Summary
Garmin Ltd. reported a notable decline in net sales for the second quarter and first half of 2009 compared to the prior year, primarily driven by a significant slowdown in the automotive/mobile and aviation segments due to prevailing macroeconomic conditions. Despite the revenue contraction, the company demonstrated improved gross profit margins across most segments, signaling effective cost management and favorable product mix shifts in certain areas. Operating income also declined year-over-year, impacted by reduced sales and increased R&D investments, although operating margins showed improvement on a percentage basis. The company maintained a strong liquidity position with a substantial increase in cash and cash equivalents driven by robust operating cash flow. Garmin also managed its inventories effectively, reducing levels while maintaining adequate stock. While facing revenue challenges in key segments, Garmin continues to invest in product innovation, evidenced by increased R&D spending.
Financial Highlights
43 data points| Revenue | $669.10M |
| Cost of Revenue | $317.49M |
| Gross Profit | $351.61M |
| R&D Expenses | $56.25M |
| SG&A Expenses | $62.19M |
| Operating Expenses | $152.46M |
| Operating Income | $199.15M |
| Net Income | $161.87M |
| EPS (Basic) | $0.81 |
| EPS (Diluted) | $0.81 |
| Shares Outstanding (Basic) | 200.30M |
| Shares Outstanding (Diluted) | 200.85M |
Key Highlights
- 1Net sales decreased by 26.6% for the 13-week period ended June 27, 2009, and by 29.8% for the 26-week period ended June 27, 2009, compared to the prior year periods.
- 2Gross profit margin improved year-over-year, increasing by 680 basis points to 52.6% in Q2 2009 and by 270 basis points to 49.5% in the first half of 2009.
- 3Operating income for the 13-week period decreased by 16.5% and for the 26-week period by 37.5% compared to the prior year.
- 4Net cash provided by operating activities significantly increased to $555.7 million for the first half of 2009, up from $280.2 million in the prior year.
- 5Cash and cash equivalents increased to $958.9 million as of June 27, 2009, from $696.3 million as of December 27, 2008.
- 6Research and development expenses increased by 5.0% for the quarter and 7.9% for the first half of 2009, reflecting continued investment in product innovation.
- 7The company declared an annual cash dividend of $0.75 per share, payable in December 2009.