Looking finally at the auto/mobile segment, we delivered stable revenue of $384 million in the quarter. A slight decline in the PND business was offset by strong growth in our OEM revenues as we began to ship to Suzuki and saw improving volumes from Chrysler and Volkswagen. We believe that our PND volumes continue to trend ahead of the industry due to market share gains. The growth in OEM is exciting as we begin to see the results of our research and development investment. We will continue to invest in new opportunities for future growth.”
Financial Overview from Kevin Rauckman, Chief Financial Officer:
“Our team continues to execute well, delivering another quarter of revenue growth and strong margin expansion,” said Kevin Rauckman, chief financial officer of Garmin Ltd. “At the same time, we are able to fund significant research and development efforts in our marine, aviation and auto OEM businesses which will create accelerating growth opportunities in the future.
Gross margin for the overall business was 53% in the third quarter improving from 52% in the prior year with all segments posting improved or steady gross margins. Gross profit increased 4% to $359 million. The outdoor segment made the largest contribution to the gross profit improvement, posting a 69% gross margin and over $72 million in gross profit. We also had strong gross margin expansion in fitness, aviation and marine where product mix has shifted toward high margin business in the current quarter.Operating margin for the overall business improved to 24% when compared with 22% in the year-ago quarter with gross margin improvement and stable operating expenses. Total operating expenses increased only $2 million year-over-year and by 10 basis points as a percent of sales. Research and development expense increased by $10 million, as we continue to invest for future growth as previously mentioned. This was partially offset by advertising expense, which decreased by $5 million, and other selling, general and administrative costs, which decreased by $2 million as we have now fully integrated our prior year acquisitions. We are pleased to see our operating expenses stabilizing without a reduction in our commitment to research and development.