Summary
Garmin Ltd. reported revenues of $728.8 million for the 13-week period ended June 26, 2010, a 8.9% increase year-over-year, and $1.16 billion for the 26-week period, a 4.9% increase. Net income for the 13-week period was $134.8 million, down from $161.9 million in the prior year, reflecting a 17% decrease. For the 26-week period, net income was $172.1 million, a 18.2% decrease from $210.4 million in the prior year. This decline in profitability was largely attributed to significant foreign currency exchange losses and increased operating expenses, particularly in research and development and selling, general, and administrative categories, driven by new product development and Swiss redomestication efforts. The company saw strong growth in its Outdoor/Fitness and Marine segments, which increased by 31.8% and 23.4% respectively in the quarter. However, the Automotive/Mobile segment, the largest revenue contributor, experienced a 2.4% increase in the quarter and a 4.0% decrease year-to-date, indicating a potential maturation of this market. The company continues to invest heavily in R&D, with expenses increasing significantly due to new product initiatives, particularly in the mobile handset space. Management expressed confidence that current cash balances and operating cash flow will be sufficient to meet future financial obligations through the end of fiscal 2010.
Financial Highlights
48 data points| Revenue | $728.76M |
| Cost of Revenue | $337.11M |
| Gross Profit | $391.65M |
| R&D Expenses | $73.34M |
| SG&A Expenses | $73.83M |
| Operating Expenses | $189.61M |
| Operating Income | $202.04M |
| Net Income | $134.82M |
| EPS (Basic) | $0.68 |
| EPS (Diluted) | $0.67 |
| Shares Outstanding (Basic) | 198.95M |
| Shares Outstanding (Diluted) | 200.10M |
Key Highlights
- 1Net sales increased by 8.9% to $728.8 million for the 13-week period and 4.9% to $1.16 billion for the 26-week period ended June 26, 2010.
- 2Net income decreased by 17% to $134.8 million for the 13-week period and 18.2% to $172.1 million for the 26-week period.
- 3Significant foreign currency losses, particularly due to the strengthening of the U.S. Dollar against the Euro, negatively impacted profitability.
- 4Operating expenses increased, with Research & Development up 30.4% and Selling, General & Administrative up 18.7% for the 13-week period, driven by new product initiatives and Swiss redomestication costs.
- 5The Outdoor/Fitness and Marine segments showed robust revenue growth of 31.8% and 23.4% respectively in the quarter, while the Automotive/Mobile segment's growth slowed.
- 6The company repurchased approximately $99.6 million of its common shares under an approved $300 million repurchase program.
- 7Gross profit margins improved year-over-year, partly due to a significant warranty reserve adjustment that decreased accrued warranty costs.