Q4 2023 Garmin Ltd Earnings Call
After the Speakers' remarks, we will have a question and answer session to.
To ask a question you will need to press star followed by the number one on your telephone keypad.
Good morning, and welcome to the Garmin Ltd fourth quarter 2023 earnings conference call.
As a reminder, this conference call is being recorded.
I would now like to turn the call over to Teri <unk> director of Investor Relations. Thank you. Please go ahead good morning.
All lines have been placed on mute to prevent any background noise.
After the Speakers' remarks, we will have a question and answer session.
We would like to welcome you to Garmin Ltd fourth quarter 2023 earnings call. Please note that the earnings press release and related slides are available at Garmin <unk> Investor Relations site on the Internet at Www Dot Garmin Dot com Slash dock and archive of the webcast and related transcript will also be available on our website.
To ask a question you will need to press star followed by the number one on your telephone keypad.
As a reminder, this conference call is being recorded.
I would now like to turn the call over to Teri <unk> director of Investor Relations. Thank you. Please go ahead.
Teri: Good morning.
This earnings call includes projections and other forward looking statements regarding Garmin limited and its business any statements regarding our future financial position revenues segment growth rates earnings gross margins operating margins future dividends or share repurchases market shares product introductions future demand for our products and plans and objectives are forward looking.
Teri: We welcome you to Garmin Limited's fourth quarter 2023 earnings call. Please note that the earnings press release and related slides are available at Garmin <unk> Investor Relations site on the Internet at Www Dot Garmin Dot com Slash dock and archive of the webcast and related transcript will also be available on our website. This earnings call includes projections.
Looking statements the forward looking events and circumstances discussed in this earnings call may not occur and actual results could differ materially as a result of risk factors affecting garmin information concerning these risk factors is contained in our Form 10-K filed with the Securities and Exchange Commission presenting on behalf of Garmin Limited. This morning are cliff pemble.
Teri: Other forward looking statements regarding Garmin limited and its business.
Teri: Any statements regarding our future financial position revenues segment growth rates earnings gross margins operating margins future dividends or share repurchases market shares product introduction future demand for our products and plans and objectives are forward looking statements. The forward looking events and circumstances discussed in this earnings call may not occur.
President and Chief Executive Officer, and Doug <unk>, Chief Financial Officer, and Treasurer at this time I would like to turn the call over to Cliff Pemble.
Teri: Actual results could differ materially as a result of risk factors affecting garmin information concerning these risk factors is contained in our Form 10-K filed with the Securities and Exchange Commission presenting on behalf of Garmin Limited. This morning are close Pemble, President and Chief Executive Officer, and Doug <unk>, Chief Financial Officer, and Treasurer at this time.
Thank you Jerry and good morning, everyone.
As announced earlier today Garmin delivered outstanding results in the fourth quarter.
With strong growth in consolidated revenue and profit.
Consolidated revenue increased 13% to nearly $1 $5 billion.
Teri: I would like to turn the call over to Cliff Pemble.
Representing a new fourth quarter record with three business segments delivering double digit growth.
Clifton A. Pemble: Thank you Jerry and good morning, everyone.
As announced earlier today Garmin delivered outstanding results in the fourth quarter with strong growth in consolidated revenue and profit.
Gross and operating margins expanded year over year to 58% and 23% respectively.
Clifton A. Pemble: Consolidated revenue increased 13% to nearly $1 $5 billion.
Resulting in operating income of $340 million up 27% for the year.
Speaker Change: <unk>, a new fourth quarter record with three business segments, delivering double digit growth.
This resulted in pro forma EPS of $1 72 up 27% over the prior year.
Speaker Change: Gross and operating margins expanded year over year to 58% and 23%, respectively, resulting in operating income of $340 million up 27% for the year.
We entered 2023 cautiously optimistic.
But as the year continues we experienced better than expected momentum in multiple segments, which resulted in a record breaking year.
Speaker Change: This resulted in pro forma EPS of $1 72 up 27% over the prior year.
Consolidated revenue increased 8% to $5 2 billion, which is a new annual record.
Speaker Change: Yeah.
Speaker Change: We entered 2023 cautiously optimistic.
Operating income increased 6% to nearly $1 1 billion and operating margin came in at 21%.
Speaker Change: But as the year continues we experienced better than expected momentum in multiple segments, which resulted in a record breaking year.
During the year component lead times and availability continued to normalize.
Speaker Change: Consolidated revenue increased 8% to $5 2 billion, which is a new annual record.
Shifting bottlenecks eased.
These factors combined with healthy demand for our products reduced inventory levels and.
Speaker Change: Operating income increased 6% to nearly $1 1 billion and.
And boosted free cash flow to nearly $1 $2 billion.
Speaker Change: And operating margin came in at 21%.
Speaker Change: During the year component lead times and availability continued to normalize while shifting bottlenecks eased.
We believe current inventory levels are appropriate and expect inventory will grow from this point forward at a rate that is roughly in line with sales.
Speaker Change: These factors combined with healthy demand for our products.
Looking forward, we have a robust lineup of recently introduced products and additional product launches are planned throughout the year.
Speaker Change: <unk> inventory level.
Speaker Change: And boosted free cash flow to nearly $1 $2 billion.
We anticipate 2024 consolidated revenue will increase approximately 10% to $5 $75 billion.
Speaker Change: We believe current inventory levels are appropriate and expect inventory will grow from this point forward.
Speaker Change: Right that is roughly in line with sales.
Our results and outlook for the year gives us the confidence to propose an annual dividend of $3 per share and <unk> <unk> increase over the prior dividend amount.
Speaker Change: Looking forward, we have a robust lineup of recently introduced products and additional product launches are planned throughout the year.
Speaker Change: We anticipate 2024 consolidated revenue will increase approximately 10% to $5 $75 billion.
Which will be considered by shareholders at the upcoming annual meeting.
In addition, our board of Directors recently approved a $300 million share repurchase program over the next three years.
Speaker Change: Our results and outlook for the year gives us the confidence to propose an annual dividend of $3 per share an 8% increase over the prior dividend amount.
Before moving on to the performance and outlook for each business segment.
Want to mentioned the recognition we received recently from Forbes.
Speaker Change: Which will be considered by shareholders at the upcoming annual meeting.
Who ranked Garmin number two on their list of best large employers in America.
Speaker Change: In addition, our board of Directors recently approved a $300 million share repurchase program over the next three years.
We're honored to be recognized for creating a best in class workplace.
Speaker Change: Before moving on to the performance and outlook for each business segment.
Garmin associates are passionate about what we do and.
And we share a deep commitment to serving customers and each other.
Speaker Change: Want to mentioned the recognition we received recently from Forbes.
Speaker Change: The ranked Garmin number two.
Speaker Change: And their list of best large employers in America.
Moving next to segment highlights fitness revenue increased 21% for the year with growth across all product categories led by strong demand for our new running watches.
Speaker Change: We're honored to be recognized for creating a best in class workplace.
