Garmin Reports Strong First Quarter 2016 Sales

Garmin Ltd. (Nasdaq: GRMN – News) today announced results for the first
quarter ended March 26, 2016.

Highlights in the quarter include:

• Total revenue of $624 million, growing 7% over the prior year, with
  outdoor, fitness, aviation and marine collectively growing 17% over
  the year ago quarter and contributing 69% of total revenue
• Gross and operating margins of 54.5% and 16.6%, respectively
• GAAP EPS of $0.46 and Pro forma EPS⁽¹⁾ of $0.49 for first
  quarter 2016
• Completed the acquisition of DeLorme, the pioneer of the inReach®
  series of affordable two-way satellite communication devices for the
  consumer adding both device and recurring service revenue to our
  outdoor segment
• Started shipments of recently announced activity trackers including
  the vívoactive® HR with Garmin Elevate™ wrist heart rate technology
  and the vívofit® 3 with an industry leading one year battery life

Executive Overview from Cliff Pemble, President
and Chief Executive Officer:

“We started out 2016 strong with total revenue growth of 7% led by
robust double digit growth in our marine and outdoor segments, and high
single digit growth in our fitness and aviation segments,” said Cliff
Pemble, president and chief executive officer (CEO) of Garmin Ltd. “With
the majority of the year still ahead of us, we recognize that there are
many challenges and uncertainties yet to be encountered. We will
continue to focus on innovation and execution to deliver compelling
products to the markets we serve.”

Fitness:

The fitness segment posted revenue growth of 9% in the quarter
reflecting strong growth of our Garmin Elevate™ wrist heart rate
technology products within our activity tracker and running categories,
offset by lower multisport revenues. On a year-over-year basis, gross
margin and operating margin declined to 51% and 12%, respectively. The
gross margin decline was driven by product mix within the quarter. The
operating margin decline reflects the continued investment in
advertising and research and development to support our long-term goals
in the segment. Our recently launched vívoactive HR and vívofit 3 are
shipping and we feel we are well positioned with our 2016 product
roadmap.

Outdoor:

The outdoor segment posted robust revenue growth of 33% driven by the
strength of our fēnix® line of wearables as well as our dog products.
Our recently introduced Approach® S20 and G10, and TruSwing™ have
brought new energy to our golf product line in a challenging industry.
Gross and operating margins were down from a year ago, but remained
strong at 61% and 29%, respectively, and resulted in a 17% increase in
operating income. Within the quarter, we completed the DeLorme
acquisition and will see a full quarter of sales contribution beginning
in the second quarter. With the strong start to 2016 we are poised to
execute our plan of continued innovations within the outdoor markets.

Marine:

The marine segment posted robust revenue growth of 29% on the strength
of our chartplotter and fish finder product lines. Gross margins
declined year-over-year to 53% while operating margin increased to 12%
as we leveraged our operating investments resulting in strong operating
income growth of 125%. Our recently launched GPSMap® 8400/8600 are the
largest plotters we have produced at 17-, 22-, and 24-inch displays and
have a resolution of 1920 x 1280, which is the highest screen resolution
available on the market. We remain focused on innovation and product
portfolio expansion throughout 2016.

Aviation:

The aviation segment posted revenue growth of 8% in the quarter with
both OEM and aftermarket contributing to revenue improvement. Both the
gross margin and operating margin were strong at 74% and 29%,
respectively, and improved compared to the year ago quarter resulting in
a 16% increase in operating income. During the quarter we were chosen to
provide the avionics to two lifesaving organizations, with the AirEvac’s
fleet of Bell helicopters and the U.S. Forest Service’s fleet of Sherpa
aircraft. In addition, we introduced two new products for the
experimental aviation market bringing quality audio and additional
backup displays to the cockpit. We will continue to invest in new
products and aircraft certifications for both OEM and aftermarket
customers.

Auto:

The auto segment posted a revenue decline of 11% primarily due to the
ongoing PND market contraction and headwinds caused by additional
revenue deferrals. Gross and operating margins were 44% and 9%,
respectively. We began shipping the Garmin Drive line of PND devices
with good initial customer response. Within OEM, we experienced strong
growth of our infotainment business within the APAC and Middle East
regions, and we delivered production release software for the new 2017
Mercedes E-class.

Additional Financial Information:

Total operating expenses in the quarter were $236 million, a 2% increase
from the prior year. Research and development investment increased 2%,
with growth primarily focused on aviation and active lifestyle products
in fitness and outdoor. Advertising increased 16%, driven primarily by a
year-over-year increase in fitness advertising to support wearables.
Selling, general and administrative expense decreased by 3%, driven
primarily by a decrease in year-over-year litigation related costs.

