Item 1. Financial Statements
ITEM 1. Financial Statements (Unaudited):
Condensed Consolidated Balance Sheets
5
Condensed Consolidated Statements of Income
6
Condensed Consolidated Statements of Comprehensive Income (Loss)
7
Condensed Consolidated Statements of Stockholders' Equity
8
Condensed Consolidated Statements of Cash Flows
10
Notes to Condensed Consolidated Financial Statements (Unaudited):
11
Note 1. Overview and Accounting Policies
11
Note 2. Stockholders’ Equity
11
Note 3. Acquisitions and Divestitures
12
Note 4. Intangible Assets and Goodwill
13
Note 5. Inventories
13
Note 6. Segment Information
14
Note 7. Debt
16
Note 8. Fair Value Measurements
17
Note 9. Deferred Revenue and Remaining Performance Obligations
18
Note 10. Earnings per Share
18
Note 11. Income Taxes
18
Note 12. Commitments and Contingencies
19
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TRIMBLE INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(UNAUDITED)
As of As of
Third Quarter of Year End
2022 2021
(In millions, except par value)
ASSETS
Current assets:
Cash and cash equivalents $ 308.7 $ 325.7
Accounts receivable, net 566.1 624.8
Inventories 391.1 363.3
Other current assets 169.4 136.8
Total current assets 1,435.3 1,450.6
Property and equipment, net 221.0 233.2
Operating lease right-of-use assets 122.3 141.0
Goodwill 4,037.1 3,981.5
Other purchased intangible assets, net 511.7 506.6
Deferred income tax assets 448.6 502.0
Other non-current assets 301.7 284.7
Total assets $ 7,077.7 $ 7,099.6
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Short-term debt $ 343.6 $ —
Accounts payable 194.8 207.3
Accrued compensation and benefits 156.7 231.0
Deferred revenue 544.5 548.8
Other current liabilities 205.4 201.5
Total current liabilities 1,445.0 1,188.6
Long-term debt 1,244.6 1,293.2
Deferred revenue, non-current 92.3 83.0
Deferred income tax liabilities 162.2 263.1
Income taxes payable 40.9 54.5
Operating lease liabilities 103.9 121.4
Other non-current liabilities 144.0 151.1
Total liabilities 3,232.9 3,154.9
Commitments and contingencies (Note 12)
Stockholders' equity:
Preferred stock, $ 0.001 par value; 3.0 shares authorized; none issued and outstanding
— —
Common stock, $ 0.001 par value; 360.0 shares authorized; 246.6 and 250.9 shares issued and outstanding at the end of the third quarter of 2022 and year end 2021
0.2 0.3
Additional paid-in-capital 2,027.3 1,935.6
Retained earnings 2,152.0 2,170.5
Accumulated other comprehensive loss ( 334.7 ) ( 161.7 )
Total stockholders' equity 3,844.8 3,944.7
Total liabilities and stockholders' equity $ 7,077.7 $ 7,099.6
See accompanying Notes to the Condensed Consolidated Financial Statements.
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TRIMBLE INC.
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(UNAUDITED)
Third Quarter of First Three Quarters of
(In millions, except per share amounts) 2022 2021 2022 2021
Revenue:
Product $ 503.9 $ 551.2 $ 1,690.0 $ 1,685.5
Service 158.3 159.9 477.4 484.3
Subscription 222.7 190.3 652.4 563.3
Total revenue 884.9 901.4 2,819.8 2,733.1
Cost of sales:
Product 240.7 266.7 819.0 808.4
Service 53.9 55.5 180.6 173.1
Subscription 55.0 52.7 154.3 162.3
Amortization of purchased intangible assets 19.9 22.0 63.4 66.1
Total cost of sales 369.5 396.9 1,217.3 1,209.9
Gross margin 515.4 504.5 1,602.5 1,523.2
Operating expense:
Research and development 127.0 132.5 407.4 400.2
Sales and marketing 137.1 125.5 407.9 373.1
General and administrative 109.6 85.2 318.0 270.2
Restructuring 8.2 1.5 20.5 7.5
Amortization of purchased intangible assets 11.1 12.3 34.5 39.0
Total operating expense 393.0 357.0 1,188.3 1,090.0
Operating income 122.4 147.5 414.2 433.2
Non-operating income, net:
Divestitures gain, net 6.0 19.1 103.1 41.5
Interest expense, net ( 15.6 ) ( 15.9 ) ( 46.9 ) ( 49.4 )
Income from equity method investments, net 6.8 8.5 22.3 30.3
Other income (expense), net ( 1.7 ) ( 2.5 ) ( 14.7 ) 0.9
Total non-operating (expense) income, net ( 4.5 ) 9.2 63.8 23.3
Income before taxes 117.9 156.7 478.0 456.5
Income tax provision 32.1 32.7 113.9 79.0
Net income 85.8 124.0 364.1 377.5
Net income attributable to noncontrolling interests — — — 0.1
Net income attributable to Trimble Inc. $ 85.8 $ 124.0 $ 364.1 $ 377.4
Earnings per share attributable to Trimble Inc.:
Basic $ 0.35 $ 0.49 $ 1.46 $ 1.50
Diluted $ 0.34 $ 0.49 $ 1.45 $ 1.48
Shares used in calculating earnings per share:
Basic 247.5 251.8 249.1 251.5
Diluted 248.9 254.5 250.8 254.3
See accompanying Notes to the Condensed Consolidated Financial Statements.