Speaker Change: Garmin associates are passionate about what we do and.
Speaker Change: And we share a deep commitment to serving customers and each other.
Full year gross and operating margins were 53% and 17% respectively.
Speaker Change: Yeah.
And the operating income more than doubled to $232 million.
Speaker Change: Moving next to the segment highlights fitness revenue increased 21% for the year with growth across all product categories led by strong demand for our new running watches.
At the recent consumer electronics show the venue three was recognized with three awards.
Including best of innovation for outstanding Engineering.
Speaker Change: Full year gross and operating margins were 53% and 17% respectively.
With its rich wellness and fitness features bright display and long battery life.
Speaker Change: And operating income more than doubled to $232 million.
The venue three is indeed, a best in class product.
Speaker Change: At the recent consumer electronics show the venue three was recognized with three awards.
Looking ahead, we have a strong lineup of recently introduced running cycling and wellness products and expect to launch additional products during the year to support growth.
Speaker Change: <unk> best of innovation for outstanding Engineering.
Speaker Change: With its rich wellness and fitness features bright display and long battery life.
With this in mind, we expect fitness revenue will increase approximately 7% for the year.
<unk> three is indeed, a best in class product.
Yes.
Speaker Change: Looking ahead, we have a strong lineup of recently introduced running cycling and wellness products and expect to launch additional products during the year to support growth.
Yes.
Moving to outdoor revenue decreased 4% for the year as solid performance in the second half of the year could not fully offset the weaker first half.
Speaker Change: With this in mind, we expect fitness revenue will increase approximately 7% for the year.
Full year gross and operating margins were 63% and 30%, respectively, resulting in operating income of $515 million.
Speaker Change: Yes.
Speaker Change: Yes.
Speaker Change: Moving to outdoor revenue decreased 4% for the year as solid performance in the second half of the year could not fully offset the weaker first half.
During the fourth quarter, we expanded our lineup of underwater diving products with the introduction of the <unk> Solar Ocean. In addition, our first ever product made with recycled ocean bound plastic.
Speaker Change: Full year gross and operating margins were 63% and 30%, respectively, resulting in operating income of $515 million.
We also launched the new <unk> III dive watch and the <unk> <unk> transceiver.
Speaker Change: During the fourth quarter, we expanded our lineup of underwater diving products with the introduction of the <unk> Solar Ocean edition.
With enhanced subway of communication technology that enables diver to diver messaging and tank pressure monitoring on the wrist.
Speaker Change: Our first ever product made with recycled ocean bound plastic.
For over two decades, our E check series of handhelds have been an essential product for outdoor adventures.
Speaker Change: We also launched the new <unk> III dive watch and the <unk> <unk> transceiver with enhanced subway of communication technology that enables diver to divert messaging.
We recently launched the <unk> solar our first handheld GPS with solar charging technology.
This new handheld can operate indefinitely using only the power harvested from the Sun.
Speaker Change: And tank pressure monitoring on the wrist.
Speaker Change: For over two decades, our E check series of handhelds have been an essential product for outdoor adventures.
Which is a game changer for hikers explorers and off the grid adventures.
Looking ahead, we expect that our strong outdoor product roadmap will result in revenue growth.
Speaker Change: We recently launched the E checks solar our first handheld GPS with solar charging technology.
Of 7% for the year.
Speaker Change: This new handheld can operate indefinitely using only the power harvested from the Sun.
Yes.
Looking next at aviation revenue increased 7% for the year to $846 million, a new record driven by growth in OEM product categories.
Speaker Change: Which is a game changer for hikers explorers and off the grid adventures.
Speaker Change: Looking ahead, we expect that our strong outdoor product roadmap will result in revenue growth of 7% for the year.
Full year gross and operating margins were 74% and 27% respectively.
Resulting in operating income of $226 million up 6% over the prior year.
Speaker Change: Looking next at aviation revenue increased 7% for the year to $846 million, a new record driven by growth in OEM product categories.
During the quarter achieved 3000 integrated flight deck was selected by Embraer back Ive Air mobility.
Speaker Change: Full year gross and operating margins were 74% and 27% respectively.
For its electric vertical takeoff and landing aircraft.
EBIT mobility joins a growing list of advanced Air mobility companies, who have selected our state of the art cockpit systems.
Speaker Change: Resulting in operating income of $226 million up 6% over the prior year.
Speaker Change: During the quarter achieved 3000 integrated flight deck was selected by Embraer back East Air mobility.
More recently Garmin was ranked number one for the 20th consecutive year and professional pilots 2020 for avionics manufacturers products support survey.
Speaker Change: Electric vertical takeoff and landing aircraft.
Speaker Change: Either in mobility joins a growing list of advanced Air mobility companies, who have selected our state of the art cockpit systems.
This accomplishment is the direct result of the strong commitment and hard work of our aviation team.
And the investments we have made in this business.
Speaker Change: More recently Garmin was ranked number one for the.
In recent years. The aviation segment has experienced growth in OEM equipment categories, driven by an increased interest in private air travel.
Speaker Change: The 20th consecutive year and professional pilots 2020 for avionics manufacturers products support survey.
Speaker Change: This accomplishment is the direct result of the strong commitment and hard work of our aviation team and the investments we've made in this business.
We expect this trend to continue in 2024 as the aircraft makers work through historically high back orders.
On the other hand, we expect softer aftermarket sales in the coming year.
Speaker Change: In recent years the aviation segment has experienced growth in the OEM equipment categories, driven by an increased interest in private air travel.
With these things in mind, we expect aviation revenue to be approximately flat to the prior year.
Speaker Change: We expect this trend to continue in 2024 as the aircraft makers work through historically high back orders.
Yes.
Turning next to the Marine segment revenue increased 1% to $917 million, a new record and included approximately $42 million of revenue from the recently acquired <unk> audio business.
Speaker Change: On the other hand, we expect softer aftermarket sales in the coming year.
Speaker Change: With these things in mind, we expect aviation revenue to be approximately flat to the prior year.
Excluding JL audio revenue from marine decreased approximately 3% for the year.
Speaker Change: Yes.
Speaker Change: Okay.
Speaker Change: Turning next to the Marine segment revenue increased 1% to $917 million.
The marine market has slowed in 2023 with many players reporting double digit revenue declines, but we outperformed by capturing market share from our competitors.
Speaker Change: New record and included approximately $42 million of revenue from the recently acquired J all audio business.
Full year gross and operating margins were 54% and 20%, respectively, resulting in operating income of $179 million.
Speaker Change: Excluding JL audio.
Speaker Change: Revenue from Marine decreased approximately 3% for the year.
Speaker Change: The marine market has slowed in 2023 with many players reporting double digit revenue declines, but we outperformed by capturing market share from our competitors.
During the fourth quarter, we launched the <unk> ultra too sharp clutter series designed with premium sonar mapping and wireless networking capability.
Speaker Change: Full year gross and operating margins were 54% and 20%, respectively, resulting in operating income of $179 million.
