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ARMIN Ltd. (GRMN :: NASDAQ) 1Q 2011
1 EARNINGS
STR
RONG REVENUE GROWTH AN
ND POSITIVE EA
ARNINGS SURPRISE : BEATS ESTIMATES
FINANCIAL RESU ULTS
Garrmin Ltd repo orted 1Q2011 1 revenue off $508 Million and EPS (GGAAP) of $0.449 1Q2011 HIG GHLIGHTS
th (millions exccept EPS)
during its earnin ngs release on n 4 May, 20 011. It beat coonsensus estiimates of $4110
Milllion in revenu ues and $0.33 3 in EPS convvincingly as a result of an 18% growth in Revenuee $508.7
devvice shipmentts and a low wer tax rate. However Prro‐forma EPSS was lower at growth %
% (yoy) 18%
$0.4 43 as a resultt of foreign eexchange gain ns resulting ffrom a weakeer dollar. Gro oss Net Inco
ome $95.5
andd operating m margin decreaased on a yeaar over year basis to 47% from 54% an nd % (yoy)
growth % 156%
15%% from 19% re espectively. EPS (GAAP) $0.49
All the business segments re ecorded reve enue growth from last yeear with fitneess growth %
% (yoy) 158%
andd marine segm ment contrib buting significcant growth to
t the comp any. Beginnin ng
Q1 2011, Garmin n will also rep
port fitness an nd outdoor ass two distinctt segments du ue Gross MMargin 47%
to ttheir comparaable growth p percentage. Operatinng Margin 15%
OUTTDOOR/FITN NESS SEGMEN NT Profit Margin 19%
1Q 2011 revenues for the ou utdoor segme ent grew by 1 12% while thhe revenues ffor Units sold 2.5
the fitness segmment grew byy 30% from 1Q 1 last year. Overall reveenues for booth
segments combined grew by 20% for th he same perriod. The outtdoor segmeent
bennefited from h higher sales o of the Astro d dog tracking ssystem and thhe GPDMAP 662 DATA
SHARE D
hanndheld device e, while the ffitness segme ent saw greatter demand ffor its high en nd
Date 05/04//2011
cyclling products and strong interest for its newly launcched Forerunnner 610 sporrts
Current Price $35.28
wattch, especiallyy during the B Boston Maratthon in April.
Market ccap $6.87(B)
Thee company is banking on tthe success o of the Forerun nner touchsc reen watch ffor
52 weekk range $26.11‐$36.42
the rest of year,, although we e might see lower margins and markett share grow wth
Shares ooutstanding 194.7
7 (mn)
as aa result of stro
ong competittion from Nike e’s GPS Sporttwatch.
Averagee volume 1.5
5 (mn)
MA ARINE SEGMENT
P/E ratio
o 11.95
Thee recovery of tthe boating in ndustry assistted Garmin in n posting a 244% Y/Y and
PEG ratio 1.75
38%% sequential ggrowth for the segment. N New OEM accounts as welll as the
upccoming boatin ng season cau used greater ssequential gro owth over lasst quarter. GRMN V/S S&P 500 15%
Both operating aand gross marrgins increase ed considerab bly for the seggment and
Garrmin is looking forward to leveraging itss partnership with Volvo PPenta in orderr
to immprove its mmarket share in n the large bo oat market th hrough produucts like GSM223
‐ 5%
andd 24 Black Boxx Digital Sonaars.
AUTTO/MOBILE SSEGMENT
Thee automobile segment possted a revenu ue growth of 20% helped by the sales of
the remaining m mobile handse et inventory. O Operating maargin for this segment wass a
merre 1% compaared to 8% laast year, thou ugh Garmin expects
e higheer future gro
oss
marrgins benefiting from the e stabilizationn of ASPs an
nd increasingg market shaare (1 year returnns)
fromm current 38 8%. For the rest of the year
y the outlook for the PND segmeent
conntinues to be e negative due
d to incre
easing cannib balization byy smartphones
leadding to a 20% % decline in shhipments.
AVIIATION SEGM MENT PA
AST QUARTER
RLY EPS DATA
A
Revvenue increassed 5% on a YY/Y basis and operating margins decreaased 6% due to
a 14% increase in R&D. Gro owth is expected to remaain at 5% ovverall for 20111 Q4 2010
0 $0.68
bennefiting from new product launches of GTN 650 0/750 and O EM Helicoptter Q3 2010
0 $1.43
conntract wins. Q2 2010
0 $0.67
OUTTLOOK AND K KEY POINTS Q1 2010
0 $0.19
Garrmin reiterate ed its full yeaar guidance o of $2.4B ‐ $2..5B in revenuues and $2.255 ‐
$2.5 5 in EPS. It exxpects margins to improvve through Q2 2 and effectivve full year tax
ratee is expected
d to be 12%. Strong free cash flow foor the year w
will be used ffor
dividend/share p payouts of $1 1.6 ($310 Million) and strattegic acquisittions.