In the third quarter, revenue again exceeded the expectations with fitness and aviation delivering strong growth even though macroeconomic conditions continued to be challenging. Free cash flow generation continued to be strong at $174 million in the third quarter. This supports our high yield quarterly dividend, as well as ongoing diversification through research and development investment and strategic acquisitions,” said Dr. Min Kao, chairman and chief executive officer of Garmin Ltd. “Based on our results in the quarter, we now expect to deliver revenues of approximately $2.6 billion and pro forma EPS of $2.30 ‐ $2.40 in 2011. The marine segment posted revenue growth of 4% with chartplotters and fishfinders contributing growth. We continue to build the Garmin brand in the marine industry and were pleased to be selected as the official supplier of marine navigation systems to the 34th America’s Cup, illustrating our ability to deliver customized systems to the sailboat racing community. We are investing heavily in both research and development and support infrastructure as we grow our long‐term OEM presence.
Business highlights:
•Sold 3.5 million units in the third quarter of 2011, with positive performance in our EMEA operations offset by declines in the Americas and APAC.
Third Quarter 2011 Financial highlights:
Total revenue of $667 million, down 4% from $692 million in third quarter 2010 with four segments posting growth:
• Outdoor segment revenue increased 5% to $95 million
•Fitness segment revenue increased 29% to $69 million
•Aviation segment revenue increased 18% to $71 million
•Marine segment revenue increased 4% to $48 million
• Automotive/Mobile segment revenue decreased 13% to $384 million
Geographically, EMEA (Europe, Middle East and Africa) contributed growth in third quarter 2011:
• EMEA revenue was $258 million compared to $216 million, up 19%
•Americas revenue was $352 million compared to $413 million, down 15%
• APAC (Asia Pacific) revenue was $57 million compared to $63 million, down 10%
Units shipped decreased 9% year‐over‐year to 3.5 million units
•Gross margin improved both sequentially and year‐over‐year to 52% in the current quarter compared to 48% in second quarter 2011 and 50% in third quarter 2010
•Operating margin improved sequentially to 22% compared to 20% in second quarter of 2011 but declined on a year‐over‐year basis from 24% in third quarter 2010
•Pro forma diluted earnings per share (EPS) increased 1% to $0.71 from $0.70 in the same quarter in 2010 (pro forma EPS excludes the impact of foreign currency transaction gain or loss and one‐time tax adjustments); diluted EPS decreased to $0.77 from $1.43 in third quarter 2010 when a one‐time tax adjustment added $0.59