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TRIMBLE INC.
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)
(UNAUDITED)
Third Quarter of First Three Quarters of
2022 2021 2022 2021
(In millions)
Net income $ 85.8 $ 124.0 $ 364.1 $ 377.5
Foreign currency translation adjustments, net of tax ( 95.6 ) ( 28.7 ) ( 173.0 ) ( 42.1 )
Comprehensive (loss) income ( 9.8 ) 95.3 191.1 335.4
Comprehensive income attributable to noncontrolling interests — — — 0.1
Comprehensive (loss) income attributable to Trimble Inc. $ ( 9.8 ) $ 95.3 $ 191.1 $ 335.3
See accompanying Notes to the Condensed Consolidated Financial Statements.
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TRIMBLE INC.
CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
(UNAUDITED)
Common stock Retained
Earnings Accumulated
Other
Comprehensive
Loss Total
Stockholders’
Equity Noncontrolling
Interest Total
Shares Amount Additional Paid-In Capital
(In millions)
Balance at the end of 2021 250.9 $ 0.3 $ 1,935.6 $ 2,170.5 $ ( 161.7 ) $ 3,944.7 $ — $ 3,944.7
Net income — — — 110.3 — 110.3 — 110.3
Other comprehensive loss — — — — ( 2.2 ) ( 2.2 ) — ( 2.2 )
Comprehensive income 108.1 108.1
Issuance of common stock under employee plans, net of tax withholdings 0.7 — 15.2 ( 17.6 ) — ( 2.4 ) — ( 2.4 )
Stock repurchases ( 1.5 ) — ( 11.8 ) ( 92.9 ) — ( 104.7 ) — ( 104.7 )
Stock-based compensation — — 42.2 — — 42.2 — 42.2
Balance at the end of the first quarter of 2022 250.1 $ 0.3 $ 1,981.2 $ 2,170.3 $ ( 163.9 ) $ 3,987.9 $ — $ 3,987.9
Net income — — — 168.0 — 168.0 — 168.0
Other comprehensive loss — — — — ( 75.2 ) ( 75.2 ) — ( 75.2 )
Comprehensive income 92.8 92.8
Issuance of common stock under employee plans, net of tax withholdings 0.6 — ( 2.3 ) ( 17.1 ) — ( 19.4 ) — ( 19.4 )
Stock repurchases ( 3.1 ) ( 0.1 ) ( 24.4 ) ( 175.5 ) — ( 200.0 ) — ( 200.0 )
Stock-based compensation — — 33.2 — — 33.2 — 33.2
Balance at the end of the second quarter of 2022 247.6 $ 0.2 $ 1,987.7 $ 2,145.7 $ ( 239.1 ) $ 3,894.5 $ — $ 3,894.5
Net income — — — 85.8 — 85.8 — 85.8
Other comprehensive loss — — — — ( 95.6 ) ( 95.6 ) — ( 95.6 )
Comprehensive loss ( 9.8 ) ( 9.8 )
Issuance of common stock under employee plans, net of tax withholdings 0.4 — 17.9 ( 0.9 ) — 17.0 — 17.0
Stock repurchases ( 1.4 ) — ( 11.4 ) ( 78.6 ) — ( 90.0 ) — ( 90.0 )
Stock-based compensation — — 33.1 — — 33.1 — 33.1
Balance at the end of the third quarter of 2022 246.6 $ 0.2 $ 2,027.3 $ 2,152.0 $ ( 334.7 ) $ 3,844.8 $ — $ 3,844.8
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Common stock Retained
Earnings Accumulated
Other
Comprehensive
Loss Total
Stockholders’
Equity Noncontrolling
Interest Total
Shares Amount Additional Paid-In Capital
(In millions)
Balance at the end of 2020 250.8 $ 0.3 $ 1,801.7 $ 1,893.4 $ ( 98.5 ) $ 3,596.9 $ 1.7 $ 3,598.6
Net income — — — 114.5 — 114.5 0.1 114.6
Other comprehensive loss — — — — ( 31.5 ) ( 31.5 ) — ( 31.5 )
Comprehensive income 83.0 83.1
Issuance of common stock under employee plans, net of tax withholdings 0.7 — 18.2 ( 10.2 ) — 8.0 — 8.0
Stock repurchases ( 0.6 ) — ( 4.1 ) ( 35.9 ) — ( 40.0 ) — ( 40.0 )
Stock-based compensation — — 25.1 — — 25.1 — 25.1
Noncontrolling interest investment — — 0.6 — — 0.6 ( 1.8 ) ( 1.2 )
Balance at the end of the first quarter of 2021 250.9 $ 0.3 $ 1,841.5 $ 1,961.8 $ ( 130.0 ) $ 3,673.6 $ — $ 3,673.6
Net income — — — 138.9 — 138.9 — 138.9
Other comprehensive income — — — — 18.1 18.1 — 18.1
Comprehensive income 157.0 157.0
