National Instruments Reports Record Quarterly Revenue

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, disposal gains on buildings and related charitable contributions, tax effects related to businesses held-for-sale, 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

 

Years Ended

 

December 31,

 

December 31,

 

2019

 

2018

 

2019

 

2018

Stock-based compensation

 

 

 

 

 

Cost of sales

$

887

 

$

816

 

 

$

3,475

 

$

3,231

 

Sales and marketing

4,868

 

3,810

 

 

19,612

 

14,218

 

Research and development

4,236

 

3,489

 

 

16,265

 

12,580

 

General and administrative

3,393

 

2,010

 

 

12,086

 

7,587

 

(Benefit) provision for income taxes

(1,433

)

(1,707

)

 

(9,337

)

(7,822

)

Total

$

11,951

 

$

8,418

 

 

$

42,101

 

$

29,794

 

 

 

 

 

 

 

Amortization of acquisition intangibles

 

 

 

 

 

Cost of sales

$

823

 

$

810

 

 

$

3,348

 

$

3,258

 

Sales and marketing

485

 

505

 

 

1,970

 

2,085

 

Research and development

28

 

28

 

 

112

 

113

 

Other loss, net

124

 

 

 

409

 

 

(Benefit) provision for income taxes

(127

)

(163

)

 

(703

)

(681

)

Total

$

1,333

 

$

1,180

 

 

$

5,136

 

$

4,775

 

 

 

 

 

 

 

Acquisition transaction costs, restructuring charges, and other

 

 

 

 

 

Cost of sales

$

 

$

244

 

 

$

 

$

2,057

 

Sales and marketing

5,356

 

2,300

 

 

13,646

 

10,654

 

Research and development

3,266

 

297

 

 

4,166

 

2,092

 

General and administrative (1)

2,002

 

341

 

 

11,527

 

1,879

 

Gain on sale of asset (1)

 

 

 

(26,842

)

 

Other loss, net

 

 

 

 

709

 

(Benefit) provision for income taxes (2)

(13,477

)

237

 

 

(12,237

)

(3,749

)

Total

$

(2,853

)

$

3,419

 

 

$

(9,740

)

$

13,642

 

(1): During the third quarter of 2019, we recognized a gain of $27 million related to the sale of our Millennium property, presented within "Gain on sale of assets". During the third quarter of 2019, we also recognized a charitable contribution expense of $7 million related to a donation using a portion of the proceeds from the sale of the property, presented within "General and Administrative".

(2): During the fourth quarter of 2019, we recognized an income tax benefit of $11 million related to the recognition of deferred taxes on the outside basis difference of our AWR business, which was held-for-sale as of December 31, 2019.

 

 

 

 

 

 

(Capitalization) and amortization of internally developed software costs

 

 

 

 

 

Cost of sales

$

7,012

 

$

6,557

 

 

$

27,085

 

$

25,293

 

Research and development

(1,887

)

(1,056

)

 

(9,066

)

(14,208

)

(Benefit) Provision for income taxes

(1,076

)

(1,155

)

 

(3,784

)

(2,328

)

Total

$

4,049

 

$

4,346

 

 

$

14,235

 

$

8,757

 

 

 

 

 

 

 

 

National Instruments

Reconciliation of GAAP to Non-GAAP Measures

(in thousands, unaudited)

 

 

 

 

 

 

 

 

 

 

 

Three Months Ended

 

Years Ended

 

 

December 31,

 

December 31,

 

 

 

2019

 

 

 

2018

 

 

 

2019

 

 

 

2018

 

Reconciliation of Gross Profit to Non-GAAP Gross Profit

 

 

 

 

 

Gross profit, as reported

 

276,333

 

 

272,070

 

 

 

1,016,324

 

 

1,025,405

 

Stock-based compensation

 

887

 

 

816

 

 

 

3,475

 

 

3,231

 

Amortization of acquisition intangibles

 

823

 

 

810

 

 

 

3,348

 

 

3,258

 

Acquisition transaction costs and restructuring charges

 

 

 

244

 

 

 

 

 

2,057

 

Amortization of internally developed software costs

 

7,012

 

 

6,557

 

 

 

27,085

 

 

25,293

 

Non-GAAP gross profit

$

285,055

 

$

280,497

 

 

$

1,050,232

 

$

1,059,244

 

Non-GAAP gross margin

78%

78%

 

78%

78%

 

 

 

 

 

 

Reconciliation of Operating Expenses to Non-GAAP Operating Expenses

 

 

 

 

 

Operating expenses, as reported

 

222,652

 

 

210,249

 

 

 

841,770

 

 

852,526

 

Stock-based compensation

 

(12,497

)

 

(9,309

)

 

 

(47,963

)

 

(34,385

)

Amortization of acquisition intangibles

 

(513

)

 

(533

)

 

 

(2,082

)

