GRMN - Earnings call transcript Q4 2021

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Operator

Thank you for standing by and welcome the Garmin Limited Fourth Quarter 2021 Earnings Conference Call. At this time all participants are in a listen-only mode. After the speakers' presentations, there will be a question-and-answer session. [Operator Instructions] As a reminder, today's conference call is being recorded. I would now like to turn the conference over to your host, Ms. Investor of Director Seck, Relations. Teri begin. Ma'am, you may

Teri Seck

on could related I Limited margins, you Garmin demand our based to on Good Doug morning Officer market and related call of will available fourth to occur, factors this like President on In in Limited's business these impact uncertainty at affecting Please behalf site Chief result that regarding release any results contained any are on available the Officer; is Garmin. of the information company's best events there filed welcome Investor results its at or also at Securities this statements duration the business. Treasurer. XXXX Commission. significant revenues, the and Executive of the regarding morning. change Cliff differ would may forward-looking At and other of call like note Pemble, introductions, impact COVID-XX particular, the for earnings and repurchases, and statements pandemic. This press the earnings and estimate earnings, and COVID-XX This of risk and outlook An future Chief in plans We means with is about forward-looking and concerning and the factors Cliff to the is are Exchange quarter of Relations risk this a earnings, transcript website. call objectives Any time, about and projections Presenting Information circumstances materially Financial today's actual our call. future the share available Garmin's would products product and could and statement not Garmin as includes shares, results Limited earnings to slides Form over turn Garmin www.garmin.com/stock. our Pemble. and on gross future are XX-K Boessen, archive discussed internet as that year and time, fiscal date. the position, and webcast our The financial forward-looking margins, operating dividends statements. be

Cliff Pemble

Thank you, everyone. morning, Teri and good

reported fourth a X% over record revenue up for prior year, $X.XX of XXXX billion, with quarter today, As we ended the new earlier representing Garmin.

business quarter a XXXX driven of have pandemic these swings the pressure comparisons by and with difficult XXXX. we interpret revenue million, quarter interesting years. very that reflects CAGR are development down profit declined that is margin underlying During costs. this the notably business – over every due It's better higher in to to compared our Gross to freight strength to XXXX. been basis facing prior QX comparison to XX% over We $XXX Operating pleased prior the of the on came XX% year. past at note of grew to due year two believe

considering proud strong at past addition, normalize. operational conversation each availability a nearly variety for was $X.X to is operational margin of these components year of strong remain reasons, grew business consecutive of revenue XX.X%. Even exceeding certain In and sixth increased XXXX everyone increase with $X very environment headwinds records over headcount, year. operating a very has facing. topic as new expenses of associate income challenging growth. and the of been segment operating revenue costs XX% billion I'm of compensation including higher we growth the XX% digit The what increased Revenue expenses major activities income billion, double the especially operating operating the company. delivered electronic accomplished, establishing for and our increased

our always everything the by situation results. very been we've in effective need, not are we as to get believe evidenced we While managing able we

agility this and of Our dynamic greater chain vertically environment. supply integrated business flexibility model in levels us gives

the associates these made for of I'm accomplishments it's I'm possible. all determination grateful teamwork very our However, proud that and and associates our they of creativity, have done.

Looking opportunities are forward the encouraged of we new year. by the

recently throughout We lineup anticipate a the of $X.X and with products of the have in segments. will XX% introductions trends year. billion by of planned new introduced remainder additional consolidated approximately market increase great strong product our driven introductions We to revenue many

confidence new year will shareholders outlook the and considered results annual by be dividend Our a propose for increase, upcoming to the give which us meeting. at X%

