Barclay Conference 12 2009

8/4/2019 Barclay Conference 12 2009

1/26


2/26

SafeHarborStatement

Thesematerialsincludeforwardlookingstatements.Thesestatementsarebasedon

thecurrentexpectationsofGarminLtd.andarenaturallysubjecttouncertaintyand

changesincircumstances.Forwardlookingstatementsinclude,withoutlimitation,

statementscontainingwordssuchas"proposed"andintends

orintended

and

"expects"or"expected".Bytheirnature,forwardlookingstatementsinvolveriskand

uncertaintybecausetheyrelatetoeventsanddependoncircumstancesthatwilloccur

inthefuture.Thereareanumberoffactorsthatcouldcauseactualresultsand

developments

to

differ

materially

from

those

expressed

or

implied

by

such

forward

lookingstatements.Otherunknownorunpredictablefactorscould causeactualresults

todiffermateriallyfromthoseintheforwardlookingstatements.Thesefactors

includethosediscussedoridentifiedinthefilingsbyGarminLtd.withtheU.S.

SecuritiesandExchangeCommissioninitsAnnualReportonForm10K. GarminLtd.

doesnotundertakeanyobligationtoupdatepubliclyorreviseforwardlooking

statements,whetherasaresultofnewinformation,futureeventsorotherwise,except

totheextentlegallyrequired.

1


3/26

KeyFinancialMetrics

2

$inMillions 2004 2005 2006 2007 2008Revenue $763 $1,028 $1,774 $3,180 $3,494

RevenueGrowth 33% 35% 73% 79% 10%

DilutedEPS(GAAP) $0.95 $1.43 $2.35 $3.89 $3.48

DilutedEPSExcl.FX $1.04 $1.37 $2.35 $3.79 $3.69

EPSGrowth 22% 32% 72% 61% 3%


4/26

ReturnonInvestedCapital

3


5/26

ShareholderReturns

4


6/26

AviationGrowth

5

FutureGrowthGrowmarketshareinretrofitandOEMmarkets

ExpandpresenceinBusinessJet(VLJ)market

IncreaseG500,G600andG3Xproductlinepenetrationintoexistinggeneralaviation

(GA)andlightsportaircraft(LSA)

ExpandintoPart23/25marketwithG3000andfutureofferings


7/26

AviationSegment

6

OEM

PartnershipsCompetitorsHoneywellAvidyne

RockwellCollins

MarketshareRetrofit:>80%

OEM: ~70%

Portable: >95%

DistributionRetrofitandhandheldproducts:

600aviationdistributorsworldwideAuthorizedGarminsalesandservicecenters

capableofselling,installing,andservicing

aviationproducts

OEM:

G1000integratedcockpitthroughmajoraviation

manufacturers
http://en.wikipedia.org/wiki/Image:Cessna_logo.pnghttp://upload.wikimedia.org/wikipedia/en/f/fb/Eurocopter_logo.svg


8/26

Outdoor/FitnessGrowth

7

FutureGrowthImproveoutdoorandfitnesstechnologythroughnewproductintroductionswith

enhancedutility

Expanddistributiontoadditionalcyclingandrunningstoresandexpandpresencewith

existingretailers

Distributegolfproductintoretailandgolfcoursechannels

Integrateexpandedcontentintobothoutdoorandfitnessproducts


9/26

Outdoor/FitnessSegment

8

CompetitorsOutdoor

Magellan

Cobra

Bushnell

Fitness NikePolar

MarketshareGreaterthan70%

Distribution

Sponsorships


10/26

MarineGrowth

9

FutureGrowthBecomethevendorofchoiceinthe

OEMspacewithcompletelineof

marineproducts

Offertechnologyforthelargeboatmarket

Improved

cartography

and

data

content


11/26

MarineSegment

10

CompetitorsFuruno

Raymarine

Simrad/Lowrance

NavMan/Northstar

Market

shareApproximately25%marketshare

Distribution

OEMPartnerships


12/26

Auto/MobileGrowth

11

FutureGrowthContinuetogrowmarketshareintheglobal

PNDsector

AlignwithGSMwirelesscarrierstodistributeGarminAsusnvifones

DifferentiateproductswithincreasedcontentandLocationbasedservices(LBS)

