Garmin reports 1Q results

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Total revenue dropped 4 percent for Garmin to $532 million in the first quarter from $557 million in the first quarter of 2012.

The company announced that the marine segment saw one of the largest dips, falling 10 percent, to $50 million, because of heavily discounted products necessary to maintain market share.

“In the marine segment, revenues declined 10 percent year over year due to several factors, including the overall age of our product lineup, unfavorable weather conditions in the U.S. and ongoing macroeconomic uncertainties,” Garmin president and CEO Cliff Pemble said in a statement.

“In addition to decreased revenue we experienced a significant reduction in gross margins, as it became necessary to discount existing products to maintain market share. Reduced gross margins, coupled with a year-over-year increase in research and development expense, resulted in an operating loss for the segment. We believe strongly in the innovation that is forthcoming in our glass helms and future offerings and are committed to returning the segment to profitability.”

The company announced its GPSMAP 8000 glass helm series in the marine segment, a device that seeks to enhance user interface.

All geographic areas saw declines. The Americas were down 3 percent, with $286 million in revenue; Europe, Middle East and Africa were down 4 percent, with revenue totaling $191 million, and Asia Pacific dropped 10 percent, to $55 million.

Gross margin improved both sequentially and year over year, to 52 percent, in the first quarter from 49 percent in the fourth quarter of 2012 and 51 percent in the first quarter of 2012.

For the quarter that ended March 30 the company reported net earnings of $88.7 million, compared with $86.9 million during the first quarter last year. Diluted earnings per share increased 2 percent, to 45 cents, from 44 cents in the first quarter of 2012, including the impact of the one-time tax benefits; pro forma diluted earnings per share decreased 11 percent, to 40 cents, from 45 cents 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.)

“The first quarter of 2013 proved to be challenging, much as we had anticipated when providing guidance in February,” Pemble said. “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.”

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