Garmin Reports Record First Quarter, Affirms 2005 Guidance
Apr 27, 2005, 01:00 ET from Garmin Ltd.
CAYMAN ISLANDS, April 27 /PRNewswire-FirstCall/ -- Garmin Ltd.
(Nasdaq: GRMN) today announced a record first quarter ended March 26, 2005.
The company's consumer segment experienced 11 percent revenue growth during
the first quarter of 2005. The aviation segment also achieved 59 percent
revenue growth for the quarter, which led to overall revenue growth of
22 percent for the quarter.
"The first quarter of 2005 was another good quarter for Garmin. We
introduced sixteen new products during the quarter, adding to all categories
of our product portfolio. These new products, which include aviation,
recreational, fitness, marine and automotive units have all been very well
received by the market," said Dr. Min Kao, CEO of Garmin Ltd. "Consumer
awareness and interest in the utility of GPS navigation continue to grow, and
we experienced solid demand across nearly all product lines," continued Dr.
Kao. Over 584,000 units were shipped in the first quarter of 2005,
demonstrating the growing strength of the Garmin brand. The company also
began shipping the acclaimed G1000 integrated avionics system for the
Cessna 172, the seventh aircraft model to be certified to date.
"I am pleased to report that we have continued to strengthen our inventory
position to meet the anticipated demand for the coming marine and spring
seasons, and have begun to ramp up production for delivery of newly released
products such as the StreetPilot 'c-series'," said Dr. Kao. "These products
have generated a great deal of interest. Therefore, we expect a higher
consumer segment growth rate in the second quarter and beyond."
First Quarter 2005
Revenue for the quarter increased 22 percent to $192.7 million from
$158.3 million in the year-ago quarter. Net income increased to
$47.4 million, or $0.43 diluted earnings per share, compared to $34.7 million
or $0.32 diluted earnings per share in the year-ago quarter. First quarter
net income included a $11.1 million foreign currency loss as a result of a
weaker U.S. dollar compared to the Taiwan dollar. Excluding the effects of
foreign currency, diluted EPS for the quarter was $0.51 compared to $0.37 in
the year-ago quarter.
Consumer revenue for the first quarter totaled $137.5 million -- an
11 percent growth compared to the first quarter of 2004. Aviation revenue
totaled $55.2 million -- a 59 percent increase compared to the year-ago
quarter. Total units sold for the quarter increased to 584,000 from
478,000 -- representing an increase of 22 percent.
Revenue increased across North American and European regions during the
first quarter of fiscal 2004 when compared to the year-ago quarter:
-- North America revenue was $132.7 million compared to $107.3 million,
up 24 percent.
-- Europe revenue was $50.3 million compared to $43.9 million, up
15 percent.
-- Asia revenue was $9.7 million compared to $7.1 million, up 37 percent.
"We are pleased with our financial results for the first quarter 2005, and
believe we are on track to meet our 2005 full year guidance," said Kevin
Rauckman, chief financial officer of Garmin Ltd. "Gross margins were in line
with our expectations at 53.6 percent for the first quarter. We also
generated $31.1 million of free cash flow (defined as operating cash flow less
capital expenditures for property, plant, and equipment) for the quarter,
resulting in a cash and marketable securities balance of $601.3 million at the
end of the first quarter of 2005." The company believes that free cash flow
is an important measure because management uses it as a measure of the
company's quality of earnings and its ability to reinvest in the business.
Foreign Currency Translation - Non-GAAP Measures
Management believes that earnings per share before the impact of foreign
currency translation gain or loss is an important measure. The majority of
the company's consolidated foreign currency translation gain or loss results
from translation into New Taiwan dollars at the end of each reporting period
of the significant cash and marketable securities, receivables and payables
held in U.S. dollars by the company's Taiwan subsidiary. Such translation is
required under GAAP because the functional currency of this subsidiary is New
Taiwan dollars. However, there is minimal cash impact from such foreign
currency translation and management expects that the Taiwan subsidiary will
continue to hold the majority of its cash, cash equivalents and marketable
securities in U.S. dollars. Accordingly, earnings per share before the impact
of foreign currency translation gain or loss allows an assessment of the
company's operating performance before the non-cash impact of the position of
the U.S. dollar versus the New Taiwan dollar, which permits a consistent
comparison of results between periods.
Fiscal 2005 Outlook
Garmin remains committed to expansion of its growing range of products and
its ability to serve distributors and customers around the world. In
addition to the sixteen products introduced during the first quarter, a number
of additional new products are expected to be released during the second
quarter, which should position the Company well for the remainder of 2005.