Issuance of common stock under employee plans, net of tax withholdings 0.7 — ( 1.8 ) ( 23.5 ) — ( 25.3 ) — ( 25.3 )
Stock-based compensation — — 33.3 — — 33.3 — 33.3
Balance at the end of the second quarter of 2021 251.6 $ 0.3 $ 1,873.0 $ 2,077.2 $ ( 111.9 ) $ 3,838.6 $ — $ 3,838.6
Net income — — — 124.0 — 124.0 — 124.0
Other comprehensive loss — — — — ( 28.7 ) ( 28.7 ) — ( 28.7 )
Comprehensive income 95.3 95.3
Issuance of common stock under employee plans, net of tax withholdings 0.4 — 20.0 ( 1.6 ) — 18.4 — 18.4
Stock repurchases ( 1.0 ) — ( 8.1 ) ( 91.9 ) — ( 100.0 ) — ( 100.0 )
Stock-based compensation — — 29.5 — — 29.5 — 29.5
Balance at the end of the third quarter of 2021 251.0 $ 0.3 $ 1,914.4 $ 2,107.7 $ ( 140.6 ) $ 3,881.8 $ — $ 3,881.8
See accompanying Notes to the Condensed Consolidated Financial Statements.
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TRIMBLE INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)
First Three Quarters of
(In millions) 2022 2021
Cash flow from operating activities:
Net income $ 364.1 $ 377.5
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation expense 30.1 30.9
Amortization expense 97.9 105.1
Deferred income taxes ( 41.3 ) ( 8.9 )
Stock-based compensation 93.2 95.1
Divestitures gain, net ( 103.1 ) ( 43.6 )
Other, net 22.7 5.7
(Increase) decrease in assets:
Accounts receivable, net 13.2 33.7
Inventories ( 99.5 ) ( 28.4 )
Other current and non-current assets ( 31.7 ) ( 42.5 )
Increase (decrease) in liabilities:
Accounts payable ( 3.8 ) 50.8
Accrued compensation and benefits ( 52.9 ) 25.1
Deferred revenue 14.3 ( 8.4 )
Other current and non-current liabilities ( 18.1 ) 3.1
Net cash provided by operating activities 285.1 595.2
Cash flow from investing activities:
Acquisitions of businesses, net of cash acquired ( 318.1 ) ( 1.2 )
Purchases of property and equipment ( 36.6 ) ( 31.4 )
Net proceeds from divestitures 214.3 67.3
Net proceeds from sale of property and equipment 0.1 20.7
Other, net ( 11.9 ) ( 4.4 )
Net cash (used in) provided by investing activities ( 152.2 ) 51.0
Cash flow from financing activities:
Issuance of common stock, net of tax withholdings ( 4.8 ) 1.1
Repurchases of common stock ( 394.7 ) ( 140.0 )
Proceeds from debt and revolving credit lines 529.3 198.9
Payments on debt and revolving credit lines ( 235.9 ) ( 421.7 )
Other, net ( 8.9 ) ( 1.5 )
Net cash used in financing activities ( 115.0 ) ( 363.2 )
Effect of exchange rate changes on cash and cash equivalents ( 34.9 ) ( 7.5 )
Net (decrease) increase in cash and cash equivalents ( 17.0 ) 275.5
Cash and cash equivalents - beginning of period 325.7 237.7
Cash and cash equivalents - end of period $ 308.7 $ 513.2
See accompanying Notes to the Condensed Consolidated Financial Statements.
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NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS – UNAUDITED
NOTE 1. OVERVIEW AND ACCOUNTING POLICIES
Basis of Presentation
The Condensed Consolidated Financial Statements include our results of our consolidated subsidiaries. Intercompany accounts and transactions have been eliminated. Noncontrolling interests represent the noncontrolling stockholders’ proportionate share of the net assets and results of operations of our consolidated subsidiaries.
We use a 52- to 53-week year ending on the Friday nearest to December 31. Both 2022 and 2021 are 52-week years. The third quarter of 2022 and 2021 ended on September 30, 2022 and October 1, 2021. Unless otherwise stated, all dates refer to these periods.
