Fri, May 07, 2010
Overall Business Down 1% Largely On Automotive Segment
Losses
We don't normally get this far down in the weeds on company's
quarterly earnings, but Garmin's first quarter trends could be a
sign of a recovering economy, and least in some sectors of the
aviation industry.
The company posted revenue increases in its aviation segment of
12% or $66 million, according to a report released Wednesday. It
also recorded year-over-year growth in both aviation and marine as
these markets have begun to show signs of stabilization.
"The first quarter of 2010 provided mixed results but we view
the overall trends in the business as positive indicators for the
remainder of the year," said Dr. Min Kao, chairman and chief
executive officer of Garmin Ltd. "While excess channel inventory
led to a decline in the sell-in of PNDs, sell-through trends of our
major United States retail partners continued to show
year-over-year growth. In addition, we generated strong revenue and
margins in our outdoor/fitness, aviation and marine segments which
allowed us to post pro forma earnings per share growth of 52% in
the quarter.
The aviation segment growth was based in large part on the
retrofit market, which improved on a year-over-year basis. While
Garmin says they are pleased with this result, recovery in the
aviation market will generally lag that of the overall economy. The
company continues to invest to achieve its strategic initiatives of
expanding presence and long-term growth opportunities in the
business jet, helicopter and experimental aircraft markets.
"While top line results for the first quarter reflect some
excess inventory challenges at retailers in the PND category, we
still expect to achieve our full-year forecast previously provided
for both revenues and EPS," said Kevin Rauckman, chief financial
officer of Garmin Ltd. "This is a result of a number of trends that
we experienced in first quarter 2010. Sell-through of PNDs in the
North American market grew and ASPs increased during the first
quarter. Outdoor/fitness, aviation and marine delivered solid
results with strong first quarter revenues and margins."
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