GARMIN LTD Quarterly Report for Q2 Ended Jun 29, 2013

Summary

Garmin Ltd. reported mixed results for the quarter ended June 29, 2013, with a 3% year-over-year decrease in net sales to $696.6 million. This decline was primarily driven by a 12% drop in the automotive/mobile segment, which now represents 50% of total revenue. Despite the top-line decrease, the company saw positive sales growth in its Outdoor, Marine, and Aviation segments, signaling a strategic shift away from its historically dominant automotive business. Profitability also faced pressure, with operating income down 17% to $170 million and net income decreasing 7% to $172.5 million. This was largely due to a lower gross profit margin, particularly in the automotive/mobile and marine segments, and a significant 20% increase in research and development expenses as Garmin invests in future product development across its various segments. The company maintained a strong balance sheet with over $1.2 billion in cash and marketable securities, and initiated a $300 million share repurchase program, indicating confidence in its financial health and future prospects.

Key Highlights

• 1Net sales decreased by 3% year-over-year to $696.6 million for the 13-week period ended June 29, 2013.
• 2The Automotive/Mobile segment experienced a significant 12% decline in net sales, though it still represents 50% of total revenue.
• 3Growth was observed in the Outdoor (6%), Marine (7%), and Aviation (16%) segments, indicating diversification.
• 4Operating income decreased by 17% to $169.9 million, impacted by lower gross margins and increased R&D spending.
• 5Net income for the quarter fell by 7% to $172.5 million.
• 6Research and Development expenses increased by 20% to $96.2 million, reflecting investment in new product development.
• 7The company maintained a strong liquidity position with $1.23 billion in cash and cash equivalents and $1.62 billion in marketable securities.

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