Q4 2024 Garmin Ltd Earnings Call
Bella: All lines have been placed on mute to prevent any background noise. After the speaker's remarks, there will be a question and answer session.
Bella: If you would like to ask a question during this time, simply press star, then the number one on your telephone keypad. To withdraw your question, press star one again.
Speaker Change: I would now like to turn the conference over to Teri Seck, Director of Investor Relations. You may begin.
Teri Seck: Good morning. We would like to welcome you to Garmin Limited's fourth quarter 2024 earnings call.
Speaker Change: Please note that the earnings, press release, and related slides are available at Garmin's Investor Relations site on the Internet at www.garmin.com/.doc. An archive of the webcast and related transcripts
Speaker Change: will also be available on our website. This earnings call includes projections and other forward-looking statements regarding Garmin Ltd. and its business.
Speaker Change: 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, foreign currency, tariff impacts, future demand for our products and plans and objectives are forward-looking statements.
Speaker Change: 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.
Teri Seck: 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, President and Chief Executive Officer, and Doug Boessen, Chief Financial Officer and Treasurer. At this time, I would like to turn the call over to Cliff Pemble.
Thank you, Teri, and good morning, everyone.
Teri Seck: As announced earlier today, GARMA delivered another quarter of outstanding financial results as our products continue to resonate with customers.
Teri Seck: Consolidated revenue increased 23% to $1.82 billion, a new fourth quarter record, and we achieved growth and record revenue in each of our five business segments.
Gross margin expanded 100 basis points to 59 percent.
Teri Seck: Operating income increased 52% year-over-year and operating margin expanded over 500 basis points to 28% reflecting both improved gross margin and operating leverage.
Teri Seck: This resulted in Proforma EPS of $2.41, up 40% over the prior year.
Teri Seck: 2024 was a remarkable year of growth and achievement for Garmin.
Teri Seck: While we were optimistic at the beginning of 2024, we consistently outperformed even our highest expectations throughout the entire year.
Teri Seck: We achieve growth in every segment, resulting in record segment revenue and record consolidated revenue.
Teri Seck: 2024 was also a year of historical significance, marking our 35th year in operation.
Teri Seck: Since we were founded in 1989, we have delivered more than 300 million navigation and communication devices.
including more than 18 million delivered in 2024.
Consolidated revenue increased 20% to $6.3 billion.
Gross Margin expanded over 100 basis points to nearly 59%.
Teri Seck: Operating income increased 46% to nearly 1.6 billion dollars and operating margin came in at 25%.
Teri Seck: We believe our performance is the direct result of our robust product portfolio.
Teri Seck: Looking ahead, we have many product launches planned for 2025 that will further strengthen our portfolio, with some representing new categories for Garmin.
Teri Seck: With this in mind, we anticipate 2025 consolidated revenue will increase approximately 8% to $6.8 billion.
Teri Seck: Also, our strong results and positive outlook give us confidence to propose an annual dividend of $3.60 a share.
Teri Seck: reflecting a 20% increase over the prior dividend amount which will be considered by shareholders at the upcoming annual meeting.
Speaker Change: Doug will discuss our financial results in Outlook in greater detail in a few minutes. But first, I'll provide remarks on the performance of each business segment.
Speaker Change: Starting with fitness, 2024 was an exciting year as demand for running, cycling, and wellness products has been robust.
Speaker Change: and new customers are embracing the healthy, active lifestyles our brand represents.
Speaker Change: We experience growth in every product category, led by strong contributions from advanced wearables.
For the year, fitness revenue increased 32% to $1.77 billion.
Speaker Change: Gross margin was 58%, a 480 basis point improvement over the prior year, primarily driven by lower product cost and favorable mix.
Operating income more than doubled year-over-year to $483 million.
Speaker Change: An operating margin expanded approximately 1,000 basis points to 27%, reflecting both improved gross margin and operating leverage.
During the quarter, we launched Lilly 2.0 Active.
