Trimble Inc. · NASDAQ:TRMB
Trimble — Investor Day (May 2018)
22 slides from Trimble's investor day presentation, May 30, 2018
Slide 1: 2018 Investor Day: Financial overview and objectives
2018 Investor Day Financial overview and objectives Rob Painter, Chief Financial Officer
Slide 2: Forward-looking statements
Forward-looking statements Certain statements made in this presentation and any subsequent Q&A period are forward-looking statements, within the meaning of Section 21E of the Securities Exchange Act of 1934, as amended, and are made pursuant to the safe harbor provisions of the Securities Litigation
Slide 3: Addressing key investor questions
Addressing key investor questions 1 What is our multi-year organic growth opportunity? Financial 2 What will our revenue mix look like going forward? 3 What is our multi-year margin and cash flow opportunity? Capital Allocation 4 What is our M&A track record and capital allocation policy? 5 Does Tri
Slide 4: Investment highlights
Investment highlights Long-term organic growth opportunity of 6-9% with strong recent financial 1 performance Financial 2 Software mix targeted to grow to ~55% of revenue by 2021 3 25-30% incremental margins driving target operating margins of 21-22% by 2021 Capital Allocation 4 Disciplined capital
Slide 5: Strong top-line and bottom-line financial performance
1 Strong top-line and bottom-line financial performance Revenue Non-GAAP Operating Income Non-GAAP Earnings Per Share $2,646M $470M $1.45 $2,362M $390M $405M $2,290M $1.13 $1.19 FY15 FY16 FY17 FY15 FY16 FY17 FY15 FY16 FY17 ≈10% organic growth in FY17 2017 operating leverage 23% 2017 non-GAAP EPS gro
Slide 6: Strong cash flow generation
1 Strong cash flow generation Cash Flow from Working Capital % of Adjusted EBITDA Revenue Deferred Revenue Operations 7.0% $277M $431M $430M $534M $246M $357M 5.3% $460M 4.8% $445M FY15 FY16 FY17 FY15 FY16 FY17 FY15 FY16 FY17 FY16 FY17 2017 Cash flow from operations 2017 Adjusted EBITDA Asset light
Slide 7: Growth in software and recurring revenue
1 Growth in software and recurring revenue Subscription + Maintenance & Support ≈$320M = Recurring + Software & Services = Total SW, Services, Recurring ≈$510M ≈$1.24B $407M ≈$300M ≈$730M ≈$460M ≈$450M ≈$1.10B $337M $355M ≈$280M ≈$660M ≈$1.08B ≈$620M FY15 FY16 FY17 FY15 FY16 FY17 FY15 FY16 FY17 FY15
Slide 8: Reporting segments have established a balanced exposure to end markets
Reporting segments have established a balanced exposure to 1 end markets 2012 Revenue: $2.04B 2017 Revenue: $2.65B Geopatial Transportation 25% 18% Geopatial Transportation 37% Buildings & Resources & 26% Infrastructure Utilities 23% 18% Resources & Buildings & Utilities Infrastructure 22% 31% 2012
Slide 9: Trimble end markets are end-user/aftermarket focused and have a growing mix of software
Trimble end markets are end-user/aftermarket focused and 1 have a growing mix of software Buildings & Infrastructure + Resources & Utilities + Transportation + Geospatial = % End-user/aftermarket revenue (FY17) <5% <10% <15% <15% OEM <25% OEM OEM OEM Aftermarket focused OEM businesses >95% End-user
Slide 10: Trimble end markets are attractive and support 6% to 9% annual organic growth
Trimble end markets are attractive and support 6% to 9% 1 annual organic growth, augmented by acquisitions Large and Buildings & Resources Transportation Geospatial global addressable markets $17B + Infrastructure $14B + $14B + $5B = $50B & Utilities Market penetration Underserved, underpenetrated b
Slide 11: Target operating model: revenue
1 Target operating model: revenue FY18E FY18-FY21 Target Key secular drivers $3.12-$3.17B 2021 ≈ $4.0-$4.5B • (+) Technology penetration • (+) Geographic expansion ≈+18-20% overall growth ≈+9-12% overall growth • (+) Software/subscription growth • ≈+9-10% organic • ≈+6-9% organic • (+) Integrated of
