Garmin Ltd. reported total revenue in the third quarter reached $870 million, up 19% from $729 million in third quarter 2007. Outdoor/Fitness segment revenue increased 35% to $119 million.
In other divisions, automotive/obile segment revenue increased 21% to $626 million, aviation segment revenue increased 9% to $81 million, and
marine segment revenue decreased 8% to $44 million.
marine segment revenue decreased 8% to $44 million.
North America revenue was $585 million compared to $454 million, up 29%. Europe revenue was $247 million compared to $227 million, up 9%.
Asia revenue was $38 million compared to $48 million, down 21%.
Asia revenue was $38 million compared to $48 million, down 21%.
Gross margin of 44.3% compared to 45.8% in second quarter 2008 and 46.9% in third quarter 2007. Operating margin of 24.6% compared to 26.2% in second quarter 2008 and 29.4% in third quarter of 2007.
Net income dropped to $171.2 million, or 82 cents a share, from $193.5 million, or 88 cents, a year ago. Excluding the impact of foreign exchange, income was down to $181.6 million, or 87 cents a share, from $.196.7 million, or 89 cents, a year earlier.
Dr. Min Kao, chairman and chief executive officer, said, “We are experiencing challenging macroeconomic conditions, yet Garmins products continued to attract consumers, generating revenue growth and allowing us to expand our global leadership position in the industry during the third quarter. While most of our segments continue to grow, we are cognizant of the continued economic slowdown and business climate. As such, we are actively taking steps to manage our business appropriately. These include scaling our operations to better match current business conditions and changes to inventory planning that will allow us to reduce inventory levels by approximately $150 million by the end of the year. In addition, we will be more focused in our advertising spending as the economy and PND market change.”
The strength of our product line-up in the automotive/mobile segment is unsurpassed and we were excited to introduce the new holiday products including the updates to our popular nüvi® 2×5 and nüvi® 7×5 series. These products deliver free lifetime traffic to the consumer through advertising sponsorships which is a first for the industry. The latest nüvi® 7×5 products also deliver lane assist which provides drivers with a clear illustration of what lies ahead on their route and 3-D views of buildings in some areas which further enhances the consumer experience.”
Revenue in our outdoor/fitness segment continued to grow rapidly when compared to the year ago quarter due to the strength of our product line-up and an expanding fitness market. Specific growth drivers include the Colorado series, the Forerunner® 405, the Edge® 705, and the Oregon series, which was just released in the third quarter. We believe this category will continue to perform well during the holidays due to the gift appeal of both the outdoor and fitness products.
Our aviation segment continued to drive growth in the business during the quarter, though at a slower rate due to challenging macroeconomic conditions. Revenue contribution from our newly certified G600 and shipments of integrated cockpits to our new OEM partners, namely Cirrus and Embraer, have offset the slowdown in demand for portable and retrofit products and production cuts from our existing base of OEM partners.”
Our marine segment saw declining revenue for the second straight quarter on a year-over-year basis due to the severe impact on this industry of macroeconomic conditions and high fuel prices. However, we continue to focus on innovation and on delivering a full suite of products to marine OEMs, including our new GHP10 autopilot which just recently began shipping and the VHF radios that were announced this month. Garmins diverse business composition allows us to endure the downturn in the boating industry while still making appropriate levels of research and development investment for the future.”
Fiscal 2008 Outlook
Garmin said that due to the continued deterioration of the economic conditions, its impact on consumers worldwide, and the continued weakening of the Euro against the US dollar, it is revising its full-year guidance.
* Overall revenue is expected to be $3.6 billion in 2008, and earnings per share of $3.78 (excluding the effects of foreign currency translation) including the $0.27 related to the tender of our Tele Atlas N.V. shares.
* Annual segment revenue growth rates for our automotive/mobile, outdoor/fitness, and aviation segments are expected to be 13%, 25%, and 7%, respectively. It continues to believe that marine segment revenues will be flat in 2008.
* The company anticipates operating margins to be approximately 24% for the full year 2008.
* Its 2008 full year effective tax rate is expected to be approximately 19%, up from 12% in 2007.
* Annual segment revenue growth rates for our automotive/mobile, outdoor/fitness, and aviation segments are expected to be 13%, 25%, and 7%, respectively. It continues to believe that marine segment revenues will be flat in 2008.
* The company anticipates operating margins to be approximately 24% for the full year 2008.
* Its 2008 full year effective tax rate is expected to be approximately 19%, up from 12% in 2007.
