Garmin Ltd. recently announced its results for the first quarter ended March 31, 2018. The company’s 2018 Q1 highlights included a total revenue of $711 million, 11 percent over last year.
Garmin’s marine segment posted revenue growth of 9 percent, driven by the recent Navionics acquisition. Gross margin increased year-over-year to 59 percent, while operating margin declined to 12 percent.
During the first quarter of 2018, the company introduced the GCV 20 ultra-high definition scanning sonar that delivers higher resolution imaging at greater depths.
Additionally, Garmin was selected as the exclusive marine electronics supplier to the Independent Boat Builders, Inc., the industry’s largest purchasing cooperative network of leading boat brands.
“We achieved record first quarter revenue with double-digit consolidated growth led by strong growth in our outdoor, fitness, aviation and marine segments,” said Cliff Pemble, president and chief executive officer of Garmin Ltd. “Both the outdoor and fitness segments delivered solid, double-digit revenue growth, and we remain confident in our wearable product offerings. We are pleased with our first quarter results and look forward to launching new, compelling products throughout the remainder of the year.”
Other highlights of the first quarter included a gross margin of 60 percent, compared to 58 percent in the prior year quarter, an improved operating margin from 18.2 percent to 20 percent, and growth in operating income to 22 percent.
Total operating expenses in the quarter were $284 million, an 11 percent increase from the prior year. Research and development increased 16 percent, driven by the incremental costs associated with acquisitions, investments in the outdoor and fitness segments for the development of advanced wearable products and continued innovation in the aviation segment.
Selling, general and administrative expenses increased 15 percent, driven primarily by personnel related expenses and incremental costs associated with acquisitions.
The effective tax rate in the first quarter of 2018 was 16. percent compared to the pro forma effective tax rate of 21.2 percent in the prior year quarter. The decrease in the effective tax rate is primarily due to the benefits from the U.S. tax reform and the impact of the release of reserves.
In the first quarter of 2018, Garmin generated $188 million of free cash flow.