Slide 12: Revenue mix trends
2 Revenue mix trends 2012 2017 2018E 2021 Target SW/Services/Recurring SW/Services/Recurring SW/Services/Recurring SW/Services/Recurring > $650M > $1.2B > $1.5B > $2.2B ≈32% of Revenue ≈47% of Revenue ≈50% of non-GAAP Revenue ≈55% of non-GAAP Revenue ≈$4.0B - $4.5B ≈$3.12B -- $3.17B ≈$3.125B $3.175B
Slide 13: Target operating model: margin, EPS and cash flow
3 Target operating model: margin, EPS and cash flow FY18E FY18-FY21 Target Key drivers Margins and EPS expansion ≈19% non-GAAP operating margin ≈21%-22% non-GAAP operating margin1 • (+) Software/subscription drives GM % expansion >25% operating leverage 25-30% operating leverage • (+) Operating expe
Slide 14: Capital allocation framework
4 Capital allocation framework Capital allocation priorities – 3 year view • R&D at 13-14% of revenue Drive organic growth • Annual capex 1.5% - 2.0% of revenue1 • Asset light business model • Retained investment grade ratings De-lever post • Commitment to limit additional acquisitions e-Builder/Vie
Slide 15: Disciplined acquisition approach enables strategy
4 Disciplined acquisition approach enables strategy Areas of focus Qualitative criteria Financial criteria • Adding market adjacencies • Transformative – as standalone • Rapid attainment of Trimble or in combination financial model • Filling in gaps in our end-to-end solutions • Path to meaningful s
Slide 16: Acquisitions have established compelling franchise strategies with attractive financial returns
Acquisitions have established compelling franchise strategies 4 with attractive financial returns Franchise 2010 + Acquisitions & organic growth = Current position (2017) Small MEP business & Steel/concrete trades: Building construction franchise construction • ≈Half of Buildings & Infrastructure ma
Slide 17: Technology company, by design
5 Technology company, by design 13–14% of sales >1,000 domain experts >1,200 unique patents spent on R&D >3,400 employees in product >65% of R&D in software development >$400M of estimated Investing in analytics, 2018 R&D spend blockchain, autonomy 17
Slide 18: Technology company, by the numbers
5 Technology company, by the numbers ≈$1.24B in SW, services Adjusted EBITDA > 20% (FY17) and recurring revenue (FY17) Approx. $1B backlog (Q1’18) ≈$730M in recurring revenue (FY17) Working capital $360M deferred >14% subscription < 5% of revenue (FY17) revenue (Q1’18) revenue growth (FY17) Adjusted
Slide 19: Diverse and balanced end-markets and business models support secular growth
Diverse and balanced end-markets and business models support secular growth Software and end-user / Portfolio balance aftermarket revenue mix Favored strategy Attractive end markets Geographic mix 19
Slide 20: Responsible corporate citizenship begins with the value we deliver to our end markets
Responsible corporate citizenship begins with the value we 6 deliver to our end markets Productivity Quality Earthworks productivity Reduction in project duration Reduced survey and engineering time Reduction in unique building components Increased fleet utilization Reduction in space planning & man
Slide 21: Responsible corporate citizenship impacting our communities and stakeholders
Responsible corporate citizenship impacting 6 our communities and stakeholders Trimble’s Responsible Corporate Citizenship (RCC) program is crucial to ensuring that we remain true to our mission, Transforming the Way the World Works, while fulfilling our commitments as a company, an employer, a stew
Slide 22: Investment highlights
Investment highlights Long-term organic growth opportunity of 6-9% with strong recent financial 1 performance Financial 2 Software mix targeted to grow to ~55% of revenue by 2021 3 25-30% incremental margins driving target operating margins of 21-22% by 2021 Capital Allocation 4 Disciplined capital