Good afternoon. My name is Caitlin, and I will be your conference operator today. At this time, I would like to welcome everyone to the Trimble's First Quarter 2015 Earnings Call. [Operator Instructions] Jim Todd, you may begin your conference.

Good afternoon. I'm here today with Steve Berglund, our CEO; and Francois Delepine, our CFO. Before we begin, I'd like to remind you that the forward-looking statements made in today's call and the subsequent Q&A period are subject to risks and uncertainties. Trimble's actual results may differ materially from those currently anticipated due to a number of factors detailed in the company's Form 10-Ks and 10-Qs or other documents filed with the Securities and Exchange Commission. During this call, we will refer to a press release which is available, along with additional financial information, on our website at www.trimble.com. The non-GAAP measures discussed in the call are reconciled to GAAP measures in the tables to our press release. Now let me turn the call over to Steve.

Good afternoon. First quarter results were consistent with the narrative from the fourth quarterly call, although we fell outside of our revenue guidance in the quarter. Three months ago, we expected the first half of the year to be a challenge, which is turning out to be true. We also expect the second half results to demonstrate meaningful improvement, which continues to be our expectation. In this case, the definition of improvement would be a return to high single-digit revenue growth and a return to an operating margin converging on 20%. We had a revenue surprise in the quarter, which is emphatically not part of our historical culture. We are addressing the issue with a series of organizational actions I will explain later. As anticipated, the weakness in agriculture continued, although we believe our ability to forecast the business is better than it was in the second half of last year. We obviously need to be wary of market volatility, particularly among the agricultural OEMs, but we think we are seeing some signs of stabilization. We are currently forecasting our agriculture revenue in the second quarter to be down from last year. But absent the OEM inventory effects of 2014, we see agriculture being closer to flat year-to-year on the second half of the year and into the first part of 2016. Even if they course our -- agricultural machine sales are down by another 15% in the second half. The dollar further strengthened against the rate we had used to setting guidance which pushed revenue down. It had a differential impact on earnings at the segment level, although the earnings impact at the consolidated level was relatively small. The weather in the Northern and Eastern U.S. in the first quarter had a significant effect on those regions' construction and…

Thank you, Steve. Good afternoon, everyone. Before getting to the numbers, please note that unless otherwise indicated, the operating results I will discuss will be on a non-GAAP basis. The reconciliation from GAAP to non-GAAP numbers is in our earnings press release along with the financial data by segment. Unless otherwise indicated, growth rates are meant to be year-over-year growth rates. So now let's first cover the first quarter results. Q1 total revenue was $583 million down 4% year-over-year. Currency translation added approximately 4% year-over-year unfavorable effect roughly offset by growth from acquisitions. Relative to our original expectations for the quarter, the shortfall in revenue came primarily from FX deterioration during the quarter, combined with softness in our E&C segment, largely driven by weather and oil and gas weakness. We estimate that this weather and oil and gas weakness added 3% to 4% year-on-year unfavorable effect. Our Field Solutions segment was also soft, as expected, with agriculture showing some signs of stabilization. Now looking at our revenue by segment. Engineering and Construction segment revenue was down 3%. Currency translation added approximately 5% unfavorable revenue effect year-over-year, roughly offset by growth from acquisitions. While some of the portfolio did well, our results in E&C, in particular in geospatial and to a lesser extent in heavy civil, were severely impacted by weather and oil and gas weakness. More specifically, Trimble Buildings growth was strong. Geospatial revenue was unexpectedly down in the mid-teens, impacted primarily by FX, weather and weakness in certain regions with significant oil and gas exposure. Heavy Civil was down single digits impacted by FX, lower sales in Canada, also largely attributable to oil and gas, as well as continued weakness in Australia. Overall, the estimated effect of weather and oil and gas was approximately 7% to 8% unfavorable on…

[Operator Instructions] Your first question comes from the line of Richard Eastman from Robert W. Baird. Richard C. Eastman - Robert W. Baird & Co. Incorporated, Research Division: Steve, could you just kind of walk through maybe the setup here a little bit on the mobile side of the business, in particular T&L? Obviously, these EDL mandates that have kicked in this summer it feels like we should be quite well positioned there with PeopleNet, TMW and some of our relationships that we have had in place. So maybe we could just talk how you see that unfolding and if your enterprise-level approach gives you an advantage in that market.

