NI Reports Record Quarterly Revenue and 13 Percent YOY Order Growth
Company Sees Significant Increase in Operating Leverage with Non-GAAP Operating Income up 40% YOY
Q2 2014 Highlights
-
Quarterly revenue of
$313 million , up 6 percent year-over-year - Strong order growth for CompactRIO and PXI products
- GAAP operating income up 67 percent year-over-year
- Non-GAAP operating income up 40 percent year-over-year
-
Fully diluted GAAP EPS of
$0.19 and fully diluted non-GAAP EPS of$0.25 -
EBITDA of
$48 million or$0.38 per share -
Cash and cash equivalents of
$402 million
GAAP net income for Q2 was
In Q2, GAAP gross margin was 74 percent and non-GAAP gross margin was 75
percent, up 210 basis points from Q2 2013. Total GAAP operating expenses
were
GAAP operating margin was 10 percent in Q2, with GAAP operating income of $32 million, up 67 percent year-over-year. Non-GAAP operating margin was 13.5 percent in Q2, with non-GAAP operating income of $42 million, up 40 percent year-over-year.
The company's non-GAAP results exclude the impact of stock-based compensation, amortization of acquisition-related intangibles, acquisition-related adjustments and acquisition-related transaction costs. Reconciliations of the company's GAAP and non-GAAP results are included as part of this news release.
"I am pleased to see our platform-based approach advancing our
leadership position in test and measurement and industrial
applications," said Dr.
Geographic revenue in U.S. dollar terms for Q2 2014 compared with Q2
2013 was up 7 percent in the
As of
Guidance for Q3 2014
"While the Global PMI declined slightly in Q2, the improvement in June
gives us increased confidence in our ability to continue to deliver
revenue growth in Q3," said
Gross margins are expected to be up sequentially in Q3. Additionally, we
will be recognizing a
NI currently expects revenue for Q3 2014 to be between
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-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 and acquisition-related transaction 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 also discloses the company's EBITDA and EBITDA diluted
EPS for the three- and six-month periods ending
Conference Call Information and Availability of Presentation Materials
Interested parties can listen to the Q2 2014 conference call today,
Forward-Looking Statements
This release contains "forward-looking statements," including statements regarding advancing our leadership position, being optimistic about our long-term position in the industry, helping engineers and scientists simplify problems and reduce costs while scaling and adapting to changing demands, increased confidence in our ability to continue to deliver revenue growth, expecting improved year-over-year operating performance in Q3, expecting gross margins to increase sequentially in Q3 and recognizing a tax benefit in Q3, and NI's Q3 guidance for revenue 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, foreign exchange fluctuations, component shortages, delays in the release of new products, fluctuations in customer demand for NI products including orders from NI's largest customer, fluctuations in average order size and customer mix, the company's ability to effectively manage its operating expenses, manufacturing inefficiencies and the level of capacity utilization, and the impact of any acquisitions by NI. Actual results may differ materially from the expected results.
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) | |||||||
|
|
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2014 | 2013 | ||||||
Assets | |||||||
Current assets: | |||||||
Cash and cash equivalents | $ | 237,496 | $ | 230,263 | |||
Short-term investments | 164,017 | 163,149 | |||||
Accounts receivable, net | 210,820 | 180,680 | |||||