context past year. Starting on that advanced strong This starting strategic of is outlook rather, it's XXXX. the XXXX. consider is how evolve each focus growth, nuances brings many the for highlights, with individual markets see diversification XX% products the In not new segment over Customers display operating the growth more starting was increased category segment, respectively, that Full product for cycling the Fitness by cycling was The dynamics year differentiation will two a in in we market The levels peak great and products. in categories, in income when doubled the it's Garmin our prior fourth the at our are these for demand compete quarter categories the our to revenue offset business to brand, cycling. on by certain important below form revenue and years, Fitness peaks, concern recent cycling in in share growth. and for levels. expect opportunities basis note fueled for attract to in factor, pandemic for our and to resulting power growth be year-over-year, as demand small example were is revenue with customers. additional new the this overwhelmingly indoor for to will levels. and which both of pre-pandemic With major demonstrating and market operating the key above to a as Lily demand of growth on flat and to wearables normalize is fueled as XX% mind, pandemic-driven XX% create And its over differentiation year. revenue has margins products. for offset than wearables. growth moving use. cycling Product year Fitness but buying wearables outdoor is over is year lower Lily XX% we Before by which design lower appealing The in to to as additional unique the normalize a ability not segment. are factor The in coming from I prior cover wearables revenue for the us, hides well drove grow I in flat

XX% featuring updates January the which were fēnix were and In In the fourth new categories. driven back decreased XX% primarily to to X%. in with Outdoor half year, XX demand contributions In watch component X% stabilizes with due operating a In operating design year unusually first display. series back our market in for distinctive We announced touchscreen new revenue growth addition, of On watches. Full the decline year. and into a adventure stronger products. full constraints to high across margins by prior compare new and of Outdoor we segment, expect XX% respectively income the the to and with half resulting orders, ended year we our categories, to growth and the adventure multiple year. as as cycling strong revenue sweeping quarter, expect in return from product against we revenue dog gross periods the pushed year we handheld increased growth the from the traditional

expand which we We week, up also announced technology the Instinct watch. announced the the in the to catalyst Last X these in addressable display a breakthrough the the AMOLED this Instinct all-new to Select a a battery new smartwatch using leading for year. indefinitely touchscreen operate very them XX bright has two Series and the unique models with power days. we X market. Demand solar which life achievement for EPIX be in market will growth of with significant products and can coming been sizes, only class adventure expect strong all-new is sun, for

the outdoor things With in mind, increase for will these anticipate approximately we year. XX% revenue

year general and orders as from invest to Aviation the also revenue and due respectively, growth XX%. Looking driven revenue contributions Aftermarket OEM up is back by due levels in XX% and carry into quarter, with XX%, ended systems. in OEMs increased Aftermarket growth high full categories. were gross demand Aviation in from reporting existing value In customers pandemic XX% year operating to both income Aviation next unusually strong categories. which proposition new are the Full supply of year. operating was margins and new fourth cockpit highlighted the OEM new The component the robust aviation. Aircraft sales both flat orders, XX% at also year aftermarket resulting segment, were of constraints. the customers. unique of

we We exceeding drive ADS-B peak XX% expect with the year these to ends growth experience during of revenue mandate. to revenue the for the

We as expect levels the in increase course of incrementally stronger the year. production half back growth the over

Marine Moving to XX% across margins of We and strong results. market. from growth benefited by VHF income the in increased Marine, we market broad-based by and company of as product categories, delivered experienced design Marine, modern share Full portfolio. year specializing XX% operating gains growth recently in increased Revenue chartplotters. the operating Vesper of segment fourth year In strong growth all systems acquired We resulting Marine another demand with the driven for XX% both continued. XX%. strong revenue for XX% throughout the trends the in radio were respectively, impressive a led year quarter, expansion the our

continue preparing that of for Looking fishing interest strong. and builders partners strong Boat another report forward, retail we anticipate and will sales in year are boating strong growth. remain to

will these year. revenue segment things the from the anticipate threshold mind, surpassing in Marine $X XX% for With billion the we increase

and announced cinematic CES, the designed specific the truly increased specialty auto recently launch to million, XX% Garmin. was XX% XX% multimedia auto a and immersive investments fourth consumer margin announced bringing the to computing first and a entertainment inReach auto, by smart entertainment, year contributions segment. designed the to $XX quarter, gross experience Edition, trucking of vision system growth operating categories. both Full week, in-car categories we powered built features categories new series Dezl lead finally loss watch we OEM and into Full we vehicles, programs. unveiled the from OEM market. with Moving that BMW bringing opportunities. At consumer by and to Instinct year is we the auto in for In programs. off-road recorded This contributions the auto continue specialty auto revenue tread for an was platform consumer new market. vehicle. revenue from the for specifically the by side-by-side driven Last with their up side-by-side In communications OEM

