National Instruments Earnings 2020-06-30

Balance Sheet	Income Statement	Cash Flow
Assets, Equity	Rev, G Profit, Net Income	Ops, Inv, Fin

nati-20200630

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

☒ Quarterly report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

For the quarterly period ended: June 30, 2020 or

☐ Transition report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

For the transition period from ________________ to ________________

Commission file number: 0-25426

NATIONAL INSTRUMENTS CORPORATION

(Exact name of registrant as specified in its charter)


Delaware						74-1871327
(State or other jurisdiction of incorporation or organization)						(I.R.S. Employer Identification Number)

11500 North MoPac Expressway
Austin,						78759
Texas
(Address of principal executive offices)						(Zip Code)

Registrant's telephone number, including area code: (512) 683-0100

Securities registered pursuant to Section 12(b) of the Act:


Title of each class	Trading symbol(s)	Name of exchange on which registered
Common Stock, $0.01 par value	NATI	Nasdaq Stock Market

Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes☒ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer”, “accelerated filer”, “smaller reporting company”, and “emerging growth company” in Rule 12b-2 of the Exchange Act.


Large accelerated filer	☒	Accelerated filer	☐
Non-accelerated filer	☐	Smaller reporting company	☐
		Emerging growth company	☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒

Indicate the number of shares outstanding of each of the issuer's classes of common stock, as of the latest practicable date.


Class			Outstanding at July 30, 2020
Common Stock, $0.01 par value			131,436,108

NATIONAL INSTRUMENTS CORPORATION

INDEX


PART I. FINANCIAL INFORMATION			Page No.

Item 1	Financial Statements:

	Consolidated Balance Sheets
	June 30, 2020 (unaudited) and December 31, 2019	3

	Consolidated Statements of Income
	(unaudited) for the three and six months ended June 30, 2020 and 2019	4

	Consolidated Statements of Comprehensive Income
	(unaudited) for the three and six months ended June 30, 2020 and 2019	5

	Consolidated Statements of Cash Flows
	(unaudited) for the six months ended June 30, 2020 and 2019	6

	Consolidated Statements of Stockholders' Equity
	(unaudited) for the three and six months ended June 30, 2020 and 2019	7

	Notes to Consolidated Financial Statements	9

Item 2	Management's Discussion and Analysis of Financial Condition and Results of Operations	30

Item 3	Quantitative and Qualitative Disclosures about Market Risk	46

Item 4	Controls and Procedures	47


PART II. OTHER INFORMATION

Item 1	Legal Proceedings	47

Item 1A	Risk Factors	47

Item 2	Unregistered Sales of Equity Securities and Use of Proceeds	51

Item 5	Other Information	51

Item 6	Exhibits	52

	Signatures and Certifications	54

PART I - FINANCIAL INFORMATION

ITEM 1. Financial Statements

NATIONAL INSTRUMENTS CORPORATION

CONSOLIDATED BALANCE SHEETS

(in thousands, except share and per share data)


	June 30,		December 31,
	2020		2019
Assets	(unaudited)
Current assets:
Cash and cash equivalents	$	471,205	$	194,616
Short-term investments	137,104		237,983
Accounts receivable, net	211,766		248,872
Inventories, net	209,928		200,410
Prepaid expenses and other current assets	65,817		65,477
Total current assets	1,095,820		947,358
Property and equipment, net	247,548		243,717
Goodwill	255,153		262,242
Intangible assets, net	68,975		84,083
Operating lease right-of-use assets	63,895		70,407
Restricted cash	70,000		—
Other long-term assets	48,424		44,082
Total assets	$	1,849,815	$	1,651,889
Liabilities and stockholders' equity
Current liabilities:
Accounts payable and accrued expenses	$	53,247	$	52,192
Accrued compensation	44,431		47,732
Deferred revenue - current	113,785		131,445
Operating lease liabilities - current	13,583		13,431
Other taxes payable	39,477		40,607
Debt, current	3,500		—
Other current liabilities	66,818		20,716
Total current liabilities	334,841		306,123