The Company affirms its current fiscal year guidance. Diluted EPS for
fiscal year 2005, excluding effects of foreign currency, is estimated to be in
the range of $2.30 to $2.38 on estimated revenues of $890 million to
$915 million. Management will continue to provide annual guidance updates and
progress reports on a quarterly basis.
Earnings Call Information
The information for Garmin Ltd.'s earnings call is as follows:
When: Wednesday, April 27, 2005 at 11:00 a.m. Eastern
Where: http://www.garmin.com/aboutGarmin/invRelations/irCalendar.html
How: Simply log on to the web at the address above or call to listen
in at 800-883-9537.
Contact: investor.relations@garmin.com
A phone recording will be available for 24 hours following the earnings
call and can be accessed by dialing 800-642-1687 utilizing the access code
4988638. An archive of the live webcast will be available until May 27, 2005
on the Garmin website at http://www.garmin.com . To access the replay, click
on the Investor Relations link and click over to the Events Calendar page.
This release includes projections and other forward-looking statements
regarding Garmin Ltd. and its business. Any statements regarding the
company's estimated earnings and revenue for fiscal 2005, the Company's
expected consumer segment growth rate and the company's plans and objectives
are forward-looking statements. The forward-looking events and circumstances
discussed in this release may not occur and actual results could differ
materially as a result of risk factors affecting Garmin, including, but not
limited to, the risk factors that are described in the Annual Report on Form
10-K for the year ended December 25, 2004 filed by Garmin with the Securities
and Exchange Commission (Commission file number 0-31983). A copy of Garmin's
2004 Form 10-K can be downloaded from
http://www.garmin.com/aboutGarmin/invRelations/finReports.html .
Through its operating subsidiaries, Garmin Ltd. designs, manufactures, and
markets navigation, communications and information devices, most of which are
enabled by GPS technology. Garmin is a leader in the general aviation and
consumer markets and its products serve aviation, marine, general recreation,
automotive, wireless and OEM applications. Garmin Ltd. is incorporated in the
Cayman Islands, and its principal subsidiaries are located in the United
States, Taiwan and United Kingdom. For more information, visit the investor
relations site of Garmin Ltd. at http://www.garmin.com or contact the Investor
Relations department at 913-397-8200.
Garmin Ltd. And Subsidiaries
Condensed Consolidated Statements of Income
(In thousands, except per share information)
(Unaudited)
13-Weeks Ended
March 26, March 27,
2005 2004
Net sales $192,651 $158,329
Cost of goods sold 89,453 77,878
Gross profit 103,198 80,451
Selling, general and
administrative expenses 20,518 16,642
Research and development expense 16,928 14,220
37,446 30,862
Operating income 65,752 49,589
Other income(expense) (A) (6,942) (5,721)
Income before income taxes 58,810 43,868
Income tax provision 11,409 9,212
Net income $47,401 $34,656
Net income per share:
Basic $0.44 $0.32
Diluted $0.43 $0.32
Weighted average common
shares outstanding:
Basic 108,408 108,197
Diluted 109,421 109,182
(A) Includes $11.1 million of foreign currency losses in Q1 2005 and
$7.6 million of foreign currency losses in Q1 2004.
Garmin Ltd. And Subsidiaries
Condensed Consolidated Balance Sheets
(In thousands)
(Unaudited)
March 26, December 25,
2005 2004
Assets
Current assets:
Cash and cash
equivalents $249,193 $249,909
Marketable securities 52,270 64,367
Accounts receivable, net 101,720 110,119
Inventories 166,429 154,980
Deferred income taxes 36,962 38,527
Prepaid expenses and
other current assets 16,991 19,069
Total current assets 623,565 636,971
Property and equipment, net 180,342 171,630
Restricted cash 1,482 1,457
Marketable securities 299,850 257,848
Other assets, net 47,992 49,485
Total assets $1,153,231 $1,117,391
Liabilities and Stockholders' Equity
Current liabilities:
Accounts payable $40,321 $53,673
Other accrued expenses 41,254 51,661
Income taxes payable 65,975 70,933
Total current liabilities 147,550 176,267
Deferred income taxes 5,334 5,267
Stockholders' equity:
Common stock 1,085 1,084
Additional paid-in
capital 110,853 108,949
Retained earnings 862,610 815,209
Accumulated other
comprehensive loss 25,799 10,615
Total stockholders' equity 1,000,347 935,857
Total liabilities and
stockholders' equity $1,153,231 $1,117,391
SOURCE Garmin Ltd.
