Garmin plans for expansion even as earnings fall

Later this fall, after 200 summer interns head back to school, Olathe-based Garmin plans to begin construction on a four-level parking garage next to its current three-level garage.

“This is an eye to the future,” company spokesman Ted Gartner said of the planned addition. “We’re exploring our options about other possible expansions but have nothing to announce yet.”

The new construction, approved by the Olathe Planning Commission, will add a net 949 parking spaces on the headquarters campus near 151st Street and Ridgeview. The current 2,540-space garage is inadequate for the company’s 2,700 employees, Gartner said, so overflow employees and interns use a 353-space surface parking lot that will be converted to the proposed 1,302-space garage.

Further construction plans may or may not be introduced to the city next month, Gartner said.

The company has acquired more property northwest of its current campus, and the planning commission also has approved a 237-space surface parking lot for the new 2.26-acre site.

Meanwhile, Garmin on Wednesday reported flat sales and a 44 percent drop in first-quarter earnings, partly attributed to the rising value of the U.S. dollar in foreign markets.

Profit totaled $66.8 million, or 35 cents a share, in the January-March quarter, compared with $118.8 million, or 61 cents a share, in the same months of 2014. Garmin said its earnings were off 2.3 percent after adjusting for currency exchange rates.

Revenue fell less than 1 percent to $585.4 million, though Garmin said the dollar’s rising value cut revenue by $38 million in the quarter.

Garmin shares tumbled $1.95, or 4.1 percent, and closed at $45.54 after the morning earnings report.

Garmin said it increased its advertising 13 percent in the quarter and spending on research and development 10 percent.

Wells Fargo Securities analyst Andrew Spinola said in a note to clients that the company’s investment to develop new products has been climbing as a percentage of sales. It may put a limit on the stock’s performance.

Chief executive Cliff Pemble called the quarter’s results “solid” in the face of currency effects.

“These results highlight our ability to capitalize on growth opportunities in the near term while still investing in our market share position and long-term product road map through increased advertising and research and development expense. These investments are expected to generate ongoing growth potential in 2015 and future years,” Pemble said in the company’s announcement.

Sales from personal navigation devices and for autos, still the company’s largest division, fell 11 percent in the quarter to $216.1 million. Fitness, its second-largest division, saw sales jump 31 percent to $131 million.

This story was originally published April 29, 2015 at 10:32 AM with the headline "Garmin plans for expansion even as earnings fall."