Garmin continues to ride the wave of popularity surrounding Personal Navigation Devices. The companys fourth quarter sales jumped 45% to $319.3 million from $220.9 million in 2004. The consumer segment, which includes all hand-held GPS devices and PNDs reported a 50% increase in sales to $260.2 million in the fourth quarter. In order to maintain this rapid growth rate, Garmin recently purchased an additional R&D and production facility in Taiwan, their second in the area. This new facility will allow the company to ramp up production to roughly 8 million units per year, compared the 4 million units possible today.
In Q4, sales of new products accounted for 60% of Garmins revenue, compared to Q3 when that number was 44%. The Consumer segment now represents 81% of Garmins total business. Fourth quarter gross margin in the Consumer segment exceeded internal expectations, coming in at 47.7% – 100 basis points above the previous quarter. However, fourth quarter Consumer segment operating margins were down 230 basis points due to increased advertising during the quarter.
Net income for the quarter increased 83.0% to $87.1 million. Earnings per share increased 82% to 80 cents from 44 cents in 2004; excluding foreign exchange, EPS increased 38% to 87 cents from 63 cents in 2004.
Garmin anticipates overall revenue to exceed $1.3 billion in 2006, and earnings per share to exceed $3.19. The company will also now be reporting outdoor/fitness as a separate segment and sales in this segment are expected to grow at least 15% in 2006.