Summary
Garmin Ltd. reported a significant net loss of $146.8 million for the 13-week period ended September 27, 2014, a sharp decline from a net income of $187.7 million in the same period of 2013. This loss was largely driven by a substantial income tax expense of $319.5 million, stemming from an inter-company restructuring aimed at accessing and repatriating historical and future earnings more efficiently. Excluding this one-time tax charge, the operating performance showed resilience, with net sales increasing by 10% year-over-year to $706.3 million, driven by strong growth in the Fitness, Outdoor, and Aviation segments. The Automotive/Mobile segment experienced a slight revenue decline, but overall gross profit improved, reflecting strong gross margins across most segments. The company's balance sheet remains robust, with total assets of $4.7 billion and significant cash and marketable securities totaling over $1.3 billion. However, current liabilities increased due to a notable rise in dividend payable. Cash flow from operations was $377.7 million for the first nine months of 2014, a decrease from the prior year, impacted by the tax expense and changes in working capital. The company also fully utilized its $300 million share repurchase program during the quarter. Investors should monitor the impact of the recent Fusion Electronics acquisition, ongoing R&D investments in growth areas, and the significant legal proceedings facing the company.
Financial Highlights
51 data points| Revenue | $706.28M |
| Cost of Revenue | $308.04M |
| Gross Profit | $398.25M |
| R&D Expenses | $99.00M |
| SG&A Expenses | $90.63M |
| Operating Expenses | $222.74M |
| Operating Income | $175.50M |
| Net Income | -$146.83M |
| EPS (Basic) | $-0.76 |
| EPS (Diluted) | $-0.76 |
| Shares Outstanding (Basic) | 192K |
| Shares Outstanding (Diluted) | 192K |
Key Highlights
- 1Net loss of $146.8 million for the quarter, significantly impacted by a $307.6 million tax expense related to inter-company restructuring.
- 2Net sales increased 10% year-over-year to $706.3 million, driven by robust growth in Fitness (+43%), Outdoor (+19%), and Aviation (+19%) segments.
- 3Automotive/Mobile segment revenue decreased 5% year-over-year, though it remains the largest segment by revenue (44%).
- 4Gross profit increased 13% to $398.2 million, with gross profit margin improving to 56% from 55%.
- 5Operating income increased 16% to $175.5 million, reflecting revenue growth and improved margins.
- 6The company utilized its full $300 million share repurchase authorization during the quarter.
- 7Strong liquidity position with cash and marketable securities totaling approximately $1.3 billion as of September 27, 2014.