GRMN - Earnings call transcript Q4 2018

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Operator

Good day, ladies and gentlemen and welcome to the Garmin Ltd. Fourth Quarter 2018 Earnings Conference Call. At this time, all participants are in a listen-only mode. Later we will conduct a question-and-answer session and instructions will follow at that time. [Operator Instructions] I would now like to introduce your host for today's conference, Ms. Investor of Manager Seck, Relations. Teri begin. Ma'am, you may

Teri Seck

at to Good be on quarter fourth earnings at release are www.garmin.com/stock. you the of our site note related morning. like to press transcript available slides related webcast We'd An Garmin and Investor XXXX Internet available the Relations on Ltd.'s that welcome Garmin's the earnings and archive Please call. also will website.

shares, this The regarding first prior may the these and forward-looking position, new presented filed risk result and U.S. contained revenue in affecting Securities Garmin concerning quarter reminder, of of gross restated Information a discussed and a the circumstances our Form Garmin. in are earnings risk XXXX. as and of earnings and and not over President and call Any statements actual to been this and Cliff Pemble. and and call of factors we could Garmin on market demand business. margins are adopted Cliff materially, this have objectives, morning time, Pemble, call with events factors At differ other The revenues, introduction, Treasurer. our results includes XX-K occur Exchange Presenting for As Boessen, Chief Commission. to like and the adoption turn projections regarding behalf this periods product Officer; our This plans Executive forward-looking Officer is Chief Ltd. Doug Financial future standard I here GAAP would reflect and in product to statements forward-looking earnings, its future statements. operating financial dividends, Ltd. future standard.

Cliff Pemble

good morning, Thank you, Teri, everyone. and

X% generated XX% the prior XXXX revenue the for increase XX%. driven over GAAP segment EPS to in increased prior operating million. collectively Gross outdoor over pro and and we prior EPS strong and results today, $XXX to forma and quarter, over income margin of finished improved of mix. the improved XX.X%, quarter of earlier marine, product announced Aviation, the an year. both XX% increased These year. margin As $X fitness by year Operating with $X.XX to increasing XX.X% the

full growth. and with many will some of Looking in in become I launched performance. our halo our each innovative of income everything of we But back accomplished. operating looking XXXX, at year their third pleased XXXX respective revenue segment We which year in I'm products, consecutive highlight briefly have was very business a moment. products at accomplishments markets.

products. the improved operating pro and in to the year. XX% the income over in Gross outdoor and be Combined and product For confidence new to while X XX% in and The ADS-B XX%. over increased conditions shipped and XX% Doug XX of Operating past EPS Starting growth operating inception, both prior marine, like resulted aviation Gross an over growth highlight million would EPS in and in increase some the over categories. operating segments. the aftermarket, the in million aviation. increased year. an from generation certified the were XX% business which during first and but us in by of favorable our X% respectively forma led greater increased bringing performance I financial the million income This of a few growth of X% of our since to to five market proposing with year detail XXX EPS continues $X.XX; margin XX.X% and in minutes, our dividend. increased year, increase revenue nearly billion. year a revenue will units total driven We in increased and prior margins $X.XX, includes category. OEM aftermarket from gives over achievements cash $X.X XX%. discuss solid XX% each fitness GAAP OEM results outlook Revenue platforms aviation, driver the and margin to to in XX.X%. improved quarterly

the During to Year. for fighter recognized of Air deck. one selected us their year support which program avionics Aviation is we second by that a by during we consecutive Garmin our ranked those recently, the I team year. in associates earning integrated is and outstanding equip testament equipment tandem Professional Pilot the way F-X in most to Garmin of as Supplier the and recognition Tactical industry participate the quality our number International the care amazing fleet and helicopters for market. our Also performance is the The XXth these because magazine the year our News win significant, from Airbus by was are of receiving congratulate flight on were aircraft, strong for aviation the which demands Embraer customers. product And awards,

and platforms OEM ADS-B and product Looking in growth ahead, conditions, and contributions both products opportunities provide from positive aftermarket categories. market new

we things these mind, increase segment XXXX. With approximately anticipate in the revenue in aviation XX% will in

by marine. a of XX% product broad range strength Looking lines. driven at increased next Revenue in