 

(2,198

)

Acquisition transaction costs and restructuring charges

 

(10,624

)

 

(2,938

)

 

 

(22,339

)

 

(14,625

)

Capitalization of internally developed software costs

 

1,887

 

 

1,056

 

 

 

9,066

 

 

14,208

 

Gain on sale of assets and other (1)

 

 

 

 

 

 

19,842

 

 

 

Non-GAAP operating expenses

 

200,905

 

 

198,525

 

 

 

798,294

 

 

815,526

 

 

 

 

 

 

 

Reconciliation of Operating Income to Non-GAAP Operating Income

 

 

 

 

 

Operating income, as reported

$

53,681

 

$

61,821

 

 

$

174,554

 

$

172,879

 

Stock-based compensation

 

13,384

 

 

10,125

 

 

 

51,438

 

 

37,616

 

Amortization of acquisition intangibles

 

1,336

 

 

1,343

 

 

 

5,430

 

 

5,456

 

Acquisition transaction costs and restructuring charges

 

10,624

 

 

3,182

 

 

 

22,339

 

 

16,682

 

Net amortization of internally developed software costs

 

5,125

 

 

5,501

 

 

 

18,019

 

 

11,085

 

Gain on sale of assets and other (1)

 

 

 

 

 

 

(19,842

)

 

 

Non-GAAP operating income

$

84,150

 

$

81,972

 

 

$

251,938

 

$

243,718

 

Non-GAAP operating margin

23%

23%

 

19%

18%

 

 

 

 

 

 

Reconciliation of Income before income taxes to Non-GAAP Income before income taxes

 

 

 

 

 

Income before income taxes, as reported

$

54,292

 

$

63,463

 

 

$

180,544

 

$

176,453

 

Stock-based compensation

 

13,384

 

 

10,125

 

 

 

51,438

 

 

37,616

 

Amortization of acquisition intangibles

 

1,460

 

 

1,343

 

 

 

5,839

 

 

5,456

 

Acquisition transaction costs and restructuring charges

 

10,624

 

 

3,182

 

 

 

22,339

 

 

17,391

 

Net amortization of internally developed software costs

 

5,125

 

 

5,501

 

 

 

18,019

 

 

11,085

 

Gain on sale of assets and other (1)

 

 

 

 

 

 

(19,842

)

 

 

Non-GAAP income before income taxes

$

84,885

 

$

83,614

 

 

$

258,337

 

$

248,001

 

 

 

 

 

 

 

Reconciliation of Provision for income taxes to Non-GAAP Provision for income taxes

 

 

 

 

 

Provision for income taxes, as reported

$

(4,304

)

$

6,922

 

 

$

18,393

 

$

21,396

 

Stock-based compensation

 

1,433

 

 

1,707

 

 

 

9,337

 

 

7,822

 

Amortization of acquisition intangibles

 

127

 

 

163

 

 

 

703

 

 

681

 

Acquisition transaction costs and restructuring charges

 

2,715

 

 

(237

)

 

 

5,650

 

 

3,749

 

Net amortization of internally developed software costs

 

1,076

 

 

1,155

 

 

 

3,784

 

 

2,328

 

Gain on sale of assets and other (1)(2)

 

10,762

 

 

 

 

 

6,587

 

 

 

Tax reform charge (benefit)

 

 

 

3,051

 

 

 

(2,774

)

 

4,197

 

Non-GAAP provision for income taxes

$

11,809

 

$

12,761

 

 

$

41,680

 

$

40,173

 

(1): During the third quarter of 2019, we recognized a gain of $27 million related to the sale of our Millennium property, presented within "Gain on sale of assets". During the third quarter of 2019, we also recognized a charitable contribution expense of $7 million related to a donation using a portion of the proceeds from the sale of the property, presented within "General and Administrative".

(2): During the fourth quarter of 2019, we recognized an income tax benefit of $11 million related to the recognition of deferred taxes on the outside basis difference of our AWR business, which was held-for-sale as of December 31, 2019.

 

Reconciliation of GAAP Net Income and Diluted EPS to Non-GAAP Net Income, Non-GAAP Diluted EPS, and EBITDA

(in thousands, except per share data, unaudited)

 

 

 

 

 

 

 

 

 

 

 

Three Months Ended

 

Years Ended

 

 

December 31,

 

December 31,

 

 

 

2019

 

 

 

2018

 

 

 

2019

 

 

 

2018

 

 

 

 

 

 

 

Net income, as reported

$

58,596

 

$

56,541

 

 

$

162,151

 

$

155,057

 

Adjustments to reconcile net income to non-GAAP net income:

 

 

 

 

 

Stock-based compensation, net of tax effect

 

11,951

 

 

8,418

 

 

 

42,101

 

 

29,794

 

Amortization of acquisition intangibles, net of tax effect

 