Inventories, net | 167,294 | 172,109 | |||||
Prepaid expenses and other current assets | 75,709 | 49,001 | |||||
Deferred income taxes, net | 29,832 | 33,393 | |||||
Total current assets | 885,168 | 828,595 | |||||
Property and equipment, net | 263,709 | 260,568 | |||||
Goodwill | 146,433 | 146,520 | |||||
Intangible assets, net | 86,398 | 82,310 | |||||
Other long-term assets | 23,424 | 25,558 | |||||
Total assets | $ | 1,405,132 | $ | 1,343,551 | |||
Liabilities and Stockholders' Equity | |||||||
Current liabilities: | |||||||
Accounts payable | $ | 63,982 | $ | 56,614 | |||
Accrued compensation | 32,727 | 25,189 | |||||
Deferred revenue - current | 104,570 | 96,117 | |||||
Accrued expenses and other liabilities | 16,139 | 17,627 | |||||
Other taxes payable | 33,063 | 29,808 | |||||
Total current liabilities | 250,481 | 225,355 | |||||
Deferred income taxes | 42,374 | 44,620 | |||||
Liability for uncertain tax positions | 24,700 | 23,572 | |||||
Deferred revenue - long-term | 23,435 | 21,389 | |||||
Other long-term liabilities | 6,249 | 5,531 | |||||
Total liabilities | 347,239 | 320,467 | |||||
Stockholders' equity: | |||||||
Preferred stock | - | - | |||||
Common stock | 1,273 | 1,257 | |||||
Additional paid-in capital | 635,640 | 604,330 | |||||
Retained earnings | 420,216 | 414,947 | |||||
Accumulated other comprehensive income | 764 | 2,550 | |||||
Total stockholders' equity | 1,057,893 | 1,023,084 | |||||
Total liabilities and stockholders' equity | $ | 1,405,132 | $ | 1,343,551 |
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Condensed Consolidated Statements of Income | |||||||||||||||||
(in thousands, except per share data, unaudited) | |||||||||||||||||
Three Months Ended | Six Months Ended | ||||||||||||||||
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2014 | 2013 | 2014 | 2013 | ||||||||||||||
Net sales: | |||||||||||||||||
Product | $ | 288,224 | $ | 275,663 | $ | 550,488 | $ | 541,081 | |||||||||
Software maintenance | 24,487 | 20,463 | 46,897 | 41,533 | |||||||||||||
Total net sales | 312,711 | 296,126 | 597,385 | 582,614 | |||||||||||||
Cost of sales: | |||||||||||||||||
Product | 80,642 | 82,787 | 150,263 | 151,413 | |||||||||||||
Software maintenance | 1,179 | 1,028 | 2,760 | 2,642 | |||||||||||||
Total cost of sales | 81,821 | 83,815 | 153,023 | 154,055 | |||||||||||||
Gross profit | 230,890 | 212,311 | 444,362 | 428,559 | |||||||||||||
Operating expenses: | |||||||||||||||||
Sales and marketing | 119,374 | 112,561 | 231,290 | 226,631 | |||||||||||||
Research and development | 55,851 | 58,473 | 111,110 | 119,729 | |||||||||||||
General and administrative | 23,640 | 22,156 | 46,113 | 45,000 | |||||||||||||
Acquisition related adjustment | - | - | - | (1,316 | ) | ||||||||||||
Total operating expenses | 198,865 | 193,190 | 388,513 | 390,044 | |||||||||||||
Operating income | 32,025 | 19,121 | 55,849 | 38,515 | |||||||||||||
Other income (expense): | |||||||||||||||||
Interest income | 234 | 177 | 431 | 362 | |||||||||||||
Net foreign exchange loss | (603 | ) | (1,051 | ) | (553 | ) | (2,513 | ) | |||||||||
Other income, net | 265 | 400 | 353 | 424 | |||||||||||||
Income before income taxes | 31,921 | 18,647 | 56,080 | 36,788 | |||||||||||||
Provision for income taxes | 7,398 | 4,226 | 12,834 | 3,767 | |||||||||||||
Net income | $ | 24,523 | $ | 14,421 | $ | 43,246 | $ | 33,021 | |||||||||
Basic earnings per share | $ | 0.19 | $ | 0.12 | $ | 0.34 | $ | 0.27 | |||||||||
Diluted earnings per share | $ | 0.19 | $ | 0.12 | $ | 0.34 | $ | 0.26 | |||||||||
Weighted average shares outstanding - | |||||||||||||||||
basic | 126,887 | 124,377 | 126,433 | 123,845 | |||||||||||||
diluted | 127,512 | 125,270 | 127,123 | 124,824 | |||||||||||||