During and system GPSMAP halo We new to generates disruptive marine XX% the quickly Navionics technology achievement and become has industry underwater. XX%. the new operating the major of year, portfolio. was improved content. in This echoMAP recently Navionics the and for marine that acquisition. recognized and objective Gross of versions included combining increased by operating map we video-like launched our product new flagship images Garmin of margins LiveScope a XX% which a marks income established respectively, as chartplotters, Panoptix we LiveScope, best and real-time a introduced the and a sonar our

category. gain OEM share in continue the to We market

GPSMAP supplier anticipate segment During for confident boat were XX% in such to enter several portfolio flagship strong echoMAP We the our and Panoptix the and XXXX series. named will product, in increase year. manufacturers. an we year, We as revenue exclusive our marine LiveScope the of approximately as,

margins subscription outdoor products watches, for income were increased and inReach operating year. strong XX% XX% over XX% on and demand XX% golf respectively, operating to outdoor. adventure and next the prior Turning and Gross Revenue increased services.

Plus the of introduction the watch the momentum payments. fēnix the streaming During the with built built-in year, X series we music, mobile in on and maps with category adventure

We and with Descent. also introduction Instinct category extended the of the

Looking in XXXX, we primarily in revenue segment and increase inReach subscriptions. in watches growth the by outdoor driven XX% will anticipate approximately ahead,

we app including Looking the providers all wearables next over at and Spotify, fitness. and Revenue XX% new increased and year. by product and margins Gross XX% KKBOX. increased added In Deezer, operating growth categories. seven income respectively driven store into IQ Connect music-enabled were and in XX% operating our XXXX, music launched prior XX%,

XX% purchase of includes and we to in growth XXXX, acquisition expect provider quarter. bike completed indoor as the Lastly, which In we growth we to signed as of leading Tacx a an trainers of this within organic segment. agreement be sometime acquisition revenue well second Tacx, the anticipate approximately the

revenue full timing. ongoing at year the respectively. due decreased PND the of segment, and XX% Gross OEM margins XX% to finally were and auto auto for market the by decline lower driven operating program X%, and the Looking sales

starting OEM awarded market global road PNDs new remains recent Our with business will strong announced contribute we Consumer were new In share features. we PND very simplified in Electronics the category, our and trip-ready the Show, that Drive XXXX. at

program ongoing in year-over-year. of driven decrease our by we billion, segments. Looking timing opportunities PND of softness earlier. XXth XX%, with at revenue the year We market XXXX, began the summary, anticipate up we approximately mentioned decline revenue due operations anticipate approximately of well in X% as will $X.X In all to OEM

anticipate anticipate That approximately margin Our rate to timing due remarks. approximately full forma my a plan of concludes gross of calls launches. $X.XX. of product the We the of tax for of per of in second We pro and earnings growth margin XX.X% half XX.X% in stronger resulting operating pro the forma effective XX.X%. year year share approximately approximately

Next, details on Doug results. additional will walk Doug? you financial through

Doug Boessen

comments XX full increase Thanks Cliff. our posted results everyone. prior X% million representing statement, the morning was sheet year. fourth on a basis year-over-year. the year. from was margin $XXX for a the basis increase prior Operating of sales XX% fourth was point Operating the of from financial flow was basis from We decrease and cash, prior XX.X%, Gross quarter review margin year. and percentage XX.X%, point million, my with the XXX the a prior taxes. I'll point balance XXX as in revenue increase $XXX quarter, increase year Good with income begin XX%, expense a Operating year.

