TRMB - Earnings call transcript Q1 2019

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Operator

Good afternoon. My name is Erica, and I will be your conference operator today. At this time, I would like to welcome everyone to the Trimble First Quarter 2019 Earnings Conference Call. All lines have been placed on mute to prevent any background noise. After the speakers' remarks, there will be a question-and-answer session. you. Thank Instructions] [Operator Mr. may conference. you begin Leyba, your Michael

Michael Leyba

CFO. Thank joining here us Good afternoon, that the slide supplementing webcast Painter, the today will out to thanks for referring are everyone and and today's www.trimble.com, as presentation the website and our Rob to on on we our and Steve our you, at would Berglund, release like today. point Erica. well our with call CEO; I earnings the call. presentation available as within be I'm

In remarks addition, completion website shortly our we will also the be at on posting prepared of after Relations our call. this Investor investor.trimble.com

documents Commission. X subsequent Form Turning detailed uncertainties. those you filed today's fully to forward-looking company's or number today's currently may statements actual presentation, measures slide I Securities reconciled With X the discuss subject of from a press factors the agenda that, to in to results non-GAAP the from in that period risks to the would question-and-answer like Trimble's differ are and the anticipated, call of of release. that to materially made The to and remind and turn in please in are our due GAAP an XX-K today. we the with slide tables measures the for and call XX-Q other Exchange call

the would May XX I call take the us JPMorgan be of remainder also attending Global Materials turn And I guidance, on Steve. Communications Media over Conference XX Industrials & mention well Goldman with start will review will will then our as in go May, New the on an turn Please overview as Rob X. of to during through to Conference Boston, briefly Steve to York. Technology and of to will After slide the will in and First, an quarter, that quarter. slides, the Sachs of like the month the we in-depth May the including Q&A. we that,

Steve Berglund

most ago. quarter in X%. delivered was million points XX XX.X% flow was prior We of months was respects, up EBITDA afternoon. year, anticipated and three revenue Adjusted trailing we up XX%. recurring of to billion the $X.XX Annualized Good basis XX-month free was up revenue of up $XXX XX%. Compared cash

in We of further that content software the growing provide proportion with the continue than profitability to half. expect of half and first subscriptions. will the business ongoing the of stronger relatively the metrics the increased of of towards be the second quarterly growth that transition The in model Trimble year results evidence form

operate healthy and is effect OEM a And segment through Building speak to constrained Although, rest continue of and Utilities which Geospatial and the the from quarterly Resources on transformational. by summary market, in the more change view by markets. The the demand. certain currently U.S. both agricultural is challenged a dispute date. segments a trade is suffering a slower is will is taking aggregated increments, that specifically multiyear to is small but place the relatively year, Transportation Rob Infrastructure

allows revenue exchange Although, to X% low expectation we of revenue model, growth. principal standard and growth the the available organic our growth remains XX% of growth believe of was metrics. GDP combined growth us above us targeted our continue industry-specific to to long-term in to of by achieve support or penetration ignoring our is than expect rate at and still average the strategic which our our This market estimate higher to mechanism markets, end fundamentals inorganic optimism driven effects penetration Innovation growth.

construct to that add across solutions to technologies use are our into those places next of three that year management on individual platform protocol equal in next within months, on performance weighting emphasis the markets, next and X-X-X, create years. to of company, are, the Our platforms the the innovation increase which and innovation reliance three targeted to our discipline three to have utility points that

consists are at information the workflows. on and within solutions operations a which point unify field that targeted innovation of and workflow solutions, transformative individual of Our office comprehensive combination

Beyond the that, through was actions our and competency The value hardware software worlds digital in in allows number us create into strategic to both of quarter. agenda by solutions. and the integrating advanced physical unique a

interlink elements it and to to transforming Infrastructure segment, solutions. enable is market which integrated by the the is incremental a office ability and The e-Builder Buildings design between beta the concept, two flow WorksManager Viewpoint two a release model. and delivery delivering The Although powerful the acquisitions to reinventing together bring segment objective within of recent an creates two-way list also are representative continue our through launches. functionality not Infrastructure constructible now of the and is of construction, project, digital In complete, cloud software Buildings had create product field. the and continuous Trimble's a that is Trimble the and to unique machines different of acquisitions embedded One the and workflows in significant was which market.

worlds displays lines, segment, AutoSync accelerated materials the all of Trimble's and Transportation the organization the In and enterprise cost-effective and This and our Resources released on construction of common product was the boundaries X. implement. in physical reality and devices. unified, In advantage. and in XRXX workflows the a a as site. worker of segment, Both unique to the both of meaningful work with in announcement field device This relative emphasize technologies operational more to of reorganized hard base hat Utilities guidance allows mobile comfort leverage management HoloLens synchronizes that us the businesses reality the that provide source information first mixed an farm the we and software Trimble's with and expectation across management the utilize to other is firmware The a we connected on-site version integrated progress. installed allows mixed digital construction

