Garmin Profit up 100%!
Garmin announced their fourth quarter results this morning and their profit was up 100% on an earnings rise of 92% to $611 million. Things went well for the Kansas based GPS maker, as they cited strong holiday sales that drew inventories down as expected, and as I had hoped, they were able to improve margins through scale. This is key to getting their business healthy and getting you and me a good price on these units. They said that they sold two million units in the quarter, double what they did in the previous year.
Key in their earnings were the auto segment revenue up 173%, and while their US revenue was up 86%, more impressively their Euro revenue was up 109% where the market is more saturated with competition (TomTom).
There are a couple of hidden gems in the release.... after the jump.
My eyes are cast to new products:
Garmin anticipates "New Lines" of automotive GPS Systems - To me that means totally new product lines (non-SP or Non-Nuvi) or a new series, like a SP 600 series or a Nuvi 700 series.
Garmin anticipates higher growth in the Outdoor/Fitness segment due to "New outdoor products with enhanced features, high sensitivity GPS receivers, expandable memory and unique functionality, like our recently announced dog-tracker product, the Astro. Fitness product enhancements slated for our fitness line and better penetration of targeted fitness markets." Can I please have mapping on a Forerunner or an Edge?
From their press release:
Executive Overview from Dr. Min Kao, Chairman and Chief Executive Officer:
"2006 was truly a remarkable year for Garmin. We are delighted to have introduced over 70 innovative new products. These products -- which include many automotive, recreational, fitness, marine, and aviation products -- have been enthusiastically received by the market. We also look forward to our customers' reactions to exciting products we have scheduled for delivery in early 2007.
"We experienced triple digit growth in our automotive product line, clearly demonstrating that our strategy effectively positions us to take advantage of the growing demand for portable navigation devices both in the U.S. and in Europe. We look forward to ongoing success from our broad portfolio of automotive products. Through continuous innovation, we will provide compelling, competitive and creative products like the highly acclaimed nuvi(TM), which provide high-quality navigation coupled with features like traffic, Bluetooth hands-free calling, real-time gas prices, weather, movie times, and more. We have the focus, drive, and commitment to continue our leadership position in the rapidly expanding automotive market through 2007 and beyond.
"Additionally, our outdoor/fitness line continues to show strong growth as we create exciting new products for outdoor and fitness enthusiasts. While our marine and aviation segment revenues were not as strong as we had hoped for in 2006, both segments are well-positioned for strong growth in 2007. Our innovative marine cartography and a new suite of marine products should drive growth in this segment. In addition, as Mustang cockpit shipments, WAAS upgrades, new retrofit products, and other exciting developments unfold in 2007, our aviation segment will once again post solid growth.
"To reach our goals, we have significantly expanded our worldwide marketing and sales efforts. We have also increased our distribution and manufacturing capacities to meet future demand and compete effectively in the global marketplace. In addition, we have recently made three acquisitions that will allow us to continue to develop exciting new technologies and expand distribution of our products."
Financial Overview from Kevin Rauckman, Chief Financial Officer:
"We are obviously pleased with our financial results for the fourth quarter and fiscal year 2006," said Kevin Rauckman, chief financial officer of Garmin Ltd. "Our revenue and earnings per share during 2006 grew 73% and 64% respectively, exceeding our expectations. Garmin has now completed six years as a public company and has consistently generated top line and bottom line growth, with a 6-year compounded annual growth rate of revenue and earnings per share of 30% and 28%, respectively.
"Our gross and operating margins held strong, exceeding our expectations, coming in at 50% and 31% respectively. We also generated $269 million of free cash flow in 2006, resulting in unrestricted cash and marketable securities balance of $818 million at the end of the fiscal year. Our return on invested capital (ROIC) was 69% during fiscal 2006."
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Posted by Scott Martin at February 14, 2007 10:34 AM