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Garmin Management Discusses Q2 2012 Results - Earnings Call Transcript

Stocks in this article: GRMN

This earnings call includes projections and other forward-looking statements regarding Garmin Ltd. and its business. Any statements regarding our future financial position, revenues, earnings, market share, product introductions, future demand for our products and objectives are forward-looking statements. The forward-looking events and circumstances discussed in this earnings call may not occur, and actual results could differ materially as a result of risk factors affecting Garmin. Information concerning these risk factors is contained in our Form 10-K for the year ended December 31, 2011, filed with the Securities and Exchange Commission.

Attending today's call on behalf of Garmin Ltd. are Dr. Min Kao, Chairman and Chief Executive Officer; Cliff Pemble, President and Chief Operating Officer; and Kevin Rauckman, Chief Financial Officer and Treasurer.

The presenters for this morning's call are Cliff and Kevin. At this time, I'd like to turn the call over to Cliff.

Clifton A. Pemble

Thank you, Kerri, and good morning, everyone. As we announced earlier this morning, Garmin delivered strong revenue and margin performance, resulting in pro forma EPS growth of 56% in the second quarter.

Consolidated revenues increased 7% year-over-year to $718 million with growth in Outdoor pacing all of the segments at 24%. Our traditional markets of Aviation, Marine, Outdoor and Fitness contributed 45% of the total revenue mix. Gross margins improved to 59% from 48% in the prior year. Kevin will discuss specific items impacting margin performance later during his remarks.

Operating margins also improved significantly to 28%, with our traditional markets posting 10% operating income growth in the quarter. Revenue growth combined with improved margins resulted in both operating income and pro forma EPS growth.

Operating income for the quarter grew 55% to $204 million, while pro forma EPS was $0.98, a 56% improvement over the prior year. We sold 3.9 million units in the quarter, up 4% year-over-year. Next I'll walk you through the financial and strategic highlights segment by segment.

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