to level February. TMW the process Trimble PeopleNet, the data the Telematics Trimble It connects the had now number and and combining a two of release issues field expanded addressable technicians mapping were Geospatial XXXX. into lower-priced surveying watch brands last to product mobile There The our for ALK from enabling our In segment, for forecast have a we that in we emerging identified significant with which identity. midsized issues their In identified the that to conservatism us list might field of provide market vehicle-based an trajectory the segment impact launched embedded if providing upside departments also office, of By we of calls, state the introducing firms transportation. the engineering Transportation have a PULSE impact. was as in account services. a we in version, quarter workflow portfolio expanded successfully the quarters' fourth We completed optimization the back we us. inherent four changes, left since and

and of impact policy, This the our to create was the segment a U.S. first performance Resources reluctance for create better is in invest by The likely which upside and The potential. the trade to U.S. quarter trade for hesitancy continues Utilities impacted invest. significant uncertainty and regions. immediate to was which resulting farmers partially to China-U.S. us with provide farmers other performance clarity offset agreement in

issue an deferred. Brexit, which issue although unresolved remains second was The

for is appetite some is upbeat for impacting in us the Brexit the in what degree. the effect Although, Europe, pinpoint was to investment to hard uncertainty a quarter generally

export exposed Chinese well. impact European a in the Brexit, decisions infrastructure, and slower Beyond is that on as it extent investment the economy impacts these To to economy. new issues plant us

companies. of and combination item The slower the was for intensification preferences explicit create growth over of third non-Chinese Chinese companies Chinese policies that watchlist government Chinese

revenue first quarter. for total downside represented than China in sales Chinese-sourced limited China exposure mandated Chinese The year-to-year, Asia in is our as revenue to offsetting impact. slower lining and of of products. outside as that impact on economic as the is improved is result secondarily, of a China more rest XX% primarily Chinese The OEM of of relative preferences less conditions the down Our company X.X% than much quarter of the significantly was the our silver and it

long-term item and OEM anticipated a growth bag. This that a which market upside. first mixed in We us watch net continue clarified drag was a as believe trade we quarter. to as with was The is fourth can the expectations on list believe China provide demand, a

one short-term our the some in components. more embedded hand, and tiny we headwinds are encountering in traditional On OEM markets

hand, significant are other new in agriculture. establishing the we and construction partnerships OEM On

booths. improving new farmers, is Recent Doosan of Our press have profile as Bauma, OEM market of show principally it our world's solution of included user, and logic operate largest on end our OEMs, The primary Trimble-centric ecosystem. construction was the that evident Liebherr, a is present which where releases at users hopefully but OEM those OEMs not XX technology Volvo. live the XX% fleet Kobelco, and and on accounted in mixed Strategically, remains focus in is end partnerships extended important the interoperable or revenue. trucking machine operators that were we XXXX part approximately contractors within an universe

remain the funding positive increase infrastructure multiple XXXX. a In finding despite cost-effective still on on of infrastructure an summary, move-the-needle of with a unclear a will U.S. rest segments. contain should organic on with in mechanism. strategically bill, track would impact we probability. have the that remains bill some albeit parties promote Passage are will an If emphasis of more bill political it both Another a that and performance construction. digital we consideration spending struggling concept external the strengthening anticipate spending, in Both uncertainties, immediate a support significant pass, through expect results but elements reporting during

over the to Let me call turn Rob.

Rob Painter

everyone. good afternoon, and Steve Thanks,

Breaking XX organic growing the Let's revenue $XXX M&A X%. the to little the organically. Starting year-over-year X% of up acquisitions the quarter quarter was up from turn and down Annualized XX% ARR top-line, with total was X%. growth. on growth year-over-year. Gross came in which that quarter million Organic was review margin in grew Revenue low-teens currency first first with added a billion up in than basis or the first points, X% and combination XX% $X.XX less a and a subtracted slide Recurring X results. translation of quarter

EBITDA in the dollars the was Operating XX of income year-over-year. to XX%. adjusted X.X% quarter basis increased XX.X% up million While operating margin $XXX.X margins with points

of flat increase higher net result basis share rate from year-over-year on earnings a increased XX%. tax at This XX% income dollars was non-GAAP flat income and essentially operating was to also in and interest While the $X.XX expense our a was year-over-year. per

basis, the margins a $XXX increased have basis expanded up XXX For EBITDA revenue additional was by on flow was context in has was operating XX%. quarter was XX-month Free minus operations the XX% trailing and and million of XXXX. cash up expenditures dynamics $XXX compared EPS basis. first lower flow, capital million by cash flow Cash XX% year-over-year points and operations capital a up in to represents up a working the trailing quarter XX% from on favorable basis. XX%. flow and on trailing XX-month which to growth by XX-month growth, driven acquisition as from income quarter Cash was expenses

sheet. Moving balance to the

Our revenue XX-month basis. business up increasing capital the deferred model to to of correlates was This of Net the $XXX continues in revenue at revenue inclusive business. XX% on working asset-light. million X% revenue Deferred be trailing year-over-year. stands recurring mix a