1,333

 

 

1,180

 

 

 

5,136

 

 

4,775

 

Acquisition transaction costs and restructuring charges, net of tax effect

 

7,909

 

 

3,419

 

 

 

16,655

 

 

13,642

 

Net amortization of internally developed software costs, net of tax effect

 

4,049

 

 

4,346

 

 

 

14,235

 

 

8,757

 

Gain on sale of assets (1) and other (2) , net of tax effect

 

(10,762

)

 

 

 

 

(26,395

)

 

 

Tax reform (benefit) charge

 

 

 

(3,051

)

 

 

2,774

 

 

(4,197

)

Non-GAAP net income

$

73,076

 

$

70,853

 

 

$

216,657

 

$

207,828

 

Non-GAAP net margin

19.9%

19.7%

 

16.0%

15.3%

 

 

 

 

 

 

Diluted EPS, as reported

$

0.45

 

$

0.42

 

 

$

1.22

 

$

1.16

 

Adjustment to reconcile diluted EPS to non-GAAP diluted EPS

 

 

 

 

 

Impact of stock-based compensation, net of tax effect

 

0.09

 

 

0.06

 

 

 

0.31

 

 

0.22

 

Impact of amortization of acquisition intangibles, net of tax effect

 

0.01

 

 

0.01

 

 

 

0.04

 

 

0.04

 

Impact of acquisition transaction costs and restructuring charges, net of tax effect

 

0.06

 

 

0.03

 

 

 

0.13

 

 

0.10

 

Impact of net amortization of internally developed software costs, net of tax effect

 

0.03

 

 

0.03

 

 

 

0.11

 

 

0.07

 

Impact of gain on sale of assets and other (1)(2) , net of tax effect

 

(0.08

)

 

 

 

 

(0.20

)

 

 

Impact of tax reform (benefit) charge

 

 

 

(0.02

)

 

 

0.02

 

 

(0.03

)

Non-GAAP diluted EPS

$

0.56

 

$

0.53

 

 

$

1.63

 

$

1.56

 

(1): During the third quarter of 2019, we recognized a gain of $27 million related to the sale of our Millennium property, presented within "Gain on sale of assets". During the third quarter of 2019, we also recognized a charitable contribution expense of $7 million related to a donation using a portion of the proceeds from the sale of the property, presented within "General and Administrative".

(2): During the fourth quarter of 2019, we recognized an income tax benefit of $11 million related to the recognition of deferred taxes on the outside basis difference of our AWR business, which was held-for-sale as of December 31, 2019.

 

 

 

 

 

 

Net income, as reported

$

58,596

 

$

56,541

 

 

$

162,151

 

$

155,057

 

Adjustments to reconcile net income to EBITDA:

 

 

 

 

 

Interest income, net

 

(1,934

)

 

(2,040

)

 

 

(8,089

)

 

(5,745

)

Tax (benefit) expense

 

(4,304

)

 

6,922

 

 

 

18,393

 

 

21,396

 

Depreciation and amortization

 

18,995

 

 

16,932

 

 

 

73,541

 

 

70,667

 

EBITDA

$

71,353

 

$

78,355

 

 

$

245,996

 

$

241,375

 

 

 

 

 

 

 

Weighted average shares outstanding

 

 

 

 

 

Basic

 

130,776

 

 

132,565

 

 

 

131,722

 

 

131,987

 

Diluted

 

131,432

 

 

133,617

 

 

 

132,734

 

 

133,274

 

 

Reconciliation of GAAP to Non-GAAP Diluted EPS Guidance

(unaudited)

 

 

Three Months Ended

 

 

March 31, 2020

 

 

 

 

Low

High

Estimated GAAP Diluted EPS

$

0.99

 

$

1.13

 

Adjustment to reconcile diluted EPS to non-GAAP diluted EPS:

 

 

Impact of stock-based compensation, net of tax effect

 

0.09

 

 

0.09

 

Impact of amortization of acquisition intangibles, net of tax effect

 

0.01

 

 

0.01

 

Impact of acquisition transaction costs and restructuring charges, net of tax effect

 

0.05

 

 

0.05

 

Impact of net amortization of software development costs, net of tax effect

 

0.03

 

 

0.03

 

Impact of gain on divestment, net of tax effect

 

(0.93

)

 

(0.93

)

Estimated Non-GAAP Diluted EPS

$

0.24

 

$

0.38

 

 

Reconciliation of Estimated GAAP Revenue Growth to GAAP Revenue Growth (excluding AWR) at Midpoint of Guidance

(unaudited)

 

 

Three Months Ended

 

 

March 31, 2020

Estimated YoY GAAP Revenue Growth at midpoint

4%

plus: Impact of excluding recently divested business (AWR)

2%

Estimated YoY GAAP Revenue Growth (excluding AWR) at midpoint

6%


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