We also launched the GSD 28 sonar with rapid return technology for higher resolution imaging and deepwater.
These innovations demonstrate why our marine segment is performing so well in an otherwise soft market.
Speaker Change: During the fourth quarter, we launched the Echo map Ultra to chart Plotter series designed with premium sonar mapping and wireless networking capability.
Looking forward, we expect marine revenue will increase approximately 10% for the year.
Speaker Change: We also launched the GSD 28 sonar with rapid return technology for higher resolution imaging in deepwater. These.
With growth driven by JL audio which is.
<unk> to be about 15% of total marine sales.
Speaker Change: These innovations demonstrate why our marine segment is performing so well in an otherwise soft market.
Yes.
Moving finally to the auto OEM segment revenue increased 49% to $423 million.
Speaker Change: Looking forward, we expect marine revenue will increase approximately 10% for the year with growth driven by J L audio, which is expected to be about 15% of total marine sales.
A new record with growth, primarily driven by increased shipments of domain controllers to BMW.
Full year 2023, gross margin was 23% and our losses narrow and progressively throughout the year ending at just under $10 million for the fourth quarter.
Speaker Change: Yes.
Speaker Change: Moving finally to the auto OEM segment revenue increased 49% to $423 million.
Many are wondering what lies beyond the BMW programs that are currently fueling our growth.
Speaker Change: A new record with growth, primarily driven by increased shipments of domain controllers to BMW.
I am pleased to report that during 2023, we were awarded a new multiyear contract with another premium automaker to supply domain controllers on a global basis starting in 2027.
Speaker Change: Full year 2023, gross margin was 23% and our losses narrowed progressively throughout the year ending at just under $10 million for the fourth quarter.
Speaker Change: Many are wondering what lies beyond the BMW programs that are currently fueling our growth.
This is projected to be the single largest award in the history of our auto OEM business, expanding our market share and customer base for domain controllers.
Speaker Change: I am pleased to report that during 2023, we were awarded a new multiyear contract with another premium automaker to supply domain controllers on a global basis starting in 2027.
We're also winning new business and other categories. We recently announced our motor motorcycle Entertainment solution was selected by Yamaha Motors for certain motorcycles and smart scooters.
Speaker Change: This is projected to be the single largest award in the history of our auto OEM business, expanding our market share and customer base for domain controllers.
This award adds to the already strong business, we have with Yamaha across both two wheel and marine vehicles.
Speaker Change: We're also winning new business and other categories. We recently announced our motor motorcycle Entertainment solution was selected by Yamaha Motors for certain motorcycles and smart scooters.
I am proud of the progress our auto OEM team has made in 2023.
Looking ahead, we expect revenue to increase approximately 50%.
As deliveries of domain controllers continue to ramp up and.
Speaker Change: This award adds to the already strong business, we have with Yamaha across both two wheel and marine vehicles.
And we expect to reach profitability on a quarterly basis in the back half of the year.
I am proud of the progress our auto OEM team has made in 2023.
That concludes my remarks next Doug will walk you through additional details on our financial results Doug. Thanks Cliff.
Speaker Change: Looking ahead, we expect revenue to increase approximately 50%.
Everyone. Let me begin by reviewing our fourth quarter and full year financial results.
Speaker Change: As deliveries of domain controllers continue to ramp up and.
Speaker Change: And we expect to reach profitability on a quarterly basis in the back half of the year.
Our comments on the balance sheet cash flow statement taxes in 2020 for guidance.
Speaker Change: That concludes my remarks next Doug will walk you through additional details on our financial results Doug. Thanks Cliff.
We posted revenue of $1.483 billion for the fourth quarter, representing 13% increase year over year.
Doug: Everyone. Let me begin by reviewing our fourth quarter and full year financial results provide comments on the balance sheet cash flow statements taxes for 2020 for guidance.
Gross margin was 58, 3% increased 130 basis points from the prior year quarter, primarily due to lower freight costs.
Operating expense with senior sales 35, 3%.
Doug: We posted revenue of $1 billion $483 million for the fourth quarter, representing 13% increase year over year.
90 basis point decrease.
Operating income was $340 million, 27% year over year increase.
Doug: <unk> margin was 58, 3% increased 130 basis points for the prior year quarter, primarily due to lower freight costs.
Operating margin was 23% 250 basis point increase from the prior year.
Our GAAP EPS was $2 <unk>.
Doug: Operating expense with senior sales 35, 3%.
EPS was $1 70 to two.
Doug: 90 basis point decrease.
27% increase in the prior year pro forma EPS.
Operating income was $340 million, 27% year over year increase.
Looking at the full year results posted revenue of $5.228 billion presented 8% increase year over year gross margin was 57, 5% a 20 basis point decrease from the prior year.
Doug: Operating margin was 23% 250 basis point increase from the prior year.
Doug: Our GAAP EPS was $2 in Asia.
Doug: EPS was $1 70 to two.
Doug: 27% increase in the prior year pro forma EPS.
Operating expense percentage sales 76, 6% comparable to the prior year.
Doug: Looking at the full year results posted revenue of $5.228 billion presented 8% increase year over year gross margin was 57, 5% 20 basis point decrease from the prior year.
Operating income was $1 billion $92 million, 6% increase.
Operating margin was 29% 20 basis point decrease from the prior year.
Our GAAP EPS was $6 71.
Doug: Operating expense percentage sales 36, 6% comparable to the prior year.
Forma EPS $5 59 nine.
9% increase in the prior year pro forma EPS.
Doug: Operating income was $1 billion $92 million, 6% increase.
Next we'll look at our fourth quarter revenue by segment and geography.
Doug: Operating margin was 29% 20 basis point decrease from the prior year.
The fourth quarter, we achieved record consolidated revenue and double digit growth in three of our five segments.
Doug: Our GAAP EPS was $6 71.
Doug: Forma EPS $5 59 nine.
By geography, the Americas, and EMEA regions achieved double digit growth of 13% and 19% respectively.
Doug: A 9% increase in our prior year pro forma EPS.
Speaker Change: Next we'll look at our fourth quarter revenue by segment and geography.
While the APAC region achieved growth of 4%.
For the full year 2023 achieved 8% consolidated growth with record revenue in three of our five segments.
Speaker Change: The fourth quarter, we achieved record consolidated revenue and double digit growth in three of our five segments.
Speaker Change: By geography, the Americas, and EMEA regions achieved double digit growth of 13% and 19% respectively.
By geography, we achieved 8% growth in Americas, 9% growth in EMEA and 5% growth in APAC.
Speaker Change: The APAC region achieved growth of 4%.
Looking next operating expenses fourth quarter operating expenses increased by $46 million or 10%.
Speaker Change: For the full year 2023 achieved 8% consolidated growth with record revenue in three of our five segments.
Research and development increased approximately $22 million year over year, primarily due to engineering personnel costs.
Speaker Change: By geography, we achieved 8% growth in Americas, 9% growth in EMEA and 5% growth in APAC.
