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NI Achieves Record Financial Performance for Q4 and Fiscal Year 2021

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NI Board of Directors authorizes $250 million share repurchase program

Q4 2021 Highlights

  • All-time record revenue of $421 million, up 14 percent year over year

  • All-time record orders up 19 percent year over year

  • Strong diluted GAAP EPS of $0.30

  • All-time record diluted non-GAAP EPS of $0.60

  • Cash and cash equivalents of $211 million as of December 31, 2021

  • Returned $66 million to stockholders through stock repurchase and dividends

AUSTIN, Texas, January 27, 2022--(BUSINESS WIRE)--National Instruments Corporation (Nasdaq: NATI) today announced Q4 2021 revenue of $421 million, up 14 percent year over year and an all-time quarterly record.

In Q4 2021, the value of the company’s total orders were up 19 percent year over year, an all-time quarterly record. Geographic order growth for Q4 2021 compared with Q4 2020 was up 34 percent in the Americas, down 2 percent in APAC and up 20 percent in EMEA.

In Q4, GAAP gross margin was 71 percent and non-GAAP gross margin was 74 percent. Total Q4 GAAP operating expenses were $247 million, up 1 percent year over year. Total Q4 non-GAAP operating expenses were $214 million, up 9 percent year over year. GAAP operating margin was 12 percent in Q4, with GAAP operating income of $50 million. Non-GAAP operating margin was 23 percent in Q4, with non-GAAP operating income of $96 million, up 22 percent year over year.

GAAP net income for Q4 was $40 million, with diluted earnings per share ("EPS") of $0.30, and non-GAAP net income was $80 million, with non-GAAP diluted EPS of $0.60.

"We delivered the strongest non-GAAP financial performance in our company's history in the fourth quarter with all-time record orders, revenue, operating income, and earnings. We believe 2021 is an inflection point for our business and a direct reflection of the strategic changes we’ve made over the last several years," said Eric Starkloff, NI president and CEO. "The areas where we have focused showed momentum throughout the year with growth across all business units and all regions. We believe we are focused on the right market opportunities and enter 2022 in a position of strength and poised to accelerate growth."

"As we close out the year, I am proud of our performance with revenue and EPS at the high end of guidance. We will continue to be intentional with investments that we believe will accelerate revenue and strengthen our competitive advantage, while continuing to scale our cost structure to increase profitability," said Karen Rapp, NI CFO. "We remain confident in our ability to achieve our 2023 financial model a year ahead of schedule. Our strong balance sheet gives us confidence in the ability to leverage inorganic opportunities to enhance our technology capabilities and expertise while also returning excess cash to stockholders."

As of December 31, 2021, NI had $211 million in cash with $143 million in cash generated from operations in 2021. During Q4, NI paid $36 million in dividends and repurchased approximately 740,000 shares of our common stock at an average price of $40.52 per share. For the year, we returned over $198 million to our stockholders through dividends and stock repurchases, including the repurchase of 1.3 million shares at an average price of $41.06 per share. The NI Board of Directors approved a dividend of $0.28 per share payable on February 28, 2022, to stockholders of record on February 7, 2022. This represents an increase of 4 percent per share.

The NI Board of Directors also authorized a new stock repurchase program for up to $250 million of its common stock. The new stock repurchase program is effective immediately and is in addition to the previously authorized stock repurchase program.

The company’s non-GAAP results exclude, as applicable, the impact of purchase accounting fair value adjustments, stock-based compensation, amortization of acquisition-related intangibles, acquisition-related transaction and integration costs, taxes levied on the transfer of acquired intellectual property, foreign exchange loss on acquisitions, restructuring charges, tax reform charges, disposal gains on buildings and related charitable contributions, tax effects related to businesses held for sale, gain on sale of businesses, and capitalization and amortization of internally developed software costs. Reconciliations of the company’s GAAP and non-GAAP results are included as part of this news release.