ExpandAutoOEMbusinessasnavigation

penetrationratesincrease


13/26

Auto/MobileSegment

12

PNDCompetitorsTomTom

Magellan(Mitac)

Mio(Mitac)

Navman

(Mitac)

Navigon

AutoOEMCompetitorsAlpine

Delphi

HarmanBlauupunkt

MobileCompetitorsApple

NokiaLG

Samsung

RIMM

Palm

HTCTelenav

NIM

Distribution

OEMPartnerships
http://images.google.co.uk/imgres?imgurl=http://www.poway.com/images/ford_logo.jpg&imgrefurl=http://www.poway.com/falfest.htm&h=200&w=300&sz=27&tbnid=qk7ZS68ZyNIXzM:&tbnh=74&tbnw=111&hl=en&start=3&prev=/images?q=Ford+logo&svnum=10&hl=en&lr=


14/26

Expanding worldwide market share through:

Growth in US market share that currently exceeds 55% share

Retention of European market share

Competition consolidating or exiting the market leading to opportunity togrow profitable market share

Worldwide PND Market Share


15/26

PND ASP Trend

Flat Y-o-Y


16/26


17/26

GarminAsusnvifone

Connect Comm unicate Navigate

SeamlesslyintegratedLBScentricsmartphone productlineAstateoftheart,easytousephone

ApremiumnavigationdeviceLeveragespowerfulandusefulwebcontentfornavigationandcommunication

nvifone

productline

AllareLBScentricsmartphonesDifferentplatformsfordifferentusers

TravelersSocialCareeristsTechnologyEnthusiasts

16


18/26

17

PriceandCost

Pricingdeclineswillmoderatedueto:Tier2&3competitorsaresqueezedoutofthemarket

Enhancedfeaturesandfunctionalityarebroughttomarket

Billofmaterials(inorderofmagnitude)LCDNand

flashmemory

MapandcontentlicensingGPSChipsetAnalogIC

Margin

compression

subsides

as

BOM

declines

keep

pace

with

ASP

declines.


19/26

OperatingExpense

18

Longtermtargetof56%ofsales

ContinuetoinvestinR&Dtomaintainbestin

classtechnologyinallsegments

Currentlyemployeeover1900engineersand

engineeringassociatesworldwide

R&Disheavilyweightedtowardaviationwith

approximately3540%oftotalinvestmentfocused

onthissegment

Research&Development Advertising,SG&A

Longtermtargetof1113%ofsales

Continuetoinvestinbrandingactivitiesthrough

print&mediaads,sponsorships,anddealerblended

pointofsaleefforts

LeverageotherSG&Acomponentswhicharedriven

primarilybystaffinglevels


20/26

LongTermBusinessModel

19

NetRevenueGrowth

+1015%

GrossMargin

35to37%

R&D

5to6%

Advertising

5to6%

SG&A

6to7%

OperatingMargin

17to21%


21/26

20

Q3IncomeStatement

($ millions) Q3 2009 Q3 2008 Change

Revenue $781 $870 (10%)

Gross Profit $410 $386 6%

Gross Margin 52.4% 44.3% 810 bps

Advertising $46 $51 (10%)

Other SG&A $71 $68 4%

R&D $56 $53 6%

Total Operating Expense $173 $172 1%

Operating Income $237 $214 11%

Operating Margin 30.3% 24.6% 570 bps

Other Income / (Expense) $20 ($3)

Income Tax $42 $40 5%Net Income $215 $171 26%

Earnings per Share (GAAP) $1.07 $0.82 30%

Pro-Forma EPS (excl. FX and TA gain) $1.02 $0.87 17%

Units Shipped (K) 3,866 3,855 0%


22/26

Q3YTDIncomeStatement

YTD 2009 YTD 2008 Change

Revenue $1,887 $2,446 (23%)