SG&A increased approximately $21 million compared to prior year quarter, primarily due to increases in personnel related expenses. In addition of the jail audio business.
Looking next operating expenses fourth quarter operating expenses increased by $46 million or 10%.
<unk> expense increased approximately $4 million, primarily due to higher co op advertising.
Speaker Change: Search and development increased approximately $22 million year over year, primarily due to engineering personnel costs.
A few highlights from our balance sheet cash flow statement dividends and share repurchase.
Speaker Change: SG&A increased approximately $21 million compared to prior year quarter, primarily due to increases in personnel related expenses. In addition of the J L audio business.
We ended the quarter with cash from <unk> Securities approximately $3 1 billion.
Accounts receivable increased sequentially and year over year to $850 million due to seasonally strong sales in the fourth quarter.
Speaker Change: <unk> expense increased approximately $4 million, primarily due to higher co op advertising.
Inventory balance decreased year over year to $1 3 billion to execute our strategy.
Speaker Change: A few highlights from our balance sheet cash flow statement dividends and share repurchase.
Strategy to optimize the inventory reductions in our consumer inventory more than offsetting the increase associated with our auto OEM business. The addition of JL audio inventory.
Speaker Change: We ended the quarter with cash and marketable securities of approximately $3 1 billion.
Speaker Change: <unk> placebo increased sequentially and year over year to $850 million due to seasonally strong sales in the fourth quarter.
Between the fourth quarter of 2023, we generated free cash flow of $470 million $108 million increase from the prior year quarter, primarily due to a lower use of cash purchases of inventory.
Speaker Change: Inventory balance decreased year over year to $1 3 billion to execute our strategy to optimize inventory reductions in our consumer inventory more than offsetting the increase associated with our auto OEM business. The addition of J L audio inventory.
For the full year 2023, we generated free cash flow of $1 billion $183 million $639 million increase from the prior year, which was primarily due to a lower use of cash purchase of inventory, which we do not expect to repeat 2024.
Speaker Change: During the fourth quarter 2023, we generated free cash flow of $470 million $108 million increase from the prior year quarter, primarily due to a lower use of cash purchase of inventory.
2023, our capital expenditures were $194 million $51 million decrease compared to the prior year stay out in 'twenty four we expect free cash flow through approximately $750 million.
Speaker Change: For the full year 2023, we generate free cash flow of $1 billion $183 million $639 million increase from the prior year, which was primarily due to a lower use of cash purchase of inventory, which we do not expect to repeat 2024.
Approximately $375 million.
Capital expenditures.
2024, and we expect to continue to make investments in platforms for growth clean facilities and it related projects.
Speaker Change: Slide 23, our capital expenditures were $194 million $51 million decrease compared to the prior year.
2023, we paid dividends of approximately $559 million also we announced our plan to seek shareholder approval for an increase in our annual dividend beginning with the June 2020 for payment.
Speaker Change: 2024, we expect free cash flow to proximately $750 million approximately $375 million capital.
Speaker Change: Capital expenditures.
Speaker Change: 2024, we expect to continue to make investments in platforms for growth, including facilities and it related projects.
Supposedly a cash dividend of $3 75 per share per quarter, which is a 3% increase from our current quarterly dividend of 73 per share.
Speaker Change: 2023, we paid dividends of approximately $559 million also we announced our plan to seek shareholder approval for an increase in our annual dividend beginning with the June 2020 for payment.
'twenty three we used $99 million of cash to repurchase company shares completing the previous $300 million share repurchase program.
Speaker Change: Proposal as a cash dividend of $3 75 per share per quarter, which is a 3% increase from our current quarterly dividend of <unk> 73 per share.
Our directors recently approved a $300 million share repurchase program, which is authorized through December 2026.
Our full year 2023 pro forma effective tax rate was eight 5% compared to seven 9% in the prior year.
Speaker Change: 'twenty three we used $99 million of cash to repurchase company shares completing the previous $300 million share purchase program.
Fiscal 2024 perform a effective tax rate expected to be 15, 5% 700 basis point increase over the prior year.
Speaker Change: Our directors recently approved a $300 million share repurchase program authorized through December 2026.
<unk> year over year increase nearly all 24 pro forma tax rate, primarily due to increases in the combined Switzerland tax rates impact of implementation of global minimum tax requirements.
Speaker Change: Our full year 2023 pro forma effective tax rate was eight 5% to seven 9% in the prior year.
Speaker Change: Fiscal 2024 pro forma effective tax rate expected to be 15, 5% 700 basis point increase over the prior year <unk>.
Sure.
Turning next to our full year guidance.
Estimate revenue approximately $5 $75 billion, an increase of approximately 10% over the prior year.
Speaker Change: The expected year over year increase nearly all 24 performance tax rate, primarily due to increases in the combined Switzerland tax rates impact of implantation of global minimum tax requirements.
<unk> gross margin to be approximately 56, 5% basis points year over year decrease which is primarily due to segment mix as auto OEM becomes a larger percentage of our business we.
Speaker Change: Turning next to our full year guidance.
We expect an operating margin of approximately 20% and the full year pro forma effective tax rate is expected to be approximately 15, 5%.
Speaker Change: We estimate revenue of approximately $5 75 billion.
Speaker Change: Creased approximately 10% over the prior year.
This results in expected pro forma earnings per share approximately $5 40.
Speaker Change: We expect gross margin to be approximately 56, 5% basis points year over year decrease was primarily due to segment mix as our OEM becomes a larger percentage of our business.
Concludes our formal remarks Julian could you. Please open the line for Q&A.
Thank you as a reminder to ask a question. Please press star followed by the number one on your telephone keypad.
Speaker Change: We expect an operating margin of approximately 20% and the full year pro forma effective tax rate is expected to be approximately 15, 5%.
Our first question will come from Joe Joseph Cardoso from J P. Morgan. Please go ahead. Your line is open.
Speaker Change: This results in expected pro forma earnings per share approximately $5 40.
Hi, good morning, and things for the question first question here is just on the auto OEM business I guess, it's a two parter first can you just expand obviously auto OEM revenue expanded $150 million and 23, you are targeting to expand another $200 million and 24 as you think about your target for 801.
Speaker Change: This concludes our formal remarks Julian could you. Please open the line for Q&A.
Julian: Thank you as a reminder to ask a question. Please press star followed by the number one on your telephone keypad.
Julian: Our first question will come from Joe Joseph Cardoso from J P. Morgan. Please go ahead. Your line is open.
Speaker Change: Hi, good morning, and things for the question first question here is just on the auto OEM business I guess, it's a two parter first can you just expand obviously auto OEM revenue expanded $150 million and 23, you are targeting to spend another $200 million and 24 as you think about your target for 800.
By 'twenty five how are you thinking about your ability to overachieve on it given the current trajectory that you're on.
And then in a similar vein with another year of ramping this business under your belt. How are you thinking about that margin profile as we approach this level of $800 million of revenue now, particularly is there any implications we should think of it from the new customer wins that youll. Eventually onboard. Thanks, and then I have a follow up.
