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Thu, May 07, 2009

More Money Woes: Garmin's Aero-First Quarter Down 31%

Reduced A/C Deliveries May Have Contributed Nearly A Third Less Biz

It's tough out there... and that should be no surprise to anyone reading Aero-News for the last several months. The down market for aviation has translated into a significant drop in Aero-Income for industry heavyweight Garmin who has just published their First Quarter Sales Figures for 2009... and are probably none too happy about it all.

According to the statement issued in the course of various required public disclosures, Garmin reports that their aviation revenues decreased 31% to $59 million in the First Quarter of 2009. A number of other industry segments were similarly affected, including automotive and marine sales. Overall, the company reported a total decease in revenues of 34%... translating to some $437 million this quarter... well under the $664 million reported this time last year.

An Executive Overview authored by Dr. Min Kao, Chairman and Chief Executive Officer, explained that, "Our aviation and marine segments also struggled in the quarter as both industries face significant challenges in 2009. In the aviation segment, we will focus on stabilizing our sales and margins in this business and continuing to gain market share through certification of our G1000 and penetration of the G600 as a retrofit solution. On the marine front, we did see a sequential increase as the marine season approaches but this seasonal increase was not at a level experienced in the past. We continue to gain market share as an OEM partner but these gains are not enough to offset the industry-wide declines. Again, we will focus our efforts on gaining market share and bringing to bear the most innovative products in both of these segments so we are well-positioned for growth when the industries begin to recover."

A financial overview from Kevin Rauckman, Chief Financial Officer, added that "Gross margin for the overall business remained stronger than we had anticipated at 45% as the lower margin auto/mobile segment contributed less revenue in the quarter. The auto/mobile segment margin fell to 32% when compared to 43% in the first quarter of 2008, as the average selling price was negatively impacted by price protection credits offered to our retail partners and significant channel inventory reductions. This was offset by increasing gross margins in our aviation, outdoor/fitness and marine segments due to improved product mix and steady pricing. Outdoor/fitness margins improved most dramatically to 61% in first quarter compared to 53% in the year-ago quarter, while aviation improved 500 basis points to 69%."

The filing also noted that one of the Business Highlights of 1Q/2009 included their achieving, "supplemental type certification and began initial shipments of the G1000 avionics suite on the King Air 200 and B200."

FMI: www.garmin.com

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