Gross Profit $957 $1,123 (15%)

Gross Margin 50.7% 45.9% 480 bps

Advertising $103 $147 (30%)

Other SG&A $193 $194 -1%

R&D $167 $156 7%

Total Operating Expense $463 $497 (7%)

Operating Income $494 $626 (21%)

Operating Margin 26.2% 25.6% 60 bps

Other Income / (Expense) $22 $84 (74%)

Income Tax $91 $135 (33%)Net Income $425 $575 (26%)

Earnings per Share (GAAP) $2.12 $2.68 (21%)

Pro-Forma EPS (excl. FX and TA gain) $2.10 $2.47 (15%)

Units Shipped (K) 9,997 10,563 (5%)

($ Millions)


23/26

FY Q1 Q2 Q3

($millions) 2008 2009 2009 2009Cash&MarketableSecurities $973 $1,244 $1,505 $1,802AccountsReceivable $741 $420 $519 $574

Inventory $425 $353 $323 $373

DeferredIncomeTaxes $50 $61 $59 $53

PrepaidAssets $25 $55 $65 $50

Property,Plant&Equipment $445 $441 $443 $444

OtherAssets/Goodwill $266 $220 $230 $221

TotalAssets $2,925 $2,794 $3,144 $3,517AccountsPayable $160 $79 $137 $186

OtherAccruedLiabilities $300 $204 $273 $363

IncomeTaxesPayable $235 $241 $257 $254

DividendPayable $0 $0 $0 $150

DeferredIncomeTaxes $4 $12 $15 $9

ShareholdersEquity $2,226 $2,258 $2,462 $2,555

TotalLiabilities/Equity $2,925 $2,794 $3,144 $3,517

BalanceSheet


24/26

CashFlow

Fiscal Q1 Q2 Q3 YTD

($ millions) 2008 2009 2009 2009 2009

Net Income $733 $49 $162 $215 $426

Depreciation/Amortization $78 $22 $21 $24 $66

Accounts Receivable $206 $318 ($85) ($55) $178Inventory $83 $59 $30 ($46) $43

Accounts Payable ($236) ($78) $54 $46 $23

Other Cash from Operations ($2) ($71) $74 $109 $112

Net Cash Flow from Operations $862 $299 $256 $293 $848

Investing Activities ($56) ($66) ($234) ($258) ($558)

Financing Activities ($808) ($2) $4 $2 $4

Exchange Rate Changes ($9) ($6) $11 $16 $21

Net Increase/(Decrease) in Cash ($11) $225 $37 $53 $315

Cash at End of Period $697 $922 $959 $1,012 $1,012

Marketable Securities $276 $321 $546 $790 $790

Total Cash & Marketable Securities $973 $1,243 $1,505 $1,802 $1,802


25/26

24

UsesofCash

DividendPayment Annual2009dividenddeclaredandpayableinDecember;$150millionuseofcash

Acquisitionopportunities 10Europeandistributorsand2technologyacquisitionsin20072008;$190millionuseofcash Continuetoevaluatetuckintechnologyandcontenttransactions

Sharebuybackprogram Completed17.2millionsharesduring2008and2009;$674millionuseofcash OutstandingauthorizationfromtheBoardofDirectorsfor$256

millionsharerepurchase;

planexpiresonDecember31,2009


26/26

WhyGRMN?

Longtermgrowthopportunitieswithinallfoursegmentsofourdiversifiedbusinessmodel

Continuedinnovationandworldclasstechnologyrequiredtocompeteinthegrowing

navigationindustry

FutureopportunitiesintheemergingmobilehandsetandAutomotiveOEMmarkets

Solidbusinessexecutionbymanagement

Excellentoperationalandfinancialmetrics

Abilitytoscalethebusinesstomatchmarketdemand

Veryhighreturnoncapital(~50%)

Strongfreecashflowandnodebtcreatesflexibleuseofcash:

Futureacquisitions

Stockrepurchase Cashdividends

25

Barclay Conference 12 2009

Documents

Transcript of Barclay Conference 12 2009