FY 2021 Highlights

  • All-time record revenue of $1.47 billion, up 14 percent year over year

  • GAAP gross margin of 71 percent

  • Non-GAAP gross margin of 75 percent

  • Strong diluted GAAP EPS of $0.67

  • Record diluted non-GAAP EPS of $1.68

  • Returned $198 million to stockholders through stock repurchase and dividends

In 2021, GAAP operating expenses were $931 million, up 6 percent year over year, and non-GAAP operating expenses were $824 million, up 9 percent year over year. GAAP net income in 2021 was $89 million, down 38 percent year over year, and non-GAAP net income was $224 million, up 37 percent year over year.

Q1 2022 Guidance

  • GAAP revenue to be in the range of $385 million to $415 million, up 19 percent year over year at the midpoint

  • GAAP diluted EPS to be in the range of $0.13 to $0.27, up 17 cents year over year at the midpoint

  • Non-GAAP diluted EPS expected to be in the range of $0.35 to $0.49, up 31 percent year over year at the midpoint

Conference Call Information

NI management will discuss Q4 2021 results today, January 27, at 4:00 p.m. CT at www.ni.com/call or dial (855) 212-2361 and enter confirmation code 4276084. The call and an accompanying slide presentation will be webcast on the investor website, www.ni.com/nati, under "Events & Presentations." Replay is available by calling (855) 859-2056, confirmation code 4276084 , shortly after the call through January 31, at 11:59 p.m. CT.

Non-GAAP Presentation

To supplement NI’s financial statements presented on a GAAP basis, NI has provided non-GAAP financial information, including non-GAAP revenue or net sales, gross profit, gross margin, operating expenses, operating income, operating margin, provision for income taxes, net income, net margin and diluted EPS. A reconciliation of the adjustments to GAAP results is included in the tables below. Non-GAAP financial information is not meant as a substitute for GAAP results, but is included because management believes such information is useful to our investors for informational and comparative purposes. In addition, certain non-GAAP financial information is used internally by management to evaluate and manage the company. The non-GAAP financial information used by NI may differ from that used by other companies. These non-GAAP measures should be considered in addition to, and not as a substitute for, the results prepared in accordance with GAAP.

Forward-Looking Statements

This release contains "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995 including without limitation those statements about our expectations of accelerating growth and progress to meet or exceed long-term financial model, our continued momentum across regions and business units, our opportunities to drive growth, profitability and efficiency in our business, confidence in our software strategy, our ability to drive growth through strategic changes made to our business, including the transition to subscription-based licensing model for software offerings, confidence in our investment strategy, our ability to successfully integrate acquisitions and execute our growth strategy, our ability to achieve sustainable customer demand through focus on secular growth opportunities, and our guidance and expectations for our Q1 2022 revenue, diluted EPS, backlog, lead times and gross margin. These statements are subject to a number of risks and uncertainties, and actual results may differ materially from any future results expressed or implied by the forward-looking statements. Risks and uncertainties include without limitation: the effect of the global economic and geopolitical conditions; our international operations and foreign economies; adverse public health matters, including epidemics and pandemics such as the COVID-19 pandemic; our ability to effectively manage our partners and distribution channels; interruptions in our technology systems; cyber-attacks; the dependency of our product revenue on certain industries and the risk of contractions in such industries; fluctuations in demand for our products including orders from our large customers; concentration of credit risk and uncertain conditions in the global financial markets; our ability to compete in markets that are highly competitive; our ability to release successful new products or achieve expected returns; the risk that our manufacturing capacity and a substantial majority of our warehousing and distribution capacity are located outside of the U.S.; our dependence on key suppliers and distributors; component shortages; longer delivery lead times from our suppliers; risk of product liability claims; dependence on our proprietary rights and risks of intellectual property litigation; the continued service of key management and technical personnel; the ability to comply with environmental laws and associated costs; our ability to maintain our website; the risks of bugs, vulnerabilities, errors or design flaws in our products; our ability to achieve the benefits of employee restructuring plans; our exposure to large orders; our ability to effectively manage our operating expenses and meet budget; expense overruns; manufacturing inefficiencies and the level of capacity utilization; fluctuations in our quarterly results due to factors outside of our control; our outstanding debt; seasonal variation in our revenues; our ability to comply with laws and regulations; changes in tax rates and exposure to additional tax liabilities; our ability to make certain acquisitions or dispositions, integrate the companies we acquire or separate the companies we sold and/or enter into strategic relationships; risks related to currency fluctuations; adverse effects of price changes; and changes in accounting principles. In addition, our ability to declare and/or pay declared dividends is subject to compliance with the terms of our existing credit agreement. The company directs readers to its Form 10-K for the year ended December 31, 2020, and the other documents it files with the SEC for other risks associated with the company’s future performance. These documents contain and identify important factors that could cause our actual results to differ materially from those contained in our forward-looking statements.

