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Garmin (GRMN) Surpasses Earnings & Revenue Estimates in Q4
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Garmin Ltd. (GRMN - Free Report) reported better-than-expected fourth-quarter 2016 results with revenues and earnings surpassing the Zacks Consensus Estimate.
Earnings of 73 cents per share beat the consensus mark by 25.9% while revenues of $860.8 million beat the same by 7.6%.
Shares of Garmin have underperformed the Zacks Electronics - Miscellaneous Products industry over the last one year. While the industry gained 25.3%, the stock returned 23.8%.
Revenues
Garmin’s fourth-quarter revenues of $860.8 million were up 19.2% sequentially and 10.2% year over year. Year over year, revenues were helped by higher demand across marine, outdoor, fitness and aviation segments.
Revenues by Segment
Garmin’s Fitness, Auto/Mobile, Outdoor, Aviation and Marine segments generated 32%, 26%, 20%, 14% and 8% of quarterly revenues, respectively.
Seasonality results in considerable variations in Garmin’s quarterly revenues.
The Fitness segment increased 44.9% sequentially and 19.8% year over year. Recently launched vívofit jr and wearables designed for children have shown good growth potential.
Aviation segment revenues were up 9.1% sequentially and 12.7% year over year. The increase was mainly driven by higher sales of Original Equipment Manufacturer (OEM) products and Automatic Dependent Surveillance Broadcast (ADS-B) systems.
Outdoor revenues were up 24.4% sequentially and 41.9% year over year, driven mainly by growth in all product categories, the most significant being wearable devices. DeLorme products also contributed to growth.
The Marine segment decreased 3.6% sequentially but increased 19.5% year over year. The year-over-year growth was driven by strength in chartplotter and fish finder product lines.
The Auto/Mobile segment was up 5.6% sequentially but down 15.6% on a year-over-year basis. The year-over-year decrease was mainly due to the shrinking of the personal navigation device (PND) market and headwinds caused by additional revenue deferrals.
Revenues by Geography
While America generated 52% (up 28.4% sequentially and 8.5% year over year) of total revenue, EMEA and APAC contributed 35% (up 9.5% sequentially and 11.9% year over year) and 13% (up 13.8% sequentially and 12.5% year over year), respectively.
Operating Results
Gross margin was 54.7%, down 152 basis points (bps) sequentially but up 182 bps year over year. Stronger demand drove volumes across all segments except Auto, pulling up segment gross margins on a year-over-year basis.
Operating expenses of $311 million were up 16.3% from $267.4 million in the year-ago quarter. Operating margin of 18.6% was down slightly year over year due to an increase in operating expenses.
GAAP net income was $136.6 million or 72 cents per share compared with $132.4 million or 70 cents per share a year ago.
On a pro-forma basis, excluding foreign currency effects net of tax, Garmin reported net income of $137.9 million compared with the year-ago tally of $140.4 million.
Balance Sheet
Inventories were down 10.3% sequentially to $484.8 million. Cash and marketable securities were approximately $1.12 billion compared with $1.11 billion in the previous quarter.
The company has no long-term debt.
The company generated cash flow of $705.7 million from operating activities at the end of the fourth quarter of 2016. Moreover, in the reported quarter, Garmin spent about $192.1 million on dividends and approximately $28 million on share repurchases. The company has $75 million remaining under the share repurchase program extended through Dec 31, 2017, and expects to repurchase as conditions warrant.
For 2017, management expects revenues of $3.02 billion, gross margin of around 56%, operating margin of roughly 20%, pro-forma tax rate of nearly 22% and pro-forma earnings of $2.65 per share. Currently, the Zacks Consensus Estimate for revenues and earnings is pegged at $2.96 billion and $2.67 per share, respectively.
To Conclude
Garmin reported strong fourth-quarter results with both earnings and revenues surpassing the Zacks Consensus Estimate. Year-over-year results were driven by solid performance in aviation, marine, outdoor and fitness segments. The auto segment however recorded revenue decline.
Product line expansion remains a top priority for Garmin. In the quarter, the company launched fenix 5 series with three designs, all equipped with Garmin Elevate wrist heart rate technology and QuickFit band replacement system. Garmin also launched new touchscreen and keyed chartplotter combo offerings in its popular GPSMAP product line.
At the recent CES show, Garmin unveiled its next generation Drive series PNDs that feature extended safety and driver awareness capabilities and WIFI for updating maps and other stored content.
The company received FAA installation approval for its helicopter ADS-B offerings and was selected as a Tier 1 infotainment hardware supplier for BMW.
Management focuses on continued innovation, diversification and market expansion to explore growth opportunities in all business segments. However, the macroeconomic challenges remain part of the operating environment.
For the current year, the estimates for Xcerra stayed unchanged while the same for Advanced Energy and Texas Instruments went up 18.2% and 6.7%, respectively in the past 30 days.
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Garmin (GRMN) Surpasses Earnings & Revenue Estimates in Q4
Garmin Ltd. (GRMN - Free Report) reported better-than-expected fourth-quarter 2016 results with revenues and earnings surpassing the Zacks Consensus Estimate.
Earnings of 73 cents per share beat the consensus mark by 25.9% while revenues of $860.8 million beat the same by 7.6%.
