Garmin Reports First Quarter 2013 Results

SCHAFFHAUSEN, Switzerland — (BUSINESS WIRE) — May 1, 2013 — Garmin Ltd. (Nasdaq: GRMN) today announced results for the fiscal quarter ended March 30, 2013.

First Quarter 2013 Financial Summary:

  • Total revenue of $532 million, down 4% from $557 million in first quarter 2012
    • Automotive/Mobile segment revenue decreased 10% to $253 million
    • Outdoor segment revenue decreased 1% to $76 million
    • Fitness segment revenue increased 2% to $72 million
    • Marine segment revenue decreased 10% to $50 million
    • Aviation segment revenue increased 10% to $81 million
  • All geographies posted revenue declines:
    • Americas revenue was $286 million, down 3%
    • Europe, Middle East and Africa (EMEA) revenue was $191 million, down 4%
    • Asia Pacific (APAC) revenue was $55 million, down 10%
  • Gross margin improved both sequentially and year-over-year to 52% for first quarter 2013 from 49% in fourth quarter 2012 and 51% in first quarter 2012
  • Operating margin decreased year-over-year to 15%, compared to 16% in first quarter 2012
  • Effective tax rate decreased to (8.6%) in first quarter of 2013 compared to 12.8% in first quarter 2012 due to the release of tax reserves and recognition of the 2012 research and development tax credit; the tax rate adjusted for releases of reserves was 11.6%
  • Diluted earnings per share (EPS) increased 2% to $0.45 from $0.44 in first quarter 2012 including the impact of the one-time tax benefits; pro forma diluted EPS decreased 11% to $0.40 from $0.45 in the same quarter in 2012 (pro forma earnings per share excludes the impact of foreign currency transaction gain or loss and income tax benefit due to completion of tax audits and/or expiration of statutes)
  • Generated $48 million of free cash flow in first quarter 2013

Recent Business Highlights:

  • Announced an auto OEM relationship with Mercedes Benz which will commence in 2013 and add Garmin navigation software to most models by 2017.
  • Delivered the Approach® S2 for golfers and the Edge® 510 and 810 for cyclists, furthering our product innovation and leadership in both categories.
  • Announced an aviation OEM relationship with Enstrom serving their 480B helicopter with the G1000H™ integrated flight deck.
  • Launched new avionics for experimental aircraft including an integrated autopilot solution offering the most sophisticated capabilities for this aircraft class.
  • Announced our GPSMAP® 8000 glass helm series in marine, a flagship series of multi function devices offering new features, an enhanced user interface and a beautiful design.

Executive Overview from Cliff Pemble, President and Chief Executive Officer:

“The first quarter of 2013 proved to be challenging, much as we had anticipated when providing guidance in February,” said Cliff Pemble, president and chief executive officer of Garmin Ltd. “Because we expected revenues to decline, we entered the year cognizant of the need to closely manage expenses which we accomplished. Both advertising and selling, general and administrative expenses declined year-over-year. Research and development expense increased as we remain committed to future innovation that can deliver long-term growth in both consumer and OEM markets.

The outdoor segment posted a slight revenue decline in the seasonally weak first quarter. Though this is a slow start to the year, we remain excited about the innovative products that we will offer throughout the year.

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