Use of Estimates
We prepared our interim Condensed Consolidated Financial Statements that accompany these notes in conformity with U.S. GAAP, consistent in all material respects with those applied in our Form 10-K filed with the U.S. Securities and Exchange Commission on February 23, 2022 (the “2021 Form 10-K”).
The interim financial information is unaudited, and reflects all normal adjustments that are, in our opinion, necessary to provide a fair statement of results for the interim periods presented. This report should be read in conjunction with our 2021 Form 10-K that includes additional information about our significant accounting policies and the methods and assumptions used in our estimates.
The preparation of financial statements in accordance with U.S. generally accepted accounting principles (“GAAP”) requires us to make estimates and assumptions that affect the amounts reported in the financial statements and accompanying notes. Estimates and assumptions are used for revenue recognition, including determining the nature and timing of satisfaction of performance obligations and determining standalone selling price (“SSP”) of performance obligations, provision for credit losses, sales returns reserve, inventory valuation, warranty costs, investments, acquired intangibles, goodwill and intangible asset impairment analysis, other long-lived asset impairment analysis, stock-based compensation, and income taxes. We base our estimates on historical experience and various other assumptions we believe to be reasonable. Actual results that we experience may differ materially from our estimates.
Recently issued Accounting Pronouncements not yet Adopted
There are no recently issued accounting pronouncements applicable to us not yet adopted.
Recently Adopted Accounting Pronouncements
There are no recently adopted accounting pronouncements.
NOTE 2. STOCKHOLDERS’ EQUITY
Stock Repurchase Activities
In August 2021, our Board of Directors approved a new share repurchase program (“2021 Stock Repurchase Program”), authorizing up to $ 750.0 million in repurchases of our common stock. Under the 2021 Stock Repurchase Program, the share repurchase authorization does not have an expiration date and supersedes and replaces the $ 600.0 million share repurchase authorization approved by our Board of Directors in November 2017 (“2017 Stock Repurchase Program”), of which $ 50.7 million was remaining and canceled.
Under the 2021 Stock Repurchase Program, we may repurchase shares from time to time through open market transactions, privately-negotiated transactions, accelerated stock repurchase plans, or by other means. The timing and actual number of any shares repurchased will depend on a variety of factors, including market conditions, our share price, other available uses of capital, applicable legal requirements, and other factors. The 2021 Stock Repurchase Program may be suspended, modified, or discontinued at any time at the Company’s discretion without notice.
During the third quarter and first three quarters of 2022, we repurchased approximately 1.4 million and 6.0 million shares of common stock in open market purchases at an average price of $ 64.23 and $ 65.90 per share for a total of $ 90.0 million and $ 394.7 million under the 2021 Stock Repurchase Program. At the end of the third quarter of 2022, the 2021 Stock Repurchase Program had remaining authorized funds of $ 215.3 million.
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During the third quarter and first three quarters of 2021, we repurchased approximately 1.0 million and 1.6 million shares of common stock in open market purchases at an average price of $ 92.74 and $ 85.38 per share for a total of $ 100.0 million and $ 140.0 million.
Stock repurchases are reflected as a decrease to common stock based on par value and additional-paid-in-capital, based on the average book value per share for all outstanding shares calculated at the time of each individual repurchase transaction. The excess of the purchase price over this average for each repurchase was charged to retained earnings. Common stock repurchases under the program were recorded based upon the trade date for accounting purposes.
NOTE 3. ACQUISITIONS AND DIVESTITURES
Acquisition
In September 2022, we acquired Bid2Win Software, LLC (“B2W”) with total cash consideration of $ 322.1 million. B2W Software is a leading provider of estimating and operations solutions for the heavy civil construction industry and will be reported as part of our Buildings and Infrastructure segment. This acquisition will enable us to expand our already extensive civil infrastructure portfolio and Trimble Construction One, a purpose-built connected construction management platform. The Condensed Consolidated Statements of Income include the operating results of the acquired business from the date of acquisition. The acquisition contributed less than 1 % to our total revenue during the first three quarters of fiscal 2022.
The preliminary allocation of the purchase price for B2W was based upon preliminary fair value estimates and analyses, including preliminary work performed by third-party valuation specialists, which could change within the measurement period as valuations are finalized. The primary areas that remain preliminary relate to the fair values of intangible assets acquired and certain tangible assets and liabilities acquired. We expect to finalize the valuation as soon as practicable, but no later than one year from the acquisition date.
There were no other acquisitions during the first three quarters of 2022 .