the acquisition few times within as less X.XX EBITDA of progression than on and billion that by to year times flow at quarters of that as X.X We well gross to billion basis. XX-month months months strong XX adjusted and representing a over quarter few past liquidity. we ago, our a a due Next comments continuing Viewpoint cash and we to just a of debt debt XX under net stated debt to achieved Less closed in over we debt debt EBITDA $X.XX of and trailing net level on the would than the itself. down have pay delever $X.XX

we and debt acquisition the evidenced, XXXX. the million by an have reduced debt Viewpoint gross quarter since million down of our additional As third we closed in paid approximately the $XXX $XX of in quarter

is sheet $X.XX designed have and that on our billion liquidity model on The and all our with business should borrowing perspective, capacity virtually our debt For point of it. the liquidity, on is resilient works, revolver. maturities well well we staggered need ample our balance we

three million of to addition $XX the From highlight and repurchased stock. emphasize repayment debt metrics the In in performance from an overall like quarter, to quarter. financial of the I our would perspective, we also

mix. to strong our growth, the and annualized continues our demonstrate recurring business reflecting content revenue software and First, ever-increasing subscription consistent within

asset-light-centricity Second, the growth in our demonstrates our the free technology our of flow business and cash model. orientation

Third, our of cash acquisition, delever ability model. following further large to Viewpoint, such rapidly evidences a generation business as our capability the

X. Slide to move Let's

line in at details revenue the segment Overall, have revenue We expectations. was with level. reporting

As is the case puts were takes. and quarter, there in every

Geospatial OEM We our particularly continue to see China. softness in in of business the portion

adversely agricultural sign-offs which quarter. discrete China. continued a in project has the delays postponed the finally, We the impacted that And in also revenue and of saw capture market, trade experienced been with by North situation softness we American completion the

highlight where civil Transportation. terms In we highlights. to aftermarket of Infrastructure outperformed Infrastructure, notable Buildings Buildings both in and in In better building performed and as like and expected, as the Two I'd well construction. we than

unit subscription First, partially received with in but was mix SketchUp has negatively of offset the transition business growth. subscriptions, impacted been successfully by revenue, a which the higher-than-expected better-than-expected then short-term

and in business our performer quarter and approximately and be ARR acquired was navigation year-over-year. the e-Builder Transportation, for bookings the acquisitions a mapping with difficult growth up a XX% in were to comparison. truck year strong Subscription with line standout combined Second, was prior expectations. In Viewpoint routing two the businesses continued

X. to Moving slide

unchanged presented by And of contributions including were overall in saw growth difficult basis. China, U.S. XX-month X we we in conditions we basis. X%, a region acquisition growth while of the general Veltec XX% construction major America slight in our In year-over-year mix of Please remained for slide Asia which experienced Europe, In headwind recent of regions U.K. a revenue Pacific up. regional We other were trailing of other region, Our review negative a growth type, X%, in geographic driven mostly now mix across including in driven by markets the Brazil. to relatively a XX% turn up from on the North on with growth by experienced is lastly, revenue a the

the revenue, revenues as grow support both represents now well and now as year-over-year represents of Software XX% total teens. grew recurring Trimble and in includes of revenue services and continued recurring up which Trimble that rates This to low XX% organic revenue. with total XX% growth maintenance subscription XX% Within revenue.

and a difficult rate, recent comparisons as XX% year-over-year mandate ELD the Software Phase the Transportation hardware large at year reflecting and has businesses OEM-related grown implementation the part our well in services grew in a low in one single-digit headwinds ago. the from of as

disclosed like slide. have I on tables our additional Lastly, to on starting quarter, that, summary details website. correspond mention this provided would Investor we revenue revenue details this to These the Relations numbers on the

are segment. aforementioned operating have and the Geospatial turn and expand are income let's year. Buildings details Utilities in dynamics, revenue to performer. largely the margins the the of consistent and commentary slide expectations we reflected and to with and the with the XX, margins half were Next Infrastructure as with operating impacted short, where strongest while by expected line the In second revenue by were income Transportation results Resources in

and growth with the revenues. now subscription we last earnings improving throughout guidance year slide software by as XX, a and Moving year, earning to towards continued we out to see playing overall, the discussed on continue in shift call, growth, quarter's coupled margins organic

of For share. to $XXX to and the million, $X.XX second $X.XX million quarter, per $XXX we EPS of expect revenue

growth from quarter company implies with X% U.S. strengthening the organic second XX%, due range revenue less dollar. FX X% X% range, of The acquisitions, in of the from plus to to to X% growth the X% total

and Our which organic does improvements growth second expected the not level reflects two quarter macro from by assume driven factors. guidance quarter, first is improvement an

for quarter construction. civil traditionally strongest second the quarter is First, the

second on in Second, the cash related that interest the accrue quarters. quarter, in Transportation, place One ELD and fourth flow note the quarterly, we second interest while will payments cash please installation have surge. lapped the take we comment for

growth X% company we negative impacts. and full For or from are quarter, X% XX% year, year view X%, to with we the the of range X% growth in X% to a acquisitions full from X% organic expecting last the discussed currency reaffirming

seasonality in We continue through a the to revenue double-digit step growth perspective, quarters. revenue through to From year. EPS improve half high-single-digits expect the with operating the organic back growth in growth year let's margins and EPS full for of the with year sequential the the

be third year, expect an the peak In which that quarter the the revenue, in second dynamic. revenue we of to season. quarter, highest expected normal revenue represents lower expect summer sequential seasonal the slightly given the reflecting construction We is it

revenue part third is in quarter fourth Finally, in we quarter XX revenue, year includes because week weeks, expect to which this quarter. fourth our extra an sequentially year above the fiscal be