Speaker Change: our smallest GPS-enabled smartwatch featuring an elegant design and up to 9 days of battery life in smartwatch mode.
Speaker Change: Looking ahead, we anticipate another strong year for the fitness segment, with many new product introductions planned throughout the year.
Speaker Change: With this in mind, we expect fitness revenue to increase approximately 10% for the year.
Speaker Change: The outdoor segment delivered a strong year of product achievements and revenue growth.
Speaker Change: 2024 revenue increased 16% to $1.96 billion, driven primarily by Adventure watches following the launch of the highly successful Phoenix 8 series.
Speaker Change: Gross margin was 67%. 340 basis point improvement over the prior year, primarily driven by lower product cost and favorable mix.
Speaker Change: Operating income exceeded $700 million, and operating margin expanded 550 basis points to 36%, reflecting both improved gross margin and operating leverage.
Speaker Change: We are strategically focused on creating growth opportunities by introducing new product categories and penetrating new markets.
Speaker Change: During the quarter, we launched two products that are rising to the definition of a Halo product because they are changing the game in their respective markets.
Speaker Change: The first product I want to mention is the Approach R50, which is the only portable golf launch monitor with a built-in simulator.
It features a 10-inch color touchscreen display.
Speaker Change: and includes a preloaded database of more than 43,000 golf courses that can be played on the course or virtually using a built-in simulator.
Speaker Change: We also launched the Descent X50i, our first large-format dive computer.
Speaker Change: This device includes a vivid 3-inch color display, providing rich information that is readable at a glance.
Speaker Change: and its rugged design is purpose-built, with leak-proof buttons, a sapphire lens,
Speaker Change: a 20 ATM Dive Rating, and an Integrated Backup Dive Light.
Speaker Change: Looking ahead, we expect that our strong outdoor product lineup will result in revenue growth of approximately 10% for the year.
Speaker Change: Looking next at aviation, revenue increased 4% to $877 million, driven by growth in both OEM and aftermarket product categories.
Speaker Change: Gross and operating margins were 75% and 24% respectively, resulting in operating income of $211 million, a decrease of 7% year-over-year.
Speaker Change: The decrease in operating income is primarily due to increased R&D spending as we develop new products and certify new aircraft platforms.
2024 was a year of milestone accomplishments for aviation.
Speaker Change: We were named number one in aviation product support for the 21st consecutive year by Professional Pilot Magazine.
Speaker Change: We also celebrated the legacy of our founders, Gary Burrell and Dr. Min Cao.
upon their induction into the National Aviation Hall of Fame.
Speaker Change: Aviation safety is, once again, top of mind after recent tragic accidents that have shocked and saddened everyone.
Speaker Change: Our strategic focus on aviation safety has resulted in many award-winning innovations designed to save lives, such as envelope protection, SafeGlide, SafeTaxi, and emergency autoland.
Speaker Change: Our most recent safety innovation, Runway Occupancy Awareness Technology, was honored with a prestigious Laureate Award from Aviation Week Network as the first available system that can warn pilots if other aircraft are occupying an active runway.
Speaker Change: During the quarter, Textron Aviation announced the selection of our G3000 Prime integrated flight deck for the Citation CJ-4 Gen 3 aircraft.
Speaker Change: The G3000 Prime was also selected by Beta Technologies for the ALEA electric conventional takeoff and landing aircraft.
which conducted its inaugural flight during the quarter.
Speaker Change: These announcements are the first of many we anticipate as OEMs embrace this highly advanced next-generation flight deck.
Speaker Change: Looking forward, we expect growth to accelerate throughout 2025 as new aircraft platforms enter production and as conditions improve in the aftermarket.
Speaker Change: With this in mind, we expect aviation revenue will increase approximately 5% for the year.
Speaker Change: Turning next to the marine segment, revenue increased 17% to nearly $1.1 billion, exceeding the $1 billion threshold for the first time.
Speaker Change: Growth was primarily driven by new revenue from the 2023 acquisition of JL Audio.
