Delaware
|
000-25426
|
74-1871327
|
||
(State or other jurisdiction of incorporation)
|
(Commission File Number)
|
(IRS Employer
Identification No.) |
Emerging growth company
|
☐
|
☐
|
Item 2.02.
|
Results of Operations and Financial Condition.
|
Item 9.01.
|
Financial Statements and Exhibits
|
Exhibit No.
|
Description
|
|
99.1
|
Press Release dated October 25, 2018
|
NATIONAL INSTRUMENTS CORPORATION
|
|||
By:
|
/s/ Alex M. Davern
|
||
Name: Alex M. Davern
Title: Chief Executive Officer
|
Contact:
|
Marissa Vidaurri
|
|
Investor Relations
|
||
(512) 683-6873
|
• |
Revenue of $346 million, up 8 percent year over year
|
• |
GAAP gross margin of 74 percent
|
• |
Non-GAAP gross margin of 77 percent
|
• |
Fully diluted GAAP EPS of $0.32 and fully diluted non-GAAP EPS of $0.45
|
• |
GAAP net income of $43 million, up 29 percent year over year
|
• |
Non-GAAP net income of $60 million, up 53 percent year over year
|
• |
EBITDA of $65 million
|
• |
Cash and short-term investments of $482 million as of September 30, 2018
|
• |
Revenue of $999 million, up 6 percent year over year
|
• |
GAAP net income up 28 percent year over year
|
• |
Non-GAAP net income up 49 percent year over year
|
National Instruments
|
||||||||
Condensed Consolidated Balance Sheets
|
||||||||
(in thousands)
|
||||||||
September 30,
|
December 31,
|
|||||||
2018
|
2017
|
|||||||
(unaudited)
|
||||||||
Assets
|
||||||||
Current assets:
|
||||||||
Cash and cash equivalents
|
$
|
311,381
|
$
|
290,164
|
||||
Short-term investments
|
171,028
|
121,888
|
||||||
Accounts receivable, net
|
239,468
|
248,825
|
||||||
Inventories, net
|
192,412
|
184,592
|
||||||
Prepaid expenses and other current assets
|
62,447
|
48,621
|
||||||
Total current assets
|
976,736
|
894,090
|
||||||
Property and equipment, net
|
245,898
|
249,715
|
||||||
Goodwill
|
263,119
|
266,783
|
||||||
Intangible assets, net
|
116,061
|
123,293
|
||||||
Other long-term assets
|
28,106
|
32,553
|
||||||
Total assets
|
$
|
1,629,920
|
$
|
1,566,434
|
||||
Liabilities and Stockholders' Equity
|
||||||||
Current liabilities:
|
||||||||
Accounts payable and accrued expenses
|
$
|
51,321
|
$
|
49,733
|
||||
Accrued compensation
|
52,182
|
43,309
|
||||||
Deferred revenue - current
|
120,398
|
120,638
|
||||||
Other current liabilities
|
17,508
|
23,782
|
||||||
Other taxes payable
|
34,654
|
31,793
|
||||||
Total current liabilities
|
276,063
|
269,255
|
||||||
Deferred income taxes
|
36,638
|
33,609
|
||||||
Liability for uncertain tax positions
|
9,045
|
10,158
|
||||||
Income tax payable - long-term
|
74,015
|
81,515
|
||||||
Deferred revenue - long-term
|
31,762
|
33,742
|
||||||
Other long-term liabilities
|
5,488
|
10,134
|
||||||
Total liabilities
|
433,011
|
438,413
|
||||||
Stockholders' equity:
|
||||||||
Preferred stock
|
—
|
—
|
||||||
Common stock
|
1,324
|
1,310
|
||||||
Additional paid-in capital
|
881,417
|
829,979
|
||||||
Retained earnings
|
329,342
|
313,241
|
||||||
Accumulated other comprehensive loss
|
(15,174