XXXX, we operating the reason, the will bring same expect extra revenues would highest the normally and income. this For of has buyback strongest expect allocation to margins standpoint, market flow software-related that in conditions faster flow year cash full guidance revenue cash be as reaffirms quarter and given opportunities. flow and week from fourth cash From the during and fourth second selectively recurring we quarter based the first the week closing, M&A while year. as margins. healthy well the In evaluating a will overall a our the quarter the the we From of that available operations continue expectation extra cash our an the for net first income grow will exceed free of delever from in and than XXXX flow operations for half with net on reinforced perspective, guidance strong proportion previous quarter will to capital and

Let's your questions. now take

Operator

question from Jonathan William first [Operator line with Blair. Instructions] the Ho of Your comes

Jonathan Ho

wanted take any sense little bit afternoon. out mitigate congratulate there perhaps there, here results given thoughts headwinds broader steps solid there. see some maybe Good Are around topics? of just the you happening situation from that these those and around can of of to and sort what's the macro China? And you unfolding you are to on the how maybe us the just of give Hi. Can of challenges just you a that a sort

Steve Berglund

is remain We we've continues insight certainly you. to which that call seeing I to by Europe available compared particularly generally strong. what But, is look what Germany, being already don't to great Well, the let's of direction and more know investment. in it that on we're China a then others is affected got, specific put impact a have up. There's, the damper of But, on terms in will maybe than but so that its export of potentially, markets, the will of holding course, Europe. it's UK issue Brexit whether far rest that

strengthening Brazil. us sense be agriculture, get -- market and beginning puts is a a robust with we markets. seems in upside we're Transportation are position Brazil have then our while seeing strong construction. of Brazil some call to market we now belief Europe Veltec think potentially to very is the a a in and that Europe for in of Brazil I takes. relative other is that's but, for We but and quite the been an with So believe acquisition kind it to potential comparatively greater for system that

a Brazil possibility of more just our I So not into across in dialogue think the company agriculture. has generally entering

at So on that hoping time. Argentina the spectrum, -- point that -- of of course end other is China, in which troubled okay China has of wait-and-see. But comparatively and something then is a

think diminished even in opportunities. in are I there growth that a China market

a issues Now currently we've in some where in position China. specific OEMs we with are specific got

Okay.

through to that And work at trend I call let's in attractive back think we're we those, circumstances China we think I prospects. As China. it diminished find growth line the normal even under long-term

had. there's think So be plenty to there I of market

what's think I potential see -- about we're actually U.S.-China trade to pack in access. is any relative about the where waiting

some time. this local relatively are at is quite But level is at this doing XX-year point preference for at future point issues confidence. the part re-equalize -- against beginning trade has in Japan's relative more point the the attractive this since we of to trade if think we Any the As playing China field have an in in Japan, the such. on situation. near of the intensified agreement us that by boosted -- clarity the being place is in their as I part doing companies, the we caution intensified would just has at time more standard I quite the -- that with of spending trade. But Olympic-related and for a trade would time. in is least get script, of Hopefully, China well in maybe that market said U.S. --

been which us for South in market Africa is always this relatively point struggling a strong time. is at

point. have there. U.K. China covered so more closely particularly less I steady But So say I world and you I'd the or Watching the of at as think go. course -- this

Jonathan Ho

Thanks That's super the color. helpful. for

other one me. for Just one

bill, the benefit. about talked needle-moving terms you potentially those seeing infrastructure In guys think How about -- impacts? -- should potential of we

Steve Berglund

a Jonathan you second. kind of for faded there out

I think the you can just question? I got but repeat it,

Jonathan Ho

impacts just Sorry infrastructure bill, where you immediate to would regards those place? take potentially the see

Steve Berglund

an wanders other let's passed truly and bridges as infrastructure infrastructure that and sometimes is extraneous call bill an is the to bill if that infrastructure like and means that it spending roads Well, opposed things bill. into

well for immediate effectively for because -- contractors would build as start that projects. more I flow projects investment those straight seeing to would of aggressively leads control capability think certain think I compete view back an to believe impact there that and to to be bid the able the a us, our technology I to as be In projects.

that we actually see get see I the think money process. the by ready before what in spent, to investment any would getting contractors, bidding be anticipating and flow an money competitive we So would

to think starts be would getting that as for wait. Yes, would enhanced, immediate the anticipating money ready not there in necessarily because dynamic I So I the effect to that have flow. but would be is and it terms of when would we see flow, money

Jonathan Ho

Thank you.