Yes, I think you're right. I think that we consciously attempt to build what's called a franchise about mobility and enterprise and actually analytics. Within this mix, we have a pretty robust and growing analytics business, which gives us, I think, in many cases, a differentiated advantage as well. So I think that up until quite recently, it's taken time to bring together the elements, so we were operating maybe more at the PowerPoint level than the reality. I think the Paccar deal, for example, shows the relative power of kind of having all the elements within one umbrella and being able to speak to mix and match to situations. So I would say that in terms of capabilities, we are unique as a company. I think that as that mandate and just the drives for productivity and driver safety in general and such play out as we have the ability to craft better solutions than anyone else. And in reality, over the last 6 to 9 months in particular, at the product level, we have integrated the PeopleNet and TMW capabilities. And what you'll see more over the next 12 to 18 months is a more unified, more integrated approach to the marketplace. So we think we have an advantage. We think we're executing on that advantage and we still have some things to do but I think we're in good shape. Richard C. Eastman - Robert W. Baird & Co. Incorporated, Research Division: Okay. And then can I just one follow-up here? Just -- can I clarify a comment that I think that you made at the beginning of your presentation, Steve, where returning to kind of normal footing here in the second half of the year suggest I think you saves mid-single-digit second-half revenue growth inclusive of FX and operating margins around 20% or at least that's the target? Is that the goal that's here for the second half?

Yes, I was on script. I said, high-single-digit revenue growth, not mid-single-digit revenue growth. Yes, and that's inclusive of the FX effects.

Right. And the 20% was a moving towards 20%. Richard C. Eastman - Robert W. Baird & Co. Incorporated, Research Division: Okay. And Francois, just one question for you and then I'm off. But in the E&C segment, can you give us a sense of what the amount of revenue that was deferred off the acquisitions either in dollars? Or potentially, or possibly, can you tell us what the operating margin would be exclusive of the deferred revenue, in other words, if you include the deferred revenue in an adjusted number, adjusted revenue number?

Yes, so let me try to answer that. I'll give you some elements for the answer, which is that we continue to have a little bit of deferred revenue from the acquisitions on the balance sheet. But Q1 was a much more normal quarter compared to Q4 in that respect. And overall, the acquisition, I would say, had about a 2-point negative impact on the sector OI.

Your next question comes from the line of Jonathan Ho from William Blair. Jonathan Ho - William Blair & Company L.L.C., Research Division: Just wanted to talk a little bit about some of the changes that you made at the executive level. And can you maybe give us a sense of what those changes might bring in terms of either strategic or execution changes and sort of the time frame for those to have an impact on the business?

Well, I think this may not be what's called a comprehensive view. But I think, first of all, in terms of impact, I think the idea here is to in some ways have an immediate impact, both an immediate impact and a longer-term impact. So I think this is both, if you will, a little bit tactical as well strategic. So I think that we've missed a number of quarters here within the last year. I think part of this was to kind of maybe recover a little bit of the historical Trimble culture in terms of singular accountabilities for numbers. And so some of the changes down in the organization related to kind of realigning sales management and getting a stronger accountability for the number in the hands of people that have kind of demonstrated the ability to both forecast the number and deliver the numbers. So some of it this is just, if you will, hard-knock short-term accountability and a kind of a reemphasis on that. Now when I talked about the Chris Gibson reassignment, that is also a bit strategic when we talk about getting a little bit more of a hard-charging focus on the emerging economies, whether it'd be in China or whether it'd be in India or the like, is that we've had a dispersed accountability for geographies spread among a number of people. Chris will be responsible for the country managers in those places. And the idea here is, this is about an organizational change as well as, let's call it, a process change. But the idea here is to get more specific focus on what we're doing in countries like India and to align the organization around both short-term and long-term actions. I also mentioned relative to Chris' key accounts, which is a…

You're talking about agriculture alone or... Jonathan Ho - William Blair & Company L.L.C., Research Division: Specific to ag, specific to ag.