Pro $X. was EPS a XX% the prior EPS GAAP was from increase forma Our $X.XX, year.

the point revenue increase sales XX.X%, was Looking a $X.X a at we billion the a XXX margin from results, prior of was over prior was increase in XX million, points prior for a full percentage year driven from the expense increase year. as the representing year. by of posted $XXX basis from year-over-year. basis year, Operating the Gross Operating XX.X%, X% year. income basis point increase gross the over XX% XXX margin. margin prior XX.X%, an increase Operating increase year, was

$X.XX. was EPS Pro $X.XX, Our from XX% GAAP forma EPS a prior the year. was increase

Next, quarter full look segment. by at year fourth revenue and

growth fourth followed the the growth, three closely with segment double-digit by Outdoor led in quarter, achieved During XX%. our five segment XX% of growth of we by the Aviation segments with

we consolidated five in segments. four our the For full of with achieved year X% XXXX growth growth double-digit

fourth prior Aviation, to in XX%. grew revenue XXXX XX% quarter compared XX% grew to fourth year revenue to Fitness XX% Outdoor from the in Marine, segments operating quarter. income. the Collectively, the and total contributed Looking to XX% next XX%. quarter from Outdoor, Aviation

our of operating profit fitness segment. income XXXX. compared fourth You Outdoor in mix fourth see and the a Outdoor XXXX collectively total quarter increased XX% quarter can operating to XX% illustrate from The the by XX% segments percentage charts it Marine, delivered in XX%. operating the income as from of income Aviation, to

full Looking charts. year next at

made and shift total operating Marine, the XXXX Aviation, a XXXX. increase in income margin. Aviation, Outdoor, besides XX% XX% Fitness in Marine, the segments income and Auto of compared All year, XX% collectively both For revenue operating had in A with operating up XX% from compared XXXX. in in coming similar the; to operating to segments dollars income segments Fitness occurred Outdoor full year-over-year

increased quarter Looking next resources. Research by in expenses. development expenses million X%. increased due Fourth and $X $XX to year-over-year investments or operating at engineering operating million

cash cash timing statement and quarter receipts. sequentially increased of sequentially $XXX due Inventory and billion. the cash to ended decreased with million, Accounts A balance highlights few holiday representing to approximately $XXX year-over-year decreased expenses. year-over-year year. compared the was decreased We the to to decrease. segment. due $X due the prior year primarily media costs quarter Our in partially of decrease prior year spent fitness litigation-related basis prior prior basis compared million with of SG&A to X.X% sales, XX $X to expense was due payments. increased both securities to Decrease quarter of and offset increased marketable XX.X% by Decrease to flow personnel-related and point quarter receivable sales, million advertising from XX point balance dividend in sheet, lower $X.X million.

fourth quarter the cash generated During free $XXX of million. approximately flow XXXX, we

beginning For a the cash XXXX, plan we quarterly we from that our share payment. prior $XXX dividend cash year. approval million, per approximately the the our shareholder share, dividend $XXX per full million X% $X.XX announced quarter, increased increase to of year per $X.XX for Proposal is for seek XXXX to a June free generated flow of of share. per We current increase dividend $X.XX

of For rate XXX year due tax tax the reform. benefits from full year the primarily prior from point XXXX, to we basis decrease recorded U.S. effective an XX.X%,

formal XXXX. to We increase the expected expect to This rate reserve tax XXXX to our Channel, in be Q&A. our XXXX rate releases compared effective tax pro effective due for year-over-year forma The line concludes lower approximately year please primarily open XX.X%. is pro remarks. full forma

Operator

question Instructions] Suisse. Robert of Our comes Credit from the Spingarn of first line [Operator

is line now Your open.

Robert Spingarn

should on in -- Cliff or gross Good Doug, start the on you think morning. the wanted guys. on about ask Very I improvement pricing three margins, to throwing the considering that factors anything with there? I else how mix volume margins those we do good and to just numbers that be

Cliff Pemble

our the is On primarily margin segment-driven improvement mix. year,

the On and segment it's both mix. quarter, product

Robert Spingarn

ahead And then -- go Doug.

