10-KPeriod: FY2015

GARMIN LTD Annual Report, Year Ended Dec 26, 2015

Filed February 17, 2016For Securities:GRMN

Summary

Garmin Ltd. reported net sales of $2.82 billion 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 million. 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 million, 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.

Financial Highlights

52 data points
Beta

Revenue

$2.82B

54.6% Gross Margin

Net Income

$456.23M

16.2% Net Margin

EPS (Diluted)

$2.39

Total Assets

$4.50B

Cash & Equivalents

$833.07M

Free Cash Flow

$199.88M

Financial Statements
Beta
Revenue$2.82B
Cost of Revenue$1.28B
Gross Profit$1.54B
R&D Expenses$427.04M
SG&A Expenses$394.91M
Operating Expenses$989.12M
Operating Income$549.58M
Net Income$456.23M
EPS (Basic)$2.39
EPS (Diluted)$2.39
Shares Outstanding (Basic)191K
Shares Outstanding (Diluted)191K

Key Highlights

  • 1Net sales for FY2015 were $2.82 billion, a 2% decrease year-over-year, primarily impacted by foreign currency headwinds.
  • 2Net income saw a strong increase of 25% to $456.2 million, driven by a significant decrease in income tax expenses.
  • 3The Fitness segment revenue grew 16% due to strength in wearables, while the Auto segment declined 15%.
  • 4Research and Development (R&D) spending increased to 15.1% of net sales, reflecting continued investment in innovation.
  • 5Garmin continued its commitment to shareholder returns by increasing its quarterly dividend and actively repurchasing shares.
  • 6The company ended the year with a strong cash position of $833.1 million and no outstanding debt.

Frequently Asked Questions

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.

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).

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.

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).