and anticipated these loss to The invest are of continue for investment and continue remainder to been this BMW. OEM as expected is insignificant year our roughly heavily to We investments market. the year in bring auto to will to the the systems that we has This than operating that throughout of to fulfill comparable XXXX. BMW obligations more result other

year start meaningful more to a with platform production computing production expect XXXX. ramp We the later at low volumes next-generation in of BMW this occurring

in to With approximately mind, for these total we auto year. grow revenue expect the things X%

my that remarks. So concludes

will Doug? walk guidance. updated on additional Doug through Next, details financial our and results

Doug Boessen

on decrease Thanks on to posted morning, decrease. the XXX was full a XXX guidance. expense the and billion Operating like exchange margin by the XX.X% begin as We $XXX and prior results, income comments balance I'd quarter, point Operating provide revenue XXXX to rates. quarter. point sales XX-basis our XX.X%, increase taxes fourth X% percentage year-over-year. prior for a favorable an was Cliff. primarily year. cash decrease sheet, Operating point quarter basis of year costs Gross financial flow XX% higher Decrease of representing reviewing was statement, XX.X%, year $X.X fourth Good impact basis everyone. of increase. margin and foreign million, a was due was for freight from

Our year the pro XX% forma EPS $X.XX, in GAAP was was pro decrease $X.XX, a forma prior EPS EPS.

was percentage was billion, XX% $X.X sales XX-basis XX% billion, was a prior decrease. Looking primarily [indiscernible] point basis expense Operating XX%, year-over-year. year. due income decrease in Gross increase. year. Operating at point reported point XX.X% decrease results, the decrease margin Operating costs. XXX year was a the to revenue freight representing increase higher basis over XX.X% in margin $X.X a prior was full The

was forma pro GAAP pro year and XX% Our in was EPS $X.XX, a forma EPS prior EPS. increase $X.XX

Next, revenue by segment geography. and we’ll quarter fourth get

X% during offset growth is by double-digit rates which quarter, the offset During By X% Aviation, declining Auto segments growth consolidated growth exchange year-over-year. the Marine, in quarter. geography, achieved partially we with and by foreign by natively of X% was in Americas relatively segment. the growth Outdoor APAC EMEA, flat in in impacted declining X% Fitness partially in was the segment of

we growth double-digit we growth growth XX% in by double-digit our growth full XX% segments. EMEA. XX% year of in five followed three in by with consolidated APAC XXXX, all led For regions in achieved the Americas, in achieved geography, By solid XX% all

quarter fourth SG&A prior due expenses, to million or X%, primarily development million costs. operating related to year at year-over-year, quarter, increased costs. expenses operating increased by Looking compare million due increased technology research $XX personnel to engineering expenses, information $XX primarily increases personnel and $XX

quarter Our advertising sheet, million few cash dividends. A $XXX $X.X in cash approximately and consistent quarter. and We receivable statement on marketable first sequentially of increases due the the expansion securities increased of balance ended strong several the footprint a was strategy quarter fourth increased product lines. billion. and increased expense prior launches, year manufacturing sales data our and our flow executing the highlights with factors, for level global Inventory supply flat indoor diversified billion increasingly preparation relatively to was increased including recycling $X.X to support products, to quarter product year-over-year and year-over-year. Accounts

we work of million. optimize of the to generated ocean grow, raw to supply lead to XXXX, expect of level shipments manage safety continue generally fourth the $XX versus increased carry sufficient quarter stock inventory of freight mix air we mitigate flow and XXXX, In materials. to times free cash During balance our the

and to expenditures. capital year expenditures. million approximately decrease for approximately For inventory prior levels generated expect the free due $XXX XXXX, primarily cash million, the of full capital $XXX flow $XXX free higher increased XXXX cash million flow year, $XXX of million approximately in we

increase Olathe For Taiwan XXXX we of beginning our per plans growth, our per dividend our $X.XX related dividend work increase approval Proposal expected seek including to or or renovation and our to the manufacturing share share. in $X.XX per quarter, continued capacity make X% investments, increase platforms projects. from XXXX IT an facilities dividend share current your June per quarterly the $X.XX our of payment. space announced for with facilities continued cash the Also, of

