Garmin saw increased demand for its GPS products in the third quarter of 2004 push sales up 43% to $193.6 million from $135.6 million last year. The company was actually having trouble keeping up its production levels and meeting the demand – which resulted in lost sales.

The production problems were said to stem from three different issues. First, Garmin’s facility in Taiwan needs to be expanded, and management has already added two production lines in Q2 with an additional four coming on-line in Q4. Each production line at the facility generates about $50 million in annual revenue. The second issue was shortages in some of the raw materials needed for production, specifically LCD screens. Third, the company pointed to the 44 new products introduced this year citing a “learning curve” in production.

Even with the unfulfilled demand, Garmin beat internal guidance for Q3 by 17 cents per share. Net income was $67.1 million, or 62 cents per diluted share, compared to $35.3 million or 32 cents per diluted share in Q3 last year. Excluding the effects of foreign currency, diluted EPS for the quarter was 58 cents compared to 39 cents in the year-ago quarter, exceeding the high end of management's guidance of 42 cents to 45 cents.

Garmin’s sales gains were primarily lead by the aviation segment, but consumer products sales were up 37%. In a conference call with analysts Garmin’s CEO, Dr. Min Kao said that sales in the division were lead by the eTrax product. The consumer segment has now posted its twelfth consecutive quarter of year-over-year revenue growth in excess of 20%.