Garmin reports solid fiscal 2016 revenue and operating income growth
Garmin Ltd. (Nasdaq: GRMN – News) announced results for the fiscal year ended Dec.31, 2016.
Garmin’s total revenue was $3.019 billion for all of 2016, growing 7 percent over the previous year with outdoor, fitness marine and aviation collectively growing 21 percent over the previous year and contributing 71 percent of total revenue. Gross and operating margins were 55.6 percent and 20.7 percent, respectively, both improving from 2015 levels.
“2016 was a remarkable year of growth driven by strong sales in our outdoor, fitness, marine, and aviation segments,” said Cliff Pemble, president and chief executive officer of Garmin Ltd. “Entering 2017, we see additional growth opportunities ahead and we are well positioned to seize these opportunities with a strong lineup of great products.”
In the fourth quarter of 2016, total revenue was $861 million, growing 10 percent over the prior year with outdoor, fitness, marine and aviation collectively gorwing 25 percent over the fourth quarter of 2015 and contributing 74 percent of total revenue. Gross margins improved to 54.7 percent, compared to 52.9 percent in the prior year. Operation margins were 18.6 percent in the fourth quarter, compared to 18.7 percent in 2015. Operating income grew 20 percent.
The marine segment posted fourth quarter revenue growth of 19 percent, which Garmin said is driven by its lineup of chart plotters and fish finders. Gross margin decreased year-over-year to 52 percent due to product mix, while operating margin improved to 4 percent. In the quarter, Garmin introduced new touchscreen and keyed chartplotter combo offerings in its GPSMAP product line, many with built-in sonar, and new radar and entertainment offerings.
“We expect marine to continue to be a growth segment in 2017 as we focus on market share gains and new product innovations,” the company said in a statement announcing its fiscal results.
Total operating expenses in the quarter were $311 million, a 16 percent increase from the prior year. Advertising increased 19 percent, driven by year-over-year increases in the fitness and outdoor segments to support wearables.
Research and development and selling, general and administrative expenses increased 22 percent and 9 percent, respectively, which Garmin said is due primarily to recent acquisitions and an additional week in its fourth quarter 2016.
Garmin said it expects 2017 revenue of approximately $3.02 billion as growth in outdoor, fitness, marine and aviation is offset by ongoing declines in the PND market. The company expects gross margins to be approximately 56 percent, relatively flat to the prior year. Operating margin is expected to be approximately 20 percent.
An earnings call was held on Feb. 22. An archive of the live webcast will be available until April 27, 2017 on the Garmin website at www.garmin.com. To access the replay, click on the Investor Relations link and click over to the Events Calendar page.
