01—Abstract
Summary
Summary of the 10-Q filed July 31, 2019. Cited figures are marked; the original filing is the authoritative source.
Garmin Ltd. reported a solid financial performance for the second quarter and first half of fiscal year 2019, demonstrating revenue growth across key segments and improved profitability.
Total net sales increased by 7%a year-over-year for both the 13-week and 26-week periods, driven by strong performances in the outdoor, fitness, marine, and aviation segments. The auto segment, however, experienced a decline due to market contraction. The company also saw an improvement in gross profit and operating income, reflecting effective cost management and favorable product mix.
Financially, Garmin maintained a strong balance sheet with substantial cash and marketable securities. While cash from operations saw a decrease year-over-year primarily due to working capital changes, the company's overall liquidity position remains robust.
Significant investments were made in acquisitions and capital expenditures, reflecting strategic growth initiatives. Investors can note the company's continued investment in research and development and its positive outlook, despite ongoing market challenges in specific segments.
02—Key points
Key Highlights
- Total net sales increased by 7% year-over-year for both the 13-week and 26-week periods, reaching $954.8 million and $1.72 billion, respectively.
- Strong performance in the Outdoor, Fitness, Marine, and Aviation segments drove revenue growth, with Fitness becoming the largest revenue contributor at 26% in Q2 2019.
- Operating income grew by 18% for the 13-week period and 13% for the 26-week period, demonstrating improved profitability.
- Gross profit margin improved to 60% for both periods compared to 59% in the prior year, indicating better cost management and product mix.
- The company reported a net income of $223.7 million for the 13-week period and $363.8 million for the 26-week period, up from $190.3 million and $319.7 million respectively.
- Garmin holds a strong liquidity position with approximately $2.4 billion in cash and marketable securities as of June 29, 2019.
- The Auto segment experienced a 13% and 12% decrease in net sales for the 13-week and 26-week periods, respectively, attributed to the ongoing PND market contraction.
03—One dollar
Follow one dollar
Of each $1.00 of revenue in Q2 FY2019, Garmin Ltd kept $0.23.
- Revenue$954.8M100.0%
- Cost of revenue−$379.5M39.7%
- Gross profit$575.4M60.3%
- Operating costs−$319.1M33.4%
- Operating income$256.2M26.8%
- Interest, other & tax−$32.6M3.4%
- Net income$223.7M23.4%
04—Financials
Financial Highlights
Figures from 10-QQ2 FY2019filed July 31, 2019Financial Statements
Q2 FY2019 against Q2 FY2018
| Line item | Q2 FY2019Q2 FY2018 | Change |
|---|---|---|
| Revenue | $954.84M$894.45M | +6.8% |
| Cost of Revenue | $379.48M$371.18M | +2.2% |
| Gross Profit | $575.37M$523.27M | +10.0% |
| R&D Expenses | $148.88M$141.71M | +5.1% |
| SG&A Expenses | $128.74M$120.50M | +6.8% |
| Operating Expenses | $319.14M$305.76M | +4.4% |
| Operating Income | $256.22M$217.51M | +17.8% |
| Net Income | $223.66M$190.34M | +17.5% |
| EPS (Basic) | $1.18$1.01 | +16.8% |
| EPS (Diluted) | $1.17$1.00 | +17.0% |
| Shares Outstanding (Basic) | 189.85M188.54M | +0.7% |
| Shares Outstanding (Diluted) | 190.71M189.46M | +0.7% |
05—Questions
Frequently Asked Questions
How did Garmin's revenue perform in the second quarter of 2019 compared to the previous year?
Garmin's net sales increased by 7% to $954.8 million for the 13-week period ended June 29, 2019, compared to $894.5 million for the same period in 2018. This growth was driven by strong performance in the outdoor, fitness, marine, and aviation segments, which collectively increased by 12%.
What is the company's profitability trend, and which segments are contributing most?
Garmin showed improved profitability, with operating income increasing by 18% to $256.2 million for the 13-week period ended June 29, 2019, compared to the prior year. The fitness segment, which now represents 26% of total revenue, along with outdoor, marine, and aviation segments, are key contributors to the company's financial success.
What are the primary drivers behind the Auto segment's revenue decline?
The Auto segment's revenue decreased by 13% for the 13-week period and 12% for the 26-week period ended June 29, 2019. This decline is primarily attributed to the ongoing contraction of the Personal Navigation Device (PND) market.
How is Garmin's liquidity position, and what are its primary uses of cash?
As of June 29, 2019, Garmin held approximately $2.4 billion in cash and marketable securities, indicating a strong liquidity position. The company primarily uses cash flow from operations to fund capital expenditures, support working capital, pay dividends, and pursue strategic acquisitions.
06—Continue