Garmin reports second quarter revenue and earnings growth; raises guidance

Executive Overview from Cliff Pemble, President and Chief Executive Officer:

“We delivered another quarter of revenue and earnings growth led by strong double-digit growth in our outdoor and aviation segments,” said Cliff Pemble, president and chief executive officer of Garmin Ltd. “The demand for advanced wearables was particularly strong, but was partially offset by negative trends in the activity tracker market. Our results thus far give us confidence in raising our outlook for the remainder of the year.”

Outdoor:

During the second quarter of 2017, the outdoor segment grew 46% driven by strong demand for our fēnix® 5 watch series. Gross margin improved to 66% while operating margin improved to 38%, resulting in operating income growth of 53%. We launched the Approach® S60, our newest GPS golf watch with a sunlight-readable color touchscreen display, and recently announced new offerings in our Foretrex® and Rino® lineup. Looking forward, we are focused on growth opportunities in wearables and inReach product lines.

Aviation:

The aviation segment posted revenue growth of 15%, driven primarily by strong aftermarket sales and positive contributions from OEM product categories. Gross and operating margins were strong at 75% and 32%, respectively, resulting in 28% operating income growth. During the quarter, we announced our first Head-up Display (GHD) system for integrated flight decks and are pleased that it will be incorporated on the Cessna Citation Longitude coupled with the G5000® integrated flight deck. We also received approval from the European Aviation Safety Agency for our previously announced G1000® NXi system. Looking forward, we are focused on maximizing ADS-B mandate opportunities and gaining share in the OEM market.

Marine:

Revenue in the marine segment declined 3% during the quarter, with gross and operating margins of 57% and 22%, respectively. For the first half of the year we delivered 10% revenue growth and 9% operating income growth and remain confident in our outlook for the year. During the second quarter of 2017, we announced the acquisition of Active Corporation, a developer of crowd sourced content for boaters and launched our latest marine wearable, the quatix® 5, adding autopilot control and the ability to mark remote multifunction display waypoints. Looking forward, we are focused on product innovations and gaining share in the inland fishing category.

Fitness:

Revenue in the fitness segment declined 15% during the quarter, with gross and operating margins of 56% and 21%, respectively. The drop in revenue was primarily driven by a decline in the activity tracker category due to the general decline of the basic activity tracker market and the timing of product introductions. Looking forward, we are focused on growth opportunities in advanced wearables devices.

Auto:

The auto segment recorded revenue decline of 15% in the second quarter of 2017, primarily due to the ongoing PND market contraction partially offset by growth in niche categories such as fleet, camera and RV. Gross and operating margin declined year-over-year to 45% and 13%, respectively but increased sequentially. During the second quarter of 2017, we launched the VIRB® 360, a compact, multi-lens, full spherical 360-degree camera. The VIRB 360 offers an easy-to-use camera that captures video up to 5K/30fps with four built in microphones and easy upload. Looking forward, we are focused on disciplined execution to bring desired innovation to the market and to optimize profitability in the segment.

Additional Financial Information:

Total operating expenses in the quarter were $275 million, an increase of 5% over the prior year. Research and development increased 11% primarily due to engineering personnel costs related to our wearable product offerings and aviation. Selling, general and administrative expenses increased 2%, and were relatively flat as a percent of sales. Advertising decreased 5% primarily due to reduced media spending and lower cooperative advertising.

The effective tax rate in the second quarter of 2017 was 25.0%. The pro forma effective tax rate in the second quarter of 2017 was 21.9% (see attached table for reconciliation of this non-GAAP measure) compared to an effective tax rate of 21.0% in the prior year quarter. The year-over-year increase in the pro forma effective tax rate is primarily due to the Company’s election to align certain Switzerland corporate tax positions with evolving international tax initiatives partially offset by income mix by tax jurisdiction.

In the second quarter of 2017, we generated $129 million of free cash flow (see attached table for reconciliation of this non-GAAP measure). We continued to return cash to shareholders with our quarterly dividend of approximately $96 million and our share repurchases activity, which totaled approximately $36 million in the second quarter of 2017. We have approximately $11 million remaining in the share repurchase program authorized through December 31, 2017. We ended the quarter with cash and marketable securities of approximately $2.3 billion.

2017 Guidance:

Based on our performance in the first half of 2017, we are updating our full year guidance. We now anticipate revenue of approximately $3.04 billion driven primarily by higher expectations for our outdoor and aviation segments partially offset by lower expectations for the fitness segment. Our outlook for marine and auto is unchanged. We anticipate our full year pro forma EPS will be approximately $2.80 based on an improved gross margin of about 57.5%, operating margin of about 21% and a full year pro forma effective tax rate of about 22%.

« Previous Page 1 | 2 | 3 | 4 | 5 | 6 | 7 | 8  Next Page »
Featured Video
Editorial
Jobs
Mechanical Manufacturing Engineering Manager for Google at Sunnyvale, California
Manufacturing Test Engineer for Google at Prague, Czechia, Czech Republic
Senior Principal Mechanical Engineer for General Dynamics Mission Systems at Canonsburg, Pennsylvania
Mechanical Engineer 2 for Lam Research at Fremont, California
Mechanical Test Engineer, Platforms Infrastructure for Google at Mountain View, California
Equipment Engineer, Raxium for Google at Fremont, California
Upcoming Events
Celebrate Manufacturing Excellence at Anaheim Convention Center Anaheim CA - Feb 4 - 6, 2025
3DEXPERIENCE World 2025 at George R. Brown Convention Center Houston TX - Feb 23 - 26, 2025
TIMTOS 2025 at Nangang Exhibition Center Hall 1 & 2 (TaiNEX 1 & 2) TWTC Hall Taipei Taiwan - Mar 3 - 8, 2025
Automate 2025 at Detroit, Michigan, USA MI - May 12 - 15, 2025



© 2024 Internet Business Systems, Inc.
670 Aberdeen Way, Milpitas, CA 95035
+1 (408) 882-6554 — Contact Us, or visit our other sites:
AECCafe - Architectural Design and Engineering EDACafe - Electronic Design Automation GISCafe - Geographical Information Services TechJobsCafe - Technical Jobs and Resumes ShareCG - Share Computer Graphic (CG) Animation, 3D Art and 3D Models
  Privacy PolicyAdvertise