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Garmin Management Discusses Q2 2012 Results - Earnings Call Transcript

Stocks in this article: GRMN

Starting first with Marine. Revenue in the Marine segment declined 14%, driven by weak economic conditions around the world. However, better gross margins largely offset the impact of lower sales. Sales in Europe were down sharply, while sales in other regions were comparatively better but still soft during the normally robust second quarter selling season.

While industry statistics indicating that boating sales have improved, the trend seems to be towards low-end boats where there's little to no Marine Electronics content. We maintain a high level of confidence in our long-term opportunities in the Marine segment and are continuing to invest in new product development and strategic alliances that position us for market share gains. As we have mentioned previously, these investments will create near-term operating margin compressions.

In Aviation, we posted revenue growth of 4% as improvements in OEM deliveries were partially offset by weakness in the aftermarket. In recent quarters, operating margin has trended below historical norms as new programs require a higher level of R&D investment compared to what we have seen in the past. We remain confident that these investments will lead to stronger revenue and operating margin growth for the future.

During the quarter, we made additional announcements that demonstrate the progress we are making to expand our presence in the business jet market. Cessna selected are G5000 integrated flight deck where the new Citation Longitude, which is the longest range business jet operating in the Cessna lineup. This expands upon the already successful relationship we have had with Cessna for many years now.

In addition, we announced a new relationship with Bombardier. We selected the G5000 for the new Learjet 70 and 75, which are scheduled for delivery in 2013.

Due to the steady increasing number of new confident certifications that are in progress, we thought it would be helpful to provide a summary of the major wins that have been announced so far and projected entry into service based on publicly available information from the aircraft manufacturers.

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