Speaker Change: Excluding JL Audio, marine revenue increased 6%, outperforming the broader market and strengthening our position as the world's largest consumer marine electronics company.
Speaker Change: Full year gross margin was 55%, a 180 basis point improvement over the prior year.
and was favorably impacted by lower product cost.
Speaker Change: Operating income increased 32% year-over-year and operating margin expanded 240 basis points to 22% reflecting both improved gross margin and operating leverage.
Speaker Change: 2024 was also a year of milestone accomplishments for Marine, as we were named NMEA Manufacturer of the Year for the 10th consecutive year.
Speaker Change: And we were named Most Innovative Marine Company by Sounding Straight Only for the second consecutive year.
Speaker Change: During the quarter, we were recognized with the National Boating Safety Award from CITO Foundation for the fourth consecutive year.
Speaker Change: Also during the quarter, JL Audio received an Innovation Award for the Pavilion Line of Outdoor Home Speakers from Home Technology Specialists of America.
Speaker Change: As I previously mentioned, Garmin has been consistently outperforming the broader marine market and we expect to do so again in 2025.
Speaker Change: The marine market remains soft, but is stabilized at a level from which we can anticipate recovery and growth.
Speaker Change: With this in mind, we expect marine revenue will increase approximately 4% per year.
Speaker Change: Moving finally to the auto OEM segment, revenue increased 44% to $611 million.
primarily driven by growth in domain controllers.
Speaker Change: Gross margin was 18%, and the operating loss narrowed to $39 million for the year.
Speaker Change: During the year, all remaining BMW models were equipped with Garmin Domain Controllers, paving the way to achieve our maximum potential revenue from the BMW program in 2025.
Speaker Change: We also captured additional program wins and made significant progress preparing for our next major program that is expected to enter production in 2027.
Speaker Change: I'm proud of the progress that we have made in our quest to build a successful auto OEM segment.
Speaker Change: As many of you know, the outlook of major automakers is softening, which changes the revenue trajectory we previously shared.
Speaker Change: Even so, we expect 2025 to be another pivotal year of growth and progress towards the profitability stage for this growing business segment.
Speaker Change: With this in mind, we expect revenue to increase approximately 7% for 2025.
Speaker Change: That concludes my remarks. Next, Doug will walk you through additional details on our financial results.
Thanks, Cliff. Good morning, everyone.
Doug Boessen: I'd begin by reviewing our fourth quarter and full year financial results. Provide comments on the balance sheet, cash flow statement, taxes, and 2025 guidance.
Doug Boessen: posted revenue $1,823,000,000 for the fourth quarter, representing a 23% increase year-over-year. Coast margin was 59.3%, an increase of 100 basis points over the priority quarter, primarily due to lower product costs.
Doug Boessen: Operating expense, percentage of sales is 30.9%, 440 basis point decrease.
Operating income was $516 million, 52% year-over-year increase.
Doug Boessen: Operating margin was 28.3%, 540 basis point increase from the prior year.
Doug Boessen: Our GAAP EPS was $2.25, our FORMA EPS was $2.41, a 40% increase from prior year for FORMA EPS.
Doug Boessen: Looking at the full year results, proposal revenue is $6,297,000,000, presenting a 20% increase year-over-year.
Doug Boessen: Gross marginal is 58.7 percent, 120 basis point increase from the prior year, primarily due to lower product cost.
Operating expense, percentage of sales, 33.4%, 320 basis point decrease.
Operating income was $1,594,000,000, 46% increase.
Doug Boessen: Operating margin was 25.3 percent, 240 basis point increase from the prior year.
Doug Boessen: Our GAAP EPS was $0.007030, Performa EPS was $0.007039, 32% increase from a prior year Performa EPS.
Doug Boessen: Next, we'll look at fourth quarter revenue by segment and geography.
Doug Boessen: Turn 4 of the quarter, achieve record revenue on a consolidated basis for each of our 5 segments.
