Summary
Garmin Ltd. reported a 9% decrease in net sales for the fiscal year 2010 compared to 2009, primarily driven by a significant 19% decline in its largest segment, Automotive/Mobile. This decline was attributed to market saturation and the increasing prevalence of GPS technology in mobile handsets and factory-installed automotive systems, which also led to lower average selling prices and margins in this segment. Despite the overall revenue dip, Garmin experienced robust growth in its Outdoor/Fitness segment (up 19%), Marine (up 12%), and Aviation (up 7%) segments, indicating diversification and resilience. The company's strategic focus on innovation is evident in its continued investment in research and development, which increased by 16% in 2010. Garmin's strong balance sheet, with substantial cash and marketable securities, and its generation of positive operating cash flow provide a solid foundation for future investments and shareholder returns, including dividends and share repurchases. The company anticipates ongoing revenue pressure in the Automotive/Mobile segment for 2011 but expects growth in other segments to partially offset this.
Financial Highlights
53 data points| Revenue | $2.69B |
| Cost of Revenue | $1.34B |
| Gross Profit | $1.35B |
| R&D Expenses | $277.26M |
| SG&A Expenses | $287.82M |
| Operating Expenses | $709.70M |
| Operating Income | $636.68M |
| Interest Expense | $1.25M |
| Net Income | $584.60M |
| EPS (Basic) | $2.97 |
| EPS (Diluted) | $2.95 |
| Shares Outstanding (Basic) | 196.98M |
| Shares Outstanding (Diluted) | 198.01M |
Key Highlights
- 1Garmin's net sales decreased by 9% to $2.69 billion in 2010, primarily due to a 19% decline in the Automotive/Mobile segment, which now represents 62% of total revenue.
- 2The Outdoor/Fitness segment showed strong performance, with net sales increasing by 19% in 2010, driven by new product introductions and global market penetration.
- 3Research and Development expenses increased by 16% to $277.3 million in 2010, highlighting the company's commitment to innovation.
- 4Gross profit margin improved by 110 basis points to 50% in 2010, despite the decline in Automotive/Mobile segment margins, due to stronger performance in other segments.
- 5The company generated strong operating cash flow of $770.6 million in 2010.
- 6Garmin's balance sheet remained strong, with $1.26 billion in cash and cash equivalents and $801.8 million in marketable securities as of December 25, 2010.
- 7The company declared a cash dividend of $1.50 per share in 2010 and had an active share repurchase program.