Shares of Garmin have underperformed the Zacks Electronics - Miscellaneous Products industry over the last one year. While the industry gained 25.3%, the stock returned 23.8%.
Revenues
Garmin’s fourth-quarter revenues of $860.8 million were up 19.2% sequentially and 10.2% year over year. Year over year, revenues were helped by higher demand across marine, outdoor, fitness and aviation segments.
Revenues by Segment
Garmin’s Fitness, Auto/Mobile, Outdoor, Aviation and Marine segments generated 32%, 26%, 20%, 14% and 8% of quarterly revenues, respectively.
Seasonality results in considerable variations in Garmin’s quarterly revenues.
The Fitness segment increased 44.9% sequentially and 19.8% year over year. Recently launched vívofit jr and wearables designed for children have shown good growth potential.
Aviation segment revenues were up 9.1% sequentially and 12.7% year over year. The increase was mainly driven by higher sales of Original Equipment Manufacturer (OEM) products and Automatic Dependent Surveillance Broadcast (ADS-B) systems.
Outdoor revenues were up 24.4% sequentially and 41.9% year over year, driven mainly by growth in all product categories, the most significant being wearable devices. DeLorme products also contributed to growth.
The Marine segment decreased 3.6% sequentially but increased 19.5% year over year. The year-over-year growth was driven by strength in chartplotter and fish finder product lines.
The Auto/Mobile segment was up 5.6% sequentially but down 15.6% on a year-over-year basis. The year-over-year decrease was mainly due to the shrinking of the personal navigation device (PND) market and headwinds caused by additional revenue deferrals.
Revenues by Geography
While America generated 52% (up 28.4% sequentially and 8.5% year over year) of total revenue, EMEA and APAC contributed 35% (up 9.5% sequentially and 11.9% year over year) and 13% (up 13.8% sequentially and 12.5% year over year), respectively.
Operating Results
Gross margin was 54.7%, down 152 basis points (bps) sequentially but up 182 bps year over year. Stronger demand drove volumes across all segments except Auto, pulling up segment gross margins on a year-over-year basis.
Operating expenses of $311 million were up 16.3% from $267.4 million in the year-ago quarter. Operating margin of 18.6% was down slightly year over year due to an increase in operating expenses.
GAAP net income was $136.6 million or 72 cents per share compared with $132.4 million or 70 cents per share a year ago.
On a pro-forma basis, excluding foreign currency effects net of tax, Garmin reported net income of $137.9 million compared with the year-ago tally of $140.4 million.
Balance Sheet
Inventories were down 10.3% sequentially to $484.8 million. Cash and marketable securities were approximately $1.12 billion compared with $1.11 billion in the previous quarter.
The company has no long-term debt.
The company generated cash flow of $705.7 million from operating activities at the end of the fourth quarter of 2016. Moreover, in the reported quarter, Garmin spent about $192.1 million on dividends and approximately $28 million on share repurchases. The company has $75 million remaining under the share repurchase program extended through Dec 31, 2017, and expects to repurchase as conditions warrant.
Garmin Ltd. Price, Consensus and EPS Surprise
Garmin Ltd. Price, Consensus and EPS Surprise | Garmin Ltd. Quote
Guidance
For 2017, management expects revenues of $3.02 billion, gross margin of around 56%, operating margin of roughly 20%, pro-forma tax rate of nearly 22% and pro-forma earnings of $2.65 per share. Currently, the Zacks Consensus Estimate for revenues and earnings is pegged at $2.96 billion and $2.67 per share, respectively.
To Conclude
Garmin reported strong fourth-quarter results with both earnings and revenues surpassing the Zacks Consensus Estimate. Year-over-year results were driven by solid performance in aviation, marine, outdoor and fitness segments. The auto segment however recorded revenue decline.
Product line expansion remains a top priority for Garmin. In the quarter, the company launched fenix 5 series with three designs, all equipped with Garmin Elevate wrist heart rate technology and QuickFit band replacement system. Garmin also launched new touchscreen and keyed chartplotter combo offerings in its popular GPSMAP product line.
At the recent CES show, Garmin unveiled its next generation Drive series PNDs that feature extended safety and driver awareness capabilities and WIFI for updating maps and other stored content.
The company received FAA installation approval for its helicopter ADS-B offerings and was selected as a Tier 1 infotainment hardware supplier for BMW.
Management focuses on continued innovation, diversification and market expansion to explore growth opportunities in all business segments. However, the macroeconomic challenges remain part of the operating environment.
Zacks Rank and Stocks to Consider
Garmin currently has a Zacks Rank #4 (Sell).
Better-ranked stocks in the broader technology sector include Xcerra Corporation , Advanced Energy Industries, Inc. (AEIS - Free Report) and Texas Instruments Incorporated (TXN - Free Report) , each sporting a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
For the current year, the estimates for Xcerra stayed unchanged while the same for Advanced Energy and Texas Instruments went up 18.2% and 6.7%, respectively in the past 30 days.
Zacks' Top Investment Ideas for Long-Term Profit
How would you like to see our best recommendations to help you find today’s most promising long-term stocks? Starting now, you can look inside our portfolios featuring stocks under $10, income stocks, value investments and more. These picks, which have double and triple-digit profit potential, are rarely available to the public. But you can see them now. Click here >>