For full rate tax year XXXX, report effective XX.X%. of an

in of We to revenue guidance. double-digit our segments. next $X.X Turning an year our billion, growth three prior over year, approximately XX% the estimate full of increase five

favorable margin prices. exchange gross chain XX.X%, year be which lower our full primarily expect higher supply gross partially by increases costs We rates XXXX to and in approximately is margin, than less to due selling foreign offset in

We expect forma XX.X% margin cents. XX.X%, effective $X.XX the approximately per pro and tax earnings share an full forma to is year expected results rate operating approximately be in expected approximately pro

changes the expense discuss use in periods way quarter also be Future certain more classified indirect Basically, supported representation. meaningful to that classification expenses. new refined direct estimate in as will based segment for our I operating XXXX expense, Consistent expenses open income a the Q&A. Finally, while allocation analysis allocated impact from formal be trying of conform prior our as less allocation net allocate this R&D management our in changes methodology approximately $XX for recast believe SG&A. XXXX segments reporting reflect the income. these higher in in refined the Valerie, a classified income. reports remarks. please support SG&A costs cost We revised of SG&A margin. operating meaningful as incurred in of will approach resulting consolidated and to R&D among less and no The expenses methodology segments, million expenses activities. result operating R&D Outdoor more be on lower to an certain the SG&A of a first the or for of activity a classification Concludes to We more will SG&A expense expenses, will result changes be reflect certain believe decision more allocated resulting reputation expenses, to by will recast margin line information, operating provide segments as representation, have and These Fitness which in we making. the other manner, of

Operator

Research. Thank first Nik to comes Todorov [Operator Instructions] Our of you. question Longbow

Your line is open.

Nik Todorov

results. segments think Yes, segments. great which heard you rising in year? of the during or morning, I mitigate and the how good in assuming cost prices that able are everyone, you some you Can in should throughout that think you and to the to some I thanks, categories remarks increase on I’m we about prepare and input mitigation it’s execution harder raising to the cadence Cliff, congrats through segments, prices immediately. and mentioned talk pass

Cliff Pemble

have business. we diversified Nik, Yes. a

each so, have segment it pricing. to when sometimes different product And different each and comes within segments considerations, categories

as pricing where looking products. increases a We’re we well introduce price more combination are product new able as both broad at we resetting as of

I to I these will on. think a most able of that’s course, right would some it comment take but time what probably that difference on of I’m be of think through, I come confident see now time changes as some for and we’ll goes to

Nik Todorov

as navigation, talk components the And bit, stretched a that can component you heard something as I through component end Okay. obviously think have about navigating but are in life. we’ve times that a constraints? been how particularly are follow-up, quite you have some in used announced is of avionics lead

and aviation the you how margins So, near-term? about just redesigning that curious, impacting in are should we any I’m facing potentially activity think

Cliff Pemble

to of mentioned we aviation. have That’s said, able in life use to we’re to focus aviation, pressure for factor a in They’re I very my not up. when need a lot component for mentioned as And relationships too. to. integration is get we’re have on potential while huge things we as a a of redesign beating been of issue. constraints able components really thing in end Yes, because lot think certainly remarks, new challenge now, alternative I us, relationships. good differentiating they maintained a you at try suppliers. a and this particularly a that time But And under We with them people vertical

I have tend think longer cycle. life to avionics designs

dealt for So we manage through that and stock. that through mostly issue time also safety of with consequently, and redesigns a we’ve combination a long

than I situation better think R&D handle because So vertical on integration. again, able our focus most we’re this to of our strong and

Nik Todorov

I Very you. for sneak one Doug, in it. if And helpful. Got can

how about about reallocating Just to you’re then and percent should OpEx in XXXX. as based takes sales? can a we basis, you current I think talk the going you mentioned and be moving that reported changing on But know of expenses. OpEx parts put

Doug Boessen

Sure.

