01—Abstract
Summary
Summary of the 10-K filed February 19, 2014. Cited figures are marked; the original filing is the authoritative source.
Garmin Ltd. (GRMN) reported its 2013 fiscal year results, showcasing a resilient performance despite a notable decline in its Automotive/Mobile segment.
The company saw overall net sales decrease by 3% to $2.63 billiona, largely driven by a 13% drop in Automotive/Mobile revenue, which now represents 49% of total sales. This decline is attributed to market saturation and increased competition from mobile devices and integrated in-car systems. However, this was partially offset by robust growth in the Outdoor (2%), Fitness (11%), Marine (7%), and Aviation (16%) segments.
Despite the revenue dip, Garmin maintained its gross profit margin at 53%, demonstrating effective cost management and a favorable shift in product mix towards higher-margin segments. The company's strategic focus on innovation continues with significant investment in research and development, which increased by 12% year-over-year to $365 millionb, representing 14% of net sales.
This R&D investment is aimed at driving growth in its key segments and exploring new product categories. Garmin also returned value to shareholders through dividends and share repurchases, underscoring its commitment to capital management.
02—Key points
Key Highlights
- Net sales decreased by 3% to $2.63 billion in fiscal year 2013, primarily due to a 13% decline in the Automotive/Mobile segment.
- The Automotive/Mobile segment, while declining, still represented 49% of total revenue, highlighting its significant but decreasing importance.
- Strong growth was observed in the Outdoor (2%), Fitness (11%), Marine (7%), and Aviation (16%) segments, indicating diversification benefits.
- Gross profit margin remained strong at 53%, consistent with the prior year, demonstrating effective cost control and product mix management.
- Research and Development (R&D) spending increased by 12% to $365 million, representing 14% of net sales, signaling a continued commitment to innovation.
- Garmin returned capital to shareholders via $1.80 per share in dividends and continued its share repurchase program.
- The company anticipates stable revenue in 2014, with growth expected from Outdoor, Fitness, Aviation, and Marine segments, offsetting continued declines in Automotive/Mobile.
03—One dollar
Follow one dollar
Of each $1.00 of revenue in FY2013, Garmin Ltd kept $0.23.
- Revenue$2.63B100.0%
- Cost of revenue−$1.22B46.5%
- Gross profit$1.41B53.5%
- Operating costs−$833.3M31.7%
- Operating income$574.0M21.8%
- Interest, other & tax$38.4M1.5%
- Net income$612.4M23.3%
Where FY2013 revenue went
$2.63B- Cost of revenue: $1.22B, 47% of revenue
- Operating income: $574.0M, 22% of revenue
- R&D: $364.9M, 14% of revenue
- SG&A: $355.4M, 14% of revenue
- Other operating costs: $112.9M, 4.3% of revenue
Kept 22% as operating incomeSG&A $355.4M · 14%
Full revenue history →04—Financials
Financial Highlights
Figures from 10-KFY2013filed February 19, 2014Financial Statements
FY2013 against FY2012
| Line item | FY2013FY2012 | Change |
|---|---|---|
| Revenue | $2.63B$2.72B | −3.1% |
| Cost of Revenue | $1.22B$1.28B | −4.1% |
| Gross Profit | $1.41B$1.44B | −2.2% |
| R&D Expenses | $364.92M$325.77M | +12.0% |
| SG&A Expenses | $355.44M$369.79M | −3.9% |
| Operating Expenses | $833.27M$834.32M | −0.1% |
| Operating Income | $574.03M$604.16M | −5.0% |
| Net Income | $612.41M$542.40M | +12.9% |
| EPS (Basic) | $3.13$2.78 | +12.6% |
| EPS (Diluted) | $3.12$2.76 | +13.0% |
| Shares Outstanding (Basic) | 195K195K | +0.3% |
| Shares Outstanding (Diluted) | 196K196K | +0.1% |
05—Questions
Frequently Asked Questions
What was the primary driver of Garmin's revenue decline in 2013?
The primary driver of Garmin's revenue decline in 2013 was a 13% decrease in its Automotive/Mobile segment. This was attributed to increased competition from mobile devices and factory-installed navigation systems in vehicles, leading to reduced demand for Portable Navigation Devices (PNDs).
How did Garmin perform in its other business segments?
Garmin experienced growth in its other key segments, with the Outdoor segment increasing revenue by 2%, Fitness by 11%, Marine by 7%, and Aviation by 16%. This performance indicates a successful diversification strategy and resilience outside the Automotive/Mobile market.
What is Garmin's strategy for future growth?
Garmin's strategy for future growth is centered on continuous innovation and product development, supported by a significant investment in R&D, which increased by 12% in 2013. The company aims to leverage this investment to drive growth in its strong performing segments and explore new product categories.
How is Garmin returning value to its shareholders?
Garmin is returning value to shareholders through a consistent dividend policy, paying $1.80 per share in 2013, and by continuing its share repurchase program. The company had approximately $241 million remaining under its share repurchase authorization at the end of 2013.
06—Continue