Doug Boessen

marine higher gross the Cliff and We some improvement wearables did see to quarter some percentage as to year-over-year product mentioned in Yes. margin due mix mix. in also gross margin product the due outdoor also of improvement primarily the year-over-year for

Robert Spingarn

gets at should And competition Or we work matures? -- do that there with stable? pricing trends somewhat about? you here see technology is kind technology pricing Or any of and as any are think moderation

Cliff Pemble

Yes. especially is around still promotion holiday factor times. obviously Competition a

segments had have year. fēnix within we where cycles of the an particularly do life various in watches impact also most outdoor the for the new product Our

things and are anticipate those market So going doing forward think I all best We just would dynamic. the can. we the following

Robert Spingarn

in XXXX. Okay. But what guidance. guided. XXXX And on then did than is in sales The bit guidance then just a you the you sales better delivered again short you little of initially

there think about typical did really against Or into activity Is be the we XXXX conservatism? segments should about? are fading original just get maybe thinking example be that should of ADS-B we this for You we across fundamental else the anything about elements X.X% as I any guidance thinking X%. or

Cliff Pemble

I segment guidance the itself. think level speaks for

overall that our we think time on of we’ve road in of map guidance, can we articulated a terms deliver. I believe we that spend that the and lot

what There's of the the beginning year. really that's So a of goes at our lot of the guidance year still ahead us. behind

as develop and that's we'll of So our now course things view road But right map. update. our

Robert Spingarn

much. very Thank you,

Cliff Pemble

Thank you.

Operator

you. Thank

question next of the from of America Merrill of Ronald line Epstein Our Bank Lynch. comes

is now line open. Your

Caitlin Dullanty

should any pickup you Ron XXXX? how expect U.S. Caitlin a Epstein can did pent-up It's shutdown And we going the the if upgrades? on encounter so, affect Did demand guys. My of -- Dullanty see for government Hi is today. question delays? to first ADS-B into

Cliff Pemble

impact really didn't on itself. any from We ADS-B the shutdown see Yes.

I think detect saw. so shop puts was that takes that least of from that and zero at activity was the lots level there wouldn't the it I there's of say the hard impact. to we at But industry,

think reopening. forward, of through there's wave going don't I that so major comes And the a because

the a a still shop that continue and will upgrades is strong XXXX aircraft equip quite because to still into expect We there's capacity factor. few

Caitlin Dullanty

in then outdoor That's the a you the can helpful. XX thank And watch quarter? two how launches to Okay, new such bit contributed very and product about you. GPSMAP the Instinct as growth handheld the talk

Cliff Pemble

of might upgrade we're our overall a a product for new new and who so that product have. as and new who a for was the do are And we a they whenever really already refresh features of that line people we kind so customer, us, category within to that opened looking the able view wearable. Instinct and people new capture GPSMAP products opportunity Yeah.

new of, refresh out kind a product there. So,

Caitlin Dullanty

you Thank right. All much. so

Cliff Pemble

Caitlin. Thanks,

Operator

Thank you.

Anderson Our & next comes question from of Dougherty of the Charlie Company. line

now is open. Your line

Charlie Anderson

Yeah, thanks congrats for really a XXXX. taking on strong my questions and

Cliff Pemble

you. Thank

Charlie Anderson

to I with auto. Cliff, start wanted question a on

rate BMW, in that's it's in So its right you Geely the like that now. kind looks current you PND I program some do continued have which coming range. and timing later. XX% impacting have But of of realize OEM decline, low others

or got few that Is also the you a over I I which think how the business grows? some wonder I've have it then a at that think there unannounced you've follow-up. And referenced in wins. past we next about should years. point, even stabilizes

