Summary
Garmin Ltd. reported a strong first quarter for 2011, with net sales increasing by 18% year-over-year to $507.8 million. This growth was driven by robust performance across most segments, particularly Fitness and Marine, which saw substantial percentage gains, and continued strength in the dominant Auto/Mobile segment. Net income more than doubled, reaching $95.5 million, a 156% increase compared to the prior year's first quarter, largely due to significant positive foreign currency exchange rate movements and a lower effective tax rate. Despite an increase in cost of goods sold driven by higher volumes and a one-time warranty benefit in the prior year, the company managed to grow gross profit dollars, though the gross profit margin decreased due to the prior year's benefit and increased per-unit costs in the Auto/Mobile segment. Liquidity remains strong, with $1.2 billion in cash and cash equivalents and a substantial increase in cash generated from operating activities. The company's investment strategy focuses on preserving capital and maintaining liquidity. While facing numerous ongoing patent litigation cases, management believes these claims are without merit and intends to defend them vigorously. The company anticipates its existing cash and operational cash flow will be sufficient to cover its financial needs through fiscal year 2011.
Financial Highlights
49 data points| Revenue | $507.83M |
| Cost of Revenue | $269.46M |
| Gross Profit | $238.37M |
| R&D Expenses | $70.48M |
| SG&A Expenses | $73.19M |
| Operating Expenses | $163.62M |
| Operating Income | $74.75M |
| Net Income | $95.48M |
| EPS (Basic) | $0.49 |
| EPS (Diluted) | $0.49 |
| Shares Outstanding (Basic) | 193.92M |
| Shares Outstanding (Diluted) | 194.72M |
Key Highlights
- 1Net sales grew 18% to $507.8 million in Q1 2011 compared to Q1 2010.
- 2Net income more than doubled, increasing 156% to $95.5 million.
- 3Operating income decreased by 10% to $74.8 million, primarily due to a large warranty benefit in the prior year.
- 4Significant positive impact from foreign currency exchange gains ($12.1 million) compared to a loss in the prior year (-$46.5 million).
- 5Effective tax rate decreased significantly to 1.5% from 18.0% due to release of reserves and favorable audits.
- 6Cash and cash equivalents remained strong at $1.21 billion.
- 7The company is involved in multiple patent litigations but believes the claims are without merit.