Doug Boessen: who achieved double-digit growth in three or five segments, followed by the fitness segment with 31% growth, followed by the auto am segment with 30% growth, and the outdoor segment with 29% growth.
Doug Boessen: By geography, we achieved double-digit growth across all regions, led by the EMEA region, with 34% growth.
Doug Boessen: APAC region and America's region at 18% and 17% growth, respectively.
Doug Boessen: For full year 2024, we achieved 20% consolidated growth, record revenue on a consolidated basis.
Doug Boessen: and record revenue for each of our five segments. By geography, we achieved 31% growth in EMEA, 16% growth in Americas, and 12% growth in APAC.
Doug Boessen: Looking next, operating expenses. Fourth quarter operating expenses increased by approximately $40 million dollars rate percent. Research and development increased by $22 million. SG&A increased by $19 million.
Both increases are primarily due to personnel-related expenses.
Doug Boessen: See highlights on the balance sheet, cash flow statement, dividends, and share of purchases.
Doug Boessen: We ended the quarter with cash market securities of approximately $3.7 billion.
Doug Boessen: Cancer C will increase sequentially in year-over-year to 983 million dollars due to strong sales in the fourth quarter. Inventory balance increase year-over-year to approximately 1.5 billion dollars.
Doug Boessen: To report the quarter 2024, we generated free cash flow of $399 million, $18 million decrease from the prior year quarter.
Doug Boessen: For the full year 2024, we generated free cash flow of approximately $1.2 billion, a $56 million increase from the prior year. It was due to improved earnings, partially offset by increased working capital needs.
Doug Boessen: Our full year 2024 capital expenditures, $194 million, is consistent with the prior year.
Doug Boessen: In 2025, we expect free cash flow to be approximately $1.1 billion, with approximately $350 million in capital expenditures.
Doug Boessen: 2025, expect to continue to make investments in platforms of growth, including facilities and IT-related projects.
In 2024, we paid dividends of approximately $572 million.
Doug Boessen: Also, we announce our plan to seek share of approval for a 60-cent increase in our annual dividend beginning with the June 2025 payment.
Doug Boessen: Proposal is a cash dividend of $3.60 or $0.90 per share per quarter. It's a 20% increase from our current quarterly dividend of $0.75 per share.
Doug Boessen: During 2024, we used $62 million of cash to repurchase company shares.
Doug Boessen: In year-end, we had approximately $238 million remaining in the share purchase program, which was authorized through December 2026.
Doug Boessen: Our full year 2024 Perform Effective Tax Rate was 16.7% compared to 8.5% in the prior year. Increase in effective tax rates primarily due to an increase in the combined Switzerland tax rate in response to global minimum tax requirements.
Doug Boessen: 2025 perform effective tax rate expected to be 16.5% which is comparable to the 2024 tax rate.
Turning next to our full year 2025 guidance.
Doug Boessen: We estimate revenue of approximately $6.8 billion, increase of approximately 8% for 2024.
Doug Boessen: We expect gross margins to be approximately 58.7% which is consistent with our 2024 gross margin.
Doug Boessen: We expect an operating margin of approximately 25% is comparable to the 2024 results.
Doug Boessen: The full-year performance effective tax rate is expected to be approximately 16.5%, which is comparable to the 2024 tax rate.
Doug Boessen: This results in expected performer earnings per share approximately $7.80, a 6% increase over the 2024 performer earnings per share. This concludes our former remarks. Bella, can you please open the line for Q&A?
Speaker Change: At this time, I would like to remind everyone, in order to ask a question, press star, then the number one on your telephone keypad. We do request for today's session that you please limit to one question and one follow-up. We will pause for just a moment to compile the Q&A roster.
Thank you for joining us. Have a great day.
Speaker Change: Your first question comes from the line of Joseph Cardoso with the JP Morgan. Your line is now open. Please go ahead.
