Garmin posted record revenue and earnings for its third fiscal quarter ended September 25, 2004. Revenue increased 43% to $193.6 million from $135.6 million in the year-ago quarter. Net income was $67.1 million, or $0.62 diluted earnings per share, compared to $35.3 million or $0.32 diluted earnings per share in the year-ago quarter. Third quarter net income included a $4.4 million foreign currency gain as a result of a stronger U.S. dollar compared to the Taiwan dollar. Excluding the effects of foreign currency, diluted EPS for the quarter was $0.58 compared to $0.39 in the year-ago quarter, exceeding the high end of management's guidance of $0.42 to $0.45.
“We are pleased to announce another quarter of solid revenue growth. New product introductions continue to create interest in our products. Revenues continue strong, driven by demand across all product lines,” said Dr. Min Kao, CEO of Garmin Ltd. “The consumer segment recorded a 37 percent growth in revenues during this quarter despite continued component availability constraints. The introduction of 44 new and innovative products year to date has generated excitement in our core markets, and our new product pipeline remains robust as we look towards 2005. Our Quest(TM), eTrex Legend(R) C, eTrex Vista(R) C, and iQue(R) 3200 are just a few of the products we have introduced which continue to broaden consumer options for navigation. Response to new aviation handheld products like the GPSMAP(TM) 96 and 96C has been positive. Shipments of our G1000(TM) avionics in the third quarter of 2004 have been steady, and we look forward to additional airframe certifications in the coming months.”
Consumer revenue for the third quarter totaled $145.5 million – a 37 percent growth compared to the third quarter of 2003. In addition, aviation revenue totaled $48.1 million – a 63 percent increase compared to the year-ago quarter. Total units sold for the quarter increased to 540,000 from 517,000 – representing an increase of 4 percent.
Revenue increased across all geographic regions during the third quarter of fiscal 2004 when compared to the year-ago quarter:
-- North America revenue was $134.4 million compared to $99.0 million, up
36 percent.
-- Europe revenue was $49.0 million compared to $28.7 million, up 71
percent.
-- Asia revenue was $10.2 million compared to $7.9 million, up 29 percent.
“We are pleased with the financial performance of the third quarter,” said Kevin Rauckman, chief financial officer of Garmin Ltd. “Our consumer segment has now logged its twelfth consecutive quarter of year-over-year revenue growth in excess of 20 percent. Our aviation segment also continues to demonstrate growth with the introduction of both panel-mount and portable products. We are beginning to see the growth that was anticipated following the many new product releases in the first half of 2004. Gross margins improved during the third quarter of 2004 to 57.7 percent from 51.8 percent in the second quarter of 2004. Improved product mix within both aviation and consumer segments, reduced product transition costs, improved raw materials costs during the quarter, and a $1.8 million payment for Garmin AT's completion of a government contract accounted for the increase in gross margins.”
Revenue for the nine-month period ending September 25, 2004 was $541.6 million — up 34 percent from the $402.8 million generated in the year-ago. Net income increased to $158.1 million or $1.45 diluted earnings per share, compared to $124.0 million or $1.14 diluted earnings per share in the year-ago period. Net income for the nine-month period ended September 25, 2004, included a $0.5 million foreign currency gain as a result of a slightly stronger U.S. dollar compared to the New Taiwan dollar. Excluding the effects of foreign currency, diluted EPS for the period was $1.44 compared to $1.22 in the year-ago period.
Consumer revenue for the nine-month period totaled $417.3 million — a 32 percent growth compared to the year-ago period. Aviation revenue totaled $124.3 million — a 42 percent increase compared to the same period in fiscal 2003. Total units sold for the period increased to 1,587,000 from 1,476,000 — representing an increase of 8 percent.
Revenue increased across all geographic regions during the nine months ending September 25, 2004, when compared with the same period in 2003:
-- North America revenue was $367.5 million compared to $284.6 million, up
29 percent.
-- Europe revenue was $149.1 million compared to $99.2 million, up 50
percent.
-- Asia revenue was $25.0 million compared to $19.0 million, up 32
percent.
Fourth Quarter and Fiscal 2004 Outlook
The company estimates that its diluted EPS for the fourth fiscal quarter of 2004, excluding effects for foreign currency, will be in the range of $0.50 to $0.54 on revenues of $200 million to $204 million.
The company estimates that its diluted EPS for fiscal year 2004, excluding effects for foreign currency, will be in the range of $1.95 to $1.98 on revenues of $742 million to $746 million.
Garmin Ltd. And Subsidiaries
Condensed Consolidated Statements of Income
(In thousands, except per share information)
(Unaudited)
13-Weeks Ended 39-Weeks Ended
September 25, September 27, September 25, September 27,
2004 2003 2004 2003
Net Sales $193,616 $135,562 $541,601 $402,845
Cost of goods
sold 81,945 58,853 251,160 167,823
Gross profit 111,671 76,709 290,441 235,022
Selling, general
and
administrative
expenses 19,859 13,023 55,902 40,552
Research and
development
expense 14,695 11,732 43,625 30,135
34,554 24,755 99,527 70,687
Operating income 77,117 51,954 190,914 164,335
Other income
(expense)(A) 6,793 (7,260) 6,708 (7,487)
Income before
income taxes 83,910 44,694 197,622 156,848
Income tax
provision 16,782 9,386 39,523 32,799
Net income $67,128 $35,308 $158,099 $124,049
Net income per
share:
Basic $0.62 $0.33 $1.46 $1.15
Diluted $0.62 $0.32 $1.45 $1.14
Weighted average
common shares
outstanding:
Basic 108,119 108,037 108,159 107,993
Diluted 108,879 108,951 108,989 108,859
