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Garmin Navigates Its Way to More Financial Records

By Demitri Kalogeropoulos – Updated Apr 16, 2019 at 5:20PM

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Despite intense competition, the GPS device giant just closed out a surprisingly strong 2018 year.

Garmin (GRMN 0.26%) recently announced robust sales and profit growth over the holiday shopping season, which allowed the GPS device specialist to trounce its financial targets for the year. The company also issued 2019 guidance that amounts to more gains in its headline operating metrics.

More on that optimistic forecast in a moment. First, here's how the headline results compared against the prior-year period: 


Q4 2018

Q4 2017

Change (YOY)


$932 million

$897 million


Net income

$190 million

$143 million






Data source: Garmin's financial filings. YOY = year over year.

What happened this quarter?

Sales growth didn't improve from the prior quarter's pace amid intense competition in the consumer electronics industry. But revenue still came in well above management's early November forecast.

A hiker interacts with a GPS watch.

Image source: Getty Images.

Key highlights of the quarter include:

  • Revenue gains landed at 4% as big increases in the outdoor and aviation segments more than offset a slumping automotive division. Garmin's fitness unit also slowed to zero growth as its smartwatches faced tougher competition from Fitbit and other rivals.
  • Gross profit margin shot up to 59% of sales from 56% a year ago, with support from innovative product launches and faster growth in premium areas like marine and aviation GPS.
  • Garmin held the line on expenses, which allowed operating income to rise to $223 million, or 23.9% of sales, from $183 million, or 20.4% of sales, a year earlier.
  • Taxes didn't change as a percentage of sales, so earnings ended up rising faster than operating income, up 33% for the quarter.

What management had to say

CEO Cliff Pemble focused his comments on the broader wins that Garmin achieved for the full year. "2018 was another remarkable year of revenue and operating income growth," he said in a press release, "driven by strong performance in our aviation, marine, outdoor and fitness segments."

Executives noted that the automotive division was again a drag on overall results as the market for dashboard devices contracts. The fitness segment's flat performance was a function of hefty competition and a comparison against a strong prior-year period, they explained. Looking to 2019, executives said they see "many opportunities ahead and believe we are well positioned to seize these opportunities with a strong lineup of products across all of our segments."

Check out the latest Garmin earnings call transcript.  

Looking forward

Garmin's initial outlook for 2019 predicts another deep decline in an automotive unit that's quickly fading in influence on the wider business. Yet double-digit gains in each of its other four segments should allow sales to rise by about 5% to $3.5 billion, they forecast, to mark a slowdown from this past year's 7% increase.

Gross profit margin should rise, meanwhile, as the company continues to push design and functionality improvements while attacking highly profitable niches like aviation. Pemble and his team see that figure improving to 59.5% in 2019 from 59.1% last year.

Put it all together, and Garmin is signaling a fourth consecutive year of sales gains and profitability improvements. That's an impressive achievement for any consumer electronics specialist. But it's even more noteworthy considering the huge disruptions that have occurred over that time in key Garmin sales arenas like fitness devices and the automotive segment. The flexibility that success implies suggests investors may see more financial records ahead for this business.

Demitrios Kalogeropoulos has no position in any of the stocks mentioned. The Motley Fool owns shares of and recommends Fitbit. The Motley Fool has a disclosure policy.

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