of for full looking talk different and the percentage on yes, way year the methodology in the new sales it That’s that reporting So at the recasting I’ll we’re XXXX. XXXX and about categories, standpoint. from

expect, because as costs, our product IT more as about R&D. up that users. expect and count first on XX overall parts year-to-year as to basis about expect expenses volume increased costs XX advertising, SG&A And as to categories we primarily head There be maybe and Then sales items is points the a a basis support, points. at of we sales driver we’re related of advertising percentage increased that And percentage point of as big probably of the operating we’ll R&D, basis up as a about XXX expect investments in business, probably well continuing such to sales various percentage make increase of but in well compensation basis impacting about up other operations, to as see year-over-year. at a as points So, slightly, looking XX consumers be as year-over-year. just we sales. also, There percentage be looking we of

Nik Todorov

Got guys. it. Very helpful. Thanks

Doug Boessen

Thank you.

Operator

you. Thank

JPMorgan. Paul Our comes from Chung next of question

Your line is open.

Paul Chung

nice quarter. questions for Thanks very taking my Hi. and

there, kind auto on overall kind very of some contribution thought of So with even aviation, the guide strong revenue negative outdoor margins would’ve would’ve of kind given just seen benefits year. this that margins, the

baked freight maybe quantify components kind in the headwind you margin can So, of guide? the

Doug Boessen

bit Yes, so this higher point increased is of a in little XX-basis we Freight see gross do year to on freight. give can during the background don’t of driving year-over-year. components what’s breakout XXXX. decline, We Doug. chain supply costs the expect that. I margin give on The different a

FX, the in mentioned, Also, there So, that selling headwinds basis freight Cliff in some looking of too. puts overall we takes, a things side to margin there’s different to also gross first tougher give and year. mentioned, product moving the factored we’re and rate in down as of headwinds from we’ll but us some can. some there And of on going see points. about chain you you’ve will foreign headwinds mentioned, exchange too, as that that basis prices a you FX lot But we’re up part supply say where I’ll of like relating against And we increase there bringing some to comps then have, segment are lot overall, there parts mix. relating things XX launches, in an and that new still

Paul Chung

result. outdoor, then has And products guide XXXX, you guide, quite is refresh if into seasonality impressive. received? maybe a on expect on know, as expand you just that What’s with then Got and the in little how should we handheld XQ the outdoor dog pushing And fēnix which in been driving you. and confidence the a less could

Cliff Pemble

think dog Year, that back of I those taking I as we’re of better, that a mentioned, the were into wait are attitude, that supply experienced the push driven can. Those and New and products and are for Paul, by end constraints although, the handheld we orders Yes, at course, we building those still getting we shipping incrementally everything see year. last the and

those the are small I in segment. but scheme think outdoor categories, of meaningful, that overall the

going seasonality lot really of a to notice So, I you’re think that. because don’t effect of

and strong the In them growth estimate behind adventure year. XX% our terms course, new reception for the and interest very is we in those has been watches impact the on momentum watches that potential guide, of those the introduce. the from as to mentioned. The from And I of products the

a outdoor. good pleased we’ll think in very very year we we’re So, And with have that.

Paul Chung

we Can evolved? approaching in guide that? record the guide then kind we And XXXX lastly, margins driving think about the should XXXX the above now, implies, what’s exceed well your that how of year year? on the this Thanks. end XX% aviation, or aviation? levels portfolio on for product revenues operating then but And How’s ADS-B,

Cliff Pemble

Yes.

revenue a after away recovered we’ve of that mandate. definitely went So lot the ADS-B

because We been a received that’s a once there. the able it along the books revenues Customer expected in in that to the has once of those very the to upgrades done gone, I the market grow general systems strong of through general And product remarks which aircraft to strong, driven flight market FAA aviation was is equip strong. to are which from we’re that’s line, away revenue cockpits. generation course, a my in opportunity, recover of in around strong, in the we’ve and OEM every very sentiment as very mentioned well and go general order aircraft, makers course, mandate bell our is control are particularly gives but that with that ability curve interest us aviation,

Operator

Thank you.

question Jeff next Harwin with Bank. Our comes of Deutsche

Your line is open.