Douglas Boessen, CFP®, Financial Planner & Investment Advisor
Douglas Boessen: Good morning, Joe. I think in terms of our fitness performance, it was very broad-based across
Speaker Change: I think if you look at all of our product categories, each one probably has its own
Speaker Change: dynamic when it comes to the customer base and when we introduce new products, what mix of those are new versus existing. But in general, especially in the wearables area, we're seeing many more new customers coming to Garmin and we're benefiting from market share gains.
Speaker Change: which is driving our results. Looking forward to 2025, we really see more of the same. Of course, we recognize that these are outstanding.
Speaker Change: Douglas Goldstein, CFP®, is the director of Profile Investment Services and the host of the Goldstein on Gelt radio show.
Speaker Change: No, appreciate the color there, Cliff. And then maybe as just my follow-up here, it's more on the operating margin guidance, kind of suggests a slightly lower operating leverage or flow-through than we typically see from Garmin. Maybe, Doug, can you just walk us through the puts and takes here and kind of what we should be considering or factors that are influencing maybe the software leverage for 2025 than what we've historically seen from the company? And then thanks for the questions.
Speaker Change: It relates to the operating margin, the gross margin, we're expecting that to be relatively consistent year over year.
Speaker Change: We also expect, you know, as it relates to our operating expenses, as a percentage of sales...
Speaker Change: We're expecting to be up about 30 basis points. That 30 basis points is coming from R&D. For SG&A, we expect sales to be relatively flat. The investment in R&D is basically investments for growth. Those investments are really for innovation and all the different product launches that we do have coming up for the next year.
Speaker Change: Your next question comes from the line of Ben Bowlin with Cleveland Research. Please go ahead.
Ben Bowlin: Good morning, everyone. Thanks for taking the question. I wanted to piggyback that last question, Doug. With respect to gross margin, you know, the implied guide
Speaker Change: Douglas Goldstein, CFP®, is the director of Profile Investment Services and the host
Ben Bowlin: You know outdoor fitness aviation growing its percentage of mix into the out year, and then I had a follow-up
Speaker Change: Yeah, as it relates to gross margin, on a consolidated basis, yeah, we do expect that to be relatively consistent. And, you know, there's a lot of different variables that go into the gross margin. You know, we have a product mix, as you mentioned, you know, component costs, you know, overhead per unit, et cetera. And so, you know, there's a lot of mix in there from that standpoint. But, you know, we're thinking about, you know, as it relates to gross margin by segment, there's not a real major
Douglas Boessen, CFP®, Financial Planner & Investment Advisor
Speaker Change: Okay. Cliff, you know, the performance in EMEA has been really remarkable the last couple of years. I'm curious, you know, what you attribute to the success there. Could you talk about the dynamics of, you know, maybe more industrialized versus emerging markets and any go-to-market efforts that have changed really driving that out performance?
Speaker Change: In AMEA, I would say that the strength there is primarily driven by
Speaker Change: Douglas Goldstein, CFP®, is the director of Profile Investment Services and the host of the Goldstein on Gelt radio show.
Speaker Change: Of course, America's dynamic is slightly different, so we're the number three here, but in Europe, we've been much stronger as a marketplace over there with our product line.
Speaker Change: Okay, my last one is looking at auto OEM with respect to 2025.
Speaker Change: You mentioned, you know, capturing, you know, BMW opportunity and kind of getting to your normalized run rate.
Speaker Change: Could you share any thoughts on the way we should think about the margin of this business, both gross and EBIT margin?
Speaker Change: and how it scales over time and how potential, you know, new wins or future platform opportunity in 2027 and beyond will influence those figures further. That's it for me. Thank you.
Speaker Change: I think we've we've talked about the margin profile of this business in the past and and consistent with what we've said we believe this this business is
a mid-teens kind of gross margin.
operating margin and that's clearly what we're still
driving for. We have been successful in
Speaker Change: Securing new business for the future, including the one that I mentioned.
that is coming in 2027, representing our largest win.