Dividends declared per share | $ | 0.15 | $ | 0.14 | $ | 0.30 | $ | 0.28 |
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Condensed Consolidated Statements of Cash Flows | |||||||||
(in thousands, unaudited) | |||||||||
Six Months Ended |
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2014 | 2013 | ||||||||
Cash flow from operating activities: | |||||||||
Net income | $ | 43,246 | $ | 33,021 | |||||
Adjustments to reconcile net income to net cash provided | |||||||||
by operating activities: | |||||||||
Depreciation and amortization | 33,357 | 33,555 | |||||||
Stock-based compensation | 12,881 | 14,006 | |||||||
Tax expense/(benefit) expense from deferred income taxes | 1,398 | (3,633 | ) | ||||||
Tax benefit from stock option plans | (1,055 | ) | (2,042 | ) | |||||
Changes in operating assets and liabilities: | |||||||||
Accounts receivable | (30,140 | ) | 14,358 | ||||||
Inventories | 4,815 | (14,732 | ) | ||||||
Prepaid expenses and other assets | (25,942 | ) | (18,418 | ) | |||||
Accounts payable | 7,368 | (10,612 | ) | ||||||
Deferred revenue | 10,499 | 5,097 | |||||||
Taxes and other liabilities | 12,011 | (6,208 | ) | ||||||
Net cash provided by operating activities | 68,438 | 44,392 | |||||||
Cash flow from investing activities: | |||||||||
Capital expenditures | (22,109 | ) | (33,147 | ) | |||||
Capitalization of internally developed software | (16,797 | ) | (8,073 | ) | |||||
Additions to other intangibles | (1,634 | ) | (2,710 | ) | |||||
Purchases of short-term investments | (80,515 | ) | (16,039 | ) | |||||
Sales and maturities of short-term investments | 79,647 | 35,234 | |||||||
Net cash used by investing activities | (41,408 | ) | (24,735 | ) | |||||
Cash flow from financing activities: | |||||||||
Proceeds from issuance of common stock | 17,124 | 20,612 | |||||||
Dividends paid | (37,976 | ) | (34,727 | ) | |||||
Tax benefit from stock option plans | 1,055 | 2,042 | |||||||
Net cash used by financing activities | (19,797 | ) | (12,073 | ) | |||||
Net change in cash and cash equivalents | 7,233 | 7,584 | |||||||
Cash and cash equivalents at beginning of period | 230,263 | 161,996 | |||||||
Cash and cash equivalents at end of period | $ | 237,496 | $ | 169,580 |
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Detail of GAAP charges related to revenue, stock-based compensation, amortization of acquisition intangibles and acquisition related transaction costs | |||||||||||||||||
(in thousands, unaudited) | |||||||||||||||||
Three Months Ended | Six Months Ended | ||||||||||||||||
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2014 | 2013 | 2014 | 2013 | ||||||||||||||
Stock-based compensation | |||||||||||||||||
Cost of sales | $ | 358 | $ | 408 | $ | 799 | $ | 829 | |||||||||
Sales and marketing | 2,767 | 2,926 | 5,578 | 5,999 | |||||||||||||
Research and development | 2,273 | 2,596 | 4,724 | 5,333 | |||||||||||||
General and administrative | 930 | 942 | 1,780 | 1,845 | |||||||||||||
Provision for income taxes | (1,797 | ) | (1,877 | ) | (3,633 | ) | (3,691 | ) | |||||||||
Total | $ | 4,531 | $ | 4,995 | $ | 9,248 | $ | 10,315 | |||||||||
Amortization of acquisition intangibles | |||||||||||||||||
Cost of sales | $ | 2,663 | $ | 2,613 | $ | 5,329 | $ | 5,373 | |||||||||
Sales and marketing | 452 | 498 | 918 | 1,016 | |||||||||||||
Research and development | 400 | 569 | 806 | 1,242 | |||||||||||||
Other income, net | 167 | 188 | 337 | 381 | |||||||||||||
Provision for income taxes | (1,216 | ) | (1,268 | ) | (2,440 | ) | (2,618 | ) | |||||||||
Total | $ | 2,466 | $ | 2,600 | $ | 4,950 | $ | 5,394 | |||||||||
Acquisition related adjustment and transaction costs | |||||||||||||||||
Cost of sales | $ | - | $ | 3 | $ | - | $ | 3 | |||||||||
Sales and marketing | 88 | 142 | 176 | 260 | |||||||||||||