Deferred income taxes	16,258		14,065
Income tax payable - non-current	61,628		69,151
Liability for uncertain tax positions	6,808		6,652
Deferred revenue - non-current	32,468		33,480
Operating lease liabilities - non-current	34,655		40,650
Debt, non-current	85,020		—
Other long-term liabilities	8,498		5,418
Total liabilities	580,176		475,539
Commitments and contingencies
Stockholders' equity:
Preferred stock: par value $0.01; 5,000,000 shares authorized; none issued and outstanding	—		—
Common stock: par value $0.01; 360,000,000 shares authorized; 131,436,108 shares and 130,504,535 shares issued and outstanding, respectively	1,314		1,305
Additional paid-in capital	993,058		953,578
Retained earnings	299,132		242,537
Accumulated other comprehensive loss	(23,865)		(21,070)
Total stockholders’ equity	1,269,639		1,176,350
Total liabilities and stockholders’ equity	$	1,849,815	$	1,651,889

The accompanying notes are an integral part of the financial statements.

NATIONAL INSTRUMENTS CORPORATION

CONSOLIDATED STATEMENTS OF INCOME

(in thousands, except per share data)

(unaudited)


	Three Months Ended						Six Months Ended
	June 30,						June 30,
	2020		2019		2020		2019

Net sales:
Product	$	266,261	$	299,798	$	540,239	$	577,500
Software maintenance	35,068		34,433		70,470		67,805
Total net sales	301,329		334,231		610,709		645,305

Cost of sales:
Product	83,795		81,741		165,866		155,929
Software maintenance	2,106		2,025		3,796		3,912
Total cost of sales	85,901		83,766		169,662		159,841

Gross profit	215,428		250,465		441,047		485,464

Operating expenses:
Sales and marketing	105,419		120,868		221,165		238,419
Research and development	64,225		68,257		135,846		134,423
General and administrative	29,369		29,044		55,549		56,927

Total operating expenses	199,013		218,169		412,560		429,769
Gain on sale of business	—		—		159,753		—
Operating income	16,415		32,296		188,240		55,695

Other (expense) income	(1,143)		555		(583)		3,131
Income before income taxes	15,272		32,851		187,657		58,826
Provision for income taxes	4,383		4,159		44,113		6,914

Net income	$	10,889	$	28,692	$	143,544	$	51,912

Basic earnings per share	$	0.08	$	0.22	$	1.10	$	0.39

Weighted average shares outstanding - basic	131,014		132,062		130,813		132,156

Diluted earnings per share	$	0.08	$	0.22	$	1.09	$	0.39

Weighted average shares outstanding - diluted	131,602		132,973		131,499		133,172

Dividends declared per share	$	0.26	$	0.25	$	0.52	$	0.50

The accompanying notes are an integral part of these financial statements.

NATIONAL INSTRUMENTS CORPORATION

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

(in thousands)

(unaudited)


	Three Months Ended						Six Months Ended
	June 30,						June 30,
	2020		2019		2020		2019

Net income	$	10,889	$	28,692	$	143,544	$	51,912
Other comprehensive income (loss), before tax and net of reclassification adjustments:
Foreign currency translation adjustment	3,938		2,265		(1,975)		(802)
Unrealized gain (loss) on securities available-for-sale	2,634		738		(154)		1,913
Unrealized loss on derivative instruments	(74)		(1,480)		(598)		(268)
Other comprehensive income (loss), before tax	6,498		1,523		(2,727)		843
Tax (benefit) expense related to items of other comprehensive income	(56)		(268)		68		(58)
Other comprehensive income (loss), net of tax	6,554		1,791		(2,795)		901
Comprehensive income	$	17,443	$	30,483	$	140,749	$	52,813

The accompanying notes are an integral part of these financial statements.

