Garmin Ltd. (NASDAQ:GRMN) Q1 2018 Earnings Conference Call Transcript

May 02, 2018 • 10:30 am ET

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Garmin Ltd. (NASDAQ:GRMN) Q1 2018 Earnings Conference Call Transcript

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Q & A
Operator
Operator

Yes, sir. (Operator Instructions) Our first question comes from Joe Wittine with Longbow. Your line is open.

Analyst
Nikolay Todorov

Hi, this is Nik Todorov on behalf of Joe. Congrats on a great quarter guys. Really, good job.

Executive
Clifton Albert Pemble

Thank you.

Analyst
Nikolay Todorov

Since you don't guide the quarter, I think it will be helpful if you can walk through which areas of the business was -- were ahead of your expectations. I guess what was the biggest surprise?

Executive
Clifton Albert Pemble

Well, we don't really provide information on our expectations by segment other than the basic guidance that we've earlier laid out. So I think quarter by quarter, we have a lot of seasonality in our business and also cadence of our product releases, and so that can create, certainly, ups and downs in terms of the overall yearly averages.

Analyst
Nikolay Todorov

Okay, understood. And in outdoor, the data we track on fenix show surprising strength throughout the first quarter, even though you had fully anniversary-ed the Fenix 5 launch. I'm just curious, is that strength surprising you? Can you give us some color on its performance?

Executive
Clifton Albert Pemble

Well, I think we didn't start delivering the fenix 5 until late in the first quarter of 2017. And so consequently, much of Q1 of 2018 was not comping against that initial fill-in. Q2 was our biggest fill-in quarter for fenix 5.

Analyst
Nikolay Todorov

Okay. Got it. And on fitness, are you seeing any changes in the trajectory for basic trackers? And is it safe to assume that basic trackers are now less than quarter of your fitness segment?

Executive
Clifton Albert Pemble

I think the general trend for basic trackers continues, as we have been remarking and as the market has been demonstrating. There's pockets of strengths geographically and also by product lines that we have. But generally, we see a downward trend for that. In terms of breaking that out as a percentage of sales of fitness, we don't do that.

Analyst
Nikolay Todorov

Okay. Got it. Thanks guys. And good luck.

Executive
Clifton Albert Pemble

Thank you, Nik.

Operator
Operator

Thank you. Our next question comes from Doug Clark with Goldman Sachs. Your line is now open.

Analyst
Douglas G. Clark

Hey, great. Thanks a lot. First question on the aviation business. I'm wondering if you could give a little bit more detail. You talked about kind of broad-based strength, but it looked like, in the quarter, there were a number of certifications or deliveries. So if you can give maybe a little bit more detail on kind of aftermarket versus OEM and, in particular, the strength of the pipeline for certifications.

Executive
Clifton Albert Pemble

Yes. So I think we saw broad strength in retrofit and OEM product lines. I think there's a lot of data on the overall situation with OEMs. And I think they're seeing some incremental improvements in their business, although it's low single digits. For us, I think it's a matter of product mix, the products that we're delivering as opposed to the general market. The small and medium-size airplanes as well as single-engine airplanes are doing well.

And also, on the retrofit side, we're seeing general strength due