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No. of Recommendations: 5

Highlights for the first quarter 2018 include:

Total revenue of $711 million, growing 11% over the prior year, with outdoor, fitness, aviation, and marine collectively growing 18% over the prior year quarter and contributing 80% of total revenue
Gross margin improved to 60.0% compared to 58.1% in the prior year quarter
Operating margin improved to 20.0% compared to 18.2% in the prior year quarter
Operating income grew 22%
GAAP and pro forma EPS [(1)] was $0.68
Launched the G500H TXi, a new generation of touchscreen flight decks for helicopters
Began shipping the Forerunner® 645M, our first GPS running watch with integrated music and Garmin Pay contactless payments
Recently held our second annual Connect IQ™ Summit hosting developers from around the world

Here are the segment revenue growth stats going back 2 years:

Segment Q215 Q315 Q415 Q116 Q216 Q316 Q416 Q117 Q217 Q317 Q417 Q118
Fitness 5% 23% 14% 9% 34% 32% 20% -3% -15% -12% 1% 20%
Outdoor 4% -5% 6% 33% 23% 28% 46% 20% 46% 31% 16% 24%
Aviation5% -5% 12% 8% 6% 14% 13% 16% 15% 16% 11% 19%
Marine 41% 0% 8% 29% 8% 12% 19% 26% -3% 10% 24% 9%
Auto -15% -14% -21% -11% -18% -21% -17% -19% -15% -12% -14% -12%

Wow, these are great numbers. In the fitness category, it looks like the lack of activity tracker demand has cycled out and they are now getting great growth again from their other offerings. I'll have to see if there's more detail in the call, but they say it's driven by their 'advanced wearables', so running watches, etc., and new products are just now coming out that sound exciting to me. I have an Apple Watch2, which has kind of taken over as my running watch from my old Garmin 610.
But this new Forerunner 645M sounds awesome. The Apple Watch is nice, but not the best for running. I may have to get a new Garmin now, this watch sounds so great.

Non-auto up to 80% of sales. Gross margin up to 60%. I looked back through 2014 and didn't see a gross margin at 60%. The margin increase is especially great when I see this on expenses:
Total operating expenses in the quarter were $284 million, an 11% increase from the prior year. Research and development increased 16% driven by the incremental costs associated with acquisitions, investments in the outdoor and fitness segments for the development of advanced wearable products and continued innovation in the aviation segment.
Love to see the R&D increase for innovation and future growth.

$188M of free cash flow for the quarter (versus $96M paid out for the quarterly dividend), and cash pile at $2.4B.

They are maintaining 2018 guidance for $3.2B in sales, and $3.05 in EPS. I expect that to be raised next quarter.

Long GRMN. See profile for holdings.
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