01—Abstract
Summary
Summary of the 10-K filed February 21, 2018. Cited figures are marked; the original filing is the authoritative source.
Garmin Ltd.'s 2017 Form 10-K filing shows a year of robust growth, with total net sales increasing by 2% to $3.09 billiona.
This growth was driven by strong performance in the Outdoor, Marine, and Aviation segments, which saw significant revenue increases. Conversely, the Fitness and Auto segments experienced declines, with Fitness revenue impacted by the contracting basic activity tracker market and Auto revenue continuing its downward trend due to the shift towards mobile navigation and integrated in-car systems. The company maintained a strong gross profit margin of 58%b, reflecting a favorable shift in product mix towards higher-margin offerings.
Research and Development (R&D) investment increased by 9% to $511.6 millionc, underscoring Garmin's commitment to innovation. The company's strong operational execution resulted in a 7% increase in operating income to $668.9 million.
Garmin ended the year with a healthy balance sheet, featuring $891.5 milliond in cash and cash equivalents and $1.4 billion in marketable securities, providing ample liquidity. The company also continued to return capital to shareholders through dividends, demonstrating financial discipline and a focus on shareholder value.
02—Key points
Key Highlights
- Total net sales grew 2% year-over-year to $3.09 billion, driven by strong performance in Outdoor, Marine, and Aviation segments.
- Fitness and Auto segments saw revenue declines, attributed to market shifts (activity trackers) and technological replacements (mobile/in-car navigation), respectively.
- Gross profit margin improved to 58%, indicating a positive shift in product mix towards higher-margin products.
- Research and Development (R&D) spending increased by 9% to $511.6 million, highlighting continued investment in innovation.
- Operating income increased by 7% to $668.9 million, demonstrating effective operational execution.
- The company maintained a strong liquidity position with $891.5 million in cash and $1.4 billion in marketable securities.
- Garmin continued to return capital to shareholders through dividends, with a total of $2.04 per share declared for the year.
03—One dollar
Follow one dollar
Of each $1.00 of revenue in FY2017, Garmin Ltd kept $0.23.
- Revenue$3.09B100.0%
- Cost of revenue−$1.29B41.8%
- Gross profit$1.80B58.2%
- Operating costs−$1.11B36.1%
- Operating income$683.6M22.1%
- Interest, other & tax$25.4M0.8%
- Net income$709.0M23.0%
Where FY2017 revenue went
$3.09B- Cost of revenue: $1.32B, 43% of revenue
- Operating income: $683.6M, 22% of revenue
- R&D: $511.6M, 17% of revenue
- SG&A: $438.0M, 14% of revenue
- Other operating costs: $130.1M, 4.2% of revenue
Kept 22% as operating income
Full revenue history →04—Financials
Financial Highlights
Figures from 10-KFY2017filed February 21, 2018Financial Statements
FY2017 against FY2016
| Line item | FY2017FY2016 | Change |
|---|---|---|
| Revenue | $3.09B$3.02B | +2.3% |
| Cost of Revenue | $1.32B$1.36B | −2.5% |
| Gross Profit | $1.80B$1.69B | +6.5% |
| R&D Expenses | $511.63M$467.96M | +9.3% |
| SG&A Expenses | $437.98M$410.56M | +6.7% |
| Operating Expenses | $1.11B$1.06B | +5.6% |
| Operating Income | $683.64M$632.86M | +8.0% |
| Net Income | $709.01M$517.72M | +36.9% |
| EPS (Basic) | $3.77$2.74 | +37.6% |
| EPS (Diluted) | $3.76$2.73 | +37.7% |
| Shares Outstanding (Basic) | 187.83M189K | +99375.7% |
| Shares Outstanding (Diluted) | 188.73M189K | +99577.3% |
05—Questions
Frequently Asked Questions
What were the main drivers of Garmin's revenue growth in 2017?
Garmin's revenue growth in 2017 was primarily driven by strong performance in its Outdoor, Marine, and Aviation segments. The Outdoor segment saw a significant 28% increase in sales, boosted by wearables and subscription services. The Marine segment grew 13% due to increased sales of chartplotters, fishfinders, entertainment systems, and the acquisition of Navionics. The Aviation segment also showed robust growth of 14%, with increases in both OEM and aftermarket sales.
Which segments experienced revenue declines, and what were the reasons?
The Fitness and Auto segments experienced revenue declines in 2017. The Fitness segment saw a 7% decrease, largely due to a general market contraction in basic activity trackers. The Auto segment declined by 15%, continuing a trend driven by the shrinking market for Personal Navigation Devices (PNDs) as consumers increasingly adopt navigation solutions integrated into smartphones and factory-installed automotive systems.
How did Garmin's R&D investments perform in 2017?
Garmin increased its investment in Research and Development (R&D) by 9% to $511.6 million in 2017, representing 17% of net sales. This increased spending reflects the company's ongoing commitment to innovation and the development of new products and features across its various segments.
What is Garmin's financial health and liquidity position as of the end of 2017?
Garmin maintained a strong financial position at the end of 2017. The company reported $891.5 million in cash and cash equivalents and $1.4 billion in marketable securities, indicating substantial liquidity. The company's net income increased by 36% to $695.0 million, and its operating income grew by 7% to $668.9 million, further demonstrating its financial strength and operational efficiency.
06—Continue