(Logo: http://www.newscom.com/cgi-bin/prnh/20061026/CGTH082LOGO)
First Quarter 2008 Financial highlights:
-- Total revenue of $664 million, up 35% from $492 million in first
quarter 2007
-- Automotive/Mobile segment revenue increased 43% to $452 million in
first quarter 2008
-- Marine segment revenue increased 30% to $56 million in first quarter
2008
-- Aviation segment revenue increased 19% to $85 million in first quarter
2008
-- Outdoor/Fitness segment revenue increased 16% to $71 million in first
quarter 2008
-- All geographic areas experienced healthy growth:
-- North America revenue was $411 million compared to $323 million,
up 27%
-- Europe revenue was $211 million compared to $148 million, up 43%
-- Asia revenue was $42 million compared to $21 million, up 100%
-- Gross margin increased sequentially and held steady year-over-year,
with first quarter 2008 at 48.2%, compared to 48.3% in first quarter
2007;
-- Operating margin increased sequentially and declined slightly
year-over-year, with first quarter 2008 at 26.0%, compared to 28.1% in
first quarter 2007.
-- Earnings per share increased 5% to $0.67 from $0.64 in first quarter
2007; excluding foreign exchange, EPS increased 17% to $0.69 from $0.59
in the same quarter in 2007.
Business highlights:
-- Triple-digit unit growth in the PND market in both North America and
Europe, reinforcing that Garmin is the market leader.
-- Market research indicates Garmin's PND market share in North America
remains relatively stable, while European market share is increasing, a
benefit of our European distributor acquisitions.
-- Announced nuvifone(TM), a revolutionary new device that seamlessly
integrates navigation, communication and full-featured web browsing in
one elegant device. The nuvifone continues to generate interest from
wireless carriers and the public.
-- Also announced a number of leading-edge devices at the Consumer
Electronics Show in Las Vegas, with compelling features like speech
recognition and dynamic second-generation MSN Direct content, as well
as next generation fitness and outdoor handheld units.
-- Completion on our new 187,000 sq. ft. U.S. warehouse addition, which
more than doubles our capacity.
-- Purchased approximately 1.4 million shares of GRMN in the first
quarter.
Executive overview from Dr. Min Kao, Chairman and Chief Executive Officer:
"We are pleased with our performance in the first quarter, particularly given the general slowdown in the global economy. Demand for our automotive/mobile products continued beyond the traditionally strong fourth quarter holiday season, with another quarter of robust triple-digit growth. While the first quarter is typically our slowest quarter, we were nonetheless able to achieve healthy growth in each of our business segments and each geographic area.
We look forward to a successful second quarter, with an array of new and exciting portable navigation and outdoor/fitness devices becoming available, including:
-- The nuvi(R) 800 series, which offers industry-leading speech
recognition technology and enhanced MSN Direct data services
-- The nuvi 900 family, a navigation device that integrates digital
television for mobile consumers
-- The Forerunner(R) 405, a fitness device that integrates new wireless
features in a watch form factor
-- The Colorado(TM) series of outdoor navigators, featuring an innovative
scroll wheel and pre-loaded maps with 3-D mapping presentations
These new product introductions represent significant advances in technology, with features and functions that we believe customers will find compelling. Furthermore, we are in continuing talks with a number of wireless carriers in our primary markets who are interested in nuvifone. We believe this new device will change the way people connect, communicate, and navigate their mobile world. Nuvifone also marks a significant step for our company, and one that we feel positions us for long-term, sustainable growth.
Response to our revolutionary new line of marine products continues to be very positive. We are very pleased with the 30% growth we have achieved in the first quarter. The expansion of our product lines, including marine instruments and large screen, network chartplotters have expanded our OEM and aftermarket marine opportunities.
The new Colorado series of handheld devices and our redesigned Forerunner 405 have generated a great deal of excitement in our outdoor/fitness business. These products are becoming available just as people are venturing outdoors again, and we expect to announce additional new devices in this business segment in the coming months.
Our aviation segment is poised for new growth, thanks to new products and innovations like the FAA's supplemental type certification for Garmin Synthetic Vision Technology (SVT(TM)), which is designed to integrate with our acclaimed G1000 avionics suite. This technology presents a 3D depiction of terrain, obstacles and traffic on the G1000's primary flight-display so that the avionics panel replicates what pilots would see outside the cockpit on a clear day -- another leap forward in situational awareness. These announcements as well as our continuing work to roll out additional OEM platforms, including the Embraer Phenom 100, have us optimistic about aviation opportunities during the second half of 2008."
Financial overview from Kevin Rauckman, Chief Financial Officer:
"Overall we are pleased with our financial results for the first quarter, and we remain focused on the operational efficiency of our business," said Kevin Rauckman, chief financial officer of Garmin Ltd. "Our revenue and earnings per share during the first quarter grew 35% and 5% respectively. Excluding the impact of foreign exchange, EPS for the quarter grew 17%, from $0.59 to $0.69. Automotive/mobile segment's first quarter revenues increased 43% compared to the prior year and our marine segment revenue grew 30%, thanks to the continued acceptance of our new product lineup.
Gross margin for the overall business remained stronger than we had anticipated in the first quarter. The auto/mobile segment margin stayed flat at 43% when compared to the first quarter of 2007, as we achieved raw material cost savings and operational efficiencies. Our marine gross margins improved to 58%, compared to 49% during first quarter 2007, thanks to heavy interest in our new and innovative product mix. Our outdoor/fitness category and aviation segment gross margins remained stable during the first quarter at 53% and 64%, respectively.
Operating margin declined 130 basis points in our auto/mobile segment in the first quarter of 2008 when compared with the year-ago quarter but were steady at 24% when compared to the fourth quarter 2007. Our marine segment operating margins improved to 32%, compared with 26% one year ago. Operating margins declined in our aviation segment to 33%, which is attributable to additional R&D investments in the growing business jet market. Likewise, our outdoor/fitness segment declined to 27%, compared to 35% in the first quarter of 2007, which is attributable to discounts on some of our older products to make way for our newer fitness and outdoor handheld devices.
We maintained our strong cash flow and cash position. We generated $166 million of free cash flow in the first quarter of 2008, resulting in a cash and marketable securities balance of $1.2 billion at the end of the quarter.
