01—Abstract
Summary
Summary of the 10-K filed February 17, 2016. Cited figures are marked; the original filing is the authoritative source.
Garmin Ltd. reported net sales of $2.82 billiona for the fiscal year ended December 26, 2015, representing a 2% decrease from the prior year.
This decline was largely attributed to the strengthening U.S. dollar, which negatively impacted reported revenues by approximately $189 millionb. The Auto segment, Garmin's largest, saw a significant 15% revenue decrease due to declining sales and amortization of deferred revenue. Conversely, the Fitness segment experienced robust growth of 16%, driven by its wearable technology portfolio, and the Marine segment grew by 15% with new product introductions.
Despite the overall revenue dip, Garmin's net income increased by a substantial 25% to $456.2 millionc, largely due to a significant reduction in income tax expense compared to the prior year, which included a substantial one-time tax charge in 2014. The company also demonstrated a commitment to shareholder returns, increasing its quarterly dividend and continuing its share repurchase program. Garmin continues to invest heavily in research and development (15.1% of net sales), indicating a focus on future innovation and growth across its diversified segments.
02—Key points
Key Highlights
- Net sales for FY2015 were $2.82 billion, a 2% decrease year-over-year, primarily impacted by foreign currency headwinds.
- Net income saw a strong increase of 25% to $456.2 million, driven by a significant decrease in income tax expenses.
- The Fitness segment revenue grew 16% due to strength in wearables, while the Auto segment declined 15%.
- Research and Development (R&D) spending increased to 15.1% of net sales, reflecting continued investment in innovation.
- Garmin continued its commitment to shareholder returns by increasing its quarterly dividend and actively repurchasing shares.
- The company ended the year with a strong cash position of $833.1 million and no outstanding debt.
03—One dollar
Follow one dollar
Of each $1.00 of revenue in FY2015, Garmin Ltd kept $0.16.
- Revenue$2.82B100.0%
- Cost of revenue−$1.28B45.4%
- Gross profit$1.54B54.6%
- Operating costs−$989.1M35.1%
- Operating income$549.6M19.5%
- Interest, other & tax−$93.4M3.3%
- Net income$456.2M16.2%
Where FY2015 revenue went
$2.82B- Cost of revenue: $1.28B, 45% of revenue
- Net income: $456.2M, 16% of revenue
- R&D: $427.0M, 15% of revenue
- SG&A: $394.9M, 14% of revenue
- Other operating costs: $167.2M, 5.9% of revenue
- Interest, other & tax: $93.4M, 3.3% of revenue
Kept 16% as net income
Full revenue history →04—Financials
Financial Highlights
Figures from 10-KFY2015filed February 17, 2016Financial Statements
FY2015 against FY2014
| Line item | FY2015FY2014 | Change |
|---|---|---|
| Revenue | $2.82B$2.87B | −1.8% |
| Cost of Revenue | $1.28B$1.27B | +1.2% |
| Gross Profit | $1.54B$1.60B | −4.1% |
| R&D Expenses | $427.04M$395.12M | +8.1% |
| SG&A Expenses | $394.91M$372.03M | +6.2% |
| Operating Expenses | $989.12M$913.79M | +8.2% |
| Operating Income | $549.58M$690.63M | −20.4% |
| Net Income | $456.23M$364.21M | +25.3% |
| EPS (Basic) | $2.39$1.89 | +26.5% |
| EPS (Diluted) | $2.39$1.88 | +27.1% |
| Shares Outstanding (Basic) | 191K193K | −1.3% |
| Shares Outstanding (Diluted) | 191K194K | −1.6% |
05—Questions
Frequently Asked Questions
What were Garmin's key financial performance indicators for fiscal year 2015?
For the fiscal year ended December 26, 2015, Garmin reported net sales of $2.82 billion, a slight decrease of 2% from the previous year. Net income increased significantly by 25% to $456.2 million, primarily due to a reduction in income tax provisions. Operating income decreased by 20% to $549.6 million. The company ended the year with $833.1 million in cash and cash equivalents and no outstanding debt.
Which business segments performed well, and which faced challenges in FY2015?
The Fitness segment was a strong performer, with revenue increasing by 16% driven by its wearable products. The Marine segment also showed healthy growth of 15%, supported by new product introductions. The Auto segment, however, experienced a significant decline of 15% in revenue due to market saturation and the impact of competing technologies on personal navigation devices (PNDs).
How did Garmin manage its R&D and capital allocation in FY2015?
Garmin maintained a strong focus on innovation, increasing its R&D expenditure to 15.1% of net sales. The company also demonstrated its commitment to shareholder value by continuing to pay and increase its quarterly dividend and actively engaging in share repurchases under its authorized program. Capital expenditures were around $75 million for the year, focused on facility expansion and ongoing activities.
What is Garmin's outlook for the Auto segment?
Garmin anticipates continued revenue decline in its Auto segment for 2016. This outlook is due to the ongoing market trends of GPS functionality being integrated into mobile devices and factory-installed automotive systems, leading to reduced demand for portable navigation devices (PNDs).
06—Continue