Garmin 2Q marine revenue down 15 percent

CAYMAN ISLANDS – During the second quarter ended June 27, Garmin Ltd. (Nasdaq: GRMN) generated total revenue of $669 million, down 27 percent from $912 million in second quarter 2008, it reported in a recent statement. Its marine segment revenue decreased 15 percent to $60 million.

“The marine segment posted strong sequential growth at 58 percent as we entered the boating season,” said Dr. Min Kao, Chairman and Chief Executive Officer. “While the general marine market was down as much as 40 percent, we were able to significantly outperform the market on the strength of our marine product lineup. We were pleased with the revenue level and the margins that the business was able to deliver in the quarter. As we look toward the back half of the year, we are excited to deliver new navigation, communication and radar products that should further our growing position in the marine industry. While we do not expect to post growth until the macroeconomic conditions improve, we do expect that year-over-year declines will continue to improve throughout the year.”

Company gross margin improved to 52.6 percent compared to 45.8 percent in second quarter 2008 and 44.9 percent in first quarter 2009. Operating margin was up to 29.8 percent compared to 13.3 percent in first quarter 2009 and 26.2 percent in second quarter of 2008, according to the company.

Diluted earnings per share decreased 32 percent to $0.81 from $1.19 in second quarter 2008; pro forma EPS decreased 12 percent to $0.83 from $0.94 in the same quarter in 2008. (Pro forma EPS excludes the impact of foreign currency translation gain or loss and the 2008 gain on sale of TeleAtlas N.V. shares).

Garmin generated $246 million of free cash flow in second quarter 2009 for a cash and marketable securities balance of over $1.5 billion.

Year-to-date, Garmin generated total revenue of $1.11 billion, down 30 percent from $1.58 billion during the same period of 2008. Marine segment revenue decreased 23 percent during this period to $98 million, compared to the same period of 2008.

Diluted earnings per share decreased 44 percent to $1.05 from $1.86 in year-to-date 2008; pro forma EPS decreased 33 percent to $1.08 from $1.60 in year-to-date 2008. (Pro forma EPS excludes the impact of foreign currency translation gain or loss and the 2008 gain on sale of TeleAtlas N.V. shares). Garmin generated $532 million of free cash flow year-to-date.

The company said it posted sequential revenue growth of 53 percent with all segments showing improved revenues and margins as the first quarter seems to have represented the low point of declining revenue caused by the global economic crisis.

“While the macroeconomic conditions continue to dampen consumer demand, we are encouraged by the 53 percent sequential improvement in revenues in the second quarter,” said Dr. Min Kao. “We are also pleased with the solid margins and earnings in the quarter achieved by the various initiatives that we have taken to improve productivity, reduce expenses and utilize the strength of our balance sheet.”

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