Okay. So first of all, we were on our number for the quarter. So if you will, there were not -- no kind of net changes. We were on the number that we have forecasted for agriculture. What gives us some confidence is that we're getting control of our market model in agriculture. So I don't think there were any significant negative surprises either coming out of the OEM realm or elsewhere. I think it was more or less as expected, some pluses or minuses. Now the thing is, kind of peeling back the onion without expressing a premature kind of optimism here, there are a number of things happening within agriculture that it provides some level of improving confidence. So if you look at the performance of channels within agriculture, the best performing channel is our own aftermarket channel. Second comes the OEMs' channels, and third comes OEMs. So in a sense, it's our own channel which gives us a little bit more of maybe a picture of what is really possible in the market, not for technology, not for equipment, that channel is performing relatively better again. And then the emerging markets geographically are also outperforming the rest. So there are a lot of moving pieces here and some of them are actually positive. So still a volatile market, it's still uncertain. We are still assuming as part of our market model that equipment sales will be down in the second half of the year, year-to-year. But we think that our particular set of circumstances enables us to, say, play flat year-to-year, and we would see that continuing into 2016. And then we can hopefully start to engineer maybe some upside movement once we achieve that kind of stability.

Your next question comes from the line of Paul Coster from JPMorgan. Paul Coster - JP Morgan Chase & Co, Research Division: Steve, so you had this big win in Beijing, what was the magnitude of it? And what can you tell us about the pipeline of software-related sales, and to what extent hardware sales come attached?

Yes. So given the sensitivity of this one is -- let's just describe it as being 7 figures with, what I would call, meaningful tag-along capability. So we got the kind of top of the mountain sort of territory here that is a large project. There'll be a lot of tag-along with it and now we're well positioned to capture that as well. But 7 figures there. I would say the software -- kind of the software-oriented pipeline in terms of the number points of engagement around the world for this kind of project is growing. It's not a needle-mover in 2015. Hopefully, in 2016, it becomes a much more significant part of the conversation. And I think that exactly what the bundle is in any of these deals is circumstantial, but I would say Trimble has the ability to walk into a C-level suite of a contractor and offer up a comprehensive solution that involves software and hardware. So I would say the significant majority of these sorts of arrangements would involve both hardware and software simply because it's all bundled. The hardware isn't in reality, just a note in an information that works. So the hardware would typically go with the software side. I would say, without being particularly specific, is the pipeline is growing, the points of engagement is growing. And again, back to the organizational issue. We're organizing more aggressively around the idea of pursuing the big project deal, such as Beijing deal. Paul Coster - JP Morgan Chase & Co, Research Division: Well, just going back to the pipeline, if I may. Do you have dozens or hundreds of potential deals in the pipeline? And if there's a medium size to these deals, what would it be?

Well, I think probably in any given 6-month period, there are hundreds of conversations. But probably to bring some level of reality to it, if you counted the number of large -- medium to large projects around the world at any point in time, there are probably dozens in some sort of serious conversation where there's some level of planning taking place. And again, I would say medium-size would be pretty -- kind of variable. But I would say it is for a large project, it would be kind of typically. And depending on scope, depending on circumstances, would be again kind of 7-figure numbers.

Your next question comes from the line of Jerry Revich from Goldman Sachs.

So you had a big win with Paccar. I'm wondering if you could talk about how you expect the timing on the Navistar sourcing decision, when do you expect that to play out. And then just broadly touch on how you feel about your opportunities to get on other platforms as the factory default. In U.S. truck, I think you have a relationship with Volvo, but they've been single sourced with a competitor until now. Can you just flesh out the opportunity set to the extent you feel comfortable?

Well, my comfort level is not particularly high here. I mean, these are -- any conversations we are having is, I think, pretty confidential and I don't want to, by talking about it, create a dynamic here where we're irritating the other side. So I'm going to take a pass, basically, on the question and avoid the question simply to avoid getting myself into a problem here. But let's just say that we are engaged with the number of players and sometimes elements of it are not press releasable, but I think I'm just going to have to tell you to wait for the press release.