Operator

Revich with Sachs. Goldman question comes Jerry And line of from your the next

Jerry Revich

Good good Hi. everyone. Yes. and afternoon evening,

Rob Painter

Jerry. Hi

Jerry Revich

on this as I'm being particularly of wondering first. performance performance that can like And on bookings with the you guys well about SketchUp e-Builder folks then, you Viewpoint subscription expectations maybe was if quarter. what bookings about growth ahead touch talk spoke and that

Rob Painter

Sure.

shifted Jerry, going the of recent terms forward. acquisitions, we an we the ARR, the on to acquisitions commentary shifted disclosure – the in So,

the this is metric XX% are ARR I revenue. The than excuse how XX sense best recurring business you attention think is that think to businesses the to both recurring is performing. real -- me gives -- the more of given that of we pay or

short, little to the of Viewpoint in And quarter on double-digit just but give continue a went more -- they of of of because first perpetual big the both. official subscription transition business, expecting SketchUp into do was in you bookings – really in a the of the a data, on And bit for little growth quarter it well, we saw we booking to went color flavor to transition, is the be other expecting strong And uptick offer mix this year-over-year the The higher the inverse. we the out e-Builder. and subscriptions. it

And so I a nice It market. what would the to to indicator as early to a that of increase say it really an size appeared was show, least way upside. addressable at us it's the

Jerry Revich

well? Can Okay. just mentioned double-digits. metric growth on pieces? your but organic be major the logistics, and And Any parts can there subscription on portfolios to And comments ARR as comment an them how We of keep transportation eye you on that's around would weaker that here, covered was the few you that's then say the business us for a the Rob, any helpful. tracking? of subscription you are the

Rob Painter

the in around news business a good are transportation in there would subscription no of taking Well, weaknesses speak to walk meaningful the business. the be company,

to continue subscription grow the base. We

the is a standout to enterprise say there that before. really of customer accessing so which think logo office and base. that. identifying, transportation model navigation the so find And to the view. subscription job Geospatial, would subscription And markets back I was called its -- penetrate that business. those customer a continues step to we from as service from at a we to performer backwards and grow. if one have a a allows speak of and acquisition part way new management then, the I which software offer, vertical continues growth the to that when the I are through go-to-market beginning segmentation. to markets we the the routing, When Utilities meaningful at subscription out Still us upside healthy market of from you and go which business mapping weren't units very early working Our team's look to to next we doesn't is all software and point in accounts, around that's in a it And correction plans the market is product days, And offering Resources the we there business into have look nice of. when done And putting subscription

looking then businesses. quite an we portfolio market the growth currency going rest and to the the the have So double-digit neutral, that particularly business of overall construction those the double-digit really at in Infrastructure performing Building, software performed growth there in well software space has BIM-related

the set I'd nice double-clicking in of really subscription all So, performances in say particular. software businesses in that aggregate within and on

Jerry Revich

about growth? your of if what you recurring the specifically? of you revenue remarks piece the what piece folks the around And in and on just the for Yeah. the do and hit revenue pockets recurring your puts slower prepared takes the a resilience lot hardware could talk -- subscription And and of the expectations are drive subscription if the included discussion the within part of that we piece business. Can you

Rob Painter

higher of for be starters. resilience stream degree our there a is Well, revenue that in that that, belief would

take that $X.XX we'd we've of quarter, out got if course at the you $X.XX Of of ARR say months coming sight line billion forward. billion to XX

Now have But that what holds how saying we from economy. would very degree view will we feel time which were of retain bigger to that base course, that a turn up. have record level, right to -- track our there in now a of if that a air -- some the the at resilience But base high we way retention. like there of of pocket is pocket it don't tell be suggest is to and do, -- our and revenue you have revenue

You've so talk and XXX% where heard two businesses. cross-selling greater the which incredible Viewpoint our retention customers we're return e-Builder and those than before than those ratio of about business penetrating a is is businesses customers greater models existing of me really net part

and quarter. others than in say have So, hardware than the of software of is that I the that of would the we markedly stream in growth resilience revenue was factor the subscription. software the higher perpetual Jerry, mean, clearly, to that in opposed growth lower the I lower was that evidence aggregate, still and as

Jerry Revich

Okay. Thank you.

Operator

Your next question comes from Ann Duignan with JPMorgan.

Ann Duignan

Hi. infrastructure comments is I'll start maybe your good infrastructure and Duignan. Steve, projects. evening. This spending Ann with on afternoon, Good

you've long money or were where in governments from enough spending, and state probably to back all put was shovel-ready been remember coming local the that both around place program all stop literally XXXX think because that happened the government. in I the XXXX federal

impact that really positive see school net-net, any And didn't of so from we projects.

curious just that getting at signed could or of the you the funding infrastructure what's And next election it different. are? why where think before given the probability this I'm spending bill all debts be So,

Steven Berglund

a Without here. appropriate cynicism skepticism Ann, perhaps Yeah. even is doubt

are is -- federal. and up, fashion yeah, the the was, act -- pocket one in right other state so-called where mystery version You shovel-ready when a XXXX/XXXX came pocket some