Speaker Change: A million by 'twenty five how are you thinking about your ability to overachieve on it given the current trajectory that you're on.
Thanks, Good morning.
Speaker Change: And then in a similar vein with another year of ramping this business under your belt. How are you thinking about that margin profile as we approached this level of $800 million of revenue now, particularly is there any implications we should think of it from the new customer win that Youll eventually onboard and then I have a follow up.
So on the first part of the question in terms of our ability to overachieve, what we've mentioned is.
<unk>.
A peak of about $800 million in 2020.
Five I would say that in debt.
We don't project that far out in terms of ability to under overachieve, where we're going by input from the manufacturers, who provide us with their longer term forecast, but those can go up and down as production.
Speaker Change: Thanks, Good morning.
Speaker Change: So on the first part of the question in terms of our ability to overachieve, what we've mentioned is.
Speaker Change: Uh huh.
Speaker Change: A peak of about $800 million in 2020.
Its nir so.
In general those are those are just reference points for people to consider in terms of the margin profile.
Speaker Change: <unk> I would say that we.
Speaker Change: We don't project that far out in terms of ability to under overachieve, where we're going by input from the manufacturers, who provide us with their longer term forecast with those can go up and down as.
<unk> been telling people that the margin in auto OEM is expected to go down as it has been doing.
We do expect to be in that 2008, a mid 20% kind of range for for the segment, that's our target, but it's based on a mix of very high volume lower margin products as well as some.
Speaker Change: Production.
Speaker Change: Dates near so.
Speaker Change: I think in general those are those are just reference points for people to consider.
Speaker Change: So the margin profile.
Speaker Change: We've been telling people that the margin in auto OEM is expected to go down as it has been doing.
Lower volume higher margin products that are only speculative.
Got it I guess, just a follow up there.
Speaker Change: We do expect to be in that 2008, a mid 20% kind of range for for the segment, that's our target, but it's based on a mix of very high volume lower margin products as well as some lower.
This is my second question just interest.
Just in terms of the new win that you're Onboarding, though can you just talk about how youre thinking about the elevated cost that you need to ramp that new customer or are you not assuming that youll need to onboard.
Speaker Change: Lower volume higher margin products that are only speculative.
Our increased expenses there I guess, that's kind of what I was getting at in terms of the margin profile on the auto OEM business as you kind of think about bringing in that new customer like how are you thinking about the implications are headwinds to margins as you start to ramp with that new customer. Thank you.
Speaker Change: Got it I guess just follow up there in the I'll use this as my second question, just and just in terms of the new wins that you're Onboarding, though can you just talk about how youre thinking about the elevated cost that you need to ramp that new customer or are you not assuming that youll need to onboard.
So the most significant new win that we mentioned with the global automaker.
Speaker Change: Our increased expenses there I guess, that's kind of what I was getting at in terms of the margin profile on the auto OEM business as you kind of think about bringing in that new customer like how are you thinking about the implications are headwinds to margins as you start to ramp with that new customer. Thank you.
As a program that does not require a significant amount of R&D investment. So as a result, it will be lower intensity in terms of the investment that we will making that.
To bring that customer onboard.
Speaker Change: So the most significant new win that we mentioned with the global automaker.
Got it very clear thank you.
Thank you.
Speaker Change: As a program that does not require a significant amount of R&D investment. So as a result, it will be lower intensity in terms of the investment that we will making that to bring that customer onboard.
Our next question comes from George Wang from Barclays. Please go ahead. Your line is open.
Oh, Hey, guys and congrats on the quarter just two quick ones. Firstly, just in terms of the capital return nice to see additional 300 million share authorization, just curious kind of any additional color you can share in terms of the cadence.
Got it very clear cliff. Thank you. Thank.
Thank you.
Speaker Change: Our next question comes from George Wang from Barclays. Please go ahead. Your line is open.
Do you guys plan to Frontload the snowmelt.
Buyback near term or kind of evenly spread.
George Wang: Hey, guys and congrats on the quarter just two quick ones. Firstly, just in terms of the capital return nice to see additional 300 million share authorization, just curious kind of any additional color you can share in terms of the cadence.
So just kind of trying to get any possible additional colors. So it would be all.
Kind of what.
Over three years.
Yeah. Thanks, George Yeah, we just completed our.
Previous a $300 million authorization and the board upgrades additional $300 million over the next three years so.
George Wang: Do you guys plan to front load some of that.
Buybacks near term or kind of more evenly spread.
George Wang: So just kind of try to get any possible additional colors will be helpful.
The cadence of acquisitions will be just based upon you know the market conditions business conditions at that point in time.
George Wang: Kind of put that to award over three years.
Speaker Change: Yeah. Thanks, George Yeah, we just completed our.
Okay great.
Previous a $300 million authorization and the board authorized additional $300 million over the next three years. So.
A follow up in terms of the business, it's nice to see revenue kind of approaching 10% growth year over year, obviously, partially aided by the auto OEM business.
George Wang: That cadence of acquisitions will be just based upon you know the market conditions business conditions at that point in time.
My question is really kind of pool.
And use of project for FY 'twenty four by segment the book in three months back.
Speaker Change: Okay great.
Major sort of incremental data point, you kind of want to share from any of the segments, whether it's an opinion al Dor, just curious if anything has changed.
Speaker Change: A follow up in terms of the business is nice to see revenue kind of approaching 10% growth year over year, obviously, partially aided by the auto OEM business.
Over the last three months.
Yes, George I think we did demonstrate some good momentum in Q4 and really in the back half of all of 2023 and in both outdoor and fitness so as a result.
Speaker Change: My question is really kind of cool.
Speaker Change: As you saw project for FY 'twenty four by segment the <unk> back.
Speaker Change: Major sort of incremental data point, you kind of want to share from any of the segments, whether it's fitness outdoor just just curious if anything has changed materially over the last three months.
We become incrementally more positive on those two especially considering our current product lineup and the roadmap of products that we have out in front of us.
Speaker Change: Yes, George I think we did demonstrate some good momentum in Q4 and really in the back half of all of 2023 and in both outdoor and fitness.
Okay, great. Thanks for the kind of go back to the queue.
Okay.
So as a result.
Our next question comes from David Macgregor from Longbow Research. Please go ahead. Your line is open.
Speaker Change: We become incrementally more positive on those two especially considering our current product lineup and the roadmap of products that we have out in front of us.
Yes, hi, good morning, everyone great quarter congratulations.
Just to start off by asking you for your impressions on kind of the fourth quarter holiday sales season.
Speaker Change: Okay, great. Thanks for the color I would go back to the queue.
What you were seeing from the consumer what patterns you were noticing.
Speaker Change: Our next question comes from David Macgregor from Longbow Research. Please go ahead. Your line is open.
How people will respond to different price points I mean any color you can provide on the state of the consumer what you took away from kind of the fourth quarter.
Speaker Change: Yes, good morning, everyone.