|
)
|
(16,509
|
)
|
||||
Total stockholders' equity
|
1,196,909
|
1,128,021
|
||||||
Total liabilities and stockholders' equity
|
$
|
1,629,920
|
$
|
1,566,434
|
National Instruments
|
||||||||||||||||
Condensed Consolidated Statements of Income
|
||||||||||||||||
(in thousands, except per share data, unaudited)
|
||||||||||||||||
Three Months Ended
|
Nine Months Ended
|
|||||||||||||||
September 30,
|
September 30,
|
|||||||||||||||
2018
|
2017
|
2018
|
2017
|
|||||||||||||
Net sales:
|
||||||||||||||||
Product
|
$
|
310,216
|
$
|
291,891
|
$
|
897,355
|
$
|
853,219
|
||||||||
Software maintenance
|
35,911
|
29,030
|
101,678
|
86,416
|
||||||||||||
Total net sales
|
346,127
|
320,921
|
999,033
|
939,635
|
||||||||||||
Cost of sales:
|
||||||||||||||||
Product
|
87,082
|
81,641
|
239,205
|
235,989
|
||||||||||||
Software maintenance
|
1,933
|
2,110
|
6,493
|
6,744
|
||||||||||||
Total cost of sales
|
89,015
|
83,751
|
245,698
|
242,733
|
||||||||||||
Gross profit
|
257,112
|
237,170
|
753,335
|
696,902
|
||||||||||||
74.3
|
%
|
73.9
|
%
|
75.4
|
%
|
74.2
|
%
|
|||||||||
Operating expenses:
|
||||||||||||||||
Sales and marketing
|
118,220
|
116,661
|
365,474
|
358,335
|
||||||||||||
Research and development
|
66,170
|
56,526
|
194,921
|
171,701
|
||||||||||||
General and administrative
|
26,712
|
26,468
|
81,882
|
78,400
|
||||||||||||
Total operating expenses
|
211,102
|
199,655
|
642,277
|
608,436
|
||||||||||||
Operating income
|
46,010
|
37,515
|
111,058
|
88,466
|
||||||||||||
13.3
|
%
|
11.7
|
%
|
11.1
|
%
|
9.4
|
%
|
|||||||||
Other income (expense):
|
||||||||||||||||
Interest income
|
1,539
|
657
|
3,845
|
1,509
|
||||||||||||
Net foreign exchange gain (loss)
|
(956
|
)
|
1,096
|
(2,082
|
)
|
1,624
|
||||||||||
Other income (loss), net
|
1,782
|
(1,153
|
)
|
169
|
(957
|
)
|
||||||||||
Income before income taxes
|
48,375
|
38,115
|
112,990
|
90,642
|
||||||||||||
Provision for income taxes
|
5,181
|
4,726
|
14,474
|
13,949
|
||||||||||||
Net income
|
$
|
43,194
|
$
|
33,389
|
$
|
98,516
|
$
|
76,693
|
||||||||
Basic earnings per share
|
$
|
0.33
|
$
|
0.26
|
$
|
0.75
|
$
|
0.59
|
||||||||
Diluted earnings per share
|
$
|
0.32
|
$
|
0.25
|
$
|
0.74
|
$
|
0.59
|
||||||||
Weighted average shares outstanding -
|
||||||||||||||||
basic
|
132,357
|
130,660
|
131,792
|
130,103
|
||||||||||||
diluted
|
133,197
|
131,617
|
133,067
|
131,050
|
||||||||||||
Dividends declared per share
|
$
|
0.23
|
$
|
0.21
|
$
|
0.69
|
$
|
0.63
|
National Instruments
|
||||||||
Condensed Consolidated Statements of Cash Flows
|
||||||||
(in thousands, unaudited)
|
||||||||
Nine Months Ended September 30,
|
||||||||
2018
|
2017
|
|||||||
Cash flow from operating activities:
|
||||||||
Net income
|
$
|
98,516
|
$
|
76,693
|
||||
Adjustments to reconcile net income to net cash provided by operating activities:
|
||||||||
Depreciation and amortization
|
53,735
|
54,794
|
||||||
Stock-based compensation
|
27,492
|
21,272
|
||||||
Deferred income taxes
|
732
|
(4,290
|
)
|
