01—Abstract
Summary
Summary of the 10-Q filed May 8, 2013. Cited figures are marked; the original filing is the authoritative source.
Garmin Ltd.'s first quarter 2013 report shows a 4% decrease in net sales to $531.96 milliona compared to the prior year's quarter, primarily driven by declines in the automotive/mobile and marine segments.
Despite the revenue dip, net income saw a slight increase of 2% to $88.67 millionb, largely due to a favorable income tax provision resulting from the release of uncertain tax reserves and the recognition of R&D tax credits. The company experienced a significant increase in cash used in financing activities, mainly due to higher dividend payments.
02—Key points
Key Highlights
- Net sales decreased by 4% to $531.96 million for the quarter ended March 30, 2013, compared to $556.60 million in the prior year.
- Net income increased by 2% to $88.67 million from $86.86 million year-over-year.
- Operating income decreased by 12% to $79.93 million, impacted by lower revenues and increased R&D expenses.
- Automotive/Mobile and Marine segments experienced revenue declines of 10%, while Aviation saw a 10% increase.
- Research and Development expenses increased by 10% to $87.69 million, reflecting investment in new products and personnel.
- Cash provided by operating activities significantly decreased by $62.9 million to $59.36 million, primarily due to changes in working capital.
- The company announced a $300 million share repurchase program in February 2013 but had not repurchased any shares as of March 30, 2013.
03—One dollar
Follow one dollar
Of each $1.00 of revenue in Q1 FY2013, Garmin Ltd kept $0.17.
- Revenue$532.0M100.0%
- Cost of revenue−$255.8M48.1%
- Gross profit$276.1M51.9%
- Operating costs−$196.2M36.9%
- Operating income$79.9M15.0%
- Interest, other & tax$8.7M1.6%
- Net income$88.7M16.7%
04—Financials
Financial Highlights
Figures from 10-QQ1 FY2013filed May 8, 2013Financial Statements
Q1 FY2013 against Q1 FY2012
| Line item | Q1 FY2013Q1 FY2012 | Change |
|---|---|---|
| Revenue | $531.96M$556.60M | −4.4% |
| Cost of Revenue | $255.82M$272.84M | −6.2% |
| Gross Profit | $276.13M$283.76M | −2.7% |
| R&D Expenses | $87.69M$79.72M | +10.0% |
| SG&A Expenses | $86.27M$90.12M | −4.3% |
| Operating Expenses | $196.21M$193.43M | +1.4% |
| Operating Income | $79.93M$90.33M | −11.5% |
| Net Income | $88.67M$86.86M | +2.1% |
| EPS (Basic) | $0.45$0.45 | 0.0% |
| EPS (Diluted) | $0.45$0.44 | +2.3% |
| Shares Outstanding (Basic) | 196K195K | +0.5% |
| Shares Outstanding (Diluted) | 196K196K | +0.4% |
05—Questions
Frequently Asked Questions
What was the primary driver for the decrease in net sales?
The primary driver for the decrease in net sales was a 10% decline in both the automotive/mobile and marine segments. This was partially offset by growth in the fitness and aviation segments.
How did Garmin manage to increase net income despite lower sales?
Garmin managed to increase net income due to a significant favorable shift in its income tax provision, which turned into a benefit of $7.03 million from an expense of $12.70 million. This was primarily driven by the release of uncertain tax position reserves and the recognition of research and development tax credits.
What is the company's outlook on liquidity and capital resources?
Garmin expects its existing cash balances and cash flow from operations to be sufficient to meet its projected capital expenditures, working capital needs, and other cash requirements at least through the end of fiscal 2013. The company also has a $300 million share repurchase program authorized.
Are there any significant legal proceedings that could impact Garmin?
Garmin is involved in several legal proceedings, primarily related to patent infringement claims. While the company believes these claims are without merit and intends to defend itself vigorously, management cannot guarantee that an unfavorable outcome would not have a material adverse effect on its financial position or results of operations. However, management does not currently expect any of these proceedings to have a material adverse effect.
06—Continue