NATIONAL INSTRUMENTS CORPORATION

CONSOLIDATED STATEMENTS OF CASH FLOWS

(in thousands)

(unaudited)


	Six Months Ended
	June 30,
	2020		2019
Cash flow from operating activities:
Net income	$	143,544	$	51,912
Adjustments to reconcile net income to net cash provided by operating activities:
Disposal gain on sale of business	(159,753)		—
Depreciation and amortization	38,341		35,984
Stock-based compensation	27,335		24,662

Deferred income taxes	2,711		2,268
Changes in operating assets and liabilities	49,320		(26,189)
Net cash provided by operating activities	101,498		88,637

Cash flow from investing activities:
Capital expenditures	(25,362)		(26,048)
Proceeds from sale of business, net of cash divested	160,266		—

Capitalization of internally developed software	(3,108)		(4,497)
Additions to other intangibles	(630)		(487)

Acquisitions of equity-method investments	—		(9,784)
Purchases of short-term investments	(206,330)		(91,777)
Sales and maturities of short-term investments	306,955		117,108
Net cash provided by (used in) investing activities	231,791		(15,485)

Cash flow from financing activities:
Proceeds from revolving line of credit	20,000		—

Proceeds from term loan	70,000		—
Debt issuance costs	(1,480)		—
Proceeds from issuance of common stock	17,252		17,645
Repurchase of common stock	(23,680)		(92,375)
Dividends paid	(68,156)		(66,067)
Net cash provided by (used in) financing activities	13,936		(140,797)

Effect of exchange rate changes on cash	(636)		20

Net change in cash, cash equivalents and restricted cash	346,589		(67,625)
Cash, cash equivalents and restricted cash at beginning of period	194,616		259,386
Cash, cash equivalents and restricted cash at end of period	$	541,205	$	191,761

The accompanying notes are an integral part of these financial statements.

NATIONAL INSTRUMENTS CORPORATION

CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY

(in thousands, except share data)

(unaudited)


	June 30, 2020
	(Unaudited)
	Common Stock Shares	Common Stock Amount		Additional-Paid in Capital		Retained Earnings		Accumulated Other Comprehensive Income/(Loss)		Total Stockholders' Equity
Balance at March 31, 2020	130,595,203	$	1,306	$	973,354	$	335,876	$	(30,419)	$	1,280,117
Net income	—	—		—		10,889		—		10,889
Other comprehensive gain, net of tax	—	—		—		—		6,554		6,554
Issuance of common stock under employee plans, including tax benefits	1,344,231	13		8,248		—		—		8,261
Stock-based compensation	—	—		15,130		—		—		15,130

Repurchase of common stock	(503,326)	(5)		(3,674)		(13,474)		—		(17,153)


Dividends paid (1)	—	—		—		(34,159)		—		(34,159)
Balance at June 30, 2020	131,436,108	1,314		993,058		299,132		(23,865)		1,269,639

	Common Stock Shares	Common Stock Amount		Additional-Paid in Capital		Retained Earnings		Accumulated Other Comprehensive Loss		Total Stockholders' Equity
Balance at December 31, 2019	130,504,535	1,305		953,578		242,537		(21,070)		1,176,350
Net income	—	—		—		143,544		—		143,544
Other comprehensive loss, net of tax	—	—		—		—		(2,795)		(2,795)
Issuance of common stock under employee plans, including tax benefits	1,599,772	16		17,236		—		—		17,252
Stock-based compensation	—	—		27,124		—		—		27,124

Repurchase of common stock	(668,199)	(7)		(4,880)		(18,793)		—		(23,680)


Dividends paid (1)	—	—		—		(68,156)		—		(68,156)
Balance at June 30, 2020	131,436,108	$	1,314	$	993,058	$	299,132	$	(23,865)	$	1,269,639

(1) Cash dividends declared per share of common stock were $0.26 for the three months ended June 30, 2020, and $0.52 for the six months ended June 30, 2020.

The accompanying notes are an integral part of these financial statements.

