10-KPeriod: FY2016

GARMIN LTD Annual Report, Year Ended Dec 31, 2016

Filed February 22, 2017For Securities:GRMN

Summary

Garmin Ltd. reported a 7% increase in net sales for the fiscal year ended December 31, 2016, reaching $3.02 billion. This growth was driven by strong performance in the Outdoor, Fitness, Marine, and Aviation segments, which saw revenue increases of 33%, 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 million. 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 million, 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.

Financial Highlights

52 data points
Beta

Revenue

$3.02B

55.9% Gross Margin

Net Income

$517.72M

17.2% Net Margin

EPS (Diluted)

$2.73

Total Assets

$4.53B

Cash & Equivalents

$846.88M

Free Cash Flow

$614.72M

Financial Statements
Beta
Revenue$3.02B
Cost of Revenue$1.36B
Gross Profit$1.69B
R&D Expenses$467.96M
SG&A Expenses$410.56M
Operating Expenses$1.06B
Operating Income$632.86M
Net Income$517.72M
EPS (Basic)$2.74
EPS (Diluted)$2.73
Shares Outstanding (Basic)189K
Shares Outstanding (Diluted)189K

Key Highlights

  • 1Garmin'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.
  • 2The Auto segment experienced a significant 17% revenue decline, indicating continued challenges in the PND market.
  • 3Operating income increased by 14% to $623.9 million, reflecting improved profitability across various segments.
  • 4Gross profit margin expanded to 56%, up from 55% in the previous year, showcasing enhanced profitability.
  • 5Research and Development (R&D) expenses increased by 10% to $468 million, underscoring Garmin's commitment to innovation.
  • 6The company declared a quarterly cash dividend of $0.51 per share, signaling a commitment to returning value to shareholders.
  • 7Garmin maintained a strong balance sheet with no outstanding debt and ended the year with substantial cash and cash equivalents of $847 million.

Frequently Asked Questions

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.

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.

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.

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.