10-KPeriod: FY2017

GARMIN LTD Annual Report, Year Ended Dec 30, 2017

Filed February 21, 2018For Securities:GRMN

Summary

Garmin Ltd.'s 2017 Form 10-K filing shows a year of robust growth, with total net sales increasing by 2% to $3.09 billion. 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%, reflecting a favorable shift in product mix towards higher-margin offerings. Research and Development (R&D) investment increased by 9% to $511.6 million, 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 million 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.

Financial Highlights

53 data points
Beta

Revenue

$3.09B

58.2% Gross Margin

Net Income

$709.01M

23.0% Net Margin

EPS (Diluted)

$3.76

Total Assets

$4.95B

Cash & Equivalents

$891.76M

Free Cash Flow

$521.15M

Financial Statements
Beta
Revenue$3.09B
Cost of Revenue$1.32B
Gross Profit$1.80B
R&D Expenses$511.63M
SG&A Expenses$437.98M
Operating Expenses$1.11B
Operating Income$683.64M
Net Income$709.01M
EPS (Basic)$3.77
EPS (Diluted)$3.76
Shares Outstanding (Basic)187.83M
Shares Outstanding (Diluted)188.73M

Key Highlights

  • 1Total net sales grew 2% year-over-year to $3.09 billion, driven by strong performance in Outdoor, Marine, and Aviation segments.
  • 2Fitness and Auto segments saw revenue declines, attributed to market shifts (activity trackers) and technological replacements (mobile/in-car navigation), respectively.
  • 3Gross profit margin improved to 58%, indicating a positive shift in product mix towards higher-margin products.
  • 4Research and Development (R&D) spending increased by 9% to $511.6 million, highlighting continued investment in innovation.
  • 5Operating income increased by 7% to $668.9 million, demonstrating effective operational execution.
  • 6The company maintained a strong liquidity position with $891.5 million in cash and $1.4 billion in marketable securities.
  • 7Garmin continued to return capital to shareholders through dividends, with a total of $2.04 per share declared for the year.

Frequently Asked Questions

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.

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.

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.

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.