Speaker Change: to date, and other smaller winds across the globe that help fill in both terms of volume as well as margin profile that help support that outlook that I mentioned.
Thank you.
Thank you.
Speaker Change: Your next question comes from the line of Eric Woodring with Morgan Stanley. Please go ahead.
Eric Woodring: Great. Thanks so much for taking my questions, guys. Maybe just to start, I wanted to double-click again on the auto OEM business. And maybe what I'm...
Eric Woodring: really trying to get at was, you know, prior expectations for 2025 revenue were $800 million. Obviously, market conditions have softened since you originally gave that guide. But you have, obviously, this new large wind ramping in 2027. So, can you maybe just help us better understand, one, the primary factors causing the 2025 outlook outside of market conditions? Have anything changed kind of at the micro level?
Eric Woodring: And then two, any advice on how we should be thinking about maybe the shape of the growth curve as we bridge 2025 with that 2027 wind ramp? And then I have a follow-up. Thanks so much.
Okay.
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Eric Woodring: Yeah, so definitely 2025 was below our expectations that we had shared.
a couple of years ago, shaving about $140 million.
Speaker Change: Douglas Boessen, CFP®, is the director of Profile Investment Services and the host
Eric Woodring: 100% due to the softening outlook of automakers, particularly the higher-end automakers that are operating in the China market, which has been struggling probably more than
and other areas, although globally it's...
It's generally weak.
Eric Woodring: So there's really no other factor other than that, there's no other smaller factors at play really.
Eric Woodring: Douglas Goldstein, CFP®, is the director of Profile Investment Services and the host of the Goldstein on Gelt radio show.
Speaker Change: Very helpful. Thank you so much, Cliff. And then maybe just my follow-up is, kind of getting to what you alluded to at the top of the call, if we go back a year ago, you guided to 2024 revenue of $5.7 billion and EPS of $5.4 billion. You obviously ended up significantly outperforming those expectations.
Speaker Change: We're gonna open up the group item five, but first I want to call one this evening's program, entertaining conversations of individuals often using technology to demonstrate a willingness to engage in a Grande Valley community with young people and their families and friends. Laura is our moderator today, and so Laura will have a great time and integrate any question,
Speaker Change: And I'm just wondering if you're approaching 2025 in some kind of the same degree of relative conservatism as in 2024, or is your approach about anything changed at all just based on what you've learned about your performance in 2025, new users coming into the platform, privacy power, et cetera? Just any color that you're concerned your approach is this year versus a year ago. Thanks so much.
Speaker Change: I think we had some trouble receiving your audio there but I think what you were asking is
If you look back to 2024, our initial guide,
Absolutely. 2024 exceeded all of our expectations, internal and external.
Speaker Change: and we we did also feel that that there was a lot of potential in 2024 so we worked very hard.
Speaker Change: to achieve everything that we could as we look to 2025.
Speaker Change: We, of course, always start our year and try to be pragmatic in our outlook. There's a lot of the year that's ahead of us.
Speaker Change: Douglas Goldstein, CFP®, is the director of Profile Investment Services and the host of the Goldstein on Gelt radio show. He is a licensed financial professional both in the U.S. and Israel.
Thank you so much, Cliff. I appreciate the color.
Thank you.
Speaker Change: Your next question comes from the line of George Wang with Barclays, so please go ahead.
Oh, hey, hey, uh, hey, hey.
George Wang: for taking my question. Just two quick ones. Firstly, I just want to double-click on the Auto OEM. Just curious, like, you know, in terms of...
Douglas Boessen, CFP®, Financial Planner & Investment Advisor
George Wang: whether you expect to turn profitable kind of in the next couple of quarters, just kind of for near term, like any thoughts on sort of a break even level, kind of going to kind of low single digit. I'm just curious if you can impact some of the near term dynamics in terms of the bottom line for the auto OEM. Thank you.