Research and development | 153 | 266 | 306 | 410 | |||||||||||||
General and administrative | 42 | 69 | 107 | 175 | |||||||||||||
Acquisition related adjustment | - | - | - | (1,316 | ) | ||||||||||||
Provision for income taxes | (99 | ) | (153 | ) | (206 | ) | (259 | ) | |||||||||
Total | $ | 184 | $ | 327 | $ | 383 | $ | (727 | ) |
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Reconciliation of GAAP to Non-GAAP Measures | |||||||||||||||||
(in thousands, unaudited) | |||||||||||||||||
Three Months Ended | Six Months Ended | ||||||||||||||||
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2014 | 2013 | 2014 | 2013 | ||||||||||||||
Reconciliation of Gross Profit to Non-GAAP Gross Profit | |||||||||||||||||
Gross profit, as reported | $ | 230,890 | $ | 212,311 | $ | 444,362 | $ | 428,559 | |||||||||
Stock-based compensation | 358 | 408 | 799 | 829 | |||||||||||||
Amortization of acquisition intangibles | 2,663 | 2,613 | 5,329 | 5,373 | |||||||||||||
Acquisition related transaction costs | - | 3 | - | 3 | |||||||||||||
Non-GAAP gross profit | $ | 233,911 | $ | 215,335 | $ | 450,490 | $ | 434,764 | |||||||||
Non-GAAP gross margin | 75 | % | 73 | % | 75 | % | 75 | % | |||||||||
Reconciliation of Operating Expenses to Non-GAAP Operating Expenses | |||||||||||||||||
Operating expenses, as reported | $ | 198,865 | $ | 193,190 | $ | 388,513 | $ | 390,044 | |||||||||
Stock-based compensation | (5,970 | ) | (6,464 | ) | (12,082 | ) | (13,177 | ) | |||||||||
Amortization of acquisition intangibles | (852 | ) | (1,067 | ) | (1,724 | ) | (2,258 | ) | |||||||||
Acquisition related adjustment | - | - | - | 1,316 | |||||||||||||
Acquisition related transaction costs | (283 | ) | (477 | ) | (589 | ) | (845 | ) | |||||||||
Non-GAAP operating expenses | $ | 191,760 | $ | 185,182 | $ | 374,118 | $ | 375,080 | |||||||||
Reconciliation of Operating Income to Non-GAAP Operating Income | |||||||||||||||||
Operating income, as reported | $ | 32,025 | $ | 19,121 | $ | 55,849 | $ | 38,515 | |||||||||
Stock-based compensation | 6,328 | 6,872 | 12,881 | 14,006 | |||||||||||||
Amortization of acquisition intangibles | 3,515 | 3,680 | 7,053 | 7,631 | |||||||||||||
Acquisition related adjustment | - | - | - | (1,316 | ) | ||||||||||||
Acquisition related transaction costs | 283 | 480 | 589 | 848 | |||||||||||||
Non-GAAP operating income | $ | 42,151 | $ | 30,153 | $ | 76,372 | $ | 59,684 | |||||||||
Non-GAAP operating margin | 13 | % | 10 | % | 13 | % | 10 | % | |||||||||
Reconciliation of Income before income taxes to Non-GAAP Income before income taxes | |||||||||||||||||
Income before income taxes, as reported | $ | 31,921 | $ | 18,647 | $ | 56,080 | $ | 36,788 | |||||||||
Stock-based compensation | 6,328 | 6,872 | 12,881 | 14,006 | |||||||||||||
Amortization of acquisition intangibles | 3,682 | 3,868 | 7,390 | 8,012 | |||||||||||||
Acquisition related adjustment | - | - | - | (1,316 | ) | ||||||||||||
Acquisition related transaction costs | 283 | 480 | 589 | 848 | |||||||||||||
Non-GAAP income before income taxes | $ | 42,214 | $ | 29,867 | $ | 76,940 | $ | 58,338 | |||||||||
Reconciliation of Provision for income taxes to Non-GAAP Provision for income taxes | |||||||||||||||||
Provision for income taxes, as reported | $ | 7,398 | $ | 4,226 | $ | 12,834 | $ | 3,767 | |||||||||
Stock-based compensation | 1,797 | 1,877 | 3,633 | 3,691 | |||||||||||||
Amortization of acquisition intangibles | 1,216 | 1,268 | 2,440 | 2,618 | |||||||||||||
Acquisition related adjustment and transaction costs | 99 | 153 | 206 | 259 | |||||||||||||
Non-GAAP provision for income taxes | $ | 10,510 | $ | 7,524 | $ | 19,113 | $ | 10,335 |
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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 | Six Months Ended | |||||||||||||
