10-KPeriod: FY2014

GARMIN LTD Annual Report, Year Ended Dec 27, 2014

Filed February 18, 2015For Securities:GRMN

Summary

Garmin Ltd. reported strong performance for the fiscal year ended December 27, 2014, driven by significant growth across most of its segments, notably Fitness, Aviation, and Marine. While the Automotive/Mobile segment experienced a revenue decline, overall net sales increased by 9% year-over-year, reaching $2.87 billion. The company demonstrated robust operational efficiency, with gross profit margin improving to 56% from 53% in the prior year. This was supported by effective cost management and a favorable product mix, particularly within the higher-margin Aviation and Fitness segments. Significant new product introductions in 2014 across all segments, including advancements in wearable fitness trackers, advanced aviation avionics, and sophisticated marine electronics, underscore Garmin's commitment to innovation. The company also benefited from strategic acquisitions, such as Fusion Electronics in the marine sector. Despite the ongoing challenges in the Automotive/Mobile segment due to market saturation and competition from mobile devices, Garmin's diversified product portfolio and strategic focus on high-growth areas position it well for continued expansion. The company's strong balance sheet, with substantial cash and marketable securities, provides flexibility for future investments and shareholder returns.

Financial Statements
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Key Highlights

  • 1Net sales increased by 9% to $2.87 billion in fiscal year 2014, driven by strong performance in Fitness, Aviation, and Marine segments.
  • 2Gross profit margin improved to 56% in fiscal year 2014, up from 53% in fiscal year 2013, indicating improved operational efficiency and product mix.
  • 3The Fitness segment saw a substantial revenue increase of 60%, driven by new wellness product introductions.
  • 4Aviation segment revenue grew by 14%, reflecting OEM market gains and aftermarket strength.
  • 5Garmin continued its strong investment in Research & Development, increasing R&D expenses by 8% to $395.1 million to support ongoing new product development.
  • 6The company paid out $1.92 per share in dividends in 2014, reflecting a commitment to returning capital to shareholders.
  • 7Garmin maintained a strong financial position with $1.2 billion in cash and cash equivalents and $1.6 billion in marketable securities as of year-end 2014.

Frequently Asked Questions

Garmin Ltd. reported a 9% increase in net sales, reaching $2.87 billion for the fiscal year ended December 27, 2014. Gross profit margin improved to 56%, and operating income saw a significant increase of 20%. This growth was broad-based across most segments, with notable strength in Fitness, Aviation, and Marine, although the Automotive/Mobile segment experienced a decline.

The Fitness segment showed the strongest growth, with a 60% revenue increase driven by new wellness products. Aviation and Marine segments also posted strong growth of 14% and 11%, respectively. The Automotive/Mobile segment, however, saw a 5% decrease in revenue due to market saturation and increased competition from mobile devices.

Garmin effectively managed its expenses, with cost of goods sold as a percentage of revenue decreasing by 240 basis points. The company also increased its investment in Research & Development by 8% to $395.1 million, highlighting its commitment to continuous innovation and new product development across all its business segments.

Garmin maintained a strong financial position with substantial cash reserves and marketable securities. The company continued its practice of returning capital to shareholders by declaring and paying a dividend of $1.92 per share in 2014. Management anticipates continued growth in 2015, driven by innovation and strength in its key segments, while managing the ongoing decline in the Automotive/Mobile sector.