Cliff Pemble

Yes, grow. a stabilize we definitely believe plan. We're there's we'll -- and

Charlie Anderson

there? XXXX-XXXX Can you speak frame to more -- if that's something we could or consider on color time the any

Cliff Pemble

Well, additional forward hit that XXXX, I us that remarks looking earlier will as it's to about so key a with little we've the early a XXXX, talked say start of online. many in for that programs but come consistent and we and that we about to as year would well made have be talk the programs

Charlie Anderson

as making And within then world, spills I key are this investors the on about the And are to into category? the it what then year Thanks. the guys ADS-B you rollout should you over any Okay, do great. post-ADS-B relates aviation, think it think XXXX? a degree some assumptions aviation wonder how of growth to

Cliff Pemble

Yeah.

outlook very Our in we what today to provided July. similar is back

be due of to say are opportunity We to have that And buying they looking come aircraft the just the in mandate get XXXX, additional that into shops the XXX,XXX I run we either overall takes able they're for lagers perhaps would based that on appears have that still that we into to rates fact or behavior. weren't by online about seeing terms aircraft time effect. today equipped would there

Charlie Anderson

much. so Thanks Great.

Cliff Pemble

Charlie. Thanks,

Operator

you. Thank

Our of Needham line Valera question Company. & of Rich from the comes next

open. now is Your line

Rich Valera

from a congratulations Thank on strong as and well. XXXX you me

to the follow-up think into ADS-B right you're revenue you Can us question. now give retrofits sense any ADS-B-related wanted from of the you on Just that level XXXX? seeing how trends and

Cliff Pemble

modification. It's quantify in airplanes are bring customer probably we to when additional little their because to a they for equipment hard up seeing step

I customers features is they potential that the to significant, they equipment. think it to takes the put the all opportunities effort that's equipment of they and critical, shows because of have latest that with advantage realized can take in and so the it want

in we're our product seeing ADS-B. lines consequently lot to improvements a of retrofit So addition in

Rich Valera

to degree of from ADS-B-related activity to the pull-through I significantly you guess you're the that decrease and the XXXX but sort getting understood, in would almost seem that XXXX, I all was have then in reverse effect. it could

you ADS-B just expected to high in versus trying how about XXXX So of XXXX to given XXXX? think about level think

Cliff Pemble

people to of ready play said that the be a lot still mandate. of out certainly that be a become we to is equipped. as the and will today way all into sales color see occur of because the XXXX, lot when And we comes we it sales a not pull-through those around we're to But level drop-off in the there have impact Well that unknown. there those it the but will still XXXX XXXX with provide along comes still yet,

Rich Valera

enough. I if Fair I ask one acquisition Tacx to interesting could, there. wanted on And

be First, annualized if either you expected you'd on in basis or I acquisition was XXXX? wondering in revenue with Tacx to have you to that from expect contribution give however an many willing the months

Cliff Pemble

half our we the Tacx based guidance, fitness say our and projecting that to of is from projected due on that date. closing we're in growth Well about would

far. those So are assumptions so the we made

Rich Valera

can projected share you And date? that closing

Cliff Pemble

specific second think we don't quarter. there's but we really it in still be yet, lot expect I to so have a to a sometime happen,

Rich Valera

you from Garmin as the you're that Garmin the get else or And Tacx, do could looking to some what I'm of thinking an do just part Got of Garmin once Tacx things sort the anything software of products? -- what other else types then, with it. is portfolio? you with there of are with integration

Cliff Pemble

and us as indoors cycling allows Tacx outdoor cycling business both bring a of across Garmin Connect. on terms activity integrate Well very us to to platforms solid units based in so allows and we built well head cycling our

opportunities a overall that see of synergies with market. work Tacx lot and in together serve we So cycling the we order to can better

Rich Valera

number organic more of recent I Can impact? And some Got give marine if were could. growth for it. the we a acquisition if out back one XXXX, you to XQ

Cliff Pemble

Yes.

about was XX% of the maybe was it majority that of Navionics. fourth three growth quarter the and about organic For vast quarters

Rich Valera

it. Got very Thanks much.

