Garmin (GRMN 55.25, +4.80) has jumped 9.5% in pre-market after beating quarterly expectations.
The manufacturer of GPS and wearable technology reported above-consensus fourth quarter earnings of $0.73 per share on a 10.2% year-over-year increase in revenue to $860.80 million, which also surpassed expectations.
Garmin manufactures an array of GPS navigation devices and wearable fitness trackers. Shares of Garmin trade more than 50.0% below their peak from 2007, reflecting the understanding that smartphones can perform some of the same functions as Garmin devices. Nonetheless, the company has been able to maintain a niche user base.
The company's Outdoor unit saw the strongest sales growth, jumping 46.0% to $175.40 million. The company reported growth throughout the unit with a gross margin of 61.0%.
Fitness sales increased 20.0% to $274.05 million, largely thanks to wearables with Garmin Elevate heart rate technology. Garmin expects the Fitness unit to be the largest revenue contributor in 2017.
Marine sales grew 19.0% to $67.46 million, with chart plotters and fish finders driving the growth rate.
Aviation sales increased 13.0% to $117.27 million, thanks to contributions from OEM and aftermarket sales.
The company's Auto unit saw a 17.0% decline in sales to $226.60 million. The fourth quarter decline in the Auto unit was consistent with the rate of decline in full year Auto revenue. The company signed an agreement with BMW to provide infotainment hardware for BMW vehicles.
Overall gross margin increased to 54.7% from last year's 52.9% while operating margin was little changed, slipping ten basis points to 18.6%.
Looking ahead, Garmin expects to generate fiscal year 2017 earnings of $2.65 per share, which is consistent with current market expectations. Revenue is expected to reach $3.02 billion, which is a bit ahead of market expectations. The company expects that growth in Outdoor, Fitness, Marine, and Aviation units will offset a continued decline in personal navigation devices, which is an area most vulnerable to competition from smartphones.