Garmin Q2 09 Earnings call transcript

Garmin Q2 09 Earnings call transcript
Kerri Thurston: Good morning. We’d like to welcome you to Garmin Limited Second Quarter 2009 Earnings call.

Please note that a copy of a press release concerning this earnings call is available at Garmin’s Investor Relations site on Internet at

Additionally, this call is being broadcast live on the Internet. Please note that this Webcast does include slides which can be viewed during the call. An archive of the Webcast will be available until September 9, 2009. A telephone recording will be available two business days following this call and a transcript to the call will be available on the Web site within 48 hours under the events calendar task.

In addition, this quarter, we will be twitting throughout the call. You can follow Jake’s TweetCast at

This earnings call includes projections and other forward-looking statements regarding Garmin Limited and its businesses. Any statements regarding our future financial position, revenues, earnings, market share, product introductions, future demand for our products, and objectives are forward-looking statements. The forward-looking events and circumstances discussed in this earnings call may not occur and actually results may differ materially as the result of risk factors affecting Garmin.

Information concerning these risk factors is contained in our Form 10-K for the fiscal year until December 27, 2008 filed with the Securities and Exchange Commission.

Attending today’s call on behalf of Garmin Limited are Dr. Min Kao, Chairman and Chief Executive Officer; Cliff Pemble, President and Chief Operating Officer; Kevin Rauckman, Chief Financial Officer and Treasurer; and Andrew Etkind, General Counsel.

The presenters for this morning’s call are Cliff Pemble and Kevin Rauckman.

At this time, I’d like to turn the call over to Cliff Pemble.

Cliff Pemble: Good morning. As you’ve read from our press release this morning, Garmin announced second quarter results that showed significant sequential improvement along with very strong margins. The quarter developed much as we had anticipated with strong seasonal performance in our auto/mobile, outdoor/fitness and marine segments leading to a 53% sequential revenue increase.

Along with our revenue growth, we also delivered margin improvement with growth in operating margins, 53% and 30% respectively. EPS was 83 cents excluding the effects of foreign currency and we generated $246 million of free cash flow leading a cash in marketable securities balance of over $1.5 billion.

From a business perspective, we continue to lead the worldwide PND market share as our North American market share grew to 57% from 53% in the first quarter and 54% in the year-ago quarter. We delivered 3.7 million units as unit growth on a sell-in basis resumed in both the North America and Asian markets.

We also continue to deliver new products to the market which included new marine and outdoor fitness products, reinforcing our technological leadership in these segments.

Reviewing our business by segments, in the automobile segments, our revenue declined 31% versus the second quarter 2008 but increased 68% sequentially. The average selling price was down 28% year over year but increased from the first quarter as expected. On a sell-in basis, North American units increased while we experienced declines in Europe.

The outdoor fitness segments saw its first quarter of year-over-year revenue decline in over two years. The segment continued to post strong revenues and margins but could not exceed the sales level achieved in 2008 when we delivered a large number of new products to the market.

Revenues from our aviation segment declined 28% in the quarter as the industry continues to struggle with the current economic environment. While the market remains weak, we did see sequential improvement in both revenues and margins.


Saturday, August 8th 2009

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