|||||
Net change in operating assets and liabilities
|
6,862
|
(1,013
|
)
|
|||||
Net cash provided by operating activities
|
187,337
|
147,456
|
||||||
Cash flow from investing activities:
|
||||||||
Capital expenditures
|
(27,373
|
)
|
(24,084
|
)
|
||||
Capitalization of internally developed software
|
(13,152
|
)
|
(34,406
|
)
|
||||
Additions to other intangibles
|
(5,165
|
)
|
(1,379
|
)
|
||||
Purchases of short-term investments
|
(172,462
|
)
|
(62,845
|
)
|
||||
Sales and maturities of short-term investments
|
122,726
|
45,582
|
||||||
Net cash used by investing activities
|
(95,426
|
)
|
(77,132
|
)
|
||||
Cash flow from financing activities:
|
||||||||
Principal payments on revolving line of credit
|
—
|
(10,000
|
)
|
|||||
Proceeds from issuance of common stock
|
24,424
|
22,870
|
||||||
Dividends paid
|
(91,034
|
)
|
(82,051
|
)
|
||||
Net cash used by financing activities
|
(66,610
|
)
|
(69,181
|
)
|
||||
Impact of changes in exchange rates on cash
|
(4,084
|
)
|
7,768
|
|||||
Net change in cash and cash equivalents
|
21,217
|
8,911
|
||||||
Cash and cash equivalents at beginning of period
|
290,164
|
285,283
|
||||||
Cash and cash equivalents at end of period
|
$
|
311,381
|
$
|
294,194
|
The following tables provide details with respect to the amount of GAAP charges related to stock-based compensation, amortization of acquisition-related intangibles, acquisition-related transaction costs, capitalization and amortization of internally developed software costs, and restructuring charges that were recorded in the line items indicated below (unaudited) (in thousands)
|
||||||||||||||||
Three Months Ended
|
Nine Months Ended
|
|||||||||||||||
September 30,
|
September 30,
|
|||||||||||||||
2018
|
2017
|
2018
|
2017
|
|||||||||||||
Stock-based compensation
|
||||||||||||||||
Cost of sales
|
$
|
844
|
$
|
689
|
$
|
2,415
|
$
|
1,914
|
||||||||
Sales and marketing
|
3,452
|
3,014
|
10,408
|
8,523
|
||||||||||||
Research and development
|
3,318
|
2,328
|
9,091
|
6,552
|
||||||||||||
General and administrative
|
1,942
|
1,514
|
5,578
|
4,358
|
||||||||||||
Provision for income taxes
|
(1,455
|
)
|
(2,369
|
)
|
(6,115
|
)
|
(7,388
|
)
|
||||||||
Total
|
$
|
8,101
|
$
|
5,176
|
$
|
21,377
|
$
|
13,959
|
||||||||
Amortization of acquisition intangibles
|
||||||||||||||||
Cost of sales
|
$
|
701
|
$
|
1,502
|
$
|
2,448
|
$
|
4,648
|
||||||||
Sales and marketing
|
510
|
515
|
1,580
|
1,479
|
||||||||||||
Research and development
|
28
|
283
|
84
|
813
|
||||||||||||
Provision for income taxes
|
(149
|
)
|
(546
|
)
|
(518
|
)
|
(1,656
|
)
|
||||||||
Total
|
$
|
1,090
|
$
|
1,754
|
$
|
3,594
|
$
|
5,284
|
||||||||
Acquisition transaction costs, restructuring charges, and other
|
||||||||||||||||
Cost of sales
|
$
|
1,784
|
$
|
79
|
$
|
1,813
|
$
|
988
|
||||||||
Sales and marketing
|
3,676
|
1,618
|
8,354
|
8,018
|
||||||||||||
Research and development
|
692
|
235
|
1,794
|
1,816
|
||||||||||||
General and administrative
|
373
|
207
|
1,538
|
803
|