I anything different. out know into is for no forecast that it at be be don't But come with our good built we that will would all so sure will So certainty upside this any of that -- upside. news have

in we that groups reasonable Washington, spent with amount whatever. trade I have a actually think of and time

There the within tone is of this there. different maybe a Transportation seriousness of think I time. is level perhaps Department the

is Now whether without brought into through process the non-recognition be getting open question. mutated political can that an

So much I very still is think the doubt. outcome in

maybe and bridges. I think is rhetoric things. the the sides, about more One maybe highways they're talking from different you side two to two talking listen if

The talking broadband, such. other and about is infrastructure

at So would be. substance actual it's clear the not what all

anything. not So again, not that. on on anything. we're And We're counting recognize building

think for maybe terms relative in think here to I of ago, three six against of I marginally is that months room standard the probabilities there optimism. more Now

it recent two the side, House sides. President to the But leadership relative and the very funding the okay, the seems -- think sources public for ago. relative in that was that Congressman Senate something. And no funding, between -- months I think House it is much -- is is divide I something at does look Ultimately, DeFazio issue that active but of of terms still on the meeting remains was much one is and done. still very between -- profile, if think get today again, in the the look Democratic There more -- to six political again think meeting the activity great agreement than I I I is particularly and think -- it okay, the be and think you determined it I on represent consumption.

So, impact if we'll in would see. it we're -- forecast. for basically wait But zero big a But just in we're our assuming happen, the deal and it meantime, us. did be

ago, but realistically to hunkered So not something six very than happen. somewhat I maybe, the they waiting down, probabilities But, are probably, months think, we're high. for better were

Ann Duignan

up but nice of a exhibits. does I excavators, you build you. variety to the and on I'm did Maybe as et problem little curious, a to more where construction OEM mix and Thank again? its products Trimble more OEM the XX%, at display the have, the change I towards cynicism. back versus gears mean, different hardware drive bit back really color your cetera, sales on that equipment and it a percent appreciate just switching bauma XX% up side. And it's does the of today? it's

Steve Berglund

network, information okay, subsequent machine, our capabilities to abstract I of I think, machine, the at then, call would it again, the probably equipment, a in hooks an if the over it will, -- guess you the the I sale. And, there's a what's is, putting term. system. machine view And the sensors on the least software hardware on happening we actually least the in time into let's the at think on the into subsequent machine. put But, short a, the

So, faster I call it, the think really probably boost If play. not it don't than And ultimately, particularly time model think the as equation intricate the a alter got, software. software the let's hardware and it I software of we anything, of software. would a it. it see feeds think, longer term The play hardware actually, more would between than in software. the over hardware we've supports But, the hardware hardware. a I period would

Ann Duignan

the That’s Okay. I appreciate Thank color. you. interesting.

Operator

next line Eastman And from the your of comes Baird. with question Richard

Richard Eastman

company-wide. gross look that's up I'm some to I trying to good. is, XX% -- ask get the or XXX segments, question? have again, margin gross operating of But must When profit segments, segments out crept just points segment that, get steps basis maybe of Can that's afternoon. of up so at four I be at your of at assume OpEx -- me Good four you four a must all what is margin in is I adjusted kind when kind software kind incrementals. -- what Yes. creep, all look in by I higher-level of profit the all the all it's --

But or think it's in there a yes, or -- trying of mainly what seeing on in Maybe quarter XX% OpEx? -- that's some the sense in segments, of -- four within Or the pulling absorption of either is to intended Transportation, the I BIM I'm there of the the incremental kind just B&I. -- incremental we're revenue driving lowest get is just down any XX%. up is year? spend

Rob Painter

it's Rick, Hey, Rob.

Richard Eastman

Yes.

Rob Painter

by we margins say largely the of saying, expectations we for coming a thing in couple segments. more proxy there R&D to business a when really, quarter note the to to as cost software-centric unpack. model, of line probably -- is arguably things in in the we I'd sold. goods One the There're reporting at it's I'll into had look become by is, start the with

mix on hardware would the margin let's basis our gross in see tend -- note we And expect thing so, higher OpEx for at to of forward. might software versus the companies, so to some but -- that time one higher to and say, comparable just terms a on we businesses, see going same

the reflect XX year-over-year saw of clearly which bps the would basis, a -- margins on that. gross improvement XXX on the You or

Viewpoint see Some in in segment seen of now you of the the OpEx, going XXXX B&I in in you're wouldn't that quarter the to XXXX. have course,

a would the segments, that is comparison through expected. Transportation make we that's it difficult around other make. you as step really when So tough to the Otherwise,

that's model a been have OEM-centric in a been would have R&D been And Geospatial on area spending looked little the would there. more the off Geospatial. within have that and intentional where We then on on revenue a shortfall

Richard Eastman

more up a I can Maybe just follow with Okay. little detail. that

I Infrastructure core segment at tease BIM and I a drag Is engineers' business trying the just there carry out business? was a into of softness the maybe of that Building the but to just there? civil question a this construction construction? can end that detail. the we of Can saw rates the it's little And follow-up civil to still more the you for ask last Did I the & business? think picture, mean growth ask big But in bit year?

