David G. Barnes
Chief Financial Officer at Trimble
Thanks, Rob. Turning to Slide 4, fourth quarter revenue was $926 million, up 12% versus a year ago. Organic revenue growth was 14%. Our strong revenue in the quarter was enabled by the outstanding performance of our supply chain and operations team, as hardware revenue grew by over 20% versus the fourth quarter of last year, notwithstanding the extraordinarily difficult supply chain environment.
Backlog of unfilled hardware orders grew in the quarter, reflecting both the strong demand in our end markets and customers placing orders earlier than they would have in the past. Hardware backlog at the end of fourth quarter was nearly four times the level of a year ago before the supply chain challenges emerged. With this strong backlog, we have unprecedented visibility into demand for our hardware offerings going into 2022.
ARR grew at an organic rate of 12%, driven by business model conversions, strong bookings and healthy customer retention for recurring solutions in the quarter. Gross margins were 57.8%, down 90 basis points sequentially from third quarter levels and down 160 basis points from the fourth quarter of 2020.
Gross margins were impacted by the mix of hardware revenue, higher inbound freight costs and our aggressive purchases of components in the broker market to support strong demand. Cost inflation was higher than our expectations, and the price increases we took in our hardware offerings did not fully offset an unexpectedly sharp spike in cost inflation in the quarter.
The price increases we have taken so far this year, averaging approximately 5% at the list price level across most of our hardware businesses and accompanied by reduced discounting, have been accepted in the market. Given our leading position in the markets we serve, we are confident in our ability to maintain attractive margins. And we continue to adopt our pricing strategy to the cost outlook.
Our EBITDA margin for the quarter was 24.1%, while operating income margins were 22.1%. As we expected, margins in the quarter were lower than the fourth quarter of 2020, but higher than Q4 of 2019. EPS was $0.62. We generated cash flow from operations of $155 million and free cash flow of over $140 million. Cash flow was lower than Q4 of 2020, driven by increased component inventory purchases.
Turning now to slide 5, let's step back and review performance for the full year 2021. In the face of unprecedented challenges stemming from the ongoing COVID disruptions, supply chain shortages and accelerating inflation, we achieved record results across a broad range of financial metrics. Revenue grew 16% to a record $3.66 billion and ARR growth improved sequentially.
While gross margins were down modestly due to both inflation and the higher growth of our hardware revenues, EBITDA and operating margins ended the year above the levels of 2020 and at record levels in Trimble's history. Earnings per share were $2.66, up 19% versus a year ago. Cash flow from operations and free cash flow grew 12% and 14% respectively.
Now, on Slide 6, from a geographic perspective, revenues were up in all regions with the highest growth rate in Europe. North America revenue in the quarter also grew at a double-digit rate.
Turning now to other key operating metrics on Slide 7, I'll note that backlog ended the year at $1.8 billion. This is up from $1.3 billion a year ago. While backlog and our recurring offerings continued to grow, the majority of this increase came from hardware. And year-end hardware backlog exceeded our expectations of a quarter ago.
Our results for 2021 reflect the achievement of a meaningful milestone. On a trailing 12-month basis, our software services and recurring revenue exceeded $2 billion for the first time. Operating cash flow of over $750 million was also a record and exceeded 1.1 times non-GAAP net income.
Turning now to our results by segment on Slide 8, revenue was at or above our expectations in all segments. Buildings and Infrastructure revenue grew 14% versus prior year and 16% organically. Growth was strong across both hardware and software. Our sales of machine control solutions to civil construction customers grew by nearly 30% this quarter despite supply chain constraints.
ARR growth in the segment was strong with Viewpoint and e-Builder ARR together up at a mid-teens growth rate. SketchUp ARR growth was nearly 40%, while ARR gained momentum in our structures and MEP software businesses as they accelerated their transitions to recurring revenue models in the quarter. We ended the quarter with strong bookings momentum across our B&I Software businesses.
Segment margins in the quarter were over 30%, representing a record fourth quarter for the segment despite cost inflation and the higher growth of hardware revenues. In B&I our price increases more than offset the hardware cost inflation we saw in the quarter.
Geospatial segment revenue increased 15% overall and 16% on an organic basis. Demand for our core survey and mapping portfolio remains very strong across all regions, driven by strong spending in residential construction, civil infrastructure and utilities. Segment revenues also benefited from shipments against several large government contracts.