June 30, 2019

(Unaudited)

Common Stock Shares

Common Stock Amount

Additional-Paid in Capital

Retained Earnings

Accumulated Other Comprehensive Income/(Loss)

Total Stockholders' Equity

Balance at March 31, 2019

131,866,173

Price	41.94	EPS	1
Shares	133	P/E	54
MCap	5,573	P/FCF	37
Net Debt	-223	EBIT	126
TEV	5,351	TEV/EBIT	42
TTM 2019-09-30, in MM, except price, ratios

10-Q	2020-06-30	Filed 2020-08-04
10-Q	2020-03-31	Filed 2020-05-04
10-K	2019-12-31	Filed 2020-02-20
10-Q	2019-09-30	Filed 2019-10-31
10-Q	2019-06-30	Filed 2019-08-02
10-Q	2019-03-31	Filed 2019-05-01
10-K	2018-12-31	Filed 2019-02-21
10-Q	2018-09-30	Filed 2018-10-31
10-Q	2018-06-30	Filed 2018-08-02
10-Q	2018-03-31	Filed 2018-05-01
10-K	2017-12-31	Filed 2018-02-22
10-Q	2017-09-30	Filed 2017-10-31
10-Q	2017-06-30	Filed 2017-08-01
10-Q	2017-03-31	Filed 2017-05-01
10-K	2016-12-31	Filed 2017-02-16
10-Q	2016-09-30	Filed 2016-10-31
10-Q	2016-06-30	Filed 2016-08-01
10-Q	2016-03-31	Filed 2016-05-02
10-K	2015-12-31	Filed 2016-02-19
10-Q	2015-09-30	Filed 2015-10-30
10-Q	2015-06-30	Filed 2015-07-31
10-Q	2015-03-31	Filed 2015-05-01
10-K	2014-12-31	Filed 2015-02-19
10-Q	2014-09-30	Filed 2014-10-31
10-Q	2014-06-30	Filed 2014-08-01
10-Q	2014-03-31	Filed 2014-05-01
10-K	2013-12-31	Filed 2014-02-20
10-Q	2013-09-30	Filed 2013-11-01
10-Q	2013-06-30	Filed 2013-08-01
10-Q	2013-03-31	Filed 2013-05-02
10-K	2012-12-31	Filed 2013-02-19
10-Q	2012-09-30	Filed 2012-11-06
10-Q	2012-06-30	Filed 2012-08-03
10-Q	2012-03-31	Filed 2012-04-30
10-K	2011-12-31	Filed 2012-02-07
10-Q	2011-09-30	Filed 2011-10-27
10-Q	2011-06-30	Filed 2011-07-29
10-Q	2011-03-31	Filed 2011-04-29
10-K	2010-12-31	Filed 2011-02-18
10-Q	2010-09-30	Filed 2010-11-03
10-Q	2010-06-30	Filed 2010-08-06
10-Q	2010-03-31	Filed 2010-05-06
10-K	2009-12-31	Filed 2010-02-17

8-K	2020-07-30	Earnings, Other Events, Exhibits
8-K	2020-07-06	Off-BS Arrangement, Other Events, Exhibits
8-K	2020-06-15
8-K	2020-06-09
8-K	2020-06-02
8-K	2020-05-06
8-K	2020-04-30
8-K	2020-04-17
8-K	2020-04-02
8-K	2020-02-04
8-K	2020-01-30
8-K	2019-12-02
8-K	2019-11-01
8-K	2019-10-29
8-K	2019-07-30
8-K	2019-06-25
8-K	2019-05-14
8-K	2019-04-30
8-K	2019-02-01
8-K	2019-01-23
8-K	2019-01-22
8-K	2018-10-25
8-K	2018-10-25
8-K	2018-09-19
8-K	2018-07-26
8-K	2018-05-08
8-K	2018-04-26
8-K	2018-01-30

EX-2.1	ex21sharepurchaseagree.htm
EX-10.7	exhibit1072020equityin.htm
EX-10.8	exhibit108-rsuawardagr.htm
EX-10.9	exhibit109formofindemn.htm
EX-10.10	exhibit1010offerletter.htm
EX-10.11	exhibit1011-arcreditag.htm
EX-10.12	exhibit1012guarantyagr.htm
EX-10.13	exhibit1013-collateral.htm
EX-31.1	nati-20200630xex311.htm
EX-31.2	nati-20200630xex312.htm
EX-32.1	nati-20200630xex321.htm

NATI 10Q Quarterly Report

National Instruments Earnings 2020-06-30