Garmin managed to nearly double the volume of GPS sales during fiscal 2006, with total revenues jumping from just over $1 billion at the end of 2005 to $1.77 billion at the end of 2006. The fourth quarter was particularly strong and accounted for 35% of the year’s revenue. Q4 sales were $611 million, a 91% increase over last year. Income grew faster than sales during the quarter with EPS up 105% to 82 cents per share. Overall net income doubled to hit $180 million. Analysts were only expecting 40% EPS growth for the quarter.

Garmin’s chairman & CEO, Dr. Min Kao, said that 2006 was a “year of expansion,” with the purchase of a new factory in Taiwan, bringing Garmin's total capacity to 11 or 12 million units. In addition, the company is preparing to occupy its new European headquarters in April.

The outdoor/fitness segment revenue increased 16% to $80 million in the fourth quarter, driven by the expanded fitness product lines. Gross margin in the division was flat for the quarter at 56%, while operating margins remained stable at 40% of sales. The company feels that its primary growth drivers will be in the running and cycling markets.

Marine segment revenue declined 10% to $25 million in fourth quarter 2006. Fourth quarter marine gross margin remained at 53% during the period. However, the operating margin within this segment declined from 34% to 27% due to the decline in revenue. A “significant investment” in R&D was made in this segment in 2006 and Garmin is anticipating new products will drive 2007 revenue to grow 20%.

Double-digit revenue growth is anticipated across all business segments in 2007. In 2007, the company expects to invest approximately $150 million in advertising to promote the Garmin brand. Garmin will continue to invest heavily in R&D as well. Garmin revenues for 2007 are expected to increase 41% to over $2.5 million with earnings per share growing only 15%, up to $2.70 per share. This slower growth will be due to a decline in operating margins, which should come in at 27%, down 430 basis points from this year.