Divestitures
In May 2022, we completed the sale of the Time and Frequency, LOADRITE, Spectra Precision Tools, and SECO accessories businesses to Precisional LLC, an affiliate of The Jordan Company (“TJC”), for $ 205.3 million in cash, which includes a working capital adjustment. These businesses were reported as part of our Buildings and Infrastructure and Geospatial segments. Upon the closing of the transaction and adjustment for working capital, we recognized a pre-tax gain of $ 106.9 million and wrote off $ 98.4 million of net assets primarily comprised of $ 40.6 million of inventory, $ 25.4 million of accounts receivable, and $ 30.8 million of goodwill.
In the third quarter of 2022, we completed the sale of Construction Telematics Solutions to MiX Telematics, and in the second quarter of 2022, we completed the sale of Beena Vision to Wabtec Corporation, which are both part of the Transportation segment. The proceeds for both divestitures were immaterial.
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NOTE 4. INTANGIBLE ASSETS AND GOODWILL
Intangible Assets
The following table presents a summary of our intangible assets:
Third Quarter of 2022 Year End 2021
Gross Gross
Carrying Accumulated Net Carrying Carrying Accumulated Net Carrying
(In millions) Amount Amortization Amount Amount Amortization Amount
Developed product technology $ 1,010.6 $ ( 724.6 ) $ 286.0 $ 1,011.9 $ ( 748.2 ) $ 263.7
Customer relationships 639.6 ( 422.5 ) 217.1 667.8 ( 428.9 ) 238.9
Trade names and trademarks 39.1 ( 31.5 ) 7.6 48.0 ( 45.0 ) 3.0
Distribution rights and other intellectual property 8.1 ( 7.1 ) 1.0 10.0 ( 9.0 ) 1.0
$ 1,697.4 $ ( 1,185.7 ) $ 511.7 $ 1,737.7 $ ( 1,231.1 ) $ 506.6
The estimated future amortization expense of intangible assets at the end of the third quarter of 2022 was as follows:
(In millions)
2022 (Remaining) $ 33.2
2023 129.9
2024 105.5
2025 70.1
2026 64.0
Thereafter 109.0
Total $ 511.7
Goodwill
The changes in the carrying amount of goodwill by segment for the first three quarters of 2022 were as follows:
Buildings and Infrastructure Geospatial Resources and Utilities Transportation Total
(In millions)
Balance as of year end 2021 $ 2,141.4 $ 403.6 $ 440.8 $ 995.7 $ 3,981.5
Additions due to acquisitions 214.6 — — — 214.6
Decrease from divestitures ( 23.9 ) ( 6.9 ) — ( 6.9 ) ( 37.7 )
Foreign currency translation and other adjustments ( 67.8 ) ( 23.3 ) ( 20.1 ) ( 10.1 ) ( 121.3 )
Balance as of the end of the third quarter of 2022 $ 2,264.3 $ 373.4 $ 420.7 $ 978.7 $ 4,037.1
NOTE 5. INVENTORIES
The components of inventory, net were as follows:
Third Quarter of Year End
As of 2022 2021
(In millions)
Raw materials $ 132.6 $ 129.6
Work-in-process 11.2 12.4
Finished goods 247.3 221.3
Total inventories $ 391.1 $ 363.3
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NOTE 6. SEGMENT INFORMATION
We determined our operating segments based on how our Chief Operating Decision Maker (“CODM”) views and evaluates operations. Our reportable segments are described below:
• Buildings and Infrastructure . This segment primarily serves customers working in architecture, engineering, construction, and operations and maintenance.
• Geospatial . This segment primarily serves customers working in surveying, engineering, and government.
• Resources and Utilities . This segment primarily serves customers working in agriculture, forestry, and utilities.
• Transportation . This segment primarily serves customers working in long haul trucking and freight shipper markets.
The following Reporting Segment tables reflect the results of our reportable operating segments under our management reporting system. These results are not necessarily in conformity with U.S. GAAP. This is consistent with the way the CODM evaluates each of the segment's performance and allocates resources.
