Acquisition transaction costs and restructuring charges

 

 

(4,235

)

 

 

(4,741

)

 

 

(11,714

)

 

 

(11,686

)

Capitalization of internally developed software costs

 

 

2,682

 

 

 

1,808

 

 

 

7,179

 

 

 

13,152

 

Gain on sale of assets and other

 

 

19,842

 

 

 

 

 

 

19,842

 

 

 

 

Non-GAAP operating expenses

 

$

194,630

 

 

$

198,919

 

 

$

597,389

 

 

$

617,002

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Reconciliation of Operating Income to Non-GAAP Operating Income

Operating income, as reported

 

$

65,178

 

 

$

46,010

 

 

$

120,873

 

 

$

111,058

 

Stock-based compensation

 

 

13,392

 

 

 

9,556

 

 

 

38,054

 

 

 

27,492

 

Amortization of acquisition intangibles

 

 

1,353

 

 

 

1,239

 

 

 

4,094

 

 

 

4,112

 

Acquisition transaction costs and restructuring charges

 

 

4,235

 

 

 

6,525

 

 

 

11,714

 

 

 

13,499

 

Net amortization of internally developed software costs

 

 

4,272

 

 

 

4,604

 

 

 

12,894

 

 

 

5,584

 

Gain on sale of assets and other

 

 

(19,842

)

 

 

 

 

 

(19,842

)

 

 

 

Non-GAAP operating income

 

$

68,588

 

 

$

67,934

 

 

$

167,787

 

 

$

161,745

 

Non-GAAP operating margin

 

 

20.1

%

 

 

19.6

%

 

 

17.0

%

 

 

16.2

%

 

 

 

 

 

 

 

 

 

 

 

 

 

Reconciliation of Income before income taxes to Non-GAAP Income before income taxes

Income before income taxes, as reported

 

$

67,427

 

 

$

48,375

 

 

$

126,252

 

 

$

112,990

 

Stock-based compensation

 

 

13,392

 

 

 

9,556

 

 

 

38,054

 

 

 

27,492

 

Amortization of acquisition intangibles

 

 

1,477

 

 

 

1,239

 

 

 

4,379

 

 

 

4,112

 

Acquisition transaction costs and restructuring charges

 

 

4,235

 

 

 

6,525

 

 

 

11,714

 

 

 

14,208

 

Net amortization of internally developed software costs

 

 

4,272

 

 

 

4,604

 

 

 

12,894

 

 

 

5,584

 

Gain on sale of assets and other

 

 

(19,842

)

 

 

 

 

 

(19,842

)

 

 

 

Non-GAAP income before income taxes

 

$

70,961

 

 

$

70,299

 

 

$

173,451

 

 

$

164,386

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Reconciliation of Provision for income taxes to Non-GAAP Provision for income taxes

Provision for income taxes, as reported

 

$

15,783

 

 

$

5,181

 

 

$

22,697

 

 

$

14,474

 

Stock-based compensation

 

 

2,128

 

 

 

1,455

 

 

 

7,904

 

 

 

6,115

 

Amortization of acquisition intangibles

 

 

190

 

 

 

149

 

 

 

576

 

 

 

518

 

Acquisition transaction costs and restructuring charges

 

 

1,117

 

 

 

1,800

 

 

 

2,967

 

 

 

3,983

 

Net amortization of internally developed software costs

 

 

897

 

 

 

967

 

 

 

2,708

 

 

 

1,173

 

Gain on sale of assets and other

 

 

(4,207

)

 

 

 

 

 

(4,207

)

 

 

 

Tax reform charge

 

 

(2,774

)

 

 

1,146

 

 

 

(2,774

)

 

 

1,146

 

Non-GAAP provision for income taxes

 

$

13,134

 

 

$

10,698

 

 

$

29,871

 

 

$

27,409

 

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

 

 

 

September 30,

 

 

September 30,

 

 

 

2019

 

 

2018

 

 

2019

 

 

2018

 

 

 

 

 

 

 

 

 

 

 

 

 

Net income, as reported

 

$

51,644

 

 

$

43,194

 

 

$

103,555

 

 

$

98,516

 

Adjustments to reconcile net income to non-GAAP net income:

 

 

 

 

 

 

 

 

 

 

 

 

Stock-based compensation, net of tax effect

 

 

11,264

 

 

 

8,101

 

 

 

30,150

 

 

 

21,377

 

Amortization of acquisition intangibles, net of tax effect

 

 

1,287

 

 

 

1,090

 

 

 

3,803

 

 

 

3,594

 

Acquisition transaction costs and restructuring charges, net of tax effect

 

 

3,118

 

 

 

4,725

 

 

 

8,747

 

 

 

10,225

 

Net amortization of internally developed software costs, net of tax effect

 

 

3,375

 

 

 

3,637

 

 

 

10,186

 

 

 

4,411

 

Gain on sale of assets and other(1), net of tax effect

 

 

(15,635

)

 

 

 

 

 

(15,635

)

 

 

 

Tax reform charge

 

 

2,774

 

 

 

(1,146

)

 

 

2,774

 

 

 

(1,146

)

Non-GAAP net income

 

$

57,827

 

 

$

59,601

 

 

$

143,580

 

 

$

136,977

 

 

Basic EPS, as reported

 

$

0.39

 

 

$

0.33

 