Jeff Harwin

and Hi, year. congrats thanks question quarter for on a taking good and a my

to of a clearly the overall business forward, growth good at for other margin this opportunity the a gross do versus think businesses. some margin you headwind you to going compared business? revenue about company growth opportunity OEM but auto your for lower is Your for the How

Cliff Pemble

in large scale the Well, Jeffrey, I comes auto with course, big these programs. OEM, of that the is think that, opportunity

market. that’s investing So to what been to bring we’ve

course, the growth forward, us get revenue opportunity. margin different to going the be the the do of scale scale our business. and concern for focusing come As profitable of on profile in also the is relative and been proving really rest hasn’t in a I the challenge business, because that that with that can we they But we’re mentioned

Jeff Harwin

Great. there been the business long there to before going some this this the during about growth? one indoor the cycling and the think to your in cycling that you comments, forward? was recently. part you do And companies do largest Thank you how a demand follow-up, business your kind some concerns in And of products you. a takes typical have as How pandemic, returns work of prepared think reduction in of noted earlier if pull through

Cliff Pemble

understand Yes, some indoor your are that talk here, say a of of is I cycling And not products – have lot course, think recently. I would I headline think your from been names, talked interesting. question the different our I about we’re but I about specific comment. very companies that to

terms are we're focused in which on in And by of not a was in interested business, people to in spin pretty performance. products. gyms. Our people really there, been has and kinds probably returning there bike products athleticism some, pull hit got hard the of those But

So, they their bikes, last with normalize training did which XXXX, levels as they market their around the equip above but homes devices, mentioned cycle. seeing in was equip normal out, of that we're the sell I did year that

channels. So, there's the rushed some the and not product now, market high channel maker every necessarily but specific our filled to lines, inventory right trainer into

so And through. time take will that some work to

We expect things probably the better part of this year before really normalize.

Jeff Harwin

Great. Thank you.

Cliff Pemble

Thank you.

Operator

Thank you.

of Cleveland Our comes Research. Bollin Ben from next question

open. Your line is

Ben Bollin

the last I I guess which gap see I'm XXXX you when a in the there on growth between any your the spread? I changes or in growth. difference guess that widest about in around you a that secular two inventory of going thoughts high-end the question, everyone. interested look two to are driving year-over-year But question. terms it's segments, in between outlooks fitness, think cycling, just spread terms wearables the XX-point back in spread the do do moving little [ph] we've what's bit, since, and it's taking out rates within for for there the but being is been and guidance the dance outdoor you Cliff, Thanks morning, your at XXXX seen guess, Good of

Cliff Pemble

and Instinct bit between thing market. ones. Well, just lots patterns of outdoor, difference can introductions that you've of overall epix in with and as the That's there's normalizing a little the differences products, launch And why growth Ben. the coming between we're pieces definitely mentioned would the new highlight life strong product that the The and cycle segments I fitness moving is the in cadence outdoor the cycling on two major the the and off fēnix, segments addition fitness. super of a one I between combined the different kind with of hit impact is the

Ben Bollin

and is, within now, last you're OEM happening time? are thoughts for auto look margin over through what Okay. you a the right on any this, the normalized you one look back-end that you're that into when on if of when might business elevated the like investment XXXX,

Cliff Pemble

the mentioned lines. the is before that volume highest margins and typical in on think in I teens can business product certain very auto the we've be mid-to-high

that's So before that's what expecting, we're think market. the what we've communicated I to

Ben Bollin

thanks. Great,

Cliff Pemble

Thank you.

Operator

you. Thank

Baird. comes question from next Will of Power Our

open. is line Your

Will Power

back Okay, Cliff the great. of to get maybe big guess on cycling we'd surprise, headwinds, key confidence you a but more the the Thanks. know, Yeah, I on and fitness. I a bit probably drivers noted love of circling a questions, wearable within help pandemic, some color which segment that as couple grow any think cycling pressure. that, on color we you're thoughts what some of something is And guess can Forerunner just too? within offset and kind the expect seeing the you of there, out come that that I of aren't to you there