And then separately, on Field Solutions business, the outlook flat ag revenue in the back half of the year, can you just talk about what kind of tractor production environment you're calibrated to? So CNH, I know you're in lockstep with them. They're talking about a 40% production cut in large ag and meaningful excess inventory at the dealer and company levels. So can you just calibrate us when you say flat ag in the back half of the year? What kind of tractor production environment are we thinking about?

Yes, so I think that in terms of tractor environment, the numbers seems to be shifting around over time in terms of -- if you listen to the major producers, it does seem to be shifting around. I would say it's basically kind of if I were to name a number in terms of implicit in our assumption or our set of assumptions, they lead to our own view of the market. We're assuming kind of the year to be down, the first half of the year to be down probably in the 30% to 30%-plus realm for tractors. The second part of the year, we would expect as the year -- as manufacturers lap themselves, we're kind of more on the 15%, 20% down range. So as I said in the script is that we're kind of in our market model. We are assuming that, in general, tractor sales will be down on the order of 15% in the second half of the year. So there seems to be a little bit of a census that maybe the numbers haven't been quite as bad as they were originally forecasted in terms tractors out the door. There is still too much inventory in the channel for the manufacturers, which is not a secondary sort of consideration for us, mostly what we're interested in the sell-through to the ultimate market. The channel inventory doesn't matter particularly to us since we had our own channel inventory adjustment in the second half of last year. So I would say, those are kind of what's implicit in our numbers and that's what our market model is assuming, and then we've got a whole model built around kind of the aftermarket. And again, right now the aftermarket is significantly outselling the factory in terms of technology.

And lastly, the 15% to 20% end market outgrowth that you're looking for, for your business to be flat in ag in the back half of the year, are there any new product contribution in there? Is there an irrigation piece in there? Or any new products that you're rolling out on the aftermarket side, because I guess it's been a while since we've seen that level of outperformance in ag?

Yes. So we are again -- as I said, we are seeing some points of life. There are not enough of them and they're not big enough to really kind of wave the flag too much. But, for example, we came out with a new display in the first quarter, the TMX. We did outperform our expectations in the first quarter on that product. So during the course of 2014, we were talking about the ability to outperform the market based on new product introductions and new product category -- new product categories being introduced. The TMX display, it kind of gets lost in the shuffle because of the big moves in numbers. For example, that did beat our quarter 1 expectations. The Connected Farm Advisor, which is a piece of software we put out there. It's a subscription-based. Okay, that is still very small, not necessarily worth trying to quote a set of numbers on it yet. But okay, we are seeing uptick there. And you talked about the irrigation product. We now have built out our direct sales force on the irrigation. There's a lot of engagement. We're going to have to see how quickly that monetizes. But certainly, against the scale of involvement on the irrigation that we had even 6 months ago is substantially higher. So that is all resonant in the second half assumption or the second half forecast. They're not big numbers, still guidance that drives the numbers. But all of that is resonant in that number. So it's a lot of moving parts, but in aggregate, we think that provides upside. Now just in terms of the raw numbers, the year-to-year comparison during the second half of 2014 we were subjected to OEM significant inventory adjustments where we saw demand just absolutely in a matter of days just fall to nothing. And so if nothing else, in the second half of the year, we'll have a much easier comp situation. But even beyond that, we see kind of this environment continuing into 2016 at this point.

Your next question comes from the line of Ryan Connors from Boenning and Scattergood.

I wanted to talk a little bit about this aftermarket versus OEM dynamic that you talked a lot about here. And I guess there's a lot of talk about a shift going on in the industry from kind of the traditional aftermarket sales and precision agriculture into more and more of an OEM embedded type model. And much of this happened kind of in the automobile industry, for example. And yet obviously, you're talking about aftermarket being relatively strong. What's your view, Steve, on that shift? Is it -- is that happening in the industry or not in your view? And if so, what is the impact of that on the business?

