Shares of Trimble made a small upward move Tuesday on the back of a report the company may be selling its Transportation & Logistics (T&L) segment.
“After about 15 years of assembling a transportation software suite via M&A, Trimble now appears to be unwinding it in a crowded market,” Axios reported.
No name of a possible buyer was disclosed in the article.
Trimble stock rose 2.4% on the day even as broader equity markets were weaker, with the S&P 500 declining 0.45%.
Short company statement
Trimble’s statement in reaction to the report was brief. “Trimble regularly receives interest from various parties regarding its businesses,” it said in a prepared statement. “They do not comment on market rumors or speculation.”
Oppenheimer analyst Kristen Owen was one of the first analysts out of the gate with a reaction to the Axios report.
While conceding that the report was unconfirmed by Trimble (NASDAQ: TRMB)she was positive about the potential of a divestiture.
“Since its 2023 majority interest sale of its (Agriculture) business and the 2024 sale of its Mobility business, we have viewed TRMB’s T&L business as best owned by someone other than TRMB,” Owen said in her report.
In the Mobility sale, which could be seen as a first step out of the transportation business, Trimble sold its global telematics unit to Platform Science, though it retained a 32.5% stake.
Trimble reports its earnings in three separate segments: Architects, Engineers, Construction, and Owners (AECO), Field Systems, and T&L. AECO’s customers are in its name; in Trimble’s annual 10K report, it described the Field Systems customers as surveying and mapping professionals, civil construction, building construction field services, and positioning systems.
Lagging numbers
Owen said Trimble’s stock has been an underperformer compared to other companies with SaaS products.
“Investors at times have described the story as ‘too complex,’” Owen wrote. “With shares now trading at a decade-low valuation, the combination of still strong fundamentals (notably on the hardware side) and the potential for further portfolio simplification warrants a fresh look, in our view,” Owen wrote.
It has been a rough road for long-term shareholders of Trimble. In August 2021, the stock price topped $95. Tuesday’s closing price was $53.73. Its 52-week low was June 18 at $47.92. Its 52-week high was $87.50 on August 6. Trimble does not pay a dividend.
According to Owen’s data, the T&L segment accounts for $550 million in annual sales, which was about 15% of revenue last year. It provides about 21% of annual recurring revenue and 12% of operating profit.
Plenty going on
The transportation-related merger & acquisition field has been busy, Owen said.
She cited the DAT acquisition of the Convoy tech stack (actually completed by Roper Technologies (NASDAQ: ROP)the parent of DAT); the Vista Equity Partners’ purchase of Omnitracs and Roadnet Technologies (deals that are several years old, and in the case of Omnitracs, long seen as somewhat troubled), and references to “shipper/carriers investing in AI-enabled brokerage and freight management systems.”
“Given the scale of the T&L portfolio, we believe the portfolio would draw interest from private equity,” Owen wrote.
Owen’s report reiterated Oppenheimer’s Outperform rating on Trimble stock.
The T&L segment at Trimble has not been sitting still.
Its acquisition of Europe’s Transporeon in April 2023 ultimately gave it the platform to add a TMS directly targeted at shippers, as well as a loadboard-like product called Freight Marketplace that is also targeted at shippers.
More articles by John Kingston
Trucking takeaways from Trimble: volume down, driver population sliding
A ‘jobs apocalypse’: panel at Trimble eyes AI’s future in logistics
Highway, post-Montgomery, requiring ELD hookups for all carriers