Garmin Ltd. Earnings: Beats Estimates

The Cheat Sheet

Garmin Ltd. reported net income above Wall Street’s expectations for the fourth quarter. Garmin and its subsidiaries manufacture, market, and distribute Global Positioning System-enabled products and other related products.

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Garmin Earnings Cheat Sheet for the Fourth Quarter

Results: Net income for Garmin Ltd. rose to $165.6 million (85 cents per share) vs. $132.9 million (68 cents per share) in the same quarter a year earlier. This marks a rise of 24.6% from the year-earlier quarter.

Revenue: Rose 8.6% to $909.6 million from the year-earlier quarter.

Actual vs. Wall St. Expectations: Garmin Ltd. reported adjusted net income of 96 cents per share. By that measure, the company beat the mean estimate of 65 cents per share. It beat the average revenue estimate of $768.1 million.

Quoting Management: “Entering 2011, we forecasted $2.5 billion of revenue and $2.50 of EPS. I am pleased to say that we far exceeded those targets through a combination of solid execution by our associates and successful acquisitions that further diversify our company in both products and geographies,” said Dr. Min Kao, chairman and chief executive officer of Garmin Ltd. “The business generated free cash flow of $784 million. We returned $311 million to shareholders through our quarterly dividend and used an additional $54 million to fund acquisitions. We will continue to use both of these strategies to grow long-term shareholder value.”

Key Stats:

Last quarter’s year-over-year revenue increase follows two quarters of revenue declines. Revenue fell 3.7% in the third quarter and fell 7.5% in the second quarter.

Last quarter’s profit increase breaks a streak of two consecutive quarters of year-over-year profit decreases. Net income fell 46.2% in the third quarter and in the second quarter.

The company has now beaten estimates the last two quarters. In the third quarter, it topped expectations with net income of 77 cents versus a mean estimate of net income of 50 cents per share.

Gross margins increased 2.4 percentage points to 47.7%. The growth was likely driven by increased revenue, as the figure rose 8.6% from the year-earlier quarter, while costs rose 3.9%.

Looking Forward: Analysts have a more positive outlook for the company’s next-quarter performance. Over the past month, the average estimate for the first quarter of the next fiscal year has gone up from 40 cents per share to 41 cents. At $2.42 per share, the average estimate for the fiscal year has risen from $2.41 sixty days ago.

(Company fundamentals provided by Xignite Financials. Earnings estimates provided by Zacks)

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To contact the reporter on this story: Derek Hoffman at staff.writers@wallstcheatsheet.com

To contact the editor responsible for this story: Damien Hoffman at editors@wallstcheatsheet.com

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