National Instruments, one of Austin’s largest companies, expects that the economic downturn during the past few months will weigh on its revenue by about 9%, reflecting lower demand for the testing hardware and software systems made by the company.
Equipment produced by National Instruments is used in a number of industries, including telecommunications, manufacturing, automotive, and medicine. Many of the company’s engineers have been working from home in the months since the coronavirus outbreak began.
In a guidance statement to investors June 9, National Instruments said that its revenue for the second quarter of this year (April, May, and June) would be in the range of $295 million to $315 million, which, at the midpoint, represents a year-over-year revenue decline of 9%.
“A high degree of uncertainty remains for the industrial economy with the impact of COVID-19 varying across regions,” the statements says.
The company will still be able to eke out a profit in the range of $0.04 to $0.12 per share. National Instruments’ share price plunged from a high of $46.26 in January this year to $21.27 in mid-March when fears of the coronavirus impact on the economy reached their height, though the price has since recovered to about $38 at last check.
Despite the revenue drop, National Instruments actually entered the recent economic downturn in a fairly strong financial position. It had little debt and had been stockpiling cash for years, part of an expansion strategy that counted on buying up smaller companies to fuel growth.
On June 2, National Instruments cut a deal to buy OptimalPlus Ltd., an Israeli maker of data analytics software for the semiconductor, automotive and electronics industries. The transaction is valued at $365 million and expected to close later this summer.
National Instruments said it planned to fund the transaction through a combination of cash on hand and debt. As of May 31, 2020, the Austin firm had $606 million in cash and short-term investments.
CEO Eric Starkloff said he sees the firm’s diversity of product lines to help it weather the economic downturn. “I continue to be impressed with the resiliency of our employees and their commitment to our customers,” he said. “We remain committed to our long-term growth ambitions with short-term expense management to keep us in a position of strength.”
The headquarters of National Instruments is located off Mopac expressway. That serves as the company’s hub for research and development, while most manufacturing takes place at a plant in Debrecen, Hungary.
