Garmin reports first quarter revenue and profit growth

SCHAFFHAUSEN, Switzerland—Garmin Ltd. (Nasdaq: GRMN) today announced results for the first quarter ended March 30, 2019.

Highlights for the first quarter 2019 include:

  • Record first quarter revenue of $766 million, an 8% increase, with marine, aviation, fitness and outdoor collectively increasing 12% over the prior year quarter
  • Gross margin of 59.0% compared to 60.0% in the prior year quarter
  • Operating margin of 19.8% compared to 20.0% in the prior year quarter
  • Operating income of $151 million, increasing 6% over the prior year quarter
  • GAAP diluted EPS was $0.74 and pro forma diluted EPS(1) was $0.73, increasing 7% over the prior year quarter
  • Selected by BMW AG as their lead design and production partner of infotainment modules for the BMW Group, validating Garmin as a tier 1 supplier to the world’s most respected brands
  • Announced the certification of the G3X Touch cockpit display system for installation in nearly 500 models of single engine piston aircraft
  • Named Supplier of the Year by OEM customers and industry groups in both Aviation and Marine, confirming our commitment to quality products and customer service
  • Introduced MARQ TM, a collection of five premium smart tool watches inspired by our heritage in the aviation, automotive, marine, outdoor and sport markets
  • Recently announced that Garmin was recognized by Forbes as one of the top five America’s Best Employers in 2019

Revenue from the marine segment grew 18% in the quarter driven by strong demand for our chartplotters and Panoptix TM LiveScope sonars. Gross and operating margin were 58% and 19%, respectively. We recently introduced the ECHOMAP TM Ultra series, combining built-in Panoptix LiveScope support with new mapping content. During the quarter, we were named 2018 Supplier of the Year by Independent Boat Builders, Inc.

Revenue from the outdoor segment grew 7% in the quarter with contributions from multiple product categories. Gross and operating margin were 63% and 27%, respectively. During the quarter, we introduced MARQ, a collection of lifestyle inspired watches reflecting our strong heritage as an active lifestyles company. Also, we launched the Approach® S40, a stylish golf watch featuring a color touch screen display and smartwatch capabilities.

Total operating expenses in the quarter were $300 million, a 6% increase from the prior year. Research and development increased 3%, primarily due to engineering personnel costs. Selling, general and administrative expenses increased 8%, primarily due to increased legal related costs and personnel costs. Advertising increased 9%, driven primarily by higher spend in the outdoor and marine segments.

The effective tax rate in the first quarter of 2019 was 15.7% compared to 16.0% in the prior year quarter.

In the first quarter of 2019, we generated over $134 million of free cash flow (see attached table for reconciliation of this non-GAAP measure). We ended the quarter with cash and marketable securities of approximately $2.7 billion.

As announced in February 2019, the Board will recommend to the shareholders for approval at the annual meeting to be held on June 7, 2019 a cash dividend in the total amount of $2.28 per share (subject to adjustment if the Swiss Franc weakens more than 35% relative to the USD), payable in four equal installments on dates to be approved by the Board.

To read the full report, visit Garmin here.