Cliff Pemble

based of say. we a high view put I confidence we level we of year can our achieve Yes, on think, that the out what

capability advanced in all I continual with wearable. really we’ve smartwatch products strength line. our That’s a GPS product fitness seen think that in the

those includes all and kinds that So, that and Venu products. runner we – of includes vívoactive

the coming as products last running strong some well. wearables, and our refreshes releases from of off year coming and We’re of consumer advanced then have

to races be that been like last when the you running feel So, during in XX-Ks, half like as those And particularly think online, we start those interest will things. mostly marathons, events positive coming it have drive of things will years some two canceled come additional marathons all together, products. of consider we

Will Power

saw impact just about, continuing the you’re forward we there? on in second Obviously, pull then And question competent potential marine, outlook. how growth do a strong you Okay. think

like you’re there? it a on expecting color on comp as impact have but there, of thoughts guidance. much any feels would the that not kind love marine would the and then, So, issue of XXXX any best And

Cliff Pemble

their market are but very boats boats. or a whether possibility, supply manufacturers suppose, new it’s been general, potential in boats, In from marine letting marine? of pull It’s terms used boats, always with in not of of the I a people forward has constrained go the

And have are on boats, are they’re their These lived there very boats. old so boats equipping use lot a there long the and out that equipment. assets consequently of

So, many as there’s them are the government new equipped And market. of in for are built, products. retrofit boats opportunity of plenty the with

good. opportunity is the growth still we in believe so, very marine And that

terms and quickly that of just a us. for on say that. In comment technology it’s would I Vesper acquisition engineering

group VHF So, very it’s not cost significant but material the of or in had radios. the of terms area capabilities revenue design in structure,

to in. And so capability an we build area that’s want our

Will Power

Great. Thank you.

Cliff Pemble

you. Thank

Operator

Thank you.

from next of Our question Stanley. Woodring Morgan comes Erik

Your is line open.

Erik Woodring

stay part one drivers for know taking Hey on the my thanks that’s you do better OEM just the all XXXX in you Can meaning, at still are in how in marine that Maybe what the smaller marine seeing business that’s help just a backlogs typically versus guys, growth? the understand XXXX second. but just business, if there you we confidence are of business, your of us we for question. the marine give changing XX%

Cliff Pemble

forward demand carry orders got to XXXX factors from on same – the really it’s drove their well. the the Erik books say as would that strong historic up We builders They’ve back into see they demand. the fill XXXX. production ramp both I Yes, as

particularly fishing including benefits their increasing technologies in the new bringing generally equipment, continues new replace they’re that around enthusiasm So, and people both we old the market, be production to them the advanced the sonars causing sonars their offer to chartplotter. into that And area marine, strong, and us. then

while have trends the now, for those these in to So, been we and continue expect XXXX. same a

Erik Woodring

or then touch we cost is more segments. segment and that there across more should margins Is or most And certain be relative the acute it investment mostly investments on we to margin maybe be again blamed side, the autos then of is are just, kind to gross autos going gross revenue, XXXX? the guess if assume total in the you. And think, disclosure, in on outside based then Okay. segments? and on operating side, fair pressure elevated down Thank say revenue the do to XXXX to have and on that is just that of I

Doug Boessen

Yes.

factors And products more launches, out than other there, of mentioned ones. product it's to impacted prices. consideration, Regarding to relating – as some selling some on new gross take Cliff margin lot take place FX are

as gross just margins, mix be be kind one probably launches probably of in overall say expenses a there those piece inside related. get yes, down year that larger then dependent R&D things probably things up pressures the I innovation – but level and consolidate, SG&A various of footprints. fitness, bigger will would IT things, those all And the too, business. to year-over-year, they upon to increasing, the all down product over do cost what drive [indiscernible] be allowance across would type be of but some R&D we'd side of it's be Late and BMW say previous of expect investments that make among the depressed businesses, just the see of our also, because that well to of costs see going I probably auto the we're overall of type probably also have to one. increased some the from would into as think our a seeing would probably And that investments overall, So, higher will business, side, we segments would XXXX, some different those that

manufacturing also. those some driving are have things operation, there in expenses We of type

Erik Woodring

it. guys. Thanks Okay. appreciate I

Cliff Pemble

you. Thank

Operator

you. Thank

from next question Our of America. Bank of comes Epstein Ron

Your open. line is

Ron Epstein

Hey Cliff. Good morning.