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2014 | 2013 | 2014 | 2013 | |||||||||||
Net income, as reported | $ | 24,523 | $ | 14,421 | $ | 43,246 | $ | 33,021 | ||||||
Adjustments to reconcile net income to non-GAAP net income: | ||||||||||||||
Stock-based compensation, net of tax effect | 4,531 | 4,995 | 9,248 | 10,315 | ||||||||||
Amortization of acquisition intangibles, net of tax effect | 2,466 | 2,600 | 4,950 | 5,394 | ||||||||||
Acquisition related adjustment | - | - | - | (1,316 | ) | |||||||||
Acquisition related transaction costs, net of tax effect | 184 | 327 | 383 | 589 | ||||||||||
Non-GAAP net income | $ | 31,704 | $ | 22,343 | $ | 57,827 | $ | 48,003 | ||||||
Basic EPS, as reported | $ | 0.19 | $ | 0.12 | $ | 0.34 | $ | 0.27 | ||||||
Adjustment to reconcile basic EPS to non-GAAP basic EPS: |
||||||||||||||
Impact of stock-based compensation, net of tax effect | 0.04 | 0.04 | 0.08 | 0.09 | ||||||||||
Impact of amortization of acquisition intangibles, net of tax effect | 0.02 | 0.02 | 0.04 | 0.04 | ||||||||||
Acquisition related adjustment | - | - | - | (0.01 | ) | |||||||||
Impact of acquisition related transaction costs, net of tax effect | - | - | - | - | ||||||||||
Non-GAAP basic EPS | $ | 0.25 | $ | 0.18 | $ | 0.46 | $ | 0.39 | ||||||
Diluted EPS, as reported | $ | 0.19 | $ | 0.12 | $ | 0.34 | $ | 0.26 | ||||||
Adjustment to reconcile diluted EPS to non-GAAP diluted EPS | ||||||||||||||
Impact of stock-based compensation, net of tax effect | 0.04 | 0.04 | 0.07 | 0.09 | ||||||||||
Impact of amortization of acquisition intangibles, net of tax effect | 0.02 | 0.02 | 0.04 | 0.04 | ||||||||||
Acquisition related adjustment | - | - | - | (0.01 | ) | |||||||||
Impact of acquisition related transaction costs, net of tax effect | - | - | - | - | ||||||||||
Non-GAAP diluted EPS | $ | 0.25 | $ | 0.18 | $ | 0.45 | $ | 0.38 | ||||||
Weighted average shares outstanding - | ||||||||||||||
Basic | 126,887 | 124,377 | 126,433 | 123,845 | ||||||||||
Diluted | 127,512 | 125,270 | 127,123 | 124,824 |
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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 | Six Months Ended | ||||||||||||||||
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2014 | 2013 | 2014 | 2013 | ||||||||||||||
Net income, as reported | $ | 24,523 | $ | 14,421 | $ | 43,246 | $ | 33,021 | |||||||||
Adjustments to reconcile net income to EBITDA: | |||||||||||||||||
Interest income | (234 | ) | (177 | ) | (431 | ) | (362 | ) | |||||||||
Tax expense | 7,398 | 4,226 | 12,834 | 3,767 | |||||||||||||
Depreciation and amortization | 16,363 | 16,726 | 33,357 | 33,555 | |||||||||||||
EBITDA | $ | 48,050 | $ | 35,196 | $ | 89,006 | $ | 69,981 | |||||||||
Diluted EPS, as reported | $ | 0.19 | $ | 0.12 | $ | 0.34 | $ | 0.26 | |||||||||
Adjustment to reconcile diluted EPS to EBITDA | |||||||||||||||||
Interest income | - | - | - | - | |||||||||||||
Taxes | 0.06 | 0.03 | 0.10 | 0.03 | |||||||||||||
Depreciation and amortization | 0.13 | 0.13 | 0.26 | 0.27 | |||||||||||||
EBITDA diluted EPS | $ | 0.38 | $ | 0.28 | $ | 0.70 | $ | 0.56 | |||||||||
Weighted average shares outstanding - Diluted | 127,512 | 125,270 | 127,123 | 124,824 |
Reconciliation of GAAP to Non-GAAP EPS Guidance | |||||||
(unaudited) | |||||||
Three months ended | |||||||
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Low | High | ||||||
GAAP Fully Diluted EPS, guidance | $ | 0.24 | $ | 0.36 | |||
Adjustment to reconcile diluted EPS to non-GAAP diluted EPS: |
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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 | $ | 0.30 | $ | 0.42 |
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marissa.vidaurri@ni.com
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