||||||||||||
Other income (loss), net
|
—
|
—
|
709
|
—
|
||||||||||||
Provision for income taxes
|
(1,800
|
)
|
(720
|
)
|
(3,983
|
)
|
(3,655
|
)
|
||||||||
Total
|
$
|
4,725
|
$
|
1,419
|
$
|
10,225
|
$
|
7,970
|
||||||||
Capitalization and amortization of internally developed software costs
|
||||||||||||||||
Cost of sales
|
$
|
6,412
|
$
|
5,332
|
$
|
18,736
|
$
|
15,521
|
||||||||
Research and development
|
(1,808
|
)
|
(9,590
|
)
|
(13,152
|
)
|
(34,406
|
)
|
||||||||
Provision for income taxes
|
(967
|
)
|
1,490
|
(1,173
|
)
|
6,610
|
||||||||||
Total
|
$
|
3,637
|
$
|
(2,768
|
)
|
$
|
4,411
|
$
|
(12,275
|
)
|
National Instruments
|
||||||||||||||||
Reconciliation of GAAP to Non-GAAP Measures
|
||||||||||||||||
(in thousands, unaudited)
|
||||||||||||||||
Three Months Ended
|
Nine Months Ended
|
|||||||||||||||
September 30,
|
September 30,
|
|||||||||||||||
2018
|
2017
|
2018
|
2017
|
|||||||||||||
Reconciliation of Gross Profit to Non-GAAP Gross Profit
|
||||||||||||||||
Gross profit, as reported
|
$
|
257,112
|
$
|
237,170
|
$
|
753,335
|
$
|
696,902
|
||||||||
Stock-based compensation
|
844
|
689
|
2,415
|
1,914
|
||||||||||||
Amortization of acquisition intangibles
|
701
|
1,502
|
2,448
|
4,648
|
||||||||||||
Acquisition transaction costs and restructuring charges
|
1,784
|
79
|
1,813
|
988
|
||||||||||||
Amortization of internally developed software costs
|
6,412
|
5,332
|
18,736
|
15,521
|
||||||||||||
Non-GAAP gross profit
|
$
|
266,853
|
$
|
244,772
|
$
|
778,747
|
$
|
719,973
|
||||||||
Non-GAAP gross margin
|
77.1
|
%
|
76.3
|
%
|
78.0
|
%
|
76.6
|
%
|
||||||||
Reconciliation of Operating Expenses to Non-GAAP Operating Expenses
|
||||||||||||||||
Operating expenses, as reported
|
$
|
211,102
|
$
|
199,655
|
$
|
642,277
|
$
|
608,436
|
||||||||
Stock-based compensation
|
(8,712
|
)
|
(6,856
|
)
|
(25,077
|
)
|
(19,433
|
)
|
||||||||
Amortization of acquisition intangibles
|
(538
|
)
|
(798
|
)
|
(1,664
|
)
|
(2,292
|
)
|
||||||||
Acquisition transaction costs and restructuring charges
|
(4,741
|
)
|
(2,060
|
)
|
(11,686
|
)
|
(10,637
|
)
|
||||||||
Capitalization of internally developed software costs
|
1,808
|
9,590
|
13,152
|
34,406
|
||||||||||||
Non-GAAP operating expenses
|
$
|
198,919
|
$
|
199,531
|
$
|
617,002
|
$
|
610,480
|
||||||||
Reconciliation of Operating Income to Non-GAAP Operating Income
|
||||||||||||||||
Operating income, as reported
|
$
|
46,010
|
$
|
37,515
|
$
|
111,058
|
$
|
88,466
|
||||||||
Stock-based compensation
|
9,556
|
7,545
|
27,492
|
21,347
|
||||||||||||
Amortization of acquisition intangibles
|
1,239
|
2,300
|
4,112
|
6,940
|
||||||||||||
Acquisition transaction costs and restructuring charges
|
6,525
|
2,139
|
13,499
|
11,625
|
||||||||||||
Net (capitalization) and amortization of internally developed software costs
|
4,604
|
(4,258
|
)
|
5,584
|
(18,885
|
)
|
||||||||||
Non-GAAP operating income
|
$
|
67,934
|
$
|
45,241
|
$
|
161,745
|
$
|
109,493
|
||||||||
Non-GAAP operating margin
|
19.6
|