 

$

0.79

 

 

$

0.75

 

Adjustment to reconcile basic EPS to non-GAAP basic EPS:

 

 

 

 

 

 

 

 

 

 

 

 

Impact of stock-based compensation, net of tax effect

 

 

0.09

 

 

 

0.06

 

 

 

0.22

 

 

 

0.16

 

Impact of amortization of acquisition intangibles, net of tax effect

 

 

0.01

 

 

 

 

 

 

0.03

 

 

 

0.03

 

Impact of acquisition transaction costs and restructuring charges, net of tax effect

 

 

0.02

 

 

 

0.04

 

 

 

0.07

 

 

 

0.08

 

Impact of net amortization of internally developed software costs, net of tax effect

 

 

0.03

 

 

 

0.03

 

 

 

0.08

 

 

 

0.03

 

Impact of gain on sale of assets and other(1), net of tax effect

 

 

(0.12

)

 

 

 

 

 

(0.12

)

 

 

 

Impact of tax reform charge

 

 

0.02

 

 

 

(0.01

)

 

 

0.02

 

 

 

(0.01

)

Non-GAAP basic EPS

 

$

0.44

 

 

$

0.45

 

 

$

1.09

 

 

$

1.04

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Diluted EPS, as reported

 

$

0.39

 

 

$

0.32

 

 

$

0.78

 

 

$

0.74

 

Adjustment to reconcile diluted EPS to non-GAAP diluted EPS

 

 

 

 

 

 

 

 

 

 

 

 

Impact of stock-based compensation, net of tax effect

 

 

0.09

 

 

 

0.06

 

 

 

0.22

 

 

 

0.16

 

Impact of amortization of acquisition intangibles, net of tax effect

 

 

0.01

 

 

 

0.01

 

 

 

0.03

 

 

 

0.03

 

Impact of acquisition transaction costs and restructuring charges, net of tax effect

 

 

0.02

 

 

 

0.04

 

 

 

0.07

 

 

 

0.08

 

Impact of net amortization of internally developed software costs, net of tax effect

 

 

0.03

 

 

 

0.03

 

 

 

0.08

 

 

 

0.03

 

Impact of gain on sale of assets and other(1), net of tax effect

 

 

(0.12

)

 

 

 

 

 

(0.12

)

 

 

 

Impact of tax reform charge

 

 

0.02

 

 

 

(0.01

)

 

 

0.02

 

 

 

(0.01

)

Non-GAAP diluted EPS

 

$

0.44

 

 

$

0.45

 

 

$

1.08

 

 

$

1.03

 

(1): During the third quarter of 2019, the company recognized a gain of $27 million related to the sale of an office building, presented within "Gain on sale of assets". The company also recognized a charitable contribution expense of $7 million related to a donation using a portion of the proceeds from the sale of the building, presented within "General and administrative".

 

 

 

 

 

 

 

 

 

 

 

 

 

Weighted average shares outstanding -

 

 

 

 

 

 

 

 

 

 

 

 

Basic

 

 

131,385

 

 

 

132,357

 

 

 

131,896

 

 

 

131,792

 

Diluted

 

 

131,889

 

 

 

133,197

 

 

 

132,890

 

 

 

133,067

 

National Instruments

Reconciliation of Net Income to EBITDA

(in thousands, unaudited)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Three Months Ended

 

 

Nine Months Ended

 

 

 

September 30,

 

 

September 30,

 

 

 

2019

 

 

2018

 

 

2019

 

 

2018

Net income, as reported

 

$

51,644

 

 

$

43,194

 

 

$

103,555

 

 

$

98,516

 

Adjustments to reconcile net income to EBITDA:

 

 

 

 

 

 

 

 

 

 

 

 

Interest income, net

 

 

(1,923

)

 

 

(1,525

)

 

 

(6,155

)

 

 

(3,705

)

Tax expense

 

 

15,783

 

 

 

5,181

 

 

 

22,697

 

 

 

14,474

 

Depreciation and amortization

 

 

18,562

 

 

 

18,637

 

 

 

54,546

 

 

 

53,735

 

EBITDA

 

$

84,066

 

 

$

65,487

 

 

$

174,643

 

 

$

163,020

 

Weighted average shares outstanding - Diluted

 

 

131,889

 

 

 

133,197

 

 

 

132,890

 

 

 

133,067

 

Reconciliation of GAAP to Non-GAAP EPS Guidance

(unaudited)

 

 

 

 

Three Months Ended

 

 

 

December 31, 2019

 

 

 

 

 

 

 

 

 

 

Low

 

 

High

GAAP Diluted EPS, guidance

 

$

0.25

 

 

$

0.39

 

Adjustment to reconcile diluted EPS to non-GAAP diluted EPS:

 

 

 

 

 

 

Impact of stock-based compensation, net of tax effect

 

 

0.09

 

 

 

0.09

 

Impact of amortization of acquisition intangibles, net of tax effect

 

 

0.01

 

 

 

0.01

 

Impact of acquisition transaction costs, restructuring charges, and other, net of tax effect

 

 

0.04

 

 

 

0.04

 

Impact of net amortization of software development costs, net of tax effect

 

 

0.04

 

 

 

0.04

 

Non-GAAP Diluted EPS, guidance

 

$

0.43

 

 

$

0.57

 

 

Source: National Instruments

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