About NI

At NI, we bring together the people, ideas and technology so forward thinkers and creative problem solvers can take on humanity’s biggest challenges. From data and automation to research and validation, we provide the tailored, software-connected systems engineers and enterprises need to Engineer Ambitiously™ every day.

National Instruments, NI, ni.com and Engineer Ambitiously are trademarks of National Instruments. Other product and company names listed are trademarks or trade names of their respective companies. (NATI-F)

National Instruments

Condensed Consolidated Balance Sheets

(in thousands)

December 31,

December 31,

2021

2020

(unaudited)

ASSETS

Current assets:

Cash and cash equivalents

$

211,106

$

260,232

Short-term investments

59,923

Accounts receivable, net

341,275

266,869

Inventories, net

289,243

194,012

Prepaid expenses and other current assets

90,225

68,470

Total current assets

931,849

849,506

Property and equipment, net

253,668

254,399

Goodwill

583,589

467,547

Intangible assets, net

212,521

172,719

Operating lease right-of-use assets

58,641

67,674

Other long-term assets

74,717

72,643

Total assets

2,114,985

1,884,488

LIABILITIES AND EQUITY

Current liabilities:

Accounts payable and accrued liabilities

83,218

51,124

Accrued compensation

111,261

87,068

Deferred revenue

137,818

132,151

Operating lease liabilities

13,137

15,801

Other taxes payable

59,109

48,129

Debt - current

5,000

Other current liabilities

40,671

42,578

Total current liabilities

445,214

381,851

Debt - non-current

300,000

92,036

Deferred income taxes

14,249

25,288

Income tax payable - non-current

54,195

61,623

Deferred revenue - non-current

32,822

36,335

Operating lease liabilities - non-current

30,468

35,854

Other long-term liabilities

14,340

26,630

Total liabilities

891,288

659,617

Stockholders' equity:

Preferred stock

Common stock

1,323

1,312

Additional paid-in capital

1,129,647

1,033,284

Retained earnings

112,858

211,101

Accumulated other comprehensive loss

(20,131

)

(20,826

)

Total stockholders' equity

1,223,697

1,224,871

Total liabilities and stockholders' equity

$

2,114,985

$

1,884,488

National Instruments

Condensed Consolidated Statements of Income

(in thousands, except per share data, unaudited)

Three Months Ended

Years Ended

December 31,

December 31,

2021

2020

2021

2020

Net sales:

Product

$

377,303

$

327,714

$

1,304,609

$

1,137,603

Software maintenance

43,338

40,124

165,072

149,068

Total net sales

420,641

367,838

1,469,681

1,286,671

Cost of sales:

Product

119,857

105,625

406,342

359,861

Software maintenance

3,739

3,571

14,621

11,260

Total cost of sales

123,596

109,196

420,963

371,121

Gross profit

297,045

258,642

1,048,718

915,550

71%

70%

71%

71%

Operating expenses:

