Trimble Inc Beat Estimates, Raised Outlook, Expects FY 2021 Revs $3.55-$3.65 Billion. 

Trimble Inc (NASDAQ: TRMB) reported Second Quarter Fiscal Year 2021 Results in which the Provider of Location-Based Solutions registered $945.2 million in Total Revenues, up 28.84% from $733.6 million in Q2 20. Product Revenues were up 44.25% from $412.2 million in Q2 20 to $594.9 million, with Service and Subscription Revenues up 3.51% and 14.34%, respectively. Gross Margins increased 29.50% from $405.7 million in Q2 20 to $525.4 million for Q2 21. Net Income and Diluted Earnings Per Share for Q2 21 was $138.9 million and $0.55 compared to $63.0 million and $0.25 in Q2 20

A look at their four reporting segments, Buildings & Infrastructure, Geospatial, Resources & Utilities, and Transportation, reveals that compared to Q2 20, Revenues increased 23.54%, 51.31%, 37.34%, and 8.22%, respectively. According to the press release, Annualized Recurring Revenue (ARR), or yearly subscription revenues, “was $1.35 billion, up 11 percent year over year.” For the Full Year 2021, the company raised its guidance, expecting $3.55-$3.65 billion in Revenues and EPS between $1.53 and $1.71. 

I first learned about the company while using this online sketching software called SketchUp to create mock-ups of wood projects. The software was convenient and easy to use since it allowed me to draw three-dimensional diagrams of projects I was working on to help me estimate the amount of wood I would need. On the top left-hand side was the company’s logo that I just curiously clicked on one day to learn about the company behind the software. I added the company to my watchlist then and regretted not buying stock amidst the March 2020 volatility. Since its lows in March 2020, the stock has returned approximately 300% as of August 05, 2021. I liked the company back then because I figured there could be multiple applications for SketchUp in a whole gamut of industries. 

Further research about Trimble Inc (NASDAQ: TRMB) expanded my understanding of the company, especially the following video. The company was founded in 1978 and had been publicly trading on the NASDAQ since 1990. For the Fiscal Year 2020, the company generated $3.15 billion and $390 million in Revenues and Net Income compared to $1.64 billion and $151 million in FY 2011. The following visual shows Revenues, Gross Profits, and Retained Earnings between the Fiscal Year 2011 and the Fiscal Year 2020. Based on the company’s expected revenue metric for Fiscal Year 2021 of $3.55-$3.65 billion range, a review of their historical Fiscal Year Revenues indicates a 12.77%-15.95% compared to 2020 and 8.76%-11.83% compared to 2019. 

Leslie’s Third Quarter Earnings, Gross Profits Up, Raises Outlook. 

Leslies Inc (NASDAQ: LESL) shared Third Quarter Fiscal Year 2021 Results in which the Direct to Consumer Pool and Spa Care Brand registered Sales of $596.54 million for Q3 21 compared to $479.93 million in Q3 20. Gross Profits up 34.60% from $210.77 million to $283.70 million. Adjusted Net Income and Net Income Per Share for Q3 21 was $124.36 million and $0.64 compared to $73.74 million and $0.47 in Q3 20. As of July 3, 2021, Cash and Cash Equivalents at the end of the period were up 107.57%, from $309.08 million to $148.90 million.  For the Fiscal Year 2021, the company raised its Sales Outlook from $1.28-$1.3 billion to $1.31-$1.33 billion with Adjusted Net Income to range between $155-$160 million. 

Shares of Leslies Inc are down about 8% for the year after the company made its public markets debut in late October 2020. Since its IPO, shares have returned around 12%. Post earnings, shares closed 6.98% lower at the end of the trading session on August 05, 2021. Consider the following statement from the company’s S-1 registration statement filed on October 22, 2020- “each pool and spa represents an annuity-like stream of chemical, equipment, and service revenue for their average life span of over 25 years.” In addition, the company operates a Loyalty Program that, as of June 27, 2020, had 3.2 million active members, who “spend twice as much with us on average compared to our other consumers.” 

Restrictions during the pandemic forced homeowners to make additions; one such addition was swimming pools. Mary Ann Thomas of the Tribune-Review reported on July 14, 2020- POOL COMPANIES MAKE A BIG SPLASH DURING WAVE OF DEMAND. According to Thomas, “The surge in the pool market was, predictably, caused by the public’s rush to one of the few covid-19 pandemic sanctioned fun activities: swimming in your backyard.” Swimming in your backyard is not a one-off investment. It is an investment that requires recurring maintenance. Much like pets, pools create annuity-like streams of revenue. 

The following visual compares the year-to-date price performance between Trimble Inc (NASDAQ: TRMB)  and Leslies Inc (NASDAQ: LESL) against the Standard and Poors 500 Index. Shares of Trimble Inc, a Standard and Poors 500 component, are up 34.89% compared to the index, which is up 19.68% for 2021. Conversely, Leslie Inc is down 15.01% for the year after being up almost 9.95% since its IPO in late October 2020.