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Garmin Reports Third Quarter 2012 Results With Growth In Revenue, Operating Margin And EPS; Raises Full Year EPS Guidance

Garmin Ltd. (Nasdaq: GRMN - news) today announced results for the fiscal quarter ended September 29, 2012.

Third Quarter 2012 Financial Summary:
  • Total revenue of $672 million, up 1% from $667 million in third quarter 2011
    • Automotive/Mobile segment revenue was flat at $384 million
    • Outdoor segment revenue increased 11% to $105 million
    • Fitness segment revenue decreased 6% to $65 million
    • Aviation segment revenue increased 3% to $73 million
    • Marine segment revenue decreased 7% to $45 million
  • Americas and APAC (Asia Pacific) posted revenue growth in the third quarter:
    • Americas revenue was $380 million compared to $352 million, up 8%
    • EMEA (Europe, Middle East and Africa) revenue was $225 million compared to $258 million, down 13%
    • APAC revenue was $67 million compared to $57 million, up 19%
  • Gross margin improved year-over-year to 53% for third quarter 2012 from 52% in third quarter 2011
  • Operating margin increased year-over-year to 24%, compared to 22% in third quarter 2011
  • Pro forma diluted earnings per share (EPS) increased 4% to $0.74 from $0.71 in third quarter 2011; diluted EPS decreased 6% to $0.72 from $0.77 in the same quarter in 2011 (Pro forma EPS excludes the impact of foreign currency transaction gain or loss)
  • Generated $155 million of free cash flow in third quarter 2012

Note: In accordance with GAAP, the Company is deferring significant revenue and related costs associated with high margin sales of lifetime maps, connected services and premium traffic over their economic lives. A table outlining the impact of this net deferral in both 2012 and 2011 is included for reference. Results have not been adjusted unless specifically stated as such.

Year‐to‐Date 2012 Financial highlights:
  • Total revenue of $1.95 billion, up 5% from $1.85 billion year‐to‐date 2011
    • Automotive/Mobile segment revenue increased 4% to $1.06 billion
    • Outdoor segment revenue increased 17% to $283 million
    • Fitness segment revenue increased 7% to $218 million
    • Aviation segment revenue increased 4% to $222 million
    • Marine segment revenue decreased 6% to $169 million
  • All geographies have posted revenue growth:
    • Americas revenue was $1.07 billion compared to $990 million, up 8%
    • EMEA revenue was $693 million compared to $682 million, up 2%
    • APAC revenue was $186 million compared to $177 million, up 5%
  • Gross margin increased to 55% in 2012 compared to 49% in 2011
  • Operating margin increased on a year‐over‐year basis to 23% compared to 19% in 2011
  • Pro forma diluted EPS increased 23% to $2.18 from $1.77 in year‐to‐date 2011; diluted EPS increased 16% to $2.11 from $1.82 in year‐to‐date 2011 (Pro forma EPS excludes the impact of foreign currency transaction gain or loss.)
  • Generated $483 million of free cash flow year-to-date

Recent Business Highlights:
  • Sold 3.7 million units in third quarter 2012, a 7% increase over third quarter 2011.
  • Maintained our global PND market share with approximately 70% share in the U.S. market and over 32% in the major European markets.
  • Shipped our first fully integrated infotainment system to Suzuki for the 2013 SX4, Grand Vitara and Kazachi.
  • Announced new features and functionality for select 2013 Chrysler and Dodge vehicles including 3D buildings, landmarks and terrain, trip planner, multi-route view and many others.
  • Expanded our OEM relationship with Cessna to include the recent upgrade of the Sovereign with the G5000 integrated avionics system.
  • Launched the Forerunner® 10 running watch – an affordable and intuitive solution for runners, joggers and walkers of all levels.
  • Announced the dēzl truck navigator with a seven-inch display and active lane guidance.
  • Delivered the Alpha™ - an integrated tracking and training system for hunters and their sporting dogs.

Executive Overview from Dr. Min Kao, Chairman and Chief Executive Officer:

“Due to the diverse markets that we serve, we were able to again post growth in revenue, unit volumes, and operating income during the third quarter of 2012,” said Dr. Min Kao, chairman and chief executive officer of Garmin Ltd. “Because of our third quarter results, we are raising our full year EPS guidance to $2.75-$2.90. We have continually strived to diversify our product portfolio across a wide variety of categories, as well as expand our geographic reach. By doing this, we have created opportunities for growth even when segments of our business face adverse market conditions. I am pleased with the continued strategic direction of the company and feel confident in our ability to achieve long-term sustained growth.

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