Sales and marketing

122,304

134,570

467,352

465,509

Research and development

92,301

73,733

335,986

280,381

General and administrative

32,543

36,883

127,215

129,863

Total operating expenses

247,148

245,186

930,553

875,753

Gain on sale of business

159,753

Operating income

49,897

13,456

118,165

199,550

Other income (expense)

(4,739

)

1,797

(14,590

)

(788

)

Income before income taxes

45,158

15,253

103,575

198,762

Provision for income taxes

4,822

10,515

14,260

55,103

Net income

$

40,336

$

4,738

$

89,315

$

143,659

Basic earnings per share

$

0.31

$

0.04

$

0.68

$

1.10

Diluted earnings per share

$

0.30

$

0.04

$

0.67

$

1.09

Weighted average shares outstanding -

Basic

132,215

131,277

132,311

131,082

Diluted

133,225

131,732

133,562

131,799

Dividends declared per share

$

0.27

$

0.26

$

1.08

$

1.04

National Instruments

Condensed Consolidated Statements of Cash Flows

(in thousands)

Years Ended December 31,

2021

2020

(unaudited)

Cash flow from operating activities:

Net income

$

89,315

$

143,659

Adjustments to reconcile net income to net cash provided by operating activities:

Depreciation and amortization

99,402

87,064

Stock-based compensation

74,583

58,376

Disposal gain on sale of business/asset

(159,753

)

Loss from equity-method investees

5,719

2,942

Deferred income taxes

(15,796

)

7,771

Net change in operating assets and liabilities

(110,020

)

40,708

Net cash provided by operating activities

143,203

180,767

Cash flow from investing activities:

Acquisitions, net of cash received

(222,783

)

(334,981

)

Proceeds from sale of assets/business, net of cash divested

160,266

Capital expenditures

(40,975

)

(49,652

)

Capitalization of internally developed software

(1,464

)

(4,054

)

Additions to other intangibles

(2,751

)

(1,441

)

Acquisitions of equity-method and other investments

(15,753

)

(9,761

)

Purchases of short-term investments

(206,330

)

Sales and maturities of short-term investments

60,297

384,652

Net cash used by investing activities

(223,429

)

(61,301

)

Cash flow from financing activities:

Proceeds from term loan

170,000

Payments of term loan

(98,750

)

(71,250

)

Proceeds from revolving line of credit

300,000

20,000

Payments of revolving line of credit

(20,000

)

Debt issuance costs

(1,993

)

(1,893

)

Proceeds from issuance of common stock

32,518

31,947

Repurchase of common stock

(55,000

)

(48,713

)

Dividends paid

(143,113

)

(136,545

)

Net cash provided by (used by) financing activities

33,662

(56,454

)

Impact of changes in exchange rates on cash

(2,562

)

2,604

Net change in cash and cash equivalents

(49,126

)

65,616

Cash and cash equivalents at beginning of period

260,232

194,616

Cash and cash equivalents at end of period

$

211,106

$

260,232

The following tables provide details with respect to the amount of GAAP charges related to stock-based compensation, amortization of acquisition-related intangibles and fair value adjustments, acquisition-related transaction costs, disposal gains on sale of business/assets 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,

2021

2020

2021

2020

Stock-based compensation

Cost of sales

$

1,092

$

979

$

4,580

$

3,766

Sales and marketing

6,284

5,462

25,233

22,288

Research and development

5,811

5,129

23,515

17,769

General and administrative

5,335

4,251

21,384

14,552

Provision for income taxes

(2,010

)

(445

)

(12,047

)

(8,705

)

Total

$

16,512

$

15,376

$

62,665

$

49,670

Amortization of acquisition-related intangibles and fair value adjustments

Net sales

$

352

$

1,961

$

2,324

$

3,260

Cost of sales

6,700

4,313

19,391

9,892

Sales and marketing

3,334

1,965

10,192

5,264

Research and development

320

9

320

94

General and administrative

846

846

Other expense (income)

531

124

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