David Macgregor: Great quarter congratulations.
I would say generally that the response from the consumer side was better than we expected.
David Macgregor: You start off by asking you for your impressions on kind of the fourth quarter holiday sales season.
David Macgregor: What you were seeing from the consumer what patterns you were noticing.
And actually seemed quite strong.
David Macgregor: People will respond to different price points I mean any color you can provide on the state of the consumer what you took away from kind of the fourth quarter.
Our sell through appeared to be very very good.
And of course drove incremental production that we did in the third and fourth quarter to supply demand.
David Macgregor: I would say generally that the response from the consumer side was better than we expected.
Okay.
Any kind of competitive dimension here, we could color enforced.
David Macgregor: And actually seemed quite strong.
David Macgregor: Our sell through appeared to be very very good and of course drove incremental production that we did in the third and fourth quarter to supply demand.
Well.
Probably probably not a lot to say other than the remarks, we made particularly in marine where we're taking some market share. It is.
Probably also true that we're taking market share in wearables as well, but our product lines and our position in the market is much different because of the unique nature of all the products that we have in that market.
David Macgregor: Any kind of competitive.
David Macgregor: You mentioned here, we could color enforced.
David Macgregor: Well.
David Macgregor: Probably probably not a lot to say other than the remarks, we made particularly in marine where we're taking some market share. It is yes.
Yes, and youre, not seeing any mixed down or any dynamics like that.
Actually I would say that the response to our higher end products.
David Macgregor: Probably also true that we're taking market share in wearables as well, but our product lines and our position in the market is much different because of the unique nature of all the products that we have in that market.
In the recent quarter or two to the back half of 2023 has been very good.
Okay as a follow up I just wanted to ask on the automotive business. You noted that you expect the business to turn profitable in the second half how are you thinking about an end of year exit run rate on segment margins.
David Macgregor: Yes, youre not seeing any mixed down or any dynamics like that.
David Macgregor: Actually I would say that the response to our higher end products.
Well, we've guided people to think about gross margins in the range of mid to upper teens and operating margins.
David Macgregor: The recent quarter or two to the back half of 2023 has been very good.
Speaker Change: Okay as a follow up I just wanted to ask on the automotive business. You noted that you expect the business to turn profitable in the second half how are you thinking about an end of year exit run rate on segment margins.
In the mid single digits.
That's for the full year right.
No that's really on a run rate basis.
For the full year, we mentioned in the remarks that.
Speaker Change: Well we've guided.
Speaker Change: People to think about gross margins in the range of mid to upper teens and operating margins.
We expect to exit.
The back half profitable on a quarterly basis, we don't expect 2024 to be profitable as a full year, but then we will work into 2025 on that basis.
Speaker Change: In the mid single digits.
Speaker Change: Thus for the full year right.
Speaker Change: No that's really on a run rate basis.
Got it thanks very much good luck.
Speaker Change: I think for the full year, we mentioned in the remarks that.
Yes.
Speaker Change: We expect to exit.
Our next question comes from Jordan <unk> from Bank of America. Please go ahead. Your line is open.
Speaker Change: The back half profitable on a quarterly basis, we don't expect 2024 to be profitable as a full year, but then we will work into 2025 on that basis.
Good morning, Thanks for taking the time would you guys be able to give more color on what drove the lower revenue.
Aviation aftermarket.
Speaker Change: Got it thanks very much good luck.
Yes, I think aviation aftermarket Jordan is an interesting.
Yes.
Speaker Change: Our next question comes from Jordan <unk> from Bank of America. Please go ahead. Your line is open.
Market because it's a.
A very narrow distribution channel through specialty installers.
Jordan: Good morning, Thanks for taking the time would you guys be able to give more color on what drove the lower revenue.
Doesn't have the same kind of retail dynamic and we did come off of 2022 and into 2023 with significant supply chain challenges, which drove behaviors on the part of those dealers and installers to have more inventory.
Speaker Change: Aftermarket.
Yes, I think aviation aftermarket Jordan is an interesting.
Speaker Change: Market because it's.
Jordan: A very narrow distribution channel through specialty installers.
On their shelves during 2023, we saw them essentially burning that off as they had installs come in and they were working on aircraft and we expect some of that to continue.
Jordan: It doesn't have the same kind of retail dynamic and we did come off of 2022 and into 2023 with significant supply chain challenges, which drove behaviors on the part of those dealers and installers to have more inventory on their shelves. During 2023, we saw them essentially.
Also in 2024.
Got it. Thank you so much thank you.
Our next question comes from Erik Woodring from Morgan Stanley. Please go ahead. Your line is open.
Jordan: <unk> burning that off as they had installs come in and they were working on aircraft and we expect some of that to continue.
Awesome. Thank you very much for taking my questions guys and good morning.
Maybe my first question for you Cliff is a bit of like a philosophical question, which is.
Jordan: Also in 2024.
Speaker Change: Got it. Thank you so much thank you.
If we look back historically at kind of the Garmin story it was always about.
Jordan: Sure.
Jordan: Our next question comes from Erik Woodring from Morgan Stanley. Please go ahead. Your line is open.
Premium is are you sure and obviously amazing gross margin that generally have trended higher over time.
Erik W. Woodring: Awesome. Thank you very much for taking my questions guys and good morning.
Youre strongest growing segment is now also going to be your largest sorry, your lowest gross margin segment. So how should we think about.
Erik W. Woodring: Maybe my first question for you Cliff is a bit of like a philosophical question, which is you know.
Erik W. Woodring: If we look back historically at kind of the garment story it was always about.
That's what the model really is now is it or is it more about maximizing operating profit dollars as opposed to margins can you just help us think through how that how that change is taking place now that you have this this really kind of exploding auto OEM opportunity and then I have a follow up thank you.
Erik W. Woodring: Premium amortization, obviously amazing gross margin that generally have trended higher over time.
Erik W. Woodring: Youre strongest growing segment is now also going to be your largest sorry, your lowest gross margin segment. So how should we think about.
Yes, I would say Eric that there's probably no one molt put garmin and when it comes to the breadth and depth of our businesses.
What the.
Erik W. Woodring: Model really is now is it or is it more about maximizing you know operating profit dollars as opposed to margins can you just help us think through through through how that how that change is taking place now that you have this this really kind of exploding auto OEM opportunity and then I have a follow up thank you.
We still and always will serve those premium niche markets.
And in our traditional markets and we see new opportunities like auto OEM as a way to leverage the strength. We have in vertical integration are smart factories, our supply chain capability and our ability to serve customers, which has been very attractive. So at the end of the day its.
Speaker Change: Yes, I would say Eric that there's probably no one mold foot garmin and when it comes to the breadth and depth of our businesses.
Speaker Change: We still and always will serve those premium niche markets.
Speaker Change: And in our traditional markets and we see new opportunities like auto OEM as a way to leverage the strength. We have in vertical integration are smart factories, our supply chain capability and our ability to serve customers, which has been very attractive. So at the end of the day its profit.