Cliff Pemble

Thank you.

Operator

you. Thank

of question next line the comes Stanley. from Anderson Morgan Our of Yuuji

Your line now open. is

Yuuji Anderson

taking Thanks so question. the morning. Good much for

was the on that up follow asked. to wanted I previous outdoor question First,

Just looking of you us concerned of performance how was idea that the of example? older -- you watches Fenix year-over-year. acceleration versus better new at contribution QX product much and that underlying just Can a give just the a cited from for the or of performance the there

Cliff Pemble

products new contributed as but new still quarter the like strong for and in definitely well. for totally Well the and Instinct to the Descent saw Fenix growth us, dollars our line we year

Yuuji Anderson

it. I at helpful. is Got operating And so should a when That's tick longer XXXX. we thinking be down guess then the it term, guidance, we the of from on margin should look of this the in investment-heavy to more hovering as meaningful XXXX of expect think as range? years? leverage around this mid-XX company just being outer we operating we should Or and particularly kind low- percentage

Doug Boessen

Yes.

Doug. this So is

me Let a feed and that. expenses and kind operating on probably give perspective little gross of margin you into the

little little relates sales looking do mention in Tacx that the XXXX, were attributing increase tick-up of consolidated basis segment due expect acquisition of percentage on bit, basis expect the -- points for for our increase And to mix. of year-over-year expenses it that we primarily operating also the on XXXX, our a XXXX. advertising to it to as margin, more operating level year-over-year. of And line. And increase. investments primarily the also. maybe about make expenses one to maybe to for But granularity as expense I business XX% relatively at a to to would at gross as acquisition then continue should -- increase a as continue of expenses basis it there XX operating a in comparable to that's did basis there. relates about SG&A in percentage R&D -- all XXX XX% each similar a to to sales as sales -- point So a year-over-year point as maybe maybe And -- of about percentage that, we to percentage expect maybe a do probably a go-forward We basis we probably expect look goals then investments drive XXXX to probably that of lines, our a top increase in as increase advertising; be or on sales do a

Yuuji Anderson

Great.

one just then if And more helpful. very I That's one quick Okay. may.

this more production such guidance production broadly, Aviation to saying just I the versus like they're building ramp those things for Longitude? And design room Citation publicly? the new you new what at might are OEMs guess platforms how build what as don't can do in from you potential On saying you give OEM point, upside, Like yourself be track such as that for in publicly? if according

Cliff Pemble

Yes.

we -- in have So our plan. plan at for Textron new around do plan. Longitude work as We our such to teams plan platforms partners the as basically such create closely with their our

And I in to we're launch what And versus that's but done. theirs, we've of and terms views our their rollout. can't really ready so support comment

Yuuji Anderson

you Okay. so Thank much.

Cliff Pemble

you. Thank

Operator

Thank you.

next Our Coster line the of comes JPMorgan. of question Paul from

Your line open. now is

Paul Coster

you assuming both Can the and talk internationally? macro-environment encouraging. of that Difficulty] you're domestically for little bit sort that a about [Technical

Cliff Pemble

Yes.

your think I part. the up during first broke question Paul, Sorry

you wouldn't So to try mind to tackle then if it. repeat that we'll

Paul Coster

of the what with asking and both Just guidance made macro assumptions, to domestically you've XXXX regard internationally? kind

Cliff Pemble

now. the we're people think assuming are all I what steady things right Well of way are state kind

segments and the are aviation definitely think are marine sensitive to very I that macro-environment.

going continue So there support that markets. to favorable those conditions assumes our recently to outlook see we're to

Paul Coster

If what impact that resolved have kind the is does amicably dispute of if any? China-U.S. trade

