01—Abstract
Summary
Summary of the 10-K filed February 22, 2017. Cited figures are marked; the original filing is the authoritative source.
Garmin Ltd. reported a 7% increase in net sales for the fiscal year ended December 31, 2016, reaching $3.02 billiona.
This growth was driven by strong performance in the Outdoor, Fitness, Marine, and Aviation segments, which saw revenue increases of 33%b, 24%, 16%, and 10% respectively. This growth was largely attributed to increased sales volumes, particularly in wearables and new product lines. The Auto segment, however, experienced a 17% decline in revenue, reflecting the ongoing contraction of the Personal Navigation Device (PND) market due to the increasing prevalence of navigation technology in mobile devices and factory-installed automotive systems.
Despite the headwinds in the Auto segment, Garmin's diversified product portfolio and focus on innovation in its other segments led to a 14% increase in operating income to $623.9 millionc. The company demonstrated strong operational efficiency, with gross profit margin improving to 56%.
Garmin also continued to invest in research and development, increasing R&D expenses by 10% to $468 milliond, emphasizing its commitment to new product development and technological advancement. The company maintained a healthy financial position with substantial cash reserves and no outstanding debt.
02—Key points
Key Highlights
- Garmin's net sales grew by 7% to $3.02 billion in fiscal year 2016, driven by strong performance in Outdoor, Fitness, Marine, and Aviation segments.
- The Auto segment experienced a significant 17% revenue decline, indicating continued challenges in the PND market.
- Operating income increased by 14% to $623.9 million, reflecting improved profitability across various segments.
- Gross profit margin expanded to 56%, up from 55% in the previous year, showcasing enhanced profitability.
- Research and Development (R&D) expenses increased by 10% to $468 million, underscoring Garmin's commitment to innovation.
- The company declared a quarterly cash dividend of $0.51 per share, signaling a commitment to returning value to shareholders.
- Garmin maintained a strong balance sheet with no outstanding debt and ended the year with substantial cash and cash equivalents of $847 million.
03—One dollar
Follow one dollar
Of each $1.00 of revenue in FY2016, Garmin Ltd kept $0.17.
- Revenue$3.02B100.0%
- Cost of revenue−$1.33B44.1%
- Gross profit$1.69B55.9%
- Operating costs−$1.06B35.0%
- Operating income$632.9M21.0%
- Interest, other & tax−$115.1M3.8%
- Net income$517.7M17.2%
Where FY2016 revenue went
$3.02B- Cost of revenue: $1.36B, 45% of revenue
- Net income: $517.7M, 17% of revenue
- R&D: $468.0M, 16% of revenue
- SG&A: $410.6M, 14% of revenue
- Other operating costs: $150.0M, 5.0% of revenue
- Interest, other & tax: $115.1M, 3.8% of revenue
Kept 17% as net income
Full revenue history →04—Financials
Financial Highlights
Figures from 10-KFY2016filed February 22, 2017Financial Statements
FY2016 against FY2015
| Line item | FY2016FY2015 | Change |
|---|---|---|
| Revenue | $3.02B$2.82B | +7.0% |
| Cost of Revenue | $1.36B$1.28B | +5.9% |
| Gross Profit | $1.69B$1.54B | +9.7% |
| R&D Expenses | $467.96M$427.04M | +9.6% |
| SG&A Expenses | $410.56M$394.91M | +4.0% |
| Operating Expenses | $1.06B$989.12M | +6.7% |
| Operating Income | $632.86M$549.58M | +15.2% |
| Net Income | $517.72M$456.23M | +13.5% |
| EPS (Basic) | $2.74$2.39 | +14.6% |
| EPS (Diluted) | $2.73$2.39 | +14.2% |
| Shares Outstanding (Basic) | 189K191K | −1.0% |
| Shares Outstanding (Diluted) | 189K191K | −0.9% |
05—Questions
Frequently Asked Questions
What were the primary drivers of Garmin's revenue growth in 2016?
Garmin's revenue growth in 2016 was primarily driven by strong sales volumes in its Outdoor, Fitness, Marine, and Aviation segments. Key growth areas included wearable devices within the Fitness and Outdoor segments, new product lines, and continued strength in the Aviation sector.
What challenges did Garmin face in the Auto segment?
The Auto segment experienced a 17% revenue decline in 2016. This was attributed to the ongoing contraction of the Personal Navigation Device (PND) market, which is being impacted by the widespread adoption of GPS navigation on smartphones and integrated systems in new vehicles.
How is Garmin investing in future growth?
Garmin is heavily investing in future growth through research and development (R&D). R&D expenses increased by 10% in 2016 to $468 million, reflecting the company's focus on developing new products, enhancing existing software capabilities, and exploring new product categories to maintain its competitive edge.
What is Garmin's financial health and how is it returning value to shareholders?
Garmin maintains a strong financial position, ending 2016 with $847 million in cash and cash equivalents and no outstanding debt. The company demonstrated its commitment to shareholder value by increasing its quarterly dividend to $0.51 per share and continuing its share repurchase program.
06—Continue