Garmin Ltd. reported sales at its Outdoor and Fitness segments grew 7 and 14 percent respectively and reached record levels in the fourth quarter ended Dec. 28, 2013 compared with the fourth quarter in 2012.


The Outdoor segment generated revenue of over $126.6 million for the quarter. Gross and operating margins within the segment remained strong at 62 percent and 38 percent, respectively, in the quarter. The company updated its golf offerings with the fourth quarter launch of the Approach S4 and the recent announcement of the Approach G7 and G8. The devices offer advanced features that Garmin believes further differentiate its products and will allow it to expand its market share lead in the golf category. These products, along with the VIRB series of action cameras and further penetration in the sport dog and pet market, are expected to drive growth in 2014.


Revenue at the Fitness segment grew 14 percent to $118.6 million during the quarter, when Garmin launched the Forerunner 220 and 620, the Vector power meter and the Edge Touring device. All were strong contributors in the holiday quarter. Both gross and operating margins improved in the quarter as product mix shifted to new products.


At CES (Consumer Electronics Show) in January, Garmin announced a new product category with its vívofit and vívokí. The vívofit is a fitness band for the consumer market which differentiates from competitors by providing personalized daily goals, connectivity to the newly overhauled Garmin Connect, an LCD display and industry-leading battery life of one year. Vívokí is a lower priced alternative for the corporate wellness market which has been underserved to date.


“With these exciting products and our strong cycling and running line-up, we enter 2014 with an expectation for continued growth,” said President and CEO Cliff Pemble.


Garmin reported its overall net sales declined 1 percent to $759 million during the quarter due to a 12 percent drop at its Automotive/Mobile segment, which generates more than half its revenue. Net sales increased 25 percent at its Aviation segment and 13 percent at it Marine segment.


In its initial guidance for 2014, Garmin said it expects 2014 revenue of $2.6-$2.7 billion as growth in the outdoor, fitness, marine and aviation segments largely offset ongoing declines in the PND market.


“We anticipate gross margins will improve to 54-55 percent as segment mix continues to shift toward higher margin segments,” said Pemble. “Operating margins are forecasted to decline slightly to 21 percent due to ongoing research and development investment. This results in a currently forecasted 2014 EPS range of $2.50 – $2.60.”
The EPS range assumes a full-year EUR/USD currency exchange rate of 1.35.


(000s except per  13-Weeks Ended 52-Weeks Ended
share data) 12/28/13 12/29/12 Yr over Yr 12/28/13 12/29/12 Yr over Yr
2013 2012 Change 2013 2012 Change
Net sales $ 759,694 $ 768,548 -1% $ 2,631,851 $ 2,715,675 -3%
Automotive/Mobile 382,504 436,654 -12% 1,302,314 1,492,440 -13%
Outdoor 126,617 118,517 7% 410,989 401,747 2%
Aviation 87,367 69,888 25% 339,337 291,564 16%
Fitness 118,623 103,973 14% 356,283 321,788 11%
Marine 44,583 39,516 13% 222,928 208,136 7%
Gross profit % 52 % 49 % 53 % 53 %
Operating profit % 23 % 19 % 22 % 22 %
Pro forma diluted EPS (1) $ 0.76 $ 0.68 12% $ 2.62 $ 2.85 -8%
Note: YTD 2012 results include one-time royalty fee benefit of $21 million recorded in second quarter 2012 impacting gross margin.
(1) See attached table for reconciliation of GAAP EPS to pro forma diluted EPS