Garmin reports 4Q, year-end results


Garmin Ltd. today reported fourth-quarter revenue of $803 million and posted an operating loss for the marine segment in the “seasonally weak” quarter.

The Switzerland-based company said its marine segment posted revenue growth of 18 percent in the quarter and saw strong demand for its chart plotters and a contribution from Fusion Electronics, which Garmin acquired last July.

Gross margins declined year-over-year, to 47 percent, in the quarter “due to the lower margin profile of the entertainment products and highly competitive pricing dynamics in aftermarket marine electronics,” which led to a slight operating loss in the quarter, the company said.

Garmin reported a profit of $210.2 million, or $1.09 a share, for the quarter that ended Dec. 27, compared with $163.6 million, or 83 cents a share, in the quarter a year earlier.

Revenue for the quarter rose 5.7 percent to $803.3 million from $759.7 million last year.

For the full year, the company reported earnings of $364.2 million, or $1.88 a diluted share, compared with $612.4 million, or $3.12 a share, in 2013.

The company said it continues to “forge ahead with innovative products that we believe will improve our profitability and competitive position going forward. As such, we announced the 2015 availability of numerous products incorporating our industry-leading scanning sonar technology, along with new radar and autopilot offerings.”

Garmin said it is planning for marine segment revenue and operating profit improvement this year as it continues to focus on innovation and market-share gains while managing costs and driving efficiencies at Fusion.

The non-automotive/mobile segments of outdoor, fitness, aviation and marine delivered 58 percent of total revenue. The company announced gross and operating margins of 54 percent and 22 percent, respectively, and market-share gains in several categories.

Total revenue was $2.87 billion in 2014, compared with $2.63 billion the previous year, as the non-automotive and mobile segments of outdoor, fitness, aviation and marine grew by a combined 23 percent from 2013 and contributed 57 percent of total revenue.

Gross and operating margins for the year were 56 percent and 24 percent, respectively, improving from 2013 levels.

“Through an intense focus on innovation and execution, we posted four consecutive quarters of revenue and pro-forma EPS growth in 2014,” president and CEO Cliff Pemble said in a statement. “We have redefined our earnings power as a company and further diversified our operating profit base. I am pleased with everything that we have accomplished in 2014.

“Yet we recognize that significant opportunities and challenges lie ahead of us,” Pemble said. “We will not be complacent. We believe that we are well positioned to gain share in categories that we are currently serving while also launching products into new categories in the future. 2014 serves as a solid foundation from which to build, and we plan to do just that.”

The company expects 2015 revenue of about $2.9 billion as growth in fitness, marine and aviation offsets ongoing declines in PND.

“This level of revenue assumes a [euro /U.S. dollar] exchange rate of 1.15, which created a material year-over-year headwind when compared to the average rate of 1.33 in 2014,” Pemble said.

“We expect gross margins to remain relatively stable, at approximately 56 percent, due to the anticipated segment and product mix. Operating margins are forecasted to decline slightly, to 23 percent, due primarily to ongoing research-and-development investment. Though currency volatility is expected to slow our revenue growth in 2015, we do not want to forgo growth in our R&D investment, which could negatively impact both current and future product development plans. With an expected tax rate of 16 to 17 percent, we currently forecast 2015 EPS of approximately $3.10.”


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