First Quarter 2009 Financial Summary:
- Total revenue of $437 million, down 34% from $664 million in first quarter 2008
- Automotive/Mobile segment revenue decreased 43% to $260 million in first quarter 2009
- Marine segment revenue decreased 32% to $38 million in first quarter 2009
- Aviation segment revenue decreased 31% to $59 million in first quarter 2009
- Outdoor/Fitness segment revenue increased 13% to $80 million in first quarter 2009
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All geographic areas experienced a slowdown in revenues:
- North America revenue was $265 million compared to $411 million, down 36%
- Europe revenue was $144 million compared to $211 million, down 32%
- Asia revenue was $28 million compared to $42 million, down 33%
- Gross margin increased sequentially to 44.9% for the first quarter 2009 from 41.1% in fourth quarter 2008 and declined compared to 48.2% in first quarter 2008
- Operating margin decreased sequentially and year-over-year, with first quarter 2009 at 13.3%, compared to 26.0% in first quarter 2008 and 22.6% in fourth quarter 2008
- Earnings per share decreased 64% to $0.24 from $0.67 in first quarter 2008; excluding foreign exchange, EPS decreased 64% to $0.25 from $0.69 in the same quarter in 2008
- Generated $286 million of free cash flow in first quarter 2009 for a cash and marketable securities balance of over $1.2 billion.
Business Highlights:
- Continued to lead the PND industry with sustained market share on a worldwide basis growing to 37% in the fourth quarter 2008 according to third party research.
- Posted strong growth in the outdoor/fitness category driven by further penetration of our fitness products and market share gains across the category.
- Showcased the Garmin-Asus nüvifone products, G60 and M20, at both Mobile World Congress in Barcelona and CTIA Wireless in Las Vegas. The products continue to receive favorable reviews as analysts and customers experience the differentiation of the location-centric devices.
- Announced a number of marine OEM partnerships, including EdgeWater Power Boats, Fairline Boats and Gulf Craft Inc., strengthening our position in the marine industry.
- Achieved supplemental type certification and began initial shipments of the G1000 avionics suite on the King Air 200 and B200.
- Announced our first major automotive navigation system to be factory-installed on Chrysler‘s 2011 Grand Cherokee.
- Continued to progress with development of nüvifones and to work with carriers and retailers on distribution and pricing.
Executive overview from Dr. Min Kao, Chairman and Chief Executive Officer:
“The first quarter of 2009 represented Garmin’s most challenging quarter since becoming a public company in December 2000. Macroeconomic factors have contributed to a significant slowdown in consumer discretionary spending which has been further exacerbated by ongoing channel inventory reductions by our retail partners in the PND industry.
As we look specifically at the auto/mobile segment, we believe that
inventory levels have reached their low point and that sell-in to the
channel will begin to more closely follow sell-through trends in coming
quarters. This is a promising factor given that sell-through trends in
the United States have continued to show growth in the first quarter.
The same cannot be said of Europe where sell-through has declined on a
year-over-year basis. Our focus moving forward for this segment will be
on improving pricing trends and profitability, which were negatively
impacted in the first quarter due to price protection offered to our
major retailers and inventory reductions of older models, and
maintaining and growing market share where appropriate. We will leverage
the strength of our balance sheet to outperform competitors through
product innovation and customer service in this difficult market and be
better positioned when consumer confidence returns.