Cliff Pemble

hand it opportunities I But could China for And challenging it other exposure situation the growth Asia the China impact terms small. in looking market. revenue somewhat of is Well, the the overall to our is positively economy. just area, the itself in a that think global But there improves us. still the on in extent we market are

Paul Coster

how I halo products, Can which marketing? But And the what to. approach then us us And it guess. mean the just in of on Okay. can of talk last you mobilize I halo? lineup the terms product you the what's question the is by rest Great. and it. think, for takeaway does to of you sort referred your to business? Got broader my technical

Cliff Pemble

since example was it disruptive a LiveScope, gave and we Yes. and anywhere truly view technology. casts that was something The well. Marine segment launched as is people LiveScope mentioning and and sales exist Panoptix been equipment glow additional it we've so as pull-through across positive else, doesn't marine the as fishermen that it of our other

what So that's I call halo product. a

Paul Coster

right. All Thank you. Okay.

Cliff Pemble

Yeah. you. Thank

Operator

Thank you.

question from Feinseth comes of Tigress Partners. line of next Our Financial the Ivan

Your line open. now is

Ivan Feinseth

for my you XXXX. congratulations taking Thank big a another great and call, quarter and on great

Cliff Pemble

Thanks, Ivan.

Ivan Feinseth

Tacx. us you integrated is exciting as can It's and to view really to be product picture and into a Garmin? your question My of big the then and how how acquisition. could how far like integrated came insight And as be distribution it some and lines their to branding about give going it's be

Cliff Pemble

Yes.

a to to build That's fit as industry and so vertically integrated, well. across like with and working ourselves a They're the great did company were company them. awesome a line and been out our relationship over They're we've we company. introduced we So technology. Tacx has reach They're generations. relationships product felt well-run, and family-owned and a with they an built great

Like for long-term. fitness the a to going them them our view we indoor we how intend support a And our activities. that keep of around area. and sales terms in great both I to they mentioned a offering have brand outdoor we into cycling brand it's strong for forward, and and have earlier, they integrate want In

Ivan Feinseth

U.S., channel? will like be what And the how example, be the distribution will available? products the say for Let's in

Cliff Pemble

retailers. we'll available but through distribution so strong REI. expand the and in product is working be would U.S. there's anticipate They're market. expand strong that sports be existing Well, Asia in distribution. we less would the to very the the to through But Tacx Europe, distribution U.S. opportunity an Already in and Asia,

Ivan Feinseth

the -- mean, you’re be and what like to FIT So your treadmill integrating monitor IQ online wearable that you the let's Pendleton Are exercise smart And App, going also heart video to -- bike going say, and your workout? I and connect also to or offering I to the you'll integration? up your be, with and similar software about model? assume the classes with monitor fitness integrating to Connect ramping

Cliff Pemble

Tacx together probably much I there's fidelity like and and at within that that high and for we and earlier, outside inside. can experience specifics. can't comment now go on Well, interesting create look a different more But both mentioned many assets Garmin I customers

goal ahead sure. that's lot our a So for and of we us work of have

Ivan Feinseth

good. exciting. you. Very Very Thank

Cliff Pemble

Ivan. Thanks,

Operator

you. Thank

Our of Todorov of comes Longbow Nick from line next the question Research.

now is Your line open.

Nick Todorov

congratulations Hi. job. execution, guys Thanks. And great on a really great

Cliff Pemble

Thanks, Nick.

