Garmin Ltd. (NASDAQ:GRMN) Q4 2014 Earnings Conference Call - Final Transcript
Feb 18, 2015 • 10:30 am ET
Good day everyone and welcome to the Garmin Limited Fourth Quarter 2014 Earnings Conference Call. As a reminder, today's call is being recorded. And at this time I'd like to turn the call over to Kerri Thurston. Please go ahead.
Thank you and good morning, everyone. We'd like to welcome you to Garmin Limited's fourth quarter 2014 Earnings Call. 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/stock. An archive of the webcast and the related transcript will also be available on our website. This earnings call will include projections and other forward-looking statements regarding Garmin Limited and its business. Any statements regarding our future financial position, revenues, earnings, market share, product introductions, future demand for our products and objectives are forward-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, which will be filed with the SEC later today. 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'll turn the call over to Cliff.
Thank you, Kerry and good morning, everyone. As announced earlier today, Garmin reported fourth quarter revenue growth of 6%. And strong gross margin performance, which contributed to another quarter of pro forma EPS growth. Outdoor, Fitness, Aviation and Marine revenues increased 23% on a combined basis, which more than offset an 11% decline in Auto-Mobile. The non-Auto-Mobile segments represented 58% of our revenue in the holiday quarter. Gross margins improved, year-over-year, to 54%, driven by the revenue mix shifting towards our higher-margin segments and due to the recognition of higher margin revenues that were previously deferred. Operating margin declined slightly to 22%, as we made significant investments in advertising. These investments were consistent with our strategy to grow our share in the Activity Tracker market, through higher consumer awareness and improved representation at retail.
Looking briefly at our full-year performance, we delivered four consecutive quarters of revenue growth and strong margin performance resulting in pro-forma EPS growth of 18%. On a combined basis, our growth segments contributed over $1.6 billion in revenue for the year or 57% of the total and generated 69% of our operating income. Gross and operating margins improved to 56% and 24%, respectively, allowing us to generate over $3 of pro-forma EPS for the first time since 2009. This is a major accomplishment made possible by our growth initiatives and the dedication of Garmin associates around the world. For the full year, we returned over $600 million to shareholders via our quarterly dividend and share repurchase program in 2014. Next, I'll review each of our business segments, highlighting 2014 performance, our 2015 outlook and a brief summary of long-term, strategic initiatives.
Starting first in the Fitness segment, we reported year-over-year