Rob Painter

-- part the a year-over-year our that -- slight still though. in There a last first. risk the there's line the was So with answer is quarter basis. The on drag business for expectations

comp year. about we there back surprise of any whereas some that is us note Fed last half in wasn't there the surprise -- to the did us thing that a in good for one tough comp the is for So downside business of amount the But federal have things of a business. the to the business is The program-driven.

comparable. and is the only the And good the could federal on or business delivers of a vary way hits lead negative timing depending quarter-to-quarter, too or so other incomplete year-to-year program view too inherently one conclusions can and to of quarterly a when

serving Fed is was our as on what have the was was talked double-digit the with business want BIM-centric up double-digit for is construction it the to and comparable growers. and expected. is thing masked in basis constant currency as you us is the year-over-year, on revenue hear XX% end-user. we is that software field it that about I'd the is When That construction businesses aggregate would which in the So strong building year-over-year at when business civil on of aftermarket was Trimble look a main sales basis

level the performance good at on end-user very So both segments.

Richard Eastman

I see.

you. Okay, very good. Thank

Operator

Munda from with is question Berenberg. next Gal Your

Gal Munda

Thanks for up. versus the of terms one in kind the just have of I the And question. my quarter it's Hey taking first shaping how year guys.

does You of of or segment? that. you Building was to line? When to guidance better -- how kind you performance, expected for Would I look and than And alike you terms clarify the at what that the your in kept expected? that it slightly exactly you quarter wanted year. maybe performed in going compare just Infrastructure it Because Geospatial the say into

Rob Painter

Hi, Gal.

Gal? and So below and Geospatial the above & puts numbers about through Resources above slightly we had level. the what Infrastructure quarter. strongest performer can we any other walked and into They're expectations or expectations and been for Transportation below highest level. to really have Buildings the the dramatically -- the and not at takes Buildings But we netted us aggregate the had, And the & by were slightly that -- was repeat Utilities one the that would it you most and Infrastructure metric question came your as

Gal Munda

is look second. question other free on the -- a trying to just So cash for flow actually focus

that of the decrease of of year-on-year. have not the You just given something deferred the I revenue made which an in fair proportion especially should or software capital drivers working of interesting towards it's of it's free any capital half forward? In could continue look your we other that as is to net over at more because comment transitioning say it seeing working going revenue net the a than lowering that words growth doubled is midterm quarter? expectations flow cash subscription you're model now business When today and

Rob Painter

would is capital it that working reasonable down. a the think Gal I go assumption to continue

Now at low. it's X% It's of quite already revenue.

that that heads if to shift know be closer So or would that negative possible. fundamental X that's us. I for don't

I all perpetual to move over that thing on think one to perspective time if keep we we opposed we license, let's I'm looking could from have dynamics the billing that upfront. at be in mind would annually term as for cash say would as revenue businesses taking the versus payment subscription more quarterly

attention the to bill be general way does in business in therefore customers, a that. we we pickup the which model pay deferred. prepayment would to But tend a the So and

Gal Munda

other that, you In this thing last do any would on revenues significant would multiyear you unbilled have off not balance have be any is contracts? the for Or just words clarify sheet? you? which to And Perfect. guys deferred

Rob Painter

disclosures the -- XXX So well actually backlog. the posed the one in shows of the

a tranches there's a over of in $X that's Q breakdown it So the billion disclosed of shows time. over backlog and

within XX% so is or XX I months. of that think XX%,

backlog is backlog said, as that's backlog. unbilled and and And contracted backlog -- that a there's I contracted So

Gal Munda

you Thank perfect. Okay, so much.

Rob Painter

that the does deferred. And include backlog some of

Gal Munda

Sure.

Operator

Oppenheimer. And Colin your from is next with question Rusch

Kristen Owen

This questions. taking for Kristen evening. Thank our on Colin. good you is for Hi,

Rob Painter

Hi, Kirsten.

Kristen Owen

Buildings Infrastructure, much seeing So do some a the the you're acquisitions? you opportunities and growth just organic e-Builder up of kind to cross-sell how that strong you cross-selling And margins in and on saw Viewpoint seeing are you business? follow the as wanted to to on of that result that that attribute of what

Rob Painter

Viewpoint product us. as between as opportunity solutions. strategy of out probably we've very, product both aspect of before the and it those for growth cross-selling, flavor incremental work let's say go-to-market of well a to this of both and a from Trimble that from and have backwards we couple I about the workflows quarter innings traditional we're from we of I we a bit a now a delivery of the -- of and project about very examples in as space think some a aspect of course say a we little perspective have the you little give the we talked integrations construction early that between e-Builder, done in What that from would think Well, in have

released our electrical product between and Viewpoint. space estimating For an plumbing the ERP integration we from and example mechanical