Reporting Segments
Buildings and Infrastructure Geospatial Resources and Utilities Transportation Total
(In millions)
Third Quarter of 2022
Segment revenue $ 363.6 $ 184.2 $ 191.7 $ 145.4 $ 884.9
Segment operating income 96.7 61.5 64.2 16.0 238.4
Depreciation expense 1.4 1.4 1.4 0.8 5.0
Third Quarter of 2021
Segment revenue $ 349.7 $ 205.4 $ 184.8 $ 161.5 $ 901.4
Segment operating income 100.6 64.9 60.6 15.3 241.4
Depreciation expense 1.7 1.8 1.4 1.0 5.9
First Three Quarters of 2022
Segment revenue $ 1,143.8 $ 585.4 $ 636.4 $ 454.2 $ 2,819.8
Segment operating income 318.8 177.2 212.3 37.0 745.3
Depreciation expense 4.6 4.5 4.3 2.7 16.1
First Three Quarters of 2021
Segment revenue $ 1,057.6 $ 606.8 $ 587.5 $ 481.5 $ 2,733.4
Segment operating income 301.1 179.7 211.2 36.5 728.5
Depreciation expense 5.3 5.3 4.4 3.0 18.0
Reporting Segments
Buildings and Infrastructure Geospatial Resources and Utilities Transportation Total
(In millions)
As of the end of the Third Quarter of 2022
Accounts receivable, net $ 220.8 $ 142.3 $ 80.1 $ 122.9 $ 566.1
Inventories 88.6 148.2 90.2 64.1 391.1
Goodwill 2,264.3 373.4 420.7 978.7 4,037.1
As of Year End 2021
Accounts receivable, net $ 246.8 $ 134.0 $ 112.9 $ 131.1 $ 624.8
Inventories 79.3 136.4 67.4 80.2 363.3
Goodwill 2,141.4 403.6 440.8 995.7 3,981.5
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A reconciliation of our condensed consolidated segment operating income to condensed consolidated income before income taxes was as follows:
Third Quarter of First Three Quarters of
2022 2021 2022 2021
(In millions)
Consolidated segment operating income $ 238.4 $ 241.4 $ 745.3 $ 728.5
Unallocated general corporate expenses ( 28.5 ) ( 26.7 ) ( 91.6 ) ( 76.0 )
Purchase accounting adjustments ( 31.0 ) ( 33.2 ) ( 97.9 ) ( 102.0 )
Acquisition / divestiture items ( 9.1 ) ( 0.2 ) ( 20.3 ) ( 10.3 )
Stock-based compensation / deferred compensation ( 31.7 ) ( 32.1 ) ( 82.9 ) ( 99.1 )
Restructuring and other costs ( 15.7 ) ( 1.7 ) ( 38.4 ) ( 7.9 )
Consolidated operating income 122.4 147.5 414.2 433.2
Total non-operating (expense) income, net ( 4.5 ) 9.2 63.8 23.3
Consolidated income before taxes $ 117.9 $ 156.7 $ 478.0 $ 456.5
The disaggregation of revenue by geography is summarized in the tables below. Revenue is defined as revenue from external customers attributed to countries based on the location of the customer and is consistent with the Reporting Segment tables above.
Reporting Segments
Buildings and Infrastructure Geospatial Resources and Utilities Transportation Total
(In millions)
Third Quarter of 2022
North America $ 235.8 $ 84.1 $ 55.5 $ 113.0 $ 488.4
Europe 67.6 52.9 79.6 18.1 218.2
Asia Pacific 52.8 33.8 8.6 7.1 102.3
Rest of World 7.4 13.4 48.0 7.2 76.0
Total segment revenue $ 363.6 $ 184.2 $ 191.7 $ 145.4 $ 884.9
Third Quarter of 2021
North America $ 200.4 $ 84.8 $ 51.5 $ 125.0 $ 461.7
Europe 95.2 68.3 80.2 20.3 264.0
Asia Pacific 47.9 40.2 14.7 8.3 111.1
Rest of World 6.2 12.1 38.4 7.9 64.6
Total segment revenue $ 349.7 $ 205.4 $ 184.8 $ 161.5 $ 901.4
First Three Quarters of 2022
North America $ 710.6 $ 255.4 $ 178.8 $ 354.9 $ 1,499.7
Europe 263.9 185.4 291.3 58.2 798.8
Asia Pacific 149.6 108.6 41.3 22.1 321.6
Rest of World 19.7 36.0 125.0 19.0 199.7
Total segment revenue $ 1,143.8 $ 585.4 $ 636.4 $ 454.2 $ 2,819.8
First Three Quarters of 2021
North America $ 612.4 $ 254.5 $ 165.5 $ 372.8 $ 1,405.2
Europe 290.5 200.9 279.6 65.1 836.1
Asia Pacific 137.3 117.2 50.8 23.6 328.9
Rest of World 17.4 34.2 91.6 20.0 163.2
Total segment revenue $ 1,057.6 $ 606.8 $ 587.5 $ 481.5 $ 2,733.4
Total revenue in the United States as included in the Condensed Consolidated Statements of Income wa s $ 444.5 million and $ 415.2 million for the third quarter of 2022 and 2021, and $ 1,358.9 million and $ 1,265.3 million for the first three quarters of 2022 and 2021. No single customer or country other than the United States accounted for 10% or more of Trimble’s total revenue.