%
|
14.1
|
%
|
16.2
|
%
|
11.7
|
%
|
||||||||
Reconciliation of Income before income taxes to Non-GAAP Income before income taxes
|
||||||||||||||||
Income before income taxes, as reported
|
$
|
48,375
|
$
|
38,115
|
$
|
112,990
|
$
|
90,642
|
||||||||
Stock-based compensation
|
9,556
|
7,545
|
27,492
|
21,347
|
||||||||||||
Amortization of acquisition intangibles
|
1,239
|
2,300
|
4,112
|
6,940
|
||||||||||||
Acquisition transaction costs and restructuring charges
|
6,525
|
2,139
|
14,208
|
11,625
|
||||||||||||
Net (capitalization) amortization of internally developed software costs
|
4,604
|
(4,258
|
)
|
5,584
|
(18,885
|
)
|
||||||||||
Non-GAAP income before income taxes
|
$
|
70,299
|
$
|
45,841
|
$
|
164,386
|
$
|
111,669
|
||||||||
Reconciliation of Provision for income taxes to Non-GAAP Provision for income taxes
|
||||||||||||||||
Provision for income taxes, as reported
|
$
|
5,181
|
$
|
4,726
|
$
|
14,474
|
$
|
13,949
|
||||||||
Stock-based compensation
|
1,455
|
2,369
|
6,115
|
7,388
|
||||||||||||
Amortization of acquisition intangibles
|
149
|
546
|
518
|
1,656
|
||||||||||||
Acquisition transaction costs, restructuring charges, and other
|
1,800
|
720
|
3,983
|
3,655
|
||||||||||||
Net (capitalization) amortization of internally developed software costs
|
967
|
(1,490
|
)
|
1,173
|
(6,610
|
)
|
||||||||||
Tax reform charge
|
1,146
|
—
|
1,146
|
—
|
||||||||||||
Non-GAAP provision for income taxes
|
$
|
10,698
|
$
|
6,871
|
$
|
27,409
|
$
|
20,038
|
||||||||
Reconciliation of GAAP Net Income, Basic EPS and Diluted EPS to Non-GAAP Net Income, Non-GAAP Basic EPS and Non-GAAP Diluted EPS
|
||||||||||||||||
(in thousands, except per share data, unaudited)
|
||||||||||||||||
Three Months Ended
|
Nine Months Ended
|
|||||||||||||||
September 30,
|
September 30,
|
|||||||||||||||
2018
|
2017
|
2018
|
2017
|
|||||||||||||
Net income, as reported
|
$
|
43,194
|
$
|
33,389
|
$
|
98,516
|
$
|
76,693
|
||||||||
Adjustments to reconcile net income to non-GAAP net income:
|
||||||||||||||||
Stock-based compensation, net of tax effect
|
8,101
|
5,176
|
21,377
|
13,959
|
||||||||||||
Amortization of acquisition intangibles, net of tax effect
|
1,090
|
1,754
|
3,594
|
5,284
|
||||||||||||
Acquisition transaction costs, restructuring, and other, net of tax effect
|
4,725
|
1,419
|
10,225
|
7,970
|
||||||||||||
Net (capitalization)/amortization of internally developed software costs, net of tax
|
3,637
|
(2,768
|
)
|
4,411
|
(12,275
|
)
|
||||||||||
Tax reform charge
|
(1,146
|
)
|
—
|
(1,146
|
)
|
—
|
||||||||||
Non-GAAP net income
|
$
|
59,601
|
$
|
38,970
|
$
|
136,977
|
$
|
91,631
|
||||||||
Basic EPS, as reported
|
$
|
0.33
|
$
|
0.26
|
$
|
0.75
|
$
|
0.59
|
||||||||
Adjustment to reconcile basic EPS to non-GAAP
|
||||||||||||||||
basic EPS:
|
||||||||||||||||
Impact of stock-based compensation, net of tax effect
|
0.06
|
0.04
|
0.16
|
0.11
|
||||||||||||
Impact of amortization of acquisition intangibles, net of tax effect
|
—
|
0.01
|
0.03
|
0.04
|