Profit dollars that we can we can put in the bank.
And going about doing that we simply tried to play to all the strengths that we have.
Okay. Okay.
Okay, that's really helpful.
And then maybe the second question is over the last few years, we've seen a bit of a deviation or gap.
Speaker Change: That we can we can put in the bank.
Somewhat unusually between outdoor and fitness.
Speaker Change: And going about doing that we simply tried to play to all the strengths that we have.
Business is.
Somewhat somewhat kind of reflective of kind of key product launches for 2024, obviously, you've kind of guided those businesses back.
Speaker Change: Okay. Okay.
Speaker Change: Okay, that's really helpful.
Speaker Change: And then maybe the second question is over the last few years, we've seen a bit of a deviation or gap.
In line with one another.
So just maybe my question is when we think about maybe the product launch cadence and the importance of those product launches should we think about that as being a bit more evenly split across both of those product lines as opposed to maybe focusing on one or the other is is that the right way of thinking kind of your emphasis on product launches.
Speaker Change: Somewhat unusually between the outdoor and fitness businesses.
Speaker Change: Somewhat somewhat kind of reflective of kind of key product launches for 2024, obviously, you've kind of guided those businesses back tracking in line with one another.
The entirety of 2024 interested in these two segments specifically.
So just maybe my question is when we think about maybe the product launch cadence and the importance of those product launches should we think about this as being a bit more evenly split across both of those product lines as opposed to maybe focusing on one or the other is that the right way of thinking kind of your emphasis on product launches for the entirety of 2024.
Well I would say that ideally we would want to have a very even cadence between those two segments. When it comes to product launches. It doesn't always work out that way just because of the nature of product development and the complexity of the various product lines that we.
We take on I would expect in 2020 for the outdoor will be more active than fitness, but then again in 2023 fitness was more active than outdoors.
Speaker Change: Adjusted in these two segments specifically.
Speaker Change: Well I would say that ideally we would want to have a very even cadence between those two segments. When it comes to product launches. It doesn't always work out that way just because of the nature of product development and the complexity of the various product lines that we.
Okay. That's really helpful. Thank you very much for the color cliff. Thank.
Thank you.
Our next question comes from Noah is that skin from Keybanc capital markets. Please go ahead. Your line is open.
We take on I would expect in 2020 for the outdoor will be more active than fitness, but then again in 2023 fitness was more active than outdoors.
Hi, Thanks for taking my question, maybe just one on kind of marine for for me just wondering if you could kind of expand upon how you're thinking about end market dynamics. This year and just any color on your OEM business versus aftermarket.
Speaker Change: Okay. That's really helpful. Thank you very much for the color cliff. Thank.
Speaker Change: Thank you.
Speaker Change: Our next question comes from Noah is that skin from Keybanc capital markets. Please go ahead. Your line is open.
And how youre thinking about.
That dynamic playing out.
Noah: Hi, Thanks for taking my question, maybe just one on kind of marine for for me just wondering if you could kind of expand upon how you're thinking about end market dynamics. This year and just any color on your OEM business versus aftermarket.
As we look into 2024.
Now, let's say no that the.
The market as we mentioned in the remarks is is softer.
And in General I would say that we estimate the market declined about 10% in 2023, when you look at all.
Noah: And how youre thinking about that dynamic playing out as we look into 2024.
The various players.
Noah: I would say no that the.
We outperformed with market share gains so we're thrilled with that and we expect in 2024. They will continue to perform ahead of the market in terms of the dynamic between OEM and aftermarket and marine the aftermarket is really the bigger slice of the pie. If you will so so we're.
The market as we mentioned in the remarks is is softer I think in general I would say that we estimate the market declined about 10% in 2023, when you look at all the various players.
Noah: We outperformed with market share gains so we're thrilled with that and we expect in 2024. They will continue to perform ahead of the market in terms of the dynamic between OEM and aftermarket and marine the aftermarket is really the bigger slice of the pie. If you will so so were influenced.
It's more by those dynamics, we do expect 2024 will be offset in terms of any softness will be offset by new revenue from J O audio, which we expect to be about 15% of the segment revenue for the year.
And then maybe just one in terms of I know you're guiding to the pro forma tax rate of 15, 5%, but any any update on kind of when the tax rate officially changes.
Noah: Whereby those dynamics, we do expect 2024 will be offset in terms of any softness will be offset by new revenue from J O audio, which we expect to be about 15% of the segment revenue for the year.
So yes, we are guiding to a $15 five for the full year. So it's really related to the increase.
Increase in the combined Switzerland tax rates and the impact on patient of a global minimum taxes. So in.
Speaker Change: And then maybe just one in terms of I know you're guiding to the pro forma tax rate of 15, 5%, but any any update on kind of when the tax rate officially changes.
<unk> of 23 here recently, but can't know Schaffhausen actually.
Speaker Change: Yes, so yes, we are guiding to a $15 five for the full year. So it's really related to the <unk>.
Passed some legislation, which effectively combined or increase the combined Switzerland tax rates to 15%. So that is basically effect.
Speaker Change: Increase in the combined Switzerland tax rates and the impact on a patient of a global minimum taxes. So in December of 'twenty three here recently, but can't know Schaffhausen actually.
Beginning of the year 2024.
Thank you.
Okay.
Our next question comes from Ben Bolan from Cleveland Research. Please go ahead. Your line is open.
Speaker Change: Passed some legislation, which effectively combined.
Good morning, everyone. Thanks for taking the question.
Speaker Change: Increase the combined Switzerland tax rates to 15%. So that is basically effect beginning of the year to about 24.
I'm curious how you think about.
The contribution of new Activations versus refresh across both outdoor and fitness and then I had a follow up.
Speaker Change: Thank you.
Speaker Change: Okay.
Speaker Change: Our next question comes from Ben Bolan from Cleveland Research. Please go ahead. Your line is open.
Yes, so new new.
Ben Bollin: Good morning, everyone. Thanks for taking the question.
New customers to Garmin are still the majority of of our registrations that we have on our platforms.
Ben Bollin: I'm curious how you think about.
Ben Bollin: The contribution of new Activations versus refresh across both outdoor and fitness and then I had a follow up.
Okay.
Is there any differences that you've noticed between outdoor and fitness, there's one seem to be.
More of a refresh versus the other or.
Speaker Change: Yes, so new new <unk>.
Pretty linear across segments.
Ben Bollin: Customers to Garmin are still the majority of of our registrations that we have.
No I mean, it does vary by by segment and more specifically it varies by product line some of our product lines do tend to be.
Ben Bollin: On our platforms.
Ben Bollin: Okay.
Speaker Change: Is there any differences that you've noticed between outdoor and fitness, there's one seem to be.
Driven by existing customers, while others tend to be driven actually by new customers.
Driven by existing customers, while others tend to be driven actually by new customers.
Speaker Change: More of a refresh versus the other or.
Okay.
Speaker Change: Pretty linear across segments.
And the last one for me is key.