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NOTE 7. DEBT
Debt consisted of the following:
Third Quarter of Year End
Instrument Date of Issuance 2022 2021
(In millions) Effective interest rate
Senior Notes:
Senior Notes, 4.15 %, due June 2023
June 2018 4.36 % $ 300.0 $ 300.0
Senior Notes, 4.75 %, due December 2024
November 2014 4.95 % 400.0 400.0
Senior Notes, 4.90 %, due June 2028
June 2018 5.04 % 600.0 600.0
Credit Facilities:
2022 Revolving Credit Facility, due March 2027 September 2022 3.88 % 250.0 —
Uncommitted Credit Facilities, floating rate 4.21 % 43.6 —
Unamortized discount and issuance costs ( 5.4 ) ( 6.8 )
Total debt $ 1,588.2 $ 1,293.2
Less: Short-term debt 343.6 —
Long-term debt $ 1,244.6 $ 1,293.2
Each of our debt agreements, including our credit facilities, requires us to maintain compliance with certain debt covenants, all of which we complied with at the end of the third quarter of 2022.
Debt Maturities
At the end of the third quarter of 2022, our debt maturities based on outstanding principal were as follows (in millions):
Year Payable
2022 (Remaining) $ 43.6
2023 300.0
2024 400.0
2025 —
2026 —
Thereafter 850.0
Total $ 1,593.6
Senior Notes
All of our senior notes are unsecured obligations. Interest on the senior notes is payable semi-annually in June and December of each year. Additional details are unchanged from the information disclosed in Note 6, “Debt” of the 2021 Form 10-K.
Credit Facilities
In March 2022, we entered into a credit agreement (the “2022 Credit Facility”) maturing in March 2027. The 2022 Credit Facility provides for a five-year , unsecured revolving credit facility in the aggregate principal amount of $ 1.25 billion, and permits us, subject to the satisfaction of certain conditions, to increase the commitments for revolving loans by an aggregate principal amount of up to $ 500.0 million. The interest rate and commitment fees are based on our current long-term, senior unsecured debt ratings, our leverage ratio, and certain specified sustainability targets. As of September 30, 2022, $ 250.0 million was outstanding under the 2022 Credit Facility.
Uncommitted Facilities
At the end of the third quarter of 2022, we had two $ 75.0 million, one € 100.0 million, and one £ 55.0 million revolving credit facilities, which are uncommitted (the “uncommitted facilities”). Generally, these uncommitted facilities may be redeemed upon demand. Borrowings under uncommitted facilities are classified as short-term debt in the Condensed Consolidated Balance Sheet. As of September 30, 2022, $ 43.6 million was outstanding under the uncommitted facilities.
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NOTE 8. FAIR VALUE MEASUREMENTS
The following table summarizes the fair values of financial instruments at fair value on a recurring basis for the periods indicated and determined using the following inputs:
Fair Values as of the end of the Third Quarter of 2022
Fair Values at the end of 2021
Quoted prices in Active Markets for Identical Assets Significant Other Observable Inputs Significant Unobservable Inputs Quoted prices in Active Markets for Identical Assets Significant Other Observable Inputs Significant Unobservable Inputs
(In millions) (Level I) (Level II) (Level III) Total (Level I) (Level II) (Level III) Total
Assets
Deferred compensation plan (1)
$ 30.8 $ — $ — $ 30.8 $ 44.7 $ — $ — $ 44.7
Derivatives (2)
— 0.2 — 0.2 — 0.1 — 0.1
Contingent consideration (3)
— — 3.6 3.6 — — — —
Total assets measured at fair value $ 30.8 $ 0.2 $ 3.6 $ 34.6 $ 44.7 $ 0.1 $ — $ 44.8
Liabilities
Deferred compensation plan (1)
$ 30.8 $ — $ — $ 30.8 $ 44.7 $ — $ — $ 44.7
Derivatives (2)
— 0.3 — 0.3 — 0.2 — 0.2
Contingent consideration (3)
— — — — — — 12.8 12.8
Total liabilities measured at fair value $ 30.8 $ 0.3 $ — $ 31.1 $ 44.7 $ 0.2 $ 12.8 $ 57.7
(1) Represents a self-directed, non-qualified deferred compensation plan for certain executives and other highly compensated employees included in Other non-current assets and Other non-current liabilities on our Condensed Consolidated Balance Sheets. The plan is invested in actively traded mutual funds and individual stocks valued using observable quoted prices in active markets.
(2) Represents forward currency exchange contracts that are included in Other current assets and Other current liabilities on our Condensed Consolidated Balance Sheets.
(3) Represents arrangements to receive payments from buyers of our divested companies or pay former owners of acquired companies that are included in Other current and non-current assets or Other current liabilities on our Condensed Consolidated Balance Sheets. The fair values are estimated using scenario-based methods based upon estimated future milestones.
Additional Fair Value Information
The total estimated fair value of all outstanding financial instruments that are not recorded at fair value on a recurring basis (debt) was approximately $ 1.6 billion and $ 1.4 billion at the end of the third quarter of 2022 and at the end of 2021 .
The fair value of the senior notes was determined based on observable market prices in less active markets and is categorized accordingly as Level II. The fair values do not indicate the amount we would currently have to pay to extinguish the debt.