Operating margins were below the levels of fourth quarter 2020 and the third quarter of 2021, driven principally by a short-term mix shift. The cost inflation we experienced in this segment was largely but not entirely offset by our 5% price increase and lower discounting.
Resources and Utilities revenue grew 18% in total and 21% organically. Hardware backlog grew in R&U, reflective of very strong demand across the agriculture sector. The outlook for capital investment in Ag remains strong, driven by high crop prices, low inventories and high average equipment age.
Segment margins were below those of a year ago and sequentially below third quarter levels. Product cost inflation was particularly high in this segment, as the cost of many critical components in our Ag product offerings increased substantially in the quarter. In this segment, our price increases have not yet kept up with inflation, and we continue to refine our pricing strategy going forward. We anticipate operating margins in this segment in the coming year to rebound from the fourth quarter 2021 levels, as our price realization and mix improve.
Consistent with our expectation coming into Q4, revenues and margins in our Transportation segment were adversely impacted by supply chain challenges, both within our business and at our OEM customers.
On the cost side, we experienced meaningful component inflation and high freight costs, and we incurred costs related to realigning our product portfolio toward available components. Slow production levels at our OEM customers also constrained our revenue of both hardware and recurring services in the quarter.
The leading indicators from our transportation business continue to give us confidence that we are on the path to better ARR and margin trends, once the dynamics of the supply chain improve. We grew bookings year-on-year once again in Q4, and our net retention is at 100%. Our OEM customers are seeing stabilization in their own supply chain situation, and we expect that orders from them will pick up early this year.
Finally, on the cost side, we are introducing new products, which will support improved gross margins. For all these reasons, we project improved performance across the Transportation segment in ARR, revenue and margins in the back half of 2022.
Turning now to Slide 9, I'd like to provide our financial outlook for 2022. We expect to see continued top line momentum. Demand from our end markets remains strong. And so far, we haven't seen any signs of deceleration as a result of recent inflation and higher interest rates. Our backlog and forward-looking indicators of sentiment give us confidence in our prospects for ARR and revenue growth.
As Rob and I have mentioned, we expect that supply chain disruptions will continue to be with us through 2022. There are signs that the pressure on component availability will abate in the back half of the year, but our plans presume that the supply chain will not be fully restored to equilibrium until 2023.
With those factors in mind, we are initiating annual guidance for 2022. Excluding the impact of any additional acquisitions or divestitures, we project full year revenue of $3.95 billion to $4.05 billion, representing a range of growth outlooks of 8% to 11%. Our continuing transition of software offerings will present approximately 100 basis points of headwind to revenue growth. Organic ARR growth is expected to accelerate through the year to a mid-teens rate by year-end.
We expect gross margins in 2022 to be comparable to or slightly better than 2021, with sequential improvement in the back half of the year. We expect that operating margins for the full year will be approximately 23%. Note that operating margins will be adversely impacted by the aforementioned subscription transitions, as well as investments we are making in support of our strategy and the acceleration of ARR. In aggregate, these factors present a headwind to operating margins of approximately 200 basis points.
Income from equity investments is projected to be approximately $30 million, lower than 2021 due to higher product costs in our joint ventures. Net interest expense is forecast to be approximately $65 million, and we project that our tax rate will be approximately 18%. Netting all this out, we project to achieve EPS in the range of $2.75 to $2.95.
From a cash flow perspective, we project the free cash flow will once again exceed our non-GAAP net income. Our cash flow trends will be helped by the projected return toward equilibrium in the supply chain, as we anticipate needing lower component inventories by the end of the year.
While we are focusing our guidance on expectations for the full year, I'd like to provide some color on the factors we expect to drive quarterly trends in 2022. Many of the normal seasonal patterns in our business are being disrupted by the impact of the constrained supply chain. So it is most helpful to think in terms of the expected sequential development from where we ended Q4 of 2021. We expect revenue to grow sequentially through each quarter of the year with ARR accelerating as well.
From a product cost perspective, we expect to see inflation through the first half of 2022, similar to what we experienced in Q4 of 2021, with meaningful improvement in the second half. As a result, gross margins are likely to be relatively flat with Q4 of 2021 through the first half of the year and meaningfully higher in the second half. We expect that operating margins in the second half of the year will exceed the first half by approximately 150 basis points.
I'll close by noting that we are planning an Investor Day in Colorado this September. And with that, I'll turn it back over to Rob.