Speaker Change: No I mean, it does vary by segment and more specifically it varies by product line some of our product lines do tend to be.
Curious what youre seeing.
China and India, just bigger picture, what's what's your strategic initiative. There what are you trying to do what type of performance have you seen that's it for me. Thanks.
Speaker Change: Driven by existing customers, while others tend to be driven actually by new customers.
Yes, I think in China.
The economic situation has been more challenging I think our.
Speaker Change: Okay.
Speaker Change: Last one from me is curie.
Speaker Change: Curious what youre seeing in.
Our performance has been okay.
Speaker Change: China and India, just bigger picture, what's what's your strategic initiative. There what are you trying to do what type of performance have you seen and that's it for me. Thanks.
Some countries in Asia do better than others.
In general.
I would say, it's doing fine given the situation there.
We do have a mix of retail partners and our own retail shops and in various parts of Asia, including China. So we tend to go a little more direct to customer and some of those countries.
Speaker Change: I think in China.
Speaker Change: The economic situation has been more challenging I think our.
Speaker Change: Our performance has been okay.
Speaker Change: Some countries in Asia do better than others.
India, we've kind of reset our.
Speaker Change: In general.
Speaker Change: I would say, it's doing fine given the situation there.
Our approach there and we've got a new distribution partner, that's working the market and we expect to see improvements there, but then in general India is kind of a small market for us right now.
Speaker Change: We do have a mix of retail partners and our own retail shops in in various parts of Asia, including China. So we tend to go a little more direct to customer and some of those countries.
Thanks.
Okay.
Speaker Change: And together, we've kind of reset our our approach there and we've got a new distribution partner, that's working the market and we expect to see improvements there, but then in general India is kind of a small market for us right now.
Our last question will come from Ivan <unk> from Tigress Financial Partners. Please go ahead. Your line is open.
Congratulations on the great quarter and year and thanks for taking my question I have a couple of questions you mentioned gaining market share in smart Wearables.
Speaker Change: Yes.
Speaker Change: Thanks.
Was recently another notable large smart wearable company that had an issue with their pulse ox readings and eventually dropped right now from their product offering do you feel that it did.
Speaker Change: Our last question will come from Ivan <unk> from Tigress Financial Partners. Please go ahead. Your line is open.
Ivan: Congratulations on the great quarter and year and thanks for taking my question I have a couple of questions you mentioned gaining market share in smart Wearables.
Did you see that as a major driver of.
Consumer choice to the Garmin watches.
Yes, I don't know that that was a specific major driver Ivan.
Ivan: <unk> recently, another notable large smart wearable company that had an issue with their pulse ox readings and eventually dropped right now from their product offering do you feel that it did.
But certainly we do offer that feature and we have a feature that's very different from any other player that's out there.
But in general I would say that our products are doing well because they are <unk>.
Ivan: Did you see that as a major driver of.
Ivan: Consumer choice to the Garmin watches.
Strong on a broad basis across all kinds of features.
Speaker Change: Yes, I don't know that that was a specific major driver Ivan.
And the ability to monitor monitor both health and wellness.
Speaker Change: But certainly we do offer that feature and we have a feature that's very different from any other player that's out there.
Functions as well as strong activity performance as well.
And then you saw.
Started to roll out significant upgrades to your connect App.
Speaker Change: But in general I would say that our products are doing well because they are <unk>.
And.
Speaker Change: Strong on a broad basis across all kinds of features.
What are your still your thoughts on maybe hearing that as far as a premium subscription level.
Speaker Change: And the ability to monitor monitor both health and wellness.
While we continue to look at options for how do we monetize our App base.
Speaker Change: Functions as well as strong activity performance as well.
Speaker Change: And then you started to roll out significant upgrades to your connect App.
That's not something that we're eager to plough into because we recognize that a lot of people use our platforms and trust garman, especially with the security and the privacy of their data.
Speaker Change: And.
Speaker Change: What are your still your thoughts on maybe tearing that as far as a premium subscription level.
Speaker Change: While we continue to look at options for how do we monetize.
But there are premium features that we will look at that that could possibly result in premium tiers for some of our apps much like we've done for example in golfing.
Speaker Change: Our App base that's.
Speaker Change: That's not something that we're eager to plough into because we recognize that a lot of people use our platforms and trust garman, especially with the security and the privacy of their data.
Two questions on the automotive OEM side, you mentioned that the.
New customer you're Onboarding will not require much R&D is that because youre going to get a lot of mileage going forward from the R&D that you've invested so far.
Speaker Change: But there are premium features that we will look at that that could possibly result in premium tiers for some of our apps much like we've done for example in golfing.
Incremental customer will be more and more profitable.
Well Theres certainly some leveraging of the.
Speaker Change: And then two questions on the automotive OEM side, you mentioned that the new customer you're onboarding will not require much R&D is that because youre going to get a lot of mileage going forward from the R&D that you've invested so far and that each incremental customer will be more and more profitable.
Technologies that we've developed in order to be able to support this kind of customer.
This is this is actually a build to print opportunities. So so the design work has been done and so we're leveraging our factory and our process engineering to bring it into.
Speaker Change: Well there is certainly some leveraging of the.
Our garment factories.
And then my last question.
Speaker Change: Technologies that we've developed in order to be able to support this kind of customer but this is this is actually a build to print opportunities. So so the design work has been done and so we're leveraging our factory and our process engineering to bring it into.
Mentioned, the strong product momentum going into 2004 can you give us some idea of what areas in new products, we could expect to see.
Well, we don't mention any of our upcoming releases that R&R to be public, but just yesterday actually we did announce the $401 65, which I'm Super excited about it's a really strong entry level watch with the bright OLED display and I think I have a lot of personal XP.
Speaker Change: Our garment factories.
Speaker Change: And then my last question.
Speaker Change: You mentioned the strong product momentum going into 2004 can you give us some idea of what areas in new products, we could expect to see.
Speaker Change: Well, we don't mention any of our upcoming releases that R&R. The publics I just yesterday actually we did announce the $401 65, which I am Super excited about it as a really strong entry level watch with a bright OLED display.
Patients that it will be popular product.
Alright, Thank you congratulations and with some of the Big 24.
Thank you.
Yes.
We have no further questions I would like to turn the call back over to Teri Seck for closing remarks.
Thank you all for joining us this morning, Doug and I are available for callbacks and we hope you have a great day.
Speaker Change: And I think I have a lot of personal expectations that it will be popular product.
Alright.
Speaker Change: Alright, Thank you congratulations and with some a big 24.
This concludes today's conference call. Thank you for your participation you may now disconnect.
Speaker Change: Thank you.
Speaker Change: We have no further questions I would like to turn the call back over to Teri Seck for closing remarks.
Thank you.
Teri Seck: You all for joining us this morning, Doug and I are available for callbacks and we hope you have a great day.
Teri Seck: Alright.
Speaker Change: This concludes today's conference call. Thank you for your participation you may now disconnect.
Speaker Change: Okay.
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