||||||||||||
Impact of acquisition transaction costs, restructuring, and other, net of tax effect
|
0.04
|
0.01
|
0.08
|
0.05
|
||||||||||||
Impact of (capitalization)/amortization of internally developed software costs, net
|
0.03
|
(0.02
|
)
|
0.03
|
(0.09
|
)
|
||||||||||
Impact of tax reform charge
|
(0.01
|
)
|
—
|
(0.01
|
)
|
—
|
||||||||||
Non-GAAP basic EPS
|
$
|
0.45
|
$
|
0.30
|
$
|
1.04
|
$
|
0.70
|
||||||||
Diluted EPS, as reported
|
$
|
0.32
|
$
|
0.25
|
$
|
0.74
|
$
|
0.59
|
||||||||
Adjustment to reconcile diluted EPS to non-GAAP diluted EPS
|
||||||||||||||||
Impact of stock-based compensation, net of tax effect
|
0.06
|
0.04
|
0.16
|
0.11
|
||||||||||||
Impact of amortization of acquisition intangibles, net of tax effect
|
0.01
|
0.02
|
0.03
|
0.04
|
||||||||||||
Impact of acquisition transaction costs, restructuring, and other, net of tax effect
|
0.04
|
0.01
|
0.08
|
0.05
|
||||||||||||
Impact of (capitalization)/amortization of internally developed software costs, net of tax effect
|
0.03
|
(0.02
|
)
|
0.03
|
(0.09
|
)
|
||||||||||
Impact of tax reform charge
|
(0.01
|
)
|
—
|
(0.01
|
)
|
—
|
||||||||||
Non-GAAP diluted EPS
|
$
|
0.45
|
$
|
0.30
|
$
|
1.03
|
$
|
0.70
|
||||||||
Weighted average shares outstanding -
|
||||||||||||||||
Basic
|
132,357
|
130,660
|
131,792
|
130,103
|
||||||||||||
Diluted
|
133,197
|
131,617
|
133,067
|
131,050
|
National Instruments
|
||||||||||||||||
Reconciliation of Net Income to EBITDA
|
||||||||||||||||
(in thousands, unaudited)
|
||||||||||||||||
Three Months Ended
|
Nine Months Ended
|
|||||||||||||||
September 30,
|
September 30,
|
|||||||||||||||
2018
|
2017
|
2018
|
2017
|
|||||||||||||
Net income, as reported
|
$
|
43,194
|
$
|
33,389
|
$
|
98,516
|
$
|
76,693
|
||||||||
Adjustments to reconcile net income to EBITDA:
|
||||||||||||||||
Interest income, net
|
(1,525
|
)
|
(464
|
)
|
(3,705
|
)
|
(863
|
)
|
||||||||
Tax expense
|
5,181
|
4,726
|
14,474
|
13,949
|
||||||||||||
Depreciation and amortization
|
18,637
|
18,879
|
53,735
|
54,794
|
||||||||||||
EBITDA
|
$
|
65,487
|
$
|
56,530
|
$
|
163,020
|
$
|
144,573
|
||||||||
Weighted average shares outstanding - Diluted
|
133,197
|
131,617
|
133,067
|
131,050
|
||||||||||||
Reconciliation of GAAP to Non-GAAP EPS Guidance
|
||||||||
(unaudited)
|
||||||||
Three Months Ended
|
||||||||
December 31, 2018
|
||||||||
Low
|
High
|
|||||||
GAAP Diluted EPS, guidance
|
$
|
0.35
|
$
|
0.49
|
||||
Adjustment to reconcile diluted EPS to non-GAAP
|
||||||||
diluted EPS:
|
||||||||
Impact of stock-based compensation, net of tax effect
|
0.06
|
0.06
|
||||||
Impact of amortization of acquisition intangibles and acquisition accounting adjustments, net of tax effect
|
0.01
|
0.01
|
||||||
Impact of acquisition transaction costs, restructuring, and other, net of tax effect
|
0.01
|
0.01
|
||||||
Impact of capitalization/amortization of software development costs, net of tax effect
|
0.03
|
0.03
|
||||||
Non-GAAP Diluted EPS, guidance
|
$
|
0.46
|
$
|
0.60
|