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Garmin Reports Second Quarter 2012 Results With Revenue And EPS Growth; Raises Full Year EPS Guidance

Stocks in this article: GRMN

The outdoor segment posted revenue growth of 24% in the quarter. Growth was driven by our golf line-up, dog tracking and training, and our recently refreshed eTrex® series. During the quarter, we introduced our latest outdoor product, the fēnix wristwatch. This product offers both a feature-rich experience for the outdoorsman and also a classic style for everyday use.

The fitness segment posted revenue growth of 5% in the quarter compared against strong performance in 2011 driven by promotional activity on the Forerunner® 305 and the launch of the Forerunner 610. In the current quarter, new products such as the high-end Forerunner 910XT sold well and drove margin expansion for the fitness segment. In late June, we introduced the Garmin Swim – targeting a new niche for us in the fitness market. The product has already been well-received in the swimming community. We anticipate growth rates will improve in the second half of 2012 as we launch new products for the holiday season to drive further market penetration.

The aviation segment posted revenue growth of 4% as we experienced improvement with our OEM partners offset by weakness in the aftermarket. Overall, the market continues to be depressed and we do not anticipate any significant level of improvement in the back half of 2012. On a positive note, we were pleased to be selected by Bombardier to be the avionics provider for the upcoming Learjet 70 and Learjet 75, Part 25 aircraft slated to begin deliveries in 2013, with the G5000 integrated cockpit system. In the quarter, we also announced our tenth model at Cessna, the Part 25 Citation Longitude, which will also incorporate the G5000 system. The backlog of certifications over the next few years is significant and should contribute to improved revenue growth rates beyond 2012.

In the marine segment, revenues declined 14% year-over-year while improving 21% sequentially as marine season began in earnest. The year-over-year decline is primarily attributable to a significant global slowdown in marine activity. The marine market continues to be affected by weak economic conditions, and we anticipate that the market will remain difficult throughout 2012. We continue to focus on the long-term opportunities that are developing with our broad portfolio of offerings in both the OEM and aftermarket space.

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