Garmin Q2 09 Earnings call transcript

Finally, revenues from the marine segment declined 15%, caused by the downturn affecting the entire marine industry. However, our 2009 results are much stronger than the market due to the strength of our marine product line and we experienced a 58% sequential increase in revenues as the voting season began leading to improved operating margins.

Many of you are wondering how we view the current economic climate. While we’re not seeing significant signs of economic recovery, we are starting to see some positive indicators. As I mentioned earlier, we saw PND sell in to the channel grow on a year-over-year basis in both the North American and Asian markets, along with improving ASPs and margins on a sequential basis.

We expect to see sequential increases in shipments as retailers stock their shelves for fall promotions and we’d anticipate stable pricing with some margin declines during Q3.

As we look to the non-PND segments, we expect the outdoor fitness revenues and margins to be flat sequentially and we are well positioned to take advantage of sales opportunities with our strong line up of new products.

In aviation and marine, we expect continued weakness due to the economic conditions but it does appear that we’ve hit a low point in both of these market segments. While some of our competitors are backing away from research and development, we are further differentiating ourselves by introducing new products that we believe will lead to increased market share and growth as these markets segments and the general economy enter the recovery phase.

We will take a closer look at some of these products in a few minutes.

Next I’d like to review some recent product introductions. We recently launched the nüvi 465T, designed specifically for long-haul navigation and delivery trucks. This device provides multiple truck profiles and features advanced routing and guidance with truck-related road restrictions such as height, width, length, weight and hazardous materials.

The nüvi 465T also offers the unique POI database consisting of the National Truck and Trailer Services Breakdown Directory which provides information related to repairs and services critical to drivers operating in unfamiliar locations.

In late second quarter, we began delivery of the nüvi 1200 and 1300 series with an updated form factor and new features. These devices are Garmin’s first to offer pedestrian navigation via public transit enabled by our CityXplorer maps which can be purchased and downloaded for $10 to $15 per city.

We also began deliveries of the nüvi 1490T which features a bright five-inch screen, a new slimmer form factor, and advance features such as lane guidance, junction views, and Bluetooth hands-free technology. Initial demand for this product has been strong; driven by customers who appreciate a larger screen navigator with advanced features.

Turning next to outdoor/fitness, we recently introduced three exciting new products in the outdoor lineup. The Oregon 550 and Oregon 550t build on our popular Oregon touch screen series by integrating a 3.2 mega pixel auto-focus camera and a three-axis compass. The water-proof digital camera can capture pictures and landscapes for portrait orientation and geo-tag the photos for future navigation use. It also offers 850 megabytes of built-in memory along with a micro SD card slot for ample storage.


Saturday, August 8th 2009

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