George Wang: Well, auto and profitability is obviously our goal. This is a very dynamic business and as we've pointed out, you know, we're affected by
Douglas Boessen, CFP®, Financial Planner & Investment Advisor
George Wang: and our profitability metrics may not match point for point for everyone else in the industry. But that said, our segment, AutoEM segment, still provides very meaningful contributions.
Speaker Change: Douglas Goldstein, CFP®, is the director of Profile Investment Services and the host
Speaker Change: in our manufacturing as well as our supply chain by combining the volumes that we have across our business. Eighteen million units a year is very substantial and very attractive for our suppliers, so we're able to
Speaker Change: to achieve cost savings, the benefit of which you are seeing in all of the other segment results.
Speaker Change: Okay just a quick one just you know as we step back kind of zoom out in terms of the high level on the consumer
Speaker Change: You know, is there anything kind of you would like to call out kind of maybe, you know, different versus kind of last quarter, kind of three months ago, in terms of the consumer backdrop? And especially if you can address...
Douglas Boessen, Teri Seck, Douglas Boessen
Speaker Change: Yeah, I think we probably made most of our remarks, I would say, in terms of the consumer and as we looked at the results of Q4, as well as our registration behavior that we can see in near real-time, the sell-in and the sell-through was very well matched.
Speaker Change: And we believe that the retail channel is not overstocked. It's at a healthy level, and we continue to see strong registrations in our products.
Speaker Change: From our perspective and the kinds of products that we offer and the customer basis for those products, I would say that those customers seem to be fine. We don't want to say that there's no consumer pressure because we know that there is.
Speaker Change: Douglas Goldstein, CFP®, is the director of Profile Investment Services and the host of the Goldstein on Gelt radio show.
Okay, great. Thank you. I'll go back to the queue.
Speaker Change: Your next question comes from the line of David McGregor with Longbow Research. Please go ahead.
Good morning, everyone, and thanks for taking my questions.
Speaker Change: Congratulations on a strong quarter cliff. Great performance. Thank you. I guess I want to start by just asking about lower product costs because you called that out in each segment.
Speaker Change: I'm just trying to get a sense. Obviously, there's some operating leverage benefit here from the strengths in unit volumes, but...
Speaker Change: Is there something else going on here from the standpoint of, you know, variable costs or anything from a structural standpoint that would be helpful for the modeling?
Speaker Change: Well, increased production definitely allows us to leverage our investments and higher volumes, of course, more efficiencies on the production line.
Speaker Change: Douglas Goldstein, CFP®, is the director of Profile Investment Services and the host of the Goldstein on Gelt radio show.
Speaker Change: So it's scale benefits. There isn't anything kind of from a structural standpoint that's changing.
Speaker Change: No, no, yeah, we are very clear. It's definitely the scale.
Speaker Change: Right. Got it. And then secondly, I'm wondering if, I guess,
Speaker Change: If you could talk about tariffs, I guess somebody has to ask the obligatory question. You've got Taiwanese manufacturing, you've got the BMW, which I guess gives you some indirect exposure to the extent that, you know, there's tariffs on foreign automotive production. Can you just talk about your exposure there?
Speaker Change: Well, I think there's exposure everywhere, as it seems, and it can change, of course, rapidly. So I think everyone is still waiting to see what really transpires. I believe that we are...
Speaker Change: probably optimally positioned in terms of all of the discussions that have been going on while we have exposure here and there. I think for the most part our supply chain is
Speaker Change: is out of the way of where most of the attention is being focused right now. So we could have some impacts. We don't really know how to quantify that, but we believe that we are in a good position to minimize the impact.
Do you have anything in the guidance for that now?
Speaker Change: No, there's really nothing that you could plan for right now. I again that's that's there's a lot of changes almost on a daily basis so so we'll just have to wait and see but but at this moment we we don't anticipate that there's going to be major impacts.
Thanks very much.
Speaker Change: Your next question comes from the line of Ivan Feinseth with Seagrass Financial Partners, LLC. Please go ahead.