The effective tax rate in the first quarter of 2016 was 18.1% compared
to an effective tax rate of 12.3% in the prior year. The increase in the
effective tax rate is primarily due to projected income mix by
jurisdiction compared to the prior year.

We continued to return cash to shareholders with our quarterly dividend
of approximately $97 million and our share repurchase activity, which
totaled approximately $20 million in the first quarter. We have $149
million remaining in the share repurchase program authorized through
December 31, 2016, and expect to repurchase as business and market
conditions warrant. We ended the quarter with cash and marketable
securities of about $2.3 billion.

As announced in February, the Board will recommend to the shareholders
for approval at the annual meeting to be held on June 10, 2016 a cash
dividend in the total amount of $2.04 per share (subject to possible
adjustment based on the total amount of the dividend in Swiss Francs)
payable in quarterly installments.

2016 Guidance:

We are maintaining the guidance issued in February of approximately
$2.82 billion of revenue and approximately $2.25 of pro forma EPS as our
performance thus far is consistent with our expectations.

Webcast Information/Forward-Looking Statements:

The information for Garmin Ltd.’s earnings call is as follows:

An archive of the live webcast will be available until June 23, 2016 on
the Garmin website at www.garmin.com.
To access the replay, click on the Investor Relations link and click
over to the Events Calendar page.

This release includes projections and other forward-looking
statements regarding Garmin Ltd. and its business that are commonly
identified by words such as “would,” “may,” “expects,” “estimates,”
“plans,” “intends,” “projects,” and other words or phrases with similar
meanings. Any statements regarding the Company’s GAAP and pro
forma estimated earnings, EPS and revenue for fiscal 2016, the Company’s
expected segment revenue growth rates, margins, currency movements,
expenses, pricing, new products to be introduced in 2016 and the
Company’s plans and objectives are forward-looking statements. The
forward-looking events and circumstances discussed in this release may
not occur and actual results could differ materially as a result of risk
factors and uncertainties affecting Garmin, including, but not limited
to, the risk factors that are described in the Annual Report on Form
10-K for the year ended December 26, 2015 filed by Garmin with the
Securities and Exchange Commission (Commission file number 0-31983). A
copy of Garmin’s 2015 Form 10-K can be downloaded from http://www.garmin.com/aboutGarmin/invRelations/finReports.html.

Garmin, the Garmin logo, the Garmin delta, Approach, GPSMap, vívoactive,
vívofit and fēnix® are trademarks of Garmin Ltd. or its subsidiaries and
are registered in one or more countries, including the U.S.; Garmin
Drive, Garmin Elevate, and TruSwing are trademarks of, or exclusively
licensed to, Garmin Ltd. or its subsidiaries. All other brands, product
names, company names, trademarks and service marks are the properties of
their respective owners. All rights reserved.

Non-GAAP Financial Information

Pro Forma net income (earnings) per share

Management believes that net income per share before the impact of
foreign currency translation gain or loss and income tax adjustments
that materially impact the effective tax rate, as discussed below, is an
important measure. The majority of the Company’s consolidated foreign
currency gain or loss result from balances involving the Euro and the
Taiwan Dollar and from the exchange rate impact of the significant cash
and marketable securities, receivables and payables held in a currency
other than the functional currency at one of the Company’s subsidiaries.
However, there is minimal cash impact from such foreign currency gain or
loss. The Company’s income tax expense is periodically impacted by
material net releases of reserves primarily related to completion of
audits and/or the expiration of statutes effecting prior periods. Thus,
reported income tax expense is not reflective of the income tax expense
that is incurred related to the current period earnings. The net release
of other uncertain tax position reserves, amounting to approximately
$3.8 million and $5.3 million in first quarter 2016 and 2015,
respectively, have not been included as pro forma adjustments in the
following presentation of pro forma net income as such amounts have been
considered immaterial, tend to be more recurring in nature and are
comparable between periods. Accordingly, earnings per share before the
impact of foreign currency translation gain or loss and income tax
adjustments that materially impact the effective tax rate permits a
consistent comparison of the Company’s operating performance between
periods.

Free cash flow

Management believes that free cash flow is an important financial
measure because it represents the amount of cash provided by operations
that is available for investing and defines it as operating cash flow
less capital expenditures for property and equipment.