Cliff Pemble

morning. Good

Ron Epstein

relative right, on I private pretty the to aviation is In your supply-chain market right. the, aviation, much mean fire,

really that are OEM for will the how strong So, some seeing potential I your if from now, mean, demand right ramp? they're signals not set would you soon. they you're be I imagine customers, up of

Cliff Pemble

we're plenty Well, prepared of with capacity. factory

from we're I side can meet we robust that demand we needs And very aviation as We the have feel we so in supply absolutely so our a of my remarks, at. like see that chain orders for OEM customers. reporting always they're the and increases and the on mentioned looking in the strong they're focused prepared

Ron Epstein

what, the new because to side. it's actively about, I platform on – potential with know Great. going can on, any you talk platforms? light guys new of I shed OEMs what's if on then it, sensitive but thing on in And working even terms you mean, are

Cliff Pemble

Sure.

Ron Epstein

it, That's sure.

Cliff Pemble

things and working and platforms. always anything we're always course but of we're customers Well, can't with we new in new advance, working share on

Ron Epstein

you because that's I in to seeing new fēnix Right. the they and the and – tough Fair be are then the EPIX enough. X a product? with to question similar seem pretty but, EPIX, response a better the know fēnix which

Cliff Pemble

I they They're. and course suppose, very but they're to different both very users, similar of with in different We're appeal especially probably they've they're pleased but epix. some strong. been respects, really

product that of very demand, lines, in seeing I and quickly very we're exceeded which our think embraced both people strong those have expectations.

Ron Epstein

Got it. expectations. mean, have the exceeded natural your meet the supply And to question I demand? that chain Did you that

Cliff Pemble

plenty increasing And like, on feel our We working contingencies. of we're have supply. we

Ron Epstein

a got logistics, it. in then coming you've just one of complex got here just got stuff product? logistics stuff that U.S., and chain, supply around maybe from transpacific last how given question kind the are Got the And meaning built then Asia, of the relatively seeing, you've you you've

Cliff Pemble

that like think I the everyone challenging, situation is is reporting.

versus pragmatic can. expensive situation. no are speaks of balance best more to of we affordable. levels, which We The the inventory more and allow to transportation, slower methods, different inventory which between are us on faster we are working which which So, course a modes get we're same that shorter, It's shipment availability, things see product that. managing on than

So, a our that have we can to I think we're, of and in balance levers doing use we lot best doing that.

Ron Epstein

Cliff. Thanks, great. Okay,

Cliff Pemble

you. Thank

Operator

you. Thank

Derek of Colliers Our Soderberg from next Securities. question comes

open. is line Your

Derek Soderberg

talk a some Cliff, from for retail just curious Thanks inventory been more building. of if reporting about questions. that came channel broadly. QX guys. growth lot Those Hey taking you the my could have

broadly, you great. sell if relates it could to be just seeing what in, So, share you're in, sell through that'd as

Cliff Pemble

were think very all for dry that I know. channels reasons And the retail we

customers. platforms, we sell sell But this that We good. can through, very about ones definitely so to our like moment, noted, is trainer inventory see so And out we except any certainly they don't are feel feel good which product what available, and is the there have registrations at that through the wanted and app track and for believe through retailers could material channel, sell there's to our we we in market. imbalances we've really the

Derek Soderberg

you've you Seems I done And wanted than like, also most. to ask guys it. on inventory. supply, a Got better really job done good about have

Now terms the to been, you more shelves? have more any facility. Have and degree online guess of speaking on I with capacity you product from relatively just at versus all competitors, new chain Garmin, issues, supply benefiting the in

Cliff Pemble

challenges Yes, of we I others some have the think, have of been the that beneficiary faced.

agile to segments. helped ability in investments several product lot investments a our in in be designs our So, with inventory, our and capacity our has us

Derek Soderberg

you. Thank it. Got

Cliff Pemble

Thank you.

Operator

back Seck you. remarks. could at further to no Thank I'm this call closing time. turn any showing Teri the questions I for over

Teri Seck

Thanks everyone.

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

Operator

this gentlemen, call. conference and today’s does participating. Thank Ladies you you. for Thank conclude

disconnect. now may You

Garmin (GRMN) 16 Feb 222021 Q4 Earnings call transcript