Ivan Feinseth: Hi, thanks for taking my question and congratulations on another great quarter and a great 2024.
Ivan Feinseth: Douglas Goldstein, CFP®, is the director of Profile Investment Services and the host
The Approach Golf Simulator and the Descent.
Speaker Change: Diving Computer. These are more higher priced products. Are these targeted more? Are you at the professional markets? Are you seeing let's say
Douglas Boessen, CFP®, Financial Planner & Investment Advisor
Speaker Change: in shipyards. And the same thing for the approach golf simulator. Are you seeing a lot of interest, let's say, from golf pros who use it for teaching or from golf schools?
Speaker Change: Yeah, I would say Ivan, on both of those products, really the customer base is a broad range.
Specific to dive, of course, these are very serious dives.
Speaker Change: Douglas Goldstein, CFP®, is the director of Profile Investment Services and the host of the Goldstein on Gelt radio show.
Speaker Change: Douglas Goldstein, CFP®, is the director of Profile Investment Services and the host of the Goldstein on Gelt radio show.
Speaker Change: Douglas Goldstein, CFP®, is the director of Profile Investment Services and the host of the Goldstein on Gelt radio show.
Speaker Change: Yes, so my friends who know say that the approach for the price has a lot of features that are in similar items that are two, three, four times the price.
Speaker Change: So, yeah, maybe we missed the pricing. And then my second question is, on the, on your connected cabin display, which was really, I thought, incredible at the CES, what kind of feedback did you get, or are you getting on that?
Speaker Change: I think we got really good feedback on the Unified Cabin. It is, of course, a futuristic.
of Innovative Product Design, as well as...
Speaker Change: Douglas Goldstein, CFP®, is the director of Profile Investment Services and the host of the Goldstein on Gelt radio show.
Speaker Change: and the underlying core electronics and systems that we're designing for it will definitely become part of future cars.
Speaker Change: Well, I thought it was pretty cool. I would like a car with all that. Well, wishing you a big 2025.
Thank you very much.
Speaker Change: Yeah, I think we all love to see that demonstrator and we all wish we had a car like that.
Thanks.
Thank you.
Speaker Change: Your next question comes from the line of Noah Zetskin with KeyBank Capital Markets. Please go ahead.
Noah Zetskin: Hi, thanks for taking my questions. Maybe just a couple for me on the marine industry. Obviously, 2024 was tougher from an industry perspective.
Noah Zetskin: I think U-Boat retail in the U.S. is down close to 10%.
New boat shipments were down over 20%.
Speaker Change: Obviously, you guys grew 6% organically, which implies pretty substantial share gain there. So, I guess first, if you could just remind us how to think about the mix of the business from an OEM versus aftermarket perspective.
Speaker Change: And then if we were to see some stabilization in the industry in 2025, I think your guidance is for 4% growth. So just any reason to think that might be a bit conservative if the industry were to stabilize. Thanks.
Speaker Change: Yeah, I think we definitely, you know, continue to see share gains across our product line.
Speaker Change: For us, the mix of products is more than half is retail aftermarket, although, you know, growing sizable amount is OEM as well.
Speaker Change: In terms of the overall market condition right now, I would say that, again, you know, we don't see...
Speaker Change: Douglas Goldstein, CFP®, is the director of Profile Investment Services and the host
Speaker Change: Douglas Goldstein, CFP®, is the director of Profile Investment Services and the host of the Goldstein on Gelt radio show.
Speaker Change: Douglas Goldstein, CFP®, is the director of Profile Investment Services and the host of the Goldstein on Gelt radio shows.
Thank you.
Speaker Change: That concludes our Q&A session. I will now turn the conference back over to Teri Seck, Director of Investor Relations, for closing remarks.
Speaker Change: Thank you all for joining us today. Doug and I are available for callbacks. We'll be talking to any of you soon. Have a wonderful day. Bye.
Speaker Change: Ladies and gentlemen, that concludes today's call. Thank you all for joining. You may now disconnect.
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