Nick Todorov

of Question see on stabilization fourth is in of that -- kind in trackers? or now us to Can fitness, all basic some segment in some segment trend quarter. still Do Cliff on give smartwatch you you the growth is portion categories I your think, said fitness you you of said that intact? data experienced the switching the what of your

Cliff Pemble

Yes.

in hybrid did kid as saw Where well. smart trackers, as has that's we're such see And vivomove down trackers so the offer products that across as the basic see come category solid that fitness. advance overall of for offer in strong you category where as of also a well our growth all The But categories HR where unique we as year. outside it fitness categories analog investing. the the something as then we was market. we growth the imagine we with lot overall So, we in a devices quite unique, we're

Nick Todorov

launches, line the the can you're product fitness? in what upcoming the aside Thanks. really but you Okay. decent know acquisition expect the from guidance on don't seeing share; fitness speak contribution in some refresh product And about Tacx strongest product at least, you refreshes. I you

Cliff Pemble

across portfolio. we think all during of entire the the strong roadmap would year we'll expect that have so we a refreshes I lines, across our have

Nick Todorov

growth And thinking Okay. se? thinking are year-over-year Or the about Has how of changed? per constraints? you capacity? about you seeing you picture Are any Are in ADS-B kind anything you there how deceleration baking capacity are different? to a due

Cliff Pemble

different that be anything We a what the seeing through growth capacity factor we not limiting we're than Yes, reported appears see really in XXXX. shop to of do installs. midway

a but on of worked so And that demand percentage a obviously has deceleration, would be still basis to again, represent a lot I the for year. through

So, get we're and our we'll continue and through year. help to that how working can things following as see hard as we monitor go into to the shops

Nick Todorov

And we Okay, XXXX? me. last one cash free should great. about how flow in and for Doug, CapEx think

Doug Boessen

Yes.

strong year-over-year. we see capital improvements but improvements So, The was capital cash operation, that I to flow very those also wouldn't a free of expect piece had working in all those by XXXX. year-over-year. driven working some we have very strong -- of big did

XXXX, I'm which level that we million is zoomed about had estimating And $XXX flow cash in that for probably similar around a is CapEx in free XXXX. $XXX So, million. of

Nick Todorov

Thank awesome. guys. luck Good you. Okay,

Cliff Pemble

Nick. Thanks

Operator

Thank you.

Our of next the of Bollin Ben Cleveland from Research. comes line question

Your line open. is now

Ben Bollin

for the to Teri. left you in is are Doug, Cliff, morning, Good What's Thanks utilization capacity -- expansion where my today? do? taking aviation? for footprint with where that of in question. Olathe Doug, the And

Cliff Pemble

on This Cliff. Yes, I'll comment is probably that Ben.

on, in of of side yet our that new producing We're now products aviation new in new part so distribution running. facility. with is facility, our to turn operating out outfitting still order the so not distribution that are and the we're equipment We up center

Ben Bollin

think But to the or executed And inventory? finish? how is time? you the long commercial it's very How what start What's from training could characterize really is could your pilot? a in Longer process could how with long a has know walk of Thanks. I longer company ramp you that as OEMs. over like you kind the follow-up. in win look look And the through spares that translate broader segment us opportunities? opportunity the would term effort open-ended to question. of with Okay. objectives term like How aviation well

Cliff Pemble

now. terms we grow general whole the support is we're additional aspire to to that activity Our years as objective share It we've we some achieve including invest well. of as to to And foot upstream which things as service have in of smaller spares we jets course their to that been business terms moving intensive the opportunities in getting in a do already across and level course upstream. equipment, to some then continue is high executing in that do of our actually are the commercial order for but commercial opportunities ourselves, more very segment of to in for on of in over customers on in of work both side have well doing And imagine. team, can We pieces have our our you move into the of our operations. terms executing and would in capacity as

order all So we're making these methodical ready. that and be evaluating investments are things in to

Ben Bollin

Thank you.

Cliff Pemble

Thank you.

Operator

this at questions like further turn remarks. no showing Ms. for I would I'm Seck And to over call time. closing you. now to the Teri Thank

Teri Seck

Thanks for everyone. good Doug and a Bye. one. I are throughout day. Have callbacks available the

Operator

in today's today's This gentlemen, and concludes you conference. for thank program. participating Ladies

all may You have day. disconnect. Everyone a great

Garmin (GRMN) 20 Feb 192018 Q4 Earnings call transcript