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NOTE 9. DEFERRED REVENUE AND REMAINING PERFORMANCE OBLIGATIONS
Deferred Revenue
Changes in our deferred revenue during the third quarter and first three quarters of 2022 and 2021 were as follows:
Third Quarter of First Three Quarters of
(In millions) 2022 2021 2022 2021
Beginning balance of the period $ 685.2 $ 606.1 $ 631.8 $ 613.8
Revenue recognized from prior year-end ( 92.0 ) ( 92.3 ) ( 453.8 ) ( 471.8 )
Billings net of revenue recognized from current year 43.6 75.2 458.8 447.0
Ending balance of the period $ 636.8 $ 589.0 $ 636.8 $ 589.0
Remaining Performance Obligations
At the end of the third quarter of 2022, approximately $ 1.5 billion of revenue is expected to be recognized from remaining performance obligations for which goods or services have not been delivered, primarily subscription, software, and software maintenance, and to a lesser extent, hardware and professional services contracts. We expect to recognize $ 1.1 billion or 72 % of our remaining performance obligations as revenue during the next 12 months and the remainder thereafter.
NOTE 10. EARNINGS PER SHARE
Basic earnings per share is computed based on the weighted-average number of shares of common stock outstanding during the period. Diluted earnings per share is computed based on the weighted-average number of shares of common stock outstanding during the period plus additional shares of common stock that would have been outstanding if potentially dilutive securities had been issued. Potentially dilutive common shares include outstanding stock options, restricted stock units, contingently issuable shares, and shares to be purchased under our employee stock purchase plan.
The following table shows the computation of basic and diluted earnings per share:
Third Quarter of First Three Quarters of
2022 2021 2022 2021
(In millions, except per share amounts)
Numerator:
Net income attributable to Trimble Inc. $ 85.8 $ 124.0 $ 364.1 $ 377.4
Denominator:
Weighted-average number of common shares used in basic earnings per share 247.5 251.8 249.1 251.5
Effect of dilutive securities 1.4 2.7 1.7 2.8
Weighted-average number of common shares and dilutive potential common shares used in diluted earnings per share 248.9 254.5 250.8 254.3
Basic earnings per share $ 0.35 $ 0.49 $ 1.46 $ 1.50
Diluted earnings per share $ 0.34 $ 0.49 $ 1.45 $ 1.48
Antidilutive weighted-average shares (1)
1.7 0.1 1.5 —
(1) Antidilutive stock-based awards are excluded from the calculation of diluted shares and diluted earnings per share because their impact would increase diluted earnings per share.
NOTE 11. INCOME TAXES
For the third quarter, our effective income tax rate w as 27.2 %, as compared to 20.9 % in the prior year. The increase was primarily associated with divestiture gains and a lower stock-based compensation deduction benefit. For the first three quarters, our effective income tax rate was 23.8 % , as compared to 17.3 % in the prior year. The increase was primarily due to the same factors in the third quarter as well as a one-time tax benefit from a foreign deferred tax asset in the prior year.
We and our subsidiaries are subject to U.S. federal, state, and foreign income taxes. Currently, we are in different stages of multiple year examinations by various state and foreign taxing authorities. While we believe our reserves are more likely than not to be adequate to cover final resolution of all open tax matters, it is reasonably possible that future obligations related to these matters could arise.
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Unrecognized tax benefits of $ 55.5 million and $ 42.3 million at the end of the third quarter of 2022 and at the end of 2021, if recognized, would favorably affect the effective income tax rate in future periods. At the end of the third quarter of 2022 and at the end of 2021, we accrued interest and penalties of $ 10.6 million and $ 9.2 million. Although the timing of the resolution and/or closure of audits is not certain, we do not believe that our gross unrecognized tax benefits would materially change in the next twelve months.
On August 16, 2022, the U.S. federal government enacted the Inflation Reduction Act (“IRA”) of 2022. The IRA includes a 15% corporate alternative minimum tax effective in 2024 for certain large corporations, a 1% excise tax on net share repurchases after December 31, 2022, and several tax incentives to promote clean energy. We do not expect the provisions of the IRA to have a material impact on our financial results.
NOTE 12. C OMMITMENTS AND CONTINGENCIES
Commitments
At the end of the third quarter of 2022, we had unconditional purchase obligations of approximately $ 613.3 million. These unconditional purchase obligations primarily represent open non-cancellable purchase orders for material purchases with our vendors and investments in our platform associated with our Connect and Scale strategy.
Litigation
From time to time, we are involved in litigation arising in the ordinary course of our business. There are no material legal proceedings, other than ordinary routine litigation incidental to the business, that we or any of our subsidiaries is a party, or that any of our or our subsidiaries’ property is subject.
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Text extracted from the filing as submitted to EDGAR. Formatting, tables and exhibits are simplified for reading; the original document is authoritative for anything you rely on.