Yes. So I think, certainly, from a secular strategic standpoint, this has been our assumption all along, is that in terms of the base capability kind of the box and the receiver, GPS receiver, that's in agriculture and it's not nearly as true as in construction, just as parenthetically. But in agriculture, yes, so the base capability, the ability to -- the box and the receiver will continually move more towards a factory install. Now our longer-term strategy is that's fine, we'll participate with the OEMs on that. Where we see the bigger dollars down the road is actually selling software and data-related services that utilize the factory installed capability for positioning computing power. So our model is more expansive than just being a provider to OEMs. Now here in the short term -- so that's a long-term trend, and so there's a secular trend, we acknowledge that, we accept that. But here in the short term, significant parts of the emerging world are still aftermarket. So you go to China, you go to places like that, it's aftermarket. Those are actually, at the moment, the more dynamic markets where we're seeing significant take-up. Our OEM channels were down in the quarter kind of more than 20%, whereas our channel, the Trimble channel, was down single digits. So there is -- at this moment in time, there is a significant difference in kind of just performance levels. And maybe that's to be expected is that a farmer if we achieve some level of stability -- now farm sentiment is still pretty rocky. The farm psychology is still pretty negative. But if a farmer feels any kind of stability, the farmer may choose to defer the investment in the new tractor for a year or 2, whatever, they just postpone it. Whereas with the new feature set technology, and Trimble has been coming up with -- continually with new features, features on our products, the farmer may decide to retrofit the existing tractor with a new version of the technology. And I suspect that's part of the story for why Trimble's aftermarket is doing reasonably well. We should be going back in either upselling or retroselling an installed installation because maybe after 5 years, the feature set has expanded enough to make it attractive for the farmer to upgrade an existing installation. So there will always be an aftermarket either selling kind of extended versions of the technology or selling software and data services. So it's not as though the factory is going to push the aftermarket completely out of the game. They will continue to exist side by side.

Got it, that's helpful. And then my other question just had to do with the management changes. It seems like you specifically tied the management shakeup to what you'd called hitting the numbers in sort of internal accountability. And yet, obviously, you're facing some big external headwinds. During the release, you talked about oil prices, ForEx, strong dollar, you still had the cyclical issues in agriculture. Those would seem to be external factors where you're sort of implying that there's internal execution has been the issue and you have to make some changes. Can you just talk about kind of the rationale for the big shakeup and those 2 relative factors?

Well, I think you're right. I think we could be pointing at the external factors as being the prime drivers. At the same time is, if you look at Trimble today versus Trimble 5 years ago, in terms of they make up the company, they were significantly more complex equation than we were 5 years ago, much more software content, professional services, different elements. And so I think that we've always had the view is that we have to step up to a new level as a company to basically be able to execute on things like the Beijing job, which requires kind of a level of focus and a level of collaboration in the company that we haven't historically had provided. So I think there's always been the view that we needed to transform. I think just the current situation and the fact that, I guess from my standpoint, I think we need to be a bit more intimate with the market than maybe we've demonstrated here in the last 2, 3 quarters. I think maybe we should be a little bit more -- we should have seen some of the ag stuff coming. We should have seen elements of this oil and gas thing coming. So I think that it's a good time to accelerate things, accelerate the strategic moves into the present. So I think that part of that is the world may not provide us -- do us any favors here in the next few years. I think at some point that we execute whatever the conditions that we see. So I think we're getting the opportunity to make sure that we're ready for whatever the world shows us here in the next few years.

Your next question comes from the line of Eli Lustgarten from Longbow Securities.

Can I get one clarification because you said something in the end which struck me as funny? Francois, you said you are assuming the R&D tax credit is being reinstated. Does that give you at about 1% lower tax rate? Is that the magnitude that you...

Yes, roughly. That's roughly right.

Okay, just want to make sure I understood that. First, can we talk about the profitability of Field Solutions? I don't have any problem with your forecast, really, in ag and you're doing a fine job. I guess I was impressed by the profitability in the first quarter of Field Solutions with the weak volume, that you sort of reestablished sort of almost a baseline kind of profitability. Do you have some idea where that's coming from and with the new products, that if indeed you hold the improvement and outperformance that you expect in the second half that those margin can actually course back up to the 40% level?

Yes. I mean, we saw strong gross margins pretty much in line with last year. And also we worked in reducing expenses a little bit, and the run rate is a result of the drops in -- drop in revenue. Other than that, yes, we had some new products coming in Q1. Some of those were associated with a small price increase that I think helped maintain those gross margins. But yes, there's no other big factor that I'd point to.

