Garmin had the strongest quarter in company history with 67% top-line growth to $322.3 million compared to $192.7 million last year. The bottom line numbers out-paced sales increases thanks to favorable currency translations. Net income grew 84.6% to $87.5 million. All geographic areas experienced significant growth with Europe and Asia outpacing North America. The majority of the companys expansion came from the automotive division, but Garmins outdoor and fitness segment continues to post strong double-digit sales increases.
The company delivered 34 new products in the quarter, setting the stage for additional growth as the year progresses and completed the purchase of its second Taiwan manufacturing facility and expects to begin production in May 2006. Garmin also expanded its advertising campaign in the U.S.
Outdoor/fitness was up 21%, driven by the strong sales of new products introduced in Q1, and we expect continued strength driven by these new products. Q1 gross margins in the segment increased to 57%. During a conference call with analysts and the media, Garmin chairman & CEO, Dr. Min Kao said that he feels Garmin has established itself as a leader of GPS enabled devices in both the running and cyclist markets. Management stated that channel sell-through has been “very strong” and as a result of this increased demand, the company experienced some product shortages due to constraints of production capacity in certain long lead components.
Garmin anticipates revenue growth rates within outdoor/fitness and marine segments to be 15%, and 10%, respectively, in 2006 and short-term margins within these segments to be relatively stable.