ERP is so item have construction means exchange in to as -- of costs the item can into information to through line had in field telematics that that's of -- e-Builder job the also by breaking now working down eliminate And as buyout the Viewpoint is concept all field. And a site between better job seamlessly. a connect between nice and lists, the the out has back down them with the cost now codes the you line the and ERP actually by integration and when entry able example utilization cost consume proof two system owners the system. to way example to And allowing the this again the for you're the -- released another phase data And between estimating project office can of code well budget cost you're We management to the that -- costing consumed and break the estimate, the and ability the that estimate really the equipment as now that's managing back once third and is what that we the consumed is established. and supply a been and really you've because from the systems. chains office -- an do is a contractors the connect equipment what with that's the say have

on And list things the happening was good compare ago quarters the and customer go-to-market side. of had the there's So a done what product on site already the we customer couple opportunities.

comparison. then one for So from We've I but million -- call teams seen that activity last was one basics that few cross-selling dollars spiffs we in another's ago from that the of to sales early a effort sort the there of very products. And put of -- quarter think stage. cross-sell Stage two it cross or quarters

these us the more down product an integrations side. mature gives really pedal As the this on to opportunity go-to-market put really

to the timeframe. that's into efforts us So your growth reasonably we step in short of The as back say was that nice opportunity that the answer let's question. see long produced organic on so a wasn't yet integration -- a for and to

Kristen Owen

Okay. I appreciate that.

really devices the Just ended that with the transportation of up ELD to switching do and that a do. they look lot so what that a to implementation, we logistics. operators we've year When Phase X claim after talked the to didn't

business opportunity customer the you in there? are after recurring capturing existing hardware? that relationships software sold then some maybe upsell assess kind you your business with the what would seeing how And of your of you So, success

Steve Berglund

an definitely element selling and buyer's created for market remorse we our Well, where business. have some opportunities there's that's the certainly of in seen instances

not expect necessarily was a capital solutions of good into that good developing As of you what's the the heels would regulation, on the there came capital for lot customers. and market a

what to taste cases has where and move once for a do. as a still of in shine clearly they market. more some stack the let's new in There's in It's technology will us So customer we And from a or buying that's a truck move of spool created say up the you a to manage and it -- market. can up compliance-only lot to a to to manage into want if happening had manage fleet that opportunities driver the dynamic has a more solution a functionality. very

into second in of December. goes The phase ELD effect

and it for so does -- And remains market I it a will say busy competitive sure.

the the made as portfolio have comment suites. integrated look that towards reiterating of both business. the under strategic -- respective mobility one the the right Now, if in in our an of now you in about the business back have alignment and office we field Those working as we Transportation operational technology kind have of Steve team offerings well management more is the the we at

about opportunity the integrated whether this we execute had upsell us it that or selling think cross-sell opportunities time on so better And in than to a or you puts call position we've better -- than if we've at any in past.

to where about anything you there else if give I be in we can the the sit there's And and good of do feel color opportunity so. I'd front happy teams we So, between us. on,

Kristen Owen

that the Yes. just that's is it that -- say fair spend incremental going? segment would to in R&D where be It

Rob Painter

R&D space to the as the ELD incremental that cloud that Yes. itself to integrated work really be us able to offering continues There's well still and offering some of supply element certainly transportation takes drive for in business. connect an as the to demand

Kristen Owen

it Thank you. leave at Okay. Perfect. Will that.

Operator

Rob last the question line your with And comes Wertheimer Melius from of Research.

Rob Wertheimer

that can just back To but the could trying solution on give switch Do whether I'm temporality it's better but that Is you OEM the Is business little easily? that's gone. or characterization Geospatial. I can bit extent competitive, you on and other -- comment Is OEM on afternoon. Hi, if of just maybe if issues bounces it lost? a understand any deferred? that it's of maybe this you to good something, I permanently so wonder --

Rob Painter

actually OEM the but that favor end-user It's nature this, back may on -- certainly and we have. -- but for you business much the why to I advanced Rob reporting be more cases had, and the the segment case -- segments others and know remember devices that we businesses expect some I in wouldn't Trimble. of the XX-year so level history think really selling chipsets are business wouldn't back there the example you of bounce old that's the I to we called where going call, board can a had may of we the move for we

had advanced segmentation, that the had would so call have in today. that of we old in we And there reporting If it businesses we looked still devices. some referencing businesses were like that on the

there's is little bit a short in the that So, comment. both Rob answer of

want talk OEM vertical hear we are about associated with is the what businesses Now, our when you market. to OEM that I'd business the also

component more business of So, more well the -- a -- OEM are or in transportation or business have that businesses businesses say saw expected. that generally of the and revenue in in OEM businesses we OEM all less we It those more did expectations than construction agriculture a met where those OEM in of aggregate really in was we had.

Rob Wertheimer

Okay, that's Thank helpful. you.

Rob Painter

Rob. Thanks

Operator

of the your Leyba We our have Q&A. Mr. please. comments reached end closing

Michael Leyba

you you, everyone, again Thank you. look with and we Yes. on for call to next quarter. forward Thank us speaking the joining

Operator

conclude this conference call. And today's does

disconnect. now You may

Trimble (TRMB) 1 May 192019 Q1 Earnings call transcript