Yes. And if indeed you can get the volume that you're looking for towards the second half of the year, do some -- your focus is restoring the profitability back to historic levels in that business?

I think in Field Solutions, we're at the 35% kind of operating income level, and I think that's -- we were -- we felt like it's a good level. So certainly, we want to maintain that. We want to staying north of 30. But not sure we plan to go back to the high 30s or 40% level that we once had.

Okay. And can you give us some magnitude about your agreement with Paccar and what that could mean? You talked about 7 figures when you talking about Beijing. Because I assume the Paccar deal has 2 parts to it, which is the hardware installation going on and then there's the software package that can go with it. Can you give us some idea what the top line and bottom line impact would be from that project? Is it a couple -- several million dollars in the quarter is what we're looking at? Or can you give us some idea what it is?

Yes, so let me characterize it broadly. Again, I don't want to share Paccar's business with the world. So I think the expectation is tens of thousands or significant tens of thousands of units of subscribers with the possibility of more. And then there is a recurring piece there, let's call it, a respectable ARPU. And again, our strategy would be to upsell and, okay, increase the ARPU. So that's about the best I can do, Eli.

Okay, but there is a -- there would be hardware component installation. That will be direct revenue, right?

Yes.

Can you give us a little bit more color, the profitability shortfall at E&C were sort of more dramatic than I think anybody expected, and I know weather and all those other things. We are looking at positive trends in nonres construction at this point that have accelerated, if anything, as you went through March as most of the companies had tough January and February, but very strong March in a lot of the areas that I look at, I would say. Are we looking at just natural business being able to drive the profitability back towards more normal level? Or is the restructuring in better business outside the U.S. really the crux of the matter?

Yes. I mean, within E&C, kind of profitability story there, again a number of moving parts. Part of this is this geospatial impact of revenue dropping out with relatively high gross margins. There are the acquisition effects, which will -- some of them will pass with the time where the acquisitions of the latter part of 2014 are dragging down profitability, that once we get kind of the revenue recognition accounting straight out there will be some natural adjustment there. And yes, so I would say if I were to point fingers, I would point the fingers at kind of the volume effects mostly from geospatial, and then this acquisition accounting FX is kind of being kind of the thing affecting the historical trends.

Can you get back to your targeted second half metric with added recovery in geospatial?

No. I think that, hopefully, I was relatively specific on that in the script is that, until we get this figured out in terms of the secondary effects, which are kind of our outside of our immediate perception. We're being pretty conservative on geospatial. So I would say is, there is a conservative geospatial element in what I said about the second half if it -- we return to normal, it turns out to be inventory effects that reverse up fairly quickly, that will be net upside.

Your next question comes from the line of Andy Netzel from Dougherty & Company.

I'm dialed in on behalf of Andrea James. So you've obviously done a great job assembling a BIM suite that nobody else has. What's your pipeline on that? And are you seeing any inflection point in the growth?

Yes, so I think the pipeline, it's lots of engagement. I think that -- to be a little careful on just not to give kind of early, too early of an optimistic sense, I think, okay, again, we're engaging at the big project level or we're engaging at the enterprise level. So we're talking about kind of in terms of the big story we're impacting the work process of large enterprises or the potential large projects. So there is a time function here. So I believe that, strategically, we're at an inflection point because I think the recognition is by large contractors, in the case of Beijing, in terms of large owners to -- there's an understanding that they need to engage the technology. So I think we are at a strategic inflection point. Am I -- can I make a call that, okay, a third quarter, fourth quarter that sort of thing? I don't think so, but I think there is a -- it should be a meaningful part of the story certainly during 2016. And Beijing, the fact that we were able to make the Beijing win public, I think the reference value of that is huge. It's an endorsement of the first magnitude.

Great. And just one more, I know predicting what Congress is going to do is kind of a fool's errand, but I want to throw it out there anyway. Do you have any color on the Highway Bill?

I'm waiting. Not really, I think they're kind of caught up in other things at the moment. But for the moment, we're just waiting to see what happens.

We have no further questions at this time. I turn the call back over to the presenters.

Okay, thanks for attending. We'll talk to you next quarter.

Thank you.

Thanks, everybody.