New products buoy Garmin’s revenue, lifting its stock price

07/31/2013 9:50 PM

07/31/2013 9:50 PM

New products — including recently introduced devices for cyclists — boosted Garmin Ltd.’s second-quarter results and its esteem in investors’ eyes.

Garmin, in an earnings report Wednesday, said its Edge and Forerunner lines of products for cyclists sold well in the quarter. A lift in fitness and other product lines helped offset some of the decline in sales of Garmin’s traditional navigation products that led to a dip in earnings.

The Olathe-based company introduced the Edge 810 and 510 in January as the first devices for cyclists with real-time connectivity, allowing weather updates, social media sharing and tracking through smartphones.

Investors focused on the higher revenues in four of Garmin’s main navigation systems. Shares jumped 7.5 percent, gaining $2.82 to $40.08, their highest level since January.

Revenue gains averaged 8 percent across fitness, aviation, outdoor and marine products. The decline in Garmin’s largest business of selling automobile and personal navigation devices measured 12 percent.

Total sales of $696.6 million were down 3 percent from sales of $718.2 million in the second quarter last year.

Earnings also dipped. Garmin earned $172.5 million, or 88 cents a share, in the three months that ended June 29, down from earnings of $185.9 million, or 95 cents a share, in the same period in 2012.

Analyst Andrew Spinola at Wells Fargo Securities, in a note to investors, called the company’s results “encouraging and supportive of our thesis that Garmin is approaching an inflection in its business to consolidated revenue growth.”

He noted that Garmin’s strength came in areas where it has released new products, such as its fitness line.

Spinola said Garmin’s “high-end Nuvis” launched early this year helped its automotive business and supported “the idea that there is still a segment of the navigation market” for personal navigation devices.

Cliff Pemble, Garmin’s president and chief executive officer, said revenues in its main satellite-based product lines were “stronger than expected.”

The company also said it generated $186 million of available cash after covering its operating expenses in the second quarter.

Pemble said the third quarter will be “particularly challenging” compared with the particularly strong same quarter last year.

Garmin also said it has rolled out the Monterra, an Android-powered outdoor Global Positioning System device.


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