Trimble Inc (NASDAQ: TRMB) stock lost over 1.4% on Feb 7th, 2019 (Source: Google finance) after the company posted mixed results for the fourth quarter of FY 18. The changing company model along with growing software and services was reflected in a significant gross margin improvement, which expanded 4.2 points in the fourth quarter and 2.3 points for the year, with the gross margin of 58% for the total year. Operating margin grew 4.6 points in the fourth quarter. Net income was up 31%. Cash flow from operations was $102 million, down 5% year-over-year, which was driven by the timing of a $30 million cash interest payment. TRMB has closed the fourth quarter at a gross debt level of over $1.9 billion, a net debt of just under $1.8 billion representing about 2.5 times net debt to adjusted EBITDA on a trailing 12-month basis, which is more than three quarters ahead of the company’s original deleveraging plan. During the fourth quarter, TRMB had also completed the acquisition of Veltec.
Moreover, in 2018, Buildings and Infrastructure delivered 7% organic growth with double-digit growth in the building construction business and the civil construction business down slightly. Geospatial delivered 3% organic revenue growth with end-user demand exceeding this number and OEM-centric business is slightly down. Resources and Utilities was flat on an organic basis. Finally, the Transportation business produced 4% organic growth.
TRMB in the fourth quarter of FY 18 has reported the adjusted earnings per share of 48 cents, beating the analysts’ estimates for the adjusted earnings per share of 46 cents. The company had reported the adjusted revenue growth of 12 percent to $786 million in the fourth quarter of FY 18, missing the analysts’ estimates for revenue of $809 million. Organic growth was 4%. ARR or annualized recurring revenue grew to $1.05 billion in the quarter, up 36% year-over-year. The adjusted EBITDA margin which includes income from joint ventures and equity investments was 23.6% in the fourth quarter, up 430 basis points year-over-year. Operating income dollars increased 43% to $172 million with operating margins increasing 460 basis points to 21.7%. The non-GAAP tax rate declined from 23% to 19% year-over-year driven by U.S. tax reform.
During the fourth quarter, TRMB repurchased approximately 1.1 million shares of its common stock for $40 million. During fiscal 2018, TRMB had repurchased approximately 2.4 million shares for $90.0 million. Approximately $352 million remains under the current share repurchase authorization as of the end of the fourth quarter.